Don Dodge on The Next Big Thing

Seesmic desktop client for Twitter and Facebook

2009-07-10T19:08:11-04:00

Loic Le Meur launched Seesmic Desktop at TechCrunch Real-Time Stream conference today. It is a desktop client front end and aggregator for Twitter and Facebook. Basically it aggregates all your Twitter posts, replies, private messages, and Facebook posts and friend streams, and presents them in separate columns on one window. You can also post to Twitter or Facebook directly from the desktop.

Seesmic also includes a search capability for Twitter so that you can monitor names, hash tags, products, or anything in near real time. Imagine you are a product manager or competitive analyst and want to follow activity and sentiment about your products or competitors. Seesmic makes it easy.

Here is a screenshot. Note that you can arrange the columns in any order, resize them, individually scroll each one, and have as many columns open as you like. Also note the first two columns in the screenshot are from Twitter, the third from Facebook, and the fourth column from Twitter.

Seesmic is probably more well known for its super simple video chat service that allows you to capture video from your laptop or phone and immediately post it to the web. It allows video chats between multiple people that can be near real time, and preserved for later viewing.

Loic Le Meur says they have a completely web based version in the works, in fact he demoed it at the conference. This means no client download required, and the ability to use it on any device that supports a browser…like your Smartphone.

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Ron Conway on Real Time monetization revenue

2009-07-10T13:21:13-04:00

Mike Arrington at TechCrunch Real Stream conference started with a panel of Ron Conway (Angel Investor) and John Borthwick (BetaWorks). Ron invested in Google at a $75M valuation. Valuation today is over $130B. That was just one of several home runs by Ron Conway. John Borthwick has invested in lots of Twitter style companies including Twitter, StockTwits, Bitly, and others. BetaWorks is an operating company that also invests in other companies.

Ron invests in people first, idea second, and then how much IP innovation they have. Ron is looking at lots of “real Time” investments. That means content that is being created spontaneously by everyone. That content can be categorized, manipulated, searched, managed, etc.

Mike Arrington says the dumbest thing Twitter could do is add friction (subscriptions) to an open process. Ron Conway says innovation is happening in Silicon Valley, not Sun Valley. This was a jab at the old media execs (John Malone, RupertMurdoch, Barry Diller) meeting at Sun Valley this week.

Ron says Real Time apps like Twitter have brought lots of new content to the web. This new content will create a whole new industry. Real Time search will be big. Ron Conway believes this new wave of the Real Time Web could be as big as the original dot com boom.

Top 10 monetization opportunities in Real Time from Ron Conway (More than $5B of revenue opportunities)

10. Lead generation – Twitter and other apps are great lead generators. Followers broadcast to their followers, etc.

9. Coupons – printed coupons is a huge business, even bigger on the RT web.

8. Analytics of the data – tons of RT data that can be analyzed for trends

7. CRM – Customer relationship Management in real time, using social network apps

6. Payments - like PayPal on Twitter

5. Commerce – selling products, referring products

4. User authentication – verification of users and accounts

3. Syndication of new ad types – There will be innovation in advertising types

2. Context sensitive advertising (Display)

1. Real Time Search – Think Google in real time, filtered by your social graph

Lots of new opportunities. New tools and services will be created that take advantage of the social graph and real time activity. Think about all the products and services created for the original web boom. Now think about how they need to change to accommodate the Real Time web. The question is, how many of them will be stand alone companies that endure, and how many of them will be acquired by the existing big players. Facebook is here to stay. Twitter…the jury is still out.

MTV on future of web video beyond short clips

2009-07-06T12:56:58-04:00

MTV has a vision for video, 8 minute scenes on the Internet, 3 of them stitched together for a half hour TV show, and a feature length movie based on the TV series. The New York Times has a story The Rise of Web Video, describing the move beyond 2 minute clips. David Gale, creator of MTV Films, and EVP of MTV Networks sat down with me to discuss his vision for the evolution of video on the Internet.

Web video is different - David Gale’s MTV division led the development of $5 Cover, a scripted reality show based on the music scene in Memphis, following upstart bands trying to make it in the city. The TV show airs Fridays on MTV. They have several other shows under development that will use the same formula; 8 minute web clips, half hour TV show, and potentially a feature length movie. This model requires a different approach to screen writing and story development. Mr. Gale said the format works well for comedy, horror, and other forms because the audience expects to laugh every few minutes in a comedy, or see horror every couple minutes. Building the story from the ground up with a couple scenes in an 8 minute sequence works well for the web, and easily transitions to the 30 minute TV format. However, trying to work backwards from a 30 minute show and break it into web length clips doesn’t work so well, for obvious reasons.

