A VC

From The Set Top Box To iTunes To Netflix

Jason Kinkaid has an interesting post on Techcrunch today about the summer TV doldrums and the opportunity this time of year presents for catching up on earlier seasons of shows you like.

I like to watch what my kids do, particularly as it relates to entertainment, as it gives me a clue about where things are going. And my kids are doing exactly what Jason suggests. They are catching up on prior seasons of Friday Night Lights, The Office, and Weeds.

This is not new behavior for them. They've been using the off season to do this for a few years and they used to purchase the older seasons on iTunes and watch them on their laptops.

That would drive me crazy because often one or two or all three kids would purchase the exact same season of shows on their respective computers. I would push them to share their purchased shows and often they would do that, but not always.

So I am happy to report that they've moved on from iTunes and are now watching these older seasons on Netflix Watch Instantly, both via the browser and on Boxee (the photo above is Netflix on Boxee in our family room).

The other interesting development is they are moving away from watching these older seasons on their laptops. They still do that quite a bit, but I've noticed that more and more they are opting to watch on the Mac Minis we've got connected to big screen TVs in our home. When they have friends over, it used to be the set top box was the device they'd watch TV on the most. Now its the Mac Mini.

Last week, some on Wall Street got all crazy about a research report written by a 15 year old intern at Morgan Stanley.  I read the research report as it was sent to me by about a half dozen friends who work on Wall Street and indeed it had some interesting insights in it. But not all 15 year olds are alike. Just as it is dangerous to read too much into what my kids do, it is dangerous to read too much into what a 15 year old in London does. But it is absolutely critical to pay attention to what teens all over the world, particularly the developed world, are doing. And one thing they are doing is changing their media consumption habits quickly.

My kids have moved from the set top box to iTunes to Netflix in less than a couple years and are now watching much of their TV streamed over the Internet. I expect they are not alone. It's a trend worth watching.

Comments (View) | Posted July 18, 2009 in Web/Tech

Seeking A Strong API/Platform Engineer

Our portfolio company Meetup has big potential for its API and platform and is looking for a super strong engineer to lead its efforts in this area. Meetup is located in NYC and is a strong, well funded leader in its category.

Comments (View) | Posted July 17, 2009 in Venture Capital and Technology

Exclusivity and Competition

Last week I wrote a post saying that I view the exclusive contracts that carriers negotiate with handset manufacturers as anti-competitive. I really don't want to see the government wade into this market if there is another way to unwind this practice.

Comments (View) | Posted July 17, 2009 in Venture Capital and Technology

Active Users and Online Retailing

There was an interesting debate in the comments to my post yesterday on active and non-active users.

Gian Fulgoni, Chairman and co-founder of comScore said:

And Steve Goldstein, CEO and co-founder of Alacra agreed with Gian and said:

Now, these are two entrepreneurs who I backed over 10 years ago who have both built profitable and valuable businesses. So they know a thing or two about business.

But I think they are both missing an important insight. When I think of online retailing, I think of three kinds of users; non-active users, active users, and active users/transactors.

As Gian points out, for a business to succeed, it needs to have a healthy number of transactors. But looking at your user base as either non-active or transactors is the wrong way to think online (and maybe offline too). Just like bookstores use cafes to bring potential purchasers in the store, online retailers should intentionally cultivate an active non-transactor user base.

Our portfolio company Etsy does a good job of this. Many of the visits to Etsy are to read The Storque, participate in the conversations in the forums, or to build up lists of your favorite things. There are literally millions of people who do these things every month. Some of them choose to transact during these visits, but many do not.

So I'd advise all online retailers to focus on making users active first and foremost and give them a lot of things they can do on your website beside transact. By doing that you increase the number of monthly visits and therefore the total amount of potential transactors.

Comments (View) | Posted July 16, 2009 in Venture Capital and Technology

The Difference Between Total Users and Active Users

Yesterday I attended the Betaworks Brown Bag lunch and got to see Scott Heiferman (founder/CEO of our portfolio company Meetup) talk about the State Department sponsored trip to Iraq he participated in earlier this year. During the discussion that followed, I went off track and asked Scott to talk about SMUGs.

SMUGs are "successful Meetup groups". They are the groups that meet regularly and are highly active in the service. Meetup determined a while back that SMUGs are the most important metric for their business and they track SMUGs carefully and constantly.

Every web service has a core group of active users and a much larger group of total users. People talk about the "twitter quitter" syndrome where only 40% of all users are active. I am not going to comment specifically on that 40% number other than to say that it did not come from Twitter and I am not sure it is accurate.

However, it is absolutely true that not all registered users of Twitter, Facebook, Meetup, or any other social web service are active. I've had a Facebook account for at least four years. I've only been active on the service recently since I started using it as my social net for friends and family. For all the time prior to that, I was counted as a registered user, but I was not actively using the service.

It is not a problem for a service to have a large group of non-active users if they have a large group of active users. It's the latter group that you need to focus on. Over time, I've learned that many non-active users become active for one reason or another. But they don't become active by focusing on them. They become active because you focus on the successful users and make them even more successful.

Your best advocates are always your most active users. So focus on them, make them successful in your service, focus on growing that number, and the non-active problem will take care of itself.

Comments (View) | Posted July 15, 2009 in Web/Tech