This is in no shape, form or fashion a commentary on VC blogger Guy Kawasaki’s latest venture Truemors and Jason Calacanis’ latest venture Mahalo.com.
I’m simply using the launch thereof - and the PR goodwill - both founders have to make a couple points:
1. Even when you can get people’s attention, keeping the hits coming is hard.
Yes, Alexa sucks, but you get the image:
As you can see, both sites have managed to pique people’s attention, but when the dust settles, I’m not sure either site has had much staying power.
Kawasaki’s site got a lot of negative press, but any PR is good PR, and he somewhat seems to have come out and thrown in the towel with regards to building an actual business, and is now trying to pass it off as a case study: By the Numbers: How I built a Web 2.0, User-Generated Content, Citizen Journalism, Long-Tail, Social Media Site for $12,107.09.
Mahalo definitely will cost more than $12,107.09.
Calacanis - whose nemesis Nick Denton seems to suggest is remorseful to have sold Weblogs Inc. too soon - raised $16M on a valuation of $100M. Madness I tell ya, madness. Side note: Denton and Calacanis are one another’s most effective publicists.
But the point is: while he will get the digerati and technorati excited, like he did today, I’m not sure about the long term staying power of Mahalo because of the reasons I outlined before.
I’m giving this one some thought, but Mahalo will either be relevant to 4% of the searching community who are early adopters etc. or it will be the exact opposite: relevant to the 96% that are not the savviest Web surfers but who’s neat and tidy results - albeit quickly out of date and potentially scammy - are comfortable and unintimidating.
Time will tell.
2. Hype is a double-edged sword
Aren’t you better off ironing out your kinks and then coming out when everything is rock and rolling? I don’t know, my personal experience says hype is not all that effective cause the wrong people are checking out your dirty laundy. Alexa sucks, yes, but the Alexa ranking suggests a high ranking for Mahalo, but other equally dubious sources like Quantcast suggest 6,000 unique users.
Alexa and Quantcast are both dubious in their own ways, but you get the idea: to justify the $100M valuation, Mahalo will have to please more people than the cool kids in the hall.
Any thoughts?
Apparently, Allen Stern’s got a couple, he runs with this and adds Kevin Rose to the mix, read more here.
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WatchMojo NewsletterIn a video interview this morning, super angel investor Ron Conway boasted about his excitement for tools that can monetize web video.
Great. Problem is, we’ve got plenty. In other words, while everyone is talking about whether Conway is right or wrong about liquidity clauses for entrepreneurs in financing rounds, the core of his argument is worth looking at.
On May 25th 2007, Jeremy Liew penned a post on Newteevee talking about all of the players vying to monetize video content, he names a “few:”
Online video is hot and everyone is scrambling to figure out how to best monetize it. Google just launched their “adsense for video” product, Advertising.com has Instream, and there are a host of startups attacking the problem as well.
Hmm… in case you’re wondering, all of the underlines texts are examples of competitors:
- Brightcove | see my post about why Brightcove should keep it simple stupid here.
- Brightroll | see my interview with CEO Tod Saceroti here.
- Video Egg | see my interview with CEO Matt Sanchez here.
- Tremor Media
- Broadband Enterprises
- Yume
- Scanscout
- Google/YouTube
- AOL/Advertising.com/Instream
- VideoMovement
- etc.
And then, you have the video search players:
- Blinkx
- Pixsy
- Podzinger/Everyzing/todayournewnameis | see my interview with CEO Alex Laats here.
- Hmm… Google/YouTube?
Reading Paul LaMonica’s article today on “Search being the next big thing in online video” is just one example.
But wait, there’s the media companies:
- NBC’s NBBC | see my interview with here.
- NBC/News Corp.’s NewCo.
Video is the best thing since sliced bread, I know, that’s why we’re investing heavily to become a leader in video content, be it for web, wireless or out of home markets, but I think we’re already at an over-invested level in online video networks and monetization tools. Just so it’s clear: I do think that it’s highly possible that the Google of online video has yet to be founded, let alone funded, but the odds of that are hard given the plethora of players Liew lists.
You have to realize one thing: content can be monetized multiple times, I can syndicate my content and monetize elsewhere. I can publish it on WatchMojo.com and monetize the display/banner real estate, the pre/post roll real estate, the embedded bugs/buttons etc.
