Musings of a VC in NYC

ClearQAM - What It Is And Why It Matters

There are millions of homes and apartments around the country that have a TV connected to a cable but have no set-top box and no video service from their local cable provider. These TV viewers either moved into a home or apartment where the previous owner had cable and the wire was still lying around. Or they are getting their broadband Internet over cable. Either way, when you connect a cable directly to most modern TVs, you can get the broadcast channels in HD without a set top box. And in doing this, you are not breaking any laws. This is perfectly legal.

The technology behind this is called ClearQAM. QAM is a modulation scheme that allows the transmission of digital TV channels on an analog RF cable. Because of a number of rules and regulations, cable televesion companies are required to provide access to the broadcast channels in the clear - thus the name ClearQAM. This whole thing is outlined pretty well in this Engadget post from a few years ago.

There are other ways to get the broadcast channels without a set-top box. You can put up an antenna and pull down them over the air for free. But for many locations, the cable is a better way to get the broadcast channels reliably.

Why am I telling all of you this? Because the cable industry is currently lobbying the FCC for a rulemaking that would allow them to encrypt QAM and shut down this whole bypass mechanism causing millions of TVs to go dark. And there aren't many voices out there opposing this rulemaking request. Our portfolio company Boxee's is one of the few that has spoken out. Their presentation to the FCC on this matter is online and is worth a quick read.

Getting rid of QAM isn't a bad idea in the long run. But encrypting the broadcast channels is not the best way to do that. Putting direct IP access to the broadcast channels on the cables is a much better approach.

It has always been the policy of our government that the broadcast channels are meant to be freely available over the air and by other means. There is no reason to change this policy now just because the cable companies want every home and apartment to have one of their set-top boxes and a paying subscription from them.

If you would like to reach out to the FCC and let them know what you think of this proposed rulemaking, you can do that here.

Related articles

• Boxee's first blog post on this (boxee blog)
• Boxee's second blog post on this (boxee blog)
• Boxee and the NCTA debate if ClearQAM is good for us (engadget.com)
• Let 1,000 Boxees bloom: fighting Big Cable's encryption initiative (arstechnica.com)
• FCC rule change could kill off Boxee - and require set-top boxes for basic cable (venturebeat.com)
• Cable Companies Have Launched A Massive Attack Against Boxee Over Set-Top Boxes (businessinsider.com)
• Boxee Stands With The CEA Against Cable Companies, Courts The FCC Chairman To Stop Proposed Ruling (techcrunch.com)
• Boxee Live TV (avc.com)

Fun Feature Friday: Clik This

I know its supposed to be Fun Friday, but this is going to be a Fun Feature Friday.

Yesterday our portfolio company Kik launched a new mobile app/platform called Clik.

Clik is really just one simple feature, implemented as a mobile platform that any developer will be able to leverage via a set of tools that are coming soon. And that feature is "point your smartphone at a browser that is showing a QR code and take control of the screen with your phone." Sounds strange the first time you hear it, but give it a try and you'll see what I mean. It's really powerful.

There's one more aspect of this feature which makes it even more fun. If your friends also have the Clik app on their phones (iPhone and Android to start), they can also take control of the screen and you can play games, play videos, play music, show pictures, etc with each other using your phones as controllers. It's fun to imagine the new kinds of games that can be built with this platform.

So do me a favor, download Clik onto your smartphone, fire up a web browser, point it to clickthis.com, and then take over your computer with your phone. You'll see the power of the platform right away.

If you are a developer and want to build something on top of the Clik platform, its really simple. No mobile development required. All web development and pretty easy to boot. If you are interested in learning more, email the Clik Platform team and they will be happy to explain how it works.

Related articles

• Control any screen with a browser: Clik turns your smartphone into the world's best remote (venturebeat.com)
• Hands on With Clik, YouTube's New Remote (mashable.com)
• Clik for iPhone and Android: Magically Control Any Web Browser from Your Phone [Apps] (gizmodo.com)
• Clik Smart TV Platform turns your smartphone into the only remote control you'll ever need (thenextweb.com)
• New platform Clik promises to seamlessly sync screens (lostremote.com)
• Clik turns your phone into a remote for YouTube parties (hands-on) (theverge.com)
• With Clik, Your Smartphone Can Control Screens Everywhere - Anthony Ha via Techcrunch (stoweboyd.com)
• Clik™ - Clik Interactive Inc (itunes.apple.com)
• Clik (thegongshow.tumblr.com)

Duck Duck Go Passed 1mm Searches Per Day

I'm a bit late with this news about our portfolio company Duck Duck Go but I am super excited about it so I'm posting it anyway. I'll let a tweet tell the story:

 

We received over 1,000,000 direct searches yesterday for the first time ever!duckduckgo.com/traffic.html

— duckduckgo (@duckduckgo) February 14, 2012

 

One million searches per day is not chump change. AOL does somewhere around four or five times that every day. And if you look at this public chart of Duck Duck Go's growth, you'll see that they may pass AOL sometime this year.

