VentureBlog

Building Great Startups in Europe

In the last month or so I have spent a fair amount of time in Europe, first in London and Cambridge, England with Silicon Valley Comes to the UK, and then in Paris, at the Le Web conference. I have judged two startup competitions, participated in a SeedCamp demo day, and met with dozens of founders and entrepreneurs. It has been an incredible survey of what is to come in Europe. There's lots of great stuff cooking. But European entrepreneurs face some real challenges when it comes to building their businesses and those challenges threaten to deeply retard the success rate of startups overseas.

The biggest challenge European entrepreneurs face is a crisis of capital. There simply isn't a robust network of angel investors who are actively investing in Europe. There are some exceptions (one of the Le Web startup competition judges reported that he was investing in about 2 startups a week -- a number that puts all but Ron Conway to shame) but the scale of early stage capital is insufficient to sustain the breadth of startup ideas being born. I believe that this lack of early stage capital is the biggest single challenge Europe faces when promoting the emergence and growth of a meaningful startup culture.

Angel investment isn't just about the capital. It is also about the advice. First time entrepreneurs face a mountain of challenges that they lack the experience to overcome. Good entrepreneurs overcome those challenges through strong intuition and sheer force of will. But great entrepreneurs overcome those challenges through strong intuition, sheer force of will, and the ability to draw upon the experience and advice of others who have navigated the challenges before them. Experienced early stage investors (be they angel investors or VCs) can help founders: avoid significant pitfalls; save time; use capital more efficiently; partner with others; think more strategically; raise future capital; etc. Without sufficient mentoring, European entrepreneurs will be left to navigate these perilous waters alone, severely inhibiting the number of survivors, let alone those who will prosper.

The early stage capital challenges European entrepreneurs face are compounded by the relative conservatism of the European Venture Capital market. Not only is it more difficult for companies abroad to raise startup capital, but they often need to make more progress than their American counterparts before qualifying for venture investment from non-US investors. Not surprisingly, many of the most promising European startups thus make fundraising trips to the United States, bypassing their local venture communities altogether. While this may good for the likes of August Capital, it will not help to grow a strong startup ecosystem overseas.

There is no question that it is important for Europe to nurture the entire startup ecosystem -- technologists, lawyers, accountants, bankers, debt providers, recruiters, etc. -- but until European entrepreneurs have a robust local source of startup capital, they will continue to fail disproportionately. Any European government hoping to incubate the next Silicon Valley should start there. The country that solves the capital conundrum will be the country on a path to meaningful startup growth and prosperity.

Congratulations to Mike Arrington and the TechCrunch Team

It's official -- AOL is buying TechCrunch. There has been an extraordinary amount of vitriol pointed at Mike Arrington as news of a potential deal seeped out onto the Web. I have no idea what motivates individuals to use the Web as a platform for hate, nor do I understand why it is that Mike has become such a lightning-rod for caustic comments, but I firmly believe that it is not deserved. Mike, Heather and the entire TechCrunch team have worked tirelessly to enhance the digital media ecosystem and we in Silicon Valley and beyond are better off for it.

What is particularly impressive is that while reporting on and promoting the startup world, Mike has managed to build his own successful startup from the ground up. I was first introduced to Mike about 5 years ago by our mutual friend Keith Teare. At the time, Mike and Keith were thinking about investing in digital media startups and, in an effort to get up to speed in the marketplace, Mike had started a blog to review various startups. Ironically, at the time, VentureBlog had been up and running for a couple years already and Mike and I talked about how he could drive traffic to his new Website. From there he was off to the races.

Over the last five years, I've had the good fortune to be involved with TechCrunch in numerous ways. I have gotten my fair share of calls from Mike grilling me about a deal that may or may not be happening. He is a persistent but fair reporter. While those calls are a pain to get, he reports what he learns, not what he suspects. My firm, August Capital, has also had the pleasure of hosting TechCrunch's summer gatherings on our Sand Hill Road patio for several years. The TechCrunch parties have done a great service for the startup community, giving its members an opportunity to meet up and exchange ideas while enjoying a drink or two (or three). And I have periodically appeared on TechCrunchTV, sharing my thoughts on company building, startup culture, etc. Those conversations have ranged from lively to insane, but they have always been fun.

