Thursday, August 24, 2006

Business 2.0 Magazine: The $100M Giveaway

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.

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2 comments:

  1. [...] time ago, I wrote about the obvious need for wireless electricity — even if it’s as simple as the power I use to recharge my devices. I say [...]

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