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Silicon Valley Exec Mike Homer Died Sunday – The Lost Conversation February 2, 2009

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Kara Swisher has a classy post that pays tribute to Mike Homer.   Mike died in his home on Sunday of a rare, neurodegenerative “prion” disease, which in Homer’s case has occurred sporadically rather than via infection (the well-known variant that occurs in animals is called mad cow disease), CJD’s incidence is one case in a million annually, and few survive beyond a year after exhibiting symptoms.

Mike Homer was a straight talking tech executive who didn’t mix words.  A few years ago before Mike was diagnosed with Creutzfeldt-Jakob disease, Bud Colligan and Mike Boich went to see Mike to record a podcast on innovation and Silicon Valley.  It would be one of the last times Mike would be in his normal ‘call it like he sees it’ mood.  That podcast was never posted due to a hard disk error.  From the description from Bud Colligan of that podcast it was a memorable conversation.  I wish that we all could have heard that podcast.  I’m sure his voice will carry on in the stories that he created here in Silicon Valley.

Homer is survived by his wife, Kristina, and three young children: James, Jack and Lucy.

His funeral is at Saint Raymond’s Catholic Church in Menlo Park on Thursday.

Recession Startups: Great Post On Innovation and Entrepreneurship – No Vacation for Entrepreneurs January 21, 2009

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I love this post from David Hornik.  I guess that I have an addiction because I love starting companies – I can’t help myself.  His real message is simple – many entrepreneur friends are starting companies in this market. Personally, I think that doing startups is like taking a vacation each startup is like a good journey.

The post is worth of a full posting here on Furrier.org.  Thanks David for a great post.

By the end of 2008, Venture Capital had been officially declared dead. Startups were laying people off so fast that even TechCrunch couldn’t manage to keep up. University Endowments and Foundations, the source of the “capital” in Venture Capital, were hemorrhaging so badly from their public company investments that many long-time believers in “alternative assets” declared a moratorium on Venture Capital. And the IPO market was a distant memory. Good times!

Welcome 2009. The public markets remain closed. Venture investors and the investors in venture investors remain “challenged.” Follow on financings have become increasingly difficult, in some instances impossible. And, while there may well be light at the end of the tunnel, it would appear that we haven’t gotten far enough down the tunnel yet to see that light.

So why am I optimistic about investing in 2009? Because entrepreneurship is an addiction, it isn’t a choice. Great entrepreneurs aren’t driven to create companies because it is easy, or because capital is plentiful, or because the public markets are swallowing anything the venture community will throw at them. Great entrepreneurs start companies because they can’t help themselves. They see a problem or a solution or white space or an opportunity and they have to do something about it.

Innovation doesn’t take a vacation during an economic downturn. Innovation is a constant. While the resources an entrepreneur may be able to bring to bear on a problem may vary with the economic climate, the desire — the need — to innovate never goes away. And Venture Capital is the fuel of that innovation. [1]

So I remain excited about the companies that will be started in 2009. There will be great companies started during this economic crisis. Some of them will be born out of the crisis itself. Others will simply be born during the crisis. But, rest assured, there will be important tech companies hatched in the next year or two. And I am certainly hoping to fund them.

Some of you reading this will say to yourselves “starting companies today is so inexpensive that we don’t need no stinkin’ VCs.” More power to you. I don’t mean to suggest that innovation will die without Venture Capital. There are many great ideas that can come to fruition without a meaningfully-large capital infusion. My hat is off to the 37 Signals and Smugmugs of this world. But for those ideas that require investment ahead of revenue to reach their full potential, Venture Capital remains an important resource for company building.

Yahoo Will Get New CEO – Carol Bartz – Good Choice – Lets See Some Bold Moves January 13, 2009

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Yahoo Inc. is expected to announce that Carol Bartz, former chief executive of software company Autodesk Inc., has accepted an offer to become the Internet company’s next CEO, according to people familiar with the situation.  Boomtown’s Kara Swisher was the first to break this and now it looks like Kara had her ear to the ground in the right spots.

Hiring an operational Silicon Valley insider is a good move for Yahoo.  What Carol needs to do is filter the signal from the noise internally at Yahoo. I’m sure everyone there is jockying for position.  Carol needs to hire from the outside and bring in some ‘mavericks’ to get Yahoo relevant again in both the product side and the corporate side.  She has a big job ahead of her.  I think the thing that no one is talking about is that she makes a great partner to Jerry Yang who obviously has the desire to make Yahoo great again.

