Before web music service Spotify launched, serial entrepreneur Martin Varsavsky called it “Joost for music,” drawing a comparison with the once-promising web video provider. Now that Joost has sold off its assets for a pittance in a deal that came to light this morning, the comparison is no longer flattering –- but there are still plenty of parallels between the two companies. And the online music’s press darling of 2009 would be well-advised to learn from Joost’s mistakes — or it could wind up suffering a similar fate.

As Om wrote this past summer, Joost had everything going for it less than three years ago: tens of millions of dollars in funding, serial entrepreneurs as founders, a hype machine, proven technology and big media partners eager to take equity. But the hype turned into backlash, media partners lost their love, key personnel including the CTO departed and early adopters tuned out as browser-based services rather than Joost’s desktop client prevailed.

Could the same things happen to Spotify? The four major record labels have taken equity in the much-buzzed startup (alongside Joost backer Li Ka-shing and other investors), but are now stalling a planned U.S. launch over royalty rates. Its CTO left last month. And in the meantime, browser-based alternatives in a variety of models are also getting attention. (One of them, Rdio, is the new project of Joost’s co-founders — and tellingly, there’s a browser-based version.) The bloom, it seems, is already falling off the rose, and Spotify hasn’t even reached the U.S. — what should be its most lucrative market — yet.

Although the two have plenty in common, their problems aren’t all the same. Spotify is already far more popular than Joost ever was — in fact, its free service is too popular, giving Spotify an expensive monthly bill that’s not nearly offset by advertising rates or paid user conversion. Joost’s content library wasn’t as deep as rival Hulu’s, while Spotify’s extensive library and slick user interface are among its great selling points. For now, people love it — perhaps too much for it to be sustainable.

That said, Spotify appears vulnerable for other reasons beyond the cost of its popularity — and in other ways that felled Joost, too. We’ve yet to see how its technology will handle more massive scale, and with offices in Stockholm, London and New York, it’s already geographically very spread out for a startup. The perception that it’s overhyped could leave first-time U.S. users underwhelmed, especially if the U.S. version isn’t as good as the European one. What’s more, Spotify’s battle to engage users in the mobile sphere among cheaper or free alternatives could be 2010’s version of Joost’s failure to deliver a browser-based product in time to head off Hulu and YouTube. In the fast-changing landscape for digital music, Spotify would be wise to look for Joost for a precedent — and a reminder that nothing is a sure thing.

Twitter This Article   Facebook This Article   Email This Article

Europe Struggles With Three Strikes, Fox Exec Wants It Anyway NewTeeVee – by Janko Roettgers "; Desert Bus For Hope Rides Again for the Third Year NewTeeVee – by Liz Shannon Miller "; Smartbook No More — What Should We Call Them? jkOnTheRun – by James Kendrick "; Dealing With the Avalanches In Life and Business WebWorkerDaily – by Amber Riviere ";

Posted by Paul Bonanos on GigaOM  |  Permalink  |  19 Comments
Tags: Joost, Online Music, spotify

If history is any guide, then recent actions by Skype co-founders Janus Friis and Niklas Zennstrom indicate that they wouldn’t hesitate killing off their own creation, unless eBay settles and pays them a lot of money. Here is why:

Friis and Zennstrom had earlier sued not only eBay but also the investor consortium (which is led by Silver Lake Partners and includes Index Ventures, Andreessen Horowitz) that was looking to acquire about 65 percent of the Internet communications service for about $2 billion.

Today, the Messrs Friis and Zennstrom sued Michael Volpi, who till recently was the CEO of Joost, an online video startup that was started by Skype founders. They also sued Index Ventures. Volpi recently joined Index Ventures, a London-based venture investor that had cashed out big time when eBay snapped up Skype for billions of dollars. As Liz reported earlier:

The gist of the lawsuit is that Volpi learned how to modify Joltid’s proprietary software to run on the web without the aid of a peer-to-peer software when he was transitioning Joost from a peer-to-peer service to a web-based Hulu clone. And with this knowledge, he was able to pitch a version of Skype that buyers could take over from eBay while side-stepping ongoing litigation.

The lawsuit is pretty harsh on Volpi who was once viewed as a savior for Joost.

