Eric Norlin emailed me an old VC joke that I thought I’d start your day off with. I put it in the category of “it’s an oldy, but a goody.”
A fisherman owns a boat and is running a nice fishing business with it. He meets a venture capitalist who promptly offers to invest in the man’s business.
Fisherman: “Why would I want you to invest?”
VC: “Well, with my capital you can buy a second boat and double the size of your business.”
Fisherman: “And why would I want to do that?”
VC: “Because eventually you’ll grow your business so large that you’ll end up selling it and making a big wad of cash.”
Fisherman: “You mean, so that I’ll be able to retire down here and buy a boat?”
Hopefully Aesop isn’t turning over in his grave.
I still read a handful of print magazines (you gotta do something in the bathroom) – one my favorites is Technology Review (MIT’s Magazine). This month’s cover story was The Internet Is Broken and is a fascinating (and probably important) article about the cost the Internet’s basic flaws which result in the need for a “clean-slate approach” being advocated by MIT’s David Clark (an Internet old-timer and chief protocol architect from 1981 – 1989.)
Clark believes there should be four basic elements that he’d like to see designed into the “new Internet architecture.”
The article is bound to be controversial, but covers a lot of ground, including discussing a proposed $300 million effort from the NSF to create a new Internet infrastructure.
Jeff Jarvis took some shots (well deserved) at VC bloggers and Ben Casnocha followed up with his own commentary. It motivated me to clean up my blogroll (sorry – no top 10 blogger list today) and dump bloggers that hadn’t posted anything in at least a month. Kind of like “ring out the old, ring in the new.”
I received a nice note and an invitation from Bill Prado at Green Mountain College to participate in a survey he’s doing on Environmental Uncertainty in Global Business. He asked that I open up the invitation to the survey on my blog for anyone that has “worked with international business matters.” If this is you, feel free to take the survey to help Bill’s research – I just did it and it took around five minutes.
When I was in Aspen in December, I once again found myself sitting in a house with Internet access (via DSL) but without wireless. This time there were only three of us competing for the Internet cable but that was two too many. We all had wireless adapters in our computers so we grumbled to each other that there must be a better way.
I was determined to find an inexpensive, portable, easy to set up Internet wireless base station. My primary computer is a Windows box so I went through all the logical network gear vendors. Everything I saw was big, bulky, or stupid looking. For some reason I wandered over to the Apple site and took a look at the Apple AirPort Express with Air Tunes. It was love at first sight – perfect size, the functionality I was looking for, and a fair price. I jumped over to the Amazon site and with 1–Click I bought it hoping it would work.
I installed it tonight. It took 15 minutes and had only one issue – the CD-ROM installer choked during the install on my Windows computer because I had a “new version of iTunes.” While that’s a stupid error, it was easy to fix by going to the Apple site, downloading the latest version of AirPort 4.2 for Windows, and installing again.
The setup was trivial and completely obvious. The only tricky thing to know is that if you want to have an encrypted network that both Macs and PCs can access, you need to use WEP, which requires exactly a 13 character password (yeah – good luck – it took a little while to come up with a 13 character password I could remember.)
While I’ve only tried this at home, it worked exactly as expected. As a result, the Apple AirPort Express with Air Tunes gets Toy of the Month status.
On Thursday CA announced that it was buying Wily Technologies for $375 million. I had a busy day and didn’t fire up FeedDemon (2.0 Alpha 1 – very very cool) until the evening to go through my 400+ RSS feeds, but I figured I’d see some commentary on it. When I read through my feeds Thursday night, I saw lots on CES, GooglePack, Google / CBS, Google Video the impending release of Skype 2.0, and Microsoft Urge, but only one post on the CA / Wily deal. Huh? I had exactly the same feeling that I wrote about early in December after Liberty Media acquired Provide Commerce for $477 million but all anyone wanted to talk about was the Yahoo / del.icio.us deal.
Now – I know everyone (except me) was hanging out at CES, but this is a significant deal! Fred Wilson has his fantastic “VC Cliche of the Week” series and I pondered doing a “VC Deal of the Week” series. I decided that I didn’t want to pressure all of the investment bankers in the world to provide me with at least one notable deal each week, so I ended up deciding to simply create a new category called “Deals” and regularly write about ones that I think are sizeable and – for whatever reason – have eluded mainstream blog commentary. I’m not going to play Jr. Financial Analyst and give you reams of financial data – if you are interested in that, I’m sure one of the financial analysts that have written research about the deal will do that. Rather, I’ll try to give some qualitative context, tell a story or two, and try to explain what I think is interesting about the deal.
The CA / Wily deal is an important one because it’s another acquisition in the steady stream of companies that were possibly queued up to go public in 2005 (now 2006) that chose to be acquired instead. It’s also reinforcement of the multiples that buyers are willing to pay for sizeable, high growth companies even if they aren’t profitable (although – given Wily’s size – it’s likely that it could have easily been profitable if it wanted to be – merely by sacrificing some growth.) It also reinforces that CA continues to be one of the active acquirers in the IT Management software segment – in addition to IBM, HP, Microsoft, Quest, BEA, Oracle, and maybe Mercury if they dig themselves out of the SEC ditch they have found themselves in.
