MSM wonder where the Aussie angels are too

"The venture funds are terrific if you need $5 million, but the biggest problem in Australia is $100,000 to $2.5 million."

Amen. So says Alan Milwidsky, executive director of Business Strategies International, in this Oz piece from yesterday. Apparently the Fin also covered this story, although it's behind that stupid ******* pay wall. Allow me to add a few more swear words about that policy: *****, ***** and *************. That means you, Mark Jones.

So anyway, following on from last week's bit on angel funding, I have been wondering why there isn't a local Paul Graham doing something like Y Combinator. If I ever manage to sell a business for enough money to give me an angel-level funding base, that's what I would do. Set up incubators in run-down shacks in Fitzroy, Redfern, Fortitude Valley, Fremantle and wherever in Adelaide that's young and hip and techy (though that might be hard to find), and hit the university campuses to look for recruits. Stand in front of lecture theatres for engineers, computer scientists, journalists, artists, whatever, and throw chairs and shout "FOUNDERS, FOUNDERS, FOUNDERS!" Interview the hopeful two-to-three-person teams, pay the good ones $6000 each for three months and take 6% of the company (as Y Combinator does), and set them to work in a sheltered environment to see what they can do. It's such a simple, low-cost model, and Graham has shown that it can work. Not that I want to go all Whitney Houston here, but I believe that innovation comes largely from university experience, as it did for me, and all those VCs building multi-million dollar warchests are going to have to sit there twiddling their thumbs unless some local angels take a leading role in nurturing the smart twenty-year-olds who are just waiting for their chance.

Is there a member of the Australian cashouterati from the first Internet boom who is willing to take that kind of chance? I hope so.

TVJ: history, spec and FAQ

I have finished the initial posts over at the new Table Vs Jetski blog: a TVJ history, a TVJ tech spec and the beginnings of a TVJ FAQ.

TVJ is part Wordpress, part OPML, part Powerpoint, part podcasting, part vlogging. TVJ is a system to describe the way that anyone can define a visual slideshow to accompany an MP3 file by composing an OPML file which links to any kind of rich media object to illustrate the audio. In short, you can treat a podcast as if it’s the soundtrack to a TV show. Through defining the OPML file you can assemble all of the visuals to go with the corresponding audio from locations anywhere around the Internet.

I hope it looks interesting to enough people to spark some debate about building such a system.

Top 10 ways non-US 2.0ers do without VC

For some reason I'm on the AVCAL mailing list... oh wait, it's because I started a business. Silly me. Anyway, so today's email congratulated Southern Cross Venture Partners on the first close of their first fund at A$100 million. The fund will be capped at A$200 million, a level expected to be reached by the end of 2006.

“The Australian marketplace is highly attractive for early-stage technology investing due to the excellent deal flow and persistent shortfall of early-stage venture capital,” said Southern Cross Venture Partners Managing Director Bob Christiansen.

“The fallout from the tech bust saw investors move towards more conservative later-stage investments, but the time is now ripe for early-stage investing as a new stream of experienced entrepreneurs and interesting innovations emerge.

“Our experience shows the Australian early-stage market is grossly undercapitalised with not enough capital to support the qualified deal-flow for at least the next four to five years.

Okay, that's all well and good. But this only crystallises, to use a Butterssism, what I have been hearing and experiencing about the local VC market. I have had my own attempts to secure venture capital backing, as have fellow local consumer Web plays b5 media, Feedcorp and The Podcast Network. I'm not talking out of turn with any of these Aussie companies here, they've all blogged about it themselves. And they have, as far as I know, had no joy. Nik Cubrilovic basically moved to the US to get VC for Omnidrive. Minti managed to snare A$1.5 million in February but it wasn't done through an actual VC firm AFAIK, was only Perth-based, and sounded more like angel funding.

Thus I present the top 10 ways that non-Valley-area 2.0 entrepreneurs have found to get around the fact that VC funds in your area are shitscared of consumer-facing businesses.

1. Don't spend any money at all.
This is largely my strategy. Our outgoings are negligible, and have so far been covered by AdSense. (AdSense doesn't count as its own item, it's assumed. We're Web 2.0, baby!)

2. Spend your own money.
You used to work at a dead end job at a multinational conglomerate as a salariman, and you had the bright idea to strike out on your own into the bright blue future. Good job, idiot, your bank balance is losing digits fast.

3. Spend the bank's money.
If you already have one mortgage on your house, what's so bad about having another one? Interest rates will come down again, won't they? Surely?

