Prediction: 3D Printing is exiting the “Trough of Disillusionment”

3D Printing had a moment in the consciousness of consumers and venture investors alike across the early part of the decade. But the attention and excitement heaped on this category seems to have waned within the venture marketing the last few years, while large public players like HP have methodically announced their own long-awaited initiatives. Perhaps it was the early sale of Makerbot, in 2013, that marked the peak of this initial portion of the cycle, or the collective realization by so many hobbyists that the technology, while inspiring, still had a way to go before it would be truly accessible and useful for more than novelty applications.

There’s no cause for alarm, however – this is classic Hype Cycle stuff. Mass publicity and zealous early adopter testimonials carried us, as expected, to the “Peak of Inflated Expectations.” Then, when early experiments revealed the distance the technology still had to go and the first generation companies exited before they could change the world, the category settled into the “Trough of Disillusionment.” It’s a path that we’ve seen so many equally transformative technologies follow (see, the Internet).

But, for anyone who’s spent time looking under the surface in this space, it’s as clear as ever that there is still tremendous innovation taking place around 3D printing and other forms of additive manufacturing. This is true for hardware, as well as software and services, as the entire value chain within this category continues to mature. And so too it is evident that these technologies will have a transformative impact on the way we design and produce the goods of the future. With the above early lessons under the industry’s collective belt, it feels like now is the time when this area of innovation will truly come into its own. We are entering 3D Printing “Slope of Enlightenment.”

In particular, it seems inevitable that additive manufacturing will soon enable rapid prototyping and on-demand or just-in-time manufacturing of consumer and small business products. Much like Uber, Instacart, and Postmates have introduced us to the distributed workforce, unlocking excess labor and vehicle capacity, and in the process upending the way we transport ourselves and the goods around us, expect additive manufacturing to usher in the era of distributed and on-demand manufacturing.

With a smartphone in every pocket and an Internet connection in every corner of the world, it won’t require a 3D printer in every home to make this a reality. Distributed networks of printing facilities and friendly neighbors are already emerging as viable options to solve the access problem. For a powerful example, look no further than E-Nable, which is making this a reality today via a global network of volunteers that is 3D printing and distributing prosthesis for those in need.

It’s not just the plastics applications, with which consumers are familiar, but those involving metalsfabrics, and even organic materials like tissue that stand to change the way the future unfolds. We’ve seen 3D printing applied to small, intricate parts, to massive structures like homes and bridges, and to far out projects like printing pizzas in space. There aren’t a lot of areas of industry that this technology won’t be able to transform.

Here in Southern California, it seems like this region stands to benefit as much as any from this coming revolution. There is little doubt that additive manufacturing will play a major role in the evolution of our historical industries such as fashion, toys, entertainment, consumer products, and medical goods. As we speak, the emergence of micro manufacturing cell concepts is reinvigorating R&D and innovation across each of these categories by reducing time and capital commitments required to test new concepts.

As I look at startups innovating in this space, there are obvious parallels to the lean startup revolution that has transformed the way software-based businesses are built. We are seeing additive manufacturing enabling iterative development of physical goods at lower cost and with shorter cycle times than has ever been possible before. What previously took weeks and multi-thousand dollar commitments to develop tooling, can now be accomplished in days if not hours, at fractions of the cost, and with previously unthinkable flexibility. This means that not only can enterprise giants benefit from these new manufacturing efficiencies, but so too can small businesses and consumers.

At Upfront, we have a long history of investing in retail innovation, consumer products, and small business platforms, not to mention, more recently, consumer hardware. Personally, I see additive manufacturing having significant impact in each of these areas and expect to invest heavily in this category going forward.

For investors, entrepreneurs, and consumers alike, we are early in this revolution and there remain important questions to be answered about how additive manufacturing will evolve. But, there is little question that this technology will play a significant role in our collective futures.

We may not yet have our hoverboards, but 3D printing feels like the the same kind of sci-fi technology that was the domain of fantasy just a few years ago. It’s an endlessly fascinating and rewarding time to be investing in this space. If you agree, and if you share a similar vision for where additive manufacturing is headed, I’d love to connect.

