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Hi, I’m Brad Feld, a managing director at the Foundry Group who lives in Boulder, Colorado. I invest in software and Internet companies around the US, run marathons and read a lot.

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Why Did We Invest in NewsGator?

Comments (38)

NewsGator announced our investment last week. I received a number of nice notes from folks in the RSS world. I also received a bunch of questions about why we invested, how the process worked, whether we were going to do other RSS investments, and where NewsGator is going now that we’ve made the investment. Suffice it to say that these are all relevant and good questions and in true blog fashion, rather than send individual emails answering them, I’m going to try to address some of the questions here as openly and transparently as I can to help anyone that is interested understand how and why this investment happened.

I thought I’d begin by talking about why we invested in NewsGator. To answer this question, I have to start by clearing up what appears to be a common misperception (and one we intend to fix quickly) about NewsGator. Interspersed in the feedback of “wow – neat investment – NewsGators’ Outlook plug-in is a phenomenal RSS reader” were comments that while NewsGator was a neat Outlook-based aggregator, there were other places people wanted to receive RSS feeds (e.g. web-based RSS readers) along with the question of “Gee – an Outlook plug-in – won’t Microsoft just crush that when they release their own?”

The misperception is that NewsGator is only an Outlook plug-in. While the most popular product from NewsGator is currently their Outlook-based aggregator, what really turned us on when we dug into NewsGator as a potential investment is NewsGator Online Services (NGOS). Greg Reinacker’s vision is much broader than simply an RSS aggregator – his goal is to provide RSS content on any device. NewsGator currently provides clients for Outlook, the Web, POP email, mobile devices (web-based and wap), and Microsoft Media Center (how cool is it to get an RSS feed on your TV?).

Following are several examples of how NGOS can be used today:

- I use a Tmoblie Sidekick – made by Danger – as my cell phone and wireless data device (web browser, email, AOL IM, wap browser, calendar). Using NGOS Mobile Edition, I can read my feeds via my web or wap browser on my Sidekick. These subscriptions are synchronized with my desktop, so I don’t have to do any set up on my Sidekick – I simply access my services.newsgator.com mobile edition account.

- NGOS has a custom search feed capability. I put in all of my companies as keywords (one per feed) and then get feeds for each company. This is similar to Yahoo! Alerts and Google Alerts, but also searches all of blogworld so I get any postings in these feeds also.

- A NewsGator / Gmail interface exists. Using this, you can route all of your feeds into your Gmail account and take advantage of Google’s search technology on your personal feed database.

Now – while Greg’s vision is broad and his technical skills amazing – he’d be the first to admit that NewsGator hasn’t packaged and promoted their various products in the most effective way. We’re already hard at work on this – expect a steady stream of product announcements in the next few months as we roll out new products to more clearly package and expose all of the technologies NewsGator has built. Existing NewsGator customers should expect to benefit broadly from this – we intend to be fanatically loyal to all of our customers – especially our early ones. We’re also extremely interested in finding out how people are using NewsGator and NGOS, as well as what they are looking for in the future products.

Ok – hopefully I’ve cleared up the misperception that NewsGator is simply an RSS reader for Outlook (although it is a damn good Outlook-based RSS aggregator!). Let me move on to why we invested in NewsGator. When I started really digging into RSS and blog technology, I began by actively playing with and trying as many different products and services as I could find. I had three goals: (1) figure out which were the most interesting products available today, (2) determine what the segments of the RSS / blog universe were, and (3) determine the “analog analogs” from the evolution of other segments (publishing, email, web, and ecommerce).

The first was fun for me as its appeal to my inner-nerd was very tactile. In many of the market segments that I invest in (such as IT infrastructure software products – companies like Cyanea, Newmerix, Oxlo, Rally Software and Xaffire) I can’t actually use the software in a sustained way. Sure – I can look at demos – but I’m not the target customer or user – so any real use case is contrived. In the RSS / blog universe I could set up a blog, read blogs, use RSS syndication, explore the tools, look at and think about my stats, and play with new search and advertising technologies as they appeared. Once I got into this, I ran across a number of interesting new companies.

