Silicon Valley is known for nurturing start-ups in a way no other place can. But it’s not all kumbaya here. And one of the most destructive things about Silicon Valley is the hype cycle. And judging by the fact that some bloggers pronounced Twitter “done” the same week the company was featured on Oprah, it’s clear that hype cycle has spun ludicrously out of control.
I’m sure you’ve seen the graphs. If not, it’s to the left. In words: A company comes out and no one likes it. It starts to attain huge growth and buzz. Suddenly it’s anointed the Messiah. Then something happens. A long time ago, that something was negative: A founder leaving, a down-round, growth that tailed-off or an inability to serve customers. Even then it wasn’t necessarily deserved, but the backlash would begin immediately. This company was a laughing stock. What was wrong with them? They’d lost it. They were toast. Well….for another few years. During which a good company would keep growing. And only later, would they get the true credit for what they’d built. Of course, “experts” would claim they got it all along.
A great example is Google—a lauded company that was dismissed when it wouldn’t immediately monetize with banner ads in the wake of the bust, then re-anointed when the numbers came out at the IPO, and it began its surge past $700 a share.
But the hype cycle isn’t confined to companies. It can describe waves of technology – like social networking, RFID or the consumer Internet itself—or people. One of the first examples I saw in the Valley was Marc Andreessen. He was built up as the young, shoe-less God of the Internet that the press brutally tore him down once the crash changed the viability of his second company, Loudcloud’s, business. It’s still deemed a “failure” in some corners of the Valley, never mind that it was painstakingly retooled as Opsware and sold for about the same amount as YouTube. People not only trashed the company, but they retroactively trashed Netscape, and Andreessen himself, saying he’d exaggerated his contributions to Mosaic. Of course, Andreessen kept his head down and kept working. Today he’s widely regarded as one of the most important mentors and angel investors of the Web 2.0 movement and one of the only people to found two companies that would end up being worth more than $1 billion each.
Sure a smug “I told you so” as you count your millions is the best way to silence and embarrass naysayers; it’s the ultimate revenge. But start-ups can take a while to reach their final destination—whether that’s bankruptcy or an IPO. Forget cold, in the Valley revenge is a dish served molding and with flies swarming around it.
There’s an element to the hype cycle that reflects human nature. We get excited about technology and tend to overestimate what it can do in a year and underestimate what it can do in ten years. That’s not all bad: Being underestimated is why a lot of start-ups catch giant companies off guard.
But the blogosphere has turned an already frustrating hype cycle manic. The famous example was Cuil—a company lauded in the morning as a “Google Killer” and trashed before our first cups of coffee got cold. Not quite as extreme is what we’ve seen with the giants of Web 2.0: MySpace, Facebook and– believe it or not– the three-year-old Twitter.
As soon as Facebook launched its platform—as if in unison—the media world decided MySpace was a has-been and Facebook was the king. Sure, Facebook is poised to overtake MySpace in the U.S., but by many accounts MySpace is making more money, increasing engagement and is still one of the largest sites on the Web. That should count for a lot.
In the last month, it’s been happening to Facebook, and it’s even more absurd. The company is still growing, having passed the 200 million or 250 million user mark, depending on who you believe. And other reports, and my own sources, say the company is doing close to a $500 million revenue run rate. Did I mention we’re in an epicly bad recession? How is that a failure?
Frequently the people calling for Zuckerberg’s head because of recent “failures” have never run a company, and never even met Zuckerberg. I tend to agree with a guy who’s done both: Reid Hoffman, CEO of LinkedIn and one of the most successful Web 2.0 investors in the Valley. “Ultimately you judge a CEO by how well the company is doing, and Facebook is doing pretty well,” he told me a few weeks ago. “I think Mark should answer any criticism by saying, ‘Look at the company; I’m doing fine.’” Did Hoffman like the new redesign? Not especially. But he added this, “It’s good to be bold in what you’re doing; it’s good to be visionary. Personally, I don’t think it was right, but Mark may very well learn from that and the next step will be much more interesting in that direction.”
Well said. Guess what, gang? Building a company is hard. No one gets every single thing right. Bloggers harping on each mistake are like the fat guy sitting in the bleachers at a baseball game berating a star player for not hitting a homerun in every at bat.