I look forward to seeing how TechCrunch will continue grow and morph under the AOL banner. This is certainly a well-deserved outcome for Mike and the team. I look forward to hosting the AOL/TechCrunch event next summer and appearing on AOL/TechCrunchTV some day soon. Congratulations to everyone involved.

The Democratization of the TED Conference

Despite my best efforts, there was no way that I was going to actually manage to blog while I was still at the TED conference this year. I don't know how anyone can do it. I suppose that is why there was such an explosion of tweeting at TED -- you can do it on the fly. But if you want to sit down and write anything vaguely coherent, it takes time. And the TED conference isn't about free time. In fact, I managed to get about 10 hours of sleep over the last three nights of TED. But now that I am back and rested, I figured I'd tap out some thoughts.

As with every year, now that TED is over, the debate has begun -- is TED an elitist event that is nothing more than a party for the rich and self-involved? I am reluctant to jump into the fray on this one. Not because I don't have an opinion. Nor because I fear angering those who will see my defense of TED as ... well ... elitist. Mostly because I think this debate is pretty well trodden territory. In fact, Robert Scoble just wrote a great post on the issue called "The Elephants in the Room at TED." But before getting to the content of this year's excellent TED, let me share a few thoughts on the democratization of TED.

When I first started attending TED a decade ago, I was blown away by the people in the room. I was by far the smallest house on the block, metaphorically speaking (still am). In fact, I distinctly remember my friend Andrew Anker leaning over to me before the start of one TED session back in the early 2000's and saying:

Don't look now, but if this row blows up, the New York Times will report "7 people died today, five of whom were Herbie Hancock, Yo-Yo Ma, Frank Gehry, Rupert Murdoch and [someone amazing who I can't remember]."

The TED conference was a spectacular salon of interesting, thoughtful, brilliant people. I considered myself lucky to participate. And while the conference didn't go out of its way to be elitist, there was no question that TED was in fact a gathering of the elite (from Technology, Entertainment and Design). What's more, the only way that you could enjoy TED was to be a member of that elite (or, maybe, borrow the coveted DVDs made of the conference that were only distributed to the attendees).

But that all changed a few years ago. In 2002, Chris Anderson took over TED. He loved TED and wanted to nurture the fantastic stuff that had come before him. But he also wanted to add pieces of himself to the event. He cared about the discussion. And he cared about the community. But he also cared about the world. And about the ideas. So he brought in some amazing people to work with him on the event. And he did what great CEOs do (after all, he had been a wildly successful entrepreneur before becoming the curator of TED) -- he asked anyone and everyone how they would make TED a better experience. What's more, he listened.

As a result of those conversations, rather than tighten the elite nature of the TED conference, Chris sought to democratize it. The first, and most significant, thing he did was to opened up his archive of amazing talks to the world. At the urging of June Cohen, TED's digital media czar, Chris made TED.com the home of "Ideas Worth Spreading." And boy have those ideas spread. As of today, over 200M TED talks have been viewed around the world. What's more, the TED team has created a user-generated translation engine for the TED Talks which allows the talks to be translated into a vast array of languages. Today TED Talks can be viewed with subtitles in over 80 languages. And those numbers are growing in all dimensions.

The good-news/bad-news of the success of the TED talks was that, as the talks spread throughout the world, interest in the TED conference grew massively. Suddenly there was more intense pressure than ever on the TED team to accommodate a larger number of people at the conference itself. In response to that huge demand, Chris and team did several things. First, they moved the conference from its beloved home in Monterey to a venue that could accommodate a much larger number of attendees. Second, they created something called TED Active -- a separate venue in which hundreds more attendees could enjoy the conference in simulcast. Third, they created the TED Associate Membership which allowed people to watch the conference streamed live into their homes and offices. Anyone who wanted could be part of the TED "elite" and watch the talks in real time. While attending TED in Long Beach remains a tough ticket to get, thousands upon thousands of individuals now experience the TED conference in real time throughout the world.

