It continues to amaze me how VCs point to the economic downturn as a reason for sluggish investing. We all know that at this point they should do exactly the opposite (and a few good ones do).

Information Technology is here to stay as we clearly have not reached the saturation point of its practical implementation, even though short-term M&A and IPO windows have pretty much closed - for now.

But I am especially dismayed by the fact that VCs seem to completely ignore responsibility for the fact that their investments strategies can’t seem to weather the storm and how they continue to hide behind the economic downturn to avoid the disclosure of their bad choices. Reminds you of anyone?

I don’t believe the VC model is broken, in the same way I don’t believe mortgage lending is broken. We will continue to buy new houses - and technologies. Both represent sizable investment returns for years to come. But the risk profile associated with lending money for a home has been miscalculated and I contend the majority of VCs are fundamentally miscalculating the risk of early-stage investing. Birds of a feather.

Here are some of the similarities:

1/ The sheer number of lenders entering the mortgage arena forced an artificial expansion into the low-end. In the technology industry about 790 US investors force a similar artificial expansion down into the low-end. Most entrepreneurs are forced to comply to the “capital efficiency” rule-book or, as I call it, sub-prime VC.

2/ The majority of people working at the mortgage bank cannot accurately assess the risk profile, neither can the majority of people working at a VC firm. The associate in a VC firm (or worse the General Partner), fresh out of school is simply not able to detect disruption. Schools are, by design, setup to teach students about white-swans, not the black swan that usually spawns real innovation.

3/ The lenders took advantage of uneducated buyers, without sufficiently reminding them that buying a house yields a debt, not an asset. Similarly, entrepreneurs are often made to believe they are successful when they land a round of funding, mistaking that for an asset (instead of a liability) and subsequently not paying enough attention to the acquisition of its real assets; new paying customers.

4/ The majority of home-buyers should not have qualified. Similarly, most technology ideas should not. Innovation is only meaningful when it monetizes ideas. So investing based on technology classifications is the wrong qualification of innovation.

As the included chart attempts to depict, the investment strategies in the 1990s and even the exuberance in 2000 produced better variance and returns than the atrophy created by the current VC rule-book. Now, too many investors herd (syndicate) around the same investment strategy, diminishing its returns and making it increasingly less attractive for smart entrepreneurs who refuse to submit themselves to subprime investment rules.

An artificial VC rule-book, sub-prime valuations, lower founder salaries, fewer M&A and zero IPO makes for a very unattractive entrepreneurial playground. If we don’t throw the VC rule-book out of the window, we should expect nothing more than sub-prime M&A and sub-prime IPOs, even when the economy recovers.

The concern is that we are creating fewer companies that someday have the financial wherewithal to acquire its smaller innovative brethren and like the lending market, are stuck with “innovation” that no-one wants to buy. I wrote about that starting more than 3 years back (here, here, here). We need VCs with the ability to spot disruptive business opportunities rather than perpetuate technology gimmickery.

Perhaps we can put the National Venture Capital Association (NVCA) to work on something better than mindless self congratulating statistics of the past and misleading videos of the actual workings of venture capital today. It could instead create more transparency of its members, to stave off tougher selection and regulation from the Limited Partners (pension funds etc.) that are otherwise unavoidable.

We, as collective contributors to the technology ecosystem - not the elusive economy - are responsible for the performance of our industry and our ability to produce real value that can weather any storm, and that means we need to get out of sub-prime VC quickly.

Tags: VC, Investment, Integrity, Innovation, Risk, Limited Partners

Not for a second do I buy into the doom-and-gloom spread by early stage investors citing the state of the economy as the reason for cutbacks. While the economic situation is worrisome, much of it is generated by supposed financial and business experts that are not. To say the least.

Sounds familiar? We have a few of those in Silicon Valley too. When money is involved, some people just can’t help themselves (or rather the opposite).

