Blog Archives

Auren Hoffman on the Internet “Black Hat” Tax

My friend Auren Hoffman has an interesting post on the “Black Hat” Tax on consumer Internet businesses, basically pegging the cost of dealing with all aspects of fraud, scams, phising, and related government legal requests,… to 25% of revenues. He then goes on to mention a couple of examples:

A great example is PayPal. The book PayPal Wars details an intense battle the engineering team and even the CEO fought against fraud. This was one of the consuming issues of the company. Now PayPal is a financial institution, so you would expect lots of fraud. But dating?

After surveying most of the dating sites, I have found that one of their top three issues is fraud. A frequent scam is to contact an unsuspecting middle-age man from a profile of a good looking woman saying "my husband is beating me here in Moscow, please send $2000 so I … Read more »

Two great blogs to track the enterprise software market

Even though I no longer focus on enterprise architecture and related software solutions, I try to keep an eye on developments in that market, especially as consumer applications and Web 2.0 concepts make their way into it (dubbed Enterprise 2.0 of course)

I have recently added to my “Favorites” folder the 451 CAOS Theory, a group blog written by analysts of the 451 Group, an analyst firm, and Confused of Calcutta, the blog of JP Rangaswami, the CIO of Dresdner Kleiner Wasserstein.

I have met JP a number of times, mainly during conferences in the US and in Europe, and have always enjoyed his progressist approach to the adoption of new tools and processes to Enterprise IT. His “About this Blog” section says it all:

I believe that it is only a matter of time before enterprise software consists of only four types of application: publishing, search, fulfilment and conversation. I believe that weaknesses and corruptions … Read more »

More thoughts about the “Web 2.0 service mark” controversy

Well, saying that the blogosphere has been busy “commenting” on the “Web 2.0 service mark” affair is an understatement. It has been on top of TechMeme for over 24 hours, it has been /.’ed, dugg, linked to 300 times, and commented upon thousands of times in aggregate, etc. After the initial admission of involvement from O’Reilly’s Corporate Communication, we have gathered that Tim is on a boat and therefore out of reach until after the week-end, so we all look forward to his thoughts on this mess situation.

John Battelle, O’Reilly’s partner in the organization of the Web 2.0 conference, has chimed in a few times on his blog to comment on the situation and confirm that letting the lawyers loose on an Irish non profit was a mistake:

As I said, as they said, as we all said, sending the Bigfoot letter to the non profit was a mistake. We’re SORRY. Tim and I did not … Read more »

Conference Speakers 2.0: Swimming in a sea of laptops

Heather Green from Blogspotting fame reflects on her experience at the Syndicate conference, where she faced the same harsh situation encountered by all panels and speakers nowadays: competition for attention from other sources of information/engagements leading to the bizarre impression that you are addressing a sea of laptops.

Yesterday I was on a panel at the Syndicate Conference here in NYC and it was odd. Looking across the room, I was treated to the sight of people bathed in blue light, busily peering into their computers. It reminded me of when I was in school and I actively ignored the teacher during class.

Maybe people were blogging. Or maybe they really had no interest in anything I or the other folks on the panel were saying. But that doesn’t make sense, because why did they chose to be there then? Either way (and I know folks have been complaining about the whole conference culture) I don’t … Read more »

Steve Ballmer at the Microsoft VC Summit 2006

One of the hilights of a Microsoft VC Summit is always Steve Ballmer’s intervention and the following Q&A. I have already referred to an interesting part of his talk regarding acquisitions, but most interesting learning I got from the session is Ballmer’s clear determination to go after Google and its position of search and online advertising leader. Microsoft has the might, and the resources, to take a long term view and give Google a run for its money (and they evolve as an organization as Scoble just posted). The consumer can only benefit from such a competition.

Here are a few more tidbits he covered:

VC investment levels up – including in early stage since 2005, with resource shortages in certain places (especially where Google has a development center) Consolidation in the industry is happening, with M&A being the primary exit option Consumer markets are driving enterprise expectations, as applications and services available in the cloud … Read more »

Microsoft VC Summit 2006: On Microsoft’s startup acquisitions

During his remarks (which I will blog when I have a bit more time), Steve Ballmer made it clear that Microsoft will continue being acquisitive, at an accelerated pace, with a price sweet spot between $30M and $200M. Of particular note was the fact that 1/3 of acquired startups are not VC-backed, just bootstrapped or angel-backed.

I found Don Dodge’s very useful post in my trackback log, in which he lists Microsoft’s most recent startup acquisitions and provides some background on the strategy:

VCs are always interested in Microsoft’s acquisition activity and direction. Over the past 12 months Microsoft has made 22 acquisitions totaling nearly $1B. This compares to just 9 acquisitions the previous year. […] Acquisitions are typically made for three reasons;

People – acquiring great engineering teams and operating managers Technology – adding a technology to an existing product set Time to market – sometimes the market moves faster than Microsoft can release a product. Security is an example. Sometimes … Read more »

McDonald’s IT scale challenges

Microsoft organized yesterday its yearly VC Summit, which is always a great occasion to catch up on Microsoft’s product plans and most importantly meet with about 100 of their senior executives representing their different business lines. Venture capitalists from the US and Europe gather for a full day of briefing, discussions and networking.

One of the panels of the day involved a number of senior IT executives discussing the challenges of their respective organization (Motorola, Morgan Stanley, Mc Donald’s,…). I actually thought that McDonald’s IT and organizational challenges were really complex:

They have 31,000 locations over the world, sometimes in places where Internet or IP connectivity is barely available Their distribution is such that it is challenging to find IT providers who will scale to their size They have 1.6M employees, who have an average turnover of 100% per year across the workforce (i.e some people only stay a few weeks or a few month while others stay longer)

The few requirements … Read more »

Visitors statistics of US social networking sites

Reading this story by the Deal about the gloomy outlook of Friendster, I came across a chart showing the unique visitors of US social networking sites (provided by Comscore, as of March 2006).

Quite stunning to see that 23% of US Internet users are visiting MySpace (1 in 4).

It would also be very interesting to see the percentage of overlap among visitors of these services.

David Hornik (sitting in fronf on me) tells that combining visitors to Six Apart’s LiveJounal and TypePad would make them rank pretty high on that chart (granted these are blogging platform more than social networking sites).

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 »

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 »

Mashing up the Enterprise through SOA and BPM

I am trying to find examples of implementations of Web 2.0 concepts/technologies in the enterprise in advance of my upcoming panel: “Web 2.0 and the Enterprise”. I was therefore very interested in David Berlind’s recent post on “Rethinking BPM in a mashup-based SOA world” – a worthy read if you are tracking the topic.

There are a large number of issues involving enterprise mashups, David pointing out to a couple of them:

 To wit, attendees from the banking and government sectors have questions about the management of user IDs across domains (when a mashup involves multiple APIs each of which relies on its own identity management technology) as well as the reliability of public components.  For example, if an enterprise dispatch application along the lines of what Kemsley describes above relies on Google or Yahoo for its mapping component, enterprise architects want to know what Google and Yahoo are doing to ensure the uptime of the relevant APIs (a … Read more »