This is a totally vain story, but I’ve been asked about this a few times, so I’ll repeat it here – plus it goes to the heart of why I blog which is something I realized in looking over some of my posts that I haven’t been writing much about. (This reminds me that still haven’t finished my post on ‘is blogging about vanity?’ yet – not sure what’s keeping me from doing that . . .).

Over the past couple of months I’ve been asked how I might measure my success as a blogger. I’m blogging for two primary reasons:
1) I want to make a name for myself. I’m a young VC who wants to stay in the venture capital world and have an impact – with my ideas; with the companies I fund; with the causes I support. I’m also located in Colorado and as such am somewhat isolated from VC ground zero, the Bay Area. Getting my voice out there supports my efforts to connect with other VCs and entrepreneurs and, I hope, will make me both a better venture capitalist as well as a better known venture capitalist (both of which I hope will allow me to do this for a long time).
2) I find it helpful to put my thoughts down on paper. I’ve always enjoyed writing (it’s the liberal arts major in me). It’s like taking a long bike ride – it helps me process and organize my thoughts and forces me to more thoroughly think through the subjects that I post on (see my blog on the difference between starting a blog and finishing a blog here).

With this as background, the answer that I usually give people who ask me about how I’ll know if I’m doing what I intend to by blogging is that I’ll know that its working when I’m introduced to someone I’ve never met before and they say something to the effect of ‘nice to meet you . . . you know, I read your blog.’

Well wouldn’t you know that this exact thing happened to me last week at VC in the Rockies. It was actually pretty cool. No doubt I have a long way to go as a Blogger, but I hope this is a sign that things are moving in the right direction.

I’ve sat through a few presentations by investment bankers recently on what it takes to go public (most recently at VC in the Rockies – see my post about the conference here).  I  thought I’d throw out some of my notes so you could see what I’m being told it takes to get public in the current market.  The VCIR panel I sat through included some thoughts on the state of the m&a market, so I’ll include those notes as well. Company ‘Requirements’: – Revenue: ‘Bigger the better’; minimum of $60m/year annualized (so $15m/quarter at the time of the IPO; however 60% of 04’ IPO’s were < $100m in revenue (up from only 30% in the depths of the market); this has been a very consistent metric across all of the bankers I’ve talked with. – Profitability: Companies should be at or near profitability prior to IPO; there was some debate across the people I talked with about whether this was a requirement – some people thought companies absolutely needed to be profitable, others gave a little bit (but not much) of wiggle room. – Funding Needs: Company needs to be fully funded – the money raised in the IPO should be expansion capital, not core operating (get to profitability) capital- Team/Execution: Company probably needs to have been around for 4+ years; management teams are coming under much closer scrutiny by investors (was not the case in the bubble)

M&A Trends: – Cash deals are at an almost all-time high (presumably driven by both low interest rates and acquiring companies belief that their stock was undervalued and therefore equity was too expensive; in addition, a lot of active acquirers in the tech space especially have large cash reserves) – Hostile deals are also at an all-time high (drive by cash availability as well as companies feeling that some targets are ripe for the picking with their depressed stock prices) – The IPO alternative is seen as a credible threat (the banker who presented at VCIR estimated that 2/3rds of m&a deals are now dual tracked – this number struck me as high, but even if the real number is ½ of that it’s still an impressive figure).

The overall feeling I get is that the IPO market is certainly available to quality companies, but that the scrutiny companies go through to get out is real. While the markets basically shut down for the sectors that I work in during 01’ and 02’ they’ve clearly come back since then (as have the m&a markets, which is the more likely exit for many of the companies that I work with). We’ll have to see what 2005 brings – 2004 saw 54 IPOs of tech companies – lets hope we’re on track to best that figure.

