Posts from June 2009

Mr. BATTELLE: And help me please
welcome our first conversant, Mr. Fred Wilson. 

Mr. WILSON: Hello. 

Mr. BATTELLE: Welcome. 

Mr. WILSON: Thank you. 

Mr. BATTELLE: So, Mr. WILSON… 

Mr. WILSON: Mr. BATTELLE… 

Mr. BATTELLE: You often get
to be the proxy for a little application that six months ago had three
million users and now has 35 million, 31 – 35 million. 

Mr. WILSON: Right. 

Mr. BATTELLE: Twitter. What
did you see when you decided to invest in Twitter? 

Mr. WILSON: Well, for me it
was really pretty simple. I’ve been blogging for close to six years
now and it takes me a good 30 minutes every day to write a blog post
and when I started using Twitter, I realized that I could communicate
some of the insight that I was trying to communicate every day in 20
seconds. And I saw that I was doing that four, five, six times a day
and having a similar amount of impact in a much lighter way experience
for me as a content creator. And the fact that Ev and Biz and Jack had
a history in the blogging world, I kind of saw this Blogger 2.0 and
that was my investment thesis. It wasn’t really much more than that.
I mean, obviously, much more has happened since then that has made it
much more than bloggers but… 

Mr. BATTELLE: It made you seem
much smarter than maybe you actually were. 

Mr. WILSON: Exactly. Every
investment I’ve ever made that has worked out fabulously is always
a case that the investment played out in a way that we didn’t imagine. 

Mr. BATTELLE: So, I guess,
the next question I was going to ask you, you may have already rendered
it moot, but what is your investment thesis? 

Mr. WILSON: For Twitter? 

Mr. BATTELLE: Well, just in
general. When you look to invest in a company, do you have a larger
thesis about what’s happening in the world? 

Mr. WILSON: Yeah. A couple
of weeks ago, I was privileged enough to be able to give a talk at Google
and the talk was about how the Internet is disrupting industries and
that’s our investment thesis. If you really want to go look at our
investment thesis and you have an hour to spare, go watch that Google
video. And our thesis is pretty simple. The Internet is a disruptive
force, it’s one of these, you know, once every hundred years kinds
of things that it goes all the way through pretty much all industries.
Certainly, the Internet is going to do this to every industry that is
end-to-end digital. The media industry I think was the first because
it is probably the most end-to-end digital, but there are many more
industries. And that is basically at a 30 thousand foot macro level,
that is our investment thesis. 

Mr. BATTELLE: You seem to have
been focusing many of your investments in the area of media and marketing
disruption. Is there a reason for that? 

Mr. WILSON: Well, we’re here
in New York and those industries are heavily concentrated here. We understand
those industries pretty well. And we have seen the kinds of things that
can really shake things up in that category and we thought media was
going to be first. So, that is why we’ve done a lot. And we also in
“Web 1.0” made a bunch of investments like the industry standard… 

Mr. BATTELLE: I’m sorry. 

Mr. WILSON: Inside that… 

Mr. BATTELLE: You just let
us sell when the guys want. 

Mr. WILSON: Exactly. But we
saw that… 

Mr. BATTELLE: We don’t have
a history or anything. 

Mr. WILSON: Because we have
a lot of history. But we saw that taking the traditional media model
and just putting it on the Internet wasn’t enough. And the big investment
success that we had back in the late 90s was GeoCities. And that allowed
me to realize that it really isn’t about just taking a magazine or
a newspaper and putting it on the Web. It’s really about turning us,
the people who are on the Web into the content creators. And so, if
you look at our portfolio, most of the things we’ve done in disrupting
media have been around citizen journalism or social media. 

Mr. BATTELLE: So, before I
want to drill down a little bit into Twitter because I actually twitted
right before you came on and said, what do you want to ask Fred. And
I got the same question over and over again which I’m sure you already
know what I’m going to ask. But, can you list three or four or five
of the investments that you’ve made besides Twitter that you think
are sort of timely right now? 

