Request to 
2005
Bye, bye Treo and Palm
September 30, 2005. Target Audience: Corporate
Last week I bought a Motorola Razr to replace my Treo650. It is beautiful, highly functional and tiny, and folds open to something substantial in my hand. The Razr synchronizes all business data from my Apple Powerbook wirelessly over Bluetooth, including most contacts and calendar appointments. At a quarter of the size, and a third of the price of a Treo it keeps me just as informed. No wonder Motorola sold 6 Million of them. Lucky Ed Zander, Motorola's CEO who rolled into Motorola (from Sun) after the Razr had already been conceived.
Apart from previous comments in this blog about the Treo with regards to UI, target market etc., the Treo's bulky form-factor (which still reminds me of the old Ericsson, pre-Sony phones) with its pointy antenna, really started to bother me. I felt like a cop patrolling the neigbourhood with a gun in its holster.
But the real reason for my change is a strategic one. I lost confidence in the Palm (Source) platform and so apparently has Palm's CEO. The announcement of the Treo700 based on Windows Mobile has reduced Palm to a commodity hardware player with not much to be proud of. Owning and refining the Palm OS and segmenting it to identifiable target markets would have been the winning business strategy.
Amazing is the power and persistence of Microsoft who now delivers the Windows Mobile version on PDA phones from Motorola, Sharp, Samsung, HP and other brands, steadily repeating its Windows PC software success downstream. I am eagerly awaiting Apple's foray in the phone OS business.
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Great Technology = Great Company?
September 02, 2005. Target Audience: Entrepreneur
| Venture
Capitalist
By Georges van Hoegaerden
On a regular basis entrepreneurs approach me with jaw-dropping technology, wonderful to look at from an innovation perspective but many times hard to envision as a standalone sustainable profit center. So what technology makes a successful company?
Technology is becoming a commodity. Think about it from a macro-economic perspective. Information technology is the instrumentation, not the differentiation of customer businesses. World's largest retailer, Walmart does not rely on technology to be successful, technology was barely available when Walmart started. Walmart built an effective business model and, in-house continuous to shape technology to support the business model. No packaged apps, or technology silos here.
Technology companies do become successful when their technology drives, usually with incremental improvements, the evolution in a marketplace. Google is successful because it optimized the online advertising business model and increased its effectiveness. It's all about market principles, not technology (BTW: which average user can tell the difference between Google and Yahoo! search). eBay is successful because it empowers free-market principles and supports true meritocracy in the sale of goods.
Bottom line:
1) Investigate de-funct, constricted or outdated markets and build technology that improves the effectiveness of those markets.
2) Find capital from investors that understand the market and appreciate technology, not the other way around.
Market principles are seldom wrong, the instrumentation often is.
On a regular basis entrepreneurs approach me with jaw-dropping technology, wonderful to look at from an innovation perspective but many times hard to envision as a standalone sustainable profit center. So what technology makes a successful company?
Technology is becoming a commodity. Think about it from a macro-economic perspective. Information technology is the instrumentation, not the differentiation of customer businesses. World's largest retailer, Walmart does not rely on technology to be successful, technology was barely available when Walmart started. Walmart built an effective business model and, in-house continuous to shape technology to support the business model. No packaged apps, or technology silos here.
Technology companies do become successful when their technology drives, usually with incremental improvements, the evolution in a marketplace. Google is successful because it optimized the online advertising business model and increased its effectiveness. It's all about market principles, not technology (BTW: which average user can tell the difference between Google and Yahoo! search). eBay is successful because it empowers free-market principles and supports true meritocracy in the sale of goods.
Bottom line:
1) Investigate de-funct, constricted or outdated markets and build technology that improves the effectiveness of those markets.
2) Find capital from investors that understand the market and appreciate technology, not the other way around.
Market principles are seldom wrong, the instrumentation often is.
Perception is reality; Apple a consumer company?
