Friday 30 September 2005

Saving Serendipity (a long post)

Syndicated content, enhanced by collaborative filtering, social networks and personalized ads, tells each of us precisely what we want to know. But all this technology carries a hidden price: the slow death of serendipity.

We all subscribe to the news stories, blogs, search results, and product alerts that we wish to read--fine tuning our feeds until our home pages perfectly reflect our individual values and desires. I already know the keywords of the news stories I'll read, the artists whose music I will hear, the authors whose books I will pre-order online, the opinions of bloggers I will follow, and the buddies with whom I will message. I'm not bothered by noisy, unfiltered content. I will know everything about what I already know, and my beliefs will only strengthen.

As my sights focus, I lose my peripheral vision. I find myself surprised to have missed important news developments (White House scandals, government coups, fad diets, Supreme Court decisions...). Increasingly I hear passing comments describing films, plays, sporting events, parties, concerts, speeches, festivals and TV shows that, had I known about them, I might have enjoyed.

I'd have had no time to reflect upon this today, if not for the serendipitous breakdown in one of my favorite personalization technologies. It happened while I was driving south on 101 to the wonderful Cordevalle Resort in San Martin. When the time came for me to serenade the empty cabin, I noticed that the face plate of my Omnifi media player (see Favorite Car Gadgets) had fallen under the seat.

For the first time in years I was forced to listen to someone else's musical programming, so I scanned my way through the FM dial to A Prairie Home Companion. After Prudence Johnson's rendition of After You've Gone, Garrison Keillor interviewed 92-year-old Diane Cummings, a former neighbor of F. Scott Fitzgerald, who lamented that nobody goes downtown anymore. Diane's observation was another bit of serendipity, because it shed some light on a question that has been on my mind: why have I, along with so many of my neighbors in Menlo Park and Atherton, been trying so hard to save Kepler's Bookstore, the 50 year-old hallmark of downtown Menlo Park? WHat distinguishes this displacement from the healthy economic consequences of competitive business that drive down costs everywhere else in town, not to mention the planet?

On May 14, 50 years ago, Roy Kepler founded an innovative bookstore to sell paperbacks, a controversial new product in the 1950's dismissed by traditional publishers as subversive, because the lower production costs democratized the set of potential authors (Stanford's book store buyers refused to buy them because they weren't really books). Roy was a conscientious objector and active pacifist who had started schools and radio stations, served jail time for his protests, handcuffed himself to a White House staircase bannister, and lectured Congress on the dangers of eroding personal liberties in the interest of national security.

Kepler's became a magnet for peace activism and civil rights. Jerry Garcia and other Grateful Deaders would frequent the store, along with Joan Baez and restless Stanford students to sing, read, and enjoy Roy's pot of coffee. Over the years, the store has committed itself to the open flow of information, defying attempts by the Menlo Park police, school boards, the FBI, vandals, neo-Nazi terrorists, and fatwas to censor what people read.

Kepler's Bookstore is Silicon Valley's original browser. Its search engines are the clerks who actually read the books.

Under the management of Roy's son Clark (pictured left), Kepler's moved to downtown Menlo Park, next to the equally hip Cafe Borrone (where Peter Borrone sneaks Madeline cookies to my kids). The two stores share an outdoor plaza and playful fountain that attract families in the morning and students at night. The store hosts story hours for kids, and Author Nights that have featured interactive talks by Gloria Steinem, Jimmy Carter and Madeleine Albright, not to mention my favorite authors Christopher Moore and Michael Shermer. High school bands play there on holidays, and parties erupt on the eve of new publications (e.g. Harry Potter, of course). The Kepler's / Borrone scene has clearly emerged as the cultural, social and intellectual center of town.

But with the one-two punch of chain stores and Amazon, Kepler's cash flow has failed to satisfy both the publishers' Receivables departments and the store's Bay Area landlord. Finally, three weeks ago Clark Kepler shut his doors, sending a shock wave through the town as we contemplated family brunches at Cafe Borrone without the requisite stroll through our neighborhood bookstore to peruse best sellers, hear stories, skim foreign newspapers, and meet our friends.

Now, how will we impart our love of reading to our kids, without the tangible props and festive atmosphere that Kepler brought to life? Will we ever again meet our favorite authors in person, to personally thank them, ask them our questions, and bring home a signed first edition to expand our libraries with a souvenir of the day?

