Toshiba is using nanoparticles to some how charge lithium-ion batteries 60 times faster than today. This will be commercialized beginning next year. This is one of the first commercialized nanotech announcements I have seen; but in the coming years we will see of thousands of nanotechnology ideas getting to market. I think by 2020 much of our material world will be influenced by nanotechnology: housing, energy, clothing, transportation, communication, agriculature, medicine and manufacturing. It will probably have a greater impact on quality of life than the internet does.
I’ve been happy to see a decline in TV viewing as internet usage continues to climb. Even since reading Amusing Ourselves to Death: Public Discourse in the Age of Show Business, by Neal Postman, I’ve been worried about our civilization, as we slouch (as most couch potatoes do) towards gomorrah. But Microsoft’s Portable TV initiative might give television a shot in the arm.
In five years will we be carrying a portable device with 1 terabyte of storage that contains all of the text, audio, and video content that we want–wherever we go? Or will we carrying a portable device that has XM satellite radio channels and high-speed wireless access to all the content we will ever want on web servers around the planet?
I’m actually not sure. Maybe both. That’s why I like being in the content business. I have always believed and still believe that in the end, content is king. You build community around content, and that leads to commerce. Simple formula: it works over and over and over again.
Here’s a USA Today article that reviews the feverish adoption rate of technology on college campuses and some of the innovative experiments that are taking place. Duke provided 1,650 freshmen students iPods last year–for educational purposes. University of Maryland provided 400 MBA students with Blackberries. UNC-Chapel Hill requires all students to own a laptop. IT spending is way up at colleges.
Being so focused on starting businesses from scratch, I have overlooked one mode of value creation which others have used very effectively: buying a company with great products or services but poor marketing, and turning on the growth engines.
I recently met two businessmen who systematically find underperforming companies and turn them around. Last week I also talked with two companies that are raising capital, going public, and then using their stock to do a “roll-up” strategy (where they acquire multiple companies) to create value.
I’m trying to find the 5 best web sites that list business acquistion opportunities. Globalbx.com looks pretty good. It lists 123 internet companies that are currently for sale. Businessesforsale.com has a better Alexa ranking (therefore more traffic) and lists more than 550 media and technology properties for sale.
What other business exchanges are you aware of?
When Jeff Bezos introduced Amazon’s A9.com search engine’s OpenSearch project, he mentioned Koders.com. I checked it out. Koders.com claims to be the leading search engine for open source code. It’s Alexa chart shows it is rapidly gaining in popularity. I think this will be a great resource for developers and entrepreneurs.
NetIQ is selling WebTrends, one of the older and more popular web analytics applications, to a SF-based private equity fund for $94 million in cash. This surprised me, since NetIQ acquired WebTrends in 2001. Then again, their 5-year stock chart doesn’t look so good.
But far more interesting is Google’s acquisition of Urchin, one of the well-known low-cost web analytics solutions. The price was reportedly $30 million. I haven’t used Urchin for a few years. I helped a client switch from Urchin to SiteCatalyst, a far better commerce-oriented web analytics solution. But in September 2004 Urchin launched a hosted solution in version 6, which represents a major step forward.
The Urchin.com web site claims its software is used by more than one million sites worldwide, including 20% of the Fortune 500.
What will Google do with Urchin? They can beef up their analytics services for their 300,000+ AdWords advertisers most of whom probably have no good analytics solution today.
But will they also use Urchin (with its installed base of one million sites) to move into other forms of internet marketing, including email marketing and affiliate marketing?
According to the September 2004 press release, "Urchin 6 accurately links conversions to specific email campaigns, ads, organic and paid keywords, affiliate programs, and any other type of online campaign. Organizations investing in search engine optimization (SEO), paid search, email blasts, and online advertising will find Urchin 6 indispensable."
IDC predicts analytics will represent an $11.8 billion market by 2008. How much of that will Google be able to capture? I wonder how much Google’s stock price will jump tomorrow on this news. (Note: I do not currently own any Google stock.)
In 2001 San Diego-based Quantified Systems (developer of Urchin) had 40 employees. They did a deal with the world’s leading web hosting company Verio, to make Urchin available to their customers. A news article then said, "Verio has told its resellers that Urchin’s retail price is $495, but it’s free on its virtual private servers. Doug Schneider, president of Verio’s small and medium enterprise hosting, said Urchin’s multilingual capability, its e-commerce reporting features and its scalability all make it an attractive addition to his company’s services."
I am reminded that one of my readers predicted last year that Google will extend its reach by getting into web hosting. Now, if Google decides to offer hosting services (since massive low-cost storage is one of their core technology advantages over most everyone else) they can add web analytics to it. They could offer both free hosting and free analytics to everyone who incorporates their search engine on their site. I’m not sure they will go this direction, but in any case, Google now represents a potentially disruptive force in the web analytics industry.
