The Death Trap

Jason Calacanis may have quit blogging, but he hasn’t quit writing valuable and provocative thoughts. His email yesterday on Google is worth reading. I think someone reblogged it but I am writing this from my blackberry on an early morning train so I can’t be sure

This post is not about Google getting into the content business. Its about another of Jason’s observations in his email

Jason wrote the following:

Why all the focus on death? ——————————

The life of a startup CEO dealing with the rabid but sometime naive blogosphere is one of extremes. You’re killing or you’re killed, you’re the shinny new object or yesterday’s news. You can couple the link-bait based blogosphere with main-stream media journalists who, instead of acting like the voice of reason and "sticking to what got them there," have taken the link-baiting bait. The MSM has had to incorporate the flame warring, rumor mongering and link-baiting ethos in order to keep up in the page-view cold war.

This is either the shot in the arm MSM needs to compete, or they’re chasing the blogosphere Thelma and Louise-style off a cliff. Time will tell I suppose.

Anyway, Facebook has had crushing success while MySpace continues to grow. Apple is hitting the ball out of the park while Microsoft continues to set sales records while fumbling into various markets. If Microsoft and Apple, MySpace and Facebook, and a Coke and Pepsi can’t kill each other why is everyone obsessed with death?

Well, because Microsoft did kill Lotus, Netscape and thousands of other software companies when they decided that the operating system just wasn’t enough.

We as a industry are obsessed with death. And its a trap that clouds your thinking. Facebook did not kill MySpace, YouTube did not kill Hulu, Google did not kill eBay, Pownce did not kill Twitter, and I could go on and on and on.

Web services are like cars or soft drinks. There’s room for many of them to coexist peacefully. You might like to drive a Honda, drink Coke, and use AIM to talk to your friends. I might like to drive a Chevy, drink Pepsi, and use Twitter to talk to my friends.

Yes, like cars and soft drinks, web services compete with each other for customers/users. But there are almost a billion internet users globally these days. And you can build a very nice business serving millions or ideally tens of millions of users.

So I’d like to suggest that we stop focusing on who is going to kill whom and instead think about market share, business model, sustainability, and profitability which are the measures that people in most businesses tend to focus on.

#VC & Technology

Comments (Archived):

  1. johndodds

    Couldn’t you argue that most of those companies killed themselves by failing to adapt to a changing environment and failing to provide the best possible product/service?

    1. fredwilson

      Yes most damage is self inflicted. The company you need to dear most is your own

  2. chartreuse

    I give Jason a hard time (deservedly!) but he had some interesting points in his last email and you picked out one of the best.

  3. scott crawford

    Nothing ensures evolution (and choice) like healthy competition.

    1. Emil Sotirov

      And then, nothing ensures survival like healthy cooperation… ah?And then, why don’t we stop the stupid analogies between the human world (aka culture) and the animal kingdom. Seemingly, red blooded, red meat eating American executives still can’t outgrow watching these Discovery/Nature channel stories about every living being killing off everybody else… and then heading off to the gym preparing for the “survival of the fittest”…

  4. monkchips

    strange (well not so strange) that Jason perpetuates the “death” argument when he mentions Lotus- 200m end users i believe, and just recorded a pretty solid quarter.Netscape begat Firefox therefore arguably also not “dead”The “dead” theme is always an interesting one. Steve Gillmor is a master of calling things dead. Sure Microsoft is dead, you can tell from all those revenues pouring in. :-)Looking at the car industry though, I see companies that are closer to “death” than many tech firms. Other industries tend to have higher costs and lower margins than IT. Room for many to co-exist? A lot of car companies have disappeared.In tech, not so much. Especially in software a company can keep alive, happily serving customers, for an awfully long time. To Ellison and the database commenterati Sybase is dead… but not to its customers.

    1. user239

      I’d be willing to bet that Ford and GM make more money in the next twenty years than Lotus and Firefox.

  5. Julien

    The difference is that car manufacturers and drink manufacturer have been “protected” for long time on their local markets… If the automotive market had been very largely open -as it is for web services- from day one, would we still have a thousand players?The fact is that for many internet businesses, it is rather easy for the customer to switch from a service to another… competitive advantages tend to be a lot more stronger and barriers to entry a lot weaker : which other market have seen a relatively new player outgrow its competitors in less than 5 years like Google did? or like Facebook might be doing? …

    1. fredwilson

      Things like network effects lock in customers a lot more than people realize.

  6. fakedjs

    What about this new service formed by former Google employees called Cuil. Any change at competing?

