« June 2005 | Main | August 2005 »
July 31, 2005
Knowing What You Don’t Know
Every entrepreneur is a first-time entrepreneur once.
How do VCs, then, evaluate first-time entrepreneurs? How can they garner the confidence to place both their money and time in someone who hasn’t started a company before?
Of course, investors can look at other past experiences as both a signal and substitute for an entrepreneurial endeavor. And strong domain expertise is always a plus, often a must-have.
A friend of mine at other firm told me that they also explicitly look for one intangible quality. For every entrepreneur who comes in to pitch they ask the question, “Does he know what he doesn’t know?”
Yes, entrepreneurs know the information that they know. It is this experience and comprehension that guides them, and gives them inspiration. But what about the information that they don’t know? Are they aware of their lack of knowledge in a certain area? Or are they (blissfully) ignorant of it?
“Knowing what you don’t know” means understanding when to ask for help, guidance, and additional information when it is needed. It doesn’t preclude someone from being confident; quite the opposite, it demonstrates a self-assurance to ask for assistance when appropriate rather than act upon a loose foundation of information.
Venture capitalists want to be assured that their money is in knowledgeable hands. But they also want to know that those hands will look to others when they aren’t fully capable. It is much better to admit that one doesn’t know something than to act blindly without it. And it takes a special person to even realize and perceive when an area of understanding is lacking.
You know what you know, but do you know what you don’t know?
Posted by David Beisel at 1:18 PM | Permalink | Comments (0) | TrackBacks (0)July 29, 2005
The Mobile Phone: "Social Computer"
I usually prefer to read blog summaries as opposed to watching full webcasts of conference sessions, but I spent time today watching the “Smartphone 2010” panel from the AlwaysOn conference last week.
My favorite comments were made by Trip Hawkins, Founder of Digital Chocolate and EA. He made the point about historical monetization of media types – that “social network” media (e.g. traditional phones) has consistently garnered around 10x in monthly revenues per user than traditional non-connected media types. The figures are debatable, but the substance of his argument is in his conclusion.
He maintains that the highest value media types on mobile phones are going to be ones that “provide access to a social network.” As such, Trip views the mobile phone moving forward as a “social computer.” The applications that connect people in some way are the ones which will drive real value.
This notion takes my thoughts about the mobile camera phone as a portable input device one step further. It’s not just about creating user-generating content, but also sharing it to connect with others. The devices, platforms, and applications which help facilitate the creation of this media and the connections stemming from it are going to be extremely valuable.
Until now my mobile telephone has been a two-way radio capable of playing a few mildly-amusing games and taking a few crude pictures. It is now becoming a portable input & connecting device initiating meaningful connections with people I know and people I don’t yet know.
In my last post on the subject, I asked if the mobile phone is the new mouse. Yes, it certainly is a new input device, but the fact that it is a connecting device is potentially even more important.
Posted by David Beisel at 4:05 PM | Permalink | Comments (1) | TrackBacks (2)July 26, 2005
A Few Quick Random Thoughts
Konfabu-device. O’Reilly says Yahoo’s acquisition of mini-application “widget” maker Konfabulator is evidence of a “long term platform shift that I've been calling Web 2.0.” He goes on to say that “the expectation that web companies will only buy other web companies should be put firmly into the trash bin.” Yes, that makes sense. If one extends this thinking, perhaps it’s not just about extending the internet from the web to the desktop, but even further as well? Does this mean that Ambient Devices – which makes actual physical devices connected to the internet – is next on the list?
Tag Me Funny. If you start browsing http://del.icio.us/tag/funny, you won’t be able to stop. Trust me. My favorite find thus far is the thirty second bunny reenactment of Pulp Fiction.
WhiteFeed. Feedmail – the next evolution in “email-like” communication or merely an overly-elaborate and overly-complex way to create an email whitelist to avoid spam?
“The New Black” is the New Black. Soon after I declared “tagging” as the new black, Paul Kedrosky (also on the VC Channel) declared “focus” the new black. Tagging’s reign ends after merely two days. But then I found this post (through Wikipedia) and realized that everything is the new black.
