In a world of social-network widgets, videoblogs and Web 2.0 gewgaws, sometimes it’s the simple things that work best. That’s the lesson of Web 1.0 start-up The Smoking Gun, a simply designed site that relies on public documents and criminal mugshots to bring in boatloads of traffic.
In recent months, some start-up technology companies have died or gone into comas after running out of money, a possible early sign that the resurgence in venture investment may be coming to an end. File123 is counting its days. Edgeio was edged out. TripUp has fallen. BrightSpot went dark. Firebrand flamed out and Ezmo is no more. Industry analysts say this year will bring a big wave of start-up deaths as the credit crisis gripping the financial markets makes investors cautious in other areas.
If corn-based biofuels are the Britney Spears of the cleantech world (a fallen star but still all over the place), fuel made from algae is the next great “American Idol” winner (major potential in the pipeline). And despite the fact that algae-to-biofuel start-ups have been taking their sweet time bringing a pond-scum fuel product to market, some inroads have been made recently–GreenFuel is building its first plant, PetroSun starts producing at their farm on April 1, and big-oil Chevron and Shell have made some early bets as well.
Seesmic is a video start-up I’ve shied away from writing about too often, because I’m not sure I really get it. But I figure if so many smart people think there’s something good going on here, I should keep an eye on what the company is doing. So last week we had founder and CEO Loïc Le Meur on the “GigaOM Show,” where I and co-host Joyce Kim got to ask him what’s the big idea.
Now that Shai Agassi’s electric-vehicle network start-up Project Better Place has started to charge ahead in its first market, Israel, the company has begun to put the pieces in place to actually build the 500,000 electric-vehicle charging stations.
Clouds are gathering over Silicon Valley’s consumer Internet companies. The sale of social-networking company Bebo comes at a time when private investors are changing their tune. They’re no longer pumping money into start-ups at the same huge valuations they were doing last year.
Maybe two years ago, I hosted a panel discussion on the emerging Web 2.0 economy, and I asked my panelists if we were in a bubble. Because it’s clear to me that we are. Not that it’s a bad thing, mind you. This is how technology evolves: like life itself, in blooms and crashes. And I think we should all acknowledge where we are in the cycle. Anyway, one of my panelists, SoftTech venture capitalist Jeff Clavier, was adamant that this was no bubble. Now Mr. Not-a-Bubble is trying to convince start-up companies that their income, if it’s in the $300,000-a-month range–a range that most companies made up of three guys and a credit-card-funded Amazon S3 account would kill for–is “noise” that distracts them from their potential.
Hollywood and Silicon Valley have something of a Mars/Venus problem: The two sides are talking but they don’t speak each other’s language. A new venture involving a phone company may just add Pluto into the mix.
On Monday, the William Morris Agency, the Hollywood talent shop, will announce that it is teaming up with the Silicon Valley venture capital firms Accel Partners and Venrock to invest in digital media start-up companies based in Southern California. What makes the combination unusual, though, is the addition of AT&T as a limited partner.
Israel’s growing solar industry, early moves on electric vehicles (the home to Shai Agassi’s first electric-vehicle infrastructure project) and recently funded water start-ups are making the state one of the front-runners of the cleantech revolution. And Israel keeps churning out new solar start-ups; on Monday a solar photovoltaic company called Pythagoras Solar said it had raised a Series A round of $10 million.
The question of business-model timing seems to come up weekly with regards to some start-up. As Twitter usage has grown, have they f’ed themselves out of a real, sustainable business model? And has Pownce done something right by launching with a business model? Personally I prefer that a start-up come out of the gate with a business model–perhaps it’s the accountant in me.
Recently I produced a CD. It was independently recorded and distributed–and it was available for free on every peer-to-peer service on the planet weeks before it was officially released, so it was only a modest commercial success.
Don’t feel bad. It was entirely expected. Even if there was such a thing as a record industry anymore, no one would expect a double-disc tribute to a 27-year-old album by The Clash to keep Avril or Pink from the top of the charts. But there’s one reaction the record has received that has helped me understand something about the broader media business: the danger of looking backward.
Back when I started the project in 2003, I was delusional enough to think I could get someone else to fund it. I spoke to executives at large multinational record companies and small independent companies, and they all told me, with varying degrees of politeness, to get lost. A few told me it was a crazy idea, a few more told me it was a bad idea and some told me, with that level of snideness only record-company executives can manage, that I’d never finish the project.
But when the record came out, I heard from several record-company executives. Some of them just wanted free copies, some wanted to offer me mild kudos and almost all of them–including one who had rejected the record back in 2003 but forgotten–asked me some version of “Why didn’t you come to us so we could have put this out?”
Aside from reminding me that some people in the record industry view memory loss as a core competency, this reversal in my fortune now that I could no longer do anything about it gave me a clue to where the media industry is right now. Around the same time the record came out, the founder of a dot-com magazine that crashed and burned reminisced with me about an email newsletter I started while the ashes of that magazine were still warm. The newsletter failed, too, in large part because in 2002 online advertising had fallen off a cliff and hit the bottom of the canyon a la Wile E. Coyote. “If you started that now,” he said, “It would be a big success.”
Perhaps. But I don’t have to start it now. The media and technology businesses are now different than they were in 2002 and 2003. When I started the online newsletter in 2002, no one else was dumb enough to try that. Now it seems as if everyone has at least a semipro blog. When I started soliciting performers for the record in 2003, no one else was stupid enough to try and assemble 36 performers to redo–for free!–a long-forgotten record. Now tribute albums are all the rage. Is it just that I have uncannily bad commercial timing?
It is true that I would have an easier time funding something now than four to five years ago. Everyone else is. Indeed, as uncov and others report so gleefully, moronic ideas are getting funded again, while five years ago even a recipe for eternal life might have had trouble scoring a meeting on Sand Hill Road.
But the response I received should make entrepreneurs–and the people who fund them–wary. In both the case of the record and the email newsletter, I was told by experts that something I did at a different time would be successful now. Wrong! If I merely updated or replicated an old idea, it would still be an old idea. But today’s business environment is all about innovation. At its best, it’s about the next thing, not a redo of the last thing. The start-ups most likely to fail are the retreads, the wannabes, the copycats, the ones that mistake features for full-fledged services.
Look at the record industry if you want to see what happens to an industry that reflexively looks backward for ideas. Know your history but don’t be limited by it. At their best, media and technology are about the new. If you had an old idea that people like, say thank you. But, if you want success, keep that old idea where it is and come up with something fresh.
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