Don Dodge on The Next Big Thing

Bing it…you will be impressed, Steve Wozniak was!

Microsoft today announced Bing, a new search engine to help people find information and make decisions. Microsoft calls Bing a Decision Engine rather than a search engine. It is designed to help make better decisions in four key areas; making a purchase decision, planning a trip, researching a health condition, or finding a local business.

Greg Sterling at SearchEngineLand did a side by side comparison of Bing vs Google, complete with screen shots. Greg says;

My overall assessment is very positive. Kumo, now Bing, has performed well and I’ve been satisfied with the results. There haven’t been any significant deficiencies or missing links (so to speak). While there have been a few occasions where I’ve found Google results to be better, the substantial gap that existed between Google and Live Search is largely gone with Bing.

Microsoft has integrated the Powerset technology to varying degrees and made numerous algorithmic improvements on the “back end” that are largely opaque to me. More obvious are the interface upgrades and changes. While many people are accustomed — even habituated — to the Google UI, I appreciated the often richer visual presentation and generally “cleaner” organization of Bing SERPs.

Apple cofounder Steve Wozniak is a big fan of Bing. Woz said “"That was the most astounding software demo I've every seen," “I thought it was going to be all marketing and sales pitch…I was really impressed.” “I have been begging for this stuff for years” Take a minute and watch this interview with the Woz. He is not easily impressed, and certainly no fan of Microsoft, so this is a huge vote of confidence.

In a press release Microsoft CEO Steve Ballmer said “Today, search engines do a decent job of helping people navigate the Web and find information, but they don’t do a very good job of enabling people to use the information they find.”  “When we set out to build Bing, we grounded ourselves in a deep understanding of how people really want to use the Web. Bing is an important first step forward in our long-term effort to deliver innovations in search that enable people to find information quickly and use the information they’ve found to accomplish tasks and make smart decisions.”

Last week I wrote about some of the Microsoft search improvements of the last 6 to 12 months and found it to be as good as Google, and in some cases better. With the launch of Bing next week I think the public will take another look at Microsoft’s search technology and come away impressed.

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Newspapers lose $9.6B in print ads, but gain $3.1B in online ads

Newspapers have been hit by a perfect storm; classified ads devastated by Monster.com and craigslist, and an economic recession that has reduced all forms of advertising. Cnet reports on a report from the Pew Internet Research Center that says newspaper classified advertising reached a peak of $19.6B in 2000, but has dropped to just under $10B in 2008, a decline of about 49%.

However, the study also reports that online advertising by newspapers has increased by $3.1B since 2002, offsetting some of the $9.6B loss in print advertising.

Trading Analog Dollars for Digital Dimes – The newspapers have complained that they can’t trade print (analog) advertising dollars for online (digital) dimes. Meaning, giving away their content online for free and trying to make up the shortfall with on line advertising just doesn’t work.

Does every online reader represent a lost print subscriber? Is the newspaper really trading print subscriptions for online ads? Perhaps in some cases, but an argument could be made that the online ad revenue is totally additive and does not cannibalize the print revenue stream.

This report shows that the industry as a whole is making the transition reasonably well, recouping about a third of the print advertising losses. Maybe the newspapers just need to do a better job of selling online ads, and use better ad targeting networks to increase the ad rates.

Newspapers are closing and going bankrupt every month. They are struggling to reduce their costs to bring them more inline with the new realities. Display ads will recover once the recession ends. Classified advertising will never return to previous levels. That business has been lost forever to craigslist, Monster.com, and other online alternatives.

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How to use Twitter effectively

Can you communicate anything useful in 140 characters? I admit I didn’t get Twitter at first. I am a blogger and enjoy long form writing, analysis, charts, links to related content, etc. Twitter seemed trivial to me, and many of the messages I saw on Twitter in the early days were useless. But, one day, sitting in a conference it became clear to me how to use Twitter. I heard some quotes that were insightful, worthy of sharing, but not enough meat for a whole blog post. Twitter was the perfect medium for sharing these insightful quotes. At right is an example of my Tweets from a recent conference.

Guy Kawasaki and others have figured out how to use Twitter in lots of interesting ways. He calls it “the most powerful marketing tool invented since TV,...and it's free, open to everyone. Bill Gates or LonelyGirl only get 140 characters.”

Twitter can be used as a teaser or pointer to an interesting story, product offer, or marketing message. Twitter is not the revenue channel, it is the lead generator. Twitter is the fastest, easiest, way to get a message to thousands or millions of people. Twitter is real time, so it is great for breaking news stories, or following stock market movements. Twitter may prove to be a very effective real time search engine with results filtered by what is currently hot, or what your friends and followers care about. Twitter could be a component of many Location Based Services that will thrive on cell phones.