“Volpi and Index lacked the credibility and financial heft to lead a private equity investment consortium to acquire Skype unless and until they advertised their knowledge of the Confidential Information.” “In a very short time, Volpi burned through a substantial amount of the working capital available to Joost at the time he became CEO. Moreover, he had removed from Joost a significant portion of Joost’s innovating and market-driving technology, leaving Joost to rely on third-party technology products. Volpi’s overall business strategy failed. Moreover, it was a failure that was extremely expensive, with Joost expending tens of millions of dollars of investors’ capital.”

As I have pointed out in the past, there is no love lost between Skype founders and Index Ventures, and today’s lawsuit is further proof of that. I am not sure where the disagreements lie, but the fact of the matter is that the two groups are major players in Europe’s startup world. Skype founders run Atomico, an investment fund that is aggressively wooing startups in the old continent. And no one is ever going to mistake the Skype founders and eBay management as BFFs.

Whatever the reasons, this battle is going to get very ugly. The fact of the matter is that if you are a major eBay shareholder, you should be worried. I mean, very worried. People are overlooking the fact that eBay is going to have to pay at least half of the damages, whatever they might be. In other words, that cost is going to be borne by eBay shareholders. As I said…don’t just be worried, also be mad. Funnily enough, eBay’s stock is up for the week.

Secondly, the Skype founders are ruthless businessmen who are going to make eBay pay for their stupidity. They are in the catbird seat to basically define the destiny of their creation. Without JoltID’s peer-to-peer technology, Skype will have to reinvent itself as a SIP-based player — as likely as me playing for a minor league baseball club.

Friis and Zennstrom are not above shutting down Skype. Janko Rottegers, over on our sister site, NewTeeVee, recounts the history of JoltId in succinct detail and writes:

Kazaa’s code was developed under contract by a startup in Estonia, with all of the work being coordinated from the Netherlands. Kazaa became Zennström and Friis’ flagship peer-to-peer product, but the idea was always to license the underlying P2P technology through a separate corporate entity called FastTrack BV. FastTrack’s code became part of a number of file-sharing clients such as Grokster, Morpheus and iMesh. Morpheus proved to be especially successful and eventually managed to get more users than Kazaa itself. Then, out of the blue, the Morpheus client stopped working in early 2002. It quickly became clear that FastTrack had shut down the client by denying it access to its P2P network. Morpheus alleged at the time that this was a ploy to steal its user base and once again make Kazaa the most popular file-sharing client. Friis and Zennström had a different take and argued that Morpheus had failed to pay its licensing dues.

By the way, Meg Whitman, who signed off the biggest corporate mistake in the history of Silicon Valley, is running for the position of the governor of California.

Joost –

Twitter This Article   Facebook This Article   Email This Article

Europe Struggles With Three Strikes, Fox Exec Wants It Anyway NewTeeVee – by Janko Roettgers "; Desert Bus For Hope Rides Again for the Third Year NewTeeVee – by Liz Shannon Miller "; Smartbook No More — What Should We Call Them? jkOnTheRun – by James Kendrick "; Dealing With the Avalanches In Life and Business WebWorkerDaily – by Amber Riviere ";

Posted by Om Malik on GigaOM  |  Permalink  |  20 Comments
Tags: eBay, Joost, Lawsuit, Mike Volpi, skype

Former Joost CEO Mike Volpi won’t be waiting in line at the unemployment office. He’s landed at Index Ventures — which invested in Joost two years ago. It seems they still believe in Volpi, even if his company did implode. Volpi will work out of Index’s London office, where, according to a press release, “he will lead early stage investments in the Internet, telecom/networking and media sectors and contribute to the firm’s later-stage growth fund.”

“I have background in networking so I will go back to my old stomping grounds,” he said during a phone conversation. He is also looking at enterprise infrastructure and related software opportunities. “Index has given me a fair range of flexibility.” Volpi has known Danny Rimer, the driving force behind Index Ventures for a long time and said that it was that relationship which helped him make the decision to join the venture fund.

He will also stay on as chairman at Joost, as the company transitions from it’s much-hyped video-streaming platform, to become a (yet another) white-label video provider. Volpi told AllThingsD’s Kara Swisher in an interview today that it’s a great time to be a VC: “In a market downturn, it is a good time to invest. There are a lot of great opportunities out there now.” I wonder if Joost’s backers said the same thing when they were pouring their money into the startup’s black hole?

