Two Thirds Done

Thoughts and experiences of an eighty one year old Wild Duck.

Avram Miller by the sea
EN | IT

587 posts since 2006

Category: Venture Capital

  • The Future History of Technology

    The book I am probably not going to write

    From time to time, I think about writing a book on the evolution of information technology. 

    I am designing it in my head.  Sometimes it is divided into three sections, which are simply the past, present and future. Frankly, I am not that interested in the present. I love writing about the history of the computer industry since I have been around a long time and I was present for most of it.  I also have a lot of  anecdotes to share. However, it is the future that has always claimed my attention since I have been a child.

    Many of you know that I was a very successful venture capital investor when I was Corporate Vice President of Business Development and Co Founder of Intel Capital. In fact, during my tenure, we were the most successful corporate venture investors, and maybe the most successful venture group over all. There were many others, especially Les Vadasz, that contributed to that accomlishment.  I have written a great deal about that and there a many articles, interviews and even videos discussing those times which seem so long ago and will not go much into that here.

    How to invest: Let me count the ways

    There are different styles of venture investing.  Many venture capitalists bet on the team.  In fact, the core competency of many of the most successful VCs is identifying the right CEO.  Frankly, I am not that good at identifying the best talent. What I focused on was determining the right areas in which to invest.  I called them “neighborhoods”which were really  business disruptions caused by changes in technologies.  A great example was the impact on the media industry resulting from digital distribution of content direct to consumers (iTunes), a disruption that is still going on.  Another is the impact of the internet on retail distribution (Amazon).  A very recent example is the impact the “sharing” economy (AirBnB) is having on the hotel industry.

    My talent was in identifying these opportunities well in advance of others.  In fact, I would often be too early.  The book that I will probably never write, will deal extensively with how I was able to identify these “neighborhoods.”  It is not something I fully understand myself.  I am also not sure if I am still able to do this.  I certainly no longer had the considerable resources that I had when I was at Intel.  By the way, my current focus is on the impact of technology on direct to consumer health care.

    The impact of high-speed residential broadband

    From about 1993 to 1999 (when I left Intel), one of my tasks was not just investing in the opportunities but helping others understand as well. That was one of the reasons I would write articles and speak at conferences of what would have been considered at the time, untreated  industries.  At first, it would seem strange that an executive from a Semi Conductor company would give a key-note address at the National Association of Broadcasters but in retrospect it all made sense.

    My job at Intel was strategic.  It was to create opportunities for intel by growing the market of PCs and as a result, the market for Intel chips.  Venture Investing was a tool for accomplishing this but had a secondary benefit of earning billions of dollars of profit for Intel.  Using some of this profit, I was able to use to fund very important initiatives like the creation of residential broadband which in turn created new investment opportunities.

    I recently came across an article I wrote for Advertising Age in 1996 (about three years from the first deployment by Intel of Cable Modems with Comcast and Viacom (who had a cable business at the time.)

    When you read it, please keep in mind this was written 21 years ago. Imagine you are in 1996 and have the point of view reflected in the article and the opportunity to invest in early stage companies.  You can see, that it might not be so surprising that Intel was able to get such great returns from its venture investments.

    TECHNOLOGY MARKETING;  COMPUTERS LEARNING USERS’ PREFERENCES–AND ADVERTISING WILL GROW MORE SELECTIVE

    By Avram Miller. Published on November 11, 1996 by Advertising Age

    Twenty-five years ago, the microprocessor was invented. The first microprocessors were simple devices when compared to the advanced capabilities of today’s products. At that time, it was impossible to imagine that these devices would evolve into the engines of the Information Age.

    In 1965, Gordon Moore, the co-founder, and chairman of Intel Corp., accurately predicted that the capabilities of semiconductor devices (of which the microprocessor is one) would double every 18 months.

    MOORE’S LAW

    Following that prediction, known as Moore’s Law, this would mean that a microprocessor’s capabilities would result in a tenfold increase over five years or a 100-fold increase in 10 years.

    Since its inception, the microprocessor has had an amazing impact on many aspects of our lives. However, it is in its role as the brains of the personal computer where this has been most evident. Since the introduction of the PC in the early 1980s, we have witnessed an explosive growth in the use of computers, and have seen the computer expand from a central information facility to become the primary desktop tool of most business professionals.

