Product vs Feature: The Lesson of XMarks

Xmarks is a really good service that  I have used since it first came out.  What it does is synchronize your browser bookmarks. Add a bookmark on your laptop and boom, it will be added to your desktop browser. Great feature.

Which is the problem.

Many companies start out with what they think is a great product because it adds a valuable  feature to an existing product.  Or it is a standalone product that differentiates itself from a competitor by a couple unique features.  Xmarks was conceived as both.

The problem for Xmarks and for any product that merely adds a few features to an incumbent product is that the incumbent product, in this case every browser on the market usually isn’t deaf, dumb and blind. They see the value in the features of the competitive product and they realize they have to add the feature to their own product. And they do.

In this case, all of the browsers have added bookmark synchronization to their newest versions.

Today, XMarks announced they were closing their doors after 4 years in business.

Before you ever release any product or service and try to build a business around it, you always have to ask yourself :

“Is this a real, stand alone product, or can the competition add my differentiated features to their own product and put me out  business ?”

23 thoughts on “Product vs Feature: The Lesson of XMarks

  1. bye bye Xmarks…

    Comment by etlovesgod -

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  4. Lets take a step back here and ask the following question, are the creators of XMARKS better off now than they were before they started this venture?

    Comment by Alessandro Machi -

  5. Hey, ya gotta start somewhere but there is always risk when you don’t own the customer and don’t own the distribution. To make a feature into something with longevity its needs some protection or innovation that is proprietary. Online stuff can be replicated quickly. It’s a digital dog eat digital dog world.

    Barrier to entry should always be on the checklist for would be entrepreneurs working on a business idea.

    Comment by commoncents66 -

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  7. TIVO is a good example too. Great idea, but ultimately not too hard to duplicate and pretty hard to patent its most valuable feature; recording and playing back video.

    Comment by mvd1959 -

  8. It is all based on compensation.

    Compensation drives commitments and commitments drive performance.

    in consulting it is typical that to be bonus eligable you need to meet a minimum utilization goal. And accelerators kick in if you exceed those goals.

    look at how many games are decided by 5 points or less and look how many free trows are missed.

    If players salary would consist of 40% base and 60% bonus they would focus on achieving the bonus. and if they would need to shoot 80% free trow to be bonus eligable they would improve quite quickly. if they could only achieve the last 20% of their bonus by shooting FT over 90% wow you would see the number of 90% go up.

    It is all about motivation and focus. Look at the NYT article this weekend that shows how many MLB players who hit .299 on the last day suddenly get the hit to make .300. Their batting average is ridiculously high. why dont they have that focus all or at least much more of the time.

    Comment by marcdencker -

  9. Hi Mark and the entire Blog Maverick Community,

    With your history of being a proud rugby player with a loud voice that can be heard, I’m reaching out to you to ask you to join the fight to help Save Cal Rugby. I personally am a UC Berkeley grad and rugby alum, and I speak for the entire Cal rugby community when I say we would love to have you involved in some capacity.

    I’m not sure if you are aware of everything that has happened with rugby being relegated to a “Varsity Club” (whatever that means) at the school, which would effectively kill the proud program that Cal Rugby has worked so hard to build since 1882. With 25 national championships since that title became official in 1980, the administration has made a mistake in doing this and did not calculate the repercussions this would bring. There are a lot of angry alums out there who are major donors who are planning to take action. We are all mobilizing as well to stage a large show at the upcoming Cal vs UCLA football game. We simply REFUSE to rollover on this and will not allow this to happen. The Rugby program is self-funded, brings in $300,000 in sponsorship money to the general athletic fund, and has offered to start up a Varsity Women’s program on our own dime.

    With Rugby growing steadily in the US, and now an Olympic sport, this will affect the entire USA Rugby community and spits in the face of the progress that has been made with rugby in our land.

    If you have a few minutes, please take a look at this video clip of an interview with our fearless coach, Jack Clark. I believe the two of you would get along smashingly and share many of the same values: http://www.csnbayarea.com/09/30/10/1-on-1-with-Cal-Rugby-Head-Coach-Jack-Cl/landing.html?blockID=322201&feedID=7093

    Mark, again, we would be grateful for any verbal/written support you could provide in our fight to right a baseless wrong. We ask that you help spread the word about the Save Cal Rugby facebook Fan site (http://www.facebook.com/pages/Save-Cal-Varsity-Rugby/151937381513223?ref=ts), as we are hoping to get tens of thousands of supporters on the facebook site. Please also spread the word to follow us on twitter @SaveCalRugby.

    Please feel free to reach out to me with any questions at all at savecalrugby@gmail.com. Thank you for hearing us out.

    Best,
    Save Cal Rugby
    http://www.savecalrugby.com

    Comment by savecalrugby -

  10. I don’t disagree with you Mark, but it’s interesting isn’t it that the business Xmarks intended to get into and they reason they cited for the shuttering of the service both have nothing to do with why users such as myself value the product: cross-browser functionality.

    I don’t know how many people find that useful or even necessary – probably not a lot, but maybe enough to construct a viable business?

    Fact is what they’ve got is a premium product that should command a premium price (when compared to free …)

    Now I know you recently put $5mm into a tequila company :-) but maybe the Xmarks numbers make sense ..?