The New York Times story says web video viewing trends are changing slowly;

“While online video is not going to replace television anytime soon, it is now decidedly mainstream. About 150 million Internet users in the United States watch about 14.5 billion videos a month, according to the measurement firm comScore, or an average of 97 videos per viewer. Although the Web lacks a standard for video measurement, comScore says average video durations have risen slowly but surely in the past year, to an average of 3.4 minutes in March.”

Sponsorship for web video has been a problem for most producers. MTV has a major advantage here with their TV sponsors and other network assets. However, YouTube has been unsuccessful to date with traditional advertising applied to web video. There are major copyright and other “rights” issues with much of the User Generated Content (UGC) on YouTube. Quality of the video is another issue. Web viewers are not very keen on pre-roll or post-roll video ads. The jury is still out on what advertising model will work with short form web video.

Product Placement - Ashton Kutcher and Jason Goldberg of Katalyst Films are experimenting with new approaches to web video. Rather than use pre-roll or post-roll ads they are using product placement within the video and premium sponsorship for their professionally created web video shows. Check out KatalystHQ, their office based reality show. Cheetos is a sponsor of the show, and Cheetos are integrated into the storyline of each episode. Obviously, to do this you need a sponsor up front before writing and shooting the video. Easy for a film company like Katalyst Films, but usually not the case with garden variety web video.

Jason Calacanis is also experimenting with web video with his show This Week In Startups, also known as TWiST. Jason built a professional studio at his Mahalo office in Santa Monica. This Week in Startups is an interview style show with viewer call in questions. Jason has three sponsors who have the startup community as their target audience. A perfect match between sponsor, content, and audience.

Sponsor, Content, Audience – The key to making video work on the internet is good alignment between sponsors, the content of the show, and the audience. To achieve this alignment the content must be very targeted and focused. This is the problem with UGC style content, while it may be funny or topical, it rarely lines up with a sponsor or audience demographic, making advertising sales nearly impossible.

In future posts I will dig deeper into each of these issues and provide other examples of successful web pioneers.

Business plans, business models, who needs them?

2009-07-04T15:15:40-04:00

For a long time I have wanted to write a post about the irrelevance of business plans. Twitter got VC funding with no business plan and no business model. Three years later they still have no revenue model, but their investors are very happy.

I confess it took me a while to figure out Twitter. I rarely use SMS or texting either. These mediums strike me as one way bursts of irrelevant chatter for the ADD (Attention Deficit Disorder) crowd. Twitter users have evolved from simple updates of what they had for breakfast to more insightful quotes, inspiration, and pointers to interesting pictures, videos, and web content. If you haven't seen or used Twitter check out this old (2007) screen shot (left) of a Twitter message from Dave Winer for an example of where it was, and one from yesterday (right) for where it is now.

Now, back to business plans - In all my years in startups and all my work with VCs I don't ever recall seeing a written business plan. The fact is that investors do not read them. Here is the inside secret... investors invest in people not business plans. Early stage investors know that great people can make a mediocre idea work, but mediocre people can't make a great idea work.

PowerPoint rules - An earlier post "How to handle the first VC meeting" explains how to get a VC meeting and what to present. Ten PowerPoint slides is all you need. A short demo or screen shots takes care of the rest. But, in the back of their minds the VCs or Angels are really evaluating YOU...how you react to questions and criticisms, how quickly you think on your feet, your energy level, passion, and vision.

Early stage investors understand that they just don't know a lot of things. They are always dealing with incomplete information and unknowns. Competitors may emerge, business models will change or become apparent later on, a better application of the technology or idea may emerge, and the political/legal/business environment might change. In those early meetings the investors are evaluating how you respond to questions, challenges, and new ideas. They may focus a lot on your past as a guide to how you will react in the future. These things matter a whole lot more than a business plan that is surely overly optimistic and filled with unfounded assumptions.

Paul Kedrosky has another take on why business plans are actually not good for you. Two reasons. First, because VCs are professional nit-pickers. Give them something to find fault with, and they'll do it with abandon. I generally tell people to come to pitch meetings with less information rather than more. Sure, you'll get pressed for more, but finesse it. Presenting a full and detailed plan is, nine times out of ten, a path to a "No" -- or at least more time-consuming than having said less.
Profits are a different issue. Being profitable too soon gives investors, rightly or wrongly, an idea of what the margins are on the business, as opposed to what they could be in some perfect world. As a result, it takes a mighty force for them to not start wading in with discounted present value worksheets, and the like, thus hammering your valuation and generally making funding much more complicated (and equity consuming) than if you were wildly unprofitable.

