Category Archives: Startup & Venture Capital

SXSW Opening Morning Thoughts

I’m writing this post about 2.5 hours before the first panel/session kicks off for SXSW 2010.  For those who are not familiar with SXSW, it’s a conference split into three areas: Interactive, Film, and Music.  I’m only down for the first few days of Interactive but in previous years, I’ve participated in the music portion as both the youngest speaker ever (at the time, 2002) for SXSW and was an exhibitor.

The energy was high even before leaving Newark Airport.  @sparkle201 (wife) and I were on a direct flight down to Austin and I’d say of the 144 people on the plane, 50% were heading to the conference.  I ran into Foursquare’s @naveen in the airport who is celebrating their First Birthday at the conference- Foursquare was born a year ago and is now over 500k strong loyal fans.  Happy Birthday guys.

Four hours later, I ran into friend and colleague @jstylman while checking in to the conference and picking up my credentials.  For the first time in a LONG time, I’m not speaking on a panel or keynoting, so I’m flying totally under the radar screen as a listener.  I’ve been longing for this day to just sit back, relax, and soak everything in.

After getting back to the hotel, I digested all that was in the schwag bag and there was a consistent theme:  stickers, QR codes, and most important and utilitarian to me:  cellphone/computer/ipad/kindle screen fiber wipes.  Genius- thank you AOL and Newegg.

bibleThe SXSWi bible is thick.  It lists all the panels/sessions and speakers as well as everything else that is going on.  What stands out immediately is the use of QR codes on every single page.  The company providing the codes is QMCodes and they are exhibiting – I’ll stop by their booth to further my education around them.  I’ve used QR codes in previous ad campaigns but the adoption in the US was rather weak a few years ago.  Can the use of QR codes in the US break out this year?   My immediate thought is that print publishers need to push these hard and how many print publishers are down here at SXSW?

There is even a twitter account setup to help people with QR codes here at SXSW:  @sxswqr

An instant favorite of mine are the products of stickybits.  For those unfamiliar (I was previously) with stickybits, it’s a simple barcode sticker that you can append any type of information to (pics, text, video, etc).  You stick them wherever you want and if people find them, they use their iPod or Android stickybits app to see what’s been virtually appended to it.  A nice way to augment reality.  Downside:  you need the stickybits app – and this may be a serious downside for the company.  I’d love to see a Verizon or AT&T snap up this company and instantly build this reader into the phone’s capabilities.

Looking forward to what starts unfolding over the next week or so – come and follow me on the adventure @dherman76

In The Data Decade, There Should Be Data-Driven Acquisitions

I’ve been immersing myself into the world of data for the past few years at work, reading lots of books, and speaking to many gurus.  What interests me both personally and professionally is the application of large data sets and how to use them to gain a competitive advantage over the competition.  Call it data arbitrage, if you will.

During my commute this morning while driving down the West Side Highway, I was think that if I was a big corporation, which companies would I acquire and why – purely for their data assets.  Here are a few, I’ve obviously not thought of everything, so please chime in- in the comments section.

Also, please note that solid business strategy does not mean that these need to be acquisitions, but potential strategic relationships, tactical biz dev, and partnerships.  I have them listed as acquisitions but understand that not all of them should be.

Record Labels (Warner, EMI, Sony, Universal) acquire Pandora, MOG, and Spotify

I do not think that the labels need to acquire all of the above, but at least one.  The reason?  Why not own the data that shows what listeners are listening to around the world? (Audioscrobbling)  By having these, you can do a few things for the label:  cut down on A&R spend as you can find artists easier, view music consumption trends as you can see the types of music and their intricacies that are popular, and also, help with distribution of music/tours as you can see what artists/genres of music are popular in different market and make sure that the artist visits that region or sells their merch.

Professional Sports teams acquire fantasy sports research companies (The Huddle, FF Today) and/or leagues themselves (i.e. CBS Sports Fantasy Football)

If we believe that the wisdom of the crowd is smarter than a few humans, then why wouldn’t NFL Scouts want access to college football fantasy sports data – i.e. how many “fantasy GM’s” owned certain players, their value, etc.  I’m sure there is some value in all of the data that fantasy sports generate and the professional teams can really benefit as they are paying outrageous salaries to these particular players.

