Yet Another (ex-)VC Blog

Cloud computing, startups, and venture capital

Archive for December 2008

My top five posts for 2008

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The...
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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

  1. Venture Capital Career Resources (glad to see people are finding this useful, but wish there were more people commenting!)
  2. Is VMware Doomed?
  3. About
  4. Brainstorming Cloud Computing Revenue Streams
  5. Understanding Cloud computing costs in the enterprise
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Written by John Gannon

December 31, 2008 at 7:26 pm

Posted in Uncategorized

Who are you?

with 5 comments

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!

Written by John Gannon

December 30, 2008 at 7:20 pm

Posted in Uncategorized

Making the pie bigger

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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).

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Written by John Gannon

December 30, 2008 at 12:27 pm

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Cloud as a component

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Robin Harris just made a post about cloud storage as a service that was both insightful and right in line with some of my thinking about cloud infrastructure.

A car wash, haircut or a Google search is a service. You show up in your car, with your hair or a browser and a complete transaction occurs. A job completes.


The number of similar cloud services on the market suggests the wrong question is being answered. While there is a market for raw cloud storage – as Amazon’s S3 has shown – the real opportunity is incorporating it as a component – in a solution to a business problem.

I’m a big fan of companies who are leveraging cloud technology and economics to develop business-focused solutions that solve specific problems.

Although its certainly interesting for IT shops to be able to leverage a cloud infrastructure to scale servers on demand or access a theoretically infinite pool of storage, its more interesting and valuable to tie these cloud components together to solve business challenges like disaster recovery (for example).  Cloud components are ultimately going to become a commodity so I think if you’re planning to play in this space, play higher in the stack and use the components to build a solution that will get business stakeholders (versus IT stakeholders) excited to open their wallets.

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Written by John Gannon

December 26, 2008 at 8:26 pm

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Zipcar comes through

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Zipcar
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It’s refreshing to see a company take ownership of my recent customer service issues the way Zipcar just did:

Hi John,

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.

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Written by John Gannon

December 26, 2008 at 4:06 pm

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Merry Christmas from The Dumpling Man!

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Dumpling Man

Dumpling Man

One of my favorite NYC eateries…

Written by John Gannon

December 25, 2008 at 10:00 am

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Bookmarks are like that box you stick in the back of your closet…

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Book with florentine paper bookmark
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…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.

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Written by John Gannon

December 19, 2008 at 6:25 pm

Posted in Uncategorized

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