The Inside Word is a weekly feature that looks at compelling industry debates and discussions unfolding on the blogs of employees at digital-media companies.
Poster: Raj Kapoor
Blog name: the vc in me ...
Company: Mayfield Fund
Backstory: Kapoor, a managing director at Mayfield Fund and co-founder of online photo-sharing service Snapfish (sold to Hewlett-Packard) argues that non-profits are on the upswing online. He cites several non-profits that have disrupted for-profit businesses, including Wikipedia, Firefox and Openstreetmap, and says he expects non-profit sites to take over other areas on the web soon.
Blog post: Why do these entities take off? “The-not-for-profit structure innocently makes it VERY hard to compete with them,” Kapoor writes. “They have such a low cost infrastructure (most of these orgs have less than 40 employees at scale and many volunteers), and the marginal cost of delivery of their service is so low, that they can offer much of it for free or very low cost without worry of profit maximization. This brings in more users, which strengthens the content or application, which then provides even more value—a virtuous cycle hard to break (the ‘network effect’), even when the resources of large companies are turned on these areas.” He also notes that eventually many of these entities (notably Firefox developer Mozilla and Craigslist) do begin to make money.
Post-script: We asked Kapoor what online categories are ripe for the next non-profit takeover. He said maps/geodata: “It’s a universally used data type, has limitless layers since there are so many data types you could put on a map (peoples, places, reviews, stories, etc.), and will have explosive use given the mobile internet and app growth.”
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By Joseph Tartakoff