Posts from July 2005

Protect My Cookies Please (continued)

Dave Morgan, CEO of Tacoda – one of our portoflio companies, weighs in on the cookie debate that I have mentioned more than a few times in the past week.  He also links to my original blog post.

The column is on MediaPost.  You can read it here.  (registration required).

Here’s the best part of Dave’s column if you don’t have the time or inclination to link through to it.


The cookies that concern Walt are not "secret," nor are they delivered
without the user’s permission. For all reputable sites, including
WSJ.com, their use is fully disclosed in their privacy policies. In
fact, many argue that they are an implicit part of the "Terms of
Service." In other words, if you want free content, you must accept the
fact that the site is going to try to place cookies. You can block
them. You can delete them. But you can’t say that you didn’t expect
them. In addition, users control cookies. All of the major browsers
have features that can be set to notify users every time a cookie is
set, or to block cookies according to pre-set rules.


The problem is that no one has taken the time to educate consumers
about what their cookies do and what to expect from them. Of course,
before the days of browser-based cookie controls and anti-spyware
software, this didn’t matter. Cookies just happened in the background,
and consumers rarely saw them or played with them.


Now, however, the game has changed. Consumers are in control. They are
all like Walt. If they don’t know what these things are, they assume
the worst. Now is the time for those that place cookies to step up and
fill this void. Now is the time for the industry to step up. Walt is
just the messenger. Don’t shoot him.

As I said in my post yesterday, tracking is good.  It delivers relevant advertising.  No it doesn’t cure AIDS, but it might get an advertisement for an AIDS drug to an AIDS patient.

As Dave says, the media industry needs to sell tracking to consumers and explain how they do it and the benefits it delivers. So let’s get busy doing that.

Exploding Radio (continued)

It’s been a while since I’ve posted on one of my favorite topics, HD Radio.

The New York Times’ Glenn Fleishman did a nice piece this morning called Revolution on the Radio.

Glenn writes:

Plug a set of headphones
into a radio tuned to an FM jazz station. Hear the hiss at the bottom
of the range and the fuzz at the top. Remember why you like compact
discs.

But don’t be impatient: wait eight seconds. An "HD"
light appears on the tuner. And now the bottom drops out. The hiss
turns to silence. The stereo channels separate, opening a cramped room
into a performance hall. And the high fuzz is now crisp high notes from
a trumpet or Ella Fitzgerald.

This is all true, but I honestly don’t believe the superior audio quality in both the FM and AM bands is going to make HD Radio popular.

I think its going to be the explosion of new formats and programming that will result from broadcasters ability to multicast two, three, or even four signals on a single FM channel.

I think other data services like "buy now", something that XM and Napster are rolling out for satellite radio now, will also prove to be big hits with consumers.

But if you are interested in the future of broadcast radio, go read the article.

AOL

Jeff Jarvis wrote a goodbye note to AOL the other day.

It’s a good read and brought back a lot of memories.

I also have one of the original AOL email addresses with no numbers in it, [email protected], that I’d like to turn over to the spammers who have owned it for the past 10 years. 

But unlike Jeff, I have kids who still use AOL and like it.

So I won’t be shutting down my AOL account anytime soon, unfortunately.

Comscore Measures Blogs

I am an investor and board member of Comscore, which owns Media Metrix, and is also owns the largest web measurement panel in the world with over 2 million panelists.

Nobody, not even Nielsen NetRatings, can hold a candle to Comscore when it comes to web measurement.

So I was thrilled to hear that Comscore is starting to measure blogs. 

At this point, it’s just a research project to figure out how best to measure what is a very fragmented and dynamic market.

But they did showcase some data at the WOMMA event on July 13th in Chicago.

Here is their data on the top blog hosting services.  Note that blogs.com and typepad.com are both hosted by typepad.

Blog_hosting_service_market_share

But possibly even more interesting is the difference in the way the "youth" blogging platforms like Xanga and Live Journal and the "mature" blogging platforms like Blogspot and typepad are used.  Here is a chart showing visits per visitor.

Blog_hosting_visits_per_visitor
Clearly the "youth" blogging platforms are "stickier".

As Comscore starts drilling down into the specific blogs, even more data will come out. 

Hopefully they’ll publish it and we can start learning more about what is going on in the blog world.

Bouncing Emails

I’ve got a bunch of emails and comments from blog readers who have had their emails to me bounce this week.

The email address I publish on this blog’s about page is down and has been since last Friday.

It’s going to be back up soon, hopefully.

I just need to get Verizon to show up and fix a dead circuit.

But in any case, please be patient, and if you got a bounce message, you can resend.

I’ve set up a spooling service that should eliminate the hard bounces.

If you use my most current email address, you won’t have any issues.

Tracking is Good

When I drive around in my car listening to the radio, I find
the ads annoying. Unless they are about
something I care about. Then I listen
intently.

When I watch TV, I experience the same thing. For the most part, I fast forward through the
ads on the Tivo. But if it’s an ad for
something I care about, I slow down the Tivo and watch the ad.

The same is true with email. I hit the delete button pretty quickly for most email marketing
messages. But if an email comes in with
information about something that matters to me, I read it carefully.

Advertising is content when its relevant and its an annoyance when its not.

Walt Mossberg started a recent column this comment:

Suppose you bought a TV set that included a component
to track what you watched, and then reported that data back to a
company that used or sold it for advertising purposes. Only nobody told
you the tracking technology was there or asked your permission to use
it.

You would likely be outraged at this violation of privacy.

