The most interesting fact is that 56% of Windows users visit this blog direct or via a google search whereas only 46% of Mac users get here by those two methods.

That 10% difference is offset by a much higher percentage of visits from Mac users coming from links on Twitter, Google Reader, Hacker News, Techmeme, Facebook, FriendFeed, Disqus, and several other services.

There are a few services that weight heavier with Windows users, like delicious, stumbleupon, and Yahoo Search (which is barely used by Mac users).

This community is a leading edge geek community so it's dangerous to make too much of this data. But I think it is safe to say that Mac users are more likely to jump on new services like Twitter and FriendFeed more quickly than Windows users. And it is also true that tech news junkies who hang out at places like Hacker News and Techmeme are more likely to be Mac users than the average news junkie.

The Twitter data is particularly interesting to me. Over 10% of Mac visits to this blog come from Twitter, whereas that number is only 5% for Windows users. That's a big difference and I'm not entirely sure what to make of it. I wonder if Twitter's user base skews Mac way more than the Internet as a whole?

Thoughts?

And then I went on to explain why that is the right way to think about the VC business.

I am revisiting that post today because I love what Marc Andreessen and Ben Horowitz had to say about their new firm in the announcement on Marc's blog yesterday. They laid out eight core values/organizing principles of the Andreessen Horowitz venture firm in that post. And number three is:

That's right. Our job is to support the entrepreneurs. You got that right Marc and Ben. The VC industry is changing. New firms with new values are sprouting up replacing older firms who saw themselves in different lights.

I'll say it again. The venture industry is not broken, but some of the participants in it are.

The topic is, you guessed it, how to make money on the Internet. The way they are going to bring this topic to life is put three local entrepreneurs, the founders of Picnik, Animoto, UrbanSpoon, together with three so-called experts, me, Mike Arrington, and Damon Darlin. The entrepreneurs are going to talk about the ways they make money and the so-called experts do the color commentary. The whole thing will be moderated by Glenn Kelman, CEO of Redfin who will keep us honest and the conversation moving. It sounds like a fun format.

Even better, the event is outside in a park and they've got a cash bar:

When: July 9, 2009, 6:00 – 7:30 p.m. panel, 7:30 - 9:30 party

Where: Olympic Sculpture Park Pavilion, 2901 Western Avenue, Seattle

• Damon Darlin, New York Times
• Fred Wilson, Union Square Ventures, AVC
• Michael Arrington, TechCrunch
• Jonathan Sposato, CEO, Picnik
• Brad Jefferson, CEO, Animoto
• Glenn Kelman, CEO, Redfin
• Ethan Lowry, Co-Founder, urbanspoon

The event is sold out (sorry for the delay in posting this news). Here's a link to a page with the best info on the event.

I don't get to Seattle very often and I'm there for a few days of vacation with the Gotham Gal so I won't be doing any meetings when I am in town, but I am very excited to be taking part in this Naked Truth event. If you live in Seattle, I hope I see you there.

The FT piece says:

There was no dubbing by me. In March 2006, I wrote a post called My Favorite Business Model in which I outlined the freemium concept and I asked the readers to help me give it an easy handle. The word Freemium was not coined by me. It came from Jarid Lukin, who at the time was working for Alacra, a company I am on the board of. Fortunately, we've got Wikipedia which has got the story straight.

Now let's talk about freeconomics. I don't believe everything will be free on the Internet. There will be plenty of paid business models. For example, if you want to watch Major League Baseball games live over the Internet, you'll pay for that. If you want to use services like the FT and the WSJ frequently (more than 10x per month), you'll pay for that. If you want to watch HBO over the Internet, you'll pay for that. If you want a Twitter desktop or mobile client, you might pay for that too.

But we also must recognize that the cost of delivering many services over the Internet has decreased significantly from what it cost to deliver them in the analog world. The marginal cost of delivering a piece of content is approaching zero. But the total cost of delivering content on the Internet is far from zero. My partner Albert wrote a great post about this last week. He said:

The price of watching a stream on Youtube is zero.   With marginal cost zero and marginal benefit zero, from a perspective of maximizing total social (net) benefit, free is the right price because it does not preclude any video that could possibly have benefit from being viewed.  That does not mean that free is sustainable because it obviously doesn’t help cover the total cost.

And, as Albert recognizes at the end of his post, this debate is not entirely about economics. It is about the value of various participants in the content ecosystem.

Gladwell got pretty negative on Anderson and his book in the New Yorker piece. He said:

It would be nice to know, as well, just how a business goes about reorganizing itself around getting people to work for “non-monetary rewards.” Does he mean that the New York Times should be staffed by volunteers, like Meals on Wheels? Anderson’s reference to people who “prefer to buy their music online” carries the faint suggestion that refraining from theft should be considered a mere preference. And then there is his insistence that the relentless downward pressure on prices represents an iron law of the digital economy. Why is it a law? Free is just another price, and prices are set by individual actors, in accordance with the aggregated particulars of marketplace power.

These are the anti-freeconomics arguments we hear from the likes of Andrew Keen and his ilk. Lambasting file sharers and entrepreneurs who rightly recognize that free is the right way to build market share on the Internet might be fun and make certain people feel good. But it's ignorance of a fundamental fact. And that fact is that free, ad supported media works best on the Internet. We have seen it again and again. I'm not going to even give examples.

Once you have built that audience, you can deliver upsells via freemium models, you can monetize it via advertising and you can branch out into other services which are easier to monetize. This post by Silicon Alley Insider on Facebook's revenues this year is instructive:

Earlier this week, we spoke to several sources who each have some insight into Facebook's financials (none of them know precisely). Taking the sources' input together, we'd estimate the company's expected 2009 revenue this way:

• $125 million from brand ads
• $150 million from Facebook's ad deal with Microsoft
• $75 million from virtual goods
• $200 million from self-service ads.

These numbers are similar enough to others that I have heard that I feel comfortable republishing them here. Facebook has 200mm+ monthly active users worldwide. Let's say they are doing $50mm per month in revenue. That's a revenue per monthly active user of $0.25. Low for sure, but enough to operate at breakeven. And I expect the self service ads and the virtual goods revenues to grow strongly in the next year, more than making up for the likely loss of some of the $150mm from the ad deal with Microsoft.

And the next move for Facebook is to generate transaction revenues with its payment service and off site ad and transcation revenues from its Facebook Connect service. I'm pretty confident that Facebook can take its revenue per monthly active user to at least $0.50 and maybe higher in the coming years.

Facebook is a perfect example of freeconomics at work. A woman who works for a major media company was in my office recently. She quoted her CEO as saying "why doesn't Facebook just charge a monthly subscription fee, they'd be making money hand over fist?". Well I believe that if Facebook did that, they'd be vulnerable to other networks offering a free service. And certainly not every one of those 200mm+ users are going to cough up a monthly subscription. But by offering a friction free service, they have built a powerful and growing network that they are now starting to monetize in various ways and that they will monetize even further in additional ways. And they are super hard to compete with because they are free.

I like to keep my posts short, so I'll end here with the observation that the Internet allows an entrrepreneur to enter a market with a free offering because the costs of doing so are not astronomical. And most entrpreneurs who take this approach will maintain an attractive free offering of their basic service forever. But that doesn't mean that everything they offer will be free. That's the whole point of freemium. Free gets you to a place where you can ask to get paid. But if you don't start with free on the Internet, most companies will never get paid.

They are looking for:

The job spec is here and if you are interested please email them at jobs@heyzap.com.

But like every great web service out there, it's the community at Hacker News that makes it so great.

This morning I read a Computer World article about the "NoSQL" movement. It was interesting to me because we have an investment in this market sector, an open source cloud based document store called MongoDB (which is mentioned in the computer world story).

There are three comments at Computerworld.com and there's 43 comments on the story at Hacker News. If you are interested in database issues, you'll find the discussion at Hacker News interesting and informative.

The SQL vs NoSQL debate is important, serious, and deeply technical. I am not going to even attempt to weigh in on it (other than to say we've got an investment in a NoSQL data store). But plenty of people are weighing in on it at Hacker News right now.

Of course there are other tech communities out there where discussions like this one have been going on for years. I am not saying they aren't vibrant and important. But Hacker News brings that together with a "techmeme style" blog aggregator and focuses very much on the startup entrepreneur (which is why it drives so much traffic to this blog).

Hacker News is a great service. If you are involved in tech startups and you don't read it regularly, you should.

But in the interim, please do go read Brad's post. I agree with what he has to say about saying no. It's a big part of the VC business and doing it right is critically important.

And while you are at it, please also go read my partner Albert's post on a conversation we had at lunch yesterday (at the Shake Shack). We got to talking about mobile app development and why Android to date has missed an opportunity that Apple gave them and everyone else.

I'll be back tomorrow with something more than a couple links

I looked over the results (click on that link above to see them) and this slide caught my attention:

Surprise, VCs are not worried about deal flow and the management teams they work with, are a bit worried about their portfolio, and are a lot worried about exits.

We've talked about this issue endlessly here on this blog and elsewhere. The problem with the VC industry is that there is too much money in it, too many portfolio companies, weak venture firms, and a tepid exit environment.

There is no lack of good opportunities, no lack of talent (both entrepreneurial and management).

Nothing is wrong with the VC business and the startup ecosystem that a few years of weak fundraising can't fix. And I think we are seeing that and will continue to see it.

But the headlines like VCs Losing Confidence in “Broken” Industry overstate the issues in my mind. The VC business is not broken. Some of the participants in it are.

The video is about 35 mins long but I've provided a transcription below the video. These transcriptions are being provided by the Simulscribe API. I'm hoping to add some cool technology I saw last week soon which will make the transcription hyperlink to the exact spot in the video. How cool will that be?

Transcription:

The good news is I wouldn't have to build that aggregation and curation system. Our portfolio company Outside.in has built it and they launched it earlier this week. It's called Outside.in For Publishers (OIP). If you are interested how it works, you can click thru and read that post. If you want to see what the curated pages created with OIP look like, here's one from Milwaukee Wisconsin.

What would the P&L of this new local media company look like? Well Peter Kafka of All Things D and Mark Josephson, CEO of Outside.in have been collaborating on that and Peter published a strawman local media company P&L on his blog the other day.

