Posts from 2007

Blog about Elf Yourself

The economic story of 2007 isn’t Facebook being worth
$15bn, its not the subprime mess and the resulting credit crunch, its not the
fact that the US economy seems eerily similar to where we were in 1975.

 The economic story of 2007 is where the money is coming
from. The capital that is propping up our companies and economy is coming from
China, The Middle East, and Russia. On Monday we learned that middle east
capital was required to shore up the balance sheet of Related Companies, one of
NYC’s largest real estate developers. Today, we learn that Morgan Stanley is
getting bailed out to the tune of $5bn from China Investment Company.

Its been happening for a while, but we are seeing
it in droves now. If you need capital, lots of it, don’t look here in the US.
Money is tight and assets are cheap in the US these days. Go to China, Russia,
or the Middle East. That’s where the capital is and when they look at the US,
they see a bargain.

I could talk about the boneheaded economic polcies that
got us into this situation, but I am not in the mood. We are where we are.

Its time to admit that the US is a global superpower in
hock to parts of the world that should make us nervous. That’s the story of 2007.

It’s that time of year again. Each day between now and the end of the year, I"ll post one record (I am dating myself with that word)

The next several days are honorable mention days. And we’ll start with the boss because I heard his version of santa claus is comin’ to town on the radio this morning on the way to the gym

This is the second year in a row that Bruce has a record in honorable mention. I think that says something about my view of his work these days. It’s good but not the thing I put on every day

Magic is the best rock record Bruce has made since The Rising. My son Josh’s band is playing Radio Nowhere. Its a great cover song, a straight up rocker

My favorite track is Livin’ In The Future and I am also partial to Girls In Their Summer Clothes, I’ll Work For Your Love, and Terry’s Song

I have friends who love Bruce and think Magic is among his best. They are annoyed that it was ignored by The Grammy’s. I would be annoyed if any of my top 10 made The Grammy’s. Its pathetic to see what goes for popular music these days. Unless its The Boss. Who has remained relevant for almost 40 years

Magic is one of the best records I bought this year. It’s not magical like some of the records to come on this list, but its solid and at times reminds me of the younger Bruce who laughed while singing about Santa Claus. I think that Bruce is long gone, but the one we’ve still got made a solid record this year and I’m happy about that.

I haven’t begun my annual countdown and I better get busy. Only 13 days left in the year, so I can post 13 records (I always do several honorable mentions). I’ve been thinking a lot about my list, but I’ve been having a hard time putting pen to paper (now that’s a metaphor isn’t it?)

In the meantime, the Gotham Gal posted her top 10 records of 2007 (and another 10 for good measure) on her blog today. I know all of these records by heart since we take turns in our house with the sonos controller. I agree with many of her choices, but not all of them. Hopefully this will spur me to get busy.

My girls read the post and their comment was "mom, we need to teach you how to post a mp3 to the web, you have to give your readers a taste".

They are right. So here’s a taste from my upcoming best of 2007, my favorite track of 2007 (as measured by last.fm)

The Opposite Of Hallelujah – Jens Lekman – Night Falls Over Kortedala

My brother in law has a saying, “you get what you give.” Every time he says it, I just nod my head.

In the late 90s, after I started my first venture capital firm, I was working like a dog and had a young family, a wife and three kids. At an offsite that I attended, there was a psychologist who talked about work life balance. He said, “you’d better pay attention to your kids when they are young, build the connections early, because if you don’t, when they become teenagers, you won’t be able to reach them and you’ll have missed your opportunity”. I made a point to get home earlier and pay more attention on the weekends. You get what you give.

Working with entrepreneurs is a lot like being a parent. If you are attentive, work hard to build a connection, if you are there when the entrepreneur needs you, then they’ll listen to you. Otherwise, they’ll just end up “managing you” and you’ll never have the impact you want to have on the company. You get what you give.

Living in a community, being a neighbor, belonging to an organization or a school is the same way. You can stick to yourself, make your own way, focus on your own needs. Or you can get involved, roll up your sleeves, and give of yourself in whatever way you can. The latter approach is so much more rewarding. You get what you give.

And it’s no surprise that blogging works the same way. I put myself, my thoughts, my experiences out there for all of you to read and react to. And everyday I get a host of comments that teach me something. You all take the time to educate me back. And I am so much better off because of it. You get what you give.

Our portfolio company Wesabe  was the first company to market in the web-based personal finance sector, which has gotten quite hot lately with the launch of competitors Mint and Geezeo.

Wesabe’s taken a bit of a backseat on the visibility front in light of its competitor’s launches, so it was nice to see that Lifehacker really likes Wesabe.

This is a very big market opportunity and we think there is room for more than one large company in this category. As Dave McClure points out in a comment to Tim O’Reilly’s post pointing to the Lifehacker review:

Wesabe targets more advanced users who want more control over their
financial details & security; Mint probably works better for folks
who want a simple solution that doesn’t require a lot of effort. Both have significant merits over previous generations of online financial services.

I am not sure that Wesabe is only a "power user’s" service. But as Lifehacker points out, Wesabe has a strong mission, sense of community, and is hyper-focused on security:

I stayed with Wesabe because I love their mission, community, and their
desire to continually improve the site. I am confident in their privacy
policy, believe they will protect my data, and like that I can take my
data with me if I want.

