Is this the story behind your disinclination towards the VC-as/with-incubator-model?
Timing - alas - rules all. A good idea with excellent execution cannot overcome poor market timing, unless burn rates are ridiculously low.
In a similar story, me and some colleagues create VideoShare - essentially what YouTube is - back in 1999, before Flash and widespread broadband adoption created the technology base platforms for online video. Had some very good traction with partnerships, but needless to say, we didn't make it past the end of 2001. So we were only 5 years too early. As you say "It hurts and it keeps hurting".
But any suggestions as to how to guage the "market-ripeness" for a particular idea? I guess a takeaway really is to manage the burn rate appropriately to give as long of a runway as possible in order to bridge the operations until the market is more ready.
fredwilson
· 8 months ago
It's very frustrating to have delivered youtube, or skype, or delicious, or twitter, or facebook ten years too early
So many people have done that and are dying watching their followers succeed where they failed
Timing is everything in life for sure
This is not the sole reason I don't like VCs as incubators but its part of a long set of experiences that keeps me away
MParekh
· 8 months ago
10 years too early and the current netbooks bundled by wireless carriers in 2 year deals also reminds me when AOL, MSN, et al were bundling PCs w/ PC vendors, with their dial-up access in multi-year deals.
fredwilson
· 8 months ago
Or peoplePC. Lots of models have been tried and tested. Those who are doing it now have a lot of lessons they can learn on other's nickels
deancollins
· 8 months ago
i still think there is a market for senior citizens targetted 'webtv' pc that utlises the processing and hard drives on a cloudification platform.
importantly the main function of this is a big blue button on top of the box so when grandma deletes something or screws up somehow that she pushes this one single button to 'revert' back to before the problem started.
no need for OS upgrades or spam/virus upgrades etc as all this is managaed centrally and all you have is a 'virtual view' of the desktop.
I wrote a paper about it once if anyone wants me to dig out a copy.
I think the problem with targeting senior citizens is that the market will consistently shrink until it disappears.
Most people on the fringe -- 40-50 years old (sorry, that's old to me :)) -- are getting quite tech savvy... so in 10-15 years, the market for "non-tech-savvy" devices will shrink considerably.
deancollins
· 8 months ago
i think the market is actually getting bigger as technology gets more complex not smaller.
Heck even i'm sick of dealing with all the software updates and revisions.
More and more people want a flawless experience where they outsource all the tech of owning a computer in a solid state device that is just a browser to a pc running somwhere else - eg nothing more than a monitor/keyboard and a box to transmit keyboard and video commands to the cloud.
alll the hard maintenance stuff is handled by someone else.
Cheers, Dean
Robert Dewey
· 8 months ago
True. My statement was about targeting senior citizens.
The whole "netbook" concept sounds a lot like web OS to me.
It would be interesting to see a study of how many people use desktop apps that require real power, and whether they would pay $100-$200 for a netbook when they could get a more powerful desktop or laptop for $300-$400.
awilensky
· 8 months ago
Web TV made the concept work with a bang. There were numerous thin client boxes on the makerket that always seemed more expensive than a Dell at the low end. Wyse and Kimtron, and others had sort of a VAR business with Citrix for smart dumb terminals that were really cheap PC's built into flat screens with Citirix boot roms, no hard drives.
Now, I believe that Asus is coming out with keyboard / PC / 8" display all in one. Now, we have all the SAAS and cloud appls and connectivity to make this happen.
sfoskett
· 8 months ago
I have a Virgin Webplayer sitting on my bookshelf right now! Hacked to run Windows or Linux without the Virgin service, of course. It's right next to my 3COM Audrey...
fredwilson
· 8 months ago
The funny thing is the CEO of IAN was named Audrey
nickdavis
· 8 months ago
I think I still have an Audrey in my basement!
Anil Dash
· 8 months ago
I've got one in my living room, too, right now. Has Windows 98 all installed. Fred, you want it as a paperweight? :)
fredwilson
· 8 months ago
I've got one too!
