Sexy Widget

Video is up from SF New Tech

There are videos up for each demo from the Widgets up the Wazoo 2 event - click through if you want to watch  Gigya, iWidgets, Widgetbox, Zembly, or MuseStorm demo their latest stuff.

Reblogging with Disqus: It's all about the river

I have come to believe that if its not in the main column, it gets ignored. A river of content, is what it seems most people want to consume

Originally posted as a comment by fredwilson on A VC using Disqus.

CNET vs. Widgetbox: Are Widgets Running Out of Steam?

If you're into widgets, I recommend taking some time and going through these two posts:

CNET's discussion of the maturing of the widget space, and Widgetbox's CEO Will Price's response.

The CNET article seems to use the terms "widgets" and "applications" interchangeably, which is a bit misleading, but for the article is well researched with a number of quotes from companies like Slide and RockYou.

I found the discussion of whether the term "widget" is falling out of favor to be pretty fluffy:

That means some companies are stepping away from the word "widget" altogether because it can imply a fleeting, lightweight commodity. Slide, for example, in recent months changed the language on its Web site and stopped trying to explain to advertisers what a widget is, according to the company's director of communications. It now describes the company as a maker of "social entertainment applications."

This reminds me a lot of the trend for companies to remove the ".com" from their name towards the end of the last boom to try and imply more stability. 

My take is that this is PR folks trying to justify their jobs - what we call the stuff is a peripheral issue at best.

Will Price makes the point that the fragmentation of the web, which is the driver of the widget phenomenon, shows no signs of abating:

On the web, will access to users concentrate like retail sales or will the very different economics of digital allow for mililions of front-doors to users and an even balance between providers of syndicated content and services and their “distributors.”  We are clearly betting on the latter.

Regardless of who won this particular debate, I am sensing mounting pressure from the media, the investor community, and the entrepreneurs themselves for widgets to begin delivering more than just reach.

I feel like the widget honeymoon is over.

The Widget Rush to B2B

The inflation and pop of the first Internet bubble went something like this:

- Excited about the cost savings of an online store versus a traditional “bricks and mortar” store, a bunch of entrepreneurs built ecommerce sites
- As venture funding poured into the space, entrepreneurs got more specialized (“your online store for ballpoint pens!”)
- As it became apparent that there weren’t enough users or sales to support all these ecommerce sites, those companies who still had resources raced to transform their businesses into B2B – selling / licensing their technology to established companies that could pay real money
- Long sales cycles, a shaky economy, and the tightening of venture purse strings doomed most of these companies
- The bubble burst

Are we seeing a similar cycle in the widget space?  Like ecommerce, the promise of widgets (at least from a marketing perspective) has a lot to do with cost benefits over an incumbent system – it’s cheaper to let your users distribute your message than it is to pay for your own distribution.  And like the ecommerce example, increasing competition and venture funding is leading to increased specialization. 

The other night I was moderating Widgets up the Wazoo 2, and things were rolling along.  The demos were great, the reach numbers cited by the companies were huge, and there was a lot of energy in the room.

Then PJ Gurumohan of Genwi stood up and asked a question that went something like this:

“So if Gigya is doing 150M pageviews per month, and at best, you can expect edge CPM of a $1 or so at most, that translates to monthly revenue of $150K, which is an annual run rate of under $2M.  Is that really a venture business?”

The crowd went silent.  A chill came over the standing room only crowd.  Somewhere, a baby whimpered.

Ori Soen of MuseStorm happened to be at the microphone, and he paused before recovering gracefully.  “No, wait, your math is wrong.  They’re not doing 150M pageviews per month, they’re reaching 150M uniques per month – that translates to billions of pageviews.”

With that, the crowd gave an audible sigh of relief, the music and buzz returned, and the party was back in full swing.

But what went unsaid was that PJ’s point still held true – even if he was off by a factor of 4,6,8 or whatever. 

Along with Clearspring, Gigya is one of the runaway successes in this space in terms of achieving reach.  If even the biggest players in the widget platform / ad network space struggle to get to meaningful revenues on $1 CPMs (which is probably optimistic), where does that leave the rest of the widget ecosystem?

This is why I think we’re seeing the rush to provide widget related tools to big, profitable companies with significant marketing budgets.  MuseStorm is now a tool that targets agencies.  KickApps goes primarily after enterprises.  Sprout and iWidgets seem to be targeting their widget tools towards enterprises and agencies.

