For a venture capitalist, I have a pathetic memory. I can never remember names of people of meetings from even the day before. I cling to my Blackberry (searching calendar, to do’s and email) for my institutional memory. I have limited ROM and use all of these means for scalable RAM.

A very cool product in this realm is Zoominfo (www.zoominfo.com). It spiders crawl bio’s, board listings, etc to pull together, in an automated fashion, consolidated profiles on individuals. It is the largest player in this space and has more than 30 million people summarized in its database. It pulls together the work history, education, current position and other affiliations of these people.

This is very useful if you are trying to remember where someone worked, want to know the background of someone you will be meeting or simply want to know someone’s title for a pitch. It is a very useful sales tool.

Its parsing technology is pretty good though not perfect. If you type in Matt McCall (I am pleased to see I am top of the list!), you will see my education and work history. It also has a number of my board positions though it missed a bit by putting me on the Motorola, Tellabs and Boeing boards (confused by my fellow Atomworks board members).

It was started in 2000 under the name Eliyon as an executive recruiting tool and has spread from there. Check it out…

"The utter stupidity of this is staggering"
       — Michael Arrington, TechCrunch article

When it rains, it pours at AOL. It is becoming a fantastic case study in how tech companies can go wrong. I only pray that they can save the brand. Couple of quick points:

1) read the tea leaves and respond to industry changes aggressively
2) the customer is king. Make the customer happy (profitably) and the rest takes care of itself.
3) take your customer feedback as gospel (no "the customer doesn’t get it…")
4) your strategy is flawed if you have to resort to strong arming tactics to maintain customers.
5) big companies have trouble maintaining innovation and agility.
6) all it takes is one or two really bad customer experiences to undermine a franchise. (avoid public embarrassments on the Today Show!)

Instead of heavy prose, here is the meaty gossip.
— AOL Consumer Data Leak AOL just acknowledged that it released the search history on 20 million web queries from 650,000 AOL users. In addition to violating the customer’s trust/covenant with the company, it is also going to unleash a fire storm both in the courts (ambulance chasers are popping the champaign corks today) and in Congress (round 2 on consumer privacy). It also slams the firms already sunken public image.
— NBC Ferrari Call AOL has rolled out a customer retention program that relies on customer service agents to convince, obstruct or cajole users from canceling their service. This Ferrari video recording is impressive even by most call center standards. Not working. In June alone, they lost 1 million subscribers. This is one reason they went to a free model, supported by ads.
— Even dead people can’t escape AOL Retention part 2…a St. Louis women has fought for 9 months to cancel her deceased father’s account.

This is the nightmare realized by a large tech corporation as well as small ones. Once the blogosphere gets hold of something, it spreads like wildfire. The blogosphere is amazing for its customer acquisition efficiency but it also has this dark side. If you query "Ferrari AOL customer service", you get 330,000 hits. That is a lot of coverage on the story (granted not all are on this story).

Kyptonite had one of the most blatant example of a brand being mashed by a) dumb PR and response and b) the efficient blogosphere. Several years ago, someone realized they could pop a Kryptonite lock with a Bic pen. They wrote the company and it responded defensively and negated the claim. Spurned, the customer made a video and released it showing how the pin tumbler mechanism was susceptible to failure. This spread like wildfire. Not only did it create significant damage at the time, these posts are permanently on the web. Today, if you query Google on "Kryptonite locks", half of top 10 or 20 listings are about this incident. It even has a Wikipedia entry.

Here is a link to the recent AOL article in its entirety:

AOL on Monday admitted exposing the personal search
data of 658,000 people, and issued an apology for what it called a
"screw up."

AOL, a unit of Time Warner Inc., made the information available for download through its research site.
The people were randomly chosen among users of AOL’s search engine from
March through May. Each record was stripped of the person’s screen
name, which was replaced with a number.

As you may recall, I have been trying to chase down a polling tool for my side bar for six months now. There are a number of interesting ones out there like Majikwidget (inspired/created by Guy Kawasaki) and WebPollCentral (Barry Moltz turned me onto that). However, TypePad finally saw the light and have integrated Vizu as a default option into their templates. So, the good news is that I can finally lob up polls, but the bad news is now I have to find topics that aren’t lame (sorry about the poor Jockey vs. Horse one but I just needed to get it up and running for testing). This is where you all come in…let me about polls that would be of interest???

      "That’s what Tiggers do best…"
                           — Tigger

Joe Born had a great follow-up email to the Venture Philanthropy post. He wrote:

"…what if we were sold/brought on new managment sometime down the road.  What would my life be like if I was full time on a non-for-profit?  Am I better off staying an entrepreneur and funding someone else’s project?"

VC’s often ask themselves the same question about entrepreneurship. Does it make sense to jump over to the light side and start up a business given all that we have seen and experienced? The answer depends upon the person and their DNA. Some VC’s make a great transition over. Andrew Anker jumped over to join the Six Apart team as have other VC’s over the years.

One of my favorite authors is Joseph Campbell who produced, with Bill Moyers, the Power of Myth series. He was one of the leading worldwide experts on "myths" and how they functioned to instruct and guide society and its people. He often used the phrase "follow your Bliss". By this, he meant to find that thing or things that give you purpose and energy when you get up in the morning. If making a difference in the lives of others gives you energy, find out in what role you are best employed. It could be as evangelist (if you are a good writer or speaker), or fundraising (if you are good at networking) or lobbying/policy (if you are strategically oriented and good at the political game) or operations in the field (if you are good managing people and getting things done). There are a lot of places for people with passion to play a role. Personally, I think it is more of an economic question than anything else. Do you want to forgo the potential economics of a successful company or the salary of being a CEO? Do you want to spend your time in the field with Chinese orphanages or in a tech start-up creating the next Google? Also, how well do you deal with the politics and cultural norms of the non-profit world? How well do you handle slow moving social systems?

