30 June 2004

RSS

Link via A VC to a RSS wishlist at therssweblog.

Tech bloggers are all a little self-involved (it's a stat thing) but this and Brad Feld's blog on why he invested in NewsGator makes it a big RSS day.
Telephony Software

Niklas Zennstrom on the emerging realization that telephony is just software; a fact that anyone in the telephony world cottoned on to at least 5 years ago - its just taken the software world a while to catch up with the practice. Link via A VC. As with any recent convert they have a habit of skipping over inconvenient facts and making statements that are not based in reality. Or at least in any reality that we are likely to face in this investment cycle.

The main thesis of his argument is accurate, provided that we stick to fixed-line networks.

"One key factor is that when telephony becomes a software application, it will live on the edges of a network. There will be no centralized control. Telephony development cycles are still very long. But their carriers' services are very much commodities, and there isn't much differentiation.

When we can change telephony to an application, we'll be able to change the economics of it. That will increase software innovation, new products, services, features. And that will be in the hand of small, nimble, software development companies. There will be higher competition, and the services will live on the Internet."


Hoever, he overstates his case. In this generation of telephony software, JAIN SLEE-based advanced intelligent networking, it takes less than a month to build and deploy an enterprise VPN. It takes less than one day to build a SMS marketing app, or location-based service; i.e. if you are watching Euro 2004 / the Yankees etc live from their stadium then you can get free calls over such-and-such network. These services are available today with some mobile providers in Europe, none in the US (albeit one fixed-line provider could if it had a marketing department worthy of the name,) and increasingly across Asia. Becasue the mobile operator is capable of gathering information from its network they are able to provide considerably more intelligence in an application.

The Internet is the ultimate stupid network. Client-side software cannot completely replace IN and that "information from the network is needed to provide new applications. And its the new applications that are supposed to pay for giving voice (still the killer app) away for free. Without which Skype and the like remain disruptive tecchnologies and not disruptive business models. I continue to believe that network ownership provides the information that is required to provide really innovative applications.

The article goes down hill a little after that:

"There will also be increased robustness. If you have a switch go down or a gatekeeper, that's not a problem to the end user. They can go to the Internet and find another route of communication. That will not be a problem for a decentralized network."

Unless of course the switch / node etc happens to be the one to which you are connected. The quality of service difference between my ISP and my mobile provider is the difference in call completion between 80% (ISP) and mid-90's (Vimpelcom). Move that quality differential to Europe where Vodafone et al really does buy equipment with 99.999% relaibility and any piece of network software has to have the same reliability. He also continues to believe that existing networks are centralized - they are not as decentralized as the Internet - but intelligence is increasingly at the edge and controlled by the same software of which he talks.

He goes on to make some good points about the commoditization of voice. Which as an overall point even the FCC gets. However, to Skype, voice is just another form of data, albeit one that the "higher quality" Internet can cope with, whereas video is, as yet, not enterprise standard. I suspect his emphasis on the death of voice is poorly masked marketing. As is the plea not to be regulated. VoIP should not be regulated, not because its not a monopoly. His desire not to be regulated is because Skype, and others, do not want to have to guarantee connections for emergency calls. It's business model precludes it from taking responsibility, but it also won't take responsibility becasue their QoS is not good enough.

My bet stays with the cable companies, the telco's that are willing to innovate quickly and Vonage - in that order. And that's before we start talking about Skype security issues.

23 June 2004

Pitch Me This

From Brad Feld on what questions a pitch to a VC / me should include and why PowerPoint is so badly used. Feld Thoughts: The Torturous World of Powerpoint.

Please, please, please if you are pitching read this first.

22 June 2004

Stock Options

A leader in the FT of 21 June on the cash flow impact of options. The title Will reform pull the plug on technology profits? (requires subscription) might give you a hint as to the writers initial leanings.

The net transfer of wealth diagrams at the bottom of the page are instructive. The article suggests that the furore over options is a back lash against the expose of how much value is being transferred from owners to employees. Over-stated I would imagine. A buy-side analyst worth his pay packet will already have factored in the dilutive/cash-flow impact of stock options. The greater issue is their ability to align interests all the time, not just when things are going well. Not being particularly well versed in motivations in large companies, my comments will be limited to start-ups (though they are inherently the same for people who value their work rather than their ability to climb the corporate ladder.)