Mr. WILSON: Well, you know,
it’s easy for me just to talk about the most successful ones. I’ll
try to mix it up. We have a company called Zynga which is the leading
social gaming company. So, they have about 25 games that run on eight
or nine different social networks and have amassed an enormous audience.
I don’t know if it’s public or I can even say but, they have as
many daily game players as any web-based gaming service out there. And
they’ve done that in a year and a half on the back of social networks. 

Mr. BATTELLE: And Texas Hold’em
Poker. 

Mr. WILSON: But, Texas Hold’em
Poker is actually not their biggest franchise. Their biggest franchise
is a game called Mafia Wars – 

Mr. BATTELLE: Oh, yeah. 

Mr. WILSON: …which is one
of the best social games, maybe the best social game. So, that’s one
company. Another company is Boxee. You showed a logo of Boxee. Boxee
is a browser, a social browser, kind of like what Flock, I think, is
trying to be. Except it’s designed only to be run on TVs and devices
connected to TVs. So, it’s a browser that’s designed for the 10-foot
experience and it’s social. So, if you and I are friends on Boxee
and you watched, you know, some movie, I see that. You can recommend
it to me, you know, it’s a little bit like Twitter in that way. That
would be another one. Disqus which is a company that a lot of people
scratched their heads about why are you messing around with a blog comment
service? I think blog comments are very important piece of the social
media landscape. I think of, sort of the four big channels in social
media as Twitter, Facebook, blogs and blog comments and Disqus is the
leading provider of third party comment system on the Web. And so, you
have for five, Meetup, which is also a social media company hiding as
a service that gets people off the Web. 

Mr. BATTELLE: Now, I’m thinking
about each one of these and it’s true. When you look at Meetup or
Disqus, Zynga, Boxee, I want to talk about separately. But, even Boxee,
I know that Boxee is sort of a half a million or so, a little more,
the rest of them, very, very large in terms of the amount of people
that are involved with this service in some way. A really funny headline
crossed my e-mail this morning and the headline, it was from one of
the news services that I subscribe to. I can’t remember which, which
is kind of one of the problems that news services have. But, it said
“Susan Boyle Fails to Monetize Massive Web Popularity.” So, this
is the woman who just lost the British version of American Idol which
I'm sure that in England they would kill me for saying that because
it started there. But, she's got millions of YouTube plays and this
is just you know as huge instant web star.  But, the headline in
the industry publication was that she failed to monetize that massive
population. Do you worry about that for something like Zynga or something
like Disqus. 

Mr. WILSON: I don't worry about
it for Zynga because they’re already monetizing at a phenomenal rate,
let’s leave it at that. But, yeah, we worry about it with every single
one of our services. I mean, I worry about it with Twitter, right. Twitter
has no revenue so… 

Mr. BATTELLE: That was a bridge
to the next question. 

Fred: So, this is a hard thing
to do, to figure out how these companies which are based implicitly
on delivering a free service to get mass adoption. And then, you can’t
turn around and start charging people to use it. That will end the party
right then and there. So, you have to come up with some way to monetize
these services and I think there is no one way. That’s the problem.
I mean, in the early days of the Web, it was slap-a-banner ad and then
we got to search and everything was about clicks and paper clicks. And
now, we’re in this new world and I don’t think there is going to
be one magic bullet that solves the problem in terms of monetizing social
media. 

Mr. BATTELLE: Let’s jump
into Twitter. 

Mr. WILSON: Right. 

Mr. BATTELLE: There have been
an awful lot of, I’m sure, very helpful speculation on what Twitter’s
business model or models might be. Can you enlighten us on the ones
that at least you and the team pay attention to or find worthy of consideration? 

