Seed Capital From Angel Investors: Saad Khan, Partner, CMEA Capital (Part 8)

By guest authors Irina Patterson and Candice Arnold

Saad: LiveOps also run a managed service where they have more than 20,000 agents who aren’t employees of the company [but] are contractors who are executing sales and customer support and other things for customers all over the world.

What’s interesting about that model and what really worked was this notion of crowdsourced work. How do you distribute work to people who are not necessarily employees of your company? How do you organize them? How do you create the flow and figure out how to allocate the right work to the right person at the right time?

So, when I talk about crowdsourced work, I’m really talking about that idea. How do you execute different kinds of work through workforces that are not even under your employment? In some cases, people can get that work done free. We’ve been early investors in that space and go back to it over and over again.

For instance, I mentioned a company to you earlier, Pixazza. Their business model is to turn every picture on the Web into an e-commerce store.

Let’s say I’m a Web publisher and I have a picture of Demi Moore walking the red carpet. The Pixazza platform will help you figure out that the shoes that Demi Moore is wearing in that picture, and show you can buy them at Zappos for $500, and it will actually drive you to the place on the Zappos site where you can buy them right then and there. And the sunglasses she’s wearing, you can get at Oakley, and so on.

What’s interesting about it is that it’s all crowdsourced. There are actual people behind the scenes at Pixazza who are really good at matching a particular image with a product that actually exists and who sells it and making that connection.

When they tag it as such, in that particular case, there’s also a performance incentive for them. If that tag is between the shoes that Demi Moore’s wearing in the picture and the Zappos item in the store, then based on how that performs, they’re getting a kickback every time.

When I talk about crowdsourced work, I think it’s this notion of how do you leverage a crowd to execute distributed work in a leveraged way. I think it’s a really exciting space.

It’s one that I’ve got probably three investments in already; and another one that I haven’t announced. I have another company, for instance called Blekko, which is essentially applying the same notion of crowd sourcing to search.

It’s basically saying that algorithmic searching isn’t enough. What you really need is a human curation element on top of algorithmic search to help you improve your search results. So, they’re leveraging, literally, thousands of users to help improve their existing search results on any particular category. It launched [around November 2010].

They’ve been doing exceptionally well. I think this idea of human effort and human curation, in a distributed fashion, is something that has profound effects in every vertical. And that’s one that we’ve invested in already and had success, so we’re going to keep going after it.

There’s so much more to be done there. That’s one area that I’m excited about.

Irina: At what stage did you invest in LiveOps?

Saad: In the case of LiveOps, we were the first outside investors. I think the first venture round that they raised, we were a part of it.

At Garage, we invested in a company called Pandora.  They went out and crowdsourced a categorization of all music on 400 different attributes.

They did that through people who are passionate about music. They weren’t necessarily people whom Pandora paid, but people who were excited about doing it. Based on all of their cumulative effort, [Pandora] created a service, which is the Music Genome Project that now powers Pandora, which is the basis of their entire technology platform.

So, I think it’s one of these themes that I’ve seen in my career and have invested in multiple times, and I think there’s a lot more to be done there. I’m very passionate about that.

The other theme that we’ve been into early on is, I think, any business that can be transformed or augmented by social, so take social and hyphenate it. Certainly, we talk about social gaming and about social commerce these days.

This segment is part 8 in the series : Seed Capital From Angel Investors: Saad Khan, Partner, CMEA Capital
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