Should troubled start-ups blame the messenger?

The hyperactive tech press thrives on "newness," but the real story is often whether last year's next big thing is doing well or falling apart.

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 .

Tags:
Tech Culture
About the author

Caroline McCarthy, a CNET News staff writer, is a downtown Manhattanite happily addicted to social-media tools and restaurant blogs. Her pre-CNET resume includes interning at an IT security firm and brewing cappuccinos.

 

Join the discussion

Conversation powered by Livefyre

Show Comments Hide Comments