This is a guest post from Muhammad Saleem, who will be speaking at Startonomics about word-of-mouth marketing on Oct 2.

The rise to fame and fall into relative obscurity of the microblogging site, Pownce, provides us with an almost perfect case study of what to avoid when launching a startup.

Jointly started by the trio of internet-entrepreneurs Kevin Rose, Leah Culver, and Daniel Burka, Pownce was surrounded by a lot of mystery, curiosity, anticipation, and buzz prior to its launch. This buzz, however, wasn’t because the site was going to do something revolutionary and change our lives, rather it was due almost singularly to Kevin Rose’s fame and previous successes with both Digg and Revision3.

The coverage was focused predominantly on the founders and their previous ventures, accepting as fact that the Pownce itself would be a major hit. Both mainstream media as well as internet-pundits declared it to be a hit and even went on the record as saying that they would exclusively use Pownce as their microblogging platform of choice. As you can see, that didn’t stay true for long.

Admittedly, Pownce does have some unique features that other microblogging platforms don’t have or at least didn’t have at launch. Why then, did the service fail to capture the imagination of the masses?

1. The Cult of Personality

Buzz is good when you know you can deliver. Warner Bros. knew what they were doing when they started the viral marketing campaign for The Dark Knight, and they have $900 million to prove it. Buzz can just as quickly work against you. Pownce created a lot of buzz, so much that people were buying and selling invites to the service on eBay. Most of that, however, was perpetuated by the belief that anything Kevin Rose touched would turn to gold. Once people actually got to use the service, many of them realized that it was okay, or even good, but not great.

Oftentimes ‘buzz management’ can be just as important as creating buzz.

2. First Mover Advantage and Network Unportability

What many pundits failed to realize was that Twitter - the service that many compared Pownce to, and which was and remains Pownce’s biggest competitor - had two major advantages. First, Twitter had singlehandedly created and popularized microblogging and in spite of issues with the service was seeing exceptional growth and loyalty. And second, for any microblogging service, just like any other social networking based service, to be successful, it’s not enough to merely get users, you have to get users and their networks to join and use the service. The problem is, it’s impossibly difficult to get entire networks of people to move from one service to another.

That’s exactly what happened. Most people tried Pownce at first but ultimately went back to Twitter because they realized that most of their friends hadn’t made the move with them. People use the services that their friends use, and most people’s friends didn’t move to Pownce.

3. Evolution, not Revolution

While people had great expectations from Pownce, the service was in actuality just an evolution of an existing platform. The features it added were either ones that a majority of people weren’t desperately asking for, or features that Twitter and other sites incorporated via third-party hosting sites. This made Pownce a more comprehensive utility but didn’t give it as much an edge as it did marginal convenience.

4. Artificially Driven Success

What many people also failed to see is that Pownce’s initial success was achieved by promoting the site on Digg (Kevin Rose’s other venture and platform for massive outbound traffic).

The initial momentum that put the site on many people’s radars was artificial and temporary. The sentiments of the community in other words, were summed up as follows:

Ultimately, you can create temporary success by creating pre-launch buzz and artificially driving traffic, but long-term, sustained growth can only be achieved by creating a truly unique and useful product that either creates value by helping users accomplish something (work utility) or provides exceptional entertainment value.

Heard enough yet? Join us at Startonomics