Thursday, March 25, 2010

Feeling social and wanting dollars

I participated in the Social Media and Monetization Roundtable put on by Plugged Inventures. Some of the participants (apologies for not having a complete list) included:
David Lifson, CEO Postling and ex-Amazon and Etsy
Eric Goldstein, CEO Amplify
Kate Gutman, VP Digital Revenue Riders Digest Interactive
Matthew Milner, VP Social Media Hearst Digital
Sarah Tevel, Associate Bessemer Ventures

As expected, the session was about the tie between creating an audience and the potential for creating near-term value (as opposed to equity value) from such aggregation. Here were some of the pithy statements which caught my attention:

"I think of sites, such as FourSquare, as small/medium business CRM"

"Social has escaped the marketing department and is now touching all parts of a corporation, ranging from ranging from development to sales through support"

"Flash commerce, through sites such as Groupon and Gilt will expand beyond fungible goods and into services and consumables"

"People who embrace social sites early tend to be 'me' focused and are deeply affected by psychic rewards. They provide the kindling that bring initial value to the later participants who seek instant gratification from the value of 'we'

In addition, emerging companies mentioned that brought nods of 'yea, cool' were:

Pushkart- Measuring social worth (and tying it to commerce)
Blippy- Uses credit card information to link folk to share and discuss things they are buying
Media 6 Degrees- Social targeted advertising
Groupable- Match sponsors with groups of people with common interests
Dotomi- Taking a personalized approach to display advertising; differentiate through remarketing

As a member of too many, or perhaps, not enough social networks, I am caught up in a cycle where my identity is fragmented amongst many domains.

Friday, March 19, 2010


Like many of you, I have been spending much time looking at various sites with a social aspect. I am struck by the 'tribe' like way words are embraced to solidify the identity of site members as part of the targeted demographic. It's akin to the way groups of off-line friends/family develop cue words that serve to bond them closer. Thinking about this, it's no wonder teens don't really like Twitter, to many of them the concept of 'Follow' is just so totally creepy.

It's really interesting looking at the words associated with many of these sites and the way they offer 'connecting' are really are not generic, but designed to capture and amplify the relationship amongst members:

Facebook Friends; become
LinkedIn Connections; many or which are
Twitter Followers; who are parents of
MissBimbo girls, and siblings of
ClubPenguin buddies

Thursday, March 18, 2010

Sticks and stones

Mom was right about many things, but she was wrong about this one. I have been an initial investor and board member of Payoneer for the past three years. The Company, under the leadership of its CEO, Yuval Tal has performed admirably through the start-up twists and turns, and now the exuberence of torrid growth .

The company started its life offering debit cards to teens. Yuval figured that commerce was going to explode for teens online and it would be a natural outgrowth of this trend for parents to move allowance dollars from cash to stored value cards. Thereby, enabling teens to shop online, with limited downside liability and no downside link to their parents credit (e.g. parent card numbers will not be floating around the net). When he launched the business, there were two metrics we kept a close eye on; fraudulent applications, and cost to convert leads to card holders. The initial thesis was the internet would bring incredible efficiencies to the market. Boy, were we wrong!

We bought some Google media and found fraudulent applications ran >60%, driving the cost of leads to a level that was not even in the ballpark of being economical. Fortunately, Yuval was able to find a market, that had a crying need for a stored value solution; affiliate payments. Today, Payoneer is a preferred way that hundreds of sites pay their affiliates. For example, iStockphoto, Elance and Odesk all use Payoneer as a way to transfer funds to their affiliates. His team has now expanded beyond affiliate payments to several wonderful verticals where the customer need is pronounced.

Recently, Payoneer has been in the news owing to a situation where they were, at most, tangentially involved. It's been yet another CEO trial by fire. For me, it again highlights why I invest behind people. They bring you to markets and there's no replacing the passion of a founder.

Monday, March 15, 2010

Gothamedia venture panel

Roused from a cold house, with no phone service, electricity or water, I spoke on a round table this AM with a few folk from the NY venture community. The session was hosted by Gene DeRose, serial entrepreneur, former CEO of Jupiter Media and now founder of HouseParty .

Panel was noteworthy by the number of areas of agreement. I don't think people were being polite, but with such industry turbulence, perhaps, we are now better listeners and open to considering different things. Here were some highlight quotes:

Howard Morgan, First Round-We have built our fund to optimize for the sub-$100mm liquidity events that have traditionally dominated the transactions in the technology space.

David Pakman, Venrock- Many entrepreneurs are building companies with wonderful potential, but that does not mean they will be good investment opportunities for institutional investors

Larry Lenihan, FirstMark Capital- We are not religious about technology, markets, or stage. We will invest where we think we can earn good returns

Danny Shultz, DFJ Gotham- Social media market feels like a winner take all area where Facebook has run the table

Friday, March 12, 2010

Moogis redux

The Allman Brothers Band are back in NY for their annual concert run; moved from the Beacon in deference to the circus- a sore point highlighted in the photo screen displayed behind the band- and playing in the magnificent United Place Theatre (former home of the Reverend Ike). It's also been a year since I've checked out Moogis, the live streaming/on demand repository of the ABB shows, created by drummer Butch Trucks. I thought this would be a wonderful time to see how the technology, experience, and pricing have changed in the last year.

