Chip Griffin: Pardon the Disruption

InterAdvocacy and TechJots Merge

I confess: I have too many blogs.  And InterAdvocacy and TechJots had too much overlap to continue to keep them separate.  So I have combined them under one banner to serve as my flagship blog: Pardon the Disruption.

Here you will find the same sort of analysis, commentary, and links that have been part of the earlier blogs.  It will allow me to do a better job of keeping the blog up to date since I won't be splitting my output between two different blogs.  And hopefully it will expose all of my readers to a few topics that they might otherwise have missed.

All of the posts from InterAdvocacy and TechJots have been imported into Pardon the Disruption so a full archive remains available.  All comments and trackbacks appear to have imported correctly as well.  (The TypePad import/export tool works nicely, it seems.)

In addition, the FeedBurner feeds have been merged into one, so I apologize in advance for any repeat posts you receive.

Boston Area Startups Show Their Stuff

I had the opportunity to attend the latest Boston Web Innovators Group event last night in Cambridge, MA (WebInno7). Lots of really bright entrepreneurs, and of course fellow investors too. The group was founded by David Beisel of Masthead Venture Partners and he has really built the event into a good regional showcase for startup activity.

Three entrepreneurs had 5 minutes each to demo their products for the group. SwapTree facilitates user-to-user trades of books, cd's, dvd's, and video games. Their "secret sauce" is the ability to consummate 3 and 4-way deals so it isn't only 1-to-1 trading. The idea is this gives your stuff more "liquidity." They want to make money through targeted advertising (they know what you have and what you want, so presumably they could target ads well). The site looked nice and the idea isn't a bad one, but it seems like they would need a heck of an audience to generate real revenue and I like companies that can make money on the way up -- not just once they have the audience. But they are passionate about their product and it will be interesting to see how it does.

MyBlogLog is a stats service turned social organizing tool for blogs. I like the fact that they have a business that can already be monetized while they are growing their new business model (people can pay for the stats service, though it is unclear how many have vs. how many use the free service). I'm not fully engaged on the social networking aspect, though it does seem neat. Frankly I was most struck by their mention of the pile of data they are sitting on about blog reader behavior. I'd love to see them organize that and charge for it. That's something blog owners and industry watchers would pay for. I know they're going to have some of that as part of their new tools, but I'd dive deep on that and knock it out of the park. Seeing pictures of my readers in my sidebar is neat, knowing what makes them tick is valuable.

Finally, PawSpot presented their niche site targeted at -- what else? -- dogs and cats. I generally like well-executed niche plays and this has potential. I believe we have moved beyond the "mass eyeball" sites like Yahoo and Google and the place to focus is on niche communities -- organizing the unorganized and serving their needs. And dog owners can be a passionate bunch. I also like their focus for growing the community initially. They want to solve the problem of caring for dogs while their owners travel. Most hate kennels and pay a lot for dog-sitters, but what if you could match up with a local dog owner who would gladly take your pet for a week. The only critique I had was that it wasn't clear from the demo shown that they are focusing user attention in this way, even though they seem to be focusing business attention on it. They're not the first in the pet community space by a long-shot, and I don't know the competition well, but PawSpot seems to have potential.

In addition to the formal presenters there were 4 "side dishes" of companies that had a table on the sides of the room where they could present their companies to interested attendees. (It would be nice for the formal presenters to have this too -- it would make it easier to have discussions with them without having to track them down in the crowded room after their demos.)

Glance is a service that shows your live computer screen on someone else's remotely. I was left not fully understanding how they're different from other services like WebEx or GoToMeeting, except perhaps in their pricing model.

Bloggerkit is a little gadget for your blog that allows you to display targeted Amazon items for sale in a box on your sidebar. Neat idea, but feels like a feature not a company. Plus it isn't contextual, which means you have to feed it keywords with each post to get targeted ads -- a lot of work. I guess the rationale is it doesn't violate the terms of Google AdSense so you can still run those ads too. Perhaps if they keyed off of Technorati tags it would be more convenient.

tourb.us is a site that makes it easier to find live band performances in your area. This is so far out of my area of expertise that I couldn't really offer any good thoughts on it.

