SplicedFeed

A Salute to Experience [The Post Money Value]

2009-07-17T22:28:12-07:00

A former Microsoft guy, Marcelo Calbucci, dreamed up and launched a web place called Sampa. It was a place where you could build your own website, blog site, picture place, etc. It crashed and Marcelo closed the doors this week. We can ignore all the of the autopsy, Monday morning quarterback stuff like timing, competition, etc.

For this post, I want to send you to his two blog posts on the death of his startup. If you are working on a startup they are a good read.

My view pre/post VC view remains the same. Taking the shot and ‘failing’ means hopefully gaining a wealth of experience that will make round two a better shot. I salute you Marcelo, as I wade through my own code, projections, and presentation material at 1am. I salute you as an experienced startup guy, not a failure.

You can read more here.

Thinking about simple inbox hacks [BijanBlog]

2009-07-17T19:26:11-07:00

I took Thursday and Friday off this week and went away with lauren and my kids for an extended weekend. We are having a blast.

For the most part and except for a few unplanned work related things I’ve been off the grid.

Tonight, everyone was wiped out and went to bed early. I’m still wide awake.

I’m staring at my inbox getting back to the most important items (family, urgent portfolio company matters, my partners and very close friends).

But my inbox doesn’t care about me and it’s all there. And growing. And in no particular order. It only cares about the most recent stuff because that is what it “bubbles up to the top”.

Not nice.

Time of email receipt isn’t the most important thing for me right now.

At a glance my email inbox looks probably a lot like yours:

-tons of work emails

-personal emails

-calender invite emails

-blog comments (disqus)

-Twitter DMs

-social net messages (so & so wants to be your friend, social net messages)

-PhoneTag voicemail transcriptions

-ecommerce receipts & status

-spam

The list goes on.

I need a way to fix this and I’m not willing to declare email bankruptcy.

When I get back home I’m going to do some simple inbox improvements:

1. Create a separate email gmail account for my disqus comments. iPhone handles multiple email accounts beautifully.

2. Create a separate email account for phonetag. (is there a way to use iPhone visual voicemail and Phonetag at the same time? I think the answer is no on this one.)

3. Create a separate email account for ecommerce stuff.

4. re-configure twitter to send DMs to sms only

5. Right now my work and personal email goto the same place. wondering if that is a good idea or not.

6. since switching to gmail, spam has gotten lighter. but it’s still a problem.

7. can i filter gmail to show me only messages where I’m on the To: line (vs cc) ?

Please share any simple inbox tips. I’m sure I’m missing some obvious ones.

Maybe I’m tired too :)

(via whatshisname) [BijanBlog]

2009-07-17T19:00:43-07:00

(via whatshisname)

peHUB Rewind [privateequityHUB]

2009-07-17T15:45:06-07:00

Here’s a look at the past two weeks of scoops, opinions and analysis from the peHUB blogging team.

Facebook’s London Sprawl Beginning to P.O. Neighbors [Social Networking]

Silicon Valley Smackdown Over Twitter Leak and Its Handling [Social Networking]

Amazing: Comic Dave Chappelle Tries Last-Minute Show in Portland; 4,000 Twitterers Crash Scene [Social Networking]

The Curiously Unsociable CEO of Social Networking Giant LinkedIn [Social Networking]

Google’s Eric Schmidt: I Might Step Off Apple’s Board. Eh, or Not. [Decisions Decisions]

Oops! No website for Andreessen Horowitz [Ironies]

Do “Operators” Make The Best VCs? [Midas List]

Mark Cuban to peHUB: You’re Wrong on This One [Impropriety]

Mark Cuban Cleared of Insider Trading Charges [Impropriety]

Steven Brill Tries Clearing the Air - and His Reputation - Around Clear Pass Debacle [Shrinking Violet]

More Clarity on the Verified Identity Shutdown [Scoops]

New Report, Same Result: VC Fundraising Drops in Q2 [Numbers]

If CIT Goes Down, These Companies May Be Hurting [The Right Size to Fail]

PE Council Testifying In Support of PE Firm Registration [Regulation]

Riverlake Partners Suspends Fundraising Action [Raisin' The Funds]

Navis Asia Fund Halfway To Target [Raisin' The Funds]

Pandora Tunes Into $35 Million [Raisin' The Funds]

Advent Raising Fifth Latin America Fund [Raisin' The Funds]

Huntsman Gay Raises $1.1 Billion for Debut Fund [Raisin' The Funds]

DFJ Moving on Japan [Raisin' The Funds]

Israeli Startup Funding Up (Slightly) in Q2 [Raisin' The Funds]

KKR Delays Fundraising Drive [Raisin' The Funds]

Former BSMB Pro Launching Moxie Capital [Hello New Firm]

Level Equity Formed by Ex-Insight Venture Pros [Hello New Firm]

PE Mergers a Reality? Edgewater Sells To Lazard [Doin' the Deals]

What Consumer Credit Protections? GTCR Ropes Rhodes for New Credit Platform [Doin' the Deals]

Sunday Funny: Cash4Gold To Solve U.S. Budget Shortfall [Random]

CastleGuard Partners Wants To Revive Middle Market Lending [Doin' the Deals]

Midweek M&A Madness [Regulars]

VC Love Affair with India Apparently Cooling [Just Not That Into You]

Q&A With Healthcare VC Doug Kelly [Interviews]

8 Questions, 7 Answers for Richard Zannino, CCMP Capital’s New Retail & Media Guy [Interviews]

From Cinnabon to Private Equity: 5 Questions for Geoff Hill [Interviews]

Laundry Room Chronicles: Q&A with Michael Toporek of Brookstone Partners [Interviews]

Steve Rattner Steps Down, What Next? [Headscratchers]

Steve Rattner Leaves DC, After Buying $4 Million Home [Headscratchers]

Price Doesn’t Matter in VC Deals, But The “Promote” Does [Vox Pop]

Silicon Valley Lessons for Detriot [Links Lists]

The New Criterion for MBA Admissions [Links Lists]

Michael Huffington sues The Carlyle Group [Links Lists]

How Dead is M&A? [Links Lists]

How to Write an MBA Admissions Essay [Links Lists]

How Bad Is CIT’s Loan Portoflio? [Links Lists]

Best VC Homepage Ever [Links Lists]

Does PE “Get” Social Media? [Links Lists]

A Tale of Two Bailouts [Links Lists]

Silicon Valley’s Beleaguered Moneymen [Links Lists]

Last week: peHUB Rewind #13

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CHART OF THE DAY: What Phones Do People Dump For iPhone? [Silicon Alley Insider]

2009-07-17T14:19:00-07:00

What phones are Apple's iPhone buyers throwing away? A lot of Motorola RAZRs.

Some 29.4% of iPhone 3G buyers were upgrading from Motorola devices, according to Nielsen's Q2 2009 Mobile Insights Survey. About 11% of iPhone 3G buyers were ditching Samsung phones, and 9% were getting rid of RIM BlackBerry devices. About 9% were upgrading from older iPhones.

Not surprisingly, the list is fairly proportional to what other phone makers' U.S. market shares looked like 2 years ago, the last time many iPhone 3G buyers got new phones.

Read the rest of this story »

peHUB Second Opinion 7.17 [privateequityHUB]

2009-07-17T13:54:50-07:00

Goldman Sachs Internal Memo: Please limit high-fives and chest bumps to a dozen a day. Don’t wear your crowns, except around the office. (New Yorker)

Strip and Flip Crowd? Am I totally out of touch in my private-equity-covering bubble to think that we moved past calling buyout firms “strip-and-flippers” awhile ago? Particularly in the middle market, which is what this article refers to, the instances that can truly be considered “strip-and-flip” are rare enough that it seems inflammatory and sloppy to call it that. (Reuters)

Distressed UK Speculation: Why is the Gates Foundation taking reckless risks? (Reuters)

Great Headlines: CNBC Scores Big With Porn And Pot (Clusterstock)

PEC Testimony Before House Financial Services Committee: “But the critical point for the members of this Committee is that the failures of individual PE-owned companies, while hardly trivial, do not give rise to the kind of systemic risk relevant to policy makers seeking to prevent global financial shocks.” (PEC)

S&P’s Solution to the AAA problem? Rotate analysts. Bogus AAAs are clearly here to stay, Dealbreaker writes.

For Fun: The 50 greatest movie trailers. (IFC)

IPO Watch: Australia version. (Carried Interest)

Happy Birthday Pete Peterson: Q&A with the Blackstone big. (FT)

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ACAS Alums Form New Mezz Fund: Boathouse Capital [privateequityHUB]

2009-07-17T13:36:37-07:00

A group of ex-American Capital professionals has teamed up to launch a new mezzanine fund based in Wayne, Penn.

Boathouse Capital is the second of what’s sure to be numerous new middle market lenders entering the fray in the aftermath of industry-wide layoffs. Last week CastleGuard Partners launched from the ashes of Freeport Financial, which earlier this year laid off all but four of its employees. Last summer the former vice chairman of CIT Group launched Tygris Commercial Finance Group, and former American Capital professionals formed Maranon Capital.

