David Rangel's Blog

Wigix

Lots of buzz the last day around the new eBay competitor Wigix. They have an interesting take on the marketplace, and you can't blame them for trying - its well known that the two "general marketplace" leaders (eBay and Craigslist) have done very little innovation in the last few years (Craigslist by design, eBay has no excuse).

Wigix' site looks ok, and the vision is interesting and ambitious (see this post by Bill Burnham for more). But at first pass I see a couple of potential issues:

1) Unlike with stocks and commodities, where all shares of MSFT or bushels of corn are the same, "stuff" is not always the same. People customize their cars, scratch their phones, etc. etc. In the current Wigix SKU pages I don't really see the ability for people to completely/richly describe their items for sale. eBay allows people to fully describe their items (including arbitrary text and pictures) - something that makes each item almost a one-off (which is sort of true), but something that also makes searching highly annoying. Wigix wants to get around this by moving closer to an idea of a commodity - but I don't know if this works. I would be wary of buying an iPod unless I am pretty sure I know what condition it's in and have seen pictures (unless I'm being told it is brand new). Wigix can probably fix this relatively easily - but it could be a challenge to do it within their commodity-like framework.

2) Wigix' vision includes people using their site as a place to keep track of all their stuff, as well as a marketplace to sell/buy that stuff. That's interesting and does make sense in a way. But I don't know if people will think about it that way. I'm willing to bet most people want a place to buy and sell, period (especially dedicated businesses - which I believe make up a big % of eBay's sellers). So it feels like the "this is my stuff" aspect of Wigix will just be superflous at best and distracting/off-putting at worst. Other "stuff trackers" have been made and have gotten limited traction. But maybe I am wrong - its possible that the stuff tracker/marketplace model is the right combination and will get big adoption.

3) Finally, I don't see a rating mechanism yet. And interestingly, the personal profile page has fields for a user's eBay ID and password so that Wigix can get to their eBay rating. This is a nice try at leveraging eBay ratings (arguably one of the most valuable pieces of eBay and built up over many years), but I have to believe eBay will shut this down VERY quickly.

In conclusion, its a pretty interesting effort. Only good things can come out of someone thinking hard about marketplaces and innovating on them.

Playcafe

Earlier today I participated in Playcafe's online game show with Ken Jennings. I had been meaning to try it, and being a little bit of a Jeopardy fan, it finally caught my attention enough to log on for the live show. The show still needs some work - they had a few technical issues, the site could be more streamlined and the game itself could improve. But they have obviously done some good work getting their technology this far, the idea/concept is great and it was fun for ~30 minutes (it would be interesting to see data on number of users and their drop-off rates).

Playcafe sits between social online games (which are hot right now on Facebook and elsewhere) and TV game shows/programming. They will do well if they can hit the right mix of scheduled/hosted real-time interaction and anytime social gaming.

They have a static Facebook page today, but it seems like they could really benefit from more aggresively leveraging a social network:

1) People adding their application (whatever form it takes) and the news feed would help them get new users/viewers. I think today's show only had ~350 viewers - at least that's the number I saw on the player (but I may well be wrong about this) - which is fairly low.

2) Leveraging the underlying social network to invite people, see who is online during the live show and form teams and/or compete with people you know would significantly improve the experience.

In any case, it's a great idea and they seem to be moving in the right direction. It will be interesting to see how the show evolves (and, without a doubt, the soon to emerge flood of competitors).

Online financial management services

As often happens, the last 6-12 months have seen a wave of new companies providing the same type of service - in this case online financial management. Basically Quicken/MS Money on the web. The best known ones are Mint and Wesabe, but there are others like Geezeo and Expensr.

First of all, I think its an area that was begging to be put on the web. After years of using MS Money in fits and starts and never being completely satisfied with the experience, I now find myself a satisfied Mint user and getting more out of it than I ever got out of Money.