Sure, Facebook’s valuation is coming down from $15 billion. But that was never a realistic valuation for the company. It wasn’t even paid by traditional venture capitalists; it was paid by Microsoft and other strategics looking to get a piece of the hot company and not caring what it cost. The company itself didn’t value Facebook at $15 billion when insiders sold stock. But is it worth $1 billion or more? Definitely. Even based on a reasonable multiple of revenues. Of the Web 2.0 wave you can count on one hand the companies that can claim that with a straight face.
Even more absurd: Now bloggers are starting to say Twitter is done. I thought it was only now hitting mainstream? It’s one thing to take a company like Cuil—that arguably over-represented what it could do—from hero to goat in less than an hour. It’s another thing to trash a company that’s only a few years old, growing exponentially, well capitalized, and conservatively run with about 30-something employees. (Let’s not even bring up the free Sprint ad and the barrage of John Stewart-Ashton-Larry King-Oprah free press.)
Look, we all do it to a degree. We fall in love with technologies, and readers and editors suddenly get an insatiable demand for stories about them. It’s reporters’ and bloggers’ jobs to give them what they want, right? But that tips into link-baiting, blindly aiming for that TechMeme traffic and writing a provocative headline that the story doesn’t even necessarily back up. It’s one thing to be the early adopter who gets bored once something is mainstream. It’s another thing to write off a company for the sheer fact that it’s successful, and you’re bored writing about it.
Here’s the thing: Great start-ups can survive the hype cycle. Horrible companies were going to fail anyway. That may leave some marginal ones in the middle, but let’s argue if the press tanks a company, it wouldn’t have gotten far ultimately. So maybe the hype cycle doesn’t really do any harm.
But who does it help? As bloggers and reporters we’re supposed to bring people reality and truth. No phase of the hype cycle is reality: Not the messiah, not the goat simply because big press has grown weary of the topic.
Looks strikingly similar to Anthony Downs’ Issue Attention Cycle.
Here’s more: http://www.anth...m/upanddown.htm
Love this part, Sarah:
“Building a company is hard. No one gets every single thing right. Bloggers harping on each mistake are like the fat guy sitting in the bleachers at a baseball game berating a star player for not hitting a homerun in every at bat.”
Well said!
TC writers “… are like the fat guy sitting in the bleachers at a baseball game berating a star player for not…” getting up to “… bat.”
Has Barnes and Noble killed the eBook reader? TC did not even let them out of the dugout before calling their career dead.
Plus if Sean Combs (or whoever he is this week) is on Larry King with Ashton (forget about the why (?!?!?!?) since it is CNN v Ashton) then I look for something else.
Oh yea, has Twitter made money? That would be a good indicator if they will survive. Popular or not…
Revenues are potentially possible with Twitter as they are with Facebook and YouTube but the question is can they make enough to offset the costs.
Jon
http://WoodMarvels.com – Create Unique Memories
now something like tht is interesting
i agree; congratulation TC u managed to write a moderately fine, well-said, post after being in my annoying whiny baby list for quite awhile :p
This is the height of comedy….
The same Sarah Lacy who covered Tesla is talking about stopping the hype cycle?
I think she has a problem with people trashing companies. Not with hyping stuff up.
Great post, Sarah. I’d write a long paragraph here on my thoughts on the subject, but Theodore Roosevelt did it for me long ago, which happens to be on my Facebook profile:
“It is not the critic who counts; not the man who points out how the strong man stumbles, or where the doer of deeds could have done them better. The credit belongs to the man who is actually in the arena, whose face is marred by dust and sweat and blood; who strives valiantly; who errs, who comes short again and again, because there is no effort without error and shortcoming; but who does actually strive to do the deeds; who knows great enthusiasms, the great devotions; who spends himself in a worthy cause; who at the best knows in the end the triumph of high achievement, and who at the worst, if he fails, at least fails while daring greatly, so that his place shall never be with those cold and timid souls who neither know victory nor defeat.”
nice reminder from Theordore. stuff i call trenchwork, sweat equity, relentless optimisim, human sacrifice. without the hype cycle the internet would get boring real quick. imagine if we did not have fb or twit to talk about. internet startups have never been so deflated. majority of the blogs on TC dont have a real person id to reference. bloggers will never be united because no one wants to put their money where their mouth is. till then the blogger community will never be taken too seriously.
BlogService.com – deliver yourself
Peter Corbett said…
It is not the critic who counts; not the man who points out how the strong man stumbles, or where the doer of deeds could have done them better.