August 16, 2005. Target Audience: Corporate
By Georges van Hoegaerden
"Apple is going in a different direction than we want to go." That is the statement from a long term Apple customer (10+ years) we recently talked to. The Apple Store in Palo Alto has recently been revamped to where the iPod and its accessories seem to make up the majority of the new store layout. Media software has been tucked into a little corner in the back. Enterprise software for Small and Medium Enterprises (SME), like FileMaker Pro Server is virtually non-existent, "you can get that online" was the response from an Apple representative.
Did you know Apple is actually making more strides than ever in the enterprise business? Oracle, MySQL and a lot of other mission critical software now runs on OS X. Apple risks loosing SME foothold if it does not carefully balance advertising the iPod trojan horse with the reasons why it created the iPod, selling higher margin products. Enterprise software may not be bought in a retail store, but providing exposure and demo stations with enterprise and SME solutions are critical to changing a destructive perception. Or does Apple plan to open new Business Stores soon?
"Apple is going in a different direction than we want to go." That is the statement from a long term Apple customer (10+ years) we recently talked to. The Apple Store in Palo Alto has recently been revamped to where the iPod and its accessories seem to make up the majority of the new store layout. Media software has been tucked into a little corner in the back. Enterprise software for Small and Medium Enterprises (SME), like FileMaker Pro Server is virtually non-existent, "you can get that online" was the response from an Apple representative.
Did you know Apple is actually making more strides than ever in the enterprise business? Oracle, MySQL and a lot of other mission critical software now runs on OS X. Apple risks loosing SME foothold if it does not carefully balance advertising the iPod trojan horse with the reasons why it created the iPod, selling higher margin products. Enterprise software may not be bought in a retail store, but providing exposure and demo stations with enterprise and SME solutions are critical to changing a destructive perception. Or does Apple plan to open new Business Stores soon?
Broadcast Media unleashed
August 09, 2005. Target Audience: Entrepreneur
By Georges van Hoegaerden
Traditional Broadcast Media is about to get a major overhaul. Traditionally the demi-cartels, consisting of the networks (like ABC, NBC, CBS or in radio Clear Channel, Vivendi etc.) have a stronghold over content production and distribution. Control of these segments is under tremendous new pressure.
1/ Content stronghold
For less than the average cost it takes to setup a restaurant, no more than $50,000, a professional video content production company can be created to produce top quality 1080p HD content (radio can be produced at a fraction of that cost using podcasting technology). Imagine a world in which the number of content production firms rivals the number of restaurants in your town (and not just Al Gore's new Current Network). Soon we will embrace new anchors and fresh programming throughout the whole season, instead of the four seasons of repetitive programming mix we have been forced to swallow for so long.
2/ Distribution stronghold
Most networks own the stations. Up-and-coming content producers are forced to do business with and, obey to the rules of distribution players to get exposure. Now with the advent of IP Television, Podcasting and upcoming convergence technologies from Tivo and Netflix and others, diverse content will be brought to anybody with an internet connection. The judgement of good content will finally rest in the hands of the viewers.
Two major factors play a role in the accelleration of change:
1/ The slowdown: The FCC is working at its own pace to change the 40-year old rules of broadcasting through governmental processes and buy-in.
2/ The speedup: The unstoppable adoption of the Internet will create new broadcast heros and "networks" that reach a broadcast and market hungry audience; our youth.
Networks better get their act together, build their own internet distribution delivery strategy, determine what people really want to watch, use real (not analytical or statistical) popularity data to up-sell popular internet programs to network television. It is not too late for networks to respond, but their time is running out.
Let the games begin.
Traditional Broadcast Media is about to get a major overhaul. Traditionally the demi-cartels, consisting of the networks (like ABC, NBC, CBS or in radio Clear Channel, Vivendi etc.) have a stronghold over content production and distribution. Control of these segments is under tremendous new pressure.
1/ Content stronghold
For less than the average cost it takes to setup a restaurant, no more than $50,000, a professional video content production company can be created to produce top quality 1080p HD content (radio can be produced at a fraction of that cost using podcasting technology). Imagine a world in which the number of content production firms rivals the number of restaurants in your town (and not just Al Gore's new Current Network). Soon we will embrace new anchors and fresh programming throughout the whole season, instead of the four seasons of repetitive programming mix we have been forced to swallow for so long.