For me, Twitter is a way to share short insightful thoughts, and a way to update people on conferences, upcoming events, and for organizing meet-ups in different cities. The people I follow use Twitter this way and I find it useful.

There is also what I call Twitter Litter. People who use Twitter to tell us what they had for breakfast, that they are picking up the kids, or other mundane things. To each his own…but I have no patience for this…even from my friends. But, that is the cool thing about Twitter…everyone can use it in their own way, and everyone can decide who to follow…or not. You can follow me on Twitter @dondodge

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What happened to small cap IPOs?

Cristina Morgan, Vice Chairman of JP Morgan says “We will take small $50M companies public, but we need buyers. Who will buy these stocks? The problem is not the investment banks and fees, it is the lack of market for small IPOs.”

Giles McNamee, founder of McNamee Lawrence says “It costs $3M to go public, plus 8% fees on the raise, then another $2M a year in SarBox compliance, audit fees, etc. It takes a big company to support that cost. We need a two tier regulatory environment. Having the same rules for General Electric and a small startup is wrong.”

Alan Patricof, founder of Greycroft Partners moderated a session today at Venture Summit East in Boston. It was an All Star panel that included; Chris Pasko, Managing Director M&A Blackstone, Tom Gabel, Head of Equity, Canaccord Adams, Giles McNamee, Founder, McNamee Lawrence, Cristina Morgan, Vice Chairman, JP Morgan, and Chris Bulger, Managing Director, Bulger Capital Partners. There were lots of great insights and quotes, here are a few;

Cristina Morgan  “We need to remember it is not a god given right for companies to go public. Many companies should not be public.

Giles McNamee says 99% of liquidity events for venture backed companies have always been M&A. IPOs are reserved for the top 1% of companies. There are 3,000 to 4,000 M&A transactions every year. Not many IPOs.

Giles - “In the UK there is zero capital gains tax for investments in private startups. That would attract capital to small companies.”

Giles - “We are living in a world where private valuations (VCs) far exceed their public valuations. So they can’t go public.”

Alan Patricof - “We need small boutique investment banks, analysts who can follow the stocks, market makers who support the bid/ask, buyers for the stock. When Fidelity pays less than a penny a share to trade stocks…there isn’t enough margin to support all the infrastructure.

Cristina - “Maybe VCs should put together a fund to buy small cap IPOs. Essentially, a public venture capital fund. The problem is not the investment bankers, it is the market of buyers.”

Patricof – “Robertson Stephens, H&Q, and the small boutique firms created the market for small IPOs. They developed the buyers market. We need to get back to that.”

Patricof - “Under today’s conditions Yahoo could not have gone public at the stage they did. Apple, Adobe, etc. could not have gone public either.”

Giles McNamee told me after the panel session that the death of small cap IPOs is complex and has been in decline for many years. One of the problems is the public market infrastructure that has been eliminated over the past 20 years. On line trading where you can buy any stock and any number of shares for $8, took all the profit out of the infrastructure. So, there is no money to pay for market makers to support bid/ask spreads that stabilize the market for a stock. The separation of analysts from investment banking and brokerage has resulted in no money available to support stock analysts on small cap stocks. No analysts means no big buyers of the stock, so they become thinly traded and illiquid. There are several other factors that have contributed to the decline of small IPOs, many of which might seem unrelated. It is a complex problem.

The IPO market for technology companies is bad, and has been since the burst of the dot com bubble. 2008 was the worst year for tech IPOs in more than 30 years. Here are some numbers for the past  years.

Year	Investment	M&A	IPO
2001	$40.6	$16.8	$3.5
2002	$21.9	$7.6	$2.1
2003	$19.7	$7.5	$2.0
2004	$22.5	$15.9	$11.4
2005	$23.2	$17.4	$4.5
2006	$26.7	$18.7	$5.1
2007	$30.8	$28.4	$10.3
2008	$28.1	$13.9	$0.5
Totals	$213.5	$126.2	$39.4

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Live Search will surprise you, try it out

This morning I did a search for a restaurant in a nearby town. I wanted to find the street address and get driving directions. First, you can do a search right from your current browser window and see the results in a new browser window. This isn’t new, Google does this with Firefox too, but it is very convenient. Over time this convenience factor might lead to more people using Live Search inside the Explorer browser.

The search results were perfect. There was a map showing the location, the street address and phone number, and a box to get directions. The restaurant web site was the first result, followed by a restaurant review from Tripadvisor, and several other relevant results. Excellent, but it gets better.

