The "C" in CRUD is for "Critical"

Recently, in some work in which I'm involved, it occurred to me that the "C" in CRUD can be critical to competitive advantage. This situation arises when you are starting up a new web 2.0-based business in which your users provide the content for the site, and that content is shared for the benefit of the user base.

"CRUD", a term used in the Rails community, simply means "Create, Read, Update, and Destroy". These are the four fundamental functions performed on database records.

In your web 2.0 business, the user content is stored in a database. The author of the content data performs CRUD operations on that data.

In this recent work I mentioned, the idea of using Microsoft Office for the C function, instead of a web form, was floated. Strange as that idea might sound, consider the following example:

Say your new web 2.0 business involves user-submitted, shared essays. (OK, OK, an archaic notion better known as a "community blog". Just stay me with me for now).

The standard way for handling the C in CRUD is to provide a web form for the user to create her essay. This is trivial HTML.

But let's say your users are older, and much more comfortable with Microsoft Word than with a web form. In that case, you might consider allowing them to create their essays in Word, then upload the completed essays to your site.

Sounds natural. What could be the problem with that?

Well, actually, in this community blog example, there is no problem. It's not a new business idea, and there ain't much value in it.

But imagine a brand new business. Not just a new website, but a new business entirely. And imagine that this new web 2.0 business concerns a new type of data that hasn't previously been shared over the Internet. Further, imagine that this new business is quite valuable.

With these extra facts, you can be sure that as soon as your new business becomes publicly known, fierce early market competition will arise. And this competition will be especially dangerous because as we've seen in Web 2.0, often there is only one winner in the market, or at least one dominant player, and a number of also-rans. This extreme result arises from the strength of the network effects in the business.

Now, in this situation, what could be the problem with letting your users submit their content by uploading Microsoft Office docs instead of by using a web form?

The answer comes down to a notion in the business called "user engagement". Among the four CRUD functions, for pretty much any kind of content, C involves, by far, the "heaviest lifting" of the four for the user. i.e. the highest degree of user engagement.

If you let your users spend this user engagement "coin" on Microsoft Office, instead of on your site, then you've lost much more than simply the opportunity to "train" your users on your site. In fact, what you've done is to open a huge back door for your competitors to sneak in and mortally wound you before you've even barely begun.

This is because your competitors will entreat your users to simply upload their Microsoft Office docs to their competitive sites. If your new business is valuable enough, and if the network effects possible in that business are strong enough, you can be sure your competitors will go to great lengths to pry those docs from your users, and to build up their own network effects.

And from the perspective of your users, it would take almost no extra work for them to upload their docs to your competitor sites as well as to yours. The vast amount of work went into creating the docs; uploading is a mere one or two clicks.

In contrast, if your users performed C strictly on your site, then their heavy lifting will have been spent on your site, and doing the same on your competitor sites will be duplicative and thereby cumbersome, to one degree or another. Making it cumbersome for your users to "cheat" on you is good business sense when you're just starting up.

This critical nature of "C" in CRUD with respect to competition in Web 2.0 businesses is illustrated by the cases of Flickr and YouTube. Each is a Web 2.0 phenomenon, and the clear leader in its respective space (photos and videos, respectively).  But one thing both have in common is more or less viable competitors.

So why is it, when these two businesses have architected their sites to enhance the monopoly-tending network effects in their services, that they have viable competitors? I believe the answer comes down to the C of CRUD.

That is, in both cases, the heaviest lifting of the C occurs off the site. In other words, the biggest part of the work of creating a great photo, or a compelling video, is in taking the photo, and in shooting and post-processing the video.

Since most of that user work happens outside of Flickr and YouTube, the door is left open for competitors to breathe.

So the lesson is: have your users perform C for their content on your site if (a) you are able to, (b) you are starting up a whole new business, and (c) that new business has any kind of value.

Sure, we should all be so lucky as to stumble upon a brand new valuable business and face a hanging curveball question like that. But as the last of the "legacy" world finally makes its way onto the Internet more than a decade after the web's popular emergence, I suspect this previously bizarre situation will prove not unique.