Posts from June 2009

What VCs Are Worrying About

A survey of VCs by Polachi Inc. has been making the rounds of the internet the past couple days. I was asked to participate in this survey but did not (not for any reason in particular).

I looked over the results (click on that link above to see them) and this slide caught my attention:
Worried

Surprise, VCs are not worried about deal flow and the management teams they work with, are a bit worried about their portfolio, and are a lot worried about exits.

We've talked about this issue endlessly here on this blog and elsewhere. The problem with the VC industry is that there is too much money in it, too many portfolio companies, weak venture firms, and a tepid exit environment.

There is no lack of good opportunities, no lack of talent (both entrepreneurial and management).

Nothing is wrong with the VC business and the startup ecosystem that a few years of weak fundraising can't fix. And I think we are seeing that and will continue to see it.

But the headlines like VCs Losing Confidence in “Broken” Industry overstate the issues in my mind. The VC business is not broken. Some of the participants in it are.

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Trendrr – The Freemium Web Charting Service

Let’s say you want to track how something you are working on is doing. You can look at it’s web traffic on comScore, Compete, Quantcast, Alexa, etc. You can check out how it is doing on Google Trends. But if you want to do something a bit more sophisticated, you might want to try Trendrr.

Trendrr is a free service (for a limited amount of data tracking) that let’s you track keywords across multiple data sets. Here’s a screen shot of the basic service which shows how it works.

Trendrr data sets
The cool thing about Trendrr is the charts that others build are shared in the service. It’s a social charting system. Here’s a chart someone called tvbuzz built for the monday night TV shows (note that this is an embed from Trendrr):

The Trendrr service was built by a NYC agency called Wiredset that focuses on social media and digital marketing for the entertainment business. And the categories in the service reflect that focus; Brands, Buzz, Film, Gaming, Music, Politics and TV. Wiredset was founded by Mark Ghuneim (aka Mediaeater), someone I’ve known for almost twenty years and one of the most digital savvy people I’ve come across in the music and entertainment business.

The big news today is that Trendrr has gone from free to freemium with the launch of Trendrr Pro. If you want to track more than 10 datasets at a time, then Trendrr Pro is for you. I like that, like Flickr, you can start off using Trendrr for free, and at anytime you can make your account a Pro account without having to set up a new account. Here’s the pricing matrix for Trendrr:

Trendrr prp 

You and I will start out with a free account and maybe over time migrate to the gold account. But the agency, record label, film studio, or game developer will likely opt for the elite offering and spend over $10,000/year with Trendrr.

That’s the Freemium model in all of its glory. We can all click over to Trendrr right now and start getting value out of it. And if it works well for us, we can become paid customers without having to be sold. And some of the customers will turn into large users who pay a lot of money for the service. Nicely done Mark and Wiredset and Trendrr.

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The Conversational Marketing Summit Interview

A few weeks ago, my friend John Battelle invited me to open the Conversational Marketing Summit with an interview. I've known John for over a decade and we backed him as CEO of The Industry Standard back in the Flatiron days. It was a fun interview and as you can see, we coordinated our outfits the night before (that's a joke).

The video is about 35 mins long but I've provided a transcription below the video. These transcriptions are being provided by the Simulscribe API. I'm hoping to add some cool technology I saw last week soon which will make the transcription hyperlink to the exact spot in the video. How cool will that be?

Transcription:

Mr. BATTELLE: And help me please
welcome our first conversant, Mr. Fred Wilson.
 

Mr. WILSON: Hello. 

Mr. BATTELLE: Welcome. 

Mr. WILSON: Thank you. 

Mr. BATTELLE: So, Mr. WILSON… 

Mr. WILSON: Mr. BATTELLE… 

Mr. BATTELLE: You often get
to be the proxy for a little application that six months ago had three
million users and now has 35 million, 31 – 35 million.
 

Mr. WILSON: Right. 

Mr. BATTELLE: Twitter. What
did you see when you decided to invest in Twitter?
 

Mr. WILSON: Well, for me it
was really pretty simple. I’ve been blogging for close to six years
now and it takes me a good 30 minutes every day to write a blog post
and when I started using Twitter, I realized that I could communicate
some of the insight that I was trying to communicate every day in 20
seconds. And I saw that I was doing that four, five, six times a day
and having a similar amount of impact in a much lighter way experience
for me as a content creator. And the fact that Ev and Biz and Jack had
a history in the blogging world, I kind of saw this Blogger 2.0 and
that was my investment thesis. It wasn’t really much more than that.
I mean, obviously, much more has happened since then that has made it
much more than bloggers but…
 

Mr. BATTELLE: It made you seem
much smarter than maybe you actually were.
 

Mr. WILSON: Exactly. Every
investment I’ve ever made that has worked out fabulously is always
a case that the investment played out in a way that we didn’t imagine.
 

Mr. BATTELLE: So, I guess,
the next question I was going to ask you, you may have already rendered
it moot, but what is your investment thesis?
 

Mr. WILSON: For Twitter? 

Mr. BATTELLE: Well, just in
general. When you look to invest in a company, do you have a larger
thesis about what’s happening in the world?
 

Mr. WILSON: Yeah. A couple
of weeks ago, I was privileged enough to be able to give a talk at Google
and the talk was about how the Internet is disrupting industries and
that’s our investment thesis. If you really want to go look at our
investment thesis and you have an hour to spare, go watch that Google
video. And our thesis is pretty simple. The Internet is a disruptive
force, it’s one of these, you know, once every hundred years kinds
of things that it goes all the way through pretty much all industries.
Certainly, the Internet is going to do this to every industry that is
end-to-end digital. The media industry I think was the first because
it is probably the most end-to-end digital, but there are many more
industries. And that is basically at a 30 thousand foot macro level,
that is our investment thesis.
 

