Our Investment in Lijit

As we’ve previously written, one of the things we intend to do with our blog is highlight the companies and entrepreneurs in whom we’ve invested. While it’s always nice to give our portfolio companies some exposure, it’s also a good way to provide concrete examples of the investment themes Foundry Group is pursuing.

The purpose of today’s post is to introduce one of those companies—Lijit Networks. The company fits into our Implicit Web theme, which focuses on tools and services that help users manage the information overload created by today’s Internet. The goal of the Implicit Web is to identify relevant content in a more efficient, intelligent and proactive manner and to present it in more insightful and actionable views. (You can read more about our thoughts on the Implicit Web in this previous post.)

Foundry co-led an investment in Lijit last year with Boulder Ventures shortly after we closed our fund, though our involvement with Lijit goes back to the original formation of the company. Brad Feld helped connect Todd Vernon and Stan James, Lijit’s co-founders, and led an angel round in the company prior to our raising our fund. Shortly after the angel round closed, High Country Venture invested alongside Lijit’s angel investors, giving the company plenty of capital to get to its first venture round.

We’ve known Todd, Lijit’s CEO, for over a decade (and were investors, via a prior venture fund, in another company that Todd co-founded). During that time we’ve come to appreciate Todd as having that compelling mix of proven entrepreneurial skills, a sharp mind and a combination of both technical prowess and business acumen. He’s also an all-around great person to work with. Once we closed our fund, we were delighted to invest in Lijit and back Todd again.

Lijit provides search tools to bloggers and other information publishers. These tools help readers search a blogger’s site for specific topics and content while also providing the blogger/publisher with a wealth of metrics and statistics about their readership and their interests. Even more compelling—this is where the Implicit Web theme comes in—Lijit also allows a blog’s readers to simultaneously search that publisher’s entire online ecosystem, whether it be a blogger’s blogroll or content that blogger has created elsewhere, such as bookmarks on del.icio.us, photos on Flickr, videos on YouTube, etc.

If you want an example of Lijit’s search widget, look at the upper right-hand corner of this page; the search box you see there is powered by Lijit.

The theory behind Lijit’s goal of enabling search beyond an individual publisher’s site is that content that is interesting and relevant to a reader’s search query often extends beyond that individual publisher’s site. In the blogosphere, conversations and content are often interwoven across multiple locations and, for any given blogger, his or her blogroll is a clear manifestation of affinity with other bloggers. That affinity might be a result of a similarity in the types of topics being covered, similarity in mind-set, or professional or personal relationships.

Using relationships among information publishers to generate and filter search results is a terrific example of how the Implicit Web should work. Rather than force the reader to laboriously identify relationships between multiple blogs, search each blog individually and manually aggregate the results, Lijit automatically discovers and exposes those relationships and the resulting relevant content—all in one simple step.

Regardless of the reason for the affinity, it stands to reason that if a reader is interested in, say, AskTheVC’s coverage of venture capital term sheets, the reader may also be interested in Brad Feld’s, Seth Levine’s and Fred Wilson’s views on that same topic. Why? Because Brad, Seth and Fred are all well-known VC bloggers who openly share their opinions drawn from their experience as venture capitalists.

One could argue that an AskTheVC reader might discover Brad’s and Seth’s blogs on his own—after all, we all work together at Foundry Group, so how hard should it be to connect those dots? But for a casual reader, discovering Fred Wilson’s blog might be more difficult given the lack of an obvious direct connection. Lijit intelligently bridges that disconnect by recognizing that Fred Wilson, Brad and Seth are all members of AskTheVC’s blogroll and thus all represent potential sources of relevant, searchable content for AskTheVC’s readership.

While we think that Lijit’s better search tools are, in and of themselves, a big step forward, we also believe that they form the foundation of other equally compelling opportunities. For example, combining a map of the blogosphere’s social graph with the ability to discern the expertise of individual bloggers and publishers (after all, a broad enough reader base is unlikely to consistently search a particular site for topics outside of that blogger’s expertise) can yield interesting insights into what pockets of expertise exist and where they reside on the web. Alternatively, the same data are very relevant to identifying various affinities and interests across a wide swath of blogs and content sites for the purpose of highly targeted advertising.

If you have a blog or are a content publisher and don’t yet have Lijit’s search widget installed yet, you’re missing out—give it a try and we bet you’ll be impressed.