Once I became “a user” (meaning I was no longer in demo mode, but I was actually using this stuff every day), I starting figuring out which segments each company fit in and correspondingly began to rank the companies in terms of my perception of their future potential. The segments I came up with in hindsight are not that surprising, so I’m happy to share them here (and take constructive feedback from anyone that’s bothered to read this far). The segments I identified are content management systems (CMS), readers (aggregators), tools, hosting, content, search, analytics, and advertising. There is obviously overlap between these segments (e.g. a company could be in more than one segment – search and advertising are a natural pairing, as are readers, tools, and analytics).

I decided that rather than try to find one “ultimate investment” in RSS that spanned all the segments (I don’t think this will exist), I wanted to make investments in several segments. I’ve been working closely on this with Ryan McIntyre who was previously a founder of Excite and knows many of these segments well from his experience there (and – hence – another view on the analog analog). We identified several companies in different segments that excited us and have been systematically exploring working with / investing in them. In several cases these companies overlap in various segments, but when in the same segment (e.g. search), they are complementary to each other rather than competitive.

NewsGator was at the top of my list for readers and tools and NGOS complimented search and analytics. Per the misperception discussed above, NewsGator is currently thought of as only a reader – and an Outlook-based one at that. In fact – today – NewsGator (through the Outlook client as well as NGOS) has capabilities that cross all four segments. Clearly the emphasis is readers and tools – but if you dig into NGOS – you can see how NewsGator could be very complimentary to other companies that have their emphasis on search and analytics.

I was introduced to Greg by Karl Florida at Return Path who had been talking to him about RSS and how it fit within Return Path’s world. Greg and I got together and I immediately liked him. He passed the “15 minute test” (in 15 minutes I believe you can make a directional decision on whether or not you want to pursue working with someone you have met for the first time). Over the next month, we met several times for increasingly long periods, talking about NewsGator, RSS / blogs in general, and his vision for what he wanted to create as an entrepreneur. This corresponded with an increase in my use of blog / RSS technology – I began actively using NewsGator and NGOS as my only aggregator technology (dumping all the other ones I had been playing around with), set up a Typepad blog (which I transitioned to Movable Type after about a month), and incorporated the reading and writing of blogs into my work habits.

In mid-May, I’d reached the point where I had a clear view that I wanted to pursue an investment in NewsGator. Greg and I started discussing this seriously and I started working through my deal approval process within my partnership. By the end of May we had a deal and officially became partners last week..

We hope NewsGator is the first of several investments we make in the RSS / blog world. I encourage you to give me feedback on NewsGator, your view of the way the market segments break down, and – if you are involved in what you think is in an interesting company in this universe, my door (ok – my “email box“) is always open.

  • http://www.mblog.com/rtwodtwo/060804.html rtwodtwo

    RSS reader Newsgator Raises Series A

    http://ross.typepad.com/blog/2004/06/newsgator_raise.html I never thought RSS programs would get VC

  • http://www.ueland.com Chris Ueland

    A Tivo, NewsGator interface would rock!

    Tivo doesn’t have any real good hooks in Series 2 that I know of – except maybe image generation w/ a graphics library using Home Media Option.

    This guy has been messing with it:
    http://grumet.net/rsstv/

    –Chris

  • http://steverubel.typepad.com/micropersuasion/2004/06/mobius_dances_t.html Micro Persuasion

    Mobius Dances the Press Release-Blog Tango

    Earlier this month I wrote about how news-makers might use press releases and blog posts in tandem. Press releases basically break the “hard” news while blog posts, written by an executive in a human voice, can delve further into the

  • http://www.realsimpleshopping.com/weblog.php Stuart Watson

    There is another TV/DVR/RSS solution:
    Torrentocracy (http://torrentocracy.com/). Also wonder when Tivo will start doing it themselves. This would help move RSS into the mainstream.

    Real Simple Shopping is an innovative use of RSS. We let you gain control of your email and still get the promotions you want. Still in beta learning about how we can improve our services.

    Thanks

    Stuart

  • http://www.ueland.com Chris Ueland

    Talk about a major hack: http://nextup.com/NewsAloud/tivo.html


    Tivo with the Home Media Option allows you to play MP3 files stored on your PC on your TV. It works by running a small program called Tivo Publisher on the PC, which communicates with your network connected Tivo unit.