UPDATE TO ORIGINAL POST ThinkEquity Partners has sarted a blog – an excellent development for those of us who are excited about the potential of corporate blogging – and just posted their thoughts on the IPO market this year.  You can check it out at: http://www.thinkequity.com/mt-archive/2005/02/ipo_dashboard_f.html

I recently wrote a blog – The Power of Location – about Quova (one of the companies I work with) and the idea of “place” on the Internet.  In response, Dimitar Vesselinov (who has a great blog) dropped a couple of comments to the post. My sense is that not everyone pays attention to the comments section of blogs, so I thought I’d post the links he suggests here. I also want to be sure I’m clear on the differences between digital identity (the subject of Dimitar’s comments) and geolocation (the subject of my post) as well as how the two ideas overlap.

First the comments. Below are some sites that Dimitar sent over for those interested in learning more about digital identity:

Schneier on Security
http://www.schneier.com/blog

The Identity Corner
http://www.idcorner.org

Identity Woman
http://www.identitywoman.net

Kim Cameron’s Identity Weblog
http://www.identityblog.com

Presentations & Audio :: Digital ID World 2004 Conference
http://conference.digitalidworld.com/2004/attendees/downloads.php

I’ve seen a couple of these sites in my travels on the Internet and checked the rest out after he sent along the comment – there’s good information here that’s worth checking out. The notion of digital identity, which seemed to lurk in the shadows for the past few years, is really starting to take off – especially now that the ever-feared Microsoft has given up on Passport (I don’t think I know anyone who actually used this service for anything close to what Microsoft intended; signing up for messenger or MSN through passport doesn’t count).

There’s clearly overlap with the world of geolocation – particularly in the realm of security and authentication (just as your digital id can be used to confirm that you are who you say you are, so can geolocation data be used to support your claim of who you are). There are important differences, however and the markets really aren’t heading in the same direction. Who you are is different from where you are. While its important at times to know who is involved in a transaction, its often just important (or more important) to know where they are (for example in validating taxes in an on-line transaction – in the off-line analogy, I don’t get charged Boulder taxes when I buy something in San Francisco just because I’m from Boulder – where I am is more important in that case than who I am).

Also, digital id is great for people who want other people to know who they are, but only works when they are part of the equation. Put it another way, digital id is for the most part an active technology – you (or your administrator) needs to actively participate in creating your digital identity. Very useful if for when you are trying to validate on a network or manage access to an array of applications. Its not useful at all if the user wants to remain anonymous or for whatever reason doesn’t want to participate in actively identifying who they are. Geolocation is passive – it doesn’t involve cookies or user defined parameters, just a look-up on an IP address. And while you can run your address through an anonomyzer service to mask your address, you ultimately have an IP address assigned to you (which may mean that a service like Quova can only tell that you are trying to hide where you are vs. telling where you are). This makes the potential universe of traceable events much higher – since every transaction on the Internet involves an IP address (even if its attempted to be masked or anonomyzed in some way) but clearly there will be only a small subset of events that involve digital id (and they will be easier to mask). I imagine that Damitar gets all this, however I wanted to add some context with which to look at the two markets.

I took an important step in my life as a venture capitalist today when I attended my first board meeting as an actual board member (rather than a board observer – see my post on this distinction from last month). While the earth didn’t exactly shake off its axis, I can’t help but feel that today was a real milestone in my life as a venture capitalist. I’ve worked with a lot of companies since joining Mobius, but this is the first deal that is really my ultimate responsibility. Today’s board meeting wasn’t unlike the hundreds of other board meetings I’ve participated in over the past 3 years, but there was no question that there was something a little different about it for me. I don’t want to make more out of this than there really is – I work very closely with all of the companies I’m involved in at Mobius and am for the most part treated by all of them as if I were on the board. Still, there was something different about my meeting today – maybe just in knowing that Mobius (and our investors) need look no further than me when judging this investment . . .

I spent the much of last week attending the annual venture conference sponsored by the Colorado Venture Capital Association. The purpose of the event is to attract out of state VCs to take a look at Colorado venture deals that are in the market (click here for a link to the companies that presented this year). I’ll talk about Colorado’s venture capital market in a separate post, but suffice it to say, it’s important to the local VC community to have financial support (at least on some deals) broader than the local community can provide. While each of us has relationships with firms out of state that we syndicate deals with, as a group this is our one annual chance to put our best foot forward to out of state investors.

