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Hi, I’m Brad Feld, a managing director at the Foundry Group who lives in Boulder, Colorado. I invest in software and Internet companies around the US, run marathons and read a lot.

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The Me Too Zone

Comments (26)

I don’t learn from demos, conferences, or listening to other people present powerpoint presentations.  I figured out a long time ago that I learn by reading, reflecting, experiencing, and playing with stuff.  The best confirmation of this was my experience at MIT – I was there seven years (through 2.5 degree programs before they threw me out), went to about 33% of my classes, read everything I could get my hands on, and did just fine.

So – it was with great pleasure that I saw Jeff Nolan’s extensive blog coverage of Demo and Weblogs Blogging Demo site.  I hate conferences – they are the convergence of all the “learning” approaches that don’t work for me.  It’s not that conferences are bad, I just can’t bear to sit in a room for a day listening to other people – followed by mid-day and evening schmoozing.  I realize this all has something to do with my upbringing on Planet Grodon as an earth child of a pair of space aliens, but – well – there you have it.

Back to Jeff’s coverage – it’s great.  While the official Demoletter site has a good overview of the companies, Jeff gives his own point of view (as a good blogger should).  As I was reading through his posts on each company, I had a strong feeling that the RSS / Blog universe has entered the “me too zone.”  It started when I read about Five Across (a Six Apart clone, but better – please change the name <g>), saw the aggregator congestion (Onfolio, Pluck), and more blog / audio / video / photo tools (Serious Magic, Imeem, WhatCounts, Photoleap, iUpload). 

Every emerging market hits a point where there is a mad rush of early stage entrepreneurs and VC’s piling in.  In some cases, it drives rapid innovation; in most it creates near term over-saturation, lots of irrational financings, and plenty of carnage as the laws of Darwin play out over the next couple of years.

I’m afraid we just hit that point with RSS / Blogging.  The meme has spread broadly – which is great.  Now we’ll watch all gods children pile in to try to get something up and running in this “space” (more on the fallacy of “space” in an upcoming blog).  Again – nothing wrong with this – it’s the natural dynamic of an early emerging market, but anyone that is experienced (and still has their long term memory intact) knows how it plays out for so many companies, entrepreneurs, and investors.

Clayton Christensen discusses this phenomenon in detail in his classic book The Innovator’s Dilemma – and reaches back to the example of the hard drive industry from 1976 to 1995.  In 1976, there were 17 firms in the hard drive industry.  Between 1976 and 1995 there were 129 new entrants to this industry.  By 1995, of the 17 firms in the industry only one – IBM’s hard drive operation – still existed as a stand alone business.  Of the 129 new entrants, 109 had failed.  Christensen developed his “technology mudslide hypothesis” from this – “coping with the relentless onslaught of technology change was akin to trying to climb a mudslide raging down a hill.  You have to scramble with everything you’ve got to stay on top of it, and if you ever once stop to catch your breath, you get buried.”

Sound / feel familiar?  Christensen then studied a lot more data and concluded his “technology mudslide hypothesis” was wrong.  He concluded that neither pace nor the difficulty of technological change lay at the root of the leading firm’s failures.  This led to Christensen’s theories on sustaining vs. disruptive technologies – where the real meat of the discussion is (and I’ll encourage you to read the book for more – it’s worth it – even if you learn better from conferences then from reading books).

While Christensen addresses what happens in the early stage of a disruptive market, I can boil it down into my own simple phrase – “the me too zone.”  It’s as if the whole world wakes up one day and starts working on the same types of things.  Lots of innovation continues at the core – and the first movers either aggressively extend their lead or completely fuck up somewhere and self-destruct – but in either case a huge number of “fast followers” (or “me too”) companies appear.  VCs suddenly get religion and the funding piles into the sector.  Suddenly everyone is talking about the “hot new “X” space”. 

The cliche “watching a car wreck in slow motion” comes to mind.  It’s definitely fun in a sick sort of way.  Welcome to the me too zone – I believe we just entered it for the RSS / blog world.  There is a huge adoption (and innovation) curve ahead of everyone who is doing stuff with RSS / blogging – and there are plenty of good investments left to make and companies to create – but the noise and clutter is about to get really loud.

  • http://loxos.blogspot.com/2005/02/startup-iterative-entrepreneurship.html Sandeep Srinivasa

    There was an interesting study by DarwinMag which in turn was based on a study by Crescendo Ventures.
    What I was able to understand from the study was a contrast between what Christensen studied and what actually happens.
    For example page 18 and 28 of the study:
    1. Most storage ventures are not disruptive
    2. 56 % of tape ventures and 23 % of NAS ventures had a successful exit.

    So while the parent-merger-company/small-time-stock-investor bit the dust, the VC’s and founders had a field day.
    right??

