With today’s buzz surround the rumor of eBay’s potential acquisition of Skype, I was struck by what the larger implications of this move would be. One of my readers, Zbigniew Lukasiak, recently brought to my attention an article which I read last weekend. Written by Andrew Odlyzko, “Content is Not King” maintains “that connectivity is more important than content.” Citing historical industry revenue figures, Odlyzko makes the point that “spending on connectivity [point-to-point communications] is much more important for communication services than spending on content can ever be.” Though the article is a little long and somewhat dated, it is a good academic argument supporting this thesis.
If these eBay rumors are indeed true, it represents a significant departure from the company’s current main business lines. And at a speculated multibillion dollar price-tag, the deal would certainly be valued at more than its most recent acquisition, Shopping.com, a “content” site. While the latter deal makes sense to me strategically, the Skype one for me is a stretch. Certainly there are other more strategic content companies out there for eBay to acquire. Given a blank slate to spend suspending strategic considerations, eBay’s possible move re-raises the question – is connectivity worth more than content?

Over the past couple years, I have been involved with and close to a number of both successful and unsuccessful startups. To me, the most exciting (and most perilous) times in a company’s life-cycle are the early first stages when it is just getting off the ground. The company’s founder(s) role is an essential one which carriers many risks for missteps. So I’ve compiled what I’ve learned to be the Seven Founding Sins – common mistakes which often divert entrepreneurs off the path towards success.
Inauthenticity. While there are notable exceptions, most successful entrepreneurial endeavors are sprung from a genuine idea born from true experience or direct & tangible observation. A founding team should not only have the relevant experience, but also immediate and authentic understanding of the end-users’/customers’ need. Blank-slate brainstormed white-board ideas rarely even deserve the material that they’re written on. Great ideas search for a great entrepreneur; great entrepreneurs don’t search for a great idea.
Sloth. It may seem obvious, but founding a company is not a full-time job. It’s a full-time life. And then some. And then some more. Only those who truly understand this notion have a shot.
Extravagance. A startup is just that – a startup. Without the full corporate infrastructure support, and more importantly, without extensive monetary resources, founders and employees must spend wisely. Even if VC financing has been raised, extravagant and wasteful spending by a few founders/leadership sets the tone for the entire organization. Jet-set lifestyles are appropriate after the liquidity event, as employees treat resources with the same respect that those in power do.
Taciturnity. Rapid progress and constant adjustment in a new endeavor requires continuous communication of these changes. Founders need to ensure that all of the constituents who are involved in making the company a success – co-founders, (prospective) investors, advisors, (potential) customers, employees, analysts, press, bloggers, professional service providers, etc. – are regularly updated with an accurate and realistic assessment of both developments and challenges that affect them specifically.
Greed. Holding too tightly to the percentage of ownership figure doesn’t allow room for a company to attract the leadership, employees, and investors that will maximize shareholder value – including the founders’. A flourishing startup endeavor requires investing equity in others to generate substantial return.
Arrogance. There is a fine line between a beneficial pride of confidence and a dangerous arrogant hubris. Founders must realize the limits of their abilities and seek help/input about when others on the team are more informed or in a better position to make decisions. Letting others control activities frees founders to contribute where they can best – in whatever role that may be. Nobody, including a founder, is always right.
Indecisiveness. The beauty of a startup is that there are endless possibilities. The difficulty is to concentrate on one opportunity, not every opportunity. The sooner that a new company can find its focus and make strides, the better. Of course any new company necessitates flexibility, but there is greater risk in trying to be “all things to all people” than succumbing to rigidity. In the end, tough choices are indeed tough, founding entrepreneurs need to make them.

Thinking about the meaning of “beta” after yesterday’s entry concerning the term’s potential overuse, I wish the term could be alternatively applied in one certain situation – on my blog posts. More generally, what if there was a way to meta-tag content, like blog-posts, with a level of how thought-out the ideas are contained within? One could classify each idea along the typical development stage nomenclature of pre-alpha, alpha, beta, and gold/release. There are many times when I would to have liked to signal to readers that what I am expressing is just a new idea that I am toying with, not something that I’ve spent a lot of time on with hard-felt beliefs. The following are some of my other posts correlated to how developed the ideas were when I posted them:
Pre-alpha: Musing on Three Not-So-Fully-Baked Ideas
Alpha: An Entrepreneur’s Perspective on Information Asymmetry in Bootstrapping
Beta: All That (Content) Glitters is Not Gold
Gold/Release: Why I Like Our NewsGator Investment
Perhaps we could use microformats, tags, or some other system to accomplish this goal? I am just thinking out loud here; perhaps you could say that this post is in alpha stage.

