EasyNet bought by BSkyB


This post is by editor from archimedes labs


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I have been meaning to post on this for a while and didn’t do so because I wanted to wait for the dust to settle. This seems like a good time.

My old company Easynet has been acquired by BSkyB for something around $375m. I was co-founder of the company, in 1994, with my friend David Rowe. David remains CEO. I left about 12 months after our IPO, in 1997, to start RealNames.

Firstly, congratulations to David and his team. But especially to David. He is an incredibly focused entreprenuer who, despite the market cap getting up to $2 billion or so during 1999 remained dedicated to building out a genuine competitor to the Telco incumbents across many markets in Europe.

BSkyB’s acquisition is testimony to that focus. They need an infrastructure capable of driving a triple play (voice, video and data) connection to homes and businesses throughout Europe. because Continue reading “EasyNet bought by BSkyB”

The Importance of back channel reference checks


This post is by Ed Sim from BeyondVC


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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.  We were recently doing a VP of Sales search for a portfolio company and in the intial call with the CEO and myself, we found the VP of Sales to be talented and engaging.  A subsequent face-to-face meeting with the CEO and myself separately over the next week further bolstered our interest in the executive.  After a few more meetings with various members of the mangement team, we decided to begin the standard referencing process where we collected the candidate’ s list of published references and called to get a better understanding of the individual’s strengths and weaknesses.  Of course, the references all came back glowing.  If they did not, I would be a little concerned.  This is where most companies end the due diligence process and begin negotiating a contract. 

However, I cannot overemphasize the importance of getting back channel references (references that were not given by the individual on the official list) to get a real view of the candidate.  You need to look deep into your network and your VC’s network to reach out to investors, executives, peers, and direct reports who worked with the candidate in prior companies to get a complete picture and balanced profile of the recruit.  A wrong hiring decision for an early stage company can be a killer!  All too often startup companies want to run fast and furious and hire that killer executive candidate ASAP without doing the extra work required to determine the right fit. In this particular case, through the back channel references we were able to find a number of inconsistencies about a candidate’s effectiveness at a prior startup, his reasons for leaving, and his overall management skills.  While the references were balanced and fair, they were far from glowing.  In fact, most of the back channel references were consistently mediocre which for me was a vote of no confidence.  Sure, you should always expect to get a couple bad references if you do enough of them on someone, but if you see a consistent pattern of concerns or "areas that need to be managed" emerge from those references, it is time to move to the next candidate.  In fact, let me extend this message and state that doing Continue reading “The Importance of back channel reference checks”

Google launches Dbase, circa 1985, but with less functionality


This post is by editor from archimedes labs


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Google launched GoogleBase last night. What a disappointment. Whilst Google Reader clearly points to somebody at Google “getting” the importance of edge published content and real-time indexing, GoogleBase is a throw back. Basically a dumb flat-file database system for the world to throw content into. It’s actually embarrasing for the whole of Silicon Valley. I know insiders who desperately do not want their name associated with it. Can’t say I blame them.

Not to be abusive but why would millions of people who run web sites, and databases, and blogs, suddenly feed stuff into GoogleBase (an act of duplicating their already web based data into another database run by Google)? Maybe to get better search results. But this is an act of pure laziness from Google. The same results could be achieved in a manner far more consistent with the distributed data model that the world is currently flocking to.

?

Continue reading “Google launches Dbase, circa 1985, but with less functionality”

Spinning your wheels – the new reality in enterpise sales


This post is by Ed Sim from BeyondVC


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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.  We keep a running tab of these losses so we can figure out some key trends, how our competitors are selling against us, and determine what sales tactics we need to employ to reverse the losses.  Interestingly enough, over the last year a trend I have been seeing is the "do nothing" trend from enterprise customers.  We find out that the potential customer has budget, we are selected as the winner, and then they do nothing.  Obviously, the earlier you can identify a potential for spinning your wheels the better off you will be.  Mike Nevens has a great post on SandHill.com outlining this new reality and ways to determine if you are spinning your wheels early in the sales process or methods to make your project one of the 5 out of 30 projects that actually get implemented rather than just approved.

The CIO of one of the largest retail banks in the US recently told me that he has about 60 new projects under evaluation. About half of them will pass technical, functional and investment hurdles. He will then fund 4 to 6 over the next two years.

That means that 25 or so projects that meet all objective criteria will not go forward.

Software vendors and investors need to understand and deal with this reality. 

