The presentation from Exit Strategy NYC at tonight’s New York Tech Meetup made me think about alternative ways to raise seed capital. When you’re raising money for your paradigm-shifting, world-changing startup, it can take a long time to build your product and simultaneously convince people with money that your team+product+company is worth funding. You want to meet the right investor, find the right “fit” etc etc etc etc. Months go by, and chip away at the time you’d normally spend building your product and – right – changing the world.
Enter Jonathan and Ashley Wegener. They took a real pain-point (have YOU ever gotten out at the wrong end of the platform in Union Square? Vom.) spent two months riding subway cars and making sweet Adobe Illustrator files and built a very cool iphone app that I have already shelled out $1.99 to download. Is Exit Strategy venture-backable? Nope. But I figure they’ll probably make around $100-$250K from selling this app to New Yorkers and tourists alike. I bet the whole process was about 3-4 months start to finish.
Now, they could spend the cash on boats and dinners and houses, or double-down and use the cash to build their “big vision”. They’ll probably make enough money from ExitStrategy to get through that painful product-development period without starving, they have already proven that they can execute, AND they have built a product that will make a lot of people’s lives just a little bit easier.
Stephen Marcus had an interesting piece on the New Atlantic Ventures blog (disclosure: I am currently a summer intern at NAV) about seed financing. After drilling down into institutional seed financing between January 2006 and June 2009 by region (New England, NYC, San Francisco, and DC – the four regions with the most VC money floating around) his data showed that while seed financing – which he defines as less than $1m – is down an insane 80.2% in Silicon Valley in the first six months of 2009 versus the same period in 2008, it’s up in both DC and NYC. See the graph for a better picture – it seems that the Valley and New England have put more capital toward larger rounds and have cut back on seed-stage deals.
Why the shift toward larger rounds? Safety. If a company is getting a $5m+ round of VC financing, chances are they are fairly established and therefore less of a risk (or rather, a different *type* of risk) for the investor. I see it as a knee-jerk reaction to the economic crisis – VCs were more inclined to put money toward more “proven” investments.
As a new admirer of the NYC startup scene, I’m happy to see New York (and DC as well) embracing seed financing – it only adds to the argument that Silicon Alley is booming once again.
The talk is called “The Art of Teaching Entrepreneurship and Innovation” (I know, how b-school of me!) and I was listening to it in podcast form on the train today. Really great talk by Tina Seeling, the executive director of the Stanford Technology Ventures Program. Got me thinking about the East Coast/West Coast separation in the way entrepreneurship is taught, which I’m sure has a direct relationship with the way businesses are built and the way investments are made.
What I wasn’t expecting, though, was about 40 minutes in when Fred Wilson said: “This holiday season there will be Boxee boxes in the stores. So you can go to the store and get a Boxee box and you can take it home and connect it to your TV and you’re done.” (Though he did say later that Boxee will not be making the boxes).
This is amazingly awesome news for Boxee (and for me!).
Why? I see at least 7 reasons (this list started out with 3 FYI):
1. Differentiation from other online video platforms
Outside of YouTube and Hulu, there are a myriad of other ways to consume video online and a whole truckload more in development. By making the link between the computer and the television, Boxee is taking a huge risk (would you really want to go up against Hulu, the MSOs and a whole host of other large corporations?), but the potential upside is significant. I think true differentiation in the video space is extremely difficult right now and this could be the key for Boxee.
2. The UI gap between television and the internet has become, well, HUGE
People who spend the majority of their time on the internet get this look of disgust on their faces when talking about the state of television. It’s not that the next best UI for TV isn’t out there – from what I can tell, TV Guide did such a great job locking in the cable providers and patenting everything related to guide technology (including a “claim for generating a simple EPG grid with channels on one axis and times on the other”) that the pace of innovation has slowed significantly.
This has created, in a way, a perfect storm for a product like Boxee: alienated users, a battle between giants that doesn’t really seem to be going anywhere, and an enormous market ripening itself for widespread change.
3. Nothing says “Recession: Game Over” like a holiday rush on Best Buy for the hottest new electronic toy
What’s the competition this year? Windows 7? Please. The economy is starting to bounce, and what better symbolizes a return to consumption than the long line outside electronics stores on Black Friday? (Circuit City R.I.P.).