The TED team was not content for their conference to involve only well-known thinkers and doers. They recognized that up and comers had a huge amount to contribute to the discussion. The result: the TED Fellows program. Some 40 young scientist, environmentalists, artists, musicians, magicians, designers... joined this year's TED conference on "scholarship." They presented their work in sessions before the conference and several joined the main stage during TED proper to describe topics ranging from the emerging tattoo culture to the future of scientific discovery. As the best of the TED Fellow talks make their way to the Web, the broader public will benefit greatly from what these emerging influencers have to say.

But perhaps their boldest and most democratizing move the TED team made was to lend the TED brand to independent gatherings. The TEDx program was launched about a year ago. Under the TEDx moniker, hundreds of TED-like programs have been hosted around the world -- from TEDxBuenosAires to TEDxBrisbane to TEDxBudapest. These independent gatherings bring the power of TED to a local level. While it was a huge risk for TED to allow these independent events to carry the TED brand, the impact has been nothing shy of spectacular. The TED conference experience is literally everywhere now. In fact, if there isn't a TEDx event being put on in your community, grab the bull by the horns and start one yourself. TED is yours for the making.

I know that it is easy to point to the $6,000 price tag of TED and cry elitism. And it is hard to deny that attending the TED conference in Long Beach is a lucky privilege that can only be lived by a small number of people. But Chris Anderson and the TED team have done everything in their power to democratize the TED experience. They coined the phrase "Ideas Worth Spreading" and are living by it. They have worked tirelessly to make the TED and these "Ideas Worth Spreading" accessible to the largest number of people possible. TED is not about elitism. TED is about the democratization of ideas -- a powerful goal which Chris and his team continue to pursue maniacally. For that I am grateful.

My 10th TED Conference

I've just arrived in Long Beach for the annual TED conference. When I first started going to TED, it was a relatively small, relatively unknown gathering in Monterey, California. But don't confuse relatively small and relatively unknown for relatively uninteresting. Since its inception, the TED conference has been an amazing gathering of people across a variety of disciplines (TED stands for Technology, Entertainment and Design). And with the advent of TED's fantastic video destination site and a growing number of enthusiastic boosters, the conference has become much larger and much more influential.

It has been a while since I blogged about TED, but I'm going to try to post some thoughts over the course of this week. There are always nuggets of wisdom I collect throughout the TED conference. And they often come from the most unlikely sources. Perhaps this year that wisdom will be dolled out by Sarah Silverman or Temple Grandin, David Byrne or Nathan Myrvold, James Cameron or Benoit Mandelbrot. Rest assured, whoever the source, there will be wisdom dolled out. And, with any luck, I can be the conduit for some of that TED wisdom.

I think this is my 10th TED. Why do I come back to TED year in and year out? Not only do I find it inspiring to learn about the trials and triumphs of some of the great thinkers of our day, but I find their diversity of background and opinion invaluable. Many of the most interesting innovations throughout time have been the result of cross-disciplinary collaboration. The same is true of the innovations of today -- they draw upon a diverse backdrop of technology and leadership. TED inspires me to think more broadly about the world in which we live (how art and science and philosophy come together) and helps to place the companies with which I interact every day into the larger technological and economic universe.

Like so many of you who watch the TED Talks in amazement, I attend the TED conference in amazement and am constantly inspired. I consider myself very lucky to have the opportunity to interact with such a transcendent group of people. I will do my best to share some of those moments of inspiration along the way.

Facebook, Twitter and P&G

This afternoon I attended an event sponsored by Proctor & Gamble called the "Innovation Outreach Venturing Day." The event was an effort by executives at P&G to connect with the investment community in the Bay Area to discuss how P&G might work more closely with the emerging technology companies we all touch every day. The pre-amble to the event was a run down of the scale of Proctor & Gamble's business and the massive amount of technology they already leverage. The scale of P&G is pretty stunning -- P&G has 32 separate brands that do more than half a billion in revenue annually (and more than half of those do more than a billion). The company has 135,000 full time employees and did nearly $80 billion in revenue last year. In other words, Proctor & Gamble is freakin' huge.

