A Look Back On VC Cafe’s Journey Since 2005

VC Cafe

VC Cafe turned seven! in this post I cover the journey of starting VC Cafe, the highs and downs along the way, and the path I followed to evolve it from a news reporting blog to a site that provides founders with practical advice. [[ This is a content summary only. Visit my website for full links, other content, and more! ]].

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Web as platform

BeyondVC

Web 2005. There has been lots of discussion about Tim O’Reilly’s Web2MemeMap. This is a nice graphical representation of what is happening in this next wave of the Internet.

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Tips for the first VC Meeting

BeyondVC

I had a meeting last week where an entrepreneur insisted on showing me a demo first. He was scrambling around asking for wireless keys and looking for ethernet jacks, while I sat there and tried to engage him in conversation. He lost my interest right then and there. As I started to think more about it, I thought it would be helpful to share some of my thoughts on how to make the first VC pitch a better experience for all participants.

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Web as platform-don’t forget the enterprise

BeyondVC

As I have written before, most of the talk about this next generation web has focused around consumer applications. I, however, have always believed that we should not forget the enterprise. This resurgence of web-based and loosely coupled applications has been driven by consumer-based innovation but there are many pockets of opportunities for the enterprise to take the best of the open web.

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Let the VOIP Infrastructure Wars Begin

BeyondVC

Microsoft’s launch of the Live Communication Server 2005 with integration into Windows and Office is the first step. Much focus has been put on the VOIP service market where you have the likes of Vonage and SunRocket (just announced another big funding round today) who want to replace your landline and the non-traditional players like Skype and now Google, AOL, and Microsoft.

Thoughts from a recent CIO dinner

BeyondVC

One of our advisors for our fund hosted a New York CIO dinner last night. It was a gathering of 30-40 of some of New York’s leading technology buyers, mostly from the financial services industry. As a VC, it was quite interesting to hear about the state of technology spending and what is top of mind for many of these players. Repeatedly I heard about grid computing, security, and service oriented architectures.

Wireless – bring down the walled gardens!

BeyondVC

At the CIO dinner I was at last night (more on that later), I had the opportunity to play with a demo model of the Motorola Q Phone running on a Verizon EVDO network. After a few minutes with this device, there is no doubt in my mind that Motorola will have another hit on its hand. It is as thin as the Razr, a little wider than my Blackberry 7100, has a full QWERTY keyboard, digital camera, full audio and video capabilities, and runs on Windows Mobile over Verizon’s high speed network.

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Frictionless sales (continued)

BeyondVC

I would even apply this frictionless sales model to the consumer web. We all know that the Internet is turning every media company upside down about worries of cannabalizing their existing business. It is clear that CBS gets it as they just announced that March Madness will be delivered free over the Internet. CBS will monetize it with ads. CBS is going open and understands this could potentially create new and additive revenue models, not less. Kudos to Larry Kramer for making this happen.

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iPod sucks

BeyondVC

I decided to go for a nice run today in the 30 degree weather to get a little mental relaxation. I was debating whether or not to bring my ipod mini and checked to see the battery life which showed about 3/4 full. So I was in the middle of my run charging up a hill when my ipod just dies out. I have to tell you that Apple has done a nice job with the iPod making it easy and user-friendly for everyone but the battery and hardware problems just bother me.

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The Importance of back channel reference checks

BeyondVC

As an early stage VC, I spend a fair amount of time helping entrepreneurs build their management teams. I have written about what we look for (read the A-Player Domino Effect ), the hiring process , and other facets of recruiting talent in previous posts. One area which I cannot overemphasize is the need for companies to do back channel references on candidates.

Spinning your wheels – the new reality in enterpise sales

BeyondVC

I was in a board meeting yesterday reviewing the sales pipeline for a portfolio company walking through the wins and losses. As I wrote in an earlier post , it is extremely important (to the extent you can), to get good data on your losses. Many times you learn more from your losses than from your wins. We like to know who we lost to and why.

