Blancer.com Tutorials and projects

Of this Twitter, yeah.

Zynga.

People always talk about Twitter and
Zynga, but I really think of
the first sort of
defining investment that we made
was in Delicious, back in 2005 and
a lot of the
things that Delicious represented to
us are evident across
a lot of our most successful investments.
We’re investors in Foursquare and
Etsy and Tumblr and
Indeed.com, and a host of others.

40-some companies in total.
So, you know,
in hindsight, you did great,
but at the time of the
investment, it was
very difficult to know which
one of these would fly and which ones wouldn’t.
So, how do you
invest early and invest right?
What’s your criteria are you investing
in the person or are you investing in the idea?

Both.
I think it’s important to have
an investment thesis, and when
we started our firm
back in 2003 and
2004, we built an investment
thesis before we went
out and raised the money
and that investment thesis has been
very narrow and specific.
And so the idea has to it inside that investment thesis.

And if it fits inside the
investment thesis, then we really
move to the team, and if
we think the team is highly
capable of executing on
the idea, then that’s kind of the magic.

I see.

So you talked a lot about valuations.
You avoid the bubble term.
So far you’ve avoided the bubble term.
But that valuations are definitely getting frothy.
and they’ve been getting frothy at the seat stage for a long time.

Right.

We just had a linked in
IPO that doubled in the first day.

Right.

Ten billion dollars.
So is it a
bubble yet, and if not,
what would it take to make it a bubble?

I don’t like to use
that word, just because to me
it’s very reminiscent of what happened
in the late 90’s and I
don’t really think that what we’re
seeing now is exactly the same thing.
So I like to just
say that we’re in a frothy investment period.
We ‘re in a period
where people are more focused on
the upside than the downside,
and valuations reflect that.

And yes, things have
gotten very expensive if you’re an investor.
If you already are invested in
a company, then you definitely benefiting from that right now.

And how has that changed your
approach to investing?
Have you passed or stayed
away from companies that you
otherwise would have invested in because they are too expensive?
Or are you just you know,
kind of, you’ve got to suck it up and pay up.

No, we definitely have a
style of investing and there
are certainly opportunities that come
along that we like that just
don’t fit our mold anymore,
but that said, our mold changes a little bit.
So if you look
at the average valuation of a
seed round that we did,
or an A round that
we did, or a B
round that we did, three years
ago, and you look at
we’ve done in the past
12 months, you’ll see that
on average the valuations probably are
up between 25 and
50 percent across the board, entry prices.

So we have to move with
the market, but there comes
a point where the market
moves beyond our comfort zone,
for a particular transaction anyway,
and we won’t do that.

Right.

So have you sold any of your Twitter stock?

You know, I don’t
want to talk specifically
about what we have done but
generally speaking, you know,
I wouldn’t argue with the news reports that are out there.

So what is, I think
there is a sense that, at
least it used to be, that if
you’re a VC and you didn’t
sell we sold before
an IPO that was
maybe frowned upon.

Right.

Things have changed obviously in the whole market.
But what’s your stance on
when is the right time to sell?

Well, I want to be aligned with the founders.
And so, we certainly wouldn’t
sell stock in a
company that we’re involved
in if the founders haven’t had
the opportunity to sell, either before
we sold, or at the same time that we sold.
So we don’t want to get out ahead of the founders.
We also don’t want to get out ahead of the companies own capital needs.

We wouldn’t sell in second
market or shares post, or any of those kinds of things.
But, if the company was
organizing an opportunity to sell,
or if ale transaction
came along that the company was
a part and parcel to
we would look at doing that as
long as we were
in sync with and aligned
with company and the founders.

So if the founders are selling, it’s okay for the early investors to sell, essentially.
Look, it’s a complicated set of issues.
I don’t think you can say it’s
just if the founders are selling everyone should sell.
because there are many cases
in our portfolio where the founders have been selling and we’ve been buying.

So, the secondary markets
have changed the way venture
business is done these days,
and we’ve had adapt to and react to it.
Sometimes we are a buyer of founders stock.
Sometimes we are a seller
in same transactions when founders
were selling stock and we have to deal with it on a case by case basis.

But when founders and early
investors are selling stock, either
to big billion
dollar funds that JP Morgan
is setting up, or that in
secondary markets, isn’t that
a signal that those
valuations are a little bit too high?
If they’re still gonna keep on going, why wouldn’t they just hold on to their stock?

Well why wouldn’t founders hold onto their stock?
The reality is that if
you buy stock at 5
cents a share and someone’s
coming along and offering you 50 cents a share, $50 a share.
You know, you have
to think about that, whether you’re a founder or an early investor.
And you don’t sell 100%
of your stock, you sell 5%
of your stock or 10%
of your stock and even
by selling five or ten percent
of your stock, you might make
ten or twenty or thirty times your entire investment.

It’s hard not to do that when you’re an investor.
And I think that it may not even be prudent not to do that if you’re an investor.
But the thing is, that by
doing that, you allow the company
to stay independent and grow and become a bigger company.

And one of the problems we’ve had
in the past ten years is
we haven’t seen too many companies
stay independent and people are
starting to say where are the next goes where are the next Ciscos?
Where are the next Microsofts?
Where are the next Oracles?
Where are the next Googles going to come from if everyone is selling their companies?

And now with the emergence
of this secondary market, it’s easier
for the founders to take a
little money off the table, and
it’s easy for the angels to
take a little money off the table,
and it’s easy for the first
institutional investors to take a little money off the table.
The shareholder base moves around
a little but the company stays independent
and can continue to grow and become a big company.

But isn’t all of this a
sign that the public markets are broken?
I mean, you know ten
years ago you would have had
these companies go public at
a billion dollar valuation and now
you’ve got some of these companies
ten, you know, Facebook, $50
billion valuation, it’s still not public.

I think there are some
things wrong with public markets, but
I also think that there’s some great things about private markets.
So in a public market
situation, you’re reporting your
financial information every quarter,
and you’re also disclosing anything that’s material to the public markets.
You have to do that.

Your stock trades every
day, you know, every
second of every day that the markets are open.
And it changes a little
bit of the culture in your company
when all of a sudden you’re,
one, accountable to a
whole set of investors who are
very quarterly, short-term driven, when
your employees start to see
their net worth go up and down every day in the public markets.

By staying private, you avoid
some of those issues, and I
think it’s, in some cases, healthier
to be a private company than to be a public company.

But are you getting
some of those same issues now with those secondary markets?
All the employees see, well, you
know our share is traded
for, you know, $50 on
SharesPost or SecondMarket .
Then they calculate.

Some of those very issues
are starting to seep into the
private market and the companies
that are being actively traded in
the private market and those companies
whether it’s Facebook or Twitter
or Zynga or a
host of other companies are starting
to figure out how to deal
with that, and they’re starting
to put in policies and agreements
with their shareholders and their employees
that they try to limit some of that.

So do you think the SEC
should re-write the rules
for who can invest in private companies.

I do, I think that
it would be good if the SEC
made it possible for the
sophisticated investors who may
not have quite the same
net worth requirements that are
in the rules today
to be angel investors, and
I think that opening up private
markets a little bit more I think would be a healthy thing.

So you think that the
definition of an accredited investor should
be lowered a little bit?

There are people who work inside our portfolio companies.
Software engineers, marketing people, who’ve
worked inside these companies for
decades and they are
as sophisticated about what’s going
on in these markets as anybody
and yet in many cases those
people don’t qualify as a
credit investors; they can’t participate
in, you know, an angel
round of one of their friends who’s starting a company.

And I think that’s not great.

But on the flip side, if they
lowered the bar, what
protections, you know, do
you think would be fair
to protect unsophisticated investors who also [xx]?

I like the idea of basically
saying OK if you have a net worth of $100,000, you can invest $10,000.
If you have a net worth of $500,000 then you can invest $50,000.
If you have a net worth of a million you can invest $100,000.
Just tier it up that way
so that you don’t have
somebody who’s got a net worth
of a hundred thousand dollars putting their
entire net worth into their
friends’ start up you know
but something that just,
you know, takes the rules and basically scales them all the way down.

Right and do you think
that there’s a way for
private companies to maybe who’ve
participated in that, maybe disclosed more about their financials.
Not total Sarbanes-Oxley but
private companies are already filling
out tax returns there
are certain data and certain
work they’ve already done that they could share with investors.

You know, I’ve got mixed feelings on
that you know, our companies benefit from
being able to keep their information
private and that’s one of the reason they stay private.
I also understand the information
I don’t really have a good answer
for that question but, it’s a
big issue and it’s going to have to get tackled.

So, if you look at
the last you know, sort
of two waves of internet
investing, in the nineties I think
you’ve said this once that really
a lot of the value came from
the companies that were building up
the infrastructure of the internet right.
Cisco’s the center of the world.
And then after that, what
we’ve seen this past decade
is people building apps on top of that infrastructure.

right, Facebook, Twitter, Four Square.
So what’s, what are
you investing now for the next day?

You know my partner Brad said to
me early on when we were
starting Union Square Ventures that
he thinks it’s better to
be an anthropologist than a
technologist in the venture business.
And so he made
me read a book called Technological
Revolution and Financial Capital written
by a professor named Carlota Perez.

And in that book, she
goes back and looks at every
technological revolution, going back
to the steam engine, railroads, automobiles, and internet.
And what you see is a very similar pattern.
The first decade or two
you build the infrastructure, so for
cars it was cars and highways.
And then you go build the applications.

