Silicon Insider: Forbes Fumbles the Blogosphere

Nov. 3, 2005 — -- It's déjà vu all over again.

I was halfway through the blogosphere summit in Manhattan last week, running back and forth to the podium introducing speakers, when it suddenly hit me: I've seen all of this before. The dedicated entrepreneurs, the explosion of new words and terms, loud disagreements on what it all means, the venture capitalists watching and waiting for the first business to break out before they break in with bags of cash.

It was in 1995, at the birth of the dot-com boom. And I had seen other versions of the same thing before that: in 1980 at the start of the PC boom, and just before that, during the birth of the video game industry. You only get a few of these epiphanies in your career, and usually you don't recognize them when they happen. But I've lived in Silicon Valley and attended enough boom births to see this for what it is.

The numbers should tell you all you need to know: There are an estimated 20 million bloggers out there. Now, we can assume that 90 percent, even 99 percent, are largely novelties put up by folks who stick their Web journals up for a few weeks then move on to something else, perhaps adding a new entry every month or two.

But even in the most pessimistic scenario, that still leaves 200,000 serious bloggers out there, scattered throughout the world, talking about everything under the sun, from politics to pet care, shoes to spelunking. That's 200,000 entrepreneurial startups, 50 times that of the number of new dot-coms a decade ago. That's more than enough critical mass to kick off a boom.

Not a Money-Maker -- Yet

It can be argued that most of these bloggers aren't making much money. But then, they don't have much overhead either -- and they are slowly groping their way toward workable revenue models. Once they do, the venture capital industry is ready to swoop in. With the Huffington Post and the soon-to-be-announced Pajamas Media, we are also seeing the birth of the first larger business structures in the blogosphere -- and the first serious interest by major advertisers. That will be the key: when General Motors takes out an ad on Instapundit, the blogosphere will ignite so fast that it will make the dot-com buildup seem like slow motion.

And that is exactly what my Valleyite's sixth sense was picking up at the summit last week. I heard it from the bloggers who are organizing into real businesses, from mainstream media executives who talked about forming partnerships with bloggers or contracting them as vast armies of stringers and freelancers, and from investors and ad agency owners who are waiting for the first blog-Google or blog-eBay or blog-Amazon to rise to the surface.

But the real confirmation of the importance of what I had just seen came after I left the hall.

Forbes is the Anti-Indicator

First, a quick surf of the Web showed me a blogosphere on fire -- with excitement over the birth of Pajamas Media, consumed with jealously over not being part of it, or pre-emptively attacking it with near-incoherence for alleged biases, incompetence or abuse of power. Not bad for an enterprise that doesn't even formally exist yet. Whenever a new idea in high-tech attracts this much adulation and calumny, you can be sure that it is on to something -- and that everyone doing the attacking is secretly plotting how to compete with it.

But the real confirmation that the game is afoot in the blogosphere came from a Forbes magazine cover story that literally hit the stands while we were in the summit. I'd noticed that one of the panelists, Paul Maidment, head of Forbes.com, was unusually circumspect with the crowd about where he worked. After I saw the magazine, I understood why.

As I've noted in this column many times over the years, I used to run Forbes' technology magazine, Forbes ASAP, which was based in Silicon Valley. ASAP was probably the largest circulation technology-business magazine in the world. I like to think it was because of the good writing and editing, but the truth is that we were respected then (and remembered now) because we understood technology, and we got the big stuff right.

By comparison, when it comes to technology, the mother ship, Forbes magazine, NEVER, EVER gets the big stuff right. It is, in fact, one of the best technology counter-indicators I know. If you want to learn about mutual funds or the annual incomes of dead celebrities, Forbes is the place to go. But when it comes to tech, read Fortune (or, if you can stay awake, Business Week) because if Forbes says something ain't so, by God it certainly is.

Remember the story about how Mike Spindler was brilliantly turning around Apple? That one was legendary. Or how about the cover story on the genius of Carly Fiorina? You may not remember it, but I assure you that thousands of HPers still do.

We used to wince over at ASAP every time Forbes would attempt a major technology story -- usually because it meant we would have to spend the next fortnight explaining to all of our Valley sources and contacts that we had nothing to do with the story, that it was the "folks back in New York" (while rolling our eyes), etc. It would take months to restore our credibility.