American Capital has undergone several rounds of layoffs, beginning as early as April 2008. Kenneth Jones, Stephen Gord, William Dyer and Chong Moua of the firm’s Philadelphia office joined forces to launch Boathouse Capital, which began fundraising toward an undisclosed sum of capital in the fall. The firm has applied for an SBIC license in hopes to leverage whatever amount of capital it raises. Boathouse Capital has not done a deal to date but plans to make mezzanine debt and non-control equity investments of up to $15 million “in top quality, later-stage businesses,” the company said.

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Novartis Extends Alnylam Deal [Xconomy VC/Deals]

2009-07-17T13:18:16-07:00

Life Sciences, deals, RNAi

Ryan McBride wrote:

Cambridge, MA-based Alnylam Pharmaceuticals (NASDAQ:ALNY) says that Swiss drug giant Novartis has opted to extend the companies’ research collaboration related to RNA interference treatments for a fifth year. The extension means that Novartis will continue to fund certain research and development efforts at Alnylam through October 2010. “We view this development as very positive for Alnylam because… it provides the company with additional non-dilutive R&D funding, and… it signals Novartis’ continued interest and investment in the RNA therapeutics space in general, and in Alnylam specifically,” wrote Simos Simeonidis, a biotech analyst for investment firm Rodman & Renshaw in New York, in a note to investors.

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UNDERWRITERS AND PARTNERS

Buy a Piece of Twitter History; Cofounder’s Berkeley House for Sale [privateequityHUB]

2009-07-17T12:44:59-07:00

The Berkeley Hills neighbors of Twitter cofounder Biz Stone better steel themselves for a massive street crowd this coming Sunday from 1 to 4 p.m. A little earlier today, Stone tweeted the listing for his two-bedroom, two-bath, William Wurster-designed family cottage. Price? $575,000.

“We loved our Wurster cottage in Berkeley but it’s time to move—if you’re into architecture, check it out: http://bit.ly/WJ1G6,” wrote Stone, who’s managed to attain rock-star status in the geek world this year.

“Cottage” isn’t a romantic euphemism, by the way. Wurster – once a big-wheel architectural teacher at UC Berkeley — built the small home as his own personal studio in 1960, according to the listing, which includes numerous shots of the home. (It also suggests that Stone has already moved into new digs; the house looks like it’s been staged for viewing.)

Btw, if you’re interested, note that the second bedroom is really more suited for an office.

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An Actual Twitter Security Problem: The Fake Retweet [Silicon Alley Insider]

2009-07-17T12:35:00-07:00

Twitter's stolen/hacked documents situation this week doesn't have anything to do with Twitter's security as a communication platform. But this does: The fake retweet, where one person uses common Twitter "retweet" lingo to make it sound like their statement is coming from someone else.

Such as these two (admittedly amusing) tweets purportedly from TechCrunch's Michael Arrington, who didn't actually say either of these things.

This isn't a huge problem yet, but at some point, Twitter might want to figure out a way to deal with it. The company is already rolling out "verified" accounts, to make sure people know which celebrities are really themselves. But that won't stop these impersonations via retweets.

Read the rest of this story »

Want to Climb the Business Ladder? It’s a Lot Easier if You’re Tall [privateequityHUB]

2009-07-17T12:13:27-07:00

Brooklyn-based journalist Ari Cohen recently published a book called, “The Tall Book: A Celebration of Life from on High.” Cohen knows a little about living in the clouds, having been a 5’3” eight-year-old who grew into the 6’ 3” adult she is today. But she also conducted some extensive research for her book that she argues, persuasively, gives tall people an advantage in the workplace (as well as elsewhere).

A couple of interesting Q&As have been been published about the book, including, today, by Fortune. It reminded me of some of the data points about which Cohen has been talking lately, and that I (5’ 9”) have personally found most intriguing.

* Tall people make an average of $789 per inch per year (for every inch above a person of average height), according to 50 years of salary surveys.

* According to numerous studies, when an employer is given the real and fictitious resume of two similarly competent employees, the tall employee will be chosen for the job 70 percent of the time.

* Thirty percent of American CEOs are 6’ 3” or taller(!).

* When friends talk, they do so at an average distance of 18 inches apart. When an employee talks with his or her boss, they typically stand four feet apart. When a tall person talks with anyone, he or she is given four feet.

* Over half of all U.S. senators are over 6′ tall.

* Over the last century, the average American president has measured in at 6’1”.

* Tall men are also the most successful dating population on earth, says Cohen. In an interview with Maclean’s magazine, she says that in her research, she found that most heterosexual people date within an 8 percent height difference, which she says is roughly five inches. “Tall men are the only ones who don’t do this,” she adds. “Tall men date whoever the hell they want.”

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Tour De France Racer Twitters His Wrist Surgery [Silicon Alley Insider]

2009-07-17T12:00:00-07:00

File Levi Leipheimer into the "oversharing" category!

The Tour de France racer -- Lance Armstrong's teammate on Team Astana -- has been tweeting his wrist surgery from France. Yikes!

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Palm Pre Not Ready For iPhone-Like Games [Silicon Alley Insider]

2009-07-17T11:45:00-07:00

Palm's (PALM) Pre smartphone and WebOS software developers kit aren't ready to support the kinds of gorgeous, motion-sensor-based games that have been so popular on Apple's (AAPL) iPhone, according to one developer.

iPhone developer Craig A. Hunter explains in a blog post, via Daring Fireball, that Palm's SDK doesn't give access to OpenGL graphics, "a requirement for serious games" or fast-enough access to the Pre's accelerometer.

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"I think registering with the SEC would kill a three-partner VC firm,” Michael Stark,..." [The Gong Show]

2009-07-17T11:22:46-07:00

““I think registering with the SEC would kill a three-partner VC firm,” Michael Stark, co-founder and general partner at Crosslink Capital”

- VCs protest registering with SEC (Dealscape)

Yikes! I sure hope not :)

Joking aside, If VC firms have to start registering with the SEC, I’m sure we’ll see a new industry of service providers that will help manage that process, just like all the 409a consultants or SarBox compliance firms that are around today.

Mark Cuban Cleared of Insider Trading Charges [privateequityHUB]

2009-07-17T11:10:28-07:00

Six weeks after the SEC’s inspector general began probing claims that staffers acted improperly while compiling a case against self-made billionaire Mark Cuban, the agency’s insider trading case has been thrown out.

Tweeted Cuban earlier: “Its been a great day so far, and its only going to get better! Back to Dallas to see the [family].”

It was back in November that Cuban was first charged by the SEC. Its claim: that Cuban sold his 6 percent stake in Canadian-based Internet search company Mamma.com in 2004, after being told by management that it was going to announce a PIPE financing.

According to the SEC, Cuban, who has called PIPE financings “a huge red flag,” almost immediately called his broker and told him to sell his entire 6 percent stake in Mamma.com – despite that the company’s announcement hadn’t yet been made public.

That call saved Cuban more than $750,000, said the government. The day after Mamma.com went public with its plans, shares in the company dropped by 9 percent.

Cuban’s attorneys have maintained all along he wasn’t told the PIPE offering was to be kept in confidence and Cuban himself said in a statement last year, “I am disappointed that the Commission chose to bring this case based upon its Enforcement staff’s win-at-any-cost ambitions. The staff’s process was result-oriented, facts be damned. The government’s claims are false and they will be proven to be so.”

In his ruling today, U.S. District Judge Sidney Fitzwater wrote that the SEC failed to allege that Cuban undertook a duty to refrain from trading information on a public stock offering that Mamma.com had planned. “Cuban cannot be held liable under the misappropriation theory of insider trading liability, even accepting all the well-pleaded facts as true and viewing them in the light most favorable to the SEC,” wrote Fitzwater.

Fitzwater has given the government 30 days to amend its case, but after the ruling, Cuban’s attorney told Reuters that he doubts that it will.

“Frankly, I think the government can’t prove the facts that they put in the first round, so I would be surprised if they re-plead here,” said the attorney, Paul Coggins of the global law firm Fish & Richardson. “I think they threw everything they had and more into this.”

The SEC had filed its civil case in the U.S. District Court for the Northern District of Texas in Dallas.

No word yet on whether its interagency probe continues.

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Seeking A Strong API/Platform Engineer [A VC]

2009-07-17T10:59:20-07:00

Our portfolio company Meetup has big potential for its API and platform and is looking for a super strong engineer to lead its efforts in this area. Meetup is located in NYC and is a strong, well funded leader in its category.

The right person:

Knows Java and Python inside out.
Has worked extensively with relational DB's.
Is comfortable "getting the word out" and evangelizing the API.
Is comfortable supporting a developer community.
Understands the architecture of the web and how it pertains to public API's.
Understands modern identity and authentication standards (OpenID, oAuth, etc.).

If you are this person or you know somebody who fits this description, please send an email to jobs@meetup.com.

The Truth About The iPhone [Silicon Alley Insider]

2009-07-17T10:30:00-07:00

Earlier this week, I ended a 12-year love affair with BlackBerry and bought an iPhone (3GS).

I described the decision process here, and the experience of buying it here. Because many of you are in a similar position--long-term BlackBerry users wondering whether to switch--I'll also describe the switchover experience.

Read the rest of this story »

Weekly Downgrade Wrap-Up: Where Does Portfolio Company Debt Stand? [privateequityHUB]

2009-07-17T10:27:35-07:00

As usual, we have a week’s worth of ratings agency actions on the debt of LBO-backed companies from Standard & Poor’s and Moody’s Investor Services.

