eDoorways Part 1 - Introduction

This article is the first in a series that analyzes a company called eDoorways.com (EDWY). I spent some time reviewing the service and considered buying stock, but decided against the purchase for now.

Here's why:

• Primary Focus
• Target Market
• Technology Scalability
• Enterprise Driven Design
• Achilles Heel
• Recommendations
• Summary

Now I'm just some anonymous blogger posting comments from a deep, dark, undisclosed location. But don't let that fool you. The vast majority of people posting to blogs use an alias because they don't want that "knock on their door."

In real life, I have been working in the IT field for over a decade. I've earned some high level certifications as a grunt, worked my way into managing a regional IT dept for a Fortune 250 company, and currently own/operate a web based company focused on a vertical niche (completely unrelated to eDoorways). I've been asked by some angel investors in my company to analyze other start ups that hold promise.

I have no desire to trash EDWY - quite the opposite. I see things in the company that have potential for a viable site. But I also see some big land mines in their path that they're planning to step on. If you are an investor, please read my recommendations before you start commenting. There is real promise here, but you must use your leverage as an investor to effect change in the company.

All the best - Jim

Update: I'm currently an investor in EDWY. I bought in at $.0255 so that I can participate in the investor preview of the software. As of 7/9/09, I'm down a few hundred bucks. No surprise. You can bet I'll sell my initial investment as soon as the pps exceeds $.027.

Next: Primary Focus »

Disclaimer

eDoorways Part 2 - Primary Focus

A Purpose Driven Site
One of the top killers of a .COM venture is the lack of a primary purpose.

When you think of Google, you think of search. eBay - auctions. Linkedin - networking/recruitment. Facebook - social/networking. And so on.

When I first looked at eDoorways.com, I had to go back and re-read the home page. I could not find what the purpose of the site was. I'm sure there is one, but the company has not made the effort to be clear on the primary function of eDoorways. That will haunt them if they go to launch with this fuzzy purpose.

The site talks a lot about how they are like Google, eBay, and MySpace all mixed up in a high speed blender. That's utter nonsense if I've ever heard it. Get serious if you want my investment.

Every site must have a primary purpose that consumers attach to your .com. Without it, you'll be forgotten very quickly.


Examples of Purpose Driven Sites
To get a sense of what I'm talking about, compare the following sites to the screenshots on eDoorway's site.

1. Hunch.com
2. Hulu.com
3. Mint.com
4. Linkedin.com
5. Facebook
6. Bing
7. Google
   

With these examples above, the user clearly sees what the site is about. Furthermore, the user does not see tons of side clutter and pages full of wigdets and gadgets that confuse the eye and delay usage.


Bing Case Study
A great case study of this clutter phenomenon is Microsoft's evolving search platform that has recently culminated with Bing. Microsoft's first major attempt at a search engine was MSN.com. They made it the default homepage of every Windows/Internet Explorer user. Even with this built in advantage of getting 90% of the world to see you first, little old Google still won the search wars. Then came Live.com. Still, too many things going on, too much noise, and it just couldn't catch up to Google.

Bing has a chance only because it is a different type of search for a different type of purpose. Google has the quick and dirty searching locked up, so Bing has focused on a niche search that combines several related search avenues into the default search results page. For Google and other engines, this is often a secondary step. Bing won't topple Google, but it may have found a way to carve out a viable place in the search world.

Most importantly, the purpose of Bing is clear from the homepage. A big simple page with a pleasing graphic and only one thing to do - Search! Microsoft may have finally learned.


Hunch Case Study
eDoorways should take a close look at Hunch. This is an automated version of consumer decision making that is similar to the EDWY model (consumers ask and live professionals answer in real time).

With Hunch, businesses buy ads through answers and help develop a controlled set of questions that lead the user to predetermined set of answers. It's a clever way to mix non-commercial answers with paid advertisements. As long as the advertisements are relevant and accurate, this should be a great tool for the indecisive.


Get Focused
The final thought I have on this topic is about the common response I've heard from investors in EDWY - "eDoorways is revolutionary and will unify all aspects of consumer and business interaction." I wonder if they have ever said this out loud a few times to hear how silly that sounds.

