Month: November 2004
This morning I hosted a presentation by the MIT Deshpande Center about their program to a group of Colorado VCs. I’m really excited about what the Deshpande Center is up to and will blog about that separately. Steve Halstedt from Centennial Ventures – a long time VC and one of the guys I’ve learned a lot from (we were both on the Raindance board together) – sat next to me and wrote the following down in the middle of the meeting and handed it to me.
Why scientists and engineers, who know so much, make so little compared to VCs (or investment bankers, or trial lawyers) who know so little.
Time is Money
Knowledge is Power
Power = Work / Time (from high school physics)
If you substitute Knowledge for Power and Money for Time
Knowledge = Work / Money
Using a little basic algebra (about the amount most VCs remember) and arranging terms, you get
Money = Work / Knowledge
For a given amount of Work as Knowledge apporaches zero, Money becomes infinite.
This explains the difference in market value between scientists/engineers and VCs.
One of my companies – Finali – announced today that they were acquired by Convergys. It continues to be a busy M&A time for us as public companies are definitely buying private companies again. Since the beginning of the summer, we’ve had a number of public companies acquire our portfolio companies, including Service Magic (by IAC/InterActiveCorp), Cyanea (by IBM), Dantz (by EMC), and now Finali (by Convergys.)
Bob Burgin and his brother Dan started Finali in 1999 with the initial vision of creating a next generation customer care business. They grew it nicely through the bursting of the Internet bubble. However, in the last 18 months, the outsourced call center business (Finali’s original business) has come under extreme pricing pressure due to outsourcing trends to places like India and the Philippines. While we considered developing an offshore labor model (all of Finali’s employees are based in the US) our customers told us that they were much more interested in our call center analytics capabilities than our call center labor. As a result, Finali repositioned its business as a high-end call center analytics provider earlier this year.
We managed the initial transition with little additional capital and we were ultimately faced with a decision to either double down and invest in growing the new model or being acquired by an existing major call center outsourcers that wanted to add our analytics capabilitiy. We found several interested potential partners and ultimately chose to hook up with Convergys.
Congrats to Bob Burgin and his team at Finali.
NewsGator launched an Enterprise RSS blog. They’ve been seeing a lot of enterprise adoption of their products, especially NewsGator for Outlook, and decided to start writing about what they are seeing and doing.
Technorati launched Vote Links which allows you to vote for or against a link on your blog. It’s a good example of Technorati innovation where they quickly roll a new feature and try it out on the blogosphere.
Oracle announced their “best and final” offer for PeopleSoft today.
I’ve heard the phrase “best and final” a remarkable number of times recently in several deals I’ve been involved in. Each time, it’s not the best and final as more negotiation occurs and the credibility of both parties is stretched as a deal doesn’t come together. In my experience, good deals for both parties don’t have “best and final” conditions – the negotiation is a dance that works its way to a deal, often winding and twisting about, but converging if both parties want it to.
When one party starts saying “best and final”, you usually know you have a problem. In the case of Oracle, it’s an unwanted (by PeopleSoft management) bidder trying to press another constituency (the PeopleSoft shareholders) to make a decision. In a public to private or private to private negotiation, it’s usually an attempt by one party to force a set of terms, rather than continue to try to collaboratively negotiate to an outcome that works for both parties.
When “best and final” gets thrown out, I usually take it as a signal that the deal is going to die. Of course, deals often die before coming back to life, in which case best and final was irrelevant. If both parties are trying to get a deal done – behavior on either side that forces a set of terms is usually counterproductive as there are often multiple constituencies involved that have to solve an increasingly complex equation (ah – if price was the only deal term that mattered – life would be so much simpler.)
So – the next time you hear “best and final” – listen carefully to what it really means.
It started snowing last night, so we get to say the first Boulder snow of the year happened in October. As I hauled my ass out of bed at 3am for my almost weekly trip to the bay area, I woke up to about six inches on the ground in the mountains where we live. It was beautiful until I had to trudge out into it to clean off and warm up my car.