Mr. WILSON: Sure. I don’t
want to get on in front of Ev and Biz on this but I can amplify some
of the things they’ve already said and maybe give you a little bit
more insight. They feel very strongly that they’re not going to charge
people to use Twitter. So, that’s not going to happen and I think
Biz was very clear a week or two ago that they think banner advertising
is a pretty unlikely solution to that. So, the things that they’re
more interested in are creating premium accounts for people who need
premium accounts. The kinds of people who need premium accounts are
businesses that are doing real business on Twitter, celebrities who
need to be known as, if it’s Oprah, you need to know that it’s Ophrah.
If it’s Mr. John Battelle, you need to know it’s Mr. John Battelle.
So, there’s… 

Mr. BATTELLE: Now, I have,
no one else does, but I have to pay. 

Mr. WILSON: You need to know
that. 

Mr. BATTELLE: I have to pay
for Twitter soon. 

Mr. WILSON: You don’t have
to, that’s the whole point of this. That Twitter’s going to – 

Mr. BATTELLE: But I get the
real Mr. Battelle, like the real shack 

Mr. WILSON: Exactly. 

Mr. BATTELLE: Does that put
me into the suggested users box? That’s what I want to find out. 

Mr. WILSON: That may well be.
That may well be part of, you know, I think, suggested users is a piece
of this. And I think there are – one could imagine, if you think about
what businesses and celebrities and brands need on Twitter and what
they’re not getting today, there’s a whole set of premium services
that are there. And you don’t have to have them if you don’t want
to. But they’re there for you and they’re priced in a manner that
makes them affordable and scaleable. So, that’s the first big initiative,
that’s the thing that Ev has been talking about for most of this year
and I fully expect that we’re going to have a bunch of those services
in the market by the end of the year. So, that’s one. The second thing
that I think is pretty obvious is there is something to do around search.
Not every Twitter search is necessarily monetizable. When you search
on your name or you search on your company or you search for that hash
tag CM Summit or whatever, there may not be any real commercial activity
there. But, if you're doing research on, I want to buy a digital camera
and I want to know what digital camera do. So, I'm going to go search
Twitter to see what the chatter is about this service, there's clearly
monetizable intent there. And I think Twitter will do something to monetize
that. So, that's a second area. And then the third is mobile. And I
don't think that the things to do in mobile are the things that the
people might be thinking about. We're not going to start charging people
to send and receive messages over and over mobile. But, you know, you
think about Twitter is the – I don't have this verified. But, I've heard
it from a couple of sources. Twitter's short code here in the States
is 40404 is the most used short code in North America more than any
other short code. 

Mr. BATTELLE: Wow! 

Mr. WILSON: And Twitter also
has – 

Mr. BATTELLE: Can someone tweet
that please? 

Mr. WILSON: And like I said,
they’re not verified but that’s what I’ve heard from a couple
of people. The other thing that you’ve got to think about is that
Twitter has a phone number for most of those 32 million people. And
those people are actively engaging in mobile device to mobile device
communication. So, there’s a bunch of things that one might want to
be able to do mobile to mobile that we’re not doing today. I might
want to be able to pay you some money, for example. Facebook has launched
a payment system and I think that that’s a very smart move on their
part. And I would hope that sometime in the next couple of years, Twitter
could launch a payment system or maybe front end the payment system
from somebody else. So, these are the kinds of things that I think are
the highest value to the community and to Twitter and to the businesses
they are conducting business on Twitter. And those are the kinds of
monetization systems that make sense to me and I think to the Twitter
team to go after. 

Mr. BATTELLE: You mentioned,
I want to unpack one thing. You said something about brands on Twitter,
sort of like celebrities having the ability to sort of build an official
presence. 

Mr. WILSON: Right. 

Mr. BATTELLE: Not unlike what
Facebook’s done with Pages, right? 

Mr. WILSON: Exactly. 

Mr. BATTELLE: And there’s
a lot of things that Twitter is doing that, are like what Facebook is
doing and the reverse. Facebook has actually redesigned around a sort
of like Twitter like thesis. The two companies seem to be staring at
each other quite directly. 

Mr. WILSON: I think learning
from each other, that may be is another way to put it. 

Mr. BATTELLE: So, how did you
feel when Evan said no to half a billion dollars from Facebook? 