This is the new reality in selling to enterprises – doing nothing may be a bigger inhibitor to sales growth than your competition!

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Your baby is ugly


This post is by Ed Sim from BeyondVC


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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.  Obviously, the last thing you want to hear when you get your initial first customers is to hear that your product has faults.  For some entrepreneurs, it is akin to saying "your baby is ugly."  Well, I have to tell you, I have seen a number of times where companies and entrepreneurs can drink too much of their own Kool-Aid and go quickly from product innovator and market leader to second place.  In a recent example, I heard a couple customers tell a company that our field guys were a little too defensive about the product and somewhat condescending with respect to a customer’s technical knowledge.  In fact, the problem was not the customer, but our product.  We made the requisite changes at the personnel level but it is obviously a more important issue reflected in the core DNA of the company.  So as an entrepreneur, I urge you to create a culture of questioning the status quo, of constantly reviewing your weaknesses and figuring out ways to improve yourself, your product, and company.  It can be very hard to do for an entrepreneur when your blood, sweat, and tears are in the product or service but it is always better for you to figure out how to make your company obsolete and thus improve it against competition rather than your competitors.  I mean, even a big company like Microsoft is making an about face acknowledging the missed opportunity on the web for the second time.  As a result, we spend alot of time pre-investment trying to understand the entrepreneur’s motivation and goals as well as getting a feel for the culture in the company.  Sure, we can always bring in a new CEO to fix the execution problems, but I am a strong believer that culture starts with the initial founding team and once it is embedded and institutionalized early on, it is very hard to change.  As an entrepreneur, think hard about the core values you want the company to abide by as these will be the principles that take your company years into the future.

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Beware of fishing expeditions


This post is by Ed Sim from BeyondVC


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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. I have seen too many companies get overly excited about these acquisition feelers and waste time educating the potential acquirer only for the acquirer to either do nothing, build it themselves, or buy a competitor.  In fact, you have to recognize and assume that many of these initial calls are just fishing expeditions where a strategic buyer is just trying to get as much information as they can about a market and the competitive landscape.  You have to assume that they are talking to all of your competitors as well.  Before taking your first meeting, make sure you get as much information you can to gauge the real interest in your company.  Here are some questions you should be asking or thinking of during your initial conversation.

  1. Who is calling you, what is their role, and what have they acquired in the past?  You need to determine whether it is just a junior person screening or if it is someone with real clout and decision making power.
  2. Why do they want to enter this market and what is the decision making process by which they will make a build/buy decision?  If they are early in the process, you have to be concerned about wasting your time, educating a potential buyer about your market, and going nowhere with your conversations.
  3. Have they talked to anyone else?  In many cases, an acquirer may already know who they want to buy, but will still talk to other players to fully understand the market and the competitive landscape and to use you as negotiating leverage.
  4. What are they looking for in terms of an acquisition?  Revenue, product, management, both?
  5. Who is responsible for making the acquisition work, and how does the acquirer intend to integrate your company into the existing infrastructure?  Will the acquisition be run as a separate, stand-alone unit or will it report to a certain group.  Knowing this will further help you understand the decision-making process of the acquirer, and who you may need to influence to get a deal done.

Before your first meeting, here are some questions you should have answered yourself:

  1. Continue reading “Beware of fishing expeditions”

Mike Arrington launches CrunchNotes


This post is by editor from archimedes labs


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Mike Arrington, editor of TechCrunch and a partner in Archimedes Ventures, has launched a second blog – CrunchNotes.
In Mikes words:

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p style=”text-indent:80pt;”>So, why am I starting CrunchNotes? The main reason is that I find that sometimes, I want to talk about more than just new companies and products. Sometimes I have something to say about what’s going on in the blogosphere or the world. Sometimes I want to link to something interesting another blogger has written, but which has nothing to do with new companies. I found that doing that on TechCrunch tends to dilute the core value of that blog.

And so I am starting CrunchNotes, a companion blog to TechCrunch. It’s a place that I can write about things that interest me but that doesn’t belong on TechCrunch.

Mike gave myself and Dave Winer a lot of kudos for helping him start in the world of Web 2. Continue reading “Mike Arrington launches CrunchNotes”

VC Blogs – the old and new


This post is by Ed Sim from BeyondVC


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I was in California 3 weeks ago when Jeff Nolan told me he was leaving SAP Ventures 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.  Yes, SAP is the dominant player in the enterprise market and even after you account for Oracle’s acquisition binge Oracle still remains the distant number 2 player in enterprise software.  That being said, there are new technologies and new ways of doing business which SAP must keep close tabs on as it maintains its dominance – think service oriented architectures, SaaS, and new markets to enter and conquer.  So I am sad to see one of my VC buddies go back to the operational side, but I look forward to working with him closely as he helps SAP evolve its stategy and maintain its leadership.