A while back, there was a lot of talk that traditional BizDev might be dead.  That your API and your widgets could do your BizDev and sales for you.

This may have been a little premature – from where I’m sitting, sales and bizdev remain crucial channels, especially as revenue expectations start to come due.

To reference back to my original dot com cycle, are we now at the stage where there is a mad rush for B2C widget companies to reinvent themselves as B2B service providers?  It sure looks that way.

But there some important differences between 2008 and 2001.  Enterprise clients are far more savvy about the distribution potential of the Internet than they were in 2000, which should shorten sales cycles.  And the proliferation of APIs make integration and implementation much easier than they were in 2000.  And last but not least, startup costs have come down which should give a longer runway for companies to figure out the revenue side of the equation.

I remain optimistic about the widget space, but would caution folks from being too ideological about their business model.  Free distribution with ads layered on top is not going to work for everybody because of the massive reach required.  Licensing and agency work can deliver real revenue, but may not achieve the reach for a homerun exit.  Hub & Spoke is cool, but it needs to be done in a way that the hub is not competing against the hosts of the spokes.  The good news is that many of the pioneering companies in this space – Clearspring, Gigya, MuseStorm, Widgetbox – are starting to devote more resources to figure out the revenue side.

Sprout Announces Fankits, Partnership with Sony

Sproutbuilder is going to B2B with their widget publishing tool.  At least that's how their latest announcement regarding their Fankits product reads to me.  Here's a snippet from there Press Release:

FanKits enable entertainment and media companies to connect and promote their branded content to consumers by allowing fans to create and share branded widgets within social media sites.

They also announced a deal with Sony to use Sproutbuilder to help movie fans create and distribute movie related widgets.  While the economics of this deal weren't released, when I read "branded widgets," I deduce that these are pay deals.

This is a departure from the free distribution / run an ad network on top business model that is being used by companies like Clearspring and Gigya, and also puts Sprout in direct competition with companies like KickApps, MuseStorm, iWidgets, and Gydget.

Congratulations to the Sprout team on the latest release and Sony deal.

Disqus Updates

Disqus has a new release out, and it looks like they've been busy.  Today they announced a Wordpress plugin, an API, and some UI changes to Disqus.com.

The Wordpress plugin does a couple of things:

• it allows blog comments to be stored locally (which is key for SEO)
• it allows bloggers to synchronize legacy comments with Disqus comments on their Wordpress blog
• it allows bloggers to import legacy comments to Disqus

Note: There is still an SEO problem here, but instead of an indexability issuue, it's a duplicate content issue.  Blogs that use Disqus will be competing in the eyes of Google as to who is the original source of the blog comment content - the blog, or Disqus.com

The API allows blogger / developers to build more robust, seamless integrations using Disqus.

And the UI changes primarily involve a shift in emphasis on the commenter profile page from a typical profile, to a river of that person's comments from around the Web.

I have a couple of reactions to these moves, in no particular order:

• I love that Disqus is offering Wordpress bloggers the ability to import their legacy comments to Disqus.  Disqus clearly has big plans for Disqus.com and compiling the most complete database of comment content on the web in a central location seems to be a good move.

• The Disqus.com profile tweaks hint at the influence of investor Fred Wilson.  At a recent keynote at a WidgetWebExpo conference, Fred began his slides with a picture of a flowing river, and the words "I am increasingly obsessed with the concept of a river of content."  Disqus.com profiles are now a river of commenting content from around the web.  Standard profiles are a dime a dozen - it makes perfect sense that Disqus profiles should highlight Disqus' bread and butter - a river of blog comments.

• Competition is a good thing.  JS-Kit's Khris Loux has been hammering Disqus on pursuing a lock-in strategy with an implicit message of "you can stop using Disqus at any time, but you will lose all of your blog comments."  The Disqus Wordpress plugin starts to address these portability related concerns.

• Disqus.com is getting dev resources, and clearly plays a big part in Disqus' future.  Hub and Spoke anyone?

• These were not trivial changes and Disqus is not a big team.  These guys are getting after it.

For more coverage, see this excellent Mashable write-up as well as the Disqus blog.

