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One of my all-time great moments as a web user was the launch of Yahoo! Finance. It was everything I had ever wanted as an investor, at least as a public market investor. I could not believe that all of it was free and in one place. I was a loyal Yahoo! Finance user for the better part of ten years. Recently I've found myself using Google Finance a bit more. But rarely does a day go by when I don't find myself visiting a service like Yahoo! Finance or Google Finance.

For the past few months, I've been using a new service instead of these two workhorses. It is called Tracked.com and it is a Union Square Ventures portfolio company.

We've never been much for "stealth" projects and this is our first. We invested in Tracked.com in the summer of 2008 and have watched it slowly but surely take shape over the past year. And we are very excited that it has now launched publicly (it was quietly available on the open web for the past few months under a different URL). Tracked.com is the brainchild of Mike Yavonditte, who ran and sold Quigo to AOL in late 2007. Mike has recruited a top notch team to go after this opportunity.

The opportunity is simply to redefine what a business information service should be on the open internet. Yahoo! Finance and Google Finance are largely ticker driven. If the company you want to learn about is not publicly traded, then you aren't going to find much information on these services.

Contrast that with services like LinkedIn or Crunchbase. These services are company and people driven. If a company or a person is well known, there is a good chance they have a page in Tracked.com. And if they don't now, they will soon.

There is one more piece to Tracked.com that is important to talk about. Tracked.com is social. Users have a profile in the service and can send messages to each other in the service (and via twitter and facebook very shortly). Objects in the service (news, quotes, charts, public filings, companies, people) can be sent around like links in twitter and facebook.

I like to say that Tracked.com is what sits in the triangle that you can form with Yahoo! Finance on one point, LinkedIn on another point, and Twitter on the third point. It is not designed to compete with these services. It is designed to complement them and extend their usage models.

But as I said yesterday, it's a lot better to spend 15 minutes using a service than reading about it. So go check out Tracked.com and let me know what you think of it.

I was treated to Dave McClure's "Startup Metrics" talk during Seedcamp in London last month. If you have not seen Dave do this talk, do yourself a favor and click on this link and spend a few minutes with the slides. Or even better, go see Dave give it live.

The ideas are simple, but so few actually apply them rigorously. In a nutshell, the methodology is: build, test, measure, iterate, test, measure, iterate, test, measure ……….

Which leads me to the point of this post. Measurement is not a simple thing. What do you measure and how do you measure it?

One of our firm's favorite measurements is the cohort analysis. From Wikipedia:

A cohort study or panel study is a form of longitudinal study used in medicine, social science and ecology. It is one type of study design and should be compared with a cross-sectional study.

A cohort
is a group of people who share a common characteristic or experience
within a defined period (e.g., are born, leave school, lose their job,
are exposed to a drug or a vaccine, etc.). Thus a group of people who
were born on a day or in a particular period, say 1948, form a birth
cohort. The comparison group may be the general population from which
the cohort is drawn, or it may be another cohort of persons thought to
have had little or no exposure to the substance under investigation,
but otherwise similar. Alternatively, subgroups within the cohort may
be compared with each other.

Like most things, it is easier to show one than explain one. And thanks to Robert J Moore, we have a few really interesting cohort analyses on Twitter to look at. He shared them in a guest post on Techcrunch yesterday.

This chart shows how new Twitter users behave over time.

And this chart shows how Twitter usage grows over time for new Twitter users who stick with the service.

I think both charts are interesting and you would not necessarily notice this behavior by looking at all users together because you need to isolate a certain group and observe them over time to see what is happening.

I'd encourage everyone doing a web startup to adopt the startup metrics methodology and within that methodology, make sure you are looking at cohorts of users, not just all of your users in the aggregate.

As usual, the comments to yesterday's post about suggested books for entrepreneurs (132 comments so far) are way better than the post itself.

At some point yesterday, when the suggestions were coming hot and heavy, I commented that we ought to create a wiki with all of these great suggestions on it.

Zachary Burt did just that on PB Wiki. Here it is. Please feel free to add any other books you think deserve to be on the list.

Over the past couple days I’ve been thinking and working on cloud based messaging.

