BloGiza

The List - April 30

Every week we run across a number of articles that catch our eye. As a regular feature, we round them up for a little something we call The List:

• A New Dimension for Your Photos - Technology Review
• Vudu Casts Its Spell on Hollywood - New York Times
• Web 3.0 Gets Under Way - Information Week
• Web 2.0 hype fading at last - Technofile Europe
• Joost Signs Major Advertisers - ClickZ
• Interview with Chris DiBona of Google - Read/Write Web
• Billboard Partners With Veoh Networks to Launch the Billboard Internet TV Channel - Top 40 Charts
• In Search Of Credibility On The Web - Information Week
• Does Intel fear $100 laptops? - CNN Money
• Gartner Predicts 80% Of Internet Users Will Be Active In Virtual Worlds - Information Week

The List - April 22

Every week we run across a number of articles that catch our eye. As a regular feature, we round them up for a little something we call The List:

• Vendors Vow To Make Web 2.0 More Useful For Businesses - Information Week
• IPTV Startups to Watch - Daily IPTV
• Google Offers "Queryless Search" & Personalized Recommendations - Search Engine Land
• Liveblogging Web 2.0 Expo: Built to Last - Conversion Rater
• Liveblogging Web 2.0 Expo: Venture Capital 2.0 - Conversion Rater
• Most frequently visited websites - not what you’d expect - Lightspeed VP
• Peter’s Principle applied to software start ups - Jeremy Fain
• Thursday, April 19, 2007 Google's Intentions for Apps and Future Acquisitions - The StepForth SEO Blog
• Surfing TV on the Internet - Technology Review
• How to Speed Up Movie Downloads - Technology Review

Internet Radio Takes a Hit

For the past several weeks, a lot of Internet radio broadcasters have lived in fear of new copyright regulations which will effectively multiply the royalties they have to pay to the RIAA's royalty collection agency.

The exact change in the regulations is more complicated than I want to go into (but you can read a good explanation here). But basically, under the old regulations Internet broadcasters would pay a small licensing fee plus a percentage of their revenues to the RIAA. Under the new rules, they will have to pay a larger licensing fee plus a fee each time a song is played.

A number of Web broadcasters appealed to the Library of Congress's Copyright Royalty Board against the new ruling. Unfortunately, the CRB has denied their appeal. Subsequently, we are now beginning to hear dire predictions from a lot of small-medium Internet radio broadcasters that the new regulations will drive them out of business.

Ay yay yay. This certainly doesn't look like good news for Pandora, Last.FM and their ilk.

Gil Rosen argues that this ruling will eventually lead to the demise of the CRB and other government 
involvement in the copyright wars. While this may or may not be true, the real problem here is less the government than the RIAA.

Granted, the music industry is the first major business to be shaken to the core by the Internet. But instead of trying to adapt to the new reality, the RIAA has desperately tried to cling onto its old business model by any means possible from strict DRM to suing individual users. The change in the copyright regulations can be seen as the latest battle in this war.

I thought EMI's recent announcement that they would start selling DRM-free tunes over the Internet represented a real change in the music industry's attitude towards the online world. Now, I'm not entirely convinced. Sad news indeed.

The List - April 16

Every week we run across a number of articles that catch our eye. As a regular feature, we round them up for a little something we call The List:

• Serial entrepreneurs: Hedge Funds as VCs? - Outright VC
• Better, More Accurate Image Search - Technology Review
• What VC's Look for In A CEO - VC Confidential
• Note to content owners: DRM doesn’t work - Mark Shuttleworth
• Web 2.0--the folly of amateurs? - CNet
• Sharing Data Visualization - Technology Review
• Google's Venture Capital Misadventures - Seeking Alpha
• Microsoft is Dead - Paul Graham
• Joost: It’s The Metadata, Stupid! - New TeeVee
• 10 Most Successful Web 2.0 Startups To Date - rev2.org
• The Upper Hand - Red Herring
• The future of video advertising and search on the Net? - Scobleizer
• Venture capitalists step up presence in China - EE Times Asia
• Tax-Wary Investors May Be Finding the Limelight Too Bright - New York Times
• Google Should Focus On Small Acquisitions - Seeking Alpha
• Where Are The Web 2.0 IPOs? - Forbes

Google Buys Doubleclick

Goog, as though looking to disprove once again the notion that they only do small purchases, has dropped another bomb on the biz-tech world. This time, we're talking about yesterday's announcement that Sergey and Larry are buying DoubleClick for $3.1B.

Some thoughts:

• DoubleClick is probably the major player in the CPM/ad serving space. Watching it getting gobbled up by Google is kind of like watching a whale swallow up a somewhat smaller whale.
  
• The deal is a whopper any which way you look at it. Goog is paying out $3.1 billion in cash for a company that two years ago was taken private for $1.1 billion and which had revenues of $300M last year. Either way, this is a huge premium, especially for a mature company like DoubleClick.
  
