Quova has started a blog on “the impact of real-world geography on the way business is conducted on the Internet” called The 37th Parallel that is hosted on AlwaysOn. I posted an article titled IP Geolocation – Investing in Insight that talks briefly about my first encounter with the notion of “IP Geolocation”, the origin of my investment in Quova, and the evolution of IP Geolocation from a clever, gimmicky idea in 1999 to a technology that is now at the core of a wide variety of Internet-based applications.
I’m participating in a half day event on 9/28/05 from 9am – 1pm put on by IBD Network and hosted at the Fenwick & West office in Mountain View, CA called The Dealmaker Forum. The quick overview is:
If your company’s strategy involves a merger, acquisition, or strategic partnership, The Dealmaker Forum is where you need to be. The Dealmaker Forum brings together expert dealmakers – CEOs, corporate development executives, VCs, and M&A experts – for an exchange of strategy, ideas, and best practices. Through an interactive, roundtable format, participants can delve into topics of critical interest for the growth of their businesses.
In addition to me, the group of “experts” currently includes:
- Lara Druyan, General Partner, Allegis Capital
- Steven Mitzenmacher, Director, Corporate Development, Business Objects
- Ken Sims, Strategic Advisor, Oracle
- Cheryl Traverse, Ex-President, CEO & Chairman, Immunix
- Paul Weinstein, VP, Business Development, Check Point Software Technologies
- Ann Winblad, General Partner, Hummer Winblad Venture Partners
- Oren Zeev, Partner, Apax Partners
Space is limited to 100 people and is invite only – if you are interested send an email to greta@ibdnetwork.com with your name, title, company, company URL, and phone number.
I’ve always loved numbers (especially primes and multiples of 3) – that partially explains my interest in web analytics and my fascination with looking at data trends. Over the past year, I’ve created my own little data laboratory – my blog. When I started blogging on 5/4/04, I obviously had 0 subscribers via RSS (by 5/8/04 I had 4, by 5/31/04 I had 60, today I have 3500 according to FeedBurner). Thanks for contributing to my laboratory (hopefully you are getting some benefits from it also!)
Since the beginning of this year, I’ve been paying a lot more attention to and experimenting with the various things you can measure on a blog. While the absolute numbers are occasionally useful, the trends are really what I’m after, so the law of large numbers works in my favor over time to improve the validity of the trends. I’m also trying to understand what impacts the trends – the deeper post specific data really helps with this.
I stepped back from it all yesterday and did an inventory of the various data I’m measuring on a daily basis. Following is the list of the services I’m using:
- FeedBurner: Core RSS feed and page view metrics
- AWStats: Core page view metrics
- Google AdSense: Page views by channel, ad click throughs
- Amazon: Online purchase metrics
- Bloglet: Email subscribers
- MyBlogLog: Outbound link tracking
- MeasureMap: Inbound / outbound link tracking (in alpha)
- Technorati: More link tracking
- Feedster: Even more link tracking
I’m also using a number of these services to enhance my blog, all which collect (or generate) other stats.
- Amazon: Reading Now, Read Recently, Toy of the Month
- Jinzora: Listening Now
- Word of Blog: Promoting Now
- MyBlogLog: Outbound link tooltip
- FeedBurner: FeedCount (subscriber count), BuzzBoost (republish Mobius PR feed)
- NewsGator: Subscribe button
- Bloglet: Email subscribers
- Google: Search on blog
- Page Two: My random page where I play with stuff until I put it in production
While FeedBurner and AWStats form the core of my analysis, I’ve been spending more time in the other tools recently looking at the data. It dawned on me that I’m missing a classic “CIO dashboard” view across all my data. Much of this data is “open” and freely available via APIs and web services although some isn’t easy to get. Now that I’ve got a suitably large set of data, it’s time to step back and see if there’s a better way to consolidate / represent it.
As I’ve said in the past, I’m a long term fan of Warren Buffett. Many of you are also as I’ve received over 500 requests for the Annual Letters of Buffett Partnership, Limited, 1957 – 1970 over the past few months. As the Q205 filings roll in, I happened to notice the disclosure for the stock holdings of Berkshire Hathaway, which are as follows.