Mr. WILSON: Ev wrote a great
memo, which probably will never see the light of day, to the senior
managers. 

Mr. BATTELLE: You could forward
it to me if you like. 

Mr. WILSON: …to the senior
management team and the board and he said, you know, there’s – I actually
don’t remember if it was four or five, but about four. There are four
reasons why a company should sell. The management team is tired and
does not have it in them to take it to the next level. There is a life-changing
financial event for the management team. There is some huge business
problem that we can’t solve on our own. A good example of that would
be YouTube and the whole sort of intellectual property issue. And, I
forget what the fourth one was, but anyway, he articulated the reasons
why a company ought to sell. And then he pointed out that we face none
of those issues and that we could finance the company and that we have
plenty of opportunity to create a sustainable business and that the
service was growing. And this was all last fall and he was right about
all of that. So, I think that in hindsight, he really provided great
leadership around that decision and convinced everybody to say no and
I think it was the right decision. 

Mr. BATTELLE: Do you think
that there is a number and then I’ll stop? But do you think that there
is a number or is it really that that decision is the same decision
even if it gets too YouTubian or DoubleClickian kinds of numbers? 

Mr. WILSON: I honestly don’t
know because no one has thrown a number out. So, you know I think… 

Mr. BATTELLE: You see, I just
got information out. 

Mr. WILSON: So, you know, until
you – I mean, what I've always learned is that the answer is no. You
know, we're not selling and then, you know, at some point, someone comes
along and, you know, Google could have sold but nobody ever really put
a deal in front of Larry and Sergey that was a number that, you know,
convinced them not to. 

Mr. BATTELLE: Right. 

Mr. WILSON: And so – and I
think maybe the same thing is true at Facebook. I've heard from people
at Google that there were conversations about buying YouTube and Facebook
at the same time and they concluded that it didn't really make sense
to do two billion plus acquisitions at the same time. There's too much
operational risk around that. So, that suggests to me that Facebook
could have been bought at some point. 

Mr. BATTELLE: Yeah. 

Mr. WILSON: So, I think the
answer is that, you know, you can never say never. But, it's also true
that all the points that have put in that memo last fall are true today. 

Mr. BATTELLE: Right. 

Mr. WILSON: And so I think
there's a real bias in which everyone has been very clear about. I think
that there's a real bias that we should try to make Twitter an independent
company for the long hall. You know, Tim O'Reilly has this thing about
the internet-operating system. And if you look at what the internet-operating
system is, it's the internet and a bunch of functions that come with
it. Your search function is Google and your purchase function is Amazon
and your list-something-for-sale function is craigslist or eBay and
you could go on and on and on. And I think Twitter has the opportunity
to be the function, which is tell the world what you're thinking, right?
If you have something that you just want to say now, you do that by
posting it to Twitter and then the internet takes it from there. So,
it's a short message input function. And because of the open API, there
are already 11,000 services built on top of that. 

Mr. BATTELLE: Yeah. 

Mr. WILSON: And so we're headed
to a million services built on top of that. So, Twitter is, I think,
becoming a piece of internet-operating system and most of those companies
I just mentioned are independent companies. 

Mr. BATTELLE: Right. 

Mr. WILSON: And it may be that
in order to continue to be a piece of the internet-operating system,
you need to be an independent company because if you sell delicious
or you sell Flickr or you sell whatever else it may be, it get sucked
into something that's not part of the internet-operating system and
a new function gets built. 

Mr. BATTELLE: So, you were
just talking about Yahoo there? 

Mr. WILSON: I didn't mean to
be… 

Mr. BATTELLE: As not… 

Mr. WILSON: I didn't mean to
be talking about Yahoo. 

Mr. BATTELLE: But it does when
you sell it and becomes part of a greater whole. Somehow, it loses some
part of its essence. 

Mr. WILSON: I think so. 

Mr. BATTELLE: Let's pull back
for a second and talk about marketing, a room full of people who are
invested in figuring out how to take a brand into the space, into the
social media space. Specifically to Twitter now as opposed to what might
be coming and more broadly, any lessons that you might have or how to
be – how to practice the craft of marketing in this sort of mercurial
environment.

