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Startups with No Revenue Model dominate TechCrunch50 Event in San Francisco in 2009

Startups with No Revenue Model dominate TechCrunch50 Event in San Francisco in 2009

By Austin Jones

It feels like it is 1999 again!   The TechCrunch 50 event was held this week (September 14-15) at the San Francisco Design Center.   It promised to be the biggest tech event of the year.   Instead, it was a horrible flop.    The VCs and even the pundits have become jaded and confused about determining what exactly is a good startup and what is a bad one.  At this year’s TechCrunch50 2009, there were few surprises and many disappointments.    The people, this time, have voted with their stomachs and pressure from hecklers rather than with their heads.

First, the event space was horrible.  For $2000 a ticket, you’d expect much better food and drinks at lunch and snacks.   Instead, we got cheap soft drinks and some trail mix to boot.  With the flu bug permeating the space because of the moldy old wooden panels of the dilapidated meeting space (the San Francisco Design Center site of TechCrunch50), perhaps attendees voted out of shear boredom, confusion, and menthol-eucalyptus cough syrup induced physical fatigue.

Let me give you my thoughts about the startups at TechCrunch 50 this year.    The winners and runner ups this year are true DOT bombs waiting to happen.    TechCrunch 50 and their ‘expert’ panel of judges thought these startups were the best:

RedBeacon

Threadsy

AnyClip

CitySourced

Here is my brief analysis of why I think these startups are not the best:

RedBeacon. Reminds me of a Web 1.0 lead generation tool for plumbers and handymen.   A dumb idea because most plumbers, handymen and local home services helpers barely know how to check their email, much less use a service like theirs.   Even still, their site sucks.  It is defocused, and you can virtually type in anything in the search box.   They supposedly have a cool ‘fast search’ algorithm when you type in ‘mas’ for massage, it comes up with “Animal Breeder”.  When you type in ‘att’ for attorney, it comes up with ‘Personal Assistant’.   How retarded is that?     Most people in neighborhoods would rather ask their neighbor for recommendations to find services rather than go on a dumb site like this.   Even if they were to go on a site, who would they rather trust, an advertisement in a local news publication, or on RedBeacon.     I visited RedBeacon’s site toward closing time of voting.

They were desperately trying to give away as many of their fancy, expensive mini-red cupcakes a possible in hopes of getting votes as the top startup.   Clearly, fraud played a huge role in their victory.  Nonetheless, I would be less harsh if I thought that their site had any redeeming technical or actual business value.    As to revenue model?   Is Joe the Plumber actually going to pay them for advertising?   Joe the Plumbers became Joe the Plumbers for a reason – they hate computers and typing.    Dumb idea, Weak Execution, but somehow has emerged as the winner of TechCrunch50.

Threadsy. Actually a decent idea, but no real revenue model.   Discover new people and connect with them in conversations. Why would a VC want to fund this company?   Nobody in their right minds I suppose given how quickly that Twitter is bleeding money, and even if people were to use this site, it would bleed money.   Also, it is likely that more established companies in the Twitter space such as TweetDeck and others will add features of this site.   A bit too late to the party.

AnyClip. It is interesting to find quotes from old movies and embed them into your site. Like YouTube, this site is destined to be a money loser.    In this world, it might be better if a company like Google did something like AnyClip themselves.  The world does not need another billion dollar a year losing startup that tries to make more money for everyone else other than itself.       It got that ever so nerdy, trademarked thumbs up from Robert Scobble, a San Jose State dropout Tech Blogger extraordinaire on the panel of experts.   Robert seems to say nice things about every startup, except for those that really suck.   However, he loved this one and gave him a wine bottle.   I had never seen Robert Scobble in person.   He is a true physical specimen.    A big tummy surrounded by a big glasses rimmed face and short arms and legs.    He truly has a distinctive trademark when he stretches his arms to yawn and gives a broken thumbs up.

CitySourced. This is a highly useful idea.   Take pictures through your iphone of things that are broken in your city through an iPhone app and send them to your city leaders.  Might even be useful for Cupertino.    The problem is this… How often do people want to actually do this?   Not likely often.  Even when they do, the masses are generally lazy and the city council people change every so often.    How do city leaders provide feedback on fixes?     Not likely to be an easy proposition.  Furthermore, for a local government to allocate the necessary budget to actually do anything major, people need to physically show up to city council meetings and talk with their leaders.     In summary, a site with somewhat of a useful, if not generic and boring, purpose, but not something that any VC should want to fund.

Let me take an opportunity to rip on the VCs at the event participating in the ‘Panel of Experts’.   Most of them, including the planted fake VC from Microsoft Don Dodge, were ME TOO VCs.    ps.  was that a Toupe or Real Hair?  None that were truly enlightened or wise for that matter, save a few such as Roeloff Botha from Sequoia Capital, Sean Parker from the Founders Fund.   For entertainment value Yossi Vardi had some interesting quips, but his comments were generally inapplicable to the real issue at hand.      Tim O’Reilly was also visually interesting as he looked like a grandpa who was either stoned, wasted, depressed, or drunk.  His hair was completely out of place and he sat there zoned out most of the time.    He did light-up a bit when hearing about the telepsychiatry startup Breakthough…  Hmmm…

The most insightful people on the ‘Panel of Experts’ were often the quietest and least impressed with the startups.   Reid Hoffman, the CEO of LinkedIn, who looks like he has lost about 50 pounds since I last saw him in October 2008 (but still has another 150 lbs to go) had some interesting things to say.   So did the often deadpan, and stone-faced honesty of Tony Hsieh, who sat there entirely unimpressed but made some strong and direct comments that challenged the value that this year’s panel of dead boring startups were bringing.

