Getting the Techmeme meme

Speaking of the decline of Consumer Web VC money, there is an interesting article on Gabe Rivera and Techmeme (who have never taken VC money) on Bloomberg. To recap, Rivera created Techmeme in 2005, tracking the output of blogs and news outlets tracking the technology scene. Techmeme used algorithms to decide the day’s most important headlines and grouprd together similar posts from different sites. Rivera started with $55,000 in personal savings. In 2006, he began selling ads and buying staff. Techmeme now has a staff of 12 who mostly work from his San Francisco apartment or their own homes (low cost or what....). While the algorithms for sifting news have improved, Techmeme has had to use human input as well (that really interested us, as it proved a hypotheis we had - for now, anyway).

Techmeme has always interested me for 3 reasons - the technology, the possible impact on the media market structure, and its business model - the opposite of the "get rich quick" startup model, its a long term game to create a valuable service sustainably. It has never gone for VC, looking instead to grow organically, from it's roots as it were. Many VC's have wanted to invest in it over the years, Rivera turned them down:

“The first time I asked Gabe if he would be interested in an angel investment,” said [Jeff] Clavier, “he replied something like: ‘I don’t want to deal with the obligations attached to raising money, and I still want to be able to take a nap after lunch.’”

Mark Suster, who I also have a lot of time for, believes it is not "VC" able

“Gabe is not the guy a VC would invest in,” Suster said. “I’m trying to find the guy who can say, ‘I want to change the world and have the biggest company possible.’ That’s who I need to finance. History would not suggest that he’s that guy.”

Techmeme has already has an influence far greater than its revenues, it genuinely did "change the world" in being the first believably viable real time media search engine - it just didn't follow that it should also "get big, fast" too. I'm sure it would have been possible to take loadsamoney, charge down a bunch of verticals with the Techmeme engine, and find all sorts of creative ways to spend VC money to pump up the volume of hits, and probably even IPO it in the Bubbletime - we've seen all that before. Rivera has also launched a separate site that aggregates media news, Mediagazer, and expects to do the same for other news-driven verticals, but at an organic pace - Once set up, the running cost of this technology is low cost, but the running cost of feeding a beast that is too big for its market is exorbitant. I think this quote from Rivera is telling:

“I don’t believe anyone aiming to build the ‘biggest company possible’ could have made something like Techmeme,” said Rivera. “Any such person working on something remotely similar to Techmeme would instead focus on how to reach tens of millions of users as quickly as possible, and as a result, the relevance of the product for a community as focused as Techmeme’s would suffer.”

I have a hunch Techmeme will be around long after some of today's other Web 2.0/Social Media darlings have colllapsed, as its based on real user demand and an economically sustainable cost base.

There is also a difference in motivation between a "build-to-run" entrepreneur and a "build-to-sell" one, I liken it to the difference between an artist who creates what is true to them, vs one who creates what will sell, now. Big studios love commercial art, but there is another whole market for "indie" art, which is often highly influential over time, and it doesn't always require starving in a garret.

Anyway, the lesson for Consumer Web startups in this most declining of VC funding times is to start looking at organic, sustainable growth business models - Techmeme shows it can be done, it doesn't necessarily mean starving in a garret, plus you could build some great stuff and create a lot of personal karma. And take afternoon naps.....