    In the last several years, we also have seen it become a major consumer product. About 40% of American homes now have purchased one or more PCs. While many industries have been completely transformed by the PC, its impact on the advertising industry has been mostly limited to a tool for production and business management. This is about to change in a fundamental way.

    The personal computer is rapidly becoming a new medium for information, entertainment, education, and commerce. The microprocessors now in development by Intel continue the pace of Moore’s Law and will greatly enhance the PC.

    Advanced video, audio and graphics capabilities will provide a powerful environment for media. Advances in communications technology over transports such as phone lines and satellites will greatly increase the access to media. The rapid growth of the Internet (itself fueled by the microprocessor) will combine with the PC to create one of the most powerful mediums for communications even known: the connected PC. And in becoming a new medium, it will have a profound impact on the ad industry, advertisers, and their customers.

    There is a lot of discussion about advertising on the Internet. Some believe the role of advertising will be limited. Reasons for this belief include the limited size of the consumer market for Internet-connected PCs, the lack of compelling content, poor measurement systems, and privacy issues. Many believe the power in this new medium is its ability to target audiences even down to the individual-the promise of one-to-one marketing in the extreme.

    NO OVERNIGHT ACTION

    While we cannot expect to see a total restructuring overnight, the history of the PC teaches that its impact will happen faster and more powerfully than most expect. Hundreds of venture-capital-backed companies and most of the leading technology companies are working to make the PC a powerful vehicle for advertisers to reach customers.

    Further, we are seeing the emergence of a new generation of consumers raised on interactivity, which is one of the most compelling attributes of the PC. As several studies show, members of Generation X are voting with their eyeballs as they spend more and more time using their computers and less time watching television.

    The relevance of advertising will be significantly enhanced as PCs learn about their users’ preferences and select the most appropriate advertising. We will see a separation of advertising and programming so that customers may actually subscribe to advertising and use “coupons” to pay for programming (see http://www.cybergold.com for an example).

    Ads will no longer be limited by time and space. Customers will choose to interact with advertising that truly assists them in making decisions. Not only will ads be more pertinent, customers will be able to order products while interacting with these ads, thereby increasing the value of the experience.

    Currently, advertising on the connected PC suffers from poor production values. This results from the combination of limited communications bandwidth (the speed of sending information to the computer) and the inability to assemble the advertisement in advance of its use.

    RANDOM BROWSERS

    Consumers typically browse the World Wide Web on the Internet in a somewhat random fashion. When they reach a destination, small advertisements known as banners are displayed. In order not to introduce delays in a medium that currently is slow, (because of limitations of the communications links), the audio-visual quality of the ad is not compelling.

    However, new techniques are about to be introduced that will allow rich audio-visual advertisements to be placed in advance on the consumer’s PC and called up at the appropriate time. This means that in addition to a high degree of customer relevancy, ads can be exceptionally entertaining. These Internet commercials will take advantage of high-resolution video, high-fidelity audio, and advanced 3D graphics to truly exploit the capabilities of the connected PC to deliver compelling advertising.

    Avram Miller, VP of business development for Intel Corp., is charged with establishing strategic alliances for the advancement of PC technology and the growth of new media. Before joining Intel, he was president of Franklin Computer Corp. and a group manager at Digital Equipment Corp.

  • QSBS Permanent: The end of year madness is no more.

    I am always surprised that many sophisticated investors do not know about QSBS.  Since 2009, there has been a 100% exclusion of all capital gains on the first $10 million of gain or 10 times the investment up to $50 million dollars, whatever is larger.  This was put in to stimulate investments in early stage/small businesses. However, the government failed to tell anyone about it.  My tax advisor, Ray Thornson, at Anderson Tax first told me and it has had a great influence on my early stage investments.  The exclusion of federal tax is like doubling the return.  This makes high-risk investment much more attractive.

    If you are an angel investor, you have some great news. Not only was QSBS extended for 2015 but it is now permanent.  Remember that the clock for the 100% exclusion of Federal Tax starts when you invest in the stock.  This means the date in which a convertible note converts for instance.  The holding period for capital gains starts when you make an investment in the note.  For normal capital gains treatment, the holding period starts when ou invest in the stock or in a convertible note that ultimately converts.

    Read this to learn more.

