Paul Elosegui – Page 7 – EUCAP Capital Partners

Achilles Heel of Web2.0 and A-List Blogs: Attracting the Mainstream

Many web2.0 companies, blog networks, and even A-list bloggers are struggling to generate sales. But, being popular among bloggers is not generating the wished for revenues. Enthusiast bloggers are currently too few, notoriously fickle, and do not buy everything they sample.

The essentials to keep in mind for web2.0 ventures are three, in order of importance

Provide value to the Client: a value proposition for the client – makes or saves him money
Clients have money and an immediate need
Be Unline the rest – better than the alternatives in some way

Early adopters, unfortunately, do not behave like Clients with Money – often on a sampling spree as they delight in trying free samples of many different products

A mainstream niche, shown in the figure, must be part of a startups vision right from the beginning. A startup’s initial clients will likely be early adopters who help bootstrap the company, and do the viral marketing, but at some stage the startup must cross into a mainstream customer segment, and leave early adopters behind.

Enthusiast blog readers and early adopters are essential for viral marketing, but are ultimately a means to an end, before maintream readers arrive.

Another much debated issue is uniqueness: Differentiation is essential for strong growth. But if demand outweighs supply, differentiation can be secondary. Many a life-style company makes a living, and provides employment for its staff, without significant differentiation.

A good breakdown of 11 Suggestions For Not Being a Dot-Bomb 2.0

Google to Locate its Mobile Innovation in London

London is to be the hub for mobile innovation for Google, Deep Nishar, Google’s director of wireless told Times Online. Mr Nishar has no doubts about the size of the global mobile market:

“You only have to look at the global trends for mobile use and PC use to see where our business is going,” said Mr Nishar. “In India, mobile-phone ownership outweighs PC ownership by a ratio of two to one. And there are five million more mobile-phone users coming online every month. By the end of this year there will be more mobile phones in India than in America.

In Britain there is one mobile phone for every person, while in some parts of Scandinavia mobile ownership is almost double that rate. “Looking at these numbers, it becomes very obvious that in the future people will want to access information on the web with a device they carry with them.

According to Mr Nishar, Google is reorganising the way it presents search results on the internet to conform better with mobiles. The research is badly needed as Google’s current mobile search service lags behind others in quality.

Google’s biggest problem is that the mobile search index is not populated with native xhtml (WAP 2.0), mobile content, but rather by wap 2.0 translations of normal web pages. The resulting mobile content served from Google caches is poor to the point of unusable.

Enclick provides mobile weather forecast service, which is one of only a handful in the world. Yet Google has trouble ranking and prioritizing a quality weather forecast in its mobile search, serving a cached translation of html content instead.

It is time to move onto the full WAP2.0 standard.

Make a donation to Yellowiki

Yell Limited have accused Yellowikis of “Passing Off”. The largest publisher of yellow pages directories in the world have written to Paul Youlten (co-founder of Yellowikis) saying they believe Yellowikis is

“plainly purporting to be associated with (Yell)” and “this amounts to a misrepresentaion… which may result in third parties associating (Yellowikis) with our client (Yell)” … “The continued presence in the market of your website will cause substantial damage to (Yell’s) good will and reputation”.

Yell’s solicitors are demanding that:

the Yellowikis site is shut down
control and ownership of the domain name is passed to Yell
compensation is paid to Yell for loss of profits
Paul and Rosa agree never to set up another competitor to Yell

In true creative commons style, Rosa & Paul Rousen are raising funds to cover the legal fees to fight yell.com’s cease and desist threat. As of today, they have covered over £1000 of the £1750 needed to cover.

Nick Denton Struggling to Monetise with the Early Adopter Market

Nick Denton’s closure of two of his blogs in his blog media network has caused outrage among some of the blogosphere purists. A classic response from early adopters, who often ignore profit-loss concerns in the object of their affection.
We have had similar responses among our online communities, for instace the enthusiast members of our online financial information forum.
Many web2.0 companies, blog networks, and even A-list bloggers are struggling to monetise their brand asset. But, being popular among the early adopter consumer segment rarely generates the wished for revenues. Early adopters are too few, notoriously fickle, and do not buy everything they sample.
Crossing the chasm between the enthusiast and the mainstream users is an exercise in targeting, sub-segmenting and lots of patience.
It may take a year or two for blogosphere early adopters to be outnumbered by arriving mainstream users. Then the blogosphere will cease to be shocked by the reality of a profit-loss statement. Even smartmobs need to eat.

