Etsy Funded for $27M: Business Focused on the “Top Line”

Etsy, a company I’ve always been a big fan of, just announced a big $27 million funding round.  If you’re skeptical that quality businesses can succeed, here’s a fun post on Etsy blog about the funding.  Indeed, the transparency is remarkable.

 

You could call it a validation of a niche marketplace, but I think it’s better described as a validation of a model that’s focuses on the true top line: its users, sellers and buyers.  Etsy (by its own admission) may not be perfect, but it always strives to do its best.  This latest funding will ensure their vision lives for the long term.

Web 2.0: Dynamics Are Still Misunderstood

Just read an interesting article in early 2007 about Web 2.0 – Great Investments Required. So much good stuff out there. He follows up the conversation with Changing Ingredients for Web 2.0 Success.

It’s a relatively rehashed argument, so I’ll try not to reiterate each and every salient point. Costs of startups driven down, but clutter means differentiation is increasingly difficult. And there are many good points that are still relevant today. A slow burn, slow grow is also OK. At the same time, you might need to raise money to blow out of the fog of Web 2.0 startups. Mr. Evslin is still very correct in these points.

What’s changed in the past year? You most recently  these dynamics at play in the Facebook App hype, which is slowly starting to die down.

1. If you’re not taking off and A) you’re not extraordinarily well-funded B) you’re not extraordinarily well-connected or C) you don’t have a strategy to steady growth, then you’re probably too late.
2. There’s also a general backlash against the “A List” media outlets (blogs, press). It’s another rehashed point. Everyone points to the PR spike, then a fast drop off to almost no traffic. You see fewer and fewer stories hitting the trajectory, and this is likely the reason for the backlash. There are fewer and fewer opportunities that are unsatisfactorily met. It was already risky. With the increased noise and everyone vying for the top outlets’ attention, it’s now incredibly risky and possibly dumb, instead of taking a more fundamental strategy.
3. There’s mention from Stowe Boyd to enter the “white space” of unmet needs rather than being a “me too”. Devastatingly obvious, but seemingly ignored today.
4. Timing is everything. In broad strokes, there is no hard-and-fast rule for a lot of this stuff. It’s a chess game with so many different permutations that every situation is different. Just about the only strategy that is most fully destined to fail is the one that simply sits still.

What is this about? What happened to faith?

Because market conditions drive decision making, constantly re-evaluating choices made. Entrepreneurship is never about blind faith – it’s about educated choices, calculated risk. A bubble also means a lot of people will get burned if some of these points don’t get understood quick.

I want more Hulu!

I spent hours this weekend (first time I consciously took some downtime practically all month) on Hulu watching some The Office and Family Guy, and discovering Chuck (somewhat of a guilty pleasure type of a show). Hulu is a solid product. The fact that it’s free is pretty damn good too.

Liz Gannes at GigaOM has an interview with Eric Feng, who I met briefly at the Crunchies. At the time, I did not realize he was Hulu’s CTO. He had a great understanding of the product, which comes across in the interview and sometimes is occasionally lost on the most technical of people.

I imagine we’ll reach a tipping point sometime in the next year or so.

This revolution is so very obvious that it’s almost not worth pointing out. The ease of use of Hulu against Comcast’s horrific interface to find anything good on cable television. There’s almost no comparison.

But apparently, the tipping point is toast. But the argument is not against viral marketing.

Something less obvious is that content is still king. Democratization, accessibility, new content models: all very true, but really doesn’t change basic principles. But when you’re good, you’re good. The future organization of content providers still remains to be seen.

There’s a tidal wave of bad stuff out there, but lo and behold, technology again comes to the rescue to help work it all out. It’ll be a fun year in the content world.

What the Web Needs Now

Want to know what web 2.0 superstar business to start? Here’s some criteria:

• Gives or saves me time and/or money

• Is an online equivalent of an offline phenomenon. The social revolution and FB platform is largely built upon building the online equivalent of something we already do (or WANT to do if it were socially acceptable) in real life.

• A new technology adjusting an existing solution. Farecast builds on Kayak, Sidestep which built on Expedia, Orbitz, Travelocity. Like.com builds on comparison search engines. Good CS and Engineering research institutions are good places to look here. Two Stanford CS PhDs a few years back had a pretty good technology too.

• Fill a niche that current providers don’t. To some extent, a niche social network can exist if it solely serves its community and serves it significantly better than the rest. Content sites can be successful when they provide valuable resources: CNET, Glam Publishing, Sugar, TheKnot. To build a big business, it needs to be a sizable niche. You want to be able to either expand into other niches or further exploit the niche you are in.

• Opens up a technology. Linux, MySQL. Of the current startup hot shots, I would say Ning can be wildly successful because of this theme. (Ning is also one of those cases of such talented management that it will be successful almost no matter what.)

• Gives back to the community. Successful exits in MySQL, success of Mozilla/Firefox and their ability to take on new initiatives such as Weave (aggregating all your user/personal information across all your desktops), usefulness and investment in Freebase/Metaweb as a big bet on the semantic web dream.

This is a pretty wide net. There are plenty of opportunities here. Personally, this is what I would like to see and use. You’d be surprised how many businesses don’t pass any of these tests.