Updated with comments from Volpi who talked with Om Malik.

Twitter This Article   Facebook This Article   Email This Article

Europe Struggles With Three Strikes, Fox Exec Wants It Anyway NewTeeVee – by Janko Roettgers "; Desert Bus For Hope Rides Again for the Third Year NewTeeVee – by Liz Shannon Miller "; Smartbook No More — What Should We Call Them? jkOnTheRun – by James Kendrick "; Dealing With the Avalanches In Life and Business WebWorkerDaily – by Amber Riviere ";

Posted by Jordan Golson on GigaOM  |  Permalink  |  4 Comments
Tags: Index, Joost, Mike Volpi

Joost, a much-vaunted online video startup, today announced that it will offer a white-label video hosting platform, thus entering a crowded market littered with the carcasses of other failed video hosts. The company is also losing its famous chief executive, Mike Volpi, whom it’s replacing with Matt Zelesko, the current vice president of engineering. And it plans to cut a portion of its workforce — between about 70 of its remaining 90 employees, according to Advertising Age. It also shut down its office in the Netherlands.

When I read about all the planned changes at the company earlier today, the first thought that crossed my mind was: Stick a fork in it; Joost is done. After all, this whole white-label video strategy is like a leaky lifeboat in the middle of the Pacific Ocean. The NewTeeVee crew sums up the situation very succinctly: “Becoming a white-label video provider was what a business did when all other strategies failed.”

As someone who has followed Joost from its very inception, when it was known as The Venice Project, I’m amazed at how badly it’s stumbled. It shouldn’t have.

It had everything going for it, including:

• Successful, Celebrity Founders: Niklas Zennstrom and Janus Friis started the company in 2006 after palming off Skype to eBay for billions of dollars.
• Proven Technology: Joltid formed the basis for music- and file-sharing service Kazaa and later Skype.
• Substantial Funding: It raised $45 million in funding from the who’s who of the tech world: Sequoia Capital, Index Ventures, Viacom, CBS and Chinese tycoon Li Ka-shing.
• Incredible Buzz: The company had incredible pre-launch buzz that helped it to convince thousands of users to download its P2P video client — something that doesn’t happen all that often on today’s web.
• Big, Famous Partners: It managed to gain early traction with content providers such as Viacom and CBS, which were also investors in the company.

So what went wrong? Quite a few things, actually. Other startups should learn from the mistakes of Joost and avoid repeating them, such as:

• Too Big, Too Fast: Joost hired too many people, too quickly. It never behaved like a startup but instead always felt like a grown-up company with too many bureaucratic layers.
• Too Geographically Spread Out: The company was based in multiple geographic locations — New York, London and The Netherlands — and as a result, each location became somewhat of a silo.
• Not Enough Focus: Remember what your mom used to say when you took too big of a bite? If you’re not careful, you’re going to choke. Startups are just like that. Unless you focus, you’re going to choke. Joost couldn’t focus on one single market — and startups need to focus on one market at a time in order to win.
• Too Much Hype Too Soon: Like many, we were one of the early fans of this startup. Its founder pedigree generated a lot of pre-release interest. Nearly 250,000 folks signed up for the beta version of the software. But when technology problems hit, the pre-release buzz turned into buzzkill.
• Slow to Fix Its Technology Problems : Joost’s P2P network had technical problems early on that resulted in user defection. The company didn’t move to address those concerns fast enough. These technology problems have continued to nag the company throughout its life, even when it switched to a browser-based focus.
• Client vs. Browser: The company took too long to realize that the client-based strategy was going to lose out to browser-based video services. Its legacy of building clients became its Achilles’ heel.
• Didn’t Press Its Early-Mover Advantage: Joost had correctly identified that it needed the blessing of the content owners, but it failed to move aggressively enough to convince them to work with its platform. The client and technology problems didn’t help matters, either.
• Big Media Dis-Connect: Its big media investors were never willing to give Joost a content edge over the competition, prompting users to tune it out in favor of other services.
• Too Many Internal Problems: The company had some serious management problems, some of which led to the firing of its CTO in January 2008.
• Hulu: It started with a simple, easy-to-use interface for its browser-based video service, offered higher-quality video and used content from its backers, NBC and Fox, to become a household name, which in turn allowed Hulu to convince other content owners to sign up for its platform. Now it owns 10 percent of online video traffic.
• Chasing Its Own Tail: Joost also made some basic mistakes, such as not having a good SEO strategy. It never quite figured out a social media strategy in order to garner viral growth, either. It was like a tech company from the 1990s — out of sync with today’s web environment.

