Does NYC Need Another Early-Stage Investment Fund?

This is a question I've been pondering for quite some time. I've gotten pretty involved in the early-stage investment scene over the past three years, having done, wow, 22 investments. It is hard to believe there have been so many really good entrepreneurs, ideas and business models that warranted funding, and that could benefit by having me as an investor, Board member and/or adviser. I have learned a lot, built some great personal and professional relationships and made a few bucks in the process. But I have been doing this as a long ranger with my own money, acting in the capacity of a "super angel" somewhere between the world of straight-angel investors and venture capitalists. And I feel that maybe I'm not really maximizing my impact due to my limited resources and limited bandwidth.

My question is: does it make sense to institutionalize, to raise outside money and to build a real business out of this? Would real value be created by my stepping up, raising money and getting serious about the early-stage investment business? Do Silicon Alley and Silicon Valley really need another guy like me? I am deeply conflicted, partially because I already know a lot of really good early-stage investors in NYC and elsewhere but also because being a "VC" has a somewhat pejorative ring to it. I don't consider myself a VC; I tend to take more risk, invest earlier and leverage the hell out of my fairly robust and diverse rolodex. I guess in this way I am an angel, but a very active and connected angel who would like to put a lot more money to work than I have in the past. The deal flow is there; I would simply step up my deal size and be able to more significantly participate in follow-on rounds.

Anyway, from time to time I muse about career stuff on this blog, and this is one of those times. Trading, hedge fund management and early-stage investing. My three work passions. It is a pity that I can't do them all, simultaneously. Wouldn't that be a cool trick...

Those Who Live in Glass Houses (MSFT) Shouldn't Throw Stones (at GOOG)

There has been more chest-thumping over the past month among big tech companies that it is beginning to feel like a gorilla convention. Microsoft beating its chest over Yahoo. Yahoo thumping right back and acting all tough to News Corp. and Time Warner. Microsoft again going gorilla with Bill Gates saying "Google does not understand business needs," while a Google executive tosses a coconut right back and dumps on Microsoft SharePoint. But the law of the jungle is: beat your chest and scream from high trees, but only if you're the best and you've got the goods. Because if you don't, you'll get pounded.

Microsoft's got enough going on without getting into PR fisticuffs with Google. Did Bill really need to go after Google Apps at a recent SharePoint conference? Because the company has so much to be proud of these days? Consider these undiplomatic words:

Answering a question about Google's competitive threat to SharePoint, Gates said that, "Its [Google's] productivity tools do not have the features and responsiveness of ours. In terms of Google tools, the day they announced them was their best day, really. Remember Google Talk? I can hardly remember its name? It was going to change the world," Gates said to much laughter and applause.

In contrast, SharePoint was about end-users and the ability to get things done, he said.

Bill's comments are sort of, well duh. I don't think Google believes it has the holy grail today in Google Apps, but it is iterating rapidly to develop a suite of products and services that are still lightweight but with greater functionality than the current offerings. Needless to say, Google is in this for the long run, and it is a logical offshoot of their core business. Here are a few words from Scott Johnston, product manager for Google Sites:

Johnston noted that competing collaboration software products like Microsoft's SharePoint are expensive and hard to implement. "They have a ton of features but in the end, because of the complexity, you rarely get the value you need out of those features. It's a huge burden to IT. The projects to implement such solutions are unbelievable."

Interesting though that Bill and Microsoft feel sufficiently threatened to compare their heavy-weight offerings to Google's new and lightweight tools. Why else would he be getting so horsey and aggressive? Think about Microsoft's approach. They've invested $25 billion+ in Home & Entertainment. Not at all related to their core business. Look at the Zune. A direct competitor to the iPod, right? So Apple should be getting aggressive and talking garbage about Microsoft's lame offering, right? Hardly. Apple is focused on innovating, building brand extensions and linking together their communications and media platforms. They don't have the time to talk trash. They do their talking in the market, where they speak very loudly. Microsoft is doing a lot of their talking at conferences. But conferences don't pay the bills.

That said, Microsoft is taking a page out of the Apple play book but leveraging similar marketing strategies to create a "halo effect" around brands they wish to push:

Microsoft is working to consolidate all of its consumer-focused marketing in its Platforms and Services division. The ultimate, anticipated result: Microsoft will have a more cohesive branding story and sales approach across for PCs, phones and the Web.

********************

Microsoft execs have been studying how one of the masters of consumer marketing, Apple, has been able to parlay sales of iPhones and iPods into new Mac sales — a phenomenon often referred to as the halo effect. Microsoft is hoping to capitalize on similar cross-product momentum with Windows Mobile phones, Zunes and Windows PCs. To kick-start its cross-brand campaign, Microsoft recently launched a $300 million consumer-focused advertising program.

Imitation is and always has been the highest form of flattery. This makes sense, and this approach has propelled Apple to unheard-of heights in both the marketplace and in customer satisfaction. Microsoft's posture on this front: study, learn, shut up and execute. This is an approach that I recommend across all their business lines. It is exactly the same thing I tell my 10-year old son when playing sports: study the game, think, think, think, keep your mouth shut and play hard, all the time. This is what gets results. Because throwing stones seldom works, especially if you've got a pop-gun of an arm.

Ad Inventory: Separating the Theoretical from the Monetizable

Disclaimer #1: I'm not an online ad expert. Disclaimer #2: I'm not an online ad expert. That said, I'm not a dummy, either, and do have a direct view into the area through my investment in Buddy Media. And I am also an active Facebook user, blogger and blog consumer, so I think I get the big picture. And what mystifies me about the big picture is this: why are so many so amped up about things like downloads (applications) and users (Facebook) without a clear discussion of their ability to be monetized?

I mean, I know people are aware that at some point, far far away, such things (apps and social networks themselves) will need to generate revenue bearing some relationship to their (astounding) valuations (Slide at $500mm pre and Facebook at 30x that - nice), but what is observe is an over-focus on the headline numbers (downloads and users, and therefore theoretical "inventory" for advertising) and an under-focus on what inventory is, shall we say, real. And as an investor and as a pragmatist I truly don't get it.

Isn't the point of investing in social networks and application development firms to make money? And if this is the case, and given the valuations we've seen, what are the metrics being used to justify such enormous numbers? I'd gather that the analysis revolves around a calculation of theoretical ad inventory, which is then subject to a massive discount for converting that into a number that is truly monetizable. But how? What are the metrics being used? Because I haven't heard or read anything that bridges the gap for me between the headline inventory number and the real inventory number. And as an investor in such things I really, really want to know.

Buddy Media's business model is different, in its young life is already generating very healthy revenues (so much greater than we could ever have imagined, in fact) and has built brand and reputation for a company focused on monetizing inventory, not simply creating it. But that is not the point. The point is that I see what appears to be a lack of investing discipline of things in and around social networks. And as bullish as I am on the early-stage investment space in general, this is an area ripe for some fresh thinking.

