Friday, October 24, 2008

Web 3.0 - Highlights From The VC Panel

I sat in on the VC panel at Web 3.0 and took note when they discussed what they look for in the deals they fund. Not a lot of surprises, but I think their points are worth repeating:
  • What problem do you solve? I look at this as a 25-words-or-less plain english statement. I've spoken to a tremendous number of entrepreneurs who struggle to do this and it's not easy. I've created these statements in companies where I've worked and it takes time, thought, and a lot of testing to figure exactly what message gets your point across in a way that people can understand. Obviously, the other benefit is that the more precisely you define the problem, the easier it'll be to solve - hopefully!
  • What's it cost to get a customer? In the late 1990's, I spent a lot of time working with companies like Expedia, E*TRADE, Fidelity, and other household names in e-commerce. Regardless of the industry, each successful e-commerce site came to the realization that their customer acquisition cost was a huge issue and one that needed to be monitored constantly. This point applies equally well to consumer facing sites as well as corporate oriented solution vendors.
  • What do you need to believe in? In other words, if you're starting a social networking site, you need to believe that 1) people are essentially social animals that will usually look for ways to connect with each other; 2) you've identified a niche and created an experience that will actually attract and retain enough of an audience to make the venture pay off; 3) the sun will rise tomorrow morning, or whatever else is essential to success. Being able to state these beliefs helps set context and provide perspective, both of which lend themselves to understanding by a third party, like a VC.
  • What are your dependencies? This is distinct from your beliefs, above - these are the things that have to happen to make your idea work. If you're pursuing a solar power idea, some examples might be 1) silicon based solar panels will continue to fall in price and rise in efficiency; 2) there's a finite supply of oil and over the long term its price will continue to rise; 3) because of construction lead times and political issues, nuclear power won't be a competitor any time soon. And so on - in any case, the point is to identify and clearly understand the things that have to exist for your business to succeed.
  • What's the competitive environment? Well, this one's pretty obvious, assuming you know what business you're really in - see the first point above. Be sure to include substitutes and not just other competitors that happen to look just like you.
  • What's the quality of the team? Putting together a business with your best friends from high school may not be such a great idea, unless they happen to be uncommonly well suited to the tasks they've been assigned. Otherwise, you're far better off reaching out to the best people you can find, which means talking to a lot of people you don't know, getting a glimpse of lot of things you don't know (through their eyes), and hopefully, finding people who are so smart and so talented they leave you thinking you'll have to work hard just to keep up with them. Inevitably, investors need to be convinced that the team in front of them can take their idea and execute on it better than anyone else around.
Whether you're experienced and have dealt with all of these issues or you're new and facing them for the first time, these points are worth bearing in mind as reminders or guides. Now go get 'em!

Monday, October 20, 2008

Thoughts on Jupitermedia Web 3.0

This was a small (~200 attendees) but successful conference. Dan Grigorovici invited me and I'm glad he did - I'd actually geared the release date of my report to be in advance of this conference and I was very nicely surprised at how many people said they found it helpful. Some quick thoughts:
  • I was surprised at how many speakers focused on online advertising or Natural Language Processing (NLP). For awhile I began to think I'd missed something in my registration materials, but I got over any misgivings in time for my panel discussion. Fortunately I had the chance to point out the in the US we have a $13 trillion economy and an audience member volunteered that online advertising accounts for roughly $85 billion. In the remaining $12.9 trillion I'm certain we're leaving many opportunities for Semantic Technology untouched.
  • When I gave a brief talk in Cambridge, MA (MA) two nights earlier, I'd been asked if any corporations were exchanging URIs in the course of conducting business. I'm not aware of any large (Global 1,000) companies engaging in this practice although I can see plenty of reasons to do so. During my panel I ran through a very simple example of Kimberly-Clark (KMB) exchanging URIs with Weyerhaeuser (WY) for production, supply chain, and demand management.
  • In a later session, a collection of West Coast VCs provided a very interesting panel discussion on what they look for in the companies they select for investment - more on this in a separate post.
All in all, Web 3.0 was time and money well spent.

Thursday, October 9, 2008

What a Whirlwind!

Response to my report has been surprisingly strong and my thanks to everyone that's written in. Several companies have contacted me to provide a briefing and I plan to write up those conversations and post them here on my blog. I'm not sure of my own next steps but I plan to offer consulting services in the interim - stay tuned and I'll post details shortly.
And special thanks to Paul Miller for having covered my report - he also kindly invited me to do a podcast which you'll find here.
Next week I'm off to the Web 3.0 conference in Santa Clara where I hope to keep learning more about how companies are using Semantic technologies to achieve their strategic goals. If you plan to attend, I hope you'll introduce yourself and say hello.