Here is a web service that provides RSS results for Google Search

http://www.ecubicle.net/gsearch_rss.asmx

Since the returned XML is RSS 2.0 compliant, the web service can also be called in a feed reader like this:

http://www.ecubicle.net/gsearch_rss.asmx/GetSearchResults?searchPage=0&gQuery=tutorial+asp+net&numOfResults=15

You need to change the searchPage, gQuery and numOfResults querystring parameters to your choice. gQuery parameter accepts all standard Google Search Operators.

I have worked with a number of VCs (in five different startups). You have done a great job of condensing and pinpointing what really matters in a VC/startup relationship. Great insight relative to the inner workings of a VC firm.

Thanks!

Herb

Now, 3 years after, I think we can say that is has succeeded. or?

Makes sense... acquisitions for Cisco business is the building block for Cisco’s future growth and competitive edge.

There is no comparison between Google and Yahoo. Google wins every time!

thank you .

Very insightful post. VCs usually have their fingers in several pies - only one of which is in your pie. In other words, there are several dimensions to the VC other than the one created by and visible in the association with your company. All these dimensions contribute to the attitude and behavior of the VC.

Sometimes as an entrepeneur you forget that your VC partners are people too and that they are prone to emotional/self-interest driven decisions just as much as anybody else. also understanding that their time/value horizon is very different from the founders of the business, and that their actions are to protect their positions and not necessarily all of the shareholders...

When you say the exit value here, are you discussing it in terms of net realizable value,selling price, or present value?

Thank you for the post. I enjoyed reading your insight. I agree, providing a capital raise package to land the first meeting is key. I would like to connect with you on LinkedIn.

Great assessment! Thanks for taking the time to provide such a substantive and detailed observation of the "DEAL FLOW" situation.

As one who works as an intermediary within the domain of both private equity (PE) firms and occasionally VC's (buy-side focus) this writer can attest, in May of 2008, that the Bear in the River scenario is still present.

This M & A firm does most of its work in the private capital/company area. That is to say, the firm hunts for and identifies profitable and available private firms that are serious and committed to a liquidity event (LE).

Our experience, on the sell side, is that most owners in the $20 MIL to $100 MIL are not proactive in planning that LE or their exit.

On the buy side, the majority of the PE firms are still acting like the Bear in the River, expecting that big salmon to jump onto their desk. As your fine article indicates, there are too many bears in the river and those big fish do not get caught with a casual swat into the river.

With 12 million baby boomers, who own private companies, fast approaching retirement, there are and will be many fine acquisition opportunities.

Those opportunities will go to those who are proactive and committed, not to those waiting in the river.

Thank you again for your thoughtful piece.

This writer hopes there will be more.

Anthony Lorizio
Hamilton Wright
www.hamiltonwright.com

Great assessment! Thanks for taking the time to provide such a substantive and detailed observation of the "DEAL FLOW" situation.

As one who works as an intermediary within the domain of both private equity (PE) firms and occasionally VC's (buy-side focus) this writer can attest, in May of 2008, that the Bear in the River scenario is still present.

This M & A firm does most of its work in the private capital/company area. That is to say, the firm hunts for and identifies profitable and available private firms that are serious and committed to a liquidity event (LE).

Our experience, on the sell side, is that most owners in the $20 MIL to $100 MIL are not proactive in planning that LE or their exit.

On the buy side, the majority of the PE firms are still acting like the Bear in the River, expecting that big salmon to jump onto their desk. As your fine article indicates, there are too many bears in the river and those big fish do not get caught with a casual swat into the river.

With 12 million baby boomers, who own private companies, fast approaching retirement, there are and will be many fine acquisition opportunities.

Those opportunities will go to those who are proactive and committed, not to those waiting in the river.

Thank you again for your thoughtful piece.

This writer hopes there will be more.

Anthony Lorizio
Hamilton Wright
www.hamiltonwright.com

I feel REST is easier than SOAP but the problem with REST is XSS(Cross site scripting)
Is REST prone to XSS.Can any one put light on this

Interesting article.

