Will your Social Media Service survive being Scoble-ized? (Confederate Air Force, Photographer: Christopher Ebdon, av8pix.com
I was struck by something Jeremiah Owyang said this morning in a series of twts:
@Scobleizer [Robert Scoble} serves a key important role in our industry, he adopts, tests, breaks, and pushes every disruptive technology.
I've known + worked with Scoble for 5 years now. He's done this for Blogs, Twitter, LiveStreaming, Facebook, Friendfeed, FourSquare, Quora
Following the Weekly Quora Quota of Silicon Valley blogs pimping a service* that many people have forgotten about (of those who tried it in The Great After Christmas Email Blitz, that is ), Mr Scoble exploded onto our screens with a renunciation of Quora. The defenders (said Silicon Valley blogs, et al) were quick to respond:
But I think Jeremiah said it well - a Social media service being Scoble-ised is equivalent to a blog being slashdotted - it will test all your systems':
- Scalability - here comes a sudden influx of many tens of thousands of people.....
- Mediability - all these people are here to read Mr Scobles voluminous output, not that of the current curated cognoscenti (and be prepered for bandwidth sucking movies, pictures etc)
- Scamability - these are partisan people, they worship their Hero - be prepared for any reputational or quality assurance systems/algorithms to be gamed to the high heavens (Update - interesting thoughts here by Robert Scoble on "Unearned Followers")
- Spamability - cometh the Scoble, cometh the Spammers who swim, lamprey-like, in his wake. Set your controls for a signal to noise ratio worse than, well...just worse than.
- Wyldeability - Oscar Wylde said that there is only one thing worse than being talked about (negatively), and that's not being talked about. You better believe it, because when he grumbles......
We wonder who will be the first System Assurance company to offer a "Scoble-Attack-In-A-Box" stress test kit....
(Update - interesting Question - why not just add a Q&A plugin to blogs - blogged here )
* Jas Dhaliwal reminds me that Kia-Ora is a juice drink - not quite Kool-Aid, but you can't have everything.
"The weekly meeting, known as Execute, was launched last summer with a specific mission: to get the near-sovereign leaders of Google's far-flung product groups into a single room and harmonize their disparate initiatives. Google co-founder Sergey Brin runs the meeting, along with new Chief Executive Officer Larry Page and soon-to-be-former CEO Eric Schmidt. The unstated goal is to save the search giant from the ossification that can paralyze large corporations. It won't be easy, because Google is a tech conglomerate, an assemblage of parts that sometimes work at cross-purposes. Among the most important barons at the meeting: Andy Rubin, who oversees the Android operating system for mobile phones; Salar Kamangar, who runs the video-sharing site YouTube; and Vic Gundotra, who heads up Google's secret project to combat the social network Facebook. "We needed to get these different product leaders together to find time to talk through all the integration points," says Page during a telephone interview with Bloomberg Businessweek minutes before a late-January Execute session. "Every time we increase the size of the company, we need to keep things going to make sure we keep our speed, pace, and passion."
If I go back to what we wrote about Yahoo's attempt to reduce the Peanut Butter in early 2008
History teaches that companies can and do come back from the brown stuff - in fact there is a strong element of cyclicality in many companies and industries. However, the "coming back from the brink" usually requires some fairly major housekeeping - some throwing out of baggage, bathwater and a few babies as well.
But it is a sad fact that the people who get companies into these states of affairs are too often the ones with the reins in hand when it comes to sorting it out, and if there is one lesson to take about companies in trouble its that senior management will fire legions of innocents before the market finally fires them in turn.
There are 3 factors weighing against this reboot:
(i) Big companies ARE big and complex - you can break it up and make all the units autonomous but they will then replicate lots of functions, not co-ordinate and even act against each other units. Keep it all together and you get a slow behemoth. Key is to differentiate complementary businesses from ones that are islands and diversions. Some of the stuff Google does is not really search (Mobile OS Software, AI Cars), and there must be an argument that those can be done in pretty independent units.