• I think by now we can all stop thinking about Google as a search engine company and start thinking about it as the world's biggest advertising machine. Google is king of the CPC/text ads space; acquiring DoubleClick gives them a huge presence in the CPM space assuming that they manage to digest the new company without cannibalizing their existing revenue streams
  
• The mega-valuation came about in part because Microsoft was also looking to buy DoubleClick. Google was able to outspend Gates & Co big time. Which means that Google has now officially taken over the title of the Borg of the new millenium.

TWS 2007 wrap-up

And so, the big event was a success, I would say.

More than 500 people showed up at Gan Oranim Tuesday night, including just about everyone who is everyone in Israel's Internet industry. Ten companies showed off their wares, generally quite well. Shimon Peres made a slightly controversial (and in my opinion slightly rambling) speech about how the Internet means we shouldn't have to study history. And Yossi Vardi did his patented Vardi schtick. (Pictures from the event can be found here).

In all, an auspicious start to what hopefully will evolve into an institution.

I won't give my opinions of the individual companies (especially since I already did so). From reading other people's blogs, it seems that ClickTale, G.ho.st, and Double Trump made strong impressions. I would, however, like to address two issues.

A lot of the commentary notes that the companies didn't  dwell on things like their revenue model, competition, or market analysis in their presentation. This is true and it was done on purpose. The companies each had seven minutes for their presentations, and we instructed them to focus on presenting their product and their vision. The rest of the pitch they could then save for potential investors.

Also, I heard a bit of grumbling about the quality of the finalists. Which I think is unfair and may stem from the wrong expectations about the event. If you came to the event looking to see the top 10 Web 2.0 hopefuls in Israel you might have come out disappointed. The finalists represented a broad spectrum of business possibilities available on the Internet, from classic Web 2.0/social networking sites to diagnostic services to B2B applications and technologies.

Also, while I think all 10 finalists have the potential to be viable businesses, not all of them (and perhaps not even the majority of them) are VC-grade investments. One or two have the potential to be significant exits. The rest may be successful on a scale that would make the founders and angels happy, but aren't large enough to interest heavier institutional investors.

Sadly, that's just how the game is played.

If you ask me the best thing about TWS is that it showed that there is a real internet industry here in Israel (or, as Deb Schultz put it, we've developed a scene like the one they had in Silicon Valley back in the good old days).

You suddenly see a lot of entrepreneurs trying out new ideas: very passionate Internet fanatics and kids who grew up on the Web. We're seeing second-generation Internet companies founded by people who worked at Hotbar, ICQ, and Incredimail. And you are increasingly seeing investors <shameless plug>who understand the potential of the Internet and who live it from the inside.</shameless plug>

As Martha Stewart would say, it's a good thing.

The List - April 8

Every week we run across a number of articles that catch our eye. As a regular feature, we round them up for a little something we call The List:

• Reality Check: Before you leap to Web 2.0, try Web 1.0 - GCN
• VCs Aim to Out-Angel the Angels - Business Week
• Convera Sheds Government Work, Targets Vertical Search For Publishers - Information Week
• Google's Victims - Valleywag
• Don't build solely on another's technology... re: Flock - CenterNetworks
• Web 2.0: End of Innocence - GigaOM
• Google's Core Competency May Not Transfer To Offline Media - Seeking Alpha
• How to Beat Google - Valleywag

With the TWS Finalists

On Thursday I had the pleasure of sitting with Yaron and Yami from the co.ils and most of the 10 companies selected to present at Tuesday's TWS 2007 event. TWS has now grown into a major industry event, with several hundred entrepreneurs, investors, and other internet afficionados are expected to show up.

Thursday's meeting was a kind of prep session to see the presentations and to provide the companies with some constructive advice to make them better. So, who are the lucky companies? In no particular order:

• Hingi (http://www.4144.co.il) - Hingi is the "Hear It 'n' Get It" music service. They allow you to find out what is playing on the radio or MTV at any given moment and download a ringtone/truetone/callback tone/MP3 of it to your cellphone. Their trick is enabling all this in two clicks, rather than seven or eight like you would expect. In other words, Hingi enables true impulse buying for music over cellular. Although I'm probably a bit older than the target demographic, I can see the value of a service like this in a multi-billion dollar ringtone market. They are definitely playing in the right playground.


• Telecut (http://telecut.co.il) - Telecut provides a SAAS that helps reduce communications costs for individuals and small businesses. Telecut analyzes your cellphone bills, checks for errors, and makes suggestions about other plans that might suit your needs better and more cheaply. While Telecut is not the "sexiest" presenter at TWS, the service looks useful and is probably relevant to the broadest swath of users.


• The Weebz Family (http://www.weebz.com) - Created by a company called Intuition, Weebz lets you set up online sites for family events such as weddings and Bar Mitzvahs, lets you edit these sites online easily, and allows family and friends to contribute their comments, photos, etc. Their branding revolves around a family of cute animated creatures called the Weebz family, which emphasizes their focus. I have to give props to the guys from Intuition for showing up wearing matching Weebz neckties. Nice to see a company that knows how to stay focused on its marketing message.


