Tales from the Echo Chamber

I’m constantly amazed by how short news cycles have become and the extent to which the Twitter echo chamber now defines how we judge a hot startup. Valuation news is regularly leaked, for example, then relentlessly retweeted, seemingly providing instant validation for many companies, when in reality, valuations for private companies mean very little.

Unfortunately, it’s starting to seem that journalists are fighting a losing race in trying to keep up with what’s truly novel. For several years now, savvy investors have been effectively gaming Twitter and mastering the ability to trumpet their investments in 140-word sound bites. It’s no wonder that Chris Sacca –- who previously worked as the head of special initiatives at Google — has raised a “secretive” new $1 billion fund, just four years after striking out on his own as an angel investor. 

Journalists have lost control of the story. In rushing to retweet the latest auction results from SharesPost, we’re not thinking about what we’re writing or questioning what we’ve been told.   

“’Are we paying too much attention to things that don’t deserve it?’ is a worthy question to ask,” says journalist John Battelle, the founder and chairman of Federated Media and founder of the Industry Standard, a Bible of the first Internet boom. “You have to step back and make a few phone calls, and I think the world is bereft of that kind of reporting right now. Absent being able to identify the next big company, there’s an inclination to declare any startup as having that potential…It’s not unlike a journalistic gold rush. Only so many people can go into the hills.”

Recently, I asked Owen Youngman, the Knight Professor of Digital Media Strategy at the Medill School of Journalism, whether today’s “real-time” media is helping to fuel a 2000-style valuation bubble.

“In my memory,” said Youngman, “a lot of glossy magazines back then were by and for the same people that are running up valuations today, and they could make even the wispiest of ideas seemed substantial.” Today, in contrast, “we have tweets that fly by faster than you can see them. If someone doesn’t see [an online story link] in the first five minutes after it’s tweeted, it’s gone forever.”

Youngman added, “I have a hard time thinking things are worse today because we’re all tweeting.”

I hope he’s right. I think he’s wrong.