For the fifth installment of my Word-of-Mouth Wisdom interview series, I decided to tap our investor base. At Bazaarvoice, we are fortunate to count six serial entrepreneurs as investors in our company. One of them is Josh Kopelman, the founder of Half.com and a prominent figure in the Web 2.0 scene. Josh calls himself a "coastally challenged VC" on his blog "Redeye VC" because he is based in Philadelphia. But you wouldn't know it because his investments are in some of the most prominent early-stage companies that I know of. His portfolio includes companies like 1-800-FREE411 (currently owns 6% of the 411 market out of nowhere), Aggregate Knowledge (a recent Bazaarvoice partner), Krugle, Riya, Root Markets, StumbleUpon, VideoEgg, Wikia, and YackPack. I can tell you from personal experience that Josh is an extraordinarily helpful investor. His connections are extraordinary and his entrepreneurial experience is incredibly impressive.
1. In December, Time Magazine announced that their “Person of the Year” is “you”. As in the “prosumer”, or consumer-turned-producer. Do you agree that the power of the “crowd” was the biggest trend of 2006?
Yes. I think we’re seeing a major shift in the online value chain. The initial killer application of the Internet was email (one-to-one), followed by websites (one-to-many). We’re now seeing the creation of a whole class of tools that easily allow people to create, organize and publicize content (many-to-many). With so much content being put online every day, the big challenge (and opportunity) is to find ways to help people discover the stuff that is relevant to them. Leveraging the “wisdom of crowds” to intelligently filter/recommend content is a very large and meaningful opportunity.
2. What are your most interesting investments in this area?
Other than Bazaarvoice (of course), other “social media” companies in our portfolio include:
StumbleUpon has developed an innovative (and addicting) way to harness the wisdom of crowds for website discovery.
Aggregate Knowledge uses the behavior of previous visitors to a web page to automatically generate product and content recommendations.
Wikia was founded by Jimmy Wales, the founder of Wikipedia. The company leverages people's innate need to create, share, and contribute to the subject areas that they are most passionate about.
3. How do you think consumer-generated content will impact the world of advertising?
I see it having an impact in a couple of ways. First, advertising goes where the eyeballs are. Consumers are spending far more time consuming consumer-generated content so over time advertising budgets will increasingly move towards that space. Second, it increasingly allows consumers to participate in the advertising process itself. The traditional one-way advertising broadcast model is now evolving towards more of a dialog between advertisers and consumers. Forward thinking advertisers are using the collective intelligence and creativity of their consumers to help them craft their messages and even create their advertising. This will result in advertising that is much more personal and relevant.
4. Do you think Google overpaid for YouTube?
No. With its massive user base and powerful community, YouTube has clearly emerged as the leader in the online video sharing space. With online video advertising set to exceed $1BB by the end of next year, and Google's ability to extract the most value out of any given online inventory, the acquisition seems like a very savvy move on Google's part. This is especially true when you think about the fact that we are only beginning to see the potential of video on the Web, and the opportunities that lie ahead in this space.
5. Given your experience at Half.com, what advice would you give our clients in leveraging their consumer-generated content?
I think it's important to understand the impact that consumer-generated content such as ratings and reviews can have on a business. In addition to allowing your consumers to communicate with each other, they also allow online merchants to begin tapping into the wisdom inherent in their current consumer base, and leverage that to create a better shopping experience for everyone who comes after them. Companies can no longer afford to not participate in the dialog that their customers are having about them and the products/service that they provide.
6. What is the future of consumer-generated content? Where does all of this lead us 5 years from now? 10 years?
Consumers today are more empowered than ever. It is now cheaper and easier than ever to create content, share your opinion, and distribute it over the Web. While this will inevitably create an overabundance of content, it will make finding the content that is most relevant to you increasingly difficult. Over time I think there will be less reliance on traditional “editors” (e.g. newspapers) and “packagers” (e.g. music labels, publishers and studios) and more reliance on automated discovery tools that harness the "implicit web" to allow people to find the content that is most interesting to them.
7. What do you think the biggest trend of 2007 will be?
Online video has reached a tipping point. Given the amount of innovation, new developments, and widespread consumer adoption in this space, I think video will continue to be the biggest trend of 2007.
I'm sure Josh would love to hear your comments, so please write in.