Comments on: 11 troubled Web companies: The next Kozmos?

Some popular Web companies may be vulnerable to the economic slowdown. Do they face an ill fate similar to that of the beloved delivery service of the last bubble?

[ISO 3 data recovery lab]

Rafes headline got me here once, but if I spot the name Rafe associated with any CNET article again I will not be reading or responding regardless of content (cry wolf once comes to mind), I hope I am allowed this freedom of choice and others do not stop reading articles by Rafe just because of my reaction

Will CNET look into such wreckless reporting as un-sportmanlike, unresearched and unedited.

I note the article has not been retracted so a first read without comments (including Rafes) would have many believe this at first value, a bit like the BBC Reporters glamorised Northern Rock problems a year ago, that became a bigger problem than ever because of poor wording and spiked sources.

Yet another Journalist that must either have no concience, or have an ego big enough to fill MySpace !

[hetzbh]

Rafe,
Meebo is an excellent service, specially with all their new "plugins" (which are actually collaborations with other start-ups). However, if any of the big guys plans to buy it, the IM providers (Microsoft, Google, AOL) will require the purchasing company to pay up for a license, as MS themselves previously stated (I don't have a link here).
I think that Google is the best candidate to buy them. If they do, they can add their service on the iGoogle page or merge it with their "Google talk" service (they already supports jabber, Google Talk, ICQ, AIM, so adding MSN shouldn't be that problematic).

[SARCE51]

Don't you think Friendster should be in the list?

[ronsherman]

The stock market is extremely volatile, even crazed. Surely it is irresponsible of you to finger some companies for probable demise?

[DavidGatZ]

Hi Rafe, it's David from Zillow,

We actually do have a revenue-generating relationship with the supplier of our foreclosure listings, thanks - you're right that it's one of the opportunities to make lemonade right now. At 5,3m UUs last month, Zillow traffic is actually up 40% from last year - we're fortunate to enjoy a very strong brand in the very fragmented online real estate market.

As you should know, a tough economic climate actually accelerates the move of ad dollars online from offline. More than 90% of home buyers start their search online yet online real estate advertising had massively lagged that trend. And so, we've seen ad sales growth outstrip traffic growth. Zillow has several innovative ad products that can target everything from households with large yards or that are planning a move to premium ZIP codes. You have to work harder for your money in this market but there is money to be made. Zillow recently introduced the world's first mortgage marketplace where borrowers are anonymous and lenders are transparent - a 180 degree flip on the traditional mortgage shopping experience - Zillow Mortgage Marketplace is well positioned to benefit from the backlash against dishonest and deceptive mortgage practices and our advertisers there are also increasing their ad spend with us.

I won't deny that these are tough times and there's no free lunch in the real estate media industry right now. We've been very frank about the fact tat this market delays IPO plans for Zillow. But there are opportunities in every market and many home buyers and owners are more interested in the value of their homes today than ever. We've remained focused on trying to answer their questions an so far, it's working.

[jeremy liew]

Rafe,

You've got a mix of companies here . Some have little or no revenue. Some have meaningful revenue but are not profitable. Some are quite profitable but perhaps unfashionable with the digerati. I think many if not all of the companies on your list will still be around when this recession ends, although they may perhaps have different owners or suffer writedowns in valuation or have substantially less employees. I think you're being unduly pessimistic

[LottieMessner]

Frankly, this analysis is on par with a drunk conversation in a bar one night with two persons who have little understanding of the technology markets.

With regards to Second Life, to use an example of the flawed reporting here. A good economist will tell you that consumer action reverts to *in each* entertainment and purchasing in times of *crunch*. Luxuries and expensive items are removed.

Now whether you term using a platform as *in reach* expenditure or a *luxury* will fluctuate dependent on the user of course..

However, I think we are safe to say Second Life by way of Linden Lab will not be in the list of failing companies in 2008 based on their economy metrics.

I think the Myspace entry is clearly another bad judgement.

Poor article imho and intended to create more consumer concern where none is needed in certain cases here.

[LottieMessner]

Frankly, this analysis is on par with a drunk conversation in a bar one night with two persons who have little understanding of the technology markets.

With regards to Second Life, to use an example of the flawed reporting here. A good economist will tell you that consumer action reverts to *in reach* entertainment and purchasing in times of *crunch*. Luxuries and expensive items are removed.

Now whether you term using a platform as *in reach* expenditure or a *luxury* will fluctuate dependent on the user of course..

However, I think we are safe to say Second Life by way of Linden Lab will not be in the list of failing companies in 2008 based on their economy metrics.

I think the Myspace entry is clearly another bad judgement.

Poor article imho and intended to create more consumer concern where none is needed in certain cases here.

[Yihong-Ding]

Rafe, thank you for sharing with us. After reading your post, I wrote one one "save the eleven troubled companies". The link is here:

http://yihongs-research.blogspot.com/2008/10/save-eleven-troubled-companies.html

Hopefully it would be an interesting complementary to your work. ;-)

[tilbee]

Not Pandora please! Everyone I know loves Pandora. The only people not using it are those who don't know about it yet.

