A running perspective on Florida's growing tech and venture community, with an occasional detour to the Southeast/national scene, venture capital FAQs and maybe a gadget or two....
My daughter's kicking off a webshow, one nephew is a director and another is a parkour nut with his own blog/videos. I guess that explains why the HP Channelbee.com contest caught my eye over at SocialSpark. One lucky entrant of 3Minutes2Launch who creates a 3 minute video, enters it in the contest and beats out the competition, will win an internship with ChannelBee and produce a documentary of their experience. The next couple videos provide a bit more detail:
I took a look at some of the entries and I have to say this isn't your typical mentos & coke mouth explosion phone-cam contest. This is a chance for someone passionate about directing to show their stuff in 3 minutes, 2 launch a film/TV career. Although I know "real" directors aren't influenced by such material things, HP's Ultimate Filmmaker Kit looks like a great prize all by itself!
As I waited for its release, I've always felt SocialSpark held great potential for spreading the word about good causes. I just didn't realize how easy it would be.
I created a free Spark (organic post idea) about Human Powered Cause Discovery and asked bloggers to do 3 things: 1) Create a Spark about their favorite Cause; 2) Blog about their favorite Cause, pointing readers to the Spark they created; and 3) Point readers to the Spark I created so readers can continue the cycle of spreading the word about worthwhile Causes.
However, it doesn't end there. Let's keep the cycle going. Please take the time, today, to pick a favorite Cause, blog about it, Spark it at SocialSpark, and point readers to my Human Powered Cause Discovery Spark.
I received a couple more VC FAQ questions. This time from an entrepreneur and investment banker who saw Angie's List close a $35M round with Battery Ventures. That large funding, and others in the social media space, left her wondering how value is measured and created in online businesses.
Her site, roxiticusdh.blogspot.com, appears to be an early step towards a "Best of" site for various cities around New Jersey and elsewhere. I say "early step" with no details, because the name and domain are clearly ripe for improvement. Her questions were:
How do VC's value an online venture? The "valuation question" is probably the most often asked question I hear directly from entrepreneurs or on venture capital panels. Entrepreneurs are either trying to understand how crazy high valuations in the news are justified or how crazy low valuations (in their eyes) offered by early-stage VCs are justified. I've been on the entrepreneur side of the table and now the VC side and I know the answer, but it's rarely satisfying for entrepreneurs to hear.
First, there is no one way to value a company. Different funds use different methods, and when you're talking about M&A time it's highly dependent upon the synergies a specific acquirer is trying to buy. Approaches also differ based upon the stage of a company. Because I focus on seed and early-stage companies, any suggestion by entrepreneurs of discounted cash flows makes me run the other way -- the future is way too uncertain for such calculations.
So, if there isn't one way, what can I expect on the fundraising trail? A mix of Art, Science and Voodoo. The Art of valuation takes into account your Market, Management, Magic and plenty of other soft factors to create a spectrum of investor excitement. The Science of valuation takes into account private and public comparables (what price are similar companies commanding in the marketplace), and some spreadsheet work with future revenue/income potentials. The Voodoo of valuation brings in such factors as fund size, typical/expected ownership % and the termsheet competition. At the end of the day, it comes down to getting multiple funding offers so you can actually reach a "market price" -- zero or one offer does not a market make.
I've even created a short presentation that reviews the Art, Science and Voodoo of Valuation and included it below:
Applying all of this to an online venture doesn't change the process much. One oddity in online ventures is the value placed on eyeballs (by some), with the potential of a freemium revenue model (most users are free, pro users pay). Because of these oddities, I'd put more weight on the Voodoo elements -- divide your round size by the typical ownership expectation of the fund you're speaking to, and you'll get pretty close to the valuation they will offer (if they offer anything).
Do you have any advice on short, medium, and long-term strategies to maximize the value of a blog or online business? For a blog, I'd start with the First Commandment of blogging: frequent quality content = traffic. Frequent content isn't enough alone and quality content isn't enough alone. It may be heresy, but I'd suggest frequency is even more important than quality -- assuming some periodic quality a reader can expect. Readers aren't expecting every blogger to be a professional writer, but they are looking for unique access or unique perspectives on information.
I'd also say that pro blogging is a contact sport. It's hard to do it well if you don't live the blogosphere life of social networking, bookmarking and engaging your readers. Just reporting information isn't enough.
