W Media Ventures

Some exciting job opportunities that came up in our portfolio companies in recent weeks – please consider applying (and spread the word to your friends)

SEO expert

This position leads Suite101‘s initiatives to generate traffic and improve monetization for online content: http://www.techvibes.com/job/head-of-seo-and-keyword-research

Online Marketing whiz kids

Smart, analytical, numbers-driven? Indochino (http://www.techvibes.com/job/pay-per-click-and-search-manager-at-vancouvers-hottest-startup) and Weddingful (http://www.techvibes.com/job/online-marketing-specialist-for-web-20-start-up-in-vancouver) are both looking for Online Marketing whiz kids

Teach leads

Looking to lead product development in a start-up environment? Scrappy and entrepreneurial? Tech leads needed for Indochino (http://www.techvibes.com/job/technical-development-lead-at-vancouvers-hottest-startup) and Weddingful (http://www.techvibes.com/job/technical-development-lead-for-web-20-start-up-in-vancouver)

All positions are based in beautiful Vancouver.

Posted: August 5th, 2010 under News.
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One of the best talks I heard at CasualConnect last week was “Building communities, not just hits” by Max Levchin (founder and CEO of Slide) and Philip Rosedale (founder and CEO of Linden Lab, the company behind Second Life). Creating an online community is extremely hard to do and I have seen a lot of examples where it just happened but nobody could explain why (and tons of examples where community plans never took off)  so I appreciated the thoughts by Max and Philip on this topic. They basically boiled it down to 4 success factors:

• Provide tools for self-organization: human beings love to be part of groups so if you provide communities tools for self-organization, people will know “who is with them and who is against them”. This could be centered around interests, passions, or locations but the principle of wanting to belong to and identifying with sub-communities is a strong driver of engagement.
• Give people a place to show off and represent themselves: this is the old principle of letting people create profiles to show their personality which has increased in importance with the emergence of game mechanics (i.e. badges) and virtual goods (i.e. decorating your profile)
• Leave room for drama in forums: you need to monitor forums so that things do not get out of hand but a bit of drama is good as it provides the basis for new conversations.
• Creating and trading stuff as key activities: giving a community the ability to create stuff (e.g. decorations, virtual goods) has a big impact on engagement. Even better is letting them trade the stuff.

Building online communities is very hard but if you are successful, you can create amazing value for your startup. So think about those 4 points when you think about adding a community aspect to your site.

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Posted: July 28th, 2010 under News.
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Yesterday I spent a day at CasualConnect in Seattle, one of the largest casual gaming conferences in North-America and took away some interesting thoughts on where social gaming is headed:

• Social gaming is about to go mainstream as big media / entertainment companies are entering the arena and game principles are being integrated in more and more sites and products (“gamification”) – the sector is probably not yet over-hyped but it definitely does not feel far away.
• Differentiation matters more than ever: as the space becomes more and more crowded, games developers need to think harder about how they can differentiate in the long run. Focusing on just one vertical and trying to dominate this (like our portfolio company Fitbrains for brain fitness games) is most likely the most viable strategy. New entrants might otherwise not get enough traction with the most likely exit option left being a talent acquisition.
• Scale matters and Zynga has perfected their “build and run” process – take an interesting gaming concept (and often copying existing ones), apply the Zynga playbook, optimize aggressively. The combination of speed, ruthless metrics focus, significant market share (probably around 60-70% on Facebook that helps drive traffic between properties) and a large capital base makes Zynga a formidable competitor for everybody.
• Quality will increasingly determine success: given the reduced virality on Facebook, the quality of the games seems to matter more going forward.
• Multi-platform: game developers will have to produce targeted experiences for all the key platforms (web, Facebook, iPhone / iPad) to maximize their reach and limit the dependence from one single platform. With Facebook still representing  the large majority of the revenues for most of the social game developers, diversification to other platforms is high on the list.
• Better understanding and targeting of users: while a lot of games were built for anybody and everybody in the past, approaches need to get more granular going forward with game design starting by defining a specific audience for the game.
• The biggest potential for the social gaming vertical is an increased monetization: currently, only 1-2% (RockYou mentioned however already 3-4%) of all gamers pay for virtual goods so there is some significant upside in improving this number to 10-15%.

Social games continue to be an exciting space – it is definitely not early days anymore but it feels that there is some good potential left for game developers that pursue a focused approach.

