Posts from VC & Technology

Brad Feld and Tom Evslin, two of my favorite bloggers and people (not necessarily in that order), are having a conversation about no-shop clauses.

They are using the language of relationships to spice up the conversation which is always interesting.

I’ll leave it up to them to keep the conversation going.

But I will say this.

There are way too many VCs who waive around term sheets promiscuously and have the nerve to expect the entrepreneur to sign up to a no shop.

It’s no wonder our industry sometimes suffers from a bad rap.

I’ve been reading Steven Levy’s Hackers.

There is this great story where the hackers at the AI Lab at MIT are being forced to use a time sharing system on their beloved PDP-6 and they are in revolt.

So Ed Fredkin, who runs the lab, enlists Richard Greenblatt to create a new "hacker friendly" time sharing system.  Richard enlists Ted Nelson and the two of them hack together a new time sharing sysem in "weeks of hard core hacking". They called this system ITS, for "incompatible time sharing system".

The reason for mentioning this is that ITS was completely open.  It had no passwords. It was completely extendable.  Anyone could add features to the system. It was designed specifically so that everyone could look at everyone else’s work.

ITS was built in the late 1960s.

Almost 40 years later we are finally seeing the "hacker ethic" arrive in consumer software and services.

I have a good friend who loves taking photos and she puts them online at Shutterfly.

When I showed her our vacation photos on Flickr last year, she askd why I used Flickr.

I told her it was open, that anyone could see our photos and we could see anyone else’s.

I am not sure what she made of that, but in any case she stayed with Shutterfly.

Then yesterday, this same friend told me that she had been doing research on a trip to Vietnam and came across this great blog called Sticky Rice.

And she mentioned that all the photos in Sticky Rice come from Flickr, so she could click through and see all the photos of Vietman taken by the Stickyrice guy.

I pointed out to our friend that she could go one step further and check out all the photos in Flickr that are tagged with the word vietnam.

The day before The Gotham Gal told the same friend that she should go do a delicious search on vietnam and vietnamese food.

None of this would be possible with passwords and closed systems.

Slowly but surely consumers are being taught the value of open systems that the hackers intuitively understood 40 years ago.

It’s about time.

Last night I attended a small gathering of interesting people put together by the wonderful women of Release 1.0.  Thanks again Esther and Daphne.

I met a guy named Scott Matthews who built something he calls "Bitty Browser".

I had heard of Bitty Browser before, but never took the time to figure it out.

Well Scott explained it to me at dinner and in five minutes this morning, I’ve got a mini browswer window running in my right sidebar, just below my delicious linkroll.

I have my funny videos feed from delicious running in the bitty browser now, but I can change that to display whatever I want.

I am going to play some more with this over time. 

I think its really cool.

Jason Calacanis was in a huge twit about the Comscore blog numbers I posted about on Tuesday.

And Jeff Jarvis took a pot shot at the "panel research" methodology that Comscore used to compile the data.

First, I’d like to suggest that everyone chill out about these numbers. 

They are the first attempt by a leading Internet measurement firm to measure the blog world.  As I said in my post:

There are some questionable stats in this report.  Gizmodo over
Engadget?  Defamer over Boing Boing?  I have my doubts about some of
the blog specific data …

Jarvis says that panel research is "messed up" and goes on to say:

This is the method used by Nielsen et al to measure TV and radio and
print readership — affecting billions of ad dollars — and it is and
always has been relative bullshit. That’s why advertisers buy it,
though — because it is relative, because they can compare this magazine
to that magazine on the same sheet. But it’s all based on a small and
only allegedly representative sample of people. It’s meaningless.

Jeff is so wrong about this that I find myself shaking my head on this one. 

First, the problem with panel research of old is small sample sizes.  The panels that have been used for decades in old media are almost always less than 100,000 people primarily because it is cost prohibitive to collect data from a larger panel.  Clearly that is way too small for accurate measurement.

But Comscore invented the concept of a "megapanel" in 1999 and is currently measuring over 2 million unique Internet users. That’s the beauty of the Internet, you can measure online at a scale unimaginable offline.  At that kind of scale, panel research is not only accurate, its amazingly accurate.  As far back as 2001, Comscore was able to predict a missed quarter for Amazon.com.  And the panel size and the technology have improved significantly since then.