And because of their scale, P&G already leverages massive amounts of technology. When talking about social media platforms, they mentioned that they already have more than a dozen in trial within the enterprise at the moment, and they continue to assess more. They have looked at every knowledge management system you can imagine, and continue to assess more. They have worked with every digital agency on the planet, and continue to assess more. What is interesting, however, is that one thing they aren't trying are cloud services. It was made clear that P&G runs everything behind their own firewall. And they have no intention of moving any part of their infrastructure into the cloud. P&G's view of the enterprise is pretty old school.

But when it comes to advertising, they clearly understand that they need to be more forward thinking. They aren't discounting television by any stretch. The continue to spend hundreds of millions of dollars in television advertising. But, as they say, P&G needs to "bring the experience to where she already is" (the folks at P&G always talk about "she" and "her" when discussing their customer) and they know that these days that is online. So they are working hard to have a big presence in digital media.

That said, Proctor & Gamble's online bets tend to be around huge aggregations of traffic, like Yahoo and Google. It was particularly interesting to see how bullish they are on Facebook. In a small group discussion about social media, one of P&G's technology leaders talked about Facebook's growth trajectory and how they are on a path to serve 5 billion people. Accordingly, P&G feels that it needs to have a significant presence on Facebook. If you are wondering if Facebook is making any money, you need look no further than P&G. It is clear that Proctor & Gamble is working with Facebook in a big way -- as an advertising platform and a brand destination. P&G's explicit goal for 2010 is to assure that each of its brands has a meaningful presence on Facebook and they are willing to pay dearly for that. And while P&G's thought leaders expressed some skepticism about the efficacy of Facebook's "engagement ads," they certainly view Facebook as a must-have for digital advertising and brand building. They didn't quantify what they are paying for that exposure, but it is quite clear that the numbers are very big.

Perhaps as interesting as P&G's love of Facebook, was its skepticism about Twitter. They described Twitter as "much more like television than one might think." To P&G, Twitter is a great broadcast medium -- it is best for one to many communications that are short bursts of timely information -- but as good as it is for timely information, the P&G folks do not view it as particularly relevant to what they are doing on the brand building and advertising side. For those things that Proctor & Gamble thinks are most interesting and important, they do not believe that Twitter will ever approach the value they can get out of a Google or Facebook. But they are open to looking at other alternatives that will have more of the engagement and brand building attributes that they hope to exploit in Facebook.

It was fascinating to get a bit of a view inside such a huge and influential company as Proctor & Gamble. And it is encouraging to see them reaching out to the greater tech community. In fact, P&G is opening an innovation office in the Bay Area and they've committed to have their senior execs make more frequent trips out to what they view as the "most important innovation ecosystem globally." It will be great to continue the conversation. There's no question that it will benefit P&G and Bay Area startups alike.

UPDATE: As you can see in the comments below, a representative from Proctor & Gamble wants to clarify that P&G does not now claim that they project Facebook's growth to 5 billion users. Rather, they are projecting the reach of their own products to 5 billion users. Since the growth projection that I heard at the P&G event wasn't attached to any time frame, I took it simply as a statement of how huge Facebook could become over time. And I agree. Facebook will be increasingly huge, and increasingly important, over time. So it didn't strike me as such a controversial statement. That said, Proctor & Gamble would like me to correct the misunderstanding, so please let it be known that if Facebook, in fact, reaches 5 billion users some day in the future, P&G did not project that that would happen :)

Aardvark: Answering the Tough Questions

When Google was out pitching their business to VCs, the reaction of many was "search? isn't that problem already solved?" And, in many ways, it was. Yahoo was well established. AltaVista and HotBot had all the geek cred. And there were plenty of other search options out there. So why in the world would you fund another search engine? (answer: to get really really rich.)

