Wednesday, December 10, 2008

What to do with Yahoo!

So, Jerry Yang has finally stepped down. The search for a new CEO has begun. I have to say I'm puzzled by most of the candidates that have been rumored so far. Yahoo is at a crossroads and requires a true change-agent. Someone who will ignore the past and play the ball as it lays.

Yang's decision to play chicken with Steve Ballmer will certainly go down in business history as one of the costliest CEO moves ever, particularly now that the economic crisis has only reinforced how rich the Microsoft offer was. Now, with a yawning $30B gap between Yahoo's current market value and the implied value of the Microsoft deal to Yahoo's shareholders, the departure of many senior executives, and a sense that the last best chance to create shareholder value has come and gone, the company is in ruins. Yang will forever be characterized as a reckless Ahab intent on pursuing his personal Moby Dick (Google) to his company's destruction.

But not so fast. Despite everything, the skeleton of a great business remains. The company is still on a $6.5 billion revenue run rate, and quite profitable even given the many squandered opportunities and mediocre execution. The next CEO of Yahoo needs to understand what Yahoo's value creation vector really is, and refocus all of his or her energy on growing precisely that business. Here's what I think the next CEO needs to do to get Yahoo back on track:

1. Maximize the exit value of the search business, and don't get hung up on competing with Google. Face it, Google won. There are plenty of ways to make an honorable exit from the search business, raise a significant war chest of cash, and cut a favorable deal with Google for the Yahoo ad and search inventory (while maintaining the ability to maximize future revenues from search-related monetization as the search business gets more complex over the next decade). Don't waste time on this one -- cut a good deal, preserve upside and flexibility, and be done with it. Yahoo's future is not in search.

2. Understand what it means to be a next-generation online media company in the modern world. Hint: it means being a marketplace. Make Yahoo a customer acquisition engine for web/media companies. Customer acquisition is the defining problem of the modern web. It's the wind behind Google's revenue sails. The massive investment by companies in virality and SEO are two common ways to attack customer acquisition without paying Google. But a huge amount of interesting internet content is not really susceptible to viral distribution or SEO, and doesn't really lend itself to discovery through Google search marketing. Yahoo could own this space.

The future of the internet (and IP-enabled media) is going to be dominated by what Anthony Noto used to call "access platforms." These are the traffic aggregation points that normally serve as an initial point of contact with customers and a jumping off point to further interactions or explorations. Examples include Google, Facebook, Myspace, iTunes, Xbox Live, and all the smaller finance, weather, sports and news sites that people access directly. As the internet gets even more fragmented and innovative, these aggregation points are even more valuable.

Yahoo is a massive traffic aggregator -- 500MM monthly uniques. Its finance, sports, email, news, IM, mobile, photo sharing, groups, and games are huge direct on-ramps. There's an opportunity to leverage cross-platform identity (think TenCent/QQ), the fire-hose of traffic to new content (think MiniClip on an order of magnitude larger scale across multiple content types, not just games), and a place people go to discover new content in a hierarchical, taxonomic way rather than noisy Google search (think Comcast). This is how Yahoo can fight Google: by not trying to beat them in search, but rather in all the things that are not best served by search.

3. Cut costs to the bone and really clean house in the executive ranks. This can be a significantly more profitable company with some strong leadership. Brad Garlinghouse said it very well in his "Peanut Butter Manifesto" -- this is a company where multiple fiefdoms, unfocused acquisitions, and overlapping operational responsibilities have led to insane redundancy of effort. This doesn't just duplicate costs, but also creates lassitude and absence of ownership for key verticals.

Fixing this will be hard, because it will involve the firing of a lot of decent middle management and talented engineers. But it is absolutely necessary. In my experience, the preservation of a few good people in a company this fucked up is never worth the risk of organizational paralysis. If you put a weak CEO in here, who will try to "inspire the existing team" you might as well shred your stock certificates. You need a ruthless ass-kicker, who will sleep well at night after firing a couple thousand people, including many senior executives.

I've heard cogent arguments that Yahoo would be best served by being chain-sawed up into it's constituent parts and sold off. That seems like a terrible waste to me. It's really, really hard to aggregate as much traffic as Yahoo has -- it feels wrong to atomize it when it could be such a wonderful revenue engine.

Mac & iPhone Apps I Like

I'm currently a Mac/iPhone user, and I have some applications that I have found extremely useful over time. For those new to these platforms, I thought I would share my favorites:


Adium (Mac): really nice IM aggregation client. Beautiful, extensible interface. Wish it did video ...
Blogo (Mac): my new favorite blogging client, which has taken over from the venerable MarsEdit. Love the Twitter integration. Blogo's microblog view has replaced Twitterific for me.
Skype (Mac): combined with my Audio-Technica AT2020 mic and my CEntrance Microport Pro USB preamp, I sound like I'm doing phone calls in a recording studio. It's awesome.
Facebook (iPhone): very nicely implemented version -- just what you need in the mobile app.
Twitterific (iPhone): great little microblog browser on the phone. Particularly speedy at loading linked sites.
BlogPress (iPhone): since I am still on Blogger for the time being, this is the best iPhone blogging tool I've found. If I ultimately go to Wordpress, they have a nice looking iPhone app. Both let you post iPhone photos to your blog.


Evernote (Mac & iPhone): billed as a memory extension tool, this is really simple but profound. Easier to see than describe, I use it to keep track of all those little bits of info that you end up looking up ten times a year (i.e., opening times for the zoo). Highly recommended, particularly given the Mac's awesome ability to print anything to a PDF.
OmniFocus (Mac & iPhone): the Swiss Army Knife of GTD.
Quicksilver (Mac): I'm still figuring out all the cool things that this can do. Basically, it runs as a background process on your desktop, and can be used to quickly launch apps. But that's like 1% of what you can actually do with it. As close to geek magic as software gets.
JungleDisk (Mac): a really nice front end to Amazon Web Services S3. Storage in the cloud, represented as a drive on your desktop.
MobileFiles (iPhone): if you use the iDisk feature of Mobile Me, this rules. Let's you access your iDisk in the cloud from your phone, view files, download, etc. The upcoming pro version will include viewers for the Microsoft Office suite.
1Password (Mac & iPhone): the Ferrari of password vaults. Really, more of an identity management solution. Integrates with your browsers on the desktop (although not on the iPhone). Generates strong passwords that you don't have to remember. Fills out forms. If you do a lot of login/ecommerce, this is a must have.

Media & Entertainment

NetNewsWire (Mac & iPhone): my all-time favorite news reader and feed aggregator. Syncs to cloud so you can use it on multiple devices and not miss anything. Nice interface, even on iPhone.
Yelp & OpenTable (Web & iPhone): two great tastes that go great together. The Yelp iPhone app is not as sexy as UrbanSpoon, but it has better reviews. OpenTable's iPhone implementation is great, and it's one of the most useful services around.
Chroma (Mac): very pretty movie player that supports avi's as well as quicktime and DivX. Has some cool movie-specific features. Also nice substitute for the built-in DVD player.


TextMate (Mac): an integrated development environment masquerading as a text editor. An essential tool for coding Rails. Highly recommended.
CSSEdit (Mac): an amazing single-purpose product for editing cascading style sheets, the visual language of the web.
Sequel Pro (Mac): the new name for the wonderful CocoaMysql code base. A powerful, easy-to-use front-end for Mysql databases.

Sunday, December 7, 2008

Hope Against Hope

It's December 7th, and Fulham FC are 9th in the Premiership table with 20 points and a positive goal difference after 15 matches played. Yes, that's not a series of typos. Fulham are a top 10 side, with more than half the points they'll need to stay up, and not even half the season gone. Last year, the Cottagers didn't hit 20 points until March. They only won 8 out of 38 matches all last season, compared to 5 out of 15 this year.

The difference thas been their defending. They've only allowed 12 goals in 15 matches, the fourth best in the league. Only the perennial powerhouses Chelsea, Liverpool and Manchester United have allowed fewer goals than Fulham. They have not lost a match yet by more than a single goal. Their tougher defending has allowed them to take a few points on the road (3 in 7 matches), and win 5 matches at home that they may have drawn or even lost last season.

The other revelation has been their performance against top 10 teams. Last year Fulham just rolled over for most of the season when they met up with a quality side -- except for a 0-0 draw with Chelsea early in the season, a couple of draws against Blackburn, a win against Everton and Aston Villa, and their late-season "great escape" heroics, they were totally hapless. This year, so far, they've beaten Arsenal, Bolton, Wigan, Newcastle and Tottenham at the Cottage, and grabbed away draws against #1 Liverpool and #5 Villa. If you didn't know better, you'd think they were actually good.

With upcoming away matches at Stoke and Spurs, and a home match against an under-achieving Middlesbrough before Chelsea arrives at Craven Cottage on December 28th, they could even take a few more points into the new year at the mid-point of the season. Given that 40 points has usually ensured safety in the top flight, if we finish the year at 23+ points and a positive goal difference, I may even allow myself to be mildly optimistic about the spring. :-)

Friday, November 7, 2008

Four Interesting Things About the Election

1. Only 22% of America's counties voted more Republican in this election than in 2004. Where were they? Primarily in Appalachia, northern Alabama, Tennessee, Arkansas, Louisiana and eastern Oklahoma. As one commentator put it: "Obviously concerned about marginal tax rates for those earning over $250,000 a year, I suppose." Heh. This was the Palin base, the rural rump at whom all the coded crypto-racism was aimed. It worked, but thankfully for only a sliver of the American electorate. Evidence, I guess, that the old Confederacy has retained its dunces.