Some More Thoughts on Collective Intelligence

To me the whole social networks "thing" is massively overblown. It is kind of like saying "xxx.com" in the late 1990s that drove valuations to absurd heights. Today calling something either a play on social networks or a social network itself seems to elicit the same frenzied response. And it is totally missing the point.

Here are a few more thoughts I've had on the topic of Collective Intelligence (CI):

• CI is not a function of who you know, but what you know.

• It is particularly potent within vertical communities, where experts and influencers rise to the top and help shape the CI of that community.

• It is often markedly different than simply the sum of a pool of autonomous actors; it takes into account the reflexive relationship among members of the community that helps shape opinion and, therefore, CI.

• It is important to differentiate between objective and subjective questions. Where the matter is factual, having access to a large pool of potential experts is valuable for getting the correct answer. Where the matter is subjective, there is no right answer and the community's CI will be driven by a handful of thought-leaders and influencers who are able to shape the dialog.

• Bonds within social networks are not nearly as impactful on CI as implied bonds with experts and thought-leaders. While these bonds are devoid of a social element, they are based on tastes, preferences and authority, not simply friendship.

• Prediction markets are an incredibly valuable and useful tool for determining group opinion. However, this is only one facet of CI that needs to be explored as part of a more comprehensive discussion of the topic.

I've got to run to catch a plane but I am eager to spend more time thinking about these and other ideas.

Collective Intelligence: Going Deep

Collective Intelligence (CI). Hmmm. It is a concept oft-bandied about but I'm not really sure what it means. According to my first-stop reference resource of choice, Wikipedia, it says the following:

Collective intelligence is a form of intelligence that emerges from the collaboration and competition of many individuals. Collective intelligence appears in a wide variety of forms of consensus decision making in bacteria, animals, humans, and computers. The study of collective intelligence may properly be considered a subfield of sociology, of business, of computer science, and of mass behavior — a field that studies collective behavior from the level of quarks to the level of bacterial, plant, animal, and human societies.

My desire to develop a more concrete understanding of CI is the direct result of being invited to attend CI Foo Camp at Googleplex tomorrow through Saturday. Pretty cool. After looking at the list of attendees, I truly feel like a pretender in their midst. That said, I'll do my best to contribute to the proceedings. Per the CI Foo Wiki, here is their operating definition of CI:

While "collective intelligence" can be defined quite broadly, we're using it to describe instances of networked computers and humans working together to solve interesting problems.CI Foo attendees are working on various projects and products that leverage collective intelligence.

If you look at the tag clouds relating to topics of interest, topics people want to hear about and topics to which people can contribute, the big winner in each of the three categories is "prediction markets." That's fine, I get it. But to me there is a big piece missing, a piece I think about all the time: how does influence ripple across social networks? Because I don't personally conceive of CI as akin to "wisdom of the crowds," where in effect CI is simply an extension of polling. This is part of it. But where does the wisdom come from? Does it simply spring forth from a large number of autonomous entities operating in a vacuum and expressing their own opinions? Or are there influences that play upon people before they vote, before they act with their feet or their wallet? Clearly it is the latter; this is akin to comparing microeconomics to macroeconomics, where one field is predicated upon a raft of simplifying assumptions (the "rational man") while the other seeks to understand the larger world for what it is - complex, interdependent and ever-changing.

Going into CI Foo my operating thesis is that collective intelligence is a direct result of a smaller number of influencers that help catalyze the dialog, around which discussion and debate takes place that eventually yields a collective and reflective result. But the difference between groupthink and my conception of CI is that the influencers change all the time depending upon the topic, the context, the timing and their network status (or reputation), and that the topics get thoroughly debated, tested and argued within and across communities. And this is the way it should be.

So one of my goals is to really dig into this area and to further gel my thoughts around expert networks, how they can best be built and operated for fun and profit. Gerson Lehrman has had it going for quite some time. LinkedIn is on the cusp of leveraging their millions of nodes to a similar end. But even with these two behemoths going at it my sense is that there is much, much more to be done. I will bounce some ideas around with my brilliant and erudite co-campers this weekend and report back next week.

Clear Asset's New ETF Contest: School Support Brings Opportunity

The first Clear Asset Management ETF contest was a huge success. Over 100 entries. Dozens of great ideas. One big winner with ten other winners. It was so successful that Clear Asset is going to do another contest starting February 25th, but wants to broaden the schools from which to draw ideas. The first contest involved Columbia, Lehigh and NYU. Three great schools. Clear Asset would like other schools to submit their interest in participating, particularly those committed to getting professors as well as students involved. The contest provides tremendous real-world experience, something around which a project might be designed or where mentoring could be an invaluable teaching tool. In any event, if you are a student and interested in entering you should speak to your professors, your investment club and your administration about getting behind the contest and securing your school's participation. Then you're off to the races. It should be a fun ride.

Monitor110 has a New CEO

So it's official: Monitor110, the company I have helped build and lead over the past three years, has announced the hiring of a true world-class financial technology leader, Brennan Carley. His hiring is the result of a thorough search process that yielded several impressive candidates, but none possessing his unusual and powerful balance of technology expertise, strategic thinking, Wall Street experience and leadership. As a Wall Street deal-maker and trading manager, I could only take the company so far, and together with our strong Board recruited Brennan out of NYFIX. Prior to that Brennan had been an Entrepreneur-in-Residence at Warburg Pincus, and spent most of his career at the likes of Radianz (where he was a co-founder), Reuters, Instinet and IBM. So now Monitor110 has the technology and business leadership it needs to fully take advantage of the massive market opportunity at the intersection of online data and computational finance, and I couldn't be more happy for both Brennan, the Monitor110 organization and its hedge fund and Wall Street clients. They are all winners in this trade; congratulations to all.

So what about me? I am moving into the role of Chairman, helping Brennan transition and then to be available to him and the entire Board as a trusted advisor. As was the case when I co-founded and joined the company, I am deeply passionate about its mission, its clients and its ability to help change the face of financial intelligence:  helping institutional investors gather, analyze and make money from unstructured data. I also have a pretty healthy rolodex that I will continue to leverage for the benefit of the company and potential clients. I have had a great experience helping to build a world-class early stage company, raising money from and working with leading institutional investors like Draper Fisher Jurvetson and DFJ Gotham Ventures, recruiting top-notch professionals in the fields of computational finance, technology, strategy and research, and, finally, bringing Brennan on board. Throughout my career I have always sought to surround myself with people better than me, with the goal of making myself replaceable at a certain point. And I have finally reached this point at Monitor110.

