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Food, The New Phenomenon

Posted on Tuesday, Apr 4th 2006

I just wrote about CNet’s acquisition of Chowhound.

(Jim Leff is visiting later this week, and we’re to try Guatemalan food in San Francisco on Friday night.)

Lo and behold, now we have Reader’s Digest acquiring AllRecipes.

Some traffic details:

From a recent press release: “Ringing in the New Year, Allrecipes.com, the world’s leading community recipe site for home cooks, will remember December 2005 as the month the company logged an all-time high of 9.1 million unique visitors to the Web site, according to their internal log files. Nielsen//NetRatings backs up this growth reporting a 25 percent increase in unique visitors to the site and 42 percent growth in page views over 2004.

With this unprecedented traffic, Allrecipes.com became the second most popular Web site in its category, behind only Foodnetwork.com. Nielsen//NetRatings also confirmed that Allrecipes.com’s traffic surpassed that of other popular consumer sites including ABC.com, iVillage.com, CondeNet.com, BetterHomesandGardens.com and Oprah.com. This capped off a history-making year for the company.”

See why Reader’s Digest paid up the $66 Million? More than 15 Million annual visitors, more than 1 Million registered users … not a bad base for RD to start building their online story!

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Online Colleges: Staggering & Growing Numbers

Posted on Thursday, Mar 30th 2006

Here is a great article from WSJ on changes in the higher education legislature that starts making the for-profit college / university category more and more attractive, especially in the online format.

Last year, for profit education companies generated about $17 Billion in revenues. This number has grown steadily from $10 Billion in 2001, and there is reason to believe, that it will continue to go up. While we celebrate the $10 Billion online advertising market, we hardly pay attention to this quiet revolution happening in Education.
Companies like Apollo (Nasdaq: APOL) also need to start tapping into the education requirements of the emerging markets, for the International opportunity is also enormous.

India, for example, cannot satisfy the need for engineering education at the moment. Anybody who knows engineering of any decent calibre and is qualified to teach, is fast lured away from academia into highly paid industry careers.

KK Sengupta, an education entrepreneur I met in Kolkata this January, told me that there are 1,346 degree engineering colleges in India with annual student intake of 440,000 students plus 1,244 polytechnics with annual intake of 265,000 students. The teacher shortage in these colleges is severe, and a lot of very old professors are teaching obsolete material.

If I were Apollo Group, I would go do deals with all these colleges and convert them into University of Pheonix satellite campuses, and deploy online training abundantly and unapologetically.

I don’t know much about the situation in China, except that the Government there is very keen on online education, and is already trying to bridge shortfalls via online endeavors.

Net net, I think, online education is a great category, and especially as the Net-savvy MySpace-Facebook generation comes of age, the category will become increasingly more compelling.

Looking For An Unsolved Problem?

Posted on Wednesday, Mar 29th 2006

The web, more than anything else, showcases Content. And Content is produced in one language, but often, consumed in many. Hence, one of the most popular web services categories is Language Translation.

There are 3,339 sites on the web that provide some sort of language translation services, according to Alexa. It is a heavily manual task, and if you have experience with Google’s translation service, you probably know that automated translation produces garbage.

The most visited sites in all ‘Translation’ categories, just to give you a flavor of the popularity of these services, which, presumably, confirms demand, are:

1. Worldlingo
www.worldlingo.com – Alexa Rank: 2,014

2. ProZ.com
www.proz.com – Alexa Rank 6,232

3. Lingo24
www.lingo24.com – Alexa Rank 15,306

4. Language and Translation
www.foreignword.com – Alexa Rank 15,591

5. Applied Language Solutions
www.appliedlanguage.com – Alexa Rank 20,581

6. TRADUguide
www.traduguide.com – Alexa Rank 22,540

7. Trusted Translations
www.trustedtranslations.com – Alexa Rank 25,228

8. Betranslated
www.betranslated.com – Alexa Rank 37,651

9. TranslatorsCafe.com
translatorscafe.com – Alexa Rank 40,929

10. SDL International
www.sdl.com – Alexa Rank 64,276

Your opportunity: a Tranlsation SaaS.