From the beginning of the commercial Internet, ventures have set off to "unify" the world with a holy grail type web site. ALL HAVE FAILED. It's like chasing the gold at the end of a rainbow or searching for the fountain of youth. Unifying the web is such a vague concept. Successful companies tackle one major need and do it well.

Once they're successful, they often branch out to complimentary services - but never will you see a successful company like Linkedin start holding eBay style actions and selling pet food.

EDWY does not currently have a self-evident purpose. People have to spend a lot of time reading to really "get it". A consumer will give you 5 seconds.


EDWY Advice
EDWY - Get a purpose. Focus on one thing and do it well. And most importantly, be able to explain that one thing in a single phrase.


Investor Homework
Investors - Go to the eDoorways web site and come up with a one sentence description of this company. Post it here, on the Google Finance boards, or on the EDWY corporate blog.


Update: 7/9/09
Since I have not been able to get valid answers from investors on "what does eDoorways do?", I decided to post the phrase that should be on the tip of every investor's tongue:

"eDoorways helps you solve your problems."

That's kind of a generic umbrella, but it clearly communicates the primary focus of the core eDoorways service (SOLVE). IRG will need to help eDoorways more effectively communicate this purpose to the masses.

« Back: Introduction :::: Next: Target Market »

Disclaimer

eDoorways Part 3 - Target Market

Micro-Boomers
According to this eDoorways page, the company's target market is the 47 million "micro-boomers". The young adults who grew up during the Internet Age are seeking out hip new sites and services like Twitter, Facebook, Hunch, etc. They have a new lingo of 'tweets' and 'googling'. They spend their days on sites that look clean, slick, and easy to use.


Micro-Reality
It is hard for me to reconcile that target market with what I see on eDoorways. First of all, the terminology is like something my parents would find appealing: Doorways, portals, . Doorways? Really? You want hip young adults to talk like grandpa? "Well, I finally got onto the Internets and opened a door to a site where I could ask questions. They had little rooms that I could sit in and other doors for me to go to when I had other questions. Then I cranked up my iPhonograph and listened to the hot new single from Fats Domino."

You might as well put a midi file looping on every page so that you create that great elevator music atmosphere. Or post phone numbers so that users can just call each other with questions. Or deliver a delorian to each user so they can go back to 1993 when a concept like doorways would have been cool.


Web 3.0
The easiest way to spot a person with no clue about technology is when they say a site will be so 'Web 3.0' and go on to talk about unified services and real time collaboration. That phrase was picked up by Microsoft to dismiss its utter failure at recognizing Web 1.0 and it's struggle to compete in a web based desktop world of Web 2.0. So if you can't compete with current technology, grab some new nonsense term that fools some people into thinking you're actually on a new level.

There is a general theory behind the next iteration of the web (which some dub Web 3.0). Whereas the current iteration (Web 2.0) is about connecting people, the next iteration will focus on connecting people with complex questions to information. In other words, you'd type in a complex question into Google like "I want to go to Paris for less than $2000" and it would immediately spit out a link to a cheap flight with a package of low cost hotels.

The inference is that the future search algorithms are much more aware of colloquial human speech and are populated with common outcomes to human decision making.


Doorway to the 90's
And that is everything that eDoorways isn't. eDoorways starts by playing catchup to the social networking game. Then they depend entirely on a live database of humans to answer questions in near real time. That is a huge step back to Web 1.0 style message boards. A true 'Web 3.0' company would be far more automated and semantic.

If eDoorways really wants to be hip and relevant, they should model a mix of GetStaisfaction.com and Hunch.com. At Hunch, people can and do type in complex questions. They are then presented with a set of questions to clarify and narrow their needs. After a minute of questions, they are presented with three answers that most closely resemble their needs. The answers are a combination of paid ads that qualify with the semantics of the question and user defined criteria.


Suggested Actions
eDoorways is really close to the mark. They've got to figure out a way to solidify a purpose and interface that matches their target market. If they continue to focus on "micro-boomers", they have a long road to hoe. If instead they focus on older users that are relatively new to the web, I think eDoorways will be much more successful in that niche.


Update: 7/7/09
eDoorways just hired IRG (Investor Relations Group) to manage their public image. Excellent move. At the very least, IRG will be able to generate a smokescreen of good press for the short term. Even if the web service doesn't take hold, they should be able to bring in enough traffic to hold a sustainable mass.