But, I will probably not use more than one, or two platforms or tools.
And, when you dig deeper, you see that online video, as is, is a much smaller market than search or display/banners. Video is maybe a $3B in 2010, paid search will be $12B by then, display/banners somewhere in between.
In other words, it’s good to be excited and bullish, trust me, we are too, but we need to exert some common sense and caution.
Last year when YouTube sold to Google I said that it would be a tough road ahead for video file sharing social networking sites, that proved to be somewhat true with Guba’s CEO leaving and Revver’s CEO being demoted to Chairman (yeah you read that right) and this, a few quarters after 2/3 of the founding management team got canned by the VCs when the CEO Starr was on vacation. Really would love to have those VCs on board.
You can place bets where you see fit, but something tells me a major shakeout in video ad networks is impending in 2008.
Disclaimer: WatchMojo.com produces video content and our sister company MetaMojo.com has a metavideo search engine.
Little company announcement: the latest addition to the WatchMojo.com video syndication network is Blinkx (we have another Blinkx-related announcement to make in the next month, regarding another unit of Mojo Supreme).
In the meantime, check out WatchMojo.com on Blinkx.
Blinkx is the latest video network to join our roster of partners in the Web, Wireless and Out-of-home Digital markets that carries WatchMojo.com’s programming of informative and entertaining video programming.
Just like week they signed a deal with Ask.com so WatchMojo.com’s reach continues to soar precipitously.
We have 4,000+ clips and right now, there’s only 200 clips on Blinkx…
Do the math, use your imagination: expect everything - and I mean everything - to grow exponentially over the next weeks, months, years.
Related:
- YouTube and WatchMojo.com Make it Official
- Joost what does WatchMojo.com Have in Common with Viacom, CNN, Turner, Sony, CBS, Warner Music Group and the NHL?
Last week I got an email from Donna Bogatin announcing that: “After 1500 posts under the Digital Markets @ ZDNet Banner I have taken the independent blogger plunge.” That’s right, she would be leaving her stable post at ZDNet to go independent at Insider Chatter.
Great, I thought… then I wondered: “hmm, haven’t we seen this before?”
George Shaheen 2.0?
During the first wave of the boom, we saw many folks give up the stability of cushy jobs and established companies to chase their digital dreams. It could be argued that the poster child for that phenomenon was George Shaheen. Shaheen, of course, quit his plush, $4M/year job as CEO of Accenture Consulting for the top job at Webvan. That was a disaster, he quit shortly thereafter.
At the micro level: of course, a lot of that outcome had to do with the fundamental flaw in some of the dot com business plans. Webvan, like Pets.com, had an underlying problem in its business model. I want to touch mellons, before I buy them. Others want to squeeze cucumbers, the point is: we might order Russian brides via the Web, but mellons and cucumbers, those we won’t order online.
At the macro level, the Web has indeed changed: broadband usage is at 53%; marketers are spending 5.9% of their budgets online, yet people spend 25% of their time online… there’s a lot more substance today than there ever was last time around.
It’s Different This Time, I Swear
Last night, the site Rafat Ali started, Paid Content turned five years old. It’s important, not because we like anniversaries, but because that means Ali started a site devoted to digital media in 2002.
2002? March 2000 marked Nasdaq’s peak. 2001 was horrible and not everyone really knew how bad it was. 2002 was arguably worst. 2003 was the beginning of the comeback, but for Ali to start his site in 2002 meant one of two things: a) it was really impossible to land a job reporting on the casualties in the space and b) he understood that over time, things would get better.
Between 2002 and 2007, Ali launched more sites under the Content Next Media banner and even raised VC financing from none other than Alan Patricof. He even assembled a board. Read our latest on “Does the Addition of Larry Kramer Mean that CBS Will Buy Paid Content?” here.
Either it was the return of the good times or we were in another crazy mode: why would a VC fund a bunch of content websites on the business of media? Well, Ali’s properties had become the most influential of the lot, leading others to take the plunge.
Enter Om Malik
Om Malik comes to mind: he gave up a nice, stable job at Business 2.0 to launch GigaOm, which today boasts a handful of sites covering everything from digital media, to broadband and wireless.
Somewhere in that landscape sits Michael Arrington, whose Tech Crunch empire rose with the rise of Web 2.0 fascination and to some extent remains vulnerable to its crash, or hype. Rumor has it that Arrington raised financing too, from Bessemer’s David Cowan and First Round Capital’s Josh Kopelman.
