Kirsten Osolind who blogs the re:invention marketing blog recently memed me. Like her, I have not posted in a number of days and may soon go dark for another week as I board a cruise with my family tomorrow morning. The venture business is supposed to be sleepy from Thanksgiving and New Years, but not this year. The last time it was like this was in 1999…hmmmm.

In keeping with the Meme Code, five things you don’t (might not) know about me:

1) Born in NYC, raised in La Jolla and live in Chicago. I guess this makes me a former surfer with an attitude that likes cold winters…

2) Spent my summer after sophomore year at Williams at McDonald’s. Worked my way up from burger flipper and fry guy to bin supervisor. Must have been the fine job I did in my burgundy polyester uniform with the trash pooper scooper outside the store on Prospect Avenue (La Jolla’s Rodeo Dr).

3) Was a confused youth as I played 4 varsity sports yet spent many hours playing Dungeons & Dragons, taught Pascal and programmed the original TRS-80 and Apple. I can remember the days when you stored your programs on a cassette recorder back then.

4) I spent my junior summer working on Wall Street where my mother made me wear a stripped sear sucker suit on my first day. My packed NYC subway broke down between stops during a 99 degree day. Luckily my suit was able to absorb the sweat from the two heavy set passengers crushed up against me. I had to walk around for 30 min in my building’s air-conditioned lobby to dry out before going up to meet my new boss. The suit went to the thrift shop very soon there after.

5) Would most like to be like Irving Harris (passed away a couple of years ago). He amassed a fortune from a series of successes (Green Goddess salad dressing, Toni Curls, Pittway, Harris Associates, etc) but his lasting mark was on early childhood development. He created new ways and new institutions to address old problems including the Erikson Institute, the Ounce of Prevention, Zero to Three, the Yale program for Early Childhood, the Harris School of Public Policy at the Univ of Chicago. He was the embodiment of venture philanthropy and showed how those with means & success have a responsibility to help others.

I usually blog either late at work or in my boxers at night (have to check Kirsten’s post above for the relevance here…).

Just so you all don’t think all VC’s are humorless moneymen without souls, I am posting Blueprint Ventures very funny holiday video about Gary Snoman, his snowman empire and becoming a VC. Enjoy.

John Dvorak and the TWIT folks were talking about the cult Ellen Feiss Apple ad. While not under the influence, she has become known as the Stoner Girl as a result of this ad. Pretty funny… In another note, Mac’s new spokes guy, Justin Long, in the Mac/PC ads is going to be retired. I found the ads very funny but it seems that Justin came across as a mean SOB and PC as a lovable victim. This was not Apple’s goal. I am a bit surprised, but expect a new Mac face in the ads…

Quantcast is an interesting "open internet ratings service". Much like Alexaholic is a poor man’s comscore, Quantcast provides demographic information on various websites pulled from their affiliated partners. It will give you a  quick overview, though the accuracy is going to highly variable depending upon the panels and the site.  That said, it is  interesting to get a rough view of who is getting drawn to a specific site. Serious analysis will obviously go to comScore, Nielsen and such for reliable stats.

"You’ve got access to a global creative department of 4 billion people"
— Steve Henry, Exec Creative Director at TBWA

People have always said that you should listen to your customer. Well, with the advent of Web 2.0 technologies, firms are taking this advice literally. I mentioned a while ago that I expected to see more and more "user generated" marketing efforts (still waiting for the exchange). This Superbowl will have 3 ads that have their origin from the masses but with different approaches. Some are running contests for ideas and then will unleash their professional resources on creating a glossy version. Another is running a contest and plans to air the actual spot created by the winner. This approach has be recently labelled "Crowdsourcing" which is kinda like open source for marketing.

TBWA has launched The Big What Adventure at TBWALabs where you can submit ideas for their different clients ranging from campaigns to events. It looks like their first exercise is wrapping up as it is next to impossible to chase down the submission page and it looks like sending in an email with the idea (not very socially friendly…) is the current solution while they revamp the website.

If any of you come across interesting "Crowdsourcing" models or companies, let me know as I have an interest in seeing if someone can make this work. The challenges are getting clients to sign up (agency based…which means getting agencies on-board), getting people to submit and finally putting the tools in place to that the exchange isn’t laced with every wild-haired scheme under the sun.

