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.

TechCrunch also wrote about Obama's plan to host fireside chats on YouTube, reminding me of FDR's fireside chats during another challenging time for our nation.

We live in a very historic time, and I'm trying to soak it all up to learn for the long-term.

Update 11/17: Just noticed Francois Gossieaux's post on the subject of cause marketing in the Obama campaign in his Facebook status update.  A good read.  Let's hope that Obama leverages the Millennials for civic causes, given his social momentum.  BTW, Francois does some good interviews, so it is worth following his blog.

Update 11/19: Twittermaven writes about Obama's success on Twitter being copied by the G7.

But recently Second Life is taking a beating.  Check out these recent articles in Time and Wired.  Even though many corporations have rushed in to grab their own virtual real estate, it turns out that not that many people are there to shop.  They are primarily there to gamble and have sex, and this shouldn't be surprising.  Many of the first businesses on the Internet were about gambling and sex.  It's the early-adopter syndrome in a medium that let's you hide your real identity and pretend to be someone else.

To be clear, I am bullish on the 3D-Web long-term.  There is no doubt that as virtual reality becomes more real and accessible to the masses, as opposed to the clunky and odd experience of Second Life today, virtual shopping will take off.  When Internet Explorer and Firefox embed 3D-Web browsers into their 2D-browsers, that may mark the tipping point.  I am also confident that this is going to take many years – at least as counted in "Internet time".  In other words, I'm talking about 3-5 years.

The 3D-Web will provide a more tactile experience than today's Web, and online shopping will blossom.  Our company has shown the potential of a more tactile experience – customer reviews allow peers to "touch and feel" a product sold online, and sales significantly increase with a corresponding reduction in returns (as customers expectations are set by each other, the element of negative surprise is reduced).  Feel free to ask us about our over 20 case studies to learn more.

Until then, I'll be watching Second Life to see how it evolves.  But I don't expect much in the near-term, to be frank.  Once a medium is hyped to the extreme and then has a counterbalancing crash in popularity, it takes years to recover.  I'm not sure that Second Life will get a second life – the word of mouth is already too negative and the community is tainted.  But there will be many 3D-Web efforts to follow…

Update 9/8:
TechCrunch reports that ICANN's CEO, Paul Twomey, keynotes at a conference with the message that virtual worlds are the future of global commerce.  William Gibson, one of my favorite authors and the inventor of the word and concept of "cyberspace", would be proud.

I also wrote about how Netflix would eventually launch digital streaming of movies, which would change the game yet again.  That would take away the only serious deficiency Netflix has versus Blockbuster – again, the immediacy of movie delivery.  What I didn't imagine is that it would happen so quickly.  The Associated Press had a great story on Netflix's new "Watch Now" feature yesterday.  One thousand movies and TV shows are available to 250,000 subscribers (for free) and they will be rolling this out to an additional 250,000 each week through June.  And Netflix is spending big money on this – $40 million to cover the licensing and overhead costs, which will cost them greatly at their current operating profit of $17 million per quarter (compared to Blockbuster's $1.9 million).  There is a lot of speculation by individual investors about the two giants battling it out, and a great deal of trading volume. 

I have to wonder if Netflix made this move not just because of Blockbuster but based on Apple's recent announcement of the Apple TV.  Apple has been a huge catalyst for digital music downloads due to the viral success of the iPod.  If Apple TV is executed well, it will become a similar catalyst for digital movie downloads, and Netflix will be well positioned versus Blockbuster.  Netflix's recent move is a difficult one for Blockbuster for copy, but Apple's iTunes may be the real competitor.

There are many word-of-mouth lessons to be learned in watching these two battle it out:

• Netflix capitalized on the negative word-of-mouth that Blockbuster had generated due to its "bad profits" – the late fees that we all grew to hate; Netflix's campaign launch was "the end of late fees" (all they really needed to say due to the bad profits doing most of the talking for them); Netflix pioneers many "sticky" social networking and community features along the way, including ratings and reviews and great collaborative filtering.
• It takes Blockbuster no less than four and a half years (during which Netflix's value grows eight-fold) to battle back due to the inertia caused by them being a franchise and not wanting to kill their most lucrative profit source (late fees); Blockbuster's campaign slogan for "Total Access" is "never be without a movie".
• It takes Netflix only four months to launch "Watch Now" and aggressively start rolling it out to (presumably) its best customers first to stop them from leaving to go to Blockbuster (or, alternatively, movie download sites like Amazon.com's Unbox, CinemaNow, Movielink, or iTunes once Apple TV is launched).

I look forward to seeing how the rest of this movie plays out.

And speaking of online video streaming, we are proud to launch online video upload for customer reviews.  Many of our clients will be launching video-enabled reviews over the coming months.

Update 1/25:
Netflix reports a very solid quarter with a record-low churn rate and 654,000 new subscribers (for a total of 6.32 million).  However, Blockbuster is projecting that it will be at 4 million subscribers by the end of 2007 (Netflix is projecting between 8-8.4 million by the end of 2007).  The battle rages on.

Well, the answer to that question is something I have been thinking about ever since launching Bazaarvoice with Brant. Why do people take the time to write reviews? [We will announce next week that we served over 19 million reviews on Cyber Monday!] Why do people take the time (like I did this morning) to vote on community photos for JPG Magazine? Why do people take the time to label images Google has crawled? [Google's top contributor, "wordgirl", has labeled 1,335,500 images since they launched this only three months ago - that is a staggering 14,839 images per day since launch!]

The answer is actually more complex than you may think. It is a combination of ego, social connection, and good karma. Let me explain:

1. Ego – At Bazaarvoice, we know that a reviewer comes back to our client's site three times, on average, after submitting a review to see if it has posted yet. When people take the time to share their opinion, they want to know the world heard it. This fact alone gives our clients three opportunities to resell a customer. In a recent report, Patti Freeman-Evans researched these reviewers.

2. Social connection – Why do you share your favorite movie with an acquaintance? Do you care if they watch it? Why do we talk about our favorite music? The answer is linked to human nature. We all care about connecting with each other as humans. This is what drives the creation of culture.

3. Good karma – A universal truth is that if you help someone, it makes you feel good. When reviewers help each other shop, it saves time. Saving time is one of the most important things we can help each other do, especially in the manic, multitasking world we live in today.

Now, if you apply these three elements to JPG Magazine, it all begins to make sense.

Obviously, we are thinking about the power of photos in customer-generated content at Bazaarvoice. A while back, we added Photo Reviews to our feature set. Wayne blogged about this recently. If you think about the three elements above, photos are a very strong component. Experts believe that the advent of the digital camera is one of the keys to why MySpace took off versus its predecessors (Geocities, etc).

How should you leverage photo reviews? With contests and multichannel recognition. Don't just run a contest for a gift certificate give-away for customers that write a review and include a photo, post the winning photo on your home page! Use it in an email campaign. Use it in a circular. Use it in an in-store display. If your community of customers sees that all three elements – ego, social connection, and good karma – are maximized by you, then it will spark customer participation unlike anything you have seen before. Threadless' entire business model is based on this, and I think it is a brilliant application of the three.

For fun, here is a photo we recently moderated that you won't see on one of our client's site because it came from a rejected review. Alas, it added no obvious value, there was no text review associated with it, and I think this person was just bored (they were thinking about element #1 above only – ego). But, it does grab your attention!