One area where rest is clearly superior imho over ws/soap is in its simple noun/verb protocol and its 'everything is a locatable resource' resolvable through simple urls. Simply beautiful or beautifully simple?

Clearly, both approaches will stay relevant as vendors align themselves with either approach. This is a good thing for everyone. Competition at the protocol level will move forward both. Hopefully this will manifest in tools that leverage the best of both worlds so that each can be employed and deployed when and where their individual strengths make them the clear choice over the other.

Is google trying to get into everything. Why real estate.

http://www.techjournalsouth.com/news/article.html?item_id=4518

Hi Bill. Are you or any of your readers aware of any life science VC’s who are blogging? If so, please let me know (arubenstein@rnaventures.com). Thank you and I love Burnhams Beat!

Bill, dead on agree. Somehow things work out. I'll share a story here that is the exact opposite but to the same effect. For the last few months, I have used a new philosophy towards life & business. I call it Karmic Marketing. In past lives, whenever an interesting deal crossed my path, I'd attempt to broker it and get a piece. Sure, sometimes you do great but you're not really adding any value and more often then not you annoy people by getting in the middle. So i changed my tune, i took on the attitude that anyone that bothers to reach out to me and appears like a serious/smart/real etc... person, I will give an hour of time to too - for free, I will happily give free advice, help solve a problem, lend out my brain to anyone that passes my fairly low threshold. On top of that If i really like the person and get comfortable and we connect, I will volunteer to make a couple of introductions for them - without them asking. Whether its potential business partners, potential friends or investors, I will send out my "Happy Networking!" emails and see it off. When I first started this, I actually got negative feedback - can you believe someone not wanting a free introduction to an employer when they are looking for a job!? Anyhow, I got passed that and learned that my introduction approach is only meant for people with optimistic attitudes and it works. This approach has gotten people to instantly trust me and i routinely get emails like "I am so happy i met you", "your the last altruistic person" - not trying to brag, i really get these frequently.

So what's the catch? None. I don't ask for anything in return. In fact I go further when I meet people now, I tell them what I'm going to do, the normal reaction is "huh?" then i do it and show that i can follow through. Now it doesn't matter if a deal ever gets done as a result of these introductions, its the fact that i go out of my way to try to help people that matters.

So how is this relevant to Bill's post? Well its because good things happen randomly and life's path is unpredictable. I've spent the past 2 years trying to figure out my next big move and i finally figured it out (the future of online advertising) and before i even had so much as a deck together, I've had a dozen investors and people that i've helped offer to help me back. I didn't ask for help - but in the next week without so much as trying to get a meeting with anyone, I have 3 meetings and was invited to a pitch thing in january. I still don't have a completed plan.

Life happens in weird ways. Do good, stay strong and roll with it, eventually good things happen if you hold your convictions....

just my 2 cents...

richie "the bootstrapper" hecker

Uuups, did I say "Brad" when I wanted to say "Bill"?

That's a tricky legal disclaimer you have. I suppose that I'm reading too much VC posts today... :)

Brad, I'm really more a "lurker" than a "commenter" but I really enjoyed this post. It's a story that deserves to be told. Thanks for sharing it.

Bill:

Ah, the old serendipitous lawsuit bit. Just kidding, of course. Irony works in strange ways, nu? I can see how some of your colleagues might have thought you a bit daft in the beginning of your releationship with Purple Yogi, but a bit of luck never hurts things to turn out in a good way. I cross-posted on your piece to http://blog.innovators-network.org The Innovators Network is a non-profit dedicated to bringing technology to startups, small businesses, non-profits, venture capitalists and intellectual property experts. Please visit us and help grow our community!

Best wishes for continued success,

Anthony Kuhn
Innovators Network

I enjoyed reading your post, I would like to exchange a link. Additionally I would like to begin a survey for VC Bloggers on various topics would you be interested to participate?

