Last week we hosted what we called the “Foundry Group Digital Life Summit” here in Boulder, Colorado. While we are no strangers to helping host conferences such as Defrag and Glue, this was a much more intimate event that we arranged ourselves.
The genesis of the idea was to get our three portfolio companies in our Digital Life Theme together – namely Cloud Engines, Memeo, and Pie Digital – for a day or two of knowledge transfer and collaboration. After mulling the idea around, we decided to extend the gathering beyond our own portfolio and invite executives and board members of venture-backed and public companies that play in the broader Digital Life universe.
On the first day, we hosted board meetings with our portfolio companies followed by a dinner as a group at Restaurant 4580, one of our favorite places to enjoy an evening with a medium sized group. We began day two with a closed session where our three companies got together and talked about topics and issues relevant to each of them. In the second half of the day, we had an open session that included executives from companies as diverse as Apple, Comcast, CBS, Bug Labs, Boxee, EchoStar, Liberty Media, Sling Media, Sonos and Qwest. This afternoon session was organized around a series of interactive panels dealing with topics from building extraordinary consumer devices, marketing new products, and working effectively with strategic partners.
The day was concluded by a fireside chat with John MacFarlane, CEO of Sonos and Blake Krikorian, founder of Sling Media, moderated by Stewart Alsop. The discussion of what the digital living room would look like in five years continued well into what was a fantastic dinner at 14th Street Bar & Grill.
We had a great time hosting this superb set of people in Boulder. In addition to plenty of insights, we had a lot of fun together participating in a wide range of conversations that wouldn’t have happened at a larger conference. We’ve now got focused events covering three of our four primary themes – we expect it’s just a matter of time before we do something around our Human Computer Interaction Theme.
Our Investment in Next Big Sound
We are very happy to announce our investment in Next Big Sound, Inc. (“NBS”). NBS is an online music analytics and insights company located in Boulder, Colorado. They measure the growth and popularity of bands across major web properties and sell actionable insights around those data to band managers and other industry professionals. NBS has developed a scalable architecture that can quickly add new sources of information and aims to be the definitive source of quantifiable fan data surrounding the music ecosystem.
This investment fits into our Glue theme and even touches upon our Protocol theme in that users (bands) can draw conclusions and correlations from the vast amount of data on the Web about their activities.
Normally, we don’t invest in companies that focus on vertical markets, but this is our second company focused on the music industry, along with Topspin. We’ve believed for a while that Music Business 2.0 is a reality whose time is upon us. The old days of making records, lobbying for spins on radio stations and letting the record companies own the relationship with fans are nearly over. We believe the future of the business lies in direct-to-fan relationships and Internet marketing.
As part of this future there will be new opportunities created to service these new direct-to-fan and Internet marketing models. We believe a key opportunity involves data. Currently, the industry-norm data report is from SoundScan. For thousands of dollars per month, industry professionals are able to see how many CDs and digital downloads have been purchased along with how many plays have occurred on terrestrial radio. We believe that this report is already mostly irrelevant. Consumers are more often spending their listening hours on the Internet and spending their dollars on merchandise and tickets, as opposed to traditional music offerings. The explosion of social media, including YouTube, Facebook, MySpace and the blogosphere have shifted the listening audience to other venues and current information sources for the industry do not cover these properties.
In our conversations with record companies and band managers and our ongoing involvement with Topspin, it has become apparent to us that the industry is craving data, metrics and reports that take into account the next generation of music consumers. The industry is in a state of flux with many differing opinions about what “works” but no one has quantifiable and usable data to defend their theses.
NBS has created a scalable web platform that already is tracking approximately 500,000 bands and over a quarter billion points of data points across web properties such as Facebook, MySpace, Last.fm, iLike, Twitter and IMEEM. One of the most compelling features of the NBS platform is that it automatically creates the list of artists to follow, instead of expecting artists to register and make themselves known. This is critical for giving artists a great experience the first time they use the data with historical trends already in place, as well as the instantaneous ability to compare themselves with other relevant artists.
Furthermore, the type of information and analytics the company is creating is the first of its kind on the web. While we believe there will be others trying to do the same in the future, the company’s blend of industry-specific knowledge, technical capabilities, compelling interface design and first-mover advantage creates a huge opportunity.