Regardless of the competitive dynamics of this market, we are very pleased to be an investor in this category because the things that make the web great; transparency, community, utility, and usability are going to transform the way people manage their money. And Wesabe is at the forefront of that movement.

If you live in NYC but haven’t had a chance to see Bug, the SDK, and meet the Bug team, then tonight will be your last opportunity this year. Here’s the note from the Bug Blog:

Bug Labs is celebrating a
fantastic 2007 by bringing BUG+ back to our native New York. We are
hosting BUG+NYC on Monday, December 17 between 6-9pm at Verlaine,
a Bug Labs favorite located on the Lower East Side. Come by, see the
BUG and SDK in all their working glory, chat it up with your fellow
tech chums, and have a drink on us. This is our last BUG+
gathering of 2007, so we hope to see you one more time before the
holidays consume us all.

Configuration pages are among the most boring parts of a web service. Most users don’t spend much time on them, some spend no time on them.

This morning I had a good laugh when I went to my disqus comment system configuration page to increase the size of the faces in the comment system. Here’s the preview pane that changes when you modify your settings:

It’s Back To The Future on the disqus configuration pages. Very nice guys. I love it.

Back when I set up my Covestor portfolio, I thought long and hard about tech/web stocks and couldn’t come up with any that I wanted to own. The two large cap Internet companies that I really like are Amazon and Google. I subsequently bought Google (GOOG) in late October at $672 and it’s up a bit since then.

Google trades at 33x next year’s earnings and I suspect, as usual, that the street is underestimating Google’s earnings power.  So in my mind, Google is not that expensive as many other Internet stocks are.

Amazon (AMZN) is harder for me to get comfortable with.  It’s trading at 100x this year’s earnings and 55x next year’s estimated earnings. And with so much of its earning power tied to its core retailing business, that seems expensive to me.

But there are two reasons I love Amazon. The first is that our family buys everything that we can on Amazon. If we want to purchase something, we first visit Amazon. If they have it, we buy it there. It’s because Amazon already has all of our payment and shipping information (all the various incarnations) and because they have never let us down. Amazon has nailed the online shopping experience. It’s the Wal-Mart of the web (without all the negativity that surrounds Wal-Mart).

But being the Wal-Mart of the web has never gotten me that excited about Amazon the stock. There is something else going on that does get me excited about Amazon the stock. Amazon is slowly but surely building a platform for web applications and services that is superior to anything out there. Almost every new company we see these days is using Amazon’s platform (S3 and EC2) for some part of their service.

We had a conversation at our portfolio CEO summit last month about Amazon. There were some questions about how reliable Amazon would be. One of our CEOs, a very capable software engineer in his own right, pointed out that if Amazon runs on it, why isn’t it good enough for a startup? That was a good point that got more than a few nodding heads.

For those who don’t know, S3 is a storage system for the web. If you have images, audio, video, or just files you need to store, you can open an S3 account and store them there instead of on your own servers. It’s highly scalable and very cost efficient. EC2 is a virtual server. If you’d rather provision a server in Amazon’s data center than get your own server and put it into a colocation facility, it’s a relatively simple thing to do with EC2.

This week, we got to see the next card in Amazon’s hand. They introduced a web database service that works with the rest of their platform. Just because you can store files in S3, doesn’t mean you can make easy queries to them. For that, you need a database layer. A database for the web. It’s pretty interesting that with all that the web has brought us over the years, we don’t really have a native database for the web.

My friend Dave Winer describes this new database that Amazon is delivering to the web in a post yesterday. Here’s what got my attention:

Today, when a company raises VC, it’s probably because their app has
achieved a certain amount of success and to get to the next level of
users they need to spend serious money on infrastruture. There’s a
serious economic and human wall here. You need to buy hardware and find
the people who know how to make a database scale. The latter is the
hard problem, the people are scarce and the big companies are bidding
up the price for their time. Now Amazon is willing to sell you that, to
turn this scarce thing into a commodity, at what likely is a very
reasonable price. (Haven’t had time to analyze this yet, but the other
services are.) Key point, the wall is gone, replaced with a ramp. If
you coded your database in Amazon to begin with you will never see the
wall. As you need more capacity you have to do nothing, other than pay your bill. 

Further, the design of Amazon’s database is
remarkably like the internal data structures of modern programming
languages. Very much like a hash or a dictionary (what Perl and Python
call these structures) or Frontier’s tables, but unlike them, you can
have multiple values with the same name. In this way it’s like XML. I
imagine all languages have had to accomodate this feature of XML (we
did in Frontier), so they should all map pretty well on Amazon’s
structure. This was gutsy, and I think smart. 

Now let’s think about what happens when thousands of web startups start using Amazon’s database system to support the services they build. Thousands of web applications using a common and shared web native database. That’s going to allow some very interesting things to develop. It may become necessary at some point to build on top of Amazon’s database if you want to get a level of interactivity with other similar services. Is Amazon building a data API? I don’t know because I am not technical enough to truly understand all of this. But it sure smells like a big deal to me.

The funny thing about Amazon’s platform play is that it feels like something Google would have done. But they didn’t (or at least they haven’t yet). Amazon is out googling Google.

That makes me want to own this stock. And so I bought some shares today. Amazon and Google now make up about half my Covestor portfolio. The rest is oil and commodity plays and Toyota which is a hybrid engine play.

I have always loved Amazon and now I have a good reason to own it. And maybe you do too.