Huge turnout at Chris Anderson’s Long Tail Talk

Over 80 people turned up to hear Chris Anderson talk on his “Long Tail” theme. A testament to how many people earn a living from the “Long Tail” – which includes several of our investment portfolio companies; i.e. product feeds to promote your long tail and dynamic page indexer for your product catalogue long tail.

Chris Anderson - Long Tail talk

Thanks to Ian Forrester for organizing the event.

Yell.com Threatens to Shutdown Yellowikis

David versus Goliath story; an example of monster corporation taking advantage of the current
pro trademark and copyright legislation to kill off a startup. Picked up from Ross Mayfield’s Weblog: Yell Threatens to Shut Down Yellowikis.

Yell.com is already under investigations for monopoly abuse of the directories market in the UK. Yell.com recently bought TPI, yellow-pages Spain, to maintain market growth in spite of Office of Fair Trading investigations in the UK. The architypal incumbent ex-state monopoly.

Yellowikis is a yellow page service in wiki format. Rosa Blaus suggested to her father, Paul Youlten, that they set up Yellowikis after she noticed small businesses were deleted from Wikipedia for not being “encyclopaedic”.Yellowikis has been growing at 8.7% month-on-month and has 494 editors and about 5,000 articles listed.

Yell is demanding that Paul and Rosa close down the website, transfer the domain names to Yell and agree to pay damages to Yell for loss of profits. Yell made $2.4bn in 2005, whereas Yellowikis had a loss of $500. The $500 was used to print T-shirts promoting Yellowikis at the Wikimania conference in Frankfurt.

Yellowiki can argue jurisdiction, since Yellow Pages is not a trademark in the U.S. It is, however, a trademark in the U.K. It would be interesting to see the verdict on geographic jurisdiction from whatever international court arbitrates this case. I hope WIPO does not get involved since, from past experience, they bias towards encumbents.

Given the dubious nature of the yell.com case, Paul and Rosa may survive the cease-and-desist and its subsequent arbitration with a little legal help from a Creative Commons institution, and digital rights activitists at the EFF.

Lifestyle Companies – The Scourge of VC Portfolios

In a moment of weakness marketing guru Seth Godin muses that “So, what’s wrong with small business?”. In VC culture, stable no growth companies – or lifestyle companies – are disaster investments little better than bankruptcies.
Barings Bank observed in a recent review of startup investments that 20% of companies developed into substantial profitable businesses, 20% failed and lost all equity, and 60% drifted sideways often regressing to life-style businesses for a small group of owner-managers.
The fact is that an investor, bank or VC fund, does not inject money into a business to improve the founders life-style and status. A VC fund usually has a 5 to 7 year window in which to realize the value of their investment. Investors want growth, preferably in multiples of 10. Life-style companies clutter up a portfolio, and require investors to negotiate a buy-out with managers. Not quite bankruptcy, but not much better.
However, ultra-growth comes at a price always. No pain, no gain. Or in financial notation, no volatility – no return. Startup owners have to suffer through extreme risk and volatility in order to accomplish growth. Life is easier and safer for the small business owner, happy with his place in the status quo.
But is safe not risky ? With increasingly dynamic markets, globalization, a stable life-style company can have some nasty surprises as competitors, with greater economies of scale, descend on its little niche. Everybody has to acquire an appetite for change, either gradual or in big lumps. Small companies are not what they used to be.

Net Neutrality Threat Puts Central Internet Hubs Under Pressure

Sovereign House in Docklands, one of the Enclick server sites, also houses the London Internet Exchange (LINX). The biggest internet hub, or Internet exchange point (IXP), in the world. The internet traffic resulting from 95% of UK internet users shunts through the LINX IXP as it transits to and from 200 ISP companies. Traffic peaks routinely exceed 100 Gbits.

Almost half of the total Internet routing table is available by peering at LINX. The LINX “collector” router contains some 57,000 routes which are obtained purely by peering with LINX members.

The Docklands Internet Exchange Point is the most central internet hub in the world, with least degrees of separation from any server or user on the internet.

LINX is a mutual, not-for-profit organization jointly owned by more than 200 members, both ISPs and content delivery service providers, from the UK, mainland Europe, the USA, Africa and the Far East. The picture shows the view outside its Sovereign House datacenter.

As a common infrastructure point, LINX also acts a common discussion and regulation point between content and telecom companies. For the good of the internet is one of its central tenets. An example of this vision is LINX lowering of fees for small ISP to connect to the central internet hub.

