SplicedFeed

Solving the Peter Principle? One Word: "Darts" [Paul Kedrosky's Infectious Greed]

2009-07-03T16:19:37-07:00

There is a fun new working paper out from some Italian scientists that models the Peter Principle. The principle says, of course, that people climb in an organization until they reach their level of maximum incompetence.

How would that happen? Well, the authors argue it should be expected in any organization where the following two conditions hold:

The best member are rewarded with promotions
Competence in a new position is not highly correlated with competence at a prior level

The authors simulated the preceding in a pyramidal organizational form using a mathematical agent model. Here is the outcome:

Here we show, by means of agent based simulations, that if the [above two conditions] actually hold in a given model of an organization with a hierarchical structure, then not only the "Peter principle" is unavoidable, but it yields in turn a significant reduction of the global efficiency of the organization. [Emphasis mine]

Granted, this shouldn't be surprising news, one would think, to anyone who has spent any time around large organizations. A disproportionate number of the positions always seem filled by people who elicit a WTF? reaction from reasonable-minded observers.

So, do we just live with it? After all, we can hardly get around elevating the best people, and it isn't unreasonable to think that one's experience in a former position doesn't adequately prepare for the new one.

Not necessarily, according to the authors:

...the best strategies to improve, or at least not to diminish, the efficiency of an organization, when one ignores the actual way of competence transmission, are those of promoting an agent at random or of randomly alternating the promotion of the best and the worst members. We think that these results could be useful to guide the management of large real hierarchical systems of different nature and in different fields.

Whoa, it turns out calling someone's promotion "random" is a compliment. Who knew darts could be so handy at promotion time?

Source:

The Peter Principle Revisited: A Computational Study
Authors: Alessandro Pluchino, Andrea Rapisarda, Cesare Garofalo

When is a Failure Not a Failure? When It's an Iraq Oil Auction [Paul Kedrosky's Infectious Greed]

2009-07-03T16:00:16-07:00

The failed Iraq oilfield auctions this week have become a litmus test for Iraq, for oil analysts and for the ever-nervous global oil market. Iraqi officials refuse to see the disappearance of most bidders and the completion of only auction (with a single bidder) as a failure. Instead, they are hawking the crowd-pleasing idea that multinational oil companies are greedy mouth-breathers that balked at the hard bargain being driven by righteous Iraqis who control so much valuable, marginal oil supply.

For their part, of course, oil companies think that the Iraqi oil auctioneers are nuts. The proffered risk/reward premium for exploration, development and production in an unsafe country with minimal infrastructure and maximal political flux was near zero. But in their zealotry to demonstrate resource nationalism to an uneasy electorate, Iraqi officials scared off most sane bidders, making the only successful buyer in this first round a bid backstopped and subsidized by the Chinese government -- and one that still required a huge price concession.

Here is a nice summary snippet from IHS on where this means the sorry process goes from here:

Without Iraq offering a better risk/reward ratio to investors it will have to undertake all investment and development itself—a process that will be slow, laborious, and under-funded, and will result in volumes nowhere near those targeted and years from their hoped-for schedule.

Iraq needs to look not only at the reward side of its offering, however; it can make significant progress on lowering the investor risks. The government needs to direct its attention to passing a national hydrocarbons law in order to lay down a clear legal framework for the deals and give them greater political legitimacy than what is just—effectively—a mere pledge of contract allegiance from the currently serving ministers. This would also lower the political risk in Iraq, as the law in itself would require some form of broader political understanding between the leading factions and thereby to some extent bind much of Iraq's political forces into taking responsibility for long-term hydrocarbon policy.

More here and here.

QOTD: Sampling the Future [Paul Kedrosky's Infectious Greed]

2009-07-03T15:05:36-07:00

The following innocuous sampling theory comment from Andy Gelman set me thinking in a bunch of dimensions today. The question had to with how to handle statistical analysis when your sample population is the entire population, and Andy's answer is important and instructive:

So, one way of framing the problem is to think of your "entire population" as a sample from a larger population, potentially including future cases.

Precisely right, and a point that many naive hypothesis-generators might keep in mind, whether in financial markets or elsewhere.

More here.

Farmworkers: Go to New York City, Young Man [Paul Kedrosky's Infectious Greed]

2009-07-03T14:59:24-07:00

I've been messing about with this tool that tries to compare supply and demand for various jobs by geography throughout the U.S. You have to be careful how you interpret it, as the following chart suggesting farmworkers (and animals (sic.)) should race to New York City and San Francisco shows, but it's still interesting.

Watching People Come of Age [Feld Thoughts]

2009-07-03T14:38:55-07:00

One of the most satisfying parts of what I do is getting to work with people over a long period of time, starting early in their careers. It’s one of the things I love about TechStars, but it’s not limited to that as I have many other relationships with young and first time entrepreneurs.