2. Bush won Indiana, North Carolina, and Virginia in 2004 by an aggregate 1 million votes. Obama won them in 2008 by relatively narrow margins. But he flipped roughly 10% of the electorate to do it. Huge.

3. Obama won New Mexico by 15%, Nevada by 12%, and Colorado by 8%. Hispanics moved Democratic nationwide by 25% points. This is really, really bad news for the Republicans, given US demographics. I predict that Texas may be the motherlode swing state in the 2032 election.

4. While the idiot mainstream media went all self-congratulatory about the civil rights implications of the Obama victory, and while it was moving to see the election through the lens of slavery and the African-American experience, I thought this was the best summary of how I saw the election:
"But relief today is not about Americans choosing an obviously black man over a white man, which proves we can come to terms with our past. It is about our choosing an obviously brilliant, reciprocal man over a thick, cynical one--a man who articulates a coherent vision of global commonwealth over someone advancing vague, military patriotism--which proves we can come to terms with our future."

Sunday, November 2, 2008

Prediction Time

Election is Tuesday, for those of you who live off the grid. At this point, the biggest unknown is the youth turnout. Early voting patterns have firmly established the fact that the Dems in general and African-Americans in particular are motivated to deliver a large turnout. Probably augurs a large Republican turnout as well. Here's my prediction for the outcome:

Electoral Vote: O:338, M:200 (Obama wins Ohio, Pennsylvania, Virginia, Florida, New Mexico, Colorado and Nevada; loses North Carolina, Indiana and Missouri; no second-tier swing states like Georgia, Arizona, North Dakota or Montana swing blue).

Popular Vote: O:51.7%, M:47.3%, others 1%

Senate: Dems: 57 seats not including Leiberman and the socialist dude.

Upside Scenario: Obama wins popular vote 53% to 46%, wins electoral vote 375 to 163, with Indiana, Missouri, North Carolina going blue and no other states swinging. Insane (and kind of irrational) Upside Scenario: Obama wins popular vote 54% to 44%, wins electoral vote 406 to 132, picks up Georgia, North Dakota, Montana and Arizona, and has near-miss in one of the southern states like Louisiana, Mississippi, or South Carolina.

Downside Scenario: McCain loses popular vote but wins electoral vote 273 to 265, with Obama trading Pennsylvania for Virginia and McCain running the table in every swing state. More Likely Downside Scenario: Obama wins popular vote 50.5% to 48.5%, wins electoral vote 306 to 232 by holding Pennsylvania, Ohio and Virginia.

State to Watch: Indiana.  Polls close early, so we'll see some data before other swing states. High early voting (450K through Halloween -- 10% of registered voters and in some counties 3X 2004 early voting turnout). We should therefore get a sense of general election turnout and demographics that could be a preview for other states where we've seen similar early voting patterns (North Carolina, Georgia, Nevada, Florida, etc.).  If Obama is close or leading in Indiana with most precincts reporting, he's going to have a big night. If McCain blows him out by 5%+, this will be a nail-biter.

Trend to Watch: Pundits over-valuing early voting results. To the extent these early votes are reported before election day votes, you may see sizable Obama leads that evaporate as the night wears on -- in Louisiana, Georgia, and other states. North Carolina may look like a blowout (Obama +8%) when polls close, and may end up with <1% popular vote separation at the end of the day.

Friday, October 31, 2008

Right Where We Want 'Em

Heh. Obama is launching ads in Arizona, Georgia and North Dakota. Now, these are some motherfucking red states. While recent polling suggests all of these states are marginally competitive, I don't expect Obama thinks he can win in these states. I agree with Nate Silver -- this is primarily a media strategy designed to demoralize the McCain campaign. It's like the burning of Atlanta in the Civil War.

I love McCain campaign manager Rick Davis' take in a memo to journalists tonight, characterizing the move as: "an attempt to widen the playing field and find his 270 Electoral Votes. This is a very tall order and trying to expand into new states in the final hours shows he doesn't have the votes to win." What? The fact that these states are competitive rather than absolutely blood red at this point is somehow bad for Obama?

McCain's silly "we got 'em right where we want 'em" nonsense made me think of this:

Thursday, October 30, 2008


I thought the Obama infomercial was pretty boring. In his effort to be substantive and to reach out to the few undecideds or soft republicans, he purposefully swung away from his lofty rhetoric into a mundane articulation of policy. Frankly, I think we could have used a jolt of his preachifying at this point -- we've seen enough policy on the stump. And the cut-away to him live at the end was totally anti-climactic.

But consider this: he did not mention Bush or McCain once during the 30 minutes. Never said, "Don't vote for him because ..." or "... failed policies of ..." Only talked about what he wanted to do. The future. Again, you may think he's the anti-christ, but the dude looked presidential.

Can you imagine McCain's 30 minutes in prime time?  Here's Juan Cole's take:
... if I had to guess, it would be ten minutes about McCain as a POW, ten minutes of McCain saying he isn’t Bush, and then ten minutes of bullshit smears about Ayers, Khalidi, socialism, celebrity, and maybe Rick Davis could go before the cameras and pull a tire gauge out of his ass. 

Cranky Asshole Update

As this most entertaining election cycle comes to a conclusion, I went back and read my Six Reasons post and felt I should update it with what I've learned in the eight weeks since I first wrote it.

I believe we've learned a lot about McCain's character and his fitness to govern from watching his campaign. And I think what we have learned is not positive, and leads me to conclude even more strongly that a vote for this man is not just a mistake, but an indictment of the voter's intelligence and powers of observation.

McCain's whole campaign has been about character. He really has not offered more than a crumb of policy discussion in the last several months. To the extent he has discussed them, his economic policies are incoherent -- like a moron reciting Ronald Reagan's talking points without really understanding the underlying issues (gee, kind of like every Sarah Palin interview, come to think of it).

What have we seen of McCain's "character"? We've seen a despicable, angry, name-calling jerk. He's an embarrassment to the American political culture. He's called his opponent a terrorist sympathizer (and doesn't object when others forget the "sympathizer" part and call Obama an actual terrorist); he's called him every 20th century name for commie that he can think of (socialist, marxist, redistributionist); he's called him naive, disloyal, dangerous, duplicitous, a Manchurian candidate, a fey academic, you name it. Pathetic.

This is McCain's character. A sense of senatorial entitlement and complete contempt for the American people as intelligent, cautious and independent-minded. Just yell a bunch of 1950's buzzwords and get them to vote with their emotions. The problem for the old bastard is that it ain't the 1950's any more.

And, once and for all, fuck John McCain's "service to our country" narrative (which, by way of reminder, was primarily as a POW in Vietnam; not exactly George Washington or Andrew Jackson or Ike territory, folks). If that's a reason to vote for him, we are a bunch of cretins. Any honor he accrued in Vietnam has been squandered in the sordid pathos of this campaign (and, before that, in the sordid personal history he accumulated post-war). He has absolutely no claim to being a viable commander in chief because of his captivity in Vietnam. It's completely idiotic.

More troubling even than the character issue is what we've learned about his fitness to govern. I'm not even going to get into the Palin pick -- all that needs to be said has been said better, by others. But back in August I wrote that he "surrounds himself with mediocre people" and the Palin pick is no exception. He has no interest in policy -- at a time of insane fragility of the American system of government and economy, this is reason enough not to vote for him. I believe he is clinically bi-polar, and I can't imagine a worse mental disorder to have in a president. He doesn't listen to anyone but himself. He's a compulsive gambler. The fatigue of the campaign trail has made him seem increasingly senile (his attempt to remember the 5th secretary of state who endoresed him on NBC was scary/pathetic). And he is going to die soon, perhaps very soon, leaving a potential power vacuum that defies historical comparison.

McCain is totally unfit to lead this nation. He really is George W. Bush with a little more gravitas -- dumb, narcissistic, mean-spirited, petty, anti-intellectual. We really don't need more of that shit.

Wednesday, October 22, 2008


HipLogic, one of the companies I invested in earlier this year, launched their platform today. Here's the video:

The conventional wisdom around Sand Hill Road is that the whole world will be running iPhones or Android phones in a couple of months, but as long-time readers know, I don't really buy that. In my conversations with carriers and handset manufacturers, they are looking for increased data services across their range of handsets, and the impending recession only makes that more urgent, as smartphone sales have fallen off in Europe and likely in the US as well.

The goals of the HipLogic platform are infinite personalization of the mobile experience, easy discovery of data services, and always-on connectivity. I think it's the right technology for the time.

Tuesday, October 21, 2008

And You Wonder ...

... why I believe we need not simply defeat these American Taliban -- we need to sow their fields with salt for a generation. Take a listen to this, all you jews, muslims, non-evangelical christians, city-dwellers, free-thinkers, etc.  

After a week during which we heard Palin call us anti-American by implication, some unhinged Minnesota congresswoman call for a McCarthyesque pogrom against the un-American members of congress, a McCain flack suggest northern Virginia isn't real because it isn't "southern" (code for conservative and xenophobic, oh, I mean "patriotic"), and the rising spectre of a Reverend Wright attack on Obama's patriotism, don't you think it's time we stopped viewing these people as simply ignorant and pathetic, and started viewing them as a threat to our democracy?

[UPDATE] Mea culpa. Leave it to the master ...

Saturday, October 18, 2008

Palin, Revisited

I've mostly remained out of the fray as the left has picked apart Palin with a vengeance. But after a month of aggressive digging (and muckraking) by both the old and new media, I think some of the realities are starting to emerge.