Widget Event Recap

Those of you who made it to the sold out Widgets up the Wazoo 2 (sfnewtech) last night - which I had the pleasure of moderating - saw a great show.  From top to bottom, the demos were superb.  Not only did we have top tier companies on the bill, but we actually had the founders of Gigya, iWidgets, Widgetbox, and MuseStorm represented in the lineup.

Here's a quick recap:

Glam Media, the events sponsor, kicked things off with some slides.  Sadly, they ran out of time for the demo portion, though Myles graciously gave them another minute as "they were buying the drinks." 

Gigya Founder and CEO Eyal Magen then gave a quick demonstration of some of Gigya's widget infrastructure / distribution tools.  He showcased an implementation that they had recently done for Coca-Cola, and highlighted Gigya's big traction (150MM unique viewers last month) and ease of implementation.  I found his discussion of how Gigya stays on top of changing destination platforms interesting (e.g. what happens when MySpace changes their platform in the middle of the night and suddenly the "add to MySpace button" doesn't work any more) - apparently they rely on a combination of around the clock human monitoring, combined with automated tools.

Peter Yared from iWidgets went next, and demonstrated how iWidget's publishing tool could be used to convert an RSS feed of RateItAll reviews into a Facebook and / or MySpace application.   Peter was able to build a nice looking FB application, complete with newsfeed story integration and the ability for other RateItAll members to plug in their own RateItAll name to create their own personalized app, in about three minutes.  I think iWidgets won the "gee whiz" award of the night with its flurry of live dragging and dropping.  Also interesting is the iWidgets revenue model - they only charge for clicks back to the host site (CPC), as opposed to impressions (CPM).

Giles Goodwin from Widgetbox continued the demo, by taking the RateItAll reviewer app that Peter had just created with iWidgets, and dropping it into the Widgetbox gallery.   He then demonstrated how this page served as a showcase and launchpad for the app,  both in terms of organic search and distribution buttons.  I was sorry that Widgetbox CEO (and former Hummer Winblad partner) wasn't there so I could ask him "What's to keep Google from doing this."  Will was very gracious when my company pitched him at Hummer Winblad, but it still would have been fun to turn the tables on him :)

Ori Soen from MuseStorm was next, and he demonstrated MuseStorm's widget publishing tool that allows you to easily pull in different elements such as video, polls, ratings, and more.  On the output side, MuseStorm supports the iPhone, in addition to big properties like Facebook and MySpace.  MuseStorm partners with Gigya for distribution and the tool has been specifically built for agencies.

The final demo was from Todd Fast, CTO of Zembly.  Zembly is a private beta social application publishing tool with a couple of twists - not only is the output social, but the publishing itself is social.  Developers collaborate using Zembly's framework.  Unlike the MuseStorm and iWidgets tools which try to emulate PowerPoint, there is a bit of lightweight coding involved in using Zembly's tool.  One other interesting / unusual thing about Zembly is that they are wholly owned by Sun Microsystems, giving them some advantages (and disadvantages) versus traditional startups which Todd spoke very candidly about.

My favorite demo of the night was the iWidgets / Widgetbox tag team.  Peter and Giles were able to show how to take an RSS feed of user activity, turn it into a slick looking, social application, and prime it for distribution in under ten minutes.

After the demos, I caught up with a few interesting folks including Michael Chin from KickApps, Niall Kennedy (sign up for Widget Summit now!), Mani Iyer from quiz site Kwanzoo, Tom Hicks from Caachi, and PJ Gurumohan from feed company Genwi.

I think a good time was had by all, and many thanks to Myles for pulling the event together.

Here are the results of the audience ratings in terms of favorite demo:

A Few Thoughts on the Funding Process

I sat on a panel a few weeks ago at SD Forum about term sheets – it was called “Term Sheet Negotiations – Do’s and Don’ts.”

I was the sole entrepreneur on the panel.  I was joined by David Rolf from VantagePoint Ventures, and two attorneys – Kerry Smith from DLA Piper, and Mark Fumia from Davis Wright Tremaine.  The panel was moderated by Shai Goldman from Silicon Valley Bank.

Just about all of the attendees were entrepreneurs.  Ostensibly, they were there to learn the finer points of term sheet negotiation.  What the terms meant, which terms were the most important, and what were some tactics in securing the best deal for your company.