Clearly, Ali, Malik and Arrington are onto something, but with the VC money comes expectations, and I’m personally not sure all three storylines will end well. Well, it will end well for the VCs, but not for the entrepreneurs.
Ali, Malik and Arrington were incidentally profiled in a recent Business Week article on the new guard of trade publishing. Incidentally, all launched networks.
Are they blogs? blogzines? ezines? Who knows. Who cares.
As the web continues to morph into whatever it’s become, it’s clear that many are going for a “Context is King” theme, a motif we’ve covered quite a bit (also the title of my 4th book, what’s my 3rd book, a little ditty called “Rupert and Me”, maybe).
The point is, all three followed the rule of diversification and have numerous websites underneath their portfolios.
Partially the reason for that is that blogging ain’t easy. And it ain’t pretty. It’s also becoming very cluttered and noisy.
Two Comparables?
Of course, Weblogs Inc. proved that the blog network model can work, having sold out for $25M to Time Warner’s AOL, and Nick Denton’s Gawker Media is probably worth a decent sum by having held out (multiples today are much better than they were in 2005, when Weblogs sold, after all).
Incidentally, Denton just lured Business 2.0’s Owen Thomas to Valleywag, so he could go back to being full-time CEO of Gawker, which naturally made the Gawker faithful cheerful.
Let’s Get into the Act
With this I guess it’s not surprising to see so many writers and business professionals get into the act.
When I found myself as the odd man out of a men’s online publisher and sought to start a new company, having a number of blogs that fit with the greater corporate product assortment made sense, so I launched BloggerMojo.com within Mojo Supreme to reinforce the “context is king” mantra, but having one blog is not an obvious option, yet having a blog network is a daunting task.
Dawn of a New Era?
The point is: if online publishing first leveled the playing field between magazines and online ezines, blogging software has nuked all barriers of entry and blurred the lines by cutting all the way down to the bone. It’s almost as if everyone has to blog, even heroes from yesteryear.
When I saw Henry Blodget get into the act, I was happy. Blodget was one of the most noteworthy stock analysts - for better or worse - and seeing him open up on Internet Outsider was nice.
Last week I saw another legend step into the ring: Marc Andreessen, who needs no introduction as the man who basically have us the World Wide Web’s first successful browser, Mosaic/Netscape Navigator. Here’s his blog.
Andreessen’s entry is noteworthy because it shows that if someone has the cachet and brand name, they can become successful as bloggers quickly.
A few days into blogging, Marc made a post called “Blogging by the Numbers,” in it he mentioned that after 4.5 days of posts, he’d made 7 posts which had garnered 48,562 pageviews and more importantly, that implied he had consumed 21 Corona’s. But more importantly, a lot of people around the Web would link to him and essentially create an audience for him. Of course, there’s not too many Marc Andreessen’s out there, and all of the audience-building is deserved… but it does raise a key nuance:
If like Bogatin you want to leave an established soapbox for a new one, you better have a plan in mind, because writing for an established brand like ZDNet gives you instant credibility. When I launched this blog, I wrote what I write now then, but it took me months to get any kind of traction. It’s a constant challenge to come up with bigger, better and bolder posts without losing your credibility by going too far. My “tipping point” came when Fred Wilson linked up my post on YouTube’s potential profitability and revenue making potential.”
To me, it was odd: I had written many such analytical posts, but it took that link from an established blogger and respected businessperson to get others to link up to my blog. Mainly, it opened my eyes to “my voice”and angle. We’ve always been “At the intersection of Wall Street, Madison Avenue and Silicon Valley,” but that validation drove it home and made me realize that I had to pursue deeper down that terrain.
Why is this relevant, because Wilson has really been showcasing Andreessen since he launched his blog (which is great because that’s how I found out that Marc was blogging, and his addition to the blogosphere is a very nice addition to an otherwise stale and repetitive landscape). Today Fred summarized the blogger dilemma well:
Be careful Marc, you are setting a very high bar which is going to be really hard to maintain.
But I hope you can keep it up because you are giving yourself, your thoughts, and your ideas to the web at large and I am loving every minute of it.
So upon all of this, I had to ask Donna some questions.
