W Media Ventures

As already announced last week, Seattle-based Yapta just closed a $2 million Series B led by Voyager Capital and I am very happy to announce that W Media participated in this round. Yapta is a online travel shopping service that monitors airfare and hotel prices for travelers. Led by CEO Tom Romary, the company has not only built up some significant traction over the past year but was also very successful in attracting top talent and top investors (the major investor besides Voyager Capital being First Round Capital). I have spent a considerable amount of time in Seattle since the beginning of the year and am really impressed by the consumer Internet scene there so I am hopeful that we will see more Seattle investments by W Media in the next little while. Looking forward to be part of the Yapta story going forward, with now 3 investments in the travel space (Escapio.com and Tripsbytips.com being the other two) this vertical is becoming increasingly important for the company.

Posted: July 3rd, 2009 under News.
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W Media Ventures has so far shied away from investments in the mobile space, partly because of a lack of exciting opportunities but most importantly because the sector has lacked a few attributes that the Internet provides: multiple monetization opportunities (business models in the mobile space were until recently mostly controlled by carriers) and an open platform to develop on (talk to any mobile start-up and you will hear about the inefficiencies to develop applications for hundreds of different handset models). Thanks to RIM, Apple and Google this has recently started to change and interesting mobile platforms with attractive monetization options have emerged. So when I got invited by Chris Fralic over at First Round Capital to invest a small amount in PinchMedia alongside them and Union Square Ventures (which are two of the smartest consumer internet VC’s in my opinion), I was very intrigued. PinchMedia provides analytics for mobile applications so think Omniture or Coremetrics for the mobile space (currently, analytics are only available for the iPhone platform but will cover the other mobile platforms (Blackberry, Android) very soon). Looking at the incredible growth the iPhone apps store has seen in the first few months since its launch there are tremendous opportunities ahead for Greg Yardley (a fellow Canadian living in NYC) and his team – they have already built up an impressive product and now also the capital and resources to scale the business.

Posted: June 4th, 2009 under News.
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Today, Michael Yurechko started working for Carrie & Danielle. How Michael got to the company? He commented on Fred Wilson’s blog on a post that was discussing if you need a college degree to be an entrepreneur, Fred connected him to me as Michael is from Vancouver, I met with Michael, liked him and offered him a job. This is what social media is all about: connecting people and ideas beyond geographies and existing relationships, don’t you love the Internet? And don’t forget to comment on a blog the next time you can be part of an interesting conversation.

Posted: June 3rd, 2009 under News.
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I attended the yearly ThinkEquity conference in Half Moon Bay at the beginning of this week and have to congratulate the organizers for putting on one of the best events where private technology companies can present to investors. This year’s conference focused on 3 major areas: social gaming, display advertising and education (2 of the 3 areas coincidentally overlap with where I currently see opportunities). Some quick take-aways:

• It is not really a secret anymore but social gaming is on fire. Zynga has apparently a revenue run rate of close to $100 million and is only a 2 year old company. Playfish’s PetSociety has more than 10 million active users on Facebook and is just 8 months old. In all of these cases, two things come together: superior, viral distribution by building games on top of the social graph and excellent monetization potential through virtual goods. Social media has shown impressive growth in many areas over the past year but social gaming is probably the only category that has turned their audience into real dollars.
• There continue to be large opportunities in display advertising: brand advertising is a significantly larger market than performance advertising but nobody has figured out how to scale it on the web. More standardization and more data will help the course but we are far away from finding a Google AdSense-like product for display.
• Education is always being cited as the big opportunity of the future but the reality still looks different with even established educational companies struggling to find the right online model. It is worthwhile reading the Hacking Education post on the Union Square Ventures blog.

All in all it still feels like very exciting times in consumer Internet…

Posted: May 15th, 2009 under News.
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After I got asked twice yesterday about where I currently saw opportunities in the consumer Internet space so it felt like good timing to sum up my thoughts on this topic in a quick blog post. Here are the 3 areas that I find the most interesting for the moment:

• Better targeting and increased accountability for display advertising: Google has set the industry standard for performance advertising but nobody has yet figured out how to drive accountability into display advertising. There are several companies working on solutions but none has captured significant market share so far.
• Marketplaces built on Twitter: Twitter is rapidly emerging into real-time search and there are opportunities to build (information, service or commerce) marketplaces on top of this eco-system. Examples are Splits.org (matching of recruiters) or Stocktwits for discussions around stocks). 
• Education: the education vertical is a natural for a high online penetration and while progress is being hampered by slow-moving institutions sitting in the middle, more and more educational ideas are getting traction. Examples are Seattle-based Teachstreet (an online community for education) or recently funded Myngle (a platform for online language education).

All three opportunities feel equally big and important to me so it will be interesting to see what ideas will emerge in these areas over the next little while.

