Monthly Archive for August, 2006

Peter Rip Tears It Up

Published
by
Brian Berliner
on August 31, 2006
in Venture Capital
. 0 Comments

I’ve referenced Peter Rip of Leapfrog Ventures here before. Excellent writing style. Quality posts can be found on his blog.

His latest is a series of posts talking about "Venture Capital 2.0".

The first installment talks about the Cycle and Key Success Factors of the Venture Capital industry to date. The last 10 years have brought us both bubble and bust. Yet, the industry continues to thrive and survive. VC firms largely did not go out of business after the bust and Limited Partners continue to pump money into VC partnerships, likely hoping for more boom times. But, realistically, when will a boom time return? The IPO market is largely dry, so VCs look to mergers and acquisitions for exits. The good news is that the great firms (like Google) can go out regardless of the market conditions and there is still irrational exuberance in the M&A space (witness Skype). All these things lead to what I call the "Limited Partner Drip". It’s like a drug. Just give me one more giant exit, then I’ll let it ride.

Peter argues that the problems with Venture Capital 1.0 are largely structural. He would know much better than I. I think the LPs have the power to limit the supply of money they feed to this asset class, or to get more strict with the (fairly high) management fees that they pay. I.e., if Venture Capital 1.0 has structural problems, those problems can be addressed by a VC firm offering the LPs a different "product". The VC product has been largely unchanged for 35 years. I look forward to more thought provoking stuff from Peter.

In Peter’s next installment, he talks about the LP Conundrum. The thing that always gets me about this industry is the parallels between LP<->VC-Firms and VC<->Portfolio-Companies. I am working on a post about this. The business models are different, to be sure, but there really are many similarities. Peter touches on one of them (when the "VC" becomes the "entrepreneur" trying to raise money for their firm from LPs). Peter ends with:

The typical VC fund attributes are size, industry, stage, and geography. These attributes past for strategies in most fund raising conversations. My next post will deal with why I think this is mostly flawed, for both VCs and LPs.

I look forward to the next installment!

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4G vs WiMAX, Round 1

Published
by
Brian Berliner
on August 31, 2006
in Mobile, Technology and Venture Capital
. 0 Comments

I’ve said it before. In the end, 4G will win over WiMAX. Now, that doesn’t mean that WiMAX won’t be able to find applications for which the technology is particularly well suited. It just means that in the global mobile marketplace, WiMAX will not be a replacement for the cellular infrastructure that will eventually lead to 4G deployments.

The Register just released an article on a demonstration done by Samsung in, presumably, Korea. They showed 4G data zipping along at 1Gb/sec, or 100Mb/sec. My (wired) Comcast High-Speed Internet gets 4Mb/sec. I.e., the demonstration was way zippier than anything we can anticipate on the near-term horizon for the US market. And, completely unwired.

Now, Sprint and Nextel have signed up to deploy WiMAX ASAP in the US. All good news. So, while WiMAX may win briefly in the US, I doubt that it will win globally. And, in the end, at those speeds, WiMAX will not be able to survive in the US either. The race is on.

Gentlemen, start your engines!

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Forget AJAX. GData is Much More Interesting

Published
by
Brian Berliner
on August 30, 2006
in Technology and Venture Capital
. 0 Comments

AJAX is all the buzz these days. Yeah, sure. It makes my web-based applications feel like desktop applications. That is important (but I kinda already had that with Flash anyway, so…). AJAX as a technology is certainly nothing new (JavaScript and XML have been around for a very long time). AJAX is a pain in the butt to use, so folks are starting to rally around Ruby on Rails instead. Again, great stuff - especially as my web-based applications become richer and more intuitive. Death to the Submit button!

However, we’re spending all this time and talk on the interface technology. The needle movers are really elsewhere.

GData is poorly named (not nearly as cool as "AJAX" or "Ruby on Rails"). It’s got a branding problem, to be sure. Heck, there’s not even a fancy logo for it. But, ignoring that, the technology is dead-on right.

GData is the Google Data APIs (Beta). Google has plugged this into Google Calendar, Google Base, and Google Blogger. It’s basically RSS & Atom (the technologies that fundamentally drive this blogging ecosystem) done right.

