Usually, I post well thought-out viewpoints, but today I’m going to express three ideas that I’ve just been mulling over in my head.
The first originated from Nivi’s post in which he conjectures “RSS is the TCP/IP packet of Web 2.0.” He goes on to say,

“You can think of RSS like a TCP/IP packet. A source publishes an RSS feed and the feed worms its way through the Internet to get to you. Things get more interesting when the feed is routed through a bunch of services before it gets to you. The feed can go through services that[:] Insert contextual ads; Strip out boring categories; Splice in other feeds from flickr, del.icio.us, or from other bloggers (see Superblog); Manage the feed (see FeedBurner); Translate RSS to email; Splice in contact and calendar info (see RSSContact and RSSCalendar). When you route a feed through a slew of services, RSS becomes a protocol for Machine to Machine (M2M) communication.”

Hmm… this is a very interesting analogy. Or is it more than an analogy? Is RSS truly the “fundamental building block” for the “Internet Operating System”? I like the idea of the Internet Operating System (IOS) – what does this notion mean and what are the ramifications if you approach thinking about it in this way?
The second idea is one I’ve raised previously. Could we solve the problem of repeatedly registering for and setting up our online social networks with a meta-system that crosses all platforms? It could store extensive commodity connection information (i.e. who is connected to who), facilitating innovation in the services realm without the necessity of gaining critical mass to express value. If there was an open and central repository system for social connection data, social networking companies would be able to tap into the already wealth of information about a person. Steve Shu says that he could see this construct “for Web 3.0, but it may be tougher for Web 2.0 timeframes.” He is probably right, but is it really that forward thinking or pie-in-the-sky? Is there a way to approach this goal incrementally to avoid the huge collective action problem that industry standards require? Could a commercial endeavor march in this direction, or does it require a commercial-agnostic entity? Or perhaps I am wrong – maybe acquiring a community of users provides a required positional advantage for social networking companies which is integral to competitive success.
Finally, I’ve been thinking about the “sell-side advertising” concept that John Battelle originally wrote about and that Fred Wilson & Dave Morgan further promote. Battelle summarizes,

“Instead of advertisers buying either PPC networks or specific publishers/sites, they simply release their ads to the net, perhaps on specified servers where they can easily be found, or on their own sites, and/or through seed buys on one or two exemplar sites. These ads are tagged with information supplied by the advertiser, for example, who they are attempting to reach, what kind of environments they want to be in (and environments they expressly forbid, like porn sites or affiliate sites), and how much money they are willing to spend on the ad.
Once the ads are let loose, here’s the cool catch – ANYONE who sees those ads can cut and paste them, just like a link, into their own sites (providing their sites conform to the guidelines the ad explicates in its tags). The ads track their own progress, and through feeds they “talk” to their “owner” – the advertiser (or their agent/agency). These feeds report back on who has pasted the ad into what sites, how many clicks that publisher has delivered, and how much juice is left in the ad’s bank account. The ad propagates until it runs out of money, then it… disappears! If the ad is working, the advertiser can fill up the tank with more money and let it ride.”

What does this concept really mean and how could it emerge? Is a company called Zoundry, which allows users to easily drop affiliate product-links directly into their blogs, the next step in this direction after “traditional” affiliate programs? Could we truly ever have sell-side advertising, as advertisers surely want to retain some control over how their products are marketed and sold? Sell-side advertising sounds great in theory, but like a social-network meta-system, I wonder what are the best next tangible incremental steps which would translate an idea into action?
Again, these are my open thoughts and questions; just wondering aloud as I wrap my head around these theoretical and conceptual ideas.