Investors still have plenty of overhang to invest with and their portfolio companies are on a 5-7 year trajectory to exit, meaning the viability of their choices is determined by the value at the end, not the value in the middle or the trajectory. The macro-economic value of a startup should remain intact in an economic downturn. So, the behavior of your investor will tell you whether you “married” well.

Very few startups should be materially impacted by the state of the economy, because:

1/ Their early stage market penetration is immaterial to the overall addressable “market”, leaving enough room for growth in any economy.

2/ The majority of (consumer focused) startups generate income through indirect monetization such as click-thru advertising, which is somewhat resilient to economic aberrations (even though purchasing may not).

3/ In early stage development, monetization is secondary to land-grab, and smart operating plans have very conservative and immaterial income projections built-in.

So, the fact that investors strike fear in the minds of entrepreneurs is the same as a president of a country at war expressing similar fear; not productive. Sure you need to be cautious and count your chickens, but great investors see this as a fantastic opportunity to double-down on their investments and amplify the market differentiation rather than restrict it.

Access to capital is a serious barrier to entry that can keep competitors out. So, if you are being restricted by your investor at this point it means he’s just not that into you and is doing you more harm than good.

Tags: VC, Markets, Investment, Economy, Consumer

I recently watched an interview on Charlie Rose with Nassim Nicholas Taleb and decided his “Black Swan” theory accurately describes the fundamental problem in early-stage technology investing (and innovation in general).

To paraphrase Taleb; the cultural assumption is that all swans are white (and therefor black swans could not exist). So you think.

Taleb (a partner at an investment firm) believes that scientists, economists, historians, policymakers, businessmen, and financiers are victims of an illusion of pattern; they overestimate the value of rational explanations of past data, and underestimate the prevalence of unexplainable randomness in that data.

The proof that Silicon Valley suffers from the white swan syndrome lies amongst many in the foolish behavior of investors, the predetermined investment allocations based on the tagging with ambiguous acronyms (such as web2.0, SOA, Cloud computing, CRM etc.) and the mindless herding of primarily unsuccessful ideas (or copies of a few successes) at the many popular technology conferences.

I am inclined to take Taleb’s theory a bit further: I believe the majority of people are victims of an illusion of pattern, established by years of (often irrelevant) education infused with the technology Kool-Aid that confined their thinking to a predetermined direction and scope. It prevented entrepreneurs and investors from ever being able to identify true innovation until it had become part of their past. Hence the rampant number of false positives and false negatives.

Taleb further adds that black swans are actually the ones that change the industry, and that the so-called “unexplainable” events (that have no single precedent in time) redefine the future of the whole industry. And so, the search is on, not just for the investor with the right macro-economic views, morals and personality, but also the vision to spot innovation that has no precedent - the black swan.

The noise in our industry is still drowning out the music. We need to change the way we invest and improve our ability to spot black swans or otherwise we will lose the entrepreneurs that can build them. Our excuse today is not the economy but our own performance in producing truly disruptive value that can withstand the test of time. We need to put real entrepreneurs on a pedestal and throw the copycats to the curb, quickly.

Albert Einstein was right all along: imagination is more important than knowledge. That applies to investors too.

Tags: VC, Innovation, Macro-economics, Einstein

Silicon Valley is not dissimilar from the politics in Washington DC in the sense that its existence today is regulated by aristocratic people (investors) who are not up for re-election for another 7-10 years and have created an ecosystem that spawns more false positives and false negatives than any politician could ever get away with.

So, it is not without a smile on my face (as I have been preaching and practicing for years) that I quote Barack Obama’s innovative approach to politics that we in Silicon Valley could learn from:

Strong personalities and strong opinions
Obama looks for strong personalities and strong opinions, while the venture business is often afraid to hire people who challenge its popular opinion. Many technology companies over the years have been invaded by managers who akin to the gold-rush are looking for the gold that is no longer easy to find. We need to change too and cultivate managers that have real experience, strong vision and strong abilities to rally a team around achievable results. Let’s get rid of managers that just like politicians prefer to feed their sex drive (my first boss in the US spent his days watching porn-videos as we prepared feverishly for a major launch) and their 401K with the least resistance possible.

