Posts from January 2006

Most longtime readers of this blog know that my favorite record of all time is Exile On Main Street.

Andy got me in a mood to listen to the Stones yesterday and when it was time to get in the shower and get ready for a night out with The Gotham Gal and friends, I wanted something uptempo.  But I only had 15 minutes.  I decided on Exile and then tried to figure out which side to play.  I ended up with the fourth and final side;

"All Down the Line" (Jagger/Richards) – 3:49
"Stop Breaking Down" (Traditional) – 4:34
"Shine a Light" (Jagger/Richards) – 4:14
"Soul Survivor" (Jagger/Richards) – 3:49

I mostly listen to this record from start to finish and kick things off with the amazing first side;

"Rocks Off" (Jagger/Richards) – 4:31
"Rip This Joint" (Jagger/Richards) – 2:23
"Shake Your Hips" (Harpo) – 2:59
"Casino Boogie" (Jagger/Richards) – 3:33
"Tumbling Dice" (Jagger/Richards) – 3:45

So I started to think about this record in its original vinyl incarnation as a four sided double record and the question of which side was the best side popped into my head.

The second side is pretty amazing too;

"Sweet Virginia" (Jagger/Richards) – 4:25
"Torn and Frayed" (Jagger/Richards) – 4:17
"Sweet Black Angel" (Jagger/Richards) – 2:54
"Loving Cup" (Jagger/Richards) – 4:23

Which leaves the third size, anchored by Keith’s anthem, Happy;

"Happy" (Jagger/Richards) – 3:04
"Turd on the Run" (Jagger/Richards) – 2:36
"Ventilator Blues" (Jagger/Richards/Taylor) – 3:24
"I Just Want to See His Face" (Jagger/Richards) – 2:52
"Let It Loose" (Jagger/Richards) – 5:16

I think if I could only listen to one side, I’d most often pick the fourth side, as I did last night.  So I’ll pick that one.  If anyone else has an opinion, I am all ears.

Andy saw the Stones last night and says they were great and Keith stole the show.

I’m sorry I missed that.

Our portfolio company Indeed.com is doing some great stuff.

For those who are not familiar with Indeed, its a job search engine.  Think Google for jobs.

As Indeed says, "one search, all jobs".  Give it a try.  It’s so simple and so powerful if you are in the market for a job.

But Indeed’s job search can run anywhere.  So if you run a web site or blog and want a job board, you don’t have to build one.  You can just host a version of Indeed.

A great example of this is Gawker Jobs which launched this past week.  Gawker is a blog about New York gossip, particularly gossip about the media industry in New York.

Gawker Jobs is just a "canned search" on Indeed for media jobs in New York.  But when you go look at Gawker Jobs, you’ll see that the featured jobs are perfect for Gawker’s audience.

There is another way to host an instant job board and that is called Indeed Jobroll.  We have been running one on our Union Square Ventures weblog since we launched it and today there is a job listing for a CEO for a podcasting startup.  Now that’s pretty relevant and we did nothing to make that job show up on our site other than enter a specific search into Indeed and save it as a Jobroll and paste the code into our blog template.  We did that once many months ago and its been working flawlessly since.

Pretty cool eh?  We think so.

For as long as there has been advertising, the advertisers have sought to run the ads in context.

By "in context", I mean car ads in the automotive section, banking ads in the finance section, beer ads in the sports section, etc etc.

The reason for this is that context has been the best available form of targeting.  You wouldn’t be reading the auto section if you aren’t interested in cars, right?

But could it be that advertising out of context works better?  That would be a shocking finding.

Of course, you’d have to have another way of targeting for that to be the case.

Enter behavioral targeting. 

Behavioral targeting is the art of advertising to people based on observed behavior instead of by what page or media they are viewing.  The idea has been around for years, but until digital media and the Internet, its mostly been a concept.

Union Square Ventures is an investor in the leading behavioral targeting comapny, Tacoda Systems.  Tacoda really pioneered large scale behavioral advertising with its Audience Management System which was launched in 2002.  Since that time, Tacoda technology has served millions of behaviorally targeted ads on the pages of many of the leading web sites.

In 2005, Tacoda launched a behaviorally targeted advertising network called Tacoda Audience Networks.  This move extended Tacoda’s reach into a much larger group of advertisers who did not want to deploy their own behavioral targeting system.

Recently Tacoda sponsored some research conducted by Next Century Media Research.  The research was an "eye tracking study" done by PreTesting, one of the leading eye tracking research providers.  In the study, researchers watched the eye movements to determine the number of "looks" and the time spent on each ad.

The results of the study were released this week and the press release is here.

The data shows that behavioral ads are 17% more effective in engaging readers than contextual ads.  But more importantly, after the first exposure to both ads, the behavioral ads perform 54% better than contextual.

Bill Harvey, the CEO of Next Century Media, is quoted in the press release saying:

It is probably a combination of more relevancy and less clutter.  It could be that there are just too many ads for the same product category attacking the user’s eye in contextual targeting, causing the user to avoid looking at any of them.

As an investor in Tacoda for the past three years, I have been privy to many anecdotal examples of this and I have my own theories for why targeted ads perform better out of context.  I think that if you are interested in cars, you are paying attention to what you are reading in the auto section and the car ads blend in.  When you see them in the sports section, out of context, you pay more attention.  Since behavioral technology targets the auto ad to people who have shown an interest in automotive content, showing them the ad in the sports section seems like a great way to get them to pay more attention to it.

It’s not likely that advertisers are going to rush to embrace advertising out of context. Hundreds of years of behavior is going to be hard to change overnight.  But those advertisers who have the courage to give it a try, using Tacoda or another behavioral advertising system, are going to get some really interesting and good results.