I’ve got a long indirect history with Wily. I was on the board of Cyanea – which was the #2 VC-backed provider of APM (Application Performance Management) software (behind Wily). Cyanea was coming on strong, inflicting some real competitive damage – especially because of their OEM agreement with IBM (where IBM actively sold Cyanea’s products under the IBM brand). At the time John Swainson (now the CEO of CA) was running the IBM Websphere group and was the internal IBM champion for Cyanea. While Cyanea was making great progress, as some point IBM made the proverbial “offer we couldn’t refuse” and acquired Cyanea in July of 2004.
At the time, my instinct was that this was a huge issue for Wily and the IBM acquisition of Cyanea was a potential threat to their long term well-being. Clearly I was wrong – it appears from the information that CA released that Wily has been growing over 70% per year and is in a position to continue this aggressive growth. Swainson knows this segment very well and is clearly attacking his old friends head on with this purchase. Dick Williams – the CEO of Wily – is also ex-IBM – showing a little more of the legacy that IBM has created in the IT Management market segment.
The VC investors – including Greylock, Accel, and Focus – appear to have had a very successful investment as the amount of capital that Wily has disclosed that they’ve raised is around $40 million. Finally, Dick Williams last company was Quokka Sports – an Internet boom and bust company that dissolved into dust. Once again, the entrepreneurial mantra of “step back up to the plate and keep trying” plays out nicely.
My long time friend Scott Moody once told me that “old computers are like porn to me.” I agree – over the years I’ve spend my fair share of money and time on eBay buying old video games and computers (many of which either reside at my office or at friends’ houses.) One of the recipients of my old computer collection – Jenny Lawton (proud guardian of a TRS-80 Model 1) sent me a copy of Retro-Electric. This beautiful book is the computer porn equivalent of Playboy’s 50th Anniversary Issue (actually – my guess is that Retro-Electric is much much better.)
The pictures are gorgeous and the text descriptions are remarkably interesting (although I mostly looked at the pictures.) The book is broken into three sections: (1) Workstation, (2) Home Base, and (3) Playtime. I’ll give you a sampling from things that I actually owned at one time or another.
Workstation: Sharp EL-8, HP-35, HP-65 (actually, I had the HP-58a), Apple II, Casio FX-2000 (my all time favorite calculator), Radio Shack TRS80 1, IBM Personal Computer, Apple Lisa, Apple Macintosh Classic, Apple Newton, Palm Pilot Personal, Apple iMac, and HP iPaq. The Clive Sinclair products (I never had any of them) dominate this section early on and provide a great history of the calculator business.
Home Base: Lava Lamp, Trimphone, Bang & Olufsen Beogram 4000 (I didn’t have a 4000, but I had something close), Polaroid SX70 Land Camera, Seiko LCD Watch, Sony Walkman, President CB Radio (I don’t remember if we had a President, but we had a model that looked just like this one), Philips VLP700 Laservision Player, Sony Watchman Pocket TV, Swatch Watch, Braun Voice Control Alarm Clock (I didn’t have the voice control, but I still use the same model from 1984 without the voice control), Freeplay Wind-Up Radio, and the currently ubiquitous Apple iPod.
Playtime: Magnavox Odyssey (I never had one but I had a friend that did and remember playing it for N hours where N = much too large a number), Atari 2600, Mattel Electronics Football (still my favorite handheld electronic toy), Milton Bradley Simon, TI Speak and Spell, Atari 400, Palitoy Merlin, Sinclair ZX-81 (ok – I had one Sinclair thing), Nintendo 64, Tamagotchi, Sony Aibo, Sony PS2, and a Microsoft XBox.
Thankfully, this is only about 10% of the items listed in the book – my electronic junkyard is already overwhelming. I’ll just stick with pictures for the balance of them.
Actually, I didn’t (although I have some ideas, but I’m going to keep them secret for now, just like Google has.) But I did find some fun videos on Google Video this morning.
Time for a run.
I regularly get asked the question “why do you bother writing things like the Term Sheet series or the Letter of Intent series.” (yeah – I also get the “why do you bother blogging” question.)
While writing things like the Term Sheet series is fun, gives Jason and I chance to collaborate on something different, gets us connected to lots of new and interesting people, and occasionally forces us to think about something and/or express an opinion on something where we previously would hedge about, we don’t learn that much.
However, as I was responding to yet another board email for one of my companies on 409A issues (and going back and forth with Jason on it), he suggested that – in the case of the 409A series – we were forced to really learn about 409A issues, do our research, form opinions, and put them into (semi-articulate) words. As a result, this is now helping us and our companies quickly deal with 409A – effectively the tail (the blog) is now wagging the dog (us).
Why Bother? Because we just got a lot smarter about something that suddenly is important to us and our companies, helped us get critical feedback from people we wouldn’t have otherwise been exposed to, and ultimately will help us do a better job for our portfolio companies. It’s satisfying to be able to say “blogging helps me learn”, since continually learning new things is high up in my hierarchy of needs.