Posted by David Beisel at 6:07 PM | Permalink | Comments (0) | TrackBacks (1)A Few Quick Random Thoughts
Konfabu-device. O’Reilly says Yahoo’s acquisition of mini-application “widget” maker Konfabulator is evidence of a “long term platform shift that I've been calling Web 2.0.” He goes on to say that “the expectation that web companies will only buy other web companies should be put firmly into the trash bin.” Yes, that makes sense. If one extends this thinking, perhaps it’s not just about extending the internet from the web to the desktop, but even further as well? Does this mean that Ambient Devices – which makes actual physical devices connected to the internet – is next on the list?
Tag Me Funny. If you start browsing http://del.icio.us/tag/funny, you won’t be able to stop. Trust me. My favorite find thus far is the thirty second bunny reenactment of Pulp Fiction.
WhiteFeed. Feedmail – the next evolution in “email-like” communication or merely an overly-elaborate and overly-complex way to create an email whitelist to avoid spam?
“The New Black” is the New Black. Soon after I declared “tagging” as the new black, Paul Kedrosky (also on the VC Channel) declared “focus” the new black. Tagging’s reign ends after merely two days. But then I found this post (through Wikipedia) and realized that everything is the new black.
Posted by David Beisel at 6:07 PM | Permalink | Comments (0) | TrackBacks (0)July 25, 2005
How Yummy are Cookies?
For past two weeks since Mossberg’s article in the Wall Street Journal, cookies continue to get slammed in the media while the debate rages. Some are equating them with spyware, as cookies are increasingly receiving a bad reputation that I think is undeserved. With nearly 60% of consumers deleting cookies according to JupiterResearch, I believe that the average consumer is throwing the baby out with the bathwater.
Unlike spyware, you can’t cast cookies as wholly “bad.” Nor is it completely fair to say that they are “completely harmless” and “good.” The value judgment should rest on the application of the technology, not the technology itself. Adam Marsh astutely and accurately identifies the heart of the issue in his two posts (here and here): it’s really about personally identifiable information (PII) and how it’s used. And different people are going to have different tolerances and preferences for the benefits that cookies bestow and the amount of anonymity that one gives up for those advantages.
For me, I like going to Amazon and receiving personalized recommendations. Or going to Netflix and the site remembering my Queue without me logging in. To be honest, I think it’s helpful for online marketers to show me ads that are more relevant to what I would like. Yes, cookies are good enough for me.
I understand why some people who wish to retain an extreme sense of privacy may want to delete some cookies after giving the notion some thoughtful consideration. But I truly think that for most consumers (including myself), the benefits of cookies vastly outweigh any privacy concerns. Sure, different people have different preferences. But let’s not over-simplify this issue and cast cookies as evil, bad, spyware.
July 22, 2005
NewsHound Makes it Easier
As I worry about next-generation consumer internet services becoming increasingly difficult, the Denver Post’s NewsHound service, which launched this week, takes a nice step in making things easier for the average non-techie. You can download the stand-alone client here. It’s a private-label RSS reader built on top of the NewsGator Media Platform, and the application definitely simplifies finding and reading content feeds for people in that area of the country (as it’s tee’d up with local content). That’s good news for consumers just learning about new ways to get fresh syndicated content, and not needing to worry about technical jargon like RSS/Atom/etc. And from a business standpoint, this deal is just one of many to come for NewsGator powering media companies’ RSS offerings.
(Disclosure: Masthead Venture Partners is an investor in NewsGator. See my previous post on why I like this investment.)
Posted by David Beisel at 2:40 PM | Permalink | Comments (1) | TrackBacks (1)...Is The New...
I like John Herren’s thought (in his comment on Jeremy Zawodny’s recent post),
“http://del.icio.us/popular is the new Slashdot.”
Yes, tagging is the new black.
July 21, 2005
The People’s Internet(?)
With all of the innovation of Web 2.0, I am a little worried about the usability and consumer-friendliness of it. Yes, blogging can be the most straightforward way to publish on the net and vertical search engines make things like looking for a job easy.
