Posts from VC & Technology

In a perfect world, nobody.

But I guess we don’t live in a perfect world.

Apple is a word.

It describes a fruit that has allegedly been around since adam and eve’s time, assuming there were people called adam and eve.

It also is the name of a computer company.

And its the name of the company that is owned by Beatles Paul McCartney, Ringo
Starr, John Lennon’s widow Yoko Ono and the estate of George
Harrison and which owns the rights to the beatles’ music.

And whomever is making the decisions regarding the beatles’ rights to the name apple thinks they have to sue apple the computer company over trademark violations.

This is all so silly.

Because in my world, apple is a fruit.

It was a matter of time before someone stepped up and funded Linden Labs and it was announced yesterday that Globespan Partners along with some big name entrepreneurs like Jeff Bezos, Mitch Kapor, and Pierre Omidyar put $11 million into Linden Labs.  That’s great news. I think the Globespan guys are great and think they’ll make excellent partners for Linden Labs.

But the bigger story is what’s going on inside Second Life.  It’s a virtual economy where anyone can build anything and it is amazing what is being built.  It is also amazing how much money is being spent there.

As I said in prior posts, I am spending some time in Second Life.  My name is Flat Plasma and I am mostly checking it out right now.  But even so, I have to say that I agree with Scoble.  Second Life is a platform (he calls it an OS) to build a lot of interesting businesses on.

So congrats to Linden Labs on their financing, on Globespan for making what seems to me to be a good bet, and to the Second Life community for creating such an interesting environment.

The father of this weekly series, the guy who taught me at least half of the cliches I know, is a guy named Bliss McCrum. He and his partner Milt Pappas taught me the venture capital business from 1986 to 1996 when I worked with them at their firm, Euclid Partners.

One of my favorite cliches from Bliss is a rising tide lifts all boats. 

Whenever things seemed too good at a portfolio company, in the stock market, the economy, or somewhere else, Bliss would quip, "well you know that a rising tide lifts all boats".

It was his way of saying "don’t mistake a good market for a good business".  The insinuation was always that the tide would come back in and so would the boats.  And you had to be prepared to make things work in tough times as well as good times.

And we are in good times in the venture business, the internet business, and for the most part, the US economy.  Consumer confidence hasn’t been this strong since before the Iraq war.  The Fed has raised rates 15 times and may not be done, signalling that the economy remains stronger than they’d like it. Venture money is flowing freely in Silicon Valley and China and in many parts of the developed or developing world.  Advertising dollars continue to move from offline media to online media and that is one rising tide that is certainly lifting all boats.

But we know these good times will come to an end at some point.  Are we in 1998 as Caterina suggests and have another year or two before the good times end?  Who knows?  I don’t expect this run of good times to play out like the last one anyway.

The best we can do is prepare our companies to withstand a business environment that is less friendly.  Companies need a business model, they need a seasoned and well constructed team, and they need patient and experienced financial partners.  With these ingredients, hard work, and some luck, you can survive a downturn.

Some of the best companies I’ve ever worked with were funded at the height of the last bubble and they are doing great now.  So it doesn’t really matter when you start a company, but it does matter that you can make it through tough times.  Because right now we have a rising tide that is lifting all boats and that won’t last forever.

We had always hoped that the Union Square Ventures weblog would give our readers an idea of what goes on inside of our firm.

Brad did that yesterday with his Yes, but … post responding to my Looking Ahead post.

He disagrees a bit with my post and goes on to make a big deal about our offer to share our delicious tags with everyone else.

If you read my post on Looking Ahead, you’ll want to read this one too.

I got a couple comments to my Freemium post and My Favorite Business Model post that I’d like to respond to.

Rick Burnes said:

The way you’ve described freemium it seems like Times Select = A Big
Freemium Experiment. Yet you’re not a big TS fan. (Who is?) Does
freemium work for content? Why does it make sense to wall off network
calling on Skype, but not Nick Kristoff’s columns?

And Jeff Jarvis said:

works in services, not content, i’d say.

