Steve and Jen bring you this daily review of the news
Premium Advertiser

News Blog Sponsors

News Links

BBC World Service
The Guardian
Washington Post
Iraq Order of Battle
NY Times
LA Times
ABC News

Blogs We Like

Daily Kos
Digby's Blog
Operation Yellow Elephant
Iraq Casualty Count
Media Matters
Talking Points
Defense Tech
Intel Dump
Soldiers for the Truth
Margaret Cho
Juan Cole
Just a Bump in the Beltway
Baghdad Burning
Howard Stern
Michael Moore
James Wolcott
Cooking for Engineers
There is No Crisis
Whiskey Bar
Rude Pundit
Crooks and Liars
Amazin' Avenue
DC Media Girl
The Server Logs

Blogger Credits

Powered by Blogger

Archives by
Publication Date
August 2003
September 2003
October 2003
November 2003
December 2003
January 2004
February 2004
March 2004
April 2004
May 2004
June 2004
July 2004
August 2004
September 2004
October 2004
November 2004
December 2004
January 2005
February 2005
March 2005
April 2005
May 2005
June 2005
July 2005
August 2005
September 2005
October 2005
November 2005
December 2005
January 2006
February 2006
March 2006
April 2006
May 2006
June 2006
July 2006
August 2006
September 2006
October 2006
November 2006
December 2006
January 2007
February 2007
Comments Credits
Comments by YACCS
Monday, March 13, 2006

Warning: bullshit alert, bullshit alert

What survived failure

Here comes the Times, proving that business reporters are gullible fools.

Alive and Well in Silicon Alley

Published: March 12, 2006

THEY arrived in crisp button-downs and pleated Dockers, 150 or so, nearly all men in their 20's and 30's, few of whom would probably object to being called a nerd.

The event, the New York Tech Meetup — part technology conference, part Showtime at the Apollo for geeks — was a monthly gathering where entrepreneurs are invited to access their inner Steve Jobs by describing their companies for a discerning and occasionally rowdy audience of technologists and venture capitalists.

As Drew Robertson, a suited executive from an Internet company called CallinSearch, learned the hard way, it can be a tough crowd.

Mr. Robertson took the podium to give a strictly timed five-minute pitch for CallinSearch, a program that allows Web surfers to make phone calls and send instant messages to sites turned up by search engines. He began by asking his tech-savvy listeners simplistic questions about their knowledge of the Web.

"You're going to get booed off before you start," shouted Scott Heiferman, a founder of the social networking company Meetup and the organizer of the Tech Meetup.

Prescient words, it turned out. Mr. Robertson faced a barrage of withering questions and eventually slunk offstage to mocking laughter from the audience.

"I got ambushed," he said afterward. "I didn't know it was a 'Gong Show' thing."

Rambunctious technology gatherings in Manhattan? Venture capitalists on the prowl? Geeks having fun at the expense of suits? What was this, 1998?

In fact, it was last Tuesday, and the bustle around the New York Tech Meetup, which began with just four attendees a little more than a year ago, is but one bit of evidence that reports of the death of Silicon Alley may have been greatly exaggerated.

Though few new-media entrepreneurs would say it loudly for fear of jinxing themselves, Silicon Alley is buzzing again. In recent months a number of Manhattan new-media companies have been involved in heady high-dollar deals that carried a faint but alluring whiff of the good old days. Start-ups are once again popping up like mushrooms in Manhattan, and last May the New York Software Industry Association opened a technology incubator at its headquarters at 55 Broad Street. It now houses 14 new companies.

And while blog publishers like Gawker Media have garnered much of the attention in the last couple of years, the action on the Alley extends far beyond blogs to software companies, e-mail newsletter publishers and online entertainment companies.

At the Tech Meetup, there were presentations from a new search engine company called Transparensee, a company called Loto that translates Web pages between Chinese and English, and Homethinking, a site that ranks real estate brokers based on sales histories.

Jason Calacanis is spouting bullshit again.

10 years later... lessons from the SAR/@NY battle.
10 years later Jason Chervokas of @NY is still complaining that I kicked his ass--I love it!!!

It's a great lesson in publishing. Back in 1996 Jason and Tom had 10 years experience on me in journalism and I was 25 year old nobody. They had a weekly email called @NY and I came out with a magazine called Silicon Alley Reporter. Silicon Alley Reporter became a $12M a year business with 70 people that is still considered the bible of Silicon Alley. @NY was sold, their founders threw in the towel, and the @NY brand was forgotten. SAR gets mentioned in every Silicon Alley story, @NY never gets any credit.

I remember the day I figured out how to kill @NY. I was sitting by the pool in Tribecca and had a print out of their newsletter. They were great journalists, and they loved doing long thought pieces. These guys were a lot better writers than I was (probably still are), but they had no personality and even less hustle. They were academics and they thought that they would beat me just because they had been around longer. Then it hit me, I should don't try and beat them at their game, I should start a new game: daily coverage.

