Is venture investing a gut business ? June 30, 2006Posted by rajAT in entrepreneur, startup, technology, vc, venture capital.
Yes, it is.
Paul Kedrosky a venture partner with Ventures West, who also writes a famous blog Infectious Greed, was moderating a VC panel where the same question was being debated – Is venture investing a gut business. And the conclusion is, that it is.
One of the main reasons is that after 4 decades of active investments the VC industry still doesnt have a formula for zeroing down on a winning company.
If you go to any conference where a VC is addressing the crowd. They will all state this statment religiously – We want “A” teams. An “A” team can save a mediocre technology, but a “B” or “C” team could screw up even the best technology. This statement is as hollow as Rakhi Savant kissing claims. In first place how you will conclude that a particular technology is mediocre or killer. In hindsight, one can always make big statments.
When the legendary VC John Doerr came down to Banglore. We asked a question to him when he repeated the same, “A” team – “B” technology statement. The questin was with a twist – Google didn’t have a management team or an “A” team when you guys invested in Google. To hell with management team they didn’t even have a plan how they are going to monetize this whole thing. Then what made you invest. John didnt offer any counter argument – infact he said Google is an outlier so its kind of pointless debating or discussing it. That really helped. Finally, he said we invested because Ram Shriram has invested. Talk about herds.
My 2 cents on it –
For a second if we look a little closer at the ideas or technology. They fall under two categories –
1) Technologies that change the world.
2) Technologies that make things which are already present better, faster or bigger.
The ideas that fall under second category, for them the business models are already proven the entrepreneurs are trying to improve the user experience. These ventures don’t create new markets but may expand existing markets. For example – the travelling industry was always there but by taking it online, booking tickets become so easy.
The first category is the difficult one. When Apple computer started who had thought that the whole PC industry will get so big. But Steve Jobs and Steve Woz thought differently. When Google came up with their search technology noone thought that online searching will be an annual $10 Billion in revenues business. The ideas that fall under this category lead to the creation of a whole new industry.
Hence the difficult part is that there is no factual data that can prove that this new stuff will work. Anyone who is trying to prove this nothing but a fool. For such things one can only go from year to year or better quarter to quarter but you cannt have a 3 year Capex plan in place. It is just not possible. Who has dreamed that iPod will be such a hit, I doubt even Steve Jobs has dreamt that iPod will be such a killer. (iPod led to the creation of microcontent, MP3 players were always there).
The panel concluded finally that picking such trends is an art and not a science. Either you have it in you or not. No business guru or a professional service can help you in taking the decision. Only your gut can show you the way.
In the end, Spreadsheet jockeys are not needed but Dreamers. 😀
Pentagon is snooping my blog June 29, 2006Posted by rajAT in nsa, pentagon, semantic web.
Pentagaon’s National Security Agency is planning to comb social networking sites and blogs as phone tapping is providing them with limited information. Since 9/11 NSA has been logging all phone calls in US. Now they are going to tap the web, in their pursuit of Osama Bin Laden.
One of the reasons given to pursue this is that people discuss their hobbies passionately at social networking sites. Hence, the people with strong inkling for flying will be under a heavy scanner. Yawn !
The major problem that NSA is facing is that there are too many formats out there in which information is stored out there. So it becomes difficult to map your information on social networking sites with your banking information. Yeps, they are scanning bank records too. They are also trying to map the purchases made by you. So all the people who buys Flight Simulator comes on radar immediately. Then their hobbies will be checked or their past credit histories or where all they have travelled, their cell histories. Its a nightmare. Our digital crumbs are everywhere.
The emergence of semantic web will solve the problem of incompatible data silos that exist on the internet today by a common data structure calledResource Description Framework (RDF).
RDF turns the web into a kind of universal spreadsheet that is readable by computers as well as people,” says David de Roure at the University of Southampton in the UK, who is an adviser to W3C.
“It means that you will be able to ask a website questions you couldn’t ask before, or perform calculations on the data it contains.”
