In Part II of our Venture Capital Series, Voce Nation sat down with Trinity Ventures general partner, Larry Orr, to discuss the transition from big bang marketing to keyword advertising and viral marketing techniques and where Trinity is focusing attention in the coming years.

What has changed for venture capital leaders like Trinity from its approach to investment strategies in the dotcom boom to this recent surge in activity around Web 2.0 companies?

In the initial dotcom boom, companies had a land grab mentality and raised large amounts of capital to support aggressive first mover strategies. Business models were predicated on big bang marketing tactics designed to jump start businesses to the point where network effects could take over. Although many big, successful companies were created, a much greater number of capital-intensive failures occurred. We all learned the hard way that network effects are a two-edged sword, and that before you reach critical mass, you have to deal with the chicken-and-egg problem.

Newer business models were born out of the necessity for entrepreneurs to make do with less capital, the maturation of the web infrastructure, and the learning that came out of Web 1.0. These new models combine some of the benefits of pay-as-you-go customer acquisition strategies with the beneficial network effects resulting from scale. Companies using keyword advertising and viral marketing techniques are able to deploy a variety of tactics and measure their effectiveness real-time before deciding where and when to put the pedal to the metal.

What types of companies or technology does Trinity see attracting investment in the next 3-5 years?



We see a broad range of emerging consumer and business services with recurring revenue models, many of which leverage user-generated content into information that can be monetized. For example, one of our portfolio companies, LoopNet, just completed its IPO and has built a very profitable subscription business that is essentially a multiple listing service for commercial real estate. There are also huge trends relating to the explosion of digital media, wireless networking and mobile devices. Each of these trends individually, and in conjunction with each other, create many opportunities ranging from consumer entertainment services to new infrastructure technologies. We are also excited about new opportunities in traditional enterprise technologies such as security and networking, especially lower cost solutions to address the needs of small to medium sized companies.

How has the social media or blogosphere impacted venture capital? How does this affect the start-up plans behind your investments?



The influence of community and user-generated content has affected venture capital in a number of ways. First, there have been a number of companies (arguably too many) directly involved in social networking and social media. Second, almost all companies can benefit from effectively using the new ecosystem as a marketing vehicle. Third, a new group of companies is starting to emerge that provide tools and services for managing the marketing ecosystem of social media, much as Web 1.0 spawned a generation of analytic tools and services. I’m sure we will see other effects continue to emerge.

Where do you suggest emerging companies invest their marketing resources? With new word-of-mouth communication vehicles available today, should start-ups adjust their marketing strategy?

Startups need to think about strategies for initially acquiring customers, as well as retaining them and leveraging them through referrals or other techniques to acquire additional customers. Usually, the hardest part is getting the flywheel going with a critical mass of initial customers. The exact mix of tactics depends on the situation, but the good news is that most Internet-oriented marketing vehicles can be deployed with small initial expenditures, and their effectiveness can be measured pretty quickly. Companies should experiment with a variety of tactics and continually evolve, giving more juice to the ones that are working and trying new techniques as they become available.

What is the one piece of advice you would give someone looking for investors today?



Use the fundraising process as a learning experience. We interact with many entrepreneurs and only invest in a small fraction of the opportunities we see. But we learn something from each interaction and develop some lasting relationships. Entrepreneurs can err by either being too stubborn, or else trying to adapt to every comment they hear from a prospective investor. The most successful ones balance the courage of their convictions with being open to input and evolving their strategies.

Technorati Tags: larry orr, socialmedia, trinity ventures, venture capital, web2.0

A quick congratulations to our own Matthew Podboy. Earlier this week his blog, Active Voice, was voted “Best PR Blog” by MarketingSherpa readers.

Matthew succeeds Voce’s own Media Guerrilla (aka Mike Manuel) who took best blog honors in 2005.

Congrats Podboy, we’re looking forward to adding another coffee mug to the trophy shelf;)

Technorati Tags: active+voice, awards, marketingsherpa, matthew+podboy

Shasta Venture’s Jason Pressman brings a hands-on perspective to Sand Hill Road, having rolled up his sleeves as the fourth employee of Walmart.com, where he spent five years driving strategy, biz dev and operations. The company - founded in January 2000 and backed by Accel Partners - was sold back to Wal-Mart Stores in July 2001. Before Walmart.com, Pressman focused on services and software investments at Selby Venture Partners.

