Saturday, December 12, 2009

Hey Hey..Oh My?

I had a spirited conversation with Elad Baron, CEO of Bitwine, yesterday about the effect of real-time search, coupled with proprietary data stores (Facebook + Twitter come to mind). Bitwine, Elad, and his members live in the 'now' and soon to be 'now' world, so he follows this closely.

The conversation was spurred by Google's announced partnerships with Facebook, MySpace and Twitter for real-time updates to their search results. So, the real-time web has naturally spawned real-time search which unlocks another avenue to mine demographic/profiling information with intent. Probably a good thing for advertisers, definitely a positive for shareholders, and if advertisers get great results, it will accelerate the downward pricing trend for purchased 'bytes' (e.g. software, music, information).

But isn't it revealing that, in an era where billions of dollars are being spent on SEO and buying keywords to 'direct' traffic, Google (and MSFT's Bing) need to ink deals with vendors for access to data within their built proprietary applications? It's the inverse of the 'norm' where companies, beg, borrow, or steal (yes, that is SEO) search engine mind share. The world's gone upside down...or perhaps, reverting back to the status quo.

On one hand, it's great to see so much timely information available and innovators building oodles of shareholder value by adding utility for many in the value chain. On the other hand, we need to think about emerging from an era of proprietary applications, with attended vendor 'account control' to an era of proprietary data prisons, again with vendor 'account control'. We ought not only to be wary of the effect of data prisons, but also the impact on exposing so much data, often from quite young folk. For example, Facebook's recent 'update' of their privacy settings brought an outcry of protest from the ACLU, the Electronic Frontier Foundation and others.

It seems as if Twitter's yet to be announced advertising plan just may be the tipping point for a data vs access battle royale. Crawlers vs content. Unlike the traditional content business, however, in this case the content, or personal profiles/links are really proprietary, at least for awhile, to the content sites. Till recently, FB members could control who has access to their profiles, on the other hand, Twitter was far more 'open', enabling people to mine profiles of unrelated 'followers'. Postings to FB had a more intimate feel, Twitter for more universal content. Each building an ecosystem that balances breadth with depth, united in their interest to mine user data. These ecosystems are linking with each other, perhaps leading to a cacophony of time slicing for viewers, and maybe a lessening of the emerging power of the closed data systems.

John Battelle takes a look at the implications of an element of the strategic battle looming between FB and Google, as it pertains to the exposing of member data. So, it's fair to say that MSFT, GOOG, FB, Twitter, et al are preparing to, as Tiger reportedly said 'go ghetto' on access to the data which members entrust to their repositories. I would not be surprised if one of the scorned players, and surely there will be scorned players, raises a new front on the 'fair use' debate, broadening it from bandwidth, to data.

It's unclear if 'there's more to the pictures than meets the eye'

Friday, December 11, 2009

Time, again and again

In the past couple of weeks, while having a number of meetings with bankers and financial folk discussing the environment for Company exits, Fund fundraising, and valuation dynamics, I have also committed to a new investment in the commerce arena (more about this in a later post). Of course, the tenor of these meetings is quite different, but a common thread runs through them 'what's the prospects for future company performance' and its close sibling, 'what's the dynamics within the industry segment'?

The software and internet industries are known for shifting paradigms, false prophets and explosive adoption that create wonderful opportunities that, when they hit, truly are globe changing.

Marking a new decade is an arbitrary reference to the passage of ten consecutive years, with little significance beyond noting ten years passage from the previous arbitrary point in time. Yet, there is a perspective gained by the look back, if nothing else as My smart friend Larry says 'pattern recognition is one of the important things a VC brings to the table'. He's right.

Ten years ago, billions of dollars were (mis)spent around the Year 2000 'bug', Microsoft was touting Window 2000, the U.S. District Court Judge Thomas Penfield Jackson ordered Microsoft to be split in two, Apple was pushing iTools and iCards, and AOL was skewered by reviewers for it's latest 'upgrade'...'AOL: You've got bugs'. While we were busy debating all these issues, from nowhere came Facebook, Google, the iPod/phone, and the Wii. Disruptive Black Swans all.

Courtesy of the Internet Archive, here's a number of links, taken from Year 2000, that highlight the shifting sands that make our industry so 'interesting':

Apple's home page

AOL's home page

Amazon's home page

Computerworld's top 100 Companies to watch

Here's my favorite

All welcome to add your favorites too.

Wednesday, December 2, 2009

Just get us behind the wheel

In an important area, the internet has failed me and it took my son to put it into perspective. After too many years in my vehicle it's now time to pony up and get a new car. Following a time worn path, my son and I trekked to the dealer where our objective was to compare the handling of two interested models. It took us nearly 90 minutes to get into a car. Here's what happened:

1. we were first ignored;
2. then deemed unworthy for taking up the time with a 'Senior Consultant';
3. pawned off to a junior salesperson as the person we were speaking with was expecting an appointment to arrive soon;
4. told that it's too bad we are looking to buy a car this month ("last month we had much better deals")
5. explained that, despite purchasing 2 cars from this dealer, we were not 'loyal' customers because none were now being financed
6. asked to cut short a test drive (5 minutes into it) as the dealer was going to close soon and paperwork had to be done

My son put it best...'dad, these cars are great, if I were a salesperson, I would do everything I could to get someone behind the wheel and let the product sell itself'. Sadly, the salespeople we saw were unnecessary friction in this process.

This brings me to the disappointing internet experience that's exasperated the turkey stuffing left in me. Vowing to 'get respect' I configured a car at the manufacturer site and, using a link, sent the configuration to the closest dealer for a quote. Unfortunately, the dealer was not interested in reciprocating electronically and wants me to visit prior to talking turkey. Grrrrr.

Enter 'the Club'. I am biased; I love shopping at Costco as it's a brand I really trust. Value, quality, discovery, it's all there. But not with cars. I filled out their forms, knowing my shopping was done and now hoping for a clean buying experience. Instead, I am barraged by emails with the subect "Hi, Please contact me' or 'your VIP number is enclosed'.....Grrrrr.

AAA is no better. The no hassle, no negotiation promise, from the dealer AAA directs you to is only for vehicles in stock. You want a configuration they don't have on the lot and the gloves come off.

Perhaps, the Zipcar experience is my salvation. In any event, it's unfortunate that too many organizations let their business processes get in the way of exposing a great product to their perspective customers.

Wednesday, November 18, 2009

Natural monopolies...not just a game

Tim O'Reilly had a wonderful post on the alternatives for Internet development from the 'small pieces loosely joined model' to the "One Ring to Rule them All".

Led by Apple and now Google's Android, we may be emerging from the 'One ring to rule them all' model of the PC-centric era. But that does not necessarily mean we stay in an open standard universe. It seems that for generation(s) computing has moved from one natural (or unnatural) monopoly to another. The Social Web may be no different as companies such as Facebook and GOOG can, in many ways, wall-off competition/innovation. This does not mean they will, but the potential is there and, if it produces a better (e.g. safer, more intuitive, more reliable) experience, history shows we will facilitate them doing it by choosing today's experience over tomorrow's potential.

Thursday, November 12, 2009

Giving 'them the business'

Bill Gurley wrote a really insightful post that describes how/why Google is commoditizing the GPS market. It got me thinking about building shareholder value in a sustainable way, in an environment where the cost of obtaining, and servicing an incremental customer is close to zero. In other words, let's recognize that IP based companies value are incredibly vulnerable if the value they create is based on the foundation of licensing that IP, when the pressure to shift to lower, or no cost alternatives, is going up literally by the day.