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Your baby is ugly

BeyondVC

I admire entrepreneurs for the risk they take and the unerring confidence they have in their product and market opportunity. However, what separates some of the great entrepreneurs from the average ones is an ability to acknowledge your weaknesses. As we all know, being an entrepreneur is a difficult job that is 24/7. Creating a new product or service can be draining but also quite rewarding emotionally and financially.

Competing with the big boys

BeyondVC

I was talking to a portfolio company CEO today about his sales pipeline and one of the key items of interest for me was understanding competitive dynamics. Besides looking at the raw numbers, I like to understand whether or not we are seeing more or less competition, why we are winning, and why we are losing. As I started to dig into this area over the last two quarters I have noticed that the big boys or incumbents have started to show up in more deals.

Beware of fishing expeditions

BeyondVC

A number of our portfolio companies have been fielding calls from strategic buyers expressing an interest in acquisition. This is great news since many of the better acquisitions come when companies are bought and not sold. For a startup, it can be quite flattering to have a large competitor or suitor express an interest in buying your company. However, as an entrepreneur you have to be skeptical as many of these calls end up as just another fishing expedition from the strategic buyer.

VC Blogs – the old and new

BeyondVC

I was in California 3 weeks ago when Jeff Nolan told me he was leaving SAP Venture s and moving to a new group within SAP desgined to "Kill Oracle." " We talked about all of the great innovation happening on the web, much of which is consumer-focused, and why it was a good time to make a switch.

Web 2.0 Bubble

BeyondVC

I had an enjoyable lunch with Jeff Jarvis today catching up on a number of things and brainstorming about value in the next generation web. During the conversation I vented a little frustration at the use of buzz words and bubble-like mentality with terms like Web 2.0. I am starting to get extremely tired and frustrated about every pitch that I see now where a company claims they are a Web 2.0 company and lists their principal reasons for being Web 2.0.

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TiddlyWiki

BeyondVC

Angus Bankes, CTO of Moreover, recently introduced me to Jeremy Ruston, the creator of TiddlyWiki. I honestly did not really get it at first, but I have been using TiddlyWiki since last weekend and have really grown to like it. According to Jeremy, who I spoke to this week, Tiddlywiki is a reusable, non-linear, personal web notebook. On the TiddlyWiki site, Jeremy goes on to say: It’s written in HTML, CSS and JavaScript to run on any modern browser without needing any ServerSide logic.

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Verisign acquires Moreover

BeyondVC

Like Nick Denton and David Galbraith , I can’t comment on the acquisition. What I can say is that Moreover was a pioneer in the early use of weblogs via newsblogger, news search, and content syndication via XML and RSS. That being said, we had to make some choices when the economy cratered in 2000 and sometimes you can be too early to market before people are fully ready for what you have. I now look forward to what Verisign will do with the combined weblogs.com/Moreover Technologies group.

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Order takers versus order makers

BeyondVC

I have to admit that hiring excellent sales people is not an easy task. Any sales person worth his weight can pitch with the best of them, articulate a strong value proposition, and demonstrate a nice track record of success. I like to look at past experiences on a sale person’s resume and a history of overachievement. All that being said, I have also had plenty of sales managers come in the door with all of the criteria but just flail.

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Next-generation web

BeyondVC

I am out in the Bay area the next couple of days but unfortunately will not be at Web 2.0. That being said, I suggest staying up-to-date on next-generation web applications and services through Emily Chang’s eHub. It is great to see all of the innovation out there but we must remember while it takes much less to build an application and get it out to the masses, the barriers to entry are much lower.

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Venture Capital and Hedge Funds

BeyondVC

Well, there is clearly lots of money sloshing around in alternative assets like hedge funds, private equity, and venture capital. That being said, I still believe there are plenty of great investment opportunities. In an earlier post titled, " Go Early, Go Late, or Go Home ," I shared some of my thoughts on what company stages of development looked attractive for investing. In addition, I highlighted the blurring of hedge funds and private equity.

Skype, Siebel and frictionless sales

BeyondVC

W hat is clear to me is that companies that get it use the Internet in a big way as a sale s and marketing channel and even a delivery mechanism for their product s. Companies that don’t miss a huge opportunity. Siebel does not get it, Salesforce.com does. Skype gets it while Vonage does not. What I am talking about is reducing friction in your sales and implementation process. The less friction you have in your sales and delivery model, the easier it is to scale.

