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Mea Culpa May 1, 2008

Posted by Simeon Simeonov in Blogging, Brand Networks, BzzAgent, IDEO, KarmaLoop, TripAdvisor, buzz marketing, startups.
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I haven’t blogged in nearly two months. It’s bad form but I have been rather busy. I’m in the process of co-founding a company in San Fran which will help bloggers write more and better posts. Which makes me blogging less ironic.

I’m at the Nantucket Conference on the eponymous island. The weather is great and the event kicked off with a couple of interesting talks. IDEO talked about their design process and how it might be adapted to startups. Then there was a good panel on buzz marketing with BzzAgent, Brand Networks, TripAdvisor and KarmaLoop.

Setting The Record Straight About Metcalfe’s Law March 2, 2008

Posted by Simeon Simeonov in Blogging.
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One can have a lot of fun these days poking around Wikipedia, discovering various types of inaccuracies and, perhaps, fixing them. But how should one treat a case where Wikipedia accurately reports on an otherwise inaccurate statement?

This thought comes to mind following an exchange I had over the past few days with Jimmy Guterman, editor of Release 2.0. In the latest issue Jimmy correctly quoted the common statement of Metcalfe’s Law, which, according to Wikipedia amongst others, states that “the value of a network is proportional to the square of the number of users.” It turns out that’s not what Bob Metcalfe, inventor of Ethernet, founder of 3Com and my partner at Polaris Venture Partners, claimed. I pinged Jimmy about this and he was kind to blog about it and spread the word. I explain what I learned from Bob about Metcalfe’s Law here (a post which was triggered by an IEEE Spectrum article that Metcalfe’s Law was wrong). About the same time, Bob also did a guest post on my partner Mike’s blog.

Should the Wikipedia article be changed? Should the original image from Bob be included in the article?

Original Metcalfe's Law formulationOriginal Metcalfe's Law formulation

Do VCs Get Nanotech? July 11, 2007

Posted by Simeon Simeonov in Blogging, Bubble 2.0, Nanotech, VC, Venture Capital, startups.
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Startup media site Xconomy (led by my friend Bob Buderi) has an interesting post based on an interview with nanotech pioneer Tim Swager from MIT. Tim’s observations are that, initially, VCs invested in a nano bubble without having a clue about what they were getting into which led to a backlash and now VCs are shying away from potentially very interesting nanotech platform companies.

The frustration I have with the VC community is that new materials can find many applications and are really a platform technology. There are many ways to get inventions to market. Biotech has bigger potential payoffs but often—not always—has much more narrow focus.

Tim’s observations are, in general, correct but I don’t fully agree with some of the conclusions he draws from them.

There was a nano mini-bubble. Some VCs invested in great platform companies backed by world-class scientists and great IP (for example, Polaris did Nanosys). Other VCs invested in “momentum” deals, hoping to get quick liquidity. Nothing new under the sun.

The nano bubble made it easier to fund platform companies because the cost of capital was lower. After exits didn’t pan out, VCs became more conservative. Cost of capital went up which makes it more difficult to fund platform companies, which often take a lot more money to mature. The “many ways to get inventions to market” are a both blessing and a curse. There is opportunity in the larger addressable market. There is also a ton of execution risk in targeting many markets at the same time and timing risk in going after them sequentially.

I particularly disagree with the comments regarding biotech. I know very little about biotech but Polaris Venture Partners is full of biotech experts and we frequently reflect on the similarities and differences between tech & life-sciences investing. I did a post on this a while back after a great conversation with Polaris venture partner Alan Crane. One of our observations was that, if a company’s offerings “work”, it is often much easier to go to market in the LS space due to the size and stability of LS markets.

The target markets for LS companies, generally speaking, are the flora and fauna. They change very slowly. If you are developing a cure for cancer you can be confident that if you succeed in creating one, there will be a big market, even many years into the future, even if one of your competitors has beaten you to market by some years. In the high-tech world, markets are rarely stable over time. By the time you are ready to deliver your solution, it could be obsolete. Some examples: great client-server products that were made irrelevant by the Web, supercomputers whose target markets were overtaken by Linux clusters, etc.

Materials-related markets may be less fickle than IT markets but, at least for a number of the nano platform companies I’ve seen, the target markets have tended to be (a) more in number, (b) quite diverse in terms of domains and (c) smaller individually than the biotech markets. This makes go-to-market focus difficult. It also makes building an executive team with the right go-to-market skills difficult.