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• Casual-game firms see growth as annual confab starts in Seattle (techflash.com)
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Posted: July 21st, 2010 under News.
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I often get asked by investors and entrepreneurs alike how building a startup outside of Silicon Valley is possible and I always answer that it depends on what kind of company you are trying to build. So if you are trying to create the next Facebook, Google, YouTube, Twitter, or Foursquare and your company requires a large amount of funding and needs to be close to where the buzz is (because dozens of other startups are competing with you with exactly the same idea and the winner will take it all), then a “secondary market” like Denver / Boulder, San Diego, Seattle, Boston, Montreal or Vancouver is not the best place to be. But if you have carved out a niche for your company that is a bit off the beaten track, are comfortable to do more with less money, bootstrap longer and grow your company a bit more organically, then any of those secondary locations could be the perfect place to start and build your company. You might not have the same access to money and senior talent but you usually have much lower costs of operating your company, access to great engineering talent without competing with the Google’s and Facebook’s of the world (and the salaries that they are paying) and an environment that sometimes makes it easier to focus on the real value of a product for customers compared to chasing the latest hype.

Not sure if you can create big companies in places like Edmonton, Kelowna or Victoria? Yes, you can! Take Bioware, the Edmonton-based gaming company that the two founders Greg and Ray built over a decade in a city that did not have not a single gaming company before they started their company – sold to EA for close to a billion dollars. Or Kelowna’s Club Penguin, a company that was the first to create a virtual world for kids and sold to Disney for over $750 million. Or my own company AbeBooks that got built in Victoria, BC, over more than a decade before being sold to Amazon.

Great companies are being started in these markets every day – they will perhaps not be as glamorous as the Valley startups but will still create enormous value for customers and subsequently exit opportunities for entrepreneurs and investors alike.

Posted: July 15th, 2010 under News.
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As the iPhone 4 antenna problem is slowly spiraling out of control (some people even start discussing a recall) I thought it would be a good time to review a few key points how to react to (serious) product problems as a company. I learned my share back in the AbeBooks days when we had a period of frequent down times that we didn’t manage that well. From my experience, there are 3 simple rules for dealing with serious product problems:

• Be honest and open: denying the problem usually doesn’t work and only destroys your credibility as a brand. Corporate speak also isn’t effective. Just be completely honest with your customers and  share as much information as you can: what happened, why it happened and what you are doing to fix it
• Over-communicate with your customers: a disgruntled customer gets even angrier when he does not get timely updates about the problem so start communicating with your customers right away and provide frequent updates. If you don’t know yet what the problem is and when it will be fixed (e.g. in the case of a downtime where you still looking for the root cause), say so which is still better that not informing your customers at all.
• Take the short-term financial hit: a recall of a product or crediting customers for service interruptions can cost a lot of money but if you are interested in building a great brand for the long-term, you must take the short-term financial hit. Your customers will reward you many times over with increased loyalty and positive word of mouth.

I don’t know if this antenna problem is serious enough for a recall of the iPhone 4 but I do know that Apple is currently destroying quite a bit of its incredible brand equity by being the (negative) headline story of many newspapers and blogs.

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Posted: July 13th, 2010 under News.
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I met with 10 early-stage startups in Seattle yesterday and it was a good reminder for me what some of the most important messages are that you want to bring across to an investor when you have a limited amount of time to present your company. Here are the 4 key points that I very much care about:

• Company vision / elevator pitch: I too often get founders that cannot describe in 2-3 sentences what the vision of their startup is and what their company is all about. Make it simple and start the conversation with it. Otherwise, the investor will feel kind of lost as they don’t even know what you really want to build.
• Team: everybody has a team slide but in an early-stage environment I really want to know who can actually build stuff (and see examples of what they have built) and who are the “suits” (and what concrete value they are bringing to the team). Your team is only 3-4 people strong so you better have the right guys on board to start this company and you need to bring this across to the potential investor.
• Competitive advantage: think long and hard about how you differentiate from other sites out there. Too often founders overestimate how differentiated their product is when it is actually just a nice evolution of existing products that will have a hard time convincing users to switch.
• Distribution: distribution often doesn’t get the necessary amount of attention and founders seem to assume that people will just flock to their site so really go through the different marketing channels and come up with a strategy that make the most sense for the product you built.

So keep your pitch short and simple and make sure to address those 4 points – it will sure help to make your pitch more concise!

P.S.: I had a great time in Seattle and am always impressed by the consumer internet scene down there – perhaps this will turn into more investments soon!

Posted: July 9th, 2010 under News.
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As the Soccer World Cup tournament in South Africa is down to 4 remaining teams (Spain, Uruguay, the Netherlands and my native Germany) it is interesting to analyze why these teams did so well and other (much more favorited or traditionally strong) teams likes Argentina, Brazil, Italy and France did not. As I see it, it comes down to two main factors:

• Talent over experience: experience is important especially in critical situations like a short tournament but in the end talent trumps experience. Germany sent the youngest national squad to South Africa since 1934 with an average age of only 25 but these young players have not only an incredible talent but also a bigger hunger to win and an amazing speed and energy that lets them out-hassle older teams. On the contrary, both Italy and France sent teams with a majority of players that participated in the 2006 final and were clearly some of the most experienced players in the whole tournament but still exited after the group phase with not a single win. But it is also important to note that the German team is not only made up of youngsters but also has a few really experienced players that provide the necessary leadership for the team.
• Coherent vision of a team over reliance on a star performance: all 4 teams succeeded without relying on a star player (actually almost all star players like Kaka, Rooney, Messi, Ronaldo or Ribery disappointed at this tournament) but by developing a coherent system of play where the team was the star and not an individual. By getting everybody to help out on the field wherever help was needed, involving every team member in the play independent of popularity off the field and always following the game plan that the coach designed the result was much more powerful than an agglomeration of talented individuals.