1) What made you leave ZDNET?Donna Bogatin: “Practice what you preach,” as I often suggest to “do no evil Google.” Among the many things I have “preached” at my Digital Markets Blog over the past year is the need for the Web world to operate more independently. For example, Ask.com ought to be more independent from Google AdWords sales and the blogosphere ought to be more independent from Google AdSense.
From a personal perspective, it is time for me to blog independently. I launched InsiderChatter.com as my new blogging home.
2) Honestly, what % of people said “go for it? and “don’t give up the stability?
Donna Bogatin: I have a 1500 “real deal” stories track record under the ZDNet banner.
When CNET VP of editorial, Dan Farber, congratulated me last month on my one year anniversary of blogging for ZDNet, he underscored that I have “covered the waterfront on emerging trends and the people at the heart of the business Internet” to conclude “the digital markets scenario she documents in her blog has played out.”
Going forward, I can best capitalize on the momentum I have developed by blogging for my own account.
The principle advantages of blogging as a freelancer within a blog network are a) infrastructure and b) distribution. The turnkey appeal of a blogging network, however, is offset by many downsides, including:
a) Bloggers’ individual brands are overpowered by the network’s brand,
b) Bloggers have no say in the editorial direction of the network,
c) Bloggers have no quality control over other network content,
d) Bloggers relinquish control over their own blogging destinies,
e) Bloggers do not fully benefit from the network fruits of their labor…
3) What was ZDNet’s reaction?
Donna Bogatin: Dan Farber thanked me for the service I have provided CNET over the past 13 months and wished me the best in all my future endeavors.
4) Which blogs do you read?
Donna Bogatin: I read all the usual “A-list” suspects, to keep up on “the conversation.” What I find most intriguing, however, is to spend time browsing blog search engines. Every day, I come upon new “unsung” bloggers that provide direct from the field news and insights.
5) Are things that dire for newspapers or magazines (offline)?
Donna Bogatin: Yes, but not just offline, and not just because of Google News or Craigslist.
Craig Newmark speaks of the need for “the fourth estate” to speak truth to power, but editorial integrity is becoming an increasingly rare commodity, both in the old media world and in the new.
Whatever happened to “The Society of Professional Journalists’ Code of Ethics”? It is optional! From the The Wall Street Journal, to The New York Times, to The Washington and New York Posts, professional “journalists” continue to be “used” as public relations conduits by the companies and individuals they ought to be giving the “third degree” to.
What’s more, as journalism refugees seek safe harbor in blogging networks online, a “fair trade” quid pro quo notion of “reporting” risks corrupting the blogosphere as well.
6) Are there any blogs you’d give up to write independently for? If they made you an offer you could not resist…
Donna Bogatin: In announcing my new blog, Greg Sterling headlined: “Donna Bogatin Breaks Out.” As Greg surmised, I do indeed plan on cherishing my new found independence. Who could resist an irresistible offer, though!
7) What are the plans for your independent blog?
Donna Bogatin: I continue my tradition of writing passionately, and often, about what is at the heart of the business Internet. The only thing that has changed in my blogging is my blog URL.
We wish her well and I look forward to her sharing her experiences blogging independently over the next few weeks and months.
Historically open source software has been synonymous with non-commercial or non-profit.
While that’s always been an incorrect assertion, nowadays it is becoming blaringly clear that the open source movement will morph more and more into commercial and for profit enterprises.
Today OpenAds, an open source ad server I considered using but did not for a few reasons, announced that it raised $5M.
OpenAds - formerly known as PhpAdsNew - follows in the footsteps of Mozilla, BitTorrent, WordPress as Paid Content points out in terms of open source entities that have taken a commercial turn by raising money.
That’s right, they’ve gone corporate, not that there’s anything wrong with that. We use Wordpress on our blog network by the way.
OpenAds is already being used by 20,000 publishers across 140 countries in 20 languages and powers more publishers than all competing solutions combined. Of course, that’s because it’s free… it will continue to remain free despite the VC cash injection.
I was thinking of the rationale to plunk $5M in such a venture (there’s a lot of merit for it, just look at the demand for ad serving technology in 2007 with aQuantive, Doubleclick and 24/7 RealMedia) and then I came across Jeff Jarvis’ post on “The open ad marketplace,” with all due respect to Mr. Jarvis, as an ad sales guy myself, I think that the concept of a universal marketplace for ads is still a lot of theory and not practice and to some extent, Google is the closest thing to it and will fight tooth and nail to hold onto it. The argument could be made that some publishers will welcome an alternative to Google, but the real case will be made for publishers to retain the power and relationship with advertisers and not trade one necessarily evil with another. In other words, if OpenAds remained VC-free, then I could see it happening, slowly but surely; but with VCs in the landscape now, kiss that proposition goodbye.