  7. gregorylent

    and there is karma and grace and luck and fate and destiny and coincidence and accident …. we actually don’t know why things succeed, or why things fail …. if it works, we say i did it, if it doesn’t we say bad timing, market forces ….any consideration of death in any form is fear wearing a different coat … life lives anywaybe of service, intend the best for all in your circle .. the rest is up to forces we can hardly name, let alone measure

    1. scott crawford

      Yes. Thx. We are lifted up on two wings.

  8. Michael Chui

    Reminds me of Guy Kawasaki’s “killer gene”.

  9. leigh

    I agree with his last point (shld focus on market share, business model, sustainability, and profitability) however, i think using un-networked product metaphors and applying them to the Web is off base. While Web companies are known for disintermediating the big monopolies back in the day, many of those same upstarts have become near monopolies now themselves in a market where technology is somewhat of a commodity. Why? Building community is not a commodity. Never has been and never will be. No matter what the GM marketing people try to do, the switching costs for my Chevy just simply aren’t that high. Ebay’s reputation engine, or my network all being connected to me on Twitter/linkedin/Facebook make leaving for a me2 product far more difficult unless there is some sort of new and incremental value (ala friendfeed).

  10. Eben Thurston

    “Killing” another company is a zero sum game. Even if you succeed in killing them, best case scenario all you end up with is what they had. And if a company is susceptible to killing then their model, products, or market must have flaws to some degree, and the killer just inherits the flaws. That story line is good for publisher’s page views, but it’s backward looking and not very useful for identifying opportunities.I’d rather focus on what’s coming next and doesn’t exist now. New products that wouldn’t have been possible before the latest innovations in mobile software and hardware, for example, or services that deliver value to mainstream users who are interested in the service not the technology, are where the big opportunities are hiding. The firms that achieve success in new mobile or in solving real world problems with technology will get a lot of attention and hopefully make a lot of money, but they won’t have killed anything.

  11. loupaglia

    Jason is really making some good points regarding this ‘meme’. Ironic for me personally since I was just twittering this morning that I wish people would stop referring to the next “thing” as the “Google Killer”. It is becoming a redundant (and unrealistic) term for all things “next up and coming”, very similar to “Web 3.0” which is defined completely based on who is using the term.On another point, altogether, it is unfortunate that Jason has shifted his thoughts to email newsletter. I’m sure more people like myself would love to get his thoughts on things but I am not going to add another method to follow things, especially one like newsletters which is untethered to the community. Hopefully, this will not be long-lived.

  12. Aronado

    Absolutely, (Co’s; shld focus on market share, business model, sustainability, and profitability)But, hey guys, that’s a little boring isn’t it? The point is that we are snapping our necks to turn and watch the “accident”, to see “what happened”, to “see the injuries.”People always write about the shocking/negative/disturbing/emotional stuff. Also, sad to say but, psychologically, reading about someones failures makes other people feel like, “hey, maybe it’s ok that I am not doing so great, look at X,Y, or Z, they’re going under.” Or conversely, boost the ego’s even more for the people who are finally doing well.Of course, not everyone thinks this way but, I would argue that many do.Solution: Maybe write more about what startups / Co’s could do better. Often times the slightest comment or suggestion can prove invaluable to a business if/when acted on.I do appreciate what Jason is saying regarding market share, and focusing on your own business metrics instead of focusing on what everyone else is doing.cheersAronado

  13. Todd K

    Differentiation, market expansion, pushing technology limits, these are the more compelling business opporunities. Killing is for when a company becomes ossified, unresponsive and fails to innovate (think CATV, but for the monopoly). Then it almost seems like a duty rather than a competitive imperative send them to the corporate graveyard. The companies in Jason’s note do not fit this profile, however. Most are continuing to innovate and lead; they will control there own destiny, at least for now.

  14. Liz

    I think the constant demand for new content drives the online rush to quick judgment. No one wants to either be scooped or to praise a company that soon goes belly up.There’s a fine line between being an enthusiastic early adopter and being a savvy, “won’t get fooled again” tech entrepreneur and it seems like many bloggers try to be both which means that mistakes will inevitably be made. Most thoughtful judgments require time to try to assess the future development of technology and the progress of adoption which is not an instantaneous, overnight process.In the entertainment business (movies & music), it used to be that the dollars from blockbusters helped to finance less popular work. I agree that a winners/losers mentality that is only interested in finding the next Facebook or Google will miss out on the profitable businesses that have small but devoted followings that sometimes take time to build.Or is this all just considered common wisdom now?

