Cook 'n the Books

The Real Life of a VC

Jim Cook — Mon, 12 Feb 2007 20:49:53 -0800

This is too funny....a must video view for those that are involved at every level of the VC world....your comic relief for the day!

Link: BLUEPRINT VENTURES.

Bloglines | Manage Claim

Jim Cook — Thu, 03 Aug 2006 21:59:20 -0700

Link: Bloglines | Manage Claim.

More good news from Silicon Valley

Jim Cook — Wed, 02 Aug 2006 08:40:08 -0700

More evidence that what we are all seeing in the trenches of Silicon Valley is also being reflected in the industry data. I've been telling everyone I know that the venture industry (which includes the VC's firms as well as the entreprenuer's and their companies) is as healthy as it's been in recent memory. It continues to feel very much like 1997-1998 (prior to the bubble). Yes, there are also signs of "bubblish mentality" through some recent fundings (VC bets), but only 1-off stories for now and it feels like the hard lessons of the past have indeed been learned in better fundings and better management.

RETURN ON FUNDINGS NEARLY 20 PERCENT IN FIRST QUARTER
By Matt Marshall Mercury News

Venture capital firms continued to show strong gains through the first three months of 2006, showing that the Silicon Valley formula of placing bets on young companies is still paying off.

According to data released this week from Thomson Financial and the National Venture Capital Association, venture funds pulled in annual returns just shy of 20 percent, approaching the high end of the 10-year average. That was up from 13.3 percent in the fourth quarter of 2005, and 4.6 percent a year ago.

How long the healthy returns last may depend on the future health of the market for initial public offerings of stock, which has been flagging lately. If the growing fleet of venture-backed start-ups can't successfully go public and offer shares for sale in the market, venture returns will slow.

NOTABLE FUNDINGS AND FACTS FROM Q2 2006
$100M rounds of investment are increasing. This is a significant indication that large dollars from smart VC's are betting that these companies will be worth at least $1B which could foretell the return of a healthy IPO market in the next 18 months (end of 2007/2008)

Altra, a Los Angeles biofuel company, has raised $120 million in a second round of funding. It is one of the largest rounds of funding ever raised by a renewable-fuel company. Limelight (an Akamai competior) that is the technology backend supporting YouTube and other internet video streaming also raised +$100M in Q2 2006.

I've also heard several indications of $50M Series A fundings that will develop starting in Sept 2006 from several promising startups going after big markets requiring large investments.

Doll Capital Management, a Menlo Park venture capital firm that has recently invested aggressively in China, has raised a new fund of $500 million to invest in fresh companies. It has offices both here and in Beijing, and also invests in Japan.

TVC raised one of the the largest ever funds in Q2 2006 at 1.5 Billion. Total Funds raised by VC Firms in Q2 2006 was almost $6.5 Billion.

Venture capital investment in Startup and Early Stage companies remained flat from the prior quarter in terms of dollars but increased 13% in the number of deals to $1 billion going into 268 deals, suggesting that VCs are offering smaller rounds to more companies. Average post-money valuations of Early Stage companies dipped slightly to $14.06 million for the 12 months ending Q1 2006.

Funding for Expansion stage companies hit the highest investment level in four years, reaching $2.9 billion, a 17% increase over the prior quarter. The number of deals rose slightly to 329, a 6% increase from Q1. The average post-money valuation for Expansion Stage companies increased to $59.16 million

The number of companies receiving "First Time Financing" reached a five-year high in Q2 2006 with 282 companies receiving $1.3 billion. This increase coincides with the recent fundraising cycle and reflects the opportunity to deploy funds into first-time companies early in a fund's life.

Source = NVCA (National Venture Capital Association) Data.
http://www.pwcmoneytree.com
http://www.nvca.org

BOTTOM LINE:
The Silicon Valley startup market is on a healthy pace of company creation, job/employment creation and once again provding the underpinnings for the next successful round of public companies.

Intelligent carpet can autodiscriminate - Engadget

Jim Cook — Wed, 26 Jul 2006 20:33:39 -0700

Proof that there's value in "Measuring, Recording, and Reporting". So, tonight's exercise is to think of something else that would be valuable to measure and record so you can report it and sell it to someone.

Link: Intelligent carpet can autodiscriminate - Engadget.

The Hardest Lessons for Startups to Learn

Jim Cook — Tue, 02 May 2006 21:41:51 -0700

This is a great article that every entrepreneur should read.

Link: The Hardest Lessons for Startups to Learn.

NetFlix Startup Story

Jim Cook — Wed, 12 Apr 2006 12:59:54 -0700

Link: TJ's Weblog: The Netflix Story - an insight perspective.

Finally finished writing this story after story-telling it so many times throughout the years. Many thanks go out to Suzanne Taylor who continued to push me to write this over a 6 month period and did a fabulous job editing and re-writing to make it as polished as it came out. Without Suzanne, this would not have been published.

It's making it's rounds on other blogs as well such as

www.markteingprofs.com

The Long Tail of Process Automation

Jim Cook — Tue, 29 Nov 2005 08:04:16 -0800

Automating otherwise manual processes has always been a favorite operational focus of mine. Automation not only ensures efficiency, accuracy, and consistency of the operation but it can also provides a competetive strategic advantage. I really like how this author integrates the "long tail" marketing concept into operations.

Link: The Long Tail of Process Automation.

Up From The Ground Came A Bubbling Crude...