• iGiza (http://www.igiza.com) - iGiza creates tools and an online platform to help people in the Multilevel Marketing (MLM) industry manage their businesses online. (MLM for those unfamiliar with the term, is a business where products are sold by independent distributors. Think Herbalife or Tupperware). Again, this is not the sexiest Internet company you'll see this week. However, I am a big fan of offline-to-online business migration. And I think there is a lot of potential here. Also, with a name like iGiza, how could I not like them?


• Urban Seeder (http://www.urbanseeder.com) - This actually does qualify as one of the sexiest Internet companies you'll see. With Urban Seeder you can leverage the Web to "grow" a relationship whether for romance, business, or other purposes. You can go from sending anonymous notes to building up a connection. The process is much more involved than this, and I fear I am not doing it justice by trying to explain it in a few sentences. But the concept is intriguing and the design of the site is great.


• Match My Pet (http://www.matchmypet.com) - Two young entrepreneurs who have developed a combination social network/breeding site for pets. The social network aspect allows you to post pictures and videos of your pet, participate in forums, and get other information. The breeding service allows you to find potential mates for your pet in your area. While I'm not sure I'd currently invest in another vertical social network, people have a real emotional attachment to their pets so I can see the potential for something like this. After all, ask the guys from Dogster.


• G.ho.st (http://g.ho.st) - G.ho.st is the Global Hosted Operating SysTem, a web-based virtual desktop which allows you to collect all your online files (web mail, Flickr photos, Google spreadsheets and docs, etc) in one place. In addition, you can share local files on the desktop as well, and have them available on any browser. All in one seamless and nicely designed package. For my money, this is one of the most interesting and exciting of the local Internet companies, both for the product as well as for the company itself (a joint Israeli-Palestinian venture based in Jerusalem and Ramallah). Definitely one to watch.


• The Flat Planet Phone Company (http://www.flatplanetphone.com) - I have to apologize to Flat Planet Phone Company, since I was called away when they were presenting and so cannot vouch firsthand about them. The company allows small companies to become VoIP resellers, in effect letting them run their own virtual phone companies.

In addition to the eight aforementioned, there are two other companies participating who did not participate the other day:

• ClickTale (http://www.clicktale.com) - ClickTale has developed a suite of tools for website usability testing and diagnostics. The ClickTale application records every move a user makes on your site and presents diagnostic reports that can help you maximize usability on the site.


• Double Trump (http://www.doubletrump.com) - Double Trump have developed PlayOn, an encapsulation technology for software that enables a variety of new business models for usage. The company's first target market is casual games. Under the standard casual gaming model, you can play a game free for an hour (or a few levels) and then you have to pay $20 or so for the full version. With PlayOn, you can choose to play for 1 cent a minute and if you play $20 worth of any game, you get to keep it. The company operates a casual gaming site of its own (http://www.playonarcade.com) which demonstrates the technology. And is also responsible for me wasting hours playing Diner Dash and Mah Jongg. In the interests of full disclosure, I should note that Double Trump is a Giza portfolio company that I am involved with, and that the entrepreneurs are a pair of really great guys.

And so we go. Ten very different companies attacking different markets with different approaches. I'm not sure if the goal of TWS was to get a seriously wide variety of companies, but if it was then mission accomplished.

Hope to see you all Tuesday night in Gan Oranim.

Koolanoo in The Marker

This month's The Marker magazine features an interview with Oded Kobo and Guy Grinberg from Koolanoo Group. (Read the first couple of paragraphs here, afterwards you have to buy a copy of the mag).

The guys talk about 360Quan, which is now one of the fastest-growing Internet sites in China, and about the Internet scene in China in general. I think the interview gives a taste of why we decided to invest in Koolanoo and why we believe they have a real chance of making it big.

A Heartwarming Passover Story

Tonight marks the beginning of Passover, as we all sit down with our families for the Seder. With your permission, dear readers, I will share with you a personal Passover anecdote.

10 years ago, in April 1997, I spent Seder night at my parents' house in Mountain View. At the time, I was running a fledgling Website design business. My dad (one of the gurus of data mining, among his other accomplishments) was guest lecturing a seminar for Masters students at Stanford.

One of the traditions of the Passover seder is that you make an effot to invite "waifs and strays," people who are far from home. And so, dad invited Sergey, one of his seminar students to the Seder. He was a bit taciturn, and spent most of the time talking to my dad. Here and there I tried to make conversation, talking about the Internet. He and his roomate were starting to play around with search engine technology. Other than that,  not much conversation.

Had I known where our respective paths were heading, I might have made more of an effort to get to know Sergey Brin a little better. But such is life. A decade later, I am a happy member of Israel's VC community. Sergey, meanwhile, co-owns a 767 and swims in a swimming pool full of cash. My dad, by the way, unsuccessfully tried to convince him to stay at Stanford and finish his degree.

A happy and wonderful Passover to you all.