Posts from July 2008

Our Newest Portfolio Company: Meetup

My partner Brad starts his post on our newest investment, Meetup, with a rumination on what’s causing the introspection that we in web investing land are going through. And he ends his thoughts on that topic with the following:

Two things will need to happen if the recent pace of innovation on the web is going to be sustained over the next few years. The next generation of services will need to have an impact on the real world and the real economy, not just an attention economy driven by self expression and discovery online. These new services will also need to reach real people, many of who use few if any web services today.

Brad is the big thinker at our firm and he’s been mulling over these changes he talks about since before we raised our new fund last winter. In his post announcing our new fund, Brad said the following:

All of this means that you will see subtle changes in the way we invest
our new fund. We will be even more selective about the early stage Web
services we back, looking for compelling differentiation, a discrete
market focus, and clear evidence of sustainable user growth. You will
also see us invest selectively in later stage opportunities that we
believe are poised to grow as more users become more dependent on the
Web to manage their daily lives.

Meetup is a perfect investment for our firm because it’s a company we know well and a service we use all the time. We have been wanting to invest in Meetup for years but we never could find the right entry point that worked for us and the company and its founders. We are so pleased that we’ve finally found it.

But there’s a lot more to our investment than simply "the right time this time". You can read Brad’s post for the whole story.

#VC & Technology

Raising The Stakes

It always amuses me that our portfolio company Zynga got its start with Poker. Because as I always tell Mark Pincus, founder and CEO of Zynga, he’s playing this hand pretty well.

And Mark seems to like the hand he’s got right now because Zynga has just raised the stakes in the social games category with the announcement of a $29mm financing round, the addition of Bing Gordon to Zynga’s board, the addition of Kleiner Perkins and IVP to the investor base, and the acquisition of YoVille.

As Erick Schonfeld says about Mark in Techcrunch:

he [Mark] feels the stakes are about to get higher as the worlds of casual
social gaming and online video games collide. That means he will have
to spend more money on both production values and marketing.

Of all the things that Zynga is doing, I think the most impactful is the addition of Bing Gordon to the Board and effectively to the Company. Bing joined EA in 1982 and brings 26 years of videogame experience to Zynga. That’s more years than many of Zynga’s awesome employees have spent on planet earth! Mark says this about Bing in the Techcrunch post:

He is super-involved in product strategy, brings the
gaming DNA to us, and is an amazing CEO coach. He’s already stopped us
from doing stupid things.

I’ve had the pleasure of getting to know Bing pretty well through his involvement with Zynga which started late last year. And I am thrilled that he and his partners at Kleiner and also IVP is involved in Zynga. This poker hand just got a lot more interesting.

#VC & Technology


The word transition is so loaded that I hate to use it. But it is what it is. Startups go through transitions all the time. And the biggest transitions of them all are when founders step back and bring experienced managers into their companies. The startup world is full of stories about the times when the transition was forced on the founders. But in my experience, the best transitions are not forced by anyone. They are driven by the founders. Our former portfolio company TACODA went through such a transition when Dave Morgan turned over the keys to the car to Curt Viebranz. Craig Newmark did the same thing with Jim Buckmaster. Reid Hoffman, a hall of fame founder in my book, did the same last year with the hiring of Dan Nye.

Our portfolio company Etsy has been going through a similar transition in the past couple weeks. A few months ago, Etsy hired Maria Thomas as their COO. But that gig did not last long. It was quickly apparent to founder Rob Kalin that Maria was the right person to be running the company day to day. And so today, Etsy announced that Maria would be taking on the CEO job. Etsy also announced the hiring of a new CTO, Internet industry vet Chad Dickerson. As Chad explains on his blog,

Etsy and the community it serves are all-around inspiring and I can’t wait to jump in

We can’t wait either Chad.

But in these transitions, it’s easy to forget about the founders. Rob, Haim, Chris, and Jared created Etsy in 2005 and gave the better part of three years of their life to creating the service. I remember the fall of 2006 about four or five months after we first invested, Chris and Haim were single handedly rebuilding the entire Etsy web service. I think they were sleeping about 2 hours a night and it had been going on for something like three or four months. They got it done but it basically killed them and almost killed the company. It was among the most heroic acts I’ve witnessed in my 20+ years in startup land. Fortunately with the arrival of Maria, Chad, and others, Chris, Haim, and Jared will not have to carry that kind of load going forward.