What will I do with my time? In the near-term I will continue to be an active early-stage investor through IA Capital Partners, having made 10 investments and achieved three exits during 2007. I also have three new deals closing in the next two weeks, and find myself squarely in the middle of high-quality deal flow from both coasts. I enjoy working with strong management teams with big ideas and sound business models, and will continue to do deals as long as I continue to see great young companies to back. I am also doing some work with a group that is taking a public company out of bankruptcy and using the public vehicle in almost a SPAC-type fashion, working to do small and medium-sized buyouts of companies in a select group of verticals in need of consolidation and scale efficiencies. Needless to say, I will continue to write my blog and use the Monitor110 product suite for finding interesting and investable data when I write stock-specific posts. I am also deeply involved in non-profit work associated with my kids' school, Little Red School House/Elisabeth Irwin High School, as well as the Pier 40 Partnership. All this stuff is keeping me pretty busy right now.

In the intermediate term I am considering opportunities to either take a leadership role in the Alternatives business on Wall Street, helping to build and expand a hedge fund platform or to do larger transactions in the private equity world. In each case I want to keep my hand in the investing realm. I miss the markets and big deals; and after three years focusing on emerging growth companies I feel the need to re-visit my roots. I am meeting with business leaders and mentors in each of these areas and will figure out what is the best fit given my background, skills and interests. The ticket to play is having fun and having a big impact. We'll see where it goes. Exciting times, to be sure.

If you want to talk early stage deals, buyouts or making money from alternative data, give me a shout. You know where to find me.

Leveraging the Collective Brain: The First Clear Asset ETF Contest is Done

And it was a big success. Clear Asset's CEO, Andrew Corn, wrote a detailed post on the contest and announced the winners on his blog. He received dozens of submissions, many of which were of extremely high quality. I know that selecting the first place winner was an extremely difficult task for Andrew and his portfolio management team. And this first test case was limited to three schools - Columbia, Lehigh and NYU. Clear will be expanding this universe in the next contest as they now understand how to manage, assimilate and analyze a large volume of ideas, and I can't imagine how many great ideas they'll garner the next time around.

I am eager to see which ETF distributors license the winning ideas; it will be the ultimate proof that the brainpower and creativity resident within our university communities is a vast and underutilized resource. I had written about Clear's innovative approach to soliciting commercially-viable ideas for their index business when the contest was first launched, and believe that their original thesis was validated through the contests' success. Congratulations to the first place winner, James Baker of NYU, the other contest winners and the entire Clear Asset team. You've broken some new ground here in the financial services realm. We'll see if others follow your lead.

We'll Always Have 2007

I'm checking out until the second week in January. Blackberry yes. Computer no. And a forced break from blogging. So I just wanted to take this opportunity to thank each and every one of you for participating in the online conversation, and sharing a little bit of yourselves with me. I have certainly tried to share some of myself with you. I'd guess you'd have a pretty good feel for me after 18 months of being out there. Hard to believe that 2007 is only my first full year of  blogging from wire to wire. It feels like it has been years. It is now such a part of me.

To those who read IA and maybe commented whom I either pissed off, inadequately stated or defended my positions or just plain disappointed, thanks for taking the time to read my stuff. I try my best and am true to myself, but I can certainly understand why not everyone might agree with me. To those who generally get me and where I am coming from, and are pretty happy with my output in 2007, I appreciate you as well. The private notes of support I've gotten throughout the year have been amazing, and I've tried to answer each and every one. I apologize if I've missed a few or haven't been as timely as I might have liked, but I was somewhat overextended in my for-profit and not-for-profit activities. I'll hopefully get that more under control during 2008, but I doubt it.

2007 has been a great year for me and for this blog. I did lots of fun stuff at work, met dozens of amazing people, continued to learn every day, saw my kids grow a year older and continue to wow me with their passion, intensity and beauty, and further deepen my relationship with my closest and best friend, my wife. More of you read me this year than in 2006, when I was really just a newbie. And apparently some people in mainstream media read me as well, as their kind notes and requests for comments and perspectives were welcome diversions throughout the year. But most importantly the sense of community I've gotten from blogging continued to grow, and I've developed real relationships with several readers of this blog who are bloggers and businesspeople themselves. I never could have imagined how blogging would serve to build my community and web of relationships in such a powerful way. And every day I continue to be surprised and impressed by the power of this medium.

Anyway, thanks again and I'll see you next year. Feel free to send me a note, as always. And all the best to you and your families for a fantastic 2008.

A Kindle for a Kanoodle?

Nah, just a Kindle for the lovely Lindsay to use on Wallstrip tomorrow. The taping will be in NYC and she needs the device for show-and-tell. If you got the goods, you might even get a cameo on the show. So for all you aspiring vlog actors, take note. Send your availability to the furry Mr. Howard Lindzon at his blog. And make Lindsay a happy vlog queen this holiday season.

Google Knol: NOT Setting the World on Fire

Google has become the new EF Hutton: when it speaks, people listen. So when I first heard about Google Knol I was curious and intrigued: a true competitor to Wikipedia? A new spin on expert networks? An easier way to discover high value content? These are all areas about which I have a high degree of interest and some degree of knowledge. But after reading the description on the Official Google Blog and thinking about it here is what I've concluded: NO BIG DEAL. Unless I am missing some big conceptual point here (which is always possible, of course), I don't see any benefits to creators of high-value content that don't already exist - and are perhaps manifest in better ways - through personal blogs and message forms, vertical search engines and Wikipedia. I know, going against the Google juggernaut risks intellectual humiliation and disdain, but is this merely an effort to devise and gain control of new sources of ad dollars? I mean, at its core, even in light of its stated mission, isn't this how Google makes money? And is this truly a vehicle for achieving the grand mission, (better) organizing all the world's information? Personally, I don't think so.

So using the illustration provided on the Google Blog - insomnia - consider these alternatives:

1. Wikipedia entry: Collaborative, multi-participant, human-edited definition
2. OrganizedWisdom WisdomCard: Domain-specific, expert-constructed vertical search result
3. ehealth Forum topic: Issue-focused, community discussion forum with expert participation
4. dr.greene.com article: Issue-focused, community questions with expert response

So let's consider the characteristics of each of these media and how they compare to Google Knol:

• Wikipedia: as close as we've gotten to aggregate knowledge. Social mission. Human-edited "wisdom of crowds" results. No advertising. No specific credit for entries. In my opinion, a fairly high-quality starting point for information discovery.
• OrganizedWisdom: vertical search for health and wellness. Social mission with commercial overlay. Human-constructed domain expert results. Targeted advertising and affiliate relationships. Specific credit for entries and payment for creating entries. High-quality  results. (Disclosure: I am an investor in OrganizedWisdom).
• ehealth Forum: issue-specific discussion board with expert participation. Social mission with commercial overlay. Targeted participation from community members of varying reputation. Targeted advertising. Community identities are known. Mixed results.
• dr.greene.com: issue-specific Q&A with expert response. Social mission with commercial overlay. Expert-moderated community discussion. Targeted advertising. Question submitters identified per instructions. High-quality results.