     

     

  • How I evaluate early stage companies

    My blog originated when I realized that I was writing the same things to different people over and over again, only at different times. For instance, I found myself giving advice about Prostate Cancer to many men because I had been diagnosed and treated for this. Once I began blogging about prostate cancer, I could just send links to various posts when people reached out to me.

    These days, I find myself getting a lot of requests for business advice especially from entrepreneurs who are starting up companies. I have decided to expand my blog topics to include advice on business matters. I may also add some posts dealing with financial and tax advice. Not sure about this yet.

    This post is about how I evaluate early stage venture businesses. Anyone that is interested in getting my help and/or investment must follow a specific format when presenting to me (of course I make exceptions). Not only is it helpful to me in terms of understanding the business proposed, but I have found that it becomes very helpful to those seeking my advice. I make them break down their business into four parts – Opportunity, Strategy, Execution, and Reward. They have to convince me about the merit of each section before proceeding to the next. For instance, if I do not believe in the opportunity, I am not really interested in the strategy. Many entrepreneurs actually have trouble distinguishing between these sections.

    Many potential investors in early-stage companies will take a different approach, clearly my approach is not the only one or even the best one.   It has served me well and I have the track record to prove it.

    The Opportunity
    First, I need to understand the opportunity. In fact, I should say that I need to believe in the opportunity. In some cases, the opportunity involves a new market while in other cases it might be a new approach to an existing market. It does not make sense to create a business if there is not a great opportunity, and you can’t really create the opportunity. It has to be there! But, you can recognize it before others.

    I often use an analogy that I find helpful. Opportunities are like waves. Companies are like surfboards. You can’t make a wave, but you can ride one if you find the right beach, you have a surfboard and know how to use it.

    Since many of you may be Shark Tank fans, let me describe the opportunity that Mark Cuban and Todd Wagner presented to me when I was Vice President of Corp. Development at Intel and Co-Founder of Intel Capital. Their company was Audionet, which later became broadcast.com and was eventually sold to Yahoo for $5.7 billion dollars. This made Mark and Todd extremely rich, and also provided Intel with a great return.

    Mark and Todd explained that there were lots of college sports games that alumni would like listen to on the radio, but at that time (1997) there was no way to connect to local radio stations unless you were in that location. Their idea was to connect to these stations and make them available via the Internet to those interested, no matter where they were located in the world. I had no interest in college sports, but I could immediately understand this opportunity. I knew that the internet was a perfect medium for distribution of college radio, especially since the audio did not require much in the way of bandwidth and could even be supported over dial-up networks.

    Another opportunity was when I met with Stratton Sclavos, the CEO of the newly formed Verisign. Verisign was a spin-off of RSA, which was the company that owned the patents for the Public/Private Key Encryption system, which now forms the security foundation of the Internet (SSLS). Intel was a first investor in the spin-off in 1995. The company went public in 1998. Intel owned about 5% of the company at that time. I knew about RSA and Public/Private Key technology when the meeting took place. Stratton was able to explain that his company, Verisign, had an exclusive license for certain applications and would be able to provide a certificate capability that would become the backbone of things like commerce on the Internet.
    I knew that this was essential and was sold on the idea immediately. We made our investment decision very soon after.

    The Strategy
    For every opportunity, there exist many potential strategies for taking advantage of it. Of course, some strategies are better than others and some are easier to execute than others.

    Geocities was one of the first of what we would now call “Social Networks.” The Opportunity was to create a platform for social networking that included commerce capabilities. The Strategy was to create virtual real estate – neighborhoods with themes could be set up. The Individuals were called homesteaders. I can’t go into the history of all this here – although it is very interesting. I think we invested in the company in late 1997. The company went public in 1998 and was sold to Yahoo in mid-1999 for $3.5 billion dollars. Unfortunately, it did poorly under Yahoo’s management but we had sold our investment by then.

    The Execution
    You can have a great opportunity and a brilliant strategy but if the execution is poor, it will not matter. When thinking about execution, I want to make sure that the talent to execute the strategy is either in place or can easily be attracted. The plan has to be realistic and financeable. Most companies that get to this stage do not have adequate finances. Particularly, if they have a great opportunity and strategy, they are not willing to have the kind of dilution of ownership required to assure that they will have enough money to deal with unexpected delays in either product or market development.

