Jeff Clavier's Software Only

OpenSolaris: Sun's move is gutsy, but is it too late ?

David Berlind over at ZDNet has published an excellent note regarding Sun "open sourcing" Solaris 10: Will Sun's 1600 patents suck the life out of Linux?. It is a thoughful complement to this CNET piece, that goes into more details on the background of the decision.

Sun has been struggling since the end of the bubble with an ever declining market share (and mindshare), and many had "buried" the company (even if it still has over $3B in cash on the balance sheet) because of its reliance on a proprietary version of Unix, and a proprietary chip design. The lack of support for cheap Intel boxes has always been a major issue for ISVs that, in an ideal world, would have wanted to run their Solaris applications on low cost servers. I am discounting the x86 version of Solaris that Sun released in the mid 90's because it was too expensive, slow and lacked a proper ecosystem (tools, drivers, etc.).

I should mention that I have been a big fan of Sun hardware and OS since the late 80's when the startup I had the priviledge to be involved with, Effix Systems, led the adoption of Sun workstations in trading floors in Europe, in the late 80's. We were amongst the first to port our applications to Solaris 2.0 when it was still in alpha stage, because we had won a major trading floor on Wall Street, and the CIO of the bank wanted to deploy on the new OS, and not the old, well proven, SunOS. Even though it was ugly, we had a great experience working with Sun labs to get patch and fixes to deliver and deploy (more or less) on schedule. And heck, at that time, even Scott McNealy was calling us to make sure that everything was going smoothly (and then he dropped a bomb on us when, a couple of years later, he abandoned Xview in favor of Motif without any real migration path, but that's another story).

Back to the subject, Solaris has always been a very good O/S, bit heavy - or one could say feature rich, but certainly one that scales well on the high end. So will we get the best of both worlds ? A great O/S, at a great price point, with the open source community behind it ? For one thing, it could help solving the perceived issue that Solaris is not as good on PC architectures as on Sun boxes. Also, CIOs might be quite keen to understand how real Sun's indemnification and them throwing in their 1600 patents will be. But if the fine print in the license does not introduce too many rinkles and limitations (see GrokLaw's thread for more on that very topic), it might well be a turning point for Sun if (big if) they become a viable and respected alternative to a Red Hat or Suse distro in the LAMP world (SAMP anyone ?).

Berlind's last paragraph summarizes the situation quite well:

What this means in the bigger picture is that all of those developers who are risking patent or copyright infringement by participating in largely unindemnified open source operating system projects such as Linux can pursue their passions in the OpenSolaris community without the threat of a legal sledgehammer swinging randomly around their heads. Whether or not OpenSolaris will be like a big vacuum that sucks the developers right out of the Linux community remains to be seen. But, if I were a Linux developer, right about now the grass would be looking awfully green on the other side of the fence. Is it too good to be true?

Private message: Duncan, do you remember that Sun briefing in 2001, where we suggested that they should open source Solaris ? Was not such a stupid idea after all.

A9 Yellow Pages are out, with pictures - Old concept, cool implementation

Many posts around about A9 releasing an interesting implementation of Yellow Pages functionality. First post I read was Om's, with some comments from Techdirt and Russ, and a full story from CNET. John Battelle then pointed to the story he wrote for Business 2.0.

As Russ mentioned for Spain, French yellow pages have had that feature for a while (here is one of my favorite restaurants in Paris, le Bistrot du Sommelier). The experiment actually started back in 1999, with 7 cities. The company which developed the technology is France-based SNV, which launched the concept back in 1994, and took two years to develop the coverage of Paris. The company was bought by Wanadoo (the ISP arm of France Telecom) in 2000. It then covered Madrid in 2001, and stopped there the European expansion.

So nothing new on the concept, but the implementation is quite nice. Key additions seem to be:

The granularity of picture shots (less than 10 feet from one picture to the next ?).

The fact that you can submit the "Best picture" for a given address. What is not clear to me is how they will sort out potential conflicts, but this idea of involving users in improving the quality of data is interesting.