And last but not least, LoudCity which "provides comprehensive internet radio licensing plans for small webcasters." Again, this simply isn't something I know well enough to provide intelligent commentary about it.

All told, a great event and good to meet interesting people with good ideas. Congrats to David Beisel on what he has accomplished for the local high tech entrepreneur community.

Tags: GenuineVC, David Beisel, Masthead Venture Partners, WebInno7, Boston Web Innovators Group, Swaptree, MyBlogLog, PawSpot, tourb.us, LoudCity, Glance, Blogerkit

New Congressional Bloggers

Beltway Blogroll points to a half dozen new bloggers in the ranks of Congress.

Book Review: FutureShop by Daniel Nissanoff

"According to an ACNielsen report issued in October 2004, American households have accumulated an average of more than $2,200 in goods they no longer use, which retain a market value of nearly half that. With more than 110 million households in the United States, that works out to an aggregate of more than $250 billion in lost value already and another $250 billion that will, likewise, soon dwindle to nothing if things don't change."

That statistic jumped off the page for me when I read FutureShop by Daniel Nissanoff, the founder of Portero, a seller of used luxury goods like watches and jewelry. Obviously, he's not exactly a disinterested observer and the book does make a passionate case for his company's business model, but it nonetheless offers a useful perspective on the rise of eBay and similar online marketplaces.

Among other things, Nissanoff argues that the growth of online auction sites makes it feasible for consumers to more easily access luxury goods. Just as car leases transformed that market by enabling drivers to lease cars they couldn't afford to buy, the ability to resell a Hermes tie or a Gucci handbag or a Rolex watch could put those products within reach. Essentially, it is the concept of temporary ownership: buy it, use it, sell it.

He also points out that with ever-shrinking product cycles, gadget guys (like me) can always have the latest gizmo without the guilt of a closet full of perfectly good products that simply have been displaced by a newer model.

The problem, he says (and I agree), is that despite all the talk about eBay being simple, it isn't. A considerable amount of effort is needed to successfully launch an auction. Pictures, description, timing, pricing, notification, shipping, etc. all take time. Hence the rise of auction drop shops where you take your stuff to a brick and mortar establishment who then handles the transaction from soup to nuts and cuts you a check afterward, less whatever commission they charge.

If you want insight into the online auction universe, this book makes sense for you.

Bottom Line: Recommended

Tags: FutureShop, Daniel Nissanoff, eBay, auction

Angels Banding Together in Greater Numbers

Go it alone or join a group? That's increasingly the question for angel investors, it seems. A recent press release offers some interesting statistics:

Individual angel investors continued to form organized investor groups with the number of angel groups increasing by nearly 60 percent in the past three years, from an estimated 150 in 2002 to 250 last year, according to an analysis by the Angel Capital Education Foundation (ACEF) and the Ewing Marion Kauffman Foundation.

The survey of angel group members of the Angel Capital Association also revealed that the average angel group invested $1.45 million and that the average angel group invested $266,000 per round and $387,000 per company during calendar 2005.

Tags: angel investing, angel groups, venture funding

Doing 1 Thing and Doing It Well

Today I had the pleasure of meeting with a fellow entrepreneur who in many ways views things differently than I do, but both of us are successful with our own models. He isn't a high-tech entrepreneur -- far from it. He actually views blogs as dangerous and thinks companies should starve them for information rather than feed them by attempting to influence them. But that's a post for another day.

In any event, his company operates on the premise that it does one or two things really well and he has no desire to broaden his offerings, engage in third party deals, or even in some cases to expand the scope of his existing agreements with clients -- even if it is in their existing wheelhouse.

He arrived at this strategy because he believes it helps employee morale and boosts operating margins. He felt that going beyond his core cometency would endanger existing businees with his clients by distracting from his basic value proposition.

Now this tends not to be how I run my own companies. I love owning a relationship with a client and if I can expand my offerings to them while maintaining quality across the spectrum, then I want to do it. I fundamentally believe that clients prefer fewer vendors whenever they can find trusted ones to deal with.

Of course, maintaining quality is key. It is never a good idea to dillute your value through a half-assed attempt at serving a new need. But if you can expand successfully I think you should do it.

But the gentleman I met with today was quite passionate about his view. And it is hard to quibble with his success.