The dark cloud of doom started to settle over the company last year, as the team at NewTeeVee noticed time and again. NewTeeVee writer Janko Roettgers offered a recipe to fix Joost last fall, but apparently it was too little, too late, even then. The company consistently failed to gain any traction, even after unveiling new APIs and a browser-based offering. In the end, however, it all boiled down to a lack of content.

Photo credit of Mike Volpi pic: Eirikso via Flickr.

Twitter This Article   Facebook This Article   Email This Article

Europe Struggles With Three Strikes, Fox Exec Wants It Anyway NewTeeVee – by Janko Roettgers "; Desert Bus For Hope Rides Again for the Third Year NewTeeVee – by Liz Shannon Miller "; Smartbook No More — What Should We Call Them? jkOnTheRun – by James Kendrick "; Dealing With the Avalanches In Life and Business WebWorkerDaily – by Amber Riviere ";

Posted by Om Malik on GigaOM  |  Permalink  |  69 Comments
Tags: #ef09_newteevee, Index Ventures, Joost, Mike Volpi, News, Online video, Sequoia Capital, Startups

Internet TV startup Joost is ditching its downloadable desktop software, as NewTeeVee previously reported. But now the company is taking things a step further, to give users the option to access the site without even downloading a P2P browser plug-in. All its content and new social features will be available in Flash, with higher definition, live, and some international programming only available with download of a “premium” (but still free) plug-in. The premium version of the site is open to the public today; the standard version will launch in mid-October. Read more at NewTeeVee

Twitter This Article   Facebook This Article   Email This Article

Europe Struggles With Three Strikes, Fox Exec Wants It Anyway NewTeeVee – by Janko Roettgers "; Desert Bus For Hope Rides Again for the Third Year NewTeeVee – by Liz Shannon Miller "; Smartbook No More — What Should We Call Them? jkOnTheRun – by James Kendrick "; Dealing With the Avalanches In Life and Business WebWorkerDaily – by Amber Riviere ";

Posted by Liz Gannes on GigaOM  |  Permalink  |  1 Comments
Tags: Flash, Joost

Exclusive: In what is likely to be a major shift in the company’s strategy, peer-to-peer startup Joost is going to stop making its desktop client. The decision to suspend the client is likely to be announced soon, I am told. The company is going to a browser-only strategy, in which much of its content is going to be available through a browser-based player. Joost, I am told, will release a small plug-in that would embed itself in the browser and allow you to grab files using the P2P technologies. The web client is likely to have better quality than average video sites. (Update: Liz has an indepth review of the upcoming service along with screenshots.)

Joost had launched its desktop client with much fanfare but for a panoply of reasons, such as bandwidth limitations, software issues and lack of content, the company lost traction and usage of its client dropped. Joost isn’t the only startup to give up backing solely the client. Veoh and Jaman adopted a browser-and-client strategy, which has helped boost their audience.

Joost was started by Skype co-founders Janus Friis and Niklas Zennström and raised over $45 million in venture capital. The company hired former Cisco executive Mike Volpi as its CEO, and in the summer of 2007, it seemed Joost was heading to the moon. Over past the 12 months, the company has had to tweak its game plan, trim its work force and refocus to a world that is less accepting of clients. The company wanted to be a key distributor of Hollywood content, but that opportunity has faded with the rise of Hulu.

Liz wondered about the possibilities of turning Joost into a web app, and well, it looks like that is finally happening. NewTeeVee writer Janko Roettgers had come up with five ways to save Joost when trouble hit last year — developing a web version was one of them. Killing the desktop client points to that.