(ii) Not saying that Larry Page himself is part of the problem, but I suspect (based purely on observation of many large corporates) - in diametric disagreement with the Business Week article, that some of the old hands may be, especially if there are stovepipes runby very powerful barons..
(iii) However,the other thing I have heard from more than one friend at Google is that it has slowly filled up with corporate weasels (the people who are great at managing up, poor at leading teams, very political, and often useless - but these people can create havoc and waste a lot of other people's time). All companies have this of course, but it sounds like Google has a bad infestation right now.
And all this is in the light of "Never mind the requirements put on a a public company". Apple and IBM are the 2 companies in this space that have successfully followed a few separate "S" curves, but in both cases they had to firstly hit the buffers (the only way you typically get freedom to make the changes necessary to succeed) and secondly had to bring in new ideas and people from outside.
So what to do? On Sunday I put forward some thoughts - Fundamentals, Focus and Futures - the chances of a second home run like search is unlikely, but Search is one hell of a home run and cultivating it could drive a company for a generation.
In Part I we looked at why the Facebook not-IPO was the start of another round of Bubblenomics. Now its getting quite interesting as Goldman will no longer allow US investors to invest from the US (don't kid yourself that they can't invest though, anyone with $2m in change will probably have money stashed elsewhere, as Wikileaks is soon due to show), blaming unfair media practices.
“Goldman Sachs originally intended to conduct a private placement in the U.S. and offshore to investors interested in Facebook. The transaction generated intense media attention following the publication of an article on the evening of January 2, 2011, shortly after the launch of the transaction. In light of this intense media coverage, Goldman Sachs has decided to proceed only with the offer to investors outside the U.S.
Goldman Sachs concluded that the level of media attention might not be consistent with the proper completion of a U.S. private placement under U.S. law. The decision not to proceed in the U.S. was based on the sole judgment of Goldman Sachs and was not required or requested by any other party. We regret the consequences of this decision, but Goldman Sachs believes this is the most prudent path to take.”
The "media coverage" is a smokescreen - a decidedly dodgy deal by the Giant Squid of US Capitalism for the hottest latest Internet hypeful was always going to attract massive mass media attention, and the fact that they were proposing to dodge SEC regulations was always going to attract SEC interest. It's difficult to believe that they didn't see all that coming, so I don't either - I would hypothesize there is something else at work here.
Other reasons therefore for pulling the deal are not totally clear yet, lots of punditry going on of course, the main theories we spotted today are:
- given the rocketing of the stock on the shadow market, from a (probably deliberately) leaked report, they are potentially guilty of “general solicitation and advertising” in private offerings (Aka potentially Pumping....and given their own caveats of their own options, possibly Dumping - and shorting, hedging etc etc) and thus would attract a host of existing US laws that would stop the Private IPO
- that this is an attempt to get the Powers That Be to see that the SEC is a hindrance on USA Corp's freedom to do business, especially for Non-IPO funding, and put pressure on the SEC to back off so lots of other juicy private deals can be done (putting cheap public money expensively into private hands)
- that they can sell to overseas investors without disclosing the sort of information than they need to for US ones (or at least publically).
Personally I think the first two are too simple - the first in that, if it is true, means that Goldman (and Facebook's) hubris is at a zenith, and all their joint banking and PR horses and men couldn't see it coming / were not listened to, and the second because that kite is just too close to the wind to fly. The third, however, does interest me, given how coy both Facebook and Goldmans are being about Facebook's real financial position - the terms are almost South Sea Bubble-like:
For carrying-on an undertaking of great advantage but no-one to know what it [the exact financials - trusssst us] is!!"
Could it be that the reality is that the numbers for a $50bn valuation just don't add up and the last thing they want now is public discloure and bloggers and everyone picking over it.?
I can't help the feeling that another shoe is yet to drop on this.
1 – Being inflexible and not actively seeking or using customer feedback
Ignoring your users is a tried and true way to fail. Yes that sounds obvious but this was the #1 reason given for failure amongst the 32 startup failure post-mortems we analyzed. Tunnel vision and not gathering user feedback are fatal flaws for most startups. For instance, ecrowds, a web content management system company, said that “ We spent way too much time building it for ourselves and not getting feedback from prospects — it’s easy to get tunnel vision. I’d recommend not going more than two or three months from the initial start to getting in the hands of prospects that are truly objective.”
