I believe consumer marketing has fundamentally changed – online has been the catalyst of this change as every user, intention, and action is trackable and hypotheses can be tested and validated in minutes.  This will move into other marketing channels – e.g.  TV as it goes more digital (note the Google-NBC announcement for the selling of broadcast TV in their online marketplace), print media (e-books), and of course outdoor (digital signage). Its not just change in customer acquisition either – it extends into the areas of customer retention and  loyalty as well.  Again, every action is trackable and hypotheses on why consumers buy at the right price points or become loyal can be tested and changed in real time.

Meanwhile, I feel the academic world of marketing education has not kept up with the change.    Marketing is often viewed as a “soft” and less rigorous major that one takes if they are more interested in boozing their way through college. The “brains” go for engineering, math, or medicine.  The reality is that in todays world technology innovation is increasingly commoditized and the marketing edge is what matters.   Marketing is more like applied math or engineering where the scientific method (hypotheses followed by testing followed by conclusions) yields the results -  with a twist of psychology thrown in…   The marketer has to use their understanding of human behavior, needs, wants via psychology and come up with hypotheses on the best way to get the consumer to an action – then test all these in real time (often multivariate testing as each text or image or color can and should change) and deploy – and then test all over again….

There is clearly strong demand for these type of people in every startup I’ve worked with.  There have been countless mistakes made in hiring a “brand marketer’ who doesn’t get “digital marketing”.  We are in need of more talent – even here in silicon valley.  I think schools should step up and help fill the long term void by teaching the new marketing.  Marketing engineering could be one of the most valuable professions and become what every smart bright-eyed college student aspires to conquer…

The web is evolving fast from a simple web page/website destination model to one of distributed data (which is synonymous with content) and applications that appear wherever the user needs them the most - whether its on a social networking profile page or a merchant page where you are about to transact.

This may seem like a simple shift but the effects on the ecosystem are profound and new winners will be created.  A web publisher can no longer think in the paradigm of a website only and driving traffic to a destination.  Sure, you have to have a destination - but in many cases its becoming a showcase site vs where the real action is.  The extreme examples are widget businesses - and Mayfield has made several bets here from Gigya (providing widget distribution infrastructure to anyone with content or apps) to Slide (vertically integrated network of widgets - now the largest in the world).  Both have significant momentum (billions of impressions per month) which would not have been achieved in the old paradigm. 

Why is this happening?  Very simply, because the user is pulling the web in this direction.  More deeply, because publishers want to take advantage of traffic and context on other sites and present relevant info when the user needs or wants it most - and both sides of the equation - publisher and data/app provider - are playing nicely.    A website is really nothing more than data and applications on a page so it makes sense that a publisher puts some structure around these items, makes them discrete, and "atomizes"/redistributes it everywhere.   Web services, APIs, and to some extent the standards set forth as part of the "semantic web" effort are making this possible - along wth an important general shift to openness in all businesses.  The destination owners (like facebook) are realizing they can't satisfy all their users needs but have great context (in their case a powerful social graph of people you care about) for others to use.   

What does this mean for investing?   Well, there are a lot of new infrastructure needs (like Gigya) but there are also new opportunities for disruptive content providers.   A content provider needs to think of themselves as a database provider now more than a text or media publisher.  I think there will be big companies created that own the most important databases in verticals - the new wave of publishers embracing concepts like crowdsourcing and UGC.  One example is an investment I made called Fixya - where users provide tech support and tips for consumer products to other users.  It's now the largest user generated tech support site in the world - with over 7M unique visitors and growing like a weed(thanks to Google SEO'ing all the solutions - kinda like wikipedia). 

What makes the Fixya database so valuable?  It can scale infinitely as more products are launched, old ones remain on our shelves, and users generate the content.  The data is categorized (by product SKU and category) and can be cut up in many different ways providing deep knowledge where the consumer needs it.  It is self policing (like wikipedia) as the expert community is rated and the best content rises to the top (like youtube).   Since it's treated like a database, this info can be presented to users where its most relevant - at a manufacturer site, in a shopping search engine, discussion forums or a merchant page.

I think every publisher of content or applications needs to change their mindset and think like a database provider  - it's no longer optional.  I'm looking for other "fixya"'s out there in large consumer and b2b categories - let me know if you have one!

In today's world, the largest risk in a consumer internet startup is typically consumer adoption.  VCs ask ourselves the question - how many users will the service attract, engage, and monetize and how quickly and easily can this occur?

One simple design factor I've noticed that can be influenced more than others is the position where the product requires user investment (in terms of time) to receive benefit.  The simple premise is that human nature is such that we are more willing to engage in products that require little upfront investment.  Even if the short term cost will produce 5x returns in future use, we are moving too fast around the net to make this tradeoff - we like to find the path of least resistance.  That said, we will tolerate increasing time investment as we use and get addicted to the product.   

Too many products require a significant investment of time upfront (e.g. long registration forms, entry of preferences, creation of a large profile, etc) before any value is received.   The consumer may be excited about the proposition (e.g. meet new friends, save time doing X with our service, find the lowest prices) but attention spans are increasingly tuned to short term benefits (e.g. search results from one query vs a multi-faceted advance search).  The "UI" was even worse in consumer products which required reading a 25 page manual before you can benefit - of course, now the smartest product manufacturers include a one page graphical quick start guide which I would bet is used far more often than any other manual.