As you might imagine, it's a "honey we shrunk the kids" story. The topline goes down by an order of magintude and so do the costs. The profits are still there (at least in theory). In Mark and Peter's strawman model, a local media business with 40mm monthly page views does about $7mm in annual revenues and almost $3mm of pre-tax income. You can go click on that link in the above paragraph if you want to see the model.

Of course, there are going to be a lot of variations on this model. At Huffington Post, I believe the formula is create 20% of the content and link to the rest. I think you could make this model work with a 50/50 creation/aggregation model but it would have to be the right locale, the right journalists, and the right advertising market.

Whether the tools come from Outside.in or someone else, I am confident that this is the direction of the local media business. As Mark says in the Outside.in post:

And if that is true, and I think it is or will be, then the local media companies that leverage their audiences for their content, create communities and conversations, will win. And they'll be profitable businesses worth owning and investing in.

Video Winners:
    Popular Choice - BBC Live (Ian Tweedie)
    Judge's Choice - Open Course Ware (Roshan Revankar)
Music Winners:
    Popular Choice - Drop Boxee [drop.io on Boxee] (Jon Steinberg)
    Judge's Choice - We Are Hunted [this got my vote] (Nick Dima)
Photo Winners:
    Popular Choice - Facebook (Junda Liu)
    Judge's Choice - Facebook (Junda Liu)

It's great to see all the stuff (like MLB, Digg, Tumblr, Current.tv, etc) that Boxee is bringing to the platform, but I am way more excited to see the app ecosystem take off. Apparently there are about 120 apps on Boxee now. My hope is that number will grow into the thousands by year end. At the end of the day, it's people like Ian, Roshan, John, Nick, and Junda (ie us) that will make Boxee the best media browser.

Our portfolio company Boxee is announcing a bunch of new stuff tonight (Tues night) in San Francisco. I blogged about this event last week and I hope some of you were able to attend as I could not. Here's some of the highlights from today's announcement:

- A new homepage that actually describes what Boxee is and why you should care

- A public alpha of the Windows version. Now the three versions, Mac, Windows, and Ubuntu are in sync on features. The plan is to keep them that way going forward.

- A partnership with Major League Baseball to offer MLB Premium to Boxee users. Live sports on Boxee is a "you have to see it" experience.

- A new navigation layout that clearly differentiates from streaming apps (like MLB Premium) and local media.

- A partnership with Digg to create Digg for TV

- A Tumblr app for Boxee (two USV portfolio companies working together always warms my heart)

- 1080p HD videos on Ubuntu

- A whole bunch of new Boxee apps (some of which I blogged about last week) resulting from the Boxee App Dev Challenge. The winners will be announced tonight.

There's a live stream of the event tonight provided by Justin.tv. I'm going to try to watch it live since I can't be there.

This is just the beginning for Boxee and bringing video on the web to your living room television. I'll use a baseball analogy in honor of MLB's partnership with Boxee. I feel like this "web video to the living room" is a nine inning game and we are in the first or second inning right now. It's going to be exciting to watch and participate in.

If you love Etsy and know how to make videos, this contest may be for you. Submissions will be accepted through August 31, 2009. You can read the details of the contest here.

They've already gotten a bunch of submissions which can be watched here. This is my favorite so far:

This isn't a new idea. I'm reminded of the contest Firefox did a while back. But it's a good idea. For a lot less than you'd spend with an agency and a production company, you can get fun spots that come from your user base. And in this day and age of social recommendations, getting your user base involved in your marketing efforts is just makes good sense.

The Transcript:

Howard Lindzon: All right we're live. We're live with Fred Flip Wilson. I don't know if you guys all remember Flip Wilson. 

Fred Wilson: So if you do. 

Howard Lindzon: What. 

Fred Wilson: I know that. If you go to, I forget with some website and you do a search for Fred Wilson. You get a lot a whole Sanford and Son. 

Howard Lindzon: 'Cause with Flip. You know, he wasn't Fred. 

Fred Wilson: It's Fred Sanford. 

Howard Lindzon: It's Fred Sanford and see your name come up with some of those? 

Fred Wilson: No, they never asked me about that. 

Howard Lindzon: So, welcome. You are my first investor in Wallstrip. 

Fred Wilson: Correct. 

Howard Lindzon: And now we got a new site called StockTwits which you didn't invest and you said it was a bad idea. 

Fred Wilson: Terrible idea. 

Howard Lindzon: So Fred, passed on this one and now we're just jamming it down to the throat with our success. 

Fred Wilson: Wait a second. Did you passed on when I offered you a stock in Twitter. 

Howard Lindzon: So Fred called me and said I got this deal for you. It's Twitter. I don't do California deals. Is that what you said to me. But it just gonna be like one of our first California deals. And I said, I mean what's the valuation. You said, 17 million (pre money). [note: Howard remembers the valuation incorrectly, it wasn't 17 pre]  And I said, I'm out. I think, you said Jeff Pulver took that stock. 

Fred Wilson: He did. Jeff Pulver took that. I offered to you first. You said no. 

Howard Lindzon: You're not sure you offered to me first. I know, it's legend. How is it for me. I mean, honestly you did offered it to me. 

Fred Wilson: I did offered it to you. You don't remember that. 

Howard Lindzon: I don't remember any. I think, I forgot where I said that you still. It's like Zynga. You owed me 25k. 

Fred Wilson: I don't owe you anything with Zynga. 

Howard Lindzon: That's Pincus. So the... 

Fred Wilson: But,  I will tell you something about Mark Pincus. He one time promised me a Porsche. 

Howard Lindzon: If. 

Fred Wilson: It was the first investment I ever made with Mark in 1995. It's called FreeLoader. He said you know when we sell FreeLoader. I'm gonna buy you a Porsche. 

Howard Lindzon: If. 

Fred Wilson: If we sell FreeLoader. 

Howard Lindzon: If. 

Fred Wilson: A Porsche. 

Howard Lindzon: So, Fred is a man who lives up to his promises. He backed Wallstreet. He made a bunch of phone calls for me. I remember you said called Brad (Feld). Brad (Feld), said I'm busy but here's 25 grand. I never knew when he hear the idea.

Howard Lindzon: And that's what the (clue in throw). I'm good friends with Brad still. So, it was the beginning of what I have termed social leverage. 'Cause I met you as many people like there now at StockTwits interacting together through your blog. What comment system you think you were using way back? 

Fred Wilson: TypePad. 

Howard Lindzon: So you are using TypePad comments like commonly abscure. bizarre, funny comments. 

Fred Wilson: Hilarious comments. 

Howard Lindzon: Hilarious comments. You heard it from Fred and Fred claim to fame in our world. Where there's many claim to fame. But Fred was the first investor in the Street.com. So, I don't know if I can't get him today to talk about it Jim Cramer. 

Fred Wilson: That's not actually technically correct. That was the first outside investment, Street.com. Jim and Marty. Marty Peretz and Jim Cramer who started the Street.com together. I think they put maybe $5 million in to the Street.com before my firm, Flatiron (invested). 

Howard Lindzon: So who approached you on that investment. 

Fred Wilson: Dave Kansas. You know Dave Kansas? 

Howard Lindzon: Yeah and Dave is now at Wall Street. He is a good guy. We interviewed him at Wallstrip. 

Fred Wilson: Yes. So, Dave is actually not at the Wall Street Journal anymore. For brief period ran a joint venture between the Wall Street Journal and Interactive Corp. called FiLife. 

Howard Lindzon: Right. 

Fred Wilson: And then. 

Howard Lindzon: He has one unique amongst visitor. 

Fred Wilson: It may be both be true. 

Howard Lindzon: Okay, so you. 

Fred Wilson: Is that you? 

Howard Lindzon: I don't know just checking to see if they lunched. 

Fred Wilson: They had lunched. And then Dave is actually moving to London. 

Howard Lindzon: Is he? 

Fred Wilson: Yes he is. 

Howard Lindzon: Okay. So he called you and you said I got a must-see investment. What year was this? '97, '98? 

Fred Wilson: No, he didn't told a must-see investment. He said, we need to raise an outside money to get Street.com. 

Howard Lindzon: Okay. 

Fred Wilson: And so, I said, yeah I like what you are doing. I'll come down and I came down to meet with them. Dave, Brendon and Simon. They were the three people who running the company at that time. 

Howard Lindzon: You know Cramer at the time? 

Fred Wilson: I mean, I was meeting him. 

Howard Lindzon: Oh, you meeting him. 

Fred Wilson: Yeah. 

Howard Lindzon: Okay. So you're waiting him to come in. How long did it take you before he thought this could be a winner. 

Fred Wilson: I thought it was a winner before even met with him. 

Howard Lindzon: Okay. 

Fred Wilson: You know, Jim Cramer, invented blogging. 

Howard Lindzon: You know, Robert Scoble was here yesterday and he said he invented blogging. 

Fred Wilson: Well. Jim Cramer, was writing what were essentially blog posts from his trading desk in 1996. 

Howard Lindzon: Is this, was he medicated then or no? 

Fred Wilson: I have no knowledge of it whatever. 

Howard Lindzon: Okay. You never saw pills? 

Fred Wilson: Never seen pills. 

Howard Lindzon: I've seen pills. So first meeting. 

Fred Wilson: Right. 

Howard Lindzon: What impressions? 

Fred Wilson: I didn't meet Jim on the first meeting. 

Howard Lindzon: Okay. 

Fred Wilson: I met. 

Howard Lindzon: Is he in the cage somewhere? 

Fred Wilson: Well. Jim was running Cramer Berkowitz at the time and the Street.com was a seperate company. And he had these three guys. Dave was running editorial. Brendon was kinda running the business side and Simon was the money guy. And so I met them, they seem like young but capable guys. I said you know we could maybe do something interesting here. And so we asked to meet to Jim. We went down, we met Jim. We were working with the guy the time of my business who knew Jim from I think Harvard. He actually gone to school with Jim in Harvard. And he said here is the good news and the bad news about Jim. He said is crazy. Jim is brilliant. He is a winner. But he is gonna drive you crazy. 

Howard Lindzon: So right on front, full disclosure. 

Fred Wilson: Yup. No, this guy Lee Greenhouse was working for us at the time who had known Jim for I guess that point, 20 years. 

Howard Lindzon: So, you where in the stocks or he was just 'cause you are in the new media. How did you know about reading some. 

Fred Wilson: We wanted to invest in leading internet companies at the time. We never have anything in our portfolio in the finance category. And even back then I thought the big media companies where vulnerable. I thought we could take on the Wall Street Journal with the leaner, meaner, more nimble finance side. And I thought Jim was great frontman for that. 

