2 B or not 2 B?

The title of this post is IM-speak for the self-referential question that seems to have gripped the blogosphere: Is Web 2.0 a bubble or not?

Marc Andreessen changed my vote during a conversation we had at the Copa (I mean of course the Cafe Copa in Palo Alto, not the-hottest-spot-north-of-Havana Copa). Between sips of my soy-decaf-mocha, I lazily referred to the Web 2.0 bubble, when Marc challenged me with "What bubble?"

This struck me as an important question for a VC like me to seriously consider, not only because Marc has been right more than once in his life, but also because he is twice my size.

I blabbered on about the web2.0 frenzy, after which Marc politely observed, with unassailable logic, that frenzies do not imply bubbles. Domestic internet IPO's are sucking up little if any public capital, and U.S. venture capital investment in internet companies actually declined in Q3 (which is backed up Thomson Venture Economics).

Marc was right again. Suffering from VC-herd-mentality, I had confused the excitement around today's new technologies with the excessive IPO march of Web1.0. All we have now is some soap--to blow a bubble we'd need a stream of hot, airy IPO's. (if only...) True, anecdotal data alert us to a coming wave of venture capital that will indiscriminately flow into every startup touting AJAX, wikis, RSS, tags, Open Source and consumer content. But over-funded ventures do not always beget IPO's--remember Go, Pointcast, Napster and Friendster?

So (in a further tribute to Godel, Escher and Bach) I assert that all that bubble spotting is itself just another bubble. The much more important question is whether there is substance to the frenzy. Many of us, including Andreessen, seem to think so, but let's save all the reasons for an O'Reilly conference, not a Saturday 2AM blog.

I have one last question to pose here, and to ask Marc next time I see him:

Why now? Why did all these new technologies seem to emerge in 2005, in a surprisingly sudden end to the internet's first Dark Ages? How much of it springs from the finanical success of Google, or the integraton ease of XML? Or should we expect this rate of innovation to only increase as we accelerate inexorably toward Ray Kurzweil's singularity?

I posed this question to my fellow panelists on a VC podcast, and the only answer I got was "2002"--that is, the year when programmers had nothing to do but dream up new stuff. (Great, another reason for Republican think tanks to advocate unemployment.)

So returning to IM speak... IYHO, iz w2 1 tym tng o d nrmL st8 of INOv8n?

CUL8R!

The Next Intel Emerges From Stealth

Our focus on consumer technology isn't restricted to web2.0 startups. Our wireless, security and media investments have all followed the consumer. (Flarion, GoTV, Mforma, Revver, Visto, Gracenote, Skype...) And our semi-conductor practice is no exception. Led by Rob Chandra, Bessemer's semi team has been funding the next generation of low-power, mixed signal chip design to enable the rapid evolution of mobile, multimedia devices (as well as dense, overheating datacenters).

One such portfolio company, PA Semi, emerges from stealth today at the Fall Processor Forum in San Jose. This crack team of chip designers was responsible for DEC Alpha, Opteron, and Sibyte.
Expect to enjoy the company's PowerPC microprocessor in video games, routers, server blades, storage appliances, supercomuters, printer/copiers, cars, etc. According to today's Wall Street Journal:

P.A. Semi, funded by the venture-capital firms Bessemer Venture Partners and Venrock Associates, expects to deliver samples of a chip next summer that operates at two gigahertz, yet draws only 13 watts of power. That product will have the core circuitry of two microprocessors, along with other circuitry often found on separate chips; P.A. Semi eventually expects to put as many as eight processors on a single piece of silicon.

By contrast, Intel's latest "dual-core" chip for servers operates at 2.8 gigahertz and draws up to 150 watts of power. Mr. Dobberpuhl concedes that competitors also will reduce their power consumption, but he expects P.A. Semi products to retain a threefold to fivefold advantage over competitors.



This powerpoint reveals more details about the company.

Wanted: Genius Hacker, Genius Architect

I'm seeking geniuses for two distinct startup opportunities in Silicon Valley. If you or someone you know qualifies, please email me a bio.

Genius Hacker: Come lead a vulnerability research lab for a successful, fast-growing security company. Be adept at reverse engineering applications and finding exploits. This is your chance to play a prominent, leadership role in the security industry (without getting arrested).

Genius Architect: Architect and develop a desktop application for an exciting web2.0 startup that we're incubating in our offices. Recruit your own technical team. Know Windows, GUI design, and web services. This is your chance to co-found a well-funded, high-potential startup with the team of your choice.

If you want coin-free laundry, free pizza, and pretty admins, join Google. If you want to play a critical role in building your company and earn lots of pre-IPO stock options, join us. (Okay, the pizza is negotiable.)

Do No Weevil

My Go-Ogle post has apparently provoked Doug Merrill, who directs Google's IS department, to blog. His debut post celebrates the boll weevil.

Indeed, weevils rock, but on African safari in 1999 my Masai guide taught me that dung beetles rule. Without these va-pooh-rizing insects, our planet would be a stinking ball of feces. Then Doug's company would have to change the name of its Earth imaging software to Google Shit.

Read This Only If You Shave

Sometimes technology helps our lives in unexpected ways.

For those of you who shave, you MUST--if you haven't already--switch to the Schick Quattro. I had thought that the Gilette Mach3 offered all the blade I'd ever need, but I must admit that four blades are perceptively better than three. All it ever takes is one pass of the Quattro razor to mow your facial lawn. (Remember having to always make multiple passes? Who has time for this?) Plus, the redundant slicers relieve the need to press the flesh so hard that you strike blood.