4. Spend your parents' money.
Ah yes, the bosom of one's familial units. I plead guilty to sponging a roast dinner once every week, although admittedly the benefits may be outweighed by the petrol costs in driving 100km round trip to get there.

5. Spend the government's money.
Have you heard about this NEIS program? It's like angel funding for no equity! All you have to do is sit through three months of boring seminars, then you get $10,000 in cold hard cash! Sweet!

6. Spend money you don't have.
You know this one guy who built a million-dollar business just by buying supplies on his credit card. No worries! Not only will those pesky interest rates be coming down again real soon, you get all those lovely frequent flier points to fly to places to spend more of this money you don't have.

7. Earn consulting money.
Sure, your skill sets may not fit with being an actual entrepreneur, but you can always dip your toe back in your old industry. Just one more day and you'll get back to your own business. Honest. Well, that per-hour rate is pretty tempting.

8. Go back to work for The Man and become a silent partner.
You were never the main guy anyway, you've made your contribution. Someone needs to earn some money around here! 2.0 is stupid anyway. I've still got equity, remember!

9. Spend MSM money.
This is great, we're screwing The Man for real dollars! By day we tug the forelock and get ordered around by middle managers for phat consulting bank, and by night we undermine the MSM on our blogs. We're engineering the revolution from the inside, man! And yes, if you want to buy us, of course we're not tainted by association.

10. Hope you'll get some MSM money at a future, indeterminate date.
... guilty as charged.

Vlog or podcast... a third way

I watched the discussion about the validity of vlogging over the weekend, via Mathew Ingram and many others, with great interest.

I have told a couple of people about the idea I had which I will be working on under the name of Table Vs Jetski, one of whom was a mate of mine who currently works in Sydney consulting for phone carriers and other publishers of video content to mobile phones. His job, as he explained it to me, is mostly in convincing media companies who have reams of full-motion video content to not just shovel the entirety of their archives onto mobile networks, because it's not going to work without tailoring the video content to the medium. You can't just push the packaged soccer highlights from a TV soccer highlights show to a phone, for example, because TV soccer highlights are usually filled with long shots of the entire field showing positional play, something which comes out on a mobile phone as a big green blob with indeterminate white pixels pinging around without context. Slow-motion replays, however, work far better on mobile screens, so to get truly compelling video content to mobiles requires a different approach to editing and shot selection.

When I explained my idea to this mate of mine, he understood it immediately.

The discussion about the merits of vlogging vs podcasting vs blogging also highlighted reasons in my own mind as to why my idea will succeed. There does need to be a medium in between podcasting and vlogging, to take advantage of humans' reliance on visual stimuli, but simultaneously taking the pressure off the creators of the content to develop highly polished production values. Blogger and Wordpress allowed bloggers to concentrate on the content, and a number of podcasting startups have had varying success in making the process of recording and publicising podcasts streamlined to enable non-geeks to enter the field. Similarly, what I'm trying to assemble is a system where a happy medium between podcasting and vlogging can be achieved in an open architecture that is highly decentralised... but may also be the key to enabling easy monetisation.

I'm not quite ready to release the concept into the wild just yet, but it's close.

Further proof that Michael Arrington has achieved the godhead

Catching up on last week's episodes of Keith & The Girl, one young kid rings in unannounced in the first five minutes of ep #346, AIDS Angel, to call some other kid a C-word, and when regular gossiping guest Patrice inquires as to the caller's name?

"Uh, Michael Arrington."

It was clearly not Michael Arrington himself, of TechCrunch fame, since the teenage-sounding kid went on to describe how the other kid whom he was cussing out had bonked his ex on the rebound... which I don't recall reading on CrunchNotes or even Valleywag.

So now random tweeners are using Mike's name instead of John Doe. He wasn't even giggling about it! What next, will the Oxford dictionary people have to accept arrington as a verb?

Quick hits from Influence 2006

A number of things arising from Influence 2006 that didn't fit into other posts:

• It was good to meet William Pramana of the William Computer Blog, which he told me has ranked as high as #9 on Technorati. Duncan kvetched elsewhere about how many of the sessions at Influence were glorified product pitches, but my experience was that that was true mostly of the consumer stream, which William attended throughout and no doubt got a lot out of for his product-focused blog, whereas over in the enterprise stream the issues got debated a lot more strongly.