I think people should get more wise while revealing stuff about themselves on the internet. with the development of technology information is going to get easier to merge, fuse and lot of stuff can be inferred from it.
From Indian perspective – Matrimonial checks will be a very famous service. People will use this service to check the background of prospective groom or bride :D.
Blog Bucks June 26, 2006Posted by rajAT in blog, bloggers, entrepreneur, startup, vc, venture capital.
As the print media ponder the possibilities presented by blogs, some journalists are raising money to turn their own independent blogs into businesses.
The latest example is, Rafat Ali, the publisher of PaidContent.org and two other news and analysis sites, MocoNews.net and Contentsutra.com, focused on digital media and other high-tech trends, has raised money to expand his Web-publishing business from venture capitalist Alan Patricof.
The financing, though small in comparison with most Web deals, is one of several in recent weeks that indicate optimism on the part of early-stage investors in the viability of blogs as an outlet for journalism, rather than the gossip and personal opinion that characterizes much of the medium.
Mr. Ali started PaidContent.org four years ago when he couldn't find work after two publications he wrote for, Inside.com and Silicon Alley Reporter, shut down. His site has since developed a following among people interested in how the Internet and other technologies are affecting the media business.
I met Mr. Rafat at a mixer in New Delhi in December. At that time Mr. Trehan, VP Indiatimes, mentioned that Rafat is a million dollar guy. AOL purchase of Weblogs Inc. was still wet and all professional bloggers were eyeing similar deals. Rafat and team continued their good work and now this deal can go along way in building PaidContent a big money spinner.
Between did I mention that ContentSutra was the first professional blog I started reading way back in 2005 (internet years 😀 ). And it openned the doors of a whole new world. Thanks Rafat and all the best.
University Venture Fund June 25, 2006Posted by rajAT in DFJ, entrepreneur, startup, tim draper, vc, venture capital.
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The University Venture Fund (UVF) announced today it has achieved a final closing of $18 million in funding, an unprecedented amount of capital for a student-run education-based business program. UVF is one of only a few business school venture capital funds, which teach students entrepreneurship by investing in risky — yet potentially rewarding — startup companies rather than in safer stocks of public corporations.
UVF is collaboration between students, the University of Utah's David Eccles School of Business and the professional investment community. Created in 2001, UVF broke new ground by modeling an aggressive, real-world approach to business education with a self-sustaining private equity fund in which students raise the capital, research the investments and pitch the deals. It is also the first fund to have a traditional limited partner relationship with investors who anticipate reasonable payback.
One of Silicon Valley's highest-profile venture capitalists praised the UVF concept. "I love the idea of the next generation of entrepreneurs being energized and educated by operating a true private equity fund," said Tim Draper, who was an early investor in Hotmail and was at the center of several record-breaking venture capital deals this past year, including the lucrative initial public offering of Baidu, dubbed "the Google of China," and the purchase of Skype by eBay for $4.1 billion. "I'd like to see this kind of education in entrepreneurship spread everywhere," he said. Draper put $1 million in UVF and is its largest private investor.
The student-run fund has other prestigious backers. UVF's largest institutional investor is UBS Bank USA, a subsidiary of UBS AG, one of the world's largest private banking institutions and one of the largest asset managers globally. This final closing of UVF added CapitalSource of Chevy Chase, Md., to UVF's group of investors. CapitalSource is a commercial finance company with offices in major cities across the United States.
The Salt Lake family of two successful entrepreneurs, billionaire medical device inventor James LeVoy Sorenson and son James Lee Sorenson, CEO of Sorenson Media and Sorenson Medical, contributed the founding $500,000 to UVF in 2001 and challenged students to create a self-sustaining investment fund.
Few such higher education programs exist today. Stock clubs and student-led investment funds of public corporate stocks are common, but the educational benefits of UVF derive from the big risks and rewards of investing in little-known, innovative private enterprises for which there are no public market valuations and so are tricky to bet on, even for seasoned professionals.