Last night, at Ignite Boulder 5, I had a permagrin on my face as I thought about the amazing job Andrew Hyde was doing. I first met Andrew a few years ago when we started TechStars – he basically volunteered to hang out with a video camera for free all summer to film stuff and learn. He was so hugely helpful that it was easy to bring him on board the TechStars team in year two as the community manager (things like TechStars.TV are Andrew’s creation.)

I attended Ignite Boulder 2 and had a great time. But last night – #5 – just blew me away. 700-ish people in the Boulder Theater, enormous energy, endless laughter and brain stimulation, and just a very good time. Andrew organized a phenomenal show and really shined as the organizer / MC.

But TechStars and Ignite Boulder are not the only things Andrew does. He also created Startup Weekend (I was at the first one in Boulder) and he was one of the founders of Boulder.me. And – with Matt Emmi of One Button -created the hilariously creative VC Wear t-shirt line (my favorite: “I went down on Sand Hill Road”.)

But wait, there’s more. Andrew is everywhere in the Boulder startup community while managing to travel all over the world sharing his brand of entrepreneurial passion. I don’t ever think I’ve seen Andrew without a smile on his face, and he’s even gracious when he kicks my butt in ping poing.

It’s been awesome to see Andrew come of age as a key driver of our local entrepreneurial community. Good job man!

Wells Fargo Gives California July 10 Drop-Dead Date [Paul Kedrosky's Infectious Greed]

2009-07-03T13:50:13-07:00

Nice to have a firm date for when California must have a budget and stop shopping IOUs. Here is Wells Fargo from a release yesterday:

Wells Fargo & Company (NYSE:WFC) said today it will accept registered warrants issued by the State of California from its retail and business customers for a limited time. It will begin accepting the registered warrants for deposit on July 2, 2009 and stop accepting them no later than July 10, 2009.

“We’re very disappointed, as are many Californians, that California has taken the unfortunate step of issuing IOUs in lieu of its payments to some businesses and individuals,” said Lisa Stevens, head of Community Banking for Wells Fargo in California. “Wells Fargo has a long history of taking extraordinary measures to help our customers and will accept registered warrants from our customers, but only for a limited time, to allow them time to make other arrangements. We are reluctant to take this step, but are doing so to help our customers who are not at fault and with the expectation that the Legislature and Governor will complete the budget within days. We join all Californians in urging our Legislature and our Governor to take the appropriate steps as soon as possible to resolve this budget crisis.”

[Emphasis mine]

It is deliriously ironic and surreal that it took California to make screwed-up and irresponsible banks look like mature adults.

James, surfing. [BijanBlog]

2009-07-03T10:36:57-07:00

James, surfing.

NBC Attacks, Tries To Stomp Out Wimbledon Semifinal Streams* [Silicon Alley Insider]

2009-07-03T10:24:00-07:00

UPDATE: The match is over. It was excellent (live). We won't wreck the outcome for you. But in case you don't want to waste the rest of your afternooon watching the tape-delay on NBC TV, just search for the results anywhere online, turn on the radio, visit a newspaper web site, visit NBC Sports.com (where their headline blares out the winner while the video only shows the same tape delay), or watch any news channel on TV.

EARLIER: Roddick and Murray are in the middle of the fourth set of their riveting Wimbledon semifinal, with Roddick leading 2 sets to 1.

Read the rest of this story »

Gnip Is Hiring Software Developers [Feld Thoughts]

2009-07-03T09:07:11-07:00

Yesterday I posted that Trada is looking for a Test Engineer. Gnip is also looking for software developers – three in fact:

If you are Boulder-based and fit the qualifications, email Jenny-Lynne Elledge.

Being International On July 4th [Mark Peter Davis]

2009-07-03T09:06:25-07:00

Tomorrow is the anniversary of America's independence - a great time to be thinking about how to be a better citizen both at home and globally.

With that spirit in mind, as of yesterday this blog has become internationalized. I added (per the recommendation of my rockstar intern Wayne) Google translator. If you don't read English well - fear not, you can now read this blog in dozens of languages. Hopefully this content will be able to help entrepreneurs everywhere.

Prometheus, $10M in Hand, Poised to Deliver Alternative Fuel for Shell Technology Ventures [Xconomy VC/Deals]

2009-07-03T08:47:25-07:00

energy, deals, Analysis

Gregory T. Huang wrote:

Kirt Montague is the Comeback Kid of the Seattle cleantech community. We saw the fire in his eyes back in March when he rocked the room with a killer presentation on waste-to-energy at Xconomy’s cleantech forum in Seattle. And we see it again now that his company, Redmond, WA-based Prometheus Energy, which produces liquid natural gas from waste, has just closed $10 million in financing—with another $10 million to come upon reaching certain milestones—from Shell Technology Ventures Fund, which is managed by Netherlands-based Kenda Capital, a division of the Dutch oil giant.

