Friday, August 17, 2007

Ka-ching for Beijing

posted by Andy Leff
China's maturing Web 2.0 industry is also an emerging VC hotbed, thanks to investors' desire to monetize growing Chinese social networks, blogs, wikis, and other Web 2.0 companies.

In fact, venture capitalists invested a whopping $200 million in growing Internet and information services firms in China during the second quarter, according to Forbes' new Acceleration: Global Venture Capital Insights Report 2007. That's *double* the amount China saw in the first quarter.

Further proof of the industry's maturation in China: Google's recent partnership with Sina, one of China's biggest Internet portals. Sina now uses Google China's search and advertising services on its portal.

Note, however, that companies receiving funding are in advanced stages of development. Many VCs burned by the dotcom burst now wait until later rounds to invest in companies, when there's greater certainty the company is financially stable and will do well in the market.

And as the Forbes report shows, VCs are investing in companies around the globe, looking for the safest and most promising returns, whether they be in China, India, or elsewhere.

So with so much VC attention on China, will American Web 2.0 companies face increased competition to secure VC dollars? Not if they take the right steps to promote their business plan.

The most important thing is to show VCs that your business is solid. Provide a clear report of your target markets and customers, marketing plans, and budget. Also show your product development road map with reasonable milestones and strategies for meeting them.

And don't forget the competition. Provide an overview of your competitive landscape, where you fall within it, and your plans to rise above competitors. Together, this information creates a comprehensive sales pitch to VCs, and helps secure the dollars you need to support and grow your business.

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Friday, August 10, 2007

Use reviews to increase views

posted by Andy Leff
Want to push your business ahead of the pack? Then draw on the strength of your customers' opinions.

That's according to e-consultancy and Bazaarvoice's Social Commerce Report 2007, which demonstrates the positive effect of customer product reviews on conversion rates, site traffic, and average order values at e-commerce sites. Other benefits include improved retention and loyalty, and improved search engine optimization.

In addition, more than half of the 800 America and European online sellers surveyed consider user-generated content either extremely important or very important to company strategy over the next year.

So you'd think these companies would be falling over themselves to create channels for effective, efficient customer feedback, right? Wrong. Only 28 percent of these forward-thinking respondents actually use customer ratings and reviews.

Why the disconnect? One adoption barrier is companies' fear of negative reviews, a concern one-third of respondents hold. (This is the same fear, incidentally, that prompts many corporate blogs to monitor or block comments.)

Another potential barrier might be the company's actual product. The report says online reviews have the most impact for complex and high-ticket items, such as cars and electronics, that require significant buyer research and investment.

So, if the product is low-risk or low-investment, such as apparel or groceries, sellers might not consider structured customer reviews a viable part of their marketing mix.

That said, I still support inviting customer feedback and ratings. It increases an organization's transparency, and demonstrates levels of customer satisfaction and service. And in the end, this open, evident commitment to quality is what really grows the bottom line.

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Thursday, August 9, 2007

The world thinks the world of Web 2.0

posted by Andy Leff
Just this week, global Internet information provider comScore released a study revealing social networking's dramatic global expansion over the past year, especially among major social networking sites.

Here's what I found most interesting (in light of our recent Friendster post):

"While attracting global users, specific social networks have a tendency to skew in popularity in different regions. For example, both (62 percent) and (68 percent) attract approximately two-thirds of their respective audiences from North America. That said, each has already amassed a large international visitor base and both appear poised to continue their global expansion. has a particularly strong grasp on Europe, attracting nearly 63 percent of its visitors from that region, while Orkut is firmly entrenched in Latin America (49 percent) and Asia-Pacific (43 percent). Friendster also attracts a significant proportion of its visitors (89 percent) from the Asia-Pacific region. Both and exhibit more balance in their respective visitor bases, drawing at least 8 percent from each of the five worldwide regions."

These figures are an important reminder for North American businesses to forego regional myopia, and remember the “world” part of World Wide Web. Tapping into an area's preferred social network -- rather than your preferred sites -- and reaching out to your intended audience on their turf increases your chances for connection.

