I hope you can join us on Sep. 22 evening for a presentation on "Where are the Deals?  Private Equity and Venture Capital Funds' Best Practices in Deal Origination ".  We'll be discussing preliminary findings from a white paper we're writing on this topic.  I'd like to thank our hosts, the  Columbia Business School Alumni Club of New York .

Here's the ad:

The quality of the deals you source is one of the greatest drivers of your success as an investor. What are you doing to improve your deal flow?

David Teten will discuss:

• How are you positioning yourself to become your target's preferred investor?

• What does research on deal-origination indicate are the primary sources of deal flow for institutional investors?

• What are you doing to identify companies that might be interested in being approached?

• What are the earmarks of a potential investment opportunity?

• How are you systematically identifying industries/situations in which you may be able to create new companies, rather than find existing companies?

• How can you use Web 2.0 tools to identify appropriate investments?

• How do you increase your inflow of useful referrals?

• What is the best way to make warm cold calls?

David Teten is a Managing Director of Evalueserve, the world's largest knowledge process outsourcing company.  Founded in 2000, the company has over 2,400 employees.  Among its 1,100 clients are 6 of the top 10 investment banks and 10 of the top 15 strategy consulting firms.  David joined Evalueserve when the firm acquired his company, the Circle of Experts.  He leads Evalueserve's services in helping institutional investors originate investments.  David was formerly CEO of Teten Executive Recruiting, which he sold to Accolo, #42 on the 2007 Inc. 500 list.  Previously, he was CEO of GoldNames, an investment bank serving the internet domain name asset class.  He worked with Bear Stearns' Investment Banking division as a member of their technology/defense M&A team, and was a strategy consultant with Mars & Co.  David is lead author of The Virtual Handshake: Opening Doors and Closing Deals Online, the first book on how businesses can use online networks and other "Web 2.0" technologies to originate deals, raise capital, win new clients, recruit star employees, and market their firm.  He holds a Harvard MBA and a Yale BA, both with honors.   David is a member of the Advisory Board for Accolo, Grouply, and the Word of Mouth Marketing Association.   He is a frequent keynote speaker to finance and technology conferences

AGENDA
6:00 - 6:30 PM Registration
6:30 - 8:00 PM Program & Reception

PLACE
Cresa Partners

100 Park Avenue, [between 40th and 41st Street] 24th floor

PRICE
CBSAC/NY Members $25
Non-members $35
Pre-registration recommended. $10 surcharge added to day-of-event registrations
To become a member click here

REGISTRATION
To purchase tickets click here: Click here to buy tickets!!!
Space is limited and will fill up quickly.

NOTES
Reception includes bottled water, soft drinks and hot & cold hors d’oeuvres

EVENT ORGANIZERS
We are grateful to Gene Kenny and Frank Graziano (CBS '82) of the Private Equity Committee for organizing this event

I enjoyed presenting a few weeks ago to the Harvard Business School Club of London on "Best Practices in Deal-Sourcing by Private Equity, Venture Capital, and Hedge Funds", generously hosted by McKinsey.  You can download my slides here.  I look forward to learning more about this area at next week's Capital Roundtable Masterclass on "The Art of Building the Right Deal Flow", in New York.  I would welcome your feedback.

Matt Nelson of Tower Group was kind enough to give me permission to post his thoughtful slides on "Web 2.0/Enterprise 2.0 in the Financial Services Industry", from the recent New York Financial Markets World conference on "Web 2.0 and Enterprise 2.0 in Capital Markets."  Christopher Rollyson and he briefly discussed his presentation here .

I’m happy to be participating at a Software and Information Industry Association lunch /webcast on October 31 in midtown New York, on "The Promises and Risks of Social Networking in the Information Industry".

The event is on “how your enterprise can profit from social networking: in promotion and marketing, in the development of new products and content creation, and even by making communities one of the services your business offers as an ancillary to content products.”

The other panelists are:

Leslie Forde, VP of Strategic Alliances, Communispace;

Kim Kobza, President and CEO, Neighborhood America;

Scott Parry, General Manager, Reuters Advicepoint

Karen Christensen , CEO, Berkshire Publishing Group will moderate.

Some of the questions that will be addressed include:

• How can we make our communities persistent and sustainable?

• What increases the value of a community to its participants?

• What social media are appropriate for my business?

• Does it really make sense to use existing free social networking communities like Facebook and Second Life?

• Can we develop our own unique social networking systems with open source technologies?

The event costs $50 for non-SIIA members. Alternatively, the event will be available via webcast. Register here.

I have attached below some notes from last Monday's Financial Markets World conference on Web 2.0 / Enterprise 2.0 in the Capital Markets Industry , at Bayard's, New York.  

My own talk was on "How to Source Deals with Web 2.0 Technologies". It was focused on how private equity funds, venture capital funds, and hedge funds can more efficiently find companies in which they can invest. Slides are here. 

Lauren Buckalew from our Shanghai office took notes, below:

------------------------------

A pilot study on awareness and use of Web 2.0 by Canright Communications and Evalueserve found that of the executives surveyed, 44% were “extremely” interested in Web 2.0 for business, but only 17% felt “extremely” or “very” knowledgeable about the technology.

The survey results—which were distributed at the Financial Markets World Web 2.0 / Enterprise 2.0 in the Capital Markets Industry event today—mirrored the speakers’ sentiments: the business community in general imagines grand possibilities for Web 2.0 technologies in the workplace, but the barriers to adoption, such as lack of understanding at the executive level or compliance issues, are still great.

I came to the event excited to be educated. I knew a little about Web 2.0, but I was overwhelmed by the possibilities I saw in the news and just wanted authoritative instruction on how to filter through all of the noise.

The most informative sessions to get the overview were Matt Nelson of TowerGroup’s opening remarks, and the last talk I attended, Dion Hinchcliffe’s ‘Applying Enterprise 2.0 and Web 2.0 in Financial Services: Early Notes from the Field’. In fact, Dion’s absorbing speech would have been better placed early in the day, as it provided a good background, real-life examples of Enterprise 2.0 successes, and a straightforward summary of its shortcomings.

Other speeches and roundtables drilled down on specific topics, like Instant Messaging, Collaboration, Web 3.0, and David Teten’s talk on using Web 2.0 to source deals (I did not hear the last talk by Tom Steinthal of BSG Alliance). Since I was learning about these areas for the first time I was only able to understand on a superficial level, but was most impressed by Penny Herscher of FirstRain and her simple yet sharp insights.

Stephen Leung, a Senior Manager at BEA Systems, who was a panelist on both the ‘Web 2.0/Enterprise 2.0 in the Financial Services Industry’ and ‘Rich Internet Applications and the Client Portal: Using Web 2.0 to Improve the Client Experience’ panels, spoke on the infrastructure and applications side of Web 2.0, and probably received the most questions from the audience.

Although the roundtable topics had various titles, and nearly all of the discussions went overtime out of lively discussion, I didn’t come out of the event in control of Web 2.0 like I thought I would; I just learned how much more there was to it, especially more creative uses of Web 2.0 apps for businesses than I could have imagined.

In following the “Top 10” theme used by Xignite Chariman/CEO/Founder Stephane Dubois to kick-off the first roundtable, here’s my Top 10 Learnings from the event:

10) Web 2.0 technologies should fit into existing workflow and should be invisible to users.

9) The finance world’s secrecy and competitiveness inherently conflicts with Web 2.0’s nature of viral, self-correcting information sharing.

8) Longtail, mashups, fine-grained entitlement, folksonomies, meta data, geo-tagging and MetaWiki are good things… once you understand them.

7) Individuals can use Web 2.0 tools to leverage existing social networks to generate sales or make deals. One can do this outside of any business structures, based on one’s own diversity of contacts, character, competence, the relevance and strength of one’s contacts, and access to information.

6) Executive decision makers’ lack of information on and understanding of Web 2.0—“What’s the ROI?/I don’t have time for this!/Kids these days and their crazy technology…”—prevent companies from realizing adoption. Any new technology would face similar barriers.

5) Web 2.0 is not a technology or a step in development, but a social concept.

4) Legal/compliance teams haven’t yet figured out how to effectively regulate Web 2.0 tools without reducing them to meaninglessness. But giving employees unbridled Web 2.0 tools is also not recommended.

3) Internal company wikis—which act as a unified log for all project developments and conversations—are a successful example of Enterprise 2.0 in the real world. Key to success is to motivate employees to use it and control the structure themselves.

2) Each element of SLATES (Search, Links, Authoring, Tagging, Extension, and Signals) is required for a Web 2.0 tool to be effective.

1) There is no clear solution for how the capital markets industry should integrate Web 2.0 into business. The interest is there, but Web 2.0 is still effectively consumer-driven, not enterprise driven.

More discussion on Enterprise 2.0 is in order, but before then, more actual application of Enterprise 2.0 in the workplace would be more informative.

Robert Peck of Bear Stearns recently presented on the theme "Yahoo should buy Facebook", with a rough valuation of Facebook. I have to admit my skepticism of this argument. Yahoo has a history of not taking advantage of its acquisitions (Broadcast.com…).

Far cheaper than buying Facebook would be to provide a systematically integrated user experience across all of those different brands. Most noteably, Yahoo owns Yahoo Groups, which to this day has one of the most active user bases of any online community. There are roughly 6 million Yahoo groups, with an average of perhaps 10 users each, and many of those users (including me) are not impressed with the quality of their current user experience. (The 6 million figure comes from Jeff Weiner of Yahoo, but the figure of 10 users each is only a rough estimate.)

Yahoo already has tremendous reach and many of the most noteworthy brands in the Web 2.0 space (Flickr, Delicious, etc.). Integrating all of these brands is a mammoth missed opportunity.