So for automobiles it was
you know McDonald’s and strip malls
and Levittown and things like that.
And so, you know, when we
wrote our original investment thesis we
said okay the infrastructure has
been built now we are building applications.
We got to go find a McDonald’s strip
malls and Levittowns of the
internet, and that’s what we’ve been
investing in for the past seven or eight years.

If you look what happens next,
you see basically huge societal
upheaval, and you see,
basically, you know, societal revolutions.
And what happened after Levittown
and McDonald’s and strip
malls is you got, you know, the 60s.

You got sexual revolution, you
got feminism, you got
anti-war movements and anti-establishment movements.
And I think that’s probably what’s next for the internet.

I think you’re starting to
see that with things like
Wikileaks and Bitcoin,
the Arab Spring, things like
Anonymous’ attack on Sony.
And I think that we’re in for pretty big societal upheaval.

And I think it’s coming pretty fast.
I’m not exactly sure how to invest in that.

I’m not even sure it’s investable.
But if you look at something like Twitter,
I think you can see that something
like Twitter not only benefits
from that but also helps facilitate
that so those kinds of ideas,
truly disruptive ideas, that are
actually almost anti-establishment in
nature, I think, are probably where
we’re gonna see the biggest opportunities over the next 10 years.

So you want to
invest in the cultural revolution on the internet?

Yep, absolutely.

Right.
And how do you, you
see that playing out what across,
I think you wrote a post recently
about mega trends and how it’s
social, it’s mobile, it’s
global, and what was the fourth one?

The cloud would be the other one.

And the cloud, right.

What I see is four big
trends, the movement of
all data and application to the
cloud, mobile, social, and global.
Those to the big four things.

Right.
And you recently, finally went all the way to the cloud with your.

Almost all the way.

Productivity, right?

I still have Excel, Word, and PowerPoint on my laptop.

You pretty much, Microsoft is
mostly out of your life right now Yes, Microsoft, it was just Microsoft.
This isn’t an anti-Microsoft stance.
It’s just an anti what that
meant, you know, to be.
It just, it bogs you down,
it creates a lot of overhead thatyou
don’t need once you get everything to the cloud.

Is Microsoft over?

No, Microsoft’s not over any more than IBM is over.
You know, these big tech companies
adapt and change and
get to be different kinds of companies, but they don’t go away.

You do a lot of blogging.
You ‘re an early blogger, right?

Right, and definitely
that sort of raised your
visibility in the
press and amongst founders.
To what extent (a) has a
blogging helped you source deals,
and to what extent has
it helped you become a better VC?

It certainly helps me source
deals, but I think
the thing it does more than that
is it helps us become better
investors because were able
to put our investor thesis out there every day.
Just like I was just saying
were interested in investing in the cultural revolution.
That ‘s a statement we
make, and then we can
start to work that
investment thesis publicly with literally
hundreds and thousands of people
who can come in and
engage in Conversations about what
that means, people will tell me I’m an idiot.

People will say, oh, that’s really smart have you looked at this.
And you know, that changes the way we think about these things.
It allows us to
become more and more granular and
specific about these ideas, and
it leads to I think,
a very, it leads
to, I think an
evolved investment at thesis.
We’re evolving our investment thesis real
time publicly and I think that’s really valuable.

So let me ask you
about a few of your investments
and if you can think back to
when you first met the founders, what
was it about them or
the company that made you want to invest?

The thing that I have come to
appreciate most about founders
is a deep obsession about
one thing over a long period of time.
When we first met Joshua
Shafter he had launched three
versions of what were sort
of social bookmarking, that he
had then shut down before he launched Delicious.
Dennis Crowley has been working
on what has become Four
Square since vindigo, which was
a flat iron portfolio company that
we invested in over 10 years ago.

Jack Dorsey you know, came
up with the original version of twitter
back in the late 90’s and
he had been obsessed about that
idea for almost a decade before he built it inside ODEO.
And I can go
on and on and on, but that
sort of maniacal obsession about
a specific issue and a
specific domain and a specific
kind of service, is the
thing that to me is the
most compelling trait of an entrepreneur.

I think Jack Dorsey once said,
when they were looking
for the first VC, is
they were looking for a, they knew that they
were going to get a
boss that they couldn’t fire.
The relationship between the
VC and the entrepreneur
is very unique one, right?
You’re the boss but you can’t be fired, in fact you can fire them, right?

Yeah and Twitter also was a founding team not a founder.
So, I really like
to talk about the
founding team at Twitter in the context of the Beatles, right.
So Ev is you know,
Paul, and Jack is
John, and Biz is
George, and Jason is Ringo.
And so when you
are dealing with founding team that’s
different than when you’re dealing
with founder, Dennis Crowley
who’s gonna come up next, I
think of as a founder
even though he has a team around
him, he was
the person whose had that
idea and has been obsessed about
it for a long period of time
and he’s built a
company around him and that
idea and Twitter evolved in a different way.

So Twitter is a fascinating company.
Just, like, if you
look at the corporate history, right, especially
through the eye’s of the founder.
So Jack, was the early
CEO, there was all these
issues with scaling and then
he moved aside and Ev
became the CEO, but he didn’t
leave, he was always, he
still remained the Chairman, right?

And then now he’s back as the Head of Product.
Now Ev is gone so, here
seems to be a lot of revolving
chairs, but the same people are kind of revolving in the chairs.
What’s going on there?

Yeah, I think it’s getting the
right person for the right job at the right time.
I mean when you have a founding
team, you have the possibility that
different people can take different
rolls at different times and I
think Ev, for example, was
a really great CEO for that
period of time where Twitter
had to go from being a project
to a company and had
to evolve into an organization
with managers and hundreds
of employees and you did a great job at that.

I’m not sure that
Ev would have been the right
person to be CEO at the
very beginning when Jack was
the CEO, and I think
Jack did a great job during that period of time.
So I think that we
‘ve actually benefited from having
different people playing that role at different times.

Right.
So, Twitter started out as
a very open ended platform play, right?
They kind of invited the community to come and build apps.

Right.

For it, and then about
a year ago, they started
closing off those options and
saying, well, actually we want to
build, we want to
own this part of the stack.
In fact you wrote a
post about people should stop filling holes.

Right.

Which from the outside it almost look
like to me it was an
unofficial memo from Twitter and
rode it.
Did they wait too long to close those options?

I think the thing you gotta remember
with Twitter is it started out
as a side project inside another
company, grew very quickly.
They spun it out into its
own company, but even then,
it was growing faster than the company was, they could support it.
And if you look at –
Twitter had no clients other than
the web client, but they had
an API, and so all
these people built mobile clients
and desktop clients and all these things.

If you’d really thought about
Twitter from day one as a
entrepreneur thinking about how am
I going to build this you would
have launched it with all
the clients out there but
they didn’t, and they are just
playing catch up, constantly playing catch up.
Mostly on scaling issues, couldn’t
really get to a lot of
the other stuff, but they had this robust API
that everybody loved to build on
top and so, Twitter kind of happened.

It wasn’t planned how Twitter happened.
Twitter happened.
And then, management team
for the past 3 or 4
years has been trying to get
their arms around it and turn it into a business.
I think they’ve done a pretty good job at it actually.

How far along are they?
They are very far along, a lot farther along than most people know.

Really.
So you’re feeling pretty good about the monetization?

I’m feeling really good about Twitter right now.

But getting back to the platform.
It seems like now they’re either building
or buying those platforms.
Has the Tweet Deck
a bunch of other clients.
Let me put it
this way, do you feel that the
holes had been filled or how many holes left to be filled?

Well the, you
know, I think
on the client side anyway, it’s
pretty clear what Twitter’s
objectives are, and I
think most of that scenario
has played itself out and
I think that’s probably the
greatest set of holes that
were out there that were on the client’s side.
There are a few other areas, I
think, that Twitter has, advertising
for example is one which
Twitter has a lot of
specific Plans for,
and I think they’ve been reasonably transparent
about what their strategies are around advertising.

But I think it may be that
there are some advertising companies out
there that are headed
for a little bit of a..

Collision?

Yeah.That
happened with Facebook too, right.
You know, my friend Seth Goldstein had
a company called Social Media that built
one of the first ad networks on
Facebook, and one day
Facebook decided they didn’t really
want Social Media to exist, and they didn’t.
So in But what
message does that send out
to other developers and start
ups that they build on
the platform, they build business on
the platform and then they get the rug pulled out from under them.

I have a saying, don’t be a
Google bitch, don’t be Facebook
bitch, don’t be a Twitter bitch, be your own bitch.

OK.

I don’t have a response for that.

So if people have
questions, line up here
on the mic and I’ll
call you Okay, another
question I wanted to ask
you was about venture capital and how
that,, you know, the whole
venture capital industry is being disrupted for a variety of reasons.
It’s cheaper to build a company.
Companies don’t need as much capital as they did at one point.

Right.

There’s a lot more more capital, angels.
Got Ron Conway there who started
as an angel, now I consider
him sort of a premium VC
but he’s like a micro VC.
But, what’s the difference between angels and
super angels and VCs who
invests and seems a lot
more competition for that, and prices are getting bid up.

So, it’s a different game, right?

It’s a different game.
Venture businesses change changing a lot.
The good news is that there’s more
capital than there has
been in a long time in
the venture business, and it’s much
more stage agnostic or maybe
not stage agnostic, but there’s
capital at all these different
stages, so there’s lots more
angel money, there’s lots more
seed money, there’s lots more
early stage money, We want more later stage money.

