The Praized Blog

Second afternoon at LeWeb conference, Chris Sacca, Founder, Lowercase Capital LLC, proposed to us his three dominant trends for 2010 in a very tongue-in-cheek presentation.

They are:

1) Douchebags

• According to Wikipedia, “the term refers to a person with a variety of negative qualities, specifically arrogance and engaging in obnoxious and/or irritating actions without malicious intent”
• According to Sacca, they create hostile environments on the social Web but he says we’re moving past this with the rise of the real Web
• This is happening because of distributed authentication. We’re being verified against an actual community plus location information.

2) Porn (the traditional definition, i.e. material that is intended to cause excitement and arousal)

• Sacca then showed us a series of graph and data charts
• “Data is porn”
• “Data enriches all Web services we can provide”
• “We’ve never known more about people’s preferences”

3) Lube

• There’s friction in the e-commerce funnel (shopping cart abandonment)
• Major mistake: we ask people to provide information before giving a service
• iTunes: makes it easy to buy
• Amazon: one-click makes it easy to buy also.
• They’ve removed the friction
• Signing up is also painful, creating a profile. As a good example, he talked about Posterous (which allows you to signup using e-mail. “E-mail is simpler than logging-in.”
• He suggested developers provide benefit first before the hurdle of signing in.
• “Let’s lubricate the Web.”

One of the most awaited presentations of LeWeb was the one by Her Majesty Queen Rania Al Abdullah of the Hashemite Kingdom of Jordan. A superstar of the social Web, Her Majesty has more than 1.1 million followers on Twitter (I love her Twitter bio: “A mum and a wife with a really cool day job…”). She gave a passionate speech about how the real-time Web can change the real world.

Some of her comments/statements:

• Did Michael Jackson change the course of the Iran revolution?
• The real-time Web is a new phase in the evolution of the Internet.
• Our thoughts, emotions, actions are increasingly live online.
• She called LeWeb’s attendees ” this century’s digital Darwins” doing “digital anthropology”, driving humanity towards new horizons.
• On her usage of social media: “My virtual self can get closer to people than my real self because of protocol and quiet deference in my presence. Online, people are not afraid to speak their mind. It demystifies who I am and what I do. Titles don’t mean much online”. Social media helps spread ideas. Queen Rania can talk to 1M people at once and she’s inspired by the potential.
• She says we must not forget and ask ”can the real-time web bring real world change? Can we tackle the big challenges like poverty, disease, education?”
• She called real-time the new prime time.
• She then discussed her charity 1Goal, whose goal is “education for all”, to help children locked out of school and locked in poverty get the education they deserve. She suggested we move from virtual activism to real action and get involved. This is not about money, this is about millions of people joining a cause which will be promoted until the 2010 World Cup in South Africa. You can sign-up here.
• She then concluded by saying “the real-time Web is a real human experience that can bring real change to humanity”.
• Her presentation was followed by a long applause and loud cheers, much appreciated by all attendees.

Osama Bedier, Vice President of PayPal Platform and Emerging Technology, was interviewed by Om Malik on the second morning of the LeWeb conference to talk about the world of e-commerce, money and future Paypal projects.

• In the history of the world, there’s been five major shifts in the way we pay: barter, coins, paper, credit cards, digital.
• Removing friction has been the objective in that evolution.
• If the future of money is digital, it means it’s fully connected and personal.
• Paypal is the first method of payment that was born with the digital age.
• Paypal moves 70B$ worth of e-commerce (out of a total of $350B).
• As they look forward, Paypal wants to go after all the money that’s being spent today ($30 trillion).
• Paypal has recently launch Paypal X to open their payment platform to developers.
• Visa/Mastercard are partners, not competitors to Paypal. 50% of Paypal’s transactions go to credit cards. The enemy is paper money.
• Innovation will be increased flexibility in paying and micropayments
• On micropayments, they have a lot of plans for 2010. Bedier didn’t want to share too much but he suggested the following: Paypal has 200M accounts across the world. They know quite a bit about the credibility of these accounts. They’ve earned credibility. Paypal should allow them to do small payments. Details next year…
• They just signed a partnership with Philipps, the television manufacturer, to enable payments on your TV. Why? Because televisions are platforms.
• From a social network point of view, Paypal is seeing growth of 20% month over month in payments there. They think it’s a huge opportunity. A lot of of those payments are around gaming and some are for dating sites but it’s slowly making its way to commerce.
• Payments + social is the future and the line between online and offline commerce is blurring and it’s driven by smart phones.

Danah Boyd, Researcher at Microsoft Research New England, talked to us about privacy, transparency and what’s public in social media.