The bottom line I believe is that both models have merit and the personality of the entrepreneur and the nature of the business must dictate the path to follow.

Press Release Feeds Through theWeblogWire

Pete Cashmore highlights a just-launched company called theWeblogWire that attempts to set up a more efficient and effective distribution method for getting press releases to bloggers:

The Weblog Wire allows companies to submit press releases, and bloggers to subscribe to these releases via RSS. Submitting a press release costs $99, or $149.99 if you want The Weblog Wire to write it for you. They also charge $100/hour for consulting services related to company blogs. But because processing a press release takes no effort, I’d drop the price to virtually zero and make it up on volume.

...

The Weblog Wire could provide one point of entry, rather than hundreds - but only if enough bloggers subscribed to the feeds. That could lead to a serious chicken-and-egg problem - The Weblog Wire might want to offer free press releases until they gain traction, and contact some key bloggers to make sure they’re subscribed.

On the surface, Pete's suggestions sounds like a great way to build traffic and audience. Unfortunately, the price theWeblogWire charges serves not only as a revenue stream, but also as a quality control. If the service were free (or even just very inexpensive) there would be much more junk flowing through. Thus making it less useful to subscribe to the feeds.

So theWeblogWire definitely faces a challenge here that must be overcome to be successful, but making press release distribution free isn't the answer.

VC's Prostitute Themselves at Keg Parties

The Wall Street Journal has a hilarious article about the lengths to which 40 and 50 year old venture capitalists will go to appear hip to young tech entrepreneurs -- including stories of one who showed up at a keg and pizza party in a white jacket. (via David Card/Jupiter Research)

Tags: vc

Book Review: The Long Tail by Chris Anderson

I read The Long Tail skeptical that it would be little more than a magazine article with filler.  Too many business books seem to be that way these days.  Even some of my favorite books, like The World is Flat, felt overly long. 

Boy was I wrong.  Anderson uses 226 pages to eloquently elaborate on his theory of the Long Tail (now accepted by most in the Internet and content industries as an accurate portrayal of today's marketplace).  Rather than rehashing rhetoric and adding useless quotes and commentary, Anderson successfully uses the book format to do things he couldn't do in a magazine article.  He provides myriad examples of the Long Tail at work in various industries.

He does a nice job of comparing and contrasting brick-and-mortar retailers with their online counterparts.  And he explores some of the challenges of the Long Tail -- I especially liked the section entitled "Is the Long Tail Full of Crap?"  I also found the discussion of the power niches to be especially compelling.

Fellow entrepreneurs and investors will find this to be a thought-provoking book.  I know it's already got my mind churning on some potential ideas.  A lot of us glibly talk about the Long Tail and some of us have even read the original article, but the book provides a wealth of new examples that extend the original article in ways that should get the creative juices flowing.

This book should be available in bookstores on Tuesday, July 11.

Bottom Line: Highly recommended.

More on the Townhall.com Re-launch

Rafat Ali over at PaidContent.org weighs in on the re-launch of townhall.com and includes a round-up of some other coverage. It echoes a lot of what Jon and I discussed when I interviewed him at the end of last month.

My Google Frustration

I need more from Google. Not more results, certainly. There's probably too many of them already.

What I need is a better way to be able to search Google. I want to be able to ask for either relevance or time to be the driving factor in the results I see.

With the wealth of information available online, factoring in the timeliness of the web page results is key. When the Internet was young, this didn't matter much. There were few resources available online and relevance made sense as the way to measure the quality of the results.

This has changed. For instance, if I Google a product to find reviews or comments about it, I want to see the most recent ones first. Older ones might deal with an earlier version where all the kinks hadn't been worked out. Or if I'm looking for information on a particular subject I'm researching, I want to see the most recent stuff because it is likely to be more helpful than one that might be missing what happened the past few years on the subject.

Yet there's an inherent bias in the Google methodology toward older information. By focusing heavily on how many links there are to a web page (as Google reportedly does), it favors web pages that have been around long enough to garner that kind of attention. Now it appears that there is some time element involved since blog posts tend to dominate in many areas, but I want to be able to be explicit about the time factor and have it truly drive the results.

Certainly there are times where that may the most important factor. If I'm seeking information on the American Revolution, timeliness probably doesn't matter quite as much as if I am researching the history of the Middle East.