The work has been to get off client-based email once and for all. Over the past month, I’ve slowly but surely transitioned from someone who uses the microsoft email system (outlook/entourage/exchange) to someone who uses Google’s Gmail.

I realize that I’m late to this trend, but I’ve been on this path for a long time. When Gmail launched, I opened an account and have been forwarding my email to Gmail since. Its a huge searchable archive that I rely on regularly to find things. I’ve also used Gmail occasionally when my outlook and entourage crash, as they do regularly (at least for me).

I’m one of those people who saves everything. My mail file is between 10gigs and 20gigs depending on how often I archive, empty stuff, and clean it up.

Many people have been telling me for some time that I need to move my mail to the cloud because a mail file as big as mine is not workable in a client/server model.

I had a brief flirtation with outlook running on parallels on my mac but that resulted in a nasty crash of my entire hard disk and regardless of whether it was parallels or something in OSX, that pushed me over the edge. While my new macbook was getting a new hard drive, I went back to my old macbook and used Gmail exclusively.

It’s taken me about a month but I’m pretty comfortable on Gmail now. I still find collapsing emails into conversations an issue at times, but I’ve also found it helpful at times. That was always my big hangup with Gmail.

There are two other things that have really helped me get comfortable with Gmail. The first is keyboard shortcuts. I never took the time to learn them before. I did this time and I now use Gmail mostly without a mouse. That rocks.

The second thing and the reason I am thinking a lot about cloud based messaging is offline Gmail. I use plane, train, and other “offline time” as a time to catch up on email. I hated the idea that I couldn’t do Gmail on a plane. With Google Gears installed, you can now use Gmail in offline mode. I’ve just finished four hours of catching up on email in the browser while being offline. It’s one of those experiences that changes the way you look at web apps.

Gmail caches your most recent mail (and attachments) so you can get a connected experience offline. I wish it would also cache the pages behind the links in my email.

I also wish Twitter’s web app would be available in offline mode. I would love to go back through my timeline for the past few days like I can now do with email and send replies and direct messages. And of course, I’d love to have the pages behind the links in twitter cached as well.

All of this is possible and I think its coming (don’t take my comments specifically about twitter, I haven’t even talked to them about this idea).

I spent some time this morning watching the Google Wave video. I had the same reaction to its UI that I’ve had with Gmail (and FriendFeed too). It looks complicated and cluttered.

But I love the way the messaging all happens in the cloud and its designed for many to many messaging. That’s what happens with the comment conversations in disqus that we have on this blog. We are emailing back and forth but the conversations are public and hosted in the cloud.

So there are some big trends here that I’ve been thinking about.

Web apps are gaining the ability to be functional offline. Which makes them work as mission critical messaging systems. And messages are being hosted in the cloud which creates the kind of scalability needed for a world in where we generate hundreds of messages a day to groups not individuals and want them archived forever.

Mobile is also a big part of this. For messaging, the triple play appears to be cloud based storage, a web app that can be used offline, and great mobile support. With Gmail offering native support of the native Blackberry mail app this summer, I’ll have my triple play. Just in tme to swap out Gmail for Wave!

I was talking to a reporter yesterday who is working on a long piece about private equity and venture capital returns.

She asked me how much the “alternative investment” class (aka venture capital and private equity) needs to outperform the public markets to make it an attractive asset class.

I don’t know the answer to that. I suppose there’s a theoretical answer based on some advanced math. But there is also a market answer. If capital leaves the alternative asset class for the public markets we’ll know that the returns are too low relative to public markets. And if capital flows back to the alternative asset class, we’ll know that returns have reached a level where these private markets are more attractive than the public markets.

There are a number of reasons why public markets are preferable to private markets (all else being equal) but to my mind, the big one is liquidity (and the lack of it in the private markets).

I am not an investor in a single buyout or private equity fund so I cannot speak intelligenty about the illiquidity of those funds but I assume it is similar to venture capital.

A venture capital fund generally has a ten year term. But in my experience it often takes a bit longer, possibly fifteen years, to exit all of the investments.

If you invested $1mm into a typical VC fund, you would not be locking up that $1mm for ten to fifteen years. The $1mm would typically be “called” from you mostly over the first five years as it gets invested. There would be some amount, less than 20pcnt, left for calls in the second five years.

