Insider Chatter by Donna Bogatin

FriendFeed co-founders Paul Buchheit and Sanjeev Singh: With ex-Googler “friends” like these, who needs Venture Capitalists!

Last week, Buchheit penned an unconvincing mini-treatise purporting to reveal “the most important thing to understand about new products and startups.” I rebutted Buchheit’s “advice” to startup entrepreneurs by underscoring “ Business Plans & Revenue Models: TWO Startup Must Haves“.

My sales rule thesis was reinforced the following day when Like.com CEO Munjal Shah made a heartfelt public plea for startups to focus on growing income, not necessarily (generally non-paying) users. SEE: Like.com to Entrepreneurs: It’s the Revenues, Stupid!

Here at Insider Chatter, I steadfastly evaluate every startup’s potential by its built-in potential for (and interest in) earning revenues and also point out the dangers of believing public “advice” that business plans and revenue targets don’t matter anymore, favored rhetoric of new fangled VCs and monied entrepreneurs.

In similar fashion, Like.com’s Shah lambasted VentureBeat and TechCrunch for dramatizing ventures’ Web traffic numbers:

As a 2nd time entrepreneurs, we at Like.com had decided to not focus on eyeballs or users, but rather revenue and eventually profits.  If you remember we first took this approach back in May of 2006 after we launched Riya (and while we had usage) and didn’t know how we were going to make money.  We retooled and launched Like.com, which we knew would make money.

How will FriendFeed make money? The Web 2.0 “cool app” built by a trio of ex-Googlers got money today, $5 million from its Googley rich founders Buchheit and Singh, plus some bonus cash from co-founder Bret Taylor’s sponosr, Benchmark Capital.

FriendFeed is now cash rich, but still business and revenue model poor! The FriendFeed mission:

The goal of FriendFeed is to make content on the Web more useful and discoverable by leveraging users’ existing social connections. FriendFeed users get a customized feed of content—from news articles to family photos to interesting links and videos—shared by people they know.

Buchheit on the FriendFeed value proposition:

The beauty of FriendFeed is that it’s so easy to use. It takes only a couple of clicks to share a link or start a discussion with friends. It makes everything you’re already doing on the Web a little more social.

VentureBeat and TechCrunch are on board! Eric Eldon is 100% certain Buchheit has developed “the best software for conversations.” Erick Schonfeld waxes: “There is something pure about FriendFeed.”

There is indeed, FriendFeed is purely another free-to-the-consumer “social sharing” tool thrown into the Web wild for non-revenue generating consumption, come what may. The self-funded startup is carefree about its own money, as well as money (not) coming into the venture.

The famous ex-Googlers have succeeded in spurring a “sharing” of early adopter love for the coming out party of their FriendFeed. Good old dependable geek adulation is an ever burgeoning Web commodity, however, and so is the consumer ability to “share,” and “comment on” and “vote for” videos, photos, blog posts…

Buchhelt may still be “doing NO evil,” but he is apparently NOT doing anything extraordinary either. 

WHAT IS THE WORLD UP TO? FriendFeed asks (in a manner eerily similar to Twitter’s (not so) inspiring “question”) and answers:

Chris posted a blog post, Albert posted two links, Rob bookmarked 12 artists, Denao favorited a video…         

What an “interesting” way to characterize “the world”? The FriendFeed team assures it will not cease “innovating” untill it has accomplished its “big” mission:

Our goal is to make content on the Web more relevant and discoverable using a combination of social mechanisms and innovative technology. This is a big problem, and we’re just getting started.

Will Paul Buchheit’s self-proclaimed knowledge of ”the most important thing to understand about new products and startups” propel his Googley FriendFeed startup to big Google like glory? UNLIKELY.

SEE: Google Killer Cuill? Ex-Googler Startups Pose NO Threat: FriendFeed, Howcast, Zillow and Facebook Meltdown: Is Twitter Next? and Silicon Alley Web 2.0 Startups: Bootstrap For Success

MORE: Antisocial Google: Googler Bradley Horowitz Mum and Google Knol: The End of Google.com, NOT Wikipedia and Why Google Sites Is BAD Business: ‘Til Death Do Us Part’?