Clearly, she's a not-very-bright small town/small state conservative. As such, she is scary to the coastal elites like all fly-over conservatives, because she's deeply religious in a freaky, enthusiastic, evangelical way; because she rejects the discourse of the traditional elites in favor of a know-nothing populism and fake "real America" patriotism (therefore, no press conferences prior to the election -- what good would that do? It would be about as useful as W. agreeing to debate theology with a panel of Wahhabi clerics); because she is into guns and snowmobiles and other stuff the elites find unpleasant. But that's not the crux of the problem.

There are two aspects of her biography that are actually quite troubling. And, no, it's not the fact that she's totally, completely unprepared for national office. Let's take that as a given.

The first is her absolute inability to tell the truth. Her ridiculous lies about her record and her abilities are really startling (Andrew Sullivan has done a good job of documenting them in his blog at the Altantic Monthly). She clearly believes it's ok to lie about almost anything to serve the higher cause of the mission from God that she is on, and to further ingratiate herself with that collection of xenophobes, fundamentalists, and rural conservatives who form her national base.

The second troubling aspect of the Palin bio can be found in the crevices of several of the stories about her -- namely, that she is largely an empty vessel, an instrument that has been played by a series of domineering men (her father, husband, minister and now a coterie of McCain handlers and conservative pundits). Hell, they won't even let her watch the news these days, so she doesn't get depressed, like Norma Desmond in Sunset Boulevard. After all, they need her blindly swinging the axe for McCain. 

Combined with her lack of intellectual power and curiosity, this character trait makes Palin able to conduct the appallingly sleazy, racist McCain campaign while appearing as chipper as a Disney character. She seems to believe that Obama is un-American/muslim/terrorist in the same uncritical manner that she believes humans and dinosaurs co-existed 6,000 years ago -- because some male authority figure told her it was "true." (Well, perhaps not true in the sense that normal people use the word true, but true in the bizarro semiotic world her brain inhabits). The immoral stuff that makes McCain twitch in disgust is just water off this daffy duck's back.

What I'm more convinced of than ever is that Palin is decidedly not the future of American conservatism, despite the idiotic claims of Fred Barnes in the Weekly Standard. If this election plays out the way it appears to be playing out, I believe the American conservative movement is headed for a great schism: the religionist wing (Palin, Huckabee) form one coalition around a few core social issues like abortion, while the ideological wing becomes the party in opposition, firing salvos at the Dems on big government and foreign policy. The latter will blame the former for losing this election (and with some legitimacy -- almost every conservative newspaper, for example, that has endorsed Obama has done so in part because of Palin).

They'll remain splintered until they find a Reagan/Clinton figure who can reunite them and move them to the center. Let's hope it doesn't happen for a good, long time.

Thursday, October 16, 2008


No, not Tom Ellsworth's mobile video company. "Get Out The Vote." The grassroots key to winning elections. Actually mobilizing the lazy, disaffected electorate to line up at the local church or school and cast an actual ballot.
You may disagree with Obama ideologically on policy (even I was a little freaked out by how many programs he said he wants to fund in last night's debate), but read this piece on how he has built his much-celebrated ground game to get out the vote, and you can't but be impressed that a politician has finally figured out how to run a top-down and bottom-up campaign in the modern world. If this "movement" has legs, the Republicans are in deep trouble for the future (as some of them are starting to acknowledge). If you want to know what he learned as a community organizer -- the element of his resume that pious Palin derides so aggressively -- this is it. And, ironically, it may crush the church-based Republican alternative for decades.
In the meantime, the Obama campaign is going on a red state offensive in the final 19 days. They are running ads in West Virginia. They are considering expanding their footprint to Georgia, North Dakota and Kentucky, while continuing their ad blitz in Florida, Missouri, Virginia and North Carolina. I can construct a (somewhat fanciful) scenario in which he breaks 400 electoral votes. On the other hand, my gut tells me that just won't happen. But I do think it's going to take a small miracle for McCain to keep it under 350.

Wednesday, October 15, 2008

The Last Debate

Much better than the previous ones. More substantive. More interactive. I was worried about old hack Bob Scheiffer as moderator, but he was pretty good.
I thought McCain started much better than Obama, who seemed a little off his game, a little slow and befuddled at the outset. McCain had him on the defensive for most of the first half of the debate.
About an hour in, though, McCain seemed to get tired and made three significant tactical blunders. First, he blew the Ayers/ACORN attack (which Obama only weakly refuted) by trying to segue into an argument that he was focused on the economy not character. Second, he got gobsmacked by Obama on the cost of health care plans. And third, he really messed up the partial birth abortion question, with his sneering air quotes on the health of the mother.
The split screen on HD really hurt McCain badly. He seemingly couldn't control his Tourette's-like mannerisms -- grunting, snorting, eye-rolling, grimacing, lip-licking --- or his obvious disdain for and condescending attitude toward Obama, who played it with his usual preternatural cool.
I think McCain won the debate scorecard -- he had more hits and took less direct damage. Substantively, I think it was a slight tilt to Obama, who seemed more credible and in control of his material. But on form, Obama crushed McCain -- he presented starkly the choice between the unflappable young man and the angry old bastard. As one commentator said afterwards, do we really want to see McCain's hideous face on our TV screens for the next four years?

Thoughts on the Sequoia Deck

Two things really struck me after reading the "RIP Good Times" deck that Sequoia Capital presented to their CEO's at an all-hands meeting last week.
First, the extremely well-done and convincing frontispiece. Looking at graph after graph of macro-economic data, one gets the overwhelming feeling of inevitability.  Of course this crash happened. Look at the numbers!  Rising consumer debt. Falling wages. Ballooning home prices. Diminished savings. Risky lending. Insane derivatives vehicles. Out of control deficits. Jeez. If it seems so inevitable in retrospect, why didn't anyone (other than Paul Krugman) see it coming? 
I'm not suggesting that Sequoia's economist are overstating the challenging nature of the current economy and the factors that got us here; rather, I am shocked that these economists weren't advising their banking and hedge fund friends to reduce leverage, anticipate the sell-off in equities, and prepare for 1929 all over again. Guess the money was too good.
Second, look at slides 46 and 47.  The "what should our CEOs do" slides. On slide 46 they admonish their CEOs to create must-have products with clear revenue models; understand consumer's ability to pay and the alternatives available from competitors; conserve cash and focus on profitability. On slide 47 they suggest an ops review in which the CEOs should focus on cutting unnecessary G&A and production costs, being realistic about closing business, developing only necessary product features, and seeking a return on invested operating dollars. Maybe I'm missing something, but isn't this what CEOs are supposed to be doing in ANY market?
That the very smart people at Sequoia, one of America's leading venture firms, feel that they have to tell their CEOs to ... well, to act like CEOs, tells me something about how much we've forgotten since the dot-com bubble burst and how much we all have been seduced by non-businesses (but ones with lots of users!) in the post-bubble web 2.0 froth.

Monday, October 13, 2008

Culture of Thrift

One of my mantras as a business unit manager and as a CEO was the importance of creating an organizational culture of thrift.  A lot of CEOs pay lip service to cost control, but don't really run their organizations with thrift as a fundamental value.  I think that is a terrible mistake.
In organizations that are succeeding, there is the tendency toward carelessness in spending. It's not outright, intentional waste; rather, it is just a willingness to let things slide and an assumption that it's not worth the pain to micro-manage everything. And so, the myriad of little expenditures run together into a flood of budget-busting costs. Conversely, running a thrifty organization means actually looking at every dollar that is being spent and thinking about the value that dollar of spending is generating in return.
Thrift is not simply cost-cutting. Many times, cutting costs is just not wise. It constrains the organization and prevents growth. But anyone who has managed a medium to large organization will attest to the fact that a lot of money gets spent on things that don't really matter to the success of the company. 
When I was younger, and dumber, I used to think you could create simple bonus incentives for managers to cut spending. But that didn't work -- managers would just say no to any project, regardless of how vital, in the interest of bonus maximization. That's where the culture of thrift came in. Instead of making the dialog about cutting, you shift the dialog to "how can we derive the most benefit from the smallest expenditure." 
Here's a great example: in the summer of 2006, Nanea Reeves and I assumed responsibility for the online platforms at Electronic Arts. I won't go into the details, but trust me -- at the time we took over, it was a mess.  We had to make a very sharp break with the past. Unfortunately, there was already a large team in place, a lot of spending in the pipeline, and a lot of risk aversion to going a radically different direction. Yet, everyone acknowledged that the platforms were broken and EA's future competitiveness would be compromised if we carried on with the existing plans.  Stalemate.
The typical way things go at EA (a company that doesn't have a trace of the culture of thrift in its DNA), you would figure out the product features and then bargain with your boss about budget. Nanea and I didn't do this -- we applied our culture of thrift thinking to the problem. We looked at the current budget and said, "How do we get what we need without any additional spending -- just by using the earmarked dollars in the budget?" We could do it, but it required firing a large number of people who were not useful to our strategy -- perhaps up to 75% of the employees in the group. It required outsourcing. And we explicitly put on the table the end of our department at the end of our project: when we finish, we go away. No empire building. No busy work. No inertial spending.
We got resistance at every level -- while nobody wanted to expand the budget to cover our new strategy, at the same time the EA culture fought us to retain unnecessary employees, continue funding quixotic projects, and not rock the boat. I kid you not: the then-CEO of EA actually interceded to question the wisdom of firing one of the low-level producers, because "he heard she was good." That's how unpopular a culture of thrift can be in an organization that is used to wanton spending. Ultimately, we prevailed, and on a recent earnings call, the now-CEO of EA actually spoke about our new "Nucleus" platform as a bedrock competitive advantage of the new, improved EA.
That's the essence of the culture of thrift. Do more with less. In this environment, it is the skill set that will separate the winners from the losers.