Really you just need good online backup software. A few companies (such as DriveHQ.com, xdrive, filesanywhere) offer great client software that can speed upload/downloading dramatically. For more detailed review of online backup / online storage services, please visit:
http://backupreview.googlepages.com/default.html
http://ftpreview.googlepages.com/index.html

I actually agree with you on the flat tax side of things. I would be happy to throw out all the complexity of the current system and go with a flat tax. My argument for capital gains treatment for carried interest is based on wanting to see some logical consistency of the current tax code, but I agree we would all be much better off if we just moved to some kind of flat tax. Unfortunately I don’t think that will happen because the tax code is a giant playground for politicians and even if they passed a flat tax I think they would be adding “amendments” the very next day.

Capital Gains = BS. Income is income. If you make money, pay taxes. While I do think the tax code itself should be changed, i don't think funds should be exempt. Esp. considering the people that run the funds and get the returns are generally the richest people in the country. Why should their business (investing) be any different from a mom and pop store? It shouldn't. In fact the tax breaks should be reversed to go to small businesses, it makes more sense as it spreads the wealth...how can anyone actually and reasonably argue for it?

The greater good argument doesn't make a difference. If the tax breaks went away, people would still be in search of alpha but probably be more selective with their investments because they would be looking for even greater returns. I would rather see more tax breaks for the entrepreneurs and grants for entrepreneurs then free money for the investors.

In terms of the tax code itself, it needs to be thrown out. A simple reason, if people should have to pay taxes - they should be able to understand what they are paying and should not need an accountant. I think requiring people to need an accountant in order to take advantage of the tax code properly is bogus.

Instead I propose the following:
1) Get rid of corporate tax breaks and make companies pay taxes.
2) Cut corp tax rate down to 10% flat, only deductions for environment (since people without incentive don't give a crap as a whole) & experimental areas.
3) Force companies to pay. if a company is found in violation of the tax code, the CEO & CFO must personally pay penalties, not just the company and harsh penalties.
4) personal taxes should be 10% flat, breaks for starting a business, environment and for taking care of other people.
5) if you earn within 15% of poverty, you pay no taxes.
6) End of story, we no longer need accountants, IRS doesn't need as many agents and the country is simpler and richer and people don't get stressed about taxes anymore.

Richie
www.Bootstrapper.com

>Why should a VC that risks their
>own capital to start a new business
>(an investment partnership) not receive
>the same tax treatment as an entrepreneur
>that risks their own capital to start a
>new business?

Sure, as a libertarian, I understand your reasoning. To the extent that your own capital is involved, you deserve capital gains treatment. We are not talking about the capital that the VC invests in his/her firm, we are talking about carried interest, which you refer to as a form of "sweat equity". In other words, we are referring to the magical, tax-saving share disbursements made by the partnership to the VC if the fund hits its performance goals. In the land of C corporations, where the technological entrepreneur dwells, there is no such thing as "sweat equity". Rather, there is "equity for cash" and "equity for sweat". In almost all cases, the IRS treats "equity for sweat" as ordinary income.

As an example, let us consider a hapless consultant working at one of your private internet businesses. This consultant loves your business and forgoes all cash payments in order to work on your business's projects. All she wants is equity for her sweat; how do you compensate her? If you make a grant of stock to her, she must immediately pay income tax on that award. Of course, that is risky, since the stock might become worthless. You could give her Non-Qualified Stock Options (NQSOs). Then, she does not have to pay taxes until she exercises them. That is a good solution; however, at exercise time, she will have to pay ordinary income taxes on the appreciation! There is no way for her to exchange sweat for equity with out paying income tax on the reward derived from her sweat/labor. That is just the way it is, the government taxes labor at a higher rate than capital.

I still do not see why VC sweat/labor is deserving of a special tax break. The only special case in the tax code where you can get "equity for sweat" without paying ordinary income tax is through Incentive Stock Options (ISOs). Of course, ISOs have strings attached to them that force ISO grantees to exercise and hold - something a VC might not like very much. You could argue that VCs need some sort of ISO treatment bolted on to the GP/LP structure, but you are not doing that. Instead, you are trying to convince entrepreneurs to defend you against the machinations of Congress when they are in a different legal structure and operating under a different set of rules and responsibilities.

