Archive for November, 2008

Lotus In The Fire

Friday, November 21st, 2008

It’s an ancient metaphor at least 2500 years old. Yet it is so apt today. The DOW has careened around 7500 all day, jumping in the last half hour to 8000 on the news of Obama’s pick for Treasury Secretary. If it weren’t for that bit of news, it would have been a terrible day for investors on Wall Street. Sumner Redstone had a margin call. The CEO of AIG had a margin call. Just about everyone I know is lamenting the loss of at least 40 percent of their investment portfolio in the past 6 months. Maybe fire is too gentle a word for this lotus. Maybe Lotus in the conflagration is better.

What is the lotus in this flaming financial hell? My clients are alive and well in Seattle and San Francisco. Everyone is facing financial turmoil. An online game company had it’s B round erased by the credit crunch a month ago. They restrutured, regrouped, and now have raised capital from the orginal investors and a few ballsy new investors to buy time to get to cashflow positive in the near future. A tech company with a huge cashburn has pushed for and attained an enviable client list and found strong interest in several large acquirers who remain undaunted by all the financial carnage around them. A hosting company that survived the bloodbath that killed Exodus, PSInet, and other hosting companies now finds itself completely sold out of capacity and yet unable to finance an expansion, and so they have decided to hunker down and optimize their client list for profitability. A startup that launched a clever social merchandising application on facebook less than a year ago finds its current investors skittish. The team has regrouped and is finding solid interest from new investors who like the progress to date.

The entrepreneurial spirit in this sector is the lotus in the fire. Not one of the CEOs i work with have given up. Not one of them has shown any willingness to concede. Everyone has had their mettle tested and are showing their ability to keep their eyes on the prize. It is a privilege to work with them and a privilege to watch such people of great character and intestinal fortitude driving for a win in the midst of such a storm.

Who says we are a nation of whinerse? I say bullshit. We are a nation of hard driven men and women willing to batte lwith self-doubt and a naysayers and high odds against us in order to have a shot at winning tomorrow.

The lotus in the fire is a beautiful sight

The Changeling

Thursday, November 13th, 2008

In just a few months, we have seen several stunning transformations of Governor Palin. The once unknown Governor of our mostly frozen frontier state burst onto the world stage. Instantly she was vilified by countless women who blogged, emailed and kvetched out loud that she was a terrible mom for accepting McCain’s offer.  Her nomination drew raised eyebrows from most politicians and news anchors. McCain – in their expert view – was betting it all on red. For the establishment on the Left and Right, she was as welcome as a polar bear sniffing at the igloo door. We had met Sarah The Usurper.

She then gave some speeches filled with GOP soundbites and folksy colloquialisms, and TA-DAH, suddenly she was hailed as our GOP Joan of Arc by thousands of ardent evangelsits and evn more midwestern farming familes thrilled that someone lively had joined McCain as running mate. We had met Sarah The Orator.

FOX news was giddy. MSNBC was laughing nervously. CNN was harrumphing because they couldn’t get an interview. After the GOP handlers finally conceeded an interview with the gentle Katie Couric, we discovered that Sarah Palin might in fact be related to the comedian Michael Palin, who brilliantly portrayed the village idiot in more than a few hilarious Monty Python episodes.  We had met Sarah The Bumbler.

It’s still hard for me to believe that anyone can be that terrible in a TV interview with someone as friendly as Katie Couric. Could Sarah Palin really be that incompetent; that inarticulate? My 9th grade daughter could have answered those questions better. How could someone so lame have achieved the pinacle of state leadership? Alaska is a remote wilderness filled with lonely men who spend way too many months in the subzero dark. It’s possible they may have voted with their loins more their minds when they elected Ms Palin. We had met Sarah the SNL Ratings Booster.

But we have experienced yet another Sarah Palin since then. In the past week, she has acquired more media coverage than in all her prior years as mayor, governor and VP candidate combined. Her expressions are still folksy, but she is tough, outspoken, and seems to have more than one brain cell after all. You dont have to agree with her, but you do have to acknowledge that she is at least as intelligent as any of the people interviewing her. We have met Sarah The Redeemed.

So what’s next for this shape shifter; this changeling? Without doubt, it has been a fascinating display of political trial by fire. It has also been a great lesson in how our opinions and our perceptions about a political figure can be molded by snippets of video on TV or youtube. Marshall McLuhan said “the medium is the message” and perhaps we have seen with Ms. Palin that the medium is the persona. Surely she hasn’t changed at all. Surely she is just a frail human being who sincerely thinks she can do something significant with her life for the benefit of others. Perhaps one day we will get to see see the real Sarah Palin, Moose Burgers and all. Until then, we will have to live with a changeling.