Mr. BATTELLE: You seem to have
been focusing many of your investments in the area of media and marketing
disruption. Is there a reason for that?
 

Mr. WILSON: Well, we’re here
in New York and those industries are heavily concentrated here. We understand
those industries pretty well. And we have seen the kinds of things that
can really shake things up in that category and we thought media was
going to be first. So, that is why we’ve done a lot. And we also in
“Web 1.0” made a bunch of investments like the industry standard…
 

Mr. BATTELLE: I’m sorry. 

Mr. WILSON: Inside that… 

Mr. BATTELLE: You just let
us sell when the guys want.
 

Mr. WILSON: Exactly. But we
saw that…
 

Mr. BATTELLE: We don’t have
a history or anything.
 

Mr. WILSON: Because we have
a lot of history. But we saw that taking the traditional media model
and just putting it on the Internet wasn’t enough. And the big investment
success that we had back in the late 90s was GeoCities. And that allowed
me to realize that it really isn’t about just taking a magazine or
a newspaper and putting it on the Web. It’s really about turning us,
the people who are on the Web into the content creators. And so, if
you look at our portfolio, most of the things we’ve done in disrupting
media have been around citizen journalism or social media.
 

Mr. BATTELLE: So, before I
want to drill down a little bit into Twitter because I actually twitted
right before you came on and said, what do you want to ask Fred. And
I got the same question over and over again which I’m sure you already
know what I’m going to ask. But, can you list three or four or five
of the investments that you’ve made besides Twitter that you think
are sort of timely right now?
 

Mr. WILSON: Well, you know,
it’s easy for me just to talk about the most successful ones. I’ll
try to mix it up. We have a company called Zynga which is the leading
social gaming company. So, they have about 25 games that run on eight
or nine different social networks and have amassed an enormous audience.
I don’t know if it’s public or I can even say but, they have as
many daily game players as any web-based gaming service out there. And
they’ve done that in a year and a half on the back of social networks.
 

Mr. BATTELLE: And Texas Hold’em
Poker.
 

Mr. WILSON: But, Texas Hold’em
Poker is actually not their biggest franchise. Their biggest franchise
is a game called Mafia Wars –
 

Mr. BATTELLE: Oh, yeah. 

Mr. WILSON: …which is one
of the best social games, maybe the best social game. So, that’s one
company. Another company is Boxee. You showed a logo of Boxee. Boxee
is a browser, a social browser, kind of like what Flock, I think, is
trying to be. Except it’s designed only to be run on TVs and devices
connected to TVs. So, it’s a browser that’s designed for the 10-foot
experience and it’s social. So, if you and I are friends on Boxee
and you watched, you know, some movie, I see that. You can recommend
it to me, you know, it’s a little bit like Twitter in that way. That
would be another one. Disqus which is a company that a lot of people
scratched their heads about why are you messing around with a blog comment
service? I think blog comments are very important piece of the social
media landscape. I think of, sort of the four big channels in social
media as Twitter, Facebook, blogs and blog comments and Disqus is the
leading provider of third party comment system on the Web. And so, you
have for five, Meetup, which is also a social media company hiding as
a service that gets people off the Web.
 

Mr. BATTELLE: Now, I’m thinking
about each one of these and it’s true. When you look at Meetup or
Disqus, Zynga, Boxee, I want to talk about separately. But, even Boxee,
I know that Boxee is sort of a half a million or so, a little more,
the rest of them, very, very large in terms of the amount of people
that are involved with this service in some way. A really funny headline
crossed my e-mail this morning and the headline, it was from one of
the news services that I subscribe to. I can’t remember which, which
is kind of one of the problems that news services have. But, it said
“Susan Boyle Fails to Monetize Massive Web Popularity.” So, this
is the woman who just lost the British version of American Idol which
I'm sure that in England they would kill me for saying that because
it started there. But, she's got millions of YouTube plays and this
is just you know as huge instant web star.  But, the headline in
the industry publication was that she failed to monetize that massive
population. Do you worry about that for something like Zynga or something
like Disqus.
 

Mr. WILSON: I don't worry about
it for Zynga because they’re already monetizing at a phenomenal rate,
let’s leave it at that. But, yeah, we worry about it with every single
one of our services. I mean, I worry about it with Twitter, right. Twitter
has no revenue so…
 

Mr. BATTELLE: That was a bridge
to the next question.
 

Fred: So, this is a hard thing
to do, to figure out how these companies which are based implicitly
on delivering a free service to get mass adoption. And then, you can’t
turn around and start charging people to use it. That will end the party
right then and there. So, you have to come up with some way to monetize
these services and I think there is no one way. That’s the problem.
I mean, in the early days of the Web, it was slap-a-banner ad and then
we got to search and everything was about clicks and paper clicks. And
now, we’re in this new world and I don’t think there is going to
be one magic bullet that solves the problem in terms of monetizing social
media.
 

Mr. BATTELLE: Let’s jump
into Twitter.
 

Mr. WILSON: Right. 

Mr. BATTELLE: There have been
an awful lot of, I’m sure, very helpful speculation on what Twitter’s
business model or models might be. Can you enlighten us on the ones
that at least you and the team pay attention to or find worthy of consideration?
 