Think anew and act anew
Obama is shaking things up. We should too. The really new ideas in technology are few and far between. We need to build and feel responsible for an ecosystem of new financiers that fund technology ideas that do not fit the mold, rather than continue to create clubs that mindlessly perpetuate businesses that copy few successes or popular acronyms.

Extreme transparency
Obama teaches us how the disclosure of governmental documents is the floor and not the ceiling. Compared to that metric, early-stage performance disclosure is probably more than 6 feet under, or in the cellar. We have no transparency in the venture business to discover who has integrity, and who is poisoning the technology ecosystem. We need to deliver transparency in order to improve the trust in technology companies that keeps private and public investor interested.

High integrity and moral
Obama, when moving back to Chicago, took a job doing what he believed in, not what made him the most money. We need to stimulate people in Silicon Valley with a passionate desire to fundamentally improve technology adoption, rather than continue to feed people who hone their skills just to get rich.

Use it or lose it
Obama evaluates and then commits quickly. And then, when the money is forked over, you are expected to make things happen. That’s how real savvy businessmen run their companies, quite different from the puppet role many startup CEOs play to appease their boards, the source of perpetual mediocrity. We need to grow a culture of buy-in and commit, risk and reward that holds people accountable for the results.

Either we regulate the early-stage technology ecosystem ourselves or the market will do it for us - with much less grace. Already, it is predicted that 25% of the VCs will go out of business soon, freeing up LP overhang for a new crop or reallocation to a new segment. Other countries (such as China) are not sitting still, the performance of our technology ecosystem will now be challenged on a global basis.

The only way not to lose grip globally is to hold the values, that made our country vote for Obama high, and aggressively reward integrity, passion and sincerity over greed. Real capitalism rewards the good and punishes the bad. And the American dream flourishes again.

Tags: Innovation, Eco-systems, Economy, Limited Partners, CEO, VC

We spend a lot of time with consumer technology companies and developed the following rules for success:

1/ Undeniable benefit.
The majority of companies accept the path of evolution developed by the first entrant in that segment and use manufacturing optimization to drive down cost and price as the basis for greater customer adoption. While that is a viable business strategy for some, real disruptive innovation is less price sensitive as it triggers new behavior. New behavior in turn, taps into new allocation of disposable income.

So, rather than looking at the competition, technology companies need to have a sound strategy as to how they will reach 30% adoption rates of the total-addressable-market that the current vendors have not. Macro-economics, the buying decisions and experience beyond just the scope of technology are important to assess.

2/ Impeccable product quality and user experience.
Consumers are both demanding and often uninformed about the technology language that many vendors impose on the use of their products. The combination is a battleground from which only well developed products emerge. Simplicity is key (and too many usability options are NOT good).

Many technology companies develop products with an engineering centric view of the world, insufficiently realizing that no consumer wants to learn a new language to understand how to use a technology product. Consumer centric interfaces and methods are just as important as product intelligence.

3/ Great support experience.
Support is no longer just a painful cost center to a business, great support can be an asset that recovers the mounting cost of product returns and prevent market adoption issues from spiraling out of control. So, great support helps perfect product quality, but only if it provides a direct closed-loop back into development. Great consumer companies engage with their customers directly and get better at defining what a market-ready product really means.

Technology companies with thousands of entries in their support and third-party forums are ignoring free research that will make their product better. Support cost should be captured in the product P&L and managed by a single manager, responsible for R&D and support. Runaway support cost is often the result of a product that simply isn’t ready for prime-time.

So, macro-economics, product quality and product experience are the main ingredients to create success for consumer technology companies and in turn will provide incredible loyalty for the next version.

Tags: Consumer, Disruption

For over 10 years I’ve built and managed growth for early stage innovation in Silicon Valley and more than ever do I believe that building real disruptive customer value is more important than trying to time an acquisition opportunity. You may too, unless of course you are a gambler and firmly believe that the $3 red-white-blue slot machines in Vegas consistently yield the greatest returns. I will not argue the outcome.