* cameras have moved from 750i to hi-def 1080i
* per an interview, they said their streaming costs/mb are down by a staggering 75%
* my personal infrastructure's been upgraded with an addition of a LD-390 Blu-Ray with built-in Wifi. This is connected to my big screen and I use Tversity as the media server
* A yearly subscription is $150/year (till March 11th?)

Looking at the forums, it seems as if there are some member issues that need resolution.

Hoping there's some blue sky behind the clouds (if you watch, check out fiddling with the resolution on the lower right corner of the video. The degradation in viewing quality is staggering as you move from 360-1080i. I suspect the issues in the forum are not Moogis related, but due to 'cloud' if that makes subscribers, looking for great live streaming experience, feel any better).

Thursday, March 11, 2010

Smiles are viral

Umair Haque, the author of Black Swan, has written a wonderful piece where he looks at the issues around the initial release of GOOGLE Buzz and draws some conclusions.

Here's some snippets and comments:

1. Today's services (I think he means web) are built to 'fail fast and cheap'. In many ways today's web companies are as 'disposable' as razors; their applications can be built inexpensively, using freelance talent and rented infrastructure. If traffic comes, then the entrepreneurs have a company, if not, then...well, next.

2. The rise of social based applications, a new category, is leading to a resurgence of best of breed applications; not burdened by a melange of features that force design compromises that result in the type of mediocre products we see in so many desktop and server based applications. Mature computing environments inexorably lead down the integrated path (e.g. the desktop) where, best of breed companies, have been decimated by 'integrated' solutions. It will be interesting to watch the rapid evolution of Facebook as they seem to be on the vertical integration path. Google, which at one time, disparaged such integrated activities, has been singed with their 'falling off the wagon' Buzz integration with Gmail. Let's see how long it takes them to be again seduced by the 'leverage' temptress. Perhaps, having such a great depth of integration opportunities is what's hindered MSFT from being a great web company.

3. 'Thin value is not sustaining'- You get to this thought by clicking through to a previous post describing how phone operators make hundreds of millions of dollars by forcing 15 second greetings on mobile phones. It's a feature purely designed to make money while pissing off customers royally. Therefore, it's not sustainable and the profits become an equity destroying habit that creates an umbrella for disruptive competitors. 'Thick value' the type of utility or experience you can't get elsewhere that saves you time, money, or is just plain fun is the heart of just about any successful company. A couple, or a singular thing really matters to your site visitor (I really try to stay away from the drug induced term 'user'). Get it right by maximizing their utility. Smiles are incredibly viral

4. Be generous in your product design- Don't hesitate to give value to your visitors, even if that value is used beyond your site. Let them use their data or 'connections' elsewhere. Notable in practice today with the massive adoption of Facebook Connect.

5. Simplify- It wasn't so long ago that printing companies measured their revenue derived from computer software instruction manuals in the hundreds of millions of dollars. Now it's close to zero. Today, we have the '8 second rule'. If a site can't engage my daughter in 8 seconds, she's gone...

Wednesday, March 10, 2010


I've been working with a committed founding team, led by Scott Stone, towards building a site that enables teens, mostly girls, to have a wonderful on-line shopping experience. Scott's team believes that online shopping is mired at only 5% of total apparel sales, in large part because the experience is 'oh so 80's'. Grab a look at the shopping experience at Homedepot and compare it with Abercrombie. It's really a commerce, and not a shopping experience. We hope to change that. The Wall Street Journal had a brief write-up here.

As in most start-ups the highs have been euphoric, the lows depressing, and the frequency of each rapid. The company is not yet encumbered by customers or partners, so things are rosy and everyone has their heads down towards a late Spring launch.

Though it's a new Company, let me share some things that have happened that starkly contrasts with early stage investing/start-ups from a mere 3 years ago:

1. Architecture- At no time were proprietary tools/foundations considered. The architecture is LAMP flavored based, but with two key caveats:
* The database will be a NoSQL flavor. So many folk have highlighted the inefficiency of SGL based systems in webscale applications that we were persuaded to go to the edge on this one.
* When building consumer applications, LAMP is not enough. We spend many hours concentrating on the LAMPF component. Facebook Connect is just so incredibly important/scary that figuring out how to work with, tweak, and be in compliance took more time than determining the components to use.

2. Infrastructure- Everything, and anything you can't carry is outsourced. Applications are GOOG based, phone is Skype, servers are virtual, etc. Expenses are totally variable and service can webscale.

3. People- We have been fortunate to find incredibly talented, equity oriented, and passionate folk in NY. Meetup is the lubrication for physical social connections. We could spend our days and nights attending all the interesting sessions held each week here.

4. Professional help- Many quality lawyers have 'special' deals for start-ups, and paying for good help won't consume your budget (less than 3% of $ raised in a seed round).

5. Angels- Most that we spoke with prefer investing at the venture stage (post-revenue). A few, notably Jon Whelan, really dug into the product and offered great feedback that influenced our product design greatly.

6. VC's- We have not been looking for VC $, but for insight. We received good feedback and offers to help. Once we do our job and get the product launched, we'll see if the offers were sincere.

The team is now busy coding, cutting and adding features, and engaging with their audience. No one knows if 'lightning' will strike, but we are encouraged...and wondering....