Lightweight Models and Cost Effective Scalability

Overview

The stock.xchng Logo

The stock.xchng Logo

One of the most important principles behind successful Web 2.0 startups are without doubt the adoption of Lightweight Models and Cost Effective Scalability patterns. In todays market environment, starting small and then being able to scale with demand is absolutely crucial for a successful Internet-based business. With the advent of numerous open-source operating systems, databases, web servers, content management systems and programming frameworks, businesses are now able to create application servers for virtually free—not counting the money spent on hardware and the services of a technical expert, of course. But with the recent proliferation of cloud-based hosting services, such as Amazon EC2, even the hardware part can be outsourced. Of course, the scalability does not only apply to the technical level but to the business model too. Adopting a scalable and cost-effective market strategy and business model, along with scalable technology, ensures that the final product will hit the market in the shortest possible timeframe while at the same time allowing for future growth.

Comparisons

stock.xchng (also abbreviated as SXC) was launched in 2001 by a Hungarian web designer and entrepreneur Peter Hamza. The unique aspect of the service was that it allowed users to share and download high-resolutions, royalty-free digital photographs and illustrations for free, in contrast to other popular commercial stock exchange sites of the time which often required paid membership. The service has social networking aspects as well: users may set up personal profiles, write personal blog entries, participate in discussions in the forums and comment on each other’s work.

Clearly, the service adopted a very effective scaleable business model right from the start: the technology stack itself was based on open-source technologies (Linux, Apache, MySQL, PHP, also known as the famous LAMP stack) and the website was operated in the beginning solely by its creators (three people in total), thus minimising the startup costs and the initial investment. The choice of flexible, robust open-source technologies allowed for the site to grow rapidly as the number of users steadily increased. In a relatively short timeframe, stock.xchng gained a massive popularity and evolved into one the most visited stock images providers on the whole Internet. In 2009, the site had over 2,500,000 million registered users and hosted around 400,000 photos, which eventually resulted in the acquisition of the company by Getty Images in 2009.

Future directions

stock.xchng is a prime example of applying the principles of Lightweight Models and Cost Effective Scalability into practice. It is indeed possible to build a highly successful online business by putting in minimum effort at the start in order to achieve maximum gain in a very short amount of time—just an excellent, unique idea is needed. As more and more free tools, hosting services and cloud-based platforms are becoming available, the barrier of entry gets even lower: one just needs to wire together existing components, services and frameworks, which can often be achieved even without writing a single line of new code. The result of this will be that we will see more and more interesting services emerging and gaining popularity, which is a benefit for the all of us.

References

stock.xchng – the leading free stock photography site
stock.xchng – site info
Wikipedia – stock.xchng
LAMP (Software Bundle)
Stock Photography, Royalty-Free Photos, Video Footage & Music | Getty Images
Stockxpert / SXC Press Release – HAAP Media Ltd Announces Full Acquisition by Getty Images

Advertisements

18 thoughts on “Lightweight Models and Cost Effective Scalability

  1. Hi…it seems that Web 2.0 tend to drive business to another level. The way small websites grow using low cost technologies to build their business have incredible results such as the example you have given and as you said with a bit of a creativity there is no way of not getting into the online market 🙂

    Nice post

  2. great introduction about the Lightweight Models and Cost Effective Scalability pattern. Definitely business should incorporate this pattern in their model in order to survive in the future. This type of business model will save any company if they did not takeoff in the market. Therefore, their business model will change and improve as the business grows.

    Great choice for the example!! stock.xchng contains the social side as they allow they users to create profiles, create personal entries, comments on other entries. Finally, such model will benefits us because in order to have a competitive advantage and compete with other companies, meaning more free services for us :D.

    great post and well done

    • Thanks, I’m glad you liked my post. It is increasingly important for every new startup to incorporate the principles of lightweight models and cost effective scalability in their business models early on, you’re right in that.

  3. yes. i totally agree, lightweight model and outsource can really ensure “do less but achieve more”. in the business, outsource can help company reduce the one-time investment, to avoid huge risk and make the discussion become more flexible. in think, in technology, lightweight is the basic of scalability. lightweight can help applications move to other platform, and easy implement new feature in the future.
    because all service of stock.xchng is free, what is the revenue models? is all their income from advertising?

  4. There’s revenue model is really clever, people can grab a free photo but they’re presented with expert, paid photos as an option for purchase. It’s a model that has obviously been very attractive to Getty Images!

    It’s quite an eye-opener for me how a company can build to the size it is just from the cookie-cutter LAMP stack. Thanks Viven!

    • Glad you like the article. In fact, several successful web services have been built on the LAMP stack initially, such as Facebook and Flickr. As far as I know, Flickr is still using PHP to this day.

  5. Hi, good example and a good read. To me this post really points out the benefits in getting things right from the start, and the statement ‘fail and fail fast’. They must have been the first to create the service with open source software that enabled them to provide the service for free. Interesting name for the website, it reminds me of a stockmarket!! Good post.

  6. As soon as I read that the pictures are free I hopped straight on to the website. What this application has to offer is very useful, It’s very time consuming sifting through Google pictures which give you permission to use or edit so I cant wait to use this in the future. As I’m sure a huge amount of users are zoning in on this application because there aren’t a heap of websites which do this for users, well none that I’m aware of until now which is great to know by the way :). Great post! always look forward to hearing your blogs.

    • Thanks, indeed this is a good place to start if you’re looking for royalty-free pictures. I found that the creativecommons image search on Flickr is quite useful in that regard too.

  7. Hi, great example and a good read. Another site that will be of benefit to me in the projects that I am involved in. SXC has applied the pattern well using flexible, robust open-source technologies coupled with a unique idea, something that my own example had, IMDb, however they were at the time of the web emerging whereas SXC was able to build upon existing knowledge rather than be the catalyst for it.

  8. Great blog post

    stock.xchng seems like an interesting example of a start-up leveraging lightweight models and cost effective scalability to grow and develop their business in the early days after the dotcom bubble well into the Web 2.0 era. It’s great that HAAP Media Ltd. was an original European start-up before the 49.7% equity investment by Jupitermedia Corporation in early 2006 and Jupitermedia’s controlling ownership acquisition of HAAP Media Ltd. including stock.xchng later in December 2006. The 2009 sale of the juptermedia/WebMediaBrands (at the worlds 3rd largest stock licensing company) to gettyimages netted them $96 million. After a bit extra reading I discovered that $82 million dollars of that deals proceeds went to payoff Jupitermedia’s outstanding debt. At least HAPP Media Ltd cashed out on stock.xchng back in 2006.

    Cheers

    http://www.crunchbase.com/company/haap-media-ltd
    http://www.abouttheimage.com/photo/category/jupiter_media/
    http://company.gettyimages.com/article_display.cfm?article_id=192&isource=corporate_website_ind_press_release

      • yeah its great, lucky Hungarians 🙂

        Their seems to be a stigma that start-ups need to be started in silicon valley or based in the US for them to succeed. This proves Europe has lots of IT skills/talent to offer the world.

        Polish-Hungarian brotherhood 🙂

        Cheers

  9. I’ve always tried to find good websites for photos that I can use online but never came across stock xchange. Very handy – the tutorial video is also very useful.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s