So just more capital out
there, which is good news for entrepeneurs,
not particularly good news for investors.
But we still can get
in to the transactions we want to get into.
I think if you have a
reputation for being a
entrepreneur friendly investor who is
savvy about the market you
invest in, who has
worked with a lot of good
companies over the years, and
has built a good reputation, you can still get into the deals you want to get into.

But you have, there’s a lot
of venture capital firms out there raising billion dollar funds.

Right.

Because they can, right?
You just raised a new fund,
just to put money on the shelf in case you needed it.
But you raised about 165 million dollars.

That ‘s correct.

So why so modest?

I just don’t like managing a lot of money.
I think that it creates
a big burden in terms of what you have to return to your investors.
If you raise a billion
dollar fund, you gotta return
three billion dollars to your investors.
That’s a lot of money.
Think about that.
Let’s say on average you own
ten, fifteen, twenty percent of
the companies you invest in.

In order to return three
billion dollars, you got to
be involved in companies
that end up being worth, you know,
somewhere between 15 and 30 billion dollars in the aggregate.
That’s a lots of companies.
One Facebook will do it.
But, you know,
one Facebook, Google come along once a decade, right?
So, it’s just too hard.

I don’t, you know…I don’t think
that it’s any fun
managing a billion dollars.

Okay.
Let’s go to the questions.
There’s a question right here?

Hi, this is Frank Denbo from Somsical.
My question is about making investments in highly regulated industries.
So, I’m creating something in
the music industry and I’m wondering
what you think about as an
investor, in terms of
the, you know, the industry, if you
feel like, you know, there are
certain regulations and things aside from
the actual idea that might be important to think about.

You know, the music business is an interesting business.
I don’t think of the music
business as highly regulated, but
it’s controlled by a
small set of companies and
it’s a very difficult business to operate in.
We only We have one company
that’s really tangentially related to
the music business, and that’s
Sound Cloud, and they’re really
focused on audio, not just music.

And we probably wouldn’t have
made that investment if they were just focused on music.
I just think the balance
of power in the music industry
is so concentrated that it’s very, very difficult for entrepreneurs.

Okay, Saul?

Saul Hansell Hey, Saul.

I’m really interested in
you The way you
think about the modernization of Twitter
in the context of what I thought was
the most interesting thing about
the company, which is how radically open it was.
There was a standard where people
can have their entire experience with
Twitter on sites or
applications or devices that the
Twitter company had nothing to do with.

And I think that openness and
the value created for
companies and users is, arguably, a big piece of their success.
It’s a company that made a little bit of money and created enormous value.
As you and your follow on investors get aspirations.
My question is, how much do you cut that off?
Do you say if you want to do
this thing on an
application, or do this
kind of other thing, you have to do it for Twitter.

You make it less open, and
how do you balance getting a
fair return for you, and
actually, with choices that
eliminate the value that’s
gonna create an ecosystem, and does
that slow the growth over time?

I think there are four
platforms that really interesting to look
at right now, Android, Apple, iOS,
Facebook and Twitter.
And I think you see all of
those platforms more or
less trying to figure out the answer to that question.
I think Android would be
the most open, then Twitter,
then Facebook, then Apple, and
I think that the choices
you make in terms of how
then you want your platform to be,
on two dimensions.

One is how large do
you want to see the ecosystem and how well do you want monetize it.
I think if you’re radically
open, you’ll have this immensely large
ecosystem – which is
I think what Android is headed towards
– that is largely “un-monetized” for you as the platform creator.
And I think, you know,
on the Apple IOS side, you
have a platform that’s highly controlled,
that you can monetize and
then, you know, a lot,
and then, you know, you just kind of go down that dimension.

And I think companies just need
to see where they need to
decide where they want to be on that spectrum.
Anywhere on that spectrum is okay,
but you just have to choose where you want to be on it.

Okay, so we have time for one or two more questions.
Quickly, please.

Yeah.
Hi, Fred.
Percofi.

Hey, how are you?
Nice to see you this morning.

Hi.
I asked if you could
think up a company that had
lasted more than ten years and you just came up with one.

Well, you asked me for…

So
many companies have been eaten by
these larger companies, you know,
like Skype and I just wonder
if your revolution is eating its children.

So this is in
reference to a blog comment on
abc.com over the weekend.
You asked me for one company
that had survived more than a decade, and I gave you one company.
But, I think it is true
that the technology industry eats
its young, and it’s very,
very hard to remain at
the height of the technology industry for long.

Google would seem so dominate
in the business three years
ago and people were
starting to talk about antitrust issues
now looks like, an also
ran compared to Facebook
and I think in three years
Facebook will look like an also ran compared to someone else.
It’s just the nature of the
business and I think that’s
what makes it great to be
an entrepreneur, and rankly what makes it great to be a venture capitalist.

Ok, well Fred, I know
you you have a board meeting, so
thank you so much for joining
us here and I think
it’s great that, you know,
we have a New York
city venture capitalist who’s kinda
leading the charge here with all these new companies.
Everyone give a round of applause to Fred.

Thank you very much, it’s fun.

So next up we’ve got
Dennis Crowley the founder
of Four Square, and Michael
will be interviewing them unless
they’re out in the back there.
So please give a round
of applause to them, and

Interesting.

From New York, even.

Even from New York, yeah.

Yeah, what do I gotta do?

What’s that for?
Oh, that’s where you’re setting up, okay.
Dennis ?

Hi, hello.

Everybody welcome Dennis
Crowley, the founder of Foursquare.
So, you have
an announcement to make today?
We’re gonna do that in a minute though right?

Okay yeah, thanks for having me on the program.

Thanks for coming.

Yeah .

Let’s see, last night we had a quick talk.

Yeah.

We talked about this big announcement
you have coming up here in a minute.
You said you are
happy to talk about anything at
all on stage, anything, as
long as we don’t talk about evaluation,
acquisitions, or fundraising?

Yup, that’s right.

So, my first question
is there’s rumors
that you’re raising a new round now
and that you’re either
going to do that round or just
take an acquisition.
What’s the evaluation on that round
and how do you compare that to
a possible acquisition by Google or someone else.

So I think I can string three
no comments in a row
for that, but yes I
have to give you our boilerplate; we cannot
comment on evaluations, acquisitions, or fundraisng process.
Or we have nothing to announce.

Alright, well that’s all I have for you.

Good, thank you.
Good night.

How’s the modeling thing going?
I know the GAP commercial,
which hopefully we’ll be able to show off here.
You have done some GQ stuff.
Is that taking up a lot of your time now?

Yes that is about all we are doing now.
We run around from one shoot to the next.
No, the Gap stuff was for charity.

It was for charity?

Yeah it’s a good way to
spread the word of Foursquare
and donate some money to
Camp Interactive which is a
charity in the Bronx.

They were going to show it up there, but I guess we’re not gonna get it.
So let’s talk about the real stuff now.
There we go.

Next slide.

See it?
Isn’t that great?
That was for charity.

Well, it was for charity, yeah.
And also if you saw it had
said, you know, “Dennis and Naveen
of Foursquare,” so it’s a good way to kind of spreading the Foursquare.

Are you wearing any makeup in that shot or is it?

I’m wearing a lot of
makeup, my hair is
styled, and I’m not holding Naveen’s arm.
That’s Naveen’s hand.

Did you get to keep the clothes?

No, we didn’t
get to keep the clothes, but my
mom got me that exact same
outfit for Christmas, and she thought it was like the most hilarious thing ever.
It kind of was.

I wish you had worn that outfit today.
That would have been great.

It’s really hot.
It’s really heavy.

O. The reason I brought
this up wasn’t just to humiliate you.
Actually, it’s seems to me
that, you know, you’re a
bit of a rock star here in
New York, sort of a
poster boy for, you know,
start up entrepreneur, successful start up entrepreneur.
I think in many ways
Kevin Rose was that
for quite a while in
San People will quick to tear them down when things started to go wrong.

Are you afraid of that at all here?
Do you feel like maybe you’re becoming too much of a rock star?
Would you rather people toned it down?

I don’t always see it that way.
I see it as what we are doing as a company.
We are kind of like public
figures and I think I have
always been a public figure on
the Internet since 1998, Yeah.

when I started doing the first round of things online.
To be honest, in the
first round of the dot com
days, I looked up to
the people that were in Silicon Valley, insiders.
I used to work at a
company called Vindigo and the
two founders, Jason and David, they were the guys that I looked up to.
And it’s kind of,
I’m starting to understand now, I
think that there’s people that look up to us in the same sense.

Hey, we went to
being unemployed to doing interesting
things to turning the things that we’re excited about into a company.

Yeah.

And you know, that’s exciting
for us, but I feel like
we’re inspiring other people to go down the same path that we went down.

OK.
Last year at Disrupt,
you told us that the
product is ten percent of what it needs to be.

Yeah.

Last night we talked about some
of your recent stats think you
said, did you say half a billion check-ins?

Yeah, it’s actually more than that.

In the last year.

Six hundred million check-ins.

Six hundred million check-ins in the last 12 months?

Well it’s total now, yeah.
So it’s accelerating, yeah.

OK.

So if you look at the whole database, it’s about 600 million.

How many a day?

It’s about three million check-ins a day.

Three million?

Yeah, some days.

Yeah.

Tuesdays are lower, and Saturdays are the biggest days.

And you’re approaching 10 million, at least registered users at this point.

