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After I got asked twice yesterday about where I currently saw opportunities in the consumer Internet space so it felt like good timing to sum up my thoughts on this topic in a quick blog post. Here are the 3 areas that I find the most interesting for the moment:

Long-term partner <a href="http://www.actoncapital.de">Acton Capital</a> (for whom I act as a venture partner for North-America) has just announced their first investment of their new late-stage consumer internet fund joining <a href="http://www.indexventures.com/">Index Ventures</a> and <a href="http://www.hcp.com/">Highland Capital Partners</a> as an investor in <a href="http://www.glassesdirect.co.uk/">Glasses Direct</a>. UK-based Glasses Direct is Europe’s largest online prescription glasses retailer and will use the funds to expand the UK business and to support a significant push into the US market. It was the second round of financing for Glasses Direct; total amount of the roudn was £10m (about 18 million Canadian dollars).

Long-term partner Acton Capital (for whom I act as a venture partner for North-America) has just announced their first investment of their new late-stage consumer internet fund joining Index Ventures and Highland Capital Partners as an investor in Glasses Direct. UK-based Glasses Direct is Europe’s largest online prescription glasses retailer and will use the funds to expand the UK business and to support a significant push into the US market. It was the second round of financing for Glasses Direct; total amount of the roudn was £10m (about 18 million Canadian dollars).

As <a href="http://blog.tripsbytips.com/view/zweite-finanzierungsrunde-von-tripsbytips/">already announced this past week</a>, <a href="http://www.actoncapital.de/">Burda Digital Ventures</a> and <a href="http://box693.bluehost.com/~version3/wp">W Media Ventures</a> have jointly invested in <a href="http://www.escapio.com">Escapio.com</a>, a booking platform for selected hotels. Escapio is a sister company of <a href="http://www.tripsbytips.de">Tripsbytips</a>, the German travel community that <a href="http://company.tripsbytips.de/%C3%83%C2%9Cber%20uns/Management">Uwe Frers</a> and myself started about 3 years ago. As Uwe is also the entrepreneur behind Escapio, it made sense to streamline ownership structures between the two companies. But besides this aspect, Escapio provides two major opportunities. Firstly, as available content and inventory grows on the Internet (and the travel vertical is definitely one of the leading segments in this respect), helping people to select the right thing becomes more and more important. This is a core priority for general search engines like Google but there is at least as much potential in specific verticals to address this problem. Escapio positions itself as being a destination site with a selection of exceptional, hand-picked hotels providing the consumer the necessary guidance to find the absolutely best hotels in hundreds of locations (check out their hotel selections for <a href="http://en.escapio.com/paris-hotels">Paris</a>, <a href="http://en.escapio.com/catalonia-hotels-barcelona-hotels">Barcelona</a> or <a href="http://en.escapio.com/tuscany-hotels">Tuscany</a>). Secondly, we have seen in the past years that content and transactions become more and more intertwined. Aligning Tripsbytips and Escapio more closely going forward will help both companies grow quicker than they could have as stand-alone sites. Very excited about adding another company to the <a href="https://www.versionone.vc/portfolio">W Media portfolio</a> - welcome Escapio!

As already announced this past week, Burda Digital Ventures and W Media Ventures have jointly invested in Escapio.com, a booking platform for selected hotels. Escapio is a sister company of Tripsbytips, the German travel community that Uwe Frers and myself started about 3 years ago. As Uwe is also the entrepreneur behind Escapio, it made sense to streamline ownership structures between the two companies. But besides this aspect, Escapio provides two major opportunities. Firstly, as available content and inventory grows on the Internet (and the travel vertical is definitely one of the leading segments in this respect), helping people to select the right thing becomes more and more important. This is a core priority for general search engines like Google but there is at least as much potential in specific verticals to address this problem. Escapio positions itself as being a destination site with a selection of exceptional, hand-picked hotels providing the consumer the necessary guidance to find the absolutely best hotels in hundreds of locations (check out their hotel selections for Paris, Barcelona or Tuscany). Secondly, we have seen in the past years that content and transactions become more and more intertwined. Aligning Tripsbytips and Escapio more closely going forward will help both companies grow quicker than they could have as stand-alone sites. Very excited about adding another company to the W Media portfolio – welcome Escapio!