Acquisitions remain nothing more than a welcome diversion on your way to building the largest technology empire. And even now when IPOs have dried up any focus away from building your empire is damaging. Real disruptive innovation is resistant to economic aberrations and a consistent focus on customer value remains your only rescue.

I believe that IPOs for technology companies will return (and subsequently spur more pre-IPO acquisitions), albeit not with the same players. Real companies can only be built by real entrepreneurs, with real disruptive products supported by real investors. New participants (on both sides) with higher moral values will be the ones to restore trust in the technology industry and subsequently public stock markets that want a piece of it.

Today, the VCs are stuck with a product of their own aristocratic making. Commoditization of investment philosophies since the 1990s has generated technologies that can best be described as sexy-cool rather than disruptive and meaningful (with a few exceptions). It paved the way for get-rich-quick entrepreneurs that are skilled in feeding the dogs the dog-food, rather than support the real entrepreneurs that have a dissenting view of the world.

So, assuming you as an entrepreneur are for real, how would you recognize an investor that is not. Here are some of my anecdotal recommendations:

1/ Avoid an investor who blames his quick response on ADD
Attention Deficit Disorder is an illness, not a skill. Recommend the investor to consult a doctor.

2/ Avoid an investor who does not carry (or seriously considers) an iPhone
The iPhone is the biggest innovation in consumer electronics in my lifetime (so far) and if your potential investor does not understand its ramification to the technology ecosystem as a whole, it is unlikely he will get yours.

3/ Avoid an investor who cannot price your company ahead of you.
Any technology investor should be able to price the value of your disruption. Ask the investor for the valuation and if he is close to your target, you can share with him your cost model and where you are today on the trajectory. Cost model and stage (the risk) are a discount to the disruptive value, the ability to build the technology is merely a commodity. In Silicon Valley technology is not the risk, but market entry with sufficient disruption is. Walk away from investors that incorrectly evaluate the risk model.

4/ Avoid an investor whose partners you can’t stand
Investors in a fund make decisions collectively, they need partner consensus before they can invest - just like in politics (more on that later). A firm with a partner you don’t like should be taken off your VC prospect list, as you cannot risk the influence of the bad apple to your company’s future. Develop your personal blacklist (as we did) based on fundamental people principles.

5/ Avoid an investor who wears his education on his sleeve
Wearing a Super Bowl ring means you made it in the real world, wearing an Ivy League ring does not. I wholeheartedly agree with Craig Venter that later stage education (without operating experience) in general is a deterrent to creativity and innovation or the ability to spot and spawn it. The majority of Silicon Valley investors are remnants from a bull market, echoing beliefs that are founded on skewed business principles.

6/ Avoid an investor who asks really dumb questions and is proud of it.
I never thought dumb questions existed until I ran into one investor who proudly blogged about how other entrepreneurs simply walked away from him, making his life easier. We walked away from him too.

7/ Avoid an investor who thinks he knows your industry better.
Even in the unlikely scenario he does, you should still walk away. Investors that know industries better than the entrepreneur should have become one. So either the investor is better informed (which should send you back to the drawing board) or he thinks he does (which becomes a pain in board meetings). Investors see a lot of things that don’t work, rather than discover the opportunities that do.

The bottom line is that we recommend entrepreneurs not to squander their great ideas with the first investor that waves money in their face. Real disruption does not become extinct quickly and so you literally have years to find a great investor out of the 790 firms that exist in the United States.

Thankfully the get-rich-quick money schemes in technology are drying up, so make sure you, as the entrepreneur, also have the integrity to build real disruption that spawns real and lasting customer value for years to come.

I look forward to helping develop new investor 2.0 and entrepreneur 2.0 strategies with you.

Tags: IPhone, VC, Investment, Commodity, Entrepreneurs

I recently ran into a great new application called cooliris (funded by Kleiner Perkins) from a similar named company in Palo Alto. But much more than just a cool application cooliris is the pre-cursor to a new way of accessing the internet, if the company plays its cards right.