Today, as a Shasta principal, Jason sits on a four-person team that oversees investments in early-age technology companies in networking, semiconductors, communications equipment, software, and “certainly very heavily in internet services.”

Voce recently sat with Jason to talk about Web 2.0 from the perspective of a venture capitalist.

How would you define Web 2.0? 
It’s such a broadly used term, and means so many things to so many people. To me, Web 2.0 is about user-generated content, it’s about Ajax and specifically applications that have substantially more usability than previous versions of the web, because you don’t have to refresh the page. And that sort of subtle point is very important, in that it makes the applications far more usable - it effectively makes a web application work like a desktop application.

(Additionally),Web 2.0 and the advent of user-generated content, and blogging in particular, really does allow there to be even narrower content windows.

And the last thing I’d say Web 2.0 is about, which to me is perhaps the most fundamentally different thing - that I think most people have not really grasped — is the breaking apart of the application from the user interface. So Ajax and RSS really allow you to take content and use it in other applications other than the application it was initially intended for. That means that, when you look at things like mash-ups and RSS readers that allow you to get content in different places, you’re effectively taking something from one place and using it somewhere else.

That’s a pretty disruptive trend. And I think that, to me, what’s exciting about Web 2.0 is looking for entrepreneurs who are thinking about what that disruptive trend means and how you capitalize on it to build the next generation of great web businesses.

What is the most exciting example right now of company that’s successfully breaking apart the application and the user interface?
One of our portfolio companies, Flock, is a really good example. What they’ve done is innovate on the browser, and they’ve provided the ability to look at photos, for example, in the browser, that are residing in other parts of the web. That’s just one simple example of a very powerful way that you create a more holistic user experience, from one that historically was more siloed and segmented. Another good example, which is not a portfolio company of ours, is Zillow. When you go to Zillow, and you interact there and play with their application - which basically helps you estimate the price of a home - it’s pulling data from a whole bunch of different sources, the MLS, the tax records, etc., and aggregating it, using mapping information that comes from another source, and pulling it all together into an application that (Zillow) is managing. That’s a a pretty powerful way to bring data together into a compelling user experience that really wasn’t possible in Web 1.0.

When someone comes to you and claims they’re “Web 2.0,” are you skeptical or are your ears perked up?

I feel like I get quite a few plans and emails where people will say, “Introduction to So-and-So, A Web 2.0 Company. . .”

Do you think it’s overused, or that it has lost meaning?

I don’t think that the term is well-defined. I don’t know that it’s overused, but I would say that it is used frequently with broad meanings, and therefore there’s a fair amount of ambiguity. Frankly, the way I defined is the way that I define it. . .not necessarily the way that others define it.

When I see a business that’s described as Web 2.0, I’m enthusiastic about it. . .because if it means what it means to me, which is an entrepreneur who’s actively thinking about how to actively build something that capitalizes on these disruptive trends. . .that’s exciting. And so no, I definitely don’t approach it with skepticism, I approach it with enthusiasm and an open mind.

That said, I do think that in some instances the venture community has become a little overly-enthusiastic with regard to web businesses in general, and I wouldn’t say that’s Web 2.0 businesses, I would just say web and consumer businesses. And that’s meant that we’ve seen an awful lot of companies funded - more companies than have been funded over the last few years - and more capital going into those companies, at higher valuations. And I don’t know that we’re necessarily seeing the outcomes of the other side. We’re not necessarily seeing lots of standalone companies.

But (Shasta is) absolutely actively looking at continuing to invest in web businesses and Web 2.0 businesses, and we fundamentally believe in them. We actually feel that our backgrounds. . .really position us well to help understand these businesses, and to help figure out how to effectively build them.

So you expressed that VCs in general have perhaps become a little overly-enthusiastic. When did that start?

I think that it started in early 2005, and sort of has continued since then. I don’t know that there was a clear inflection point, but to me it was probably around the end of 2004, the beginning of 2005.

What do you think triggered it?