Today, more than a decade after Google got started, one once again could reasonably make the assumption that search is a solved problem. Why would a VC invest in search when Google has virtually cornered the market? The short answer is that many VCs are deeply afraid of missing the next Google (and who can blame them -- Google was the best venture investment EVER). But that's a crappy reason to invest in search. (In fact, it is a crappy reason to invest in anything.) There are plenty of other reasons to look for yet another paradigm shift in search.

I believe that the best reason to continue to invest in search is that search engines are getting worse by the day. Why is that? For one, the amount of content on the Web continues to grow at a staggering rate. While there may once have been a mere handful of definitive sources for any given search, there are now thousands of relevant results for virtually any topic. That problem is exacerbated by the explosion of user generated content.

Far more problematic for search, however, are the economic incentives around the whole search eco-system. There is huge money to be made in search and all savvy online businesses are acutely aware of that fact. Because so much money is at stake, herculean efforts are put into gaming the system. Search Engine Optimization (SEO) has become an economic imperative for all businesses. And the object of SEO is not to get people the most relevant search results to their queries. The object of SEO is to drive the greatest amount of traffic possible to the optimized websites. In other words, the economic incentives of the search business assure that huge efforts are put into making search results less relevant, not more so.

Given those realities, it has been clear to me for some time that important new search technologies would have to emerge to help solve the "decreasing quality of search results" problem. Enter Aardvark. The Aardvark founders -- a group of entrepreneurs hailing largely from none other than the Google mother ship -- pitched me on the power of injecting human knowledge and relationships into the search process. By drawing upon the knowledge of your friends and their friends, the Aardvark founders surmised that you would be able to get more accurate, more relevant, better tailored answers to a huge range of subjective questions (e.g., "Where's the best place to eat sushi in Palo Alto?" "How can I best convert my VHS tapes to a digital format?" "I love The Decemberists -- any other bands out there that I should be listening to?" etc. etc.) Thus, the Aardvark team went about building the necessary technology to solve that problem, and I had the good fortune to fund them in that quest.

This week the Aardvark team is launching the fruits of that labor at South By Southwest (SXSW). They have built a "social search engine" that lives inside your IM and email. It allows you to ask questions of Aardvark, which then goes about determining who among your friends and friends of friends is most qualified to answer those questions. As the Aardvark team point out in their blog, Social Search is particularly well suited to answer subjective questions where "context" is important. Aardvark allows you to gather that context, both implicitly through the relationships you have with the answerers, and explicitly through the conversations between questioners and answerers. The resulting answers prove stunningly well-tailored to the person asking the question. And they avoid the pitfalls of the current search engines -- they are not subject to the vagaries of the proliferating user generated content, nor of the economic manipulation of search results.

I'm certain that there will be ongoing innovation in and around search. Getting the best possible answer to any question -- objective or subjective -- that can be arbitrarily posed, is a monumentally challenging problem. Aardvark goes a long way to addressing the shortcomings of search today and I am excited to see it roll out to a larger group of people.

Fantastic Advice for Angel Investors

I had the good fortune of participating in the first (hopefully of many) AngelConf today. AngleConf was the brainchild of Paul Graham of YCombinator fame (although, you never know, it may well have been the brainchild of Jessica Livingston, so my apologies if that's the case Jessica). Not only is Paul a prolific angel investor, but he is also a thought leader and a mentor by nature. His AngelConf was an attempt to share the collective wisdom of the angel investor community with would-be angel investors.

The speakers at AngelConf were a veritable who's who of the angel world. Among those speaking were Ron Conway (Angel Investors, Baseline Ventures), Dave McClure (500Hats, Founders Fund), Paul Buchheit (Google, FriendFeed), Andrea Zurek (Google, XG Ventures), Naval Ravikant (The Hit Forge), Michael Dearing (Ebay, Stanford Design School), Mike Maples (Maples Investments), Ariel Poler (Textmarks, numerous startups), Aydin Senkut (Google, Felicis Ventures), Jeff Clavier (SoftechVC), and Jim Young (HotOrNot). Like YCombinator's rapid-fire demo days in which companies are given only a few minutes to present, each angel investor was given seven minutes to share his or her wisdom with the crowd. And this impressive group did not disappoint.

