Category: analysis

I’m unimpressed so far at this year’s startups launching at TechCrunch Disrupt. It’s not just this year though, it’s been all years. It’s not TechCrunch’s fault, it’s mine. I know why I’m unimpressed — I’m sitting here watching the launch announcements and waiting to see the next Twitter, Facebook, Foursquare, Instagram, etc.

But that’s not going to happen — because it hasn’t happened for a Consumer Internet startup before. Yes, some good companies have come from these events — mostly enterprise, but most Consumer Internet startups don’t go anywhere after the conference. That’s the reality though for a startup trying to become a real business — 95%+ will die on the vine. Thus, 9.5 out of 10 of these startups (despite being filtered from 1,000 submissions) will be deadpooled.

So I was curious, have there been any big “wins” out of these TechCrunch startup events in the past? At first glance of the companies that have presented between 2007-2011, the names that I immediately think of as successful are:

• TC40 2007 – Mint.com (Intuit acquired), TripIt (acquired), WooMe (TC40, despite the controversy), Powerset (Microsoft acquired), DocStoc, PubMatic, Xobni
• TC50 2008 – Yammer, Dropbox
• TC50 2009 – ODesk, Clicker (CBS acquired)
• TCDisrupt 2010 SF – Qwiki (Facebook founder Eduardo invested)
• TCDisrupt 2010 NYC – Soluto (who knows, maybe they will be; product/solution seems awesome)
• (Here are DEMO’s success stories, looks similar to TechCrunch’s conferences)

Thus, TC40 2007 seems the most successful, but those startups have also had more time to prove their business, iterate, and innovate. There are some good companies that launched and many years to go until we see how big they really become, but I’d say the biggest out of all of those will end up being ODesk, with Mint.com, Yammer, and Dropbox being the other big successes.

I think the big problem is that there’s way too many consumer startups launching here and they think they can break from a conference like this. The truth is, they won’t. There are tons of consumer startups and only a handful gain critical mass, so it’s very unfair of me to have expectations of seeing the next Twitter launch here. The next Twitter will launch organically, as we have historically seen — not on a stage.

A consumer startup that has nailed the product/market fit can not be kept under wraps for launching at a conference like this. If you are awesome, likely it’ll leak out somehow if you have some private beta users — you simply can’t stop someone that is loving your service from exploding with sheer passion to everyone they can tell.

These startups are brand new and most need to get more feedback and iterate further to nail their product/market fit. On the other hand, some of these startups never had a problem they were solving — thus, they never stood a chance.

This was a post I started writing April 25 of this year, I never finished it, but thought I’d post it now.

Alternative title to this post: Web 2.0 Dust Settles. Enterprises wondering how do we now use this stuff in our businesses?

This year’s Web 2.0 Expo (in SF) had a completely different vibe than last year’s event. The innovation in Web 2.0 is in the deadpool. That’s obviously not all true, but for an entrepreneur/innovator like me, the crazy chaotic mess of innovation has gone through its’ whirlwind and settled down a bit.

Don’t get me wrong, I still feel we’re at the very beginning of innovation, but you all know it’s not as whack as it was in the early days of TechCrunch. Mobile will bring us a ton of new early-day TechCrunch craziness in the coming years. (In fact, I’m shocked no one has stepped up with a blog that is the early-day TechCrunch blog for Mobile applications/startups)

I’ll be honest, this past year has been much of a yawner for me in “Web 2.0”. What was interesting at Web2Expo was Enterprise — but not in terms of Enterprise-specific applications. Enterprises sent many representatives to the conference and they were all collectively saying, “OK, you entrepreneurs/innovators have screwed around enough — and you found some things that don’t work, and found others that do work. Now how do we integrate those things that do work into our own businesses to increase profits and maximize efficiencies?”

And as Allen Stern and I just discussed, Enterprises = Money. If the Web 2.0 companies that are left standing can learn how to adapt their businesses in someway to Enterprises, they’ll be tapping into some large pools of capital.

Digg would fit into CNET; especially with CNET seemingly trimming the fat and trying to get back to a core business model — which I believe is back to becoming something in the Tech world.

