Archive for December 2008
Here are the top 5 posts and pages from johngannonblog.com as of today, based on total page views.
I figured this would be interesting to check out and then look back on in 2009.
Best wishes for the New Year and please celebrate safely!
(drum roll please…)
Top Pages and Posts of 2008
- Venture Capital Career Resources (glad to see people are finding this useful, but wish there were more people commenting!)
- Is VMware Doomed?
- Brainstorming Cloud Computing Revenue Streams
- Understanding Cloud computing costs in the enterprise
Allan Stern recently polled readers on centernetworks.com to provide a brief bio/background about themselves. I thought this was a great idea, and since imitation is the sincerest form of flattery, here goes…
If you are a semi-regular reader of this blog, it would be great to hear from you in the comments to this post about who you are, where you are from, and what you’re working on these days. I check the stats provided by wordpress.com pretty frequently but they don’t give me the level of detail I’d like to see about who is reading the blog and what they’re interested in seeing.
So let ‘er rip!
Founders spend lots of time, money, blood, sweat, and tears in creating a new business, and they obviously want to maximize the financial return on their investment. Thus it is important to understand how to value either a) new strategic hires or b) investment capital, as both will reduce the founders equity stake and controlling interest in their business.
I think the question to ask when valuing new hires and investors is “How does this new hire/investor make the pie bigger?“
For example, if you are a technical founder but don’t have the key contacts within your target industry that will get you in the door with potential customers, how much is it worth (in equity terms) to get someone with those contacts on board? This person will probably demand a significant chunk of equity but if you are confident that they can get you in the door with potential partners and get deals closed, maybe they are worth the dilution you’ll experience as a founder.
Now let’s turn to the investor case. If you have bootstrapped your company and are able to become cash flow positive without raising outside funds, then you have a business that self-financed and quite possibly sustainable. However, if your company is burning cash or has ambitious growth targets that can only be met by significant investment in product, sales, or marketing (beyond what you can finance through cash flows or your own wallet), then you will need to think about outside funding. Taking on outside funding is going to dilute your ownership stake but may also allow you to make the pie (the size of your company in revenues, valuation, etc) bigger.
If taking in $X million in investment will allow you to hire 3 sales people to sell into target accounts and create a channel sales program but will reduce your ownership stake by Y%, is it worth it? Do you believe that the $X million investment (and the hiring capability, etc that it affords you) will help you build a $50 million dollar company instead of a $5 million company? Taking said investment may reduce your ownership stake to 50% from 100%, but my guess is that most entrepreneurs want to own 50% of a $50 million company versus 100% of a $5 million company.
Obviously you will never be able to accurately compute that adding $X of investment or giving up some % of equity to a key employee will grow the overall pie by a specific amount. However, you should think about (in orders of magnitude) how these decisions will help you grow the overall pie (your company’s value) as well as the absolute size of your piece of the pie (the value of your share of the company at exit).
Related articles by Zemanta
Zipcar understands that when it comes to your transportation, you have choices. Likewise, we thank you for choosing Zipcar. More importantly, per your member feedback, we are concerned with your unsatisfactory experiences with Zipcar. Please know that we understand the impact that it imposes on your choice of Zipcar and how it can dictate how viable our service is as your alternative mode of transportation. I reviewed your account and the incidents that you reported have been noted and are being addressed. Your feedback is greatly appreciated as we are only as good as our members’ communication. Likewise, we make every effort to hold irresponsible members accountable for misbehavior and inconveniencing others. However, there are times of unforeseen incidents due to extenuating circumstances and your understanding and graciousness are greatly appreciated. Our goal is to make the best possible resolutions in those unfortunate circumstances. Likewise, Zipcar strives to provide a great service and we are constantly looking for ways to improve.
We do apologize for any inconveniences and do take these accounts seriously. We hope that you will give Zipcar further opportunities to better your future experiences. With that in mind, please accept $100 in driving credit to accommodate those future reservations. It has already been posted to your account and is good until 2/21/09.
Please know that I emailed you in consideration of not imposing on your schedule. Also, I have attached for your reference Zipcar for business rates. I noticed that you have utilized Zipcar during the week and thought this would be beneficial to you because it extends better rates in all of our markets.