  • http://bigben.blogs.com Ben Casnocha

    It’s good you know how you learn best…it’s something I’m still trying to figure out. While I have a gen’l sense, I want to take a neurofeedback test to find out exactly how my brain processes information and how I can optimize that. On conferences, the downside is that heavy weight is given to those who are charismatic speakers not necessarily to those who have the best ideas/thoughts/provocations. Whereas in a book being charismatic isn’t the point – it’s about the substance.

    On audio/photo/blogging/video tools, my question is whether the best of this stuff will exist on the desktop or on the web. I’ve found many of the online services more powerful but usually end up using desktop programs for blogging and photos because I can use them when I’m not connected. As we become “always on” I would bet on a future in which everything is rented through the web.

  • http://phelpsblog.blogspot.com/ Peter Phelps

    Brad -

    Interesting analysis. I know Onfolio pretty well and think it is going to be a great product and company.

    Separately, the mortgage ads on your feed are a little tacky.

    Peter Phelps

  • http://www.ratcliffeblog.com/archives/2005/02/quick_into_that.html RatcliffeBrowse

    Quick, into that pile!

    Feld Thoughts: The Me Too Zone: Every emerging market hits a point where there is a mad rush of early stage entrepreneurs and VC’s piling in. In some cases, it drives rapid innovation; in most it creates near term…

  • http://thecommunityengine.com/webcites/archives/2005/02/feld_thoughts_t.html del.icio.us WebCites

    Feld Thoughts: The Me Too Zone

    My cut is that there is not much new in the basic blog. The next wave of innovation is what builds on top of the RSS explosion we have going on now. Most business models in this area can…

  • http://loxos.blogspot.com/2005/02/startup-iterative-entrepreneurship.html DAtum

    Iterative Entrepreneurship

    However, while Christensen focuses on the disruptiveness of innovation, this study focuses on the fact that most storage ventures are not disruptive at all. This is interesting to me, with all due respect to Mr. Christensen, because while this may no…

  • http://myst-technology.com Bill French

    Brad:

    [Innovator's Dilemma...]

    Agree 100%, and we enjoyed his follow-on, Innovator’s Solutions; it’s like a bible for us. Here’s a similar observation about RSS from 2003. ;-)

    RSS: Disruptive Technology Hiding in Plain Sight [by F. Andy Seidl]

    We put a stake in this “space” in 2002, but not as a blog or RSS tools company; those are simply things we do well because paying customers have asked us to. In that sense, we’re part of the “me too” crowd, but we see blogs and RSS as part of a natural transition to smarter information systems that are based on web services; systems that will ultimately lead to entirely new applications that enterprises will derive great benefit from.

    Looking forward to your “space” take.

    BF –

  • http://globelogger.com/item.php?id=301 Moonwatcher

    Wired and Wireless in Denver

    A dog-eared copy of The Innovator’s Dilemma, which I’ve been re-reading in preparation for some planning meetings this week, sits on the table in front of me. I’m plowing through my morning RSS feeds when I come across this post by Brad Feld…

  • Dave Jilk

    No problem, just differentiate. Evolve into an open source wireless photonics blog company.

  • http://www.extragroup.de/weblog/hmk/archives/001673.html HMK's Spurious

    Feld Thoughts: The Me Too Zone

    Feld Thoughts: The Me Too Zone. Every emerging market hits a point where there is a mad rush of early stage entrepreneurs and VC’s piling in….I’m afraid we just hit that point with RSS / Blogging….

  • http://www.extragroup.de/weblog/hmk/archives/001673.html HMK’s Spurious Thoughts

    Feld Thoughts: The Me Too Zone

    Feld Thoughts: The Me Too Zone. Every emerging market hits a point where there is a mad rush of early stage entrepreneurs and VC’s piling in….I’m afraid we just hit that point with RSS / Blogging….

  • http://noonerspism.blogspot.com/ David Gibbons

    oh please,

    ths is a great analysis of the “me too” phase – but let’s phase it, how many options are there – it’s either “me too” OR, “me first” (any other options?) – which is the worst of the 2 evils?

    It just so happens that “me first” recently developed a bad name again – ‘member the .com thang? – so, it naturally stands to rason that there will be a phase of “me too” right now. Having personally heard a self-professed “Angel Investor” say, “we don’t do startups” in the past week, I can understand how the entire business food-chain is driving the “me too” trend at present – for better or for worse.

    I love Dave Jilk’s response above – “just differentiate” – beautiful – I agree – whether the prevailing trend is “me too” or “me first”, the single test of a great idea should be;
    “does this innovation create new & attractive value for its customers?” – if so, it should be executed on – fast! Competition will come, and you’ll have to keep moving – if it’s in a “me too” space, competition will come from established players, with installed capacity – in a “me first” sace, competition comes from upstarts due to the low barrier to entry. But, regardless of the “phase”, there will be competition. So……..Just Innovate – again! To identify value innovation, I highly recommend the book, “blue ocean strategy” by Kim and Maubourgne. I personally believe that all strategies that get money – either ventire or corporate ca$h should first have to present their “strategy canvas” per this book’s templates – with an annual review of the same.

