Many of these trends have been evolving for some time now and will surely receive attention in 2010.

Flex & Flash:

Most websites now integrate flash/flex to some degree while standalone applications are also on the rise. The technology is being used for way more than web animation.

Micro-blogging/Messaging/Status Updates:

Twitter made famous the short comments/status updates which are now being widely used in many websites, most notably in Facebook, and are becoming more prevalent in emerging startups as well.

Online reputations (individuals and businesses):

The best example of online reputations is demonstrated in EBay’s seller reputation or Yelp’s business reviews.  Online reputations are beginning to hold more value and services intended to support these reputations are beginning to spring up as well.

Cloud Computing:

The marketing effort on the cloud computing front seems to have increased substantially. The idea (and service) isn’t new but the quantity of companies and startups setting up their own clouds as a business model is greatly increasing.

Social Media:

The buzz these days is “social” and it seems most new ideas find a better way to harness social interactions via the web. There is consolidation going on right now where management services are being created to help individuals navigate through social sites more effectively. Social sites will continue to spring up and evolve while management aggregation sites will follow the trend. Newest example is Google Buzz.

Geolocation:

Many web companies and mobile developers are beginning to make a hard push for geolocation which can have a direct impact on social networks, advertisers, and especially for small and local businesses. Companies pursuing a geolocation services include Google, Gowalla, Apple, Twitter, and many more.

Video Advertising:

Many video sites, not just YouTube, are implementing advertising features where users will have to view an ad while watching a video. By exposing users to these ads, advertisers are able to build advertising channels similar to that of television.

Search:

Microsoft’s Bing will continue to take greater market share from Google.

Mobile:

Android will become a household name. Mobile marketing initiatives will continue to increase. Access to the internet via mobile devices will skyrocket resulting in websites catering to their mobile traffic.

Real-Time:

Websites will continue to implement real-time features such as Google and their Real-Time search. Mobile providers and developers stand to make great strides in this arena.

Content Creation, Aggregation, and Management:

As more and more content is being created through blogs, microblogging, discussions, and online comments there is a growing need to manage this data on a large scale.  The information contained within the content will be attractive to marketers, product developers, and startups in general. 2010 will continue to see services and ideas intended to address content.

Analytics and Intelligence:

With the explosion of data and content creation there is a growing need for expertise to extract relevant information. Many companies, such as Twitter, have a need to understand their users and trends within their communities. There will be more in-house analysis and analytics teams as well as independent service providers devoted to mining all this data.

Google Nexus One

No longer an issue of hardware:

Stacked up side by side the Nexus One has better hardware than the iPhone but that is a meaningless fact as Apple can ultimately upgrade iPhone’s hardware for future releases. Differentiating phones by upgrading hardware as the unique differentiator is a strategy doomed to failure similarly to what is happening with desktop computers. Image and price will take a bigger part in the decision making process. Over time, and maybe it has already begun, consumers are worrying less about hardware and more about features and image.

An iPhone killer? Irrelevant question.

The argument for whether this phone is or isn’t an “iPhone Killer” is tired and irrelevant at this point. IPhone’s clout has expanded beyond the design and ease of use that originally propelled it to its current status. The most dominant features of the iPhone today are the status symbol it projects (its brand image) and the applications available with it (flexible and expressive). Although the Nexus One name and Android’s available applications are no match for the sexy design and image the iPhone portrays, those points are liable to change in the future.

Question: What may be the reason(s) Google entered the mobile phone market?

Answer: To promote and distribute Android and ultimately increase Google brand awareness while driving advertising and opening doors for other revenue streams.

1. Anything that Google does or promotes gets attention. By entering the mobile phone market Google shows its commitment to the mobile industry thereby gaining customer and partner attention.
2. Google is using Android to go after the mobile OS market just as Microsoft Windows went after the PC OS market. By having Android where smartphone owners are Google can increase its contact and access to customers.
3. Android is a “mobile operating system” meaning it is not limited to smartphones. There are numerous mobile devices, some in development, that require a mobile operating system which include:  laptops, netbooks, tablets, media players, automobiles, and more. If Android can become THE mobile operating system for these devices it can be extremely beneficial to Google.
4. Advertising and search are what Google does well. As mobile phone usage increases, new mobile advertising methods and traditional adverting methods will increase as well. The Nexus One gives Google the opportunity to completely guide the mobile experience and funnel traffic to its services.