Friday, October 10, 2008

Fite Dem Back

I've been listening to a lot of Linton Kwesi Johnson lately. For those of you who don't know him, LKJ was a British dub poet of West Indian origin, who recorded several amazing and incendiary reggae albums in the late 70s and early 80s. LKJ is, sadly, the perfect soundtrack to the current political and economic circumstances.

LKJ was at the height of his powers as a poet during a time of tremendous racial strife in England, with the anti-immigrant National Front on the rise, and frequent acts of violence perpetrated against blacks and Pakistanis by dead-enders and skinheads, and more subtle institutional racism perpetrated by the police, through the infamous "sus" laws. LKJ took on the racism of British culture with calm fury that still resonates as clear as a bell today.

Earlier this year, with the war still raging and the Democratic primaries in full swing, I was attracted to the dark, apocalyptic tones of "Time Come," with its rock-steady beats and lyrics of dire warning. Later, over the summer, I spent more time listening to his incredible "Independant Intavenshan" with its passionate call for personal political action, against a backdrop of jaunty horns.

But in the last couple of weeks, as the Republican demagogues have unleashed the race-baiting, xenophobic anger of the extreme right (and particularly the "Christian" conservative base), the song I keep gravitating to is LKJ's "Fite Dem Back." To wit:
Fascists on the attack!
No botha worry 'bout dat
Fascists on the attack!
We will fite dem back
Fascists on the attack!
We will countah-attack
Fascists on the attack!
When we drive dem back
We gonna smash they brains in
'Cause they ain't got nothin in 'em
This election gives us a clear chance to repudiate the toxic brew of hate and ignorance that passes for populism on the extreme right, and perhaps to end the unholy influence of evangelical christianity over the Republican party.

In times like these, when fascist cops can get on stage and spew thinly-veiled race hatred with impunity, we have a moral duty as Americans to fite dem back. To smash them. To demoralize them and end their power as a movement.

Friday, October 3, 2008

Veep Debate Redux

I actually found the vice-presidential debate more enjoyable than the presidential debate.  In place of the grouchy dickhead McCain and the aloof, bloodless Obama, Palin and Biden seemed like nice, normal people.  
Palin held her own, didn't try for too many scripted zingers, and, after a shaky start, seemed to relax into the moment.  I expected her to over-perform expectations, so her good performance didn't really surprise me all that much.
Biden was better than I expected -- more substantive, less windy, and as genuine as a guy who's lived in the Senate his whole adult life can possibly be.  He kept his answers short.  He was respectful of Palin but critical of McCain.  He walked the tightrope well.
Gwen Ifill, the moderator, was a train-wreck.  She failed miserably to keep the debaters on the question at hand, and let them wander all over the place in their answers.  
Who won?  Who cares.  Unless Jesus Christ walked into the auditorium and endorsed Palin, her performance wasn't going to change the game much (perhaps, as I expect, it will stanch the bleeding somewhat, and keep McCain at -6 to -8% over the weekend).  Biden reinforced the cool competence of the Obama campaign, without making too much trouble.  Unlike the punditocray, I think it was a draw, and the draw benefits the leader.
The best moment for me wasn't really anything either of them said, but rather it was the warm, cordial moment when they brought their families on stage at the end.  Huge contrast from McCain snubbing Obama by not looking at him, and the robotic Cindy reaching out to shake Obama's hand like she was removing moldy cheese from the refrigerator.  The families seemed at ease with one another on stage, and it made me like both of the candidates more. 

Entrepreneurship in Tough Times

I think it's too early to assess the real impact of the Great Wall Street Meltdown of 2008 on the venture community and on the startup companies we fund. One thing seems clear: with the IPO market disappearing and the M&A market effected by the diminished currencies of the potential buyers, the exit opportunities are certain to be attenuated.  The blowback from this attenuation -- and an overall reduction in risk tolerance by investors across the board -- will likely take the fun out of fundraising for a while.

This will also have an immediate and palpable effect on pre-money valuations. Venture tolerance for risk is deeply entangled with our ability to acquire ownership, the price we pay for that ownership, the cost to maintain that ownership over time, and the availability of exits.  If the market for follow-on financings gets soft, and it takes much longer to get companies liquid, then we will have to assume greater downstream dilution, or increased and prolonged pro-rata investment to maintain ownership, with the increased risk that brings.
The really hard-sells in this environment are typically the "build an audience and think about business models later" plays.  These companies are generally hit the hardest by the diminishing venture risk-tolerance. I'm not sure this is entirely justified, particularly if the company has a low burn rate, but the rationale seems to be that it's harder to flip these no-revenue plays for their strategic advantage alone (vis YouTube) when the buyers' currencies get whacked, and it's impossible to take them public in a contracting market focused on economic fundamentals.  
But it is not all gloom and doom.  I have personal experience launching and managing a startup to success in the last downturn. JAMDAT raised its first round of venture investment in early 2001.  We raised a series B in 2002 and a series C in 2003, before going public on the heels of Google in October 2004.  So I have some scars from financing a company during times like these, as well as the pleasure of seeing it all work out in the end when the market recovers.
Based on that experience, I want to offer three lessons from the JAMDAT playbook for entrepreneurs dealing with a the fear-tainted venture capital environment:
1) Focus the burn.  I am not arguing for lay-offs and contraction, hunkering down in the bunker with canned goods and ammo. But you need to be spending every dollar you have in single-minded pursuit of the things that are going to increase shareholder value and the likelihood of future financing. 
We kept JAMDAT at around 30 employees and a $400K burn for two and a half years, until our revenue model became clear.  If the team needed a feature and we wouldn't fund it, they got creative -- outsourced to India, formed partnerships with independent developers. We grew expenses and headcount in response to actual financial opportunities. 
There were some tough times -- the US carriers delayed launching the services that enabled our business by 6-9 months (which was the blink of an eye for them, but devastating to our carefully-managed cash position).  You have to plan ahead -- getting caught with no cash and having to appeal to your existing investors for bridge financing, or having to raise money when you are on your knees, is a recipe for entrepreneurial disaster.
2) Manage for Long-Term Competitive Advantage.  This is not the time to be chasing every possible tangential business opportunity, or funding pet projects and speculative R&D. This is the time to pursue your chosen strategy with insane focus. We used to evaluate everything we did at JAMDAT with the following question: is this going to create long-term competitive advantage for our publishing business? 
We were pursuing a risky strategy -- it assumed that color screen phones with embedded operating systems and bill-on-behalf models would predominate in the cell phone markets in the US and Europe.  That was non-obvious in 2001/2.  But we were right; and the fiscal discipline and strategic focus that we embedded in our DNA during the uncertain period allowed us to get to profitability and market dominance rapidly after the worm turned.  We had eliminated all the fat and distraction, and we were able to execute much more efficiently when the business took off.
3) Don't Fool Yourself.  Raising money in these environments really sucks. In the spring of 2002, we initiated our series B -- a full 8 months before we were scheduled to run out of cash. Just to be on the safe side.  Every tier 2 and tier 3 VC we pitched announced that they were "only doing down rounds."  We were literally thrown out of one VC's office -- asked to eat the lunch that had been ordered for us elsewhere -- because we had the temerity to suggest that, having funded JAMDAT at a post-bubble valuation and having shown good progress, we should not be lumped in with, or whatever other dead dot-comedy they may have funded in the 1999 greed-orgy.
The key is that you have to be honest with yourself about your business. You have to talk the talk and walk the walk on risk reduction and focus.  You have to be honest about your opportunity.  In this environment, you won't be getting away with top-down, "if-we-only-get-1%-of-this-huge-market" fantasies, or bullshit pro forma P&Ls with 70% EBIT margins in year 3. 
The VC who kicked us to the curb was an idiot -- he was so focused on the deal that he couldn't see the opportunity. That happens a lot in these funding environments. But don't blame the VCs for seeing through your bad business, either.  An investor may have the stomach to take a flier and see if it works out in a frothy market, but not now.

Thursday, October 2, 2008

Dangerously Unfit

If you thought I was stretching when I questioned McCain's personal narrative and described him as the callow beneficiary of nepotism and favors, read Tim Dickinson's new article in Rolling Stone. If anything, I understated what an asshole he was and is.  If Obama had received this much "affirmative action," he'd be answering for it every day.
Well, perhaps it just won't matter.  Looks like the pigeons are coming home to roost.  McCain is conceding defeat in Michigan, one of the few blue states he had a chance to pick off.  Now he can only play defense, hoping to stop the Obama machine from rolling him in Virginia, North Carolina, and Missouri, while he tries to put the math together to win with a bare minimum majority in the electoral college.
I think we'll be seeing a lot more of Jeremiah Wright, sex ed for kindergartners, and dead abortion babies in the weeks to come, as Johnny Pugilism hits the ropes for the last time.
Oh, and perky Palin wins the debate tonight if she manages not to fart, drool, or confuse Palestine with Pakistan.  Post-Couric, expectations are so low it is almost impossible for her to under-perform.  That said, she's got to be nerved out -- the pressure on her must be ridiculous. She's the last chance McCain has to reverse the tide at this point.
Biden is not exactly inspiring a lot of confidence, either. I attended an intimate dinner with Biden in LA last year, when he was cranking up his campaign. He's a nice guy, but boy can he spew bullshit.  Somebody asked him an ethanol question that could have been answered in one sentence, and he talked for almost 20 excruciating minutes.
I think the Hartford Courant had the best line on Biden v. Palin: that the audience is anticipating the debate with "ghoulish fascination -- like waiting for a crash at a NASCAR race ..."