• Duncan Riley linked a piece on Threadwatch mercilessly attacking an Australian IT article on search engine optimisation by Simon Hayes. Another blogger calls the article "trash". Simon is a good journalist, but it looks like he got this one a little skew-whiff. One of the Threadwatch commenters even hints that the quoted SEO expert is connected to News Interactive. It may seem I'm picking on the Oz given the previous post about Stuart Kennedy, but it just seemed timely to point this out as, in Duncan's pithy portrayal: "More proof that Australia is out of touch".

• The main reason that I consider Influence 2006 to be an unqualified success is the poker night on Sunday, in which yours truly beat a table of ten including thrashing Phil Sim himself in heads-up play. We all started with 450 chips and 5/10 blinds, but I kept on getting dealt rubbish and folded until the blinds quickly hit 100/200. The first time I had to post the big blind of 200 I got a pair of 7s, went all in and won, and never looked back. Phil had won a big early hand with pocket aces and so was the chip leader going into the end game, but it was too easy to bully him out of pots with raises that he couldn't stomach. My evil eye technique was working a treat. Finally, as Phil's previously mountainous chip stack had dwindled to foothills, it came down to him going all-in with 10/4 offsuit, and me holding A/Q of hearts. I called, Phil saw he was dominated, and had that sick look of despair written all over his swarthy dial. The flop paired his 10 and gave me no love, then the turn was also a blank, and Phil thought he was still alive. Then the river... an ace! Victory was mine. If only it was as easy to part customers from their money as it is to take poker chips from Phil...

MSM vs Web 2.0 @ Influence 2006 (version 2.0)

After the medieval-themed dinner at the Influence 2006 conference last night I caught up with Stuart Kennedy, editor of the Australian newspaper's IT section, and thus steward of the most influential MSM mouthpiece in the local scene. I remember him back when he was a shitkicker for CDN, so we were able to have a robust discussion about the Web 2.0 phenomenon without pussyfooting around any of the arguments.

EDIT: After having a word with Stuart and realising that I should have asked him about blogging about a private conversation, I have decided to take out statements I attributed to him, even if indirectly, and couch the arguments only in terms of my own opinions. Unlike the MySpace generation, I have a sense of shame when it comes to respecting privacy. I apologise to Stuart for having gone off half-cocked like that.

Certain members of the blogosphere display an overweening arrogance in declaring the death of mainstream media, and newspapers in particular. Without many Web 2.0 sites having got to the stage where they are rivalling the readership of newspapers, it is hard to take seriously any of the numerous pundits using their small-footprint blogs to argue that MSM was now irrelevant in the new media world. In particular, these Jeremiahs are not acknowledging strongly enough that the blogosphere as it has evolved is wholly dependent on MSM, because very few blogs conduct primary journalism, and even less understand newsgathering.

It is easy to be skeptical once you understand what the financial numbers are actually telling us. The Oz's revenue streams in their IT section have not been decimated by the Craigslists of this world, since the classified job ads that used to fund the fatness of the section have now been painlessly replaced by display advertising from vendors. Of course, that advertising budget has to have been shifted from somewhere else, and it has been a noticeable trend in local IT business magazines over past couple of years that permanent staff numbers have been slashed in favour of freelance armies.

I think TC is now committing acts of journalism on a daily basis. TC is a rather singular example since its viral adoption was engineered via a wave of sycophancy and patronage which would not be viable outside the peculiar social power relationships of the Web 2.0 industry. Can the TechCrunch model be translated to general IT... or to the mining sector, or to golf, or the bridal industry, or anything that is not native to the blogosphere? It's easy to say no. My point is that TechCrunch is not a direct threat to Stuart's newspaper business, but it is effectively this Internet boom's version of Fast Company or Industry Standard. (Hmm, we seem to have been bashing print magazines a lot.)

Where Stuart should detect some danger, in my opinion, is in the news aggregators. As I explained to him, bloggers don't do much primary journalism, but aggregators like Digg and Techmeme and Topix are aimed at doing Stuart's own job. Stuart commissions stories and sends journos out to cover them and then assembles the resultant content into pretty pages full of poignant pictures and purple prose which he expects that his audience will buy in totality. You can't buy one page of the Oz, you have to pay for the whole package. On the Web, however, aggregators become an alternative editor. Where newspapers strove in olden times to be a "journal of record", aggregators are doing a better job of that function these days than individual MSM sources are. You won't get a whole-of-industry view from just the Oz, or just the AFR, or just the Age, because they all cover different stories. Aggregators can compile front pages that give readers everything that they are interested in, no matter what the source. Instead of getting "page views" for every single story in a print newspaper, online versions of those stories get linked in isolation. No longer can newspaper editors like Stuart control the reader experience. Where the bloggers come in is bolstering the role of the aggregators by clustering their stories around what appears in the aggregator, so that the Techmeme crowd becomes a self-fulfilling prophecy of what is in the journal of record for each five-minute span.