Jeff is absolutely correct and he answers Rick’s question.  If your business is entirely about content, then you must offer your content for free and support it with advertising.  You can offer the same content in more convenient forms as a paid service (email and RSS alerts, packaged without ads, archives, etc) but I believe you must make the content free or you will not maximize the audience and the value of the online medium.

I believe that the Times is making a mistake with Times Select.  I’ve blogged about this in the past.  The numbers may support their decision, it was an easy one to make since they never took ads in their columnist’s pages anyway. 

But I believe that putting up a wall between the online audience and content marginalizes that content and makes it less valuable.  The online medium is all about links and you can’t link to content that isn’t freely available.

I do believe that offering services to the Times’ customers such as crossword puzzles, archive search, photography archive, etc are great examples of ways to leverage the freemium business model and I just wish the TImes would focus on adding more services like that and take down the wall between their potential audience and their best columnists.

One of the things we are spending time on in our quest to look ahead is virtual worlds and avatars.

I’ve spent some time in Second Life and have created a persona called Flat Plasma.  I haven’t spent any money there yet and am not yet as addicted as Scoble and Kent Newsome.

But there is something really interesting in the intersection of virtual worlds, social networking, and the ability to create almost any reality you want.

So in an attempt to add some virtual reality to this blog, I created an avatar of myself at SitePal, a cool service that allows you to create a hosted avatar and put it anywhere you can place some javascript (like my blog).

I annoyed a bunch of readers this morning with the audio and so I’ve cut that out for now.  I intend to allow you to play my avatar’s voice if and when you choose, but I haven’t worked that up yet.  I will, hopefully this week.

And I plan on changing the look and feel pretty regularly.  Ideally, I’d like to put this avatar everywhere I’ve got a picture on the web; last.fm, myspace, flickr, etc, etc.  It would be cool if everytime I change my avatar, it instantly changes everywhere I’ve put it.

Jackson says in the comments to my MP3 of the Week post today:

I think Virtual fred should lip synch to the mp3 of the week.

I might try to make that happen too!  Cheerios has something like that called Cheerioke.com.  I’ll have to check it out.

Most blogs are multi-column (two or three) web pages with a single column of posts organized in chronological order.

Most feeds are delivered the same way minus the extra columns.

This is a technique taken (at least from my vantage point) from the news feeds and other information feeds of the financial markets.

We used to call it a bulletin board system.

Not we call it a blog or a feed.

Most people who have grown up designing magazines or newspapers probably look at this user interface and think of it as ugly and boring.

But I think its super efficient (like the single search field on google.com).

And I think we’ll see two trends, at least in online publishing.

– more and more text oriented content will be organized in this manner

– feeds and blogs will look more and more alike.  there will come a time when you are reading a feed in a reader and you will think you are reading the blog in a browser.

I am not sure whether the feeds wil move more toward the blog style or the blogs will move more toward the feed style, but I feel pretty strongly that we’ll see the two start to merge in the coming year or two.

I have always felt that function wins out over form in mediums where such things can be measured.

Although I run advertising on my blog and feed, I’ve always felt that the big payoff from blogging comes in other less direct ways.  For me, the big payoff is the discussion which I gain from in so many ways it’s going to take too long to list them.

But yesterday, I got some payoff in another way which was just as great.  A longtime blog reader named Howard Lindzon who regularly comments on my posts realized I was in Phoenix for a couple days with my family and offered me two tickets to see the Suns play last night.

Josh and I went, we saw a good game, although Nash and Marion weren’t at their best, and we had a wonderful time.  And I got to meet a long time blog reader and commenter to boot.

What a great night!

I’ve never been a writer and never plan to be.  I write a lot on this blog but I don’t consider it writing.

Bob Lefsetz made a passing comment in a story he told on his blog today that got my attention.

Bob said:

So this man in the queue at the bathroom haughtily says I must be a
lawyer.  I told him I was once.  But that was long ago.  And now that I
was a writer.  And I lived for the responses.  It wasn’t a chore to
check my Blackberry, but often a key to excitement.

What Bob is referring to (I think) is the excitement of getting an email notifying you of a comment or trackback to your post.

And that is what writing in the new two way medium is all about.

Writing for the response.