Category Archives: Web/Tech

VCs Blogging and Tweeting

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Jeff Bussgang, whose blog has been a source of inspiration for me over the years, has a post on VCs blogging.  There seems to be a bit of controversy over the issue, as you can see in the comments of the post, and its re-blogs at PEHub and Business Week.

As a VC who blogs and tweets, let me come out with my reasons.

  1. Record of Thoughts: My blog is a personal note pad.  I find it useful to be able to browse over a record, albeit public, of my thoughts on certain topics and how they have evolved over time.
  2. Discussion Arena: I use Sortipreneur, even with its small audience, as a useful discussion environment.  Through my blog and my tweets, I am able to interact with a community where many members are smarter than me.  I use it to ask questions, test ideas and, sometimes, provoke.
  3. Newsfeed: My blog often works as the News tab for me.  I use it to announce investments, events, etc. that may be relevant or interesting to the Turkish startup community.
  4. Education: Probably the most selfish reason for my blog is that it helps me educate my consitutents and help me do my job easier.  I can communicate what type of deals I am interested in, the VC structure, the deal process, etc.

After about four and a half years of blogging, I can say I have benefited a lot from the activity. I beleive ideas grow thorough sharing and a blog is a great vehicle for that.

Reflections on the Decade

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Mmx Larry Cheng has a post a few days ago listing the decade-by-decade returns of major US financial indices.  Here are the returns from 2000 to 2010:

S&P500: -2.9%
DJIA: -0.5%
NASDAQ: -5.7%

I am not an Economist so I will not comment on the first two numbers, except that, as Larry also notes, it's much more difficult to count on 6-8% returns from the stock market that we've been taught to assume.

However, the NASDAQ number does make me think.  2000-2010 was the decade in which we saw the biggest breakthroughs in the connected economy.  In this decade, we saw:

  1. The maturing of Google as the precursor of the connected OS.
  2. The enormous drop in the cost to test ideas by creating lean startups.
  3. The emergence of video over IP, with Youtube (Google) streaming more than a billion videos a day now.
  4. The creation of the first attempts to own the identity layer of the connected economy, with Facebook and Twitter.
  5. The blockbuster hits of digital media consumption hardware, with the iPod and perhaps the Kindle.
  6. The biggest milestones of the mobile computing convergence: the iPhone and Blackberry.
  7. The breaking of stale structures of content creation and distribution, through blogging and social media.
  8. The availability of almost-free voice communication with Skype.
  9. The power with which customers of content innovate to get to content of their choice, legally or otherwise, at minimal cost, represented by the torrent universe.

Each of these areas represent enormous leaps forward in utility and value.  Yet, the financial proxy for these innovations, arguably NASDAQ, is down for the decade.  My explanation for this is the inefficiency of the index in representing this value.

The individual stock prices and market capitalizations may be less and less relevant in accurately representing the value these companies will generate.  How do you value a record label during a seismic shift in how digital content is consumed? How could we have been able to predict the impact of iPhone, Kindle, or Google in our lives, before these products are launched?  This problem cuts both ways.  It can over or under-represent a technology/media company's value.

My point is that we are coming out of a decade of giant leaps forward in the connected economy.  The reflection of this massive creation of value and decrease of friction will have to be represented in dollars and cents.  Apparently, it is not being reflected in NASDAQ just yet.  Maybe it will catch up, or manifest itself through other measures. However, I continue to be very bullish about the economic implications of the connected economy.

Is SaaS Renting?

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Emrecan Dogan has a good analysis of content rental business models.  He's created a simple framework for evaluating the dynamics of renting different types of content, and he's taken as examples books, textboks, music, movies, video games and software.

Of this list, the software example has attracted my attention.  I think Emrecan's talking about shrink-wrapped software.  He's attached it an average price point of $90. And he concludes that the rental market potential is low.

This made me think of Software-as-a-Service models, which are frequently thought of as rental models.  But when you approach it using Emrecan's framework, SaaS looks more like a subscription/service model than a true rental model.

Maybe it's just a semantics issue but I have seen so many cases where SaaS is treated like a rental approach that I thought the difference is worth noting.

