The sad state of Canada's (and specifically Toronto's) early-stage venture investment sector is enough to make entrepreneurs run for the hills -- or at least run south to our more risk accepting and Web 2.0 knowledgeable U.S. neighbours.

The BBC news service had a story that once again tracked how an innovative Canadian start-up had to go south to get attention. Now, of course, they are superstars. The firm? StumbleUpon. I have to confess I didn't even know they were Canadian. Damn our resource-driven economy. It continues to stifle early-stage tech companies.

"We had had some venture capitalist calls in Canada but they were never really interested in the product - as much as how fast we were growing.

"We had been under the radar in Calgary but there are a lot more people who want to find something new here," he says.

StumbleUpon has since been named the number one social media company on the web by Business 2.0 magazine.

Prominent Silicon Valley investor Brad O'Neill stumbled upon StumbleUpon and a series of e-mails and phone calls led to the founders being invited to California.

At the end of 2005 two of the three decided to move to San Francisco, with Justin LaFrance still based in Canada.

StumbleUpon's founders had an idea. They wanted to track the most interesting web phenomenon in a way not possible through Google. How to do it was the question.

"The general idea was how to discover really interesting information without searching for it.

"At the time, I was a huge Google fan. It had been around for a year or two in the mainstream. But it was still only good if you actually knew what you wanted to look for."

StumbleUpon lets users - called Stumblers - give the thumbs up or down on (...read more...)

BBC News

Web 2.0 wonders: Stumble Upon BBC News, UK - 29 Mar 2007 Stumble Upon has since been named the number one social media company on the web by Business 2.0 magazine. Camp says the challenge of the job now is to try ...

WiseNav Website Competition Encourages Consumers To Engage With ... CGI Directory (press release), IL - 28 Mar 2007 Consumers, on both sides of the Atlantic, have a chance to test their Web 2.0 imagination with the launch today of WiseNav?s website building competition. ...

Here is a press release from the SD Card association that illustrates the impact recordable mobile T.V. is having on the Japanese market:

ORLANDO, FLA., March 27 /CNW/ - The SD Card Association announced todayat CTIA 2007 that the 5 million Japanese consumers who watch mobile TVprogramming on their phones -- and can record the programming with SDHigh-Capacity (SDHC) and SD memory cards -- will more than double in 2007 to12 million mobile TV viewers. Thirteen handset models feature SD recordingtechnologies today and three-quarters of all mobile phones in Japan areequipped with SD slots.

"The remarkable regional success of mobile TV in Japan provides a glimpseinto the global market opportunity for video content," said Paul Reinhardt,executive director of the SD Card Association. "SDHC memory cards provide therecording technologies and digital rights management protection to supportworldwide mobile TV success."

Both SDHC and SD memory cards enable consumers to securely store andwatch video when they want. SDHC and SD cards have built-in specifications forcopy protection rights management (CPRM) and SD-Binding specifications tiestored content to authorized devices from carriers. The SDA is working with the leading mobile TV technologies, includingMediaFLO, DVB-H and DMB, to increase the portability and interoperability ofcontent in and between devices such as mobile phones, car navigation systemsand portable DVD players.

The Internet -- as we commonly use it today -- has been around now for about fifteen years. To say that it has changed the way we do things is to understate the obvious. Virtually every component of knowledge-driven human exchange has or will be influenced by this remarkable communications platform. The reason why is partly technical to be sure, but the underlying technology is not the only reason. If the Net had not been conceived of as a fundamentally democratic system where no node had dominance over another or no circuit hierarchical influence over a competitor, then it would not be as influential as it is today. The Internet has given us the power to change the world for the better through the rapid exchange of ideas and information. Look at the http://www.wikipedia.com as a classic representation of this ideal.

Some economists and business theorists argue that the Internet represents one of the greatest wealth generating opportunities ever.

All is not good in Net-land though. There are large corporate and governmental forces who don't like the idea that you can phone Australia for virtually nothing using your Skype connection or bloggers with open-source news networks, for example, can influence elections. It is funny how companies embrace innovation and "free market" ideas when they can dominate but revile those things when their companies have to change or be superceded.

A few big companies do not want to be dissintermediated, so they've come up with a plan.

Their scheme goes something like this: You will have to pay more to ensure your circuits can effectively carry VoIP transmissions. Or, certain kinds of content will only be available to you if you pay more. Right now, everyone has access to the same content. If those arguing for a tiered system get their way (...read more...)