NBS will derive revenue from industry professionals who will rely on this data to make decisions regarding their artists. Today, they are used to paying $4,000 a month for reports which track CD and digital download sales. While this information is important, it only explains what happened and provides no data as to why certain events may have occurred. NBS data will provide greater insights into the information that they are seeking and will allow the industry professional to make better decisions.
NBS is a 2009 graduate of TechStars and we were fortunate to get to work with the team over the summer. We are honored to continue to be their partner with their first round of financing, as they had no shortage of funding options after a very successful summer.
See you at Defrag!
Several years ago, along with conference veteran Eric Norlin, we started Defrag – a conference designed to bring together a group of technologists to talk about the challenges around increasing fragmentation of data online and the tools and technologies that are being developed to make sense out of this data mess. We strongly believe that rather than sitting on the sideline watching and listening to the conversation taking place within the markets we care about that we should be actively facilitating and participating in that discussion (Defrag sits at the intersection of our Implicit Web and Protocol themes). In October we’ll be holding our third edition of Defrag and we’re extremely excited about how the conference is coming together.
Eric has been a great partner to work with on Defrag as well as our Glue Conference in the spring. The post below is a great example of why we love working with him and the passion that we all feel about the conferences we’re involved with. At the end is a special offer on registration. We’d strongly encourage you to join us at the event and the offer below is the best discount going (but note that it ends on Wed). See you at Defrag!
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Defrag’s September Special Originally posted by Eric Norlin on the Defrag Blog, September 28
I’ve been getting a lot of requests as of late regarding a discount for Defrag – and we’re going to oblige by running a special for the last three days of September (Monday through Wednesday), but I awoke this morning wondering what I should say about coming to defrag.
And then it hit me…
I really do take this personally. There’s no such thing as “it’s just business” in my world. Every last detail, every small minute thing, every single attendee’s experience — they matter to me. I can tell you every piece of “constructive feedback” I received after last year’s show. Hell, I can tell you who said it, where they work (then and now), and what *exactly* they said (because I’ve got it right here in front of me). Why? Because it all matters. Because it’s not just business. Because Defrag isn’t a “job” for me; it’s a passion.
You will never see me start a conference because there’s a “market” to tap. I start conferences because I think there’s a problem to solve. Because there’s a need.
Add those two paragraphs together and what do you get? A really different experience at Defrag — because it’s not just business. Because we take this personally.
Alright, enough of that — here’s the special: Use the code “septspecial1″ anytime between now and end of the day on wednesday and you’ll receive $300 off of the Defrag registration. That makes us the best value going, and it makes this the best price you’re going to find.
In the spring of 2008, we announced our initial investment in Seattle-based Smith & Tinker, a company founded by veterans of the toy, internet and gaming industries. At that time, the company was heads-down in development mode and wasn’t quite ready to talk about the product they were developing, so our initial blog post was somewhat short on details about what the company was up to. Beyond repeating Smith & Tinker’s mission, “reinventing play for the connected generation”, we said little.
Today we can be much less coy. On August 3rd, after nearly two years of development, the company launched its first game, entitled Nanovor, an online-offline hybrid game targeted at boys aged 7 – 12. To quote the company’s description of the backstory behind Nanovor:
Nanovor is based in a rich fictional world where nanoscopic monsters, known as Nanovor, live and battle inside computers. These nanoscopic dust mites ruled our still-molten Earth, long before any other species could survive. As Earth cooled and the atmosphere became oxygen-rich, the silicon-based Nanovor slipped into deep hibernation for billions of years. In 1958, when silicon was embedded within a computer chip and electricity pulsed through it for the very first time, the Nanovor sprung back to life. Fast forward to present day. Lucas Nelson accidentally discovers these tiny monsters living inside his computer. With the help of his high school science professor, he uncovers the fact that the Nanovor must fight in order to produce the adrenaline necessary to avoid going back into a crystallized state. As fate would have it, Lucas has stumbled onto what Smith & Tinker believes will be the next boys’ mega-hit.
To us, some of the most compelling aspects of Smith & Tinker and Nanovor are the extensive backstory supporting the Nanovor universe and the company’s plans to make the world of Nanovor truly immersive by simultaneously releasing collectible figurines, internet video webisodes, comic books and graphic novels to enrich kids’ experience of the game.