GlennKelman
· 8 months ago
My first thought was early must be better than late, given the number of me-too investments out there. But then again, I wonder how often me-too investments -- deals where the entrepreneurs and the investors know that they are imitating a startup that has already gotten traction, and are presumably playing for second place -- succeed?
fredwilson
· 8 months ago
The problem with being way too early is you can try to wait it out and that's very costly
If you get there too late, you generally know that pretty quickly
Robert Dewey
· 8 months ago
Not sure I agree with "better too early than late"
Friendster was early, and didn't do so hot. MySpace came in and changed the game slightly, and succeeded... then Facebook picked up where MySpace left off, and succeeded in an even bigger way.
You just need to innovate with what's already out there, not necessarily re-invent the entire wheel.
fredwilson
· 8 months ago
Facebook and myspace were on time, not late
Alan Warms
· 8 months ago
Too early resonates, like building online communites, er, social media for business :-) , and too early was exacerbated by the bubble because everything ramped up faster than it should of and then when you realized you were too early you were already at a certain size
Getting to profitability in 03 was hardest thing I ever did on the other side of that - but you DEFINITELY do learn
I do - I sold it and the company to Outstart in '04 but bought just the domain (and trademark) back from them in '07 I think- I still love it and in fact i am using now (participatemedia.com redirects to participate.com).
Seeing as how social media continues to grow I think it will continue to grow in value however I end up leveraging it
Speaking of which - I sent note to Twitter on trying to get twitter.com/participate as user name - it is being squatted (no followers, no following) and i do own trademark and url. I assume these guys are developing a thoughtful strategy along those lines ...
fredwilson
· 8 months ago
Yes they are but it involves humans unfortunately
Alan Warms
· 8 months ago
I am sure it will all work out - they are super smart guys....too much to do right now I am sure.
nickdavis
· 8 months ago
It's true you can be too early, but is there any way to actually tell you're too early without the advantage of hindsight?
How do you make this actionable? How do you judge whether an idea is too early when presented to you?
markslater
· 8 months ago
well this is the gorilla in the room. quant this and you have a winning formula.
kidmercury
· 8 months ago
i think one possible way to see if something is too early is to look at who they will be putting out of business if they are successful, and to see if that company is actually ready to be put out of business. for instance, if someone plans on building the next great online ad network, i think now is a great time for that, as i think google and the adsense model of advertising has peaked in a way; so i think it could be a great time to take a shot at building next big thing in advertising. if someone had tried this five years ago, i'd be a bit more skeptical, as i think you could have made a stronger case that google and the adsense model still had a lot of growth opportunity.
of course, even in the view i am suggesting, you still have to be able to correctly assess whether or not the company whose revenue you're taking has in fact peaked.
likewise, i'd say if you don't know who you're putting out of business, or if you think you're not putting anyone out of business, you might be too early or unclear on your trajectory.
my $.02 fwiw.
fredwilson
· 8 months ago
I agree. But I've come to the conclusion that its got to be something other than banners or text ads. The eric clemons post in techcrunch really got me thinking. I think he got some things wrong but I also think he got a lot of things right
kidmercury
· 8 months ago
i like two things
1. the "your friends like this stuff, you should buy it" type of ads, priced on affiliate basis 2. paid content, paying for blog stars to review your product
i think there will be a trend towards niche-ification, i.e. niche ad networks and niche publishing networks centered around niche communities of interest. basically i see this as part of a trend towards our one world economy being replaced by a collection of niche economies. i see it as an inevitable consequence of open beating closed, and the closed economy being disrupted by the open economy.
but the old economy is closed because money supply is monopolized by bankers. so to get to the other side, the land where we all make money off niche economies, we have to open the money supply. that's why i generally don't think any new economy solution will work until the rules to enable the new economy are in place.
I'm going to put a virtual currency on this blog just to make you happy kid
kidmercury
· 8 months ago
hahahaha, fredbucks! definitely likely to have a more responsible monetary policy than the federal reserve's policy. and given the money you can make on exchange rates, it will be a great market to be in, as people look to jump ship from the dollar. then, using your influence, you can get merchants to start accepting fredbucks (and get a piece of all transactions involving fredbucks). toss in some rfid chips, cards, and readers, and you have the ability to use fredbucks in offline, "real world" transactions, thus increasing its appeal in comparison to federal reserve notes. it's the blog star business model!
just don't go on a power trip now that you're the central banker, like start printing money like crazy and robbing us and doing stuff like bombing us and blaming it on a guy in a cave in afghanistan and saying we need to pay you more and give up all our rights in order to be protected. if you do that, and if you start channeling the devil, i think we'll right back in the same mess we're in now!
