Yahoo: Yang Disease is Spreading [Paul Kedrosky's Infectious Greed]

Apparently Yang Disease is spreading at Yahoo. Recall, this is a company that seemingly thinks that, despite being a struggling outfit presented with a 70% price premium over its then trading price,  it is the one that gets to set the terms of the takeover discussion.

The latest evidence , Yahoo's chair Bostock has joined the anti-acquisition fray tonight with a meandering and illogical letter that repeats all sorts of silly claims, like that Yahoo didn't know it had been offered $33 by Microsoft; that it gets to set the terms; that Microsoft didn't respond in a timely way; that Yahoo's board has handled this appropriately, etc.

Sheer madness.

So You Want to Be a VC [VC Confidential]

"...it's more about people skills and the ability to assess whether there's a market for something."
  -- Dick Kramlich, co-founder NEA

I was cleaning out my files the other day and came across a 2005 NYT article by Gary Rivlin on the venture industry titled "So You Want to Be a Venture Capitalist". It is well worth a read for any of you inspiring investors. Couple of takeaways from it:
-- "Below the surface, there's a huge amount of turnover."  I did not realize the degree of turnover at some firms, including 70% partner turnover at NEA (1997-2005) and 70+% partner turnover at Kleiner (1997-2005). Some is due to poor performance and other is due to strong performance and retirement.
-- Up or out. A large share of a fund's profits are often driven by 25-30% of the partners. This is a true meritocracy and the results are clear to quantify. Over half the partners will fail in the bigger picture.
-- Entrepreneurs have a hard transition to the investing side despite the large trend towards this.
-- Success is driven by being a good judge of people and for understanding when markets are getting ready for inflection. "you're a natural athlete or you're not"
-- It is a mentoring business with a long gestation period..."probably 6-8 years and you should be prepared for losses of about $20 million (per person)".

One last point that the article doesn't mention is that the entry period can be grueling. It is not as rosy as most people on the outside assume. 60% of a good fund's deal will lose money or breakeven. The loses come early and winners take time to compound. So, sometimes you have years of carnage while being out in the wilderness hoping for the hits to come through.

"By all rights Stewart Alsop should have been a terrific venture capitalist. So why did Mr. Alsop, long considered a cyber-prophet among technology leaders, wash out in a profession in which he seemed predestined to succeed?

In recent months, as venture capital firms have announced the formation of new investment funds, a hot topic among the Silicon Valley cognoscenti has been the exodus of "tourist V.C.'s," as people from nonfinancial backgrounds are known here. Some have left the field because they did not pick enough winners; others have gone on to pursue different projects. Whatever the reason, there are hundreds fewer venture capitalists around today than just two years ago...." (click here for rest)

"...it's more about people skills and the ability to assess whether there's a market for something." -- Dick Kramlich, co-founder NEA I was cleaning out my files the other day and came across a 2005 NYT article by Gary Rivlin...

It's for the Dogs [VC Confidential]

The nice thing about doing angel investing on the side is that I can invest in fun, if not wacky, ideas from time to time. I put a little money into a friend's (John Funk, wonderful serial entrepreneur) IP incubator called Evergreen IP. His partners come out of the CPG world and they have licensed an array of innovations/patents and are now bringing several to market. One of these is the Dog Pause Bowl (www.dogpausebowl.com) which is targeted at obese dogs or dogs that eat too quickly. Look out Weight Watchers... He describes this better than I in his post "We Have Liftoff!".

The nice thing about doing angel investing on the side is that I can invest in fun, if not wacky, ideas from time to time. I put a little money into a friend's (John Funk, wonderful serial entrepreneur) IP incubator...

Just Along for the Ride [OC VC]

I have written about the parallels between surfing and investing in start-ups before (see Surf’s Up!… ironically, written just about a year ago to the day), but have found myself thinking about the similarities yet again recently and thought I’d share my thoughts on the matter with all of you once again. Whether you are a [...]

Shareholder Value, What You Didn’t Know [Venture Chronicles]

“But Paulson’s move adds to Icahn’s support among Yahoo shareholders, since hedge funds tend to pursue returns more aggressively than other institutional shareholders and are more likely to vocally press for strategic moves that could boost stock values.”

Where does one even begin to parse this statement buried in the Reuters piece about Carl Icahn and Yahoo? Let’s give it a try.

It was news to me that hedge funds alone are preoccupied with investment returns to the degree that they “more aggressively” pursue them than other funds. I like to think I’m pretty aggressive even though I can’t amass billion dollar positions…

I guess we could let the “more likely to vocally press” part of the paragraph slide since it kind of goes in lock step with the notion they are more “aggressively” pursuing said returns, but it may also be that these funds have the ability to amass such large positions that their voices are heard above all others.

