A number of business software companies are preparing for initial public offerings in the next 12 months, according to a Reuters article. With the rapid rise of cloud computing, these companies hope that their business models, which leverage the cloud, will enable them to go public. The business model that these companies use is called Software As A Service, or SaaS, whereby they essentially lease their software to companies on the cloud, and their customers pay them monthly based on the number of users (or to use the lingo, seats). Investors like the recurring revenue model as it gives better visibility to a forward revenue stream. The Reuters article identifies a number of companies planning IPOs. The article can be found here: http://in.reuters.com/article/2012/06/08/idINL1E8H773O20120608
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As I've posted about before, San Francisco's technology scene is growing rapidly. Companies including Twitter, Zynga, Yelp, Dropbox, Airbnb, OpenTable, Salesforce.com, Foursquare, Digg, Instagram (and many more) are headquartered in San Francisco. The Reuters article "Chic Geeks Give San Francisco A new Tech Groove" provides some more insight as to why tech start-ups are choosing San Francisco as their base. Here's the link: http://www.reuters.com/article/2012/06/01/us-sanfrancisco-siliconvalley-geeks-idUSBRE85007Q20120601
Prior posts on San Francisco: http://www.allenlatta.com/1/post/2012/05/benchmark-capital-opening-san-francisco-office-on-market-street.html http://www.allenlatta.com/1/post/2012/02/more-on-san-francisco-start-up-scene.html http://www.allenlatta.com/1/post/2012/02/san-francisco-as-tech-central-uncrunched.html The New York Times has an interesting article on New York's thriving technology start-up scene. "For Tech Start-Ups, New York Has Increasing Allure" outlines how New York's tech start-ups benefit from being close to the media, advertising and fashion industries, and that it has grown to the point of being an attractive alternative to Silicon Valley.
I've previously posted about NY's tech scene. Here's a link to a post on a digital map of NY digital start-ups and venture capital firms: http://www.allenlatta.com/1/post/2012/5/new-york-digital-start-up-and-vc-map.html. Here's a link to a prior post on NY's tech scene: http://www.allenlatta.com/1/post/2011/11/new-yorks-technology-scene-ny-times.html Link to the NY Times article: http://www.nytimes.com/2012/05/28/technology/for-tech-startups-new-york-has-increasing-allure.html? In another sign that San Francisco is a booming center for technology start-ups, Benchmark Capital is opening an office above the Warfield Theater, a popular concert venue, on Market Street by Taylor Street. The new satellite office will be just blocks away from Benchmark's portfolio company Twitter, when their build-out is completed. Here's the story by the Washington Post: http://www.washingtonpost.com/business/twitter-joined-in-san-francisco-by-one-of-its-biggest-investors/2012/05/25/gJQAMnQJqU_story.html
Good article by The Wall Street Journal on the pace of acquisitions by new tech bellweathers Facebook, Zynga and Groupon. In "New Tech Spenders in Feeding Frenzy," the buying habits of tech companies are explored. According to the article, in the first three months of this year, Facebook, Zynga and Groupon have combined to make 21 acquisitions, over double the pace of their combined acquisitions during the same period last year. Many of the deals are moves to acquire technologies or enter new markets, as opposed to "aqui-hires" - acquisitions to acquire engineering or other talent. Here's a link to the article: http://online.wsj.com/article/SB10001424052702304543904577396691153835210.html
Further to my earlier post on the Tech Bubble (link here), two leading Silicon Valley icons, Marc Andreessen and Ron Conway, have both indicated that they believe there is not a tech bubble. In the AllThingsD.com article "Nope! Still No Bubble Here, Says Marc Andreessen" there is no bubble due to the modest multiples at which public tech companies are trading and the declines in stock prices of many highly touted tech IPOs. Andreessen does concede that there may have been some private deals where the valuations may have been off.
In the CNNMoney article "Ron Conway: Tech is Nowhere Near a Bubble", Conway argues that e-commerce demonstrates how much money can be created on the web. With fewer that 6% of people buying online, Conway estimates that this number can rise to 25% over the next 10 years. Links: Prior post on Tech Bubble: http://www.allenlatta.com/1/post/2012/04/tech-bubble-two-views.html Nope! Still No Bubble Here, Says Marc Andreessen http://allthingsd.com/20120501/nope-still-no-bubble-here-says-marc-andreessen/ Ron Conway: Tech is Nowhere Near a Bubble http://money.cnn.com/2012/04/30/markets/ron-conway-tech-bubble/ In "Disruptions: With No Revenue, an Illusion of Value," author Nick Bilton presents a case that there is a technology bubble, based upon (a) how some start-ups are advised by investors not to have revenues, as revenues lead to valuations driven by science, where no revenues means "finger in the wind" valuations; and (b) most venture capitalists are more interested in quick flips with eye-popping premiums. An example is no-revenue Instagram being acquired be Facebook for $1 billion, and other examples of multi-million dollar acquisitions of zero revenue companies are provided, including YouTube.