Big corporations like business plans. The one place I have seen them used is inside big corporations. Big companies require all kinds of plans and justifications for making an investment in a new product or new piece of equipment. Big companies have teams of MBA's skilled at poking holes in financial projections and shooting down projects. Big companies have a lot more at stake, their business is more predictable, their revenues and costs can be reasonably forecast. So, business plans make sense for them.

Business plans are used to examine cost and risk. PowerPoint's are used to create a vision of opportunity. This is why entrepreneurs should stick to short PowerPoint presentations and avoid detailed business plans.

Page views required to generate $1M in ad revenue?

2009-07-01T12:47:54-04:00

Facebook, MySpace, LinkedIn, Beebo, Plaxo, Orkut, and MSN Spaces are the biggest well known social network spaces. But what about the 800 other sites scrambling for audiences in the social network space? Can they generate $1M in advertising revenue per month, or even per year? Will they ever be profitable?

USA Today says "Social Network Sites Work To Turn Users Into Profits" and summarizes the problem with this quote;

"Short of striking it rich with online ads or creating a new revenue stream, how can so many sites leverage their vast audiences? In many respects, it is the same query that dogged portal companies in the mid-1990s and search engines in the early '90s. Some were sold. Some went public. Some went belly up.

The ongoing challenge is to concoct a potion — be it through banner ads, premium subscriptions or licensing agreements — that no one has perfected. Facebook, crown jewel of the field, is valued at $15 billion but barely turns a profit."

CPM versus CPC - Big audiences are great but how you monetize them is the key to financial success. Google and the search companies are able to sell Cost Per Click (CPC) ads and command very high rates. Content sites and social networks don't have a search term to key off so they charge Cost Per Thousand (Mil) or CPM rates. In some cases it can take 1,000 page views to generate the same revenue as one click on an ad.

A penny for your thoughts? I talked to a Facebook App developer at the ReMix conference a few weeks ago. He told me his app is generating 300 million page views per month. Wow! Then I asked what kind of CPM (Cost Per Thousand) ad rates he was getting. He shrugged and said somewhere between $0.02 and $0.05 per thousand. That pencils out to between $6K and $15K of advertising revenue per month for those 300 million page views.

How much traffic is needed to generate $1M in ad revenue? It all depends on how well you can target your audience and how much you can charge for CPM rates. But, based on a survey of social network sites let's assume an average CPM of $0.40. You would need 2.5 Billion page views per month to earn $1M in ad revenues. That is 2,500,000,000 page views...and how many sites can sell out all their page view inventory?

A New Revenue Model? - Google revolutionized the search business by banning display ads sold on a CPM basis, and instead offering text based ads where you only pay when someone clicks on the ad, what we now refer to as CPC.

It will probably take a new revenue approach to make many Social Networks profitable. From the USA Today story;

"Facebook's ambitious plan to reshape advertising — via a new approach to social marketing, called Beacon — was a bust. The idea was to inform friends whenever a Facebook member purchased something from online retailers. When consumers protested its invasion of privacy, Facebook CEO Mark Zuckerberg acknowledged the miscue and promptly apologized.

Even Google, as close to a money mint as anything online, has struggled. Google has a deal with Rupert Murdoch's News Corp. to place ads on MySpace, and owns Orkut, which flopped in the USA. Co-founder Sergey Brin recently admitted the "monetization work we were doing there didn't pan out as well as we had hoped."

Which new model will work? No one knows at this point, but there will be billions of dollars for whoever figures it out.

Beacon was innovative, but privacy concerns killed it. We are often influenced by what our friends buy, maybe just a slightly different approach will work.

Social recommendations are very powerful. Back in the early days of the web there were several attempts to consolidate buyers into groups to get better prices. Could social networks do something similar?

Businesses and advertisers are anxious to tap into the power of social networks. The social networks are building huge audiences but can't figure out how to monetize them. When they learn how to connect effectively the benefits will be amazing for everyone involved.

This is a business problem, not a technology problem. The answer will be simple and obvious. In fact, it has probably already been considered and rejected several times. Someone will come along and put a slightly different twist on it and...Eureka!!! Don't you just love business? How do you think this will play out?

Why do Fast Followers often beat the First Mover innovators?