Entrepreneurial Focus

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Mark Suster has been blogging about entrepreneurial characteristics.  I like his list and agree with all of his points.

The topic has made me think about a key difference I have noticed in Turkish entrepreneurs and their counterparts in the US (and largely, western Europe): multiple, parallel ventures.

I understand this in the entrepreneurs who are emerging out of a "work for hire" service shop.  In those cases, many of the parallel ventures are off-shoots of ideas or products developed previously.

I also understand large groups of entrepreneurs. In that case there may be excess capacity at the leadership level that gets taken up by a new good idea that the team just does not want to let go.

However, it's surprising to me that a small team that's gone to work on a great idea can find time to focus on a second (or sometimes, third or fourth) project.  There's usually so much work involved in getting one idea off the ground that it should be extremely difficult to parallel process multiple projects.

One reason for the popularity of this model in Turkey may be the scarcity of capital.  Entrepreneurs don't want to put all of their eggs in one basket.  And if they don't have an outside investor who's directing them to focus on one idea, they try to progress several ventures together to see which one is getting traction.

In our investments, we try to get the entrepreneurs to focus on the idea at hand. Many times, there are previous projects they continue to be involved in, but the core focus always has to be in the company we've invested in.

Twitter Spawning 50K Apps

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By now it's obvious that much of Twitter's value comes from its platform characteristics.  I can not think of another company that better embodies the spirit of connectedness in 2009.  But, hearing that 50,000 registered applications to date have been built using Twitter APIs, is still mindboggling.

It's also the evidence of Twitter's openness that powers its growth.

Twitter & Google Starting to Date?

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Googtw After yesterday's announcement of Yahoo intergating wih Facebook Connect, comes the news of Google and Twitter joining forces to allow Twitter integration with Google's Friend Connect.

John Battalle reads this as "Twitter, as in Not Facebook". On the opposite side, Marshall Kirkpatrick's take on it is "just like Yahoo bowed to Facebook, Google is bowing to Twitter".

I think I have a different view of this.  Despite the timing of both transactions, they represent different strategies to me.  Yahoo's move was a bow to Facebook, in favor of its users and the utility they extract from Yahoo, but eroding a strategic advantage Yahoo may have pursued through its massive reach.

Google's move, on the other hand, is less about bowing to Twitter.  Twitter knows surprisingly little about its users, whereas Google knows a ton – thorough clickstreams, search behavior and Gmail.  In fact, I'd say Google still owns a much larger chunk of the social graph than Twitter.  What Twitter is great at is realtime and declared interests.  And it's growing super fast.

This move by Google and Twitter makes me suspect even more my prediction yesterday.  This alliance will allow Google to observe how Twitter helps its users and evaluate Twitter as a potential acquisiton target.  It will also help Google to preserve some ground against Facebook, who has now clearly become the only contender to Google for ownership of the identity layer of the internet.

Facebook Eliminates One Rival in the Race for Social Graph Ownership

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Rocky_victory Today's announcement that Yahoo is integrating into Facebook Connect must have been accompanied with the sound of champagne bottles popping over at Facebook's headquarters.  It's a big victory for Facebook as it advances towards ownership of the identity layer of the internet.

To be honest, I am a bit puzzled at the early concession by Yahoo.  I am fuly convinced that by now Yahoo sees itself as a media company.  It's obvious with its concentration on content.  But, it also has an enormous amount of data on users and, through Yahoo Mail and Yahoo Groups, a nice chunk of the social graph.  And I would have expected Yahoo to try to extract some value out of that.

What's weird is that Mashable is calling this:

"…a no-brainer for Yahoo, who has been trying for years to make its services more social on its own. Now, they’ll start to see some of the benefits that smaller publishers have seen from Facebook Connect (more comments, extra traffic from Facebook, etc.) on a massive scale."

That is ridiculous.  Yahoo is not a small publisher.  It's one of the first and greatest destinations on the internet.  It's got as much traffic as Facebook and more members (500m vs Facebook's 350m).  Why is Yahoo doing this?  And isn't it ironic that the announcement is coming from Jim Stoneham, who's responsible for Yahoo communities?