Mr. WILSON: Sure. I don’t
want to get on in front of Ev and Biz on this but I can amplify some
of the things they’ve already said and maybe give you a little bit
more insight. They feel very strongly that they’re not going to charge
people to use Twitter. So, that’s not going to happen and I think
Biz was very clear a week or two ago that they think banner advertising
is a pretty unlikely solution to that. So, the things that they’re
more interested in are creating premium accounts for people who need
premium accounts. The kinds of people who need premium accounts are
businesses that are doing real business on Twitter, celebrities who
need to be known as, if it’s Oprah, you need to know that it’s Ophrah.
If it’s Mr. John Battelle, you need to know it’s Mr. John Battelle.
So, there’s…
 

Mr. BATTELLE: Now, I have,
no one else does, but I have to pay.
 

Mr. WILSON: You need to know
that.
 

Mr. BATTELLE: I have to pay
for Twitter soon.
 

Mr. WILSON: You don’t have
to, that’s the whole point of this. That Twitter’s going to –
 

Mr. BATTELLE: But I get the
real Mr. Battelle, like the real shack
 

Mr. WILSON: Exactly. 

Mr. BATTELLE: Does that put
me into the suggested users box? That’s what I want to find out.
 

Mr. WILSON: That may well be.
That may well be part of, you know, I think, suggested users is a piece
of this. And I think there are – one could imagine, if you think about
what businesses and celebrities and brands need on Twitter and what
they’re not getting today, there’s a whole set of premium services
that are there. And you don’t have to have them if you don’t want
to. But they’re there for you and they’re priced in a manner that
makes them affordable and scaleable. So, that’s the first big initiative,
that’s the thing that Ev has been talking about for most of this year
and I fully expect that we’re going to have a bunch of those services
in the market by the end of the year. So, that’s one. The second thing
that I think is pretty obvious is there is something to do around search.
Not every Twitter search is necessarily monetizable. When you search
on your name or you search on your company or you search for that hash
tag CM Summit or whatever, there may not be any real commercial activity
there. But, if you're doing research on, I want to buy a digital camera
and I want to know what digital camera do. So, I'm going to go search
Twitter to see what the chatter is about this service, there's clearly
monetizable intent there. And I think Twitter will do something to monetize
that. So, that's a second area. And then the third is mobile. And I
don't think that the things to do in mobile are the things that the
people might be thinking about. We're not going to start charging people
to send and receive messages over and over mobile. But, you know, you
think about Twitter is the – I don't have this verified. But, I've heard
it from a couple of sources. Twitter's short code here in the States
is 40404 is the most used short code in North America more than any
other short code.
 

Mr. BATTELLE: Wow! 

Mr. WILSON: And Twitter also
has –
 

Mr. BATTELLE: Can someone tweet
that please?
 

Mr. WILSON: And like I said,
they’re not verified but that’s what I’ve heard from a couple
of people. The other thing that you’ve got to think about is that
Twitter has a phone number for most of those 32 million people. And
those people are actively engaging in mobile device to mobile device
communication. So, there’s a bunch of things that one might want to
be able to do mobile to mobile that we’re not doing today. I might
want to be able to pay you some money, for example. Facebook has launched
a payment system and I think that that’s a very smart move on their
part. And I would hope that sometime in the next couple of years, Twitter
could launch a payment system or maybe front end the payment system
from somebody else. So, these are the kinds of things that I think are
the highest value to the community and to Twitter and to the businesses
they are conducting business on Twitter. And those are the kinds of
monetization systems that make sense to me and I think to the Twitter
team to go after.
 

Mr. BATTELLE: You mentioned,
I want to unpack one thing. You said something about brands on Twitter,
sort of like celebrities having the ability to sort of build an official
presence.
 

Mr. WILSON: Right. 

Mr. BATTELLE: Not unlike what
Facebook’s done with Pages, right?
 

Mr. WILSON: Exactly. 

Mr. BATTELLE: And there’s
a lot of things that Twitter is doing that, are like what Facebook is
doing and the reverse. Facebook has actually redesigned around a sort
of like Twitter like thesis. The two companies seem to be staring at
each other quite directly.
 

Mr. WILSON: I think learning
from each other, that may be is another way to put it.
 

Mr. BATTELLE: So, how did you
feel when Evan said no to half a billion dollars from Facebook?
 

Mr. WILSON: Ev wrote a great
memo, which probably will never see the light of day, to the senior
managers.
 

Mr. BATTELLE: You could forward
it to me if you like.
 

Mr. WILSON: …to the senior
management team and the board and he said, you know, there’s – I actually
don’t remember if it was four or five, but about four. There are four
reasons why a company should sell. The management team is tired and
does not have it in them to take it to the next level. There is a life-changing
financial event for the management team. There is some huge business
problem that we can’t solve on our own. A good example of that would
be YouTube and the whole sort of intellectual property issue. And, I
forget what the fourth one was, but anyway, he articulated the reasons
why a company ought to sell. And then he pointed out that we face none
of those issues and that we could finance the company and that we have
plenty of opportunity to create a sustainable business and that the
service was growing. And this was all last fall and he was right about
all of that. So, I think that in hindsight, he really provided great
leadership around that decision and convinced everybody to say no and
I think it was the right decision.
 

Mr. BATTELLE: Do you think
that there is a number and then I’ll stop? But do you think that there
is a number or is it really that that decision is the same decision
even if it gets too YouTubian or DoubleClickian kinds of numbers?
 

Mr. WILSON: I honestly don’t
know because no one has thrown a number out. So, you know I think…
 

Mr. BATTELLE: You see, I just
got information out.
 

Mr. WILSON: So, you know, until
you – I mean, what I've always learned is that the answer is no. You
know, we're not selling and then, you know, at some point, someone comes
along and, you know, Google could have sold but nobody ever really put
a deal in front of Larry and Sergey that was a number that, you know,
convinced them not to.
 