  15. Jim in Colorado

    Taking it in the context of Jason’s email the “Coke vs Pepsi” analogy is not quite right in Mahalo vs Google. Thats more “Coke vs a lemonade stand.” While Mahalo can coexist with google, its certainly a serious risk to their current model and they need to adjust quickly to make themselves different then what google offers in Knol, or just stay ahead or “out of the way of google” much as software firms in the 90s tried to stay out of the way of Microsoft .

  16. stone

    This is a good post but quite a bit self-serving. As CEO of Mahalo, Jason must deflect the arrows pointed at his company which question their viability or reason to exist. With Knol that case just got a lot harder. Jason needs to “spin” a new tune so he can keep morale high and dollars flowing from VC’s. Either side going sour could upset the balance and “kill” his company.

  17. Charlie Crystle

    Microsoft didn’t kill off Lotus, Jason. Lotus killed Lotus and then sold out to IBM, which successfully smothered it.Next, Netscape started in 1994 and sold to AOL for $10 billion by the time the deal closed in 1998. That doesn’t sound like death to me. It does sound like Jason saying something literally untrue (perhaps unintentionally) and then you repeating it without challenging it or correcting it. I think the world has come to accept this view of the history of the software world, and it just isn’t accurate.People need to come to grips with the fact that you can beat Microsoft if you serve your customers better and market better.

  18. Vishy

    The question though is — will VCs invest in companies that aren’t ‘X-killers’? The smart money will no doubt consider ‘Blue Ocean’-type strategies carefully, but investing in ‘X-killer’ companies is a way for VCs (who are often described as too prone to group behavior) to invest in well-understood problem domains.

  19. Dorian Benkoil

    Fred. You in a Chevy. Really? 🙂

  20. Mark Mofield

    I think you make an excellent point here, and I think one need look no further than recent discussions about whether or not FriendFeed was going to “kill” Twitter. Perhaps what we have seen is that they exist for different purposes and, perhaps, make each other better. Perhaps the rivalry of FriendFeed has made Twitter insure they are more stable. Many of the conversations that I have taken part in on FriendFeed have started with someone’s Twitter post. I think we sometimes look only for how one company will eliminate another while failing to discuss how each company or service helps drive improvement and innovation.

  21. BBProductivity

    Here is the reason why we are focusing on death: Everyone is looking for the next killer application. The one application/system/idea that will disrupt how everyone is doing business.I agree that this thinking is not always “right” because if you can gain a small market share in a huge market you don’t need to be the only dominating company. There is room for Oracle, DB2, SQL Server and also MySQL.The challenge is when we don’t see a clear business model and the only thing that counts is market share. Then the ones that have money tend to gain market share and sooner or later the smaller players in the market run out of money.

  22. centernetworks

    Fred – totally agree – it’s why I don’t kill things on CN. How many companies actually talk about death to their competitors? When you meet with your portfolio companies, how many of them want death to their rivals? Very few that I’ve interviewed, been a part of, or been around. The “death” comes from blogs who need to kill things for pageviews. All you have to do is walk around manhattan and see pizza places directly across the street to realize that everyone has their own desired flavor and crust.Does Cuil want to kill Google? Doubt it. Does Twitter want to kill irc/aim/chat? Doubt it. Does Etsy want to kill eBay? Does Google want to kill Microsoft? etc. Sure they want to take share points away but I doubt any of them want death.And I agree with you that there’s plenty of room for more than one player in most verticals and segments.

  23. Erik Sherman

    The “death” syndrome also happens because it makes life easy, and many people like that. You see the same thing in political coverage. Everything is a horse race, and if you can keep on top of who’s out front, you can excuse yourself as being too busy to understand the subtleties. But in business, you eventually find that it won’t be winner take all, and you’ll have to keep working. Reality pushes ego aside, and those who are willing to extend the required effort will be fine. Many won’t.

  24. David B.

    I’ve been in this industry for a long time and it has always been about secrecy and killing — until now. I don’t know what changed but here in Prague, we’re going to Open Coffee meetings and similar meetup places and actually working together. The scene is actually, genuinely collaborative. I don’t know how it happened but I love it. Most startups in town are on friendly terms with each other and we even ask each other for help. One is a potential competitor yet they gave me technical advice on how to scale more efficiently. Again, I don’t know what changed but it’s amazing and I hope it lasts.And now for something completely different: (Duffy, “Mercy”)…

  25. fatbatman

    In the battle for eyeballs splitting the world into black and white, success or failure, provides headlines for the technorati media. It’s exactly the same thing tabloid newspapers do with celebrities.So who’s the tech blog equivalent of the national enquirer? 🙂

  26. Jé Maverick

    “I’d like to suggest that we stop focusing on who is going to kill whom and instead think about market share, business model, sustainability, and profitability which are the measures that people in most businesses tend to focus on.”A – men.

