Areas Of Interest

A few days ago, I exchanged emails with a journalist friend. She said the following, "I'm just wondering which sectors/investment areas/types of start-ups you think will be exciting investments in 2010, and which you're staying away from because they're over-hyped, not yet ready, etc." 

Today I sent a friend in the VC business an email outlining some areas I wanted to focus on this year so we could find some things to work on together.

In thinking about those two events, I decided I should just post the answers right here. So here goes:

I should say that this is my view, it probably reflects the views of my partners but I haven't shared this with them so I can't be sure. This is not an attempt to guess what my colleagues in the venture business are looking at. I don't think very much about that anyway. Every partner and every firm has their own investment thesis and that's great. I don't think it makes much sense to think very much about what others are doing. Focus on what you are doing. This is what I'd like to be doing in 2010:

1) Mobile: I am very excited about Android. As much as the iPhone has been transformative, it is still a tightly controlled environment. Android opens up mobile in a way that it can begin to look and feel like the web. Android will be on many handsets and many carriers. Developers can work with the source code if they want to. Apps don't have to be cleared by Google to run on Android phones. I could go on and on. These might not seem like big things but they are huge. Mary Meeker said in her mobile internet report that the mobile internet will likely be at least twice as big as the desktop internet. I think that's a safe bet and I would venture that it could be well north of that.

2) Mobile What?: We believe that we should focus on things you can do with a mobile web service that you cannot do on a wired web service. My partner Albert wrote a post about this last year and the conversation/comments on it are very enlightening. Go read his post and the comments and you'll see what kinds of things we are thinking about/looking at in mobile.

3) Gaming: I believe gaming is the most powerful form of entertainment and education right now. I see it with my kids every day. Gaming is becoming social and our portfolio company Zynga is the leader in social gaming. Gaming is also becoming mobile and the most popular apps across all app stores and operating systems are games. One area of gaming I am particularly excited about is augmented reality games. Augmented reality according to wikipedia is "a term for a live direct or indirect view of a physical real-world environment whose elements are merged with (or augmented by) virtual computer-generated imagery – creating a mixed reality." When I explained augmented reality to my son Josh, he said "do you mean me and my friends could run around the park shooting each other with our iPhones?". Well I hope we can come up with better augmented reality games than Tag and real life Call Of Duty but that's the idea for sure.

4) New forms of commerce and currency: I wrote a post last week about Etsy and the San Telmo markets in Buenos Aires that explains how the current e-commerce model on the internet is limiting and outlining the work we have yet to do to realize the potential of commerce on the web. Etsy is doing its part to move the commerce model forward and I am proud of that company and our investment in it. But there is so much more commerce that needs to be brought natively onto the web. Some of that will be new forms of commerce and some of that will be new forms of currency. I am excited about both.

5) Cloud based platforms and APIs – Many web services have APIs today. A good example is the Twitter API. These APIs have become development platforms in their own right. On top of that, Amazon and others are offering very robust cloud based platforms for developers. The combination of these two trends means that modern web and mobile development is being done on top of cloud based services and APIs. Until recently, we had not been interested in services aimed at developers but the emergence of cloud based platforms and open APIs is changing that. We've made two investments in this sector to date, MongoDB, a cloud based open source datastore, and Twilio, an API that allows web developers to access telephony resources from the cloud. Developers are the new power users. If you cater to them, you can build a large user base with significant network effects. And that is one of the key things we look for in our investments.

6) Education and the Energy/Environment: We've been looking at these two verticals for the past year. We've only made one investment to date, AMEE, which is a cloud based API for recording and measuring energy and carbon consumption. But we have not lost any of our interest in these verticals, which we believe are being impacted by the global open internet. We don't believe in making investments until we have done our homework, analyzed the sectors, and developed a thesis about where we want to invest. We are well on our way to doing that and I hope we'll do more in these two verticals in 2010.

So these are the six areas I'll be looking closely at in 2010. The first two are really one and the same, so it's five areas; mobile, gaming, commerce/currency, cloud platforms/APIs, and eduction/energy/environment.

In the six years we've been actively investing under the Union Square Ventures brand/platform, I've led/managed thirteen investments. So that's about two per year and that's the pace I like to work on. So five sectors, two investments means I won't be making an investment in each sector this year. We have three partners in our firm and we generally make six to eight investments per year as a firm. We may be able to make at least one investment in each sector as a firm. That would be a nice goal.

#VC & Technology

Comments (Archived):

  1. Yuval

    Fred. You continue to inspire. Have a Happy New Year!

    1. paramendra

      The dude is a visionary, that’s for sure.

  2. anthonybrown

    I like your breakdown, my predicition is that mobile and energy/environment are going to be the most exciting of that group.

  3. David Hauser

    2010 will be all about applications and companies actually making money, that is what excites me.

    1. theslingster

      2010 will be about the platform owners (google, facebook, apple, etc) targeting the most successful and profit-potetnial 3d party apps, changing their api rules, starting their own competitor and eventually putting the third party out of business (like Microsoft in the 80s).Regarding profits, my prediction!! is; There’s going to be a bit more of a shake out that will make it hard for modestly profitable companies to get credit ir to ipo. Crdeit issues will suppress cash flow positive for a while. One ans opinion

  4. Rik Wuts

    It’s interesting to note that 3 of the five are platformish (mobile, gaming, and clouds) and the other two seem more like specific applications of the first 3. Am I right?

    1. fredwilson

      yes, but i wouldn’t read too much into that. amee is a platform for energy/carbon for example.we try to be agnostic between applications and platforms, because we’ve found out that the most popular applications can quickly become platforms, like what is happening with foursquare now

      1. Rik Wuts

        Ok. but isn’t there a scale difference? Arguably ‘mobile’ is a lot bigger and more diverse than Foursquare or even Twitter.

        1. fredwilson

          right, but foursquare and twitter are both used as platforms to build new mobile apps

          1. paramendra

            Cutting to the chase, I think Adroid will be your number one word for 2010. That covers so many areas.

      2. theslingster

        platforms, applications, they are minor to the business model…

  5. Guest

    This is a great list. I especially agree with education and commerce. People have not even begun to understand the potential.I wasn’t a fan of that mobile analyst report — the mobile web is the device agnostic web and it’ll go beyond mobile devices. Of course the device agnostic internet is going to grow. The internet was designed for this and any analyst that doesn’t acknowledge it would be one I’d be wary to listen to.I would look to companies that are creating things in the device agnostic — not just mobile — mindset. It will all be the same internet.

    1. fredwilson

      good point about device agnosticbut when you think about the opportunities that are being presented right now, devices do come into playtiming is important in investing

      1. the build

        Yes but the important differentiation is that they’re not going to be limited to mobile. Fixed things like vending machines etc will likely exist for internet based universal payment structures, etc. Most will also see mobile and limit their mindsets to solely obvious devices like tablets and handhelds/smart phones in general so it’s good to keep in mind there’s a wider picture as many projects will be able to take advantage of it. Ford just created a car with internet access, there was a toy that debuted at TC50.In terms of investing, its early, but not too much if the right approach is applied.

        1. fredwilson

          it interesting to talk about carsi have a fancy satellite radio in my new carbut instead i jack into my android phone and play last.fm radionot sure the factory installed devices will beat the ones we have in ourpocket

          1. adamhanft

            Have you seen Ford’s intention to open their Sync API to developers in 2010? The automobile could be a new app engine.http://is.gd/5L7GW

          2. Rocky Agrawal

            The smarter car makers are recognizing this and working to integrate off-board technologies into the car. The car replacement cycle is much slower than the CE replacement cycle. Ford has been doing an incredible job incorporating third-party devices into their vehicles. I expect we’ll see more APIs that will allow phones, music players and other devices to interact with embedded microphones, speakers, displays and vehicle sensors.There’s an added benefit for car mfrs: offloading this onto a consumer-provided device helps reduce their liability exposure.Disclosure: I worked on Ford’s SYNC product while at Tellme.

      2. ShanaC

        I think device agnosticism is very simplistic when it comes to application layer. Things never seem right when you get multiple devices that are not the same trying to work together.

    2. paramendra

      Patricia. Why can’t I leave comments at your blog? No Disqus?

      1. the build

        I just installed a new tumblr theme and disqus requires that you reinstall each time. I’m hoping it’ll be adjust this week.