Missing the Dot-com Boom

Even as we at ASAP (and our peers in the tech media) were cheering the birth of the dot-com boom and the hundreds of tycoons it created, Forbes was advising its readers to stick to "value investing" or some such phrase, which meant essentially: put all of your money in Consolidated Amalgamates or Amalgamated Consolidates, and sit back and watch your savings grow at a thrilling 5 percent per year.

How many billions did that cost Forbes readers?

Then, five years later, when we at ASAP saw the bubble was about to burst and put a guillotine on our cover, Forbes was finally getting traction on cheering the New Visionaries. How many billions did that cost Forbes readers? Toss in convincing George Gilder that he was not only a technology visionary but stock pick guru, and between 1995 and 2001 Forbes achieved a kind of personal portfolio disaster hat trick.

At about the end of that period, a few months before Forbes killed ASAP because tech advertising was dead (uhm, hefted a copy of Wired or Business 2.0 lately?), I agreed, against my wishes, to appear on the magazine's TV show, "Forbes on Fox." I had just written in my magazine that, even as we were bottoming out on the dot-com crash, tech was already positioning itself for a huge new boom, one that would extend well into the decade; and that, as part of this boom, e-commerce would be bigger and more important than ever.

I was instantly attacked by the senior Forbes editors. How dare I suggest that tech could come back? And how could I possibly say that the surviving dot-coms would be bigger than ever? Or that Silicon Valley would come back to even greater prosperity?

My reply, to paraphrase, was that "You guys completely missed the last boom, so why should anybody listen to you when it comes to predicting the next one?"

Silence. I was never invited back.

Meanwhile, online business dominates retail in the U.S., and that little Silicon Valley company called Google rules the world.

Predicting the Bust of the Bloggers

So, needless to say, seeing the words "Forbes" and "tech" anywhere near each other usually makes my teeth chatter. Still, last Thursday at the airport, when I at last looked at the new Forbes cover, I could only laugh. This time, Forbes may have set a new high water mark: It actually wrote off a new industry on the very day it was born.

The piece, "The Attack of the Blogs," is a strange, sour essay by Daniel Lyons whose theme -- captured well in the subhead -- is: "Web logs are the prized platform of an on-line lynch mob spouting liberty but spewing lies, libel and invective ..." What follows is an apparent attempt to tar all of those 20 million bloggers out there with the scummy practices of a few dozen renegades. The overall message is (picture an old guy at a private club rattling his old-fashioned invective and shouting): "Of course I believe in free speech and all that, but this kind of thing must be stopped!"

There is already a hilarious parody of Lyons' piece circling the blogosphere in which an 18th-century essayist complains that pervasive printing presses have led to the rise of pamphleteers, whose scurrilous antics have prevented King George III from raising taxes to finance his "benevolent aims" for the colonies.

That's pretty accurate, actually. To its eternal credit, Forbes really does want everybody to become wealthy. But until they do, the little people need to know their place. All of this entrepreneurship business only creates chaos, frightens the horses, and threatens the well-being of the Right Kind of People.

Meanwhile, given the magazine's record with tech, it is interesting to speculate: Which is worse for a technology company -- to be attacked by bloggers or celebrated by Forbes?

Let me make a prediction. Five years from now, the blogosphere will have developed into a powerful economic engine that has all but driven newspapers into oblivion, has morphed (thanks to cell phone cameras) into a video medium that challenges television news, and has created a whole new group of major companies and media superstars. Billions of dollars will be made by those prescient enough to either get on board or invest in these companies. At this point, the industry will then undergo its first shakeout, with the loss of perhaps several million blogs -- though the overall industry will continue to grow at a steady pace.

And, at about that moment, Forbes will announce that the blogosphere is the Next Big Thing for investors. Maybe they'll even invite me back to Forbes on Fox.

This work is the opinion of the columnist and in no way reflects the opinion of ABC News.

Michael S. Malone, once called "the Boswell of Silicon Valley," most recently was editor at large of Forbes ASAP magazine. He has covered Silicon Valley and high-tech for more than 20 years, beginning with the San Jose Mercury-News as the nation's first daily high-tech reporter. His articles and editorials have appeared in such publications as The Wall Street Journal, The Economist and Fortune, and for two years he was a columnist for The New York Times. He has hosted two national PBS shows: "Malone," a half-hour interview program that ran for nine years; and a 16-part interview series in 2001 called "Betting It All: The Entrepreneurs." Malone is best known as the author of a dozen books: his latest, a collection of his best newspaper and magazine writings, is called "The Valley of Heart's Delight" (Wiley).