I enjoyed tonight's talk by Peter Thiel at NYC Junto, on "How New Technologies Thwart Government and Promote Freedom". Junto is a libertarian-focused discussion group organized by Victor Niederhoffer. I've been following Peter's writing for a while, since we overlap directly in our interests in investing and in online networks. Peter is President of Clarium Capital Management, an investor in both LinkedIn and Facebook, and was co-founder and former CEO of Paypal.

Peter started with two questions:

1) Let's assume libertarian view is correct. Why aren't more people libertarian?

2) What do we do about it? How do we make the world more libertarian?

Answers to question 1

- maybe libertarianism is not in peoples' interest

- lack of education

- [Cf. Bryan Caplan's book, The Myth of The Rational Voter]

Answers to question 2

When Peter was an undergrad, he might say:

- Education

- Go door to door

- Convince people to vote for candidates

But as he got older, he saw this is very hard to do.

(highlight of the evening: Victor Niederhoffer's toddler son wanders around Peter's legs at this point)

An IQ test for libertarians: ask them how optimistic they are. The more pessimistic they are, the smarter they are.

One solution: move control of money from the government to individuals. But you cant do this via plebiscite. If there was a form of money that government couldn’t measure or track, you'd have a powerful alternative. This insight was genesis of Paypal in late 1990s.

In mid 90s, several companies were creating alternative currencies: Cybercash, Digicash, etc. All of the initial attempts were going out of business. Money has a network-like aspect. How do you create a new currency when no one else is using it?

All these efforts had run aground against this rock. So Paypal started by leveraging against existing systems: credit cards, checks. Send money to anyone with an email address. Started with 24 employees at Paypal. Preloaded accounts with $10. Started to spread. We grew at 5-7% compounded daily.

Einstein, "Compound interest is so miraculous it could only be created by G-d".

Initial theory was very idealistic. In reality we ran up against many obstacles, the first of which were customers. Massive amounts of emails/customer service inquiries.

Spring/summer 2000: discovered bad people are out there. Whole wave of fraud, including Russian mobsters, tried to exploit Paypal. Someone threatened Peter's mother unless PayPal unfroze his account. Then that person ended up shot dead.

Found dystopian website in Former Soviet Union: "Carders World". A carder is someone who steals financial information on people. This was a marketplace for personal financial information. They had a manifesto saying that they were going to take down the capitalist system. Paypal information was there.

2001 period: next obstacle was government. Initial Paypal strategy was to ignore government regulations—'we are not a bank'; ' none of these laws apply to us'. If we rolled this out quickly enough, the government couldn't stop us. "If you have a world where everyone is a criminal, you have to change the law."

Visa/Mastercard tried to come up with rules to prohibit Paypal from using their service. Government was even slower. Radical technological change must be fast.

In 2001/02, when company went public, things really hit the wall. The person investigating their S-1 thought that his job was to stop companies from going public. "He was demoted in government, which is a really extraordinary thing to happen."

Businessweek article said that state of Louisiana hadn't quite signed off on this. SEC investigator told Paypal management that state of Louisiana was going to shut this down. So in middle of roadshow, Peter had to track down government regulators in Louisana and convince them that Louisana did not want to get reputation as a particularly backward place. "So within 2 days, we managed to get that stopped. At the time we had 100,000 Louisana users."

"We are now in 100 countries. 3^rd largest payment brand after Visa/Mastercard in the world. "

How successful were we? Paypal currency is still denominated in national currencies. If you only have one form of currency, you're beholden to the issuer of that currency. Our initial vision inspired in part by Argentinean economic turmoil. If you can force competition between governments, you'll have stabler currencies.

Early 1980s: high inflation rates all over the world. Since then, it's gone down almost everywhere. Forms and symbols can persist well after the substance is gone, e.g., Queen's face is still on UK currency. Technology has been a very powerful force for decentralizing things.

1960s Time magazine cover: picture of 1 big computer that could run the world. Cf. Hal 2001. Computers as a force for centralization is a classic image. In the 90s, power shifted to individuals.

Famous early example: Soros distributing fax machines throughout Eastern bloc.

If everyone becomes a currency dealer thru Paypal, it changes the world.

So much has changed. For example in 1971: it was illegal to own gold and other currencies in the US. 1971 Treasury Secretary said, "It's our money---we can print as much as we want and it's the rest of the world's problem". You can't imagine Hank Paulson saying something similar today.

Power is shifting ineluctably away. Will technology continue to be a force for decentralization?

Why did 1960s vision of centralized computer not happen?

Peoples' ability to process information is flat, but the amount of information has gone up dramatically. So the only solution is decentralization. This is also why Moscow can't set the price of potatoes in Vladivostock.

You may be able to approximate information processing to a problem solveable in polynomial time---and then you have AI, and the 1960s vision of a centralized computer processing everything.

By 2050, we could have thousands of different countries. We have 10-20 years to push as hard and far as we can in direction of more liberty.

Q: How do you prevent Paypal from being used as electronic hawalla---form of terrorist financing?

A: We have protections in place---abide by Patriot Act.

2002: first year number of printed checks in US went down.

Q: question about Second Life and inflation

Q: question about goldmoney.com

A: The problem with gold is that when you really need it, it's not there. In 1933 the government confiscated all the gold bullion in the US.

Q; How do you promote libertarianism?

A: When I was young I tried to reduce the demand side (demand for regulation), but then I saw it was much too hard. So now I focus on the supply side. If I expand the supply side (e.g., more options for currencies), I reduce the amount of government in the system.

I want to promote change without being obliged to go through an election or plebiscite.

Governments are losing power to inflate because of technology. The risks are now tilted to deflation, not inflation. A deflationary environment is hard to invest in, because you can't just lever up and pay things off in cheaper dollars. Private equity and real estate are bad ideas in a deflationary environment. Donald Trump's argument is that you should be short dollars by going long real estate, is disastrous.

Q: How does Facebook promote libertarianism?

A: Facebook will be the dominant next media company . Since the old media companies are non-libertarian, this in itself is good.

Hedge funds are a way to bet against stupidity of governments.

Q: Could you comment on US visa policies and their impact on competitiveness.

He commented that once a tipping point happens, it's impossible to go back. Once the camel's back is broken, it can't be healed. Right now the marginal tax rate in NY is ~50%. In London it's 0%. So it's compelling for a hedge fund to set up shop in London, not NY.

There's a definite shifting of centers of quality overseas. It's happening faster in finance than in technology, but it is happening. (Audience member mentioned that Microsoft is setting up research centers in Canada and elsewhere specifically because they cant bring the researchers they hire into the US.)

Jason Alba at JibberJobber added a JibberJobber profile to the Virtual Handshake social software company wiki. Barbara Safani writes,

A successful job search campaign requires exceptional organizational and follow-up skills. Jibber Jobber provides an easy to use interface that takes the drudgery out of the job search process while improving efficiencies and accelerating search activity.

If you want to avoid the lines, Techcrunch writes how to cobble together an iPhone equivalent for free.

I enjoyed speaking at the recent Web 2.0 New York conference.  I have posted an expanded version of my slide deck on "Web 3.0: Where Are We Headed?"  My thanks to Sutithi Chakraborty for her help in researching this topic.

The folks at Landslide have figured out a great marketing strategy: If you view a demo of their "sales workstyle management" system, they'll give you a free copy of The Virtual Handshake--Opening Doors and Closing Deals Online.

Alex Salkever of Inc. wrote in Turning Sales Into Science that Landslide "gives sales staffers what they need, when they need it, to close a deal."  In other words, Landslide provides salespeople more infrastructure, so that they can focus more on selling and less on all of the other activities that distract them from their main job.

Link: Watch a Landslide demo, get a copy of The Virtual Handshake

I was a judge tonight at an event sponsored by the MIT Enterprise Forum-NY, presentations by three social networking companies. (Sponsor: Fish & Richardson P.C.) The other judges:

- Steve Brotman, Managing Director, Greenhill SAVP

- Jim Coleman, President & Certified Facilitator -The Alternative Board - Chelsea New York

- Russ Fein, Managing Director, Corporate Fuel Partners

- Lori Hoberman: (Moderator), Co-Chair, Corporate & Securities Group at Fish & Richardson P.C.

------------------------------------

Company 1: RevCat.com

Pitch: "RevCat is the creator of the Relationship Value Index (RVI), the first technology to enable employees to build and effectively use organizational networks. RVI provides a new approach to knowledge and contact management. It enables individuals and groups to navigate organizations guided by their performance objectives to effectively get the information, decisions and expertise necessary to meet their objectives. The solution includes software and consulting."

Jim Caruso, CEO:

2 year old firm.

1^st year in business was working with Honeywell Corp, with cross-section of their 100,000 employees.

Industry trends they're riding:

- social networking expanding into corp. workflow

- organizational network analysis has identified clear ROI (e.g., Rob Cross at UVA)

Pain points:

- wasted time communicating expectations and needs

- uncertainty on how to prioritize the people who can help

- difficulty reaching someone who can help

- ineffective at asking someone to help you reach someone else

- frustration waiting for email/vmail response

Goal: RVI becomes the social networking standard used in business to drive individual effectiveness.

RVI measures: mutual benefit, cycle time, invested success, gain access, feedback, walk away, referral, meet objectives

Value proposition:

- Reuse and distribute expertise residing in informal networks (call it knowledge management upside down)

- Reduce costs related to ineffective use of people resources

- Identify faster ways to leverage colleagues to meet business objectives

Honeywell case study: employees didn’t know how to get things done, because of constant reorganization.

Fidelity case study: employees frustrated maneuvering across 40 business units in company.

Their goal is to be the standard measure for relationship value. Generating revenue thru software licensing.