Company Class Value Shares Coca Cola Com $8,350,000,000 200,000,000 American Express Co. Com $8,070,237,000 151,610,700 Gillette Co. Com $5,112,617,000 100,980,000 Wells Fargo & Co. Com $3,476,090,000 56,448,380 Moody's Corp. Com $2,158,080,000 48,000,000 Wesco Financial Corp. Com $2,053,111,000 5,703,087 Washington Post Co. Cl B $1,442,736,000 1,727,765 M&T Bank Corp. Com $705,493,000 6,708,760 Shaw Communications Inc. Cl B $456,940,000 22,000,000 American Standard Cos. Com $440,072,000 10,497,900 First Data Corp. Com $346,208,000 8,625,000 Gap Inc. Com $304,826,000 15,434,243 Comcast Corp. CLA SPL $299,500,000 10,000,000 USG Corp. Com $276,250,000 6,500,000 Gannett Inc. Com $245,228,000 3,447,600 Costco Wholesale Corp. Com $235,011,000 5,254,000 Sun Trusts Banks Inc. Com $231,500,000 3,204,600 Nike Inc. Com $214,300,000 2,474,600 Iron Mountain Inc. Com $155,100,000 5,000,000 Tyco International Ltd. Com $146,000,000 5,000,000 Pier 1 Imports Inc. Com $113,520,000 8,000,000 Outback Steakhouse Inc. Com $82,283,000 1,818,800 Servicemaster Co. Com $75,195,000 5,611,600 Lexmark International Cl A $64,830,000 1,000,000 Sealed Air Corp. Com $55,431,000 1,113,300 Petrochina Co Ltd. ADR $48,404,000 659,000 Home Depot Inc. Com $36,760,000 945,000 Proctor & Gamble Co. Com $33,232,000 630,000 Mueller Industries Com $23,084,000 851,800 Comdisco Holding Co. Com $22,784,000 1,518,978 Lowe's Cos. Com $22,706,000 390,000 Dean Foods Co. Com $13,233,000 375,500 Total Value $35,310,761,000
While the old mainstays are predictable (and make up the majority of the value), the holdings in the $100m to $1b range are fascinating.
We just had the biggest earthquake of the summer – a 4.7 at 12:57pm our time – about 38 miles from Homer. Following is the map (hint: look for the big red box.)
We have lots of little earthquakes nearby all the time – this time it was big enough to notice. At first I thought Amy had snuck up on me and was shaking the back of my chair to get my attention. I said something like “hey babe” but the shaking continued. I turned around and Amy wasn’t there. I then noticed that my computer monitors were bouncing around at which point “EARTHQUAKE!” entered my brain. I rolled with the last five seconds (it was about 10 seconds long) and then went up stairs to announce the event. Amy thought I was slamming doors down stairs, so she didn’t make the connection until I told her.
As long as I can remember, a phrase that I have heard regularly is “what is the next killer app?” Entrepreneurs and VCs are always looking for the next killer app upon which to build a huge business. Last month, Richard Nolan and Robert Austin wrote a short article in Sloan Management Review that concluded that “even gifted visionaries [will not be able] to imagine the next killer app.” They asserted that – as a result of research they’ve been doing with their HBS Internet2 Business Group – there are two critical practices to overcoming impediments to identifying the next multi-billion markets for communication technologies. They are:
- Simply try things out: We are seeing this every day with all the web 2.0 stuff that’s being created. The new approach – being used by many of our favorite web services – is build, release, test, iterate. Google has popularized the notion of “beta services” – when everything is “beta”, you’ve got a new paradigm with a short (days / weeks / one month) release cycle that can be quickly iterated on rather than a monolithic 12 – 18 months (or more) release cycle.
- Focus on the information context: This is a little harder to see in practice, but it’s all about “enabling the feedback loop between users and manufacturers.” Eric von Hippel has been talking about this since the late 1970’s – he’s now calling it “Democratizing Innovation” – if you get both sides deeply involved in the innovation context, better things get created. Tom Evslin’s been on a Typepad customization rampage – this is a great small example – and I hope our friends at Six Apart are watching.
Nolan and Austin conclude by suggesting “Extrapolation of the present will follow lines less straight and more recombinant than can be deciphered. In that case, we will need processes and technologies that will allow us to intelligently stumble upon the future.” Adam Bosworth talked recently about “keeping it simple and sloppy” – this is a big part of intelligently stumbling forward. Who needs a “killer app” when you can play until something special emerges?
Dan Bricklin has a thoughtful post on software patents as a follow up to a bunch of stuff that’s gone around the web the past few weeks since the NY Times article on Microsoft’s quest for patents. Buried in Dan’s post is the ultimate wisdom:
“I’m not against patents in general (they are good for some industries, I guess), but I do have real problems with how they are affecting the software industry which has other means of protection and incentive that have proven successful to society. Of course, as I’ve written, they are the current law of the land and I still apply for them at times.”
