Employees generally don’t leave hot startups. They lose some or all of their stock options, and they also lose the resume value of being associated with a startup brand. And that’s doubly true for executive level employees.
When an exec leaves a startup it isn’t necessarily news. But in the last couple of months we’ve seen two execs leave high profile second tier social networks – one from Piczo, and now one from Bebo.
First to go was Jeanine LeFlore, Piczo’s VP of Products and Marketing. Both LeFlore and Piczo CEO Jeremy Verba tell me she left on good terms. She is now running her own startup, called LiveHit, which is months away from launching.
This weekend we received a press release that Bebo’s co-founder and VP Business Development, Jim Scheinman, has left the company to become an entrepreneur in residence at Charles River Ventures. Scheinman was also one of the first employees at Friendster back in the day.
Everyone mentioned above is a friend of mine, and yet I have a feeling I’ll never hear the whole story behind either departure. What I suspect, though, is that there may be a fear that the social networking space is heading for a shakeout. The big guys, which are roughly defined as MySpace, Facebook and (now) Orkut can manage their own destiny. The smaller players may see less riches ahead, and some execs may be looking for greener pastures elsewhere.
Here’s worldwide Comscore for each (unique visitors):
Photo Credit: Silicon Republic and Auren Hoffman.
There might be some truth to that. There are only so many Social Networks that can ever really gain traction. Even if none the “Big Three” turn out to be the ubiquitous social network that they each expect to be, they are more than popular enough to make it nearly impossible for anyone but the most clever startups to be able to make waves.
Is it time to bail out of the social networking space? Probably not but it might be time to stop trying to be the one size fits all social network and start exploring more -interesting- ways to provide value. Online social networks that have strong connections to meatspace networks comes to mind.
Why can’t you take it for face value of what they say, instead of having ulterior motives you’re conceptualizing?
But i’d have to agree with the social networking shakeout – ultimately it’ll be only the existing big boys alive, while the rest will barely keep their heads afloat, if not closed ultimately
in the domain name world, dot.Mobi looks very promising.
I smell a bubble burst
I just read Duncan’s “The End of Advertising” article @ http://www.tech...-as-we-know-it/
A quote from that article:
“broadcasters must change their mass audience mind-set to cater to niche consumer segments”
I totally agree with that. If you also agree with it, then there is an enormous market for niche social networks and portals. Any objections?
I don’t know about that. It seems to be the seasonal pattern of the web to go from wanting to aggregate as much data as humanly possible, realizing that real human communication doesn’t work like that and then deciding to break it apart again into manageable chunks.
More than a whole bunch of niche social networks, what we really need are a few social networks that handle their users more realistically. Facebook almost had this right with the idea of networks, but as they expand they seem to be losing track of it.
I think anyone in the market to build a social network should spend some time researching how people actually organize themselves in real societies. I would bet what you come up with will provide far more utility than most of the current options.
@4
I’m not sure if I agree with there being “an enormous market for niche social networks”. A very big part of social networks is to connect like-minded people, and specially now with them opening up with the Facebook platform and OpenSocial do I really need to sign-up with another network to connect with those people?
I can agree with niche portals perhaps, but I think that eventually the big players in the social networking space will be compelling enough to make niche social networks, to an extent, obsolete.
Any thoughts?
@ toulax
Yep exactly. I think we are both echo-ing the same points but with different reasons.
Two possible scenarios:
(#1 )Few big portals that can serve all kinds of niches
(#2) Lots of niche portals that can all be interlinked with sthg like OpenSocial
What would be your ultimate choice?
I would go for #2 considering that I definitely dont want my DISCO buddy to interact with one of my clients on the same social network. But at the same time, I would need to connect to either of them seamlessly. I think thats exactly why something like OpenSocial is gaining traction.
Speaking of EIRs at CRV, Mark Jacobstein also just left loopt for that role .
The next money is going to Energy startups. Think about the color of the dollar and you will have an idea of where we should all focus our attention. That being said, Maybe they are simply trying to launch startups that will yield better returns for their time/investments. I think there is still lots of money to be made in the social networking environment for smart players who can cut the features from 100 to 5.
From one serial entrepreneur to another… Jeanine, you are really a hot woman. Smart, attractive and ambitious women are a very tough breed to find in the modern jungles we all inhabit!
I doubt she’s single but maybe luck is on my side with this post
Jon
I don’t consider a 2nd tier social network. Its massive in the uk and is not going anywhere yet. Maybe Yahoo will buy em.
I think the point is these people are moving on to other things. Would you rather be an employee with your 1-2% stake or a founder with a lot more?
Maybe its because they don’t have much to do? Social networks don’t do a lot of marketing or business development. Social networking is a lot like the dating industry, you don’t do a heck of a lot of business development and marketing if there is any is all online.
Why do you routinely ignore the world’s biggest social network when you talk about “the big ones”. Windows Live Spaces has more traffic than any other social network but you seem to fail to realise that.
Window Live Spaces lacks in many features that many other social networking sites are providing however I agree they could have been the biggest social networking site, but let them compete first with Yahoo! forthcoming Mosh their nearest competitor.
-Paul
#10: Innovative use of TechCrunch as a social network. Michael, when do you launch TechMatch.com?