    Me too’s are sometimes a great investment – a few “late starters” that have managed to make their competition irrelevant by value innovation: google, ford – both should have come to market!

    Another area I’d dispute is the theory that a space gets stagnant as it gets crowded. With all due respects, oh please! If Necessity if the mother of Invention, (market) Density is the mother of Innovation, Invention’s step-brother. This week’s interview with Bill Gate’s (see “one on one with bill gates”) illustrates this point – Gate’s is predicting both a) the convergence of communications and computing and b) SIMPLIFICATION of computing interfaces as the next “killer app” in IT / IS. The only reason there’s a need for simplification and integration is BECAUSE the market for info tech and systems is so crowded – not because there’s nothing there.

    What I do appreciate is that maybe, the business and particularly the venture community is getting bored of seeing “me too” business plans in general. If this is the prevailing mood, hold on, it’s going to be 1999 all over again. wooooohhooooooo – here we go. luckily, my business plan has both – i’d planned on funding the “me first” part in 2007, but maybe, just maybe … we should float that first.

    As for blogging etc., I may be a pleb, but I only started blogging & subscribing this past qtr. – & I consider myself an “early adopter” (questioning that, after reading this post). I think there will be a lot more density in this _space_ – more innovation – and maybe even a few useful products. Let’s face it, there probably isn’t even a single product in the space that has broad brand awareness. There’s LOTS of room! What about knowledge management applications for blogging & subscribing in the enterprise – that alone could be huge

    Feld, I may be reading too much between the lines here – but my recommendation – take a vacation, sit on a beach, read “blue ocean strategy”, come back ready to sift through the pile of both “me too’s” and “me first’s” – thar’s some blue ocean’s thar !!!

  • http://blogs.openaether.org/index.php?p=67 waves in the aether

    why I don’t like blogs

    Someone finally explained to me why I don’t like blogs.

  • Eliot Jacobsen

    Hi, Brad:

    I thought you’d find it interesting that the VC “pile on” behavior in the disk drive industry described by Christensen was well-treated earlier by Sahlman and Stevenson in the HBS case “Capital Market Myopia” in 1985.

    http://harvardbusinessonline.hbsp.harvard.edu/b02/en/common/item_detail.jhtml?id=288005

    Seems like this behavior shows no sign of abating. VC’s now seem to over-apply Christensen’s distruption model and use it as an excuse to “pile on” even more. They’re getting clumpier and clumpier even as funds get larger and larger.

    Perhaps it’s time to consider how to “disrupt” the VC’s themselves.

    Nice blog. Keep it up.

    Eliot Jacobsen

  • http://www.situativity.org/archives/000142.html Situativity

    The Blogging Bubble?

    bgblogging: Saturation point? Barbara is grappling with the same questions that I think are creeping into the whole blogosphere in one form or another. What is the saturation point for blogging in the classroom? I extend this to ask, “What…

  • http://www.siliconbeat.com/entries/2005/03/01/the_me_too_zone.html SiliconBeat

    The Me Too Zone

    Struggling to keep up with all the emerging consumer related technology out there? Join the club. Check out the post by venture capitalist Brad Feld about what he calls the "Me Too Zone." Every emerging market hits a point where there is a mad rush of …

  • http://mt.middlebury.edu/middblogs/ganley/bgblogging/007091.html bgblogging

    Trackback Recap

    A few posts back I wrote about trackbacks vs. comments (with an insightful comment by Aaron Campbell thrown into the mix). Developments on my course blogs and with former students who miss the blogs have me thinking more about the…

  • http://www.siliconbeat.com/entries/2005/03/01/the_me_too_zone.html SiliconBeat

    The Me Too Zone

    Struggling to keep up with all the emerging consumer related technology out there? Join the club. Check out the post by venture capitalist Brad Feld about what he calls the “Me Too Zone.” Every emerging market hits a point where there is a mad rush of …

  • Chris Bulger

    Brad,

    Nice piece. But it is hard to discuss the historical trends in the “me too zone” without noting how dramatically the flock of sheep has grown over the last 10 years.

    If we charaterize VC’s over funding the disk drive space between 1975 and 1995 as “piling on” when as a group they were only investing $8b to $10b per year, then we need to raise the description several orders of magnitude to describe the same behavior when the dollar volumes are 5x to 10x.

    Also difficult to discuss “me too” behavior without acknowledging that is is rational given 2% management fees. Well fed sheep flock together.

    Chris Bulger

  • http://www.tmarkiewicz.com Tom Markiewicz

    I have to agree with David’s comments above. Which really drives innovation? The “me toos” or the “me firsts”? I would argue the “me toos”, as without them there would be no impetus for any of the firms to innovate.

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