jump to navigation

How will Tablets and Kindles change reading? March 26, 2012

Posted by jeremyliew in Uncategorized.
Tags: , , , ,

The first attempts to capitalize on a new medium are always simple ports from an old medium. The first TV shows were newscasts – basically the same as radio, a guy reading the news. The first e-commerce sites were cataloges ported to the internet, with the same copy and a single picture. But over time, content that is customized to each medium comes to the fore. Now we have the sit com, the police procedural and the reality show on TV, and flash sales, subscription commerce and daily deals online.  So how will Tablets and Kindles change the way we read?

The first generation of eBooks were simply ports of regular books. But Amazon has already started to experiment with a new format, the Kindle Single:

exceptional ideas–well researched, well argued, and well illustrated–between 5,000 and 30,000 words.

They recognized that the economics of print publishing have forced books to be 80-100,000 words long. Anyone who has read a business book knows that this does a disservice to both reader and writer. Some ideas have a natural length less than 100,000 words, and extending them to book length does no good to anyone. But the economics of book publishing, and the public’s willingness to pay for a “small book”, forced this convention. Ebooks have no such constaints, and allow authors to write at any length. Byliner is taking a similar approach, trying to build an eBook centric publisher.

Other companies are recognizing that eBooks lowers the barrier for self publishing more than ever before. Companies like Blurb and LuLu both started out supporting physical book self publishing and now also support eBook selfpublishing.  Fan Fiction is another related opportunity.

The WSJ noted another unexpected consequence of tables and kindle reading that is emerging, more to do with content and genre:

Electronic readers, and the reading privacy they provide, are fueling a boom in sales of sexy romance novels, or “romantica,” as the genre is called in the book industry.

As with romance novels, romantica features an old-fashioned love story and pop-culture references like those found in “chick lit.” Plus, there is sex—a lot of it. Yet unlike traditional erotica, romantica always includes what’s known as “HEA”—”happily ever after.”

Kindles, iPads and Nooks “are the ultimate brown paper wrapper,” says Brenda Knight, associate publisher at Cleis Press, of Berkeley, Calif., a publisher of erotica since 1980.

Why has tablet reading unleashed a surge in the erotic romance genre? Because online commerce has made buying the books less embarassing:

Ms. Benson says the digital format helped her get over her embarrassment. She reviews romance books for Smexybooks.com and erotica for the website Heroes and Heartbreakers. Even so, she says she wouldn’t read these books in print if she were in view of anyone. “Some of the covers are very explicit,” she says.

Erotica on the Mischief Books site is tagged with icons. Handcuffs denote “kinky”; an upraised palm means “discipline.” The HarperCollins imprint says it plans to publish at least 60 e-titles a year. “It used to be a long walk to the counter with an erotica selection, but now that’s a thing of the past,” says Adam Nevill, Mischief Books’ editorial director. (HarperCollins, like The Wall Street Journal, is owned by News Corp.

Another dimension for innovation has been around engagement. Many children’s books and apps have become highly interactive, including those from publishers like Callaway, Duck Duck Moose, and Oceanhouse Media.

I’m really excited about the ongoing innovation in reading and expect to see some very valuable companies created in this area. We’re seeing experimentation around length, authorship, genre and interactivity. What do you see as the most innovative companies in the eBooks space?

Financial services disruption sneaks up from below. March 19, 2012

Posted by jeremyliew in Uncategorized.
Tags: , , , , ,

A couple of weeks ago I did a guest post on PandoDaily about how big data + machine learning is creating new opportunities in lending. What’s interesting is that most of the disruption is starting in the bottom end of the market; unbanked and underbanked lending and payments. That is not an accident. I did another guest post today at PandoDaily explaining why disruption in financial services comes from below.

Subscription business models are getting their day in the sun March 7, 2012

Posted by jeremyliew in Ecommerce, subscription.

Today’s NY Times notes that subscriptions are all the rage in ecommerce. It features three of our portfolio companies. Alex Zhardanovsky, cofounder of Petflow*, and Azoogle before that, is one of the people interviewed:

But he had an idea to build the business by taking a different approach to sales. While selling online ads, he had seen other companies, like Netflix, persuade consumers to lock in monthly fees for repeat orders. Those companies, he believed, were generally more successful and thus bought more of his ads. For his new business, Mr. Zhardanovsky’s plan was to sell dog food on a subscription basis. He figured that other pet owners had experienced the same frustrations keeping the food stocked and might be willing to sign up for a monthly delivery service as well. “Dogs never stop needing to eat,” he said….

In its first month, July 2010, the company shipped about 60 orders; by January of this year, that number had leapt to 27,000. In 2011, PetFlow exceeded $13 million in revenue — with 60 percent of its sales coming on a subscription basis — and it projects revenue will exceed $30 million this year. “I’ve come to appreciate,” Mr. Zhardanovsky said, “that subscription models are, in so many ways, the holy grail of business.”

Brian Lee, cofounder of Shoedazzle* with Kim Khardashian, is also quoted:

“A subscription model allows you to establish long-term relationships with customers as opposed to selling them one pair of shoes and hoping they come back,” said Mr. Lee, who also was a founder of LegalZoom. It was his experience at LegalZoom, a legal-document business based on single transactions, that prompted Mr. Lee to look for recurring revenue: “I wanted to start a business where you didn’t have to worry as much about whether the customer would come back.” The idea of using a subscription model to sell shoes came to him, he said, after he realized how many shoes his wife was buying on a regular basis.

The Times also notes where the subscription model works best:

Given the experiences of companies like PetFlow, ShoeDazzle and BabbaCo, it is tempting to wonder why not every company is trying a subscription model. And, in fact, Brian Lee, the founder of ShoeDazzle, said he frequently heard pitches from entrepreneurs who wanted to create the ShoeDazzle of wine or underwear or some other product. “I think subscription models work best in two instances,” he said. “Where the product is a necessity or when it’s an absolute passion. It stops making sense when you try to do something like a tree-of-the-month club, which doesn’t fit either of those categories.”

Taking his own advice, Mr. Lee recently founded another subscription-based business, this one with Jessica Alba, the actress. It is called the Honest Company*, and it ships diapers and other baby products.

We’re proud to be backing such great companies and entrepreneurs.

* Lightspeed Portfolio Companies