7 ms·

What Has Changed

151 points by hboon 14y ago

mark_l_watson 14y ago
Small comment on cost of developing simultaneously for iOS, Android, and the web: it still seems to me that for the majority content rich sites that HTML5 universal platform web apps are the way to go. I don't like to install a lot of apps on my Android phone and iPad so I may not accurately reflect the market at large.
- tomjen3 14y ago
  I agree with the second point. Who wants to install an app for every bloody site one visits? Techcrunch is almost impossible to browse from an iPad because they blast those overlays in your face.
- chimeracoder 14y ago
  I agree - single-purpose applications are only necessary if you want to take advantage of functionality beyond what a typical browser provides... which is a very small fraction of apps on the market. News publications tend to be the worst with this - if all I want to do is read your content, I'd rather just visit your mobile site, especially if you put all your resources into iOS/Android/etc. solely behind designing a good site. Sometimes, it seems like we're back in the 90s, developing for three different platforms (browsers) simultaneously... except we've regressed even more, because even less code is shared between the platforms (and now the server logic may even need to be tweaked to support all clients). The more things change, the more things stay the same....
  - rhizome 14y ago
    It's a sad sign of overselling in the web-development industry when every podunk newspaper wants me to install some discrete app for their site, usually covering the page with a modal popup, which causes me to hit the back button and not visit their site at all.
- m0nastic 14y ago
  I'm just a single data point in the opposite direction, but any site that I go to frequently that has an app, I'm almost certain to prefer interacting with it via the app. If the app is just a crappy webview to their site, then no, but I tend to ignore those sites altogether.
MatthewPhillips 14y ago
Wish he had touched on the rate at which consumer-oriented startups are failing. My perception is that the success rate is going down, and we only have huge success stories (Pinterest, Kickstarter) and failures. I'm counting acquihires as failures because we just don't know. But my perception might be wrong. We do know that only a tiny minority of apps are making any money in the App Store, and the move from the web to phones must mean there are fewer successful web startups as well.
- jpdoctor 14y ago
  > I'm counting acquihires as failures because we just don't know. I'd add: During tech bubble v1, the acquihire deals stopped as the many failures put significant amounts of talent on the market. For example: Salaries for IC designers quickly rationalized.
  - fredwilson 14y ago
    that would be a wonderful thing if it were to happen
- fredwilson 14y ago
  we haven't seen that yet although i suspect you are right. we tend to stick with our portfolio companies longer than we maybe should so it will take a while before we see what the failure rates are. in our 2004 fund, which is pretty mature now, the failure rate was about 33%, which is what we model it out to be at the start of a fund
ohashi 14y ago
It's interesting to see someone claim the costs of starting up are rising. That's a monumental shift in the trend of the last 10(?) years.
- cargo8 14y ago
  Yes, but the reasons are somewhat different. If anything, startup costs have gone down with technology costs and as access to technology increases. The problem now is that with the great saturation of these consumer web startups, and the "startup-gold-rush" mentality of everyone trying to start a company, the "bar" has been set much higher for an acceptable product. It's no longer good enough to have an app that works, it must work, and be beautiful, and be cross-platform, and use the cloud, and have social integration, and ...
  - fredwilson 14y ago
    yes, and the cost of developing for iOS, Android, and web at the same time
    - ohashi 14y ago
      Do you expect costs to continue to rise, stabilize or decrease in the next 5-10 years and why?
      - fredwilson 14y ago
        i think they will start to go back down once we make developing for mobile easier
  - Silhouette 14y ago
    It's no longer good enough to have an app that works, it must work, and be beautiful, and be cross-platform, and use the cloud, and have social integration, and ... Or maybe (he writes, donning his HN-proof flamesuit) having genuinely innovative ideas actually does matter. There are plenty of people around here who keep saying it's the execution that counts, launch with a MVP because you need data so you can pivot, what matters is having a great team, and all that. I'm sure there is some element of truth in all of those things, but most of the "businesses" based on that philosophy seem to build something obvious that a thousand other people thought of and any 15 year old geek could do in a weekend, and then act all surprised when they don't become the next Facebook. If these are the kinds of people who are approaching VCs with a view to serious funding, it's hardly surprising that most of the ones that don't have literally the best execution in a market with hundreds or thousands of plausible competitors will fail. To me, it seems crazy today to even try going after mass-market, low-level consumer services. There's far more money in B2B unless you really make it to the top in B2C, which you are extremely unlikely to do even with a fantastic offering. And if you are happy to settle for a business that is merely very lucrative rather than the next Facebook/Google, you can do very well in B2C with a good idea in just about any specialised field, where the market is not every consumer in the world but the people in the market really want what you're offering because it genuinely benefits them in some way that nothing else did before. [Edit: I see Fred is posting here, so I'll mention that it would be interesting to know how many of the companies VCs take on tend to be in that latter category these days. Is specialist B2C just too small for VC-style deals to make sense most of the time?]
