For our last discussion at the RealTime CrunchUp, we’ve got a panel on actually generating revenue from these services. Participating in the discussion are some of the Valley’s top VCs and veterans of the space. Brian Singerman Founders Fund Ron Conway Angel Investor Dan’l Lewin Corporate VP for Strategic and Emerging Business Development at Microsoft George Zachary Charles River Ventures Paul BuchheitFacebook/FriendFeed Andrew Braccia Accel Partners Michael Arrington Editor and Founder, TechCrunch Moderated by Steve Gillmor and Erick Schonfeld ES: We talk a lot about the overflow of information. Lots of interest in geo-stream. Where do the money making opportunities lie here? We have lots of consumer use cases. GZ: That’s a broad question. We’re investors in three companies now starting to accrue rev. in this space: Twitter, Yammer, and SMSGupshup (Twitter of India). Regarding Yammer: In 0 for marketing, over 10% conversation of the install base for Yammer. The company has around 550k installed enterprise seats in 14 months. MA: It’s this insidious product where it’s very sticky and you hae to start paying. It’s a good thing. GZ: It’s a good thing for the company, and investor.. DL: Good for customer too. Company stays around. GZ: In response to Marc Benioff copying Yammer, we got lots of calls saying Chatter copied Yammer. MA: There’s 550k installed enterprise seats, over 10% of new seats convert. There’s below 100k paid seats. Near 100k paying users. GZ: Marc Benioff setting price at 50 per user gives us some room… ES: What’s yammer’s strategy to ingest other enterprise data systems. GZ: I think yammer is going to be the future of enterprise messaging. There’s going to be serious competition and we know that. ES: FriendFeed was the first sig. acqusition in this space. Wasn’t the size of what people were talking about with Twitter, but it’s a milestone. From a founder perspective you were building this system, can you tell us about, what you thought was obviously the future. PB: Facebook kept talking to us, they were very persistent. We were never looking to sell, even when we did. What happened is we started talking to them more, learning where they’re going. As we put more thought into the future of Facebook it started seeming like an intriguing possibility. The opportunity at Facebook is very substantial. Nobody has ever announced the deal. The biggest component is what is the value is Facebook. I think the value of Facebook is going to be huge. It is going to get more successful. ES: Brian can you talk about what you guys are interested in? BS: We’re also in Yammer. We’re also interested in where real time can go in non consumer/enterprise. There’s lots of room in devices, biotech. Lots of cool companies being able to figure out on the fly if there is E Coli in a substance. You can leverage tech to do lots of stuff that used to take a long time. … AB: We’re taking a wide approach. MA: Kimball Musk this morning said there are gobs of money in search. When Twitter bought Summize, I think they gave them like 8% of the company, not sure if that’s been reported, it was a huge part of the company. I think they realized it was still very hard and passed it to Bing/Google. The places where the money is with Yammer, which touches on things like Echange. And search. But where else are people making money. Where are startups making money if not one of those two buckets? RC: Those are good buckets. I agree, what you’re seeing with the programmable web. Some business is going to take off, we’re seeing things that haven’t been created yet that are going to see a huge amount of value in things being created. RC: Coupons alone to inventivize users to go to a nearby place, revenues from that alone could be massive. This is going to happen in 2010. BS: We’ve seen a huge amont of traffic on real-time coupons/offerings. ES: How does microsoft look at this. DL: he first thing for us is to build the infrastructure out, and look at the big information flows, like we did for the Twitter relationship. Some of these things will be things we’ll be interested in. We have been and will continue to be inquisitive. It’s been around 20 companies a year on avg. about 10 of those are bubble up like this and become important parts of a broader strategy. RealTime goes way back to the very beginning of data exchange. Who carries the flow, where is the value at what moment in time of the flow of information. These are all indications of inevitability of realtime. What we’ve done with Twitter/Bing those are foundations for much bigger connections. There’s a little company doing math in the cloud, seven guys optomizing POS information. 5k retail points, 20k units inventory in a warehouse. SG: What do you know about deal with Twitter. DL: Which deal?