But in speaking with some of the entrepreneurs afterwards, it seemed that the elephant in the room was “How do I get my company funded?”

I don’t claim to be an expert in getting funded.  I’ve gone through three financings, and I feel that each one was a struggle.

But I can pass on what I know.  If you flash back six months to my situation, my company RateItAll was a bootstrapped, one man band with no active advisors.  We did have a product though, we did have revenue, and we did have some traction.  However, even with those three things, we were still unfundable.

So what I did was to talk to folks more knowledgeable than me and come up with a list of things that would reduce the obstacles to funding.  My plan was to go down the list, check the boxes, and see where it got me.

So here’s my funding checklist in no particular order.  Obviously, some folks, based on reputation, history, or luck won’t need to fill all these boxes.  But if you’re like me, you will.

Team – one man bands are unfundable.  Not only is there is too much risk to the investor, but it also raises questions as to why the entrepreneur has been unable to sell his idea to anyone else.  How do you expect to sell investors if you can’t sell well enough to build a team?  You have to be prepared to give out a big chunk of equity to find the right folks and skills to round out your team.  In my case, a two person founding team enough, but you’re probably not going to go wrong with a founding team of three or four.  Obviously, a team made up of folks who have successfully launched and sold startups before helps a lot.

Get known – Make yourself findable, public, and transparent.  Write a blog.  Hit the networking events.  Help other entrepreneurs out.  Get involved with the local meetups.  Help out at conferences if you can’t get speaking gigs.  Get the name out there.  This is where living in the SF Bay Area is such an advantage.

Advisors – If you don’t know a lot of investors personally, having an advisor who does is the next best thing.  Finding the right advisors was critically important to our funding, as all of our investors came via advisor introductions.

Product – There’s a handful of folks out there who can get funded on an idea and a few slides.  I don’t know any of them personally, and I’m not one of them.

Traction – See my comment on product.

Other Signals of Quality – your law firm, your company collateral, mentions in the tech blogs, well known people / companies that user your product / service

Some of these boxes will be easier to check than others, but my sense is that working methodically through this list will reduce the barriers to getting funding. 

Good luck out there – despite what you hear about bubbles and the abundance of “dumb money,” raising funding is never easy from my experience.

Getting to Know Intense Debate

I find the blog commenting space to be one of the most fascinating battlegrounds on the web right now.  If you are trying to build a distributed business, there's much to be learned from the trials and tribulations of companies like Disqus, JS-Kit, and Intense Debate as they attempt to build out a footprint by pushing a feature to existing blog communities. 

I've written extensively about how I believe that there are all sorts of features that can be won on a cross domain basis.  By studying the pioneers in blog commenting addressing issues such as the SEO-ability of content, less than friendly host platforms, login, and universal profiles, perhaps providers of other cross domain features can gain a leg up.

Intense Debate is a company that I don't know very well, probably because they're not local to SF.  They came out of TechStars (Colorado's version of Y Combinator) and is often evangelized by Brad Feld. 

Here's an interesting interview with Intense Debate founder Jon Fox on Center Networks.

Widgets up the Wazoo: Part Two

I'm moderating what is shaping up to be another excellent widget panel on Wednesday night in San Francisco on behalf of SF New Tech.  Check out the line up:

iWidgets
Peter Yared, Founder & CEO
iWidgets helps you produce social widgets so your users can show off their activity. Whether it’s recipes, outfits or comments, their friends will want to clickthrough and see what’s up!  http://www.iwidgets.com

Widgetbox
Will Price, CEO
Widgetbox helps people express, connect, create and inform using web widgets that can be easily shared and distributed anywhere on the web. http://www.widgetbox.com

Musestorm
Ori Soen, Founder & CEO
MuseStorm provides the one platform for agencies, brand marketers, and entertainment companies to produce, manage, analyze, and deliver widgets that extend their brand message into social and viral environments.  http://www.musestorm.com

Gigya
Eyal Magen, Co-Founder & CEO
Gigya helps publishers and advertisers increase reach and engagement, distributing widgets to any platform and providing powerful social features to any website.  http://www.gigya.com

Zembly
Todd Fast, CTO
Zembly helps you easily create and host social applications of all shapes and sizes, on the most popular social platforms on the web. . . along with other people.  http://www.zembly.com

I think there are still tickets left - if you make it, please come up and say hi.