Mr. WILSON: Well, I think you
said it in your introductory remarks. It's – you've got to have the
conversation. You got to be in the conversation. A good example of this
– two or three weeks ago, I guess and I don't do very often on my blog.
I did a bitch post and I bitched about American Express. And it was
a great thing that… 

Mr. WILSON: Marcy, leading
the audience… 

Mr. BATTELLE: One of our sponsors,
thank you. 

Mr. WILSON: Came into – in
the conversation and left a comment. 

Mr. BATTELLE: Yeah, right. 

Mr. WILSON: And it was a great
thing. And the comment discussion took a new life after that happened.
But, it wasn't as good as it could have been. And yesterday evening,
I wrote a post about conferences and pointed out that I've never been
to a TED conference and probably never will go to a TED conference.
What's interesting about that is that several of the people behind TED
were very quickly in that conversation and a bunch of people rallied
around TED and if you go look at that comment thread, it's a very balanced
conversation and in fact, it might even be a pro-TED conversation. That
didn't happen with American Express. Now, I don't know that the two
brands are that comparable because American Express is a big company,
right? And everybody has had at least one experience with American Express
that might not have been ideal. So, so you know, it's harder to imagine
that, you know, hundreds of people would have come to the aid of American
Express in that conversation. Whereas with TED, you know, it's a beloved
brand among some group of people and those people were there. Whenever
I write about Apple and I'm very critical of Apple, the Apple fanboys
come out and they come out with a vengeance and you know, they can… 

Mr. BATTELLE: You know, this
is actually a very interesting point because there is – I mean, my first
job in this business 25 years ago was being a reporter covering Apple. 

Mr. WILSON: Right. 

Mr. BATTELLE: So, I know that
fanboy, they're actually like fan old men now. 

Mr. WILSON: Right. 

Mr. BATTELLE: But, I know them
very well and what I find extraordinary about it is that Apple is the
only company that has that kind of an extremely, you know, evangelical
base on the web that absolutely ignores it and does not feed it, right?
They do not join the conversation. Apple is a very traditional company
when it comes to this. It's almost like they're playing a little judo
and saying we're not going to do what everyone else is doing. 

Mr. WILSON: Well, they can
get away with it because they have – they're ninjas, right? And they
know that their ninjas are going to fight their fight for them. 

Mr. BATTELLE: Right. 

Mr. WILSON: But, I think most
brands don't have that and so I think they have to create social media
ninjas of their own. 

Mr. BATTELLE: Apple ninjas.
Good point. 

Mr. WILSON: I didn't make up
that term, social media ninja. 

Mr. BATTELLE: No. 

Mr. WILSON: David Kidder and
Max Kalehoff from Clickable were the ones who introduced it to me. And
that they have inside their company a group of people that are called
social media ninjas and they use it very effectively. 

Mr. BATTELLE: I want to ask
you about a couple of the post you've made recently and it's more like
your ideas. 

Mr. WILSON: Right. 

Mr. BATTELLE: One of your ideas
is called "The Power of Passed Links." 

Mr. WILSON: Right. 

Mr. BATTELLE: You wrote a post
about that in April. I think it was in April. 

Mr. WILSON: Right. 

Mr. BATTELLE: Can you enlighten
us on – and sort of generally, the idea there and why you think it matters? 

