Not All Startups Go To Heaven. Read Why They Die.

The comment that "9 out of 10 startups fail" is Silicon Valley legend. Everybody says it, and as debate on Quora rages, nobody knows whether its true or where the idea originated. Truth is, with practically every business venture, there is risk, short term and long term. Startups carry higher amounts of risk, but also higher potential rewards. It's the antithesis of mutual funds and blue chip stocks. Some fail quietly. Some succeed loudly. Some fail extremely loudly, leaving a burning hole in the ground where somebody's money and dreams used to be. And often, the people behind the carnage dust themselves off and try again. It's tradition.

Expertly chronicling many of the reasons startups perish over the last year has been Steve Duplessie of the Enterprise Strategy Group (better known as ESG). While you may not be familiar with his work, ESG is easily the most respected analyst firm in enterprise infrastructure and software. I've benefitted from working alongside Steve and his team in various roles at companies I've worked for and consulted for, and appreciate the firm's insight. I have especially appreciated Steve's taking the time to illustrate many of the failures he has seen firsthand, to help people learn from those mistakes and try to increase their chances of success.

It's one thing to boost entrepreneurs and investors by highlighting successful companies' history, and another to try and help them avoid failure. Such is this path Steve has taken and I am sharing with you. If you don't have the time to read them all today, bookmark his blog and come back to make sure you do. There are lessons to be learned.

• Fail Factors – Why Startups Die: Revenue versus Valuation
  
• Fail Factors – Why Startups Die – The Zealot
  
• Fail Factors – Why Startups Die: The Israeli Illusion
  
• Fail Factors – Why Big Companies Die: Success is a Birthright
  
• Fail Factors – Why Startups Die: Running Backwards
  
• Fail Factors – Why Startups Die: The Golden CEO
  
• Fail Factors – Why Startups Die: The Money Is In The Problem, Not The Solution
  
• Fail Factors – Why Startups Die: Financing Part 1
  
• Fail Factors – Why Startups Die: Financing Part 2
  
• Fail Factors – Why Startups Die: The Silent Killers
  
• Fail Factors – Why Startups Die: Hiring
  
• Fail Factors – Why Startups Die: My Personal Failure(s)
  
• Fail Factors – Why Startups Die: Launch Now!
  
• Fail Factors – Why Startups Die: Leading Into The Abyss

Since starting my career in Silicon Valley in 1998, as I was wrapping my degrees from UC Berkeley, I have only worked for startups, from 3-4 person companies to one that peaked over 200. I've consulted for large firms and small and advised others that count only the CEO/founder as the employee. But I've seen many of the experiences Steve discusses.

I've been at a company that dramatically reduced its staff because it couldn't raise another round of funding. I've been at a company that was shut down because of differences between its lead investor and management. I've been at a company that struggled because its products didn't match its amazing promise - fed by a zealous CEO with charisma. I've seen great management and poor alike struggle. I've seen companies with products chasing solutions that may only exist in a lab. And I know while I've done many things right, there are always changes I wish I could go back and do over again that could push these companies in a better direction.

I talk a lot about successful companies with great products that I enjoy and use every day. Many of these products and companies are going to go on and have success, be they household names or acquired by household names themselves. Many others will go away for any number of reasons - including the many choices Steve lays out in his intriguing series.

For months, I have had highlighting his series as a "to do" for me to bring to the fore for you. While ESG's focus may be enterprise and not consumer, and while the team is based in Massachusetts, not Silicon Valley, there are lessons to be learned. You might find yourself nodding along as you read his stories, recognizing your colleagues or partners, or even yourself.

Also, despite Steve's initial reticence to jump into this new fangled social media world, he's discoverable on Twitter at @stevedupe. Worth a follow.

Disclosures: During my time at BlueArc from 2001-2009, ESG was was a paid analyst firm to assist the company. ESG also has relationships with Emulex and Ocarina Networks, both of whom are current or past clients of Paladin Advisors Group. (See: LinkedIn or About Page)

New Apple TV Extends Fragmentation, Cupertino Style

For all the noise around fragmentation in the world of Android, one would think the state of affairs on the other side of the technology aisle would be perfectly unified - with one operating system, one user environment, and one experience where all things play nice. But while it's not as often discussed, my plethora of Apple devices is increasingly fragmented. The newest culprit? The brand new Apple TV, which has an incredible form factor, and some surprises in terms of what's simply not there - making me have to remember what media plays on what devices, and what devices are capable of doing what.

Despite my switch to Android on the phone, I still have plenty of Apple products in my house - from my wife and my laptops, our iPads (shared with the twins), a first generation Apple TV and second generation Apple TV and the newest iPod Touch.

After getting the new Apple TV, and attaching an entirely too expensive HDMI cable (not included) from Radio Shack, I set up the device and browsed to available TV shows to rent or buy.

The first search I made was for "Dexter", the Showtime drama I've become addicted to in the last month or so. Having already pulled down seasons one through three on my Mac, I wanted to pull down season four on the Apple TV. No dice. No results found.

