Category Archives: Internet & Web X.0

Y Combinator Advertising Startups

Paul Graham clues all entrepreneurs in regarding different investment areas that they’d like to fund; thus, making his deal flow much more efficient. For entrepreneurs, this is a golden opportunity and for folks who are thinking about jumping into the startup world, these 30 ideas should get you thinking.

One of the ideas that I’d like to talk about is “Fix Advertising” as Paul calls it.

12. Fix advertising. Advertising could be made much better if it tried to please its audience, instead of treating them like victims who deserve x amount of abuse in return for whatever free site they’re getting. It doesn’t work anyway; audiences learn to tune out boring ads, no matter how loud they shout.

What we have now is basically print and TV advertising translated to the web. The right answer will probably look very different. It might not even seem like advertising, by current standards. So the way to approach this problem is probably to start over from scratch: to think what the goal of advertising is, and ask how to do that using the new ingredients technology gives us. Probably the new answers exist already, in some early form that will only later be recognized as the replacement for traditional advertising.

Is advertising broken? In order to fix something, that means it’s broken. Last time I checked, consumers are buying more products than ever. Advertising is certainly not broken. In my eyes, advertising needs to evolve and that’s what “fix advertising” should focus on. I believe that the next iteration of advertising is going to involve a wealth of data. I talk about it here. And here. Moving from assumptions to precise targeting is going to be very fruitful for all involved: the consumer and the advertiser.

Is it time to bring back Seth Goldstein’s startup, Root Markets? Consumer attention has value and should consumers control that?

Silicon Alley/Valley: Time to Lose Some Weight

Weight Gym The economic climate that we are in is having an effect on Silicon Alley/Valley. Many of the companies (dot com or others) are generating revenue through subscriptions, advertising, affiliate and such, which is being affected by the cut-back in spending both from consumers and corporations (ad spend or otherwise).

Om Malik posted on Why Silicon Valley Should be Worried which you should certainly check out. Upon Google’s Q2 announcement today, the stock plummeted 12%.

While I do not want to go through a long recession or have my family be negatively impacted, I do think that this is good for Silicon Alley/Valley. There is a lot of smoke and mirrors as to what is happening on the street level and who is really generating meaningful revenue. We’ve got top bloggers/Internet Celebs that walk around conferences like they are Brad Pitt and everyone wants to talk to them… but behind the curtains, their companies are having serious problems. Entrepreneurs are getting a false sense of what and WHO are real.

We all can read TechCrunch and other major startup news sources, but at the end of the day, many of these companies are going to become vaporware or face extinction fairly quickly. This is healthy and I welcome it.. .. and we all can learn from it.

When the economy picks back up, the strongest will survive as Darwinian Theory will prevail. For now however, Silicon Valley/Alley must tighten up and brace themselves for the economic environment. Lets see who survives, maybe I should launch my Dot-Com Vulture Fund sooner than later?

Goodbye Media Sales Execs

Ad exchanges are all the rage on Madison Avenue as many major ad holding companies are jumping into the game. Publicis is launching an Audience on Demand Network which plugs into Microsoft, Google, Yahoo!, and Platform-A (AOL) and Havas and WPP are partnering with Yahoo!’s RightMedia. All of these deals have been announced in the past 60 days, so what are you going to do if you are a media sales executive who has purchased a Maserati Gran Turismo, house in the Hamptons, and supporting 2 kids through college? Aren’t all of the agencies now going to by-pass you and go straight to the exchanges through their newly minted partnerships?

That could certainly be the case, but I don’t think it’s going to play out that way. Ad exchanges and Madison Avenue are going to grow close together in many different scenarios, but media sales executives are going to still have jobs and honestly, could blossom. Here is why:

While ad exchanges currently supply Madison Avenue with inventory such as 300X250, 728X90, and other IAB standard impression units, you cannot purchase integrated/custom campaigns. While what you can do in a banner/button unit can be extremely creative and unique, you are not able to purchase page takeovers, custom content, or any other unique placements.

I believe Media Sales Exec’s lives are going to become much more efficient. Let agencies and marketers buy standard ad-units through exchanges layering on different targeting data (not just technologies), but when the phone rings to publishers, it’ll be for the custom/highly integrated media opportunities: where the sexy dollars are.