Now let's consider some of the key features of Google Knol:

1. Page owner ("author" in Google parlance) is known and gets full credit
2. Readers can suggest edits subject to owner acceptance
3. Ease of publishing/editing pages
4. Platform may give rise to multiple Knols on a single subject
5. Community ratings and reviews of specific pages
6. Ability to take advertising

Now let's consider my options first as a content creator, then as a content consumer:

• Content creator: First question: do I want recognition and do I want to make money? If no, then Wikipedia is a good place to start. I can contribute my knowledge in an easy lightweight manner, with an eye towards enhancing the world's knowledge. If yes, then Wikipedia isn't the place for me. So what are my options? I can start my own blog, sell my services to a vertical content aggregator or expert network willing to pay for my expertise or establish a Google Knol. If I start my own blog, I can build my own brand, my own site, use it is a robust platform not only for sharing expert insights but also for collaboration, sharing materials, commerce, etc. It is mine. And I can do with it what I please. It can be indexed. It can be linked to. I can generate ad revenue. My reputation will be reflective of who links to me, how many people subscribe to me and my overall traffic. Now if I sell my services to an expert network, I can get paid for my knowledge and the intensity of my involvement. I can also build brand and monetize this however I see fit over time. I don't control my own real estate as I do with a blog but I also don't need to maintain it, either. This is a very targeted, very parameterized way of monetizing my expertise. Or I can start a Google Knol. Starting a knol is easy, seemingly not unlike starting a blog. But why would others contribute to my knol as a source of knowledge (as opposed to discussion)? If I don't care about money or credit, am I really going to choose someone's knol over Wikipedia? And if I do care about money or credit, I'm not getting any of that from submitting an edit or addition to someone's knol so why do it? I really don't know. There will likely be competing knols on major topics of interest which may be good for the content consumer but not so great for the content creator. So from the content creation standpoint, I'm not sure I get it. Unless community involvement is not really what you're after and what you are really after is being indexed by Google, becoming known on a particular topic and having Google help you to generate ad revenue. Then I get it.

• Content consumer: If I am interested in better understanding insomnia on a general level, where am I going to go first? Depends on my level of knowledge. If I know of a good vertical search engine, I'll go there first because the information is going to be highly targeted, highly relevant and from reputable sources. If I don't, my backup would be Wikipedia. It may not be comprehensive, it may not be perfect, but it is going to give me a lot of information and links that are valuable and my lead me in the right direction. Would I choose a knol over a vertical search engine or Wikipedia? I'm not sure why. With many knols on a given topic I may be barraged with alternative views that could be more annoying than anything else, similar to doing a fairly unstructured search in Google that yields 85,000 results where the one best suited for me might be on page 86. Sure, there are community ratings of each knol, so I might simply decide to read the most highly rated knol in my area of interest. But depending upon the nature of the topic and the complexity of the issue, the community rating may or may not be reflective of the value of the information. If I go to a vertical search engine that is expert-powered, I know I am getting results from a highly reputable source. This is very valuable. With a knol, it is pure wisdom of crowds at work, which might not be the most comforting vehicle with which to gauge reputation depending upon the complexity of the topic.

So based on what I know, which is admittedly little, this is where I am coming out. I don't see Google Knol as either a threat to Wikipedia or almost any other information discovery medium, for that matter. But maybe I'm just missing it.

The Right Venue for Online Discussion?

This blog? My Facebook groups? A couple of very pointed but sensible comments to my recent post made one thing clear: that this blog is where I should look to spur active conversations, not my Facebook groups. I am frankly confused, and would like to share two comments from yesterday's post.

From Ian Wilson:

Why not just keep discussion centered on this blog? I am sure most of the people signed up to the facebook groups also read your blog.

Right now there does not seem to be any easy way to manage discussions around various web sites...so having them all in 1 place, your place, seems like the easiest way to keep the conversation flowing, imho.

Facebook is becoming more and more cluttered with spam daily, so much so that its cost of use is getting too steep for me, I cant find the signal for the noise. Does anyone else find that?

From Michael Sharon:

I completely agree with Ian. Encouraging conversation around your primary and most visited community - although it's in some respects a limited channel - is far more useful than trying to stimulate discussion within multiple sub-communities based around related topics on sites which have higher barriers to entry.

It may not be your fault that there hasn't been enough discussion in those groups, perhaps it's simply that the conversation and the platform that you have here is enough for most people, most of the time.

You mention fomenting an active dialogue which reminded me of this article about the User Generated Content myth over at Publishing 2.0 (link neutered! google it). I think the reality of the situation is that encouraging an active dialogue within any one of your groups would require a non-trivial investment in attention - which you've chosen (unsurprisingly) to spend at your main site here. For me, Facebook is less useful for high value, public dialogues simply because content within the group is not searchable (through Google or FB). If the intention is for the conversation to be private or limited to group members only, then I think FB is the tool for you, otherwise, keep it in the blogosphere.

I've got to say, Ian and Michael make a lot of sense. But as a test, I am going to run questions in both venues and see what happens. But after reflecting on it a bit, I do think they are right as my blog has far greater reach than my Facebook groups, and the goal of posing questions and stimulating discussion among my readers is to cast a wide net. So in order to raise a new question I had posed on my IA Capital Partners group to a broader audience, I am reproducing it for my blog readers here:

 

I am currently looking at deals related to online investing tools and resources, as well as gaming and gaming services. There are some others but these are the mega themes. I recently exited one of my companies in the online financial space, am helping work on strategic partnerships for another and just invested in a young integrated gaming entertainment company, Green Screen Interactive Software. I'd be interested in what others are seeing out there. Deal flow is very strong.

I've got lot of other questions rattling around that I will post soon but this is my question du jour. I'd love to know your thoughts. Thanks in advance for participating in what is hopefully a rich, interesting, interactive discussion.

My Use of Facebook Groups: IA Capital Partners and Information Arbitrage

I have done a woeful job using these groups to stimulate discussion. I tossed out a few questions early on, generated some interesting dialog, and then stopped. Stupid. Sorry about that. So here is my pledge. I will use best efforts going forward to do the following:

• IA Capital Partners Facebook group: Pose questions and offer commentary around what I am actually seeing in early-stage deal land, a land where I am very active and seeing a lot of stuff. I'll share ideas, trends, themes and memes, and would love group members to share their perspectives as well.

• Information Arbitrage Facebook group: Raise thematic questions and issues of interest to me around Wall Street and technology, and generate a hopefully vibrant discussion around these issues.

I'd also love it if group members started question and theme threads of their own around the concepts and meanings of these groups. I think Facebook groups can be a very powerful medium for an active, multi-threaded conversation. I just feel like I haven't done my part to foment an active dialog. My bad. I'll try to do better.