Om agrees with me and sees Facebook as the big winner and Yahoo as the big loser here, and compares this move to Yahoo's deal with Google in terms of magnitude.  I think this is actually a bigger deal. In search, Yahoo lost to Google's technology.  It did not have much chance against Google.  Whereas in this case, Yahoo's still got a ton of data (groups data, mail-related social graph, hotjobs-driven professional information, flickr's social graph, etc.) to be a contender in the identity layer game.

I expect the next move from Google.  Facebook's got a lot of momentum and Google can not watch this passively. I'd predicted Twitter being bought in 2009.  It was not.  2010 maybe?

Sanalika

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Yesterday I blogged about my surprise upon seeing the Turkish virtual world Sanalika on Google's fastest rising list for 2009.  I further commented that "it has not made much of an impact in the Turkish internet scene so far".

I have since been contacted by a few friends in the Turkish gaming community who informed me that in facti Sanalika is a strong contender and that Alexa does not fairly represent Sanalika's traffic because of its flash-based site.  I stand corrected.

Turks on Google 2009: Sahadan and Sanalika?

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Right after my earlier post today on top search terms of 2009, I saw that Google had just released their Zeitgeist 2009.  While it's difficult to do an apples-to-apples comparison with Yahoo and Bing, the Fastest Rising List gives a taste:

  1. michael jackson
  2. facebook
  3. tuenti
  4. twitter
  5. sanalika
  6. new moon
  7. lady gaga
  8. windows 7
  9. dantri.com.vn
  10. torpedo gratis

And, yes, MJ tops this list, too! 🙂

However, what piqued my interest the most in Google's Zeitgeist this year are the Turkish entries, namely:

Sanalika, #5 in Fastest Rising

and

Sahadan, #4 in Fastest Rising in Sports.

Mind you, these are Global lists…

Sahadan is a Turkish sports news website, and to me, it's the less surprising of the two.  It's a solid property, a long-time resident of the Turkish Alexa 100, and given the level of interest in football in Turkey, a top Turkish site is not a far-fetched entry in the Google list.  Also notable is the fact that it's ranked above Livescore.

Sanalika, however,is a different story.  Ranking 375th in Alexa's Turkey rankings, it's a virtual world similar to IMVU or Popmundo. It has not made much of an impact in the Turkish internet scene so far, so I had to doublecheck when I saw its name on the Google list.

I still suspect Sanalika's inclusion on the list may be a quirk of the methodology used.  Curious…

Also, note KralOyun, a Turkish game portal, #6 in the Fastest Falling list.

All in all, Turks are showing their strong online presence as we've noted before.

UPDATE: The Sanalika saga continues with comments from Arda on TC Europe and Robin on TC.

Yahoo vs Bing Search Terms

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In the last couple of days, both Bing and Yahoo announced their top search terms for 2010.  Here they are:

For Yahoo:

  1. Michael Jackson
  2. Twilight
  3. WWE
  4. Megan Fox
  5. Britney Spears
  6. Naruto
  7. American Idol
  8. Kim Kardashian
  9. NASCAR
  10. Runescape

And, Bing:

  1. Michael Jackson
  2. Twitter
  3. Swine Flu
  4. Stock Market
  5. Farrah Fawcett
  6. Patrick Swayze
  7. Cash for Clunkers
  8. Jon and Kate Gosselin
  9. Billy Mays
  10. Jaycee Dugard

While it's not really surprising that MJ topped both lists, I am blown away by how dissimilar the two lists are.  Jackson is the ONLY common searched topic on the two search engines.  Venture Beat has an explanation:

Perhaps that’s not surprising — Bing is a much newer service, and
probably appealed to a more tech-aware audience. Yahoo, on the other
hand, reaches more users
(though it plans to replace its underlying search technology with
Bing), and its list skews even more heavily towards celebrities and pop
culture.

But I don't buy it.  Bing and Yahoo are both very mainstream search engines.  I could expect a difference of this magnitude on Powerset, Hakia or Wolfram Alpha, but the difference leads me to suspect that maybe there is a difference in methodologies.

I am looking forward to Google's Yearend Zeitgeist to see how that compares.