San Jose Mercury News – A Cautionary Tale from Business Week

There is a great summary at Business Week of the  remarkable rise and pending fall of Silicon Valley’s newspaper – the San Jose Mercury News.     They note that in many ways the Mercury News saw it all coming, but still failed to position itself to profit from the migration of offline info to online info.  

Although the article does not make this point, to me the failure supports the idea that paradigm shifts do not come from old systems evolving into new ones even when the old systems “get it”, rather they come from new folks thinking out of the old boxes and building the next generation of innovative solutions basically from scratch.  

Obviously new technology rests on the shoulders of old technology, but it seems reasonable to assume that the next big things are not going to come from the previous big things, they are going to spring up from the harsh, quirky, and shifting sands of technology and innovation.     I would suggest that IBM might be an exception to this notion but clearly Microsoft, then Yahoo and Google, now YouTube, Myspace and Facebook all fit this model of major changes coming more from scratch than from a slow simmering of existing ideas.     This also helps explain the challenges of Venture Capitalism in finding “the next big thing”, which may right now only be known by the glimmer in a college kid’s eye.

If so, who is next?

9 thoughts on “San Jose Mercury News – A Cautionary Tale from Business Week

  1. I wonder if someone can dredge up a similar article on the Buggywhip Industry as Model Ts started rolling off the assembly line: failure to innovate, struggles over whose proprietary standards will prevail, near term focus on being in the black, dying but will live longer if you quit smoking seems a common theme.

    Innovation? Let us take a look at ‘twitter’ and its emulators. I think the next ‘gleam’ will come from whoever develops a Social Network Contact Manager Program that handles all your Twitter, Pownce, DarnItAll contacts … all just so that bandwith can be used to let the world know that you are watching the sun set over the Pacific Ocean while you are slurping a cup of coffee.

  2. Facebook and the Fickle Finger of Fate …

    From some blog somewhere that I found somehow:
    “…I have a Pownce account and frankly don’t update it often. It competed for my attention with Twitter. Granted the scope of Pownce is more interesting with messages, events, files, music as discrete classes of information. Still, can’t get into it. I don’t see a lot of buzz around Pownce or it being used for spreading the word quickly. Could be wrong, of course. …”

    This person seems to acknowledge that Pownce is the more interesting platform, more technologically advanced and more useful but that Twitter despite some noticeable service interruptions is what people use. It seems this nugget represents the real value for venture capitalists: amongst the technoratii teens ‘buzz’ predominates over everything. Does a venture capitalist want to invest in ‘buzz’? Art Linkletter made a great deal of money in Hoola Hoops, but he knew there would be competitors and he knew it was all a flash-in-the-pan fad. Are Pownce and Twitter going to be battling it out for growth and innovation driven ad revenue? Or does the “buzz set” have such fickle devotions that a venture capitalist should set his sights elsewhere entirely. A great deal of money was made in “Pet Rocks” but the guy who invested in “Pet Pebbles” didn’t do so well at all! How is a venture capitalist to know?

    All industry players, from newspapers to buggywhip makers, seem to want to say ‘lets do it my way’ and all wind up with the 5-4 vote to disband at the inevitable ‘its too late to do anything at all meeting’. I wonder if venture capitalists will soon be holding similar meetings after they have invested in the fickle fads of teenyboppers or barhopping vixens who posted their escapades on social networking sites.

    Perhaps the venture capitalists should focus on the less fadish and more substantial? After all, online journalism efforts don’t seem to help line any virtual birdcages. You need real value these days.

  3. All these ‘applications within Facebook’ are really dependent upon Facebook being a market leader (for some reason) and just as Twitter is the leader (perhaps because it was first) but is technologically less capable and less reliable than Pownce, Facebook is the leader … but for how long?

    Just as blogs are falling prey to spam (Captcha, UltraCaptcha and GetLostIfYouAin’tRegistered) so too will social networks and email hybrids. Increased spam will likely be the trigger for defections from the popular leaders such as Facebook/Twitter/Whatever. There are only so many video feeds that one can stand even if they are from a circle of acquaintances.

    Wall Street and Silicon Valley may be valueing these firms a bit optimistically and ignoring the fact that defections can escalate when some more trendy fad comes down the pike.

  4. develops a Social Network Contact Manager Program that handles all your Twitter, Pownce, DarnItAll contacts

    FG I agree this would be great. claims to be this type of application but they are still beta and I have not got my “invitation” yet. I expect to review it soon.

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  6. Wall Street and Silicon Valley may be valueing these firms a bit optimistically and ignoring the fact that defections can escalate when some more trendy fad

    Yes, and the weird thing is that almost everybody down there would agree.

    I remember during bubble ONE I wrote a financial reporter asking why she was not making it clearer to people that the tech valuations were almost certainly inflated. Her answer: of course they are inflated, which is partly why they’ll keep going up. Yes, it was nonsensical.

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  8. Pingback: Patrick Leigh Fermor, Words of Mercury

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