There are a lot of activities, though, which just aren’t that user-friendly - at least not yet. Does a non-techie like my aunt understand what it means to tag content, let alone want to do it? Is registering for so many social networking sites helping me connect or wasting my time? Why is it that subscribing to RSS feeds often really isn’t simple?
One of the rotating quotes on the Web 2.0 conference website is from Jeff Bezos, “Web 1.0 was making the Internet for people, Web 2.0 is making the Internet better for computers.” Really? Is that good? I think the Internet should be for people.
Posted by David Beisel at 11:52 AM | Permalink | Comments (0) | TrackBacks (0)July 20, 2005
Struggling with Identifying Your Customers
We meet with a number of companies as Masthead that either provide ad-supported consumer content or technologies to enable/facilitate consumer applications. In both of these case, the leaders of these startups sometimes haven’t given much thought into who truly is the customer.
With ad-supported content sites, is the customer the reader/user or the advertisers? Or both? What about if the content is advertorial in nature? Many start-ups providing an enabling technology, a middleware component, or other type of infrastructure to support a consumer-facing business have the same difficulty. Is the company’s “customer” the true end-user of the product or merely the channel to the end-user? Examples of companies that run into this challenge include gaming infrastructure firms, music personalization companies, and mobile application providers who sell to the carriers, along with many others.
Why does this matter? While one party is a customer, and the other one can be an important constituent, there are times when decisions need to be made which will help one but adversely affect the other. Early on at Sombasa Media, which published consumer-facing e-mail newsletters, we struggled with who our customer truly was. But once we identified ourselves as an e-mail marketing company devoted to offering services to advertisers, our confusion subsided and our focus intensified.
I don’t think that that there isn’t a one-size-fit-all approach identifying the true customer. In fact, it’s something that is integral in defining the business model of the firm. And yes, it, like many other things in a startup, can change and evolve over time. But the entrepreneurs who we’ve met with who have given deliberate thought about and focused their company around clearly articulated customers make an impression with us and leave a trail of success that those who clearly haven’t don’t.
July 18, 2005
XFN and the Open Social Network
In two of my recent posts (“Musing on Three Not-So-Fully-Baked Ideas” and “Social Networks: The Network or the Service?”) , I expressed my desire for a open and central repository system for social connection data. It looks like I just ran across a system that seems to address these wishes. XFN, the Xhtml Friends Network, “is a simple way to represent human relationships,” as one of the extensions of the microformats standards effort. In line with and similar to my own theoretical vision of a system, their “delusions of grandeur” state,
“1. XFN provides the basis for a world-wide distributed network of personal connections. Proprietary data-owning services like Friendster could be superceded by XFN crawling and searching sites —a sort of "Friendorati," as it were. The advantage of a Friendorati-style network is that it allows every individual to fully express themselves through personal weblogs and web sites, instead of to the limited degree permitted by a proprietary service's user interface.2. Commercial services like Amazon, which currently ask users to manually register all their friends in order to make "wish list" and other information sharing simpler, may find it easier simply to crawl XFN relationships on the open Internet. This would allow a user to enter the URL of their site, and let the service programmatically analyze XFN relationships to build a list of friends.”
I love it. If we as a community were able to adopt this type system, it would indeed transition connection data to just that – data – forcing web-software networking applications to focus on creating valuable services, as opposed to building and retaining walled-in proprietary networks. However, as I commented previously, I do realize that this would take huge collective action to build a critical mass of users.
To start in this process, though, I have followed the Global Multimedia Protocols Group’s steps to get started and have (hopefully) successfully made my blog site XFN friendly. As such, my blogroll (maintained by BlogRolling) should now include metadata for which people in it I have met and consider a business acquaintance. (I’ve included their XFN friendly logo in my blogroll as well).
I would welcome anyone else’s ideas and reactions to this one (including tips if I haven’t executed on the setup correctly). Especially since I am still wrapping my head around the idea.
Search vs. Discovery
Like Steve Rubel, I missed Kevin Hale’s essay The Importance of RSS when it was published a month ago. In it, Kevin provides an in-depth hypothesis on Google’s perspective of RSS.
