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Profiles in Arrogance

Great post on an article in Entrepreneur Magazine written by Brad Feld - A VC's Biggest Flaw:  Arrogance.  Brad is an entrepreneur turned venture capitalist and I appreciate the candor of the article. 

I have definitely met a few of these types of people over the years and have many friends and acquaintances that are VCs.  I tend to gravitate towards those not described below but have had my share of exposure to these types of folks as well. 

The investors you choose are as critical if not more so than the executive team around you.  The money is important but so is the man or woman behind it that will be with you every step of the way. 

Read the article and learn more about these VC personas (the descriptions are mine):

1. Mr. 'Know-It-All':  need I say more?
   
2. Young VC:  a freshly minted MBA with no experience or operating knowledge who has never made a cold call, asked for an order, or gotten an ear full from a customer about a buggy product.
   
3. Experienced Entrepreneur:  can't keep their hands out of the operating details because that is where their passion and knowledge resides.

Venture capital provides fuel for innovation and entrepreneurship and I believe it is one of the foundational layers of our economy and society.  It not only has the appetite for risk but the stated purpose of taking on high levels of it for the chance of a high return and there are lots of exceptional people putting it to work everyday...and, like any industry, a few less so.

Hooray! Here comes a tech IPO

Out of the storm of negativity comes a ray of sunshine.  OpenTable has filed and will be going public. It has been so long since a venture backed company has done this that you may have forgotten what this is all about. 

Essentially, a company with a business model and growth sells a part of its self to the public equity market (institutional and individual investors).  I didn't necessarily say profitable as OpenTable didn't quite make money on revenues of $41.3 million through September 2008.

Good to see this happening as well as a service that I have used and found value in over the years positioned to make the leap into the public markets.  If you've never used OpenTable to make a restaurant reservation, you should check it out.

Gary Snoman has been RIF'd

Sign of the times or fate that awaits all entrepreneurs turned venture capitalists turned masters of the universe?

Unfortunately, the folks at Blueprint Ventures decided to give Gary the boot and are not doing a Gary Snoman video this year.  This is actually too bad because this clever approach definitely got these guys some attention.

C'mon guys, where's that Holiday spirit?

As a tribute to all that Gary has done for us over the last three years, here's the one that got it all started in 2005 as well as 2006 when Gary becomes a VC:

What's on the VC mind these days?

Here's a great video clip (via PEHub) put together to promote the AlwaysOn Venture Summit.  There is no shortage of pessimism and negativity related to the financial markets these days so the thoughts of this crew are especially interesting given that early stage investing is, after all, a game of optimism and belief in what "could be." 

There seemed to be consensus that the IPO market may return 2H09 but that is dependent on broader stabilization of the financial markets.  Also, here's the list I captured of what venture capitalists will be investing in:

• Alternative energy and clean technology especially related to corporate IT
• Communications especially mobile handset opportunities
• Online gaming
• Products/services that deliver value to end users (yes, a bit vague but could be my note taking)
• Online ad efficiency
• Electric cars
  

 

Does private equity offer superior returns?

Via PEHub, here's some data to sink your teeth into about the state of private capital.  As their post points out, slide 14 highlights some interesting return data.  Not sure an 8.8% 5 year return is much to brag about although the 10 year return number is a more respectable 16.6% for venture funds (9.5% for all private equity in the same time period...eck!).   Also, this data was as of 6/2008 before current market...um...volatility.

Exits are exceeding life of funds in many cases (ie, more than 10 years) which puts a whole new dynamic into venture funding and that was before the current market trauma.  The IPO market will return.  It's just a matter of when and until then the entire asset class is going to be under scrutiny from those that fund it.

Private Equity Data Roundup

View SlideShare presentation or Upload your own.

A candid VC conversation

This is a good interview with Bob Ackerman of Allegis Capital by Robert Scoble.  I'm biased but I like the operating perspective in VCs.  If life takes me that direction at some point, I look forward to applying some of the lessons learned by living long sales cycles, struggling to come up with the right positioning, suffering through a destructive change of mind by a 'strategic partner' or putting a buggy product in the hands of the first customer. 

You don't get that perspective in an investment bank or through an HBS case study.  Who knows, maybe the pendulum swings back towards operating vets as Bob discusses here.  A bit long (30-ish minutes) but worth the time.

Another great Intel Capital portfolio company day

This time the folks at McGraw-Hill invited a handful of Intel's portfolio companies to New York City to brief their senior leadership on what we do and how we could help their various lines of business and initiatives.

I can't say enough about the great questions and interactivity the folks from McGraw-Hill demonstrated and really appreciate them inviting Hubspan to be part of the day.  I saw a few folks from the previous event I was part of in Orlando and learned about a few new cool companies like Mixercast, Workshare, & JackBe. 

It was also great to see fellow Seattle company Delve Networks there and I enjoyed meeting CEO Alex Castro. They take video and make it searchable.  With such a massive amount of video content floating around these days, relevance and the ability to quickly extract things meaningful to you is a major opportunity.

Interesting interview with Brad Burnham of Union Square Ventures

Some interesting points here including the desire to find "web meets world" businesses where a broad set of people use web-based applications as part of their daily lives versus an early adopter crew for sport or curiosity.  Not an earth shattering point but one to pay attention to coming from a group that has funded a lot of clever "web 2.0" applications in recent years.

LinkedIn Love

Or not.  Here is a somewhat cheesy but informative video on why LinkedIn raised a bucket of cash ($53MM) at a monster valuation ($1B).  I kind of like this approach as it gets the message out in a rapid, direct, and standard way.  People want to hear from the investors directly on deals like this and this is a great one way medium to tell the story. 

I wouldn't go so far to call it the longest three minutes of my life like PE Hub but next time maybe they can tone down the hype and emphasis on their investment prowess a bit and add additional focus on what makes the company, business model and space so exciting and really worthy of these digits. 

Regardless, these highly regarded VCs are now on the video record touting the investment and logic behind the valuation.  I find the latter disclosure directly by the investors really "interesting."  Hope it works out for them.

I can't wait for the parade of parody videos to follow.

Intel Capital portfolio companies on display

I had the opportunity to participate in Intel Capital's (one of our investors) technology day in steamy hot Orlando, FL on Friday. It was part of the last day's activities for CSC's Technology and Business Solutions conference and they selected a handful of Intel's portfolio companies to give short pitches to the attendees. I met some great folks from CSC and Intel as well as portfolio companies like NewsGator, Dexterra, SpikeSource and Jajah among others.

I really enjoyed chatting with Newsgator CEO J.B. Holston about what they are doing to build on their RSS roots and broaden their social computing offerings.  I also had the chance to drop in on the evening festivities for Microsoft's big TechEd event and enjoyed the entertainment at Universal Studios for the first time on Thursday night with some other Seattleites relishing the Florida heat.

Thanks to the team from Intel for coordinating and the folks at CSC for wanting to know more about Hubspan.