May 5, 2009 3
Two weeks ago I wrote a Tuesday push about loopthing.com. Despite having a nicely designed site, Loopthing isn’t something that resonates with me in terms of a business model. Until the service matures I believe that they’re sitting in the category of web business which I describe as “Me too! (dot zero)”. The Me2.0 businesses are missing one or more of these essential ingredients:
- At least ten percent innovation on their competitors to make them stand out (Satisfying the criteria of “value to customer” versus “uniqueness”).
- A niche that’s small enough that they can dominate without significant competition before branching out into new markets or niches.
- A superstar web or entrepreneur personality who can drive traffic immediately just by having their name attached to the project (E.g. Jason Calacanis, Guy Kawasaki, Gary Vaynerchuk, Kevin Rose, et al) – It’s possible to succeed as a “Me too!” if you have a “celebrity” name attached.
This week’s Tuesday Push is for yet another business listings portal, in the guise of Revahealth.com. So what’s different here? For a start, Revahealth have been around for a few years, giving them time to solidify their business model and giving them a head-start on any recent competitors. Secondly, and most importantly by far, they’ve picked a small but extremely profitable niche that isn’t going to go away any time soon – Healthcare.
The business model is straightforward. Business for healthcare services like Dentistry, Cosmetic surgery, and Laser eye surgery practices are competitive. Your average small-to-medium sized clinic isn’t likely to have a web page, and even if they did it’s probably unlikely that they have much time to update it regularly. Revahealth fill this gap by funnelling clients to grateful clinics who reward them with a referral fee. In addition, Revahealth offer the “freemium” model where clinics can list their business for free, but there’s a much nicer upgraded profile available for a fee. The model is proven – Internet marketing “superstars” such as Jeremy Schoemaker have commented on it before. The difference between Revahealth and the countless other “business portal / connect users to business” sites is in the niche.
The healthcare niche is by no means small, but certainly not as big as “a list of all businesses”. This means that it’s possible for one player in the field to make a name as the go-to place for healthcare information and dominate, with the added benefit that there’s revenue immediately. Once they are a recognised brand in the healthcare sector, there’s nothing stopping them from moving into another area using the same basic technology and business model.
In Micheal Cusumano’s eight-point lens for business evaluation, the management team is the primary criteria. Revahealth benefits from Caelan King’s experience in marketing and as a product manager, and the experience of Ray Nolan as a board member, who has built Web Reservations International into the (very profitable) market leader in hostel bookings. Tapping into Ray’s experience of the problems faced in building a niche service like hostel bookings is a very useful skill to have on board when moving into another area.
Calelan puts a lot of effort into the Revahealth blog (well worth a read), is active on twitter, and regularly presents at conferences such as Bizcamp. While this isn’t marketing to the specific audience of their product, it ensures brand awareness of revahealth within the technical and entrepreneurial community, and at the very least indicates that there’s no plan to let their technology stagnate.
From a business perspective, Revahealth ticks a lot of boxes – a solid management team with a compelling offering in an attractive market. The site itself has lots of content, the design is clean, spacious and easy to use, and the layout seems entirely geared towards the company’s organic SEO efforts. I can see Revahealth doing very well – Healthcare services are an necessity, and they have a great targetted service which I think will continue to grow profitably.
Here’s a presentation that Caelan King gave on monetising web applications at Barcamp Belfast, which goes into more details about Revahealth’s revenue model. (Via Ken McGuire’s excellent Tuesday Push for RevaHealth).