VCinJerusalem

Happy New Year

While I wish for all of us a Shana Tova Umetuka (Happy "Sweet" New Year), want to send thoughts especially to Gilad Shalit and Jonathan Pollard. They will not be able to celebrate the new year tonight with their families, may this be the last Rosh Hashana they spend in captivity.

V'shavu Banim L'gvulom. This year. Amen.

Kara Swisher Gets Personal at Demo

For me, anything associated with the Wall Street Journal takes on an air of seriousness, woodcuts instead of photos, distinctive typeface, the whole package commanding authority. Now I know that perception is often far from reality, but the highlight of attending Demo conference last week was a fireside chat (well, without an actual fire) between Walt Mossberg and Kara Swisher, the producers of D conference, and columnists for the Wall Street Journal. And let me tell you, the conversation was nothing like I expected, especially from Kara Swisher.

Before I get to Kara's substantive comments about my favorite over-valuation in the past ten years, I want to dwell for a moment on how personal Kara got in her comments. From her "bite me Comcast" to her reactions to the "other conference" happening up in the BayArea (TechCrunch50), Kara was not at all the reserved Wall Street Journal reporter/columnist I was expecting (Walt stayed more true to pre-conceived notions).

First, in reaction to TechCrunch, Kara said (and this is in front of entire Demo audience, not sure if it was web-cast):
"Getting lectured in journalism ethics by Michael Arrington is like getting parenting tips from Britney Spears."

Kara and Walt then turned to social networks and the grandaddy of them all, Facebook. Again Kara got a little [too] personal, talking about Facebook CEO Mark Zuckerberg as a "twelve year old with stupid clothing choices."

Of course, she did follow that with some somewhat more serious thoughts/questions on Facebook and other social networks like: How do they make money? How do they grow?

Both of those are the key questions, Kara didn't have any answers. Not sure that Mark does either...

Why do I dwell on all of this so much?

For me, a relative outsider, in from Jerusalem to check in on the pulse of technology entrpreneurship, I was reminded how much of an insider game the tech world remains, even in the always on, twittered to death era we live in. What do I mean by that? Well, why do people physically gather in conferences to begin with? Because being there matters, and in the end personalities drive business.

A lot can be accomplished in the virtual world, where things can get personal as well, but in the end physical interaction can't be beat.

Last week TechCrunch passed 1,000,000 subscribers to its RSS feed, which is quite an accomplishment (consider that the Wall Street Journal subscriber base is only about 2 million). Michael Arrington and friends definitely are a force to be reckoned with -- and they know all too well that physical beats virtual hands down. Which is why Techcrunch hosted a competing [physical] conference to Demo.

What does this mean for Jerusalem Capital and our portfolio companies? That we need to get personal as well, we need to be in direct contact with key industry players on a regular basis, and need to show up in order to be counted.

Oh, and regards to the 12 year old with poor clothing choices, well, you all know what I think about Facebook....definitely not worth what Mark and Microsoft think it is/was, but also not going away anytime soon, unless they run out of money. And with Lehman days away from a fire sale, anything is possible.

hi5 Attacks Continue

Pretty soon there will be a global "denial of service," caused by the ever increasing hi5 attacks. I hope that somewhere in hi5 management (and/or board, VCs) there is someone paying attention to the blogs, because public frustration is building. And at some point (if we have not reached it yet) a class action could be filed against hi5, on behalf of the Net public, for harassment and waste of good screen space. Just think of all the milliseconds we waste deleting all those hi5 "friend" requests.

Here is another email from a real friend of mine, in response to my query as to whether he really sent me a hi5 invitation:

Inadvertently. Ignore it. I received one from ______, clicked, and
clicked that I did NOT want them to send to my entire elist. They did it anyway.
Don't sign up for it.
Shabbat shalom, ______

 Lets hope that the hi5 attacks end soon, and we can return to our regular spam....

hi5 Actually Quite Low, Signs of Desparation

Over the past few days I have been receiving more and more of these, maybe you have as well (fill in the blank for some random contact you have in some address book):

___________ would like to be your friend on hi5!

I set up a hi5 profile and I want to add you as a friend so we can share pictures and start building our network. First you need to join hi5! Once you join, you will have a chance to create a profile, share pictures, and find friends.

Thanks,
_____________

Now, I do believe in social networks, so don't get me wrong. But I also believe in fairies and peanut butter, but don't want any of the above to be shoved in my face or sent to be under false pretenses.

After receiving quite a few hi5 "friend requests" I then received this message (from an actual real world friend):

Hi All,

 

I appologize if you got in the last few days an invitation from me to join hi5.  It seems this website acts as a worm - taking my address book from gmail and sending invitation to all.

Now, I am giving the folks at hi5 the benefit of the doubt, and assume that they utilize one of those "next-next-next" approaches that ask for user data and in fine print say they will suck all the contacts out of Google, etc to build your network. i.e. not really a bona fide worm, as my friend above suggests.

But it is a good indication that venture backed social networks have lost all sense of differentiation (TODAY ONLY...FIND FRIENDS....SHARE PICTURES....), and are taking measures coming very close to spam, so that even a relatively sophisticated user like my friend above (a super-smart programmer, just so you know) slanders them with the "worm" label.

One social network that is impressive as a business is LinkedIn, not only because they were one of the first but because they have focused on a few key areas of nice revenue generation that simply work. LinkedIn is quickly turning into a real business. hi5, doubtful.

For sharing pictures I have many good solutions out there by teams who are focused on just that, ranging from Picassa to Flickr (and obviously Facebook has that functionality built in on a basic level). And for finding friends, well, I have my real lfe, and the untold hordes of virtual friends as well who keep sending me hi5 invitations...

Its time for all the social network companies to turn themselves into businesses, and lay off the spam. Forget "user growth," focus on monetization. Unless one of your board members is on the board of a cash rich company that could buy you, then do whatever they say...hey, if you have it use it. End of the day this game is about making money for investors and creating wealth for founders and management.