Young children around the world have seen their parents disappear from their lives in the saddest of circumstances. Perfectly normal, functioning parent have contracted severe cases of Berryitis (also known as Screensucking) and disappeared from everyday family involvement. I am certain we will be seeing TV ads to help support these poor orphaned children… My children have expressed annoyance over my Blackberry usage.

I always knew there was going to be a 12 Step program for this illness. Whitney Tilson (Tilson Funds) sent me the following:

BlackBerry Orphans

The
growing use of email gadgets is spawning a generation of resentful children. A
look at furtive thumb-typers, the signs of compulsive use and how kids are
fighting back.

By KATHERINE
ROSMAN

December 8,
2006; Page W1

There is a new member of the family, and, like all new siblings, this one is getting a disproportionate amount of attention, resulting in jealousy, tantrums, even trips to the therapist.

It’s the BlackBerry.

As hand-held email devices proliferate, they are having an unexpected impact on family dynamics: Parents and their children are swapping roles. Like a bunch of teenagers, some parents are routinely lying to their kids, sneaking around the house to covertly check their emails and disobeying house rules established to minimize compulsive typing. The refusal of parents to follow a few simple rules is pushing some children to the brink. They are fearful that parents will be distracted by emails while driving, concerned about Mom and Dad’s shortening attention spans and exasperated by their parents’ obsession with their gadgets. Bob Ledbetter III, a third-grader in Rome, Ga., says he tries to tell his father to put the BlackBerry down, but can’t even get his attention. "Sometimes I think he’s deaf," says the 9-year-old.

The household tension comes as gadgets like BlackBerrys and Treos — once primarily tools for investment bankers and lawyers — have entered the pantheon of devices, including the TV, the personal computer and the cellphone, that have forcefully inserted themselves into the American home. Research In Motion, the maker of BlackBerry, logged 6.2 million subscribers at the end of the second quarter this year, up from 3.65 million in the same period last year. Palm sold 569,000 Treos in the first quarter this year, up 21% from the same quarter the previous year. The problem has only gotten worse as more devices combine phone and email. Since people rarely leave home without a cellphone, even events that were once BlackBerry-free are now susceptible to office email.

KICKING THE HABIT
Engaging in near-constant BlackBerry checking is similar to acts associated with Obsessive-Compulsive Disorder. We sought advice for curbing the habitual email itch from professionals (12 Step Program Below).

The gadgets are recognizable to young children. A few parents say "BlackBerry" is in their toddlers’ early vocabulary. Lucas Ellin, a Los Angeles 5-year-old, pretends he has his own, parading around the house with a small toy in his hand while shrieking, "Look, Mommy, it’s my BlackBerry!" Earlier this fall, Novelty Inc., a manufacturer in Greenfield, Ind., unveiled its "My Very Own Berry Assistant" toy, available at convenience stores and gas stations under a sign reading, "Just like Dad and Mom’s." The company expects to sell nearly 100,000 units before the end of the year.

‘Very Annoyed’

In Austin, Texas, Hohlt Pecore, 7, and his sister, Elsa, 4, have complicated relationships with their mother’s BlackBerry. "I feel very annoyed," says Hohlt. "She’s always concentrating on that blasted thing." (Hohlt says he picked up the word "blasted" from the film "Pirates of the Caribbean.")

Elsa has hidden the BlackBerry on occasion — Hohlt says she tried to flush it down the toilet last year. Their mother, Elizabeth Pecore, who co-owns a specialty grocery store, denies the incident. But Elsa also seems to recognize that it brings her mom comfort, not unlike a pacifier or security blanket. Recently, seeing her mom slumped on the couch after work, Elsa fished the BlackBerry from her mother’s purse and brought it to her. "Mommy," she asked, "will this make you feel better?"

Emma Colonna wishes her parents would behave, at least when they’re out in public. The ninth-grade student in Port Washington, N.Y., says she has caught her parents typing emails on their Treos during her eighth-grade awards ceremony, at dinner and in darkened movie theaters. "During my dance recital, I’m 99% sure they were emailing except while I was on stage," she says. "I think that’s kind of rude."

Emma, 14, also identifies with adults who wish their kids spent less time playing videogames. "At my student orientation for high school, my mom was playing solitaire," she says. "She has a bad attention span." Her mother, Barbara Chang, the chief executive of a nonprofit group, says, "It’s become this crutch."