    3. ShanaC

      From a sheer design standpoint- even if the internet is agnostic, things on the internet will not be. Even if you can implement HTML5 and flash and java and everything under the sun with unlimited bandwandiwth in something the size of your hand, the fact that it is the size of your hand will change the way you look and behave towards the site.It would be far smarter to implement standards based on screen sizes because of behavioral difference rather than faking it. End users will be happier if the implementation fits the device. Think about it in terms of actual locations- just because you can often buy books at Walmart, doesn’t mean a bookstore is often a better choice.

      1. the build

        It’s obvious that the experience and how/why/what users will access by device will vary by the device and the best function it serves but that won’t change that it’s all delivered via the SAME PLATFORM — the internet. I post constantly and have for some time on my company’s blog. This is where transmedia approach comes into play.

        1. ShanaC

          It appears to me that there is an application layer problem. We’re solving it by creating subsets or minature versions. It should bother you that there is a mobile version of foursquare called http://m.foursquare.com and that data is served “semi-differently” due to mobile problems. it may long term (in internet time) be that we branch mobile data separately because the handling of that data and the delivery of that data is inconsistent. We assume pipe-dom for cellular and similar devices that will be similar to TCP/IP. That will be wonderful, however phone development will be hampered by the fact that they still need to work in the wilds of Greater Yellowstone Area. It will be interesting to see what the world looks like a few years out.As for transmedia I have but one word, and I wish they were mine”The Spectacle erases the dividing line between self and world, in the that the self, under siege by the presence/absence of the world, is eventually overwhelmed; it is likewise erases the dividing line between true and false, repressing all directly lived truth beneath the real presence of the falsehood maintained by the organization of appearances. The individual, though condemned to the passive acceptance of an alien everyday reality, is thus driven to a form of madness in which, by resorting to magical devices, he entertains the illusion that he is reacting to this fate. The recognition and consumption of commodities are at the core of this pseudo-response to a communication to which no response is possible. The need to imitate that the consumer experiences is indeed a truly infantile need, one truly determined by every aspect of his fundamental dispossession. In terms used by Gabel (Joseph Gobbels) to describe quite another level of pathology, “the abnormal need for representation here compensates for a torturing feeling of being at the margin of existence.” Guy Debord, The Society of the Spectacle Third Edition. paragraph 219.http://en.wikipedia.org/wik…;) I read. A lot. Including about mass media theory that is…

          1. Guest

            Apologies but I can’t seem to make sense of what you’re saying here.For everybody else, transmedia is an approach to storytelling that has the potential to be a solution in the fragmented market — ie, having to do business over more than one platform, which is where a lot of companies are today. Just because a company — even a large one — has mastered one platform, the secondary (or thereafter) platform(s) present new challenges most fail, such as print media failing to adapt and adopt to internet business. It’s not a common approach/mindset now but will be soon.

          2. ShanaC

            For certain people, The Situationist International are an approach to massmedia and storytelling that are hellbent on destroying that method. GuyDebord wrote The Society of the Spectacle as a manifesto to explainhow and why in 1968 to explain how and why.The idea is to purposely fragment you and to show your critical failures toshow the human condition in order to liberate society, because all art ispolitical. Though I’m not a Marxist or post MarxistA) One should know that media theory predates the internet by quite a longtime once you start engaging with the marxistsB) I do agree with their points about fragmentation of media that causespull, that there is an artistic anti-art in media and advertising thatcauses religious fervor in post modern society that one should be verycareful about.But hey, I bet you knew that already- all part of the art of mythicstorytelling in the packaging that is media. If you have to dodetournement, you will run into some crazy problems that come withcommodity fetishism, which you can already see in the internet press aboutsay, smartphones, but not television advertisements…If you want, I could always have my MFA advisor buddy start assigning me toread stuff about gender theory according to Lacanian views of society andthe 3rd wave. But Society of the Spectacle is really mainstream for itsread of mass media of all sorts, including the internet and its premise tobring it down. Really. Sometimes you just got to read your critics.

  6. karen_e

    Exciting list!

  7. ADstruc

    Fred,Happy New Year – I wish you and the family all the best.With respect to #4, what specific types of e-commerce do you see being most promising in 2010?All the best,JohnADstrucwww.ADstruc.comOnline buying platform for outdoor advertising.

    1. fredwilson

      anti e-commerce

      1. ADstruc

        DOH! I meant to write what other forms of commerce would you like to see…not other e-commerce! 🙂

        1. fredwilson

          i don’t have concrete enough thoughts here to do your question justice. i’ll work on it.

          1. Aviah Laor

            many-to-many instead of one-to-many (or few-to-many). Decline of brands, rise of personal touch.

          2. paramendra

            As in the social will only grow.

          3. ShanaC

            That’s very long tail and very expensive. Very curatorial. It’s why we keep getting into arguments about the “best” versus “cheapest” structure of the web. In the end, we all have to manage the cost of this stuff.

          4. theslingster

            Not so sure… Many to many has histroically been trumped by few to many. Why? Ecommies of scale and the rise of expertise. Egyptian society arose because a few farmers could feed the whole society. Today, whose doing better than walmart?It will be a major paradym shift if many to many trumps few to many

      2. David Fishman

        “You never change things by fighting existing reality, but by building a new model that obsoletes the existing model.” R. Buckminster FullerSocial e-commerce FTW 🙂

  8. kidmercury

    killer post boss. seems like a good opportunity for me to make the same points i always make:1. communities that incorporate gaming will be financed by virtual currencies and education. it is so important for those in this business to understand the full implications of caving to government, and to ask themselves whether their loyalty is to the right thing or to fear of govt. remember china has already cracked down on virtual currencies.2. to be in the virtual currency business and ignore/deny that monetary policy of nation states is a competitor is to be willfully ignorant. 3. everytime amee is mentioned i am going to note the following:a. i have repeatedly asked agentgav on twitter (the guy in charge of amee) to offer justification for why carbon tracking is necessary. none has been provided. agentgav did find the time to make fun of me for being a conspiracy theorist, lol, talk about taking the bait. b. the idea that climate change is a scam is hardly new or under the radar, there is so much evidence for it, where do i begin. here is probably good enough. c. remember this is all about taxation, and the carbon industry is about transfer of wealth, theft. article.d. amee’s claim will be that they are a neutral company just providing a tracking service. governments will track carbon so they can tax it. that’s the problem. remember that amee is anagram for “avoiding mass extcintion everywhere” or something like that, something about how we are all going to die if we don’t conserve energy. hence we must let amee track us so that governemnt can tax us. a new carbon market will ensure the free market transfers carbon credits and preserves the economy. lol, are we going to see it for the blatant scam that it is or are we just going to be ignorant and make fun of it as a conspiracy theory, that is the question.e. also remember the criminals have discussed the idea of using carbon credits as the new world currency as a part of their one world government. the correct solution to the global monetary crisis is virtual currencies, not carbon credits. carbon credits is a scam you can see coming a mile away. any real interest in the energy revolution centers on, or at least acknowledges, exposing the free energy technology that is already in existence but has been suppressed. only the truth can set us free. as the stage gets set for web 2012, this will only become more apparent.

    1. fredwilson

      i’m not going to get into a debate about the benefits of a carbon tax. i am in favor of it. you are not. let’s leave it at that. the fact is that we are going to have that and if so, amee is a valuable service for companies who have to manage that liability

      1. kidmercury

        of course you not going to have a debate on it, because there is no way to win a debate without the truth.you favor a carbon tax because we live in a fascist economy and a carbon tax favors your economic interests. that’s not to say you are a bad person (i think just the opposite), but rather illustrates your economic interests, not what is necessarily advantageous over the long haul for society at large.in any event, i will continue mentioning the inconvenient truth everytime amee is mentioned, simply to ensure the message reaches those who are open to hearing it. in due time i am confident that will include you as well. now as for most of your peers, lol, i doubt there is much hope for them, they are going to have to get hit really hard economically/psychologically before their ego can accept the truth that sets them free. actually they will probably just wait for you to go first since you are more of a leader. lol, gotta enjoy the perks of leadership boss!

        1. Aviah Laor

          “Pollution” taxes should reflect the real cost of everything. Once employed (probably in 2110), durable goods will be less popular, fixing will be preferred on buying new, local over transported etc. But than Amazon will be left with 30% of the products with 300% of price. so we wait.

          1. ShanaC

            Aviah, you are an interesting (I think) woman.

          2. Aviah Laor

            man. In the bible it’s originally a male name.

          3. ShanaC

            I assumed female ah/et gendering in Hebrew, y’know. Besides unlikeTradional Jewish Americans, y’all aren’t as strict with gendering rules ofwords and names and people. You generally don’t see female Tals in the USunless the girl has israeli parents. My fault.