In my experience, some clients use traditional ad-units as the sole basis of their campaign and are able to do very well based on their KPIs; and for others, we build out highly integrated opportunities. Media Sales Execs do not want to be bothered for a small $20,000 media buy for 300X250s and 728X90s as servicing the account takes the same amount of time as a $250,000 buy for page takeovers and custom content integrations. Which would you want to service if they took the same amount of time? Thought so.

So, while many publishers are trying to figure out how to build their sales team to account for ad exchanges, don’t be scared. The business you receive from the exchanges may make your company much more efficient and add to your bottom line to account for less overhead (staff to cover simple buys). If you’re a Media Sales Exec, start tracking your leads and watch the size of your deals increase over time if you’re participating with exchanges.

If you are an ad network trying to figure out your role in this environment and have lots of data, please reach out to me as I’d like to talk to you.

Entrepreneurial Challenge: Need Distribution?

I’d like to pose a challenge to all entrepreneurs or established companies who are looking to increase their distribution (and business) in the digital media world.  I’m friendly advising someone/company that has legal access to over 750,000 US Internet users and we are trying to come up with new ways to monetize the audience.

Distribution will come from access to a ‘portal’ like page and thru email announcements.  How can we monetize these better and/or release a new product/service/solution to this audience.

Since we probably aren’t going to build new businesses around this, we are looking to potentially partner (through business development arrangements) with entrepreneurs like you.  We are looking to hear from entrepreneurs or established companies who have a product/service/solution in the market today, or have an “idea” of what we could potentially pursue.

Think of this as a RFI:  Request for Information.  The ultimate prize is having access to the userbase which should help us increase our revenue (top and bottomline) and add value to the community.  In most cases, should you be picked, you would receive a business development arrangement that is mutually exclusive.  There is potential for us to fund “ideas,” but that is in a case by case basis.

Interested?  You can fill out this form.

Feel free to spread the link to anyone:

I’ll be closing the entries at the end of next week (7/18/08).

Happy entrepreneuring!

The 2008 Battle: Apps vs. Widgets

App vs Widgets

The Battle of 2008: App vs. Widget.  We’ve heard the term “widget” more than we’d like to admit, especially working on the agency side of the business when the majority of the meetings are about widgets and distribution strategies.

There are over 130,000,000 results for widget in Google.  There are 188,000,000 results for “apps.”  As the iPhone release draws near, get ready for “apps” to battle to be the top buzzword for 2008.

App vs. Widget Google Trends

As you can see by the above Google Trends data, ‘widgets’ became a hot entity in second quarter of 2005 when Yahoo! announced their widget initiative. The search volume around Apps has been steadily growing and should continue to grow, potentially at a faster pace, as the iPhone App Store roles out.

Venture Capitalists will be putting many small bets to work in the Apps space as they’ve done so in the widget space.  Kleiner Perkins has announced $100 million to fund iPhone applications.  My friends over at Union Square Ventures and First Round Capital have funded my friend Greg’s company, Pinch Media.  Check out this video of Greg presenting at the first annual Media Kitchen Digital Media Venture Capital Conference.  We’ve been talking quite a bit about iPhone apps but lets not forget about Facebook Apps and widgets… Federated Media has built a healthy business monetizing apps and widgets.

VC’s will help companies invest in an infrastructure where they can monetize this new world.  It’s going to be rocky, it’s going to be all over the media, but it’s certainly going to be fascinating.

So in a world where we love [to hate] buzzwords, I think we may be retiring widgets soon for apps, but this is surely a battle to play out in 2008.  I think 2009 may have buzzwords such as platforms, exchanges, data, and LBS, but lets concentrate on this year right now.

Buying Behavior & the Social Graph

I’ve got quite a few clients that are selling products/services to consumers. The Social Graph has played a role in all of our conversations and we’ve been rethinking the way we’re engaging with consumers. There is an interesting PDF case study by Shawndra Hill, courtesy of Auren Hoffman that I uncovered and would love to hear some feedback based on your thoughts.

Some interesting companies in the Social Graph space: Media6, Lotame, 33 Across, and Radian6.

Building Your Infrastructure on Someone Else's Turf

It’s been a debate in the past about whether or not you should build your infrastructure on someone else’s turf. I’d say the “Berlin Wall” is falling in this debate as API’s are one of the causes of this paradigm shift. Today, Summize was rumored to have been acquired by Twitter.

This blog post isn’t to debate whether Twitter should have fixed it’s infrastructure before adding an asset, but it’s to look at the strategy to rely on someone else.