Right now, we all subscribe to a "feed". The "feed" is delivered to us through a newsreader client of some kind (I use NetNewsWire). Information is getting packaged into RSS & Atom feeds like there’s no tomorrow, which is great for us information consumers (and aggregators). However, this is all a very passive experience today. We poll for information, download it, then process it in our client. Nothing more. Very pre-Web 1.0.

The underpinnings that drive GData allow for this to become so much more interesting. GData allows for your application (think beyond a newsreader/feedreader) to interact with the service programmatically. It’s no longer poll and download. It’s an API to interact with feed services. We talk about this in the context of blog and news "feeds" today, but you need to think bigger than that. These feeds are really just portals to information (think: ALL information, including that inside databases and filesystems - it’s all getting plumbed with Atom right now).

What I like about this:

  • GData and other similar approaches allows for the "architecture of participation" for the applications themselves
  • It’s easy to use
  • It’s an extension on the stuff (RSS & Atom) that is getting plugged into every layer of our applications and operating systems (Microsoft is doing so with Vista big-time)
  • Since it is REST-based, it’s so much easier to deploy and manage. This architecture has a much better chance of winning over any of the complicated SOA tools that I’ve seen out there to date
  • There is a serious opportunity for a startup to create a framework (or, better yet, a hosting provider similar to FeedBurner) that allows for the server applications to easily adapt to this new two-way world of feeds.

What I don’t like about this:

  • It’s not a standard. IETF is working on this. Stay tuned.
  • Google has done horrible marketing of this very well conceived and implemented technology.

Bottom line: This is the beginnings of the true programmatic web. The Web As A Platform. I look forward to watching the innovation.

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Mobile Media Revenue Projections: 2006-2011

Published
by
Brian Berliner
on August 29, 2006
in Mobile and Venture Capital
. 1 Comment

Found in the current (August 28, 2006) edition of Red Herring magazine. Courtesy of Juniper Research.

Mobile Media Revenues (Billions), projected

Market 2006 2011
Streamed Mobile TV $0.6 $2.7
Broadcast Mobile TV $0.1 $1.8
Ring Tones $4.2 $2.4
Ringback Tones $1.0 $7.2
Full Track Downloads $0.2 $11.7
Streamed Music $0.4 $4.2

So, it looks like Ring Tones + Ringback Tones continue to grow in size (from $5.2B to $9.6B), with the market shifting heavily from Ring Tones to Ringback Tones. Amazing. I can’t wait to hear all the exciting ringback tones I will get to listen to in the future.

Also, Full Track Downloads come on with a vengeance moving from a weak $0.2B to an incredibly strong $11.7B. I have a hard time seeing that happen.

Interestingly, while the other numbers look inflated, the Mobile TV projections for 2011 actually look small to me. There is decent growth projected in those markets, to be sure. But, I think that in 2011, people will spend more money on viewing mobile video content than they will on downloading full music tracks. But, hey. That’s just me. I could be wrong.

Bottom line: Juniper shows these markets, in aggregate growing from $6.5B in 2006 to a whopping $30B in 2011. Yow. Place your bets.

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Amazon Elastic Compute Cloud (EC2) - killer apps

Published
by
Brian Berliner
on August 28, 2006
in Startups, Technology, Venture Capital and Virtualization
. 1 Comment

I must admit that I am pretty excited about the recently announced service from Amazon (still in Beta). The Elastic Compute Cloud, or “EC2″. It has nothing to do with Books or ISBN numbers. And, it’s pretty darn cool. EC2 in a nutshell:

Amazon Elastic Compute Cloud (Amazon EC2) is a web service that provides resizable compute capacity in the cloud. It is designed to make web-scale computing easier for developers. [...] Amazon EC2 presents a true virtual computing environment, allowing you to use web service interfaces to requisition machines for use, load them with your custom application environment, manage your network’s access permissions, and run your image using as many or few systems as you desire. [...] Amazon EC2 enables you to increase or decrease capacity within minutes, not hours or days. You can commission one, hundreds or even thousands of server instances simultaneously. Of course, because this is all controlled with web service APIs, your application can automatically scale itself up and down depending on its needs.

