April « 2009 « TechPulse 360

[SDForum] Cloud Startups Must Hit $10 Million To Attract Venture Money

April 16, 2009

Speaking at last night’s SDForum‘s town hall event on venture capital investment in software startups, venture capitalists from Morgenthaler and Shasta Ventures want to see software-as-a-service (SaaS) or enterprise Cloud computing startups reach $10 million in sales before considering investing in it.

“What we’ve learn over the last 5 years is that SaaS companies take a lot longer to get profitable that what most VCs plan on. And a lot of these SaaS companies can hit $10 million in revenues and then they hit a ceiling. And so we’ll go very early stage in a few things but things like SaaS where we learned that lessons through the years – unless there’s an extreme hockey stick ramp – we’ll wait until they hit that [$10 million] mark,” explains Morgenthaler Ventures principal, Rebecca Lynn.

And to further make her point, Lynn adds:

“There’s just a lot of expense to get that momentum going. But if we see something as compelling as Salesforce that is taking off like wildfire and virally adopted, that would be an exception. in general, what we’ve seen in SaaS is that they could be very good companies but is sort of a slug up to a certain point.”

However, cloud startups can break that $10 million ceiling by having quick sales cycle, as Shasta Ventures, Evan Liang explains:

“What we’ve seen about this $10 million ceiling is wether or not that company can be very crisp in their value proposition and have a very repeatable sale process. It seems that if you have a great founder, he can personally bring himself to a certain revenue, but if you can’t build that sustainable, scalable salesforce that’s when they hit the wall.”

For Shai Goldman, who co-manages Silicon Valley Bank Capital‘s Venture Exchange program, the cloud startups that are doing well do telesales and use a lot of self-service features to accelerate the sales cycle rather than having a lot of salespeople out there trying to sale one company at a time. “I’ve seen companies with $1 million revenue run-rate, meaning you have to hit a $100,000 in revenue or so and growing, and at that point they can raise a series A,” said Goldman.

Leave a Comment » | news, software, startups, venture capital | Tagged: cloud, liang, Morgenthaler, saas, SDForum, shasta, svb | Permalink
Posted by TechPulse 360

Premium Services Fastest Way To Web Site Profitability

April 16, 2009

The thinking among Web entrepreneurs is changing. Online advertising is out and premium services are in.

With more newspapers and news organizations talking about imposing online subscription fees, one might think the Web is headed toward a future of private clubs and walled enclaves.

Online advertising is losing favor, but subscriptions don't appear to be the answer

But most entrepreneurs appear to believe a combination of free and for-fee services might be the key to their digital futures.

This thinking was reflected in a survey of attendees at the recent Web 2.0 Expo in San Francisco. The study, commissioned by Yola, found that 78 percent of respondents believed the combination would help them weather the downturn.

In contrast, 42 percent believed a subscription model would be the fastest way to profitability.

This change in thinking could still alter the freewheeling, everything-for-free environment of the Internet. And it could prompt a shift away from online advertising.

The same survey found that only 39 percent of people believed hosted ads would bring profitability. And only 8 percent said online auction sites would grow this year.

The Internet appears poised for another key shift in thinking. It is time to noodle on that.

Leave a Comment » | news, web 2.0 | Tagged: Free Content, Premium Services, Profits, Subscriptions, web 2.0 expo, Web Sites | Permalink
Posted by Mark Boslet

Spam Contributes To Global Warming

April 16, 2009

Spam is more than a nuisance. It is contributing meaningfully to global warming.

A study shows each spam is responsible for 0.3 grams of CO2

This observation may come as a surprise to most people. But here is the argument laid out in a study commissioned by McAfee and completed by climate researchers ICF International.

More than 63 trillion spam e-mails zipped across the world’s computer networks in 2008, enough to overwhelm the mailboxes of most Internet users.

ICF researchers found that the energy required to transmit, process and filter all this spam adds up to 33 billion kilowatt-hours of electricity, or enough to generate 0.3 grams of carbon dioxide for each message sent and received.