2009-06-26T23:06:37-04:00

Innovation drives our industry, attracts the best talent, attracts VC money, and wins fame for its leaders. Innovation leaders burst onto the scene, win early market leadership, but sometimes can't sustain the pace. Why do "fast followers" often jump in later and make fortunes? Is management responsible for the success or failure? Or, are these innovation leaders acquired by larger players before they have a chance to evolve into successful stand alone companies?

I have been on the leading edge, sometimes bleeding edge, of technology for most of my career. I have been fortunate to be part of start-up teams that have created "first-of-its-kind" innovations at companies like Forte Software, AltaVista, Napster, Bowstreet, and Groove Networks. All of these companies were first in their field, yet few of them realized the financial rewards one would expect. Is it all timing and luck? I don't think so.

Before exploring the reasons for success or failure lets review a list of innovation leaders and fast followers.

AltaVista -> Google
Napster -> iTunes
VisiCalc -> Lotus 123 -> Excel
Word Perfect -> Word
Netscape -> Internet Explorer
Apple Newton -> Palm Pilot -> Blackberry
IBM PC -> Compaq -> Dell
Double Click -> Google Ad Sense
Ofoto -> Flickr
Compuserve -> AOL -> @Home -> Comcast & Verizon
Nintendo –> Xbox
Friendster –> Facebook
Blackberry –> iPhone

All of these companies were innovation leaders and market leaders. Yet, they were eclipsed by fast followers, in some cases multiple times, who imitated their innovation. My belief is that the technology was outstanding...the management was not.

Clayton Christensen wrote The Innovators Dilemma which I reviewed in an earlier post. The basic premise of the book is that management optimizes around protecting their existing business and fails to recognize and react to disruptive threats. However, the examples in Christensen's book play out over 10 or 20 years. The above examples played out in 5 or less years. Are the same factors at work here? Lets take a look.

AltaVista was the first search engine and the clear technology leader. The management at DEC didn't understand what they had and didn't invest the necessary resources to make it a business success. Later Compaq and CMGI squandered the search opportunity and tried to imitate Yahoo, Excite, Lycos, and AOL in the consumer portal game. Big mistake. Fault management.

Napster was the first P2P file sharing application to bring together search, FTP, and Instant Messaging. Brilliant technical synergy. There are lots of reasons for failure here, mostly management decisions and unfortunate timing.

VisiCalc was the first spreadsheet, invented by Dan Bricklin and Bob Frankston. I know Dan fairly well but have never asked him why he thinks VisiCalc fell behind and Excel moved ahead. This topic deserves its own post. My memory is that VisiCalc was slow to adopt the DOS platform. Lotus 123 moved ahead on DOS and achieved market leadership, but failed to jump onto the Windows platform fast enough. Excel did make the move and the rest is history.

IBM created the PC revolution and was the early leader. Compaq was a fast follower focusing on "transportable" PCs and won huge market share. Dell came in later and trounced them all with a better business model.

Compuserve was the first dial-up service provider. Together with Prodigy they dominated the market. Later AOL entered the game with superior marketing and original content. AOL absolutely dominated in the 80's and early 90's. Then @Home created the cable Internet market and took the early lead. It wasn't long before Verizon, Comcast, and other cable providers owned the broadband market. AOL never really made the transition from dial-up to broadband.

In nearly every case the early innovators were eclipsed by fast followers. Why did the fast followers take over market share leadership?

Better business model (Google, Ad Sense, Dell)
Better market position (Word, Excel, Comcast, Verizon)
Better timing (iTunes, Flickr)
Better platform choices (Blackberry, Word, Excel)
Better management (all the fast followers)

It is overly simplistic to pin the success or failure of these innovators on one factor. There were a combination of factors at work. But in most cases the problem was not inferior technology, it was inferior management decisions.

So, were these early innovators led by technical visionaries who were not good managers? Will the imitators and "fast followers" suffer the same fate and be overtaken by new fast followers?

The list of "fast followers" above are more than just imitators. They have continued to innovate far beyond the original idea or feature set and have maintained market leadership. If you look closely at these companies they have a mix of technical visionaries and business management leaders. I discussed this with Robert Scoble who pointed out that it takes a different set of skills to start a company than it does to sustain a company. This balance of skills, I think, is the key to sustained market leadership.

Cisco is an example of an early innovator that kept their market leadership position over time. Their technical founders brought in professional managers to take them to the next level.