I am pretty anti-widget when it comes to the future of television. I have no interest in seeing a sun in the corner of my screen when I’m watching Law and Order: SVU. I like Boxee’s app-driven model much better.
I know a lot of people are really into the Yahoo! widgets and there has been a lot of praise for the new Samsung TVs, but I’m not a huge fan.
The recent Boxee app development challenge is a great example of what can be done with the Boxee platform – photos, education, and news are just the beginning.
6. Boxee in its current state is too difficult to use with your TV and only sometimes compelling to use with your computer
Do I really use Boxee that much now? Nope. I love it, but for videos I find myself most often at Hulu, YouTube and Vimeo. The “pain point” is much sharper for television; online video is too slick and user-friendly, competition is vast and the video space in general is really crowded.
7. I am sick of paying for cable
Comcast, are you reading this? We’re breaking up. It pains me to pay $60/month so that I can scroll through those silly ads between every four listings in the guide software. I can’t stand staring at my remote and wondering what to do with all those buttons that I never seem to use. Anecdotally, it seems like the early adopter crowd is fed up and starting to unplug en masse. Here’s my guess on how the rest of the demo groups will shake out:
NOW – Early Adopters – Currently hacking together solutions that for the most part involve Mac Minis
1-3 Years – College Students – What do all dorm rooms have? Internet Access. Probably wireless. Cable TV is a pain in dorms, and colleges would love an IP solution that could just use the existing wireless
1-3 Years – Yuppies – The ones who always have to have the “latest and greatest”
4-6 Years – Moms – Once word gets out that you can look at baby photos through Flickr on your TV? Forget it.
5-7 Years – Everyone Else – Yeah, five years is a long time, but the MSOs are huge and the TV world moves slower than the internet.
Anyway, here’s hoping the Boxee set-top rumors will pan out this holiday season.
I put together a piece for change.org this weekend on dealing with rejection. I’ve been meaning to write on the topic for a few months – I think you can tell a lot about someone based on how he/she handles rejection.
Remember: if everyone wanted to drink your kool-aid, it would be water.
Back in April, I attended Tim Hwang’s XORCon and saw MIT undergrad Colin McSwiggen give a talk called “Is Memetic Engineering Real?“. Last week at Ignite NYC I started thinking about it again (not to mention, the Xhibit story is pretty amazing).
So. Is there money to be made from memes?
Rocketboom.com founder Andrew Baron apparently thinks so. According to newteevee, Baron’s new video venture mag.ma aims to be THE viral video tracker on the web. I love analytics just as much as anyone, so I’m looking forward to all the sweet, sweet data that he claims mag.ma will deliver. I am already obsessed with bit.ly, and I’d love a more thorough overview of a video’s stats beyond the view count.
I think there are two key ways to capitalize on internet memes:
1. Leaders and followers. I hear a lot from advertising people about the identification of leaders and followers on the web. Sure, you can identify leading websites by their traffic and price accordingly. But the identification of leader and follower personalities in any sort of scalable way is much harder (ie, who’s the most popular girl in this high school that I can give a free pair of jeans to in the hopes of selling lots more?). That is part of the reason why advertising is so hard on social networking sites. Sure, you might have 1000 friends, but how highly do they regard your opinion? How much influence do you really have?
One could suggest that by tracking memes you can identify these “leaders”. Knowing true inflencers in a space as vast and complicated as the web is very valuable data for advertisers.
2. Collectibles. What’s the difference between a meme and a fad? I think of fads as physical. If a concept has proven itself digitally – engineering a crossover to something physical could be pretty powerful. We’re all waiting for the next slap bracelet.
Seriously though, if you know someone that’s currently working on an Xhibit face magnet for my car, please let me know.
In my Web 3.0 class last spring I heard the story of Six Degrees. Six Degrees was a social network that started in 1997 and shut down in 2001. It was one of the first online social networking sites and according to this screenshot (thanks Way Back Machine) they had over 2 million users in 1999:
We spent a lot of time in class analyzing why Six Degrees didn’t survive the dotcom bust. Social networks were going to be huge! The power of the network effect would crush new competitors!
…and yet they didn’t make it.
I think the demise of Six Degrees shows the importance of timing. How many pre-youtube youtubes tried and failed because most people didn’t have broadband and couldn’t support streaming video? There are tons of theories out there that speculate on which products are widely adopted, but more and more I am realizing that timing is one of the most compelling factors.