But the only way Digg users wouldn’t revolt this, is if Kevin Rose had some hard stipulations — here are a couple:

1. CNET, before we sell, show us how we’d integrate into your family of Sites. Where will we appear and How? I want design mockups. We’ll help with this initial vision.
2. When are you going to integrate us in the manner that we have agreed on? If not within 3 (?) months, then we have an out-clause from the deal — but not you.

And actually, I’d ask the Digg community what thoughts they have in terms of Digg being acquired. Who do they think could acquire Digg and they’d be happy.

Although, maybe CNET isn’t a good fit if they are trying to get out of Tech and more to the mainstream. Of course if that is the case, then the die-hards will likely jump ship to a Digg competitor that goes back to the tech roots.

Your thoughts?

Caution: This is a bit of a freeform flow of information from my head…

Ultimately, all music will be free someday — ok, 99% of it. OK, maybe I’m wrong. I was thinking of TV — that’s all free to consumers. I was thinking of Newspapers and online writing (blogs) — that’s all free. Those are all subsidized by advertising revenues (including paid classified listings in newspapers, which is advertising essentially).

But then I started thinking about Books — that’s writing, but they charge money for them. Or Movies — that’s a more packaged/produced piece of video (typically) — and those cost money.

Music has radio — radio is free. Although you have to listen to whatever radio broadcasts out to you — just like TV — just like online newspapers & blogs. So the CD is the DVD is the Book is the Video Game.

Video Games don’t really have a “free” equivalent. (I can’t think of a free equivalent to Halo 3 — I guess the free online games offered at like Yahoo! Games and Pogo?)

And the concert is the movie theater — both are experiences; you pay for the experience of the big screen, or the roar of the crowd that’s familiar with a music band/artist. T-Shirts and stickers — along with all sorts of other branded crap by a band/artist or movie — is the ancillary stuff that sells and makes those industries more extra money. For newspapers, the equivalent are the paid classified ads I’d say.

Time is money and the only resource we all lack — and which we all value the most. If a consumer spends time listening to your music, and telling their friends all about it, which results in selling out your shows — that’s the “virtual currency” (or labor cost) they are putting up, rather than spending their valuable free time watching TV, or watching YouTube, or watching a movie, or playing outside, or playing video games, or brushing their teeth, or listening to another band. If a consumer spends the time to listen to your music (out of the millions of artists and albums that exist out there — and likely billions of songs), then consider yourself talented — and the money will follow.

I called it last week — a Yahoo/AOL merger potential. I disagree with Arrington that Yahoo needs to compete with Google; I think they are going in a different direction. If they team with AOL, then they have so many weapons in the battle for behavioral display advertising — and access to probably 65% (?) of the eyeballs on the web [via pageviews; just like Google commands that via search queries].

Match them up with the ISPs to anonymously track each user and you’re doing some real damage with behavioral display advertising (super high CPMs).

Guest post I wrote for CenterNetworks — reprinted below:

Google has announced that 2D barcodes (called a “QR code“) can be included in their Google Print Ads program. Here’s how it works — you’re reading a magazine and there’s an advertisement for something you’re actually interested in. Most times you’d just turn the page and forget about it, because you’re not near your computer and don’t feel like stopping what you’re doing to go find out more information on the product/service in the ad by logging onto the Internet. But now, the print advertiser can put a 2D barcode in the ad, and you can simply whip out your cell phone, take a picture of the 2D barcode (using specific software installed on your cell phone that recognizes/decodes the 2D barcode) and then your phone’s web browser opens and automatically takes you to a corresponding website with more information on the product/service that you’re interested in.

It’s quite an interesting proposition for advertisers, because it allows them to use unique barcodes for all of their advertisements and thus track which ads are providing the highest ROI (or at least the highest engagement). An advertiser could have a different tracking code for one magazine (Fortune) vs another magazine (Forbes) and determine which publication to purchase ads in again; one newspaper vs another in the same city; etc.

As we all are aware, the USA lags in the mobile sector — we’re years behind Europe and Asia. QR Codes have been used for awhile in Japan, enabling these “physical world hyperlinks“. In fact, if an advertisement catches the interest of someone in Japan while they are out and about, 41.7% say they engage with the ad by scanning the QR code to find out more information.

