Okay, I guess I’ll take your money

As more than one observer has pointed out, one of the benefits of being a Web-based startup is that you can get a lot farther with less money, to the point where some Web 2.0 companies such as Flickr, del.icio.us and Writely made it all the way from tiny startup to multimillion-dollar buyout by one of the Internet majors without any large-scale financing whatsoever.

The founders of Dabble DB, the Vancouver-based interactive Web database provider, say they had every intention of avoiding the usual venture-capital rodeo. And yet they just announced a financing deal (rumoured to be about $2-million U.S.) with Ventures West of Vancouver, a deal brokered by Ventures West advisor — and now partner — Paul Kedrosky, the Canadian-born and San Diego-based VC behind the blog Infectious Greed.

So what changed their minds? The two co-founders of the company, Andrew Catton and Avi Bryant — who tend to finish each other’s sentences, which makes it difficult to identify who said what in a conference-call interview — said before they got in touch with Paul (who I got to know in the lead up to the mesh conference I helped organize last month in Toronto), they had gotten a lot of interest from venture groups such as Hummer Winblad, particularly after they showed off their service at the venture-capital oriented Under The Radar conference in March. But they turned them all away.

“We joked about giving them the ‘soft no’ response,” the co-founders said, since that’s how many VCs describe their response to companies when they are trying to let them down easily. “But we tended to shut them off pretty quickly. We weren’t playing hard to get — we just didn’t want their money.” The two twenty-somethings said they didn’t want to go down the usual Silicon Valley route of having to give up a large stake in the company and/or board seats.

Paul described the co-founders’ reaction to traditional VCs as “almost an allergic response.” But he offered a middle way that appealed to the company. “I told them what I had in mind as a sort of entrepreneur-friendly approach,” as opposed to the traditional Silicon Valley model, he said in an interview. In addition, “most of what they would have gotten [with a traditional VC] is access to board members and access to the buyout channel, and with me they get those things anyway because I know all those people.”

The upshot for Dabble DB is that they get funding from a local VC, but one with contacts in the Valley, and they only have to give up one board seat (to Kedrosky) and they don’t have to move to Silicon Valley — as StumbleUpon, formerly based in Calgary, did earlier this year.

Om and Rafat are the future of news

Not much time to post today — in the middle of moving, which is not an easy thing with three daughters, two of whom are teenagers — but I wanted to take note of the Wall Street Journal article about bloggers finding financial backing, and not just because it mentions my friend Om Malik, who was kind enough to come north to Toronto for mesh even though he didn’t know any of us from Adam.

The story notes that Om recently left Business 2.0 magazine to go full-time as a blogger and start what is likely to become a new media organization, and it also notes that Rafat Ali and the team at PaidContent also got financing from long-time tech investor Alan Patricof’s Greycroft Partners. Rafat says they will be “hiring a journalist in NYC, starting our UK vertical, launching a redesign of all our sites, hiring more staff for operations and sales, bringing on interns, planning more industry mixers and developing conferences, starting our research arm, and more.”

This is a nice counterpoint to Richard Siklos’s recent piece in the New York Times, in which he talked about how minuscule new media ventures are compared with “old” media such as News Corp. — and there’s no question that the relatively tiny sums given to Om and Rafat (less than $1-million each) wouldn’t even show up on the books of a major media outlet.

But I would argue that any media organization with brains should be paying close attention to what Om and particularly Rafat and his team are doing — it may sound apocalyptic, but PaidContent is the future of journalism in many ways. They are doing more enterprise reporting than lots of newspapers and magazines, and at one-tenth the cost. As Jeff Jarvis notes, from small seeds. Cynthia Brumfield at IPDemocracy (another excellent site for news and commentary) compares it to the early days of cable.

Digg takes on the Old Grey Lady

My old-media pal Scott Karp over at Publishing 2.0 latched onto something that I noticed as well — a “data point,” as I like to call them — in Mike Arrington’s post about Digg launching the new broader version of its news filter next Monday. According to TechCrunch and Alexa’s traffic stats, Digg has about 800,000 unique visitors a day and page views of about 9 million a day (and those numbers continue to grow at a fairly dramatic rate). Extrapolating from those figures gives Digg almost as many page views a month as the New York Times, and almost as many unique visitors a month as well.