Wednesday, October 1, 2008

The Fat Lady is Practicing Her Scales Backstage

I don't trust polls.  There are a lot of reasons, not the least of which is the tendency of polls to be dead wrong.

That said, if the current presidential election polling is correct merely in identifying the trends, our war hero buddy Johnny Drama is fucked.  Clearly, there is a lot of time left on the clock, and this could (and likely will) tighten before voters cast ballots in November. But this is some very, very bad news for the GOP.

Some context for you non-junkies:  Obama is currently leading -- comfortably in many cases -- in Florida (2004 Bush +5%), Ohio (+2.1), Nevada (+2.6), Virginia (+8.2), North Carolina (+12.4), Colorado (+4.7), New Mexico (+1), and Iowa (+1) -- all states won by Bush in 2004 by the margins in parenthesis.  CNN has Obama slightly ahead in Missouri, which Bush won +7.2%; and most polls have Indiana too close to call, a state where Bush won +20.7%.  

This represents an aggregate 123 electoral vote swing in favor of the Democrats. To give you a sense of how bad this is going for McCain/Palin, North Carolina hasn't voted Democratic since 1976 -- not even for Bill Clinton. Indiana hasn't gone blue in the last 40 years.  Bush won in 2004 with 286 electoral votes to Kerry's 252. Assuming the polls are correct and the leads hold (kind of a ludicrous assumption given past experience, but let's go with it), Obama beats McCain in a landslide, 375 to 163.  My own prediction is a lot closer: between 305 and 318 electoral votes for Obama to win the presidency.

Interestingly, the Obama camp said a week ago that the polls understated the power of their ground game. They believe that their registration of new voters (young people, African-Americans) is not captured in the traditional polling.  When this was first reported, it sounded naive.  Now it looks more plausible than ever.

Monday, September 29, 2008

I Don't Like It There Much, Anymore

Glenn Reynolds' Instapundit used to be one of my favorite blogs on the internet. He's also one of the internet's most successful and popular political bloggers, so he's not exactly an undiscovered gem. But if you've read any of the politics posts on my site, my previous admiration for Instapundit would probably surprise you. "Isn't Glenn just a partisan Republican flack, snarkily repeating every conservative orthodoxy?," you might ask. Why would I put him among my favorites when my own political instincts break distinctly to the other side of the aisle?

After 9/11, Instapundit emerged as one of the so-called "war blogger" sites, providing thoughtful, patriotic commentary on geopolitics, the war on terror, and the mainstream media's tendency to soft-pedal the threat of Islamic extremism in order to score political points against the administration of George Bush.

However, unlike many of the "war bloggers," Glenn, a University of Tennessee law professor, was not a one trick pony. He had an active intelligence and an omnivorous appetite for pop culture. He is an excellent source of science fiction reviews, for example, and has championed many interesting authors on his blog. He likes music. He's interested in digital photography. He covers many compelling legal issues of the day, as well as many local Knoxville or Tennessee issues. He is an astute critic of the self-righteousness of the mainstream media. He has linked to a lot of small bloggers and brought them an audience (the so-called "instalanche" of traffic). And he does it with a nice style -- terse, well-edited commentary that lets the links speak for themselves, with a little editorial cherry on top.

Refreshingly, he was also politically open-minded and independent. He is a hawk on the war (broadly defined), but reasonable and able to criticize the failings of the Bush administration's prosecution of the Iraq theatre, in particular. In fact, he has been something of a lone empiricist on the war in a sea of ideologues -- vis his support of Michael Yon and others who venture outside the confines of the Green Zone to report. He had many socially liberal or libertarian impulses, which he was not afraid to foreground. Reading Glenn, at least in the past, you felt like you were interacting with a real person, with real, complicated political views.

Glenn has gotten a lot of criticism over the years from the likes of Tony Pierce and Oliver Willis for being a crypto-Republican, but I don't think that was entirely fair, at least in the past. Yes, he supported the Republican George Bush over the likes of Gore and Kerry; I know many rational independents who thought Bush was a dangerous lightweight, but who still found Gore and Kerry unpalatable.

Over the last year, though, I feel like Glenn has come unhinged. He's lost his independent spirit, his ability to see through the artifice of politics to the real truths, as he had often done in the past. Honestly, I see little difference in his current politics from the likes of Hugh Hewitt and Bill Kristol. He's become a Republican tool, in the thrall of the McCain campaign.

He clearly doesn't like Obama. That's not the issue. The issue is his utter inability to see the American zeitgeist laid bare in front of him. In the past, he'd have cleverly barbecued McCain for the Sarah Palin selection (while acknowledging the populist, anti-intellectual impulse behind it). He'd have thrown fits over McCain's cynical stunts. But recently he seems so deeply in bed with the right, not just on the war (which has always been his central, defining issue), but across the board, that he's just not that fun to read any more.

I used to not agree with him all the time, but I found him intelligent, challenging, and worthy of engagement. Now, I think he's just another predictable Republican idiot, the moral equivalent of those robotic surrogates regurgitating the party line on CNN. I find myself looking forward to election day, when he's going to get all his monotonic pro-McCain rhetoric, his petty attempt to equivocate Obama's "naivete" and "corruption" with McCain's lack of fitness for the presidency, slammed back up his ass.

And I think it's a damn shame.

Thursday, September 25, 2008

Stunt Man

You know, I gave McCain too much credit, calling him an antagonist rather than a leader. In fact, he's actually a stunt man, lurching from one massive, insanely risky, and highly self-dramatizing performance to the next. Hurricane's coming .... cancel the convention! Time to select my VP ... pick the hockey mom who has only been outside the US once! Wall Street is in crisis ... no, the fundamentals of our economy are strong!  Woops, did I say that? I meant: fire the chairman of the SEC!  Losing momentum because I'm not perceived as competent on the economy ... cancel the debates!  Suspend the campaign!  It's a joke, really.

I can't believe this is playing well in middle America.  Certainly, the poll moves for Obama in recent days suggest that the combination of McCain pinballing his way through this economic crisis and the unravelling of the myth of Sarah Palin (vis the pathetic Katie Couric interview, including this cringe-worthy exchange on the Alaska-is-close-to-Russia meme) is collectively lifting the democratic candidate to new heights, particularly in the key battleground states. Sending his bullet-headed attack dog, Steve Schmidt, out to snarl at the New York Times every day may work with the black helicopter crowd, but is it working on Main Street?

McCain is increasingly reminiscent of that crazy old dude at the home, who storms out the front door in his underwear, shouting, "You can't tell me what to do," at the nurses. 

Thursday, September 18, 2008


Sometimes, I really wonder about the Silicon Valley echo chamber. I spent the day yesterday at GigaOm's Mobilize conference, which is really a first-rate show. Great panels, well done.

But the concentration on mobile internet companies and start-ups really masks the reality of the mobile business. If you had just woken up from a Rip Van Winkle sleep and attended this conference, you'd believe that the Apple iPhone was as ubiquitous as the Nokia Series 40, that Google's Android was the second coming, and that everybody in the world was sitting in their homes and cars, just waiting to grab mobile applications and social networking tools on their mobile phones. You'd also wonder why the evil carriers were holding all this magnificent innovation back from the long-suffering public.

I love my iPhone. I think it's great. I love my Blackberry, too. But I am a sophisticated, prosperous, urban geek. I don't presume to believe that the rest of the world is lusting for these devices. I saw this same phenomenon with Palm -- everybody in Silicon Valley had a Palm Pilot, and just presumed everyone else in America did, too. Or wanted one. Guess again.

As I sat in the audience yesterday, I couldn't help but think, man, there is going to be a lot of carnage in the mobile application developer community. Two things are going to drive that.

One, the mobile advertising revenues just aren't there. I've talked to developers who thought they were going to get $10-$20 ECPMs and they are actually getting less than $1. It is simply not possible to get to public company scale as an ad-based pure play right now, and I would bet that it's going to be several years before we see a mobile ad-based pure play with >$40MM annual revenues. So the whole internet idea of free, media model-based mobile content is only viable if you are monetizing somewhere else, like on the web (Yelp, Facebook, etc.).

Two, all these open or pseudo-open platforms are good for developers, but not so great for creating publishing leverage and aggregation points. Sure, it's useful to get something up and out there without the overhead of dealing with slow moving carrier content people, but there is a downside.

There are currently 3,000 iPhone apps, with hundreds of new ones being submitted each month. So you've turned a first order problem (i.e., how to get on the deck) into a second order problem (i.e., how to get noticed amongst the flood of apps on the deck). Instead of bribing the carriers with MDF for placement like we did in the old days, you have to spend even more money marketing direct to consumer. We're back to reach and brands -- that's how you get above the noise.

Think I'm just being old-school? Go do a search for "sudoku" on the app store; there are fifty sudoku games on the deck. Five zero. You think anyone is sifting though that mess on the basis of quality? If you are in a competitive category, like sudoku, you pretty much have to be free. Meaning, ad supported, with limited revenue potential due to the low CPMs, mentioned above. Everyone forgets that the walled garden was great if you were inside the wall. Kept all the weeds and parasites out.