Safety is another issue. Will Singletary, a 9-year-old in Atlanta, doesn’t approve of his dad’s proclivity for typing while driving. "It makes me worried he’s going to crash," he says. "He only looks up a few times." His dad, private banker Ross Singletary, calls it "a legit concern." He adds: "Some emails are important enough to look at en route."

Some mental-health professionals report that the intrusion of mobile email gadgets and wireless technology into family life is a growing topic of discussion in therapy. They have specific tips for dealing with the problem, like putting the device in a drawer during a set time period every day. "A lot of kids are upset by it," says Geraldine Kerr, a licensed marriage and family therapist in Morristown, N.J. She says parents need to recognize that some situations require undivided attention. When you shut off the device, she says, "You’re communicating nonverbally that ‘you matter and what’s important to you is important to me.’ "

Still, like teenagers sneaking cigarettes behind school, parents are secretly rebelling against the rules. The children of one New Jersey executive mandate that their mom ignore her mobile email from dinnertime until their bedtime. To get around their dictates, the mother hides the gadget in the bathroom, where she makes frequent trips before, during and after dinner. The kids "think I have a small bladder," she says. She declined to be named because she’s afraid her 12- and 13-year-old children might discover her secret.

Even in the context of close relationships, the issue is thorny. Christina Huffington, 17 years old and the older daughter of the Huffington Post co-founder Arianna Huffington, introduced the topic of her mom’s constant emailing during a session with the family therapist. Her mother carries two BlackBerrys with her at all times. She looks at them while shopping and doing the downward-dog pose in yoga practice. "I had the feeling that my mom never listened to me," Christina says. The therapist advised that the family dinner table be an email-free zone. Still, Christina has her own BlackBerry — a gift from her mother — and she often uses it to communicate with her mom.

For many parents, finding the right balance is a struggle. Although mobile email allows them to attend a soccer game in the middle of the day, it also brings the office into the family room after dinner. In an age of connectedness, they sometimes have trouble disengaging from the office — and many admit they check their messages more often than required. Bob Ledbetter Jr., whose son questions his hearing, agrees that he spends too much time checking his email. The commercial real-estate developer usually turns off his BlackBerry each night around 7:30 but then sometimes finds himself fiddling on his laptop computer. Totally disconnecting during family time "is a discipline I need to learn," says Mr. Ledbetter. "Even though I’m home, I’m not necessarily there."

Parents point out they’re not alone in their habits. Jerry Colonna, father of ninth-grader Emma, says that for her birthday earlier this month, she asked for and received a T-Mobile Sidekick. "She’s obsessively on email now," he says. "Kind of ironic." Emma responds: "I use it a moderate amount."

One of BlackBerry’s biggest defenders, Jim Balsillie, the chairman of Research In Motion, says children should ask themselves, "Would you rather have your parents 20% not there or 100% not there?" Yet he, too, struggles with the issue. His wife tried to keep him off the device after work, asking him to leave it by the front door every night. When he snuck it in his pocket, he feared getting caught.

Chris DuMont, 15, of San Marino, Calif., recognizes that his father’s habit helps bring in income. "Sometimes when we’re on vacation he’ll be on" his device, Chris says. "But the whole reason we’re on vacation is because he’s working."

Part of the blame certainly lies with the corporations that are outfitting their staffs with email devices, creating the expectation that employees will be available and responsive at all times. Still, some professionals have successfully carved time away from email, says Melissa Mazmanian, a fourth-year doctoral candidate at the Massachusetts Institute of Technology’s Sloan School of Management. For her dissertation, Ms. Mazmanian, 31, is studying the patterns of BlackBerry use among nearly 200 bankers, lawyers and employees of a footwear manufacturing company. People with infants and toddlers most actively set aside personal time, and colleagues learned to leave them alone.

More often, intervention is required. Lucas Ellin, the son of "Entourage" creator Doug Ellin, says his dad checks his email at restaurants, during Lucas’s soccer games and on school visits. Lucas sometimes tries to divert his father’s focus away from the device by hiding it or taking his dad’s face in his hands to physically get his attention. When nothing else works, Lucas turns to the highest of authorities. "I go tell my mom that Daddy’s not listening and then my mom yells at him," he says.

Sophie Singletary, the 7-year-old daughter of BlackBerry-driver Ross Singletary, can only dream of the day when she gets to call the shots. "I would say, ‘You can only use the BlackBerry for two hours a day,’ " she says. Then she pauses, and reconsiders: "Oh, actually, make it five minutes!"

