Congratulations, TubeMogul

http://www.foundationcapital.com/blog/2014/07/congratulations-tubemogul/

 

Posted in Miscellaneous | 2 Comments

The Impact of Social Media on Marketing

Social media has democratized the tools of self expression, transforming the relationship that consumers have with brands, products and services.

Traditionally, marketers have used the metaphor of a funnel to think about the consumer buying process. Consumers would start at the top with multiple brands and would narrow their choice down to a final decision somewhat linearly. In addition, Companies traditionally used paid-media to “push” their messages at a few well-defined points along the funnel to build awareness, drive consideration, and ultimately inspire purchase. In this model,  marketing has largely been a one way communication process. 

As a result of social media, this metaphor (i.e. the notion of a funnel) is increasingly irrelevant. From being passive and depending on brands to communicate with them, empowered consumers have taken charge. Consumers now have instant access to a wealth of information and they are leveraging social media to make buying decisions often without even engaging with the brand itself. In addition, network effects create the potential for 1 disgruntled consumer to influence the purchase decisions of millions of other consumers.

Clearly most marketers are rapidly figuring out how to buy ads within social media. The more innovative marketers are developing their own content (“owned media”), building online communities of brand ambassadors and building social sharing tools into their web-sites. And this is just the start. Empowered consumers will continue to increase the influence they exert over a brand’s messaging and communication, and brands will respond by innovating on ways to co-opt consumers/consumer messaging.  The most innovative companies (e.g. Modcloth) will leverage social media to reinvent their product, co-opting consumers into the design process. I would go so far as to say that social media will catalyze the creation of entirely new brands. The Huffington Post is a great example of such a media brand; the question is whether social media will enable the creation of entirely new CPG, automotive and financial services brands ?

Posted in Internet, Marketing Technology, On-Line Advertising | Tagged , , | 12 Comments

As all advertising becomes digital, will there be a “Google for Brand Advertisers” ?

Advertising is a $ 500 B + industry globally, 20 % of which, almost $ 100 B, is digital today. With tablets, smart phones, and Connected TVs, consumers are starting to live in an “all digital world”. As that happens, all advertising will become digital. And the impact on marketers will be profound, especially as all TV advertising becomes digital (for those that doubt that TV will become all digital by the end of this decade, try out Barry Diller’s Aereo service in NY).

Let me give you an example of how profound these changes are for a marketer. When I started my career at Unilever, I used to buy TV advertising and it was a simple process. I would hire a creative agency that would come up with a bunch of story ideas, I would shortlist some ideas, and they would go ahead and create a fews ads. I would then pick a picked a couple of TV shows and after that, every week I would be able to reach 10s of millions of consumers. Today, with online video, the world is much more complex. Audiences are fragmented across sites, apps, and devices. Consumers view content on demand at a time and place of their choosing. Increasingly sites like Hulu are offering consumers a choice of ads that they can see. And then off course, with touch screens, consumers expect to be able to interact with the ads.

At the risk of over-simplifying this, a decade ago, marketers made a handful of big decisions. Today, in a digital world, marketers make 10s of millions of very specific decisions, almost on  daily basis. Instead of being able to do a media plan on a spreadsheet, marketers now need all kinds of tools and technologies. And so, there has emerged a whole class of applications and services (e.g. DSPs, data management platforms, optimization tools) that enable advertisers to manage the purchase of digital media.

I believe that this transition is inevitable. The questions I think about are:

  1. What this ecosystem will look like in 5 years ?
  2. What will be the characteristics of the winners on the Demand side in 2017 ?
  3. Will there be  Google for Brand Advertisers ? What will it look like ?

If you have a POV on these questions, I would love to hear from you….

Posted in Miscellaneous, On-Line Advertising | 9 Comments

Decade of the CMO

Historically, marketers have played a limited role in driving IT spend. I believe that this is changing, and that selling technology to marketers is a huge opportunity. I believe that this is the decade of the CMO (Chief Marketing Officer).

To set this in context, its helpful to take a look at how the priorities for Fortune 500 companies have evolved over the last 3 decades, and the impact that has had on IT spend.