          4. theslingster

            Absolutely. The true costs of shipping from, say china to the US, are not reflected in the pricemental. These cost are environmental, biological (health), and social (child labor). Localized business using local resources may have an excellent chance at becoming strong regionalize businesses in the future.I have noticed that some VC companies are seeing this too- I have nothing to do with these guys, but launch capital seems to think this also; http://launchcapital.wordpr

          5. Mr. Econotarian

            You may be over-estimating the energy cost of transportation. Oceangoing mega-freighters are incredibly energy efficient per pound of good moved, as is Wal-Mart’s large truck-based logistics.Even if you double the cost of fuel through carbon taxes, the transportation energy costs of most products is still very small compared to capital, labor, and raw material costs.I don’t doubt that higher fuel costs will move commerce towards electronic consumption (such as e-books), but the effect will be more marginal versus revolutionary for manufactured goods or food products.I doubt there will be much uptake in locally produced products, because raw materials still need to be transported to local manufacturers, negating most of the reduction in transportation costs from local manufacturer to local consumer. That reduction would have to be larger than potential reductions in labor costs, as well as reductions in productivity due to moving manufacture away from expertise.

      2. Aviah Laor

        Carbon emission – that’s where the Zynga’s tractors really shine!

        1. paramendra

          I used the Zynga seeder earlier. 🙂

    2. Mark Essel

      I hadn’t heard much about the carbon footprint tax and how it could be leveraged before. Interesting point of view Kid.

    3. paramendra

      To suggest global warming is not happening, I mean where do you want me to start?

      1. kidmercury

        global warming archive. the entire solar system is heating up, that is what is causing global warming/climate change.

      2. mcbeese

        Global warming is easy to measure. The debate is the cause.I personally believe that there is more likelihood that the current warming trend is just another of the earth’s cycles. Won’t be the first and won’t be the last.However, why does any of the debate have to affect our willingness to do the right thing – and the smart thing – for our environment? Seriously.

    4. markslater

      where do you get all this stuff?! don’t get me wrong it makes for interesting reading…..

      1. kidmercury

        i’ve been a kook for a while now, so it adds up over time. infowars.com is my primary source for daily news. projectcamelot.org for longer documentary type stuff and to satisfy my deeper kook desires.

    5. theslingster

      Hey kid quicksilver, the marketing practice of shilling digital games as having an educational value has been aroung in the pc era since the early 80s. Course its true in many ways, but by now there are so many games out there that claiming games have educational value is just lip service. Eventually, the kids gotta to get to the classroom.Forget about the social value of carbon taxes, what’s the social value of a kid whose convinced to spend their allowance buying some avatar as oppsoed to saving that money, buying clothing with that money, etc

  9. gregg grossman

    With mobile getting some traction after hearing “next year is the year of mobile …” for better than 10 years i think education is the next area where we’ll see breakthroughs.Two good examples in my opinion are …http://www.youtube.com/user…Salman Khan started out trying to help his niece with math homework and now has 1000’s of tutorials on his youtube channel.http://www.lynda.com/For $25 / mo Lynda.com gives you access in depth lessons on everything from excel to advanced digital audio editing

  10. Chris Hogg

    Nice post Fred. Under the mobile umbrella, what are your thoughts on mHealth applications and mHealth market generally?

    1. fredwilson

      my partner albert has been thinking more about that area than i havehe mentioned it in this post that i linked to in my posthttp://unionsquareventures….

  11. Norbert Mayer-Wittmann

    I have said or many years that there is phenmenal growth potential for mobile telephony in the developing world.Do you think twitter will (or should) return to its original focus on SMS technology?Do you have any predictionsregarding the integration of the web with mobile telecom services?It seems to me like there is still a HUGE gap (market niche / arbitrage opportunity) between data transfer rates via SMS vs web.

    1. fredwilson

      well i think twitter could come close to replacing sms in time

      1. Pat

        With mobile app push notifications, it has replaced SMS with some friends for me. We love it. More of my friends need smartphones so I can enlighten them.

        1. Justin

          I agree with Norbet that there is a huge & still fast growing market for SMS or similar low bandwidth platforms in the developing world.And, there’s good money in those markets: look at companies such as http://www.mxit.com (www.en.wikipedia.org/wiki/M… that are leveraging IM, social networking, social gaming, & virtual currencies in “marginal” markets such as Africa and Indonesia to make respectable profits — all on a SMS platform. Tencent (with its QQ virtual currency, games platforms, & social networking) in China is another good example.It’s also useful to understand that mobile penetration is often higher than in developed world markets (because mobile is the only phone – there are no fixed lines), that developing world markets are often early adopters, and that mobile/online banking is enthusiastically embraced.With the advent of Android, there are massive opportunities — but very few Silicon Valley start-ups appear to be looking south or even east.

      2. ShanaC

        I don’t. I’d have to email why- it has to with a discussion I was having with someone who is in closed beta, and I don’t want to destroy that guy’s closed beta.

  12. John Honovich

    Fred, with regards to gaming making your list, do you believe the extensive criticisms of social gaming companies like Zygna have any merit? There seems to be many who believe that social gaming is based on a quicksand of advertisements that take advantage of their players. To the extent that this criticisms are valid, it would call into question the strength of this area.If you have already addressed this, I’d appreciate a link to that post.

    1. fredwilson

      i’ve tried hard to stay out of that debate because it is a false debatezynga makes almost all of its revenue on virtual goodsi said in my etsy/san telmo post the other day that more tractors are sold every day in farmville than are sold in the US every yearthat’s where the money is in social gamingthe “scammy ads” thing is total red herring that everyone got excited about but is almost entirely irrelevant

      1. paramendra

        That tractor stat – first time hearing – is telling.

        1. theslingster

          hardly/ A real tractor costs tens of thousand and has huge productivity to society. A virtual tractor is a frivolous purchase, with little social value

          1. fredwilson

            the tractor is actually a payment to the developer of the game for theentertainment value of playing the gamevirtual goods are possibly the most elegant implementation of the freemiumbusiness model

          2. theslingster

            My apologies. Developers deserve and should be paid and the buy a virtual tractor model is a great way to do that. Still the comparison to a real tractor is meaningless>>>

      2. gorbachev

        http://consumerist.com/2009…With all due respect Fred, it is not irrelevant when your friend built his business on defrauding/scamming customers until the VCs came calling, and then laughs about it afterwards. It’s like mobsters going legit once they’ve built enough capital.He’s now flush with money, yet at no point has ever talked about compensating all those people he stole from.For that reason I will never play a single Zynga game again. I will also actively discourage anyone from doing so either.I’m sure you’re going to make a killing on this investment, but know that it was built on top of theft.

        1. fredwilson

          i will not argue with people who don’t have their facts straight and getthem from blogs who don’t have them straight either

          1. gorbachev

            That’s your choice. One wonders though what exactly is not factual about the YouTube video appearance where your friend can be seen and heard bragging about scamming his users. Are you implying his lying on that video?But to each his own. I understand why you’d have a bit of a bias on this issue.

          2. fredwilson

            that was a very short excerpt of a longer conversation mark was having abouthow entrepreneurs need to focus on revenue early on so they can keep controlof their company. that was the point mark was making. then he said somethingto the effect “hell we even tried a toolbar. i couldn’t figure out how toget it off my computer. i told my guys to take that offer down immediately”of course the person who uploaded the video had no interest in showing it incontextnobody who got involved in that shitstorm took the time to really do thework and look at what Zynga did and did not do. or compare it to Google andeveryone else who does way worse on a daily basisthe whole thing totally annoys me. it’s not fair.

          3. gorbachev

            That sounds plausible. Thanks for clarifying.

          4. Keith Smith

            Can I just add a comment to this whole silly debate that has annoyed me for some time now? Mark “admits” in this video that they gave their users the Zwinky toolbar in exchange for poker chips. Oh the horror.Zwinky is an IAC company/product. Google is the search engine behind the Zwinky toolbar. The Zwinky toolbar is distributed and advertised by just about every major online company in existence today. How in the world can people continue to think that Zynga is evil for distributing a product that is made by a public company, endorsed by and partnered with by Google and similarly distributed by every major web site?Folks should have thanked Mark for having a higher “do no evil” bar than Google (which he demonstrated by turning down revenue by not distributing the toolbar after he personally found it annoying) and get out of attack mode. We should all get excited and cheer when a startup appears to be reaching terminal velocity, not attack and deride pointlessly.I agree with Fred that this was a misguided “debate”.