Silicon Alley Daily launched and I bet the farm on it. I hired four real journalists to write it, and I stepped back and let them go to work. People said there wasn't enough news for daily coverage but we forged ahead. We scooped them on nine out of 10 stories--even if we didn't do it with 1,000 word thought pieces. People didn't want 1,000 word pieces, they wanted the news as quickly and frequently as they could get it (email newsletters were in many ways early blogs). By the time @NY's weely came out people had already read the news in Silicon Alley Daily 1-6 days earlier. @NY was so concerned about looking like they were following SAR that they waited a year--a year!!!--to start a daily newsletter. An ego move for sure, and while they held their ground we lapped them--over and over and over

Here is Tom Watson's response

Bulletin: Silicon Alley Still Dead

Don't believe everything you read, and watch out for what section of the paper you read it in. Those are the two thoughts I have for you this morning, as I add my voice to the disapproving chorus of those reacting to the rather silly story in the Style section of the Times. Alive and Well in Silicon Alley purports to document the rise of New York's media technology sector once again - and damnit, the wonderful "style" of those go-go 90s we all miss so damned badly. So cool. But as Jason Chervokas says this morning, "if Silicon Alley's going down that road again, well, I've got a start-up to sell you, online pizza delivery, $100 million valuation. It could happen."

Great line, and it refers to an actual company that (successfully) made the funding rounds in 1996 in New York. Which should tell you something. After the Netscape IPO in 1995, the gold rush enveloped the formerly anti-entrepreneur ruling class of New York. Silicon Alley 1.0 was a gold rush town straight out of HBO's virulent Deadwood - a shoot 'em up frontier village filled with con men, hustlers, snake oil salesmen and all the hookers, hangers-on, and profiteers you could possibly fit into lofts and cube farms from the Hudson to the East River. It was all great fun, I have to admit - oh except for the heartache, the bankruptcies, and the thousands of employees left with stock options that retained as much value as Confederate paper circa 1865. Nor was it much fun for all the late investors, to would-be angels, the amateur money that flooded the town looking for the next eBay, the next Amazon.

Still and all, there was a creative spirit that was eventually welded to the greatest graduate business school of them all - the means streets of a cruel market - and I know it was a fascinating period in my own professional life. Ideas were everywhere, even if countless ne'er-do-well trust fund babies spent other people's money on high-end vodka, cocaine, and Super Bowl ads. [When I found myself featured in a full-color spread - clothed - in Penthouse magazine next to a certain notorious party boy and his dog, and two pages away from an explicit montage of two, er, Vikings of some sort ... well, I knew the jig was up: the for-sale sign went up quickly at good old @NY].

As a board member of NYSIA, I spent a couple of hours at the our old haunt at 55 Broad Street this week and schmoozed with its chief Bruce Bernstein - who has more staying power than any dozen start-ups - and we talked a bit about the buzz in the air. It's not the money really, although there have been a few nice exits, primarily of companies that ran cheap and have been plugging along for years now, some of them before the catastrophe of 9/11. It's more the creativity - lots of ideas, lots of open discussion, some collaboration. And then there's Google and Yahoo - why did they move their big sales units to New York? Easy: it's where big media lives and they want to get the big campaign money. And they probably will: that's business.

Which the Times Styles article clearly was not. Back in the day, Jason and I were first attracted to the business story and to its place in New York's history; as he says:

...first and foremost we took seriously the ideas that New York could be an important hothouse for the invention of new media technology businesses and that the boys in Silicon Valley could learn something from New York's media-centered approach to technology. We also believed that media technology start-ups could have a major financial impact on a city that hadn't had a new home grown industry since movies left in the 1920s.

The kernel of this remained during the bad years, but the explosion of the phony bubble we had predicted accurately - but too early, of course - killed thousands and thousands of jobs. Now we're getting photos of pool tables again, and descriptions of techie wardrobes. Who cares? At 55 Broad, I bumped into John Tepper Marlin, the economist who did some terrific reports on New York's job growth and job decline during and after the bubble. Now out on his own and working on some project, he told me that the job numbers are just starting the creep up again. This is a good thing, real evidence of an important - and still young - sector coming back from the dead in town. The Times didn't bother to report this. In short, I'll agree with Fred Wilson's take:

I don't like the name Silicon Alley either and never did.

Why do we need some wannabe name to describe something that is going on in every major city in our country and increasingly every major city in the world?

Entrepreneurs are building interesting companies using technology and brains and imagination.

That's all there is to it. And if there's a story in that, let's put it where it belongs in the business section or the technology section, not the style section.