Google is opening new market opportunities for themselves (and giving great end-user value) by following a consistent strategy of shrinking the gross revenue potential from markets that rely upon licensing of IP. It's really important to reflect that Google gets much more efficient, and valuable, as its network grows. It' value is what they do with the network and is totally divorced from the cost of the IP engine that provisions it. It's this divorce that makes it so hard for IP based competitors, like MSFT, to compete against them. It's like archers, who must husband their arrows, competing against machine gunners...the rules of engagement have changed, no need to conserve ammo as bullets are 'free', so shoot first (and often); take aim later.

To fuel its growth, it's incumbent upon Google to pick off markets populated by companies with suddenly exposed 'monopolies'; vulnerable to the dual shift to 'cloud' delivery and an incremental customer delivery cost that, at best, is nominal. The bigger the market, the higher the vendor margins, the more incentive for Google to commoditize.

We have seen this is play out in consumer facing applications and, in the B2B world, folk such as, RedHat and MySQL have only scratched the surface for the B2B opportunity.

Thursday, October 22, 2009

Traffic Jam

One of the most profound changes I have seen in the shift from client, or server based software companies, to the web, is the construct of the sales/marketing function. The shift of massive dollars and attention to marketing (GOOG); and away from direct sales and marketing support is astounding. Yet, recent experiences with a few portfolio companies has given me pause to think about where we are, and where's the market heading.

One of the laws of large markets is that, when they hit a critical size, they fragment. This is playing out, in spades, with Search. Not from the perspective of GOOG vs Yahoo vs Bing et al, but from the view of looking at, or for; people, places and things. Now that Facebook and LinkedIn have hit the magical tipping point, GOOG is no longer my 411 for people search. Likewise, the duo of TripAdvisor and Zagat handle my place inquiries with less clicks and more relevance. And for the mother of all categories, 'things', Ebay, Amazon, iTunes, and that great commoditizer, Craigslist, have my dial tone.

MSFL (My Smart Friend Larry) suggested that I run a chart comparing traffic for GOOG, Facebook and Amazon. Fascinating to see how FB has passed Amazon, and has GOOG in its sites. Though not on the chart, and amazing for a couple of year old company, Twitter is at a level near 50% of Amazon, and LinkedIn is 50% of Twitter..

Traffic, make that relevant traffic, is the 'coin of the realm' for internet companies. Heretofore, many firms rightfully obsessed with buying (Adwords) or 'stealing' (SEO) traffic from Google. But a couple of factors should shift the status quo. First, the aforementioned tipping point sites, and they're not the only one's, should continue to improve their price/performance faster than GOOG, which seems to be getting less relevant, in absolute terms, due to the 'optimizers' breaking it. At the same time, Adwords is getting so price efficient, where so many well capitalized companies are bidding for keywords, that the toll on the traffic ramp is just getting too steep to build a sustainable, capital efficient, business proposition. It's almost like where we were ten years ago in pre-paying for a sales force and SE's in the Enterprise space.

The good news in all this is the rapid maturation of social media. The potential for companies to offer a thrilling value proposition which their constituents (I am really shy about calling them 'users') enhance their personal value by inviting their friends/co-workers/social supply chain is astounding. When properly executed, the savings in sales/marketing expenses that companies can now devote to their products is tremendously exciting for entrepreneurs and as they say in Wharton, 'juicy' for investors.

The airwaves are full of Tweets, posts, and videos over what this means for the venture, angel and expansion asset classes. I am sure there's room for all, and the relative opportunities will inevitably ebb and flow between them. As they say, stopped clocks are right twice a day. If you choose one area, and stay with it, no doubt that you'll be least once per decade.

Friday, October 16, 2009

How many people does it take?

There's an industry parable that I often quote:

A VC in training asks "How many people does it take to write great software?"

The sage CEO responds "two, one to write the code, and the other to shoot the programmer when it's done".

I've been actively working with an entrepreneur towards seed funding his new venture. He's been actively speaking with potential employees, business partners, and surveying the target demographic. We get great feedback, and incredible ideas which keeps expanding the product requirement list. And that's the good and bad news. Without his active pruning of the product branches, the Product Requirement Document surely would've collapsed long ago.

This set me to thinking about the product experience we see as consumers, or as professionals. Too often I have been involved with or seen products/sites that are beautiful, yet with so many irrelevant features which burnt precious capital, time, and focus. In many ways and markets, the great progress in LAMP tools and vast open source resources, the art of product management seems to have overtaken the impact of the science of architecture/programming in determining success.

For grounding, I try to hearken back to simple principles such as Google's home page, devoid of everything but its search box. Why? Because the site is all about speed...get the visitor off to their destination ASAP. Management product folk determined that it's to sacrifice near term revenue to optimize the #1 distinguishing site feature, speed. For long, this was a contrarian approach scoffed at my industry sages.

It's not only search. Look at the comparison of three large players in the dating vertical below:

The UI for Plenty of Fish is enough to give any respectable UI designer angina; but it works fabulously well.

How about the mother of simplicity; Craigslist? In many ways, you have to admire a self-professed 'geek' like Craig Newmark, who has consistently rejected 'cool' in favor of effective navigation. Check out the graph comparing traffic on Craigslist, Ebay and Amazon.

The Wii, with it's pedestrian avatars and antiquated graphics slaughtered Sony and MSFT in this generation's console battle. The essence of a site's success may be 'cool', but it's not a prerequisite for success.

You can't judge a book by it's cover.

Friday, October 9, 2009

Aaron Patzer, Mint founder

Skip the first 1:30 and you'll listen to his unvarnished perspective, in detail, on the phases of starting a web based company. From prototype, to alpha, to beta and launch. The building of a company and the transition of a nerd to CEO.

Interesting points (some tongue in cheek):

* Each engineer is worth $500k and each marketing person subtracts $250k from valuation
* Concentrated on efforts building a great application
* Initial revenue projections are bull; revenue/user (in his case) was more important

Mint CEO Aaron Patzer on Startups from Techcrunch on Vimeo.

Thursday, October 8, 2009

Latest fund raising figures for VC firms

It's no surprise that LP's are still 'stressed' and unwilling/unable to make VC commitments. The malaise is affecting new, and existing funds.

Here's the link

Thoughtful (and negative) Google Wave review

I think there's a tremendous opportunity around more efficiently bringing real-time attributes to many applications, including multi-media. The silo's of mail, IM, Tweeting, etc are getting too clumsy and unwieldy to manage. That's why I like the appeal of Wave.

Executing on a market opportunity is, of course, a distinct step from seeing it. Here's a well thought first impression of Google Wave written by Orli Yakuel.

This is an early beta and it will be interesting to see how the product evolves. On that topic, and as a stunning contrast, I just downloaded the most recent version of Powerpoint viewer (2007). Imagine freezing a crippled application for 2+ years? MSFT's DNA is totally different from successful web based companies. I suppose if I was charged with protecting a $58b revenue stream and 36% operating margins, it would stifle my innovation too....notwithstanding the MSFT haters, I would love to see the passion return.

Tuesday, October 6, 2009

Mike Moritz interview

Guy Kawasaki interviewed Mike Moritz of Sequoia and Paul Graham of YCombinator on the MSFT Campus back in July.

Much of being an entrepreneur is figuring out what to do, when to do it, and getting others to help. If you're interested in a framework it's worth a view...

Thursday, October 1, 2009

AAPL Tablet vs Kindle?

We have 2 Kindle's in our household and have experienced mixed reviews on its utility. On one hand, it is a great device for traveling, on the other, it's just so parochially just a reader (a good one) that, along with the Blackberry, I feel Internet and application disabled when compared next to the iPhone.