cletus 14y ago
For me this post read like it was skirting around the issue. I have an enormous amount of respect for Fred Wilson but you have to remember that when a VC writes something, it's not only what they think; they're doing it for a reason. Take Chris Dixon's post [1] as an example. He's now a VC. He wants to diminish the stigma around talent acquisitions. Why? Because that's how VCs get paid in the vast majority of cases. Those big wins when a company goes public are pretty rare. Big acquisitions? Also relatively rare. Most are 1x-5x "bailouts" I would guess. Paul Graham's most recent essay [2] was excellent but remember this site exists as a funnel for YC finding teams and companies to invest in. So, to address Fred's points: > 1) the consumer web has matured This is a strange argument. It wasn't mature 2 years ago? 3? Twitter and Pinterest (which he mentions) did get a "standing start". > 2) the consumer is moving from desktop/web to mobile/app The trend in recent years has been for startup costs to be going down. $50,000 can buy you a lot of Web development and hosting these days. Labour costs (engineers) are probably going up. Everything else is much cheaper. Mobile seems to buck this trend. I imagine the cost of developing a Web site plus apps for Android and iOS is significantly more expensive. Well it must be by definition because you still need the Web site (in most cases). It's partly why people will target one platform first (typically iOS). > 3) the momentum/late stage investors have moved from consumer to enterprise This is a symptom and it seems to be the elephant in the room that Fred isn't mentioning: the consumer Web space is crowded. To draw from PG's essay, enterprise has both the "schlep" and "unsexy" factors going for it and it's an area that, depending your market, can be hard to penetrate but also far easier to get paying customers. It's hard to extract money from consumers except for three things: games, advertising and, to a certain extent, hardware. I've thought for at least 2-3 years that if I were to start a startup it'd be somewhere in enterprise space. The fact that VC funding is, according to Fred, going there too just confirms that. > But it is a tougher time for early stage consumer internet companies than I have seen since the 2001-2004 time frame. This to me was the strangest point of all. 2001-2004 were on the whole terrible. But it's still way cheaper now making bootstrapping just that much more viable than it ever was 10 years ago. To me this is just more evidence that we're not in a bubble because the VC "market" is acting quite rationally. For every Instagram there are a hundred failures and many more acqui-bailouts. Yet many people--too many people (IMHO)--are working on shit that just doesn't matter ("it's a social network... for cats!" as the cliche goes) in a very crowded space and most are going to be disappointed. What I believe Fred is doing here is signalling that he (and by extension USV) are interested in non-consumer startups. They don't want to come out and say "we're not interested in consumer startups" as that'll put them at a disadvantage when it comes to funding hot startups/teams. I agree: enterprise and even infrastructure (particularly cloud-related infrastructure) seem to have stronger opportunities than consumer web (IMHO). [1]: http://news.ycombinator.com/item?id=4825418 http://news.ycombinator.com/item?id=4825418 [2]: http://news.ycombinator.com/item?id=4806852 http://news.ycombinator.com/item?id=4806852
Animus7 14y ago
If I were to blndly guess at an underlying phenomenon, it would be what I've come to call "app pollution" for lack of a better term. More and more money is being thrown at an ever increasing amount of new apps, and many of which operate on huge losses as long as user numbers remain high. From the other side, entrenched players (twitter, facebook, youtube, big media) are scrambling for ever more aggressive ways to jam themselves into people's lives to hopefully extract revenue and meet the growth shareholders demand. All of this is being pushed onto a market that has a limited attention span for all of this crap being thrown at them (and a lot of it is pure crap). The result is less and less consumer loyalty, dwindling revenues for everyone, increasing disillusionment on the part of investors, and ever more ridiculous expectations on the part of users: "$1.49 for an app I use every day and that cost at least $50K to develop? I dunno, feels like a premium price." It's different from the first bubble in that there is actually a lot of non-immaginary value flying around this time, and eveyone is readily embracing the internet and related tech. But there's also more and more crap. There's just too much pollution on the web and in every app store, and it's starting to smell. Strangely enough, I think there might be a startup idea somewhere in there.
- rhizome 14y ago
  There is an entire historical tranche of business oriented toward commodification, which I believe is what we're seeing applied to internet functionality as a whole. All kinds of services with nothing much behind them, to the point that business models are being based upon not much more than a Rails gem and force of personality.
fatbird 14y ago
We are thesis driven to the core. We believe in what we believe in, for good or bad. And that is large networks of engaged users that have the power to disrupt big markets. This seems like a trivial true-ism, and utterly useless as a strategic guide, yet he cites it as their core thesis. I read the whole thing, and I'm still not sure he said anything concrete. There were lots of bits that seemed concrete [1], but on pausing and thinking about it for a moment, they all seemed to be of the variety "There's more blue than red, but don't forget there's some green there too." ETA: I don't intend to crap on the linked article; I'm sincerely struggling with my intuition that there's very little light for all the heat in VC pronouncements. During my startup experience I continually heard sage bon mots like "it's a move-fast environment." Okay, how fast? Are there move-slow environments? [1] Cletus' post above does a good job singling out statements that appear concrete but are either literally non-sensical, or just trivial a=a observations.