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Google Does Joga

Posted on Tuesday, Mar 28th 2006

As the Net buzzes with news and speculation of Facebook’s acquisition offers, check out Joga for a preview of the kind of advertising directions Google is experimenting with. It is also, needless to say, one of their spins on social networking, it is their answer to Yahoo! Groups, and it is also one of their User-generated content plays.

“Joga is an online community created by Google and Nike for anyone anywhere in the world who shares a love for soccer, the world’s most popular sport. Joga is about getting to know your fellow fans; creating games and clubs; accessing athletes from Nike; and enjoying video clips and photos (you can even upload your own). You can strengthen existing friendships and begin new ones, join a wide variety of professional athletes and soccer communities, and even create your own to discuss soccer, exchange tips on the coolest moves, browse through various pitches worldwide, and plan your next game.” … reads the introduction.

Joga is today’s top mover upwards on Alexa, showing a sudden and enormous spike this week.

I like this strategy from Google. This is really the way to do it, and I applaud the move towards branded communities co-sponsored with their advertisers, while folding in social networking and user generated content into it.

Great!

Chowhound Becomes CNet

Posted on Friday, Mar 24th 2006

CNet recently made a very smart acquisition called Chowhound. I had somehow missed this acquisition, and Rafat Ali did not report it on Paidcontent.org, so I guess he missed it too.

Chowhound is a grassroots community for serious foodies, and my friend Leslie Huang has helped them with their accounting for a while. It has been a very, very difficult business to run, and as you will read in the interview below with Jim Leff, the founder, they have been running this operation in the red for about 9 years.

Some statistics:

Alexa Rank: 4,499 .
Reach per Million Users: 120 .
Unique Monthly Visitors: 800,000 .
Impressive numbers?

Listen to this: Zagat’s Alexa rank is 5,255, which means Chowhound is more popular than Zagat.

I have to say, I am thrilled to see this outcome for them. Over the years, Leslie has kept us entertained with new restaurant ideas that she garnered from Chowhound, and many of them were absolutely awesome, unique adventures. Sam Lok, a hole in the wall on Jackson Street, comes to mind as one that was so off-beat and authentic, that it drove my Chinese friend, Joey, visiting from Boston over New Years a few years back, into fits of ecstasy!

Here is an interview with Jim Leff, the founder. I had the pleasure of meeting him once at a Chowhound dinner in Chinatown, San Francisco some years back.

Well, congratulations, Jim, well done!

Viral Islands

Posted on Thursday, Mar 23rd 2006

You have heard this story before. A small application or a piece of content took off on the net and had a major viral effect. MySpace, Facebook, YouTube, BitTorrent, Flickr, Skype … Fred Wilson has written a whole story about this today.

Well, it is the kind of business the VCs are looking for right now : Microcap deals with Viral traction.

Now, there is a bit more of a framework that you can create for yourself, if you are trying to come up with such applications, services, or content.

Think of the segments that are online, always-on, and participate in this sort of viral behavior: Tech Geeks, Teens & Twens, Digital Photo hobbyists, Gadget freaks, and perhaps a few other such large niches. So, by definition, to get the full benefit of your viral effect, you need something that appeals to and leverages, one of these Viral Islands. All the services I mentioned above will nicely fit into one of these categories.

This also means, if you have a service that is outside of these few segments, you will NOT get the immediate benefit of the viral effect. You would need to seed those segments first.

So, if you can put together traffic momentum around a service by boot-strapping & micro-cap’ing, it is relatively safe to say, today, that one or the other VC will fund your Series A.

There is a small fallacy, however, in this investment thesis from the VC point of view, if too many deals get funded on the assumption that let’s build traffic, and the monetization will happen automatically.