This week the agencies were busy withdrawing ratings on bankrupt companies and issuing new ratings on newly-exchanged debt facilities. Almost every action is related in some way to bankruptcy or a distressed debt exchange, which we may as well get used to, because there’s a lot of debt out there to be refinanced. To be specific, around $190 billion worth of speculative-grade bonds will mature between 2009 and 2011, according to Moody’s. Fortunately $120 billion of that isn’t due until 2011.

In addition to the downgrades, upgrades and withdrawals, S&P did some outlook revising: The agency affirmed its ratings on Rite Aid Corp. but revised its outlook from ‘negative’ to ‘stable.’ The company owes its revised outlook to improved liquidity and financial flexibility. Rite Aid, which has investments on Contrarian Capital and Leonard Green & Partners, recently refinanced of the bulk of its 2010 debt maturities, including a new $1.0 billion asset-based revolving credit facility. Currently the company has a ‘B-‘ corporate credit rating.

Company: Sbarro, Inc.
Sponsor: MidOcean Partners
Upgrade: Moody’s upgraded the company’s 1st lien senior secured ratings to Caa1 (LGD 2, 17%) from Caa2 (LGD 2, 21%).
Highlights: “The upgrade … reflects the establishment earlier this year of its 2nd lien senior secured term loan. This resulted in a higher level of liabilities that are junior to these securities and provides the 1st lien revolver and term loan lenders with a greater level of support in a distressed situation.”

Company: Instant Web Inc.
Sponsor: Avista Capital
Downgrade: S&P lowered the company’s corporate credit rating corporate to ‘CCC’ from ‘B-’.
Highlights: “The ratings downgrade reflects our concern of a potential covenant violation as early as the fourth quarter of 2009, when the net debt to EBITDA covenant under the company’s first-lien senior credit facility steps down…” said Standard & Poor’s credit analyst Ariel Silverberg.

Company: Duane Reade Inc.
Sponsor: Oak Hill Capital Management Inc.
Ratings Assignment: S&P assigned its ‘B-’ issue-level and ‘4′ recovery ratings to Duane Reade Inc.’s proposed $215 million senior secured notes due 2015.
Highlights: “The ‘CC’ corporate credit rating reflects our view of Duane Reade’s recent discounted offer ($875 for each $1,000 principal amount) for the $195 million subordinated notes as a distressed exchange and tantamount to a default,” said Standard & Poor’s credit analyst Ana Lai. The ratings agency believes that Duane Reade’s highly leveraged capital structure may be unsustainable.

Company: Freedom Communications, Inc.
Sponsor: Blackstone Group and Providence Equity Partners
Withdrawal: Moody’s withdrew its rating on the company because it will
lack adequate information to maintain a rating going forward.
Highlights: “The most recent rating action occurred on March 18, 2009 when Moody’s downgraded Freedom’s Corporate Family rating to Caa3 from Caa1 and Probability of Default rating to Caa3 from Caa2.”

Company: NXP B.V.
Sponsor: Bain Capital, KKR
Upgrade: S&P raised its long-term corporate credit rating on the Dutch semiconductor manufacturer to ‘CCC’ from ‘SD’.
Highlights: “The ratings primarily reflect our assessment of NXP’s capital structure and financial risk profile as highly leveraged following NXP’s recently completed distressed cash exchange for its senior unsecured and senior secured notes,” said Standard & Poor’s credit analyst Patrice Cochelin.

Company: Euramax International
Sponsor: GS Capital Partners
Downgrade: S&P lowered its corporate credit rating on the company to ‘D’ from ‘CC’ followed its out-of-court restructuring with lenders. Moody’s lowered the company’s probability of default rating to D from Ca and withdrew the company from future coverage.

Company: RathGibson, Inc.
Sponsor: DLJ Merchant Banking Partners
Downgrade: Moody’s downgraded the company’s probability of default rating to D
from Ca.
Highlights: The downgrade follows the July 13, 2009 announcement that
RathGibson will reorganize under Chapter 11.

Company: Allis-Chalmers Energy
Sponsor: Lime Rock Partners (27.9% stake)
Upgrade: S&P raised its corporate credit rating on the company to ‘B-’ from ‘SD’.
Highlights: “The new corporate credit rating reflects decreased interest expense due to the reduction in debt levels and the company’s enhanced liquidity profile. However, in our view the changes are relatively minor given the company’s large debt levels and we remain concerned about weak industry fundamentals.”

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10 Things Twitter's Stolen Docs Taught Us [Silicon Alley Insider]

2009-07-17T10:27:00-07:00

A malicious hacker broke into a Twitter employee's Google Docs account and forwarded some 300 secret company documents to TechCrunch.

Unfortunately, that blog published the whole mess in a post that is so long it would take 25 pages to print out.

Who has time for that?

Read the rest of this story »

Microsoft and Yahoo Finally Making a Deal? [Xconomy VC/Deals]

2009-07-17T10:18:00-07:00

IT, Internet, Search Engine

Eric Hal Schwartz wrote:

Microsoft and Yahoo, after complicated negotiations and a few false starts, may be very close to announcing a deal wherein Redmond, WA-based Microsoft will take over the search advertising business run by Sunnyvale, CA-based Yahoo. The latest news, from a report on All Things Digital (and many other subsequent articles), indicates a formal announcement could be made as soon as next week. Microsoft executives are currently meeting with Yahoo in California to discuss the deal, possibly worth billions of dollars, and one that could give Microsoft an edge in dealing with its main search rival, Google.

According to reports, the discussions include notable Microsoft execs Satya Nadella, head of research and development in the online services division, senior vice president of the online audience business group Yusuf Mehdi, and president of the online services group (and former Yahoo executive) Qi Lu.

The latest round of talks between the two companies began in March, although they have nearly fallen apart several times due to the sheer complexity of the arrangement. But both sides have a lot to gain from settling those details. The money gained by Yahoo, both directly and in savings, would be a help as its search market share is attacked by both Google and Microsoft’s own new engine, Bing. And with Google so dominant, Microsoft needs all the leverage it can attain in the search arena.

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The Coming Apple Tablet-Netbook-Smartphone-Kindle Stats Problem [Silicon Alley Insider]

2009-07-17T10:00:00-07:00

As computers, smartphones, Internet tablets, game devices, and e-book readers all start to do more of the same things, it's going to get trickier defining markets and identifying success.

For instance, right now, market shares in the PC industry -- usually calculated by unit shipments -- are getting whacked around by companies selling cheap, low-margin netbooks.

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FDIC Mailbag: Comments on the Bank Investing Proposals [privateequityHUB]

2009-07-17T09:45:21-07:00

The FDIC is two weeks into the comment period on its proposed rules for PE bank investments, and has begun publishing the inbox. Only three up there so far, but I’d expect a slew more to appear before the August 10 deadline.

For the uninitiated, many of these rules are pointlessly punative and would literally prevent PE firms from investing in banks (troubled or otherwise). For example, a cross-guarantee requirement not only would violate a private equity fund’s charter, but would create the very systemic risk that some other legislation is trying to guard against.

The most pertinent comment comes from from Charles Moore, president of Banc Funds. Seems he’s okay with the rules for most, but not for firms (like his) that limit their investments to less than 10% ownership. As such, he’d like a safe harbor for those at 9.9% or below. He writes, in part:

“Since 1986, we have invested primarily in small depository institutions known as community banks… We think it is an important distinction to note that the pool of bank investors in the United States is not homogeneous, and the pool of private equity investors is not homogeneous… The proposed Qualifications would be very onerous for us. We are not a large investor with a large staff, but we have made dozens of investments over the years in banks where we owned between 5-9% of the company. We and other investors owning less than 9.9% would have our ability to invest capital eliminated without the 9.9% safe harbor.”

The other two emails come from individuals who do not identify themselves via any corporate affiliation. Someone named Alan Keeler argues that the proposed 15% leverage ratio requirement is far too high, and that a 10% ratio should be satisfactory. Then there is Michigan resident Mark Maisonneuve, who is outright “opposed to private equity ownership of banks,” adding that “private equity is the tenement landlord capital of the financial world.” (I disagree, but great line).

We’ll keep an eye on the FDIC’s site, and have put in a call to see if there are submitted comments that have yet to be posted.

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Sorry, YouTube Bears, You Were Wrong [Silicon Alley Insider]

2009-07-17T09:22:00-07:00

Ever since Google bought YouTube for $1.7 billion, a crowd of armchair analysts have cackled smugly about how colossally stupid this was.

$1.7 billion for THAT?

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Verizon's Shorter Exclusive Phone Deals Probably Won't Help You [Silicon Alley Insider]

2009-07-17T09:10:00-07:00

Don't get shocked by Verizon Wireless's pledge to shorten its exclusive cellphone deals to benefit small wireless rivals: It probably won't help you, and it won't hurt Verizon.

Verizon, the biggest U.S. carrier, is trying to make itself look better to the government by vowing that it will allow smaller wireless carriers, with 500,000 customers or fewer, get access to Verizon's exclusive handsets after six months.

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Exclusivity and Competition [A VC]

2009-07-17T08:54:01-07:00

Last week I wrote a post saying that I view the exclusive contracts that carriers negotiate with handset manufacturers as anti-competitive. I really don't want to see the government wade into this market if there is another way to unwind this practice.