Amazon has been testing the Kindle in a few Universities (wonderful idea for backpack laden Middle schoolers too). Unfortunately, the initial review from Princeton is not too compelling. The need is there for a tablet sized real internet device (sorry MSFT, still suffering from buying your Gen 1 OS). Between smart phones, tablets, PC's and the iTouch, there seems to have been enough trial and error to collect solid information for product managers somewhere to hit one out of the ballpark.

Wednesday, September 30, 2009

Billions of applications downloades; where's the beef?

Per Apple, as reported in BusinessInsider, more than 2 billion applications have been downloaded onto iPhones. A truly incredible number, and with 85,000 applications in hundreds of niches, represents the democratization (commoditization) of software as I suspect that the vast majority of these downloads were of software that cost less than $2.00/download (with no maintenance charges). More than 10 MILLION applications are downloaded each day! 40 applications per phone....(maybe I should insert disposable before application?).

But (and there always needs to be a but), where are the great new emerging iPhone software companies that are roaring their way to the IPO bank, or into the adoring arms of buyers?

Perhaps, the iPhone really represents a watershed, and terminal, event in the software market. The tipping point of consumer software, where it's now an element of 'Free', a way station towards advertising, subscription, or commerce revenues. No longer a revenue objective in its own right. If so, wherefore art thou future MSFT, EA, Intuit (note the Mint acquisition as highly strategic in a deeply commoditized IP world)? Do your businesses look like Google or Amazon?

Thursday, September 24, 2009

Social Media Revolution video

Erik Qualman runs a bog called Socialnomics and is the author or a similarly titled book that covers the Social Media arena.

Here's a video, chock full of factoids that I found interesting:

Larry Ellison and 'why I acquired Sun'

Interesting post by Will Price describing Larry Ellison's speech Monday night.

Essentially, he argues that the Enterprise business may now be best served by rejecting the move to a components based horizontal approach, where the customer chooses a multitude of 'best of breed' vendors. Instead, a 'vertical' approach (harken back to dominant IBM) where one vendor supplies, or integrates the total solution is best for the customer.

I suppose he's right in an environment where innovation is stilted, and competition offers many alternatives. Or, you have a culture of intense innovation (Apple). I think you need two of these conditions to be present for his vision to be successful.

Here's a snippet of Mr. Ellison entertaining the crowd on his view of cloud computing

Wednesday, September 23, 2009

Google Wave

Google announced their new communications platform, Google Wave will open to the public on Sept 30th. This open sourced platform seems to unite mail and IM in a 'live' application environment that is courting the developer community. If it lives up to its hype this just may spark a creative tidal (er) wave in the communications segment (along with porn, one of the 2 key drivers of the early internet). What could also be really big is that, apparently, Wave does not operate under MSFT's IE 6 browser due to lack of JavaScript and HTML5 support.

Here's a link from Mashable highlighting the top 6 Wave features

Ride 'em Lar

Monday, September 21, 2009


A good article in today's WSJ highlights the fallacy of making long (or mid-term) economic forecasts. As we are in the autumn season, where CEO's are preparing budgets and plans for themselves, and investors, I think it's especially relevant.

In the technology space there are so many moving parts, ranging from competitive products, pricing, evolving ecosystems that the general economic environment is often a secondary item to contemplate. One thing I have found is important in the planning process is to empower the CEO with enough flexibility to adjust to the knobs to find the right tune for today's environment.

Wednesday, September 16, 2009

Judge Rakoff goes the extra mile

The Wall Street Journal reported yesterday that Judge Rakoff rejected the proposed settlement between the SEC and Bank of America. He was critical of both parties and seems to be injecting a strong dose of common sense by shining a light on who authorized billion dollar bonus payments to employees in a company that was on the verge of collapse, and why this was not disclosed in public filings.

Here's a copy of the Judge's opinion.

Tuesday, September 15, 2009

Hard boiled eggs

Now that school is back in session, and lunch making duties beckon, I had to search for the time it takes to make a hard boiled egg. Not as straightforward a task as you would imagine.

Google came back with 'about 473,000 responses' to my inquiry about 'cooking hard boiled eggs'. Recipes detailed piercing the large end with a tack, removing eggs from refrigerator for 30 minutes before boiling, putting eggs in warm water till the water boiled, then removing from heat. And, of course, the fierce 15 vs 17 minute religious battle.

It took more time sifting recipes than boiling the eggs!

If there's so many opinions about making hard boiled eggs, and so many will give results that equally please me, just imagine how many ways there are to build a great company (or not to).

You just got to take your nose out of the book and start boiling the water.

Monday, September 14, 2009

Platform or application?

Friday, Skype announced that it was discontinuing its Extras program due to 'lack of interest from the developer community'. Announced in late 2006, the program was launched with much initial success, with more than 10mm downloads in the first 4 months and more than 4,000 developers signed to build applications on the platform.

The Extra program always seemed to hold great promise. The ability for young vendors, for a fee based on a % of revenues, to hook into a huge (now nearly 500mm) installed base, seamlessly integrate a payment mechanism, and to ride a new ecosystem around the instant web had great equity building appeal. Of course, there was a huge caveat, Extra sent Skype on the path towards being a platform, where its infrastructure takes a back seat to the application written above it. Product management now had to take into account a new constituency, the developer community, as concerned with API's as consumers were about the next new function. It takes strong and consistent leadership to pull this off well. Not many companies have done so successfully.

Despite initial success, shortly into the platform journey it seemed as if Ebay/Skype was having great trouble straddling the 'coopetition' line that platform players, who also build applications must walk. Certification and promotion seemed arbitrary and statements of direction were murky at best. Developers, investors and consumers were confused. It became just too hard to navigate in a world populated with alternatives, so Extra participants turned their attention elsewhere, or disappeared.

With such great potential to stir up the market, unfortunately, Ebay/Skype performed a hysterectomy on its potential Golden Goose.

Tuesday, September 1, 2009


Thoughtful piece in the Atlantic, written by David Goldhill "How American Health Care Killed My Father"

Monday, August 31, 2009

Whatever time it takes

I was struck by an Op-Ed in the NY Times over the weekend where it was remembered that during a long procedural Senate session, Bobby Kennedy once asked Ted "how long will it take before I become a great Senator"? The response was, 'whatever time it takes'. Sometimes, you just never know enough to give a more succinct answer.

Early stage venture backed companies often don't have the luxury to purse a 'whatever time it takes' strategy. Capital is invested, a site is built and the next step is the launch. The launch event that, pre-Google, was accompanied by shrimp with cocktail sauce, mini hot dogs and much press schmoozing. Post Google (excepting Bing), the standard seems to have gravitated towards a 'softer' launch, SEO tweaking, a beta banner, and a not too subtle buzzzzzz campaign with Facebook and Twitter resources brought to bear.

Though using different tactics, both methods have the same corporate objective; build positive metrics to raise more capital before the current dollars are exhausted. Today, early stage venture backed companies tend to be capitalized for an approximate 18 month run before more capital is required. Whatever time it takes means 12 months of market vindication (assuming a 6 month R&D incubation).

Contrast these ritualistic approaches with Wikipedia, now the 7th most visited site (per Alexa) or SpringSource, recently acquired by VMWare for $362mm. Here's their mission:

'SpringSource forges open source innovations to create lean and powerful technology that people love to use.'

Simple, direct, and all about creating great product that people will use (note that Springsource was venture backed, led by Accel and Benchmark). Numerous examples abound of quite successful sites that took a 'whatever time it takes' approach to building equity value. A couple of years ago, Club Penquin was the rage, today it's Twitter.