2 – Building a solution looking for a problem, i.e., not targeting a “market need”
Choosing to tackle problems that are interesting to solve rather than those that serve a market need was often cited as a reason for failure. Sure, you can build an app and see if it will stick, but knowing there is a market need upfront is a good thing. “Companies should tackle market problems not technical problems” according to the BricaBox founder. One of the main reasons BricaBox failed was because it was solving a technical problem. The founder states that, “While it’s good to scratch itches, it’s best to scratch those you share with the greater market. If you want to solve a technical problem, get a group together and do it as open source.”
3 – Not the right team
A diverse team with different skill sets was often cited as being critical to the success of a starti[ company. Failure post-mortems often lamented that “I wish we had a CTO from the start, or wished that the startup had “a founder that loved the business aspect of things”. In some cases, the founding team wished they had more checks and balances. As Nouncers founder stated, “This brings me back to the underlying problem I didn’t have a partner to balance me out and provide sanity checks for business and technology decisions made.” Wesabe founder also stated that he was the sole and quite stubborn decision maker for much of the enterprises life, and therefore he can blame no one but himself for the failures of Wesabe. Team deficiencies were given as a reason for startup failure almost 1/3 of the time.
4 – Poor Marketing
Knowing your target audience and knowing how to get their attention and convert them to leads and ultimately customers is one of the most important skills of a successful business. Yet, in almost 30% of failures, ineffective marketing was a primary cause of failure. Oftentimes, the inability to market was a function of founders who liked to code or build product but who didn’t relish the idea of promoting the product. The folks at Devver highlighted the need to find someone who enjoys creating and finding distribution channels and developing business relationship for the company as a key need that startups should ensure they fill.
5 – Ran out of cash
Money and time are finite and need to be allocated judiciously. The question of how should you spend your money was a frequent conundrum and reason for failure cited by failed startups. The decision on whether to spend significantly upfront to get the product off the group or develop gradually over time is a tough act to balance. The team at YouCastr cited money problems as the reason for failure but went on to highlight other reasons for shutting down vs. trying to raise more money writing:
The single biggest reason we are closing down (a common one) is running out of cash. Despite putting the company in an EXTREMELY lean position, generating revenue, and holding out as long as we could, we didn’t have the cash to keep going. The next few reasons shed more light as to why we chose to shut down instead of finding more cash.
The old saw was that more companies were killed by poor cashflow than anything else, but factors 1, 2 and 4 probably are the main contributing factors to that problem. No cash, no flow. The issue No 3 - the team - is interesting, as if I take that comment " I didn’t have a partner to balance me out and provide sanity checks for business and technology decisions made" and think about some of the founders and startup CEOs I know, I can safely say that the main way that any decision was made was by agreeing with them - it was "my way or the highway". I don't therefore "buy" the team argument, I more buy the willingness of the key decision makers to change when things are not working (aka "pivoting" - point 9).
As to the day to day on your way to your doom, this article by James Altucheron why you "can't call yourself an entrepreneur until.." is good fun.
....many are questioning whether or not it’s possible to successfully duplicate the Y Combinator model in Europe. The diverse and fragmented European market has often been considered a hurdle for many local entrepreneurs, who have more barriers to cross than they would in the large, more homogenous US market. Even Paul Graham isn’t certain as to how much of an impact this fragmentation could have on launching startups in Europe vis-à-vis the United States.
......
And then there's the question of how much the success of Y Combinator is tied to its founder. It’s impossible to imagine Y Combinator being as successful as it is without Paul Graham behind it. Still, replicating the model should not be synonymous with cloning him. While Graham is able to recognize the indispensable role that he plays, he feels that given the right mentors (and additional factors, including in particular a strong angel investor community) the model should be replicable.
