#AOSS09 #DMS PitchFests


We’re still covering the scene at Stanford where 900 have flowed through to hear founders and funders espouse the essence of innovation. Over lunch I had a chance to catch up with Craig Sherman of Gaia, Alvin Lau of Dolby, Scott Brown of Cisco, David McKeown of Invest Northern Ireland who were on site scouting out the 100 companies pitching and soaking up the great advice onstage.  I was impressed to see how the Eos offering has evolved into a turnkey enterprise solution for making media sites more dynamic, more engaging, more fan-centric.  It’s the backbone of several of the Warner Music Group sites including www.allseanpaul.com, www.lauraizibor.com.  For just a fraction of what media companies currently spend on web production, Eos delivers fully customizable templates that incorporate rich media sharing, blogs, tweets, fan feeds, etc. saving countless hand-coding hours and asset management headaches.  With Eos, a media company can quickly transform a static site into one bustling with peer-to-peer activity, and increased engagement.  The only catch is that Eos business model is based on a 360 rev-share deal currently only marketed to mega media companies.  A missed market might be video game publishers and other entertainment brands who do not host 3P ads, but do seek greater fan engagement for hub and microsites, and a fast, inexpensive way to manage website production and create a stellar user experience that makes fans stay and port their social graph.  But I digress.  The advice at the conference is golden.  If you have a chance, check out the videos on the AlwaysOn site which should post soon. Below are the gems from today:

Ron Conway
1990 invested in early stage companies, over 500 companies, half self, half with Angel Investors I & II, SV Angel LLC, investment climate could not be better, making 40-50 investments over next year, market is great, focus is real-time data, see explosion ahead of us.  Build a product and test for $1mm says the most practical way is to put together a syndicate of 2-3 angels, then go to VC for $4-5mm.  Raise bar for exit, M&A exit $15-30mm, nice outcome for investor.  $50-$100mm exit for VC.  Google FB started with $1mm round.  YouTube started with Sequioa and quickly needed that money, server costs massive.  Brilliant move.  Google FB test the market before raising VC round.  Twitter did angel first, then VC, better valuation.  (Scale development better with angels) Likes repeat entrepreneur, will invest without traction, all about the relationship, ideas morphs like crazy over time.  Next thing – real-time data, FriendFeed, Twitter, Aardvark, real-time search, new corpus of content on the web created spontaneously, very relevant to users, today its 1-2% content of web, 3y will be 25% on the web, represents a $5B opportunity, the next multibillion market, dominated by a wide range of companies, not 1-2.  (recommends LSA Life Science Angels) Take no board seats, spend hour with an entrepreneurs, hear key issues, better than a 5 hour board meeting with PPT presentations.  Get involved only at inflection points, building management team, once product works, getting to scale, make introductions to Y! etc., help with exits, introduce company to liquidity prospects.  Build syndicate, we like to invest together.

Joyce Chung, Garage Technology Ventures
Core technology based cos, sw, cleantech, infrastructure, look for deals that are capital efficient, don’t need a lot of capital to prove opportunity.  Cautious but optimistic.  Clearly less capital out there, less to invest, harder to find funding, its a buyers market, seeing companies further along, products more mature, revenue stage, valuations are still very low, reasonable for investor, (end of 2008 market was hot, valuations unreasonable)  More options for exits with angels.  Take $8mm VC for $100mm exit with competitors coming in, force an unnatural act or take money off table with Hearst, happily building company within Hearst now.  Show consumer/user adoption – depends on sector, like to see realtechnology than can be validated.  Not funding a science project.  Sector agnostic but require capital efficiency.  Initial product doesn’t require more than $5mm to prove product.  Uninteresting – Web 2.0 consumer services, variations on existing products tough to get excited over.  Do take board seats.  Angels don’t compete against each other, invest together. 

Aydin Senkut, Felicis Ventures
Early Googler, angel investing last 4 years, consumer internet, mobile, great opportunities.  Importance of bootstrapping.  Forcing new ideas to come to the forefront.  More entrepreneur friendly.  Implications taking VC money at high valuation.  $1-2mm to $5-6mm inital investment.  Look for good IP, space is important.  2years ago video monetization, social gaming now online education consumer health, fulfilling critical need for users.  Mint.com – good feeling to nail user experience, now that they have traction, everyone wants them.  Identify teams in promising space, back up team and support them, clear in what they want to do, magic sauce – team, space, user experience.  1y ago social gaming was big.  Consumer health data coming, big fields, real impact on our lives, e.g. Nike/iPod getting people to run.  Be aware of big fundamental trends of data coming on to the web.  Steer away from sectors with entrenched competitors, early momentum is important.  Sit on only one board.  Personal brand more important, care about the entrepreneur.  Mentorship, how much they care about the idea and want to make a difference.

