2008 may or not be the year that the dot-com bubble bursts but it is increasingly apparent it will be the “Year of the Deadpool” – something that should keep TechCrunch (and its Deadpool) busy chronicling the declines of many start-ups that it has enthusiastically covered in the past.
The growing population of the Deadpool will happen because many companies will run out of money, momentum, energy and time. They’ll fail to attract enough users, investors, revenue and suitors to make a go of it. Lots of companies will disappear, people will lose their jobs, and everything will be covered in glorious details on the blogosphere.
For all you eternal optimists, the good news is the Deadpool’s growth will be disappointing but not calamitous. In some respects, it will be a healthy development as weaker companies disappear, providing the survivors will more opportunities to succeed – something Charles Darwin would appreciate.
Look at the video market where Joost, Hulu and dozens of other players are scrambling for a piece of the action. Is there really room for everyone? No. So, what will it take for a few companies to emerge as viable businesses? Less competition would be a solid start. Check out Mathew Ingram’s post on whether Joost is cooked in light of its CTO’s firing.
It’s also important to remember that starting an online business is easier than ever so new start-ups will continue to emerge – a contrast to the last dot-com crash when start-ups and venture capital disappeared for a few years. As well, the Internet economy will continue to grow as advertisers take advantage of the Web.
So, let’s not cry about the Deadpool. Instead, realize it’s hopefully just part of a healthy ecosystem.
Technorati Tags: Deadpool, StartUps, Veture Capital
5 Comments
So true Mark. I did some rough estimates and the trend of “deadpooled” companies in 2006 was nothing compared to the one in 2007. This year will be much worse as you say. Well, I suppose it’s the market self readjustment.
It certainly feels like we might be heading for this.
Once again, every now and then a new business model seems to emerge (web 2.0 in this case) but it always comes back to the same fundamental ingredient — customers. If the customers (and revenue) are not there, every other good thing the company builds (brand, users, investors, buzz) will go away in due course. Investors will only stick around long enough to determine if there is traction (revenue) and users will only stick around as long as their is differentiating value (generally funded by revenue). The ugly side of buzz is the negative “press” that will surely appear when the cracks start to appear…
Thanks for the thought-provoking post.
Mark:
I applaud your use of spin. What you describe is basic business and economics in a market based system. There really is no news here…just a quick synopsis of economics 101.
But hey, all the power to you as you create posts from a traditional economics text book…
E Guy: What can I say?
Then again, what’s the Deadpool but a place for companies that failed to become economically viable?
Indeed. Deadpools makes us realize that the web is a living thing. I feel the web has matured considerably since I took interest in it and now you see sites that are becoming house hold name. Facebook, Myspace, Wikipedia and many more. They have indeed made it harder for startups to make then selves noticed. Stealing thunder in some cases and in other just plain squashing them. There might come a point where all the web Viable ideas are taken… but then there might be a whole new wave of thinking.. what I believe will be in RIA and that… will blow us all away.
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[...] Additional Reading: Paris Lemon has similar content complaints (but more sympathy), NewTeeVee writes about the firing of Joost’s CTO, and Mark Evans suggests 2008 may be the year of the “deadpool”. [...]