News and Updates on Quantum Partners and Projects

• “State of the Industry” Annual Luncheon Panel moderated by Quantum Principal

May 17, 2012: 

At the Fulfillment Managemet Assoction's end of season event on May 16, three industry leaders discussed their companies' experiences with digital product and product innovation.  The panelists were David Blansfield, Co-President, F+W Media, Gregg Hano, CEO of Mag+ (having been recently promoted from SVP of Bonnier Corporate Sales and Technology Group) and John Reese, Executive Director-Consumer Marketing at Wenner Media.  Ava Seave of Quantum moderated the discussion.  The sell-out crowd of 120 FMA members heard the panelists talk about how social media works (or doesn't) for their subscriptions and their traffic; what jobs are actually hard to fill--even in this economy; and what they think will be the next big disruption in the business. 

• Quantum Media Principal Ava Seave comments on sale of Variety for The Wrap

March 28, 2012: 

After the announcement that Variety was going on the block, there has been much speculation about who the potential buyer might be.  For the article "Is There a Buyer That Can Steer Variety Into the Fast Lane?" although Seave has no direct knowledge of who is looking at the financials, she did not hesitate in speculating about who should be an appropriate buyer.  Dismissing the categories of  b-to-b publishers or data companies as potential acquirers,  "Seave said the key is finding a buyer, like a Bloomberg or a Dow Jones, that could leverage existing infrastructure. 'Bloomberg is super smart, and they do care about media,” Seave said. “They can, in a really intelligent way, use the content and are really great with data.'” To read the entire story, go here.

• Media Guru Albert Wenger of Union Square Ventures, explains investment philosophy

February 29, 2012: 

Albert Wenger was February’s “Media Guru” at the breakfast series organized by Quantum Media, and hosted by the Harvard Business School Club.  Unlike most of these talks, Wenger chose to speak “on the record” at the packed breakfast; he said that it seemed appropriate that since his company is an investor in Twitter to not encourage use of the network.

When asked about the role of intuition in making venture capital investments, he said intuition was just one part of the process. He cited five areas that influence the investment decision:

1. They have a very precise idea of what they are looking for - -which are applications that form networks.  “Application innovation is where we see a need.”
2. They look at a lot of similar ideas in a small space, so have context.
3. Most of their investing is in services that have already launched, so can evaluate the quality of the idea very directly.
4. They look at the Google analytics of the product.
5. Intuition.

USV’s investments tend to be relatively small compared to VCs in more traditional areas. For energy, say, the capital intensive activities are in building the initial “engine.”  For internet/digital based innovations, there is very little capital deployed in the beginning, but if the network gets large, than a lot of capital is needed to support that infrastructure.  For example, for Tumblr, a company in their portfolio, now needs $1,000,000 per month to pay for bandwidth.

Other topics  Wenger discussed:

• Facebook’s valuation:   Facebook will be able to justify their high valuation if they turn out to be good stewards of the network.  Network effects are like levering interest – great on the way up, equally negatively effective on the way down.
• Copyright laws:  They benefit “incumbent, hierarchical” industries and are used to fight networks disrupting the industry.  The example given was Etsy’s handmade toy market disrupted the big toy makers/distributors, so there are lobbying efforts to try to more strictly regulate hand-made toys.
• Efficiency:  “We believe networks are much more efficient than hierarchical companies.”
• Building communities of trust:  Transparency is key. Heavy moderation works, but doesn’t scale. Internal ratings systems are a good tool.  The portfolio company Edmodo for K-12 teachers, students and parents is working on this problem by having lots of features that let people flag inappropriate content, and not allowing any private communications.
• Centralized networks:  We are now in the Golden Age of Centralized Networks (like Twitter.) But we are expecting that protocol/decentralized networks will eventually rule.