A Hedge Fund Acquires Wikipedia

Wikipedia has tons of research but what is probably most interesting to me (of which I do not have access to) is which articles/topics on Wikipedia are trending.  If someone knew which were the highest read articles and which articles were trending in near-real-time, then investors can make big decisions about where they should place their bets.  If articles about South African soccer balls are trending, then maybe an acquisition/investment can be made within the country of which these queries are being made from.

How about some others?  I know I had a few others in my head but forgot them by the time I sat down to write this.

2010 Predictions & Trends: Technology, Media & Marketing

I created an uber prediction list back in 2007 and it was a hit.  Here are some of the predictions already posted across the net re: technology, media, and marketing – three things I’m very interested in.  If I missed your post and you’d like to be listed, just leave a comment and I’ll add you.

Social Media & Optimized Display in the Same Post? Recapping 2009

Unless you live under a rock, the economic environment impacted brands and agencies this year and the whole publisher ecosystem that goes with it (media cos, ad networks, etc).  Full-year 2009 will mark only the fifth spending drop since Ad Age began ranking the 100 Leading National Advertisers in 1956.

Holding Co. Stock Chart As you can see from this chart, holding company stocks (MDCA, IPG, OMC, HAVSF, PUBGY, WPPGY) all tanked along with everyone else during late 2008 but have started to bounce back in 2009.

In the digital trenches, I witnessed an interesting divide really start to occur:  this “social media” phenomenon and hyper targeted and optimized display advertising.  If you put a social media “guru” in a room with a data and targeting company, the conversation would probably be as bad as one of my dates when I first moved to Manhattan.

Social Media
I put “social media” in quotes as I fundamentally do not believe that this exists in itself.  I believe that all media can be social and it’s not new.  Anyway – this year saw a continuation of thousands (over 15,700) of social media experts pop up on Twitter and even carve out little businesses for themselves as consultants/agencies to a few brands.  The common question in 2009 that came across my desk was “what should be my social media strategy?”    Twitter’s constant presence in the news in early 2009 and Facebook’s dominance in the social networking/graphing space has contributed to this “social media” trend.

Recently, Pepsi announced it was going to forgo its advertisement in the Super Bowl which we’ve grown accustomed to each year and put those dollars to work in a rather large social media campaign.  I applaud their efforts to generate PR, but is this sustainable for them?  Meaning, they are essentially putting the money to work in a cause marketing campaign… will this have impact?

2009 saw Dell racked up over $6.5 worth of sales directly attributable to Twitter and the almost-too-hyper/passionate Gary Vaynerchuk climb to 848k followers.

Hyper Targeting & Optimized Display
There has been a trend in the display space towards audience driven media.  If you can identify an audience based on different characteristics stored in computer cookies, why not advertise to a handful of extremely targeted users? Data facilitators/providers like BlueKai, Exelate, Domdex, TargusInfo, Media6, Lookery, Rapleaf, Peer39, LucidMedia, Quantcast, and many others became front and center this year.  Demand Side Platforms (DSP), or technologies that allow the dollar holders (typically agencies) get closer to the media (through exchanges and other sources) also became popular and a few closed significant funding rounds.  AdExchanger popped onto the scene and started covering this entire space rather comprehensively.  If you have not read their 2009 year end report, download it now.

2010 should be interesting for this industry as the government is looking into online privacy.   Because much of the targeting is done through accessing anonymous cookies, this whole industry could be hampered or shut-down depending on legislation that is passed around ad targeting.  There are a few startups, particularly the Better Advertising Project focusing on helping congress solve these issues.  Personally, this would be a big bummer as I believe that if we can offer a much more targeted advertisement to users, then their overall experience could be much better.

Recap
Any media planner or buyer on Madison Ave has put a few social elements and optimized display on a media plan in 2009.  I’m sure that this will still occur in 2010 but I’m going to hypothesize that the gap between optimized display and social media may widen and you might start to see shops specialize in one or the other (i.e. CPMAdvisors vs. Crayon).