You have pointed out an undeniable fact, however any business (regardless of what it is) is dictated by the very basic concept of economic of supply & demand. The idea that is promoted by Paul Graham that you just build something that people want and then worry about how the economic principles apply, is what caused all the hype cycles. Sure, Google built something where they didn’t know how to monetize initially, but didn’t change the very fact of economic principle of supply & demand still apply. Had Google started charging for fees to use its search engine by its users, the demand would have waned, since there were other free web search engines available that users could use. This is the reason that Google went with paid online advertisement as its revenue model so as not to offset the demand for its service.
Finally, Sarah Lacy built her career in the software hyping industry. Why is she bringing this up now, is beyond me. She would have been perhaps a political journo or something else if not for the flourishing software hypes in the Valley.
The birth of Silicon Valley was started by scientists with real ideas that they knew that their business model conform to supply & demand. They thought out that there will be profit to be made.
The hype of web-2.0 or web-xxx in the Valley, was not how the Valley was about. It was the battle ground for physicists in its early days to see who can outdo each other with the coolest inventions, best state-of-the-art original idea (not me-too type) they apply in their competitions with each other.
I think that the Valley has lost its original mana, with the emergence of inflated useless web-xxx applications in the last 15 years or so. These useless web-xxx companies have more coverage at the Wall Street J, than the real companies in the Valleys who are developing lasers for modern electronics, fibre-optic and photonic devices that revolutionalize telecommunications and medical technology and so forth. I mean more coverage from Twitter in the US media than real companies who are building real technologies, and Sarah Lacy helps this promote this hype.
This very blog is responsible for 80% of the valley hype cycle along with valleywag, so you shouldn’t be one to talk.
Look on Technorati, and see yourselves at the top of the list. TC, Scoble, and Valleywag are THE hype cycle. Remember when you guys tried to push a 15B valuation of facebook? Tried to push Origami as the next big gen of PC?
Now you’re adopted posterous as the next Twitter, for no particular defensible reason.
I read a really good article today in the NY Times about penalizing all the cash hoarders in the valley and forcing them to invest again.
http://www.nyti.../19view.html?em
What do you think?
It’s better than over-taxing them into submission like in Europe and Canada.
I think negative interest rates would be cool. I could use a huge loan right now even though we have just enough capital to reach our milestones. Like a cash flow buffer loan. Can’t get one right now, but if there was a negative interest rate, I would have one in an hour.
Chris,
When you say TC is responsible for 80% of valley hype, do you mean directly or indirectly?
The way I see it, half the time hype comes not from TC directly, but simply because anytime they cover a company, their influential status and pure amount of readers begin to blog about that company, which in turn creates the hype.
Curious to hear what you think.
http://www.tech...5/25/twitter-2/
“When you say TC is responsible for 80% of valley hype, do you mean directly or indirectly?”
Directly, 100% sure, final answer. I don’t need to phone a friend.
The 15B valuation was almost all TC and Scoble. The Jerry Yang lynching was almost all M. Arrington. He would have completely gotten away with it had 30+ Yahoo! employees not jumped on Techcrunch and started b1tching at him anonymously.
M$ was the only company that was foolish enough to have put their investor’s dollars in at that value after it was created and upheld on an internet blogging platform.
“Air valuation”
With the new 2B valuation, Microsoft, formerly lead by an intelligent person, lost their investors 215 Million cash dollars in intrinsic value.
Not play money, real money from the public. The Microsoft phone interview on the private equity investment was a “techcrunch exclusive”
Go read The Fountainhead (http://en.wikip...he_Fountainhead). You’ll notice several key parallels between the current media (TechCrunch included) and Gail Wynand (from Wikipedia: “…his success is dependent upon his ability to manipulate public opinion, a flaw which eventually leads to his downfall.”).
TechCrunch (and all media) can select what to cover (they WILL turn down money from companies who offer to pay for articles). They choose based on what brings them money (from ads, and readership – readership allows them to charge companies more for posts they DO put up). If Twitter gets readers, they cover that (read: “hype”).
Allen Stern, on the other hand, does not cover Twitter (or hype cycles) because he is not like Wynand, therefore not as popular, but a better source of information — for people seeking “real” coverage. He is “boring” because of it.
Sarah, in this post, is simply following the hype cycle. This cycle is: the general populous discovery (or re-discovery) that media pumps hype. She’s hyping the anti-hype cycle (ironic, isn’t it? – but it does not matter as long as it brings readers). In a month or so, this cycle will be over, people will forget it, and the next cycle will being. Sarah will write about it. The core media paradigm has not changed.