From WSJ today. Ms. Bartz, 60 years old, will face a number of challenges as she tries to turn around Yahoo’s flagging performance and stock price. Some investors have been lobbying for a break-up of the Internet giant, for instance. Yahoo faces tough competition from Internet rivals such as Google Inc.

Ms. Bartz still serves as executive chairman of Autodesk, of San Rafael, Calif., which she ran as chief executive from 1992 to 2006. Autodesk is around half the size of Yahoo, with approximately 7,000 employees world-wide.

Ms. Bartz was also an executive at Sun Microsystems Inc. and she sits on the board of Cisco Systems Inc., with Mr Yang. She is also a member of the Intel Corp. board with Yahoo President Susan Decker, who was also interviewing for the CEO job.

In afternoon trading, Yahoo’s stock fell 2% to $11.96 on the Nasdaq Stock Market. The stock remains well below its 52-week high of $30.25.

Ms. Bartz’s appointment will likely reopen questions of Yahoo’s strategic direction, potentially clearing the path for the company to restart negotiations with Microsoft over a sale of its search business. Microsoft CEO Steve Ballmer, who tried and failed to buy Yahoo last year, has publicly said in the past few weeks that a search deal with Yahoo should be made when there is a management transition at both companies. Microsoft late last year hired a Yahoo search executive Qi Lu to lead its Internet business.

Ms. Bartz and Yahoo’s board will also have to turn to other ways to right the business, which is being hurt further by the down economy. That could include striking a deal with another partner like Time Warner Inc.’s AOL or divesting of smaller business units.

With these major strategic questions in mind, Yahoo’s board focused its CEO search on experienced executives with deal and operating experience, according to people familiar with the search. Yahoo Chairman Roy Bostock led an informal committee of directors in the search; the group also included Frank Biondi, the former chief executive of Viacom Inc. Directors quickly zeroed in on a short-list of external candidates, such as former Vodafone Group PLC Chief Executive Arun Sarin, among others.

New Venture Capital Model Is Coming? Limited Partner Investors Seeking New Avenues January 7, 2009

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NOTE:  Visit the siliconANGLE blog for a community of bloggers on Social Web and Technology Opinion and Analysis.  THANKS

Is this financial market mess going to put the nail in the venture community? Today’s Venture capital has been struggling for sometime with ony a few small hits and very handful of big returns. The problem is that entrepreneurship is stuck because of venture capital. We need to modernize the venture capital business so entrepreneurs can get busy. I am seeing more early stage creative development then in years past. The entrepreneurial process will never die but it will evolve. These are the pains that we are seeing now with startups. The capital markets are a mess and with no liquidity market today’s venture capital firms are spinning their wheels. The good news is that capital markets are efficient and will work around the bottleneck we are seeing. This NYTimes story is an early indicator that big money will find new homes.

NYTimes has a very interesting story…

Investors in venture capital and private equity funds who want out are discovering that their stakes are worth less than they paid for them.

As returns on venture capital investments sour and investors’ wealth deteriorates, some of these investors — the universities, foundations and pension funds known as limited partners — have been unloading their stakes in the funds. When they decide they can no longer supply the money they had previously committed, they sell their stakes at a discount to what is known as a secondary firm.

In the second half of 2008, as more limited partners tried to sell their stakes, the price they could get for those stakes fell to 61 cents for every dollar of face value, according to a report from Cogent Partners, an investment bank for institutions looking to sell their holdings on the secondary market. That is down from 84.7 cents on the dollar in the first half of the year and a 4 percent premium in 2007.

A stake in an early stage venture capital fund that has already been fully invested, for example, would be worth 10 to 30 cents on the dollar, Mr. Gull said. “It would have relatively young portfolio companies, some number of them will need additional capital so the fund will get diluted and there are not going to be any exits for some number of years.

A 40 percent loss is no different than investments in the public markets, Mr. Gull noted, and investors would prefer to have the cash. They think, “It’s a sure thing that I can redeploy in some other activity I think has a larger chance for return,” he said.

Mr. Gull said he could not predict when pricing would improve, but his firm is betting that it will not see any meaningful returns from private equity and venture funds until late 2010.