In other words, the problem with nano platform companies right now is two fold:

  • Cost of capital is somewhat higher
  • The platform enables too many “applications”, none of which is a “killer app”

Does this mean that nanotech inventors with big platform ideas should think smaller? Absolutely not. It does, however, mean that they need to think about the business and go-to-market models (and hence the funding requirements) of their companies much sooner. This often means getting business-focused talent involved earlier in the process.

Social Computing Magazine May 13, 2007

Posted by Simeon Simeonov in Blogging, Digital Media, New Blogs, Social computing, Web 2.0.
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After many years with SYS-CON, my friend Jeremy Geelan has struck it on his own with Social Computing Magazine. Worth keeping an eye on it as Jeremy has a number of sharp people (and me) on the editorial board. Computing has been social all along but it has taken Web 2.0 to bring this front and center in our collective consciousness.

Widgets, Widgets, Everywhere March 14, 2007

Posted by Simeon Simeonov in Blogging, Bubble 2.0, Digital Media, Long Tail, Mobile, MySpace, Social computing, The Long Tail, Web 2.0, e-commerce, social networking, startups.
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Widgets are the new cool. Everyone agrees they are a big phenomenon that’s here to stay.

No, widgets are not new. They’ve been around for a very long time in multiple technology implementations. Some prior examples are in Brad Feld’s post. As for Web-based implementations, in 2001, I was on an OASIS technical committee for Web Service Interactive Applications (WSIA), which more or less was trying to build standard (unnecessarily complicated ones) about how widgets powered by Web services could interoperate on the browser page. That work eventually led to Web Services for Remote Portlets (WSRP). And what about Kevin Werbach’s 1999 Release 1.0 issue on syndication?

In their current form, widgets are the next step in the trend towards disaggregation of content at the production end and aggregation of content by the consumer. This is why they are here to stay. They will also go mobile, partly because the form factor is a fit for small screens. Most in the mobile space, from Nokia (Widsets) to Opera (Opera Widgets) are exploring the concept. There is even a W3C TR for Widgets 1.0. (I’m surprised they didn’t start with Widgets 2.0, just to stay on part with the rest of the 2.0 vintage nomenclature.) On top of this Vista, Mac OS, Google and Yahoo have their own version of widgets. Widgetbox’s directory has about 7,000 widgets. And, yes, there is volume. RockYou is pushing 100M/day.

So, in all of this, where is the money? David Cohen thinks there is money to the made. Brad Feld is skeptical. Jeremy Liew is pondering how RockYou will make money despite its volume. Fred Wilson relates widgets to feeds. Mypartner, Mike Hirshland, pushes the debate forward.

Let’s first consider some of the models for monetizing widgets:

  • Several widgets can be packaged with an ad unit next to them.
  • Widgets can embed advertising in their content.
  • They can show promotional campaigns, competitions or other pay-for-placement content.
  • Widgets can tie into affiliate networks, e.g., buy this product on Amazon.
  • They can collect valuable data, e.g., MyBlogLog.

To analyze how monetization might work we have to look at the content value chain. There are widget builders. There are the page owners (think bloggers and folks who own a profile on a soc networking site). There are the publishers (site owners). There may or may not be a widget distribution/syndication network in the middle.

Widgets are content and widgets builders can extract value based on whether that content is unique, valuable and relevant. Nothing new here but the form factor. Content owners can let widgets spread in order to drive traffic back to their sites or they can decide to monetize valuable content. What’s new with widgets is the need/opportunity to syndicate at the level of the Net as opposed to through a small set of pre-negotiated relationships. This poses some distribution and measurement challenges.

For site owners, widgets offer a way to create new inventory. They also offer some very interesting targeting opportunities. Widgets let you take several bites at the same page. Managing this and targeting for maximum impact are not trivial. Certainly, most site owners won’t let others make a ton of money off of their real-estate without wanting a cut.

For most page owners, widgets are bling. Direct monetization doesn’t make sense. The average casual blogger gets 150-250 hits/month. The average “pro” blogger gets 800-1000 hits/month. The average social network profile gets less than 100 hits/month. There is no meaningful eCPM that makes direct monetization relevant for the average page owner. That’s a BIG problem for monetizing widgets–how do you make the long tail of users put monetizable widgets on their pages? Some solutions are to (a) focus on content relevant for the page owner and (b) indirect monetization, e.g., lotteries, etc.