Why is this so hard for people to figure out for themselves?
The nuance is missed in my post unless you understand Wynand’s situation.
Beautiful….
Maybe Jerry Yang can give her a copy on the Barnes and Noble eBook reader.
I’ve been saying this for 3 years now. TechCrunch and Silicon Valley VC’s are largely responsible for the hype cycle.
How?
For the longer version, read the following:
http://blog.ago...ebook-combined/
For the Coles Notes, read the following:
They glorified “companies” that were nothing more than cool apps with no utility and, worse, no hopes of a revenue model.
As a result, they poisoned the ecosystem by encouraging a generation of entrepreneurs to build useless products – all of whom now sit in the dead pool.
If you want to stop they Hype machine, look at yourselves first. Focusing on “boring” revenue generating companies provides greater value and less hype than yet another social networking site that allows a zillion people to do a zillion things that nobody is willing to pay for and no company is willing to buy.
Regards,
George
George, you’ve stated a fact in your comment from your blog post:
Folks, if a million people use your services but refuse to give you a dollar, you don’t have a business – you have a hobby.
That is very true, and as you said, there is genuine business in Web-2.0 .
Yes, let TC & Co focus on “boring” revenue generating companies – like ours.
Funny, just stumbled here after reading more about Susan Boyle. The blogosphere and hype cycle plays not only in tech startups, but also in all of pop culture. It’s the haters!
Sarah, thanks for your good analysisl The hero to goat cycle seems to get faster and faster. I think it will have to break soon. (wishful thinking?).
Sarah, please, get a journalism degree! Your words are right, but the presentation is horrible. You could have said that much quicker in a shorter text. Please, get to the point! This is not school where teachers prefer the girl with the longest text.
HAHAHA,
Dude it wasn’t that bad, but I do see your point.
Any degree that requires more intellectual input than underwater basketweaving would suffice.
Also, has anyone else notice the comments section is generally a lot less engaging and intelligent lately? Look at it. It’s all textual fellation with linkspam.
My guess is it’s all the unintelligent luddites finally realizing the internet means something. And it is that demographic that Sarah Lacy is here to entertain.
Well, I wouldn’t go so far as to say that the words were right. I wrote up my comments about these “words” in a comment on HN: http://news.yco.../item?id=569959
Sarah,
Great write-up.
“But who does it help? As bloggers and reporters we’re supposed to bring people reality and truth.”
Nice to see you have a personal sense of integrity and respect for your job.
http://www.snazl.com
best Techcrunch post i have read in months.
I agree with you in principle Sarah…HOWEVER it’s hard not to want to jump ship when the Oprah, soccer mom, and spambot rats take the wheel.
That was a ship metaphor. I’m not very good at metaphors, I think.
How are they taking the wheel? They are also using Twitter and you’re in no way forced to follow them.
Sounds more like you’re too hip to be doing what anyone else is doing.
Thanks for the post Sarah. As I grow older I realize how important things like facebook, myspace, twitter and blogs are to people and have abandoned my scornful attitude towards them and their followers. I believe as we progress through this economic downturn we’ll see compassion for companies, their founders, and their followers increase while the unviable money-mad business fall away. Curcuit City obviously didn’t foster the same following as facebook and I see a lot more happy people on myspace than I did at Linen’s-n-things.
Hype and excitement has its role, but calm casual customers are what matters.
Like any journalists, many tech bloggers want as many “shocking front page” stories and they want to be the first to call out someone(read Zuckerberg).
When Oprah joined Twitter bloggers made up a shocking estimate that Twitter is turning into junk because of that and so on…
Same thing with Facebook’s new layout. Immediately when I saw the new layout I knew that it’s gonna be good for FB and its users ( http://www.tech...loser-together/ )
, while other journalists from other blogs were bashing Zuckerberg like they were writing for a gossip mag.
I totally agree . I think many bloggers should think furhter ahead and deeper before making extreme statements just for getting clicks! I thought the blogosphere was better than the print press, but I guess I was wrong. Good job on it TC, you guys are one of the few honest guys out there.
TechCrunch hypes Seesmic and Friendfeed too much.
As they say, you live by the sword, you die by the sword. Twitter, Facebook, etc, would have never been in their positions had it not been for the same hype cycle that you mention. What you suggest is like having nuclear fission without all the nasty byproducts. Too bad for them. If they had a real business that was built upon a revenue model, instead of grow fast now, and maybe make money later, maybe it wouldn’t be like this.