For Google the Nexus One is a play for Android, advertising, and strategic positioning.

Was this a good strategic move?

SpinVox has received a lot of hype over the years and the current economic conditions have helped bring to light the company’s shortcomings. The discussions of a possible IPO and $500M valuation gave way in the recent downturn. Since SpinVox has some high profile customers and technology that, in theory, could be integrated with Nuance’s software, this acquisition could turn out well for Nuance. However, a concern arises when reviewing SpinVox’s competitors and threats. Nuance might have still overpaid.

How will Nuance use this acquisition?

On the basic level Nuance can take SpinVox’s existing customers and continue to provide voice-to-text services while trying to up sell these customers additional products and services. There’s a comforting feeling knowing that human capital is used to ensure one’s services are functioning properly, albeit not very sexy.

On the technologic front, if SpinVox has amassed an extensive knowledge of speech recognition than that could create some real value for Nuance and help them both further refine and enhance their existing product line as well as capture more market share and expand their reach into similar services.

• How do you think Twitter will use this acquisition?
• Was the acquisition a good strategic move?
• What’s next?

How will they use this acquisition?

As the company already stated, they plan on adding location information to tweets. This can help connect twitter’s current community (tweeple?) to physical locations. By doing so users could feasibly connect with friends and build on existing B&M locations in the real time. Since Twitter is increasingly used as a marketing tool there could be tremendous opportunity here.

Was this a good strategic move?

It depends on how well the new features will be implemented into the existing service and how it allows users to take full advantage of these features. Additionally, the data which accumulates in Twitter’s system is now enhanced and is therefore more attractive to companies like Microsoft and Google who may wish to access it.

What’s next?

This is the best part. There are already numerous applications out there that combine Twitter with locations. If enhanced functionality is made available to developers to either (a) offer new functions or (b) use more robust data, then we can see this acquisition can drive innovation in Twitter applications.

In any case, we’ll probably begin to see some changes soon.

http://www.youtube.com/watch?v=FqrRSsvZNNU
I highly recommend watching this video about Adam Smith’s startup experience at Xobni but here are a list of highlights for those in a hurry.

OVERVIEW SUMMARY:

• Networking: Adam emphasizes networking in order to build your team, attain funding, and expand business opportunities.
• Financing: He promotes using ones money wisely but has probably received more financial backing then the average entrepreneur.
• Product development: The product doesn’t have to be perfect, you just have to be conscious of where it stands in the eyes of the consumer and be nimble and smart enough to learn from your mistakes in order to move on to your next attempt.

(Notes are written in the order they appear in the video)
NETWORKING: To get funding.
At first Adam networked with everyone. He connected with a professor at MIT who happened to be a partner at Y Combinator (ycombinator.com).  Adam was given $12k in funding for equity in his new company.

NETWORKING: To build a team.
In order to find people to work with, Adam’s approach was to “shake the friend tree”.  He spoke with the smartest people he knew and managed to convince one friend to cancel his plans and start the company with him.

SMART MONEY (FRUGLE): Setting up office space.
The office was set up near Harvard Square in an apartment. The third bedroom was sublet and Adam was resourceful with his spending on furniture.  He  bought $35 desks from Goodwill and folding chairs from Costco.

FUNDING:  Building a team.
After managing to raise $80K from various angles the team decided to move to out west. Once there, after setting up in a nice apartment, Xobni managed to raise $4M in round A fundraising which they used to build a team hiring a new employee every month.

PRODUCT DEVELOPMENT & QUALITY: Receiving feedback and executing.
Product debuted in 2007 and although it wasn’t perfect (issues and bugs) it received market feedback and coverage. Adam states that the goal is to reach the Product Market Fit where they created a product people wanted for a market that existed. Before product market fit the team remained smaller. After reaching that point they choose to scale up. Once product market fit was reached it was a case of “brutal, raw, execution”.