AngelConf was part training session, part confessional, part group therapy. Virtually all the speakers were in agreement that angel investing is not for the faint of heart. As one investor after the next stated, you have to be prepared to lose all your money. If losing your money is going to keep you up at night, perhaps angel investing isn't the thing for you to do. That said, there were plenty in the speakers lineup who have every intention of making money. Folks like Jeff Clavier and Mike Maples are investing other people's money. For them, the goal is assuredly to make money. For many of the others it was a fantastic mix of geeky pleasure at building great things, the need to stay engaged in the tech world, a desire to give back to the entrepreneurial community, etc. While for most of the speakers angel investing is essentially a full time job (even if they have another full time job), everyone in the room seemed to be there for the love of the game.

What was some of the most interesting advice imparted? Here are a few thoughts from the speakers:

* It's a small community -- if you screw one entrepreneur, you'll be out of the angel business because entrepreneurs talk (Conway)

* Angel investing is about learning on the job, which means that you can plan on screwing up your first 10 deals at least (McClure)

* If you assume that the money is gone once you've invested it -- that it is like a lottery ticket -- then you will have a better time angel investing (Buchheit)

* Work with other angel investors so that you can get the advantage of their expertise (Zurich)

* There is no rational way to arrive at valuation, so don't be overly concerned about getting it right (Graham)

* Don't worry if the idea seems crazy -- if it didn't seem crazy, it would be too late to invest as an angel (Graham)

* The lifeblood of angel investors is deal flow -- you need huge deal flow to find enough stuff that is worth investing in (Ravikant)

* The best deals come from other angels (Ravikant)

* Don't be afraid to throw a little dynamite into the status quo and see what comes out of it -- often times interesting stuff emerges (and sometimes nothing does) (Dearing)

* The Rule of 12 -- you need to invest in 12 companies to have statistical diversity -- invest in fewer than 12 deals and you run the risk of them all failing (Maples)

* Like in the movie "Oceans 11," you want to pull together the best team of angel specialists there are out there -- it increases the likelihood that the company will succeed (Maples)

* Help bring your entrepreneurs together so that they can learn from one another (Poler)

* By being a connector, you will see the most interesting stuff and work with the most interesting people (Senkut)

* Angel investing is all about the syndicate -- you can lead if you want to but it can be lonely until others join in the syndicate (Clavier)

* Angel investors need to distinguish themselves from others with money -- what do you bring to the table? Contacts. Experience. Advice. (Young)

* Only invest in stuff you actually know something about -- otherwise you're just buying a lottery ticket (Young)

All in all, a pretty jam packed few hours. The energy in the room was great. It felt very much like being in a room full of entrepreneurs. Because, in the end, like entrepreneurs, angel investors are company builders. They love technology. They love company creation. And, like me, they thrive on the fun and excitement of the startup world.

I hope that Paul will have another AngelConf some time in the future. It was a fantastic way to spend the afternoon.

DEMO will miss Chris Shipley

I was deeply saddened to read Erick Schonfeld's post on TechCrunch entitled "DEMO Gets Desperate: Shipley Out, Marshall In." The feud between Mike Arrington and Chris Shipley has been well documented. Arrington has gone so far as to hope for the demise of the DEMO conference. He and Jason Calacanis have taken great pains to question the ethics of DEMO's business model.[1] They have lashed out at Chris Shipley repeatedly. And now Erick Schonfeld has jumped on the DEMO-bashing bandwagon.

I have known Chris Shipley for many years. She is fair and honest. She is smart and thoughtful. And she has worked long and hard to build the DEMO conference into a premier outlet for startups. Chris Shipley is a believer in the power of technology and the value of emerging companies. She has helped launch many hundreds of great companies and products. And she is a powerful advocate for those companies that she has showcased on the DEMO stage.