The conference has been going on for over 20 years, but a few years ago the CVCA figured out that they would attract more people (particularly out of state VCs) by holding the conference up in the mountains rather than down in Denver (there was always a ski day after the conference, but since most people were staying down in Denver the skiing wasn’t really a big draw). As a result, the conference has been held up in Beaver Creek for the past 3 years, to great success. This year was no exception – the conference drew a record number of attendees (over 270); a record number of venture capitalists (81) and a record number of out of state venture capitalists (31).

The conference is a mix of social activities (there are a number of cocktail parties and an astonishing number of ‘private’ dinners hosted by various service providers over the 2 ½ day conference), company presentations (the conference had both a life sciences track and an software track) and topic specific presentations (one panel presentation in the morning and a lunch keynote). Here are my observations/notes from the conference: Company Presentations: I caught about a dozen company presentations and overall walked away impressed with the quality of the deals that presented at the conference (see this Denver Post article for some other people’s thoughts on the presentations). I was on the selection committee that chose the presenters for this year’s conference and I can tell you that my impression of the deal flow in Colorado having gone through the process of looking at a majority of the local companies that are currently in the market is that, while the deal quality at the top is high (which was reflected in my positive reaction to the presentations at VCIR) the depth is pretty shallow. I remember being a little nervous about filling out the speaking slots at the beginning of the process – there was a very clear inflection point in deal quality. As the selection process wore on and we received additional business plans we were able to fill out all of the available slots, but the process definitely left me with the impression above – there are a number of great Colorado deals in the market, but below the top 25 or so deals, the quality really drops off.

Companies of note includedRally Software and Oxlo (both Mobius portfolio companies); Umbria Communications (I blogged about this company last week – they could have taken up a full hour just with the q&a interest their presentation garnered); Webroot (who just announced a $108m raise – the CFO Mike Irwin spoke and while I can tell you that the company is experiencing remarkable revenue growth, he didn’t offer up any details of their recent round); New Global Telecom (these guys were a wholesale provider of carrier services that went bankrupt a couple of years ago, somehow avoided liquidation, recapitalized with only a couple of million dollars (less?) and are now transitioning into the VOIP space; and Tendril (Zigbee middleware platform founded by local entrepreneur Tim Enwall).

Keynote Address: This year’s keynote was given by Seth Godin. Other than having a great first name, Seth is an incredibly engaging speaker. The gist of his presentation was that marketing has changed – companies don’t create a product and then somehow get the message out to people that they should buy it but rather that product itself is the new marketing – creating something extraordinary that people want and will tell their friends about is the way to create ‘buzz’ around products. Clearly he’s slanted to the consumer space (he sold his last business to Yahoo), but there’s lessons for the enterprise space as well. I’d put the presentation in the category of ‘brain candy’ – it was interesting, well put together, engaging, Seth is a great speaker who had some interesting ideas that were clearly designed to be presented in a way that were both thought provoking and entertaining. My sense is that I’ve now effectively read a couple of his books having sat through his presentation.

Panel Presentation – the state of technology m&a and the IPO market: I almost skipped this panel but am glad I didn’t.  There was a lot of good info conveyed here – I’m going to write a separate post to really cover it well.  The panel consisted of two bankers (one m&a banker and one corporate finance) and an institutional investor talking about the state of the markets, what they look for in deals, etc.  The highlight of the panel was when the institutional investor, in response to a question, said that the bank that takes you public really doesn’t matter from his perspective (the two bankers visibly grimaced on that one). Key themes from the panel were that dual track processes are becoming more in vogue (using the red herring or the threat of one as a way of driving m&a) and the general easing of the markets (both IPO and m&a).

So – there you have it.  Two and a half days of schmoozing and company pitches into a couple of paragraphs.  We’ll do this again next year – please join us.

