It looks like my friends at eBay (finally) woke up: eBay US just announced a dramatic change in fees for their fixed price (Buy-It-Now) items. After eBay struggled with their growth and saw quite a few sellers either abandon ship or grow their out-of-eBay business rather significantly, eBay seems to have heard the message and “bit the bullet”: They lowered the listing fee for fixed price items from $.15 - $4 (!) depending on the starting price and for a maximum duration of a meager 7 days to a flat $.35 for a whopping 30 days maximum duration. This comes with an increase in final value fees - though the total net effect is definitely a significant reduction in total fees for a seller.

This move will reduce the risk for any seller in listing his items on eBay (in case they don’t sell after 30 days the loss is only $.35) - which will result in a dramatic increase in total listings on the eBay marketplace. This is an interesting move as eBay always was concerned about a) the average conversion rate (ratio between listed and sold items) and b) findability (the ability of consumers to actually find what they are looking for - which gets much harder the more items are available for sale). It looks like eBay gave up it’s reservation on point a) - or believes that with a 30 day time period most items will actually sell, thus the change will not influence the overall average conversion rate too much. With point b) I guess (and hope) eBay has some improvements to their search engine in the making - otherwise it can get messy (I remember the old days when you searched for a cell phone and you found pages and pages full of cell phone accessories). It will also be interesting to see when we see these changes globally (especially in the UK and Germany - eBay’s strong international footholds).

eBay is also quite aggressive in promoting these changes (the gloves are definitely off) and launched a mini-site with examples and even videos highlighting the importance of the change (watch the video “Priced to Sell: Big Changes at the World’s Largest Marketplace” for a great Lorrie Norrington pushing the changes really hard):

http://thebestplacetosell.ebay.com/

Good to have you back eBay!

Disclaimer: I worked at eBay from 2001 to 2005.

Well, well - after a very relaxing vacation I’m back in London. And therefore this blog is back. I am sure you didn’t miss me - never mind. Here we go:

I recently saw an old keynote from Steve Jobs (a very old one indeed - it’s actually the event where Steve introduced the Apple Macintosh in 1993). What struck me is the fact that even 25 years ago, Steve’s presentations were mind-boggling, griping and perfectly choreographed. When you watch presentations Steve held in recent years (since his return to Apple), you witness some of the finest forms of presentation techniques you can find.

As a person who needs and wants to speak publicly every once in a while there is a lot to learn from the so-called Steve-Notes. Go to YouTube or the Apple Quicktime site and download a couple of keynotes, watch them over and over again and try to learn as much from them as you can. BusinessWeek recently wrote a really nice summary of the key techniques used by Steve to make his presentations really memorable (article linked here).

To widen your view I also highly recommend watching Benjamin Zanders recent presentation at TED Conference (video linked here). In this speech Benjamin delivers a tremendous performance to get people excited about classical music - highly recommended!

The summer finally arrived in this beloved city of mine - London (yepp, it’s true: It’s not raining!) and I’ll be on a two week summer break. Posts will be most likely non-existent during this period. Normal service will resume from mid-August.

Enjoy the summer everyone! And drop me a line at pascal {at} finette.co.uk if you want to reach out to me.

Recently someone who reads my blog said that I should include pictures. It would make the blog more interesting. Well, well - let’s keep it simple and add only images if they make a difference… Talking about which (visuals that is): That brings us straight to my early weekend (yeah, I know - it’s Thursday!) recommendation:

I’m not sure how many of you have seen the documentary Startup.com - if you haven’t seen it, go get it now. It’s one of the most mesmerizing stories ever told - and a must-see for everyone involved in a start-up.

IMDb gives it a very solid 7.1 rating and writes:

Friends since high school, 20-somethings Kaleil Isaza Tuzman and Tom Herman have an idea: a Web site for people to conduct business with municipal governments. This documentary tracks the rise and fall of govWorks.com from May of 1999 to December of 2000, and the trials the business brings to the relationship of these best friends. Kaleil raises the money, Tom’s the technical chief. A third partner wants a buy out; girlfriends come and go; Tom’s daughter needs attention. And always the need for cash and for improving the site. Venture capital comes in by the millions. Kaleil is on C-SPAN, CNN, and magazine covers. Will the business or the friendship crash first?