Competitors and potential partners: contact management, social networking (Contact Network Corp, LinkedIn); Human Capital management (Softscape, Kenexa, Halogen); CRM (Salesforce);

RVI is different approach to business relationships. Real-time capture of knowledge and relationship strength.

Barriers to entry: have been at this 7 years.

Customers are typically large complex organizations. Raytheon, Credit Suisse, Pfizer, Dunkin Brands. 350,000 users right now.

MY FEEDBACK:

What I like:

good management team that worked together in the past

-real clients

Feedback on presentation

- should work with KM companies

- not clear how to use it day to day

My Concerns

- long sales cycle, because they have to sell to General Counsel, CTO, CEO

- I'm concerned about relatively little progress after so much time has passed

FEEDBACK FROM PANEL

Responses from Caruso

- they're talking with some big consulting firms about white-labeling this. Have been in business 2 years.

- They approached some of the early adopters (Spoke, Visible Path, etc.) about being the corporate front end for them, but those conversations didn’t bear fruit.

- people are stingy about their relationships

- they mainly sell to CTOs

Responses from Audience

- why not target NGOs?

----------------------------------------------------------

Next Company: YourLocal.com

Pitch: "YourLocal.com is the first website that enables users to navigate their entire local experience. Featuring a wiki-enabled event guide, user-generated reviews, and the community-building tools of a social network, YourLocal.com produces abundant, dynamic content. At the same time, an individualized recommendations engine helps guide users through the "white noise" of events, and towards the events they're most likely to enjoy."

Scott Stedman presenting

Scott Stedman and his brother are founders/owners of "The L Magazine", 102,000 circulation biweekly, largest NY tristate event guide. They cover both venues and events.

Events that you see will be customized for your particular interests. Will incorporate both user-generated revews and events.

Interface guide is modeled on Netflix.

Competitors:

EventMe.com, Bernardoslist.com, Upcoming, Yelp, down2night, whatsupNYC, renkoo.

None have recommendation engine. They don’t amalgamate user-generated reviews.

My feedback:

- very crowded space. Instead why not build "ntag for the social networking/dating space"? Help me meet the women at the party who meet my specs, who will be interested in me. No one's done that well, and that's very valuable. I'd pay for that.

Other feedback from panel:

- don't say you want "5-8 employees"; it's too wide a range

- don't put a pre-money valuation, because someone may think it's worth more.

- Clarify conflict between L Magazine and YourLocal.com . It's better to just get investors in L Magazine as one entity, which owns YourLocal.com . What happens if you expand to Seattle and want to launch a local presence there?

- Go deeper on problems that current users have with their existing site and competitors.

Feedback from audience:

- partner with local weeklies in major cities to get their content

- no evidence in presentation of technology expertise

-----------------------------------------

Collectors Quest

Pitch: "Collectors Quest is a Broadband TV Network targeting the collectors community and advertisers seeking access to this high-value group. Collectors Quest combines a mix of high-quality broadband video, social networking and ecommerce to address a passionate community already online, that spends significant time and money on collecting interests."

Elizabeth Kressel, Founder & CEO

Consumers spend $100b annually for collectibles. 73m Americans are collectors, with an average of 2-3 collections. Over 10m people annually attend collector events.

3 prongs: content, commerce, community.

Very strong management team; 4 with experience in this sector, and 3 worked together previously

COO was founder of auctions.com .

Revenue model:

- targeted commerce. Margins 50-75% on collectible items (standard in this industry).

- Advertising. CPM of $10-$30 due to niche focus. Pre-roll ad rates of $25 but as high as $75 .

- Publishing

Entertaining and informative videos. No one else is offering this in this sector.

1-to-1 marketing in its purest form.

Revenues from UGC and community. Profiles are based on dating profiles. "Make me an offer" feature to provide CQ opportunity to get additional revenues. Use technology to make collecting easier.

"Collecting is all about bragging"---so it's easy to get detailed demographic data

Milestones: secure call center, finalize inventory mgmt, website launched,

Partners; hearst, primedia, mbeckett, Today Show

Collectors clubs with 500K members have agreed to promote CQTV.

Competitors:

Very fragmented area.

Content: collecting sites, cable programmers, network programmers

Commerce: TV , internet auctions, other retail outlets

Have raised $400K to date, and seeking $3m in capital.

Process patent is in process

My feedback

- Great presentation, very professional. Best of the evening by a big margin.

- Raise more money

- Copy MyThings.com

eBay is 1.25% of the $100B/year in revenues in this area. This is very fragmented market. EBay started with collectors market but has since abandoned it.

Other panelists

- this is very viral

- what is your liability in case of fraud, given there's extensive fraud in this market (e.g., signed baseball cards)? Answer: they'll use the same guidelines as ebay.

Shirky describes this generational shift in terms of pidgin versus Creole.

“Do you know that distinction? Pidgin is what gets spoken when people patch things together from different languages, so it serves well enough to communicate. But Creole is what the children speak, the children of pidgin speakers. They impose rules and structure, which makes the Creole language completely coherent and expressive, on par with any language. What we are witnessing is the Creolization of media.”

That’s a cool metaphor, I respond. “I actually don’t think it’s a metaphor,” he says. “I think there may actually be real neurological changes involved.”

The site’s name stems from old school programmer Ward Cunningham’s invention of the first wiki, which originally drew its name from the Hawaiian word “wiki,” which means quick.

 In the case of Wikipedia, this refers to the site’s facilitation of quick collaboration between users in the creation of informational pages.

 On Monday, Wales unveiled a new, free-hosting service called OpenServing, a site that will offer free hosting and use of the powerful Wikia software to anyone interested in creating a community site.

 The kicker: Wales intends to make this all available while permitting users to keep 100 percent of any advertising revenue they earn on their site from ad networks such as Google Adsense. more

I enjoyed meeting with Jim Fowler yesterday, CEO of Jigsaw (our wiki profile). Jigsaw is a marketplace for business contact information. It's very useful for salespeople, recruiters, researchers, jobseekers, and so on. Some noteable data points:

+ We know from our (Nitron Advisors') own experience that the problem with most traditional list services is that their data is often out-of-date, whereas Jigsaw has attracted a community who are motivated to cleanse the data on their behalf. 80% of Jigsaw phone numbers are direct dial, in part because of their approach to gathering data.

+ Most Jigsaw revenues come from recruiters and financial advisors. 50% of revenue is from corporate clients, who find the data cleansing service that Jigsaw offers particularly valuable. All of Salesforce's salesforce uses Jigsaw . Only a small percentage of corporate customers upload data, but Jim sees that percentage increasing over time.

+ 1/4 of revenue is from resellers/partners --- you can see a list at http://jigsaw.com/company_information/partners.xhtml .

+ He's identified several competitors: WillyLoman.com, 7 Chinese competitors. Jim claims that he is the only player with significant traction.

+ As with all social networks, Jigsaw has some users who abuse the system. So like all data vendors, Jigsaw has started to insert dummy records to track abuse, resale, and so on of their data.

+ Jim claims that some corporate sales brokers have stopped selling databases with emails, because of their concern that their lists will end up on Jigsaw.

+ Although many people (Michael Arrington, Rafe Nadleman) are critical of Jigsaw on privacy grounds, to date only 200 people have asked to be removed from Jigsaw, and >2500 people have asked to be added to Jigsaw so they can proactively manage their data.

+ The database is used heavily; 70% of all contacts in the system are "bought" at least once a year.

+ Jim claims that the people who are really hurt by Jigsaw are CEOs like him and me, because it makes executive recruiters more efficient---so that they can steal our employees more readily. He says "As soon as we're cash flow positive [this year], I've told all our employees that we're giving free lunches every day. We have to do what Google does, because I know that so many people are working hard to recruit our employees."

One of the questions I get asked fairly frequently is how people can leverage Web 2.0 techniques in their applications and infrastructure today. Now that it's getting more well known, more people seem to be actively interested in making immediate, practical use of Web 2.0 ideas.

Sony, for instance, paid $65 million for a video-sharing site called Grouper.com and started a nifty service through which you can load your favorite clip from one of its movies — say, Jack Nicholson barking, “You can’t handle the truth” at Tom Cruise in “A Few Good Men” — onto your MySpace or Facebook page.

 Over the last few weeks, other media companies have accelerated their efforts in social networking.

For example, the Hearst Corporation on Jan. 8 bought a small company called eCrush.com.

And the Walt Disney Company, the CBS Corporation, Viacom and NBC have all been busy planning new social networking features for their various Web sites.

Thanks to some regulatory arbitrage, AllFreeCallswill let you make phone calls to many foreign countries for free.

 Dial 712-858-8094, and at the prompt dial 011, the country code you are calling, and the number you wish to call.

 Easy. Some of the bloggers writing about this call this "free", but that's a bit misleading.

Because AllFreeCalls is taking advantage of certain government subsidies, you as a taxpayer are really paying for this call.

I've recently talked with a few people about 'social commerce'---the idea that our online business activities will both reflect and in part be driven by our personal social network.

My coauthor Scott Allen recently did a market research study on "Transactional Trust in Social Commerce", which provides some context on this.

For example, many people would prefer to buy a used car from a friend or a friend of a friend, rather than a stranger.

 The social context is particularly important, in my experience, when purchasing services as opposed to products. Why?

Because the quality of a service varies wildly depending on the motivation and context of the service-provider.

 For example, my wife and I are currently evaluating some contractors to do some renovation for us, and a contractor who lives near us and knows some of our friends socially is less likely to rip us off than someone who is a stranger.

Amazon has a primitive version of this functionality, in that I can see that people who like book A also like book B.

I've also seen quite a few startups who are working on various variations of, 'What is an efficient way to buy stuff from friends as opposed to strangers?"