PLUS: Silicon Alley: Crouching Tiger, Hidden Entrepreneurs and How Web 2.0 Meetups Displaced the New York Software Industry and Business Plans Help the Web 2.0 Kool-Aid Go Down and DayJet CEO: Business Models Drive Disruption, NOT Technology and CED Tech 2007: 30 Cool Startups, But NO Facebook Apps 

ALSO: LinkedIn’s BIG Agenda: Stamp Out Business Cards!

CONTACT DONNA BOGATIN

Michael Arrington is outraged over what he (now) characterizes as a “hypocritical, wrong and conflicted” Union Square Venture’s celebrity blogging VC: Fred Wilson.

ODD? After all, I subjected an extremely flawed Fred Wilson post last week to a similar style of analytical analysis as Arrington does today (without indulging in similar style emotional, personal vindictives as Arrington does though), citing Jason Calacanis on Wilson’s propensity to over “share” publicly, at his blog: SEE: Why Silicon Alley VCs Should Do Blogging Due Diligence, Too

Arrington wasn’t outraged then, however. In fact, Arrington threw his personal support to blogger Wilson in the comments:

Arrington to Wilson, one week ago: “Fred, Great post. You are such a good blogger, especially for someone outside of Silicon Valley.”

What a difference a week makes? Not really, what a difference a Wilson crtiique of TechCrunch’s co-editor makes! BUT, Arrington’s condoning of Wilson’s “hypocricy 101″ style last week helped fuel the blogging VCs ongoing propensity for doublespeak, a typical Wiilson approach that Arrington notes, NOW:  

Also, in a comment to his original post, he says “Erick didn’t get it wrong…but i think he missed the opportunity to get it right.”

How can you be both wrong and right at the same time?

GOOD QUESTION, and “how can” a VC recommend that his portfolio companies sell out to the likes of Yahoo, AOL, Google, while at the same time decrying that such profitable Union Square Ventures business decisions are “not good” for the Internet, as I analyze and critique in Is Union Square Ventures Changing Exit Strategies?

“Web services don’t get better under the ownership of big companies. They get worse,” the Union Square Ventures’ managing partner declared.

REALLY? Poor Union Square Ventures portfolio companies Twitter, Wesabe, Zynga….then? After all, how can Wilson advise “exits” to “big companies” Google, Yahoo!, Microsoft… if such “big” sell outs will stifle Web innovation, according to Wilson.

“We don’t need or want consolidation of services on the Internet,” Wilson warned.

There is no apparent change in Wilson’s VC modus operandi which spurs such “consolidation,” however, if it is to the financial advantage of his Union Square Ventures’ financial returns.

While Arrington defends his writer and Wilson defends his portfolio company, however, there is one entrepreneur’s story that is not being heard: The plea of Munjal Shah, CEO of Riya (developer of the Like.com Visual shopping service), to focus on startups’ revenues:

I would ask every reporter to get a new metric for evaluating how startups are doing. Why can’t Michael, Matt, Om, and others start asking for this info before writting positive pieces about companies. 

EXCELLENT SUBJECT MATTER, and one that I continuously report on and analyze here at Insider Chatter. In fact, I headlined yesterday–Business Plans & Revenue Models: TWO Startup Must Haves–a critique of ex-Googler Paul Buchheit’s advice to startups that was devoid of a financial performance metrics discussion.

Michael, Matt, Om, and others may continue to perpetuate the myth that a startup’s traffic is the best indicator of success, but I steadfastly spur entrepreneurs to focus on the bottom line and welcome every opportunity to speak with founders and CEOs about their sales and profitability milestones, and happily share their inspirational accomplishments here at Insider Chatter.

Insider Chatter also respects timed company embargoes, another “glitch” in Venture Beat’s report on Like.com that was lamented by Like.com’s Shah. I have similarily experienced Venture Beat’s “misunderstanding” of clearly stated timing restricitions on news releases. Venture Beat’s self-serving propensity to “hit publish” before mutually agreed upon times risks hurting not only Venture Beat’s Web publishing competitors but the very startups being covered, Shah’s Like.com big case in point.