Earlier this week, I had lunch with a VC friend of mine, and the subject of blogging came up. He told me that nobody at his firm blogs, not because they aren’t aware and “plugged in” to the phenomenon, but rather because they associate VC blogging with a negative reputational value. We talked about the risks involved with VC blogging, which I think could apply to all “professional” blogging (by that I mean individuals who blog about their professional life specifically, not those who are paid to blog).
While many in the blogging community have extolled the virtues of this activity, it appears that the potential risks involved have often gone largely overlooked. My friend and I identified five perceived reputational risks involved with professional blogging that could inhibit people from doing so:
1. Blogging is viewed by many as a fad. Whether or not this ultimately bears to be true, the viewpoint is a real one. Should one associate their career and personal brand with a trend that perhaps may fall by the wayside? What will be the reputational effect if/when one stops blogging?
2. Bloggers are sometimes perceived to have many negative attributes. Some believe that bloggers are overly-bearing “used-car salesman-types” in selling themselves or the extremely ego-centric people who speak the loudest but don’t really know what they are talking about.
3. Professionals (especially VCs) should have a network already to leverage; blogging could signal that one’s network is weak. Blogging is in effect a “networking” activity which connects people to other people. Some view bloggers as those who don’t have a strong network and use it as a crutch, or as those who aren’t successful in other networking venues.
4. Professionals are busy people; blogging could imply that one isn’t busy with “real” work. Serious blogging takes serious effort, and all professionals are limited by the amount of time that they have during the day. Perhaps bloggers can’t find productive uses of their time and are using blogging as a meager substitute for nothing.
5. Blogging provides an uninhibited permanent record to ones’ thoughts. Yes, permanent. Everyone is wrong some of the time. (In fact, VCs are wrong a lot of the time with their investments). When someone is wrong and there is an easily accessible record of it, that individual must either admit the error if his/her ways or ignore it to cover it up. Both of these are difficult actions to take, and could potentially leave someone worse off than taking no vocal opinion at all. And with the internet being archived in the manner that it is, it’s clear that anything published online will be able to be accessed forever.
My own personal view: User-generated self-expression content is here to stay, but blogging in its current form will certainly evolve. Currently, I see many benefits to blogging, and will continue to do so until those are over-weighted by downsides. If that point comes, I will clearly articulate why I have decided to stop (or slow down my postings). I feel that transparency here is the best route to chose, as do many others in this community. Yes, the negative attributes enumerated above are both real and tangibly felt by many, and I, along with any professional blogger, do run the risk of these associations. But I believe that the benefits associated with blogging, including the ability to critically think about and express views that are extensions of my work, outweigh the potential drawbacks and risks. And, of course, I am careful to limit what I say to things that are careful and thoughtfully articulated, as I am mindful of the permanent record that online publishing brings with it. In sum, while some in the community may argue that everyone should embrace the self-expression blogging phenomenon, I would argue that each individual should carefully weigh the risks and merits involved with it.

Two weeks ago, I wrote was has turned into my most commented on post to date, An Entrepreneur’s Perspective on Information Asymmetry in Bootstrapping. I intended this entry to highlight a unique perspective on the role of information in the genesis of a startup, but my readers identified a more important and deeper issue at play: the role and involvement of a founding team and founder’s equity. My original comments were as follows,

“[My entrepreneur friend’s] perspective is grounded on the fact that a significant information asymmetry exists between an entrepreneur and his or her constituents, especially extremely early in company formation. No matter how much she communicates her vision of the opportunity, prospective employees/contractors and angel investors alike are not going to be as fully informed about the situation as she is. Only she fully knows the market opportunity and has complete confidence in her ability to execute on it. Because of this differing level of information among each party, her constituents are going to perceive her venture to be riskier than it actually is. And investors and employees are going to want a higher compensation-level for that added perceived risk. Consequently, she doesn’t want to give up more equity than she believes is a “fair price” for investment or services, as these other parties have an inherently different viewpoint than she does.”

Many, like Pat Matthews, commented on the greater issue at hand, raising concerns about founding a company without committed people besides one individual,

“I know how difficult it is to build a successful startup – and I think it’s nearly impossible to do it simply with contract workers.”

Samuel Murphy echos,

“I thought building a new business was supposed to be a team endeavor? Could she be shooting herself in the foot if she tries to hold on to too much of the potential value? What is an idea worth? What is the creation of a new entity worth, Zero (maybe negative) through billions, but how often is one person able to hold majority control? Doesn’t seem too often these days.”