But the interesting point for now is around the different routes Mint and Wesabe have taken over the last few months and the apparent results (of course, its still very early and things could change). I've used both of them and I have taken two lessons out of seeing their development:

1) Good UX trumps privacy concerns (within reason) - I started using Wesabe early on and had a reasonably good experience. But the fact that they wouldn't directly connect to banks to get transaction information always seemed like an unnecessary inconvenience - they had all my transaction info anyway and, while it not being able to connect directly to the bank should make me feel safer, the reality is that I am not concerned (I would catch fraudulent transactions and most banks would let you off the hook if notified quickly enough). Mint, on the other hand, from the beginning connected directly to banks, making usage simpler and more streamlined. Interestingly, and belatedly, Wesabe just announced direct upload of transactions from banks.

This wasn't the only reason I switched though. In fact, I gave Mint a try when it opened up to the public, didn't like it and stayed with Wesabe. However this brings me to the next point.

2) Rapid improvement/iteration is (obviously) a must - As mentioned above, I initially tried Mint, didn't like it enough to switch and stayed with Wesabe. However several months passed and I noticed very little improvement in Wesabe - tagging was still flaky/annoying, there was no way to easily track spend across categories/time, etc. Early this year I logged back into Mint for the heck of it and was actually blown away - the things I remembered as annoying/lacking were gone. And I found that it had features (like the Trends tab) that blew away anything Wesabe had. So I have now fully switched to Mint and am a happy user - its a really good service (with a few minor annoyances).

Based on conversations and imperfect stats, it seems that Mint is clearly the leader in usage now. I attribute this lead to the two points above. For 1), the fact is that privacy, in my opinion, is just not that big a deal anymore. As long as the company is not a fly-by-night outfit and has reasonable safeguards, I think most people are over, or soon will be, their privacy concerns. Scott McNealy had it right 9 years ago. Point 2) is just common sense.

As a final note, I haven't used any of the other services out there. If anyone thinks they are better than Mint, I'd love to hear about it. Of course, one of the great (for the providers) and scary (for users) things about these services is that they are very, very sticky. I have so much data in there already that an alternative would have to be A LOT better for me to consider switching.

Alien life and "great filters"

I found this article in the MIT Tech Review, by Nick Bostrom, fascinating. I enjoy counterintuitive/contrarian thinking, and this is a great example.

Basically, Bostrom postulates that it would be bad news if we were to find signs of life on Mars (or anywhere in our galaxy for that matter). But not because he wouldn't like to see it - in fact I think many people, and certainly most scientists, would welcome such a finding. Rather, he says that
finding signs of life could instead be a very bad sign for our future outlook. Why is this?

Given the vastness of the universe, and the length of time available for other civilizations to develop, one would assume that there is expansive life out there. However we have seen no evidence of it (see: Fermi Paradox). So either something fishy is going on (e.g., we cannot detect alien life) or there simply isn't that much life out there. The latter is much more likely. Bostrom then talks about "great filters" - evolutionary transitions that occur with very low probability. Most life forms die off when they encounter a great filter.

That leaves us with two possibilities:
1) We (humans) have already gone through a great filter, likely one at a very early stage (well before we were humans), and survived. It follows that there will be very few signs of life to encounter since most will have not survived the filter.

2) We have not yet encountered a great filter, but will relatively soon. When we encounter that filter we will likely die off. In this scenario it follows that getting to our current stage is relatively easy (since we haven't passed a filter) and life similar to us should be common.

Therefore, if we were to find signs of life on Mars (or somewhere else nearby), it could be an indicator that we are in scenario 2). After all, having life evolve on 2 planets on the same solar system would indicate that it is something pretty common. And the more developed these life forms are/were, the more likely that we have not yet passed any sort of great filter. That is why the longer it takes us to encounter alien life, the better a chance we have at being in scenario 1). We would be (mostly) alone, but with a (hopefully) bright future in front of us.

Unless there are multiple Great Filters....

Anyway - its a great article and I've probably done a terrible job of explaining it. Just read it.

VC in China

The numbers talked about in this VentureBeat post really caught my eye:

IDG Ventures was the first VC firm to begin investing in China back in 1993. Since then, it has plowed $450 million into 180 companies... By 2020, IDG’s money for early-stage investments will grow to $3 billion, up from around $950 million now

And on the performance of some IDG investments:

... [IDG] paid $2 million for a 20 percent stake in Tencent, which is now worth $1.2 billion. It invested in search engine Baidu at $2 a share, and it is now $350 a share. It invested in Sohu at 22 cents; it’s now $45. He invested $6 million into Ctrip, and got a $800 million profit.