Rob Hayes, First Round Capital
$125mm seed venture fund, 70 companies in portfolio, national footprint east coast and SF, tremendous deal flow, last 9m lots of interesting newcrazy ideas out of left field, not Twitter plus one, last year was derivative deals, young excited smart entrepreneurs, more excited than last couple of years.  $50mm exit is a life-changing event is VC failure.  Go first meeting to term sheet in days.  99/100 we’re not going to invest.  Only thing better than quick yes, is quick no.  We help them try to find other people if its not us.  Mint had code and vision but it was pre-product.  Industry is more capital efficient.  Don’t come with idea to start a website.  Traction can mean a lot of different things.  Work nights weekends, quit job, have the passion, understand what they want to build and show something.  SW internet – implicit web – pull data out of locked up silos – Mint perfect example – takes data from mortgage, credit cards, student loans, find best products for you.  Mint knows drives a lot, needs a credit card that gives gas.  Uninteresting – derivative ideas e.g. search, space not done, just haven’t seen breakthrough. Take board seat 18-24 months.  Real action happens bw board meetings.  Figure out who you like to work with and having them around the table.

Ethan Topper, Union Square Advisors
Microsoft does 25 deals a year but will only do deals with those with pre-existing relationship.

Paul Kwan, Morgan Stanley
Truly understand LTV lifetime value of customer, you might lose money now but if LTV strong, $ tomorrow.

Tim Draper (KPMG video)
SOX hurts, sweeps $3-4mm in profits, startup not as attracted for IPO.   

Joe Kennedy, Pandora
When in DC don’t look down on the 24y staffer, they’re probably writing the position paper.

Rich LeFurgy, IAB
Is it too hard for a creative culture like Madison Avenue to embrace technology.  The buying and selling of audiences will change when it’s all digital media.

Frank Addante, Rubicon
Google has 23% of $65B online ad spend, other 77% is very fragmented.

Konrad Feldman, Quantcast
Quantcast wants to be a media company and participate in the $65B digital media market, today 2/3 online publishers today use Quantcast (the rest: comScore, Nielsen)

Dan Scheinman, Cisco
With the purchase of Flip, Cisco is making bets in video, watching how consumers are creating content, consuming content.  Content should lead the device design, not other way around.  Now, people putting out devices and then seeing what content develops.  Consumer at the center of everything in media. In the future, value lies in knowledge of that consumer. Going from static to community site increases engagement 8x, engagement now measured in minutes, no longer seconds. Media companies are spending 95% of budgets on technology – drupal, wordpress… – Eos ties it together – simple cheap great UI.  The magic of SV is whenever there is disruption, the robust ecosystem creates opportunities. 

Norm Fogelsong, IVP
IVP portfolio – Gaia, Zynga, Twitter – Twitter’s team, did it before – new journalism, saved lives in Mumbai.  Growth may be incremental but every 5 years something big happens to change everything.  Silicon Valley is the world’s center of innovation and will be a source for years to come.

Fred Wang, Trinity Ventures
The current VC numbers are the new norm, $15-20B/y – half, third of what it was, growth will be incremental. People overestimate the impact of tech trends in the near term (2y time frame) and underestimate long term impacts (over 10y). Interesting portfolio company Avaak peel stick video network w 1y battery life remote viewing of anything from anywhere at anytime.

Tom Malloy, Adobe
Key software trends: Cloud computing, social software, media technologies. We’ve been waiting for the year of 3-D for a long time.

Shervin Pishevar, SGN
Facebook has opportunity to be social OS.  Some online companies save you time but online game companies help you consume time

Bambi Francisco, Vator.tv
I used Aardvark and Yahoo Answers, got a faster answer from Aardvark 

Clara Shih, The Facebook Era
Social networks as opne platform CRM, risk of developing on platforms like FB and Twitter is you don’t own your customers.  (not sure anyone can own a customer).

Lastly, there was a lot of discussion on edtech and cleantech not on point with our coverage but worth checking out.  Here is an article related to the edtech panel:  www.trustednomad.com/blog/2009/07/30/concerns-about-the-coming-education-revolution and here are visionary VC Vinod Khosla’s insights on cleantech:

Vinod Kohsla
15 years ago there wasn’t a forecast that predicted Internet stocks or bandwidth, green breakthrough coming  Painting roof white saves more $ than driving Prius.  Plugging into electric car is plugging into lump of coal because that’s where US/India energy comes from.  Biggest producers of greenhouse gases are coal, oil, concrete and steel. Breakthrough that will change rules in energy – cost-effective carbon sequestration.  Every greentech investment we make should reach unsubsidized competitiveness w/in 5-7 years.  I don’t think India or China will agree to a carbon cap. Maybe China by 2020.  Lithium ion batteries are overhyped and will possibly be replaced.

