Raw notes by Ed Costello from the nextNYDigital Community Conversation: BizDev 2.0 on November 15, 2006. Apologies for misattributions and misquotations (feel free to edit, this is a wiki afterall).
CEO is Charlie O’Donnell from Oddcast Marti is Marti Grimmick from CheckPointBlack.com. Charlie and Marti coordinated and kicked off the event.
Where possible I identify NextNY’ers but in most cases I could not read the name tags.
The speakers were:
Charlie kicked off the conversation with the question: “Are all of the business development professionals going to be out of work in five years, to be replaced by RSS, APIs, etc.?” directed to the invited speakers.
CEO: Are all of the business dev professionalss going to be out of work in 5 years, to be replaced by RSS apis, etc? (To Catherin Levene)
Catherine LEVENE: distribution is incredibly important, as much as you can make that turnkey. But personal relationships are key as well. There’ll always be the next platform, the next idea, the next business and you’ll always need people
Zia WIGDER: realizing how important human contact is in Arabic venture. Visual piece is incredibly important in establishing trust in relationships. Business models will change but professionals won’t be out of a job.
Fred WILSON: That you don’t need a B/D relationship between two services to give customers the opportunity to benefit from an integration relationship between those services. Services need to create ways to make these happen and users need to use them to show what’s working and of value and what is not. B/D will still be needed but it’s not a necessary step to make anything happen anymore.
Chris FRALIC: doesn’t think B/D will ever go away. It makes things a lot easier to get started. Things like APIs and affiliate programs make life easier makes it easier to start and to scale easier.
Tina SHARKEY: “We can date more people a lot faster” because the APIs are open. Like speed dating. Being able to just mash stuff up first and then see if a deal can be done. Then B/Ders are enablers and partners in making it happen and anticipating where the next models are. How to engage consumers and get consumers to go along with us. What do licenses look like in this world? Busness dev becomes a catalyst in getting things done and reinventing models.
Niki SCEVAK: That new forms of technology don’t change business development that much. Allows someone small to prove themselves. Can prove value to potential partners. Helps business development act smarter.
Marti: What are the benefits of this open world, open APIs, and who’s going to benefit?
LEVENE: makes it easier to establish third party relationships without additional overhead. Example of NYTimes getting requests to repurpose content. Uneconomical to do it any other way than turnkey manner. The added value that an individual person adds to a commodity relationship is small. If you’re small, apis, widgets make it possible to grow quickly and gain distribution at economical rates.
SCEVAK: both parties have to win out of the transaction and that’s the case with APIs. There are new issues around control and monitoring the potentially large network of people using your content. Ultimately the benefits outweigh the risks.
FRALIC: affiliate was a terribly (good) efficient way of getting ebay started with 3rd parties. Allowed affiliates to arbitrage between Google and eBay on keywords and drive customers to ebay. Mostly hands off
CEO: is there a limit to that? At some point is there a middleman in the process who’s extracting too much value? Issues about who’s providing value to whom. Big companies complaining that widgets affiliates taking value away.
WILSON: the success of these relationships relies ultimately on the implementation of the service. Eg: simplyhired deal with myspace. Myspace buried simplyhired. Gotta get the architecture of how the service is implemented before you make the deal.
SHARKEY: concept of “anchor tenancy” . “If we didn’t have commitments on the table about our placements we were going to die.” That placement must be relevant. Worse thing is to have senior leadership push down what is going to happen. Need for value exchange in deals. That they look at value exchange in multiple ways. That relationships matter and self-service matters and you need to find the best balance between the two.
That the days of exclusive anchor tenancy are over. Only care about it at the head and not the long tail.
CEO: who values the most out of this between large cos and small cos.
ALBUSH: use short term exclusive
Marti: what are the trends, open partnerships? Closed?
WIGDER: that partnerships are something people are anxious to have, that they want to have a deal in the social networking space and not be left out. That people are more interested in the partnership than that it works well.