See for example www.stylehive.com and www.thisnext.com.

This was supposed to be a significant part of Tribe's business model, and some of the local services directories (e.g., Yelp, LinkedIn) are also trying to leverage the fact that you trust your friends' (or friends of friends of friends) recommendations. I see several advantages of socializing commerce, in general:

1. Higher likelihood of truth in advertising.

 The friend is less likely to lie about how lemony the used car is, because he knows that interacting with you is a repeated game, not a one-time game.

 2. Reduced purchase cost because of fewer intermediaries.

By buying a car from a friend, you don't have to pay a dealer's markup.

3. Reduced costs of identifying the right product.

 Friends (or friends of friends) tend to have similar tastes. If my friend is (like me) a city dad with a child, then my friend is also likely to have a car to sell me that suits the needs of me and my family.

4. Helping out your friends/your community.

 No one does a business transaction unless he/she derives some benefit. You'd rather that your friend gets the economic benefit of selling a car than a stranger.

So does it make sense to use online networks to make commerce more social?

To evaluate against the criteria I listed:

 1. Higher likelihood of truth in advertising.

 Possibly also true online. However, online we already have measures of reputation that are not dependent on me knowing someone who knows the person in question: eBay's reputation functionality, Rapleaf, etc.

 2. Reduced purchase cost.

I think in most cases this doesn't apply online, and in fact the purchase cost when buying via a social network can be higher because I lose the advantage of a broad seller base competing with one another. In addition, somehow the intermediary (e.g., Amazon, eBay) has to make a markup. If I'm buying something online anyway, then I've got access to a shopping comparison engine which will lower my purchase cost to the bare minimum.

3. Reduced costs of identifying the right product.

This is likely true, but only for a small number of products. For many products, my friends are not necessarily more knowledgeable about the product category than Cnet.com---so I should really just buy what Cnet recommends, not what my friends are buying. The one advantage of buying what my friends recommend is that, if conforming is my goal, this helps me to conform.

If everyone else pays a premium for an iPod or Treo 650 then clearly I must buy one too.

4. Helping out your friends/your community.

 To some extent this is also true online.

 However, I doubt it's a big motivation for many people. Research from the likes of Forrester, Resource Interactive and Morgan Stanley is also beginning to focus on a new generation of consumers they term the Millennials (aka, “Generation Y”) who range in age from 18-26 years old.

Their buying patterns differ from prior generations. The Millennials exceed the Boomers in size, distrust media and have little to no affinity for brands.

 As opposed to earlier generations, they value their peers’ advice and validation: therefore, CNet recommendations are less valuable. Jeff Leventhal, CEO of Spinback, observed, "this generation is the largest consumer group to date and will shift the commerce paradigm."

It's clear that many people like doing business with others in their community, or with others to whom they're interconnected. Think how many offices have an internal email list for people to sell sporting tickets, TVs, etc.

Think of the bulletin boards with things for sale that you'll see in many churches or synagogues. However, if you are already doing commerce online as opposed to face-to-face, I'd argue that in many cases it's irrational to make your commerce decisions dependent on your social ties.

 In most cases it's more rational to just buy things via a comparison shopping engine (Shopzilla, Froogle, etc.), particularly when buying a commodity good that could otherwise be found in a few block radius.

The good news for the startups trying to do something in this area: first, many people are irrational and will prefer to buy via a social intermediary, even if they get a worse deal. And second, for certain types of purchases buying via a social intermediary can be more rational, especially when the item is a not a common good, but rather a unique or collectible item.

Used cars are the most obvious example, because there are so many ways in which the seller can deceive you about the true value of the product.

If you're a Pez dispenser collector, fellow members of your community can also turn you on to an impulse purchase which you would not have searched for yourself on Shopzilla, but which you are excited to buy because a trusted peer refers you to it. Feedback welcome.

New York County Lawyers’ Association’s Cyberspace Law Committee

presents

Web 2.0: Upgrade Your Web Marketing

The Internet is upgrading to version 2.0 and so should your law firm's marketing. More and more lawyers are taking their practices to the next level and this forum should help you do the same. Take an evening to familiarize yourself with how blogging, online referral networks, research-sharing wikis and more can expand your firm’s profile and attract prospective clients.

SPEAKERS

Scott Lichtman

COO, Nitron Advisors

Scott Lichtman is COO of Nitron Advisors (www.nitronadvisors.com), a provider of senior industry executives with specialized backgrounds to law firms for testimony and to investment funds for market advice. Nitron Advisors extensively applies Web 2.0 technologies – including blogs, peer referral networks, online expertise acquisition services, specialized professional search engines and live interactions – to acquire clients and experts as well as build awareness for the firm’s capabilities.

Partner, Schwimmer Mitchell Law Firm

Martin Schwimmer is co-founder and Partner at Schwimmer Mitchell. He represents owners of some of the most famous and soon-to-be-famous trademarks in the world. He focuses on international and domestic trademark and domain name counseling, prosecution and litigation. Martin was General Counsel to an ICANN-accredited domain name registrar and continues to represent domain name companies. Martin was a partner at Fross Zelnick Lehrman & Zissu. Managing Intellectual Property Magazine selected Martin as one of the best trademark lawyers in the United States. Martin writes and speaks frequently on trademark and domain name issues and is editor of The Trademark Blog, www.schwimmerlegal.com, one of the most popular blogs on the Internet in this field of law (and generally ranked #1 by Google in this niche).

Bruce MacEwan

Creator and Host of AdamSmithEsq.com

Bruce MacEwan is a lawyer as well as a consultant to law firms on strategic and economic issues. He publishes the site “Adam Smith, Esq.” providing insights into the business of law firms, which generates 250,000 page views per month. You can read it at www.AdamSmithEsq.com. In his consulting practice, Bruce provides guidance on how to expand one’s business in the legal world. A recent engagement, for example, was a return-on-investment analysis of a knowledge management initiative at an AmLaw 20 practice. He’s also produced empirical studies of the structure of the profession, working with leading law professors. Most relevant to tonight, he has witnessed fascinating situations in which Web 2.0 technologies are being used to the fullest in law and related professional services. Bruce has written for or been the subject of articles in: The National Law Journal, Law Firm, Inc., Law Technology News as well as the Wall Street Journal and Web 2.0 magazine. He is a member of the New York State Bar Association’s committee on Law Practice Management.

Natalie Sulimani, Event Co-Chair, NYCLA Cyberspace Law Executive Committee;

Ron Katter and Henry Diaz, Event Co-Chairs, Co-Chairs NYCLA Solo and Small Firm Practice Committee

Thursday, November 16, 2006, 6:00 - 8:00 PM

NYCLA Home of Law - 14 Vesey Street

(between Broadway and Church Street)

RSVP: DLAMB(AT)nycla.org, Subject: "November 16 Forum". Entrance and facilities for those with disabilities are available. For wheelchair access, a ramp is provided. Please call 212 267-6646 at least one day in advance to make arrangements.

There's a great write-up of danah boyd in Financial Times, which labels her the high priestess of internet friendship. I thought they did a great job, with the exception of not respecting her preference of not capitalizing her name. In addition to profiling danah, the article also chronicles the development of Friendster and MySpace, and others, as well as some of danah's insights on social networking sites. For one thing, danah found that while these sites have created a few celebrities of their own,

...apart from a few intense self-promoters, most people, Boyd found, were using the sites to present themselves to a small group of friends and get their recognition and feedback. The sites are an opportunity to define in public who they are. By providing an audience, and the tools to interact with that audience, the social networks are satisfying that need. Boyd calls this behaviour “identity production? and, employing a favourite phrase of hers, says that young people are trying to “write themselves into being?.

“The fears are so painfully overblown,? said Boyd. “Is there porn on MySpace? Of course. And bullying, sexual teasing and harassment are rampant among teenagers. It is how you learn to make meaning, cultural roles, norms. These kids need to explore their life among strangers. Teach them how to negotiate this new world. They need these public spaces now that other public spaces are closed to them. They need a place that is theirs. We should not always be chasing them and stopping them from growing up.?

That business has been launched: ReputationDefender. What I like about the model is that I think it addresses a real concern that people have (or should have). 10% of Internet searches are for proper names; you are being evaluated every day online. ReputationDefender's main competition will be the same competition that PR firms have: people providing the service in-house instead of using an outside provider.

An interesting question they'll have to address as they scale is verifying the identity of the person using the service. If I say that I want to monitor the activity of my child, who verifies that that person is my child? And this is a great tool for stalking and identity theft (as are ZoomInfo and many other online network services): perhaps I fill out a form indicating that I want to monitor the online activities of a certain individual, who may not be me personally. Verifying that a given credit card ties to the name of the person being investigated is an obvious way to verify identity, but of course large numbers of credit card numbers are stolen every year.

I agree with Pete Cashmorethat it would be preferable to offer a very basic automated tracking service for free to get people into the system - "entering your credit card details is a massive barrier for the casual visitor". After all, people can easily use any search engine/blog reader to view discussion of their name across the net.

More here and here.

"People who access the Internet for what have become routine functions -- sending emails, writing blogs, and posting photos and information about themselves on social networking sites -- do not realize how much of their personal privacy they put at risk, according to Wharton faculty and legal experts. Nor, they add, have the courts fully addressed the ways in which the Internet can be harnessed for questionable purposes that encroach on privacy. "

...[L]ots of situations that used to be private are now public. It's not a question of privacy but of social norms. Perhaps the answer is just, 'That's too bad.' If someone had snapped a photo of [the Korean girl who didn't clean up after her dog on the subway] robbing a bank and she said, 'You can't take a photo of me,' most of us would say, 'Too bad, you were robbing a bank.' In a perverse way, we're going back to the small town where everyone knows what everyone else is doing by virtue of the global information superhighway. My point is, right or wrong, this is going to happen. Google is not going to go away."