Then I clicked on the box to get driving directions and I was amazed at the results. Along with the normal map and turn by turn directions there were landmarks for each turn.

For example, it said “Turn right onto Elwyn Road. EXXON on the corner.” How did the map directions know about the Exxon station on the corner? Pretty cool. There were several other landmarks along the way, but here is where it gets really interesting.

At the end point it said “The last intersection is Sagamore Grove. If you reach Shaw Rd. you have gone too far.” And just for good measure the directions also included the phone number for the restaurant. Wow! That is better than expected for maps and directions.

Just for kicks I did the exact same search on Google. The first three search results were identical, and the first page of results was equal in quality. Google also included a map, street address, phone number, and a “get directions” box. However, the directions didn’t include the useful landmarks or alert about going too far.

This experience matches what I have been seeing for the past 6 to 12 months when comparing search results. Live Search is as good as Google, and in some cases better. Other improvements are revealed in a very intuitive way, and in the flow of your search. For example, when entering a search query, Live Search opens a box just below the search box with “Live Search Suggestions” for possible related queries. It surfaces your past search queries that match the first few letters of your current search, and makes suggestions about alternative related search queries. The suggestions refine as you continue to type in your search query. This is really impressive. It helps users form better search queries, and points them to relevant related topics.

The search market share numbers don’t yet show gains for Microsoft Live Search, but as more people use Live Search and all its services that could change. Count me as impressed.

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Venture Summit East 2009 Boston

Venture Summit East 2009: Where the big money meets the big ideas! Happening in Boston May 20th – 22nd. I will be attending and speaking on a panel with Paul Deninger, Vice Chairman of Jefferies & Co. This is a great place to meet entrepreneurs, VCs, and corporate M&A people, all in one place, and very accessible.

The nice thing about conferences is the people you meet. It would take months to set up meetings with a few of these people, but at a conference you might sit next to them at a session, talk to them on a break, or see them at lunch. It is a very efficient way to see a lot of people in a very short period of time.

Some of the speakers at Venture Summit East include;  
•  Bob Davis, General Partner, Highland Capital Partners
•  Scott Anthony, President, Innosight,
•  Tim Draper, Draper Fisher Jurvetson 
•  William Sahlman, Professor of Business Administration - Harvard Business School
•  Chris Pasko, M&A Advisory Services, Blackstone
•  Giles McNamee, Founder, McNamee Lawrence & Co.
•  Jeff Fagnan, Atlas Venture
•  Michael Skok, North Bridge Venture Partners
•  Sunil Dhaliwal, Battery Ventures
•  Chuck McDermott, Rockport Capital Partners
•  Mark Zanoli, Managing Director, J.P. Morgan
•  Michael Greeley, Flybridge Capital Partners
•  Bijan Sabet, Spark Capital
•  Paul Maeder, Highland Capital Partners
•  Alan Patricof, Founder, Greycroft Partners
•  Ed Anderson, North Bridge Venture Partners
•  Lucy McQuilken, Intel Capital 
•  Woody Benson, Prism VentureWorks
•  John Landry, Lead Dog Ventures
•  Paul Sagan, CEO, Akamai
•  Don Dodge, Microsoft
•  Jeffrey Bussgang, Flybridge Capital Partners
•  David Beisel, Venrock
•  Alan Spoon, Polaris Venture Partners
•  Andy Goldfarb,Globespan Capital Partners
•  John Simon, General Catalyst Partners
•  Ted Morgan, CEO, Skyhook Wireless
•  Jeff Glass, Managing Director, Bain Capital
•  Scott Cutler, EVP, NYSE Euronext
•  Jeff Hoffmeister, Morgan Stanley
•  David Lavallee, Managing Director, Revolution Partners
•  Michael Millman, Managing Director, J.P. Morgan
•  Ham Lord, Managing Director, Launchpad Venture Group
•  Jean Hammond, Co-Leader, Boston Forum, Golden Seeds
•  David Verrill, Founder & Managing Director, Hub Angels Investment Group
•  Gabor Garai, Partner, Foley & Lardner
•  Lita Nelsen, Director, Office of Technology Licensing, MIT

As New England’s premier annual event in the venture, technology and capital communities, Venture Summit East matches growth-company buyers and sellers and identifies the most promising innovation-driven, growth investment opportunities. Executives who attend Venture Summit East will enjoy unrivaled access to the most influential angels, venture capital, private equity and corporate investors, corporate buyers, technology partners, and the CEOs of some of the most exciting private companies in New England.