Another example of a 'whatever time it takes' success story is The New York Road Runners Foundation. My buddy Jim Milne is a co-founder of this organization that establishes community-based running programs, primarily through schools. Today, with a staff of 30, it serves more than 50,000 kids/week in more than 250 schools and has recently helped establish a program in S. Africa.

Obviously a key to successfully adopting the 'whatever time it takes' strategy is building and launching a site with enough novel utility that its adherents vocally support it via word of mouth, community forums, and product suggestions. Incidentally, all contributors to incredible capital efficiency.

Monday, August 24, 2009

Candidate for man of the year

Admittedly, similar to my smart friend Larry, I have Libertarian tendencies. Nevertheless, I am quite put-out by the opaque handling of the Merrill bonuses. Billions of dollars of taxpayer went out as bonuses to folk who brought a company to its knees, and its head to the M&A chopping block. The SEC has been notably silent about who knew what and when about all this.

Rather than blindly accepting yet another 'slap on the wrist' settlement, Judge Jed S. Rakoff wants to know more. He's requested, and will publicly release the information that we should know, before deciding to accept, or deny the SEC settlement with Merrill.

Here's the NY Times article describing his perspective. Also, just in, is the B of A response. The SEC will file its response by the end of the day.

Wednesday, August 19, 2009

ATT and GOOG Voice

Andy Kessler wrote a nice piece in today's Wall Street Journal, where he opined that ATT/Apple's disincentive to 'open' the airwaves is as much an 'alpha' (company) problem, as it's a 'beta' (industry) issue.

Beginning with the concept that airwaves can be owned by private entities, the government has not only sold, but set a mechanism to maximize the price companies pay for exclusive airwave access. Of course, the derivative of large upfront payments is an expectation of a long and fruitful annuity of high customer payments.

We have a situation here where there is a non-alignment of government objectives (per the President "the US should lead the world in broadband penetration and Internet access.") and its policy of selling access.

Given the airwave ground rules, plus the granting of municipal cable monopolies (more upfront government fees) ATT/Apple, and others, are behaving exactly the way one would expect. Unfortunately, it's not in their long-term interests, nor those of the US, to have regulations that unnaturally create high margins in a world where marginal costs are plummeting and innovators, such as Google, are at the doorstep.

As we have seen, entrepreneurs who are stifled by locked doors, find windows of opportunity.

Tuesday, August 18, 2009

Legal agreements

Fred Wilson, Chris Dixon, Brad Feld and others have recently posted about first round funding terms, and helpfully followed with advice and pointers to documents from the law firms Gunderson, Wilson Sonsini and Cooley Godward that will assist entrepreneurs (and VC's) to come to equitable terms.

A site that I have found helpful is, which hosts a searchable database of a myriad of agreements, by scores of law firms.

In addition, you may want to search Scribd for relevant documents. As an example, here's a search that I conducted on venture financing.

Better transparency in the financing process is good for all.

Monday, August 17, 2009

20 million video views and going strong

User generated video
Site built by a friend (in the business)
100% viral 'marketing'
Ads by Google on the home site (not sure of the relevance for all, but clearly some return)
Video hosted and stored, for no cost @ Youtube

Those Twin Lakes rock!

And of course, the spoof with 1.4mm views:

Virtually yours

I have recently been exposed to some happenings (in the estimated $2B revenue) virtual world arena. As in just about any market of this size, it is experiencing fragmentation as the communities become more granular.

Second Life is probably the best known property for folk of my generation. With IBM as a visible member of its community, it's just fine for folk like me to 'research' the site.

Here's an analyst report on the still private company prepared by Global Silicon Valley Partners.

While 'researching' Second Life, a young member of my household commented that it was not as much fun as Stardoll. If you have not yet heard, or played with Stardoll, check out the site comparison below:

Per the site " Stardoll is the largest online community for girls who love fashion, shopping, decorating, creativity, and making new friends from around the world. Members create their own MeDoll avatar, go shopping, dress up, decorate their suite, express themselves creatively and socialize with each other."

Though the site clearly does not have the graphic quality, nor depth of SecondLife, it is good enough to build a rabid following of 7-17 year olds and two years ago attracted a $6mm investment from Index Ventures and Sequoia.

In my household, I have seen a steady progression from Webkinz to Club Penguin, followed by Stardoll, which leads to Miss Bimbo.

Saturday, August 15, 2009

A bite out of the Apple?

One of the attractive, and sticky applications that endears Blackberry owners to their devices is Blackberry Messenger Manager (BBM). It's essentially an instant message application for your smart phone that facilitates texting.

A new version of BBM was just 'leaked' (messenger 5.0) and looks like a significant enhancement. It adds location management to the application, group chat, and facilitates adding new contacts through a neat 'bar code' feature which is integrated with the camera.

To me, the core strength of the BBerry is around its communication (mail and messenger) attributes. This upgrade cements the appeal for current owners, and those interested in having a device maximized for communications. For others, who seek a mobile internet experience, the iPhone just can't be beat.

Here's a nice tutorial on YouTube, posted by Moe Step:

Thursday, August 13, 2009

Open Source

The WSJ published a fine article about the success Peter Fenton of Benchmark (formerly Accel) has had in concentrating on, and exiting, Open Source investments. I am a huge believer that Enterprise prices are on a steady downward pricing curve and that 'best of breed' vendors are suffering from the slings and arrows of open source (maintenance based) pricing, AND pricing bundles from integrated vendors that takes away, or minimizes ASP's for these independent vendors. While terribly painful for these focused vendors (and their investors), it's good for customers.

Here's some of the quotes that I really enjoyed (and agree with):

When praising open-source many venture investors tout the low-cost product development that comes from a project’s community. But for Fenton, that’s overstated - the real advantage he says is the distribution model.

Rather than “expensive sales efforts and negotiations with the upper management to get the most money possible,” the people that will be using the software can easily download and try the product. This helps the best products proliferate and weeds out the underperformers.

Having a well-received product not only results in plenty of downloads, users and developers, it also makes the sales process that much easier. With SpringSource, “anyone the company sold to was already using the product,”

The success of open source, coupled with the aggressive pricing of integrated vendors (CA, Oracle et al) is mostly killing the business model of the best of breed vendors offering limited product suites. Unless these vendors offer real technology innovation, as opposed to products based on business process innovation, it will be quite hard for them to realize returns that will justify the capital investment necessary to build the IP and a direct sales/service organization to support it.

From an investors point of view, the opportunity cost of investing in an Enterprise software company that requires a direct salesforce, a dedicated R&D team, plus a 24/7 support organization pales in comparison to internet enabled alternatives. As my buddy Elad once said "Stay away from businesses that fight technology trends", and embrace the one's that are ahead of the wave.

Wednesday, August 12, 2009

Stop making sense

I've been thinking about two high profile, yet unrelated transactions that took place in the past 30 days in the Internet. The Yahoo/MSFT licensing deal and now the Facebook/Friendfeed acquisition. Here's my thoughts:


As a Yahoo shareholder I was initially quite disappointed with the terms of the transaction. Like many others, I hoped for much more. However, the reality is that Yahoo search was a depreciating asset. The operation did not have the vision to change the playing field (e.g. Wolfram Alpha), was mired in a distant second market share position, and despite the most public display of being for sale, had no other visible bidders. I believe the management/board team has rightly decided to do a final harvest of the fruits of the 'last war' and clear the decks for the next battle(s). Too bad there was not a 'boat-full of upfront cash, but this outcome is more a reflection of the market value, rather than lack of trying to maximize, or will to do a transaction.

