It’s not often a partner at a successful venture capital fund leaves to do anything except retire (although there is some evidence to the contrary). But Will Price, a general partner at Hummer Winblad Venture Partners, has resigned from his firm and, as of today, is the CEO of widget startup Widgetbox.
The company has raised $14.5 million from Hummer Winblad, Sequoia Capital and Northgate Capital. Hummer Winblad has been around since 1989 and has invested $620 million of so in startups. Price feels that Widgetbox is poised to take advantage of the huge surge in widget usage. And if the AOL acquisition of Goowy and the recent Slide valuation is any indication, there’s lots of room to grow for Widgetbox.
I asked Price to write a guest post telling us why he made the decision to leave a very safe and very lucrative job and enter the very unsafe and risky world of startups again. His post is below, although it can largely be summed up in this post, too. If you want to follow Price’s regular updates, his blog is here.
My name is Will Price and until yesterday I served as a General Partner at Hummer Winblad Venture Partners, an early stage venture capital firm that was founded in 1989 (investments include TheKnot, Napster, HubPages, Omniture, Powersoft, Hyperion and others). While passionate about the firm and the venture industry, I am leaving Hummer Winblad today to take the CEO role at one of the startups I invested in - Widgetbox.
Michael Arrington kindly offered me the chance to explain my decision to leave venture capital and to join Widgetbox as the CEO. While the detail follows, in summary the combination of my personal aspirations to return to an operating role and my passion for the widget market and the company (which I helped seed fund) made this a no-brainer move for me.
My logic:
The best markets and the best companies ride the tide of history. Widgets are such a market.
The Web’s tide is open, distributed, standard, user-defined, and, in many ways, the most powerful force of the modern era. Widgets are not a fad, or web 2.0-hype, but fundamentally they are the unit by which users are assembling and defining their web experience.
Widgets are portable applications that are user-defined, user-assembled, and consumed independent of the source of the underlying content, commerce, and application functionality. The combination of user-control and decentralized interaction to important services represents an important paradigm shift in how users discover, select, and consume the best of the web.
In Nov 2007, Comscore reported that 650m global uniques, or 65% of the web universe, interacted with a widget. The growth in widget adoption and social media speaks to users’ unmet needs and frustrations with traditional web models. Today, brands, developers, media companies, and established Internet players are racing to understand the forces driving user behavior and the power of a more componentized and distributed web. While widget penetration is at 65% of Internet users and growing, spend in the widget category in 2007 was less than $20m, or 0.1% of the total online ad spend
market.
The 650x differential between spend and the record growth in user adoption is very powerful to consider. Users are always ahead of the market, as evidenced by the systemic under-allocation of ad dollars on-line; 21% of media consumption is on-line vs. 7% of ad spend. However, this 3:1 imbalance is steadily eroding and the widget market will prove to be no different and no less transformative. Traditional portal models that aggregate users and resell that aggregation are fundamentally at odds with the emerging paradigm of user and community defined experience and distributed consumption.
Marketers need to fish where the fish are, however, in an early market there are often more questions than answers. While widgets are enjoying end-user success, the commercial relevance of widgets remains unclear to many. Are widgets a new marketing channel? If so, are they effective? How do you build them, buy them, track them? What is the unit of value; an impression, an install, an engagement…? What type of ecosystem will form around the phenomena? In order to move beyond fad status, an economic model for the widget ecosystem needs to be better developed and measurable value delivered to both end-users and marketers.
Widgetbox, along with Slide, Rockyou, Goowy, Clearspring, Gigya, and others, is working to enable users, developers, brands, media houses, and incumbents to ride the tidal wave of web componentization.
Widgetbox, backed by Hummer Winblad, Sequoia Capital, Northgate Capital, and Michael Dearing, is the web’s largest gallery of widgets. Widgetbox’s growth in the past year has been extraordinary, with a current monthly audience of 30m uniques, 400m monthly widgetviews, and widgets installed across 230,000 domains.
