High-Class Problems

Posted on December 7, 2006 by Simeon Simeonov

Courtesy of Mark Anderson comes a great quote from Adobe CEO Bruce Chizen:

“Oh, I love Google. Google is a big threat for Microsoft and distracts it from the rest of us. [Google] is simultaneously our heat shield and an important partner.” — quoted in the German financial weekly Euro am Sonntag.

Bruce is downplaying the fact that Adobe and MS are getting ready for a major battle first over file formats (PDF and Flash are just too big), then over the online designer community and the mobile presentation tier and, finally, over a generation of online applications.

The more successful a company becomes, the more people are gunning for its place. Richard Sarnoff, a leading Bertelsmann exec, commented along similar lines in a discussion this week that “all large companies experience margin pressure.” These are high-class problems to have. Unless your company becomes very successful, you’ll probably never experience them. If you do, it really helps to have some big, powerful friends with aligned interests.

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Social Commerce

Posted on December 2, 2006 by Simeon Simeonov

I finally did it. Earlier in the week I noticed that Wikipedia didn’t have a page for social commerce, so I tried to create one. 30+mins into it, IE 7.0.5730.11 crashed (too many tabs open) and I lost my work. No, I had not saved a draft. Yes, I should have used Firefox, as someone reminded me today. I switch between both browsers and had just happened to open IE then. Bad luck.

On the social networking panel at the MIT VC Conference today I talked a fair bit about social commerce and why I think it’s a trend worth watching. The concept resonated with panelists and the audience so I had no choice but to get back to Wikipedia and finish the job. Here is the social commerce page. Please, add more content/links.

Update: Well, despite the fact that to my knowledge at least 5-6 people contributed to the page and the content was starting to look pretty good, we weren’t able to defeat the Wikipedia bots–they auto-deleted the page, probably due to lack of references. Hard to have references to a new concept… It didn’t help that during that period I had to do a lot of travel and so had limited time to contribute. How about this–put some content in comments to this post and then I’ll try again early next year.

Social commerce is not new. Tupperware parties and other multi-level marketing schemes are all examples of social commerce but so are emerging models of selling & recommendation through social networks.

A couple of weeks ago I had lunch in NYC with an ex-IAC exec who knows more about online businesses and e-commerce than I can ever hope to learn. We were talking about areas that we find interesting and somehow social commerce came up. The discussion that followed was fast and enlightening. I guess we ended up agreeing on two things: (a) the concept of social commerce is sound and eventually, it will be a meaningful part of e-commerce and (b) many of the initial attempts at social commerce will be terrible failures.

Still, I believe in the ability of markets to evolve solutions to problems. From an investment standpoint, this means that I’m looking for highly iterative (hypothesize-test-adjust) capital-efficient businesses to try out specific social commerce ideas and platforms that can enable others to experiment. Both Allurent and 8th Ring have a role to play in the latter category.

I have written more on this in my E-Commerce 2.0 post/article as one of the three big trends to watch. (The other two are rich user experiences and disaggregation.)

Posted in Social Commerce, startups, Web 2.0 | Tagged , , , , , , , , | 8 Comments

Monetizing Social Networks

Posted on December 1, 2006 by Simeon Simeonov

The MIT VC Conference is tomorrow. I’m taking part in a panel on monetizing social networking businesses. It promises to be a very interesting discussion, judging by the emails that have been flying between the panelists and the caliber of people involved: from the requisite couple of VCs to CEOs dealing with these issues every day such as Josh Schanker from Sconex and Hans Gieskes from H3.

Another conference treat will be a lunch keynote by my partner Alan Spoon.

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Mobile Payments One Step Closer

Posted on November 23, 2006 by Simeon Simeonov

ZDNet reports on a collaboration that should bring mobile payments closer to reality. 

Sony and former Philips chip unit NXP Semiconductors have announced they will create a joint venture to create a secure chip that enables short-range wireless interaction between handhelds, PCs and other consumer electronic devices.

The problem with mobile payments has not been one of core technology. There have been a number of successful pilots in Asia and Europe. The article has some good links but you can also look at the Octopus card and the Oyster card. The core wireless and security technologies have been available for nearly a decade. The main issue has been compatibility (and the associated increase in cost if a device were to support multiple solutions). That’s why the Sony-NXP collaboration is important–together the companies will have critical mass to push a common solution to market. ETA 3+yrs?

