One thought I have is that as an Entrepreneur, one can’t afford to be naive or passive regarding potential competition. There has to be some sensible second-guessing and planning for likely moves by other players as part of the core strategy.

It seems to me that more care could be taken by current startups to avoid building businesses that can be snuffed in an instant by bigger players. Obviously you cant worry about this all day, and it’s just bad luck if out of the blue Google releases an app in your space (Kiko etc) but still..In the case of the FB marketplace, it was rumoured to be coming for a long time: users were already trying to post items for sale using the exisiting features (as you mentioned) and a quick survey of the top apps built with the FB api revealed the “classifieds” idea was common.

It seems to me that the question today should be not “is this the death of other marketplaces?” but “how effectively have FB implemented the feature/how have the other apps positioned themselves to differentiate?” Your post gives the impression that all facebook have to do is launch a feature and it instantly renders other apps without a chance.. Let me give the example of photo-sharing sites. Facebook is big for photos, but last I heard it hadn’t rendered Flickr/Photobucket etc obsolete!

Towards the end of your post you talk about how to avoid competing with Facebook, use of the API etc. I disagree with you here. Any site which “complements” or enhances the Facebook site is at risk of being copied/made redundant by improvements to Facebook itself. Trying to “compete” with another site simply by e.g. providing an “improved” view of the data is great for the users but not a sensible business – the site interface is such a superficial part of the whole and improvements can be copied by strong competitors with little effort.

API integration is cool, but if a site relies on a single third-party API or site for success then you’re treading on an extremely unstable footing. The APIs provide a great (free!) testing ground for the big sites to see what people want, what will be successful. Ultimately a company with plentiful dev resources like Facebook has a very low barrier to entry to creating new features itself. Remember that the ultimate reason for releasing an API for a site is to increase it’s own growth!

To become a success and minimise the risk, sites have to provide value when used themselves, or provide integration with *several* third-party sites, preferably adding additional functionality on top – more than just a “mashup”. This removes reliance on the whims of individual big players (like Facebook) from the long-term chances of success. An alternative is to target a different market (non-students)..

So, whats the risk factor with Auctomatic and the Ebay API?