I just saw the news that Verizon is offering to cut is exclusive contracts to six months. This is clearly in response to the threat of government regulation and I hope that voluntary changes in the market like this will get us where we need to go.

The bottom line for me is we should work toward a market where any device can operate with any phone number on any network. That is the architecture that has made the internet such an unbelievable platform for innovation.

The mobile market, if set up properly, may have even greater potential for innovation. The only thing that is currently holding it back is that the business and technical architecture of mobile is based on closed systems and exclusive contracts. It feels like we are moving, slowly but surely, in the right direction. That's good to know as a user of mobile devices and as an investor in the mobile web.

Cheech and Chong on Economics [Jeff Nolan]

2009-07-17T08:46:36-07:00

The economics part is in first 1:20. Via @GregorMacDonald

Name Calling: What's Behind These Tech Companies' Names? [Silicon Alley Insider]

2009-07-17T08:42:11-07:00

Why is Bing called Bing, and Ning called Ning?

SMH explains how seven popular tech companies got their names.

Bing. Microsoft was looking for something short, easy and global; and a name that would eventually convert to a verb, like "google."

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Femta Raises $1M [Xconomy VC/Deals]

2009-07-17T08:21:37-07:00

Life Sciences, funding, Venture Capital

Bruce V. Bigelow wrote:

Femta Pharmaceuticals, a San Diego biotech developing a new generation of antibody therapeutics, is raising $1 million in venture captial, according to a recent filing with government regulators. Investors were not disclosed in the filing, although San Francisco’s Latterell Venture Partners identifies Femta as one of its portfolio companies. Femta was founded last year.

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Mark Cuban's Insider Trading Case Dropped [Silicon Alley Insider]

2009-07-17T08:05:00-07:00

A federal judge has thrown out the SEC's insider trading suit against Dallas Mavericks owner (and digital entrepreneur) Mark Cuban, according to the AP.

Cuban was accused of dumping Mamma.com stock after learning about an impending stock offering in 2004.

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Microsoft Starts Long, Slow Process Of Killing The Videogame Disc [Silicon Alley Insider]

2009-07-17T07:55:00-07:00

Microsoft's (MSFT) latest Xbox Live update includes the first edition of Games on Demand, the Xbox equivalent of the iPhone App Store. This means that Xbox users will begin to be able to purchase, download, and install full games over the Internet, without having to go out to the store and buy a physical disc.

The idea is that this convenience factor will, over time, eventually replace the game disc. And by facilitating the game download, Microsoft stands to get a piece of the action that it wasn't getting before.

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Apple And The Mafia Threatened My Life Via My iPod, Says Man [Silicon Alley Insider]

2009-07-17T07:42:17-07:00

A California man is suing Apple (AAPL), claiming the company conspired with the Italian mafia to track and threaten him through his iPods, the Apple insider reports.

Gregory McKenna claims that an iPod shuffle that he bought on eBay and an iPod mini he bought from an Apple store were both rigged with receivers through which the Mafia transmitted death threats to him.

The lawsuit says that Apple "conspired with the Mafia and other Defendants to manufacture, distribute, and sell illegally bugged iPods and other electronic equipment to Plaintiff to perpetuate the stalking, extortion, and torture."

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CIT Debt Extends to Mega-Buyouts - Full List of Sponsor Facilities [privateequityHUB]

2009-07-17T07:22:29-07:00

As requested, we have posted the full list of 133 LBO-backed companies with CIT in the capital structure below. For reference, yesterday we posted a list of 30-some LBO-backed companies which used CIT as a lead arranger over the last three years. The full list is for the same time period.

The difference in size between the types of companies on the lists is striking: yesterday’s list of CIT-led transactions is clearly populated with middle market to lower middle market companies sponsored by likes of Thoma Cressey and Wind Point Partners. But this list shows that CIT’s reach goes all the way to the mega-buyouts.

Companies like Michaels Stores, backed by Blackstone and Bain Capital, Dollar General and HCA, backed by KKR, and Dunkin Brands, backed by Bain Capital and THL Partners, fall squarely into the mega-buyout category. Still, the majority of the companies are middle market.

Incidentally, CIT shares are trading up this morning as the firm scrambles to “secure lifelines” from private sector investors. One rumors that’s been circulating is that that JPMorgan may buy its “factoring” unit, which provides financing to the fashion world.

Update: Scribd is misbehaving, so I’ll post the list there as soon as I work that out. For now, view the list directly:

LBO-Backed Companies CIT Has Lent To (Any Part of Capital Structure)
pehub.com

Company Name	Date	Deal Amount (m)	Deal Amount (US$m)	Purpose

AHM Holdings 1 Inc	2-Feb-07	US$ 41	41	LBO

AccentHealth LLC	4-Sep-08	US$ 56	56	LBO

Accutest Corp	25-May-07	US$ 50	50	LBO

Ace Cash Express Inc	5-Oct-06	US$ 430	430	LBO

Activant Solutions Inc	2-May-06	US$ 430	430	LBO

Advanced Homecare Management	3-Aug-07	US$ 161	161	LBO

Advanced Homecare Management	25-Oct-06	US$ 8	8	LBO

Advantage Sales & Marketing	28-Mar-06	US$ 585	585	LBO

Alere Medical Inc	31-Mar-07	US$ 80	80	LBO

Ambulatory Services of America Inc	12-Dec-07	US$ 124	124	LBO

Anchor Drilling Fluids USA Inc	16-Apr-08	US$ 120	120	LBO

Anchor Hocking	1-Jun-07	US$ 69	69	LBO

Au Bon Pain	5-Mar-08	US$ 108	108	LBO

Audio Visual Services Corp	28-Feb-07	US$ 315	315	LBO

Blue Water Automotive Systems	17-May-06	US$ 68	68	Acquis. line

BondDesk	16-Aug-06	US$ 86	86	LBO

Booz-Allen & Hamilton	1-Jul-08	US$ 810	810	LBO

Bosque Power Co	20-Dec-07	US$ 413	413	LBO

Brickman Group	23-Jan-07	US$ 425	425	LBO

Business Records Management LLC	22-Feb-08	US$ 28	28	LBO

CCC Information Services Inc	10-Feb-06	US$ 300	300	LBO

CRC Health Corp	6-Feb-06	US$ 640	640	LBO

Cajun Operating Co	29-Jun-09	US$ 155	155	LBO

Catapult Learning LLC	20-Mar-08	US$ 47	47	LBO

Centra Industries Inc	31-Oct-07	US$ 72	72	LBO

Citadel Plastics LLC	8-Mar-07	US$ 43	43	LBO

CoTo Acquisition LLC	10-Jan-08	US$ 35	35	LBO

Community Hospice (CHA)	29-Jan-07	US$ 63	63	LBO

Concorde Career Colleges	30-Aug-06	US$ 65	65	LBO

Consolidated Precision Products	17-Apr-08	US$ 157	157	LBO

Contec	28-Jul-08	US$ 205	205	LBO

Contec	11-Jul-06	US$ 145	145	LBO

DAE Aviation	1-Oct-07	US$ 937	937	LBO

David’s Bridal Inc	31-Jan-07	US$ 450	450	LBO

Delta Rigging & Tools Inc	4-Aug-08	US$ 50	50	LBO

Dollar General	6-Jul-07	US$ 5,525	5,525	LBO

Dunkin Brands	20-Feb-06	US$ 1,800	1,800	LBO

Ellman International Inc	8-Feb-08	US$ 20	20	LBO

Entertainment Cruises Inc	22-Aug-06	US$ 61	61	LBO

Fenwal Inc	28-Feb-07	US$ 475	475	LBO

FiberMark Inc	8-Feb-08	US$ 168	168	LBO

General Electric Commercial Aviation Training [GECAT]	5-Jun-07	US$ 254	254	LBO

HC Cable OPCO LLC	21-Apr-08	US$ 50	50	LBO

HCA Inc	16-Feb-07	US$ 12,864	12,864	LBO

HMT Inc	21-Jun-07	US$ 137	137	LBO

Hargray Communications Group Inc	18-Jun-07	US$ 325	325	LBO

Harris Connect	15-Sep-08	US$ 26	26	LBO

Haven Hospitals	1-Dec-06	US$ 7	7	LBO

Hawkeye Renewables LLC	30-Jun-06	US$ 600	600	LBO

Hearthside Food Solutions	9-Apr-09	US$ 115	115	LBO

Hudson Group	29-Mar-08	US$ 295	295	LBO

Hudson Products Corp	25-Aug-08	US$ 375	375	LBO

IPS Corp	13-Jul-06	US$ 102	102	LBO

ITN	25-Sep-06	US$ 90	90	LBO

Identity Group	7-Dec-07	US$ 42	42	LBO

InfrastruX Group Inc	19-Apr-06	US$ 275	275	LBO

Inmar Inc	30-Apr-07	US$ 175	175	LBO

Interim Health Services	19-May-06	US$ 62	62	LBO

JHP Pharmaceuticals LLC	28-Sep-07	US$ 57	57	LBO

Jacuzzi Brands [Ex- US Industries Inc]	7-Feb-07	US$ 1,155	1,155	LBO

Jones Stephens	7-Sep-06	US$ 56	56	LBO

K2 Advisors LLC	30-Apr-07	US$ 129	129	LBO

Knape & Vogt	28-Jul-06	US$ 97	97	LBO

Lewis Goetz & Co Inc	6-Jun-07	US$ 98	98	LBO

Liberty Dialysis	18-Jan-06	US$ 30	30	LBO

Liberty Tire Services of Ohio LLC	5-Nov-08	US$ 110	110	LBO

Lord & Taylor	2-Oct-06	US$ 350	350	LBO

MECS Inc	31-Jan-08	US$ 190	190	LBO

Maritime Telecommunications Network	5-May-06	US$ 110	110	LBO

MedPlast Inc	18-Apr-08	US$ 39	39	LBO

Medtech Products Inc	15-Jul-08	US$ 38	38	LBO

Metals USA	17-May-07	US$ 450	450	LBO

Michael’s Finer Meats LLC	25-Feb-08	US$ 35	35	LBO

Michaels Stores Inc	31-Oct-06	US$ 2,400	2,400	LBO

Michaels Stores Inc	31-Oct-06	US$ 2,400	2,400	LBO

Mobile Storage Group	1-Aug-06	US$ 300	300	LBO

Modern Luxury Publishing	22-Jun-07	US$ 125	125	LBO

NCO Group Inc	15-Nov-06	US$ 1,069	1,069	LBO

National Envelope	4-Apr-06	US$ 220	220	LBO

National MENTOR	29-Jun-06	US$ 480	480	LBO

National Renal Institutes	7-Apr-06	US$ 300	300	LBO

Neff Corp	31-May-07	US$ 290	290	LBO

Neff Corp	31-May-07	US$ 350	350	LBO

New Acton Mobile Industries Inc	2-Feb-07	US$ 90	90	LBO

New Century Transportation	14-Aug-06	US$ 120	120	LBO

New World Gaming	1-Jul-07	US$ 1,065	1,065	LBO

Nutrition Physiology Corp	31-Jul-08	US$ 31	31	LBO

Nuveen Investments Inc	13-Nov-07	US$ 2,915	2,915	LBO

Obcorp LLC	30-Jan-09	US$ 36	36	LBO

PRACS Institute Ltd	14-Mar-07	US$ 189	189	LBO

Permian Tank & Manufacturing	6-Dec-07	US$ 77	77	LBO

Philosophy Inc	7-Mar-07	US$ 310	310	LBO

Primrose School Franchising Co	31-Mar-06	US$ 31	31	LBO

Primus International	7-Jun-06	US$ 190	190	LBO

RGIS Holdings	26-Apr-07	US$ 900	900	LBO

RanPak Inc	29-Feb-08	US$ 430	430	LBO

Randall-Reilly Publishing Co LLC	29-Feb-08	US$ 94	94	LBO

Renfro Corp	5-Oct-06	US$ 205	205	LBO

RollEase	31-Jul-07	US$ 41	41	LBO

Ryt-Way Industries	11-Aug-08	US$ 70	70	LBO

SJI LLC	6-Dec-07	US$ 83	83	LBO

Seaboard International Inc	18-Apr-07	US$ 55	55	LBO

Sequa Corp	3-Dec-07	US$ 2,050	2,050	LBO

Seven Media Pty Ltd	28-Dec-06	A$ 3,050	2,409	LBO

Sheplers Inc	30-Jul-07	US$ 35	35	LBO

Sleep Innovations	30-Mar-07	US$ 320	320	LBO

SourceCorp Inc	8-Jun-06	US$ 400	400	LBO

Southern California Pizza Co LLC	18-Aug-08	US$ 29	29	LBO

Sports Authority Inc	13-Apr-06	US$ 1,025	1,025	LBO

Sprint Industrial Holdings LLC	31-Oct-07	US$ 128	128	LBO

Stampede Meats	22-Mar-07	US$ 90	90	LBO

Star Tribune	1-Mar-07	US$ 486	486	LBO

Sterling Foods LLC	31-Dec-08	US$ 42	42	LBO

Sun Products Corp [ex-Huish Detergents Inc]	26-Apr-07	US$ 1,150	1,150	LBO

Surgical Care Affiliates	29-Jun-07	US$ 490	490	LBO

Surveymonkey.com	21-Apr-09	US$ 39	39	LBO

TMW Systems Inc	12-Sep-07	US$ 43	43	LBO

TRANZACT	31-Oct-07	US$ 80	80	LBO

Taylor Wharton International LLC	7-Dec-07	US$ 163	163	LBO

Team Health Inc	16-Mar-07	US$ 425	425	LBO

Thomas Nelson Inc	12-Jun-06	US$ 235	235	LBO

Transilwrap Co	4-Sep-07	US$ 95	95	LBO

TravelCLICK Holdings Inc	20-Dec-07	US$ 105	105	LBO

Tri-Star Electronics International Inc	2-Feb-07	US$ 123	123	LBO

Tribune Co	17-May-07	US$ 10,133	10,133	LBO

Tube City IMS Corp [ex-International Mill Service]	17-Jan-07	US$ 350	350	LBO

UP Acquisition Sub Inc	8-Feb-08	US$ 225	225	LBO

US HealthWorks Holding Co	20-Dec-06	US$ 135	135	LBO

Unifrax Corp	28-Apr-06	US$ 230	230	LBO

United Central Industrial Supply Co	28-Apr-06	US$ 142	142	LBO

Vistar Corp [Ex- Multifoods Distribution Group]	20-Jul-07	US$ 450	450	LBO

Webex Inc	10-Aug-07	US$ 40	40	LBO

Wesco Aircraft Hardware Corp	25-Sep-06	US$ 775	775	LBO

Yankee Candle Co	6-Feb-07	US$ 775	775	LBO

Source: Thomson Reuters and peHUB.com

Yesterday’s list of lead arranger transactions: If CIT Goes Down, These Companies May Be Hurting

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Facebook Violates Canadian Privacy Law [Silicon Alley Insider]

2009-07-17T07:01:00-07:00

Facebook.com has serious privacy gaps according to a report by Canada's privacy commissioner, Reuters says.

Privacy Commissioner Jennifer Stoddart said that privacy information on the site was confusing and incomplete.

Some of Facebook's violations as mentioned in the report are:

Retaining personal information of users who have deactivated their accounts.
Providing information on how to deactivate accounts, but not on how to delete accounts.
Disclosing users personal information to third-party developers. There are around 950,000 developers in 180 countries, Stoddart said via Reuters.

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Common Financing Mistakes: Missing The Land Grab [Mark Peter Davis]

2009-07-17T06:20:45-07:00

In my post, How To Finance Your Startup, I outlined a basic framework for deciding how to finance a startup. As a follow-on I wanted to use the framework to highlight the two most common types of financing strategy errors that I see entrepreneurs make.

Don't Miss The Land Grab

Some entrepreneurs start companies that sit in the top left corner of the matrix above - their financial model shows that for little money they can create a big company. While if they have substantial barriers from day 1 their model may reflect reality, if they don't have initial barriers they'll likely need to raise capital to grab share quickly and assert themselves in their marketplace.

For example, if eBay were first launched in our current world of extremely low technology costs, the founders would probably be able to make a case that they may not need to raise capital to build a big business. Hosting the site on the cloud and using what is now relatively basic technology, they might be able to launch the site for a small sum and run it profitably in the near term. The founders, however, would be remiss not to raise capital in that situation as the real barriers in the auction business (network effects) aren't significant until scale is achieved. While their business is small it's easier for competitors to challenge them.

This is a typical land grab situation: 1) barriers build with scale and 2) the cost of operating the business is low and therefore the initial barriers to entry are also minimal. In these situations it's often better to raise capital to expand the business quickly and build the scale required to make a defensible large business.

At the heart of these situations lies a hesitancy amongst some founders to be diluted by the investors. It's not unreasonable for entrepreneurs to be sensitive to dilution - it's logical. While simple intuition tells us that owning more of a company will translate into a bigger payout, however, it's not always true. Being too sensitive to dilution can lead entrepreneurs to miss the opportunity at hand. At the end of the day its the value of your stake in a company that matters - owning a smaller percentage of a highly valuable asset is often better than owning a lot of a company worth nothing.

In sum, you should take a real look at your company's initial barriers. If you have a business that can become large and limited initial barriers, you may be better off raising capital early in order to grab enough land to stop competitors.

GamerDNA Reveals Ad Network [Xconomy VC/Deals]

2009-07-17T06:19:36-07:00

video games, Web, deals

Ryan McBride wrote:

Cambridge, MA-based GamerDNA, a social network for video gamers, says that it has released an advertising network that enables game companies to deliver ads to people depending on the games they are playing and discussing online. The firm’s early customers for the ad network include big names in the game industry such as CCP Games, Dell, Funcom, Namco Bandai Games America, and Turbine, according to company. Wade has followed GamerDNA and its ambitious plans to grab its share of the growing, multibillion-dollar video game market.

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AOL Refugee Raises $7 Milllion For SB Nation [Silicon Alley Insider]

2009-07-17T06:05:00-07:00

Former AOL exec Jim bankoff raised $7 million for his sports news network, SB Nation, AllThingsD reports.

This second round of funding values the company at $30 million.

Founded in 2003 by DailyKos founder Markos Moulitsas, SB Nation is a sports blog and describes itself as "network of fan-centric online sports communities."