Standing on FenceTwitter has been extremely tough to rely on as of late. The service has been plagued by service outages. This directly (not indirect) affects Summize. Summize needs Twitter. Does Twitter need Summize? It’d say no, but it’s a nice to have.

Can you build your infrastructure on someone else’s platform? Look at Amazon Web Services. How many startups are built on their platform? Plenty.

I’m still on the fence (standing on the ‘wall’ so to speak) because of the direct relationship and reliance one may have on another partner. Another partner directly controls your fate. That’s tough to stomach.

What are your thoughts?

Blogging is the Music Industry All Over Again?

I’ve been thinking about bloggers, blogging, memes, and this entire ecosystem from a macro-POV over the past few days. What caused me to think about it… I’m not sure, but nonetheless, I’m down the path and wanted to throw a few ideas out there.

In early 00s, I spent enough time in the music industry to understand the problems that we hear about everyday. Essentially, the music industry for the most part, relies on the ‘hit’ model, which means that a small portion of their artist roster generates enough revenue to cover the entire roster. (You can also draw a parallel to venture capital, publishing, and other industries)

Because the few chosen artists (signed to major labels) are promoted in such a way that exaggerates their excessive lifestyle, many, many artists (bands) want to be signed to a ‘major’ label because they believe that the clout, promotion, advances, and contacts that the label has within the market will help them to become rock’n’roll hall of fame inductees. Generally, this doesn’t happen. Even signed to a major label doesn’t guarantee you success, it even doesn’t guarantee that they will release your upcoming album.

Musicians use instruments in their craft. These instruments are pretty much worthless without someone playing them. A Fender guitar is nothing but a few strings, some solid wood, and a few screws/glue/etc holding it together. It’s the artist behind the instrument who brings value to the instrument.

In the blogosphere, the platform is the instrument. Whether you have chosen to use TypePad, WordPress, Blogger, Tumblr, or any other blogging platform, it’s worthless without someone (or multiple people) behind it producing content. The content producer is the artist (or musician in this instance).  There are a handful of blogs that generate 80% of the buzz (TechCrunch, ReadWriteWeb, Ars Technica, Silicon Alley Insider, VentureBeat, Gizmodo, Engadget, paidContent, Between the Lines, GigaOM, A VC, The Social, TechDirt, etc) but there are millions of blogs who exist as well…

Using the blog/music analogy, the 20% of the blogosphere that generates 80% of the revenue are the blogs signed to major labels. What are these major labels in relationship to the blogosphere? Examples are Federated Media, UTA, WMA, and any other high profile blog representation services. Google Adsense and advertising networks are generating revenue for blogs of all shapes and sizes (majority of the long-tail) and I attribute this to the similarities of CDBaby/Amazon and other online merchandise retailers for the music industry however they are doing it in a passive way.

The music industry has the radio, which helped create hits across the globe. Whether you were a one hit wonder like Marcy Playground (I loved those guys) or a multiple-platinum seller like Coldplay, the radio certainly helped bring their music to the masses. In the blogosphere, you’ve got major influencing sites like TechMeme, TechCrunch, and BoingBoing (amongst others) who help drive traffic that potentially create an opportunity for your blog to transition into the pro-blogging space.

We all live the dream, some to play at MSG in front of 15,000 screaming fans, or a direct link to one of my postings from Robert Scoble, but it’s almost impossible to attain.

Thinking about the business model for bands, you’ve got a few ways to monetize yourself: sell music, sell merchandise, sell concert tickets (play shows), take donations, etc.  The business model for blogs are pay-for-access, advertising, merchandise (maybe this is a way of the future?), or a loss-leader, like this blog is.  I don’t make a dime off of it, but it opens the door to conversations that I’d not normally have.

With so many musicians and bloggers, it’s impossible to follow them all. Look at the amount of music discovery services that have emerged.  Blogging discovering on the way?  Are VC dollars flowing in that direction?  Are micro-blogs like Tumblr essentially “singles”?

Would love to hear your thoughts…

Here’s a starting question:

1.  Who will be the RCRD LBL of the blogosphere

Microblogging: DH's Tumblr Page

I’ve got a Tumblr page setup for micro-blogging… quotes, thoughts, pictures, videos that I find fascinating… generally, they compliment this blog well. Sometimes, they are totally random.

Feel free to check it out. For those of you who are RSS buffs, there is a separate feed for the Tumblr page.