To the contrary, I’d be overjoyed. Because tracking consumer
behavior is the best way to deliver relevancy. And I want relevancy in my advertising. Badly.

I am not suggesting that the tracking should be done without
my consent and awareness, but honestly I’d prefer that over no tracking if it
means that I’d get some relevancy in the ads that come my way.

Unfortunately, the first attempts at tracking consumer
behavior on the Internet were made by companies that messed with our
computers. They threw ads at us in new
browser windows (pop-ups and pop-unders). They put executable software on our computers that slowed them down and
in extreme cases made them unusable. And so the process of tracking consumer
behavior has unfortunately been married with the term “spyware” in the minds of
many consumers.

But the bad guys are getting shut down and/or coming clean and the good guys are
starting to embrace behavioral tracking as a way to target advertising. But these efforts by the good guys are
getting slammed by privacy advocates trying to establish tracking as something that
is bad.

That is something that needs to change.  Because if we are
ever going to get more relevancy in our advertising systems, something I crave
and I suspect most people crave, then we need to allow tracking to flourish.

Obviously we need rules about what is acceptable and what is
not.

Does anyone get upset when Amazon makes recommendations
based on past purchase behavior? I think
not. My guess is most people love that.

Does anyone get upset when you get ads from Google that
match the search term you just typed in? I think not.

Does anyone get upset when the NY Times runs travel ads at
you on the front page when you’ve recently visited their travel section? I
doubt it.

These are all examples of using consumer behavior to provide
relevancy in advertising.

It’s the future of advertising and it’s great for everyone.

Marketers love it because it makes their ad spend more
efficient.

Publishers love it because it monetizes their pages better.

And consumers love it because the ads become content instead
of noise.

Signal over noise. That’s what we all want. And
tracking is the way to get it.

So track my behavior please.

Disclosure:
Union Square Ventures and Flatiron Partners have
investments in a number of digital marketing services companies that use
various techniques to increase the relevancy of advertising. And we hope to invest in more over time. We are big believers in the power of targeted
advertising and are putting our money where our mouth is.

VC Cliche of the Week

I spent some time this week working on financing strategies
for some of our portfolio companies. It’s very important to have a financing strategy.

You can’t simply put together a powerpoint deck, set up a
bunch of meetings, and expect someone to step up and do the deal. What if things go badly? What do you do then?

So I believe you need to design a financing strategy that
aims high but has a well crafted downside scenario.

The cliche about this that I like is “hope for the best and prepare for the
worst
”.

It’s a bit like applying to colleges. You might want to
apply for early admission at your top choice, you might have a short list of
three to four places you’d love to go, but you also need a “safe school” that
you can live with.

I knew a kid in high school who applied to one college. He didn’t get in. That really sucked.

So how do you go about hoping for the best and preparing for
the worst
?

I think its best to start with the downside scenario. What happens if your company can’t get anyone
to step up and do the financing on terms that are acceptable?

Well there are a couple approaches to this. The first is to do the financing when you
don’t really need the money. That’s a
great strategy. Maybe you’ve got nine
months of cash left in the bank. Maybe
you go out and talk to three or four potential investors to see if you can get
something done with them on terms you’d like. If you can’t, you stop the process, go back to work, and come back to
market in another six months.

If you don’t have that luxury, then you need to turn to your
existing investors as your downside scenario.

There are a couple of ways to think about this.

The first is to get the existing investors to tell you on
what terms they’d be willing to do an insider round. Get that locked down and then go out and see
if you can do better. If you can’t, then
you come back with your tail between your legs, but comforted in the knowledge
that your company isn’t going to hit the wall.

The second way to deal with this is to put a bridge in
place. Get the existing investors to
loan the company enough cash to fund the company for say six months and agree
to convert the bridge into the next round.

You can even marry these two approaches by getting the
investors to bridge a portion of a potential insider round while you go out and try to
find a new investor to provide the balance of the round and set the terms.

The only thing I would caution against is using the bridge
if you don’t have to. Many new investors
will see an outstanding bridge loan as a sign of weakness and approach the deal
accordingly.

If you need the cash, take the bridge. If you don’t, then I’d avoid it.

Having a downside scenario is really critical to a
successful financing strategy because it gives you confidence. Then you are inviting new investors in, not
begging for money. That’s a big
difference as anyone who has gone begging for money can attest to.

So prepare for the worst. If you do, your hopes for the best have a better chance of coming true.

Work Life Balance

Seven or eight years ago, when my kids were much younger, I attended an offsite.

One of the speakers was a organizational psychologist who spoke on "work life balance".

Although I didn’t know it at the time, it was an issue that I was really struggling with, having just started Flatiron, wanting badly to prove myself to my partners and investors, and also struggling with a family – three young kids and a wife.

The speaker said something that really shook me up.  He said, "if you don’t connect deeply with your kids before they turn teenagers, you never will".  My kids were probably seven, five, and two at the time.  I loved them deeply and the idea that they’d turn away from me when they grew up scared me.

So I made a point to "conect with them", them being the entire family, including my wife.

Why do I tell you this?

Because Brad Feld has a great post, one of the best he’s ever done, up on his blog right now about work life balance.

Brad tells an even scarier story (and I knew Brad back then and its true).

But he also gives his four five point plan which is similar to a less formal approach that The Gotham Gal and I have used for years with great results.

I love entrepreneurs who work like crazy, but I also like to see a balance in their lives to keep things stable.  Brad’s plan is a good way to go if you feel like you need some balance in your life.