Upfront backs Parachute in bringing luxury bedding to the masses

We spend more time in our beds than nearly any other space in life. And we now know that quality of sleep is one of the single most important elements of living a healthy life. And yet, for most consumers, bedding and the other elements that go into creating a luxurious and rejuvenating sleep experience are little more than an afterthought. By the same token, few if any consumers could name a single bedding brand, let alone one that they would profess to love. But as with any disconnect of this type, therein lies a massive opportunity.

As technology investors seeking disruptive businesses capable of exponential growth, it may not seem like the bedding or broader home goods markets would merit our attention. But when the right entrepreneur comes along with a unique perspective on a big market, we couldn’t disagree more. I could not be more excited to announce that Upfront Ventures has led a $3.75 million Series A round in online luxury-bedding brand Parachute. We’re joined by other great investors, including Queensbridge, Mesa, Daher Capital, and Joanne Wilson.

The first thing that stood out when I encountered Parachute, was its dynamic and deeply authentic founder, Ariel Kaye. Ariel has personal experience working in both the bedding industry and in consumer insights. Because of this intersection, she also is the rare type of entrepreneur who lives and breaths her brand, and who possesses a deep connection with the customer she’s working to serve. While it was Ariel that first caught our attention, the fact that Parachute is targeting a deeply fragmented $25 billion home textiles market, drove home how significant the opportunity is to create a beloved sleep brand.

It’s not much of a stretch to say that no one loves shopping for bedding. In part, this is because it’s confusing, and in part because it’s disconcertingly expensive. Parachute has simplified the traditional retail process from start to finish by delivering fine Italian-made sheets, duvets, towels, and other bedding essentials direct to consumer at affordable prices, with free 30-day returns, and without the broken offline shopping experience and misleading marketing that typically accompanies most comparable department store products.

Parachute entered the market approximately 18 months ago, and the response has been nothing short of remarkable. We’re proud to say, the company sold $1 million worth of bedding in its first 12 months, and is on pace to triple that sum in its second year. Along the way, the company has demonstrated that customers in this category will develop brand loyalty and continue to repurchase when the product and purchase experience deliver as promised. By the same token, Ariel and her team have succeeded in creating an uncommonly gender-neutral brand that sees 40 percent of purchases coming from male consumers, and one that is translating across all 50 states and in 25 countries.

One thing that’s becoming abundantly clear is that today’s consumers are more discerning and sophisticated than ever when it comes to the brands they choose to align themselves with. We see this in the emergence of juggernaut aspirational consumer brands like Warby Parker and Toms Shoes, and in the demand for thoughtfully designed, and ethically delivered digital products and services. Like many of these omni-channel brand forbears, Parachute puts social responsibility at the core of its brand, producing all of its products sustainably and allowing consumers to give back with each purchase, donating thousands of life-saving malaria nets to date through Nothing But Nets. Most importantly, these are brand attributes that come from a place of authentic caring, rather than just some afterthought bolted on to polish its story.

It’s not just consumers who are holding brands to a higher standard. Many businesses too are finding that integrating authentic brands into their offerings can help them stand out amid a sea of sameness. Parachute, for example, is beginning to partner with boutique hotels in locations like Los Angeles and the Hamptons, and we see the B2B market as an enormous opportunity going forward. We like a channel that does not just generate revenue but becomes an unusual method to give future customers “a feel” for the brand. In other words, there’s more than meets the eye when it comes to disrupting bedding and the broader home goods market.

Building a durable brand is no easy task, online or offline. Parachute is early in its journey to proving that it can deliver value and joy to consumers time and again, and that consumers want to find a sleep brand that they can endorse and trust. But by all early indications, Ariel and her team have landed on something special here. We could not be more thrilled to be joining the company on its journey.

I was all wrong about the Los Angeles startup community

I am proudly an LA native. Yet when I started my career in technology I chose to live in San Francisco, New York, Boston & even Seattle over Los Angeles. I had characterized my hometown as an “entertainment town” and I had chosen not to build my career in entertainment.

I moved back to LA in 2007 for family reasons while pregnant with my first child, yet did so reluctantly based on concerns it would set back my professional career.