Yeah were pretty close we are somewhere between nine and ten right now.

So, you talked about, besides that
is great, you talked about
all the data your sort of gathering.

Yep.

And things you want to do with that.
Can you talk a little bit about that, like, what you’re going to do with that data?

Yeah, I mean, when I said
that last year, like, there’s, you
know, we were only ten percent of the way through the road map.
There ‘s, you know, there’s certain
things that you can do with a
scale, that you can’t do without scale, and it’s scale in certain levels, right?
So we’ve got 60 people now
working at Foursquare, so we’ve got
people that are dedicated just to
machine learning and coming up with recommendations on things.

We’ve got 600 million check-ins, that’s
a lot of data that allows
us to flip through
the types of places that people
are going to and use that stuff for recommendations.
Then we’ve got a critical mass
of users, like almost 10 million
users and these people are
kind of along for ride with us,
They’re banging on the stuff that
we’re building, they’re giving us feedback,
and it’s kind of like,
we put those three pieces together, we can do the stuff that we haven’t been able to do.

Okay.
There’s a rumor
today that you
guys are going to do
with deal with Groupon similar to
the Looped deal…partnership.
I imagine it’s, you
know, people check in or they’re
near something where there’s a Groupon-type deal.
Is that happening and when?

Is that what?

Is that happening – this partnership – and when?

Oh, well, I guess the fourth thing is I can’t really comment on partnerships either.
But, you know, I think
it goes without saying that we talk to people in this phase.
We try to figure out the best
way to…

Just give me
this one.
I mean, no one’s evening paying attention, like…You can just say.
You doing a Groupon deal?
Like…

Well, we…you know, we talk to lots of people.
We have nothing specifically to announce on that.

You’re not going to budge on that one?

Not what?

You’re not budging on that one.

Yeah.
I should have said there was four rules instead of three rules.

How is monetization going?
That’s not one of
the four, now four things partnerships
monetizations, I’m allowed to ask about, how is that going?

No, you are.

Do you have revenue?

We’ve generated some revenue, mostly
off of a lot of the stuff we’ve
been doing with Brendan Badges and some of these other partnerships.
It ‘s interesting because
I get these questions from people
a lot, like how does Foursquare going to make money?
Do people here understand what the Foursquare revenue model is?

No?
Yes?
Does anyone understand this?

Why, yes?

No, maybe this early, thank
you, in the front.
No, I mean, the products that we’re
building they’re turning out to
be very, very efficient at
helping our users find
their way to new businesses, and helping
those businesses keep and retain existing loyal customers.
Like a lot of the stuff that we’re doing is focused on loyalty.

Who are your best customers?
How do you bring them back in on a regular basis?
I don’t know if you
guys have seen the merchant dashboard
that we built for a lot
of these merchants, but we show
them, these are your best customers, these are the stats about the folks that are visiting.
Here are things that you can do
to optimize to get people in
the door more efficiently, or get people in more often.

I think those tools are going to be valuable to local merchants.
I think that’s going to be one of things that that we’ll be monetizing.

So, what is revenue now?
Is it less than a million total?

Yeah and again, revenue,
non-disclose.
But the stuff that we’ve been generating from revenue is, or the revenue that we’ve been generating so far, it’s…

I’m adding that to the list then, of things we can’t talk about.

Are we on five now?

We’re on five, yeah.

But if we’re going to end this thing in like five minutes, then.
But, no, the revenue that
we generated is so far has been
the stuff that’s outside of what
we expect the majority of the revenue to be from.

OK.

We’re not charging local merchants for the tools that we built yet.
Everything’s self service.
Everything ‘s free, you guys have a…
You know your local coffee shop or
the guy who runs the local
bar or cafe, you should get them on the Foursquare platform.

You want to talk about this new announcement?
Now?

I’d be honored to.

Do you have it ready?
OK, so it’s all yours.
That should work.

How do you?
Although the light’s not on.

Well presumably if you put the phone down.

It turns on?

Things will happen.

I don’t know how to do that.

And backstage, if we could
turn on the overhead projector?
There we go.

Did someone just flip the switch or did that magically happen?

It’s on now.

OK.
So do you guys remember
there’s a whole bunch of noiseis
, I guess.

So what is that device we’re looking at?

This is the INQ Cloud Touch,
also known as the Facebook Phone.
You guys remember the announcement from back in February, or so?
So, this is made by the folks at INQ.
Hi.
Thanks for putting your hands up in the front.
I’m like, hey.
This is made by the folks at INQ.
It ‘s available right now in the UK.

It’s hasn’t come to the US yet.

Do you know how many of those have been sold?

I don’t know actually.
Frank’s here, we can ask Frank after.
But it’s an Android phone that has… so, this is the standard Android screen.
But when scroll to the right,
just like the widgets are, you
know it has all of this Facebook content as well.
And so, these guys have done a
great job pulling a lot of the Facebook graph into Foursquare.

And so, and what we’ve announced,
or what we’re announcing today, is that
if you scroll to the left, you end
up seeing, you know, the default
view for location now is going to be all the Foursquare data.
So this is a view that any user with this phone is going to see.
And its just really a list of the things that happen to be nearby.

Now right now we’re on 55th and
9th so I can flip
through and it’s showing me, you know, photos that were taken from Foursquare.
these are interesting venues that came
out of the explore tab, which is
the recommendations filter that we have built into Foursquare.
So these are the most interesting things to do nearby.

There’s a couple of quick widgets.
You can click the check-in button.
You can add this to your to do list.
It shows you if there’s a special there or not.
So, you know, we’re thinking this
as, we ‘re seeing that this is a great
way to introduce people that, introduce
it to folks that have never used
Foursquare, that may be Facebook users.

Introduce them to all the
interesting things that we’re doing around
recommendations and discovery of local places and places that are nearby.

And so this will, this is
not available yet on this
phone, but as this phone
gets its AOS upgrade, I think
it’s later on in the summer,
you’ll be able to see this
and all users will have access to this.

Alright, if you have questions
for Dennis, go ahead and line up
at, there’s two microphones at least here in the front.
We’ll take a couple of questions.

Can I also say one more thing about this?

Nope.
hat’s it, you’re done.

That’s it, I’m done.
I think one of the most interesting
things about this, is that it’s
all built off our API, so
there’s no real special arrangement with the guys from INQ.
It’s like they were interested been
doing this, we’ve pointed with our
API documentation, they’re working
with our, you know, platform evangelist back at the office.

And this is stuff that, you know,
that, you know, we’ve got almost
ten thousand developers that are building
off the API now and as
we’re starting to hit that critical
mass we’re seeing these things get
a lot more interesting and like
a lot more viral and just reaching
a much larger audience so it’s really exciting for us.

So there is no commercial deal at all with them?
It’s just No.

They’re using your API?

Yeah, they, I mean this has our “China make the best phone possible”.

Yeah.

Their thinking is like if
you pull in location data from
Four Square it makes the device a lot more interesting for everyone.

Last question and then we can go to other questions from the audience.
You know there was a lot
of worry in the tech
press when Facebook launched a competitive product.
It’s been a while now.
I think you guys have continued to grow.
Has the growth rate increased since Facebook launched?
Has it been studied?

How are they as a competitor?

Yeah.
The growth numbers have been
great like we’ll still seeing, we
pick up almost a million users
a month, you know.

Yeah.It
‘s funny about a month
and a half ago we were celebrating
the fact that we got 2 million check-ins in a day.
Then a month and a half
later it’s like okay now we
are at three million check-ins a day,
so everything’s accelerating for us.
I think, you know, the Facebook stuff
is interesting because, in the
same way that, you know,
Facebook and Twitter taught the world
about sharing, I think Facebook
places is teaching a
critical mass of users, like, hey,
location is interesting, interesting things come out of it.

Yeah.

And I think because that’s the core
thing that we focus on as a
company and a product, like
it enables us to make just
more interesting products around location
and I think people will ultimately start gravitating towards us.

Sure.

We have a question here.Just
state who you are as well
.

Frank Dimball from Sonsical.
My question is about the direction of Foursquare.

So when I first heard about
it, it was pitched to me as like a game for real life.

Yep.

So you have badges and leader boards and
things and especially with the explore
tab now, it seems like you’re
kinda moving away from that and
just being like a tool for location based services?

Yeah?

So, I’m wondering like which direction
you guys think you’re gonna go
into, you gonna have more game
elements or if you are you gonna help out in the real world?

Yeah, I never really thought thought of it as a game.
With a game, it’s like winners and losers and I didn’t want to go down that direction.
I’ve always thought of it as a social utility.
Even going back to the dodgeball days.
Dodgeball was a social utility that
was meant to be fun and playful.
And it’s kind of the same
thing that’s true of course, we start
with the utility, use some game
mechanics to do some of
the on boarding and really use
game mechanics to make it fun and interesting, maybe a little bit competitive.

But it was never really meant
to be like a game with a beginning and an end.
You know, the thing that we’ve always
had our eyes on is all the
stuff we can do to
help people to explore the
world around them in different ways.
We were talking about finally being
able to do the things we want
to do because of the critical mass of users and data.

Just the right employees like that.
That is what you see in the explore tab.
So the direction that we are
going towards, it’s all about,
okay, you’ve got this device in your pocket, it’s a network sensor.
Like, we should be listening to everything
that’s going on, taking into
consideration all the things
that you’ve done, based on your
Foursquare history, and maybe the
history from other grounds, and then
we should be able to serve up, like
what is the best thing for you to do right now?