Nanovor’s rollout begins with the Online Battle Game for the PC, The game lets kids collect and battle their Nanovor online. Nanocash, the game’s virtual currency, lets kids expand their collection by buying online booster packs of more monsters and by trading their Nanovor with friends. Nanovor encourages kids to improve their logic skills by playing an included puzzle game to evolve Nanovor into new species. Kids explore the game’s many facets as they discover and share strategies to battle their teams of nanovor to victory.
While the Nanovor Online Battle Game provides a superb kid-vs-kid gaming experience online at the PC, Smith & Tinker’s vision is to enable kids to take the Nanovor universe with them wherever they go, and that they be able to play both solo and head-to-head with other children when they are away from a computer. To enable this, Smith & Tinker will soon release the Nanoscope. Borrowing again from the company’s announcement of Nanovor:
The Nanoscope is a handheld digital gaming device that lets kids take their Nanovor play offline. With the Nanoscope, kids can battle face to face with friends, and play solo-games to further enhance their collection of monsters. Players can download their collection onto the device via a USB connection. Kids can also connect up to four handhelds for head-to-head combat, making it possible for battles to occur anytime and anywhere. Monsters literally jump between screens as each battle is played out with thousands of awesome combat animations. All play on the Nanoscope is recorded, allowing kids to upload their progress to an online account. This provides for a cohesive online and offline play experience for the first time.
The key to the Nanovor experience is the notion that the game can be played both online and offline, and that it enables kids to collect and battle digital artifacts both in the virtual world of the game and when they are face-to-face in the physical world. We view the platform Smith & Tinker has created as an important step for the toy industry, and as an example of another step in the evolution of human-computer interaction enabled by the availability of computing components sophisticated enough (yet cheap enough) to bring a compelling and unique gaming experience to a children’s toy with a sub $50 price point. As we’ve discussed previously in this blog, we believe there will be rich opportunities for companies that recognize and take advantage of the evolving nature of human-computer interaction, and we believe Smith & Tinker fits neatly into our human-computer interaction theme.
In the spring of this year, with development of the online battle game and the handheld Nanoscope device nearly completed, the company set out to raise an equity round to support the rollout of Nanovor and to build a war-chest to enable the marketing launch of the game in time for the all-important holiday retail season. Today, the online battle game (for PC) is available for download at nanovor.com, and the game and other related merchandise can be had at Amazon, Best Buy and Toys ‘R’ Us. The launch of the handheld Nanoscope device that enables offline and head-to-head battles will follow in October nationwide at these and other major retailers.
Today, the company announced a new round of funding, with DCM joining the financing, along with existing investors including us, Vulcan Capital, Alsop-Louie Partners and Leo Capital Holdings. At Foundry Group, we are particularly excited to have DCM join the investor syndicate, as it provides us with another opportunity to collaborate with them. In the past, we co-invested (via Mobius Venture Capital) with DCM in Sling Media, and we are excited to be working with them again. An article in today’s WSJ provides further details about the company and the financing, as does a detailed post over at TechFlash.
We’ve been flattered with the feedback on our new Foundry Group website design. We had a lot of fun putting it together and are really happy with how it turned out. Websites for venture firms can be a challenge and in our case we wanted to create a site that was informative, serious but not stuffy and corporate. It was also important to us that it reflected our personalities.
The front page picture for us is the real highlight of the new design. Our intent was to poke fun at ourselves; not to imply that we were about to form the new Foundry Group band (although Jason and Ryan are indeed in a band together). The shot is actually a take-off on the iconic Reservoir Dogs picture (not of U2 as some have speculated).
The picture came about almost by accident. After taking a bunch of individual candid shots (some of which ended up on our respective bio pages) we headed out to take some more industrial looking “Foundry” pictures in an alley near our office. Just before we left Seth’s wife, Greeley, called to suggest that we stage a Reservoir Dogs picture for fun. It was the last photo we took that afternoon and it wasn’t our intention at the time to use it anywhere on the site (we took a bunch of different group shots that day specifically for that purpose). Fast forward a few weeks to when the photographer sent us the proofs. Upon opening these final shots of the day the unanimous and immediate thought was “this has to be on the front page of our new site”.
We’ve kept much of the content from the prior version of our site and continue to have the focus of much of the site on our blog as well as information on the companies in which we have investments.