COMPANY POLITICS: Working with a small team.
Since the company was so small everyone knew what everyone else was doing in “painstaking detail”. This environment makes the company more nimble, creative, and energetic.

(Google was used as an example in that it took them from 1998-2004 to go from Product Market Fit to IPO)

WORK ETHIC: Working at a startup.
At first they worked all available hours 7 days a week however Adam believes that this was too much.

DECISION MAKING: Product and company direction.
Their first product was an analytical tool that wasn’t used frequently and therefore did not create as much value to corporate and private users as he would have liked. A segment, management consulting, loved the product. Xobni was faced with the choice of whether to go towards enterprise email analytics or to do something completely different. They chose to do something different. Companies have to be nimble and learn from their mistakes in order to move to the next phase in their evolution.

PRODUCT RE-DESIGN AND DEVELOPMENT: Created new product for Outlook (sidebar)
Xobni decided to create a sidebar for Outlook. It was received with open arms and good coverage. However, at the time they didn’t know if they were going in the right direction. Adam Re-emphasized that the most important thing is to be nimble.

Q&A:

Question:  How to execute well?
Answer:

• Hire good people who are smart and can get things done. “Fire and forget” because they can be their own project manager.
• External deadlines are very useful. Work fills the time it is allotted. If you want to get something done quickly, create a deadline that you can’t control, like signing up for a conference.
• Always do something. Be active and just do it. Otherwise, you’re not experimenting enough. Big companies have to be more careful here.
• Expect one quarter of projects to fail. If everything works, means you’re not taking enough risks or being ambitious enough.
• Focus only on what the user needs now.
• Have lots of experiments but strategically focused. Yahoo is spread too thin. Apple is a great example of focus.
• Learn how to use outside resources. If you’re not good at something find someone who is (contractors for specific projects).
• Build DNA as a company. Hire diverse personnel that can offset your strengths and weaknesses. Don’t get people like yourself.
• Hit the high notes:  focus on what you do really well.
• 90% of execution is persevering when everyone else gives up. Don’t give up.

Question: Audience member has a “hot product” and wants to know (a) the angel investing environment now and (b) how Silicon Valley compares with Boston.
Answer:
The economy has forced many into entrepreneurship (“vibrant”) and as a result investors are actively looking for good deals. Adam believes the West Coast is geared towards startups especially with the networking opportunities. There are advantages to being there.

Question: What do you have for startup reading?
Answer:

1. Founders at Work by Jessica Livingston
2. High Stakes No Prisoners by Charles Ferguson
3. Paul Graham’s essays

Contact info:
adam@adamsmith.cc
blog.adamsmith.cc
@asmith (twitter)

Pranav Mistry: The thrilling potential of SixthSense technology

Those of us who have seen the movie Minority Report with Tom Cruise can recollect a scene where Chief John Anderton (Tom Cruise) physically interacts with an augmented reality device. The character moved his hands and the digital objects effortlessly responded to these physical commands.

Pranav Mistry, an MIT graduate student, has been working in the MIT Media Lab developing augmented reality devices that appear to be the incarnation of the ideas presented in the movie. Working with brilliant MIT team members, Pranav has made a tremendous presentation displaying the potential of the Sixth Sense project at TED India.

The video above is described as follows:

“At TEDIndia, Pranav Mistry demos several tools that help the physical world interact with the world of data — including a deep look at his SixthSense device and a new, paradigm-shifting paper “laptop.” In an onstage Q&A, Mistry says he’ll open-source the software behind SixthSense, to open its possibilities to all.” (Source)

As we can see from the video, the uses for this technology could revolutionize the way we interact with each other, the world around us, and of course the digital world. This sort of reality enhancing opportunity seems an entrepreneur’s and a venture capitalist’s dream come true. The prospects are limitless and all that holds the development community back from this imminent OpenSource MIT endeavor is the rate at which Pranav and his teammates can release a stable product (legal issues pending of course).