The ICE Conference (formerly iSummit) is over for another year. Lack of electrical outlets and a usable wireless system capable of handling a geek-filled audience made live-blogging pretty well impossible. That said, this conference unlike, say, MESH, did not require live blogging. Why? Well, ICE 07's theme could be described as "How do big media companies monetize all this digital stuff anyway?" We are talking big, juggernaut companies like Bell, Telus, and Rogers who really don't need Gagglescape's help promoting themselves.

Not that we hadn't heard the messages all before. Let's face it, digital media is now mainstream and is a money-making commodity managed by accountants who, by their nature, are concerned with the bottom line of the industry. The corporate presentations were trade-show stuff. Not to say many in the audience expected more. They probably didn't. But if you came looking for the latest Web 2.0 and social-networking trends you were left unsatisfied.

Still, the organizers did a great job and the conference went on without a hitch. Lots of old friends reconnected and new friendships were made. At the end of it all I suppose that's the important message (along with there is money to be made in this industry and we - big companies - know how to do it).

One event that snuck in some younger thinking was the CHUM U-Pitch challenge. Hosted by the always knowledgeable Amber Mac and including as a panelist TorCamp's David Crow, the presentations had a bit of that "American Idol" flavour to them. Who would win? In the end my favourite from the Murmur guys came second.

Grand Prize Winner
Where'd You Get That? by ChickAdvisor Inc.

2nd Prize
Torontopia by Gabe Sawhney

3rd Prize
Reach For The Starz by Digital Goldfish

I'm off to OCAD's Mobile Nation Conference today. Stay (...read more...)

New World Order: A Cross-Platform Super Panel
Moderated by James Lewis, Decima Publishing

What is th emeta-theme of this panel? Is it - Media companies will not be everything to all people or is it that those who control the pipes don't worry too much about disruptive change?

Maria Hale / Mike Lee: The panelists are talking about how they maintain their existing businesses in spite of the onslaught of new technologies and trends. CHUM and Rogers take an approach of controlling their markets.

Shel Israel: The disruptive tendencies of the Internet have reached the tipping point. Kids are coming into the marketplace who will disrupt everything. How will marketers reach kids who are immune to marketing. They have a toolset that represents a vast decentralization of decision-making. The bigger you are - as a company - the sooner you have to start turning.

Jim Griffin: Best practices - how is your experience? They care about the customer and get two-way feedback. Taking best practices.

Maria Hale: Chat-rooms and TV are two separate things. TV and the TV broadcast experience does not come across online.

Mike Lee: The market is stratified. Joost, the product, is a slightly more cost-effective way of delivering video to a customer. Joost content is not genius... S.I. I think it is genius... M.L. I think they have repackaged things that already exist.

M.H.: Juiced allow CHUM to package a bunch of shows in a new way.

S.I.: Rock and roll did not replace opera but it did change the world... this is a transformative era. Joost is taking the world where it has not gone before.

The panel has drifted into the world of advertising support of content and media. How do you pay for this content?

Massive sea-change coming because of personalized bots that capture (...read more...)

I'm blogging the ICE 2007 conference semi-live from the Carlu in Toronto.

Keynote speaker: Robert Sawyer, Futurist.

Moore's Law is impacting media channels... In the next ten years we will have seven times more computing power than we have today.

Small mobile screens are a stepping stone and will be around for about eight more seconds.

Rate of change is ramping up exponentially - asymptotically which is ten years down the road. The future is VR.

Storage capacities will become almost infinite -- think bigger and grander.

This is a "Dancing Bear" moment. Initially cool but after a while you are not interested. Mobile is like that now. Aim high in what you are trying to do.

Star Trek fan clubs are showing the incredibly high quality films. People on desktops doing professional special effects.

Gap of VR and reality is closing. Soon simulations will be indistinguishable from reality. The creative and nimble will lead the marketplace.

There is money to made in aggregation - like YouTube. However, we are competing with amateurs.

Branding becomes enormously important in this kind of distribution. Brand yourself!!!

The future is a drunken slut you can take home every night - you have to be prepared to engage with it.

Think bigger, more open, and wider. Be a visionary. The future will be here before you know it.

In the digital world there is infinite economies. It is no longer based on scarcity.

GeoFencing is a ridiculous notion. We are trying to force the market backwards.

"No media organization can cancel the future." U.K. quotation.

