Building His Own Start-Up Ecosystem

Asked to unravel the seeming contradiction between his vision for the future of technology and his investment decisions, Litman explains, "There are still many fundamentals around the technology that are underserved."

(One might guess that another reason for those investment choices: Litman's partner at WashingtonVC, Mike Mann, previously founded a company called BuyDomains, and many of WashingtonVC's investments have top-of-the-line domain names that are virtually impossible to get today.)

WashingtonVC's latest play is a company it created and funded called Aux Interactive (pronounced "ox"). Aux, with just a couple of employees so far, is WashingtonVC's top company directly engaging the social media space. The company's goal is to help customers -- businesses -- develop strategies for social media. That could mean building applications that work within social networks like Facebook to bolster a brand or sell a product, or even applications for internal corporate social networks.

By no means is Aux the first interactive firm. There have been countless such firms, many of them resting in peace. But Litman, who is searching for a chief executive for Aux, says the company will triumph because it has developed proprietary tools for assessing the value of social media for companies.

(He wouldn't share the approach, making it hard to know how unique it actually is.)

"Social media for any new technology requires some analysis of the metrics you use to judge the success," Litman said.

He added that the future of social-media applications will build on what's available now -- simple games you play against your friends, book recommendation services and other distractions. For example, LinkedIn, the social network geared toward professionals, will eventually allow outsiders to build applications for it. When it does, enterprise-oriented software companies will want to -- to recruit employees, to find customers, to sell services.

WashingtonVC pools Litman's and Mann's money. Litman wouldn't say how much, though he would say it's well into the millions.

WashingtonVC's investments are usually under a million dollars.

In addition to the cash, WashingtonVC provides important corporate back-end services that many start-up companies can't afford or don't know much about, such as marketing strategy, human resources, legal advice, etc. Litman, who spent several years investing in and commuting to East Asia, calls the concept "keiretsu," a Japanese word referring to a company that's at the center of a business ecosystem.