 

of widgets, bubbles, and wildebeest

Friday, November 7th, 2008

 

 

 

 

  I was asked eariler this week by a friend – a seasoned veteran of internet investing – what my opinion was on widget world aka web2.0 and if it was indeed time to stick a fork in it, then what was next? It’s a funny topic.

Web2.0 is bursting for the same reasons that Web1.0 met its filmy end. Lack of business model. Lack of management talent. Irrational exhuberance. Herd-like behavior of institutional investors.

I distinctly remember in 1997 how entrepreneurs with absolutely no business model (…oh hell, not even a revenue model…) could get financing from angels and soon thereafter VCs because they were going to “disintermediate” something using the “new power” of the internet. I now sheepishly admit to succesfully raising money for a bplan that called for a website in which all consumer product was free. Why were we fixated on free? Because Nicholas Negroponte and other pundits often quoted by WIred Magazine were saying “Information wants to be Free!” on the internet and that was one of the drivers for disintermediating shopping malls, newspapers, book publishers, catalog merchants, etc.

As I came to know my fellow entrepreneurs, I discovered that most had no prior management experience and almost none had professional management training. They were techies with hubris posing as business acumen or else they were inspirational salesmen and women with a brilliant command of jargon. And most were pretty darn young. My peers claimed I was a gray-beard at the ripe age of 35.

All was well for a while.  All boats rose with the tide of consumer enthusiasm and the massive infusion of loose capital. Many of us crazy entrepreneurs were able to raise capital on a napkin plan, stake out solid growth in consumer visits and page views on rude software in a semi functional browser (t was 1999 after all) We had convinced ourselves that eventually we were all gonna make a lot of money from a business model TBD in the future. My MBA counted for nothing. My 10 years of operating experience in F100 companies counted for nothing. Well, for a few years anyway.  Then it all came home to roost. Most of those “businesses” proved fatally flawed. Web 1.0 popped. No bailout from congress for us.

Then along comes Web2.0  a few years ago, and those of us with an ounce of short term memory still functioning, said “huh?” We wondered what happened to all the people who just learned their lesson from Web 1.0  Here we were once again with engineers filled with school boy test taking skills thinking that was the same as brilliant business skills.  Once again we had bplan devoid of P&L linkage to product plan. And once again we had a heard of Wildebeest investing in these ventures because they didn’t want to miss out on the next Google or Facebook or Youtube.

 

 

 

And now the Wildebeest are running in the opposite direction. Web2.0 companies aren’t making any money. In fact, Facebook, on the backs of which many Web2.0 companies were formed, isnt making money yet. Then the credit crunch hit and the DOW lost over 40% in market value in about 12 months. Panic ensued and for a few weeks there was no investment by any of the VCs. It’s already thawing now as VCs start quietly entering the dealflow again, but it’s a whimper compared to 2 years ago.

What’s next after all this?

I am an optimist. Web 3.0 will start with more seasonsed veterans of the first two Web phases. VCs are asking for bootstrap business plans and business models that have inherent cashflow from (gasp!) paying customers. There will be fewer investments made, the tech VC industry will consolidate to a much smaller number of players. But they will be better investments in fewer plans. And where? I believe the iPhone is the watershed moment for the mobile device as the next place. It’s been hyped for over 10 years but I think the time has come. Facebook will finally make money when a viable consumer application that has inherent value runs on it. In the same way that Microsoft was a silly company until Word, Excel, Outlook, and Powerpoint became mainstays of business operations, somebody is going to find the killer app on Fbook. At which point Fbook will face the same choice MSFT did when Lotus succeedded with 123.  Build? Buy? Kill? Tax?

Is tech investing in the internet dead with Web2.0? No. No way Jose. It’s just finally growing up. And although i’d like to believe it’s mature, there is probably room for another bubble or two to burst in the next 5 years or so.

World Reaction

Wednesday, November 5th, 2008

On September 12, 2001 almost every human on the planet waved an American flag and said “I am an American” and in the past 7 years we have squandered that solidarity, goodwill, and our treasury to boot.

What a wonderful opportunity we have before us; to rebuild and perhaps regain the place we had seven years ago. It may not be as good as we want it to be in just a few months or years, but it sure is great to have the chance to make our nation something great. And it is wonderful to see so much shift in how we as Americans are viewed worldwide, in one evening.

