Posted on Sandhill.com was the question 'Will Salesforce.com be the last software company to hit $1 billion in revenue?' Salesforce.com just passed the trailing $1B revenue milestone 10 years after its founding and, given the economic situation, this attention grabbing redundant question, was fair game.
Three experienced people follow the softball question with affirmative answers from their different perspectives:
1. Bryan Stolle, Mohr Davidow Ventures- With more connected people than ever, the opportunity to create value is larger than ever
2. Bill Portelli CEO CollabNet- An emerging 'cloud' market which IDC pegs at $42B in 20012 is but one area where the next $B company can emerge
3. Scott Abel, CEO Spiceworks- The opportunity for Social Business Applications (defined here on the SpiceWorks blog) is untapped and has many nascent billion dollar segments.
Each of the commentators make valid points, but from my perspective, a post by Bill Gurley of Benchmark, highlighting the way Tencent, a China based company founded in 1998 as an IM based service, has surpassed $1.2B in revenue by branching out from its IM roots by offering related services to its growing customer base. Its growth seems eerily similar to the way Amazon is no longer solely about books; yet has a powerful set of business principles that naturally lead to adjacent markets.
The company concentrates, though not exclusively, on building revenue via sales of casual games, communications services, payment services and advertising. With more than 60% of its employees involved in R&D, and most sales transacted via self-service that does not require salesforce intervention, the firm seems to embrace a blend of a 'Google' culture, within a commerce driven business model. It's a wonderful post (though a bit too virtual good centered for my taste) and worth reading here.
It's been a wonderful question and answer morning.
Showing posts with label mohr davidow. Show all posts
Showing posts with label mohr davidow. Show all posts
Friday, March 27, 2009
Monday, March 2, 2009
Riders on the Storm
Dan Primack of PEHUB posted on what seems to be a growing trend amongst Venture firms; raising 'Annex funds'. In the post, he cited prestigious firms such as Kleiner, Mohr Davidow, Tallwood and First Round Capital all going down this route.
Venture firms usually seek to raise annex funds when the world changes mid-fund, causing a change in their investment thesis or in execution strategy. Such changes most often are symptoms of a firm finding, for whatever reason, they have insufficient capital to carry out their stated initial mission.
In today's market, it would be reasonable to assume that VC's (and the list is surely much broader than these organizations) are faced with a dual market reality of portfolio investments taking a longer period of time to be self-supporting and finding a paucity of like minded firms sufficiently interested in leading follow-on rounds. This double whammy means that prudent firms ought to provision reserves, to support their portfolio, at much higher rates than budgeted. An Annex alternative would be to either reduce the breadth/depth of new investments (e.g. strategy change), or deeply triage existing investments (perhaps prematurely). These actions 'create' more reserves for surviving portfolio investments.
We were last confronted with firms raising Annex funds when the internet only bubble burst. Unfortunately, I don't think many of these funds did well for their LP's. Though, that was before many of these experienced managers garnered experience riding the storm.
Venture firms usually seek to raise annex funds when the world changes mid-fund, causing a change in their investment thesis or in execution strategy. Such changes most often are symptoms of a firm finding, for whatever reason, they have insufficient capital to carry out their stated initial mission.
In today's market, it would be reasonable to assume that VC's (and the list is surely much broader than these organizations) are faced with a dual market reality of portfolio investments taking a longer period of time to be self-supporting and finding a paucity of like minded firms sufficiently interested in leading follow-on rounds. This double whammy means that prudent firms ought to provision reserves, to support their portfolio, at much higher rates than budgeted. An Annex alternative would be to either reduce the breadth/depth of new investments (e.g. strategy change), or deeply triage existing investments (perhaps prematurely). These actions 'create' more reserves for surviving portfolio investments.
We were last confronted with firms raising Annex funds when the internet only bubble burst. Unfortunately, I don't think many of these funds did well for their LP's. Though, that was before many of these experienced managers garnered experience riding the storm.
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