Related articles by Zemanta
…never to be heard from again, except for that once-per-year cleaning when you look at the box for a few seconds and then put it back in the closet :)
If you follow this blog or my delicious feed, you will notice that I bookmark frequently. However, the truth of the matter is that I rarely go back to search those bookmarks.
If I need to find something online I generally visit Google and search, even if I’m looking for something related to a topic I’ve studied (and bookmarked) in depth.
The bottom line is that I’ve just realized I’m using my bookmarks to communicate my current interests in business and in life to the outside world, and not as a way to refer back to items I’ve found interesting.
What would be very interesting is if I could connect those bookmarks to other parts of my Internet experience, allowing me to tap into them when viewing other relevant content.
For example, if I bookmarked an article about storage area networks, it would be nice to have my email client aware of that when I emailed someone who worked at EMC. Similarly, if I bookmarked an article about a specific startup, I’d want my email program to make me aware of those bookmarks and give me an option to plug them into an email to someone working at that startup. (Xobni, are you listening? :)
My point (not limited to bookmarks) is that it would be cool to see technologies that would bubble up data I generated on the Internet yesterday and find interesting ways to repurpose it today. It does take an investment of time and effort to generate this data and I’d like to be able to get a return on that investment.
Related articles by Zemanta
This came from someone at Columbia Business School. If you fit the bill please feel free to reach out per the instructions listed below:
I’m reaching out to see if you or any entrepreneurs you know are looking for venture capital and interested
in participating in the entrepreneur consulting club InSITE. We’re currently recruiting companies for the spring semester and would love more applications from the nextNY community. Basically our pitch is as follows:
* InSITE is a selective fellowship of the top MBA and Law students
from Columbia and NYU who are interested in entrepreneurial finance.
Each semester, InSITE Fellows provide New York-based entrepreneurs
with free consulting services to help them raise financing and in
return our fellows get great hands-on learning experience.
* Fellows and entrepreneurs meet once a week to focus the company’s
strategy and positioning and craft or improve the company’s VC pitch
presentation. Presentation style, business plan, financial projections
and overall business model are also reviewed if needed. The semester
culminates with “pitch day” when the entrepreneurs are given an
opportunity to present their new pitch to angel investors and venture
capital affiliates which include leading funds such as Greenhill SAVP,
DFJ Gotham, Investor Growth Capital, and RRE Ventures. Past InSITE
company clients include Vindigo, Flavorpill, RecycleBank, Enterprise
Air and HopStop. For more information on InSITE, please check out our
website at http://www.insiteny.org.
* We are in the process of accepting applications from New York-
based companies that are in need of InSITE’s core services. We are
looking for energized entrepreneurs who are ready to make the time
commitment to InSITE and are looking to raise funding through angel
investors and/or venture capitalists.
If you know someone who might be interested in applying, please see
the instructions here: http://www.insiteny.org/node/59. We’d very
much appreciate any referrals you might offer. First round
application deadline is January 5!!
Related articles by Zemanta
Every blogger is doing a 2009 predictions post at this time of year, so why shouldn’t I? In fact, this is the only time I’ll be able to say my predictions for the previous year were perfect (because I was zero-for-zero), so I’m going to enjoy my unblemished record while I can…
VMware gets acquired: Whomever owns VMW will own the 21st century datacenter. Cisco and Microsoft have enough cash on the balance sheet to foot the bill, but will they? A Cisco/EMC merger would be pretty interesting, too.
Someone purchases Citrix: Again, Cisco and Microsoft would be logical acquirers. Cisco is focused on growing the application side of their business and Microsoft can always use more ammo against VMware.
Continued slow growth of cloud computing in the enterprise: Due to concerns about security, cloud computing adoption in the enterprise will still severely lag that of the SMB/SME markets.
Social media works its way into enterprise IT: I think there is huge value in leveraging social media to help IT professionals do their jobs better. New entrants to the enterprise IT market that lack the baggage of legacy product lines will integrate social media into their products and use rich internet application technologies to enable that integration.
M&A frenzy begins in Q2: Right around the middle of 2009 I predict that investors and operating companies will perceive a (near) bottom in the market and will go shopping in earnest for assets and companies.
Feel free to comment on these predictions or add some of your own!