New Reality: Silicon Valley Wealth Machine – The Rebooting Meritocracy December 21, 2008

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Businessweek has a post about Silicon Valley wealth machine. Silicon Valley is going through another downturn. It’s the second major downturn in less than 10yrs. I’ve been on the ground for all of those years. It’s down, but not completely ‘out’.

Silicon Valley is a special place for entrepreneurship, and it continues to be. The issue is not that there is a wrench in the machine, but that the machine is broken. It’s rebooting.

One thing I love about Silicon Valley is that there are no handouts. It’s the ultimate entrepreneurial meritocracy. Change happens and it happens both from the bottom up (entrepreneurs) and the top down (capital market). The question is which force is driving the change.

Redistribution of wealth is upon us. The entrepreneurs and investors that move on this current market opportunity will capture the proverbial “chips on the table”. As an entrepreneur, I love this market. Opportunities are everywhere. Unlike the dot com bust, this tech (entrepreneurial) market never really crashed. Everywhere I look I see discounts and new opportunities. Smart money will move around, but in select places. Is the market scary? If you’re an incumbent it sure is scary.

Silicon Valley Web 2.0 is hurting, but not for the obvious reasons. A bigger force is at play here – massive redistribution of wealth is taking place. Some are scared, and some are welcoming the opportunity of possibly acquiring the wealth “on the table”. I think that Facebook and Twitter are great examples of what might be possible. Facebook will become the next Google. The only thing holding them up is that the ‘new revenue’ model that is soon to arrive at the “station”. When that “train” arrives (and it will) Facebook will say Goodbye to all the naysayers.

Research & Development Void?

The bigger picture is more long term and that’s all about research and development. Judy Estrin recently came out to talk about something really important – the innovation gap. Let me translate her thesis – we are screwed if we don’t have steady research unencumbered by short term agendas. Think how important institutions like Stanford, MIT, and SRI have been to Silicon Valley and entrepreneurship. Without these deep research institutions we would not have many innovations that created wealth – hello Ethernet; hello Apple; hello Cisco; hello Google, ..etc.

The lack of institutional research leaves a void in the Silicon Valley ecosystem. John Markoff postulates in his book “What the Dormouse Said” that the culture and research of the 60s drove the PC revolution. The question now is what revolution are we developing and where is the research? Will we miss the next important energy, medical, or tech breakthrough? Where is our modern day moonshot mandate?

How will it play out? The future is unwritten.

Update: The Wall Street Journal has a great perspective on how regulation is hurting entrepreneurship. Add the lack of research mentioned above and the opinion is complete.

Silicon Valley VCs Are Actively Investing December 2, 2008

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All the talk about Silicon Valley being dead is bull. In fact many of the top VCs are actively investing like True Ventures, Norwest, Benchmark Capital, Foundation, among others. There are some top tier guys who are really hurting. I’ll post more on that later.

Here is a post from Benchmark partner Bill Gurley. I first met Bill when he was an analyst years ago before he joined Hummer Winblad then Benchmark. Bill not that technical but is very skilled at analyzing and reading the market. I think his views are right on the money (pun intended).

Bill says…
What is driving our enthusiasm to be optimistic while the general perception is that we should be “scared”? Here are four answers on a roll:

1) We make money investing, not sitting on our money. Innovation and disruption are constant and not subject to the whims of the overall economy.

2) We believe that environments like this tend to sort out the true entrepreneurs from the pretenders. When money is easy in Silicon Valley, it tends to attract short-term opportunists looking to make a fast-buck rather than build a lasting company. Only the best entrepreneurs set sail in rough seas like this.

3) We like the probability for startups (especially Series A deals) in this environment. Consider that people are easier to hire and rent is cheap. Incumbents are cutting their R&D budgets, and there will be fewer startups in each space, all of which means less competition. These are good things.

4) Graham and Dodd said it first and best, but one “… should try to be fearful when others are greedy and greedy when others are fearful.” Pretty clear what time it is.

Web 2.0 Summit – Just Doing Business – What Bubble November 11, 2008

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I have to say that I was a bit skeptical about the recent Web 2.0 Summit.  I thought that it would be a bust.  In fact first impressions were that it was trending that way.  However after Jerry Yang’s conversation with John Batelle the Web2.0 Summit pickup up the pace.

I had a chance to speak with many of my friends in the space, and it was clear that doing business and building ventures was on the mind of many.  Unlike recent years where the Web 2.0 Summit felt a bit bubbly, this year was different.  Many were talking about ideas and sending signals of open collaboration – many among serial entrepreneurs.  For companies in the Web 2.0 space the conversation was on doing business.

