The NY Times on MySpace’s economics and challenges

I came across this New-York Times article about MySpace, its economics and challenges: For MySpace, Making Friends Was Easy. Big Profit Is Tougher (sub req’d). It is full of interesting data points, and is especially interesting in the light of the growing importance MySpace has in the Web 2.0 ecosystem. Not only is MySpace the second largest Internet web site in page served, it has also become a common launchpad for new startups that offer widgets that can be integrated in users’ home pages. Bambi Francisco had a good piece on this “trick” two weeks ago: MySpacenomics (sub req’d).

Interesting snippets:

MySpace now has over 70 million signed users (but the article does not mention how many users are actually active – logging at least once in the last 90 days). As mentioned, only Yahoo serves more pages than MySpace which is getting close to one billion pages per day. The yearly … Read more »

“Israeli VC on Sand Hill road” is her blog

And Tali Aben is her name.

I was very happy to see that my good friend Tali just joined the ranks of the VC bloggers, and be the first VC blogher in a long time – which is great. Tali is a General Partner at Gemini Israel Funds – a Tier 1 Isreali firm, and is based in Silicon Valley. You will no doubt find her experience of helping Israeli portfolio companies interesting, and her wit and frank style enjoyable.

As she puts it in her first post:

I suppose, there’s a first time for everything…. and it’s high time to get this blog started. I’ll start by saying what it is I’ll be blogging about:

* Issues facing Israeli startups * Raising 3 boys (ages 2,8 and 12) * Professional women * Digital Photography

I suppose that will keep me busy for awhile….. stay tuned.

Welcome Tali. … Read more »

Venture Investment Statistics 2005

Buddy Will Price has the Venture Investment Statistics for 2005, from VentureSource, a division of Dow Jones and Ernst & Young.

Commitments to VC Funds, $22.2 bn. Up 18.7% from 2004 VC Financings, $22.1bn. Up 2.8% from 2004 IT Financings, $12 bn. Down 4% form 2004 Software Financings, $5.11bn, Down 6% from 2004 Number of Active Firms, 1,417 Down 49% from 2000, 61% if you define active as > 4 deals per year. Number of exits, 397. IPOs: 41, down 38% from 2004, with $2.24bn raised via IPO M&A: 356, down 12% from 2004, with $27bn in total exit value Number of private companies funded since 2000 net of 2005 exits: 5,406 with $132bn invested in them Average of $24.4m invested in companies At current exit rate, will take 13.6 years to get through backlog (amount available to VC firms for investments / total investments per year) Median M&A exit $47.5m Median Pre-moneys (across sectors) Seed … Read more »

Sarbanes Oxley’s collateral damage: US public markets ?

I mentioned two days ago the continued decrease of the volume IPOs of VC-backed companies. Discussing it with a VC friend, we sort of joked about the efficiency of the Sarbanes Oxley regulation that is essentially scaring away from the public markets a generation of companies – hence reducing in a round about way the potential for fraud and abuse from these new companies.

This morning, Benchmark Capital’s Bill Gurley is pointing to a Wall Street Journal piece (that I could not read b/c you need to be a subscriber) from the CEO of the Nasdaq market warning of the potential demise of US Markets due to Sarbanes Oxley:

He is properly concerned that the overly bureaucratic Sarbanes-Oxley (SOX) processes could lead to the end of global domination by the U.S. capital markets. Ironically, the two gentlemen that created SOX did it with the intention of “preserving” U.S. capital market leadership. Their fear was that people … Read more »

How about friends and family financing ?

Quite a bit of discussion took place in the comments and offline following my post on accredited investors, especially as it relates to friends and family financing. These investors will typically be “easier” to convince to support and finance your idea, but at the same time they might not qualify for the accreditation as defined by the law.

So what can you do as a young entrepreneur/team needing some cash? First order: can your savings and credit cards get you anywhere meaningful? Second: in order to avoid being stuck between a rock and a hard place, a loan that will be re-imbursed as opposed to converting into the next round of equity financing might be a temporary solution. Unfortunately for the unaccredited lender, he/she will not be able to benefit from that early support through the perks angels typically get: discount to Series A, warrant coverage, etc. because only accredited investors can acquire equity. And once … Read more »

Why startups must only take financing from accredited investors

Seed stage investing is getting very busy these days, and over the past few months I have started hearing about companies taking money in small amounts from a large number of friends and family investors. Easy money ? Maybe, but…

Whilst it is great to get that kind of support from your close circle, it often involves investors who are not accredited. The accreditation has nothing to do with the sophistication of the investor, nor having gone through a formal exam but a set of criteria clearly defined by the SEC (Rule 501(a) under the Securities Act of 1933) – which are related to a minimum level of yearly income or a minimum NAV (net asset value).