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Google Promises YouTube Profitability -- And Lots Of Pre-Rolls [Silicon Alley Insider]

2009-07-17T05:55:00-07:00

During yesterday's earnings call, Google (GOOG) execs said YouTube will finally be profitable soon. How?

By continuing to add short- and long-form premium content and then selling pre-roll ads against it.

Following this recipe, Google sales topper Nikesh Arora said YouTube's "monetized views" more than tripled in the last year.

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Microsoft Xbox Sales Grow While Industry Tanks [Silicon Alley Insider]

2009-07-17T05:38:00-07:00

U.S sales of video game hardware and software fell 31% to $1.17 billion in June, Reuters reports, citing a study by NPD Group Inc.

The drop is the biggest since 2000.

Sales of game software fell 29% to $625.8 million, while hardware sales dropped 38% to $382.6 million. Sales of accessories declined 22%.

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MSNBC Calls CNN Ad "Fiction Writing" [Silicon Alley Insider]

2009-07-17T05:27:00-07:00

According to the Nielsen ratings, MSNBC and Fox News stomped CNN in the second quarter, dropping it to the third-place among the coveted 25-54 demographic.

But none of that stopped CNN from putting out an ad proclaiming itself "No. 1, with more viewers than Fox and MSNBC."

LA Times: Confused? We can help. CNN is using a cumulative number that reflects anyone who watched CNN for six minutes in a given month, a tidbit it chose not to disclose in the ad. That's not a standard that advertisers traditionally embrace when trying to decide where to put their money, and CNN's rivals consider it a dubious number.

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peHUB First Read [privateequityHUB]

2009-07-17T04:30:36-07:00

* A Tale of Two Bailouts: “Goldman will surely deny that its risk-taking is subsidized by the taxpayer — but then so did Fannie Mae and Freddie Mac, right up to the bitter end. An implicit government guarantee is only free until it’s not, and when the bill comes due it tends to be huge. So for the moment, Goldman Sachs — or should we say Goldie Mac? — enjoys the best of both worlds: outsize profits for its traders and shareholders and a taxpayer backstop should anything go wrong.”

* Seven large companies beating the economic odds

* CNBC vs. Denninger vs. Roubini

* Morning Call: U.S. futures slip on GE earnings, London gears up for best week since January, European shares having their best week since November, the Nikkei rises 0.6% and Chinese stocks hit 13-month high.

* Politico: Jimmy Carter’s “malaise” speech wears well

* Benchmark Capital’s Bill Gurley chimes in on the “free” debate.

* Cerberus reportedly has bought Alpha Media, the Maxim magazine publisher that Quadrangle Group wrote off a while back.

* Four ways to make money off of mobile apps.

* When Lauren Cohen isn’t being a professor at Harvard Business School, he’s busy participating in strongmen competitions:

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Midway's Corporate Officers Clean Out Their Desks [Silicon Alley Insider]

2009-07-17T04:26:00-07:00

Twitter: "we absolutely did not give permission for these documents to be shared.” [Twitter]
Facebook doesn't do enough for user privacy, says watchdog [Reuters]
Ex-49er Steve Young joins VC firm [Mercury News]
Where tech companies got their name [SMH]
Warring Twitter books race to publication [Gawker]
Midway's corporate officers clean out their desks [IndustryGamers]
Viacom says its figured out Web video advertising [MediaMemo]
Letterman beats up on Conan some more [NYT]

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Premium Content Syndication and Monetization [The Gong Show]

2009-07-17T04:00:00-07:00

A few years ago I got a call from a friend at a large media company (name withheld to protect the innocent) who asked for some ideas/feedback regarding web syndication of the content his company owned. He saw all his content being bittorrented, remixed on YouTube, and posted in snippets on blogs. He understood that this was interesting user engagement and valuable viral marketing that should be fostered, but all of these use cases were illegal and unmonetized, so he had to do something.

He asked me if I had examples of successful web syndication of high-value video content for free… he was constructing a business case to the board and wanted to propose that they open up their archives of content, with monetization through ads attached, to be embedded anywhere, but he wanted some evidence, such as positive case studies to backup his proposal.

I didn’t know what to tell him. I certainly wanted to see his proposal adopted because I thought it was a great, daring idea, and it felt net-native. And, as a consumer of content, I thought they could build a terrific product out of free access to their archives. But, when I think of successful distribution of premium content on the web, I think of MLB.TV, WSJ, Netflix Watch Instantly, FT… I haven’t seen a *Big Win* by a media company that gave everything away for free and relied only on embedded ads for monetization.

I was pleased to read Bill Gurley’s take on the Free meme floating around the web because his opinions are in sync with my hesitation. Bill wrote:

Even though the marginal cost may be zero, if you have highly differentiated content, there is no reason to adopt a free business model… HBO’s hit shows should not be free. The NFL has no need to offer free access to all games. The Wall Street Journal is doing the exact right thing, and I find it peculiar that the New York Times is not executing the same strategy. I would also suggest that over the next two years you will see the majority of high-quality video content move behind a subscription wall, even at sites like Hulu.

So, in short, I still feel like I wish I could have been more helpful to my big media friend, but it wasn’t clear to me that free access to their content was the right solution for them, and I still haven’t figured it out today.

Biz Dev for Startups: 25 years of learning in 25 slides [Nothing To Say]

2009-07-17T03:49:56-07:00

I had the opportunity this evening to present to about 70 entrepreneurs at DreamitVentures in Philadelphia. My friend Steve Barsh helps run the program and asked me to speak about Business Development for Startups, and I was honored to be among an impressive group of speakers. This is a subject I'm passionate about - I've been focused on technology sales and BD since I graduated college, and it's still part of how I help portfolio companies as a VC. So I put this talk together with some of the things I've learned, and I hope it might be useful. Do you have any other BD ideas and best practices to share in the comments?

BDforStartups

Microsoft And Yahoo THIS CLOSE To A Search Deal. Again. [Silicon Alley Insider]

2009-07-17T02:48:18-07:00

Microsoft and Yahoo have gotten hot and heavy again on the search-display partnership, Kara Swisher says.

If the companies actually make it to the altar (which they should), it will be interesting to see what prompted this renewed enthusiasm for one another. Some possibilities:

Yahoo saw its search share declining again (death)
Microsoft finally dug deep into its pockets for some serious cash (because Microsoft, too, was startled that Bing's first month was such a bust?)

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Weekly Tweet archive [The Equity Kicker]

2009-07-17T01:01:59-07:00

One of the reasons I write this blog is as a sort of online scrap book or diary to record both my own thoughts and interesting third party content (I also have a Tumblog which does the same thing for more personal content) – and it has been bugging me for some time that my Tweets are not getting captured in either of these two places – something I got round to fixing this week.

So going forward every weekend there will be an automated post with all of my Tweets from the previous week (assuming all goes well with the plugins I’m using, and thanks to Alex King’s Twitter Tools for the Twitter digest functionality).

Unfortunately I tried and failed to turn off the Twitter update for that automated post, and as a result you will get a Twitter update for a post full of Tweets that you may have already seen. Apologies for the duplication.

As part of this I’ve also started Tweeting more links to interesting stories, both because I hope they will be interesting to those of you kind enough to follow me, and because I’d like to capture them for my own records.

Do let me know if any of this gets too much for you – either via the duplication of notification, the increase in the number of Tweets or even having the Tweet archive on TheEquityKicker in the first place (initially I planned to put it on Tumblr, but could only find plugins that a daily archive rather than weekly archive).

Presentation on VC activity in India at London [Shantanu Bhagwat on Globalization, Venture Capital etc...]

2009-07-17T00:29:10-07:00

Shared some slides at the India Investment Opportunities Forum in London yesterday. India Investment Opportunities Jul 09 View more presentations from Shantanu Bhagwat. I also talked about some of my investments (Myntra, Innoviti and ElementsAkademia) in India. It was a good interactive session. I felt the mood is turning upbeat (although less so here in London and in the US). More [...]

$50M for ConforMIS, $8.2M for ConnectEDU, $7.25M for MedVentive, & More Boston-Area Deals News [Xconomy VC/Deals]

2009-07-16T21:22:56-07:00

Roundup, deals, VC

Rebecca Zacks wrote:

I’m happy to say that the last week has provided a number of venture financings to talk about, and a few other deals as well.

—Waltham, MA-based North Bridge Venture Partners committed to participating in a planned $5 million Series A round of financing for MC10. The newbie firm, formed last year and housed in North Bridge’s office, aims to commercialize a stretchable silicon material that could be used to embed advanced electronics in a host of industrial and biomedical products.

—ConforMIS, a maker of customized implants for knee surgery based in Burlington, MA, raised $50 million in a Series D financing round. The sovereign funds of Kuwait and Singapore contributed to the round, as did previous backer Aeris Capital and others.

—Chemsford, MA-based OurStage, which runs an online community and marketplace for music, took in $3 million of a planned $6 million Series B round of venture capital. More than 100 angel investors reportedly back the firm, along with venture firm Signature Capital.

—ConnectEDU of Boston raised $8.2 million from Allen & Company and other investors in a Series C financing round. The startup makes online tools for college admissions and career planning.

