Felicis Ventures Blog

Internationalization: Strength, Weakness & Opportunity

Internationalization can be leveraged by fast growing websites to reinforce their lead globally and create a barrier to entry for copycat versions in other countries. What could be a great strength often ends up being a missed opportunity. Just visit some of the most successful sites on the web today: Digg, LinkedIn and Facebook. While each has built a strong user base, they all lack internationalization for the time being. So if you're a visitor to any of these sites but can't speak English, you're out of luck.

Take Digg for example: the Google Trends chart on the left clearly demonstrates that its following extends far beyond English speakers. People are searching for Digg in Norwegian, Catalan (Spain), Tagalog (Philippines) and Swedish. So, why not create a wiki-like platform so that all Digg users from around the world could translate popular news pieces into their own languages. This would allow local users who can't speak English to enjoy this great site as well.

Another case in point: Facebook. While it grew phenomenally in the US, it could not prevent its German competitor Studiverzeichnis taking the lead in Germany and Austria. Facebook has been around since 2005 and is 22nd most trafficked site globally (according to Alexa). Yet its German rival was able to rocket to Alexa Top 333 in less than a year, and is #13 in Germany (Facebook is #235 in comparison) [once again based on Alexa]. Contrast with Myspace, which is now available in 12 localized versions, and not surprisingly happens to be the one of the leading social networking sites in every major country.

Xing is one of LinkedIn's greatest competitors. While it's trailing LinkedIn in traffic globally, Xing is already available in no less than 16 languages which can all be easily accessed from its homepage. The German company managed to go public in Europe last December at a valuation (at the time) greater than 4 times LinkedIn's latest round of financing.

Google launched its first 10 international sites on June 2000, less than 22 months after it was started. While we used outside translation services for that first international launch, Google subsequently employed the user translation method, which was first made popular by the weather site Wunderground. It simply allows users to translate user interface strings into their own languages and even act as supervisors to oversee the quality of translation by others. This strategy allowed Google to expand a lot faster into more languages and more countries later on (at least until respective local offices were opened).

It could be argued that weaker international monetization and risk of losing focus may explain the hesitation with internationalization. However both can be managed. Google reported that 44% of its revenues in Q4 of 2006 came from outside the US. The advertising revenues from merely Google partners in Japan grew more than 60 fold between 2002 and 2004. The investment in internationalization paid off nicely for the company. As for staying focused: by putting its loyal users to task, Google managed to address internationalization with minimal resources and faster than anybody could have predicted.

Internationalization can be a great strength. It's at the very least a great opportunity. Don't let it become a weakness.

 

Pictures More Viral Than Words

Imagini, which first shot up to the top ranks of Digg two weeks ago, works by using a personality test based on a series of cool images to then match you to other people or allow you to find cool gifts for your friends. According to their homepage, they were able to sign up 750,000 people from around the world in 2 weeks (!). They also managed to enter the top 5 Alexa Movers & Shakers just recently which bodes extremely well for the company. The UI and the images are impressive. Just try it...

US Government Plans To Incentivize Angels

The Wall Street Journal (WSJ) reported about proposed legislation today which would give angel investors (individuals with a net worth north of $1 million who invest in early stage companies) a 25% tax credit on investments in start-ups up to $500,000 on the condition that they make at least 2 investments in that year for up to $250,000 in each business.

This idea might have a positive impact in Silicon Valley, especially if scarcer liquidity options put pressure on early stage investing in the next year or two.

According to the Center for Venture Research at the University of New Hampshire, US angels and VCs invested about $23 billion and $22 billion in about 50,000 and 3,000 deals, respectively in 2005. One can argue that those initial higher risk investments allowed for the riskier ideas that had merit to potentially prosper and at least reach a maturity stage where they could be further funded by established VCs increasing the chances of success further.

The point of angel investing is to support a company financially when the risk is biggest. One of the functions of angel investors that's as important as their financial support, is their knowledge and advice. Both have a positive impact in making great ideas a reality. The proposed legislation can only help by making it more attractive for angel investors to invest in early stage companies and increasing total angel investment for promising start-ups.

Solid Growth of E-Commerce & Its Implications

We get on the Internet to search, email, watch videos, listen to music and talk with others - but one of our most favorite activities on the Internet is: Shopping. Purchasing a good on-line for personal or business use was the second most common activity among the US Internet users according to Mediamark Research Inc's Fall 2006 Survey. While the people who watched videos, read blogs or made a phone call on-line more than doubled last year; in absolute terms, those numbers pale in comparison to the ranks of on-line shoppers.

According to data from Compete and research by eMarketer (which produced the chart on the left), on-line shopping sites, especially the websites of department stores, added the highest number of new users last November. Clearly, a large portion of those new users were doing their holiday shopping on-line, but nevertheless, the growth of Internet users shopping on line was impressive.

