Jeff Clavier's Software Only

Trends in Venture Financing - Q106 Data

I wrote a year ago about the compilation that law firm Fenwick & West produces every quarter of the venture financing terms received by a sample of companies in the Bay Area. The Q106 data report essentially shows a strong support in financing across stages, with a total $6B invested during the quarters, and increasing valuation “”step-ups” from one round to the next:

The Fenwick & West Venture Capital Barometer showed a 64% average price increase for companies receiving venture capital in 1Q06 compared to such companies’ previous financing round.  This was also the largest increase since the survey began.

What the report does not show is an increase in valuations asked by entrepreneurs for their initial round of financing, especially in last three months. Event at seed stage, it is not uncommon these days to hear about high single digit pre-money ($5M to $8M) which is – at least in the areas in which I invest – becoming pretty expensive. 

Terms are also increasingly entrepreneur friendly, where some of the Series A I see no longer include anti-dilution protection and liquidation preferences are 1x non participating.

Another useful data point, the PWC MoneyTree Report for Q106 can be downloaded here (PDF).

Auren Hoffman on the Internet "Black Hat" Tax

My friend Auren Hoffman has an interesting post on the “Black Hat” Tax on consumer Internet businesses, basically pegging the cost of dealing with all aspects of fraud, scams, phising, and related government legal requests,… to 25% of revenues. He then goes on to mention a couple of examples:

A great example is PayPal. The book PayPal Wars details an intense battle the engineering team and even the CEO fought against fraud. This was one of the consuming issues of the company. Now PayPal is a financial institution, so you would expect lots of fraud. But dating?

After surveying most of the dating sites, I have found that one of their top three issues is fraud. A frequent scam is to contact an unsuspecting middle-age man from a profile of a good looking woman saying "my husband is beating me here in Moscow, please send $2000 so I can buy a plane ticket and escape." The unsuspecting chap sends the money only to never hear from the person again. Apparently there are scam factories in the Philippines and other places that have thousands of people, paid on 50% commission, working to scam unsuspecting dupes in this way. And one success a month is $1000/mo which compares well to many countries where the avg salary might only be $200/mo.

Troubling, and unfortunately, the statement that it is only going to get worse is very credible. Just check this piece in this morning’s New York Times: Technology and Easy Credit Give Identity Thieves an Edge.

Two great blogs to track the enterprise software market

Even though I no longer focus on enterprise architecture and related software solutions, I try to keep an eye on developments in that market, especially as consumer applications and Web 2.0 concepts make their way into it (dubbed Enterprise 2.0 of course)

I have recently added to my “Favorites” folder the 451 CAOS Theory, a group blog written by analysts of the 451 Group, an analyst firm, and Confused of Calcutta, the blog of JP Rangaswami, the CIO of Dresdner Kleiner Wasserstein.

I have met JP a number of times, mainly during conferences in the US and in Europe, and have always enjoyed his progressist approach to the adoption of new tools and processes to Enterprise IT. His “About this Blog” section says it all:

I believe that it is only a matter of time before enterprise software consists of only four types of application: publishing, search, fulfilment and conversation. I believe that weaknesses and corruptions in our own thinking about digital rights and intellectual property rights will have the effect of slowing down or sometimes even blocking this from happening.

I believe we keep building layers of lock-in that prevent information from flowing freely, and that we have a lot to learn about the right thing to do in this respect. I believe identity and presence and authentication and permissioning are in some ways the new battlegrounds, where the freedom of information flow will be fought for, and bitterly at that.

I believe that we do live in an age of information overload, and that we have to find ways of simplifying our access to the information; of assessing the quality of the information; of having better tools to visualise the information, to enrich and improve it, of passing the information on.

I believe that Moore’s Law and Metcalfe’s Law and Gilder’s Law have created an environment where it is finally possible to demonstrate the value of information technology in simple terms rather than by complex inferences and abstract arguments.

I believe that simplicity and convenience are important, and that we have to learn to respect human time.

I believe we need to discuss these things and find ways of getting them right. And I have a fervent hope that through this blog, I can keep the conversations going and learn from them.

As to the 451 CAOS, which stands for Commercial Adoption of Open Source, I really appreciate some of the insights that the 451 analysts share in extenso on the blog, which has this description:

This blog covers open source in the enterprise. It is written by analysts from The 451 Group, an independent technology-industry analyst company focused on the business of enterprise IT innovation, which also produces the 451 CAOS Research Service.

Let's help Stormhoek wines get referenced in the Bay Area

On CrunchNotes, Mike is trying to offer some support to South African winery Stormhoek in order to get it referenced in our neighborhood (the Bay Area): Buying Stormhoek in California.

I first discovered how good Stormhoek wine is at a party I threw at my house a couple of months ago. Stormhoek donated 10 cases of their wine for the event, and people loved it.

A problem, though, is that you can’t buy Stormhoek wine in California. Hugh Macleod is trying to change that. I’m going to ask K&L Wines, down the street from my house, to start carrying the wine. If you live in the bay area, consider doing the same.

