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February 23, 2007
Pop Goes the IPO?
Michael Copeland’s latest Business2.0 article predicts a "tidal shift" towards the emergence of tech IPOs in the next couple months. While his language is perhaps excessively strong, I think that his sentiments will likely prove to be correct. There are a number of real growth technology-based businesses which weathered the storm earlier this decade that have emerged commanding both healthy top lines and bottom ones. And some of these even have “.com” in their names. It’s inevitable that the climate will change towards realizing the merit these businesses posses for going public is real.
It’s been interesting to hear similar thoughts in private conversations as the inklings have been written in the press, but it seems as though many are treating this story of impending IPOs like a jack in the box – winding and winding, waiting and waiting for the fun to emerge at one instant. I suspect the acceptance of offerings by public investors will increase steadily and markedly in the next year or so, but those waiting for an overwhelming stampede will be disappointed.
Social Media Monetization via Acquisition at FIM
Om Malik wonders "why did Fox buy Strategic Data" saying that "It is becoming obvious 2007 is the 'show me the money' year for MySpace and other FIM acquisitions." At face value, this deal is a notable move of taking important vendor technology in house that will help bolster the revenue base of the property within a larger corporate entity. However, I see this as a larger step for the industry as a whole piecing together what will eventually be a myriad of ways that social software will be significantly monetized.
While the executive quotes talk about the replacement of existing ad network vendors towards in house technology, it is really an acknowledgement that innovation in driving real revenue must (at least partially) come from outside the company. And while the largest social networks like MySpace are indeed media properties (and therefore ad supported), I think that it’s likely we’ll see other valid revenue models emerge as well, whether it’s transactional based, facilitating commerce, etc.
Even in the past couple weeks, we at Masthead have seen a couple interesting startups taking a unique approach to monetizing this type of traffic going beyond ad supported. I believe the key for these endeavors is to fit into an existing revenue model applied elsewhere, be applicable across many niche demographics, and of course scale. We’re still seeing vertical social networks pitched to us without little plans for revenue generation, which is more than a little troubling in my opinion.
Posted by at 12:14 PM | Permalink | Comments (3) | TrackBacks (0)February 16, 2007
The Real Reason I Love My BlackBerry
Yesterday I came across yet another (read: tired subject matter) article about the perils of living in an "always on" culture with the advent of portable devices like BlackBerrys and Treos. While I fall into the camp of viewing the carrying of a device with me "liberating" as opposed to draining, my reasoning goes beyond purely staying connected via e-mail anywhere I am (which is obviously a huge benefit). With my 8700 series, the mobile browser functionality actually works rather well. And with that, I have my my.yahoo page as the default home page. Even more than with a PC browser start page, I find the having mobile start page is extremely helpful – with feeds from all of my favorite news sources and blogs, to weather, to links to other relevant content I want on the go.
This perspective seems to resonate with a number of the comments around mobile search coming out of this week’s 3GSM conference according to this MocoNews post. Daniel Appelquist, Vodafone’s senior technology strategist, said "It’s about getting to content in zero clicks …and about having the information you want when you pull the phone out of your pocket." And that’s exactly how I view the content I get when I use my BlackBerry in this way. (Whether an operator like Vodaphone will in the future play a/the central role in delivering that type of information is an entirely different issue.) Jim Holden, Google’s director of global wireless strategic partnerships, "pointed out that search isn’t just about accessing the mobile Internet. It’s also about creating an environment on the phone where users can make use of the information and content they find." In other words, there is a distinct difference between the "how you find information" and "what information you find" on mobile devices vs. on the PC. And obviously the industry has a long way to go to discover the right model here, especially for mass consumer devices. In the meantime, for me though, the new slim BlackBerry 8800 is making my 8700 look obsolete.
Asking About the Founding Story
A year ago I posted about when I meet with entrepreneurs for the first time that I like to ask about the founding story, the plot of how the idea for the company was generated and how the principals in it came together. These intangible details of a founding story accurately portray a startup as a unique coalescence of real people, not just a valuable aggregation of human and technological capital.