We need an end to silo thinking... then end to things that we once considered separate. Find synergies or combinatorics.

Broadband is the new crustaceous asteroid: today is the age of the blurring between the professional and the consumer.

The ICE 2007 conference begins tomorrow at the Carlu (Yonge and College, Toronto). Gagglescape will be blogging semi-live from the conference. Stay tuned.

ICE 2007: Content That Pays is a high-level conference dedicated to the business of content on interactive platforms.

ICE 2007 sessions will offer delegates an executive-level interactive exchange and big picture opportunities to explore IDEAS, MODELS and MARKETS.

Over a two-day period in downtown Toronto ICE 2007 will examine the business of content and how the transformation of the entertainment industries are quickly changing traditional relationships between the media and end users - turning “audiences” into “players” and at times into the “content” itself.

No matter where you are on the political spectrum, odds are that as a Canadian you have an opinion on what steps need to be taken to salvage our environment. Some of you feel that government is long overdue in taking steps to reduce this country's carbon emissions. Corporate Knights Editor Toby Heaps has argued for a carbon tax and an overall investment of $100 billion dollars. Others out there say that the free market economy will provide the means to this much needed end.

"Free-Market Environmentalism," as it is called, offers that the free market is best able to respond to the new demands of an environmentally aware marketplace.

My experience suggests that like many complex issues the truth lies somewhere between the two polemics. Free markets are able to move far more quickly than government in certain areas. Governments can establish regulatory frameworks supported by law. Without the two working symbiotically we are bound to fail.

Look at the corrosive expansion of the GTA's suburbs for an example of what economists call negative externalities in the free market system.

For a whole host of reasons many suburbs are unsustainable: they destroy Ontario's food-producing lands; they virtually demand that households require two cars because essential amenities are not within walking distance; they assume cheap, abundant energy; they overload the region's road networks; they don't pay their share of infrastructure costs; they promote over-consumption; and so on . . .

The free market drove this cancerous growth because externalities were not required to be paid for in the sale costs of those houses. In other words, the costs mentioned above were not part of the financial equation. If they were other types of housing that took external costs into account would have been developed.

Clearly, government was complicit in this regulatory (...read more...)

Image from the John Street Media Corridor Project CD-ROM, 1995/6

The Ontario College of Art and Design announced earlier today that their Mobile Media Lab has received a $360 thousand dollar research grant from the federal government. OCAD plays host to next week's Mobile Nation conference, from March 22 to 25.

OCAD President Sara Diamond was instrumental in bringing this area of exploration to OCAD, and sees its evolution as essential to the near future of the Ontario and Canadian economies. She says, "Mobile media and communication is the future of entertainment, education, tourism and even health care provision. We're developing products that consumers all over the world - from the UK, to India, to Argentina - will want to use. We're collaborating with the best children's media producers in Canada on this project as well as top tier fiction and arts entertainment media. Imagine your computer game-playing child as an active physical participant in playing and learning outdoors with the help of a mobile device, instead of sitting at home."

Portage will create a virtual theatre, a vibrant entertainment park, on a downtown Toronto street, installing a number of experiences in the John Street corridor that are triggered or controlled by cell phone users. These experiences are "locative" - that is, they provide cultural or information content relevant to a specific geographic environment. They're also interactive. Players can change content, upload information and experience the environment they're in by interacting with content that changes as they move through the street. And cultural producers can use the underlying technology, a new design engine called MEE, to port their content - be it an "indie" film short or a virtual museum tour - to the cell phone.

Just a follow up to the John Street Corridor project noted above: I designed the (...read more...)

The last two years or so have seen an ebbing of Canadian venture capital activity in the early-stage sector. Why is that? The reasons are varied and too detailed to explore in one posting -- just read back over Gagglescape's numerous postings on the subject.

The trend does seem to be influencing the entire sector and boils down to one basic principle: bigger deals generate bigger returns.

Venture Capital legend Apax Partners typifies the trend. This week the venerable VC institution closed its doors to new venture investments in its new 10 billion Euro private equity fund. Here is what VCRatings has to say about Apax:

The changing nature of the venture capital market is pushing some firms into a hybrid model. And the firms such as Apax that pursued the hybrid model are concentrating on private equity. The reason is to be found in the numbers. Apax's 4.3 billion 2005 fund has already returned 57%. No time to cultivate many, small deals when fewer, bigger ones are so lucrative.