The opportunity for widget distribution/syndication/management platforms is to help address the abovementioned problems that arise when you try to match N widget builders with M site owners and their Q millions of users, namely:

  • Discovery of widgets (content) that is relevant for people with specific interests. This is not trivial as it involves not just search but also recommendation. How else can you help widget developers “move” new widgets onto pages? As the number of widgets on the Net grows, the value of these services will increase.
  • Easy distribution of the widgets, from putting them on pages to enabling actions (say, working around MySpace’s Flash linking restrictions) to making sure that content is served fast. As widgets become commonplace and some standards (formal or de facto) emerge, the value-add here will decrease.
  • Measurement, measurement, measurement. And analytics, which are not easy to do in a broad syndication environment. There is a lot of value in this for two reasons. First, from the standpoint of traffic rating agencies, widgets count as page views. That won’t last. Eventually, someone will realize that serving 4 square inches of content is not the same as serving 100 square inches. Second, widgets will penetrate real estate that’s not monetizable. For example, I don’t want to make money from my blog but I may put some widgets on it. From a behavioral targeting standpoint, widget distribution networks may get better data than even some of the very large ad networks.
  • Monetization enablement + audit. No rocket science here but someone needs to make money move through the content value chain.
  • Widget marketing services, from SEO to SEM to viral distribution enablement. A widget syndication network may have the best data to optimize these. Some type of fee or pay-for-placement structure has to be put in place amongst widget developers to address prioritization conflicts.

This is a classic aggregator/middleman play. The main reason why these types of businesses succeed is that there are economies of scale in aggregation. The two patterns of failure involve top line collapse due to big producers cutting direct distribution deals with publishers and margin collapse due to (a) the commoditization of the aggregator value or (b) the bargaining power of large producers and publishers. There are many examples of these aggregator plays succeeding (ad networks are a prime example) and many more examples of them failing.

Who knows how this will play out with widget management systems? Ideas/opinions welcome.

Second Life Numbers: Mystery Revealed January 8, 2007

Posted by Simeon Simeonov in Blogging, Digital Media, Social computing, Web 2.0, startups, virtual worlds.
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Some of you have probably followed the debate in the blogosphere about virtual community usage and growth. Very recently, Clay Shirky and David Kirkpatrick had a somewhat tense exchange over the credibility of some Second Life numbers. David talked to CEO Philip Rosedale and got some hard data. The numbers look good but I wonder what the month-to-month growth variability is.

1,525,670 unique people have logged into SL at least once. This is considering distinct email/payment info as distinct people, rather than IP addresses. [He is checking the unique IP address numbers but suspects they will be comparable.]…So in comparing that to the overall signup number, the difference is created by two sources: alt accounts (cases where one person has multiple accounts), and cases where the person signed up but has never logged in (possibly because of firewall or computer problems).

252,284 people have logged in more than 30 days after their account creation date.

…

While the percent of registrants still active after 30 days has, predictably, declined a lot since early 2004 when it exceeded 45%, it remains a substantial 15%. Of those 254,000 who registered in October, 39,575 still were active after 30 days. The absolute number of those still returning after 30 days grew 23% for October registrants over those who registered in September.

It is hard for me not to be impressed with any service whose active new users are growing 23% a month.

Source: The Browser: Truth and rumors from the tech world

Windows Live Writer Screencast October 1, 2006

Posted by Simeon Simeonov in Blogging, Microsoft, WordPress.
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Jon Udell interviews JJ Allaire and Jack Ozzie about Windows Live Writer. It’s all captured in a nice screencast. If you see it, you’ll know why I enjoy blogging with WLW. The beta update fixed most of the issues that I had mentioned to JJ. The coolest thing, however, are the details provided around the plug-in architecture. I’m sure we’ll see a lot of action on this front.

I wish WordPress integration was a little better. I guess that’s something Matt and JJ should talk about…

Windows Live Writer August 14, 2006

Posted by Simeon Simeonov in Blogging, Microsoft, Weblogs, Windows Live.
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After Onfolio was acquired by Microsoft, JJ Allaire (founder of Allaire) moved to Redmond and is now a GM on the Windows Live team working on all sorts of cool things, including Windows Live Writer.

Today our team is shipping the beta version of Windows Live Writer.

I’m using the beta and I find it to be a better way to write posts. My screen is 1920×1200. I’ve yet to find a Web-based editor that can make meaningful use of it. It’s not that I’m not trying, BTW.

Wishlist for the next version (too late to mod this one):

  • Edit old posts
  • Create new categories w/o leaving the product.
  • One-click style selection (I have custom CSS styles defined in WordPress) that I’d like to be able to use w/o going to HTML.
  • Onfolio integration. I’m not sure exactly what this means but as an Onfolio addict I know I want it.

Source: Flying Upside Down