WashingtonVC Targets Social Media


Eric Litman is a long-time Washington area technology guy who on his blog calls himself an "Internet entrepreneur and evangelist." Litman was one of four founders of a well-known local Internet development company in the 1990s called Proxicom. Using proceeds from selling that company and other ventures, he is now running a technology investment firm out of Rockville called WashingtonVC. His vision for the future of technology sounds quite sweeping:

"There's the perception that the Internet is done in terms of innovation," he says. "We're still at the very beginning in terms of human-computer interaction models in terms of opportunities."

Say again?

"People today sit in front of a computer typing on an absolutely bizarre keyboard layout that was traditionally designed to prevent people from typing too quickly, so they wouldn't jam the typewriter. We use a device that causes repetitive stress syndrome called the mouse."


Eric Litman

He continues:

"It's going to take 10, 15, 20 years to say who's going to win. We know it's going to look nothing like a QWERTY keyboard, a mouse at our side and an Internet Explorer version 30."

So WashingtonVC is investing in disruptive technologies that will change the future of technology, right?

Not exactly.

WashingtonVC, a little more than a year old, is investing in many basic technology companies - many of them seemingly straight out of the late 1990s. To some degree they don't even touch on the current Web craze for social media and Web applications.

As one of his top investments, Litman touts DialAGeek, a remote technical support solution that he says can help consumers and small and medium size businesses get computer support at prices far below competitors, based in Rockville. Other examples of companies in WashingtonVC's portfolio include a Utah company called Search Engine Optimization, for getting your company high on the list of Google results; BrowserMedia, a Web development and Web design agency in Bethesda; another Bethesda firm called HappyBirthday.com, a site for celebrating birthdays; and Phone.com, a Boston-based virtual phone service.

Asked to unravel the seeming contradiction between his vision for the future of technology and his investment decisions, Litman explains, "There are still many fundamentals around the technology that are underserved."

(One might guess that another reason for those investment choices: Litman's partner at WashingtonVC, Mike Mann, previously founded a company called BuyDomains, and many of WashingtonVC's investments have top-of-the-line domain names that are virtually impossible to get today.)

WashingtonVC's latest play is a company it created and funded called Aux Interactive (pronounced "Ox.") Aux, with just a couple of employees so far, is WashingtonVC's top company directly engaging the social media space. The company's goal is to help customers--businesses--develop strategies for social media. That could mean building applications that work within social networks like Facebook--in order to bolster a brand or sell a product--or even applications for internal corporate social networks.

By no means is Aux the first interactive agency. There have been countless such agencies, many of them resting in peace. But Litman, who is searching for a chief executive for Aux, believes the company will triumph because it has developed proprietary tools for assessing the value of social media for companies. (He wouldn't share the approach, making it hard to know how distinct the approach is.)

"Social media for any new technology requires some analysis of the metrics you use to judge the success," Litman said. He added the future of social media applications will build on what's available now -- simple games you play against your friends, book recommendation services and other distractions. For example, LinkedIn, the social network geared toward professionals, will eventually allow outsiders to build applications for it, and when it does, enterprise-oriented software companies will want to - to recruit employees, to find customers, to sell services.

WashingtonVC pools Litman's and Mann's money. Litman wouldn't say how much, though he would say it's well into the millions.

WashingtonVC's investments are usually under a million dollars. And in addition to the cash, WashingtonVC provides important corporate back-end services that many startup companies can't afford or don't know much about, such as marketing strategy, human resources, legal advice, etc. Litman, who spent several years investing and commuting to East Asia, calls the concept "keiretsu," which he described as a "fundamental concept that you have a defender of a business ecosystem."

By Zachary Goldfarb  |  April 4, 2008; 11:30 AM ET  | Category:  TechPost
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Comments

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I love WashingtonVC like a kid loves candy.

Posted by: Andrew Mager | April 4, 2008 2:37 PM

Great article, looking forward to seeing good things out of Aux and Eric Litman!

Posted by: Christina Miller | April 4, 2008 2:43 PM

I've had the opportunity to meet Eric and found him to be very eloquent and forward-thinking. It is no surprise to me that he has raised the profile of WashingtonVC in the past year.

Posted by: Greg | April 4, 2008 3:02 PM

Three questions:

1. Is WashingtonVC targeting social media or isn't it?
2. Will keiretsu help my carpal tunnel?
3. Given the incredibly poor quality of this article, shouldn't the author have stayed in Goldfrapp?

Thank you.

Posted by: Jared Dokowsky | April 4, 2008 3:20 PM

Investing in seemingly revolutionary technologies and ideas isn't always what smart investors do. Google, for example, didn't invest Internet search technology. In matter of fact, the only thing Google really did well at the beginning was make searching smarter than the rest of the competition. Their "revolutionary idea" was to keep it simple stupid. Litman is right when he suggests we're at the beginning of how the Internet is going to evolve in our lives. Evolution rather than revolution is also the keyword here. Human beings don't just drop whatever they are doing right now to embrace new fangled technologies and processes. It was exactly this kind of thinking that led to the Internet bubble of the early 2000s. Very few companies manage to create truly disruptive, revolutionary products that consumers embrace... really the iPhone is the only one that comes to mind, and Apple was in an incredible position with their processor-agnostic operating system, their design engineering prowess and iPod halo effect to create such a product. Phone.com and Birthday.com might not seem like revolutionary ideas, but who hasn't wondered why it should cost hundreds of bucks a month to get business-class phone service or suffered the pain of planning someone's birthday party.


All that being said, Web 2.0 isn't a exactly revolution in technology either. Neither is blogging. The technologies behind blogging where available circa 1996. What was revolutionary was the consumer experience. Wordpress, Blogger.com and Xanga brought blogging to the masses by creating easy to use interfaces that emphasized content and speediness. They didn't invent HTML. With the advent of ubiquitous wireless broadband, the possibilities of information and the creation thereof are only at the beginning.

I don't know what Litman has up his sleeves, but having taken a look at and used some of the services that he has invested in, I'm looking forward to seeing what else he'll have a hand in creating. Moreover, you should hear some of the ideas that VC people get pitched every day. Know how many people think they have a Facebook or a Google killer up their sleeves?

Posted by: rhapsodyartist | April 4, 2008 3:29 PM

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