ForbesOnTech

Carl Icahn Raider of the Lost Ark-- Silicon Valley Takeovers Can Happen

Silicon Valley has always been unique. Entrepreneurs have been free to follow their dreams—as long as they coincided with the same path to liquidity as that of their venture capital backers.

But its gene pool lacks much of the fresh talent from outside northern California that marks other industrial centers. There’s almost nothing in the history of Silicon Valley and its entrepreneurs that makes me believe any company—most of all Yahoo—can survive a proxy fight like the looming battle between Jerry Yang and Carl Icahn.

Yahoo may be the best example in Silicon Valley of how not to grow a company.  In it’s short history, it’s never really been able to create a top notch brand and it’s become a revolving door for talent that’s moves laterally not upward. Yahoo is an artifact from an earlier age; a time when start-ups thought they would become content kings or giant search engine/ information aggregators. Along the way Yahoo lost its focus and it has jumped from haphazardly through a variety of business models, never quite succeeding at anything it tried. Yahoo has become yesterday’s brioche and it really doesn’t appear  there’s much that can save it.

To make my point try this: Every time you hear the name “Yahoo” think “Excite@Home.”  Where is this company today? It’s little more than a footnote and absent a near divine miracle, I think Yahoo is doomed to become a subordinate entry in the same footnote list as Excite@home.

But if nothing else, the unfolding story of Yahoo should increase the pucker factor for entrepreneurs and their investors. Until now the Valley has escaped predatory investors and take-over kings.  But if things are changing Carl Icahn may just be the lead predator in a pack of hungry foxes looking at some of Silicon Valley’s cash plump chickens.  Do I think Donald trump is going to invade the Valley anytime soon?  Hell no. But there are some companies that have enough cash to make them prime targets.

Take a second and imagine Apple if Steve Jobs’ health were to crash.  (Note, I give Jobs and Apple high marks for management of Steve Job’s brief fight with Pancreatic cancer that affected the company’s stock not a whit). If there were a change in Job’s health I believe Apple’s stock price would drop and consumer confidence in the brand would tumble. Add to this Apple’s image as “only one person can manage the beast so we don’t have a strong number two” and you have the picture of a company that could be taken over.

Who would do this? There are two obvious candidates in Silicon Valley—Larry Ellison’s Oracle or Google.

All of this is pure conjecture on my part and I’m not saying it would happen, I’m just noting that takeovers of technology companies are possible and could happen, as, long as the right celestial tumblers line up and the lock that’s heretofore stopped corporate raiders in Silicon Valley pops open.—Jim Forbes 05/17/2008.

What Does $100 Million For iPhone Developers Buy Apple?--Platform Legitimacy!

The creation of a $100 million fund that’s designed to fuel development of business and other applications for Apple’siPhone could be just the push Apple needs to continue its success.

            Administered by top-ranked Kleiner Perkins Caufield & Byers, the iPhone fund has met with unprecedented demand for meetings with the administering firm and downloads of software development kits (SDKs) from Apple. Apple reported earlier this week that its IPhone SDK had been downloaded more than 100,000 times.  Meanwhile, up on Sandhill Road in Menlo Park, CA, KPCB is reportedly seeing meeting requests from startups and established developers alike. All of which want a piece of the iPhone iFund’s gold-laden bandwagon.

            KPCB’s iFund has the same value as it’s Java Fund from the 1990’s. Apple and KPCB officials are hopeful developers will respond to funding with games, location-based services as well as enterprise and personal applications.

            Although games for mobile phones have not gained wide acceptance in the US market, they represent significant revenue in offshore markets such as Asia and Europe. I believe the iPhone with its above average graphics could be the mobile phone platform that makes games a profitable venture for US software developers and their wireless carrier partners. In addition its use of internal hardware that senses whether the phone is being used in landscape or portrait modes could be a boost for games developers looking for a viable platform.

            There are other applications I hope show up for the iPhone. Foremost among those are location based services including generating relevant local coupons. Banking and personal finance packages are other applications that could drive iPhone sales and help carriers.  Chase as well as other banks are now actively advertising the use of mobile phones as a method to check account balances, but the technology could be made much more capable, allowing consumers to perform all of the same financial tasks using their cell phones as they do on their primary computers (view balances as well as manipulate accounts and financial positions).      

