VCs Continue to Lust After Consumer Internet

The WSJ says tonight that a 29-year-old AOL staffer who headed up the firm’s instant messaging group will jump ship to venture firm Mayfield. The paper (and Mayfield) say that it’s about kicking up the firm’s consumer Internet emphasis.

Given the number of people making such jumps — hey, I receive semi-regular entreaties — I’m beginning to think we should create a consumer Internet VC bubble index, one where we track new consumer-centric hires at mainline venture firms. As I’ve said here a number of times, while I’m a believer in consumer-centric venture investing, it is very tough stuff. Why? Because most venture investors have a hard time thinking like a typical consumer, and because it can be very tough to get such deals through an enterprise-centric partnership.

Related posts:

  1. Speaking of Consumer-Centric Venture Capital …
  2. VCs, Consumer Technologies, & Cursed Lemmings
  3. Are Consumers the Undiscovered Venture Country?
  4. Gates Agrees with Consumer-Centric VCs
  5. The Consumer-Centric Venture Investing Bubble

Comments

  1. ian says:

    tell me about it! SBX’s Schultz and Maveron have done pretty well. Venture investing with a board game company? Why not–doesn’t sound as dumb as selling pet supplies online…

  2. Hear ye! Hear ye!
    This is me talking myself out of consumer apps.
    I’d go as far as saying I just don’t believe in consumer investing full stop…because that’s what’s in the manual and the rules haven’t changed.
    Historically, no one would touch consumer start-ups with a ten foot pole. Sure, expansion capital – no problem…but early stage and seed capital…no way.
    Maybe I am, errrr…not smart…but having poorly defined customers, who change at the drop of a hat, who can dump you anytime and who rarely spend more than $100 a pop. No, no, no, and no.
    I’m not buying, “starting companies is cheap” and “customer acquisition is free”.
    Venture capital is best allocated to players who supply industry.

  3. ian says:

    ok, but what is the belief really based on? the biz to biz world does have a distinct rulebook–selling to the F1000 is a fairly limited customer base, and long sales cycles, etc. don’t help things.
    “…but having poorly defined customers, who change at the drop of a hat, who can dump you anytime and who rarely spend more than $100[000] a pop…”
    I added a few decimal places to the above–could this now read like somebody who doesn’t like selling to industry?
    I’m also making a distinction to Internet-based consumer plays v. consumer plays that might use the internet. Consumer spending does account for about 2/3 of GDP in the US. Could it be (humble question) that the venture world tends to be dismissive of businesses/industries they aren’t familiar with?

  4. No…i don’t think it’s an information problem.
    The thing is, I just don’t feel comfortable selling to somebody who doesn’t have a well defined budget, or someone who isn’t motivated by competitive pressures or shareholders.
    It’s difficult to pitch consumers because, unless you are in pharmaceuticals, purchasing decisions for consumers are rarely mission critical (sincere apologies for using that term)….which means prices can’t be raised as easily, which means earnings have more inbuilt volatility and so on and so forth.
    I mean, give me one good argument for B2C over B2B ‘caus I’m stumped.