When I embarked on writing a book about venture capital and entrepreneurship, I struggled with one question:  how do I produce a 250 page document that is professionally edited, packaged and distributed, yet communicate the information consistent with the spirit of the blogosphere – open and free.

Desipte the best efforts of many, the publishing industry remains a financially-driven business.  Agents, publishers, editors, retailers and others in the value chain all make a living doing what they do.  They don't have the luxury of another job that supports them while they write on the side, like many VCs and entrepreneurs.

So, I decided to take the best compromised approach I could figure out.  First, I convinced the publisher (Penguin's business imprint, Portfolio) to allow me to distribute a meaningful chunk of the book for free.  The first 40 or so pages of the book can be found at www.jeffbussgang.com and can be downloaded, read and distributed for free.  Go for it.

Second, I decided to donate a meaningful portion of whatever meagre earnings I receive from the book (after digging into the business, I was kind of shocked how little money is left for the author after agents, editors, publishers and retailers all get their cut of your $20-25 hardcover!) to Endeavor, a terrific non-profit that promotes global entrepreneurship.  Endeavor was founded by Linda Rottenberg, an amazing entrepreneur in her own right, who has built a global network that promotes and supports entrepreneurship.

Third, Penguin has been kind enough to agree to allow me to give many hundreds of copies of the books away to universities, incubators, and other forums where it might be useful to entrepreneurs.  I keep thinking about any way possible to reduce the friction between an entrepreneur and a successful business and incubators and business plans and shared office space are all terrific vehicles.

So that's my gameplan.  Not perfect, but the best I could figure out given the constraints.  Let me know what you think – or if there are other angles I should be thinking of.  The book is widely available next week, so I still have time.  🙂

You can follow me on Twitter at:  www.twitter.com/bussgang

Forgot the news about the increase in retail earnings that suggest the American consumer is back.  Forget the fact that the Dow Jones closed on Friday right at 11,000 – the highest it has been in 18 months.  Want to know the really good news?  The US technology industry has never been in better shape, and has arguably entered what may become one of the greatest sector growth eras in business history.

Lost in the news of the tepid (now maybe solid) recovery over the last year is that the top US technology firms have become absolute world beaters and are surging through the recovery.  The US now has seven leading technology companies with over 100 billion in market capitalization that have never been in a better position in their respective industries – Apple, Cisco, Google, HP, IBM, Microsoft and Oracle.

Want proof?  On October 9th, 2008 – the last time the Dow was at 11,000 – the aggregate market capitalization of these seven companies was 770 billion.  At the closing bell on April 9th, 2009 - with the Dow back to 11,000 – the aggregate market capitalization of these seven companies was 1,238 billion.  In these 18 months, while the Dow fought its way back to par, these seven companies saw an increase in their market capitalization of over 60 percent!

Anecdotally, each of these seven companies is arguably in a stronger position than they have ever been and poised to take advantage of the very bright future presented by the dual forces of innovation and globalization.  Apple?  iPad, iPhone, iTouch, iAd, 'nuff said.  Cisco?  Think of the bandwidth IP video is going to require over the next 5 years.  Google?  The youngest company in this cohort, they continue to suck billions of advertising dollars away from media and traditional advertising companies into their online money-making machine.  HP?  The company has remade itself under Mark Hurd's steady leadership to once again become a trusted enterprise solutions company for IT and a surging leader in the PC industry.  IBM?  With its globalization push, the company is taking advantage of every major industry around the world treating technology and enterprise systems as a competitive weapon.  Microsoft?  Its Windows hegemony remains a strong cash cow, despite threats from Apple and Google.  (Interestingly, at 266 billion, Microsoft has the largest market capitalization of this group, but its valuation growth of 34.2% over the 18 month period was the smallest.  At 170.4%, Apple's was the largest.)  Oracle?  They continue to get rewarded handsomely as they continue to stitch together the software that runs business aroud the globe.