That mean together, this onslaught is responsible for the emissions of 2.4 million homes or 3.1 million passenger cars.

With power plants spewing massive columns of smoke and the emissions from million of vehicles wafting over the nation’s highways, unwanted e-mail may seem an insignificant drop in the bucket.

But if driving around the world 1.6 million times is insignificant, them dismiss the contribution of spam. Otherwise, hope for a more effective way to filter these digital pests.

Leave a Comment » | Clean Tech, news, online security, web 2.0 | Tagged: Global Warming, ICF Intrnational, McAfee, Spam E-Mail | Permalink
Posted by Mark Boslet

[SDForum] Venture Capitalists Reflect On An Industry In The Doldrums

April 16, 2009

Speaking at last night’s SDForum VC roundtable town hall meeting on software and Cloud investments, venture capitalists from Morgenthaler and Shasta Ventures spend a bit of time reflecting on their industry which has been hard hit by the downturn.

Here were their most “colorful” comments:

Rebecca Lynn of Morgenthaler Ventures is seeing series A pre-money valuations finally come down to earth

Rebecca Lynn, principal (Internet services, digital media, financial services and software), Morgenthaler Ventures

“The biggest thing that has changed is that pre-money valuation on a series A has come down to earth. Right now, $3-$5 million is completely market for a good series A and you could expect a VC to take 20 to 40 percent [ownership] and I think 30 percent is probably the norm.”

“IPOs are not an option for a little while until some things fundamentally change. The average to an IPO is now 8.3 years, and almost 7 years to an M&A (mergers and acquisitions). And that doesn’t work in venture economics, because it’s still 3 to 5 years before you need to have a liquidity event.”

“To be venture back-able, you’ve got to paint in your picture a way your company could possibly be a billion dollars business or sell for a billion dollars, and have other options on the way down.”

“In this environment, a lot of VCs are moving later stage because they can essentially do a series C at a series A price.”

“Venture money is not right for many businesses. But, it doesn’t mean it’s a bad idea.”

“Right now, probably one of the last places you want to put your money in is Venture [capital].”

“Don’t bring your grey hair adviser in your meeting with venture capitalists, never. Ever!”

Evan Liang of Shasta Ventures sees a more smaller venture capital industry

Evan Liang, senior associate (Consumer Internet, Software), Shasta Ventures.

“The venture capital industry is going to be smaller over time. When you look at the amount of fundraising from LPs [or limited partners] and that will be smaller over time as the total pool of dollars get smaller and you should expect smaller rounds [of funding for startups] in the future.”

“You have a lot of venture capitalists that are taking a lot of meetings but it’s almost for entertainment value! And that’s unfortunate for the entrepreneurs.”

“The Angel market has been hit very hard in this downturn”

“Seed stage investing can also be interesting in this environment because if you take a 7 to 8 years exit period, you will be exiting in a hopefully different environment.”

“If we map this downturn with the last one [in 2001], and if optimistically we have a turnaround as quick as the last one because I think this one is worse, 2008 would be compared to 2001 and 2009 would be like 2002. Venture activity was still pretty much dead in 2002 and it was more of 2003 that you saw more of a turnaround and a pick-up in activity. And in an optimistic case, you might look at 2010 before you see things really picking up a bit.”

Leave a Comment » | news, startups, venture capital | Tagged: liang, lynn, Morgenthaler, SDForum, shasta | Permalink
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Search Market Grows, But Google Doesn’t Increase Its Market Share

April 15, 2009

The U.S. search market rebounded in March with Internet users generating 14.3 billion online queries, an increase of 9 percent.

Google ends March with 63.7% of the search market, up 0.4 points

But Google was unable to claim market share from rivals Yahoo and Microsoft.

The number of search queries had declined 3 percent in February, according to comScore. The turnabout may suggest consumers are returning to their pre-downturn habits, using the net to search for data and product information.