#DMS, Digital Media Summit
Down south, another type of pitchfest is happening at the UCLA Digital Media Summit.  These days, whether you’re selling story or venture, you need more than a good idea.  The business model matters.  Its the essence of the pitch.  To get funded, you have to sell your vision on how you’re going to make money, aggregate mass audience, and syndicate.  Follow all the lively discussion at #DMS. PaidContent is onsite and has already started posting reviews:  paidcontent.org/article/419-dms-how-youtube-made-money-from-the-latest-viral-video-sensationpaidcontent.org/article/419-dms-william-morris-exec-expect-an-influx-of-celeb-fueled-content-company

W 7/29  9-5:30

Mitch Singer, Sony, Curt Mavis, Lionsgate, Yair Landau, Mass Animation, Suzanne Stefanac, AFI, Avner Ronen, Boxee, Mitchell Berman, ZillionTV, David Gale, MTV Films, Anthony Soohoo, CBS Interactive, Louis Castle, EA, Greg Johnson, WMA, Nim Kim, Nexon, Christopher Swain, USC, Om Malik, GigaOm, Meredith Artley, LA Times, Jeffrey Lee, Mission Ventures, Neal Hansch, Rustic Canyon Partners, Rick Gibson, Hot Ventures, David Blumberg, Blumberg Capital, Scott Sangster, Tech Coast Angels includes PitchFest
UCLA/Covel Commons 

Footnotes from the tweeps:

VCs – Jeff Lee, Mission Ventures, Neil Hansch, Rustic Canyon Partners, Rick Gibson, Hot Ventures, David Blumberg, Blumberg Capital
DM startups need plan to monetize users beyond ad revs. Deal flow up slightly Q1. Every pitch integrating social media.

Joerg Bachmaier, Married on MySpace
Engaged w/ MySpace community and got them involved in the story by allowing them to influence it.  Especially in this economy brand entertainment has to sell product not just create awareness.  

Jordan Hoffner, YouTube
Ask a TV exec what’s more important: controlling content or making $, and they say control.  People want to find a show on Yahoo … I guess that’s Yah-Bing now, right?  On tagging videos: The more metadata, the better. Tag everything, especially if you want us to monetize it.  On YouTube’s critics: It’s only been 5 years — it’s still early. My daughter just turned 5, and trust me, she’s not mature.

Chris Di Cesare, YouTube
Fred gets more views than Hannah Montana, shows like Fred are getting pre-rolls and post-rolls are starting to get bought by TV buyers, production companies spending millions on online content and they get lost in the sea of 20mins of video uploaded each min.

Andrew Lin, Miramax
You don’t have to spend money on promoting a contest he says everyone involved should be willing to accept failure.  On dealing with the disconnect between engagement online and box office sales – if he knew the answer to that he’d be retired somewhere – there’s no formula and you need a good flick.  Bigger agencies are behind on social media, and boutique agencies are setting the pace.

Avner Ronen, Boxee
Will Boxee survive the set-top box/content management wars – I don’t know. There are alot of other players here.

Mitchell Berman, ZillionTV
Quoted Wilde and Emerson re: changes in TV ecosystem.   You know Blowin’ in the Wind? We have a hurricane blowing here.

Greg Johnson, William Morris Endeavor
In terms of gaming disruption in retail creates confusion and opportunity. Convergence enables new forms of entertainment, William Morris has a fund to get convergent media projects off the ground.  Digital distribution is a huge disruptor in the gaming industry 17% return on retail vs. 85% from digital.  XBLA, iPhone are some of the best distribution and rev-share opps for indie game developers. Draws parallels to the music industry; going indie vs. a label. Infrastructure like iTunes is in place.

Min Kim, Nexon
Nexon pioneered the micro-transaction.  If you’re an IP holder and you have a brand you are fighting for engagement and social games increase engagement.

Chris Swain, USC Games Institute
Students view Facebook as an OS for their lives. None on MySpace. Majority of dollars spent online on games are spent by women 30+.

Louis Castle, Westwood Studios
People mistake the E for Everyone as S for Sucks. All family-friendly/casual games don’t have to be bad, playing a game is about fun and playability not graphics or complexity, an approachable experience.

Curt Mavis, Lionsgate
Still searching for sustainable model for original online content after 10 yrs.

Champa Saigal, Infosys
Winners in music biz – Apple, Amazon, Wal-Mart | Possible winners – Artists | Losers – Virgin, Tower.

Meredith Artley, LA Times
Print still makes more advertising $ than online.  LA Times redesigning site 2 give advertisers more opportunities & sales team more inventory.

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