Posts from May 2009

Last week, I was at the gym going through my twitter followers on my phone and coming across so many links that I wanted to click on. But being on my phone, I was reluctant to click on the links and live with the 30 seconds of wait time that is the mobile web (at least on my phone).

So I started thinking that I needed a web app just for links and then tweeted this message:

And of course, someone did build it. A bunch of people built something based on that tweet and I have not done a good job of keeping track of them all.

The first one to get my attention was built by Doug Estadt and was custom built for me. Here it is. Doug, who is also behind DateTwit, has now "commercialized" the app he built for me and it is called Twitrollr. Although the functionality is the same in my custom app and Twitrollr, I vastly prefer the UI of my custom app.

The next one to come to my attention is called Tweetlinx. It does basically the same thing but the UI is a bit different.

And then Ivan Kirigin, who created TipJoy, tipped me off to Tweetsip which uses the Hacker News UI. I like it very much.

Ivan also pointed out that these apps are quite easy to build and will likely end up being a feature:

I think I'll continue to use my custom app for now since it works best for me. But there are some other good options out there for others who want an app like this. And hopefully we will see this offered as a feature in twitter clients soon.

The fact is that twitter has become the best source of links for me and, at times, I am too busy to go through my entire feed and just want the links. Now I can do that. Thanks to everyone who hacked something together based on my tweet. If I've left anyone out, please leave a link to your app in the comments and I'll revise this post to include it as well.

Update: Here are some additional apps that were mentioned in the comments:

Microplaza

Cubby Scott

I’m giving a talk at Google Mountain View on Wednesday at 10:30am pacific time. Here’s how the talk is described in the email that was sent around Google announcing it:

I’ve been working on the talk over the weekend but did not get as far as I’d like. I’ve got a bit more to do on the last two topics which are energy and health care. Here’s a first draft. Let me know what you think and if you have ideas, please share them in the comments.

Today I'm on a short flight from montreal to newark and don't have time to write much. But I thought it might be worth putting down some quick thoughts.

1) I'm reading Turning Learning Right Side Up: Putting Education Back on Track
by Russell Ackoff (I took a class by him at Wharton) and Daniel Greenberg. Both Rob Kalin and my partner Albert recommended this book to me. And I will recommend it to all of you. These two understand the problems with our current education system and write very eloquently about what's wrong and how we can fix it. It's a quick read and you can download it to your Kindle and easily polish it off on a cross country flight.

2) It's hard to tell if the banking crisis is entering its end game or not. The stress test exercise gave the markets a lot of confidence that the Treasury and the Fed have a handle on it now. Geithner has gone from having to get his boss' show of confidence to looking quite strong in a few months. If this is, in fact, the end game, then the economists like Roubini and Krugman who were calling for nationalization are going to look like chicken little.

3) We've been visiting our investors over the past few months. It has been eye opening. They are all looking at some big drops in asset values in the past year. They are struggling with a host of difficult issues. And one of them is the role of venture capital and private equity in their asset mix. My gut says we will see asset allocations for venture capital and private equity come down in the coming years and we'll see some large investors leave these asset classes altogether.

4) For almost twenty years, I mostly avoided the 'developers tools' sector. I always thought developers were too small a market to allow for the creation of large businesses. Of course there are exceptions to this rule. But in the past few years, I've started to look for investments that have developers as a core consituency. Services like Twitter and Boxee are succeeding because developers want to write for these platforms. These are not developer tools for sure, but success requires significant third party developer adoption. The role of viral adoption by consumers is well understood in web marketing but I don't think we've yet really wrapped our heads around the role of developer adoption and how powerful it is in ramping consumer web services.

5) Montreal is the perfect city for a long weekend getaway, particularly if you live in the northeast and love to eat. It's an hour flight from NYC and you feel like you're in europe. The french language is a big part of that and so is the architecture and the vibe. But the food is the star. Go visit gothamgal.com for more details on the foodie weekend we just completed.

That's it. We've landed in Newark. Time to go home and celebrate Mother's Day. Happy Mother's day to all the moms out there.

Montreal_May 079
Originally uploaded by dutchkat_03.

My dad was in the military and when he was away, he'd get occasional time off in some place nice. They called it R&R.

