Jeff Clavier's Software Only

Fortune Cookie

Posted by: softtechvc on Buzznet

I was visiting one of the “Big 3” with a startup client of mine the other day, and we had lunch at the cafeteria. Having had the excellent asian cuisine menu selection, we took a few fortune cookies.

The CEO of the company got this “fortune”: ''Unexpected offer deserves serious consideration”.

There was no termsheet on the back of the paper...

But we considered it priceless anyway. Talking about subluminal messages…

PS: True story, I swear.

What are your favorite tech startup founder's blogs ?

In a week, I will have the privilege of addressing the Founders Forum SIG to talk about “Blogging for Company Founders”. The session can apparently only be attended by a maximum of 25 CEOs or founders of startup companies, on a FCFS basis. I therefore hope to have a very interactive session, and only plan to have a very brief presentation to jump in questions and issues of the audience as quickly as possible.

One of the things I want to cover at some point during the conversation is what kind of great, and bad, examples, have been seen out there in terms of founder blogs, and I would really like to go beyond the social media “pure plays”: Mena Trott, Caterina Fake, Matt Mullenweg, Dave Sifry, Scott Rafer, Loic Le Meur,… who have all been blogging for a long (and sometimes long long) time and might have started/joined their current venture because of their blogging. They sort of come with the territory, and are expected.

I am therefore interested in hearing from you guys about startup founders outside the pure social media space whose blog has attracted your attention, and has helped establish the visibility and credibility of the company in a space that is not particularly blogging/RSS savvy.

I would also like to hear about this segmentation of tech startup blogs, in which I see four major facets (even though the first two could be combined):

• the PR blog: mostly used to communicate around the product(s) and services offered by the company, it features new functionality, tips, service announcements (booh, we’ve crashed or we’re having a massage),… and is a “disaster recovery” channel (i.e it is one of the elements used to deal with major PR issues).
  I would expect any startup that launches nowadays to have a PR blog, available at blog.domainname.com (?).
• the community blog is an extension of the PR blog, it helps animating the user community, and features examples of the usage of the products. Good examples of a community blog are the Flickr Blog, or BlogPulse Highlights.
• the reference blog: aggregates and editorializes news and links related to the industry in which the startup is operating, it can become a preferred source of information if the point of view is not completely one sided (otherwise it becomes a “PR blog”). A couple reference blogs I subscribe to are Findory’s Greg Linden, who covers search, blogging and RSS aggregation, and WhizSpark’s Peter Caputa who covers the Web 2.0 space and entrepreneurship as it relates to his startup.
• the authoritative blog: mostly contain original pieces describing personal thoughts or experiences of the founder(s), and therefore provide a unique point of view on an industry or a market. One  example is Jotspot’s Joe Kraus.

I actually used the word facets because a comprehensive blog will cover all three aspects, and I would nominate SocialText’s Ross Mayfield as one of the best examples. But once again, I am looking too much at the blogs I read for my own practice, and would love to hear about great blogs that are not related to social media or Web 2.0 per se.

As I did for the Venture Capital session I led at Bar Camp, I will post the presentation and summarize our discussion shortly after the event.

Thanks in advance for your input!Please list those blogs in the comments of this post, or send me an email: jeff [dot] clavier [at] gmail [dot] com.

On this day, my birthday

Isn’t it a bit goofy to mention your birthday on your blog ? Well, I’ll do it anyway but will also point you to what (other more interesting things) happened on an Aug 29th (via the BBC), and to a list of celebrities and luminaries who were born on that “glorious” date (via Wikipedia):

• 1619 - Jean-Baptiste Colbert, French minister of finance (d. 1683)
• 1632 - John Locke, English philosopher (d. 1704)
• 1862 - Maurice Maeterlinck, Belgian writer (d. 1949)
• 1915 - Ingrid Bergman, Swedish actress (d. 1982)
• 1920 - Charlie Parker, American jazz saxophonist and composer (d. 1955)
• 1923 - The Lord Attenborough, English film director
• 1936 - John McCain, American politician
• 1938 - Robert Rubin, United States Secretary of the Treasury
• 1938 - Elliott Gould, American actor
• 1939 - Joel Schumacher, American film director
• 1941 - Robin Leach, English television host
• 1946 - Bob Beamon, American jumper
• 1958 - Michael Jackson, American singer and songwriter
• 1962 - Rebecca De Mornay, American actress

As for myself, I celebrated this morning at breakfast with the family since I have a dinner with clients tonight. I was greeted with these two wonderful gifts that my kids painted and cooked in special ceramic oven. So precious.