          5. fredwilson

            thank you Keith. at least someone took the time to understand what really happened. that video made Mark look really bad but he really did the right thing by telling his team to get rid of that offer.

          6. Karl

            Fred,It seems like the “Right Thing” for Mark to do is to refund all the money Znyga made on the scams (or Hell, give it charity). OfferPal and SuperRewards alone likely took in something well North of $100M in 2009 and Zynga as the biggest winner in the space, saw many millions of that. Zynga also has a history of cloning works of others then using its marketing muscle to win the day, which has its own ethical issues that a well respected VC like yourself should not be cheering on or defending (or invested in). Just because it is done by others does not make it right for you.You can put the offer scandal to rest, go get an outside audit of Zynga’s offer take in 2008 an 2009 then publish it. You will be doing the whole industry a huge service and clearing Mark’s name in the process (and your own). Though you might also learn some “facts” yourself (either Mark is not being forthright in the amount of money Zynga made with offers or you both aren’t – OfferPal’s CEO already got busted for outright lying about scale of the scams running).You can take the “high road” and ignore the challenge but it would be a giant waste of a great chance to clear all of this up once and for all (before the Justice Department and FTC weighs in later this year).

          7. fredwilson

            i’m not entirely sure why Zynga is being singled out given that lead gen hasbeen going on for years and Zynga’s revenues from lead gen are a tiny partof the industry

          8. Charles

            Agreed. Perplexing. It’s a broad topic and lead gen has always fraught with conversion and incentive alignment. I think the dialogue has lacked context and historical perspective, either of which would have informed the debate materially. The lead gen aspect actually seems so pedestrian in contrast to the virtual goods side of the house, which is really interesting. 2 cents.

          9. Prokofy

            Yes, keep outing the Google piece of it. Fred FTW.

          10. Elie Seidman

            What Arrington missed was the more boring side of the story – that Mark is 130% right about the need for entrepreneurs to control their own destiny. Mark’s been around the block – worth listening to him. He’s not confused. Arrington got his wishes though – more page views on which to serve ads. As I mention in my list of entrepreneurial lessons that I’ve learned over the years – http://www.elieseidman.com/lessons-ive-learned-… – Be careful what you read in life and always ask what someones incentive is if you want to understand their behavior.

          11. Prokofy

            My favourite part in all this is the video where the Zynga representative really sticks it to Arrington, swearing like a sailor.http://www.youtube.com/watc…I never played a Zynga game (I don’t think), but this is enough to make me start!

      3. Prokofy

        Go, Fred, I’m so glad you did step in here, it is a false debate and Arrington, aside from his role-playing of an “investigative journalist,” is trying to drive people to another game that he likes that his friend Susan Wu has invested in and developed called “City of Eternals” which forces you to sign up with RL info from Facebook.

  13. deaconlight9

    I really liked your mention on apis. Think most of web development are going to focus itself in 2010 (thanks to api based interaction and mashups) into an unified data interaction system on large scale.One of my goals as a developer myself is to merge the api thinking into companies that are out of it for no aparent reason other than waste money on 2004 approaches since their data can spread more widely thanks to the perl based factor on mashups that api model can bring for their business.All other thoughts you mentioned are very conservative.But:”We believe that we should focus on things you can do with a mobile web service that you cannot do on a wired web service”Perhaps you should believe in companies that address this question:”How can I generate content from a mobile based system that would bring real interaction for real people on the web and how can I make it useful out of my phone or web in a business perspective”Happy new year.

  14. Mark Essel

    Great thesis on mobile web, Android, cloud computing, APIs and businesses which cater to developers. These are precisely the leveraging “super” features the web (both mobile and non) will see great strides in. I also think this year we’ll see social standards become more embedded as developers embrace simple and effective means of identifying users and having knowledge of a user’s various social sub-graphs (personal, professional, and passions).

  15. Kenny Ma

    Hi Fred, I think mobile is the most interesting on your list and I also think that Android will eventually have a larger market share than the iPhone. The trade off between an open vs. closed platform is mass adoption vs. quality control. They will co-exist, much like Windows and Mac today, but I do see Android having a larger market share.What do you think of the idea that TV becoming the 3rd screen for the web? I would love to see internet enabled TV’s that are preloaded with Boxee or even better yet, Android 🙂

    1. fredwilson

      well my bet on boxee is that they are android for all the CE companies that are going to find themselves competing with the Apple TV soon

      1. Elie Seidman

        very cool. I’m using AppleTV all the time now. Also using NetFlix on demand (via Tivo). The receiver I have (or anyone of the many other boxes in my media room) that is connected to my TV should have the AppleTV like software installed on it.

  16. awaldstein

    Great list Fred. Thnx for fueling the weekend with thought.”Developers are the new power users. If you cater to them, you can build a large user base with significant network effects.” So true.This has always been the motto to live by for the business owner and marketer. Make the developer your partner and affiliate and the market will come to you if the app is juicy or fun or necessary enough. With the cloud, the investment ecosystem has changed but from the marketer’s and channel builder’s point of view, the developer always ruled. In the 90s, we took Creative Labs public with little else than the promise of what a then large number of registered developer SDKs could point to in the early computer gaming market.

    1. Dave Pinsen

      “In the 90s, we took Creative Labs public with little else than the promise of…”In the 90s, a lot of stuff was taken public with little else than the promise of something. The difference seems to be that today it’s VCs and big companies instead of retail investors ponying up for unprofitable Internet businesses.

      1. fredwilson

        and that’s a good thing

        1. Dave Pinsen

          I agree.

          1. awaldstein

            And I Dave.Of course, I was pointing to the fact that the wisdom and strength of developers is key.I might add that the ‘promise’ of creaf delivered by selling north of 50M cards within 48 months driven by the software and games of those developers.

  17. Vincent TAUZIA

    I like the approach. I agree with mobile, education, cloud / APIs. The trend is set, and more opportunities will arise in these fields. However, I believe the next screen to be completely changed by technology is television. It will be of the same magnitude as mobile phone and we’ll start seeing the change in 2010 with a lot of non-linear offering on our set-top boxes. The 2010s will confirm the potential of mobile phone and will be the end of television as we know it.

    1. fredwilson

      yes, we have a platform bet in this space with Boxeethat is an area that we could look to make more investments in but it is also a difficult market where the content owners are not particularly embracing new open platforms

  18. joerg

    augmented reality call of duty is here already… http://itunes.apple.com/us/… it’s called gunman and is in the app store since about a week or so. 🙂

    1. fredwilson

      josh will be so excited!

  19. ajitpalP

    happy new year Fred, have not read all the comments, could you clarify why you have combined “education and the energy/environment”Is there are relation between these you are envisioning or it just happens to be 2 topics combined in one?My team and I are working on couple of things in education field so always curious to read you valuable opinions on ‘education’

    1. fredwilson

      just two topics combined into one

  20. William Mougayar

    What I like about this list is that’s it’s forward-looking. Could you comment about where you see revenue models going for the above segments, or in general for 2010+? What’s changing/what’s not. (could be another post on its own, as it’s a big topic).

    1. fredwilson

      i concern myself with revenue models a few years into our investments, notwhen we are making them.

      1. William Mougayar

        That response already says a lot about your thinking. Good insight. I think I might have read or heard you alluding to this stance, but I didn’t realize it was such a staple. So, paraphrasing your thinking might be “innovative revenue models follow successful user traction/adoption” ?

  21. David Dalka

    All good choices, I’m most interested in items 2 and 4 in terms of startups I’d like to help scale.

  22. Aviah Laor

    New (real) currencies are a real challenge. From “the PayPal wars” it seems that this was their initial idea, to provide a currency system that easily bypass governments manipulations.And new currencies bring, naturally, new forms of taxes. But that could be a good thing – maybe the withered Farmville crops are deductible?

    1. paramendra

      “……- maybe the withered Farmville crops are deductible?….”LOLNo way. Laziness should not be rewarded.

    2. ShanaC

      Basket them with common currencies from countries and turn them into derivative products. Stick them on the forex and develop a clearing house. I would bet people would do a swap of the USDX basket currencies+Farmville currency if it were available to them and it could be underwrote. Not so complicated anymore, or at least less complicated. Modeling would be though. Effectively, websites are now countries with what sort of GDP?