Howard Lindzon: And so you invested. Were you do only investor. 

Fred Wilson: We're the only investor then. There were subsequent rounds where we brought other investors in. 

Howard Lindzon: So when did you first realized that Jim is crazy. Nah, I'm kidding. So what don't you tell us. 

Fred Wilson: You know. Jim is crazy like a fox. I mean, there is a method to Jim's madness. 

Howard Lindzon: I don't understand what method is. To be famous? 

Fred Wilson: No, no. Jim is an idea-minute guy. He can't stop himself. 

Howard Lindzon: He would have been a great VC. 

Fred Wilson: I don't know. He is not patient.  Jim is impatient. 

Howard Lindzon: So he is yelling on his entrepreneurs. He think too fast. 

Fred Wilson: Yeah and he is mercurial. He changes his mind a lot. 

Howard Lindzon: Okay. 

Fred Wilson: But Jim saw this whole thing coming. Way before anybody else did. He understood that anybody could publish to a website. He understood that you could go direct to the audience. It didn't need to go through. 

Howard Lindzon: Editors or ... 

Fred Wilson: The media whatever and he understood stocks with one of the most addictive forms of media out there. And it, you know, you could build large audience talking about stocks all day long. So he knew all that. Like 10 years before the rest was figured out. 

Howard Lindzon: So why he seem doing anything creative now? Do you think? 

Fred Wilson: I think Jim was always very caught up with TV and the idea that, you know, he could have a bigger megaphone on TV than internet. I think he really like what he is doing with mad money. I thinks that's really a good venue for him, honestly. 

Howard Lindzon: So who did the IPO? 

Fred Wilson: Goldman Sachs.   

Howard Lindzon: So Michael Perrick love that. Did all that stuff. 

Fred Wilson: I believe Michael was the analyst. 

Howard Lindzon: I just saw Michael yesterday. 

Fred Wilson: I believe Michael was the analyst. I'm not sure about that. 

Howard Lindzon: And so what was the valuation when you guys went public. 

Fred Wilson: I think, it was like $250 million valuation. But then it traded to like a billion dollars. 

Howard Lindzon: I remember like the first few days. 

Fred Wilson: It drove Jim crazy 'cause he knew the company wasn't worth a billion dollars. And he was just pounding his head on the table saying, oh my god, we screwed up, we screwed up. Now we got a valuation we can't sustain.  Then he also saw that we were screwed at that moment which we were. 

Howard Lindzon: Right. So flash forward to the new web. The new fund Union Square Ventures. The you have second Union Square Ventures this time. 

Fred Wilson: We have 2 funds. 

Howard Lindzon: Yeah. 

Fred Wilson: Union Square 2004. Union Square 2008. 

Howard Lindzon: And has 2008 had made any investment? 

Fred Wilson:Yeah. We've made 7 I think, 6 or 7. 

Howard Lindzon: So tell me about. So Fred is obviously an early investor in Twitter. My luck is been, I had made an investment in Twitter through Summize and through  my investment in beta works. 

Fred Wilson: Right. 

Howard Lindzon: So I have an investment there and I think it seems like Twitter stole Summize. What's you're thinking there. 

Fred Wilson: Stole Summize? 

Howard Lindzon: Yeah. 

Fred Wilson: I think, it was... 

Howard Lindzon: You called Summize a search or a Twitter search. Do you still call Summize or Twitter search? 

Fred Wilson: You wanna know the truth? I actually type Summize.com 

Howard Lindzon: Right. 

Fred Wilson: 'Cause it is shorter than Search.Twitter.com. 

Howard Lindzon: Right. 

Fred Wilson: Although, now search is integrated in to the each user's homepage. So I tend to actually go there now most of the time. 

Howard Lindzon: So you gave me a quote for a front page when we're doing. I don't know if you remember it. It's like you knew the stocks maybe because you're inside in the Cramer scene. But if you knew that Twitter and stocks. Or I wrote that poster company years ago, you knew that was a good idea. 

Fred Wilson: Yeah, great idea. 

Howard Lindzon: People. I think you said, if you like to stocks and you like talking about them all day long. Then StockTwits is for you. 

Fred Wilson: I think that is right. 

Howard Lindzon: So what are we doing right and what are we doing wrong? 

Fred Wilson: I think mostly right. I think the idea of building StockTwits as a platform on top of a bunch of social platforms. Starting with Twitter. Now Facebook and ideally any other social platform that opens up it's API. Is a great idea. Imagine if, there are now about version of Twitter and Facebook all around the world. 

Howard Lindzon: Right. 

Fred Wilson: So there's Facebook clones in 20 countries. There's Twitter clones in 20 countries. If all of those... 

Howard Lindzon: There's Twitter clones in 20 countries. 

Fred Wilson: Yeah. 

Howard Lindzon: That's it. 

Fred Wilson: If all of those services were open in the same way that Facebook and Twitter are, Twitter is more open than Facebook. But I think Facebook is trying to become as open as Twitter is and if all these other services became open and StockTwits set on top of all of that, right?. I mean in the people in China is using the Chinese Twitter clone or chatting out Chinese stocks and that's what coming into StockTwits, you know that's you've aggregated the entire global conversation about stocks. 

Howard Lindzon: Right. 

Fred Wilson: That's brilliant. 

Howard Lindzone: But I'm not that smart. So... 

Fred Wilson: Yes, you are. 

Howard Lindzone: So I need that. So we need another 20 or 30 tech guys. 

Fred Wilson: Oh, yeah. Yes, you definitely need a brilliant technologist, I agree with that.  

Howard Lindzon: And then so what do you think, we're doing. I mean are we following it enough to see like what other stuff we could be doing or adding or you're not following it close enough.  

Fred Wilson: I checked StockTwits maybe 2 or 3 times a week. I'm not in it everyday.  

Howard Lindzon: Well you're not that in to stocks. 

Fred Wilson:  Not really. 

Howard Lindzon: Anymore. So, Fred  sold Google and Amazon this morning. Last October, I think you were buying Google and Amazon. We're bought buying Amazon. You're buying Google. 

Fred Wilson: I was buying Google, Amazon and Apple and then late last year I bailed out my Apple 'cause I just didn't like the fact the jobs wasn't really being straight with the street and I just felt like. I mean it's a great company, but I just thought like I didn't really want to own stock in a company who's CEO is not necessarily being transparent. So, I got out of that, you know that was, you know economically a mistake cause the stock is done great, but I don't feel bad about it.  

Howard Lindzon: And then Google is up. 

Fred Wilson: Google I bought. I bought Google between 325 and 275 in October, November last year. So, I probably, average cost to 300 and I bought Amazon between 35 and 40. So, probably an average cost of 37, 38 and I did that because it felt to me like the world was putting a fire sale on stocks and you know I just  went in and bought the stock that I understood and I bought it 6 to 8 times earnings which I feel like when you're getting the best companies in the world is 6-8 times earnings, you just got to do it and a lot of conviction about it and I wrote, you know series of blog post about that fact that I was doing it and why I was doing it and how I was doing it and I built up a position in those stocks like I got out of Apple whenever I got out of it, when the job thing happened and then I held on to the Google and Amazon. Traded in and out of Google once I sold it 330, got back in it 300 and then I just saw yesterday that Google was like a 420 and Amazon was like at 82 and I said you know what, I don't have that conviction anymore. I don't feel like these stocks are on sale anymore. It feels like they fairly valued now. I don't know if the market is gonna go up or down. I don't have, I don't have any convictions. If I have conviction I should known these stocks. 

Howard Lindzon: But generally you're not a stock person.  

Fred Wilson: No. I did it because you know I'm a contrarian, you know when everybody else says, oh my God the world is falling apart you can't own stocks. To me it's like I got to buy stocks. I want to buy stocks when that happens.  

Howard Lindzon: Okay.  And then tell me about Twitter investments itself. Who approach you and how did it happen.  

Fred Wilson: What happened with Twitter was, that I started using Twitter in the winter of 2007. So January, February and March of '07. And then I read a blog post on Evan Williams blog talking about the creation of Odeo. Not the creation of Odeo the creation of Obvious which was incubated that he, he turned the company called Odeo into incubator called Obvious. And then I called them up and said are you gonna spin Twitter out of Obvious in the same way that Bitly got spun out of Beta Works and he said yeah we're thinking about doing that and so I said when I can come talk to you about it and he said yeah I why don't you come let's talk about it. And I brought my partner Brad with me. We flew out to California and basically had a 2-hour conversation with Ev and Jack and we said this is what we think Twitter can be and this is what we would do if we were you and this is why we want to invest and we had a great conversation and then flew back to New York, basically flew out for the meeting. Flew back to New York I called them the next day and said how it goes and said we like you guys. And I said can I send you term sheet and said yeah. I sent them the term sheet and he like the price and he called me back. Waited for the weekend call me back the next week said I think we're gonna do this with you.  

Howard Lindzon: Did you have any other investors do the deal with you? 

Fred Wilson: Charles River Ventures which was an investor in Odeo  

Howard Lindzon: Okay. 

Fred Wilson: Took a small piece of it and people like Marc Andreesen and Dick Costolo and I believe Mark Pincus, my former partner Jerry Colonna, Chris Sacca, Ron Conway, a lots of angels. In fact what we did was we said we'll take $5 million for the round. But we'll let you cut us back to $3 1/2 million because we believe that there's a lot of smart people out there who understand how big Twitter is gonna be and they can provide added value so you can sell up to million and a half dollars... 

Howard Lindzon: So, I learned that strategy from you. It's like you have the power to be the lead not me, but you share it all kind of it helps in this age. Is that the biggest thing that's change in venture capital maybe?  

Fred Wilson: Well, I think the venture capital is actually gone the other way, I think people become greedier about their deals. When I got into the business in the mid 80's people were very eager to syndicate deals and as people have raise larger and larger funds they now feel the need to put more money into these companies and then the less wanting  to syndicate. But I think syndicating investment is the smartest think you can do because you get a lot of smart people who now have invested interest in the thing and then they want to go make the company successful.  

Howard Lindzon: And what about, okay so Twitter today how many rounds a big, how much is the raise. 