- fredwilson 14y ago
  we think it is very useful as a strategic guide. if you think of etsy, twitter, lending club, workmarket, pollenware, and kickstarter, you might struggle to understand why they all fit our investment thesis it is because they are all networks that are large and growing and disrupt big markets (twitter - news, etsy - sale of artisinal goods, kickstarter - the studio model in entertainment, lending club - consumer lending, pollenware - working capital finance, workmarket - contingent labor)
  - fatbird 14y ago
    I see how those examples fit the model of a community of engaged users that disrupts an existing business model built on a larger but much more passive community of users. What I have trouble seeing is the contrasting model where a startup is trying to build a user community that isn't highly engaged, or isn't trying to disrupt a big market. Would you mind giving an example or two of someone you rejected along those lines, or does your strategic guide cut differently than I'm expecting?
    - fredwilson 14y ago
aresant 14y ago
I think the missing #4 "What's Changed" in this article is that the consumer web is NOT monetizing as quickly as expected. If you look at Fred's UVC portfolio for "Consumer Web" I would hazard that their three largest are Twitter, Tumblr, & FourSquare. Each of these companies is currently making massive pushes to "monetize" their consumer web bases: For example: FourSquare is only @ $2m/yr & hires first VP of Revenue (1), Tumblr hires new head of global ad sales & Fred Wilson defends rev model (2), Twitter infuriates developers, pushes new ad units (3) That story is playing out all over the consumer web right now, including at Facebook. Pulling from a GigaOM article "Wilson thinks sites should follow Twitter’s lead and ensure ad content is the form of an atomic unit that mimics the native content – a tweet on Twitter, a video on YouTube and so on." Each of the portfolio companies he's involved in are embracing that model. But as an observer it seems that while the inclusion of "atomic" ad units is certainly a good solution, they're not going to fetch anywhere close to the price of Google's search inventory - eg the Holy Grail of monetization - so there's got to be less excitement as VCs watch these #s unfold. (1) http://www.businessinsider.com/foursquares-revenues-valuation-2012-11#ixzz2DGGgPFgT http://www.businessinsider.com/foursquares-revenues-valuatio... (2) http://gigaom.com/2012/11/07/is-tumblr-the-new-geocities-vc-fred-wilson-says-no-points-to-ads/ http://gigaom.com/2012/11/07/is-tumblr-the-new-geocities-vc-... (3) http://www.telegraph.co.uk/technology/twitter/9481987/Twitter-seizes-more-control-over-tweets-in-advertising-push.html http://www.telegraph.co.uk/technology/twitter/9481987/Twitte...
- fredwilson 14y ago
  i think you are right that the social web will not monetize as well as search. btw - foursquare's VP Revenue hire was its first, not a new one.
  - aresant 14y ago
    Edited, thanks for the note -
  - qeorge 14y ago
    Of course not - with search ads the consumers and the advertisers interests are aligned. The ads add value. With social the ads are always a distraction. At best its serendipitous. Its the difference between selling vegetables at a farmers market vs a roadside stand. No matter how pretty the stand it will never beat the market full of customers who came there to buy.
enko 14y ago
This article could basically be retitled "Clueless VC belatedly realises all these companies without business models will probably not make any money after all". I mean seriously. This is what's wrong with capitalism, where undeserved windfall gains are the norm. Companies we invest in have to show they are able to make money! Wow, how revolutionary.
- deleted 14y ago
  [deleted]
- DenisM 14y ago
  Your post is inflammatory. Compare it to other posts in this thread, and you will see that you're detracting from the conversation, not adding to it.
  - timrpeterson 14y ago
    why does it have to compare to other posts? why can't it be inflammatory? i think it adds to the conversation
  - enko 14y ago
    Thanks for pulling me up on that. You are right. I think I had something to add, but the way I chose to do it was not constructive. I'm still learning and I really appreciate guidance like this.
itsprofitbaron 14y ago
I agree with this post to some extent however, I still believe that there is a lot of space on the "web" especially in the likes of ecommerce, education, small/medium enterprises, advertising & of course International which has opportunities in all of those sectors as well as others. However, looking at USV's latest investments[1], posts as well as Fred's posts especially this one, it is appears they prefer enterprise startups[2] BUT they are still interested in consumer startups as long as they have a transactional or high intent ad business model. [1] Pollenware, DuoLingo, DuckDuckGo, Dwolla, Funding Circle etc [2] http://www.usv.com/2012/08/networks-and-the-enterprise.php http://www.usv.com/2012/08/networks-and-the-enterprise.php
deleted 14y ago
[deleted]
wilfra 14y ago
"there is a large pool of money in the venture capital asset class that is opportunistic, momentum driven, and thesis agnostic. this pool is driven largely by the public markets." Mixed in all of the fluff is the real answer, though worded vaguely. What this means is that Zynga, Facebook and Groupon tanking in the stock market is the reason. That is What Has Changed.
trotsky 14y ago
It all sounds pretty defensible and true, but it mostly just boils down to facebook being underwater. venture partners are herd animals, tried and true.