In Defense of "Free"

The recent comScore numbers are in and the answer is pretty clear: The NYTimes.com won and won big, showing a 64% rise in readers and a 52% rise in page views over the last quarter. Why? The mid-September tear-down of the subscription edifice Times Select. TechCrunch carried the story yesterday and Marketing Pilgrim added onto it today. Here is Marketing Pilgrim's interpretation of the NYT's decision to go free:

The main reason behind they changed models is that search engines were bringing a new demographic to the site. In the past more people went directly to the site, and they were often regular readers who are loyal to the paper. People coming to the site via search engines were turned off by having to subscribe. Most likely they are looking at a specific article and want to pick and choose rather than read the entire paper. Sort of like how we want to buy our songs one at a time rather than buying the whole CD.

Right now subscribers generate about $10 million a year in revenue. After running the numbers the Times saw more growth potential in online advertising revenue than in collection for subscriptions.

I like the iTunes analogy. I think they are right on. I believe most online consumers of media, be they consuming text, audio or video, want it a la carte. They don't want to be forced to buy the entire paper, the entire CD, the entire movie. A snippet here, a song there, a micro-chunked video now and again, and I get what I want, when I want it and how I want it. This is also consistent with Digg, StumbleUpon and other community-based recommendation engines, where people read and listen to what is popular and/or what their friends are into. And this is cool. And as ad targeting gets increasingly better, the value of these recommendations only gets more valuable to advertisers seeking to reach a particular demographic with empirical, measurable results.

And there is no doubt the Mr. Murdoch has already internalized this phenomenon by announcing the freeing of the Wall Street Journal Online. He knows that edifice Rex - the realm of Old Media - is rapidly dying. And he is going to get out in front of it. MySpace was only the beginning...

Oh, The Pain - Falling Below Howard in the SA 100. NOT!

Just when I thought I had suffered the gravest of injustices, tying the not-so-dainty and not-too-dextrous Howard in the original Blackberry Thumb-off, I was alterted to this: that I am #90 on the Silicon Alley 100, and Mr. Lindzon is #61. I know, I know, when I heard that Howard was 61 I thought they were talking about his age but no, this is where he falls on the list.

Now Howard is very proud of his position, and has been gloating about it both online and offline (I had the pleasure of sitting in a Board meeting with the slimmed-down Lindzon, who is looking like an advertisement for Nutri-Fast). In fact, he can't seem to shut up about it. Recognition on a list of any kind is almost too much for him to handle. Real-world validation! On the same list as major-domo Michael Bloomberg, VC dude and pal Fred Wilson and the babealicious Lindsay Campbell! This is the culmination of a dizzying 2007 for my Phoenix-based friend.

I think his inclusion into the SA 100 glitterati might be just the catalyst to get Mr. Lindzon to trade the sun and sand for the friendly confines of Silicon Alley. All the pieces are now in place. He is an online media playa. Friends and pals among top NY VCs. Dropping the pear-shaped leisure body for a lean, mean and sleek NY look. Is the writing on the wall? Maybe Silicon Alley Insider can investigate... The question isn't if Lindzon can handle NY, but if NY can handle Lindzon.

Congrats to Mr. #61. You really did have a rocking year and you deserve it, pal. But someone had to kick you in the nuts for being so freaking excited about a stupid list. And that someone just had to be me. xoxoxo

Trust and Reputation in Online and Offline Media: ADIA's Investment in Citigroup

When ADIA's $7.5 billion investment in Citigroup was announced and I saw how the transaction was depicted in mainstream media, I felt I had to blog it. MSMs portrayal of the deal was so off-base from an educated financial analyst's perspective that I almost put my fist through my computer screen. But before I did, I surfed around the high-end financial blogs I consume to see what, if anything, had been written. And to my great pleasure, I did find some stuff that began to shine a light on the true underpinnings of the deal, light-years better than anything that had been written in MSM. But there was also plenty of stuff in the blogosphere that wasn't so good and, in fact, was no better than the MSM hype machine. And to raise the "interesting bar" that much higher, one of the best pieces of analysis out there was from FT Alphaville, the blogging arm of a premier MSM publication, the Financial Times, but only after they suffered from a bad case of foot-in-mouth disease arising from some sensationalist rhetoric of their own.

So where does MSM end and the blogosphere begin? And how does one separate the good from the garbage? Not easy questions. My early conclusion is that the issues of trust and reputation have almost completely melded between online and offline media, with both sources showing the same characteristics and incidence of quality and hype. And as a consumer you've got to do your homework. Big brands, whether online or offline, don't necessarily guarantee quality. Only those who can understand quality can truly assess it, which is why the blogosphere is such a powerful medium for checks-and-balances not only when applied to mainstream media, but to the blogosphere itself.

Now on to my story. What was pretty interesting about the Citi/ADIA deal is that while I didn't totally agree with certain of bloggers' analysis, several did get the dialog going in the right direction and shine a bright light on the issue at hand: that the ADIA investment was neither stupid nor ill-conceived on Citigroup's part (In fact, I'd argue that it was a true win/win for both issuer and investor). And that I was able to reach out to these bloggers, add my two cents, and help further refine the analysis in order to get to the right answer.

For me, after frustration with MSMs depiction of the deal, I looked to Andrew Clavell over at Financial Crookery. He was the first I saw to raise the issue of optionality in the deal, and the fact that this needed to be taken into account when considering the differential between Citi's dividend rate and the coupon rate on the mandatory issued to ADIA. I was initially so euphoric that I posted a comment saying "thanks." Mick Weinstein, editor of Seeking Alpha, asked me for my view on the deal and I forwarded him Andrew's post.  This really helped get the ball rolling online after Seeking Alpha posted Andrew's piece. After thinking about it a bit more I sent Andrew a clarifying note on the topic, as I felt his analysis was quite good but could have been explained more simply:

Andrew, after reading the comments it might be easier to describe the structure from Citi's perspective as a stock sale to ADIA at 31.83 and the purchase of a 31.83/37.24 call spread settled in Citi shares. Below 31.83, Citi has sold shares at a fixed price. Between 31.83 and 37.24, Citi has sold shares at the price at which the 31.83 call is exercised. Above 37.24, Citi has sold shares at 37.24. The value of the purchased call spread is what accounts for the difference between the dividend rate and the coupon rate. As it relates to call spread valuation there are issues certainly of volatility levels and skew between the strikes, expected dividend rates (as one of your commenters properly raised), etc., but this is the punch line. Hope this helps.

jck's post over at Alea cited Andrew's post and sought to correct some perceived inaccuracies. Again, I thought jck's post was very good but also wasn't quite right, so I felt compelled to drop him a note as well:

Hey, re: the citi deal, Andrew was not quite correct and I sent a follow up note to him. This is a kind of forward sale and a kind of a mandatory but there IS optionality, by definition, since the number of final shares are unknown. This is the way I think about the deal [then provided the same description I had provided to Andrew above].