Google already has time components in Google News and Google Groups, so let's hope they're working on making similar functionality available in the core search results.

My Beef with 37signals

First, let me say that 37signals does creative work and meets the needs of many people (and if you read to the end of this post, you'll see I actually want you to spend money with them). But I find some of the advice they've been dispensing lately to be lacking.

To put it simply, they suggest cutting corners in the name of innovation.

Now, I'm a foe of bureaucracy as much as any entrepreneur. And I love it when a sudden brainstorm leads to immediate prototyping without delving into the whys and wherefores. But some of the stuff on their blog lately, as well as in their online book, I think send the wrong message to entrepreneurs.

Some examples:

37signals rails against meetings. But meetings matter. It seems hip to bash meetings, especially in the startup world, but it isn't that meetings are bad. Bad meetings are bad. Entrepreneurs need to learn how to run good meetings that foster discussion and arrive at actionable decisions. And there must be follow-up. Jason writes "Meetings are expensive when you think about the opportunity cost. On a pure cost basis, meetings can quickly become liabilities, not assets." Baloney. When you skip formal meetings you have more "expensive" drive-by meetings (whether they be in person, on the phone, over IM, or email). And God forbid there are more than 2 people involved in a project -- then you have scattered drive-bys that keep people on different pages.

My advice: Have meetings. Just make them smarter.

37signals plays to the Lowest Common Denominator. In his "Growing in vs. Growing out" post Jason states: "We’d rather our customers grow out of our products eventually than never be able to grow into them in the first place." This may work for their own product set (though I question it over the long term, but they know their customers better). But growing with your customers can be an important way to evolve a business and develop better revenue streams. In their book "Getting Real" they assert "When we built Ta-da List we intentionally omitted a lot of stuff ... We kept the tool clean and uncluttered by letting people get creative. People figured out how to solve issues on their own."

I'm in favor of simplicity, but not at the expense of valuable functionality. If users are needing to create workarounds to your service, you ought to seriously look at adding that functionality. To suggest otherwise seems cool to other geeks, but geeks aren't the only customers for most companies.

My advice: Don't dumb down your product if a significant portion of your user base wants more.

But, but, but...

... You Should Still Read "Getting Real" by 37signals because 90% of it is good advice!

I know it seems odd for me to argue this after attacking a couple of key points in the book. But the rest of it is a powerful and simple way to communicate to Internet entrepreneurs how to keep things simple when they're getting started. It mirrors much of my own thinking and clearly and concisely walks through the key elements of a startup.

Getting Real is available online and is well worth the $19 charge. Just watch for the potholes I mention and, as always, use your own judgment on what else may be a little over the top.

Patently Absurd

I'm all for protecting intellectual property rights. But the patents awarded by the USPTO in the area of software and the Internet continue to boggle my mind. Red Herring reports on the much-discussed Friendster patent:

The U.S. patent, which was awarded June 27, is extremely general, and would seem to cover the activities of many other sites, especially those like LinkedIn that allow people to connect within a certain number of degrees of separation.

Brad Feld points to some ideas from John Funk on how the system could be improved (essentially through a patent application Wiki that allows the public to comment on "inventions" and disclose potential prior art). Earlier this year, Brad had suggested abolishing software patents altogether. Another idea worth considering.

I don't claim to have all the answers here, but this is clearly an area in need of thoughtful discussion and careful (but timely) reform.

Early Beats Late

Will Price shares some data from the National Venture Capital Association and Thomson Financial that shows the performance of private equity funds. It shows that over the past 20 years, Early/Seed VC beats Later Stage VC with respective returns of 20.4% and 13.5%.

This does include the Bubble Era, so as Will points out "It will fascinating to watch if the rolling 20 year returns to early stage venture remain in the 20+% range."

I'm also curious as to how many dud funds there are in there pulling down the overall numbers (and conversely how many superstars are beefing it up). A median return number in each category would be a fascinating addition to weed out the best and the worst and explore the "norm."