I have spent a considerable amount of time in the inner city of Chicago. When my mother passed away over 10 years ago, I took several months off from work to walk around the inner city and think through how we wanted to direct our small, newly formed family foundation. (BTW, I can’t stress enough how important and rewarding it is to spend significant time in the field where services are delivered for your cause of choice. Too few people just write checks.) I concluded that my motor spins too quickly and I grow too impatient over impasses to work effectively in the field. I do not handle non-profit or neighborhood politics as well as others. However, I am a good evangelist and a good networker. I can provide support for the causes I believe in and help those who do work at the field level best. Everyone needs to self-assess. All of this obviously applies to entrepreneurial roles for everyone as well…

Figure out what your type of work your Tigger does best and follow your "bliss".

I came across an interesting new venture blog, Startup Review, written by Nisan Gabbay at Sierra Ventures. I like the format, which is more case study based than traditional postings.  My fellow Feedburner board member/investor and uber-blogger, Brad Feld, gave a nice overview of Nisan’s new blog.

I came across an interesting new venture blog, Startup Review, written by Nisan Gabbay at Sierra Ventures. I like the format, which is more case study based than traditional postings.  My fellow Feedburner board member/investor and uber-blogger, Brad Feld, gave a nice overview of Nisan’s new blog.

"Who’s the U-Boat Commander?
"
             — Service Manager after Tom Cruise
                puts his dads Porsche in Lake
                Michigan (Risky Business)

How do you mess up a business this badly? AOL had 35 million subscribers at its peak. See the NYT’s quote below…it will lose 33% of its subscribers in the next year, which is already down 50% from its peak. It just goes to show how if you can see how the competition is going to eat your lunch, get to the lunch box early yourself and start eating…Technology moves too quickly and Darwin always strikes quickly.

NYT’s today: "The jobs eliminated by the current cutbacks will largely not be
replaced. An AOL spokesman said that the company had not ruled out
further layoffs but that none were in current plans. AOL has said it
expects to lose at least six million of its 17.7 million subscribers in
the next year and more than nine million in total over three years."

Nik Rokop just forwarded on a cool link…http://www.goodsearch.com/. The site allows charities to sign-up and as members use the Good Search engine (powered by Yahoo), the charity gets money. Kinda like uPromise meets affiliate marketing. Most charities seem to be raising small amounts here (hard to change consumers behavior like what they search with), but a pretty cool, well-intentioned idea. Anyone seeing any other types of creative Web 2.0 charity concepts?

Wow. If you want to see a big difference between the buyout and VC world, check out this article in PE Week: Return of the Corporate Raider. It never ceases to amaze me how often the buyout shops will charge egregious fees for services that are standard, free value-add in the venture world.

Return of the Corporate Raiders

Burger King is supposed to represent the best of what private equity has to offer. Unfortunately, it also represents the worst…

My father-in-law started in the brokerage trading business in the mid-1960’s. He showed me an industry tombstone advertisement page from 1969 that had over 50 regional and local brokerage firms, along with a handful of the growing national players (like Merrill Lynch). Today, nearly all of them are either dead or acquired and it is dominated by the majors. There are boutiques, a couple of regionals (Blair, Baird, etc) but it is dominated by the large players. The venture business is heading in a similar direction it looks like.

Scale is becoming increasingly important (domain expertise, visability, branding, etc) just as it was in the brokerage business. The challenge is that venture does not scale well. It is impossible, as we all showed in 2000, to do early stage venture from an $800m fund. However, LP’s are not interested in backing unproven groups. Groups with history are, again, getting big funds raised. So, I’m not certain how this trend continues to play out since the forces are pushing to larger organizations, but larger organizations ($800-$1B) groups have trouble successfully deploying money early stage and getting solid returns. So, they are likely going to:

— go later stage and compete with the hedge funds and existing later stage players. This will drive pricing up (as is happening in buyouts) which will hurt returns.
— go international and chase the China dollar
— put 50+ investments into a fund and take a portfolio approach.

In short, this is a mess (for both start-ups…too many competitors and for VC’s) and why we have pulled back to a regional early stage focus while leveraging the 34 offices worldwide in our network for scale. Below is the recent press release from Venture Economics reporting on the YTD fundraising in venture:

"Venture capital fund-raising activity in the second quarter of 2006 is further proof that fewer and bigger war chests are being amassed by investors.

According to new data compiled by VentureOne, a research unit of Dow Jones & Co., the number of funds closed during the quarter fell dramatically from the year-earlier period, to 23 from 37, but the amount raised remained steady, with $8.2 billion in the latest quarter versus $8.3 million in the period last year.

In addition, barring a second half flurry of small fund closings, 2006 as a whole is shaping up as the year that funds under $100 million were all but forgotten. In the first half of this year, only 28% of the funds closed have been less than $100 million. If that trend continues throughout the year, 2006 would have the smallest portion of double-digit funds raised since 1992, the earliest period tracked by VentureOne.

The percentage of sub-$100 million funds raised has been falling steadily on an annual basis for the past four years, the data shows, from some 71% in 2002, to 63% the following year, 52% in 2004 and 44% in 2005. The median fund size this year sits at a high $170 million.

The largest fund that closed in the second quarter is Oak Investment Partners’ Fund XII, which happens to be the largest venture capital fund ever raised at $2.56 billion. And as limited partners clamor to get into brand-name funds, the trend of bigger-is-better shows no sign of slowing down. The third quarter kicked off with New Enterprise Associates raising its giant $2.5 billion twelfth fund. DCM, a Silicon Valley early-stage venture capital firm founded in 1996, closed its largest fund to date, the $500 million DCM V, last Thursday."