A few excerpts follow, but the entire essay is well worth the read,
“I don’t think Google really feels threatened (or has ever felt threatened) by portal strategy. I think what they’re afraid of is the rise of applications that seem to be tracking importance and trends better than search. In the race to find what deserves face-time, services like del.icio.us, Technorati and Digg.com in combination with the rapid adoption of web apps like bloglines, newsgator, feedster and kinja are making Google’s search seem very, very slow. And it’s all being accomplished with RSS technology.But what’s Google’s plan for RSS? Well, the thing is Google’s been working on an RSS strategy for a long time now. Matt Mullenweg and a host of other savvy / obsessive stat watchers have noticed Google’s bots have been searching for the location of index.rdf and atom.xml since at least April of 2004.
This preemptive crawling, I believe, will be the basis of their own version of a tagging system that replaces search terms for tags.”
This isn’t the first time I’ve read about the notion that Web 2.0 technologies are threatening search. But I think we need to be careful about describing what aspect of search is vulnerable and why. In its purest form, I view “search” as looking for something which I know I am looking for. By subtle contrast, I would call “discovery” looking for something which I don’t know I am looking for. I’ve alluded to this distinction before, and I am sure others have more articulately expressed it as well.
The importance of the difference is the ramification of new approaches to “looking for” information. With “search” in its strictly defined form, RSS adds the component of timeliness to relevance and cardinality/page-rank in determining the most appropriate ordering of results. However, I don’t think it RSS fundamentally changes the way that people look for information that they know they want; it just adds another dimension. On the other hand, when I want to find information which I don’t know I am looking for, there are now an in increasing number of possibilities: tagging systems like del.icio.us, personalized RSS feeds from Findory, and even merely reading others’ blogs.
The difficulty for “traditional” players like Google isn’t that search is going to be replaced by alternatives, but that the line between search and discovery is often barely noticeable. No, classifying "finding something" as search or discovery isn’t a binary proposition, but rather placing it along a gradual spectrum that exists between the two. In this fuzzy grey area lies both the opportunity for new alternative approach startups, but also the power for Google to merely extend its current offering. In his conclusion Kevin Hale is right, “I think RSS has a very promising future and Google is going to make sure they do everything in their power to be the ones to usher it in.”
July 15, 2005
Calling it Web 2.0? I Guess it’s Happening.
It’s no secret that there is a lot of innovation happening right now in the online space. The problem is that there are a number of terms being thrown around right now labeling this trend, the most popular of which (I think) is Web 2.0. To be honest, I am not a big fan of this term. I can’t put my finger on what it is exactly that I don’t like, but it just doesn’t sit well with me.
When I first launched this blog, I posted about the transition from the “Reference Web” to the “Incremental Web,” as Topix.net’s Rich Skrenta has dubbed it. But I now realize the current developments are more than just that.
An article in this month’s Technology Review, “Social Machines” calls Web 2.0 “the transformation of the original web of static documents into a collection of pages that still look like documents but are actually interfaces to full-fledged computer platforms.” Wikipedia summarizes the term as “ongoing transition of the World Wide Web from a collection of websites to a full-fledged computing platform serving web applications to end users.” (Apparently this innovation is “full-fledged,” regardless of what you name it.)
And it looks like the term “Web 2.0” is gaining popularity, as indicated by this Blogpulse chart. But some of those peaks are distorted by O’Reilly conference and Yahoo’s MyWeb 2.0 (un-coincidentally) sharing the same specific nomenclature as the generic term, further fueling my (and others’?) confusion about what we are really talking about here.
To me, the term, “Internet Operating System” better captures the essence of this ongoing change, which I believe was coined by O’Reilly three years ago, but just never caught on. I think it’s just because IOS doesn’t sound as sexy as Web 2.0.
But do either of those above terms really encapsulate ideas like the increased importance of vertical search, the rise of user-generated content, and the oncoming integration of the mobile platform into the open internet? I am not so sure. Somehow, those trends aren’t necessarily fully included. And that’s nothing to say about the huge force in how “traditional” search is still changing our world.
Yes, there’s a lot of disruptive change occurring in the digital media space, but I am just not sure what to call it. I guess I’ll have to stick with Web 2.0 for now.