As much as we try to stem entropy, life cannot evolve without the critical component of serendipitous mutation. In a post-Kepler world, where will we face random literary discoveries and chance encounters to knock us off course now and then? Or do I simply become my home page?

I'm pleased to report, however, that there is hope. My college friend Daniel Mendez (who first got me into serious book collecting), called Clark Kepler the day after closure to save the store. Daniel has since recruited me and 16 like-minded neighbors (whom Daniel has named the "Kepler's Patron Circle") to fund the continued operations of Kepler's, subject to the landlord's willingness to re-structure the rent obligations. It's a long shot, but with the support of new investors, and, more much importantly, the patronage of readers, the Keplers' store will persist for another half century. Judging by the vocal protests and rallies organized by Menlo Park City Council Member Kelly Furgeson, Bay Area residents are fired up to move their business back offline. (Makeshift signs in the downtown plaza read "Browse on Amazon, Buy at Kepler's").

When Kepler's re-opens, I will invite you all downtown to join us for brunch and a stroll through the store (but turn off your cell phone and Blackberry). Be sure to look for your friends, and meet some new ones. Pick up a New York Times to see what's happening in the world, and check out the authors featured in Kepler's coming season.

You never know what might happen that day.

Tuesday 27 September 2005

High-Tech Marital Aid

Marriage demands open and regular communication. But who has time for this?

Nathalie and I have side-by-side desks at home, each with a thin client computer. Sometimes we get emails that we like to share with the other, so naturally we just forward them, rather than disturb the other's phone conversation or train of thought. When I get such an email from Nathalie, I might have a comment or two, so of course I bounce it right back. Oddly, we often find ourselves engaged in entire email threads back and forth while sitting in the same room. At some point, one of us finally says, "Cut it out already, I'm sitting right here. Just talk!"

Saturday 24 September 2005

Parents Gone Wild

Head hurts from last night's wild PTA party at Lisa and former Covad CFO (and ditch-digger) Tim Healy's house, with Bluefire CEO Bob Dvorak, Googlers Miriam Rivera and Jeff Dean, VC Ed Hurwitz, Data Domain's Chief Architect Hugo Patterson, 3Par founder Ashok Singhal, Sun's Java graphics guru Jeanette Hung and lots of other first grade parents.

Everyone brought food and wine, but Nathalie and I forgot that we were also supposed to bring the plates. For about 2 hours no one noticed that there weren't any--everyone seemed to just wait for someone else to start eating. So meanwhile we all just drank and drank, until I finally set out (rather clumsily) to investigate the disturbing lack of dinner activity.

Too bad our 6-year-olds weren't there. I'm sure that any one of them would have been smart enough to immediately ask "Hey, where are the plates?"

Thursday 22 September 2005

Wyse Up At Home

We'd all like a PC now and then in the kitchen, bedroom, family room, bathroom, or other rooms of the house, for browsing and emailing. But adding a home PC today is like adopting a pet--it's a serious commitment of time, money, and tender, loving care to keep it up to date, secure, performant, and free of adware. Who has time for this? Plus you need to free up (or build) and ventilate cabinet space, hiding away the wires and hoping no one complains about the fan noise. And unless you want your electric bill to spike from powering all those machines, you'll have wait 10 minutes before each usage for the computer to boot (who has time for that?).


My family has solved this problem using thin clients. For under $100 per unit on eBay (plus the cost of a small, simple monitor), we sprinkle little Wyse thin clients throughout the house so that one is always on and accessible. We now hide the two noisy PC's in a closet, along with the UPS and external storage. From any thin client, you push a button to connect in under 2 seconds to either computer or, as I do, to my computer at work. The performance is surprisingly good--indistinguishable, in fact, from using a local PC (even when connecting to my office PC). And as each user moves around from terminal to terminal, the desktop follows him or her, exactly as it had appeared during the previous session.

Wyse and other manufacturers make thin clients of varying sophistication, including some that run real operating systems (Windows, Linux) and local applications. But I like the thinnest, simplest ones--the Wyse clients that run their proprietary Blazer OS. It's fast, cheap, and just smart enough to run the RDP and Citrix protocols, a Wifi stack, and lots of local I/O.

Specifically, the 1200LE and 1125SE both support 100MB ethernet connections and an optional Wifi card in case you don't have Cat5 in your bathroom. (To be clear, I'm not a shareholder in Wyse, nor did I invest in eBay.)

Installation is simple, and now I have only 2 PC's to manage, even though we have 8 workstations around the house.

