The return of tech IPOs?
Paul Kedrosky has an interesting post predicting that 2006 is the end of the misery for venture-backed technology companies seeking an IPO exit and that 2007 will see a resurgence. It seems that he is suggesting that the supply of attractive tech equities is shrinking (or has shrunk enough), yet the demand for tech equities will remain constant or increase and the potential issuers are lacking in attractive exit options in the private market.
We know the tech IPO market will return eventually. I just do not know if the catalysts that Paul suggests are either true catalysts or are enough at this time. It is true that many new tech companies are generating meaningful revenues, and I am a firm believer that Web 2.0 does represent a fundamental value creation opportunity. I am struggling with identifying where the next set of leaders are in this new wave of value creation. Where are the standalone entities such as Amazon, eBay, Yahoo, and Google (among all of the other high-value product line staples, such as PayPal, etc.) in this new mix of prospective IPO candidates?
Reflecting back on the period of 1994-1997, I think many of us back then knew that Amazon, Yahoo, and eBay were going to be successes. Google came along later and became a verb, ensuring it’s place in line. Can you say the same about YouTube or Facebook? Maybe, but it is not as obvious in my view, unless I’m just getting to be too old.
What’s more, did we ever see the Web 1.0 leaders so actively trying to sell themselves to the highest bidder? While I suppose that with the IPO market being so dry, no alternative really exists. But if things are so great, who really cares what your valuation is or should be, and why sell now? So much private equity money is available now that if an awesome growth story exists of Google or even eBay like proportions, and that company needed capital, the private equity markets are awash in investment dollars to fuel the fire. Raise the cash, grow the business, and take it public when the time and market is right.
With all of the talk about how much FaceBook is worth and how much a bidder should pay, it seems that all may not be as great as it seems and some may be desperate to cash out before the party ends rather than just growing the thing like Google did. I don’t believe there has been as much talk about YouTube’s valuation by its insiders yet, and it may actually be the real deal. Time will tell.
I do hope Paul is right and 2007 is a resurgence of tech IPOs, even if it is just a moderate uptick (nobody is expecting a return to 1999 here). I would like to see a little more fundamental support in the prospective candidates that will fuel this return of the IPO market before getting my hopes up too high.
– brian
Theodore Levitt on the value of customer engagement
While perusing through the hundreds of feeds in my feed reader, I came across this post from Mike Hirshland of Polaris Ventures and author of the blog VC Mike.
In it he references the following quote from the book Marketing Myopia, initially authored in 1960 by one of the great marketing minds Theodore Levitt.
“The railroads did not stop growing because the need for passenger and freight transportation declined. That grew. The railroads are in trouble today not because that need was filled by others (cars, trucks, airplanes, and even telephones) but because it was not filled by the railroads themselves. They let others take customers away from them because they assumed themselves to be in the railroad business rather than in the transportation business. The reason they defined their industry incorrectly was that they were railroad oriented instead of transportation oriented; they were product oriented instead of customer oriented.â€
I initially read this book when I was fresh out of college in an entry engineering role at P&G trying to make a switch into Brand Management. I have continued to reference it throughout my career; I remember this specific quote vividly.
It’s a compelling reminder from way back in 1960 that being customer-focused rather than product-focused is the right way to go. Companies cannot go wrong in getting ever closer to its customers and engaging them on multiple levels. The value of doing so is always there, and new tools, enabling technologies, and evolving business processes make the ability to continuously improve in getting closer to customers a reality.
– brian
Interesting VC analysis
Peter Rip at Early Stage VC has an interesting series of blog posts that he is producing on Venture Capital 2.0. This post caught my attention for some data that was in it regarding ways for limited partners to successfully pick VC funds which will earn the outsized returns.
I copied the paragraph below:
Last year Alignment Capital published a really interesting analysis of fund managers that speaks to these two criteria. After analyzing 645 separate venture funds, they found:
- Longevity weakly correlates with IRR, showing continuous improvement between funds I and III, leveling off thereafter.
- Second quartile funds were nearly as likely to have a top-quartile follow-on fund as the current top-quartile funds.
Point #2 above was very interesting and unexpected. Essentially it means that the next set of funds that will earn outsized returns can come from a pool of half of the funds in existence. As a limited partner, where fund selection is this asset class is critical to achieving proper risk adjusted return, how does one pick which funds to allocate capital for this asset class?
– brian
Social Networks and Business
While the consumer-to-consumer side of the web is buzzing with the advent and growth of social networks such as MySpace and Facebook among others, we at Kalivo are ear-deep in the process of figuring out how to enable businesses with the powerful marketing and loyalty building capabilities that social networking makes possible. I’d like to start by re-phrasing the term ’social network’ in the context of business use. For businesses, I prefer to refer to these as ‘professional networks’, as typically in business the networking is related to building professional capability and/or expertise and connections.