In fact, OpenAds will lose a few accounts just as it’s likely to win a few accounts by raising VC money, but a few of the arguments and things Jarvis outlines are worth considering or at least thinking about in the back of your head, namely: “We need an open-source standard for measurement that tallies not just audience and views but other key values of citizens’ media.”
Investors include First Round Capital, Mangrove (backers of Skype, by the way) and O’Reilly AlphaTech Ventures. Read more on First Round’s rationale here.
Ron Conway is the Tiger Woods/Michael Jordan/Wayne Gretzky/Joe Montana of angel investing. Just to make it even more clear: Ron Conyway knows a lot more about entrepreneurs, startups etc. in his pinky than I do in my entire brain.
I’m not sure if he’s lumping the Founders’ Fund into the lower tier VCs, but today Conway comes out gunning…
And I’m not sure I fully agree with Mr. Conway when he says:
What’s happening is third-tier VCs are trying to get deals away from Sequoia and KP and offering entrepreneurs some cash as part of the deal. I firmly believe that all the cash going into a company belongs in the company. I don’t want entrepreneurs to be bought off. All the money raised belongs in the company, so the entrepreneur can hire more people and build the company faster, and test out their idea. The entrepreneur taking a million bucks out of the company that should have stayed in the company says the company doesn’t have as much a potential for success.
For the record I also think that cash should remain in the company, but I do think that in some cases it’s not unacceptable to do otherwise.
1. By the Time Outside Investors Come In, Risk Profile Has Reduced
When I launched WatchMojo.com, I spent 80% of my time on sales and business development, and 20% examining M&A opportunities and financing options. Things never went far, but generally speaking: ALL investors (be it VC or angels) loved my background and my “vision” for why we were building WatchMojo.com, the largest producer, publisher and syndicator of video content for wireless, web and out-of-home digital markets (let alone also develop search products, matching applications and other media properties) but ultimately said: “We don’t really invest in content, stay in touch, when you don’t need us, we’ll invest plenty-of-cash.”
Suffice to say I gave up on VCs and angel and just got the company to generate revenues and be self-sustaining because it was a waste of time.
So I spent 18 months and my own funds to get the company to where it is now. If tomorrow an investor comes and wants to invest, it is really a travesty for the founder to get some of his money back? Why should it all be “sweat equity”? That’s what so-called first-tier VCs tell easily-impressed entrepreneurs to get them to agree to nonsense clauses.
2. It Helps Investors Get a Bigger Chunk
Nowadays, everything we read seems to suggest that an entrepreneur can build a company sooner, faster and with less resources. Sure over time you need money - lots of it - to really build a multi-million dollar company, but if you play your cards right, then you can probably finance through sales.
But say a VC or angel comes along and wants to have 20, 25, 33, 35% but that implies that they plunk down way more money than you need.
Why keep it all in the bank? Why not give a slice (a slice Ron, a slice) to the entrepreneur, to pay off bills, buy his supporting wife a gift, etc.?
3. Misaligned Timeline
I also have news for VCs and angels. Companies - even startups, money losing or not - have timelines, histories, DNAs before outside investors walk into the door, an investor that comes in and introduces a lot of draconian clauses needs to take somewhat of a greater risk than most VC term sheets call for. One simple way to do that is for them to actually - yes, brace yourself - part with some dough.
4 - It Allows for Patience
Mr. Conway then blasts Zuckerberg because by virtue of having cashed in at financing rounds, he’s less inclined to sell for $1B. Well, Facebook notwithstanding (I thought everyone was giving props to Mark for passing up Viacom and Yahoo!’s offers these days?), isn’t it a good thing for entrepreneurs not to want to cash in early? If I could secure $X in a financing deal, would that not give me the appetite to hold out a bit longer, bust my ass a tad more, so that the company could sell for many times X and dare I say it, do an IPO one day?
Anyway, like I said, I’m no expert, but just because some things have been a certain way does not mean that they should remain.
If you disagree, that’s why we have comments.
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