For those of you who read my blog, you know that I am passionate about the venture capital industry and its importance in supporting innovation and entrepreneurship. As a General Partner at Hummer Winblad, I enjoyed the exposure and access to some of the key innovators and drivers of the new economy; company’s like Omniture, Move Networks, Mulesource, Widgetbox, and many others. At 36, however, I felt a persisting and important pull to embark on a new journey of growth, discovery, and learning.
In my career to date, I have found that if you follow your heart, work tirelessly, and fish in good waters, good things will happen. For Widgetbox and our colleagues in the space, good things will continue to happen if we stay true to the web’s architecture of openness, distribution, and standardization and to users’ passion for empowerment, expression, and need for community.
Michael, just a heads up - there’s a typo in the article: See “widget backed Widgetbox. ” at end of first para. Cheers.
is this a rick roll? Reason I’m asking is the guy looks a lot like Rick Astley
Will congrats on leaving Hummer. Now if only the founding GP’s would toss….
“In my career to date, I have found that if you follow your heart, work tirelessly, and fish in good waters, good things will happen.”
Couldn’t agree more!! Good luck to him!!
Stan
Another reason Will might have taken on this job is that it’s desperation time at Widget Box and all related widget makers. There is no revenue model for these companies. Widgets are just little blips on the screen; most people don’t pay any attention to them. As a result, marketers don’t know what to pay for them. It is absurd that these companies have raised so much money.
Nice hair!
I’m very happy Will took the job. He’s was very involved with the company in helping it get off the ground, and is just the guy to make the company reach it’s full potential. There have been a lot of twists and turns in the widget space over the last twelve months, but there is now more potential than ever for a company like Widgetbox as initiatives like OpenSocial take root and interoperability between social networks starts to become real.
Wow, this seems a stretch for HM - they are so enterprise focused, so non-consumer/web2.0 typey-feely
Video from San Francisco Bay Area Interactive Group: Takeaways from Hummer Winblad Venture Partners’ Will Price on Wadget Panel
http://www.facebook.com/video/.....3328730337
Congrats Will, and good luck!
Widgets. Money. Two sentences. Never in the same sentence. Widgets do not equal money. The market is relatively rational. There is a reason there is a discrepancy between online advertising and online time - people ignore it. There is a reason between the discrepancy between widget usage and widget ad spend- people ignore advertising on widgets even more so than in other sources.
The web is turning into a giant Ponzi scheme. Advertising has to drive real product sales. Whatever happned to developing innovative products that people want? No one needs another dumb widget or widget company.
The point that @11 and so many others seem to miss is that widgets essentially become the web for a growing number of people.
The question used to be: Who has the page with the most hits? That question means less and less. For an individual person, the most important page is the one containing his/her widgets.
What Will seems to be doing is recognizing the future, and trying to be involved in it, and figure out how to make money at it. More power to him!
Glad to see them get some help. Very good guys there, but there are signs that they could use a little operational discipline.
Will,
This is a great move and it is fantastic for Widgetbox. I can’t wait to see how you execute and I am as you convinced in the potential of widgets.
Good luck and please stay in touch!
Alex
In my post this week - Making Widgets Viral Puzzles Developers - http://www.demo.com/community/?q=node/25191 - Widgetbox vp Pam Webber says how much a mystery it is to know which widgets will be viral and have a shot at convincing advertisers to spend and which widgets will be wallflowers.
I believe she’s correct on noting interactivity is the key attractor to clicking on a widget. I do believe widgets are like seeds that help raise awareness about your site - give a taste and they will come. Whether advertisers think so too remains to be seen.
“While passionate about the firm and the venture industry, I am leaving Hummer Winblad today to take the CEO role at one of the startups I invested in - Widgetbox.”
this could mean that maybe they weren’t able to find another CEO to lead this company or who believed in its potential…..it’s good if he succeeds, but as someone who’s invested in it and believes in it….he had to step up to the CEO role if they can’t find someone else….so no surprise there….
