A small step?
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 . . .). …
February 17, 2005· 2 min read
What it takes to go public
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) …
February 17, 2005· 3 min read
Who vs. Where
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. …
February 16, 2005· 3 min read
Steppin’ Up
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 . . .
February 15, 2005· 1 min read
Venture Capital in the Rockies
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. …
February 14, 2005· 5 min read
The Masses Speak
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. …
February 8, 2005· 4 min read
The Power of Location
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.
February 3, 2005· 3 min read
The 10 Minute Difference
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. …
January 31, 2005· 3 min read
eWork CEO Hans Bukow on OutsourcingTV
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.
January 28, 2005· 1 min read
eWork/Prosavvy Merger
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.
January 27, 2005· 4 min read