The issue with panel research is you need time to develop the statistical algorithms that weight the panel data correctly before you scale the numbers.  And you need a very good dictionary of the domains you track.  These take time to nail down.  Clearly Comscore hasn’t nailed it yet, but they never said they had.

When viewed as a first attempt at measuring the blog world with a rigourous methodology, this report is impressive and as I said in my post:

But that’s where Comscore is really strong.  They’ll take the feedback
they get from this report and drill down and eventually they’ll nail it.

Now on to Jason.  When he stops hyperventilating about the flaws in the analysis of specific blogs, he should go read the front of the report.

Everything he’s bitching about was fully disclosed up front and the idea that Comscore can be "bought" is so laughable that it makes Jason look silly.

Jason gives Comscore some advice in his lastest riff on the report.  And some of it is good, like starting a blog.  So I’ll return the favor and give Jason some advice:

Chill out, stop yelling at people and throwing around crazy accusations
Calmly suggest Comscore some ways to improve the methodology
Share your server logs with them so they can figure out what’s wrong
Make friends not enemies

The blog world needs good numbers.  Comscore is going to give them to us.  We’ll just have to be patient while they figure all this stuff out.

This week I am going with a cliche that is  not specific to the venture business, but I’ve modified it slightly to reflect the way I use it to talk about founders and CEOs.

I often look at a founder or a CEO, see the tired eyes, an anxious twitch in the cheek, or a missing beat in their step and think to myself or say outloud to others – "he’s got the weight of the company on his shoulders".

Being the founder and/or CEO is heavy duty. To use another cliche, "it’s lonely at the top".

There are some leaders who seem to bear the burden with ease. Our president would be in that camp, but recently even he seems to be showing the strains.

But most people, regardless of how well prepared they are for the role, will find being the leader to be a thankless role at times. 

Everyone inside the company is looking to you for answers, for leadership, for direction, and on top of that, they want it with a smile and a pat on the back.

Try doing all that on a day when you find out that the numbers were awful the past month, that your CTO is leaving to do another startup, and your lead investor is giving you a hard time. 

Frankly, its a thankless task most of the time.  Because who do they report to?  A board, not a person.  And a board is a lot less likely to provide day to day management and support.  Groups don’t do that, people do.  And unfortunately, a board is a group not a person.

Now I try hard to provide some of that day to day management and support to the people who run the companies we invest in.  But "try" is the operative word.  I don’t do as good of a job as I’d like for a bunch of reasons, including the fact that we sit on a bunch of boards (we try to keep it to no more than six) so we’ve got a lot of "mouth’s to feed", the fact that we have an agenda (to make money) that isn’t always directly consistent with the CEO’s agenda (to keep the company moving forward and keep his job), and the fact that I’ve never had a CEO job so I really don’t know what it’s like to do that job day in and day out.  I suspect I’m pretty good at providing management and support given all those limitations.

But my advice to founders and CEOs who find that they have the weight of the company on their shoulders is to get some help.

And there are two sources of help I recommend.

The first is inside the company.  A CEO/founder must surround themselves with people who they like, trust, and can lower their guard with.  The best leaders have a "kitchen cabinet" of people they can be completely honest with and who they rely on for advice, counsel, and support. It is tricky to provide that back to the same people who are providing it to you, but you must try to make it happen.

The second is outside the company.  I encourage every CEO/founder I work with to find someone that they can meet with at least once a week to talk to about their hopes, dreams, challenges, anxieties, and fears.  I don’t normally suggest a shrink, but a coach or a mentor who has no other agenda than to be your counsel and friend is critical.  Most of the successful leaders I know has someone like this, at least for part of their stint on the job.

The bottom line is being a founder/CEO is a really hard job.  It’s even harder if you’ve never done it before. If you find yourself being slowed down by the weight of the company on your shoulders, find some people you can trust and be totally honest with to help you carry the load.

A couple weeks ago, I got my hands on a presentation that Comscore made to the Word of Mouth Marketing Association (WOMMA) and posted it on this blog.

I am an investor in and a director of Comscore and have been working with this great company since 1999.  The team at Comscore is constantly pushing the envelope in measuring the Internet.  They were the first to build a megapanel, the first to measure online commerce at the transaction level, the first to measure search, the first to measure streaming audio, the first to build a hispanic panel, etc, etc.