Chris Dodge
· 8 months ago
I'm glad you brought up the Eric Clemons debate on TC. I too really enjoyed it, although some of his more points border a bit on conspiracy (e.g. Trademark extortion).
I've never been a fan for subsidized based revenue models (aka Display Advertising): a 3rd party tries (brand advertiser) to derive value from a transaction between the principals (producer and consumer) through basically subsidizing the costs of production and distribution.
I'd rather put it to the consumer to declare and recognize the value of what they are consuming. By consuming for free, there really isn't the conscious awareness that these freebies are really subsized by a 3rd party who has a separate interest in the interaction.
I view Eric's point that since the consumer really marginalizes the subsidy (and the corresponding marketing/branding messages), it's efficacy for the 3rd party will continue to erode. Plus all of the ad inventory which will just continue to drive down the yield rates.
I know that there's a long history for the subsidy approach: TV, radio, print advertising. So I'm not 100% sure where the breakdowns are occuring for online. Definately the inventory is a problem.
That's why I was such a HUGE fan of Radiohead's experiment whereby the challaged the consumer to declare what value he/she put on the music. It was BRILLIANT of an idea! For some it was 0.99 for the album, for others 9.99, others it was 0.0. I think, for me, I did 5.00 or so.
I know subscriptions are the kiss of death vis-a-vis traffic acquisition. Micropayments really haven't taken off, but are likely the right approach. I know I'd pay Pandora some money as it has terrific value for me. If they turn to audio ad inserts, not so sure how I'd react.
Howard Morgan
· 8 months ago
Well put, Fred.
Pleasure and pain do seem to be linked in investing. And with lots of patience some of these ideas come back again. If we recognize them the second time, we can actually make some money.
David Semeria
· 8 months ago
Too early with respect to the market or the available technology?
From what you have written it would appear IAN wasn't feasible given its dial-up modem (amongst other issues), whereas the underlying consumer proposition was perhaps even more valid then than it is now, given the falling cost of PCs.
I think it's important to make this distinction.
markslater
· 8 months ago
this has to be the single most important truth - or 'tip of the spear' - for every VC. i read this and could think of loads of companies that were too early.
facebook and twitter are perfectly timed. All this stuff was done many times over before but these guys iterated and designed there way right in to the main flow of the river, not in to an ox-bow.
here are two of my favorites:
- SHAZAM - this was a sick sick app - but did not have the larger ecosystem of sharing and discovery around it - i guess its now found a home as an iphone app. - KOZMO - this model may still yet work - but people had to get over th gimmick of ordering and delivering 1 condom first
timing timing timing
fredwilson
· 8 months ago
Kozmo was actually well timed. They were profitable in nyc and boston when they went under. It was the other 18 markets they went into that killed them. Two mistakes in one. 1) massive overexpansion at one with huge leases and an irrecoverable burn 2) most of those 18 markets would not have worked anyway because they lacked the urban density required for success
kidmercury
· 8 months ago
timing would be difficult no matter what, but the fed distorting the market makes it a lot more difficult than it needs to be. lots of the "too early" investments in dot com bubble came about because of the excess amount of money greenspan and his homies created. this naturally led to malinvestments and overinvestments in capital goods (which for internet entrepreneurs will be servers and bandwidth costs). basically having too much money contributed to investors mistiming investment opportunities.
because the fed and the corrupt and compliant congress have more or less distorted the entire US economy (and the global economy by extension), this issue is still with us. IMO we've seen too much investment in capital goods (namely servers) rather than the cultivation of other assets critical for startups, like my personal favorite, trust. this has led to other problems, like way too many business models built on the yellow pages model, an over-reliance on return on bandwidth as the dominating financial metric, and the lack of any real progress on things like data portability, which if pursued with the same diligence that bandwidth-centric/SaaS business models are pursued, would unlock far more value for all.
fortunately i think we are in the early phases of a massive correction; the end of the bubble/ponzi economy, and the return to capitalism based on sound money. it will require a lot of pain, far more than what we've seen thus far. but when we get there, there will be fewer mistimed investments.