2/ Distribution stronghold
Most networks own the stations. Up-and-coming content producers are forced to do business with and, obey to the rules of distribution players to get exposure. Now with the advent of IP Television, Podcasting and upcoming convergence technologies from Tivo and Netflix and others, diverse content will be brought to anybody with an internet connection. The judgement of good content will finally rest in the hands of the viewers.
Two major factors play a role in the accelleration of change:
1/ The slowdown: The FCC is working at its own pace to change the 40-year old rules of broadcasting through governmental processes and buy-in.
2/ The speedup: The unstoppable adoption of the Internet will create new broadcast heros and "networks" that reach a broadcast and market hungry audience; our youth.
Networks better get their act together, build their own internet distribution delivery strategy, determine what people really want to watch, use real (not analytical or statistical) popularity data to up-sell popular internet programs to network television. It is not too late for networks to respond, but their time is running out.
Let the games begin.
Advertising Make-over
August 08, 2005. Target Audience: Entrepreneur
By Georges van Hoegaerden
Blog readership in the first quarter of this year jumped 45 percent to 49.5 million people, or one-sixth of the total U.S. population, according to a report in Red Herring today. As potential buyers are looking to learn from micro-celebrities what to buy and visit the blogs that gave these micro-celebrities their status, advertisers have new opportunities to attach specific marketing messages to specific content in these blogs. A new Adwords or Vibrant Media - like opportunity where blog content is matched with pre-defined and pre-paid advertising keywords or categories is on the horizon. Advertising strategies are changing fast and about to get a big makeover again. Never before have advertisers been able to target buyers more precisely. Another reason why the Internet is becoming such a powerful distribution channel.
Blog readership in the first quarter of this year jumped 45 percent to 49.5 million people, or one-sixth of the total U.S. population, according to a report in Red Herring today. As potential buyers are looking to learn from micro-celebrities what to buy and visit the blogs that gave these micro-celebrities their status, advertisers have new opportunities to attach specific marketing messages to specific content in these blogs. A new Adwords or Vibrant Media - like opportunity where blog content is matched with pre-defined and pre-paid advertising keywords or categories is on the horizon. Advertising strategies are changing fast and about to get a big makeover again. Never before have advertisers been able to target buyers more precisely. Another reason why the Internet is becoming such a powerful distribution channel.
The Long Tail Continues
July 21, 2005. Target Audience: Entrepreneur
| Venture
Capitalist
By Georges van Hoegaerden
At The Long Tail Churchill Club event this morning Chris Anderson (Wired Editor in Chief and writer for the Economist), who claims ownership of the term, discussed his research and his upcoming book about The Long Tail. His speech reiterated some well understood findings at Amazon, Netflix, Rhapsody (all of which have been mentioned here before) as well as some esoteric analytical findings in which academia make an attempt to approximate the outcome of Long Tail markets with formulas. The Q&A session lead us into some of the business impacts of Long Tail markets. First he agreed with us, no business should create a Long Tail without a Torso. Second, new search technology customized to every individual usage (vertical search) is essential. Third, new "Taste-makers" of the world or micro-celebrities, vocalized by blogging about niche expertise, will fuel and direct the trust in The Long Tail. Meritocracy with democratic production. Interesting example mentioned was Lego, the toy company that changed its conservative marketing strategy (Pareto based) into a community marketing strategy, realizing better segmentation and margins can be derived from its very loyal community that continues to grow.
Our stance: Long Tail markets can succeed if:
1) The Torso exists and is successful in drawing the crowd
2) Long Tail demand is fed through Long Tail supply, creating a free-market
3) Arbitration is "owned" by the marketplace (not the company)
4) The marketplace offers sufficient transparency, to allow for discovery, not just search
5) The business behind the marketplace makes money on distribution (not aggregation)
6) The marketplace offers integrity, in pricing, use and abuse prevention
Read on for more information on The Long Tail in this blog series...