CEO: Issue of how many users you can get on your own vs through a partnership. How much can you do on your own and how much do you need partnership
WILSON: that deals are easier to do now, thus do more deals. Try to identify companies that are starting to get a lot of activity before other people take notice and make deals with them. There’s not 50 people knocking on their doors yet. Do business with a lot of nobodies in the case one ofthem makes it big
NEXTNY: Is there a fear or though process on the big guys that there’s a platform world is there a sense with the smaller guys that they can deal with more than a couple partnerships.
NEXTNY #2: that the web is the platform.
Darren HERMAN: Wilson’s notion is how music industry works (or doesn’t work). For Darren they do high level bizdev deals but have also opened up their API so that game developers can utilize the API. “We become the A&R of IGA worldwide and we know what games are popular and develop the big targets”.
CEO: That Darren is finalist in businessweek top 25
Seth Goldstein: the more value I as a user provide into a system with my attention/intention the more I’d want to do a bizdev deal on the individual basis.
FRALIC: the things that seem to work are the company buyouts (eg Yahoo acquiring del.icio.us) or companies will step up, eg Google guaranteeing $900mm to myspace.
Goldstein: but will users get paid
SHARKEY: but they are getting paid, eg via adsense
Next NY#2: that people value reputation within community, perhaps that’s how they get “paid” rather than monetary. Acceptance within a community.
NextnY #3: that people can establish authority, get reputation but also may want to get paid.
#4: that users are getting incredibly useful free services. That’s the tradeoff. They are not gong to pay for the service,
WILSON: “now social media optimization” . that big companies aren’t going to do the deals, story of del.icio.us trying to get media cos to add “tag in delicious” to content, but they didn’t, and instead bloggers popularized it.
FRALIC: couple of key deals can set the way though, eg: delicious link on washingtonpost.com.
LEVENE: two issues. The blogosphere is really powerful. If you launch tools into the blogosphere and they catch on that is a great train to ride. Working with media companies…long sales cycle, they don’t want to be the first. Need to identify the companies willing to take risks. Don’t waste a lot of time pounding the pavement with media companies.
CEO: wonders if the blogworld is too small
LEVENE: that the blogworld is influential not necessarily large
SHARKEY: that AOL allows subscription to users’ feeds via AIM. Turning weblogsinc into a media company. Big because of its influence, not because of its pageviews. Not everything needs to be at scale, if it sits on their platform they can enable it. If they can’t enable it, can’t place it within their platform then it won’t be as successful.
WIGDER: even though blogs are a minority of users, very influential. Eg product recommendations.
WILSON: the ultimate bizdev deal is getting bought. A part of business development’s role is to “schmooze up”.
FRALIC: it’s a good sign when someone wants to invest with your next round. Dual pathing of conversations between doing a deal and doing an acquisition
Ken Berger: the differences between the first boom and this one, the first time around it was about how many eyeballs you can get, then the suspension of disbelief failed and the boom crashed, now eyeballs can be monetized (adsense). Now it’s a completely different deal. How much traction can this take? How long is it going to keep going of the monetizing of eyeballs
CEO: what are the economics like for valuations of companies, value difference between owning the property and doing a deal with the property.
SHARKEY: we buy companies for multiple reasons, but one key is for team. Not necessarily solving feature problems and can solve them through acquisition of feature solutions. Secondly they buy models that complement their existing models. Third don’t necessarily buy audience but possibly a high value category, unduplicated reach that is complementary to the network and that the value will increase the day it goes onto their network. Like having people solve their problems without necessarily asking first. That the problems are not always as hard to solve as they (AOL) make them out to be.
Marti: does the use / reuse of these same apis and technologies cheapen or diminish the value.
NextNY#3: the real value is the audience rather than the technology or content behind it.
NextNY#?: that UI will be one of the most important differentiators. The thing about XML is that it’s not for describing looks but data. It’s up to the mashup site to decide how to present that data. UX a key differentiator.
CEO:
WIGDER: companies moving towards deconstructing their web sites. Companies looking to pull out different bits of information so that wherever you enter the site you get the information they want to convey. In search driven world can’t predict how someone will enter your site.
Herman: if you make everything available through an API does it kill competition or make it stronger? All the data is out there, it’s what you do with it that will set you apart.