My friend responded,

“Yes, I need a team. Yes, I must lead by example. And, yes, I realize 100% of nothing is still nothing… I don’t have the skills to build it myself… So I’m using my skills to get cash to pay someone else to use their skills to build my prototype. And who knows, maybe the developer will become my first team member. At least I’ll have something, other than an idea, to reduce the asymmetry that currently exists. And in the meantime I’ll keep reaching out to people who drink the same kool-aid and see if there is a talented developer in the mix.”

My own thoughts and opinion are two-fold:
1. One should strive to eventually have founding team. Speaking from my own experience at Sombasa Media where we had four founders, I do truly believe that starting a company should be a team effort. A group of people devoted to an endeavor provides the added resources, and more importantly, the spirit, that will help carry the company in its infancy and later on during difficult or strenuous times. Yes, there are numerous counter-examples, I completely realize. What I am saying is that all other things being equal, a founding team is much stronger than a lone founder.
2. Picking and establishing a founding team is a matter of timing with complex issues facing different companies with different situations. Though a team is ideal, an idea often starts with one. It is up to the sole entrepreneur to manage the process and transition from this idea’s inception towards manifestation. Establishing the founding team is a delicate and difficult process, and one that should be handled carefully with input and advice form others. It is up to the judgment of the entrepreneur to understand who and when is right for the company. I commend my friend for her openness to critical feedback on her situation which she has genuinely expressed to me in person and also in her comments to the post, “I took to heart each of your comments… Thanks… You have given me, and I’m sure many entrepreneurs, some great insight.” There is obviously no easy one-size-fits-all answer here, and an entrepreneur who is both mindful and deliberate about his/her actions during this stage is more likely to succeed than one who isn’t. That is not to say missteps are going to be avoided, but rather the entrepreneur who is thoughtful and flexible possesses an advantage. (For additional reading about the pitfalls involved with not picking the right founders, I’d highly recommend reading Allen Morgan’s entry from yesterday about the subject.)

Consider a piece of software that allows you to fix, manage, and store your photos. Better yet – you can assign “tags” to each of your pictures with as many keywords that you want, which allows you to find, sort, and retrieve your photos quickly and easily. And you can even share your tagged images with all of your friends.
Now, name that software. Flickr, which launched in early 2004? No. What about CNET’s Shoebox, which just launched last Friday? No.
Try Adobe’s Photoshop Album 1.0, which was released in early 2003. Yes, Adobe’s low-end consumer product was ahead of its time, quietly introducing photo tagging to the masses before it was hip among the digerati to do so. But now on its 2.0 release, Photoshop Album has been outpaced by desktop software offerings like Google’s Picasa and all of the next-generation internet services like Flickr. But, as I’ve written previously, the company is “is used to producing shrink-wrapped software, not online services.” So with a divide in the internal culture between the “internet folks” and the “product people,” the company has been slow to introduce a service that integrates both an online component with a desktop app.
But don’t expect Adobe to stand by idle forever. This company shouldn’t let opportunity slide by in any digital imaging space, especially when it appears that there is so much opportunity here. With a relatively rich currency for additional acquisitions Adobe could go out shopping in the next year or two to put them back in the forefront of consumer photo software and services. So besides for other obvious “internet company” acquirers, photo-sharing startups should continue to innovate and make themselves look pretty for Adobe as well.
(Disclosure: Although I’ve worked for Adobe in the past, my opinions expressed above are merely that – opinions. I have no knowledge of internal company efforts.)
UPDATE: In a comment, Sam Pullara points out that the tagging was available in iPhoto as far back as at least January 2002 (in function, but not name). Indeed, he notes that “Tagging isn’t new. People actively using it in a collaborative fashion is fairly new.” I have two thoughts from this feedback. First, it would be interesting learn more about the history of “tagging” (Wikipedia doesn’t add much). Second, though Album wasn’t the first instance of photo tagging, I still maintain the three main points of my post: that Photoshop Album 1.0 was very forward thinking in this realm, that Adobe has fallen behind in the consumer photo sharing game, and that there is a high potential for acquisition in this space by the company. Thanks, Sam, for the input.