Another VC friend, Scott Maxwell of Insight Venture Partners, has launched a new blog with encouragement from myself and Brad Feld.  Many of the VC bloggers on the web are early stage focused so Scott will bring a unique twist to the VC blogging world by focusing on expansion stage companies that have a product and some decent quarterly revenue.  As Scott mentions in his post:

The issues faced by technology companies at this stage of development are very different that early stage companies. The major issues are around distribution strategy and execution, but as companies scale they tend to need more formal development approaches and have many other process, organization, skill, and staffing gaps as well. Every CEO is also looking for more leads, customer introductions, and ongoing advice in every category, personal and professional.

I tend to agree with Scott so if you want a different perspective, a perspective of what your later round VC is looking for, I suggest putting Scott’s blog on your must read list.

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Web 2.0 Bubble


This post is by Ed Sim from BeyondVC


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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.  It reminds me of the mid-90s when everyone said they were an Internet company and sprinkled their pitch with wild growth expectations from Jupiter Communications.  Or when everyone said they were a Java company when Java was the cool buzzword.  Frankly I do not care if you are Web 2.0, Web 1.0, etc.  All I care about is what your service or product does, why it is valuable to the end user, why it is uniquely different from the competition, what the barriers to entry are, and how you plan on reaching your customers and how you will ultimately make money.  Don’t start your pitch with Web 2.0 ecochamber talk.  In fact as Jeff and I discussed several companies and ideas, we concluded that most of them were just features and not companies.  And as Jeff states, when small is the new big, then it poses problems for VCs as well.

Then Ed and I were talking about similar challenges for investors and entrepreneurs in the small-is-the-new-big age: Today, it’s much, much easier to start a new company on far, far less capital than it used to be. But this also means that it’s easier for someone else to start a competitor. So speed is more important than ever: You have to develop your business as quickly and nimbly as possible to build your product and then perfect it after it’s out so you quickly establish your value. This means that the VCs need to be able to act just as nimbly to invest as quickly as possible. The good news is that the investments are smaller and the risk is thus less. But the bad news, of course, is that it costs more effort and attention to manage many more smaller investments and it’s hard to act quickly at scale. Early bird, worm, and all that.

While getting in early and being nimble is a great way to make money, no matter how early you go, it is hard to build a sustainable VC portfolio investing in features.  As an entrepreneur, if you can get up and running for $20-30k, Continue reading “Web 2.0 Bubble”

TiddlyWiki


This post is by Ed Sim from BeyondVC


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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. It allows anyone to create personal SelfContained hypertext documents that can be posted to any WebServer, sent by email or kept on a USB thumb drive to make a WikiOnAStick.

As I’ve said before increasingly the web is becoming my platform and the browser is my gateway to rich services.  I have a public blog which you are reading here, a private blog where I bookmark some items and make notes to myself, a couple of wikis which we use internally at Dawntreader or with portfolio companies to work on specific projects, and now a TiddlyWiki which I use to organize my personal thoughts, put ToDoLists together, record call notes, etc.  Instead of having all of my notes in a notebook or in Outlook or Word, I now have a searchable, taggable personal notebook accessible through any web browser.  I can link to files in my hard drive, websites, etc.  It is open source and there is an increasingly strong community building new plugins and macros to add to your TiddlyWiki.  The great thing is that it is a selfcontained file with no server side installation meaning I can carry it with me, email it, put it on a USB drive, or even upload it to a fileshare internally or on the web.  I am still grokking this but needless to say I suggest that you save a copy of it and start using it.  I am currently using Johnny LeRoys TigglyTagWiki version which you can find here.  As for how big or active the community is, Jeremy says it is hard to tell but his site is getting 25k unique visitors a month and growing.  On Technorati there are 1271 posts with Tiddlywiki mentioned.  For an even clearer explanation of TiddlyWiki, I suggest going to Euicho.com.  Euicho does a good job of breaking it down to its elements, comparing and contrasting it to Wikis, and outlining the limitless possibilities:

  • It works great as a documentation manager for products, software, etc.
  • Do you have a desktop full of tiny .txt file reminders and notes? It can store little bits of information, Continue reading “TiddlyWiki”

Verisign acquires Moreover


This post is by Ed Sim from BeyondVC


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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.  As David Galbraith says, it will be interesting to watch…

I have been banging on about the importance of ping servers for a while, perhaps Versign with Moreover and Weblogs.com can do something or perhaps another startup will.