It’s hard to explain the value that Rob brings to Etsy. It’s his baby in so many ways. And Rob will be staying on as Chief Creative Officer, a role that was made for him. Creativity is way more than designing a great web page, something that Rob can do in his sleep. It’s about designing an ecosystem that allows people to make a living making things. It’s about building into something that can help teach millions of people how to do exactly that. And it’s about continuing to push the envelope of what the Internet can do to make people’s lives better.

Transitions are never easy on the people involved and the company that goes through them. But they are inevitable in the evolution of a company. I have learned that they can’t be forced, they must happen on a timetable that makes sense for the company and the founders. Now is Etsy’s time and they seem to be doing a great job working through it.

#VC & Technology

More Globalization Thoughts

So I was thinking about the stats that I posted yesterday about global internet users. North America makes up about 20% of all Internet users. But the Internet revenues in North America are certainly greater than 50% of all Internet revenues, although I say that without the benefit of any numbers.

I would like a chart of revenue/user in each major geography. I suspect that North America would be the highest, followed closely by Europe. After that, I suspect Latin America. Then Asia and Middle East/Africa.

Maybe there’s a proxy out there we can use. Maybe it’s Amazon. Maybe it’s eBay and the other major online auction sites (Mercado Libre and a number of asian services).

As investors like us start thinking about how to allocate capital to a global internet, it would be very useful to focus on revenue/user instead of just global audience.

Of course, that’s already happening because North America is only 20% of the global internet audience but it attracts well over 80% of the investment capital. And that will change. It already is.

#VC & Technology

Globalization: Some Numbers

I’ve been thinking a lot about the global internet lately.

Here are the May comScore numbers for total Internet audience

Worldwide – 853mm (up 10% from 772mm last year)

North America – 185mm (up 4% from 178mm last year)

Europe – 240mm (up 8% from 223mm last year)

Asia – 323mm (up 14% from 283mm last year)

Latin America – 63mm (up 19% from 53mm last year)

Middle East/Africa – 43mm (up 23% from 35mm last year)

As is typically the case, the smallest markets are growing the fastest. But a couple other things stand out to me. Asia added 40mm Internet users in the past year. Europe added 17mm. Latin America added 10mm. Africa and the Middle East added more than North America.

It’s as Fareed Zakaria says "the US isn’t declining, but the rest of the world is rising".

And I’ll end this brief post with a link to Pascal Zachary’s article in the New York Times about technology in Nairobi, Kenya. If you, like me, are thinking about the global reach of technology and the Internet, then you should read it. This paragraph is telling:

Still, Nairobi is home to a digital brew that invites optimism
about its chances for creating unusual innovations. The city has
relatively few wired phone lines or networked personal computers, so
mobile phones are the essential digital tool. Four times as many people
have them as have bank accounts. Text messages are far more popular
than e-mail. Safaricom, the dominant mobile provider, offers a service
called M-pesa that lets customers send money with text messages. Nokia sells brand-new phones here for as little as $33.

The numbers at the top of this post are for computers (PCs) connected to the Internet. They would look very different if they were total internet connected devices (PCs + mobile phones).

When we went out to raise a second fund at the start of this year, we told our investors that the Internet was getting more global, more mobile, more social, more intelligent, and more playful.

Those are all big trends, but the first two are tightly linked and very powerful as Pascal’s article points out.

#VC & Technology

My Favorite Things About Paris

  Paris :  01.07.2008 22:13 
  Originally uploaded by Olivier Colas.

We are leaving Paris today. Taking the eurostar to London for a few days and then back to the states. I thought I’d say goodbye to Paris with a list of my favorite things about Paris. I got the idea from the Gotham Gal who is composing a similar list.

Here my ten favorite things about Paris in no particular order.

1) The Bread – From croissants to baguettes and everything in between

2) The Coffee – A great cup of coffee on every corner

3) The Weather – Much cooler than July in New York City

4) The Language – I love to hear it spoken and like to try to speak it as well though I do it badly.

5) The Velib – We biked all over Paris. I think I used the Velib almost every day we were in town.

6) Mobile Broadband Underground – The Metro is great, with Internet it’s the best subway system I’ve ever been on.

7) Eating Outside – We have so few places in NYC to sit outside and eat and drink and watch the scene. In Paris, you get that everywhere.

8) The River Seine – Many european cities are built on rivers, but few are as lovely as the Seine.

9) The Pompidou – We went to many museums during our stay but the Pompidou is by far my favorite.

10) The Apartment Buildings – I love the look of the parisian apartment buildings. This is a photo I took of one from the Promenade Plantee. They are so beautiful and they are everywhere.

