Lessons from 10 disappointing tech stories of 2009

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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
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.

Popjam
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.

fruugo
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.

be-a-magpie
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
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
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
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
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.

Wigadoo
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?

Kwiqq
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.

  • http://www.socialibrium.com Ray

    Nice post Mike – the “lessons learned” synopsis definitely provides several useful nuggets.

  • AndreaF

    Mike, good article. You’re right, we probably don’t analize enough our failures to learn from them. I think this is typical of the european mentality of wanting to keep your ideas under wrap for as long as possible for fear of them being stolen and because of the stigma attached to failure.
    A general consideration: in my view, many start ups launched in the last 2-4 years have come up with good ideas but not good business models; meaning, they have built very good applications that would have succeeded if bolted on a platform but where doomed from the start as a stand alone solution. As an example, I believe wigadoo fits the bill. In the beginning they tried to target end users directly and this was a mistake. Their idea was cool but you cannot expect me to go and check out yet another travel related site that offers a very specific solution. They should have tried to integrate their technology into existing travel websites and across them.
    Also, Joost seemed a bad idea from the start. Why would anyone download an app when you could watch videos on the web. Related to this I am curious to see what is going to happen to mobile in 2010. Wouldn’t it be better to have web based solutions rather than apps now that browsing on a phone is becoming ok and that netbook are becoming mainstream? But this is another story.

    • magnum

      “good ideas but not good business models” I think Twitter is an exception for that :D

      And a quick review on how’s the decade has been: http://bit.ly/decade-recap-review

    • fedd

      > they have built very good applications that would have succeeded if bolted on a platform but where doomed from the start as a stand alone solution

      why then some VCs say, “your product must be a whole product, not a feature of some other”?

      i.e., who’d fund a feature of some other’s product?

      • AndreaF

        that is my point – these apps should not be funded by VCs; they just need some seed / angel funding and good connections to partner with bigger players. They are not businesses but applications.

  • http://www.techcrunchfail.com/ TechCrunchFail

    Excellent article.

    Unfortunatley, you have been put in the techcrunch fail blog Mike Butcher too.

    http://www.techcrunchfail.com/2009/12/22/spelling-fail-mike-butcher/

    Haven’t had time for this blog, but I will be adding more content, I promise you.

    Need to go through the backlog of enteries too.

    • http://twitter.com/mikebutcher Mike Butcher

      I’m honoured. I’ll clean up the typos. But at least I put my name to my posts.

      • http://www.techcrunchfail.com/ TechCrunchFail

        These formalities will come later.

        You seem annoyed by my comment. My posts are just an attempt to regulate; “get Techcrunch on its best behaviour!” Not an attempt to make anyone feel bad. Everyone makes mistakes, you’ll probably find spelling mistakes in my decayed blog!

        Btw, just had a look at techhub. +1

      • TCCritic

        Glad to see someone took my idea and turn it into a blog.

        @TechCrunchFail just run a Google (Bing!) search for “TCCritic” to find a few more fails.

    • tom

      @TechCrunchFail
      you are the greatest content contributor ever. thank you!

    • http://phreadz.com Kosso

      ‘enteries’?

      did you mean ‘entries’?

  • http://thewaterrat.com/2009/12/22/lessons-from-10-disappointing-tech-stories-of-2009/ Lessons from 10 disappointing tech stories of 2009 « TheWaterRat

    […] Continue reading here Posted in Business and Technology | Leave a Comment » […]

  • dude

    Where’s CrunchPad?

  • Jan Schulz-Hofen

    Come on, Mike, we all know that compete scores aren’t everything :) Magpie has had a great year 2009, we’ve become profitable in Spring and we had a number of impressive brands using our services, including Heineken, Bacardi, Deutsche Post, ARD (the first German television channel), Tetrapak, The Sun UK, etc.

    Besides that, we are actually one of the few European startups which have been copied by companies in U.S. :)

    Cheers,

    Jan
    CEO Magpie & Friends Ltd.

  • leox

    the “lesson learned” section is too simple.

    • http://twitter.com/mikebutcher Mike Butcher

      You want an essay or do you want to read a blog post and get on with your life?