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Missing an engineering release date can be a symptom of a larger problem

BeyondVC

I was in a board meeting last week reviewing a product release schedule for the next year. I was extremely concerned that we missed the last release, and as we dug in deeper what we saw were a few features scattered throughout the schedule tied to deals that were just closed. Now this would not be a big deal if these requirements were market-driven features that were necessary for a number of customers.

You only have one chance to make a first impression

BeyondVC

Yesterday, I had the opportunity to spend time with the CTO of a major financial services company with a $1 billion IT budget. In these meetings I like to learn about the major priorities and where the open opportunities for early stage companies exist. The good news was that the company was very open to working with entrepeneurial ventures. Priority number 1 for the organization was to standardize on a common architecture and infrastructure.

Net and VC Loyalty

BeyondVC

Robert Scoble has asked the VCs to respond to an eWeek article titled Is.Net Failing to Draw Venture Capital Loyalty? There is not much for me to add to this article as we all know that the only loyalty VCs have is to their Limited Partners to generate long-term capital gains. This means we do not fund a company because of what technology platform it chooses to develop on but rather what problem the company and product is solving and how big that opportunity is.

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Jobs at Gurunet (Answers.com)

BeyondVC

I have received many an interesting resume through this blog. Given that, I thought I would let you know of some job opportunities at Gurunet, creators of Answers.com. The company recently opened a New York City office and is looking to hire 2 in Business Development (one to help manage traffic partnerships and the other to manage content relationships), 1 in Marketing, 1 Online Advertising Sales Rep, 1 Linux Sytems Engineer, and 1 Office Manager.

LP Conference

BeyondVC

I am not sure how many entrepreneurs understand the structure of venture capital funds but the bottom line is that while VCs manage funds, we ultimately report to our investors or Limited Partners (LPs). It is not our money, and we have a fiduciary responsibility to manage it properly and generate the returns our LPs expect of us.

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Cisco, a value play?

BeyondVC

In fact, Cisco’s 2005 P/E at 17 is less than that of the S&P 500’s at 17.4. I was reading Barron’s this morning and came across an article (sorry-need subscription for this) claiming Cisco’s potential appeal as a value stock. It is hard to believe that this high flying company which once was the largest market cap company at $600b is now potentially a great value play.

The laws of supply and demand for VCs and IT Buyers

BeyondVC

There is a supply and demand equation for every startup’s product or service. In early stage companies, I sometimes see too much from the supply side and not enough from the demand part of the equation. In other words, inventing great products that no one wants to buy is a waste of time, money and effort. While there are not nearly the amount of startups on the East Coast as in Silicon Valley, being in New York I do have tremendous access to Fortune 500 companies.

Nickels and dimes don’t add up

BeyondVC

I recently helped negotiate an employment contract for a new hire at a portfolio company. It was clear from the very beginning that this new VP of Marketing was the right fit for the company and that the chemistry was there. Both sides were excited about moving forward until we got to the employment contract. In theory, we were in general agreement on salary range, bonus, etc. but what ended up scaring us was the fact that every issue, big or small, was negotiated to the nth degree.

Fundraising is a distraction

BeyondVC

I was speaking with a friend yesterday who recently signed a term sheet to raise a Series B round. While he did not hit it out of the park with the valuation, it was a nice step-up none-the-less and would provide his company with the capital to move forward and stay ahead of its competition.

What does Sarbanes-Oxley have to do with donuts?

BeyondVC

I had lunch with a friend of mine yesterday who is an officer with a public technology company. As we started discussing his business, one of the topics of conversation was Sarbanes Oxley. His company just went through an expensive Sarbox audit to get into compliance and while his company passed with flying colors on most of the important issues, his company failed the audit. Here is the short story. One of his sales reps was hosting a client meeting and bought $15 worth of donuts.