As a researcher, Boyd says she tries to look in people’s online lives (for example, she searches for random words on Twitter) to get into worlds that are different than her own. She wants to de-familiarize herself and tries to change assumptions about what people are doing.

She gave three examples of situations where underlying assumptions were wrong

1. The college admission officer

• A few years ago, a college admission officer received an essay written by someone who wanted to get into college to leave his gang world. When the officer looked at his MySpace page, he realized that the individual was still in a gang and his profile was very much gang-oriented. The college officer assumed he was lying but his profile made sense in his community’s “gang culture”. He probably wanted to leave but he had to survive it. Two different contexts.

• A daughter inviting his father to become a MySpace friend and giving access to her profile. Dad saw that she’s displaying a “what drug are you?” quiz result showing the she is “cocaine”. Dad became uncomfortable and had a talk with his daughter. The father asked “How did you get to be “cocaine”?”. She answered that the kids that smoke pot and took mushrooms were lame and crazy. But she added that her dad’s generation did coke and they turned out ok (!?!). Dad did not assume/interpret what he saw and engaged a conversation. It was key in understanding his daughter’s behavior.

• A young women kills her mother. She had a profile on MySpace. Her mother was alcoholic, she had abused her and a long period of time was documented on MySpace. Everything was publicly listed but nobody was looking. It was visible. When talking with her friends, people had reported it but nobody did anything about it.

She then asked us “when should be looking when we’re not? Should we be looking at people in trouble? Should we look at different worlds than ours?” She mentioned a concept from Jane Jacobs: “the eyes on the street”. They’re the lookouts for our community and the best way to keep a community safe. How do we do that online? We use “privacy” to justify why we’re not looking. Just think of domestic violence. In the 1960’s, it didn’t exist (i.e. “I can beat my wife in the privacy of my home”). Now, we have a right to safety in a private space, in our home. We can’t use privacy to justify bad behavior. She says she sees a lot of kids crying out for help online.

On bullying, she says that parents believe technology created a new evolution of bullying. It’s actually not more present than before but it’s more visible. People couldn’t see it before. Parents blame the technology thinking that bullying will go away. We can see these dynamics now. The internet is bringing diversity (different worlds) together. We should embrace the power of visibility. We’re making things we like and things we don’t like visible to everyone.

I love the fact that Boyd specifically talked about online bullying because she was “bullied” via Twitter at the last Web 2.0 conference in New York. You can read about that on her blog.

More in The Guardian and in ReadWriteWeb.

Tony Hsieh, CEO, Zappos.com, blew away the crowd this morning at LeWeb with an inspiring speech about meaning/purpose and happiness. A long applause followed his presentation.

Highlights:

• Hsieh says Zappos takes most of the money they would have invested in marketing and invests it in customer experience
• The corporate culture is the number one priority. Zappos hires for culture, they give five weeks of training to every new employee, they offer new hires $2000 after one week to quit, they have a culture book, and use twitter to build culture
• They base their decisions on the 3Cs: Clothing / Customer service / Culture
• They worry about customer happiness, employee happiness, vendor happiness
• What separates great from good companies? Culture: committable core values
• The main comment he gets: “that’s great but it would never work at my company”. Hsieh says it doesn’t matter what your values are, the important is to stick to them.
• As for vision, he says that whatever you’re thinking, think bigger. Does the vision have meaning? Chase the vision, not the money.
• Everyone should take a step back and ask what is your goal in life and the reasons why it’s your goal? and then you should ask why you answered that? and try it again. Keep asking “why” and everyone eventually answers “happiness”.
• Problem: people are very bad at predicting what will bring them sustained happiness.
• The few different frameworks of happiness: perceived control, perceived progress, connectedness, vision/meaning (something bigger than yourself)
• Meaning / higher purpose is the most sustainable way to be reach happiness

Hsieh suggested three books if you’re interested in the topic:

• “From Good to Great” – Jim Collins
• “Tribal Leadership” - Dave Logan, John King, Halee Fischer-Wright
• “Happiness Hypothesis” – Jonathan Haidt

By the way, do you know you can visit Zappos’ offices in Las Vegas. Details here.

Interesting VC/Angel roundtable this morning at LeWeb moderated by Dave McClure (who defined himself as Startup Investor & TroubleMaker!). Here’s what participants had to say about the VC/angel market in 2009 and what we can look for in the future.

Christopher Sacca, Founder, Lowercase Capital LLC

• His firm does early stage investment ($50K to 250K) and very large investment ($500M+)
• It is now cheap to start a company. Ten years ago, it would cost you $1M before your first line of code. Rent and Engineers are now the two biggest expense lines.
• Sacca revealed that they did 3 deals yesterday.
• The changes he saw recently: valuations are up again driven by larger funds probably because it was a year of low activity. Funds need to get the money out and VCs definitely have money.

