Posts from October 2008

Talking Stocks

I was reading MG Siegler’s post on Twittter’s organizational changes this morning and came across this comment:

Yeah, it’ll be interesting to see what people talk about when the elections are over. Women’s fashion?

Originally posted as a comment by MG Siegler on VentureBeat using Disqus.

I replied, "stocks" and linked to Stocktwits.

Stocktwits is the invention of my friends Howard Lindzon and Soren Macbeth. I am not an investor but I do have a vested interest in its success, because like many other things, it was built on top of Twitter and adds value to Twitter. In fact it even looks a bit like Twitter:


Stocktwits asks a slightly different question than Twitter, it wants to know "What are you trading". And the key is to put a $ in front of the ticker, like I did with $goog in my tweet in that screen shot.

Stocktwits takes care of the rest. If you like stocks and like to talk about them all day long, then Stocktwits and Twitter are the thing for you. Check it out and let me know what you think.

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Oh My, I Love This Community

I just got back online after a long day and saw that this community gave over $4000 today to Donors Choose. I was part of that, but a small part. I completed a project with a donation of about $150. The rest came from 10 donors, at an average of $400 per donation.

I cannot thank all of you enough for that. We are back in first place, we are now well ahead of last year’s pace, and I am humbled by the generosity of this community.

Now I’ve got to get some more projects to fund on the giving page. Please feel free to send me suggestions via email or the comments. And thanks!

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We Are Getting Killed In The Donor's Choose Challenge

Last year this community won the Donors Choose Bloggers Challenge with almost 100 donors in this community who collectively gave almost $20,000. Right now, thirty-three of us have given about $7400, which at current course and speed will mean we’ll raise less than $15,000 from around 60 donors.

Meanwhile TechCrunch and AllThingsD have stepped it up. Here’s the leaderboard as of this morning:



And to make matters worse, Kara Swisher has taken to taunting. If Arrington joins in, then I am going to get upset!

I realize that with the market melting down everyone is feeling less generous and please don’t take this as admonishment. It’s just that I think this community here at AVC can be the most generous in the tech sector, like we were last year, and I’d like to see us step up and do that. I will do my part by making another donation today (but I am not going to personally donate our way back into first place, we have to do it together). If you feel like joining me in doing that today, click here and make a donation. Thanks!

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The "Content" API

Most of the APIs we think about are data driven. Developers can use the Facebook API to build apps that run in Facebook. Developers can use the Twitter API to build applications that leverage the twitter user base and content. Developers can use the AMEE API to build carbon footprinting applications.

So it was interesting to me to see that the New York Times announced the availability of their first API this week. Their first API is also really data, the aggregated set of campaign finance data their reporters are using to write about the US presidential election.

But I suspect that the Times will start to explore how to turn their content into an API as well. Imagine if you could get access to all of the stories written about the Empire State Building via an API. Or if you could get all the stories written about Mike Bloomberg.

Of course, content is data, but it’s a bit different. Content is unstructured data with the benefits of a lot of context, semantics, relationships. Once the vast databases of content that exist inside the big media companies start becoming available via APIs, we can start to do some amazing things.

We’ve seen a number of companies that have built algorithms using wikipedia data. And the things they’ve built are pretty powerful. But if instead of being limited to wikipedia, they could use dozens of highly trusted, accurate content sources, they could probably do much more.

Slowly but surely the web is becoming more intelligent. I am not sure we’ll ever reach the nirvana of the "semantic web" but we are certainly seeing it become smarter every day and I think "content APIs" will be an important part of how that will happen.

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TargetSpot Acquires Ronning Lipset Radio

Our portfolio company TargetSpot, which is the leader in streaming audio monetization, has acquired Ronning Lipset Radio, the largest internet radio ad sales organization. This is a great marriage, technology plus sales, and makes TargetSpot the largest online radio ad network.

Many people don’t realize it, but online radio reaches over 50mm listeners per month in the US. There is a huge and loyal audience for online radio and it’s growing very quickly. And yet the online radio ad market is less than 1% of the total radio ad market. Like all advertising markets, the imbalance between audience size and ad revenue share will balance out over time and we are very bullish on the online radio ad market.

