Tim Oren's Due Diligence

Is iGoogle Hosed?

I use iGoogle to collect a number of RSS feeds originated from blogs, in addition to a few of Google's MSM-originated feeds. The updating rate on the blog feeds has gotten slower and slower over the last few weeks. Right now, none of my non-MSM feeds have updated on the iGoogle pages since Thursday, two days ago. When I click through to the blogs, most of them have at least one post since then. I doubt all of their feeds happened to break at once.

What's going on, Google? I'll have to move my feeds elsewhere if you've gone unstable.

The Roving Eye: 2/12/08

LT G's 'Kaboom' blog is the best milblog writing to come out of Iraq since Neil "Red Six" Prakash rotated out.

Reverse engineering Mother Nature. Very cool, working backwards from current organisms to reconstruct a protein sequence from a common ancestor, and then determining some of the adaptations and environment of that early organism. It's hard to believe there are still evolution deniers out there, just as we're taking big strides in exposing and analyzing its action over time. Via Ole Eichhorn.

Japan's Aerospace Exploration Agency is building and testing prototype components for orbital powersat systems. Glad to see someone serious about this, we need to be trying out all the alt.energy approaches that look feasible, for both strategic and environmental reasons.

I got a good prognosis from my first post-op X-Ray yesterday. The price is six more weeks cooped up on a walker. Well worth it for a full recovery.

The Roving Eye: 2/9/08

Ole Eichhorn is blogging again, and has been for about a month. Welcome back!

My favorite new read of the holiday season was Richard Preston's "The Wild Trees"" (Fluffer to Kevin Kelly for the recommend.) It tells the story of men and women compelled to find the world's tallest tress - and climb them. Many of these monsters are in North Coast redwood country that I know fairly well. Not that I've got ambitions towards the climbing, but I'd love to walk those groves. [Shack happy already? — ed. Yes.] The author has a photo gallery section on his site that's well worth a look. Sort of puts my own old growth hunting activities in the shade, so to speak.

If you're anticipating major surgery, voluntary or otherwise, here's a word for you: Acidophilus. Seems the antibiotic cocktails used to prevent post-operative infections are also powerful enough to blow away your internal set of intestinal flora. That's the collection of bacteria that have become our symbiotic digesters in return for a usually congenial host environment. Once they're gone, the old GI tract - um - doesn't work so well. So the Acidophilus capsules with replacement flora, usually ignored by all but diet supplement fiends, are suddenly important in rebooting the system. You can find them at the nearest health food store - that would be Trader Joe's in our case. HT: our doc, who we love for his minimalist outlook on prescriptions.

Best YHOO post. Cruel, but fair, just like the Piranha brothers.

BlogWorld: A Mouse That Roars

Marc 'Armed Liberal' Danziger and Glenn Reynolds profess themselves pleased by the inaugural BlogWorld Expo, last week in Vegas. I had a more mixed reaction, perhaps based on my jaded appetites: I've been going to shows back to the old COMDEX in its heyday and the West Coast Computer Faires. And I've been to a fair number of 'first time' shows, due to a career split between developing and investing in new technologies - CD-ROMs, Atari STs, HyperCard, 'hypertext', WiFi wireless data, and on it goes. Since a first time show by definition addresses a market that is only partially defined, and due to its low cost attracts a fair number of out-and-out hucksters, it's often hard to extract a consistent theme, or to forecast the survival of the show and market.

BlogWorld certainly fits the pattern. In no particular order, there were exhibitors representing:

• Aggregators: directories, topical specialists, horizontal blog portals, branded content networks, audio and video


• Tool vendors, from basic text blogs to sound and video and DIY blog-to-book


• Far too many blog advertising networks and gimmicks


• Far too many 'feature level' technologies


• Platform providers: Yahoo, Windows Live, AOL


• Old media about new media: books, magazines, movies


• Consultancies


• Corporate and other PR presences

Many of these have the hallmarks of first time exhibitors: minimal signage, no clear message, no attempt to qualify the people that came past the booth. You can easily guess that half of them won't be back next time.

But that cacophony is normal at this stage. What matters is whether the underlying market is viable, and whether the show turns out to be a nexus bringing together potential partners and customers and vendors. That's a more relevant measure than the fact the show took up no more than one third of one of Vegas' exhibit halls, and the attendees at the sessions rattled around in the large meeting rooms. I had only a limited sample, but at least some attendees thought there was value in the connections made on the floor, in the hallways, and at the parties.

And yet, there's a difference between this show and many of the other first-timers. If you compare the still-minimalist 'large' BlogWorld presences to what you'd find at even a specialty technology show (e.g., RSA), you'd be ignoring the reality: This is an upstart sector that has discomfited the traditional media - stolen audience, discredited stories and brands, and credibly threatens to build completely new distribution networks. It has meaningfully affected everything from the value of major corporate brands to national military strategies and political campaigns. How many wannabe shows draw official representation from both the White House and Dept. of Defense communications staffs?

