05 December 2004

Me Too Investing

Om charts the end of the original Reef Edge business plan and then finishes the post with the (multi-) million dollar question;
The big question, however remains for the venture capital community: how do you evaluate a start-up that is involved in highly commoditized business like WiFi?
Um...you don't. Venture investing is about anticipating trends, being the start-up that the main stream wants to buy when the product goes mainstream. If you are investing in VoIP today then please go read the hundreds of posts available on me too investing. That is unless you are Tim Draper at DFJ who has the uncanny knack of spotting disruptions in business models. Skype continues to outperform expectations.

The answer lies in the link at the top of Om's page in a very readable 10 Commandments for Entrepreneurs from a Mayfield Blog. Actually it's 13 coommandments and the 3 extra are the most important. I paraphrase;

1. Great technology
2. Great team
3. A market undergoing significant transition

The VoIP market is still in the process of undergoing significant change but the end games are beginning to look a little clearer. With the possible exception of Popular Telephony I don't see much technology disruption going on in the VoIP business model. Technologically the changes are even fewer and further between. This game has been going on for a while. We are approaching the moment of truth when the last 3-4 years of worrying will either lead to a great sale, a good sale, a thank god we sold that sale or oh shit. With the only really unknown happening at the good end of the scale.

Telecom has been undergoing it's own moment of transition for a while now ~ effectively since the beginning of the Internet bubble. There are some plays to be made at the edge (sic) but I doubt that an investment made today in a technology will result in a "Google" day.

We made one play in the telecom world very early and very boldly generating pretty much a 10 on the ulcer scale. At the end of the year I will step down off the board in favour of someone who can help the company as it transitions from a business generating $5-7mn in sales to one that could well do over $40mn in 2005. Job done, time to get the ulcer in full functioning mode again.

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05 December 2004

Me Too Investing

Om charts the end of the original Reef Edge business plan and then finishes the post with the (multi-) million dollar question;
The big question, however remains for the venture capital community: how do you evaluate a start-up that is involved in highly commoditized business like WiFi?
Um...you don't. Venture investing is about anticipating trends, being the start-up that the main stream wants to buy when the product goes mainstream. If you are investing in VoIP today then please go read the hundreds of posts available on me too investing. That is unless you are Tim Draper at DFJ who has the uncanny knack of spotting disruptions in business models. Skype continues to outperform expectations.

The answer lies in the link at the top of Om's page in a very readable 10 Commandments for Entrepreneurs from a Mayfield Blog. Actually it's 13 coommandments and the 3 extra are the most important. I paraphrase;

1. Great technology
2. Great team
3. A market undergoing significant transition

The VoIP market is still in the process of undergoing significant change but the end games are beginning to look a little clearer. With the possible exception of Popular Telephony I don't see much technology disruption going on in the VoIP business model. Technologically the changes are even fewer and further between. This game has been going on for a while. We are approaching the moment of truth when the last 3-4 years of worrying will either lead to a great sale, a good sale, a thank god we sold that sale or oh shit. With the only really unknown happening at the good end of the scale.

Telecom has been undergoing it's own moment of transition for a while now ~ effectively since the beginning of the Internet bubble. There are some plays to be made at the edge (sic) but I doubt that an investment made today in a technology will result in a "Google" day.

We made one play in the telecom world very early and very boldly generating pretty much a 10 on the ulcer scale. At the end of the year I will step down off the board in favour of someone who can help the company as it transitions from a business generating $5-7mn in sales to one that could well do over $40mn in 2005. Job done, time to get the ulcer in full functioning mode again.

No comments: