Posts from July 2008

This is something I’ve been pondering a bit lately. Certainly there are some notable successes with browser extensions:

– StumbleUpon – one of the most popular Firefox extensions was sold to eBay last year for a price in the neighborhood of $50mm
– Clipmarks – another popular Firefox extension was sold to Forbes last year for an undisclosed amount, rumored to be in the high single digits or low teens
– Delicious – thought not only a browser extension, much of the activity on Delicious comes through the Firefox extension. Delicious was sold to Yahoo! for $30mm, but I continue to believe that there was a viable sustainable business opportunity with Delicious, we just didn’t get the opportunity to go for it.

Here’s the 100 most popular Firefox extensions. I currently use three of them; downloadthemall, delicious, and foxytunes. I have, at one time or another, tried about one quarter of the top 100. All three of the companies mentioned above that have been sold have extensions in the top 100. But its interesting to note that none of them are top 10 or even top 20. Stumbleupon is about the 20th most popular extension, Delicious is about the 30th, and Clipmarks is about the 50th.

Many of the most popular extensions are blockers (ads, script, flash) or download helpers (audio, video, etc). It’s hard to see how one builds a business around blocking or downloading, but I am sure there are people working hard to figure that out. AdBlockPlus gets almost 300k downloads per week and has been downloaded over 21mm times. That translates into a lot of active users. There surely is some sort of business opportunity there.

In general, browser extensions are pretty geeky. Just spend some time on that top 100 list and you’ll see stuff like ftp tools, greasemonkey, and debugers. That’s not mainstream stuff.

We have one company that started out as a browser extension, Adaptive Blue. Their Blue Organizer extension is the 102nd most popular extension and has been downloaded almost 1.4mm times and gets about 16k downloads per week. But even so, while we were evaluating Adaptive Blue as an investment opportunity we encouraged Alex Iskold and his team to broaden the base of the business and the SmartLinks service is partly a result of those conversations.

We felt then, and I continue to feel, that a browser extension can be a useful way to get your technology into the market, particularly to the power user segment of the market, but it should not be the only way you get your technology into the market.

Here’s a screenshot of all the extensions I am currently using:

Leaving off the talkback, tamper data, and dom inspector add-ons, I currently use 11 extensions. Of these, seven are offered by companies that have other services (Adaptive Blue, Delicious, FoxyTunes, Google, Mahalo, Skydeck, deluux, and FoxyTunes again). Three are offered by developers who only offer their technology via a browser extension (downloadthemall, screengrab, and zemanta).

I don’t know if I am representative, but that little exercise shows that many useful browser extensions are offered by companies as a supplement or compliment to their existing web-based service. Mahalo is a good example of that. I could go to Mahalo and do searches, but instead I’ve installed Mahalo Follow which just inserts some Mahalo results into my Google searches. That’s smart on their part and a good utility for me.

So back to the original question I posed at the beginning of this post. Can you build a business on browser extensions? Although a few companies have gotten into the market via extensions and gotten sold for good money, I think the answer is largely no. A browser extension is a smart way to enter the market, particularly if you want to reach power users early on, but you need to figure out how to build a broader service offering with your technology in order to reach a mainstream audience if you really want to build something big and sustainable.

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Being in Paris today, I thought this was a fitting picture.

It reminds me (and hopefully all of us) that some of our greatest moments as a country have been where we’ve partnered with other countries to make the world a better place.

I spent a day in Cophenhagen yesterday. Got up at before dawn (which is really early this time of year in Paris) and got home after sunset (which is really late this time of year in Paris).

But it was totally worth it. I spent a full day in the offices of Sunstone Ventures with my friend Christian meeting startups every hour back to back. Christian set up the day and all I had to do was sit in the meetings, listen, and ask questions. Then afterwards, I caught up with my friend Martin who has been working in and around the startup scene in his homeland of Sweden and Denmark and also the Netherlands.

The startup community in Scandinavia isn’t much different than the startup community in New York or Silicon Valley. Each and every company that I met was similar in some important way to a company that I have seen in the US. However, there are a few important differences that I noted.

I saw two companies that participate in the online advertising technology business. One primarily serves the online agency market and one primarily serves the online publisher market. Neither were doing anything completely new (at least I didn’t see it), but both had built significant market share in the Scandinavian market. They had real customers using their platforms to run real campaigns. Both were looking for capital to expand to the rest of europe and then on to the US.

We don’t see that kind of opportunity so much in the US. The companies in the online advertising business don’t have an easily accessible market that they can get started in. Neither of these companies will be able to build a large (greater than $20mm per year) business if they stay in Scandinavia but they will be able to build a real business, serving real customers, with solid products before having to face the tougher competition of the rest of the world. And I see that both as an advantage and a disadvantage. I think its an advantage to have a "home court" advantage when you are just getting started. But I also worry that it can make it even harder to break out of the region when its time to do that.