Less than three years after emerging from nowhere, the hot social networking website MySpace is on pace to be worth a whopping $15 billion in just three more years. Or is it? And is the much smaller Facebook really worth the $900 million or more Yahoo is reported to have offered for it? The problem, say Wharton experts, is a dearth of information -- including data on expected revenue generation and cost structure -- to plug into the standard valuation models.

Nitron Advisors' COO, Scott Lichtman, took detailed notes on last Thursday's panel on "The State of Independent Research" at the New York Society of Security Analysts.

It was a well-attended event that covered questions ranging from how independent research firms are capturing value through new delivery models to the impact of Elliot Spitzer's global research settlement and prospects for research jobs on the buy-side and sell-side.

NYSSA notes that, 'These are the opinions of speakers at NYSSA's Career Chat on Independent Research and do not necessarily reflect the opinions of NYSSA or its members. NYSSA does not endorse or promote any of the opinions or products mentioned.'

SPEAKERS

Eric Alexander, President, Institutional Services, Wall Street Access
Michael W. Mayhew, Founder and CEO, Integrity Research Associates,LLC
Paul Spillane, President and CEO, Soleil Securities Group, Inc.
David Teten, CEO, Nitron Advisors
David Weild IV, President and CEO,The National Research Exchange
CHAIR: Richard G. Lipstein, Boyden Global Executive Search BIOGRAPHIES

 He is responsible for strategic development of the firm’s research offering, including coverage of mergers and acquisitions, energy, healthcare, and special situations.

 Previously, he served as director of marketing, and was instrumental in forging strategic relationships that helped the firm grow over the next decade.

 Prior to joining Wall Street Access, Alexander was a vice president with the public relations firm Burson Marsteller, where his clients included AT&T and American Express.


Michael W. Mayhew is founder and CEO of Integrity Research Associates, LLC, a ratings, analysis, and consulting firm for the equity research industry.

 Prior to founding his firm, he was CEO and president of Garban Information Systems, the financial information division of Garban/United News & Media.

 Previously, he was director of strategic planning and business development for Standard Poor’s Financial Information Services Group.

 Mayhew has been quoted widely by various newswires, newspapers, and industry magazines, including Reuters, Investment Dealers Digest, Institutional Investor Magazine, Bloomberg News, Forbes, The Wall Street Journal, The New York Times, Financial Times, and Business Week.

 He is a member of the Board of Directors of Investorside, the nonprofit trade organization for the independent research community, and chairs a committee of the board to establish best practices for the research industry.

 Paul Spillane, president and CEO of Soleil Securities Group, Inc., has been in the securities industry for over 25 years.

He started his career at Goldman Sachs. where he worked in fixed income, foreign exchange, commodities, futures, and options products.

 He then moved to Deutsche Bank, serving as managing director and head of global market sales for the Americas.

Spillane subsequently transferred to global equities as a senior member of the executive team responsible for building the global equities businesses.

 Most recently, he was responsible for establishing Deutsche Bank’s Global Relationship Management program.

David Teten is CEO of Nitron Advisors, a unique research firm that provides hedge funds, private equity funds, venture capital funds, and law firms with direct access to a global network of carefully selected frontline industry executives, scientists, academics, and consultants.

 David also is the coauthor of The Virtual Handshake: Opening Doors and Closing Deals Online, the first business book describing how to take full advantage of blogs, social network sites, online networks, and other "social software.

" He runs TheVirtualHandshake.com, a resource site and blog, and co-writes a monthly column for FastCompany.com.

 Teten was CEO of an executive recruiting firm that he sold to Accolo, and CEO of GoldNames, an investment bank focusing on serving the internet domain name asset class.

 He has worked with Bear Stearns’ Investment Banking division as a member of their technology/defense mergers and acquisitions team, and was a strategy consultant with Mars & Co.


David Weild IV is president and CEO of The National Research Exchange (The NRE), an innovator in products and services that support capital formation.

 The NRE provides patent-pending analytics and facilities that enable the systematic evaluation and long-term funding of research and related services.

 Weild served as vice chairman of The NASDAQ Stock Market and spent fourteen years at Prudential Securities, where he served as president of PrudentialSecurities.com, head of corporate finance, head of technology investment banking, and head of equity capital markets.

 He also chaired Prudential’s Equity New Issues Commitment Committee.

 PROGRAM DESCRIPTION The entire research industry is undergoing a seismic shift that will produce both winners and losers in the coming years.

Some of the more innovative research providers will continue to experience growth, while the total number of independent research firms is to expected to fall almost two-thirds by 2009.

 The need for good research, however, will never go away. Learn the reasons for the coming shakeout and how you can be among the success stories.

 Scott Lichtman's notes: Richard Lipstein Question: Please describe your business models for independent research. David Weild IV: We are a utility for Wall Street to get research paid for explicitly, while achieving coverage and liquidity for smaller public firms.

Coverage continues to be shed across the industry. Fewer IPOs are symptomatic of this. There were < 200 IPOS in each of last 3 years.

 Pre-bubble, there were 460 IPOs/year avg. We have 14 patents.

David Teten: We provide access to frontline industry experts who can provide deep insight into the companies and industries you are analyzing.

 There is a circle of economic agents around any company – suppliers, customers, regulatory observers-- who are in an appropriate position to provide fresh information to investors.

 We provide access to that circle.

 This means your analysts are drawing conclusions and making the buy/sell recommendations (not us), while you benefit from ready access to unique sources.

 There are three trends that drive the fast growth of our model:


1) The destruction of credibility of sell-side research.

2) Trend towards more people, including senior executives, who are managing their careers individually, without assuming they are wedded long-term to a given firm. These "corporate alumni’ are an exceptional base of knowledge.

3) A trend towards people having a public, articulated virtual identity, through personal web sites, bios and resumes online, social network sites, and software that is aggregating people’s backgrounds into a chronological whole.

I discuss these technologies in more depth in The Virtual Handshake- Opening Doors and Closing Deals Online.

We are actively seeking out consulting firms and individuals who would like to consult through our platform.

Paul Spillane, Soleil Securities. Our goal: Premier aggregator and distributor of intellectual content.

We are a registered broker dealer. We have a significant distribution platform, analysts all around the country and an agency trading desk in New York.

 Covering 320 stocks, 32 analysts, 3-5 alternative products. Analysts work when they want, get paid based on deliverables.

Incorporating Fixed income, Commodities, Equities, and commentary on data sources.

If you can think of a new idea, you can provide content in our model. We are looking for employees, firms to partner with and new sources of content.

 Michael Mayhew: Integrity is the leading provider of information assessment and evaluation on the research industry.

We publish research on the industry including a blog, web-based tools, due diligence on 436 research firms. Now adding 60 firms in Europe to the database.

 We help funds find research to add alpha, and mitigate risk in using research. Very little due diligence is typically done on hiring a research firm, especially compared to investing in a fund or fund-of-funds.

 We help funds reduce their risk in hiring a research firm.

 Eric Alexander: We offer clients an integrated service, including access to a team of leading analysts in M&A, special situations, oil and gas, utilities and agribusiness.

 We also offer clients access to a proprietary network of healthcare experts.

 Also have a trading desk – important for clients to gain a full range of service and for us to get paid appropriately.

We customize offerings for each client. Richard Lipstein Question: What are challenges facing independent research firms.

David Teten: Research has a very unusual economic model: You usually get paid well after the service is delivered, you usually don't know how much you'll get paid, and neither seller nor the purchaser knows the exact value of the service.

The value of research varies enormously from highly negative to many millions of dollars, yet it's not common to define, let alone track, the metrics to place a value/price on it.

Also, declining commissions on a per trade basis are putting pressure on the economic equation.

Michael Mayhew: 2 major trends.
1) Biggest challenge is proving value, day in and day out.

The kind of research that could be sold 20 yrs ago has changed. Today folks want trading ideas and proprietary data points.

Very large % of research firms have a tough time proving value, and probably shouldn’t be in business.

2) Getting paid is hard, even if you prove value. David Weild IV: A rough statistic: He took all research analysts, divided by (monthly) trading volume, and got 20,000 shares/analyst. If 50% is program-based, 50% of what's left is algorithm based, and therefore there's only 5,000 shares traded to pay each analyst.

 That's roughly 250 shares/day. At 5c/share that is not a lot of money to spread around, and 5c is a high figure by current trading standards.

 The business is fundamentally bankrupt at some level.

 Clients want 3 things – 1) access to management, (2) experts, (3) traditional research. People want things that no one else has.

Eric Alexander: A lot of what the industry does is a commodity.

 Some of the forms of compensation are a thing of the past.

 It’s much more entrepreneurial now.

Richard Lipstein Question: Buyside firms are decrying the lack of research but cutting back on # of research suppliers.

How did we get in this contradictory situation? David Teten: The buyside is not seeing enough compelling research from the sell-side.

 However, the number of buyside analysts is way up, which shows a commitment to proprietary sources. Michael Mayhew: Other trends are happening too.

 There will be a significant reduction in # of firms getting paid. Firms will separate research fees and execution fees.

You may only have 20 firms getting commissions, but hundreds getting research checks. Richard Lipstein Question: Paul, how does one manage a virtual corporation? Paul Spillane: Everything about the decline in research firms/getting paid is music to our ears.

This is the only industry I’ve seen that has no idea of COGS (cost of goods sold).

We love a value-driven model.

 If you can add value, clients will pay you unlimited amounts.

 So good analysts in their virtual workspace are making 2-3x what they did in a bulge-bracket environment.

"We manage by compensation."

