Lessons from 10 disappointing tech stories of 2009

So it’s the end of 2009 and an appropiate time to take stock. We’re not going to bore you with a long analysis of the year. Suffice it to say that funding for startup tech companies remains tight. And when VCs are running out of LPs to go to, you really know it is. The VC model is still finding its feet in a market where exits are still not that clear. For many companies 2009 was a nightmare – especially the first half. But anecdotal evidence I’ve been picking up suggests that confidence in the European tech scene re-started tentatively after the summer. Hoepfully, conversations that have been going on for the last few months will see the light of day in new announcements, launches and, I daresay, one or two exits in the new year.

The European scene remains disparate and spread out. The view that it should somehow magic together it’s own version of Silicon Valley into existance is highly misplaced. As I continue to argue, Europe is a network of ‘tech hubs’ (something I hope to help with in some small way with my personal involvement in the TechHub project). But initiatives like the recent SeedSummit are enlivening the startup scene once more, along with Europe’s lively event scene.

But before we hit the new year running, let’s look at a handful of companies that aimed for the moon only hit the next field in 2009. One of the things we don’t do in Europe enough is mull over what hasn’t worked. We need to get very much more real about these kinds of things if anyone is to learn anything. So here is a stab at just that.

Here are 10 disppointing tech stories from 2009 and what we may be able to learn from the problems. Some of them are ongoing, and not failures as such at all – just disappointing. Some were indeed, out-right deadpooled companies. In no particular order:

Wubud was a startup announced by Segala’s Paul Walsh, informally at TechCrunch 50 last year. It has yet to appear, although I’m told by Paul that it remains a live project. In which case, Wubud still is a “social network for mobile people”. Now, this seemed like a damned good idea in 2008. Hell, it even had the making of a distribution model as early as April. It also had £150,000 seed funding. But although it was expected to appear as late as September this year, in 2009, with startups like Foursquare, Gowalla, Rummble and more motoring in that game – and even, potentially, Facebook – it is going to be very hard to see what Wubud can do to gain traction. But that hasn’t stopped it from blogging it’s logo designs, offering a Macbook Air to twitter followers and various other methods of tub-thumping. Ok, so it is perhaps even unfair to include this in this list. I saw an early version of the app running on a Nokia handset (some time ago btw), and it has yet to launch so it is not technically a disappointment. However, the issue here is that we, among others, are a bit tired of waiting for it to launch. To paraphrase a recent TechCrunch post, nobody cares about secretive stealth startups any more. However, there may be good news on the horizon. Perhaps as a result of me twittering that I was going to write this post, Paul Walsh now says he’ll be blogging about Wubud’s plans shortly. Today even. So in the spirit of the season we wish them nothing but good luck – but we’d also like to see the product actually appear. [Update: A day later there is no sign of that blog post as yet. Update on Jan 2, 2010: An invite only Alpha is now slated for the end of Jan 2010].

Lesson learned: Don’t start beating the PR drum loudly until you can show a product publicly.

With an great name like Popjam, this startup was off to a running start. It also had the populist genius of Alex Tew (the Million Dollar Home age kid) behind it. Billed as a platform for humour, it seemed like it had the potential to become a sort of ‘Twitter for funny’. However, although it had the microblogging site’s ‘follow not friend’ model, it forgot one thing: it didn’t integrate with Twitter. That may not have been the sole reason it is now effectively mothballed, sitting unused on a forgotten server. But it sure didn’t help.

Lesson learned: If you see a sports car like Twitter racing by and can hook your startup’s growth to it, then do it. Fast.

Finnish startup Fruugo was founded in late 2006 to build a massive pan-European social e-commerce service. It only launched in closed beta at the beginning of this year but burnt through about 14.5 million euros to get there. It’s now ‘subsisting’ on a €1 million bridge loan. At one point it had over 100 employees (remember, this was prior to a closed beta launch) and now has 25 to 30 people. Fruugo CEO Juha Usva recently told TechCrunch’s Robin Wauters that “Things are moving to a good direction, and we are looking forward to successful remaining of the year and 2010.” That’s just dandy. But can we just point out: all that money and not even an English version? [Update: Our apologies, there is an English version. Anyone using it?]

Lesson learned: Where do we start? The main one is – and this is for European startups to take to heart – don’t take years building something with an awesome scalable back end (as Fruugo bragged) and then not actually, er, launch. Oh, and go and read up on Lean Startups.