  1. The 80s was the decade of leveraged buyouts, out-sourcing and managing global businesses. In that environment, CFOs ruled the roost and they drove the adoption of planning and resource management systems, resulting in successes like SAP, Oracle, and JD Edwards.
  2. The 90’s marked the dawn of the information age, and a focus on growth. As a result we saw sales take the pre-eminent role within organizations. Markets like Sales force Management, Customer Relationship Management and Support Management all took off, creating companies like Seibel, Scopus, Vantive, and late in the decade Saleforce.com
  3. The 2000s, has been a decade of consolidation, improving core IT infrastructure and managing IT costs. This focus on CIOs has created companies like VM Ware, Citrix, Symantec and EMC.

Going forward, I believe that this (the 2010- decade) is the decade of CMOs. For one, marketing budgets are 3 X CIO budgets and growing faster. Second, social media, has moved marketing from the side stage to center stage. And, with the advent of digital marketing, technology is now at the heart of all marketing.

Already, this wave has created several large players including Google and Adobe.  IBM, which has acquired (Ck IBm acquistions)  CoreMetrics, XYZ and Tealeaf (which was an Foundation Capital portfolio company), is also building out a footprint in the nascent Marketing technologies space.

There is a school of thought that by the end of the decade, CMOs will invest more in IT than CIOs. So what does this mean for technology start-ups. I think that there are 4 key trends that CMOs are investing behind, and that start-ups should seek to understand.

  1. Empowered Consumers which is all about the impact of social media
  2. All Advertising is becoming Digital
  3. Martinis to Metrics, which is all about the focus on marketing accountability and ROI
  4. The Transformation of the Retail Environment especially due to the impact of smart phones and tablets

In subsequent posts, I will take a crack at fleshing out each of these trends. In parallel, I would love to get feedback on the above.

Posted in On-Line Advertising | Tagged , , | 3 Comments

Touch, and go…

…was the title of a recent Economist story on Microsoft (http://www.economist.com/news/business/21565225-microsoft-makes-its-pitch-mobile-age-tablets-high). The core thrust of the article is that while Microsoft still has 90% of the PC OS market, it has only 30 %of the personal computing market (factoring in tablets and smart phones). With Forrester forecasting that by 2016, PCs will account for less than 20% of the personal computing market, Windows 8 has to win in the tablet and smartphone market for MS to remain relevant.

I am typing this blog post on my MS Surface, and I think that MS has a shot. But it is touch, and go. Windows 8 has several redeeming features:

  1. One OS across devices. The integration across devices is useful. For example, I can create documents on my Surface and edit them on my PC, and the SmartGlass app allows tablets and smartphones to become adjuncts to X-Boxes in the home showing additional information and enabling you to use your Win8 tablet/phone as a remote control.
  2. Designed for content creation. The Surface is really designed to allow users to create content in addition to consuming it. The touch keyboard, the dimensions of the Surface (its more rectangular, making it easier to type), and Ofice2013 makes it much easier to create content.

At the same time, Microsoft lacks the ecosystem that Apple has developed over the last decade. App and accessory developers offer a host of “add ons” that make the Apple experience much more compelling for most consumers.

Even if Windows 8 succeeds, by 2016, MS’s share of the operating system market will be well below 50%, probably closer to 30%. Given the uphill road ahead, what should Microsoft do ? Here are my 2 cents:

  1. Acquire Netflix. X-Box Live and Skype are already compelling consumer brands. With the addition of Netflix, Microsoft will be the undisputed leader in online consumer entertainment. Netflix will also enable Microsoft to take the lead in online video, an emerging $250 B+ market (over time). Most importantly, it will give Microsoft a credible CEO successor in Reed Hastings. In fact, I cannot think of a more suitable CEO for MS than Reed. He knows MS well (has been on the board for 5 years, although he did recently announce that he would not seek re-election), has software/geek chops (Reed was the founder of Pure Software prior to Netflix), will bring much needed online DNA into the company and will have the external perspective required to radically re-shape the company
  2. Let go of its obsession with Windows. The one thing that really bugged me about the Surface was that when I tried to log into its Skype app, it insisted on changing my Skype id to my Windows id. That is STUPID! Having to change my 10 year old Skype id really pissed me off. And it reminded me of the time that MS tried to brand its search engine “Windows Search”. There are many other vestiges of MS’s Windows obsession in the Surface which only take away from the product experience.  Emotions apart, MS needs to accept that the best days of Windows are behind it, and move on. In the same vein, appointing a Windows/MS veteran as Ballmer’s successor would be a mistake, as it would only perpetuate the Windows legacy.
  3. Acquire Dropbox or Box.net. Microsoft needs a credible way to engage with iPhone and Android users. It has not launched versions of Office for either platform, and I suspect that it will keep it that way for a while, given that Office integration is one of the compelling features of Windows 8. Skype and Netflix (if it acquires it) will provide MS with consumer touch points on non-Windows devices. Acquiring one of the leading productivity apps on the App Store will provide Microsoft with a strong launch pad for its iPhone/Android strategy.

The Economist said it well, it is touch, and go for Microsoft. I wish it well.

Posted in Miscellaneous | 3 Comments

My 3 Words for 2012

2011 has been an amazing year on so many dimensions:

  1. Our second son, Aniket (a.k.a. one who makes the whole world his home), was born on June 13. Aditya (a.k.a. the Sun), our other son who is almost 3, started going to pre-school, where he is learning Mandarin  (he goes to a Mandarin immersion program where he is the only kid who does not have Mandarin speaking parents – we already feel the pressure to learn:-)). Parenting is humbling, exhilarating, exhausting, frustrating and  incredibly rewarding all at the same time.
  2. After 10 years at Barclays Global Investors (BGI)/BlackRock, my wife, Pooja, started Nipun Capital in the fall. Nipun (a.k.a. skilled) is an Asia focused asset management firm that Pooja co-founded along with Dr. Charles Lee, the Former Head of Research at BGI who is now a Professor at Stanford’s GSB. In 4 months, they have hired an amazing product team, raised angel funding and they are on the verge of launching their first product, an institutional quality Total Return Fund. Watching Pooja set up Nipun has been an enriching experience for me: I have so much more empathy for start-up founders, and the roller coaster that they ride every day.
  3. I had the privilege of seeing one of my portfolio companies, TreeHouse which is India’s leading pre-school education company, go public on the Indian stock exchanges. In addition, in 2011,  I led an investment into Aggregate Knowledge (audience and campaign analytics for digital media) and joined the board of Conviva (experience management for online video). I also became a General Partner at Foundation Capital, earlier this year. I am thrilled to join the partnership, and look forward to continuing to invest in exceptional people and their plans to change the world.

As I was reflecting on the whirlwind that 2011 has been for me, I came across a blog post by Elliot Ng which really struck a chord. In it, Elliot describes his “3 words to help guide 2012”. What appealed to me about the concept of the 3 words was that they were guiding pillars vs. specific goals or objectives. Chris Brogan who introduced the concept to Elliot described them as “helping you the way that a lighthouse helps a ship in a storm”. Ideally they are themes that are evocative of a personal vision, and a compass by which to set direction for day to day goals, and tasks. As soon as  I read Chris’s post, I set about to identify my 3 words for 2012. They may not mean much for you. Or they may mean very different things to you. That’s OK. These words are only meant to guide me on my journey.

My 3 Words for 2012: Introspect, Intentional, Re-wire

Introspect

In my universe, Introspect ties several concepts together – self-reflection, Deliberate Practice, blogging, and learning from every interaction with the entrepreneurs and CEOs I work with every day. I have always been a fan of self-analysis tools like MBTI (if you are curious, I am an ENTP) and StrengthFinder.  I find that they create a framework for a dialog with myself. They help pull together and verbalize insights and observations about myself that I have put away in some corner of my brain. Yet these tools are just a starting point. In 2012, I want to find a way to do a better job of learning from every interaction that I have. I want to learn from every entrepreneur that I chose not to fund. And I want to learn from every time that I blow my top. Most of all, I want to distil those learnings to do better the next time.