Every time I read about <a href="http://www.yahoo.com">Yahoo</a>'s share of the search market I wonder to what sites the Yahoo traffic is actually going. Here is the mystery: depending on the source, Yahoo's share of the US search market is around 20% give or take (e.g. <a href="http://blog.compete.com/2009/03/18/february-search-market-share-google-yahoo-msn-ask-aol/">Compete numbers</a> or <a href="http://www.businessinsider.com/2009/1/important-yahoos-share-of-search-market-has-stabilized-yhoo">ComScore numbers</a>) but when I look at the actual numbers of our portfolio companies I have never seen a site that gets more than 7% of its search engine traffic from Yahoo with many sites rather being in the 1-2% range. So while the sample might not be perfect, it can definitely not explain this large discrepancy - so here are a few theories that I came up with: <ul> <li>Google Analytics over represents Google's traffic (all above mentioned portfolio companies use Google Analytics)</li> <li>Yahoo <a href="http://searchmarketing.yahoo.com/srchsb/index.php">Search Submit program</a> skews the results towards paying clients</li> <li>Yahoo drives a large amount of traffic to its own properties (like <a href="http://finance.yahoo.com/">Yahoo Finance</a> or <a href="http://sports.yahoo.com/">Yahoo Sports</a>) instead of third-party sites</li> </ul> Perhaps it is a combination of these factors but it is such a large discrepancy that I just don't fully understand what is happening.

Every time I read about Yahoo‘s share of the search market I wonder to what sites the Yahoo traffic is actually going. Here is the mystery: depending on the source, Yahoo’s share of the US search market is around 20% give or take (e.g. Compete numbers or ComScore numbers) but when I look at the actual numbers of our portfolio companies I have never seen a site that gets more than 7% of its search engine traffic from Yahoo with many sites rather being in the 1-2% range. So while the sample might not be perfect, it can definitely not explain this large discrepancy – so here are a few theories that I came up with:

<a href="http://www.rbccm.com/">RBC</a> came out with a very interesting analysis today that looked at how much <a href="http://www.facebook.com">Facebook</a> and <a href="http://www.google.com">Google</a> were complements or on a collission course and it got quite some attention among tech blogs (e.g. <a href="http://www.businessinsider.com/henry-blodget-facebook-could-kill-google-analyst-2009-3">SI</a>). RBC's conclusion: <em>Complementary (For Now): Google and Facebook are two of the fastest growing and largest companies on the internet, and thus far, Facebook's ascendancy has likely helped Google gain share. 45% of monthly unique users go directly to Facebook (as a starting page), up from 39% a year ago. At the same time, Google is now driving 64% of Facebook's uniques, up from 51% a year ago. Google.com, on the other hand, has a consistent 66% of its uniques as a starting page, same as a year ago. Google's uniques via Facebook are growing at 188% y/y, and now represent 19% of Google's traffic (up from 9% 12-months ago).</em> The problem of that analysis lies in my opinion in how they interpret the Comscore numbers they use. The Comscore "entries / exits" analysis tracks what sites people visit before and after visiting a particular site. While some of that traffic is actively driven from one site to the other (e.g. Google driving search traffic to content sites), most of it is just the sequence of how people use different sites (e.g. <a href="http://www.abebooks.com">AbeBooks</a> always had tons of people coming from <a href="http://www.amazon.com">Amazon</a> before visiting AbeBooks and tons that left for Amazon after a visit to AbeBooks). In my opinion, only actively driven traffic through links creates dependencies between sites and Facebook is likely to depend much more on Google for that (e.g. people search) than Google depends on Facebook (Facebook probably only drives significant traffic to one of Google properties, YouTube, through video sharing). So while the RBC analysis might be looking at the wrong facts to analyze the Facebook versus Google situation, Facebook being a potential threat to Google is probably one of the more interesting questions in the Internet space at the moment. My take on that question is that Facebook will be more threatening than complementary to Google in a few ways: recommendations, videos, news items shared by friends will take away traffic from traditional search ("social search"), Facebook will also most likely gain share in people search over time and could also dominate the search for products &amp; brands over time. What are your thoughts?<span style="font-size: 10pt; font-family: &quot;Times New Roman&quot;,&quot;serif&quot;; mso-fareast-font-family: Calibri; mso-fareast-theme-font: minor-latin; mso-ansi-language: EN-US; mso-fareast-language: EN-US; mso-bidi-language: AR-SA;"><br style="mso-special-character: line-break;" /></span>

