I’ve been meaning to write about my friend Dave Schappell’s startup TeachStreet since it launched back in April. With TeachStreet’s launch into it’s second market – Portland today – now seems like the perfect time.
First a little background – I met Dave last year at Seattle Ignite summer 2007. I was introduced by now TeachStreet board member Dave McClure, once again proving in the Web 2.0 space if you don’t know McClure you might not exist (sort of like a tree falling and no one around to hear it). In fact, a little TeachStreet history occured in my dinning room as Schappell wrapped up his immigration issues with his co-founder and CTO for TeachStreet. Glad I could play my small role.
Getting to know Dave over the last year has shown me that Dave is a rock star and why I expect the same from TeachStreet. TeachStreet’s real genius is much like the genius beyond super successful startups like Yelp. Yelp’s success is that it owns SEO for restaurants especially on the West Coast. TeachStreet not only has the opportunity to own SEO for personal instruction, but also the directory and potentially web presense for a sector of the personal services industry that without TeachStreet would ever exist. Startups that figure out how to own SEO and the web presence for a economic sector have the real potential to do very well for their users, customers (the businesses they help market) and themselves.
So if you’re looking for a tutor, instructor or a personal enrichment class – TeachStreet is the site to try. If you’re looking for a startup doing something that is very real and has some very interesting potential in a sector that I expect to see a lot of cool things (ie. call it SEO 2.0 startups for lack of a better cliche) then pay attention to Dave Schappell and TeachStreet.
Check it out – written by our publisher relations guru Rex Dixon.
Posted in work
Tagged lookery, startups
The recent WSJ article on Google’s difficulties monetizing YouTube has caught a lot of attention with the stat that Google can only sell ads around 4% of the videos on the site (due to copyright concerns). With roughly a billion videos viewed a day that leaves a lot of unmonetized traffic.
At the same time as noted by SAI and Venturebeat, a bunch of silly and seemingly crack-smoking inspired revenue estimates were published by Wall Street analysts estimating YouTube’s 2008 revenue at around $200 million for 2008 and $350 to $400 million for next year.
As I noted in a recent post – the video ad market has a long way to go to be anything of significance. Given Wall Street’s ability to hype hallucinogenic estimates I am not surprised to see those crazy numbers thrown out there. But someone has to take a closer look and expose the crack smoking for what it is.
Let’s take a look – 4% of YouTube’s content is monetizable. Let’s assume for a moment that 4% represents 10% of YouTube’s traffic – given the 1 billion videos viewed per day – that’s 100 million views. YouTube is selling a new format – the video overlay with some estimates as high as a $20 cpm. Now being in the ad business – I doubt very much that Google is actually getting anywhere close to $20 – real 30 second video ads are getting $20 CPM for essentially the equivalent of a 5-10 second banner-sized pop-up ad.
Let’s say Google sales force is good and they are getting a $10 cpm on what they can sell and let’s assume they are achieving a typical premium sell through of 30% of their inventory. That means that they aren’t selling 100 million overlay ads per day that means they are selling 30 million. At a $10 CPM that’s $300k per day, $9 million a month and just under a $100 million per year. And given the amount of inventory – I highly doubt YouTube is seeing a 30% fill rate and a $10 eCPM a much more likely scenario is half that fill rate at half that CPM or $25 million a year. Also as more inventory opens up to Google, the eCPM’s are likely to fall as the social networks have shown having a ton of inventory puts a lot of downward pressure on CPM’s.
Now a $25 to $100 million dollar a year business is nice especially for a business that’s not even 4 years old but I doubt that even covers YouTube’s bandwidth costs even at the high end of the estimate.
Like a lot of folks I am spending less time blogging, more time working. But I’m still offering up pithy thoughts throughout the day on twitter. I can found at http://www.twitter.com/sawickipedia.
Posted in personal, work
Comscore (via Allen Stern at CenterNetwork) reports that 11.5 billion videos were watched online in March in the U.S. 11.5 billion sounds like an awfully big number. But it’s not. At least not in terms of web scale. Comscore itself estimates that total page views online are estimated in the trillions per month. Heck even my company, Lookery, a demographic-based ad network that’s less then a year old delivered almost 3 billion ads in April. It’s estimated that MySpace and Facebook combined do more then 100 billion page views a month.
And Comscore which likely undercounts pages views by a factor of 2 to 3x is OVERstating videos. In their stats, they estimate the AVERAGE online user watches 83 videos a month! Seriously. Personally I can’t believe that stat. I’m as addicted to the Internet as the next guy and I watch maybe 30 videos a month. Maybe.
So even if you take Comscore’s numbers at face value, 11.5 billion isn’t that big of a number when you look at the economic size of the video market. Assuming a range of $1 to $5 cpm and 1 ad per video (any format, method, size, style doesn’t really matter), you’re looking at a TOTAL market size of just $11.5 million to $57.5 million for all online video. That’s out of a total online ad market of about $2 billion a month.
