Jeff Clavier's Software Only

Mint+Intuit: It's done - for $170M

I have made no mystery over the years that out of the 65 companies I have invested in over the past 5 years, Mint and its CEO Aaron Patzer, was one of the most exciting. It definitely met the “3-asses” rule: a young, brilliant, kick-ass CEO (Aaron), a big-ass, phenomenal, market (personal finance) and a smart-ass product (mint.com).

I met Aaron in July 2006, thanks to the introduction of Sanford Barr (Aaron owes you a big one man ;), and I was impressed by his determination and ambitions, and promptly decided to invest in the Seed round eventually led by my good friends of First Round Capital. After building its product for over a year, Mint launched at TechCrunch40 in Sept. 2007 (and won the $50,000 prize). And from thereon, it developed a fantastic service, adding 1.4M users, and this morning, announced that Intuit had agreed to acquire the company for $170M in cash.

Aaron was just on stage at the TechCrunch50 conference, two years later, to confirm the “rumor”. Aaron will run Quicken Online and Quicken Desktop over at Intuit. He also wrote a great guest post on TechCrunch, relating to some of the fundamentals of building Mint.

Huge congratulations (and thanks!) to Aaron, the entire Mint team and all my fellow co-investors for this fantastic success. Exiting at $170M in this environment is no small feat.

Rob Hayes has a great post on the history of Mint, which he witnessed, and contributed to, as a board member since the Seed round. And yes, Mintuit was an easy one. The New York Times also wrote about the acquisition here and here. Josh Kopelman points out that Aaron (Patzer) always preaches fiscal discipline, he's now a member of the First Round Capital “blank check club” -- and should he ever start another company, he can come to us to claim it ;-), and I'll offer the same!

Tags: intuit, mint

One of the 25 Most Influential People on the Web. Moi?

Well, I would certainly not have claimed it, but BusinessWeek has when putting together this list of usual, and not so usual, suspects that includes yours truly.

You see, what always troubles me having investors being “celebrated” is that our job is to help and support entrepreneurs, and make sure that the attention is focused on them, not us. Like I said when the list of 13 Web 2.0 Kingmakers was published, I feel that I have been extremely lucky to work with a number of really smart entrepreneurs, some (5) who sold their companies in early yet very profitable exits, a few (4) who failed, and a lot (close to 40) who are still working very hard at it at different stages of financing. But four years into investing in consumer Internet, they - collectively - and I still have everything to prove, especially in these most challenging times.

So thanks to BusinessWeek for the attention, and let's hope that in a few years I will have proven them right. It is obviously very nice to share the investor spot with peeps like Peter Thiel and Paul Graham. And many congratulations to my friends Loic "The Communicator", Ev "The Blogger", Matt "The Publisher", Joi "The Adviser", Kevin "The Poster Boy" and Gabe "The Traffic Driver" for this well deserved recognition.

While I am at it, many people have complained to me, over and again, that I had abandoned my blog. As I explained in this post a few months ago, I sort of have - in an extended sabbatical kind of way - but you can always find my rumblings of all kinds at @jeff on Twitter.

Tags: evanwilliams, gaberivera, joiito, kevinrose, loiclemeur, mattmullenweg, jeffclavier

Twitter: Where Nobody Knows Your Name - Yet ?

Props to Kara Swisher for prompting me to open Ecto and work on a blog post, something I have not done in a long long time (almost 5 months since this announcement of my Seesmic investment). I won't even apologize to my 122K RSS subscribers (what ?) because I am not feeling apologetic at all. I have moved on from blogging - feeling the obligation of developing 500 word pieces that took sometimes a couple of hours to assemble - to bits of 140 characters, and rarely videos, I post every now and then and I suspect that a lot of my “audience” - entrepreneurs, VCs, established Internet companies and other constituents have pretty much followed me to twitter. Disclosure: I did not invest in Twitter but a lot of my friends have.

Kara makes the point in her post that Twitter is not very well known outside of Silicon Valley - yet and asks when we'll see a mainstream adoption. This is true and I suspect very similar to Flickr's initial ramp 4 years ago. In comparison Facebook was broadly known and used in her sample audience, but I would argue that anyone actively using Facebook status messages might be counted in the Twitter “use case”: easy to publish micro bits of information, including pointers/notifications to other pieces media.
This micro-chunking of the information - the arbitrary limitation to a few tens or hundreds of characters in a world of Gigabit networks - drops the time commitment barrier to a couple of minutes tops. Most people can't commit large chunks of time to read/write/comment on blogs, but everyone has a couple minutes to spare a few times a day... not too far away from a phone or a computer.
Offering broad access on the web, on the phone, one message at a time or through applications, in real time (even if you are not pushing it like Scoble does) or in batch mode, allows time (and CPA ?) challenged users to get a quick return on the attention investment they choose to make at any point during the day.

Would we spend more time face to face in order to catch up on our day to day ? No, lack of time. Is it sad that we proxy a conversation with a 140-character max status update? No, because a tweet might lead to a conversation that would not have happened in a first place. You can't speak to me, I won't read you, but do notify me - sort of thing. Do I need to ask myself if I am a writer or a journalist before twittering ? NO. And that's why we'll see eventually millions of users of these simple communication tools starting to publish bits about their lives, even though they will never have a blog or use an RSS reader.

Note that I am making the case for a broad adoption of micro-blogging, or whatever that “super easy posting of a personal status update” is called. As to whether Twitter, Facebook or another yet-to-come service will be the “winner” in the space, who knows. But the broader audience, and the broader need, will be there. As to how you turn this into a business, and make money? There are enough smart people in and around these services, and enough usage, that something will eventually be figured out IMHO.

And if you marry that with the iPhone platform, it gets even more interesting. But that's another story... in 5 months or so.

Photo Credit: PinarOzger. Don't ask me why I felt that this picture of Tim O'Reilly bowing to Dave McClure was relevant to the story, but it did ;).