There is a rare breed of technical visionaries who are also great business leaders. Bill Gates, Gordon Moore, Larry Ellison, and Scott McNealy are examples. They are truly extraordinary and rare. However, I suspect that each of them has a strong business management team behind them. Bill Gates has Steve Ballmer. Larry Ellison had Ray Lane. The early innovators who failed did not have the business leadership necessary to sustain them.

Lessons for entrepreneurs;

Never stop innovating
Build a well rounded management team early
Value sales and marketing talent as much as technical talent
React quickly to disruptive technologies or business models
Don't be too proud to imitate when it makes sense

NOTE: This is a reprint of a story I wrote four years ago. I thought I would reprint it for the benefit of new readers of this blog.

Why VCs say no 99% of the time

2009-06-25T19:15:31-04:00

Venture Capital investing is a very tough game...and very lucrative if you are good at it. Part of my job at Microsoft is working with VCs, so I have learned a lot about the way they think...and why they say No to 99% of the deals they see.

This blog post by Jeff Bussgang, of Flybridge Capital Partners explains why VCs want to see every new startup...but say no 99% of the time.

"As one wise old VC once told me, "the trick in this business is to spend very little time on a lot of deals, and then a lot of time on very few deals." In other words, see everything to be a better investor, but exert a very tough first filter so that you only spend time on very, very few deals. In my experience, a typical VC has the bandwidth to actively "spend time" or actively work on only one to two deals at any given time and perhaps 10-20 in a year -- as compared to those 300-500 they get exposed to."

What are the odds? - VCs are exposed to about 500 opportunities a year. They spend time seriously looking at about 20 companies a year, and invest in two or three. So, they say no about 99% of the time.

We all say no 99% of the time - I would guess that every one of you reading this blog have a stock portfolio with 5 to 10 individual stocks or mutual funds. There are more than 5,000 publicly listed companies to choose from, and another 5,000 mutual funds. But, out of 10,000 possible companies you chose 10 to invest in. Why? Why did you reject the other 9,990 companies? Obviously there are more than 10 good companies to invest in. Other investors chose to invest their money in the other 9,990 companies...why not you?

We invest in people we know and companies we understand - We do this in our own personal investing, and VCs, with rare exceptions, do the same when they make decisions. We all say no 99% of the time, and we reject perfectly good companies, but we invest in things we feel comfortable with.

Find the right VC match - Don't be too quick to change your strategy or company pitch just because the first batch of VCs rejects it. It is all about finding the right VC that is interested in what you are doing and comfortable in the market space. Don't waste time trying to convince a reluctant VC. Move on and spend the time finding the right VC for you...that "gets it" the first time. There are at least 1,000 VCs in the USA. They all have different investment tastes...just like all of us do. Go for it!

For more information on how to raise money from VCs see the Microsoft StartupZone Resource section.

Boston startup events

2009-06-23T14:09:17-04:00

Boston has a vibrant startup community with lots of events to connect with VCs, Angels, and other startups. Here are several events for the coming weeks.

Xsite:2009 The Recovery Starts Here – June 24, 8:00AM – Organized by Xconomy. High-tech, life-sciences, and energy innovation may well hold the key to the nation's economic health and long-term competitiveness. And as a hotbed of American innovation, New England is poised to become a key driver of economic recovery in the U.S.

What’s Next In Tech – Exploring The Growth Opportunities of 2009 And Beyond – June 25, 6:00PM - Organized and hosted by Scott Kirsner. Register now for just $60.00. Whether you're starting a business, investing, or looking for your next career opportunity, you won't want to miss this jam-packed evening of networking and conversation. Led by a stellar group of entrepreneurs and venture capitalists, we'll separate hype from reality -- and explore which technology areas are actually growing and creating big opportunities for the future.

The Convergence of Video and TV – July 8, 6:00PM – Organized by MITX - Who will be the true benefactors in this new video ecosystem and how can marketers take advantage of this trend?

Understanding The Dilution Impact of Early Stage Investment – July 14, 12:00PM – Organized by The Capital Network

WebInno – Boston Web Innovators – July 15, 6:30PM – Organized by David Beisel of Venrock

Tech Tuesday - is a regular monthly meet-up organized by Dan Bricklin, of Visi-Calc spreadsheet fame. Tech Tuesday is for geeks, tech savvy professionals, DIY-ers, press, and other industry luminaries for an informal gathering.

This Week In Startups QA

2009-06-23T13:36:13-04:00

This Week In Startups is a weekly webcast hosted by Jason Calacanis that takes questions from startups, and discusses news events of the day. Jason asked me to be a guest on the show link to the video. The questions were great issues for all startups so it makes sense to share them here.