    3. theslingster

      don’t underestimate the flexibility of our currency system. There are many towns in the US that have issued their own currency, easily and legally. The value is that town currencies are only recognized in the town and not any neigboring town. Thus the currency is kept within the town and encourages local consuption

      1. ShanaC

        Just because they did, doesn’t mean they are legal. I’m not an expert on the issue, but it actually may not be legal it starts to compete with US currency en mass. Right now no one cares because these currencies never escape county lines. A Zynga or a Facebook doing so would be a currency being released on an international scale, which means you would have issues that the US and the World Bank would be raising eyebrows at.

        1. theslingster

          World currencies have been digital for decades; the US and and World Bank seem to get by fine with it. Zynga is hardly more threat than monopoly money…now if they start forging US dollars for North Korea, well thats a different storyThese local town currecnies are legal; an example of the flexibililty of our currency policy. Naturally, every transaction a sales tax is collected and distributed to city/state/federal tax collectors.

    4. flathood

      or perhaps subsidies for not planting…

  23. Kevin Ryan

    Fred is a loser. What was his performance this year??? Stop promoting this schmuck!!

    1. paramendra

      The dude is a rare visionary. I hope you are joking. Otherwise you come across as ignorant. ….. 2009 was a bad year across the board, period. If it was bad for you as well, sorry. Hope 2010 is better.

    2. fredwilson

      i’m the one promoting the schmuck!!

  24. J. Andrew Rogers

    I agree that mobile is huge. There is a platform piece missing in there somewhere (maybe related to the cloud), but the long-term trends are unmistakable.Augmented Reality is over-hyped. There are multiple open computer science problems related to building an effective, scalable system that have to be solved first. Gaggles of well-funded PhDs have been trying to crack these problems for years and progress has been slow. This will seriously limit what an AR venture can do in practice. Augmented Reality has a lot of potential, but the differentiator for a successful venture will be substantial new technology that solves some of the major hurdles in implementation. I’d probably be doing something in this space if it wasn’t for my painful awareness of the deep technical limitations in practice, and at least some (though not all) of these will have to be addressed before apps really become useful — it is very early.Cloud platforms have a big near-term opportunity that is a pretty even mixture of execution and (hardcore computer science) technology. This opportunity is *shard-less*, scalable data models, the bane of all current cloud platforms and what continues to relegate it to marginal status, and the potential this kind of platform would offer for seam-less integration of different data models in the cloud, which would require well-designed open APIs. This would be an unimaginably enabling product. The requisite technology is being successfully prototyped at scale by research organizations (unlike augmented reality), so this merely requires someone willing to invest in a path to commercialization.No shortage of great opportunities in the coming year.

    1. fredwilson

      the “shard-less” data store is what mongoDB is trying to be

      1. J. Andrew Rogers

        That’s great! MongoDB’s site still only talks about sharded models. It would be fantastic to have a platform available that does all the operations MapReduce doesn’t do. Distributing computations over non-partitionable data sets is a neat trick and a greenfield application opportunity.

  25. Graham Siener

    I’ve been thinking a lot about Energy/Environment these days, especially in the context of shifting markets. I think there will be a big move (a la traditional media) towards ‘peer production,’ the analog being distributed generation. This ties into platforms like AMEE, but what are your thoughts on the physical limitations of distributing electrons? Cloud computing works because Google can store a copy of my email in Asia, but making renewables in Asia won’t get me cleaner energy.Put another way, do you think that the internet paradigm can translate into the energy world?

    1. paramendra

      “Cloud computing works because Google can store a copy of my email in Asia, but making renewables in Asia won’t get me cleaner energy.”Clever but incomplete analogy. How many of the industrial products you buy are manufactured in Asia? There you go. The internet paradigm can translate into the energy world.

      1. Graham Siener

        Good point, but it still has to be shipped here.I was surprised to learn that (in the US) buying apples from NZ has a lower carbon impact than from Washington State — NZ is powered mostly by renewables and has a longer growing season. Services like AMEE are creating the infrastructure to make these truths more evident, but we’re stuck in an opt-in model. Until regulations mandate reporting, it remains easy to hide behind the term “organic,” even when Stonyfield imports most of their milk from Europe.

    2. fredwilson

      yes, but more on the behavior change/demand side than the supply side

  26. Jason

    happy new decade, quick thing about mobile is that it can give us local social. the AR gamer, the card swiping merchant, pretty much everything we can be, all here and now. and with relevance, we either mean what we mean or mean here now…but a bigger thing id like to say is on the cloud point. ive read around that we shouldn’t focus stacks based on platforms, but cloud is one id argue for, i would like to see more choices higher up the chain. tier ones have the networks, the IBMs CISCOs Intels have the hardware and VMs, it would be great to see more combined forces enter the market, they have the engineers, the capital, and the experience. SalesForce does great, will go on a Python train to get to Gs App Engine, we aren’t leaving Microsoft, Engine Yard looks fun, and both Rackspace and Amazon are reliable enough to build onto, and just read the news of the AT&T IBM offering.i ♥ the capital efficient models, give me cdn, hosting, ips, instances, and pay only for what’s used. next combine them, eventually provide a price-point that kills shared hosting, priceless.

  27. Ben Ackles

    Are you interested in real-time, geo-location or the semantic web? It appears these spaces are all starting to gather momentum going into 2010. Did you intentionally leave them off because they’re less attractive to VCs?

    1. paramendra

      I think all three are incorporated in the list.

    2. fredwilson

      nope, we have a number of bets in them already

      1. socialcoop

        Of all these interests it seems like geo-location is the killer feature. I can imagine when the browser becomes more location aware these technologies are going experience even greater adoption.

  28. Lars Tong Strömberg

    The combination of points 3 and 4 in the form of virtual goods is a really interesting field imo to watch in 2010.http://www.torstensson.com/

  29. Aviah Laor

    No “social” investments per-se, this year?Education should go with gaming. Even Zynga can shove a little knowledge here and there, compensate for some more complex challenges etc. Especially for kids. With kids games, bits of education can encourage parents to pay a little.

    1. fredwilson

      i think social is a requirement and less a stand alone investment thesis at this point

  30. NICCAI

    I think the key takeaway for 2010 is that we should no longer be planning from desktop (or website) down. We should now be planning our ideas from the mobile experience up. Hence, I think, your bent towards services in general. Establishing infrastructure services to support applications from the bottom up will be the next wave – really this is one of the key components in twitter’s success. A product doesn’t necessarily need a user experience – it could just as easily facilitate it.

  31. Darren Herman

    Fred, great post and Happy New Year.Per your thesis on e-commerce & gaming: Per our conversations just over two years ago, I still think that there needs to be a legit secondary marketplace for Virtual Goods & Currencies, a la PlaySpan and LiveGamer that focuses on retail and social games. Tying this in both virtually and offline through mobile payments (venmo, etc) and in-store cards will be the way to get to mass.Electronic Arts (ERTS) market cap is $5.8bln. Zynga is rumored to be around 1/6th. I’d like to be Zynga right now as they are built around the new model in the gaming industry.

    1. fredwilson

      i think one of the key questions about a secondary market is how do the primary market players get a benefit from that? if someone can crack that problem, then maybe it can accelerate the development of a secondary market.

      1. theslingster

        I know the distraction value of entertainment virtual goods (as opposed to essential virtual goods like currency) Can someone explain the social value of entertainment virtual goods (might it not be better for kiddies to put their money toward clothing,college, etc)?Games/gambling have been aroun d since the earliest humans, and indeed the science of predicting the future (probability) was well know by the earliest gamblers (fermat pascal huygens discovered the underlying math in the 15th cent.) Are virtual characters today essentially the same thing as buying a chess set 1,000 years ago? Is there an accompanying intellectual development with entertainmenet virtual goods as there is with the use of a chess set?

        1. fredwilson

          i really do believe that my kids get great educational value out of playinggameshave you read steven johnson’s book on the subject?http://www.amazon.com/Every

          1. Prokofy

            Yes, it’s an education about how to function in tribal groups run by ruthless warlords, and kill other people.

          2. DCTech

            http://blogs.edweek.org/edw… saw a presentation in June this past year, Florida Virtual is doing some amazing things with gaming and education.