The only downside is that you can't run video over RDP or Citrix, so either give your kids their own PC/minimac or, as we do, just stick the kids in the computer closet.

Wednesday 14 September 2005

Wired on Flock

Who needs to see the product? Wired just likes the buzz. Now "Flock" has hit the top 10 search terms on Technorati.

By the way, we put some more money into Flock last week, along with a new host of angels.

Tuesday 13 September 2005

Go-Ogle!

Do No Evil, they say. But no one said you can't be naughty now and then...


Reliable, inside sources who understandably wish to remain anonymous have confirmed to me that (and I kid you not) Google's recruiters have been directed to hire every attractive single woman they can. Now that Grateful Dead chef Charlie Ayers cashed in his stock option, this is Google's new retention program.

Maybe that explains the genesis of "I'm Feeling Lucky," and also what the founders were really doing at Playboy Magazine. Could Paris Hilton be Google's next Vice President Engineering?

Monday 12 September 2005

Rob Stavis Led Skype Series A

Thank you Rob for chasing down two elusive programmers in Amsterdam (Niklas Zennström and Janus Friis), and leading Skype's first round of venture capital. The acquisition by eBay generated a record multiple for us, and in under 2 years.

Venture capital is a career change for Stavis, who had previously succeeded Meriwether as head of Salomon's global arbitrage trading desk. After years of serving on Salomon's executive committee, Stavis spent a few years as an angel investor, funding novel financial service firms like reinsurer PXRE (now public on NYSE), and technology ventures like Arbinet (now public on NASADAQ). More importantly, Stavis led the funding rounds of New York's hottest restaurants (Union Pacific, Calle Ocho, Django, and Rain) and toughest golf club courses (Friar's Head, ranked #1 by GolfWeek).

Stavis joined Bessemer's New York office as a part-timer in 2000, but we have since managed to suck him in full time. Other Stavis investments include Gerson Lehrman Group, Soleil Securities, and Revver (a stealth venture in P2P video). He is an insightful, athletic and genuinely nice guy who both maddens and inspires you by just naturally doing everything so well: skiing, golf, math, diving, cooking, and, now, venture capital.

Saturday 10 September 2005

"Cost Reduction" Headphones


Anyone who has tried the Bose Quiet Comfort 2 Headphones (reviewed here) appreciates the enormous difference they make in the quality of mobile audio. But if you're impressed by Bose's ability to cancel out noise, just look at how they have cancelled out gravity--the kind that normally forces down consumer electronics prices over time. With a very tight control of its channel, Bose has managed to sustain the $300 price tag and street price since I bought mine 6 years ago.


Fortunately, there are some inexpensive alternatives. Wealthy audiophiles should check out the just-as-good Solitude product ($200). Everyone else should do what I did--go to Staples or Walgreen's and buy this $35 product from Maxell. It's 90% as good as the Bose product, with the added benefit that when your batteries die 35,000 feet above a red state, the Maxell headphones stop cancelling noise but otherwise keep working.

Wednesday 7 September 2005

The Best Startup Advice I Have

When are company forecasts reliable, and when is it time, based on those forecasts, to ramp up the sales force? Investors and entrepreneurs face these two critical questions, respectively, in every venture-backed company. The wrong answer will either blow a startup's precious capital, or miss the opportunity.

So at Bessemer, when we assess investments and direct their pace of investment, we always keep in mind the Sales Learning Curve (SLC). The SLC is the invention of Stanford Business Professor Mark Leslie, who also happened to have founded and led two Bessemer portfolio companies, one of which is dead and forgotten, and other of which is Veritas! Prior to Leslie's formal description of the SLC, VC's like us just stumbled along, making clumsy judgments about the quality of forecasts and a company's readiness to "ramp it up" based upon the patterns we could glean from our own anecdotal data.

Leslie describes the SLC in a paper (pending publication) titled something like (it's been a while since I've read it) "It Always Takes Longer and Costs More." This paper attempts to explain why it is that Silicon Valley, which is so good and experienced at inventing new technology and building new companies, can't ever seem to craft business plans that track reality.

Leslie's approach springs from the observation that factories would never presume to produce widgets in volume until they have brought the cost per widget down to a profitable level through a commonly recognized manufacturing learning curve. Only once you start manufacturing something can you identify hurdles and opportunities, ultimately learning how to reduce cost, improve quality, and raise yields.