It was an environment of executives doing deals.  What a concept.  The reality of the market is now on doing business.  The event was successful and for the first time I felt a strong sense of business focus.  Industry participants actually looking to build an industry.

This begs the question:  was there ever a bubble?  Sure some companies are flashy and ajaxy but in reality we never had a bubble or bubble burst.  The financial reality or depression didn’t originate from Silicon Valley or Web 2.0.  The crisis vectored in from mainstream financial systems.

Future of Web 2.0 – Just Do Business.  That’s on the mind of entrepreneurs, VCs, and large corporations.  How refeshing.

Is Yahoo Being Served Silicon Valley Divorce Papers ? It Needs Big Game Changing Product November 6, 2008

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I’ve been thinking about the Jerry Yang conversation yesterday with John Batelle and it hit me – Yahoo has for years being the outsider in Silicon Valley. The recent blog and press coverage of Jerry’s comments yesterday make it clear that the core culture in Silicon Valley is frustrated with Yahoo and by default Jerry Yang.

Two posts stand out in my mind that got me thinking about this. Mike Arrington’s post and Om Malik’s post (other coverage is basically saying the same thing) speak to the core feelings about Yahoo.  I know both Mike and Om love Yahoo for it’s storied history, but like they and others (me included) are frustrated by the bungled execution.

What’s really going on here?  Yahoo losted a ton of great people in the years that it milked it’s dominant portal status.  That is compounded by a misdirection in strategy one that during the Semel years (the media focus) saw Yahoo lose many of their top product and engineering mavericks.  Innovation is the culture of Silicon Valley and Yahoo lost that years ago.  The recent pile on going down is just built up frustration by Silicon Valley on Yahoo and Jerry Yang is taking all the heat.

I’m pulling for Jerry Yang because I respect the ‘guts’ that it takes for the founder to come back.  It’s very noble of Jerry, but trying to transform his company into a platform player will take years.  It will take new leadership underneath Jerry.  Fact is they just don’t have the ‘chops’ on the product and engineering side.  Silicon Valley wants nothing to do with a ‘false’ prophet.  Jerry needs to move faster or the ‘mob’ will take them down (as Mike Arrington suggests).

Turning the Yahoo battleship will take time.  All Yahoo needs is one game changing new product.  This reminds me of the old minicomputer days.  Yahoo is the Digital Equipment Corp (DEC) of Web 2.0.  They’ve been on this portal and media thing why to long (similar to DEC on the minicomputer) – it might be too late. Some minicomputer companies like HP got new relevant products (hello LaserJet) that fueled a reinvention.

If Yahoo doesn’t get the new product and engineering mojo back Silicon Valley and others will completely turn on Yahoo.

It’s doable for Yahoo due to their ‘huge’ installed base of users, but the window is closing. They need a new product that is relevant – a new flagship.

Run Jerry Run!  Get it done.

I would love to see the founder take back his company and make the turn around.  The question is “do they have the people to do it”?  Silicon Valley doesn’t thinks so.

I’m not convinced yet of Yahoo’s demise and will wait to judge Yahoo.  I think that they can. I vote for the founder to stay – Jerry should stay, but he needs a new management team that will follow the founder in his vision.  I blame Semel not Jerry.

What do you think that they need to do?

Silicon Valley Panic – The Valley is Upside Down October 27, 2008

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I am seeing tons of panic here in Silicon Valley.  Just a few weeks after the Sequoia memo (great PR for Sequoia capital – wondering what Kleiner Perkins is thinking right now), the valley is upside down.

It’s crazy and it’s changing everything around the startup process.  The memo from Sequoia has thrown everything into gridlock and yet the VCs are sitting on billions of cash under management.

I think that this is the best time for a startup.  In fact the gloom and doom has reached an all time high.  Everyone is saying survive and fight another day or “How to Survive in Silicon Valley”.  This mindset is an indictment of the state of panic.

Instead the title should be “How to Thrive” – Playing it safe never was Silicon Valley’s greatest strength.   Has the Valley lost it’s way?

The Silicon Valley and Hollywood Dance – It’s a Hit Driven Market October 23, 2008

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There are striking similarities between Hollywood and Silicon Valley.  The inside joke that I’ve been sharing lately in comparing the two markets -  in Hollywood when actors are out of work (no script) they become bartenders or go to events and pose and in Silicon Valley when entrepreneurs are out of work (no startup) they are consultants or go to events and pose. Each actor or entrepreneur are claiming working on the next big thing.