Why is DDG growing so fast? Well first and foremost, their product is getting better and better. I have changed all my browsers to default to DDG and I am watching the service improve before my eyes. And the redesign that launched around year end is excellent. So if you haven't tried DDG recently, you should give it a try.

But it may also be that other search engines are doing things that some users don't approve of and those users are shopping around for a new search engine. If you are in that camp, join me at DDG and see what clean, private, impartial and fast search is like.

Related articles

• DuckDuckGo Hits New Milestone: 1 Million Searches (searchenginewatch.com)
• DuckDuckGo Has Its First Million-Search Day (searchengineland.com)
• Try DuckDuckGo: the friendly search engine (zaddymanlib.wordpress.com)

Understanding Kickstarter

It was a big week for our portfolio company Kickstarter. In the span of 24 hours, not one but two projects passed $1mm in funding. Co-founder Yancey Strickler wrote a great blog post laying out the timeline of those 24 hours.

Even with all the press about Kickstarter in the past year, I feel that it remains quite misunderstood as a service and a business. One of the best explanations of Kickstarter I've seen is a talk that Yancey gave last June at Creative Mornings.

If you have 30 minutes this morning to watch some video, I think you'll find this quite interesting and useful to understand exactly what is going on with Kickstarter.

Utilities vs Networks

It's interesting to see a network, Instagram, starting to replace the iPhone's native camera application in many users' daily usage of their phones. I see this in my kids' behavior all the time. When they want to take a photo, they open Instagram, not the camera application.

In the PC era, when applications got bundled into the operating system, they became instoppable. All the competitive apps got left in the dust. But in the mobile era, it seems that a different dynamic is at play. The native applications are getting beat by networks. And these networks will eventually go cross platform which means that the native applications will be at an even greater disadvantage.

I expect we will see this happen not only with the camera application, but also with the calendar app, the contacts app, the to do list, etc, etc. Clean, simple, networked, social, cross platform mobile apps will be the winning model in the mobile ecosystem and the OS vendors will not be able to maintain dominance with the default apps they ship with the OS.

Networks beat utilities in the age when everyone is connected to everyone else. This is a big opportunity for startups. We've already got a few bets in this area and are looking to make more.

Feature Friday: Highlight This Post

The other day my friend Ben Kweller released his new record, Go Fly A Kite. I wanted to give Ben a little help getting the word out. So I used a new feature on Tumblr to create this:

Yesterday our friends at Spark Capital announced that Nabeel Hyatt had joined their firm as a Venture Partner. Bijan used that same new feature on Tumblr to create this:

This feature is called "Highlight This Post" and it is available at the lower right of the post creation screen in Tumblr.

Highlighting a post cost $1. The highlight activity happens in the Tumblr Dashboard. For as long as the post is active in dashboards, it will carry the highlight. I put $20 into my Tumblr credits early this week and will use the Highlight feature as need be. I haven't highlighted a post since the Ben Kweller post, but I certainly expect to use this feature regularly.

Highlight This Post is one of several parts of the Tumblr promoted suite. I don't want to reveal what else is coming but I can assure you that the other features will be as fun, clean, and native as this one.

Payments Day

Yesterday was payments day at USV. Two pretty big things that our firm has been involved in for a while now were coincidentally announced on the same day.

First, our newest portfolio company Dwolla announced the closing of a round we led on their blog. Dwolla is building a large network of engaged users via a radically lower cost payment system. How much lower? Zero for transactions below $10 and a $0.25 flat fee for transactions over $10. If you move $10,000 over the Dwolla network, you or the recipient (your choice) will be charged $0.25. That's it.

Dwolla does this by avoiding credit cards. They see credit cards as the enemy. They want to build a system where the money moves directly from my bank to your bank as quickly and inexpensively as possible. They have big plans and we are bought into them.

Dwolla also offers "Instant" which is a way to instantly load your Dwolla account with funds via an immediate loan from a third party bank. The cost of the Instant service is $3/month and a $5 late fee if you don't pay down your instant loan to zero each month.

If you want to try Dwolla on the web, the iPhone, or the Android phone, go here, sign up, and start moving money less expensively.

Another major payments initiave was announced yesterday by our portfolio company Etsy. For a while now, Etsy has realized that checking out via PayPal was suboptimal for many buyers and also many sellers. But PayPal is deeply ingrained into the Etsy community and the company did not want to do a "rip and replace". So yesterday Etsy announced Direct Checkout. PayPal will remain a checkout option for sellers. But starting yesterday some sellers on Etsy will offer the option to checkout directly on Etsy. And Etsy will be gradually rolling Direct Checkout out to all of its sellers over time as they scale the service and the support system around it.

Both of these situations recognize something fundamental about payments. And that is that being in the payment flow allows you to do other more imporant things for your customers. In Etsy's case, that means things like gift cards, better shipping options, better marketing opportunities. In Dwolla's case that means making payments essentially free and making money on value added services like Instant and others to come.

Payments are one of those things that are fundamental to the online experience. And there are large networks that are being built with payments at the core of them. We are proud to be involved in companies like Etsy and Dwolla who are working at the intersection of networks and payments and we certainly would like to be meeting more companies like them.