      • http://yiannopoulos.net/ Milo Yiannopoulos

        +1

      • Jof

        +1

        Hahahaha! Genius comeback!

  • Greg S.

    Nice analysis, though I do no agree on your “lesson learned” for Joost. Spotify has proven that P2P software may in some very special circumstances beat the web browser, and Joost may have been one of those.

    • http://twitter.com/mikebutcher Mike Butcher

      Fair comment, although in Flash lay the demise of “P2P TV”. Music streaming has not had an equivalent as such – and even then Spotify spent to years laying deals before it even launched. The experiences of the translation of music and video to the Web are quite different in implementation, and different again in user adoption. Yes, Spotify may have used Flash, but I think the iPhone+Spotify may be a seen, after a while, as a perfect storm.

  • http://www.holesinthenet.co.il/archives/7146 ה-Wave של 2009 ועוד חמישה דברים | חורים ברשת

    […] 10 סיפורי הטכנולוגיה המבאסים של השנה. החברות הכושלות, הטעויות המחפירות. […]

  • wulfcry

    Nice article , So where do I sign up to get my pitch going up for an european startup.

  • http://www.moviestorm.co.uk Jeff Zie

    re. Moviestorm:

    Mike,

    News of our demise has been greatly exaggerated… (Though to be fair, we’ve not done any press-releases – including my own appointment – as we’ve actually had our heads down.)

    The whole team (including our investors) have actually been pulling together to effectively re-launch the product and business-model over 2009. The first iteration of this completed in early December.

    As we all know, Compete’s data lags by a month (and the methodology’s not exact), so let’s see what the numbers show for December. We are already seeing a huge increase in traffic and activity… and from the US, too :-p

    But I believe that the lesson you mention was learnt in 2008, and re-aligned in spring 2009 – the board, management team and staff ARE (and have been) on board with the project…

    An overview of where we’re going can be seen at:
    http://www.moviestorm.co.uk/community/index.php?page=videos&section=view&vid_id=102940

    Just promise you’ll ping me, or anyone from the team, (or our investors) before making any assumptions about our premature demise next time, OK?

    Jeff Zie
    CEO
    Moviestorm

    • http://be-a-magpie.com Jan Schulz-Hofen

      +1

      I would have appreciated a line or two from you beforehand, Mike.

    • Sean

      Moviestorm: Don’t be annoyed with Mike for his post about you guys.

      There really is no such thing as bad press. I’d never heard about you guys and now just spent the last 20 mins touring your site – bloody brilliant!

      • http://www.moviestorm.co.uk Jeff Zie

        Thanks for the positive feedback, Sean.

        With finite time and resource in 2009, we thought we’d focus on the product and proposition over PR, and position in 2010.

        Whilst negative feedback like the article is often useful, I find that an article like this *can* adversely affect our reputation amongst the investment community (who really don’t have time to dig deeper).

        Which is pretty deadly these days, especially for smaller, low-profile start-ups…

    • http://twitter.com/mikebutcher Mike Butcher

      For the record I did not say demise, I said, “disappointing”. It’s also taken a post to flush you guys out so I’m glad to hear you are back on track. Look forward to catching up in the new year.

      • http://www.moviestorm.co.uk Jeff Zie

        Mike – you’d be surprised how quickly ‘disappointing’ gets read as ‘failed’ to a lot of people… and how much influence your pieces can have.

        Glad we cleared things up – I’d be more than happy to talk you through what we’re up to in the New Year.

  • http://www.techcrunchfail.com/ TechCrunchFail

    Apologies Mike, but that’s two strikes according to the above comments. :)

    http://www.techcrunchfail.com/2009/12/22/mike-butcher-two-fails-in-one-post-no-really/

    • devi

      Actually here techcrunchfail is failed to represent the right idea.

      Let me strike that Mike expressed those start ups are disappointing and not a failure.They should consider in optimistic way because indirectly mike says they have potential.They should have inspiring attitutes to be succeded.

      and another thing is, for emotions like disappointing,inspiration,creative,jealous,and so on dont need Solid Facts.

      I think i expressed right.if not correct pls

  • devi

    The lesson i learnt after reading this post will be failures are essential for hyped start ups.

  • Research

    I just checked the PopJam and I really loved it. Come on guys take the advantage of Facebook, Twitter and the rest!