[onlyauser]

RAFE...You are a useless FEAR MONGER. Sure pal, companies fail. Failure is not bad it is just part of the process of business and life. So these companies fail. So what. The workers, the administrators, the products, the ideas and the customers will exist even after the companies fail. Guess what? They will do just fine and good tech will live on even through company failures. BRAVE ENTREPRENEURS not cowards stuck in fear of failure are the reason you can even write articles. How in the world do you live with your frightened little self?

[Chris Grayson]

The problem with Second Life is that it is too large (geographically) for the number of users. They used the sale of virtual land as a business model, and the more land they sold, the larger the ratio of square feet to people. As a consequence, the place always looks empty, even with 35,000 people logged on at any given time. The more land they sell, the empty the place looks.

Hopefully it will not die. It is just slightly ahead of its time. People still don't "get it" yet. In another 2 or 3 years, virtual worlds will be springing up everywhere. In 5 years, they will be ubiquitous under the moniker of the "3D web." Hopefully with some identity portability and standards for compatibility.

[celsius0010]

If myspace goes we will be in the stoneage lol Trust me.. I dont even have a myspace. But if they cant make money off of having one of the largest advertising networks in history.. That means people wont be using computers or people wont be buying ANYTHING.. Hundreds of major companies like ford and chevrolet would die before myspace and the whole worlds financial system would crumble and we would probably switch to communism temporarily.. Sad thing is im not exagerating

[cprincipe]

The level of idiocy in these comments is astounding. I am assuming that no one commenting is old enough to remember the Web 1.0 bubble of the late 90's. A site/service's popularity has absolutely nothing to do whether they can pay the bills at the end of the month. Most of the companies on Rafe's list have been operating on VC money coming from idiots with cash to burn from the overinflated stock market. The crashing market will lead to that VC money drying up and sites that don't have a solid revenue model (and AdWords doesn't count) will go bye-bye.

[crines]

Rafe,

I like a lot of your thoughts and writing and ALL companies not just us startups are in for some tough times and new challenges which could not really be be planned for but putting Twitter on this list (and at #1 I might add) is in my opinion short-sighted and wrong.

My understanding of the history of Twitter is it started as an afterthought for the guys at Obvious Corp but they recognized the value and built upon it. Since then a number of SMART VCs and a number of companies have also recognized the value.

Twitter goes way beyond a chat/status application and is quickly becoming the next information conduit. I liken Twitter to Pipes in Unix. No not literally and not right at this moment but soon. It is glue, it is a connector, with the right device it's location, it is an enabler, it is infrastructure. We only see a couple game changing "applications" in a cycle, applications that other things can be built on and thrive and I believe twitter is one of these.

I believe we will start to see Twitter and API partners slowly release game changing applications in various spaces. Applications that go well beyond the chat apps we have now which are great and useful but not landscape changing. Twitter seems outwardly simple but how it is used makes all the difference in the world.

I am not arguing revenue is not needed (I LIKE REVENUE!), I'd pay a fee as would many or some form of advertising revenue could be used or something else but I think and trust the Obvious Corp. guys and their backers. They are taking the LONG VIEW of what twitter can be and I for one think that is a good thing.

Rafe, how many companies do you cover can you say have a long view? A view beyond acquisition? Twitter may have started as a lark but we are well past that someone there had ah AHA moment,

Full Disclaimer: I have a chicken in the race building what I think is a game changing application that uses twitter in many ways. I could have chosen any twitter like conduit to build upon but I chose twitter. I am not affiliated with twitter in anyway other than as an api user and tweeter.

http://twitter.com/communicating

P.S. I have singled out Twitter as that is where my focus is, I wonder if someone has a similar analysis of the other apps on your list I like Meebo and TripIt too but can't write something like this about them as I have not thought about them as tightly integrated parts of my applications eco-systems.

[ericabiz]

Hi Rafe,

You don't think the "Election 08" toolbar and the current.tv box on everyone's Twitter homepage is an ad? I think Current's paying for that -- especially since Twitter hasn't responded to numerous queries to give us an option to remove the toolbar for more than a few hours.

-Erica

[CHRlSCO]

I just wrote a detailed blog about a recent (bad) experience I had with Zillow involving possibly deceptive practices: "Problems at Zillow? Confusing UI? Yes. Deceptive? Maybe"" http://chrisco.wordpress.com/2008/10/16/problems-at-zillow-confusing-ui-yes-deceptive-maybe/

[nowimcool]

I use skype quite a bit as it's the cheapest way to make an international call! And, for someone who couldn't be bothered paying a monthly fee for a landline it makes other long distance calls cheap too (less than what I would spend on the monthly fee). I hope Skype stays around for a long long time!

If skype and myspace shut down today I would miss skype a lot more than myspace.

I wonder, who cares that eBay owns Skype? If skype is making money (are they? the post never mentioned that they were in financial trouble) there is no reason for ebay to end it.

[teenagers1]

Yes, the accessible of Web Company of troubled teens is really helpful for struggling teens. There are many organizations and <A HREF=http://www.strugglingteen.net/> teens Christian school </A> provides various information with the help of internet and other sources.

http://www.strugglingteen.net/