Do yourself a favor - add it to your Lovefilm or NetFlix list, buy a copy on Amazon or find a friend who has a copy. Get your fellow co-founders together and watch it. It’s well worth it! (Harvard shows it regularly in their start-up classes)

This has to be a short one - busy day today (Yepp, I know - that is no excuse!). Here are a couple of links which I have sitting in my inbox for a while and which I think make a really good read for every entrepreneur:

• Starting a Business in a Recession (Inc Magazine - Link)
• How to Succeed in Business in 4 Easy Steps (Inc Magazine - Link)
• Innovation: Making Inspiration Routine (Inc Magazine - Link)

Enjoy reading these really great articles.

I’m a little late with this one - I know, I know. So let’s not waste any time and jump right into it:

John Lilly, Mozilla’s CEO stated in late November 2007 that Mozilla assumes that Firefox has more than 125 million users. That was in November last year - about 8 months ago. In the meantime Mozilla released version 3 of Firefox to much fanfare - so I guess it is safe to assume that now significantly more than 150 million people all over the world use Firefox (you can download Firefox in about 50 different languages). That’s a global market share north of 20% - more than one in every five human beings on the net uses Firefox.

Now you should understand that Firefox is an open system - you can easily add extensions which do everything from the mundane (like displaying funny pictures) to turning Firefox into something completely different (like creating a kiddy-friendly browser). Extensions can speak to application servers to get things done in the background; they can skin the browser to make Firefox look, feel and behave different and they can interact not only with the web but also with other applications on your computer (take for example FoxyTunes which puts a little iTunes controller into your browser status bar). Firefox extensions are developed using JavaScript and XUL (XML User Interface Language) - which makes them easy to build and maintain (and often doesn’t require a steep learning curve as JavaScript and XML is heavily used in pretty much everything Web 2.0).

Now let’s bring this together:

We have 150m active users who experience the Internet through Firefox - they spend hours every day (!) in Firefox. We have a platform which allows us to build powerful applications (aka extensions) with little effort. We even have a working distribution system (Firefox features extensions in the application and makes it easy to download and install new extensions).

In my eyes this is one of the most amazing business opportunities around - and funny enough one of the least explored. We have tons of discussions about Facebook (even I blogged about it), we speak about OpenSocial and iPhone Apps - there are even VC funds specifically for Facebook and iPhone applications. But we seem to miss the great opportunity which stares us right into the face every time we open our browser.

Still not convinced? StumbleUpon built its business on top of a Firefox and Internet Explorer extension and was sold to eBay for $75m. The StumbleUpon extension was downloaded more than 8 million times according to the Firefox extensions website. The aforementioned FoxyTunes was sold to Yahoo for $20-30m, again FoxyTunes build its business on a Firefox extension. And it was download more than 7 million times…

As always I would love to hear your ideas and opinions - and if you happen to build a business on top of an extension: Let me know.

…long live User Generated Context.

Havas Media Lab just released a very interesting strategy note about user generated content (or better: context). It’s very worth while reading - really good food for thought. Their core arguments are:

• More than 50% of connected consumers create content (!) and more than 80% of them rely on the content other consumers created (e.g. youTube videos, consumer reviews, etc)
• The media industry struggles heavily with the whole concept - the main problem is that we constantly mix up user generated content with user generated context (most users don’t create original content but provide context)
• Context for example is a user review: On it’s own it is pretty meaningless, once put into context with hundreds of other reviews it creates a ton of value
• Context complements content and thus increases the value of content dramatically - therefore if you are in the business of content creation you should do everything you can to allow the creation of context (discussions, ratings, links, etc)

The paper explores these points more deeply and also draws some interesting conclusions for their application. It’s definitely recommended reading.