The ability to add your own picture to an existing business, provided that an existing Amazon user. The moderation of such addition remains to be clarified.

The display of all shops on a street is also pretty cool.

The VC Outlook: "Hot or Not"

Tonight saw the 15th edition of the Churchill Club's "Hot or Not" event where top VCs share their views of interesting investment spaces, and where they will focus their energy and capital. Since the press was well represented in the attendance, my post will deal with my areas of interests, and the current focus of my business: software, and particularly social media, search and consumer plays.

On deck were Jim Breyer from Accel Partners, and Chairman of the NVCA (National Venture Capital Association), Bill Gurley from Benchmark Capital, and Joe Lacob from Kleiner Perkins Caufield and Beyers. A great panel of Tier 1 VCs, who was moderated by one of their peers, Geoff Yang from Redpoint Ventures. Jim, Bill and Geoff are investing in enterprise and consumer plays, whereas Joe is focusing on healthcare (and a few other things) - hence bringing a different perspective.

I have attended, and participated to, a number of VC panels, and it is very difficult to go beyond VC 101 and generalities. These 4 did a very good job at sharing some genuine insights on what each believed, and disagreed. A special mention to Geoff who I thought did a good job as a moderator.

About 500 people were attending the event, and the room certainly looked almost full. That, plus the number of IPOs in 2004, the number of companies in registration, and M&A and VC investment statistics ($22B invested last year) led Geoff to ask whether "the Valley was back". Jim commented on the broad agreement that there was too many venture firms, and too much money to invest. However Limited Partners commiting to venture funds have a set allocation for the asset class, that leads them to invest in the funds they can have access to (and don't believe that any pension fund or fund of fund has access to the VC funds they choose, it is certainly not the case with Tier 1 funds). Hence the oversupply of capital.
It is therefore up to the VCs to avoid over-investing in interesting spaces, plunking money in me-too plays mimicing investments made by other funds. Bill added that for him August 03 is when things turned around in the Valley, thanks to increased spending by consumers and enterprises, and the "return" of experienced entrepreneurs (who had been sitting on the sidelines during the burst of the bubble).

On software, Jim shared that Accel would not consider investing in a traditional enterprise software company that does not have an open source component, and relies on the traditional perpetual license model. Subscription based, managed service offering, are definitely favored. And capital efficiency (i.e how much money needs to be invested to get a company to a major milestone like profitability) will be a must.

It is true that VCs have a hard time getting excited in these plays, because it is difficult to find genuine "white spaces" in which a large company can be built. There are obviously exceptions, but the bar has just gone higher on the need for differentiation, proof of ROI, etc.

On Entrepreneurs, two types were mentioned: experienced executives with a strong track record and surrounding themselves with a strong team (here is the Splunk example, recently funded by friend and ventureblogger extraordinaire David Hornik). And innovative "twenty-something" looking at new ways of leveraging the internet as both a media and a distribution mechanism, and coming up with radically different solutions, products and services.

This notion of "twenty-something Stanford dropouts" as a source of radical innovation is recurrent in Mike Moritz's interviews. Looking at two of his most successful investments, you'd appreciate why: Jerry Yang and David Filo (Yahoo), and Sergey Brin and Larry Page (Google) all were of these kinds.

There is a now a wide recognition that companies have to be structured around centers of competencies, where the skills, costs and market equation can be optimized. VCs will there have to learn making investments in companies where engineering might be in Israel or India, the market in Europe and executive management in the Valley. This led to a discussion on China, which is obviously an area of great interest for VCs, but where the traditional US model will be challenging to replicate.

Consumer/Internet plays were mentioned by the panel as an area of major opportunity: digital home, community plays, peer-to-peer media sharing and blogging, etc. The issue is always the business model at scale, and how to monetize gazillions of users.

