Archive for March, 2005

Toshiba: Nanotech Battery Charges 60 Times Faster

paulballen — Thu, 31 Mar 2005 10:03:39 -0800

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.

Portable TV

paulballen — Thu, 31 Mar 2005 10:03:18 -0800

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.

XM Satellite Radio Targets Cell Phones, PDAs, MP3 Players

paulballen — Wed, 30 Mar 2005 21:41:31 -0800

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.

XM Satellite is targeting portable devices now.

USA Today: Gadgets on College Campuses

paulballen — Tue, 29 Mar 2005 14:48:17 -0800

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.

Acquisition and Turn-Around Strategy

paulballen — Tue, 29 Mar 2005 07:03:21 -0800

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?

Searching for Open Source Code

paulballen — Tue, 29 Mar 2005 06:03:57 -0800

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.

Free Web Analytics for All Advertisers?

paulballen — Mon, 28 Mar 2005 22:41:25 -0800

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.

Wall Street Journal report (subscribers only)

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.

Zopa: The eBay of Person to Person Lending

paulballen — Sat, 26 Mar 2005 06:03:36 -0800

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.

Notes from Seminar: The Power of Angel Investing

paulballen — Fri, 25 Mar 2005 22:03:00 -0800

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

Hedge Funds Consider Going Public

paulballen — Fri, 25 Mar 2005 17:38:25 -0800

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.

Technorati: 500,000 Blog Posts Per Day

paulballen — Fri, 25 Mar 2005 04:03:49 -0800

Joi Ito shared some nice Dave Sifry (CEO of Technorati) chart's showing the number of blog posts each day over the past two years. It appears that more and more people are discovering how fulfilling blogging really is. Last November I posted my thoughts about the benefits of blogging. Check it out, and let me know why you blog or don't blog.

Excellent Blog: Small Business Trends

paulballen — Thu, 24 Mar 2005 15:45:56 -0800

I noticed on Alexa that people who visit my web site also visit Small Business Trends, which I found to be a very well written blog to help entrepreneurs.

Tracking Hot Topics in the Blogosphere

paulballen — Thu, 24 Mar 2005 11:03:10 -0800

My Junto friends told me today about Blogpulse.com, which has a trend feature to show you how many bloggers are talking about certain topics over time. Here's a two-month chart on the phrase "Google maps."

Now someone needs to combine this buzz-measurement tools with something like Google Alerts, so that if certain keywords start getting blogged about a great deal, that I will be notified and get links to the key posts of the thought leaders. If you kick off a viral campaign and try to get bloggers to cover your topic, Blogpulse would be a great way to measure your success.

Idea Stage Startup Funding

paulballen — Thu, 24 Mar 2005 10:03:04 -0800

I frequently complain about the lack of idea or seed stage funding available for Utah entrepreneurs. Sometimes, especially in the open source software era, and in era of internet marketing, a venture can be started with just a few thousand dollars. (FundingUtah.com cost only $2,000 to launch phase I. We're now finishing phase II and working on a couple possible revenue streams. We also own 70 more domains, so that if this site works in Utah, we may roll it out elsewhere. We already have more than 100 entrepreneurs and 49 angels signed up, representing almost $30 million in available funds.) There has never been a better time in history to start a company.

Phil Windley blogged this week about a program back east called Summer Founders. He said he wished we had something like that in Utah. I checked it out and it looks way cool. Back in Cambridge, MA there are 4 guys who have started a seed stage fund called Y Combinator. Their summer program is designed to provide seed capital to entrepreneurs (hackers mainly) who might be able to make a go of a company if they had a little financial support.

But Phil, we have Junto here in Utah, thanks to Greg Warnock.

I think Junto is structurally superior to the very laid back Summer Founders program. You end up with a team of five who are committed and incentivized to help each other succeed, each with their startup company. I attended a Firepoll advisory board meeting today with Greg and the five Junto entrepreneurs (and Craig Bott from Grow Utah Ventures, a $5 million private VC fund). There is a lot of energy there and I think we'll see some great entrepreneurial developments coming from these groups. I applaud Greg for his vision and his willingness to teach young college grads to take the entrepreneurial path.

Stock Options Vesting Based on Milestones, Not Calendar Months

paulballen — Wed, 23 Mar 2005 22:18:52 -0800

The Entrepreneur's Manual has another powerful idea, one that I have never seen implemented. In all my years of working in and around high tech companies, I can't think of a single one that has ever rewarded employees and teams with stock options based on achieving milestones; rather, all the options plans I have ever seen are based on a 3-4 year vesting schedule. As long as you don't get fired, you get the stock, month after month.