Remember, though, “It’s the revenues, stupid!” Entrepreneurs ought to heed Shah’s real-world call to financial arms:

As a 2nd time entrepreneurs, we at Like.com had decided to not focus on eyeballs or users, but rather revenue and eventually profits.  If you remember we first took this approach back in May of 2006 after we launched Riya (and while we had usage) and didn’t know how we were going to make money.  We retooled and launched Like.com, which we knew would make money.

Like.com likes revenues!

MORE: Silicon Alley Web 2.0 Startups: Bootstrap For Success and Silicon Alley: Crouching Tiger, Hidden Entrepreneurs and How Web 2.0 Meetups Displaced the New York Software Industry and Business Plans Help the Web 2.0 Kool-Aid Go Down 

PLUS: Facebook Meltdown: Is Twitter Next? and FriendFeed: Got Google Millions? Who Needs Revenues!

CONTACT DONNA BOGATIN

STOP the virtual presses? An ex-Google staffer reveals to the world “the most important thing to understand about new products and startups,” OR NOT!

Paul Buchheit’s Digg worthy headline doesn’t appear to deliver on the promised “one” thing, in good Digg-bait fashion! Buchheit’s startup advice column is composed of two parts: First, the reposting, verbatim, of seven paragraphs from a Marc Andreessen “the only thing that matters” post, and then, 15 rambling paragraphs which retrace Buchheit’s Gmail glory days, among other things, and conclude with the cryptic “Find the gradient, then follow it.”

IS “the gradient” the one most important thing startups must understand, according to Buchheit? If so, Buchheit ought to define precisely what he means by “the gradient.”

Before revealing the supposed “one” most important new products “thing,” though, Buchheit, disclaims that “in his mind” there are really two (lengthy) “most important” points. In readers’ minds, however, Buchheit’s one, no two, no, ok, one or two points (maybe), may be understood as: ATTITUDE, the right one, that is.  

WHO has the right attitude? Google employee #23 may believe Google does (even though Buchheit lobs an odd, ”dig” at his ex-fellow Googler engineers)! After all, Google can not be “evil,” according to Buccheit himself! 

Buchheit refers his readers to the Wikipedia (not Google Knol!) short, but glowing, entry on him, which not only credits him for the Web 2.0 movement, well before Tim O’Conference Reilly launched his financial ship, but also reiterates Buchheit’s claim that HE is the one responsible for the Googley ”don’t be evil” slogan. YAY?

HUMILITY, Buchheit then surprsingly lectures, is the attitude to have, a key competitive weapon. REALLY? How is that the Google kingdom of “rocket scientist” ego extraordinaires is on a power tear then, the very kingdom Buchheit proudly hails from?

Buchheit touts his startup FriendFeed’s ”release to the world” “launch.” FriendFeed’s “world,” for now, though, is but a “semi-release by private beta,” actually. Nevertheless, Buchheit assures he now has users that he can listen to.

Startup entrepreneurs nevertheless ought to really listen to two old-school “important things” lessons: Business Plans and Revenue Models.

WHY? Any worthwhile entrepreneurial endeavor requires not only an inspiring vision, but a solid business foundation upon which to build for success and a roadmap for executing intelligently to realize the (grounded) dream.

A good Business Plan is not an immutable mandate, it is a viable, flexible, target course of action for growing a sustainable venture. A good Revenue Model does not dismiss the need to cultivate users, it informs product development so that venture offerings present compelling, market-tested, real world value proposititions to users.

Will Paul Buchheit’s self-proclaimed knowledge of ”the most important thing to understand about new products and startups” propel his FriendFeed startup to Google like glory? UNLIKELY. SEE: Google Killer Cuill? Ex-Googler Startups Pose NO Threat: FriendFeed, Howcast, Zillow

PLUS: FriendFeed: Got Google Millions? Who Needs Revenues!

MORE: Antisocial Google: Googler Bradley Horowitz Mum and Google Knol: The End of Google.com, NOT Wikipedia and Startup Like.com: It’s the Revenues, Stupid!

