Posts from 2004

Steve Smith lays out the new places money will start flowing from in 2005.  On his list are:

Behavioral Targeting

Vertical Search

Digital Distribution

Blogs

Streaming Video

Mobile Data

B2B Content

I’ve invested money and/or my time in all of these categories with the exception of streaming video.   I agree that all of them are poised to start producing real revenue in 2005.  Some will be more interesting places to invest than others.  But its a good list and a good column.

I was at an industry event the other day and I asked a group of assembled smart people when the media PC was going to get hooked up to a critical mass of TV sets.  The answer I liked best was never.

The reason?

Wireless bridges like the D-Link Media Lounge are going to be used to hook up computers to home entertainment systems and the PC and the TV are going to stay in different rooms.

I am not recommending the D-Link Media Lounge right now.  From the comments I’ve read on Amazon and elsewhere, this product is not really ready for prime time just yet.  But it or something else similar will be soon.

And when you can stream video, audio, flash animation, and all the other great things we’ve got on our PCs into the home entertainment system and use your remote to do it, via the high speed wireless network, we are going to see TV explode like never before.

I can’t wait.

Microsoft’s entry into blogging is live. 

It’s called MSN Spaces.

I went to check it out.

It’s Xanga, without the teen coolness of Xanga.

I am sure some people will use it.  But I can’t figure out why they would.

Update:  Ross Mayfield and Robert Scoble have blogged MSN Spaces too, with a much more comprehensive analysis.  And what can be better than reading a Microsoft employee like Scoble critique his own company’s product.  You gotta love the blogging culture.

The opening and title song starts out "Don’t wanna be an American idiot."  I knew instantly that I was going to love this record.  And I do.  It’s certainly the best record that Green Day has made and it may be one of the best records that has come out this year.

Like all great records (London Calling, Joshua Tree, etc) the first four or five songs just get better and better.  It makes you listen to the whole record, which is becoming a lost art.

But make no mistake.  Green Day is a punk rock band and this is a punk rock record.

But it’s also a rock opera, concept album, or whatever term you want to use.

If you like rock and can take driving punk from time to time, get this record.

As you may know, the congress is cutting back the Small Business Association’s SBIC program.  The government will meet its committment to existing SBIC’s but will not license new ones.

Tim Oren has a great post on this topic and so I will not go into the details, but instead link to his post.  Go read it if you are interested in SBIC’s and venture capital.

To be completely and totally honest (which is the idea behind this blog), I am thrilled about this.  As hard as it is to raise venture funds these days, I have never once been tempted to go the SBIC route.  I believe the government has no business supplying early stage venture capital when there are so many institutions who are seeking to increase their committments to venture capital right now.

I think the SBIC program was a really good thing in the early development of the venture capital business and acted like a seed investor.  But the venture capital business is mature, full of experienced investors, and has become an attractive well understood place for large instituions, both public and private, to invest their capital.

As a result, SBIC’s have been subject to adverse selection.  The managers who can raise a fund with insitutional LPs do just that.  The managers who cannot, go the SBIC route.

To make matters worse, the SBIC loans the money.  So on top of the adverse selection, the government is taking equity risk and getting debt returns.  It’s crazy.  Now some argue that the government is getting their money out first in a preference position and that is why debt returns make sense.  I disagree.  Venture capital is a risky business and, as my former partner Bliss used to say, "when they back up the trucks, they take away all the furniture".  When things go bad, everyone gets hurt, including the government.

Check out this quote, taken from Tim’s post, by the current SBA Administrator:

The Small Business Investment Company [SBIC] program was reauthorized, but SBA officials will continue to focus on limiting the government’s exposure to losses from this venture capital program. The White House estimates bad investments by SBICs could cost taxpayers $2 billion. Says [SBA Associate Administrator Anthony] Bedell, "We need to stop that bleeding."

As Tim points out in his post, the $2 billion in losses is old news.  That was caused by the burst of the bubble, but old news takes its time winding its way through the venture business and the SBA is still feeling the impact of these losses.

The government is selling at the bottom, but so what?  That’s when all the investors who shouldn’t be in a market sell.  I say goodbye and good riddance.  It’s time that the government got out of the venture business anyway.