One of the great benefits of Web2.0 consumer internet services is that the product cycles have diminished. No longer are the next versions available and shipped every eighteen months like traditional shrink-wrapped software. Instead, when a new feature is ready, then it’s ready to go live to beta test. Google has led the charge of conditioning of us to view these beta versions as an ever evolving service. After all, GMail is still in beta well over two years after its initial release.
For startups, however, is there market adoption risk in the perpetual beta? Or, more importantly, is there risk in launching with only a half-baked or quarter-baked service? Yes, I know and agree with all of the virtues extolled in the continuous launch approach – immediate feedback from customers, quicker time-to-market, ability for building buzz. It seems to me, though, that the widespread early beta launching perhaps has gone just a little too far.
It appears that the word “beta” is slowly losing its original meaning. Or maybe it’s just evolving. Wikipedia says a “beta release usually represents the first feature complete version” of a product. Is that really true of all Web2.0 start-ups slapped with the “beta” moniker? Perhaps “alpha” (“still awaits full debugging or full implementation of all its functionality”) or “pre-alpha” (“not feature complete; that is, it is at the stage where designers are still wondering about what functionalities the product should have”) are more suitable labels.
The purpose of this post isn’t to complain over semantics, but about suggesting that startups more actively think about managing the expectations of its users. Many times I have visited new sites (wearing my consumer hat, not my VC hat) and been completely turned off because of the utter lack of functionality of the beta version. Will I forgive them and return at a later date remembering that, after all, it was a beta? Maybe, but less likely. Everything’s a beta these days, so why should I be any more tolerant of deficiencies? While the early adopter community may be forgiving and conscious of the Web2.0 beta paradigm, the average consumer is not.
I am not suggesting that we go back in time and resurrect extended product cycles. Hardly. I am suggesting that emerging web services startups should give some deliberate thought about what constituencies are ready to see a release – and especially a new launch – before it is opened up to the general public.

Like Jeff Nolan and Russell Glass have recently expressed, I am struggling with the excitement surrounding podcasting. Yes, I understand that it is an extension of user-generated content into another media type and that it rides the wave of digitized sound files becoming ubiquitous with portable listening devices. I’ve listened to a fair share of technology-related podcasts myself (most of which have been forwarded to me by others), and they often provide unique insights (like Dave Winer’s May interview with John Palfrey and Jim Moore a month before they announced their RSS Investors fund).
But I think that the main difficulty I have with podcasts stems from the fact that they are temporal in nature. Unlike static text or still-photographs, audio files (and video files, for that matter) possess a time component to them. This attribute poses two issues: first, the content cannot be easily scanned and adjusted accordingly by the reader. I can skim an article or a set of pictures to determine if I want to read the whole thing or view one in more detail. Instead with podcasts, I am required to listen to the content in its entirety to fully appreciate the value contained within it. In addition, temporal content doesn’t allow for easy and direct pointing from other user-generated content. One of the great things about blogs compared to mere “old-fashioned” websites is the ability to trackback and point to another part of the conversation because an entry is permalinked. The ability to do this with audio files is more limited.
On the content creation side, no matter how easy the technology is now, it is still a larger production hurdle to create an audio file versus typing or taking a snapshot. Although I consider myself an avid blogger, I don’t feel the impetus to create in these formats.
Perhaps I am thinking of this content type too much in a blog paradigm and not in a news/analysis/entertainment one. Yet because of the limitations above, I am having trouble seeing the kinds of content that would uniquely find this medium best, as opposed to the extremes of purely text or a full audio-video file. While the full audio-video format enabling vblogging posses the same limitations enumerated above, it appears to me to be a much richer experience that transcends these drawbacks for many types of content.
But one person is just one datapoint (especially myself). Obviously there is a lot of enthusiasm surrounding the phenomenon, including blue-chip VC investments. Perhaps over time I’ll begin to see it myself; although I am just not there yet.