When do start-up founders / employees worry about stock options?

a. When things are going well
b. The day they join
c. Every new financing round

When do start-up founders / employees worry about cash remuneration?

The rest of the time.

In particular stock options have almost no impact on employee behaviour when life gets difficult (sweat equity yes, options no.) As the article points out there is a growing feeling that options are a poor way to incentivize employees.

Not that I am trying to do away with options altogether. Better a stock option than cash, especially when the cash is limited. But lets not pretend that a talented sales guy is tied to the company (aligns his interest with yours) through stock options. Not being seen to fail is a better incentive.

Which leads to the follow on question. With what do you replace stock options? Maybe like democracy they are the worst system we have; except for all the others.
RSS and email

A good post here from Many-to-Many on ID and push versus pull communication models. Because I am looking at a deal that crosses in to this space (P2P information updating; this time push versus pull) the post touches upon a number of the areas that I think about.

I think that both Ross and I exist outside the big company way of doing things ("behind the firewall) and therefore think about email in a different way from an IBM'er. Michael Sippey comment makes the point better than I can. He concludes; "We�?re doomed to a life of infoglut, push or pull!"

Maybe the question we need to be asking is not trusted versus untrusted, push versus pull; but restoring quality of information. Is it really better if a meeting note is posted to a corporate blog-site or mailed to the everyone who might want to know about this. The same information has different meanings to different people. Since I started pondering corporate information networks I cannot count the number of times that I have been told that the seemingly useless dissemination of information (cc; all) has resulted in a bad decision not being made byforcingg someone to turn up to a meeting with additional information.

Whether the information is pushed or pulled matters not. We have to read an enormous amount and discard 99% of it so as not to miss something.

With one of our companies (a $5mn+ 2nd year start-up) they are blogging the softer elements of sales/marketing meetings. I receive the RSS feed more as an experiment in communication than trying to play a role in product marketing. The writers are all "trusted" emailers and the VP sales, a founder and board member, will regularly email me as well. He'll get in to my inbox whether he pushes or I pull. However, I rarely get informational email from the company, instead I get actionable email. I pay more attention to the actionable email when that has to be dealt with because they want me to pay attention. And when I set aside time to be informed I get more out of that. Better quality information.

You could argue that if I managed my time better I would achieve the same purpose.

07 June 2004

More On Mobile

Earlier today I had a mini-rant on the US not getting mobile services then via Om Malik comes this super rant from Russell Beattie Where's the Mobility? It took me a while to get through the comments so I have not had a chance to get the rest of his blog but I agree with the theme of what he says if not all the content.

First of all the means of communication is (relatively) unimportant. There are great things to be said for CDMA2000 versus W-CDMA v's WiFI, WiMax and on and on. In short there are inherently better ways of delivering bandwidth to the place and time that it is required; some suffer from poor economics others from integration issues, others still from pure stupidity by carriers. However, the issue is not the means of connectivity but the services that can be provided by connectivity. Just because a person's connectivity is limited to a desk top PC does not reduce the communication services that he can access via SIP (to his machine) and via SS7 to other communications devices.

It is the services that matter; these used to be called apps. To build them quickly and to utilize all the services that may be required to make them easy to deploy and easy to market you rapidly move in to the great convergence that is rarely covered; networks and IT. Some quick definitions; what do I mean by services? Parlay does a pretty good job of defining them but here they are anyway;

Generic Call Control
User Interaction
Mobility
Terminal Capabilities
Data Session Control
Generic Messaging
Connectivity
Account Management
Charging
PAM
Policy Management

A mobile operator looking to build an app on a 2.5 - 3G network needs to use some or all of these capabilities in different mixes depending on the nature of the service; a PAM app requires PAM, location, terminal capabilities, call control, charging. A video call requires call control, charging and data session control. Just think of the charging capabilities required - do you charge per mb, or for the type of the call at the time of day? Imagine if a filewas transferred during a video call - how would that be charged. Ask a Bell-head what chance of developing these services in an AIN environment. And yet as I mildly ranted earlier US operators are building services using stovepipe solutions that don't allow these services to be easily offered and easily changed.