    Broadcom was an early stage semiconductor company focused on networking. Its first products were designed to provide ethernet connectivity for the nascent home network market. Intel invested in the company around 1990 I believe, and then did a follow-on investment later. Broadcom correctly identified several major market opportunities. The first was home networks, the second one was Digital Cable Television and the third (which I helped them understand) was high-speed residential broadband. Their strategy was to put as much capability in their chips as possible and then sell them to original equipment manufacturers (OEMS) that would incorporate the Broadcom chips into their products. Their objective was to become the Intel of networking chips. They had serious competitors in every market, but they out-executed them all and offered the best products. Intel should have acquired them, but they believed that they could our perform Broadcom (same thing happened with Qualcomm).

    I now will give an example of bad execution in the face of a major opportunity and a great strategy. In the spirit of full disclosure, I have to say that I was responsible for the strategy which I believe could have been successful although we will never know. The company is @Home. The opportunity was the use of the Cable TV infrastructure to provide high-speed broadband connectivity to homes in the USA. As readers of this blog will know, I played a leading role in the creation of residential broadband. I worked on all aspects of the infrastructure, from the chips to content and everything in between.

    I had been concerned that the cable companies were not technically capable of becoming a Broadband ISP. Then, as now, they had a terrible reputation for customer service. In the early days of broadband cable, the modem was installed on the actual computer. This required a cable service tech to open the computer. Do you get the picture? Later, the modem was external and connected via ethernet but home computers did not normally have an ethernet capability. I got the idea to form a company that would take over all the support for the Cable Companies as well as operate the ISP services. I proposed that this company be created by a consortium of cable companies along with General Instruments, a company we were working with to create the broadband cable technology at Intel. For a number of reasons, I was unsuccessful in getting the cable companies to agree to my proposal. In December 1994, I ran into John Doerr and Vinod Khosla from one of the leading VC firms – Kleiner Perkins at the main Cable Industry Trade Show. I know them very well. I told them about my idea to create a company and they thought it made a lot of senses. I said why don’t you try to make it happen? and they did.

    @Home proves that you can have a great opportunity and strategy and even be well financed and still screw up if the CEO and Board are not focused on making the company a success.

    Strangely, the first CEO of @Home was Will Hearst, the grandson of William Randolph Hearst, the newspaper magnate. Will was/is a great guy but not someone from the technology world. Will realized this and started looking for his replacement. @home had a very competent technologist, Milo Medin, but later they brought in Tom Jermoluk (TJ) to replace Will. I can’t say anything positive about this man and I will leave it to that other than to remark that there is almost no way a company can be successful without a good CEO. @Home’s main execution problem was that the way the board was set up with respect to governance. The cable companies controlled the decisions of the company and were more interested in their own issues than in seeing the company become a success. Then Kleiner Perkins had some issues with another investment they had in a company called Excite. They decided to merge the two companies which made no sense and became a disaster.

    The Reward
    If I believe in the Opportunity, Strategy, and the ability of the company to Execute, I am then of course interested in the payoff or the Reward. As an investor, I have a number of things I want to understand. The financing plans of the company need to make sense and that the company will be adequately financed. This is especially important if you are an angel investor because if there are down rounds, you may be forced to either invest more or have your position be wiped out. I look for businesses that can scale with most of the costs being variable. I like to understand cash breakeven before I get too excited at the thought of a blowout IPO or Acquisition. I don’t have hard rules about having to see 10 times on my money. I like to see the risk and reward match. I also do not like to see the payout be too far in the future because the future is too hard to predict.
    When I was at Intel, my group was able to generate amazing returns for the company. I did not do nearly that well for myself once I left, which proved to me that there were lots of advantages that Intel had in investing in early stage companies that I did not have personally. By the way, I still did well.

    If you have all four areas covered, you will still need to create an outstanding presentation. Perhaps this will be a future topic.

    In closing, I want to say, that if there is not a great opportunity, then why bother? While it is not easy, it is possible to change strategies if the one you are on no longer makes sense. It is definitely possible to improve execution even after failures, it may just cost a lot. And the last thing I will say has to do with Reward. Don’t be greedy. After I left Intel, I was very involved with an internet company that was very successful at one time. We had an offer to buy the company that would have made the two founders very rich, but they and a VC board member thought it was too early to sell. The company is still alive but worth about 10% of the offer made over ten years ago.