This is simply a story of folks who dont have the business skills to contribute to a growing company, they are ‘idea only’ founders..they either quit or most likely got pushed out for a smart HBS grad to do the new job right.
@5 -Steve
I think that the Niche based sites are just getting going and we haven’t seen the crossover to them yet as they are still Forum/BB based.. I think once the tools are out there that can allow that kind of crossover (Web 2.0) things will shift quickly and OpenSocial will become incredibly powerful tool.
#15: Entrepreneurship is about seizing an opportunity, no matter how dim or crazy and running with it. It’s a heck of a long shot to say the least… but I have beaten the odds before.
At the very least, I possibly gain another friend to run through some ideas with (after a NDA and non-comp of course).
Jon
i dunno if there’s a huge story here, except to consider some basic vesting math, and perhaps a perspective on initial & subsequent option allocations.
guessing jim was fully vested or close to it, and while Bebo looks like a solid win i’m not sure if their growth is beating out FB adoption in the UK. in any case, if he’s mostly / fully vested he probably would consider leaving unless there were additional equity allocations made to keep him.
looks like jeanine was only at Piczo for slightly under 2 years, but she’s also doing her own startup. after 2 years, you could certainly make the case that equity diversification is a reason to leave… especially if you’re confident in your own ability, and you know you’ll get a founder’s stake at your own venture.
assuming a standard 4-year vesting cycle with a 1-year cliff, (and no incremental allocations) consider the motivations for staying an incremental year given how long you’ve been at a startup:
a) 1yr, 2yrs, 3yrs,
(continuing)
a) 1yr, 2yrs, 3yrs,
mike: dude WTF up with your comments functionality?
everything is getting clipped…
i’m not sure i’d consider 2 people leaving the social networking space to be the bellwether of an impending shake-out. can you site some additional examples of “founders and execs leaving second tier social networks”?
if you can’t, i’d say this is pretty much a non-story.
A social networking “shakeout” shouldn’t surprise anyone. But, let’s be clear, shakeout doesn’t have to mean “bubble burst” (and Michael didn’t say that). When an apple falls off the tree, its seeds can produce a new tree and, who knows, with the right cross-pollenation it could make all surrounding trees more fruitful. I suspect that what we’re seeing isn’t the first wrinkles on the bubble (sorry you doom and gloomers). Instead we’re seeing the logical progression of a new industry, albeit faster than other industries in the past. But isn’t that what we’ve come to expect?
Hi, this is Jeanine from LiveHit – Thanks for the mention, Michael!
And to alleviate any doubt, Michael is correct that I left on very good terms. Jeremy was very supportive of my starting my own venture, and I also remain on the Piczo Board of Advisors to help in Piczo’s continued success. It’s bittersweet to leave someplace I greatly care about. But as “Jon” above says… entrepreneurship is about seizing an opportunity, and sometime you just have to follow your passions and pursue your dreams.
Jeanine LeFlore
Founder and CEO, LiveHit
http://www.livehit.com
I told you so! Even an angel group that I met with expressed their displeasure over all the redundant investment in me-too social sites and YAVSS (Yet Another Video Sharing Site).
http://bizcast....igh-full-o.html
We saw it happen to search and to the portal space as well, its natural for some consolidation to take place. But nevertheless, I don’t believe that Facebook, MySpace and Orkut are for everyone. There will always be room for niche social networks that target specific communities.
People leave startups for all sorts of reasons; and start ups can be a difficult places to work with lots of stress, pressure, long housr, etc. Many times there is a difference of opinions, etc.; And if you are not drinking the company coolaide you can get ousted. I was at two start – ups and they started off fine, but in both cases the CEO’s got “Founders” disease and did not take good advice and drove the companies into the ground.
The answer is fairly obvious. There’s a national recession on the way (or already started depending on where you live). The dot-com bubble is about to burst again. Smart people are going to leave the companies that don’t make money and have no realistic business plan. Same deal as 2000-2001. Nothing is happening that didn’t already happen and can’t be easily predicted.
Jeanine – I’m more intrigued by Livehit. Love to hear more – can you put me on “the list” — sbauman@greenoughcom.com.
Good luck!
There seems to be more and more evidence that these sites are going to be hard to monetize. Look at some of the data you get back when you look at targeted Facebook ads on how many folks can really be targeted:
http://smoothsp...-few-to-target/
Unless there’s reason to believe the also rans are bucking that sort of trend, it’s going to be very hard for them.
Its not about monetizing. Its the rush inside them. They want to launch companies. They want to be number 1 not number 2, 3 or x for that matter. The guy who has launched http://www.CurryPlanet.com an Indian bookmarking site left a well known online automotive company in Seattle right when they were talking about acquiring another company and going public. He could have stayed there and probably make some good money. But he instead wanted to run his own venture. Most of those how launch businesses usually are not part of the pack. They will assume management roles with other companies just to gain some expreince but they always have their true goal in the sight. For example, take Steve Jobs. He was working at Atari when he launched Apple. He would have hit it big at Atari too but wanted to go on his own.
Not sure two would make a trend…
Twine: Social networking done right … and painlessly. Ladies and gents, the game is only beginning …
Speaking of EIRs at CRV
Will there be a common platform or a body or a standard, which will network all the social networking website, for the interest of the public to be connected across sites, to the common interest across globe.