Behind these seven behemoths, there are numerous other leading US technology companies that are emerging as potential long-term winners.  Amazon's market capitalization is 62 billion – over 150% higher than it was 18 months ago.  They clearly have a shot at entering the 100 billion club and also appear to be in an extraordinarily strong position for the future, with secular growth expected in their core strength areas of e-commerce and cloud computing.  Never mind the private companies, like Facebook, that continue to grow rapidly and may someday enter into this elite 100 billion club.

So forget about the good news about the America consumer, the return of the Dow, and even that baseball is back.  The best news of all – it's glory days for US technology.

I don't watch alot of TV, so I'm usually a late adopter when it comes to great television shows.  Mad Men is no exception.  Although the show is entering its fourth season, I'm just getting around to watching Season 1 and I am falling in love with the show.  It reminds me of the Sopranos – flawed characters that you at times root for, at times despise, interlocked in an entertaining drama that centers on the fundamental search for happiness and respect.

So while I'm in the midst of enjoying Mad Men, it was with great amusement that I hosted a dinner with a dozen or so CEOs of advertising agencies and advertising technology start-ups the other night.  Last year, I blogged about how Madison Avenue was going tech ("Revenge of the Nerds", I called it).  At the time, I thought there was hope that the big ad agencies would evolve to become techno-savvy nerds and help lead the innovation charge.  This year, it's a foregone conclusion in my mind that Madison Ave's Mad Men are doomed.

With the rampant digitization of advertising and the explosive growth of performance-based marketing, the nerds are taking over advertising.  Advertising innovation is coming from technology-driven giants – like Google, Microsoft and now even Apple – as well as start-up companies that are nibbling away at the value-chain, including many of our own portfolio companies (e.g., DataXu, BzzAgent and digital Arbor).

Although many of these technology-driven companies are partnering with the major advertising agencies today, the agency CEOs at my dinner with very bearish on what the future held for the agencies and whether they would survive the New World Order.  In their view, there are four reasons for this:

• Wall Street Pressure.  In talking to advertising agency executives, you can't help but be struck by how much their EPS targets affect their behavior – and hamstrings their ability to invest.  So long as they are slaves to Wall Street, the major advertising holding companies will be unable to undergo the necessary, wholesale transformation required to thrive in the digital age.  It reminded me of James Carville's famous quip that in another life, he hoped to be reincarnated as a bond trader so that he could wield some real power.  Agency CEOs seem to wish they were Wall St analysts or venture-backed CEOs rather than trapped as holding company leaders.
• CFO/Procurement.  Each of the agency CEOs at our dinner bemoaned the fact that "above the line" advertising budgets were now in the hands of the procurement officer and that the power pecking order has become CEO, CFO, CMO.  One of the CEOs at the dinner, Wayne Townsend of Click Squared, noted wryly that below-the-line marketing budgets has always been in the hands of the procurement officer.  Welcome to the club!  The problem for the agencies is that this trend means great creative (the Big Idea) and great relationships (three martini lunch) aren't important to the procurement officer, only hard ROI.
• Lack of Pay for Performance.  One agency CEO pointed out that if you look at the revenue per employee at the major agency holding companies, it's a fraction of what it is for premiere management consulting shops, like BCG and McKinsey.  In the absence of a pay for performance paradigm (akin to performance-based marketers like Google, who get paid per click or per acquisition), the agencies are forced to operate like a glorified body shop, whether their campaigns move the needle on the business or not.  This caps the upside and results in odd incentives, such as worrying more about getting fired than about delivering great work.
• Talent.  The best technology and business development talent is not flocking to advertising agencies.  They are flocking to advertising technology start-ups and Google, Microsoft and Apple.  Over time, the best talent wins in any industry.  By this reckoning, the advertising agencies are doomed.

The advertising agencies are thus in a structural box, a classic case of Innovator's Dilemma.  Meanwhile, venture capitalists and entrepreneurs smell blood.  Young companies are going directly to CMOs to mine their marketing budgets.  And marketers are more aggressive about experimenting with new media, socu has Twitter and Facebook, with the help of niche consultants and technology providers.