My point isn’t to say online video won’t be or isn’t important. It’s more a comment about the incredibly large scale required to build a large media business or market. The media business is about a little off a whole heck of a lot. That’s why ads are priced in cost per thousands. And the need to have immense scale also explains why the media business gravitates towards consolidation but that’s a post for another day. When videos viewed starts approaching trillions then we’ll be somewhere.
I heard about the Genographic Project while watching a documentary on some 4,000 year old European mummies found in Eastern China. The Genographic Project is tracing the lineage and migration of humanity using mitochondrial DNA. To a geek like me this is some very cool stuff. They have a cool website that is well worth checking out (link).
The Genographic Project recently had a press release that traces back our genetic adam and eve to about 60 to 70 thousand years ago in East Africa. What’s interesting about that is they have also determined that the first modern humans date to about 200,000 years ago. Apparently from 200,000 years ago to about 70,000 years ago – humans migrated and populated most of Africa and then seemingly due to climate change (possibly linked to a massive volcanic eruption in Sumatra 73,000 years ago that was 3,000 (!!!) times stronger then the Mt. St. Helens eruption in 1980) the population collapsed to what they estimate of only 2,000 people in East Africa. And from that small population and from one man and one woman within it – every modern human today can be traced too! Note – when they say genetic adam and eve that ‘s the woman and man whose dna we can trace ourselves too – it means any prior genetic diversity doesn’t exist in the gene pool of modern humanity.
And from that time – the project traces via genetic variation the migration of humanity across the globe and how quickly it expanded, overlapped and crossed paths. Great stuff.
Here’s a picture of the map of human migration (an interactive one exists on the site):
Surf Canyon is a startup focused on improving search results that a college friend of mine, Dave Hardtke, is chief scientist (despite my prior stated views on inflated startup titles I bit my tongue and didn’t but Dave’s chops). We had dinner tonite in SF in order to catch up socially and talk shop. This is Dave’s first startup so I’ve been more then open about sharing whatever experience and lessons I can. As Lee Lorenzen noted on a panel at this week’s Snap Summit conference and Dave’s coming to learn, startups represent a lifestyle as much as a career. It’s certainly a nutty way to make a living, but one where I couldn’t imagine doing anything else. Welcome aboard the start-up train Dave – I hope you enjoy it as much as I have and do.
Dinner tonite was actually the birthday dinner for Surf Canyon’s CEO – Mark Cramer (I was Dave’s rather poor second choice to his lovely wife who couldn’t make it). Mark’s friends were all in attendance and since Mark has been on the startup ride for a while was a chance to meet a bunch of other startup folks. I got a chance to meet an entirely new circle of startup folks.
One of the interesting points of the conversation when talking shop about Surf Canyon was talking about how they could get more downloads of their search plugin and toolbar. I spent a number of years in the toolbar space and have been surprised by how many questions I have been getting recently about my toolbar years especially from folks in the social networking space. So here’s my general take – in an increasingly web and browser dominated world – getting any user to install software is an increasingly difficult. Users have become wary of hidden risks and potentially harmful software coming from seemingly innocuous software. The adoption/conversion rates from web-based applications vs. downloads can be a factor of 3x difference if not more. Also web-based applications have the potential to be tied into social network platforms which can be very effective channels for incredibly cheap user acquisition.
At the same time, the toolbar market from a user perspective is highly saturated. Google is the dominant toolbar today and it’s hard to find virgin users who either don’t have a toolbar or are willing to replace what they already have. And the competition to reach those users is fierce and being fought be folks who are making a lot of money. Ask.com’s Smiley Central toolbar group pays $1.50 to $3 per install in part because of their Google ad syndication deal they can make $5 to 6 per install (at least that and likely even higher). So for new anyone looking to offer a toolbar as their primary business model – I usually offer a strong word of caution. Even if you have a better mouse trap, if you can’t pay for shelf space, then you might want to consider a different model. And case in point, the only “viral” toolbar from the last few years that was reasonably and widely successful has been Stumbleupon. Every else – even Google – can bring their war chests and buy up the market.
Now Surf Canyon has a real cool browser plug-in and a great product is a great place to start. I just hope that the competitive and financial realities of the toolbar market don’t prevent them from being a big success.
John Cook breaks the news that my friend Dave Schappell has closed the series A for his startup – TeachStreet. TeachStreet is building a directory of teachers and classes for instruction from lessons, classes to private tutors. Dave is a total rockstar and I can’t imagine him not being successful so I am glad I publicly congratulate he and the rest of the TeachStreet team on the round. I expect great things out of them and front what I’ve seen visiting their office semi-regularly I don’t think I’ll be disappointed.
It’s been a good year so far for my friends with this being the second VC series A (blist earlier closed their series A) to close. And to follow on a previous post – both Dave and Kevin (of blist) fit the in-demand experienced entrepreneur profile – nice to see my generation doing well.