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The Walls Are Starting to Come Down

Posted on November 22, 2006 by Simeon Simeonov

My friend Ajit Jaokar blogs about Hutchison 3 opening the garden and announcing fixed rate pricing.

Either of the two parts of the announcement on their own wouldn’t have meant as much. Carriers in the US have all you can eat plans. They are not open. European and Asian carriers are much more open but their pricing prevents wide use of mobile content and applications–consumers would end up with sticker shock at the end of the month.

This is big. The leadership of 3 must be convinced that mobile advertising is the way to go. As I’ve written here previously, it’s not a matter of if but when and how. I guess 3 will start generating some interesting data pretty soon.

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Ten Worst Internet Acquisitions Ever

Posted on November 22, 2006 by Simeon Simeonov

This brings back memories. The most recently entry on the list is Skype, which is clearly too early to tell. This list has no entries between 2000 and 2005, when eBay got Skype. Were buyers that restrained during those days?

What about making a list of the worst startup acquisitions ever? The criteria are(a) exit priced at a significant premium to market, (b) business tanking post acquisition and (c) most of the good people fleeing. Send me your favorites.

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The Latest from JibJab

Posted on November 16, 2006 by Simeon Simeonov

Weird Al has creeped many people out but never like this.

Looking at the JibJab Flash animation/collage, which uses photos for characters’ faces, I can’t help but wonder if there is a way to automate the production process more.

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Beyond Pizza

Posted on November 16, 2006 by Simeon Simeonov

Courtesy of my friend Jack Odell comes a valuable link for entrepreneurs who want to go beyond pizza–the Burrito Blog. For those in the Boston area who can’t decide whether it’s pizza or Mexican that’s going to feed their ideas, Jack personally recommends the strangely named Romano’s Pizza.

We were surprised to find a fairly decent mexican dive right near our apartment. Part of the reason it had been difficult to find was because it was ingeniously named “Romano’s Pizza” (its half pizza-joint/half mexican food). We’ve been pretty impressed with their tacos and burritos, though. May be worth checking out if you find yourself in the area.

My favorite Mexican places in the Boston area are Ole Mexican Grill in Arlington and Cambridge.  I like the lighter Oaxaca fare. Ricardo’s quesadilla in Arlington packs a punch. I’m eternally grateful to John Peyton, a star engineer on my team at Allaire, for introducing me to Ole.

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Video Downloads

Posted on November 14, 2006 by Simeon Simeonov

In looking at the video download space, three sets of questions loom large.

First, how much does portability matter? Is it OK to only download to the PC/laptop? Will consumers buy the necessary gear to display PC-downloaded movies on their TVs? What’s the importance of an on-the-road solution, something that portable players can deal with? Note that DVDs are pretty portable and can be played on any PC/laptop, on portable players and on anyone else’s DVD player. Is the DVD the standard by which video downloads will be measured?

Second, how much will security matter? The music industry has ultimately decided to go with fairly flimsy DRM technology that can be broken/circumvented by any Internet-savvy user willing to do it. Will the video industry go the same way or will they demand much stronger controls?

Last but not least, there is the pricing model question. Looking at CinemaNow and MovieLink as examples, new movies (before they are available on DVD) are priced in the $15 range. That seems fine. Many others, already available on DVD, are in the $5-10 range. It takes 2-4 movie downloads/month for Netflix to become more cost-effective. What’s the industry’s path to subscription-based downloads, if any? Royalty payments in the industry are all tied to per-copy pricing mechanisms. A change to a subscription model that isn’t inherently based on a per-copy royalty stream (as is Netflix because of the physical DVD) will cause some havoc.

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Techcrunch Party in NYC

Posted on November 13, 2006 by Simeon Simeonov

I’ll be at the Techcrunch party in NYC on Thursday. Polaris is a sponsor (MikeA doesn’t make it out East that often, so let’s celebrate ;-). The party is so over-booked (450 person waiting list) that they will have to remove the beds from BED.

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