Plus, Nathalie likes to see me move my business away from Gillette. Meanwhile, I hope the scientists at Schick Labs are hard at work on a Pentium product.

It's a Wonderful Life

Kepler's Bookstore re-opened its doors this morning with a ribbon-cutting ceremony attended by throngs of supportive readers who cheered on Clark Kepler and his dedicated staff. Cafe Borrone distributed free cookies while Mayor Winkler announced a city proclamation thanking Daniel Mendez and all the other tireless volunteers and investors for saving the cultural landmark of Menlo Park. Throughout the afternoon, a jazz band serenaded the festive plaza, as the crowd descended upon the store shelves. As of this moment--5 minutes to closure--the checkout lines have still not receded, and the number of neighbors who signed up for Kepler's Membership far surpassed anyone's expectations.

As my son and I spoke to Clark today, his determined but friendly demeanor reminded me of Jimmy Stewart in Frank Capra's classic film It's A Wonderful Life (re-enacted here by bunnies). Upon his father's death, George Bailey reluctantly set aside his personal ambitions to assume the family business, for the good of Bedford Falls. Many years later, when circumstances beyond his control threatened to bankrupt the business, George felt responsible for the failure, and sank into a state of despondency. But as George reflected upon his contributions and importance within his community, he felt a renewed sense of purpose; meanwhile, all his grateful neighbors converged upon his home with unexpected pledges of financial and emotional support that saved his troubled business.

Substitute Menlo Park for Bedford Falls, and you have the story of Clark Kepler. Perhaps today, just like George Bailey, Clark realized that he is a more successful man than he had thought.

So here's to Clark, the richest man in town!

A Day of Mashups, Wikis, AJAX and Open Source

Energetic, young and crowded. Developers-turned-entrepreneurs filled the halls to hear Google, Yahoo and Interactive slip hints as to what they'll acquire next. Open source zealots cheered on the demonstrations (on Mac OS, of course) of new web services stitched together in the hopes of attracting huge communities. Zimbra impressed all with the search and sharing features of its AJAX collaboration suite. Ross Mayfield showed off SocialText's cool Wiki apps, and AllPeers demonstrated an application framework that I can't explain because I don't understand (ok, they had only 6 minutes). Rollyo impressed me with its ability to develop new search engines on the fly, and Michael Tanne (Flock angel) of Wink showed collaborative filtering at work in search. Orb streamed a video from its CTO's living room, and remotely turned on his lamp. Jumping on the bandwagon, KnowNow re-spun its alert service as an RSS alternative (but the software persisted in displaying annoying pop-ups during the subsequent demos). Real Travel, ZVents (click this: ), Writely, PubSub all demoed well.

My favorite, of course, was Flock, even though the company obviously jumped the gun demonstrating a feature or two that weren't yet ready for the spotlight (at least not in its Mac browser). Coincidentally, the Flock launch was today's #1 read story on BusinessWeek.com.

Web2.0 was a great place for me to catch up with other VC's, such as my blog muses Fred Wilson, Stewart Alsop, Ryan Macintyre, Nivi, and Dave Beisel. I also ran into lots of enterprise-focused VCs like Mitch Kertzman and Mike Orsak showing up to see what all the fuss is about.

In one year the Web2.0 show has evolved from a band of angel-funded startups sharing ideas to a myriad of VC-backed companies touting their products. Next year, will O'Reilly have to rename the event Bubble2.0?

You Are My Sunshine

My 3 year old son visited me at work today. He does this quite regularly, says hi to everybody, and always heads straight to Rob's office to raid his candy bowl. Today I was in a meeting, though, with an entrepreneur and with our newest associate, James Cham, when my son showed up. So he came in, climbed up onto a chair, and joined us at the conference table. He listened quietly. Midway through the discussion, he contributed to the meeting by singing You Are My Sunshine.

I think our meetings could all use more songs in them.

Success! Kepler's is Back.

Yesterday Daniel Mendez and Clark Kepler announced a financial restructuring of Kepler's to enable its re-opening this Saturday. (See previous post Saving Serendipity.)

As a member of Kepler's Patron's Circle, I invite all of you who live near Menlo Park to the big Opening Party 11am and, please, buy lots of books!

The First VC Blog in India?

This year, Bessemer has expanded aggressively to Asia, opening offices in Mumbai, Bangalore and Shanghai, investing in Bokee and Rico Auto Parts, and cutting distribution deals on behalf of our U.S. portfolio companies, such as Flock and Netli (the "wormhole factory").

Our Mumbai office is staffed by a relatively new Bessemer investor, Anand Sridharan, who has launched a blog ("Seriously Clueless") about capitalizing new ventures in India. Experienced in both Indian and US culture, Anand highlights the differences in our economies, explaining, for example, that the cheap labor pool in India completely saps any demand that might exist for capital goods like vacuum cleaners and high-volume flour mills. Anand also cautions against trying to sell $2 ringtones to a nation whose workers earn only $2 a day, and need those wages to pay for food, shelter, transportation, medicine and children's education.

Contrary to my earlier characterization of Bessemer's team, Anand has actually worked as a consultant inside a Tata Steel mill, where he witnessed the Bessemer conversion process first-hand.