Should you walk down this direction and visit the shop?
Is there a friend you should
know that’s a couple blocks away,
and it’s really, you know,
taking advantage of the sensors to,
just, you know, introduce people to new and more interesting experiences around them.

Thank you.

Can I see the phone?

Yeah.
Yeah.

May I?
Is it your personal phone, or is it one I can play with for a second?

This is, no, you can play with this one.

It is your personal phone?

No, I have an iPhone, I’m
switching over to, I’ve been playing with Android more often now?

So your email isn’t hooked up to this?

No.

Just opening up Gmail.
Nope, it isn’t.
What advice do
you give to young start ups?
I’m sure young entrepreneurs come to
you all the time, maybe
they’re just starting, or they’ve started,
and maybe they’re going to, you
know, have somebody like Facebook compete with them?

Yeah.

Do you give them advice, of like,
you know, don’t worry about the competition, just focus on your product.
What kind of advice do you give companies?

Yeah, I think, are you just trying to distract me so you can go through my phone?

You what?

Are you just trying to distract me so you can go through my phone?

No, no, I’m not doing anything .

OK.

If I’m gonna do that,
I won’t do that in front of 2000 people.

That’s fair.
No, I think some of the
best advice is, you know,
we’ve got our own envision of the
things we want to build, and
there’s other people that are making
noise around us like people
that are being inspired by the stuff
that we’re building, you see a lot of things that look very similar.
You know, I find that it’s most
helpful just to keep executing on
our vision, and like, and if
we start chasing what other people
are doing, whether they’re bigger competitors or
smaller competitors, it just, it’s
a distraction, it’s a waste of time for us.

This isn’t really working.

This is, what do you mean?
Well I’m trying to find nearby, it’s giving me Sullivan’s Bakery?

Yeah, right now, because this
is the prototype, the location is hard coated into it, Yeah.

So, the next version that will
come out will have, you
can see the general mock,
you can flip through some of the screens back and forth.

So, it doesn’t really work yet.

Yeah, it’s like a rough prototype.

OK.
Where are your text messages on here?

Luckily, they’re in my backpack, on my iPhone.

Let’s have another question.

Hi, my name is Andrew Furman, I’m a student at Carnegie Melon.
You keep saying that
you want to
keep you know, I’ve
really thought about, you know, it’d
be cool if I could say, hey
I’m going to be at this venue at this time on Foursquare.

Yeah.

Have you thought about that, or can
you comment on what the big, next feature is going to be?

Yeah, we do think, Foursquare
is very much based on the present tense.
Like what is happening now, what’s happening in the next three hours or so.
We haven’t really done anything in
the future tense, a lot of
what we’re doing is in the past tense right?
So we look at the history of all the things you’ve done, and that’s the power of the explore engine.

So, I think there’s an opportunity
to do some of the future planning stuff,
and that’s stuff that we’ve been paying a lot of attention to.

Internally, as a company,
we have a rallying cry every quarter.
For Q1, it was like every check in counts.
Right?
We wanted users to feel
like every time they were checking in it was actually going to some greater good.
And that’s why the game mechanics got
revamped, and that’s what happened with the explore tab.

Like, every check in, no
matter where it is, is contributing to that algorithm.
For this quarter, it’s like make the thing lighter and faster and easier.
I think the product is pretty good right now, I don’t think it’s great.
It’s a little bit slow,
it’s a little bit heavy, there’s things
that we definitely need to fix a lot of the stuff we focus on in this quarter.

What is it, it’s May right?
We should be launching a bunch
of stuff, next month, that
fixes a lot of those core issues.

We have time for one more question.
Who really wants to ask a question?
You okay with that?

I can be quick.

Well we don’t need to be quick, we can only do one person.
Let’s go to here.
If she’s quick, then we’ll go to you.

Alright, thank you.
My name is Michelle Sun.
I work for for a
blog on China Tech called
Technote and I was
just curious that Foursquare, like
all location based services, how
do you tie to margins on the ground?
And what are your plans internationally and especially in Asia?
Thanks.

Sure, and what are our plans in general or with merchants?
Oh, you got cut off.

Yeah, in general, like internationally.

Yeah, it’s interesting.
About 50 percent of
the users and usage for Foursquare
is outside of the US, which is a huge plus.
The first time we ran it it was 40 percent.
I was like No way that’s true.
We ran it again, and we’re seeing huge growth internationally.
It’s really coming from all over.
We see big pockets in Europe.

Are fifty percent of the check-ins outside of the U.S. as well?

Yeah, users and usage.
Yeah.

Yeah, OK.

So, we see big pockets of usage in Europe.
Brazil is lighting up for us right now.
Like, a lot of Southeast Asia.
Japan is huge for us.

Did you say Brazil was the largest?

Not the largest, but that’s, we’ve
seen a huge growth spurt as of recently.
You know, we’re thinking of, we’ve
translated the app into five
different languages and we’re kind of
planning what the next four languages
are going to be, based upon like
the other areas of the world
that are really picking up with Foursquare usage.

We haven’t, we don’t really
have like a strong like a policy around international expansion, it’s just been happening.

Are you,you’re only English?

No, no, no, we’re in five languages.

What are the five languages?

Actually it’s six languages: English, Spanish,
German, French, Italian, Japanese.

Yeah.

And we’re looking to do
a couple of other languages later
this quarter as well.
So we haven’t had a real plan around international expansion.
It’s just been happening.
You know, as we start to
grow the company, we think about,
like, do we have to open European office.
We’re have to open an office in Asia.

Those are things we’re going to have to think about within in the next year or so.
But there’s no formal international expansion plan yet.
It’s just kind of happening, and we’re along for the ride.

I can do a minute total question and answer, so go ahead.

I’ll skip to the question, so there’s Google Places.
Who does mission data, and mission
usage integrated data and social graph based recommendations.
Which one do you see winning in the long term and why?

Are you talking about just the API just the Places database?

No, the whole system, the whole ideal.
Are you going to trust the machine
more or social network and usage generated data?

Well in terms of what
product wins, I think that we definitely win.

Be more specific on places on Foursquare, location places.

Yeah, it’s interesting.
If you look at the stuff out of the
API, I think one
of the reasons our API
is so interesting to the developers
is because it’s You can
take the data, you can share it however you want.
We’re not held down by licensing
restrictions because the 15 million
venues that have been added by
users, those are user generated content.

We can do whatever we want with it.
The developers can do whatever they want with it.
It’s an interesting data set, so
if you are using
Google places API or the Facebook places API, you’re
basically using other aggregated data sets from elsewhere.
One of the things that is really
interesting about the Foursquare one is
that you get every cafeteria in the googleplex.

You get every classroom at NYU.
You get strange, you know
you get train stations, just interesting
places that people tend to congregate, right?
So it’s a much more colorful database.
I think represents, not just
merchants, but the type of
places people want to go
and the type of places people like to share that they’ve been there.

So I think that gives us a slight advantage there.

Are you getting more check ins via the API?

I’m sorry, we’re done.
You’re the one who told me
I have to wrap up now,
and then now you’re This is a good question.

I don’t know what the actual breakdown is.
100 percent of the check ins come from the
API You know this phone,
the apps that’s running on
this are built off the API, but our own apps are built on top of our API.

Yeah, but that’s not what he’s asking.

What percentage of check ins?

What percentage come from elsewhere?

Your half.

I don’t know what the number is.
I can follow up with you, but the majority of the stuff is coming from our clients.

Thank you.
We’re gonna have to end.
Sorry.
Dennis, thanks so much for your time.

Cool, thanks for having me.

Thanks for announcing this on stage.
Great.
Yeah.

After you.

Great, thank you.

The what?

Great show!

Thanks, its your show now!
So you, how the hell
did we both end up at AOL,
that’s what I am trying to figure out.
Like, a year ago, we just
made fun of AOL, right?

We didn’t actually make fun of AOL.
Remember a year ago, we thought
if we could afford you, we wanted to buy you, remember?

Yep.

We had one meeting in my at my office, after finding out the cost.

We talked about it.

You had talked to our
CEO, Eric Hippeau, and we
thought, “wouldn’t it be great
if we brought Mike and
Tech Crunch into the Huffington Post?”
Then we realized that we were slightly above our budget.

Yeah, I don’t really want to talk about this part of it.
I was hoping to talk about you
less than us but, yeah, we
talked about merging and then we ended up with AOL.
I thought you were going to IPO,
but instead, you’re now
at AOL and you’re
my boss so I actually
have to report to you and
we’ve already had a couple
of sticky situations and is
it as awkward for you
as it is for me in the
sense of I’m not good
at reporting to people, so is it going to work?

Do you think?

So far it has worked.

Yeah.

I think so far it’s been
really good.
As you said we did have
actually one situation.
I don’t think more than one
over the whole issue of
conflict of interest, and reporting,
and disclosing, and financial conflicts
and you and I resolved it.

We worked it out.

And we haven’t even announced our resolution
but maybe we can use the
Tech Crunch conference to
announce that we decided that we
want to use Tech Crunch
as a petri dish for this,
for disclosing and discussing multiple conflicts
of interest that journalists are not
discussing, whether it’s financial
conflicts of interest or conflicts
of interest when it comes to
sources, and access to
sources are in fact people you invite to your conference.