I was wrong. Just the opposite happened. My return to Los Angeles coincided with the renaissance of the LA tech sector as the experienced leaders from Web 1.0 had begun funding or founding their second and third companies in what would blossom into the thriving ecosystem that we now find in LA.

I have since built and operated three businesses in LA and more recently joined as a partner in one of region’s leading venture capital funds, Upfront Ventures. As my decade home nears, I am even more bullish on the city and the future of our burgeoning technology community.

While it’s easy to make the case for why LA is a fantastic place to live for weather and lifestyle, I’d like to outline here why it is also an amazing place to work and to start a company.


You probably know that LA is the home of Caltech, one of the country’s most prestigious science institutions that is blocks away from the NASA-funded Jet Propulsion Laboratory, home of some of our country’s best and brightest minds. You may be surprised to learn that in addition we graduate the largest number of engineers of any region in the country and have more top-25 engineering universities than anywhere else in the US.

Previously, many of these graduates who wanted to pursue software careers would to leave for other cities, but today, an increasing number staying to work at LA’s emerging local success stories like SnapChat, Tinder, Maker Studios, or TrueCar,  as well as within the growing local operations of global companies like Google and Facebook.

We are also seeing explosive growth of earlier stage start-ups (great analysis here) along with second and third generation entrepreneurs mentoring and investing in the next generation – folks like Bill Gross, Gil Elbaz, Brian Lee, Richard Rosenblatt, and Jason Nazar.

In addition, LA has a huge pool of other creative talent. Los Angeles is arguably the creative capital of the world with one out of every six people in LA employed in a creative field.

As the internet evolves from an era of building the infrastructure (routers, switches, databases) to building the applications that sit on top, the value placed on brand building, story-telling, and design becomes ever more critical. LA’s mix of different types of talent may be one reason why many of this generation’s most transformative and beloved companies are emerging in sunny LA. As our tech world moves more into virtual and augmented reality, there is no doubt LA’s star will continue to rise.

Having access to hire great talent is only one part of the equation in building a great company. The other is obviously retaining talent, as employee departures are among the most disruptive elements to building a great culture and high performing team.

I have observed that LA has lower staff turnover rates, with many of our high-profile CEOs and founders pointing to staff retention and loyalty as one of the biggest positives of building a startup in this city. And first timers to the LA tech community are surprised at how supportive the community is of its own companies, consistently rooting for local winners regardless of personal ties or investments.

Urban Culture, Manufacturing, and Distribution

Los Angeles is the most diverse county in the country, with a very interesting cross section of urban and suburban living. As a result, LA is a great launch and test market for many types of local marketplaces and on-demand businesses. Interestingly, start-ups often seek out LA-based VCs as a source of funding because LA is one of their top three launch cities.

As we move into the second wave of many on-demand services, I believe convenience will be table stakes. In turn, differentiated brand value and marketing savvy will become even more crucial to separating the winners from the losers. With this transition, great urban centers of culture like LA and NYC, which understand how to tap into cultural trends and have access to the influencers to help reach the masses, grow ever more important.

LA also has an advantage in industries that are beyond the well known areas of content, video, aerospace, and retail. LA County recently surpassed New York’s fashion district in terms of total industry jobs. We are also observing many important hardware startups are locating in LA to access our region’s decades worth of experience in building things like rockets, planes, and satellites, as well as consumer goods for companies like Mattel or Disney. Tying these industries together is the contiguous LA-Long Beach port, which is the most significant in the Western Hemisphere.  As trade with Asia grows and digital & physical goods both become intertwined in the Internet of Things, LA’s star will continue to rise.

Outside the above established industries, LA offer advantages around distribution and marketing as well. In today’s information-saturated age, companies must increasingly be creative in how they acquire consumers, often through inefficient or mass media channels. Many cities now have deep performance marketing or hacking talent. But our region is unique in its access to influencers and large-scale media distribution platforms.

What’s interesting is that the power of new media distribution platforms is starting to capture the attention of mainstream software and hardware companies outside the obvious industries of gaming, content, and commerce. Recently, I have spoken to numerous startups, ranging from those involved in manufacturing to productivity software to education, that are either considering moving to LA or establishing a sizable presence here to understand and exploit this region’s unique marketing assets.