David
· 8 months ago
I founded a company called Impulse Radio in 1999 to create data services like secondary channel, on-demand audio, display content, etc for IBOC (I still like to call it by its old school moniker). Talk about being too early. Reminds me of a great quote from Max Levchin talking about the early days at paypal and its original business model: "Kind of like the early Christians in the first century we were all really hard at work waiting for the second coming. Still waiting." But I do agree, I learned a great deal from that pain.
fredwilson
· 8 months ago
I am still waiting for the first coming of IBOC ;)
Shane
· 8 months ago
This is perhaps the best example of the "catching the wave" surfing example I have seen so many investors talk about. You can't catch it if it ain't there yet... However, it is very cool that people were so far ahead of their time.
fredwilson
· 8 months ago
As I said before on the wave analogy, you do have to be in the water to catch the wave
GL
· 8 months ago
If memory serves I believe Larry Ellison from Oracle also had a similar initiative. Can't recall if it was a stand alone company he invested in or inside project at Oracle.
fredwilson
· 8 months ago
He did. IAN was not alone. There were many variations on this theme
hypermark
· 8 months ago
Fred, one of my favorite "pattern recognition" bits was passed along by Stu Philips (formerly of USVP), who said that it is as lethal to be too early as it is to be wrong.
His analog, which I unfortunately remember too well (I am getting old) was Novell. When they first came out, no one understood why they needed a network. To print? To share a file? Novell almost died multiple times as a result of having been too early.
Then, email became a must have application, and suddenly everyone understood why they needed a network. Novell almost became Microsoft (in terms of dominance - PC OS v. Network OS).
Then Novell "missed" the Internet. But that, as they say, is another story.
Mark
fredwilson
· 8 months ago
So true. You can't miss the next big thing in the tech business or you are dead meat
Lindsey Port
· 8 months ago
Interesting post. When I came up with my startup idea, or better yet stumbled upon it, I thought "I am shocked no one else is doing this yet". Although, now a year later and a live site, I believe the concept is a home-run but maybe our market still needs to "grow up" a bit. The video selling concept that I have just launched beta receives unbelievable feedback but the only issue is that the market of individuals that use and communicate via video religiously are still teenagers or college students. The ebay pro seller is definitely not as well-versed with using video to sell, and on the flip side, the video and internet pros are still too young to have a credit and/or paypal account. This strikes me with the question, "Am I a pioneer or am I too early?". The site is www.intheglo.com. What are your thoughts Fred?
markslater
· 8 months ago
some one should curate a'long and gone' book of short stories by 10 venture capitalists of the last quarter century. they probably have the best seat in the house to see the gain and then feel the pain. I'd buy it. there are some wonderful stories out there.
fredwilson
· 8 months ago
I haven't looked at your service because I am on a blackberry. I worry a bit about video selling. Video takes time to watch. I'll do that for entertainment but not for information. And selling is at its heart information transfer
Steven Kane
· 8 months ago
now, now - i wouldn't call being way too early a "cardinal sin"!
at worst i'd call it an occupational hazard.
but really i'd call it an accolade, a badge of honor.
its darned hard, maybe impossible, to be an entrepreneur or a venture investor and not deliberately be early.
the whole point is to try to do *new* things.
hell, that's the fun, the thrill, the whole gestalt (and sometimes, the payoff.)
and, being *too late* is more the cardinal sin - one that many startups and venture investors are guilty of -- of being copycats or cynical or simply lazy.
i've been way too early quite a few times -- and i'm no less proud of that than of the times the timing turned out right. as if anybody knows that in advance, and as if luck doesn't play a major role.........!
fredwilson
· 8 months ago
Luck is a huge part of this. I pinch myself every day for luck and to remind myself of how lucky I've been
But being too late is a faster death than being too early and often less expensive
Ed Sim
· 8 months ago
Great points Fred. I have been there and done that. What I like to say is that "pioneers get arrows in their backs."
fredwilson
· 8 months ago
Hi ed. Thanks for stopping by and leaving a comment
David Henderson
· 8 months ago
Recessions and bubble-bursts have a funny way of transforming "early" into "way to early." Here we go again. Anybody here try to get a B round done circa 2001-2? The wounds have just been reopened.