I ran into cooliris when it first launched because of its initial focus on photography, and since then the company continued to dramatically improve its scope and has quickly become an appealing application to get news presented visually.

Stronger put, I predict that in 5 years from now the browser (like Safari, Firefox, Chrome, Internet Explorer) will not be the predominant way we access the internet. But that perhaps is an easy prediction. The majority of applications on an iPhone already use non-browser access (Facebook, Plaxo, eBay etc) and so do a few others on the PC (such as iTunes).

The browser is a very technological way of accessing data on the Internet, with poor navigational attributes. The URL language is certainly not one everyone understands and that relegates the dependency on search, which is still the primary way to navigate the Internet. And as the internet continues to grow in size, search will yield ever diminishing navigational success.

Clearly more companies are looking to improve Internet navigation. AT&T’s new Pogo browser, Google Chrome and enhancements to Firefox are an indication of the awareness of the pain. We will see more examples of improved navigational capabilities, some of which I can’t divulge at this point. But until then - enjoy cooliris.

Tags: FaceBook, Firefox, Browser, EBay, AT&T, Google

As any economist will tell you, a dollar bill is not worth a dollar. And so the real value of that paper bill is defined by the trust we put in it. The trust that you will receive a certain (yet fluctuating; some days a dollar is worth more than others) amount of goods and services in exchange. Simple right?

So given that, trust is the most important denomination in determining the value of a product or a service. And trust builds from consistent delivery on stated promises, which - in turn - requires the unwavering commitment from people with integrity and honesty....do you feel the slide coming?

So:
1/ Why do many companies make promises they don’t keep?
I evaluate a lot of technology companies (about 60 this year alone, public and private) and most are simply lying about, or overstating (decibel marketing) the benefits of their proposition. Because the majority of potential customers and investors are ill-informed about the pros and cons of this specialized industry, technology companies can often get away with sneaky monetization strategies that take advantage of a lesser informed audience.

In Silicon Valley, “success” is often defined by how skilled you are in fooling customers and sucking up to aristocratic investors (to which few have access), rather than the authenticity of your proposition. A mediocre ecosystem is what still remains after the technology bust from 2001 in which self proclaimed “serial entrepreneurs” and investors have been able to dodge real value creation and sell out short.

Not the VC model is broken, but many of the participants are. That noise is severely eroding the trust in an inherently sound technology industry. We need to enforce more transparency and hold ourselves to higher standards to restore the integrity and trust.

2/ Why do we allow short-selling on public company stock?
First, the performance of public stock says nothing about the actual value or outlook of a company, in the same way the dollar offers no guarantee of what you get for it. Public stocks are already a lousy interpretation of the actual performance of a company, as it merely echos popular opinion (and not the company facts).

So, selling short is really a bet on performance of popular opinion and does nothing but undermine the trust in the longevity of a business and cannibalizes shareholder value. Quarterly earnings reports are an absolute joke as many companies move profits around, claim leadership in a market that is defined by themselves and reduce cost rather than improve their marketplace position in order to make quarterly earnings look good. They also force healthy companies to focus on often unpredictable economic aberrations rather than on their long term and macro-economic leadership position.

The ability to sell short creates unrest and undue fear in a system that requires the opposite. Can you imagine holding the president of the United States accountable on a quarterly basis? That would be bad for our country (in most cases).

We should implement a predetermined holding period for the sale of stock, the expiration determined by the company and regulated by the SEC (which can also prevent some nasty insider trader deals) to build back trust.

3/ Why are some allowed to resell securities?
Reselling securities (which was illegal a few years back) based on finagled credit scores are perhaps the double whammy in the erosion of trust in public companies. Company credit scores that are maintained (and marketed) by commercial companies create profit driven scores and unrealistic prices (up and down) for securities. We simply need to stop the resale of securities and regulate the process of maintaining credit scores (both business and personal) vigorously and immediately.