Prometheus Energy, and Montague, have been through some rough patches. The company was founded in 2003 and raised more than $20 million in venture funding through the alternative fuels heyday of 2006. That year, Montague took Prometheus public on London’s Alternative Investment Market (AIM). The move didn’t work out, and the company was de-listed in 2008. Prometheus went through layoffs, personnel changes, and slumping revenues. Last September, the assets of the company were acquired by Black River Asset Management, a large private equity firm based in Minnetonka, MN, and San Mateo, CA.

“We’ve hung in there, we’ve weathered the storm,” says Montague (pronounced “Mon-tag”), Prometheus’s co-founder and CEO. “It hasn’t been easy. It’s been painful. But we’re still here, and we’re growing. Having Shell [Technology Ventures and Kenda Capital] close this deal validates a lot of what we’ve done.”

Indeed, it’s a big deal for Prometheus Energy, for Seattle cleantech, and for the future of alternative fuels. It also highlights some broader and more globally important business trends. One is that big oil companies are starting to invest heavily in alternative energy technologies, even in the midst of the recession. Another is that the capital for these deals in the U.S. increasingly is coming from overseas. “You’ve got a situation where the market for this technology is not just domestic, it’s global,” says Michael Butler, CEO of Seattle-based Cascadia Capital, the investment bank that brokered the Prometheus deal. “Kirt went to Shell [Technology Ventures] because of the value they bring.”

Gaining a strategic partner like Shell Technology Ventures appears to be quite …Next Page »

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UNDERWRITERS AND PARTNERS

Watch Wimbledon LIVE ONLINE [Silicon Alley Insider]

2009-07-03T08:35:00-07:00

NBC refuses to show the Andy Murray-Andy Roddick semifinal live. Fortunately, there's the Spanish ESPN feed on ustream below. And there's this nice English stream on justin.tv:

Read the rest of this story »

Wimbledon Semifinals Wrecked For You By NBC (Again) [Silicon Alley Insider]

2009-07-03T08:21:00-07:00

UPDATE: Good news, tennis fans. No thanks to NBC, you can watch the semifinal live here, on ustream (ESPN Spain). And here's another, better one, in English.

UPDATE 2: It's noon ET, and NBC has finally started broadcasting. As expected, however, the network idiots have decided to show the match on a 2-hour tape delay (online, too!), so it's not worth watching. Click the link above to see it live.

Read the rest of this story »

Mass Personalisation and Venture Capital: not just 3D Printers. [The coffee shops of Mayfair]

2009-07-03T07:39:01-07:00

One of my Investment themes at Advent is Personalisation.

Why?

eCommerce is clearly one of the few bright spots right now and we’re still in the realm of simple investment stories around backing companies selling stuff online. The Chemist Direct investment thesis? The “Superdrug” of tomorrow. ASOS? The Arcadia of tomorrow. ChainReaction (my personal favourite) is the Halfords of tomorrow. Vente Privee the TKMaxx of tommorrow. Etc etc.

So we’re getting better and better at selling standard product online.

However, there’s an interesting batch of companies who’ve been funded which I expect to see more and more money chasing: Retailers selling product SKUs of 1. A product that personalised and unique to each purchasers.

How can this stack up?

The web is one low-cost route to market and can be leveraged to offer everyone the tools to create their own products. The challenge for businesses is getting the back-end right to be able to manufacture and fulfill.

On “simple personalisation” Europe has some excellent first-wave companies. Spreadhshirt and personalised t-shirts, still growing nicely. Moo.com and cards. Graze.com and healthy food boxes.

What interests me is the second wave of far more complex manufacture & fulfilment or completely new products. GlassesDirect is a great example: something made specifically for me. Not to mention the operational ball-ache of made to order glasses and the drop shipping challenges of fulfillment.

Tailorstore is another great example: We all want tailored shirts but here’s something made in Asia, and delivered to the UK via Germany, from a business based in Sweden.

There is real innovation here: at the technical, operational, manufacturing and financial level. This is a great playground for die-hard entrepreneurs: intellectual challenges, people saying “it can’t be done”, creative solutions and grinding out deals.

I would love to meet more companies in this sector.

There is also a level beyond this: companies coming up with products that are not currently available. I love the idea of being able to design a new car online specifically for me or design a new gadget and get it made by a 3d printer. It’s just I’m not yet convinced this is en-masse right now. Tell me if I am wrong.

HeyZap's Looking For A Strong Software Engineer In SF [A VC]

2009-07-03T06:04:35-07:00

Our newest portfolio company, HeyZap, is looking for the fourth member of their team. HeyZap is a platform for game developers to get wide viral distribution for their flash games and monetize them.