In the context of reviewing Yahoo’s MyWeb 2.0, John Battelle gripes,

“But, on the other hand, it’s a pain in the ass to keep creating social networks, maintaining groups, tagging, sharing, etc. It’s a habit I’m not sure the masses will ever get into, at least in a way that is driven by pure selflessness.”

I personally share his concerns. There is a lot of power in connecting and sharing information with others – it’s obviously a major theme driving innovation on the web now. However, the difficulty and frustration involved with the setup of these services is not insignificant, even for a fairly technology-savvy person like myself. How does the average non-techie person like my mother approach these tasks? The answer is that she doesn’t.
Currently, the companies in the social networking space or that contain a group/social aspect tightly hold onto their connection information. And rightfully so – the network effect is indeed a powerful one that comprises much of the value and competitive advantage of these companies. But as the number of social networks and connection-services grows, the likelihood of achieving the necessary critical mass for each one diminishes. With how many services is the average consumer going to invite and tell his/her friends to join or connect?
What we could turn that situation on its head? What if you could harness the power of the service as more valuable than the network itself? In a previous post, I argued that “in addition to possessing a reason d’etre, successful social networking companies will more closely integrate the revenue model into the functionality of the service.” I see the service itself as true gem, not the information about connections that support that service.
After all, isn’t your connections information going to become a commodity? In the future, shouldn’t all online services know who I know and how I relate to them? Perhaps a solution to this problem is to have an open system in which information about whom you know and the meta-data about those connections stored in an open fashion? In this scenario, services wouldn’t have to rely gaining critical mass to express value; instead, they would be able to tap into the already wealth of information about a person. I do realize that this would take enormous collective action, but perhaps there is a way to approach it incrementally. (I’ll have to think about this idea more).
In the end, I believe that the real value is in the social services (from recommending music to finding a job to sharing photos) overshadows the network on which they rest. With a little effort anyone can obtain my social connections data – the key is to know what to do with it. Could we intelligently figure out how to solve this problem that Battelle complains about above?

Last week I wrote a post entitled “Know Your VC’s Magic Number” in which I said,

“At the heart of the issue is that different VCs are managing different sized funds – so the appetite for how much capital they would like to invest in a company over its lifetime varies accordingly… In determining if a venture firm is a good fit for an entrepreneur (and vis versa), every first meeting should include a brief discussion about fund size, typical initial investment size, and the magic number of how much the VC would ideally like to deploy over the life of a company.”

Two interesting related blogs entries surfaced (to me) since then about this subject that I thought are worth highlighting. The first, Jeff Bussgang’s piece “Size Matters” adds some additional color and historical perspective to topic,

“…a critical thing for an entrepreneur when fundraising is to find a firm that’s going to fit their capital profile. After all, if a VC is trying to force too much money down the entrepreneur’s throats, it will mean more dilution than they’d like. And not having deep pockets means there’s a risk of getting caught short just at the moment when a few extra million might be needed to get to the next level. Thus, the Goldilocks Rule applies to VCs and fund size: not too big, and not too small, but just right.”

In addition, Jeff clarifies that it is the size of the current fund that actually matters in how much capital that a VC would ideally deploy,

“The nature of that sweet spot comes down to the size of their current fund, not their total capital under management, for all the reasons discussed above. Thus, always ask a firm what their current fund size is, not what they have under historical management.”

The second related piece was written by Christian Mayaud, in which he argues that not only is there a magic number for VCs, but also a magic number for entrepreneurs. They will act differently in the face of risk depending on their progress to date in achieving an ideal “magic” net worth number,

“If you look at the professional life of a typical successful entrepreneur, their ability to tolerate personal risk varies over time… [It is] something an entrepreneur should become conscious of because his personal risk tolerance profile will color his judgement over the lifetime of his career… Young recent college graduates behave differently from middle-aged first time entrepreneurs, serial entrepreneurs behave differently from first-time entrepreneurs, senior managers behave differently than founders, etc., etc. — in part, due to the existence of their Personal Risk Tolerance Curves and where they are along them.”