            In reports that surfaced earlier this week, there was at least one mention that Apple would need to approve applications for its iPhone.

            According to Kleiner Perkins, the iFund will makes investments as little as $100,000 in seed financing and up to $15 million in expansion funding for mobile applications or services companies. The venture firm also noted that if the demand for iPhone funding exceeded $100 million, the company would raise additional funding.

            The importance of funding programs that are limited to specific platforms is hard to understate, I believe.  Like all risk financing based enterprises, there are many more failures than successes. The Java fund, for example, isn’t notable for the number of its long-term high flyers, but rather that it helped make Java a commonly used platform throughout various computing environments.  Take Marimba Software as an example. It got a lot of attention in the period during and after its funding. But today Marimba is little more than a historical footnote to an earlier time in the entrepreneurial environment of the 1990’s. Now a part of BMC Software Solutions Inc. in Houston, Marimba’s platform is widely used to assess the impact of changes in software throughout an organization.

            The ifund could have the same impact on Apple’s iPhone as the Java Fund had on Sun’s Java platform.  The winner isn’t likely to be any one company or group of entrepreneurs, but rather Apple and its iPhone.

            But Apple could discover a very hungry carnivore hiding out in the dark a few months out. That beast is Google’s Android smart phone architecture and when it hits the US market Apple could find itself in hard fight for the life of the iPhone.

            And it’s too early to count out Palm, which has relationships with most of the major carriers and whose base of users and developers is nearly as loyal as Apple’s. Later this year, Palm is expected to roll out a new version of its Palm OS.

            Let’s see, who do I trust more, Apple or Google? Can I ask the cannibals to dine somewhere else?—Jim Forbes 03/14/2007.

My List of Great Demo 2008 Companies Continues to Grow

I came home from Demo 2008, took two Tylenol for a blown out left knee and promptly went to bed; for almost a full day. Now that I can hobble around ising my trusty five year old shillelagh It’s time to finish my thoughts on a couple of the companies I saw at Demo this week.

            First up is Education.com’s School Finder. A product I wish I had access to in 2002 when my beautiful daughter, the lovely Miss Amanda, was getting ready to go away to college.  School Finder is a parent’s dream: it lets you match your kids’ needs to college offerings and the local environment. When School Finder goes live in about two months, it will have information on about 100,000 public and private schools. I was impressed by this start-up’s deep well of information on various colleges and their locations.  I quickly realized how valuable this site and tool would have been back in 2002, when (based on bad advice) she chose a Boston area women’s university whose classes were seldom transferable. School Finder is just one of Education.com’s offerings. It also offers modest on-line tutoring, and electronic learning. This site already has great traffic numbers. The addition of School Finder to its offerings will bolster both its position and usefulness, creating even more unique visitors. I think Education.com and School Finder may be one of the jewels of Demo 2008.  I really wish it had been around five years ago, when I was a parent trying to help my soon to fledge daughter pick a college that met her needs and expectations.  Oh, prior to moving to go to school in Boston, my daughter had never experienced a real snowstorm.

            I’m a sucker for mobile applications and Ribbit’s Amphibian, a web telephony application made me realized just how important the personal information provided in our profile information files have become when we connect with friends or potential business associates on the phone. Imagine getting a phone call from a potential client and suddenly being presented with personal information from their FaceBook page. I understand the need to connect with people in order to sell or convince someone of a value proposition, and Ribbit’s Amphibian is the first example I’ve seen of an application that gives me access to someone’s web presence, while I’m talking with them on my mobile phone.

            It’s this type of application that highlights the need for new mobile phone plans that offer affordable internet access as part of business or high-minute plans. I believe that platforms like Ribbit and apps like Amphibian also work best with cell phones with large screens, which facilitate more complete information displays.