As I've been saying all summer: the killer app for iPhone is the app store itself. It is the very concept of personalization, of relevant content at your fingertips. It's not any one specific application. Apple has no interest in giving any individual app producer distribution leverage or gatekeeper status -- it's not their style. They'll continue to slice and dice the apps by category, and let the oceans run red.

Despite this, there were some compelling comments from the various panelists. Paran Johar from Jumptap was very candid and smart about the nature of mobile advertising. Jason Devitt from Skydeck was spot on about user interface in the mobile world and the need for simplicity. The "mobile gurus" panel was entertaining -- even though I don't like the Zumobi product very much, I thought their founder, John SanGiovanni, had a manic intelligence, a real sense of the future, and many good points about design.

It was good to get the carrier panel and the VC panel at the end of the day. The VC's were at least truthful about the difficulty of creating big businesses and I was happy to hear them mention my start-up, JAMDAT, as the biggest mobile exit in the modern era -- although the iFund guy, Matt Murphy, was kind of disingenuous about his "JAMDAT did it with 5% penetration; iPhone apps are at 10X that rate" -- yeah, but iPhone is far less than 5% of the market, so 50% penetration of iPhone is less than half our 5% penetration rate, since we were on virtually every handset.

The carriers were hopeful but sober about the future. They reminded everyone in the audience that they were in a mass market business, and needed solutions that worked across their range of handsets. I thought Frank Meehan from 3UK was particularly coherent in his thinking.

But for me the best part of the day, the comment that suggested the biggest change, was not from Rich Miner at Google, or from one of the app companies: it was hearing the T-Mobile rep say they were committed to over-coming past problems with developers and offering specifics like transparent business models.

In my day, T-Mo was the absolute worst. They hired a string of boneheaded, tin-pot dictators like Kyle Levine and Michael Gallelli to manage their interface with the development community and everyone who did business with them hated them. They were everything that was wrong with carriers. If T-Mo recognizes they have a problem and is willing to change, then there is hope for the mobile content business after all.

Monday, September 1, 2008

It Gets Worse ...

Ok, the Kos kiddies went on the slander dis tip over the weekend accusing Sarah Palin of covering up her daughter's pregnancy by claiming that baby Trig was actually hers. Offered some pretty convincing circumstantial evidence. The conservative commentators went apeshit -- after all, disgusting slander-mongering is usually reserved to them (vis the Swiftboaters, or the Obama-is-a-Muslim meme).

Lo and behold, Palin then comes out and reveals that her 17 year old daughter is preggers, with a convenient time line that "proves" the Kos meme was a lie. Well, not so fast, says my wife. She thinks that we will see a fake miscarriage in the next couple of months ...

There are actually two legitimate issues here. First, McCain's judgment. Either he didn't do any vetting at all, or he did, and he went with her anyway. Either way, it's a total "fuck you" pick. Like I said in my Six Reasons post, he's not a leader, he's an antagonist. That's what the Palin pick is, pure and simple.

Sure, it's cynical and pure identity politics, but that's just par for the political course. Can't really fault him for doing what every pol does when given half a chance. What it really gives lie to is the "put the country first" bullshit he's been spewing all summer. He just revealed he's willing to fuck the country -- leaving it in the hands of the most unserious neophyte in American political history -- to further his own political advantage.

The second issue is more subtle, but, in my mind, equally meaningful. And, I hate to say it, but it's a class thing. That is, are the Palin's the kind of people we really want in the White House, at the core of our political tradition?

I mean, this family is really a half step removed from what they'd call white trash in my old neighborhood in south Florida. Knocked up 17 year old daughter. Creationist evangelicals. Mom got knocked up herself at 23 by her high school boyfriend. Shotgun marriage. Bounces around five schools in four years before graduating college in Idaho. Works as a part-time sportscaster, goes on the pageant circuit. Husband is a commercial fisherman, snowmobile enthusiast. Has a DUI. Sarah's sister, the locus of "Troopergate," has nine kids from multiple husbands. I mean, do we really want a political version of Brittany Spears' family in the Oval Office?

Most importantly, where is their aspiration to excellence? Are their dreams for their children so limited that they are happy their 17 year old is going to marry some high school hockey player who proudly refers to himself as a "fuckin' redneck." I mean, I'm all for class identity, but isn't part of our duty as parents to protect our children from this sort of result in their lives?

You can call the Obama's "elitist" if you want, but Barry overcame his poor, dysfunctional background to attend Columbia, Harvard Law School, win a US Senate seat and run for President. Michele Obama and her brother Craig rose from their working-class origins to both attend Princeton; she went to HLS as well and became a lawyer at a white shoe firm in Chicago. Craig excelled in the basketball world as a player and coach, worked for a decade at well-known investment banks, and is currently the popular head coach of the Pac 10 Oregon State men's team. These stories are the essence of the American dream -- work hard and rise up.

I know the Republicans think that a large part of the conservative constituency will see the Palin's as "keeping it real" -- with the hunting and snowmobiling, the hockey, the fucked up family issues, the older son skipping college to go to Iraq -- but I think we want for better in our political life than these people.

Friday, August 29, 2008

Sarah Palin

Like just about everybody, I don't know much about her.  But what I do know is that the first Democratic response to her selection was absolutely stupid:
"Today, John McCain put the former mayor of a town of 9,000 with zero foreign policy experience a heartbeat away from the presidency."
If they thought this one through, they'd realize that McCain just handed them a major gift on a silver platter.  

How on earth can he now criticize Obama's lack of experience, when he is tacitly suggesting that Palin is qualified to be president with even less experience?  Oh, they'll say that she has "executive" experience -- but this is just bullshit.  I mean, no offense to Alaska, but how does being governor for all of 2 years of a state with a population smaller than Memphis, Tennessee and an economy smaller than Sudan's trump Obama's resume as a US Senator and Illinois legislator? I think McCain just fumbled his strongest argument against Obama.

Something else seems a bit strange in Palin's resume.  She gave birth to a son with Down's Syndrome just 4 months ago after hiding the pregnancy from the public for most of the baby's term.  A little weird that she would be willing to head out on the campaign trail with a 4 month old handicapped kid in the house.  Odd.

Thursday, August 28, 2008

Six Reasons Why You Shouldn't Vote For McCain

6. He's a pugilist, not a leader. He has thrived as a "maverick" by challenging from outside the centers of power. He pokes powerful and cynical politicians in the eye. He's an insurgent. But, like Castro or Robert Mugabe, insurgents can get kind of deranged when they win. I don't think he knows how to lead. I think he knows how to resist. It's the legacy of his captivity, perhaps.

5. He's a Cold War relic. Look at his recent saber-rattling rhetoric on Georgia. He called it "the first probably serious crisis internationally since the end of the Cold War." Er, 9/11 wasn't serious? The rise of modern China wasn't serious? His old-school fear of Soviet Russia is going to get us committed to extending the NATO umbrella to all these idiotic places that are really not in our strategic purview. Like Georgia. I mean, I comprehend the strategic rationale for the expenditure of blood and treasure in Iraq way before I get the rationale for the Caucasus. We've got bigger problems than Russia's mischief along its southern border -- how about a nuclear Pakistan becoming a nearly failed state, a beehive of lunatic Islam and reactionary tribalism? This man's world view was formed at the height of US-Soviet tensions. I don't believe his instincts are relevant or helpful to solving modern global problems.

4. He is kind of dumb and doesn't appear to have a strong commitment to excellence. Finished 894th out of the 899 students in his class at the U.S. Naval Academy -- which, while a fine school, is probably top 100 academically rather than top 10 (a recent survey put it at #79). His application to the War College was rejected, and he only managed to gain acceptance through the intercession of his family (see reason #3, below).  He stumbled like a bumpkin into the savings and loan scandals. He surrounds himself with mediocre people. And he's horrible when speaking impromptu -- vis the "how many houses?" gaffe. He starts every sentence with "My friends ..." and ends every sentence with his mouth contorted in a rictus of yellowed dentures. It's creepy.

3. He is dishonest about his personal history. This guy is Johnny Nepotism -- his daddy and granddaddy were Navy admirals, who made sure he followed in the family trade. The reason his captivity in Vietnam got all the attention and infusion of symbolic meaning that it did was because his father orchestrated it, brought the press into the story. There were many heroic POWs in Vietnam but somehow McCain became the poster boy for defiant resistance. He came back, fucked over his first wife, caroused around like a frat boy, found a rich, vapid second wife, and -- shocker! -- had her beer distributor father bankroll his political career. He's the opposite of self-made.

2. He's out of touch with America. Oh, he's in touch with those flag-wavers at the VFW, and all the pathetic conservatives who have been looking for a replacement father-figure after Ronald Reagan died. But the real America, the one with massive debt problems, an energy crisis, an innovation economy based on the internet, bad public education and health care -- he doesn't know fuck all about that America. I don't know about you, but I don't live in the flag waving VFW America. And I suspect you don't either.

1. He is simply too old. Think about it for a moment, he'll be 72 when he's sworn in. I recognize that the aged have much to contribute to American society. But have you had any recent contact with a 72 year old man? No offense, but if you were looking for a CEO for a troubled company that was facing a tough economy and increased foreign competition, you would not be recruiting a man in his 70's. I've heard this boomer propaganda for decades about 50 being the new 40, and 60 being the new 50. But 70 is the old 70. The brain slows down. The thought processes get cemented in place. The energy levels drop. Against the backdrop and demands of a 21st century presidency -- in an era of 24 hour news cycles and globalization -- I will say it categorically right now: McCain is too old to be president.