At The Long Tail Churchill Club event this morning Chris Anderson (Wired Editor in Chief and writer for the Economist), who claims ownership of the term, discussed his research and his upcoming book about The Long Tail. His speech reiterated some well understood findings at Amazon, Netflix, Rhapsody (all of which have been mentioned here before) as well as some esoteric analytical findings in which academia make an attempt to approximate the outcome of Long Tail markets with formulas. The Q&A session lead us into some of the business impacts of Long Tail markets. First he agreed with us, no business should create a Long Tail without a Torso. Second, new search technology customized to every individual usage (vertical search) is essential. Third, new "Taste-makers" of the world or micro-celebrities, vocalized by blogging about niche expertise, will fuel and direct the trust in The Long Tail. Meritocracy with democratic production. Interesting example mentioned was Lego, the toy company that changed its conservative marketing strategy (Pareto based) into a community marketing strategy, realizing better segmentation and margins can be derived from its very loyal community that continues to grow.
Our stance: Long Tail markets can succeed if:
1) The Torso exists and is successful in drawing the crowd
2) Long Tail demand is fed through Long Tail supply, creating a free-market
3) Arbitration is "owned" by the marketplace (not the company)
4) The marketplace offers sufficient transparency, to allow for discovery, not just search
5) The business behind the marketplace makes money on distribution (not aggregation)
6) The marketplace offers integrity, in pricing, use and abuse prevention
Read on for more information on The Long Tail in this blog series...
PowerPC or Intel, who cares? Or do I?
July 09, 2005. Target Audience: Review
By Georges van Hoegaerden
Apple switching to Intel is a move that stunned the faithful Mac community, yet most of us knew Mac OS X was derived from a dual core OS Steve Jobs had been running for a while at Next. Had we forgotten?
Did the success of the iPod blur our vision? But more important than the choice for Intel CPU's is the impact on the choice for other hardware components of the computer. The Mac derives its cool look, slim laptop design, unique features and true innovation from a primarily proprietary hardware design process. Low cost and commodity designs from mostly Intel, AMD, and other mass market producers still turns out computer bricks. Intel performance is good, instead of "Intel Inside" just add "Apple Everywhere Else".
Apple switching to Intel is a move that stunned the faithful Mac community, yet most of us knew Mac OS X was derived from a dual core OS Steve Jobs had been running for a while at Next. Had we forgotten?
Did the success of the iPod blur our vision? But more important than the choice for Intel CPU's is the impact on the choice for other hardware components of the computer. The Mac derives its cool look, slim laptop design, unique features and true innovation from a primarily proprietary hardware design process. Low cost and commodity designs from mostly Intel, AMD, and other mass market producers still turns out computer bricks. Intel performance is good, instead of "Intel Inside" just add "Apple Everywhere Else".
Oracle Collaboration "sweet"
July 09, 2005. Target Audience: Corporate
By Georges van Hoegaerden
While attending Tony Perkins' Media 100 beer-and-burger bash at the Alpine Inn, I was confronted by another opinionist that questioned Oracle's foray in the Enterprise Collaboration business. Indeed, it has been a long road; Oracle*Mail, Oracle Office, Oracle Library, Oracle Documents, Oracle Workflow, Oracle InterOffice Suite, Oracle InterOffice, Oracle Collaboration Suite is the reincarnation Oracle's installed base has been hit up with since 1990. As the lead salesman (or should I say Director of Worldwide Marketing), more than 7 years ago for Oracle Office and InterOffice I learned a few important lessons that stuck with me forever.
For one, technology does not
sell. Oracle's collaboration tools were then,
and are now some of the best in the business.
Two, deliver a proposition to sales people that matches the vendor's existing business model. Incompatibility of business models is why 800-pound Gorillas can't buy themselves into new categories.