Brilliant writing!
What would Jerry Yang have to say about TC????
Gartner’s hype cycle is about technology, not companies.
For technology it makes a lot sense. When a new technology comes out people have to figure out what it can and can’t do, resulting in those waves of inflated expectations, disappointment and eventually productivity.
Facebook and Twitter are not technologies. They are a bunch of fairly generic features, packaged with marketing and design. There is a backlash against them because they seem unable to sufficiently monetize their growing user bases.
Perhaps Facebook and Twitter can transform and reach a plateau of productivity. Unlike most tangible technology though there is no guarantee there is one for them out there.
Agreed. I don’t recall seeing a Gartner hype cycle about a specific company. It’s used to measure the trend of technology adoption.
Solid, thoughtful post, Sarah.
I’ve been an industry analyst for IDC for 20 years, so I’ve watched the hype cycle play out over and over.
The hype cycle is at least somewhat predictable. It has dashed a bunch of dreams on the rocks of reality and cost a lot of money. It is supremely frustrating.
But, I think that the hype cycle is necessary.
Lining up new business with new technology and new markets is an imprecise, risky process. I’d argue that the process is largely chaotic. It is at least uncertain.
It is almost impossible for anyone, no matter how smart, insightful or lucky to get everything right the first or second time around. It takes a lot of experimenting — trial and error.
On the front of the hype cycle almost all efforts fail until some smart or lucky group learns enough from the earlier efforts/failures to get it right, at least partially. Then others learn from that success and move forward. Then good things happen until a dominant design emerges or business/technology/markets change. Then the cycle starts again.
It’s a timeless process and apparently part of the human condition. I think that only way to get around the turmoil of trial and error and the resulting hype cycle is to see into the future. So far, we can’t really do that.
–Dave
Techcrunch profits from this all. I guess you know that if another dot.com bubble bursts you will also be responsible for billions of people losing billions of dollars around the World: their pensions/savings money just because some people thought it would be great to hype all this not-money-making-stuff?
I believe you DO get direct benefits or money from these companies for promotion because the Twitter/Facebook here is just ridicilous
Even Google can’t monetize a lot of their projects and now we should all support some guys trying to make a buck out of nothing else than user base with the cost of probable stock exchange crash yet again? No thanks.
There are a lot more GREAT start ups there. If you would really do your job and go hunt from them instead posting articles ( read: commercials in article form sent by companies ) it would be much more beneficial to all of us. Just because they are not “hot” at the moment doesn’t mean that they are not important.
Did a survey among Twitter users:
What do you use Twitter for? More Business or more personal?
https://tweetbr...nswers/to/41278
Based on the result of this poll, most of users are using Twitter for business. At the end, users will demand some serious use of Twitter, not just useless ranting.
WOW! 22 answers to a question posted on the internet. Those are some serious statistics right there. Seriously Dexin, wtf? Do you know anything about market research?
It is a sample among my followers. But it already shows you what people think.
selection bias much?
i hope for your sake that it is not as difficult for you to understand why this is statistically insignificant as you are making it sound
NO IT DOESN’T!
If you can’t realize why you are an idiot for drawing such a conclusion, you are even dumber than I originally thought.
ru and anon, You two are trolls.
You two should get a basic textbook on statistics and study the concept of “margin of error” = 1 divided by the square root of the number in the sample.
Going to Amazon and ordering a copy “Moderen Applied Statistics with S-plus” should do you some good. Be warned that the book may work your brains too much.
dexin did it correctly, and stated it precisely. Market research? Do you know you must learn how to do basic math first?
“As bloggers and reporters we’re supposed to bring people reality and truth. No phase of the hype cycle is reality: Not the messiah, not the goat simply because big press has grown weary of the topic.”
OK. So start writing about genuine topics instead of bs on YouTube, Facebook, MySpace, Twitter etc. The sad fact is, you and all of the other tech bloggers are LAZY. You write about the big names and spin spin spin to make sure your words get read. Instead of writing about the “hype cycle”, which calls into question your entire profession, and is really just more bs, why don’t you actually cover the industry you set out to using professional journalism standards. At the end of the day, anything you write about companies like Twitter is pure speculation. If they company in question doesn’t know what they are doing, and a company like Twitter truly doesn’t, how can you pretend to? You are just full of hot air.