Twitter This Article   Facebook This Article   Email This Article

Europe Struggles With Three Strikes, Fox Exec Wants It Anyway NewTeeVee – by Janko Roettgers "; Desert Bus For Hope Rides Again for the Third Year NewTeeVee – by Liz Shannon Miller "; Smartbook No More — What Should We Call Them? jkOnTheRun – by James Kendrick "; Dealing With the Avalanches In Life and Business WebWorkerDaily – by Amber Riviere ";

Posted by Om Malik on GigaOM  |  Permalink  |  82 Comments
Tags: Hulu, Jaman, Joost, Sequoia Capital, Veoh

Mike Volpi, CEO of Joost, spent his first weekend in California in many months dealing with the blowback from a story in The Sunday Times (of UK) that has the company scaling back its global ambitions in favor of a US-only focus. We talked earlier this evening, and Volpi said none of those things are actually true. (PaidContent had talked to Joost spokesperson earlier today.)

“We are focusing on US, Western Europe, China and a few other Asian markets,” he told me. “Taking a more measured approach to our expansion, and keeping it in sync with markets where online advertising is mature enough.” Volpi pointed out that Joost launched in China two weeks ago, and has recently signed content partnerships in Scandinavia. When you add to the mix UK, France and a couple of other Western European countries, Volpi said it is pretty obvious that the company is not scaling back from its global ambitions.

“What we are not doing is chasing every market, because as a start-up we need to be focused,” Volpi added. Due to its heritage – it was started by Skype co-founders Niklas Zennstrom and Janus Friis – Joost had received a lot of press coverage. God knows, I wrote about them a few times. The fact that it is run by Volpi, a highly regarded former Cisco executive and funded by the likes of uber VC funds Sequoia Capital and Index Ventures, it is hardly a surprise that Joost is being closely scrutinized. The company raised about $45 million in May 2007.

Joost was supposed to be the delivery vehicle for Hollywood content in the US. Instead, Hulu, a web-based video company backed by major networks chose its thunder and market, leaving Joost scrambling to play catch up. It has Viacom and CBS as its primary US partners, and it clearly needs to sign-up more A-list type content providers. Furthermore, the BBC’s iPlayer (where the former Joost CTO currently works), Kangaroo and other players are beginning to challenge Joost on its turf in Europe as well.

That said, the company doesn’t have much room for error. It needs to quickly improve its client and platform. Joost client has been subject of much criticism. Volpi knows that. He said that Joost is going to announce a new web-based platform in a few months. (We offered them 5 ways they can get out of trouble. Anil Gupte had listed 7 reasons they could be in trouble.)

When I asked Volpi about layoffs, he said that company realigned its work force. A few people were let go recently, as I first reported for NewTeeVee. Many contractors were cut as well.

As a result Joost of today is a trimmer version of its former self, thanks to pruning by Volpi, who became Joost CEO in May 2007. Some of these details were outlined in a Portfolio article. I tried to pin down Volpi on the total number of employees the company currently has, but he would not comment.

Rafat in his report says that Joost has about 100 employees. By that yardstick and my own not-quite-confirmed-data, that’s a head count reduction of around 35 to 40. Volpi said that the company is adding more “engineering” folks in their New York office and contrary to published reports has no plans to shut down the Netherlands operation.

Photo by Joey Wan.

Twitter This Article   Facebook This Article   Email This Article

Europe Struggles With Three Strikes, Fox Exec Wants It Anyway NewTeeVee – by Janko Roettgers "; Desert Bus For Hope Rides Again for the Third Year NewTeeVee – by Liz Shannon Miller "; Smartbook No More — What Should We Call Them? jkOnTheRun – by James Kendrick "; Dealing With the Avalanches In Life and Business WebWorkerDaily – by Amber Riviere ";

Posted by Om Malik on GigaOM  |  Permalink  |  23 Comments
Tags: Joost, Mike Volpi, P2P TV

Peer-to-peer TV start-up Joost will make live-streaming video available to all its users tomorrow; it has also scored a deal with its investor CBS to live stream March Madness. A new client should be ready for download by about noon ET on Wednesday, reports NewTeeVee.

Twitter This Article   Facebook This Article   Email This Article

Europe Struggles With Three Strikes, Fox Exec Wants It Anyway NewTeeVee – by Janko Roettgers "; Desert Bus For Hope Rides Again for the Third Year NewTeeVee – by Liz Shannon Miller "; Smartbook No More — What Should We Call Them? jkOnTheRun – by James Kendrick "; Dealing With the Avalanches In Life and Business WebWorkerDaily – by Amber Riviere ";

Posted by Edit Staff on GigaOM  |  Permalink  |  4 Comments
Tags: Joost, Live TV, P2P