Damn. Thinking about it, I am one step closer to the big 4–0.

Update: Thank you all for your comments, trackbacks, voicemails, emails, IMs, text messages and other forms of “happy b’day” expressions. I really appreciated it.

Introducing the SDForum Search SIG

We're back! After the smashing (let's keep it modest) success of Vertical Leap, the SDForum Vertical Search conference, Dave McClure and yours truly have agreed to co-chair the SDForum Search SIG, and we are excited to announce the first event - taking place on Sept 14th on the Yahoo campus in Sunnyvale: "Audio Search : Selling Picks & Shovels at the Podcast Gold Rush". If you don't understand Dave's English, it means that we'll talk about Podcasting Search and Directories.

For our readers outside of Silicon Valley, the SDForum is a key local non-profit that is organizing a large number of events around different technologies, and a SIG (for Special Interest Group) focuses on a given technology or market. The Search SIG is all about, well, Search... and its tag line will be (until we find something more catchy) “the Search for Search".

The purpose of the Search SIG is to offer a communication and collaboration platform to the Search ecosystem: search engines, marketers/advertisers, users and developers. Through a series of monthly events, the SIG will cover a large diversity of topics: from the latest developments in search to the needs of brands and advertisers, through the issues and key learnings of starting, funding, building, and exiting a search company.

We plan to use different formats for the SIG as well: fireside chats with key executives of the ecosystem, panels, presentations + Q&As, unconference - i.e the panel is the audience, etc. Once thing we request, demand, beg for, is the participation of the audience.

We also want to give companies the opportunity to introduce themselves, launch their products, in short segments of 5 to 15 minutes max. And at the end of each session, anybody having an announcement to make will be able to do so.

The Search SIG will take place at a few locations in Silicon Valley, and rotate amongst them, most likely on a quarterly basis.

We are set for the first two sessions, September and October (Mobile Search - a joint event with our friends of Mobile Monday) , beyond that we are welcoming your input.

• Fireside chat with a search engine Founder
• Unconference format + holiday bash (kind of what we have in mind for December)
• Search and the law of very large numbers - a look at the architecture of a search engine

So let us know what you think, topics you would like to see covered, and if you want to use the Search SIG as a launch pad for your Search startup, get in touch with us.

We can be reached through searchsig [at] gmail [dot] com.

Tag: SearchSIG

Categories and Players in Contextual Advertising

As the growing number of Web 2.0 rely on advertising as their main source of revenues, I read with interest a great summary published by SearchViews, on the four types of contextual advertising.

• Search-based Contextual: serves ads matching the content of a site/page as precisely as possible.
  Google AdSense and Yahoo Publisher Network are by far the two largest players, with AskJeeves having recently launched their own network.
• Channel-Based Contextual: serves ads largely based on the targets/demographics of the channel (site or portion of a site).
  Value Click is the largest player in the space.
• Behaviorally-Based Contextual: tracks users across a network of affiliated sites in order to build a profile, that is then used to target the user with relevant ads, as well as generate off-line sales leads.
  Tacoda and Blue Lithium are mentioned, and I would add Revenue Science.
• In-Line Advertising: these are the big, annoying, roll-over ads that pop-up if you get too close to them on certain site, or even are displayed on top of the text.
  Vibrant Media is one of the providers of these ads.

Worth a read.

Legitimate trackbacks and monitoring conversations

I was reading with a bit of amusement the exchange between Steve Rubel and Jeremy Pepper on what constitutes a “kosher” trackback or not. At issue is whether a five-months old post (Jeremy’s) can legitimately trackback a brand new one (Steve’s). In my book, if the old post is modified to include an update, and point to the new one as a relevant addition, then that’s fine. What does not work here (at least for me) is that Jeremy did not link to Steve’s post, but still trackbacked it. I would have done like Steve: check the post that sent the trackback, see that there was no link to my post, and delete the trackback.