One of my Junto friends sent me a link about Zopa, a new UK-based company backed by Benchmark Capital (a top tier VC fund–check out the Benchmark Portfolio). Zopa apparently allows individuals to lend money to other individuals with good credit ratings–from 2,000 pounds to 15,000 pounds. Zopa takes a 1% transaction fee. There are insurance provisions and a spreading of risk among 50 borrowers so the lenders money should be safe.
I think this is a great concept. Who wants to put their money in a bank anymore to earn a lower interest rate than inflation? Meanwhile, the credit card companies rack up fortunes by charging high interest rates. I think Zopa could disintermediate the credit card companies. I love this idea. I hope it comes to the U.S. soon so I can try it out.
Every time I find a new cool web service I have to try it so that I can see and feel how it works and then more easily predict how quickly it will be adopted. I used to challenge all our Ancestry.com employees to do online banking, online stock trading, use eBay, sign up for PayPal, book travel online, buy books online, and do everything they could online so they could learn what sites delivered a great user experience. I still think that is good advice for anyone involved in an internet business.
I attended the first half of a seminar yesterday at the University of Utah by the Kauffman Foundation on angel investing. Kauffman does a lot to promote entrepreneurship. They have presented this “Power of Angel Investing” seminar more than 20 times. Led by Entrepreneur-in-Residence Bill Payne, the presentations and materials were designed to help people become angel investors or to learn how to be a smarter angel investor. I found it very worthwhile (especially from the standpoint of an entrepreneur trying to discover how angel investors think.)
Angel investing is becoming more organized and more professional with the formation of the Angel Capital Assocation which is holding its 2005 Summit in San Francisco on April 3-5. I wish their web site has a list of members. They don’t, but Gaebler.com has links to angel investor groups in almost every state.
I keep wondering why more investors don’t do more seed stage investing (because it is so much fun), and after seeing this chart from Venture Economics and the HFRI Equity Hedge Index (2001), my wonderment has increased:
Historical 20-Year Returns
Seed Funds, 22.4%All Venture Funds, 18.7%Hedge Funds, 18.7%Buyout Funds, 16.5%S&P 500, 14.9%NASDAQ, 13.2%
One VC yesterday admitted that most VCs have a Lemmings or herd mentality. If Kleiner Perkins makes an investment in networking technology (or whatever example he used), then all other VCs scramble to find a similar deal. If JP Morgan does a medical devices investment, everyone flocks to similar deals. (As an example, remember the flood of social networking deals 1-2 years ago.)
One counter example is Draper, Fisher, Jurvetson. They continue to be 1-2 years ahead of most other VCs. They are definitely risk takers and pathfinders. From internet (Hotmail) to open source (SugarCRM) nanotechnology (multiple deals) to Voip (Skype). I even loved their experiment with meVC, a venture fund that was publicly traded to help the little guy get into the big investment deals. In fact, if you want an awesome experience peering into the future, spend 30 minutes studying each of a few dozen of the 250 companies in the Draper Fisher Jurvetson portfolio, especially those funded in the last 2-3 years.
I came away yesterday with hundreds of pages of resources for angel investors and notes on valuation methodologies and deal structure suggestions.
One of the most valuable things I picked up yesterday was this link to a set of public domain model legal documents created by the National Venture Capital Assocation. The docs include a model Term Sheet, Stock Purchase Agreement, Certificate of Incorporation, Investor Rights Agreement, Voting Agreement, Right of First Refusal and Co-Sale Agreement, Management Rights Letter, Model Opinion Letter, and Model Indemnification Agreement.
I know this list of docs is completely overwhelming for young entrepreneurs, but sooner or later you’ll probably need to understand the major elements involved in each one, why they exist, and how you can make sure that your deal is not unfairly favorable to the investors. As Bill Payne mentioned yesterday, angels are pretty tolerant of founders, and usually let them stay around for a long time even if performance isn’t great, but VCs are much more likely to replace the founders quickly. Before you take capital from anyone, you should realize why they might dump you and how, and what you may end up with.
Bill Payne has invested (if I recall) if more than 30 deals. Here are some of his guidelines for angels:
- He likes to do due diligence and term sheet negotiations simultaneously. He does due diligence to validate the claims of the business plan.
- Angels should use a due diligence checklist. (We got a 6-page list in the handouts. I think entrepreneurs should see some due diligence lists to prepare themselves for what might be asked. Here’s a shorter due diligence checklist from Heartland Angels.)
- Angels and VCs don’t sign NDAs. Business plans and exec summaries don’t need to disclose secret sauce. If there is secret sauce (like source code or a patentable idea), a very specific NDA can be signed when it is disclosed.
- Don’t require the entrepreneur to be both visionary and operationally strong. It
Years ago I was a big fan of the meVC concept, a venture capital fund that was publicly traded allowing small investors to own shares in order to hopefully participate in some of the big returns venture capital firms often see. It didn’t work, but now it appears that some hedge funds are considering going public as well.