So, lesson one: This is a crowd that punches way above its weight. You can't judge it by the metrics of an established or even emergent technology market.

Perhaps a better comparison would be a Cable Show. There you get juxtapositions like the Playboy Channel (displaying its wares, shall we say), located right across from hard core tech vendors of video servers and optical fiber. BlogWorld was a small, low rent version of that melange of everything from content to infrastructure. You had your cheese cake, your celebrities, your live shows from the floor, as well as the techie bits. (Credit for first two images: Glenn Reynolds)

So here's my second lesson: I have seen the future of media, and it is low rent. Those big booths at the Cable Show and other mass media conclaves are made possible by high margins, which are in turn enabled by a stranglehold over distribution. What I saw in Vegas is competing effectively for part of that audience, distribution and hence margins. BlogWorld will never really look like a Cable Show, and the latter will never go away. But everything about the old media, from brands to margins and audience is at threat of being corroded by the participants in this little show.

Update: A Hollywood insider reaches similar conclusions, coming from a completely different direction. Via Mickey Kaus.

Off to Blog World

I'll be off at Blog World Expo in Vegas for the next two days. Reports as events warrant. Sometimes you just need to meet people f2f.

What's Going On Here?

So what's the deal, you might ask? Nothing but sporadic posts here for months on end, and then suddenly back to something like a regular writing schedule. Here's at least part of the story:

Over a year and a half ago I wrote that I had taken on a part time CEO role at a startup. That venture was in the area of database security, particularly centered on privacy and reidentification control of shared, but matchable databases. We were in stealth mode, and in spite of bold and hopeful promises to the contrary, working on it largely absorbed the creative energy that formerly produced bloggable content, while my actual output was being directed to an internal wiki. (Thanks, Ross!)

We put together some very modest angel funding to allow creation of a working prototype and recruited a capable security-oriented coder to do so. As that approached some definition of ready, I recruited a more business development oriented CEO to take my place, and shop the idea to both early adopters in the finanicial institutions sector, as well potential OEM partners in the security and analytics domains. I continued as CTO during that process.

Long story short: The returns are in, and what we have produced comes out as a feature, in multiple markets, rather than a free standing company. In spite of having written on the topic, sometimes you have to walk the road to find out the answer. Fortunately, we minimized the capital consumed as we did so, but at the end of the day the ability to extract revenue as a stand-alone doesn't measure up to the costs of sales given both the technology and the market. So rather than taking any more investors' money, we have stood down the company and are in the process of looking for a buyer for the technology.

So for the first time in a long time, I've got some free time and head space for blogging and other activities. There's a fair amount of 'scrap research' from the recent venture that will likely find its way here, suitably laundered as always. Pacifica Fund itself is nearing seven years old, and a number of our ventures are going through the exit process. Once these deals have closed, I may be able to write more about the trials and tribulations of the liquidity process without compromising my fiduciary role. Finally, there's a fair number of topics of interest that were laid aside over the last months due to lack of bandwidth, and some of those are already getting back into my reading and writing mix.

Often the best way to find out where you need to go next is to find out what's interesting enough to inspire the energy for researching and writing. So, no long term promises, but I will likely be more active here for at least the immediate future.

VC Blogs as People Journalism?

Well, maybe if Jeff Jarvis has his way. After dissing most VC blogs as 'abstracted' and 'cliched', he suggests:

VC gossip, catty VC valuation badmouthing, anonymous confessions of the top 10 ways VCs blow off venture beggars, sex tips of the nearly wealthy...

Now I'm not actually sure if he's serious or tongue in cheek, but since Jeff won his spurs starting up Entertainment Weekly, let's take him at his word for the duration of a post, and forecast the chances of VC bloggers turning into People style dish artists.

Ain't. Gonna. Happen. 100%. Here are a few of the reasons why the Valley scene will never be like Hollywood journalism.

Hollywood thrives on publicity. To some extent 'brand awareness' is the only asset of an entertainment celebrity, from actor to news anchor to director. Just make sure the name is spelled right, even if it is the Enquirer or ET. General press notice just gets a VC a batch of dumb proposals and dumb questions.

The VC thrives on word of mouth. What we crave is a good reputation in the trust network that connects up good ideas, smart people, and money. And dishing your deals would do what to that?

The value VCs add is highly specific, taken in both the vernacular and transaction cost economics senses of the word. In most cases, the deal analysis and ongoing business direction will require a good deal of analysis of (variously) the technology involved, the market entry tactics, competitor's capabilities, strengths and holes in the team, fund raising environment, and so on. Particularly early stage deals tend to be 'one-offs' (and if they aren't, you've got to wonder about competitive barriers).

So given that we aren't going to dish on specific deals, and that each of them is likely an oddball in some way, it's hard to come up with pithy and often applicable rules that aren't so high level as to be banal. The comment by Jeff's contrarian friend that "I’d rather see VCs talk about situations where they *didn’t* follow the business cliches" is therefore astute.

