Capital Efficient Business Models

BeyondVC

Yesterday I participated on a panel at the Mid Atlantic Venture Conference on the current venture capital market and how to raise capital. While this was a plain-vanilla panel about venture investing, there was one theme that was echoed by a number of my fellow panelists from Rho Ventures, New Venture Partners, Edison Ventures, and Cross Atlantic-today’s world requires software companies to have a capital-efficient business model.

Companies are bought and not sold

BeyondVC

Besides taking a brief time out to celebrate the Expertcity deal , I have spent a fair amount of time interviewing VP candidates for one of my portfolio companies. As with any smart executive who cares about the value of equity, the question I am often asked is, “What is your exit strategy.”

Check Point makes first meaningful acquisition

BeyondVC

Zone is expected to do around $28mm of revenue in 2003 and $42mm in 2004. The revenue multiple is 7x for 2003 and 5x for 2004. So Checkpoint is going to buy Zone Labs for $205mm. Here are my thoughts on the deal. That is pretty much in line with existing security multiples of 6-8x revenue. The more significant point is that Checkpoint made its first, meaningful acquisition. So for all of you security companies out there, add Checkpoint as another potential acquirer.

The Economy and IT Spending

BeyondVC

Its latest survey calls for an increase of 2% spending for 2003 versus a December 2002 survey which forecasted a decline of 1.1% for 2003 spending. That being said, the October 2003 survey forecasts spending growth of only 1.3% for 2004, down from an August 2003 spending survey forecast of 2.3% It looks like the economy in Q3 grew even faster than we initially thought , 8.2% annual rate versus 7.2%.

The Perfect is the Enemy of the Good

BeyondVC

Yesterday, I was in a meeting with an early stage company reviewing the product development plan with the management team. While the plan was well thought out and defined by process, there was one major problem-it would take too damn long to get a product in GA (generally available to sell!). There were 2 problems-an overemphasis on process and a burning desire to build the ‘perfect product’ at the expense of getting to market. Let me address each problem in turn.

ASP Part II-Siebel buys Upshot, Motiva

BeyondVC

It looks like Siebel is jumpstarting its efforts on the ASP side with its purchase of Upshot for $50mm + $20mm of earnout for 2003 and 2004. Word has it that Salesforce.com is expecting to do $100mm of revenue in 2003 while being profitable for the last 2 quarters. Siebel Buys UpShot, Motiva. If you can’t beat ’em, join ’em. On an earlier post , I commented on the return of the ASP model.

China’s real effect on our economy

BeyondVC

By keeping the Yuan low, the Chinese are keeping our interest rates low as they are huge buyers of US Government bonds (as of May 2003, China held $121.7 It is easy to blame China for our domestic problems. The argument from Bush and the US Goverment is that because China is keeping the Yuan artificially low against the dollar, the US is losing jobs and running a huge trade deficit.

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Citrix buys GoToMyPc maker, Expertcity-great day for ASPs

BeyondVC

Congratulations to Expertcity and Andreas, John, and Klaus. It has been great to work with you from a board level over the last 4 1/2 years. When the transaction closes, I look forward to writing a little more about how you were able to persevere through some tough times, launch new product, stay focused on leveraging the core screen sharing technology, and build a high growth business in a completely new market.

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Software packaging

BeyondVC

Om Malik (ex-senior writer for Red Herring) has been writing about the commoditization of hardware. In a recent article in Business 2.0 titled “The Rise of the Instant Company,” Om talks about how hardware has become commoditized to the point where hardware expense as a cost of goods sold is de minimis. In other words, companies can now cobble together off-the-shelf-hardware with proprietary software to create companies that can quickly and cost-effectively go after large incumbents.

Securing Cyberspace-the Government vs. the private sector

BeyondVC

There were 2 conferences yesterday addressing cybersecurity. One was the National Cyber Security Summit in Santa Clara and the other was a smaller event in DC. While I was not in attendance, I did speak with a couple of people who participated in the events. The takeaway is that 85% of the critical infrastructure in the US is owned and controlled by the private sector. The other 15% is the government.