Related articles

• Dwolla's payment ambitions grow with $5M round (gigaom.com)
• Dwolla Raises $5 Million Series B From Union Square Ventures & Others (techcrunch.com)
• Dwolla Raises $5 Million From Union Square Ventures To Continue Building Its (Nearly) Fee-Free Payment Network (businessinsider.com)
• Etsy: Announcing Direct Checkout. (No longer just PayPal.) (etsy.com)
• ETSY now has "Direct Checkout" (adafruit.com)

Engagio Followup

Back in early December 2011, I wrote a blog post about Engagio, a new web service launched by our very own William Mougayar. For those who didn't read that post, Engagio is a service that aggregates your comment activity across many of the major social platforms and gives you a gmail style dashboard to see them and reply to them.

A lot has happened in the past 45 days since that post and I wanted to bring everyone up to speed on this project.

First, and most importantly, Engagio is now open to everyone. Every few days, I'd send an email to William saying "you have to open it up". And he'd reply, "we can't scale it yet". Now they think they can scale it, so it's open to everyone. If you didn't or couldn't check it out back then, you can now.

There are a bunch of new features, large and small. Most of them are pretty useful. A good example of that is social profiles. Here's Fake Grimlock's social profile, for example.

There is even a "fred wilson feature." At Disqus, the "fred wilson feature" was the ability to get an email for every comment and the ability to reply to the email and post it to the comment thread. At Engagio, the "fred wilson feature" is the ability to "mute a site." I get so many comments on AVC that my Engagio inbox is filled with them and I see nothing else. When I mute AVC, I see all my other commenting activity on the web, at Twitter, at Foursquare, at other blogs. This single feature has made Engagio way more useful to me. To "mute a site", you go to the Sites page via the left nav section, and click on the icon next to the site name.

Finally a disclosure. Engagio did a small seed round to given them runway to execute the "build the user base" stage of the business. My wife and I made a small angel investment in this round. I've been encouraging William to do this project since he first mentioned it to me in the fall. It seemed only right to encourage with both words and capital.

Please let William and me know what you think of the progress Engagio has made since it launched 45 days ago in the comments.

Dispersion and Entropy In Social Media

On Monday, I trained it up to New Haven to meet a Yale professor named Dina Mayzlin and talk to her class. I thoroughly enjoyed talking to Dina's class as it allowed me to work on some new material in a comfortable setting. But the talk Dina and I had over breakfast before class was even more thought provoking.

Dina got her PhD at MIT's Sloan School a decade ago, before she started teach at Yale. Her thesis looked at TV shows being talked about in the social media of that time, newsgroups, IRC, Usenet, etc, etc.

What she and her colleagues found out was that volume (number of mentions) was not a good predictor of popularity. Volume was more of a trailing indicator than a leading indicator.

But Disperson, or what Dina calls Entropy, turned out to be a very reliable leading indicator of popularlity of a TV show. The wider and broader the discussion of the TV show went within online social media, the more likely the show was to become popular.

By coincidence, the material I am working on in my public talks right now is about the fragmentation of social media. And so as I talked about fragmentation with Dina's Yale class, I started to weave her work, which was still rattling around in my brain, into my fragmentation thesis.

I am totally convinced that the world of social media is not consolidating around one "winner takes all" social platform. Instead, the world of social media is fragmenting into dozens of social platforms that are best of breed for a certain kind of social engagement. If you are building a social media strategy today, you absolutely need to address Facebook, YouTube, Twitter, and Tumblr. And you should also consider Foursquare, Instagram, Pinterest and Path. If you are in the music business, you need to consider SoundCloud. If you are in the book business, you need to consider Wattpad. If you are in the TV business, you need to conside GetGlue. And so on and so forth. Many of the companies I just mentioned, but not all of them sadly, are USV portfolio companies.

That's the thesis I spent thirty minutes on in front of the Yale class. But near the end of the talk to Dina's class, it occured to me that disperson/entropy can be gained by engaging on multiple social platforms. The number of likes on Facebook or tweets on Twitter is volume and is likely to be a trailing indicator of popularity. But if you track the essential social gestures across the fragmenting landscape of social platforms, likes, tweets, tumbls, checkins, pins, etc, then you get a measure of dispersion that may well be a leading indicator of popularity or the slope of the popularity curve.

That's the theory anyway. I'll leave the research to Dina and others. I hope someone will run the numbers to see if it works.

Understanding Twitter

Twitter is one of the most misunderstood companies I've ever worked with. When you are in the inside, or close to the inside, and you see what people write, it makes you shake your head.

Yesterday Dick Costolo, CEO of Twitter, was interviewed by Peter Kafka on stage at the D: Dive Into Media conference. Here's a 13 minute edit of that interview that I watched this morning. I think Dick does a great job of addressing much of the misinformation that has been written about Twitter this past few weeks.

I've worked with Dick since he was the co-founder and CEO of our former portfolio company Feedburner. I worked closely with Ev Williams to convince Dick to join Twitter and I am incredibly happy and also quite proud to see how good of a job he is doing running Twitter.