Leveraged Theta

I’m just an observer in the space, for now…but an economist I know made me question the thesis behind those investing in businesses with only vague plans for revenue under the presumption that “money follows eyeballs”.There has got to be an upper bound to the number of businesses that can survive solely based on eyeballs.  I mean, yah, if you can create something with unique content – user created or otherwise – you’re off the to races, and if people have to check it multiple times per day “let me get my check book, i’ll invest in that” is what I would have said days ago.  Now, I’m not so sure.  There is a finite supply on eyeballs, and an ever growing supply of places to point a browser.  I know the internet is growing way too fast, and I’m long that, but we’re becoming a nation of A.D.D. . Unless we all keep with the trend of sleeping less and less, businesses that require eyeballs to sustain revenue could be in for trouble, or at least, stiff competition.

Twitter is threatening the dot com like multiples given to Facebook’s revenue, just because every twitter user, likely checks there facebook, a little less.  Do you see what I’m getting at?

I can’t help but comment on this, with respect to one specific new idea, Disqus.  Some really sharp dudesI know are investing in it.  That’s different, it’s more of a service.  It’s not in the same league as other web services, and it’s not like a widget, it’s different and unique. All I know is it’s a very different model than single dot com ideas. I’d be long if I could. But, I have to say, I see trouble for their revenue.  I’m also not so sure the idea to ‘follow’ is as portable to disqus.  I have yet to use the feature they likely worked hard to program.  I mean, am I really going to read a stream of comments, that are likely fragments of conversations?  I guess I might, if people started commenting in proper English and full sentences, without using “that” or “it” referencing something in the original blog post.  But it’s likely my eyeballs will steer towards things with a bit more value than a bunch of half conversations.  But then again, it’s funny how people I know, like Donna, who have told me, “they are too busy to blog”. Her Disqus comment thread looks like the formation of a blog to me, since she writes in full sentences. If they changed the UI, they could make it more useful, but that applies to almost everything in the field of technology.   Don’t get me wrong I LOVE DISQUS, I don’t have to list the great features, you know them.  I just have beef with the ‘follow’ idea, and all I’m saying is, I hope that’s not what they are counting on driving revenue.

Disqus will be interesting to watch develop. And of course, I wish nothing but the best for KBC partners and Union Square Ventures.  Likely Disqus does just fine.  But to the rest of the eyeball chasers – I wish you all the best of luck, I think you’ll need it!

These, are just my humble thoughts, and I’m relatively uninformed about the supply and demand of eyeballs as well as growth patterns in the space, specifically in a quantitative sense.

One more thing, I want to say, concentration of value, is something that will make businesses built on eyeballs succeed.  The higher the concentration of value, in both the advertising that monetizes a service, and the information displayed to the user, is something I believe in.  As the world gets busier and busier, we need to optimize our usage of the one thing that is seemingly infinite, but is inherently not, TIME.  That’s why I think the trend in RSS readers is just the tip of the ice berg.  Ask the average person – “what’s RSS?” they couldn’t tell you, but they recognize that little orange icon…and it’s something “they’ve been meaning to look into”. For the same reason, that is, concentration of value, I believe content ads are the next big thing. That is, it’s going to take contextual based advertising down a peg.  I know Fraser thinks personalization and memory are what contextual advertising really need, but I think it will just delay the looming success of content ads.  Publishers will reap the rewards, advertisers will do the same, and so will the user.  Win, Win, Win.