But here’s the kicker: not every business fitting above is a good business. If you want to find a good business, you’ll have to stick to the basics: margins, volume, competitive space, growth in sector. There is a difference between interesting and a good business.

What if you have all of the above? Well, execute, spread your idea and acquire users. Easy enough .

Deciding where to dedicate your time is an important one. Choose wisely. Have fun!

Heath Ledger, Keeping Perspective in Life

As I’m sure it has affected many, the death of Heath Ledger yesterday was a cerebral moment for me.  Nothing but kind words for the man come across.  He was surely loved by many, blessed with talent and innate gifts.   It’s a somber moment, clearly for his loved ones beyond all else.

Although the cause of his death is unknown, signs of suicide were present.  For every Heath Ledger, there are many more tales of depression and suicide.  Tim Ferriss has a wonderful post on the labeling of depression as depression affecting how you actually feel.  Please read it if you would like more good info.

I simply don’t know what medical depression might be like, but the rhythms and ups and downs and life affect everyone.

It’s easy enough to get caught up in the hustle and competition in life.  An event like this puts it all in perspective, and a time for both you and me to be grateful of all we have.

Crunchies, Yunus and State of the Valley So Far

Friday evening I attended the Crunchies, a collaboration by TechCrunch, GigaOM, ReadWriteWeb and VentureBeat for a startup awards ceremony- the first time for the event. Mashable also did an awards show this month. You can view some highlights and coverage here.

As far as events go, the Crunchies Award Show was the most “web celeb” heavy event for the 4+ months that I’ve now been in San Francisco. In attendance and accepting awards were Mark Zuckerberg (Facebook), Kevin Rose (Digg), and many well-known CEOs/VCs/founders.

First, a few critiques:

1. Get a real emcee. A natural person might have been Steve Lyons- it was very clear that his Fake Steve Jobs acceptance speech was the highlight of the show.
2. Timing is everything. Even the Oscars has hiccups, but the show must go on. Keep the timing down pat, and don’t worry so much about the hiccups (or even acknowledge them).
3. Put the community’s best foot forward. The show felt too much like a conference. The funniest, most entertaining, and most poignant people should be up on stage and given appropriate license to spice the show up. I understood the need for sponsors, but they don’t necessarily need to be presenters.

The cynics can (and will) say that this was simply self promotion, and maybe it was– I think these changes moves the show away from self promotion, yet would result in more attention and a more successful show. However, it’s never easy to put together something of this magnitude and the first years will never provide a return for all the work involved to putting the show together. It’s a great first step.

Traditionally, the Valley hasn’t been the most entertaining of places. It’s not even that Valley types take themselves too seriously, just that “showing off” is sometimes frowned upon. I find it all very entertaining personally, even aside from its fulfilling nature. I’m probably in the vast minority there, especially outside of Valley.

Is Silicon Valley insidery? Absolutely, but not without fundamental meritocratic underpinnings. The best stuff will bubble up, but it’s faster with established connections. I’ve started to build my network, even without the big name startup (yet!). I’m impressed and inspired by the caliber of people here. I’m less impressed by pedigree, but more impressed and inspired by people with interesting pursuits. There is no shortage of people like that here, despite some bubble chasing occurring.

Earlier last week, I went to a Muhammad Yunus speech hosted by the Commonwealth Club. Inspiring is a vast understatement of the Nobel Prize Winner’s succinct description of his successes with Grameen Bank, the pioneer of microlending in developing nations, and the vision of a world with social businesses and profit-making businesses. No judgment, just a real solution to a very real problem.

Would it be contradictory to the Valley ethos to embrace these flashier pursuits, such as awards shows, elaborate parties, exclusive events? Is it a bad thing for the Valley to go Hollywood?

Many would argue that it is, but sometimes you need a broader platform. We want kids to think “that could be me”, and mean changing the world instead of acting.

I’m happy that Valley pursuits can remain somewhat pure, and that even the biggest Valley egos don’t hold a candle to Hollywood egos. It’ll never be Hollywood, and I hope it never will be. But the entrepreneurial stage is growing, and shining a light on it is a great thing.

It’s NOT Freedom of Information, It’s Protection of Information

It’s pretty rare that I wholeheartedly agree with, or even care about, one side of a disconnected tech argument. This time I do.

If you haven’t followed it, today the argument is over Robert Scoble’s account suspension from Facebook for participating in a Plaxo test product that scrapes user information from Facebook.

Kara Swisher seems to agree that Robert Scoble is fighting for freedom and portability of information. I flatly disagree. Scoble also freely admits that he broke the Terms of Service.

Instead, I agree wholeheartedly with Michael Arrington and Loren Feldman (his video is quite good). Scoble wants to free YOUR information. Where there could be some disagreement is that I don’t necessarily think that Scoble has malicious intent. Gathering your rolodex to plan your next career/business move is not malicious. So if his account gets reinstated, I wouldn’t really care.

But go one step further and the entire system breaks down. Facebook then no longer has the potential of being a trustable silo of private and public information. No one will ever post their cell phone or primary e-mail addresses. Or remotely sensitive personal information.  Once that contract breaks down, then Facebook falls far from that $15 billion valuation.  You can’t make exceptions. That’s the reason why rules and terms exist. Plain and simple.

Facebook really got it right this time. There may be some business motivation, but they still got it right.  And that’s all that matters.