Dan’l Lewin, Corporate Vice President, Strategic and Emerging Business Development, Microsoft Corporation

• Microsoft buys 10-20 small companies per year, about half of those are VC-backed.
• Those acquisitions are usually companies that are 2 to 5 year-old.
• 2009 was a good year relative for young companies.
• Microsoft buys many companies abroad, not just in the US.
• When asked if he thinks acquirers are competing with VCs, Lewin said he doesn’t think so given the scale of their business. They look at businesses that are close to the core, extending the business.

Dave McClure, Chris Sacca, Dan’l Lewin

David Hornik, Jeremy Wenokur, Eric Archambeau

David Hornik, August Capital

• 2009 was a great year for August Capital as they closed a new $650M fund.
• Hornik did 4 deals in the last 12 months (6 in the last 15 months).
• Size of those deals: between $1M to $35M. Usually, they are Series A rounds (approximately $4M)
• What’s a successful investment for Hornik: when he can say “that was great!”.
• In 2010, a lot of people are hoping is the year that VC are able to raise money. In the case of Gowalla, competition for the deal between funds drove the price up.
• Hornik mentioned that it’s cheap to start companies these days but, as it starts scaling, it’s not as cheap. It’s cheaper the ten years ago but it’s not cheap. The things that succeed require capital.

Jeremy Wenokur, Angel investor & Advisor to Apax Partner

• Wenokur says he took 9 months off and just restarted investing.
• The size of his deals: $25-50k investments.
• He’s seen the shift of money to smaller funds and that’s why you see a lot of deals being chased.
• For him, a good exit is $20M-30M exit and it happens one out of five times.

Eric Archambeau, General Partner, Wellington Partners

• They search Europe for investments
• They have 800M euros in management
• They do 50K to 25M euros investments
• in Web investment, they look for evidence of traction
• In reference to smaller exits in 2009, Archambeau says that maybe VCs were less patient this year and maybe exited too early.

In the most-awaited session of the afternoon of Day 1 at LeWeb, Michael Arrington (from TechCrunch) sat down with Marissa Mayer, Vice President, Search Products and User Experience at Google to discuss a series of hot topics like recent Google innovations, mobile and the newspaper industry.

On recent innovations:

• Mayer says Google is focused on future of search and they expect different modality of search, not just through keywords. That’s why they launched Google Goggles this week which is basically image recognition (you take a picture and Google tells you what it is). See this example. They also expanded voice search to Japanese and added the “What’s nearby” mobile functionality. Mayer thinks that people will eventually talk to their phone or take a picture to make a search. They also added real-time results (from Twitter, blogs, Facebook, MySpace, etc.) to regular search results, which drastically increases the relevancy of Google search results.
• On Google Chrome, she mentioned the release of Chrome Extensions which allows anyone to add functionalities via plugins in the Chrome browser (like Firefox). She said there are “tens of millions of Chrome users”.
• On Google Wave, Arrington stated “there’s something there” but wondered if we needed more “training”. I think most people are unsure of the value of Wave today and that’s why the Techcrunch founder asked the question.

On mobile searches:

• Mayer says they’ve grown tremendously on smart phones. Asked by Arrington if their total share of mobile searches over total searches was in the 1 to 5% range, she answered “slightly higher than that”.

On newspapers:

• Arrington started by saying we all understand the dire situation of print media and mentioned Eric Schmidt recent vision piece in the Wall Street Journal. He then asked Mayer: “What’s your vision?”. The VP from Google answered with a question: “how do you get users more engaged with news online?” She continued by stating that if we could build a news site from scratch today, it would probably look very different than what we have today. She then mentioned The Living Stories experiment they’re doing with the New York Times and the Washington Post. “What if the story was alive? Not just the print version posted online.” She added that the Web ”puts pressure on the atomic unit of consumption. The article is the atomic unit.” She then suggested we could aggregate all news story on the same topic on one page, like Wikipedia, to help with discovery in Google.
• She closed that topic by suggesting “personalized stream of news”, probably on your mobile phone, would be interesting. The stream would be filtered according to your social circle, location, the news brands you like, the writers you like, and the important news you should know about (she called them “veggies”).
• Asked if newspapers will move fast enough, she thought so and mentioned the New York Times and Washington Post are very progressive partners and very interested on how they can reinvent themselves.
• On Murdoch, Mayer mentioned the partnership with MySpace. Asked if she thought News Corp would pull their content from Google, she answered ”I hope not” as it would impact comprehensiveness of their results set. She added ”we have to respect the content owners. We would respect his will.”
• Finally, Arrington asked if Google would consider paying for content, Marissa Mayer proposed that they already have programs for content monetization through Google Adsense and their display ads network.

