Tuesday, August 30, 2005

It's definitely a small world

Recently, I met a young company called EasyRoommate that epitomizes the truly global nature of business today.

EasyRoommate is headquartered in New York City and all of its employees are in a single office just off Union Square. Everyone speaks English, but rarely as a first language. The Italian woman who operates www.EasyStanza.it sits next to a Spanish woman responsible for www.EasyPiso.es who sits next to a French man working on www.Appartager.com. Between the three of them and another half-dozen colleagues, they operate an identical roommate-finding service on web sites in 19 countries and six languages from a single office in New York.

They host the sites at a data center in nearby Westchester County, and they outsource most of their technology development to programmers in Latin America and India.

Despite all the complexity involved and the fact that most of his paying customers and advertisers are thousands of miles away, the entrepreneur behind it all earns a profit every month.

Pretty impressive.

Sunday, August 28, 2005

Bye, bye cell phone?

In preparation for some competition with the combined Sprint-Nextel, according to Yahoo News, Verizon is expected to announced a price drop on its EVDO service from $80 to $60 per month.

Ten years ago I didn't have a cell phone. Today, it accounts for more than half of my calls. With EVDO's "near-broadband" wireless service at just $60/month, I'll have unlimited internet access and international phone calls via SkypeOut's super cheap $0.02 per minute rates. Add WiFi connectivity, and you'll even be able to reach me on airplanes. Lufthansa already passed
the two-year anniversary of its first WiFi enabled jet.

So, all I need is an EVDO capable handheld device, and I can say bye, bye to my cell phone?!

On second thought, it's not that simple:

  • EVDO coverage -- it's decent today, but no match for the CDMA network my current cell phone uses. Hopefully Verizon will keep spending the billions it takes to put up more EVDO base stations. And maybe Qualcomm will extend its domination to Europe and Asia so EVDO will work everywhere.

  • Battery life -- it seems that no matter how much I use it, my cell phone always lasts an entire day on a single charge. With their faster processors and larger screens, most handhelds churn through a battery charge in just a few hours. I guess we need one of new battery startups like A123 or one of the many micro fuel cell startups to release a break-through product.
  • These two requirements are simple to describe, but I have feeling they could take 15 years to achieve. For now, I'll have to settle for my Motorola v710.

    Thursday, August 25, 2005

    Annoying clicks

    I have never been able to verify its authenticity, but my favorite Dell tech support interaction goes something like this (circa 1990):

      Customer: I just set up my new PC, but the foot pedal is not working.
      Tech support: The foot pedal?
      Customer: Yeah, I keep stepping on it, but the computer won't turn on.
      Tech support: Sir, the on/off switch is the orange button located in the middle of the front of the computer case. Try that.
      Customer: Oh, okay (presses button). Yes, that worked. My computer is finally on, but now what do I do with the foot pedal.
      (After a few minutes, the tech support rep figured out that the customer had mistaken the mouse -- then a new PC accessory with the first pre-installed shipments of Windows-386 -- for a foot pedal.)

    I recount this mix-up because most of my favorite software operates just as well with my mouse out of reach on the floor. Every required click is often a waste of time. It is so much easier for an experienced user to press a key or two (or even three or four) then to transition a hand from the keyboard to the mouse, line-up the pointer, and click away.

    Still, almost 15 years after Windows usurped DOS as the primary PC OS, many software developers don't get it.

    I love My Yahoo, I have it carefully customized, and (for the foreseeable future) it is my homepage. Yet I manually navigate to Google every time I want to do a web search (ALT-D, google, CTRL-enter is faster/easier than clicking in the My Yahoo search box). It baffles me that the Yahoo web developers haven't designed the My Yahoo page to load with the search box in focus. I wonder how many people with mouse allergies like mine use similar workarounds to avoid the extra clicks.