          3. lazarofuentes

            Fred, You are absolutely right. You can definitely educate with games. You can also increase confidence, self esteem and worth, as well as empower real change offline with games.We’re building a branded social multiplayer game where kids quest for ways to “Help Improve the Planet” [HIP] while planting habitats, seeding reefs, cleaning parks, etc… at many well known and world heritage sites made virtual. The game is called HipChicas.com and we will give a percentage of each virtual good purchased, or each sponsorship received to offline non-profit organizations doing what we call “HIP” – Help Improve the Planet – work and projects.This game will be targeted to Tween girls [7 to 12 years old] and has a strong Latin theme like the many successful “preschool” brands Dora, Diego, Handy Manny, Maya & Miguel and others with Latin themes.But the multi-Billion dollar “Latin preschool genre” [and broad base of appeal] has had no follow up for the Tween market.Combine this niche demographic appeal with the lack of positive feminine role modeling for Tween girls in general [Bratz, Barbie, etc…] and with a small team of experienced gaming, entertainment and digital media professionals leveraging multiple technology platforms you can compete with incumbents and be successful.Add a strong narrative with characters designed for multiplatform distribution and after some traction online you have the makings for long term brand sustainability, tying all types of offline products, entertainment and activities to the online game. This is something that most games today lack and something we’ve envisioned early.We have 17,000 registrations and the songs on the site have been downloaded in excess of 50,000 times. We need a small round to sustain game development for 18 to 24 months and to do some marketing and biz dev.Sorry, for the length of the comment. I got to writing and couldn’t stop. I won’t apologize for taking this opportunity to introduce you to our project though. We feel strongly that we have a real opportunity here. Hope you think so, too.Regards,Laz FuentesCEOHip Venture Co.

      2. Richard Kain

        I think the answer is as with any other commodity, primary market players should get a benefit from the liquidity secondary players bring. The effort to make a +15 Attack Mithril sword is more valuable because if I have one already I can make another for resale. I think the problem game makers face in “balancing” gameplay so financially driven players don’t overwhelm the system is by having the rest of the balance a market place dynamic in place would bring. There is seldom a restriction on supply and the goods’ attributes remain static not relative. Too many Mithril swords, they should only have +7 Attack and so forth. That is a _different_ kind of gameplay than is traditional (now I have to do a market projection whether it’s worth it to create a +(N?) Attack Mithril Sword) but would open up new worlds once players are accustomed to the change. I hope a company like TwoFish/LiveGamer will offer such an integrated solution for developers.

  32. paramendra

    iPhone has been the Mac, the Android phones will be the PC, the one for the masses.I did not know Zynga was one of your portfolio companies. (I have made that statement many times before about other exciting companies.) I have been hooked to Farmville for weeks now. I am the richest farmer in my neigborhood. I expect to buy a million dollar villa in less than a week.

    1. fredwilson

      that makes me happy to hear

  33. Harvest Creative

    I think one giant opportunity is connecting two of your focus areas… mobile and commerce. Even with new apps popping up everywhere, there really hasn’t been a big improvement in mobile commerce. I’m excited to see everything come together (mobile/voice search, price comparison, testimonials/ratings, easy account charge payment, social recommendations, mobile friendly interface) into one powerful hand-held personal shopping tool. If we can make it easier for consumers to quickly purchase something while it’s on their mind, we’ll see commerce via web shoot through the roof.

  34. Lance Walley

    Cool, I’m in 2 of them :-)I’m seeing entrepreneurs in tech and non-tech markets utilizing cloud services to offer SaaS solutions for real money.It’s the guy making a system to manage restaurant inventory that really excites me, because that kind of solution is 100% utility. And there are many, many restaurants on earth :-).

  35. martinowen

    I am pleased that “education” gets a mention. Having devised (amongst other things) a mobile, social, augmented reality, educational (which could involve virtual currency and trading) some time ago (see http://www.futurelab.org.uk… …. could be my time has come. However mentioning the “e” word seems the quickest way to trun investors off.

    1. fredwilson

      you are right that education has been a turn off for investors in he pastbut i think that is going to change

      1. theslingwster

        There’s an incredible future in digital eduction. But all of these fools investing in renting text books, reselling them etc are missing the boat.Digital textbooks are the future-paper textbooks are history. Why? A digital medical textbook doesnt just show a picture af a heart condition as a text book does. A digital textbook has a link to an actual operation fising that heart condtion.Studying the physics of a gyroscope? A digital textbook will use immersive technology so you can feel the forces of a gyroscope. Companies that pursue this course could maek a fortune because so many more students will be able to learn things than via a text book, This is one persons prediction…the

        1. Bryan Green

          I completely agree with this. Everyone’s talking about Apple creating a tablet to possibly “save” the newspapers and magazines. They may do that, but I think the real killer feature would be a system to provide dynamic textbooks that students can buy cheaply and interact with to learn. If they could control the digital textbook market, they’d make a ton of money.

      2. howardlindzon

        education stocks are a homerun and have been since apollo – univeristy of phoenix went public. the problem with education and technology is its all e-commerce and NO social commerce.i think that’s the post about eduuctaion…and the web.

        1. glen_NIXTY

          Couldn’t agree with you more. We at http://www.nixty.com believe that the solutions to our educational problems have to have a p2p basis. Teachers just don’t scale.

  36. Shaun Abrahamson

    Thanks for sharing, Fred.I am curious about what specific new opportunities come to you as a result of being open about what areas are of most interest (and why).Best wishes for the new year.

    1. fredwilson

      well i could send you a snapshot of my inbox today 🙂

      1. Shaun Abrahamson

        a snapshot would be wonderful, assuming you will flag your favorites :)seriously though. as much as I appreciate you sharing these insights, really appreciate what you are doing to the process of finding and evaluating areas of investment by opening up the conversation. looking forward to learning more in 2010 – at some point hopefully contribute something too.on a different note – are you looking at opportunities outside the us? more specifically teams based outside the us.

  37. Nitin Mittal

    I think open APIs will be a huge catalyst in merging/overlapping communities and networks to drive consumption or commerce. Also, I think the rapid proliferation of unstructured data is becoming unwieldy. Smarter database and BI solutions will be developed to address the valuable data created in real-time on social media. Vendors will need to link this with the RDBMS world.

  38. shareme

    Well, I am hitting tow of your themes Mobile and Gaming through 2 startups. One, as Temp CTO stand-in and it has a social twist on it as well. the other one is somewhat smaller and strictly android based.But I believe that a mobile client app alone is not a business but a service platform integrated into the mobile app is in fact a business. Its just finding the right partners that can bring other needed resources to the table.I think I might have found the right ‘Angels’, lets just say I am in test the Angels mode and they have passed every test thus far with flying colors.Happy NYE Fred Wilson..Yes, I should have my Nexus One by my Feb birthday hopefully 🙂

    1. fredwilson

      it’s a great phone. that’s all i am saying

      1. ShanaC

        *snicker*

  39. Megan Cunningham

    Hey Fred,These are really interesting views on these trends. It’s always great to see not just what you’re interested in but why.The mobile call is spot-on. Yes, everyone’s been saying ‘this year is THE year’ – but now there is real market traction, and more than one model that’s been successful: http://bit.ly/8vTbOT. I disagree with Android over iphone though. With the ipod, remember how *everyone* raced to buy their music for that platform and then stayed with it through thick and thin b/c they now had their collection tied to it? Similarly, the embedded nature of buying proprietary device-apps for the iphone is quite a hurdle for Google and its dev network to overcome. Once Apple dumps AT&T I don’t see anyone catching up.Separately, from being an AVC reader, the two areas I would’ve liked to see added are (1) TABLET / touch-screen technology, and (2) NEWS – while you may not be interested in helping journalists or the news businesses get back on their feet (it’s a tall order) I do recall your Oct ’08 post about attending Jarvis’ conference, and was inspired to see how you connected your portfolio companies to the sector. We’ve been tracking the innovations in news at our new Breaking The New News blog, with original interviews and writing on the subject. (http://www.breakingthenewne… As always, would be interested in your opinion!

    1. fredwilson

      i don’t have any well developed thoughts on the tablet opportunity other than i want one for my eliptical trainer asap!