ALSO: Silicon Alley: Crouching Tiger, Hidden Entrepreneurs and How Web 2.0 Meetups Displaced the New York Software Industry and Business Plans Help the Web 2.0 Kool-Aid Go Down and DayJet CEO: Business Models Drive Disruption, NOT Technology and CED Tech 2007: 30 Cool Startups, But NO Facebook Apps 

CONTACT DONNA BOGATIN

BEWARE SILICON VALLEY RAMBO?

Determined competition is essential for a democratic United States political system, and for a vibrant tech economy, NO MATTER WHERE THE COMPETITORS HAIL FROM.

A native New Yorker myself, I called my fellow Silicon Alley startups to (who needs Silicon Valley) action yesterday– Silicon Alley Web 2.0 Startups: Bootstrap For Success – pointing out the hazards of relying on Michael Rambo Arrington’s “obsessive” Web 2.0 chronicling and personal startup investment stance for transferable winning entrepreneurial insights.

As Arrington and Loic LeMeur made clear their intention to seek to “change the world” together, along with a dozen of their closest, powerful, monied Silicon Valley “friends,” I underscored: If you can make it here, you can make it anywhere: New York, NY! Sing it loud, sing it proud fellow Silicon Alley Web entrepreneurs and keep focused: A blinding coterie of Internet star-powered “angel” investor friends is optional, very.

Arrington hails the competitive advantage of Silicon Valley is its competitive spirit: The non-stop drive to “compete to the death”! Hey Michael, Greed IS Good, as you well know, and New York City has long been the capital on that capitalistic front!

Arrington’s ode to the Silicon Valley where he made his big mark suggests his turf enjoys some sort of inalienable claim to success with the American Dream: ”If you are willing to do absolutly anything to achieve your dreams, there is no better placed to be than here.”

REALLY? Good thing Bill Gates, Michael Dell, Michael Bloomberg…got lost on their way to California!

What is really ironic about Arrington’s dissing of Seattle tech, though, is that he lambasts the outdoor nature of Seattle’s nature: “If staring at lakes and skiing after work are important to you, don’t be surprised when your startup doesn’t cut it.” HAH! The legions of New Yorkers that toil 24/7 in windowless, steel skyscrapers scoff in the same fashion at those in the valley sitting at sidewalk cafes and golfing after work.

The current Silicon Valley tech gold rush benefits from a happy, temporal confluence of human and financial resources, NOT from inexorable innate “winning” characteristics. The California gold rush fever that WAS based on native west coast assets depleted itself. Silicon Valley may very well burst its own bubble too, for good.

Silicon Alley? Manhattan was the unfortunate 9/11 victim because terrorists were determined to destroy the money making capital of the world.

I was attending a Silicon Alley conference on Internet business models at the time of the attacks at a downtown tech hub. I fled from the falling World Trade Towers and made the pilgrimage to safety uptown by foot with thousands of my fellow New Yorkers.

Silicon Alley is now in flux, as I analysed earlier in the week. SEE How Web 2.0 Meetups Displaced the New York Software Industry

Arrington cockily disses ”mini tech hubs” at his competitive peril, though. I hear people are “Sleepless In Seattle,” but I KNOW, if you can make it HERE, you can make it ANYWHERE!

Stay tuned for New York, New York’s SILICON ALLEY: CROUCHING TIGER AND HIDDEN ENTREPRENEURS! Disruption is in the (smog filled New York City) air!

PLUS: Business Plans Help the Web 2.0 Kool-Aid Go Down and Yahoo Refugees? Hillary Clinton To Save American Dream for Silicon Valley and NYT Accepts Google Muzzle: Bombs YouTube NYC Story

CONTACT DONNA BOGATIN

If you can make it here, you can make it anywhere: New York, NY! Sing it loud, sing it proud fellow Silicon Alley Web entrepreneurs and keep focused: A blinding coterie of Internet star-powered “angel” investor friends is optional, very.

While Silicon Valley’s latest French import–Loic LeMeur-hails an increasingly cliched open Web “conversation,’ his thick as honey ode to his own Web insider friends testifies to a not so open, entrenched, self-perpetuating Web 2.0 power clique. BEWARE the dazzle, though: Incestuous back-slapping, mutal promoing  and “A-list” money-passing is not all it is hyped to be.