Whatever happens, the architecture of online publishing is changing and with it, the entire architecture of search – pinged instead of crawled. That is a very big deal for Google.

It has been quite a journey during the last five years, but I am glad that I had the chance to work closely with so many talented professionals like Nick Denton, Jeff Jarvis, David Galbraith, Jim Pitkow, and Angus Bankes, many of whom are helping shape the next generation web.

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Weblogs.com sold to VeriSign


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Weblogscom

It was confirmed today that Dave Winer’s weblogs.com has sold its assets to VeriSign. The price has not been officially disclosed but the blogosphere has very efficiently decided the range ($2-5m). Dave has posted his story and his response to the reactions.

Michael Graves – a great guy and heading up the technology side of VeriSign’s Real Time Web team – has posted a significant and detailed overview of the what?, why? and where now? of the deal.

Several commentators, including Dave (thanks Dave) have revealed that Mike Arrington and myself were involved in helping make the deal happen. Mike has a post up on TechCrunch. I have received quite a few requests to clarify and to save time I’ll say a little here.

Firstly, we can claim no credit for the deal. VeriSign bought weblogs.com for two reasons that have nothing to do with us. First,

Www Vrsn Logo

Continue reading “Weblogs.com sold to VeriSign”

Order takers versus order makers


This post is by Ed Sim from BeyondVC


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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.  Some have ridden a hot product in a hot market and others for some reason just cannot make the transition from one company to another or one market to another.  One of the fundamental criteria that any startup needs to look for is hunger.  If you are a sales rep at an early stage company with no name, no brand, and an unproven product, you better be hungry, make your calls, schedule your meetings and not take no for an answer.  What this boils down for me is the difference between "order takers" and "order makers."  In one of my portfolio companies we thought we hired the best team with significant industry experience having ramped up a startup to a successful IPO.  What happened, in my mind and the CEO’s mind, is that they got fat and happy.  At the peak of their success from the prior company the sales team had performed so well that they transitioned from order making to order taking.  Instead of going out and playing the numbers game-doing the dirty work, making the calls, and having the meetings, they expected resellers and customers to come to them.  They expected the fax machine to ring with orders.  They went elephant hunting in search of the big win which proved to be elusive or too lenghty an endeavor.  So whatever you do when you hire your next group of sales reps, make sure they have the qualifications but more importantly make sure that they have the hunger and desire to win.  Make sure that you have "order makers" and not "order takers."

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Next-generation web


This post is by Ed Sim from BeyondVC


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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.  All it takes is one to two smart programmers to get a rich product in the market and as you dig into eHub it is quite obvious that there are several categories with 3 or 4 players in them already (not including what Yahoo, Google, and others are doing).

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Web as platform


This post is by Ed Sim from BeyondVC


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There has been lots of discussion about Tim O’Reilly’s Web2MemeMap.

Timoreilly_web2mememap_2

This is a nice graphical representation of what is happening in this next wave of the Internet.  As an add-on to this, I thought I would compare and contrast some differences, all quite obvious, with the first euphoric Internet wave.  I have shared many of these thoughts in earlier posts like "The web-based platform" last October and "Web-based businesses circa 2004."

Web 1999/2000 Web 2005
Critical Mass 12.8m 209m
GoToMarket Philosophy If you build it, they will come Release early and release often
Tech platform Sun, Oracle, EMC=   Big $$$ LAMP, open source, Intel, clusters, JBOD
Philosophy Closed Open, APIs and data sharing
Customer acquisition Spend $$$, advertising Spend nothing, word of mouth rules
Milestone for VC Funding No users, great idea Lots of users and rich interaction
$ used for Building product, marketing $ to acquire users Scaling back end, adding more features/functionality
First Round Funding VC – $5-10mm Angels – $0-2mm
Second Round Funding VC – $10-20mm VC – $5 or trade sale
Business Models Unproven Proven

So as you can see, there are more sophisticated users, it costs significantly less to launch a new service/product, and many of the business models are proven to reach profitability.  In other words, these business models are quite capital efficient.  It is no wonder why VCs are quite excited about next generation web companies.  All that being said, I, like others, worry about believing all of our own hype, and moving ourselves to another bubble.  As you see from Tim’s map and my table above, if it costs less to build and launch a company, then the barriers to entry must be lower as well.  What this really means is that building a sustainable competitive advantage in this new open world means leveraging network effects to foster loyalty, community, and collaboration. In most cases this will be enough to create lots of value.  In other cases like Friendster vs.MySpace it shows that this network effect can also be fleeting.