Felix Salmon over at Portfolio.com then did a nice job in his post titled "Why Citi's 11% Coupon Doesn't Mean it's Paying Junk Rates," trying to convert Andrew's original post into english for a broader audience.

Then my friends over at FT Alphaville got into the act and added more color and analysis to a deal that still needed a little help, and especially some curative words after suffering from the same news-hype affliction as their MSM parent. One of the comments to the FT Alphaville post, from klandnyc, did an amazing job of making the point of my entire post:

As a major financial newspaper, you should have gotten it right the first time that a comparison to junk bond wasn’t the right way to look at a forward equity issuance. I think the most interesting thing about the deal is actually the media coverage of it. Junk journalism (your word, not mine) is being practiced en mass on both sides of the Atlantic. WSJ has an equally “subprime” coverage comparing the deal to junk bond. In that sense, financial journalists aren’t very different from their counterparts covering political news. It’s all about sensational headlines sans nuance with very little fact checking. The picture is equally dismal in the blogger-sphere, with a few notable exception. For me, this one little deal turns out to a revealing and useful way to judge the quality and integrity of the hundred of so-called experts who blog everyday about developing financial news and deals. It differentiates those who know what they are talking about from those who don’t but talk about them anyway. It’s really not rocket science in this case. Anyone who was comparing the 11% yield to junk bond in this deal should start with learning about the difference between bond and equity - you know - the finance 101 stuff. Better still, they should consider writing about something else other than finance. Perhaps there is an opening in the political news department?

This comment really got me thinking. I had recently been called to the mat for writing a post based on a Wall Street Journal article that itself proved to be wrong (regarding alleged Merrill Lynch accounting trickery). This particularly harsh comment came from a reader who responded to my recent post describing my rage at MSM and the WSJ's shoddy reporting. From David Harper:

Baloney.

This is exactly why the financial blogosphere gets a bad rap; i.e., as merely derivative of the real press.

You cited a single article as your source, without any verification, corroboration or journalistic fact-checking. The WSJ made an error, and so did you. Two errors, not one. Felix Solomon added value by being skeptical, by adding his analysis. You parroted the article. By my analysis, the WSJ was 90+% accurate on 11/2 (i.e., 1+ errors out of of XX articles). Your error rate on this day was 25% or 50% or 100%, etc. (if you posted 4, 2 or 1 time)

The other difference is the WSJ retracted. You did not retract, you blamed your only source.

Ouch. Now I did take issue with some of Mr. Harper's points in my following response, but I must admit that they did provoke subsequent thought:

David, deep breath. Calm down. So first, read my blog. I do, in fact, sometimes use articles in MSM for the basis of certain of my posts. This is not regurgitation. There is generally significant additional commentary and analysis provided that enhances, adds to or critiques the article in question, and sometimes brings the discussion in a different direction. I also write a lot on topics and issues that in no way refer to MSM sources. So if you don't like this, too bad. Don't read my blog.

I am not a journalist and have never purported to be one, either. Some bloggers are and put themselves forth as such. I am not and have never pretended to be. So there.

The post I wrote on November 3rd did qualify the WSJ story, saying "...and if what's described in the WSJ is true..." Also, the Merrill claim was particularly poignant given the abundance of similar transactions done in prior years for similar purposes. As I am not a journalist, the whole retraction concept is anathema to my blogging. I made my readers aware of the issue, discussed it and shared my thoughts. Again, like it or not. It's my blog and this is what you'll get if you read it.

Sorry if you feel I am a cause for giving financial blogs a bad rap. I respectfully disagree. You clearly don't understand why I blog, and if most of my readers felt like you they wouldn't read me. But they do.

I sounded pretty defensive, right? I was. Partly because I was pissed off about being judged so harshly but also because I think I felt part of what David said was right. I state above that I am not a journalist and, therefore, shouldn't be held to the same standards. Is this right? Or is it kind of like me taking a stance like the basketball player Charles Barkley: "I am not a role model." Well, Mr. Barkley most assuredly was a role model whether he liked it or not, and I'm wondering to myself if as a well-read and trusted blogger if I am, in fact, a journalist. And if I don't want to be a journalist, should I only write opinion and run my blog as an Op-Ed page instead of a blog with a mixture of news commentary and opinion? I really don't know the answer. But I'm thinking about it. But what I do know is that Mr. Harper's comment struck a nerve, and the recent coverage of the Citi/ADIA deal only hastened my introspection, and solidified for me that the trusted end of the blogosphere and MSM are being perceived much the same way, with standards of trust and truth that need to be taken very, very seriously.

WSJ Re: Merrill Lynch: Authority in Mainstream Media Takes a Hit

One of the big knocks on the blogosphere as a source of news and insight is that the content created is often of questionable authority. From whom are these views coming, anyway? Given this, how can the reader assign much weight to what is written? Sure, there are a handful of "cross-over" content creators who pen for alternative media outlets but are really mainstream writers in bloggers' clothing, but they are in the minority. Authority is the bugaboo of the blogging world. But this is clearly not a problem in the world of mainstream media (MSM) because of the editorial review process and the standards to which content creators are held, right? WRONG.

Consider a little snafu over at the Wall Street Journal. Felix Salmon pointed out today that the WSJ just corrected a front-page story from three weeks ago that showed their reporting to be something other than rigorous, balanced and professional. Consider this lead in from the original WSJ story dated 11/3/2007:

Deals With Hedge Funds
May Be Helping Merrill
Delay Mortgage Losses

By SUSAN PULLIAM
November 2, 2007; Page A1

Merrill Lynch & Co., in a bid to slash its exposure to risky mortgage-backed securities, has engaged in deals with hedge funds that may have been designed to delay the day of reckoning on losses, people close to the situation said.

The transactions are among the issues likely to be examined by the Securities and Exchange Commission. The SEC is looking into how the Wall Street firm has been valuing, or "marking," its mortgage securities and how it has disclosed its positions to investors, a person familiar with the probe said. Regulators are scrutinizing whether Merrill knew its mortgage-related problem was bigger than what it indicated to investors throughout the summer.

In one deal, a hedge fund bought $1 billion in commercial paper issued by a Merrill-related entity containing mortgages, a person close to the situation said. In exchange, the hedge fund had the right to sell back the commercial paper to Merrill itself after one year for a guaranteed minimum return, this person said.

********************

That was then, this is now. The correction to the story above, dated 11/26/2007:

ON NOV. 2, the Journal published a page-one article on Merrill Lynch & Co. that was based on incorrect information that the firm had engaged in off-balance-sheet deals with hedge funds in a possible bid to delay the recognition of losses connected to the firm's mortgage-securities exposure. In fact, Merrill proposed a deal with a hedge fund involving $1 billion in commercial paper issued by a Merrill-related entity containing mortgage securities. In exchange, the hedge fund would have had the right to sell the mortgage securities back to Merrill after one year for a guaranteed minimum return. However, Merrill didn't complete the deal after the firm's finance department determined it didn't meet proper accounting criteria. In addition, Merrill says it has accounted properly for all its transactions with hedge funds.