Michael TechCrunch Arrington, for big example. LeMeur offers a Valentine’s Day testimonial to “angel” Arrington for his media and financial embrace: “Michael sees hundreds of startups a week so coming from him it was a important for me of course”( excuse LeMeur’s English!).

Those very same startups that Michael “sees,” however, often bemoan the lack of a net positive “TechCrunch effect.” Just ask Mr. Web 2.0 himself, Tim O’Reilly, as I recount in Web 2.0 Startups: Will Geek Chumby ‘Fade Away’ in 2008?

O’Reilly dismissed out of hand the “obsessive” work of Arrington’s TechCrunch on the very eve of his own beloved Web 2.0 Summit in October:

TechCrunch is the #1 site on the Techmeme leaderboard, yet most of what it covers will be forgotten not merely in years but in months, and have proven to be completely unimportant: the froth of me-too company creation around ideas and trends that as yet are quite immature and poorly understood. (Michael Arrington himself told me that most of the companies he’s covered since starting Techcrunch “have just faded away”.)

BUT, Monsieur LeMeur will protest that OUI, MAIS Michael LIKES my Seesmic! Alas, if Arrington puts his money where his mouth is, that may be the biggest Web 2.0 red flag of all, as I analyze in Edgeio Web 2.0 Bomb: Michael TechCrunch Arrington Cheers $5 million Startup Loss and Edgeio $5 million Failure: The Myth of Disposable Startups.

Beware copain LeMeur’s startup advice as well, I analyse in Loic Le Meur Seesmic Formula? NO (Big) Idea, NO (Marketing) Plan, NO (Revenue) Model.

Voulez gagner dans le monde entrepreneurial? N’ecoutez pas Monsieur Loic Le Meur, n’importe qu’il parle en Anglais, ou en Francais!

Loic Le Meur is an alum of France’s take on Harvard Business School, and so am I: Hautes Etudes Commerciales, HEC. Nevertheless, Le Meur giddily, and Web 2.0 fashionably, disses all notions of solid business theory.

I do not, though. In the world of startup advice, my money would be on a different French-born entrepreneur that ventured to the United States long before Le Meur was on the French-American scene: Georges Doriot, Harvard Business School Professor and considered the creator of the modern practice of venture capitalism, a theoretically sound practice.

LeMeur proudly scoffs at the need for research, planning, marketing…What has he planned to do with all the new found money his star spangled friends are handing over then? The irony of the LeMeur Web 2.0 startup “theory” is that he ought to be able to bootstrap his way to viral success!

Fellow Silicon Alley entrepreneurs, YOU CAN TOO!

Who needs marketing? Don’t focus on getting rich? Who even needs a big idea? as per LeMeur! Just do it, he says.

I say just do it as well, but with a solid, low-cost business plan providing the fuel, NOT big name, you scratch my back, I’ll scratch yours angel dust, as LeMeur hails for his own “precious” and “amazing” immigrant startup story.

Here is a bit of the “conversation” that LeMeur’s deliberate money and power fueled startup “friending” has inspired, at Le Meur’s blog:

MON DIEU WRITES TO LOIC: Congrats Loic. Having such a group of rich friends surely must have taken time to cultivate but clearly all that arse kissing has proved worthwhile and with your garlic flair and charm that was easy.

Although I think your hard work starts now because you have taken money from “friends” and they trust you to return it with a successful sale of seesmic. So no pressure then, just your reputation.

In launching seesmic and raising the money you proved two things.

1. It is more about who you know and not what you know. Seesmic is an ok solution technically in search of a mass market but somehow people have given you $6m to show it can return $600m. There are better ideas out there that will not get this level of funding.

2. It is where you live that matters. The names you drop in the post above show that you have to be in the “in-crowd”.

I do wish you well and now wonder who will buy you. Perhaps Microsoft now they have $45bn spare.

MORE: Digg: TechCrunch Bails on Arrington Web 2.0 Fave and Google Joins Blogosphere in Mocking Wikia Search: Jimmy Wales Defiant and Mahalo: Will Calacanis Win the Billion Dollar Startup Lottery in 2008?