Realistically, the company is way too far behind in the current market 'sweet spot', namely real-time and social. Let alone invisible in exploring, let alone taking early market stakes, in other emerging markets. Hopefully, with the search transaction now behind them and a rebuilt management team at the helm, the team can focus on building going forward value for shareholders by bringing together innovation and its audience reach.


I am a believer that when markets develop, initially best of breed vendors take early leads. Later, firms which combine their initial market share, with a product vision which expands their offerings to serve more needs for their customers, emerge/remain market forces. In the last couple of days, Facebook has aggressively signaled its intent to expand its service through incorporating real-time, adding more user requested social features, and introducing an alpha version of Facebook lite. These are important and timely additions as they simultaneously fend off competition from below (Twitter), and from established vendors who will surely mount spirited counter attacks (Yahoo, MSFT etc).

I suspect the M&A market will shortly heat up for a select few of the innovative social vendors and their shareholders.

Wednesday, August 5, 2009

Marc Andreessen

Marc Andreessen (Netscape and Opsware, Ning and Andreessen Horwitz) at his irreverent best:

On newspapers- "stop the presses, how many years of pain do you want to take"
Facebook- 175mm active users, no brand advertising preferring organic growth
iPhone- A central platform for developers to build mobile applications "it was like beamed in from the future"

Qik- He's an investor...any phone with a video camera can stream video live to the web

Venture Capital- We are going to invest in many early stage software companies, with a small amount of initial capital ($200k-$1mm), when successful he'll invest more deeply. Harnessing capital efficiency which the web brings.

Twitter- He bet on the entrepreneur while he was with Odeo, when it was failing, he saw an opportunity that became Twitter. He returned the money raised for Odeo and invited the investors to join him in Twitter.

Kindle- Is representative of the new era of publishing. It's a new form factor 'web pads' that will be a precursor for a generation of similar devices (as a Kindle owner, I agree, and can't wait for a similar sized iPod/iPhone).

Monday, August 3, 2009

ATT is getting 'engaged' on the FCC iPhone matter

Per Seeking Alpha:

Update: AT&T responded to this post with the following statements:

AT&T does not manage or approve applications for the App Store. We have received the letter and will, of course, respond to it.

Customers can use any compatible GSM phone on our network, not just the ones we’ve approved and sell. And they also can use apps we don’t approve. We don’t approve iPhone applications.

So, it would seem that Apple are the folk that rejected the GOOG Voice application. Though, the company who 'gains' the most by this rejection is ATT (hard to see the upside for Apple, unless the rejection was formally done by Apple, at the behest of ATT). It's great the FCC is getting into this and one or both of these organizations will, hopefully, change their evil ways.

Bottom line is that if you purchase a device (phone, computer, tablet etc), you should be the one who decides what should go on it. Perhaps, ATT/Apple should read the GOOG 'ten things Google has found to be true'.

If pressed for time, 'Don't be evil' should suffice.

Saturday, August 1, 2009

Copy of FCC letters...

Courtesy of Techcrunch

FCC Letter to Apple

July 31, 2009

Catherine A. Novelli, Vice President
Worldwide Government Affairs
Apple Inc.
901 15th Street, NW, Suite 1000
Washington, DC 20005

RE: Google Voice and related iPhone applications

Dear Ms. Novelli:

Recent press reports indicate that Apple has declined to approve the Google Voice application for the iPhone and has removed related (and previously approved) third-party applications from the iPhone App Store. In light of pending FCC proceedings regarding wireless open access (RM-11361) and handset exclusivity (RM-11497), we are interested in a more complete understanding of this situation.

To that end, please provide answers to the following questions by close of business on Friday, August 21, 2009.

1. Why did Apple reject the Google Voice application for iPhone and remove related third-party applications from its App Store? In addition to Google Voice, which related third-party applications were removed or have been rejected? Please provide the specific name of each application and the contact information for the developer.
2. Did Apple act alone, or in consultation with AT&T, in deciding to reject the Google Voice application and related applications? If the latter, please describe the communications between Apple and AT&T in connection with the decision to reject Google Voice. Are there any contractual conditions or non-contractual understandings with AT&T that affected Apple’s decision in this matter?
3. Does AT&T have any role in the approval of iPhone applications generally (or in certain cases)? If so, under what circumstances, and what role does it play? What roles are specified in the contractual provisions between Apple and AT&T (or any non-contractual understandings) regarding the consideration of particular iPhone applications?
4. Please explain any differences between the Google Voice iPhone application and any Voice over Internet Protocol (VoIP) applications that Apple has approved for the iPhone. Are any of the approved VoIP applications allowed to operate on AT&T’s 3G network?
5. What other applications have been rejected for use on the iPhone and for what reasons? Is there a list of prohibited applications or of categories of applications that is provided to potential vendors/developers? If so, is this posted on the iTunes website or otherwise disclosed to consumers?
6. What are the standards for considering and approving iPhone applications? What is the approval process for such applications (timing, reasons for rejection, appeal process, etc.)? What is the percentage of applications that are rejected? What are the major reasons for rejecting an application?

Request for Confidential Treatment. If Apple requests that any information or documents responsive to this letter be treated in a confidential manner, it shall submit, along with all responsive information and documents, a statement in accordance with section 0.459 of the Commission’s rules. 47 C.F.R. § 0.459. Requests for confidential treatment must comply with the requirements of section 0.459, including the standards of specificity mandated by section 0.459(b). Accordingly, “blanket” requests for confidentiality of a large set of documents are unacceptable. Pursuant to section 0.459(c), the Bureau will not consider requests that do not comply with the requirements of section 0.459.

Thank you in advance for your anticipated cooperation.


James D. Schlichting
Acting Chief
Wireless Telecommunications Bureau
Federal Communications Commission

FCC Letter to Google

July 31, 2009

Richard S. Whitt, Esq.
Washington Telecom and Media Counsel
Google Inc.
1101 New York Avenue, NW, Second Floor
Washington, DC 20005

RE: Apple’s Rejection of the Google Voice for iPhone Application

Dear Mr. Whitt:

Recent press reports indicate that Apple has declined to approve the Google Voice application for the iPhone and has removed related (and previously approved) third-party applications from the iPhone App Store. In light of pending FCC proceedings regarding wireless open access (RM-11361) and handset exclusivity (RM-11497), we are interested in a more complete understanding of this situation.

To that end, please provide answers to the following questions by close of business on Friday, August 21, 2009.

1. Please provide a description of the proposed Google Voice application for iPhone. What are the key features, and how does it operate (over a voice or data network, etc.)?
2. What explanation was given (if any) for Apple’s rejection of the Google Voice application (and for any other Google applications for iPhone that have been rejected, such as Google Latitude)? Please describe any communications between Google and AT&T or Apple on this topic and a summary of any meetings or discussion.
3. Has Apple approved any Google applications for the Apple App Store? If so, what services do they provide, and, in Google’s opinion, are they similar to any Apple/AT&T-provided applications?
4. Does Google have any other proposed applications pending with Apple, and if so, what services do they provide?
5. Are there other mechanisms by which an iPhone user will be able to access either some or all of the features of Google Voice? If so, please explain how and to what extent iPhone users can utilize Google Voice despite the fact that it is not available through Apple’s App Store.
6. Please provide a description of the standards for considering and approving applications with respect to Google’s Android platform. What is the approval process for such applications (timing, reasons for rejection, appeal process, etc.)? What is the percentage of applications that are rejected? What are the major reasons for rejecting an application?