Fred Wilson: Twitter is on 3 rounds. Our round and then a year after that in the midst of the worst period in Twitter history which was March, April, May of last year. The service was down more than it was up and it was just really, you know problems. We run out of money and we talk to a lot of venture capitalist and we got a couple of term sheets and the most aggressive over them all was Spark Capital with Bijan. And I got to give them a lot credit because they've really saw the Twitter you know is gonna come through all this, you know technical issues that they had and they made bet out of a very difficult time. So that was... 

Howard Lindzon: Did you bring...so you use some guys in San Francisco to fix that yes or no? 

Fred Wilson: You wanna know my opinion of what fix Twitter. 

Fred Wilson: I think the thing that really, I mean and Twitter is not "fixed", but the service is become much more stable and much more reliable. I don't think these services are ever "fixed" because they continue to grow and grow and grow and you have to scale, scale, scale, scale. So, I think fix is a wrong term to be using, but when we did the Summize acquisition. We got the Summize tech team integrated with our tech team and Greg Pass who was one of the 2 founders of Summize  became the VP of engineering at Twitter and Greg and his team from Summize combined with the talented people we had at Twitter meshed and the culture in the Engineering organization became a great positive can do culture and they just, they got, they act together and the service has become more stable and so Twitter fix its own problems. 

Howard Lindzon: And so let's talk about. Give me some, I mean I don't know how close you are with the company. How many employees, 40 something. 

Fred Wilson: I think Maybe 50 now.  

Howard Lindzon: So what happens when these niches  start develop like StockTwits. I'm was hearing from Robert yesterday that Twinkle has created their on Twitter. Right so let's say. 

Fred Wilson: Twinkle has created their own Twitter?

Howard Lindzon: No back in duplicate copy or version of Twitter.  

Fred Wilson: All right. 

Howard Lindzon: So let say that happens in moms and other sites. How is that gonna  effect, you know when the niches decide what if we can't figure how to monetize on Twitter we're gonna create their own platform. Like what do you think Twitter. If you are running the company, can you tell me what you think the monetization strategy would be or would you be chasing monetization or you will be doing... 

Fred Wilson: Well, I wanna.  

Howard Lindzon: It's not really great question... 

Fred Wilson: I wanna address the first question you asked which is can people build services on top of Twitter and then take their communities off of Twitter into private communities. I think they can do that but I think the challenge with doing that is that not everybody is you know is stock conversation in StockTwits. But because StockTwits is built on top of Twitter those conversations they're going back and forth in the Twitter. So, I could be in Twitter or TweetDeck or some other Twitter application and I could see an update that you wrote about something from within StockTwits and so if you take the community entirely out of Twitter then I'll never see that anymore, those conversations are gonna be silo'd off and not part of the larger conversation and I think that's a mistake strategically for people who are building the services on top of Twitter and Facebook.  

Howard Lindzon: So how you monetize?  

Fred Wilson: Well... 

Howard Lindzon: If I can't take of  ___ community or if I can't take that data. Let's just passed it on the community and create more features 'cause Twitters only have a certain amount of features.  

Fred Wilson:  Oh, you can create more features. I'm not suggesting that you take the...I'm not suggesting that you don't create more features. I think that's exactly what you should be doing. You should be creating a lot  applications specific features. Things the people who talked about stocks want that they can't get a Twitter.com or TwitDeck or (Seismic) or somenthing like it. 

Howard Lindzon: And you're saying build them on top of Twitter?  

Fred Wilson: Build  it on StocksTwits like you already have.  

Howard Lindzon:  Um.. 

Fred Wilson: You have charting application. You have...you can search by ticker. You can do all this things and StockTwits that you can't do on Twitter. The point is the basic atomic element, which is the Twit, the update. That I think needs to continue to be connected into the Twitter ecosystem or Facebook ecosystem and ideally Facebook and Twitter should get connected to each other right. So we have one  sort of global status update ecosystem. And all these applications that are built on top of it are communicating back and forth into that. So that it's one system in the internet. 

Howard Lindzon:  So when you see this... when you started her did you see this one when you started? 

Fred Wilson: Not really. 

Howard Lindzon:  So when you making an investment like that. What are you still considering taking, are you still taking a flyer by nature.  Or you just betting on the service or betting on the fact that you love the product or you're betting on.  

Fred Wilsson:  Every investment we make is a flyer. Let's just be clear about that. It's an educated flyer in a sense that we have some thesis about why we should be making this by. And about a third of them worked out better than we thought that they would. Burt a third of them worked out horribly and by a third of them worked, but if we have known that they that were gonna worked  at that level we'd probably wouldn't make the investment. 

Howard Lindzon:  Or the past... 

Fred Wilson:  So all the returns comes from about thirty percent of the bets we make.  

Howard Linzon:  It's up in the same way since the mid 80's where your in there.  

Fred Wilson:  Yeah. You know, if you go back the Union Square 2008 fund is probably the 6th or 7th venture fund that I've involved with in my career. And I have all accessed to all of that data from every portfolio that I have been involved with. And if you crunched the numbers and some have been better performing funds. But the 1/3. 1/3, 1/3  numbers kind of all shake out in similar way. . 

Howar Lindzon:  Which is a deal that you have done...talked about your worst deal. 

Fred Wilson:  Well, I tell people that my worst investment was the company called StarMedia. Even though StarMedia went public and traded up to couple of billion dollars, 2.5 billion dollars in market caps. So you would say well "how could that be your worst deal?" but that company blew up and ended being worth nothing. And I was on the board and you know, I feel like the board didn't do the things that it needed to with respect to the management team quickly enough and as a result that company spun out of control and we lost everything. So that in my mind was the worst, that's my worst investment.  

Howard Lindzon:  And what investment are you like the proudest of?  

Fred Wilson:  Well, I'm really proud of what Mark has done with Zynga. I mean, it just blows me away. And I've been investing with Mark for fifteen years.

Howard Lindzon:  So talk about Zynga for a second. 

Fred Wilson: Zynga is the leading social gaming... 

Howard Lindzon:  'Cause I'm supposed to be in Zynga but Mark has forgotten to remind me.  

Fred Wilson:  Should we just stop talking about it now? 

Howard Lindzon:  No, I want to hear it. Well how much money  I didn't make.  

Fred Wilson: Except my Porsche.  

Howard Lindzon:  So what's Zynga? 

Fred Wilson:  Zynga is the leading social gaming company in the world. They make social games, which are games that exist in social networks and take advantage of the fact that you and I are connected in Twitter or you and I are connected in Facebook. So if I'm playing Mafia Wars I can get you to be part of my Mafia and we could play the game together. 

Howard Lindzon:  Right. 

Fred Wilson:  And the other thing important about social games is that the best social games. We don't play in realtime together. Like, you know, some social games you're playing in real time together like Texas Hold 'Em poker, which is a Zynga game. You and I will be playing poker together at the same time. But most of the best social games we don't play at the same time together. We're playing together, but I'm playing, you know what at 8:00 in the morning and you're playing at 4:00 in the afternoon, but we're seeing each others play and we're reacting to them. Little bit like Fantasy Baseball works. You make your trades, I make my trades. I see your trades, you see my trades, you see my stats. Fantasy Baseball is probably the first social game.

Howard Lindzon:  Why so have made an investment in just fantasy sports. 

Fred Wilson:  We did actually back in Flatiron. We invested in a company called...what were they called...ah I have drawn blank. It was one of the top fantasy sports services on the Internet and we ended up selling it to Sporting News.  [note: it was called Small World Sports]

Howard Lindzon:  Let's wrap up. Looking forward the next five years. 

Howard Lindzon: You know, speaking of to Michel Perrick who would built it's IPO business in the '90's. He was telling me he is never been this excited since '94, '95. 

Fred Wilson: Oh, he feels the environment for entrepreneurship today is as good as it was 15 years ago. 

Howard Lindzon: The environment from tech in the sense of mobile apps and access. He was laying his ground work when you know. You know he did, you and nanny said, you know, you had the access. And then he could see the vision like the 10 different layers of companies that were gonna come public after that. IPO market's death. 

Fred Wilson: You know market. 

Howard Lindzon: Did ever comeback. 

Fred Wilson: No, no. The IPO market is not dead. 

Howard Lindzon: Well. I'm saying it's been dead. 

Fred Wilson: It been dead. But it doesn't mean it is dead. 

Howard Lindzon: No. Absolutely no. 

Fred Wilson: You know the conviction that I had around buying Apple and Google, and Amazon last October, November. Is the conviction I have about the IPO market. If the IPO market has stock, I'll be buying it right now. It can only go in one place - up. 

Howard Lindzon: Yeah. 

Fred Wilson: And there is no way that there is not gonna be an IPO market. 

Howard Lindzon: Well I just think. I just think there is something common. I don't know if it will be after the fall or next year or another year away right now. Where people seeing what fresh company. This is, I'm gonna start from scratch and I wanna buy the best of the best with this new greater comp. that may have better controls. It may have, the SCC may have better control. I'm not saying they will. But I'm saying, I think there's gonna be a little bit of a turn there. And say you know what, that were the best companies to invest. 

Fred Wilson: But. 

Howard Lindzon: But he was saying that mobile is the place to be for that. 

Fred Wilson: But not just mobile. I think with the iPhone showed was by creating a software based phone that was open. That people could innovate on top of it with the SDK in an AppStore. Right were anybody could create an app for the iPhone. Right? So what is, there is 10,000 apps for the iPhone, 15,000 apps for the iPhone. It's amazing. You know, I wrote a post this morning about Boxee. And Boxee is, if you've created an AppStore in you're set top box. That's basically what's Boxee is, right. So I listed like 20 new TV channels that were build in the past month on Boxee by hackers. Somebody wanted a TV channel for bass fishing. Okay. 

Howard Lindzon: Ahuh. 

Fred Wilson: So they created the bass fishing app on Boxee. So there is now TV channel for bass fishing. 

Howard Lindzon: And where does pulling shows from. Who's choosing the shows? 

Fred Wilson: The web. You could create a StockTwits TV app for Boxee. Right? And then that it would become a channel on the same way I add the apps I want to my iPhone. People and whether it's Boxee or Apple TV or Windows Media Player or some piece of software I haven't seen yet. That's what gonna happen on the TV too. You gonna decide what channels you want. The cable company is not gonna tell you what channels. 500 channels and you don't give a shit about. 

Howard Lindzon: So Boxee like a Firefox for television. 

Fred Wilson: Boxee, Firefox for television. 

Howard Lindzon: So it's Boxee.com. Is it? 