Electing a smart, young, assertive black man changes how Americans are viewed forever. I am truly proud to be an American. Truly proud.

 http://www.dw-world.de/dw/function/0,2145,12215_cid_3766019,00.html

 

 http://news.bbc.co.uk/2/hi/uk_news/politics/7710034.stm

 

 http://canadianpress.google.com/article/ALeqM5g3vdWdbYsKoZn7LeshJjE_D0QhwQ

 

 http://english.aljazeera.net/

 

 http://www.bloomberg.com/apps/news?pid=20601103&sid=aePA_k5KEoVg&refer=us

 

 http://www.upi.com/Top_News/2008/11/05/Kenyan_clan_celebrates_Obama_win/UPI-31751225870506/

 

 from Le Monde, watching minute-by-minute what the reaction was…

 

08:16 – Angela Merkel affirmed the importance of partnership with the United States 
German Chancellor Angela Merkel congratulated Barack Obama on his victory “historic”. “Be convinced that my government is aware of the importance and value of our transatlantic partnership,” she added while inviting the new president to visit soon in Germany. 200 000 people had come cheer the candidate at a transition in Berlin.

08:10 – Frank-Walter Steinmeier expects a change in U.S. foreign policy 
America has voted for change in domestic policy as foreign, “said Foreign Minister German Social Democrat, who welcomed future collaboration with the new American president.

07:28 – No quick exit from Iraq as the chief diplomat in Iraq 
The election of Barack Obama to the presidency of the United States “will not a quick U.S. withdrawal from Iraq,” the chief diplomat in Iraq Hoshyar Zebari.

07:22 – Gordon Brown welcomed the “progressive values” and a “vision for the future” 
British Prime Minister Gordon Brown congratulated Barack Obama on his election to the American presidency, commending his “progressive values and vision for the future.”

07:03 – A “great hope” for Nicolas Sarkozy 
Nicolas Sarkozy congratulated Barack Obama for his “brilliant victory” in the U.S. presidential election, which he said raises <”un immense espoir” France, Europe and the world. By choosing the Democratic candidate to become their Metis 44th president, Americans were “the choice of change, openness and optimism,” writes the French president in a message which the Elysee released a copy Wednesday.

07:01 – Japan promises strengthening relations 
The Japanese Prime Minister Taro Aso congratulated Barack Obama and promised to strengthen relations with the United States, the main ally of Japan.

06:57 – The appeal of Hamas to Obama 
Hamas, which controls the Gaza Strip, has called U.S. President-elect Barack Obama to “learn from mistakes” of previous administrations, and especially (George W.) Bush “to the Arab-Muslim world.

06:56 – Entering a “new era” for the Afghan president 
Afghan President Hamid Karzai congratulated Barack Obama, saying that his victory in the U.S. presidential election would bring the world into a “new era”.

06:53 – congratulation to Hu Jintao 
Chinese President Hu Jintao congratulated Barack Obama on his victory in the U.S. presidential election, indicating want to raise the relations between China and the United States to a new level, said the Ministry of Foreign Affairs.

06:49 – Mahmoud Abbas calls for the involvement of the new president in the conflict 
Mahmoud Abbas called the American president elected Barack Obama to accelerate efforts towards a settlement of Israeli-Palestinian conflict.

06:44 – circumspection in Baghdad 
The election of Barack Obama to the presidency of the United States “will not make a quick U.S. withdrawal from Iraq” as chief diplomat in Iraq Hoshyar Zebari. “We do not believe there will be a sudden political change,” he stressed.

06:40 – Optimism in Asian markets 
Asian stocks posted strong increases. In Tokyo, the Nikkei gained 2.52% to 4 h 35 GMT after having already rocketed to 6.27% yesterday. At the same time, Hongkong s’envolait of 5.65%, 4.39% for Singapore, Seoul and Shanghai 3.71% to 4.22%. Sydney gained 2.77%, 0.55% of Taipei, New Zealand 1.47% and 2.90% of Bangkok.

A Prayer

Tuesday, November 4th, 2008

obama 2008 logo

Congratulations to Senator Obama on becoming the 44th President of the United States. It is an historic moment for our country. For many in our country he has been an inspiring voice and a ardent advocate of hope. During this campaign the ugliness of our humanity came out more than once during McCain rallys and during interviews on the radio and on TV. 

I have a fervent prayer. May Obama and his family be safe from harm intended by angry, irrational racist crazy people. This is indeed a moment of hope for us all. To show the world that we really have created a nation in which all men are created equal and that every citizen has the right to aspire and with luck attain the highest public office in the land.

I am so very proud today to be an American. And I pray that President Elect Obama has the opportunity to effect the change he has so ardently advocated.