Now when I read something in the WSJ, I have come to believe that the story is truthful, well-researched and generally relevant. So when I cite the WSJ as a source in posts that I write I view it, from a factual perspective, to be correct. Well, I had given the WSJ my trust when I wrote the following post, only to be proven wrong and made to look like a jackass:

The Root Cause of Today's Market Turmoil?: It's a Matter of Trust

Trust in our government. Trust in our financial institutions. Trust in those who play the role of "trusted adviser," regardless of whether or not they are considered fiduciaries by law. After taking a big step back and asking the question "Why are the markets trading so poorly, and why are financial institutions in particular getting crushed?" the answer boiled down to one word: trust. Or the lack thereof, as seems to be the case today.

The last few days the buzz has been about Merrill Lynch, and the possibility that they've been trying to engage in cosmetic balance sheet transactions to make things look better than they really are. From today's Wall Street Journal:

Merrill Lynch & Co., in a bid to slash its exposure to risky mortgage-backed securities, has engaged in deals with hedge funds that may have been designed to delay the day of reckoning on losses, people close to the situation said.

********************

In one deal, a hedge fund bought $1 billion in commercial paper issued by a Merrill-related entity containing mortgages, a person close to the situation said. In exchange, the hedge fund had the right to sell back the commercial paper to Merrill itself after one year for a guaranteed minimum return, this person said.

While the Merrill-related entity's assets and liabilities weren't on Merrill's own balance sheet, Merrill might have been required to take a write-down if the entity was unable to sell the commercial paper to other investors and suffered losses, the person said. The deal delayed that risk for a year, the person said.

In a statement, a Merrill Lynch spokeswoman said, "We don't comment on specific transactions and we are confident in the appropriateness of our marks."

Whoa. Now as one who has trafficked in the world of structured transactions for the bulk of my career, I can tell you that this type of "creative balance sheet management" has been going on for decades. No joke. And in the wake of Enron, things were supposed to have changed, where "sham" transactions (those without true economic substance, or where the transfer of risk didn't truly take place) were supposed to go the way of the buggy whip. Well think again, friends. There is a fine line between risk retention and true risk reduction, and if what's described in the WSJ is true, these deals are all about balance sheet presentation and have nothing to do with risk reduction. And FYI, Merrill Lynch shareholders, your firm is paying money, your money, to effect this optical illusion. So not only is there a breach of trust, you are paying for it, too.

Breach of trust? Tell me about it. I'm pissed. Really, really pissed. I had the title right but the subject wrong: Media: It's a Matter of Trust. And my trust and those of millions of others has been breached. The New York Times had their own problems with the Jayson Blair fiasco, and many other breaches across mainstream media have recently come to light. So the next time someone from MSM blathers on about how the user-generated content is a bunch of garbage and that MSM is the only source of truthful and authoritative news and events, I'm going to pull up this post on my Blackberry and promptly say "SHUT UP."

Hacking Webkinz: What's Up With That?

My family just had dinner with some close friends of ours, celebrating our pre-Thanksgiving Wednesday ritual at our favorite neighborhood Japanese restaurant. Two 40-something couples hanging out, getting a little head on, with four beautiful kids joking around, playing 20 Questions and Mad Libs. A pair of 10 and 7 year olds, one boys and the other girls, reveling in their shared history and interests. All was good. Except one thing. The little girl discovered today that her entire Webkinz room had been cleaned out. Totally cyber hacked. This little girl had spent months painstakingly playing games, earning points and furnishing and decorating her room, and identifying with all she had put in to her little project. It was all her own. And she was proud of it.

Needless to say, when she came home and logged on and found out that she had been robbed, she was pretty hysterical. I've got to tell you, I've had stuff taken a few times in my day and I've felt pretty angry and violated myself. And I was far older than 7 when both thefts occurred. So this little girl feels violated, unempowered and helpless. Her mom, who is quite computer-savvy, logs right on to Webkins to find out how to deal with the situation. The first thing she reads when clicking on Customer Support and Has Something Gone Missing is this:

The only way an item can go missing is if someone knows your username and password (or Secret Code) and has accessed your account. If someone has removed or sold an item, it cannot be reinstated. Please change your password by clicking on the “Login” button on the menu to your left (or go to the Webkinz World homepage and click “Login”). Click “Change my Password.” You’ll be able to create a new password. Please remember to make it something easy for you to remember but difficult for others to guess.

Now that's a pretty confident statement: "The only way an item can go missing is if someone knows your username and password (or Secret Code) and has accessed your account." I don't think Google, Microsoft or Yahoo! make such declarations. Based upon my experience with the Internet and on Wall Street, if one were to interpret such a statement as a Service Level Agreement it would mean 100% assurance, no deviation. This clearly is nonsensical, as no service provider on the planet can guarantee such performance. But somehow Webkins feels they can. And even with such an astounding level of confidence, it is really hard to get hold of them. No easy way to drop Customer Support an email. No seamless way to share concerns and issues. This is not the way it should work. If you claim a 100% service level one of two things needs to be happening, either:

1. Perfection, no variation; or
2. Ready, willing and able service representatives to address issues in real-time.

Since neither of these appear to be present in this situation, I'm frankly confused. How does a little girl get satisfaction from having been robbed? It doesn't appear that Webkins has either anticipated such a circumstance or gives a sh*t. I'd be really interested to know their stance on these issues. Because I'm not happy. And neither is my 7 year old friend.

 

From the Mailbag: Blogging 101 - Building Readership

Building awareness of your blog. A very interesting issue with both spiritual and technical elements. I know some who really couldn't care less how broadly their blog is read. I know others who want their blogs to be among the best read on the planet, and take steps to make this happen. And yet others, like me, fall somewhere in between. It is a very personal issue and one that requires a bit of discussion around the "why" before launching in to the "how." The question as posed by a recent IA reader is as follows:

"...may I ask you to consider posting on your own blog about how you built your readership, what worked and didn't work etc.  Of course quality content comes first, but how important, bluntly, was self marketing?"

As it relates to the "why," I write in a certain way that attracts a certain kind of reader. Not the kind who is going to live on my site watching what I post 5-10 times a day, but one who checks their RSS reader every day or two and says "Oh, Roger has written something new. Let me check it out because he usually has something interesting to say." They know it will take more than 30 seconds to read, is generally around a topical issue concerning Wall Street, finance or technology and will have some hard-hitting, unambiguous commentary from someone who (often?) knows what he's talking about. Almost by definition, mine isn't a blog that will be near the top of any kind of ranking. I came late to blogging (less than a year and a half), am not from the VC/tech/entrepreneur/online world and don't write for daily market watchers or trading types. I write about stuff I think is important and where I feel I can constructively add to the conversation taking place in both online and offline media. Period. And this works for me. My goal was to be well-read, well-respected and to be an important part of the discussions that intersect with my interests, abilities and experiences. And I think I have done that pretty well. Approximately 3500 subscribers, 30-40k uniques a month, a link roll that I am proud of. I'm making it happen my way.

