betaworks, vc

Paul Graham:

The exciting thing about market economies is that stupidity equals opportunity. And so it is in this case. There is a huge, unexploited opportunity in startup investing. Y Combinator funds startups at the very beginning. VCs will fund them once they're already starting to succeed. But between the two there is a substantial gap.

John Borthwick, re betaworks:

Mid 2007 we flipped our approach — and went bottoms up. We stayed small, under the radar, focussed on our theme, seeking not to be distracted by opportunism. We started identifying standards and methodologies to scale our work and stopped trying to over think the design. By the fall of 2007 we had assembled our learning and formally started to build out the platform. Six months later we have four things that we have built and we have fourteen seed investments. . . .

Someone said to me last week that we are a reverse incubator. Incubators share the peripheral services things that I believe entrepreneurs can and should get from the market (legal, hr, accounting, office space) — betaworks is designed to share core capabilities - software / IP, knowledge, data, standards, analytics, leadership, tools etc… Someone a year ago called it a funcubator — maybe outcubator? — a little less George Clintoneque.

Scott Rafer:

VCs are money managers rather that bold desperados? must be a very slow news day.

Someecards.com

Why did betaworks get involved with someecards? See below - Brook Lundy, co-founder.

Killer Apps

My list of most important apps/products of the last 30 years:

*Remote control
*MTV circa 1980-84
*Curb-side check in
*Caller ID
*Email
*Instant messaging
*iPod 80 gig
*EZPass
*EpiPen
*Metrocards on NYC subways
*Suzuki method of teaching guitar
*Senduit/Rapidshare/yousendit/megaupload etc etc

Y Combinator Demo Day

Y Combinator's investor demo day was last week, out in Mountain View, showcasing the latest batch of companies that Paul & Co. have funded and worked with . Kind of blew my mind. Not because I saw 19 very interesting and innovative ideas (yes, every single one of them), not because they will all be huge businesses some day (they won't, that's not the point), and not because I came away from there wanting to invest and get involved with a few - or more - of these (I did).

Blew my mind because 19 presentations, with two breaks, were made and the program ended, to the minute, at the time listed on the agenda. 3:57 pm, precisely. When does that happen? It stayed exactly on schedule.

Moreover, when do you see presentations from 19 technology companies in one afternoon, and then not want it to end?

Thanks Paul, Jessica, all.

Email, Microsoft, Yahoo

There is one way that a Microsoft - Yahoo merger makes very important sense, and that area has as its base email. Yahoo mail, according to Wikipedia, has 260 million users. Microsoft Hotmail looks to have 280 million users.

Putting aside all the chatter about search, display ads and content (total distraction that falls right into Google's hands), these are hugely important assets.

Email is a base level consumer activity, and more importantly can be a jumping off point for related personal utility and organizational applications.

I'm thinking Microsoft and Yahoo should be totally focused on utilizing this combined base as a web based email start page -- 500mm plus users -- then layer on great end user applications. Add in delicious for web links (e.g., email links right from delicious). Integrate Flickr for photos (e.g., download .jpg attachments right into Flickr). Build in a publishing service, acquire Six Apart or Wordpress or even better Tumblr! And integrate them all in a way that make sense from the perspective of consumer web-based utilities and publishing, ensuring that the design enhances the functionality and keeping things simple. Then add document storage and sharing, and online word processing and spreadsheet apps. The list over time can grow, lots of fun whiteboarding this out can be done here. Numerous ways to monetize also.

What you just might end up with is a great personal self publishing platform, all tied together. Something unique, that no one else has. You don't necessarily need to be the best at what you do, but you do need to be the only one who does what you do.

MySpace scaling revenues

MySpace is a service that has tremendous benefit and utility to its users, and in terms of an efficient, scalable business, is wildly underrated in the tech industry. Facebook et al seem to get more attention and have more sex appeal, which I think works to MySpace's advantage.

Plus the most interesting ad tech news of the year was what seemed like a little heralded acquisition from those folks. In creating an interesting business, with the potential for valuable advanced ad targeting, I watch what MySpace is doing. Particularly because Peter Kafka just wrote that:

Everyone knows that advertising on social networks and video sites is challenging, but the WSJ rehashes the story anyway (using three reporters!): CPMs remain low, most inventory goes unsold, marketers are connecting their brand with any anything-goes site, etc.

What the Journal doesn't play up, most likely because the news popped late Monday afternoon: News Corp.'s MySpace is finally making some headway selling ads. Its Fox Interactive Media unit, which is basically MySpace, generated $233 million in sales last quarter, up 86% y/y and up 24% from the previous quarter. Most encouraging is that Google's guaranteed search dollars made up just $62 million of that total, meaning that FIM's non-search dollars increased 43% y/y and 32% from last quarter.

Simplicity = utility

Marco built (well, released) something called Instapaper the other day which allows one to save web articles to read later.

Its goal is simple (save to read later), its functionality is simple (click the read later button/bookmarket) and its design is simple (only 61 words -- including credits - on the front page!). Nothing that couldn't be accomplished, I suppose, with delicious or a million other services. Yet I am now getting addicted to Instapaper, I think because design (front end or functionality-wise) really does matter in achieving a stated goal for web products.

Simplicity of design + simplicity of purpose = enormous utility and value to users.

Media Physics

Ian Rogers of Yahoo and elsewhere writes that that scale of the web creates media opportunity through the creation of:

" . . . a loosely-coupled value chain including users as value creators. The value chain is not owned by a single entity (LimeWire, Apple, or Universal). There are many participants in a healthy ecosystem. Furthermore, users are no longer just consumers, they’re active participants adding value and any successful solution will leverage this user-contributed value."

