Wednesday, November 20, 2013

'What is" vs the "what was" revolution

I've been involved with a few companies who are riding (or fell off the horse) in the relatively new Discovery space. Over the past 15 years consumers and businesses have derived great utility from search, a function which enables people to find information about what has happened or what was posted, frequently days, months or years previously. Businesses also received great rewards by advertising against the keywords used for these searches. More recently, and certainly the combination of mobile geolocation with sites such as Pinterest. WeHeartIt. Twitter  a firehose of data around what IS, vs what WAS is now available for Enterprises.

All this data, which I call the Social Highway, has many on and off ramps. The on ramps include countless blogs, data streams, photo streams, commerce streams, etc.; all delivered in real-time. Compiling the data is relatively easy, turning it into actionable information is much more difficult and is the secret sauce behind companies which built solutions optimized for real-time big data sets to measure and analyze:

  • Buying intention
  • Customer support
  • Brand health
  • Influencers (positive and negative)
  • Psychographics

While this information is powerful, the real impact will only be felt as Enterprises adjust their business processes to direct the information to the right people, put in place processes for institutional learning and retention, and do this in a cross-silo manner. Unlike today's Enterprise, where each department has its own information silos, supported by people and processes, the Social Highway's on and off ramps do not respect traditional turfs. Customers may simultaneously require support, sales and marketing assistance. Influencers (and their minions) can be instantly pinpointed for special treatment, akin the TSA fast-lanes and be couponed, receive priority support and surveyed, all in one interaction. And all these interactions are no longer asynchronous.

Enterprise structure will have to be more elastic. It's a revolution in the making.














Tuesday, October 22, 2013

Looking after business

Last week I had breakfast with 'smart' Larry. Over a bowl of oatmeal he opined that at the end of the day, the role of an investor is to create returns. He went on to note that entrepreneurs, VC's and entrepreneurs easily get confused when caught in turbulent times, or when money flows like a river. He highlited that it's the money, not necessarily company building that is key to investor survival (e.g. building companies, but not showing great realized returns will not get you to the Limited Partner fundraising finish line). As usual, Larry is right.

It's important for entrepreneurs and investors to recognize that it's the making money part of the business that is ultimately key to survival. Often this creates positive alignment between entrepreneurs as well as multiple classes of investors. However, sometimes (e.g. when a company is not doing well) it creates a zero sum situation. When this happens, as is more common than not, the rational expectation is that folk will look after their own interests. If someone acts irrationally, it's usually the entrepreneur, who bends over backwards to take care of employees and investors.

As Tessio said in the Godfather " it was only business"


Tuesday, October 1, 2013

Constrained, shared, and pirated media

One of the great things about the technology industry is that, when a technology paradigm shifts, hard and fast rules for success begats soft and slow companies which can't or won't adust to them. IBM, Yahoo and Microsoft are examples of survivors which are, did, or will reinvent themselves to deal with the PC, social, and mobile paradigms. One of the early rules of the social web was really a short hand equation:

For every person who posts;
Ten will comment
Eighty-nine will silently read

The explosion of Twitter,Vine, and Snapchat turned that equation on its head, and while doing so, created a massive wealth opportunity for a few entrepreneurs and their backers, opened up new categories for innovation, and took a great deal of 'friction' out of the user experience.

A few months ago I read a great post by Andrew Chen on constrained media. He argues that a class of applications which have intentional limits (140 characters, 6 seconds of video or 10 seconds per photo) blows apart the above rule of thumb. These constraints have the glorious attributes of simplifying product management to concentrate on an easy experience, creates its own context, and most importantly to me, makes casual posting acceptable. It's no problem if you don't have the skills to write the great American novel, 140 characters, replete with abbreviations is more than welcome! Tearing down the walls which hindered sharing, engagement and virality are good things.

One area that he did not mention, and it fits within his theme, is the concept of reblogging. Pioneered by Tumblr and fast followers Pinterest and WeHeartIt, these services greatly reduced the friction associated with repurposing (some may say 'borrowing') photos and other IP via one click snipping. It made it incredibly easy for people to express themselves and visually fashion their online identities. While doing so, it created legions of followers, shared media, and engagement.

A holy grail for wealth creation.

Tuesday, June 11, 2013

Apple thoughts

Yesterday, at its World Wide Developer Conference, Apple presented a series of product-line extensions ranging from an updated operating system, to a streaming music service, and a series of hardware tweaks. By the end of the day, the press was somewhat disappointed and  the stock market was mixed to down.

I think it's important to revisit the DNA of Apple's staggeringly great run over the past decade. In fact, you can point to a similarity over the Company's lifetime. Apple tends to invent, what in hindsight were obvious solutions, which are so self-evident in their presentation as to be accepted immediately by tens of millions of people. As the solutions tend to 'invent' markets, they begin with near 100% share, which the force of gravity and well capitalized competitors continually erode. PC's are in the single digits and the phones have about a 1/3 share. The tablet, being relatively newer, still has share over 60%, but it's declining too.  Revenues are going up, as the markets are growing, but share is declining.

