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msuster
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Hey, Jeff. There's already a Charlie Rose style show on the VC industry. Why don't you visit LA and come on it with me! Check it out at http://thisweekin.com/thisweekin-venture-capital/
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I don't mind being challenged; in fact, I normally appreciate it as a way to further the debate & learn. The trouble is - you add no arguments, no facts and no logic to the debate. So let's start with basics: - I asserted that online advertising is mostly a direct response medium and branded advertising is not online. I provided a graph. So your talking about Coke & Pepsi is irrelevant. I even specifically showed that a brand like Hershey spends only 0.1% of its budget online. I already asserted that. - Quoting CTRs out of context is irrelevant. You need to focus on eCPMs. As a direct response marketer all I care about is "customer acquisition costs" and if I spend $22 dollars to get a customer at a 0.1% CTR or $22 to buy a customer through a TV or print ad - all I care about is the $22. Not mentioned in your post. - You make no mention of alternatives that you're advocating for. - You make no mention of SEO/SEM - the two largest components of online advertising. - You assert that digital marketing is "wasted" - you give no evidence. - I have directly discussed why integrated marketing is more effective than banner advertising and I have data. You haven't discussed this at all. - Finally, you throw in a Red Herring about HuffPo & Arrington, which has zero to do with my post and zero to do with your alleged argument about advertising. And my case for "integrated marketing" did not say "don't disclose it's marketing," I argue for the opposite. This is a very lazy post. Frankly, I'm not sure what point you're trying to make at all. Boo.
This is a great post that gives a good landscape of many of the recent public statements made by VC's. Let me add the following to what you quoted me saying at Deal Maker Media. 1. I agree that we (VC's) are funding people who expect some sort of exit on the business in the future (e.g. 7 years out) and the currect environment does not affect that. 2. For VC's this can actually be a good investment period because we get more realistic valuations going into the investment. We also get people who truly want to be (or NEED to be) entrepreneurs. In an up market everybody wants to try their hand at it - most unsuccessfully. 3. The reasons for the "doom and gloom" are justified. Even with a great product or service it's hard to find corporate buyers (investment decisions are delayed and controlled by fewer ane more senior people) and individual consumers have no money to buy goods. We also know that advertising is already falling off a cliff (see: http://mediamemo.allthingsd.com/20081224/new-york-times-november-was-so-terrible-even-our-interent-ads-were-down/). This means that companies have to last longer. 4. This brings me to the point that Sequoia and Ron Conway were making - you need your cash to last as long as possible! So low burn rates and small teams are the only things that prevail. And if you can pull down your venture debt lines, get clients to prepay for services ... whatever it takes. This would be no big deal if VC's were funding at record paces - they are not. Why? 5. VC's are spending a lot of time dealing with existing portfolio companies (counselling, triage, etc.) and many are out trying to raise their own money for their next funds. It's as hard for them as it is for the entrepreneurs. 6. VC's are also now able to get good prices for later stage deals (e.g. $10+ million in revenue) so your Web 2.0, widgetized, iPhone-enabled application that is ported to Facebook, Salesforce.com and integrated with Twitter and Flickr and has 800,000 uniques but sub $2 million in revenue and a burn-rate of $500k / month is going to struggle to get $$$. It's a tough world out there. Realistic, practical and tenacious entrepreneurs and great businesses will survive. But to what some people are saying - this is not 2001/02 all over again. It's worse. And the sooner management teams figure that out the sooner they'll take the actions necessary to survive and thrive in this economic downturn.