« Back: Primary Focus :::: Next: Technology Scalability »

Disclaimer

eDoorways Part 4 - Technology Scalability

Don't Panic
This section is really more about preference than objectivity. I am personally less likely to invest in a company that has a higher operating cost per page served than its closest competitors.

For example, say Massive Motors spends $8,000 to produce a car that sells for $15,000. Their competitor Nimble Wheels spends $6,700 to produce a similar car that sells for $14,000. Who would you invest in based on that limited information?

The same principles hold true on the web. Google manages hundreds of thousands of machines to operate their global network. They rely on open source (free) operating systems, an open database product (home built), and uses a mix of free to use languages that do not need to be licensed (C, Python, among others). Google is able to deliver a cost per search that undercuts Yahoo and Microsoft. As such, they have more leverage in negotiate ad deals.

Potential competitors to eDoorways like Hunch, Yahoo Answers, Experts-Exchange, and GetSatisfaction all use open source server platforms like FreeBSD or a Linux variant. eDoorways will run on Windows, so every server in the farm will cost more to license and operate.

To make matters worse, the software for eDoorways is being written in a .Net flavor, so it will always require a Windows server underneath. The competitors listed above use Ruby on Rails, PHP, Perl, or Python, so they can shop any host and any platform that meets their needs.

It is often argued that .NET is cheaper to program in, but arguing about programming languages is a lot like arguing which Religion is the True Religion. It really has more to do with what your team is comfortable with, what your consumers need, and what is the most feasible selection for your company to operate. One thing is true for shops running a Microsoft stack: They burn through more cash than those companies using nimble alternatives.

So the investor takeaway on this shouldn't be anything more than being aware that some operational dollars are going to be eaten up by software licensing while most competitors do not have that built-in cost.


Reduce Costs during launch
Many start ups also burn cash by designing their infrastructure to meet the initial peak demand of hundreds of thousands, only to have the investment wasted when the traffic settles down to normal levels.

I would highly recommend that eDoorways look to augment their standard server farm with temporary traffic load measures available through cloud computing services. Amazon AWS offers on-demand servers (EC2) starting at $.10/hr for Linux and $.125/hr for Windows. They can also host content with S3 for $.10/GB hosted.

Mixing cloud resources into a launch is a massive cost savings. Say they need an extra 500 servers for the first month (~730 hrs) to meet peak demand. Traditional deployments would require them to go buy 500 servers and have them all on and running. Figure that each server will cost a minimum of $1K. That's really conservative considering that you'll also need racks, switches, routers, storage arrays, software licenses, etc. But let's just say $500K is what they need to meet that peak demand in the first month.

With the cloud, all they'd pay is 730 * .125 * 500 = $45,625. It gets better, since this is largely a US based service, most of these machines can be turned off at night. Also, traffic tends to rise as a bell curve throughout the day and throughout the week. And the best part about the Amazon cloud is that you can script the farm to expand and contract automatically based on load. So as traffic picks up, machines turn on automatically. When traffic declines, the capacity declines to match usage. All the while they just pay for the hours they use. EDWY could easily provide massive scalability for the launch for less than $30K.


Investor Takeaway
If I were investing in this company, I would certainly ask the management about their deployment plans for the launch. Are they going to build peak capacity in house? What happens when demand exceeds capacity? What happens when the initial burst of traffic dissipates into normal usage levels? Have they heard of cloud computing?

These comments here are targeted for current investors and are designed to help you pressure the company to be more nimble in their ongoing operations. The less cash they burn monthly means the more profits that you the investor can pocket.

« Back: Target Market :::: Next: Enterprise Driven Design »

Disclaimer

eDoorways Part 5 - Enterprise Driven Design

Designed for the Enterprise
The developer of eDoorways is speakTECH. This development firm is described by eDoorways as a company specializing in building applications for large enterprise clients.

It should come as no surprise that the screenshots posted for the eDoorways 'SOLVE' platform look strikingly similar to an enterprise application. The images look busy, cluttered, and full of all kinds of tools and buttons. Enterprises love that stuff. End users hate it.

Consumers consistently use simple and efficient tools over complex and combersome tools. In a previous post I referenced the comparison of MSN.com (failed) and Live.com (failed) to Bing.com. Microsoft's first two attempts were to beat Google by offering more and more tools all right up front. Because Google is simple, fast, and effective, it's market share grew ever more dominant.