The question around which I would like to start this conversation is related to whether business social networks - i.e. professional networks - will be a mass scale phenomenon like on the consumer side with a couple of huge winners, or whether niches will rule. I will posit that, in the context of a professional network, relevance matters more than scale. A lot of folks are out searching or trying to create the business version of MySpace, yet I do not think that only one will emerge.
In the business world, professionals have areas of expertise that they and their companies rely upon to drive value for customers and for one’s career. In one’s professional career, being connected to more folks like oneself is a way to continue to (1) learn, (2) teach, (3) find job opportunities, (4) problem solve, and (5) identify relevant resources to aid in your job success. Whether you are a processing engineer, a risk management professional, a CIO, or a loan officer, you have a specific professional peer group with which collaboration can be mutually beneficial. Yet, in many to most cases (unless you are a sales executive), collaborating across these professions outside of the walls of your company is not nearly as beneficial.
For any one of these professional areas we would not expect to find 100 million or even 10 million people, a statistic which represents the aspirations of most consumer-oriented social networks. In fact, in some professional niches you may find 50,000 or 100,000 people in total. Does the fact that the number is small make is such that professional networks online should not exist? Can the expense of operating such a service for a relatively small community be economically viable? After all someone has to fund and operate the network for it to exist.
I believe that not only these professional networks should and must exist, but that it can be a profitable endeavor to provide the underlying professional network service to groups of this size. In fact, it is plausible to argue that professional networks must exist in these size chunks and that anything larger would falter due to irrelevance.
All arguments are made more valuable with examples. Here are a few professional networks that we have found in our discussions that appear to be successful and focused on an appropriate professional niche. I have no evidence that says any of these networks have millions of members.
- DBAZine sponspored by BMC Software for database administration professionals
- Enterprise Leadership sponsored by BMC Software for CIOs
- CRM Success sponsored by Salesforce.com for sales professionals
The value to the professional network provider is (1) a captive, highly relevant and active audience and (2) rich information about the professional behaviors and activities of the membership, and (3) the potential for word-of-mouth promotion through the conversations happening on the network hub. The operator of a successful niche professional network can reap revenue benefits from selling sponsorships, advertising, data & analytics, and the ability to converse with and poll the members to those businesses that are trying to target the professionals collaborating in the network. Such access to highly relevant decision-makers, users, and/or influencers for a given product is very valuable to the marketing department of any company.
Dare I say it … there may be a long tail effect here. All metaphors and models aside, I do believe that the future of professional networks will be built one niche at a time. Kalivo has built the Professional Hub product specifically to power these types of professional networks.
– brian
Impending MacBook problems
My 6 month old MacBook Pro just started making a weird noise the past two days. The best way to describe it seems to be that it sounds like a car idling in the driveway. A very soft chugging that is repeatable.
Time for a backup and a trip to the Apple store …. if I can get on the Genuis bar list.
Also makes me wonder about the durability of Apple notebooks in general. I bought this b/c my 13 month old 17" Powerbook was in for repair for a bad hard drive and motherboard (I made out OK by taking the prepaid service flat fee not knowing what the problem was). Now this one is barely 6 months old and is showing bad signs.
I’ve been rougher with laptops than I was with these beauties … with no physical problems with the hardware for longer periods of time. Hmmm ….
Anyone else seeing this type of problem on the MacBook?
– brian
The value of a company evangelist
Pluggd just launched their corporate blog. You can read and/or subscribe to it here. One of the interesting things about the blog is that it is primarily authored by someone that is not a Pluggd employee. Drew is a podcast producer and podcast consumer and Pluggd user, and he apparently loves the Pluggd service. So he offered to blog about it for them!
Great stuff. There is likely to be no better evangelist that a loyal and satisfied user.
– brian
Pluggd continues its rise … and they’ll be at DEMO
Alex continues to make strides with Pluggd. Recently they were selected to present at DEMO, which should be a great boost for the service.
Read about it here.
– brian
links for 2006-08-22
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(tags: investing)
Mazda - the customers take charge
Since starting Kalivo, we are continually asked for examples where the customer has taken charge using the Web to effect change in a company that serves them, or at the very least begin to have their voice heard. I am a bit late to highlight this example, but since it’s only been about 2 weeks, I think it’s still news and it is an effective example. So, here goes.
Recently a video communication between Mazda and its dealers was made public on the Web via Google Video. In it contained an announcement of a change in procedure whereby Mazda would not count poor customer satisfaction survey scores at dealerships for their RX-8 product. Rather than recount the entire episode here, John Neff from Autoblog has done a great job summarizing the entire event and the ensuing customer eruption on the Web.