The only saving grace for the industry may be that their remains great power in the Big Idea.  Great creative can still move the needle and provides the direction for all that whiz bang, targeted, performance-based execution.  The success of creative boutiques like McGarry and Bowen suggests that niche is still a lucrative one.

As for me, I'll keep enjoying "Mad Men" and continue to invest in nerdy, little technology companies to make them obsolete, historical relics.

I mentioned in my last post that I decided to write a book about venture capital and entrepreneurship, which is coming out next month (see http://bit.ly/mstrVC). In this post, I wanted to answer the question: "Who did you interview?"

Selecting interviewees was a tricky process.  The purpose of the book is to be a helpful guide for entrepreneurs as they navigate the process of building their companies in partnership with VCs, so I wanted to capture the voices and insights of both entrepreneurs and VCs.  In particular, I wanted to capture a diverse group – diversity in terms of geography, industry focus, gender and age.  Here's who I ended up with:

Entrepreneurs:

• Tim Bucher (Zing, WebTV)
• Jack Dorsey (Square, Twitter)
• Gail Goodman (Constant Contact, Open Market)
• Reid Hoffman (LinkedIn, PayPal)
• Robert Langer (> 20 start-ups, including MicroCHIPs, T2, Predictive Bio)
• Marsha Moses (Predictive BioSciences)
• Eric Paley (Brontes)
• Mark Pincus (Zynga, Tribe, SupportSoft)
• Christoph Westphal (Sirtris, Alnylam, Momenta)

Venture Capitalists I interviewed were:

• Tim Draper (DFJ)
• Irena Goldenberg (Highland Europe)
• David Hornik (August)
• Terry McGuire (Polaris)
• Howard Morgan (First Round)
• Patricia Nakache (Trinity Ventures)
• Henry Nguyen (IDG Ventures Vietnam)
• Fred Wilson (Union Squrare)
• Quan Zhou (IDG-Accel China)

Interestingly, three of these entrepreneurs became VCs after I completed the interviews (Hoffman/Greylock, Paley/Founder Collective, Westphal/Longwood).

So what do folks think?  I know I missed tens, if not hundreds, of other great people.  I emphasized people who were currently active in the business rather than historical figures, but tried to include folks with decades of tenure and perspective alongside younger voices.  I do regret not having more international entrepreneurs to compliment the three international VCs.  Perhaps next edition?!

In my next blog post, I'll talk about the outline of the material the book covers and the different approach I am taking (with the support of Penguin) to making the content broadly available.

"I've decided to write a book," I told my wife over a year ago.

She gave me that what-the-bleep-are-you-talking-about look.  You may be familiar with your spouse.

"You've what?"

"I've decided to write a book," I repeated, slightly less confidently.

"On what?"

"Venture capital and entreneurship."

"Why?"

"Well, when I was an entrepreneur, I couldn't find any good books on how this mysterious capital-raising process worked and how to harness the resources and knowledge of the VC industry to help build my start-up. Now that I've seen it from the other side, I want to explain to entrepreneurs how it all works to help them be successful. There are good blogs out there, but no good books that pull it all together."

"When are you going to find the time to write a book?" she challenged.

I didn't have a very good answer for that one.

But somehow I've figured it out over the last year plus and am pleased to report that my book, called Mastering the VC Game, will be coming out this spring from Penguin’s business imprint, Portfolio (see http://bit.ly/5dDkY9).

I've gotten wonderful feedback from dozens of insightful entrepreneurs and VCs, many of whom I interviewed for the material, as well as the support of my partners and my family.

In the next few blogs, I'll talk a bit about who I interviewed, what I learned and what lessons might be useful to entrepreneurs.

Although VC money is not a fit in all cases, the lessons from VCs and the entrepreneurs they work with are useful in a broad range of businesses.

So stay tuned for more information.

But first, here's a question I've been wanting to ask – if you could interview a bunch of VCs and entrepreneurs and get them to disclose how they practice their trade, who would you want to interview?

I'm curious to see if I selected the right ones.

