Monthly Archives: October 2009

Books / VC — No Comments
19
Oct 09

Viral Loops: a Love Story

Over at TechCrunch guest blogger Adam Penenberg as put part of his new book Viral Loops up. It is the story of how Tim Draper got the viral loop into Hotmail. Given that investors love to see viral marketing theses days it is nice to see that one of the earlier loops was brought about by VC. 

At the next meeting at DFJ Tim Draper once again pushed the two young
entrepreneurs to insert a tagline into each message. Bhatia and Smith
were adamant about not adulterating email. It just wasn’t done. They
would feel like they were polluting emails with advertising, and what
about privacy issues? If someone is adding a tagline what else were
they doing? A user would wonder what else they had access to and they
were also fairly certain it was unethical. But Draper wouldn’t let it
go. The benefits, he contended, far outweighed the risks. If they were
predicating their entire business on the size of their user base, they
should be doing everything in their power to increase it as fast as
possible. “P.S. I love you. Get your free email at HoTMaiL.” The more
he said it, the more he liked it. (via TechCrunch)

Apparently this story was under contention for a while until the authors of Founders at Work dug up some corroborating evidence. So here is at least one case where the VC really did contribute more than just capital.

Gadgets — No Comments
15
Oct 09

Track My Life: FitBit

I received my FitBit device last night, and I was quite excited. Basically it is a pedometer that tracks your calorie burn as well as your sleep patterns. It isn't meant to be as in depth and accurate as BodyBugg, but it does seem pretty neat.

The idea is that it is like Google Analytics for your life. (Too geeky for you, fair enough. It is simple tracker to give you some good stats on what you're up to.) Anyway, I ordered mine last summer and I've been patiently waiting for it since it slipped it's deadlines a couple of times. It finally arrived last night, and I must admit I'm conflicted.

See, I like the device and it is clear they are trying to be Apple like in design. But they haven't quite gotten there. For instance the packaging looks like Apples, until you open it. Instead of that elegant feel of clever folding, you get an elegant look but with packaging that is really tricky to put back together. 

The real bummer is that it broke today. The plastic cover came unglued. The team immediately answered my email and they are sending me a new one. (I'll send this one back once I receive it.) And they are paying for shipping, but it certainly does make it feel more like a beta product than a full release. 

The data about my sleep was interesting, 97% efficiency. Take that Evil Monkey in my closet.

Evil-monkey-in-closet

I'll post a more in depth review once I've gotten a week or two of usage under my belt and the data that goes with it.

VC — No Comments
08
Oct 09

The Skills to Pay the Bills

Paul Kedrosky has a really nice article on revamping the venture model. The gist is that LP's should be more closely aligned with the GP's by changing fee structures and payouts. The only problem as I see it comes from the fact that the top tier VC's have the scarce resource: skill.

If one person has the scarce resource they will raise prices until they get to keep all of the excess profit in a business, and this is what happens in venture. Sure, LP's can drive down prices on firms that don't perform, but it is well known that you shouldn't be investing in firms that aren't top decile anyway. That leaves the top firms to charge whatever they want, and so they will get the excess profits. While I agree that LPs should try to renegotiate the contract I'm sure they will really have the power to do so over the long term. LPs provide capital, and until recently that wasn't a scarce resource. If it stays a scarce resource then we probably have larger problems and venture investing will be poor. If the economy turns around then once again the LPs power will diminish as capital rushes to the best managers.