Posted by David Beisel at 4:52 PM | Permalink | Comments (0) | TrackBacks (2)July 13, 2005
Four-Star VC
Today’s buzz surrounds the announcement that of Colin Powell becoming a Kleiner, Perkins, Caufield & Byers strategic limited partner.
So is there a story here beyond the preeminent venture firm connecting with preeminent leader? Is it that the blurring of lines of what a “partner” means in a VC firm, with the role of “strategic limited partner” wedged in between LP and GP? Is it that the venture business is “institutionalizing,” as Paul Kedrosky suggests? Are we returning to the days of celebrity VCs? Is this a story about branding? Can we really extrapolate an industry-wide trend from this one datapoint?
I disagree with the portion of the NYT article which says that the “the looming question is what the 68-year-old Mr. Powell, who served in the military for 35 years and rose to the rank of four-star general, can offer a venture capital firm that specializes in the financing of biotechnology start-ups and technology companies.” To me, the answer is indeed clear: unrivaled leadership experience and the ability to mentor CEOs, a vast and deep network of extremely influential people around the globe, and domain expertise in security. Many are criticizing the fit, but wouldn’t every VC firm want someone with the above characteristics involved with it?
Rather, I see the real story here not in that Kleiner chose Powell or vis-versa, but rather that Powell chooses to become active in venture capital at all. Here is a four-star General and former U.S. Secretary of State. A man with seemingly limitless options (after all, he at one time was a likely contender for the Presidency) opts to spend his time helping to build start-up companies. Yes, there’s money in it – but there are plenty of other things that Powell could do to build wealth. The move doesn’t surprise me, but I believe that the deepest part of the story is why he would chose this (albeit part-time) route above everything else that is an option for him.
Posted by David Beisel at 4:42 PM | Permalink | Comments (0) | TrackBacks (0)July 12, 2005
Musing on Three Not-So-Fully-Baked Ideas
Usually, I post well thought-out viewpoints, but today I’m going to express three ideas that I’ve just been mulling over in my head.
The first originated from Nivi’s post in which he conjectures “RSS is the TCP/IP packet of Web 2.0.” He goes on to say,
“You can think of RSS like a TCP/IP packet. A source publishes an RSS feed and the feed worms its way through the Internet to get to you. Things get more interesting when the feed is routed through a bunch of services before it gets to you. The feed can go through services that[:] Insert contextual ads; Strip out boring categories; Splice in other feeds from flickr, del.icio.us, or from other bloggers (see Superblog); Manage the feed (see FeedBurner); Translate RSS to email; Splice in contact and calendar info (see RSSContact and RSSCalendar). When you route a feed through a slew of services, RSS becomes a protocol for Machine to Machine (M2M) communication.”
Hmm… this is a very interesting analogy. Or is it more than an analogy? Is RSS truly the “fundamental building block” for the “Internet Operating System”? I like the idea of the Internet Operating System (IOS) – what does this notion mean and what are the ramifications if you approach thinking about it in this way?
The second idea is one I’ve raised previously. Could we solve the problem of repeatedly registering for and setting up our online social networks with a meta-system that crosses all platforms? It could store extensive commodity connection information (i.e. who is connected to who), facilitating innovation in the services realm without the necessity of gaining critical mass to express value. If there was an open and central repository system for social connection data, social networking companies would be able to tap into the already wealth of information about a person. Steve Shu says that he could see this construct “for Web 3.0, but it may be tougher for Web 2.0 timeframes.” He is probably right, but is it really that forward thinking or pie-in-the-sky? Is there a way to approach this goal incrementally to avoid the huge collective action problem that industry standards require? Could a commercial endeavor march in this direction, or does it require a commercial-agnostic entity? Or perhaps I am wrong – maybe acquiring a community of users provides a required positional advantage for social networking companies which is integral to competitive success.
