January 15, 2006

"Feed mayo to the Tuna"

Marketing is not rocket science. Michael Arrington - creator of www.techcrunch.com and serial entrepreneur throws conflicts to the wind and uses his connections to create buzz in his area of experise - start-ups.

He also is successful in his blog because he has picked a focus. What he calls - Web 2.0 companies.

His barbeque and makeshift meetings can be duplicate din any major city where tech start-ups thrive.

Posted on Sun, Jan. 15, 2006
Web 2.0: `a read and write mechanism'
By Matt Marshall
Mercury News
Michael Arrington, founder and writer of TechCrunch, has become a go-to person for many of the new Silicon Valley Internet companies hoping to strike it big.

Foremost for the companies is to get featured in TechCrunch (www.TechCrunch.com), a blog devoted exclusively to so-called Web 2.0 companies that seek to use the Internet in ways that are more interactive than the previous generation of Internet companies. The new wave of Internet companies also often use more sophisticated Web technologies.

TechCrunch, which launched in June, has more than 20,000 daily visitors, according to Arrington.

Arrington got the idea for the blog while he was doing research for creating Edgeio -- a search engine blog for classified ads posted on blogs -- that he hopes to launch within the next month. In the process, he looked at all types of Internet start-ups because he wanted to track the competition and look at how new, cheap Internet tools such as AJAX and programming languages such as Ruby are being used to launch businesses.

The former corporate lawyer has become an impresario of sorts for Silicon Valley's latest Internet companies.

He opens up his home in Atherton for regular barbecues, where entrepreneurs, geeks and other Internet players gather to network and present ideas and businesses. The gatherings have become a source of buzz about Silicon Valley's start-up scene.

Take start-up Riya, which is developing technology to help identify people in digital photographs for easier sorting. It sponsored a party at Arrington's house in November, paying for pizza for the 250 or so guests that showed up. An early rumor that Google wanted to buy the company was amplified at the party, in part because Riya Chief Executive Munjal Shah, who gave a talk there, didn't deny it.

Google ended up not buying Riya, but the start-up drew attention, and the company recently announced a $15 million round of fresh venture capital.

Some observers have questioned how objective Arrington's TechCrunch blog can be when he writes about companies that have sponsored his parties and when he himself invests in and serves as a consultant to Web 2.0 companies.

But Arrington says he's conscious of these entanglements. ``I'm nervous about conflicts,'' he says, noting that he has a policy of disclosing his consulting relationships when he writes about those companies.

The number of people wanting to come to his barbecues has grown. He has another one scheduled for next month, and for the first time he is having to think about hiring security guards to monitor the door.

Last time, he shut down the Web site where people signed up for the party, drawing the line at 250 attendees, the maximum his house can handle. ``If more people show up, it'll just break,'' he said.

Arrington recently spoke with the Mercury News. Here are edited excerpts from the interview:

Q Why did you start TechCrunch?

A I met (technologist) Dave Winer for the first time last year. We started talking about Web 2.0 companies in general. Everyone was building companies with their heads down, and weren't bothering to locate all of the competition out there.

I was looking to start a company and wanted to know what was out there. But there was no single blog dedicated to all the new start-ups. Since I was doing due diligence on all these companies anyway, it wasn't much harder to write about them.

Q What gave you the idea for the barbecues?

A I had a couple of guys staying here at my place. We said, ``Let's do a barbecue.'' We all called a couple of people. Twenty-five people showed up impromptu. The guys from (video hosting Web site) YouTube showed up. I posted about it on TechCrunch and put up pictures.

So I get all these comments from people saying, ``If you do another one, invite me next time.'' So I did a second one, and 100 people showed up. Then a third one, 200 people.

Q You focus exclusively on Web 2.0 companies. How do you define Web 2.0?

A It's the conversation piece, the interactive piece. It's not just a television-like experience, where you are looking at stuff online and occasionally filling out forms to buy stuff. It's very much a read and write mechanism.

And there's a platform for this -- the new programming tools that are available to people. Look at AJAX and Ruby (new programming tools for creating Web sites), which make it so much easier and cheaper for people to execute on an idea.

The other thing is the rise of the ``edge,'' which (venture capitalist) Fred Wilson has spoken about on his blog. There is so much content being created at the edge of the network -- outside of centralized Web sites. And much of it is useless, but the people who are able to exploit that, format it, and make it structured and mash it up, are going to be really important.

Q Lots of these new Internet companies have been funded by venture capitalists. Is there a bubble now in Web 2.0?

A I don't know. SearchFox (a company that lets you subscribe to online content) closed down. They hadn't raised any money. It's so easy to start companies, and products, and most of them will fail. I don't think that necessarily means there's a bubble.

Things are different. The public isn't paying the price. In the late 1990s companies were going public on Nasdaq. Now, they're getting acquired by Google, AOL, Yahoo and Microsoft. As long as that happens, venture capitalists keep investing.

How long will that continue? It may depend on whether market valuations of Google and others continue to rise. Their appetite might be based on their market capitalization.

Q What areas are overheated?

A The RSS (really simple syndication, which is a protocol that allows people to subscribe to online content) area is ridiculous. Attensa just raised $9 million. Dave Winer just launched an RSS reader (a way to collect your subscribed online content). And that's happening as other guys, with quality products, like SearchFox, are just flat-out shutting down.

Another area one is AJAX home pages. These guys are just launching left and right. Microsoft, Yahoo and Google all have comparable products. They're not going to buy new ones. Another one are the (community-oriented) review sites. They are all funded. But I think their business model is terrible.

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