So we are very excited to have the largest online radio ad network, TargetSpot, in our portfolio. And we are very fortunate to have Eric and Andy, the founders of Ronning Lipset, join the TargetSpot team as head of our sales organization.

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CauseWired Quote Of The Day

It really was Oprah who catalyzed all sorts of expansion opportunities," says Best, who remembers that his site reacted by crashing from the massive influx of new traffic.
Charles Best, founder of Donors Choose, quoted in CauseWired

Like most businesses, Donors Choose got some lucky breaks along the way. One of the biggest was when Oprah Winfrey did a nationally televised segment on Donors Choose in June of 2003. Naturally, the Donors Choose servers crashed under the load Oprah generated. It always seems to work that way with startups.

But now, five years later Donors Choose has built a very robust platform that has scaled along with its business. Go give it a test drive and please make a donation on the AVC giving page.

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The Yin and Yang of Public and Private Markets

There really is just one capital market, it’s a global market and has been for a long time (the french helped to finance the revolutionary war), but it’s become even more global in the post World War II era. Capital markets are where you go for capital for your business, your investment, your project, your building, your home, etc. And though the word is plural, there really is only one capital market at the end of the day. You can see that by looking at the charts of the dow, the ftse, the hang seng, and the nikkei over the past month.


When capital gets more expensive in one sector, geography, or asset class, it generally gets more expensive in all of them. That’s not always true and there are all sorts of lags and caveats, but it’s generally true and getting more so.

In the past couple weeks we’ve been able to witness that happening in the public markets. Pick any stock, market, or sector and you’ve been able to watch asset values getting re-priced in real time reflecting new rates of return and risk premiums that investors are assigning to them.


And that’s how it happens in the public markets, which is what we’ve all been staring at for the past month. But the capital markets are much bigger than the public equity markets and we have not been able to "stare" at the rest of the capital markets so easily.

The markets that everyone has been talking about lately are the credit markets. They are harder to "stare at" but it can still be done if you’ve got a Bloomberg terminal or some other workstation that you can get credit market data on. The chart I’ve seen a bunch is the "TED spread", the spread between treasury bills and three month LIBOR. Thanks to a reader’s comment, here is a chart of it.


The Ted spread has gone way up in the past month as investors have not wanted to own any paper not guaranteed by the US government. That’s in part what the splurge/bailout/nationalization/socialization movement is all about – making a lot more paper guaranteed by the US government or another government, for a while anyway until things calm down.

But the markets that most readers of this blog care about are the private equity markets and in particular the venture capital markets. There is no chart we can stare at to see how the values of our companies are being impacted. That’s good in some ways because if there were a chart, we’d all be staring at it instead of working hard to build the businesses we have invested in, started, or work for.

But make no mistake, the venture capital and related debt markets have been impacted by what has gone on in the past month. I am seeing it every day in our portfolio and in the investment opportunities we look at. Financings are blowing up, terms are being renegotiated, venture lenders are getting more conservative, and existing investors are stepping up to fill the gaps. The good news is that a lot of companies, and many in our portfolios, have raised money recently and have a good amount of cash on hand. Many of those companies who are flush with cash are cutting burn rates and making sure the cash lasts even longer.

But the venture capital markets don’t move in real-time and they don’t report the prices of every transaction to a market system. So it takes time for all of this to happen and it doesn’t happen uniformly. I guarantee that there are some financings happening right now that are getting done at valuations which would have made sense nine months ago but don’t make sense right now, at least to the uninformed observer. I also guarantee that there are some financings happening right now that are getting done at valuations at half or even less of what they would have commanded nine months ago, even though the public markets have only gone down about 33% year to date.

The public markets and private markets are linked and they all participate in that one mega capital market I talked about at the start of this post. But there are all kinds of lags and disconnects between them that cause things to behave differently between the two markets. So you can look to the public markets for some clues, and everyone I know is doing that, but it will only help so much. We are going to have to make up a lot of this as we go along. But I know one thing for sure. Capital has gotten more expensive in the past month (actually it started getting more expensive late last year) and we all had better reflect that in our plans and strategies.