From hosted-PBX to VoIP services over any network the convergence of networks and IT (as well as object oriented programming) has fundamentally changed the way that services can be provided over networks of any kind.

I would be remiss not to acknowledge that there are issues, substantial issues, in provisioning data for different devices; securing enterprise data; marketing the need to enterprises and on and on. However, it strikes me that these are implementation issues not technology issues.

So I conclude its not just mobility, its mostly mobility but its about services over any network.
Venture Over Funding

A great post here from Bill Burnham via Fred's A VC's blog on massive overfunding in the mobile application space.

I am not going to add to the comments on over-funding of hot companies; but actually rubbish the technology and then take a poke at technology acquisition. Seven is a great example of a stove-pipe solution. Great if you want to add just the ability to send and receive mobile email, but once a network operator wants to add other services / applications and charging capabilities with slightly greater sophistication than $x per mb, or per email then the system integrators get to rub their hands and put their hands back in to the cookie jar. All these cool apps, are just that apps. They aren't technologically advanced, they aren't future proof and they are difficult to integrate.

A semi-literate Java programmer could replicate Seven's technology in about a week using this generation open standard; if you don't believe me go to the Parlay org's website or Sun Microsystems JAIN (Java for advanced intelligent networks) JSLEE websites and think about how much more these two technologies can offer than Seven.

So why has Seven raised a chunk and the ISV's that form Parlay and JAIN / JSLEE next to nothing. Superior marketing may have something to do with it but there is also a trend in the US to keep on acquiring stove-pipe solutions - and then complain that they don't do the job advertised. It has been suggested that as US carriers, in particular, have cut back on R&D they have lost the ability to spot technical bullshit in the marketing blurb.

Somewhere between the US super-charged attitude and the European ultra-cautious approach would make sense for everyone.

01 June 2004

Energy Conservation

Flipping marvellous post from Jeff Nolan on the downside of depending upon gas guzzlers for your means of transportation Dependent on Gas. Not exactly SAP stuff but isn't that the point anyway. Anyway I am sure that he will be delighted to hear that I support one of the main tenants of his piece. Namely that electricty driven motors are the most obvious solution; provided that I remember the physics that I was once taught. If we had finished capital raising I would have backed a very smart brushed-electric motor. Instead its got Russian money and risks heading to oblivion.

Just got to find a way to create cheap electricity!! That will do for the next challenge.
RAISING CAPITAL

I am on the road raising capital for our next fund � DFJ Nexus. As an affiliate of DFJ we are targeting globally applicable Russian technology. This is now my third time doing this; cannot say that it gets any better but I get the feeling that this may be a sweet spot in the VC capital raising cycle. Yes LP�s are focused on performance, terms (transparency) and fit. As an emerging manager targeting a truly novel space we should command attention. But this far up the value chain?

All that being said I truly hate the process. Skepticism, is high among the skills that I bring to the table as an early stage VC. LP�s, Gatekeepers and the like should not be listening to me because of my ability to pitch but my ability to be intelligently skeptical. We are all intelligent people but the rules are written in favor of snake oil merchants.

BTW � I am totally in favor of transparency. I would be willing to omit an LP if they did not understand the J-curve; not because they wanted to publish the figures.
TRAVEL

I am coming to the end of one month of travel. Which included 16 separate flights, 2 train journeys and 1 long car drive. Some of observations: US major carriers will go out of business. I have flown Jet Blue, South Western and ATA over the last few weeks. Jet Blue is the clear winner. In all of them the service was better than the established airlines, the prices were cheaper and we landed on time and they were FULL. My international travel on American Airlines was scandalous. It was low cost travel at high cost prices. The US and EU have to come to an agreement on open skies as soon as possible. However I assume that national carriers, which includes Delta, AA and United, control over landing slots will preclude this and leave us all subject to cartel pricing.