151 points by hboon 14y ago

Small comment on cost of developing simultaneously for iOS, Android, and the web: it still seems to me that for the majority content rich sites that HTML5 universal platform web apps are the way to go. I don't like to install a lot of apps on my Android phone and iPad so I may not accurately reflect the market at large.

tomjen3 14y ago
I agree with the second point. Who wants to install an app for every bloody site one visits? Techcrunch is almost impossible to browse from an iPad because they blast those overlays in your face.
chimeracoder 14y ago
I agree - single-purpose applications are only necessary if you want to take advantage of functionality beyond what a typical browser provides... which is a very small fraction of apps on the market. News publications tend to be the worst with this - if all I want to do is read your content, I'd rather just visit your mobile site, especially if you put all your resources into iOS/Android/etc. solely behind designing a good site. Sometimes, it seems like we're back in the 90s, developing for three different platforms (browsers) simultaneously... except we've regressed even more, because even less code is shared between the platforms (and now the server logic may even need to be tweaked to support all clients). The more things change, the more things stay the same....
- rhizome 14y ago
  It's a sad sign of overselling in the web-development industry when every podunk newspaper wants me to install some discrete app for their site, usually covering the page with a modal popup, which causes me to hit the back button and not visit their site at all.
m0nastic 14y ago
I'm just a single data point in the opposite direction, but any site that I go to frequently that has an app, I'm almost certain to prefer interacting with it via the app. If the app is just a crappy webview to their site, then no, but I tend to ignore those sites altogether.