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The Global Discussion

Several weeks ago I sat down with Nathan Lipson, a journalist from Israel, and talked to him about the market meltdown, venture capital, and what is going on in the US economy. I blogged about it the next day and that started a great discussion that currently numbers a great discussion.

Nathan posted his article sometime in the past day or two and it’s available here. Unfortunately I can’t read Hebrew and so I’ve asked a few friends of mine who do to let me know how the article came out.

There are many web page translation services on the web and I tried out a few that claimed to do hebrew to english but gave up after a few failures. I am sure that there’s a tool that would work, but I didn’t find it and like many things on the web, I gave up after a few tries.

But this experience brings up a broader issue. The readers of this blog are global. In the past month, this blog’s web pages have been visited by almost 120,000 people from 165 countries. The top six countries are all english speaking (US, UK, Canada, India, Australia, Ireland) but the rest of the top ten are France, Germany, Netherlands, and Singapore. The top fifty countries all registered 100 visitors or more and include places like Vietnam, Estonia, and Pakistan.

The posts and comments and discussion on this blog are entirely in english, which makes sense, but it does limit the discussion. It would be great if there was a "translate" button on the front page of the blog and in the comment system and people could participate in this "social media" regardless of language.

And because of the architecture of the web, those translations don’t have to be provided by Six Apart and/or Disqus.

I am wondering if there is an api version of the translation web services that I visited this morning seeking a hebrew to english translation? There should be. And it could be peer produced and open sourced like wikipedia is. We could collectively translate the web for each other. Maybe someone is doing this. If so, I’d like to learn about it. If not, let’s make it happen.

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Great Post By John Borthwick

Alley Insider has posted a memo that John Borthwick, co-founder of NYC-based investor/incubator Betaworks sent to his portfolio companies. There are many gems in it so I suggest you all click on that link and read it. But here are some of my favorites:

It’s counterintuitive, but during an up cycle people accept
conventional wisdom, and during a down cycle people challenge it.
That’s good. Very good. And the cycle will winnow competition.

And if you need to make cuts, make them now. Don’t cut 10% now and then
another 10% early next year — make the change in one fell swoop.
Piecemealing your way through change kills momentum, hurts culture and
the team and is a chickenshit way to run a business.

There will be a flight to quality; this always happens.
But this time I think it’s going to be more than that.    For TV and
print this has been an unusual year: The shift to online has been
stemmed first by the Olympics and second by the election. But
year-over-year  growth in ad spend has been down across the board (see
slide 32 of the sequoia deck, linked below). Expect the next year to be
ugly and different. I think spend will move online, very fast, and
print may right downhill.  And people will look for ROI — real
measurable results. Monetizing social media is hard. Much to do here,
much money/share to make/take.

I think this cycle is going to drive
another significant shift in how open and interconnected the Web is.
This is good news for you, and this is bad news for the Facebooks of
the world, who tried to replicate the walled garden strategy of Web 1.0.

Think about what happened through the last cycle. Start with AWS.
In the 1990s, Internet companies had to own everything top to tail.
Today you can use Amazon and other services to pop up a new box for
hundreds of dollars, if that. Thats a huge shift, and it’s also a shift
towards interdependency.

We are all now dependent on the Amazon’s of the world for parts of
our infrastructure. I think this turn of the cycle is going to drive a
lot more openness.  This in turn ties to the market figuring out how to
rapidly establish bottoms-up standards. This is about working with
others and figuring out how to do things without having to do all the

Thanks to John and Alley Insider for sharing this.

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Vote For Donors Choose In The American Express Members Project

American Express is giving away $1.5mm to the winning project and $500k to the project that comes in second. This contest ends in less than 2 days. The number of projects still in the race is now five and Donors Choose is one of them and is currently in second. If you’ve been reading this blog, you know that Donors Choose is an amazing organization that allows us to give teaching materials directly to needy public school classrooms.

You have to be a member of American Express (which means you have a card) to vote. I just voted for Donors Choose. It took all of about two minutes, but I suggest you have your amex card handy when you do it.

If you want to see all five finalists, go here. This community has visited the Donors Choose Giving Page over 500 times in the past week and a half. If we can generate a similar amount of votes in the Members Project, it will likely make a big difference.

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