I wanted to add that I believe that learning the founding story also helps us as VCs evaluate and better understand entrepreneurial teams in situations where we haven’t had prior experience working together. It faciliates VCs learning more about the company along many dimensions, as it sheds light on subtle cues about a team’s core and the values. And it provides perspective around the original thesis upon which the company was established. In understanding a startup’s narrative, we can better ascertain where blind spots could be in the team’s perspective. If there have been bumps along the way, what has the company held onto and what has evolved? How open are people to change and feedback from the original idea, while staying true to the essence of the fundamental thesis? (If the company is too new to have faced major obstacles, that fact exposes a lot as well.) In other words, learning the founding story is an attempt to proxy having had directly watched a startup grow over time. With a greater perspective of a company’s heritage, the more informed an investment decision VCs can make.
February 8, 2007
Social Media Monetization
Last Saturday I had the privilege of participating on a panel at the Harvard Business School Venture Capital and Private Equity Conference entitled "What’s Next: What will be the next hot sectors for venture investment?" All of the panelists were asked to bring a slide highlighting a "hot" VC investment sector for the upcoming year. I chose to talk about the broad theme of "social media monetization" as an upcoming trend in the coming twelve months.
With the rise of social media – now accounting for over 5% of internet visits and growing – we’ve seen investors continue to pour money into new spins on social networks. Vertical social networks and uniquely branded social sites have sprung up from both startups and from established media companies. The primary goal of these to date been about acquiring audience, and leveraging the network effects which result from an increasingly growing user base. But I think we’ll see a shift of attention in the coming months (which has already begun) towards startups focused on and about generated revenue out of these media assets. While many of the strongest players have been paying attention to it for well over a year, I suspect that many of the second and third tier social media sites haven’t been focused on monetization to date. But with the increasing impatience around delivering tangible results, a refreshing turn towards building media businesses not just media properties will follow. And with this move, there are opportunities for companies to facilitate in that monetization process for those sites which will look for partners to help them on their own.
In my quick talk, I identified four categories of social media monetization:
• Behavioral-based advertising networks – matching targeted ads to people based on who they are rather than page context. An advertisement is effective if it is relevant to a specific person, regardless if that ad isn’t matched to the current page (which is difficult to discern contextually in many social sites given the nature of the content).
• Syndication advertising widgets – facilitating the tools to spread marketing messages in a distributed web. The current use-cases of branded badges, contests, and music video promotion are just the beginning of widget advertising.
• Social shopping/commerce – providing consumers with rich social context and relevancy to the purchases which they are making with inherently monetizeable content.
• Integrated mobile platforms – incorporating medium with embedded billing mechanism. While consumers are reluctant and to pay for services on the web, they’ve repeatedly shown a willingness to pay for content on their mobile (ringtones, premium SMS, etc.). There is further opportunity to marry these two worlds working towards the goal of monetizing the tremendous traffic online.
While I had been spending a lot of time in (and blogged about) each of these individual areas in the past year and continue to do so (in fact, note that Masthead Venture Partners is an investor in Tacoda, an online behavioral advertising network; ExpoTV, a social commerce service; and Intercasting, a mobile social networking platform), it wasn’t until going through the exercise thinking about articulating a broad trend did I come to the insight that all of these groupings fell under the same broad theme. And it leads me to ask to myself… what other categories of social media monetization are or will emerge?
February 2, 2007
Super Media XLI
Because my Pittsburgh Steelers’ mediocre season didn’t propel them into this year’s Super Bowl, this weekend I will be paying more attention to the media experience as a whole rather than the game itself. The premier media event of the year, the Superbowl has come to both signify and magnify the larger trends in the digitalization of media content. It not only represents what’s becoming the new best practice in tactics for advertisers (e.g. using social video sharing sites to pre-release some material to create blogosphere buzz, like Budweiser’s sneakpeak this week on Youtube). It also offers a venue for high-profile pioneering experimentation which push the boundaries of digital advertising (like unique mobile interaction with advertisements). Of course this makes sense, as Steven R. Schreibman puts it, "The Super Bowl is the only media property where the advertising is as big a story as the content of the show so you want to see how much you can leverage it."
But it’s funny to think back only to last year that it was real news that the Super Bowl ads would be available after the game on a multitude of platforms – mobile, VoD, online, etc. – after the game. And now a year later, that is to be expected. Of course I should be able to see them whenever and however I want! For all of the hype and overanalysis of this media spectacle, the event truly has come to lead the way in reflecting advertisers use of multiple digital mediums in what is becoming an increasingly post 30-second spot world.
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