My wife, The Gotham Gal, and I do the same thing once or twice a year. We get away from NYC, work, family, and go some place nice for a long weekend.

We are doing that this weekend in Montreal.

We got here around noon, had a nice lunch in a bistro that reminded me of Paris, took a long walk around the Old Port, and then I took a long nap (I needed it after yesterday's extended day trip to Austin, Texas).

I don't plan to post much about this long weekend in Montreal, but the Gothal Gal has already started and I expect she will continue.

We are only here for 48 hours and already have dinner reservations both nights, but if there is something you'd like to suggest we do, see, or eat, please let me know in the comments.

I was talking to a reporter yesterday who is working on a long piece about private equity and venture capital returns.

She asked me how much the “alternative investment” class (aka venture capital and private equity) needs to outperform the public markets to make it an attractive asset class.

I don’t know the answer to that. I suppose there’s a theoretical answer based on some advanced math. But there is also a market answer. If capital leaves the alternative asset class for the public markets we’ll know that the returns are too low relative to public markets. And if capital flows back to the alternative asset class, we’ll know that returns have reached a level where these private markets are more attractive than the public markets.

There are a number of reasons why public markets are preferable to private markets (all else being equal) but to my mind, the big one is liquidity (and the lack of it in the private markets).

I am not an investor in a single buyout or private equity fund so I cannot speak intelligenty about the illiquidity of those funds but I assume it is similar to venture capital.

A venture capital fund generally has a ten year term. But in my experience it often takes a bit longer, possibly fifteen years, to exit all of the investments.

If you invested $1mm into a typical VC fund, you would not be locking up that $1mm for ten to fifteen years. The $1mm would typically be “called” from you mostly over the first five years as it gets invested. There would be some amount, less than 20pcnt, left for calls in the second five years.

The way I like to model it is 18pcnt per year for five years and 2pcnt per year for the next five years. The USV funds we manage have capital calls that look more like an s-curve than a straight line but that’s getting too granular for this post.

The money comes back to you in the latter half of the fund. I like to model it as 40pnct per year for the last five years and then 10pcnt per year for years 11 through 15. That assumes the fund returns 2.5x net to the investor which is a very good return for a VC fund.

So you can look at the numbers and see that you are out the money for a considerable period of time.

And if you want the money back on some other timetable, you have very few options.

You cannot ask to be redeemed. It won’t happen. You can try to sell your interest in the ‘secondary market’ and you will get between 20cents on the dollar and 40cents on the dollar for all but the very best funds.

So venture capital and presumably private equity as well is a very illiquid asset class.

Contrast that with a mutual fund. You want out, you get out at whatever the current market value of your fund interest is.

It is very hard to wrap your head around what illiquidity really means until you experience it first hand. Then you know its a very undesirable feature for an investor.

So, in summary, when I was talking to the reporter yesterday, I noted that the ten year returns for VC are between 5pcnt and 10pcnt whereas the S&P is negative by something like 5pcnt (I’m on a plane and can’t look it up).

Is a 10pcnt excess return enough to incent a rational investor to part with their money for an extended period of time? Maybe, it depends on who the investor is. But it certainly is not a slam dunk in my mind.

Image by fredwilson via Flickr

Our portfolio company Boxee makes a browser that is optimized for consuming internet content on your TV set. You (or CE hardware companies) put Boxee's browser on a device that is connected to the internet and your TV. Someday soon the  Boxee browser will simply come with TVs and you'll just connect the TV to the internet.

Boxee is designed like Firefox. It's open source and anyone can build extensions to the Boxee broswer. But in a nod to Apple's iPhone, Boxee has deployed this "add on" capability as an app store. Developers write apps for Boxee and users discover them in the app store. Today, all apps are free but that will not be the case forever.

