THE BLOG

The Sudden Implosion of "Secret" May Reveal A Secret: Is Silicon Valley Out Of Touch Or Just Losing It's Touch?

05/19/2015 04:41 pm ET | Updated May 19, 2016

As I read of Secret's biting the startup dust and the resulting fallout over the last few weeks, I just had to laugh. Not in a mocking way. And certainly not at all the money lost or at those who put all that capital, $35m-ish, into the company hoping for a big payout only to end up popping a Zyrtec to avoid sneezing and choking on the implosive dust.

It's was more of a head-shaking laugh as in "All those star investors and nary a one could figure out how to save or try to save the company?" Really?

If you look at the Secret timeline, it's demise started last August, 2014. This inverted hockey stick trajectory came just days after it raised $25m in July. An investor's nightmare, no doubt.

So, what happened in August? Well, THIS happened on August 7th.

Fortune magazine published "We Tested Secret's Anti-Bullying System...And It Failed." If you look at this excellent graph at GigaOm (which also just bit the dust) by AppAnnie when do you see a noticeable dip? About a week into August? Yep. You'll also see the August 22nd reference noting that Secret released new user controls and App Annie seems to correlate that to the massive drop.

There may be some truth to that as users could no longer use their personal photo library and had to use images from Flickr, among other changes. However, I posit it started weeks before when the damaging Fortune magazine article was published and, thus, became the catalyst for users to abandon Secret in droves. Again, look at the graph.

This is where Secret's "star investors" should have come to the rescue. There are enough of them who are media savvy, who understand how crucial (and often critical) it is to get ahead of a problem/bad publicity/shit storm. Ashton Kutcher knows this very well and has the resources to help. Pete Cashmore for heaven's sake. He's the founder of Mashable. I'm not saying use Mashable, but use the pr resources he has available. At the end of the day, there are a number of investors who could have tapped their pr/media peeps and helped out. Spin that bad-press into a meaningful message and move it forward.

Instead, founders David Byttow and Chrys Bader-Wechseler issued a weak email back to Fortune magazine. Then in the midst of the August 2014 free fall issued this blog post announcing the aforementioned changes (and others) to the app. No direct mention of the issues raised in Fortune magazine article.

In fact, they probably didn't need to directly address the the article, but certainly the issues raised in the article in a smart, aggressive way. They could have done it in a blog pushed to every user of Secret re-enforcing it's complete commitment to keep the app free from anti-bullying and inappropriate, flagged behavior. Worded much better, of course, than I just did and wrapped in a nice positive, promotional and value-add pr push. That would have been the crucial first of four steps I would have implemented.

How am I qualified to say that, you ask? Well, where did I work from 1999-2011? NBC's entertainment/news show "Access Hollywood." Do you have any idea the number of self-inflicted, career-damaging wounds (some literally) that I've seen during my Hollywood career, not to mention my 30-year career as a journalist? They would fill a book, which I've been told I should write, but will not. I've witnessed first hand some of the best in crisis management -- corporate, studio, A-list and more. Some of it happened in the blink of an eye and was absolutely brilliant. Other times I sat there looking at a situation of meltdown, implosion and destruction knowing it's about to go public and thought, "Why isn't their PR team/advisors getting ahead of this?"

Now, transition that experience into my ever-increasing role advising startups over the last seven years and now as a managing partner in SierraMaya360.vc and you get an idea of where I'm coming from. I can see around these corners. In fact, I can see around most of these type of corners well before they appear. At the end of the day, no one likes to hit a Mack truck head on. (Trust me, there a many corners in other endeavors I can't see around, just ask my wife)

The net-net is this. In this day and age, companies, not just startups, need a key, veteran media specialist who has seen it all and can see around those corners. For startups, this key ingredient will not be fiscally feasible in the form of a pr firm. At $5k/$10k/$15k+ per month, it's not an option. Ah, but what if their advisors have crucial media experience? Or those advisors have pr firms on retainer which can lend critical expertise? What if one of the vc's backing the startup has that skill set? All of this is 100 percent, completely possible.

Look, it's finally time to recognize (and admit) that this is not your Mom and Dad's Silicon Valley. It's 2015. No offense to those in their billion-dollar, Silicon Valley ivory towers, but there's been a shift. A definitive shift and it has nothing to do with the San Andreas fault. I'll save that view for my next post, but suffice to say the old vc way of doing business with their portfolio companies, especially the early to mid-stages, doesn't cut it. It's as if Silicon Valley has ushered in all these great companies which have radically transformed, shaped and changed the future, yet many on Sand Hill Road forgot to come along.

Which brings us back to the sudden and swift demise of Secret and the lack of any truly 'new school' vc's in the mix to help the company. Maybe smart assets could have helped save the company. Maybe not, especially with not-so-secret whispers that once Byttow and Bader-Wechseler nabbed a cool $3,000,000.00 apiece from the $25m raise, they were less "into their gig".

This is akin to an athlete who has a great season, banks an incredible new, $100m contract and then loses focus the following season. Why? Maybe $100m reasons? $100m distractions?

Not sure if this happened here and $3m is not $100m, especially to these two founders who've had success before. But no one is allergic to the allure of putting six zeros before a number of your choosing. It's definitely nothing to sneeze at, even if you have packet of Zyrtec at the ready.

Just make sure you send some to the investors who are left in dust waiting to see if you return their money as promised.