They are looking for:

a talented engineer with extensive experience; hopefully you have made one or more sites that clearly illustrate your capabilities. You should be a technical generalist, meaning you are comfortable and eager to work on what is needed and learn what is necessary, in a fast-moving, dynamic environment.

The job spec is here and if you are interested please email them at jobs@heyzap.com.

Michael Jackson Is Dead Online, Too [Silicon Alley Insider]

2009-07-03T06:00:00-07:00

When Michael Jackson died, I wondered how quickly the conversation about him would fade online and how long it would persist on TV “news.” Well, it didn’t take long to see the divergence: TV thinks we’re still buzzing about MJ. But online, we’re not.

Here’s Blogpulse on mentions of Michael Jackson:

Read the rest of this story »

If Facebook was a country it would be world’s fourth largest [The Equity Kicker]

2009-07-03T05:36:50-07:00

There is an article in the FT today that asks whether Facebook is a “web phenomenon on the cusp of greatness or just a social craze?”, and as we’ve discussed here before the last thing any of us needs is for it to turn out to be a fad.

I think it is just about fair to say that the debate is still open, but what is definitively the case is that Facebook’s momentum is on the increase.

First take a look at these charts (courtesy of the FT)

The graph on the left shows the traffic momentum is strong, and the pie chart on the right shows that Facebook is pretty much an all age site now (or at least all age up to retirment).

Secondly, these highlights from recently released engagement stats on FB (courtesy of Inside Facebook) tell a story of a community that is on the rise in terms of depth and richness as well as size:

30 million users update their statuses at least once each day (13 million did per month at the beginning of the year)
8 million users become fans of Pages each day (up from 2.5 million per day at the beginning of the year)
10 million videos are uploaded each month (up from 4 million)
900 million photos are uploaded to the site each month (up from 700 million)
1 billion pieces of content (web links, news stories, blog posts, notes, photos, etc.) are shared each week (up from 15 million per month)
35 million active groups exist on the site (up from 19 million)
2.5 million notes created each month
30 million users access Facebook each month through a mobile device

Given all this, and that with a population of 240 million Facebook would be the fourth largest country in the world I’d say that Facebook should be able to lay the ‘social fad’ accusations to rest pretty soon. Then if they could just start making money they could answer the business sustainability question….

Gladwell Hates Most In Anderson What He Fails To See In Himself [Silicon Alley Insider]

2009-07-03T05:30:00-07:00

When I saw Malcolm Gladwell doggedly dissecting Chris Anderson's upcoming "Free: The Future of a Radical Price" (see Chris' response here) my first reaction was: Brilliant!

Chris Anderson is editor-in-chief of Wired, and Malcolm Gladwell is a top brand name at The New Yorker, and as corporate cousins, clearly Condé Nast's publicity machine must have engineered this beef, trying to boost sales of both their titles through a completely manufactured rivalry.

Their past titles have been champions of what I call the "Airport Books" genre: The elite class of business titles that I see sold in airport newsstands next to the magazines and crappy romance novels. (I might have unknowingly stolen "airport books" from someone else, but I can't find a citation.)

Read the rest of this story »

Google, AOL, Yahoo and Microsoft To US: Don't Tread On Me [Silicon Alley Insider]

2009-07-03T05:00:00-07:00

Online advertising's biggest players to government: Please stay out of our business.

Google, AOL, Yahoo and Microsoft, along with a host of other advertising, agency and marketer associations, took another step in pressing their case that the government doesn't need to regulate the collecting of data for ad-targeting purposes by search engines, websites, advertisers and ad networks. They've crafted their own set of rules in the hope of heading off potential regulation in Congress.

For months, a wide-ranging group of marketers, portals, publishers and ad networks represented by industry groups -- such as the Interactive Advertising Bureau, the American Association of Advertising Agencies, the Direct Marketing Association and the Association of National Advertisers -- have been working on "self-regulatory principles," which were released today. They require sites to provide prominent disclosure of who is collecting information and the ability to opt out, inform consumers of any change to a site's privacy policy, and offer special protections for sensitive data connected to health and financial issues or children, among other things.

Read the rest of this story »

Facebook Grows By 700,000 Users A Day [Silicon Alley Insider]

2009-07-03T02:39:40-07:00

Justice Depart officially begins investigation into Google Books [PaidContent]
New York thieves target iPhone owners more [Reuters]
Analyst says Apple's app store revenues are"a few hundred million dollars at best" [WSJ]
Yahoo is "a place where people make and manage the important connections they have," says CTO [BoomTown]
The top 25 Facebook games [ISG]
Facebook grows by 700,000 users a day [Inside Facebook]

Join the conversation about this story »

Trada is Hiring for a Test Engineer + Support [Feld Thoughts]

2009-07-02T21:34:57-07:00

Trada, one of our portfolio companies in Boulder, is looking to hire. They’re looking for a tech-skilled individual who thinks they can do just about everything, because they might be asked to. Primary role is testing their online advertising app but there’s a huge opportunity to contribute much more. There’s dev work; cloud systems admin; operations tasks; end-user support; and customer facing account management tasks that can be added to the mix for the properly skilled (and properly motivated) individual. While still in stealth these guys are already rocking. Interested – contact Michael Lawless at mlawless@trada.com.