Another interesting thing that I saw in a lot of these companies, that reminds me very much of the NY startup market, was active use of remote development. There were at least two and I think maybe three companies I saw that are doing development in Tallin, Estonia. While not technically in Scandinavia, Estonia (and Latvia and Lithuania) are an important source of development talent for european tech companies including ones in Scandinavia. It’s a very short flight to these small countries and I think they are well situated, both geographically and talent wise, to become more important to the tech startup world in the coming years.

I enjoyed meeting all the companies and am nervous about calling out any of them without calling all of them. But there were several that are bloggable for various reasons.

Christian is an investor in Issuu. Issuu is "youtube for high end publications". Think magazines and catalogs and brochures that are designed of print but need an online presence. Here’s a catalog for an Italian furniture house that I found on Issue.

And here’s a NYC rocker photo book that I found on Issuu.

Print isn’t going to go away anytime soon for these kind of publications and so it makes sense that there should be an online resource to upload and share them. Issuu is that place.

The second company that bears mention is one near and dear to my heart because it is using web technologies to make the world a better place, specifically Africa. The company and service is called myc4 and its like Kiva+Grameen+Prosper focused exclusively on providing access to capital to African small businesses. I really like the way the service is constructed. Although you do lend directly to the small businesses, you do it through "lenders" which are local companies that set up operation on the platform. The lender takes a cut of the loan but deals with the hassles of diligencing the loan, servicing it and collecting it. I think this will bring the default rates, which are high in services like Prosper, down significantly. If you feel like loaning some money to a small business in Africa, go do it through myc4 and let me know what you think.

Finally, I met a company called ESNation that owns one of the top videogaming teams in europe called Meet Your Makers (MYM). They are competing this weekend in Paris in the Electronic Sports World Cup. I’ve never been to a video gaming tournament. I think Josh and I will check that out this weekend. Call it diligence.

Anyway, that’s a short summary of my day in Scandinavia yesterday. It was a blast. Thanks to Christian and Martin for their hospitality. I think I’ll be back.

If you asked me who my inspirations were when I started to blog, they would have been:

Seth Godin – because his blog was my favorite read at the time (and still is in my top 10)
Dave Winer – because Scripting News was the first blog I ever read (when it was an email newsletter)
Stewart Alsop – because his weekly PC Letter was my favorite read when I got started in the VC business
Jim Cramer – because he defined the kind of blogging I wanted to do
Bill Gurley – because he was the first VC to write regularly on the business in his Above The Crowd newsletter

Bill Gurley is the only one of these people who hasn’t been actively blogging in the past couple years. (Many people will say that Jim Cramer doesn’t blog, but he does, you just have to pay to read it).

Bill has just returned to blogging and right away he contributes to the conversation about the IPO drought. Bill argues that it’s not really a demand problem. He says it’s a supply problem.

If you went back to say 1995 and asked any entrepreneur or tech executive, “what is your one key goal for your company?,” they would all say – “IPO”. This overwhelming desire to be a part of a company that achieved a public offering was universal. It mirrored an athlete going to the Olympics, or perhaps playing in the pros. This passionate desire to be public is completely gone in Silicon Valley. For
reasons you could easily list – Sarbanes Oxley; 12b1 trading rules;
shareholder litigation; option pricing scandals; personal liability on
10-Q filing signatures – it is simply not much fun being a public
executive.

The Benchmark portfolio current has over 15 companies north of $50MM in revenues, and they are all private. This would have never happened in 1995 (even pre-bubble) where most of these companies would ALREADY BE public.

I don’t think we have a demand problem, we have a supply problem. No one wants to manage a public company.

I am mostly with Bill on this one. In the short run, we may have a demand problem as wall street is not in a good mood right now. But long term, its a supply problem for sure.

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This is the soap opera drama that won’t go away. Every time you think you’ve heard the last of it, it comes back again

The latest is a WSJ report just out that says Microsoft is trying to rope in big media partners like News Corp and Time Warner to make another bid for Yahoo!

Apparently Microsoft wants the search business badly and can’t stomache losing it to Google. That makes sense

It seems they are less in love with the other parts of Yahoo! and are exploring some kind of ‘carving up’ of Yahoo! with other big media companies

This conjures up images of the wounded animal being devoured by a pack of wild animals

It also is very much the result of Google’s market power. Somehow a breakup of Yahoo! is seen by these ‘wild animals’ as the way to balance the market and make it easier to compete with Google

I don’t see that happening but I do see Yahoo! going away at this point

I’ve wanted Yahoo! to stay independent and restructure and be relevant again

But it sure feels like that’s not going to happen. Wall street has spoken with its trading of YHOO below $20 yesterday and if Microsoft is back at the table with a bigger pile of money, then its probably the time for the end game

Its a shame for Yahoo! and I suspect that Microsoft and its partners (if they play ball) will not get much out of this whole mess.

But the writing sure does seem like its on the wall for Yahoo! now