2. Proposed Agenda
• Review OATV investment opportunity
• Update on fundraising and first close
• Explore OATV’s investment thesis: “Watching the
Alpha Geeks”
• Feedback/Next Steps
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3. Investment Opportunity Review
• Seed investments in the $500K +/- range
• Participate in Series A round with top-tier
venture funds (an additional $1-3M) or sell to
strategic buyer
• Total investment: $1-4M
• Maintain a board seat
• Leverage O’Reilly to validate and promote start-
up technologies through books, blogs, online
sites, and conferences
• Historical performance: 41% annualized IRR
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4. Investment Thesis:
“Watching the Alpha Geeks”
• O’Reilly identifies emerging technology trends by
watching the cutting edge individuals
• An accepted marketing discipline, known in other
industries as “Coolhunting”
– Fashion, Sports, Toys, Video Games
– “Who is the coolest kid you know?”
• Essence of Alpha Geek watching or Coolhunting is
pattern recognition
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5. Pattern Recognition
• Some obvious patterns: Moore’s Law; The Dot
Com Boom and Bust; The World is Flat
• Other patterns are the product of fragile
intuition that seemingly unrelated items are
deeply connected
• OATV pattern recognition methodology:
– Identify the Alpha Geeks and watch what
they’re doing
– Integrate seemingly unrelated signals that
indicate broader technology trends
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6. Identifying the Alpha Geeks
• Ask network of O’Reilly authors, advisors and
entrepreneurs: “Who’s doing the most
interesting work in your field?”
– FOO Camp
– Conferences
– Books
• Triangulation as a filter: when someone shows
up in 2-3 di!erent contexts, pay attention
– Joshua Schachter: blogging, mapping and
social software
• Find where they collaborate
– P2P in 2001: decentralization@yahoo.com
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7. How We Find Signals Showing a New
Technology Trend
• Non-Standard Data Sources
– If you want accurate non-consensus forecasts, it helps
to have data sources not used by everyone else
• Examples:
– BookScan- measure book sales (Amarank Tool)
– Netscan– ask the computers rather than the users
– Google AdWord Technology- measure cost per click
– Simply Hired- millions of technology job postings
– Del.icio.us- tag volume
– Yahoo Search Terms- popular tech terms
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8. Use Alpha Geeks and Signals to
Identity Long Term Trends &
Investment Opportunities
• If a trend takes hold, what primary and
secondary companies benefit? Past examples:
– The Internet
• eBay, Sun, Cisco, Oracle
– Open Source
• Red Hat, MySQL, Google, Yahoo!
– Screen scraping
• IBM, Microsoft, Amazon, Flickr
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9. Examples of Trends We’ve Identified
and Related Investment Opportunities
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10. Data is the Next “Intel Inside”
• Technology trend: Applications are increasingly
data driven; the technology or even look and
feel of the application is easily copied
• Investment thesis: Companies that own unique,
hard to recreate sources of data may lead to an
Intel-like single source of competitive advantage
• Example: Navteq
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11. Data is the Next “Intel Inside”
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12. Designed for Participation
• Technology trend: Successful software projects
are architected to be used easily as a component
of a larger system
• Investment thesis: Software companies that keep
their product modular, well documented and
under a license that doesn’t hinder
recombination will attract more users
• Example: Amazon.com
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13. Designed for Participation
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14. Participation by Default
• Technology trend: Only a small percentage of
Internet users will go to the trouble of adding
value to a web site
• Investment thesis: Companies that have
services which make participation the default
choice will grow faster
• Example: Flickr
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15. Participation by Default
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16. Software as a Service
(the perpetual beta)
• Technology trend: When devices and programs
are connected to the Internet, applications are
no longer software artifacts: they’re ongoing
services
• Investment thesis: Companies that don’t
package up new features into monolithic
releases but rather engage users as real-time
testers satisfy their customers’ needs and
requirements
• Example: Google
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17. Software as a Service
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18. The Long Tail
• Technology trend: Many of the limiting factors
from the physical world are absent on the
Internet.
• Investment thesis: Companies can use the
power of the computer to monetize niches
formerly too small to be commercial.
• Example: MySpace
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19. The Long Tail
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20. Software Above the Level of a Single
Device
• Technology trend: The PC is no longer the only
access point for networked applications
• Investment thesis: Companies should design
their applications to integrate services and share
data across bound and mobile devices, Internet
servers and services
• Example: Apple
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21. Software Above the Level of a Single
Device
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22. Remixing of Existing Apps and
Technologies
• Technology trend: When content is digital, it
lends itself to being broken down and remixed
• Investment thesis: Companies that build their
business model from the smallest atomic units
will be more competitive
• Example: Salesforce.com
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23. Remixing of Existing Apps and
Technologies
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24. OATV Investment Thesis
Watch Alpha Geeks
Identify Signals Indicating New Trend
Invest in Companies Leveraging Trend
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25. Feedback and Next Steps
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