Mike Maples, Jr. is the managing partner of Maples Investments, and was recently named as one of "8 Rising VC Stars" by Fortune Magazine for his investments in business and consumer technology companies. His background spans a variety of markets including consumer technology, small business, and the enterprise, and he has led various functions in product development, marketing, business development, and corporate strategy. Mike co-founded Motive and was responsible for worldwide product marketing at Tivoli. Now as an investor, he is behind investments such as Twitter, Digg, Spiceworks, Chegg, IMVU, and Aggregate Knowledge. See his investments here.

Mike shared some of his thoughts on joining Bazaarvoice as an investor and advisor, as well as his investment strategy and perspectives on the market:

Why did you invest in us when some investors are cautious of the “Web 2.0” space?  TechCrunch recently said that Web 2.0 is a bankrupt term.

I suppose it's more accurate to consider the question in reverse.  I've been looking for the opportunity to invest in Bazaarvoice for quite some time and I am thrilled to be *permitted* to invest. I guess persistence does pay off sometimes!

In terms of the market space, and all of the talk of web 2.0, in my view the company's success speaks for itself.  It's customers read like a who's-who of online commerce providers and the company has dared to be new and different in an environment characterized by a lot of me-too companies.  It has also discovered a very efficient business model that can reach scale without raising a lot of money.

What trends do you see in the marketplace that support the growth for our type of service?

The first generation of companies in the social web understood that user-generated content would be important for value creation and many of the companies I invested in earlier were the first to jump on this.  In my opinion, Bazaarvoice is the first company to marry user-generated content with user-generated *commerce*. Combining these two is very powerful because you have the architecture of participation characterized by communities, combined with a very straightforward and efficient way to monetize.

I believe that there will be several very interesting user-generated commerce plays (especially since eBay hasn't moved quickly enough in recent years) and I think Bazaarvoice is the first in this new wave just as companies like Facebook, digg, and Twitter were pioneers of the user-generated content trend.

The other trend that is powerful is the shift from traditional "old media" style mass-marketing to peer-to-peer marketing enabled by relationships on the Internet.  Bazaarvoice is a leader in leveraging this and I am also working with 750 Industries, who plays firmly into this trend as well.

How does this investment align with your priorities and what you want to invest in?

At a high level, I believe that about 15 startups per year will set themselves apart in a fundamental way from the over 8,000 that will be funded.  If I had to reduce my strategy to one sentence, it would be "Find as many of the 15 as you can every year."

Finding the 15 out of the 8,000 is a lot easier said than done!  My approach is to invest in companies that have a visionary founding team, a huge potential market, a fundamental advantage backed up with a network effect, modest capital requirements, and a unique value proposition for customers. I believe that Bazaarvoice has been a superperformer in these areas for some time.

As an investor in Digg, Twitter, and now Bazaarvoice, where do you see the “social space” going in the next five years?

The trends in technology innovation have switched from enterprise trickling down to consumer innovations scaling up.  The bellweather companies are now companies like LinkedIn, digg, Bazaarvoice, Twitter, and Facebook and they are the companies to watch to get a feel for what will happen with business solutions in the future.  There will be new types of companies in the business software and services arena that apply IT consumerization to solve problems that have in the past been solved by expensive and hard-to-use enterprise software.  Some of the companies I work with are already demonstrating this, such as Solarwinds, Spiceworks, Demandforce, Egnyte, and Hyper9.   Each of these firms leverage network effects, highly appealing user experiences, communities, and consumer internet sales and marketing methods to build their products and their businesses with great efficiency.

Five years from now the trend toward IT consumerization will be very pervasive and will impact small businesses and enterprises in a very fundmental way.  Traditional enterprise software companies will feel that this is very disruptive but the users of technology will be the big winners.

1. Many in our industry can remember NetPerceptions and their early contributions to the personalization and recommendations space. But that was over 10 years ago!  In a nutshell, what big changes have occurred since then to alter the landscape of this space, now called “Discovery”?

The single biggest contributor to making the Discovery category happen was the shift in focus from the algorithm to the experience. Discovery is all about driving relevant experience in context to what people are reading, viewing and buying. It doesn’t matter what algorithm you use if the consumer doesn’t like what they see.  This requires an almost algorithm agnostic approach to placing the right content and products in front of customers. Pick the best approach to drive the best result.

The second big shift happened in the ability to cost effectively manage massive volumes of information. The volume of data required to do discovery is staggering. You have to literally process billions of pieces of data, predict exactly the right content that people want to see based on what millions of others have done – and deliver it in milliseconds on a web page, through emails or into other channels like advertising.