Regulations do not turn us into a socialistic society, but the reality is that no economy operates without rules to protect trust. Free-markets require a basic set of rules to prevent a few bad apples to create insurmountable fear for the rest of us.

For the technologists amongst us: eBay deploys no less than seven dedicated servers to detect suspicious transactions that could challenge the trust in its free-market model.

In the same way we deploy rigid traffic laws to drive a car, should we deploy rules of engagement to protect our economic serenity. As long as we don’t dictate the destination of our travels or where we place our individual economic bets, we should be just fine in our support of a blossoming capitalistic society.

Trust comes from transparency, integrity and authenticity that builds real value, not from taking advantage of the ill-informed. So, building a successful company does not start with a new product strategy but with a leader who has the drive to win that is larger than his greed. Building disruptive products that truly improve people’s lives will yield personal satisfaction and trust that will keep customers coming back for more.

Trust is the only currency that matters, so stop squandering it.

Tags: EBay, Economy, Eco-systems, Free-market, VC, Stock, Transparency, Securities, Capitalism, Macro-economics, Economy

I was flattered last week by a visit from Rick Smolan, the creator of some very creative photo-projects, such as From Alice to Ocean, America 24/7, Blue Planet Run and his latest America At Home. Since the early 90s, From Alice to Ocean stuck with me when it was first introduced and distributed with Apple computers and the clever use of multimedia capabilities built into the Mac early on. But the great thing about these projects is not just the stunning imagery but rather what they evoke. Again, the value of photography is in the eye of the beholder.

Rick approaches photography in the same way I look at business; by simply surfacing the facts. So much in our lives is influenced by mountains of politics and rhetoric that reduce the chance of quick resolution and success. How do you think we can ensure a vibrant global economy and peace if 1.1 Billion people - 1 in every 6 - worldwide have no access to clean water. The book Blue Planet Run displays that with chilling accuracy.

But Rick Smolans projects shed light on reality, good and bad. America at Home is a compelling compilation of how American families live at home, rich and poor, photographed by the families themselves and complemented by photographs from professional photographers. The pictures and their captions are so inspiring that a country decided to buy more than 200,000 books to educate their children on who Americans really are. Transparency works both ways.

I would like to see Rick do a book of “The World at Home”, so I can continue to sit down with my daughter and give her a peek into the living rooms across the world.

Our welfare greatly depends on our ability to become a citizen of this world. To achieve that every school should at least purchase one of Ricks books so our children receive an objective view of the opportunities and problems in our global eco-system and thrive.

Update: For readers of my blog, Rick has graciously offered a discount of $10 off his book America At Home, which you can customize with your own image on the cover. Just enter the code GEORGES at checkout.

Tags: Photography, Mac, Photographers, Apple, Economy, Transparency

With that title I just pulled the pacifier out of the mouths of many marketers...and many of them will start crying.

But smart business people know better. Compartmentalization is very fundamental human behavior, in our personal life and business. In business the definition of “The Market” is the currency that aims to provide quick answers to everyday questions. The problem with market categorizations is that they are often incorrect, irrelevant, stale and frankly, the antagonist of innovation.

Here is why:

1/ People buy products, markets don’t.
No matter what the scenario, in the end people (not businesses) make purchasing decisions. And since people are unique, so are their complex reasons to buy. A unique mix of psychographics and demographics aided by free-market access to the Internet further emphasizes the power of “You” over the power of “The Market”.

2/ Markets are bad type-castings.
Customer surveys show that the compelling-reasons-to-buy rarely match up with the predetermined definition of “The Market”. And since many purchasing decisions rely on factors unrelated to the product (such as budgets, approvals, personal relationships, operational planning, risk mitigation etc.) a prospect qualification or disqualification within that market means absolutely nothing.

3/ Market definitions are bad currencies.
Since there are no rules for defining markets and everyone gets to dream up their own, the value of that market definition is meaningless. Imagine the value of the dollar if everyone gets to define how much it is worth and print theirs at home. Market segmentation and negotiations on market positions with analysts further deflate the significance and trust in traditional market definitions.

