Posts from February 2005

One of the big risks in web-based businesses that survive on advertising or data revenues is losing customers via churn.

I am reminded of that when reading this Brianstorms post, called Things I’ve Stopped Doing.

For fun, click through to the main site and check out his Christo inspired motif.

The Gotham Gal and I watched most of the Grammy’s last night.

But Josh missed it as he had to go to bed early.

And since it’s his birthday, we are watching the Tivo recording of the show tonight.

My highlights:

Joss Stone ducking the cameras when she was announced for her Grammy nomination.  She’s still a kid after all.  And her Janis Joplin tribute too.  What a voice that girl has.  And we love that she sings barefoot. I hope stardom doesn’t change her.

U2 singing Sometimes You Can’t Make It On Your Own.  Bono and the Edge never fail to entertain me.

Green Day’s performance of American Idiot.  It rocked and they rock!!!!

Kanye West’s acceptance speech.  His ending was awesome, "Everyone wondered what I’d do if I didn’t win.  Well I guess we’ll never know".  You got that right Kanye.

Ellen DeGeneres’s American Express ad.  I love her and the ad.

Freebird and Sweet Home Alabama. Yes, I grew up in the 70s.

And one thing that wasn’t on the show – Wilco’s first Grammy for Best Alternative Rock Album.  I suspect the fact that Wilco decided to honor an obligation to play a show in Birmingham, Alabama last night had something to do with being left out of the show.

Regardless, as Bono said, it was the best Grammy’s I’ve seen in a long time.

I came across a great article this weekend in eMarketer.

The piece is titled Web Marketers Branch Out Beyond Banners.

That is not news as web marketers have been using other ad methods for years.

But the stats in the article are fascinating.

Here is a chart of the best performing categories of online marketing according to AdTech attendees in December 2004.

First of all, its my pleasure (as a large shareholder of two email marketing companies) to point out that emailing to house lists performs better than paid search (the current darling of online media).

But beyond that, my main point of this post is that behavior matters. The top three performing segments of online media are based purely on behavior.

First comes house lists.  You don’t get onto house lists in this post Can Spam environment without asking to be on them.  Opting into an email list is behavior of the highest order.  You are asking to get info mailed to you.  No wonder they perform so well.

Second comes paid search. Paid search ads result from a person typing in a keyword in a search field.  That’s behavior of the second highest order. It’s a consumer looking for information, possibly on your product or service. Again it’s not surprising that these ads perform so well.

Third comes behavioral targeting.  This technique involves the publisher storing profiles on a consumer’s behavior and serving ads that are targeted to that behavior. This is less active behavior in some regards than the first two, but it’s active behavior that’s driving these ads and I am not surprised to see that this method performs almost as well as the first two.

As some readers of this blog know, we are investors in Tacoda, the leader in behavioral targeting, so I am pleased to see that the market has come to realize that behavioral is in the big leagues along with emailing to house lists and paid search. It’s about time.

My cousin Ned Drew took this great panoramic photo of The Gates.

I am not sure how he did this, but its very cool.

Every once in a while a record comes along that takes me back, time machine style, to a time that’s come and gone.

So it is with The Killer’s record, Hot Fuss.

This record takes me back to the late 80s when the Gotham Gal and I were married without kids and living in the east village.  We loved The Cure and listened to them all the time.

The Killers sounds so much like The Cure, particularly before they began their Disntegration.

The songs that have gotten the most airplay on this record are the Grammy nominated Somebody Told Me and Mr. Brightside, which is quickly moving to the top of the iTunes Top 10.

Stuck right between them on the record is my favorite track, Smile Like You Mean It. If you heard this song on the radio, you’d think it was The Cure.

So, Smile Like You Mean It is my MP3 of the Week.

I hope you like it.

I saw this scene on the way to work this morning and I had to shoot it and blog it.

The street cleaner is driving up the left side of the street, cleaning it.

The cars that were parked in front of it are moving aside to let it by and then angling to back right in behind it.

Such is the life of a "opposite side of the street" parker in NYC.

You’ll also notice a garbage truck up ahead of this mess causing even more congestion on 10th Street this morning.