The third big difference is ease of deployment. Ten years ago it was all enterprise software and compatibility questions about your content management system. Web 2.0 principles eliminate this huge drag on the sales and deployment time.

We have definitely learned a lot of great insights on how the space evolved, what worked, what didn’t from the founders of companies like Net Perceptions and Firefly. We took that all into account when we were building out our discovery network.

2. Aggregate Knowledge’s offering is unique in that it creates content-centric relationships between merchants (who want your solution to drive greater conversion on their sites) and publishers (who want to monetize their content and traffic through high-performing advertising).  Why is this relationship so essential to your business model?

If you really want to pique somebody’s interest to buy or view something, you need to show them content relevant to their interests. People want to read articles, view videos, and buy products based on what they are interested in at that moment in time, and that is relevant to what is happening in the world right now. And “right now” is very important for relevance. We provide Discovery on some of the world’s largest newspaper websites. You can’t wait until the weekend to figure out the matching stories. You only have a few seconds and that’s what Aggregate Knowledge delivers.

In so doing, we connect the merchants, retailers and publishers in our network. We understand the patterns and connections between the products, articles, blogs, videos, photos, etc. between retailers and publishers in our network sites. By understanding these connections, we can place highly relevant and targeted products and content to consumers visiting sites in our network. When people see something that is relevant to them, they buy more, read more and come back for more. This is the foundation to our business model.

3. Successful online brands are increasingly savvy about prioritizing their technology investments based on conversion impact, ROI, payback, etc.  What can companies expect from their investment in a solution like Aggregate Knowledge’s?

One of the best things about web services is that there is very little upfront time required to get started and no upfront license fees. This immediately focuses the conversation on providing the most engaging experience for our customer’s consumers. Once you drive a more engaging and relevant discovery experience on your site and through your marketing and sales channels, you can see substantial lift in sales, click through rates, click to purchase conversion, time on site, etc. We know it starts with creating a great experience. There is nothing more powerful than reading an article on a site about wine collecting and then seeing all of the related products that have been purchased by people who read that same article. That experience alone can drive sales, longer time on site, and return visits to both sites. This leads to a two fold win: driving the business metrics of our customers as well as delighting their consumers with a satisfying experience.

4. Can you share a few examples of brands/sites that are really delivering on the promise of personalized content, products, and offers along with great user experience of those things?

Delightful Deliveries is a great example of how discovery works. Delightful Deliveries is the leading site for gourmet gifts and gift baskets. People go to their site for gifts of all occasions including birthdays, baby gifts, back to school, holidays, and seasonal gifts. They are using our discovery offerings to literally emulate how people naturally shop for gifts. With every click on one of their gifts, their customers see related gift options based on what others have viewed or purchased. This is important because many times you don’t know what you are looking for when buying that perfect gift. Now their customers are leading each other to their great gift finds. This is also a great example of the power of user-driven merchandizing. What really determines if the ‘beer of the month’ club is relevant to Father’s day or summer time? In this case, Delightful Deliveries customers’ help determine what the most relevant gifts are for different occasions, seasons, and holidays.

In addition to our customers, there are certainly other companies doing this well. For example Facebook. As you may know, prior to starting Aggregate Knowledge I was a founder of Tribe.net, one of the first social networks. Many lessons learned from social networking are being applied at Aggregate Knowledge. Facebook is a company that is winning by driving a highly relevant experience for their members. They give you all the things you need to run your online life on Facebook. Every tool and application on Facebook helps make it easier to connect and communicate with friends and your network. We are excited to see how this translates to their new advertising service, as we are doing very similar things with content.

5. Follow-on question: For many years, Amazon.com has been the industry model for both community functionality (ratings & reviews) and personalization.  Do they still hold that distinction?

They certainly helped validate the business value of user-driven reviews and cross-selling through recommendations. I would say that this still is very important, but the new opportunity lies in driving this beyond your website and through all sales and marketing channels.

Doing this as web service for all retailers is also a big distinction. It’s certainly one of the reasons Aggregate Knowledge and Bazaarvoice partnered. By providing reviews, recommendations, discovery, and user generated content our joint customers get the best of all worlds.

6. Your solution has very clear multi-channel value and utility.  Can you share any thoughts on your multi-channel strategy and future offerings targeted to the offline world?  What requirements should multi-channel retailers have of an online discovery solution that could be leveraged cross-channel?

It’s only discovery if you are driving relevant product and content to consumers through all marketing, sales and communication channels. Basically touch the consumer in all the places they touch your business. We consider this the ticket to the dance to work with retailers, as they are all working to drive the same experiences on their site, through their emails, in their advertising and affiliate promotions. In fact, many of our conversations start with companies wanting to automatically deliver product and content placements into their emails. We are initially focused on priority channels such as our customer’s web sites, emails and affiliate promotions and ads. We are also working on some big plans for RSS, mobile, and point of sale. We call this strategy “Discovery Everywhere” and you will be hearing a great deal more about it in 2008.