    Comment by robertcollings -

  11. I also meant to add that the issue of product versus feature is huge in the world of the stock market. The stock market tends to frown on stand alone hardware products and LOVES products in which software can be added to after the fact.

    The problem as I see it is that at some point we get an imbalance in which everybody is trying to land on top of an existing product rather than create a new product/service.

    Comment by Alessandro Machi -

  12. Was Xmarks profitable for any of the four years they were in business?

    It seems that with their success record quitting is the best way to prevent debt, yet if in the future they have another idea, they probably will get venture capital funding and be the creators of an original product or feature.

    Comment by Alessandro Machi -

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  14. Apparently, Twitter just rolled out a version that incorporated all of the best features from desktop apps for its service. You can read a full article about it here: http://mashable.com/2010/09/14/new-twitter-app/.

    Comment by josephwesley -

  15. UGH! I hate to see any venture fail. Been there and got the T-shirt.

    Some years ago, I spent money and time (and more money) working on technology that would enable mass-custom graphic animations to be delivered via banners based on customer demographics and psychographics.

    We pitched at least 20 VCs in Silicon Valley. Most of the venture capitalists saw the solution as a feature to other products (It really wasn’t but it was hard to argue the point). However, we approached Fortune 500 customers and they got it. They loved it but were not willing to take the risk on a startup. We could not have picked the worst customers: Fortune 500.

    Back then (1999), we just did not have sufficient capital to set up an ASP model and offer it as a service. I had to throw in the towel. But with every failure there is a beginning of a new success. I took what I learned from it and applied it to online marketplaces and raised a venture capital fund. So the failed experience helped me get to the next step in the entrepreneur / investor journey.

    Whether it’s a product or service can be tricky to see at times. For instance, here’s a crazy question: What if Facebook decided to add twitter-like features (mimic Twitter) on Facebook so you could access updates from everyone on all of Facebook? (Yeah, all of 500MM users.)

    Now, we’re talking David vs. Goliath.

    damir
    damir@entrepreneurdex.com

    Comment by entrepreneurdex -

  16. Almost every product is a feature.

    XMarks is a feature of a browser.

    Firefox is a feature of an OS.

    An OS is a feature of a motherboard.

    ————

    Everyone on top always tries to swallow up those beneath them. Sometimes it works (Browsers swallowing up bookmark syncing), and sometimes it doesn’t (IBM releasing OS/2).

    Comment by mateo2 -

  17. @James – I still believe you have a unique product, not *just* a feature, and being browser-independent is a key feature of your product. But obviously that’s not enough to keep things up and running, unfortunately. I hope we can pledge enough to keep things running.

    Comment by jnt -

  18. Thanks Mark. I agree the product/service vs. feature is a key question to ask. One important clarification at Xmarks is that we started out with the explicit plan to use the free sync feature to amass data for a search & discovery service. If that service had taken off, we would have had a real business on our hands independent of the browser vendors. It was a high risk bet that didn’t work, but as startup entrepreneurs we knew that risk going in.

    Regards, James (Xmarks CEO)

    From MC> Makes perfect sense. I would probably have gone for it as well. I wrote the post just as a reminder to consider the risks of being an enhancement to another product. I think we all lose track of it in the excitement of the idea. Thx for the comment !

    Comment by jamesjoaquin -

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  20. I think you miss the point here Mark. 4 years is a long time for a business model where the risk is to be squeezed out. They knew their risk and they braved it. I know you would say it is good they took the risk. I think the moral of the story is to have a better risk management, not to be afraid of the risk of being squeezed out. They needed a 2 year exit point with the type of risk they were taking OR if no exit is possible after 3 years they need to pivot at that same point. They could use their tech to pivot into a service that gets them out of the squeeze. You need to ride into the wave of risk and look for other swells on that wave. To manage their risk they needed an exit deadline and then seek a pivot point.

    Comment by arshilegorky -

  21. There’s a fight to keep it alive as long as people are willing to pay: http://www.pledgebank.com/XmarksPremium

    Comment by Rob Fay -

  22. To add to that… do you think Lastpass will be next? Same concept, right?

    Comment by jnt -

  23. I was really sad to hear of Xmarks shutting down.

    While I get what you’re saying, it is still frustrating, as Xmarks provided a platform *independent* of the browsers. So if I was at work and locked into using IE, I could still access and use xmarks. If I was on my laptop and/or my computers, I could use Firefox OR Chrome, and still have the same set synced up. If I was on my wife’s computer, I could use IE there, and again, STILL have access to the same set. If I was on my ex-iPhone, I could just set xmarks mobile page as my homepage – same thing on my Droid now.

    Not to mention the different profile sets Xmarks provided…

    Maybe I’m in the minority, but I can’t imagine everybody has access to the exact same browser everywhere they utilize the internet. Maybe a majority of the places, but not everywhere. And Xmarks provided that convenience. Since each browser handles bookmarks differently (especially IE!), I can’t use a normal syncing solution like Sugarsync or Dropbox (with a symlink) or whatever.

    Again, I get what you’re saying, but it’s frustrating regardless…

    Comment by jnt -

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