via Is Boston Still a Venture Capital Hotbed? – Bits Blog – NYTimes.com.
Boston feels pretty dead in terms of tech innovation. Aside from a few exceptions during the dot.bomb days (CMGI, Lycos) and some old glories and hardcore wire-head firms, the VC community feels deader than disco in The Hub.
“Boston’s venture capital and start-up industries, once fueled by the minicomputer boom, have been shrinking in recent years. The amount of venture capital invested in Boston companies fell from $3.9 billion in 2007 to $3.3 billion in 2008, while investment in Silicon Valley start-ups stayed steady at $11 billion, according to the National Venture Capital Association.”
Amazing boom and bust that took three decades. 60s saw a big DARPA fueled engine around MIT, Mitre, Lincoln Labs ….70s saw the minicomputer take off …. 80s were the Lotus decade …. but by the 90s the writing was on the wall. The innovation table tilted to the Valley where the PC revolution went beserk in the 70s.
Is expensive. $23 bucks a day. Granted it’s Singapore bucks, but still. I’ve dropped $50 since leaving Boston on Tuesday to stay connected. I am totally time-zone challenged right now. It’s Wednesday at 1 pm on Cape Cod. I left Cape Cod on Tuesday at 7 am. I arrived here at Wednesday at 11:30 pm. Now it is Thursday at 2 am.
Singapore? Hot. Humid (gee, it must be on the equator). I didn’t get caned at customs. The hotel is nice. The scotch tastes the same.
Time to eat a sleeping pill and aim for six hours of unconsciousness.
A VC: VC Cliche of the Week: If You Must Dorecast, Do It Often
"a couple years ago Matt Blumberg and Jack Sinclair, CEO and CFO (now COO) of Return Path came to the Board with an interesting proposal. They suggested that they develop an annual budget and four quarterly budgets. And they suggested that at the end of each quarter, they develop a new quarterly budget for the next quarter and beyond, which is essentially a reforecast based on what happened in the current quarter. The net of this was that we went to a rolling budget processs where there was a big budgeting effort at year end and a shorter one at the end of each quarter.
If you must forecast, do it often."
An excellent posting by Fred Wilson on the difficulties inherent in financial forecasting. Forecasts can crush a technology company — there have been some famous forecasting debacles when companies have completely misread the market and been woefully undersupplied in the cast of unexpectedly hot products, or overstocked with dogs.
When I was consulting to Gartner I had the pleasure to work with Gartner Fellow, Ken McGee on his book, Head’s Up, an excellent discussion of forecasting that comes to the critical judgment that it is impossible to forecast the future, only to "predict the present." McGee’s advice, similar to Wilson’s, is that frequent assessments are better than impossibly long-distance views over the horizon.
Old Media’s Lame-Duck Days
Jon Fine comments at BusinessWeek about the new world order in new media, correctly pointing out in this current climate of Dot.bomb 2.0 M&A fever that a company like MySpace couldn’t have become MySpace if its new owner, News Corp., had tried to launch it.
"If acquiring bits and pieces isn’t budging the stock price, what will? It’s extremely difficult for an old-media player to build a serious new-media asset. There are established competitors. There are generational issues. (Myspace would not have become myspace had it been launched by News Corp.) And there are the quarterly numbers that Wall Street demands — when it’s not whacking the moguls for being too dependent on mature businesses. To move the needle right now, you need something massive. You need, for instance, to buy Yahoo. Of course, today it’s too late to buy Yahoo. Today, Yahoo buys you. Assuming, that is, that Yahoo thinks its business sense can cross the generational divide. Or that it’s even worth the bother."
Venture funds return to Net – The Boston Globe
The "Google Effect" in Boston-area VC. Sort of akin to the Microsoft Effect in the early 90s — if the entrepreneur can’t convincingly cast the strategy out from beneath the shadow of the industry behemoth, then don’t bother asking.
I ran into the "Outlook Effect" in the winter of 2004 while raising funds for a startup focused on collaboration web-services for the SMB market. Every VC had a short-sighted Outlook obsession. How long before they shift that to an AJAX obsession?
The Google-Factor paints most decisions in my media world these days, but intuitively I have to agree with IDG CEO Pat Kenealy’s cynical assessment that Google is to 2005 what AOL was to 1999 — a looming behemoth that will be replaced by another looming behemoth as surely as it will snow in January in Framingham.
"But when entrepreneurs come calling at venture firms these days, foraging for money to bankroll Internet start-ups, they can expect to be grilled about their approach to the fast-growing Google, which boasts a market value of about $90 billion and more than $7 billion in cash."
:: Spark Capital ::
Paidcontent sheds some light on the launch of Spark Capital, the $260 million Cambridge VC firm that took an ad out in Monday’s NYT.
"Founders: Dennis Miller, who was executive VP responsible for production and original programming for TNT from 1990-95; Todd Dagres, who notably backed Akamai while a partner at Battery Ventures; and Santo Politi, former president of new media at Blockbuster, who was responsible for figuring out how to move the video-rental giant into digital-broadcasting and VOD services. Other partners include Paul J. Conway, former chief financial officer at Charles River Ventures, and Bijan Sabet, previously an entrepreneur-in-residence at Charles River. "
Smart team with strong heritage. CRV is one of the top tier Boston-area VCs.
Genuine VC: Seven Founding Sins
Fred Wilson points out this great post by David Beisel. Like Fred, I’ve added Beisel to the blogroll.
The sins are:
Colin Crawford notes with some awe the series A investment by Kleiner and Sequoia, the ne plus ultra names in "smart money" in Adam Curry’s PodShow (which is producing Castblaster and putting together a blog ad network). Aggregator and downloader Odeo also getting some money from Charles River — also known for being smart money (and more or less allergic to dot.com frothiness).
I’ve been chipping away at a podcast business plan for CXO — a sponsor model. These are early days in podcast advertising — so far no light bulbs are going off over my head but the marketers seem eager to get aboard.
A VC: Posting, Subscribing, and Tagging
Should be required reading for anyone who doesn’t get it.