GenuineVC David Beisel's Perspective on Digital Change

March 3, 2008

Ben Kunz wrote an interesting article in this week’s BusinessWeek, but it wasn’t the controversial and inaptly-named title (“Why Widgets Don’t Work”) which caught my attention. Rather, it was his framework for the “history of the web” which did. He outlined a transition among three distinct phases of consumers’ primary activity online from receiving, to hunting, and now doing. While the web started with people passively receiving content from AOL, it soon transitioned to people hunting for information with Google. He says “’do’ is where the web is headed in 2008,” citing social networks and other social services (e.g. editing spreadsheets on Google docs, watching bank account with credit card balances, twittering). While the shift towards doing has been already well-underway for some time, I think the construct of understanding people’s mindset as they’re using the web, and how it is changing, is useful in discerning where it’s going and where the pockets of innovation (and corresponding startup opportunity) will be.

There is certainly a natural progression of the web as a media outlet and how we use it – we first learned to receive information with this new medium, then we learned to look for it proactively. We are now so comfortable with the platform that we now are at ease spending time on it “doing”, acting, and performing endeavors in and of themselves. I would say doing is really comprised of two activities: true point-to-point person-to-person communication and performing other real stand-alone activities which are further enhanced with point-to-point communication. (Online casual gaming is a good example of the latter – we’re seeing a trend towards incorporating social functionality into gaming activity, but the services themselves are primarily about the games which are then supplemented with communication).

A notable insight here occurs if we layer the do’er construct on top two other key internet trends – the deportalization of the web and the rise of online video – from which we can gleen some interesting areas for disruptive opportunity. With traffic proliferating towards the far reaches of the net (way down the long tail, if you will), advertisers are having a more difficult time reaching these corners. Widgets are certainly one way to do this, but it isn’t necessarily always a personalized experience. The true challenge is how to identify what advertising messages a user will be receptive to (not using personally identifiable information) in the absence of the contextual relevance afforded by “receiving” and “hunting”-based content. That is essentially the prime challenge that social networks are facing; it’s hard to monetize their content because it’s difficult to know what people want when they’re doing and not receiving/hunting. Behavioral ad networks are beginning to solve this problem, but only partially. And of course we’re seeing experimentation play out (with difficulty) with Facebook’s recent Beacon episode. It’s still going to take a few years and numerous innovations by startups (not just the large social networks and other social services) to figure out how ads should effectively reach the “doers” on every corner of the net.

The other intersection of this construct, with the online video adoption trend, indicates we’re still just in the early stages of being comfortable with the video format. Almost all of the video we watch online is in receiving mode. People fire up YouTube and watch the latest most popular clip forwarded to them, or you turn to Hulu to catch an episode of “It’s Always Sunny in Philadelphia” that was missed last week on FX. We are just beginning to hunt for video, but it’s really right around the corner as a mainstream use-case. Soon users and producers will be creating more informational-based content in addition to the entertainment-based video content which is the current norm. The web’s freeing from the binds of 500 cable channels will have the same effect on video that unshackling from physical printed materials had on text. The shift to universal search by Google (i.e. incorporating video segments in addition to text pages into search results) will really facilitate this change. Many VCs have anticipated this shift to hunting video with numerous fundings of how-to sites over the past few months, but there are many opportunities for informational-based video content for hunting consumers beyond the how-to. And in following this schema, the intersection of doing and video is one step further off, but it will come much sooner than it did with text+image content. YouTube just this past week hinted towards incorporating live video onto the site, which is potentially just one manifestation.

Kunz concludes his article essentially acknowledging widgets do actually work, just that some widgets are going to be more effective than others – it depends if and how it engages the right audience. At the end of the day, widgets are merely one arrow in an online advertisers’ quiver, not the only shotgun. They’re just one piece of the ever evolving puzzle of the web, which is “doing” more now than ever.

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  • Rob Go
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    Hardware naughty or nice? Great infographic from @witheiler http://t.co/ScOXC4UlaO
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    RT @bsrubin: I just published “Serial — The podcast that got me addicted to work.” https://t.co/rPXxoJP78k cc @serial
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    is the CS183B class that @sama is putting on for credit?
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    @wayne feel better

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