Request for Confidential Treatment. If Google requests that any information or documents responsive to this letter be treated in a confidential manner, it shall submit, along with all responsive information and documents, a statement in accordance with section 0.459 of the Commission’s rules. 47 C.F.R. § 0.459. Requests for confidential treatment must comply with the requirements of section 0.459, including the standards of specificity mandated by section 0.459(b). Accordingly, “blanket” requests for confidentiality of a large set of documents are unacceptable. Pursuant to section 0.459(c), the Bureau will not consider requests that do not comply with the requirements of section 0.459.

Thank you in advance for your anticipated cooperation.


James D. Schlichting
Acting Chief
Wireless Telecommunications Bureau
Federal Communications Commission

FCC Letter to AT&T

July 31, 2009

James W. Cicconi
Senior Executive Vice President-External and Legislative Affairs
AT&T Services, Inc.
1120 20th Street, NW, Suite 1000
Washington, DC 20036

RE: Apple’s Rejection of the Google Voice for iPhone Application

Dear Mr. Cicconi:

Recent press reports indicate that Apple has declined to approve the Google Voice application for the iPhone and has removed related (and previously approved) third-party applications from the iPhone App Store. In light of pending FCC proceedings regarding wireless open access (RM-11361) and handset exclusivity (RM-11497), we are interested in a more complete understanding of this situation.

To that end, please provide answers to the following questions by close of business on Friday, August 21, 2009.

1. What role, if any, did AT&T play in Apple’s consideration of the Google Voice and related applications? What role, if any, does AT&T play in consideration of iPhone applications generally? What roles are specified in the contractual provisions between Apple and AT&T (or in any non-contractual understanding between the companies) regarding the consideration of particular iPhone applications?
2. Did Apple consult with AT&T in the process of deciding to reject the Google Voice application? If so, please describe any communications between AT&T and Apple or Google on this topic, including the parties involved and a summary of any meetings or discussions.
3. Please explain AT&T’s understanding of any differences between the Google Voice iPhone application and any Voice over Internet Protocol applications that are currently used on the AT&T network, either via the iPhone or via handsets other than the iPhone.
4. To AT&T’s knowledge, what other applications have been rejected for use on the iPhone? Which of these applications were designed to operate on AT&T’s 3G network? What was AT&T’s role in considering whether such applications would be approved or rejected?
5. Please detail any conditions included in AT&T’s agreements or contracts with Apple for the iPhone related to the certification of applications or any particular application’s ability to use AT&T’s 3G network.
6. Are there any terms in AT&T’s customer agreements that limit customer usage of certain third-party applications? If so, please indicate how consumers are informed of such limitations and whether such limitations are posted on the iTunes website as well. In general, what is AT&T’s role in certifying applications on devices that run over AT&T’s 3G network? What, if any, applications require AT&T’s approval to be added to a device? Are there any differences between AT&T’s treatment of the iPhone and other devices used on its 3G network?
7. Please list the services/applications that AT&T provides for the iPhone, and whether there any similar, competing iPhone applications offered by other providers in Apple’s App Store.
8. Do any devices that operate on AT&T’s network allow use of the Google Voice application? Do any devices that operate on AT&T’s network allow use of other applications that have been rejected for the iPhone?
9. Please explain whether, on AT&T’s network, consumers’ access to and usage of Google Voice is disabled on the iPhone but permitted on other handsets, including Research in Motion’s BlackBerry devices.

Request for Confidential Treatment. If AT&T requests that any information or documents responsive to this letter be treated in a confidential manner, it shall submit, along with all responsive information and documents, a statement in accordance with section 0.459 of the Commission’s rules. 47 C.F.R. § 0.459. Requests for confidential treatment must comply with the requirements of section 0.459, including the standards of specificity mandated by section 0.459(b). Accordingly, “blanket” requests for confidentiality of a large set of documents are unacceptable. Pursuant to section 0.459(c), the Bureau will not consider requests that do not comply with the requirements of section 0.459.

Thank you in advance for your anticipated cooperation.


James D. Schlichting
Acting Chief
Wireless Telecommunications Bureau Federal Communications Commission

FCC inquiry into GOOG Voice's elimination from App Store

I can only applaud the continued weakening of the carrier hegemony. Here's the CNN synopsis.

Friday, July 31, 2009

Sitting here in limbo

We recently found a use for an old XP laptop. I took it out of the closet and began updating the OS, Browser(s),applications and utilities (AV). All went well till I looked for OS updates. 'Naturally' you can not install XP updates via Firefox or Chrome, so I dutifully went to the IE download site. At the site, I was exposed to MSFT's strong Silverlight push as it took a few minutes to find the link to only download IE8.

While IE8 was (is) downloading, I have updated:

Chrome (new install)
AVG (new install)
Adobe reader update
Quicktime update

No wonder analysts are so deeply concerned that Yahoo has just 'sold' their most important infrastructure component, for zero cash upfront.

Note to a world where switching costs have dramatically been reduced, please be very careful about the migration path to Windows 7. I've been to the Apple store for purchases now three times in the past 6 months. You will note that entry level 15" Macbook is sold out....purely a reflection of the great Apple experience, coupled with a cavalier disregard for newly empowered users.

Please do better.

Wednesday, July 29, 2009

Steroids and Yahoo/MSFT

After nearly a full year of wrangling, Yahoo and MSFT have completed their search deal. With massive investments in R&D and marketing, and now the Yahoo deal secure, I was thinking about whether, after 7 frustrating years, MSFT is ready to really compete in the largest, and most pivotal Internet space.

Let me start with a bias...I think that the 'best' product, offering the most value, usually wins. Best, of course is an ambiguous definition. Nonetheless, as both services are 'free', cost is measured via opportunity cost. All things being equal, however, an incumbent market share leader usually beats competitors who offer only similar value. As in war, an invading force requires an overwhelming advantage to dislodge an opponent.

A common expression when trying to position a new product vs an entrenched competitor is to say 'gee, our product is like theirs, but on steroids'. Obviously, this is now a dated expression, taken from the days when steroids had a connotation of bringing speed, strength, virility, and other good stuff with no downside. But, the expression masks something, a lack of sustainable differentiation. If anything, merely an incremental advancement that does not stand the scrutiny of the market. I have a hard time recalling products 'on steroids' dislodging market leaders. It takes much more innovation, or fundamentally changing the value curve to do so. Google did it to Yahoo, and Yahoo did it to AOL. Curious, I wanted to do a quick test to see if Bing is bookmark worthy.

Let me share a totally random and singular (unscientific)comparison; here's the top five results, with the top 3 irrelevant for me, when searching 'Bing is Google on steroids' in Bing:

Mexican Steroids - Web - CyberDefender steroids / mexican-steroids.html [Found on Google, Bing,]​20... ·

Steroids - definition of Steroids in the Medical dictionary
- by the ...
... Google Bing? ... Steroids. A group of drugs that includes the corticosteroids, similar to hormones produced ...​Steroids · Cached page
steroids definition of steroids in the Free Online Encyclopedia.
... Google Bing? ... steroids, class of lipids lipids, a broad class of organic products found in living systems​steroids · Cached page

Search Wars: Forget Bing, Google Has More to Worry About from Twitter
Stealing any thunder Microsoft might have managed to generate for Bing , day 2 of the Google I/O ... Google Wave, Email on Steroids! — Inventor Spot - Inventions, Innovations, and ...​bing_​google_has_more_to_worry_​about ·

Five Reasons Why Microsoft’s BING Outshines Google –
Five Reasons Why Microsoft’s BING Outshines Google . By Bryan Lambert - Sunday, June 14, 2009 ... With Bing you get image and video results on steroids. For instance, with the image ...​Five-Reasons-Why-Microsofts-BING-Outshines-Google.htm · Cached page