Despite the better environment, market shares among the top search engines remained essentially unchanged. Google’s share grew 0.4 points to 63.7 percent, comScore said.

Yahoo meanwhile lost 0.1 points of share to 20.5, and Microsoft gained as much to end the month with an 8.3 percent share.

Leave a Comment » | news, web 2.0 | Tagged: ComScore, Google, Microsoft, Online Search, Search Market, yahoo | Permalink
Posted by Mark Boslet

H-P Passes Dell In U.S. PC Sales; But Industry Continues Decline

April 15, 2009

Apple needs to come up with a low cost PC to reverse the slide of its Macintosh sales (mock up by Isamu Sanada)

Apple needs to come up with a low cost PC to weather the downturn (mock up by Isamu Sanada)

H-P is now the world’s undisputed leader of the computer market, period.

Until today, Dell always bragged that it was selling more PCs in the U.S. market than its Palo Alto, Calif.-rival.

But according to studies released today by analyst firms Gartner and IDC, H-P now holds the crown with a 27.6 percent market share, ahead of Dell at 26.3 percent.

Low-cost PC sales growth helped avoid steeper fall

However, today’s analysts findings contradict Intel’s CEO Paul Otellini optimistic comments made yesterday about an end of the PC industry slide, as worldwide PC shipments for the first quarter of 2009 continue to decline: -7.1 percent compared to the same quarter a year ago for IDC and -6.5 percent for Gartner.

Apple also suffered from the continuing downturn and saw a 1.1 percent decline globally of its Macintosh sales. “Apple’s relatively higher ASP (average selling price) created challenges for it in the tough economy,” said Gartner analysts.

Leave a Comment » | news | Tagged: Dell, Gartner, hp, IDC, Intel | Permalink
Posted by TechPulse 360

Government Audit Takes Aim At Obama Broadband Stimulus Plan

April 15, 2009

If past efforts are a guide, President Barack Obama’s plan to spend $7.2 billion to bring broadband to rural communities may fall short of its goals.

President Obama needs to provide more than just broad guidelines for his $7.2 billion in broadband stimulus

Money allocated under earlier government efforts to bring Internet connections to America’s smallest communities hasn’t always been spent properly.

This is the conclusion of a report by the inspector general at the Department of Agriculture that was released this week and which examined the $1.35 billion in loans that have been granted since 2001.

The report points to a necessity for the new Obama program: establish clear rules and accountability. If Obama fails to lay out clear details for the program, the money will not be allocated with a well-defined purpose and some of it is likely to be wasted.

The report found that some of the earlier loans were made to communities that already had broadband service and which were close to metropolitan areas, instead of in rural areas of the country.

When confronted with Congressional demands to revise the program, administrators hesitated to make changes to the program’s rules, the report found.

The administrators said they were waiting for Congressional revisions to the program expected in 2008. In the meantime, however, they had proposed rules limiting the loans to communities with fewer than four service providers – a definition that could be argued to include most of the country.

If Obama wants his proposal to succeed, he had better offer more than the broad overview he has offered so far.

Leave a Comment » | communications, government, news | Tagged: Barack Obama, Broadband Policy, Department of Agriculture, Stimulus Bill | Permalink
Posted by Mark Boslet

MotherApp Turns Web Sites Into Native Apps For iPhone, Google Android, Windows Mobile

April 15, 2009

MotherApp generates a native mobile phone application from a Web site

MotherApp creates native mobile phone applications from Web sites

Looking for a recession proof business? Try mobile applications, and more specifically for the Apple iPhone.

In just a little more than 9 months, Apple will serve the one-billionth iPhone application from its App Store.

A gold rush that left many companies on the starting blocks, incapable of building their own application, either because of a lack of expertise in Objective-C – the computer language used to develop iPhone applications – or of available iPhone developers.

And that’s where MotherApp comes in handy.