The question I would raise is if an entrepreneur’s (or anyone’s for that matter) magic net worth number shifts over time. I agree that an inexperienced entrepreneur may see things differently than one who has a few successes under his or her belt, but don’t those successes broaden the view of what is in fact potentially achievable? Moreover, I would also maintain that entrepreneurs specifically are not just driven by extrinsic motivations, but also by intrinsic ones as well. There are often deeper reasons than financial ones why an entrepreneur – especially a serial entrepreneur – is willing to take significant risks with both his/her private wealth and career. To overlook those considerations is simplifying the issue to a certain degree. That being said, Christian is correct in stating that VCs should and do bear in mind an entrepreneur’s situation when assessing an investment opportunity.

With the number of VCs who blog increasing, the amount of valuable information available is growing as well. Most of the VC blog content available possesses a time-based relevancy component to it. And that’s one reason that blogs are so interesting – they are an instant feedback mechanism to learn what individuals are thinking about a certain subject or topic.
But I’ve notice that a significant portion of content of what VCs have blogged has been reference material. It is largely static recommendations and thoughts directed towards entrepreneurs to give them insight into the venture capital process. Some of the best examples include Allen Morgan’s “Ten Commandments for Entrepreneurs,” Brad Feld & Jason Mendelson’s “Term Sheet Series,” along with many others.
Does it make sense for us (read: me take the lead) to start an open venture capital wiki for this type of reference material? Would it be helpful to have it all in one central location, as opposed to spread throughout disparate blogs? (Of course, we would diligently follow the licensing and attribution requests/intentions of the authors). One idea would be post the material on a dedicated hosted wiki (through SocialText or on Seedwiki). Another would be to avoid “recreating the wheel” and just use Wikipedia as the central resource.
So… I am looking for my readers’ (i.e. your) thoughts. Is this open venture capital wiki a good idea? What is the best forum or technology service solution for this project? What are the posts that you think should be included? Do you think that others will contribute to this effort? I am eager to hear your ideas via e-mail, comments, and trackbacks. Thanks.
Note: special thanks to Jeff Clavier for acting as a sounding board for my initial thoughts on this idea.

Historically, the U.S. mobile carriers have taken a “walled-garden” approach to content. They have provided content providers with a closed-portal system in which nearly everything that consumers can purchase and use on their phones is distributed exclusively through their own proprietary deck. However, it appears that the tide may be turning. In the last few months, many have begun to predict that the U.S. industry will eventually emulate Europe’s model in which the carriers’ remove their walled-garden in favor of an off-deck distribution open billing approach. And while this diminishes the power of carriers as a gatekeeper for content, it potentially increases their revenue as they capture a slice of the exploding content stream through their frictionless billing service.
Antony Bruno of Reuters recently wrote in Sprint, Verizon Opening Doors to Mobile Content,

“Sprint and Verizon Wireless may soon lower the walls on their networks, allowing their subscribers greater access to third-party content, including ringtones and graphics. The mobile phone giants are responding to U.S. cell phone users’ growing interest in buying content from sources other than their wireless carrier. Allowing subscribers to access non-network content is a common practice for mobile operators in Europe, as well as U.S. carriers Cingular, Nextel and T-Mobile… In the last year, [other] carriers have seen off-portal content sales grow at a compound annual rate of 410 percent. In the last six months, total off-portal sales activity skyrocketed 1,024 percent, with a month-over-month growth of 141 percent this past quarter alone.”

QPass, a wireless transaction management firm, recently stated in a piece entitled North America Following Europe’s Off-Portal Purchasing Trend,

“Off-portal content will grow in the U.S. once operators realize they can only handle so much content via their own portals and they can make money from off-portal traffic… Most importantly, operators will enjoy significant revenue generation from mobile content and services as they bill off-portal space at a very low cost of acquisition.”

Finally, Moconews.net commented,

“While operators may mourn the decline of their ‘portal power’, they stand to benefit in the long run from the shift back to off-net content provision.”