  • Could Qualcomm really buy Intel: It is all Heddy Lamar’s fault

    Origins of Intel Capital and its mission

    Learning today that Qualcomm has a market capitalization that is now greater than Intel’s, makes me a bit sad and disappointed in myself.  When Les Vadasz and I started Intel’s Corporative Business Development Group around 1991, now known as Intel Capital,  we saw it as a strategic vehicle.  I had started making minority investment a few years earlier after giving up on the idea of using acquisitions to grow the company.  Les and I thought that by  investing in early stage companies, Intel would gain insight into the future which would impact its strategic direction.  Since our objective was  strategic, we would have been happy with just getting a good financial return.  Instead we got a fantastic financial return (when I left Intel in 1999, Intel was arguably one of the most if not the most successful venture capitalists).  The disappointing part is, as far as I can see, there was no impact on Intel’s strategy for the future and results are clear to be seen now. We did have major impact on the computer industry on the other hand, particularly in the development of residential broadband and consumer Internet.

    Qualcomm market Cap greater than Intel’s
    The market capitalization of Qualcomm at more than 100 billion is now higher than Intel’s. This would have been unthinkable in 1991 when I first meet with the founders of Qualcomm, Irwin Jacobs and Andy Viterbi.  It reminded me of the time in 1982 when I was a group manager at Digital Equipment Corporation, the second largest computer company in the world, and met the CEO of an early stage company called Compaq. How could I have guessed then that sixteen years later, Compaq would acquire Digital only to be eventually swallowed later by HP ten years after that.
    I was extremely impressed with the Qualcomm people at that meeting.  Les Vadasz, my boss at Intel and badge number three was with me as were a number of other Intel people but I no longer remember who they were.  The Qualcomm folks first gave us an amazing tutorial on CMDA  (Code Division Multiple Access) the technology they were developing for mobile phones.  At that time, cell communication was analog. The primary technology  deployed in the USA was called AMPS for Advanced Mobile Phone System. At the same time that Qualcomm was developing CMDA, while another technology was being developed primarily  in Europe called GSM.  GSM was very successful and is still the primary communications standard for most of the world.

    CMDA and Heddy Lamar
    CDMA uses a technique called spread spectrum.  I can’t go into it here and frankly, I am not sure I can explain why I thought that CDMA was the technology of the future other than to say  it was clear to me that it was both more secure and would provide higher bandwidth for data (and remember this is 1990).  Before leaving the technology discussion, I have to point out the role that actress Hedy Lamar played in the development of the idea.  Here is something from the Qualcomm site about this:

    Once described as the most beautiful woman in the world, actress Hedy Lamarr was one of Hollywood’s most glamorous silver screen goddesses of the 1930’s and 40’s. But Ms. Lamarr had another talent: she was brilliant.
    Working together with avante-garde music composer George Antheil, Lamarr came up with the notion that multiple frequencies could be used to send a single radio transmission – a concept that’s now known as frequency hopping. The concept would eventually provide the basis for the CDMA airlink, which Qualcomm first commercialized in 1995. Today, CDMA and its core principles provide the backbone for wireless communications, thanks to the creative vision of one extraordinary woman.
“Films have a certain place in a certain time period, but technology is forever.” – Hedy Lamar

     

    The possibility of an Intel investment in Qualcomm
    At the same Qualcomm meeting,  Les and I  were briefly introduced to Paul Jacobs the son of the then CEO and founder Irwin Jacobs.  Paul was responsible for another part of Qualcomm which was developing an email system called  Eudora. I am not sure why Qualcomm acquired Eudora from The University of Illinois where it had been developed.  Perhaps, they saw the possibilities of mobile email.  Paul Jacobs is now the current CEO of Qualcomm.

