Posts from 2003

Rainforest in the City

There are so many things about Rio that are amazing. One of them is the “central park” of Rio, the Tijuca National Park. It’s a tropical rain forest that sits right in the center of the city.

It was a partly cloudy day yesterday at the beach, but 20 minutes later when we got up into the rainforest, it was doing just that, raining.

Five minutes later, it was sunny. Five minutes later, it was raining. That’s the way it is in Rio, particularly in Tijuca.

Since i forgot the cord that connects my digital camera to my laptop, the pictures will have to wait until i get back. Which is too bad, as Jeff Jarvis points out in his comment to my last post.

All i can say is that you’ve got to come check this country out. It’s amazing.

#Blogging On The Road

Ethernet in Rio

My romantic notions of posting from the internet cafe are gone, replaced by an ethernet jack in our hotel room. The amazing thing is there’s none of that stuff where you have to launch the browser, log in, pay more, etc. You just plug in and go. Gotta love Rio.

#Blogging On The Road


The original Portugese capital of Brazil is a city in Bahia called Salvador. The portugese settled in Brazil in the mid 16th century and held it until they turned it over peacefully to the Brazilians in 1822.

You get a sense of the enormous wealth that the Portugese took out of Brazil during this time by visiting Salvador. They have these massive churches at almost every corner, built with the profits they made on the trade of sugar, gold, tobacco, coconuts, etc.

We visited one church called Sao Francisco (St Francis) which was covered from floor to ceiling with intricate wood carvings that were covered completely in gold leaf. I’ve been to a ton of churces in my day in Europe and the US and i’ve never seen anything like this before.

The other really cool thing about Salvador is the way the african, portugese, and native populations have combined to create a unique culture that features its own food, music, dress, etc. It’s a very interesting place to visit, although its really hot this time of year.

#Blogging On The Road


What do you get when you mix New Orleans, Hawaii, and Rio? You get Bahia, in Brazil, about 500 miles north of Rio. I’m here and its amazing. The weather is tropical, the food is creole, the people are wonderful, and the sounds and sights are totally brazilian. You name it, they’ve got it; surfing, fishing, snorkeling, eco tours, sailing, windsurfing, etc. We are having a blast.

#Blogging On The Road

Blogging on the road

I will be travelling for the next two weeks with my family. We are going to brazil. We are trading new york winter for brazilian summer. It should be fantastic.

I am going to try to blog a bit on the trip. I have this romantic notion of posting from an internet cafe in rio or from my cell phone on the beach.

We’ll see if that actualy happens.

#Blogging On The Road

Andrew Anker on Friction

Andrew Anker has written a terrific post making some very solid counter arguments to my earlier post on How Much Is Too Much.

Andrew is absolutely right that it will take a lot longer for the venture market to self correct than a market with less friction like public equities. And he may be right that the venture market continues to be overfunded.

But I stick with my assertion that the venture market is getting healthier. I am heading into my 18th year in this business and it just feels like we are back to a normal market. The nuclear winter we were in for the past three years is clearly over. But i don’t see the crazy excesses of the ’98-’00 time frame either.

I spent some time yesterday with two VCs i know well. They are good VCs. But they can’t get a fund raised right now. They raised their first fund in the ’99 time frame when everyone could get money. They learned a lot, did some dumb things, but did some really smart things too. And they have good companies in their portfolio and a few that are going to be big winners. But the market won’t give them more money until they prove themselves with real cash returns. That’s the kind of restraint that didn’t exist in the bubble that does exist now and will cause the market to reach equilibrium.

I also think that Silicon Valley, where Andrew works, is home to more of the oversupply than the east coast, where i spend most of my time. Here is my back of the envelope math:

Let’s say that $20bn of new money is the most the venture market can really handle in any year. And let’s say that Silicon Valley is home to 60% of all venture deals. That says Silicon Valley can only take $12bn of new money in any year. If the average Silcon Valley venture fund is $400mm, then that means only 30 new funds can be formed in Silicon Valley in a single year before that market gets overfunded. I believe that there will be at least 40-50 new funds formed in Silicon Valley in 2004.

Let’s apply that same back of the envelope math to the NY tri-state area which is a market i know well. The NY tri-state area has traditionally been home to 6-8% of all venture deals. If you apply the 6% number to $20bn, that means that no more than $1.2bn should come into venture funds in the NY tri-state market in a single year. The average fund size in the NY tri-state market is closer to $200mm, and that means there can be 6 funds formed this year. I believe there will be, at most, 3 to 4 new funds formed in the NY tri-state area in 2004.

So that may be an explanation for why Andrew feels he’s in an overfunded market and I don’t. It may also be an explanation why there have been 6 to 8 deals in the NY tri-state market funded by Silicon Valley and Boston-based VC firms in 2003.

The bottom line – this is an important debate and i am glad we are discussing it.

#VC & Technology

Digital Radio

All major forms of media have gone digital over the past decade. Many people read their newspaper online. More and more music is bought or illegally downloaded in MP3 format. Cable television is increasingly delivered digitally. The list goes on and on.