Twenty-five students commit 20 hours per week to performing due diligence on venture capital investments for professional private equity companies participating in the UVF program. Startup businesses the students find potentially lucrative are then pitched to volunteer investment professionals who oversee which ones are included in the UVF portfolio. A wide range of graduates and undergraduates are enrolled, including engineering students and medical students, and the program has expanded to include students from Westminster College in Salt Lake City and Brigham Young University in Provo. The University of Michigan and Cornell offer similar, student-involved private equity funds that are smaller, with $3 million and $500,000 invested respectively.
A recent graduate credits his current business success to the learning experience provided by UVF. "Everything I needed to get our new-concept business going, I learned from working with UVF," said Nate Thurgood, who graduated in 2003 and recently played a lead role in developing BelleHavens, a high-end equity destination club. Launched in 2004, BelleHavens already has properties in three countries with 11 destinations and has a member satisfaction rating of 97 percent. "From business valuation to deal-structuring to due diligence, I really couldn't have done it without participating in UVF. It's not just the entrepreneurial experience that was so helpful, but working with sophisticated investors for the first time was very important for me," he said.
Undergrads gain real-world experience through the risky business of seeding startups with money from limited investors who expect a satisfactory return on their investment.
Career Advice June 23, 2006Posted by rajAT in career advice, counselling.
When it is time to quit ?
Our parents and grandparents believed you should stay at a job for five years, 10 years or even your whole life. But in a world where companies come and go — where they grow from nothing to the Fortune 500 and then disappear, all in a few years — that's just not possible.
Let's look at it from the perspective of evolution: Species that evolve the fastest are the ones that don't mate for life with same partner. By switching mates, swapping genes with someone new, you continually reshuffle the gene pool, making it more likely you'll create something new and neat and novel and useful.
Here's the deal: The time to look for a new job is when you don't need one. The time to switch jobs is before it feels comfortable. Go. Switch. Challenge yourself; get yourself a raise and a promotion. You owe it to your career and your skills.
The full article by Seth is here.
In short – Never Settle :D.
Stardoll – Your paper doll heaven June 23, 2006Posted by rajAT in barbie, culture, stardoll, startup.
We all have played with guddas and guddias (dolls) when we were kids. And we were so possessive about them and we wont let anyone go near them. They will be with us all the time :). If someone will touch them then that is the end of world :).
But the digital kids are different, aren't they. There guddas and guddias are digital. They love to share them with their friends. I am touched. New age kids understand that you get positive karma by sharing things :). Ahem ! Ahem !!. The startup behind this is Stardoll.
Stardoll.com a brainchild of Scandinavian-born Liisa. Inspired by her childhood passion for paperdolls, Liisa drew dolls and accompanying wardrobes, and also taught herself web design. Rapidly her personal homepage became a destination for teens. In 2004, with the help of her son, she upgraded the site and called it Paperdoll Heaven.
Stardoll is an online celebrity dress up and community site for everyone who likes fashion and celebrities. Most of the visitors are girls between 7 and 17.
The site offers visitors more than 320 dolls and tens of thousands of garments and accessories and there are new dolls created every week.
Since its inception Stardoll has gained popularity with girls young and old from more than 190 countries. Relying solely on “word-of-mouth”, the company has built a global membership base exceeding 900,000 and attracts more than one million unique visitors a month.
Just thinking a bit more strategically, this is a great example of blue ocean strategy where you think different from the crowd and create new markets. Most of the other startups out there are trying to get the attention of this demographic by dishing out more games or enabling them to socialize with each other better. This can disrupt the existing monopolies of Mattel (Barbie).
Btw it got funded by, none other than Sequoia Capital.
Football mania gripped Sadhus June 22, 2006Posted by rajAT in fifa, football, fun, india.
Hindu ascetics play soccer on the banks of the River Ganges in Allahabad.
Who says we are only a cricket crazy nation.
We should put a team of these guys. Look at their footwork man :).
Via Associated Press.