Finally, I’ve been thinking about the “sell-side advertising” concept that John Battelle originally wrote about and that Fred Wilson & Dave Morgan further promote. Battelle summarizes,
“Instead of advertisers buying either PPC networks or specific publishers/sites, they simply release their ads to the net, perhaps on specified servers where they can easily be found, or on their own sites, and/or through seed buys on one or two exemplar sites. These ads are tagged with information supplied by the advertiser, for example, who they are attempting to reach, what kind of environments they want to be in (and environments they expressly forbid, like porn sites or affiliate sites), and how much money they are willing to spend on the ad.Once the ads are let loose, here's the cool catch - ANYONE who sees those ads can cut and paste them, just like a link, into their own sites (providing their sites conform to the guidelines the ad explicates in its tags). The ads track their own progress, and through feeds they "talk" to their "owner" - the advertiser (or their agent/agency). These feeds report back on who has pasted the ad into what sites, how many clicks that publisher has delivered, and how much juice is left in the ad's bank account. The ad propagates until it runs out of money, then it... disappears! If the ad is working, the advertiser can fill up the tank with more money and let it ride.”
What does this concept really mean and how could it emerge? Is a company called Zoundry, which allows users to easily drop affiliate product-links directly into their blogs, the next step in this direction after “traditional” affiliate programs? Could we truly ever have sell-side advertising, as advertisers surely want to retain some control over how their products are marketed and sold? Sell-side advertising sounds great in theory, but like a social-network meta-system, I wonder what are the best next tangible incremental steps which would translate an idea into action?
Again, these are my open thoughts and questions; just wondering aloud as I wrap my head around these theoretical and conceptual ideas.
July 8, 2005
Stop! You Shouldn't Blog. The Risks of Professional Blogging
Earlier this week, I had lunch with a VC friend of mine, and the subject of blogging came up. He told me that nobody at his firm blogs, not because they aren’t aware and “plugged in” to the phenomenon, but rather because they associate VC blogging with a negative reputational value. We talked about the risks involved with VC blogging, which I think could apply to all “professional” blogging (by that I mean individuals who blog about their professional life specifically, not those who are paid to blog).
While many in the blogging community have extolled the virtues of this activity, it appears that the potential risks involved have often gone largely overlooked. My friend and I identified five perceived reputational risks involved with professional blogging that could inhibit people from doing so:
1. Blogging is viewed by many as a fad. Whether or not this ultimately bears to be true, the viewpoint is a real one. Should one associate their career and personal brand with a trend that perhaps may fall by the wayside? What will be the reputational effect if/when one stops blogging?
2. Bloggers are sometimes perceived to have many negative attributes. Some believe that bloggers are overly-bearing “used-car salesman-types” in selling themselves or the extremely ego-centric people who speak the loudest but don’t really know what they are talking about.
3. Professionals (especially VCs) should have a network already to leverage; blogging could signal that one’s network is weak. Blogging is in effect a “networking” activity which connects people to other people. Some view bloggers as those who don’t have a strong network and use it as a crutch, or as those who aren’t successful in other networking venues.
4. Professionals are busy people; blogging could imply that one isn’t busy with “real” work. Serious blogging takes serious effort, and all professionals are limited by the amount of time that they have during the day. Perhaps bloggers can’t find productive uses of their time and are using blogging as a meager substitute for nothing.
5. Blogging provides an uninhibited permanent record to ones’ thoughts. Yes, permanent. Everyone is wrong some of the time. (In fact, VCs are wrong a lot of the time with their investments). When someone is wrong and there is an easily accessible record of it, that individual must either admit the error if his/her ways or ignore it to cover it up. Both of these are difficult actions to take, and could potentially leave someone worse off than taking no vocal opinion at all. And with the internet being archived in the manner that it is, it’s clear that anything published online will be able to be accessed forever.
My own personal view: User-generated self-expression content is here to stay, but blogging in its current form will certainly evolve. Currently, I see many benefits to blogging, and will continue to do so until those are over-weighted by downsides. If that point comes, I will clearly articulate why I have decided to stop (or slow down my postings). I feel that transparency here is the best route to chose, as do many others in this community. Yes, the negative attributes enumerated above are both real and tangibly felt by many, and I, along with any professional blogger, do run the risk of these associations. But I believe that the benefits associated with blogging, including the ability to critically think about and express views that are extensions of my work, outweigh the potential drawbacks and risks. And, of course, I am careful to limit what I say to things that are careful and thoughtfully articulated, as I am mindful of the permanent record that online publishing brings with it. In sum, while some in the community may argue that everyone should embrace the self-expression blogging phenomenon, I would argue that each individual should carefully weigh the risks and merits involved with it.