The notion of Deliberate Practice is something that I am still getting my arms around. I have always been somewhat skeptical of Gladwell’s 10,000 hour theory, and very dubious of the idea that with 10,000 hours of effort, anyone could come up with the Theory of Relativity. Given my skepticism, this post about Deliberate Practice really struck a chord with me.  The post cites a 2005 study of chess players  that found that  “serious study“  — the arduous task of reviewing past games of better players, trying to predict each move in advance — was the strongest predictor of chess skill. The article makes the case that key to exceptional performance is identifying what constitutes Diliberate Practice in your chosen field of endeavor. I have chosen to be a venture investor, helping exceptional people build enduring and valuable companies. And so, as part of introspecting in 2012, I would like to better understand what constitutes Diliberate Practice for a venture investor.

I am an infrequent blogger. Its been almost a year since I wrote something. As a result, people often ask me why I blog at all. After all, given how infrequently I post, I am unlikely to ever develop much of an audience for my blog. For me, that’s irrelevant. I love the fact that you are reading this blog post and hope to get feedback from you. Yet, I write for myself. I blog as a way to synthesize ideas floating around in my head. I blog to force myself to take a stand, to expose what I am thinking to others and get feedback. Well, in 2012, as I introspect more, I hope to blog more often.

Intentional.

Elliot also used the word Intentional and so when I started this process, I tried hard to stay away from it. I came up  several words that evoked the theme that I was looking for –  Deliberate (the adjective), Organized, Purposeful, Prioritize, Pro-active, Balance. Yet none of them fully captured the idea or also evoked concepts that did not resonate for me. For example, I liked purposeful, but for me, it also minimizes the serendipity which is so core to who I am and what I do. I liked Deliberate, but as a verb, its meaning is similar to introspect. And so after a lot of meandering, I finally settled on IntentionalFor me, Intentional evokes 2 broad concepts – the notion of being proactive and the notion of balance.

  1. Proactive. Like many people, I get more mail than I can ever respond to. I get more requests for meetings than there are hours in the day. And so I find myself reacting to in-bound requests for much of the time. I try to prioritize, and am slowly learning to say no. Yet, that is only the beginning. For me, being proactive means making a conscious effort to allocate my time to reflect my priorities and goals. It means setting aside the urgent to focus on the truly important. It means giving up immediate gratification for more enduring rewards. For me, it often means not watching one more episode of the The Big Bang Theory late at night so that I can get up early and go to the gym the next morning. It means making the time to attend a Churchhill club event that is not directly related to anything I am doing today. And it means saying no to all those cookies in the kitchen at 4 PM when I desperately need a sugar high!
  2. Balance. I have always been an intense person, with the tendency to focus all my energies on my current obsession. Sometimes, that  results in my making choices that may seem reckless to others, such as when I skipped an exam in college because I was in the middle of re-reading Eric Segal’s Love Story for the nth time. In my 20s, it was easier to channelize all my energies on the few things that I cared about at any point in time. Today, I find that I need to balance my varied professional passions, my multiple family commitments (kids, wife, mother) and my personal interests. Yet, for me, its not about doing a little bit of everything. Its about being more deliberate about where I engage, and about being more purposeful about my bursts of intensity.

Re-wire

I have always been fascinated by the idea that the human brain is capable of constantly re-wiring itself. I have always been paranoid about being struck in my own little box, about developing blinders over time. And so, I have sought and reveled in new ideas, people and fresh connections. I am fortunate that my job as a venture capitalist exposes me to new people and ideas every day. And yet, over time, those networks tend to get incestous. In fact, the more “intentional” I get, the less likely it is that I will invest time/energy in engaging with a random person or idea. And so, even as I seek to be more intentional in 2012, I hope to engineer more serendipitous encounters with exceptional people out-side my networks who are working on life changing ideas in areas that I know nothing about.

Re-wiring may mean being more deliberate about attending conferences, something I have generally avoided in the past because of the needle in a haystack problem. Re-wiring may mean diving deep into a completely new area of technology. Or it may mean learning to play chess or swim in my 40s.

I will figure out I will do as the year unfolds. And that is the beauty of the 3 words process. Its about defining guiding pillars upfront, while giving yourself the flexibility to make lots of decisions along the way.