In one of Fred Wilson’s VC Cliche of the Week posts, he stated that “patents are just like nuclear bombs, you just got to have some.” Mutually assured destruction is supposedly a deterrent, isn’t it? Some day, the elusive “someone” (whenever any of us said “someone” in my house growing up, we always really meant “mom”) might get around to fixing our patent system with regard to software patents. Until then, as Dan says, “… they are the current law of the land and I still apply for them at times.”
Earlier this week I did a brief post on the “no shop agreement” that is a common feature in a term sheet. I compared signing a no shop to the construct of serial monogamy in a relationship. I had a couple of comments (one that was intellectual, one that was a little harsher and painted VCs as “duplicitous.”) I was mulling over my obviously (in hindsight to me) asymmetric view when Tom Evslin very clearly and coherently articulated why my analogy was really unilateral monogamy (e.g. the VC isn’t signing up for serial monogamy – only the entrepreneur is.)
Tom – and the comments I received – are correct (although I don’t agree with the generalization that “VCs are duplicitous.”) After reading Tom’s post, I thought about my own behavior (at least my perception of my own behavior) vs. the general case and realized I’ve mixed the two up. I’ve been on the giving and receiving side of unilateral no shops many times and – when on the receiving side – have usually been sensitive to why the other party wouldn’t sign a reciprocal no shop. In most cases, I simply don’t put a lot of weight behind the no shop due to the ability to bind it with time (30 – 45 days), plus whenever I’m on the receiving end, I’ve done my best to test commitment before signing up to do the deal.
In addition to Tom’s post, Rick Segal wrote up his thoughts in a post titled “The Handshake Clause” where he makes the point that his firm doesn’t sign a term sheet until they are committed to doing a deal. His explanation of how he approaches this is useful, but it is important to acknowledge that there is a wide range of behavior among VCs – the group that doesn’t put a term sheet down until they are committed are at one end of the spectrum; the group that puts down a term sheet to try to lock up a deal while they think about whether or not they want to do it is at the other. I’d like to think that we are at the “good” end of this spectrum (e.g. we won’t issue a term sheet unless we are ready to do a deal.) Obviously, your mileage will vary with the VCs you are dealing with – hence the value of doing your own due diligence on your potential future partners.
As I mulled this over, I came up with a couple of examples in the past 10 years where the no shop had any meaningful impact on a deal in which I was involved. I could come up with an edge case for each situation, but this was a small number vs. the number of deals I’ve been involved in. In addition, when I thought about the situations where I was a VC and was negatively impacted by not having a no shop (e.g. a company we had agreed with on a term sheet went and did something else) or where I was on the receiving end of a no shop and was negatively impacted by it (e.g. an acquirer tied me up but then ultimately didn’t close on the deal), I actually didn’t feel particularly bad about either of the situations since there was both logic associated with the outcome and grace exhibited by the participants. Following are two examples:
- We signed a term sheet to invest in company X. We didn’t include a no shop in the term sheet – I don’t think there was a particular reason why. We were working to close the investment (I think we were 15 days into a 30–ish day process) and had legal docs going back and forth. One of the founders called us and said that they had just received an offer to be acquired and they wanted to pursue it. We told them no problem – we’d still be there to do the deal if it didn’t come together. We were very open with them about the pros and cons of doing the deal from our perspective and – given the economics – encouraged them to pursue it (it was a great deal for them.) They ended up closing the deal and – as a token – gave us a small amount of equity in the company for our efforts (totally unexpected and unnecessary, but appreciated.)
- I was an existing investor in a company that was in the process of closing an outside led round at a significant step up in valuation. The company was under a no shop agreement with the new VC. Within a week of closing, we received an acquisition overture from one of the strategic investors in the company. We immediately told the new lead investor about it who graciously agreed to suspend the no shop and wait to see whether we wanted to move forward with the acquisition or the financing. We negotiated with the acquirer for several weeks, checking regularly with the new potential investor to make sure they were still interested in closing the round if we chose not to pursue the acquisition. They were incredibly supportive and patient. The company covered their legal fees up to that point (unprompted – although it was probably in the term sheet that we’d cover them – I can’t recall.) We ended up moving forward with the acquisition; the new investor was disappointed in the outcome but happy and supportive of what we did.
As I said earlier, these are edge cases – in almost all of my experiences the no shop ended up being irrelevant. But – as both of these example show – the quality and the character of the people involved made all the difference. Near the end of his post, Tom makes the point that it’s “good negotiating advice to make sure that every clause which can be mutual is mutual.” I completely agree.