RBC came out with a very interesting analysis today that looked at how much Facebook and Google were complements or on a collission course and it got quite some attention among tech blogs (e.g. SI). RBC’s conclusion:

Securing additional financing is one of the most important (and toughest) tasks for start-ups these days - so I want to congratulate Mike Tan and his team for <a href="http://www.techvibes.com/blog/teampages-scores-2nd-round-of-financing">closing a second round of financing</a> for <a href="http://www.teampages.com">TeamPages</a> that also brought a few new investors into the company. TeamPages has shown some very good traction over the past 9 months so this money will help them to continue to grow the company at the same pace. And all you coaches and parents that are involved in youth sports should <a href="http://www.teampages.com/account/signup">sign up your teams</a> now.

Securing additional financing is one of the most important (and toughest) tasks for start-ups these days – so I want to congratulate Mike Tan and his team for closing a second round of financing for TeamPages that also brought a few new investors into the company. TeamPages has shown some very good traction over the past 9 months so this money will help them to continue to grow the company at the same pace. And all you coaches and parents that are involved in youth sports should sign up your teams now.

The past few years have seen an incredible explosion of the creation of unique content - first through blogs, then through social networks, now through communication networks like <a href="http://www.twitter.com">Twitter</a>. As content creation expanded we moved from the creation of longer, "thought-through" content pieces to short status updates and quick thoughts and "like's". In my opinion, the biggest potential going forward lies in a smarter way of aggregating and filtering all this content, especially on a local level. Sites like <a href="http://www.techmeme.com">Techmeme</a> (for tech news) and <a href="http://www.outside.in">outside.in</a> (for local news in the US) have done a pretty good job of aggregating different content sites. Friend feeds help us discover and filter the content generated by our friends. But the real deal would be for me a site that aggregates content, real-time information (like Twitter or status updates) and friends' content in one place and develops filtering algorithms that bring the most important content and conversations for a certain topic to the top. Anybody working on something like this?

The past few years have seen an incredible explosion of the creation of unique content – first through blogs, then through social networks, now through communication networks like Twitter. As content creation expanded we moved from the creation of longer, “thought-through” content pieces to short status updates and quick thoughts and “like’s”. In my opinion, the biggest potential going forward lies in a smarter way of aggregating and filtering all this content, especially on a local level. Sites like Techmeme (for tech news) and outside.in (for local news in the US) have done a pretty good job of aggregating different content sites. Friend feeds help us discover and filter the content generated by our friends. But the real deal would be for me a site that aggregates content, real-time information (like Twitter or status updates) and friends’ content in one place and develops filtering algorithms that bring the most important content and conversations for a certain topic to the top. Anybody working on something like this?

Calgary-based <a href="http://www.tynt.com">Tynt</a> announced today that <a href="http://www.techvibes.com/blog/tynt-multimedia-closes-5-million-series-a-investment">they closed a $5 million Series A financing</a> with <a href="http://www.inoviacapital.com/">iNovia Capital</a> from Montreal and I am happy that W Media had the opportunity to participate in the financing with a small amount. The company is led by <a href="http://www.linkedin.com/in/derekball">Derek Ball</a>, one of the most successful technology entrepreneurs in Western Canada, and he was certainly the most important reason why I decided to invest in the company. Tynt has developed <a href="http://tynt.com/tracer/about">Tracer</a>, a tool that <a href="http://www.techvibes.com/blog/tynt-monitors-engagement-with-tracer">tracks user actions on websites</a> including copy/paste and highlight to help content producers learn what content their users find most engaging. In addition, Tracer can drive traffic back to the site using the copied content (i.e. by inserting an attribution link into the email with the copied content). A few W Media portfolio companies have so far implemented Tracer and found the tool very helpful in analyzing offline / online interactions with their content so I am sure Tracer will find a large audience among publishers out there.

Calgary-based Tynt announced today that they closed a $5 million Series A financing with iNovia Capital from Montreal and I am happy that W Media had the opportunity to participate in the financing with a small amount. The company is led by Derek Ball, one of the most successful technology entrepreneurs in Western Canada, and he was certainly the most important reason why I decided to invest in the company. Tynt has developed Tracer, a tool that tracks user actions on websites including copy/paste and highlight to help content producers learn what content their users find most engaging. In addition, Tracer can drive traffic back to the site using the copied content (i.e. by inserting an attribution link into the email with the copied content). A few W Media portfolio companies have so far implemented Tracer and found the tool very helpful in analyzing offline / online interactions with their content so I am sure Tracer will find a large audience among publishers out there.