Browsing the available TV networks quickly displayed why this was the case. Apple TV only offers selections from Fox, ABC, BBC and Disney. With Fox being the lowest in the alphabet, I thought it was a bug, but it wasn't that I missed Showtime outright, it just flat-out doesn't exist. CNET highlights how only 3 of the top 25 shows are available, but there's just something odd about knowing content is in the iTunes store (like Dexter) but my new Apple TV can't get to it, while the old first gen one (downstairs) can.

The capability gap between different devices from Apple is already clearly felt within iTunes. The iPad has started a cottage industry of high quality application development for the larger screened devices, which is great, but the backwards compatibility is practically invisible. In fact, if you have iPhone and iPad, you might find yourself buying an application twice, on the same account, for each device, with no discount. With the promise of applications being developed for the new Apple TV, you can see the potential for yet another purchase looming on the horizon.

While Android is clearly struggling with the challenge of bringing 2.2 support to all the latest handsets (and making progress), we see Apple TV running a variant of iOS (mixed with the traditional Apple TV OS), different than that of the iPhone/iPod Touch, with iPads still not having iOS 4, and yes, Macs still being Macs. I don't think it's too crazy, for a company focused on the Open Web (courtesy Daring Fireball) to find a way to tap into the Internet in a very real way and unify access to media and applications.

For now, until this is solved, it seems we need to expect the new Apple TV to have a different set of titles from iTunes than its older cousin, and the iPod Touch or iPhone to have a different set of applications than the iPad or Mac OS. This is real fragmentation, and it's a drag.

AOL: You've Got Brizzly! (And They've Got Your AIM)

It's said often that where there is smoke, there is fire. In early July, I tried to read the smoke signals emanating from Brizzly co-founder Chris Wetherell and investor Mike Hirshland on Twitter about a myterious "buyout offer" and "legalese", incorrectly guessing the social media client was going to be joining up with Foursquare. It turns out that my hunch correctly had sniffed out fire, but completely whiffed on the suitor. Instead of a 2010-era nimble startup, Brizzly's acquirer is the 1990s-era AOL, who can now be confirmed is picking up Thing Labs (makers of Brizzly), including the company's well-respected small team, and all company assets, from the Brizzly Web and iPhone client, the Brizzly Guide, the URL shortener, and even its colorful mascot, Phineas T. Brizzly the bear.

The acquisition is said to be at $18 million guaranteed, with potential earnouts to near $30 million. The company's founders, Jason Shellen and Chris Wetherell will be running AOL Instant Messenger and the company's lifestream service - giving the pair high profile roles that could impact millions of users immediately.

It was this acquirer that set off the curious tweets in July, putting the team in an odd position of having to deny they were being sold to Foursquare. What was not said, however, was that no sale was taking place, period - because, indeed, those gears had started to turn at an Old Media company speed.

Follow the Bouncing Ball! (Not to Foursquare, but to AOL)

That Thing Labs would be the target of potential M&A activity is no surprise. Shellen and Wetherell are given a good amount of credit for their work at Google on Reader and Blogger, with Shellen's work dating prior to Google's acquisition of the Ev Williams-co-founded Pyra Labs back in 2003. The team is very sharp, and had created not just "yet another" Twitter client, but one that had deep ties into the social graph across multiple networks, and a lightly heralded, but very cool, collaboration system called Picnics.



Mike Tipped Us M&A Was On, But It Took Months to Bake

It's Picnics that has AOL ready to take Brizzly out for more than a mere lunch.

The combination of a top-notch team and intriguing technology saw Thing Labs enter into potential acquisition talks with multiple partners this summer, some who eventually found the product not to be a perfect fit with their portfolio, and still others, who were rejected by the company's team out of fear they would be part of a soulless "talent buy" who would take Brizzly off the map. Meanwhile, as these distractions emerged, the company retained the opportunity to initiate the raise of a Series B round of funding, following their $600k Series A round completed in late 2009. Other potential acquirers included Yahoo! and Google, both of which Thing Labs was said to have turned down.

Yet the somewhat unlikely partner of AOL, a media giant with a damaged brand, especially in the mind of Silicon Valley and startup entrepreneurs more specifically, has emerged as the victorious buyer, following due diligence not just from their team to see if Thing Labs would be a solid complement to their still-popular with millions of people Instant Messenger client, but also from the Thing Labs developers, who wanted to be sure of the quality of AOL's development team, especially as some of them had experienced less than satisfactory relationships with younger gung-ho teams at large Web services previously in their career.

As has been reported by AOL-watchers like Kara Swisher and Mike Arrington over the last couple years, the company is trying to gain a respectable presence in Silicon Valley, under the leadership of former Googler Tim Armstrong. But with company headquarters in Dulles, Virginia, and much of the leadership in New York, AOL is struggling to attract and retain top talent in the Bay Area. The prospect of being acquired by a Web 1.0 property like AOL initially tugged at Thing Labs' leadership, while recognizing the financial benefits for the company's 7 employees, who for the most part, excluding the cofounders, could be seeing a tax bracket upgrade after this transaction settles. While the deal is officially being reported as $18 million, the contract calls for significant earn-out clauses, which could drive the eventual price up to as much as $30 million, serving to provide Golden Handcuffs to the team's talent and locking them up to the company that once flooded the USPS with floppy disks promising free hours each month of dial-up service and a walled garden.