And so, to wrap up, my 3 words are: Introspect, Intentional and Re-wire. I am excited about using them as lighthouses, helping me navigate the storm that is life.  If you are excited by the idea, and do end up writing your own 3 words for 2012, do tell me about them. 

Posted in Miscellaneous, Personal Reflections | 11 Comments

Windows Mobile: the cat does have nine lives!

With the recent Nokia deal, Windows Mobile is back! While Nokia seems irrelevant in the US, Symbian still has 37.6 % market share globally (amongst smart phones), and more importantly, Nokia has 40+ % of the global cellphone market (of devices sold by the top 10 cellphone makers). So, while Nokia will continue to loose share in 2011/2012, it will remain the largest cellphone maker (in volume terms) for a while.

I think that Windows Mobile has a credible shot at 30 % + market share of all cellphones by 2015 up from 4.2 % of all smartphones today.

  • By 2015, all phones will be smart phones, and just with Nokia alone, Windows Mobile could have 30% + market share. In addition Samsung, HTC, LG and other Asian manufacturers will all hedge their bets and sell a mix of Windows Mobile and Android.
  • Nokia and Microsoft both have a very strong retail and corporate distribution channel in Asia and Europe. Together, they have also strong relationships with both carriers and large enterprises, which both Google and Apple lack.
  • MSFT has a very strong developer ecosystem in Asia and Europe and amongst enterprise developers in the US. In India, which has the 2nd largest number of developers after the US, .NET has more developers than the open source stack. Not a surprise when you consider that Indian developers cut their teeth at the IT out-sourcers which use .NET extensively.

The Windows-Nokia alliance could be the new WINTEL, and in time may be remembered as pivotal as Yahoo’s decision to out-source search to Bing or even IBM’s decision to out-source the PC OS to Microsoft. In particular, this is bad news for RIM’s platform and HP’s Web OS (formerly Palm), both of which I suspect will be history by 2015. Google will continue to be the market leader with 50% + of the market and Apple will end up with 15 % in volume terms and highly profitable.

Off course all this assumes that MSFT and Nokia can execute together, which is a big IF! What do you think? Does Windows Mobile have nine lives?

Posted in India, Mobile | 15 Comments

On-Line Video: Wakeup call for Content Owners

While 2010 was a banner year for online video, it was also a year of missed opportunities.

Online video came of age in 2010.

  1. First and foremost, 2010 was the year of Netflix. With almost 20 M subscribers at the end of the year, it is closing in on Comcast  which has 23 M subs. More than 2/3 of Netflix’s subscribers use its streaming service, with 3.5 M streaming during prime time on any given day. Clearly, mainstream consumers are watching online video!
  2. Internet connected TVs are becoming the norm. Over 100 M TVs (globally) are connected to the internet, mostly through gaming consoles. In addition, most OEMs are pushing Smart TVs heavily, and a variety of boxes (e.g. Google TV) that connect existing TVs to the internet are becoming available.
  3. Video quality issues are becoming a thing of the past. Companies like Conviva have made it possible to cost effectively stream HD quality video at scale (i.e. for millions of users) without buffering or other quality issues.  Millions of people watched the Soccer World Cup in South Africa online. I watch Netflix movies on a 55” LED HD TV (with a Wi-Fi connection) without any issues at all.

However, content availability continues to be an issue online. Content owners are rightly concerned about replacing analog dollars with digital pennies. Yet 28% of US consumers say that they are considering cutting the cord, and HBO recently reported a decline in subscribers in the same year that Netflix doubled its subscriber base. Doesn’t it feel like they (content owners) are plugging holes in the dam with their pinkie fingers ?

Content owners should instead take embrace online video and work with players in the ecosystem to develop a viable business model.

