Friday, August 10, 2007

Friday Morning at Matrix Partners

I had a chance to sit down with David Skok and Nick Beim this morning at Matrix Partners in Waltham. We covered a lot of ground...but I was especially interested in some of the higher-level perspectives that David and Nick served up.

David says that when people think about disruption, they often think about technology disruption: cell phones replacing land-lines, or minicomputers replacing mainframes. "But what's more often happening now," he says, "are business model disruptions." He mentioned two in particular: companies offering software as a service are gnawing into the revenues of companies that sell software by-the-seat, and companies built on open source technology are taking share from companies with proprietary technology. David, of course, is investing in open source, and he says he has investments in two new SaaS companies that are still in stealth mode.

Nick, whom I bumped into yesterday at the Y Combinator Demo Day, is an investor in, based in NYC, and in Waltham.

"There has been lots of attention given to viral sites that work, like YouTube, MySpace, Facebook, and Flickr," Nick says. But how many sites are out there with plans to "go viral" that no one has ever heard of?

If you look at who's actually making money, Nick says, some of the more interesting businesses are being built around lead-gen, product comparison sites, and online subscriptions. (He's especially a fan of TripAdvisor, the Needham site that is basically a lead-gen engine for online travel agencies.) As examples of the last category, he mentioned a few companies I hadn't heard Bag Borrow or Steal and Steve Case's Revolution Places, as well as a few I had, like Zipcar, Netflix, and

Before I left, I tweaked Matrix a bit for not having a partner who blogs. There's a disruption happening here, too: not a technology or business model disruption, but a networking disruption.

I think the old model of venture capitalist, which I'm sure can still be successful, waits for the entrepreneur to figure out how to network her way to them: who can introduce me, how do I make the connection and get that meeting? The new model was on display Thursday at Y Combinator: VCs like David Hornik and Fred Wilson (of CA and NY, respectively), whose blogging helps weave them into the entrepreneurial community and makes them more accessible. People know what they're thinking about because they blog it -- and that gives them an opening to say, 'I know you've been blogging about X, and we're building a company in that space.'

I wonder if, over time, that may give them access to more deals of the Facebook type, where a founder is in college or just out, has no connections to the Waltham VC community, may not know any entrepreneurs who can make introductions, but happens to bump into one of these blogging VCs at an event.

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