I’ve recently just begun to spend a little bit of time thinking about marketing and advertising on mobile phones. With my background in online/e-mail direct marketing, I can easily see the potential power of direct marketing opportunities that the mobile phone platform offers. Obviously, members of groups like the Mobile Marketing Association (MMA) see the promise as well. It seems to me, however, that most of the mobile marketing to date has been the utilization of white-labeled storefronts for brands to extend into images, ringtones, and games. Or MMS/SMS opt-in promotions. Will we ever see banner-ads or text-ads, akin to those online, enabled by advertising networks embedded into applications or even onto the deck itself? In five years will I open up my flip-phone and see an ad before I answer my call?
It seems to me that the difference between online and mobile marketing is that the consumers fundamentally view media consumption on these channels as different. Consumers expect everything online to be “free,” and thus tolerate an amount of intrusiveness from advertising. On the other hand, consumers are conscious of and willing to pay for their phones’ service and the content that goes with it. An inappropriate or ill-timed advertisement could overly disgruntle a user away from either the carrier or the marketer. The hurdle promote on a mobile phone seems like a high one which deserves careful attention of those who are pursuing these avenues. But if approached correctly, it seems like quite an opportunity. Because of this working hypothesis, I’m going to continue to spend more time here; again, it’s something that I’ve just started to think about.

Coincidentally (or maybe not so) in the past week, I’ve been in a few conversations about more and more apps coming to a browser near you enabled by Ajax – namely an alternative to the Microsoft Office suite. Paolo Massa is working on AjaxOffice and Writely is an alternative to Word already available in beta. Which begs the question – where is all of this data going to be stored? Flickr already stores my photos, but what about every other filetype? Perhaps it would be better if all of my own files were tagged and stored remotely, as Jesse Andrews suggests, “Web 2.0 needs Data 2.0! A del.icio.us for files.” Will the browser finally render my OS inconsequential and break the MS stronghold? I am not saying that these ideas/plans aren’t without concerns, but they are definitely thought-provoking.
UPDATE: It’s tough to continually monitor the blogosphere for everything relevant to a conversation. Case in point, last night I as I was catching up, I saw this post by Robert Scoble and the follow-up by Om Malik debating the role of thin clients. Also, read Richard MacManus’s thoughtful piece as well.

Yesterday Jeff Nolan raised the idea of creating a VC wiki as a central repository for all of the valuable content created by venture bloggers as of late (spurred on by Brad Feld & Jason Mendelson’s Term Sheet Series). I asked the same question in a post two months ago – is it time for a venture capital reference wiki?
Since that blog entry I’ve had a number of conversations about the idea, both over e-mail and in real-time. And because of these, my thinking has changed. My own new thoughts on the issue are as follows:
1. Reference vs. opinion material. Much of the content which would be included is not necessarily purely reference material as I first believed, but really advice-based content. Though it is not time-sensitive (like most other information in wikis to my knowledge), it is indeed opinion-based, as opposed to purely factual. So while Allen Morgan’s Ten Commandments from Entrepreneurs is a great timeless series of pieces to continually refer back to, I see it as inherently different type of content than, say, that found on Wikipedia. Somehow to me, the type of material we are discussing doesn’t neatly fit into a reference wiki form.
2. Whose content is it? My hypothesis is that some of the leading VC bloggers would prefer not to decouple their content from their own site, as they would like to retain the associated authorship of such work. (Note that I am not attempting to ascertain the intentions of anyone specifically, just making a broader general comment.) An attempt to create a site that includes VC authors’ text (with citations) rather than just links to their text on their own sites may go against the grain of how the spirit of how their content to was intended to be used. And I agree with this sentiment from a reader standpoint as well – there is value not just in citing an author of the content, but also tying the content with an author. Because much of the content is advisory rather than just factual, I want to know who is communicating it to me.
3. Limiting conversation. An attempt to create a go-to reference site for VC advice (as a living document continually evolving with consensus) limits open and outwardly facing discussions of the issues at hand in the blogosphere. While there are often cases where there aren’t severe disagreements on certain topics, I would think that there are subtleties to many issues at hand which are worth highlighting in conversational format (as opposed to a reference one).
Because of all of the above concerns, I don’t think that a VC Wiki is necessarily the best way to proactively archive the extremely useful time-insensitive content that is emerging in the VC niche of the blogosphere. Perhaps the better way to approach the situation is to be proactively organized about tagging content of this type in delicious, as both Brad Feld and Toby Padilla suggested in comments to my original post. I’ll think about that notion more. That being said, both Ross Mayfield and Tom Shields are hosting viable VC Wiki sites that could be used as a platform, if consensus moved in the other direction. Other thoughts and reactions? Obviously this is an evolving discussion.

