Monday, July 23, 2007

California Dreamin’

This weekend I attended IDG Ventures’ “Catch the Wave” retreat (Version 4.0) in Kennebunkport, Maine. It was very nicely organized and geared toward fun activities and networking.

While it seems like there’s always an event like this going on in California, why are there are so few events like this one held in the Boston area? Are we New Englanders so conservative that it affects not just venture valuations, but also our socializing? Seems so.

My good friend Scott Kirner's new blog kicks off with an apropos theme: “Five Things Boston Could Do to Encourage More Consumer-Oriented Tech Activity.” Scott and I belong to an unofficial club of entrepreneurs, journalists, VCs and others who provide analysis and support towards encouraging entrepreneurship in the Boston area. It seems like such an uphill effort. Fortunately, IDG, General Catalyst and a handful of other VCs and vendors have aggressively embraced “consumer plays” and “California ways” – a small but noticeable contribution to making it more of an easier effort.

At the IDG Wave retreat I met Kimathi Marangu of mallnetworks, who schooled me in the ways of “letting go” – what a California concept! As a father of two beguiling children, I thought I knew what this meant, but it turns out that in order to truly “grok” consumer plays, one has to aggressively “let go.”

Personally letting go means switching off the enterprise customer venture development orientation. Consumer plays are automated middlemen who facilitate tiny transactions and activities that large consumer companies are unable or unwilling to do until the economics make it clear they must.

Mallnetworks’ value proposition is based on optimizing the economics of affinity programs for companies with credit card and mileage programs, retaining more customers longer and then taking a fraction of the economic value generated from longer-term loyalty and paying it out to mallnetworks. It's a great idea, but difficult to model and scale. Still, Kimathi will do it if anyone can.

So all you New England entrepreneurs out there can take a lesson from those on the left coast: There are consumer venture waves to be caught if you can learn to go with the (cash) flow.

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