Note that I am not saying that Steve is right and Jeremy is wrong in their particular context, but that it is also my policy: I only accept trackbacks that include a link to my post. Why ? Because trackbacks are a way to start/continue a conversation, and I am delighted to send traffic away to blogs that continue a conversation I have started, and that link to me. But trackbacks aren’t a one way street. And if you believe that your own post adds another dimension to the conversation, just leave a comment and mention the URL (like Narendra – co-founder of Webshots – did on my post regarding G’Talk with his rant on “we don’t need no stickin’ Google IM”).

Blogging platforms should actually have an option to analyze incoming trackbacks for the presence of a proper link. For example, if you trackback a CNET post without linking to it, your trackback will be ignored.

I also picked up a question from one of my regular readers, Zoli Erdos, who was asking if there are tools out there that allow you to track comments you have left, and monitor ensuing conversations. Integrated systems like Buzznet, and I believe Flickr, allow you to monitor these if you have an account on the platform. I also know that Blogware, the platform used by Master Eric Rice, can send emails when comments are made on a post you have commented on but that is email, and that’s not great. One could probably manually bookmark posts that he/she comments on, and come back to them after a couple of days, but that also is not great. So Six Apart, WordPress, please, can you guys agree on some mechanisms to get this functionality implemented.
In the meantime, any suggestion as to how to do this efficiently will be appreciated.

Bar Camp: Session on Venture Capital Concepts

I led a discussion on fund raising at mighty Bar Camp last week-end. The goal was essentially to try and answer the questions guys in the room might have. These are generally related to funding raising strategies (how much to raise when), funding sources (how do I find angels, VC firms, other source of capital that are right for me), and how can I assess the fundability of my project (and how can I increase it).

We started by going through a short presentation on venture capital concepts, in order to set the scene and provide some (hopefully) useful pointers. I have posted this presentation at the request of attendees, but must reckon that without the voice-over, it is sort of raw information. I am also enclosing my VC blogroll for reference.

The discussion we then had covered a lot of grounds, and I want to thank my Sam Perry and Mike Arrington – who is a recovering corporate lawyer and writes the terrific TechCrunch – for engaging in the discussion and sharing their views and experience.

The few pointers I mentioned were:

• Allen Morgan’s “10 Commandments” - that he is actually continuing beyond 10 – is providing great insights on the VC perspective
• Brad Feld recently completed his “Termsheet series”, providing both explanations and recommendations on typical financing terms – and is nicely complemented by this white paper.
• Fred Wilson also has an interesting series on “VC cliches”. As someone pointed out, I don’t have Fred in my blogroll (it was in, got out), but I know that many people I read do and link to the best pieces he writes - which I enjoy reading as well.

Most of the VCs in my blogroll share great hints, experiences and thoughts related to companies they have invested in (or passed on), and markets they cover. My own posts related to Venture Capital will typically be found in the Venture Capital category.

Speaking of Brad Feld (I know, I am a fan), he was recently interviewed on Venture Voice. I recommend the program that covers a number of topics we talked about.

Some of the points we covered:

• I always warn my readers, or entrepreneurs I address, that we tend to generalize when blogging about markets, terms, opportunities, etc. – whereas each deal is different in nature – because of the team behind it, the concepts, the technology, the relationships, etc. So everything we write about has to be taken into a  “general” context.
• Not all businesses are meant to be funded by VCs, which does not mean that they are necessarily bad or not interesting. They might just miss the scale that VCs require to make their own economics work (minimum 5 to 10X return on investment, $50 to $100M in revenues potential,…), but might very well end up being profitable businesses with a few millions of dollars in revenues that will end up generating nice cash flows, and/or interest a larger company enough to get acquired.
• It is cheap to start a company, and get a product/service to market in the Web 2.0 world. This post covered the point quite extensively, and is complemented by this one on “built to flip” startups.
• Networking is key in the early stage of a startup, so try and find a few key advisors: entrepreneurs, VCs, executives,… who can provide you with honest (read brutal) feedback on your venture. It will only make it better. And hire a good lawyer – he will be a great advisor as well, and will avoid you making the mistakes that would take time and money to untangle afterwards.
• and several others…

Download:

• Presentation (PDF)
• VC Blogroll (OPML)

Tag: barcamp

Open IM ? Me too says Skype!