There are a bunch of cool Boxee apps available already, but in an effort to stimulate the creative juices of developers, Boxee has announced a competition – The Boxee App Dev Challenge. Here are the details:

in each category we will have a People’s Choice award and a Judge’s Choice award:

People’s Choice Award: Drobo 
Judge’s Choice Award: Sony Bravia XBR9 46″

the deadline for submitting your application is June 14th at 11:59pm PT, but we encourage you to submit early and often as we’ll be talking up cool applications as they come in.
voting will take place between June 15th – June 22nd.

on June 23rd will have a boxee event in San Francisco (RSVP here) announcing the People’s Choice and our esteemed judges will choose a winner from the 10 most popular apps in each category.

the judges at the event will be:
Veronica Belmont - Tekzilla, Qore
Ryan Block - GDGT, former EIC Engadget
Avner Ronen - boxee founder and CEO
couple more judges (we are interviewing prospects: Obama, Oprah, AplusK)

looking for more info on how to develop boxee apps: check out http://developer.boxee.tv and take a look at the sample app (we will publish additional sample apps). please submit your app to [email protected].

whether you’re a developer or just a boxee fan, we look forward to seeing you @ the event. RSVP here.

The Sony Bravia is a sweet big screen TV and Boxee is giving away three of them (and three Drobos too). If you are a developer who is interested in working on video, audio, or image apps, this challenge might be just the thing for you.

One of Mike Bloomberg's greatest achievements is the creation of the 311 service here in New York City. These 311 services operate in many large cities in the US and Canada. The first one was in Baltimore in the mid 90s.

Apparently Bloomberg is a huge user of 311 himself and he calls all the time as he is driving around the city, reporting potholes and such.

We had a pothole in our neighborhood that I passed every day on my way to the subway. It was a big one and I'd watch car after car pound the hell out of their undercarriage as they made their way from Hudson onto Bethune street.  One day I stopped and snapped this photo with my Blackberry and posted it to Flickr (and then automatically to Twitter):

I added the following to the Flickr headline which became the tweet:

Of course I could have called 311, like our Mayor does, and reported the pothole. But doing it this way does a bunch of things;

1) It saves the cost of staffing large call centers because computers can handle most of the processing of messages like this. There will still need to be humans at some part of this process, but the front end can certainly be automated.

2) You get an image of the pothole which should help the crews who fix them evaluate the worst ones and prioritize.

3) The photo and the twitter message is out there for anyone to see. Ideally this message would get routed, via something like our portfolio company outside.in, to the various local media in the neighborhood. If the messages have enough metadata in them, you could even create pages of local media based on the most common neighborhood issues (crime, infrastructure, schools, parks, etc)

4) The public discussion about the photo and related posts could be aggregated to create even more metadata and further identify the highest priority issues.

We see this "public channel" in action already with services like Comcast Cares on Twitter. Anyone can pick up the phone and call Comcast and tell them that their cable service isn't working. But the only people who know about that are the person making the call and call center rep taking it. When someone posts on Twitter that their cable service isn't working and directs the message to Comcast Cares, many people see that. Some of them may be other Comcast customers who might find out that their cable isn't working either. And as Comcast Cares elevates the issue, gets it fixed, and reports back, everyone gets to see that too. It's a huge win for Comcast. Anything that can make a cable company look better is a great thing and the use of the public channel is exactly that.

The public channel is just developing. It's in its infancy. Services like Twitter and Facebook are building key elements of it. But we need a lot more infrastructure to make this happen. I do not believe that the way this will happen is the creation of "enterprise services" that will be sold to local governments. I think we'll see things like GetSatisfaction and Uservoice develop that are consumer facing first and foremost that governments will be forced to adopt.

My friend John Geraci, co-founder of Outside.in, is developing a non-profit called DIYcity that is attempting to spearhead a movement along this idea. If you are interested in working on projects in this area, you should join DIYcity and start collaborating with others who are working in this space.

The public channel is the right channel for business and government. Most "customer support" issues are not confined to one person (just look at the comments on my American Express post for proof of that). So we should be using a public channel to talk to companies and institutions. They'll benefit and so will we.

I've said it a few times on this blog recently as offhand comments, but I feel compelled to say it a bit more loudly. I think we will see the end of the IPO drought for venture backed companies within the next year, possibly by the end of this year. I don't know if this market rally we've been having is a headfake or the end of the bear market. My gut says we'll see at least one more pronounced down move before we see bottom.

But either way, at some point investors are going to want to own stocks again, and when they do, I think the old fashioned VC-backed IPO will have quite a bit of appeal. Here's five reasons I think this is going to happen:

1) VCs have been in the penalty box for almost a decade since we committed the cardinal sin of foisting crap into the public markets. Somehow the investment bankers who helped us do it got out a lot earlier than we did. But we've done our time and others have replaced VCs as enemy number one of public market investors.

