A Flash in the Magic Pan

Monetizing cultural phenomena and other quixotic adventures

A couple of weeks back, the CEO of a web start up called Svpply, Inc caused a ripple in the blogosphere when he posted that he really didn’t know what he was up to. He was candid in describing the challenges that he faced on a daily basis and his anxiety in addressing them. Subscribers were effusive in their support of his post and the courage and candor that it took to come out with it.

But that’s not the real shocker.

Right off the bat he offered an innocent yet profound insight into the current state of internet entrepreneurship, which was to employ capital for “the stated purpose of building…a cultural phenomenon”. Not building a business. Not solving a problem. Not even meeting a need …but building a cultural phenomenon.

Now, it turns out that cultural phenomenon aren’t exactly well defined but I’m sure most of us can conjure up something that fits the bill whether it be in the form of entertainment, food, fashion, lifestyle, etc. It is a pretty broad category that includes not only Elvis but also the aliens that abducted him, Hula-hoops, Frisbees and theme based restaurants like the Magic Pan. And the internet has produced its share of cultural phenomena like the game Angry Birds which has just gone over 200 million downloads and the current craze of Planking which rivals glue sniffing when it comes to unfortunate side effects.

And it is understandable that the internet would be viewed as the natural means of creating and spreading a monetizable cultural phenomenon. Where else can you find a medium with the same reach, immediacy and rate of contagion? Researchers are only beginning to analyze and understand how trends spread through the use of smart phones and cell phones. Only recently have huge data sets of smart phone transactions become available for analysis. And only in the past few years have social scientists set about discovering the trends exhibited by these larger data sets. Understanding the behavior of these transactions might even make the notion of designing and producing cultural phenomenon even more predictable.

What’s not as easily understood is the idea that serious venture capital is fully engrossed in the creation and exploitation of cultural phenomena, which one might argue is a cultural phenomenon all to itself. And the reason for that is simple. The fact is that most cultural phenomena, regardless of their popularity, don’t last; their lives are bright but short. Take the Magic Pan. Born in San Francisco of a genuine innovation, this once popular crepe-ery reached its zenith in the 1980’s with 110 restaurants across the United States and then disappeared altogether. Hardly anybody remembers the Magic Pan but eating food wrapped in tortillas lives on in the current generation popular restaurants and breakfast burritos.

So one has to wonder why the current crop of venture capitalists have suddenly become so enamored of Wham-O’s business model. Have they simply spent too much time on TechCrunch and are worried that they won’t catch the next Big Thing? Have the quants finally determined that the realizable rate of return on the internet equivalent of mood rings and lava lamps exceeds that for serious advances in life science and electrical engineering?

I guess at some level it really doesn’t matter so long as Ronco can finally take its rightful place along side the American Research and Development Corporation in the pantheon of true business innovators.

Somewhere, Izzy Mandelbaum is smiling.