Fred Wilson: No, .tv. Boxee.tv. 

Howard Lindzon: Boxee.tv show. Is it still in like a private that you have to get an invite. 

Fred Wilson: Next week, June 23rd. 

Howard Lindzon: June 23rd. 

Fred Wilson: In San Francisco. 

Howard Lindzon: In San Francisco. 

Fred Wilson: At a club called Mezzanine. 

Howard Lindzon: Mezzanine. 

Fred Wilson: It's gonna be an enormous. 

Howard Lindzon: Are you in San Francisco right now? 

Fred Wilson: I can't, I wrote a post about how bummed I am. I got. 

Howard Lindzon: I don't read your blog. 

Fred Wilson: You don't read my blog? 

Howard Lindzon: Yeah. 

Fred Wilson: You read my Twits? 

Howard Lindzon: No. I declared time bankruptcy yesterday. You'll hear from my attorney. 

Fred Wilson: How long will have that for. 

Howard Lindzon: I have a time bankruptcy attorney. I don't know. It's just a very tough problem. So you're gonna be, so Boxee launches. 

Fred Wilson: Boxee is doing a big launch party on June 23rd in San Francisco. It's next Tuesday night at a club called Mezzanine. And it's gonna be an amazing event. If I was in San Francisco, I would be there. But I won't be. 

Howard Lindzon: Explain how this could change. I mean obviously there's people think that Apple TV could do the same thing. 

Fred Wilson: Apple could do the same thing. 

Howard Lindzon: Okay. 

Fred Wilson: Apple did on the phone. 

Howard Lindzon: Right. 

Fred Wilson: They haven't yet done it on the TV, they might.  

Howard Lindzon: The show. 

Fred Wilson: They might. 

Howard: They might. But and if they do, there could be a place for two browsers. 

Fred Wilson: Well, we still use the BlackBerry's. 

Howard Lindzon: Right. 

Fred Wilson: Just because Apple came up with the phone. It doesn't mean they gonna, every single person in the world is gonna use the iPhone. 

Howard Lindzon: Yeah. 

Fred Wilson: There is usually 2 or 3 providers. 

Howard Lindzon: You're so geeky. So how I would I set up Boxee. If I can get it. 

Fred Wilson: Oh, Boxee is, so Boxee is geeky. Right? 

Howard Lindzon: Yeah. 

Fred Wilson: Twitter started out with the geeks. 

Howard Lindzon: Right. 

Fred Wilson: That's where you gonna start 'cause those people who built for the platform. 

Howard Lindzon: Right. 

Fred Wilson: So you gonna service them first. But this holiday season there would be Boxee boxes in the stores. So you can go in the store and get a Boxee box. And you could take it home, you connect it with you TV which most of us can do. And you're done. 

Howard Lindzon: But I thought the whole idea was not to have a box. 

Fred Wilson: No, Boxee is not making the box. 

Howard Lindzon: I understand. But I thought the whole idea is you are just getting the internet on your TV. Why can't that just happen. With some guy with the. 

Fred Wilson: I think. I think within a couple of years. 

Howard Lindzon: App showing. 

Fred Wilson: I think within a couple of years what's gonna happen is your TV. This thing right here that we're looking at is gonna have a processor in it. It's gonna have Boxee and Front Row and Windows Media and a whole bunch of media browsers.

Howard Lindzon: Where you gonna get this clip through when you turn on your TV. 

Fred Wilson: And you pick which one you wanna use 

Howard Lindzon: Just like remoting your computer. 

Fred Wilson: And boom.  Then you gonna watch it. So won't need a Boxee box in 2 or 3 years. But today not every TV and you know not every TV is gonna have that. You know consumer electronics business is, you know. 

Howard Lindzon: So what will be up if we create StockTwits TV programming. Well, you'll be able to watch it on your machine or catch up later at home. 

Fred Wilson: Well. Yes, if you create StockTwits app for Boxee then I added it to my Boxee. Then when I logged in I see oh there is a new show in StockTwits, boom, watch.  

Howard Lindzon: From your TV.  

Fred Wilson:  From your TV.  

Howard Lindzon:  It's pretty hot people. So your blog is at HowardLindzon.com. Oh wait a minute your blog... 

Fred Wilson:  I actually did a domain take over. It is now HowardLindzon.com.  

Howard Lindzon:  So your blog...  

Fred Wilson: Its now (HowarSchminzon.com).  

Howard Lindzon: There is a fake poser on Twitter. And I think I know who it is. Twitter doesn't return my calls. Howard (Schminzon).  

Fred Wilson: They don't return anybody's call. Don't take it personally.  

Howard Lindzon: I know. The blog is... 

Fred Wilson:  A V C  

Howard Lindzon:  Adam Victor Charlie dot com. And he's been blogging  there since 1960? 

Fred Wilson: I was born in 61.  

Howard Lindzon:  Oh. So did you take it over from your parents?  'Cause they do the who is. It seems like they go way back like... 

Fred Wilson:  2003. 

Howard Lindzon:  When did you know that you're gonna be a nerd? 

Fred Wilson:  Before they was... 

Howard Lindzon:  What the nerds do, like 10 years different? 

Fred Wilson:  I think I knew I was gonna be nerd when I was a teenager. I got into computers.  

Howard Lindzon:  And what like that 1986 or even before that? 

Fred Wilson: No, my dad was a professor at the military academy West Point and they had a computer center and some friends of mine, some nerd friends of mine  and i would go down there and they let us in the evenings and we could write code on these cool machines with this really main frame type terminals... 

Howard Lindzon:  Right. 

Fred Wilson:  Thats when  I knew I was a nerd.  

Howard Lindzon:  And MIT. 

Fred Wilson:  Yup. 

Howard: And what's MIT like? Lot of chicks? 

Fred Wilson: No. 

Howard Lindzon:  ... 

Fred Wilson:  When I was there maybe 15-20% of the student body was women. Now I hears its pretty much 50/50.  

Howard Lindzon:  Did those women shave?  

Fred Wilson: No. 

Howard Lindzon:  MIT women do not shave. You heard it from Fred.  

Howard Lindzon:  And when did you started going out with women that do shave? 

Fred Wilson:  When did I started going out with women who do shave? 

Howard Lindzon: Yeah. 

Fred Wilson:  I'm not gonna answer that question. 

Howard Lindzon: All right. 

Howard:  When did you meet the lovely Gotham? So your wife also blogs.  

Fred Wilson:  Gothamgal.com 

Howard:  And she got a new blog. It's nice. 

Fred Wilson:  It is. 

Howard Lindzon:  She blogs about food. So I generally read her blog more than yours.  

Fred Wilson:  That's a great idea. You get at least get something to eat when you read her blog. 

Howard Lindzon:  She got it down. So how does she put with you? How does someone's, how long have you been married?  

Fred Wilson:  I will give an answer to that question,  in 2 words, stick tolerance.  

Howard Lindzon: So there you have it. It's stick tolerance. I know that. I know where that comes from. I have that same thing at everybody in my life. They put up a lot of sticks. All right. So thanks first of all for backing Wallstrip. 

Fred Wilson: It's was great.  

Howard Lindzon: And thanks for not helping that on StockTwits.  

Fred Wilson:  That's okay.  

Howard Lindzon:  Its helped a lot.  

Fred Wilson:  Good. 

Howard Lindzon: And continued good luck with the Twitter and all your portfolio companies and we'll talk soon.  So avc.com Fred Wilson and good luck today in the markets. All right thanks man. 

Fred Wilson:  All right.

I thought today might be a good opportunity to talk about some of those lessons and how they impact how I approach building successful long term relationships in business. In my business, the most important relationships are those between my partners and me, and the relationships with the entrepreneurs we back and their teams. It's absolutely critical to get those relationships right and sustain them for the long haul.

A marriage is not an easy relationship by any means. The stresses of children, finances, families, and a shared living space (and many more) wears on the partnership and causes tension and friction. It takes work and a lot of communication to make it successful. But in addition to constant effort and communication, I think there are two other critical factors - tolerance and shared vision/values.

Rabbi Niles Goldstein told a joke in his last shabbat service at the New Shul. He asked a woman to explain the success of her marriage. And she replied "shtick tolerance". I've tweeted and told that joke a few times publicly since hearing it a few weeks back. I like it very much. I know that my shtick gets old and nobody has heard it as much as the Gotham Gal. She knows how to mute it. And I can do the same with hers (and yes, she has a shtick too). Tolerance is critical to a successful long term relationship. You need to be able to tune out certain stuff that gets old and let it pass you by without getting annoyed or upset. I've had to work hard on that and it has paid dividends in both my marriage and my business life.

Even more important are shared values and vision. Milton Pappas, the man who taught me more about venture capital than anyone else also taught me a lot about marriage. When we got married, I was working for Milton. When our first child, Jessica, was born, he told me, "make one night a week date night. do it every week without fail. and when you are alone, don't talk about the daily grind, talk about your hopes and dreams, what you want to do together and what you will do together". That was very sage advice. I must admit that I don't practice it enough, but I do practice it (like many things in my life).

Tolerance and shared vision/values are critical in business as well. This past thursday night, I talked to Prof. Ari Ginsberg's class at NYU's Stern School Of Business. In the Q&A after my talk, a young man asked me "when you are in competition for a deal, how do you win the deal?".

I replied that we compete on cultural fit and shared vision/values. I explained that we don't compete on price, terms, "value add" or any other of the typical things VCs talk about. We focus on building a relationship with the entrepreneur that makes them comfortable with us and that convinces them that we will have tolerance for their shtick (and man do entrepreneurs have shtick). And most importantly we talk about their hopes and dreams, how they plan to get there, and why we share those hopes and dreams and want to help them achieve them. That is the only way I know how to win a deal and it works when both parties are sincere and open and honest with each other.

Like a marriage, a venture investment is a long term relationship. None of mine have lasted twenty-two years and none will be as important as my marriage. But if you treat them like a marriage (on both sides) and work hard at them, communicate early and often, are tolerant, and most importantly share your vision and values, it can be a very rewarding experience, both emotionally and financially.

But I call it the "people's choice awards" because Boxee is going to show what happens when you let the viewers determine what channels they want on their TV. Instead of the "500 channels and nothing's on" programming that the cable companies deliver, Boxee is going to show what hackers working on open source software for your TV can do in less than a month.