Internet trivia: IAN was also the name of of another early dot.com company (1995) that merged with a division of Poppee Tyson to become ___________?
Hint: Seth's very 1st startup was one of their 1st customers. :-)
fredwilson
· 8 months ago
Doubleclick. What do I win?
James Joaquin
· 8 months ago
Ah yes, reminds me of my many years working on the Apple Newton - a poster child for "too early"!
fredwilson
· 8 months ago
I have a collection of devices in the bookshelf in my office and newton is there. Its important to stare at it every now and then. So much to learn from that thing
lazerow
· 8 months ago
Nice post Fred. It's interesting to look at today's landscape and try to figure out what's too early (semantic web?), what's too late (me-too ad networks? web 2.0 features with no business model?) and what's just on time (mobile, social networks, social gaming -- Zynga is kicking ass and taking names, agency ad solutions, etc.). Be well.
fredwilson
· 8 months ago
There are a bunch of things in our portfolio that are too early. But I'm not going to name names
DMPR
· 8 months ago
Nice memory lane jog, Fred. During my time at IAN, it seems the tricky areas were plentiful - we were pitching this thing as not a 2nd full-on PC, but a Web-only branded device. But broadband wasn't shakin' yet, so it was a large time suck. Then hackers started finding ways to get the web devices and rejig them to their own specs. It was a pretty crazy period in the 22nd St. office. We did get some big deals signed, but the onslaught of time and money and technology scuttered those plans.
fredwilson
· 8 months ago
That office went on to house several other flatiron portfolio companies and one of them, return path, has emerged as a large and successful company
vruz
· 8 months ago
I'm curious to learn how have you developed techniques or methods to evaluate the 'tooearliness' of a product or idea, or is it still 10 years after a matter of hit and miss, and largely self-restraint,acquired wisdom and gut feeling ?
fredwilson
· 8 months ago
I can't help with your main question. Our current portfolio is most certainly full of ideas that are too early.
But I sure hope we won't have 10mm in them when we figure that out. The one thing I have figured out how to do is limit our capital at risk before knowing if the investment is going to work
vruz
· 8 months ago
that sounds reasonable.
what's the approach you follow when it becomes apparent that *now* is the time for an old idea that was too early at the time ? revisit the old stuff toolbox, or search anew ? or is that left to entrepreneurs to come back anew according to their gut feeling ?
I have the feeling like an entrepreneur -- fraught with ideas and vision -- rarely has the huge self-restraint needed to wait until the time is right, and that's perhaps one thing where a wise, seasoned investor can help, because the entrepreneur will try as hard as she can to make it real, and in general that's the very best definition of what being an entrepreneur means.
to manage the 'tooearliness' risk is essentially to modulate the entrepreneuralism of the entrepreneur, and self-restraint doesn't seem to be enough.
fredwilson
· 8 months ago
We don't start companies, entrepreneurs do
So it's up to them to figure out that now is the time
Fred’s conclusion? “Beware of ‘way too early’.” This does sound like good advice, except perhaps when coming from a VC, especially when contrasted to Peter Drucker’s dictum, “The best way to predict the future is to create it.”
[...]
A decade ago PointCast became a canonical example of a product that was “too early” because we didn’t have pervasive broadband for a push service (though the company would have been a success if it didn’t refuse the $450M buyout offer from News Corp). Since then Apple and Google, among others, have taught us how to create the necessary conditions for their products to succeed by compressing time through strategic invention.
If VCs want to become indispensable to the companies they advise, perhaps they ought to remember that it’s “too early” only if you fail.
smcnally
· 8 months ago
The timing didn't didn't help, but there was difficulty focusing, as well.
