Tugboat invests with unbending conviction.
“Venture capital is the most expensive kind of money,” said a well meaning friend of my parents. He was giving me career advice over coffee at Bucks during a break between my college terms and it was the first time I had heard the phrase “venture capital.” I had no clue what he was talking about or why he chose to share this bit of seemingly gratuitous, and tautologically inaccurate, information — I thought money was money — but the phrase stuck with me. Fast-forward a couple of decades, after many adventures reporting on, raising, spending, and sometimes squandering, venture capital, and I’m starting to understand what he meant.
Be careful planning businesses around mega-trends.
Mary Meeker’s ”Latest Stunning Presentation About The State Of The Web” has been making the rounds in the last couple of weeks. It is compelling and shows how dramatically mobile and tablets (the iPad, really) are growing. And it showcases dozens of ways that we have “re-imagined” the old and ushered in the new; from computing to cars and coupons to cash registers — everything is being re-imagined.
Slide 17 points out that Internet and mobile advertising spending is less, as a proportion, than actual time spent online and on mobile, compared to other media. In other words, the Internet and mobile (especially) are not attracting as much advertising as they are usage. This is “material upside” that represents a “$20B opportunity.” Slide 17 reminds me of one I saw 13 years ago. In a Mary Meeker report. In fact, it’s basically the same slide. So, since those who don’t know history are destined to repeat it, I thought I’d wax historical.
Is this the beginning of the end or the end of the beginning?
“Epic Fail.” “Disastrous.” “Sputters.” “Flops.” And that was just when Facebook, the largest company to go public in US history, failed to get a “pop” on its opening day. What seemed like a little schadenfreude induced hyperbole on Friday (after all, a $100B market cap ain’t bad), seemed generous after a 19% decline in the first two full days of trading. Who knows where the stock will go from here, but it’s not surprising (at least, it shouldn’t have been) that with a 15% float they couldn’t find enough buyers to support a price that was 76 times its projected 2012 profits. With slowing growth rates and painful anecdotes like GM pulling its advertising, it’s tough to defend a multiple that is around 6 times the 2012 p/e for Apple (which is growing faster) and Google (which has faster display ad growth). Some have suggested that Facebook may be worth less than half its debut price while others value it at $30M or lower. All this raises interesting questions about how well private markets, which valued Facebook above $100B, price pre-IPO companies — or how useful that pricing information is as a predictor of the public market.
With so many companies flooding the scene, are we in the trench warfare stage of entrepreneurialism?
On April 25th, 1915 the Allies invaded the Gallipoli peninsula, in a attempt to capture Constantinople and topple the Ottoman Empire. The campaign lasted over 7 months and ultimately failed, due in part to Commander Ataturk who would transform the aging empire into modern Turkey (and Constantinople into Istanbul) — but not before nearly 500,000 men lost their lives. It lives on today as a stark reminder of the brutality of war and in images of young men in trenches, commanded by generals out of harms way, sprinting over bodies of their compatriots in futile attempts to take out machine guns before the machine guns mowed them down. 60% of the soldiers were lost.
Of course it’s metaphorical & hyperbolic to say, but is there something about today’s startup world that reminds one of the trench warfare of World War I? Does it not conjure up, in some ways, the image of older men (usually), safe from harm, rapidly training, equipping, and then directing college aged men (usually) out of their bunkers to storm an position — only to see most of them fail?
A new generation of Internet companies and applications.
Welcome to the “third wave” – a new generation of Internet companies and applications. Just what the “third wave” is, however, is still to be determined. In pitching his new “sFund,” John Doerr wrote: “we’re on the third wave now. This is about the social web.” Previously, when pitching the iFund, Doerr described the “third shift” as “interacting fluidly on full and fast screens with vast information stored locally. And that will start a third renaissance of software.” Later Doerr described the three waves as (1) microchip & PC, (2) the Internet, and (3) social, mobile and new forms of commerce.
Ten Journalist Murder Cases to Solve, Reports the Committee to Protect Journalists http://bit.ly/azH9R1