Mr. WILSON: So, what I've been
looking at is the refer logs for all of our portfolio companies and
also wherever else I can get somebody to show me their refer logs and
I've been building a database hopefully over time and looking at the
amount of links that are coming from organic and paid search, just largely
Google, to be honest. And a number of visits that are coming from what
I consider to be social media, which is in my mind, Facebook, Twitter,
blog and blog comments. And what's interesting to me is that Google
is still doing great and the amount of traffic that most companies are
getting from Google – for most people, it's somewhere between 40 and
60, 70 percent of the traffic. So, Google still owns the web. But that's
only grown at about maybe five or 10 percent month over month, maybe
even less for some companies. It's growing though. But, social media
is growing at a very fast clip. Twitter and Facebook are growing at
like 40 percent month over month, the number of incoming visits. And
those visits are coming from what I called passed links – links that
are passed from me to you. And of course, with the re-tweet function
in Twitter in particular, that can get amplified very, very quickly.
And so I think that, you know, email is another form of passed link.
It's the original form of passed link, but emails can get passed around
virally but most emails don't have that kind of amplification factor
that social media does. Blogs and blog comments, I think, are a big
piece of this but hard to see because they're not coming from a single
domain and so that's a real problem and opportunity for somebody to
go kind of grab a ball to blog domains and all the blog comment domains
and call that blogs and give that data to people who use Google analytics
and others to kind of see how much of that is coming from blogs. My
guess is that blogs as a group is equally powerful and more powerful
than Facebook and Twitter. But any case, you take those trend lines
and you take them out another year. Social media together is going to
be bigger than Google. 

Mr. BATTELLE: In other words,
this thesis played out is trouble for Google because Google has gotten
to its position by being the circulatory system of the web. 

Mr. WILSON: Right. 

Mr. BATTELLE: And now, a new
circulatory system is developing, which is laid over it – it's dependent
on it, certainly. It's integrated with it, but it is growing much faster
than it. 

Mr. WILSON: Happens all the
time. You know, when the U.S. government was trying to go after Microsoft,
you know, for being a monopoly, what was happening was that, you know,
the hackers were building Linux. And now, you know, as Google starts
to look like a monopoly who owns the web, we're coming together to create
a new form of media. It's more powerful than it, so I think this is
inevitable. 

Mr. BATTELLE: So, I wrote a
post in March or actually, I guess it was earlier than that – in December
where I said Twitter equals YouTube because people were noticing that
search referrals – there's sort of a new signal of search on the web
and it was Twitter and that seems to really be growing the amount of
search that's coming out of Twitter. 

Mr. WILSON: Yeah. I'm not convinced
that the thing that Twitter does that's so disruptive is search. 

Mr. BATTELLE: Well, it's not
so much that it's a search in the traditional form but rather, I think,
every tweet might be seen as a query. 

Mr. WILSON: That I agree. I
really think of it as this passed links phenomenon, right. So, I saw
it this morning. I, you know, ComScore has some big news today which
I think they're going to be talking about at some point. 

Mr. BATTELLE: And they’re
announcing it here. 

Mr. WILSON: Right. 

Mr. BATTELLE: Stay tuned. 

Mr. WILSON: So, I wrote a blog
post, you know, John knows it. I was on the board of ComScore. I was
one of the founding investors there and was on the board for nine years
and it's a company that is still near and dear to my heart although
I’m not involved now anymore. They have some big news and I wrote
a blog post about it and I twitted it and in the 20 minutes between
when I posted and left to come up here, it had been re-twitted about
30 times. I don't know how big the audiences of those people who re-twitted
it where, but if each of them had a thousand followers, you know, that's
20,000 people who are going to see it at length that did not see it
on my initial… 

Mr. BATTELLE: Right. 

Mr. WILSON: I mean, there's
obviously some overlap, but that to me is maybe a bigger deal than search. 

Mr. BATTELLE: Right. 

Mr. WILSON: Is that viral spreading
of links. 

Mr. BATTELLE: So, you're using
that viral spreading of links to focus that quick silver attention on
something in the moment. 

Mr. WILSON: Right and it is
relevant. 

Mr. BATTELLE: Right. But that
is exactly what search does, except in the static form as opposed to
real time form and that's the thing that I find so fascinating. 

Mr. WILSON: What's different
though is search is very intent-driven. 

Mr. BATTELLE: Right. 