—————–

A 12-Step Program for Addicts

By KATHERINE
ROSMAN

December 8,
2006; Page W14

If you work at an organization where no important business is conducted between 7:30 a.m. and 8:30 a.m., is it necessary to check your BlackBerry at five-minute intervals during that period? For many, the word "CrackBerry" has established itself as a regular, albeit humorous, part of their lexicon. But engaging in such "checking rituals" is similar to acts associated with Obsessive-Compulsive Disorder like frequently checking that the lights are off, says Dr. Michael Jenike, a professor of psychiatry at Harvard Medical School.

Users might be clinically considered compulsive if they feel very anxious when they haven’t "completed" the task of checking for new messages, says Dr. Norman Epstein, a professor of family studies at the University of Maryland. After checking email, he says, compulsive people will feel temporary relief but then "will need to check again" soon to temper recurring anxiety.

We sought advice for curbing the habitual email itch from a nearly a dozen professionals — a time-management expert, professors and therapists who specialize in family counseling and Obsessive-Compulsive Disorder. Here are their recommendations:

1. During meals, do not check email.

2. Do not hide your email habits from family members. If you feel that someone would be upset to see you BlackBerrying, it’s a sign that you probably shouldn’t be.

3. Commit to stop emailing while driving (even at red lights), walking across the street or doing anything that requires careful attention.

4. Do not check email for the first hour of the day. In addition to giving you time to leisurely read the newspaper or spend time with your family, the practice will help you shake the tic-like checking ritual.

5. Endeavor to leave the mobile email device in the car or at home when attending any function taking place at your child’s school, or when picking up your child from school.

6. Decide on an email-free block of time. Parents should first assess their child’s conversational patterns — some like to talk about their day immediately after school, others just before bedtime. Even if your child doesn’t seem interested in talking, stick to your promise not to email during that time.

7. Set boundaries at work: Alert your colleagues that your mobile email device will be turned off during the predetermined time slot.

8. Actually turn off your device and stick it in a drawer during the time you’ve designated as email-free.

9. If you are in the middle of a work crisis, still try to respect some boundaries. Consider blocking out a few 15-minute periods to check email — and then turn the device off again. Honestly assess whether the situation at work is an actual crisis that can’t be solved without your oversight.

10. When emailing while socializing or spending time with your family, ask yourself if your priority at that moment is enjoying after-work activities or getting work done. If it is the former, power-down. If it’s the latter, return to the office.

11. Upon arriving home, practice a ritual that helps you mentally separate the work day from the after-work evening. Light a candle, put on music, pour a cocktail. Don’t check your email during this time.

12. If mobile email overuse creates tension between you and your significant other, consider creating jointly agreed-upon BlackBerry-free zones. For instance, unless your bedroom doubles as a home office, consider maintaining it as a sanctuary of your personal life.

The paid search revenue model is very addictive. New companies are launching everyday, leveraging online paid search engines to drive revenue. This obviates the need for bag carrier or other uncertain, high cost sales models. With cheap, commoditized infrastructure, any Joe and their dog can get into the online game. There has also emerged an enormous lead gen industry of players who simply arbitrage between what buyers (Lending Tree, etc) are willing to pay for a lead and what the intermediary has to pay through search, affiliate, etc to get the lead. Several years ago, you could drive a truck through this margin. In fact, while I could never talk anyone into it, I wanted to set up a hedge fund/trading firm targetted solely at profiting from the online efficiencies. Adteractive has built out a massively profitable business doing this for companies and pocketing the differential. It is rumored that after only 3 years, they were doing over $100m in revenue and dropping tens of million in cash flow.

The beauty and the curse of efficient markets is that everyone else has seen this and jumped into the market. Like hedge funds with stocks, one and two man operations are targetting every niche of the web, seeking out arbitrage opportunities. As a result, search has become perhaps the most expensive online acquisition channel, followed by affiliate marketing. Marketing emails to house files are by far the most profitable and efficient channel.

There are economies of scale to search as well. The larger you get and the more you do it, the more efficient you become. To begin with, Google and crew are continually tweaking their models, resulting in dramatic changes in results. You have to stay on top of these changes, especially for organic. On the paid side, companies grow more efficient through experience. They optimize price vs. word vs. position. This allows the bigger to get bigger at the expense of the smaller players. Niche players can do very well in their core areas (these are usually Affiliates who then resell their traffic on an affiliate basis).