Even though I REALLY am not that into the book Eat, Pray, Love, I keep coming back to Elizabeth Gilbert’s TED talk from earlier this year on creativity. She spend a good few minutes talking about a poet who used to run in from the fields to take down her poems.
Capturing ideas is really important – absolutely – but I am finding that one of the most valuable steps in the idea to reality process is the feedback you get from people across the spectrum – people you deeply respect and people you think are total idiots. Often the most obstinate haters are the people that can help your idea evolve most drastically.
I have been intensely exploring the New York tech scene for a scant five days now (school’s out for summer!), so you can ONLY IMAGINE how intrigued I am by this week’s second-annual “Internet Week New York“.
In a genius move by the Mayor’s office, the city has crowdsourced the actual planning of the week’s events to the local technology scene. This is great for the city (less manpower required to pull off a week-long geekfest) and beneficial to curious folks trying to get a feel for the technology community in New York – analyzing the list of events gives a pretty thorough landscape of what New York can offer to digital dilettantes looking to enhance their knowledge of the internets.
Although there will be a solid group of out-of-towners around, I see this week as a by-NYC for-NYC event. That said, the paradox here is as follows: event organizers will likely put together an event that exhibits their strengths, meaning the events this week will serve to highlight and reinforce the strengths – which I see as content creation, advertising and investment – of the NYC tech community.
THE GOOD – Content Content Content.
If you believe “content is king” – and who doesn’t these days? – there will be ample opportunity to juice up your knowledge on content development and execution from the content capital of the universe. New Yorkers, old-media and new-media alike, respect the good stuff like nowhere else.
Check out content-related events here, here and here.
THE NOT-SO-GOOD – Where are the Developers?
There are few events that involve actually learning how to code and/or build stuff (exceptions here and here). From what I can tell, the best way to lock down job security if you work in print media/traditional advertising is to beef up your knowledge of the digital side. If you’re a content ninja, wouldn’t having a working knowledge of rails, php, python or even wordpress provide a huge advantage?
What I think Internet Week lacks are these “gateway” classes for the throngs of old-media types who are ready to embrace the future of digital media. If New York really wants to establish itself as a technology hub, there needs to be a REALLY low barrier to entry for people interested in actually learning to build new media.
So where are the coding parties? Please let me know – business students don’t usually get invited.
I’ve been closely following the debate about the culpability of MBA programs in the recent financial crisis. How could I not? I’m $75K deep into an investment that – depending on who you talk to – may not, in fact, be the key to world domination. [SIGH].
Here’s where I – typical and current b-schooler that I am – stand on this issue. I have experienced first-hand the negativity and suspicion that comes my way when I tell people I’m in business school. There’s this seemingly inevitable distrust that is tangible, whether it’s people thinking I want to “network them” or steal their technology or somehow make money off of them in one way or another.
It’s depressing that this is the general impression of MBAs, but I won’t say it’s undeserved. We have a special, albeit tongue-in-cheek, award at school for networking (video here!) and many of my classmates, myself included, have a deep appreciation for the art of arbitrage (buy low, sell high!) that started at a young age.
That said, I just can’t agree with the argument that the business school curriculum “indoctrinates [students] with half-baked management and finance theories, along with an unshakeable belief in their own talents, before sending them out to earn ill-deserved fortunes” (from 8 March 09 article in the Guardian). If anything, I have become more wary of power and question deeply the way I interact with others and the implications that will have for my future employers/employees.
One of the central themes in my first-year of classes has been that band-aids (of the Enron + Lehman variety especially) won’t hide deep systemic issues for very long. The premise that you need to build respectable companies geared toward long-term success is definitely embedded in the MBA curriculum – the gap, I believe, lies in teaching students how to abide by those principles outside of the classroom, when shareholder/investor pressure mounts and they don’t have a supportive peer group to look to for guidance.
If we must play the blame-game when discussing the origin of the financial crisis, we’ve got to tie in modern corporate culture, market economics, George W. Bush and a host of other factors, the MBA curriculum included. However, clinging to the idea that business schools are factories pumping out Objectivist, Faustian, schmooze-machines is short-sighted and not particularly accurate.