Of course this could just be a mature firm expanding into new markets as its ability to compete in them grows. The fundamental market need for early-stage funding hasn't gone away. What has changed is that the mechanisms to generate return on a capital investment have become so efficient that lower return/higher-risk markets are not as appealing to investors.

About six years ago I was working feverishly on an acquisition for thinkthinkthink Inc. Our target? We wanted to buy a company founded by a professor at the University of Toronto. That company used A.I. algorithms to create natural language based online ad placements. The deal fell apart after the Internet market meltdown. It turns out the idea was ahead of its time.

Venturebeat.com has a story this month about "peer39," a New York startup that is using natural language and machine learning to increase ad conversion rates.

That company has raised $3 million from New York-based Dawntreader Ventures according to chief executive Amiad Solomon.

Natural language is the holy grail of the online ad industry as most everyone in the industry realizes that the next surge of revenue growth will be from non-geeks -- people who are not comfortable with the existing Internet.

Former digital titan Xerox is creating a Google-killing natural search engine according to Endless Innovation:

"A subsidiary of Xerox has signed an agreement to jointly develop and license search engine technology that they hope could lead to the next Google or Yahoo!. The agreement between Xerox’s Palo Alto Research Center and Powerset, both based in California, includes a long-term collaboration and technology licensing, with the Xerox subsidiary providing technology in exchange for royalties and an equity stake in Powerset.

Powerset’s search engine work focuses on “natural language,” which involves using ordinary, familiar sentence structure in searches, leading to easier, more accurate search results. The two firms have been working together since 2005."

Is there a company in Canada working in this sector?

American Capital Strategies invested $160 million Canadian dollars in Guelph-based company GeoSign last week. That investment represented a minority stake in the company. Impressive. Lots of bloggers are writing about it: here, here, and here.

How big is this deal? Here is what the Globe and Mail says about the investment:

"This is the largest single private equity deal in Canada, in the Internet space, in the last four years," said Iain Klugman, president of Communitech, an industry group representing tech companies in the region.

In the United States, he added, the deal is second only to a $200-million (U.S.) private equity placement received by Vonage Holdings Corp., an Internet telephone company, in May 2005.

What did their investment buy them? Apparently GeoSign has about 180 websites covering a range of consumer topics as well as local search services. They use a proprietary algorithm the company developed to leverage the Google Search algorithm. That means GeoSign's sites will turn up at or near the top of a Google search.

Let's think this through. If $160 million represents a minority position in the company then the overall valuation (which the company declined to discuss) is in the range of $350 million dollars. Let's say that valuation represents a multiple of cash flow. It is hard to imagine a company with 180 websites with advertising is generating enough cash flow to justify that kind of valuation.

Does anyone know the details of this deal?

While I'm enthusiastic about a local company breaking the investment barrier I wonder about the long-term viability of this investment. The company's website touts its special algorthim. What happens if Google changes its search methods? Will GeoSigns be out of business literally overnight?

Italian Telecom's plan to embrace the disruptive truth of mobile convergence.

Last week we covered Canada's faltering mobile industry as it continues to use protectionist policies to exclude competitors and ensure Canadians fall further behind in their adoption of mobile innovations. Many of our readers probably don't worry too much about the trend. After all, does it really matter if cell phone use costs a few dollars more in Canada? Damn right it does.

As any marketing geek will be happy to explain to you, markets don't develop overnight. No, they are assembled piece-by-piece through a complex evolution of innovative products, consumer demand, and time. If this market ecosystem does not evolve the result is that in the Darwinian world of modern market share those who don't have the infrastructure will die off.

This is what Ajik Jaokar has to say about how the mobile market is about to change the world of advertising:

Currently, an Operator's core asset is voice. I believe that VOIP and other technologies will cannibalise the Voice revenue. This is already happening. Hence, the core assets of a Telco will shift from Voice(current) to others like Identity, Location(which will power location based advertising), customer history(datamining complex customer segmentation) , billing etc. All of these new assets will be 'sold' to third parties i.e. independent applications developers through APIs (Application Programming Interfaces). Services themselves will be 'Plug and Play' and the Operator will be the orchestrator of services (and not a pipe).

If Canada chooses not to abide by the rules of an open marketplace then we will continue to fall behind our global competitors and our telco's "Income Trust" mentality will mean we will be overwhelmed by foreign competition. We have to develop a local ecosystem that will take advantage of the atomization of the mobile (...read more...)