Today it was announced that Chris is handing over DEMO to Matt Marshall of VentureBeat. My congratulations to Matt. I wish him the best of luck in his new role with DEMO. I have long been a fan of the DEMO conference and hope that it will continue to prosper. As Marshall Kirkpatrick writes in ReadWriteWeb, "We'd like to see a bunch of successful conferences thrive and bring great technology into the public eye." I couldn't agree with him more.

I look forward to attending this year's DEMO conference a little over two weeks from now. I am sure that I will see some compelling demos, meet many great entrepreneurs, and get a broad overview of the startup landscape. But, most of all, I look forward to seeing Chris Shipley on the DEMO stage one final time and to wishing her the best as she passes the torch to Matt Marshall. Chris has been a wonderful steward of the DEMO conference and her thoughtfulness will surely be missed.

[1] I personally believe that the suggestion that DEMO's business model is somehow less ethical because startups are charged to participate in the event is silly. It is, no doubt, a different model than Arrington and Calacanis's conference which makes its money through sponsorships and registration fees, rather than demonstration fees. But that does not make it less ethical. Is it unethical for Sprint to charge for 411 calls merely because 1-800-FREE411 will provide information for free? I don't think so. It's a shame that Chris Shipley has had such strong accusations leveled at her over these last couple years.

The Evolution of TED

For almost a decade I've been enjoying the TED conference. For those of you who haven't heard of it, the TED conference is a mind-blowing gathering of deep thinkers from the worlds of Technology, Entertainment and Design (plus any number of fields in and around Technology, Entertainment and Design). Over the years, the audience has become almost as star studded as the speaker lineup -- folks like Matt Groening, Paul Simon, Al Gore, who once graced the stage now show up to listen and be a part of the broader TED community. The result is 4+ days of mental over-stimulation, followed by exhaustion and then a countdown until next year's TED.

This year marked the 25th anniversary of TED. The conference started as a small gathering back in 1984 and has grown over the years in both scale and notoriety. Up until a few years ago, TED grew by virtue of word of mouth. Folks like myself who had the good fortune of finding our way to TED would inevitably return signing its praises and bring a few friends with us the next year and the next year and the next year. That all changed when the TED organization decided to release videos of the TED talks into the World Wide Web. Since that time, TED talks have been viewed over 100 Million times and awareness of the TED conference has skyrocketed, as has demand for the conference.

In response to rising demand and the logistical challenges associated with TED's old venue in Monterey, California, the TED organization moved the conference this year to the Long Beach Convention Center. In many ways, Long Beach could not be further from the quaint, upscale TED tradition in Monterey. For one thing, the old Monterey theater held a mere 500 people, whereas the new Long Beach venue accommodates 1,700 in the orchestra alone. Long Beach is a city. Monterey, a town. For those of us making the transition from the TED of old to the TED of new, the contrasts were great and comparisons near impossible to avoid.

Given all that, it is not surprising that many of the TED old guard expressed deep concern about TED in Long Beach. They felt that it was too large, too impersonal, too lacking in community. They objected to the new, bigger theater. They complained about the impersonal character of the city of Long Beach. And they weren't too fond of the food either.

So why am I not surprised by these complaints? And why do I think that the TED organization should not be too concerned? Those of us in the startup world have seen this play before. When companies succeed, prosper and grow, there inevitably comes a time when they need to move out of their quaint, nostalgic offices and into new, bigger, often less-personal digs. The employees who have been with the company since its inception bemoan the change, pointing to it as evidence that the company has lost its bearing. They are certain that the company will not survive the transition intact. And while some of those early employees may not make the transition themselves, the growing and prospering company usually does.

Those companies that manage to transition best from small, gutsy startups to large, established companies are the ones with the strongest corporate cultures. While growing companies inevitably have to make certain adjustments to their traditions to accommodate their increased scale and trajectory, the heart of their corporate cultures remains vibrant and continues to support the companies' expansion.

So too with TED. The TED culture is a powerful one. Indeed, the culture of TED has continued to grow over the two and a half decades it has been in existence. That powerful culture has been reinforced by the philanthropic bent of Chris Anderson, who has been TED's "curator" for almost a decade now. People attend TED, not only to have their minds expanded, but with high hopes for helping build a better planet. And with that overarching goal, the TED culture remains vibrant.