Here's a taste of it:

The Amie Street channel
The Any Clip channel
The We Are Hunted channel (my personal favorite)
The National Film Board channel
The WatchUWant channel
The PokerStars channel
The Twitter channel
The Movie Times channel
The Local Video channel
The Radio Controlled Devices channel
The ABC7 News (KGO) channel
The Twitter/YouTube/News channel (another favorite)
The Videogames channel
The BBC channel
The Mozy Backup Your Media channel
The Ethnic TV channel
The I Can Has Cheeseburger channel
The Cobra Snake channel
The Open Courseware channel (talk about hacking education!)
The UK Open University channel
The L8R channel (watch later project)
The C Dans L'Air channel
The Bass Fishing channel
The Boxee Queue channel (watch later project)
The Weather channel
The Daily Kitten channel
The HotForWords channel
The Guild channel
The Facebook Photos channel
The Drop.io channel
The White House channel

and that is just what has been submitted so far. There's another five days left in the contest so I expect the final list will be twice as long.

Imagine if your set top box had an "app store" like the iPhone has. That's what Boxee is all about. You put Boxee on your TV and let hackers around the world build channels and you pick which ones you want on your TV.

That future vision will be on display full tilt next Tuesday night in SF. If the turnout is anything like the Webster Hall Boxee meetup this spring in NYC, it will be one hell of a fun night. And so I am totally bummed that I can't be there. I hope you can.

Disqus is looking for three technical hires in the bay area:

- A front end developer who can work in javascript
- A senior back end developer who can work in Python/Django
- A systems/server engineer to keep it all running smoothly

The detailed job descriptions are here. If you are interested or know someone good they should go after please email me or jobs@disqus.com.

Daniel and I appreciate everyone's help with this. Disqus is a great company which is starting to break out and it is a great place to work with nice upside.

But, of course, that's not what I said. It's what Erick Schonfeld says I said at the 140conference yesterday in a post on TechCrunch. Now I know that we aren't supposed to believe what is written on TechCrunch and I certainly don't but I fear that many people still do.

So let me be perfectly clear about this. I said social media, led by Facebook and Twitter, will surpass Google in driving traffic to many websites sometime in the next year. The tweets in this stream validate that. Erick was in the audience but so were most of those twitterers.

Or we could just look at Jonny Goldstein's wonderful notes he took during my talk.

Ok, now that I've gotten that off my chest, I'll return to the regularly scheduled programming.

[note - thanks to the simulscribe api for this transcription]

I've been saying this to anyone who will listen to me for the past six months. I've got Boxee on my big screen in our family room and when I am home at night, I'd like to fire up Boxee and watch all the video I've come across on the Internet but did not have time to get to.

The crazy thing is the same day the talk with Scoble was published, I got my wish (sort of). A developer named Monsur Hossain submitted a tool called BoxeeQueue to the Boxee App Competition. BoxeeQueue does exactly what you think it does. There's a bookmarklet that you add to your browser and you send video to a queue that is actually an rss feed in Boxee. I used BoxeeQueue over the weekend to watch some video and it works well.

But just as quickly as BoxeeQueue showed up, we've got a horse race going. My friend Daryn launched L8R which works via delicious. You simply tag videos with the L8R tag in delicious and they show up in a Boxee app Daryn built called L8R. I did not get to check out the L8R app this weekend, but L8R also has a web app and here are the videos I've queued up to watch L8R :)

But Daryn and Monsur are not the only people working on this problem. The comment thread to the Scoble talk mentions a few more and I'll be trying them out as they launch.

For the record, I don't think anyone has yet "nailed it" in terms of what the "watch later" tool should do. Here are the requirements as I see them:

1) Both a bookmarklet and extensions for the browsers that support extensions

2) You should be able to right click (or control click on a mac) on any link and have the video behind that link added to the queue. You should not have to click thru to the page to add something to the queue.

3) The queue should be available as a web app (as L8R has done) but also as an app on every media browser or media player out there. Boxee is a great place to start and I sure hope everyone starts there since its an open platform built from the ground up for something like this. But the queue should be available on xbox, playstation, wii, roku, appletv, windows media center, etc, etc.

4) There should be mobile apps for the iPhone, Blackberry, Pre, Android, Windows Mobile, etc. And it would be great if the mobile apps cached at least an hour of video so you can use the "watch later" app when you are not connected.

Since this "watch later project" is being done out in the open, I'd love to hear all of your thoughts on additional features this tool should have and also please let me know about any other groups, companies, developers working on this. I am sure there are a bunch out there. I'd like to compile a comprehensive list and publish it here.

UPDATE:

Here is another service I learned about yesterday

Vodpod, Vodpod FF extension here

I add one new song each day and so when you listen to fredwilson.fm, you are listening to my favorite songs (mostly new stuff that I find on the web) in reverse chronological order. That's it. Pretty simple and very easy for me to program.

As Internet radio services go, fredwilson.fm is tiny. It averages around sixty listeners per day and gets around 1,300 visitors per month.

Fredwilson.fm is a perfect example of nanomedia. The service has a tiny audience and will never amount to anything other than a hobby of mine. There may be some hardcore fans of fredwilson.fm, but they are measured in the tens, certainly less than a hundred. It will never be a commercial property. It will never run advertising.

So it's easy to ignore services like this. And many do. But those who do miss a very important point about nanomedia. Each service in its own right is borderline meaningless. But the aggregation of all of these nanomedia services are a big deal.

My friend John Borthwick and I were interviewed by Seth Goldstein a few weeks back at his social media bootcamp. The video of that interview is here. I asserted then that "the aggregation of all of this social media is the greatest media that has ever been created."

Let's keep looking at music blogging (which is what powers fredwilson.fm). My stream and your stream and your friend's stream might not get much of an audience. But when you combine them all together as the Hype Machine, elbo.ws, and We Are Hunted have done, you get music services which start to amass sizeable audiences.

On the open web, services get built on top of services. Fredwilson.fm is built on top of Tumblr and Streampad. Hype Machine and Elbo.ws are built on top of services like fredwilson.fm. As we move up the aggregation stack, we start to assemble larger audiences. And then a song like the Velvet Underground song, Pale Blue Eyes, I posted to fredwilson.fm a while back can get more plays (1505 as of right now) than the total number of visits fredwilson.fm gets each month.

The new media is a disaggregated medium, where the channels themselves may be small but the microchunks that flow out of them can be very large. And that's why nanomedia is important.

UPDATE: PhoneTag has an api and they used it to transcribe this. Wow. This is awesome. Here's the transcript:

Robert: So, who are you?

Fred: I'm Fred Wilson.

Robert: And one thing I've been getting around and talking people about is the 2010 Web which some people call Web 3 but, I think, I just don't like the term.

Fred: Right.

Robert: Web 2.0 or Web 3.0. I think…

Fred: Me neither.

Robert: They explain times in the web, you know, the 1994 Web was about getting a web page. In 2001, it was about adding people and interactivity to those pages. And the 2010 Web is…

Fred: Well, I think, it's real time, for sure. I think it's distributed in the sense that things are going to happen outside of where they start, the whole concept of sort of apps on the iPhone or apps on Facebook or Twitter apps, big part of what's going on now that's going to go mainstream. You know, the way you experience Twitter is through FriendFeed and that's not an entirely obvious thing to most people that, you know, they can use one service through another service and then maybe another service on top of that. And I think that's all part of the 2010 Web. I think games, not so much playing games because we all play games on the Web but, it started to take the notion of what is playing a game and bring it in to more Web services, the notions of virtual currencies and establishing status and just creating game play dynamic inside of services.

Robert: You're talking about Tumblr right?

Fred: Right.

Robert: The Tumblrity…

Fred: Yes, the Tumblrs are this thing called Tumblrity which is recognizing that just the number of followers isn't really what matters inside a social system. It's a combination of how many people following you and how many people really engaged with you and how many people click on a link that you send around or how many people reply or how many people resend stuff. And what Tumblr is going to say, it built an algorithm that sort of captures all that they've established Tumblrity. It's also how often you actually create content in the system. And so people have gone crazy over Tumblrity. Everybody wants to know what their Tumblrity is. They want to make it better, you know. It created some competitive juices and that's essentially a game. It's not to suggest that Tumblr isn't more than a game, it is more than a game but being that it is really, I think, self-reinforcing game play dynamic. So, I think that is a big part of the 2010 Web. And then, also, you know, the ability, virtual currencies, I think. Maybe that's too big of a word, but Facebook's launching a payment system. And you know, I think, a number of people have written that Twitter should have a payment system. I mean, I've often thought like, if I can say The Scobalizer, you know, and send you a message, why can't I say, (P?) Scobalizer $100?

Robert: You can do that anytime you want.

Fred: Anytime, but, you know, so we could maybe, start getting accounts in these social systems that, maybe get some value, accretion from what we do in the system and also allow us to use as accounts to move money around much in the way that people do this already in Second Life and people will start doing it in Facebook. People already do it in Facebook games. So, these are all the kind of things that I think…Mobile is another big part of the 2010 Web. I don't know if this is true, but, I heard that the 40404 shortcode is the most used shortcode in the United States now.

Robert: Yeah, that's Twitter's shortcode, right?

Fred: Yes, Twitter's shortcode. And if that's true, it's a big deal and I think it shows the power of mobile and Web being connected natively. I pull up my phone, I Twit something, you see it on the Web or you see it in front of you which is also on the Web, or you see it in Twit Deck. And that's a very seamless experience between mobile and Web and desktop. And TV obviously should be another piece of that. And so, that's all…

Robert: Now, we just had Adobe and they're showing up the new Flash Player that does 1080p Video.

Fred: Amazing.

Robert: And so, now, you can do a video with a camera like this one and distribute it to iPhones, distribute it to 60-inch TVs and it's (Boxy?) users.

Fred: I'm a huge fan of the TV as… You know, no, the third screen, right. So it's the desktop or Web top, the mobile phone and the TV in the family living room, and we've all known that, but it hasn't really happened. We're still watching more video on our laptops. And we, being geeks, still watch… I'm a geek. Are you a geek?

Robert: Yeah.