Follow me on Twitter:  www.twitter.com/bussgang

I'll never forget my first marketing class at business school.  Our professor peered at us with an intense glare as he pushed back on our standard, "chip shot" comments.  At one point in the class he asked the guy next to me to opine on the case we were discussing, which involved launching a new consumer product.  "Well," my neighbor answered confidently, "I think it will be a hit because I can see my mother-in-law buying it."

"I see," replied my professor dryly and then turned to the class with a withering look on his face, "Steve appears to have fallen into that fatal trap of 'Mother In Law Market Research' – believing this new product will be a hit just because his mother-in-law likes it.  Instead, let's look at the data, shall we?"

This put down to allowing personal experience influence your assessment of new products and services came back to me this week while at my board meeting for our mobile video portfolio company, Transpera. As we discussed poor video delivery quality and AT&T's clogged network, eveyone started devolving into their own anecdote of "what happened when I tried to watch a recent video on my iPhone".

Yet, although I know it frustrates entrepreneurs, I confess to being sympathetic to investors who use their own experience as a guide to their investment activities.  Frankly, I think it is a critical part of my job as an investor to try out new products and services and those experiences certainly do inform my investment judgment.

Many VCs I talk to feel the same way. Brad Feld wrote a great article in this month's Entrepreneur Magazine urging entrepreneurs to let him play with their products rather than present them to him. Jack Dorsey, the founder of Twitter, recently told me that the reason he chose to work with Fred Wilson, rather than a host of interested Silicon Valley VCs, is that Fred was a Twitter power user from the beginning. When Fred first met the Twitter team, Jack said he was full of new ideas of where to take the product and the power of the model.

The desire to experience new products and services and technologies is why I own a Blackberry, an iPhone, a Kindle, a Sonos, a Roku, and subscribe to a ridiculous number of online services, blogs and feeds.  I also study how my pre-teen and teenage kids interact with games, devices, IM, Gmail, Google Buzz, to get insights into how younger users will experience the emerging connected world.  I even throw things at my wife that are targeted at her demographic to get her outside perspective on them.

I do appreciate that entrepreneurs get frustrated when the VCs extrapolate too much from their personal experience, particularly when they're not the target market.  I remember pitching Upromise to one well-heeled VC who asked, "is college really not affordable?"  Um…on planet Earth it isn't.  I guess if you live in the stratosphere…

Anyway, here's my simple advice to entrepreneurs:  tell a story.  As John Quincy Adams says in the movie The Amistad:  "Whoever tells the best story wins." Make it real for the prospective investors.  If they're not the target market, bring that target market user's pain and pressing need for your new whizbang product or service to life.

And don't be afraid to ask your mother-in-law for advice.

Follow me on twitter:  www.twitter.com/bussgang

In his storied baseball career, Curt Schilling has rarely found himself at a loss for words.  So it was great fun to watch him sit speechless for an hour as Harvard Business School students dissected his entrepreneurial venture and some of the choices he was making as a manager, leader and strategist. The setting was akin to sitting around the living room analyzing last night's World Series pitching performance.  Judging from the rigor of their analysis, the students would have put a bevy of ESPN and newspaper sportscasters to shame.

The two classes I taught this week at HBS, based on a case that I co-authored with Professor Noam Wasserman called "Curt Schilling's Next Pitch" (which you can order here from HBS Press), were energized to have Schilling in the classroom alongside his CEO Jen Maclean. Although none of the students can relate to his triumphs and tribulations as a professional athlete (save one student who was a professional soccer player before turning to a business career!), they could all relate to his struggles to launch his gaming start-up, 38 Studios, and his efforts to chart a course for success for the growing company, which now has over 130 employees.

My favorite line for the day was when, during the Q&A session at the end, Schilling started off by confessing, "After one year at a junior college and a 23 year career in professional baseball, it cost me nearly $30 million to get to Harvard." The comment was in reference to the fact that Schilling has been funding 38 Studios almost entirely out of his own pocket.  Many VCs turned him down when he first launched the company in 2006 and 2007 (including me, which is the subject of a funny story, where a VC buddy of mine and I ended up having dinner with Schilling alongside our then 7 year old sons in Fort Meyers, FL in 2007 while he was in the midst of Spring Training, but that's another story for another day). 