A couple of days ago the following story hit my inbox from Marketwatch (story below, link here):
WASHINGTON
(MarketWatch) — While you watch the Super Bowl, dozens of online-savvy consumers and Web loggers will be watching the Net to see how the game’s TV commercials are playing in Peoria.

Intelliseek Inc. of Cincinnati and New Media Strategies of Arlington, Va., have lined up dozens of people to surf Web sites, blogs and message boards to get a fast read on the effectiveness and popularity of marketers’ commercials. With TV costing as much as $2.  million for a 30-second spot, companies want to know whether their money was spent wisely.

As people post comments about the ads on the Web, the marketing companies’ monitors will report what’s being said.

“Conversations all over the Internet, from message boards to blogs and beyond, now allow us to get a true pulse in real time,” said NMS Chief Executive Pete Snyder in a statement. His firm is doing a similar monitoring process of the entertainment industry and the Oscars contest.

“Studio execs and entertainment insiders watch very closely what people are saying online,” he added.

Besides the companies whose products are being pitched, advertising agencies are also interested in the results. Marketing officers hope they’ve chosen the right creative teams and campaign strategies.   It’s important that agencies, even more so than brands, are getting the right kind of buzz,” said Snyder, in a comment reported by Media Post. A couple of things struck me about this article. First – it’s great to see the blogsphere being recognized as a place where the masses gather to talk about current issues. While not exactly old school, this concept isn’t completely new – plenty has been written about blogging around the Democratic and Republican conventions (and around the election more generally). Still – it’s clear that more and more the blog space is being looked to as a microcosm of society as a whole.

Second, it’s also fantastic to see that corporations are paying media companies to monitor speech in the blog-world. Clearly they buy into premise #1 and feel that what bloggers are saying is important to understand and monitor.

While this is all great, what really struck me about this story is how backwards these companies are going about the business of measuring speech in the blogsphere. Am I reading this piece correctly – are these media firms actually hiring a bunch of people to manually search the web during the super bowl to try to figure out what bloggers are saying about the advertisements? Are they passing this off as scientific or statistically valid research?  Do they really think they can ‘get the true pulse’ of what is being said in this way? I’m picturing a bunch of people sitting in a big room in front of computers polling Technorati with random key-word searches trying to figure out what’s being written about sky-diving airplane pilots chasing after a six-pack of Bud.

This reminds me of a story from a company I worked with before I joined Mobius. It was about 1998 and the early days of the automated testing market. A web site operator contacted a company I was working with (it was a testing consulting firm that was a partner of ours) and asked if we would be able to arrange for 30,000 people to hit his web-site at the same time to see if it could handle the load (he actually thought we had thousands of people at the ready to do this). Pretty amusing, but in the context of a time before the wide adoption of testing tools it wasn’t completely out there. These days, most development shops, of the shelf software for testing their software.

Similarly, the way these media firms are going about measuring blog speech is equally as quaint as the guy who asked the testing firm to coordinate 30,000 people to hit his web-site (and just as clumsy). Technology alreadyexists that can enable wide scale measurement of speech by bloggers (see Umbria Communications for the best example of this – note: we are not investors in the company, although it is Colorado based and I know the CEO, Howard Kaushansky, well). To me, this technology is critical to the overall development of blogging. If the blogsphere is to become relevant as a medium for measuring the thoughts and views of society we have to be able to measure what it is saying en masse. While my blog may be relevant to a small (hopefully growing) segment of the universe (and I hope have some influence on how people think about the topics I post on) the power of my speech is amplified greatly when it is combined with that of others. I don’t mind being one voice among many – I just don’t want to be stuck only as a voice alone. The Internet and the blogsphere by extension is a technology platform – lets make sure we’re making use of technology to measure it as well.

The Mobius web-site was spoofed recently. Someone – presumably looking to pass themselves off as a legitimate venture capitalist and needing a web-site to do so – copied our site and changed the name of the firm as well as some of the biographical  information (contacts, team, etc). They even went so far as to pull live feeds from our site that updated our portfolio ticker.