The show starts with Jason asking me questions about Microsoft, Bing, Zune, and other issues. The show went on for two hours…all of it compelling and insightful :-), but here is a guide to the questions and time marks.

How do I get VC or Angel funding for my business? Investors expect an exit or sale to get their return. But, I don’t want to ever sell the business. Can I get financed? (13:50 mark) This particular business was a newspaper so the answer was slightly different than it would be for a software or web company, but many of the issues are the same for any company.

How do I price sponsorships for my new web site? How do advertisers measure the value of sponsorships? Can I raise the price later? (27:00 mark) Jason uses his own show as an example of how to price sponsorships and how to create value for sponsors.

Our project started out as a 50/50 partnership, but now my partner has lost interest and isn’t working much on it. Technically he owns 50%. How do I work this out so I can move forward and develop the idea? (38:15 mark) This sort of thing happens all the time but you don’t read much about it because it usually gets worked out…or the business just dissolves. Jason and I offered several approaches to working this problem out, and suggested a simple legal agreement to handle this kind of thing.

My CEO has committed us to a program that I don’t agree with. I think it is a big mistake. What should I do about it? (52:00 mark) This was an interesting question. Jason gave some great advice that made the caller really think about his position. I suggested that this happens all the time in startups, and there are usually lots of strategy and product changes before they get it right. Don’t get hung up on one decision. There are rarely obvious right answers, and always incomplete information to make them.

How should we pick a lawyer for our startup? How much should we expect to pay? (62:40 mark) Again, Jason had great advice. My response can be summarized as, don’t hire your cousin Vinny. Get a lawyer that specializes in startups.

We don’t need to raise money, but we would like to have an Angel investor as an advisor. How do we find the right person? What type of relationship and deal should we propose? (66:55 mark) Again, great advice. This is a common question and really important.

The news of the week included iPhone 3GS, MySpace, Twitter, and other topical issues. (76:00 mark)

Jason Calacanis does a great job on This Week In Startups, a great resource for anyone starting and building a company. The show is LIVE every Friday at 1:00PM PST, and is available for streaming later.

Microsoft StartupZone also has great advice for startups and the BizSpark software program for startups.

How to get funding from VCs and Angels

2009-06-10T15:49:35-04:00

Last week I talked with a young first time entrepreneur looking for funding. He didn’t know where to start. I pointed him to Microsoft StartupZone where there is LOTS of great information from Guy Kawasaki, Brad Feld, Paul Graham, Ann Winblad, Ron Conway, and others about how to get funded.

There are over 50 fact filled articles covering topics like;

Getting a meeting – Once you have learned everything about how to put together a great pitch, business plan, and understand how much you need, the next step is getting a meeting with an investor. The best way to get the first meeting is to get referred by someone the VC knows. Someone like a former entrepreneur, board member, another VC, one of your advisors, etc. The chances of a first time entrepreneur getting a meeting without an introduction from a trusted advisor are very small.

How to handle the first meeting

Send a PowerPoint presentation of about 10 slides that describes the problem you solve, who your potential customers are, who your competitors are, the business model, the team, potential market size, how much money you need, and a plan with major milestones.
Be flexible and responsive, and don't expect the same from the VC. VCs are very busy people and are easily distracted. Be flexible about the meeting agenda. Respond to questions immediately. Do not make them wait until later in the presentation.
Research what kinds of companies the VC has funded in the past. Connect with any people you know at those companies. Get insight into how the VC works, and get a referral to the VC.

Here are some things to avoid when meeting with VCs

Don't use the latest buzzwords. This drives VCs crazy. Focus on the problem you solve for customers. Use real scenarios, not hypothetical web2.0 dreams.
Don't spend lots of time explaining "how" you do it. They don't care about the technical details. Explain what problem you solve for customers.
Don't avoid the competitor question. If you don't have competitors then you don't have a big market, or the problem you are trying to solve doesn't exist. If the problem does exist than customers have figured out some way to deal with it. Show that you understand how they are dealing with it today.
Don't be arrogant, and don't bluff answers. If you don't know, don't guess. Tell them you will get back to them.
Don't diss the competition. Respect the competition and anticipate what their reaction will be to your entry into the market.
Don't ask for an NDA. Don't think you are the only person to ever have this idea. Don't worry about VCs stealing your idea. They throw away hundreds of good ideas every year because the timing isn't right, the team isn't right, or the business model isn't right