So its not surprising that they are the first to deliver a comprehensive measurement of the blog audience.

I ended my post from several weeks ago with:

As Comscore starts drilling down into the specific blogs, even more data will come out. 

Hopefully they’ll publish it and we can start learning more about what is going on in the blog world.

Well it didn’t take long.  Yesterday Comscore put out "Behaviors of the Blogosphere", by far the most comprehensive analysis of the blog audience that I have seen.

I am not going to cut and paste from the report because its a PDF and that’s a pain in the butt to do (as Jeff Jarvis’ post on this report shows).

And this is just the start.  As Comscore starts to build a dictionary for the blog world and starts to track this emerging part of the Internet, we’ll be treated to even more granular and interesting data.

There are some questionable stats in this report.  Gizmodo over Engadget?  Defamer over Boing Boing?  I have my doubts about some of the blog specific data and the fact that Nick Denton was the co-sponsor of this report begs the question even more. My guess is that Nick provided really good data on his blogs whereas the other blogs were not measured quite so accurately.

But that’s where Comscore is really strong.  They’ll take the feedback they get from this report and drill down and eventually they’ll nail it.

The important story here is that blogs have gotten attention at a major measurement firm.  That’s a big deal and I am glad it’s Comscore leading the pack once again.

Last year, when Brad and I were on the road raising our
fund, we used to talk a lot about web services that should exist but don’t.

One of Brad’s favorites was “paid job search.”

Brad would say that job classifieds on the Internet worked
like job classifieds in the newspapers, you had to pay for a listing. Then he’d point out that the business model
of choice on the Internet was list for free, pay for clicks. And we’d wonder why nobody was doing that.

We did a little research and found out that Flipdog.com had
tried it in the heyday of web 1.0 and had a hard time making it work and sold
out to Monster.com in the spring of 2001. We looked at what Monster had done with Flipdog and it appeared that
they hadn’t done much.

We noticed that there were a few small companies trying to
make a go of the paid job search business model but none seemed to be getting
much traction. So we just shook our
heads and filed it away as something to figure out.

Then in mid December, as we were in the process of closing
our fund, I read this post about Indeed on John Batelle’s Searchblog. I emailed the link to Brad (we weren’t using delicious back then) and he
called Paul Forster, the CEO and
co-founder of Indeed.

That begun a seven month courtship that culminated last
Friday in an investment by Union Square Ventures into Indeed. Not all of our deals take seven months but
Paul and his partner Rony Kahan took a lot of convincing. They had built and
sold their last business (another jobs business called Jobsinthemoney) without
venture capital and had to be convinced that they should sell a meaningful
ownership interest to people they didn’t even know.

I guess we did a pretty good sales job because we got them
over that, finally. We were joined in
our investment by The New York Times Company and Allen & Company, two top
notch organizations that we’ve invested and built companies with before.

To Paul and Rony’s credit, during that seven month courtship,
they have built Indeed into the leader in the job search market. Their competitors will probably take
exception to that comment, but our analysis of traffic, jobs indexed, and name
recognition indicates that Indeed is the leader in pure job search.

So, why did we make this investment, beyond the fact that
this was one of the sectors that has always interested us?

For one, we are big believers in the fragmentation of the
Internet. We don’t believe that there are going to be several large “destinations”
where employers will go to list their jobs in the coming years.

We are a believer in what some of us are calling “sell side
advertising”. That’s the idea that
advertisers will put their ads on the Internet for anyone to find and
display. And if the advertiser gets clicks
back, they will pay for the clicks.

Job search is one of the first places that sell-side
advertising is going to happen because most employers already put the jobs they
are currently looking to fill on their web sites. Those jobs are the “sell side” ads. Indeed and others are crawling the Internet, grabbing
those “ads” and displaying them.

It just makes so much sense. Most large employers have HR systems in place which allow managers to
automatically post open positions to the web. Those systems then take the incoming applications/resumes they collect
on their web sites and process them into the hiring workflow.

In our due diligence, we talked to these employers. They
don’t really want to list their jobs in newspapers, job boards, or anywhere
other than their website because that’s where they want to collect the
resumes. What employers want is the
ability to buy traffic to their website, and direct it to the jobs they most
want to fill. And they want to buy that
traffic on a paid for performance basis, not a fixed price basis.

