(Updated)
Fred Wilson doesn’t like Mike Arrington’s deadpool:
“So I have to shake my head at the resurrection of the dead pool, which was made popular last time around by Fucked Company. Do we really need to celebrate when companies fail?”
No, we don’t, and I don’t think TechCrunch does. Let’s be realistic: TechCrunch did not build this boom. Yes, a well-timed review helps a startup gain initial traction, but Mike does not make those companies successful: whether they make it or not, they do so on their own. And when they fail, they fail own their own merits, too. Failures are part of business reality, and reporting on them only makes TechCrunch balanced. Without it Mike would be just a biased cheerleader (something he was accused of in the past).
In fact Arrington’s latest post, Bubble, Bubble, Bubble is optimistic, despite the title:
“But this doesn’t mean we’re in a bubble. In fact, I think the exact opposite. I think a few failures are direct evidence that we are not in a bubble and that the private venture markets are actually in the process of letting off a little steam to keep things rational…
…I also disagree that too much money is chasing too few good ideas … Remember that VC’s business models are designed to fail most of the time – the majority of their investments are expected to go belly up, and they hope that just one or two out of ten have a big return…
…So every time a startup dies, I don’t think it’s evidence of a bubble about to burst. I think it’s evidence of a market that is working exactly as it should. Most companies fail, but enough win to keep the whole ecosystem healthy.”
This does not sound like deadpool celebration to me. Au contraire, it sounds like realistic, but still positive market assessment.
Most companies in the “deadpool” are/were way overfunded for what they do. They, and their investors did not follow the model outlined in Fred Wilson’s excellent article, Web 2.0 Is A Gift, Not A Threat, To VCs. A must-read, IMHO.
Update (1/8): Our little discussion made it to The New York Times.
To be fair I don’t believe that Arrington is trying to knock the boom down, but he is correctly noting the realities of a marketplace that in some parts has become inflated. Indeed, something like the TechCrunch Deadpool is a great antidote to an otherwise at times overly bubblish sector.
Deadpool is a bit of a snarky name, but hard as it is for some to accept business failure always ought always to lead to business insight.
After bubble 1.0 this insight was as slow in coming as the confidence to build new forms of web business. This time around I believe start-ups and investors are much more clued up and much more averse to boom/bust economics.
Agreed, this is my least favorite part of TechCrunch. F**ked Company was exceedingly clever in its day, b/c so many of the companies were so overfunded and cynically formed, that it was hard to not be fascinated by the comeupance in some failures.
The best part of TC IMO is its optimism about great stuff happening on the web today. The deadpool is sort of a buzzkill.
FC was often the first place to find out if there’s trouble brewing in a company before anything leaked.. typically the well-funded ones with 100’s of employees, where insiders started to post on FC….