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I gave a talk yesterday at the Paley Center for Media to a number of members of the Writer’s Guild of America.  The group generally consisted of folks who make or want to make a living by producing content – a job increasingly challenged by the web’s democratizing open platform.

I attempted to explain a little bit about venture capital and its significance in helping fund many of the most innovative companies of our time, how and why those companies tend to disrupt the status quo, the specific impact this disruption has had on the media industry and some practical tips for how to hopefully stay relevant in the new media order.

It was a thoughtful and receptive group.  I hope they found the discussion worthwhile.  If you’re interested, my slides can be found below.

As an aside, one thing the Internet sure has done is make the process of putting these presentations together so much easier.  Images, data and even fully blown charts are all readily available in the public domain for anyone who needs them.  Services like Slideshare and Scribd are simply fantastic.  The web forces a premium on ideas and richness of discussion vs. the ability to make a fancy graph or chart.  Yet another example of how the web enables us to focus on what really matters by making data and information so easily accessible to all.

WGA Presentation 2.24.10

View more presentations from mokoyfman.

I was asked recently by an amazing organization called Reboot for my thoughts on what the Sabbath means to me in the current always-on, real-time information age.  They follow:

We live in a world of endless information flow.  Bits and bytes are our food and water.  They move back and forth at a deafening pace.  In this world of boundless stimulation and interaction, how does one disconnect, reflect, take stock?  One of the defining elements of this information economy is it’s social, connected nature, where we both put out and consume information as part of our shared human experience.  For me, it is the information intake that when left unchecked tends to overtake me.  Setting aside a fixed weekly time for contemplation, whenever and for however long it is, allows me to disconnect and refocus internally.  Then, what I put out more closely reflects my true ‘self’ rather than tending towards a boomerang-like reflection of what I take in.  This return to self is my Sabbath, my peace, a chance to reconnect with my inner thoughts and light.

Chris Dixon wrote an excellent post on entrepreneurship the other day that I’ve continued to ruminate on.  Chris argues that contrary to popular belief venture-backed innovation could and should actually increase, but we have a systemic cultural problem in that we don’t champion entrepreneurship enough as an American society.

I’ve made the argument before that, damn the numbers, perhaps the venture industry needs to expand as we retool our country through entrepreneurship amidst the current crisis.  Yet after making those claims, I quickly fall back to the same math that Fred and others have done assuming a fixed cap on potential venture-backed exits.

But why?  Why are we resigned to the fact that innovation is of a fixed quantity in our society?  More importantly, what happened to the American entrepreneurial spirit?

America was founded on the back of entrepreneurs.  The folks that came to this country, those that pushed west, literally built the U.S. on their entrepreneurial backs.  We were established and we grew as a society of entrepreneurs.

But over time, we’ve moved from an economy of builders to an economy of servicers.  As Chris correctly points out, many of our best and brightest college graduates end up at banks, consulting firms, law firms, large companies, etc.

I believe that the decline in American entrepreneurship is entirely a function of our own success.  I’ve always found people with nothing to lose – rich or poor – make the best entrepreneurs.  Americans, on the other hand, simply have way too much to lose.  Our success as a country has bred a sense of comfort, which ultimately leads to complacency and a drive towards safety and protection of wealth rather than expansion.

Will the current financial crisis beget more entrepreneurship.  Absolutely.  Is it enough to turn the national tide?  Probably not.

Can this systemic risk aversion we display as a culture be perhaps turned through education?  Maybe.  But we’re going to have to start young and somehow figure out how to inspire, as we can no longer rely on the inordinate powers of fear or necessity to drive us.

I’m often guilty of being a skeptic when it comes to these types of tectonic societal shifts.  But I sure as hell hope we can gather enough momentum around this one.  I for one am committed to do my small part to help us get there.

We’ve seen a lot of the web giants attempt recently to move into growing areas dominated early by young upstarts.

has of course been all the rage these past couple days, with it’s /-like feed integration into Gmail.  Prior to that it was Yelp taking a swipe at FourSquare with their check-in addition.  Even launched recently to compete with the likes of .

All of these recent moves reflect a desire on the part of these larger companies to incorporate more of a sense of community into their already successful platforms.  The inherent problem with this is that community (like entrepreneurship – more on that another time) can’t be manufactured.  True community is organic, and it usually builds around a very simple, clean premise.  And once it begins to tip, it has a life all its own usually very difficult to stop.

Bijan has a great post today on Google Buzz and trying to do too much.  What’s so powerful about the simplicity he espouses is that it is precisely that initial use case simplicity that generates natural community.

For many years, when looking at acquisitions or building businesses, I worried about the likes of Google, or Yahoo before that, and their ability to move into the market we were going after and destroy us.

While this fear is grounded and often a very real threat, it is usually only so in the cases where the area you are playing in is fundamentally strategic to the respective 800 pound gorilla.

Community is something they all want, but not fundamentally strategic to what they currently have.  Google is a search and advertising business.  Yelp is a user-generated content and advertising business.  Neither of them begin or end with community.