Putting aside celebrity and baseball, the case has two pedagogical lessons:

1. Entrepreneurs who have been successful in one field and have developed a "blueprint" for what it takes to be successful, can sometimes struggle to translate that blueprint into a new field.  Therefore, they should be thoughtful about what skills and habits they should adapt to develop a new blueprint that suits the new field.  I have been through this myself personally when, after being an enterprise software entrepreneur at early e-commerce leader Open Market in the 1990s, I embarked on becoming a consumer Internet entrepreneur at Upromise and had to learn a whole new blueprint (never mind learn the VC blueprint I find myself still adapting to since I made that conversion seven years ago!).
2. Harnessing and containing strong, visionary founders is a tricky endeavor, but there are some useful techniques that can be applied to improve the chances of success.  Some of the students had worked with Jeff Bezos, Michael Dell, and other larger-than-life founders, and shared their related challenges and lessons learned in those environments.  In many situations, the founder is a creative force of nature rather than an experienced operating manager, and skillfully managing the tension between those two essential ingredients can make or break a start-up.

Schilling was a great sport and everyone had good fun.  As he observed when we first sat down to interview him for the case, "Jeff, I don't mind being put in the lion's den.  They can't be any worse than the Boston sports media."  All joking aside, the 140 HBS students ended the class with tremendous respect for his entrepreneurial skills.  In a poll taken after reading the case, approximately two thirds of them thought he had what it takes to become an All Star entrepreneur.  One third was more skeptical.  Stay tuned.

pictured (L to R):  Professor Noam Wasserman, Curt Schilling, me, 38 Studios CEO Jen Maclean.
 
Follow me on Twitter:  www.twitter.com/bussgang

I've been worrying lately that we are suffering from a lost generation of entrepreneurs.

That was my first reaction when I read what Sequoia's Doug Leone said a few weeks ago about innovation and age at a recent talk with MIT Sloan students visiting Silicon Valley, where Leone claimed that only people under the age of 30 are truly innovative.  Over 30 folks can manage innovation, Leone observed, but you need to be under 30 to create it.  Examples cited included Jack Dorsey, Twitter's founder who was 30 at the time that he started the service.

Now you can argue whether this is right or whether it's a hyperbolic statement for effect, but let's put that aside for now.  Here's my worry:  when I was under 30, I had the opportunity to be a part of a rocket ship start-up (Open Market), that promoted me into an executive team position of a public company in my 20s.  The lessons and skills from that experience inspired me to delude myself into thinking I could be the founding president of another start-up, Upromise, when I was 30.  At the time, when I looked around at my peers and friends, they were all doing the same thing at a similar age.  Folks like Jeff Glass, who started m-Qube at around the same time and age, Scott Friend, who became president of ProfitLogic, Russ Wilcox at e-Ink and many more). These companies all eventually became substantial companies that each resulted in exits north of $100 million.

Now fast-forward to today.  During the period of 2001-2009, there have been very few substantial start-ups built to allow that generation's 20-somethings to learn and develop company-building skills.  As a result, we have a lost generation of entrepreneurs. Not enough 20-somethings, or let's even say under 35, have had the opportunity to see success at a young age and learn the important lessons of start-up leadership.  I think once you've seen some success in your 20s, you are that much more likely to be a strong entrepreneurial advocate, mentor and serial starter in your 30s.

When my partners and I tried to develop a list of today's under 35 entrepreneurs who had started companies and seen meaningful success with them, it was a depressingly short list.  In addition to Twitter's Jack Dorsey, Mark Zuckerburg is an obvious one, as are the YouTube founders, Chad Hurley and Steve Chen.  Less well-known standouts include the Great Point Energy team (Andrew Pearlman and Avi Goldberg), who saw some success at Coatue (sold to AMD) which led them to starting what looks to be a fascinating and potentially game-changing clean energy company.  And there's Ric Fulop, who co-founded A123 in his late 20s, last year's IPO darling.