Ok, that’s a bit of marketing speak. Bottom line: EC2 provides a highly scalable pool of compute servers that are hosted by Amazon. You pay by the drink (only for what you use), so it is truly a Utility Computing model. And, best of all, it is all programmable and managed by web services requests, which means that you can scale your app up and down very easily and completely on-demand. For more, read the FAQ. This is gonna be big.And, to be perfectly clear, you never have to order a server, receive it, unbox it, install it, diagnose it when it’s broken, fix it, upgrade it when it’s old, add more A/C when the server room gets too hot, buy a ton of bandwidth into your site to account for the expected “peak load”, etc. Lots of headaches go away through a hosted model. But, this is so much better than the usual dumb hosting model, which provides you with either a physical server or a virtual private server - those solutions have no real and easy way of scaling your application on-demand.Now, the guys on the Amazon Web Services team are seriously good. I kid you not. They have been on the forefront of opening up the core set of infrastructure and data that Amazon has built to find ways of increasing Amazon revenues. Did I say that this is gonna be big? Their blurb:

Amazon has spent ten years and over $1 billion developing a world-class technology and content platform that powers the Amazon web sites for millions of customers every day. Using Amazon Web Services, developers can build software applications leveraging the same robust, scalable, and reliable technology.

But, EC2 takes a very big step forward. Especially now. This kind of capability allows startups to have a world-class and scalable infrastructure from day one. No need to buy massive racks of servers and bandwidth pipes. If the startup’s service takes off, you can spin it in-house later. I’m sure Amazon will end up pricing this to entice you to never want to bring these capabilities back in-house (current pricing feels a bit high, but many details are not yet fully known).Jon Udell has posted a screencast showing the EC2 service running his application, just as his local servers do. No big deal, but you can tell that he’s pretty excited. Maluke has a nice write-up here, including this snippet:

Please note that EC2 is not limited to web hosting applications, far from it. It makes even more sense to use it for virtual render farms, to run simulations and other tasks that require a lot of computing power but are usually executed only once in a while. So if you need for ex. 100 instance-hours to complete the computation, you can make your own cluster of 20 machines of similar power (will cost about $10000 for hardware alone) and complete the task in 5 hours, you can use EC2 to create this virtual cluster, compute and then shut it down when done and pay much less — $10 per job. Or you could use EC2 to create a 200 machine virtual cluster, complete the job in half an hour and pay the same $10 for it. Think about that.

Of course, I’m a bit biased. The service will need some killer virtualization management tools, like what we built at Cassatt. The Cassatt system (many patents pending) is a goal-oriented system designed specifically to scale application tiers on-demand, based on your specifications. Of course, nothing works with EC2 today, but having easy management tools allows this to be very easy to deploy and manage for production-type services. That’s what Cassatt does. Disclosure: I am founder and was the founding CTO of Cassatt.Another somewhat biased example of a killer application for EC2. Using it as your dev/test server farm. My buddies over at Gauntlet Systems (recently acquired by Borland) had a hosted build/test system which just makes a lot of sense to me. Plugging Gauntlet Systems into EC2 would make for a very scalable software test farm with very little need to build the infrastructure yourself (just pass the charges back to your customers, since you would be charging them by the drink anyway; basically, let Amazon do the nasty accounting for you!).Final somewhat biased example here is the use of Akimbi Systems plugged into EC2. Akimbi was recently acquired by VMware. They have a great tool for moving your dev/test environment to a virtualized and very dynamic environment. Ground-breaking stuff. Having a module for Akimbi that plugs into EC2 would allow you to fully outsource your test environment. Disclosure: I am an advisor to Akimbi.OK, I’m excited too. Nice work Amazon!Tags: , , , , , , ,

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An Entrepreneur in Residence, Part 1

Published
by
Brian Berliner
on August 25, 2006
in Venture Capital
. 3 Comments

This post is part of my Venture Capital FAQ Series.

I was an Entrepreneur in Residence for Sevin Rosen Funds from May 2005 through February 2006. It was a wonderful experience - one that ended up changing my career path from "entrepreneur" to "investor". I wanted to write a couple of articles about the experience to explain, first-hand, what it was like to be an EIR for a top-tier firm like Sevin Rosen Funds (SRF). This first installment will talk about the "Entrepreneur in Residence" title in general. Part 2 will discuss how we defined my specific role. Part 3 will close with some of the activities surrounding my particular instance of the title.

Part 1: A word about the title itself…

"An entrepreneur in what?"