The Venture Summit East agenda is full of top notch speakers and panels. You can register here.

What’s Next in Tech? Boston

Everyone wants to know about the next big thing in technology. Scott Kirsner is organizing an evening event in Boston on Thursday, June 25th that's called "What's Next in Tech." A panel of entrepreneurs will reveal their thoughts on the next big thing, followed by a panel of VCs discussing where they are investing their money.

Speakers include people like Helen Greiner (a founder of iRobot, and now The Droid Works), Mike Dornbrook (COO of Harmonix Music Systems, the creators of Guitar Hero and Rock Band), Ellen Rubin (founder of cloud computing start-up CloudSwitch), and Brian Halligan (CEO of social media leaders HubSpot). Forward-thinking Venture Capital investors like Bijan Sabet of Spark Capital, Michael Greeley of Flybridge Capital, and John Simon from General Catalyst, and others will offer their insights.

The discussion is likely to include cloud computing, videogames, robotics, social media, clean-tech, wireless applications, and other fast-growing sectors. You can register at

What’s Next In Tech - Where will the next waves of growth will come from?

Date: Thursday, June 25th
Time: 6:00 PM - 8:30 PM (ET)
Where: Boston University, School of Management, 595 Commonwealth Ave, Boston, 02215
Price: $40

What do you think is the next big thing in tech? Leave a comment and share your thoughts. Here are a few discussion starters.

Cloud Computing – Obviously…everyone knows this. Amazon, Google, Microsoft, and other big players are making huge investments in Cloud Computing. But, where are the opportunities for startups? Every decade it seems a platform shift creates opportunities for tools (management, monitoring, migration, security, performance, auditing, etc) to manage the transition. All the tools that worked so well in the mainframe era didn’t work for client/server. New companies emerged to fill the gap. Then web based applications came along and created a new need for software tools to manage the process. The old client server tools didn’t work. The move to virtualization did it again. And now we have a new set of challenges in cloud computing. There are lots of gaps and holes to fill.

Mobile Applications – Again, pretty obvious given the success of the iPhone. But, of the 30,000 iPhone apps, most of which are free, where are the real business opportunities? The key word is business. Most of the existing apps are focused on consumers. The real money will be made in enterprise applications for business. There are lots of existing business applications that should be available on your cell phone, and lots of new ways of doing the old thing. Think of how Salesforce.com changed the way CRM was done…and apply the same thinking to enterprise applications on cell phones. Take advantage of location awareness, speech interface, always connected, camera technology, recording capability, and other capabilities of the cell phone.

Social Networks – Hasn’t Facebook and MySpace already covered this? Yes, for generalized groups, but what about networks for online gamers, job hunters, dating, and other groups? Social Networks are more than just discussion groups or online meeting places. The power of social networks is in the rich data stream, preferences, profiles, ranking, and higher level patterns that emerge from using them. People feel more connected and empowered when they have information, especially information they can use to build relationships. Online gamers play in solitude. They want community. Job hunters search in solitude. So do people in the dating scene. Matching the need for community with the rich profile information and data stream of social networks will create new opportunities.

Hyper local News, Search, Community – Newspapers are in deep financial trouble. Local news coverage will be lost as newspapers go out of business. Local businesses need a way to reach their audience, advertise, and build a relationship with their community. Search works well on a macro level, but not very well on a local level. If you live in Davis Square in Somerville, or Beacon Hill in Boston, you are probably searching for very different businesses and services…even though they are less than 5 miles apart. Hyper-local news, search, and community will offer new opportunities as traditional sources of information fade away. New business models will emerge, and more efficient ways of connecting people, businesses, and communities.

These are just a few ideas. There are lots more opportunities in tech. Discuss them here, and attend the “What’s Next in Tech” conference in Boston on June 25th.

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Unemployment – how bad is it?

Stories of layoffs and unemployment are in the news all the time. It is easy to become immune to them since they don’t really affect you personally. Ronald Reagan used to say “Recession is when your neighbor loses his job. Depression is when you lose yours.” This week Microsoft laid off 3,000 people, many of them friends and people I know. Maybe I am different, but it does deeply affect me when people I know lose their jobs through no fault of their own.

Today the US Labor Department will release employment numbers for April. Analysts expect big job losses, but a continuing decline from prior months. The US economy has been shedding more than 600,000 jobs a month over the past 6 months. The unemployment rate is expected to jump from 8.5% in March to nearly 9.0% in April, the highest unemployment rate in 26 years. That is bad…really bad.