That is a pretty staggering number — and it has to be fairly sobering for anyone who works at the New York Times and is paying attention, not to mention anyone at a traditional media organization like the one I work for. There are issues with the traffic numbers that TechCrunch is using, of course, as one commenter on Scott’s post pointed out: Alexa’s measurement tools only track the U.S. audience, and the New York Times almost certainly has a fairly broad international readership. Still, the NYT’s online readership is likely growing relatively slowly, and Digg is still climbing like a rocket.

Scott notes that filters and aggregators such as Digg.com are “leeches” on traditional media such as the New York Times, and he is right to a certain extent, although I think the word leech is a little over-the-top. It’s true that aggregators don’t do original reporting, which is why they will never replace the journalist who goes to cover a battle in Afghanistan or uncovers corporate fraud at Enron or whatever. But here’s a little secret: many newspapers and media organizations, including the NYT, don’t do as much original reporting as people might think. In many cases, they make extensive use of wire reports and other material — does that make them leeches too?

Digg and others like it (I like Reddit.com and Rojo’s filter too) are not going to replace investigative journalism — that’s a giant red herring. But they can still replace much of what newspapers do, and it would be stupid to ignore that.

Bill Gates, TV pirate

Sometimes it pays to read all the way to the end of an interview. In a recent chat (subscription required) between Microsoft co-founder, chairman and gazillionaire William Henry Gates III and the Wall Street Journal’s tech guy Walt Mossberg, the discussion turned to the phenomenon of “social networking” and sites like video-sharing service YouTube.com.

At this point, Mr. Bill admitted that he had watched several programs — including excerpts from shows about the legendary basketball team The Harlem Globetrotters and some physics lectures (he is a geek, after all). Here’s an excerpt from ComputerWorld magazine’s website:

WSJ: “You watch physics lectures and Harlem Globetrotters [on YouTube]?”

Gates: “This social-networking thing takes you to crazy places.”

WSJ: “But those were stolen, correct?”

Gates: “Stolen’s a strong word. It’s copyrighted content that the owner wasn’t paid for. So yes.”

As a commenter on the ComputerWorld blog notes (sometimes it pays to read to the end of the comments on blogs as well), copyright infringement isn’t technically theft — at least, not as far as the U.S. courts are concerned. Still, that doesn’t make it right.

But then, Mr. Gates has what you might call a “nuanced” approach to piracy, even when it involves Microsoft products. In 1998, he told CNET News that he knew large-scale bootlegging of products was occurring in China, but didn’t seem overly concerned.

As he put it: “About 3 million computers get sold every year in China, but people don’t pay for the software. Someday they will, though. As long as they are going to steal it, we want them to steal ours. They’ll get sort of addicted, and then we’ll somehow figure out how to collect sometime in the next decade.”

Send your avatar to a conference

I was having dinner with my fellow mesh organizers the other night, and I half-jokingly suggested that our next conference on Web 2.0 topics should be held in Second Life, the virtual world/game that some are calling “the new golf.” There have been book signings (Cory Doctorow’s) and talk shows in the online world, and several companies have set up shop there — including the hip T-shirt maker American Apparel, which is going to sell clothing to avatars for $1 each.

That was a few days ago, and now I read on Steve Rubel’s blog that someone has stolen my idea. A virtual panel discussion on marketing to avatars will be held in Second Life with Paul Hemp, who wrote a recent piece in the Harvard Business Review all about… yes, marketing to avatars. Among the other panelists are Tony Walsh of Clickable Culture.

This is a fascinating area, I think. I haven’t played around much with Second Life, but I’ve checked out There.com and done some looking around a few other virtual worlds such as Project Entropia, and the whole idea of marketing to avatars is an interesting one. And let’s face it — if companies such as Adidas don’t get in there and do their own marketing, they are likely to find someone else doing it for them.


The BBC has also hosted a music festival of sorts within Second Life, and there is more about that here — the network says it wants to do more similar events, including virtual band interviews, etc.