We looked up information on the domain on whois and on some of the registry sites, but the most interesting data came from one of our portfolio companies – Quova. Quova has mapped the IP space of the internet for physical location. If you give them an IP address, they can tell you where it is located (the data are extremely accurate to the country level; very accurate to the city level and beyond). They can also tell you some useful things about the address (connection type; carrier; proxy info; device; etc). We’ve been investors in Quova for several years and I’ve worked with the company pretty closely since I joined Mobius. In this time I’ve had the chance to talk with some of the company’s customers (who use the data for things like fraud detection and localized marketing), sat through demos of the company’s service, talked with their technical team, etc. I’ve never really had the chance to use the service . . . until now. I was amazed with the data they were able to come up with and it was very helpful to our IT group who was trying to gather more information about the site in question. The Internet is often described as a place without borders. In reality that’s not correct. Technology exists that gives us the ability to define these borders. Technology also gives us the opportunity to take some of the anonymity away from the Internet and to create boundaries around our on-line lives. There is such a thing as ‘there’ on the internet (as opposed to ‘anywhere’) and I think we’ll see an increasing use of this technology to make each of our experiences on the Internet both safer and more relevant (just the past year has seen the ability to localize searches; more geographically targeted banner adds; etc. – often powered by Quova’s technology) and more profitable (routing traffic that was previously unserviceable, for instance, to a partner site who can service the traffic, etc.).  Think of the Internet as comprising both a virtual ‘there’ and a physical ‘there’ that combine to create our experience (and may separately be relevant to enhancing that experience). It’s not hard to come up with the ways that the combination of these data will quickly change our on-line experiences.

When I graduated from college I worked on Wall Street for a couple of years as an analyst for Morgan Stanley. While a valuable experience, especially for someone such as myself who had never even considered taking a business or finance course (I was an econ and psychology major), the job pretty much sucked. While I enjoyed the finance aspect of it and, particularly in my second year, had great access to the CEOs and CFOs of the companies I worked with, a lot of my job involved staying up until all hours of the night (morning, technically) preparing analysis and putting together ‘pitch books’ for use in presentations the following day. Not particularly glamorous work. Nor was it generally mentally taxing (to be clear, we did plenty of extremely complicated analysis work, but much of the day to day analysis was more mundane and involved lots of data gathering in the Morgan Stanley library – this was pre the ubiquitous access to financial data on the internet – and less time actually crunching numbers. The job involved working about 90 hours a week (up to 120 on some weeks) and was akin to running a marathon – stamina  counted for a lot.One of the things that’s true about investment banking – even at the analyst level – is that a pretty sizable portion of ones pay comes at the end of the year (actually February for most banks) in the form of a bonus. Bonuses are doled out at senior levels based on deals brought in and revenue generated for the firm, but at the lower levels they were directly tied to your performance review. Morgan Stanley had a rating system with a bunch of levels and the difference in bonus pay-out was pretty substantial. At the top of the pyramid was Outstanding followed by Very Good and so on. A pretty descent percentage of analysts were rated Very Good (probably over 50%), but a very small number (about 5%) were rated Outstanding. The difference in pay was tens of thousands  of dollars (a pretty substantial portion of one’s pay as an analyst).So what’s the difference between Very Good and Outstanding? I’ve been asked this question a bunch of times and the answer to me is very clear. The difference is 10 minutes every day. At a job where one regularly worked 90 hours or more every week there was a huge incentive to cut out of work as soon as you could (at 2am you wanted to get home as soon as you could). But the difference between doing a very good job and an outstanding job was the last 10 minutes of every day when you had  the chance to stop and consider the work you had just done and check it. Most times it was probably fine, but 1 out of10 times you found something that needed adjusting or correcting.

In many respects this was the most important thing I learned at MS and I’ve carried it with my ever since. Despite life’s pull at your time, the difference between doing something well and doing something outstanding is not the 95% of the time you spend actually doing the work – it’s the 5% of the time you spend when you’re done making sure your work is right.

