Monday, July 27, 2009

Zappos Founders Do Well In Sale To Amazon

Last week, Amazon acquired Zappos for roughly $847M. The founders did very well. Via What Everyone Made from the Zappos Sale.
It’s much harder to see how much Hsieh and Lin are making, because no one knows how much of the proceeds of the Venture Frogs shares goes to their pockets or to their LPs. But they clearly did well. Hsieh made at least $214 million; Lin made at least $18 million, with the Venture Frogs shares netting an additional $163 million. If that’s a forced sale, the two are crying all the way to the bank.

Zappos was all about execution. When a founding team executes this well, they certainly deserve the spoils. Many congratulations to them and all the Zappos employees for building a really great company.

Investor Sequoia returned about $160M on their $35M investment. That's a nice cash-on-cash return for them. Congratulations to them for supporting their investment through multiple rounds and helping to build a really great company.

Amazon gets a great asset.

Customers win in the end.

I love seeing these kinds of results for entrepreneurs, investors, employees, and smart acquirers. Congrats to all!

Google Voice iPhone App Denied?

Looks like the Google Voice iPhone application has been denied from the Apple iPhone App Store. Via Apple Is Growing Rotten To The Core: Official Google Voice App Blocked From App Store:
Earlier today we learned that Apple had begun to pull all Google Voice-enabled applications from the App Store, citing the fact that they “duplicate features that come with the iPhone”. Now comes even worse news: we’ve learned that Apple has blocked Google’s official Google Voice application itself from the App Store. In other words, Google Voice — one of the best things to happen to telephony services in a very long time — will have no presence at all on the App Store. If there’s ever been a time to be furious with Apple, now is it.

I'm completely bummed, and disappointed in Apple. And, I'm a huge fan-boy, so this is hard for me to admit.

Looks like I should have purchased the GV Mobile appication while it was still available, instead of waiting for the announced upcoming release of the official Google Voice application.

If AT&T doesn't want free SMS, then they should disable that within the applications, not completely remove them. Using Google Voice doesn't reduce the number of minutes that I burn with AT&T, since my Google Voice account is linked directly to my AT&T iPhone. Everybody should be able to win here.

Apple?

Anyone?

Saturday, July 25, 2009

RackSpace Opens The Cloud, But Needs To Do More

Rackspace is wise to go open with their API and work to build an open community around cloud services (via RackSpace Opens The Cloud):
Rackspace is open-sourcing the specs for its Cloud Servers and Cloud Files APIs under the Creative Commons 3.0 Attribution license, enabling third-party developers to copy, implement and rehash them as they see fit.

In addition, The Rackspace Cloud (formerly known as Mosso) has made available Cloud Files language bindings along with technical guidelines for Java, PHP, Python, C# and Ruby under the MIT license through GitHub. Rackspace aims to offer a reference implementation in Python soon and in a press release casually mentions it “is aware of Ruby, Perl, Java, and Twisted Python Cloud Servers bindings”, which are all in the process of being developed.

However, I don't think it's enough to offer up an API. When I think about how successful NFS became, it's clear to me that it was the combination of offering up the API as well as a reference implementation and test suite. The NFS team also sponsored "Connectathon" events where everyone could check the interoperability of their ports.

I know that the two domains are not the same. I know that the NFS implementation was not "open source", but rather commercially licensed (there really was no equivalent open source concept like the Creative Commons in the 1980's).

The point I'm making is that if Rackspace wants this to truly become the industry standard, they need to actively foster the community. Even to the point of enabling their direct competitors with a reference implementation of their server side abilities. Rackspace should be confident enough in their lead and implementation to do so.

Wednesday, July 22, 2009

How Much Information? 2009 Update

I recently saw this:
Together, the cloud and the next generation of intelligent infrastructure will also help us navigate a world where information is growing exponentially. With less than 20 per cent of the world’s population currently online, the amount of digital information doubles every 18 months. According to industry analyst firm IDC, 988 exabytes of data are added annually to the digital universe, about 18m times the information in all the books ever written.

via FT.com / Technology / Digital Business - Technology critical to turning mass of data into useful insight.

And it reminded me of the seminal Berkeley paper, How Much Information, most recently released in 2003, I believe.

Yeah, there might be a market for archive and storage...

Doubles every 18 months, eh? Sounds a bit like Moore's law, but applied to bits. "The number of bits of information in the world doubles approximately every 18 months". I like that thought.

Monday, July 20, 2009

In VC deals, It's Pre Money + Option Pool Size That Matters

Jeff Bussgang of Flybridge Capital has a great post up about the nuances of early-stage VC financings. For first-time entrepreneurs, there is a lot of confusion about what financing terms really matter in the term sheet.

via Seeing Both Sides: In VC deals, Price Doesn't Matter - But The "Promote" Does

Jeff talks about the "Promote", which most entrepreneurs really don't consider. He says, "The “promote”, as we have called it, is the founding team’s ownership percentage multiplied by the post-money valuation."

