Houston Chronicle Signs Up With FeedBurner
When I invested in FeedBurner, one of my premises was that traditional media would rapidly adopt RSS for content distribution and – as part of this adoption – would aggressively look to outsource part (or all) of the feed management activities to a company (e.g. FeedBurner) that had built out a broad series of feed management tools and services. I had real conviction about this (as did Dick Costolo and the FeedBurner team) so I didn’t bother calling anyone that I knew in traditional media – given how early things were with regard to the adoption of RSS, most of the people I knew would have said “tell me what RSS is again?”
A potential investor was less convinced and talked to a number of his traditional media friends. They all said – unambiguously – “no way – we’d never outsource that – what that RSS thing is.” Of course, a year later, all the folks that this potential investor had talked to has outsourced their feed management to FeedBurner.
This is a classic challenge in the VC “due diligence” process. All VCs (including me) want validation that the product, service, or technology will be adopted by the market targeted by the entrepreneur. However, in very early markets, this is extremely difficult to validate and more often than not you end up with “potential customer bipolar disorder” – either customers say (as in this case) “no way – not interesting” or – alternatively – they say “definitely – I’d love that” but leave off the key phrase “if it was free.” Obviously, bad decisions can be made if one places an inappropriate weight on this variable.
In an early market, I’ve decided that this validation isn’t important to me. I don’t blindly invest – I think hard about it – but I recognize that whatever market data I collect could easily be a complete head fake. As a result, I look for analogous situations in older markets (especially ones that I have experience with), use my instincts, and think hard about how things might play out. I recognize – a priori – that I could be wrong and I’m willing to take that chance.
In FeedBurner’s case, I was right. FeedBurner has already built up an incredible customer base of traditional media companies who are outsourcing their feed management to FeedBurner. Look for more announcements coming soon – the Houston Chronicle is simply a good example of how deep into mainstream media (the Houston Chronicle is a top 10 newspaper and is part of Hearst Corp) this can go.