So if aggregators become the new filters for MSM content, will Stuart and his contemporaries have to adapt to what aggregators think is hard news? Stuart is an old-fashioned journo in every sense of the word, with a strongly-developed sense of hard news and how to get it. What if the aggregators favour one kind of story over the other, which conflicts with Stuart's conceptualisation of what his readers want and what types of news stories are meaningful for the industries he's covering?

And if the aggregators start attracting that display advertising away from MSM outlets, what would happen to Stuart's budget for editorial? Does the whole system break down because MSM outlets can't fund the quality reporting that the aggregators are relying on them for?

Of course, this is all speculation that is dependent on the model of the aggregator-fuelled blogosphere cyclotron extending past its Web 2.0 niche and breaking out of the early adopter crowd to become the new paradigm of audience-media interaction. Stuart's way is still winning at the moment, despite the wailings of the anti-MSM bloggers, and the blog model is the one that has to prove itself. If someone can figure out how to get the Crunch/Meme codependency to work outside Valley geek culture, then Stuart has something to worry about.

Update: Duncan Riley has some thoughts on the disconnect between Aussie MSM journos and Web 2.0.

Influence 2006: Stationa/ery Company

Second day into Influence 2006, the conference in the Hunter Valley designed by Phil Sim to bring journos, PR flacks, analysts, vendors and users together in an informal environment. Richard Giles likened the structure to an unconference format, but if Dave Winer were here he'd be loudly critical of the seating arrangements putting the panel members in front and the audience in the back - although because this is an invite-only event (unless you're a vendor) he would likely boycott it anyway, as he does FOO Camp.

Having not seen many of the assembled denizens of the Sydney IT media mafia for nigh on five years, it's interesting to see how little attitudes have changed. The same old concepts keep on getting pushed by the same vendors, year after year, and the journos are still implacably cynical. I'm not criticising Influence in particular, but it's easy to draw the conclusion that the underlying structure of the IT media is wrong. How can anything meaningful come out of PR-coached vendor performers spruiking at bored journos who have heard it all hundreds of times before?

Then again, are the newer methods any more informative for the casual reader? Would you get more out of a MSM opinion piece on any particular subject than if you watched two of the protagonists on either side of the debate duke it out in the comments of a blog post? I guess it depends on the communication skills of the MSM writer versus the commenters. IT media readerships are going down, while blog consumption is going up. Does that mean that readers are making the choice that reading first-hand accounts and opinions by amateur writers (who may or may not be professional-grade quality in their chosen field) are more compelling, more timely and more informative than MSM journos writing lengthy screeds in time-shifted newspaper copy or month-old magazine prose?

I had assumed that the editor of Australian Anthill magazine, who said in his session today that his publication had originally been positioned as a Red Herring or Fast Company clone, would know what TechCrunch was. I was wrong.

Are IT journos out of touch? Some vendors are out of touch, that much is clear from today's sessions. Do journos know how to ask the right question to expose those vendors? Or can they, given that their livelihoods depend on advertising dollars from those same vendors? Okay, maybe that's a cheap shot. It seems to me that journos' cynicism is in striking contrast with the cheerful boosterism of Michael Arrington at TechCrunch, and it seems Mike is winning, at least with some section of the audience. I get the feeling that the market is crying out for a new print publication which melds MSM professionalism with bloggish geek cred that would be as influential as Fast Company was back in the day. Maybe Mike should authorise a TechCrunch magazine? I'm sure I'm not the first person to suggest that.

Or perhaps that's the wrong attitude to take. Perhaps the business mags like MIS with fat ad rates and six-month lead times on articles will finally get swamped when someone figures out how to translate the TechCrunch blog model to enterprise IT. All I know for sure is that the old model is looking tired and past its use-by date.

Mobile m0nty

Okay, so this is the first post I have made from a laptop with a wireless Net connection, while waiting for a plane to Sydney to attend Phil Sim's Influence conference. WTF, this looks just the same as the normal Internet! Ripped off!