I have been listening to Wilco’s live record, Kicking Television, a lot recently.  I really like it.  And I got a preview of Loose Fur’s new record, Born Again In The USA, the other day and have given it a few listens.  And the new Minus 5 record has also been getting serious airtime in house.  All of these records feature Jeff Tweedy, one of my all time favorite musicians.

Jeff has participated in a bunch of bands over the years, from Uncle Tupelo and Wilco, to Loose Fur and Minus 5.  And of course there is the collaboration with Billy Bragg on the Mermaid Avenue records. There is no shortage of Jeff Tweedy music to wrap your ears around.

One of the best collaborative efforts Jeff has been part of is Golden Smog.  And the Golden Smog record to own is called Weird Tales.  Golden Smog is a bunch of Minneapolis musicians from Soul Asylum and The Jayhawks plus Jeff Tweedy and some of his bandmates from Wilco.

Weird Tales came out in 1998 and is a great collection of songs. If you like the Jayhawks and Wilco, you will love this record.

My favorite songs on the record are Looking Forward To Seeing You, Lost Love, Making Waves, Please Tell My Brother, and the closing track – Jennifer Save Me.

You can get it at Amazon.com.

If given a choice between being a radical pushing the envelope and a pragmatist dealing with the realities of life, my heart will choose the radical every day.  But my brain (and pocketbook) prefers the pragmatist.

When I wrote The Future of Media post, you were getting my radical side, pushing everyone to see that digital media is at best a free medium.  Since then, I have been hit over the head in the comments section, private emails, and in conversations with content owners of all shapes and sizes.

The reality of the rich media marketplace is a bit different right now than where I hope the future of media ends up.

So I took the time to jot down all my notes on my conversations with content owners over the past couple months since I wrote that post.  A summary of those notes and my six big conclusions are the subject of a post on the Union Square Ventures weblog called Rich Media Realities.  If you are interested in what I’ve learned, go give it a read.

Several years ago, we were offered the opportunity to sell our interest in Inteliseek, which was merged yesterday into the new Nielsen Buzzmetrics.  We declined the opportunity because although the offer for our stock was fair value given where the Company was at the time, we felt that our stock had option value.

Option value is a cliche I hear a lot in the venture capital business and it is fundamental to what we do, particularly the early stage venture business.

I believe that regardless of the "valuation" placed on the Company in most first round investments, what you are really paying for is option value.

Option value means the potential for a gain.  If you own 20% of a company, you own 20% of the current value plus 20% of the potential upside. It’s the latter that I am calling option value.

I heard recently about a book or an article that made the case that options are bad.  That people actually prefer less choice not more choice.  That may be true in real life, but it is certainly not true in money and finance.

Options, particularly long life options, which is what early stage stock really is, are very valuable.  It’s hard to value these instruments with traditional option pricing mechanisms but we know that if you hold onto them and good things happen with the portfolio company, you are going to get rewarded.

So the next time you buy or sell early stage stock, think less about the current value of what you are buying, because there honestly isn’t much value in an early stage company, and think more about the potential value creation, the odds of success, and the time frame it would take to get there, and value what you are buying or selling as an option.  You may be surprised at the results of that analysis.

I sat down to breakfast with my friend Mark and he said "are you going to see Hard-Fi tonight?"

My immediate reaction was that somehow the Ticketweb concert notification emails were ending up in my junk mail folder, but instead I said, "where are they playing?"  He replied "The Bowery Ballroom."

So I asked Mark if he could work some magic with his friends in the music biz and get me tickets.  He said he’d see what he could do.

Mark and I talked toward the end of the day and no tickets were to be had.  It was a "hot show".

Meanwhile I had picked a convenient location for my dinner with my friend Ronny and his son Evan (we went to Little Giant which was good but did not live up to The Gotham Gal’s rave review).

After dinner I walked by The Bowery Ballroom and inquired if there were any tickets for the show. "Sold out" the guy at the door told me.  I was heading home when the bouncer asked me if I was looking for tickets.  I said yes and he introduced me to a young woman and her friend.  She had two tickets. I asked how much and she said, "they are yours, I got them for free".  Being by myself, I took one and headed in.

Inside I met a young woman who produces a Maxim radio show on Sirius and her friend and her friend’s boyfriend. And then I met a guy who used to work for Return Path who reads this blog and found out about Hard-Fi by reading it.  Cool.

Then the band came on.  They played pretty much the entire record plus the cover of The White Stripes "Seven Nation Army" from the Cash Machine EP.  Highlights were Cash Machine, Tied Up Too Tight, Feltham, and the closing song – Living For The Weekend.  Here is my Flickr photostream of the show.

The lead singer was super high energy and I couldn’t help but think he was the punk rock version of Joshua Schachter.  He played this cool instrument that was like a recorder with a keyboard on it.  No idea what it is called, but it makes that great sound at the begining of many of their songs.

I am really glad I went. They were great.

Go see them if you have the chance.  And I hope you get a windfall like I did.

So Google bought dMarc today for $100 million upfront and a huge earnout.

dMarc makes software for radio broadcasters to insert audio advertising into their broadcast streams.

Google said it plans to integrate dMarc’s technology into its AdWords advertising program according to this post on Jeff Jarvis’ Buzzmachine.

So if I am getting this right, Google is going to offer audio ads in addition to text and banner ads.  It’s not clear if they will be placed as search results or in some other context (AdSense for streaming audio and video?).

In any case, this is another move that shows that rich media is a big direction for Google, both on the content side and the advertising side.