AOL is obviously on an acquisition spree, rivaling only Google in terms of buzz in the last few months. The Thing Labs acquisition follows news today that the company also picked up TechCrunch itself, bringing the tech blog titan into the content-focused Web pioneer. The company also purchased 5 min yesterday.

Interestingly, with the TechCrunch acquisition, AOL has Crunchbase, and with the Thing Labs acquisition, AOL also has the Brizzly Guide - a more real-time directory, edited by users. The two could be complimentary, separate or one could be retired. It's said the Brizzly Guide will be used for real-time home page news curation.

Additionally, the work with Foursquare turned out not to be completely empty after all. While not part of the M&A transaction, Brizzly announced integration with Foursquare overnight, letting you view checkins alongside updates on Twitter and Facebook in the service.

As a sidenote, this continues the unique career path of Thing Labs' Ben Darnell, who in the space of just a little over a year, has worked at Google Reader, then FriendFeed, then Facebook, then Thing Labs and now, AOL. But this time, he probably made a little bit of money. Ben has recently been known for his contributions and leadership to the Tornado Web server project. AOL might be seen as old tech, but it picked up some serious new media leadership here.

Official word of the deal should break soon.

I Am Your Web site's One True Fan (And I Can Prove It)

Although it's only been a little more than three years since Yahoo! acquired MyBlogLog, the company behind the once-popular visitor tracker for blogs and Web sites, on the Web, it's practically an eternity. It's well known that internal politics and bad management of the acquisition pretty much squeezed the life out of the product and the company's founders quickly scattered to bigger and better things. But the desire to bring visitors and blogs together never left the mind of Eric Marcoullier, who learned from the MyBlogLog flameout, and today, unveiled a new visitor tracking service - with some fun gaming elements, called OneTrueFan. I've been using it for weeks, and as you can imagine, like any other conquest that involves competition and hours of sitting in front of a computer monitor, I'm hooked, and in many cases, I'm "winning"... proving myself to be the One True Fan of a Web site (or at least the one who has clicked through more pages than anybody else).

The idea of OneTrueFan is pretty simple. To participate, you install a browser extension (for Chrome, Firefox or Safari) and a browser bar will track your Web visits. Each time you go to a new domain or subdomain, you get 10 points. For each visit to a subsequent new page, you get an additional point. So, for example, if you visit six different pages, you have 15 total points. Once you reach 20 points on a domain, you are a fan. If you have more points than any other fan, you are the One True Fan.

My OneTrueFan Page With History, Connections, Badges

Being the OneTrueFan (or OTF) of an obscure domain isn't anything to brag about, for sure. But there's no question, in my mind, that popular Web properties that see regular daily visits are going to see serious competition between people who are visiting frequently and sharing content from those pages. Sharing content from One True Fan to Facebook, Twitter, Delicious or other properties is an additional 5 points. Already, in the alpha period, I have seen people battle daily at owning the title of OTF for specific Web sites - and if you want, you can get an e-mail notification if you either take the title from somebody, or lose it yourself. And each time you start a new browser session, the OneTrueFan bar will alert you that a transfer has taken place.

I am now the OneTrueFan of GigaOm!

As with Foursquare and other social gaming services, the immediate benefits of a product like OneTrueFan are not perfectly clear. I don't get any monetary reward for being the OTF of both Twitter and Facebook at the same time (as I have it now), and all sites are equal, so you don't get any more points for being OTF of Google than you do by being OTF of my blog (sorry, I've got that one too). But OTF starts immediately with badges and leaderboards, showing the top visitors to any domain, the history of any user, including sites won and lost, their top friends (by total points), how many sites they are fans of, and how many OTF titles they hold.

Sites I am OTF of, and top Friends' Scores

For people permanently on the Web, like myself or Brad Feld, one can capture multiple site titles a day, and lifetime scores are already well above 20,000. That may be an unfair advantage to those who browse more casually, or use RSS readers to pull content from different sites.

So you might be wondering about privacy? Will OneTrueFan give away your addiction to fantasy football, anime, or pornography? That's up to you. You can hide any particular visit, or block any domain from OneTrueFan, and the bar will no longer track your visits to that site. And if you're worried that OneTrueFan is tracking your Web site history in the first place, well, that's just what it does, so if you don't like it, don't use it.

One good thing about OneTrueFan, in addition to the amusing gameplay, and learning what other people visit the same sites you do, is that you don't need yet another login and you don't have to recreate your social graph. OTF taps into your Twitter account and connects you automatically to your friends on that network - saving you a tedious chore of finding people as much as you are finding new content.

I have been using the site for several weeks, and admit I check in on the stats to see how people are doing and what they are sharing and viewing. They unveiled officially today at TC Disrupt, predictably being compared to Foursquare. But this is one location based app that you can use without ever having to leave your house.

You can find OneTrueFan at http://www.onetruefan.com.