Totally right (and we're betting a whole investment thesis - so-called outside in services - against this proposition). Moreover, its why the music business in particular reminds me of the online ad business years ago. Value - and creativity - come from different places now -- from the outside of where they traditionally have in media. Makes for interesting opportunities and challenges (and investments and things being built).

Design

Seth Godin writes today about Charles and EJ's latest designs at I'm in like with you:

"Given the choice, that teenager you're trying to market to is ignoring you and she's on this site instead. Take it or leave it."

Design, functionality, sensibility, and new ways of creating engagement matter.

Smart venture investing quote

Jeff Nolan writes something very insightful about the potential changed nature of venture investing (which is near and dear to my betaworks heart):

"[I]n many ways I recoil at the notion that true invention and innovation matters less today, but it does appear to be the case. The fact remains that most acquisitions are in the $30-60 million range so if you want to generate a return across an entire portfolio of deals you simply have to adjust the economics of the deals and the process by which you engage them. Jeff Clavier is the epitome of this new model."

Facebook is My Space's Best Friend

In the context of design and aesthetics, Andrew Chen reminds me that:

• My Space is alot larger than Facebook in terms of users, pages per visitor, and ads per page viewed; and
  
• My Space has more visits, visitors, page views, and average stay than Facebook (as of September at least).

Of course, some measure of "buzz" suggests that many see Facebook, at least lately, as the more important or newsworthy (and oftentimes alot) player here:


When I looked at those stats and generated this chart, it occurred to me that all the buzz, or chatter, focused on Facebook has been the best thing to happen to MySpace in the past six months. The volume of the chatter, which has been remarkably high in the past few weeks in particular, has taken enormous attention off the market leader. Indeed, it has created the perception that the bigger site (from any number of metrics), now plays an underdog role. Moreover, I'd bet it has enabled them as a company to be focused on execution, and not fending off press and attention related to valuation, or beacon, or whether the CEO wears shoes.

In fact, in my mind, the most important social networking ad news of the year was the launch of the MySpace targeted ad platform. Much more important than apps or beacons.

In this case, maybe Goliath has in fact become David.

betaworks

Peter wrote about betaworks today.

Music is like the online ad business 10 years ago

I've written about my love affair with Amie St., so its obvious that I am intrigued by different ways to deliver audio content.

My friend David, who has been at the epicenter of the online ad business for the past 10 years, and I were talking last night while checking out Songkick.

We discussed how the changes undergoing the music business today are amazingly similar to the changes that occurred to the (online) ad business 7 or 8 years ago, to wit:

* it's moving from a seller-driven to a buyer-driven industry;

* it's moving from a volume model (CPM) to a transactional (CPC) one;

* we are witnessing the commoditization of the middle man;

* there is now a real lack of analytics, showing for example how to value different forms of consumption; and

* delivery is moving from a fixed/set flight to an always on (platform agnostic) structure for distribution.

If these are in fact the case (and I think they are), there could be real value to be had by looking at the successes of the ad model, and then porting them over.

The most interesting online ad news of the year

. . . could be the new My Space targeted ad platform reported on by CNET and Tech Crunch.

Looks like this is the fruit of the earlier Fox Interactive Media acquisition of Strategic Data Corp. earlier this year.

This has the potential to be much more interesting than the much heralded deals involving aQuantive, Doubleclick, Right Media, etc., because this could represent the most advanced instance of behavioral targeting into social media networks.

If this advancement allows real action-based (i.e., not just interest based) targeting (what Lotame and Andy Monfried call "verb targeting"), maybe real value can finally be brought to the consumer and advertiser. That's the potential, at least, and if it works I think represents the biggest breakthrough for online advertising since AdSense.

And while I had heard that there was still much too much manual categorization going on inside MySpace as part of this - if the end result is an easy, efficient product for advertisers, it will do well.

Fichey - better presentation layer?

Design and presentation matter.

Billy Chasen is a friend and a highly creative developer we've (betaworks) been working with the past few months. Billy's created a number of great apps, and perhaps I'm biased but I find myself using each of them heavily. One is downfly, another is fichey. I like them because they all seem to solve specific problems, at least ones that are particular to me.

I'm using fichey now on a daily basis. The problem Billy set out to solve is that the web is awash in wonderful, interesting, but unstructured content (data). As a result, applications and algorithms have been developed to structure this content, machine based, human based, or often combinations of the two.

These apps/algorithms do an amazing job of providing context and delivering the content. Digg, delicious, reddit -- perfect examples of high value content structuring applications. But while the content sorting has advanced, consuming the results is still stuck in the same old point - click - hit-browser-back button - repeat method of discovery. It's clunky and slow. It's boring.

There's something appealing about leafing through the pages of a magazine. It's casual, fast, fun and allows one to quickly scan a high volume of content to get to something that is even more relevant.

That's fichey, in a nutshell -- it's a presentation tool. A visually appealing, more efficient way to view (leaf through) large groups of content. It saves a user time -- you can page through a given days top Digg stories in seconds, stopping where you want, paging on as you please.

Brady Forrest at O'Reilly recently described a note he got that said "wouldn't it be cool to see Google search results displayed Cover Flow-style in the Safari web browser."

Fichey is a small step towards getting at this idea. It's early and Billy is already working on building more into it. But for now, at a minimum, it works.