I also found a few things strangely interesting at this year’s TechCrunch 50.    First, Ron Conway and the rest of the sheep angels on the first day’s panel such as Yossi Verdi were impressed with the wrong companies.   For example, ToonsTunes. Great marketers those ToonsTunes people..  Gave away useless badges say ‘BackStage Passes’.  For a while, I thought I was cool.  However, later, I discovered that I as a walking doofus who was walking around the halls with an utterly useless self promotion item for a ToonsTunes and I wasn’t going to get to go backstage anywhere.

The ToonTunes concept looks interesting.  What is also interesting is that ToonTunes seems to be started by a bunch of former mortgage brokers/underwriters.  They must be really bored with their day jobs and decided to do something like ToonTunes on the side. While the VCs had a heart attack when the founders mentioned their valuation expectations, I cringed at the wolf pack mentality of the angels who seemed to start salivating for a minute.

The most entertaining aspect of the second day was Chamillionaire, a Grammy winning recording artist and rap star.  Like Obama, Chamillionaire’s father is African Muslim and his mother is a Christian.      I felt kind of old when this guy came on, because I had never heard of him before.   I come from the MCHammer, 2Pac, Biggie Smalls high school/college era.    Nonetheless, this dude, Chamillionaire, unlike Obama, seems to have sold out his true African birth name of Hakeem Seriki for Chamiillionaire.     Good too see that even after 15 years, it is still about the Benjamins baby.      Chamillionaire only black guy I saw at the TechCrunch50 event for sure. He came on as a guest judge.   Listening intently with a sideways hat and a stern-focused look on his face, Cahmillionaire was smart and had some great insights. It slightly squinted when the Stribe founders (who looked like the French version of Borat and his sidekick) called him ‘Bro’.    I thought they were going to go further, but then they didn’t..  What a dumb concept that Stribe was.  Stribe.   Who really wants to put a social network on their corporate page.    How will they ever make money?   The founders of Stribe should have stayed in Paris rather than spend the huge amount of money, time, and expenses to come to this event.   The guy even mentioned that his site was available in French.  Duh?

There were at least two other memorable, and interesting presentations.   The first one was from these dudes who looked like they were from the movie Scarface in a funny named startup called ‘Udorse‘.  Dressed in nice, fancy clothing and from New York, the CEO guy spoke on stage like it was a bar fight. Also, he kept showing pictures of himself surrounded by a bevy of female companions at different parties.  Clearly, this guy has an oversized ego.   I was just about falling asleep, resting downward in my TechCrunch50 chair when he began to speak.      Then, I sat up.     He started yelling at me and the audience.  When an Italian looking tough from New York in fancy clothes starts yelling at you on stage, you listen.   His arms moved about in an animated manner.   I don’t remember much of what he said, because I was too busy hiding behind my laptop screen.   The concept they have is interesting, but destined to flop.  Tony Hsieh was right.   Which sane person would want to make money off their friends’ clothes?    Might be a good site for metro-sexuals and fashion conscious gay singles, but that’s about it…

The other interesting company was Yext.   All I remember about them is that they claimed, right on stage, to already have 20 million in revenue.   Why the heck are they at the event in the first place then?   Trying to raise an extra $50 grand when they have so much revenue?   Seems a bit skeptical for me.    I challenge the Yext owners to make their financials public. Being a private company, they can say anything.    The dumber members on the Panel of Experts started to salivate.    However, at least one guy Paul Graham seemed skeptical.   I share his skepticism.   I can’t imagine that local gyms want to pay $1000 a year on average on hearing their phone ring (e.g., they claim to have 20,000 local customers).    Ridiculous if you ask me.    Sounds like a shady shell game.   Bernie Madoff of local advertising conspiracy theories anyone?

In the DemoPit, there were a number of interesting companies that didn’t get enough limelight.   In the game to get poker chips, there was tremendous fraud and deceit.     Both the winners on the first day secured their limelight in this fashion.   First, the startup YourVersion had 5 guys at their booth, including 3 Santa Clara University student walkers who went around heckling people for Chips.   Would be fine, if I didn’t think that they don’t have a revenue model at all, and are basically trying to build a new site around something that is destined to be a feature on Twitter and other more established twitter apps one day.    That being said, perhaps I shouldn’t single them out.   In general, too many “Me Too real time search, something weird and different” real time search productivity startups filled the entire moldy-smelling-warehouse conference floor.