Although Pranav presented applications for an individual, I initially think about group and societal effects. Imagine OpenSource software development, meeting social media in a community that openly embraces this exciting technology. Digital product ownership websites that are now growing in scope and size could give their digital products enhanced real world interactivity. Social networking sites such as Facebook and MySpace could create additional functionality that reflects their users’ lives more effectively in the digital world. Marketers and advertisers could improve their efforts to reach out to potential customers while the customers themselves might have new ways of interacting with media projected onto them.

And what effects will take place on an individual level? All of those additional features on cell phones could be rendered obsolete, in addition to the cell phones themselves. On the scene reporting for news agencies and blogging could transition into a fully enhanced digital report with complete access to the necessary technology with a lighter and more mobile footprint. GPS devices could become highly interactive as mapping and direction services can augment one’s reality thereby increasing their effectiveness. In essence, one’s personal computer becomes a part of him or her. The personal computing industry would shift as desktops, laptops, and similar devices become obsolete. The online gaming world could literally come to life as those millions of online role playing gamers (OLRPG) can finally enter the worlds they’ve been roaming for years. The lines between work and home could become more blurred as access to productivity and communication tools are now ever present. The Internet would come to life as connectivity and communication would consistently be at our fingertips.

I suspect that development isn’t in an advanced a stage as it appears to be in the TED presentation and as such I’m not sure this project will be affecting us anytime soon. However, it’s nice to get a glimpse of innovation that could be so universally impactful that any spectator can instantly recognize the value and quickly perceive their own extension of that technology.

Fenwick & West’s recent survey of venture capital investing leaves room for optimism as the 4^th quarter of 2009 is already underway. The survey tracks numerous points of venture capital spending and is able to highlight percentage changes from quarter to quarter. Although precise explanations for statistical changes are hard to pinpoint, generalizations can be made.

The most notable and optimistic theme indicated from the survey is that investors are becoming more optimistic. This optimism is demonstrated by the 11% price increase of companies from Q2 to Q3, the first such occurrence in 2009. A second significant point is that 41% of valuations have increased in value as opposed to 36% which have decreased. This is also the first occurrence in 2009 where increases in valuations exceeded decreases.

Even though there are still points for concern within the survey, the positive highlights can be coupled with significant economic indicators in order predict a resurgence in the industry. As the major indices continue their slow ascent, unemployment tappers off, and M&A and IPO activates heat up, the venture capital industry is making strides towards a recovery.

With total investments estimated at $160M by numerous firms (including: Insight Venture Partners, Kleiner Perkins Caufield & Byers, Foundation Capital, Gabriel Venture Partners, and Primera Capital) and an established client base, Chegg.com is in an enviable position. With so much support from such prominent VCs and repeat business Chegg.com appears destined to succeed.

However, even with such support, Chegg.com still has challenges to overcome. These challenges include other textbook renting sites as well as used book purchasing sites.

A brief market search of two books yields the following prices:

Atlas of Human Anatomy by Netter

• Chegg.com – Rent – $37.49
• CampusBookRentals.com – Rent – $50.41
• Bookrenter.com – Rent – $43.03
• Amazon.com – Buy – $55.00
• Half.com – Buy – $50.00
• ValoreBooks.com – Buy – $38.59

Freakonomics by Levitt

• Chegg.com – Rent – $11.99
• CampusBookRentals.com – Rent – $15.99
• Bookrenter.com – Rent – $22.71
• Amazon.com – Buy – $4.71
• Half.com – Buy – N/A
• ValoreBooks.com – Buy – $7.00

As we can see, renting a book isn’t always the optimal solution however if one does rent, Chegg.com appears to have the price advantage. If we were to solely compare textbooks there is a good chance that cost savings would be more apparent. In this case, Freakonomics is not a textbook so the advantage Chegg.com possesses is not obvious. Even still, with competitors and alternatives looming, if customers (mostly college students) don’t realize significant savings over buying used books, Chegg.com will have to maintain exceptional customer service as well as offer additional services in order to maintain leadership.

With so many competitors and supplementary services offered online, one would have to wonder what it takes to succeed in such a crowded space. Maybe all that’s needed to succeed is another $57M.