I believe this event is another good example of the power that customers increasingly have using the technologies and the global conversation vehicle of the Web today. It also highlights how rapidly an incident like this can expand.
Following this story to Digg, a content community site where a story can ascend to the top of the heap based on how many people in the community voted for (i.e. “digg”) the story, you can see well over 300 Digg users thought this was interesting.
What’s more, the RX-8 enthusiast site, RX-8 Club had a discussion on this issue as well. This site is compelling, as it appears to be loaded with current RX-8 owners, whom of course are potential repeat customers and product evangelists. I counted some statistics for the rx8club.com community, and here they are: over 6,360 members, 13,789 discussion threads, and 234,215 individual posts! Pretty active for a single product line from Mazda.
Mazda chose to respond to this incident with a stock message directed at the RX-8 community site rx8club.com directly from the Product Communications Manager of Mazda’s North American operations. This stock response was a classic blessed message with no ability to reply, respond or otherwise engage. It can be viewed by clicking on either the Autoblog link or rx8club.com discusson thread. Mazda needed to seize on this event and engage with its enthusiasts here, rather than deliver a stock one-way message; instead, they chose to pass on the opportunity to further degrade goodwill with their customers.
For me, this incident, the response from Mazda, and the ensuing additional frustration among RX-8 customers is a tangible example and it highlights a few important points:
- customers are now empowered by their own ability to self-aggregate and interact on the Web, and they are increasingly leveraging that power
- the traditional means of communicating with a one-way approach in a world that is now empowered with dialog and conversation, is inappropriate and ineffective
- companies that do not equip themselves with the tools and processes for customer engagement in this new conversation environment will see their customer base erode as competitors that do begin to better meet their needs
Leading companies have already begun the process of quickly upgrading their customer engagement capability. A compelling business case exists for doing so sooner rather than later.
Where does your company stand on embracing the new ways of customer engagement?
– brian
links for 2006-08-21
Kalivo now running on Kalivo
I’m pleased to announce that we are now running the Kalivo business on our own software. Check out the Kalivo website and you will see a working deployment of the Kalivo Customer Hub. In fact, it is possible that you are reading this on or from our Kalivo-powered website already (more on that below).
The notion of “eating our own dogfood” has been something I’ve always wanted to do in my career, but have not yet had the opportunity to implement. For the first time I’m running a business that can benefit tremendously from using its own product. It’s not only the hair club president that gets to do this!
The benefits of doing so are manyfold, including primarily:
- Ability to empathize with our customers - firsthand experience with our products gives us a unique viewpoint into their value, features, usability, and challenges
- Provides the ultimate endorsement - the success of our business depends on the success of our products in more ways than just the ability to sell our stuff
Effectively, we become our own case study, and have the ability to directly measure the value delivered by our products and relay that value to our customers and prospects. Moreover, as we discover new ways to leverage our product to drive business value, we can quickly implement those features and/or share that knowledge so that all may benefit.
I highly encourage everyone to go to our website and try out the implementation of our Customer Hub. Content all over the website is “discussable”, meaning you may leave a comment about our products, our FAQs, etc. Furthermore, you may start your own conversations on the website too. To contribute content, all we ask is that you register with us.
Much of the discussable content is in the “Community” section of the website, including this blog post, which is being replcated at the Kalivo website under the tag “CEO Blog”. We will be pulling blog and community content from across the web that we believe is relevant to our community into our Customer Hub, and it will all be discussable. To find interesting discussions, use the “Tag Cloud” section of the right-hand sidebar to identify discussions tagged with names that are of interest to you. To track you activitiy and conversations, make use of the “My Page” section of the website and/or subscribe using the many RSS feeds we provide.
We view our website - our Customer Hub - as a powerful pipeline to our customers and key constituents, and look forward to talking with and learning from all of you there (here). We will certainly be sharing our findings from using our own product on the Kalivo website as well.
We are looking forward to the discussion.
– brian
Kalivo is now running on Kalivo
I’m pleased to announce that we are now running the Kalivo business on our own software. Check out the Kalivo website and you will see a working deployment of the Kalivo Customer Hub. In fact, it is possible that you are reading this on or from our Kalivo-powered website already (more on that below).
The notion of "eating our own dogfood" has been something I’ve always wanted to do in my career, but have not yet had the opportunity to implement. For the first time I’m running a business that can benefit tremendously from using its own product. It’s not only the hair club president that gets to do this!