Here’s an interesting thought - and as it is time for the weekend, I’ll make it short and will elaborate post more on this over the weekend:

With more than 125 million active users (I’ll try to find the correct number over the weekend) and marketshare of more than 30% in a lot of countries and an open interface which allows you to build cool and useful applications on top of the browser, doesn’t Firefox become the new platform and thus a very cool and interesting business opportunity?

As said - this is only a thought provoking teaser - more over the weekend.

I guess I need to get a bit more creative (and consistent) with my blog titles. Anyway - let’s talk about visual search. Which might well be the next frontier. As mentioned yesterday I firmly believe that we see a change in e-commerce - we will see more and more rich image and media, which will make us want that item we are looking at right now so much more. You’ll see a range of companies like RichFX jump on the opportunity and solve this need.

What you’ll also see is the advent of visual search in product search - and this will be a tremendously powerful shift. Check out Like.com and Pixsta to get an idea of what is coming our way: You shop by visual reference and not by painstakingly describing the item you are looking for - go to Like.com, select a category and narrow down your search by clicking into the images, telling the Like.com engine which features (e.g. a specific color or style) you are interested in. The whole process is so intuitive and fun - which makes you realize how little fun it is to go to a ‘normal’ retailer website, click on the category, then on the subcategory, then on a brand, and so on and so on.

It’s interesting to see how similar but also different Like.com (a US-based company) and Pixsta (a UK-based company) are: Like.com is the offspring of Riya - a technology company which originally developed facial recognition technology to identify and tag your digital images by ‘understanding’ who is in the picture. Like.com was more or less a technology showcase - originally Like.com showed pictures of VIPs (models, actresses, etc.), allowed you to click on certain features (e.g. a handbag) and searched for products which looked similar (which in itself is a great concept - you see that damn hot but also damn expensive Prada handbag which Kate Moss recently wore; run the picture of Kate wearing it through a visual search engine and you’ll find similar looking bags from all the more affordable high street retailers). Interestingly enough Like.com gave up this feature and is now a destination site - a purely visual shopping engine which facilitates products from a broad range of retailers. Pixsta follows a slightly different path - instead of putting their money on one card (becoming a destination site), they bet on a distributed approach by licensing their technology to media sites (e.g. ELLE or the German Gala magazine). Both companies set out to create a new, much better shopping experience - and to a wide degree they already provide a better experience than most ‘traditional’ shopping experiences.

I believe that we are only at the very beginning of this trend - combine a visual search engine with rich media images and the results will get so much better. Combine a visual search engine with the semantic web and the results will become so much more meaningful. Build this as a whitelabel tool which you can easily integrate into an existing infrastructure (e.g. your aging Intershop online store) and you’ve got a great business opportunity at hand. Design a new user interface and mashup visual search with the data from price comparison sites and you’ve got a killer application at hand: Where do I find what I am looking for (also if it looks similar to the item I wanted to buy) - for the best price? Imagine a site could tell you that you could get a handback which looks very, very similar to the one you originally intended to buy for $100 less. How powerful an argument is that?

Okay, I’ll admit it - I briefly thought about naming this post: “The Power of Images or: Sex Sells”. But this post is not about sex - it’s about the increasing importance of: Visuals. Images. Pictures. And sex is usually packaged in nice visuals - at least if it should sell to a broader audience. But again - this post is not about sex.

What this post is about is the recent announcement from my former employer ChannelAdvisor, in which they told the world that they acquired RichFX - RichFX is a company in the rich media image space. What that means is, that they produce Flash-based images and catalogs for online retailers which allows them to display their products in all it’s visual glory. RichFX has a nice client list including 45 of the top 500 Internet retailers - amongst them familiar names such as Wal-Mart, Disney, Saks or Brooks Brothers. Scot Wingo, ChannelAdvisor’s CEO, posted a couple of examples of customers using RichFX - check out Disney or Saks to get a feeling for the stuff RichFX is doing.

That’s all nice and good - but now you are asking: What does that have to do with anything? That’s a fine question - and deserves a fine answer. The answer is: Conversion - according to the information available from ChannelAdvisor and RichFX the usage of rich media images enhances your conversion by about 10%… Repeat after me: 10%. If you ever worked in retail and/or e-tailing you know that 10% is a lot. It is huge. Read Scot’s blog post for a pretty good example.