From my personal point of view, this trend implies that there is greater potential for new start-ups to emerge in the e-commerce segment to make on-line shopping even more user-friendly and convenient for consumers.

One of the biggest beneficiaries of this trend are the sites that provide personalized recommendations, like Loomia (note: I'm one of their angel investors) and Aggregate Knowledge which allow for smarter and more custom shopping experience. The data behind their growing importance is solid (according to eMarketer, as of 2006):

• 80% of Internet users indicated interest in receiving personalized content
• 57% of Internet users are willing to provide demographic data in exchange for personalized content
• 43% of Internet users are willing to let websites track their clicks and purchases in exchange for personalized content

Other types of sites that could leverage this trend to their advantage are:

• Product rating sites like Wize - for more informed shopping (Raj Kapoor has a great blogpost on this)
• Consumer support sites like Fixya - to help with the products after the purchase
• Shopping search engines like Bizrate which encompass all product categories or commercial search engines that focus on specialized commercial products like Octopart - to allow smart product search/comparison based on price, specs, ratings and other factors

Highlights from D Day @ Y Combinator

12 start-ups presented at Y Combinator yesterday - majority of them built their concepts in less than 10 weeks. It was an impressive group of founders who collectively did a tremendous job of demonstrating their companies. While the development level differed among the presenters, all companies could show at least a private beta or some relevant proof of concept. Kudos to Paul Graham, Jessica Livingston and the rest of the Y Combinator team for an awesome job on selecting these companies and the wonderful organization.

My personal favorites are:

Zenter
Online presentation site that actually works smoothly and *fast*. They added super cool features like being able to add graphics, use *any* font from the web for any text in the presentation, or easily insert images from the web without leaving the online draft. It also allows people to collaborate on a presentation. Needless to say it works with existing powerpoint presentations. Unlike powerpoint, interactivity with the audience is possible via real-time surveys that can measure the listeners response to a multiple choice question in real-time and add it to the current slide. The competition from the established players is not to be underestimated but Zenter seems to be ahead of anyone else in this space.

Weebly
If you have ever wished for a really easy-to-use WYSIWYG website creator/editor that works online, fast, isn't limited to dumbed-down templates with just a handful of pages, look no further: Weebly has done it. They've also really streamlined the code, so the action looks swift. Their site includes neat features like integrating Google Maps to a website, which can be updated easily. While one can argue that the price for such convenience is zero - I disagree - I think in combination with some nice ISP/hosting features bundled in - this could be an unbeatable service, users might happily pay for.

Octopart

If you ever tried searching for electronics parts, you probably realize it can be incredibly difficult to sort between suppliers, while trying to keep track of the part numbers, prices, etc. Enter Octopart's vertical search engine which makes searching for parts a breeze. Results include major suppliers, prices,  available stock, product specs and more. It's fast, it's targeting an under-served niche, it focuses on search terms that are virtually all commercial and it's fast.

Other notables included:

• Virtualmin (Web based virtual hosting)
• Writewith (Collaborative online word processing)
• Auctomatic (online selling utility for eBay power sellers)

More detailed reviews of all the participants can be found on TechCrunch.

I want my [personalized] TV

Imagine TV in high quality video, personalized based on what you like, such as 24hr mountain biking, or all Formula One races or 24hr celebrity gossip. You can clearly search for the most popular videos on anything, browse by category, or look for the "most watched" but there is not yet a way to get video, completely customized based on YOUR preferences.

YouTube, Metacafe and many other sites became hugely popular based on an immense selection of user generated video content. According to Forrester Research, 15.5 million households watched internet video in 2006, compared to 7.9 million that used social networking sites or 9.4 million that bought and downloaded music files. That's just the beginning - live TV over the internet, consumable on any device, including PC, TV or mobile phone will change how we enjoy entertainment.

In fact, just like major TV stations fighting over TV celebrities and popular TV hosts, video sites are now fighting over the most popular consumer generated video producers. But it will be more interesting to watch the competition to provide customized TV over the internet.

There's excellent coverage of number of different start-ups going after this market in different ways on TechCrunch. For instance, MobiTV assembled a $100 million war chest to go after live TV mostly over mobile devices (they do offer a PC service via AT&T). Then there is ManiaTV which impresses with its unique and live programming, JumpTV which stands out by providing access to a large number of international TV channels over the internet. The traffic numbers clearly demonstrate that these two are winning over other approaches like limited cable over the internet, Al Gore's CurrentTV or old TV programming over the internet. A notable exception is Orb which is gaining popularity by offering your home cable lineup and more via a software download instead of a specialized device like Slingbox.

My personal take on it is that it comes down to quality content, selection, AND personalization. It will be exciting to watch who gets that last one right.