Three, commission sales people competitively to other proven product offerings. Don't let your weakest sales people hide behind selling the "impossible". Again, Oracle's technology is not the problem, incompatible business models is the real issue. I see a bright future for Oracle's Collaboration Suite as the software-as-a-service solution for customers who have bought into Salesforce.com's business model.
Now, Digital Asset Management, often erroneously merged into the Collaboration substrate, is a market category that Oracle needs to own and quickly. "Unstructured" data and corporate media management markets are currently growing at a clip of 45% a year, faster than RDBMS or ERP growth. If Oracle wants to be the database for all corporate data, digital asset management is the real opportunity, not only because it works best with Oracle's organic business model. I've got suggestions for Chuck (Rozwat and Phillips) of who to buy to get in quick.
While attending Tony Perkins' Media 100 beer-and-burger bash at the Alpine Inn, I was confronted by another opinionist that questioned Oracle's foray in the Enterprise Collaboration business. Indeed, it has been a long road; Oracle*Mail, Oracle Office, Oracle Library, Oracle Documents, Oracle Workflow, Oracle InterOffice Suite, Oracle InterOffice, Oracle Collaboration Suite is the reincarnation Oracle's installed base has been hit up with since 1990. As the lead salesman (or should I say Director of Worldwide Marketing), more than 7 years ago for Oracle Office and InterOffice I learned a few important lessons that stuck with me forever.
Two, deliver a proposition to sales people that matches the vendor's existing business model. Incompatibility of business models is why 800-pound Gorillas can't buy themselves into new categories.
Three, commission sales people competitively to other proven product offerings. Don't let your weakest sales people hide behind selling the "impossible". Again, Oracle's technology is not the problem, incompatible business models is the real issue. I see a bright future for Oracle's Collaboration Suite as the software-as-a-service solution for customers who have bought into Salesforce.com's business model.
Now, Digital Asset Management, often erroneously merged into the Collaboration substrate, is a market category that Oracle needs to own and quickly. "Unstructured" data and corporate media management markets are currently growing at a clip of 45% a year, faster than RDBMS or ERP growth. If Oracle wants to be the database for all corporate data, digital asset management is the real opportunity, not only because it works best with Oracle's organic business model. I've got suggestions for Chuck (Rozwat and Phillips) of who to buy to get in quick.
Step it up Skype!
June 29, 2005. Target Audience: Entrepreneur
As the number of simultaneous Skype users topples two million, audio quality starts to degrade and excitement about a great alternative to costly international calls starts to wane. My weekly calls to Australia and Europe are getting less reliable every month. It is time for Skype to step up its relationships with eager VPN providers (perhaps even the ones that have not joined the proprietary VOIP deployment) to deliver quality-of-service levels that maintain the superb voice-quality we got accustomed to during Skype's inception. I would have no problem paying a small fixed monthly service fee to improve call quality and it could turn Skype in a much more viable and profitable business. Any network provider would be eager to become the backbone of Skype's popularity. Akamai, are you listening too?
Podcasting; a new free market by Apple
June 28, 2005. Target Audience: Entrepreneur
| Venture
Capitalist
By Georges van Hoegaerden
Radio is about to get a major overhaul. With iTunes, record companies are losing their arbitration, no longer are we forced to buy collections (CDs) in order to enjoy that one favorite song. In the near future that power will be diminished even further. Musicians will post their music without intervention and arbitration of a record company, giving buyers the ultimate selection of music they want to enjoy. Pod-casts is the technology that allows you to pick which radio segment you'd like to listen to (instead of a whole program), and deliver it to you at whatever time is convenient. More exciting is that the creation of pod-casts is open to everyone, allowing anyone to get on the soapbox and speak their mind to the world. Independent reporting from the trenches is only minutes away. New music stations will spring up and deliver music from all corners, to all corners of the globe. Welcome to a free world.