There is no shortage of specialists, advisors, skilled people - even customers. But reporter Roxanna Vera answers the question herself. Talking about possibly the closest European example, Seedcamp, she notes:
Seedcamp’s team hosts a number of “mini Seedcamps” throughout the first half of the year in order to scout out the best potential participants from across the globe. The best companies receive up to €50,000 – usually for about 8 to 10 per cent of the company – and participate in a 3-month program in London with over 400 mentors. But even if Seedcamp covers a potentially larger territory than its American rivals and boasts hundreds of top-tier mentors, it funds far fewer companies per year than Y Combinator or TechStars, perhaps because angel investment doesn’t flow like rainwater on this side of the Atlantic.
She ends optimistically:
In the end, developing a Y Combinator-like model for Europe may not be as complicated as it seems and it definitely doesn’t require cloning Paul Graham with all the local talent we have here. Sure, companies will have to think beyond their national boundaries from the get-go and deal with a potentially less-developed angel investor community. But from my experience, good ideas always get funded one way or another.
Good ideas do get funded, but "Go West - to Y Combinator, young man" has been a path too often trodden by European entrepreneurs seeking that funding.
Sadly, her line about Seedcamp "it funds far fewer companies per year than Y Combinator or TechStars" says it all. More companies, better funded is what is missing.
Until that situation improves, the answer to "Could the UK build a Y Combinator?" is, sadly, no. The reasons why it is so, and how it could be improved, is a whole 'nother question. But looking at research going back 20 years, here are some starters for UK vs the USA:
- Higher costs of setting up a small business
- Higher costs of running a small business (red tape, fewer tax breaks etc)
- Lower benefits to founders (financial instruments, tax benefits etc)
- More conservative buyers
....and, leading the pack time after time - far harder to get much less funding.
...is the core reason it makes sense for Facebook to be public: Accountability to its customers. The rest of this debate is simply financial folks arguing amongst themselves.
Facebook is the greatest repository of data about people's intentions, relationships, and utterances that ever has been created. Period. And a company that owns that much private data should be accountable to the public. The public should be able to review its practices, its financials, and question its intentions in a manner backed by our collective and legally codified will. That's the point of a public company - accountability, transparency, and thorough reporting.
If Facebook wants to stay private and not be part of the social mores which we've built that govern major corporations (flawed though they may be), well I think that would be a major strategic blunder, one that would ultimately doom the company.
I was going to take him to task on what I thought was a combination of naivete and idealism, but the commentators on the blog got there first on the naivete part - Matt Terenzio first:
I appreciate your point, but implying that going public will somehow make our data safer from moral transgressions, or Facebook more accountable is laughable, no? You are one of the smartest guys I read, but a Facebook IPO does nothing for the users.
Are you seriously considering "the public" Facebook's "customers?"
Well at least you threw in "Period." so we'd know you were... "serious." (ha)
"And a company that owns that much private data should be accountable to the public."
"Should be," "that much," huh? Based on what? Can you cite any examples that set a precedent for this imaginary, less than poetic, far from specific principle you are so certain of? Apparently not since your argument went circular instead. (double ha)
Let me help you sleep better at night. Your entire (2 minute) thesis is based on a supremely flawed premise. When 580,000,000+ users render information to Facebook (and their only real customers aka advertisers) it ceases to be private. When you check-in, it ain't private. When you "like" and "poke" and "friend" and whine that Suzy wouldn't kiss you after the dance, it ain't private.
If it's a principle to modernize you seek, I suggest this one:
"Knucklehead beware."
(Latin translation pending
Dan is echoing our view of these services that "if you ain't paying, you ain't the customer" - and "users are there to be used". The history of public companies is hardly one to make us believe that going public per se will help. But I do think the current picture is far worse. I can't believe that an environment with minimal regulation, minimum disclosure and valuations based on microstakes is a healthy alternative. The last time too-big-to-fail banks were allowed to package and sell on very large but untested assets didn't exactly end well......
As another of the commentators notes, this situation should be temporary:
The Goldman deal will not hold up if the SEC is anything but sleeping (again!). The creation of a partnership for the some purpose of investing in a specific pre-identified company at pre-identified terms is a fundamentally different animal than a VC partnership deciding to invest into a company after the LPs committed capital -- and therefore clearly violates the SEC's 499 shareholder guidance. Anyone not seeing this got carried away a bit... So the SEC, if it is up to it's job, will soon require FB to file statements in which case they nay as well trade public.