Unless you have a proven track record in building such (.com) companies, you will have to find ways of bootstrapping your initial go to market  (on angel/friends and family funding). I have heard quite consistently that a million users (give or take) is the magic number that would get VCs potentially excited.
Because these bootstrapping costs are limited thanks to LAMP-based open source architectures, there will be a plethora of services that will be developed and released by very small teams, and will be delivering value to their users upon launch. Great examples of such services are del.icio.us or Memeorandum, developed by Gabe Avalos (who I met at BloggerCon III). He got exposure through Robert Scoble, who really liked his hack and blogged about it. Now the issue is to figure out how to turn this very cool feature into a product, and a company (if this is of interest, I'm leading a BMA Roundtable on that topic mid-february).

This discussion led to a mention of a 2003 Hot sector: social networking, with a claim from Bill that we will be blown away by the revenues of such companies in the next couple of years. Benchmark invested in Friendster back then, LinkedIn just launched their (paying) job feature, and Redpoint is investing in Myspace, a site which has developed a very impressive traction lately. We'll see.

Bill mentioned his interest in gaming companies (Benchmark just invested in Linden Lab and Sulake - the Finland-based maker of Habbo Hotel, and Jamdat recently IPO'ed), and how big an opportunity they represent. Part of the business model of Second Life (Linden's game) is actually to enable "real" commerce of virtual items, allowing game experts to make a living out as a result of their build-up of virtual assets in the game. Players of EverQuest or Ultima Online have been used to purchase virtual assets on eBay for a while.

Geoff concluded on a note of caution, expressing his hope that the industry will have learnt from its mistakes in the late 90's, and his concern that the recent performance improvement of the stock market will drive private valuations higher - potentially higher than VCs would like to pay.

Pud gets $4M from Sequoia for AdBrite!

I often start my day by reading a few newsletters, a couple of on-line journals and the latest posts of  "must read" blogs. VentureWire is one of these newsletters, listing the latest VC financing, M&A, and senior management appointments. Whilst the professional newsletter requires a subscription, VentureWire Alert provides the headlines for free.

One headline caught my attention (polite way of saying it) this morning: F***edCompany Founder Gets Sequoia's Backing For AdBrite. I stopped my browsing to read in detail this witty article that was also printed in the Wall Street Journal (also requiring a sub - via PaidContent.org).

For me Pud, the self-inflicted nickname of Philip J Kaplan, was the editor/animator and webmaster of F...dCompany.com who made (generally) hilarious descriptions of dot-com's troubles, borderline narratives about his relations (or lack thereof) with the opposite sex, and a tendency of doing quite a lot of things without his pants on (in English, dans le texte).

During the dot-com explosion, we - and a lot of other VCs - were monitoring FC to check whether any news related to our companies or their competitors were popping up. And more than once, what had appeared on FC was discussed during board meetings of these companies. And more than once, FC access got banned or monitored in these companies, just to figure out who was leaking information and official memos. Good old days... At that time, when we were busy figuring out what to do with those failing investments, FC was certainly a "tool of the trade", and for some a bedtable book.

In any case, having "Philippe Kaplan", "F...edCompany.com", "gets", "Sequoia Capital financing" used in the same sentence was surprising enough to warrant a detailed read of the article. Adbrite, which is the new name of MarketBanker - the company that Pud started to sell his ad brokering technology, is offering a service "competing" against Yahoo and Google, with a couple of interesting twists: advertisers are charged a flat fee (and not on a per-click basis) and web sites can review/veto ads before they are displayed. Even though revenues are still limited ($1M over the past 6 months reportedly), this is a company that is worth watching, and a service worth trying I'm told. Sequoia has already backed (and made $B on) both Yahoo and Google, two Internet advertising giants. And I knew from a discussion with Mark Kvamme, the Partner who did the investment, that they were still keen on the sector given the rapid growth it has enjoyed.

So, when will we see Pud on the cover of magazines as the next billionaire to be ? Let's hope for him that it will happen some day.

Rock'on Pud!

PS: One thing though: I would have *paid* to attend Pud's presentation to the Partners meeting. Can we safely assume he was wearing his pants that day :-) ?

Update: I see in my referral logs that many people want to find out if AdBrite is hiring. Yes, it is: here is the Linkedin Jobs ad.