Mr. BATTELLE: Right. 

Mr. WILSON: And so – and I
think maybe the same thing is true at Facebook. I've heard from people
at Google that there were conversations about buying YouTube and Facebook
at the same time and they concluded that it didn't really make sense
to do two billion plus acquisitions at the same time. There's too much
operational risk around that. So, that suggests to me that Facebook
could have been bought at some point.
 

Mr. BATTELLE: Yeah. 

Mr. WILSON: So, I think the
answer is that, you know, you can never say never. But, it's also true
that all the points that have put in that memo last fall are true today.
 

Mr. BATTELLE: Right. 

Mr. WILSON: And so I think
there's a real bias in which everyone has been very clear about. I think
that there's a real bias that we should try to make Twitter an independent
company for the long hall. You know, Tim O'Reilly has this thing about
the internet-operating system. And if you look at what the internet-operating
system is, it's the internet and a bunch of functions that come with
it. Your search function is Google and your purchase function is Amazon
and your list-something-for-sale function is craigslist or eBay and
you could go on and on and on. And I think Twitter has the opportunity
to be the function, which is tell the world what you're thinking, right?
If you have something that you just want to say now, you do that by
posting it to Twitter and then the internet takes it from there. So,
it's a short message input function. And because of the open API, there
are already 11,000 services built on top of that.
 

Mr. BATTELLE: Yeah. 

Mr. WILSON: And so we're headed
to a million services built on top of that. So, Twitter is, I think,
becoming a piece of internet-operating system and most of those companies
I just mentioned are independent companies.
 

Mr. BATTELLE: Right. 

Mr. WILSON: And it may be that
in order to continue to be a piece of the internet-operating system,
you need to be an independent company because if you sell delicious
or you sell Flickr or you sell whatever else it may be, it get sucked
into something that's not part of the internet-operating system and
a new function gets built.
 

Mr. BATTELLE: So, you were
just talking about Yahoo there?
 

Mr. WILSON: I didn't mean to
be…
 

Mr. BATTELLE: As not… 

Mr. WILSON: I didn't mean to
be talking about Yahoo.
 

Mr. BATTELLE: But it does when
you sell it and becomes part of a greater whole. Somehow, it loses some
part of its essence.
 

Mr. WILSON: I think so. 

Mr. BATTELLE: Let's pull back
for a second and talk about marketing, a room full of people who are
invested in figuring out how to take a brand into the space, into the
social media space. Specifically to Twitter now as opposed to what might
be coming and more broadly, any lessons that you might have or how to
be – how to practice the craft of marketing in this sort of mercurial
environment.

Mr. WILSON: Well, I think you
said it in your introductory remarks. It's – you've got to have the
conversation. You got to be in the conversation. A good example of this
– two or three weeks ago, I guess and I don't do very often on my blog.
I did a bitch post and I bitched about American Express. And it was
a great thing that…
 

Mr. WILSON: Marcy, leading
the audience…
 

Mr. BATTELLE: One of our sponsors,
thank you.
 

Mr. WILSON: Came into – in
the conversation and left a comment.
 

Mr. BATTELLE: Yeah, right. 

Mr. WILSON: And it was a great
thing. And the comment discussion took a new life after that happened.
But, it wasn't as good as it could have been. And yesterday evening,
I wrote a post about conferences and pointed out that I've never been
to a TED conference and probably never will go to a TED conference.
What's interesting about that is that several of the people behind TED
were very quickly in that conversation and a bunch of people rallied
around TED and if you go look at that comment thread, it's a very balanced
conversation and in fact, it might even be a pro-TED conversation. That
didn't happen with American Express. Now, I don't know that the two
brands are that comparable because American Express is a big company,
right? And everybody has had at least one experience with American Express
that might not have been ideal. So, so you know, it's harder to imagine
that, you know, hundreds of people would have come to the aid of American
Express in that conversation. Whereas with TED, you know, it's a beloved
brand among some group of people and those people were there. Whenever
I write about Apple and I'm very critical of Apple, the Apple fanboys
come out and they come out with a vengeance and you know, they can…
 

Mr. BATTELLE: You know, this
is actually a very interesting point because there is – I mean, my first
job in this business 25 years ago was being a reporter covering Apple.
 

Mr. WILSON: Right. 

Mr. BATTELLE: So, I know that
fanboy, they're actually like fan old men now.
 

Mr. WILSON: Right. 

Mr. BATTELLE: But, I know them
very well and what I find extraordinary about it is that Apple is the
only company that has that kind of an extremely, you know, evangelical
base on the web that absolutely ignores it and does not feed it, right?
They do not join the conversation. Apple is a very traditional company
when it comes to this. It's almost like they're playing a little judo
and saying we're not going to do what everyone else is doing.
 

Mr. WILSON: Well, they can
get away with it because they have – they're ninjas, right? And they
know that their ninjas are going to fight their fight for them.
 

Mr. BATTELLE: Right. 

Mr. WILSON: But, I think most
brands don't have that and so I think they have to create social media
ninjas of their own.
 

Mr. BATTELLE: Apple ninjas.
Good point.
 

Mr. WILSON: I didn't make up
that term, social media ninja.
 

Mr. BATTELLE: No. 

Mr. WILSON: David Kidder and
Max Kalehoff from Clickable were the ones who introduced it to me. And
that they have inside their company a group of people that are called
social media ninjas and they use it very effectively.
 

Mr. BATTELLE: I want to ask
you about a couple of the post you've made recently and it's more like
your ideas.
 