German/UK startup Be-A-Mapgpie will pay you to insert advertisements into your Twitter stream. Advertisers pay on a cost-per-thousand-impression basis, and the ads are promised to be delivered to relevant audiences based on keywords. That means Be-A-Magpie will analyse the content of your Twitter messages to see if there is a match to particular advertisers. Technically not a disappointment of 2009 as it launched in Nov 2008 – however, it contiinues to hang around this year and can’t surely be long for this world. There was a flurry of interest as people logged in only to find their account tweeting out about Magpie. Very annoying. [Update: They say they are doing just fine, see comments below. I still don’t like the spammy model].

Lesson learned: Just because you can game a social network like Twitter doesn’t mean it’s going to be a good idea for your business.

Spinvox said it used software to translate voicemails into text for mobile services. It turned out it also used plenty of humans to do this. Rumoured to be for sale for $150m, if the deal goes through Spinvox will have effectively turned £150m of investors capital into £92m. Now that’s one kind of translation service. I could could go on but you should just read this.

Lesson learned: Be transparent about what your service is capable of and set the correct expectations.

Joost was born in a time when everything thought TV would end up porting wholesale to the Internet. The trouble was, Joost was another download in a sea of downloads. It seems amazing, but the browser – and even HD video playing inside a browser – won the day once more. No-one needed this P2P video platform and few were bothered about the rather dull content. The writing was on the wall over two years ago. Asked if they had used it more than once, an entire Glasshouse audience kept their hands down. And that was at a ‘fireside chat’ with co-founder Niklas Zennström. Joost has been acquired.

Lesson learned: It’s an optimistic person that bets against the Web brower. Is Chrome P2P software? No.

Pickum was a gambling site designed to make gaming ‘social’. It had £2.6m in investment from Virgin USA and First Round Capital but they ran out of money this year. Most of that funding went on the expensive gaming licences, legals and infrastructure to provide real money gaming. Although founder Sean Glass was a savvy entrepreneur, fund-raising at the beginning of this year was a total nightmare. And I guess the concept might have been a tad tricky to impart as well. Other sites like Betfair had a much simpler proposition. And lets not forget the time and effort spent on video programmes and a dedicated web site for the Pikum Girls.

Lesson learned: We shouldn’t be too tough – if they’d raised more funding they might still be here. But the proposition was too complex for a target market just used to slapping down some cash on a horse or a football game. So: Keep It Simple Stupid.

Moviestorm is a “User-generated content package enabling consumers to create their own movies in 15 minutes.” The business model is a free basic tool with revenue derived from subscriptions and sales of content packs providing additional characters, sets, sounds and animations. In the classic phrase it seemed like a good idea at the time. However various management issues, disagreements on strategy, changes of personnel, have not helped it. It’s a shame that the latest news on it is a sponsored blog post. US traffic, which would be a natural fit, is not growing, according to Compete. {Update: They admit in comments below that they went through a rough patch up until Spring this year, but now it’s all good. Ok, fine, let’s see some traction next year then.]

Lessons learned: Everyone has to be on board with the project.

Backed by Last Minute guru Brent Hoberman, Wigadoo helped people pay their fair share for group outings such as events by chipping in to a central purse. But the company ran out of time and money. It was another casualty of the dread crucible of this first part of this year.

Lesson learned: Don’t try to raise money in Europe? Just kidding folks! But Wigadoo needed real scale to get traction. And when it comes to getting lots of scale fast, at least pretending to be a US company can help. Why be proud?

To end on an upbeat note, we should pay tribute to Raj Anand who has saved us the trouble and blogged in detail how Kwiqq started out as a B2B white label social networking platform, but eventually realised it couldn’t continue. Some great quotes: “Our biggest shortcoming was that everyone was our customer, we weren’t targeting a vertical market. Instead we were a bit like the whole world is our target market… we were too focused on delivery and really weren’t focusing on sustainability. As a matter of fact we weren’t working on long term recurring revenue models which actually made sense.” Enough said.

Lesson learned: See Raj’s blog post. But TechCrunch thinks: Kwiqq started out in the wrong place. It was a potential startup that ended up serving clients, which is never scalable and gets you into a whole other business you are probably not ready for.