This led to a thoughtful response by Chris Dixon on his blog. In "Is it a Tech Bubble" Mr. Dixon argues that the situation is more nuanced, and provides seven thoughts:
Links: "Disruptions: With No Revenue, an Illusion of Value" http://bits.blogs.nytimes.com/2012/04/29/disruptions-with-no-revenue-an-illusion-of-value/ "Is it a Tech Bubble" http://cdixon.org/2012/04/29/is-it-a-tech-bubble/ I attended the SuperReturn International conference on private equity and venture capital in Berlin earlier this year, and was impressed by the speakers and format of the conference. Before the conference I had posted a link to an article on ReadWriteWeb discussing East Berlin's start-up scene (link here), and so was curious to learn more. At the conference, it was clear that Berlin had become a center of activity for technology start-ups.
Bloomberg Businessweek has now posted a good article "Berlin Cracks the Startup Code" which expands on the earlier ReadWriteWeb article and identifies some of the venture capital firms active in Berlin and some of the Berlin start-ups that have received funding from international venture capital firms. One key takeaway is that more than 500 tech start-ups were founded in Berlin in 2011, an impressive number. Link to the Bloomberg Businessweek article: http://www.businessweek.com/articles/2012-04-12/berlin-cracks-the-startup-code Link to my prior post on East Berlin's startup scene: http://www.allenlatta.com/1/post/2012/02/east-berlins-start-up-scene.html Jonathan Marino has a good post on peHUB this morning discussing big data and some of the returns investors have seen form these deals. The post is "Big Data, Big Exits... Big Future for Startups?" and the link is here: http://www.pehub.com/142020/big-data-big-exits%E2%80%A6-big-future-for-startups/
Big data has many applications, and applying big data to marketing is in its early stages. Ajay Agarwal of Bain Capital Ventures has a post "Marketing is the Next Big Money Sector in Technology" on GigaOM that discusses the application of big data to marketing, and how web businesses will benefit. Here's the link to the article: http://gigaom.com/2012/03/17/marketing-is-the-next-big-money-sector-in-technology/
The NY Times has posted an article "Big Data's Grass-Roots Revolution" which discusses how the incredible volumes of data that is being generated can be analyzed by regular folks like you and me. There's also a video by Google's Chief Economist, Val Varian, from the Strata 2012 conference on how one can use Google data for economic forecasting. The beginning of Mr. Varian's speech discusses the correlation of searching for vodka and searching for hangovers.
Here's the link to the NYTimes.com story: http://bits.blogs.nytimes.com/2012/03/02/big-datas-grassroots-revolution/ Link to Hal Varian's talk "Using Google Data for Short-Term Economic Forecasting" at Strata 2012: http://www.youtube.com/watch?feature=player_embedded&v=-I8acYHQ0v0 There's a good post on ReadWriteWeb called "Fast Times In East Berlin: Exploring Europe's New Startup Capital." The article discusses the development of East Berlin's start-up scene, and identifies some characteristics that make East Berlin attractive: inexpensive (compared to other cities), good infrastructure, and creative people from all over the world. The article also discusses some of the venture capital firms investing in tech start-ups there. Here's the link: http://www.readwriteweb.com/archives/berlin_europe_startup_capital.php
Ron Conway, uber-angel investor, was recently interviewed by CNET. In the interview, Ron discusses the health of the Silicon Valley economy, early-stage funding environment and new technologies and companies that interest him.
Here's the link: http://news.cnet.com/8301-13772_3-57383899-52/uber-angel-ron-conway-silicon-valley-is-stronger-than-ever/ Ron was recently profiled by Forbes, here's a link to my prior post with the story: http://www.allenlatta.com/1/post/2012/02/ron-conway-profile-forbes.html On the heels of my prior post on San Francisco as Tech Central, here's another link to a blog post on medriscoll.com "Start-ups Belong in San Francisco." The post discusses some of the qualities that contribute to making San Francisco such a vibrant and unique place for the start-up scene. Worth a read. Here's the link: http://medriscoll.com/post/18137813025/start-ups-belong-in-san-francisco
Here's a link to my prior post on San Francisco: http://www.allenlatta.com/1/post/2012/02/san-francisco-as-tech-central-uncrunched.html In the Business Insider post "One VC Is Putting More Than $100 Million Into Big Data Startups -- Here's Why," Ping Li of Accel Partners discusses why Accel is so interested in the area. Its a good post and worth a read. Here's the link: http://www.businessinsider.com/this-vc-is-putting-more-than-100-million-into-big-data-startups-heres-why-2012-2
For more on Big Data, see my prior post: http://www.allenlatta.com/1/post/2012/02/venture-capital-sees-big-returns-in-big-data-reuters.html "Entrepreneurial activity is on the rise in Brazil and spreading into new industries." This is the opening sentence to an interesting post by Mark Boslet on peHUB "Entrepreneurship is Growing Up in Brazil and So Are Investment Opportunities." The posting goes on to discuss how Brazilian entrepreneurship is moving from software into new sectors and identifies investors targeting companies in Brazil, including Accel Partners.
