Josh joined Sphere in the second half of 2007, after a lengthy and persistent appeal process. He fully believed in our business and value proposition from the start and it was apparent from the vigor with which he approached me. Once on the team, he applied that same vigor to business development, turning over every rock he could find and signing partnership after partnership, including several of our largest. When we were acquired by AOL in April 2008, we asked Josh to lead our expansion across the AOL universe and represent us on the ground in NYC.  He did so admirably, guiding our contribution to AOL while ensuring that our existing business continued to prosper. Without being asked, he assumed leadership of Product Development, Advertising Management and Design and each of these areas has improved significantly under his stewardship. In March, we named Josh COO and his command of the business has only improved since.   He oversaw some great hires in product development and business development in 2009, and led an inspiring retreat at our annual get together in September.  

My decision to step down was made easier knowing that Surphace is in excellent hands. Josh is the right leader for the business today. He’s a natural leader and a great guy to work with – earning consistent praise from all. Mapping out an exciting product pipeline for the next twelve months, Josh has provided Surphace with the ingredients to continue to prosper as a standalone business within AOL. I couldn’t be more pleased for Josh and excited for the Surphace team. Please join me in raising a virtual toast!

In 2005, I had the good fortune of being on the founding team of Sphere and joining True Ventures simultaneously. I always thought that I’d eventually focus all of my attention on one or the other, but both were too much fun and I guess I’m selfish in that way.  As time passed, I went deeper into each role and I never got around to choosing one or the other. It worked out nicely. True is on its second fund and Sphere had a successful sale to AOL in 2008. Most importantly, Sphere’s business and team are both thriving within AOL. While I’m proud of my contributions to both, the heroes in this equation are Martin, Steve, Toni, Shea DiDonna, Braughm Ricke, Om Malik, Puneet Agarwal, John Burke, Phil Black, Jon Callaghan, Marty Moe, Bill Wilson and AOL – they trusted and empowered me to pursue both. I am extremely grateful.

As I’ve thought through the question of what’s next, I’ve realized that I love the complementary perspectives acquired from building a company as an entrepreneur and investor. They are symbiotic roles and it’s really hard to say which has influenced me more. While my role at True as a Venture Partner will continue to deepen (because there is nothing more rewarding than working with people you admire and trust), I also find myself with a burning need to start another company. I’ve discovered my formula and doing both makes me happiest.

As for my next company, I’m not sure what the answer to that question is, but I’ve decided that I need to move on from Sphere (now Surphace) to figure it out.  This may feel like old news as I’ve been working to make myself obsolete as Josh Guttman transitioned into the CEO role. My decision is easy as I know that Surphace is in excellent hands. I wouldn’t feel comfortable leaving if I didn’t believe that Josh was the right leader for the business today.  He’s a natural leader and has a strategy for the future that I believe is going to accelerate growth for Surphace and AOL. I couldn’t be more pleased for Josh and excited for the Surphace team.

As for my thoughts about Surphace and AOL’s future, I’m more optimistic than ever. We joined AOL at an opportune time. AOL is doing what great, sustainable businesses do every so often – they’re reinventing themselves. As the business model of the oldest and one of the biggest Internet businesses evolves, Sphere/Surphace has become an important piece of their strategy to reach across and engage the web. In the past year, we’ve had an insiders’ view into how AOL’s new leadership team has moved aggressively to engage their audience (new vertical focused websites; a focus on engagement and not page-views for page-views sake; hiring leading journalistic talent when others downsized; acquisitions in the local content space; shorter development cycles with an emphasis on release, iterate and release). There is nothing like winning and the AOL publishing business is winning. As a result, I’m pleased to also announce that I’ve agreed to serve as a Special Advisor to AOL Ventures as they reinvent themselves. I am thrilled at this opportunity to evolve my relationship.