Both markets thrive because of optimism.  That is why the best survive by seeing opportunities when other people talk about doom and gloom.  I see Hollywood and Siicon Valley striking a balance very soon.  They both need each other.  The both are realizing that they don’t have the skills that the other has.  This NY Times story strikes true.

If there is any proof point look no furthen than Steve Jobs success at Apple.  He and his team have single handedly changed the media game by using the ITunes platform (aka the ITunes store).

Of the NY Times story here is my favorite piece…

Hollywood and Silicon Valley are engaged in an awkward dance, Mr. Miller said.  “Having been inside studios, I know they don’t have the DNA to take early-stage risks,” he said. They get paid to make surefire hits like the Superman movie. “To start something from scratch, to take high levels of risk — generally speaking, that was not how the studios were built.” The two worlds speak different languages and “there is star envy on both sides,” he said.

Yet they have similarities, he said. Both are hit-driven businesses run by small, insular groups of people. More importantly, they need one another. Entertainment companies will founder if they don’t move from old media like television and radio to digital media. Meanwhile, tech companies will fail if they do not understand the content — movies, shows, music — that people will use their technologies to consume.

The economic downturn has arrived at a critical time for the entertainment industry’s transition to digital media. Many of these big media companies will be forced to cut back on acquisitions of digital media start-ups, Mr. Miller predicted.

Eventually, he said, there will be a shake-out, with two or three companies creating professional content for the Web, just as there have been dominant producers of network programming for television.

For now, “everyone agrees these worlds are crashing into one another,” he said.

New Startup Model – Young Grasshoppers Out There Watch How Andy Bechtolsheim Does It October 23, 2008

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UPDATE FROM SUN:  see comments below; Sun PR is saying that Andy will remain at SUN as an employee part-time.  The question is can Andy serve both masters?  Is Andy even needed there or is he a figurehead.  I see know problem with him being two places but the reality is he has to focus on one.  There might be more to this story.  I will talk to SUN and find out the story.

The NY Times is reporting that SUN Cofounder Andy Bechtolsheim is leaving SUN to go to his new startup Arista Networks (which has been building a product for 4 years). Who said this is a bad time to do a startup.  While the web 2.0 flops are bunkering down for the winter and trying to figure out what to do, Andy is developing a real business going after a real market.

I have my take on why Arista will be successful on my Broadband Developments blog – which covers this vertical.

This post is about how to do a startup.  Here I want to highlight a tidbit from the NYTimes story where Andy Bechtolsheim says…”

Lean staffing also helps Arista keep its costs down. The Menlo Park, Calif., company has fewer than 50 employees and started shipping systems a few months ago even though it had no formal chief executive.

“One mistake a lot of start-ups make with the encouragement of venture capitalists is to hire the whole management team upfront,” said Mr. Bechtolsheim. “You have a lot of people twiddling their thumbs and spending money.”

He is right on the money.  Ramping up the management team to early can be dangerous.  Founding CEO of a early or zero stage startup doesn’t have to be “Mr Big” with pedigree.  It has to be “Mr Entrepreneur” who can assemble the right ingredients for the startup – core team, product and product roadmap, key customer activity or early market development, and entry to that market.  Note;  Even tech titans moonlight on their day job before quitting.

To all the young startup “Grasshoopers” out there learn from Andy and his approach.  Build a product for a real market that will pay you money for that value – Now that’s a business model worth investing.

Zuckerberg Opportunity Part II – Silicon Valley Legacy at Risk? May 31, 2008

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The NY Times is doing a followup piece to my post called The Zuckerberg Opporunity. They are following up on my first post and story called The Zuckerberg Opportunity. The Zuckerberg Opportunity was a followup on the story on the big story that I have been tracking on Microsoft buying Facebook. The NY Times goes deeper into the deal side dynamics of the Zuckerberg Opportunity. (Note: I’m glad to see the NY TImes run with my original piece – it needs deeper analysis and more detailed reporting – thanks Steven)

NY Times DealBook has a great followup post to my post Zuckerberg Opportunity. The professor Steven Davidoff pens a detailed post around some of the tactical challenges around the Zuckerberg Opportunity.

