mark kvamme – sequoia
chris moore- redpoint
theresia ranzetta – accel
andrea stavropoulous – draper fisher
mark, whose group funded yahoo and google– search has been good to us. plans to fund more search. david filo wasnt’ wearing search when the visited– there was broken glass in the street. Filo said he wanted someone on a 14.4 to find the website he wants in 2 seconds or less. it’s the same now– yahoo did a great ob of human based search, google came along as did great algo– the future is int eh combination of the two. the experience has to get better, consumers vote with their mouses. it has to be significantly better, visibility better.
one investment.. kayak… travel search engine. travel is unique,a nd one things kayak has… had a deal with AOL for distribution. people forget that google got their lift from being yahoo’s search engine. you need distribution. If you have distribution, you have clicks and the advertisers will find you.
Chris– ask jeeves, mysimon
thoughts on Internet 2.o? fatlands, oddle?
some good wins, not as nice as sequoia (laughter). Google, yahoo, jeeves… good at a certain class of queries: navigational queries. you know what you are looking for and you go there. the next set of challenges is a class of queries that are more complex the the ones you think of today. lots of room for improvement in the search expereinces. All the big guys re tryign to fill in the user expereince, goobling up the niche engines. the question for us is how big can these oppurtunities be?
oodle aggregates classified listings newspapers, watch out! and fatlands is comparison search (another?!?!)
andreas suggets all successful Internet products understand/use/focus on search. I can’t think of any business that doesn’t center on the search concept that’s successful. in terms of moving forward, we’re looking for… business model. volume and how much you can charge/earn for each result each action. you don’t need both. enterprise with small market but high value 20-50 cents a page, as opposed to a few cents on a page for commercial site. a couple area’s I’m focused on, new devices– mobile device search. become the eyeball bandit. looking at web 2.0 stuff. distributed real time information if you can’t assume static web pages is the way of the future. rss, pings, podcasting, blogging, etc.
teresia social networking/search.
see vertical search in focused media. accel has always been focused on rich media. see vertical search as focused media property… mixing human with algo. use humans as filters. not only editors and staff, but end users. facebook, brightcove.
facebook is college students, but the real value is community which mirrors physical community with verification (via .edu) and the end users make their space. good demographic, college folks. with web 2.0 tools, the end users can be more involved.
if it’s a niche technology, it can be a problem to scaling, but a niche audience can be value, lasting value. One thing you can’t beat is a loyal audience.
Mark suggests get live fast, get as many users using it as soon as possible. It’s hard to judge size of market, put it out there to start learning.
he’s said he’s seen a lot of verticals that should not be VC funded… too small for VC, but still profitable (hot or not)
Andreas reminds you to do the math, make some projections.
Chris.. if you can get 4-5 scary engineers together who will go with no salary, you can do fine. you can sell vertical search for 20 mil, with no VC. you can get these demonstrated on the cheap. adsense makes it easy to monetize.. demonstrate your idea. take the money when there is a good reason to take it, such as scale the engineering team to solve a complex problem, or marketing to blow out on the traffic side.. be selfish and things when and IF to talk to VC. good money in sole proprietorships.
Andreas will do sub-one million investments to get into certain companies, do the bridge… such as technorati.
chris says do the small deals.. they incubated oodles because it could be money. VC can’t make money on 100000 investment, but you can. myspace– we could never had predicted it. we couldn’t predict that was the mix. so we invested late.. it depends.
Q: are ads the way to go, or are there other ways to go?
teresia– what are the ways to make money: ads, transactions and to a lesser degree, subscriptions. greatest rev is when you have two. shopping.com is 50/50 ads transactions. Sometimes we can’t see what it’ll be in the beginning. we want to see an interesting user experiences and yet entraprenuers dont’ hire designers.
andreas… take it a level up. why do people search? these actions– find a site, a product, etc– have a value. consider it as a auction model, let people bid them up to their market value. What is the value of the action once the result appears? H5 knows the value. Regarding expert advice, a big issue is that it’s hard to prove the value of the result before I get it. How do you avoid taking a discount on the uncertainty of the answer?
Q: Stanford kids starting a search company ask how big investment do you want and how do you find angels who are savvy in search.
mark: We’ll come find you (heh)
andreas: you only do the small investments if you believe it will be huge. but if you believe, you do the small investment even when it’s not typical– it’s a cheap investmeent.
teres– we dont’ think of dollars in, we think of dollars potentiall out
mark: we never say, put money to work, we htink of ROT– return on time. VC can only do one or two early stage, you do 15-18 in general. you have to choose. If i invest 100k, you are my investment for the year. I have to believe.
Q: barrier to entry?
Chris– nontrivial. the big guys are watching. it’s easy to get people to find you, but you need a order of magnitude better user experience and distribution.
Andreas– they are not winning today because of quality of search results. there are problems in google’s results. people can game it. google aims for microsoft.. it’s hard to fight on different fronts. large companies are slower to react to new threats… by the time they figure you out, it’s too late. the current darlings can be the next victims.
Q: duplication of efforts, do you seen any strategic technologies everyone needs a start up could provide?
mark– advertising networks, and others.. plenty!
chris– fishing frontier, drive traffic, montezation services.