Richard White says the best way to grant stock to employees is when they achieve pre-set milestones. One milestone might be shipping a quality product. 50,000 shares are issued. Another might be getting 2% market penetration. Another 50,000 shares. Then getting to positive cash flow for 3 consecutive months: 100,000 shares. Minimum profits of $100,000 per quarter: another 100,000 shares. Raising outside capital and making a competitive acquisition could have shares assigned to it. Every major and even minor milestone has some shares assigned to them.

Every milestone reached would result in shares being issued and divided among employees based on pre-determined ratios. If a company achieved all of its major milestones in the first year then the employees would celebrate having the entire stock option pool vested in one year--instead of four--but the investors should be happy too because the company reached all of its objectives much more quickly than they had expected.

I've got to learn more about this concept and whether it is used anymore. I love the idea of motivating teams to achieve results and not just pass time.

Who knows anything about this kind of stock option plan?

Getting on the GSA Schedule

paulballen — Wed, 23 Mar 2005 22:03:59 -0800

A friend of mine wants to get his web application listed on the GSA Schedule so he can sell to federal customers. There are apparently 8,600 approved vendors on the GSA Schedule. I found this link to the GSA web site, with typically hard-to-understand instructions.

Do any of my readers know the fastest way to get approved by GSA to sell to government agencies and federal customers?

The Entrepreneur's Manual

paulballen — Mon, 21 Mar 2005 23:03:29 -0800

As a huge fan of The Entrepreneur's Manual published in 1977, I've been wondering what happened to the author Richard M. White. This morning I received an email from a friend who found a 1995 San Jose Mercury news article that says Rich White passed away from cancer in 1995, five years after being diagnosed. Rich was born in North Carolina, received his business degree from Notre Dame, and spent his life starting companies and then helping others learn how to succeed in business. Chilton Publishing sold more than 300,000 copies of his book. This must qualify The Entrepreneurs Manual as one of the best selling books on entrepreneurship in history. I have seen reports that E-Myth and E-Myth Revisited have sold more than 250,000 copies since it was first published in 1986. Both are essential reading for entrepreneurs.

Yahoo Buys Flickr; IAC Buys Ask Jeeves

paulballen — Mon, 21 Mar 2005 10:23:53 -0800

Jerry Yang announced Yahoo's acquisition of Flickr and Barry Diller's IAC pays $1.8 billion for AskJeeves. IAC also launched Gifts.com, which combined with AskJeeves gets IAC quickly into the ecommerce and comparison shopping space. The Gifts.com backend database could easily be used to launch a Froogle or Shopping.com-like service as well.

MyFamily.com CEO Departs

paulballen — Fri, 18 Mar 2005 22:03:48 -0800

Dick Eastman has reported that Tom Stockham has left MyFamily.com where he has served as CEO for 3 1/2 years. I enjoyed working with Tom for several months. He always treated the MyFamily.com founders (including those who had been asked to leave earlier) with tremendous respect. He is a good man and a friend and I wish him all the best in his future endeavors.

Has This Page Been Indexed by Google?

paulballen — Fri, 18 Mar 2005 22:03:45 -0800

Have you ever wondered if a particular page on your web site has been indexed by Google so that Google users can find it?

It's easy to find out. Here's how:

1. Download the Google toolbar (if you haven't already.)2. Under options, click Page Info Menu.3. Now, go to any web page.4. Use the Page Info Button on the toolbar menu (the blue circle with an "i" inside) and select "Cached Snapshot of Page"

If Google has already indexed this page, you'll see a snapshot of what the page looked like when it spidered your site.

If Google has not indexed this page, you'll get a message like this:

Your search - cache:http://www.worldhistory.com/shop/index.php - did not match any documents.

Worldhistory.com has started adding ecommerce products (such as flags from various countries) to its new shopping cart. But it turns out that Google hasn't yet indexed the main shopping page or any of the product pages.

So, now I need to get one or more high quality links to the world history shopping page so that Google will follow those links and add these quality pages and products to their index. With a few good links, it should happen within a month at the most. (It often happens within a day or two)

LinkedIn vs the Big City After Hours Bar

paulballen — Fri, 18 Mar 2005 21:03:25 -0800

In New York and San Francisco, a lot of business networking happens after business hours at bars and other venues. There are places to go almost nightly, where co-workers hangout together and people meet new people. Back in 1999 one of my MyFamily.com co-workers in particular was the king of San Francisco after hours business networking--he knew everyone at other SF dot coms. Such networking leads to cross-pollination of ideas and deal-making and has a very positive impact on business.