I don’t know. There was the Google IPO and there were a couple of bigger acquisitions. There was a lot of enthusiasm around the Flickr acquisition, but that was a small acquisition. One of those things - or some combination of those events — started it, and then it continued to be fed by the acquisition of MySpace, the acquisition of some of the shopping comparison engines, and then some of the smaller acquisitions like OddPost, Upcoming.org, Weblogs, Inc. But I don’t know - it’s a good question and I’ve thought about it a lot.

So how does PR and communication tie into this mix?

They are critical components in making companies successful. I think that companies sometimes will engage in PR or communications or begin working with a PR firm or getting a prominent blogger to write about them before they’re really ready for prime time, before they’re ready to garner the attention. I’d say in the “new world,” the way that effective PR and communications is done is fairly different from the way it’s been done in the past. In the past, as you well know, it was more about getting to the right channels, getting to the right markets, getting to the right conferences, and while those things are still important, there’s a whole new world out there - the blogosphere - that’s accessed in a much different way.

Technorati Tags: jason pressman, shasta ventures, Silicon Valley, Startups, venture capital, web2.0

More pictures here. Enjoy!

Technorati Tags: Events, PR, Silicon Valley, Voce, voce communications

Several industry watches claim tech is back and dangerously close to repeating the mistakes we all so recently experienced from the last tech boom. NextFifteen’s Tim Dyson recently blogged about the resurgence of tech PR citing a PRWeek survey and the numbers various agencies have released regarding their 2005 results. And tech pundit, Rafe Needleman recently blogged about “Bubble 2.0″ getting out of hand based on the pandemonium at Michael Arrington’s TechCrunch meet-up party. According to Valleywag, Apple Computer is bursting at the seams as the company waits for new facilities to be finished. And do I even need to mention Valleyschwag?

Is this Bubble 2.0 and is that bubble over-inflating again? If you studied basic economics, you know that the economy moves in cycles, but are we ready for another cycle in overdrive? Or will investors, marketers and executives be more savvy as we all still feel the headaches leftover from our 2001 hangover?

The game plan for the team here at Voce is to approach the new, new economy the same way we approached the old, new economy. Seek out long-term viable partners with a clear value proposition - even one that we PR folks can understand - and deliver kick-ass results.

– Janet Martin

Technorati Tags: Economy, PR, Bubble2.0, Technology

Voce client Eric Brown from NetApp recently gave a local PRSA seminar on “Building out a Global PR Program.” Below is a list of Brown’s best practices when taking your program international, as well as some common myths re: international public relations.

Best Practices:

1. Integrated marketing is everything - PR should not be a stand alone program. If PR is all you’re doing in a specific region, you ought to rethink dedicating resources to that region.
2. Get in the habit of reading The Economist - CNN and Fox News are too US centric. Expand your literary horizons.
3. Take a cultural sensitivity training class - A seemingly benign gesture to you may offend someone else.
4. Plan to wine and dine - Business outside the US is done between 5:00PM and 2:00AM. Don’t skip out at the end of the day to watch movies in your hotel room. (PS - you may have to eat jellyfish.)
5. Don’t assume everyone’s English fluency - People may nod when you talk, but that doesn’t necessarily mean they understand you.
6. Get close to local management - Bond with the locals. You need them on your side when you’re an ocean away.
7. Squeeze out middlemen and filters - Carefully analyze those that try to take control of your program (e.g. resellers, distributors, PR agencies looking solely at the bottom line etc).
8. Internationalize “New Media”- Corporate Blogs can be a great tool to repurpose content regionally.
9. Set the goals, get out of the way - Get the right people in place and don’t micromanage. You don’t have the time.

Some Common International PR Myths:

1. The UK is just like the US
2. British journalists are the “toughest”
3. Content is more important than style
4. “We won’t need a translator”
5. French loathe Americans
6. Everyone in Amsterdam tokes
7. Chinese are hungry for Americana
8. I won’t survive Japan if I don’t eat sushi
9. Journalists won’t accept gifts, trips, or junkets
10. Advertising and PR are separate/distinct
11. Business ink is doable everywhere
12. “My country is unlike any on Earth”

Technorati Tags: International, NetApp, PR