  • Kbaby

    Mike I LOVE your article. But you need to proof-read and learn to be a better writer. I don’t mean to be a douche, I’m never bothered by grammer, unless it’s so bad I catch myself double-checking my reading. Even small mistakes in articles take away from a blog’s reputation of having accurate information. Your wording and expressions are a bit strange at times. Sometimes not so bad and other times just worded so oddly I find myself re-reading it several times, not because it’s me, but because it breaks the flow and order of information.

    example: “don’t take years building something with an awesome scalable back end (as Fruugo bragged) when you don’t even launch.” => should be => “don’t take years building something with an awesome scalable back end (as Fruugo bragged) before you’ve even launched.”

    example: “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.” => should be => “It was a potential startup that ended up serving clients, which was never scalable, and got you into a whole other business you probably weren’t ready for.” (past tense) /or/ “It’s a potential startup that ends up serving clients, which is never scalable, and gets you into a whole other business that you’re probably not ready for.” (present tense)

    • AndreaF

      “Grammar”, not “Grammer”

      • http://yiannopoulos.net/ Milo Yiannopoulos

        +10

      • http://twitter.com/mikebutcher Mike Butcher

        I think this sums up my feelings on the matter:

        Braddock: Winston, you are drunk, and what’s more, you are disgustingly drunk.
        Winston Churchill: Bessie, my dear, you are ugly, and what’s more, you are disgustingly ugly. But tomorrow I shall be sober and you will still be disgustingly ugly.

      • Kbaby

        Epic fail for me. *shoots self*

  • http://wind333.wordpress.com/2009/12/23/my-daily-readings-12232009/ My daily readings 12/23/2009 « Strange Kite

    […] Lessons from 10 disappointing tech stories of 2009 […]

  • http://www.techfruit.com Tim | TechFruit

    Ummmm… Fruugo does have an English version
    http://www.fruugo.com/fi/en/eur/

    • http://twitter.com/mikebutcher Mike Butcher

      My apologies – I will update the post.

  • Jabba The Hut

    Is this the Tech equivalent of the ‘actors who passed away this year’ at the Oscars/Baftas. Blueeegkkh!

  • http://www.macgasm.net/2009/12/23/dear-bbc-we-dont-want-your-set-top-box-we-want-your-content-where-we-want-it-not-where-you-want-it/ Dear BBC: We don’t want your set top box. We want your content where we want it, not where you want it. | Macgasm

    […] Techcrunch posted an article today about some missteps made by startups this year, and how they can be avoided in the future. It seems like the Joomla misstep can be directly applied to these set top boxes. Mike Butcher writes, “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”. […]

  • http://dismalsci.wordpress.com/2009/12/23/links-for-2009-12-23/ links for 2009-12-23 « that dismal science

    […] Lessons from 10 disappointing tech stories of 2009 (tags: startup startups 2009 tech investment company) […]

  • http://thebln.com/blog/ Mark Littlewood

    Could you please run a compilation of the 10 maddest, most fuckwitted comments, or even commentators, on Techcrunch UK in 2009?

    I don’t always get to read everything so I am sure I have missed some gems. Taking you to task for your poor grammer (grandma?) must be up there.

    Keep up the good work and Happy Christmas.

  • http://netzwertig.com/2009/12/24/linkwertig-google-mybloglog-transformers-identitaet/ Linkwertig: Google, MyBlogLog, Transformers, Identität » netzwertig.com

    […] » Lessons from 10 disappointing tech stories of 2009 […]

  • Steve

    You forget to mention whisher, who went through a sale and an embezzlement lawsuit against its CEO and founder:

    http://gigaom.com/2009/06/24/the-strange-tale-of-wi-fi-startup-whisher/

    Seems they were based in Barcelona, so I guess it counts as a EU failure. Lesson learned? Don’t trust your CEO with all the money, always keep a division of powers in the company, however small it is.

  • http://muzaki.net/2009/daily-digest-for-december-24th9251166.html Daily Digest for December 24th | Reading Muzaki

    […] Lessons from 10 disappointing tech stories of 2009 […]

  • http://innercityblocks.com Tyrell Cowam

    Will Try to avoid such type of mistakes with my website.

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