The one thing that’s consistent is that the audience is in the center of all planning AND buying both in social and optimized display – the more we can learn about our audiences and serve highly relevant messaging to each audience segment will allow us to create better relationships.  Better relationships between users and brands, means a mutually beneficial relationship for the agency and advertiser.

If you are interested in the Optimized Display & Hyper Targeting area, I’ve put together a Twitter list of thought-leaders in this space.  You can subscribe to it here.

RIA – Rich Internet Applications

Imagine if the web didn’t have to live in the browser.  In many ways, we are experiencing that today (i.e. Foursquare or Tweetdeck) but what if we put it onto the desktop?

For those unfamiliar with RIA or “Rich Internet Applications,” they can be defined here:

Rich Internet applications (RIAs) are web applications that have most of the characteristics of desktop applications, typically delivered either by way of a standards based web browser, via a browser plug-in, or independently via sandboxes or virtual machines.[1] Examples of RIA frameworks include Ajax, Curl, GWT, Adobe Flash/Adobe Flex/AIR, Java/JavaFX,[2] Mozilla’s XUL and Microsoft Silverlight.[3]

I think there is an opportunity to take much of what is happening on the web and put it into it’s own desktop application which can have many different uses based on what the user wants.  Companies and projects like Stocktwits, Tweetdeck, Snackr, and others are building ontop of this philosophy and it seems to be working.

Check out Adobe’s gallery of AIR apps.

To be open and candid, I am seriously contemplating an investment in this area.  If you go back to many of the blog posts here, you can probably figure out what the investment will be.  What I’m looking for right now are talented RIA (Flex, AIR, and ActionScript) developers who have some open bandwidth to work on a project (paid of course) as well, as, anyone (investors, entrepreneurs, consultants) who have some war stories building a RIA based consumer and B2B product.

If you know anyone or are interested in conversation, please reach out.

Open Letter to Ms. Internet

Dear Ms. Internet,

As someone who has spent 8+ hours a day with you over the past 10 years, both for professional and personal needs, I have to say that having a long term relationship with you is challenging at best and you are starting to get a reputation for your celebrity-length relationships.

You are young and in your prime and are the hottest girl at the dance.  Your reputation precedes you wherever you go, from Sand Hill Road, CA to Varick Street, NY, and even then, we all want a piece of you.

The problem with this is that you are breaking hearts everywhere you go and businesses built on-top of you fail before they ever have the chance to breathe.  If you are here for one night stands, then let us know as many of us expect you to be marriage material.

Let me explain.

Marriage material is when ecosystems (family) can bloom and everyone expects them to last so that society can adopt them into the fabric of life.  Ms. Internet, you are making this impossible.

Consequences of your actions:
The rapid pace of innovation (which I love and made my name in) within the digital media space (including you, Ms. Internet) is going to contribute to its very demise.  How can we build sustainable businesses when the life expectancy of an online business is virtually one capital raise and the entire industry is onto the next-biggest thing?

Why this whore-ish attitude does not work:
· Advertising:  have you ever written a check for $100MM to one digital media partner?  No.  Let me explain why:  Digital media partners (i.e. Hulu, Ad.com, AdMob) deliver a structured product (sometimes service) to meet the needs of a particular client. Generally, there is never enough inventory to spend significant dollars (scale issue) or by the time we have tested the particular product, the industry is onto the next best and greatest product (innovation issue).

· Venture Capital:  I’m speaking from an outsider but there is a real movement from within the industry to change up the deal mechanics as within the digital media space, it’s just not sustainable.   The speed of innovation is important here because if a company spends it’s venture money building a product for the market tomorrow, in two weeks, it may be out of fashion. I wrote a blog post about this a few years back about how social communities are like clubs – you do not want to be the hot one or you are the un-cool one next Fall.


We do not need more Friday or Saturday night flings.  We need companies and services that have the time to breathe and blossom into something sustainable.  My frustration comes from within the advertising world – we (you) are making it very hard to shift large amounts of money online with this type of attitude. Scale issues are solved when the market has time to mature and so far, we’ve had very little time because of the pace of innovation.  I’d like to write a check for hundreds of millions of dollars, similar to how my television brethren do so, and with that, think about how much value that would be created within the digital media ecosystem.

