My friend Roger Ehrenberg has posted one of the most honest candid post mortems on a failed startup that I have ever seen from the leadership of the company. His company, Monitor 110, tried to use technology to surface investable information from the Internet. That is an incredibly difficult problem to solve and I have witnessed more than a few firms stub their toe on it. But it's the back story that Roger tells that is the most potent. Every entrepreneur and VC needs to read his post.

If you have an iPhone and have downloaded apps and games to it, there's a good chance you've got Tap Tap Revenge on your phone because its the most popular app right now, free or paid. If you don't have it, here's a link to it at the iTunes store so you can download it and try it out.

Tap Tap Revenge is like Dance Dance Revolution meets Guitar Hero for the iPhone. You hear music and you tap along. And best of all, you can play your friends in two player mode. Here are a couple reviews of the game if you want to read more about it.

This post is not about the game, it's about what we can learn from its success. I posted a bunch of questions about the iPhone platform a week ago and this is my first follow up post. I hope and expect there will be more.

One of the questions I asked about iPhone platform is whether there would be a "first mover" advantage like the one Slide, RockYou, and iLike got on the Facebook platform. At least initially, it appears that is not the case.

Tap Tap Revenge was not available the first two days that the iPhone app store was open because of some technical problems and so we saw the rise of Super Monkey Ball, Remote, Pandora, etc.

But once Tapulous, the developer of Tap Tap Revenge, was able to work through the technical issues with Apple and get the app released in the store, it started its rise to the top. It was unavailable on Thursday and Friday, it was released on Saturday, and it was the most popular game by Sunday night, and became the most popular app by the middle of the week. At this time, it appears that Tap Tap Revenge has the most heat of any iPhone app out there.

So being first out of the box was not as important as I thought it might be. That said, Tap Tap Revenge did get into the app store in the first week and that may be all one needs to get the "first mover advantage."

But I think there is something even more important to notice about Tap Tap's success. When Seth Godin released his first marketing book, Permission Marketing, he gave away the first four chapters for free via pdf to over 150,000 people. It generated a lot of buzz about the book and was a big factor in the book's success when it eventually became available in hardback. So when he followed up with Unleashing The Ideavirus, he went one step further. He gave away the entire book for free in pdf (it still is available free). Seth says that over 2mm copies were given away. And yet when the book was published in hardback it went to #5 on Amazon. It was a demonstration of the very tactics Seth was evangelizing in the Ideavirus book. Seth asserted that by giving away your product early to your greatest fans who will do more work and put up with a less than optimal experience, you prime the pump for the mass market. That's because your early fans will spread the ideavirus and market the book for you.

Tapulous did the same thing with Tap Tap Revenge. The game was first made available for the iPhone at the start of this year. But the only people who could play it were people with phones that were jailbroken. So it's audience was small, but fanatical. These were the early iPhone app adopters, the ones who would work harder and put up with a less than optimal experience. But now that everyone can play Tap Tap, the early adopters are telling everyone else how great it is.

There's another advantage to the developers who released apps for the jailbreak market. They got to iterate the app for six months to make it better and better. The currrent version is not beta, not even version 1.0. It's version 1.1. It's gotten better already.

I have not taken the time to do a study of how all the jailbreak era apps are doing now. I am sure that not all of them have had the same success that Tap Tap has had. Of course game play and game quality matters a lot too. Tap Tap is drafting on the success of Guitar Hero and Dance Dance before it and that's a big deal.

Over time, it's likely that the best apps will rise to the top on the iPhone platform like they have on the Facebook platform. And games will be very popular. And free apps will be more popular than paid apps. That much is clear already.

But we need to watch closely and learn about what's working and what's not working. Right now Tap Tap Revenge is working big time and their ability to seed the market early is one big reason why.

Just off the phone Ram Srinivasan, a native Indian who moved to the U.S. 29 years ago, and has been on a well-worn path to becoming a Silicon Valley venture capitalist since. He logged years as an engineer and manager at HP and Sun, founded a company during the bubble (FireClick; it also sold for the post-bubble price of $7.5 million after raising $25.5 million), and two years ago began working with the pan-European venture capital firm Wellington Partners as a venture partner. (Eric Archambeau, a GP in Wellington’s London office, was one of Fireclick’s first investors.)