Mr. WILSON: I want to buy a
digital camera. I go, I search, I buy. And the passed links thing is
much more serendipitous. StumbleUpon, I think was a very interesting
service we weren’t an investor in it, but it was very serendipitous
when you stumbled upon something. And I think that Twitter and Facebook
and social media more broadly, I think, is a more powerful way of that
serendipity. I’d see you want, I think in life you want some things
you subscribe to, you want some things that you go search for and then
everything else you kind of want to come at you through some filtered
set of trusted sources. And that’s… 

Mr. BATTELLE: Through what
Mark calls the social graph. 

Mr. WILSON: Correct. But the
social graph that the problem that Facebook has and they know it, is
that there are a lot of people out there who are not friends, who are
really powerful social recommenders and you're not just going to have
them in your social graph in the original instantiation of the way Facebook
was setup. 

Mr. BATTELLE: Yeah. 

Mr. WILSON: And so, I think,
blogging to me is the proper model and I think that the people who started
Twitter launched Twitter with the blogging model, which is I can follow
you and you don't have to read me. And we don't have to be friends,
but you can be influential and that is, I think, a more natural model,
that relationship model to me. 

Mr. BATTELLE: That's one of
the reasons that we have both LinkedIn and Aardvark here, as I think
the second and third order social graph is very, very interesting as
a recommendation filter, right? 

Mr. WILSON: Right. 

Mr. BATTELLE: But, I think,
everyone who uses LinkedIn, one of the things about it that works is
that it is not just who you are connected to professionally, it is who
they might be connected to or who they, you know, third order as well.
In Aardvark which is a service you'll see here, it works exactly the
same way. 

Mr. WILSON: Right. 

Mr. BATTELLE: We're going to
run out of time if I don’t let you guys get some questions. And so
I think, we've got folks with microphones if anyone wants to ask Fred
a question that I haven't asked. Please raise your hand and do. I want
to make this as much a conversation as possible. Thank you for the house
lights. While you do that, let me ask you about earning media, because
that is another one of the ideas that I found really important that
you’ve written about recently. 

Mr. WILSON: So earn media is
the opposite of paid media. So instead of going out and buying media,
figure out a way to earn the media, and there’s lots of ways you can
do it. I mean, it all started with PR. I think the PR firms are the
ones who created the term earn media. But I think that now with the
whole social media eco system out there, there's a lot of ways you can
earn media and many of the best things that have been done are things
that you've been doing John with your partners to create presence in
the blogs and presence in Facebook and presence in Twitter and other
places. And, you know, my favorite story about that is the Korean Barbeque
Taco trucks in Los Angeles. There are two trucks – Kogi BBQ. If you're
ever in LA and you use Twitter, just follow Kogi BBQ and they drive
all around, these two trucks drive around LA and they Twitter where
they are. If you happen to be near where they are, you can go get one
of the best Korean barbeque tacos you've ever had. And I think, you
know, they've got 15 – the last time I checked, they've got about 15,000
followers and they've done it all through blogs, Flickr and Twitter
and that's a great example of earning their media. They don't have to
buy it. 

Mr. BATTELLE: Yeah, and their
lines are ridiculous. They just show up and there's a flash crowd around
their taco truck. 

Mr. WILSON: Right. 

Mr. BATTELLE: …which is pretty
cool. They have a question over here. 

Unidentified man #1: Hey, how
is it going? Love the matching outfits by the way. 

Mr. BATTELLE: He’s got
checks and I got stripes. 

Unidentified man #1: Only because
I'm wearing the same suit, I think. So Fred if you're the CEO or board
member investor somehow magically in-charge of the New York Times, what’s
the first three to five things you would do? 

Mr. WILSON: I would get rid
of the paper. I would shut down the paper. I would stop… 

Mr. BATTELLE: Is it the Times,
I'm sorry. 

Mr. WILSON: Yeah. I would stop
covering stuff that is covered better elsewhere. I’d stop covering
business, The Journal does it better. I would stop covering sports,
The Post does it better, and I would focus on what they do uniquely
well, their opinion, their national political news, their world political
news. I mean when, you know, Obama nominated Sotomayor, is that how
you say her last name, I don't know anyway, to the Supreme Court, the
next day, The Times had three or four really great pieces about that.
Nobody does that better than they are. Do that and do nothing else. 