Having said all of this, I love innovation.  Innovation is important to any ecosystem and allows the ecosystem to keep evolving.  As a person, I tend to be just ahead of the innovation curve but as a marketer, I can see that we’re moving a little too fast for the online advertising community to evolve.

All the best,

Darren Herman
(t):  @dherman76

Fashion 2.0 & the consuMEr in the MEconomy

As many readers of this blog know, I’m a big fan of the fashion world.  I enjoy many different types of fashion (everything from conservative prep to sporty) and especially enjoy how the fashion world is being infused with different technologies.  I’ve been meeting with companies that provide custom shirts all the way down to crowd sourced outfit selection and have seen some great innovation.

Just this past weekend, I stumbled into and ordered a custom suit from the online/offline company, MySuit.  These guys have 2 presences in NY – one in Herald Square (Manhattan) and one in the Westchester Mall in White Plains.  While I haven’t gotten my suit yet (takes 2 weeks), I am extremely fascinated with the experience overall experience and will judge the quality after I’ve worn it a few times.  What is particularly interesting to me about MySuit is the consuMEr element of it.

Increased adoption of technology in the fashion world (as well as the innovation and evolution of technology) allows for a once mass industry to become “me” centric – or custom.  Ideally (somewhat theoretical now), once you are measured, then every article of clothing can be custom.  Today, this opportunity would cost significant dollars, but tomorrow, it could be attainable.

picture-1

Tomorrow evening is the Fashion 2.0 event hosted by my friend and colleague Yuliz from MyItThings.  There are a few companies presenting but I’m interested in hearing the presentation by ProperCloth.  These guys have created a simple but effective website for ordering custom shirts online.  They aren’t the first nor do I know if they are the best, but hearing them present tomorrow is going to be interesting.

Are any other readers of this blog going?  Would love to hook up.  I’m actually taking my father who is a fashion industry executive and introducing him around to these new companies.  Should be fun.

BTW:  I don’t think I touched enough on consuMEr or MEconomy enough, but I ran out of time and that’s for future posts.

Roll Ups in the Digital Space

There are a few areas of the digital space I’m particularly fond of right now and they have to do with mining content for data, and then turning the data into insights.  Note, that data is generally “dumb” as a single data set can mean different things to different people (insights).  Owning the data is one thing, but mining it for insights and meaning is another.  I’d rather have the smartest insights team than owning a data set that I don’t know what to do with.

Anyway, I think there are a few companies/areas that I’d like to roll-up.  This is me personally speaking, having nothing to do with any business I’m affiliated with.  Also, please note that I’ve not put any banking rigor to this, so have no idea about valuations/cap tables, etc – so this is purely conversational fodder.

URL Shortening ServicesBit.ly for example.  I’d like to buy as many of them that have a userbase, and roll them out a la TweetLnks style.  I cannot sit on Twitter all day long (or even Seesmic Desktop or Tweetdeck) so I miss a whole host of links that are shared that may be interesting to me.  @bbhlabs and @epc share some great links (amongst dozens of others) and I miss them.   If I can strike deals with all of the URL Shortening Serivces (or buy them), I’d be able to create a very comprehensive new type of daily digest.   Not sure if the idea is coming across well, but I think it has legs.  Monetization can come from adding affiliate links (getting buy-off from the stakeholders) as well, as, premium services.

TweetDeck & Seesmic – may be too late for the latter, but I think rolling companies like these up is a very nice platform for the next generation of communication online and thru mobile.   AOL IM is making a play for the mobile space now (just released, AT&T should be scared), but these are two fantastic AIR platforms that have lots of opportunity.  Could compliment the above.

Data Aggregators – Exelate, BlueKai, Domdex, Demdex, Lookery, TargusInfo, etc.  Package them all up and own the data space.  Every ad network and holding company will need access to this data so if you can aggregate all of these players up and create a centralized cookie jar, could be really interesting.  While one would argue that the sum of the parts is greater than the whole, I am not sure if that stands up inthe short-term for these players.  I think there could be a quick exit here as well.

Any others?  Thoughts?