I want to give a huge thanks to the people who’ve made the last few years what they were: my family tops the list, an entrepreneur is only as good as their support system and this is my secret sauce. My co-founders, Martin and Steve, who trusted me to play a role in helping them get the tech they invented the exposure it deserved. Toni and Phil who taught me about generosity at a moment when I was able to learn. Matt Mullenweg who opened up my thinking of how a start-up operates.  Marty and Bill who have been consistently supportive since Day One – I can’t underscore enough how much I appreciate the manner in which they’ve empowered us to thrive in an appropriately independent environment. They have treated me (and the Sphere team) with enormous respect for which I am both thankful and flattered.  The original Sphere team, the current Surphace team who have embraced AOL. Our investors and advisors who supported and helped shape our vision. The True team and entrepreneurs who have taught me about sacrifice, vision, execution and the value of pursuing your dreams — and, of course, Lewis Dvorkin, Kevin Lockland and Bill who paid us the nicest compliment of all in offering to acquire our company and then doing so.

It’s been a thrilling, at times difficult, always rewarding and lucky ride I’ve been on. Thanks to all.

The obvious question is why, in the midst of continued success – growth and distribution – are we changing our name?  In most cases, businesses change their names in order to relaunch, restart and/or establish a clean break from their pasts.  Our situation is very different.  Our business is as strong as ever, and from where I sit, the future looks as bright as I can remember (brighter, in fact).

Sphere is a name that’s been good to us.  It helped us become the business we are today catering to the likes of: Time, CNN, Tribune, WSJ, TMZ, CBS, AOL and millions of individual blogs.  As a brand, it communicates the totality of information disseminated across the web.  When we launched the business 3+ years ago, we did so with a desire to deliver that totality to users in the form of a blog search engine, so the name made sense.  Over time, our business has shifted, focusing much of its energy on large name-brand publishers.  We’ve learned that those publishers are as interested in syndication of their own content as they are in retrieving relevant third-party stuff.   In essence, our business today is centered around bringing content to the surface and so, Surphace is a name that, not only defines our business, but one we’ve grown to love.

Surphace is also a name that weaves incredibly well with our 2010 product roadmap, which includes, among other things:

• S4 – our self-serve platform currently in alpha (you can sign up for beta right here)
• SurphBoard – a spiffy updated editorial UI for our larger partners
• A url shortener in stealth mode – strategic to other products
• A real-time conversation thread, showing topical surphing in motion
• And a few more that we can’t yet disclose….:)

Nothing else about us will change.  Practically our entire team (plus a few talented additions) remains intact since the acquisition 18 months ago, and we couldn’t be happier with our extended family at AOL.  Some of you reading this must be chomping at the bit, wondering what’s going to happen to the Sphere domain.   To quell that curiosity, Sphere.com will soon grow to become one of AOL’s benchmark online destinations, and to maximize the suspense, I’ll leave it at that for now.

To all our existing partners, I plan to connect with each of you in person over the coming weeks to discuss our new product pipeline.  To all our future partners, we can’t wait to work with you.  Please get in touch and let’s see what we can create together.

What you’ll see is that with click-thru rates in the 1-2% range (slightly below our average), the average reader who engages with Sphere travels 4-7.5 pages deeper into a given site.  Combined with the inbound UVs driven through our network (tends to approximate 1%+/- of monthly article page impressions), that original click is worth between $30 and $46 eCPM.  For the sake of full transparency, these figures were higher than we expected, forcing me to go back and review the calculations.  They are, in fact, correct though, and they represent the clearest explanation yet of why Sphere represents pure ROI for publishers.  Since we’ve modeled our business with zero up front cost, there is zero downside to trying Sphere on your site.

If you’d like more information, please get in touch to explore what we can do together.