Why does design matter?
If eDoorways were designed as a software package to be sold to enterprises, it would undoubtedly do quite well. The problem is that eDoorways is supposed to be targeting consumers on the open web. As such, it is at the mercy of consumer design fads and practices. The Golden rule with consumer sites is that the Simplest Site Wins.

When consumers look at Hunch, GetSatisfaction, and Yahoo Answers, they are more likely to understand the purpose of the site and get into it. When the average consumer sees the current eDoorways homepage (screenshot), they are going to feel overwhelmed.


Recommendation
EDWY should test their site with focus groups in their target market. Put groups in front of Hunch, GetSatisfaction, Yahoo Answers, and eDoorways. Just watch how long it takes the user to get started with each site, how well they succeed at getting their goals accomplished, and interview them after using each tool.

The insight gained from this exercise should be quite valuable. You should be able to score the results and compare that with your site's goals. If they don't align (which I suspect they won't), your options are to redisign the interface or find a new target market that more closely aligns with your site.

« Back: Technology Scalability :::: Next: Achilles Heel »

Disclaimer

eDoorways Part 6 - Achilles Heel

Achilles Heel
This post will perhaps be the most contentious assessment I'll make of eDoorways. The foundation of the SOLVE platform is the novelty of consumers asking questions and having real-time responses from experts/businesses.

That sounds wonderful.


Now back to reality
Let's remind ourselves of the target market: micro-boomers (20's & 30's) and local small business owners. Most micro-boomers are savvy enough to get most questions answered through searches, and most small business owners cannot devote hours each day to answering questions for people outside of their market.

Think about Susie who owns Little Susie's Bakery. Someone has a question about the best way to bake a pie. What is she supposed to do with that? Politely ask the consumer living 500 miles away to buy a pie from her shop?

How about Jim who owns Jim's repair shop. A guy logs in and asks for help restoring the transmission of '57 Chevy. Jim should say 'haul it over to my shop and I'll do it for $1500'... but that wouldn't work well with eDoorways' model.

Incidentally, you can Google both questions above and get those answers instantly.

With the live chat feature of eDoorways, both the consumer and the business would have to be geographically close to each other. That can be done through basic IP checks with varying success.

The larger problem is how do you guarantee that an expert will be online at any hour, for any topic, and in any location? If you can't provide that 24/7, you can't guarantee that live response service. And if you can't guarantee that live service, eDoorways is reduced to a Yahoo Answers style of site.


A Real, real-time response?
To guarantee a real time response, have the managers at EDWY really thought through what it will take to reach a mass large enough to support such a commitment? They are creating a chicken and egg scenario in which they must get a large enough group of consumers to make it worth the time for experts/businesses to devote on the site. But they must also get a large enough group of experts/business to make it useful for consumers to use the site.

Otherwise, consumers will just be asking questions with no one to answer in real time, and thus the entire purpose of the site is lost.

This criticism is fundamental to my view that eDoorways will ultimately disappoint investors.


Recommendations
To break that chicken-egg scenario, they could do one of the following:
1) Drop the real time guarantee and fall in line with competitors that guarantee a fast response (2-24 hours). (GetSatisfaction.com & Answers.Yahoo.com model)
2) Have a premium service that consumers pay into and experts/businesses are paid for their time. (Experts-Exchange.com model)
3) Have the real time response be derived through semantic results - driven by predetermined logic that leads the user to outcomes that include relevant information and product placement. This can remain free and still be extremely profitable. (Hunch.com model)

eDoorways could seek a different delivery mechanism. Building a Facebook app would instantly open a consumer base large enough for businesses to sign on. Facebook provides so many great demographics that it really could make for a viable combination.

eDoorways could also seek a different market. Rather than focus on consumer fed revenue model, EDWY might consider packaging the solution as a hosted app for enterprise customers. What better way to get get thousands of mini "SOLVE" portals than to have Toyota pay a license fee to offer a live Q&A for their consumers. Or have Best Buy provide real-time sales answers to their products.

Little Susie's Bakery or Jim's Repair Shop will be unlikely to derive any revenue from such a solution relative to the amount of time the owner would invest online. Local advertising is still going to be their best marketing avenue.