That’s what most of my friends and family would say when I told them my new title. Turns out, the Venture Capital community is small. As of May 2006, the NVCA1 has somewhere around 485 firms listed as members, with only about 8 investment professionals per firm (on average). Of those firms, only a small fraction have active EIR programs. So, at any point in time, it’s hard to believe that there are more than a hundred EIRs in circulation on the planet. That makes the EIR title somewhat exclusive! As a result, nobody outside our industry has ever heard of such a title. Especially given that the title is not a "career" title. You get the title, hold it at most a year or so, then leave it behind when you move on. I.e., there are very few EIRs and they hold their title for a very short period of time. So, in terms of "Title-Years" (a term I just made up), being an EIR may be one of the rarest titles out there to hold. It’s no wonder that they lay-person outside of Venture Capital has never heard of it.

I, for one, am proud to be a member of the EIR Alumni Club (if we had a club)…

You know it’s a rare title when you type it into Wikipedia and see the top match being "Vacation property"! OK, add double-quotes. Now, the top match is Virvint Capital because they list an EIR as part of their management team. Digging down, we see a 2.3% Relevancy match in the Venture Capital topic where they say:

EIRs are experts in a particular domain and perform due dilligence on potential deals. EIRs are engaged by VC firms temporarily (six to 18 months) and are expected to develop and pitch startup ideas to their host firm (although neither party is bound to work with each other). Some EIR’s move on to roles such as Chief Technology Officer (CTO) at a portfolio company.

Not much has been written about this elusive title. In researching for this article, I found that there are many consulting companies and schools that use the "Entrepreneur in Residence" title in ways other than I describe. For this discussion, I am limiting the scope of the title to EIRs working for Venture Capital firms.

You will also see references to "Executive in Residence" or "CEO in Residence". This allows for executives and CEOs who are not necessarily entrepreneurs (or who choose to emphasize their executive status over their entrepreneurial experience) to join a VC firm in a similar capacity to an EIR, so what I say here about EIR applies to them as well. My general experience is that you see more "Entrepreneurs in Residence" at VC firms, while the "Executive in Residence" and "CEO in Residence" is more often found at Private Equity (PE) firms. However, this is changing as more VC firms choose to keep the stash of known-quantity CEO’s close for when a CEO needs replacing at a Portfolio company.

Here are a few choice links about the title (slim pickins, please add other good links in the Comments section):

I’ve talked to quite a few other EIRs about their role within their sponsoring firm. The EIR title is a very nebulous one. Every Venture Capital firm is different and defines the role to suit their individual style.

  1. Some don’t do EIR programs at all. Some do them frequently, with an ever-rotating entrepreneurial door.
  2. Some limit the participation to a single EIR at a time. Others will take on multiple entrepreneurs if the timing just happens to work itself out that way.
  3. Some only take on entrepreneurs that they have worked with before (maybe as a previous founder or key contributor at one of their portfolio companies, or someone that the Partner has worked with in a previous life). Others will take on entrepreneurs that they don’t know, but are highly regarded as experts in an industry segment (particularly one that interests a General Partner of the firm!).
  4. Some restrict the access that the EIR has to the firm’s operations. Others run it wide open and transparent.
  5. Some will keep an EIR in stealth mode with no public announcement. Others will issue a Press Release. Others will add the EIR to their web site.
  6. Some encourage the EIR to assist with the day-to-day operations of the firm. Others keep the two worlds separate.
  7. Some will compensate the EIR through the VC firm’s management fees (with the EIR being a "consultant" to the firm). Others will choose to seed a company entity and use fund money instead of fee money.

Be sure to continue the story. Please read:

  • Part 2: Accepting the title
  • Part 3: A day in the life of

1Note: Not all VC firms are members of the NVCA. For this article, I assume that NVCA represents the "majority" of VC firms. Double the numbers for worst-case estimates. It would be great if the NVCA clarified their estimate of the percentage of the VC industry that are members currently (in the comments section below).