An example:
This relationship between option pool size and price isn’t always understood by entrepreneurs, but is well-understood by VCs.  I learned it the hard way in the first term sheet that I put forward to an entrepreneur.  I was competing with another firm.  We put forward a “6 on 7” deal with a 20% option pool.  In other words, we would invest (alongside another VC) $6 million at a $7 million pre-money valuation to own 46% of the company.  The founders would own 34% and we would set aside a stock option pool of 20% for future hires.  One of my competitors put forward a “6 on 9” deal, in other words $6 million invested at a $9 million pre-money valuation to own 40% of the company.  But my competitor inserted a larger option pool than I did – 30% – so the founders would only receive 30% of the company as compared to my deal that gave them 34%.  The entrepreneur chose the competing deal.  When I asked why he looked me in the eye and said, “Jeff – their price was better.  My company is worth more than $7 million”.

In this example, the "promote" works out to be about $4.5M in either case, so the offers are exactly the same from the "promote" perspective.

However, the better response for this entrepreneur would have been to go back to the VC with the $9M pre-money valuation and argue that the option pool of 30% was way too big (and, it really is -- what the hell are you going to do with a 30% option pool in your Series A timeframe? Really?). Reducing the option pool to 15% would have made the "numbers" side of these deals a lot more palatable, and resulted in a "promote" of $6.75M. Clearly the better deal.

Many thanks to Jeff Bussgang for this excellent article.

Friday, July 17, 2009

iPhone App Store + Ad Revenue == Developer Gold Rush

What I find most interesting about this story is that it is possible to make $2,000 a day with the most simple of simplest iPhone applications -- based ONLY on Ad revenue and a FREE application. The app shows elegant frames around a black screen that you can use as a pseudo-mirror. That's it. $2K a day! Check out the graphs on ad hits here:

Top iPhone App Developer Was Losing Out On $2000 A Day Because Of Sloppy Coding .

The iPhone App Store is an amazing gold rush for application developers. I said it before. Apple has nailed it with their App Store, and the recent additions in iPhone OS 3.0 (subscriptions and in-game purchases) confirm my belief.

Apple is taking the friction out of developing and releasing mobile applications. That's why their mobile platform is succeeding.

Can others take as much friction out?

<<silence>>

Thursday, July 16, 2009

Sand Hill Slave Returns to Blogging

I completely missed that Sand Hill Slave has returned to blogging last month! Entertaining reading for anyone in and around the VC industry.
No apologies, no excuses. I'm similar to the man who dates a woman forever, and then goes Casper on her. If it's meant to be, he comes back with that one grand gesture- out from a robin's egg blue box...a glorious stone to slip on her finger! Like that guy, I've also returned with a simple gesture no less; now it may not involve a ring, but it definitely involves a certain finger….

via Sand Hill Slave: Even Though I Walk Through the Valley in the Shadow of Tech, I will fear no VC... - Journal - The Office Space Scheherazade Returns- .

First Look: The Palm Pre Mojo SDK and Palm Acquisition Thoughts

First glance at the Palm Pre Mojo SDK is that it's a pretty nice piece of work. Developers doing web-based programming today will have no problem making "chicklet" applications by the thousands.

Thinking out-of-the-box for a moment, Palm would be a good acquisition target for Adobe. The Mojo SDK could certainly use the Adobe expertise in web-based development tools. Alone, Palm really doesn't have a chance of catching up with Apple.

Unfortunately, the Palm "App Store" will not be available until fall:
Thousands of developers have participated in the Mojo SDK early access program since it began in early April. New applications are in the pipeline for the Palm App Catalog, and the App Catalog submission process will be opened to all developers beginning this fall.

via The Official Palm Blog: Mojo SDK available to all .

Wednesday, July 15, 2009

Twitter + Wordpress Ultimate Integration

Here's how I integrated my Twitter status updates into my Wordpress blog. I wanted to load all of my old, archived tweets as "Weekly Digest" combined posts, but I didn't want those digests to show up on my home-page, and I didn't want those digests to show up in my RSS feed. I wanted all of the digest tweets to be accessible via the new Tweets category that I just set up.

Here's what I did:

  1. Create a new category to hold your new tweets. I created the Tweets category.

  2. Download, install and activate the Lifestream Wordpress Plugin. I pulled straight from the Subversion repository with the command (from the wp-content/plugins directory):
    svn co http://svn.wp-plugins.org/lifestream/trunk lifestream

  3. Add a new "Twitter" feed to the Lifestream plugin. This will get you the most recent 20 tweets, which was not what I wanted. An earlier version of the plugin could download all archived tweets, so I downgraded to version 0.99.4 with the command (from the lifestream directory):
    svn sw http://svn.wp-plugins.org/lifestream/tags/0.99.4

  4. Re-add the Twitter feed to Lifestream, which should give you all (or, at least most) of your archived tweets.

  5. Unfortunately, Lifestream does not set up Weekly digest posts for all the existing events/tweets that it loaded. So, I had to hack on lifestream.php to do that. If there's interest in the comments, I will post my diffs here. Let me know!

  6. I ended up with 42 weekly digest posts being created. Unfortunately, they all showed up on my blog home page, as well as in the RSS feed. Not what I wanted.

  7. Download, install and activate the Ultimate Category Excluder Wordpress plugin.

  8. Configure the Category Exclusion plugin to exclude the Tweets category from the Main Page and from the Feeds.


And, that's all there is to it.

Your Main Page and Feeds stay clean, but your Tweets (and any other feed/stream that you want to include) will get archived with your blog.