LinkedIn Jobs: Job postings with a social twist

As I hinted last Friday, LinkedIn Jobs is now available as a preview. Reid Hoffman has often mentioned that offering this feature was a natural extension of LinkedIn.

Like other job sites, you will be able to set search criteria regarding a position (except salary level ?) and access the list of available positions. Where social networking features kick in is in the display of your degree of connection on LinkedIn to the poster of the ad (1 if you are directly connected, 2 if one person connects you and the poster through the network, etc.) and how many people have endorsed that person on the service. The whole idea is obviously to use your personal network to due diligence the company, the team and the person hiring, as well as find ways to get to them through your connections.

The detailed view of a position also mentions how many people in your network work for that company, and whether the person posting and yourself have one or more LinkedIn Groups in common.

So who's hiring ? Obviously LinkedIn (which I recommend), but also Wondir, "which is building a new and different kind of information service to connect people who have information needs with the people and information that can help them". The person who posted the position is Allen Searls, Doc's son. Very cool concept.

Did I mention that posting jobs was free during the preview ? Definitely worth trying (10 jobs have been added since I began typing this post, and 360 within the first 4 hours). The combination of trusted referrals and due diligence, and what I would expect to be a competitive pricing (though I don't have any specific information), should make this service very relevant a number of positions.

This also hints at a source of revenues for LinkedIn, a question which has been floating around for a while. Charlene Li just added her insights on that very topic.

LinkedIn: a timely resource for 5,000 ex-PeopleSoft employees

CNET News.com just confirmed the "rumor":

Oracle dropped the ax Friday, announcing plans to lay off 5,000 workers in its effort to squeeze costs out of its $10.3 billion software merger with PeopleSoft.

This is very sad for all people who will be impacted by this massive "rif" (reduction in force in startup speak), and we can only hope for them that they will find opportunities quickly. Best of luck to all of them.

I can only assume that Jeff Nolan, a partner with SAP Ventures, is going to be inundated by emails after posting yesterday that his portfolio companies are seeking talents that typical PeopleSoft ex-employees might have. And so will Brad Feld. On the startup side, Ross mentions opportunities at SocialText.

I would imagine that many in the 11,000-strong PeopleSoft workforce have been busy updating and posting their resumes, bios, blogs and have hit the road to participate to networking events.

Just as a data point: in my (reasonably large) LinkedIn network, I have access to 4,726 current PeopleSoft employees. Since I know that I can reach about 80% of all LinkedIn members, I guess that about 5,500 PeopleSoft employees must be in the database - that's 50% of the company (!!!). Not surprising that they have created a LinkedIn Group for the PeopleSoft Alumni Network.

Hmm, let's now look at how many have joined recently: 3,756 (of the 4,726) have joined in the last 3 months, 3,189 in the last month, 1,617 in the last two weeks and 951 in the last week. Which means that LinkedIn must have seen a massive spike in PeopleSoft registrations since Dec 13th (the day Oracle's "victory" was confirmed).

It has been a common question in the press as to LinkedIn's value and business model. Well, sounds like employers interested in attracting PeopleSoft talents should get busy on the site... or better post their job offers on LinkedIn. Being to post jobs directly on LinkedIn ? WTF ?

Well, here is the tip of the day: based on some emails that a few LinkedIn members have received yesterday, a preview of LinkedIn Jobs should be available on... Monday Sunday.

I hope that this will generate a few success stories involving ex-PeopleSoft employees, and that we'll see appearing on the site like this one (or this one - shameless self promotion).

Private Message: Sorry Jean-Luc, but you might have to put some more servers up over the week-end :-).

Disclosure: I am not affiliated with LinkedIn, but as I mentioned in my previous post about the company, I have been a big fan for a while, and quite a few of my friends are involved in the company as executives or investors.

Update: Joi seems to have noticed as well, thanks to Chiara's post.

Steve Case at the Computer History Museum

Posted by: softtechvc

Steve Case, the co-founder of AOL, addressed quite a large audience tonight, interviewed by Walt Mossberg, at the Computer History Museum.