Not complying with this rule, which means – yes – turning money down, will come back and haunt you down the road when it is time to further finance or sell your company. Just as an example: unaccredited investors can rescind their investment at … Read more »

Delaware re-incorporation and entity conversion just got easier

Startup companies sometimes need to re-incorporate in Delaware if they did their incorporation in a state where corporate law is deemed less friendly to business operations or investments. Other times, it is the legal structure which has to be changed (say from an LLC to a C Corp).

Brad Feld has started a useful set of posts on the topic a while back, and just mentioned that both changes got easier in Delaware:

The first innovation (Section 265 of DCGL – Delaware Corporate General Law) creates a simpler process for the reincorporation of non-Delaware corporations in Delaware (through a one-step “conversion” rather than through the traditional but cumbersome reverse merger of the non-Delaware corporation into a wholly-owned Delaware sub.) In English – if you are incorporated in a state other than Delaware and want to reincorporate in Delaware – it’s now a lot easier.

The second innovation allows for the one-step conversion of non-Delaware limited liability companies into Delaware corporations.  These conversions/reincorporations have historically required 2 steps – for … Read more »

Podcasting news:’s funding and TalkCrunch’s first show

Busy evening on the podcasting front: first came the inaugural show of a new weekly podcast, TalkCrunch. Given the highly recognizable brand, you won’t be surprised to listen to the audio extension of TechCrunch. The first show is about events and calendars, and you can subscribe to the feed here.

The second piece of news that I am delighted to relay is the Series A funding of, the podcast production company of John Furrier: the company just raised $5.5M (!!!) from US Venture Partners and Venrock Associates. Over the past year, John has tirelessly recorded and produced hundreds of shows with entrepreneurs, VCs, lawyers and senior executives – creating a market and a business model for himself and his growing team on both the consumer and the corporate side. It is not common for VC investments to get into content creation – traditionally a space where revenue multiples don’t exceed 3 … Read more »

If you are still wondering whether to buy an EVDO card – read this

It has been a few days since I bought an EVDO card (using the excuse that my new office would not have Internet access for about a week), and I must say that I am totally bought in: this is the best productivity tool I have bought in a while, both in terms of convenience and time saved.

Time saved can be measured in the (sometime long) minutes one has to spend testing, configuring and sometimes paying for Wifi access. Convenience is due to the ability to access the Net during a “downtime” (like this morning when I waited for the airport shuttle) where this was no Wifi access point around.

Add to this the fact that the first couple of hours of a large conference is generally spent screwing around with a non-working Wifi (apparently Etech’s attendees faced that last week), and you will very quickly rationalize that $60 to $80 a month is *nothing*.

I for … Read more »

Josh Kopelman has avoided it for a long time – but he’s finally done it: he blogs

It is with delight that I have discovered that my friend Josh Kopelman, the Managing Director of First Round Capital, and one of the early stage investors I respect the most, has finally given up and has launched his blog a few days ago. “Redeye VC” relates to the fact that Josh seems to exclusively fly the redeye from SFO to Philadelphia, his home base. Here is his feed.

In his first post, Josh tries to explain why he has taken so much time to give in: #4 rings so true (it is 4:29am as I type this on Sunday morning).

4. I don’t have the time.There are currently 364 unanswered emails in my inbox.  I have 14 phone calls to return.  Six meetings a day.  I’m currently sitting on the redeye flying back from SFO to PHL. I have a wife.  Two kids.  If I had an extra hour a day, I’d rather spend it … Read more »

TechDirt’s Greenhouse: a very interesting experiment

I spent the day hanging out at the TechDirt Greenhouse, and I am glad I did – even if this meant spending a day away from the family. Mike Masnick and his team came up with an interesting concept: getting startups to present their product/services for 5 mins, and get the audience divided up in small discussion groups that would address a key business or strategy question related to one of the presenting companies. We’d spend about 40 mins talking around the subject allocated to us, and report back to the whole group. In order to make sure that attendees would hang out with different people (as opposed to their friends), the TechDirt team put together a set of markers that defined which session/meeting room one should attend.

Oh, and there were the leaders: Red, Blue, Orange, Pink, Green, Mauve. Guess which one I inherited ? Yep, the Pink one. Our role was to facilitate discussions, and make sure … Read more »

Pictures of our new offices

Much of the week-end has been spent on packing and moving to our new offices, in downtown Menlo Park. There have a number of notable news over the past few days, but I have been very busy with mundane things like getting new furniture, Internet connectivity, a parking permit, etc… and a Verizon EVDO card (the Kyocera KPC650 – the one working fine on both PCs and Macs). Since the new office won’t be connected to the net for  a week, it seemed to be the perfect occasion to try EDVO. The result so far is conclusive: with compression turned on, effective bandwidth got close to 700 Kb – not too bad (!!!).

What I am not sure of is the drain on the battery generated by the card, and whether I should set the card so that it turns itself off automatically when a Wifi connection takes place.

Here are some pictures of the office “in progress”:

Read more »