7. Aggregate Knowledge and Bazaarvoice are partners and share several successful clients.  How do you think customer generated content, such as ratings & reviews, and other social media complements your offering?

Customer generated rating and reviews are all part of the discovery experience and fit hand and glove with our services. Ratings and reviews are instrumental to helping customers reach a decision about what products they want to buy. Our goal is to deliver the most relevant products in front of customers based on what others are doing. Bazaarvoice tells them what they are saying!

He also knows a thing or two about word-of-mouth marketing.  Outside of the fact that he has made many investments that have to do with the subject, you may remember that Half.com bought the naming rights to a city in Oregon and renamed it Half.com.  This was a seemingly silly PR stunt (as I remember how the media initially reported the story at the time), but it paid off in spades.  Read Mark Hughes bio (a past speaker at a Word of Mouth Marketing Association conference) and you'll see what I mean.

1. In December, Time Magazine announced that their “Person of the Year” is “you”.  As in the “prosumer”, or consumer-turned-producer.  Do you agree that the power of the “crowd” was the biggest trend of 2006?

Yes.  I think we’re seeing a major shift in the online value chain.  The initial killer application of the Internet was email (one-to-one), followed by websites (one-to-many).  We’re now seeing the creation of a whole class of tools that easily allow people to create, organize and publicize content (many-to-many).  With so much content being put online every day, the big challenge (and opportunity) is to find ways to help people discover the stuff that is relevant to them.  Leveraging the “wisdom of crowds” to intelligently filter/recommend content is a very large and meaningful opportunity.  

Other than Bazaarvoice (of course), other “social media” companies in our portfolio include:

VideoEgg has built a very powerful distributed video network – and currently power the user-generated video of 5 of the top 20 social networks (AOL, Bebo, Hi5, Tagged, and MyYearbook).

StumbleUpon has developed an innovative (and addicting) way to harness the wisdom of crowds for website discovery.

Aggregate Knowledge uses the behavior of previous visitors to a web page to automatically generate product and content recommendations.

Wikia was founded by Jimmy Wales, the founder of Wikipedia.  The company leverages people's innate need to create, share, and contribute to the subject areas that they are most passionate about.

3. How do you think consumer-generated content will impact the world of advertising?

I see it having an impact in a couple of ways.  First, advertising goes where the eyeballs are.  Consumers are spending far more time consuming consumer-generated content so over time advertising budgets will increasingly move towards that space.  Second, it increasingly allows consumers to participate in the advertising process itself.  The traditional one-way advertising broadcast model is now evolving towards more of a dialog between advertisers and consumers.  Forward thinking advertisers are using the collective intelligence and creativity of their consumers to help them craft their messages and even create their advertising.  This will result in advertising that is much more personal and relevant.

4. Do you think Google overpaid for YouTube?

No.  With its massive user base and powerful community, YouTube has clearly emerged as the leader in the online video sharing space.  With online video advertising set to exceed $1BB by the end of next year, and Google's ability to extract the most value out of any given online inventory, the acquisition seems like a very savvy move on Google's part.  This is especially true when you think about the fact that we are only beginning to see the potential of video on the Web, and the opportunities that lie ahead in this space.

5. Given your experience at Half.com, what advice would you give our clients in leveraging their consumer-generated content?

I think it's important to understand the impact that consumer-generated content such as ratings and reviews can have on a business.  In addition to allowing your consumers to communicate with each other, they also allow online merchants to begin tapping into the wisdom inherent in their current consumer base, and leverage that to create a better shopping experience for everyone who comes after them.  Companies can no longer afford to not participate in the dialog that their customers are having about them and the products/service that they provide.

6. What is the future of consumer-generated content?  Where does all of this lead us 5 years from now?  10 years?

Consumers today are more empowered than ever. It is now cheaper and easier than ever to create content, share your opinion, and distribute it over the Web. While this will inevitably create an overabundance of content, it will make finding the content that is most relevant to you increasingly difficult.  Over time I think there will be less reliance on traditional “editors” (e.g. newspapers) and “packagers” (e.g. music labels, publishers and studios) and more reliance on automated discovery tools that harness the "implicit web" to allow people to find the content that is most interesting to them.

7. What do you think the biggest trend of 2007 will be?

Online video has reached a tipping point. Given the amount of innovation, new developments, and widespread consumer adoption in this space, I think video will continue to be the biggest trend of 2007.

I'm sure Josh would love to hear your comments, so please write in.