Should troubled start-ups blame the messenger?

No one's denying that the economy's rough. Not a single U.S. company filed for an initial public offering in the second quarter of 2008, the first time since 1978 that this has happened. Mergers in the tech and media industries are down. In this kind of climate, anything from a publicly traded tech giant to the smallest of garage operations can be hit hard.

But if you're one of the little guys, there's another obstacle you have to face: the media hype. (Yes, we at CNET News.com admit that we may, on occasion, be part of this phenomenon.)

Any industry's media can fuel buzz, but the tech industry is especially prone to it; like the notoriously fickle fashion press, tech relies on innovation and "newness." Since there's an incessant march of new start-ups to cover, and a general suspicion of anything that hasn't generated particularly appetizing (or scandalizing) headlines recently, the tech press has turned into a powerful mill for "Whatever happened to...?" tales in which last year's next big thing can easily turn into this year's overhyped embarrassment.

So here's our version of the "Whatever happened to...?" summer story:

Remember Virb? It was that feed-friendly social network that emerged as a "prettier MySpace" a while back from the creators of PureVolume, an indie-music-focused network that had some traction before News Corp.'s acquisition basically took over the online-music promotion market.

With a slick interface that contrasted with MySpace's clunkiness (the social network has since been redesigned), Virb offered an iTunes plug-in that shared music tastes much like Last.fm, and easy ways to pull in feeds from Flickr and other social sites long before the FriendFeed craze emerged.

But Virb never caught on. Traffic is static, and Compete.com says traffic to sister site PureVolume is actually plummeting, with its U.S. traffic showing a 54 percent drop from 2007.

Representatives from Virb admitted that they'd made "some mistakes" in the process. "We didn't do the best job in giving our users the right tools to find new friends, content and communities," exec Brad Smith told CNET News.com. But should things take a turn for the worse, it's probably good that the questionably fated start-up only generated a blip of buzz in the first place: that means a less high-profile fall, and a company like Virb could seek a quick exit from a buyer that likes its catchy interface design.

It won't be easy for megahyped companies that have yet to deliver. The blog world hasn't been quite as ambivalent about Joost, the video start-up from the creators of Skype and Kazaa, which was speculated about for months under the Bond movie-worthy code name "The Venice Project."

Perhaps because of the breathless chatter surrounding the company that was supposed to kill YouTube, TiVo, and your local cable company, Joost seemed all the more disappointing when it launched. The downloadable client wasn't intuitive, and big-time content partners like Viacom didn't always serve up their prime-time offerings.

Then NBC Universal and News Corp. got together to form Hulu, a company that was subject to so much negative buzz ("Big media couldn't possibly get it right") that its launch couldn't have been anything but a pleasant surprise. In truth, Hulu was very well received and continues to get positive press; Joost was suddenly second place in hubs for professional video content.

Joost's representatives, and some of its big corporate partners (including CNET News.com publisher CBS) still believe in it. The start-up has also said a Web-based version is on the way, and bored office drones everywhere awarded it a brief moment in the sun when it streamed 2008's March Madness basketball games live. But if it can't get itself back on its feet, the erstwhile megahype will ensure that Joost won't just fade away. Should it shutter, it could fall into the same sentences as dot-bombs like Webvan and Pets.com, potentially a permanent embarrassment for executives.

Beyond that, hyped projects that flop can have broader industry implications. When the Web drama Quarterlife earned a whole lot of press, it was ported to NBC as a prime-time series. Actual interest in the series hadn't lived up to all the press surrounding it, and Quarterlife lasted a single episode, after pulling in dismal ratings. It remained alive on the Web.

But the real twist about the tech press' hype generator is that things are not always as they seem. When a start-up isn't making headlines, announcing new deals or venture funding, some of us with RSS readers full of tech blogs are conditioned to assume that it's gasping for breath and in desperate search of a buyer.

Take Daylife, an aesthetically astute news aggregator that made quite a few headlines early in 2007. The New York-based start-up, its offices nestled in the middle of the new-media-heavy SoHo neighborhood, had chic launch partners in the form of TreeHugger and The Huffington Post. It had celebrity angel investors in TechCrunch czar Michael Arrington, new-media pundit Jeff Jarvis, and Meetup founder Scott Heiferman.

Press about Daylife's launch took an unexpected turn when Arrington expressed disappointment in the company's final product. We haven't heard much from it in months.

The surprise? Daylife is actually doing all right. It's still nothing compared to Digg or The Huffington Post, but analytics firms like Compete show traffic on a steady rise, in spite of a dearth of blog attention and little Valley name cred.