What’s interesting here is how Silicon Valley and the VC community will respond to this. Silicon Valley has been an environment where the VCs have always maintained a balance between the ‘greed’ part of their job with the ‘unwritten’ rule of maintaining the legacy of Silicon Valley.

Lately, we have been seeing an environment lately where VCs really don’t care about screwing entrepreneurs over for a quick buck or shutting ventures down over political internal VC partnership fighting. If this trend of not building great sustainable companies continues then the legacy of Silicon Valley will be at risk.

I love Silicon Valley for what it has been famous for – innovation and the celebration of entrepreneurship. An enviroinment that rewards innovation, entrepreneurs, and entrepreneurship will create great companies and yield great profits for investors.

If Silicon Valley becomes known as a place not friendly to entrepreneurs and quick rich VC plans, then the legacy of Silicon Valley is at risk.

Silicon Valley Rumblings – Will HP Buy Seagate? May 30, 2008

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HP has been on the move lately. Expanding on the services business by buying EDS. What should HP do next? Buy Seagate?

Seagate (NYSE: STX) would give HP access to a major cloud position with storage in the cloud. Seagate known for their OEM drive business and enterprise storage recently launched a consumer business over 1 year ago. Why this might be interesting for HP and Seagate – HP has been a big customer for years of Seagate but HP could gain a foothold in the ‘cloud computing’ sector with Seagate. Seagate’s consumer line would certainly get a ‘shot in the arm’ from HP’s massive consumer presence.

Although this isn’t a full fledged rumor, it certainly is a conversation around Silicon Valley according to sources. I will dig into this more but I would buy the consumer brand and cloud services from Seagate and leave the OEM business alone. Seagate’s market cap is currently $10 billion as of today.

Why Startups Fail? Entrepreneurs Perspective – Keep the Founder Around May 23, 2008

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Why do startups fail? There are many reasons. Here is a post from a VC in Silicon Valley called VCDave – David Feinleib is a partner at MDV – Mohr Davidow Ventures – He invests in Internet-enabled companies.

This is a great post from VCDave, but I would add that the faster the market moves the more the founder needs to be in charge. Finding a founder with vision, product skill, and deal making ability is ideal. Venture capitalists need to let the founder run the ship. If VCs run interference with the founder then the entire venture slows down. Building a startup from nothing is difficult and navigating the market landscape with imperfect information is key. Entrepreneurs are good at dealing with ambiguities.

Once a venture enters the market the venture plan has to be in a constant state of reinvention to ‘hit’ the tipping point for the preferred business model for the proverbial ‘big opportunity’. One thing often over looked is the important objective of getting the new venture in a position in the market to seize the growth opportunity contemplated by the entrepreneur and the investor.

Entrepreneurs and VCs need to deal with change as a positive not a negative. If the ventures position in a growing market is good then the change is a normal characteristic. To me it’s about letting the founder stay in control until the venture hits calmer waters. Founders know best in the early stages. Creative, product, sales, and deal making skills matters the most. VCs shouldn’t just replace founders because a few waves crash on the ship.

If investors want a return remember that the founders know best. Don’t replace the founder to early.

http://www.usatoday.com/money/companies/management/2007-08-21-founder-ceos_N.htm

Update: Donna who tracks the NYC startup scene at StartupAlpha has a post on this. Here is 37Signals Jason Fried’s take at Signal vs Noise on this topic.

Two important points Donna and Jason make: 1) build a good sustainable venture and 2) if the market is slowly developing then there is no market.

Here is a good section from end of Jason’s post “If the entrepreneur finds themselves in a situation they can’t control it’s almost certainly because they put themselves in that position — either by borrowing too much, spending too much, rushing too fast, creating a false sense of urgency, hiring the wrong people, attacking a market that doesn’t exist, or not focusing on generating revenue early enough. Natural disasters are out of our control, bad business decisions are in your control.”

My advice to entrepreneurs: try to maintain control for as long as you can (control > 50%) at all costs. Only go over 50% dilution if you need to scale and never run out of money.

Update 2: An post from last year from Denny Miu who I have met and respect. He writes a great post that has lessons and observations.

Victory for Silicon Valley; The Silicon Valley Poison Pill Worked – As Predicted May 4, 2008

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Today’s Microsoft retreat is a victory for Silicon Valley and all the startups.  Now that the troops are pulling out of Silicon Valley everyone is jumping up and down eager to get down to business – except the bloggers who are all trying to figure out what happened (not including Kara Swisher she was on top of this story from day one).