PLUS: Why Silicon Alley VCs Should Do Blogging Due Diligence, Too and Is Union Square Ventures Changing Exit Strategies? and How Web 2.0 Meetups Displaced the New York Software Industry and LinkedIn Preps Spy Network: Is YOUR Company Safe? and Yahoo Refugees? Hillary Clinton To Save American Dream for Silicon Valley and NYT Accepts Google Muzzle: Bombs YouTube NYC Story

CONTACT DONNA BOGATIN

Users are not the only ones rooting for the success of Firefox 3, the “add-on” world is, including Me.dium.  

Me.dium means to “reveal the hidden world’ behind people’s browsers. Before the venture funded Colorado-based startup can successfully do so en masse, however, it must first successfully reveal what the meaning of Me.dium is, to a critical mass of people.

Socal browsing, co-browsing, virtual presence…is but some of the geek speak that has sprung up to add Web 2.0 flair to Me.dium’s fundamental product handle: Browser sidebar.

Is the typical person that browses the Internet plugged in to browser plug-ins? Not today. Me.dium’s financiers are nevertheless betting–to the tune of about $20 million–that they will be, sooner rather than later. Elliott Katzman, general Partner of Commonwealth Capital Ventures, has not only put his firm’s money behind Me.dium’s vision, he is investing even more, his time. Katzman joined the Me.dium board in conjunction with Commonwealth leading the $15 million Series B funding of Me.dium. Katzman travels from his Boston offices to the west coast monthly for the startup’s board meetings.

In announcing the Me.dium funding, Katzman underscored that Commonwealth “believes Me.dium is pioneering the next phase of social interaction on the Web.” I recently spoke with Elliott Katzman to gain insights into how Commonwealth evaluated the Me.dium investment opportunity and with Me.dium co-founder David Mandell for a first-hand take on how the venture’s “social surfing” tool aims to “lead an exciting new category.”

What is the Me.dium market opportunity? DEMO 07 positioned the startup as ”still searching for a business model.” Me.dium’s position could be more aptly characterized, though, as building towards a highly scalable, highly monetizable Internet platform.

Katzman shared with me how his own entrepreneurial experiences inform his anlaysis of the large potential for an interactive, people-fueled, Web-based transactions system. Katzman founded an online social networking application long before they became fashionable: Myteam.com. In contrast to the niche community site, however, Me.dium is targeting the entire Internet population.

Cofounder Mandell wants Me.dium to “change the way people interact online” by making the solo browsing experience more closely resemble how indiividuals rely on the actions of others to guide their navigation of the offline world. Just as people continuously react to what other people are doing as they make real time decisions in the phsyical world, Me.dium’s Web browsing community serves to guide Web surfing decisions.

Katzman envisions opt-in Internet surfing among friends will support a powerful commercial referral system and ecommerce lead generation tool. The vision is big and Commonwealth is confident that the Me.dium management team is up to the challenge. Venture capitalists famously advise to “bet the jockey, not the horse,” but founder strength is particularly crucial when the entrepreneurial goal is to create an entirely new market. Agility is key in being able to respond to technology and demand shifts, Katzman conveyed to me.

How IS the Me.dium team doing in conveying its message to the large Internet? Downloads of the Me.dium application are “quite good,” Mandell told me, declining to provide hard numbers, and “regular users are very happy,” he shared. At this juncture, however, “regular” Me.dium users are undoubtedly mainly early tech adopters, and not generally representative of the regular Internet base at large. For example, Elliott Katzman, himself, has a Me.dium profile and enjoys surfing with online friends!

It is of course still early in the Web’s social game: Me.dium and its backers are betting that slow and steady will win the Internet race.

MORE ON ME.DIUM: Got a Web 2.0 Startup? Microsoft Wants YOU!

PLUS: MySpace To Google: Learn How To Sell Advertising, OMMA Report and MySpace to Facebook: NO ‘Reach, Relevancy, Results’! OMMA Report and LinkedIn Preps Spy Network: Is YOUR Company Safe? and Henry Blodget Tech Ticker Puts Yahoo Finance at SEC Risk and Yahoo Refugees? Hillary Clinton To Restore American Dream for Silicon Valley

CONTACT DONNA BOGATIN