“The famous example was Cuil—a company lauded in the morning as a “Google Killer” and trashed before our first cups of coffee got cold.”
That’s some out of control spinning of the facts. Maybe you should get a job at Fox News? The truth is that mainstream media were the only ones that ever ‘hyped’ Cuil. The tech writers for the most part dismissed it from the very start.
Mark Carras said…
Maybe you should get a job at Fox News?
Mark, Fox News tells the truth, not spinning, while other networks are very good at spinning. What’s wrong with telling the truth?
I am sure that you will like the O’Reilly show or Glen Becks. They tell the truth and you decide.
HA! Funny.
-hype sells.
-a little hype can go a long way.
-hype works.
-dont blame the hype, blame the hyper.
MarketerLocator.com – sell others
The article has a certain irony to it
Great post, Sarah. This is the type of post that keeps me coming back to TC – knowing the industry from the inside but stepping outside for a big-picture analysis.
As for TC being part of the problem you’re calling out, yes but
1) you just started writing here (welcome)
2) since when does that disqualify you for a great idea?
Well done. Now let’s see if anyone listens!
My reaction when I hear too much hype about any company now is to cringe…I know something bad will happen to kill the buzz.
But following what you advocate in this blog post would mean shutting down TechCrunch.
Twitter = Eminem
You have to much success (Oprah vs. Top 40 radio stations) and you are out.
Twitter you are official not a gansta anymore.
FLV converter for Mac
do you want to convert flv for mac?
Uh, yeah. If TC cared about decoupling itself from the hype circle would you all break embargos to get the first crack at profiting from the hype?
We’ll stop when TechCrunch stops. Try searching for “is king” or “is dead” in the archives.
Sarah Lacy calling for an end to the “hype cycle” is like a crack fiend supporting the war on drugs.
Let’s remember who Lacy is. She wrote the “Valley Boys” piece in BusinessWeek that puffed up Digg, promoting the ridiculous valuations that had been given to it by its own investors.
She wrote a book called “Once You’re Lucky, Twice You’re Good,” that is billed as “The captivating story of the mavericks who emerged from the dotcom rubble to found the multibillion-dollar companies taking the Web into the twenty-first century”. Only problem: of all the companies she promotes in the book, which include Facebook, YouTube, Slide and Digg, all but a couple haven’t made a single cent of profit and only a couple have achieved liquidity.
She has hyped Cuil, writing “I trust my sources on this one” despite the fact that she called search results “sup-par.”
She has hyped Tesla, which, unless you believe in fairly tales, looks a lot like DeLorean 2.0.
Need I say more? If Lacy really wants to stop the hype circle, she needs to do her part: stop writing.
Give her some grace Charlie. No one’s perfect; we all have lapses in judgment and are susceptible hypocrisy from time to time. She speaks the truth here and that is a good thing regardless if you like her or not.
If I told you to keep buying Lehman Brothers stock until it went bankrupt, would I be guilty of a “lapse in judgment” too Kevin?
Sarah Lacy has consistently and systematically hyped companies of questionable substance. She deserves no presumption of credibility.
Her hype-mongering is publicly documented — from her articles to her books to her Tech Ticker videos. Maybe you should take a look.
The only thing that’s changed is everybody now knows the emperor has no clothes and people like Sarah Lacy are trying to pretend like they are doing the disrobing.
Charlie Spliff said…
If Lacy really wants to stop the hype circle, she needs to do her part: stop writing.
Instead of suggesting Sarah to stop writing Charlie, she could just continue writing about technology companies in the Valley that invent/develop real technologies with changes our lives without us (consumers) being aware of those revolutionary new technologies let alone who are behind them. So, I reckon that Sarah will be able to write about those companies that don’t involve in web-xxx hypes. One such company that she could visit their office in the Valley for an interview is Lightwire Inc.
Researchers at Lightwire Inc invent new technologies that counts (ie, the market wants) and not me-too social networkings which are no technology at all, although Sarah is being mesmerized with those web-xxx social networkings companies.
I meant to say:
real technologies which change our lives
instead of:
real technologies with changes our lives
JWTF was your article really about? You lost me about half way. None he less I think I get it. Do not pay attention to the naysayers.
What you should really ask though is this. Out of Facebook or Twitter who is really worth more in the long run?
Thus FB should sell for 3 bill or less and walk as it really aint worth Jack if a new hype hits the web in the social world.
