Smoke & Mirrors: A Good Portion of the Digital Media Space
I’ve spent some time thinking about this post and how I wanted to structure it but couldn’t really find the right way. So with that said, here we go…
There are two points I’m trying to get across with this (not mutually exclusive of each other):
- The Gartner Curve (hype) around PR
- Investment/acquisition opportunity in 2008
Take a look at the graphic below. It’s a representation of the famous Gartner Curve (hype cycle). For those of you who haven’t seen this before, here is a summary off Wikipedia:
A hype cycle is a graphic representation of the maturity, adoption and business application of specific technologies. The term was coined by Gartner[citation needed], an analyst/research house, based in the United States, that provides opinions, advice and data on the global information technology industry.
Essentially, there has been lots of talk about Web2.0 (I hate that term) companies getting covered by TechCrunch and other rather influential blogs, being all over the blogosphere for the next 15 days, and then falling off the radar screen in the trough of disillusionment and never recovering again. I’m seeing this all of the time now and it’s becoming increasingly tougher to pick the winners because of all of the hype in the space.
What ever happened to ImInLikeWithYou, Pownce, and other companies who we thought could almost take over the world with their media coverage?
There are many reasons to launch a public relations campaign around a startup and I’d think that raising the profile of the company is probably what is most important. When you raise a profile of the company, it becomes attractive to investors, consumers may take notice, and you ignite conversations with potential business development partners. I’ve certainly done it before and I’ll do it again as an entrepreneur. The issue though is that you must maintain your momentum throughout your organization’s life, or the hype you seek in the beginning will be meaningless down the road.
There is a lot of smoke and mirrors though in the industry. Many startups who are getting written about all the time have very little under the hood and once they hit the trough of disillusionment, they probably will never recover. I urge everyone to take a step back and not take every blog for granted. Heck, don’t take mine. I try to be as non-biased as I can but it’s just human nature. Step back and form your own decisions. You can see JupiterResearch got pretty upset tonight…
With this smoke and mirrors and the famous “trough” – it opens up deal-making mavens to come in and swoop up the dead companies. The dead “pool” is about to turn into the “ocean” as many of the venture funded companies of 2005, 06, 07 are about to run out of cash (as they realize that there aren’t enough ad dollars for every one of them). I see some great opportunity here to purchase the assets of some of these failed dotcoms and roll them up.
Back in October 07, I talked about the dot com deadpool fund… this is one of the best times to potentially think about this idea as there is certainly lots of smoke and mirrors with current startups, VC investments are rising to 6 year highs, and external factors like the economy is showing signs of weakness (though MSFT had a great quarter).