—Tributes.com, a Boston-based provider of online obituary listings, raised a $1.2 million second round of funding from unnamed backers. The deal brings the firm’s total raised to $5.4 million.

—Burlington, MA-based voice technology giant Nuance Communications (NASDAQ: NUAN) acquired Seattle-based Jott, a provider of phone-based voice-to-text services, for an undisclosed sum.

—Mobile advertising software firm Nexage raised $4 million in a Series A round of venture capital and announced plans to relocate from Fremont, CA, to Boston. GrandBanks Capital of Wellesley, MA, and Toronto-based BlackBerry Partners Fund participated in the financing.

—GreenRay, a Westford, MA-based maker of plug-and-play solar panels, raised $2 million in a Series A round of financing. Quercus Trust led the first-round financing, which was joined by 21Ventures.

—Phase Forward (NASDAQ:PFWD) of Waltham, MA, agreed to pay $10 million to acquire the interactive voice and Web-response services business of Princeton, NJ-based Covance (NYSE:CVD). As part of the deal, Phase Forward will provide its clinical trials data management software to Covance’s customers.

—Waltham, MA-based MedVentive raised a $7.25 million Series C round of venture capital led by Excel Venture Management and joined by HLM Venture Partners and Long River Ventures. MedVentive provides business intelligence software for health plans, medical centers, and pharmacies.

—Sheldon, CT-based iMedX indicated in a regulatory filing that it has raised $13.3 million in a new round of financing that involved two investors. The firm provides outsourced transcription services for doctors using proprietary software.

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“Almost All” Will be Charging for Content? [Jeff Nolan]

2009-07-16T20:54:54-07:00

First of all, the Financial Times is a true gem of a news organization and they have a really smart team of folks working on the digital side. Bottom line, I have a ton of respect for that team. There is much good insight and advice found in this interview however it is obscured by this one soundbite.

The Financial Times editor, Lionel Barber, has predicted that “almost all” news organisations will be charging for online content within a year.
[From Financial Times editor says most news websites will charge within a year | Media | guardian.co.uk]

Barber goes on to say that the big impediment is a payment mechanism (he didn’t say a micropayment system but that is pretty much what he is referring to). Sorry, the problem isn’t that people can’t pay by the article but rather that they have not demonstrated any interest or intent in a pay by the article scheme. I might do it for financial news but it’s a big maybe because it’s more likely that I’ll step up to a subscription and there simply isn’t a lot of elasticity in subscription rates and when the advertising component continue to suck wind there is little good news in the financial pictures these groups can expect.

Insofar as “almost all” news organizations doing it… well that only works if indeed almost all do it and do it pretty much in a coordinated fashion otherwise it’s a classic prisoner’s dilemma game. Why would one news group turn on a payment scheme when a competitor featuring the same content could continue offering it for free?

The odds of all the major news organizations coordinating such a move is nil because we all know these guys couldn’t organize a piss-up in a brewery, at least not so when it comes to monetizing their digital experience. Something has to change in online news but a pay by the article scheme simply isn’t the answer that will bring relief to a battered industry.

iPhone Beer Pong App Making $7,000 A Month From Ads [Silicon Alley Insider]

2009-07-16T15:15:00-07:00

Another advertising data point from Apple's (AAPL) wildly popular iPhone app store: Beer Pong Challenge, an iPhone app that lets you play beer pong, is making more than $7,000 a month from ads.

Specifically, publisher Super Experiment is making an average $7,296 a month from in-game ads, at a $3.21 effective CPM. (That means that for every 1,000 impressions, the company gets $3.21.) The company exclusively uses Greystripe as its mobile ad network, displaying multimedia ads that take up the full screen. (Sample below.)

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Stolen Docs Reveal Minutes From Twitter's Google Meeting [Silicon Alley Insider]

2009-07-16T14:22:00-07:00

On March 12, Twitter met with to discuss how a long-rumored search deal with Google would work. Here are the notes from the meeting, according to stolen documents posted on TechCrunch.

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Still bailing [The Fein Line]

2009-07-16T14:16:56-07:00

In light of the huge profits announced by Goldman Sachs and JP Morgan, I continue to feel that we've been taken for a ride by our Treasury Department (under both Paulson and Geithner). They rushed through big bailouts for these banks, and these banks were probably in trouble. But, if you believe Elizabeth Warren (she heads up the Congressional panel that is overseeing the bailout), we're continuing to subsidize these banks.

First, her team's analysis showed that the initial bank investments we all made were done at a 34% discount. That means that the moment that the money was transferred from the US Treasury to the banks that we lost 34%. This was before any stock moves up or down, etc. We just gave them a bunch of free money and didn't get enough value back in return. Keep in mind that we made these investments at a 34% discount AFTER their stocks had already dropped alot due to investor fears.

Now, the banks are repaying the money and looking to buy back the warrants that they issued to the government. These warrants were our 'upside' to reward the taxpayers for being the bailer-outer of last resort. According to what I heard on NPR's Hear and Now yesterday, Elizabeth Warren now also estimates that the government is selling back the warrants to these successful banks at a 34% discount. No wonder these banks have such huge profits so fast!

I'm glad that the banks are healthy. There is no doubt that they have returned to health due to the large government bailouts, including money paid to AIG that went right out to banks such as these as part of AIG's obligations. But, with such financial health, we shouldn't be cutting our share of the upside. We need people in the Treasury who hold the line for taxpayers.

I'm glad that Ms. Warren is so outspoken. You can find her on all kinds of shows, including this two part interview from The Daily Show (Part 1 and Part 2). Let's hope she keeps it up.

The Daily Show With Jon Stewart

Mon - Thurs 11p / 10c

Elizabeth Warren Pt. 1

www.thedailyshow.com

Daily Show
Full Episodes

Political Humor

Joke of the Day

The Daily Show With Jon Stewart

Mon - Thurs 11p / 10c

Elizabeth Warren Pt. 2

www.thedailyshow.com

Daily Show
Full Episodes

Political Humor

Joke of the Day

Twitter Plans IPO Or Sale Of Company Next Year [Silicon Alley Insider]

2009-07-16T13:53:00-07:00

Another fun tidbit from the stolen Twitter docs (which Twitter has disavowed):

In the document below, Twitter discusses the possibility of "engaging" investment bank Morgan Stanley.

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Twitter's Stolen Docs Reveal Internal Product Ideas [Silicon Alley Insider]

2009-07-16T13:37:00-07:00

According to stolen documents published on TechCrunch, Twitter plans to have $140 million revenues by 2010 and $1.5 billion sales by 2013. How?

Notes from a meeting incidate:

Verified accounts, the "fastest way to make money without putting a whole organization behind it.”
Search ads.
Sponsored Tweets
AdSense Widgets
Payments

Here are the notes:

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CNBC Blows Google Earnings, Gives Revenue A Billion-Dollar Haircut [Silicon Alley Insider]

2009-07-16T13:25:00-07:00

Google just announced in-line net revenues of $4.07 billion. (See Henry Blodget's live analysis here.) But CNBC mistakenly reported Google's net sales as $3.07 billion before correcting themselves a moment later.

"To come up almost -- well, over -- almost a billion dollars short is going to take a lot of people by surprise and not in a good way," CNBC's Jim Goldman said, according to media monitoring firm TVEyes.

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Twitter's Preferred List Of Investment Bankers [Silicon Alley Insider]

2009-07-16T13:23:00-07:00

Twitter plans to reach $140 million revenues by 2010 and $1.5 billion revenues by 2013. If it gets there, it's going to be a startup any banker would want to take public.

But Twitter doesn't want to work with just anybody.

According to stolen documents posted on TechCrunch, Twitter drew up the following list of bankers it wants to work with "for a year and a half - exchange favors, then use them for the transaction.”

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Twitter's Stolen Docs Ask: "How Could Facebook Kill Us?" [Silicon Alley Insider]

2009-07-16T13:19:00-07:00

TechCrunch published more internal Twitter docs the blog recieved from a hacker who stole them.

Reading them, we're fascinated by how seriously Twitter takes its competition with Facebook.

At one point, Twitter execs held a meeting to answer the question "How could Facebook kill us?"

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Google's Growth Grinds To A Halt [Silicon Alley Insider]

2009-07-16T13:01:00-07:00

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Google Earnings Cheat Sheet [Silicon Alley Insider]

2009-07-16T12:42:00-07:00

Google reports Q2 after the close (GOOG). We'll be providing live analysis and commentary starting at 4PM ET. Hope you'll join us!

Background:

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CHART OF THE DAY: Sorry, M&A Isn't Coming Back Soon [Silicon Alley Insider]

2009-07-16T12:40:00-07:00

The equities tracked by the S&P 500 seem to have bottomed. Does that mean we can expect the mergers-and-acquisitions market to pick up any time soon?

Not according to this chart via the WSJ's Deal Journal, used by J.P. Morgan in a conference. It shows that after the last two S&P plunges, U.S. M&A volume grew very slowly. Assuming the same thing happens this time, this is obviously not great news for all those VCs so worried about finding exits for their startups.

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Soliciting questions for Glasshouse VC panel next week [The Equity Kicker]

2009-07-16T11:55:16-07:00

I’m doing a panel next week at the Glasshouse Show Me The Money event next Tuesday. The other panelists will be Michael Birch (Bebo and now the PRO Founders Fund), Rory Cellan-Jones (BBC) and Andreas Lazar (Allen & Co).