Affordability and Quality of Life

Living and building companies in LA is hardly a low-cost endeavor. But compared to other leading urban and suburban startup communities, including San Francisco, Silicon Valley, and New York, Los Angeles is significantly more affordable. Building a startup is hard enough. When living on a shoestring budget, it pays to be in a place where capital can be stretched a lot further.

Add these cost advantages to tje the undeniable quality of life advantages of living in one of the sunniest and most culturally diverse regions in the country and it’s easy to see why LA is at the top of many entrepreneurs’ list.


I’ve lived in many of the US’s top technology centers and have now returned home to my native Los Angeles. As I have chosen to build my career and family here, I have been simply astounded at what a technology hub my city has become and how much it’s transforming our local economy. If you want access to some of the best engineering talent, if you want higher retention rates, if you want lower-cost living and year-round beautiful weather – we’d love to welcome you to join us in our movement.

The Daily 5: Five Topics in 5 minutes or less

The Daily 5 is a new idea with which I am experimenting. The idea formed over breakfast this morning with Christen O'Brien, founding team member and all around awesome human at 500 Startups. 

The Daily 5 will be five topics of the day shared over Meerkat initially and then posted later on the blog. The aim is that each story will be 1 minute or less and heavily related to tech, brand, venture capital and the occasional lifestyle digression. 

The 5 topics today:

(1) Meerkat the brand

(2) The import of the Sandwich Video Fund

(3) Airbnb/Homeaway reality concept

(4) Lean In: 1 major dislike/ 1 major like

(5) LA Tech Eco-system - Christen's perspective 

Video below (note: Meerkat doesn't support landscape mode, apologies for the black bars of death)

What do start-ups and Birdman have in common?

Both are team sports. Both require incredible individual team players who figure out how to work together in a single cut, in difficult circumstances to do something audacious and do it incredibly well. I imagine in both, the teams involved (especially given the technique of Birdman), had to improvise under difficult circumstances to create something singular. 

In retrospect, Michael Keaton’s reluctant quip “Look, it's great to be here. Who am I kidding? This is just great fun.” was one of my favorite moments of the Oscar’s.

For the three of you who did not see the best picture speech (likely because you only put an extra thirty minutes on the DVR record time), the exuberant and eloquent director Alejandro Gonzalez Iñarritu shoved Keaton up to the mic; Keaton said little and looked elated, almost dazed.

Michael Keaton was clearly enjoying the best picture moment as part of his Birdman team. He had lost best actor only moments earlier.

Teams win together and lose together. Ninety-eight percent of the Academy Awards are about individual achievement. Yet, individuals don't make great movies. Individuals will get comments like “X actor did an incredible job, but the plot was convoluted and the other acting was ehh.” The whole point of movie going is to enjoy the entire experience, the amalgamation of writing, direction, acting, editing, cinematography, costume design and the business people who make it all happen.

Birdman may be one of my favorite movies of all time (only time will tell). The script and technique were unique, well executed and incredibly acted. Any one of the component parts- actors, director, writers, composers, etc- could have won an award in my mind (perhaps why I am not asked to vote!).

Much like a start-up, where we revere larger than life founders (or directors/producers), it is about the chemistry of teams (actors, cinematographers, editors, set designers), the way founders, their first set of hires, their next set hires and so on come together to build a company (a movie).

I used to row in college. I cannot imagine winning an award for best six seat. For the boat to win, the company to thrive, and the movie to entertain, the team must win together. Winning as a team also just feels better to me.

Ironically, Birdman is a commentary about the ego and narcissism of an actor and of our society as whole in our “see me” culture. Most of the awards at the Oscars celebrate individual achievement, which is the innocent drug that can drive ego. What I love most is watching the motley cast of talent stand up there together, as a team, having won the award for telling a magical story that takes us to another place.

Why Return to Venture Capital Now?

It has been a little over eight years since I left the venture industry, and I am excited to announce today that I am returning to join Upfront Ventures as a Partner.

