Posts from November 2008

Our portfolio company outside.in announced on their blog yesterday that traffic is up 400% ytd and scaling, performance, and reliability are becoming key concerns for them. And so they also announced they are looking for a CTO who can help them manage to these new priorities.

Outside.in scans the web for local news and information, geotags the content, and serves it up in three places; the outside.in web site, blogs (see the story map on my sidebar), and neighborhood pages on its media partners websites. Basically outside.in organizes the hyperlocal web. It’s a great business and a great opportunity for someone with experience scaling large web services.

Outside.in’s CEO Mark Josephson has more detail on this position, which is in Brookyn (Dumbo), on the outside.in blog. If you are interested, and I sure hope you are, please email to [email protected] with your resume or LinkedIn profile.

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When I was a kid we used to watch movies on TV and they’d have commercial breaks in them. That was when we’d run to the kitchen for a drink, head to the bathroom, or just chill out for a minute or two. I have fond memories of watching movies that way.

That’s what we did this weekend in our home. We’ve got Hulu hooked up to our big screen TV two ways, via the browser on our mac mini and via boxee, also running on our mac mini (but you can also run Boxee on Apple TV).

On saturday afternoon my oldest daughter was scrolling through the films in Hulu and found a Gus Van Sant film called Finding Forrester. So we decided to watch it. There were four or five commercial breaks during the film, we broke once so I could pick up my son at his basketball practice, and we were able to watch the whole thing before we all went out on Sat evening. We never once had a buffering issue and although it was not HD, it looked way better than standard TV on the big screen.

Yesterday evening, Josh and I were alone and we decided to watch Finding Forrester again. No problem, we went to the mac mini, loaded up Hulu via Boxee, and watched it again.

This is the future of the movie business I think. Sure, we’ll still go to the theater with friends and family for a night out. But when the entire library of films is available for streaming on demand via the Internet, that’s how we’ll choose to watch them. And the commercial interruptions? No problem, like it was when I was 10, it’s the perfect time to run to the bathroom or get a glass of water and a twizzler.

Our friend Jeff Jarvis has a book coming out shortly called What Would Google Do?

Jeff was kind enough to give me a pre-galley and I am reading it now. I will blog some quotes as I read it as I’ve done with several other books this year. Here’s the first of hopefully many to come:

Yahoo! is the last old media company. Google is the first post-media company.

I like the term post-media way better than new-media. I am going to try to use it going forward.

Nick Carr takes offense to Mark Zuckerberg’s "second law of social media" which Saul Hansell describes as:

“I would expect that next year, people will share twice as much
information as they share this year, and next year, they will be
sharing twice as much as they did the year before”

Nick ends his short post with the following point:

I’m troubled, though, by the implications of this exponential growth in
our release of intimate data. I mean, aren’t we all pretty much tapped
out already? Think forward a few years, and imagine the kind of details
we’re all going to have to disgorge just to satisfy the demands of
Zuckerberg’s Second Law. Shall no fart pass without a tweet?

I think Nick is missing two key points. First, I read Mark’s comment as talking about all of us, not just what Nick or I share. So it’s not that I’ll double my output next year (although I do think I’ve been doubling each year for the past five years), it’s that all of us together will share twice as much info next year as we in the aggregate have shared this year.

The second point is that sharing is not limited to blogging and twittering. It includes posting photos to Flickr, like the 82 photos that Obama’s photographer David Katz posted the other day. It includes videos we upload to YouTube, music we post to Tumblr, quotes we like that we reblog, sharing our travel plans on dopplr, uploading our transactions to wesabe, posting our stock trades to covestor, and many other forms of social sharing that are too numerous to outline here.

We are just at the start of the social media revolution and this is not about twittering farts. To suggest that is trivialize an important societal change that we are undergoing. As I’ve said before, my vision for social media is really simple:

every single human being posting their thoughts and experiences in any number of ways to the Internet

I think it’s going to happen and Zuckerberg’s law is in line with my thinking about how we are going to get there.

For the past 2 1/2 years, we’ve been using Sonos as the primary interface to music in our home. It started when Sonos did an advertising deal on this blog and as part of that campaign, I did a long review of Sonos. That first Sonos box led to a few more, and we’ve now got four Sonos boxes in our two homes (we paid for all of them). Sonos has updated their software a couple times since then and they’ve addressed all of the issues I raised in that initial review.

But a week or so ago, they did something really big. They released an iPhone/iPod Touch app. I have four Sonos boxes and I have four Sonos wireless controllers. It’s the wireless controller that really makes Sonos what it is. The picture at the top of this post is the Sonos wireless controller in our family room where it usually hangs out, controlling our music all day long.

But the controllers are $399 each and they are a bit bulky, need a proprietary charger, and serve only one purpose.

Compare that to the iPod Touch that’s running the Sonos app on in our family room now. It costs $229 and it does everything that the Sonos controller does. It’s easier to type on when searching for music, it’s easier to scroll through artists and/or albums with the gestures on the touch screen, and it’s lighter and smaller. In short, the iPod touch running the Sonos app is a better experience than Sonos’ own wireless controller.

The iPhone/iPod Touch form factor makes for an ideal family room remote. It’s better than any universal remote we’ve ever used. And it benefits from the application store/market ecosystem it can participate in. I think the Sonos app is just the first of many entertainment device controller apps that will find their way onto our iPod Touch.

But honestly, I don’t like the idea of paying for the 8gb of storage on that iPod Touch that we aren’t using. I don’t like the idea of the audio codec and headphone hack and assorted other hardware that’s required to provide iPod functionality that we’ll never use.