    I was interested in having Intel invest in Qualcomm.  As readers of my blog will know, I was always passionate about  communications/networking technology.  I thought these people were brilliant and had very complimentary technology capabilities.  It would also provide Intel with a relationship in the San Diego area where so many communications companies were located also seemed attractive to me.  But I certainly did not make the sale at Intel.  I am not sure it even got much further than Les Vadasz.  It is no longer clear to me why there was a lack of interest.  I suspect that it just felt too far away from our core business which at that time was selling microprocessors to manufactures of desktop computers. It might have been difficult for those that understood anything about mobile technology to imagine that CMDA  could compete with GSM which had much more support.  While CMDA never really beat GSM it allowed Qualcomm to develop its capabilities and to increase its patent position.  Over time, Qualcomm became the leading supplier of mobile communications technology with customers like Apple.  Qualcomm was the 7th leading semi conductor supplier in 2011.  In 2005, Paul Jacobs became CEO of Qualcomm, the company his father, Irwin Jacobs founded and led.

    So back to the Intel/Qualcomm story
    Since I could not get Intel interested in Qualcomm, I decided to buy Qualcomm stock in its IPO in 1991.  Unfortunately, I sold a few years later.  The market cap is now a bit over 100 billion. It was about 400 million in 1991.   Today, Intel’s market cap is slightly lower than Qualcomm. When I left Intel in April of 1999, the market cap of Intel was $218 billion.  At that time Qualcomm was valued at 26 billion dollars or one 10th of Intel’s value at that time.  Qualcom market cap was only 4 billion dollars the year before.

    Two lost opportunities that could have changed everything for Intel
    In the late 90s, there were two companies that Intel should have acquired in my opinion. One was Qualcomm.  The other was Broadcom which had a market cap of one billion in 1998. Intel did have an investment in Broadcom of some significance.  Broadcom is now worth 17 billion.  By owning these two companies, Intel would have the leading position in broadband and cellular communications instead of just owning an aging microprocessor architecture. But instead Intel has done nothing of significance. They have just been milking their microprocessor business. Winning Apple’s Mac business was a major success but Intel was not able to get the more important part Apple’s business which is the i-Devices.  I suspect that Apple will replace the Intel microprocessors with their own chips in the next 3-5 years and even the threat of this will put major pricing pressure on Intel.

    Over the years since I left Intel, I have suggested to some of the Intel executives that they consider acquiring Qualcomm but the response was always, it was too expensive.  Well the market has thought differently.  If anything, it has thought that Intel was too expensive.

    So will  Qualcomm acquire Intel?
    I doubt that they will do it.  Qualcomm will continue to grow while Intel will eventually end up a semi conductor foundry where Apple and other’s will have their chips manufactured unless they make some major changes.  How sad!  I am sure that many of my former Intel colleagues will disagree with my point of view but the numbers speak for themselves.   Interestingly, if it did happen, the CEO’s first name would still be Paul.

  • Born to blast

    I just came back from a three day trip to Silicon Valley.  I rarely visit Silicon Valley ever since that day in April 1999 when I turned in my badge at Intel and drove to my new home in San Francisco.  My primary reason for the trip was to see my dad who lives in Santa Clara and to visit with my eldest son and his family.  I gave my dad who is 87 some advanced lessons on how to use Facebook.  That evening I celebrated the first day of Hanukkah with two of my grandsons.  We lite the candles to celebrate an event that happened 2200 years ago in the heart of a community at has an attention span measured in milliseconds.  By the way, the next night at an Intel Alumni event (more on that later), I celebrated the second night of Hanukkah with a few Jewish friends via an iPhone app called iMennorah.
    I stayed at the Four Seasons Hotel in East Palo Alto. It was the first time in eleven years that I spent a night in Palo Alto, a town where I lived for eleven years before leaving Intel.  The Four Seasons is built in an area which had been previously called Whiskey Gulch which was al two block area located in the small part of East Palo Alto which was on the “right” side of the Freeway, i.e. the Palo Alto side.   Whiskey Gulch was named that way because in the past their was a rule in Palo Alto was dry and no alcohol could be sold.  I got involved twice with East Palo Alto. One  in the summer of 1966 when I lived there as part of a program to coach high school kids that were going to be allowed to go to Universities without having the actually grades and skills.  The second time was in 1992 when Bart Decrem started PluggedIn. East Palo Alto had one of the highest murder rates in the USA at this time.  It was a small disenfranchised enclave in the middle of the wealth and education of Silicon Valley.  Most people living in Palo Alto only thought of East Palo Alto as the place where the maids and gardeners came from.  I lived in Palo Alto by the way.  Domino’s Pizza refused to deliver in East Palo Alto.  Around 1992, I  became the first chair of the PluggedIn board and served proudly in that capacity for seven years.  We had a lot of success in up lifting the community.  We helped some of the kids start up business.  My son, Asher (now Executive Director of the Post Carbon Institute) worked with Pluggedin to create a network for the citizens of East Palo Alto called EPA.net which is still functioning.  But now part of the community we tried to build was gone and replaced with a hotel and a number of office buildings.  In fact, I had a meeting the next day  with my tax adviser and financial managers in one of those buildings.  How ironic and a bit sad.  Then I meet with the Executive Director of Equal Access and organization that is helping tens of millions of people in rural Asia and Africa.  I am a senior advisor to this organization.  Somehow on about five million dollars a year we can change the lives of so many people.