So what do we do about it?  I suppose one thing we can do is celebrate the heck out of the under 35 entrepreneurs we know who have seen success because we need their peers to know that it's possible and encourage them to serve as role models to today's students so that we don't suffer from yet another lost generation in the years ahead.  So who else should be on our list?

I'm pleased to have a guest blog post by Kevin Oakes, CEO of my portfolio company i4cp (the Institute for Corporate Productivity) and a leading thinker in leadership and high performance.

Pick a leader – any successful leader. Then search Amazon and see how many books and other publications come up on that person. Abraham Lincoln? 83,642. Gandhi? 61,923. Even Barack Obama, who was widely introduced to the world just five years ago, has 8,670. People love studying successful people.

In the same way that many people have an insatiable appetite to study successful leaders, we in the business world tend to be fascinated with high-performance organizations. What are they like? What do they do differently? Is there a secret recipe that allows them to outperform their competition?

Of course, many books have been dedicated to this subject. From Tom Peters’s and Bob Waterman’s early 80’s best seller In Search of Excellence to Jim Collins’ Built to Last and Good to Great, there has been a succession of books that leaders and managers across the globe have devoured. Programs such as GE’s Six Sigma have trained countless people in how to achieve top performance and consultants have built entire practices around elements of high-performing companies.

While business professionals want to learn more about high-performance organizations in the hopes that they can apply some of the secret sauce to their own organization, many of the companies profiled within the pages of the aforementioned books were unable to sustain high performance. In fact, the number is about half. While much has been written on the subject, the truth is that the ingredients to high performance remain something of a mystery.

Part of the reason is the definition – what exactly do we mean by high performance? Is there a difference between simply surviving (which was the fate of some of the companies profiled in Built to Last, for example) and performing well over a long period? Do we mean companies which outperform others in their own industry or across industries? Over how long a time period does an organization need to perform exceptionally well in order to be considered a “high performer”? And which measures, financial or otherwise, are the best ones to use?

Over the last three decades, i4cp researchers have looked at various ways to define high performance and the traits that separate the consistently top organizations from the rest. Through that time, we have come to recognize high-performing organizations as ones that consistently outperform most of their competitors in four primary areas:

• Revenue growth
• Market share
• Profitability
• Customer satisfaction

And, over the years, our research team has examined well over 100 different core human capital areas and tried to determine the differences between high-performing and low-performing organizations. The research has clearly shown that no single ingredient guarantees organizational success. Rather, high performance is like a delicate entrée – based on a staple of core ingredients any one of which, if left out or of inferior quality, will ruin the entire item.

The Five Domains of High Performance

Our research has shown that there are five basic ingredients which separate higher performers from their lower-performing counterparts:

1. Their strategies are more consistent, clearly communicated and well thought out. They are more likely than other companies to say that their philosophies are consistent with their strategies and their performance measurements mirror their strategies.
2. Leadership is clear, fair and talent-oriented. Those leaders are more likely to promote the best people for the job, to make sure performance expectations are well known and consistent with the strategy, and to be committed to developing their people.
3. There is a commitment to the right talent within the organization, and while employees are treated as unique individuals, the organization takes a holistic approach to managing and making decisions based on data-driven information. This begins with a strategic approach to workforce planning. It entails looking at the organization from an outside-in perspective that identifies the business model components and areas that drive value and then determines what the organization needs.
4. The culture is strong in all the right ways, and employees are more likely to think the organization is a good place to work. Employees not only adapt well to change, they embrace it. High performers also emphasize a readiness to meet new challenges and are committed to innovation.
5. They are more likely to have a strong market focus and go above and beyond for their customers. They are organized internally around what’s best for the customer, they think hard about customers’ future and long-term needs, and their strategy is based on customer data. And they are more likely to see customer information as the most important factor for developing new products and services.