    My Yahoo is just one example. What I'd really like to see is an evolution of web UI standards to facilitate better keyboard navigation. It is possible to tab through all the links on a page and navigate to the one in focus by pressing enter. But many pages have enough links to make tabbing impractical. I can think of a few potential solutions, but I'm hoping the clever Firefox UI designers (or plug-in authors) will come up with something great.

    These little things really do matter. For example, I think Firefox's real "advantages" over IE are just an amalgamation of subtle usability improvements. Similarly, Skype's dominance of PC VoIP is driven by its slick software that gets every little feature just right. Getting the little things right often leads to fantastic user adoption.

    But based on the rarity of truly elegant software UIs, sweating the small stuff is no easy task. I sure wish more developers did it well.

        Sunday, August 21, 2005

        A few more Longs

        Here are three more things I'm very bullish about:

        • Networked CE (consumer electronics) -- I anticipate a day in the not-so-distant future when every CE device -- TVs, stereo components, and even clock radios -- will have a built-in network interface. I do not think this means we will see new CE brands (though Sonos may prove me wrong) as I think the brands we already know and trust (Sony, Samsung, Panasonic, etc) will add networking on their own. But I do think there will be untold new digital services and software to tap the potential of these new connected devices. I am looking forward to the day when my networked clock radio automatically checks my Outlook calendar to ascertain when I need wake-up.
        • Tech support for the home -- I have not verified the claim, but a few sources have told me that one of BestBuy's fastest growth engines is its GeekSquad service. As PC and CE networking at home get ever more complicated, the typical household will fall farther behind the tech learning curve. While consumers may let the VCR flash "12:00" ad infinitum, they won't sit idly by when bits stop flowing over their home LAN, which, no doubt, will soon include several PCs, their telephones, and their living room electronics. I expect we will soon see innovative business models aimed at solving the home tech support problem cost-effectively and profitably.
        • Video games and the massive ecosystem around them -- video games' widespread appeal continues to blow me away. Whether it's casual games for the masses (who didn't whittle away at least a few hours experimenting with Minesweeper when it first appeared as a Windows accessory?), realistic simulations like EA's sports series, or fantasy alternative realities like World of Warcraft, there is already something for everyone. And the breadth and quality in every category continues to improve. Some people actually play video games for a living. Others pay hundreds of dollars for -- or even steal -- "virtual goods" for their on screen characters. At least one has been fingered for knifing (in real life!) a friend who stole his virtual property. For a wonderfully entertaining read on the subject, try this. Video gaming growth rates are staggering with no signs of letting up.

        Sunday, August 14, 2005

        Shorts and longs

        I have decided to start peppering my blog with occasional "shorts" and "longs" as defined in the stock market sense. For those less familiar with equity trading, to "go long" means to buy something (typically shares of stock) -- essentially betting that it will go up in value. A short sale is just the opposite: the sale of something you don't own -- a bet that it will go down in value allowing you to buy it back for less than you got when you sold it.

        So I plan to use "short" to describe new ideas/businesses/phenomena that I do not believe in or that I think will be roadkill in the history books. And of course I'll say I'm "long" things that strike me as having, quite appropriately, great long term potential.

        A recent investment in Quadriserve, by my colleague Rob Stavis, inspired this first post of shorts and longs. The inspiration is two fold. First, to sell something short, you need to borrow it from someone, and Quadriserve's business is about helping investors, typically hedge funds, borrow the stocks they want to short. Second, Quadriserve epitomizes what I call "eBay for" ideas, and I'm very bullish on "eBay for" businesses.

        Longs (actually just one long in this post)
        • "eBay for" businesses -- these are marketplaces which make money by providing a forum for buyers and sellers to come together. As marketplaces, these businesses don't need to worry about things like inventory and working capital. As a result, they often have highly attractive economic models. Gerson Lehrman Group (eBay for information), StubHub (eBay for event tickets) and ComputerRepair (eBay for onsite technology services) are three successful "ebay for" businesses. Hopefully Quadriserve will join this esteemed group.
        • I am on the lookout to go long other "ebay for" businesses -- especially those run by entrepreneurs with smart plans to build liquidity, which is always the hardest part. Once they achieve critical mass, it's nearly impossible for a competitor to overthrow them.


