Category Archives: venture capital

Startup Mecca Rises From Abandoned Guinness Storehouse

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PorterShed co-founder John Breslin

From my Forbes blog:

John Breslin strides through a warren of offices and hallways in an abandoned building that was once a Guinness storehouse and more recently offices for the bus transit firm CIE. Frankly, it’s a dump, smelling of mildew, the floors strewn with pallets, chipped-off masonry, drink coasters, and broken office furniture.

Standing in the dilapidated building in Ireland’s city of Galway last summer, I found it hard to envision this as the startup mecca that it’s intended to become by March. But after its current renovation is complete, PorterShed will house up to 75 people working for startups and growth companies, serving as a co-working space where entrepreneurs can collaborate, get help from law firms and venture capitalists, and participate in coding competitions. “It’s not the best building,” Breslin, one of the founders of the project, told me apologetically when he gave me a pre-construction tour. “But it has a lot of potential.”

Breslin, an electronic engineering professor at the National University of Ireland Galway and an entrepreneur who started Ireland’s biggest social media website, might as well be talking about Galway. The city of 75,000 in the west of Ireland, sixth largest on the island and its fastest-growing, is home to a variety of tech companies, notably the medical device maker Medtronic. But after Galway lost Airbnb and other companies looking for city-center lodgings in recent years, a group of local entrepreneurs and business people decided to do something about it.

Galway’s experience in trying to attract fast-growing startups is a window into the challenges of jumpstarting technology development in areas outside Silicon Valley. In an era when startups can become multibillion-dollar giants in the space of a few years, creating their own ecosystems of support companies and jobs, it’s more critical than ever that cities and regions figure out how to attract their own. …

Read the rest of the post.

The Top 10 Tech Trends Through 2020, From Five Top Venture Capitalists

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From my Forbes blog:

Get ready for the Skynet economy, the death of the car, and the re-emergence of women in tech.

Those are three of the top 10 trends coming in technology in the next few years, according to several top venture capitalists. They made their predictions Thursday night at a local Silicon Valley institution, the 17th annual top 10 tech trends dinner held in San Jose by the Churchill Club, which hosts forums with tech’s top executives, financiers, entrepreneurs, and thinkers. The criteria for the trends are that they must not be obvious (a rule frequently broken) and will be big in five years (also often broken).

Offering their prognostications at the event were Bill Gurley of Benchmark Partners (recently described by rival VC Marc Andreessen as “my Newman” after Jerry Seinfeld’s enemy), fast-talking science geek Steve Jurvetson of Draper Fisher Jurvetson, China-focused Jenny Lee of GGV Capital, early-stage investor Rebecca Lynn of Canvas Venture Fund, and former serial entrepreneur Shervin Pishevar of Sherpa Ventures. A few samples of what the VCs expect to see:

The virtual me: Lee thinks advances in hardware and sensors will create an explosion of data that will be aggregated into personal profiles that will know more about you than you do. Gurley says humans don’t want to be tracked that much, especially if the devices keep telling you what to do. Likewise, Jurvetson thinks these data-driven systems will be assistants more than taskmasters. And Pishevar suggests this data will work best if it’s made entertaining or gamified. Lee politely implies they’re all old.

The Skynet economy: Jurvetson sees universal broadband, via very low satellites, bringing untold amounts of talent into the global economy. Every part of the Earth would be equally covered with 16 GB a second Internet access by these now affordable satellites. This will profoundly change the lives of these people. Gurley is the main doubter, partly because he thinks it’s too big to invest in. Lynn waffles too, mostly because these people have bigger fish to fry, like, oh, keeping their babies alive. But Lee says wishing it comes true is part of making it come true.

Rise of the robocars: By 2020 we will no longer debate the inevitability of autonomous cars, Jurvetson predicts. They’re already safer than my parents and I trust them for my kids, he adds. There could be a 10 times reduction of vehicles, parking, etc. as well as a 10X reduction in traffic deaths.

The reemergence of women in tech: Half of computer science students will be women in five years, up from 10% now and a peak of 36% in 1984, argues Lynn. She blames the personal computer, which was targeted at males. Lots of pressure to change the situation. And more positive stories are being told, says Gurley. No one’s stupid enough to vote against this hot-button issue.

Overall winner with the highest percentage of audience votes: Rise of the robocars! So Jurvetson gets to wear the ceremonial wizard’s cape. Really, there’s a ceremonial red and blue wizard’s cape. “Do I have to wear it?” he asked. Yes, he did.

And then everyone drove off alone in their Teslas to buy stuff on their smartphone and pore over their binders full of women.

Read the rest of the 10 predictions.

Google Makes Renewed Grab for the Rest of Online Advertising

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New DoubleClick ad system heats up battle to create an operating system for digital marketing

Cross-posted from my Forbes.com blog The New Persuaders:

It wasn’t supposed to be this way. Hundreds of well-funded online ad technology companies have sprouted up in recent years, each aiming to make it easier and more efficient for marketers to reach just the target audience they want.

Terence Kawaja, CEO of boutique investment bank Luma Partners, created this now-famous Display Lumascape to show how complex the online ad tech industry has become.

Yet the result is a crazy quilt of companies–graphically illustrated in that mess of a chart on the right–that drives marketers and agencies crazy. The very existence of so many competing products, in fact, has made placing ads online and measuring their impact more complicated and cumbersome than ever. “Venture capital has supported and financed a bunch of chaos,” advertising veteran Randall Rothenberg, CEO of the trade group Interactive Advertising Bureau, griped at a recent ad conference.

The result: Most ad dollars, nearly $200 billion a year, still get spent on television because it’s so much easier.