Tags: vc, nvca, early stage vc, seed funding

Latest InterAdvocacy Online Reading List

Stuff worth checking out:

• "Chris Heuer is the project lead: Signups for the new media press release (really!)" (Tom Foremski) - more on the effort to update the press release for the new media age. Something worth following.
• "Blogs, Politics and Public Relations" (Beltway Blogroll) - campaigns in the new media age
• "GOP Superiority in Political Technology" (Beltway Blogroll) - the DailyKos take on how Republicans understand better how to use tech for politics, despite the blogosphere's alleged left-wing leanings
• "Breaking Down the Facebook-Interpublic Ad-Equity Deal" (PaidContent.org) - I haven't had time to cover this as I had hoped, so I'm finally getting around to passing along the link to readers who may have missed this story and what it means

Latest Online Reading List

• "Accidental Tech Entrepreneurs Turn Their Hobbies Into Livelihood" (InformationWeek) - explores how several entrepreneurs happened upon their first company
• "So Much Fanfare, So Few Hits" (BusinessWeek) - a look at Google's non-search products
• "VCs discuss the next big things" (Fortune) - a recap of Fortune's Brainstorm conference held in Aspen
• "Why Google is Doing Checkouts" (GigaOM) - perhaps the best analysis I've seen of Google's latest product launch
• "Is Meta Better?" (Fred Wilson) - a rundown on memetracker web sites and a discussion of whether user-selected content is better than editor-selected content (I hope to offer my own assessment in the near future on this same topic)

It's Not Just Scoble

Red Herring has a good article detailing how "A slew of executives have been leaving establishment companies like Amazon, eBay, and Yahoo to head up Internet startups."

The article talks about Jeff Housenhold, Gil Penchina, and Jordan Glazier of eBay. And Ellen Siminoff, Susan Choe, and Jim Brock of Yahoo. And Krishna Motukuri of Amazon.

The author draws an interesting conclusion: "But the startup CEOs may end up back at their former employers, and in some cases that’s the unspoken subtext; exit opportunities for Internet startups these days are all about acquisitions."

WSJ Meet NYT

Apparently the Wall Street Journal and the New York Times where channeling each other today. Or at least their headline writers were.

• WSJ: "Can 'The Long Tail Wag' the Dog?"
• NYT: "Tail is Wagging the Internet Dog"

The stories are different. The Journal piece is about summer reading and the lack of a breakout book for the beach. The Times focuses on a Slate.com story from two years ago that got a surge in traffic this week when it appeared on Digg.com.

In a related note, I'm about halfway through Chris Anderson's "The Long Tail" and will offer my thoughts on it as soon as I'm done.

Tags: long tail, chris anderson, new york times, wall street journal

Schmidt the Google Babysitter

John Battelle points to the Wall Street Journal story detailing the dispute between the Google founders and the guy they hired to renovate their personal 767. Oh yeah, and the dispute between Brin and Page over the size of their beds in their personal staterooms -- a dispute apparently refereed by CEO Schmidt. Wonder if he knew he was going to be a babysitter, too?

Tags: google, brin, page, schmidt

Blog Posts Worth Reading

I've been getting caught up on some old reading today. At the moment, I don't have time to expound on the ideas presented in the blog posts listed below, but I commend them to your reading. I may write more about some of them in the future, but I wanted to pass them along now in case circumstances keep me from saying more.

• "An Angel Investor is Not" (EnablingAngels)
• "Do CEO's Overcompensate for Their Strengths?" (Brad Feld)
• "Angel Capital: Do Tax Credits Work?" (Kauffman Foundation)
• "What's the Biggest Lie About Blogging?" (Ann Handley) [via Shel Israel]
• "The Value of the Demo" (David Beisel)
• "Is it Illegal to Describe the Sporting Event You're Watching?" (TechDirt)
• "65 VC & Angel Investor Blogs" (Andrew Fife)

Kiva: Distributed Microfinance in Developing Nations

I came across a post on Blog Business Summit that highlighted a site called Kiva that provides the opportunity to make loans to entrepreneurs in developing nations.  Typical loan needs are about $1000, from what I could tell in browsing the site.

It's an interesting concept that falls somewhere between charity and investing.  While both of the former give both a psychic and financial benefit to the funder, Kiva focuses exclusively on the psychic benefits since the loans are all interest-free with no equity position in the venture.

