Graham on Google: Web 2.0 foe

If your Web 2.0 financial backer is not your friend, who is?
Written by Donna Bogatin, Contributor

Paul Graham, financial backer of (via Y Combinator), and once cheerleader for, recently folded online calendar site Kiko, lays the blame on Google for the failure of his protégé company.

At his blog, Graham puts forth a rambling capitulation to Google:

What nailed Kiko was Google Calendar…The killer, unforseen by the Kikos and by us, was Google Calendar's integration with Gmail. The Kikos can't very well write their own Gmail to compete…Google may be even more dangerous than Microsoft…How can Yahoo or MSN or AOL launch some cool new thing when the people who care about cool new things never visit their sites? The best solution for most startup founders would probably be to stay out of Google's way.

Graham’s bizarre ode to the Google mystique begs the question, has he read the Kiko post mortems published by the company he financed?

In “Google Writely: Will competitors be wronged?” I quote Kiko team member Richard White clearly stating that Google is NOT the reason for the start-up folding:

Did you see Google Calendar coming? Yes.
It had been in internal beta for over a year and not all the Googlers at the 'plex are good at keeping secrets. The launch that really surprised us was 30boxes.

Did Google Calendar kill Kiko? No.
One of our biggest traffic days was when Google Calendar was released because we were mentioned in all the new stories as one of their top competitors. In fact, we repositioned Kiko to take advantage of a market that most other players, including Google Calendar, were neglecting: users outside the US…

Our failure is more due to our own ineptitude not the fact that Google crushed us.

Graham’s laying the blame on Google for his Y Combinator-backed company’s failure is all the more surprising given that Y Combinator recommends a Google buyout as a portfolio company exit strategy.

Y Combinator says:

Y Combinator funding lets you sell early, if you want to. We think startups will increasingly opt to sell themselves when they're small for a few million, rather than take more funding and roll the dice again. Google and Yahoo both like to do this sort of acquisition, and we expect it to become increasingly common.

More curious than Graham’s laying of blame on Google for his own portfolio company’s failure, however, is his cynicism regarding the disposable nature of the Web 2.0 models he chooses to invest in.

Graham concludes:

There's another encouraging point here for the new generation of web startups. Failure is not a disaster when you're very light. The total amount raised by Kiko in its existence would be about six months' salary for a first-rate developer. There's a good chance they'll recover most of it by selling their code. They only had one employee besides themselves. So this is not an expensive, acrimonious flameout like used to happen during the Bubble.

They tried hard; they made something good; they just happened to get hit by a stray bullet. Ok, so try again. Y Combinator funded their new idea yesterday.

And this one is not the sort of thing Google employees would be using at work. In fact, it's probably the most outrageous startup idea I've ever heard. It's good to see those two haven't lost their appetite for risk.

While the divergent thoughts put forth render commentary difficult, the thrust seems to be that as little money and/or time was invested in Kiko, what the heck!

Graham indirectly acknowledges that his Y Combinator was not a significant asset to Kiko and his cavalier reference to Google as a “stray bullet” confirms the lack of competitive analysis supporting the Kiko start-up.

Moreover, Graham’s “dissing” of his own portfolio company, that he chose to back, is perplexing.

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