I wanted to share my thoughts on what I would be looking for in an internet services investment.  These are my personal views – not those of Esprit.

Thanks to Brad at Union Square Ventures for his great series on investment philosophy which provided the inspiration for this post.

I echo all his comments on scalability, defensability, IT leverage and disruption and for a detailed discussion on these topics his posts are a must read.  I’m going to keep it sort and sweet here though.

For me the best internet service plays have two characteristics:

  1. Execution is everything – so it’s got to have traffic and momentum
  2. The business model should be self evident from the service – e.g. Skype limited free calls and some paid for calls

Getting in ahead of these two things takes great people a lot of faith.