MatthewPhillips 14y ago

Wish he had touched on the rate at which consumer-oriented startups are failing. My perception is that the success rate is going down, and we only have huge success stories (Pinterest, Kickstarter) and failures. I'm counting acquihires as failures because we just don't know. But my perception might be wrong. We do know that only a tiny minority of apps are making any money in the App Store, and the move from the web to phones must mean there are fewer successful web startups as well.

jpdoctor 14y ago
> I'm counting acquihires as failures because we just don't know. I'd add: During tech bubble v1, the acquihire deals stopped as the many failures put significant amounts of talent on the market. For example: Salaries for IC designers quickly rationalized.
- fredwilson 14y ago
  that would be a wonderful thing if it were to happen
fredwilson 14y ago
we haven't seen that yet although i suspect you are right. we tend to stick with our portfolio companies longer than we maybe should so it will take a while before we see what the failure rates are. in our 2004 fund, which is pretty mature now, the failure rate was about 33%, which is what we model it out to be at the start of a fund

ohashi 14y ago

It's interesting to see someone claim the costs of starting up are rising. That's a monumental shift in the trend of the last 10(?) years.

cargo8 14y ago
Yes, but the reasons are somewhat different. If anything, startup costs have gone down with technology costs and as access to technology increases. The problem now is that with the great saturation of these consumer web startups, and the "startup-gold-rush" mentality of everyone trying to start a company, the "bar" has been set much higher for an acceptable product. It's no longer good enough to have an app that works, it must work, and be beautiful, and be cross-platform, and use the cloud, and have social integration, and ...
- fredwilson 14y ago
  yes, and the cost of developing for iOS, Android, and web at the same time
  - ohashi 14y ago
    Do you expect costs to continue to rise, stabilize or decrease in the next 5-10 years and why?
    - fredwilson 14y ago
      i think they will start to go back down once we make developing for mobile easier
- Silhouette 14y ago
  It's no longer good enough to have an app that works, it must work, and be beautiful, and be cross-platform, and use the cloud, and have social integration, and ... Or maybe (he writes, donning his HN-proof flamesuit) having genuinely innovative ideas actually does matter. There are plenty of people around here who keep saying it's the execution that counts, launch with a MVP because you need data so you can pivot, what matters is having a great team, and all that. I'm sure there is some element of truth in all of those things, but most of the "businesses" based on that philosophy seem to build something obvious that a thousand other people thought of and any 15 year old geek could do in a weekend, and then act all surprised when they don't become the next Facebook. If these are the kinds of people who are approaching VCs with a view to serious funding, it's hardly surprising that most of the ones that don't have literally the best execution in a market with hundreds or thousands of plausible competitors will fail. To me, it seems crazy today to even try going after mass-market, low-level consumer services. There's far more money in B2B unless you really make it to the top in B2C, which you are extremely unlikely to do even with a fantastic offering. And if you are happy to settle for a business that is merely very lucrative rather than the next Facebook/Google, you can do very well in B2C with a good idea in just about any specialised field, where the market is not every consumer in the world but the people in the market really want what you're offering because it genuinely benefits them in some way that nothing else did before. [Edit: I see Fred is posting here, so I'll mention that it would be interesting to know how many of the companies VCs take on tend to be in that latter category these days. Is specialist B2C just too small for VC-style deals to make sense most of the time?]

cletus 14y ago

For me this post read like it was skirting around the issue. I have an enormous amount of respect for Fred Wilson but you have to remember that when a VC writes something, it's not only what they think; they're doing it for a reason. Take Chris Dixon's post [1] as an example. He's now a VC. He wants to diminish the stigma around talent acquisitions. Why? Because that's how VCs get paid in the vast majority of cases. Those big wins when a company goes public are pretty rare. Big acquisitions? Also relatively rare. Most are 1x-5x "bailouts" I would guess. Paul Graham's most recent essay [2] was excellent but remember this site exists as a funnel for YC finding teams and companies to invest in. So, to address Fred's points: > 1) the consumer web has matured This is a strange argument. It wasn't mature 2 years ago? 3? Twitter and Pinterest (which he mentions) did get a "standing start". > 2) the consumer is moving from desktop/web to mobile/app The trend in recent years has been for startup costs to be going down. $50,000 can buy you a lot of Web development and hosting these days. Labour costs (engineers) are probably going up. Everything else is much cheaper. Mobile seems to buck this trend. I imagine the cost of developing a Web site plus apps for Android and iOS is significantly more expensive. Well it must be by definition because you still need the Web site (in most cases). It's partly why people will target one platform first (typically iOS). > 3) the momentum/late stage investors have moved from consumer to enterprise This is a symptom and it seems to be the elephant in the room that Fred isn't mentioning: the consumer Web space is crowded. To draw from PG's essay, enterprise has both the "schlep" and "unsexy" factors going for it and it's an area that, depending your market, can be hard to penetrate but also far easier to get paying customers. It's hard to extract money from consumers except for three things: games, advertising and, to a certain extent, hardware. I've thought for at least 2-3 years that if I were to start a startup it'd be somewhere in enterprise space. The fact that VC funding is, according to Fred, going there too just confirms that. > But it is a tougher time for early stage consumer internet companies than I have seen since the 2001-2004 time frame. This to me was the strangest point of all. 2001-2004 were on the whole terrible. But it's still way cheaper now making bootstrapping just that much more viable than it ever was 10 years ago. To me this is just more evidence that we're not in a bubble because the VC "market" is acting quite rationally. For every Instagram there are a hundred failures and many more acqui-bailouts. Yet many people--too many people (IMHO)--are working on shit that just doesn't matter ("it's a social network... for cats!" as the cliche goes) in a very crowded space and most are going to be disappointed. What I believe Fred is doing here is signalling that he (and by extension USV) are interested in non-consumer startups. They don't want to come out and say "we're not interested in consumer startups" as that'll put them at a disadvantage when it comes to funding hot startups/teams. I agree: enterprise and even infrastructure (particularly cloud-related infrastructure) seem to have stronger opportunities than consumer web (IMHO). [1]: http://news.ycombinator.com/item?id=4825418 http://news.ycombinator.com/item?id=4825418 [2]: http://news.ycombinator.com/item?id=4806852 http://news.ycombinator.com/item?id=4806852

