Why Still Do an Email Startup?

Last week, there was quite a discussion going around building an email startup. From the face of it, every tech guru in Silicon Valley believes that there is not much left in building an email startup.

Founder of Xoopit, a startup in mail applications (acquired by Yahoo) shared interesting perspectives on the same (with a candid advice : 20 Reasons Why Not To Do an Email Startup). Do go through the entire presentation.

At a fundamental level, Email is not just about a messaging service, but is a communication channel.
Lets look at what email business actually means.

The problem statement.
Email is an overload. Email kills your productivity. But you still need email, because it’s the primary communication channel between you and the other party. What email lacks is a prioritized recipient (which Google attempts to solve with Priority Inbox), and most importantly,inability to make an actionable (and contextual) sense of email content.email_business

Where is the money in Email Business?

Consumer Business? Probably not so much, as consumers typically don’t pay for email services (before Gmail, people used to pay $25/year to Yahoo for POP service) and in fact, most of the pure-play email companies have gone extinct. The ones that are still around are companies that look at email service as a content business (i.e. sell CPM ads) and in some cases, sell premium accounts (i.e. freemium model).

Can you really build another email service? A passionate entrepreneur will say yes, and everybody else will say Not possible (just the way they did with search engines, way back in 90s). Leaving you to decide who is (eventually) correct, I strongly believe that email still holds a huge opportunity in enterprise segment, especially in the small to mid tier businesses.

And guess what, you don’t really need to build your own email client (cloud services like Google Apps/Zoho provide a huge opportunity plus the targeted userbase).
Here are some of the opportunities where applications built on top of an email client will add value (decrease manual cost/improve productivity):
a. Integration between existing in-house IT services and email. While Zimbra boasts of good integration apps, there still is a business to be built, especially in the small-mid sized business

b. Information overload : Surprisingly, there are so many tools, but none seems to solve the real issue of information overload.

c. Collaboration : Distributed teams/Global deployments/SAAS – well, collaboration is the key and is pretty much an open space. Collaboration, integrated with one’s social/business network is a potential

d. Actionable : Email has the richest information about one’s project/work schedules and there is hardly a mechanism where native clients enable you to extract more information from your email client. Startups like IssueBurner etc. brings task management/issue tracking to email and expect more such focused offerings in the coming days.

e. Semantic : Enterprise companies will still pay for services that will make sense of email using sentiment extraction (especially for customer support services).

The list goes on and the biggest challenge, as pointed in the above presentation is when these platform companies start building their own services – and that’s where a platform agnostic product survives the show. Most importantly, startups need to look at email as a communication channel (now that Facebook Message is announced), instead of a pure-play messaging service, to grab a piece of the pie.

In short, one needs to be in the business of X (replace X with email productivity, email task management etc etc). And not simply, ‘X for Gmail’.

Email as a concept will not die, but will reinvent itself. While Google/Facebook will (hopefully) lead the change (in consumer world), enterprise business is wide open for startups.

What’s your opinion?

[image credit: Biscarotte]

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