In the 18 years that I’ve been doing venture capital investing, I’ve probably been very involved in over 250 deals.  I’ve probably been tangentially involved in another 500 to 1000.  I don’t just mean venture investments.  I mean mergers, acquisitions, IPOs, strategic investments, joint ventures, venture fund formations, employment contracts, severance/termination agreements, and a whole lot more.

And I have to say that getting a "deal" done is one of the hardest things that you have to do in business.  It’s easy to come to an agreement on the business terms of a deal.  But then you’ve got to sell it to the other constituents, then you’ve got to paper over it, and then you’ve got to close it.

It seems like its getting harder to get deals done these days.  That’s not a comment on the desire to do deals, I think that’s been on the rise for the past 18 months.  I am talking about what it actually takes to get through all the steps to actually close a deal.

Some of this is probably due to the increased scrutiny that everyone is under post Sarbanes Oxley/Enron/Adelphia/WorldCom/etc.  Lawyers are more cautious and more empowered to be naysayers.  Accountants are more cautious and more empowered to be naysayers.  Boards are more cautious and more empowered to be naysayers.

I guess this is good in many ways and a natural reaction to the excesses of the late 90s.  But it’s also a drag on the risk taking nature of our free markets/capitalistic/entrepreneurial business climate here in the US, and that’s not a good thing.

It takes at least one and in many cases all of the following three things to get a deal done in this world we find ourselves in:

1) A familiarity and trust among the participants in the deal.  Familiarity and trust greases the skids, makes things easier, and is a great foundation for any deal.

2) A competitive dynamic and a deadline.  If a deal is hotly contested and has a deadline that can’t be pushed out, then getting a deal done is a lot easier.  That’s always been the case, but these factors are more important than ever.  I think using a public offering or an auction process in order to bring a buyer to the table quickly is the best way to sell a company these days.

3) Intense focus and effort.  Unfortunately, there’s a cost to this approach.  If the CEO and/or his team has to focus intently on getting a deal done, everything else is going to take a back seat.  And in the end, there’s a big cost to that.

So what do I think we should all do about this?  We should think long and hard before we jump into a deal, recognizing the costs associated with deal doing and the risks of actually getting to a close.  Once we’ve made the decision to jump in, we should look for trust and familiarity if at all possible, create a process that produces the right competitive dynamic and urgency, and we should commit ourselves to getting it done.

Because deals are what business is all about.  And plus, I love doing deals.

I love finding out about cool new bands.  Rilo Kiley fits that bill.

They’ve got an alternative/country/rock sound that is somewhere between Pavement and Bettie Serveert.

While the guitar playing is great, the thing that really does it for me is singer Jenny Lewis’ vocals.  If I didn’t know, I’d swear it was Carol van Dijk from Bettie Serveert, and I love Carol’s vocals.

Here are a couple tracks from their best record, Execution of All Things.

Spectacular Views

With Arms Outstretched

Rilo Kiley also has a new album, More Adventurous, that made Amazon’s Best of 2004 list, and that’s how I found out about them.

I hope you like them.

I’ve taken my time adding another record to this list.  It is, as my brother Rod said in his comments, "a monumental task".  It is also, as my friend Bob said in his comments, " An age old effort, which never fails to satisfy".  I hope its more of the latter and less of the former for all of our sakes.

With that said, I am going to add a new album to the list every week until I get to 50 (albums not years!).  That should make it less "monumental" and more "satisfying", at least for me.

This week’s addition, spurred on in part by U2’s ubiquity on the public airwaves and on my private airwaves this week, is their finest album, The Joshua Tree.

I know that Ted and Tony have a preference for Unforgettable Fire, driven at least in part by U2’s greatest song, Bad.  And Bob is a fan of Achtung Baby.  I like that record too and I also really like All That You Can’t Leave Behind.

But The Joshua Tree is the U2 record I never can get enough of, like The Stones’ Exile, and so that’s why it ends up on my 50 favorite list.

Rafat Ali points to a cNet article about Google, Yahoo!, Microsoft, and AOL’s efforts to add video to their search offerings.

I’ve talked about some of this in my prior Exploding TV posts. (I wish TypePad supported a better way to link to multiple posts on the same topic).

The near term impact of this stuff, particularly Google’s efforts, is going to be felt by the companies who are already staking out this territory for business information services, companies like Critical Mention, ShadowTV, and others.

Longer term, however, I think this may well be how we watch TV.  Check out John Battelle’s futuristic vision on this one.  It’s coming, and not so far fetched as it might seem.