Bribery, Porn, and Spam Are the Path to Riches in the App World | Wired Business | Wired.com
"I saw the best minds of my generation... writing spam filters." — Neal Stephenson, Solve For X
Something seems very off about BranchOut, Viddy, and Socialcam growing so much so fast to raise obscene amounts of money, only to see traffic collapse immediately after:
“Viddy nailed this — their highest point was within seven days of their massive funding round and they are way, way down since then,” says Michael Seibel, CEO of fierce Viddy rival SocialCam and one of several entrepreneurs who mentioned Viddy to us in connection to traffic spikes.
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On May 2, The Next Web began a series of articles about how SocialCam generated traffic and installs via a marketing service called Free App A Day and by stocking its video library with popular YouTube videos, rather than relying entirely on uploads from users. Users who encountered SocialCam-hosted YouTube videos on Facebook were prompted to register for the app before they could even watch the videos, a fairly slimy trick.
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Kleiner’s Murphy says both Viddy and SocialCam “got a frenzy going” by cleverly exploiting a move by Facebook to allow video apps to connect to the site’s social graph. In other words, they were able to spike traffic without paying.
“It was turning knobs,” he says of how the video startups pumped up traffic, “and then immediately going to market rather than buying traffic. In the case of Viddy they took off and raised in a week, then Social Cam did a better job two weeks later and passed them.”
Murphy says he and the gang at Kleiner Perkins have their methods to spot unfair play when doing diligence on a potential investment. “We focus heavily on daily active users, sessions, and time-per-session to get a sense of what is really going on,” Murphy says.
Too many investors overvalue momentum.
They incentivize entrepreneurs to cheat.
Zynga and Groupon were pioneers in paying gobs of money to acquire users thru any means necessary.
Looked at ZNGA or GRPN stock prices lately?
SocialCam managed to get out...sold for $60 million to Autodesk (!?!).
Clearly, the founders (who are experienced and have been around) didn't think the company had a good long-term future.
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