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Business 2.0 Magazine: The $100M Giveaway

Published
by
Brian Berliner
on August 24, 2006
in Startups and Venture Capital
. 1 Comment

Business 2.0 Magazine features 20 Venture Capitalists telling the entrepreneur one specific area that interests them, how much money their firm is willing to throw at the problem initially, and how far along they want the team to get (progress+time) in building out the solution/company. The total is $100M for investments.I love it!To see which ideas these VCs will fund for a total of $100 million, click here. The business2blog articles is here.VCs get to see A LOT of companies parade their business plan before them. As such, they often get a very good handle on what markets are important and what markets are underserved or unserved.VCs are not entrepreneurs, however. They are investors. If the VC believed in their idea with entrepreneur passion, they would write up the business plan and go get started building the business. Instead, they are sharing with us one of the holes they see in the market today and are making an indication that their firm wishes to place a bet to fill that hole. Entrepreneurs should read this article.VCs are wrong more often than they are right. I’m working on a post about that for my Venture Capital FAQ Series of articles. The business model of the asset class allows for that. So, I don’t think that you should latch on to one of these ideas and build a plan around it. Instead, you need to be true to yourself and your particular skills/knowledge. Your company needs to be your idea. You need to have the passion. You need to have a deep understanding of the market you are entering. You need to understand the technology, markets, distribution channels, competitive forces, key people, etc. Don’t chase someone else’s idea of what is going to be big. Chase your own.So, what caught my eye in the list? Brian’s Picks:

  1. The New Power Play, Elon Musk, co-Founder of PayPal: “As Musk’s two most recent investments — in a space rocket and an all-electric sports car — suggest, the 35-year-old entrepreneur likes to think big. So he’s intrigued by the promise of a next-generation battery called an ultracapacitor, capable of powering everything from cars to tractors. Unlike chemical batteries, ultracapacitors store energy as an electrical field between a pair of conducting plates. Theoretically, they can be charged in less than a second and far outlast anything now on the market.” 
    • Absolutely. This is go big or stay home. Agreed that this is a University opportunity. Exits for this kind of business do not often line up with venture firm’s fund cycles, but a stand-alone guy like Elon can have the patience that the other firms can’t.
  2. A Better Energizer, Samir Kaul and Vinod Khosla, partners, Khosla Ventures: “Khosla, a legendary Silicon Valley VC whose winners have included Juniper Networks and Redback Networks, and Kaul are looking for an engineering team to build a lithium-ion battery with five times the life of anything found in cell phones, PDAs, or cameras. Matsushita and Sanyo are pushing the limits on lithium-ion cells, as are a couple of promising startups. But as with ultracapacitors, Khosla and Kaul think the right inventor will come from an academic lab. “We see research that proves it’s attainable,” Kaul says. “This is not a flying car. If it was, I’d ask for 20 times.” “ 
    • Same comments as above apply here. Anyone that solves the battery problem will do very well. This is an obvious idea, and again, Khosla Ventures can have the patience to see it through. Of course, I’d like to see wireless recharging of my devices - why deliver power over lines? Remove the battery problem altogether.
  3. New Tricks for Old Drugs, Kate Mitchell, managing director, BA Venture Partners: “A team of researchers that can identify, patent, and market new uses for prescription drugs with expiring patents. The typical drug discovery process can last 15 years and cost $500 million. But “repurposed drugs” — already approved by the FDA for safety in treating specific illnesses — can be turned around quickly and cheaply and used to treat other maladies. The process can take as little as three years, with a cost that Mitchell says tops out at about $150 million after clinical trials.” 
    • Fantastic. One-fifth the time and One-third the cost. Those numbers are not great, but good enough to build a nice business (if one of them pops). And, what I love about this is that this can be a world-changer. Finding new uses for old drugs (that we now know a ton about) can unlock improved health globally.
  4. Search for the Small Screen, The Investor: Danny Rimer, general partner, Index Ventures: “Delivery of new types of Web search to mobile phones. Google, Microsoft, and Yahoo are all taking a swipe at this, but Rimer believes they’re betting on a losing strategy. [...] Rimer’s willing to invest in new search applications that, for example, depend as much on voice recognition as on text input, and would offer up everything from shopping and news headlines to driving directions and restaurant reviews with a few voice commands and keystrokes. Like many of the startups he funds at Geneva-based Index Ventures, Rimer expects this one to make heavy use of open-source software to hold down development costs.” “ 
    • I upgraded to a new Nokia E61 Smartphone and it sure could use a service to give me what I want out of the darn thing. This area is ripe for the picking. The world is going mobile and wireless. Data services are skyrocketing for the carriers. The US lags Asia, as usual - this is a global need and opportunity. Nobody has figured out how to deliver ads to mobile phones in a way that works with how we consume mobile services. Mobile phones continue to fly off the shelves. This is hot.
  5. GPS-Guided Coupons, Jeff Crowe, general partner, Norwest Venture Partners: “GPS-enabled ads and coupons piped to your mobile phone at just the right time and place. Location-based marketing is a concept that’s been bandied about for years, but only now is the required technology becoming cheap enough to implement. Companies like Yahoo and Google, meanwhile, have proven inept at building quality services for wireless carriers. Though the timing is ideal for a startup to build the technical pieces, persuading customers to sign up for a steady barrage of marketing offers may prove the bigger challenge. “The behavioral piece is the biggest uncertainty, but you’ve got to make your bets now,” Crowe says.” 
    • For all the same reasons as the last idea, this one is good as well. The LBS market is growing, certainly. The younger generation, in particular, expects their mobile phone to be an active device, not a passive one (it’s not just “for emergencies”, it is their connection to the world around them). Active LBS will greatly enhance the phone’s value and relevance in adapting to where I am and what I’m interested in. Lord knows I don’t want to get Viagra coupons buzzing on my phone as I drive by Longs Drugs. So, the one that can build this right will win big (relevance-placed coupons/ads and rev-share of the coupon usage - the “coupon-through” rate).
  6. A Matchmaker for Mashups, Todd Dagres, general partner, Spark Capital: “A Web-based service that allows users to combine their own videos with a library of licensable clips and music to create video mashups online. Want to create a cameo for yourself in Glengarry Glen Ross? Have your boss stand in for Lumbergh in Office Space? That’s at the core of Dagres’s idea.” 
    • I hated the title of this one because I so loathe the “Mashup” term. But, that’s not what this really is. YouTube is already full of user-generated videos with amateurs doing some very impressive video editing (check out all the Star Wars knock-offs). The tools are largely becoming democratized now. This tool takes it to the next level. I don’t think you need the licensing deals to make this interesting, though it’s pretty easy to make a case for how this can be a big revenue stream for movies that are on the shelf but have some cult following. Heck, the editing tool doesn’t even need to be that good. The users will put up with spending hours making these things just right if it turns out looking cool.
  7. Optimized Sales for the Little Guy, James Slavet, partner, Greylock Partners: “A Web-based service that helps small online publishers choose the most profitable way to sell their ad inventory - whether that’s direct sales, Google’s or Yahoo’s ad networks, or other channels. Large digital-media consulting firms like Aquantive already provide this service for big clients; what’s lacking is a nonproprietary service that can do it for smaller players. “Unless you’re one of the larger sites,” Slavet says, “you’ve either got nothing to help you or some hacked-together system that isn’t efficient at all.” “ 
    • I think of this as an automated Federated Media for the Long Tail of publishers. Buzzword compliant? I chose Google AdSense for my blog. Why? Because it was easy and because it was Google. However, if there was a site out there that could demonstrate equivalent or better relevancy, quick and reliable ad insertions, equivalent analytics, and 50% better returns, I’d switch in a heartbeat. It’s easy to switch, as it turns out. Google does not have a lock on the long tail. They may own them for now, but an upstart can really take it away quickly. And, this is an incredibly scalable business - build a revenue share with Wordpress.com, TypePad/LiveJournal, Drupal, etc., to get some mass adoption quickly and there’s nothing to prevent you from scaling up to take on Aquantive.

So, that was fun.BTW, I am available as an Advisor or Executive Coach for any of these teams (except the battery or health ones - not my bag, baby). Here’s my About page.Tags: , , , , , , ,

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My Dream App is, well, Dreamy

Published
by
Brian Berliner
on August 23, 2006
in Mac OS X, Software, Startups and Venture Capital
. 0 Comments

Take a walk over to My Dream App. Right Now!

I think of it as American Idol meets the Shareware market.

So, here’s the business model.

If you have a great idea for the Mac OS X platform, but no way to build it or hire a team to build it, you can submit your idea to My Dream App right now. This thing was announced all of 2 days ago and they’ve received 1572 ideas submitted so far. Incredible. You have until September 1, 2006, to submit your ideas, so get on with it!