Fred: More video on our laptops than we do on our TVs and that I think is going to change. But, the thing I really want is… you know, how there's a Delicious Firefox plugin, so whenever you see a Web page, you can just hit your Delicious plugin and it just go… that your (apps?) gets posted on a map into Delicious. What I want is a video plugin, right, where I have a little thing on my browser, anytime you e-mail me a link and I see it in Gmail or you pass a link to me in Friend Feed or Twitter, or I see a link in Facebook, or I come across a video, I just want to bookmark it. But what… I really want to bookmark it. I want to queue it. And then, after I get home at night, after the kids, dinner with the kids and homework, that hour-long time that I have where I sort of lean back, linear video, I just want to go to my queue which I've built up over the past day or two and just boom, sit back and watch linear video, watch this video, and then the next thing is some funny clip somebody saw me and then go watch Charlie Rose and, you know…

Robert: It seems, yeah, I was driving and I just picked up my son… Marian was driving actually one day on a Sunday and it was during one of the golf tournaments. And Twitter was going nuts about Tiger Woods, right. Tiger just made the most amazing shot we've ever seen.

Fred: Right.

Robert: I was just…hundreds of them, right, you know. And so, that told me that there was something really interesting on TV but I couldn't watch TV right then. I wanted to click a button and save…

Fred: Save that for me.

Robert: And save that for me and bind that moment because I don't want to watch the whole two-hour tournament.

Fred: Exactly.

Robert: I just wanted to see that shot, you know. It's sort of like the nightly news, you know. And it's really hard to do that, driving and so…

Fred: And I think when we do that, when we create services like that with Microchunk Video that allow us to essentially queue up that video. I mean, you know, we've seen a little bit with TiVo remote, right. Like you can hear about something and through TiVo you can somehow log on to the Web and tell your TiVo to record it but that's way, way too hard, right. You know, we need to be as simple as your seeing Tiger Woods hit an amazing shot in your Twitter feed and you need to be able to do something right then and there. Maybe through a Twitter and that goes and grabs that thing and puts it into some queue that later on at night, you can sit back and there it's going to be for you. When that happens, I think, video on the Web is going to take off big time.

Robert: So, you've been investing in all sorts of interesting stuff at Twitter and Bit.ly, right? And the…

Fred: I'm not an investor in Bit.ly but I'm a big of the guys who did Bit.ly. That was John Borthwick and Andy Weissman of Betaworks.

Robert: How did you get involved with Twitter?

Fred: I was using it and…

Robert: You chased them. I saw you on the blog.

Fred: Yeah, yeah. What happened was, I was using it and Ev wrote a post on his blog, this is why you got to read blogs. Ev wrote a post on his blog that said, we are going to spin Twitter out of Obvious Corporation. Obvious was the successor to Odeo and I happened to be in San Francisco. I called Ev, he said, yeah, you know, I was coming to talk about it. It turned out I couldn't come in that day. Our schedules didn't work. I flew back to New York. I sat down with my partner, I said, you know, we should make this investment. So, at that time, it was just the two of us. We now have a third partner, Albert, but at that time, it was just Brad and myself. The next week we flew out there. We had a two-hour meeting with Jack and Ev. We basically convinced them that we were good guys. We came back, I called Ev. I said, what do you think? He said, we liked you. I said, can I send you a term sheet? He said, yes. I sent him a term sheet. He called me back the next day. He said, I think we can do this. We did the deal.

Robert: Where do you think, I could spend a whole lot in two hours just typing on my Twitter. For regular businesses on the street, you know, a restaurant, a bike shop or a small manufacturing company. How do you think they're going to use the real time, the Twitter, the Friend Feed, the Facebook from the future?

Fred: Well, I think that we need a lot more stuff built on top of these services. I see Facebook and Twitter and Friend Feed emerging as public channels. I call them public because it's a way for people to communicate with each other publicly. And the problem with those channels is they're really noisy. And I think we need services built on top of them. I think Facebook and Friend Feed and Twitter are building a lot of those services into their services. But I think way more people are building services on top of them. And I think they're going to be people who built services for the small guy, the local merchant, to be able to do what they need to do. There's a company called CoTweet that's here in New York that's building an application for businesses to engage on Twitter. A good example of that is that we have a company called Clickable which is built to service on top of the Adwords API. So, for small businesses who want to buy and sell, who want to buy Adwords, Clickable is a better interface for them. And there's going to be somebody who builds a great interface for the small business on there for Twitter. It could be Clickable. Actually, it's a smart thing for them to do. But, it will probably be somebody else just because they've got a lot of do already. And that's the great thing about these open APIs which is another big part of the 2010 Web, is that services are going to be built on top of services are going to be built on top of services. And you know, how we always have these layers, these stacks and then the next layer comes, the next layer comes. That's happening faster and faster and faster just like pop, pop, pop, pop, pop, pop. And developers are just building amazing stuff. I'm going to a meet up tonight in Brooklyn. Three of our portfolio companies, all my blogging tools and they're having a blogging API meet up so to discuss outside in and (Samantha?) all have really cool blogging tools, all of which have APIs. And they're doing a presentation to developers who want to built blogging tools on their APIs and other APIs. And that's, there's just going to be more and more of that.

Robert: Yeah, it's pretty crazy how the blog is changing. What I'm doing now is doing cut and paste programming, you know, cut and paste programming.

Fred: Exactly.

Robert: And so, on my blog, I have a whole bunch of widgets on the side, one of which is Friend Feed, one is a Google Latitude thing, one is a Facebook Connect thing, and those were just copied and pasted…

Fred: Right.

Robert: (Without a script?). If you're a more adept programmer, then you can actually play with the APIs to build even something cooler, right?

Fred: Right. Yeah, and what people do is they post it for themselves.

Robert: Yeah.

Fred: And they put it out there and other people like it too. Etsy has an API and…

Robert: Etsy is a really cool service for people who want to sell handmade goods, right?

Fred: Yeah. It's an arts and crafts marketplace on the Web. It's really the best way to think about it, and many of the sellers are women, and there is a small but meaningful subset of Etsy sellers who are married to geeks, and so, a lot of them have, you know, said to their husbands or boyfriends, "Hey, can you build me something on top of the Etsy API?" And so we see a lot of activity where, you know, sellers want some widget that they can put on their blog or on Facebook and, you know, Etsy doesn't really have that for them, so they get their significant other to build it on top of the Etsy API. And then, once it's out there, other sellers see it and say, "I want that, too" and starts to propagate. I mean, I have this single blog roller on my blog. I just wrote on my blog, like, I don't want to do a blog (roll?) because the blogs are being changed and the idea of constantly managing a blog (roll?) is too hard for me. What I really want is just a Firefox plugin that watches what I read and decides what the most important blogs are to me, and over time, it will evolve and change. Some guy built it. It's called BlogRollr and it's just a widget to put on your blog, you download a Firefox plugin, it basically looks for pages with RSS feeds on them, counts them up, and then the one that you visit the most is first on your BlogRollr, and you can have a…

Robert: That's awesome.

Fred: Isn't it cool?

Robert: That's awesome.

Fred: I just wrote about it. Someone built it. You know, that's the amazing thing is that with all the tools out there, it's not that hard to build stuff. It's about building stuff that people care about.

Robert: Yeah.

Fred: So, this is sort of a five-year trend, not a one-year trend. But what we see, these engineers are even more important than ever. Most of our companies, at least half the headcount is in engineering, and I don't see that doing anything but continuing to go up. The other area that we're seeing a lot of headcount in is what I call environmental remediations, sort of trying to deal with all the bad stuff that happens in these systems, spam, hacking, fishing, abusive behavior, you know, squatting, like one of the issues Twitter has to deal with is people squatting on people's brands.

Robert: Yeah.

Fred: Someone had Scobalizer, you know, that wouldn't be right, you know, so they have got to deal with that. And so, that's basically large customer support infrastructure and engineering that's dedicated, so, you know, you can't scale… those kinds of problems you can't scale with just adding more humans, so you just have to start building detection systems and moderation systems. And so that whole area is just a huge call center for anybody that's involved in social media, and most of our companies are involved in social media. Discuss, for example, has been building their own comment spam system. They're using all the existing systems that are out there.

Robert: Yeah.

Fred: And now, you know, they sort of mash them all together, and now, they're building their own proprietary algorithms that use a lot of the data that they've got inside their system. You just got to do that.

Robert: Yeah. Are you saying that physical infrastructure is changing? You know, 10 years ago, people have to buy their own servers or use…

Fred: Oh, we see most people building on a Cloud, you know, the small startups building on a Cloud. Some people, as they…

Robert: Completely on the Cloud or a hybrid (frame?)…

Fred: Hybrid mostly. Some people pure Cloud. We are seeing some companies as they scale go to a collocation, you know. You know, I think servers the size of Facebook or Twitter, you know, it's unlikely that they could run that entirely on the Cloud and they don't. But it's amazing how many services do still run on the Cloud.

Robert: Yeah.

Fred: And I think we'll see more and more of that.

Robert: Yeah. Anything else that you're seeing? It's 2009, we're in the middle of a recession, depression, whatever you really want to call it…

Fred: The only thing that I would say is we would talk a lot about sort of horizontal, you know, innovation, what's… you know, what's happening kind of across all sectors. We're very interested in, you know, a lot of what the internet has changed, disrupted or whatever you want to call it over the past 15 years has been the media business.

Robert: Yeah.

Fred: And we think that education, finance, energy, government, health care, those are all sectors that we should look for really disruptive internet services to evolve either into or build up inside of… we're particularly excited about education and energy and finance. Little less excited about government and health care, but we're looking to cross all these sectors and there's lot… lots of interesting innovation going on.

Robert: Sometime in the next 10 years, there's going to be a revolution in education due to the cell phone.

Fred: Yeah, not just the cell phone but you know, this whole home schooling, un-schooling movement, you know, which I thought was sort of like the lunatic Fringe but it's starting to become more mainstream and I think entrepreneurs are starting to build services for that movement. And that movement's just really hungry for any kind of service they could leverage and I think there will be businesses that will ultimately disrupt the entire education system that will start in the home schooling and un-schooling movements because that's the place that they can get going first.

Robert: Yeah. Tell me about the tools that you're using. Yeah.

Fred: What do I use?

Robert: Yeah. I see you on Twitter all the time.

Fred: Well, I'm pretty old school. I… I'm the anti-school…

Robert: I love your blog by the way. It's one of the few that I read everyday and I'm sending…

Fred: Thank you.

Robert: Pretty crazy.

Fred: I'm very old school. I mean, I'm embarrassed to say that I use the Twitter Web app and SMS as the two ways I interact with Twitter which is pretty, pretty (log-eye?) when compared to what's our there.

