As readers of my blog know, I never flog my portfolio companies, but tomorrow is CyberMonday and as a fan of e-commerce over the last 12 years in the industry, I find it hard to not do a little cheerleading in general and for Mall Networks in particular.
According to shop.org, 68.5 million people will shop for holiday gifts from work, up substantially from last year, and 30.2% of holiday sales will be influenced by the Internet. It’s an incredible transformation and it’s hard to imagine what the next 12 years will bring given the pervasiveness of broadband, mobile and the forces of globalization. It’ll be interesting to see if consumer worries about the housing slump, mortgage crisis and other economic woes will slow down e-commerce spending tomorrow and beyond this holiday season.
Before memories fade too quickly, it’s worth noting what a great event we had Friday night when we hosted TechCrunch’s inaugural Boston MeetUp event. 800 entrepreneurs, VCs, press and other industry players came to network and celebrate the beginning of the holiday season. A number of local start-ups use the opportunity to launch themselves to the market. Below is a pic of me with the ubiquitous Don Dodge from Microsoft. Special thanks to Michael Arrington and TechCrunch CEO Heather Harde for organizing the event with us.
Rumor has it that we will finally hear the news on the Google phone today. The search firm’s every move is closely watched, but lately even the parochial Boston technology community is abuzz about what’s happening in Silicon Valley. For months now, both the Boston Globe and the Boston Business Journal have breathlessly reported Google’s every move, including its real estate and hiring forays, with hundreds of engineers briskly hired and crammed into office space in Kendall Square – apparently nearly all of whom are working on its planned mobile offering. When I was at the wireless trade show conference (CTIA) last week in San Francisco, there wasn’t alot new to talk about, and so Google’s reported entry into the spectrum auction and top-secret efforts to create a phone operating system loomed particularly large.
And yesterday’s Sunday NY Times raves about the gadget prowess of the executive in charge of the effort Andy Rubin. Meanwhile, the stock price has never been higher, closing yesterday at over $711 per share with a market capitalization of $222 billion, surpassing even Cisco.
The parochial debate in Boston is whether Google’s presence is a net plus or minus. The grander debate on the world stage is whether Google is a Netscape-like flash in the pan or truly a history-making enterprise? My vote on both accounts is huge "net plus" and "history-making".
Google’s vision is breath-taking: the company is after no less than the $800 billion of advertising dollars that are currently spent worldwide by giants like General Motors and P&G down to your local dry cleaners. With only roughly $20 billion in that advertising spend happening online in 2007, the data shows that online ad spending, although growing at a torrid pace, has not caught up with the time consumers are spending online as compared to other media (insert here the usual diatribe about the decline of the newspaper, network television and the like along with the required gratuitous reference to the "Long Tail" of content and entertainment). Its ambitious plans into the mobile market are merely a natural extension of this strategy. Google is following the consumer eyeballs – and consumers worldwide are more and more turning to their mobile phones as a source for news, information, games, entertainment and video.
What some people don’t fully appreciate is that Google is actually after more than the online and mobile ad market. They are after the offline ad market as well. The vision isn’t just about the transformation of advertising and content to digital media. It’s also about making advertising measurable. Google is in the midst of a huge experiment in television advertising (thanks to its partnership with EchoStar), radio advertising (thanks to its acquisition of dMarc) and magazine advertising (through a strange reseller/price arbitrage arrangement that is merely an excuse to get down the learning curve). And through this powerful connection with advertising and marketing as its core focus, Google is entering into technology arrangements and developing offerings that are threatening Microsoft’s core business of Windows, Office and the enterprise.
Can Microsoft stop them? Consider this: at General Motors, I would venture to guess that the CIO has periodic meetings with Steve Ballmer to review strategy, future plans and important high-level requirements. I would guess the CMO has the same meetings with Eric Schmidt. Google apparently has hundreds of employees now based in Detroit servicing the auto industry marketers.
So should we welcome Google’s entry into the Boston market? With open arms! We VCs may not like the impact of the added competition and downstream price inflation on Boston high-tech talent – the predictable result of Google’s giant sucking sound. But having Boston serve as one of the talent hubs for Google will allow us to get a window into one of the most important industrial companies in the world, serving as a base grooming strong managers (which there is a dearth of in Boston) and a potential source of interesting M&A and partnership opportunities.
Thus, the message to Google from Boston VCs and the broader high-tech community should be: "Bring it On". Hire as many as you can. Buy a few things while you’re here. And somebody should tell Eric Schmidt to spend as much time in Nantucket as possible!