That’s the problem Google aims to solve with a revamped ad buying system it will announce today at a private Future of Advertising event hosted by its DoubleClick display-ad management and technology unit. (Part of the event will be livestreamed here.) The company, which already dominates 60% of the online ad business–those little text ads that appear on the right and top of the page when you do a search–now has its sights set on the remaining 40% of the industry. That would be the $25 billion worldwide market for display ads, the graphical and video banners familiar on virtually every commercial website.

Google’s goal: Provide the leading one-stop shop for advertisers and publishers to buy ads on websites, mobile phones, social networks, apps, and whatever other new media the Internet spawns. Essentially, it’s building an operating system for ads much like Microsoft did with its Windows for PCs–with much the same appeal to marketers and agencies as Windows has for PC users. “When you’re putting together a campaign, you want everything connected vs. trying to piece it all together,” says Kurt Unkel, president of the online ad buying operation at Publicis Groupe’s VivaKi digital ad agency, a Google partner.

Google’s announcement is the latest salvo in a war to control the next era of digital marketing. After a decade in which Google’s search ads overtook display ads with an unmatched ability to turn clicks directly into sales, many advertisers and publishers expect–or at least hope for–a resurgence of new kinds of display ads that could woo brand advertising dollars from TV. Neal Mohan, Google’s vice president of display advertising products, has predicted that display will be a $200 billion industry in a few years.

Read the rest of the story at The New Persuaders.

Beyond the Wow Factor: Why LinkedIn’s IPO Matters

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It would be easy to take today’s blockbuster initial public offering by business networking service LinkedIn as a sign that the IPO, the fuel for the tech industry’s wealth-creation engine, is back. But one IPO on the first day won’t tell us that. It’s just as easy to dismiss the rocket-ride to well over double its already-raised offering price as a sign of another bubble. Again, one great IPO’s first day doesn’t mean everybody will party like it’s 1999 (though if it’s “brain-dead” to suspect there’s more than a little froth in Internet investing, take me off life support now).

Still, there are many other lessons we should take away from LinkedIn’s IPO. Here are a few:

* Social networking has arrived as more than a cute phenomenon. LinkedIn may not be Facebook or even Twitter, but it’s serious networking, using people’s social connections to create real value. A lot of people already know this, but for the rest, it’s well past time to stop listening to the Luddites who think Facebook and Twitter are nothing but places to tell people what you ate for lunch.

* At the same time, it’s also apparent that social networking won’t be a winner-take-all business. Yes, a lot of businesses and even professionals use Facebook for business purposes, and will continue to do so. But many more people recognize the value in having separate circles of friends, colleagues, business contacts, and the like. Now, I’d bet that Facebook could be the biggest winner–winner-take-most, if you will. But Mark Zuckerberg clearly won’t own everything social.

* This is the first real sign of whether individual-investor interest in IPOs has returned. It was already apparent that the (literally) marquee names like Facebook, or even Zynga or Groupon, would rock the world when they go public. They’ve got fame, huge and fast-growing revenues, and soaring private valuations already, so using them as a proxy for whether smaller fry would go public was always erroneous. LinkedIn, by contrast, is a much smaller business that’s closer to those of dozens of private Internet companies that to date have been unable to provide their venture investors and entrepreneurial teams exits besides getting acquired. You can be sure that those private Internet companies are using LinkedIn to research potential chief financial officers and arranging meetings with Wall Street investment bankers, if they weren’t already.

* Those shady private-market valuations, which have given Facebook, for one, $65 billion-and-up valuations, suddenly don’t look so crazy after all following the first IPO of an actively traded private company on private exchanges such as Second Market and SharesPost. LinkedIn’s $2.4 billion valuation on those marketplaces, in fact, indicates to some that the supposedly savvy investors trading shares privately vastly underestimated the value of these companies. No doubt LinkedIn’s market cap will be volatile, so it’s unwise to think that Facebook suddenly will be worth multiples of its already breathtaking valuation. But it’s clear that the limited number of shares being traded on these exchanges, as well as the limited amount of information these investors had, didn’t necessarily cause them to overpay. At the same time, it’s unlikely the SEC will back off from scrutinizing whether to regulate them–in fact, it may move even more quickly if this IPO sparks renewed interest in the exchanges.

* LinkedIn’s success proves that Web companies aren’t entirely dependent on advertising for revenues, providing hope that other business models such as subscriptions and paid services are credible alternatives. LinkedIn makes most of its revenues not from advertising but from paid services for recruiters and premium subscriptions.

* Nice guys don’t always finish last. Talk to almost any entrepreneur about LinkedIn cofounder and executive chairman Reid Hoffman, and you’ll get nothing but admiration, and not just because he’s an angel investor in many dozens of their startups as well as a partner in the venture capital firm Greylock Partners. Hoffman seems generous with his time–not least, full disclosure, with me as a reporter since LinkedIn’s earliest days. I remember asking him once, years ago, about the libertarian, government-bashing leanings of some of his more famous colleagues from PayPal, and he sighed and recalled how, as the liberal in the bunch, he kept pushing them to give back to people less fortunate than they. Regardless of your politics, though, isn’t it nice to see that you can become a billionaire without being a jerk?

* For individual investors, the rule for Internet company stocks still should be caveat emptor. That $8 billion $9 billion valuation likely won’t stay that high in coming weeks or months, not consistently anyway, as the pent-up enthusiasm for Internet IPOs gets spent (at least until Groupon or Zynga or Facebook cranks it up again). For all the success of LinkedIn as a company and as a bellwether for Internet stock issues, it’s still a speculative play, and its share movement may well drive home yet another lesson: Individual investors should never put money they can’t afford to lose into anything their dentist is investing in, their cabbie mentions, or the press is hyperventilating about.