NextNY: open data/apis that we don’t know what people can do with the apis and data, there is no limit
NextNY: flickr example: don’t come telling what you want to do, show us an example
Wilson: that someone mashed up a slick web interface atop Rhapsody. That web services as the dial tone. World of open APIs makes the user interface much, much more important.
FRALIC: housingmaps.com opened eyes to what is possible. Eventual acquired by Google. But could they have succeeded as a company. What is the value of X million widget users on MySpace?
SHARKEY: that widgets, skins, etc can be incentive to MySpace users to help keep them in the ecosystem because Fox/MySpace cannot deal at the micro level.
FRALIC: paypal vs ebay example, paypal initially “built” on ebay. That Myspace states they don’t want a repeat example, but they tried this with Youtube and user community revolted.
John Keegan: if you’re making a bet that you can build a feature that can get purchased seems like you’re rolling the dice. But is that a business?
FRALIC: FNAC (Feature Not a Company), passing on companies which are obviously built to be flipped.
NextNY: that that’s how movie production has been done for years, directors and producers nurse a project along
FRALIC: that that’s not a problem if that (flipping) is the entrepreneur’s goals but they won’t invest in such a “company”.
SHARKEY: venture can’t back features, but entrepreneurs can.
NextNYer: you can literally build something in one night, perhaps a week. But the point is the creativity to look at the data and APIs and see a feature/value to be created there. Why not build a site/app every day?
NextNYer: What’s the role of business development in that model?
NextNYer: that bizdev is the other market. It’s the marketing side of this environment. Hope that bizdev will retain focus on building value.
That it’s all about monetizing attention and audience and not the technology.
That in the YouTube deal business dev focused on the big players, marketing could not do that, business dev dealt with legal.
LEVENE: that the advertising business today is very different from 2000. That big advertisers were rare online in 2000. Today advertisers are craving quality content. In 2000 even if you had the eyeballs there wasn’t enough ad dollars to support the page views. The number of advertisers is higher today, the size of the buy is higher.
NextNY: when is it going to blow up? Can it go on forever?
NextNY ?: it depends on the economy, if the economy tanks advertising is going to tank, regardless of medium. If you build something sustainable you should be able to survive a downturn.
LEVENE: don’t need to higher 100 people into your company, technology is cheaper, platform is cheaper, number of people employed in business. If there is a shakeout it does not mean the death of the industry as in 2000. Second: the venture money isn’t going into non-revenue generating companies which are cycling back into large companies so crash is less likely.
NextNY: now ad buys are smaller, partly due to monetization by things like AdSense. That if you look at ad buys the downturn is occurring already (MSN, AOL down YOY).
Next NY: that marketers are smarter now. Better tracking allows better success metrics. In 2000 it was just page views, but knowledge and learning is better now.
Robin Chan?: as long as we have visibility into the customer base, the online ad dollars will keep pumping.
Darren Herman: there was no online ad market when the crash occurred. That today there’s billions of dollars pouring and committed into the market today
FRALIC: people spend enormous amounts of time online today yet ad dollars still don’t reflect that. VC dollars are pouring into companies which are just iterations of other companies. There isn’t room for all of those companies to succeed. It’s so cheap to run a company that you might never know that they’ve run out of money.
Kevin ?: that pubsub isn’t run by anyone right now, there is no staff.
?: Where’s the product? What is the thing I would pay for?
WIGDER: every section of online ad market is growing. There isn’t the skyrocketing growth. There is also a lot of the gimmicky companies again. There’ll be a shakeout but that doesn’t mean the industry won’t grow.
Rishi Khanna: getting eyeballs become more difficult as users get better at managing their attention.
SHARKEY: that myspace users have AIM window up and cell phone and they’re looking at all of them at the same time. That it’s good to have many people solving the same problems and that as a collective we’ll end up with some good solutions. That there will be a default feature set that people will have grown up with. The common features are getting defined, this is good it’s innovation. That we haven’t begun to scale yet. That the money is coming in not from VCs but from the Fortune 100s, that money is shifting from traditional media in a big way. Paying attention to where their customers are paying attention.