I am certainly glad I am not a VC at the moment. Barriers to enter have dropped to negative numbers. Everyone one with a good idea and a lot more people with bad ideas are able to create a web 2.0 “business” with the flick of a mouse. For me this means the signal to noise ratio has turned (more noise than signal). It use to be a great team, strong investors and board coupled to a great business plan could lead to success (it was not a guarantee). But now the most important thing is a good idea (I always think they are a dime a dozen,,,,, I have twenty a dayJ) that is transmitted like a virus across the net. Somewhere, there are two guys who had a good idea, got discovered, saw their traffic take off, thought to themselves “we are the luckiest guys on the earth”, decided a few weeks later that it was not luck (It was) and that they were the smartest guys on the earth, sold there company to a major traditional media company for 100s of millions, and then a few weeks later the management at the major media company said “these guys were the luckiest guys on the earth”. So were the VC’s that invested in them.
My dear friend, Mark Cringley has an interesting column on this topic today. Check here. I do not exactly agree with him. Yes there is Google ECO system, just like their was a Cisco ECO system. But at the same time there were many other companies making acquisitions and also a real IPO market. And I do not think that roll ups will work very well when what you are rolling up is duplicated by tens of other companies. I have an idea: Let’s create new companies that can last and maybe even acquire some of the R&D the floats around the net under the title of early stage companies Hopefully there will be an IPO market again even if it moves off shore