Category Archives: Startup & Venture Capital

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.

Forthcoming: Hb's 60secs of M&A; subscribe today

I’ve always talked about creating a vulture fund, but haven’t executed on it for one reason or another.

Something that I can execute however is an email list that would update you on interesting companies/technologies/assets for sale that could benefit your digital media organization.  Whether you’re in the M&A department of IAC or Google, a private equity fund, or a business owner/entrepreneur who wants to branch into new areas, this email list is for you.

The inspiration for this list comes from two recent emails I received from friends showcasing some interesting acquisition opportunities.  Additionally, I’ve been speaking to some entrepreneurial friends who want to sell their companies and/or projects and don’t have a simple method for doing so.
Very brief opportunities (email to be much more in-depth):
  1. StreetRead:  Financial News App that appeared on Webware, Lifehacker, Wall Street & Tech, etc.
  2. HeyAmigo:  PPC Newsletter advertising
Both opportunities above have significant market opportunity if they fall into the right hands.

The email list will be either every two weeks or monthly, so don’t expect a significant volume of emails.

They will be coming from my Herman blackbook email account.

Please sign up for the list here.

The First 72 Hours: New Platforms Fund (Hb)

I thought I’d write this post to recap the first 72 hours of launching the New Platforms Fund thru Herman blackbook.  Upon waking up this past Friday morning, we received front page coverage on TechCrunch with a less than stellar headline and then became top billing on Mashable.  Upon logging onto Twitter, started receiving DM’s from friends and folks I’ve never met with strong support for both the New Platforms Fund and Herman blackbook.

The initial gut reaction that most people had to the fund, as illustrated on TechCrunch, was in some cases negative, as $1-3k investments are in themselves, small.  Yes, that amount of money is extremely small, but what we’re trying to fund are simple applications of technologies off of innovative platforms from the napkin or alpha stage.  Beyond the dollar, we’re offering our network of Herman blackbook, which has been billed behind closed doors as the next generation of Allen & Co.

The response has been tremendous.  Within 12 hours, we had over 40 serious submissions ranging from from applications on Twitter, the iPhone, Android, and the Google API.  There were some miscellaneous submissions but we discarded them as they didn’t reside on a platform.  As of writing this on 6pm on Sunday afternoon, we have doubled our submissions and are combing through each one in-depth.

I also had several members of the press reach out to me and spoke to them about the vision of what Hb and the New Platforms Fund has.  The press, most notably some of the top financial periodicals and tech reporters of industry mags were asking me about why we chose to fund companies that do not own the platform in which they are building upon.  Very valid question and I used to wrestle with this as well.  My standpoint is that a rising tide raises all ships – meaning, we can make a platform more valuable by building on top of it.  No one ever said that innovation comes without risks.

We finished going through the first 50 ideas submitted and have written down why we aren’t going to be moving forward with many of them.  I thought it would be beneficial to all entrepreneurs out there to see why ideas may be rejected as this is a great learning experience.  These are posted on Hb, but I’ve also pasted here:

  • We do not have any existing domain knowledge in the particular market of which these ideas/concepts were submitted.  The power of Hb is more than just money; it’s our network and experience.  If we fund certain ideas, we want to ensure that they have the best opportunity to succeed.
  • Not a big idea.  Some of the ideas we’ve seen are just not big enough in terms of opportunity.
  • Competitive environment.  The market which the ideas/concept fall into are crowded and we’d rather place our bets in a less crowded space.
  • Market opportunity is limited.  If we need to approach the market with only a 3 month window to generate revenue, we are most likely to pass.
  • Idea doesn’t sit ontop of a platform.  Our fund is all about being part of an ecosystem and platforms such as Boxee, Appnexus, Twitter, etc.  Your idea should sit on top of a platform.
  • Explanation of idea was not clear from the description.
  • While we are investing in ideas and concepts, we couldn’t figure out the business application for it.
  • As much as we love video games, film, and music, we don’t invest in specific projects such as a new game, movie, or band.  We will however invest in services around an industry.  We try to stay away from very hit driven businesses.
  • No barriers to entry into the market.
  • Who is the team leader?  Should have experience relevant to the idea.
  • Lastly, not within the funds scope.

Each bullet point above is at least a blog post in itself.  Feel free to comment and I’ll respond in-depth if you want to learn more.

Looking forward to more submissions and making the Hb process a learning experience for everyone.