I was working for Bill Kirkner at the time of the Virgin / IAN / Prodigy plans. Prodigy's thoughts we're on the (coming up or just passed) IPO, there were acquisitions and being acquired, rolling out SBC's DSL subs was a major initiative. Through all this, many ideas were being actively worked; some of them were actually good. Even with smart, good people, it's generally not effective to focus on too many things simultaneously.
So many ills of IAN device, as noted, could have been whitewashed with speed. Dialup at the best of times was not always the best of times. With new custom client software (the IAN device ran QNX, like Audrey, IIRC), rushing on hardware and software engineering, and at least three masters to serve, focus - and therefore quality - was difficult to maintain.
Ten years later, ubiquitous broadband, "always-on" connections, even more cheap, standard hardware and software to bend to your will, and we'll see how it works for AT&T.
Drjohnhennessy
· 8 months ago
Interesting. I've always had the phrase "be two weeks ahead of the market - and no more" running in the background as I look at technology. In the case of netbooks/IAN I think the key confirming event, the harbinger was the day my favourite coffee shop started to offer free WiFi connection. That signaled the technical and fiscal maturity of the infrastrcuture needed to make netbooks go.
mfeinstein
· 8 months ago
I think that the biggest problem isn't being too early, but sticking with something that is 'too early' for too long. You don't really know how early something is until you see if the market develops as you thought when you invested. But, if it burns too much cash, you can get to 'sticking with it for too long' very quickly. If you are too worried about being too early, you can end up being overly cautious. More here: http://www.thefeinline.com/blog1/2009/04/never_...
All Comments
Timing - alas - rules all. A good idea with excellent execution cannot overcome poor market timing, unless burn rates are ridiculously low.
In a similar story, me and some colleagues create VideoShare - essentially what YouTube is - back in 1999, before Flash and widespread broadband adoption created the technology base platforms for online video. Had some very good traction with partnerships, but needless to say, we didn't make it past the end of 2001. So we were only 5 years too early. As you say "It hurts and it keeps hurting".
But any suggestions as to how to guage the "market-ripeness" for a particular idea? I guess a takeaway really is to manage the burn rate appropriately to give as long of a runway as possible in order to bridge the operations until the market is more ready.
So many people have done that and are dying watching their followers succeed where they failed
Timing is everything in life for sure
This is not the sole reason I don't like VCs as incubators but its part of a long set of experiences that keeps me away
importantly the main function of this is a big blue button on top of the box so when grandma deletes something or screws up somehow that she pushes this one single button to 'revert' back to before the problem started.
no need for OS upgrades or spam/virus upgrades etc as all this is managaed centrally and all you have is a 'virtual view' of the desktop.
I wrote a paper about it once if anyone wants me to dig out a copy.
Cheers,
Dean Collins
www.Cognation.net
Most people on the fringe -- 40-50 years old (sorry, that's old to me :)) -- are getting quite tech savvy... so in 10-15 years, the market for "non-tech-savvy" devices will shrink considerably.
Heck even i'm sick of dealing with all the software updates and revisions.
More and more people want a flawless experience where they outsource all the tech of owning a computer in a solid state device that is just a browser to a pc running somwhere else - eg nothing more than a monitor/keyboard and a box to transmit keyboard and video commands to the cloud.
alll the hard maintenance stuff is handled by someone else.
Cheers,
Dean
The whole "netbook" concept sounds a lot like web OS to me.
It would be interesting to see a study of how many people use desktop apps that require real power, and whether they would pay $100-$200 for a netbook when they could get a more powerful desktop or laptop for $300-$400.
Now, I believe that Asus is coming out with keyboard / PC / 8" display all in one. Now, we have all the SAAS and cloud appls and connectivity to make this happen.
If you get there too late, you generally know that pretty quickly
Friendster was early, and didn't do so hot. MySpace came in and changed the game slightly, and succeeded... then Facebook picked up where MySpace left off, and succeeded in an even bigger way.
You just need to innovate with what's already out there, not necessarily re-invent the entire wheel.