Posted by David Beisel at 4:05 PM | Permalink | Comments (0) | TrackBacks (5)July 6, 2005
Entrepreneur Bootstrapping Follow-Up
Two weeks ago, I wrote was has turned into my most commented on post to date, An Entrepreneur’s Perspective on Information Asymmetry in Bootstrapping. I intended this entry to highlight a unique perspective on the role of information in the genesis of a startup, but my readers identified a more important and deeper issue at play: the role and involvement of a founding team and founder’s equity. My original comments were as follows,
“[My entrepreneur friend’s] perspective is grounded on the fact that a significant information asymmetry exists between an entrepreneur and his or her constituents, especially extremely early in company formation. No matter how much she communicates her vision of the opportunity, prospective employees/contractors and angel investors alike are not going to be as fully informed about the situation as she is. Only she fully knows the market opportunity and has complete confidence in her ability to execute on it. Because of this differing level of information among each party, her constituents are going to perceive her venture to be riskier than it actually is. And investors and employees are going to want a higher compensation-level for that added perceived risk. Consequently, she doesn’t want to give up more equity than she believes is a “fair price” for investment or services, as these other parties have an inherently different viewpoint than she does.”
Many, like Pat Matthews, commented on the greater issue at hand, raising concerns about founding a company without committed people besides one individual,
“I know how difficult it is to build a successful startup - and I think it’s nearly impossible to do it simply with contract workers.”
Samuel Murphy echos,
“I thought building a new business was supposed to be a team endeavor? Could she be shooting herself in the foot if she tries to hold on to too much of the potential value? What is an idea worth? What is the creation of a new entity worth, Zero (maybe negative) through billions, but how often is one person able to hold majority control? Doesn't seem too often these days.”
My friend responded,
“Yes, I need a team. Yes, I must lead by example. And, yes, I realize 100% of nothing is still nothing… I don’t have the skills to build it myself… So I’m using my skills to get cash to pay someone else to use their skills to build my prototype. And who knows, maybe the developer will become my first team member. At least I’ll have something, other than an idea, to reduce the asymmetry that currently exists. And in the meantime I’ll keep reaching out to people who drink the same kool-aid and see if there is a talented developer in the mix.”
My own thoughts and opinion are two-fold:
1. One should strive to eventually have founding team. Speaking from my own experience at Sombasa Media where we had four founders, I do truly believe that starting a company should be a team effort. A group of people devoted to an endeavor provides the added resources, and more importantly, the spirit, that will help carry the company in its infancy and later on during difficult or strenuous times. Yes, there are numerous counter-examples, I completely realize. What I am saying is that all other things being equal, a founding team is much stronger than a lone founder.
2. Picking and establishing a founding team is a matter of timing with complex issues facing different companies with different situations. Though a team is ideal, an idea often starts with one. It is up to the sole entrepreneur to manage the process and transition from this idea’s inception towards manifestation. Establishing the founding team is a delicate and difficult process, and one that should be handled carefully with input and advice form others. It is up to the judgment of the entrepreneur to understand who and when is right for the company. I commend my friend for her openness to critical feedback on her situation which she has genuinely expressed to me in person and also in her comments to the post, “I took to heart each of your comments… Thanks… You have given me, and I’m sure many entrepreneurs, some great insight.” There is obviously no easy one-size-fits-all answer here, and an entrepreneur who is both mindful and deliberate about his/her actions during this stage is more likely to succeed than one who isn’t. That is not to say missteps are going to be avoided, but rather the entrepreneur who is thoughtful and flexible possesses an advantage. (For additional reading about the pitfalls involved with not picking the right founders, I’d highly recommend reading Allen Morgan’s entry from yesterday about the subject.)
July 5, 2005
A Picture Ahead of its Time
Consider a piece of software that allows you to fix, manage, and store your photos. Better yet – you can assign “tags” to each of your pictures with as many keywords that you want, which allows you to find, sort, and retrieve your photos quickly and easily. And you can even share your tagged images with all of your friends.