Then, assuming traffic comes, the question becomes how do you make a business from your efforts. There are thousands of get-rich-blogging pundits, but I'd focus on the networks or marketplaces that help you earn by doing what you already love. If your blogging has to change significantly for monetization then I'm not sure it's sustainable. Write the way you enjoy and find marketplaces that will bring advertisers to you, from a variety of topic/product areas so you and your readers don't tire of the sponsors.
Last, for blogs, I'd suggest setting your expectations appropriately. Getting rich blogging is unlikely. However, there are thousands of bloggers paying a mortgage, buying new cars or taking extra vacations with their earnings. Consider anything beyond that just icing on the cake.
For non-blog online businesses, it's hard for me to give one set of value-creating actions. It really depends upon the business. As an investor who has been around viral businesses since HotMail first pioneered the approach, I encourage every online business to 1) find ways for new customers to learn about your business specifically because current customers use it and 2) streamline your referral/signup process to remove every barrier to adoption.
So there you have it, valuation and value-creation in one handy-dandy blog post. I really only scratched the surface, but I hope you find a nugget of interest. If nothing else, I must have prompted another question...if so, blog me another VC FAQ.
As SocialSpark was in private alpha I wanted to try out their Spark feature. Even if you aren't looking to monetize your blog, Sparks allow you to highlight a hot topic, pose a question or share a good cause -- providing a true "marketplace of ideas" for bloggers to pickup and blog about. I don't blog nearly as often as most bloggers and yet I sometimes get writer's block. Combine that with the fact that more posts equals more traffic, and Sparks can be a valuable firehose for blogging ideas.
I created one Spark for Tyler's Hope and another for VC Frequently Asked Questions. The VC FAQ Spark also tested SocialSpark's BlogUBack feature -- whereby I asked for posts I could blog about. Specifically, I asked people to share some common questions for VCs and/or specific questions they have for me as a VC. I really appreciate the questions I've received and my thoughts on the first few from caseyjenks.com are below:
How and why did you transition from being a developer into a venture capitalist? While working at IBM's Networking Labs, I convinced management to allow me to pursue a dual MBA/JD degree from UNC Chapel Hill during the day -- fulfilling my operating responsibilities at night. I focused on entrepreneurship and new media at UNC, dove into venture capital topics pretty heavily and helped found/build some local startups. Via the Kauffmann Fellowship program I got introduced to Draper Fisher Jurvetson and was invited to help launch their first east coast fund. After building two funds with DFJ, I founded Inflexion with my current partners and Village Ventures. Breaking into VC was a combination of unique Engineering/MBA/JD education, technology operating experience, passion for startups/VC and a boatload of luck.
How does your experience as a developer help you with your current career? Being a passionated developer taught me a crazy work ethic, especially on things I enjoyed working on. My VC efforts benefit from that drive. I also believe my background provides a unique view into technology investments and future strategy -- especially when initial prototypes don't show all that's possible and I can riff with entrepreneurs about what's possible. Last, I think developers (or engineers generally) learn the benefits of fixing problems once with well-thought solutions rather than applying patches. You'd be surprised how many times that perspective pays dividends in company building -- when quick fixes feel so easy.
If you were to go back to programming, would you want to go back to doing the networking research type stuff you did at IBM, or something new? I still dabble in programming and have a blast with open source offerings -- makes it so easy to build something substantial quickly. I've got a notebook full of ideas and no time to pursue them. If I jumped back to the operator side, I'd focus more on quick-to-prototype applications with minimal adoption friction, simple/clean design and maximum viral potential -- with the potential for changing the world (e.g. not another bookmarking service)
What emerging technology excites you the most? There are tons, but a couple I've been spending cycles on lately are open-source search (e.g. Nutch, Hadoop) and wireless power (e.g. WiPower, Witricity). Search feels like something that will eventually be open-source supplied with a combination of solid search algos, grid storage/computing and self-perfecting AI (to improve algos based upon user/community feedback). Wireless power has been a long-term obsession of mine and we're getting closer.
I hope these answers were helpful. If anyone else has questions for my VC FAQ, try out my Spark and I'll answer any here that make sense for FVB readers!
So, today's the day Sparky is let out of his private alpha chains...
IZEA's latest innovation is being unleashed today at Ad:Tech, San Francisco, and the stars of advertising and blogging are already lining up to meet Sparky and the world's first Social Marketing Network:SocialSpark.
I gave you a hint of what to expect when the site was being designed back in November, and as you can see, my tone has shifted from Ricky Bobby to The Rock. This is a seriously powerful platform for bloggers and advertisers, the likes of which hasn't been seen before. In fact, before I even describe it, go signup and come back, I'll wait...
