Actually, It's Rupert's Third Try

Rupert Murdoch, the man behind News Corporation, has been both praised and ridiculed in the press for propelling his media empire onto the Internet with the acquisition of MySpace. Newsweek called it "Murdoch's New Groove" and the Techdirt headline mockingly shouted "All Hail Lord Murdoch of the Internet" as if to say he just discovered the Internet, and he's already declared himself king.

Regardless of whether you think News Corp's recent MySpace purchase was brilliant or idiotic, you have to hand it to Rupert Murdoch for his persistence. This is at least his third attempt to figure out what a media company should do online.

He was among the very earliest online pioneers with his 1994 purchase of Delphi Internet Services. That foray did not end well (Delphi eventually faded into obscurity), but Murdoch was obviously paying careful attention to the Internet before most of us even had an email address.

That first failure did not deter him. In early 2000, he purchased a significant equity stake in UpMyStreet, which is still one of the most clever local search sites online (unfortunately, it only works in the United Kingdom). UpMyStreet got caught by the trappings of the bubble and was out of cash by 2003. A cash-flow generating young upstart called USwitch.com acquired the assets and has operated UpMyStreet profitably ever since. The US media giant Scripps took notice and bought Uswitch for $366 million last week. Maybe Murdoch was, perhaps, just a bit too early.

Much more recently, News Corp. ventured back online with the purchase of Scout, a collection of online and offline local sports media properties, and MySpace. Many believe MySpace will fade just as quickly as it ascended from an idea to a top-10 Internet property. Though it is unclear whether Murdoch will ultimately regret his recent purchases, it is crystal clear that he has been thinking about and exploring Internet media for quite some time.

To Yahoo or Not to Yahoo

I use Yahoo every day. It is my Firefox homepage and accounts for more of my web traffic than does any other site on the Internet. I'm clearly not alone. According to this Alexa chart, Yahoo serves almost 3x as many pages as Google.

Seven years ago, I invested the time to customize a My Yahoo page and have incrementally added quite a bit to it since then. It has become my primary RSS aggregator, my sports and finance ticker and my first source of news. (I would even use it for web searches, but for some idiotic reason, the folks at Yahoo have not programmed the page to load with the search box in focus; as long as I have to make an extra click, I might as well click in Firefox's Google box.)

In a piece for Fortune last week, David Kirkpatrick warns Wall Street not to "stare so hard at Google you miss Yahoo." He highlights Yahoo's relatively cheap P/E ratio of 24x (including a bunch of one-time gains last year including the sale of some Google stock) when compared with Google's 67x . He argues that Yahoo is catching up to Google in terms of search quality and has made some smart moves to capitalize on social networking with its Flickr and Delicious acquisitions. He believes Yahoo will soon be considered Google's peer.

My hedge fund friend thinks otherwise. He questions Yahoo's future relevance entirely. His argument goes something like this: AOL was "stage one" of the Internet -- consumers did not even know how to get online in the early days, and AOL's sheltered dial-up service made it accessible.

Yahoo is stage two of my friend's "training wheels for the Internet" theory. As everyone learned to get online, they needed a place to go that conveniently aggregated their media content and introduced new services. Yahoo served that purpose.

In stage three, however, as consumers finally comprehend and master features like bookmarking and RSS aggregating, will Yahoo still have a purpose? Though I'm currently a devoted Yahoo user, I tend to agree with my hedge fund friend. This Alexa graph supports his theory:
In terms of reach, Yahoo is falling behind. The number of consumers relying on Yahoo the way I do is not growing. Google has overtaken Yahoo as the primary Internet home page, and as users like me find superior best-of-breed alternatives to replace the components of their My Yahoo pages, I suspect the flat blue line in the graph will trend downward.

A Helping of my Yelping

In this blog, I have focused on topics related to areas I think are ripe with innovation and, therefore, present fertile ground for venture investing. And I have rambled on about miscellaneous gadgets, technologies and anecdotes that have captured my imagination (or at least my attention). I deliberately shied away from referring to my Bessemer investments to prevent this from becoming a shameless promotional tool. I included the simple link to my investments in the right-hand column and left it at that.

Until now!

If you haven't already explored Yelp, now would be a good time to check it out. If you wait much longer, you'll qualify for luddite status, because the rest of the Internet population will have discovered it before you. This is what one might call a blog brag, but here is Alexa's summary of Yelp's recent traffic growth:
For investors, few things in life are more pleasing than graphs that go up and to the right.

So, why did I invest in Yelp, and what is it?

My investment in Yelp was an outgrowth of my interest in community-oriented, user-generated content, but I'll blog more about that later. Yelp solves what I call "the Citysearch problem." I used to love Citysearch. It showcased what other people thought about everything local -- stores, restaurants, dentists, auto mechanics, etc. But over time it became virtually impossible to find a negative review about anything. All the content read like it had been written by a close relative of the store owner.

Enter Yelp. Yelp reveals who is behind the opinions. It lets you determine whether you share the same sensibilities as each reviewer. And then you can discover other local establishments you otherwise might never have found. Instinctively, we all consult friends for referrals when we're in need of a new doctor, the right restaurant for a special date, or a trustworthy mechanic. Yelp adds the power and scale of the Internet to these word-of-mouth referrals.

Yelp is also trying to become a verb. To Yelp about something is to share one's opinions. Mine accumulate at jeremyl.yelp.com. I have also added a helping of my Yelping to the right-hand column of this blog. Yelp's nifty Maptastic feature plots my reviews on a Google map. You can tell I spend most of my time bouncing between San Francisco and New York.

Yelp's talented team managed to incorporate the user interface je ne seis quoi which makes some sites really slick and fun to use. When you sign up, click Member Search near the top right of the page to search for me and add me as a friend.