The winner however is rail journeys. I write this on board Eurostar from London to Brussels � not cheap but comfortable. The same is true for the Acela (?) from DC to NY. Travel, waiting, check-in (try travelling around the US with an Uzbek, Ukrainian and Turkmen visa pasted in your passport � more security officials have had a close up of my feet than is good for an individual) are completed in 5 minutes. There is real space on the train and the wine is not bad. My next trip to the NE of the US will be done exclusively by train.
ECONOMIST RUSSIA SURVEY

It�s rare to openly praise journalists in a blog, much less those you have never met, albeit he taught my wife to salsa whilst I was traveling. However, I have to unreservedly recommend the Economist�s Russia survey to anyone even slightly interested in Russia.

Gideon Lichfield, the Economist�s Russia correspondent, has done a fantastic job of presenting a readable, accurate and balanced account of Russia today. In particular the section on the Silovki (the men of power; the ex-KGB) is as good an article as could be written by a reporter � as opposed to an interested commentator. In his Yahoo Group�s commentary he apologizes for his �inability to understand the place.� Actually his balanced, nuanced approach shows far greater understanding than his predecessor who was both a Slavophile and phobe, sometimes in the same sentence. Anyway if we understood the place what would we spend the weekend at the Dacha discussing?

I have criticisms of omission; which could be equally blamed on editors as on Gideon. The first is that he is absolutely correct to emphasize the paltry nature of real reform. That is reform that is actually implemented by the bureaucracy. But the nature of the reform deserves more praise. Without letting on how much tax I paid in 2003 the Government has agreed to pay back $6,000 of it as a result of me buying an apartment. The income tax rate is 13%. This is an intelligent policy to bring the populace into the �white� economy.

The second criticism relates to the one-sided nature of the sausage factory story. Small and medium-sized business is booming. Fredrik Ekman, my partner at Mint Capital founded Oriflame in the FSU. Oriflame is an Avon-style cosmetics business. Earlier this year it went public on the Stockholm Stock Exchange. Some 30% of its revenues and 40% of its net income is derived from the FSU, principally Russia. The numbers made good reading for its owners bank managers.

Mint�s investments in the local-economy are booming and our interaction with organized crime is zero. I have my reservations over Russia�s medium-term viability but if we can get out before Putin becomes a lame duck (which maybe a western term with no meaning in a non-liberal democracy) they will return substantially over our risked cost-of-capital.

30 June 2004

RSS

Link via A VC to a RSS wishlist at therssweblog.

Tech bloggers are all a little self-involved (it's a stat thing) but this and Brad Feld's blog on why he invested in NewsGator makes it a big RSS day.

Telephony Software

Niklas Zennstrom on the emerging realization that telephony is just software; a fact that anyone in the telephony world cottoned on to at least 5 years ago - its just taken the software world a while to catch up with the practice. Link via A VC. As with any recent convert they have a habit of skipping over inconvenient facts and making statements that are not based in reality. Or at least in any reality that we are likely to face in this investment cycle.

The main thesis of his argument is accurate, provided that we stick to fixed-line networks.

"One key factor is that when telephony becomes a software application, it will live on the edges of a network. There will be no centralized control. Telephony development cycles are still very long. But their carriers' services are very much commodities, and there isn't much differentiation.

When we can change telephony to an application, we'll be able to change the economics of it. That will increase software innovation, new products, services, features. And that will be in the hand of small, nimble, software development companies. There will be higher competition, and the services will live on the Internet."


Hoever, he overstates his case. In this generation of telephony software, JAIN SLEE-based advanced intelligent networking, it takes less than a month to build and deploy an enterprise VPN. It takes less than one day to build a SMS marketing app, or location-based service; i.e. if you are watching Euro 2004 / the Yankees etc live from their stadium then you can get free calls over such-and-such network. These services are available today with some mobile providers in Europe, none in the US (albeit one fixed-line provider could if it had a marketing department worthy of the name,) and increasingly across Asia. Becasue the mobile operator is capable of gathering information from its network they are able to provide considerably more intelligence in an application.

The Internet is the ultimate stupid network. Client-side software cannot completely replace IN and that "information from the network is needed to provide new applications. And its the new applications that are supposed to pay for giving voice (still the killer app) away for free. Without which Skype and the like remain disruptive tecchnologies and not disruptive business models. I continue to believe that network ownership provides the information that is required to provide really innovative applications.