I like the overall concept, but I'd like to see a financial component added.  The options I see would include:

* Charge a modest interest rate.  It need not be a lot -- this isn't a way for investors to get rich -- but even a token amount would better educate the recipients about business financing and would vest the donor more in the outcome.

* Make equity investments not loans.  Since Kiva partners with other organizations, it might be possible to aggregate the investments of individuals through that partner (much as an angel investing group does) to take a small equity position in the business.  Again, no investor is going to get wealthy this way, but it creates a more "real world" scenario.  This option would likely be relatively complicated, however, and could create a variety of legal and tax challenges.

* Find a way to make the loans tax deductible.  I'm not a tax lawyer or accountant, but I'm fairly confident that some creative experts in these areas could craft the program in such a way to make the loan contributions tax deductible.  If Kiva were a non-profit it seems to me they could accept tax-deductible contributions and each donor could have a "fund" where they would "recommend" recipients.  As the loans are repaid they could re-allocate their funds.  This way the donor still has the personal relationship with the recipient that makes Kiva potentially powerful, but it opens up the possibility of putting more money to work since tax deductibility would attract more donors.  (This is similar to how many so-called "donor-advised funds" operate -- the donor makes "suggestions" that the foundation almost always accepts.)

Personally, I'm partial to the third option, though I'd still encourage Kiva and their partner organizations to charge a modest interest rate simply as an educational tool.

Nevertheless, I like the creativity that the team at Kiva is showing in achieving charitable goals in a unique way.

Tags: Kiva, microfinance, charity

Real World Seed Investing Stats

It's only figures for one investor and it includes some of the first Internet bubble, but the numbers that Paul Kedrosky dug up about the success of seed stage investments based on size of initial investment and whether or not the individual was on the board are certainly interesting. "The upshot: [Vinod Khosla's] highest returns came disproportionately from investments where he put in less than $1m, and from where he had a board seat."

Tags: Paul Kedrosky, Vinod Khosla, seed stage, vc

Sheraton.com Relaunches as Social Networking Site

Sheraton Hotels & Resorts completely revamped its web presence to include a major social networking component. Specifically, they provide visitors with the opportunity to share stories about their visits to various Sheraton properties.

I'm not sure the idea will catch on. It's good to see a more traditional company seeking to innovate online, but it seems their new site focuses more on pizzazz than on quality content. Perhaps that will evolve as more folks share their stories and beef up the available content. But right now the interface focuses mostly on a map of the world with pictures.

It will be an intersting experiment to watch. My gut is that they might have been better off partnering in some fashion with a site like TripAdvisor to link to reviews of their properties (for better or worse) and perhaps addressing the issues raised in those reviews. It would increase transparency -- the currency of the Internet these days -- and would provide real value to guests. The share a picture and a story bit now has some modest entertainment value, but doesn't seem to add much to the user experience, in my view.

Tags: sheraton, social networking, consumer generated media, tripadvisor, online travel

Board Meeting Tips

Will Price offers some good advice on running startup board meetings. I'd echo his advice and underscore the point that board meetings need to be a dialogue not a monologue. There are the obvious things that need to be covered as updates, though I like to see as much of that done in the pre-meeting memo as possible.

Then zero in on one or perhaps two topics that can be discussed in depth. The board will learn more about what the CEO and his team are up to, and hopefully they will be able to offer good advice and suggestions in return.

Tags: startup, will price, entrepreneur, board, ceo

Wikipedia Founder Launches Political Mudpit

Jimmy Wales the creator of Wikipedia, has launched a wiki designed to be a resource for information on issues, parties, and campaigns.  Unfortunately, the effort demonstrates right out of the gate that highly charged issues may not be the best use of the wiki format where readers get to edit entries themselves. 

The battle has already begun.  The very first entry listed on the Campaigns Wikia home page, Terrorism, opens thusly: "Terrorism is bad, but it can in no way destroy our way of life in the same way that overreaching, liberty-infringing state action to stop terrorist acts certainly can." 

This certainly doesn't meet the mission established by Mr. Wales in his open letter of July 4 where he announced this effort: "I am launching today a new Wikia website aimed at being a central meeting ground for people on all sides of the political spectrum who think that it is time for politics to become more participatory, and more intelligent."

An intriguing concept, but one that seems to be destined to fail.