At that time, the My Dream App team will pick 24 ideas from the list - what they think are the best (and implementable) ideas of the bunch. The top 24 picks will be announced between September 4 and September 15.

Starting September 16, the elimination rounds begin. From September 16 through October 23, the voting is turned over to the user community (registered on the web site). Five, count ‘em, 5 eliminations rounds later, the top 3 winners are selected (all by popular vote).

The top 24 picks all win a prize. The first 6 eliminated get an iPod Shuffle. That’s hardly a prize. The 3 winners get a MacBook Pro laptop and 15% of the NET profits from the sales of the shareware product that is subsequently built and brought to market.

What I like about it:

  • Great idea that is getting lots of traction
  • The Forum discussions about many of the submitted ideas are FASCINATING; truly a demonstration of the openness of Web 2.0 users. The ideas are already being refined, compared, discussed, and improved.
  • If the concept is proven to be solid, it can be easily extended to other platforms (Windows, Symbian, PalmOS, Linux, Solaris, SaaS).
  • Could imagine building this into a marketplace for programmers and ideas. Just because you are a great coder does not mean that you know the killer idea (and vice versa). You would think that O’Reilly would be all over this.
  • The ideas themselves are not big enough to support a VC-funded business. That’s expected, as the target is the Shareware market. However, the My Dream App concept, with some tweaks I discussed above for scalability, could build a nice-sized business and, what I like, is that it could build applications that change the world.

What I don’t like about it:

  • The My Dream App guys exclusively own your idea if it is selected. I understand why they did this - they are running a business, and this term makes the legal issues very clear and concise. However, I think it is a bit onerous and they should have stated it as "you own your idea and have given us an exclusive license to bring it to market as a shareware solution for the Apple Macintosh".
  • You get 15% of NET profit, but nobody has defined the accounting that goes into calculating the profit (i.e., what are reasonable and usual expenses, who pays for the developer, etc).
  • They only have to pay you for the Apple Macintosh version. The implication is that if they take your submitted idea (which you gave them, remember) to another platform, like Windows, they would owe you nothing.
  • I personally feel that 5 rounds of elimination are too many rounds. I would do: 24 to 12, 12 to 6, 6 to 3. Resulting in 3 rounds of elimination.

I intend to watch this closely (and, hopefully, will be picked to judge as I’m a big Mac user and fan). I wish these guys all the success in the world. Fun stuff!

Anyway, this has had some great blog coverage. TechCrunch, Paul Stamatiou, O’Reilly Mac Devcenter Blog, binarytales, MacUser.com, Pomcast.com, Manual Web Crawler, anshuljain, FixYourThinking, Mac1

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Entrepreneurs Need To Drink…

Published
by
Brian Berliner
on August 22, 2006
in Gadgets, Personal and Venture Capital
. 6 Comments

Coffee, that is!

Our current coffee pot at home is a Melitta Mill & Brew. It has the following problems:

  1. Doesn’t brew coffee hot enough, so the full flavor is not achieved; it’s blah
  2. Pot is made of glass, so the coffee doesn’t stay hot after brewing
  3. Warmer under the glass pot continues to cook the coffee after brewing, which quickly detracts from the flavor over time
  4. A plastic piece which holds the grinder in place broke off some months ago, but that has not affected the brewing, until…
  5. Another plastic piece broke off that holds the coffee filter in place. I "fixed" it, temporarily, but we knew the time would come to replace it.

So, I spent the day, well, really, almost the whole day on Saturday researching coffee pots. One day of my life consumed in the quest for better coffee. Such as it is. Results of my hard work gladly shared with you below.

Core requirements were:

  1. Brew temperature of 195+ degrees F (ideal is 195-205)
  2. Quality construction
  3. Thermal carafe (with vacuum seal ability)
  4. Automatic timer to start the brew going in the morning
  5. Under $200 (the Melitta can be had for $60, so we were willing to spend more)

Having a grinder was a nice-to-have, but not required. We also didn’t need some fancy $3,000 espresso, cappuccino, latte, fancy-shmancy unit. We just wanted good, basic coffee that brewed at the right temperature and stayed hot for a few hours (while I blog and drink!). For espresso, we would just buy a dedicated espresso machine later. For the other stuff - well, we don’t care.