The way I like to model it is 18pcnt per year for five years and 2pcnt per year for the next five years. The USV funds we manage have capital calls that look more like an s-curve than a straight line but that’s getting too granular for this post.

The money comes back to you in the latter half of the fund. I like to model it as 40pnct per year for the last five years and then 10pcnt per year for years 11 through 15. That assumes the fund returns 2.5x net to the investor which is a very good return for a VC fund.

So you can look at the numbers and see that you are out the money for a considerable period of time.

And if you want the money back on some other timetable, you have very few options.

You cannot ask to be redeemed. It won’t happen. You can try to sell your interest in the ‘secondary market’ and you will get between 20cents on the dollar and 40cents on the dollar for all but the very best funds.

So venture capital and presumably private equity as well is a very illiquid asset class.

Contrast that with a mutual fund. You want out, you get out at whatever the current market value of your fund interest is.

It is very hard to wrap your head around what illiquidity really means until you experience it first hand. Then you know its a very undesirable feature for an investor.

So, in summary, when I was talking to the reporter yesterday, I noted that the ten year returns for VC are between 5pcnt and 10pcnt whereas the S&P is negative by something like 5pcnt (I’m on a plane and can’t look it up).

Is a 10pcnt excess return enough to incent a rational investor to part with their money for an extended period of time? Maybe, it depends on who the investor is. But it certainly is not a slam dunk in my mind.

On Sunday night the Gotham Gal and I went up to the MOMA to see a showing of We Live In Public, a documentary about the life of Josh Harris, "the greatest internet pioneer you never heard of". The Gotham Gal has a great review of the film on her blog.

The film is everything I thought it could be. Ondi Timoner did an incredible job and earned all the accolades the film has received, including Best Documentary at Sundance.

The Internet scene in NYC was a unique time and place and nobody was pushing the envelope harder and faster than Josh Harris. Though I could never get comfortable investing in Josh, for reasons the movie will make adundantly clear, I have tremendous respect for him and everything he accomplished. He is a brilliant person who sees the future as clearly as anyone I have met.

The biggest treat of the night was seeing Josh, who is living in ethiopia, and Ondi together. I got the opportunity to say hi to both of them and watch the two of them talk about the film after the screening.

After the screening ended, I noticed Josh standing next to me. So I jumped up and said hi. He asked me "did you like it" And I said "yes, it's awesome". The Gotham Gal said "what do you think Josh?" And Josh said "I haven't seen it". The Gotham Gal said "really, why?". And he said, "if you were me, would you see it?"

Josh has a point there. See the movie and you'll understand.

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When Brad and I were raising our first fund in 2004, we’d plan to get to our pitch meeting an hour or so ahead of time and then go find a Starbucks for coffee and internet. We never even thought to try anything else. We just used the Starbucks store locator app and got bad cofee and better wifi.

But in five years, a lot has changed. Yesterday morning I drove from LA to Irvine California to pay a visit to one of the investors in our fund. As usual, I left plenty of extra time and arrived in Irvine an hour early.

There were plenty of Starbucks around but I ignored them, hit Yelp on my blackberry browser and did a search for espresso in/near Irvine.

That led me to a place called Javatini’s where I got a very well made cappucino delievered in a ceramic mug. It was a vastly superior cup of coffee and the wifi was free and fast too.

Today I drove up to Pasadena to see another of our investors. Again I left a lot of extra time and even though I sat on I10 for what seemed to me to be an eternity, I got there an hour early. I did the same thing, avoided Starbucks and sat outside in the sun and enjoyed a much better cup of coffee and a yogurt and fruit bowl courtesy of Yelp.

After my meeting I drove back to Santa Monica for a meeting at Mahalo with Jason and his team. I got back in no time and had a hankering for a fish taco (among my all time favorite meals). Yelp served up a place on the Santa Monica/Brentwood border call Kay’n Dave’s where I just finished a slightly spicy baja fish on light and fluffy home made tacos.

That’s three for three with Yelp in the past day and a half. I’m happy and I’m so done with bad coffee and bad food when I’m travelling.