The idea is that the discussion will help entrepreneurs make the right choices about funding and dispel some of the myths about VC. To that end if you’ve got any topics/questions/lessons learned that it would be interesting for us to talk about please let us know in the comments.

AboutUs Adds $1.2M from Voyager, Others [Xconomy VC/Deals]

2009-07-16T10:50:00-07:00

deals, Internet, VC

Gregory T. Huang wrote:

Portland, OR-based AboutUs, an Internet startup focused on information discovery and sharing, has closed $1.2 million in financing, according to an SEC filing. CEO Ray King confirmed the funding, saying it rounds out the company’s Series A. Back in January, AboutUs announced a $2.5 million commitment from Seattle-based Voyager Capital. The latest tranche closing includes $1 million from Voyager, fulfilling its $2.5 million commitment, and $200,000 from other investors. Erik Benson of Voyager and Paul Stahura of Demand Media are listed as directors.

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Diversions: Drugs and Power at the Tour de France [Paul Kedrosky's Infectious Greed]

2009-07-16T10:44:09-07:00

Great and quant-friendly post up at Sports Scientists mulling the relationship among power output, drug use, and Tour de France climbing rates over the last decade. The conclusion -- alongside freakish power output figures over time -- is the unsurprising and sad one that performance-enhancing drug usage remain a problem in the world’s greatest cycling race.

Philips Buys Kamen’s Teletrol [Xconomy VC/Deals]

2009-07-16T09:54:10-07:00

IT, deals, energy

Wade Roush wrote:

Royal Philips Electronics of Amsterdam announced today that it has acquired Teletrol Systems, a Manchester, NH, company that specializes in providing software that automates the management of power and lighting systems in buildings. With 37 employees, Teletrol was founded in 1985 and was wholly owned by Dean Kamen, the famed inventor and founder of DEKA Research and Development in Manchester. Financial details of the sale were not disclosed. According to Philips, the operations of Teletrol will be incorporated into its Philips Lighting unit.

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Blue Marble Closes Series A Funding [Xconomy VC/Deals]

2009-07-16T09:17:55-07:00

cleantech, deals, funding

Eric Hal Schwartz wrote:

Blue Marble Energy announced today that it had reached its Series A financing goal. The Seattle-based company is developing ways of turning organic material like algae and human waste into useful chemicals and renewable fuel. Financial details of the funding were not disclosed, but in April Blue Marble reported in an SEC filing that it had raised approximately $1 million of a $2 million offer in equity.

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How To Finance Your Startup [Mark Peter Davis]

2009-07-16T07:53:39-07:00

How entrepreneurs finance their company is one of the most critical decisions that they will make during the course of their startup. The structure of their financing will be one of the key drivers of the financial return from their venture.

There are financing structures for companies that have small potential and structures for companies that have big potential. There is not a one-size fits all strategy for capitalizing a company.

Ultimately, financing a startup properly boils down to aligning the financing structure with the business opportunity and capital needs. In other words, the way in which you elect to finance your company should at a high-level be determined by 1) how big of a business opportunity it presents and 2) how much capital is required to breakeven. While there are a number of other considerations, but I would argue that these are the first two dimensions to consider as they should help entrepreneurs more quickly find the right direction for their financial strategy.

The 2x2 chart below should help to illustrate how to think about which fundraising category that they are in.

Venture Capital
If you have a big idea that can generate at least $50M in revenue and the business requires millions of dollars to get the company to a cash flow positive position, you should probably pursue venture capital.

Not Viable
If your business requires significant capital, but is not poised to become a large business you may not be able to find a viable funding source. You will either need to find dumb money or trick savvy investors into believing your company has bigger prospects. If your company falls into this category, you should probably go back to the drawing board and find another opportunity to pursue.

Bootstrap
If you have the potential to build a small business - one that generates single-digit or low double-digit millions in revenue - while requiring little capital to achieve breakeven, you have a lifestyle business. In my opinion lifestyles business are best financed when the founders take as little outside capital as possible - these are companies where it's really only exciting for founders if they own a large percentage of the equity. Additionally, by raising less capital entrepreneurs will be able to avoid accruing a large amount of liquidity preference. If there is a significant amount of liquidity preference in the company, it may be difficult for the entrepreneurs to realize a meaningful payout when the sell the company.

Depends On Barriers
If your company has the potential to become a big business and requires little capital to get there the decision between bootstrapping the company and raising venture capital generally boils down to your expected barriers. If there is little risk of a competitor beating you to scale and taking the opportunity, because you have a unique approach, protected IP or otherwise, then you may want to bootstrap the company in order to maximize your ownership of the company. If your barriers are limited, however, and additional capital can help you capture market share more quickly, securing the opportunity, then you should consider venture capital.

I frequently meet entrepreneurs that should be bootstrapping who are seeking venture capital or entrepreneurs that should be seeking venture capital when they are bootstrapping. The former could limit their returns by loading too much liquidity preference into the business, the latter is often building the business too slowly to capture the opportunity properly.

Picking the right fundraising strategy is often as significant of an indicator of the founder's payout as selecting the right business strategy. Take the time to understand what type of company you are building and finance it properly.

Alex's News Picks: July 16th [Mark Peter Davis]

2009-07-16T07:24:52-07:00

RFID Makes Running Marathons More Fun [Feld Thoughts]

2009-07-16T05:43:48-07:00

When I ran my first marathon in 1983, I remember carefully filling out all the information on my race number so that when I crossed the finish line the race organizers could actually figure out my time and place. I can’t remember, but I don’t think any computers were involved; I believe it was entirely a manual process. Maybe there was an Apple II and a copy of Visicalc or dBase II somewhere behind the scenes, but I doubt it.

This is a photo of 25,000 people running the inaugural Seattle Rock ‘N’ Roll Marathon last weekend. Each of them is wearing a tiny ChronoTrack D-tag which contains an RFID chip made by Impinj.

Now, if you’ve ever run a marathon (or any organized road race), you know that the timing systems have made huge progress in the past decade. Runners in big races now talk about “chip time” which is the actual time you ran the race; the time it takes from the point you crossed the starting line to the point you crossed the finish line. No more adjusting your “time” for the 2 minutes and 33 seconds it takes to get across the starting line (or – if you are a back of the pack starter like me, the 10+ minutes it occasionally takes.)

However, if you are like me, you hate the fucking two ounces of plastic you have to tie to your shoe, or wrap around your ankle, or weave into your shoelaces. It’s uncomfortable, unbalanced (two ounces on your right ankle over 26.2 miles is actually noticeable), and super frustrating when it doesn’t work. Then, when you get to the finish line, you have to get it off your shoe (usually with help from a race helper person) and give it back! Blech.

The RFID chip approach completely changes the whole dynamic. It’s light weight (imperceptible), trivial to attach to your shoe, and you can keep it because it’s extremely inexpensive. Plus, I find it awesomely cool to wear an RFID tag while I’m running (and use another product from a company in which I’m an investor in a way I hadn’t expected.) Fun!

Sciele Pharma Cancels Victory Pharma Buyout, Life Science Startups Raise Capital, Sorrento Therapeutics Engineers Reverse Merger, & More San Diego Life Sciences News [Xconomy VC/Deals]

2009-07-16T05:40:42-07:00

Roundup, Life Sciences, deals

Bruce V. Bigelow wrote:

We saw a couple of San Diego’s life sciences companies successfully raise capital in the past week. But a couple of others experienced problems that would have been difficult to anticipate.

—Sciele Pharma, an Atlanta, GA, unit of Japan’s Shionogi & Co. left San Diego’s Victory Pharma at the altar last week, after announcing in May that it would acquire Victory Pharma for $150 million. Sciele said only that the cancellation was due to an unforseen development after the agreement was signed. However, Denise found that an FDA advisory committee’s call for banning drugs that combine acetaminophen and narcotics could affect two of the pain relievers marketed by Victory Pharma.

—San Diego’s Sorrento Therapeutics, which raised $2.3 million in June, announced it has arranged a reverse merger with QuikByte Software, a Florida company with registered securities but is no longer in business. Once the merger is completed, Sorrento Therapeutics will take over the dormant shell company to become a publicly traded company. QuikByte will officially be renamed and relocate its headquarters to San Diego. The deal, which is expected to close by the end of September, is subject to QuikByte getting an aggregate investment of $2 million. Sorrento Therapeutics specializes in new methods for developing fully human monoclonal antibodies. Antonius Schuh will continue to head the startup as CEO.

—Telegraph Hill Partners, a San Francisco private equity firm, has put $5 million in venture funding into Poway, CA-based Nexus Biosystems, a four-year-old biotech. Nexus specializes in making automated sample storage and retrieval systems for use by biotech laboratories in storing biological samples.

—TorreyPines Therapeutics is trying again today to muster enough shareholder votes to approve a liquidation plan for the San Diego biotech. The company had to continue its special shareholder meeting last week after failing to get a simple majority of shareholder votes to approve a measure to dissolve the company.

—Carlsbad, CA-based biomedical diagnostics startup Helixis has raised $5.5 million out of a planned secondary round of $6.5 million in venture capital funding. The company plans to commercialize advanced molecular diagnostic technology developed by two prominent Caltech scientists.

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