Better yet, find out why these sites are more attractive to people in different regions. How do they use the sites? What features or benefits appeal to them? You can then use this insight into their style and usage preferences to further develop your online product or service.

The result: By expanding your digital worldview, you'll broaden your business's horizons, too.

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Wednesday, August 8, 2007

Do you see a VC?

posted by Andy Leff
Heard this story before? Smart person gets idea for new widget. Person ropes in one or two other smart people. The smart team perfects amazing widget in garage on shoestring budget.

Then team starts free blog about widget. Other smart people take notice, and become widget devotees. News spreads. Widget sales soar. Original smart team retires obscenely rich.

This scenario, of course, is every Web 2.0 entrepreneur's dream. But it can also be a venture capitalist's nightmare, according to Fred Wilson writing in Social Computing Magazine.

Why? Because business development that used to require $20 million can now take as little as $60k to achieve the same results, thanks to cheaper, faster, and easier Web services and capabilities.

So what's a VC to do when business owners can run the show themselves? Wilson's answer: Wait for stage two of their growth. Sure, startup costs might be covered by cheap Web apps and free blog PR, but success leads to expansion.

And that means more staff, more customer service, more infrastructure, more advertising -- and a need for more capital. Wilson sums up the VC opportunity here:

"Venture capital still plays an important role in financing web entrepreneurs. But the need for capital comes later in the company formation process. And that is a very good thing for everyone involved. Because VCs can scale their capital (i.e. risk) exposure as the risk is mitigated from the opportunity. They can still get their $10mm per deal invested, but they will put less up at the start and more up later."

On the flip side, business owners should factor expansion into their long-term business strategy, and consider VC funding for future rounds.

Hopeless entrepreneurial romantics need not fear; calling on VCs won't damage the company's original Cinderella story. Rather, it ensures the company has a reasonable chance for success at a point when DIY techniques can no longer sustain the growing enterprise.

Don't get me wrong, companies' original spirit and customer interaction should remain intact with blogs, forums, and a strong Web presence. But later-stage VC can give Web 2.0 widget-makers a leg-up in a competitive space, and grease the wheels for the next round of invention.

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Wednesday, August 1, 2007

Giving voice to blog posts

posted by Andy Leff
First there was vox humana. Then came vox populi. Now we have vox post -- or voice posts -- unrolled last week on sites such as OhGizmo and Boing Boing.

But wait! you say. The concept sounds vaguely familiar. That's because voice posts aren't new. Odeo's Audioblogger service hit the scene a couple years ago and partnered with Google and Blogger, only to be laid to rest in November 2006.

Still, it was enough time to pique interest among forward-thinking bloggers. And now HP is resurrecting the technology as a marketing strategy.

You might also be thinking voice posts are podcasts by another name. Well, not quite. Voice posts consist mainly of voice recordings sent by mobile phone, and posted directly to blogs. Essentially, they are aural versions of traditional text posts, where authors speak their views instead of typing them.

Podcasts, on the other hand, are digital media files distributed via syndication feed, and available for download and playback. They often feature interviews and shows, which range in production value, length, and complexity.

Voice posts offer some unique benefits to experimental authors. Faithful blog audiences get to hear raw, unedited views expressed in their favorite bloggers' actual voices. This strengthens a personal connection to writer and content.

Plus, varying written and spoken formats add interest and texture to blog sites, and can attract a new subset of followers who prefer listening to reading.

Now the drawbacks. Some authors express themselves better through the keyboard than the recorder. And while blog posts aren't usually heavily edited, their publishing structure does let writers add some spit and polish before sending them into the great wide Web.

In contrast, off-the-cuff voice posts risk becoming rambling streams of consciousness, where the most cogent points are lost in the babble, rather than called out on the page.

That said, I think authors who apply basic blogging guidelines for readable text to voice posts will make the format work. These best practices include offering clear, concise information; calling out links; and providing interesting analysis for your audience.

If any of you already use voice posts on your business or personal blogs, let me know how it's working out. We welcome all dos, don'ts, and dohs you've discovered along the way.

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