Palfrey, principal for the investment group, says, "We have a long-standing interest in the new set of technologies that RSS is representative of. RSS is the new layer of the Internet. If you think about it, the Internet in the early 1990s was largely driven by email. In the mid-to-late 1990s, it was putting things up on the Web and HTML. By 2000, it was XML. We see RSS as the next natural extension of that."
Even though the name of the group is RSS Investors, the main focus will be on supporting associated technologies, rather than on RSS itself. "It's like during the California Gold Rush: it wasn't the people mining the gold who made the money, it was the people who sold pick axes," Palfrey explains. "We don't expect to make money from RSS; we expect to profit from related businesses."
Palfrey thinks the time is right for such an investment group based on his estimate of 100% growth in RSS news feeds in the last year, and the potential for using RSS and related technologies in corporate as well as consumer environments.
"We are sticking our neck out with the following prediction: RSS is the next layer of information technology," adds Moore. "RSS encompasses the RSS standard as well as the community of technologists, hobbyists, and media players and professionals who are innovating with it. It also includes the ‘institutional services' that are available for innovators to draw on and script together an ever-expanding array of blog, pod, and vblog services, aggregators, notification servers, search engines, and a vast range of service species yet to be catalogued. This is a new ecosystem," says Moore. "New forms of co-evolution have been unleashed."
Palfrey sees three areas for RSS-related investments: First, the infrastructure that supports RSS, pointing to companies like Akamai, which profit from content delivery services. He includes security-related services under this umbrella, saying that one-third of RSS feeds contain spam. Second, he targets knowledge management services like those provided by NewsGator and similar services, and third, media companies that employ RSS. Though the group isn't interested in online journalism models at this time, they are looking at companies that provide specialized news feed services for corporations. An example would be an auto manufacturer wanting to monitor online "buzz" about a new or proposed car design.
Marc Strohlein, VP and lead analyst, Outsell, Inc., believes that RSS Investors' diversified investment philosophy is a good one. If the group were focused on RSS alone, it probably couldn't generate enough interest and investment dollars. Strohlein points to a steady increase in RSS and related technologies, particularly now that Microsoft has announced that it will include RSS capabilities in its new Longhorn operating system, due out some time late next year.
Right now, RSS is primarily used by a lot of non-commercial vendors, but it's starting to move into the enterprise because, as Strohlein describes it, RSS provides a very lightweight way of moving information among applications. He says, "We're just starting to see the use of RSS in the enterprise, and the launch of the investment group validates that there's something there."