false precision

VCIR - Wrap

Wow, first off I have to say that live blogging is not easy. I only committed to the morning sessions, thank god, and after that I was spent. As I re-read what I posted I'm pretty happy with the results. I liked the format of trying to capture the highlights of the "pitch" and then in the last paragraph adding my own opinion, for what it's worth.

I saw a couple of presentations in the afternoon that stood out for me (before giving up and hitting the bar). The first was Yieldex. Yieldex is a software platform for publishers that helps schedule online ads for placement in publisher properties.

At Lijit we are just starting to get comfortable in the Ad space, but I have to say that based on my limited experience in this space I get it. If anything, they are bit early – but not much. Check them out.

The other company that comes to mind is SocialThing! I have to admit that for the last year, I simply didn't get this deal. Don't get me wrong, I love the founder; he is outgoing and really sells the deal. But, I didn't GET IT. While, their customer is not ME, I got it today.

SocialThing! Aggregates lifestream information (think twitter) into a display from all your social networks. I immediately thought of it as twitter on steroids. It was undeniably cool.. Ok, I was ALMOST there. Then they showed the iPhone integration they are going to debut at SXSW next week. SOLD. Ok, it's still not "my" world – but it was really cool to see the scrolling list of life 'stuff' on the iPhone.

To me the no-brainer investment – ahhh, for the VC with unlimited means and a telco bias was Zayo Group. Made me wish I had a spare $100M to invest. The safe New Media investment was Filtrbox.. It may not be a billion dollar company but it's going to be a solid success. SocialThing! Could be huge, or zero (I personally like these kinds of companies) but I can just barely trust my instincts with this one.

All in all, it was fun for me. I love this stuff. In my limited experience all high velocity companies are point-in-time stories. Check back in 6 months and things change. Congrats to all the presenters today.

VCIR - HiveLive

HiveLive is an enterprise social software company. They provide enabling technology to allow companies and I suspect brands to build interaction around their online properties. John Kembel is the founder and CEO. They have raised $2.2M in angel financing to date, but announced they just closed a $5.6M round lead by GrowTech.

Why is this important? HiveLive would say that community is next frontier for CRM. I define this as means to create a dialog between themselves and customers. This includes Lead Gen, Loyalty Retention, Market Intelligence and Customer Support. Among other things, HiveLive has recognized that businesses with partners or supply chain interaction are likely fruitful ground for their solution. Their customers come to them to avoid trying to integrate blogs, forums, etc.

Here is what I think. First, I just barely understand this space. I understand connecting customers and companies. The few examples I have seen such as the social bolt-on's to USAToday have been forced to me. What I like about the HiveLive story is that they are looking at the idea fresh. Rather than bolting blogs, forums, etc together they are trying to create an "environment". I think this is unique – and the data analytics they can generate is likely very valuable if they capture a user experience that works for their customers (and their customers). John and team are clearly passionate about the space and this is probably the best reason to invest.

VCIR – Control4

Control4 is a home automation device company. I have personally looked at their stuff on multiple occasions although I have not bought any of their stuff. The CEO is Will West. They have raised $80M to date and are not profitable. They have 185 employees. They predict revenue growth from $40M last year to $60M this year.

Since inception they have attempted to control, ahh everything. Their company launched with over 25 devices with everything from music control to security. The vision is to be the Microsoft of home control. The market for this home control is currently $600M. In order to widen this market they are expanding into hospitality market. They are also expanding into large commercial markets where at the top end they will compete with Johnson Controls. They envision a play where their control technology is built into home gear rather then an add-on.

Here's what I think, these guys are really wide. Every time I look at his company I think how can you be successful with a shotgun approach? Another major concern I have is without real standards in this space this continues to be a risky space. On the counterpoint, if they become the standard then obviously that's valuable. I can't help but think to succeed here you have to focus. If they can transform into the technology license company I get it, if not, not.

VCIR - FiltrBox

I have to say out of the gate that I like FiltrBox and know a little about the company before the presentation. FiltrBox was a techstars company last summer and they have made steady progress on not too much money. Ari Newman is the President and Founder and there are currently 4 employees. The company is pre-revenue. To date they have raised a modest $500K and are currently looking for a $3M series A investment.

FiltrBox watches the information that is being published on the Internet, scores it, and provides it in a way average people can understand. Their product is a subscription based product and focused on mid-size business. The idea is fit between large buzz monitoring solutions that are expensive and free products like Google Alerts.

Here's what I think, FiltrBox's competition seems to me to be the free service from Google, Google Alerts. Some see this as a deal killer for FiltrBox. I completely disagree with this. Google Alerts was basically an afterthought constructed by Google they will likely never really do anything with. Anyone who uses Google Alerts for any length of time quickly finds out that the amount of noise makes it completely useless. If FiltrBox can sort out the noise, they will have a great product and great business.

 

VCIR - WBS Connect

WBS connect is a leading international provider of high bandwidth IP based telecommunications services. Scott Charter is CEO with 15 years in the Telecom industry. The company was founded in 2003 and is self funded.

WBS provides business connectivity. They are basically a middle man between business buyers and the bandwidth providers. Revenues for the previous 2 years, $6.4M, $18.5M, and are projecting $40M this year. They have 18 employees. They partner with basically all the big bandwidth providers for bandwidth. They have 55 points of presence in the US.

Here is what I think. They are basically winning deals because of customer service and price arbitrage between the providers that they resell. Having bought bandwidth from the large guys in my previous life I can attest to the time it takes to turn up bandwidth fast. Raindance was a connectivity centric business and it took a lot of time manage these relationships. The thing I don't quite get is bandwidth prices drop all the time, but like the voice market we used to be in at Raindance it seems to me that margins will be tough to maintain. It seems to me that owning the bandwidth will ultimately win. The company says they will maintain margins with higher touch services.