As to the "how," the question my reader posed, I will share what I did to build my online presence, but of course it will only directly apply to those who share my goals. I can offer some suggestions for those who want to be near the top of Technorati/Alexa rankings, but since I really don't care about this my advice will be half-hearted and likely not the best. I will also take as a given what my reader said, that content quality needs to be high. This is the ticket to play the game (at least the way I play it).

#1: Tell your friends. I emailed a bunch of friends across the domains I planned to write about (namely, Wall Street and technology) to tell them of my blog. I also sent an email to my LinkedIn network announcing my new endeavor. This was a useful way to get the ball rolling.

#2: Track your traffic, subscribers and inbound links upfront. I use StatCounter, FeedBurner and Technorati to follow my traffic, feeds and links in order that I can understand my readership. I started this at the very beginning of my blogging. This has helped me discover people interested in my blog and to track those who link to my content. I will sometimes reach out to these people to establish a relationship.

#3: Reach out to those who share a similar perspective or world-view online. I quickly identified a group of bloggers who wrote about some of the same topics I did, and personally reached out to them. For me this included Paul Kedrosky, Trader Mike and Howard Lindzon, all of whom are now friends and colleagues. I found a group of intelligent, thoughtful, web-savvy people who really helped me build awareness and provide advice. I often became part of their blogrolls and this helped to build my early online footprint.

#4: Reach out to those who share a similar perspective or world-view offline. As I built credibility and a following online and I then sought to leverage this offline. This included writers from the Wall Street Journal, the Financial Times, the New York Times and Barron's. Some of this attention came to me and some I went out and got myself. I emailed top writers at publications I respected and got a dialog going. It is absolutely amazing how receptive these writers were to being contacted. It was then that I saw first-hand the blurring between traditional and new media. They were interested in getting the best ideas and insights wherever they be found, and are no longer bound by conventional offline sources.

#5: Write frequently enough to be relevant and keep people interested. Unless you already have a large following and have down-shifted to a less-frequent publishing cycle, you've got to write several times a week, at least. Those who want big followings will have to publish several times a day in areas that attract this kind of readership, e.g., the stock market and investing, but to simply build a core following you probably need to write at least four times a week. And this is a good routine to get into, anyway.

#6: Write about the occasional non-core topic that is "buzzy" and by all means be provocative. I like the business of gaming. Gaming happens to have a very wide, active and passionate following on the Internet. It is also a very different online following then, say, those interested in Wall Street and investing. When I started writing about gaming from a different perspective than most bloggers and took some very aggressive stances I got picked up. A lot. It also helped me make connections across the gaming community that has resulted in new friends, new perspectives and a new pocket of readers. This is key to building a growing readership base; identifying new groups that find your blog a "must read."

#7: Build relationships with bloggers who aggregate content and have a wide reach. Every domain has "nodes," people who run sites that publish top links in a specific area of interest. If you can show them that you write consistently good content they will sometimes link to you, which can expose you to an entirely new set of readers and cause a permanent increase in your traffic.

#8: Build relationships, all the time. This isn't really another "to do" but simply an amplification of what is obvious from above.

Success (as defined by awareness from those whom you care about) online, as in life, is all about relationships and making connections. If you are a good and worthwhile person and have something to say, and if this is reflected in your writing, you have the ability to be successful online. All it takes is passion, focus, finding your own voice and some of the basic steps outlined above. Do these steps constitute personal promotion or marketing? Sure. But this is no different than they way we develop relationships, establish networks and build reputation in life. But once you have been online for a while and established a good reputation, you can take it wherever you want it to go. The only limit is your imagination and effort.

The Internet: Offering Insight by Giving Voice

Yesterday I wrote a fairly detailed, research-oriented post on gaming. Now I'm looking for nuggets all the time, and occasionally I find one that reminds me why watching for what comes across the Internet is so interesting, and potentially so important. And this example, believe it or not, has to do with the Nintendo Wii. The source: a guy who works in Target actually stocking the units in the store. He might have a pretty interesting perspective at a grass roots level, no?

From allgames.com 10/28/2007, Wii Shortage is Nintendo Bull Shit:

Here's the deal I work at Target in electronics at night unloading trucks, which means that I see all the new product we get in before they're released. Last night (10/27/07) I was doing my job and found that we had received 7 boxes of Wiis and in each box are 3 of the system. I thought to myself well this is rare and quickly put them in the back room because we do not put consoles out the day I was working, (this is dumb I know but this is not the first dumb thing I have come across since working there that made no sense.) well as I go to put them on the shelf of the electronics room I look around for a place to put them and as I 'm doing this I look up on a very high shelf. Now what do you think I saw, well is was none other then more boxes of Wiis looking down at me (totaling 48 with the others I had just received) and as I saw them I thought we have never had this many in store in a month's time and Target is not even the a major benefactor of game sells so we do not supply much.

I don't know just thought it was interesting that there are so many of this "hard to find" system in a back room of a Target in South Jersey 2 weeks+ from Black Friday.....

Now this is just one's guys view in one store of one retailer, but it is kind of interesting. But wait, as I've discussed on many occasions, it is sometimes the comments that are even more interesting than the posts themselves. Here is a comment from the aforementioned post:

Actually I've been reading this... not sure if it's true or not... but the Wii is now easy to find in Japan. It's finally sticking around store shelves so Nintendo has been shifting some of their supplies over to the US because in the US it's still selling like crazy so you may see more Wiis on store shelves for the holidays then ever before but still with that said they believe that it's still going to sell out which is why they upped their projected sales for March 2008 to 17.5 Million.

Another things to consider is that the amount of consoles that get shipped weekly is 100,000 to all major retailers. Microsoft bumped their amount to 120,000 because when the 360 was launched it was a hard find like the Wii up until March. The Wii has already sold 12,000,000+ in less than 12 months so they have been selling practically a million consoles a month so they have upped the amount more than 200% and with this increase it's still selling like crazy.

The shift from Japan to US may put more Wiis on stores shelves in US but with the amount of Wiis being sold in the US it doesn't seem to want to die down which is why I think Reggie thinks there will be a shortage.

Again, just one data point, not something that in and of itself is going to cause you to go out and either go long or short NTDOY. But it is an interesting factoid that can play a part in building your investment mosaic. The Internet never ceases to amaze me. A guy unloading trucks at Target blogging about his experiences? He gets a voice, we get some insight. Sounds like a fair trade.