Quick notes from a Web 3.0 panel discussion that I participated in [ at the Red Herring ATRE Conference in Mumbai y'day ]
1. Satya Prabhakar (Founder and CEO, Sulekha.com) mentioned: “Scarcest commodity in the world is human attention”
2. Seth of meebo.com talked about meebo and the challenges of monetising web 2.0 startups/ user traffic
3. Gerard Rego (MSC Software) spoke about the bottom of the pyramid markets
4. Gurudatt mentioned how the NetAlter.com might transform the current Internet architecture
I was on the panel that discussed Web 3.0.
I mentioned how:
1. Non-US users of internet (86% of total) growing at 30% vs. 3% growth of US
2. Epicentre decisively moving to Asia (driven primarily by large user base in India and China (e.g. Japan’s lead in mobile payments/ S Korea in broadband
and shared my thoughts on Web 3.0/ and how it is marked by three main features:
1. Internet Unplugged (i.e. going wireless and accessible not just through your PC/mobile but also through your game console, e-book, TV, fridge)
2. Internet 3.0 = Its all about the consumer (Consumers #1 users of semiconductors in the world (vs. IT + Government) AND Consumer IP traffic expected to surpass enterprise in 2008
(ARM has shipped more than 6bn microprocessors to date, mainly due to mobile and the microprocessor in consumer goods )
3. NOT just about the consumer BUT its all about *me* – personalised everything (search, contetnt incl news)
The Challenge is to “How to make it pay?”
November 6th, 2007
Posted by
Shantanu |
Conferences and Panels, Technology & Innovation, Venture Capital |
no comments
… or have people finally stumbled upon a good way of making money in this niche?
Red Herring reported on “The New VC Way” a few weeks back mentioning how ”tiny investments in startups” may be the “the wave of the future” in venture capital.
Now I do not count myself as a veteran of the industry, nor an expert in any sense but given how hard it is to make money in venture capital, I cannot help wondering how exactly will the new wave of incubators get their returns.
But lets get back to the article.
It talks about Paul Graham’s Y Combinator although it is not strictly speaking an “Incubator”… (see the FAQ on the site) ..and mentions how Y Combinator and others “offer early-stage Internet entrepreneurs relatively small amounts of money, technical and business advice, and other assistance in exchange for small ownership stakes and little or no control over the startups’ operations.” (emphasis mine).
But is this really that much different from the incubator model that became very fashionable a few years ago – in a certain time? I dont know enough about these firms to conclusively say anything but there are quite a few similarities.
The firms themselves though prefer not to call themselves incubators (see Y Combintaor’s FAQ excerpt above); David Cohen of TechStars calls this “the professionalization of angel investing.”
However the article does mention that “TechStars and its brethren do not seek a particular financial windfall from their investments like traditional venture capitalists do” – which brings me back to the question – so how exactly do they make their returns?
I do not necessarily doubt that these operations are successful – but I am just curious as to whether they are able to beat the best upper quartile VC funds over an extended period.
Out here, I know Saul Klein is very enthused by the model and thinking of something similar…
I am going to email him to find out his latest thoughts and hopefully we will be able to share it with all of you soon.
June 10th, 2007
Posted by
Shantanu |
Venture Capital |
4 comments
Stumbled across this NY Times story a few weeks ago: “Some Unrest Is Bubbling Beneath the Top Tier” on venture capital performance (free, but needs registration).
It graphically illustrates what insiders have known all along, i.e. - performance amongst VCs (and funds) varies tremendously – and talks about how LPs believe that “the industry is far less healthy than it advertises and that but for the most successful venture firms, it is struggling. ”
The article also mentions a recent NVCA meeting where LPs publicly stated that “venture capitalists on the whole have not made meaningful payouts for years to their limited partners”.
Eric Doppstadt, Director of PE for Ford Foundation put it more forcefully: “I find it shocking that an asset class that has provided so little payback continues to attract so much capital.”
This criticism has been around for a while now (see here and here) and although it is true that returns in VC have been (are?) highly concentrated, I dont think this is (or should be) be reason enough to doubt the asset class as a whole.