The Hong-Kong base 7-people startup offers a an automated service that will take any Web application and turn it into a native app for the iPhone, Google Android and/or Windows Mobile devices.

Support for the Blackberry is coming in July and in September for Symbian/Nokia.

All you need is a web site to build a iPhone app!

“MotherApp is a kind of compiler and it’s a 2 step process. First you develop a Web site using our HTML standard that includes some proprietary extensions to access the mobile phones special hardware, like the GPS radio or the camera. Then send us a link to the Web site and a day or two later, we send back the native application for any or all of the supported mobile platforms,” explains Ken Law, one of the three co-founders and an ex-Googler (pre-IPO) that I first met earlier this month at the Web 2.0 Expo conference.

A MotherApp application costs $1,000 per mobile platform.

The biggest stumbling block in MotherApp service is that customers have not access to the native mobile application source code. “But they can modify it as much as they want for 6-months for free and we are thinking of a business model where companies would pay a $99 a month subscription for example which will let them change their applications as much a they want,” responds Ken.

The other limitation of MotherApp’s technology is the kind of applications that MotherApp can actually “compile.”

“We are focused on client-server applications, like the Facebook, Youtube or LinkedIn apps. And they can be pretty complex like OpenRice, the Yelp of Hong-Kong. But we can not handle “fancy” applications like video games,” confides Law.

Although MotherApp raised an Angel round from Googlers, the startup is mostly self-funded by the 4 wealthy ex-Googlers co-founders and is already profitable.

The company is looking to expand in Silicon Valley, seeking to partner with Web developers with expertise in developing Web sites and gadgets/widgets and looking to offer mobile apps as well, and Web 2.0 companies wanting to turn their web site into native mobile applications.

For Law, MotherApp’s main competitor is open source development tool PhoneGap.

“The PhoneGap is embedding a browser inside the native application. So instead of learning Objective-C, you can use Web standards like AJAX and CSS. But it’s not a true iPhone app and you can not use the camera or access the device’s file-system for example,” warns Law.

Here’s a video excerpt of my conversation with Law in a Mountain View, Calif.-cafe:

16 Comments | Interviews, news, software, web 2.0, wireless | Tagged: android, Apple, blackberry, Facebook, Google, iPhone, LinkedIn, Microsoft, mobile, nokia, openrice, rim, symbian, windows, Yelp, youtube | Permalink
Posted by TechPulse 360

Intel Hopes To Put The Screws To AMD By Accelerating 32 Nanometer Production

April 15, 2009

Downturn or no downturn, Intel makes a living investing in technology.

And that is exactly what it plans to do this year. The company said Tuesday it is accelerating its push to 32 nanometer production technology, hoping to put the screws to its less well funded rival Advanced Micro Devices.

Intel now expects its first 32-nanometer chip ahead of schedule in the fourth quarter

The new factories it is building will produce smaller, faster chip circuits at a lower cost.

On a first-quarter conference call, Intel said it would begin shipping its first 32-nanometer chip, Westmere, in the fourth quarter. That would make it ahead of schedule.

Already thousands of samples have gone to 30 computer makers for testing and computer design, said CEO Paul Otellini.

“Our 32-nanometer process is very healthy,” he said. It won’t improve the health of AMD.

4 Comments | chips, news | Tagged: 32 Nanometer, Advanced Micro Device, Intel, Production Technology | Permalink
Posted by Mark Boslet

TechPulse 360

Premium Services Fastest Way To Web Site Profitability

Spam Contributes To Global Warming

[SDForum] Venture Capitalists Reflect On An Industry In The Doldrums

Search Market Grows, But Google Doesn’t Increase Its Market Share

H-P Passes Dell In U.S. PC Sales; But Industry Continues Decline

Government Audit Takes Aim At Obama Broadband Stimulus Plan

MotherApp Turns Web Sites Into Native Apps For iPhone, Google Android, Windows Mobile

Intel Hopes To Put The Screws To AMD By Accelerating 32 Nanometer Production

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