April Speaking Engagements

I have just returned from speaking at the OMMA Global conference with friends & industry luminaries John Battelle, Jason Calacanis, and Paul Kedrosky which was all about the intersection of advertising with technology.  If you missed the talk, Max Kalehoff, our panel moderator (and VP of Marketing @ Clickable) penned a nice piece in MediaPost.

I haven’t been out speaking much (nor updating this blog as often) as things have been extremely hectic back in the NYC office and with the birth of my son (now almost 5 months old!).  I was supposed to be speaking at the Web 2.0 Expo in SF this coming week but had a client conflict come up and had to back out at the last possible second which I absolutely hate doing because it hinders the flow of the conference.  Apologies again to both the conference organizers and all who I was supposed to meet with.

Currently, the following speaking engagements are on my schedule for April 2009:

  • Bootstrapper Summit, billed as “the most intimate venture capital conference.”  I’ll be talking on Wednesday, April 1 at 9:30AM on a panel with some friends about investing and executing in digital media.   If you would like to attend, I have 1 FREE pass to give away.  Please contact me thru this form and the first who reaches out will get the pass.
  • NYC Entrepreneurship Week.  I’ll be speaking on April 21 at 5:00PM on an evening panel about media.   Some of the topics include emerging trends in media and the current and future media landscape.

Looking forward to speaking at these events.

Path 101 – Coming Out Party

Sans the party.

My wife (@sparkle201) and I (@dherman76) were asked by our friend Charlie O’Donnell about a year ago to invest in his new startup, Path 101, at a very early stage in it’s life cycle.  Initially Charlie approached me for the investment but I have no real domain knowledge of the HR world, so I flipped this one over to my wife who had been involved in HR for 15 years at a large global bank.

The deal was a no brainer when Charlie sold us his vision – even though he wasn’t quite there yet in terms of actual execution; his vision was grand and we feel that this sort of vision is needed in the marketplace.  Additionally, Path 101 helps filter millions of data sources (resumes) and turn them into actual information – an area that I’m interested in as a side note.

I’m proud to say, that Charlie, Alex, Hilary, Jennifer, and the rest of the team have publicly launched and the site is open for all to use.  This could not come at a better time as the US Unemployment is about 8.1% and this tool would be helpful for not only those entire 8.1%, but an even higher percentage of people who are looking to change their jobs.

I’m going to paste a bit of what they wrote on their site so that all can learn exactly what Path 101 is:

Path 101 has always been about opening up career opportunities to people using data.  We believe that it’s not that people don’t know what they want to do with their careers–they just don’t know what’s out there to do.  By crawling the web for resumes and analyzing that data in our Resume Genome Project, we’re learning more and more about what real career paths actually look like and figuring out how best to expose that data.

See our screencast demo and FAQ here:  http://mapping.path101.com/faq

Our resume analyzer tool, powered by these public resumes, is the first of its kind.  Nowhere else can you automatically upload your resume or your public LinkedIn profile and get a customized view of how you compare to others,what other people with your background are doing, the schooling you might need, and what other career options are available to you.  This is complimented by industry and function landing pages–views of the data we’ve gathered that help provide detail on career options and opportunities.

Our career advice section, also part of this new release, is the only place on the web where you can anonymously ask or answer career advice and directed it towards professionals in a specific industry.  We know that many career questions are sensitive, especially when you’re currently employed, and we value your privacy.  You might not want to ask career questions in front of your whole network.  On the other hand, sometimes you want as much help as you can get.  That’s why we built integration into Twitter and Facebook so that you can share your questions and advice with everyone across your network to get more people providing their accumulated wisdom.  You can even sign up just to be an advice giver, and request to get sent a limited number of e-mails per week targeted towards people in your field.

Finally, we continue to get excellent and supportive feedback on our personality test.  Over 80% of people who start the test complete it.  It has provided thousands of people with useful feedback on what industries people have professionals with similar mindsets.  We’re looking forward to our upcoming job satisfaction survey–part of a future release–that will give us a lot more flexibility on what we ask questions about and how they directly relate to specific aspects of your resume.

So congratulations to the Path 101 for the launch and I look forward to all of the feedback that you receive to iterate the product to the next level.