Funny that the very day Google launched their Jabber/XMPP-based Instant Messenger (the now famous Google Talk), Skype retaliated by releasing their own IM APIs, allowing web site developers to incorporate presence data, and 3rd party to develop their own Skype client. It is worth nothing though that these APIs only cover the (otherwise excellent) IM part of Skype, not the most popular service – voice calls.

CNet reports in this article:

Skype believes it can be a significant threat to instant messaging giants Yahoo, MSN and America Online. With 51 million registered usernames, Skype IM is potentially twice the size of Yahoo's instant messaging community, and six times that of America Online, according to figures provided by Skype.

Skype Journal does a great job at providing more details on the annoucement:

SkypeWeb: Creating a web of availability
Skype will launch a web presence server solution under the name SkypeWeb. This will be supported in a new client release (we don't know when) which will broadcast your presence data via preferences in the client. Apparently a new bit of code in the P2P network will ping status updates every five second to a presence server. Presence information will be availabie in the form of an ATOM feed which will enable presence updates and also enable contact lists. All list detail is said to be controlled by the user. Thus the Atom feed will push presence data direct from the Skype client enabling contact lists for a circle of friends. The general idea space is good. Details? Client? We don't know yet.

SkypeNet: Stripped down client extends Developer opportunities
Skype will open up presence and IM functionality to the whole world under the name SkypeNet. It's unknown whether this will include file sharing. SkypeNet is made up of SkypeLite clients --- a headless Skype client, without user interface, that can be integrated into any application. This should let you build Skype servers and web services. It should help Skype become enabled in programs like Trillian, make Skype more interesting for online game publishers, and create opportunities for business applications that need to scale. This is a huge gap in their architecture and, depending on execution, SkypeNet may fill it.

Make sure to read Stuart’s take on Skype’s challenges.

Client plug: I can’t help but mentioning that web and online community developers interested in adding powerful communication tools can take advantage of Userplane’s zero download instant-on products: chat room, instant messaging, web recording, etc. Over 3,000 web sites use these tools today (including MySpace, Friendster, eHarmony,…) aggregating millions of unique users monthly. Don’t hesitate to ask if you have any question. The price ? Free to begin with.

Tag: googletalk, skype, userplane

Just tested Google Talk: neat, still a bit basic, more open and as clear as Skype...

which is not surprising since they are reportedly using the same technology from Global IP Sound.

As you can see, the Windows client is pretty basic, but functional. It is necessary to have a gmail account to sign up for the service – by invitation it sounds like. I just tried a voice call with my friend Dave, and was quite impressed by the sound quality. And since it picks up default devices, it is very easy to connect. The online help concerning the service is here, quite comprehensive for something that has just been released.

The client also acts as a Gmail notifier, which displays rather large popup messages when a new email arrives. This can be turned off by users who like me, pop their email out of Gmail.

As pointed out by Om and Niall, it is possible to connect other IM clients to the service through a Jabber/XMPP interface. This is the list of compatible clients, which can also be found here:

The fact that they are using XMPP is notable since the non-interoperability of IM services has historically been a big pain in the b..t. I wonder if they will get into offering access to “the others” through back-end plugins, or if Trillian will be the stop-gap solution (which is a great stop-gap, even for the $25). And the reported interoperability "under way" with SIP signaling and the Gizmo Project is also worth noting.

As rumors that Skype’s growth is stalling develop, Google jumping in with both feet with a solution that looks more standard is not without consequence. Update: Skype just released a suite of IM APIs, so Google can only claim more standard, not more open - for now.

Competition is always good… even for making free phone calls. And thanks to my friend Adam, the co-founder of Truveo, for being the first one to send me an invite.

Tag: googletalk

More:

• SiliconBeat just published a long piece, including interviews from Googlers.
• Russ tells us more about Jabber and XMPP
• TechCrunch's Mike Arrington points us to the Wikipedia entry of Google Talk
• Dave McClure calls Skype "Dead Meat"
• SkypeJournal provides a detailed account of the functionality: available and missing ones
• Off topic, but the NYTimes has a "Google Baaaddd" article that is worth a read - from darlings to borgs - in one year

 

Why the PodShow investment makes sense - at least to me

I have posted about PodShow’s funding upon the news “leaking”, and nothing I have read,  heard or watched since seems to contradict what I sort of guessed: Kleiner Perkins led the round, and invited Sequoia and Ram Shiram in – most likely so that PodShow founders end up a Google feel-alike funding syndicate. No idea of the actual split of the capital among syndicate players, but that is really not important – at least for now. Update: just found the press release announcing the investment.