Now, name that software. Flickr, which launched in early 2004? No. What about CNET’s Shoebox, which just launched last Friday? No.
Try Adobe’s Photoshop Album 1.0, which was released in early 2003. Yes, Adobe’s low-end consumer product was ahead of its time, quietly introducing photo tagging to the masses before it was hip among the digerati to do so. But now on its 2.0 release, Photoshop Album has been outpaced by desktop software offerings like Google’s Picasa and all of the next-generation internet services like Flickr. But, as I’ve written previously, the company is “is used to producing shrink-wrapped software, not online services.” So with a divide in the internal culture between the “internet folks” and the “product people,” the company has been slow to introduce a service that integrates both an online component with a desktop app.
But don’t expect Adobe to stand by idle forever. This company shouldn’t let opportunity slide by in any digital imaging space, especially when it appears that there is so much opportunity here. With a relatively rich currency for additional acquisitions Adobe could go out shopping in the next year or two to put them back in the forefront of consumer photo software and services. So besides for other obvious “internet company” acquirers, photo-sharing startups should continue to innovate and make themselves look pretty for Adobe as well.
(Disclosure: Although I’ve worked for Adobe in the past, my opinions expressed above are merely that – opinions. I have no knowledge of internal company efforts.)
UPDATE: In a comment, Sam Pullara points out that the tagging was available in iPhoto as far back as at least January 2002 (in function, but not name). Indeed, he notes that “Tagging isn't new. People actively using it in a collaborative fashion is fairly new.” I have two thoughts from this feedback. First, it would be interesting learn more about the history of “tagging” (Wikipedia doesn’t add much). Second, though Album wasn’t the first instance of photo tagging, I still maintain the three main points of my post: that Photoshop Album 1.0 was very forward thinking in this realm, that Adobe has fallen behind in the consumer photo sharing game, and that there is a high potential for acquisition in this space by the company. Thanks, Sam, for the input.
Posted by David Beisel at 11:44 AM | Permalink | Comments (1) | TrackBacks (0)July 1, 2005
Social Networks: The Network or the Service?
In the context of reviewing Yahoo’s MyWeb 2.0, John Battelle gripes,
“But, on the other hand, it's a pain in the ass to keep creating social networks, maintaining groups, tagging, sharing, etc. It's a habit I'm not sure the masses will ever get into, at least in a way that is driven by pure selflessness.”
I personally share his concerns. There is a lot of power in connecting and sharing information with others – it’s obviously a major theme driving innovation on the web now. However, the difficulty and frustration involved with the setup of these services is not insignificant, even for a fairly technology-savvy person like myself. How does the average non-techie person like my mother approach these tasks? The answer is that she doesn’t.
Currently, the companies in the social networking space or that contain a group/social aspect tightly hold onto their connection information. And rightfully so – the network effect is indeed a powerful one that comprises much of the value and competitive advantage of these companies. But as the number of social networks and connection-services grows, the likelihood of achieving the necessary critical mass for each one diminishes. With how many services is the average consumer going to invite and tell his/her friends to join or connect?
What we could turn that situation on its head? What if you could harness the power of the service as more valuable than the network itself? In a previous post, I argued that “in addition to possessing a reason d’etre, successful social networking companies will more closely integrate the revenue model into the functionality of the service.” I see the service itself as true gem, not the information about connections that support that service.
After all, isn’t your connections information going to become a commodity? In the future, shouldn’t all online services know who I know and how I relate to them? Perhaps a solution to this problem is to have an open system in which information about whom you know and the meta-data about those connections stored in an open fashion? In this scenario, services wouldn’t have to rely gaining critical mass to express value; instead, they would be able to tap into the already wealth of information about a person. I do realize that this would take enormous collective action, but perhaps there is a way to approach it incrementally. (I’ll have to think about this idea more).
In the end, I believe that the real value is in the social services (from recommending music to finding a job to sharing photos) overshadows the network on which they rest. With a little effort anyone can obtain my social connections data – the key is to know what to do with it. Could we intelligently figure out how to solve this problem that Battelle complains about above?