The benefits of digital media are many, but to name a few, we now can search for what we want, we can time shift the delivery of media, marketers can target advertising that’s actually relevant to us, we can consume the media on new devices like iPods and HD TVs, we have more programming to choose from, etc, etc.

The benefits of digital delivery aren’t available today to radio listeners who comprise one of the largest and most loyal media sectors. We have satellite radio which is starting to emerge as a digital alternative to the traditional broadcast radio market. And there is a great piece on the benefits of satellite radio in today’s New York Times circuits section.

Satellite radio costs $10/month and even so, it has over 1.2mm subsribers between the two providers, XM and Sirius.

The success of satellite television was one of the major forces behind the conversion of cable to digital. Now that cable is converting to digital, satellite television has lost a lot of its appeal. It will be interesting to see if the same scenario plays out in the radio market.

What most radio listeners don’t know is that their world is about to undergo a conversion to digital broadcasting. The technology is called HD Radio and on October 10, 2002, the FCC announced that it had approved the use of HD Radio technology as the standard by which the broadcast radio industry will convert from analog broadcasting to digital broadcasting.

Almost 100 radio stations across the country are currently broadcasting their signals digitally using HD Radio technology. But nobody can hear them. Yet. Kenwood has recently released its KTC-HR100 which is its first HD radio tuner. It can connect to any Sirius ready Kenwood car radio. Pioneer will have an integrated HD car radio in the market early next year.

I am more than just an interested observer in all of this. For the past five years, I’ve been an investor in a company called iBiquity Digital that is the sole developer of HD Radio technology. It has been an incredible challenge. First there was the engineering challenge of developing a digital system that could operate in the existing AM and FM bands, require no new spectrum (unlike digital television), and operate on the same channels as the existing stations operate. The system had to offer better sound quality and had to go through the most rigorous testing phase of any technology system i’ve ever been involved with. Then the company had to get the FCC to approve the system. The Company had to get all the companies that currently service the radio industry – reciever manufacturers, chip manufacturers, transmitter manufacturers, studio system developers, etc to agree to manufacture HD compatible equipment. And now the company is working hard to get the radio stations to put the HD radio signal on air. But its happening. And the result is going to be a great improvement in the life of the radio listener.

To start, the listener will get better sound quality. FM will be CD quality, with no noise in the signal. AM will be FM quality. AM stations will be able to broadcast music for the first time since FM came along in the 1960s. And i expect we’ll see niche programming like classical, jazz, bluegrass, latin, folk, reggae, etc emerge on the AM band.

But the most important innovations (like all forms of digital media) will be in the way radio will be consumed and the new things you can do. The radios will tell you what you are listening to. You’ll be able to download (and pay) for the song if you want it. You’ll be able to store and replay the shows you like if you can’t hear them live.

Just like the digital cellphones have all kinds of new features that the analog phones couldn’t support, digital radios will become very different animals than the analog radios we’ve been living with for the past 50 years.

This conversion will take some time. But its starting in 2004. I hope you are as excited about it as i am. If you are, please call your favorite radio stations and ask them to put up a digital signal this year. And then go out and buy an HD Radio for your home and your car.

#VC & Technology

Hussein Captured

Well this is big news. Saddam Hussein has been captured by US troops and will now go on trial in Iraq. This is big for the Bush team. It’s not clear how much of an impact it will have on the ongoing strife in Iraq, but its a huge political victory which shows that Bush’s plan in Iraq is having the results he’s looking for.

If you want to see some great pictures and commentary on this breaking news, go to Jeff Jarvis’ Buzzmachine.


Dean vs. Clark (Continued)

I have always been fascinated by polls. I love data and in the world of politics, polls are the best data that you can get. They are never perfect, but if you pay attention to them, you’ll generally know what’s going on, who’s going up, who’s going down, etc.

There is a new Newsweek poll out on the Democratic presidential primary.

It shows that Dean is in command, not surprisingly. It also shows that Clark and Lieberman and Gephart are playing for second place, and everyone else is so far back that they really can’t be taken seriously anymore.

Interestingly, Clark polls better than Dean in a race against Bush. With Dean beating Clark by 12 points in among Democrats, what does that tell you about Clark’s crossover appeal?


My crystal ball on email

Imagine a world where anyone can send you a message about anything at any time for free.

Imagine that you have a gatekeeper who knows exactly what you want to know about and what you don’t and only allows those messages you care about to get to you.

This imaginary world is the future of email.

Frankly, we are almost there.

The first world has been around for a while now and the downside of that world is known as spam.

The second world is emerging. The gatekeeper is known as a spam filter. The spam filtering technology that currently exists is a crude approximation of what we will eventually have.

Technology is an amazing thing. It evolves, gets better, cheaper, more efficient every day. And so it is with spam filters.

Soon they’ll know exactly what you want to get and what you don’t. As your tastes change, they’ll know that too. They’ll tell the emailers what you want, what you don’t, how often is too much, how often is too little. They’ll be your filter to the world.

Get used to the idea. It’s coming fast.

#VC & Technology