During my time away, I have co-headed IAC’s M&A group, led Urbanspoon and Citysearch, and, in my most recent and biggest adventure, launched a start-up, P.S. XO, which has just recently merged to become Seedling. Looking back, these choices may appear to form a path in the rear view mirror, but each new voyage resulted from running down a passion and working hard to see it through. The primary link was my drive to learn new things and help others reach their potential. I have found this flow both in operating and investing.

So why go back to Venture Capital and join Upfront now?

After raising over $10 million in total capital, the new Seedling is on fire. The company is on track to hit $20 million in revenue in 2015, doubling year-over-year. I am grateful to put the day-to-day leadership in the hands of CEO Phoebe Hayman, a uniquely talented operator and data-driven brand savant. The baby that my co-founder Soleil Moon Frye and I created is set up to be a big, important company that aspires to change the way families live and enjoy every day.

With the Seedling day-to-day torch sitting in great hands, it feels like a special and important moment in time for me to become part of what Upfront is creating.  I am excited to come full circle back to VC bringing a sharpened eye for investment opportunities and the perspective I have gained as an operator. 

In Upfront, I have found a firm with values that align with my own combined with a desire to take big bets and enjoy the ride.   I am moved to join a team of operators led by an operator (and my board member) in a market that is not only the 3rd biggest and fastest growing, but my hometown of Los Angeles.  

I have worked in New York, San Francisco and Boston and met incredible friends and operators during those times. I look forward to rekindling those relationships now that I can finally pull up from the day-to-day grind of running a startup full time.

After spending the last decade in the game, I am thrilled to move back to being a coach for others pursuing their dreams.

Goodbye for Now

The time comes for me to say goodbye, but I hope to return again someday.  My stay in the blogworld was short and incredibly gratifying.  I thank you all for reading and welcoming my thoughts, opinions, reviews and rambles (hopefully only occasionally).  In the next couple weeks, I will be joining Interactive Corp’s (IAC) Mergers & Acquisitions group.  Please stay in touch!  I will hopefully have the opportunity to connect with many of you directly to discuss emerging business ideas and models or just to shoot the entrepreneurial breeze.  Possibly, one of my Battery colleagues who is equally excited about digital media may pick up where I left off lest the url sit latent for too long! 

You are with me in my RSS feeds…


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Google Says: I Want My MTV!

What can I say, kudos to Google. For a while it became blogging du jour to take a stab at Google’s video strategy. Some complained the features and functions did not live up to expectations- “the product is delayed…. The content is limited… The player is not working…My account won't authenticate..” Back in January, Andrew Goodman from made the analogy  that Google’s foray into video was akin to a billionaire buying a sports team, a trophy business that serves vanity more than financial profit. Many small businesses praised Google’s aimless “bring your random video here” strategy with their tongue in cheek. This strategy had the nice side effect of providing free bandwidth and hosting to serve up these businesses’ video for free.

And yet as Google’s strategy starts to take shape publicly, it seems to me they are approaching the market with a smart staged approach and a great launch content partner. First, Google’s features are improving, with page layout that makes better use of the page space and adding instream rating and permalinks (similar to YouTube). Second, Google entered the market incrementally, gradually bringing on popular features and new content. Google carefully navigated the copyright waters, brining on clips like The White House Correspondent’s Speech from CSPAN and Pirates of the Caribbean: Dead Man's Chest Trailer from Disney.  Google is increasingly moving users to the video section of their site.  Media companies also seem to trust Google to syndicate copyrighted content over the search giant's powerful network.

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NBC to run TV promos on YouTube

This could also read YouTube sees the fork and takes it! 

When user generated video content comes up in conversation, the question I am most often asked is "What is going to happen with YouTube?" Are the IP/copyright holders goign to sue the video aggregators once they start to monetize content or will they demand royalties?  Will the large media companies allow a trickle of premium content to flow illegially on YouTube as promotion for the more mainstream channels or will they do their best to shut down any illegal copyrighted material?  Is YouTube the next Napster (the first iteration of the company)?

Link: NBC to run TV promos on YouTube.

By Andrew Wallenstein

NBC and YouTube are going from foes to friends.

The network is announcing a deal today that will see select clips of NBC series embedded on the popular viral-video site beginning this week, sources said.

