Source: Cnet, Dec 2011
The big thing that happened in 2011 was sort of the rise of the verticals, and e-commerce was the hotbed of that. We saw the rise of a whole category of e-commerce category killers in verticals that 5 or 10 years ago couldn’t support high growth companies because the markets weren’t big enough.
What e-commerce players are you thinking of?
We just did an investment in Fab, which is just growing by leaps and bounds, and there’s Airbnb [Andreessen-Horowitz is an investor]. That company is growing vertically. It’s software eats real estate, software eats home furnishings. Another very exciting company, which we’re not invested in, is called Warby Parker, an e-tailer for eyeglasses. So it’s software eats Lens Crafters.
I expect vertical specialization to continue and there to be killer Silicon Valley style software companies in all kinds of verticals and categories in 2012 and 2013 that weren’t viable three or five years ago.
E-commerce was the hotbed of vertical personalization of 2011, and big fat vertical expansion goes into other categories other than e-commerce in 2012. It could be content. It could be new kinds of service providers.
But the new companies in e-commerce verticals are providing a very differentiating customer experience that is much more like shopping as entertainment.
Fab has more interesting products and merchandising and presents them in a more interesting way with much deeper social interaction. At Fab, something like 25 percent of the purchases over Black Friday weekend were a result of Facebook referrals. There’s a whole fun element to shopping and whole entertainment element and whole excitement element that the first generation of e-tailers were not very good at.
The new generation of e-tailers are much more appealing to normal people–people who like to go the mall, have fun with their friends and try on clothes and compare clothes, and go home and brag to their roommate what they got on sale, and all the rest of it. A lot of new startups are not only very viable but also growing very fast because they provide a very different experience