TechWag

The story of blog nation is a complex story of failure; there are many issues and mistakes that brought about the failure of blognation run by Sam Sethi . The failure of the Blognation network came as a surprise to a number of blognation writers, who were unaware of what was really happening to the company under the hood . In the good by letter from Sam Sethi on the Blognation web site, Sam points out a number of reasons that the blog network failed .

However, the letter left many confused, and in some ways dissatisfied about the way that the problems were handled. As troubles at Blognation began to mount, the failure of blognation became a war of words, blogs, and reputation. Blognation’s failure was public , using the blogosphere to help inform and form the various camps that were either pro or against the CEO of the company. In business, ultimately the CEO of a company is responsible for everything that happens when they are the boss . In the end, in Sam’s good-bye note, he noted that he is responsible for what happened at Blognation.

The story started to hit the public blogosphere when Oliver Starr wrote an open letter to Sam Sethi on his blog, owstarr.com concerning some of the issues and concerns that would soon become the subject of many discussions in the blogosphere. At near the same time on the same day, 05 December 2007, Debbie Jones at Mobile Jones blog also penned an open letter to Sam Sethi, which further sparked the debate in the blogosphere. Sam Sethi undertook various attempts at damage control, especially when it came to Mr. Starr . However, the information had hit the blogosphere, and being an open system, the public debate took off once Techcrunch covered it . Hundreds of bloggers started forming sides as to who was most at fault over the failure of the company .

Some were more charitable than others were when it came to the public flame out of a company. For some it was hard to make the decision to go and leave Blognation because of payment issues . It was this confusion about the shutdown, and the confusion with the arguments in public that lead to the very messy public disclosure and discussion of the shutdown overall. Everyone who had an opinion, informed, or not chimed in on this “meme du jour,” which confused and convoluted the actual story as it unfolded.

Many had an opinion, and some even offered a reason why a community blog system like blognation could fail such as “fixed costs, variable income ” that many community blogs have. What comes out of this though is that there were very real issues that can be used to keep a community blog from imploding. These in general are the reasons why blognation failed.

1. Most bloggers trust who they work for, the trust that bloggers had in the CEO of blognation broke under the idea of non-payment, amidst the continual comments that they would be paid.

2. The CEO appeared to blame the failure on everyone other than himself, then take responsibility later on leading to conflicting messages. This was immediately latched onto in the blogosphere causing additional commentary that at some points were denigrating to everyone who was involved.

3. The involvement of the Blogosphere, the formation of camps either pro or con, supporting or not supporting the eventual failure of the company and the step down of Sam Sethi. As people worked though the range of materials available to them, various forms of “truth” appeared, and the more popular the blog, the more weight was carried for that particular brand of truth. As a PR (Public Relations) exercise, when Sam Sethi stepped down on the 12th from Blognation, he had lost the public relations side of keeping the company going.

There was a continual trust issue between the writers and the owner of blog nation. Most of this lack of trust centered on the fundamental issue of payment for services rendered, or what were considered legitimate expenses on the part of the bloggers. People rarely work free or without compensation; they have bills to pay, and things to do. The main problem centered on the idea of some people got partial payment, while others did not get any payment at all. This caused more confusion on the part of the writers, wondering what was going on . Many blamed the failure of blognation to be associated with the massive coronary and death of Marc Orchant, because of payment issues, and other pressure to meet bills . When starting up a community blog, payment is something that needs to happen so that your writers will continue to write for the community enterprise and the community good.

Payment is not a negotiable thing, people need to be paid for the work that they are doing for the company . If people are not paid, then the issue can quickly spin out of any form of control as people, especially bloggers will take their concerns to the blogosphere as seen in the public failure of Blognation. While there are accusations of unprofessional behavior on all parts as well as long memories pointing to another network failure. The final key issue is that past due accounts continued to accrue for Blognation as writers continued to attempt to be paid for the work that they had done for blognation . This eroded trust, and in the end was a direct key issue for the failure of blognation.

There is a direct relationship to what was happening at Blognation, and the continual proclamations that Blognation is successful, that funding was coming, that everyone was going to be paid, and indeed some were paid is in direct relationship to what was happening at larger companies and how bad news was suppressed .

The clear point though is with the suppression of bad news and the CEO’s personal responses were the one thing that people were going on when they made the decisions to stay and write at Blognation. They made the decision based on the information that they had, even through the information was questionable. The problems with a lack of transparency is that decisions were based on hope rather than solid business facts, much like the dot com boom, the reality belied the hype.

In Sam Sethi’s goodbye note, he started by blaming others, and then ended it by owning up to the responsibility for the failure of the company. He points to the failure to obtain VC funds early enough or quick enough to keep the company afloat. However the information was released to Techcrunch about the term sheet , it was Sam’s responsibility to do as much damage control as possible. The Techcrunch article appeared a month before Oliver Starr’s and Debbie Jones. The term sheet that Sam states was the key reason why the angel investor pulled out was published 2 days after Oliver and Debbie’s articles on their respective blogs.

Since Term Sheets are highly confidential, this file should never have been shared with anyone until Blognation could issue a stable press release. The mistake was sharing confidential information with someone outside the company. The investor would be rightly concerned then with how private data would be used and shared throughout the system. With privacy laws in the US and Europe in favor of users right now, sharing of private information on this level would generally lead to a further erosion in trust around Sam. In Sam’s goodbye letter he blames Techcrunch for publishing it, but given the nature of Techcrunch, this was information that was “too good to pass up” as it was exactly what Techcrunch specializes in, first heard information about technology companies.

There was an added dimension with the Techcrunch publication, many of the blognation writers and Techcrunch writers knew each other, and there were professional and in some cases personal relationships between the people who wrote for each blog. These personal relationships could have clouded the decision to print or not print the term sheet.

With available records and blog entries, the failure of blog nation is one of loss of trust, management that was unable to deliver on its promises, and the eventual disillusionment of writers and potential sources of funding. Of all the mistakes, any one of these alone could have lead to the failure of the blogging system, but together they formed a perfect storm of events that took 8 days to unfurl blognation from the initial letters on December 5th to the final step down of Sam Sethi on the 13th. In terms of failure, this is a perfect example of the “perfect storm” style of event where personality and people clashed to the point where the blogging system was no longer viable.

tags: rise, fall, blognation, overview, blogger business model, failure, fail, case study

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