Radio is about to get a major overhaul. With iTunes, record companies are losing their arbitration, no longer are we forced to buy collections (CDs) in order to enjoy that one favorite song. In the near future that power will be diminished even further. Musicians will post their music without intervention and arbitration of a record company, giving buyers the ultimate selection of music they want to enjoy. Pod-casts is the technology that allows you to pick which radio segment you'd like to listen to (instead of a whole program), and deliver it to you at whatever time is convenient. More exciting is that the creation of pod-casts is open to everyone, allowing anyone to get on the soapbox and speak their mind to the world. Independent reporting from the trenches is only minutes away. New music stations will spring up and deliver music from all corners, to all corners of the globe. Welcome to a free world.
LaserCard; Silicon Valley's best kept secret
June 26, 2005. Target Audience: Corporate
| Venture
Capitalist
With homeland security as a hot topic these days, LaserCard in Mountain View (NASDAQ: LCRD, formerly known as Drexler Technologies) quietly continues to ship millions of unique memory cards as the foundation for "Green" cards and National ID cards to US, Italian, and Canadian governments and others. In addition to its incredible resistance against wear and tear (we punched holes in it and it still read successfully) and unique security features, the LaserCard stores an impressive 2.8M of personal and biometric data. Fingerprints, retina scans, voice encoding or whatever becomes the prevalent set of biometric verifiers, can be combined with visual authentication to ensure the holder of the card is indeed the one presenting himself. All these attributes can be stored on the card and read offline without the need for centralized databases. So why is homeland security not using this card to it's fullest potential? Why does it waste time on privacy debates with regards to centralized storage? Why, four years after 911 are we still not able to verify a persons real identity?
No Long Tail without a Torso
June 24, 2005. Target Audience: Entrepreneur
| Venture
Capitalist
By Georges van Hoegaerden
Investors are getting flooded with Long Tail startups. The Long Tail is the well documented phenomenon in which Amazon.com makes more money in selling books that are not(!) in the top 10,000 and creates controversy about traditional sales principles. Hundreds of examples exist before the introduction of the internet. But the Long Tail really only exists when there is a body attached to it. You go to Amazon because you find the most well known books, then you'll explore its creative variety. The body represents the highly targeted top quality that draws in the audience in the first place. So stop pitching Long Tails, where you rely on some undefined creative variety. Focus on making your numbers in the identifiable market, then benefit from the Long Tail to expand your selection beyond the traditional and constricted marketplace. More on the Long Tail here.
Investors are getting flooded with Long Tail startups. The Long Tail is the well documented phenomenon in which Amazon.com makes more money in selling books that are not(!) in the top 10,000 and creates controversy about traditional sales principles. Hundreds of examples exist before the introduction of the internet. But the Long Tail really only exists when there is a body attached to it. You go to Amazon because you find the most well known books, then you'll explore its creative variety. The body represents the highly targeted top quality that draws in the audience in the first place. So stop pitching Long Tails, where you rely on some undefined creative variety. Focus on making your numbers in the identifiable market, then benefit from the Long Tail to expand your selection beyond the traditional and constricted marketplace. More on the Long Tail here.
Google versus eBay; room to spare
June 21, 2005. Target Audience: Entrepreneur
No-one can ignore the power of Google. Undeniably it has built a brand that draws huge advertising dollars. Not dissimilar from Yahoo five years ago. Unlike Ray Lane (who we recently pitched to with a marketplace investment) we don't believe Google will be the player that takes all. Google is a place where you find things (among a lot of things you don't want) and eBay is a place where you know what you want and trade it. Google CEO Eric Schmidt left a little more room than Ray in a recent interview with Charlie Rose, clearly leaving the door open for both players. But what is eBay doing? eBay still seems to be getting bigger, but not much smarter. As with any company, staying true to the core of your success as you grow is a challenge. Many temptations lie ahead.
In search of the Economist VC
June 15, 2005. Target Audience: Entrepreneur
| Venture
Capitalist
By Georges van Hoegaerden
Free market principles are over 400 years old when the Dutch started selling flowers using a manual auctioning system. eBay has done a masterful job of bringing this age old success to the internet in selling person-to-person goods. The benefit of eBay is macro-economic not technology (or user 'friendliness'). That may be the reason why it barely escaped the (2-3) veto at Benchmark Capital. The success of free-market principles can be extended to many verticals and it remains a big surprise to me that eBay has not delved into other verticals using these hard earned principles.