Pre Barcamp Meet June 22, 2006Posted by rajAT in barcamp, barcamphyderabad, hyderabad.
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There is a Pre Barcamp Meet this Saturday – 24th June
Time – 11 AM
Venue – Cafe Coffee Day – Jubilee Hills ( Opp. to Barista )
All are invited.
Lets drum that place 🙂
Webyantra: Indian Techcrunch June 21, 2006Posted by rajAT in india, techcrunch, web2.0.
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Amit Ranjan has started Indian Techcrunch. Yeps, now all you guys can get instant traffic on their newly launched web service by getting it featured on Webyantra. And I hope that you will get beyond 53,000 meme :).
Webyantra is a blog, which is dedicated to profiling innovative Indian web products and internet services. It’s a platform for Indian web startups, ecommerce websites and internet based businesses to showcase their products & services to Indian internet users.
Amit has earlier featured Pixrat (Flickr + Delicious mashup) on his blog, and subsequently it got picked by TechCrunch. Pixrat is first Indian Web2.0 startup to be featured there. Amit later reviewed TaaZZa which also brought laurels to him. This all motivated him to start Webyantra where all Indian startups will be reviewed.
Webyantra will get hot soon, I don't have an ounce of doubt in my mind about that. Techcrunch was also started humbly roughly an year ago.
Great job Amit and all the best :).
Risk Capital in India June 20, 2006Posted by rajAT in bangalore, entrepreneur, entrepreneurship, hyderabad, IIIT, iit, india, isb, startup, tie, vc, venture capital.
Rafiq Dossani from Stanford and Asawari Desai from TiE has written a report on what is holding the growth of risk capital in India [Via Venturewoods]. Below are some of excerpts from the report and my supporting thoughts on it.
Over 90% of the money invested by VC firms is in late state ventures. And the remaining More than 90% of the money invested in VC firms in India ventures lie in the category of late stage funding. The rest of the funding also goes into the firms who are replicating proven business models. Hence, the risk capital as such is totally absent in India. There are multiple reasons for such a scenario –
1. Domestic Risk capital providers who are skilled at risk assessment and portfolio diversification lack technical skills and market awareness.
This is very true. Most of the HNI (High Networth Individuals) one will find here will be from IT/ ITES industries who will have little or no clue about what is latest in the industry. Some of them who might be able to dish out the names of hottest startups like Riya, Skype (now eBay), Flikr (now Yahoo) etc. but they won't have clear idea as in why they are hot.
2. Early-stage entrepreneurs, though skilled at cost-control and technology, lack market awareness, product development skills, global standards of professional and ethical behavior and team building skills.
a. Some of the entrepreneurs here will simply try to replicate what has been done in US without understanding the whole idea in depth.
b. Early startups will not have discipline which is essential to certain extent.
c. The ideas that they are chasing can get changed very radically because some other quick opportunity will knock their door. Mostly in services side.
3. Inadequate pipeline of angel/university/state funded seed-stage firms.
Univeristy funding or support is happenning at few IITs (Bombay, Chennai) very actively. Now IIIT-H has also started supporting startups. But a wider penetration will take a lot lot more time.
You cannot create a vibrant entrepreneur community in pockets. If Stanford students were crucial in creating Sillicon valley than students from other universities have also played a very important role. All top 100 univs in US have an active Incubation cells. This imbibes a spirit of entrepreneurship in the students right from the beginning.
4. Seed and early-stage entrepreneurs’ professional networks consist primarily of a few strong personal connections and brokers. A wider network of professional associates, incubators and prior-stage financiers, is largely absent.
TiE is the only entrepreneurship network in India. It has chapters all over India, but TiE Bangalore is the most active one. Recently it launched TiE-EAP which is great foot forward. ISB in Hyderabad is also trying to build the same along with TiE Hyderabad and IIIT-H.
At grassroots alot is happenning now days. All Tier 1 IT hubs (Delhi, Hyderabad, Chennai, Bangalore, Mumbai, Pune) have successfully organized Barcamps which were hugely successful. A small step but can go a long way as it gives a platform to the like minded to come and meet.