One other point to consider with all of this is the significant changes ahead in the enterprise.  Many of the points in the map above fit consumer-facing services.  With the proliferation of broadband and the thought that the consumer is also an enterprise user, we must be cognizant of the many opportunities for web-based services to be brought into the corporation from the ground-up. Everything we did in Windows and Office and other enterprise apps 5 years ago can be done through a browser/web with Salesforce.com, Skype, and web-based email and calendaring.  We Continue reading “Web as platform”

Venture Capital and Hedge Funds


This post is by Ed Sim from BeyondVC


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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.  As hedge funds receive more dollars and the markets, therefore, become more efficient, hedge funds need to find new ways to generate returns.  Increasingly, hedge funds are moving just from private equity and now more aggressively into venture capital.  Barron’s highlights this trend in an article from this past week’s edition.

Investors had better take notice. As hedge funds search for new strategies to produce the holy grail of "alpha," or outsized returns relative to risk, private-equity investments of all stripes are suddenly turning up in the industry’s portfolios.

The holdings — ranging from modest positions in startup companies to multibillion dollar corporate buyouts to a variety of more esoteric instruments, like subordinated debt — already amount to $65 billion, or 7% of hedge-fund investments, according to estimates by Freeman & Co., a New York-based financial boutique. That tally, the firm believes, could swell to $100 billion by next year.

Today’s Wall Street Journal has an article (can’t find online source but in Marketplace B3C) on hedge funds entering the venture capital market.  It is no secret that hedge funds took flyers on early stage tech companies during the bubble.  However, what’s different this time is that hedge funds are looking to create separate vehicles to make venture capital investments with a longer time frame to withdraw capital.  As the article states, the big concern is if hedge funds can be patient enough to generate the needed returns.  Instead of worrying about the tick, hedge funds need to understand that VC is a 5 year game plan.  The other area of concern for me is the idea of even more money plowing into early stage deals.  I can vividly remember during the boom being priced out of a few deals from some hedge funds who were willing to give money at a higher valuation with less oversight to eager entrepreneurs.  All this being said, this trend is just starting but one to which we should pay close attention.  I just do not want all of this capital to end up badly in the next bubble.

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Microsoft’s Reorganization and Web 2.0


This post is by editor from archimedes labs


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Microsoft Logo

Microsoft announced a major reorganization this week. the crux of the reorg seems to be that the MSN and Windows divisions are being unified, and as part of this Jim Allchin is retiring. A new “Platform Products and Services Division” is the result. It will be led by Kevin Johnson once Allchin retires.

There will also be a “Business Division” led by Jeff Raikes. This includes the Office line of products and it’s “Business Solutions and packaged applications group”.Robbie Bach wil head the third group – “Entertainment and Devices division”.

Many commentators are interpreting the changes as having been motivated by Microsoft’s need to modernize itself to better compete in a Web 2.0 world.

There are many good reasons for Microsoft to be concerned about the changing architecture of computing, and particularly the architecture of the network. However many of the commentaries about this fail to nail the Continue reading “Microsoft’s Reorganization and Web 2.0”

Let the VOIP Infrastructure Wars Begin


This post is by Ed Sim from BeyondVC


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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.  However, what is more interesting to watch for me is the battle between the incumbent phone equipment players and the new upstarts.  This war reached another milestone 2 days ago with Avaya’s purchase of Nimcat Networks, a serverless VOIP infrastructure player.