At, On and In Seesmic

Even though it is still in closed alpha, Seesmic has started generating a lot of buzz in Silicon Valley, in France and in the Social Media ecosystem. I remember clearly when its founder, my dear friend Loic Le Meur, told me months ago about the idea of a video community that would be able to interact and exchange using short form videos - sort of a “Twitter for Video”. I don't recall if my initial reaction was “Doh”, “Yukh” or “Pfffh”. Then, mid October, I had access to the very cut of the product. It was still pretty raw, or at least medium rare, but definitely showed a lot of potential for creating conversations through short form videos on Seesmic itself, but also the on other services that videos can be posted or linked on. I also saw the initial frenzy - that we are used to - around the release of the first set of keys to access the application, and the increasing number of videos created by the first few hundreds of test users. For a group that size, they create a *lot* of video content, and we can see conversations happening around these videos on twitter, youtube or individual blogs.

So yesterday I was at Seesmic, visiting the office - great space I must say, just a puppy promenade away from Dogster's headquarter - where the previously announced recording studio is being built. This gave me the opportunity to be on Seesmic, in show #40 which also featured the inaugural Seesmic logo, aka “The Racoon”. And finally, on that video, I briefly announced that SoftTech VC was investing in Seesmic, joining a list of prestigious investors.

So thank you Loic for giving me the opportunity of being at, on and in Seesmic! And yes, from now on, you will be referred to as “Number 8”, since Seesmic is the 8th investment of the fund. Those paying attention will point out that I had announced 4 investments to date - correctly so. It is just that investments #5, #6 and #7 have not been disclosed yet. They will at the right time in the near future.

I have embedded show #40 in this post, but if you want to suffer watch the full segment we taped, you will find it here.

Finally, I announced on the show that I had a few Seesmic invites, feel free to leave comments, link to this post or message me on twitter (@jeffclavier), and I will send you an invite code.

Tags: seesmic

Conferences FYI: Graphing Social Patterns, the Business of APIs, Defrag and LeWeb3

I have explained and written many times over about conferences I attend, speak at or help organize. They represent a unique opportunity to catch up with a vast number of contacts or companies in our industry, and meet (and get pitched by) startups by the dozen. At the Getting Funded panel of TechCrunch40, I even mentioned that “getting mobbed at conferences was welcome” (as noted by John Paczkowski in his column :-)) and boy was I well served - it took me over an hour to leave the room after talking to about 20+ startup entrepreneurs). So I like attending conferences, and one of my favorite activity - besides being on stage - is “lobbyconing”.

The next couple of months are going to be very busy on the conference circuit. We'll obviously have the main event of the Web 2.0 industry, Web 2.0 Summit, in a couple of weeks - no need to talk about that one. I want to give a shout to 4 events that are put together by friends of mine, and look very interesting.

First, starting in a couple of days is Graphing Social Patterns : The Business & Technology of Facebook, organized by my good friend Dave Mc Clure. It is a conference for developers and marketers on how to build and distribute apps for the Facebook Platform, and how to reach online communities using social networking platforms and applications. The conference will be held in San Jose, CA from October 7th-9th. Main conference sessions are Monday 10/8 and Tuesday 10/9, with a bunch of cool workshops and a Hackathon on Sunday 10/7. Readers of Software Only can register with this 30% off discount code, but act quick - the conference is about to sell out.

Then is the Business of APIs conference, co-produced by my friends of DealMaker Media and Mashery's CEO Oren Michels (Disc. I was a founding investor of Mashery). As we know APIs are a key foundation of the Web 2.0 ecosystem, but too often (sigh) is the business implications of making APIs available overlooked. The objective of the event is to cover that very topic. It will take place in the afternoon of Monday 10/15, at the San Francisco City Club, and you can request an invitation here.

Early November I will head to Denver for Defrag, a very interesting event focused solely on the internet-based tools that transform loads of information into layers of knowledge, and accelerate the “aha” moment. Defrag is about the space that lives in between knowledge management, “social” networking, collaboration and business intelligence. You can enter the code defrag3 to get $300 off the registration price.

Finally, on December 11&12th, we'll have the fourth edition of LeWeb3, which I am really looking forward to. This year's program is in the good hands of Cathy Brooks, producer extraordinaire. I'll have a discount code for my readers sometime next week.

Announcing SoftTech VC’s $12M seed fund – the Return to the Dark Side

After 3 years of angel investing in 20+ Consumer Internet startups (and profitably selling 5 of them), I am very excited, and humbled, to announce the launch of my very own VC fund, SoftTech VC II, L.P. Some of you may wonder what is actually the difference between what I have been doing until now – after all I am still referred to as a VC by many – and this new $12M fund.

One major difference: I have taken the step (back to the Dark Side ☺) and have raised outside capital, from a mix of fantastic institutional and private investors. Angels invest their own money, VCs invest capital they have raised from others - as well as their own since it is market practice that Fund Managers also contribute to the fund’s capital. In most cases, it is extremely difficult to raise the first fund of a new firm. Despite great individual track records, it might take a year or two of effort to assemble a syndicate of Limited Partners (this is how people investing in VC funds are referred to) willing to back a new team.

When I left my previous fund (Reuters Venture Capital), I wanted none of that: my passion was working with early stage entrepreneurs, supporting them with time, cash and connections. And since I had zero track record in the consumer internet space, thinking that I could raise outside capital in 2004 would have been a total fantasy. That’s why, like so many entrepreneurs, I decided to bootstrap my own startup – using some of the family’s savings and generating cashflows from a few consulting gigs. It just so happens that the “market” I had decided to enter was early stage investing… in other startups. Last June, serendipity helped me decide, and eventually secure, the next logical step for SoftTech VC. As many friends in the angel and VC community were asking me whether I was thinking of joining an existing firm, or raise my own fund at some point, a few people hinted that they would be really interested in investing in a fund if I was to start one.

