Posts from May 2004

The Lounge

I spent four years at MIT from 1979 to 1983. It was an amazing time for me in so many ways.

I lived in a house across the river from MIT at 119 Bay State Road.

For two years, I lived on the fourth floor, in the rear of the house, in a room that overlooked the Charles River.

I loved this room and we called it “The Lounge”.

I found out last night that The Lounge burnt to a crisp in January. Here’s a picture of the rear of the house after the fire.
beta_house_rear

I met my wife Joanne, The Gotham Gal, sitting on the window bed in the lounge which had the most amazing view of MIT and the Charles River. This is what it looks like now.
lounge_window_bed_fire

I feel like someone I know and love has died. It’s weird I know. But that’s how I feel.

#Random Posts

Moral Authority

What exactly do these words mean? And how can they possibly be used to defend what we are doing in Iraq?

When George W. Bush talked to his “real father” about whether he should go to war with Iraq, he must not have been listening when the good lord said, “He who is without sin should throw the first stone”.

Now many will say that Bin Laden threw the first stone and i don’t disagree with that. But what does Iraq have to do with Bin Laden?

More importantly though, the first stone in the conflict between Christians and Muslims (that’s what this is all about in the end) was probably thrown long before those words got into the Bible in the first place.

Which takes me back to “moral authority”. Claiming to have “moral authority” in a mess like this is the most arrogant and dangerous thing a country can do. And we have done it.

#Politics

You Won't Get It Back???

The Boston Globe ran a great list of ten issues with the venture capital business earlier this week.

I generally agree with all of these issues at some level and have been outspoken on this blog about a few of them.

But I take issue with Paul Ferri’s quote in the article. He says, “”Let me give you some advice. Do not put money into this industry. You won’t get it back.”

What is he talking about? I don’t know of anyone who is active in the venture business right now who feels that way. Our portfolio is producing great returns on the money we invested post-2000 and I am fairly certain most of my colleagues in the business are experiencing the same results.

I think its absolutely true that if you back a VC firm that is trying to find the next Apollo, Cascade, Stratus, Apple, Sycamore, and Tivoli (the deals the Globe listed as representative of Paul’s big successes), you may not get it back. The business is changing. But most firms can adapt and are in fact adapting. Less core tech is being funded. More applied tech is getting money. Firms are doing recaps, rollups, spinouts, etc.

The venture business is full of smart people who understand how to sensibly invest capital. And the technology business is full of smart entrepreneurs who will find new ways to make money. I am betting the technology venture business will be a money maker for many years to come.

#VC & Technology

VOIP Data

One of the most interesting data elements about a business is the activity on the phones. Corporations have been mining information about contacts and relationships via SFA and CRM systems for awhile now. But the most important activity, the phone calls, has not been easily captured.

VOIP changes that. Now phone calls are like emails. They can be captured, recorded, analyzed, and mined for interesting data.

It seems to me that VOIP is rapidly taking share from PBX systems in small, medium, and large businesses. I don’t see many ways to play that from an infrastructure perspective, but I think there may be some really interesting software, services, and data opportunities resulting from this shift from analog to digital in the telephone business.

If you know of anyone doing anything interesting in this area, let me know.

#VC & Technology

Kinja vs. Newsgator

My friends are asking me why I like to read my RSS feeds on the web. Email is so much better they say.

I use an email-based reader (Newsgator) and a web-based reader (Kinja). There are other readers for email and the web, but these are the two that I use.

After thinking about it for a little bit, I think its because I like to blog when I read blogs. And I use TypePad which is a web-based blogging tool. So I am in my browser when I write my blog and it’s just more natural for me to be in my browser when I read blogs. It makes linking to other blogs easier for me.

What I’d really like is a tight integration between my blogging tool (TypePad) and my web-based feedreader (Kinja). That would make life a lot easier for me.

#VC & Technology

Transparency (Continued)

The Wall Street Journal has a front page story today on the venture capital industry’s efforts to keep its performance confidential. Leading funds like Sequoia, Kleiner Perkins, and Charles River are declining to accept investments from public institutions that are required to release fund performance information in freedom of information act (FOIA) requests.

I don’t get it.

I realize that Sequoia, KP, and Charles River have put up good enough numbers over the years that they can set the terms of investment in their funds and decide who they want and who they don’t. I am not criticizing them for their decision.

But I do think this is much ado about nothing. The fear, as expressed in the Journal article, is that “interim results are likely to look bad because of the funds fees, the quick failure of some startups, and the immaturity of others”. This would lead “institutions to nit-pick every decision” making it “hard to invest for the long term”.

That’s crap and everyone knows it.

The data on the long-term performance of VC funds is out there. There is over 20 years of data available. It shows very clearly that the early returns are almost always negative. It also shows that the long-term numbers are very good. The same Journal article says that the University of California’s venture fund portfolio produced annual returns of 41% over the ten year period from 1993 to 2003.

The venture business is subject to early losses and long term gains. This pattern is known as J-curve and its well documented. The VC business also is subject to cyclicality. Some “vintage years” are much better than others. The 1996 vintage may be the best ever. The 1999 and 2000 vintages may be very bad (although Google could change that for some LPs).

And these facts aren’t lost on the general public. The Journal had a piece on Google a week and half ago where it said that the 1999 KP fund was down 31% per annum as of year end 2003 but that its investment in Google would return that fund something like 6x. The venture business is a volatile roller coaster ride. That’s not a surprise to anyone.

So I come out on the side of transparency. The industry’s efforts to keep performance a “trade secret” make us look like we’ve got something to hide. We don’t. We’ve got something to brag about.

#VC & Technology

The End Of The Terminal As We Know It ...

… And I Feel Fine.

Sorry for the bad REM bastardization.

I’ve been waiting for the inevitable end of the market data terminal since the Internet hit the scene in 1995/96. And it hasn’t happened.

As Steve Goldstein points out in his Alacra Blog, Bloomberg is still selling 1200 new terminals a month. That’s a lot of market data terminals!

But I think Bloomberg is the exception. His terminals come with things that you just can’t get over the Internet today. He has a proprietary messaging system that everyone uses. That’s the network effect working for him.

I’d like to know what you all think. Can the Internet ever break Bloomberg’s stranglehold on the Wall Street desktop?

#Uncategorized