… MA: What’s the other deal? DL: They did one with us. SG: Question is licensing of feeds? DL: Why would I offer details on this. RC: Yon can tell Dan’l likes this job. MA: I feel like panelists know the answer to this. RC: The companies we’re investing in today that TC writes about are indiciation of where the market is going. COtweet. Retime search companies. That’s going to be a hell of a horse race. I think one of the real time search engines that exists today will win out. AB: Realtime search is a tough space. I think Google does a pretty good job at information retreival. Facebook has search in a different way (more discovery serendipitious). I look at it, if you go back 4 years ago, most of the companies you would see that were web enabled, you could see the same traffic refeeral chart. 30% google SEO. 40% SEM. the rest direct. Today out of nowhere Facebook/Twitter have become huge reffers. ES: Paul, you’re both a buyer and seller because you’re an active angel investor. To what extent do the companies you invest in fall in this theme. PB: I don’t know if I’ve invested in too many real time. I think real time is valuable because… basically the word relevance. Search is valuable because it’s relevant. Realtime enables that across a lot of other domains. If right now I say I am sitting right here and I get a coupon, it works because it’s relevant to me. If I got it tomorrow it would no longer be relevant. One of the companies I recently invested in. They do car sales/car business. They look for intention are you looking to buy a car, are you having trouble, that’s a good opportunity to contact them. MA: There’s another angle to FB search. Forget where you are, what you’ve done. I found when I look people I know, search results are really good. Reason is because they are ranked based on people who have mutual friends. Google doesn’t address that at all. Applies to more than just people. Who you are is really relevant to almost all searches. PB: Relevance has multiple dimension. Google got keywords. There is time relevance. All are opportunities. ES: As we look forward at where all this is going. Seems like there are a lot of different approaches. Is there danger of confusion here. Do I build on top of Twitter/Facebook, quasi open systems Google is pushing. MA: Stocktwits built on Twitter and now they’ve moved almost completely off it. Zynga is doing it with Farmville now. BS: If you need to move off, all startups pivot. They can pivot. But I suggest starting with something, pick best thing for the job, and don’t be afraid to pivot. RC: Start with one with cheapest cost, highest number of users, off you go. AB: I think good entrepreneurs will find their way. Omar at AdMob.. even before iPhone launched he was focused on that as an opportunity for a business. They’ll find their way. DL: Big question is whether company that rises as a company like Twitter. Or one like Facebook becomes core platform. Pick starting point but it’s hard to argue that anyone can anticipiate which one is going to get lift like a Twitter. Why Twitter and not someone else. ES: George, maybe you can answer that. Twitter, Facebook, Google each platforms taking different approaches. GZ: The concept of a social network has been around for a long time.The one difference is twitter is unlike geocities etc. Twitter is an example of a horizontal network. They own namespace, let third parties build it out. ES: FriendFeed was ultimate twitter client. Paul, you built it partially on back of Twitter. But then when you sold to FB you bet on FB model. PB: I think both companies have promising future. I don’t see it as once vs other. I don’t know how the future will play out. They’re both incredibly well positioned. I’d love to own either (or both). FB had all these features, for API had to allow access to each, more complex. Twitter only had a few features so it was very easy to build a Twitter client. Set up this whole ecosystem of twitter apps. Everyone filled in the little pieces by themselves. I’m curious if anyone else can do this. They’ve managed to outsource this. SG: Does anyone have an opinion if lists, RT, etc are going to be plus or minus. RC: Huge plus. People have been screaming for ecosystem for lists for a year. Whole ecosystem of companies built off lists themselves. Twitter is building a platform. in the next year there will be 100 apps built off twitter lists. DL: I think most of the money will be made in enterprise communications. ES: What will be the biggest real time exit next year? DL: I think a number of things sub 100, 50. One thing that will be a billion dollar thing. Not even sure there will be exists. It think opportunities for big things will be able to stand alone. GZ: I can’t even predict what’s going to happen next year. I think most of the companies in this space in terms of revenue are fairly immature with the exception of FB. I think more likely for big exists in 2010/2011. RC: This market is in its infancy. I think a couple max in 50-100. Acquisitions in 2010 will be for IP and great teams. MA: Do you think Zynga is doing more monthly rev than Facebook? RC: Interesting question. PB: I’ve heard rumors of Zynga IPO. AB: I agree with the panel. Crunch Network : CrunchGear drool over the sexiest new gadgets and hardware.
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