BzzAgent Scores $13.75 Million

BzzAgent sounds like a great idea if you think about it for two minutes and – then a pile of poo if you analyse it for another two. So I’m pretty surprised to see that they’ve landed $13.75 million in funding from IDG and General Catalyst Partners.

The idea behind BzzAgent is simple enough, tapping into the power of Word of Mouth Marketing. Lots of people have written about it, but Malcolm Gladwell’s Tipping Point remains my favourite “must read” source. The principle is that you’re much more likely to listen to a trusted source known to you than someone you don’t know. This includes the media, which in recent years has declined in trustworthiness, in most people’s perceptions.

So, if I want a new phone, I’m quite likely to canvass Carlo’s opinion as I know him, he has no axe to grind and he’s an expert. If I want a new bike, Carlo wouldn’t necessarily be someone I would consult, but I would talk to Oliver as he’s a world class biking athlete (OK, I’d talk to Oliver about the phone too).

So, if you could find a way of harnessing the power of Word of Mouth Marketing, it would be pretty neat.

BzzAgent claims to have done this. People sign up to become a Bzz Agent and go round telling their friends and family all about new products. The snag is that they’re paid to do this, immediately bringing into question their motivation for telling people about the product in the first place.

Gladwell is very clear that the people who “sell” us ideas must be independent and unpaid, otherwise they instantly loose all credibility – immediately and forever. Clearly, it must be so. If I find out that Oliver is being paid to promote the bike he recommends, I am going to question his motivation for recommending it.

BzzAgent is doubly controversial though. They pay people to hawk products. But those Bzz Agents don’t normally declare their interest. It’s one thing for Oliver to promote a particular bike if he’s open about it and believes it to be the best. But if he’s keeping his motivation a secret too, I’m going to be really pissed off when I find out.

So, how can Bzz Agents possibly be a trusted, independent or honourable source of information?

In VC terms, it’s like me recommending a company to invest in that I have shares in and that I don’t declare at any point to the VC.

Anyway, some VCs have clearly bought into BzzAgent’s schtick, unless the investment is to expand into a new (and hopefully more honest) direction. I can only conclude that this must be the case as I can’t see why they’d need anything like this amount of money, even if their concept wasn’t flawed.

Just to clarify a final thing. This isn’t in any way an attack on the integrity of the management and team at BzzAgent. I’m sure that they believe in their concept and that they think it’s a good way of selling their clients’ products. I happen to disagree fundamentally and don’t think that this idea will work unless it’s changed radically some how.

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