  40. ShanaC

    Hmm I keep thinking derivative markets and bonds when anyone says web currency. That you really could build a full fledged investment bank/personal bank/currency exchange (firewalled between each part) on top of an API that hooks into everyone. That’s still just me, and we’ve had that argument already here about why. And I don’t think that is a this year thing. Maybe a 2012 thing. First you need to have currency and a change in the way people think about the web, and for a really opening up of APIs. You are starting to see elements of this, but not en mass, or not massively enough to open a bank or some sort of specialized finance firmI think you need to take a closer look at both hardware coming out as well as material sciences when it comes to mobile anything. You’ve read my 2000 word beef on mobile computing and design and why I’m OS agnostic. Android is a game changer, but Someone could hit google very hard if Anti-trust developed. I don’t even necessarily think that is going to be key- Google just is very hot right now, but that is now, perfection is not divinely ordained in these markets to come from the GooglePlex. Something we don’t know could be a game changer, and no one here can forecast what that will be.And lastly- I would say go into a school and partner with a school briefly if you want to do something involving education. Schools are massively bureaucratic and they screw up a lot. I will never forget the time I hand graded scantrons because someone from Chicago Public Schools forgot to grade this one school’s scantrons on a city mandated exam- just realize that is what you are going up against…

    1. fredwilson

      i think you have to stay away from established schools if you want to doanything innovative in educationthey are like the record labels in the music businessthey have entrenched interests and don’t have the right incentives to adoptmassive game changing technologies

      1. ShanaC

        I think you are definitely correct on that- the question is how to do this. A private school often has vastly different economic interests and alignments (My dad is selling some stuff to schools both public and private, it is much easier to sell to a private), particularly for enrichment. You already do see some (really bad on really bad machines) software and websites out there for children for basic math and reading (I was proctoring and explaining how this stuff works to 3rd graders)Considering I’ve met some 3rd Graders who can’t read or write or do math, but were definitely smart, that would on a personal level be my first area to hit, and hit hard. Nielsen Norman Group points out that 43% of the US is low literacy as adults. I suspect that math skills are just as bad. I really would suggest prototyping anything inside something like UChicago Charter/UEI in partnership with these people (http://www.math.uchicago.ed… since they have a history of being really serious about teaching and getting anything that works out there.

        1. paul martin

          Have not met Nielsen or Norman but all the young adults I know (mainly unemployed – thanks to greedy ..ers..) have excellent literacy skills, if you redefine literacy as the ability to communicate. In my first job I remember Richard Burton publishing that there are 126 ways to get three digit subtraction wrong, with my first child I could not easily explain/understand the new flowchart technique to overcome this (non) issue. If calculators (mobile adding machines) have redefined math literacy – are the Kindle aspects of the iphones doing the same to literacy ? No, (as good as Facebook is in collaborative writing), ie the same answer I give my kids “are we there yet ?”. And it will always be so, courtesy of the long tail.

      2. Jason L. Baptiste

        I’ve always thought that there is a ton of opportunity in regards to the home schooled market+education. I don’t know the market numbers, but I do know you can get past the bureaucracy as individual parents have the ability to try something new.

        1. glen_NIXTY

          Right on. Homeschooling market is 2MM plus. A lot of opportunity in this space.

      3. theslingster

        Some are adopting. I beleive MIT offers its full undergrad curriculum online for free. Not bad if you are a kid trying to get ahead in somalia…

      4. glen_NIXTY

        I think that is true in many established school domains, but the charter school segment (which is a favorite of this administration) has a lot of innovative possibilities.

  41. jeffreymcmanus

    I’d be interested to know more about what you’re seeing in education and what you’d like to see. I’ve taken (and taught) a few university classes in the past few years to get a feel for the space after doing a bunch of corporate-sector instruction early in my career. Education is crying out for platform tech although truly disrupting that industry seems like it would pose some of the same challenges as disrupting other industries based on information cartels (in this respect, universities and record labels share a lot of traits).

    1. ShanaC

      Yes but education is across the board highly bureaucratic. it’s something that needs a lot of people involved from day one to not be bureaucratic, as oxymoronic as that sounds…someone to just cut through the fat to get to the point. This is not a one person game-changer, it is a many person working cohesively to change a paradigm of what is education game-changer, unfortunately…

      1. glen_NIXTY

        I agree and think that you have to provide a platform that solves real problems for learners, educators, and academic institutions in order to get them on board. It is going to take time to make real transition in this market. Some of the ed tech bloggers feel like this is an either/or situation. Either you support things as they are OR you completely revolutionize things. We at http://www.nixty.com see it more as a both/and situation. We can support things and transform things at the same time. There is an incredible amount of talent and resources in the current systems. They are already actively trying to transform themselves w/opencourseware, open access etc. There just needs to be a clear path that harnesses current strengths and builds a bridge to more innovative approaches.

    2. fredwilson

      that’s pretty much what we are looking for

  42. Kameko Oliver

    Hi Fred,Just found your blog via TechMeme.com. Pretty informative! Any insight into a VC’s mindset is truly invaluable to an entrepreneur. One area of interest from your post is the area of e-commerce. I hope other VCs share your mindset because I am hoping to secure an investment in my little startup called “Social Entertainment Shopping” dba PennyGrabber. My question to you is… what aspect of an e-commerce startup would motivate a VC like your self to want to invest? From what I’ve read, the general goal of a VC is to invest in a startup which can generate 50-100 million in revenue within 5 -7 years. From my calculations, PennyGrabber can generate that in less than a month inside of a 2 year customer acquisition period. So I am puzzled as to why all the VCs I’ve approaced (via email) so far seem to not be interested? This puzzles me. What do you suggest I do to generate interest?

    1. fredwilson

      we don’t invest on a revenue assumption because we’ve found that revenueassumptions are not often realizedwe try to invest in web services that we believe will obtain large userbases, that will be defensible, and will be disruptive in some way to theexisting market they operate in

    2. Ryan

      It could be the typos on your homepage. Or the fact that there is nothing to do when you get there. Or because you’re home page seems more like a homage to a new term you invented, “Social Entertainment Shopping,” than a site for consumers to interact with.Sorry to be a hater, I want you to succeed in this. But come on, don’t expect to generate $50-100 million per month in revenue and then get upset when people think you are crazy and ignore you. That is a ridiculously ambitious goal for a site that has no users and no product.

  43. sid

    social search, the social web seems like they would be big in the next year or two. In my opinion, search seems like it will improve leaps and bounds, tight integration with the social web will benefit the end user significantly, it’s already begun with google’s social search experiment and startups like worio brining out some interesting engines.

  44. Aviah Laor

    I would like to call Ayn Rand for 3 minutes and get her opinion on the virtual currencies

  45. Timothy Post

    One area of interest and I believe huge growth potential is in the “internationalization” of many of the current group of web services. As someone who lives in Russia, I am painfully aware of the disconnect between the growth of social media and the internet in Russia and the lack of Cyrillic versions of many popular start-ups.As often happens, I get excited about a new Web 2.0/social media service and get a small (couple hundred) groups of friends here to try the service. However, the viral growth is limited when my friends’ friends, who don’t read english, can’t understand how to use these new services.Twitter still doesn’t have a Cyrillic version but that hasn’t stopped almost a quarter million Russians from signing up and being very active users. See the following link for a sample of Russian using Twitter in Krasnodar:http://twitter.com/timothyp…Facebook has embraced internationalization of its network and the growth of Facebook users outside the US has been one of the big stories of 2009.I would suggest that other companies emulate what Facebook has done with its “Translators” program (i.e. crowd source the translation itself). There is a ton of opportunity in this area for 2010 and beyond.

    1. ShanaC

      It is utf-8 supported though as far as I can tell…

  46. Guest

    I think mobile is going to be huge, too. There’s so much potential in so many areas. I can imagine start ups moving in and eating the lunch of Craigslist or eBay by developing a solid mobile strategy for finding items that are geographically close, and easily listing items with your phone’s camera. It just makes more sense.I think the integration of geolocation into the mobile web will also help change the way we shop. For example, which stores around me have deals on items I’m looking for? Which restaurants serve chilli fries? Yelp is good for reviews, Red Laser is good for comparing items to online, Yowza is good for coupons… But I’m more interested in using my phone and inputting a query such as “jeans,” and seeing the jeans available from retailers around me… all from the comfort of a coffee shop.Lots of potential!

  47. joeagliozzo

    Fred I have been working in alternative energy for 2+ years trying to find the “sweet spot” from an entrepreneurial perspective. Have looked at carbon trading and compliance, renewable energy credits, wind, solar, fuel cell, smart grid, infrastructure improvements, electric and hybrid car recharging, finance and tax credits, and have actually completed some commercial scale solar finance transactions. Currently we are a three man company in “lean startup” mode (meaning still figuring it out!) Happy to share ideas and experiences anytime as you refine your investment strategy.

  48. kenny

    why not finance? lots of innovation and success stories out there in that space – wombat, apama, etc.