Building Sales Teams

BeyondVC

Jeff Nolan from SAP Ventures has some interesting insights on building sales teams. One other I would add is pay commissions when you get paid. The post Building Sales Teams appeared first on BeyondVC. Entrepreneurship

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Hand-held device security

BeyondVC

Hackers like to go where they can cause the most pain. As 3G rolls out in the US, you can bet that hackers will go there as well. There was a great article last Friday in the New York Times about viruses and other security issues on cellphone and hand-held devices in Japan (free site but registration required). It is clear that we should look at how Japan is dealing with this issue as their wireless infrastructure is much more advanced than ours at this point.

Chuck Prince, CEO of Citigroup

BeyondVC

I was at the TIE Tri-State annual event in New York yesterday and participated on a venture capital panel helping young companies refine their pitches and business strategies. There were some interesting software and BPO (Business Process Outsourcing)companies that presented.

netForensics raises $12 million

BeyondVC

Congratulations to netForensics! We are excited to have Nomura as a new investor and look forward to them helping us with our international expansion. For those of you who are interested in security, please see an earlier posting on Microsoft and Securing the Perimeter. The post netForensics raises $12 million appeared first on BeyondVC. Security Venture Capital

Strategic Investors-the Good, the Bad, and the Ugly

BeyondVC

I had the opportunity to speak on a panel today at the Corporate Venture Capital Summit. There was an interesting crew of speakers representing corporate-related venture activities for companies such as Hitachi, Intel, Nokia, Panasonic, Siemens, and Kodak. While one moderator cited numbers showing that the amount of corporate venture investing in terms of dollars is down 50% from 2000, in my mind, that does not seem that different from the change in the general VC market.

Thoughts on Offshore Outsourcing

BeyondVC

A number of my portfolio companies outsource development to India and other locales. When offshoring it is important to think about what can and cannot be offshored, whether management can handle it, and whether or not you open your own office with your own infrastructure or outsource completely.

Novell in Microsoft’s crosshairs?

BeyondVC

Novell to buy Suse. “This is not about competing with Microsoft. This is about addressing the impediments holding Linux back,” says Chris Stone, Novell’s Vice Chairman in the office of the CEO. What a great quote! I have worked with Chris in the past having invested in his prior company, Tilion. Chris is a smart guy and thinks big. Who in their right mind will tell Microsoft that they are competing directly with them?

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Corporate DNA

BeyondVC

Like individuals, every company has its own DNA. Every company possesses a unique team with a unique culture, rhythm, and way of doing business. What many of us forgot during the last few years is that it is awfully hard to change one’s DNA. What do I mean by that?

What Microsoft really needs to secure the perimeter

BeyondVC

We all know that there have been a number of issues with Microsoft’s security. We have all been bothered by the daily ‘Windows Update Available’ alert. Steve Ballmer has stated that making their products more secure is their highest priority. In fact, MSFT’s CFO mentioned that security-related issues had a negative impact on its most recent quarter delaying some very large licensing deals. So what is Microsoft doing to fix this?

Google weighs IPO next year

BeyondVC

Yes, this is old news and much anticipated. Just one word of caution for us venture capitalists and entrepreneurs-let’s not equate this to a return to the mid-to-late 90s IPO boom.

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Linux on the Desktop (continued)

BeyondVC

In an earlier post , I talk about 2004 as a year where Linux begins to make inroads on the desktop. Here is a recent article from Infoworld suggesting the same. In the article Nat Friedman, cofounder of Ximian which was recently sold to Novell, makes some interesting points. It is not a David vs. Goliath battle where Linux fells Microsoft with one swift blow; 2. Desktops for Linux shouldn’t try to look like Windows.