But something else in the article caught my eye: “According to the venture capital association, every year since 1997 the profit distributions from venture firms have been lower than the amount that they have invested” – is this simply the hangover of the dot-com bust – now in its final stages – or symptomatic of a deeper malaise (see “Beginning of the End for Venture Capital?“)?
I dont know for sure…but definitely something to think about.
Finally, here is an “estimate” from the same article that starkly illustrates the concentration of returns (attributed to Diana H. Frazier, Managing Partner at Flag Capital Management): “…(between) 1986 to 2002, only 32 firms accounted for 56 percent of money distributed”
…and this slide appears to confirm that (thanks to Pat for this)
June 4th, 2007
Posted by
Shantanu |
Venture Capital |
2 comments
I scored as low as it could possibly get*…which set me thinking – is this the right test for becoming a VC? (I can hear Tut tuts!)
Actually, Is there any right “test” for determining whether a person is well-suited for a career in VC – or more importantly, will he/she succeed?
The test misses one important thing; unfortunately it cannot be measured…and unlike the experiences and skills one has, it is entirely unpredictable and may desert you when you need it most – I am thinking *LUCK* 
.
* Yes, I know this is post-facto rationalisation, but…
I think I screwed up “Background” in a major way…missing on all the +5s and being saddled with two -5s (for my sins at LBS and Monitor) 
Note to Guy: Can I get a bonus +5 for “unusual” background? Radio DJ, Comp Engg, Mushroom farmer, Diplomat etc?
May 15th, 2007
Posted by
Shantanu |
Miscellaneous, Venture Capital, What VCs really do |
4 comments
I was going to check out The Funded* today but discovered that Jason has beaten me to it!
The site does not have many European funds but does briefly mention London Seed Capital, Atlas and Index - sadly nothing on Amadeus.
I have nothing to add to what Jason has written except to re-emphasise the following (this is for entrepreneurs and start-ups):
If you’ve dealt with (and preferably received funds from) a VC, I would recommend you post your experience on The Funded.
As for me, I will try and see if we can get a nice entry for Amadeus
.
P.S. Thanks to Barak for a great title and to Loken for the link (in response to my earlier post)
May 8th, 2007
Posted by
Shantanu |
FAQs for Entrepreneurs, Venture Capital, Venture Capital in Europe, What VCs really do |
2 comments
Ok…I admit that is an exaggeration…but one of the VC industry’s well-known article of faith is that good VCs must have some entrepreneurial experience in their past lives/careers… (see e.g. one of Guy Kawasaki’s best posts: “The Venture Capital Aptitude Test“. Update: pl. see comment below.
The main premise being of course that unless you have been an entrepreneur, you can never understand what it is to be on the other side of the table, you find it hard to empathise with management and you cannot really add value.
Is this really true? While empirical evidence may suggest a strong correlation, it would be wrong to infer a causal relationship based on that.
Why do I say that? Look at John Doerr, arguably one of the most successful VCs in silicon valley (or anywhere else for that matter)…and look at Mike Moritz (a former journalist with TIME magazine)…On the other hand, I know there is Vinod Khosla…
But that’s really not my point…
Fundamentally, VCs and entrepreneurs are on the opposite sides of the spectrum…while VCs need to act from the “buy” side: cautious/ paranoid/ careful…entrepreneurs would usually be on the sell side: exuberant, wildly optimistic, believing that anything is possible, in a hurry…
So to a certain extent, whether you will be a good VC or a good entrepreneur is “hard-wired”…and it is difficult to be both…
No wonder then that great entrepreneurs rarely make good VCs and great VCs rarely make successful entrepreneurs…
Exceptions? I am sure there are some…Vinod Khosla for instance and of course, Hermann Hauser…but not a large list, I guess…
Right…or wrong?
See also:
Will Price’s comment on this topic and an interview with Larry Sullivan which talks about this but is also very readable – on its own – as it recounts his experiences of managing a global start-up (that got incorporated in 3 countries within 3 weeks!)
Find of the Day: This interview with John Doerr (from 1997) with some timeless advice for entrepreneurs (and VCs); also here.
.
P.S. Over the coming weekend, I have promised myself to take the VCAT and am contemplating posting the results online (suicidal?)… watch this space.
May 3rd, 2007
Posted by
Shantanu |
Entrepreneurship, Venture Capital, What VCs really do |
10 comments