This outcome was clear to me from day 1 – Yahoo would fight to the death rather than roll over and take it up the butt from Microsoft.  As this chapter of history comes to a close the story is bigger than what the stock number was or one particular issue.  It was bigger than all of that.  As I wrote in February it was the Silicon Valley Poison Pill in action.  The culture in Silicon Valley is deep in tradition and this trophy in Yahoo was not going to Redmond.  Hey I’m a big fan of Microsoft and Dan’l Lewin here in Silicon Valley (except that blogger idiot Mark Ashton), but the culture of Silicon Valley just won out.  This is going to make one great John Markoff story for the NY Times. – go ahead John run with it.

Another story line here is the big win for all those starving Web 2.0 companies looking for a partner – Yes Yahoo will remain free to be a real force in the Web 2.0 community again.  Now with open social (yes reported here first) and with upcoming announcements of Yahoo opening up.  Yahoo is born again.  As we the kids cheer in baseball Yahoo employees are cheering – “2 out rally….2 out rally….2 out rally…2 out rally”.  If this doesn’t wake up the dead at Yahoo nothing will.

This is a win for Web 2.0 and startups around the world but mostly a big win for Silicon Valley.   Yahoooo

Don’t forget how Google is loving this.

Tech Entrepreneurship Recession – Microsoft Yahoo – Tea Leaves; April 10, 2008

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War! What is it good for! Absolutely nothing! – Say it again!

Are wars really good for business? Is tech entrepreneurship in recession heading toward depression? The battle between Microsoft and Yahoo is reaching it’s climax (if not already). However, there are some very interesting and unique perspectives come from two blog posts that jumped out at me – Kara Swisher and Fred Wilson. Kara has the funniest headline saying “Jesus is coming” with the storyline about the inside scoop on the ‘dance’ between the two. What strikes me with Kara’s post is that Yahoo might already be defeated in the ‘braindrain’ that they have been experiencing. Even if Yahoo survives is it already dead on the vine?

Fred Wilson only draws a reference to the battle in his post about liquidity – saying that with no IPO market we are in trouble and worse the tech giants are playing with assets like toys. I think that Fred is on to something with no liquidity (other than M&A by big firms). Is this really a robust market for innovation where the big guys are doing all the acquiring? Is this the ecosystem that produces good entrepreneurship?

What ties both these posts together is the trend that acquisitions might not be the best for innovation – Kara bluntly states that AOL’s acquisitions aren’t doing well. While Fred says it’s great to get the cash but Yahoo hasn’t done well with their acquisitions. Meanwhile the capital markets are a mess.

As an entrepreneur with four kids I’m concerned about the prospects for all entrepreneurs in this current environment. Maybe I’m just not feeling good today. Startups should have some friction, but not outright frustration. I’ve been doing early stage startups for 10+ years and never seen this much frustration since 2002-03. We are in a tech recession or at least a grinding halt.

I’m one of the most optimistic guys (all entrepreneurs are), but my mood on this startup market: Bear

New Sheriff in Town – Dan Farber New Editor In Chief at Cnet April 7, 2008

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Tom Foremski writes a great story on the new editor in chief at Cnet – Dan Farber.  Tom lists the changes that Dan is making at Cnet. 

Cnet has a big advantage over everyone else right now for three reasons:  1) Dan knows the business both old school and new school (blogging), 2) they have the infrastructure, and 3) they know how to put out massive amounts of content.

I talked with Dan last week about some of the changes at Cnet – he said that the big goal is to just coordinate the systems -hmmmm …. translation: cnet will keep pumping out good content in volume and will start cross linking;  What does this mean … Look for cnet to parlay their strong reporting and analysis capabilities with blogging infrastructure.  Look for Cnet to become the new leader on the Techmeme Leaderboard. 

Maybe the line “There is a new sheriff in town” applies here and his name is Dan Farber.

Here are some highlights on the changes at Cnet under the leadership of Dan Farber (source Tom Foremski):

-Different CNET departments now publish using the same template.

- Publish a story as quickly as possible, edit it later.

- Stories are updated constantly.

- Adding the right keywords and tags to make stories discoverable by search engines. About 40 per cent of CNET traffic comes from search engines.

- Use Internet standards whenever possible.

- There is no end to the work day, you are always on call.

- Everybody blogs.

- Create synergies between news, reviews, analysis, and blogs.