Saturday, August 23, 2008

Fulham FC

Ok, I'm a Fulham supporter. I know, it's slightly pathetic. But like many FFC supporters, I have a story.

In the early '80s I spent a summer living with my friend Hamish McAlpine (now the head of Tartan Films and a great supporter of transgressive, psychotronic cinema) and his entourage in London. At the time, Hamish lived pretty far down the King's Road near the Fulham-Broadway tube station, a good walk past the World's End pub -- in fact, quite a bit closer to Fulham town than to Sloan Square. A couple of years later, Hamish had relocated to tonier digs on the Cheyne Walk, next door to Mick Jagger, and I had the fond memory of my summer, drinking in Fulham pubs.

In the early '80s, Chelsea FC were not even in the Premiership -- they were a decent Division 2 team. Fulham, a middle-of-the-table Division 3 team, were about to make their first magic run, achieving promotion to Division 2 in the '81-82 season, then the next year missing out on promotion to the Premiership by just one point (and finishing 14 positions above Chelsea in the table!).

In those pre-internet and pre-Fox Soccer Channel days, you couldn't be much of a supporter of a lower division European club from the USA. But I was always happy to see Fulham doing well, and sorry, later in the the '80s and early '90s, when they headed for relegation to Division 4. I lost track of them, and was only vaguely aware of their acquisition by Mohamed Al-Fayed (the owner of Harrod's) in '97 and their subsequent promotion to the Premiership in '00-'01.

What brought me back was the combination of greater TV access to matches through Setanta and Fox, access to Premiership news on the internet, and Fulham manager Chris Coleman's infatuation with American players after the acquisition of McBride and Bocanegra in early '04 (at one point, Fulham had five on the roster: McBride, Boca, Dempsey, Eddie Johnson, and Keller). After a couple of over-achieving seasons under Coleman, during which Fulham consistently finished in the middle of the Premiership table, they began to falter. Last season, it looked like they were going down for sure.

Then came the "Great Escape." Under new manager Roy Hodgson, Fulham were 7 points in the drop zone with 4 matches to play. Miraculously, they won their last three in a row, twice on the road (where they had been woeful all season), including the astonishing comeback from 2 goals down at Man City, scoring 3 times in the last 20 minutes.

The Premiership season opened last weekend, and hapless Fulham looked inept once again in a 2-1 away loss to recently-promoted Hull City, throwing away an early lead. It looked like another year of frustration and relegation battles. But this week, hosting Arsenal, it was a different Fulham team on the field. With tough tackling and good possession play (at least most of the time) Fulham held off Arsenal's late surge to win 1-0.

The Fulham optimist looks at the upcoming fixtures, sees some winnable matches: they have West Ham, West Brom, Sunderland, Pompey and Wigan all before they run into the better sides in late November and through the winter. With a little luck and some draws on the road, they could get to 20 points by the mid-point, halfway to the magic number that will insure they remain in the top flight for another season. It's precisely that irrational belief that we'll catch a break and stay up that seems to characterize the Cottager supporters -- and it was certainly given a jolt to the good with today's result against Arsenal. COYW!

Saturday, July 12, 2008

Obama & Clinton As Executives

Stuck without a book on a recent long flight, I ended up reading a bunch of current magazines. Among the articles I read were a number of post-mortems on the Democratic primaries.

Two stories in particular really struck me. The first was the companion piece to Jann Wenner's interview with Obama in Rolling Stone, "Obama's Brain Trust" by Tim Dickinson. The second was Gail Sheehy's look at the Clinton campaign in the most recent Vanity Fair.

A lot has been made about Obama's readiness to govern versus Hillary's experience. But after reading these two articles, which leader seems like the superior executive? Obama comes off as trusting, in control of his team and his message, willing to delegate, willing to try new things, flexible in the face of changing circumstances. Hillary seems manipulative, unable to control her staff, a poor judge of character in hiring (vis Mark Penn), possessing no fiscal discipline, and willing to vary her message based on polling.

I realize that the victors write the history, and we might be seeing a different side of this had, god forbid, Hillary won. However, I recently talked to someone who had lobbied Hillary's senate office on some health care legislation. She said that Hillary's senate office was just as disorganized and arrogant as these articles portray her campaign.

The Dems spent years in the thrall of one of the biggest dumb-asses in American politics, Bob Schrum. This guy had a tin ear for the American Zeitgeist. Total loser. But candidates came back to him again and again because he had experience (Mark Penn, who ran Hillary's campaign, seems cut from the same loser cloth). Experience is not a panacea. It's got to be the right kind of experience.

The Obama folks, on the other hand, are not exactly outsiders -- the prevalence of the Daschle team was news to me -- but they are innovators. On this evidence, you'd have to conclude that Obama would be far more likely to be ready on day one than Hillary. She would have made a terrible chief executive. I'll take his execution over her experience, any day of the week.

Wednesday, July 9, 2008

Why no IPO?

My partner, Bill Gurley, wrote an interesting post in his Above the Crowd blog, responding to Matt Richtel's piece about the dearth of venture-backed IPO's in the quarter. To summarize, Matt's contention is that the IPO drought was caused by lack of demand (e.g., Wall Street doesn't like what Sand Hill Road is selling); Bill's contention is that the drought was caused by lack of supply (e.g., CEO's don't want to be public). Bill is right.

Why don't CEO's want to be public? The usual explanations relate to the perceived public and governmental hostility towards public companies and their CEO's. Sarbanes-Oxley. Reg FD. FAS 123. Shareholder derivative litigation. I was a public company CEO under this legal regime, and I can attest to the fact that it well and truly sucks. Sarbox compliance costs a fortune (particularly for a smaller company) and creates a climate of fear in the management ranks. Reg FD turns the CEO into a stump-speech politician and raises the spectre of litigation every time you open your mouth (although, the incarceration of career criminals like Bill Lerach and his cohorts will reduce this a bit). FAS 123 has created a culture of financial obfuscation, in which most companies keep two sets of books, reducing the very transparency the rules sought to foster.

But I think there is a simpler reason why nobody wants to go public: greed. Historically, the IPO was the rocket sled to huge wealth creation for the CEO. This was further reinforced during the bubble. This is, however, no longer the case -- selling your company for cash is far more expedient, unless you are fortunate enough to be the CEO of Google.

My experience is a case in point. I was able to sell around 7% of my JAMDAT stock into the IPO (and this, even grudgingly, as the investment bankers were worried that too much "secondary selling" would look bad to investors). I was advised to sell no more than 15-20% of my holdings annually through a 10b5 programmed selling plan -- I sold a couple of thousand shares, weekly, at whatever price the stock opened at Tuesday morning. And some brain dead short would post a comment on the Yahoo message boards every time a Form 4 hit the internet, saying, "Lasky is selling, the company must be tanking!"

After 18 months, I had put away a decent amount of money in human terms, but not that much at all in modern CEO terms (I recognize that the waterline for CEO comp has risen dramatically over the last 40 years, and that is certainly part of the problem; but in the era of outrageous income inequality in which we live, you measure success against your peers, not your father's peers). Then, suddenly, EA bought JAMDAT for cash, and I got a check for 6X the money I had dribbled into my bank account over the previous year and a half, in one day. The discounted present value of the stream of programmed sales I had teed up for the next 5 years made this cash sale even more valuable to me -- depending on the discount rate and the risk of my programmed sales occurring at or above the $27 per share price EA paid, you could argue it was worth almost twice as much to me to get the money all at once, up front.

Going public is risky. You have intense quarterly pressure to make revenue and earnings numbers. The market is brutally efficient at pricing your stock, and brutally efficient at sending it into free fall when they think something may be wrong. Everything you do is scrutinized and criticized. The SEC is just waiting for you to slip up -- you are essentially presumed guilty until proven innocent. The legal and regulatory regime is a bitch to navigate. And, on top of it all, everyone in the process begrudges the founder/CEO who takes money off the table -- it's perceived as a sign of weakness. The Street wants you to buy more of the stock in which you often have 100% of your net worth tied up.

Nevertheless, I wouldn't give back the seven quarters that I got to sit in that chair. It was exhilarating. I commanded the bully pulpit for my fledgling industry. I made many deserving employees and investors tons of money. I had a powerful currency, which I put to work. It was awesome.

But if we, as venture capitalists, want to create incentives for our CEO's to take their companies public, we have to solve the greed problem. We can't have the trade sale be so vastly more attractive than the IPO. Part of this is about reducing personal risk and regulatory pain, but it's also about structuring compensation to help foster the IPO as a result.

Sunday, June 29, 2008

Euro 2008: The Final

The better team won.  There's no question.  Spain played well enough to win the final, and consistently played well throughout the tournament.  Unless you are a die hard German homer, you have to say they were second best.

Germany started well.  The Spanish defense looked confused for the first 10-12 minutes, and Germany had good possession in midfield.  Then Spain seemed to relax and get some penetration, and Germany suddenly lost the initiative. Torres hit the post with a header in the 22nd minute, and came back and scored in the 33rd on sheer determination, beating Lahm and then Lehmann on a dead run.

Spain controlled the match for the next 25 minutes with their usual mix of one-touch passing and midfield possession.  They also played brilliant defense -- they were so well-organized that they always seemed to be in Germany's passing lanes, and either Puyol, or Senna, or Sergio Ramos made the plays when they were called upon.  Iniesta and Xavi were awesome in Germany's half.