Case was asked about his debuts: he started his career at P&G, then moved on to Pizza Hut, where he was New Pizza Development Director (that's what he said).

He then co-founded AOL, creating one of the largest Internet companies, merging with Time Warner in 2000.

Some of the remarks he made that I found interesting:
- Key to AOL's initial ramp was to convince PC manufacturers to bundle a modem in PCs around 1988, turning personal computers into communication devices. Previously AOL was shipping modem cards and drivers with its application.
- It took 9 years to reach 1M members, and then 9 months to get to 2M. This was at the beginning of the growth of the Internet.
- Introducing flat rate pricing was not a choice, it was an obligation due to the pressure that MSN was imposing. This forced AOL to come up with additional services, driving additional revenues.
- At the same time, the introduction of "all you can eat" pricing led to a huge increase of usage of AOL dialup access, and ultimately to the "busy signal" crisis.
- The company faced the issue of maintaining a "walled garden" vs. providing access to the Internet, and available content and services out "in the open". According to Case, the reason for AOL's growth (to 30M members) was that they did a good job, delivering simplicity and additional value, compared to the competition.
- The AOL Time Warner merger was a good idea, creating an unprecedented Internet/Broadband/Media giant but execution and timing were wrong. And Case reckoned that he and Gerald Levin were probably both the wrong leaders for the combined company. He also took full responsibility for the failure of the merger, apparently for the first time.
- "Out of 20 years spent at AOL, I liked the first 10 years better because I like creating and attacking more than managing and defending".

CNET has an interesting article about the part related to the demise of the AOL Time Warner merger.

More about Steve Case and AOL's story in Kara Swisher's book: aol.com: How Steve Case Beat Bill Gates, Nailed the Netheads, and Made Millions in the War for the Web.

Some pictures of the event:

To the editors of BusinessWeek Online's DealFlow

Matt Marshall and Steve Rubel, (and Brad Feld), mentioned the launch of a new blog (or "blog" - see below) focusing on the startup/VC world by BusinessWeek Online: DealFlow. It is interesting because mainstream press can add a different perspective in their reporting on our industry. However, as I checked it out (full of hope and interest), I found no RSS feed, no way to trackback a story or leave a comment on a particular post.

So it is a "blog" (something that looks almost like a blog, is referred to as a blog, but is not a blog).

It is actually surprising that they do not provide (at least) an RSS feed for their "blog" since they offer some for their news. And, hem, it is not as though BW was the first to use this channel, and therefore had to discover what it means to foster participation, as opposed to traditional "one-way" publishing. As Jeremy Wright points out, FC Now was there over 18 months ago.

And whilst they offer a comment box, it is so @#(*$# tiny that I had write my comment/suggestion to them in another window (just could not read what I was typing). So I thought that I might as well post it here also:

Hi,

Great initiative to launch a "blog" to focus on the VC/startup world (which happens to be the world I leave in). The reason why I am using "blog", and not blog, is that your "blog" is lacking three key features: RSS feed, trackbacks and comments.

There are just too many interesting blogs out there that I can read in my aggregator to go through the extra effort of checking out your web site. And if you publish something interesting, I want to be able to refer/trackback to it. And I want to see comments from your readers below your posts, to get a more complete view of the story.

Oh, and by the way, what's with the size of your comment (shoe) box ? Did your web designer realize that you can only put 12 characters per line ?

Hope this helps turning your "blog" into a great blog.

Best regards,

Jeff Clavier
Managing Partner, SoftTech VC

Update: I just spotted this morning (01/18/05) that an RSS feed had been added to this blog (here). You can see it is a bit of a hack: it is listed in the middle of the list of blogs BW Online offers, it does not contain the full archive yet, and it does not really pass the Feed Validator test at this point.

But hey, it is great that they listened to their readers. Keep up the good work, just comments and trackbacks to go.

And, hum, if you could make [email protected] a real mailbox, that'd be cool as well.