One way to solve this problem is to collect only what's absolutely needed initially and then gradually ask for more information - even if the product won't be as flexible or sacrifices some of the long term benefits.   These changes seem easy but have huge implications on databases, customer tracking, etc.  For instance, at Snapfish, we first made the user do a lengthy registration process before uploading a photo to snapfish.  After we noticed the dropoff, we thought it would be easy to allow upload first and registration later once we have the user's photos and they take an action which requires registration (e.g. buy or share photos).  It seemed simple but it required us to rethink the way we store customer data as some users would have "orphan" accounts and this issue rippled thru all processes that involved customer data - needless to say it was very tough to even test this change.   With new services, its a lot easier to "do it right the first time" (we called it the DIRFT process) - which is advice I give all our startups.

In summary, think about the fastest path to user benefit with least cost/pain (time or data investment) - even if it sacrifices functionality or long term benefit.  Once you get a user hooked, you will have their attention to move them up the cost/benefit continuum.   

Venture capitalists and entrepreneurs believe the greatest opportunities are those disruptive to the current state of the art/market. This disruption typically happens with a major technological change (e.g. the PC, the internet, the mobile phone, broadband) and sometimes by the rise of a new geographical market (e.g. new startups in China that take advantage of innovation started in other countries). 

There is another type of disruption i've noticed that happens in the consumer space and its "generational".  The services that appealed to one generation (e.g. those of us in our 30s like Yahoo, hotmail, etc) tend not to appeal to a new generation (e.g. those in the 20s or teens like MySpace, AIM, etc). A generation shift used to be separated 30-40 years but now it occurs much faster.  The rate of change from one age group to the next is so fierce that even a difference of 5 years could mean a whol new pattern of consumption.

This "generational disruption" creates new opportunities at a faster pace than waiting for the next big technological wave - especially in internet media.  An example of a disruptive shift that has occured is in my old hunting grounds - online photos.

Consumers in their 30s were early adopters of online photo services because provided a secure and private area to share photos with friends and family which appealed to this generation and their lifestyle (family oriented, concerned about privacy, etc).  They didn't really care about "user generated content" and were limited in their "self expression".  They valued prints and gifts and businesses like Snapfish and Shutterfly were built to satisfy their needs.  Our assumption was that this would be our core demographic of users but we would also appeal to younger users as well since they were adopting digital photography and had the same basic need to share photos.  We would provide features that appeal to both of these groups of users.

Over time, we found it's really hard to build your service to appeal to two different age groups - especially when there is a generational shift in usage.  Younger users wanted open and public areas to host their photos and they wanted the world to see them and comment on them.  They care little about prints and more about showing the world what they are up to and how important they are.  One is a commerce model and the other a media model.  We frankly couldn't create a service to cater to both groups.

Thus, the rise of Photobucket and social networking photo sites such as Facebook, Tagged, and Myspace Photos.  These sites are media models which thrive on reach and page views.  Snapfish and others are commerce models where page views aren't a core metric.  These sites have all done well against their metrics and although its not clear if a billion dollar media business will come out of online photos, there is definitely demand - manifested quite differently depending on the generation.

Other examples of generational disruption include:

Classmates --> Facebook

Yahoo --> Myspace

Hotmail --> AIM --> Twitter (?)

World of Warcraft --> Club Pengun 

There's bound to be more interesting, "generationally disruptive" opportunities in the future happening faster than ever before - and i'll keep my eyes open - this time as a VC vs entrepreneur ; )

Online advertising is  continuing to take off with over $25B in global revenue this year and no signs of slowing down.  This has been dominated by performance based ads but brand advertisers have taken notice and are migrating to the web - especially given the increasing shift of audiences from traditional media to the net.   

The challenge for brand advertisers is to find audiences they want to reach (at scale) done in the most effective and emotional way (e.g. rich media) and in the right context (e.g. not next to content they would find offensive or unknown - like most user-generated content or certain news stories).   Until now, they've flocked to premium inventory at the major networks (Yahoo, MSN, AOL) and vertical sites with scale (e.g. ESPN, iVillage) but these networks and sites are selling out the quality rich media inventory in the right context (they have plenty of tonnage in areas that brand advertisers don't care about).    There's a supply-demand mismatch and I think there's an opportunity for the long tail to take advantage of it.

The issue for the long tail is that each site alone is too small and is not "validated" by the advertiser or someone they trust.  The solution actually lies in the "head"...  These sites or media publishers (large branded anchor sites or traditional publishers) can create a large branded network by affiliating with many sites in the long tail.  The anchor typically has a strong brand (e.g. Washington Post or an upstart like Glam) and handpicks long tail sites that meet their quality standard to include in the network.  They then use their trust and relationships with brand advertisers to sell ads across the network - perhaps at a discount to their anchor site.  This is a perfect setup for publishers who have deep brand advertiser relationships but not enough quality inventory (such as traditional magazines who don't have a ton of users on the web).  The long tail may have great content (e.g. high quality blogs or hobby sites) but doesn't have the scale or expertise or relationships to get the ad dollars and can get more revenue per pixel vs performance ad networks.  It's a win win all around.

i'm interested in investment opportunities in this new ecosystem - whether its a new upstart network by a publisher/entrepreneur or a platform to make all this happen (like Adify).  It's inevitable that more dollars will move online (6% of ad spend is online but time spent online by consumers ranges from 15%-35% depending on the demographic) and this seems like the right way for brand dollars to find their audiences.

I've recently made a few investments in internet companies in China with Mayfield's local partner, GSR Ventures.  Two of my deals are Baihe (the largest dating site in China that is focused on serious relationships - like eharmony) and Qunar (travel meta search in China).  Although I don't claim to be a China expert (nor do I speak the language), I have learned a thing or two about investing in the internet in China.  Check out the article in Business Week that I wrote about investing in China.