The key that #12 Scott and others forget is that there has to be some money at the end of this tunnel to make this business work. Widgets have to be careful in how obtrusive they are in their advertising for 3 reasons:
a) Widgets are taking up real estate on someone else’s site. They will need to share revenues with that site OR risk being subverted.
b) Widgets take up a smaller amount of space pixel wise so they have less space to use for advertising.
c) Widgets have a very low barrier to entry and therefore, if a widget’s advertising becomes too obtrusive, someone else will make a similar widget, with less advertising (or no advertising because some dumb VC will give them $20 million to do it and that’s their revenue model) and this will supersede the original, now obnoxious widget.
nice to see a VC jump to the other side and become an entrepreneur!
or is his move a nod to the fact that being a VC is now becoming choppy waters, with the credit crunch and slowing economy…
I expect more than a few VC types to be “joining industry” - a few of these funds are beginning to tank here in the UK…
This move is a nod to the fact that his fellow GPs probably kicked him out. Nobody would deliberately take a GP role for just two years. Either the fund is troubled or his relationships with his partners are troubled (which will always happen if his investments are troubled).
He’s right in that if you work hard and fish in good waters that good things will happen, and I wish him luck. However, it’s a highly unusual career trajectory — akin to planting a vineyard and leaving before the first bottled vintage can even be tasted and evaluated.
VCs taking a shot at the operational side is not all that uncommon. More should. Good luck to Will.
Will, I read your letter with great interest because Agoracom just recently started looking into the use of widgets to further expand our reach. I was struggling to understand where widgets would fit into and complement our business model - but things are a lot clearer now thanks to your letter.
Thanks and good luck in your new path.
Regards,
George
I’ve taken a moment to read all of the comments here and agree that widgets - like most Web 2.0 apps - have yet to find a business model. To this point, all the attention seems to be on advertising as the solution.
However - like most Web 2.0 apps - everybody is missing the B2B revenue stream. For example, I would gladly pay a monthly/annual fee to a widget provider that made it easy for me to build widgets.
Now, I know that many of you are going to say “this is already provided for free”. However, what the majority of people here do not realize is that the majority of businesses on this planet are not Web 2.0 savvy and don’t know what all of their options are. They are lost in the maze of blogs, widgets, podcasting, social networks, etc. and can not determine what is best for them.
I know this because Agoracom is generating 7-digit revenues AND 7-digit profits by being the Web 2.0 provider in the small-cap stock space…and we’re growing by leaps and bounds.
I believe the B2B revenue stream is often missed or forgotten about in most Web 2.0 apps because the majority of people building them are coders/techies/programmers. They are not business people who understand the power of door knocking and pounding the pavement. They would rather build something cool and hope to god that AdSense can reward them for it.
Unfortunately, it doesn’t happen and then everyone screams “there is no business model”. There IS a business model, you’re just too lazy to exploit it. Stop working ’till 3AM while chatting/twittering/IMing/FBing everybody about how cool your app is and start waking up at 7AM to hit the street!
Until that happens, most apps will fail to find a business model.
Business people, on the other hand, will always find the business model. How? I’ll share one tip with you: Just bang the street and show your local merchants how you can help them use Facebook/YouTube/Google, etc. to expand their business. Show them value and they will pay.
Try it today.
Go hit 50 local merchants and simply show them how Google Adwords can drive new business to them. Tell them you will manage their program for a flat fee of $500/month. Spend $250 on Google and keep $250 for yourself. Just one client per week (cake walk) for the next year and you’ve built a $13,500/month revenue stream. Keep doing that for the next two years as you slowly up sell YouTube videos, widgets, etc. and tell me if “there is no business model”.
I did it, so don’t tell me it can’t be done.
Less “cool” and more “utility” please. It is that simple.
Regards,
George
Good luck to Will. Widgets seem to have huge potential for becoming primary interaction points for consumers. In my mind, success in widgets will requires skills analogous to movie studios or video game makers. They need to ride the entertainment rails similar to those industries.
More thoughts here: http://tinyurl.com/2gjgg2