That what job search does for employers. It’s really simple. Job search delivers traffic to employer’s
websites more efficiently than any other method.

The value proposition for job seekers is equally strong. As Indeed says in its tag line “one search.
all jobs.”

In the old model, a job seeker needed to scour all the major
job boards, the local classifieds, craigslist, and the web sites of the
companies they are interested in working for. That is because nobody had a
comprehensive list of the open jobs.

Now, it’s much simpler. The job seekers just go to
Indeed.com, they do a search, and they get all the jobs that are listed on the
Internet, no matter where they are listed.

But on top of that, they get advanced search functionality,
the ability to store searches, turn them into RSS feeds, and be alerted when
new jobs show up in the index that meet their criteria.

This is a revolution for the job seeker and the traffic
growth that Indeed has been seeing since launching in beta last November
indicates that job seekers love the idea of job search.

So Indeed has a strong value proposition for both job
seekers and employers. That’s
critical.

But on top of that, there is something really interesting
going on with paid job search. One of the central tenets of Web 2.0 is the
notion of syndication of content and commerce. Indeed facilitates that in a big
way for the existing job classified providers. Because Indeed and some of the
other job search services “play nice”, job boards and other job publishers have
been supportive of the efforts of these services.

In fact, one of the leaders in the job board market,
Yahoo!/Hotjobs, recently embraced job search in a big way. Yahoo!’s
implementation of job search is really interesting. They are backfilling their
Hot Jobs service with a job search service that is similar to Indeed’s. It will be interesting to see whether job
seekers prefer search results that are filtered exclusively by relevance
(Indeed) or by paid/free (as Yahoo! is doing).

But regardless of the business model, the fact that
Yahoo!/Hot Jobs is embracing job search means to us that this model is here to
stay and is likely to be the front end for most job searches in the future.

It will also be interesting to watch Yahoo! to see if the leaders in traditional web search can do vertical search as well as the companies who are focused exclusively on vertical search. The requirements of job search or travel search or some other form of vertical search require different crawlers, different frequency, different results alogorithms, etc.  So Yahoo!’s entrance into job search is going to be interesting on multiple dimensions.

Another really valuable asset that the job search players
own is an index of all the jobs that are available at any time. Indeed keeps jobs in its index for 30 days
and currently has over 3.5 million jobs, a figure that is growing daily as new
sources are added. That compares to
Simply Hired, one of Indeed’s competitors, which keeps jobs in its index for 45
days which boosts their total jobs number. But whatever the policy of keeping jobs in the index, Indeed and Simply
Hired have way more jobs available to search than the job boards. The largest job board has less than 500,000 jobs
in the latest 30 day period.

Longtime readers know that I have been running an Indeed
Jobroll on the right sidebar of this blog for about six months. Anyone can do
that by visiting Indeed and doing an advanced search. The results of that search (in my case
venture capital and web technology jobs in New York City) will be displayed in a job
roll that can be run on any website or blog.

The jobroll is a good example of the way that the Indeed
index can be syndicated to provide value to publishers and other operators of
web services. In a Web 2.0 world, apps are built on top of apps, and at its
core, Indeed is a web service. We look
forward to lots of innovation in this area over time.

Like any early stage investment, there are lots of risks and
challenges for Indeed and its investors in the coming years. But we are prepared for that because that’s
our business.

We are really looking forward to working with Paul and Rony
and their team to build the next big thing in the jobs business. Brad is joining the board and will be our
point person on the investment, but our style is that every person at Union
Square Ventures is involved in every investment and we certainly hope to be a
“value added investor” in every sense of the word.

If you are interested in learning more about Indeed, I’d
encourage you to go there and do a job search, subscribe to a job search or two
with RSS, and put a Indeed job roll on your blog. I think you’ll be as impressed as we have
been.

Michael Parekh has a post up today called "On Why Is Tagging So Frickin’ Hard?"

It is a really good post and anyone who is interested in this subject of tagging should go read it.

Michael was inspired to write the post after reading Tom Evslin’s post on how he integrated tagging, comments, and trackbacks into his Typepad blog.

