Posts from January 2006

There is spam that comes from computers (spambots) not people.  That is evil, ugly, awful, etc and it is on my Internet Axis of Evil and always will be.

Then there is spam from people.  This is email that is sent by one person to a group of people, and even to just one person.  I’ll call it personal spam.

But it is one sided.  There is no value in recieving the personal spam.  All value accrues to the sender.

I try very hard to avoid sending that kind of personal spam.  Because when you send it you use up valuable political capital with the recipient.

My suggestion to everyone who is tempted to send this kind of personal spam is to think about every email you send and ask the question if the recipient is going to get any value out of recieving it.  If the answer is no, then don’t hit the send button.

A couple weeks ago my partner Brad Burnham did a post on how we use biology to mine for insights into web services that ran on the Union Square Ventures weblog.  I blogged about it briefly here.

That was the start of a series on using science to help us think about markets we invest in.

Brad is back with his second post in the series.  This one is about thermodynamics and web services.

Give it a read.  I think you’ll enjoy it.

I have bought probably ten cars in my life and have never actually kicked the tires. 

But the visual of a guy walking around the car, checking it out, kicking the tires, is one that has contributed a classic cliche to the VC vernacular.

Due diligence is a critical part of the venture process. No matter how well you know the market and the entrepreneur, there is nothing better than the due diligence process to help you make the go/no-go investment decision.

And my favorite part of the due diligence process is kicking the tires.  By that I mean going to visit the company, meeting all the people involved, seeing how the place operates, the vibe, whether people are up walking around and talking to each other, or closed up in their cubes staring at their computers.  I like to see smiles on the faces and laughter in the halls.

Of course any company can put on a good show for one day, and I suspect they all do that at some level.  But kicking the tires is a very important thing to do regardless of how much shine has been applied.  The hubcaps can still fall off at any time and I’ve seen some crazy stuff happen in company visits that has given me pause about making an investment.

When people don’t get along and have trouble working together, it can’t really be hidden very well.  When people aren’t happy in a workplace, you can smell it.  And we are usually investing in companies that are between 5 and 25 employees.  At that size, culture and communication is critical and its pretty easy to tell if a company is working well togehter or not.

So when you think about making an investment the next time, make sure to kick the tires.  And if the hubcap pops off, pay attention.

I promise to get back to this category more often.  I’ve been a bit focused on figuring out what’s next after "web 2.0".

In any case, for anyone who rocked their way through the 1970s, I suggest you go check out Raj Bala’s latest podcast, called Loudspeakers #13.

It’s a rock and roll tour through the 1970s, with an emphasis on the songs and artists who have most influenced today’s younger bands.

The Stooges track (Loose) is worth the listen all by itself.  Iggy is one of the all time great rockers.

Other highlights for me were:

Stevie Wonder – Mistra Know It All (1973) – we all know guys like Mistra Know It All.
Television – Marquee Moon (1977) – love the cool riff that runs throughout the song
Buzzcocks – Why Can’t I Touch It? (1979) – fantastic track
The Beatles – I Me Mine (1970) – George Harrison really rocked at the end of The Beatles
The Velvet Underground – I Found A Reason (1971)  – my favorite VU track

Prompted by my post on Job’s fantastic venture return on his investment in Pixar, a reader sent me a link to this interesting analysis of the value of Pixar to Disney that ran in Slate last October.

This paragraph was the most interesting to me:

Steve Jobs, as head of Pixar Animation Studios, has handed Disney four of the potentially richest mother lodes in the history of filmdom. Namely, the sequel rights to Toy Story; Finding Nemo; Monsters, Inc.; and The Incredibles. These franchises are particularly lucrative because they have no stars, directors, or other gross players entitled to a share of the take. Disney also has the exclusive rights to use all of the Pixar characters in its theme parks.

The article goes on to explain why Disney and Pixar remained tied together even after Jobs refused to sign another distribution deal with them.  Which sort of explains why the merger happened.

I am sure there’s more to it than what’s in this Slate article, but its good reading nonetheless for those who are interested in the movie business and how to create value.  Jobs certainly created a lot of that for himself and the other Pixar shareholders.

How does 740 times your money in 20 years sound?

Sounds fantastic to me.

That’s what Steve Jobs just did.

20 years ago, he bought Pixar for $10mm.

And he just sold it to Disney for $7.4bn.

Now he’s surely taken some dilution along the way and he may have ponied up more money along the way too.  That’s what happens with venture investments.

So maybe he made 300 to 400 times his money.  Who cares?

Say what you will about Steve Jobs, and I have said plenty about the consumer unfriendly stuff that Apple is doing with the iPod and online music lately, but he is one of the great technology businessmen of our time, maybe the greatest.

And this deal should go down in history as one of the great venture investments.

My understanding is that much of YouTube’s growth has been driven by uptake of YouTube videos on MySpace.  That could be incorrect and certainly YouTube is growing like a weed and not all of the growth can be attributed to MySpace.

But if you look at the second half of December, there was a two week period where the growth flattened out.  That corresponded with MySpace temporarily shutting down YouTube and resulted in my post on the topic.

So when I got an email from MySpace last night announcing that they have launched MySpace video, I figured it would be worth checking out the details of what they have launched.

I uploaded a video to my MySpace account this morning.  It’s still not viewable.  MySpace tells me almost eight hours later that the video status is "processing".  I guess I need to call MySpace "lame" because that’s what I called Google when they pulled that stunt on me last fall. When you upload content to the web, you want to see it instantly.  That’s how this stuff has to work.

Anyway, in need of some instant gratification, I decided to go look at some of the videos that have been uploaded by others on MySpace.  I was told that I had to upgrade to Flash 8.  I did that.  Then went back to look at videos from others.  The video player looks a lot like YouTube’s but I can’t find anything on the web or in blogs to indicate the MySpace licensed their video upload/player technology from someone else.  So I assume its home grown.  In any case, the play button in the middle of the player and the controls at the bottom look a lot like YouTube.

When I get my video "processed" and onto my MySpace page, I’ll link to it and let you know how clean the integration is.  Ideally, it should be much easier to post a video to your MySpace page with MySpace’s own player than with YouTube.

But for now, I still see way more people (including my girls and their friends) using YouTube to post videos on MySpace.

It will be interesting to see how this plays out.  I think that if MySpace gets its video service working well, it could be an issue for YouTube, at least it may slow the amazing ramp its on now.  If MySpace can’t get its video service working, then News Corp may come knocking on the YouTube door, assuming they haven’t already.

I made the observation in my post on Yahoo! vs Google that CPM advertising (ie banners and sponsorships) may be making a relative comeback in comparison to search in 2006.

Here is some data from the BtoB online survey "2006 Marketing Priorities and Plans" of 366 senior
marketing executives that seems to indicate that observation is correct.

In 2006,
72.0% of marketers plan to increase online budgets. Within Internet
spending, the specific media that will receive the greatest share of
marketers’ online budgets in 2006 will be

•     Web sites (30.3%)
   
•     e-mail (22.0%)
   
•     search (20.3%)
   
•     sponsorships (10.3%)
   

I take "web sites" and "sponsorships" to mean CPM based advertising.  If that is a correct assumption, then it seems to indicate that twice the amount of money is going into CPM advertising in 2006 than is going into search.

From the iPod support pages.

Note: The iPod battery indicator shows approximately
how much charge is left in the battery. In some iPods, you may find
that the battery indicator shows some charge left, but your iPod stops
playing because the battery is, in fact, empty. In other cases, the
battery indicator may show less than a full charge even though you’ve
fully charged it.

I always suspected this.

And find it really irritating.