Brands like Starbucks, Taco Bell, and McDonalds are powerful. But Yelp and services like it on a mobile phone have the power to disrupt the scale advantages of these national brands and allow the Javanitis, Kay’n Daves, and Father’s Offices of the world compete.

And that’s a good thing.

One of the great things about being in business with serial entrepreneurs is that they have a wealth of talented people they’ve worked with in past startups to tap into as the company grows.

Some founding teams stick together from startup to startup and its always great to get the chance to back a whole team of successful serial entrepreneurs. But that doesn’t happen very often.

Success creates wealth and wealth and ambition generally lead talented startup people to try their own startups. Its like when the Beatles broke up and John, Paul, and George each went on to solo careers.

But sometimes a startup is so exciting and full of potential that it pulls the dream team back together. Everyone in startup land likes to work on a big winner and so many entrepreneurs are willing to give up on their own startup dreams (at least temporarily) and get the band back together for a while.

We are seeing this play out in a number of our portfolio companies right now and its a very encouraging sign. It may also be true that as times get tougher, the best teams are coming together and consolidating around the best opportunities.

Whatever the reason for it, it’s very exciting to see. Teams that have worked together successfully before know the strenghts and weaknesses of each other and they know how to get along, make hard decisions, and move the ball forward each and every day.

One thing that’s really hard in putting the band back together is equity stakes. When you have a team that was together in a prior company, they have the knowledge and history of their respective value and ownership stakes hard wired in their mind.

When some come back to join the band well after the company has been formed, the equity stakes that can be offered are often much less and certainly in a different balance. I’ve seen this problem delay and even prevent putting the band back together.

One thing I generally advise is to be more generous with equity being offered to a former colleague or partner than the market might dictate. For one thing, you know the value of the person much better. And also, you can argue that even though the stake being offered is lower than they might want or expect, its higher than market. That often does the trick.

The one area I think this approach is the most effective is with engineering talent and engineering management. Its so hard to build a technical team that can deliver the right product in the right timeframe and works well with the rest of the company.

I once flew from SF to NYC seated next to Steve Chen, co-founder of YouTube. When I asked him about their ability to scale the service without many issues he said ‘I never worried about scaling issues. Whenever we needed more engineering talent, we’d just tap into our network of former colleagues from PayPal and eBay’. It didn’t hurt that eBay/PayPal had become a big company by then and talented people were vested and chomping at the bit for a new challenge.

Putting the band back together is a key reason why places like silicon valley have a competitive advantage over other startup regions. But locations like New York City, Boston, Seattle and a few other regions around the world certainly have enough history of startup success now that they benefit from the same effects.

So when you are growing fast and trying to find the right talent to match the opportunity, you should always try to put the band back together if you can.

It snowed in Paris today and the cold was air was felt in the large spacious and beatiful event space in the 19th arrondisement where Le Web is being held.

Apparently the wifi didn’t work very well in the event space either. But neither issue got in my way as I managed to have about a dozen ‘meetings’ with entrepreneurs and a few investors between 9am and 5:15pm when the venture capital panel started

Spending a day at Le Web bouncing from meeting to meeting is a great way to take the temperature of the european web startup world. The temperature was cold in the building and people tell me the funding environment is even colder

That’s a shame (and an opportunity) because there are a lot of good companies working on building web businesses in europe.

There are some areas where europe has advantages over the US.

Linquistics/semantics is one possible area of advantage. Europeans have been living in a world with many languages and I believe they have a more native understanding of language structure and analysis

Energy and the environment is another. The ‘green’ movement has been alive and well in europe for a long time now and the european economies have been working on reducing their reliance on expensive carbon based energy for longer than the US has

Mobile is another area where the european consumer is ahead of the US consumer and where the carriers are more open to new technologies and business models

I am sure there are areas other than these but my point is that the european startup scene is not simply a poor cousin to what’s going on in the US. Its a lot like the NYC startup scene except that its distributed across a big geography

And that’s why Le Web is so great. It brought this startup scene together for a couple days in cold and snowy Paris. And I am happy that I could be there to catch the snow falling and re-open a lot of conversations I started this summer.