"There was a lot of buzz about what we were doing, but not by us," founder Upendra Shardanand said about Daylife's choice to stay under the radar. "My point of view is that we let the hype come and go, and just keep our heads down." He said most of Daylife's traffic (and all of its dollars) come from widget development in partnership with big news organizations, which is the company's core business. They've worked with CNN Money, the U.K.'s Daily Telegraph, and The Washington Post, among others, and Shardanand says they're doing just fine.

Another New York-based news aggregation company, Newser, has a similar story. It's been out of the headlines ever since attracting the attention of both Silicon Valley and Gotham media over its insider executive team, headed by publishing veteran and Bubble 1.0 chronicler (in his book Burn Rate) Michael Wolff.

Traffic is still far below that of news aggregation stalwarts like The Huffington Post, but it has been on a steady upward climb nonetheless. Numbers show that Newser is just about even with Daylife on a gradual but consistent growth trajectory.

"We're totally happy with the way everything is going, so for us, it's certainly not a question of hype and media attention," Wolff said in an interview. "I know its value, and I know its lack of value."

He said that while press hype can, at best, give a company a temporary boost, it can have a more adverse effect in the other direction. The decline of a faltering start-up can be all the more precipitous, if the hype balloon had been overinflated in the first place. Would-be entrepreneurs who "are out there ginning up press and not out there creating," he said, will pay for that when they fail to meet expectations.

"We got quite a bit of press attention which we didn't want," Wolff said, echoing what Daylife's Shardanand had said about his own start-up. "It distracts everybody," Wolff continued. "It builds up expectations that you probably can't meet. It makes the operators begin to think that they're something they're not. It takes everybody's eye off the main focus, which is economical traffic growth."

But quiet growth just might not be enough to ensure survival in this kind of economic condition, especially when all signs point to fewer exit routes. It also might not be enough to placate the hungry news hounds who populate the comment rolls of GigaOm and Mashable, and in a culture so rooted in the spread of information, a little meme can get big very quickly.

The common (and not exactly correct) wisdom that Second Life has turned into a 3D ghost town, for example, could easily deter new users from signing up. It's like the fashion industry: when the bigwigs declare something dead, that might actually kill it.

Recently, the constantly talked-about Twitter took down its "replies" feature for maintenance purposes. And TechCrunch, the Boss Tweed of the tech blog world, declared that the new trend was to ditch the fritzing microblogging service for FriendFeed, a social-network aggregator that's proven to be one of the most buzzworthy tech start-ups of '08.

There was only one problem: even FriendFeed co-founder Bret Taylor thinks that's a bit of an overstatement. "There's been a lot of blog posts about 'killing' this service and 'killing' that service," Taylor said in an interview. "(FriendFeed was) founded on the principle that you should be able to use any site you want, even if it's not the same site that your friends use, and FriendFeed provides that social glue."

Not every start-up is going to be able to work its way into a graceful exit, as would-be Twitter rival Jaiku did when Google snapped it up early. And not every company will be able to reinvent itself, which early social-networking leader Friendster managed to do somewhat by gaining popularity in Asian markets after infrastructure issues and subsequent bad press put a damper on its U.S. growth.

That's what Virb hopes to do. "The next iteration of Virb (is) hitting the Internet later this summer," Brad Smith wrote in an e-mail. "If we can take the ideas that worked, and raise that bar up a few notches, I think we'll have a winner on our hands."

Perhaps the best lesson is to just keep going, even if a Valley insider blog says you're doomed. That's been the mantra at Pownce, which launched with the star power of Digg founder Kevin Rose last year and which has received some disappointed reactions since it failed to snatch Twitter's audience away.

"We definitely did receive a lot of hype when Pownce first launched a year ago. However, since then, it's been a lot of steady growth," community manager Ariel Waldman told CNET News.com. She added that Pownce's team continues to work hard. "We have paid accounts, we have public file sharing, which we launched a couple of months ago, and we're always working on new features."

While statistics from Compete show that the original Pownce hype led to a huge traffic spike that soon plunged, it has since stabilized into a "normal" growth phase that has reached about half of its "hype" numbers and continues to climb gradually.

FriendFeed's Taylor said that knowing when to block out the hype and the backlash from the press is crucial. "That sort of negative tone is something that we aren't really that happy about, but it's sort of standard fare in the blogosphere," he said. "People play up or perceive competition, and we're just going on our way, trying to make the best service possible."

Still, there will invariably be a few victims, as in any industry where the media is driven by fast, momentary buzz. Web 2.0, for better or worse, will always have its Twitters.