Mr. WILSON: Right. 

Mr. BATTELLE: One of your ideas
is called "The Power of Passed Links."
 

Mr. WILSON: Right. 

Mr. BATTELLE: You wrote a post
about that in April. I think it was in April.
 

Mr. WILSON: Right. 

Mr. BATTELLE: Can you enlighten
us on – and sort of generally, the idea there and why you think it matters?
 

Mr. WILSON: So, what I've been
looking at is the refer logs for all of our portfolio companies and
also wherever else I can get somebody to show me their refer logs and
I've been building a database hopefully over time and looking at the
amount of links that are coming from organic and paid search, just largely
Google, to be honest. And a number of visits that are coming from what
I consider to be social media, which is in my mind, Facebook, Twitter,
blog and blog comments. And what's interesting to me is that Google
is still doing great and the amount of traffic that most companies are
getting from Google – for most people, it's somewhere between 40 and
60, 70 percent of the traffic. So, Google still owns the web. But that's
only grown at about maybe five or 10 percent month over month, maybe
even less for some companies. It's growing though. But, social media
is growing at a very fast clip. Twitter and Facebook are growing at
like 40 percent month over month, the number of incoming visits. And
those visits are coming from what I called passed links – links that
are passed from me to you. And of course, with the re-tweet function
in Twitter in particular, that can get amplified very, very quickly.
And so I think that, you know, email is another form of passed link.
It's the original form of passed link, but emails can get passed around
virally but most emails don't have that kind of amplification factor
that social media does. Blogs and blog comments, I think, are a big
piece of this but hard to see because they're not coming from a single
domain and so that's a real problem and opportunity for somebody to
go kind of grab a ball to blog domains and all the blog comment domains
and call that blogs and give that data to people who use Google analytics
and others to kind of see how much of that is coming from blogs. My
guess is that blogs as a group is equally powerful and more powerful
than Facebook and Twitter. But any case, you take those trend lines
and you take them out another year. Social media together is going to
be bigger than Google.
 

Mr. BATTELLE: In other words,
this thesis played out is trouble for Google because Google has gotten
to its position by being the circulatory system of the web.
 

Mr. WILSON: Right. 

Mr. BATTELLE: And now, a new
circulatory system is developing, which is laid over it – it's dependent
on it, certainly. It's integrated with it, but it is growing much faster
than it.
 

Mr. WILSON: Happens all the
time. You know, when the U.S. government was trying to go after Microsoft,
you know, for being a monopoly, what was happening was that, you know,
the hackers were building Linux. And now, you know, as Google starts
to look like a monopoly who owns the web, we're coming together to create
a new form of media. It's more powerful than it, so I think this is
inevitable.
 

Mr. BATTELLE: So, I wrote a
post in March or actually, I guess it was earlier than that – in December
where I said Twitter equals YouTube because people were noticing that
search referrals – there's sort of a new signal of search on the web
and it was Twitter and that seems to really be growing the amount of
search that's coming out of Twitter.
 

Mr. WILSON: Yeah. I'm not convinced
that the thing that Twitter does that's so disruptive is search.
 

Mr. BATTELLE: Well, it's not
so much that it's a search in the traditional form but rather, I think,
every tweet might be seen as a query.
 

Mr. WILSON: That I agree. I
really think of it as this passed links phenomenon, right. So, I saw
it this morning. I, you know, ComScore has some big news today which
I think they're going to be talking about at some point.
 

Mr. BATTELLE: And they’re
announcing it here.
 

Mr. WILSON: Right. 

Mr. BATTELLE: Stay tuned. 

Mr. WILSON: So, I wrote a blog
post, you know, John knows it. I was on the board of ComScore. I was
one of the founding investors there and was on the board for nine years
and it's a company that is still near and dear to my heart although
I’m not involved now anymore. They have some big news and I wrote
a blog post about it and I twitted it and in the 20 minutes between
when I posted and left to come up here, it had been re-twitted about
30 times. I don't know how big the audiences of those people who re-twitted
it where, but if each of them had a thousand followers, you know, that's
20,000 people who are going to see it at length that did not see it
on my initial…
 

Mr. BATTELLE: Right. 

Mr. WILSON: I mean, there's
obviously some overlap, but that to me is maybe a bigger deal than search.
 

Mr. BATTELLE: Right. 

Mr. WILSON: Is that viral spreading
of links.
 

Mr. BATTELLE: So, you're using
that viral spreading of links to focus that quick silver attention on
something in the moment.
 

Mr. WILSON: Right and it is
relevant.
 

Mr. BATTELLE: Right. But that
is exactly what search does, except in the static form as opposed to
real time form and that's the thing that I find so fascinating.
 

Mr. WILSON: What's different
though is search is very intent-driven.
 

Mr. BATTELLE: Right. 

Mr. WILSON: I want to buy a
digital camera. I go, I search, I buy. And the passed links thing is
much more serendipitous. StumbleUpon, I think was a very interesting
service we weren’t an investor in it, but it was very serendipitous
when you stumbled upon something. And I think that Twitter and Facebook
and social media more broadly, I think, is a more powerful way of that
serendipity. I’d see you want, I think in life you want some things
you subscribe to, you want some things that you go search for and then
everything else you kind of want to come at you through some filtered
set of trusted sources. And that’s…
 

Mr. BATTELLE: Through what
Mark calls the social graph.
 

Mr. WILSON: Correct. But the
social graph that the problem that Facebook has and they know it, is
that there are a lot of people out there who are not friends, who are
really powerful social recommenders and you're not just going to have
them in your social graph in the original instantiation of the way Facebook
was setup.
 