Intellikine, Chasing Hot Cancer Drug Target, Raises Big Venture Round [Xconomy VC/Deals]

2009-07-02T18:07:34-07:00

Biotech, cancer, VC

Luke Timmerman wrote:

La Jolla, CA-based Intellikine, a company developing drugs against one of the hottest targets in cancer biology, has nailed down $16 million in venture capital out of a round that could be worth as much as $38.5 million, according to a regulatory filing.

Intellikine got the capital infusion from its founding crew of investors—Sofinnova Ventures, Abingworth Management, and CMEA Ventures—as well as four new investors, says David Kabakoff, an executive in residence with Sofinnova in San Diego.

The company, founded in September 2007, is developing drugs to block the PI3 kinase pathway, which controls critical cell processes like proliferation, migration, and cell survival. Evidence has been mounting for years that when these normal functions get flipped into an overactive mode, it’s a hallmark of cancer cells growing out of control as well as an immune system going haywire and attacking healthy tissue. Some of the world’s biggest drug companies, including GlaxoSmithKline, Novartis, and Roche are developing new cancer drugs to block this target, as well as smaller companies like South San Francisco-based Exelixis and Seattle-based Calistoga Pharmaceuticals.

Intellikine attracted the money to build up its pipeline of drug candidates, and move its lead contender to its first clinical trial, Kabakoff said in an e-mail. “The company has PI3 kinase inhibitors with an unprecedented range of specificities, which will be developed for cancer and inflammatory disease,” Kabakoff says.

Other companies appear to be further along in clinical trials than Intellikine in the pursuit to develop drugs against this target. Exelixis signed a partnership with Paris-based drug giant Sanofi-Aventis in May that could be worth more than $1 billion to further develop its drugs in clinical trials. That same month, Calistoga raised $30 million in venture capital, then released data at a pair of medical meetings that said its drug was able to shrink tumors in half of the patients in an initial clinical trial, at low doses, with minimal side effects.

Intellikine’s lead candidate is a highly potent small-molecule drug that’s actually made to block a pair of different targets called mTORC1 and mTORC2, Kabakoff says. The PI3 kinase inhibitors are actually a little further behind in animal tests, according to the company’s website.

Intellikine CEO Troy Wilson was out of the country and unavailable for comment.

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High and Dry - Radiohead [BijanBlog]

2009-07-02T18:00:00-07:00

High and Dry - Radiohead

The Unbearable Stupidity of Some Patents [Feld Thoughts]

2009-07-02T16:17:51-07:00

If I told you that I had just filed a patent for “a system to sell equity in domain names”, I’d expect you to laugh at me. I haven’t ranted and raved against software (and business method) patents for a while because I got bored of doing it. The PTO has gotten so far behind on responding to patent applications that the whole notion of a four year cycle to get a software patent approved just underscores how ridiculous the whole thing is given the pace of innovation in software.

But – today’s silly patent popped up somewhere and I just couldn’t resist poking fun at it. Go Daddy has filed a patent for a method of selling equity in domain names. I can’t wait to see what the SEC has to say about this one.

I sure do hope the new regime in Washington D.C. has the balls to address the software patent issue this time around and end this madness.

peHUB Rewind [privateequityHUB]

2009-07-02T15:00:02-07:00

Here’s a look at the past two weeks of scoops, opinions and analysis from the peHUB blogging team.

LBO-Backed Bankruptcy List: On Pace to Double Last Year’s Total [Quarterly Stuff]

Fund Performance Data Dump [Quarterly Stuff]

Fund Performance Data Dump (Part Deux) [Quarterly Stuff]

VC-Backed IPOs Rise Infinitely in Q2 [Quarterly Stuff]

Private Equity Activity Falls in Q2 [Quarterly Stuff]

Global PE Fundraising Rises in Q2 [Quarterly Stuff]

PCG Pays $2 Million To Escape New York Probe [Buy Yourself Out of Trouble!]

Escape from New York (Part II) [It's That Easy!]