The deal is quite a reversal from the well-publicized conflict that broke out between the companies in February, when peacock parent company NBC Universal ordered YouTube to remove hundreds of copyright-violating clips. A skit from "Saturday Night Live" titled "Lazy Sunday" triggered millions of streams for YouTube, becoming its most popular clip for a time.

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“Web Video Goes Mainstream: Is Your Brand Ready?”

The answer is no for the most part, but people are trying.

I had a chance to speak at the “Web Video Goes Mainstream: Is Your Brand Ready?” conference last week. It bestowed a few pearls of wisdom and edgy speakers, along with the litany of clichés, questions with no answer (e.g., how will YouTube make money?) and humdrum “I come from a big company with a big name who is involved in video on the web in a big way” speakers.

Here’s an idea- after every conference involving video on the web, we should let a panel of attendees from a cross-functional sample set (e.g., agency, brand, internet company, old media company, consultant, investor, etc) rate each speaker. Then we should rank order the companies who have speakers who “get it” and then invest in those companies. My mom used to make investment decisions about retail companies in this manner. She sold off Ann Taylor when she thought the inventory became boxy and matronly and bought up the Gap as they started expanding into Kids/Baby. She did pretty well.*

If we employed my faulty stock buying scheme, I would recommend buying Microsoft, Razorfish/Avenue A and Brightcove (sorry its private, but maybe Diller will float you a couple of his shares). And I would be short Google-- screaming short all the way down the elevator shaft all alone. 

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Storyboarding Video on the Web

Pieces of video on the web info create the storyboard…

Time teenagers spend on the web vs. TV- 3 hours/day for both
Takeaway: If the ratio of US Media Usage to Ad Spending is 2x for TV and 4.7x for Internet, ad dollars have to continue to move.

Akamai used to charge $72 per gig to stream high quality video 5 years ago, 72 cents/gig today.
Takeaway: Moore's Law in the house!

J&J- skipped the up-fronts, but struck an ad deal with Tivo for time shifted ad units.
P&G moved 30% of their enormous annual ad budget from TV to other media.

Takeaway: Brands are starting to shift, but we are only seeing early adopters. These two pieces of information are news, which means the other 498 Fortune 500 are still largely doing ad business as usual.

Recent paraphrased quote from Cadillac’s head of marketing when asked about their video on the web strategy- “It’s a lot of trial and error…" $100M here or there to figure out what works.
Takeaway: Brands are very confused by the fragmented media market. Mass media market has fragmented by channel, time and content type. Advertisers have moved from a world of figuring out how to shave off excesses to building up micro-media audiences. Brands need to figure out how to aggregate audiences on the web. Coke still needs hundreds of millions of people to drink their carbonated goodness. And yet, Coke cannot continue to spend a hundred million dollars on TV and call it a day. But it is hard to spend a hundred million dollars at all on the web, let alone in the day you could do it on TV. Marketers are only just starting to figure out how to buy fragmented inventory.

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The Future of TV

"Here we are face to face, a couple of silver spoons. Hopin’ to find, we’re two of a kind, making a go, making it grow…” Sing it with me. “Together, we’re going to find our way.  Together, taking the time each daaaaay...”  Twenty years ago, I worshiped Ricky Schroeder on my walls, wore his signature crisscrossed jelly bracelets, and never missed my weekly 30 minutes of Silver Spoons.  

If you are Gen X — my people, the remote control generation and ex-lovers of acid wash — rock on, hit the fast forward button three times and skip ahead two sentences!

If you are a baby boomer and know how to use a DVR, pause, rewind, insert theme song from The Andy Griffith Show and say “Now I get it.”

If you are wondering why I was praying to a washed up NYPD Blue actor, grab your iPod, buddy list and use the last fraction of your attention span to play The OC theme song (does it have one?).

Just how big is that gap between TV generations? It’s big and it keeps growing. This could give you a clue: I was speaking to a venerable PR executive recently who relayed a story about a disagreement he had with his teenage daughter. Mid-way through the argument, his daughter said, “Dad, pause, and let’s rewind, I would like to start this conversation again.” Kids today only know a world where they can “start-over.” The     way teenagers interact with video through DVRs and Windows Media Players/Flash is influencing the way they argue with their fathers. And it’s a pretty clear signal that the world of TV has changed forever.