So to answer one of Jeff's queries, no, most VCs don't talk in slogans amongst themselves (and those who do are scary). You might call if carefully calibrated and highly motivated gossip, if you want, but it's part of how VCs do a job of putting together ventures in the face of great uncertainty. And there's no motivation at all for that gossip function to be publicly visible.

Citizens' Media: Emerging Patterns

"The Internet detects censorship as damage and routes around it." This old net warrior's proverb is a good one to keep in mind when looking for patterns as citizens' media emerge from truly embryonic stage and begin to develop specialization. Some straws in the wind:

• Blogger Bill Roggio gets an invite from military acquaintances to cover operations in Iraq, passes the electronic hat to raise funding, goes there and does that. On his return he is attacked by an MSM story insinuating that he is variously part of a military information war operation, or a partisan tool.


• Michael Yon returns from his own citizens' media reporting stint in Mosul and other parts of Iraq. He calls for retired military volunteers to help him review stories from the troops and other in theatre. These stories will feed into a 'Frontline Forum'. Interestingly, the e-mail address for response is 'michaelyonmagazine'.


• The U.S. Army's PR agency begins contacting bloggers to provide them direct access to DOD editorial content.


• Pajamas Media continues to morph, seemingly into an hybrid of blog content aggregator and ad placement network. Business model and fortunes unknown at this point, but its skyscraper sidebar adverts are becoming familiar around the blogosphere and feature some big names.


• Robert Cringley, grizzled veteran of media from hot type to blog, analyzes the impact of pay-per-click advertising on traditional media, and finds it deadly, implying not only a burden of accountability not possible in the MSM, but a reduction in the total cash flow through the media industry.

Along with that Internet mantra, it's worth pondering some startup wisdom. Effective market entry occurs where the differentiating value of an innovation is the greatest, not necessarily where it will deliver the greatest value in the long run.

There is a non-accidental pattern in the cited events. Information sources and users are beginning to connect to each other around the incumbent media, motivated by the media's inability or unwillingness to carry their messages. A modicum of advertising revenue is beginning to flow in that direction, though not enough to move large numbers of partipants to full-time professional status. The new media are evolving away from a sharp line between audience and commentariat. With the old media's status as gatekeeper discredited to the initial audience, this is not seen as a disadvantage.

It's not going far out on the limb to suggest that these events of the past month will one day be viewed as harbingers of the new media roles and institutions that eventually evolve. The place to watch in the next 12-24 months is the role and effectiveness of advertising in blogs and other citizens' media organs. Is brand exposure still relevant, or is Cringely right in suggesting that PPC rules all? What motivates viewers to notice or act in an often high charged context? What types of advertisers do best in narrowcasting venues? Which in aggregators? Is there one uber-algorithm for placement, as with AdSense, or will effectiveness require specialization? Answers to questions like these will be determining how high is the sky for the new media, and how low the fall for the old.

PJ Media: E Unum, Pluribus

The division of Pajamas Media into two groups, one focusing on content, the other on advertising, became public over the weekend, relieving me of some gentleman's nondisclosure agreements. Of all places, the LA Voice has the story close to right , though they don't see the failure of symbiosis between the two halves. Allow me.

The logic for both parts under one roof is simply stated: Both would depend on bloggers as the element of supply, of either bylined content, or audience and attention. But they sell to very different markets. The content side must sell to content packagers or consumers. The advertising side sells, well, to advertisers.

It's somewhat axiomatic that a startup gets one bet. That is, one product or service, to one market. There are a lot of reasons, ranging from management bandwidth to capital requirements of forming two sales forces to conflicting demands from different sets of customers. They were all relevant in this situation.

Marc and Roger can attest that I, my partners, and other business plan reviewers banged on them to cut the initial set of business propositions down to one bullet point, and focus on it. But there were two legitimate business opportunities inside the plan, each with potential support from investors and backing from part of the team. Roger is notably a content guy, Marc is a systems architect and manager. After some further input from the market (in the form of potential investors, advertisers, partners and a few bloggers), it was evident that a Solomonic solution was the best one in this case. There are now two entities that will each attempt to serve the blogging community and its own set of customers.

Unfortunately for any attempts to paint this as a politically driven break up, that just isn't in the story. So far as I can tell, Roger is no 'rabid conservative' nor is Marc a 'vehement liberal' (though he is still Armed), regardless of anyone who wants to pick a fight on their behalf, and are anyway too smart to let such differences get in the way of a logical outcome. They, Charles, and others concerned have gone through a difficult passage of having to rejig a business plan while at the center of publicity and curiosity, and have come to a reasonable conclusion. I wish both entities the very best of success.

Great Liveblogging from Jeff Nolan

SAP Ventures' Jeff Nolan is at the TTI/Vanguard conference on Evolving Systems, and is doing a great job with commentary on the sessions. Read forward from here. One of the things I like about these reports, and Jeff's blogging in general, is that he calls it when a famous name or digirati-du-jour says something inane or contradictory. A public service antidote to the puffery common on the conference circuit.