The Kiko Affair
There's a lot of talk lately about Kiko's founders putting the site up for auction on eBay. There's both less and more than meets the eye here. — I think Dharmesh Shah is overreacting, for example, when he implies this somehow signals the end of "Web 2.0:"
Context & Ripple Effects
Kiko shut down this week and put itself up for sale as an eBay auction, and Dharmesh Shah's post-mortem read the failure as a possible end-of-era signal for "Web 2.0." Paul Graham's reply pushes back on exactly that inference: one funded calendar app winding down tells you little about a category.
What makes the episode more than a squabble over narrative is the mechanism — a startup being liquidated through eBay itself, the same platform whose 2006 has been dominated by bigger questions like analyst doubts over recouping its multibillion-dollar Skype deal. Failure is becoming a public, mediated event rather than a quiet wind-down.
First-order effects
- Kiko's founders get a liquidation channel that didn't exist for most failed startups before: an open auction for the site's assets, with a visible price instead of a silent write-off.
- Dharmesh Shah's 'end of Web 2.0' framing now has a named, prominent counterparty in Graham, forcing the bubble debate to be argued on evidence rather than asserted.
Second-order effects
- Other marginal Web 2.0 startups gain a template for exiting — eBay becomes an ad-hoc secondary market for failed startup assets, changing what founders and investors can expect to recover at shutdown.
- Bloggers and analysts who cover the ecosystem now have a recurring beat: every visible startup failure becomes a test case in the Web 2.0 bubble argument, amplifying each individual shutdown's narrative weight.
Third-order effects
- If failures keep getting read as sector-wide signals, sentiment around early-stage web investing will swing on a handful of high-profile liquidations rather than on aggregate fundamentals — a structural fragility in how the market prices the category.
- Auction-based wind-downs point toward a normalization of failure-as-transaction in the startup economy, where even collapse runs through platforms and produces public data points.
The trend: Startup failure is turning into a public, platform-mediated event whose individual data points feed — and distort — the broader Web 2.0 bubble debate.