How Betaworks Works: R&D Lab For the Web

Last week at the ReadWriteWeb 2WAY Summit, our COO Sean Ammirati spoke to Betaworks CEO John Borthwick. Betaworks has funded and incubated a number of companies in the real-time Web market, such as TweetDeck, Bit.ly and Chartbeat.

Betaworks is an unusual organization: part holding company, part investment firm, part incubator. In his conversation with Sean, Borthwick described Betaworks as “an R&D lab for the next layer of the Web.” He clarified that it’s legally a company though, so there is a business focus beyond the research and development activities. This type of structure has clearly been successful for Betaworks, so will we see more of it in the Internet business?

Partly the answer to that is the health of the startup ecosystem. Betaworks spotted the trend of the real-time Web early and helped developed some key startups in this area, particularly third party Twitter services. So Sean asked Borthwick what he thinks of the market currently. Borthwick replied that he doesn’t think the market is in a bubble. He noted that companies with very large valuations have big revenue: Facebook, GroupOn, Zynga and even Twitter. So he thinks those valuations are justified.

Another key is when startups should pivot, to capitalize on market opportunities or changes. According to Borthwick, user adoption and engagement are two key metrics for companies when deciding whether to pivot or not. He also talked about “right-sizing your business” if necessary, in other words don’t over-reach and raise a lot of capital if it’s not feasible to reach the mainstream.

iPad magazine apps is an example of an emerging market that Betaworks is at the early stage of exploring. News.me is a personalized magazine from the Betaworks stable, competing head on with Flipboard. Borthwick explained that News.me is both an iPad app and an email subscription service. With the iPad app, they charge 99c per week and pay that revenue to publishers (they have done deals with 650 publishers, including ReadWriteWeb).

News.me isn’t just another Flipboard copycat. Whereas Flipboard is a social magazine, News.me is a curated reading experience. It works by showing different views of what people are reading. It isn’t based on what a person has read, but what they are likely to read according to who they follow and interact with on Twitter.

It remains to be seen if News.me can successfully compete against Flipboard and other online reading services, but it’s a great example of how Betaworks pushes the boundaries when releasing new Web products.

You can see the entire conversation here, courtesy of Livestream:

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