We shall see.....all the kings horses and men have so far failed to rein in the banking system, 2 years after the Great Recession started.
But I think that John's more idealistic point is valid, ie: given the immense amount of data held on so many people, is a corporate structure - private or public - fit for purpose for such an enterprise? Should entities like Facebook not be truly publicly accountable in some way, as the potential for harm from misuse of that sort of data is something too big to ignore. A small number of very powerful people having unfettered and unmeasurable access to that data is not the ideal position, we would argue.
Incidentally, I read quite a few arguments last night in the vein that since these were private investors being allowed to pony up for an inflated asset, this was not a "bubble" per se, and even that the SEC should not be involved. This only 2 years after The Crunch..... those who cannot recall the past are doomed to be repeat it.
Update - on the last point, I think Mark Benioff (Salesforce CEO) said it succinctly re Facebook and private shareholdings - "It's already a public company. It's just unregulated" - (on WSJ)
Just over 2 years ago we wrote about YouNoodle, which was going to predict the probable success of startups. Now it appears a better method has come to hand - look not at at the makeup of the Startup team, but instead at the VC team:
This paper examines whether the human capital of first-time venture capital fund management teams can predict fund performance and finds that it can. I find that fund management teams with more task-specific human capital, as measured by more managers having past experience as venture capitalists and by more managers having past experience as executives at start-up companies, manage funds with greater fractions of portfolio company exits. I also find that fund management teams with more industry-specific human capital in strategy and management consulting and, to a lesser extent, engineering and non-venture finance manage funds with greater fractions of portfolio company exits. Perhaps counter-intuitively, I find that fund management teams that have more general human capital in business administration, as measured by more managers having MBAs, manage funds with lower fractions of portfolio company exits. Overall, measures of task- and industry-specific human capital are stronger predictors of fund performance than are measures of general human capital.
The paper is " The Role of Top Management Team Human Capital in Venture Capital Markets: Evidence from First-Time Funds" by Rebecca Zarutskie of Duke University's Fuqua* School of Business.
If I had to hypothesize why this is the case, it would be that VC's who understand startups, strategy or technology will invest earlier into the "lead" company, the others will be part of the thundering herd and invest later and/or into me-too's
I am not sure what Wikileaks is trying to achieve here by emptying the diplomatic bag (see here for typical meedja peek-a-boo), in terms of cost/benefits.
As Shefaly puts it, in terms of the benefits "The leaks reveal the obvious about nations, confirming stereotypes of bullies the world over. What else?"
What worries me is the costs.
What do Assange & Co think these organisations are supposed to do when they are trying to honestly evaluate issues - wrap them up in fluff-speak?. There is shedding light in dark places to root out corruption, and there is opening up stuff that stops people who are trying to help you.
I suggest Wikileaks needs to be able to discern the difference PDQ or we are all going to suffer, as I cannot see the governments of the world allowing these sorts of data to be leaked ad infinitum, and a lot of good stuff will be lost if they do crack down. Doing the former is a major boon, doing the latter makes them a risk.
For people who believe in an open, neutral internet this sort of stuff is an own goal, as it gives increasing ammunition to those who would gag the 'Net, and makes it harder for the 'Net's friends to defend it.
The 'Net is a technology, usable for good or ill - and heaven knows there are enough people trying to use it for ill already without these guys playing into the hands of the Nay-Sayers in the corridors of power.
With power comes responsibility, use it or we shall most surely all lose it.
Update - This article - titled "US embassy cables: The job of the media is not to protect the powerful from embarrassment" from Grauniad journo Simon Jenkins in my opinion shows the inability of the "all data must be free" extreme fraternity to differentiate between exposing data for public interest and exposing data as an irresponsible act for private profit.
This reminds me of the action of bovver boys in perfectly respectable protests (take the latest one on tuition fees) - the activities of a few hotheads who take it too far compromise the aims of the protest and alienate the majority who otherwise would support it.