There is a business story there, and I'll be paying more attention myself in the coming months. But I have to chuckle. This morning I noticed that Jason Calacanis, our old bete noir from the 90s, is in fighting spirit and spitting at my old partner (and me as well) after Jason's initial blog post. Here's the Calacanis take:

I love the fact that I beat them so bad that Jason still can't get over it. That is what competition is about--getting inside the other guys head to the point at which they take their mind off the game. I *tortured* these guys for five years and ten years later they are still throwing stones.

I think Jason has let L.A. get into his DNA, infecting his viewpoint - it's a very non-Brooklyn sentiment, it seems to me: unkind, inaccurate, and all-hype. You know, post 9/11 in this town and after the Iraq debacle,bragging about torture ain't cool. We like to keep it real around here (let's hope the Times is listening). Hey Jason, time to get out of the cabana and come back to a real town. Where, it seems, there is some interest growth - in business, not in style.
Well, I have a different viewpoint.

It wasn't much fun working in the labor law allergic Sillicon Alley. Seven day weeks, screwing the sales staff, open drug use, it was bound to crash and burn in an ugly fashion.

Ideas? No, bad ideas, wasting other people's money, was the rule.

But there was a nasty side to this, besides the sexism and anti-union sentiment. It was a racial exclusivity which was and may still kill this industry in New York. Too many of these companies hired their friends and in this case, their friends were all white, and some were all white and all Ivy.

New York is 55 percent minority, and any market sector which isn't open to hiring grads from the city's colleges, like NYIT, Pratt, SVA, NYU and Cooper, schools with black and latino techies, is going to face open political hostility, as the ad industy does now. It is politically unacceptable, yet so many who ran the alley and run it today, seem blind to.

If opportunity is not shared, then who has a political stake in it's survival?

But Tom also misses another point.

The professional blogs not only have low overhead, but are profitable to an amazing degree. Nick Denton may have the employment practices of an 19th Century coal mine owner, but he makes money. So does Weblogs. They may not understand why they make money, but they do.

Why don't they understand? They see that cash cones in, and that they get ads, but they don't get it. Blogs can lose money like anything else, if done stupidly. But like bar ownership, it would take serious effort to become unprofitable.

The first thing is that the overhead has moved from meetspace to the internet. What do I mean? A blog's most expensive outlay is the software used to build it . In the old days, everyone had to build their own sites from raw materials. Anyone foolish enough to use Front Page would soon come to regret it.

Blogging software solved two formerly expensive problems: one, CMS (content management systems), because the blog is its own archive, two user interface, since blogging software handles coding and content creation in one shot.

What used to take hours to update now takes minutes, and the actual code of the site doesn't have to be modified daily. When you placed an article in an old website, unless you had access to a very expensive CMS, the code on the page would be changed, because the article would have to be slotted into whatever table or space you had.

Now, anyone can slot articles into a pre designed format. Even art can be added at will without having a designer plop in a shot. The actual writer can go to a database and slot it in to their post.

What this does is lower the cost of production, significantly. It also changes the focus of a website on the backend. In the dotcom days, everyone but writers designed sites to be read. Programmers had a say, designers had a say, UI people had a say, but writers were expected to produce content and little else. Which would be fine, except most content online needs to be read.

What blogs did was lower the cost of content not only in terms of production, but creation. It is easier for someone to post to a blog from a laptop, a PDA or blackberry generated e-mail than it was to use the old CMS which often required a remote network login. Which means that people have a lot more mobility now and that makes blogging a lot easier, which makes content production easier, which means it can go up quicker. That gives blogs a timeliness which couldn't happen during the dotcom era.

The great failings of dotcoms, besides their ridiculously exclusive hiring practices, was that they were all minicorporations, all trying to either cash out or go public and that required support and services which drained the bottom line. They had to respond to investors, the market, clients, and when so few people had serious business experience, the failures were bound to happen.

Blogs are the first wave of profitable, sustainable online businesses. Ebay was a good idea until people realized that there were few checks on reputation or honesty, except for pathetic items like "feedback".

What blogs do and other tools will do, is enhance critical functions while limiting overhead costs. A lot of trouble came when people spent money they didn't have to build mini empires. . Just because you have investors doesn't mean you can spend their money like you won the lottery.

With public blogging tools and low cost commerical alternatives, people can create blogs and grow them slowly or as demand dictates, not try to worry about market placement and other issues.

Silicon Alley just got in the way of the growth of the internet. It is good that it is a shell of itself.

posted by Steve @ 12:08:00 AM

12:08:00 AM

The News Blog home page


Editorial Staff

Add to My AOL

Support The News Blog

Amazon Honor System Click Here to Pay Learn More
News Blog Food Blog
Visit the News Blog Food Blog
The News Blog Shops
Operation Yellow Elephant
Enlist, Young Republicans