- Getting journalists to put in web links to non-CNET publications. “It’s about being part of the web and not separate from it,” he says.

- Carrying a pad of paper and pencil is not enough. Journalists also take photos, videos, and make podcasts.

Are Web 2.0 Entrepreneur’s Love Affair with Venture Capital Over March 18, 2008

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Cnet has a story headline “Is venture capital’s love affair with Web 2.0 over?”- Ironic??

According to this massive trend 2007 deals are down an amazing amount – total deal numbers down an amazing 5.   “Web 2.0 deals in the Bay Area actually dropped from 74 deals in 2006 to 69 last year” -Wow.

Entrepreneurs are starting companies that require less capital and no venture capital at all.  Maybe entrepreneur’s love affair with venture capital is over.  It’s clear to me that entrepreneurs that I talk to are bootstrapping longer and financing ventures themselves.

I hardly think that a reduction of 5 deals validates a venture capitalist trend.  Most VCs are not that savvy on Web 2.0 and are generally skeptical on web deals.  The ones that do get it are doing many deals.  Jeff Clavier has already pounded out 16+ deals in his new fund.

Entrepreneurs Beware. Yahoo Buyout Could Kill Technology Startups? Advice: Be an Arms Dealer. February 2, 2008

Posted by John in Technology.
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Entrepreneurs beware Microsoft buying Yahoo could shut down the tech startup scene.  It could send the startup climate back to 2001 levels – nuclear winter shut down.  I lived through 2001-2004.  It was ugly.  

Brad Burnham has hit on a narrow topic about the downside of the Yahoo buyout for Silicon Valley.  Brad’s story is very relevant with ‘macro’ implications to the tech world not just Silicon Valley.   This deal could cripple startup activity.

Efficiency for Microsoft means leverage with suppliers.  Translation:  Startups are suppliers and Microsoft just became Walmart.  This could have a chilling effect on the VC and tech investment community.  This new industry structure puts even more of an emphasis on ‘hits’ or category specific deals.   If the Venture Capitalists are confused today can you imaging what they will do going forward.   This could get ugly. 

Advice for Technology Startups and VCs:  Understand where your company is in the pecking order in this war.  If you’re not an arms dealer then you might want to rethink your strategy. 

Update:   others are thinking the same….  A VC -Fred Wilson; Opportunity for another big player to bid:   News Corp. 

Yahoo Stalled: No Wind in Their Sails? Google isn’t stalled. What’s the Problem? New CTO? January 30, 2008

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Last year Jerry Yang took over as ‘Captain’ Yahoo but their ship is stalled.  Where are those new ‘sails’ to capture the new winds that are clearly blowing Google and Facebook’s way?  Yahoo needs to change the game.  Where’s the competive strategy?  Where the “Eye of the Tiger” attitude? 

Businessweek had the best analysis on Yahoo’s situation around the recent layoff and future prospects for success.  Display advertising is feeling the pre-recession jitters but not search (or ecommerc) advertising.  Yahoo keeps losing ground in search to Google.  According to Nielsen Online‘s numbers, usually the most conservative measure of the market, Google’s share of searches in December was 56.3% to Yahoo’s 17.7%, and Google got 70% more searches per searcher than Yahoo.

Yahoo needs new products and fast.  Jerry Yang says they are focused on investments on new initiatives.  As Yang’s vow to keep spending on some initiatives indicates, Yahoo’s hope remains coming up with new services that catch people’s imagination as Google, MySpace (NWS), Facebook, and other sites have.

I’ve been predicting a Yahoo comeback and openness for sometime.  Look for Yahoo to join opensocial and compete in the web 2.0 infrastructure. 

New CTO?  What does it Mean:

Silver Lining in new CTO hire:  One promising sign from their new hire, Ari Balogh, is that he’s an infrastructure guy.   He knows how to deal with scale and product rollouts that are managed service based.  What does this mean?  Yahoo could develop (fast) a significant position against both Google and Microsoft Live if Ari Balogh and team can integrate services and leverage user data for new products – a kind of “Mega Mashup” product strategy.  The portal model is dying and advertisers are voting.   

Also look for possible Data as a Service product set.    Yahoo has so many possibilities but they need to pick a few and go with it.   Yahoo has all the ‘raw materials’ and the audience to roll out ‘instant’ killer products. 

For Yahoo to succeed it’s all about competitive strategy.  Can’t wait to see how they execute their plan. 

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