However, the days of wine and roses is drawing to a close for the average mom & pop. As more and more of their competitors come online, two things drive the competition. How big the margin on their product(s) are (e.g. how much money do they have to work with) and their conversion rates. People wanting to win the search game need to enter with a margin advantage which gives them more room to bid. More importantly, conversion determines, often, the eventual winner. If we both spend $10 for traffic but you convert twice a well as I do, then you are making twice what I am on that traffic and can bid more aggressively. This creates a virtuous cycle. Landing pages, page layout, web experience as well as branding drive conversion on the sites. Again, more experienced players know best how to optimize their user experience and drive up conversions.

Interestingly enough, during recessions, search becomes much more attractive as rates fall through the floor. We will see what will happen during the next one (many say next year). During these periods, a well run operation can dramatically build up business by taking advantage of lower ad rates.

Like any market, the search market grows more efficient with each day. People begin to look far and wide for new arbitrage opportunities. As our economy continues to heat up and as Web 2.0 players flood onto the scene, this will eventually become an infeasible channel for many players. If you play this game, realize the key levers in the model and act accordingly. In particular, if you are in the lead gen world, move your model, if possible, from pure arbitrage to a more vertical model where you differentiate yourself on different elements. Some players are moving all the way back to owning product and look more like traditional web businesses. They can then leverage the profits of the business to continue feeding their search crack addition.

Good luck…

Chicago was hit by its first hard snow of the winter. American cancelled a lot of its flights from midnight through noon today and the roads are an icy mess (though starting to shape up). Our dog is in second heaven, jumping through the snow and as we shovel the walkways, thinks we are throwing him something and keeps digging into the tossed piles for his prize. The upside of all of this is that everywhere has a beautiful, white blanket which should last for a couple of days.

However, the dark side of this is that we have about 150 feet of Arbor Vitaes which bend over in the snow. If not addressed, it freezes there and permanently harms them. So, I get to go out and whack both sides of the hedges with a broom. I end up covered in snow, soaking wet and suffering a near heart attack from the significant activity over about an hour and a half.

I gave up snow blowing since our driveway is too long and gladly pay $50 for a plow to come through. As I whacked away, I wondered if there wasn’t an invention that could save me from by anguish on the bushes. I could see it selling on Midnight infomercial with the wood chippers, Alpaca’s and Ab Loungers. Email or comment with any suggestions!

Sunday I will go back to a more traditional post about "Google Cocaine" (credit to Sridhar Murthy at our company, TicketsNow, for this).

"No longer can America take for granted its global superiority as a market for capital"
— the Economist

In a recent November 25th article "Down on the Street", the Economist lays out a very compelling analysis and overview of the mess our domestic financial markets are in. As discussed often in this blog, if we don’t address many of the issues plaguing our financial system as it relates to emerging businesses, we will lose our pole position in the global financial world. In fact, for the first time, Europe’s share of the worldwide corporate-debt issuance market surpassed the US. Furthermore, the AIM & LSE have passed the US in terms of % share of worldwide IPO proceeds with Hong Kong nearly dead-even with us. As recently as 2004, the US share was 5-10x that of Europe and Asia.

Some factors are to be expected such as capital and companies electing to stay local versus meeting in the US. However, many factors are self-inflicted wounds ranging from SOX to shareholder litigation abuse to balkanized regulatory oversight to inadequate shareholder rights. My favorite example is where China Life was hit by a shareholder suit within days of its US IPO. While things are heading in the right direction with SOX review, tort reform and the prosecution of the leaches at Milberg, Weiss.

The article is a good read for those interested in this topic and have any desire to ever go public on our soil…

Andy Kessler recently posted a series of posts about his view on the future of media and web. In "Media 2.Uh-Oh", he consolidates the six different posts into one piece. In it, he describes how the media model of old, owning the pipe, has been broken by the wave of new Web 2.0 technologies and the resulting battlefield requires a new set of strategies. In the past, large fortunes were made by controlling the pipe to the end consumer, whether this be phone, cable, newspaper, magazine or cellular. However, today, there is no dedicated end to end pipe. The newspapers have experienced this, video & cable are starting down this path and cellular will enjoy this once dual mode phones hit enmass.

Factors driving this even further are the "layering" of application architectures (web services & AJAX), P2P and low/zero marginal cost internet distribution. He goes into a series of recommendations around establishing virtual pipes (many would call some "networks") and "Going Wide". It is a good read. Enjoy.