A few more discussions and one PowerPoint, later the core foundation of my new fund was there:

• invest in 30 to 40 seed stage startups
• average “bite size” of $250K, ranging from $100K to $500K
• able to lead, co-lead or follow other firms or angel syndicates
• focusing on consumer Internet, but with a great flexibility to enter new sectors opportunistically • open to a few non Silicon Valley deals
• capital efficiency, great teams, differentiated ideas and flexibility on “how big it can become” will be common characteristics shared by the companies we invest in
• working hand in hand with the best firms in Silicon Valley, and the usual suspects in the acquisition gang, to build a successful outcome for everyone involved
• I would be the sole Fund Manager of the fund, with the support of a fantastic advisory board: my friends Jon Miller, Josh Kopelman and Reid Hoffman

The actual size of the fund was the subject of an interesting discussions, tossing around different numbers that all would have made sense: $5M, $10M, $20M,… A number of factors led us (my investors and myself) to decide that $12M was the right amount, and a significant portion of the fund was subscribed in just a few days, with final allocations having been made a short time thereafter. You have two ways to look at how long it took to raise the fund: 3 ½ years of hard work since I started investing, or a few weeks. All this would not have happened without the support and wisdom of the great investors who decided to follow me in this adventure: Jon Miller, Reid Hoffman, Josh Kopelman, Geoff Ralston, Jim Bankoff, Mark Fletcher, MR Rangaswami, Loic Le Meur, Brad Feld, Frank Caufield and his firm Darwin Ventures, Tim Chang and the whole Norwest Venture Partners team. And no, I am not naming everyone – some investors want to remain “stealth” and I obviously will respect it. But thanks to ALL of you.

I am used to always direct any bit of attention I get from the media to the real heroes: the entrepreneurs I have the privilege to work with, building great companies, capturing markets and having fun at the same time. I am therefore super psyched to introduce the first four investments of SoftTech VC II. Yes, four. Been busy this summer, between forming the fund, selling two companies (Yay Kaboodle and Maya’s Mom!), and getting these four to the finish lines.

I will write a post about the fund’s investment areas of interest later this week, and want to share a quick background to these new investments:

• SocialMedia.com was co-founded by my good friend Seth Goldstein, and has been building an infrastructure and an ad network targeted at social network application developers. The company will help these developers manage, market and monetize their applications.  After just a few weeks, last Friday’s revenue on Facebook alone, was over $10K - most of which was distributed to independent developers.
• Active Athlete Media’s focus is active consumers who participate in sports, and the advertisers desiring to reach this passionate audience engaged in the sports they love, on thousands of mid to long tail websites. To date, I had been reluctant to jump into a sport-centric community (passion centric communities will still have a strong representation in the new portfolio). However a monetization solution like Active Athlete’s, which has been steadily growing and generating revenues, became very attractive in order to set foot in the category.
• Satisfaction Unlimited announced its funding mentioning me as an angel investor just last week, but I am pleased to point out that it is actually SoftTech VC II that made this investment. I have known the co-founders of the company, Thor and Lane, for a long time, and saw their concept of a People-Powered Customer Service being refined and improved over the course of several meetings through the summer, and could not pass on it.
• Grouply is one of these “The World Needs” companies where one day I decide that a product or service needs a fresh start. There are hundreds of millions of users of message boards, email lists, forums and online groups products like Google Groups and Yahoo Groups, and they have not evolved for a long long time. Grouply will help solve that by enabling users to easily adopt a richer and more powerful experience for their existing online groups.

One of the key factors that have influenced my decision to get on this journey is the sheer number and quality of many of the companies that I have had a chance to be introduced to. I feel extremely lucky to have the best job in the world, and to be given the opportunity to take my passion to the next level.

Turning to page 40

It took me a few minutes to start writing something after putting in this title “Turning to page 40”. I re-read the many emails, Facebook private and wall messages, skype IMs, SMSs, twitter messages and greeting e-cards I received over the past 24 hours. I am grateful for all of these, a big Thank You to you all. One of my journalist friends nailed it: “Just wanted to chime in and wish you a great year ... and decade, I suppose!”. A great decade is what I am wishing myself today, I guess for the first time. I only have a vague souvenir of my turning 20, I remember the 30 transition because of the great wines (and the headaches) we had, but for some reason I find that turning 40 is a bigger deal. Sort of not being old yet, but not being young any more. My good friend Reid Hoffman took the same turn a few weeks ago, and I'll have to confer with him on his thoughts on the matter (happy belated birthday to you Reid :-).

This new decade coincides with two other important milestones. One is personal: in 2 weeks, my beloved wife Bernadette and I will have been married for 15 years, and I have to send a big shout and much love to that beautiful, wonderful and wicked smart woman for having put up with me for such a long time. And for having supported my sort of unpredictable career moves - from being a CTO in France to becoming a VC in Silicon Valley 7 years ago, and then leaving the comforts of the “dark side” to launch SoftTech VC, kinda my own startup.

That is my second milestone: about 3 years ago (and a few months), I decided to start this firm and invest my time and our family's money into early stage startups, more precisely consumer internet startups located in Silicon Valley. Web 2.0 did not exist per se then, nor was it as obvious as today that there was a tremendous opportunity to help launch capital efficient consumer services that would leverage a more mature Internet, one that was widely available, and where monetization opportunities were real (at least in my mind). Three years, 25 deals and 5 successful M&A exits later (Truveo/AOL, Userplane/AOL, MyBlogLog/Yahoo, Kaboodle/Hearst, Maya's Mom/J&J's BabyCenter), I am still very bullish about the myriad of early stage investment opportunities that are in front of us. Yes, there are pockets of over-invested areas in the consumer space, and yes, some valuations got me to wonder wtf some investors were thinking (*), but that does not mean that we are entering Bubble 2.0. That's what I am betting in getting ready to make my next batch of 25 early stage investments in the next few years. And I hope that I will have the same sheer luck of meeting exceptional, smart and passionate entrepreneurs - some of which I decided to join and support, and others I wished best of luck to.