Over the past year, as our analytics have steadily caught up with the swift pace of our partner roll-outs, we’ve begun to gather more meaningful insight into the effectiveness of Sphere’s technology for our partners.  Fortunately, we continue to surprise ourselves with the results.  The slightly blurry chart below is a click-map from Omniture for an AOL News article a few weeks ago.  It shows that, on this article, three of the most popular five clicks were into the Sphere module.  This means that, in aggregate, Sphere was the most clicked on item on the page, by a fairly wide margin.  While this was a particularly strong performing article for our technology, Sphere consistently attracted one or two of the top five clicks.   This is tremendously encouraging because more people clicking into Sphere means more effective recirculation for our partners.   It also means that our algorithm is surphacing relevant results that people want to see.  And if that weren’t enough, it also means that many many eyes roll over the ad unit (for those partners who run advertising with us) leading to more opportunities for our advertising partners to get noticed.  We love finding new measurement tools when they show us results like these and we’ll share more in the weeks ahead.

Why do we care?  Because this is where Sphere lives and this is where we integrate ads with our content.  Online ad sales development has struggled to keep pace with innovations in content delivery and the evolution of web page design.   Today, the lion’s share of media is sold in three traditional sizes and placements – 728×90 leaderboard, 300×250 box ad and the 160×600 skyscraper, which all live either at the top of the page or in the right column.  This is bound to change.  As you can see in the heatmap study (and as everyone intuitively already knows), there is a direct disconnect between where readers focus their attention and where the bulk of ads are sold on the page.  For this reason, the leading publishers continue to think up new schemes and ad formats to test.  Unfortunately, the most recent ideas have involved larger and larger ads, which more than anything else, are more and more annoying rather than more effective.  As my girlfriend likes to remind me, bigger is not always better:)  As the industry continues to search for that elusive golden egg, Sphere is packaging more tightly integrated content/advertising modules than ever before.  If you’ve been following this blog, you saw us roll out the 468×60 on LA Times.  It received such an overwhelmingly positive response from our fans (not to mention excellent performance and click-thru rates) that we’ve decided to add it into our core product mix.  DailyFinance and Switched are the most recent sites to go live with our integrated 468×60 and both were integrated about as seamlessly as I’ve seen advertising integrated anywhere online.  It’s virtually impossible for an engaged reader who is commenting, sharing, emailing or printing not to interact with this module and therefore, also the integrated 468×60 ad unit.  It’s safe to assume that a large majority of readers who reach the end of the article will see the ad.  We already know that our content links draw an average 1.5-2.0% click-thru rate so a good chunk of readers are hovering right there on top of the ad already.  In terms of reaching a reader in the midst of their interaction with the content, I haven’t seen many better options.  The 468×60 banner is not as popular a unit as it once was, but we’re confident that media buyers will see the value in both this tightly integrated package and in reaching the most engaged readers specifically where they’re spending their time on the page.  If you’re a media buyer and this resonates with you, please contact us at advertising [at] sphere [dot] com.

Way to go Harry!  You make us oh-so proud.

Along with recirculating related LA Times content on each article, we’ve also created custom indices for the LA Times of both their favorite LA blogs and local news sources as well as a custom “around the web” index of sites with whom they’ve chosen to share traffic.  Both are innovative ways to use Sphere’s technology to a publisher’s advantage.  We’ve also integrated a 468×60 IAB ad unit beneath the content in this module, creating a seamless and integrated experience.  This excites me because we’ve learned that when content and advertising are married in an effective and natural way, performance of both improve.

This is the first of several Tribune sites to launch with Sphere, so we have our work cut out for us, but a special thanks goes to Ron Parsons and his team at Tribune for driving this project from the very beginning.  On Sphere’s side, Troy, Kevin, Adam and, as always, Martin get the credit for making the magic happen and making the rest of us look good:)

Josh joined us in November of 2007. His primary focus was on helping Sphere accelerate its Publisher footprint. He excelled in that role, quickly becoming a leading contributor to our extensive network of A-list partners.  Also, we asked him to lead our expansion within AOL – he has done an exceptional job guiding our efforts.

Above all, it’s his proactive leadership that has made the most important impact on Sphere. without being asked, he has taken on a leadership role on Product Development, Design and Advertising Management. Each of these areas have been strengthened significantly under his leadership.

Thus, the entire Sphere team is thrilled to see his contributions, his role and responsibility at Sphere recognized. Congrats Josh!

You can follow him on Twitter at @JGut