The article goes down hill a little after that:

"There will also be increased robustness. If you have a switch go down or a gatekeeper, that's not a problem to the end user. They can go to the Internet and find another route of communication. That will not be a problem for a decentralized network."

Unless of course the switch / node etc happens to be the one to which you are connected. The quality of service difference between my ISP and my mobile provider is the difference in call completion between 80% (ISP) and mid-90's (Vimpelcom). Move that quality differential to Europe where Vodafone et al really does buy equipment with 99.999% relaibility and any piece of network software has to have the same reliability. He also continues to believe that existing networks are centralized - they are not as decentralized as the Internet - but intelligence is increasingly at the edge and controlled by the same software of which he talks.

He goes on to make some good points about the commoditization of voice. Which as an overall point even the FCC gets. However, to Skype, voice is just another form of data, albeit one that the "higher quality" Internet can cope with, whereas video is, as yet, not enterprise standard. I suspect his emphasis on the death of voice is poorly masked marketing. As is the plea not to be regulated. VoIP should not be regulated, not because its not a monopoly. His desire not to be regulated is because Skype, and others, do not want to have to guarantee connections for emergency calls. It's business model precludes it from taking responsibility, but it also won't take responsibility becasue their QoS is not good enough.

My bet stays with the cable companies, the telco's that are willing to innovate quickly and Vonage - in that order. And that's before we start talking about Skype security issues.

23 June 2004

Pitch Me This

From Brad Feld on what questions a pitch to a VC / me should include and why PowerPoint is so badly used. Feld Thoughts: The Torturous World of Powerpoint.

Please, please, please if you are pitching read this first.

22 June 2004

Stock Options

A leader in the FT of 21 June on the cash flow impact of options. The title Will reform pull the plug on technology profits? (requires subscription) might give you a hint as to the writers initial leanings.

The net transfer of wealth diagrams at the bottom of the page are instructive. The article suggests that the furore over options is a back lash against the expose of how much value is being transferred from owners to employees. Over-stated I would imagine. A buy-side analyst worth his pay packet will already have factored in the dilutive/cash-flow impact of stock options. The greater issue is their ability to align interests all the time, not just when things are going well. Not being particularly well versed in motivations in large companies, my comments will be limited to start-ups (though they are inherently the same for people who value their work rather than their ability to climb the corporate ladder.)

When do start-up founders / employees worry about stock options?

a. When things are going well
b. The day they join
c. Every new financing round

When do start-up founders / employees worry about cash remuneration?

The rest of the time.

In particular stock options have almost no impact on employee behaviour when life gets difficult (sweat equity yes, options no.) As the article points out there is a growing feeling that options are a poor way to incentivize employees.

Not that I am trying to do away with options altogether. Better a stock option than cash, especially when the cash is limited. But lets not pretend that a talented sales guy is tied to the company (aligns his interest with yours) through stock options. Not being seen to fail is a better incentive.

Which leads to the follow on question. With what do you replace stock options? Maybe like democracy they are the worst system we have; except for all the others.

RSS and email

A good post here from Many-to-Many on ID and push versus pull communication models. Because I am looking at a deal that crosses in to this space (P2P information updating; this time push versus pull) the post touches upon a number of the areas that I think about.

I think that both Ross and I exist outside the big company way of doing things ("behind the firewall) and therefore think about email in a different way from an IBM'er. Michael Sippey comment makes the point better than I can. He concludes; "We�?re doomed to a life of infoglut, push or pull!"

Maybe the question we need to be asking is not trusted versus untrusted, push versus pull; but restoring quality of information. Is it really better if a meeting note is posted to a corporate blog-site or mailed to the everyone who might want to know about this. The same information has different meanings to different people. Since I started pondering corporate information networks I cannot count the number of times that I have been told that the seemingly useless dissemination of information (cc; all) has resulted in a bad decision not being made byforcingg someone to turn up to a meeting with additional information.

Whether the information is pushed or pulled matters not. We have to read an enormous amount and discard 99% of it so as not to miss something.

With one of our companies (a $5mn+ 2nd year start-up) they are blogging the softer elements of sales/marketing meetings. I receive the RSS feed more as an experiment in communication than trying to play a role in product marketing. The writers are all "trusted" emailers and the VP sales, a founder and board member, will regularly email me as well. He'll get in to my inbox whether he pushes or I pull. However, I rarely get informational email from the company, instead I get actionable email. I pay more attention to the actionable email when that has to be dealt with because they want me to pay attention. And when I set aside time to be informed I get more out of that. Better quality information.