88% of PE Firms Have Cut Portfolio Company Headcount [Studies]

Los Angeles PE Firms To Buy Century-Old Tulsa Pipe Company [Deal Scoops]

Highland Capital Delays Fund Close [Tough Times]

Ashmore: Private Equity Is Deep Underwater [Tough Times]

Of Work Ethic and Private Equity [Essays]

Bain Capital Offers To Cut Size of Co-Invest Fund [peHUB Approves]

KKR Proposes A Double Secret Reverse IPO [About-Faces]

Chatting Up The KKR “IPO” [Reuters Insider]

Report: Dave Mosher Leaving Madison Dearborn [HR]

Wall Street’s Oldest Fund Placement Biz To Close [Bye Bye Merrill]

Fundraising Updates: Centerbridge, Domain, Insight Equity & More… [Scoops]

Blood, Sweat & Capital Takes The Stage [New Firms]

Bill Gates on Raising Successful Kids [Randomness]

Solar “Bloodbath” Expected by Year End [Predictions]

Not So Clear: Verified Identity Pass Shuts Down [VC Fail]

Social Network TeeBeeDee Shutting Down in Two Weeks [VC Fail]

Paul Allen Jumps Back in Founder’s Seat with Software Startup Xiant [Second Acts]

Audio From Nantucket VC Panel [VC Notables]

Q&A With Saban Ventures’ Craig Cooper: Half of L.A. VCs Struggling to Raise Funds [Surprised?]

Fundraising a Long Slog, Including for Ex-Googlers [More of the Same]

Did VC Fund Size Cuts Work? [In-Depth Look]

VCs Losing Confidence in “Broken” Industry [Studies]

Holy Kaw! There’s a Lot of Porn on Twitter [TwitHacks]

Study Disputes The Value of VCs “Buying Local” [Go Go Globalization]

Jurvetson Propelling $60 Million SpaceX Round [New Money]

The Return of Redlasso? [Second Tries]

You Bet Your Ass, Highway 12 Backs Med Device Company ["It Feels Good"?]

Steve Jobs May be in Memphis [WSJ Reports]

Tagged In Today’s NY Times [Follow-Ups]

Anderson Cribs from Wikipedia in New Book “Free”

[From the Irony Department]

A Twist on the Standard Biz Plan Competition [Contests]

VC Landscape Teeming With Ex-Googlers [No Shit]

Google Cofounder’s Wife Advertises Her Company…On a Blimp [Randomness]

Founders Fund: Eyeing Life Beyond Consumer Web Startups [Interviews]

Westly: We’ll Have a Dozen Cleantech IPOs [Hopefuls]

Cleantech Investment Bank Launches, Complete with PE Practice [Wall Street is "Good For The Family"]

Dollars Tick Upward for Clean Tech Investments [More Hopefuls]

Cleantech: What GE’s Skillern Said [GE Also Hopeful]

Do VCs Take The Summer Off? Entrepreneurs Say Yes. Data Says No. [Its Like School!]

peHUB Scouts Out with DEMO in Boston [Events]

Weekly Downgrade Wrap-Up [Regulars]

The True Story of True Ventures [Q&A]

Six Quick Questions with Navin Chaddha of Mayfield [Q&A]

NEA: Lonely at the Top, and on Sand Hill Road [Movin On Up]

How to cold call a VC [Links lists]

Apollo clawbacks? [Links lists]

Sand Hill Slave is back [Links lists]

Slipping a table under the table [Links lists]

Fortress Investment Group managing Jackson’s money? [Links lists]

Bain Capital’s “hairy” GOME situation [Links lists]

PPIP: Not dead yet [Links lists]

Dear Madoff Victims, Get over it [Links lists]

Greed will come again [Links lists]

7 Tips on Improving Your LP Relations [Vox Populi]

The Systemic Risk of Venture Capital [Vox Populi]

Keep Browsing: peHUB Rewind June 19, peHUB Rewind June 12, peHUB Rewind June 5, peHUB Rewind May 29, peHUB Rewind May 22, peHUB Rewind May 14, peHUB Rewind May 8, peHUB Rewind May 3, peHUB Rewind April 17, peHUB Rewind April 10, peHUB Rewind April 27

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This is Going to Be Big (I Think): A Look at Numerate [privateequityHUB]

2009-07-02T14:16:25-07:00

In recent weeks, I’ve heard a few VCs talk about the promise of “biocomputational” startups, biotechs that are more quickly than ever collecting, processing, and making use of genomic data. Gene Security Network, which produces a test used to screen chromosomes during the in-vitro fertilization process is one that’s raised $10 million in the last couple of years, including from Sequoia Capital, Claremont Creek Ventures, and Alafi Capital.

Another that looks to hold potentially even more promise is a drug-design technology firm called Numerate, whose technology — from what I gather — is far enough along that it will be exceedingly hard for competitors to catch up. That’s largely because the company been tinkering with that technology for seven years; it emerged from a failed version of its earlier self called Pharmix, a biotecth that burned through $20 million of capital from Mohr Davidow Ventures among other investors.