Ok. I can’t say that I’ve ever heard of OutsourcingTV.com but apparently it exists and they did an “interview” with Hans Bukow, the CEO of eWork on the recent eWork/ProSavvy merger (see my last blog post). You can check out the interview at the following link:

http://www.outsourcingtv.com/ot/index.jsp?movieid=13688&channel=

I’m in the middle of writing a post on whether blogging means an end to traditional media and, not to steal my thunder, but I think this interview backs up the point I’m going to make – there’s lots of room in the world for niche media (or point media) to exist along side more traditional media sources. Clearly enough people care about the outsourcing market for there to be a website that supports it (and magazines, etc.). While the merger of two companies like eWork and ProSavvy won’t necessarily make it to traditional media (other than perhaps an inch blurb in the business section), it’s clearly important to people who follow the industry and, as this piece shows, warrants further discussion/elaboration.

One of the companies that I work with closely, ProSavvy, announced this week  that it merged with eWork (the combined company will keep the eWork name). The merger creates perhaps the largest private company in the workforce management/services procurement/payroll services business. As part of the merger, Mobius led a new round of financing into the combined business. You can read the press release here. In layman terms, the combined business offers products that allow businesses to manage various aspects of procuring, managing and payrolling temporary employees (contract laborers) and what are called fixed project deliverables (consulting projects). The combined business has three main products: eWork Enterprise – a enterprise software platform for managing contract work (whether that be contract labor, consultants, etc.)  eWork Markets – a platform for procuring contract labor with a bunch of tools for managing that process (whether it be a formal RFP, which the platform can guide a business through or a less formal requirements process) eWork Services – outsourced payroll and HR services This deal makes sense for a bunch of reasons. We’ve been investors in ProSavvy for over 5 years (along with Park Corporation and Pequot). It’s been an interesting road to get here as the business has done a great job of lasting through the tech bust and emerging on the other side. About 3 years ago the company started focusing more on its marketplace (the on-line market it created where companies can request consulting services and member consultants can bid on these projects) and less on delivering an installed software platform. We were finding at the time that companies that were interested in the product as software were starting their software initiatives by controlling their contract labor spend (temporary workers), rather than their fixed project deliverable spending (consultants). They wanted to manage the latter, but doing so with installed software was taking a back seat to contract labor. So, ProSavvy focused on refining its service and the tools that it built around procuring and managing consultants and built its network of consultants. We’ve had the view for a while that the markets for fixed project deliverable procurement and contract labor procurement were going to converge – fundamentally we’re talking about a very similar problem to manage. Companies started coming to this conclusion as well as more and more RFPs in the space were asking for a combined solution. ProSavvy found itself being asked to team up with companies that provided contingent labor software in bidding on these contracts – and they did so with a number of the firms in the contingent labor software world. Eventually it became clear that the company would benefit greatly from being a part of one of these businesses, rather than positioning itself as an add-on to their solutions (or them as an add-on to ours). Enter conversations with eWork and, several months of work and you have the merger that was just announced.  I’m pretty excited about the prospects for the combined business. Certainly there has been a lot of money that has gone into this space and a number of large VCs have made pretty decent bets on companies that compete with eWork (venture-backed companies in the space include eLance; IQ Navigator and FieldGlass). Ultimately I think eWork will benefit from competition in this market – these firms are all hungry, well run and have good product offerings. I think the addition of the ProSavvy marketplace to the eWork product offering brings something different to the mix that will help eWork stay ahead of the competition. On a personal note, while this isn’t an exit (we didn’t cash out in the deal), I’m satisfied to see the hard work that we’ve put into ProSavvy over the past years pay off in the form of a company changing event. The new business is in the capablehands of Hans Bukow,who is the eWork founder and CEO. Thisis a project that I’m going to stay close to – I’m joining the board of thecompany – and look forward to reporting to you on their future success.