You could argue that if I managed my time better I would achieve the same purpose.

07 June 2004

More On Mobile

Earlier today I had a mini-rant on the US not getting mobile services then via Om Malik comes this super rant from Russell Beattie Where's the Mobility? It took me a while to get through the comments so I have not had a chance to get the rest of his blog but I agree with the theme of what he says if not all the content.

First of all the means of communication is (relatively) unimportant. There are great things to be said for CDMA2000 versus W-CDMA v's WiFI, WiMax and on and on. In short there are inherently better ways of delivering bandwidth to the place and time that it is required; some suffer from poor economics others from integration issues, others still from pure stupidity by carriers. However, the issue is not the means of connectivity but the services that can be provided by connectivity. Just because a person's connectivity is limited to a desk top PC does not reduce the communication services that he can access via SIP (to his machine) and via SS7 to other communications devices.

It is the services that matter; these used to be called apps. To build them quickly and to utilize all the services that may be required to make them easy to deploy and easy to market you rapidly move in to the great convergence that is rarely covered; networks and IT. Some quick definitions; what do I mean by services? Parlay does a pretty good job of defining them but here they are anyway;

Generic Call Control
User Interaction
Mobility
Terminal Capabilities
Data Session Control
Generic Messaging
Connectivity
Account Management
Charging
PAM
Policy Management

A mobile operator looking to build an app on a 2.5 - 3G network needs to use some or all of these capabilities in different mixes depending on the nature of the service; a PAM app requires PAM, location, terminal capabilities, call control, charging. A video call requires call control, charging and data session control. Just think of the charging capabilities required - do you charge per mb, or for the type of the call at the time of day? Imagine if a filewas transferred during a video call - how would that be charged. Ask a Bell-head what chance of developing these services in an AIN environment. And yet as I mildly ranted earlier US operators are building services using stovepipe solutions that don't allow these services to be easily offered and easily changed.

From hosted-PBX to VoIP services over any network the convergence of networks and IT (as well as object oriented programming) has fundamentally changed the way that services can be provided over networks of any kind.

I would be remiss not to acknowledge that there are issues, substantial issues, in provisioning data for different devices; securing enterprise data; marketing the need to enterprises and on and on. However, it strikes me that these are implementation issues not technology issues.

So I conclude its not just mobility, its mostly mobility but its about services over any network.

Venture Over Funding

A great post here from Bill Burnham via Fred's A VC's blog on massive overfunding in the mobile application space.

I am not going to add to the comments on over-funding of hot companies; but actually rubbish the technology and then take a poke at technology acquisition. Seven is a great example of a stove-pipe solution. Great if you want to add just the ability to send and receive mobile email, but once a network operator wants to add other services / applications and charging capabilities with slightly greater sophistication than $x per mb, or per email then the system integrators get to rub their hands and put their hands back in to the cookie jar. All these cool apps, are just that apps. They aren't technologically advanced, they aren't future proof and they are difficult to integrate.

A semi-literate Java programmer could replicate Seven's technology in about a week using this generation open standard; if you don't believe me go to the Parlay org's website or Sun Microsystems JAIN (Java for advanced intelligent networks) JSLEE websites and think about how much more these two technologies can offer than Seven.

So why has Seven raised a chunk and the ISV's that form Parlay and JAIN / JSLEE next to nothing. Superior marketing may have something to do with it but there is also a trend in the US to keep on acquiring stove-pipe solutions - and then complain that they don't do the job advertised. It has been suggested that as US carriers, in particular, have cut back on R&D they have lost the ability to spot technical bullshit in the marketing blurb.

Somewhere between the US super-charged attitude and the European ultra-cautious approach would make sense for everyone.