Getting to profitability in 03 was hardest thing I ever did on the other side of that - but you DEFINITELY do learn
Seeing as how social media continues to grow I think it will continue to grow in value however I end up leveraging it
Speaking of which - I sent note to Twitter on trying to get twitter.com/participate as user name - it is being squatted (no followers, no following) and i do own trademark and url. I assume these guys are developing a thoughtful strategy along those lines ...
How do you make this actionable? How do you judge whether an idea is too early when presented to you?
of course, even in the view i am suggesting, you still have to be able to correctly assess whether or not the company whose revenue you're taking has in fact peaked.
likewise, i'd say if you don't know who you're putting out of business, or if you think you're not putting anyone out of business, you might be too early or unclear on your trajectory.
my $.02 fwiw.
1. the "your friends like this stuff, you should buy it" type of ads, priced on affiliate basis
2. paid content, paying for blog stars to review your product
i think there will be a trend towards niche-ification, i.e. niche ad networks and niche publishing networks centered around niche communities of interest. basically i see this as part of a trend towards our one world economy being replaced by a collection of niche economies. i see it as an inevitable consequence of open beating closed, and the closed economy being disrupted by the open economy.
but the old economy is closed because money supply is monopolized by bankers. so to get to the other side, the land where we all make money off niche economies, we have to open the money supply. that's why i generally don't think any new economy solution will work until the rules to enable the new economy are in place.
which is why we all need to sing my song, "proud to be a conspiracy theorist." it'll be in itunes shortly.
just don't go on a power trip now that you're the central banker, like start printing money like crazy and robbing us and doing stuff like bombing us and blaming it on a guy in a cave in afghanistan and saying we need to pay you more and give up all our rights in order to be protected. if you do that, and if you start channeling the devil, i think we'll right back in the same mess we're in now!
I've never been a fan for subsidized based revenue models (aka Display Advertising): a 3rd party tries (brand advertiser) to derive value from a transaction between the principals (producer and consumer) through basically subsidizing the costs of production and distribution.
I'd rather put it to the consumer to declare and recognize the value of what they are consuming. By consuming for free, there really isn't the conscious awareness that these freebies are really subsized by a 3rd party who has a separate interest in the interaction.
I view Eric's point that since the consumer really marginalizes the subsidy (and the corresponding marketing/branding messages), it's efficacy for the 3rd party will continue to erode. Plus all of the ad inventory which will just continue to drive down the yield rates.
I know that there's a long history for the subsidy approach: TV, radio, print advertising. So I'm not 100% sure where the breakdowns are occuring for online. Definately the inventory is a problem.
That's why I was such a HUGE fan of Radiohead's experiment whereby the challaged the consumer to declare what value he/she put on the music. It was BRILLIANT of an idea! For some it was 0.99 for the album, for others 9.99, others it was 0.0. I think, for me, I did 5.00 or so.
I know subscriptions are the kiss of death vis-a-vis traffic acquisition. Micropayments really haven't taken off, but are likely the right approach. I know I'd pay Pandora some money as it has terrific value for me. If they turn to audio ad inserts, not so sure how I'd react.
Pleasure and pain do seem to be linked in investing. And with lots of patience some of these ideas come back again. If we recognize them the second time, we can actually make some money.
From what you have written it would appear IAN wasn't feasible given its dial-up modem (amongst other issues), whereas the underlying consumer proposition was perhaps even more valid then than it is now, given the falling cost of PCs.
I think it's important to make this distinction.
facebook and twitter are perfectly timed. All this stuff was done many times over before but these guys iterated and designed there way right in to the main flow of the river, not in to an ox-bow.
here are two of my favorites:
- SHAZAM - this was a sick sick app - but did not have the larger ecosystem of sharing and discovery around it - i guess its now found a home as an iphone app.
- KOZMO - this model may still yet work - but people had to get over th gimmick of ordering and delivering 1 condom first
timing timing timing
because the fed and the corrupt and compliant congress have more or less distorted the entire US economy (and the global economy by extension), this issue is still with us. IMO we've seen too much investment in capital goods (namely servers) rather than the cultivation of other assets critical for startups, like my personal favorite, trust. this has led to other problems, like way too many business models built on the yellow pages model, an over-reliance on return on bandwidth as the dominating financial metric, and the lack of any real progress on things like data portability, which if pursued with the same diligence that bandwidth-centric/SaaS business models are pursued, would unlock far more value for all.
fortunately i think we are in the early phases of a massive correction; the end of the bubble/ponzi economy, and the return to capitalism based on sound money. it will require a lot of pain, far more than what we've seen thus far. but when we get there, there will be fewer mistimed investments.