Mr. BATTELLE: Yeah. 

Mr. WILSON: And so, I think,
blogging to me is the proper model and I think that the people who started
Twitter launched Twitter with the blogging model, which is I can follow
you and you don't have to read me. And we don't have to be friends,
but you can be influential and that is, I think, a more natural model,
that relationship model to me.
 

Mr. BATTELLE: That's one of
the reasons that we have both LinkedIn and Aardvark here, as I think
the second and third order social graph is very, very interesting as
a recommendation filter, right?
 

Mr. WILSON: Right. 

Mr. BATTELLE: But, I think,
everyone who uses LinkedIn, one of the things about it that works is
that it is not just who you are connected to professionally, it is who
they might be connected to or who they, you know, third order as well.
In Aardvark which is a service you'll see here, it works exactly the
same way.
 

Mr. WILSON: Right. 

Mr. BATTELLE: We're going to
run out of time if I don’t let you guys get some questions. And so
I think, we've got folks with microphones if anyone wants to ask Fred
a question that I haven't asked. Please raise your hand and do. I want
to make this as much a conversation as possible. Thank you for the house
lights. While you do that, let me ask you about earning media, because
that is another one of the ideas that I found really important that
you’ve written about recently.
 

Mr. WILSON: So earn media is
the opposite of paid media. So instead of going out and buying media,
figure out a way to earn the media, and there’s lots of ways you can
do it. I mean, it all started with PR. I think the PR firms are the
ones who created the term earn media. But I think that now with the
whole social media eco system out there, there's a lot of ways you can
earn media and many of the best things that have been done are things
that you've been doing John with your partners to create presence in
the blogs and presence in Facebook and presence in Twitter and other
places. And, you know, my favorite story about that is the Korean Barbeque
Taco trucks in Los Angeles. There are two trucks – Kogi BBQ. If you're
ever in LA and you use Twitter, just follow Kogi BBQ and they drive
all around, these two trucks drive around LA and they Twitter where
they are. If you happen to be near where they are, you can go get one
of the best Korean barbeque tacos you've ever had. And I think, you
know, they've got 15 – the last time I checked, they've got about 15,000
followers and they've done it all through blogs, Flickr and Twitter
and that's a great example of earning their media. They don't have to
buy it.
 

Mr. BATTELLE: Yeah, and their
lines are ridiculous. They just show up and there's a flash crowd around
their taco truck.
 

Mr. WILSON: Right. 

Mr. BATTELLE: …which is pretty
cool. They have a question over here.
 

Unidentified man #1: Hey, how
is it going? Love the matching outfits by the way.
 

Mr. BATTELLE: He’s got
checks and I got stripes.
 

Unidentified man #1: Only because
I'm wearing the same suit, I think. So Fred if you're the CEO or board
member investor somehow magically in-charge of the New York Times, what’s
the first three to five things you would do?
 

Mr. WILSON: I would get rid
of the paper. I would shut down the paper. I would stop…
 

Mr. BATTELLE: Is it the Times,
I'm sorry.
 

Mr. WILSON: Yeah. I would stop
covering stuff that is covered better elsewhere. I’d stop covering
business, The Journal does it better. I would stop covering sports,
The Post does it better, and I would focus on what they do uniquely
well, their opinion, their national political news, their world political
news. I mean when, you know, Obama nominated Sotomayor, is that how
you say her last name, I don't know anyway, to the Supreme Court, the
next day, The Times had three or four really great pieces about that.
Nobody does that better than they are. Do that and do nothing else.
 

Mr. BATTELLE: So the things
you said to get rid over are the legacy revenue streams for the business,
right? You know, business brings in business advertisers, the print
edition used to be the fundamentally, you know, 80% of the revenue.
 

Mr. WILSON: Right. 

Mr. BATTELLE: You’re basically
talking about a plan not unlike GM for The New York Times where you
just sort of take make two companies put the cool – the good stuff here
and all the legacy stuff that's losing money and bleeding but used to
be, you know, in another company like get sold off the parts. So that's
what you suggesting is we should…
 

Mr. WILSON: I think they can
only do what's sustainable, right? And the one thing that's sustainable
for them is the thing that they do uniquely better than anybody else
and that's the only thing, I think, they do uniquely better than anybody
else so that's what they should do. I mean I don't know else what they
can do.
 

Mr. BATTELLE: Over here. 

Unidentified man #2: Hey there,
it's a great discussion. Something that I've seen in the last few months
and I know there's data to explain it, but I'm curious on your take
on it. It seems like MySpace has fallen out of the conversation, you're
talking about social media, you’re talking about social network, about
Facebook and all these other companies yet you never mentioned MySpace.
 

Mr. WILSON: Well, MySpace does
not have viral channels. MySpace isn't a viral service. If you look
at the way that – if you look at people who build apps on top of Facebook
and people who build apps on top of MySpace, MySpace it doesn't –
it just, there's no way, it’s not built in to the nature of their
service, it's stuff gets passed around. I think MySpace is largely an
entertainment business. Largely around music and to a slightly lesser
extent, video and I think that they have a place to exist in that world
as a social entertainment service, but they don't seem to have the DNA
to be a social media service, a broad horizontal social media platform,
the way that Twitter and Facebook are. So that's my take on MySpace.
 

Mr. BATTELLE: I spent sometime
with Jon Miller and Owen Van Natta last week. Jon Miller is the new
chief digital officer for Murdoch and Owen was the number two guy at
Facebook who is now running MySpace. And they're hoping that maybe a
year from now when we meet, you won't be saying that. But, they also
agree that the focus of the company is really on entertainment and music
for now.
 