            CellSpin is another mobile-based application I liked at Demo 08. This startup is one of the several companies that have been in development for almost two years. What CellSpin does that’s unique is it allows you to post and synchronize you posts to multiple outlets with an absolute minimum of user intervention. For example, if you wanted to post something to Blogger, eBay, FaceBook, Flickr, Live Journal, Picassa or YouTube, you could do so with a minimum of clicks and all your files would be automatically synchronized. Of all the products at Demo 08, I had the most experience with CellSpin. I like its ultra clean interface, and its promise of simultaneously posting virtually all media types (including video and audio) to multiple sites with one or two clicks.

            I love great mobile technology and Skyfire, a downloadable browser for mobile phones just knocked my socks off. My ongoing complaint with the Internet experience on so-called phones is that it just plain sucks. I’ve sat by and waited, and waited for freaking ever for some pages to load on various smart phones and in many cases just walked away from the experience rather than endure the tedious experience of taking advantage of the web on cell phone. Skyfire changes that. I was blown away by this company’s pavilion-demonstration that after only two minutes left me wishing that my antique cell phone would support the Skyfire browser.

            Unlike other browsers for mobile phones, Skyfire supports dynamic Flash, Ajax and Java technologies, which allows smart phones running this new browser to deliver a desktop-like computing experience.

            If there was one technology and company from Demo 08 that is worth watching, it’s Skyfire.

            A quick note pertaining to CellSpin and Skyfire.  Both of these companies are tying their success to third-party cellular networks and smart phone manufacturers. It’s one thing to develop and introduce a product with obvious advantages and little cost adders and an altogether different thing to score a huge win with that product.

            The problem here is that start-ups are ill equipped to navigate the treacherous rocks and shoals that provide safe harbor for key decision makers that can guarantee and provide a safe birth in this industry segment.

            What I’ve seen over the years is a long line of entrepreneurs network with B-School buddies who work for telcos, thinking such people will become their allies in driving adoption.  The problem with this thinking is the ultra conservative nature of telco management.  That B-school chum who is your champion may have a sexy title, but the  reality is not very promising: the champion’s name on an org chart is five cells off center and at least as many levels down from the decision makers and check signers.

            There are at least three domestic cellular network companies that appear to be aggressively courting new technologies: AT&T, Sprint and Verizon immediately come to mind. I rank Sprint at the top of this list followed by Verizon and AT&T.

            Well, I’ve run out of time for this post, so up on ForbesonTech it goes.—Jim Forbes, recovering from my favorite technology show, Demo on 1/31/2008.

{ mandatory disclosure, I am a retired producer of Demo shows as well as the editor of the printed and electronic versions of DemoLetter. I have no fiduciary or other ties with Demo, or any of its parent organizations. But I am one of the few people who has run a Demo show and sat through thousands of meetings with companies during the selection process of the show.  There, I’ve said it. I’m still proud of it—jmf}

Finding an Exploitable Niche with Many Potential Partners-- A Winning Strategy

As the days until Demo 08 --which kicks of late next month—roll down, I think a lot about new products and how they can prosper in today’s hyper connected environment.

            There’s one product in particular I’m watching that won’t be at Demo. I wish it was ready for launch, but it’s developer told me he doesn’t want to show it until it’s user interface is completed. I promised the developer I wouldn’t preannounce his product and I won’t.

            But I do want to write about this particular developer’s approach to product development. Some history: this developer has one of the most diverse backgrounds I’ve ever seen in any technologist. He’s an ex-reporter, a former publishing exec, and has a first-rate pedigree in consumer and technology marketing. He’s passionate about software and has an innate ability to find and exploit niches.

            What’s remarkable is this developer’s ability to find market opportunities that coincide with the rapid acceptance of new peripherals. The only comparison I’ve seen over the years was Symantec’s Turner Hall subsidiary, which created a profitable niche in the late 1980’s by publishing add-ons for Lotus 1-2-3 that let you add features such as word publishing and elegant printing solutions to Lotus spreadsheets.

            This developer has already had one moderate success by adding a new capability to a popular peripheral. That first product was used by people who needed a one-click solution for printing data in a variety of formats.

            Casing around for a new product, this developer looked no farther than some of the new laptops that were being used by family members and peripheral that he uses on calls to his family in the Pacific Northwest. What he noticed is that the laptops had a feature that was underused, but loaded with untapped potential.