(*) I remember distinctly hearing these same discussions when KP & Sequoia invested in Google, and when Accel Partners invested in Facebook. So these valuations do make sense sometimes...

So thanks again to all for your kind wishes, and cheers to the new decade :-). I am off to a meeting with my lawyers now, writing some of the first paragraphs of... page 40.

Photo Credit: Jeremiah Owyang (congrats on the new gig Dude :-).

Tags: turning40

The iPhone mania: Robert Scoble and Patrick first in line

  Robert and Patrick first in front of the Apple store in Palo Alto 
  Originally uploaded by jeffclavier

Robert has said that he was going to do it: well here he is with Patrick camping in front of the Apple store in Palo Alto since this morning 9:30am. For the short period of time I was there, a crew from CNBC and a   reporter from the Red Herring showed up to interview them.

It is going to be a zoo over there tonight, but it should be fun. I am not planning to stay overnight, but I might do my meetings tomorrow afternoon in the queue if there aren't gazillions of people waiting.

Apple has released information about tomorrow's "stampede": they will close the stores for 4 hours before the 6pm opening, and will sell a maximum of 2 iPhones per person.

I really need to find an original way of talking about the conferences I attend

Howdy! First, to all of you really anxious to follow me around (but don't feel obliged, really) twitter (here) is where my “creativity” expresses itself these days. In short bursts of 140 characters max - which I found amazingly annoying but now really appreciate.

May has been crazy busy at work, lots of good developments in the portfolio, and lots of thoughts put in the scaling of my own business. And of course a bunch of conferences. And June is going to look pretty much the same.

First, I am writing this from SFO on my way to Amsterdam, where the Next Web conference is taking place this Friday. A great line-up of keynote speakers, and the super nice organizers, has led me to accept to fly to Europe for a couple of days (ouch). I'll write my preso in the plane on “Investing Around The Globe and the New Connectedness”.

Then, I will speak at SuperNova 2007, the conference put together by Kevin Werbach that takes place on June 20/22 in San Francisco. I will be on the investors panel and might disclose a new investment I have made there and then.

Finally, I will attend another DealMaker Media Under the Radar event, this one on Entertainment and Media (Disclosure: I suggested a few names of companies in the category and was asked to sit on the selection committee of the event). It will take place on June 28th at the Microsoft Campus in Mountain View.

More when I get to Amsterdam, the plane has pulled back from the gate and the flight attendant is not happy that I tell her that I have to publish this. See you on the other side :-).

Another week, another bunch of conferences and events

You might think that I am spending all my time speaking at, or attending, conferences and there are some weeks where that feels very true. This week is one of those, with a few back to back events that are worth mentioning.

Monday 5/7 is the day of Startup Camp II, at the Westin San Francisco Market Street. I will hang out there for the day, and will probably lead/participate to a startup financing session, but there will be a lot of very interesting discussions.
Update: I just posted the slides that I used in the session this morning. Thanks to all involved for your participation and your many questions.
Update II: a few people complained that they could not really make sense of the slides (like the empty slides on Growth and Exit). This might indeed be the case since their sole purpose is to synthesize the points I covered in my talk.

Tuesday 5/8 sees the start of Software 2007 at the Santa Clara Convention Center, Santa Clara CA), a conference focused on the enterprise software market that will last for 2 days. As already mentioned, Ismael Ghalimi and I will lead the Enterprise 2.0 theme, made up of four panels.

Finally, I want to give a big shout to David Beach, the new co-chair of the SDForum Search SIG. He has put together a very interesting event for Tuesday Night over at Google on People Search. Very interesting topic that has seen a bunch of activity over the past couple of years, and it is just the beginning. Companies participating are Wink, ZoomInfo and Spock - Mike Arrington will be mc'ing. You can still attend that event by registering on site just before the session.

I will also swing by Stirr's Founder Mixer 2.5 on Wednesday. Another shout to Sanford Barr for starting this event that has become a must attend in the Bay Area for startup entrepreneurs, established companies and financiers.

Do come and chat if you are attending any of these events.

Tags: startupcamp2, searchsig, software2007

Introducing Kongregate - my first investment in the gaming space

My most recent investment, Kongregate, announced its beta launch last night alongside the closing of a $1M seed financing. I am delighted to be part of a strong syndicate of angel investors, led by my good friend Reid Hoffman, backing gaming veteran Jim Greer and his team. Even though I don’t like these types of analogy, you could argue that Kongregate is a YouTube for casual games developed in Flash (today).

Developers will be able to upload their work on the site – maintaining all IP, rights, etc. – and will get exposed to the community who will review, rate and eventually rank the game based on how much it is being played. They will eventually get a cut of the advertising revenue generated by Kongregate, though in the short term exposure, user feedback and popularity will be the most significant benefit they extract. One of the hooks offered by Kongregate is a set of APIs that allows developers to create contests and statistics that will be saved in the player’s profile.

To date, during the alpha phase of the service, about 300 games have been uploaded.

Users don’t need to be registered to play, but some of the more advanced features like maintaining personal statistics, chat rooms and contests participation are reserved to site members (membership being of course free). In an interview with Red Herring’s Ryan Olson, I mentioned that one of the motivations for gamers is ego/bragging rights about beating a level, hitting challenges and being on the top score leaderboard (the need for consumer services to satisfy one of the seven sins is a notion I learnt from Accel Partner’s Kevin Efrusy) . There is also the opportunity to hang out online in one of the many chat rooms available on the service, where you can interact with other gamers as you are playing.

The screenshot below shows one of the popular games of the moment, The Fancy Pants Adventures (which has been played over 50,000 times). You can also see the live chat on the right hand-side, and if you scroll below the game, you find all the rating, reviews/comments and recommendations about other games that might be of interest.