His analog, which I unfortunately remember too well (I am getting old) was Novell. When they first came out, no one understood why they needed a network. To print? To share a file? Novell almost died multiple times as a result of having been too early.
Then, email became a must have application, and suddenly everyone understood why they needed a network. Novell almost became Microsoft (in terms of dominance - PC OS v. Network OS).
Then Novell "missed" the Internet. But that, as they say, is another story.
Mark
at worst i'd call it an occupational hazard.
but really i'd call it an accolade, a badge of honor.
its darned hard, maybe impossible, to be an entrepreneur or a venture investor and not deliberately be early.
the whole point is to try to do *new* things.
hell, that's the fun, the thrill, the whole gestalt (and sometimes, the payoff.)
and, being *too late* is more the cardinal sin - one that many startups and venture investors are guilty of -- of being copycats or cynical or simply lazy.
i've been way too early quite a few times -- and i'm no less proud of that than of the times the timing turned out right. as if anybody knows that in advance, and as if luck doesn't play a major role.........!
But being too late is a faster death than being too early and often less expensive
Internet trivia: IAN was also the name of of another early dot.com company (1995) that merged with a division of Poppee Tyson to become ___________?
Hint: Seth's very 1st startup was one of their 1st customers. :-)
But I sure hope we won't have 10mm in them when we figure that out. The one thing I have figured out how to do is limit our capital at risk before knowing if the investment is going to work
what's the approach you follow when it becomes apparent that *now* is the time for an old idea that was too early at the time ? revisit the old stuff toolbox, or search anew ? or is that left to entrepreneurs to come back anew according to their gut feeling ?
I have the feeling like an entrepreneur -- fraught with ideas and vision -- rarely has the huge self-restraint needed to wait until the time is right, and that's perhaps one thing where a wise, seasoned investor can help, because the entrepreneur will try as hard as she can to make it real, and in general that's the very best definition of what being an entrepreneur means.
to manage the 'tooearliness' risk is essentially to modulate the entrepreneuralism of the entrepreneur, and self-restraint doesn't seem to be enough.
So it's up to them to figure out that now is the time
We can react to that, but we can't initiate that
When is it “too early” for a new product?
http://counternotions.com/2009/04/06/too-early/
Fred’s conclusion? “Beware of ‘way too early’.” This does sound like good advice, except perhaps when coming from a VC, especially when contrasted to Peter Drucker’s dictum, “The best way to predict the future is to create it.”
[...]
A decade ago PointCast became a canonical example of a product that was “too early” because we didn’t have pervasive broadband for a push service (though the company would have been a success if it didn’t refuse the $450M buyout offer from News Corp). Since then Apple and Google, among others, have taught us how to create the necessary conditions for their products to succeed by compressing time through strategic invention.
If VCs want to become indispensable to the companies they advise, perhaps they ought to remember that it’s “too early” only if you fail.
I was working for Bill Kirkner at the time of the Virgin / IAN / Prodigy plans. Prodigy's thoughts we're on the (coming up or just passed) IPO, there were acquisitions and being acquired, rolling out SBC's DSL subs was a major initiative. Through all this, many ideas were being actively worked; some of them were actually good. Even with smart, good people, it's generally not effective to focus on too many things simultaneously.
So many ills of IAN device, as noted, could have been whitewashed with speed. Dialup at the best of times was not always the best of times. With new custom client software (the IAN device ran QNX, like Audrey, IIRC), rushing on hardware and software engineering, and at least three masters to serve, focus - and therefore quality - was difficult to maintain.
Ten years later, ubiquitous broadband, "always-on" connections, even more cheap, standard hardware and software to bend to your will, and we'll see how it works for AT&T.
More here:
http://www.thefeinline.com/blog1/2009/04/never_...