OK, now that you've signed up and, possibly, reviewed the video above, what more can I share. There's so much in SocialSpark, I'll just focus on a few innovations that get me excited:
1st advertiser/brand/agency social network with direct publisher friending, blogrolls, street teams and a dashboard to manage diverse social media marketing efforts. Imagine: advertisers proactively identifying relevant bloggers and organizing vertical advertising networks for their brands.
1st face-based analytics: GOOG analytics plus MyBlogLog (faces for visitors, not just recent readers) plus visitor demographics in one end-to-end analytics, ranking, marketing and blog monetization platform. Imagine: understanding your visitors as people with faces and demographics, rather than pagevisits per unique, bounce-rates or IP addresses.
1st 100% automated, in-post human disclosure, including audit tools to help publishers and advertisers verify compliance with key corporate or industry guidelines such as WOMMA’s Code of Ethics. Imagine: a marketplace that provides the tools to maximize visibility for readers and 100% Code of Ethics compliance.
1st 100% automated, in-post machine disclosure via “nofollow”, including audit tools to help publishers and advertisers verify compliance with key search engine policies such as Google’s quality guidelines. Imagine: advertise and blog in the open with SocialSpark, without fear of GOOG penalties from SponsoredReviews, PayU2Blog, TLA or other paid-link companies that violate Google Quality Guidelines. Align yourself with SocialSpark sooner than later, I believe a fresh round of pagerank penalties are in process for those smaller networks and DIY link sellers.
1st one-click blog sponsorship ad unit requiring no blog design/template editing to position the ad unit and provides 100% publisher approval to match brands to readers. Imagine: brands you trust ask to sponsor you and it's done with one-click. Personally, I'm not a big fan of the Blog Welcome, but I believe that is being decoupled from the easy/valuable bottom sponsorship banner.
1st clearinghouse for blog writer’s-block remedies called Sparks, providing organic post ideas such as inspiring charities, hot topics, etc. Imagine: more posts = more traffic, but without backstage passes and exclusive press releases like the elites get, how do you ramp your organic post inspirations? Sparks. I particularly like the potential for spreading your favorite posts or charities via free Sparks.
What else?
Well, I can share that advertiser appetite from the private alpha is already gobbling up sponsorship of the best tech, mommy and daddy blogs. If you are a tech blogger, a mommy blogger or a daddy blogger -- the sooner you signup, the more likely you are to be added to relevant advertiser street teams. As the marketplace grows, competition will be tougher and getting noticed by your favorite brands could take more effort.
I've shared plenty here, but I probably also prompted some questions -- let me have 'em...
Oh, and given my post title, I'll leave you with a video montage of Method Man's tribute to The Rock -- "Do you Smell What the Rock is Cooking?" He reminds me of Ted Murphy, but with muscles, good looks and personality ;-)
"What does that do, does that blow your mind? That just happened!"
~ Ricky Bobby
That is IZEA's announcement today of SocialSpark.com (codenamed Argus) -- the future of online advertising. Ricky Bobby's quote to Jean Girard kept running through my head as I watched Ted and Pete demo the world's first advertiser social network, complete with first-of-its kind face-based analytics, advertiser-blogger friending and feedback, multi-dimensional social media advertising, and ROI-focused reporting and tracking.
I can't believe how much stuff is in SocialSpark. What I can believe is that the platform brings value to every publisher and every advertiser who cares about social media. Every blogger in the world can gain value from SocialSpark's face-based analytics, regardless of their plans around monetization. Every advertiser in the world can gain value from SocialSpark's blogger search and demographic-based targeting to kickstart and/or manage their social media relationships.
Imagine, as a blogger, being able to contact any brand of interest to share feedback and your interest in their products. Imagine, as an advertiser, being able to measure brand and direct marketing across multiple domains (e.g. not just Facebook, MySpace or others) with real-time reporting on current ROI and expected ROI as conversations builds across the net. There simply hasn't been anything like this, and I'm not even spilling the beans on RealRank and ROIRank -- measurements of true value and influence.
My daughter's kicking off a webshow, one nephew is a director and another is a parkour nut with his own blog/videos. I guess that explains why the HP Channelbee.com contest caught my eye over at SocialSpark. One lucky entrant of 3Minutes2Launch who creates a 3 minute video, enters it in the contest and beats out the competition, will win an internship with ChannelBee and produce a documentary of their experience. The next couple videos provide a bit more detail:
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Posted by VC Dan | 12:52 PM
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