I have been looking into the different segments of the gaming space for a few months, trying to understand the trends and opportunities that my kind of investing might have. I have been fortunate to meet and discuss with a number of CEOs in the space, including the talented CEO of Boonty, Mathieu Nouzareth, who gave me a great primer on this industry a few months ago. Kongregate was almost the ideal first investment opportunity for me since it bridges the gap between gaming and passion-centric communities, one of my main area of interest. I am very excited to announce that first dip in the gaming space, which has proven to be fascinating so far – even if traditionally it has not been one to generate spectacular returns for investors. We shall see!

I have been asked if users would develop games "for real", therefore increasing the amount of content on the site. My answer is essentially that 1) based on the current set of uploads, we see a lot of amateur game developers uploading interesting demos or actual games, and 2) a user will typically play a given game over and over (and over) in order to beat levels or succeed on challenges. The need to massive daily uploads is therefore less critical than on an audio or video site. Traffic and usage patterns will have the final word on that question at the end of the day.

 

More:

• The official press release
• A great interview of Jim Greer in Gamasutra
• Coverage from TechCrunch, VentureBeat, Reuters,…

Such a small world - even online

I was writing a piece about my latest investment, Kongregate, and was reading Ryan Olson’s piece about the company when I stumbled upon that ad being displayed on the page, just below one of my quotes. It shows Dogster’s Ted Rheingold, in his now world famous dog suit. Dogster is of course another one of my investments.

By the way, if you have a dog or a cat, and they don’t have a Dogster/Catster account, be ashamed! Redeeming yourself is just a click away .

So funny!

Interesting Web 2.0 conferences and events

The busy conference season is upon us again (just cleared TED 2007 which was an absolute blast), and I want to mention two events where I will be speaking in the coming month:

WEB 2.0 EXPO / APRIL 15–18 (Moscone Center, San Francisco CA)

The Web 2.0 Expo is a spin-off of the highly popular Web 2.0 conference (now called the Web 2.0 Summit), that will feature a large number of Web 2.0 companies exhibiting their products, as well as a multi-track conference that will be preceded by a number of workshops. A big shout to my co-chair of the Search SIG Dave McClure for co-organizing this event.

On the 15th, I will be running the workshop Starting Up 2.0: Strategies for Pitching, Financing & Growing Your Web 2.0 Startup with my good friend Rob Hayes from First Round Capital. If you have attended some of the Camps (BarCamp, TagCamp, MashupCamp,…) I have run a number of sessions about Angel/VC financing, trying to give participants insights on the funding cycle. We will have 3 hours to cover the startup process, and there will be a lot to talk about. We will keep the scripted part of  the session to 2 hours tops so that we can make sure that we address as many of questions of the audience as we can. Feel free to send me an email or leave comments on this post if you plan to attend the workshop, and have specific issues you would like to see addressed.

On the 15th, I will participate to a the Panel on Venture Capital 2.0: Bright Future or Broken Forever?. Since there will be six of us on stage, and we are all very opinionated, it promises a fun debate. I am really looking forward to the conversation with David Hornik, Chris Moore, Josh Kopelman, Michael Eisenberg (who we don’t get to see often enough out here). Mike Arrington will have the "interesting" task of keeping us on topic and/or schedule.

SOFTWARE 2007 / MAY 7–8 (Santa Clara Convention Center, Santa Clara CA)

My friend MR Rangaswami has organized the Software conference for a number of years now. We met a long time ago when I was still an enterprise software investor, and have kept in touch to compare notes on the evolution of systems in the enterprise world. MR has asked Ismail Ghalimi – the CEO of Intalio, organizer of the Office 2.0 conference and talented IT Blogger – and yours truly to run an Enterprise 2.0 theme at Software 2007, which will span across 4 panels (titles listed below are work in progress):

• What does Web 2.0 mean to the enterprise beyond the technical alphabet soup
• Enterprise 2.0: Meet the companies
• Office 2.0: Meet the companies
• Enterprise/Office 2.0: the CIO point of view

Our goal is to set the scene in the first panel, establishing what 2.0 means in the enterprise context and where we have seen actual usage from corporate clients. “Meet the companies” will feature 4 startups building products in a particular segment in the Enterprise/Office space and will both their product vision and their market development strategy (against the incumbents). We will wrap up the discussion with a panel of three/four CIOs and get their views (“So what ? Who cares ?”) on this new generation of applications and services. I will post the formal program and names of participants in these sessions in due course.

Readers of Software Only can get a $300 discount off the regular price by clicking on this link.

UNDER THE RADAR: WHY OFFICE 2.0 MATTERS / MARCH 23 (Microsoft Campus, Mountain View CA)

I will also be attending (but not speaking at this time) the Under the Radar event on Office 2.0 put together by Debbie and Alison over at DealMaker Media. It will be interesting to listen and meet 32 company CEOs in the office 2.0 space. Readers of Software Only can actually get a discount by registering through this link.

Twittering or not twittering, that is the question

Much has been written on, about and around Twitter – with a clear acceleration over the past… three weeks ? Essentially the traffic on the site, and the number of mentions in the blogosphere seem to be highly correlated – which is not surprising since a lot of the Twitterati are also highly visible bloggers.

I had not paid much attention to Twitter during my 6–months blogging break, but discovered it two weeks ago when hanging out with my friends Scott Beale and Robert Scoble – who have been twittering away for some time. I jokingly told Scott that I would never use “that” but I did twitter quite a bit at Ted 2007, and since then.

What works for me with Twitter is the fact that I can fire one comment, one thought, one message, in 30 to 60 seconds. And not bother with presenting, formatting or developing that idea – because, or I should say thanks, to the 140 characters limit. I have always had difficulty at writing posts of less than 200 to 500 words, and so that artificial constraint is actually interesting. Obviously, the editorial value of these 140–character messages tend to “vary greatly”, and I would expect only a small number of close friends and/or associates to be interested in that “stream of consciousness”.

What struck me, or at least surprised me, what the speed at which Twitter got its mention in the New York times, was called the blogging killer, had its first mashups, and created a passionate debate between fans and opponents. Talking about mashups, Twittervision is really way cool, and could easily be applied to photostreams.