One large difficulty facing web startups relying on user-generated content is the chicken-and-egg problem of creating both the content and an audience. Without people creating/sharing material, there’s no reason for people to surf the site; without traffic, there’s little reason to contribute.
As I’ve written before, different content types require different levels of contribution before the offering as a whole delivers tangible value. Photo sharing sites, for example, don’t need a large number of contributors before the content contained within is worth viewing. On the other end of the spectrum, however, are local yellow pages and directories. These sites necessitate both a wide and deep contribution-level before the service is a go-to destination for such information. Once this magical level of “critical mass” is reached, a virtuous cycle of audience and content-generation follows.
So what’s a company stuck in this situation to do? One way to prime the pump is to in effect pay users to contribute. Judy’s Book rewards users with a $5 coffee card and for adding five posts and gives them an iPod Shuffle for writing 50 reviews and inviting ten friends (aiming at both sides of the equation). It’s appealing to explicit & external rather than the intrinsic rewards for creating material.
Unfortunately for startups, the large portals and established internet players have a leg up because they already posses an audience. (Yahoo Local just relaunched emphasizing user-generated content and already has some good user-written reviews of restaurants.)
But my favorite example of seeding user-generated local content just came last from Amazon. When I opened my inbox this morning, I found an email entitled, “Tell us about Masthead Venture Partners”:

Dear Amazon customer,
We want to introduce you to the new Amazon.com Yellow Pages!
We are sending you this email because you recently shipped an Amazon.com purchase to the location of Masthead Venture Partners. You will find Masthead Venture Partners listed in the Amazon.com Yellow Pages because we have provided a free business listing to them.
We are asking business owners, employees, and customers to submit more information about businesses free of charge, so we can help businesses and customers find each other. Last year tens of millions of customers conducted a shopping transaction on Amazon.com, so we know this will be a powerful tool for business owners and consumers alike.
You can help improve the information of Masthead Venture Partners now!
* Tell us more about the business:
http://www.amazon.com/gp/yp/B0008JOL94/ref=yp_ema_dp_biz/#improve
* Upload your own custom pictures of Masthead Venture Partners:
http://www.amazon.com/gp/yp/B0008JOL94/ref=yp_ema_dp_ima/#improve
* Write a review!
Check out the current free business listing and see how you can make it better!
http://www.amazon.com/gp/yp/B0008JOL94/ref=yp_ema_dp
By taking a moment to tell us more about Masthead Venture Partners you can make the business listing more attractive to potential customers.
Thank you for using Amazon.com Yellow Pages!
Sincerely,
The Amazon.com Yellow Pages Team

Specific, targeted, personalized direct marketing – now that’s a great way to seed user-generated content. I think Amazon was very clever in realizing and capitalizing on the asset list that it already owns.
(Yes, this communication could be construed as spam-like and alienate some customers. I hypothesize that a cross-functional e-mail like this one sparked internal debate in the company.)
As user-generated content continues to become increasingly important, I think we will continue to see new and innovative ways to spark both an audience and material for that audience.

Just one day after I suggested that Google’s acquisition strategy is to cherry-pick small pre-significant-funding startups to buy innovation and engineering talent, the company announces that it plans to sell approximately $4.2B in shares of its stock. And as Paul Kedrosky concluded, “It seems fairly certain, therefore, that Google has some company-buying in mind.” Large company-buying if that’s the case. It appears that Google’s past purchases are perhaps not necessarily indicative of its future ones. So now both low-flying seed-stage companies and larger-cap techs are potential acquisition targets. Internet startups seeking liquidity have even more reason to become hopeful.
The alternative explanation, however, is that Google views its stock as overpriced and is “selling high” while it can. This is at least the second event this month of “selling search” – the other was Jupitermedia Corporation selling Searchenginewatch.com and the SearchEngine Strategies show.
UPDATE: Apropos, you can check out Rags’ blog for a job posting from Google “looking for people of all levels of experience to join its M&A team.”