Jim Breyer of Accel Partners discussed Brazil in a video interview last year, which can be found in a prior post here: http://www.allenlatta.com/1/post/2011/11/jim-breyer-interview-on-techcrunch.html Michael Arrington has a new post on his Uncrunched blog "San Francisco Or Palo Alto." In this post, he comments that over the past few years San Francisco has stolen the show from Palo Alto as the center of Tech and that The Creamery in South Of Market (SOMA) seems to be where a huge percentage of meetings are happening.
I have lived and worked in San Francisco for a dozen years and I have seen the ebb and flow of tech start-ups here. In the peak of the Internet bubble (circa 2000), SOMA was the home to numerous Internet and New Media start-ups. After the bubble burst, SOMA seemed to be quieter, but in the past five years, my sense is that San Francisco and SOMA have been re-energized. Here's a link to the post on Uncrunched: http://uncrunched.com/2012/02/21/san-francisco-or-palo-alto/ In the comments to the post, there's a link to a map of funded startups, which is also interesting. Here's the link: http://www.flickr.com/photos/alexmuse/6847577587/in/photostream/ Vinod Khosla, the founder of Khosla Ventures, has an article on TechCrunch called "The 'Unhyped' New Areas in Internet and Mobile" in which he discusses twelve areas in Internet or Mobile he sees as "potential fishing ponds" that will be disruptive or take off. Some of these areas are: Big Data or Analytics; Education 2.0; TV 2.0; Health 2.0; and Utility Apps. Very interesting article. Here's the link: http://techcrunch.com/2012/02/19/unhyped-internet-and-mobile/
There's an interesting article by Sarah McBride on Reuters.com called "Venture Capital Sees Big Returns in Big Data" that's worth a read. In the article, Accel Partners' Ping Li outlines four themes for big data: (1) storage and networking services that support big data platforms; (2) platforms that enable the analysis of huge volumes of data; (3) big data apps; and (4) data-driven apps (data is used in a way that drives another app). Big data is garnering a lot of attention from venture capitalists these days, and this article provides some interesting background. Here's the link: http://www.reuters.com/article/2012/02/17/us-venture-bigdata-idUSTRE81G1HO20120217
Here are a couple prior posts regarding big data: Big Data 101: http://www.allenlatta.com/1/post/2012/02/big-data-101-nytimescom.html Start-Ups Tackling Big Data: http://www.allenlatta.com/1/post/2011/12/start-ups-tackling-big-data-nytimescom.html GigaOM has posted an interesting article about Las Vegas and its developing tech culture, which is being driven in part by the efforts of Tony Hsieh, the CEO of Zappos. The article is "An Inside Look at the High-Tech Awakening in Las Vegas" and the link is here: http://gigaom.com/2012/02/16/an-inside-look-at-the-high-tech-awakening-in-las-vegas/
Cisco has posted an update to its Global Mobile Data Traffic Forecast to include numbers from 2011. Here's a link to the press release: http://www.cisco.com/en/US/solutions/collateral/ns341/ns525/ns537/ns705/ns827/white_paper_c11-520862.html
A few interesting take-aways from the press release headnotes:
There is a lot of information here, but the bottom line is that growth in international mobile data is exploding. Carriers will have huge challenges with dealing with this incredible growth. The NYTimes.com recently published a good overview of Big Data entitled "The Age of Big Data". The explosive growth of data creates new opportunities to analyze, interpret and use this data to help companies use the data to make better business decisions. Think "Moneyball" on a massive scale. This is a growing area of interest for venture capitalists. The article provides a really good overview of Big Data and the opportunity it provides. Here's the link: http://www.nytimes.com/2012/02/12/sunday-review/big-datas-impact-in-the-world.html?pagewanted=all
Reuters reports that Kleiner Perkins Caufield & Byers is considering starting a new fund focused on investments in cloud computing startup companies. It's unclear from the story whether this would be a new, separate fund raised from investors, or a "fund" which is created by allocating monies from its other funds. Kleiner has two other funds that are pursuing focused strategies: an iFund which invests in apps and solutions for mobile devices; and a fund that focuses on social startups. Here's a link to the article: http://www.bloomberg.com/news/2012-02-10/kleiner-perkins-considering-new-fund-for-cloud-computing-services-startups.html
An article posted yesterday on WSJ.com "Portland makes Bid To Become Budding Techlandia" discusses Portland's emerging technology scene as well as some new incubator funds being established. In my view, as salaries in Silicon Valley are driven higher by competition (see the WSJ.com article here), I believe the door will open to areas like Portland to develop their own technology / venture capital infrastructure. Here's a link to the article: http://blogs.wsj.com/venturecapital/2012/01/23/portland-makes-bid-to-become-budding-techlandia/
There's a post by Nick Bilton posted yesterday on NYTimes.com called "Distruptions: Tach Valuation Defy the Restraints of Reality." It's an interesting read, as it offers one view of the mentality of tech company valuations in Silicon Valley. In my opinion, the article focuses on a small (irrational) subset of behavior in Silicon Valley, while most of the seasoned, institutional venture capital investors take a more disciplined approach to investing and valuations. Here's a link to the article: http://bits.blogs.nytimes.com/2012/01/22/disruptions-the-sloshing-sound-of-tech-valuations/
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