Animus7 14y ago

If I were to blndly guess at an underlying phenomenon, it would be what I've come to call "app pollution" for lack of a better term. More and more money is being thrown at an ever increasing amount of new apps, and many of which operate on huge losses as long as user numbers remain high. From the other side, entrenched players (twitter, facebook, youtube, big media) are scrambling for ever more aggressive ways to jam themselves into people's lives to hopefully extract revenue and meet the growth shareholders demand. All of this is being pushed onto a market that has a limited attention span for all of this crap being thrown at them (and a lot of it is pure crap). The result is less and less consumer loyalty, dwindling revenues for everyone, increasing disillusionment on the part of investors, and ever more ridiculous expectations on the part of users: "$1.49 for an app I use every day and that cost at least $50K to develop? I dunno, feels like a premium price." It's different from the first bubble in that there is actually a lot of non-immaginary value flying around this time, and eveyone is readily embracing the internet and related tech. But there's also more and more crap. There's just too much pollution on the web and in every app store, and it's starting to smell. Strangely enough, I think there might be a startup idea somewhere in there.

rhizome 14y ago
There is an entire historical tranche of business oriented toward commodification, which I believe is what we're seeing applied to internet functionality as a whole. All kinds of services with nothing much behind them, to the point that business models are being based upon not much more than a Rails gem and force of personality.

fatbird 14y ago

We are thesis driven to the core. We believe in what we believe in, for good or bad. And that is large networks of engaged users that have the power to disrupt big markets. This seems like a trivial true-ism, and utterly useless as a strategic guide, yet he cites it as their core thesis. I read the whole thing, and I'm still not sure he said anything concrete. There were lots of bits that seemed concrete [1], but on pausing and thinking about it for a moment, they all seemed to be of the variety "There's more blue than red, but don't forget there's some green there too." ETA: I don't intend to crap on the linked article; I'm sincerely struggling with my intuition that there's very little light for all the heat in VC pronouncements. During my startup experience I continually heard sage bon mots like "it's a move-fast environment." Okay, how fast? Are there move-slow environments? [1] Cletus' post above does a good job singling out statements that appear concrete but are either literally non-sensical, or just trivial a=a observations.

fredwilson 14y ago
we think it is very useful as a strategic guide. if you think of etsy, twitter, lending club, workmarket, pollenware, and kickstarter, you might struggle to understand why they all fit our investment thesis it is because they are all networks that are large and growing and disrupt big markets (twitter - news, etsy - sale of artisinal goods, kickstarter - the studio model in entertainment, lending club - consumer lending, pollenware - working capital finance, workmarket - contingent labor)
- fatbird 14y ago
  I see how those examples fit the model of a community of engaged users that disrupts an existing business model built on a larger but much more passive community of users. What I have trouble seeing is the contrasting model where a startup is trying to build a user community that isn't highly engaged, or isn't trying to disrupt a big market. Would you mind giving an example or two of someone you rejected along those lines, or does your strategic guide cut differently than I'm expecting?
  - fredwilson 14y ago