Mr. WILSON: The problem is,
there are companies out there; AOL, Yahoo and MySpace are all very good
examples of it, that don't have deep technology innovation in their
DNA. And, you know, it seems to me that that is an absolute requirement
if you want to be a platform and I think, that if you don't want to
be a platform, then I don't know what you should be aspiring to be.
I mean, I don't know that there is anything else that you would want
to be.
 

Mr. BATTELLE: One more question
and then I think we are going to have to… Okay, I got it.
 

Unidentified man #3: I'm curious
about your outlook for the US economy and how your expectations for
recovery impact your portfolio strategy.
 

Mr. WILSON: I think the economy
is going through a restructuring more than, I mean, this is a downturn
of course, but I think the more profound thing that's going on is my
partner Albert wrote this thing today about, you know, GM's going bankrupt
and there's all this innovation going on in the technology space at
the same time. And you just think about that for a second. What we're
witnessing is sort of the – or The Times is another good example,
we're witnessing sort of the dwindling of the industrial era and the
rise of the information era. And so, I'm very bullish about our business
and the kinds of companies we invest in and we're seeing it in our portfolio.
And we have a dozen companies that have revenues of more than 10 million
a year or more and all of them were flattish in the first quarter and
all of them are doing much better now. It may just be stimulus money
kind of sloshing around the economy, but I really believe that the kinds
of companies that we were involved in and that many of you are involved
in are going to be just fine.
 

Unidentified man #3: To that
point, you saw that GM and Citi exit the Dow Jones 30 and Cisco was
added to that point.
 

Mr. WILSON: Good example, perfect. 

Mr. BATTELLE: Well, we can't
keep going for a much longer time but please join me in thanking Fred
for coming here.
 

Mr. WILSON: Thank you.

A Pause From The Regular Programming For A Commercial

Prod_washes This is not a paid post. This is a shout out for a product that I think is the best of its kind and I wanted to share with all of you.

The Gotham Gal found this product a few years back and we've been using it in our home for about five years now. It's called "In The Raw Body Wash". I am a fan of grapefruit/tangerine, but it comes in about a dozen frangrances.

Here's why I like it so much; great packaging, the pump works flawlessly, it's plastic not glass, its the right consistency, it washes off well, it's thick enough that I shave with it, and every one of the various frangrances is a winner. And the products are organic and handmade.

You can buy it online on their website. If you try it out, come back here and let us know what you think.

Aggregate, Curate, Publish To Create Local Media

If I was starting The Village Voice today, I would not print anything. I would not hire a ton of writers. I would build a website and a mobile app (or two or three). I would hire a Publisher and a few salespeople. I would hire an editor and a few journalists. And then I'd go out and find every blog, twitter, facebook, flickr, youtube, and other social media feed out there that is related to downtown NYC and I would pull it all into an aggregation system where my editor and journalists could cull through the posts coming in, curate them, and then publish them. I'd do a bit of original reporting on the big stories but most of what I'd do would be smart curation, with a voice, and an opinion.

The good news is I wouldn't have to build that aggregation and curation system. Our portfolio company Outside.in has built it and they launched it earlier this week. It's called Outside.in For Publishers (OIP). If you are interested how it works, you can click thru and read that post. If you want to see what the curated pages created with OIP look like, here's one from Milwaukee Wisconsin.

What would the P&L of this new local media company look like? Well Peter Kafka of All Things D and Mark Josephson, CEO of Outside.in have been collaborating on that and Peter published a strawman local media company P&L on his blog the other day.

As you might imagine, it's a "honey we shrunk the kids" story. The topline goes down by an order of magintude and so do the costs. The profits are still there (at least in theory). In Mark and Peter's strawman model, a local media business with 40mm monthly page views does about $7mm in annual revenues and almost $3mm of pre-tax income. You can go click on that link in the above paragraph if you want to see the model.

Of course, there are going to be a lot of variations on this model. At Huffington Post, I believe the formula is create 20% of the content and link to the rest. I think you could make this model work with a 50/50 creation/aggregation model but it would have to be the right locale, the right journalists, and the right advertising market.

Whether the tools come from Outside.in or someone else, I am confident that this is the direction of the local media business. As Mark says in the Outside.in post:

Quite simply, everyone is a publisher today.

And if that is true, and I think it is or will be, then the local media companies that leverage their audiences for their content, create communities and conversations, will win. And they'll be profitable businesses worth owning and investing in.

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What Kind Of Content Is Popular On The Internet?

I love how Gawker Media is so transparent with their traffic stats. At the bottom of every Gawker site is a link to the sitemeter stats. I've spent some time over the past week looking closely at Gawker's site network and looking at the stats. It's an interesting story. Here's most of the Gawker network:

Gawker properties

In addition, Gawker also operates the Fleshbot porn network. So it's interesting to see how all these sites do and what are the ones with the largest audiences. The links below are not to the sites themselves but to the stats pages of the sites.

The Gizmodo blog (Gadgets) is by far and away the most popular site on the network with 90mm monthly visits and 6mm uniques.

Lifehacker (hacker lifestyle) is next with 5mm uniques but only 30mm monthly visits.

Kotaku (Gaming) has more visits than Lifehacker (45mm monthly visits) but about 3mm uniques.

The flagship Gawker (gossip) blog has 2.7mm monthly uniques and about 20mm monthly visits.

The rich verticals of autos (Jalopnik), women (Jezebel), and sports (Deadspin) all clock in at between 1mm and 2mm monthly uniques and 10mm to 20mm monthly visits.