Michael has a good sense of humor and he goes on to say:

And what did Tom invest in making these very commendable, and helpful changes?
In his words:

For the last thirty-six hours I have been writing code to make my blog more useful (with help from both TypePad and del.icio.us).

Now, this is Tom Evslin, who as his bio states:

Tom Evslin was cofounder (with wife Mary), Chairman and CEO of ITXC
Corp. …

Evslin conceived, launched, and ran AT&T’s first ISP, AT&T
WorldNet Service. …

At Microsoft, Evslin was responsible for the server products now in
Microsoft BackOffice including Microsoft Exchange and for Exchange’s
predecessor Microsoft Mail. …..

Evslin is an inventor on five granted US patents.

Whew, now I know what it takes to implement tags on my web site.

Now, I know Tom pretty well and he is truly a top notch technologist. 

But you honestly don’t need to be an inventor on five granted US patents to use tagging services like del.icio.us.

Tagging isn’t as intuitive as it needs to be and it does take some work to figure out how to use some of this stuff.

But Tom’s specific issues were related to making his RSS feed work like his blog posts, with links built in for tagging with del.icio.us, commenting, and trackbacking.

That’s hard stuff and I haven’t even begun to tackle that problem, although Tom has now shared his work with all of us so I plan to do it soon.

The problem is that TypePad, Blogger, and other blogging platforms haven’t integrated this stuff that we all want to use into their systems.  So we are forced to write HTML to make it happen.  That’s not going work as blogging goes mainstream.

Over a year ago, I wrote a post called Blogging Tools Suck. It was a pretty popular post at the time with over 10 trackbacks and 20 comments.

Go read it and you’ll see that very few of the things that I asked for have been delivered by TypePad.  And my list is a lot longer now.  I want del.icio.us integration, I want better Flickr integration, I want better Technorati integration, etc, etc.

I don’t really fault TypePad for this.  The people who run TypePad are doing a good job keeping up with the rate of growth and keeping the service moving in the right direction.

Their problem is a fundamental issue with Web 2.0.

In a Web 2.0 world, apps are built on top of apps, using open APIs, allowing users to mix and match to create the best experience for their needs. 

If you are a nerd, like Tom Evslin or me, that’s pretty cool.

If you are The Gotham Gal, that’s not going to work one bit.

In a Web 1.0 world, a company like TypePad would build everything themself.

But in Web 2.0, other services, like Flickr, Technorati, del.icio.us, AdSense, Google Maps, Bloglet, SiteMeter, Feedburner, etc that have gained significant user traction, need to be supported.

That’s a major headache and it will be interesting to see how TypePad and other blogging platforms deal with it.

It’s almost an advertisement for an open source platform like WordPress where the users can actually add this kind of stuff into the platform.

So TypePad is faced with the fact that many of their users want Web 2.0 style integration and they need to build it themself.  That’s a lot of work without much benefit to them.  But I see no other choice for them over the long haul other than to deliver that kind of integration.

But back to tagging before I wrap up this long rambling post.

I believe that tagging is hard to get for many first time users because in "open tagging services" like del.icio.us, furl, simpy, etc, you don’t tag in the service. You tag somewhere else.

That’s a disconnnect that many first time users don’t understand.

The best way to solve this is to do what Tom has done, and what many others (including me) have done, which is to put links to whatever "open tagging service" you like right in your blog and your RSS feed.

That makes tagging happen where users want to tag, not in the service itself.

Over time, I believe these tagging links will appear all over the web and tagging will become a lot easier. 

I also think that the services like del.icio.us can solve these first time user issues with other user interface solutions.

But for now, tagging is "so frickin’ hard". 

Recognizing that is the first step to making it easier.

For almost a year, I’ve been saying that Wifi should be public infrastructure.

I’ve posted on this on several occasions and I firmly believe that broadband wifi should be like roads, bridges, and tunnels.

There have been a couple columns in the NY Times op-ed section recently in support of that idea.

In today’s week in review section, Nicholas Kristof, talks about how the farmers in rural Oregon have done it.

Earlier this week, Thomas Friedman wrote a column titled "Calling All Luddites" which talked about how sad it is that the US doesn’t have a modern public infrastructure for communications.

If Japanese can have cell phones and wifi on their subways, if the farmers in Oregon can have wifi and wimax throughout the entire county, why can’t we have public wifi in NYC? 

Good questions.