« Back: Enterprise Driven Design :::: Next: Recommendations »

Disclaimer

eDoorways Part 7 - Recommendations

Summary of Recommendations
Here's the recap of the concerns I have with the platform and suggestions to improve the service.


Find a Purpose
The most fundamental recommendation that I have for EDWY is to solve the riddle of purpose. What is the targeted primary goal of the site? If your visitors remember one catch phrase about your service, what would it be?

Innovation is vague and is not a goal. Putting Google & MySpace in a blender is campy and not a goal. A B2C gateway is vague and not a goal. A platform for consumer Q&A with experts is close to a goal, but it competes with other stated goals of providing a marketplace and a 'connection to the global community.'

Mint.com helps you manage your money. Hunch.com helps you make decisions. Facebook.com keeps you connected with friends. Deep behind the scenes of all of these sites you're matched with products and services through ads, emails, and in-line product placement.

So what does eDoorways do?


Solve the Chicken & Egg
Figure out a way to be profitable in the event that the ratio of consumer questions : expert/business answers is not maintained in perfect balance.

Drop the expectation of real time answers unless you can really back that up. Really. You only have one shot at a successful launch. The online hoards will not forgive a fumbled start.

If you do offer real time support, you're going to end up having to pay people to provide real time answers during the startup period and during periods of every day for ever. That's why you should charge for the premium service or drop the expectation of live, expert answers from businesses near your home.


Consider additional delivery models
Consider building a Facebook app to give you instant access to a massive user community.

Consider building an interface for the iPhone or a generic mobile device to give you access to a larger community. Some CSS styling can usually make your app functional on any smart phone. With mobile devices, you can quantify location of the user and match them with the nearest expert (geographically) - especially as the user travels. Plus, you'd get more direct access to 'experts' who might have day jobs. Sending questions on their phone will bypass the corporate network and make it more likely for experts at businesses to respond quickly. For instance, the real time chat could be done through a txt message gateway.

Consider licensing an instance of your app to enterprises for dependable revenue. Not only would you get regular cash, you would ensure a dependable user base of experts paid for by the large corporate clients. So if you're smart about it... you make the back-end fluid enough to intermingle the Q&A from both the corporate instances and the main site.


Test your 'Target Market'
Get a focus group going with your target market and see how your service compares with other close competitors. You still have time to adjust your target market or tweak your site, so get going on this asap.


Augment your deployment with the 'Cloud'
Check out what Amazon is doing to help power the next iteration of web sites. Mixing in scalable and cost effective horsepower will save EDWY hundreds of thousands of dollars and help ensure a smooth and responsive launch.

« Back: Achilles Heel :::: Next: Summary »

Disclaimer

eDoorways Summary

Investor Summary
All of the recommendations are applicable to you. Since you are a partial owner in the company, I would highly recommend that you press EDWY management for answers to some of these concerns and learn about how they are prepared to address them.

You have the right to influence the company through investor pressure. There is certainly opportunity for EDWY to be successful. As it is currently designed, however, I see the expectations vastly outweighing the likely performance of this venture.

I fully expect the share price to rise in anticipation of the October launch date. If you're currently underwater, consider selling at a spike and buying back your position with the profits you made. Then the pressure is off. But I fully believe that once the post-launch performance of the site is measured, the consensus will be that eDoorways underperformed to the expectations and your shares will drop significantly.

I welcome any comments on these posts and my conclusion. If you have questions about my analysis, I also welcome a discussion.


Disclaimer
I am not invested in EDWY. I considered it when news of the conference call came out. I was asked by the investors of my company to provide them with an analysis of this and other tech stocks. I did not write these posts to trash the company, and if you read through my analysis and suggestions you'll recognize that this is constructive criticism. When tech writers pick up the launch of eDoorways, don't think for a minute that they'll be treating yet another .com venture with kid gloves.

If I or my investors buy into EDWY, I will update the post here to reflect the price per share that shares were purchased at.

Update: I made a personal stock purchase in EDWY. I'd like to see the investor walk through and potentially revise my analysis.

Good Luck
Good luck to those investors who are riding profits. I also hope that EDWY takes these suggestions under advisement.


All the best - Jim

« Back - Recommendations :::: Start Over »

Disclaimer