I just finished <a href="http://web.mit.edu/ariely/www/MIT/">Dan Ariely</a>'s new book "<a href="http://www.predictablyirrational.com/">Predictably Irrational</a>" and can only recommend it to everybody who is interested in understanding human behavior a bit better. Dan's book includes tons of research that show how irrational human beings can sometimes be and how we can take better business, policy and personal decisions if we understand our irrational behavior in the first place. Examples include how humans often take sub-optimal decisions when being offered a "free option", how the human mind often operates based on relative choices (not absolute ones that should matter more), and how we all become more honest when we are reminded of a code of conduct. So act rationally for once and <a href="http://www.abebooks.com/search/an/ariely/tn/Predictably+Irrational">buy the book now</a>!

I just finished Dan Ariely‘s new book “Predictably Irrational” and can only recommend it to everybody who is interested in understanding human behavior a bit better. Dan’s book includes tons of research that show how irrational human beings can sometimes be and how we can take better business, policy and personal decisions if we understand our irrational behavior in the first place. Examples include how humans often take sub-optimal decisions when being offered a “free option”, how the human mind often operates based on relative choices (not absolute ones that should matter more), and how we all become more honest when we are reminded of a code of conduct. So act rationally for once and buy the book now!

I have been watching <a href="http://www.fitbrains.com/about/">Michael Cole</a> and his Vancouver-based company <a href="http://www.fitbrains.com/">Fitbrains</a> for almost two years now and am very happy that I finally got the chance to make an investment in them. Fitbrains develops <a href="http://www.fitbrains.com/games/">online brain games and exercises</a> based on <a href="http://www.fitbrains.com/science/">scientific research</a> which help keep your mind sharp - you might want to call it social gaming with a purpose. The exciting part of the product is that you can really see improvements of your memory and concentration if you regularly use the games to train your brain. The company has so far developed 14 games and a really strong community of regular players is starting to evolve. The social gaming area has seen tremendous growth in the past few years and while <a href="http://www.techvibes.com/blog/global/category/gaming">Vancouver is a gaming hot-spot</a> I have until now shied away from any investments in this area. But with monetization (subscriptions, virtual goods) and distribution (iPhone apps, Facebook) becoming more and more mature, the investment in Fitbrains comes as a good point in time.

I have been watching Michael Cole and his Vancouver-based company Fitbrains for almost two years now and am very happy that I finally got the chance to make an investment in them. Fitbrains develops online brain games and exercises based on scientific research which help keep your mind sharp – you might want to call it social gaming with a purpose. The exciting part of the product is that you can really see improvements of your memory and concentration if you regularly use the games to train your brain. The company has so far developed 14 games and a really strong community of regular players is starting to evolve. The social gaming area has seen tremendous growth in the past few years and while Vancouver is a gaming hot-spot I have until now shied away from any investments in this area. But with monetization (subscriptions, virtual goods) and distribution (iPhone apps, Facebook) becoming more and more mature, the investment in Fitbrains comes as a good point in time.

<a href="http://www.techvibes.com">Techvibes</a> did a great job in <a href="http://www.techvibes.com/blog/first-round-capitals-office-hours-a-hit-in-vancity">putting together a video</a> from <a href="https://www.versionone.vc/news/first-round-capital-coming-to-vancouver-on-jan-15/">last week's Office Hour event of First Round Capital and W Media Ventures</a>: <object data="http://vimeo.com/moogaloop.swf?clip_id=2874104&amp;server=vimeo.com&amp;show_title=1&amp;show_byline=1&amp;show_portrait=0&amp;color=&amp;fullscreen=1" type="application/x-shockwave-flash" width="400" height="222"><param name="allowfullscreen" value="true" /><param name="allowscriptaccess" value="always" /><param name="src" value="http://vimeo.com/moogaloop.swf?clip_id=2874104&amp;server=vimeo.com&amp;show_title=1&amp;show_byline=1&amp;show_portrait=0&amp;color=&amp;fullscreen=1" /></object> <a href="http://vimeo.com/">Techvibes TV presents First Round Capital / W Media's "Office Hours" at the Agro Cafe</a> from <a href="http://vimeo.com/user1177557">Rob Lewis</a> on <a href="http://vimeo.com">Vimeo</a>.