[martingale]

By far the worst problem facing technology, the US, the world, and civilization is the seemingly gleefully outrageously incompetent, deliberately brain-dead media that just utterly refuses to provide readers with solid information about reality.

What the media does to high technology start up companies is just a special case.

To the media the subject -- mathematics, science, medical science, technology, engineering, business, finance, energy, the economy, war, politics, etc. -- just does not matter because the media mostly stays with just a few standard 'stories' and in those mostly just changes the names.

The standard stories have some old background: They are based heavily on fiction from literature, especially English literature and 'formula fiction' going back to the plays of the ancient Greeks. So, the goal is always emotion, to grab people by the heart, the gut, or lower still, and never information, never between the ears. Leading themes are danger, scandal, sin, corruption. Since 'character identification' plays a major role, there is always much more interest in particular cases and anecdotal information than in the general case with averages and distributions.

E.g., as in 'The Music Man', the media has pushed HARD on "the terrible trouble River City is in", in this case, from 'global warming'. As in the movie, the media concentrates on "telltale signs" such as snows on Mount Kilimanjaro and video clips of glaciers reaching the sea and nearly never mentions the basic data on temperature, just temperature: E.g., as on page 2 of

Committee on Surface Temperature Reconstructions for the Last 2,000 Years, National Research Council, 'Surface Temperature Reconstructions for the Last 2,000 Years', ISBN 0-309-66264-8, 196 pages, National Academies Press, 2006.

the temperature now is almost exactly the same as it was in the year 1000 before 1000 years of human industrial activity.

Then, the situation is painted as in a morality play, e.g., each molecule of CO2 you emit is an egregious, filthy, sordid, ugly, vile, hideous, contemptible, disgraceful, detestable, depraved, despicable, degenerate, degraded, evil, irredeemable, sinful, blasphemous, damnable, desecrated rape of Mother Nature's gentle, delicate, sensitive, pretty, pure, pristine, precious, unspoiled, 100% all-natural, chaste, sacred, virginal environment.

Then, as in pagan religions, we are asked for sacrifices, in this case we are asked to sacrifice much of the progress of the industrial revolution.

The media content is just emotional nonsense and not information. So, the world is left (A) flying blind and (B) often actually seriously misled. It's DANGEROUS.

Bluntly, the people writing for the media nearly never know what they are writing about: Nearly always, when they write about a subject I am well informed on, I see that the writers are badly informed and passing out nonsense.

The media content is called 'writing' and is not information and is at best light entertainment, is usually meaningless, pointless, useless, and worthless, and can be positively harmful. This writing is from a tradition where fantasy was always better than reality.

But by 1900, from mathematics, physical science, medical science, engineering, and technology, the world was rapidly getting some terrific lessons in some grand new standards of information safety and efficacy, and, thus, in comparison, 'literature' and its 'writing' were seen as a few hundred years overdue for the scrap heap of history from the accent of man.

In particular, there really was a good writer, one of the world's best ever, in England in the 1600s -- Newton and NOT Shakespeare: With Newton, it is very clear what he is claiming is true, and he gives solid evidence for his claims; with Shakespeare, it is nearly never clear what he is claiming is true, and he gives no solid or even useful evidence for anything. Shakespeare is just intellectual junk; since the English literature crowd affirms that he is by far their best, then the rest is much worse.

Civilization just CANNOT hope to solve its problems and move forward using as information the often toxic detritus recycled by 'writers' from the scrap heap of history.

E.g., from the article,

"Any industry's media can fuel buzz, but the tech industry is especially prone to it; like the notoriously fickle fashion press, tech relies on innovation and 'newness.'"

nonsense; total absurd nonsense: (1) "Buzz" is from nearly irrelevant down to misleading and sometimes seriously harmful. (2) Since all media 'writing' is much the same, it is all much like that of the "fashion press", and this adds evidence to my claim that there is no solid information in the media. (3) The remark, "tech relies on innovation and 'newness.'" is nonsense, absolutely 100% pure fantasy, disconnected nonsense: Instead, technology relies overwhelmingly just on large steps up in productivity, especially economic productivity. Any technology that is a large step up is necessarily new, but, as in the fashion industry, being new is not good evidence of improved productivity. That the media, and Ms. McCarthy, see new steps up in productivity in technology -- e.g., optical fiber communications at 100 Gbps per laser wavelength, microelectronics at 35 nm line width, 1 TB in a hard disk drive in the standard 3.5" 'form factor' -- as comparable with changes in hemlines, waistlines, and bust lines in the fashion industry illustrates the total disconnect from reality of media 'writing'.