Josh is nine years old today. 

He’s a valentines day baby and its appropriate because he’s such a lovable guy.

I think watching the youngest child grow up is possibly the hardest because this is the last ninth birthday we’ll celebrate with one of our kids.

But there’s also a great side of them growing up and that’s watching them embrace the world around them, something Josh does with abandon.

So Happy Birthday Josh.  I hope you have a great day!

We took the whole family up to Central Park today to see Christo‘s public art project called The Gates.

It was a beautiful sunny day with clear blue skies serving as the perfect backdrop for the bright orange gates that are lined up one after another all over the park.

We weren’t the only ones who decided to go see The Gates today.  The park was mobbed with people and I suspect it will be that way until the project comes down in two weeks.

But it really didn’t matter.  The crowds of people didn’t take anything away from the beauty of the installation.

If you live in NY or nearby or are visiting the city in the next couple weeks, I would urge you to go see The Gates. It’s a really amazing sight to behold.

UPDATE: Jarvis hated The Gates.  I’ve heard that from a few people.

I loved them.  It was a river of color flowing through the park. It lit the place up. Beauty is art, its that simple for me.

Several of the comments to Cringely (continued) and Fisking Calacanis asked me if I had read the Change This manifesto called Fixing Venture Capital by Joel Spolsky.

Yes, I have read it.

Joel makes some good points, but I think he’s wrong that the venture capital business needs to be fixed.  Some VCs should be fixed, but the business as a whole works pretty well.

Here are the major points Joel makes in his manifesto:

• VCs only want 100 to 1 returns and are willing to risk everything to get them while entrepreneurs want a safe high probability bet.
• VCs are so inundated with business plans that they become focused on the process of whittling down opportunities instead of finding the best opportunities.
• The "standard VC deal" is unfair to entrepreneurs and smart ones won’t take it.

Some of this is familiar territory as Jason’s rant articulated a few of these themes as well.

The first two points are accurate about some VCs, but not the best VCs. The third is the classic situation of one side not understanding the other side.

I’ll take each of them in order.

• VCs’s only want to hit home runs – I don’t think this is true. I’ve worked in three venture capital firms and have worked on over 150 deals with probably close to 500 firms in the 18 years I’ve been in the VC business.  My experience is that VCs are interested in making every investment work and are not in the "hits" business. It is true that if the investments don’t work, the VCs have an interest in getting out of the deal so it doesn’t consume any more capital, but that happens in about 1/3 of all early stage venture capital deals. The other 2/3 end up turning into businesses that the VCs are happy to work on and commit more capital too for as long as it takes for them to become sucessful.
• VCs are too overwhelmed with incoming deals to pay attention to the good companies – This is absolutely true of the bad VCs. But they don’t end up staying in business longer than a couple funds. The best firms don’t focus to much energy on looking at everything that comes their way.  They identify a set of markets they like, articulate their strategy clearly as possible, and then go out and find the deals that fit into their strategy.
• The standard VC deal is unfair to entrepreneurs – Joel focused on two aspects of the "standard VC deal", the "liquidation preference" and the "no shop". 
  • Brad Feld has a long post on the liquidation preference that anyone interested in this topic should read. This term is designed to protect the VCs from having the company sold by the entrpreneur at a price that gets the entrepreneur a good return, but results in the VC losing money. Not only is it fair, but its been standard practice in the VC business since the 1970s and very few deals are done without it.
  • The no shop isn’t designed to stop the entrepreneur from shopping his deal. It’s designed to stop the "shopping" process once the entrepreneur has selected his preferred investor so that the VC can complete his due diligence and hire lawyers to get the deal documented and closed.  It makes perfect sense that once both parties need to start spending money on deal expenses they should have an exclusive period to close the deal.

I hope nobody takes this as a criticism of Joel’s piece because I think its good that he and others are putting the entrepreneur’s views out there for discussion.

My goal is to get the VC’s views out there in response and insure that a healthy and educated debate results.

I’d love to hear everyone’s comments, either in the comments to this blog, or even better on other blog posts.