Archive for May, 2007
Talk about the collision between commerce and media. Some time this summer, Publicis is going to drive the launch of Honeyshed, self-described as, “MTV meets QVC.” Now, we should all recognize as eloquently stated in this Bubblegeneration blog post, that is actually a redundant statement. Regardless, I bow down to the revolutionary zeal that it had to take for an advertising executive to utter those words. To illustrate, a quick trip down memory lane….
A couple of years ago I was talking to Mitch Oscar, the interactive television guru at Carat. We were talking – as one often does with ad agency executives – about what was cool and what wasn’t. ‘Shopping,’ Mitch said, ‘is not cool. It’s grimy and pedestrian.’ Anyone who has spent time on Madison Avenue knows that that quote encapsulates the conventional wisdom of the advertising world.
So for Andrew Essex to include the ultimate retailer in the description of what most observers are describing (for lack of a better label) as a “branded entertainment” destination is not only astonishing but thrilling. Heck, here he’s even comfortable analogizing the whole concept to a mall. You may accuse me of reading too much into the semantics being used, but this is important stuff. Lots of commentators are riding Bubblegeneration’s coattails in slamming Publicis’ assertion that people love brands, but give Publicis credit for effectively allowing that people do hate advertising and recognize that they are creeping, however cautiously, toward the obvious common ground that people DO love products. Let’s forgive them for now if they still have to call them “brands” in order to continue to justify their own existence.
Admittedly they haven’t been copying me on drafts of the business plan (here’s the definitive article on Honeyshed to date), but I think my biggest fear is that the ambition is too big, that they are biting off too much at once & it will be very difficult to bring it all together in a coherent whole. If I understand it correctly, they will literally be trying to run live content at the same time that they are trying to compete in the ridiculously competitive “viral video” sweepstakes business (both services implying a dedication to a destination vs. giving themselves an easy fallback as a syndication play). And one wonders if the CGM side of things was tacked on at the last minute….have they decided what happens when they get the kind of videos that the NY Times described this past weekend in the CGM area?
If they can keep the aperture tight enough to get some traction, the implications will be vast. For one, it will suggest that agencies can create destinations for their clients and don’t need content providers in nearly the same way that the traditional media business is predicated on. Much more importantly, we’ll learn vast amounts about how wide the span actually is between brand “discovery” (the dream) and the grimy, pedestrian business of retail. Let the show begin….
PS – Haven’t seen anyone else blogging about this, but how about the participation of Smuggler Productions? As noted below, they are also involved in a big way with eBay’s video push. This has to make them the hottest professional production shop in web 2.0. Ah heck, why don’t I just go way out on a limb and predict that eBay will be a launch partner of Honeyshed.
May 31st, 2007
This is another question that I get all of the time and a very misunderstood topic. The easy answer on how to value an angel round is that you probably shouldn’t, as strange as that sounds. The practice of not valuing the angel round has become very prevalent on the west coast and seems to be picking up steam on the east coast. From all appearances, it may be a trend that sticks. So, how does this work?
Instead of affixing a price to the capital, you give it an interest rate (7 – 10% seems to be pretty common at the moment) and allow that interest to ‘PIK’ (or payment-in-kind…it just means that you don’t pay it out in cash, but you allow the interest to be added to the principal amount and to grow the balance over time). At the time of a VC investment, the idea is that the ‘debt’, including all of the accrued interest, will convert into the round at a 10 – 15% discount to the VC pricing. This has several benefits:
a. aligns interests between all parties,
b. allows you to avoid a potentially difficult and time-consuming process with the angels,
c. provides additional assurance that the angels will not get left behind by the VCs.
If this is confusing, fear not. The next post will be a basic explanation of capital structure principles from an entrepreneur’s perspective.
May 30th, 2007
Hi - I just created a new group on Facebook dedicated to Commerce 2.0. If you move quickly you could even be the second member! It’s here
May 21st, 2007
Here’s a link to a great post on early hiring by Luke Sontag that’s up at Found+Read. He focuses on passion as a key differentiator. It’s a great complement to my post below which focuses on leveraging skillsets. For me, the importance of passion in start-ups is that virtually every issue will look insurmountable at first. The appropriate response to “insurmountable” issues in a corporate context is to wait or to try a different direction…to methodically plot your course. In a start-up, you just need to smash blindly against those barriers with everything you’ve got and to enjoy the pain. If the guy beside you is doing it, too, well, that’s the rocket fuel that keeps you going. On the other hand, if one guy is pointing out all of the challenges and going home at 5pm, it can drain the energy out of the entire company. Great post, Luke.
May 17th, 2007
Better start this one with a disclaimer: the New York Times is one of the finest, most credible news organizations in the world. They have super smart people that work like crazy and do a fabulous job walking the complicated ethical boundaries of their profession. The fact that the individual exceptions get so much attention just proves the rule.