The ramifications of the trend towards off-deck content – if and when it happens in this country – could be enormous. Of course, it will cause a dramatic shift in the way that “traditional” mobile content (like ringtones/music, wallpaper/graphical content, and gaming) is marketed and distributed. But more importantly from my perspective, the potential end of the walled garden creates opportunity for innovative content and applications from startups that have only begun to proliferate under the current industry structure. What hasn’t worked previously that will now begin to emerge through these alternative channels? Or even more exciting, what new content and applications that are just emerging as a result of other trends will be even further encouraged by a more open industry structure?

Sarah Lacy of BusinessWeek laments in the context of the Grokster vs. MGM case, “It takes guts to be a startup in the music sharing business these days… there are also a lot of pitfalls.” Indeed, the legal copyright risks involved with the peer-to-peer file-sharing leave startups with a potential minefield to navigate. Even as Mercora approaches addressing these issues from a “radio” solution and others are planning to leverage Snocap’s technology in their “safer” peer-to-peer offering, the difficulty in playing in this arena is apparent. Yet as the music industry continues to move towards full digital distribution, I believe that there are other areas where startups can capitalize on opportunities in the music space:
Recommendation & Discovery – How do music listeners find and discover new music? Startups like Musicmobs, Audioscrobbler, Savage Beast, and many others offer consumers music recommendations (direct and via distribution channels). Some services plug directly into iTunes to gather listening history & preferences, and others gather data in other ways. Some engines base recommendations on what other users with similar habits listen to, and others try to directly discern qualities inherent in the music itself. All in essence are taking a step towards what I’ve called predictive personalized media.
Piracy Interdiction & Enforcement – Instead of facilitating the piracy of music, MediaSentry (recently acquired by SafeNet) and BayTSP operate on the other side of the coin. In addition to monitoring P2P networks for copyright infringement, these firms help their clients in the interdiction and enforcement of infringers.
Band Promotion – A company called Sonicbids offers independent artists electronic press kits. Bands and solo artists use this product to promote themselves to local venues and music festivals.
Local Show Calendars – While not directly focused on the music space specifically, vertical search engines like EVDB log and facilitate discovery of local music events.
Band Community – The social aspect of music is a compelling one, and while MySpace has a strong offering community features around bands and other music artists, there is probably room for additional innovation here.
Plus, of course, there also DRM offerings and other software infrastructure pieces as well. Certainly the above list is not exhaustive, but is rather a reflection of the possibilities available for music-related start-ups other than delivering and/or distributing the music. The point I am trying to make is that as music continues to transition to pure electronic distribution, new business models and alternative revenue streams will emerge. And there are opportunities for start-ups to capitalize on this trend outside of merely offering the music itself. As an avid music listener, I am personally excited about the technologies and services that help me find, share, and experience music.

Yes, I do realize that the concept of mobile blogging (moblogging) has been around for a while now. But one important aspect really didn’t hit me until during a few recent conversations here at Masthead and after reading this NYT article on Verizon’s new offering. The point that really stuck me is the “vision of one billion people walking around with mobile camcorders.” And when we get there, the notion of mobile reporting will be dramatically altered. As the mobile phone transforms into a personal & portable input device, soon there will be millions of people roaming around with direct and immediate publishing machines.
What are the ramifications of this change? In essence, there will be millions of roaming open source reporters walking around, ready to log and publish news immediately as it occurs. Now that’s very cool. We won’t have to wait for traditional news media to learn about and send someone to cover an unexpected event. Provided that there are people in proximity with a mobile camera phone, the experience can be instantly covered and reported via blogs. Of course this type of coverage is already occurring with conferences and other events of the digerati club, as well as during last year’s election. But surely there will be one seminal large-scale event when moblog reporting truly hits the mainstream. Perhaps someday soon a 24-hour news channel will replace the scrolling ticker with a Flickr RSS feed of event-specific tagged photos? Or we’ll just receive our news via RSS feed from “trusted” editors of (mo)blogs? (As I’ve blogged about previously, we need some type of filter for the massive amount of instant content that will be available.)
If anyone has links to others’ thoughts on this idea of roaming mobile reporters, I would be interested if you could share them.