Communities are natural.  They have a power all their own.  Tumblr, FourSquare, Twitter, Facebook – they are who they are because of the power of their communities, not the other way around.

So while Yelp and Google may finally have some success with their attempts at community, to think that they can uproot or halt the growth of natural, social, viral communities is just not right.

I attended the excellent AdMeld today.  The conference focused on the rapid movement of online ad inventory to real time bidding platforms.

For some time now I’ve been concerned that the glut of advertising inventory available on the web would drive the value of most of that massive long tail of impressions towards $0.

While there is certainly a degradation of value taking place given hugely increased supply, user data is fundamentally improving this problem by providing the ability to target at the user level (vs. impression) and thereby significantly increasing value.

The online ‘non-search’ ad space is (finally) starting to look more and more like an efficient market, where almost every piece of inventory has value to some advertiser because of the specific user it touches, the data on that user and how/when/where it touches that user.

The equation –> Real time inventory + Data = Value.

The key remaining question however is price – what is each impression worth at the end of the day?

Current real-time exchange impression value is certainly depressed versus artificial rate card CPMs, but largely higher than traditional run of network/remnant rates. Eventually though, this exchange inventory will likely increase in value as more and more useful data is appended.

How much more value?  And what does the composition of this market look like when it all shakes out?  Too early to tell definitively.

What’s clear though is that RTB is the future of online direct marketing beyond search.

A representative from eBay said today at the conference that real-time exchanges currently provide the best ROI of any platform across the board for them, and they are increasingly moving dollars to RTB from search.  This may be somewhat of a function of the artificially low-priced available inventory, but it is still incredible given where the market is starting from.

Branding dollars are increasingly moving to these platforms as well, as buyers continue to push for buying all types of media through this more efficient methodology.  To combat this, many publishers are now adding pricing floors for 'premium’ inventory moving through exchanges to create scarcity value.  This feels like it will work for very unique inventory and audiences.  Although I’m not sure how sustainable it is for how much inventory over time.  It will certainly be interesting to watch and likely have massive impact on publisher top-lines.

What is clear is that a lot more inventory is heading to RTB platforms.  The shift from search will drive prices up for this display inventory, and prices will stabilize at some point much higher than today but perhaps less than historically achieved through direct sales.  And certainly advertising dollars will be more efficiently distributed across the web vs. concentrated in a few sites.

This is a fascinating market just beginning to unfold in front of us.  I’m curious to hear your thoughts and perspectives.

We’ve recently seen a number of deals where founders/employees and in some cases early investors have taken money off the table in high priced late stage rounds.  Yelp - Elevation , Zynga - DST & Facebook - DST are the highest profile recent examples.

These are great deals for the industry, as they provide liquidity and/or growth capital at very attractive equity prices for companies not quite ready for the public markets (for many valid potential reasons).  We need more of this kind of liquidity in the marketplace.

Another very powerful way to take advantage of expensive equity is through acquisitions. The best time for a company to do deals is when they benefit from high priced stock.

This is effectively the opposite of taking money off the table – it’s increasing the capitalization base of a company by issuing new shares to targets that hopefully add more value to the overall enterprise than the equity given up for them.

The theory is that if you get a fair price for the assets you purchase and the value of your stock is fully priced by the market, the acquisition should be accretive and you should gain value.

Determining whether an acquisition is accretive or not is very tough to do when you’re dealing with companies that have little to no earnings.  But these deals can be very strategically accretive, especially when a larger company is acquiring a much smaller one.

A great example of this is the Google - YouTube deal.

Even though the YouTube deal looked incredibly expensive at first blush, Google got enough lift in their share price on the day of the deal announcement to entirely cover the cost of the acquisition.  This was the market applauding Google’s ability to use high priced stock to acquire a strategic asset by pushing that stock even higher.

Now there is always debate as to whether acquisitions are a good thing for companies or whether they are distracting, especially for earlier stage businesses without the ability to effectively integrate (hard for any company, let alone a young one).

My answer – like everything else, it depends on many factors.  But if done correctly, an acquisition strategy can be very powerful.

So what kind of deals should companies do?

The most interesting potential targets are those that provide a boost to R&D and/or HR, by bringing in great technology and/or great people to the organization.  Secondly are businesses that collapse the value chain, by either adding monetization capabilities to a business with a lot of user traction or adding a direct relationship with users (businesses or consumers) for companies with a proven monetization platform.

In terms of size, my general take is that businesses should look for smaller (~10% of total capitalization or less) strategic acquisitions.  Otherwise, things tend to get very messy with shareholder interests and governance on both sides.  Bigger deals are certainly doable, but need to be very strategic and are usually much more complicated.

We’ve seen being a very aggressive acquirer as a public company.  and Zynga have done a handful of smart strategic acquisitions in the private markets.  We’ve even seen Apple enter the fray recently, something we have not seen from them before.

I expect to see a bunch more of this.