The company is far better at inventing new markets than protecting their position in existing ones. It's not that they are disinterested in doing so, but unlike what Microsoft pulled off 20 years ago, the key candidates for customer 'lock-in' are applications which are now browser, rather than operating system based.  Presenting a family of solutions such as iOS, Airplay, iCloud, iTunes etc helps to influence people to stay in the family; it's necessary, but not sufficient for lock-in. This is good for consumers, and I believe good for Apple. They have to keep innovating to not only stay ahead, but to support a premium position.

Market defining opportunities do not present themselves every year, let alone the time it takes to properly engineer the right solution, at an acceptable price. As a consequence, the company will have up and down performance, and will continue to lose customers in some segments, while gaining share in others. That's just a fact, and again, it's better for them to accept this than to bring out products before their time. After all, it took three CEO's and five years to recover from the Newton debacle.

Friday, May 24, 2013

An original thinker...Scott Belsky

Behance is a community of creative folk founded by Scott Belsky. He recently sold the company to Adobe and now leads their community efforts. He is an original thinker whose passionate about his product and his constituency. Recently, I met with him, and saw his presentation at NJTech Meet-up. Fortunately, here's a version of it given at Internet Week in NY.

Here's some snippets to whet your appetite:
  • Meritocracy, innovation and access are not natural to the web
  • The problem is the web is verticalizing. This limits creativity and inspiration. Behance leveraged that 95% of creatives follow other fields and would appreciate broad exposure
  • Creative meritocracy is about credible mass vs critical mass. Not a crowd sourcing fan. Good to hear a dissenting voice
  • I try to hire great people and view my role as to be the wind at their backs







Thursday, May 23, 2013

Random Tumblr thoughts

The Tumblr user metrics were spectacular with:

  • 108mm blogs and 50+ billion posts
  • 76mm posts were created EVERY day
  • In April of 2013, just before the acquisition, the website had more than 13B page views. 


The company was launched in 2006, so the exit in 2013, fits the timeline seen between start-up and exit. Of course, great success, or quick failure accelerates the exit timeframes.

New York has now seen two great exits in the last 12 months, Buddy Media and now Tumblr, Once 'lucky' and twice a trend. Capital flows to where it's 'appreciated'; NY has now generated the type of spectacular returns that investors will accelerate their moves here.

Kudos to Union Square and Spark. They first invested in an untried CEO, in an under performing technology City, and in an arena "social", which was not yet taken seriously. Viva the product guys and the investors who had a great deal of patience. As Chris Douvous said, moves like this are either career threatening, or career making.

Marissa Mayer is changing the culture at Yahoo. In the past year, she has now made 10 acquisitions and is bringing back an entrepreneurial spark to the engineering and product teams for this once proud franchise.
Tumblr absolutely fits her first acquisition screen, she wants Yahoo to be a part of your everyday online routine. You may scratch your head on the price, but this transaction is dead on strategy.

Carol Bartz, was the right CEO for a time at Yahoo, as she cleaned up the run away anarchy, held people accountable, and had a no nonsense approach. Though she was unable to, or was not given the time to articulate and execute on a grow the company plan, she did set a foundation for Marissa Mayer to do her thing.

For the success of the transaction, it's dangerous for the buyer and seller to highlight that Tumblr will be autonomous. Sure they should be protected from all the people who want to 'help', but it is essential that a MERGED singular entity put their best foot forward. Tumblr, now as part of a public company is no longer a science project, there's an obligation to earn revenues and profits. This can best be achieved with some help from the other parts of the company which are collectively earning quarterly revenues in excess of $1B.










Monday, April 8, 2013

Patent litigation; Now the cost of doing business?

According to Forbes, patent trolls now account for the majoity of  patent lawsuits in the US. It's clearly been a growth industry as the percentage of troll induced suits grew from 45 to 62% in the last year; more than ten new troll suits evey day. Of great concern to me is that 55% of troll defendants earn less than $10mm in revenue (per Collen Chien, Santa Clara University Law School). My experience is that these firms already have enough roadblocks to success and IP suits, no matter how far fetched, have huge potential to disrupt progress, if not the sustainability of young companies. I am confident that, given the uncertainty of ligitation, and the huge exposure in real dollars, many a financing or potential exit needs to have these matters settled before a buyer proceeds with the transaction. Regardless of the settlement, the cost of litigation, in the many hundreds of thousands of dollars, plus the management distraction are huge issues for all of us.

Below is a chart (credit RPX) showing the marketshare growth of the trolls. This only happens when a business, no matter how nefarious is profitable. In fact, per the PWC report cited below, the annual median damage award was $5.3mm. It's significant that when these cases are heard by juries, the rewards to non-practicing entities tend to be many multiples of those awarded by judges. Therefore, there is a peverse incentive for NPE's to not settle, but to push an average of 2.5 years, for a jury trial. Based on performance, the odds are stacked against the defendants


*non- PAE are non practicing entities, usually corporate shells whose only assets are patents


The present administration is trying to help with the reintroduction of the SHIELD Act and hearings are being held by the House Judiciary committee on the topic. The key provision in the Act is for losers in these suits to bear the costs of both parties, akin to the British system of torts. I am not sure this is a good solution as it always favors the 'deep pockets', but something has to be done.

For more information, here's an excellent PWC report on the topic from 2012.

I applaud the efforts of one of our industry associations, the SIIA  (links to their relevant activities) to help. It would be great if they were joined by the NVCA and others too.