But the point of this blog is how fast things are changing on the business side of the media business and how we’re often not appreciating those changes. So I’m going to tell a short story from our past. It’s meant to be illustrative. If it comes off as critical, let’s accept it as being self-critical for our own inability to communicate the future we’ve been seeing.
Eighteen months ago a (very smart) business partner with a (very) big title got excited about what we were doing in the area of ‘advertising as programming.’ And so he said, “you should talk to the New York Times Venture Group and I’m going to make it happen.” What does one say to that other than, “GREAT!”
I have no idea who he talked to & it doesn’t matter. But being the good friend he is, he gave us the direct feedback over the phone a couple of weeks later and it wasn’t good. It ran something like this, “This was a non-starter for them. In fact, there was, well, a shudder of repulsion at the idea of advertising being treated as programming. It’s kind of inconceivable based on the whole mission of the Times and they didn’t even want to entertain it.” As brutal as it was to hear that, I remember not being surprised.
Maybe that’s why, even with all that’s happened in the intervening time, I was still a little surprised to open up paidcontent this morning to see that the New York Times has entered the infomercial business (oh yes, it’s not even that newsworthy…you have to go all of the way to the bottom of David Kaplan’s article to find it). Don’t get me wrong, I think it’s the right thing for them to do. And I don’t think they’ll do it in any way other than a perfectly appropriate one for both marketers and consumers. But don’t get me wrong, the Times, they are a ‘changin.
Update: Apparently I’m not the only to think this is news! Adotas picked up this post and put it in their features section and Hawthorne Media (a leading infomercial producer and media buyer) has even done a videoblog about it.
May 17th, 2007
Hiring is hard. This is a topic that fills books. I ran into an old friend recently on a plane (public company CEO) and he put forward that the second biggest mistake you could make as a senior executive was to hire the wrong person (the first biggest mistake was not firing them as soon as you figured it out). When you’re a little company with limited resources, though, the temptation is to hire the first suitable candidate that walks in the door….your time is limited, the need to get help is acute and you may be feeling a bit humble about your place in the world (assuming your last name isn’t Andreessen or you aren’t funded by Kleiner Perkins). You may be tempted to hire someone who is more of a friend than ideal candidate (with the thinking, “I know them, I can trust them & besides, isn’t being able to make these decisions what having your own company is all about?”).
But this is also one of your first opportunities to show discipline and make a good executive decision. So who should you hire? Well, a key attribute of being an entrepreneur is knowing your own weaknesses. So, start with this hire. Map out the company’s next six months of challenges and hire someone who best complements you in the areas where you are weakest. While I would try to find someone who could stay for the long term, I’d worry less about whether they can scale into a senior position or will always be a role player. Just find that person who will give you the most leverage over the next six months. Someone who can own a set of discrete mission-critical (and everything you do should be mission-critical) tasks for the medium-term.
May 8th, 2007
In the last post, I talked about how we’ve been thinking about the stylization of video content even in commerce context. An article came out today in AdAge that shows how one very important company has thought through the same issue: eBay.
A couple of weeks ago, eBay announced here that they were going to let users start creating links to videos they had created to sell their products.
But that was, as they say, the least of it. As AdAge reports, eBay hired CAA who hired Smuggler Production who are creating 200 videos which are already inspiring other sellers to create their own videos. In addition, Smuggler is creating short videos about successful product sales. While today users are only allowed to link to the videos (and the links are kind of hard to find), soon eBay will move to full hosting.
All of the videos I’ve been able to watch (or read about) have been done with a strong emphasis on entertainment over information. The videos will also apparently attach to the seller’s profile after the sale is complete (as opposed to, say, similar products). So the purpose of the video appears to be about raising the profile of the creator / seller and branding more than a “seeing is believing” approach to selling. In theory, that fun patina should rub off on the eBay brand.
I like it. It’s very complementary to other examples of the “media / commerce” collision which we’ve started to cover here.
BTW – Here’s a link to another to a blog called “dot.com to dot.bomb and beyond”. Peter concludes by wondering whether eBay will buy Expo. Hmm….hasn’t come up yet.
May 8th, 2007
ExpoTV, the Leading Video Provider of Consumer Generated Product Reviews, Crosses 55,000 “VideopinionsSM” Reviews Created by Members
NEW YORK – May 1, 2007 – ExpoTV (www.ExpoTV.com), a fun, fast way for real people to connect, share and celebrate the products they are passionate about, today announced the expansion of their Web site offerings. To dramatically improve the conversation between consumers, the community experience on ExpoTV is being enhanced with a series of innovative social networking components. Recent programs have been embraced by the ExpoTV community with the company passing more than 55,000 Videopinions reviews in its product review catalog. Click here to read more.
May 1st, 2007