The benefits of doing so are manyfold, including primarily:
- Ability to empathize with our customers - firsthand experience with our products gives us a unique viewpoint into their value, features, usability, and challenges
- Provides the ultimate endorsement - the success of our business depends on the success of our products in more ways than just the ability to sell our stuff
Effectively, we become our own case study, and have the ability to directly measure the value delivered by our products and relay that value to our customers and prospects. Moreover, as we discover new ways to leverage our product to drive business value, we can quickly implement those features and/or share that knowledge so that all may benefit.
I highly encourage everyone to go to our website and try out the implementation of our Customer Hub. Content all over the website is "discussable", meaning you may leave a comment about our products, our FAQs, etc. Furthermore, you may start your own conversations on the website too. To contribute content, all we ask is that you register with us.
Much of the discussable content is in the "Community" section of the website, including this blog post, which is being replcated at the Kalivo website under the tag "CEO Blog". We will be pulling blog and community content from across the web that we believe is relevant to our community into our Customer Hub, and it will all be discussable. To find interesting discussions, use the "Tag Cloud" section of the right-hand sidebar to identify discussions tagged with names that are of interest to you. To track you activitiy and conversations, make use of the "My Page" section of the website and/or subscribe using the many RSS feeds we provide.
We view our website - our Customer Hub - as a powerful pipeline to our customers and key constituents, and look forward to talking with and learning from all of you there (here). We will certainly be sharing our findings from using our own product on the Kalivo website as well.
We are looking forward to the discussion.
– brian
Writing from Ecto
Thanks to Jeff Nolan at Venture Chronicles I am writing this blog entry from Ecto. Ecto is a wonderful tool so far … I’m still in trial, but it looks like I’ll buy it. I am authoring two blogs right now. It can be a frustrating experience having to log-in to each admin console to write a post. It can also be frustrating if you have a flaky Web connection or none at all (e.g on an (Boeing) airplane).
I have created two posts from Ecto in my corporate Listening Post blog, which runs on Wordpress, and it has been a great and flexible experience. I’m now trying it here, which is (for now) a TypePad blog. So far, I recommend using this product. The trial is free and it takes only a minute or two to set up the system to connect to your blog(s). Give it a try if you are looking for an offline authoring environment.
– brian
Another purchase influenced by social media
I recently blogged in Weblogs lead me to two purchases about how a blog post and user comment helped influence me to procure a service from AuthSmtp. This posting is about the second purchase.
After the original post, a couple of people mentioned to me offline that this was not so big of a deal, because the commitment I made to AuthSmtp was only for $2/month. Thus, they were implying that the purchase price hurdle was sufficiently low for me to be influenced by a couple of websites. My downside was pretty low.
My second purchase was a more substantial commitment. I was not in the market for a new mobile phone or PDA, so I was not actively searching to make a purchase. One of the blogs to which I subscribe, Infectious Greed by Paul Kedrosky had a post about the Treo 700p. It was called I heart by Treo 700p. It was pretty clear that Paul was recommending this device.
I’ve been perpetually frustrated trying to get to a single mobile device that can handle email/text communication, web surfing and be a reliable phone all is one. The kicker is that it needs to be in a form factor that is comfortable to carry and use, and does not make you look like you’re speaking into a hand calculator. Sorry to be so vain, but I just don’t like the way I feel talking into one of those blackberries (of which I have owned three).
Having seen and held the Treos before, I was not sure I’d like this new one. I have a problem typing on their keypads. However, Paul’s referral piqued me to take a look at this new model.
I next went to Phone Scoop, which in my humble opinion is the best place to get honest feedback, reviews and specs on mobile devices. I read the reviews there on the Treo device, and then looked at the Motorola Q and refreshed myself on what others were saying about the Blackberry just to be sure I wasn’t being overly cynical.
Now I had to see it in-person and went to visit Verizon Wireless. I tested the 700p, 700w, and the Motorola Q. With that in-person experience, I was ready to buy. The device was $350, and I decided to switch providers from Cingular to Verizon Wireless to boot. My monthly bill from Verizon for phone minutes and data will be around $100/month. This is a little more of a commitment than $2/month.
What’s more, the Treo 700p allows me to connect my MacBook Pro via Bluetooth to the phone and surf the Web on the MacBook using the Verizon high speed EVDO network. No wires, no card, and just about anytime acccess.
Plus, I do love the form factor of the Treo! Finally an all-in-one device I feel I can use all of the time.
I can say with confidence that this purchase may never have happened if I didn’t browse Paul’s post and feel compelled to take a look, and if the reviews on Phonescoop didn’t convince me to make the trip to the store. It was an individual user and a community of reviews that got me started and over any major objections.
– brian
links for 2006-08-16
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(tags: software)
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