How bad is it? At the current rate of job loss, within two months, it will be worse than The Great Depression.  Marketwatch.com says “This recession, which began in December 2007, has seen some of the worst job losses since the Great Depression. Through March, payrolls had fallen 3.7% from the peak, the worst job losses since the 1957-58 recession. The 1957-58 postwar record of a 4.4% drop would be smashed if another million jobs are lost.”

Tough times never last, tough people do.

"For many, it was as if the clocks had rolled back to the thirties and the time of the Great Depression. Company upon company declared bankruptcy. Unemployment soared. Politicians used the depressed state of the country to their advantage. It provided a great opportunity to highlight the failures, shortcomings, and faults of the opposite political party. Democrats found in it an opportunity to blame the Republican administration which was in charge. Predictably, the Republicans, in turn, blamed the "Democratic administration that created the problem", which the Republicans had inherited."

Sound familiar? That is an excerpt from Dr. Robert Schuller's book "Tough Times Never Last, But Tough People Do", written 25 years ago. The book is an inspirational guide to dealing with tough times.

We are all dealing with some tough times now. The expression "Tough times never last, but tough people do" brought back memories of earlier tough times and how we found ways to make it through. Since 1980 there have been at least four major recessions...and recoveries. We will recover from this one too.

Innovation will lead us out of this - Chaos brings opportunity. A recession makes companies think about saving money. They consider small vendors that they wouldn't do business with in boom times. Competitors go out of business. Be in a position to take advantage of chaos and uncertainty. Startups are innovation leaders, and innovation will spark an economic revival. 

Every economic collapse has a flower that carries with it the seeds of economic recovery. Look around and you will see the seeds of revival. Little green shoots.

Show compassion to anyone who has lost a job, and show some love to startups who are trying to create new jobs.

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Microsoft Startup Incubation Week goes worldwide

Microsoft is organizing several “Incubation Week” programs to help startups incubate and develop outstanding ideas. The events will feature technical gurus from Microsoft, technology veterans who have built their own applications, and influential venture capitalists and industry experts. Our developers will lead interactive discussions, provide helpful advice, and facilitate actual application development on site. At the end of the week, we’ll select a winner who will be eligible for prizes and special PR opportunities.

These events are free (plan your own travel expenses), and each team can bring up to three participants (one business and 1-2 technical). All startups are eligible, whether or not you have an application built today.

Mobile Incubation Week Singapore.  May 25 – June 1 - The event will be held at Microsoft’s Singapore office

Mobile Incubation Week Europe June 1-5 (Cardinal Place, 100 Victoria Street, London) .

To nominate your team for either session, please submit the following details to Mobile Incubation Week:

• Contact information
• Location of Company
• Size of company and year founded (if applicable)
• Overview of your idea
• Why you would like to participate
• How your applications is unique to Windows Mobile
  *Note: please do not send confidential materials at this time as no NDA has been signed.

Applications will be judged according to the strength of the founding team, originality and creativity of the idea, and its uniqueness to Windows Mobile.  The deadline for applications is ending soon so get your applications in today so you don’t miss this fantastic opportunity!

Questions?  Email Mobile Incubation Week..

BizSpark helps over 12,000 startups in a tough economy

Microsoft BizSpark, is a global program designed to help accelerate the success of early stage software Startups. BizSpark, announced in November of 2008, has signed up over 12,000 startups in just 6 months. BizSpark is world wide, and now includes over 1,300 Network Partners in 82 countries who can offer the program directly to startups.

Some of the active network partners are Seedcamp, Thefunded.com, 47hats, TiE, SoftLine, Senac Sao Paulo, Mashable, Startups.ro, China Business Angel Network, etc. These and other BizSpark Network Partners can offer the program directly to startups.

BizSpark hosting partners like RackSpace, Peer1, GoGrid or Navisite, are also significantly driving enrollments and helping startups to get hosting service with a significant discount.   The List of BizSpark hosting partners keep growing and we recently announced that GoDaddy just joined the program.

BizSpark provides Visual Studio, development tools, Windows Server, SQL Server, SharePoint, an MSDN subscription,  and lots more. A more complete list can be found on the BizSpark site.

BizSpark is a global program. The USA is obviously the largest source of startups, but Brazil, Russia, India, and China are also enrolling lots of startups.

BizSpark is for startups building software products or services. The startups must be a private company, less than 3 years old, and have less than $1M in annual revenues. Startups can stay in the program as long as they qualify, up to 3 years. After 3 years they pay a $100 lump sum fee.

See the BizSpark site to learn more, or find a Network Partner to sign you up. You can also contact me directly to get into the program.

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