There is also some discussion on IDG getting favorable tax treatment in China and the possibility of this significantly increasing the overall flow of money into China (if other firms manage to get it as well).

Thinking about this led me to some thoughts on current Chinese successes and to future startups. First, current successes:

1) So far, the big Chinese success stories have started as copies of western companies (Baidu/Google, CTrip/Expedia, Tencent/ICQ, Taobao/eBay, etc.). But, to be fair, they have done a very good job of adjusting the concepts to their own markets and soundly beating western competitors.

2) The next test for these big Chinese players will be to continue growing by expanding internationally. The Chinese market is big enough that they will have their hands full just focusing domestically for the next 3-5 years - but then things will get interesting. World-class western companies (e.g., MS, GOOG, EBAY) have a large % of revenue coming from non-US markets now (Google just hit 51%). My guess is that Chinese companies will find it relatively much harder to grow organically outside of China.

3) This leads me to think that some of these Chinese companies will become acquisitive in the US and Europe. US and European startups have been acquired by MS/Google/Yahoo and a few other smaller guys - but I bet that in 3-5 years we will see Baidu/Tencent/etc come out aggressively and become exit alternatives for western startups. I would think that seeing first-hand how western companies failed in their market the first time around, they will be smart about how they enter western markets (e.g., by not trying to impose their vision on acquisitions).

As for future startups in China:

1) Those IDG performance numbers are obviously great and they are a real testament to IDG's foresight in entering the China market early. But it will be extremely tough to replicate them. Just like in any other market, the inflow of so much money will drive up valuations and reduce returns

2) It will be interesting to see if China will start producing their own set of innovative startups or will just keep on churning out Chinese versions of western success stories. The future will obviously be brighter if they do the former. I bet they will, but they are not there yet.

3) While I am a big believer in China, I am very wary of projections that have their GDP growing at 10% for another 10-15 years. I think that pace of growth will become unsustainable, especially if commodity prices keep rising and China starts having to spend more money to fix their environmental issues. Both these issues together could be a real downer for their economy and slow things down for a few years, further reducing returns.

In any case, what happens over the next few years in China will be fascinating. I spent half of last year in Beijing, and the energy there is amazing. I hope they can keep their momentum going.

Microsoft/Yahoo/AOL/News Corp/Google

Turns out that Yahoo is now in talks with AOL about merging, while at the same time starting a test to use Google AdSense on their search results. Google of course also happens to serve AOL's search ads and owns 5% of the company. At the same time, Microsoft is talking with News Corp. to jointly bid on Yahoo and potentially combine MSN, Yahoo and MySpace.

This whole situation is pretty crazy. But whichever way things shake out in the end, my opinion is that the winner will be Google:

1) If Yahoo somehow stays independent, they will be forced to do something drastic to improve performance and will likely outsource search ads to Google. Even though Yahoo would keep the bulk of the revenue, Google would benefit from the additional scale and data. Meanwhile Microsoft would be in the same position it is today - lacking ad platform scale and falling further behind Google.

2) If Microsoft buys Yahoo, I believe the regulatory issues will be such a drag on timing and integration issues will be such a drag on performance, that Google will have 1-2 years to further increase their lead on the combined MS/Yahoo. If MS screws up the integration, their problems will be amplified.

3) Yahoo and AOL merging is just a repeat of 1), but with added complexity for Yahoo management. Combining a struggling #2 and #4 is not a recipe for success.

4) Microsoft and News Corp. buying Yahoo and throwing MySpace into the mix is a repeat of 2), but with added complexity for Microsoft management. News Corp. would own a small but significant percentage of the new entity and would have a say in how things are run. Bad news all around, except for Google.

Honestly, Google can't lose. They end up serving ads for Yahoo or Yahoo/AOL (which is great for them) or they watch MS/Yahoo or MS/Yahoo/MySpace struggle with integration for a couple of years (great for them) or they deal with the status quo (which has been great for them). In the meantime they will throw as many wrenches as they can into the process, creating more uncertainty for everyone else and increasing their lead.

Macro issues notwithstanding, Google stock will be much higher (especially compared to YHOO and MSFT) over the next 2-3 years.