The industry needs to get away from the lack of connection between quality and reward – casual votes on who should get what.

We have the same regulatory framework that any registered broker-dealer has, with the analysts being registered 86s or 87s.

Our good analysts work "24x7" at times because they love the work and get paid well, and other times take a break.

"It’s an absolutely fantastic time to be an analyst. The bottom is here."

The # of stocks covered by bulge-bracket firms is going lower and lower. The bottom line is here, there will be less people around, but those who are good will be making money.

 Like Nitron, we only pay an expert when they get a phone call. Eric Alexander: Research revenues might go from $3.9bn to $3.6bn, but it's still a big opportunity.

 David Weild IV: Wall St research firms are getting smart that they do get paid. Roughly 50-70% of bulge bracket revenues for an offering are for the deal, and 30% is to provide coverage, but the funds aren’t always allocated to that purpose.

It seems like Reuters and Thompson want to know who is consuming their research and cut out people who are drinking for free.

The tide is turning on getting paid. Eric Alexander: We are still committed to trading desk model. It’s hard without a desk; it's integral.

 The buyside sees their traders as integral to their team and so do we.

 AUDIENCE QUESTIONS Q to Soleil: What does it mean for an analyst to "deliver" value and get paid commensurately? Paul Spillane: There are many ways to signal how to pay: a voting mechanism, # of visits set up, commissions paid. Clients now are responsible, e.g. Via the UK's regulations, to say how research is allocated.

More hedge funds have a formal voting mechanism due to regulatory requirements.

 Checks come in with specific analyst names on them to us.

Michael Mayhew: All about producing good research.

 To one client that’s management access, to another it's industry expertise, and to another it's performance recommendations.

Issue is that if you produce me-too maintenance research, models that don’t outperform, you have to worry.

Question: What about outsourcing research to India and other places.

Eric Alexander: This question is symptomatic of how much has become commoditized. Reg FD has commoditized information.

Michael Mayhew: Couple years ago, the avg cost of wall st to cover a company was $192K – per company.

There was an absolute need to lower that cost, so moving some research oversees made a lot of sense.

But value-add of a research firm can’t be outsourced. David Weild IV: But you can create new value by leveraging offshore resource.

 It may become a necessity to have competency in offshore inputs.

Paul Spillane: The last mile is where the value is. We get 7 calls/month from Indian firms to provide us with outsourcing.

Most of those analysts don’t have 86s/87s and don’t talk to management.

 Offshores won’t complete with mainline analysts, they will focus on filtering through existing data in more conventional ways, at least for now.

 Offshore won’t be a huge threat.

 We think $8bn will be paid out, over time, in hard research.

 If you look at outsourcing initiatives in the technology world, JPM outsourced their platform to IBM in a multi-billion deal, but brought it back in-house when the deal expired.

 We’ll all experiment with it, but when cost goes up for offshore it will lose competitiveness. We used to pay $25K for an associate abroad, now its $50K.

 Richard Lipstein: One bulge analyst I know is having increasing quality issues, exacerbated by language barriers, time differences.

They didn’t see benefit anymore. Michael Mayhew: I’m concerned about long term risk. If we outsource associates, when do future senior analysts come from? Are we going to hire the offshore people and bring them here? David Teten: All of this gloom & doom is great news for Nitron.

Offshore people working off same public data further commoditizes publicly available analytics. Basic Yahoo! finance data is free.

There are so many hedge funds out there, and they're all obsessed with chasing alpha, which they can't do with the same tools as everyone else.

 (The hedge fund incubators, incidentally, remind me of the dot-com incubators we used to see, which is a sign that there is a surplus of hedge funds. 2006 is the first year when we're on track to see more hedge funds shut down than open up.)

Audience Question/Observation: In the last few years, lot of great info free on internet has become available in forms of blogs.

Incredible corporate-experience types, speaking their minds and providing insights while going after eyeballs.

They are getting paid $550K/year monetizing eyeballs (Editor's note: I know extremely few bloggers earning that type of money!).

Paul Spillane: This industry has to recognize that as a threat. The audience member asking the question has worked in tech – so she's better able to know where to find quality information.

 The insights aren’t there for (isolated) associates to make money.

 Michael Mayhew: There is a model that’s been developed over a few years, for readily available info: Research that is restricted to small # of clients (and which delivers alpha).

Hedge funds will pay lots and lots of money for restricted access, which means 30,40, or 60 clients. Hedges won’t trade off blog content because it's available to thousands/millions of people.

Also, most hedge funds don’t want to say: "if this deal blows up, I’ll tell my manager I got the info free off the internet. " Give me a break! David Teten: If I have really good info, am I giving it for free on a blog? Publicly-available information (on a blog, New York Times, etc.) is designed to be relevant to the average person.

 If you want customized analysis for your portfolio/your situation, then you typically pay the person who produced the analysis that's broadly relevant. He proves his credibility with his general analysis.

Eric Alexander: Blogs are a threat. Collaborative relationships deliver distinct ideas. You need a talented, experienced analyst with an expert network to find the alpha idea.

Blogs don’t work standalone but they are a valuable contribution.

 Paul Spillane: Most investors have an overload of info.

 We have a product to grade blog: Collective Intellect.

Using AI to sort through hundreds of millions of blogs a day to rate for accuracy.

This product is on desks of some of the largest prop trading desks in the world.

It can be a CYA, but you can’t sort through all the available info and it becomes more productive.

 Audience observation: Great bloggers are identified and filtered by word of mouth.

 Experienced people don’t read every single blog.

Paul Spillane: But imagine if you can also grade them all.

 We’re excited about the prospects.

David Weild IV: In my west coast conversations, a lot of funds are using expert networks.

 One guy I spoke with was a well respected 1990s internet analyst.

 Widely followed. He said that one key problem with Wall St research is deteriorated quality.

 Because of Reg FD, executives are uncomfortable with sharing corporate info.

 Sourcing of independent experts has become very important.

 One guy is using expert networks to do due diligence on potential portfolio co’s.

 Won’t replace need for direct access.

Audience Question: What’s the career opportunity and income oppty for sell-side analysts.

Do you see migration to buyside? What about buy/sellside relative compensation? Eric Alexander: It’s important to be part of an organization with a regulatory structure, so the analyst can focus on the work.

 There’s an opportunity to be more entrepreneurial these days.

Locked in salaries and guarantees are much less available.

Richard Lipstein: The top of the Internet bubble skewed compensation and demand for analysts.

Comp for internet analysts gone down significantly.

They used to be able to make 7-8 figures.

Compensation has bottomed out because of disappearance of guarantees and extreme salaries.

 Not easy for sell-side analyst to move to the buyside because they’re viewed as a salesperson.

 However, hedge funds hire more sellsiders, young ones, than mutual funds.

 It’s worth noting that a typical analyst will make more than 98% of the US population rather than 99.9% in the past.

 Paul Spillane: You summed it up perfectly. It’s not easy to move to the buyside.

But everyone is still paying people 6-7 figures.

A lot of doctors, lawyers, fireman who don’t get paid that – who arguably provide critical value to society.

David Teten: I saw a talk by a prominent person in the research industry, who said, "If you meet an analyst that’s been on sellside for more than 5 yrs, they’re not good at picking stocks, because if they were, they'd get a job on the buy-side."

There is increasingly a disaggregation of analyst's responsibilities. Management access is highly valued by the buy-side–but that’s a concierge service firms like ours (Nitron) do more effectively than generalist research firms.

 Richard Lipstein Question: The typical independent research firm is much smaller than bulge bracket dept.

 There have been problems, eg Overstock.com took a research firm to court for allegedly being part of a plan to devalue and short sell the stock.

 How can small firm deal with intimidation of big corporation, particularly when issuing negative research? Paul Spillane: Associate yourselves with a firm with strong compliance.

 Reputation of your employer is important to focus on when you are an analyst.

Unless you commit fraud, you are in a good position to make clear statements - your opinion is your opinion.

One analyst whose opinion dropped a stock 50% (is rumored to have) received death threats – from a retail firm! Richard Lipstein: I think it’s more an issue of small research firms can't cover legal costs to defend themselves.

 Paul Spillane: Agencies like SEC, NASDAQ won’t allow that intimidation…and the First Amendment. Eric Alexander: Be clear who the customer is.

It's not the company covered, it’s the investor.

 Paul Spillane: WSJ or NYT would love to ‘defend’ the small guy with strong opinion.

The court of public opinion doesn’t cost much. And it's great PR. David Teten: Most of time, the analyst is doing right thing.

 Owen Lamont research showed that, the more a corporation fights a critical analyst, the more likely it is later on that the analyst is correct.

Jeff Skilling said "They’re on to us," in response to a certain piece of independent research.

That's a great ad for independent research! (As Jim Chanos pointed out in a recent talk).

Audience Question: Given internet bubble, do you see another shakeout? David Weild IV:

There’s a rationalization, but other models are flourishing.

The big shoe that dropped wasn’t the bubble, it was decimalization in 2001.

 That cuts 95% of the commission flow.

 The internet brought direct transaction models and commission compression – commission went from $350 avg to 5 bucks.

David Teten: Creative destruction is a benefit, not a bug, of capitalism.

Net net, people are making a lot of money in finance.

The industry is always evolving, companies change, people move around, but the quality people do just fine.

 Michael Mayhew: For sell side research, unbundling will have a big impact.

When asst mgr has ability to select research and broker independently, that will really impact someone like Goldman Sachs.

 If they charge 4c/sh, how much is for research and how much will get they for this Question: What’s the track record of Spitzer agreement to channel $s to indie firms?

Eric Alexander: Some large firms got huge funds channeled to them.

We’re not in that space at all. I’m hopeful this is over soon, it hasn’t been effective at all.