Coming in at the back of the pack is Sci-Fi (io9) and porn (Fleshbot) with about 10mm monthly visits.

Of course, it's a bit crazy to use one blog network to make any conclusions about the overall popularity of various forms of content on the Internet. And some of these sites are more mature (like Gawker and Gizmodo) than others (io9).

But it is interesting to me that gadgets and geek lifestyle are bigger properties with more growth than things like autos, women, and sports. And it is also interesting that gaming is doing much better than gossip. And of course, it's worth noting that porn is coming in last.

If you look at the comScore/Media Metrix Global Top 100, what you see is that very little of this kind of content is in the top 100. It is dominated by utlities (search, social networking), games, ecommerce, and international properties. However, ESPN does have 35mm monthly uniques and iVillage does have 33mm uniques. Gawker Media itself comes in at #247 on the Media Metrix global list with about 15mm uniques.

So, in conclusion, I think it is safe to say that the Internet is not just for porn. It's mostly for social media, search, shopping, and other utilities. And when it comes to content, geeks and gamers are still a very important audience on the Internet. I wonder if it will always be that way.

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Boxee App Dev Challenge Winners

As a follow up to my post last night about the big Boxee announcement, here are the winners of the App Dev Challenge that were announced last night:

Video Winners:
    Popular Choice – BBC Live (Ian Tweedie)
    Judge's Choice – Open Course Ware (Roshan Revankar)
Music Winners:
    Popular Choice – Drop Boxee [drop.io on Boxee] (Jon Steinberg)
    Judge's Choice – We Are Hunted [this got my vote] (Nick Dima)
Photo Winners:
    Popular Choice – Facebook (Junda Liu)
    Judge's Choice – Facebook (Junda Liu)

It's great to see all the stuff (like MLB, Digg, Tumblr, Current.tv, etc) that Boxee is bringing to the platform, but I am way more excited to see the app ecosystem take off. Apparently there are about 120 apps on Boxee now. My hope is that number will grow into the thousands by year end. At the end of the day, it's people like Ian, Roshan, John, Nick, and Junda (ie us) that will make Boxee the best media browser.

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A Bunch Of New Stuff From Boxee

Image representing Boxee as depicted in CrunchBaseImage via CrunchBase

Our portfolio company Boxee is announcing a bunch of new stuff tonight (Tues night) in San Francisco. I blogged about this event last week and I hope some of you were able to attend as I could not. Here's some of the highlights from today's announcement:

- A new homepage that actually describes what Boxee is and why you should care

- A public alpha of the Windows version. Now the three versions, Mac, Windows, and Ubuntu are in sync on features. The plan is to keep them that way going forward.

- A partnership with Major League Baseball to offer MLB Premium to Boxee users. Live sports on Boxee is a "you have to see it" experience.

- A new navigation layout that clearly differentiates from streaming apps (like MLB Premium) and local media.

- A partnership with Digg to create Digg for TV

- A Tumblr app for Boxee (two USV portfolio companies working together always warms my heart)

- 1080p HD videos on Ubuntu

- A whole bunch of new Boxee apps (some of which I blogged about last week) resulting from the Boxee App Dev Challenge. The winners will be announced tonight.

There's a live stream of the event tonight provided by Justin.tv. I'm going to try to watch it live since I can't be there.

This is just the beginning for Boxee and bringing video on the web to your living room television. I'll use a baseball analogy in honor of MLB's partnership with Boxee. I feel like this "web video to the living room" is a nine inning game and we are in the first or second inning right now. It's going to be exciting to watch and participate in.

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Need Some 15 and 30 Second Spots? Hire Your User Base.

Our portfolio company Etsy has set aside $10,000 to produce some video spots promoting Etsy. That doesn't sound like very much money and it isn't. But they are not spending it with agencies and production companies. They've started the Etsy Handmade Moment contest and have established a first prize of $3250, a second prize of $1250, and six runner up prizes of $500.

If you love Etsy and know how to make videos, this contest may be for you. Submissions will be accepted through August 31, 2009. You can read the details of the contest here.

They've already gotten a bunch of submissions which can be watched here. This is my favorite so far:

This isn't a new idea. I'm reminded of the contest Firefox did a while back. But it's a good idea. For a lot less than you'd spend with an agency and a production company, you can get fun spots that come from your user base. And in this day and age of social recommendations, getting your user base involved in your marketing efforts is just makes good sense.

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My Week With Bing

Switching to Bing for a week had no meaningful impact on my internet experience, either positively or negatively. I was able to find most of what I was looking for with Bing and I enjoyed the experience. That said, I found no reason to switch from Google and I am returning to my practice of relying on Google as my primary search engine.

Here's some high level thoughts:

- Bing's image search is an improvement over Google's. When I look for an image, in the past, I would go to Flickr first and Google second. In the future, I'll go to Flickr first and Bing second.

- Bing doesn't know about social media. If you search Joanne Wilson on Google, my wife's Gotham Gal blog is the first result. If you search Joanne Wilson on Bing, it's not even on the first page.

- Bing's search results feel less "real time" than Google's, probably as a result from the lack of news links. This is an area both need to work on.

- There's a lot less paid links in Bing's service than Google's. I view that as a bad thing although many will view that as a good thing. On many ecommerce searches, I prefer the paid links over the organic links, which are often spammed up.

Our portfolio company, Clickable, which offers a easy to use front end to search and keyword ad buying for small businesses, did something similar last week and published their thoughts on the Clickable blog. They were more analytical in their analysis than me but came to pretty much the same conclusions.

That's my quick take. I'd love to hear all of yours.

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