Let me set the stage for you as it is a microcosm of what is happening in other IT markets.  Currently you have the incumbents like Cisco, Avaya, and Nortel which are dominating industry roll-outs across enterprises.  Some of these companies are next-generation players as they have replaced the old-school PBX systems of other competitors or even their own legacy systems.  While the market is still early in development, the new IP PBX guys are playing the same sales and marketing game as the old school PBX players.  Enter the next area of the market, the open source players like Digium with Asterisk and Pingtel with SIPFoundry.  Both of these companies are employing the open source model of letting customers download the product and upselling support and maintenance.  The core value proposition is similar to many open source companies – commoditize the old closed system with off-the-shelf hardware and let customers avoid vendor lock-in with a pure, open system saving on their TCO.  There are definitely some technical differentiations between Asterisk and SIPFoundry, but nonetheless, the approaches to market are pretty similar.  Finally, you have the disruptive players like Nimcat Networks and Popular Telephony (Peerio) who are promoting a serverless, peer-to-peer architecture.  With intelligence embedded in the edge, these companies promise even more ease of use (just plug a phone into your LAN and you are ready to go) and lower TCO than the other vendors.  Of course there are many issues with privacy and security when you start talking about P2P but this is still quite an interesting technology which will find its market. 

Fast forward back to Avaya buying Nimcat.  For an early stage company, promoting a new standard and new architecture is huge, uphill battle.  On the other hand, incumbents like Avaya must continue to analyze their competitive threats and move quickly to protect market share, even if they have to cannabalize their own sales.  This move by Avaya is brilliant and I look forward to seeing how it will embed Nimcat intelligence in its products and to see if a giant like this can Continue reading “Let the VOIP Infrastructure Wars Begin”

Skype, Siebel and frictionless sales


This post is by Ed Sim from BeyondVC


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What is clear to me is that companies that get it use the Internet in a big way as a sales and marketing channel and even a delivery mechanism for their products.  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. The easier it is to scale the faster and more efficiently you can grow.  Software as a service is the epitome of this-easy to sell, easy to deliver, and easy to use.  Of course, the one concern is the easier it is to implement a technology or service, the easier it is to rip it out. 

Whether it be consumer or enterprise, all companies should think about how they can utilize the Internet for delivering their product.  The more you do over the web (market, sell, deliver product, run your service) the more you can scale your business with incredible efficiency.  After all it only took Skype 2.5 years and $20mm of capital to create $2.5-4b of value while it took Siebel a whole heck of a lot more capital, effort, and time to do the same.  While Vonage is doing quite well with its growth, it still requires an incredible deployment of capital and it still requires users to wait for hardware to be shipped to their house before using it.  There is more friction in using the Vonage service as compared to Skype.  And obviously there is more friction to implementing Siebel than Salesforce.com.  In this day and age we are all use to instant gratification and demand fulfillment.  Salesforce.com and Skype provide that for its customers.

Of course, if you are selling an enterprise product with a high ticket price you have to be extremely cautious.  It will only work if your product is easy to deliver (download, SaaS, etc.), install, and use.  In theory, it sounds great to be able to generate great customer leads and revenue by offering your product over the web.  However, this means that you will most likely be selling a product/service with a low ticket price which means you either need to have high volume to generate significant revenue or have an upselling machine which enables you to seed your customers with a lower price version and harvest them to get lots of repeat business from your initial sale. Continue reading “Skype, Siebel and frictionless sales”

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


This post is by Ed Sim from BeyondVC


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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.  However, the big concern was that most of these requirements were one-off features for specific customers that were just closed in the earlier quarter.  So while engineering missed the release date for the product and should be held accountable, this analysis points to a much deeper issue and is a great example of how all of the various groups and functions in a company need to work together as a team.

My first thought was that if we continued on this path we would never have a product that met market needs.  There would be no way that the engineering team could execute against its development schedule with a number of one-off requests.  So we asked management to analyze the problem and report back to the board.  The first place to look was product management to determine whether these customer requirements were one-off adjustments or features that were significant market needs that product management did not identify.  The other place to look was sales to determine if sales reps were selling what we didn’t have and promising the world to close deals.  As you may know, a healthy tension between sales and product management will always exist.  Sales will always want any and every feature to close that big deal and product management should only want features that will address broader market needs.

After a week, management reported back to the board and determined that the problem eminated from sales.  More specifically, it was pretty clear that the sales reps were not properly trained or equipped to sell the product.  When not armed with the knowledge and sales tools to properly sell, it was quite easy for the reps to get derailed during sales presentations, flail when addressing customer objections to the product, and agree to add one-off features to close a deal.  To address this problem, management presented a plan to get the sales reps properly trained, equipped, and managed.  In addition, management would have to play an ongoing role stressing the importance of closing the right deals and walking away from the wrong deals.  So the next time engineering misses a release date, make sure you understand why because most Continue reading “Missing an engineering release date can be a symptom of a larger problem”