Recently, a new job site TheLadders where I posted my resume (for research purposes on marketplaces), raised capital with a new approach to job search. Instead of charging recruiters it charges the job seeker (specifically the ones above $100K/year salary) a price for access to the premium jobs on the site. A nice concept but how do we know that instead of trusting the applicant, we can now trust the recruiters. Are these posts for real. How are recruiters held accountable. How do I know if my personal data is not abused? As NY attorney general Eliot Spitzer declares: "For a market to be truly free and efficient and have the full confidence of its participants two things are required: integrity and transparency". Why would I trust a job site that does not tell me what transactions are committed. Would I be drawn to eBay if I did not know what products really go for?
Free market principles will change the record industry, new players like Apple have implemented the first phase of a free-market for music. Without truly recognizing it, the record labels are participating in a movement in which the stars are no longer produced by labels, but stars are produced by people. But Apple needed the labels to draw the participants into its marketplace first.
Open-source represents another form of free market principles. Virtually unlimited software development supply is matched with the diverse appetite for the Linux operating system. Why are we still entrusting the publishing of books to the demi-cartel of the book publisher. You can publish books in Audible on iTunes and the software is ready today to publish Adobe's PDF format (yes, in iTunes). What stops Apple from becoming the media hub where free market principles apply to any data type and buyers can tap into the Pareto and Long Tail supply simultaneously.
There are some real hurdles. Hurdles that require capital and domain expertise and VC's to fund them. But we need a different VC, not the technology nut that wants to send a new rocket into space, but one that understands the power of history and evolution.
Free market principles are over 400 years old when the Dutch started selling flowers using a manual auctioning system. eBay has done a masterful job of bringing this age old success to the internet in selling person-to-person goods. The benefit of eBay is macro-economic not technology (or user 'friendliness'). That may be the reason why it barely escaped the (2-3) veto at Benchmark Capital. The success of free-market principles can be extended to many verticals and it remains a big surprise to me that eBay has not delved into other verticals using these hard earned principles.
Recently, a new job site TheLadders where I posted my resume (for research purposes on marketplaces), raised capital with a new approach to job search. Instead of charging recruiters it charges the job seeker (specifically the ones above $100K/year salary) a price for access to the premium jobs on the site. A nice concept but how do we know that instead of trusting the applicant, we can now trust the recruiters. Are these posts for real. How are recruiters held accountable. How do I know if my personal data is not abused? As NY attorney general Eliot Spitzer declares: "For a market to be truly free and efficient and have the full confidence of its participants two things are required: integrity and transparency". Why would I trust a job site that does not tell me what transactions are committed. Would I be drawn to eBay if I did not know what products really go for?
Free market principles will change the record industry, new players like Apple have implemented the first phase of a free-market for music. Without truly recognizing it, the record labels are participating in a movement in which the stars are no longer produced by labels, but stars are produced by people. But Apple needed the labels to draw the participants into its marketplace first.
Open-source represents another form of free market principles. Virtually unlimited software development supply is matched with the diverse appetite for the Linux operating system. Why are we still entrusting the publishing of books to the demi-cartel of the book publisher. You can publish books in Audible on iTunes and the software is ready today to publish Adobe's PDF format (yes, in iTunes). What stops Apple from becoming the media hub where free market principles apply to any data type and buyers can tap into the Pareto and Long Tail supply simultaneously.
There are some real hurdles. Hurdles that require capital and domain expertise and VC's to fund them. But we need a different VC, not the technology nut that wants to send a new rocket into space, but one that understands the power of history and evolution.