And because you are inviting the CEO
of the company to your conference, you
are perhaps not going to
be as completely open
and same sort in the coverage of the company.
So we found a solution, which
was was basically using TechCrunch
when your redesign becomes public,
which we hope will be soon,
to also have that open
conversation that is not happening at the moment.

Yeah.
Yeah, and I’m going to talk
to Jeff Jarvis later today as
well about this issue a little bit.
But one more question,
I know we are over time, but
do you think the content
strategy stuff is going to work?
I mean, we kind of
live in our own little world at
TechCrunch, and then occasionally we get
poked by AOL, but you’re in it.

I mean, you’re next to Tim all the time.
You’re obviously making the strategy.
Is there any real hope for any of this working?

Absolutely .
I would say its its a
guarantee that it’s going
to work, that’s how optimistic I am.
Let me explain why.
First of all because, look at
what we’ve done already.
You know, AOL bought
the Huffington Post in February.

Yeah.

And we didn’t even
become legal until 6 weeks after that, right?
And here we are we brought
edit and tech together on the 5th floor.
I don’t know if
you’ve been to the new newsroom since
you have been in San Francisco but I’d love you to come and see.
Cubicles are down, we have
a really amazing newsroom
now with great journalists that we’ve brought in.

We’ve hired 130 new journalists,
and we’re hiring another 50 to 60.
Basically the kind of
journalistic newsroom culture that
Jay was talking about combined with that.
We moved staff to the
sixth floor so they can
do their very important job but
not interfere in the day
to day way with what we’re doing at it.

We are creating the
kind of culture which is
open, which encourages all
viewpoints,but which is
an obsession with facts and
fact checking and the great
thing is whether it is politics,
Mapquest, or movie phone.

Nice.

Our goal is to bring better and better story telling.

You just plugged two AOL properties that I.

Three AOL properties.
Oh I love it.

Yep.

Moviefone and Mapquest.

Mapquest is amazing.
I was, I was in bed recently.
I don’t know use it but if you expect.

No Mapquest is a huge
piece of crap compared to Google Maps.

Why?
This is so entirely wrong, OK.

You never used Mapquest.

I have totally used Mapquest.

I would question that you’ve ever.
I don’t want to call you
a liar on stage but I’m calling you a liar if you say you used Mapquest.

Not only have I used map
web regularly because I’m you’re dyslexic.
And if you are an especially dyslexic
person, Mapquest is infinitely better than Google Maps.

OK.

On top we have an infinitely cooler name.
I mean Mapquest is about the journey.

Are we?

And one of the things we
are doing now is we’re integrating
the journey into the destination.
So it is not just about getting
there but what are you seeing along the way?

So I report to you?
Does that mean that at the end of the year or something you’re gonna review me?
In like this was good, this wasn’t so good.
How’s that gonna work?
I’m not good at taking even constructive criticism.

Okay, here’s what I’d like to do at the end of the year.
I’d like to take you to a great dinner.

Yeah.

With fabulous orzo and Greek wine.

The AOL business conduct policy
doesn’t allow us to drink, even
off hours, I don’t think..

I haven’t signed off on
that AOL policy, I don’t
know where you found that.

Yeah I don’t know.
So we’re gonna go out to
dinner, and then you’re gonna get
me drunk, and then we’re gonna
talk about little areas I need to improve in.

We’re going to go to
dinner, I’m going to get
you drunk and then we see
what happens.

All rightnteresting, so far.

Okay, I just want to say one more thing about MapQuest.

About MapQuest?
Yeah.

Because I was in Denver
two weeks ago for
the fifteenth anniversary of MapQuest.

Have they updated it at all in those fifteen years?
That’s okay.
That’s what I love about Michael
that he can just say
anything he wants to even
if its not based on fact, except on background.
On stage you can do that.
But here’s the thing, here’s the thing.

That was mean.

That was mean?

You added that Tech Crunch thing, but.

You told me that I wasn’t checking on MapQuest.
Incidentally, if you go to Andrew Ross Sorkin, who is.

To what?

Andrew Ross Sorkin, who’s in the news this week with his movie.
He will tell you.

He used MapQuest before?

Not only does he use MapQuest
but MapQuest, he says, is
better than Google Maps if you want to get there.
And my goal as the
Editor and Chief now is
to also make it better
about how you get there.
I mean, I just want you
to hear me out here because we
have all these amazing sites around
food, books, travel, and you
can bring all that so that when you start on the journey.

You know a lot
more about what’s happening along the
way and then you can share it with your friends.

I love your enthusiasm.
When you all start using MapQuest.
Just give it a try, OK?

We’re all going to do that, yeah.
Do you own any stock in AOL?

Yes.
I’ve got 25% percent of the
proceeds that I got from the sale, I got in stock.
And then I got additional stock as part of my deal.

No ours was all cash.

You use your own cash?

Yes.

What about your own personal dealers
running a tech branch.
And do you have some stock?

I didn’t quite understand what you asked.
I own no AOL stock.

Peter, that’s a mistake because I
think that if you buy some
AOL stock now you’re going to make a lot of money.

Right now?

Yeah.

Is that based insider information that you have.

Oh, I am sorry I am not allowed.

I’m trying to find exactly
when I should buy and then when I should sell.

Based on no insider information,
I would suggest you
buy it right now like as soon as your off the stage!

I think you might be breaking the law right now actually.

Really?
No, not until you buy it.
Don’t buy it until we check with the council, OK?
If you don’t buy then I’m not breaking the law.

Thank you so much for coming.

Thank you.

Thank you well I
tried to get Bill Keller
from the NY times to try and
debate Arianna but he chickened out, but I think this was actually better.
So, we are running a little bit late.
So, we’re going to take a break now

Wow.
they’ve applauded for every speaker, but you, dead silence.
Oh, there it goes.

So it was
a year ago, here, that you asked me how things were going? And I said i was dead tired, ready to retire and end all this. And you said that’s too
bad because we’d like to buy you.”
And I said “I feel
great, more energetic than ever.”
And things went from there.
So thank you for buying us by the way, I appreciate that.

Give me the report card for one year in.
We didn’t talk about this yet, but Well, your check is cashed.

It was good.

It was awkward when suddenly I
was working for Ariana Huffington,
and I found via some press release.
I felt like that
was something that, I don’t
like working for other people so much,
and that was a little
weird, but it turns out We get along really well.
She mostly leaves me alone.
So, that’s good.

From your perspective was it a good deal?
Was it something you’re happy with?

Yeah.

Would you re-do it?
Would you not?

No, I think really with the deal overall.
And I think both deals actually.
I think the Techcrunch deal and Huffington Post deals. I will
say this, people don’t know this,
last year, backstage, as Michael
and I had this conversation, you told me ‘I don’t have my questions.
My questions aren’t ready for you.’
So we did our-

Yeah.

And we did some joint questioning, and then
this year I showed up and things are much more organized.
By the way, this place is a lot better than the place last year.

It’s a lot bigger and nicer.
It’s funny because now we have all this staff to help with things.
And so, somebody from
AOL has been helping me prep
on speakers, and she actually
works in Brad Darlinghouse’s group.
So, some of the questions she’s recommended,
I think, are sort of interesting based on that.

Talk about how handsome he is and things like that.
Let’s start off with a hard question.
Is
Is any of this stuff you are doing going to work?
Are you going to make a business out of this whole content thing?

I hope so.

But seriously, revenue has
been declining for the most part.
Although you said that display advertising was up a little bit last quarter, right?

Yep.

So, here’s the reason
I think the business one is going be a great business.
First and foremost, I think
the intersection of information
and commerce is a very powerful
place to be for any
business, and when you
add on the disruption with the
Internet, with information, and commerce,
I think where we’ve positioned ourselves
is where the internet is going to
be, and where it’s going,
so there is a device war in Silicon Valley.

All the major companies are battling
each other on online platforms on devices.

Yeah.

Everybody in that space is
using content to differentiate themselves
and my guess is they’re going to do a lot more of that in the future.
And on the consumer side,
if you look at how fast the
Internet is expanding, the top
150 content Sites were expanding
twice as fast as the
internet so you know
if we wanted to skate where
the puck is going I think
AOL is the furthest, the
company probably pushing that on the envelope the most.

By the way, I love the
fact that people think content is
not a great business because it
keeps people out of the business.
Intuit allows us to only
hire people who believe in
that business and I think that’s been
a huge strategic asset for us.

Do you see acquiring more
content companies like TechCrunch and HuffPo?

I think one of
the things we did internally this quarter
is say we were gonna focus on execution and integration.
So we kind of
took a breather from doing deals.
That being said I think
if there are opportunistic things
to, we would do
them and and I’m a
huge believer in content and
content brand so I think we would do more deals.

What are the five companies you’d like to own that you don’t?

I can’t tell you that publicly.
But I have a list
in my head and we have
ongoing discussions with a
lot of people in the space and
there’s nothing imminent that we’re
going to do but I see
five or ten companies I think
are really interesting in the context that.

But, really, what you’d like
to see is sort of a
combined Yahoo and AOL, I assume.

You know, I’d like
to see a, The look on
the face was classic I would
love to see
the content space be very
successful and I would
love to see, what ever
you want to call it. The portal space is not the most popular space in the world.
But I think that is a
misnomer for what the opportunity is.
I think the opportunity is, people
want to have contextualized information and
have people provide information
that’s going to make their lives better and
I think that’s one of the
things we’re focused on, have more
products against over the coming year.

If you were…Thank you.
You didn’t answer the question at all but that was a good answer.
I can talk to you on stage, I just
can’t talk to you in
the work environment and get away with it.