See more on Techcrunch.

Chris Pirillo, Founder, Lockergnome, talked about “communities” this afternoon at LeWeb conference. It was a refreshing presentation, very much right-brain. Here are his nine statements on “community”:

1. Community is already there, inside everyone. Pirillo defines himself (amongst other things) as ”I live in Seattle”, “I love coffee” and “I have an iPhone”. This is “Chris Pirillo” and he’s going to be looking for people he can identify with.
2. Community is becoming increasingly distributed. We’re all distributed. We need to be distributed. The things we care most don’t exist on one site. These things are omnipresent.
3. Community requires tools that can’t be built. Our spirit cannot scale. We can’t scale ourselves. We can throw tools online but if you believe a community is a tool, then you are a tool. We are the community.
4. Community is a commodity, but people aren’t. The voice of people is not a commodity.
5. Community cannot be controlled, only guided. You can’t shut up people. It’s good if people say bad things about you because it means they care enough to say bad things about you. Pirillo says “Control is BS”. Control exists in the hands of you.
6. Community is no longer defined by physical boundaries. Pirillo says he has more in common with the attendees here than with his neighbors.
7. Community grows its own leaders. Leaders will tell you when things are right and wrong. Community needs to respect its leaders. You can anoint a leader.
8. Community is antithesis of ego. Twitter is not a community tool. Facebook is more like it.
9. Community is everywhere, inside you. Tools will come and go but community will remain. “Twitter isn’t going to be around forever, Facebook won’t either, but the human spirit and the need for belonging transcends these tools.”

I had the opportunity to listen to Niklas Zennstrom this afternoon. He’s currently a Partner at Atomico Ventures (his VC fund) but he’s well-known as the founder of Kazaa, Skype and Joost. I wrote about Joost and Zennstrom recently. He talked about entrepreneurship, his own personal failures and successes and the European scene. As an entrepreneur myself, it was a very inspiring speech.

A few excerpts:

• Entrepreneurship is a lifestyle and takes up all your life. It requires lots of sweat and long hours of work.
• You need an unshakeable belief in your startup, to be passionate about it, even when people don’t believe it.
• For Kazaa, they were too early, actually several years early. This was a missed opportunity in terms of business development as their proposal to music companies fell on deaf ears.
• If something is not working, take a deep breath and start again. In Zennstrom’s case, it became Skype. They went after a large market (phone companies) with fat margins. Skype got a lot of traction really quickly but it was very difficult to raise money. No one wanted to touch the company. VCs thought it was too risky.
• He believes Loic Le Meur is probably the last European entrepreneur to move to Silicon Valley (Loic moved to San Francisco a few years ago to launch Seesmic, his current startup)
• Entrepreneurs need to think of Europe as a market (critical mass vs. the US market)
• Europe has a tendency to stigmatize failure but you cannot have big returns if you don’t have big risks
• Joost was a misjudged opportunity. They could not strike the right partnerships.
• Whatever you do, you never know the results in advance.
• How’s the scene now? We’ve seen more and more companies from Europe being successful with a culture of international startup company. Companies think globally from the get go.
• We now have European role models: Zennstrom himself, Loic Le Meur, Martin Varsavsky, etc.
• Do we need an European Silicon Valley (i.e. a physical place)? No, we can meet online and then network at events.
• Capital is no longer as important for entrepreneurs as a few years ago. Building a startup is more cost efficient and companies are able to reinvent themselves quicker with agile entrepreneurs.
• It’s exciting to be an entrepreneur in Europe. In recession, you build companies and in peak market, you exit. The next few years will be fantastic. Disfunctional markets means entrepreneurs will enter the market.
• Atomico Ventures wants to bet on European entrepreneurs that want to build tomorrow’s global companies. It’s all about the people (passionate) and it’s all about the size of the market.

More on Techcrunch.

Mike Jones, COO, MySpace, and Monica Keller, Group Architect, stepped on stage right after Twitter. It was a tough act to follow given Twitter’s growth (and Facebook’s for that matter) but they still managed to announce exciting things. MySpace is opening up its real-time activity stream unrestricted using push technology with no time delay. The first three partners are Google, OneRiot, and Groovy Networks. They also announced a few other improvements to their API, the details of which are on their corporate blog.

They also announced a developer challenge starting in January. More details will be found soon in their developer section. MySpace currently has 110M users each month and 46 million events are published in the activity stream every day.

Additional information:

ReadWriteWeb: “Myspace Opens Floodgates: Developers Get API for Real-Time Stream”

Techcrunch: “MySpace Launches New Set Of Realtime APIs With Google, OneRiot And Groovy”