If you haven’t heard already, Google has purchased Feedburner. Fred Wilson gives some color to the deal on his blog. While terms were not disclosed, Fred admits that his firm made about 3 times its money on the deal. That doesn’t sound like a “homerun” but he clearly outlines how rewarding the investment was for him and his firm in terms of personal satisfaction and in learning about the new media feed world.
This transaction confirms what few prescient VCs have known is the next wave of startups that take advantage of new media. Several years ago no one knew what a widget was or what a feed was. We were all using email and looking at portals and webpages. A very small iteration occurred, and that included the “blog”, the “feed”, and the “community”. In the past few years these have taken off and it remains an undercapitalized investment category simply because a lot of VCs don’t understand the power of this space.
Now some would argue that these aren’t new concepts after all. The original webpage is basically a blog. A feed is basically a piece of directed spam. And a community is simply the readers of a portal.
So what exactly has changed? In my mind, the main thing that has changed is that savvy entrepreneurs have figured out a way to provide “turnkey” solutions for the masses. Now you could very well argue that software had already been created to provide this turnkey solution. However, those solutions never took off in the past like they have today. I believe the reason is because these solutions now come in SaaS “Software as a Service” models – no software on the computer – everything online.
I’m still bullish on these new media companies run by very smart people that are very low cost to build and scale. These companies use viral marketing to spread like wildfire. And they get gobbled up by giants soon after their popularity grows.
The best thing about them is that they essentially become successful in the same way that most companies get successful – they package a turnkey product and make it available for the masses.