Posted: May 5th, 2009 under News.
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Long-term partner Acton Capital (for whom I act as a venture partner for North-America) has just announced their first investment of their new late-stage consumer internet fund joining Index Ventures and Highland Capital Partners as an investor in Glasses Direct. UK-based Glasses Direct is Europe’s largest online prescription glasses retailer and will use the funds to expand the UK business and to support a significant push into the US market. It was the second round of financing for Glasses Direct; total amount of the roudn was £10m (about 18 million Canadian dollars).

Posted: April 23rd, 2009 under News.
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As already announced this past week, Burda Digital Ventures and W Media Ventures have jointly invested in Escapio.com, a booking platform for selected hotels. Escapio is a sister company of Tripsbytips, the German travel community that Uwe Frers and myself started about 3 years ago. As Uwe is also the entrepreneur behind Escapio, it made sense to streamline ownership structures between the two companies. But besides this aspect, Escapio provides two major opportunities. Firstly, as available content and inventory grows on the Internet (and the travel vertical is definitely one of the leading segments in this respect), helping people to select the right thing becomes more and more important. This is a core priority for general search engines like Google but there is at least as much potential in specific verticals to address this problem. Escapio positions itself as being a destination site with a selection of exceptional, hand-picked hotels providing the consumer the necessary guidance to find the absolutely best hotels in hundreds of locations (check out their hotel selections for Paris, Barcelona or Tuscany). Secondly, we have seen in the past years that content and transactions become more and more intertwined. Aligning Tripsbytips and Escapio more closely going forward will help both companies grow quicker than they could have as stand-alone sites. Very excited about adding another company to the W Media portfolio - welcome Escapio!

Posted: April 16th, 2009 under News.
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Every time I read about Yahoo’s share of the search market I wonder to what sites the Yahoo traffic is actually going. Here is the mystery: depending on the source, Yahoo’s share of the US search market is around 20%  give or take (e.g. Compete numbers or ComScore numbers) but when I look at the actual numbers of our portfolio companies I have never seen a site that gets more than 7% of its search engine traffic from Yahoo with many sites rather being in the 1-2% range. So while the sample might not be perfect, it can definitely not explain this large discrepancy – so here are a few theories that I came up with:

• Google Analytics over represents Google’s traffic (all above mentioned portfolio companies use Google Analytics)
• Yahoo Search Submit program skews the results towards paying clients
• Yahoo drives a large amount of traffic to its own properties (like Yahoo Finance or Yahoo Sports) instead of third-party sites

Perhaps it is a combination of these factors but it is such a large discrepancy that I just don’t fully understand what is happening.

Posted: March 27th, 2009 under News.
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RBC came out with a very interesting analysis today that looked at how much Facebook and Google were complements or on a collission course and it got quite some attention among tech blogs (e.g. SI). RBC’s conclusion:

Complementary (For Now): Google and Facebook are two of the fastest growing and largest companies on the internet, and thus far, Facebook’s ascendancy has likely helped Google gain share. 45% of monthly unique users go directly to Facebook (as a starting page), up from 39% a year ago. At the same time, Google is now driving 64% of Facebook’s uniques, up from 51% a year ago. Google.com, on the other hand, has a consistent 66% of its uniques as a starting page, same as a year ago. Google’s uniques via Facebook are growing at 188% y/y, and now represent 19% of Google’s traffic (up from 9% 12-months ago).

The problem of that analysis lies in my opinion in how they interpret the Comscore numbers they use.  The Comscore ”entries / exits” analysis tracks what sites people visit before and after visiting a particular site. While some of that traffic is actively driven from one site to the other (e.g. Google driving search traffic to content sites), most of it is just the sequence of how people use different sites (e.g. AbeBooks always had tons of people coming from Amazon before visiting AbeBooks and tons that left for Amazon after a visit to AbeBooks). In my opinion, only actively driven traffic through links creates dependencies between sites and Facebook is likely to depend much more on Google for that (e.g. people search) than Google depends on Facebook (Facebook probably only drives significant traffic to one of Google properties, YouTube, through video sharing).

So while the RBC analysis might be looking at the wrong facts to analyze the Facebook versus Google situation, Facebook being a potential threat to Google is probably one of the more interesting questions in the Internet space at the moment. My take on that question is that Facebook will be more threatening than complementary to Google in a few ways: recommendations, videos, news items shared by friends will take away traffic from traditional search (”social search”), Facebook will also most likely gain share in people search over time and could also dominate the search for products & brands over time. What are your thoughts?

Posted: March 18th, 2009 under News.
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Securing additional financing is one of the most important (and toughest) tasks for start-ups these days – so I want to congratulate Mike Tan and his team for closing a second round of financing for TeamPages that also brought a few new investors into the company. TeamPages has shown some very good traction over the past 9 months so this money will help them to continue to grow the company at the same pace. And all you coaches and parents that are involved in youth sports should sign up your teams now.

Posted: March 17th, 2009 under News.
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