If you happened to be the
CEO We had
a leadership meeting in California
with the AOL executives a few
weeks ago and part of it was, and I’m not going to answer.

I wasn’t invited to that meeting.

I won’t answer to Yahoo specifically.

Why wasn’t I invited to that meeting?

We have to keep these separate.
There’s a Chinese wall.
If you want to come over the wall, I’ll have you next time.

I’d love to sit in on those meetings.

You’re more than welcome to come.
Why don’t you come to the next one?

But sorry, you were saying?
So, you were talking
in that meeting about what you
would do when
you get takes to be
a great company and I think
the great company comes down to three things.
I think one is having a real clear vision for the future.

OK.

Second is having an execution
plan; for that, a
clear execution plan, clear metrics
and follow-through on that and the third thing is the culture.
I think the culture is actually the
most important thing when you
take a giant step back, because it’s how people basically operate.
And, so, regardless of what
business you have or who is
running what business, I think those
three things are absolutely critical,
and the same advice
I got from other CEO’s, I would
give to any other company.

You talk about culture.
It’s interesting, we’ve written about
the AOL culture clashing with
our own, for the most
part we just want to be
left alone.
And AOL, the one thing
is you send us all this promotional
stuff like morale boosting
snow globes, and wine.

Do you keep it?

We write about most of it.

We drank the wine.
It was good.
But the question I have
is there’s these weekly drinking
events and it’s almost
sort of forced drinking, you know what I’m talking about the luge?

Yeah.

And there is actually
a policy against drinking in the office.
It seems like the forced drinking
event conflicts with the
‘no drinking in the office’ and
I’ve even asked on the record,
what’s the deal with that
and are we, because we don’t
really participate, is that bad for us?
Like, my review, will that?

What’s the deal with that?
There’s a lot of drinking that
goes on at AOL.

Well, Thursday nights we have
these luge parties which allows
everyone to get together, and kind of celebrate.

And do like shots of vodka off of an ice slide.

I think that happened one week.
I haven’t seen the ice luge again.
I did catch my
eye when I was at that party for a little while.
But I was working with you in mind.

I would have loved to have seen you, a picture of you doing a shot of it.

There ‘s a reason there’s no picture
on it, because I didn’t do it.

But we also are doing a lot of things.
We have just actually installed speakers in
all the offices and at
5:30 every day we’re having a DJ
play music every night.
And so I think we’re
trying to do a lot of things
that just make it interesting and
creative to be at AOL.
It doesn’t have to do with drinking .

It has to with just the
culture we wanna have, we’re trying a lot of different things.

Are we considered stuffy because we don’t participate in some of that?
Or is that okay?

I don’t want to say this, but I don’t think you guys are considered like that at all.
Obviously because, we care about you and we love you, but.

That reminds me of last
year, when Carol Bart said,
“You have a tiny,
tiny company,” she said to me, right before she told me to fuck off.

I don’t think so, as you
guys do your own thing.
I don’t see any ..

You mean you don’t think about us all day every day?

I do think about you all day every
day, but Thursday night luge events.
I figure, Michael Ennerton, you
probably have your own editorial parties.
What do you guys do?

I’m going to ask you the hard questions now.

Alright.

You know, as I told
you, the person who wrote
these notes works for Brad Darlinghouse.nd
the question I’m supposed to
ask is “Brad Garlinghouse’s team is
building some cool products these days.
When are you gonna start monetizing them?”
So, he owns e-mail and AIM?
and Addition, reader, about.me.

Any revenue at all coming from any of those products?

Yes, as a matter of fact we’re up pretty
significantly in mail revenue year over year.

What is mail revenue?

E-mail.

No, how much revenue?

Oh, how much of it?
I don’t think I can disclose that but its a lot.
So, we’ve done a very good job.

If it was a lot a lot, you’d have to disclose it, right?

Right.

So it’s It’s bigger than a breadbox.

OK.
That’s been successful, and
frankly, I’ve told Brad, for
the new products that we’re working
on in his group, I’m not concerned about monetization.
for those products.
I’m concerned about consumer usage, so, if you takes something like about.me,
which is growing really quickly, I
don’t think we’ve had one conversation
about ads for that product and
I wouldn’t expect to have any
conversations about ads for
that product until we really
nail the consumer DNA for that, and I think we’re working on that.

Brad, on some of our
traditional projects, mail and AIM,
he’s under more revenue pressure, but
for the new products and services we’re
under, its probably the exact opposite.
Like, put non-pressure on them about
monitization because I feel
it’s more important to have great
consumer products and services than it is monetization.

Which execs run Business Alliance?
There’s Greg Garlinghouse.
There is John Broad.

Yep, with Ariana.
You have the most media group in patch.

Okay.
Who runs patch?
John does.

John.
Well, John and Ariana both, yeah.

So, it’s really Garlinghouse, John, and Ariana.

Ned Broadie runs the B to B business.
We service 26,000 other publishers.

And Ned Broadie, which is, yeah.

Of those four, which one
is the most talented, do you think?

Which one’s the most talented?
I think they’re all
pretty talented and they have different skill sets but.

Which one would you fire,
if you had to fire one, which
one would it be?

You know, as of right now, they’re all on my good list.
So I don’t have anybody’s line.

Why is Arianna editor-in-chief?
Why am I not editor-in-chief?

I didn’t think you wanted the job!

I ‘m not sure, but I probably
would have if I knew
that, it was, you know, but
you could have brought them in under
TechCrunch right, so it could
have been TechCrunch and then have
Arianna report to.
I just can’t.

I remember we talked about that last year.

We naming the company TechCrunch?

Yeah .
AOL has.

Wait, wait, wait.
By the way, I’m supposed be your boss here.
Are we doing better this year or worse?
It looks like its a bigger space.
But are we doing better this year, or worse this year?
Revenues, tenants?

What’s that?
Thumbs down, worse this year?
Defend yourself up on the microphone is there a mic there?
Yeah.
There’s no mic there, is there?
Oh, there is.
And we’re going to
need security to escort him out in a moment.

It ‘s a fake microphone.

Only the AC unit keeps coming on.

It’s a little too cold isn’t it?

Well no, it’s just really loud.

It is a little loud.
Yeah, we’ll have that fixed right away.But
otherwise, fantastic.

Thank you for coming, and we’re sorry you have to leave now.

Hold on, how many people were last year at TechCrunch?
Three.
So these are all new customers.

I think we had about 1,700
people last year, this year we have 2,100.

Are we making more or less money this year?

We’re making a lot more money this year.

Yeah yeah, you know
well you’ll see later.
It was great though because before we got to keep all the money.
Now, you know there’s
no incentive at all for
us to be profitable, but somehow…

It seems to be working.

The last thing
I’d like to talk about is,
we talked about Yahoo!
and you’re not gonna talk about that.
My guess is, in a
year there’s a decent
chance that AOL and Yahoo!
are the same company.
And that’s based on –

Why do you think that?

Well, based on internal memos I’ve
been reading.
It seems like both companies are
going to struggle alone, but
together they have a lot lot
of, they have a lot more users.

Do you think AOL is struggling?

Yeah.

How come?

I think there’s a plan.
If you didn’t have
the dial-up revenue, the company
wouldn’t be profitable, would it?

That’s opinion.

That should be fact.
It might be right or
wrong, but it should be fact.
It feels like its getting a little insensitive now.
I’m not an AOL cheerleader.
Although I think that the company
is clearly, I’ve said this before you bought us, is that there’s clearly a vision.
And clearly we’re executing
on that vision, unlike Yahoo!

which doesn’t seem to have
a vision, and we’ll see what happens.

So I think we clearly know where we’re going.I
think we have more work to do,but
if you look at our results from last
quarter there’s a lot
of cost issues that
Wall Street brought up but when
we look at the revenue the display revenue underneath.
I think we’re making tremendous progress
there, and I said publicly
that we want to be in industry growth
rates by the second half of
this year and I think we’re on target to do that.

I think there’s also really exciting
things like Patch locally and other things that we’re working on.
Look, AOL has been
a turn around, we said how it’s a comeback.
I think we’re very clear on what we’re doing.
It’s up to us.
I don’t think there’s any competitive dynamic in
the market that’s gonna get in the way of us being successful.

I think it’s up to us to kind of plow forward, so.

Okay, we get to have one question.
Don Dodge?

Hi.

Hi, Tim Hey Content is
king, that was what we
heard back in the boom times.
If that’s true, it seems
like you believe content is king,
but if that were true, why
don’t pay walls work?
And why does local content
monetize terribly?

So one is local content does not monetize terribly.
I think that people write
a lot of stuff about our investment
patch and other things.
But you know when you look
at the pure monetization, I think
somebody wrote an article saying it’s getting a couple dollars CPM.
You know, it couldn’t be further from the truth.

So I think local’s actually going monetize at a very great level overall .

And I think, second of
all I think paywalls are
going work.
I think to some degrees
people haven’t pushed paywalls far enough or made it easy enough.

And I think there’s two things with paywalls.
One is, what are you
putting behind the wall, and is it worth paying for?
I mean that’s a pretty basic question .
The second one is, what’s the experience of paying?
I think how you pay
actually matters a lot, and
I think if you look back,
I think Apple’s done a great job in the music space.

The process of how you
do something almost as important
as what you get especially in
these micropayment areas, so
I think people do it.
Our strategy has been term
believer in paid content also for the web.
And I think it’s a huge opportunity.
So, and it’ s been
interesting to watch people’s negative feedback on content.