The questions I got after my initial post ranged from “What is the business model ?” to “What are these VCs seeing in podcasting ?” (including some “WTF ???”). And since I repeated my (modest) explanation a number of times, it was natural to post it.

The prestige of the syndicate, which was subject to mockery when they invested $25M in Google way back when – and returned a “mere” 300+ times that investment, has obviously increased the credibility of PodShow – almost instantly. But the business model is yet to be validated, and the real size of the opportunity to be assessed.

To get a glimpse of PodShow’s vision, I would recommend listening to the Aug 15th issue of the Gillmor Gang during which CEO Ron Bloom (26’ into the show) clarifies the current master plan: essentially tap into the $27B budget today allocated to broadcast radio – and get a portion of it shifted to a medium that will eventually allow marketers to have a fine grain targetting and better tracking (I bet our MP3 players are soon going to provide many more data than today as to what you listen to, skip, come back to, etc. – all constitute elements of Attention metadata). Bloom in the same program explains that he and Curry are essentially doing the same thing they successfully accomplished a number of years ago with their previous company: convince an existing establishment that a new medium in being created, and that – like every new medium – very large opportunities are being created. Good complements to this program are Dan Farber’s account of the Gang’s discussion, and this video interview of Ron Bloom and Adam Curry by MarketWatch’s Bambi Francisco.

Looking at it from the standpoint of the VCs now, what do we have: a very large market ($27B in ad spending) that has a chance of being disrupted, a couple of guys who have worked together before, and have succeeded in participating to the disruption of an adjacent space, and one of the two guys is one of the most visible – if not the most visible – opinion leader in this new space. Very large market being ripe for disruption, market changing play, repeat team, recognized leader (providing a de-facto differentiation), not too crazy probability of success,… all these factors tend to look very positive in a VC investment context.

What else ? Risky investment ? What is the exit ? Answers to these two questions can be found in two interviews. On investment risk, I will quote DFJ’s John Fisher from this terrific interview by Sterling Hoffman:

In general, there’s a critical notion that many people don’t understand about early stage or high-risk investing. That is, the most that you can possibly lose on any given investment is one times your money. The most you can make is unlimited. The truth is that risk and reward are often directly correlated. It doesn’t make any sense to be afraid of risk as a venture capitalist. What you need to be concerned about is: “How big is the upside?” The truth is that in the early stage of the venture capital business it is common to lose all of your money on the first third of your deals. It’s common to make no meaningful return on the second-third of your deals and it’s common to make all of your return on the last third. The baseball metaphor really applies: if you’re a .333 hitter, you’re at the top of the league. In the venture capital business, if you make money on a third of your deals; you should be doing fine so long as you’re making more than three times your money on average on all your deals, you’re making money for your limited partners across the board. A home run analogy really applies too. The magnitude of your winners determines the ultimate degree of success. So the home run deals make the difference between mediocre returns and superb returns. What really matters is the magnitude of the winners. You’ve got to swing for the fences every time you place a bet because, given the fact that the risk is high in all of these situations, you better make sure that the winners really pay off. So you will have to be very ambitious for them and only invest in companies that can, if they become successful and truly achieve their vision, become extraordinarily valuable.

On exits, I will refer to a podcast interview PodTech.net’s John Furrier did with Sequoia’s Mark Kvamme. At some point, John asks the same question I asked Mark at Vertical Leap (on the VC panel I was moderating): how do you plan exits ?  Mark provided a consistent answer: “Our job (at Sequoia) is to build great companies, exits take care of themselves”.

My position is therefore that it made a ton of sense for KP and Sequoia to come in, and fund PodShow given its potential and its risk profile. They are amongst a handful of firms that would be able to support the development of this opportunity into a new market, without looking constantly at the huge execution and adoption risk that the team will be facing. Because at the end of the day, the worst that can happen is that they lose their $9M (or whatever they will have invested) – and all things considered (in this context), they certainly won’t lose sleep over it given the potential payout.