Treo650: In the land of the blind, the one-eyed is king
May 26, 2005. Target Audience: Review
By Georges van Hoegaerden
As a fervent Macintosh user (I have never bought a Windows PC in my life, but been "forced" to use one), the Treo650 is about the only game in town to get your office with you on the road. The success of the Palm in 1997 started with a simple concept, provide business users with four simple buttons that gives them access to everything they need. No more, no less. Since then the Palm platform has grown in all directions, except the one I need; better support for the business user. I like access to e-mail and a decent browser, I don't like the fact that many of the phone software capabilities are not truly integrated with the original Palm software capabilities. Bluetooth performance of the Treo is below par, calls sometimes do not get sent to the Treo headset, regardless of the button you press (the headset works fine with my Powerbook and Skype). Categories don't work with the Mac. Call log can't be scrolled through using navigation keys. No keystroke consistency between applications. No global hot button consistency. Inconsistent user interface behavior between applications. Should I go on?
Opinion: I wish Apple made a phone, using a proprietary device that serves the needs of a business user very well (a key target considering its $500 price point) , instead of trying to appeal to a broad software market. In the same way the iPod did that for music players. Proprietary platforms competing with "open-source" will yield better customer value, Apple please bring it on.
Seismic changes in Digital Entertainment
May 06, 2005. Target Audience: Entrepreneur
By Georges van Hoegaerden
Attended the Churchill Club seminar under the same name. Interesting speakers were Chuck D (Public Enemy), Roger McNamee (Integral Capital Partners, Silver Lake Partners, Elevation Partners) and Blake Ross (Firefox creator). It is becoming clear that the old rules of how to create or tap into large media markets have changed. To own these markets one must provide a large selection. MP3 music sharing has given listeners a taste of virtually unlimited supply they are not willing to give up on. The Long Tail roars its head yet again. Tivo1, Mike Ramsay added that 50% of programs recorded on Tivo are non-popular programs. Roger quoted the Death of the Pareto principle. The Palo Alto library has known this for many years, more than 75% of its purchasing budget is for non-popular selection. Mobility and locality were mentioned as important side effects of Long Tail markets. The ability to serve up that wide selection on a wide variety of devices is crucial. Arbitration of content (the way record companies enforce The Pareto principle) is no longer accepted by buyers. Buyers want to find any creative material they are interested in, and in some cases, want to have the ability to get in touch with the artist directly. New search capabilities become important to weed through large selections, Google capabilities were considered insufficient. Scanning type search, "I know it when I see it", provides interesting new browse capabilities for buyers. Blake added that as a technology industry we have the responsibility to make things easier to use before we move on to another golden opportunity. We agree with Roger that media should become the new Consumer Packaged Goods.
Getty Images; the image demi-cartel
March 28, 2005. Target Audience: Corporate
By Georges van Hoegaerden
Getty Images, the self proclaimed market leader in the $7B stock photography market, recently posted an impressive $622M in 2004 revenues. Our in-depth analysis of the market actually shows a 2004 decline in Royalty Free and Rights Managed images sold compared to 2003 and Getty making it up by increasing ASPs significantly and a small increase in editorial sales. Royalty free images were sold at an ASP of $210 compared to $150, Rights Managed images moved up to $585 from $560 in 2003. While the company boasts an impressive 70M images on file, our analysis shows Getty Images sold no more than 1.5M images in 2003, a 3.5% market share of 43M images sold each year in the stock imagery market. Hardly a gorilla, want to know what are they are really selling?
Our opinion: Agency & distribution model are in conflict, restricting organic growth.
Getty Images, the self proclaimed market leader in the $7B stock photography market, recently posted an impressive $622M in 2004 revenues. Our in-depth analysis of the market actually shows a 2004 decline in Royalty Free and Rights Managed images sold compared to 2003 and Getty making it up by increasing ASPs significantly and a small increase in editorial sales. Royalty free images were sold at an ASP of $210 compared to $150, Rights Managed images moved up to $585 from $560 in 2003. While the company boasts an impressive 70M images on file, our analysis shows Getty Images sold no more than 1.5M images in 2003, a 3.5% market share of 43M images sold each year in the stock imagery market. Hardly a gorilla, want to know what are they are really selling?
Our opinion: Agency & distribution model are in conflict, restricting organic growth.
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