    1. fredwilson

      only that we have a few investments there already. we’ll certainly make morebut it’s not a new focus or area of interest for us

  49. Prokofy

    Well those all seem like good judgement calls. Augmented reality needs a lot of work. I see the same set of moral and ethical issues around AR that I see around Virtual Worlds — a group of arrogant tekkies who are overlaying *their cultural values* on to the software and welding it into the world that results so that it is not free and democratic. “Crowd-sourcing” so often turns into “clique funnelling” and so on. The other day on a bus I saw a group of people play “Truth or Dare” using the i-phone API. That’s cool at one level, but at another level, their imaginations have been taken over by whoever wrote the “Truth or Dare” API for iphone and their questions.Although you and others keep talking about mobile and services like this getting cheaper, they aren’t, really. You have to have $500 in hand to get a good phone and sign up for 2 years of service, and that service can be $79 a month. And if you buy one that is “unlocked,” you are still facing the problem of how to find a carrier to take you and paying them then, unless you imagine you’ll use Skype for everything?There’s also the issue of who owns the data and how you keep your data protected in “the cloud” of course.I’m glad you’re pushing on the commerce models. Etsy is not enough. Virtual goods are big already and will get bigger, but so are content services. And until that becomes more equitable and accessible it will not take off for millions. I really took Jason Calacanis to task for inserting “vertical managers” who take 20 percent of a page’s revenue, backing away from his original concept of having “anyone” who was a demonstrable expert running a human-powered page in his Mahalo and earning revenue all themselves. He is inciting one group of customers against another by essentially offering them some of management’s revenue to go invade other people’s pages and siphone from them. And he is going backward to the old encyclopedia model that used to have to be sold door to door, which he sells now door to Twitter, same idea.I also worry about the concept of all of these services you invest in being reliant on the “Google ad” business model and not on creations of interfaces where people can easily pay other people micropayments for services. There has to appear a Craigslist that is not run on the principle of technocommunism, where the owner enriches himself from sex ads and the people pay nothing but then get nothing.

  50. adamhanft

    Insightful of course. I see a big confluence between carbon consumption and gaming; whomever is the first to bring an entertainment construct to the tracking of an individual’s or household’s carbon footprint will achieve great success. A gaming framework –“Gameworking” as I call it — could be transformative, very much along the lines of the “The Fun Theory”, which is a Volkswagen initiative for changing behavior that uses the precepts of behavioral economics. Right now, tracking carbon has all the fun of a diabetic monitoring their blood pressure.

  51. Walter Jeffries

    How about investing in real small farms.Build a future of real food.See below.Cheers-WalterSugar Mountain Farmin the mountains of VermontSave 30% off Pastured Pork with free processing: http://SugarMtnFarm.com/csaRead about our on-farm butcher shop project: http://SugarMtnFarm.com/but

    1. theslingster

      Ar you near the barkers and colored ballons?

  52. Salil Punalekar

    Mobile platform can have a significant impact in making basic healthcare services accesible to remote regions in developing / underdeveloped countries. There are a few ideas that if implemented can be transformational. Are you aware of anyone investing in this sector?Thanks

  53. paramendra

    One word: Android.

  54. disqus_0idclpk9KV

    google announces WIMAX nyc, google releases google-phone at $400 for phone + $30 for dataplan. aapl kills iphone and releases new itouch, same thing as google-phone essentially. verizon and att wireless lose half their customer base in 3 months (both know this is coming, hence the lack of investment in cell towers in nyc), with many many ppl more than willing to pay the RIDIC cancellation fees. google and apple compete solely on software browser hardware features, the data plan/”cell service plan” itself iz a commodity (major shift in the value chain). apple has RIDIC closed network for apps, google is open source. LONG google, g’s main hardware partner SHORT apple, verizon, att, 5 year and 10 year out of the money options. YOU ARE [email protected]

  55. samharrison

    fred, best of luck but not a “revolutionary” agenda…more of the same ol’

  56. Rakesh K Parimi

    Fred,Happy New Year 2010 !What if Amazon were to open up Kindle?What if we collaborate to define the next generation of open-media mobile-enterprise system? — I have been watching mobile space too for a while and I said it last year that mobile will see breakthrough very soon.I have an idea, which I think is a strong one; how am I to get in touch with you?

  57. Ovi_Jacob

    Fred,First time commenter, regular reader. Enjoyed the list, generally. Reacting to #6, as a former educator, current cleantech VC associate, I am excited about both, although very specific sub-sectors therein. In energy, most recently: grid-level storage, next-generation turbines and components, bio-tech/agri-tech crossovers. I think consumer electronics applications for the education market is very intriguing as well, although confess to not having my finger on that pulse any longer (location enabled collaboration, adult-learning communities and the regular suspects such as digital library/text book platforms and edu-tainment/gaming are my favorites). Would love a bit more depth on where you are starting to look.Thanks

  58. leeschneider

    Fred, hands down, the best part of your posts are your responses to the comments. Comments themselves would be second best, I guess. Don’t know how you have the time to respond as frequently as you do, but I think it’s great.

  59. Kevin

    A week or so ago when you posted on Etsy and the market in Brazil it got me thinking. Yesterday I saw that LG and Samsung are planning to produce TV’s that integrate Skype. The seed you planted in my head with Etsy (and I’m quite sure the idea has been out there for many many years and finally just creeped my way) is one in which the web experience we know now with a site like say Etsy, combines with Skype and/or other video conferencing or at least voice conferencing and perhaps the gaming/avatar abilities already out there. It may be web 3.0, and I know 2.0 isn’t really developed yet; but it seems to me that these various platforms can and may converge so that someone could use Etsy on their TV/smartphone/computer and have it fully and natively integrated with other technologies so that people could shop, talk, gossip together online. Right now these experiences are largely solo events for these types of experiences — but for business purpose webinars are old news — so I guess what I imagine for companies like Etsy is a cooler (and two way) webinar where people can interact more as they would at a mall if they were shopping together. For the most part the technologies are there already.

  60. Mike

    I’m very late to the party here, but I’d be interested to hear any thoughts on the mobile web and Pranav Mistry’s work with Sixth Sense:http://www.pranavmistry.com…Chris Anderson at TED referred to Mistry as the #1 inventory in the world at TED India. I doubt he throws words like that around much.

  61. MFPrice1

    Hi Fred, I was preparing for an advisory board meeting this morning and had written to them our 2010 areas of focus, then when I read your post just now it was so corollary that I thought you would find what I wrote them to almost be amusing (and you may well be right), in any case here is what I wrote before reading your post:Over-Invested Sectors.- CleanTech.- Cloud-enablement.- Gaming.- Mobile apps.- Web video/TV/Movies.- Mobile payments.Interesting Targets:Social Media (beyond platforms and keyword monitoring).- Employee monitoring.- Collaboration.- Real-Time info & interaction.- Data augmenting from social sites.- Social-driven commerce.Mobile.- Contacts/Leads.- New possibilities due to 4G LTE (true broadband).New Leaders Integration.- New apps leveraging Google docs/apps/maps smartly.- New value leveraging Facebook communities/features.Productivity.- Work-at-home enablement.- Michael Price, CEOVentures

    1. fredwilson

      wow, very similar strategies. that’s excellent

  62. beststockreport

    I guess that was a good event. Thanks

  63. fredwilson

    oh god yes, wouldn’t that be wonderful

  64. William Mougayar

    Kind of like Amazon affiliates. Brilliant idea. Then you can slice off curated lists from the messy iTunes.

  65. Megan Cunningham

    You can pretty much do this with their affiliate program, and/or by creating and maintaining an iTunes list, which many music blogs and iphone app blogs do: http://www.apple.com/itunes… I know it’s not the same as API access but for Charlie’s request it has the same end-user benefits.The “distributed commerce” idea is an incredibly interesting one, however, especially when paired with other more feature-laden engines like We Are Hunted, Last.FM or Pandora. For those types of mashups, API access to iTunes would be a real boon.

  66. paul martin

    I think if you resegment the 6 items you may see that education is key and maybe characterised as the new religion; go go Googlistas. Physical training places in some areas are the new churches, virtual ones depend on the congregation declaiming their belief (the two websites mentioned have strong user feedback space). As local educational monopolies crumble and the market forces (read recession) curtail old teaching, I wonder how important (virtual) real time is for real learning.

  67. fredwilson

    i’ve been using it. it is a very strong competitor to iPhone

  68. davidandrz

    Great idea but not going to happen.Apple’s DNA is to control the user experience, and an API relinquishes end user experience. Add in the fact they are having enormous success w/o the API and it’s just never going to happen despite how great an idea it is