Imagine, based on the Teens & Twens Social Networking phenomenon that is getting funded a dime-a-dozen right now (even YouTube is, in effect, a Teens, Twens, and Geeks Social Networking service, via Video sharing) – there will be an overbuild in ad inventory to reach this segment, dropping CPM / CPC / CPA prices down drastically.

Already, there is too much Ad Inventory out there that serves the Tech Geek audience, as well as the Photo enthusiasts, the former because of the success of Blogging, which the techies embraced first, and the second because of the over-funding in the digital photography category.

Rather than being short-sighted and following the crowd, VCs should start thinking about how to seed new segments that are coveted by advertisers, and funding deals that are outside of these early adopter niches.

Don Lucas, God Father

Posted on Saturday, Mar 18th 2006

I have been researching the history of Venture Capital in Silicon Valley, and certain names come up as those of maximum significance.

General William H. Draper Jr. became the first professional West Coast venture capitalist when he founded Draper, Gaither & Anderson in 1958. Donald L. Lucas joined this firm, and led the investment in National Semiconductor, which in turn spawned a good deal of the innovation that followed in Microelectronics.

Don Lucas left DG&A, and started investing on his own in 1967. There after, he became God Father to several of tech’s top entrepreneurs and CEOs, the most notable, difficult and colorful of them being Larry Ellison. Don Lucas, incredible as it may sound, was Larry Ellison’s mentor, and the founding investor and first Chairman of the Oracle Board. Still today, Lucas maintains a Board seat at Oracle, and from what I have heard, Ellison remains ever indebted to him for that seminal career break. It is safe to say that no company has had more impact on Enterprise Software than Oracle.

Don Lucas has also mentored another charismatic CEO: Cadence’s Joe Costello, and was also the Chairman of Cadence’s Board until recently. Joe has called Lucas his “Business Father”. Again, no company has had more impact on EDA than Cadence, and while much of that impact is credited to Joe’s boundless energy and creativity, Lucas remained a strong behind-the-scenes character in that success story.

Finally, Don was an early investor in Authorware in 1988, which later merged with Macromind/Paracomp to become Macromedia in 1992. In the emergence of rich, interactive multimedia, this set of companies have had a tremendous contribution, and once again, the behind-the-scenes touch of Don Lucas, along with the other behind-the-scenes touch of John Doerr, were major factors.

John Doerr’s track-record in venture capital is well-known and much celebrated. Don Lucas, however, has maintained a much lower profile, but continues to score with smaller, but interesting plays such as PDF Solutions, a DFM services play and 51Job, a Chinese job search site, both of which have gone public over the last few years.

At 75, Don Lucas, today, still maintains several Board Seats : Oracle and Cadence amongst them.

I wonder, though, who are the torch bearers of the likes of Don Lucas and Tom Perkins – the great venture capitalists, the great mentors, the great God Fathers?

B:B Advertising’s Holy Grail

Posted on Saturday, Mar 18th 2006

Epocrates sells web-based reference guides packed with medical information that doctors can access on their PalmPilots or Pocket PCs. Why it’s growing? More than half of the nation’s 400,000 physicians use Epocrates guides, which the company updates weekly with current information on everything from drug interactions to treatment recommendations.

Here is an older story by Erick Schonfeld on the company.

The revenue mix comprises of subscription and advertising, the latter because pharmaceutical companies find it a very targeted way to reach the eyeballs of the physicians.

This is an interesting, new trend, whereby, B-to-B advertising is seeking out extremely targeted, verticalized channels, rather than the spray-and-pray models that prevailed earlier.

Epocrates is benefitting handsomely. They have a very narrow niche offering which the target audience finds enormously valuable, and hence their viral, word-of-mouth marketing has been superbly successful.

This would, by and large, be true for all precisely segmented, compelling offerings, and Epocrates is a good case-study to learn from.