    I also had several meetings with old friends that are involved in high tech investing.  Speaking with my VC friends,  I heard a lot of stories about crazy valuations including companies that refused significant offers only to have go out of business  few months later. Then I read this story.   It kind of reminds me of the Gold Rush days with Sailors jumping ship to rush up to the gold fields.  Most found nothing and those that fund gold were soon separated from their tursures.  It was the people supplying the miners that made the money.

    Later that evening I went to an Intel Alumni event.   It was attended by almost 200 people many of which had been at Intel from the 70s or like me from the 80s.  Andy Grove even attended.  I moderated a panel dealing with early stage companies both from the perspective of the entrepreneur and the venture investor.  The questions we explored where what were the skills we learned at Intel that helped us as entrepreneurs are as venture investors and what were the things we did not learn at Intel that hindered us.   I plan to post on what we discussed that evening later.  But at this event where people who started young and grew old working for one company over more than 30 years in some cases.  And working for a company the changed the world.  And while I am disappointed in what happened later at Intel,  the company that is still the leading semi conductor company in the world.  What a different experience these people had to those working for the current crop of start ups.

  • Communitainment (I bet this word never makes it to the dictionary)

    Someone I very much respect sent me a link to an article on Ad Week which you can read here.  It is definitely worth reading.  In general I agree with what was written but I do want to point out that what we observe at any point in time is the sum of many waves of change which have different time constant.  For instance, watching TV has a very long time constant. But reality TV has a shorter one.  Things come and go.  And the closer you build a strategy to the youth market the faster the time constant. And unfortunately, it is easier to see changes in the past than changes in the future and it is very easy to mistake transition for the future.   

    What I am struggling with is the clutter on the net and the issue of loyalty or lack of loyalty.  It takes time to get a return on investment

     

  • Is user created content the next CB Radio

    Check wikipedia for an interesting history of Citizen Band radio.  It was an amazing phenomenon in which consumers chatted with each other.  Even “chat rooms” developed.  But it was not the CB radio but the cellular phone that survived and transformed all our lives (about a billion cell phones are sold a year).  

    Now a lot of people know (what some of us knew over ten years ago) that the media industry as we know it is dead.  I guess dying would be more accurate.  And many people think that the new world order of media is user generated content. And while I believe user generated content is a big driver of change (was it not email that was the early driver of the net), it is just one component of a 21st century media company.  I am not sure what form new media companies will take and I think it is good to keep an open mind.  Many people mistake a transition for a new phase. And frankly I think we are in a transition.  Over the next five years there will be major changes in how and when consumers interact with media and definitely user involvement will play a major role as it should.  But I think we will see branded content.  Some individuals who have the talent and drive to consistently produce “products” that many people want to see. Eventually they will get “agents”J. 

  • The new VC: “Turn on, Tune in and Drop Out”

    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

  • We are all going to live long but we might not know it

    For a long time,  sciences have worked on ways to extend our lives but not our minds  The result is predictable or at least many of thought so.  But now it turns out the science has discovered that the brain (home of the mind) is more like a muscle than was thought. Meaning that it can be exercised which makes us smarter  The people at Posit Science have made amazing progress in developing the technology (they call it science) to allow most of us to gain back ten to fifteen years through a series of exercises done with the help of your friendly PC.  They are also testing web based exercises.  I have been advising Posit for the last few years because I believe this is one of the biggest ideas I have heard in years  I have done the exercises and they had very significant results for me (that is  why I am still a boy at 61 years).  Check out www.positscience.com to learn more. And if you are a 20 to 30 year old, maybe you can think of your poor parents and grandparents