In response to your two comments:

1) Yes, it is possible for carried interest to result in a capital loss. VC’s must invest in their fund and can lose 100% of that investment if the fund does not perform well. I know this to be true, because I invested a lot of money as a VC in a VC fund in 2000 and have plenty of tax losses to show for it :-)

2) As I said above, VCs do invest their own money in their funds. In fact their investors typically mandate that they do so that the interests of the Limited Partners and the General Partners are aligned. For example, in a $1BN investment fund the VC managers would typically have to personally invest a minimum of $10M. While this is the minimum, in many funds the VCs invest significantly more than the minimum. Just like all the other investors, if the fund does not perform, the VCs could lose this entire investment.

While some may say “hey $10M is only 1% of $1BN, so it’s not that much money”, it should be pointed out that A) $10M in after-tax dollars is not chump change when you have to invest that out of your own pocket B) entrepreneurs often account for a much smaller % of the total cash invested in their own company’s (although, as with VCs, there are plenty of examples where entrepreneurs have invested a much higher %).

VC’s also file Section 83(b)’s on their cash investments in their funds in the same manner that entrepreneur’s do. Incidentally, you do not have to file an 83(b) to get capital gains treatment, the 83(b) just makes it a lot harder for the IRS to contest the capital gains treatment of your income. VC’s would also have to pay ordinary income tax if their GP interest was granted to them for free, but most VCs buy these interests with cash.

While I am not 100% sure, I believe the founders of Google, similar to what most founders do, bought their founders stock when the company was formed for a nominal amount (probably less than $100). Buying the stock, as opposed to receiving it as a free grant, means that their founder’s stock generates no immediate income tax and in fact would generate a deductible tax loss if the company went bankrupt.

Why should a VC that risks their own capital to start a new business (an investment partnership) not receive the same tax treatment as an entrepreneur that risks their own capital to start a new business? Both of them raise capital from other people and invest it in their business. The goal of both businesses is to produce profits on that capital. VCs produce the profit by investing the capital in financial assets while most entrepreneurs do it by investing the capital in capital assets. I think some entrepreneurs might argue that their capital is “better” than VC capital because it is deployed to build a specific business, but couldn’t one argue that VC capital is better because it makes it possible to build multiple business and helps foster an entrepreneurial economy? Personally, I think they both serve an important role that is deserving a special tax treatment. Arguing the superiority of one capital investment strategy over another (as the VC and Private Equity guys did at the conference) is self-defeating and misses the larger point: the tax code should incent risk taking and capital investment in a wide variety of endeavors.

At a high level, there is really no difference between a VC capital and entrepreneurial capital. More importantly, as I pointed out in my post, there is no logical reason as to why someone who supports taxing VC’s profits at ordinary rates wouldn’t support taxing entrepreneurs profits at ordinary rates. As the logic for taxing one is clearly applicable to the other.

As to VC carried interest being a “bonus”, similar to what an investment banker receives, VC carried interest differs significantly from a bonus in that A) VCs invest their own cash and that cash is at risk, i.e. they can lose 100% of it if the fund does not perform B) unlike a bonus, there is no discretion in paying carried interest C) unlike a bonus that is typically paid by a set time, there is no set time to receive carried interest D) carried interest is generated by the collective efforts of the fund as opposed to the individual performance of the person. Finally, if you believe that VC carried interest is a “bonus” then aren’t you compelled to have the same position on the stock gains that entrepreneurs/employees experience? There is no difference at all between the two since both groups pay for their shares, have their returns “at risk”, and receive salaries while they are working.

> should entrepreneurs that invest
> time/effort/IP have to pay ordinary income
> on the profits from sales of their stock

This is a red herring. The entrepreneurs risk their own capital and resources. VCs do not, at least no more so than a mutual fund manager. If they want the benefit of lower taxes via capital gains, all they have to do is invest their own money in the fund (or the entrepreneur).

