This is the start of a new interview series on Read/WriteWeb, about venture capitalists (VCs) and their thoughts on 'next generation web'. The aim is to find out what Web technology trends and products VCs are tracking - and at the same time provide some expert tips and advice for Web developers and entrepreneurs.
Accel. Accel is a Silicon Valley and London-based VC firm and is an investor in Web companies such as Facebook, Brightcove, Kosmix, Netvibes, Zimbra - and many others. Judy is part of Accel's Venture Development team, in their London office. She has 25 years experience in the computer industry, including working for Microsoft, HP and Apple. Before joining Accel, Judy was Corporate Vice President of MSN Global Sales and Marketing at Microsoft. Thanks Judy for participating in this interview!In this first installment, we talk with Judy Gibbons of
R/WW: What web or new media companies have you invested in over the past 12-18 months?
Judy: In the London office we've invested in:
- NetVibes: Personalized home page
- Autoquake: Largest seller of cars on eBay in the UK
- Kayak.com, the world’s largest travel search engine
- Weeworld: Avatars
- Spreadshirt: online marketplace for customised products
- Amobee: Ad-serving network for mobile devices
- Doublefusion: Network for in-game advertising in online games
- Refresh Mobile: Mobile Publishing Company
- The Cloud: WiFi Hotspot service provider
- SwiftFind: On-line Registry of Valuables
R/WW: Looking at upcoming web technologies, which trends are you interested in currently - and which trends do you see becoming increasingly important over the next 12-18 months?
Judy: It’s often referred to as web 2.0, but could more accurately be described as 'second generation internet' - and I think there are some recurring themes. For example:
- narrowband --> broadband --> pervasiveness
- transactional --> socialisation and entertainment
- single applications --> mashups
- generic search --> vertical search
- pc only --> pc + mobile
- emerging revenue models --> proven models
- heavy start up costs --> low start up costs
- overcapitalisation --> bootstrapping, high capital efficiency
- Valley dominated --> innovation happening more broadly
- tentative advertising models --> established ROI models
These translate into a number of interesting business areas, some established but moving to second generation; some new. For example:
- Vertical search - e.g. Kayak & Trulia (US)
- Social Networking - e.g. WeeWorld (the more time you spend online the more important your virtual identity will become) & Facebook (US)
- IP TV - e.g. Brightcove (US)
- Advertising across new platforms - e.g. Amobee for mobile, Refresh Mobile for Gaming
- Mobile content/apps - e.g. Refresh Mobile
- Next generation ecommerce - e.g. Autoquake – auctions/make offline channel more efficient, Spreadshirt – user generate content
- Connection pervasiveness e.g. The Cloud public wi-fi
R/WW: In the blogosphere a certain type of 'web 2.0' company is endlessly hyped - e.g. Flickr, del.icio.us, YouTube - while other deserving companies struggle to get attention from bloggers. What are a few examples of companies that are under-hyped, in your opinion?
Judy: Personal home pages like PageFlakes & Netvibes. These represent the third generation of Internet usage: first portals because there was little content and it was hard to find; second search because there was an ever increasing amount of content if you could only track it down; now personalized ‘pull’ home pages, because most sophisticated users know what content and apps they want to check into every day - and they want these brought to them to improve productivity.
Also Vertical Search like Kosmix and Kayak and Trulia - we are so far away from this problem being solved. There is massive consumer demand and compelling business models. Google was just the beginning...
R/WW: What are the main differences in the Web industry in Europe versus Silicon Valley, other parts of the US, or Asia? Obviously easier access to VC funds in the Valley is one key difference, but are there others - for example the types of products being produced?
Judy: Vs The Valley in previous decades;
- Innovation is happening everywhere; in the midwest, in NY, in Paris, in London
- Barriers to entry are lower; cheap to build a service, can grow virally and get user adoption
- Strong embrace of open source ethos - especially in Europe; people freely collaborating e.g. Netvibes eco system
R/WW: For a Next Generation Web startup, which is more important - building the technology with defensible IP, or just putting your beta product out there and growing your customer base?
Judy: They’re related; it’s about building something that is compelling to end users, that keeps them coming back and gets them recommending it to friends; that creates feedback and new ideas, that results in new features and functionality that spawns compelling business models. The IP is often in the customer and market knowledge - as much as in the software. It’s about the knowhow; pure IP on its own is often not enough. Equally companies with good ideas who attract early users, but fail to build on this through innovation, usually fade away..
R/WW: In your view what is the #1 problem that web startup CEOs commonly have:
Judy: All of the above, to be frank. The order varies for a given start up and depends on what phase they are in. That’s the challenge; they have to execute well across all of these dimensions.
R/WW: This is a question a lot of our readers will be interested in - how does an entrepreneur get on Accel's radar?
Judy: The best way is to find someone to make an introduction, as this inherently qualifies the company; it’s not that hard – six degrees of separation and all that. They can look at the existing portfolio for example.
Failing that, a direct approach to the right VC with the right pitch. Preparation helps; the entrepreneur needs to know enough about how venture works to know it’s right for them and their business, know which VC at which firm is likely to be most interested (read bios on web sites) and be able to explain the business well.