Read on   

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Online Video: Now in Syndication

As I was thinking about a breakfast I had this morning with a rare brain- one that understands macro-economics, emerging media technologies and the traditional agency world, I came across the ClickZ article below.  Both brought me to a similar point-  namely marketing spend is posting double digit growth, but not necessarily in the areas where vcs are putting most of their money. 

For example, online video is still small and large advertisers/agencies don't necessarily get it.  And if they do get it, well they may not want to put their ad dollars there.  Why?  No one was fired for buying IBM (so the adage goes).  When I mentioned this cliche this morning, I was corrected.  Since Lenovo bought a portion of the company, it should now read "No one was fired for buying IBM unless they work for the State Department."  Point being, large advertisers are still only dipping their toe online and while they will get more and more comfortable, online video revenues will not be a deluge.  And yet, the vc community has funded over 180 online video companies. 

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Putting Words in Your Mouth

Everyone knows a market segment is not really a segment until it has an acronym.  The old adage goes- if you don't have one make it up.  ERP was once known as way to manage accounting, manufacturing, hr, etc out of a single system or database.  It became an industry when people stopped knowing what the "P" stood for- planning? production? product? perturbed because I spent $100M on SAP and all I got was this server? Over the years the acronym broke down further into CRM, SFA, SCM, EAI, GL. 

In the great tradition of acronyms, we now have WOM or word of mouth marketing.  Now anyone who likes to talk as much as I do or spent any time as a teenage girl has been engaging in this practice for year- "Hey Sally did you see those fantastic Guess jeans with the purple triangle patch (excerpt from the 80s)?"  If you were a basketball player in the 80s you might have said, "check out my Air Jordans, cool red and black colors and I think I can almost dunk from the free throw line."  Now word-of-mouth marketing is not only seen as a must for marketing new products and services, but an entire industry is growing up around the term, trying to figure out how to create, institutionalize, monitor, and measure word of mouth.  The WOMMA organization, founded in late 2004, was created to support companies "pioneering the art and science of amplifying genuine consumer satisfaction."

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Social Networking is Not a Strategy, But it is an Application

The power of community is now taken as a given as communities like Myspace and Facebook lead the charge with 38M and 10M active users respectively. Simple ad-supported revenue models have emerged. Much like TV networks/programs, the communities with the most scale and active user base (GRPs equivalent) garner the highest CPMs- averaging between $1-$5/user for the different leading communities.

As I mentioned in a recent post, the number of community sites is exploding. I have heard from a few in the trenches My Space users that the site is going a little too mainstream. The aspiring indie musician is a little put off by the huge Netflix banner ad bumping up against their 3 fans in Croatia.

Companies like Bebo (recently funded by Benchmark Europe) is up to 100M page views/day, 30% growth in the last two months. In the past couple months, Bebo has passed Tagged, TagWorld, Buzznet and MyYearbook based on Alexa rankings. Why? The interface is simple, the graphics are better and it has a serious network effect going in the high school community. Users will flock to sites where they can interact with their friends. Closed communities are becoming more attractive as users look to interact with more of their kind. Ex-AOL hancho Bob Pittman recently invested in a company called, an invite only community for the rich and famous. As if Paris Hilton needed another means to meet her Greek or Football throwing boyfriend of the week.

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The One(s) that Got Away: Third Screen Media

I was speaking to Ben Levitan about blogging the other day and he pointed out to me that Bessemer really had the first blog. For years, Bessemer has kept a site dedicated to their “anti-portfolio” or the ones that got away. Every vc does this in an informal way, lamenting the good ones decided not to do or did not pursue preemptively. Some of the more data driven vcs will go back and analyze why they decided to pass on a company that went on to achieve greatness.

 I dare you to look up Cisco or Google in any vc’s database. Actually, most vcs will not have this information in a database (which is fairly ironic since we are a tech loving industry), but if they did, it would either say something serious like “competitive space, concerns about management team, are routers really necessary?” Those with a little humor, who either never got a look at the opportunity or saw the need to alter the past for posterity, would probably have something more like “started by a wacky husband and wife team from a little college named after some guy called Leland Jr.”

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