So what can startups learn from all of this? I think that both points are also some of the most important success factors for startups. Always hire for talent over experience as the young, smart, hungry team member will very quickly produce more for your company than the seasoned employee that has worked in a similar position for the past 10 years (but make sure that enough seasoned leadership is in place to guide the younger team members). And always focus on the team and a coherent vision that they can follow instead of relying on a few super-stars that might do incredible things once in w while but most often stand in the way of building a great company in the long run.

Looking forward to the final 4 games – and you might guess which team I am cheering for…

Posted: July 6th, 2010 under News.
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Call it the Fred Wilson school of thought but hanging at the Union Square Ventures offices in the past month has really convinced me that I should blog more. And I have already started to do so in the past weeks (here, here, or here).  Why?

• It is a great way of connecting with your customers / audience and spreading your thoughts. Take Mint‘s incredible success with their blog (leading to their $170 million sale to Intuit) or Fred Wilson’s blog at avc.com that attracts tens of thousands visitors every day. Or look at how Chris Dixon suddenly went from an angel investor mostly known in NYC to one of most followed seed investors in the country.
• It is the easiest way to get feed-back: comments on blog posts are just one feed-back channel but putting out your thoughts usually starts a lot of new conversations that you wouldn’t have had before. So when I put up a post last week looking for the StartupCFO of Vancouver, I got 5 leads within a couple of days.
• It helps structure your own thoughts and ideas. Blogging is a lot of work but it really forces you to think through a problem in a concise way.

I am most definitely not the first person to say that blogging is important but take this post as an encouragement if you have been thinking about starting a blog for a long time and just needed a little push. I needed it, I got it – you got it now, too!

Posted: June 3rd, 2010 under News.
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Facebook‘s success in building out the social graph is exciting and scary at the same time. Exciting as it has turned social into one of the key growth drivers of the web, scary as one company seems to control the “social infrastructure” that we all want to build companies on. I am pretty sure that Facebook will remain the only mainstream social graph on the web for the next little while but also think that more and more site-specific social graphs will emerge (check out the thoughts on this topic by Albert Wenger and Fred Wilson). So if you are a startup building a product based on a social graph, I would recommend to follow two strategies:

• Use existing social graphs to build your own (site-specific) social graph by making it as easy as possible for people to find their Facebook and Twitter friends / followers that already use your service (or let them invite additional friends / followers to the service). Up to a year ago most sites focused on email invites to build the social graph but the uptake on this is considerably smaller. So this is really an “ease of use” question with the best implementation award going to Plancast in my opinion as they have really nailed the UI.
• Help create new connections on your site by making it as easy as possible for your users to discover other users of your service that they should follow / friend. This is probably the area where most value could be created but not many sites have built anything interesting. Wouldn’t it be interesting if Foursquare pointed out people to me that frequently check into the same locations as I do? Or Disqus would recommend following people that comment on the same sites as I do? A big chunk of Facebook’s growth has been driven by their “friends recommendation” feature and interestingly enough, no other site has so far focused on the same strategy (with perhaps the exception of Linkedin).

Controlling as much as possible of the social graph will be extremely important for any site so leverage the existing social graphs as much as possible but really focus on creating new (useful) connections among your users.

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Posted: June 1st, 2010 under News.
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Michael Arrington has argued at the occasion of the launch of his new Techcrunch Disrupt conference that a “third wave” in the evolution of technology is here. With personal computing being the first wave and the Internet the second, he claims that the growing importance of social, mobile and new forms of commerce is revolutionary enough to be called a “third wave”.

I generally agree with his assessment of those major trends driving the future development of the Internet but I would like to add a few thoughts:

• I think that it is rather an evolution than a revolution – social and mobile have been part of the development of the ecosystem since quite some time but have now both reached enough scale to be large underlying growth drivers
• I would add “open data” as an underlying driver of the development we are currently seeing – as more and more data is made accessible to the public, new and interesting applications will be built on top of this data.
• The biggest risk will be that social could end up being fully controlled by Facebook and mobile by Apple and I hope for the development of the overall ecosystem that we will see strong competitors and platforms to both emerging (which is more likely in mobile with Google’s Android than it is in social)

Even though the current development feels more like “Web 2.5″ instead of  a”Third Wave”, these are extremely exciting times for Consumer Internet entrepreneurs and investors alike with social, mobile, new commerce and open data driving a lot of innovation in the upcoming years.

Posted: May 27th, 2010 under News.
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