Posts from October 2009

Last tuesday night, I gave a talk at Clickable‘s monthly speaker series on “What Makes NYC’s Web Startup Scene Special?” The talk was recorded and the video went up last night. I’ve embedded it here at the end of this post. The entire video is about an hour, but my talk is only the first 20 minutes. The remainder of the video includes follow-up remarks by Jack Dorsey and Chris Dixon and then about 20 minutes of Q&A. I hope you like it.

Fred Wilson At Clickable’s Interesting Cafe: What Makes The NYC Startup Sector So Great? from Max Kalehoff on Vimeo.

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• The NYC Web Startup Sector (avc.com)
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At our Hacking Philanthropy event a few years back we talked about all kinds of new philanthropic models that were emerging online. One model that did not come up in our brainstorming sessions was the sale of virtual goods for philanthropy. And yet, based on the data I am seeing this weekend, this could be a very big one.

Our portfolio company Zynga's Farmville game is the most popular social game online ever with almost 20mm people playing the game every day. On Friday Zynga released a new kind of seed into the game called "Sweet Seeds for Haiti". Since Friday, they have sold about 100,000 of these seeds which cost 25 FV cash.

Here is how the offer is described in the game:

Salutations, y’all! Today, FarmVille is proud to release “Sweet Seeds
for Haiti”. In this event, y’all will be able to purchase Sweet
Potatoes that NEVER WITHER, yield XP and 125 COINS PER HARVEST! Even
better than that is the fact that 50% of the
proceeds will go to helpin’ children in Haiti. What could be sweeter
than lending a helping hand to children in need? You’ll also get a
SPECIAL GIFT with your purchase so hurry on over to FarmVille and check
it out!

And here are the details about where the money is going in Haiti:

Haiti is the poorest country in the Western Hemisphere
and the 7th poorest in the world. Zynga’s mission of connecting the
world through games is enhanced by our opportunity to support the
health and education of these children and their families. For
additional information on the recipient organizations, please see www.FATEM.org and www.FONKOZE.org.

FATEM is a non-profit organization based in Mirebalais, Haiti, and
originally organized to bring information technology to the people in
the region, thus helping with the economic advancement of the area.
More recently, however, FATEM recognized the need for a sustainable
means by which to support the general education of Haitian children and
to ensure that these children have the necessary meals that will permit
their young bodies and brains to learn and grow.

FONKOZE, based in Port-au-Prince, is an alternative bank for the
poor. It is Haiti’s largest micro-finance institution and is committed
to the economic and social improvement of the people and communities of
Haiti and to the reduction of poverty in the country.

It's a bit tricky to estimate how much money the Sweet Seeds For Haiti has raised to date because you can earn FV cash and you can buy FV cash. When purchased, 25 FV cash costs $5. So if everyone bought the FV cash that has been used to buy the roughly 100k of sweet seeds to date, then $500k will have been raised, $250k of it going to charitable organizations in Haiti.

Even though that is best case, it's a pretty big number for three days. The key to this is that the seeds have value in the game and are tied into the game play and game mechanic. So not only are players doing something good when they buy sweet seeds, they are also advancing their own interests in the game.

I can imagine this approach being adopted across a multitude of online social games. It's an exciting development and an area to keep an eye on.

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I've said this before on this blog and I'll say it again. Traditional local media companies; radio stations, TV stations, local newspapers, and the like, are in a tough situation. Each of those businesses had a monopoly or near monopoly on their audiences a decade ago. Now none of them do.

The owners and operators of these businesses have been trained to think their strengths are local and relevant content, their monopolies or near monopolies on distribution (spectrum in the case of radio and TV), and their brands. All of these assets are waning quickly.

But there is one asset that is still quite significant and the value of it is growing, not shrinking. It is their large, well trained, and well connected salesforces.

I was reminded of this fact when I read Claire Cain Miller's piece on Curbed and the Village Voice today. Before I go on I should disclose that The Gotham Gal and I are small investors in Curbed and The Gotham Gal is what I like to call a "hands on investor" in the company.

As Claire explains in her piece:

The Village Voice …. has built this sales force over
five decades as a weekly newspaper. So it is acting as a local ad
network for Curbed, Mr. Steele said, selling local businesses ads for
its Web site as well as the Curbed blogs and then sharing revenue. In
return, it gets to offer Curbed’s articles and readers, in addition to
its own, to lure advertisers.

This story is playing out all around local media these days.

We have an investment in the leading online audio ad network, Targetspot. Targetspot has online audio advertising inventory from many of the largest radio station groups, as well as audio inventory from "pure play internet" services like AOL, Yahoo, Live365, Slacker, and several more that have not yet been announced. Advertisers don't buy the individual stations or services, they buy the network, either on a national, spot, or local basis.

When the network is "sliced" along a local dimension, like "all online audio listeners in New York City" that inventory is valuable to a local advertiser. And Targetspot's radio station partners who have salesforces in New York City can make good money selling the local network buy. And increasingly they are interested in doing just that.

But it doesn't stop at CPM buys like banners and audio ads. The same thing is happening in search and leads. Our portfolio company Clickable has a service called Platform that local media companies use to resell search and leads that come from search ads to their local advertisers.

This makes all the sense in the world. The media business, either on the national or local level, is losing its grip on audiences as they fragment and disperse all over the digital realm (including of course mobile). But they do not need to lose their grip on the relationships they have built up with local merchants since the days of Mad Men. What they need to do, and what they are increasingly doing, is reselling the inventory of others to their customers. As Claire points out in the NY Times piece on Curbed and The Village Voice, it is a win win for everyone, including the local merchants and their customers and potential customers.

Several of our portfolio companies are looking to hire marketing VPs. I was reminded of that yesterday when I read Matt Blumberg’s post called Wanted: Rock Star Marketer

http://onlyonce.blogs.com/onlyonce/2009/09/wanted-rock-star-marketer.html

Retun Path’s VP Marketing position is the most senior of the open marketing roles in our portfolio but we have several more.

If you are an experienced marketing executive who understands how to support a sales force, generate leads, and tailor a strong message to the marketplace, we’d like to get to know you.

First thing to do is click on the link above and check out the Return Path position.

And please also click the contact link at the upper right of this blog and send me an email if you’d like to run marketing for one of our companies.