“But Paulson’s move adds to Icahn’s support among Yahoo shareholders, since hedge funds tend to pursue returns more aggressively than other institutional shareholders and are more likely to vocally press for strategic moves that could boost stock values.”

Where does one even begin to parse this statement buried in the Reuters piece about Carl [...]

Speaking of Market Tops ... Sprott [Paul Kedrosky's Infectious Greed]

Does the Sprott IPO issue today mark a kind of energy/resources market top, much the same way that Blackstone et al., going public did the same thing for private equity? After all, when a highly successful energy/resources fund manager decides that he can make more money being public and decides to sell shares to the public, you have to ask yourself: Should I be buying what he is selling? 

More here.

Sweet! Two sites in the French top 25 ! [Fred Destin]

Big is not necessarily beautiful, but two of the companies I am involved with, DailyMotion and PriceMinister, show up in Nielsen's April 08 audience measurements for France.  Nice, both because DailyMotion is still edging ahead of the YouTube behemoth (look! no advertising!) and because, on the ecommerce side, PriceMinister comes in at the same size as FNAC both being behind a site you may have come across before, eBay.  Well done to PKM and team at Price, 6M official uniques for e-commerce is an awesome achievement !!  All that is left to do is to match to turnover of SNCF.com now :-))))

With the recent acquisitions of Doctissimo, AuFeminin etc we are also the only independents left on that list with Skyrock.

The less francophile amongst you will have noticed that 1/2/3/6/9/10/13/14 are all US players...  Time to wake up guys...

 

Nielsen Unique audiences (000), France, April 2008

Big is not necessarily beautiful, but two of the companies I am involved with, DailyMotion and PriceMinister, show up in Nielsen's April 08 audience measurements for France. Nice, both because DailyMotion is still edging ahead of the YouTube behemoth (look!...

The "Trump Top" in Oil [Paul Kedrosky's Infectious Greed]

My friend Doug Kass is calling a near-term "Trump top" in oil prices:

Trump waxed enthusiastically about oil on "Squawk Box today," saying that real estate is not the business to get into as a young man -- now it is energy.

And oil is off $4 from its peak prices, although that could change with word of an explosion and fire in Nigeria today.

Icahn's Eleven: Yahoo Board Slate as Clooney Flick [Paul Kedrosky's Infectious Greed]

Must amusing take so far on the proposed Icahn board slate for Yahoo comes from Breakingviews this morning. The folks there have done it as a winking take on the George Clooney flick, Ocean's Eleven, with Icahn in the starring role. The semi-serious point, of course, is that Icahn's board nominees are doing this is as a quick caper: They want to make their money and get out quick.

I would post an excerpt, but the Breakingviews site has an irritating feature that prevents copying of even portions of stories.

Consider the squad:
   * The Loudmouth, Icahn: An experienced loudmouth activist whose success measured in billions of dollars makes him hard to ignore.
   * The Boss, Frank Biondi: a former movie studio and Viacom boss. His operational experience in the business could help Yahoo in its cooperation with content partners.
   * Snake Oil, aka Mark Cuban: An entrepreneur with a history of creating companies that he then sells for far more than they are worth to sucker corporations. Cuban sold broadcast.com to Yahoo for $5.7bn at the height of the dotcom bubble - useful experience for selling Yahoo to Microsoft.
   * The Figleaf, Lucian Bebchuk: The Harvard Law School professor is one of the foremost experts on corporate governance and a strong advocate for aligning executive pay to performance. Shareholders rejecting a seat for Bebchuk would be protesting motherhood and apple pie.

Hey, What if the Founder Gets Hit By a Bus? Nada [Paul Kedrosky's Infectious Greed]

One of the questions investors in early-stage companies -- both private and public -- often ask is this: What if the founder gets hit by a bus? It is, of course, an investor's way of saying, "How much of this company's continuing success requires this man/women at the helm?"

Most investors skew toward believing that founders of successful companies matter a great deal. A new paper, however, makes the argument that founders are largely expendable. By looking at what happens when founders die, the author concludes that founders are good for ideas, but dispensable for managing the company -- even early in its life:

I analyze the causal effect of the founder for firms in their infancy by using variation in the occurrence of founder death. Both cross-sectional and within-firm estimates suggest that founder death has only a slight effect on firm performance, as measured by firm survival, profitability, or growth. I interpret this as the founder being substitutable even in a firm's infancy and that the main function of the founder is to discover new opportunities and setting up the firm rather than managing it. [Emphasis mine]

Memo to the Semantic Web [Venture Chronicles]