2) There are a lot of really solid companies sitting in venture portfolios waiting for the right moment to go public. Stuart Ellman of RRE wrote last fall that:

RRE has a number of companies that
had zero revenues when we invested and which are now doing $100 million
or more in revenues and growing very quickly.  These companies have
achieved what they needed to achieve, become market leaders, yet they
cannot go public or exit under the assumptions that employees or
founders assumed when they began.

3) Many of these companies are subscription-based or annuity type business models that make for great public companies. Sarah Lacy touched on this on her post about Open Table's IPO:

4) When investors decide they want to own stocks again, they are going to look for simple businesses, products they can understand, balance sheets with cash and not much else, and growth without leverage. Guess what? That's what the venture capital industry produces.

5) Sarbox is now well understood by the accounting industry and by the finance teams inside of our companies. There are providers of Sarbox compliance tools and services that have now brought the cost of Sarbox compliance down to reasonable levels. I'm not saying that Sarbox is good or that it doesn't need to be reworked (it does), but it's a devil we know at this point and it will not impede the IPO boom when it comes.

Last week the NVCA put out a four point plan to "restore liquidity in the venture capital industry" at its annual meeting last week in Boston. It involves getting more investment banks engaged in taking our companies public, spurring the development of secondary market exchages and related pre-IPO liquidity activities, continued lobbying for lower taxes on VCs and entrepreneurs, and reform of Sarbox.

Regular readers know that I am a huge fan of the secondary market idea and I welcome the NVCA's attention and energy on that issue. On the other three, I think they are wasting their time. It's like the government suing Microsoft while Linux was growing in popularity right under their noses. I believe the market will take care of this problem as soon as we get a market that wants to purchase equities.

And my gut says that time will come sooner than most think.

A few weeks ago I was having lunch with a friend who is a very successful entrepreneur. He told me he'd been having some problems recently with American Express. They'd been denying charges and giving him all sort of grief. Our lunch turned into a support group. Because I've been having the same experiences. We shared our horror stories and I felt a bit better about it.

My friend sent me a link to this story by David Lazarus in the LA Times last week. It turns out we are not alone in getting hosed by American Express. They are doing it to all of their best customers. David starts out his story with the following observation:

I've been a customer of American Express since 1983 and have never failed to pay a bill. Right now, between my business interests and family, I carry and pay for five American Express accounts. I'm not going to get into the monthly amounts that these accounts turn over, but I will say that they are significant.

The smallest of these accounts is an old Flatiron Partners account. We don't use that account very much anymore, but we do still use it occasionally. A month ago, we were accidentally late paying that account. And as a result American Express shut down all of my accounts without notifying me. My partners in Union Square Ventures could not use their cards, I could not use my personal card, they shut off all of the accounts I have with them even though they were not in any way related to the Flatiron account. I suspect the accounts are linked because they all funnel membership miles into one single account.

But that's just one example of the hassles of being an American Express customer these days. My wife and I are routinely denied when making charges at stores and restaurants. When we call to ask why, we are told that the charge looks "fraudulent". And then they ask us if we really are making that charge. When we assure them that we do indeed want to make that purchase, American Express authorizes it.

I understand that credit card fraud is a huge problem these days and appreciate that American Express protects its customers from the fraud. But I've noticed a 180 degree change in the company in the past year or so and I think they've simply gone too far.

Maybe American Express should offer its customers the opportunity to pay an annual fraud charge that insures that American Express will not deny any charges on our accounts. I'd be happy to do that. I realize they are taking a beating and I also feel that whatever algorithms they are using to detect fraud are often wrong at the most inconvenient times.

As for deadbeats, the credit history of a person should be the single most important data point in determining credit risk. When I called American Express to figure out what was wrong with my cards in the middle of the Flatiron situation, I was told it was their policy to shut down all accounts if there was a late payment on an account. I asked if my 26 year perfect credit with them was material to the situation and I was told it was not. I hung up on them.

I understand the business challenges facing American Express. Fraud and increasing default rates makes for a very unpleasant business situation. But as David points out in his article, they should be careful not to show their good customers the door.

During the brief time I was without all of my American Express cards, I used my Chase VISA card and the experience was not any different. A swipe is a swipe and not one of them was denied.