So what are the folks in mid-America to do? We live in smaller population centers, with far less concentration of businesses, and there are comparatively few networking events that draw us together. Besides, many non-city dwellers have greater family and community responsibilities (and therefore less free evening time) than the young, hip crowds that flock to the high-energy cities. I know I'm over-generalizing, but I'm trying to make a point.

I have found that LinkedIn.com can adequately replace big city after-hours networking if used intelligentlly. For example, today LinkedIn.com has more than 2,400 users in the Provo, Utah area (a lot more people than can even fit into even a very crowded bar). Today I went through all the most connected Provoans who are not connected to me. I have found half a dozen very successful and talented people with lots of connections (and some endorsements) whom I am now anxious to meet. In the next few weeks, I'll make contact with each of these people and invite them to lunch or to an event like a UVEF meeting.

LinkedIn is the best place I know to proactively meet important and trustworthy people outside of your current circle of friends. It is far less random and therefore even more productive than hanging out after hours at a big city bar.

Unless you are using LinkedIn proactively and regularly (at least weekly!) you are neglecting what I consider the best tool on the web for building your social capital, which rivals intellectual capital as the greatest source of value creation on the planet.

Both social capital and intellectual capital are combined in the clever Morgan Stanley ad campaign from a few years back: "It's not who you know. It's what who you know knows." LinkedIn can help you increase both. Use it.

2004 Deal Flow Report from MWVG

paulballen — Fri, 18 Mar 2005 16:11:52 -0800

Yesterday I attended the Mountain West Venture Group annual Deal Flow lunch where the 2004 Deal Flow report was handed out. Here's a report from the Salt Lake Tribune.

Activity is picking up in Utah, but the Deal Flow report misses a lot of early stage funding activity: Infobase Media ($1.15 million), Firepoll and SilentWhistle are three companies I'm aware of that aren't listed in the report. I bet they miss most angel financings.

They announced the following for 2004:

5 Public Offerings = $778,462,25085 Venture Capital/Private Equity Deals = $399,448,64023 Other Fundings = $1,665,114,00038 Mergers and Acquisitions = $1,064,688,000

MountainWest Venture Group also changed its name to MountainWest Capital Network. FundingUtah.com did a poll of 181 people last fall to choose our name (we had already decided not to use Utah Angel Network due to possible confusion with the Utah Angels) and Utah Capital Network actually got the most votes. But we chose FundingUtah.com because it was #2 but got the most positive qualitative feedback from our survey participants.

So their new name is probably a good one.

Is YEO Worth Joining?

paulballen — Fri, 18 Mar 2005 05:03:33 -0800

Two friends have told me I should join YEO--Young Entrepreneurs Organization. If you are a YEO member, please comment on how valuable it has been to you, on a scale of 1-10 (10 being the highest).

While surfing, I just came across a Bay Area group with called Alliance of CEOs (www.allianceofceos.com) that looks interesting--only there isn't a chapter in Utah. Colorado's CXO.org also looks interesting.

Keeping Up on Utah Business

paulballen — Thu, 17 Mar 2005 22:03:42 -0800

A lawyer visiting from Texas (BYU alum) asked me yesterday about the most exciting companies in Utah and the sectors where I am seeing the most startups. I told him I'm more entrepreneur than investor, so I haven't mentally categorized the hottest sectors for startups, but I did mention that Governor Leavitt had in mind 9 "economic ecosystems" where he thought Utah companies could do well. I think Governor Huntsman's new economic development team call these "clusters" and say we should focus on fewer sectors where we can excel.

Today from reading the paper I added two publicly traded companies with operations in Utah to my stock tracking service on My Yahoo. They are:

InvesTools--Lost $12 million on revenues of $96.9 million in 2004, employees 275 people, market cap of $228 million
American Skiing Company (Park City) has a market cap of only $13 million but has 1,400 employees. It owns the Canyons Ski Resort and several others around the county.

I also found this list of the 100 largest employers in Utah County. They each have at least 200 employees. Notice how many of these large employers are government and public sector entities. We definitely need more private sector growth companies in Utah County if our population is going to double in the next 20 years.

Neopets.com goes mobile

paulballen — Thu, 17 Mar 2005 22:03:30 -0800

Neopets.com is one of the most addicting web sites ever built, with its virtual pets and 160 free games and community features for kids. Harvard Business Review published a case study about Neopets showing how it reached profitability in 1999 after just four months in business. By 2001 it had 65 employees and $15 million in revenue. Today it has 70 million registered users and has an Alexa ranking of 67. Now it is taking its "feed your virtual pet or it will die" service to cell phones.