NYC Entrepreneurs and Offshore Resources

BeyondVC

Having met with a number of NYC entrepreneurs recently, I am refreshed to see that many of them are utilizing offshore resources to develop their products. Yes, this is not a new phenomenon, but in a city that lacks hard core developers willing to work for options instead of cash like the Wall Streeters, it is significant. New York has always been known as a strong new media capital and not known for development of real hard core software.

Time for Linux on the Desktop?

BeyondVC

As everyone knows, Linux has grown dramatically in the server market capturing 20+% market share in a few years. Many of you also know that there have been a number of attempts to bring Linux to the desktop. Eazel founded in 2000 wanted to make a Linux GUI as easy to use as a Mac. While many of these attempts failed, I believe we are ready for another wave to bring Linux back to the desktop for the following reasons: 1.

NYC 2.0

BeyondVC

I recently spoke with Richard Adams, founder of Referral Networks, which was later sold to Peopleclick. He has started a new venture, RipDigital , which does the dirty work of converting CD collections into MP3 libraries. Basically all you have to do is place an order on the website and the company ships a box to you, you pack your CDs into the box, RipDigital does the conversion, and then ships your new library on either a DVD or portable hard drive along with your CDs.

A big week for VOIP

BeyondVC

I have been helping a friend of mine who is moving into town get access to local resources such as carpenters, painters, and restaurants. An email I received from him today had the standard list of questions on utilities but the one that surprised me most was, “Who is your cable provider and do they offer VOIP?” ” This was a surprise since he is not the most bleeding-edge technical guy.

Where are they now?

BeyondVC

Do you remember the name Jonathan Cohen? Jonathan, who was negative on Internet stocks in the late ’90s, was replaced by none other than Henry Blodget at Merrill Lynch. Henry’s $400 call on Amazon.com put him well on his way towards equity research fame or infamy. As I was catching up on my reading and looking at top performing funds for Q3, it was great to see Johnathan Cohen’s Royce Technology Fund top the charts.

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Price isn’t everything

BeyondVC

I had breakfast with a friend the other day, and he was in the process of a bankruptcy filing for his startup. We started talking about why his wireless company had failed and one of the main reasons he cited was that the price was too high. Many of you may ask why is that a problem. Isn’t getting a high price a great thing? The term sheet that the company signed was led by a strategic investor and contingent on finding another VC as a co-lead.

No more annoying calls at dinnertime!

BeyondVC

Court lets ‘do-not-call’ list go forward. In this fast-paced world, I have to admit that having dinner with my family is sacred time. During dinnertime, the last thing we want is a seemingly endless, annoying barrage of telemarketing calls. We never really had a problem until we moved from the city to the suburbs and got on every credit card list known to man due to our new mortgage. Our name and phone number spread like a bad computer virus.

Is the ASP Model Back

BeyondVC

Siebel and IBM team on hosted CRM service. It feels like 1999 again when the ASP (application service provider) business model was all the rage. Why is Siebel trying this again when their most recent foray was a complete disaster ? Bottom line: Salesforce.com is eating their lunch. Siebel’s enterprise license revenue model is coming under real pressure as large enterprises are getting tired of spending millions of dollars upfront with no real ROI. Could this be the return of the ASP model?

No, the cloud model is not dead

deal architect

2003 was by the far the worst financial year for our The meltdown of stocks like LinkedIn, Tableau and Splunk is leading some people to say “cloud is the new dot.com”. To start with, the term dot.com brings painful memories.

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Ray Dalio’s Principles of Success

Feld Thoughts

My abyss happened between 2001 and 2003 and, while I wasn’t alone in my mistakes as Dalio was in his, I related deeply to it. I became a Ray Dalio fan earlier this year when I read his book Principles.