Jim Cook — Mon, 31 Oct 2005 09:50:00 -0800

Speculating on the health of Silicon Vallley has been a recurring theme among Silicon Valley circles and media pundits for many months. It's clear to me that "we" indeed are back. The risk/reward balance among entreprenuers and VC's has definitely shifted decidely toward the risk side of the teeter totter...and that is healthy for the startup community, Silicon Valley, and small business growth.

The recent proof points that Silicon Valley is healthy again?....

1) E-commerce is back in a big way. Several startups have been funded recently and the buzz is back. Alibaba in China is the recent pinnacle of these valuations. Even the Kozmo founder is going back "all-in"

2) Online Advertising has risen from the dead and buried (thanks Google). Pure Play media companies valuations are trading both publicly and privately at 6x-10x Revenues and +25-40x EBITDA. About.com (+$400M), Then you have Baidu in China.

3) Acquisitions Galore: In the first half of 2005, media/interactive M&A transactions totaled +$8B vs +$2B in the first half of 2004 (think Intermix/MySpace, AskJeeves, DoubleClick, Shopping.com, etc). We hear of a new big M&A deal almost every other day (Skype, Siebel, Macromedia, now talk of AOL..). Ruperch Mudoch and Fox Interactive are out buying first asking questions later (Scout.com, Intermix, IGN combined $1.5B so far and counting)

4) The big players (Microsoft, Google, Yahoo) are gobbling up smaller companies as fast as they can (Keyhole, Picasa, Dialpad, Teleo, Flickr, Snapfish, Konfabulator, Urchin, Dodgeball, and we are hearing Technorati and Facebook are next).

And finally to put an exclamation point on this "bubbling crude" theme (the return of Silicon Valley), this week I was involved in 2 separate discussions with CEO's, VC's, and investment bankers in which I heard the following:

1) Roll Up Funding Strategies are alive and well in today's very active M&A market. Buy companies..roll them up....sell the whole package for more

2) B2B is the next big strategy shift now that "all things consumer" has had such success in the past few years. It's time to start selling products and services to businesses now.

Money and ideas are bubbling up...now the trick is whether we can refine them and into what "grade" (87, 89, Premium, or simply sludge)......

"...they said California is the place you oughta be so they packed up their bags and moved to the Valley.....Silicon that is.......stock option pools and internet stars"

The "Golden Age" of Technology Startups?

Jim Cook — Thu, 27 Oct 2005 07:54:40 -0700

...And How Today's Entreprenuers and Startups Are Quite Similar To Today's Top Chefs and Restaurants.....

The kitchen is getting crowded. There are several cook's in the kitchen and everyone is using the same ingredients. These analogies have been recurring themes in my head the past several months. Start-ups are back in a very visible way in Silicon Valley, the VC market is very active, and the M&A market is exploding.

So what's different this time? The article below offers a good premise that we are entering a "golden age" of company creation. After reading it, the analogy I used above (startups vs top chefs and restaurants) dawned on me. By combining today's specialized technology ingredients (XML, RSS, etc) with several basic technology ingredients (Linux, etc), today's very smart entreprenuers can be likened to some of the top chefs in the world where star status is not differentiated by the ingredients used (there are no secret cooking ingredients) but rather by HOW the ingredients are combined and MOST IMPORTANTLY how the whole package is presented (not just the plate of food but all the way down to the restaurants ambience and wait staff service level).

Below are a few articles with different but similar viewpoints on this new "golden age" of technology

It is likely that in the coming years we will see sizable businesses (based on yearly revenue) come and go at what will seem to be alarming speeds. Businesses can now be created in a matter of weeks to capitalize on whatever important trend or market demand is surfacing. Huge amounts of venture capital in many cases will not be required for establishing the infrastructure, the billing and accounting systems, the transport or supply systems, the IT function - and the list goes on. Such commodities will be expertly and automatically leveraged by super-deep, business-to-business automation, and new enterprises will start up by focusing their energy on differentiating their value in the marketplace rather than creating and supporting all of the associated accoutrements.

Link: Print Story.

Hornik also posted yesterday on a very similar theme here
Built To Be Bought

EBay TV? or ESN (EBay Shopping Network)

Jim Cook — Mon, 19 Sep 2005 22:32:15 -0700

"...Other potential synergies haven't even left the lab. Analysts say Skype may add video to its free PC-to-PC communication service. With video panes added to eBay pages, online sellers could get closer than ever to approximating live shopping, while buyers could well gain increased confidence from being able to see moving pictures of items for sale..."

As I read this today (Business Week article cited above - link below), I immediately thought EBay is going to try to out-Diller the king of hype himself - Barry Diller. I had the fortune to work briefly for Mr Diller (1996-1997) as an executive of the Internet Shopping Network. I've personally toured HSN headquarters in Florida and analyzed the back office operations in depth (incl. the shipping and payment processing logistics)

So, the Skype acquistion and it's opportunity starts to make more sense to me now. EBay TV must be back on the priority list down in San Jose. The EBay Shopping Network where small and large businesses will use EBay's platform technologies to create and store video commercials of their products, promote them, and then auction key time slots to the highest bidder. No need for studio productions anymore like the old guard HSN and QVC now that podcasting and videocasting are the next wave. The viewing consumer makes the final call with Skype and pays for it with PayPal. EBay thus creates the first truly vertical supply/demand chain.

Link: Skype's "Aha!" Experience.