I suspect that some long-time TEDsters will drift away as a result of the move to Long Beach. But there will be plenty of eager participants ready to take their place. And those of us who remain will continue to be treated to a dizzying mental carnival, surrounded by an eclictic community of friends, old and new alike.

John Palfrey Speaks on "Born Digital: Understanding The First Generation of Digital Natives"

If you have not yet experienced "Digital Natives" in their natural habitat, come on over to my house on any weekend. When I wander down stairs on a Saturday or Sunday morning, the scene is always pretty much the same. The TV is on and yammering away. But my kids are far more engaged in their respective laptops than they are in the TV making noise in the foreground. My 6 year old is likely buying a new go kart for his Webkinz monkey. My 8 year old is busy shooting balloons on Addicting Games. My 11 year old is blogging about some great new Japanese rock band video he found on YouTube. My 13 year old is reading the latest news about his favorite performers on Broadway.com. And, amazingly, while "watching" TV and voraciously consuming the Web, my children are more than capable of fighting with each at the same time -- digital multitasking at its finest.

Digital Natives today may be a small group of non-voting, non-credit card holding kids. But soon Digital Natives will be the predominant consumers of media, goods, services. And as such, they will expect their experiences to be inherently digital. Analog experiences will be viewed as quaint -- perhaps they'll trigger nostalgia for the good old days of board games and books -- but, in the end, the expectations will be one hundred percent digital. Companies will need to think differently about how they market to Digital Natives. Governments will need to think differently about how they engage Digital Citizens. Doctors will need to think diffeerently about how they treat Digital Patients. It won't be an evolution -- it will need to be a revolution.

I already see this revolution when I'm pitched on businesses whose customers are kids. Businesses focused on children or Millennials (the next big group of consumers being chased by the advertising world) have no interest in the historically analog world. Their products are naturally digital. They acquire customers digitally. They interact digitally. Indeed, any analog byproduct of the digital experience (you know, like meet real humans in person) is just that, a byproduct. Kids want their media consumption, their shopping, their communications to be digital. Webkinz is a great example of this phenomenon -- who would have thought that stuffed animals could prove to be the gateway drug to a digital experience? Yet that is precisely what they have become.

In light of all that, it was great to read the timely new book by John Palfrey and Urs Gasser called "Born Digital: Understanding the First Generation of Digital Natives." John and Urs look into the opportunities and challenges posed by this digital revolution. Those of us with kids are living in and among the Digital Natives and certainly can use all the help we can get to navigate this brave new world both for ourselves and for our kids.

I am a huge fan of John Palfrey's. John has spent the better part of the last decade running Harvard's Berkman Center for Internet & Society. On the side, he has been thrilling students in the classroom at Harvard Law School, doing interesting research, charming would be donors to the Center, and moonlighting as a Venture Capitalist at Highland Capital. He is truly a renaissance man. I have the great fortune of co-teaching a class on entrepreneurship and Venture Capital with John and he is a wonderfully understated speaker and thinker.

For those of you in the Bay Area next Monday, September 15th, I am co-sponsoring an event in the city to celebrate the release of John's "Born Digital" book. The reception is for friends of the Berkman Center and will include a talk by John about his book. It should be a great group of people and an interesting conversation. There is no need to RSVP to the event, just come on by. Here are the details:

Book Talk and Reception for Born Digital: Understanding The First Generation of Digital Natives by John Palfrey and Urs Gasser Monday, September 15th, 2008 6:00PM, to be followed by a cocktail reception.

Hotel Vitale
8 Mission St
San Francisco, CA 94105
(415) 278-3700
Directions and map: http://www.hotelvitale.com/location/directions&map.html

More about the Event: http://cyber.law.harvard.edu/node/4575
More about Born Digital and the Authors: http://www.borndigitalbook.com/
Born Digital in Seattle 9/17/08: http://cyber.law.harvard.edu/node/4576
About the Berkman Center: http://cyber.law.harvard.edu/about