Some but not all — including MDV — stayed for the ride at Numerate, which has already raised $9.5 million over two funding rounds since November. They may see that commitment pay off, too. Last month, the company was selected to negotiate what may be up to a $6.5 million grant from the Defense Threat Reduction Agency, a unit of the Department of Defense. It’s already received a much smaller grant from the National Institutes of Health. And Numerate is in discussions with nearly every big pharmaceutical company in the world, four (that we can’t disclose publicly) with which it is already collaborating.

So what does Numerate do, and how? Earlier this week, I spoke about the company with CEO Guido Lanza, who’d cofounded and served as CTO of Pharmix. I also rang Adam Grosser, a managing partner at Foundation Capital, which has become Numerate’s leading investor despite that Numerate is so far from the Foundation’s typical focus areas that there’s no place for it – yet — on the venture firm’s Website.

Adam, why Numerate?

AG: For starters, the drug discovery process — particularly the R&D process — is broken. The FDA has approved about 20 drugs per year from 1980 through 2006. Meanwhile, the R&D expenditures required for 20 new drugs in 1980 were $3 billion and by 2006, they were $41 billion. The process isn’t working. It’s not viable to spend $2 billion to get a drug through the process.

Why has the process grown so expensive?

AG: Largely because of the human decision-making and intuition involved. You have to identify a target, then have a sense for what might bind to it and have the effect of expressing or inhibiting something, and you have to be right. And that’s just the very beginning of the process.

In fact, the process takes so long that intellectual property laws are having to be modified. I was talking with a scientist at Stanford recently who began work on a target 16 years ago and the drug will get approved by the FDA this year. Because patents are good for 17 years and most patents are patented at the beginning, the [U.S. Patent and Trademark Office] has had to come up with this crazy process of extensions; otherwise, no one could capitalize on their own work.

So how is Numerate trying to speed up the process?

AG: It’s basically narrowed down the process of selecting which drug is likely to work from a very large set of drugs. Its technology can quickly discern what makes a small molecule toxic, how you deal with bias and noise and data from a tech standpoint.

Put another way, it’s taking the human decision-making piece and transforming it into a data-driven approach where you can take billions of ideas and evaluate them. In the end, it has solved the computer science problem of drug discovery.

But isn’t there also a bottleneck issue at the FDA that needs to be overcome?

I don’t think it’s the FDA’s fault. They’re necessarily cautious. You don’t want to put things in people that are risky. But if you could take five to seven years out of the front end, you could get to clinical trials much more quickly.

Guido, how does the business side of things work, and how well-protected is your company?

GL: Actually, most of our information we’re able to keep as trade secrets because we don’t sell the technology. We partner on the output. A pharmaceutical company will come to us with an idea — maybe they are looking for an anti-cancer drug that hits the following targets but not these other targets yet is localized to the brain. That might be a specification we’d start with. From there, we go and design a compound using this technology they’ve never had access to. If it performs as we say it will, we receive eventual royalties on the sale of the drug. That’s the coin of the realm in our industry: compound intellectual property.

What can you say publicly about your technology?

We’re basically shifting the trial and error piece to the computer, and running that whole process on the cloud, through Amazon. We have access to as many computers as we want at any given time. If we need 500 to 1,000 computers for a month to tell us which compound is worth making, we can do that, as we can easily do five to 10 projects a year as a result. And that was prior to starting work on the next generation of our technology, which will be a real accelerator for us.

How many compounds can most other biotech companies produce in a year’s time?

GL: Small biotechs can work on two or three maybe, while large ones like Genentech may work on tens of projects.

So what’s happening in that time that you’re producing a compound for a customer?

GL: Based on the specifications we’re given, our chemists then begin to look at a focused area of about a hundred billion compounds, which takes about a month. Then we start to look at all these ideas and our [technology] begins to rank them by likelihood of success. Over the next couple of months, working around the clock, the computer is combining different ideas and it’s getting smarter and smarter as it goes. Then you have to go to the lab and make the compounds and that takes a couple more months.

Why will Numerate work where Pharmix failed?

GL: Pharmix, which developed the previous generation of technology that we’re using now, had the wrong business model. We thought then that if you have something that generates small molecule drugs, why not use it yourself? But there were reasons why that wasn’t the right model, in terms of which risks we could take on and mitigate. Other companies are better at picking out the next cancer drug.

Who are Numerate’s most direct competitors?

GL: There are really two in question: people who outlicense compounds — traditional biotechs, for example, and people who will run the traditional process for you, often in India or China. We have lost a deal when a company trying to do a drug design has gone out and licensed a compound that’s farther along, using a firm [abroad] because it can be much cheaper. The problem is that you don’t necessarily wind up with something you can use. There’s a design and not just an execution piece that [pharmaceutical] companies should be focusing on.