            The developer is also known for his market due diligence skills. He discovered that the particular peripheral that caught his attention is sold in 100,000 unit volumes but noted that the peripheral’s potential is seldom exploited.

            I’m trying very hard not to tip the developer’s hand.

            But what he’s ready to provide users is an elegant piece of software that will let you customize a very personal data type in a way that’s not been easily done before.  But more important to me is that the developer’s technology reduces to a few clicks a process that use to require mastery of a very complex application.

            More importantly, consumer goods and services companies will want to license versions of this application to provide fun links between their companies, product, services or events and the consumer.

            It’s been a long time—since I produced Demo events—that I met with a developer whose product and business pitch made me itemize the proposed product’s potential. What struck me about this veteran entrepreneur’s idea was the vast licensing pool and the technology’s ability to create highly personalized and amusing content.

            Sorry to be mysterious, but I didn’t want to tip the developer’s hand. Keep your eyes open for more on this product, as it gets ready to launch.  You’ll want it, honest! Jim Forbes, 12/31/2007.

Preparing for the Demofall07 Pavilion--It's As important as Your Stage Spot

How to Make the Most of your Demofall07 Pavilion Experience

Demo is a fast paced and fascinating crucible for young and old companies alike. While most companies spend considerable time polishing and refining their on-stage presentations, a lot of the real magic in Demo happens after a company has left the stage and is standing by their tables in the Demonstrator’s Pavilion.

            It’s natural to think that you want to wow the audience with an upbeat, professionally staged on-stage demonstration.  That’s good for the event. But what can be better for your company is an even shorter bottom-up presentation that’s tailored for the Demonstrator’s Pavilion.

            When you company is on stage the audience is focused on you. Demo is designed to cut down on anything that distracts from your opportunity to deliver a message while you’re on stage. The Demonstrator’s Pavilion is a different opportunity. It’s set up not only to allow you to strut your company’s stuff, but also to facilitate business networking. It’s the second part of the proposition that requires you hone your presentation to a razor’s edge.

            To succeed in the Pavilion you need initially to be able to quickly engage a subject’s attention and then hold it for two to three minutes. And while you’re doing acrobatics with your mouse and the pixels are zooming around like a Steven Spielberg lighting effect, the person watching your carefully planned and rehearsed demo is subject to being distracted by his B-school buddy, a swelling bladder, or just as likely, the passage of the USS Reagan outside in San Diego’s harbor. That’s why it’s just as important to practice your Pavilion pitch, as it is your on-stage demonstration.

            More importantly, each and every person that works your station in the Pavilion has to be able to deliver that same pitch, each and every time.

            If your audience needs a more detailed demonstration make arrangements to take your notebook and requisite equipment to a quiet place where you can deliver a distraction free demonstration. As part of your preparation for working in the Pavilion, find a place where there’s good wireless connectivity and (if needed) a persistent cellular connection. Don’t assume that every quiet looking nook or cranny is wireless nirvana.  Create and distribute “treasure maps” showing the locations you’ve found that offer optimal demonstrating conditions.

Part of the allure of attending a conference on the shore of San Diego harbor is the constant parade of large aircraft carriers, fast moving US Navy missile frigates, high speed Navy SEAL team delivery boats and the occasional 80-foot hover craft (called LCAC’s) as well as the infrequent atomic submarine transiting the harbor. Make the most of the distractions, but don’t be rude and check email using your demonstration hardware.

Use your co-workers at  Demo as field scouts. The information they bring back can be a priceless tool in positioning your product against others, or within categories. If you think something your scouts have learned on their technological forays is critical to positioning your product, highlight that feature in your Pavilion pitch. Again, make sure everyone working your demonstrator table delivers the same pitch.

            Members of the press will come by your station. Make sure you keep a supply of hand out material close at hand. While I personally dislike hate sitting through Power Point presentations, I prefer to learn as much about a company and its products as I can in the Pavilion and sometimes a concise slide deck helps.

