Bubble stories from the dot com boom: Webvan. Raised $370 million in IPO, expanded to 8 cities, gigantic infrastructure, 2000 employees, not enough customers. Pets.com. IPO to liquidation within 9 months. Hop On. Disposable mobile; dubbed one of the best inventions of year by TIME in 2001. Washington Post, BW wrote enthusiastically about it. Stock soared from 2 cents to $1.50. SF Chron decides to write about it: Todd Wallack, checked out phone and found out it didn’t work well. Went online to check out company with SEC, could not find any financial info on them. No phones on the market. Spoke to tech analysts who were skeptical, said CEO Peter Michaels had stolen their money to buy yachts and corporate charter had been suspended; looked inside phone. Trademark had been scratched off, except for battery, and it said Nokia. He spoke to them, sent them the phone, this was only a $200 Nokia phone disguised to look like a $30 phone. Only produced phones for newsrooms and investors and all the company ever sold was STOCK. How can we avoid that? Todd Wallack from Boston Globe:
Funding from credible VC
Partnership with well known company or
Track record of starting companies.
Tom Abate @ SF Chron: “There is no way not to hype something that’s not new.” If no products, write on group of companies in the same space.
Dan Farber @ CNET: Whenever it is interesting
Trick iis to rite without buying into their messianic vision that this is going to change the world. We are guides for our readers, finding new species, some might not survive, but we are there to observe. We of knowledge instead of “wire service approach.” Back up what you’re writing with links — instead of having all perspectives in one article, they may get around that by linking.
Panelists: Managing editor of largest Scandinavian biz daily
MK: Green Tech Media, analyst
Turo Uskali: Senior research scholar, writing on bubbles.
Question: Pete, how early would you write?
Peter: What we try to do or what we try to find out is the company has to prove itself in any way — real customers, want to see the numbers. As it often is, their loss is bigger than their turnover, and that’s a bad sign. Or, of course, if the company listed somewhere or traded somewhere or has got successful people behind it so you can get ahold of the company more than just a fantastic idea and that is what happened too much in 2000, 2001 — we all got too fired up from the good speakers with the big egos, even in Sweden.
What will be the consequences if they have to have customers and good finances b/f you are willing to write about them?
They don’t have to have good finances, just have to prove themselves in some way — how many people work there, turnover? burn rate? IPO? Usually they don’t talk as well about these things as they do about their vision for the world.
MK: If there’s a published paper — two years ago, paper came out of UCLA desalination technology — peer reviewed, you can cover it at that point. Web 2.0: when they start getting a groundswell of customers. A lot of people didn’t believe in Facebook b/c it was late to the space, but then they started to get a groundswell of users. He gets worried about credentials. Kleiner Perkins is their founder, and they say that like it is all they need to say, but he says that, at least in cleantech, it doesn’t mean anything.
Or a mention in the NYT: it must be true, they covered it. He gets worried about that, or if it’s over-funded. Those are his cardinal rules.
TU: In all societies, we need bubbles. Not necessarily big ones that would cause crisis. What he prefers is, let’s create tiny bubbles. When I went to wine country, learned that the best sparkling wine, you can find that one if you find those quality tiny bubbles. They do not cause any hangovers, he says. Example: they are just working on that in Princeton. Read in the WSJ, they’re hiring “clever minds” to do research on bubbles. The politicians and also the scholars, they have been able to realize that now, there is time to research on this issue — every ten years there’s a bubble…
Evan Hanson, chief editor of Wired.com, she interviewed him: he worked at CNET during the bubble. He said, CNET stock was soaring in 1999, went up, so it was hard to remain completely unbiased in some circumstances. Do you see a problem in being part of the market that you cover.
MK: Yeah. You have to watch yourself. The best thing about being a reporter is that it’s a harmless job. You’re not forcing people to buy Pets.com; you’re writing about it. Vicarious thrills.
PF: Media, especially newspapers, are under “hard pressure” and it’s a market that is undergoing this huge change, so of course it’s difficult to be working. If you want to be outside the market, you are in the market — you boost them if you write about them. On the other hand, you want to write about the new companies.
John Joss: How many people here have written about nanotech? Carbon nanotubes are a health hazard. Electronics industry, Memorista, just announced by HP.
PF: We have written about nanotech, but we haven’t been writing about Memorista, we want to sell papers instead.
MK: I’ll look clean and fresh pressed in my coffin due to the nanotech coating my clothes.
Question from audience: does it matter when we write about new companies? More eyeballs going to websites that cover that vertical space. They start the ball running, at what point does it become an avalanche that we in the traditional media have to pick up on as well? Does it matter if we stay away as traditional media if that company is being covered by blogs.
PF: We need to write about them, but do it properly and be critical.
JJ: Challenge isn’t can you make it popular for the reader, but can you make it clear and relevant for the audience?
MK: That’s a daily assignment for me. When started CNET, got a lot of guff for not having layers of editorial vetting. We made some mistakes but we got it out quicker.
PF: When the media is changing, even tho the traditional media is losing maybe, the trademarks of the newspapers give trust. The trustworthiness will pay off.
Audience question: Rather than reporting on individual companies, what about reporting on a group of companies that would survive together. What do you think about reporting on clusters of companies, not just competitors, but collaborators?
MK: Oh yeah, there’s always that fifth paragraph in there where you have to mention other companies doing something similar…
PF: Good way to write about new areas, so you don’t boost one over the other.
She’s talking about supply chain — groups of companies who are surviving together — a different approach.
Audience question: About story she told about Hop-On
Hannah’s question for Turo: What are the signs of a bubble? Too much money chasing too few ideas, says Turo. Like Web 2.0 one year ago.
PF: We are living in a world where money is moving faster and faster, we will have bigger bubbles.
JJ: How do you get the story to journalists? They have transmit modes, but no receive modes.