5. Underdeveloped equity markets for listing early-stage firms.
All big internet companies in India get themselves listed at NASDAQ or NYSE. This shows that Indian investor is not ready for the new age companies.
6. Shortage of complementary capital, such as debt capital.
Organized debt markets in India doesn't exist. One can get debt from improper channels at very high rate of interest. Mr. Finance minister are you listening.
7. The business environment discourages sophisticated standards of – corporate governance.
8.University-Industry partnership was an alien concept 5 years back. Corporate India is still trying to discover how such alliances can affect its topline.
9.Domestic consumption of IT is not very high. When labor is cheap why bother about IT. This is the mantra at most of the organizations.
10. Bureaucratic, regulatory, legal and tax hurdles affects smallers VC firms and angel investors. Need of the hour is such firms and not big ones. Read my views on it here.
Well this all means we have long way to go. And we will go 🙂 :).
MoMo rings into India June 20, 2006Posted by rajAT in bangalore, hyderabad, india, mobile monday.
Full DNA page can be viewed here.
PS: Mobile Monday Hyderabad will be announced at Barcamp on 15th.
Mr. Clean June 20, 2006Posted by rajAT in advertising, marketing.
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This ad won exceptional innovation in Media.
And it does communicate the message brilliantly.
Agency – Grey Worldwide GmbH / Duesseldorf
VC delegation visiting IIIT Hyderabad June 19, 2006Posted by rajAT in entrepreneur, hyderabad, IIIT, india, vc, venture capital.
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A VC delegation is visiting IIIT-H campus today. few of the names I came to know are-
Mr Gordon Campbell founded and operated a number of Silicon Valley technology companies. He established Techfarm, Inc. and Techfarm Ventures as models for partnering start-ups, creating cutting-edge technologies, with seasoned managerial and financial experience.
Mr. Lauro has 25 years of engineering, operating and venture capital investing experience in the IT, electronics and semiconductor sectors. Prior to joining Techfarm in 2005, he was Managing Director at Wasserstein Venture Capital.
Laura Onopchenko joined Techfarm in July 1998 from 3Dfx Interactive where she was the director of investor relations and business development. During her tenure at 3Dfx, she positioned the company, to the institutional investment community for an initial public offering and a successful secondary.
Sateesh Andra is a seasoned entrepreneur and executive. Sateesh co-founded Euclid in 2000, a leading provider of IT Management Software that enables Global 2000 companies to align IT spending with business priorities. He has launched an India focussed Angel Fund. He is based out of Hyderabad.
FOSS, GoogleMaps, Poker @ Barcamp Pune June 18, 2006Posted by rajAT in barcamp, barcamppune, foss, googlemaps, Online Poker.
Other notable stuff from Barcamp Pune
It is great to see women interest in FOSS. Runa gave a talk on Women's groups in FOSS. Atul Chitnis also gave a talk on "Understanding FOSS business model". I couldn't attend both of them :(. Blame it on 4 parallel sessions. And they were on four different floors and the schedules were getting changed on the fly.
Rakesh Raju from Indecca shared his experiences about the scaling problems they are facing with their online Poker game. Hundreds of thousands of players accessing their games. He mentioned a language called Erlang developed by ericcson is very robust and is great for concurrent programming.
Mandar Patil form OnSkreen gave a demo of their product.
Betterlabs.net @ Barcamp Pune June 18, 2006Posted by rajAT in barcamp, barcamppune, india, web2.0.
It is just great to see Web 2.0 sites coming from India. A happenning bunch of people (Vaibhav, Satish, etc.) at Betterlabs.net are doing some great work. Vaibhav is based in Silicon valley. I met Satish and team at Barcamp Pune. At barcamp they presented Indiagoes a news aggregator. They promise that they will not annoy their users by showing them tonnes of advertisements which is the generally the case these days. TimesofIndia is yuck.
Here are their flagships.
All the best guys and carry on the good work :).