            Can this strategy pay off? You bet. One of the little known “Best-of Demo” stories I’m aware of is that of a small company called Digital Transit. I picked this company because of its simple technological approach for updating mobile hardware. They had not yet received venture funding but they understood that the Demonstrator’s Pavilion was the place where they could get their technology in front of people who would license it, or fund their operations. Digital Transit was officially acquired shortly after the show, but the acquisition began at Demo Mobile in the Pavilion. Today, Digital Transit’s technology is at the heart of HP’s mobile device operating system update process.

            A final thought: If your company has hired someone to help you prep for your stage appearance, make sure they also work with you on your Pavilion pitch and demo.

            See you next week at Demofall07. I’m the big guy commuting to the show in an 18-foot white Panga, docked behind the hotel—Jim Forbes 09/18/2007. 

(mandatory disclosure: I was the founding producer of DemoMobile, the predecessor to Demofall and co-produced the annual Demo conferences with Chris Shipley. I also wrote and edited the monthly and weekly versions of DemoLetter, DemoMobile Letter. I am now retired and no longer work for Demo.  I live in rural San Diego County.)

Tags: Demofall 07

"Ship of Gold and The Deep Blue Sea"-- A Thoroughly Remarkable Book

I’ve just finished the most remarkable book that combines history and technology and entrepreneurs I’ve ever read. It’s called “Ship of Gold and the Deep Blue Sea,” and the author—Gary Kinder—gets the featured spot on my shelf of books about entrepreneurs because of this book.

            Ship of Gold has been out for a while,9like almost a decade) but I wanted to read it after watching a PBS show on the search for and excavation of the SS Central America in the deep Atlantic off the Carolina coast.

It’s been my experience that technology entrepreneur books are either dry as Mojave dust, or just too fawning. This book is neither; plus it has an excellent section on how the entrepreneur who located and salvaged the wreck raised money using a limited partnership.

            What makes Ship of Gold radically different from the pablum-like content of most books about entrepreneurs is the author’s research into the passengers and cargo of the Central America, which sank in 1857 hurricane season carrying several hundred souls and a cargo of gold coins and bullion pulled from the California gold fields. Also, the sections on seamanship and technology are so good as to be exemplary.

            The book expertly weaves background on the boat’s passengers, the journey northward from Havana to the point where it sank, and the remarkable seamanship of the Central America’s crew and those of passing ships that rescued many of female and children passengers with the story of an eclectic entrepreneur and his search for and salvage of the ship and its golden cargo.

            My God, what a read! If you’re interested in California history, entrepreneurs or marine archaeology, jump over to Amazon right now and buy this book. I wish all books about entrepreneurs were as good as Ship of Gold and the Deep Blue Sea. —Jim Forbes on 04/16/2007.

Entrepreneurial Appellations--Who Would have Guessed?

Two weeks ago, Demo’s executive producer, Chris Shipley, posted a piece in DemoLetter el that still has me thinking. 

Her piece was titled “Wow! Real high Tech” and was based on a recent scouting trip to the UK.

Chris’ entry was a good field report.I recommend you visit it at:

http://www.demo.com/demoletter/wow_real_high_tech.php#more

What caught my attention and continues to fascinate me was her noting that some European entrepreneurs are consciously avoiding mimicking their Silicon Valley counterparts and instead said they prefer to model their actions after more staid east coast early stage companies. Boston was specifically singled out.

Chris perceptively noted that most of the companies she met with assiduously avoided the Web 2.0 moniker and its associated buzzwords and gratuitous marketing hyperbole.

            Shipley noted that UK entrepreneurs appeared to be focused on providing solutions to real user needs and adding that many of the early English early stagers already had “first revenues.”

            I agree with my ex-boss, Chris Shipley, seeing startups that are focused on solutions to real problems is a refreshing concept. In fact I believe it’s just what Silicon Valley needs.

            Entrepreneurial appellations, who would have predicted it? Lets’ see, I’ll order a Thames Valley noveau red with this first round, a full bodied customer-focused Devon Sauvignon Blanc with the second round of financing, and an incremental sip of sweet sparking Palo Alto ill-managed start-up with desert. 

            Maybe what Chris found were entrepreneurs who in the words of one of my favorite investors, Peter Rip,” Respect the money.”—Jim Forbes on 03/12/2007