And from Google, using the identical 'Bing is Google on steroids:

Five Reasons Why Microsoft's BING Outshines Google –
Bing is what Google was 10 years ago, fresh, innovative, and (dare I say it) cool. ... With Bing you get image and video results on steroids. ... - Cached - Similar -

19 Comments - User Centric Releases Results of Eye Tracking Study
usercentric google versus bing eye tracking study .... It would be very earlier to compare Bing with Google however no doubt Bing seems ... - Cached - Similar -

Bing Launch Has Google Scared | Internet Marketing News

It is very unlikely that Bing will be able to knock Google from the top of the ... Yotify- Google Alerts on Steroids - 1995 views; Find High Pagerank Blogs ... - Cached - Similar -

Google Wave, Email on Steroids!
Google Wave is what email would be like if it were on steroids! ... "Bing" on the other hand is another story! So there you have it. Google once again leads ... - Cached - Similar -

What the Bing is this? Live Search Makeover Review | FlipCurve - 9:24am
Jun 4, 2009 ... Bing honestly feels a little like Google on steroids, which I feel will lead to either a love it or hate it response. ... - Cached -

In this random example, the Bing juice just didn't go far enough. Google on steroids, hardly. A homerun? Hardly.

Friday, July 24, 2009

The structured debate

Over the past two weeks my household has been a microcosm of the Bberry vs iPhone raging debate. It's about settled now, with my wife's phone now adopted as 'our' phone and the Bberry, still a best in class for inputting alphanumeric characters, relegated for my inputting duty for long mails. The Bberry remains a wonderful device for structured tasks such as mail or texting. The iPhone, optimized for unstructured tasks, is foremost a web gateway, and now adequate

Thinking about an analogy from the software business, the Bberry is a best of breed device that's optimized for the critical task of mail and texting. The iPhone is an integrated device, whose 3Gs' text inputting has just crossed the 'good enough' bar and it's optimized for bringing the mobile web AND myriad of affordable applications now makes it compelling.

Previously, I posted about the commoditization of pricing, in part due to the integration of multiple features (phone, music player, game player, compass, etc) that makes the iPhone a price LEADER. But, I neglected to highlight, as I should, the tens of thousands of affordable (many free) quality applications that enable the iPhone to morph to so many single use devices that are only limited by your imagination (e.g. flashlight, ebook reader, fingerprint scanner etc). These reinforce the iPhone's price/performance leadership to heights beyond the 66% discount previously noted.

In the software business, early stage markets are most often dominated by fast moving best of breed vendors who optimize for one application. As markets mature, they tend to pull in other features and leaders emerge as integrated vendors that combine many capabilities. This integration, usually demanded and greatly appreciated by customers, relegate best of breed vendors, who do not expand their scope, to second tier status. MSFT was (note the tense) the paradigm of commoditization and integration of the desktop. Goog, with Chrome(s), search and the application suites have taken this approach to the web.

Web based applications, such as eBay, Facebook, LinkedIn, Amazon,etc. are greatly expanding their focus, as they must. Amazon, as they repeatedly show (now with the Zappos acquisition) are doing the same for commerce. In my view, this is the key challenge today for Twitter (as opposed to monetization) as their best of breed status can easily be subsumed by any of the above vendors (especially as Goog makes progress with Wave).

RIP John 'Marmaduke' Dawson of the New Riders

Wednesday, July 22, 2009

Looking for the trickle down

Apple announced great results yesterday highlighted by some interesting iphone statistics:

5.2 million phones sold in the last quarter
1.5B apps downloaded in the first year of the App Store

Here is a replay of the earnings webcast.

Now that billions of applications have been downloaded by tens of millions of people, I am wondering why we have not seen a robust next generation of mobile-centric software app companies, centered on this platform, achieve critical mass. If not, while many were bemoaning the lack of paradigm shifts, it seems as if we have seen the market pendulum swing away from downloaded applications and towards platform independent web based applications.

Thinking of market shifts, here's a post from David Winer, that reflects on the rise of the internet and its implication to MSFT, and a warning to entrepreneurs who may seek 'account' control based on a platform (the internet) that's by definition, open and near frictionless.

Tuesday, July 21, 2009

With but a whimper

On Friday, Sun Microsystems disappeared into Oracle. In the 'old' days it was the hardware companies, flush with cash and customers, who were buying software companies. How the mighty have fallen, and the torch has passed.

It seems to me that the 'big iron' and big software days are long gone; out with the big upfront 'vig', customer 'control' and proprietary lock-in. Hurray for enpowerment, pay as you go, and open API's.

We are an industry that consumes its babies and stimulus dollars be damned, nothing is going to stop the flow of jobs, capital and intellect away from stagnant and towards opportunities. As it should be.

Tuesday, July 14, 2009

Another place for tax dollarrs to visit?

A recent post in TechCrunch called for Government scrutiny of the Search business. The argument is that, since the commerce around Search, as run by Goog, is a black box with no transparency it's subject to abuse by a company that has achieved monopoly power.

I tend to think that market interference tends to often bring worse outcomes than the status-quo, but nonetheless, the post makes for an interesting read.

Monday, July 13, 2009

Q2 Venture capital fundraising

Per the National Venture Capital Association, the numbers are not pretty:

25 Funds raised $1.7B, the lowest level since 1996 when 21 Funds raised $938mm.

Eight first time funds raised capital led by Domain Associated Management ($371mm and Andreessen Horwitz $300mm).

Here is the text of the release

If this is a sustained trend, no doubt it will affect the capital available for entrepreneurial companies and exacerbate the 'husbanding' of capital to support existing investments. Time will tell if the lowering of available capital creates a more holistic balance between a generation of capital efficient companies and the resources available to support them, or if we are destined to live in a feast n famine environment.

Ten exciting Israeli start-ups

The influential Israeli business daily, The Globes and the blog site, paneled a jury to sift through 700 applicants to reach the final 10 to present live (streamed too) at the annual Internet, Media and Communications conference.

Congratulations to Reimage and here is the list of the finalists:

Ten Years After

It's been ten years since a student in Boston, Shawn Fenning, led a computing revolution that nearly destroyed a multi-billion dollar industry, is profoundly affecting nearly all forms of digital content, spurred Congress to enact new laws, and was influential in promoting Free as a business model.

His Napster long ago was swallowed by turbulent seas, but peer to peer applications live on in more than 200 million computers and is now a respectable noun to be uttered in polite company.

The Pew Internet & American Life Project recently published a research report looking at the Music Industry 10 years after Napster. It's a good read, especially if you broaden your interpretation to include all digital content.

Sunday, July 12, 2009

Mice move elepants

Dave Winer, often called the 'father of RSS' recently posted about a new Google service PubSubHubbub, that provides near real-time updates of RSS/Atom feeds. Per David it:

makes it possible to build a distributed Twitter-like system with components that are not made by a single company, and with servers not run by a single company. It makes it possible to build a Twitter without the limitations of Twitter. (For example, no 140-character limit, the ability to handle enclosures, categories without #hashtags.)

The protocol is free; anyone can run a hub or subscribe.

Friday, July 10, 2009

Swimming with the tide

Amazon jumped into a new niche today with the announcement of a beta version of an online cellphone store,AmazonWireless. As someone who recently went through cellphone purchasing hell, I welcome their entrance into a market where the sales effort contains too much unnecessary friction, and too often have unhelpful people, with best intent, just not helping.

It's about time

Thursday, July 9, 2009

All that shines is not Chrome

I've been doing some more thinking about the Chrome OS and its implications/next steps.