Now pause for a moment and consider what this could mean for an e-tailer: If you are able to increase your conversion rate by 10%, you are able to significantly enhance your competitve situation. Which makes me wonder how long it will take the wider market to adopt technology which is similar to RichFX. You don’t see it on that many sites at the moment - especially not in my home country Germany.

Which brings us to the power of visual product search sites like Like.com or Pixsta - but that is material for another post.

I’m passionate about entrepreneurship - really passionate about it. That’s one of the many reasons why I think that Seedcamp is great. For those of you who don’t know Seedcamp yet - it’s basically the European version of Y Combinator, backed by the top European VCs and run by a terrific group of people.

Reshma Sohoni (Seedcamp’s CEO) just informed me that they now accept applications for the upcoming Seedcamp week in September (15th - 19th). If you run an early stage startup - go ahead, register, get accepted and see you in London!

On my recent flight back from San Francisco I stumbled upon an interesting statistic: The top 5 websites in the US in 2005 (ranked by Internet traffic) according to Alexa were:

• 1. Yahoo.com
• 2. MSN.com
• 3. Google.com
• 4. eBay.com
• 5. Amazon.com

This resulted in an easy to manage world for every ecommerce company. You might not like the fact that you have to pay to access the audiences from each one of those top 5 players, but you effectively could buy them: Online advertising in the form of display and/or text ads on Yahoo, MSN and Google bought you traffic to your own webstore, listing your products on eBay and Amazons marketplace allowed you to sell your goods directly to their users. The world was easy to understand and manage: All you had to do, was to manage your marketing expenses in comparison to your conversion rate and gross margin.

Fast forward only three years and the world changed radically. Today the top 5 US-websites ranked by traffic are:

• 1. Yahoo.com
• 2. YouTube.com
• 3. Live.com
• 4. Google.com
• 5. MySpace.com
• (6. Facebook.com)

This new reality made life a lot harder. If you are selling goods or services on the Internet and you want to tap into the audiences of YouTube, Live.com, MySpace or Facebook you have a problem. Although these companies sell (in one form or another) online advertising, it is widely known that the effectiveness of these ads is problematic. Building Facebook apps or MySpace widgets is not a walk in the park - and there has yet to be one which actually proves the concept that you can create an ecommerce opportunity in one of those little applications. Todays most used applications are all in the arena of fun and communication.

Hard times for E-Tailers - at the same time an exciting opportunity for the ones who are willing (and able) to experiment.

Recently the fantastic OStatic blog posted an interesting article about venture funding in the open source space. It is great to see that VCs seem to warm up to open source projects (total spending in Q2 2008 was $115m, up from $101.5m a quarter before) and start to fund them - although it is notoriously hard to fund these projects as often open source projects are more or less a loose structure without a clear ‘ownership’ (which is not meant as in ‘ownership of intellectual property’ but more in the sense of a clearly defined group of people/organization driving the project). Further, the sheer nature of open source often forbids an ownership structure which could possibly work for a VC firm.

Yet, beside these more fundamental topics, it puzzles me that all the funded open source companies are in the area of corporate solutions - rPath does software appliance, Neocleus does virtualization and funambol for example operates in the space of mobile communication. Where are the consumer oriented plays?

First of all I believe it is important to note that there are tons of consumer applications in the open source space - yet a lot of them miss the all important marketing clout which makes them accessible to a wide consumer audience (to speak in our beloved MBA lingua: They haven’t crossed the chasm). The ones which do are few and far apart - top of my head the three projects which jump to mind are Mozilla with Firefox and Thunderbird (which is an obvious one), Songbird (a media player with a focus on music) and Miro (a video player and platform).

Why is that? You would imagine that volunteers should be easier to rally behind a common goal and cause if you set out to provide something in the space of consumer tech (e.g. a better alternative to iTunes rather than something seemingly boring like an alternative to Salesforce.com).