In previous years, I had done a lot of research on this topic — how do you connect consumers from an “offline environment” (no computer access nearby, such as in a car, living room, etc) to an online environment to learn more about a product/service they see in an advertisement (whether it’s in a newspaper, magazine, billboard, TV commercial, or on the radio)? Basically, how do you eliminate needing your ad to be seen a frequency of 7 times before they can even think of making a purchase.

I even started a business (Aboutcodes – defunct now) that used VXML to allow a consumer to dial a toll-free number and input a code listed in an advertisement. This code/ad was then added to their Aboutcodes online account and the next time they logged into their account, the consumer would see links to further information on any products/services they had interest in (that they saw in ads).

A company that has been doing similar by using text messages is Houston-based QTags. The user sends an ad code via SMS, which then saves that ad to their online QTags account for viewing when they log online next. QTags charges advertisers for this service, which has been an uphill battle for them.

Seeing that the QR code has gained large adoption in Japan, it’s only sensible to assume this “technology” will gain adoption in the USA in the years to come. However, the standard in the USA right now is SMS text messages and thus I am curious whether a free SMS-based service could take off — whereby advertisers can register tracking codes for their ads (free via a website), use the codes in their ads, then consumers see an ad, send an SMS with a code, then an SMS is shot back with a hyperlink in it, which the user can then bring up in their mobile web browser — but also the code/hyperlink is saved to the user’s online account for this free service. This service I speak of would need the support of major advertisers to embrace the technology and utilize it in their ads. In the meantime, we’ll see if Google’s support of QR Codes can help them gain traction in the USA.

I was just thinking about Jotspot — remember that enterprise wiki site that got tons of buzz, because the founders were some of the Excite guys? They were acquired by Google back in October 2006 and I haven’t heard of them since. Turns out I’m not the only one, I checked out their listing on Wikipedia, and someone posted as of February 4, 2008, “The JotSpot homepage and many user accounts have gone missing, and it looks like no word from Google as to what happened.”

The list goes on with acquired start-ups that get neglected by Google — remember the mobile service Dodgeball (and the infamous photo of the founder giving the middle finger to Google after he resigned).

Or Jaiku, which was supposedly a Twitter competitor, yet even fellow Googlers won’t give the company any love — instead their colleagues talk about Twitter in their product demos.

Another one I could swear I’ve read didn’t go well for the founders was dMarc Broadcasting — a radio advertising software and platform.

Anyhow, I may just be full of crap, because if you check out the list of acquisitions Google has made, these are a mere blip out of the whole, and Google may have been acquiring teams, rather than a focus on technology, with some of these acquisitions.

OK – Not really. But honestly, I’d love to see Yahoo! blow off Microsoft and swing back with the purchase of AOL. I don’t think a merger of Yahoo! and Microsoft could really do anything. Microsoft wants a piece of search, which is the reason they are going after this. But in reality, I’m not sure the merging of these two behemoths would change people’s minds to use either of them for search if they aren’t already.

Now let’s talk about AOL. I honestly think AOL and Yahoo! together could be a good fit. AOL has been secretly amassing quite the conglomerate of advertising companies — they have their hands in basically every link of the chain for monetizing the Internet (via advertising). AOL also still has a strong consumer brand, which is what Yahoo! is.

AOL has shifted their strategy with all of these Advertising company purchases and a move away from being an ISP. Google owns 5% of AOL (at the time it valued AOL at $20B). I’d love to see Yahoo! purchase AOL, sell-off all the dial-up/broadband ISP-related activities to United Online (Juno, NetZero) and/or a Comcast (broadband), and take over more pieces of the web (AOL.com) — and make use of all their advertising companies to become the Display advertising behemoth of the web. Let Google keep going strong on search, but start focusing on highly-targeted display advertising using behavioral tracking mechanisms — and link up with other Sites on the web, allowing them to contribute user data anonymously, which then increases the CPM’s of their own ad inventory.

Yahoo! also just purchased Maven networks, so they are getting into video advertising too (apparently the reason they bought them was for their video ad serving technology).

So to recap — Time/Warner: Sell AOL to Yahoo! for cash or straight stock.

Yahoo! AOL would own tons of eyeballs on the web. (Someone should do a further analysis on this whole idea; I’d be curious about the effects: internationally; how all the ad companies would complement each other; etc)

I’m not the first to talk about this possibility, back in late 2006 Fortune spoke about it.