VCIR – Zayo Group

Zayo Group is a regional provider of telecom services, bandwidth, voice and managed services. Dan Caruso is the CEO and the management team appears to be really seasoned coming from ICG, L3, WorldCom, MFS, etc.

They have $225M committed and have spent $140M of that. In their first year of operations they estimate revenues to be approximately $160M.

Their strategy is to buy companies that installed fiber networks during the bubble (about 80). A lot of those have been purchased by the big guys (strategics) but not all. The companies they buy are generally healthy now but capital constrained. The company thesis is that the glut of bandwidth will soon be coming to an end. As a rollup play they plan to buy up properties as fast as possible. They believe they can beat the big guys simply because the big guys are not the healthy.

Here is what I think. I think this is a great idea. They are looking for another $125M equity. They are concentrating on integration, one and capture of additional properties second. This is a deal for the large telecom centric funds but I think this one is going to be huge. As long as they run the resulting company free cash flow positive they will be a takeout down the road when the strategics get healthier and need to grow again.

VCIR – The Plan

I'm trying the live blogging thing this morning. I'm attending Venture Capital in the Rockies conference. I've attended the conference for the last several years and last year I was a presenter. Right now I'm watching the Limited Partner Panel hosted by Brad Feld. Limited partners are the guys that fund the VC's.

David Cohen is sitting across the table from me looking engrossed in the presentation. Looking at the presentation schedule there are a few contentions between companies I want to see but I think my strategy for the morning is the following.

1. Zayo Group / Dan Caruso, CEO
2. WBS Connect / Scott Charter, President & CEO
3. FiltrBox / Ari Newman, President - (although I really want to see Tenril Networks in Track Two)
4. Control4 / Will West, CEO
5. HiveLive / John Kembel, CEO

So bottom line from the panel that is wrapping up as I write this. If you are a regional VC, and telling a story that you are an expert in a region and that's why your LP's should invest – that appears to be a non-starting strategy. They all want to invest in VC's with national reach (I think we all knew that).

Foundry Group Launches

I see from Brads Feld's Blog that the Foundry Group had their official coming out party.

I've known Brad for about 10 years now. I first met him when his Softbank Fund, later Mobius invested in Raindance way back in 1998 or 1999. We had a rather eclectic board back then with Brad easily being the most 'interesting specimen' at the table. As years went on I really grew to appreciate Brad's no bullshit, no drama form of investment and board participation. Brad has a unique way of sitting there, as the rest of the room spins into a "bag-of-cats" and then say, "It's really not that hard, just XXX, if that doesn't work just YYY, if that doesn't work your fucked". And he was generally correct, everyone stands down – and then he goes back to his email on his phone".

Years later I met Chris Wand. Chris is some kind of mutant encyclopedia of startup mechanics. I don't know anyone who has a bag of wrenches larger then Chris. I once asked Chris why he doesn't write a blog. He said, "I have nothing to say" – which is one of the good things about Chris, if he doesn't have anything to say he doesn't talk. Believe me, this is not only a feature but a benefit of a board member. Chris has been a huge help to us at Lijit and we are psyched to have him on our board. I can out drive him at the track, but that's not why we like him.

I have spent time with the other guys but don't know them as well. I have been blown away with their prior investments at Mobius. Ryan's investment in Sling was total brilliance in my opinion. A few years back I was at the NetLeaders Forum where John Malone spoke. During his conversation (not really a speech) he mentioned Sling 3 times as being really cool. I remember thinking to myself, ok that thing is going to the moon. And it did.

Seth Levine helped out tremendously with my VCIR presentation last year and has been a great supporter of Lijit ever since. The first time I did a practice presentation for him I think his comment was, "Ok, now can you bring any excitement to that". Seth was right, I sucked and as a result I pretty much reworked the entire thing.

Jason Mendelson helped us cut through all the crap with getting our lease squared away in downtown Boulder. Seems, the landlord wasn't that excited about signing a five year lease with an unprofitable company that had 18 months of runway. WTF?

Boulder, is lucky to have Foundry Group in town and their presence will help solidify Boulders position as the best place to start a company. But besides that they are great guys. Even if they don't invest in your company, my experience they will be hugely helpful. If you are an early stage company that fits their investment profile these are the guys you want.

Stupid Question: Does Acrobat work with Vista?

Since running Vista, I guess about a year now, I haven't been unable to run Adobe Acrobat Full Version. The problem is that Acrobat writes its licensing stuff to some keys in the registry that apparently Vista no longer allows.. Every once in a while I uninstall the free version and re-install. I always get his string of total BS.

The free version works (after this crap) because it doesn't look for the updated keys in the registry to see if it is properly licensed. The full version works for about 8 times then gets mad that it's not licensed even though it is. I have called Adobe several times and talked with very nice people in India about the problem. They just give me a key that resets the license key then I have 8 more runs.

Am I the only person on the planet that can't do this? Yes, I am running the install with System Admin Privileges (even though Adobe doesn't tell me to do it)..

WTF? Ross? Help?

Saved by my Slingbox at LAX

People who don't understand the value of place-shifting, have never been trapped at LAX waiting for delayed flight. After a brief moment of panic that I didn't have my Sling finderID, I found it and I was watching news back at home with amazing quality and stereo sound.

A great value for $200. I'm still waiting for the ahh-ha moment with the nearly 1 year old AppleTV. Maybe the new software update I got the other night will be the key to unlock the (any) value in it. At least once I find my AppleID..