4/ Time changes everything (but markets).
Market definitions (in technology) change slowly yet products that attract new buyers change quickly. That means the definition of “The Market” (to which much decision-making is attached) is always far behind the adoption rate of new products and therefor far behind the identification of a new set of buyers. The minute “The Market” is defined, it has become irrelevant and ripe for disruption.

So, where does that leave marketing? Is marketing dead?

No, but it is time for technology marketers to grow up. The pacifier is being replaced by something else. Something more substantial and meaningful. Food becomes the new pacifier and customers will be feeding it to you.

1/ Listen before you speak.
Literally. Forget about what you as the marketer think of the product, early-adopter purchasing decisions are much more valuable in determining how the product is perceived and received. The credibility of new customers counts, more so than the ability of a marketer to spin a story. Spend time with your VP of Sales, in online forums, setup a Google Alert and figure out how to market customer perception.

2/ Manage the promise.
Crucial to the impact of marketing is the credibility of the company promise. Marketing, and specifically Product Marketing is vital in establishing that the promise is fulfilled to the satisfaction of the customer. A few bad words from customers on the internet can cost the company millions of dollars to repair, if it can recover from it at all. So, it is important that the promise to customers does not consist of blatant lies, leads to frustration or bleeds hundreds of support calls. Manage the critical success factors of your promise.

3/ Enable the dialog.
Orchestrate the interaction between customers and prospects and be sure to listen in. They will give you the marketing messages that truly resonate - on a silver platter.

4/ Manage the conversion rate.
Getting crowds to listen or visit the company website is rather simple, getting them to buy the product is more difficult. The company is only measured on the latter and since marketing is usually the scape goat and the first to be questioned when results are down, implementing a mechanism that detects, manages and reports on conversion rates yields invaluable metrics for improvement.

As long as there is macro-economic benefit to using your product, marketing is a very straightforward process. It requires a new class of people that are not afraid to throw the old-class of market definitions overboard and focus on the extrapolation of existing sales success, by simply listening for and consistently reverberating an honest and effective marketing message.

As Don Draper, the biggest ad man at the Sterling Cooper Advertising Agency of the TV series Mad Men explains; I don’t tell stories - I sell product.

Tags: Markets, Marketing, Performance, Promise, Analysts, Google, Psychographics, Demographics

Jupiter-Images finally sold to Getty-Images after a similar attempt in February of 2007. With estimated revenues of around $79M (when last tracked) and con-jointed debt of $95M with other Jupiter Media properties, Jupiter-Images sold to Getty-Images for only $96M in cash. Sounds like a fire-sale to me.

Imaging super stores make no economic sense, as described in this blog before.

1/ Images are like art. Taking preferences of buyer and seller into account, they preferably sell only once (or as few times as possible). No buyer wants that image to appear in similar publications and so every transaction is unique. Super-stores, however, are modeled to provide one-to-many sales transactions and are therefor NOT suited to support the image exchange marketplace.

2/ Except when images are produced on a commissioned photography basis (for example by Getty-Images staff photographers), the image super store actually does not own the image, it merely has a right to operate as a reseller. Nothing would stop a photographer from trading his images somewhere else, dramatically deflating the value of the super-store.

Fact remains that $22B of images are exchanged every year, most of it (90%) not through online transactions or the sum of all super-stores. This represents a big opportunity not many Venture Capitalists understand, as it is a market-play rather than a pure technology-play. But established companies may be able to build an iTunes of images to feed their ecosystem of products.

In the meantime, Getty-Images (now private again) keeps on puffing itself up like a puffer-fish. The question is: how long will it be able to hold its breath.

Tags: Photography, Getty-Images, VC, ITunes, Jupiter-images, Revenues, Private Equity

Apparently Digital Railroad, another storage provider of the digital photography market is in trouble. No surprise again, because