Mr. BATTELLE: So the things
you said to get rid over are the legacy revenue streams for the business,
right? You know, business brings in business advertisers, the print
edition used to be the fundamentally, you know, 80% of the revenue. 

Mr. WILSON: Right. 

Mr. BATTELLE: You’re basically
talking about a plan not unlike GM for The New York Times where you
just sort of take make two companies put the cool – the good stuff here
and all the legacy stuff that's losing money and bleeding but used to
be, you know, in another company like get sold off the parts. So that's
what you suggesting is we should… 

Mr. WILSON: I think they can
only do what's sustainable, right? And the one thing that's sustainable
for them is the thing that they do uniquely better than anybody else
and that's the only thing, I think, they do uniquely better than anybody
else so that's what they should do. I mean I don't know else what they
can do. 

Mr. BATTELLE: Over here. 

Unidentified man #2: Hey there,
it's a great discussion. Something that I've seen in the last few months
and I know there's data to explain it, but I'm curious on your take
on it. It seems like MySpace has fallen out of the conversation, you're
talking about social media, you’re talking about social network, about
Facebook and all these other companies yet you never mentioned MySpace. 

Mr. WILSON: Well, MySpace does
not have viral channels. MySpace isn't a viral service. If you look
at the way that – if you look at people who build apps on top of Facebook
and people who build apps on top of MySpace, MySpace it doesn't –
it just, there's no way, it’s not built in to the nature of their
service, it's stuff gets passed around. I think MySpace is largely an
entertainment business. Largely around music and to a slightly lesser
extent, video and I think that they have a place to exist in that world
as a social entertainment service, but they don't seem to have the DNA
to be a social media service, a broad horizontal social media platform,
the way that Twitter and Facebook are. So that's my take on MySpace. 

Mr. BATTELLE: I spent sometime
with Jon Miller and Owen Van Natta last week. Jon Miller is the new
chief digital officer for Murdoch and Owen was the number two guy at
Facebook who is now running MySpace. And they're hoping that maybe a
year from now when we meet, you won't be saying that. But, they also
agree that the focus of the company is really on entertainment and music
for now. 

Mr. WILSON: The problem is,
there are companies out there; AOL, Yahoo and MySpace are all very good
examples of it, that don't have deep technology innovation in their
DNA. And, you know, it seems to me that that is an absolute requirement
if you want to be a platform and I think, that if you don't want to
be a platform, then I don't know what you should be aspiring to be.
I mean, I don't know that there is anything else that you would want
to be. 

Mr. BATTELLE: One more question
and then I think we are going to have to… Okay, I got it. 

Unidentified man #3: I'm curious
about your outlook for the US economy and how your expectations for
recovery impact your portfolio strategy. 

Mr. WILSON: I think the economy
is going through a restructuring more than, I mean, this is a downturn
of course, but I think the more profound thing that's going on is my
partner Albert wrote this thing today about, you know, GM's going bankrupt
and there's all this innovation going on in the technology space at
the same time. And you just think about that for a second. What we're
witnessing is sort of the – or The Times is another good example,
we're witnessing sort of the dwindling of the industrial era and the
rise of the information era. And so, I'm very bullish about our business
and the kinds of companies we invest in and we're seeing it in our portfolio.
And we have a dozen companies that have revenues of more than 10 million
a year or more and all of them were flattish in the first quarter and
all of them are doing much better now. It may just be stimulus money
kind of sloshing around the economy, but I really believe that the kinds
of companies that we were involved in and that many of you are involved
in are going to be just fine. 

Unidentified man #3: To that
point, you saw that GM and Citi exit the Dow Jones 30 and Cisco was
added to that point. 

Mr. WILSON: Good example, perfect. 

Mr. BATTELLE: Well, we can't
keep going for a much longer time but please join me in thanking Fred
for coming here. 

Mr. WILSON: Thank you.