LINX’s future is in peril though, whether it survives will depend on how it navigates the Net Neutrality debacle. Telecom companies are to acquire the right to charge for transit as well as delivery of internet traffic.. Transit points like LINX have so far been exempt from commercial interests, as all traffic was treated equally. From the moment tariffs can be levied legitimately on traffic transit, internet hubs become commercial battlefields.

Is Electronic Trading the Future of Advertising Buy ?

Jonathan Wall, Marketing Director at the top online electronics store in the UK dabs.com, explained at Internet World 2006 that his marketing team is now composed principally of web analytics experts who are constantly trading on the screens for the best prices and return on investment for their advertising spending.With revenues in excess of €300m and an online marketing budget rumoured to in excess of €25m, can the dabs.com web analytics team be the future model of marketing teams?

Jonathan’s vision could not be more different from the traditional marketing department, with its one-stop-shopping of TV upfront and the big-media lunch circuit. Compared to the accountability forced onto internet marketing, the TV advertising industry is wasteful, untargeted, irrelevant, and ultimately damned irritating to your customers.

advertising screen web analytics trading

The change has similarities with the modernisation of financial market trading. Traditional buying and selling of financial assets was based on open outcry system. The prices at which customers were able to sell their assets depended on a chain of human interaction which ended in the open outcry buying and selling trading pit.

The open outcry system was plagued by inefficiencies, trader cartels which pre-arranged price and articificially increased price spreads and margins for the traders and banks. As a result the price spread, difference between the buy and sell price for the clients and suppliers was large.

Talented traders could read their fellow traders and manipulate larger spreads for themselves.

Most of these human intermediaries have been taken out of modern financial trading. Open outcry trading has become mostly extinct, replaced by electronic trading. The buy sell spreads, and the cost of trading have dropped dramatically.

The inefficiencies and huge cost of face to face trading has been replaced by zero overhead direct screen trading. The client has real-time access to real prices and can trades directly with suppliers.

Google Adwords bidding is a copy of financial screen trading. Though the spread, the margin retained by Google is still a large inefficiency, that will come down as other online advertising networks, like Yahoo Search Marketing start to compete on more level basis.

The world of advertising is heading towards a big change. Gone are the days of inefficiency and un-accountable media channels. The new trading in advertising buy is electronic and transparent, and completely accountable.

Lord Saatchi:”Ruthless Clarity in Branding”

For decades, Lord Saatchi has been an icon of the advertising and marketing industry in the UK. The company he co-founded with his brother, Saatchi & Saatchi, is notorious for managing the conservative government comeback in the 80s and 90s. Baron Maurice weighs in on the death of the TV-industrial complex with insightful tips for brand owners

TV Advertisign at its worst will be killed off by the internet

With the fragmentation of media, TV adverts are no longer having any impact, only the efficient, the brutally concentrated thought will survive.

Only the most brutally simple ideas will be survive in the complexity and confusion of the digital marketplace.

Its the modern equivalent of having the best site on the high street, except the location is in the mind.

Precision is better than greed The strongest brands are defined by their ownership of one thought; it is best to be unique and precise in owning one word than overlapping in concept with others through greed.
Favorite word: Simplicity
the new generation of digital consumer multi-tasks and has a brain programmed to edit ruthlessly

Biggest marketing problem in the 21st century, people’s protective filtering from media intrusion; Malcom Gladwell’s “Blink”, Seth Godin’s “All marketers are liars”.

Media fragmentation can be navigated by Unifying your Brand Concept and Meaning. It doesnt matter what the medium is that carries the message.

Advertising agencies struggling with ever fragmenting media and demographics can use the “One Word” Simplified-Brand as a Unifying concept which clarifies, redefines and re-unites their target audience again. Demographics is about meaning, a Word, a Concept and less about channels and age-groups.
Reminds me of the Daniel Pink’s “The Concept Age”

Broadcast advertising will remain a dominant feature of the overall advertising landscape provided

Simplicity will save TV advertising. Strong simple concept will punch trough the media noise and save TV advertising.
Mmmm….not sure about this one.

Damn, he is good; there is life left in the old dog yet. Maurice’s “one-word” branding and strategy has similarities with Seth Godin’s uniqueness, “subsubsegmenting” and nicheing thesis. Lord Maurice is a little unclear on the mechanics and detail of how to segment the demographics. But he states that select the word and meaning right, and segmentation takes care of itself.

For an old dynasour of the TV-industrial complex, with an estimated $600m made from TV advertising and marketing, he is not resting on his laurels. Seth Godin should make him an emeritus member of his fabled Big-Moo-33 for evolving above and beyond any need to.