This whole debate to me boils down to one thing: is it possible for carried interest to result in a capital *loss* that can be offset against other gains? If the answer is no, then it sure sounds like regular income to me. It's a reward for performance, not a gain in invested capital, no different than a real estate agent.

You said:

>it seems crystal clear to me that
>those who advocate eliminating capital
>gains for carried interest are logically
>compelled to have the same position when
>it comes to other forms of sweat /
>intangible equity, but I think the
>Professor is one of the few people on
>that side of the debate that have the
>courage to be upfront with the logical
>consequences of their position.

Yes, the Professor is right because that is the law as it now stands. Currently, entrepreneurs pay ordinary income taxes on restricted stock grants. Fortunately, we can file a Section 83(b) Election with the IRS and thereby elect to include the whole grant as part of our current income. Therefore, right now, we pay both income tax and capital gains tax on our stock positions! The Google founders would have had to pay an extra $2BN on their founding stock if they had not filed a Section 83(b) Election early on and paid income taxes on their founding stock when it was worth substantially less. If Google had not been a success, then the founders would have paid income tax for receiving a worthless asset!

I am disappointed in VCs since they seem to think that running other people's money entitles them to some sort of giant tax break. I just do not see it. Carried interest is no different from a bonus on Wall Street, and Wall Street professionals seem to have no problems with paying income taxes on their bonuses.

did anyone mention that income tax is illegal? vc or not, no one should be paying this totally fraudulent tax. even the corporate shills at CNBC covered it:

http://www.youtube.com/watch?v=JZl6202HJGQ

it may be painful to admit it but the US government is run by a bunch of thugs. target #1 is the american taxpayer.

beacon of hope: ron paul.

I think I agree with your post Of course the component parts of a composite application can be mixed and matched, much like lego blocks, allowing developers to create an wide variety of applications with a relatively small set of services.

Interesting analysis but I think the wrong conclusion. Question is whether Sequoia made the right decision strong arming the LPs. Yale obviously thinks that Sequoia's expertise does not extend as far is the VC is pushing it or they would have opted into the new funds. Yale will probably continue to generate excellent returns without Sequoia, but will Sequoia succeed with all these new funds (and markets).

This buying spree by Google at the expense of smaller tech companies may be good if it improves Internet advertising as a whole. However, there is also a potential danger when monopoly would start to hurt the Internet. If there will be more competitors in Internet advertising, Google will work harder to improve its products and services. Monopoly will do the otherwise.

As a lawyer who has "lost" uncounted thousands of contingent fees, I would appreciate capital gain treatment when I am successful. My worst result was when I was outstandingly successful for my clients but Congress effectively expropriated my fees, limiting them to less than my wife's out of pocket cost in financing my work. I conceived, designed, drafted and was very involved in securing passage of the 1971 Alaska Native Claims Settlement Act. For Alaska Natives, they received about a billion dollars and fee title, with mineral rights, to about as much land as in the State of Washington. My fee award was $130,000. At 77, I still enjoy working, dancing, biking, swimming, and downhill skiing.

I've successfully raised VC funds with two start ups, served as an independent director on a board, and currently sit on three advisory boards for tech companies, and this is an excellent illumination of the fundamentals for a fledgling entrepreneur. In a future post you may want to cover "VC speak" and what underlying meanings exist, e.g., differed no versus permanent no,as well as asking the VC their cycle of analysis and the amount of companies they invested in the past year. Your readers may also be interested in "The Funded" a blog for those who have successfully raised venture money, and the ratings and comments of specific VCs and their partners www.thefunded.com
Paul

This is article gave me a lot of insight. This is surely gona help me when we move out to raise fund. Thanks :).

Great read. I just came across the article. It stands the test of time - 3 years down the track and we are starting to enter a world of integration via Mashups that target the less ambitious end of the EAI solution spectrum. Not sure if the tools are ready for the business users to design the solution just yet, but definitely moving towards it.

My main concern is that you can't guarantee every page of your website will be included in the SERPs. Considering I'm constantly adding new products to my company's website, I need to be sure that customers can find them as soon as possible.http://www.seoptimizerz.com