Protecting privacy in the 'Net age is a hard enough act to master without this sort of irresponsible, ill-considered stirring. People who actually understand how the 'Net works know that public net neutrality and open-ness is a delicate thing and not an automatic outcome. What do these guys think (I use the word loosely) the outcome is going to be here?
So I open up Techmeme and see that quite a few management changes at the top have been announced by various Web 2.0 (or thereabouts ) darlings - the interesting thing is I have never seen so many on the Techmeme leader board at the same time:
Skype is recruiting itself a Cisco CEO (it doesn't get more Corporate than that) probably in preparation to sell itself (again) or IPO - TechCrunch :
Skype’s new CEO is going to be Tony Bates, a senior VP at Cisco, who runs its Enterprise and Service Provider groups, which together account for about $30 billion worth of Cisco’s business. Bates will be moving to Skype HQ in Luxembourg and will begin his duties at the end of October. CFO Adrian Dillion will be acting CEO in the interim. Since it’s spin-off from eBay, Skype has a completely new executive team, including a new CFO, general counsel, chief marketing officer, and head of engineering. Now Bates will top off the new team.
Bates is a heavy hitter, especially in the enterprise world, where the bulk of Skype’s future revenues may come from. He was responsible for about 80 percent of Cisco’s business and even more of its profits. He had 12,000 employees reporting to him. Someone like Bates doesn’t leave that kind of a job unless he thinks Skype is going to become a major company with serious upside.
Skype's future is in the Enterprise space - what are they smoking? P2P is anathema to secure corporate nets. Also VoiP isn't that hard, well not for the big Telcos and large SI's that play in that space and own all the customers. Skype's only real strategic advantage is high consumer/SOHO penetration.
Anyway, next up is Twitter, which has put current COO Dick Costolo into the CEO position (Costolo flogged Feedburner to Google, you may recall) - TechCrunch again:
As COO, Costolo has been integral in Twitter’s attempt to make money. Efforts to do just that seem to ramp up everyday. And Costolo has been able to help Twitter bring aboard an impressive roster of talent. In Williams’ post, he mentions: Ali Rowghani, Adam Bain, Mike Abbott, Katie Stanton and Kevin Thau. All but Thau came aboard after Costolo.
Williams [Twitter co Founder] notes that Costolo has been a CEO three times before in his career, so he’s confident the transition will be a smooth one. Of course, this is also the second CEO change for Twitter as Williams himself took over from creator Jack Dorsey almost exactly two years ago.
Twitter tells us that Williams’ title will now just officially be “co-founder” and that he’ll be focusing on product strategy and vision. It’s worth noting that with the New Twitter roll-out, the company made it very clear that the product was mainly the brainchild of Williams. While that’s undoubtedly true, they were also undoubtedly setting up the company for this transition.
T'was Costolo wot puts Ads into Feeedburner and thus p*ssed off many of its users, but he did flog the company to Google before they caught on. They closed it eventually, of course. Let's see what he can do for Twitter.
Last up, Farmville manufacturer (grower?) Zynga recruits a Yahoodie - All things D:
For Zynga–the fast-growing San Francisco-based maker of such online hits as Farmville and Mafia Wars that got its start on Facebook–mobile is becoming a critical new platform for growth, as consumers use a variety of increasingly functional mobile devices, such as smartphones and tablet computers.
It’s also the fastest growing area internationally, where mobile phones are more widespread and where Zynga is seeking its next spurt of growth.
Sources said Zynga had been pursuing Ko for months. Before heading the Audience unit at Yahoo (YHOO), Ko ran its mobile operations, which included heading product development, making distribution deals and more.
Asia, Mobile, Online Social gaming for Real Money.....be a tough battle with the Japanese and Koreans who really invented this sort of game genre.
