Dissecting Naked – When and what to publish about a failing startup

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Scorpion logging machine will eventually kill us all

The Next Web blog – normally great – has had a slight crisis of confidence and attacked TechCrunch UK’s report on the demise of Naked. Blogger David Petherick says they had all the facts about Naked a month ago but chose not to delve into why the firm had cashflow problems or make “a dramatic, and possibly premature, pronouncement of death” because this would not have been a “helpful” approach.

This is kind’ve an odd post.

They say they had close contact with Naked, which quite clearly went into formal administration in early May. Yet they didn’t report it when they were legally able to do so.

On the one hand I understand their motives. Maybe they wanted to give Naked some breathing space to find new backers? They were clearly close to the company. David Petherick of The Next Web commented on the story: “I have had a personal interest in this project since meeting with Naked at StartupCamp in London in March, and Next Web staff have used the beautiful beta version of Naked, and I personally find it very useful.”

But as anyone knows, you can’t sit on a story forever. Sooner or later it will come out. Besides, if the company is any good, then reporting that it has gone into administration is not going to spook a proper new investor. It may even help find them a new one. And there’s an obligation to inform the reader here.

Interestingly, The Next Web also seems to think that the story’s reference to Bonnier’s divource proceedings freezing his assets and stopping further funding to Naked was “salacious”. Actually I think it’s rather relevant. Bonnier was – by all accounts – the sole backer of the enterprise. If his ability to pump more cash into the company was stopped then we need to know why. Furthermore, the allegation wasn’t made by me – it was made by his co-founder Tom Vandendooren and COO, not some junior employee.

Nor did I “selectively unearth” anything about Bonnier. As anyone who Googles this guy will know, there is a very long list of ventures he’s been involved in. It is a fact he was investigated, and cleared of any involvement, in an insider-dealing scam in the 1990s. It is a fact that in 2004 he was fined £290,000 for abuse of the financial markets, but was later able to return in 2006 as a CEO. It’s up to readers to decide if these facts are relevant to the story or not. It is also a fact that I called him and asked him to comment on the story and to date he has not called me back.

Meanwhile, as is often the case, the comments which flood in on any story are often at least as interesting as the story itself. And this has been the case with TechCrunch’s story on Naked. So let’s take a look at what people are saying – all the below have been extracted from the comments and can be read in full here.

• Was Naked’s application any good?

- Naked looked similar to Pownce, but it’s web-only status stopped it from going further.

- “I took part in some focus group testing of Naked during their alpha phase and all of our group were pretty certain within 10 minutes of using the app that it wouldn’t be a success. It was effectively a very poor implementation of Facebook walls (with group support) mashed with some lifestreaming (which I seem to remember was unimplemented at that stage). It was shocking to see quite how wrong they had got the user experience”

- “My understanding of ‘getting naked’ was that tooth extraction was preferable and certainly less painful.”

- (Gordon Candelin): “Not all the money was spent on premium web companies – I designed the beta site of Naked (which has been rather poorly implemented) and haven’t received a penny, nor am I likely to. While working with the Naked team I felt that were some very practical issues with user interface which unfortunately weren’t being addressed. They would have done better perhaps with a smaller dev team and a full time designer/UI expert to help inform the structure.”

• Were they over-staffed?

- “If it is employees then surely they would get down to the core few who will go with the idea and surely the other stuff can be bootstrapped?!”

- “Spending cash on 12 employees and two excellent but premium-rate web agencies at such an early stage doesn’t make sense to me.”

- “They 1) hired too many staff… 2) they used services from expensive agencies and web studios, and 3) rent an office in London known to be the most expensive place in the world.”

• Why did Naked fail?

- “Not getting enough first round funding. Then falling behind schedule technically…Followed by a lower than expected appetite for further investment”

- “Their CEO overestimated his abilities to acquire funding in time.”