1. Google's ecosystem today is concentrated on breaking its service (SEO) vs supporting its infrastructure. There will have to be a huge amount of work to switch the DNA of this relationship to create the primordial muck for a new OS to be successful.

2. The OS will have a Linux kernel and much Javascript. The later is known for not being a speed demon and performance will be the first measure for its competitiveness (similar to the Chrome browser).

3. Despite the OS being 'fast, lightweight and optimized for the cloud' it will need to run/support some local applications. Such applications need to be readily available, perhaps via a GOOG iTunes like application store.

4. With Android and Chrome OS I would not be surprised if Eric Schmidt resigned from the Apple board as the more he takes on MSFT, the more Apple is exposed to 'friendly fire'

5. The PC era is now rapidly being commoditized from two fronts. The iPhone, which is now a computer, phone, camera, video camera, GPS, music player and game platform represents fantastic value and a classic example of exporting deflation for the benefit of customers. Let's do the math* (courtesy of Amazon):

Netbook PC $375
Phone (Nokia) $ 90
Camera (p&s) $125
Flip video $129
GPS $ 90
iPod $224
Nintendo DS $130

Total $1163

iPhone $399

Savings $764
% savings 66%

The other commoditizing force is the cloud which moves storage and computations away from the personal computer. Hence the move to low cost netbooks that, despite being low(er) power, represent the fastest growing segment of the PC market.

It's easy to look at Apple as a purveyor of premium priced products that gets away with it due to design and brand. I think this is a misplaced perspective that competitors will ignore at their peril.

*I know it's not totally 'apples to apples' due to quality of comparisons (e.g. camera pixels)

MOGUAI - Sittin On Chrome - The best home videos are here

Wednesday, July 8, 2009

Shifting sands

MSFT has done a historic job of utilizing the combination of applications (Office) and its Windows brand to build an industry defining company over the past 30 years. It's competitors were primarily in the applications camp (e.g. Lotus), the infrastructure business (Novell...once led by Eric Schmidt), or the hardware space (IBM). Its business strategy of utilizing the interplay between the two to defend its flanks, while commoditizing the overall price users paid for computing was brilliant and added value for its 'users' while maiming its competitors.

For the first time in many years there are now real storm clouds on the horizon for MSFT. Not anemic growth due to a customer saturation, or self-infliced mediocre products. But a real core competitive challenge.

GOOG's unrelated, but coincident announcements of removing the Beta from its mail client and the same day announcing it's entering the OS business via an 'open source (Linux based), free, lightweight' code base which will be initially targeted towards buyers of netbooks, represents an attempt to trap MSFT in a competitive pincer movement which combines the attributes of a technology shift to the cloud, a platform change to lighter computing (netbooks), and a differentiated business model (freemium).

I am sure there will be some initial confusion about where Android begins and this OS, named Chrome OS ends. GOOG says the following (in essence we are throwing both into the market and will let it decide which will do better:

"Google Chrome OS is a new project, separate from Android. Android was designed from the beginning to work across a variety of devices from phones to set-top boxes to netbooks. Google Chrome OS is being created for people who spend most of their time on the web, and is being designed to power computers ranging from small netbooks to full-size desktop systems. While there are areas where Google Chrome OS and Android overlap, we believe choice will drive innovation for the benefit of everyone, including Google."

In the past, MSFT was at its best when its core was challenged. Time for a Mojo test.

Monday, July 6, 2009

Marc Andreessen on his new fund, mega-franchise opportunities, and

Marc Andresseen, probably best known for starting Netscape and Opsware (now part of HP) and Ning. has just closed on raising $300mm for a new Venture Fund. He's on the board of Facebook and an angel investor in Twitter and is using the foundation of those experiences to look at 'franchise creating opportunities'. The following interview displays both is passion and irreverent sides. If you don't have time to read the whole interview from VCJnews, here's an annotated version of the discussion:

Q: What is a franchise company?

A: Andy Rachleff, who is a VC [formerly at Benchmark Capital] who now teaches venture capital at Stanford, did an analysis. Basically between roughly the mid-80s and the mid-2000s—a good cross section of time across a couple of different cycles—what he found is that basically there are about 15 companies a year that are founded in the tech industry that will eventually get to $100 million in annual revenue. Those companies in total represent a very large percentage of the returns to venture capital. His data show that they were 97% of all public returns, which is a good proxy for all returns. So those are the companies that matter. Those are the companies that have a big impact on the world. Those are the companies building foundational technology. Those are the companies that generate all the venture returns.

So, we’re going after those 15 companies and we’ll enter them at any point where we find them. Ideally, we’ll find them at the seed stage and we will help develop them and put in more and more capital as they grow. Failing that, if we screw that up, we will then, as we say, ‘correct our mistakes,’ and we would go into a later round.

Q: What’s your optimal deal size?

A: First of all, you’ll notice that there are two GPs. That’s a large ratio of dollars to GP, probably three or four times what you’ll find in a lot of funds. The deal-size range—this is an area where we’ve relaxed the focus—the deal size range is $50,000 to $50 million.

Here’s why. First of all, we think that it’s not a stage-specific exercise, at least the way that we do it. It’s a company-specific enterprise. We’re on the hunt for new franchise companies in the category I described. Our view is when you find one of those franchises—or a company that you think can be one of those franchises—you want to invest as much as you can both in time and effort across as many rounds as you can.

Q: How will that affect the number of investments you make?

A: The majority of the investments will be in seed stage. We may do as many as 60 to 80 seed stage investments in the first fund. Typically, in the seed stage, we wouldn’t go on the board. In fact, at the seed stage, we often advocate that the companies not even have boards. At the seed stage these days you’re talking about a company with like four or five people, so if you try to put a board together the board can end up with more people than the company. And a seed stage company’s mission in life, in our view, is to find product/market fit. Until it does that, all the rest of the company-building stuff doesn’t make any sense. That’s one side of things.

From our standpoint, a majority of our dollars will go into a much smaller number of deals at the venture stage than at the late stage. And so, hypothetically, 10 to 15 venture deals and two to three late stage deals or something like that. One twist is that we’re broadening the early to late side. We’re more multistage than most. Another twist is we’re narrowing the domain, which we discussed, pretty tightly.

Q: You seem to be a firm believer in the if-we-can-scale-this-thing, the money will come model. You’ve said as much about Facebook and Ning and Qik. But that doesn’t always work. It costs Pandora a lot of money every time it attracts a new user for example, but those users still prefer not to be fed ads. As an investor, how do you know when that’s a viable approach?

A: No. 1, the details really, really matter. The cost structure really matters. I don’t know enough about Pandora. When people get in trouble with this sort of thing, it’s usually for one of two reasons. Either the market wasn’t going to be that large—in which case deferring revenue to get to the market wasn’t worthwhile—or the costs are just too high. So, I don’t want to talk about Pandora specifically.

But, in contrast, here’s how I think about the economics of Twitter, for example. The economics of Twitter are that they’ve spent about $15 million. They have created already a global brand name. Ben likes to point out that the Bing ad campaign [by Microsoft] is $300 million of advertising. Would you rather own the Bing brand or the Twitter brand? So, what’s that worth? Two, they have a user base of about 30 million users now, growing very fast. And, three, they have that growth rate, so they have all the future acquisition.

But even just looking at the current user base, they’ve spent maybe 50 cents per acquired user. Total. For everything. All development, all marketing, everything. And so on the revenue side, you say: ‘Suppose they want to monetize that? Can they get 50 cents per user per year in terms of ads?’ Yeah, probably they could do that. So to go get that $15 million back seems really easy, and it seems like there’s a lot more upside beyond that.

Finally, here's a link to his blog (now on hiatus).