  27. david cushman

    Fred, you’re right. we’re always talking about the death of this or the death of that. I think the evolutionary nature of all things networked means we should focus more on life. I blogged as much one. Got called a hippy for my trouble ;-)http://fasterfuture.blogspo…

  28. stone

    BTW, who told Jason that he has to deal with the blogosphere at all? Is it his childish desire to be popular or famous that causes this proclivity, or is it something else? Jason needs to “put up” or “shut up”. So far he’s a C+ player in an industry that only remembers “A “players. If Mahalo fails he’ll blame it on “distractions” and not on poor vision/execution.

  29. Dan Weinreb

    Sure, Facebook did not kill MySpace, and so on. And Google didn’t kill Alta Vista; Alta Vista’s death was self-inflicted. But the company that explicitly attempts to kill other companies is Microsoft. Netscape may have managed to sell out for a lot of money, but Microsoft’s attempt to “suck the oxygen” out of Netscape’s browser was largely successful; they still have overwhelming market share today for their browser. It’s very hard to compete with Microsoft on their home turf, namely PC applications and operating systems. Intuit, with Quicken, is one of the rare exceptions in a large market. Now that the rules are changing with the Web being a major platform, other companies have more of a chance. But for decades, whenever starting up a new software company, it was necessary to ask how you would prevent Microsoft from squashing you. Usual answer: our target market is too small for them to notice. The big markets were left to Microsoft.

  30. Noah David Simon


  31. joshviney

    So, what is a young technology product professional supposed to say when asked about the competition?My experience is that folks on the Web use so called competing products everyday. Members of Match are members of Y! Personals, Facebook members have Myspace/Linkedin accounts, eBay listers sell on cl, Zappos customers buy shoes from Bluefly, publishers using Atlas use Adsense too, and now Wikipedia authors have Knols.

    1. fredwilson

      How about “the more the merrier”?

  32. etpickett

    I just finished reading Wikinomics, the best book of many I have read of putting everything “in context” in terms of finding myself a born and raised New Yawker in exile, Sleepless in Silicon Valley. Sometimes, with all the changes going on in the economy, and the pathetic lack of national leadership, I feel “lost in a thousand points of light” in a “globalization gap” I deeply care about for others as well. Read World Class: Thriving Locally In The Global Economy, by Rosabeth Moss Kanter, Harvard B-School Professor c. 1995 (still holds up very well). Frankly, the only resource in the blogosphere that has helped me put so many unexpected changes in my life into perspective has been Fred’s tangibly “gracious” posts, way beyond business and career alone. I found him through Howard Lindzon (of Wallstrip fame and I have since learned more), also very thought-provocative, mostly on the business side for me. I sincerely thank both of these gentlemen for their valued points of view and shared knowledge. I have spoken with Howard, and hope to meet both of them someday. It would be a privilege. In Fred’s case, and why I decided to reply to this post specifically, it is because he has an uncanny way of edu-taining posts that “make sense” for me of 1+1=3cubed, so to speak, meaning who else out there “relates” such parks and music and positive insights on “the collaboration economy,” hopefully sustainably? Thank you Fred. As a former VIP colleague I still respect immensely from my high performing community investment and environmental empowerment zone days, through 091101 and into 2005 at the Brooklyn Navy Yard and the greater Williamsburg, Greenpoint, and Bushwick areas calls it, Fred, you have “The Spirit of L’Chaim.” 🙂

    1. fredwilson


  33. etpickett

    Fred, I hope I’m not imposing, but maybe it’s more than a coincidence that on the day I do my first post with my favorite “community capitalist” (multiple entendres noted! 🙂 ), I was provided this:…From parks to music to yes, social networking and venture investment and more, perhaps, just perhaps, no rose colored glasses, rather because it is “green” (multiple entendres noted 🙂 )…”these times, they are a changin.” Per Wikinomics and specific chapters in there about the “physical” world and social networking impacts as well, perhaps “this” is part of your forthcoming New York presentation? Please stay in touch. No hype, on the merits, and you “know” I have been reading your blog for a long, long time before posting, I “know” you are a special voice that needs to be “heard.” I am trying too, a born and raised (and for many “seasons of love,” 091101 too!)…”a New Yawker Sleepless in Silicon Valley.”Thanks for caring, sharing, and helping!Saludos siempre, emilio

  34. scam

    I know that fruit flies love themselves some wine. I have noticed that if there are any around, and you leave a glass of wine out for even a few minutes, they dive right in and drown themselves. I wonder if this is how they die here, too?