01 June 2004

Energy Conservation

Flipping marvellous post from Jeff Nolan on the downside of depending upon gas guzzlers for your means of transportation Dependent on Gas. Not exactly SAP stuff but isn't that the point anyway. Anyway I am sure that he will be delighted to hear that I support one of the main tenants of his piece. Namely that electricty driven motors are the most obvious solution; provided that I remember the physics that I was once taught. If we had finished capital raising I would have backed a very smart brushed-electric motor. Instead its got Russian money and risks heading to oblivion.

Just got to find a way to create cheap electricity!! That will do for the next challenge.

RAISING CAPITAL

I am on the road raising capital for our next fund � DFJ Nexus. As an affiliate of DFJ we are targeting globally applicable Russian technology. This is now my third time doing this; cannot say that it gets any better but I get the feeling that this may be a sweet spot in the VC capital raising cycle. Yes LP�s are focused on performance, terms (transparency) and fit. As an emerging manager targeting a truly novel space we should command attention. But this far up the value chain?

All that being said I truly hate the process. Skepticism, is high among the skills that I bring to the table as an early stage VC. LP�s, Gatekeepers and the like should not be listening to me because of my ability to pitch but my ability to be intelligently skeptical. We are all intelligent people but the rules are written in favor of snake oil merchants.

BTW � I am totally in favor of transparency. I would be willing to omit an LP if they did not understand the J-curve; not because they wanted to publish the figures.

TRAVEL

I am coming to the end of one month of travel. Which included 16 separate flights, 2 train journeys and 1 long car drive. Some of observations: US major carriers will go out of business. I have flown Jet Blue, South Western and ATA over the last few weeks. Jet Blue is the clear winner. In all of them the service was better than the established airlines, the prices were cheaper and we landed on time and they were FULL. My international travel on American Airlines was scandalous. It was low cost travel at high cost prices. The US and EU have to come to an agreement on open skies as soon as possible. However I assume that national carriers, which includes Delta, AA and United, control over landing slots will preclude this and leave us all subject to cartel pricing.

The winner however is rail journeys. I write this on board Eurostar from London to Brussels � not cheap but comfortable. The same is true for the Acela (?) from DC to NY. Travel, waiting, check-in (try travelling around the US with an Uzbek, Ukrainian and Turkmen visa pasted in your passport � more security officials have had a close up of my feet than is good for an individual) are completed in 5 minutes. There is real space on the train and the wine is not bad. My next trip to the NE of the US will be done exclusively by train.

ECONOMIST RUSSIA SURVEY

It�s rare to openly praise journalists in a blog, much less those you have never met, albeit he taught my wife to salsa whilst I was traveling. However, I have to unreservedly recommend the Economist�s Russia survey to anyone even slightly interested in Russia.

Gideon Lichfield, the Economist�s Russia correspondent, has done a fantastic job of presenting a readable, accurate and balanced account of Russia today. In particular the section on the Silovki (the men of power; the ex-KGB) is as good an article as could be written by a reporter � as opposed to an interested commentator. In his Yahoo Group�s commentary he apologizes for his �inability to understand the place.� Actually his balanced, nuanced approach shows far greater understanding than his predecessor who was both a Slavophile and phobe, sometimes in the same sentence. Anyway if we understood the place what would we spend the weekend at the Dacha discussing?

I have criticisms of omission; which could be equally blamed on editors as on Gideon. The first is that he is absolutely correct to emphasize the paltry nature of real reform. That is reform that is actually implemented by the bureaucracy. But the nature of the reform deserves more praise. Without letting on how much tax I paid in 2003 the Government has agreed to pay back $6,000 of it as a result of me buying an apartment. The income tax rate is 13%. This is an intelligent policy to bring the populace into the �white� economy.

The second criticism relates to the one-sided nature of the sausage factory story. Small and medium-sized business is booming. Fredrik Ekman, my partner at Mint Capital founded Oriflame in the FSU. Oriflame is an Avon-style cosmetics business. Earlier this year it went public on the Stockholm Stock Exchange. Some 30% of its revenues and 40% of its net income is derived from the FSU, principally Russia. The numbers made good reading for its owners bank managers.

Mint�s investments in the local-economy are booming and our interaction with organized crime is zero. I have my reservations over Russia�s medium-term viability but if we can get out before Putin becomes a lame duck (which maybe a western term with no meaning in a non-liberal democracy) they will return substantially over our risked cost-of-capital.