data.insights.ideas

Phew. That’s my first breath I’ve taken since I landed back in New York City on Tuesday morning at 3AM EST. For nearly a week, I was in San Francisco for the Goldman Sachs Technology and Internet Conference 2009 and other meetings throughout the Bay Area. You can take a look at the agenda [PDF] on their site (although it was nearly impossible to find online without an invitation to the conference - which, fortunately, I received).

I’m going to take more of a 50k foot Jason Calacanis approach to this piece, as there’s been a lot on my mind since setting foot back on the East Coast. In no particular order:

• “We’d rather be overspecialized than overdiversified in the way do business” - Chief Content Officer Ted Sarandos of Netflix, Inc. I sat in Ted’s breakout session and the light went off for me: simplicity of execution is key in today’s connected web. Sure, there are the bigger players out there like Facebook and Google with lots of diversified offerings but I look at Twitter and think of evolution and simplicity. Netflix is kicking butt right now because they focused on doing one thing and doing it well when they started years ago and are now a juggernaut in the industry. Your scope and operations may be small at first but your vision and mission can be the size of the world. You’ll get to scale as long as clear execution is aligned.

• Interesting VC panel with three stage size investors: Ron Conway (don’t really need an introduction here to Ron, but check out CrunchBase), Bill Gurley (early- to mid-stage investor at Benchmark Capital) and Jay Hoag (later stage at Technology Crossover ventures). According to Ron, “Deal quality has gone up in this economy but deal quantity has gone down at least 10x.” VCs like Ron and Bill are still getting 3-4 new pitches a day through trusted referrals but are increasingly looking up to entrepreneurs to help stimulate and lift us from this downward financial trend. According to Bill, “For some reason here in Silicon Valley, people have no idea of QQ and the success of Tencent.” I couldn’t agree more; although it was quite interesting to see some members of Tencent’s management team in the same room with Bill when he said this. I asked a question about the future of e-commerce in the years to come while keeping in mind the juggernauts of Amazon, Inc. and Zappos in mind: “Where do VCs see innovation coming from, specifically on the e-commerce side of the business?” All agreed that e-commerce would be big this year but prefaced that customer service is going to be critical for success. Ron brought up Zappos and the way they meticulously operate their customer service department. Like any business, and even more so in e-commerce, pay attention to your customer. Not surprising, VCs still have money they are sitting on and need to deploy. However, it’s a totally different funding environment than even 12-16 months ago. It’s out there, but you need to work even harder for it.

• The CFO of Yahoo! did a lunch keynote on Wednesday only to get fired the next day.

• I’m very intrigued by the Priceline business model, especially now. Jeff Boyd, their CEO, talked about an ever important and pertinent channel for both buyers and suppliers looking for the best deals on airfare. At their current scale, Priceline can satisfy both ends of the classic two-sided market and are doing it well with compelling flights and prices. Price-sensitivity, according to Jeff, is the most important aspect to consumers when looking for flights domestically or internationally.

• I have a lot of respect for Jim Louderback, CEO of Revision3 for speaking his mind during the Online Video Panel. For Jim, TV is dead and the networks that produce shows are going to slowly fade away. Paul Graham just wrote about this yesterday that covers many points Jim raised. More on Graham below, but on a different topic.

• eBay has a near equal split of revenues coming in from fixed price auctions and traditional auction prices. Skype, said CEO John Donahoe and CFO Bob Swan, is a top priority this year for eBay on the topic of integration. An aside: speaking with conference attendees (mainly hedge funds, LPs and capital asset managers), I noticed that there was an interest in hearing more about PayPal as many feel it could entirely spin-off from eBay and do exceptionally well.

• The Social Networking Panel was fun. CEOs and COOs of Eventful, Yelp, Tangle and Zynga were there and all understood the imperative of the space right now: engagement. Monetization was of course a concern from the audience, but all agreed that social networking and social media isn’t ready to directly monetize their applications right now. As Mark Pincus of Zynga discussed, Facebook really helped the ecosystem out in a big way when they released Platform in 2007. Developers can now produce applications and get paid for them. (I asked a question about Facebook Payments, which was supposed to roll out at f8 where I saw Mark prior to GSIT09, and if this was the way to really monetize social networks). E-commerce, according to the panel, can be the killer application in 2009 for social media.

• Ellen Levy, VP or Corporate Development at LinkedIn (and former VC at Benchmark), thinks social commerce, specifically group-buying (or tuangou) will explode this year.

• ZipCars are sweet. I drove a Volvo S40 on the 101 down to Palo Alto and back for two days out of the trip.

• If you’re a startup in Northern California, or someone who is interested in startups, entrepreneurship and social media, you should check out Startup2Startup run by Dave McClure. Visitors, like myself, are always more than welcome.

• Peet’s iced coffee destroys Dunkin Donuts here on the East Coast. They also have super strong Early Gray loose leaf tea. The strength can be overwhelming.

• If you’re building a technology company, you should (more than likely) move to Silicon Valley. Not only do you have an amazing talent pool among engineers and a relatively stable ecosystem of capital lenders, you have a support group of other technology companies in the area. But let me be clear about one thing and list a meager request, as it was brought up time-after-time when I told folks I’m from New York City: if you’re a startup, you don’t need to move to Silicon Valley just because you’re a startup. I’m not arguing that you don’t have great weather, don’t have amazing driving roads or don’t have an awesome entrepreneurial environment, but seriously, the constant and incessant echo-chamber is killing innovation. Stop (Paul Graham on building a Silicon Valley) it (the Hacker News discussion on PG’s post). Why not build your startup in New York City?

• I like the New York MoMA space better than San Francisco’s.

• See below for a Scribd embed on Goldman Sachs’ top Internet and Technology trends for 2009.

March 05, 2009, 11:45am

mikehudack:

continuations:

For some startups partnerships are essential to execution, for instance by giving access to an audience, a technology, or a process.  In those situations I have a rule that is based on a fair bit of experience: try to avoid partnering with other startups (David) or the biggest players in the respective market (Goliath).

Partnering with other startups is problematic because they may change direction and wind up competing with you, or dropping whatever it is that you are relying on, or possibly go out of business altogether.  Startups partnering with each other for something essential is too often a case of the blind leading the blind.

Partnering with the biggest of the big on the other hand tends to be problematic because they are unlikely to be sufficiently responsive.  I am specifically talking about a partnership here, which requires the Goliath to do something out of the ordinary course of business.  In other words, using Amazon S3 is not an example of partnering.  Working with Amazon on building something that requires them to modify how S3 works would be an example of partnering.  Another problem in partnering with a Goliath is that most likely the person responsible for the partnership is several layers down from top management and your whole partnership may go out the window when that person changes jobs.

So whenever possible, as a startup you should rely on mid size well established companies when it comes to strategic partnerships.  Once that have enough of a business that they won’t go away or totally change strategy, but for whom the partnership is meaningful enough and visible at the executive level to actually make it work.

Great advice.

August 01, 2008, 10:10am