Published Jan 6, 2005

I’m a loyal Movable Type user, so MT maker Six Apart’s acquisition of online journaling pioneer LiveJournal is of great interest to me. What could inspire the one company to buy the other? What’s the plan? It’s hard to see.

From both a business and a software development point of view, there appear to be a small number of possible drivers behind this merger: buying users to increase the user base, buying talent to improve the product, selling the hassle of running a company, and, last but not least, a next-generation vision of online personal presence and community-building based around Web Services.

Buying Users

One real, but simple, possibility is that 6A and LJ were feeling squeezed as large companies entered the blogging sphere. Google bought Blogger, and Microsoft has introduced MSN Spaces. These big players are scary, and maybe 6A and LJ felt they’d find strength in numbers. Apparently LJ has 5.6 million users and that’s sure a lot of strength in numbers. Still, that’s just buying momentum, and Google and MS have plenty of money to do that.

One more useful reason to buy users is to create a continuum of products along which individuals can move as their demographics change — much like General Motors, which starts you out with the Chevy, moves you through the Buick, to finally the Cadillac. LJ draws a younger crowd and 6A an older, more professional one. Is the plan to get ‘em young and keep ‘em when they get older? It’s difficult to see how two such different products as MT and LJ could form a continuum.

Buying Talent

In the aforelinked post by 6A owner Mena Trott, she mentions LJ founder Brad Fitzpatrick’s ninja coding skillz, and, especially, the very effective server tools he’s built. While MT is a downloaded application — I pay my host, Freedom2Operate, for space on a server, then run the MT application from there — LJ is hosted on central servers. LJ has learned a lot about running said servers effeciently, and, especially as MT branches out into hosted services with TypePad (and runs into server load issues for even the local application), MT may simply need to buy Brad and his staff’s skill to build a scaleable application and grow.

It’s not at all uncommon for small companies to hire outside talent this way. It allows the outside talent to gain ownership in the company, to wrap up their outside work, and is a way for the acquiring company to give (abundant) equity in lieu of (scarce) cash for technology and services.

Selling The Hassle

Brad makes an important statment when he says:

I love technology and designing the LiveJournal architecture but I hate running a business. While I’ve been learning a lot of business stuff over the past 5 years and it’s been kinda interesting, I just don’t love it and I’m not great at it. Plus it just keeps getting harder as LiveJournal grows, sucking away more of my time and youth. I’m ready to pass off what I see as “the boring stuff” to somebody else that I trust and focus on the fun stuff.

A lot of entrepreneurs are people with great ideas, not great businesspeople. For these kinds of entrepreneurs, a good — and quick — exit strategy can be very important, especially if these entrepreneurs get in a position of power within a growing and original company. Brad is becoming 6A’s Chief Architect, so this seems to be that kind of a move for him. If so, well done, Brad!

A Web Service-Based Vision

There is one other possibility. As the blogosphere has grown, so has the popularity of RSS. This is good evidence that new technology drives new ways of consuming information, and maybe we’re just on the cusp of a new wave of personal, meaningful, information-sharing, and relationship-building presences on the Web.

What if your next blog had not only what you wrote, and what you linked, but similar links, and links your friends had made, and everybody could discuss these items? That’s a possible future for blogs, and not so far away. 6A has a big advantage in Web services, pioneering TrackBack and using XML-RPC to enable all sorts of blog-posting approaches (I’m quite the Luddite in that I only use the Web interface). LJ has the community aspect down. Maybe, together, LJ and 6A can pioneer the protocols that drive the next wave of blogging tools, and gain a march on their larger competitors and direct the path of development for a little while, gaining both money and momentum while running the show.

There’s nothing wrong with a plan with a touch of World Domination thrown in. In fact, the impetus for the merger probably includes some of all of the above points, and the near-term plans for both companies probably run

  1. Buying Talent
  2. Selling Hassle
  3. Buying Users
  4. Owning The Web-Service Based Future

Not a bad plan. I’ll be interested to see how it turns out, and when I get threaded comments!