As the only full-time person in Wellington’s Palo Alto office, Srinivasan’s primary task for the last two years has been to help Wellington’s European entrepreneurs navigate the U.S. as they look to grow globally. I asked him how he does that.

How are European entrepreneurs different from U.S entrepreneurs, and how do you help them bridge the cultural divide?

The biggest challenge is conveying to European entrepreneurs how fast the marketplace moves here. It’s much faster than in Europe. It’s also my job to sort of help our European entrepreneurs better prepare for the directness of American entrepreneurs and employees, which isn’t something to which they’re accustomed.

What about Europeans risk tolerance?

They’re much more risk averse in Europe, which makes the whole recruiting environment interesting. You end up recruiting only people who have an extreme propensity to be in a startup environment. It’s very hard for people to leave a big company. I recently interviewed a potential VP of engineering candidate, and he said that he would rather have an increase in base salary of $10,000 rather than owing a more significant share of the company. That fundamental internalization — that risk has its rewards — hasn’t quite taken place. The whole notion of stock options is still pretty new to them.

Are Europeans as well-acquainted with public relations as their U.S. counterparts?

Not at all. Europeans very much have what I’d call a we-build-technology-and-people-come-and-buy-it approach to business. They’re not market centric. They don’t think about product marketing. Wellington’s entrepreneurs are getting there, though.

Given how much time you now spend with European entrepreneurs, do you ever find yourself using Old World adages, like, “when in a band of wolves, cry as wolves do”?

No.

One of the things I love about being a VC is the opportunity to work with passionate, brilliant, talented (and sometimes whacky) entrepreneurs.

BzzAgent CEO/founder Dave Balter is all these things, particularly whacky.

Dave is the founder of BzzAgent - the leading company in the exploding field of word of mouth marketing.  Dave co-founded the Word Of Mouth Marketing Association and wrote the definitive book on the topic, Grapevine.

This is a guy who is so transparent that in the middle of a fundraising process, he blogged about the criteria he was using to pick his VC partner.

This is a guy who invited an "artist in residence" to hang out around the office, produce all the art that decorates the walls and illustrate his second book.

Ah yes, Dave has a second book.  A monkey is on the cover.  The final chapter has excerpts from a college essay he wrote about Captain Crunch.  Leeches feature prominently in a chapter I'm still not sure I understand.  It is truly random and whacky.

Yet it is also brilliant and insightful.  Word of mouth is an elusive but potent tool for driving your business.  Dave is the Zen Master (yes, a nod to Phil Jackson) of the field and anyone who is interested in driving word of mouth for their product or service - B2C, B2B, non-profit, whatever - would benefit from reading the book.

As usual, Dave wanted to do something different with the publication of the book.  So, he decided to self-publish it.  He's making it available for free online (click here to download) or if you want the hard-cover version, you can order it on his Amazon page.

I promised Dave I'd change my name to "Bzzgang" if the company were to become a huge success.  As a result, my wife is watching the company's tremendous progress warily.

Thomson Reuters is sending me down the coast to live in Los Angeles and cover the intersection of money and technology for the Venture Capital Journal and I’m leaving Saturday.

It’s easy to see Los Angeles as a place to go for new media. Who in Silicon Valley hasn’t heard the “Digital Hollywood” pitch before? But other industries, such as cleantech, are starting to flourish there too. Just take a look at Earth2Tech’s map of cleantech companies funded in the region, constructed earlier this year.

In fact, over 100 companies in all different types of industries attracted more than $4.3 billion in venture capital dollars so far this year in the Los Angeles area, according to data from Thomson Reuters (publisher of PeHub). Download the list.

Connie wrote a great story for the May cover of the Venture Capital Journal that tells more about Los Angeles than anything else I’ve read about the VC scene there. The money quote in Connie’s story came from Jim Armstrong, a managing director at Clearstone: “Our competition isn’t Anthem or Palomar. It’s Southwest Airlines, taking entrepreneurs up to Sand Hill Road.”

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