After reading a ton of reviews, I determined that there was no perfect model. Everything had quality control issues. Also, the addition of the Thermal Carafe apparently causes a number of design problems in these units, resulting in coffee spilling out onto the cabinet and the floor if you don’t place the carafe perfectly back in the unit. This seemed to be universal among all the models. I chose to accept the risk so I can have my coffee hot in the pot and not cooked to crap in the glass.

Under $100, there were two that caught my eye:

  • Zojirushi EC-BD15
    The Zojirushi looks to be the best value. You can find it for $75 on NewEgg. Most of the complaints surround the spilling problem I mentioned above, and the fact that the unit seemed to fail in some way after 9-12 months of service (lots of quality problems). On the plus side, it seems to brew at the (correct) hottest temperatures, and the carafe appears to hold the heat. Ignoring the quality complaints, this appeared to be a really good "value" coffee maker. I was tempted by this one, but chose to pass because of the rampant quality problems and reports of spilling.
  • Cuisinart DTC-975
    The Cuisinart also had plenty of spills reported. I could not get any feel for whether the coffee brewed at the proper temperature. However, the Cuisinart received very high marks for the Thermal Carafe itself - they may have the best one out there. Unfortunately, quality problems plagued the lid on the carafe, making it very hard for folks to line everything up perfectly - spills galore. I felt good about the carafe, but without confirmation of the brew temperature and the quality issues, I decided to pass on this one too.

Above $100, the following didn’t make the cut either:

  • Cuisinart DGB-600 Grind-and-Brew
    This one runs about $148. It does include a coffee grinder, whish would be a nice plus. However, 2 family members already owned it. After talking to them, this one was quickly removed from the list. Doesn’t brew at the right temperature and doesn’t keep the coffee hot. We didn’t hear any spilling complaints.
  • Capresso CoffeeTEAM Therm
    This one runs about $299. Also includes a coffee grinder. However, the grinds are fed into the filter through an elaborate swing-arm motion of the filter basket. It looks cool, sure, but that’s way too many moving parts. And, the reviews confirmed my instinct. Keep it simple, guys. Good reports on coffee quality, however. And, it was well beyond what we wanted to pay. TWIT Review here.
  • Capresso ST600
    This one runs about $230. It’s beautiful looking, no grinder, and a bit beyond our price limit. I would have given it serious consideration, but there just weren’t enough reviews posted to make me comfortable spending that much for a coffee maker. Capresso does seem to know how to brew coffee at the correct temperature, however, so i feel like I would have gotten a decent coffee maker. I just had no way to know. Pass.

So, who won the business?

We decided to purchase the Capresso MT500 (Model 440.05).

Capresso seemed to consistently make good coffee. This unit seemed to have fewer complaints of spills and quality problems (but it certainly did have its share). It runs about $169, so it is certainly not cheap, but it is in our price range. The Thermal Carafe does not appear to be as good as the Zojirushi or the Cuisinart DTC-975, but I think it will be such an upgrade compared to what we have now, that I am not worried.

The coffeegeek site included a nice review on this unit, but the review is a bit dated.

Placed the order on Amazon on Saturday evening. It arrived today. I will do a follow-up report with full stats on brewing temperature and carafe thermal capabilities.

Venture Capital Note: The process of finding and reading user-generated product reviews is really painful and time consuming. Nobody has found a way to build a great social networking site around reviews which attract, rate, build a reviewer’s reputation, and rewards them for their contributions. Or, a site that aggregates the reviews of the hundreds of shopping sites with proprietary review engines. Add a note in the comments if you think I should try and comment on a better review engine for consumer products.

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Nisan Gabbay: Startup Review

Published
by
Brian Berliner
on August 22, 2006
in Startups and Venture Capital
. 0 Comments

I had breakfast with Nisan Gabbay, Analyst at Sierra Ventures, this morning at Buck’s of Woodside. We had a nice chat about the Web 2.0 markets and some exciting things that Nisan is seeing and working on (he will give you the details later, I am sure).

Nisan is the author of a blog called Startup Review:

Startup Review will feature weekly, in-depth case studies on successful Internet start-ups. The companies profiled will have achieved either: a) significant exits, b) large revenue, and/or c) strong Internet brands.

Startup Review has received good coverage from Brad Feld, Matt McCall, and Richard MacManus. I just wanted to add some link love for Nisan’s effort. Keep up the good work!

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