aresant 14y ago

I think the missing #4 "What's Changed" in this article is that the consumer web is NOT monetizing as quickly as expected. If you look at Fred's UVC portfolio for "Consumer Web" I would hazard that their three largest are Twitter, Tumblr, & FourSquare. Each of these companies is currently making massive pushes to "monetize" their consumer web bases: For example: FourSquare is only @ $2m/yr & hires first VP of Revenue (1), Tumblr hires new head of global ad sales & Fred Wilson defends rev model (2), Twitter infuriates developers, pushes new ad units (3) That story is playing out all over the consumer web right now, including at Facebook. Pulling from a GigaOM article "Wilson thinks sites should follow Twitter’s lead and ensure ad content is the form of an atomic unit that mimics the native content – a tweet on Twitter, a video on YouTube and so on." Each of the portfolio companies he's involved in are embracing that model. But as an observer it seems that while the inclusion of "atomic" ad units is certainly a good solution, they're not going to fetch anywhere close to the price of Google's search inventory - eg the Holy Grail of monetization - so there's got to be less excitement as VCs watch these #s unfold. (1) http://www.businessinsider.com/foursquares-revenues-valuation-2012-11#ixzz2DGGgPFgT http://www.businessinsider.com/foursquares-revenues-valuatio... (2) http://gigaom.com/2012/11/07/is-tumblr-the-new-geocities-vc-fred-wilson-says-no-points-to-ads/ http://gigaom.com/2012/11/07/is-tumblr-the-new-geocities-vc-... (3) http://www.telegraph.co.uk/technology/twitter/9481987/Twitter-seizes-more-control-over-tweets-in-advertising-push.html http://www.telegraph.co.uk/technology/twitter/9481987/Twitte...

fredwilson 14y ago
i think you are right that the social web will not monetize as well as search. btw - foursquare's VP Revenue hire was its first, not a new one.
- aresant 14y ago
  Edited, thanks for the note -
- qeorge 14y ago
  Of course not - with search ads the consumers and the advertisers interests are aligned. The ads add value. With social the ads are always a distraction. At best its serendipitous. Its the difference between selling vegetables at a farmers market vs a roadside stand. No matter how pretty the stand it will never beat the market full of customers who came there to buy.

enko 14y ago

This article could basically be retitled "Clueless VC belatedly realises all these companies without business models will probably not make any money after all". I mean seriously. This is what's wrong with capitalism, where undeserved windfall gains are the norm. Companies we invest in have to show they are able to make money! Wow, how revolutionary.

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DenisM 14y ago
Your post is inflammatory. Compare it to other posts in this thread, and you will see that you're detracting from the conversation, not adding to it.
- timrpeterson 14y ago
  why does it have to compare to other posts? why can't it be inflammatory? i think it adds to the conversation
- enko 14y ago
  Thanks for pulling me up on that. You are right. I think I had something to add, but the way I chose to do it was not constructive. I'm still learning and I really appreciate guidance like this.

itsprofitbaron 14y ago

I agree with this post to some extent however, I still believe that there is a lot of space on the "web" especially in the likes of ecommerce, education, small/medium enterprises, advertising & of course International which has opportunities in all of those sectors as well as others. However, looking at USV's latest investments[1], posts as well as Fred's posts especially this one, it is appears they prefer enterprise startups[2] BUT they are still interested in consumer startups as long as they have a transactional or high intent ad business model. [1] Pollenware, DuoLingo, DuckDuckGo, Dwolla, Funding Circle etc [2] http://www.usv.com/2012/08/networks-and-the-enterprise.php http://www.usv.com/2012/08/networks-and-the-enterprise.php

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wilfra 14y ago

"there is a large pool of money in the venture capital asset class that is opportunistic, momentum driven, and thesis agnostic. this pool is driven largely by the public markets." Mixed in all of the fluff is the real answer, though worded vaguely. What this means is that Zynga, Facebook and Groupon tanking in the stock market is the reason. That is What Has Changed.

trotsky 14y ago

It all sounds pretty defensible and true, but it mostly just boils down to facebook being underwater. venture partners are herd animals, tried and true.