David Teten: Spitzer uses lawsuits effectively for gubernatorial campaigns, but not necessarily in the pursuit of justice.

Someone asked a panel I participated on earlier this year "where should I invest, as a retail investor?" Look, you as a retail investor have the worst information and the worst prices.

You're much better off hiring a professional, by putting your money in a mutual fund, hedge fund, or hiring a Financial Advisor.

Spitzer agreement was a solution in search of a problem.

The retail investor will almost inevitably have inferior returns to the professional, because of the nature of the industry.

 Richard Lipstein: The Wall St. Journal said ‘you can’t legislate against greed’. David Weild IV: I’ve talked to many of the NASD regulators.

 All agreed that the Spitzer agreement has been an "absolute disaster".

 Jack Coffee, of Columbia, on their board, calls it a new form of government.

It has created a level of paralysis – 3 years left, and firms are afraid to innovate.

Every bulge bracket says behind close doors won’t pony up again.

It hasn’t expanded coverage to new names. It was a grand experiment that failed. "This is a drug."

Has failed to expand coverae.

The audience member asked what are usage statistics for the independent research that had to be posted.

 5% of retail hits are on the indie research, the rest is from the main provider.

 The only success from the agreement is focusing people on the problem – Wall St research has greater integrity today.

Teten: There is one pressing, highly important public policy goal that the Spitzer settlement achieved: Spitzer won the primary. Question: Comment on future consolidation in independent research firms.

Is pace likely to quicken? A panelist said there are over 400 firms today. Michael Mayhew: 450 firms in N. America. We certainly believe in consolidation but not across the board. Restricted providers will do quite well.

Fundamental data-based research will consolidate.

 My partner has argued that research is frankly a lifestyle business for many.

 If you have a dozen clients paying $100K each, you can have a nice business for a few analysts.

I suspect the number therefore will be unusually high, but fundamental traditional research will find it increasingly difficult to get paid.

 David Teten: Consolidation per se doesn't concern us.

I would be worried if the overall pie shrinking dramatically.

But to my knowledge, expert networks are the fastest growing sector in the research business.

 Consolidation means we buy or get bought, and there are worse things that can happen.

 Eric Alexander: For full disclosure, my business partner in the audience asked the consolidation question.

 The alternative to a lifestyle approach to making some money in research is being part of collaborative effort.

 When someone like Monsanto wants to do a deal, they can turn to one of our deal specialists.

 Richard Lipstein Question: What about the idea of a corporate rollup, e.g. how Eric Alexander got Foresight. Eric Alexander: That wasn’t an acquisition but a subset of analysts were attracted to our platform.

 David Weild IV: Question for Michael--What # of firms have > 5m revenues? Michael Mayhew: Quite small, < 10% of 450. Lot of folks with $1m revenue.

Some consolidation when firms go out of business, other when firms get bought. Question: Going back to the value of research, how is the way investment firms are compensated linked to value? In an unbundled world, mutual funds are asset-based profit-makers, not performance based, so they should worry less about costs.

Hedge funds are compensated by assets and performance, so they are looking for research value. Would mutuals prefer bundled research? Michael Mayhew: The audience member asks analysts how they judge good research.

They say, "I’ll know it when I see it." This means, many buy-side people don’t know what makes good research to them.

That only has a chance of working if they get research for free, use it, then decide later on if they liked it, but its still subjective.

David Teten: There are 3 reasons why hedge funds are desirable clients.

They have a lot of money compared to cash/overhead requirements, they don't usually have an easy way to measure the value of your unique product (compared with tools available to measure ROI if you are selling, e.g., bottled water to them), and they are paying with soft dollars, i.e., other peoples' money. I have problems with how soft dollars are used when applied too broadly, but the system works to the benefit of research firms.

Eric Alexander: It’s a lot harder for a research firm to penetrate/develop business with large mutual fund. "I’m sitting with a fire hose of info" says one large-fund portfolio manager.

 They need barriers to access, not more info. Question: What are new models on how to pay for research: Is it arbitrary or still predominantly through trades? Paul Spillane: 85-90% is still via soft dollar.

 It will take a lot longer to wean off than anyone thinks.

 If a large mutual fund company wanted to separate costs, it could be 3% of their management fee.

 For a smaller firm, its entire management fee could be allocated to research cost. Richard Lipstein Question: Last question.

For someone looking to get in the research business, what does this business mean for the up-and-coming professional? Eric Alexander: Paul Spillane and I say same thing.

Be good, and be entrepreneurial.

If you have been a salesperson, bone up on analytics.

If you are an analyst, participate in selling.

Michael Mayhew: Ample opportunities for good and great analysts.

A lot of analysts have spun off with high expectations.

Paul Spillane: If you love it and are passionate about it, there’s never been a better time.

 If you don’t love it, join a bulge bracket firm.

You get real motivated when you wake up thinking "how am I going to make money for my family?" David Teten: Be focused to add value. There is a story, true I believe, of one analyst making over 2 million covering one stock (McDonald's).

 Pick a domain you can own, then become the recognized expert in that domain. David Weild IV:

1) Being a research analyst is a wonderful thing, whether starting independent and or bulge bracket.

You learn a real discipline in a dynamic market (securities).

You can switch to private equity or corporate side. It’s a great training ground.

I’d like my kid to do this.

2) Just to mention separately, this is anniversary of 9/11.

 There is a wonderful organization on that was on 60 Minutes called Tuesday’s Children, which provides services to kids who lost parents.

Helps them get through college. Annual event at Cipriani’s 9/27.

They placed kids on take-your-child-to-work day. I’m on the board of directors.

Please consider supporting them.

"Remove yourself as much as possible and don't invest your ego in one particular date," Frost offers. "Remember that it's very easy to get carried away and imbue a profile with overly favorable qualities.

 My advice is to try to stay calm and resist being invested in one person until you've actually gotten to know them. Avoid long e-mail correspondences because they tend to heighten expectations.

" "It also takes resilience to go on a lot of dates and spend time actually arranging to meet rather than spending hours a week just searching. The people who go on a lot of dates are the people who find someone. In some sense it's a numbers game."

 New users especially should keep in mind that online dating is not in the end so fundamentally different from regular dating, adds Norton. You try to find people, you try to meet them.

 "It's the people who think it will be quite different from their regular experiences who end up being the most disappointed …. In online dating, the same sorts of people who are online are also out there offline. It can help you sort, but ultimately it takes work, effort, and a little luck."

The event below is targeted at CFOs of mid-size and larger companies (over $50M in revenues). I hope that you can join us.

 CFO Leadership Team First Alumni Gathering September 21, Stamford, CT Guest Speaker: David Teten The Virtual Handshake: Opening Doors and Closing Deals Online Join fellow CFOs of mid-size and larger companies, and learn how to accelerate your sales, recruit star employees, enhance your marketing, or just find your next job by using online networks.

David Teten will discuss blogs, social network sites, virtual communities, relationship capital management software, biography analysis software, and other new tools.

 When: September 21, 6:30 to 8:30 PM Cost: $30 including hors'deurves, cash bar

Where: Stamford, CT (location disclosed to confirmed attendees) RSVP: by September 14 to Kevin McEnery, KJMcEnery(at)aol.com, 1-203-348-4435

Who: This event is open only to members of the CFO Leadership Group. Members must have experience as CFO or Divisional CFO in an organization with at least $50M in revenues.

 A few select recruiters specializing in CFO searches will also attend. Our members have experience with companies that include Acclaim Entertainment, Altria, Arc, Associated Press, Atari, Barnes & Noble, Calvin Klein, Dover, Gartner, Georgia Pacific, Gerber Scientific, Groupe Danone, Kodak, Labatt, McCann Relationship Marketing, Nestle, Newsweek, Pepsi, Revlon, Rogers, Scholastic, Sesame Workshop, The Reader’s Digest Association, Time Warner Cable, and World Wrestling Entertainment. Nominations welcome for members.

 Why: To see old and new friends

MORE ON OUR SPEAKER When you finish David Teten’s program, you’ll know how to:

 * create a powerful professional presence online

 * attract business in online networks

 * meet more relevant clients and potential clients

 * start and promote your own blog

 * master the email deluge

 * analyze and value your community of business partners

 * manage your contact database

 * ensure privacy and safety online

 "We hosted one of David Teten’s presentations at the Euromoney 2004 Annual Hedge Fund Start-Up & Business Development  Forum. Out of 40 speakers, David tied for first place for the highest speaker rating." - Diane Higgins, Financial Markets, EuroMoney PLC

BIOGRAPHY David Teten is CEO of Nitron Advisors ( www.NitronAdvisors.com), which provides independent industry experts with consulting opportunities to hedge funds and other institutional investors.

 To participate in paid interviews with Nitron Advisors’ institutional investor clients, at no cost to you, join the Nitron Advisors Circle of Experts ( www.CircleofExperts.com ).

 David is the co-author of The Virtual Handshake: Opening Doors and Closing Deals Online ( www.TheVirtualHandshake.com ).

David was formerly CEO of an investment bank specializing in Internet domain names. He has worked with the Bear Stearns Technology investment banking group and Mars & Co strategy consulting.

The amount of Internet buzz a movie generates is a strong predictor of its box-office take. But it hardly matters whether that buzz is good or bad, according to a study by Yong Liu, an assistant professor of marketing at the Eller College of Business at the University of Arizona.

HBS Professor Andrei Hagiu is an expert on multi-sided markets, and recently interviewed me on that topic:

Market Platform Dynamics--Catalyst Conversation: Conversation with David Teten. His site requires that you submit an email address to read the article (but I should note that he doesn't actually test if the email address is functional.)