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Sports: Big Data gets Bigger

deal architect

Michael Lewis was describing how controversial his book, Moneyball, was when it first came out in 2003. Baseball coaches and scouts didn’t need no stinkin’ analytical rigor or new metrics. A decade later, as I attend the MIT Sloan Sports. Innovative Business Uses of Technology

Billionaire AND Mechanic

deal architect

Julian Guthrie’s new book catalogs the improbable path that brought together the billionaire, Larry Ellison and the radiator mechanic, Norbert Barjurin and their runs at the 2003, 2007 and 2010 America Cup.

Welcome to The Entrepreneurial Mind 4.0

The Entrepreneurial Mind

In 2003, you could probably fit all the bloggers in the entire state of Tennessee into one of my classrooms and still have room for a few more. I first launched this blog fifteen years ago. It started quite simply as an experiment with a new medium that I knew very little about.

The Awesomeness of Battlestar Galactica

Feld Thoughts

I have no idea how I missed the re-imagining of the series in 2003. ” Season 1 from 2003 was stunningly good. I was totally fried and fighting off a cold yesterday so I decided to spend my digital sabbath on the couch watching Season 1 of Battlestar Galactica.

InnoTech Austin to Spotlight Artificial Intelligence, Blockchain Technology and More on Nov. 16th

SiliconHills

In 2003, Austin’s tech industry looked much different than it does today. The dot com crash had led to many Internet startups failing and even established companies like Intel halted expansion plans here. But despite the upheaval in the industry, Sean Lowery, executive director of InnoTech Austin, saw the city’s potential for a rebirth of […]. The post InnoTech Austin to Spotlight Artificial Intelligence, Blockchain Technology and More on Nov. 16th appeared first on SiliconHills.

Try On The Decision For 30 Days

Feld Thoughts

In 2003 I seriously thought about quitting Mobius Venture Capital. In early 2003, I started to think about leaving Mobius. I woke up one morning in February 2003 and decided to spend a little time each day pretending like I had quit Mobius. In March 2003 I fully engaged in Mobius. While 2003 – 2006 was an incredible grind, I look back on that time period as one that I am satisfied with as we did manage to get Mobius to a stable place.

Early Stage VCs – Be Careful Out There

Feld Thoughts

In 2003 the angels started to reappear (some of the best angel deals of all time were done between 2004 and 2007) and the super angel language started to be used around 2007. In addition to our own funds, we are investors in a number of other early-stage VC funds as part of our Foundry Group Next strategy. Yesterday, in one of the quarterly updates that we get, I saw the following paragraph.

[Infographic] Five Of The Top Email Mistakes That Will Send You To The Spam Folder

YoungUpstarts

For example, the CAN-SPAM ACT of 2003 dictates that that Internet Service Providers (ISPs) weed out promotional spam that violate its guidelines.

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CSO Research of Austin Merges With MBA Focus

SiliconHills

MBA Focus, founded in 2003, provides graduate business school career service software and recruitment technology. CSO Research, which makes undergraduate career service software and founded in Austin in 2001, has merged with MBA Focus, based in Dublin, Ohio. It works with more than 2,000 companies and students at 75 graduate schools. Erik Mulloy is the […] The post CSO Research of Austin Merges With MBA Focus appeared first on SiliconHills. Austin

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We Were Right – Just a Decade Early

Feld Thoughts

2003 – 2012 was the climb to Enlightenment. This is a line my friend Jerry Colonna uses when something like the AT&T – Time Warner deal occurs. As time passes, the line has shifted to “We were right – just fifteen years early.”

If I Could Start Over As An Entrepreneur Again This Is One Thing I Would Do Differently

Entrepreneurs-Journey.com by Yaro Starak

It was the year 2003… Like most days, I started my morning lying in bed on my back, feeling a combination of excitement and stress as I stared at the ceiling, thinking about all the things I’d like to change about my life.

Age of companies when they achieve $1bn valuations

The Equity Kicker

The fact that the trend has been going for some time – Google was founded in 1998 and Tesla and Facebook in 2003 and 2004 respectively – suggests that the bubble explanation can’t be the whole story.