Robert: I turned off SMS three years ago. So…

Fred: And…

Robert: But that's because I, I just couldn't deal with it… with having to manage, you know, that many users. So…

Fred: I still visit Techmeme everyday and try to keep track of what's going on out there. I, I use Gmail just actually switched pretty much from Outlook to Gmail. It took me a while, I kind of force myself to do it. I'm loving it now. What else? I don't use Instant Messaging very much because I'm away from my desk. I spend most of my day in meetings or like out on the road, meeting people like you…

Robert: That's why Twitter works so well. It's like you can do it while in between things…

Fred: Right.

Robert: You know.

Fred: Exactly.

Robert: I (never?) said to the congressmen that I talked with who are on Twitter loved it because they could do it in more other way - going from session to session or…

Fred: Exactly.

Robert: From the meeting to...

Fred: I snack on Twitter.

Robert: Yeah.

Fred: You know, it's like, I wrote a twit over the weekend. My son and I were waiting in line at the shopping market and we both pulled out our phones and I went to Twitter and started, you know, catching up on Twitter. It was, we knew we were going to be in line for like two or three minutes. So I'm catching up on Twitter and he goes in, he plays his game of Mafia Wars on his iPhone and he goes in and plays two or three hands of Mafia Wars and we both snacked on our particular mobile app and then, you know, it's our turn to pay and we left.

Robert: Yeah. The (road?) really site that because I have a 19-month old son and he already knows how to turn on an iPhone and find his game, so he knows how to page through the apps.

Fred: What's his game?

Robert: Well, Monkey Ball. Yeah, it's Monkey Ball, I think. It's the one that he likes or SmackTalk, he loves that. It's little animals that you talk to the iPhone and it talks back to you with a monkey, with a funny voice. But he knows how to pick out his app and start it up and how, you know…

Fred: It's amazing!

I am proud to say that I've said at least half of these sayings at one time or another and I don't do email on my blackberry during board meetings.

It's an interesting question and one I've never tried to answer directly in writing. But it's also a question we attempt to answer every day in our firm as we evaluate thousands of new startups every year.

Let's take ten of the most popular new consumer technology products in recent years (with a couple of our portfolio companies in the mix): iPhone, Facebook, Wii, Hulu, FlipCam, Rock Band, Mafia Wars, Blogger, Pandora, and Twitter and let's try to describe in one sentence or less why they broke out (feel free to debate the reasons they broke out in the comments):

iPhone - mobile browser with a killer touch screen interface
Facebook - a social net with real utility
Wii - gesture based user interface for gaming
Hulu - your favorite TV shows in a fantastic web UI
FlipCam - a video cam that fits in your pocket comfortably
Rock Band - everyone can be a rock star for a few minutes
Mafia Wars - a natively social game built for social nets
Blogger - a printing press for everyone
Pandora - drop dead simple personalized radio
Twitter - blogging everyone can do in less than a minute

In most of these cases, the breakthrough product or service delivered a new experience to consumers that they had never had before. Sure there were social nets before Facebook, but none allowed you to run your life the way Facebook does for my kids. Sure there were browsers on phones before the iPhone, but there hadn't been one that you could actually use like you use a browser on a computer. Sure there had been personalized internet radio services before Pandora but not one that was drop dead simple and delivered a great experience.

So it seems to me that consumers are driven to new experiences that are simple and useful and/or entertaining. It is not enough to be the first to market with a new technology. You have to be the first to market with a version of the technology that is simple and easy to use.

I'm curious to hear everyone else's thoughts on this. The sooner the better since the panel starts at 10am today.

The past couple days, I've been going back and forth with one of our lawyers on a deal we are working on. We've decided to suggest some changes to the deal and the lawyers are marking up the documents to show the changes.

We could simply send the marked up document back and say "these are the changes we are looking for". I've taken that approach in the past and it's not ideal. Usually, the recipient gets ticked off and you end up spending a lot of time and energy getting things back on track.

The better approach is to compile a list of the big changes you are looking for and call the recipient and walk them through the things you need changed. It's even better if you can do that face to face, although I wouldn't suggest getting on a plane to do this unless the deal is super important and very material to your company.

There are three primary reasons I've learned (the hard way) that a live discussion is the best way to suggest changes to a deal:

1) It shows respect for the other side. Instructing a lawyer to mark up a document and send it back is a slap in the face and most people get very upset by it if the changes are material.

2) Discussing deal terms principal to principal is so much easier than working through lawyers. I've gotten way more done this way.

3) Many times, there is a misunderstanding of the deal terms being discussed that documents and lawyers can't break through. A conversation can usually resolve these kinds of misunderstandings quickly.

So I suggest that we should all resist the temptation to convey material changes via the exchange of markups. At best, it saves you a twenty minute conversation, at worst it can easily cost you a deal.

You'd expect a cover story about one of our portfolio companies (Twitter) which mentions our Hacking Education event would excite me. But honestly, that's not why the piece is still rumbling around my brain this morning.

It's the finish of Steven's piece where he talks about "end user innovation" that is so brilliant. He makes this "larger point about modern innovation":

But what actually happened to American innovation during that period? We came up with America Online, Netscape, Amazon, Google, Blogger, Wikipedia, Craigslist, TiVo, Netflix, eBay, the iPod and iPhone, Xbox, Facebook and Twitter itself. Sure, we didn't build the Prius or the Wii, but if you measure global innovation in terms of actual lifestyle-changing hit products and not just grad students, the U.S. has been lapping the field for the past 20 years.

That's the thing that gets me so excited to get up and get going every day. Technology has reached a point where anyone can get involved with innovation. Patents and degrees matter a lot less. Imagining something and then coding it up is what its all about these days.

We are engaged in what Eric von Hippel calls "end user innovation" and it is a fundamental shift in the way society innovates. The Twitter founders are a perfect example. They built a simple tool to share short messages and it has become something entirely different. As Steven says:

It's like inventing a toaster oven and then looking around a year later and seeing that your customers have of their own accord figured out a way to turn it into a microwave.

I'd like to do exactly that to my toaster. Since every time I write about something I want, one of you builds it, I'm expecting my microtoaster to show up sometime soon.

Of course, as Holly was talking, I was thinking of different leaps of faith. I'm not much for religion to be honest. It's something I partipate in but not something I believe in.

But I very much believe in leaps of faith. Every investment we make, every person we back, every strategy we concoct in partnership with the entrepreneurs we back is a leap of faith. Wikipedia says that a leap of faith is:

I was on a call yesterday with another VC who asked me why we made our investment in Zemanta last summer. There's a blog post I wrote up that explains our thinking at the time, but I did not point him to it. I explained that we had a gut instinct about the technology, market, and team that made us think there was a substantial opportunity in allowing people to "write smarter."

There is no market for tools, beyond spell checkers and grammar checkers, to allow people to write smarter. There's no business model for a tool like Zemanta. There's no established track record of successful internet companies in Slovenia. In short, there was little to no empirical evidence to go on when we made our investment in Zemanta. And nine months later, there still isn't.

So I told the VC I was on the call with that if he was going to invest in Zemanta, it would have to be a leap of faith. Maybe he'll make it and maybe he won't. I still have faith in Zemanta and I still have faith in all of our portfolio companies.

You need a lot of things to be a successful venture capital investor. You need to understand the market you invest in. You need great networking skills. You need to be able to add value to your investments. You need an understanding of financial markets and how companies are valued. Those skills are neccessary but not sufficient. Because most of all you need to be able to make leaps of faith. And the right ones, of course.

The problem with set top box data is that it is controlled by the cable companies and they have not been particularly open with it. There are a few companies that have access to it, but suffice it to say that building a business based on getting access to set top data is not for the faint of heart.

So I was quite interested when I came across this post from one of our portfolio companies, Simulmedia, which is working in this TV targeting space. Simulmedia was founded by Dave Morgan, founder of Real Media and TACODA and a veteran of the online ad targeting business, to deliver similar products and services to the TV market. So he knows a bit about all of this stuff.

The post describes a little experiment Simulmedia did to analyze TV channel surfers using only Twitter posts as their data source. Simulmedia explains why they turned to Twitter data for this work:

To investigate surfing behavior further we tapped into data from Twitter, where dozens of people announce to the world that they are channel surfing every day.  Unlike traditional ratings or second-by-second set-top-box information, Twitter has rich qualitative information that reveals motivations behind viewers’ surfing.

Here's the results of their study:

While the data in and of itself is interesting, I am more intrigued by the idea that Twitter can be used as a panel that once it is large enough (and maybe it is already) that can produce much of the same data that is currently locked in set top boxes and controlled by the cable companies.

The Internet is disruptive and reminds me of that fact every day.

I've always been fascinated by the Internet measurement business and comScore is the recognized leader in that business. With agencies, marketers, wall street, and a host of other important constituencies, comScore is the "gold standard."

But I've also been very frustrated that comScore's panel centric approach (2mm Internet users worldwide) doesn't measure small early stage web services very well. It's only once a service gets a significant audience that a panel based approach can really work.

I've also spent countless hours explaining why panel-based numbers don't match server logs. Many people think server logs can't be wrong. But they can because one person can access a web service from their home computer, work computer, mobile phone, and friend's laptop in one single day and be counted as four unique visitors. Server side numbers are also impacted by cookie deletion, which is common among the most sophisticated (and most active) web users.

So the panel based approach has issues and so does the server based approach. The simplistic way I've always looked at it is panel undercounts and server-side overcounts. I've always advocated a "triangulation" approach to get to the right number.

So it's very big news that comScore has spent the past year building an entirely new approach to Internet audience measurement that combines its "gold standard" panel with server-side numbers reported by web services who install comScore's beacon. The comScore press release that explains how Media Metrix 360 works is here.

If you have a smallish web service but still need comScore numbers to sell advertising or raise capital or for some other reason, you can now put the comScore beacon on your pages and get reported right along with everyone else. This is also hugely important for "apps" that run on top of web platforms like Facebook. Our portfolio company Zynga, for example, has a huge number of montly unique visitors but the Internet audience measurement services have not been able to see most of them. If Zynga puts the comScore beacon on their pages, they would be reported alongside all of the web-based gaming services.

The other big innovation with Media Metrix 360 is the "universe" report which does the following:

I think this is a very big deal, for comScore, its customers, and web services of all shapes and sizes that want to be counted correctly. I'm thrilled to see this happen.