The flies will leave for the fresh shiit. FB is really all hype though. MS and Steve would be silly to pay more than 3 bill for it. TWITTER baby.
Points well taken. Although, I think this is less about the hype and attention around Twitter and more about the evolution of tech on the web, how early adopter communities not only drive attention but also push the envelope with change. I’m sure Twitter will do quite well and be around for a while, but it can’t be everything for everyone. Neither is Tumblr, but it feels a little closer. A next evolution and progressive movement which – strictly from a communication standpoint – is refreshing.
1. In SOME sectors of the technology industry, the problem is much more muted. E.g., my blog DBMS2 is pretty much the go-to source for certain areas of database management and related technologies. While there’s a ton of start-up activity, expectation, and disappointment in those areas, I don’t think we’re NEARLY as subject to the hype cycle as the “sexier” technology sectors are right now. Rather, we write about real technology that at least purports to solve known problems.
2. The press has been just as guilty as the bloggers. Famously, an area of technology featured on the Business Week cover is almost certainly being much overhyped. Conversely, my most famously successful buy recommendation ever as a stock analyst was set directly against a negative Business Week cover story. (Lotus in 1985.)
CAM
The blogs is the army plus da navy, NOT Jay-Z!
Great article.
I respectfully disagree on few items. First, I don’t think that bloggers create hype or have much influence over a company. Typically a great success story is discovered just like an axiom in nature. Two plus two was always four, but it took millenniums for that truth to be discovered. Similarly, great entrepreneurs who are on their mission to change the world for the better can do it without the need of the media hype.
If you look at the history of successful, visionary companies, none of them were created because of the amazing PR or some hype. The opposite is true in fact. Most companies that enjoyed wide media coverage have experienced serious falls shortly after. This is similar to love in some ways. Falling in love is always temporary. It’s a result of being enchanted and mesmerized. Once the outter layers of the person are revealed, the enchantment wears off and the work on true love begins. True love can only be experienced by few people as it entails extraordinary hard work, commitment, surrender and wisdom. Similarly, a truly successful company requires core values that will lead it through many ups and downs to the ultimate goal. So, the founders who believe in themselves and their core values do not need any hype to be successful. The hype will find them.
It’s funny to hear about how extreme the superiority complex can get among the bloggers. It almost sounds as if Oprah or the media decides on who will be successful.
Do not confuse reporting journalism with creation. Also PR does not make companies, they simply try to shove things we don’t want down our throats. Apple commercials did not make iPhone popular. It was the product and word of mouth.
We all want to feel important I’m sure, but to take credit for someone’s hard work and to think that writing a paragraph about what they’re doing will ultimately make them or break them is, well insane.
By my count, TechCrunch has published no fewer than 74 – yes SEVENTY FOUR articles mentioning Twitter in the last 12 days alone. Contributing to the Hype Cycle? Maybe just a little.
This is good and all, but let’s look at the first company you mention, Twitter. TC hires a new writer, a writer lauded for his ability to write headlines, and that writer proceeds bang us over the head with news of Twitter, Oprah, Kutcher, CNN, CNNbrk guy, and every other shill associated with last week’s Twitter stunt. Even Mike seemed to be over it, but that was too late and way after this website’s hype had already beaten down the readership. This article would have been nice about a week ago.
I think that Sarah Lacy (or any other technical journalist) would be interested to follow a real technical online journal/magazine/newsletter like Laser Focus World. They do cover real technology news (ie, not hyping), from applications in the domain of Telecommunication, Defense, Medical instrumentation & Devices, Scientific, IT (ie, embedded systems & opto-electronic devise’s related software) , Industrial, Space Explorations & Applications, Consumer Applications, and more. It is much more entertaining for reporters and its readership to report on cutting-edge new technologies rather than dedicating time to interview me-too businesses which are exaggerated/fake/wannabe/hyper-inflated/want-to-take-over-the-world/want-to-be-next-Bill-Gates/looking-only-to-be-acquired-by-someone-and-not-to-generate-profit ones.
Kudo’s to the entrepreneurs out there who aspire to be successful & starting a business (whatever type domain they may be in), I support that since I am a capitalist but I have issues with Sarah’s reporting style in promoting the hypes that she now questions.
Ok, I guess I’m going to piss off a lot of people stating this, but…
The way I see it, roughly 90% of the companies introduced by TC are what I would have called “Shareware” in the 80s. In those days, people learning to program on a new platform would write free utilities as a hobby and release them, sometimes with source, and sometimes with a nag to donate money. We uploaded apps for C64/PC/Amiga/AtariST to BBSes, online services, USENET, and the early internet. Nobody considered this the launch of a ’startup’.