So, a "rush for seriousness" all of a sudden? It has, of course, probably got a lot to do with the Need For Money now that Risk Capital is running away from the space. It is also worth reflecting on this as London plays host to it's 6th or so Future of Webs Apps (FOWA) conference and ring the changes in Web 2.0 since it began. I was looking at the photos of the speakers all looking very traditional webcool (see the video above - kudos Jas Dhaliwal for link), but reflected that soon it will be no more of the Founders in T-Shirts that characterised the Future of Webs Apps Past, and we will see more Men in Suits in Future of Web Apps Future. 2002 Revisited.........
This week, it would seem that all the Blog Pundits went into acquisition-deficit-disorder frenzy, firing off suggestions that X should buy Y soonest, no doubt following AOL buying Techcrunch. One of thwe main proponents was Henry "DotCom" Blodgett's SAI, (I suspect they were playing corporate spin-the-bottle one night after hours) who finally hit M&Agasm with Google buying Twitter, leading to John Battlelle calling (sensibly) for them to Stop It!
Those who decide whether Twitter goes to Google pretty much come down to a handful of folks: Founders Evan Williams, Jack Dorsey, and Biz Stone, with COO Dick Costolo and Twitter's investors and other Board members (Fred Wilson, Peter Fenton, and Bijan Sabet). I know most of these guys well enough to say this with confidence: They don't want to sell, and even more importantly, they don't need to.
Now, sure, Google can write a ridiculous check, and perhaps, that might sway the key folks (management). But I doubt it. Why? Because nearly all of them have already sold a company to Google - Blogger (Evan and Biz) or Feeedburner (Dick). And, well, they didn't stick around, did they?
They've got a tiger by the tail, the chance to build an independent, lasting legacy that will cement each one of them forever into the immortal tablets of business history. It's really, really hard to pass that chance up, especially if you've already gotten a score or two under your belt. Why not swing for the fences if you're already batting over 300?
In short, they're not in it for the money. They're in it for the immortality. And that's a much, much bigger deal.
Battelle also feels Google is becoming more sophisticated as a buyer (not hard). But this point above about Da Management wanting to hold on for a higher, better offer reminded me of the fading of Digg (do you remember them - they used to be big, oh, 3 years ago?) who surely must be the posterboy Pointcast of web 2.0 (Pointcast famously refused to sell in dotcom days for several hundred million thinking it was going to change thev world and collapsed a year afterwards in dotcom bust, Digg's investors apparently refused $80m a few years back). Now its desperately trying to scrabble back - Venturebeat:
In the last few weeks Digg has brought back a slew of old features whose absence had rankled site users. The Upcoming section returned along with the pagination feature. Pagination had been removed in favor of a feature similar to one on Twitter that allows users to expand the number of items on one page instead of clicking to another page. Digg also brought back user submission logs and unveiled new publisher buttons. Many publishers did not use the new buttons immediately, however, because of ongoing problems with the site’s Application Programming Interface
We'd put money on it not succeeding, the rate of iteration is so fast in this space and those who come later inevitably come in with a better product, and its darned hard to re-jig the legacy system to match - a point made by Wesabe's founder about why they failed vs Mint:
There's a lot to be said for not rushing to market, and learning from the mistakes the first entrants make. Shipping a "minimum viable product" immediately and learning from the market directly makes good sense to me, but engaging with and supporting users is anything but free. Observation can be cheaper. Mint (and some others) did well by seeing where we screwed up, and waiting to launch until they had a better approach.
Personally, although this is valid, I also felt his problem was not just technology but marketing, as one of TechCrunch's commentators remarked:
But he never addressed the marketing side of Wesabe. From what I know, Patzer of Mint spent every free dollar on PR. It was his cheapest form of advertising to the masses. Whether it was PR or Google Adwords or SEO or promotions or whatever...Wesabe stayed too internally focused to get the market share needed.
When Mint won TechCrunch40 startup competition, despite already being funded and having some of its backers on the panel, you pretty much knew everything you needed to about their modus operandii....Mint was heading for the exit from the get go.
But Mint/Wesabe points us back to the techCrunch/AOL thing, in that in any space there is probaby one, maybe two big exits (when Intuit bought Mint, who was going to buy Wesabe?). Same with TechCrunch - apart from AOL, who else will pay big bucks for another Tech Blog?
In M&A, as in so much else, timing is everything......