If Apple were to release an iTouch (an iPod Touch without the iPod functionality) that simply was a processor, OS, wifi, touch screen, browser, and a minimal amount of storage (but not enough for photos and music), it would be a killer device to build home controller apps on. I think it could be sold for less than $150 (I’d love to hear some opinions of what Apple could sell it for profitably). And it could participate in the app ecosytem like the iPhone and iPod Touch can. It might even be a great game device too.

Developers are using the iPhone SDK to do amazing things (like pocket guitar) and I think it’s inevitable that we’ll soon see a third device in the iPhone family because it will allow developers to focus on new markets like home entertainment controllers like the Sonos app.

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Bigness of purpose is what separates 20th century and 21st century organizations: yesterday, we built huge corporations to do tiny, incremental things – tomorrow, we must build small organizations that can do tremendously massive things.

Umair Haque – Seven Lessons For Radical Innovators

I did this interview several months ago as part of a Federated Media campaign that may run on this blog at some point. I like how it came out even though I look exhausted in the video. It’s roughly 8 mins long and it’s mostly about how technology has changed the way I work.

Last night, we were in a cab heading to an event and the Gotham Gal said, "the market dropped around 400 each of the last two days, what’s up with that?". I thought of Bliss McCrum, the guy who first taught me about the markets, and said "more sellers than buyers I guess".

The truth is I’ve tuned the markets out lately. It’s not that they don’t matter, they matter a lot, but the indexes don’t tell the whole story of what’s going on. As Howard pointed out recently:

I like a day like today because indexes did much worse than stocks.

I am not sure what market gurus make of days when indexes do worse than stocks, but that’s what I feel like is going on in my world. I’ve been trying to bottom fish for weeks and have limit/good till filled orders in for:

$AMZN at $40
$GOOG at $320
$AAPL at $90

These are three companies I have great confidence in. I love where they are with their businesses, I think they’ll come through the downturn better than most, and all three have strong cash flows with even stronger balance sheets. In short, the kinds of companies you want to own in this market, if you want to own anything.

I’ve had these limit orders in for several weeks and I’ve not had one fill yet. It could happen this morning with $GOOG, but I’ve thought that on several days in the past couple weeks and it has not happened. There’s support for these stocks coming from somewhere. Or maybe there just isn’t that much supply. Maybe the selling in these stocks has come and gone. Who knows, but I am just saying that the carnage we are witnessing elsewhere in the market has not been happening in the titans of web/tech in recent weeks.

I’ve also been reading less gloomy prognostications recently. A friend of mine, someone who has been trading professionally 24/5 for around 20 years and a perennial bear, said this to me in an email yesterday:

For the first time I can remember I am less bearish then the consensus. I expect one stimulus package to be passed this year or the day after the inauguration and then another mid year. That stimulus along with all the additional liquidity the Fed is dumping into the system should result in overall growth to be positive for 2009! National housing prices should bottom (stop going down) in the 2nd quarter after another 8-10% drop. Equities should sell off another 15-25% and then form a long term bottom.

Look at that chart of the Nasdaq that I posted at the top of this post (click here for a bigger one). I am not a technician but that sure look likes a bottom trying to form to me.

But in any case, I am with my friend. I’m a lot less bearish on the stock market than many of the blogs I’m reading. I’ve got my orders in and am waiting for the fill. I hope it comes.

Over the years, I’ve seen a bunch of ways to screen a venture capital portfolio looking for insights into risk, return, capital allocation, and areas of concern. I posted about one of them last week I call the Survival Matrix and people seemed to like that one so I’ve got another one for you this morning.

The Survival Matrix is all about risk, particularly financing risk, in your portfolio. It allows you to easily identify the companies that are going to have near term financing issues.

I call this next one the Portfolio Maturation screen. You plot annual revenues on the y-axis and a subjective measure of "traction" on the x-axis. It’s tempting to be overly quantitative with the x-axis and I urge you to avoid doing that. Just pick a numerical score for each company (1 to 30) that gives you some sense of how well they are doing in their attempts to scale into their market opportunity. If the company is a consumer facing web service, then uvs per month would be a good metric to think about. If the company is an ad network, then the amount of inventory they control would be a good metric. If the company is a enterprise oriented web service, then number of customers or channel partners or market share would be a good metric.

Here’s what it looks like (again this a set of make believe companies and does not reflect our portfolio or any portfolio I am aware of).

The size of the balls represents how much is invested in each company.

What you want to see (of course) is the balls move up and to the right over time. And you want to see them start out small and get bigger as they move up and to the right.

I’ve seen companies get to the up and right location different ways. You can move up in a straight line by adding revenues in parallel with scaling into your market. That’s the most typical way to grow.

Or like the light blue/green ball, you can move out on the x-axis agressively acquiring customers without generating revenues and then once you’ve reached critical mass, you can turn on the revenue engine and move into the desired location.

You can also scale along the revenue line first, like the orange and purple balls, and then try to gain traction. In my experience, this is the safest way to grow a business but also the hardest move to make. For whatever reason, a lot of balls get stuck in the upper left of this chart.

What you don’t want to see is the lavender ball stuck at no traction and no revenue and growing bigger and bigger. That’s a troubled company and you need to either figure out how to help them or find a way to get them out of the portfolio.

The other great thing about this screen is it shows if you are scaling capital into your best companies. We like to start with a very small ball and grow it over time as the company develops its business. If the balls are too big on the lower left of this chart or too small on the upper right, then we are not doing a good job of capital allocation and that’s a problem.

I hope you like this screen. Let me know what you think about it in the comments please.