What used to be little hobbyist hacks in those days have turned into the Y-Combinator hyped startups of the day. Half a dozen Twitter clients, URL shortners, picture uploaders, and email-to-blog gateways, pumped with great fanfare here, stuff that I consider hobbyist material that shouldn’t merit TC coverage, and belongs on TUCOWS/FreshMeat/etc al.
I agree with Falafulu. Too much money is invested in toy hobbist sites, and too much coverage is of these, 99% of which are doomed to failure and aren’t very innovative or interesting. Not enough coverage is done on startups who are generating real innovation, some of which is in software, and a lot in other fields of engineering.
And TC commenting on “hype” as if they are above it, at the meta-level, is downright bizarre. I half expect The Onion to do a parody of this soon.
great comment.
I thought TC was all about hyping stuff up!
It just hit me that Sarah’s article isn’t really an attack on hype, it’s a sly defense of Twitter (and Facebook) and criticism of those who think the bubble may be bursting on Web 2.0.
You see, the problem is, you don’t realize that these companies are not mere passing fads or commodities without business models. No, they truly are the next Google, and the only reason you and others may be critical of them was because of the insanely raised expectations, but you should be more reasonable and realize how great they really are.
I like your thought provoking viewpoint Sarah. However the Hype Cycle is really inevitability when any substantial technology based innovation is introduced to a market. It can’t be completely stopped because it’s existence arises from a fundamental mismatch between the speed of social excitement and the slower pace of engineering progress & market penetration. We explain this in our book about the Hype Cycle.
We believe its effect can be dampened by thoughtful management and mastering it includes learning how to use it to your advantage. It is very important to note that a certain amount of hype can help overcome corporate adoption inertia – so hype is not all bad.
The rise of web based social media is sometimes having an amplifying and sharpening effect on the shape of the curve – I think you are seeing that. This is especially true when the situation is self referential i.e. social media hype about new forms of social media. We probably all have a lot to learn in our use of blogging, twittering and the like – as our societies explore and mature into understanding cultural best practices for these media.
I’m famously NOT a fan of Gartner (nor of analysts in general) but I do acknowledge the sources of my ideas.
it’s the Gartner Hype Cycle.
And as others have pointed out, it is ascribed to technologies not companies.
The more appropriate analogy for companies would be the Eagles’ “new kid in town”, so many start-ups being from California ‘n’ all.
Hype may be an essential part of the innovation cycle as it acts as a rallying cry to the rest of the industry to get behind the subject of the hype. It helps start-ups raise attention and money and so it helps entrepreneurs, VCs and bankers get richer. The media gets good stories to write about and the public gets a warm glow about how much better the future will be.
The interesting question is whether the media should be part of the hype machine and encoruage entrepreneurial activity and innovation, or whether it should take the role of critical analyst and dish out a good dissing now and again to puncture the hype.
I strongly believe Blogger is the hottest thing online! I also believe that Twitter is the second hottest thing online! My rational is that twitter will survive the hype cycle but blogger never needed hype. All blogger needs is love. Just like that song all we need is love. I also believe that friendster and facebook will one day join forces!
This is some good reading material.
Sarah, you’re a great contibutor here, keep it up, and I agree with everything you said here.
People oftne think of themselves to be “too cool” to like something that is “mainstream”.
Sarah,
Thanks so much for the wonderful article. I’m glad you linked to my post about Twitter being ‘done.’
Two quick points:
1) I don’t think you can literally stop the hype cycle. It’s a valuable tool – although I don’t believe it’s very scientific. I’ve tried to create a more scientific analysis for anyone channel: like twitter that looks at the life cycle for a platform. When used in tandem with the Hype Cycle I believe you can really better understand where the value is on any one content generation platform.
2) My provocative headline aside, (Twitter is done. Tumblr is Next.) I don’t think Twitter is going to fall of the face of the web. I do think it will soon (6-9 months) start to see a high attrition rate. I also believe it will soon find value as a breaking news platform for everything from geo-targeted news (@02138Now) or industry, group and interest-based news aggregators.
Thanks again. Have a great day.
TechCrunch is so over
Once again, Sarah Lacy proves why she really should have gone to J-school.
http://www.tech...hool-right-now/