For anyone who knew anything at all about high technology startups and business, that "newness" is as in the fashion industry is a threat of death from outrageous laughter. Can see the reactions at Intel and AMD to suggestions that, as in the fashion industry, for something 'new' with 'buzz' they should return to something from the past, say, 1 micron line widths instead of 45 nm? What about returning the Internet backbone to T1 lines at 1.5 Mbps? What about telling Seagate that in hard disk drive colors, "pink is the new black"?

Or, send some business proposals to the venture capital firms on Sand Hill Road or Winter Street and emphasize 'newness' and 'buzz' as in the fashion industry, ignore compelling reasons for the customer to buy, greater productivity, etc. and watch the reactions.

A witch doctor from a stone age tribe watching modern surgery would interpret what he saw mostly only in terms of his gross ignorance and misinformation about medicine and see next to nothing at all of the magnificent understanding of reality on display before him.

Similarly, a person whose only tool is a hammer sees each problem as a nail and ignores everything else that is real.

Similarly, English literature is just about vicarious, escapist, fantasy, emotional experience entertainment and never about reality so that 'writing' in this tradition is also unreal fantasy nonsense.

Outside of just light entertainment, fantasy nonsense is often DANGEROUS, results in human suffering, and, thus, is BAD. So, the direction is clear: Outside of light entertainment, DON'T DO IT.

In particular, 'fickle' 'buzz' about businesses is commonly VERY destructive, e.g., leads to bubbles, good businesses being ignored, bad businesses being hyped, both good and bad businesses losing money, etc.

Information technology is by far the greatest step up so far in the ascent of man. E.g., Computers, software, disk storage, optical fibers, and the Internet are magnificent increases in economic productivity. Intel, Microsoft, Cisco, Google and more have changed the world.

To confuse such magnificent progress with the total fantasy nonsense of the changes in the fashion industry looks like a case of raging, overwhelming emotions for a deliberate rush to create fantasy nonsense to create disasters to create dependency. No one in touch with reality would entertain such dysfunctional nonsense for even a single milli, micro, nano, pico, femto second.

Media: GET REAL.

Good news: The media is a self-selecting herd, but the users of the Internet are NOT. The Internet is well on the way, FINALLY, maybe just in time for civilization, to letting solid information replace the media fantasy nonsense.

[Penguinisto]

I'm not so sure why the doom and gloom... I've worked for quite a few of the 'little guys', none of which were interested at all in an IPO. Their 'exit strategy' consisted of growing year-over-year, and in becoming the top dog in their defined-but-evolving marketplaces (which they in turn had forged out of essentially nothing). These are the companies that I seek out whenever I'm looking for a better position. These are the companies that, by and large, operate a sane environment, and are more interested in delivering excellent products than in delivering brand recognition.

There is a vast difference between the flash-in-the-pan startups that only ride a fad to cash out from it, and the far more numerous small companies who actually want to make some headway in this world.

Frankly, the media darlings are far more populated by the PR-driven con artists than in the more powerful and intelligent companies that have managed to carve out quite a large but profitable niche for themselves.

For once, I'd love to see you folks cover companies like daz3d.com and part.net - two of the companies that exemplify quiet strength, and not spend so much ink and time on all those 'flash and sizzle' companies that in truth have more 'mouth than muscle'.

/P

[limefan913]

Pownce is awesome, and I'm glad to see they're doing well.

[MiamiWebDesigner]

Web 2.0 Is Like Pornography

Like so many tech articles posted since Tim O'Reilly coined the term in 2004, this one references "Web 2.0" as if it were something tangible--or at least a concept with clear, concise definition. It is not. In 2006, Web founder Sir Tim Berners-Lee sagely observed that "nobody knows what it means":

http://tinyurl.com/y6ewzy

And now in 2008, the most honest thing we can say is that "Web 2.0" means whatever the techno-marketeer (ab)using it wants it to mean. Otherwise, why would intelligent people like Isaac O'Bannon still be writing articles asking "What is Web 2.0?":

http://tinyurl.com/5solok

And, why would McKinsey's just-released best-of-breed report entitled "Building the Web 2.0 Enterprise" ...

http://tinyurl.com/6sxls7

... include no attempt at defining the term other than to list the "Web 2.0 Tools" that comprise or enable it? And even there, the chief ingredient is identified only as "Web Services", adding more mystery to the mix as one ethereal term is offered up to explain another.

As originated in an Onstartups.com website design posting that no longer exists...

http://tinyurl.com/57a2u4

... "Web 2.0" is like pornography: Nobody has defined it, but you know it when you see it.

Bruce Arnold, Web Designer, Miami Florida
http://www.PervasivePersuasion.com