    NewsAloud is windows software that can automatically retrieve news stories from a variety of news sites such as Yahoo News and Reuters, as well as from any RSS Feed. It then uses Voice Synthesis (Text To Speech or TTS) to create MP3 files from these news stories, for listening away from the PC, typically on portable MP3 players.

    :-)

  • http://www.ideoplex.com/blog/2004/06/#a930 Take the First Step

    Who Are You?

    I just wonder if this is the harbinger of a new VC capability. Industry relationships are a factor in selecting a VC. A well connected Venture Blog can initiate and explore customer conversations that a Startup can not. Will we ever see customer relati…

  • Alistair Stobie

    I hope its as good an investment as Newsgator is a service. I love my RSS feed in Entourage via NGOS pop service (even if most of the html gets eaten.) Keep it at the forefront of delivering RSS feeds of almost anything and soon we will have email delivered to our RSS aggregator!

    Your why did we invest analysis lacked the revenue piece. Not that I exepected an overly deep insight but a comment as to why NG will generate a meaningful share of ad revenue, or whether my paltry $5/month makes it a sure fire winner.

    Delighted to know that NG will still be around for a while.

  • http://www.geeknewscentral.com/archives/002841.html Geek News Central

    The thought process behind the Venture Capitol funding of NewsGator

    Every small company has challenges and one of those challenges is always money. Just as I have big dreams and…

  • http://www.rassoc.com/gregr/weblog/archive.aspx?post=731 Greg Reinacker'

    NewsGator's recent funding

    You've almost certainly heard by now that NewsGator Technologies has taken on venture funding from Mobius Venture…

  • http:///gen.kanai.net Gen Kanai

    I’ve seen some interesting extensions of RSS to the game platforms PS-BB (PlayStation BroadBand) as well as XBOX here in Japan. The XML parsers on the game platforms are pretty primitive right now, but it’s clear that syndication means feeds in places one never thought possible in the past.

  • http://www.dashes.com/links/archives/20040627.php#013436 anil dash's dai

    why mobius invested in newsgator
    http://www.feld.com/blog/archives/2004/06/why_did….

  • http://houseofwarwick.com/2004/07/02.html#a830 house of warwick

    A VC explains his investment in NewsGator

    Brad Feld : “Why Did We Invest in NewsGator?”

  • http://www.rassoc.com/gregr/weblog/archive.aspx?post=731 Greg Reinacker’s Weblog

    NewsGator’s recent funding

    You’ve almost certainly heard by now that NewsGator Technologies has taken on venture funding from Mobius Venture…

  • http://www.dashes.com/links/archives/20040627.php#013436 anil dash’s daily links
  • http://gensystem.europe.webmatrixhosting.net/al/archive/2004/07/03/429.aspx Anatoly Lubarsky Blog

    NewsGator

  • http://www.gadgetopia.com/2004/07/03/NewsGatorBeyondTheAggregator.html Gadgetopia

    NewsGator: Beyond the Aggregator

    Why Did We Invest in NewsGator?: Here’s a post from a venture capitalist about why he invested in NewsGator. The misperception is that NewsGator is only an Outlook plug-in. While the most popular product from NewsGator is currently their Outlook-based…

  • http://houseofwarwick.com/2004/07/06#a539 house of warwick

    Permalinks

    Very sorry about the permalink situation.

  • http://weblog.cemper.com/a/200407/08-newsgator-gets-venture-capital.php Technology & Bus

    NewsGator gets Venture Capital

    Oh well – VentureCap times are in again I guess… is the whole market crazy about blogs, content aggregation and text ads ? I think so… People start pouring money into a newsreader company creating NewsGator and explain it… Why…

  • http://www.revenews.com/samharrelson/archives/000091.html ReveNews: Sam Harrelson

    Advertising on RSS

    An article from ClickZ points to the rising stakes in the RSS game, particularly as more venture capital begins to pour in and companies like Bloglines ponder adding an advertising feature to their blog products. How will the influx of venture capital …

  • http://weblog.cemper.com/a/200407/08-newsgator-gets-venture-capital.php Technology & Business News, Project Management & Marketing comments, review and links by Christoph C. Cemper, Project Manager

    NewsGator gets Venture Capital

    Oh well – VentureCap times are in again I guess… is the whole market crazy about blogs, content aggregation and text ads ? I think so… People start pouring money into a newsreader company creating NewsGator and explain it… Why…