Following up on my draft post on 'Business Models for User-Generated Media', I wrote some notes on this morning's iBreakfast.

Shawn Gold, SVP, MySpace: Marketing in a Networked Culture

MySpace has 100m users projected by july

84m registered users, 2m new registered users per week (size of Houston), 48m unique visitors per month in US

2^nd most popular site for content consumption on the Internet, as defined by page views. 29000 indie film profiles. 1.8m music profiles.

#1 video viewing site

#1 referrer to Google—8.19% of Google's traffic

42% of YouTube viewing is happening on MySpace.

Goal:

MySpace will become THE full service community portal

Introduce innovative advertising solutions while being at forefront of pop culture

DNA of Myspace Generation : MySpace is their place. Where youth culture gathers to express themselves, connect with friends, and discover popular culture.

Big differentiator from competition is the way MySpace is used to discover popular culture, i.e., bands/TV shows.

All the growth is viral---they market to influencers not to audience members.

Nielsen: Myspace reaches 51% of 13-17 year olds online (which is 85% of all 13-17 year olds).

79% of the site is 18+, and 25M users who are 30+.

Why so successful:

-A user's profile is a metaphor for their room or apt.

- The Internet generation has grown up sharing their lives

- The profile is a characterization of who they are

- They want to express themselves creatively.

Children lack a 'their space'. 7-11 doesn’t let them hang out in front; the mall security guards kick them out. They're used to being in public. MySpace is a form of identity production.

Everyone takes pride in their medium. It's 'vested media' because they created it.

When people say the pages are unwieldy, just think of a teenager's room.

Social networks/blogs serve as a publishing platform for early adopters. Word of Mouth has turned into 'citizen journalism', which people trust more than traditional media.

MySpace allows brands to become living, breathing entities that consumers can interact with.

Best brand programs tie into self-expression, facilitate connections between people, or is centered around the discovery of popular culture.

87m stories in the database, and a lot of that content is professional. Every nightclub, every major Christian band, every celebrity brand, is in the database. They're now slicing the database by professional type, e.g., if you want to reach all the comedians.

Basic idea of marketing: "Tell a Friend"

Average page is visited 30 times a day. If you're in the top 8, your exposure is exponential. XMen has 3.2m friends. If you friend them, you can have top 16 friends, instead of top 8.

Core: identification and individuality. Don’t separate them---that's Geocities. Understand core needs (identification and individuality), and address their core needs: recognition, knowledge, self-expression, belonging, access, discovery, appreciation, and confidence.

We facilitate this on a social networking platform.

Next speaker----Shelly Palmer, author, Television Disrupted

Five buzzwords you can use right now. You will sound like a genius if you use these.

- Mobile video: clipcasts or streamcasts. He dislikes the term 'cellphone video', because not all mobile video (e.g., ipod video) is via a cell tower. Why does ESPN Mobile have only 2400 subscribers—because it's $30-$400/month. It's a MVNO—they own the handset and customer experience. They're $30M in the hole. All the vanity cell services will meet the same fate. ESPN invested a lot of money into the technology. Behaviors change glacially. In the last century, fastest time to market for an electronic tool was Xerox machine. It killed carbon paper extremely quickly. Instantly successful. Normally new tools take 5-100 years---fax machine took 100 years.

- IPTV—Internet Protocol Television

- Broadband Video—call it 'IP Video'. 'Streaming Video' is a silly term.

- Podcasting---he hates this word. A use of the RSS spec---it has nothing to do with IPods or broadcasting. Coined by Adam Curry. Based on XML spec. Blogging is the most popular use of RSS.

- Mesh Networks—each node connects or two or more nodes. No central server. Self-healing. Hard to shut down. Napster was a file-sharing network, therefore easy to shut down. If they're wireless they're a swarm. BitTorrent is best example of a mesh network. Cant be used in real-time streaming.

Oct. 12, 2005: the date that Steve Jobs and Eiger unilaterally decided to put TV shows on ipod—Desperate HouseWives. Very controversial with affiliates. The day the TV world changed.

"Contact is King!"

Different words for all of you in the audience:

Cable companies call customers 'subscribers'

Phone companies call them 'access lines'

TV cos. Call them 'Viewers'

Computer cos. Call them 'users'

2/17/2009: all analog TV spectrum will go digital. Your old analog TV won't work. The good news: all the old analog frequencies will be reclaimed by the gov't and auctioned off. Most likely it will be used to create a large broadband cloud—WiMAX? No longer will you use a little local wifi network—you'll use the large broadband cloud. Hermistown, OR has largest broadband cloud in America: 700 sq miles, 5 megabits. It's like living in Star Trek. Cant handle lots of streaming video/VOIP, but it's enough for email. Intel is banking heavily on WiMAX.

Every cell phone call ends with 'hello', instead of 'goodbye', because of connectivity problems

Q&A

Shawn: They review every photo/video uploaded to myspace

Any member can report objectionable content

25000 volunteers police school site

Algorithms that search for underage kids---e.g., mentioning 12 candles on a birthday cake. They kick off 5000 underage kids/day.

Myspace is the size of two Californias—and the crime on the site is equivalent to 5 blocks in NYC

Tomorrow morning I'll be speaking at http://ibreakfast.com/ on Business Models in User Generated Media. I have attached a DRAFT of my talk below. I'd be grateful for any feedback readers might have. In particular, I'm trying to get rough revenue estimates for each of the categories below.

Business Models for User Generated Media (UGM)

Accolo acquires Teten Executive Recruiting; combined firm is innovator in using social software and online networks for recruiting.

Larkspur, CA – June 22, 2006 – Accolo, Inc. today announced the acquisition of Teten Executive Recruiting, a retained executive search firm that specializes in using online networks to reach and recruit the most qualified candidates. The firm focuses on the hedge fund, private equity, and strategy consulting industries. Founder and author David Teten joins Accolo’s Advisory Board.

David Teten said, "I first discovered Accolo ( www.Accolo.com) in my research for my book about social software and online networks, became a client, and then created a partnership with them. When I learned how they had re-engineered the recruiting process to incorporate the power of online networks, I thought: this is the way recruiting should be. I think that the traditional recruiting model is broken and painfully inefficient, and I am excited to have the privilege of working with a team that understands the logical way that companies should manage the process of finding great people."

In this cash and stock deal, Accolo gains access to Teten Executive Recruiting ( www.TetenCo.com) clients such as American Real Estate Partners, Net2Phone, OfficeTiger, The Trium Group, Zacks Investment Research, and IDT Entertainment. Teten Executive Recruiting is known as a thought leader in using blogs, listservs, online communities, social network software, relationship capital management software, and biography analysis software for recruiting. Accolo has acquired the proprietary tools that Teten Executive Recruiting has developed.

John Younger, CEO of Accolo, commented, "We were excited about Teten Executive Recruiting's list of lighthouse clients and its deep expertise in social software and online networks. This acquisition is the logical culmination of a mutually beneficial relationship. The company is providing us with new strategies to continue raising the bar, as well as new clients to take advantage of our growing senior executive search capabilities. Just in the past year, we have recruited CIOs, CEOs, CFOs, and Vice Presidents for companies with revenues of $5 million to $1.5 billion."

Jon Weber, President of American Real Estate Partners (NYSE: ACP), commented, "Finding top talent quickly and efficiently is a high priority for us. We’ve been pleased with the way Teten Executive Recruiting and Accolo combine their talents to save us time and money to hire the best people. Their solution has worked well for several of our companies”

Martin Babinec, CEO of TriNet ( www.TriNet.com ), emphasized, “TriNet’s long association with Accolo has been borne out of a deep faith and confidence in the company’s innovative approach to sourcing and recruiting. The fact that Accolo’s team continues to seek out partners that will expand and deepen its already impressive service delivery is proof that the company won’t rest on its laurels. TriNet is enthusiastic about Accolo’s latest milestone and looks forward to its future successes.”

David Teten, founder of Teten Executive Recruiting, is coauthor of the first business book on these strategies and technologies, The Virtual Handshake: Opening Doors and Closing Deals Online. He runs a business resource guide and blog about social software and online networks at www.TheVirtualHandshake.com . David also co-writes a monthly column about online networks for www.FastCompany.com, and was recently honored as a "Future HR Leader" by Human Capital magazine for his innovative use of online networks. David is a member of the Advisory Board of the Word of Mouth Marketing Association (www.Womma.org), which is also an Accolo client.

David Teten will continue in his current role as CEO of Nitron Advisors, LLC (www.NitronAdvisors.com ). Nitron Advisors provides hedge funds, venture capitalists, other institutional investors, and law firms with direct insight from a broad network of senior industry experts, located at www.CircleofExperts.com.

About Accolo

Accolo has built proprietary, patented software and processes that automate roughly 80% of the recruiting process. Accolo leverages this toolkit to provide Recruitment Process Outsourcing services, becoming part of a company's internal recruitment function. Accolo's unique application of the “art” of recruiting within a highly automated framework, along with a network of over 300,000 past and present candidates, delivers quantifiable improvements in recruiting quality, efficiency and cost. Our clients meet the top performer they will hire in an average of 13 days. The average company spends 15.9% of an employee's salary on recruiting; Accolo clients spend less than 9%.

Accolo is profitable and revenues more than doubled last year. The company is the HRO World 2005 Recruitment Process Outsourcer of the Year and a founding member of the Recruitment Process Outsourcing Association (www.RPOAssociation.org). The Company was founded in 2000 and its investors include Vedior (Amsterdam: VDR, www.Vedior.com ) and TriNet ( www.TriNet.com ). Accolo works with such leading customers as JDS Uniphase, Blue Shield of California, Starmine, CMP United Business Media, ValueClick, Verity, and PRNewsWire. For more information, visit www.Accolo.com.