Around the hour mark, Spain lost it and Germany had their best chances to score.  Germany just had a poor attack.  They couldn't get the build-up against the Spanish defense. I expected better from Kuranyi -- he was weak off the bench.  The German pressure lasted only 6 or 7 minutes, and then Spain went back on the attack: Sergio Ramos had an open header stopped by Lehmann, and Frings stopped an Iniesta bullet right on the goal line.  

Spain closed it out in style.  They were so committed to attack that they almost went up 2-0 in the 80th minute, when Guiza's knock down just missed Senna, the supposed holding midfielder, charging 70 meters on an open goal.  In the 80th minute, up 1-0.  You expect that from Brazil, but not a European side.  Spain had a 13-4 advantage in shots, 7-1 in shots on target.

Man of the Match:  Many candidates.  Casillas played a remarkable match -- but he didn't really have much to do. Puyol was awesome, but only for the first 60 minutes; after that, he had a fair number of howlers and was lucky Germany didn't make more of his mistakes. Xavi provided great service -- including the through pass for Torres' goal. Torres was a fury, scored the game-winner, and could have scored two more, so he's a clear candidate. But for me, Iniesta caused Germany the most problems throughout the match, and when I think about who changed the tenor of the match, it was him.

Spain were fun to watch in every one of their 6 matches -- creative, positive, organized (they didn't concede a goal in the knock-out stage against Italy, Russia and Germany).  Superb offensive production -- 12 goals in the tournament.  The only unbeaten side.

Great final.  Great tournament.  Great champion. 

Saturday, June 28, 2008

Euro 2008: Russia 0:3 Spain

Spain won this one going away. Not even close. Throughout the tournament, Spain has played a quick-passing, ball control offense, but has seemingly struggled to finish chances (this strikes me as a bit odd, since Spain scored a decent 10 goals in 5 matches, but hey, what do I know). This time, at least in the second half, they kept possession and scored goals.

Except for an occasional dangerous shot here or there, Russia didn't even show up. I thought the Spanish defense did a great job neutralizing Arshavin -- he was a non-factor for most of the match. I think we underestimate the tenacity of Puyol and the rest of the Spanish defenders, because we are so mesmerized by Spain's classy attacking style. Spain outshot Russia 18-6, and in shots-on-goal it was 11-1. Total domination.

The only black spot was the first half injury to David Villa, the tournament's leading scorer. He's apparently out for the final (as, it is rumored, is the German captain Ballack). But the Spanish side is so deep that it probably won't matter that much. They could go to either Fabregas or Guiza (who redeemed his mediocre performance against Italy with a much better one against Russia). My fear is that Aragones goes to a 4-5-1 with Fabregas in attacking midfield and Torres as the lone striker -- I think he'd be better off playing the 4-4-2 that got them to the finals in the first place. I don't think Torres can function well in the 4-5-1.

So, on to the dream final, with the two pre-tournament favorites. I really hope that Spain can beat the smug, dreary Germans. From what we've seen so far, I think it's very possible. They have to score first -- they don't want to be chasing against the Germans. If they stay in their game, play possession, and don't concede free kicks (where the German advantage in the air will come into play), they should be fine.

This match needs an early goal to open it up -- I have a suspicion that if we don't get that early goal we may be in for another match like the Spain-Italy quarter-final, with Spain attacking but not scoring, and Germany absorbing pressure and trying to get a long ball to Klose or Podolski on the counter. I just hope not. Spain 2, Germany 1, in regulation.

Wednesday, June 25, 2008

Euro 2008: Turkey 2:3 Germany

Well, I was wrong about the score, but I was right about the Turks.  Man, they are tough. I underestimated the sheer will of the Turkish second string -- mostly guys from the great Turkish clubs like Besiktas, Galatasaray, and Fenerbahce. They were playing with only three or four of their starters, and yet they managed to score two excellent goals against Germany.

Turkey came out and really took it to the Germans, who seemed listless for the first 20 minutes. Altintop showed great initiative, and Turkey looked dangerous around Germany's goal -- particularly when Kasim hit the crossbar.  The goal in the 22nd minute was kind of flukey, but it came off a well-executed throw in and cross.  Germany came quickly back and scored within 5 minutes.  Then, with 11 minutes to go, and the international video feed down, Klose got in front of the Turkish keeper and headed in what looked like a sure winner.  But of course Turkey came back and Semih scored a terrific redirect past Lehmann at the near post. 2-2 with about 5 minutes to go -- it had to be extra time.

But Germany had a little magic left -- a fantastic bit of skill on a one-two that released Lahm on the left side of the goal, and he finished like a striker, into the top corner.  Over, fittingly, in the 90th minute.

Major props to Turkey. What a performance.  They are clearly on the international stage to stay.  Germany won, but they looked beatable: shaky under pressure around their goal, unable to maintain possession in midfield, and reliant on counter-attacking against a depleted and stretched Turkish defense.  May work against Russia, but probably not as well against Spain.

Monday, June 23, 2008

Euro 2008: Redux & Semi-finals Preview

Ok, let's admit it.  Euro 2008 has been insane.  The quality of play has been excellent and a significant number of the matches have been on the knife's edge until the final whistle.  

The semi-finals will be Germany v. Turkey and Russia v. Spain.  I think you could have gotten long odds on this foursome before the tournament.  Of the four, only Germany was a stone cold favorite. The bugbear of Spanish failure in major tournaments argued for one or both of the Group of Death teams -- Holland, Italy or France -- to be in the semi's.  Certainly not Spain and Russia.  If it had to be two Group D teams, it was more likely Sweden than Russia.

But ... Germany struggled out of Group B behind the Croats; Turkey rallied bravely to beat Switzerland, then Czech Republic, then Croatia; Russia reversed their early fortunes and beat Sweden and Holland; and Spain cruised through their group before outlasting Italy in a shootout. So there you have it.  

The top five matches for me were: 

I think the Croatia-Turkey match was technically "better" than the Holland-France match, and would have been my #3 if the Croats had won it in extra time as it looked like they would.  But the junk Turkey goal at the end and their shootout win just ruined it for me.  I like Turkey, but that was a terrible ending to an amazing performance by Croatia in this tournament.

Turkey-Czech Republic was one of the best football matches I have ever watched.  It had everything -- high stakes (a guaranteed place in the second round for the winner, the possibility of penalties if it ended in a draw), tons of goals, and one of the most remarkable comebacks ever, as Turkey overcame a two goal lead in the last 15 minutes.  It was glorious.  Ultimately, though, I felt it was more drama than quality. 

Spain-Italy was actually drab as football matches go.  Italy played very negative football, with an occasional long ball or free kick aimed at Toni.  Bleh. Spain tried to lay siege with possession and skill, but couldn't finish.  0-0 for 120 minutes.  Not normally my favorite kind of match.

But I watched it with my Spanish father-in-law and my football-crazed seven year old, wearing their red jerseys, and we were hanging on every half-chance.  My son was so nervous he was literally bouncing up and down on the couch. When golden boy Fernando Torres was substituted for the totally overrated Guiza, we booed (we were right, too -- Torres had been inspiring, while Guiza was ineffective and then proceeded to miss a penalty in the shootout).  When Casillas saved Di Natale's penalty and Fabregas stepped up and buried his match-winner (his first ever penalty kick in an international -- no pressure, kid), we were ecstatic.

But it was the relentless and beautiful Russian offensive onslaught against the Dutch that really made it my match of the tournament so far.  The Russians should have been scared of the Dutch, who scored the most goals of any team in the group stage (nine, allowing only one), crushed France, Italy and Romania and looked destined for the final.  Somebody forgot to mention this to Andrei Arshavin.  He terrorized the Dutch in the first 50 minutes -- I thought he had three outright chances that he basically made by himself.  When Pavlyuchenko scored the first goal, no way could you say it was against the run of play.  Russia should have won it outright, but Holland came back and Van Nistelrooy stole a goal in the last couple of minutes.  

In the second period of extra time, Arshavin, whose fitness was unbelievable, put the Dutch away.  First, he made a crazy run down the left to the end line and crossed to the far post for Torbinski's go-ahead goal.  It was Arshavin's third aggressive, dangerous cross in extra-time.  Then minutes later he took a long throw-in and turned the defender brilliantly, slotting the ball through Van Der Saar's legs for the kill shot.  Awesome football. 

Predictions for the semi's?  You have to see Germany as the heavy favorite against Turkey.  But I think it may be closer than the pundits think.  Turkey are very tough, both physically and mentally.  They are just too depleted from injuries.  I think it's 2-0, Germany.  But I wouldn't be surprised if it goes to extra time 0-0 and the Germans have to struggle to win it.

Spain will have their hands full with Russia.  Both teams are young, fast and skillful.  Spain is more experienced, better at defending, and has more international stars; Russia has the motivation, the better coach, and the one guy who can make a play when he needs to most. Spain abused Russia 4:1 in the first match of the group stage, but Arshavin was on the bench due to a red card suspension he picked up in qualifying (against Andorra -- is that even a country?), and Russia clearly didn't have their sea legs early in the tournament.  Too close to call, but it feels like 2:1 Spain in a wide-open match.

Any of the possible finals will produce intriguing story lines.  Clearly, Germany-Spain would be the marquee matchup, but Germany-Russia would be intense, too.  Russia-Turkey would have the European football world reeling -- more even than the improbable Greek run in 2004.  I can't wait.