I liked the Shiraz and the Sauvignon Blanc when I tasted it the first time, so hopefully we’ll make this happen. I have to go to K&:L to pick-up an order, so I’ll make sure to ask as well.

Tags: stormhoek, wine

Timely podcast recording with Tom "Don't touch my Web 2.0 conference" Raftery

Tom Raftery has become a celebrity for his reporting of the IT@Cork Web 2.0 Incident that the blogosphere has been buzzing about since last Friday, and that got him interviewed by the New York Times: Squabble Over Name Ruffles a Web Utopia. He is also the producer of the podcast channel PodLeaders. I met Tom at Les Blogs 2.0 and most recently at the Web 2.0 Irish Conference.

We talked about recording a podcast on both occasions, and we are recording it this Tuesday. Given the context, not too sure who is going to interview whom… In any case, Tom has published a post where you can leave questions you would like us to address.

 

More thoughts about the "Web 2.0 service mark" controversy

Well, saying that the blogosphere has been busy “commenting” on the “Web 2.0 service mark” affair is an understatement. It has been on top of TechMeme for over 24 hours, it has been /.’ed, dugg, linked to 300 times, and commented upon thousands of times in aggregate, etc. After the initial admission of involvement from O’Reilly’s Corporate Communication, we have gathered that Tim is on a boat and therefore out of reach until after the week-end, so we all look forward to his thoughts on this mess situation.

John Battelle, O’Reilly’s partner in the organization of the Web 2.0 conference, has chimed in a few times on his blog to comment on the situation and confirm that letting the lawyers loose on an Irish non profit was a mistake:

As I said, as they said, as we all said, sending the Bigfoot letter to the non profit was a mistake. We're SORRY. Tim and I did not know it was happening. This was done by the legal departments and business folks at CMP and O'Reilly. I was not in the loop - I run the program, not the business. Clearly it shoudl not have been done, and from what I'm told, it has been worked out with the folks in Ireland. And we apologized. As we should have.

Now that we have that bit out of the way, it would be constructive to understand if the right Creative Commons license slapped on “Web 2.0 <event>” would do the trick for O’Reilly and CMP, instead or on top of a service mark (and I am no lawyer so I don’t know if that makes sense). 

Finally, and as usual, there has been a bit too much exaggeration (like mixing a cease and desist letter and a lawsuit) and name calling around.  This unfortunately led observers to look at us as a lynch mob, as opposed to a mob that expressed a profound disagreement related to a community matter. And it shows how quickly things snowball when a brand or a business does not have his/her spokesperson at hand to engage in the discussion.

On that note, I wish you all a relaxing Memorial Day week-end.

The O'Reilly Web 2.0 legal blunder - or leave my Irish buddies alone!

Yo O’Reilly's, before sending bullshit cease and desist letters to a bunch of bloggers/podcasters whose only sin is to evangelize Web 2.0 in their Irish province as a non-profit, why don’t you guys read this post I wrote 4 months ago about Judy’s Book when they were awarded a trademark on “social search”. Hint: they publicly announced that they would not do such a thing as trying to enforce their trademark because it would be silly and a waste of money.

Now google “Web 2.0 conference” and you will find dozens of references to conferences in Canada, Spain, Ireland (that I keynoted), France, etc etc. Isn’t it a bit too late for asserting (pending) rights ? One could argue that going after a US conference organizer that would be using “the Web 2.0 Conference” might make (some) sense, but going after the Irish ? Hello ? And even, isn’t Web 2.0 a common term now ?

Finally has anyone done a trade-off analysis between the (questionable) impact on your business of someone else using “Web 2.0 Conference” (given that everyone knows you created the whole concept), and the hit your brand is going to suffer from because what you have just done is sooooo opposite to the values associated with O’Reilly. Some bloggers even took your defense suggesting that CMP led the charge until, well, it was confirmed you were also behind it.

Come on guys, seriously, you are better than this. If anything, “Web 2.0” should be a Community Mark. So let’s have a quick apology to everyone,  “we really did not mean that”, “piece, love, unity 2.0”, etc. and we can all go back to our blogging and genuine anticipation of the Web 2.0 Conference 2006.

Otherwise, you can monitor the "shitstorm" on TechMeme and the pounding on the official explanation. Or as Liam says in the comments of this post on CrunchNotes: "Let the mob convene". 

Rick Segal was in good form last night:

Finally, an exercise for the reader. For some fun and  homework, grab the list of O’Reilly conference speakers and friends of O’Reilly campers found around the internet. Cross reference those people’s blogs via Ice Rocket, to see how many of them step up and smack O’Reilly over this rather aggressive IP protection move. You won’t find many. You won’t find tons of people boycotting O’Reilly books or conferences.  The reason? Brand. Tim has personally been the true good guy face of his company and you can be sure that he is no dummy.  Barring a massive overdose of stupid pills, Tim will step up own it and give an apology/explanation that will calm people down. In my view, a bunch of overeager corporate types will get a WTF, wet noodle beating and the rest of us will see a smart business owner take responsibility for this, oopsie.  I would expect nothing less.

Hope the vacation was relaxing, Tim.