Having said that, this seems to be a large part of the problem: The large enterprise open source projects all have a revenue-generating structure behind them (and are often organized in proper legal entities which make them fundable by venture capital as you can buy and sell shares in them). This makes it significantly easier as it allows the project to establish an infrastructure with people who are paid to run the show, spend (some) money on marketing and PR and so on. The consumer projects mostly lack this infrastructure - which is even more so a problem as they operate in a space where marketing, PR and business development are actually paramount to success (the consumer space is unforgiving - see my post about marketing spend here).

This all strikes me as an interesting challenge - one which cries out for a good, robust, scalable solution. Options could include a publicly funded (through government grants and/or donations) organization which provides marketing, PR and business development capacities as a shared resource to these projects; effectively helping them break through the ‘noise barrier’ of consumer markets. Taking this idea to an even higher level and you could create a fund (again build on top of publicly available financing sources and similar to the funds being setup for Facebook or iPhone apps) which gives out grants to open source projects to help them break into consumer markets.

What is your take on this?

The team at UK-based online art retailer Eyestorm not only gave us Eyestorm Trade, their marketplace for (re)selling art works you bought on Eyestorm before (see my write-up on this truly innovative business model here), but now brings us the brilliant ‘Make us an Offer‘.

‘Make us an Offer’ allows Eyestorm customers to make an offer on every art work for sale on the Eyestorm website. The Eyestorm team reviews the offer and if they deem it ‘possible’ you get the art work at the price you have set. In my eyes this is a brilliant and highly engaging way to increase sales, very much in the way social shopping sites like Woot create artificial scarcity. Makes you wonder why other brands / retailers (especially in the luxury goods segment) don’t use this technique more often and in a more concise way. All in all it’s a wonderful way to engage with your customers, get a better feeling about price perception (other than setting your prices in a vacuum) and it can help you increase your sell-through rate significantly.

I guess I have to start with an apology - it has been a little while since my last posting. Not that you would care, do you? But I do care a great deal about your comments - guys, thank you so much for your thoughtful comments lately (and I thought that nobody actually reads my blog & it’s more an exercise in collecting my thoughts)! It’s much appreciated and I love to discuss my viewpoints with you.

Anyway - let’s get to business. Talking about which - part of my business is to talk to entrepreneurs and start-ups. A lot. What strikes me time and time again is the misguided intention or better ‘driving force’ behind some people’s desire to build a start-up. If you are in contact with a larger group of start-ups you might have seen them yourself - founder which seem to only exist for that fabled event commonly referred to as ‘THE EXIT‘ (which more often than not fails to materialize).

Now you might ask: What’s wrong with that? Doesn’t the whole venture capital industry live of exactly this fact? The answer (at least for me - and this is a rather personal matter, so take it with a pinch of salt) is straight and ugly: No. It is wrong - out of a couple of reasons:

a) More likely than not you will never have an exit event (a sale or even an IPO - though I guess nobody really thinks that this is a likely outcome anymore). Especially if you are based in Europe your chances to sell your company are slim - we simply don’t have a strong M&A culture and beside a couple of media companies like Holtzbrinck in Germany there are simply not a lot of buyers.

b) It usually takes time to build a successful company. We are talking years. Years you and your team need to stay motivated, navigate all the tough times (and believe me - they will come) and reinvent the company regularly (most successful companies change face quite substantially during their lifetime). Can you really do this if your primary motivation is money (and let’s face it - if you are exit-driven, it really means you want to get rich. Nothing wrong with that - it’s just a rather weak motivator when the sailing gets rough).

c) Building companies based on an exit goal might detract you from the real goals - building a sustainable company which provides an income for the people who work there and delivers a service the public needs.

There we have it - I fundamentally believe that you should only build companies which you truly believe in, which set out to deliver a service to the public and which (at least in the case of for-profits) have the clear goal of providing income to the people who work there. The funny thing is - if you succeed in building a company which follows these guiding principles, you’ll find yourself in the comfortable situation that your business becomes so much more sellable than the next build-it-quick-and-cash-out-clone down the road.