        • Video blogs -- I don't doubt we will see lots of video blogging hit the web, but I'd short a business based on the idea that this will be a moneymaker. I think people really value high production quality, and I don't think that's coming any time soon from amateurs. It's easier (and a lot cheaper) to write reasonably well than it is to make decent videos.
        • During lunch last week, John Hiller, the CEO of Xanga, a top blogging site and one of the 30 most visited web sites in the world, pointed out to me that blogging isn't really about publishing; it's about conversation. Sure, there are blogs like Gizmodo and Blogspotting that actually are "publications" in a traditional sense. But the vast majority of Xanga and MySpace blogs are basically conversations among friends or colleagues. One person's blog entry is often a response or reference to another. The community and conversational aspects are big drivers of the blog phenomenon, and that's much harder to achieve with video. I have a hard time seeing how you'd respond to a video with another video.

          All that said, I do think people will want to share their videos (of their kids, trips, etc) much like they privately share their photos on sites like Shutterfly. And I do enjoy an occasional trip to Stupidvideos, but I'd still short video blogging.

        • The French economy -- I just returned from a brief vacation including a short stop in France. On a beautiful Sunday in Paris, everything was closed. Not a single shop to visit. Only the cheesiest tourist trap restaurants were open. When the entire country takes off for the month of August, it's no wonder they've got 10% unemployment.

        I intend to add to this list of shorts and longs with future posts, though I admit it makes me nervous to make a public record of them. Someone will undoubtedly rub my nose in any bad calls I make. So I ask that if you think I'm off base with any of these, tell me now before it's obvious.

          Monday, August 01, 2005

          Contribution economy

          Prior to the internet, the only businesses built around donated products were thrift shops. For decades, generous people have donated goods (mostly clothing and furniture) to community storefronts where the products can be purchased by consumers. To my knowledge, the thrift shops collect money mostly to ensure they are self-sustaining, and less fortunate consumers get great deals on other people's used stuff. It's a great model, but nobody ever got rich from it (nor did they intend to do so).

          The internet has introduced many new businesses built on donations. Fortune's David Kirkpatrick refers to the whole industry as the "contribution economy" in his recent article. It appears that consumers are willing to donate quite a bit of their time.

          There are thousands of open source software projects that represent literally millions of donated programming hours from developers around the globe.

          The Wikipedia is another great example. It started in 2001 but already includes more than 600,000 English-language articles and rapidly growing versions in nine other languages are not far behind. It will not be long before the Wikipedia turns the Encyclopedia Britannica from a crucial library staple into an obsolete relic. The cost of producing the 1M+ articles in 10 languages: $0.

          Even more curious to me, though, are for-profit businesses that simply could never have been born without the generosity of countless free laborers. Companies like Redhat and XenSource, for example, make money by packaging and supporting open source software (Linux and Xen, respectively) . The software they "sell" would have cost them tens of millions of dollars to develop, and yet most of their R&D was contributed for free.

          Another example is Gracenote, which is one of my Bessemer investments. Countless consumers manually entered the meta-data (artist, song name, genre, etc) for more than 50 million music tracks into Gracenote's CDDB over the last decade. Gracenote now licenses that data to many consumer electronics and software publishers. A free version of the data still exists from FreeDB, but much like Redhat and XenSource, Gracenote supplies the support and service level agreements critical for commercial offerings.

          There are many other money-makers built on the backs of the contribution economy. A couple of additional examples that jump to mind include Blogger and TripAdvisor.

          There is an emerging crop that has recently attracted my attention. They are focused on the local search problem by using user contributions to rate things such as restaurants and service providers. RateItAll, Yelp, and Tribe are early contenders.

          I'm trying to figure out how to predict which of these contribution economy startups will succeed. Any ideas?