When You Rely On A Single Source For All Your Business, You're In Trouble

from the it's-that-simple dept

TechCrunch points us to a story that I had to triple-check wasn't an early April Fool's release, concerning a Canadian internet company named GeoSign that supposedly raised $160 million a year ago to fuel its Google ad arbitrage play, only to have it all collapse in a year, in part due to Google finally hitting back against arbitragers. The story is fascinating on a number of points -- from the idea of putting $160 million into what was clearly a fluke (though, it sounds like the VC probably pulled most of that money out of the company) to the fact that the company's collapse (and massive layoffs) happened just months after the $160 million was closed. However, the key point was that all of the company's revenue came from a single arbitrage play: buying Google keywords and sending people to landing pages with Yahoo ads on them. When Google pulled the plug (as it should have), the entire revenue line disappeared. While there are plenty of firms that rely solely on Google for traffic (and even sue when that traffic goes away), this should be a clear reminder to anyone: if you are totally reliant on a single company for your business to work out, you're probably in trouble. No good business is built entirely off a single supplier or revenue source.

Filed Under: business failure, search arbitrage, single source
Companies: geosign, google


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  • identicon
    Lawrence D'Oliveiro, 20 Mar 2008 @ 1:30am

    You mean...

    ...like all those hardware and software companies depending on Microsoft Windows?

    reply to this | link to this | view in chronology ]

  • identicon
    Ran, 20 Mar 2008 @ 1:44am

    Who's in trouble?

    If they raised 160$mil and the founders pulled nice salaries and maybe a "bonus" here and there, I doubt theyre in trouble. Their customers on the other hand...

    reply to this | link to this | view in chronology ]

  • icon
    TX CHL Instructor (profile), 20 Mar 2008 @ 3:07am

    That's why smart suppliers...

    That's why smart suppliers won't sell more than 10% of their production to WalMart.

    reply to this | link to this | view in chronology ]

  • identicon
    Anonymous Coward, 20 Mar 2008 @ 5:35am

    I buy everything from toilet paper to televisions exclusively from SkyMall. The day they go out of business is the day I perish.

    reply to this | link to this | view in chronology ]

  • identicon
    Shuryno, 20 Mar 2008 @ 5:35am

    Good Work Google

    These people are the scum of the internet.There's nothing I hate more than advertising landing pages(Actually there's somethings, but it's irrelevant :) ). Those are the people linking you to make money fast scams. Google's trying to clean it up, so don't believe the SEO's gurus, It's algo will always change to make sure the searcher has the best results and experiences possible. If it notice too many junk sites making high PR, it will crack down on what allows them to do it, and SEO will try to find a way to make it to the top, rince & repeat.

    Build rich unique content sites and Google will embrace you.

    reply to this | link to this | view in chronology ]

  • identicon
    Tina, 24 May 2008 @ 10:48pm

    Relying on a single source for your Business Needs!

    Very useful topic indeed. It is not worth relying on every one and One as well out there in the market, But you may give it a try, by studying their history, what their customers say about them, and by knowing their qualifications and the quality work they have-had done. Getting a good business company and relying on a single one could be helpful too. It all depends how do you measure their abilities, expertise, and knowledge.

    Thanks again for a brilliant post.

    Regards:

    Tina

    reply to this | link to this | view in chronology ]


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