  1. Content owners should aggressively make all their content available online.
    1. Free-to-air (FTA) channels like CBS and ABC should take advantage of the online medium to establish a direct relationship with their consumers. FTA channels should make all their shows available online (for On Demand streaming) on their web properties. In fact, they should aggressively resolve content rights issues and release their entire archives on-line. In addition, FTA channels should make it easy for content distributors like YouTube, Netflix, Joost, Hulu and others to syndicate their content while maintaining control over the advertising rights (see below for details)
    2. Premium channels should offer on-line only subscriptions, similar to Netflix’s streaming only offering. There is a risk of cannibalizing existing revenues, but if they don’t, then they also run the risk of becoming irrelevant.
  2. In order to effectively monetize their content through this transition, content owners need to be able to manage the advertising rights associated with their content irrespective of where it is viewed.  For example, content owners need to bundle on-line inventory (across distributors) with TV inventory and ensure that “exclusive” rights are honored on0line. In order to do so, content owners are working with vendors like FreeWheel to put in place advertising rights management platforms and integrate ad operations across online and linear TV
  3. While online video distribution has its challenges, it also offers content owners and advertisers a host of new capabilities. Content owners can offer a broader variety of ad formats, superior targeting/ tracking and potentially a more engaged audience. For advertisers, online video enables them to improve the efficacy of their advertising by:
    1. Enabling more targeted advertising. Today, most advertisers focus excessively on reach, and not enough on audience segmentation. How often have you see TV ads that you thought were utterly irrelevant? With on-line video, Pampers can target moms with young kids while Lipitor can target middle aged men, both of whom might watch Greys Anatomy
    2. Customizing creative/messaging. On-line video allows advertising to add a “call to action” based on location, serve up different creatives to various audience sub-segments, or even change the creative based on where an individual user in in the sales funnel
    3. Blurring the line between advertising and content. TV artificially constrains advertisers to produce 15, 30 and 60 second spots. On-line, advertisers can offer longer form videos, or provide links to infomercials within traditional 30 second spots. On-line video enables advertisers to engage and build a relationship with interested consumers (also likely buyers) while maintaining a respect distance with others

Advertisers are not standing on the side lines.  Several well know brand advertisers have taken the plunge and moved substantial budgets on-line. Some even talk about moving 100% of their budget from TV to online. Managing this transition is hard though. Harnessing the power of the medium requires a technology platform like TubeMogul to track where they place ads, analyze how consumers engage with those ads and then make decisions around creative and media buying based on that data.

The transition to online video is challenging for content owners, yet inevitable. At the same time, by making advertising more effective and accountable, this transition has the potential to increase total (TV+ online video) ad spend. I guess, the real question is which content owners are going to say, “fortune favors the bold”, and take the plunge!

PS: Through Foundation Capital, I am on the board of/or involved with Conviva, TubeMogul and FreeWheel

Posted in Internet, On-Line Advertising, Video | 7 Comments

Great article in Infoworld…

…on the impact of tablets on the PC ecosystem and Android vs. iOS. Well worth the read. See The key mobile trends emerging from CES 2011

Thanks to Srinivas Mantripagada for sharing this.

Posted in Internet, Mobile | 1 Comment

Tablets: not a cheaper PC, but a better mobile phone…

…so said a senior consumer electronics executive in India. He went on to say that electronics retailers in India are bullish on the market opportunity for tablets, and are gearing up to work with both OEMs and mobile carriers to launch a host of android tablets in the coming months. The first few launches, Samsung’s Galaxy Tab and the OlivePad are both selling well. In comparison, netbooks have not done well in India as they were perceived to be inferior PCs.

In general, the sentiment in India seems to be that wireless broadband enabled tablets will do for internet access what mobile phones did for telephony. Far from being crazy, predictions of 200M+ broadband users by 2015 are now commonplace.

A leading indicator of the potential is recent announcements by Indian tablet vendors.

  1. At one of the spectrum, is Notion Ink’s Adam tablet which Engadget described as  “one of the most unique Android tablets on the market”. With its PixelQi screen and its Tegra 2 dual core CPU, its performance is impressive. However, the most impressive part is its user interface which is definitely a step on the Android UI.
  2. At the other end of the spectrum is the $ 35 (yes thirty five dollars!) Saksha tablet. The Saksha was funded by a Government grant,  designed jointly by the IITs and HCL is now launching it commercially in early 2011.  Press reports suggest that the Saksha has a 9” screen, 2 GB memory, a 500 MHz processor, a front video camera, and is built on the Android OS.

“Not a cheaper PC, but a better mobile phone…”. Maybe, perceptions do change reality. What do you think ?

Posted in India, Internet, Mobile | 3 Comments