My biggest beef in the demo pit goes for oDesk.   This company seems really desperate. Though not really a startup, and having raised more that $29million dollars to date from leading investors including Benchmark, the CEO and his staff were hustling for new $150 dollar business at this event.    oDesk somehow managed to con the greedy TechCrunch50 organizers to give them a Demo Pit spot.   I guess that the organizers really wanted as many $3K demo pits sold as possible.

While even Michael Arrington the venerable TechCrunch founder and dark force acknowledged that oDesk was really not a startup and didn’t have anything new, he still gave them their ten minutes on stage.   I imagine with $29 million in funding and plenty of staff, the oDesk team really hustled to get as many chips as possible.    The CEO basically rehashed most, if not, ALL old features on oDesk during his demo and sat their glibly afterward, having had the perverse pleasure of denying a truly deserving real startup launching at TechCrunch50 the opportunity to get their company in front stage.    What A Smuck. The VCs must be getting desperate that they are never going to see a 10X return on their investment, much less a 2X one.

So, who do I think were the top startups of TechCrunch if any?    Here is my list of favorites and why :

Trademarkia.com -   Interesting business with a real revenue model.   New ways for companies to create brands, logos, and slogans by looking at expired names.  Reminds me of the early days of the secondary market for expired domain names.  In addition to free trademark search and trademark registration, the company is creating a secondary market for expired business names, logos and slogans.   In addition, they have an awesome logo search capability that lets you search inside of logos.   This tool should be tremendously valuable for logo designers.    Trademarkia is probably the most under appreciated startups of the event.    The USPTO site sucks, Trademarkia has innovated around this boring space in a unique way.  It has much better search for logos, names and slogans and has a clear revenue model in selling trademarks both new and expired.   In addition, there are countless business partnership opportunities for this company such as domain name sellers such as GoDaddy, with Logo design companies like LogoWorks and 99designs.  A truly interesting and unique startup.    This company is bound to give LegalZoom and others a  run for their money.   They should partner with them as they clearly have a unique and winning product.

Breakthrough.com A well executed startup with a clear and focused business plan.  Has a real revenue model and is the CEO was professional and knowledgeable on stage.   The site basically allows depressed people to connect with psychiatrists through the internet before they meet in person. An interesting idea that I think will really take off. What’s more, health care plans (maybe even one day Obama’s public health care plan) covers this type of medical service. Bradley Horowitz, the Panel of Expert member from sponsor Google looked like a total idiot when the CEO responded to Bradley’s remarks about how it was kind of sad and depressing that people would have to use a site like this one.   The CEO ask Bradley to put himself in the position of someone who was depressed, had been raped, or was suicidal.  Bradley, who made smart-alecky remarks to many other companies and thereby provided some entertainment fodder (including a quip asking Jason Calacanis the pre-screener of the Techcrunch50 what exactly he saw interesting in a previous company he say, thereby putting Jason on the spot and sarcastically implying that Jason had made the wrong choice) but on this one, he seemed stumped.   Incidentally, Jason Calacanis’s personality took on a whole new dimension for me when he as shown in as a trash talking, f word using, basketball bouncer in a erotic, almost X rated independent film clip shown in the AnyClip demo.   For those you interested parties, the movie wis called We Live in Public (2009), a true independent work of art.       Jason apparently is a man of many interests.

CLASEMOVIL. A truly inspiring company that I think has a bright future.    A small team in Mexico developed what seemed to be a well thought out and immersive world in which students in Latin American learn while exploring and playing.    The site can clearly be localized to other languages.   However, CLASEMOVIL was dissed by the VCs and Panel of Experts as having no revenue model.  They might be right, but here is a business that might change the world.    Perhaps CLASSMOVIL should become a 501(3)c nonprofit and raise money from philanthropic funds.

FluidHTML. Seems technically very strong and solves an important need for developers who want to build applications in Flash, but don’t know the tools well and are more comfortable in code than with design applications.  That being said, the best Flash developers are artists and not coders.   Interesting concept none-the-less and has great potential for active usage by developers.

Other than that, the most of the other companies in the Demo Pit and on stage I saw were either more “Me Too real time search, something weird and different” or something with no real revenue model.    Admittedly, I didn’t get a chance to see all the presentations and I didn’t get a chance to visit all the Demo Pit booths, but this is my honest opinion.     Definitely no Mint-like quality startups in this year’s TechCrunch50, whose boastful CEO Aaron Patzer proudly if not cockily reportedly just sold for $170 million on the first day of the event. What A Smuck. Made everyone else jealous and himself look like a nouveau riche Tool.  Heck, no even Yammer, the winner last year.   This was clearly the weakest TechCrunch 50 in terms of startup quality in its brief 3 year history.    That being said, who am I?  Take it with a grain of salt…

By Austin Jones,

Reporter for The Daily Net,

San Francisco/Silicon Valley Tech Beat

 

Tags: Chamillionaire, google, Jason Calacanis, LinkedIn, michael arrington, microsoft, Reid Hoffman, Ron Conway, San Franscisco, startups, techcrunch, techcrunch50, venture capital

Posted by admin on Sep 16th, 2009 and filed under Featured, Local News, National News, People, Regional News, Technology, World News. You can follow any responses to this entry through the RSS 2.0. You can leave a response by filling following comment form or trackback to this entry from your site

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