So it is something new and important happening in front of us, or is it a fad that will burn out that much faster ?

I say who cares? If it is truly useful to some people (like Tara “Miss Rogue” Hunt), it will find its (killer) application amongst other publishing and collaboration tools. And in the meantime I have added my own Twitter badge on this blog.

Disclosure: I have no interest in Obvious Corp, the makers of Twitter.

Looking back at three years of Web 2.0 investing

Almost three years ago, I left the fund I was a general partner of and decided to switch my investment focus from mid-stage enterprise software to (very) early stage consumer Internet. Dotcoms as they were, since the Web 2.0 meme had not been cornered yet. Since I had limited investment track record in that space, it was clear that raising a fund – may it be from traditional limited partners or high net worth individuals – would be impossible, or so close to it that it was not worth trying. The alternative (like any bootstrapped startup) was to start investing our own cash in some of the companies that were building a new generation of services for the consumer.

Why the consumer? Because I still could not figure out how to make angel-type investments provide any meaningful leverage/return in the enterprise software space, whereas interesting things were being built for the consumer on a capital efficient basis. So efficient that these companies sometimes managed to launch their service and even generate revenues on very limited outside investment - because hardware, bandwidth and (open source) software costs had decreased by one to three orders of magnitude. And since the burst of the first Internet bubble had drastically lowered salary expectations of early stage startup employees, overall startup costs decreased to a point that a friends and family, or angel, financing of a few hundreds of thousands dollars allowed a company to reach a number of key milestones.

Three years ago, we were busy inviting the same group of friends to a bunch of social networks. Some people were reading blogs directly on web sites or through the first generation of feed aggregators, and all VC bloggers could sit around a dining table. My initial interest in user generated content – text, pictures, audio and the very beginnings of video – led to my involvement in Buzznet (photo sharing), Truveo (video search) and Feedster (RSS search). Around the same time, I came across Userplane (private instant messaging network) for the first time – but did not engage for almost a year. I also made a conscious decision to attend a lot of conferences, events and other geek dinners. This allowed me to meet casually a number of the CEOs I would end up investing in: Dogster’s Ted Rheingold, Edgeio’s Keith Teare, Rapleaf’s Auren Hoffman,… And this blog – started in June 2004 – led me to meet another group of entrepreneurs: Kaboodle’s Manish Chandra, Maya’s Mom’s Ann Crady and Wikio’s Pierre Chappaz just to name a few. A large number of deals also came through referrals from angel investors or firms I have worked with several times.

And then there is the strategy that brings it altogether, putting each companies in a nice set of well defined buckets. I started with 3 buckets: Search, Social Media, Infrastructure. And evolved each bucket with the investments I made, and the ones I passed on. But that will be the subject of other posts in the next couple of days.

The slide below is a list of the companies I have invested in, most in cash, a few in kind, sometimes both. I have also listed two advisory boards I am/was part of: Netvibes, that I met a few days after they had closed their angel round, and MyBlogLog, that was acquired by Yahoo in January 2007 before we closed the angel round that was in the works. Were also acquired – by AOL – Truveo and Userplane, respectively in January and August 2006.

It is common practice for startups these days to keep a stealthy profile even several months after raising a round of financing, and this has delayed the (almost) full disclosure of my portfolio until… tonight. I want to point out however that I have always made these disclosure in private when required, for example when an entrepreneur has contacted me about a company that would be overlapping or competitive to one of  mine.

PS: Peter Rip has an interesting piece: Web 2.0 - Over and Out, in which he suggests that the Web 2.0 hype has peaked, and now the real work begins. We'll also address that aspect in future posts.

Back from Le Web 3, and I am so glad I was there

Unless you have been away for a week in an Internet-deprived location, or don't bother reading blogs anymore, you are at least aware that a conference called Le Web3 took place in Paris (France) last week, and that a very profound and passionate controversy ensued - initially led by mostly negative feedback and subsequently by a wave of positive ones.

I rarely take part of blogging “shitstorms” - unless one of my companies is right in the middle of it of course - since things related to angel investing happen largely behind closed doors. However this time, I ended up in the middle of it. First because my good friend Loic, the organizer of Le Web 3, was taking a beating which turned very nasty and personal - to the point of often drifting away from issues with the conference and focusing on personal anger against him. Second because I ended up driving a large part of the second day of the show as Loic was busy dealing with the “insertion” in the program of Shimon Peres, and French Presidential candidates Francois Bayrou and Nicolas Sarkozy. Since we added 90 minutes of content in the program, whilst trying to keep every speaker who made it to the show in said program, we had to plan (and re-plan) almost in realtime. So some of the complaints from speakers about the last minute changes, the recombination of panels, etc. should also come my way. I will only note that Bruno Bonnell, the CEO of Atari, flew from New-York especially for the conference, and only made a joke when pointing out that he could taken the next flight out had he known that his panel would be delayed by 3 hours (my doing, again). And this is a guy running a public company.

Loic has just posted a very detailed response to the criticism he has received, and so I won't cover the same topics. I would however like to share some reflections I have had at the conference and since then:

• As I said in my closing remarks at the conference, Le Web 3 might have had issues (and the magnitude of these issues really varied from one attendee to the next) but it was a very important event. It was the first time I saw the European ecosystem (like the one we have in Silicon Valley) come together in a palpable way. Young startup entrepreneurs hanging out with more experienced ones, potential partners from large Internet or telco companies, and - at last I should say - investors. I was pleased to see a large number of VCs from all over Europe chatting around with companies presenting at the startup corner or just attending the conference. Since I am not attending European conferences at the same rate as US ones (!!!), I would be happy to be proven wrong but I heard it many times from attendees (the happy ones).
• There was a disconnect between some of the audience and the intent of the conference, that we'll need to address in the future - provided that there is something beyond Le Web 3. This year's program was meant to be a departure from Les Blogs, with a much broader scope and ambition - the Web as a platform, for technology, business, media, etc. but also for culture, society and politics. This shift seemed clear to me, but there were people in the audience expecting a new iteration of Les Blogs - which is obviously not what they got.
• Like Ross, I think that as disrupting as it was, it was a good thing to add Peres, Bayrou and Sarkozy at the last minute despite the obvious risks involved in doing so. I was really disappointed, and embarassed, at the demonstration that many influential French politicians are or feel completely unable of entering into a conversation in English. Why can't they all be like Christine Lagarde, the Minister of Foreign Trade, who has a perfect command of Shakespeare's language and is super smart.
• Loic called for an end of blogger conferences. I am actually longing for conferences recognizing that the content part of the program is second to the networking opportunity. I paid almost $5,000 (if you count incidentals) to attend the Web 2.0 conference this year, and in 3 days I must have spent a maximum of 3 or 4 hours in the room. Why ? Because I was so busy meeting or networking with so a ton interesting executives in the audience. I had a very similar experience at Le Web 3 - until I took over from Loic and then almost ran away from people because the focus was on the program.

I think that Le Web 3 went way beyond the achievements of the first and second edition of Les Blogs, despite or maybe even thanks to the controversy. In any case, I want to congratulate Loic (again) for putting it together, and want to encourage him to push for the limits for next year's conference - or whatever ends up materializing.. in less than 6 weeks. And I hope that this time he will listen when I say that 30 mins is *way* too short for a panel - but that's another story.

PS: I was asked to list my favorite sessions/speakers. I thought that the two panels on gaming were really interesting (thanks to the panelists, not the moderator - me - who demonstrated that he was still very limited in his knowledge of the gaming market). And I really liked the talks from Danah Boyd and Hans Rosling.
PPS: I have to give a special shout to the Netvibes party. As many people mentioned, the music was a bit too loud to have networking conversations but man the dancing was good.
PPPS: I had to update this post with the amusing cartoon that the unique Hugh McLeod just posted. As usual, a pleasure to hang out with you in Paris Hugh.

Tags: lemeur, leweb3

No I never left the building, I was just busy working in the basement

My friend and European VC blogger Fred Destin made an amusing comment in one of his blog entries: Jeff Clavier has left the building, following a discussion I had had with Rick Segal at StartupCamp in the midst of the three sessions I led that day. I basically told Rick that I was in need of recapturing part of my life/time and blogging - both reading and writing - had been the elected victim. So yes, and I have to apologize to my readers, I had largely left the building because of a number of (good) things going on with my portfolio companies and my own business. And my reading had been limited to a few feeds (TechCrunch, GigaOm, VentureBeat, PaidContent) integrated in my Netvibes home page, providing me with the key info regarding my industry.

So thanks to all having emailed me, or blogged, about their concerns: all is well, just incredibly busy with my work, investing and then working with my companies, as well as spending a lot of time speaking at, and attending, conferences. Just as a reference point, four of my investments officially launched their service in the past 10 days.

Oh yeah, and when you are busy and try and make so many things at the same time, you f..k up, like I did last week: I was getting out of my car - on the phone with a company, typing an email (on the phone) to another, and picked up my bag which was in the trunk of my car. In said bag, which was open because I got a call as I was taking something off of it and forgot to close it, my 3 month old MacBook Pro - which flew off the bag to implode on the floor of the parking lot of my office. Fixing the Mac would have cost about $1,500 so decided to get the brand new MacBook Pro for just a bit more money: faster, larger disk and most importantly: it does not burn your b...s when you are using the machine on your lap. The only downside is that Apple seems to have changed the keyboard which now has a very bizarre touch when you type, and makes an annoying squeeky noise.

GoogTube is happening for $1.65B - and I understand why Chad could not attend tomorrow's Search SIG

It is all over the news so you don’t need a rehash: the rumors were true and Google has acquired YouTube for $1.65B in GOOG stock. There are several remarkable facts in this acquisition, and I only have a few minutes in between meetings (before meeting a company involved in online video something, just as it happens) to mention them:

• Copyright issues, pirated content and YouTube often appear in the same sentence – and now that Google owns the company, you can only bet that they will be solved one way or another.
• Google gets another foot in content hosting, after Gmail, Blogger and GoogleBase. They are not only about organizing the world’s information anymore – just in case you wondered.
• YouTube will remain a separate operation, even physically, which seems to indicate that the risk of messing up the secret sauce post-acquisition has been considered.
• From a pure deal perspective, Sequoia Capital (which also backed YHOO and GOOG) adds another icon to the list of successful exits they have had. Their 30% investment in YouTube for $11.5M has turned into $500M in less than two years – a 43x multiple, or more if the GOOG stock gets a pop over the next 30 days.
• Now that the leader (46% of the online video market) has been taken out, I can’t wait to see what happens next – especially as Yahoo was rumored to be involved in the deal until the last minute, and I am sure that Fox, Viacom, AOL and the others were not too far behind.

I have had a lot of questions over the past 48 hours regarding the timing of tomorrow night’s Search SIG on The growing online video ecosystem. No, I was not aware of anything going down but I thought it was a good time to step back and discuss the developments of that industry. And I am not surprised that Chad Hurley declined to join us because of "his crazy schedule" . I look forward to seeing you all planning to attend, and have a great conversation about what happens next with Om and the rest of our panel.

PS:

• Best logo goes to my friends at PaidContent
• The official Google statement is here

SDForum Search SIG: The growing online video ecosystem - October 10th 6:30pm @ Microsoft - Featuring VideoEgg, Dabble, CastTV, POSTRoller

Update: we are trying for the first time to video stream the session at this address (QuickTime 7).