Ouch!

Lightspeed-Gemini Internet Lab (LGiLab) launches with French TechCrunch Editor as General Manager

Blogging buddy Ouriel Ohayon, the Editor of the French version of TechCrunch and former ICQ Business Development director, has been appointed General Manager of a new seed stage Israeli investment vehicle, the Lightspeed-Gemini Internet Lab (LGiLab). The Lab is located in Herzliya (the Israeli equivalent of Palo Alto), and has appointed the former CEO of Shopping.com, Dan Ciporin, as Chairman.

Two well known VC firms, Gemini Israel Funds and LightSpeed Venture Partners, are funding the operations of the Lab and will be providing the capital to seed finance these companies. Their goal, I assume, is to efficiently support the development of a few projects in their initial phases, and figure out which ones make sense to invest in as VC deals. And they will be able to do so at a tiny fraction of the cost of Web 1.0 incubators that burnt through hundreds of millions of dollars.

Congratulations to Ouriel, and looking forward to hearing about what’s cooking in the Lab (on a forthcoming blog I would assume) ? Yet another proof that a great blog can help contribute to creating very interesting (career) opportunities.

 

Wine Spectator launches editors blogs and RSS feeds

The Wine Spectator is one of the leading US publications on the world of wine, featuring reviews, ratings, analysis, etc. The ratings are particularly influential when it comes to how well a given wine will sell, and for how much. Wine Spectator Online subscriptions ($49.5/yr) can be purchased separately from the magazine in order to access to their extensive wine ratings database, articles, etc. The latest addition to the content: blogs, developed by five of the editors/columnists.

Because they make content available behind a toll booth - which I am happy to pay for because of the quality and authority of it, Wine Spectator has elected to make blog posts available only to subscribers, and to my surprise, it does not prevent a lot of comments and active conversations from taking place. Comments are moderated (comments policy here) but at the end of the day, each subscriber is clearly identified - and accountable - through his/her subscription identity, making comments pretty relevant. On that topic, Editor and Publisher Marvin R. Shanken writes (sub req'd):

The blogs make an interesting contrast with our forums. For many years, this site has offered an open forum--and I mean open--where wine lovers can gather to discuss a wide range of wine topics or just rant. These forums are very popular. Thousands of wine lovers have signed up as members, and many more “lurk” on the site just to read the discussions. Some threads end up with many thousands of viewers. It is our way of giving wine drinkers access to a community and a home to visit.

But some of our editors have been reluctant to comment there, myself included. For one reason, the site allows posters to use screen names. While most posters behave responsibly, there are some who write inappropriately from time to time, saying things they would be otherwise afraid to say if they were required to use their real names. Some clearly have a hidden agenda, though we have no way of knowing exactly what it is or who they are.

The beauty of the new editors' blogs is that they are offered behind a wall--that is, only online subscribers can read them and post comments. Everyone is required to use their real names.

RSS feeds are available: all blogs, daily wine picks, etc. Daily picks are available as a free full feed, which is great. Only headlines are available for blog posts, content has to be read on the site - which is a bit of a bummer. I should be able to enter my subscription password in order to access the content in my feed reader, or at least the first paragraph of each post should be made available as a partial feed. I would also add support for trackbacks in order to bring in “outside” conversations, and FeedFlare-like features to the feeds.

Not perfect yet, but a very welcome development. And it is interesting that blogs are used to develop further the Wine Spectator community, as opposed to being used as a lead generation/subscription conversion mechanism.

Update: I have been following some of the conversations between Wine Spectator's editors and their readers/commentators, and I confirm the sentiment of having an expert, or at least highly clued-in, audience getting involved on these blogs. Definitely worth the read.

Bebo statistics explained

There has been quite a bit of confusion around the numbers I (and others) have quoted related to Bebo’s page views, uniques, etc. Jim Scheinman, Bebo’s VP of Business Development and Sales, kindly stopped by and clarified things in the comments of my original post on the company’s $15M financing:

Much of the confusion in the #s above (and frankly in many blog postings) about Bebo's and other SN site #s come from the mashing of various data sources. So, for example, while Bebo reported 2.5 Billion monthly page views (and we're actually just shy of 3 Billion now), we never reported the 1 million unique user #. In fact, I'm not sure where that came from, but I suspect it's a Media Metrix/Comscore unique user # for US members only. Our internal data shows that Bebo overall has significantly higher unique user #s, and you can do the research to see what 3rd parties report our monthly unique user # to be. Bebo's key markets are the UK, IE, US, CA, AU & NZ which comprises almost all of our traffic. So, the #s will vary if you're looking only at the US market (which many US publications do) or at Bebo's total market.
Also, when you use Alexa to look at traffic, you're looking at the total traffic from all countries. So, in Bebo's case, that'll be our total traffic from our 6 core markets. In Orkut's case, that'll be their total traffic, which is almost entirely from Brazil, and so on. The key thing to remember there is that not all traffic is created equally (ie--I'd rather own the UK market than the Brazilian market if my primary revenue source is advertising).

Thanks Jim, much appreciated.

Tag: bebo