  • http://uberbin.net/archivos/2004/07/httpwwwrassocco.php Denken

    Los fondos llegan al RSS

    Primero lo descubrieron todos, luego Bill Gates habl

  • http://uberbin.net/archivos/2004/07/httpwwwrassocco.php Denken

    Los fondos llegan al RSS

    Primero lo descubrieron todos, luego Bill Gates habl

  • http://www.worthwhilemag.com/entry/2004/07/22/cool_blog.php Worthwhile

    Cool Blog

    Brad Feld is a venture capitalist based in Boulder Colorado who works for Mobius Ventures, but this quick description will give you all the wrong ideas about who he is as a blogger. He’s a great blogger and very wide-ranging…

  • http://www.tjacobi.com/archives/the_newsgator_round.html TJ's Weblog

    the newsgator round

    Brad Feld has had a longer post a while ago, why he had invested in Newsgator Online Services (the company is really more than the ubiquitous Outlook plug-in he argue). I missed it still pretty worth browsing through…. "Now -…

  • http://www.tjacobi.com/archives/the_newsgator_round.html TJ’s Weblog

    the newsgator round

    Brad Feld has had a longer post a while ago, why he had invested in Newsgator Online Services (the company is really more than the ubiquitous Outlook plug-in he argue). I missed it still pretty worth browsing through…. “Now -…

  • http://www.kantianxia.com Andy Yin

    Hey, Brad,

    Not sure if Mobius or you would be interested in pursuing international investment opportunities in the RSS space.

    We are the leading product and service provider of RSS technology in China. Based in Shanghai, the company was founded earlier this year and has achieved a critical mass of customers and solid product portfolio.

    Having observed Newsgator’s dramatic progress since it received Mobius’ investment, our team here feel that you understand the technology and industry so well that your advice and involvement in our venture will undoubtedly bring a wealth of value to us.

    We seriously invite you to engage a conversation with our management team in the near future. Should you be interested, please give me an email or we can always chat on MSN. My ID is xzbfrf@yahoo.com.

    Thanks, Brad. We look forward to hearing from you.

    -Andy Yin
    CEO
    http://www.kantianxia.com

  • http://blog.justbe.com/jb/2005/02/newsgators_road.html jB: no – that's

    Newsgator's Roadmap

    Newsgator's Greg Reinecker has posted some details about the planned features and overall roadmap for the newsgator products (outlook, online, media-center edt. ec) over here: http://www.rassoc.com/gregr/weblog/archive.aspx?p….

  • http://blog.justbe.com/jb/2005/02/newsgators_road.html jB: no – that’s definitely not good enough

    Newsgator’s Roadmap

    Newsgator’s Greg Reinecker has posted some details about the planned features and overall roadmap for the newsgator products (outlook, online, media-center edt. ec) over here: http://www.rassoc.com/gregr/weblog/archive.aspx?post=753.

  • http://trioconnect.org/radioToManila/2004/07/02#a519 radioToManila

    A VC explains his investment in NewsGator

    Brad Feld : “Why Did We Invest in NewsGator?” Archive: comments

  • http://www.genuinevc.com/archives/2005/04/why_i_like_our.htm Genuine VC

    Why I Like Our NewsGator Investment

    Earlier today, NewsGator announced another round of investment from Mobius and the addition of Masthead Venture Partners. I’ve been very closely involved with the deal here at Masthead, working with partner Rich Levandov and the teams at NewsGator an…

  • http://trioconnect.net/0001004/2004/07/02.html#a830 Steve Kirks' Ra

    A VC explains his investment in NewsGator

    Brad Feld : "Why Did We Invest in NewsGator?"

  • http://trioconnect.net/0001004/2004/07/02.html#a830 Steve Kirks’ Radio Weblog

    A VC explains his investment in NewsGator

    Brad Feld : “Why Did We Invest in NewsGator?”

  • http://www.readwriteweb.com/archives/002818.php Read/Write Web

    The RSS Space defined

    I recently finished a report on ‘The RSS Space’ for a client. In it I mapped out the current RSS vendor landscape, building on a blog post that Brad Feld wrote well over a year ago. I’ve decided to publish…

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  • http://www.investmenthouse.com.au Raymond Kirk

    That's great, I never thought about Why Did We Invest in NewsGator like that before.

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