While these five domains – Strategy, Leadership, Talent, Culture and Market – may seem a bit broad or even obvious, the separation our research has shown between high and low performers in these domains is startling. For example, in a just-released study on high performance by i4cp, the following graph depicts this separation:

These findings, along with previous studies, have convinced us to target our research on discovering the best ways for companies to boost their performance in these five domains and the numerous sub-domains within. We’re convinced that companies that focus on excelling in these areas are cooking up a surefire recipe for long-term success.

 
i4cp's 4-Part Recommendation:

1. Take stock to determine where your organization stands in these five areas, and be honest – even the best performing companies aren’t always superb in each area. To get an objective view, survey the workforce on these domains as well as use other assessment tools.
2. Once you’ve determined your areas of strength and weakness, make sure senior management is involved in improving on the weak areas while not taking the eye off of the strengths; in tough economies it can be easy to stop focusing on core areas that the company has excelled in. Don’t forget to investigate the practices of other organizations that are excelling in your areas of weakness; it’s amazing how some very simple and inexpensive ideas can make a huge difference in closing the gap.
3. Although companies should focus on the specific tactics for boosting their performance in each of these five areas, it’s important to align the five areas as a whole. Each domain feeds off the others, and ignoring one is like leaving a key ingredient out of a culinary masterpiece.
4. Although these efforts should continue indefinitely to sustain performance over time, organizations should also do regular reevaluations of their progress so they can make course corrections as needed.

View a recording of a webinar, The Five Domains of High-Performance Organizations.

Today's announcement of our investment in oneforty is a useful prompt to talk about why I'm a big believer (and now investor) in the real-time Web.

The real-time Web (i.e., the overwhelming stream of instant, free flowing information available digitally) is clearly hitting the mainstream. One can declare this confidently when even CNN calls it a "top 10 trend" for 2010.

The recent debate over Twitter's traffic volume (as played out in TechCrunch and betaworks' John Borthwick's blog, "Charting the Real-Time Web"), suggests that the real-time Web is continuing to explode, even though the standard tracking measurements are unable to accurately capture the data.

Interestingly, the reason there is a debate is that the real-time Web, and Twitter activity in particular, is by and large invisible to the standard Web methods of traffic monitoring, information search and discovery. When I fire up TweetDeck to track real-time news and information (I almost never go to websites anymore to read the news – it is curated and linked for me via Twitter) as well as the changing status of my friends and family via Facebook (also tracked conveniently in TweetDeck), these information streams are invisible to compete and other web measurement services. Google and Bing are scrambling to catch up and paying Twitter good money to access the data stream (which, Spencer Ante of BusinessWeek reports, enabled Twitter to become profitable in 2009).  All of this, and the more robust Twitter API, is transforming Twitter into a platform company rather than simply an engaging consumer service.

If you want to build a platform, you need to attract developers. Ryan Saver, Twitter's platform chief, reported recently that there were 50,000 Twitter applications to date and that the first-ever Twitter developer conference (whimsically named, "Chirp") will be held this year.

Which leads me to being an investor in oneforty.  If you believe the real-time Web is an exploding environment that allows the distribution of content and identity like never before, and if you believe Twitter is taking a fundamentally open, platform-driven strategy that transcends the Web, then you conclude that there is a new economy forming around the Twitterverse.  And a new economy needs a marketplace. That's where oneforty comes in. 

The 50,000 applications available on Twitter – and the tens of thousands coming – need to be discovered, rated and reviewed, and ultimately be available for purchase. These developers need services to get their apps discovered and a back-end platform to take payment.

Founded by Laura Fitton, oneforty has established itself as the leading application store and marketplace for Twitter. Laura, known as @pistachio, is a great entrepreneur and her story is an amazing one. As the single mother of two kids, Laura loves to refer herself as "the Accidental Entrepreneur" and a Cinderella story.  But with only a few hundred thousand dollars of seed money and a bit of help from TechStars, Laura was able to build a strong team and launch the service and establish it as an early leader.

We'll see how it plays out.  Is the real-time Web as large an evolution as the Web itself or simply an embedded feature?  Will Twitter become a big, successful platform or will it remain simply an entertaining service?  Will oneforty become a major on ramp for Twitter and the evolve into a community-defining marketplace?  Those are the questions that will play out in the coming months and years.  It should be fun.

Follow me on Twitter:  www.twitter.com/bussgang.