I mean people are so
incredibly negative on the content models overall.

But I think when you look at the
larger dynamics of how
consumers are behaving, how the
device companies are behaving, and
some of the things like Netflix some
other things, it’s very exciting
I think were are at the start of
the next evolution of content and
the companies that focus on and
do a really good job of it
will probably build brands for
the next ouple decades, if not more.

And part of the reason
we bought Techron is because I’m
a huge believer in brands overall.
I think Techron occupies a pretty unique space.
Let me just bring up one other example.
When I left Google to go
to AOL I was also
personal investor, and start ups
in New York City like Betaworks
and other things like
that, and you look at something like
TechCrunch from a brand
perspective, which You might
disagree, it was a mainly California
brand for a long time,
a Silicon Valley brand, but I
think this conference in general shows you What are you talking about?

Were you or no?

We had parties in London and we had a year.
That’s just ridiculous.
We are a global brand.

You ‘re a global brand with
users but I don’t think you
guys have expanded out of Silicon Valley enough.
So, I mean I
think in general, Mike will
disagree, but the fact
there’s 2100 people here and
TechCrunch is a huge part of
New York, that’s what we’re
betting on for the future in all of our spaces.

You didn’t fire me
when I announced that I had
made a bunch of investments in start-ups.
So, I’m assuming that that’s all fine.

I think that’s a good idea, actually.

No problem?

I think there’s a
whole future of journalism
what journalism looks like but I What does it look like?

But I think if you do things
that are negative because you made
an investments you’re going to
screw your own personal brand up in the TechCrunch brand.

Right.

So, I don’t know why you’d have incentive to do that.

I think technically, I violated a policy or something.
I think we’re good right?
On the record?
Everything’s good.
Thank you very much for your time.
Is there anything else you want to say?
Anything like, you know you really want people to focus?
How about this?
If people in the audience that
don’t use any AOL products right
now, except for Techcrunch, the
one product that you want
them to checkout, would it be About.me?

Like something you think is really important?

About.me
is pretty cool.
I think the new …

Who has an about.me
page?

Who has About.me
pages?
That’s not bad.
I think also – how many people in here have businesses of you own?
So, you should also
check out the AOL Sponsored
Links product, which is a
great little product that actually does a lot of revenue, is growing very quickly.
And then I would also
say that if you live in a patch
town, you should sign up
for a patch newsletter because my
guess is you’ll use the newsletter more than use the site.

It’s very useful information; very
local, and I live in a patch town.
I get a lot of my local information
just from the newsletter every day and it takes about five seconds.
It’s great.
All right.

Thank you very much.

Thanks for having me.

And thanks for coming.

Okay.

We’re gonna have a quick session with Jeff Jarvis.
Come on out.

You changed sides.

Hey Jeff, I wanted to mix things up a little bit.
You know on the agenda I don’t think we

Hi everybody, I’m
Scott and this is Kush Bu,
and I wanted to thank everybody
who voted for us in the audience choice.
These are my props.
You ‘re going to
put them out there.
Oh yes, let’s pass them out to the judges, by all means.
So our website is called Happy
Toy Machine.
And our mission in life is
to give users the ability
to create cool, cute and
crazy custom plush toys online.

So you can call us
“CafePress for Toys”, you can
call us “Build a Bear on
Steroids”, but that’s our mission.including
plush toys have done
surprisingly well in a networked
world and 1.7
billion Meanwhile, more
and more customers are getting use
to designing their own custom products
online at sites like Cafepress,
Zazzle, Blanklabel and Chocomize.

We’re combining these two trends to
create something truly cool
and unique for our customers.
So I want to talk a little
bit about some of our current
customers and some of our target future customers.
Our initial website launch is targeted at mostly individuals.
So Sam is 8 years old,
but he’s not too old to
play with plush toys, especially when
you can make them in the shape
of a ninja, or a robot, or an alien.

Jessica is 80 years
old and while she’s not
above buying plush toys for
her grandkids, she’s also not
above buying them for her best friend, Ursula, either.
In future iterations of the
website we hope to target small businesses and organizations.
Hendrick would like nothing better than
to make a run of plush toys for his kids’ t-ball team.

While Andy works for Intel and
would like to do the same for his team’s next product launch.

So are we going to do a short demo?

When users visit our site,
they come to our toy designer
and this is where they can
design their own custom plush toy.
They can change the colors, they can change the body parts.
They can change the decorations, they can
write their name on it, and
do all sorts of things to
create their truly own personal and unique toy.

But the really cool
thing, is that when
your done making your toy
online, you can press
“Build It” and we actually
manufacture the toy, physically
manufacture the toy, and send it to you.
You see some of the samples littered about up here.
You see here a
video of just some of the
things going on in
our factory and this
is the really really cool part,
this is the secret sauce that above
all else enables us to
truly make a unique and
custom experience for our
customers So here’s
a word from our customers: “Happy Toy Machine.”
“Happy Toy Machine.”
“Happy Toy Machine!

Happy Toy Machine!
Happy Toy Machine!
Thanks a lot.
Alright, I was Happy Toy Machine.
I like this guy.
Alright, so judges, any question about Happy toy machine?
How much, on average, are their products?
So, we have two sizes,
the small size you
see here is $30 and the
larger size you see sitting over there is about $50.

And it’s “all-you-can-eat” pricing,
so that includes any features and embroidery you care to put on it.
How does that compare to build the bear?

So if you look at,
we always compare ourselves to
build the bear and so that’s
$30 is roughly the same
as a as a Build the
Bear toy, and we offer a lot more customizable options.

Strangely enough in a
previous life I was a
toy designer, and in
the bitching community And if
you learn anything, it’s the Barbie
model, right, the Barbies that cost
and it’s what you build around it.
So I’m surprised, in a
custom bear, you’re not doing
custom stuff for the
bear, or is that kind of where you’re going next?

That’s where we’re going once we can hire a couple more programmers.

How do you get customers?
How do you, I mean, it’s
expensive to get a brand
out there like this direct to
customers outside of going
direct to businesses, how are you finding customers?

Right, so in
the early stages, and again, we’re
just getting off the ground, we’ve
done it with word of mouth,
now that alone may not
scale the business, and we’re
looking at doing things down the
line once we get established a
little bit like for instance, partnering with
somebody where we can plug
our back end into their front end.

For instance if they have a video
game with a lot of traffic
but nobody is paying for it, and we
can help solve their problems
and they can help solve our problems.

Yeah, a platform where they
can come up with their own
arcs, and you just print.

We are not quite there yet.
We argued to implant pictures,
like upload your own picture
and we’ll embroider it onto the toy.

I know there is a lot of
difficulty in the back in actually making that work.
But is that?
I mean, do you see
yourself more as sort of
a tool for other folks
to key the distribution, where they
come up with ways of coming
up with things that can, the way the bear can look.
You can okay whether it’s actually
feasible and work with them, but than they sell it?

We can do that, I mean our
initial vision is that
we make it, just – it’s about simplicity.
So If we, if we
remove a couple of features
but we make it dead simple to
design and you don’t have any
back and forth and fill out
forms about what you like
and we miss understand what you
like, then, all the better.

I always benchmark, I have
four kids and I always benchmark it to my 6 year old.
If he can use the site
unsupervised then I figure
we’re simple enough.

Is the uniqueness the process where
you can take someone where they
can build very easily and then
you can manufacture with very few
people, or is it, is
that sort of the…

Right, so
it’s in the process, so basically
We we’ve automated as much
of the, especially the design process
but also the but also
the back end process where
we developed software that can
basically massage the inputs
into the outputs that our
machines are expecting, for instance,
and so we can reduce
the manual part of the process to as little as possible.

Why toys versus furniture,
other areas, when they have higher margins?

Maybe it’s just
my experience, because I’m a dad of four.
But, when I looked at
going into kind of a
custom manufacturing, and I kind
of came in at it from the
technology side, and then
I looked at my kids… I said,
well, let’s not try to
convince people to design something that they’re not already designing.

And then when I looked and I
saw my kids, they were going
on Disney.com or Nick Jr. and they’re making these characters.
What if we can suck that out of the computer and give it to them?
And of course when I brought it up to them, they thought it was a great idea.

Could you use it, though?
Because I know, for example, MakerBot[sp?]
and the 3D printing has become
unbelievably huge for corporate purposes.
Is there a business use?

Right, so we did explore
also plastic toys, and
if we go that way
in the future then that could be one way to do it.
This is what I’m curious: could you
sell to Disney, and say
hey I’ll do a lot
of this hard work, you guys,
and, you know, you’re selling to
a much more intelligent audience who
can actually work a little bit
more timely with you
to you’re more
of a B to D play, it
might make more sense to get greater distribution.

Yeah, yeah I didn’t think of that.
That’s a good point.
Very cool.
Very nice.
Thank you.
Yeah.
Okay, well, that was Happy Toy Machine.
The stars of Alley Audience
Choice congratulations for making through this far.

Thank you.

Congratulations those who managed to catch little best choice as well.
And that brings us to the
end of today’s sessions and
it brings us to the end of the whole event today.
So, let’s get one more round of applause for all of our fabulous judges.
Thank you, thank you guys for sticking around.
I know we were running late today but,
but yeah some amazing companies
right at the end so it was
worth sticking around for and then let
me hand you back to Eric.

Yeah so there ‘s an
after party hosted by Media Temple.