Venture capital in China

BeyondVC

I recently caught up with my friend Derek Sulger, founder of Linktone (Nasdaq: LTON) and current founder and CFO of Smartpay , a Paypal-like play in China (I really like what Derek is doing with this one-no credit in China, use the mobile phones for debiting from bank accounts). Derek and I are college friends and we certainly have come a long way from college when he finds my email on Google under a heading " Geeking out with Ed Sim " (thanks to Jeff Clavier for this one!)

Welcome GreenPlum and Bizgres

BeyondVC

I have looked at a number of open source projects over the last year and mostly agree with Bill Burnham’s comments that many of these open source plays are "marketing gimmics for startup companies." " Many of these companies are trying to start a new project from scratch, hoping to build a community brick by brick. In addition, without the ability to create a community, it is hard to build a real sustainable revenue model.

Working with partners

BeyondVC

I can’t tell you how many early stage companies I talk to tout their great list of partners. I always step back in amazement at how a small company can support more than one, really large partner in the beginning. In fact, I remember being in a meeting with a strategic partner once and having them tell me that we would break if they put their resources behind our product. You have to realize there are 2 kinds of partners – technology partners and real partners.

Go early, go late, or go home

BeyondVC

After having returned from vacation last week, I had the chance to reflect on the current venture and investing market. Yes, one of the big challenges is that there is still way too much money sloshing around in alternative assets. As I think about how to make money in this competitive environment and where to make new investments, I keep coming back to the thought that there is still opportunity very early or very late in a company’s life cycle.

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Developers matter in enterprise sales-just reach them economically

BeyondVC

" That’s been a pretty focusing statement for us over the years, and as we enter the new year, you should expect 2005 to be one in which we place an ever heightening focus on our dialog with the community, and the developer community in particular. Jonathan Schwartz from Sun has a good post about the nature of developers, and why building a relationship with them is key to creating opportunities.

When competitors are acquired…

BeyondVC

It is clear that we are moving towards a consolidation phase in the technology sector. M&A activity has been heating up over the last 18 months as strategic acquirers are looking to bulk up and broaden their product offerings. During the last few months, we have had a few board discussions on this very topic. The conversations were not about us trying to shop any of our companies as I firmly believe that companies are bought and not sold (see an earlier post ).

Know when to say “No”

BeyondVC

I have said many times before that with respect to doing deals that saying No is as important as saying Yes. Let me elaborate. A portfolio company has recently been in trials with a potential strategic partner about a reseller relationship. We got in first, set the criteria for success to leverage our technical and business advantages, and were selected as the winner. We had the most customers, the best product, and best customer support.

RSS Ads

BeyondVC

From day one, I got into blogging not knowing what to expect and figuring out the best way to learn about a market is to dive into it and become a user. So I did that 18 months ago assuming that the time I spent as a blogger would either help me find compelling investment opportunities or provide me with in depth knowledge to help existing portfolio companies leverage this new opportunity.

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Speed versus flexibility

BeyondVC

A number of companies are developing software and sytems which rely on packet processing at high speeds to deliver their respective functionality. This includes companies in the networking and security space. The debate over custom ASICs versus off-the-shelf components has raged on over the years. Over the last five years a new class of chip has arrived on the scene called the network processor. It is supposed to give the engineer the speed of ASICs with the flexibility of software.

Linuxworld Boston

BeyondVC

Last year at this time, I was at Demo in Arizona watching a couple of my portfolio companies launch new products and networking with other VCs and entrepreneurs. Given my travel schedule of late, I decided to go to Linuxworld in Boston for a day and follow Demo from many of the bloggers like Jeff Nolan. It seems that the consensus view from Demo was that there were lots of interesting products but nothing that blew the audience away. I, too, can say the same about Linuxworld.

HBS Compensation Survey

BeyondVC

Professor Noam Wasserman of HBS along with individuals from J. Robert Scott, Wilmer Cutler Pickering Hale and Dorr LLP, and Ernst & Young LLP put together an annual compensation report for venture-backed companies. If you are venture-backed and interested in participating and receiving a free copy of the report to baseline compensation for your employees, I suggest going to CompStudy to get started.