A Building Next To The Promenade

#Blogging On The Road

Read This Post

My friend Roger Ehrenberg has posted one of the most honest candid post mortems on a failed startup that I have ever seen from the leadership of the company. His company, Monitor 110, tried to use technology to surface investable information from the Internet. That is an incredibly difficult problem to solve and I have witnessed more than a few firms stub their toe on it. But it’s the back story that Roger tells that is the most potent. Every entrepreneur and VC needs to read his post.

#VC & Technology

iPhone Platform: What We Can Learn From Tap Tap Revenge

If you have an iPhone and have downloaded apps and games to it, there’s a good chance you’ve got Tap Tap Revenge on your phone because its the most popular app right now, free or paid. If you don’t have it, here’s a link to it at the iTunes store so you can download it and try it out.

Tap Tap Revenge is like Dance Dance Revolution meets Guitar Hero for the iPhone. You hear music and you tap along. And best of all, you can play your friends in two player mode. Here are a couple reviews of the game if you want to read more about it.

This post is not about the game, it’s about what we can learn from its success. I posted a bunch of questions about the iPhone platform a week ago and this is my first follow up post. I hope and expect there will be more.

One of the questions I asked about iPhone platform is whether there would be a "first mover" advantage like the one Slide, RockYou, and iLike got on the Facebook platform. At least initially, it appears that is not the case.

Tap Tap Revenge was not available the first two days that the iPhone app store was open because of some technical problems and so we saw the rise of Super Monkey Ball, Remote, Pandora, etc.

But once Tapulous, the developer of Tap Tap Revenge, was able to work through the technical issues with Apple and get the app released in the store, it started its rise to the top. It was unavailable on Thursday and Friday, it was released on Saturday, and it was the most popular game by Sunday night, and became the most popular app by the middle of the week. At this time, it appears that Tap Tap Revenge has the most heat of any iPhone app out there.

So being first out of the box was not as important as I thought it might be. That said, Tap Tap Revenge did get into the app store in the first week and that may be all one needs to get the "first mover advantage."

But I think there is something even more important to notice about Tap Tap’s success. When Seth Godin released his first marketing book, Permission Marketing, he gave away the first four chapters for free via pdf to over 150,000 people. It generated a lot of buzz about the book and was a big factor in the book’s success when it eventually became available in hardback. So when he followed up with Unleashing The Ideavirus, he went one step further. He gave away the entire book for free in pdf (it still is available free). Seth says that over 2mm copies were given away. And yet when the book was published in hardback it went to #5 on Amazon. It was a demonstration of the very tactics Seth was evangelizing in the Ideavirus book. Seth asserted that by giving away your product early to your greatest fans who will do more work and put up with a less than optimal experience, you prime the pump for the mass market. That’s because your early fans will spread the ideavirus and market the book for you.

Tapulous did the same thing with Tap Tap Revenge. The game was first made available for the iPhone at the start of this year. But the only people who could play it were people with phones that were jailbroken. So it’s audience was small, but fanatical. These were the early iPhone app adopters, the ones who would work harder and put up with a less than optimal experience. But now that everyone can play Tap Tap, the early adopters are telling everyone else how great it is.

There’s another advantage to the developers who released apps for the jailbreak market. They got to iterate the app for six months to make it better and better. The currrent version is not beta, not even version 1.0. It’s version 1.1. It’s gotten better already.

I have not taken the time to do a study of how all the jailbreak era apps are doing now. I am sure that not all of them have had the same success that Tap Tap has had. Of course game play and game quality matters a lot too. Tap Tap is drafting on the success of Guitar Hero and Dance Dance before it and that’s a big deal.

Over time, it’s likely that the best apps will rise to the top on the iPhone platform like they have on the Facebook platform. And games will be very popular. And free apps will be more popular than paid apps. That much is clear already.

But we need to watch closely and learn about what’s working and what’s not working. Right now Tap Tap Revenge is working big time and their ability to seed the market early is one big reason why.

#VC & Technology

A Great Engineering Leadership Opportunity In London

This will test my recent efforts to make AVC a globally relevant blog.

Our portfolio company Covestor is looking for someone to head up their engineering organization in Central London.

Here is the blog post detailing the position.

I had the opportunity to visit with the entire Covestor team on Weds morning in London. It’s a great bunch of people and a fantastic culture. If you are a fit for this position, I strongly encourage you to go meet them.

#Listings#VC & Technology