Likewise, technology companies shouldn't expect to sell their 1.0 product without undergoing a learning curve around the needed feature set, the competitive response, the right type of channel and sales rep, optimal pricing, etc. And yet, nearly every business plan I have seen shifts gears directly from Development to Sales, staffed by a growing number of experienced sales reps charged to sell their regular quota of product.

The consequence of skipping the Sales Learning Curve in a business plan is all too common: the company fails to meet the plan, sales reps are fired, eventually the VP Sales is fired, and the company has to raise a highly dilutive down round of capital to stay in business.

Leslie's prescription for success and capital efficiency is a plan that includes the Sales Learning Curve. Accept that until we're out there selling, we can't know what we don't know about the selling process. The goal at this point is to maximize runway, since you can't rush science. As my erudite partner and Harvard Business School Professor Felda Hardymon likes to instruct, "run the business like a one story whorehouse" (with no fucking overhead). Hire only two or three creative, guerilla-style reps and a VP who knows how to experiment with multiple channels.

It may take 4, 7, or 10 quarters to climb the curve. Only then, when your sales force is a profit center (with two quarters where contribution exceeds twice the sales costs) is it time to flick the switch. At this point, raise lots of capital and hire as many talented reps as you can possibly find! This kind of prescriptive framework for clearly distinguishing the phases of a company is so much more actionable than the wishy-washy approach of hesitantly adding more and more sales reps over time.

The SLC is least helpful in markets like telecom carrier equipment, in which it's rather straight-forward to determine the needs and buying habits of the customer. That's why these companies tend to accrue a lot of value after winning just one or two large customers.

But for enterprise-focused startups, the SLC is critical. No amount of up-front due diligence can yield the clarity that comes from actual field sales. Enterprise companies are particularly vulnerable to the delusion that they have cracked the code, thanks to some early wins. But without a proven, profitable sales force, it is reckless to ramp up the sales and marketing expenses.

The extreme value of the SLC is seen in consumer markets. Focus groups or not, you just never know. That's why, as I discussed in this earlier post, we try not to fund User Behavior Risk.

Further reading: Professor Leslie's slides on a case study of applying the SLC to the Nano-Optical Customer-Adaptive Software/Hardware (NOCASH) company.

Friday 2 September 2005

Flock and Roll, Baby!

Wheee! I'm now posting from right inside the Flock browser's integrated blog editor. Dragging and dropping images like these of the Flock's shephereds Bart Decrem Flickr Photoand Geoff Arone Flickr Photo straight from web pages while I browse. Flock's editor has Full textual editing
controls.

Still a few more weeks to the public beta. But anyone lucky enough to have attended Flock's OPSCON party or Bar Camp has seen the demo or gotten an invite, and thumbs are pointing up. I normally don't splog, but I prefer not to praise my own companies, so I'll just drag and drop some recent posts right into my Flock editor...

p2p networks » Flock: new browser on Firefox
Ted Rheingold's Web Journal » Blog Archive » BarCamp == DorkCamp == Nerdtacular
Like It Matters: Yo, Get the Flock Out
Razvan Antonescu » Meet the Flockers
Ajaxian Blog: Flock: New Browser on Firefox
Scobleizer: Microsoft Geek Blogger
Roland Tanglao's Weblog: Flock rocks (or Chris Messina is a demo god)!
mies: Flock has landed.
Download Squad
Read/Write Web: Web 2.0 Weekly Wrap-up
Flock feedback | B.Mann Consulting
owenkellett.info » Flock and the Web 2.0



Okee Bokee

Ni hau! I'm pleased to report that Bessemer just closed an investment, alongside Granite Global and Mobius, in China's largest blogging site, Bokee (fka Blog China). In fact, I telephonically attended my first Bokee board meeting this morning at midnight California time. I'm still not entirely sure what Bokee does, but as soon as I learn Mandarin, I intend to fully investigate.

This is Bessemer's first investment in China (excluding Mosel Vitelic in Taiwan), and stems from the great work of Hans Tung in our Shanghai office.

Bokee exemplifies the kind of high-margin consumer technology venture I profiled in my road map post--with consumer generated content, viral growth, and proven consumer appeal. And Bokee benefits from all three major catalysts behind Bessemer's interest in consumer ventures: rapid evolution of mobile services (Bokee sells mobile access to blogs), emergence of consumer classes in India and China, and the highly accelerated adoption rate of successful applications.

As Red Herring reports (though I couldn't tell you why), it was Bokee that first compelled me to explore the blogosphere.