Close to 300 video hosting, sharing and editing sites have been counted to date, serving hundreds of millions, if not billions, of videos a day. Video creation is also growing exponentially, and the availability of decent video recording capabilities in cell phones will only accelerate it. It therefore made to us to organize a session on the developing online video ecosystem, ranging from editing, hosting, advertising to search and aggregation. And to make the picture complete, we have also invited the video content production side of things. We expect, and actually wanted, that we’ll discuss topics broader than search per se - but as we’ll establish it, search and discovery mechanisms are fundamental enablers in the world of videos.

To MC the event, we have also decided to innovate: we will have two moderators, who – amongst so many things – produce the “Om & Niall Podsessions” podcast. Om as in Om Malik and Niall as in Niall Kennedy, who are both actors and commentators of the evolving development of online media. Their recent podcast on the topic of video led to their leading this session.

Will be joining us on October 10th for that session:

• Video Editing and Hosting: VideoEgg – Matt Sanchez
• Video Search: CastTV – Alex Vikati
• Video Bookmarking: Dabble – Mary Hodder
• Video Advertising Network: POSTRoller – Tod Sacerdoti

The event will take place at the Conference Center of the Microsoft Silicon Valley Campus (Building 1, 1065 La Avenida St., Mountain View) which has a capacity of 270 attendees. We suggest that you pre-register on this page of the SDForum web site. Note that we will only be able to accept sign-ups at the door based on the remaining capacity. This will also help us figuring out required food and beverages. To speed up the signing process, please print, fill in and bring this form if you are parking your car on the Microsoft campus

The now well established Search SIG Agenda format will be used:

6:30-7:00pm - Registration / Food & Drink
7:00–7:05pm - A few words about the Search SIG
7:05-8:15pm - Act I: The growing online video ecosystem
8:15-8:30pm - Intermission: Search Networking & Geeking Out
8:30-9:00pm - Act II: Product Demos from VideoEgg, CastTV, Dabble and POSTRoller– and Q&A with the audience
9:00-9:15pm - Open Mike Geek: Announcements (30 seconds of fame & fortune)
9:16pm - You Don’t Have To Go Home, But You Can’t Stay Here

Do get in touch with us (searchsig [at] gmail [dot] com) if you want to use a demo slot to launch a new search startup (one, and maybe two companies can take advantage of that).

And remember, there is a distribution list for Search SIG announcements – if you want to join, send an email to sdforum_searchsig-subscribe@yahoogroups.com.

Tags: searchsig

Mo' money to build a bigger Dogster niche

A year ago (give or take 10 days) I wrote about Dogster Inc. – the maker of the highly popular dogster.com and catster.com – turning profitable, an unusual fate among Web 2.0 companies. It was still a very small business, but gave co-founders Ted Rheingold, John Vars and Steven Reading a foundation to grow their company at the pace free cashflows were being generated. Up until then I had considered Dogster as an amusing parody of other social networking sites, and suddenly realized that there might be much more than met the eye.

A few metrics caught my attention: the size of the user base, the consistent growth, a promising ARPU (Average Revenue Per User) and a CPM which was higher than I expected, thanks to an advertising program that was more than pure banner and text ads. These metrics doubled in a few months, allowing the company to scale its operation to 10 salaried employees while increasing its cash balance. The other thing increasing was the list of brand advertisers interested in reaching out to this thriving community of passionate dogs and cats lovers, including the likes of Disney, Target, PetSmart, Clorox/FreshStep, Gap/Old Navy, Warner Brothers, Nintendo and VPI Pet Insurance.

As the company turned in its first six-figure revenue month, it became clear that the small Dogster “niche” was turning into a real business. The economics of that market are indeed significant: 63% of US households have cats or dogs (160M pets total), yearly spending is around $36B, and advertising budgets on pet products are in the billions of USD. It also became clear that the solid organic, and profitable, growth of Dogster could sustain a bit of a booster in the form of an outside financing – which leads to today’s news.

A couple of hours ago, CEO Ted Rheingold announced on the Dogster blog that the company had closed a $1M Series A financing from a roster of angel investors – mixing successful Internet entrepreneurs and experienced investors. As a matter of disclosure, but you already guessed, I am thrilled to be involved in this great syndicate (*). Joining the Dogster board as the representative of Series A investors is Michael Parekh, an active angel investor – and blogger, who in a previous life founded the Internet Research activity of Goldman Sachs. The official press release is here.

Dogster will be using these funds to accelerate the development of new features, hire a number of new employees including a kick-ass Marketing Director, launch a number of new properties in -ster, build new distribution partnerships like the VideoEgg or Userplane one, and more generally have additional means to engage and support our users.

Staying true to the values of the community as it grows 4 to 5–fold over the next 12 months is certainly going to be challenging for the team, but I have total confidence in their ability to bring the company to the next level. Congratulations for the success to date, best of luck for the future.

Now, esteemed reader, give us a hand: think of 5 of your favorites dogs and/or cats, and point their owners to the registration pages of Dogster and Catster.

And yes: Woof!

Oh, I was SO waiting for that headline: “the bubble is back, the new sock puppet got funded”. Greg (Linden), have you noticed the “profitable for 3 quarters”, “positive cashflows”, “making money” mentions ?

(*) Just to list a few of these angel investors: Joshua Schachter - del.icio.us./Yahoo, Adam Beguelin - Truveo/AOL, Michael Tanne – Wink, Jim Young – hotornot, Mike Arrington – TechCrunch, Mike Jones - Userplane/AOL, George Sarlo - Walden Funds, Frank Caufield - Darwin VC, Aydin Senkut - Felicis Ventures, Robert Simon - Alta Partners, Brad Feld – Mobius Ventures,… and more.

More:

• Yes, it is true that Dogster had several funding avenues, and the team elected to only raise a $1M round that ended up being oversubscribed (a lot).
• A great coverage is developing: Matt Marshall on VentureBeat, Liz Gaines on GigaOm, Dan Farber on ZDNet, Bambi Francisco, Tom Taulli on BloggingStocks.
• Rafat is already betting on a CNet take-out. Dude, please let me pay long term capital gains on an exit for once.
• Here is the TechMeme thread.