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CHART OF THE DAY: Search Ads Aren't As "Helpful" As Google Suggests [Silicon Alley Insider]

2009-07-02T13:47:00-07:00

In his piece on the origins of Google advertising, Wired's Steven Levy writes that Larry Page and Sergey Brin's main requirement for all Google search ads is that they "should be useful and welcome—not annoying intrusions."

Given Google's (GOOG) massive $20 billion plus annual revenues, one might think this requirement has been well-met.

Not so, say respondents in a survey from AdWeekMedia and Harris Interactive. In fact, 37% of those respondents find the most "helpful" form of advertising is TV advertising, while only 14% credit Internet search ads for their purchases.

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AT&T Saw 65,000 Texts Per Second Following Michael Jackson's Death (Leaked Memo) [Silicon Alley Insider]

2009-07-02T13:42:00-07:00

MacDailyNews obtained an internal AT&T (T) memo that lauds all sorts of milestones related to "iLaunch"-- the day Apple's (AAPL) new, speedy iPhone 3GS went on sale.

The memo also mentions that AT&T saw 65,000 texts per second on June 25, the day Michael Jackson died.

Here's your copy:

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Private Equity Group To FDIC: Try Again [privateequityHUB]

2009-07-02T13:33:50-07:00

The Private Equity Council isn’t going to let federal regulators off so easily this time around.

Last month, the private equity lobby supported the government’s requirement that buyout firms register with the SEC, even while arguing that “private equity firms do not create systemic risk.” Today, however, the PEC came out against proposed FDIC guidelines for buyout firm investments in banks, saying that they go to far and would be counterproductive.

“We hope that the comment period yields changes that facilitate the flow of private capital into the banking system, consistent with the Administration’s other efforts to address the financial crisis,” said PEC president Doug Lowenstein.

To recap, the proposed rules include a minimum three-year hold time, capitalization requirements, cross-guarantees for firms with multiple banks in its portfolios, and extensive disclosures, particularly regarding ownership structures.

To be clear, there is no surprise in these guidelines. We had a pretty decent idea that Sheila Bair was going for these exact guidelines a few weeks ago. My hunch is that private equity firms are going to push more on certain of the rules than others.

The ones that should probably be scaled back are the cross-guarantees between portfolio companies-something a buyout pro does not currently do with portfolio companies; this isolation of funds and investments could be what’s keeping some funds in the black.

But the biggest bone of contention will like to be with the capitalization requirements, which, at leverage ratio of 15 percent and capital of at least 6 percent of risk-weighted assets, is stricter than what most buyout firms would be willing to adhere to and stricter than what is required of other investors in banks (for example, wealthy individuals or publicly traded entities).

As for the others: A buyout firm cannot rationally argue that a bank under its ownership should be able to lend to it. Why even risk the appearance of impropriety when the “leverage” part of leveraged buyouts is under so much scrutiny already? A bank giving its owner favorable terms on debt would only serve to fuel that fire. I doubt the PEC and buyout firms will argue against this one. Besides, I believe Blackstone, Carlyle, et al agreed in their recent purchase of BankUnited that the bank subsidiary would to its parent firm.

The same goes for disclosures. The move toward greater transparency for buyout firms shouldn’t stop with Blackstone, Carlyle and KKR making their annual reports public. There’s no problem in the government knowing who owns what piece of which bank..

The PEC declined to comment further on its statement.

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Readings [Paul Kedrosky's Infectious Greed]

2009-07-02T13:16:59-07:00

There is some good stuff in the current issue of Foreign Policy:

Thing again about Asia’s inevitable rise (Source)
The end of finance is the end of macho (Source)
The 2009 Failed States Index (Source)
The collapse of the Baltic states (Source
Why birth rates matter (Source)

Venture Capitalists are Best Kept at a Distance [Paul Kedrosky's Infectious Greed]

2009-07-02T13:05:15-07:00

There is amusing (in an admittedly academic sense) new paper out seemingly showing that venture capitalists obtain a significant portion of their performance by investing in deals outside their local area. That, of course, runs contrary to the usual VC mantra that they only invest in their local area.

A cynic (or an entrepreneur) would like say the answer is obvious. Venture capitalists are meddlesome sorts who get in the way of running a company, so startups will do best to the extent that they can keep VCs a few timezones and/or flights away.

For some reason the paper’s author don’t proffer the above explanation. Instead, they argue it is a combination of higher hurdle rate forcing VCs into making better investments, plus some geographic arbitrage. While both are possible, even if geographic arbitrage in venture is mostly a loser strategy, I’d also bet there is a reputational effect going on. In short, the “smart money” from out of town gets to do deals in the hinterlands at better valuations than does a local fund.

Source:

Buy Local? The Geography of Successful and Unsuccessful Venture Capital Expansion
Henry Chen*, Paul Gompers**, Anna Kovner***, and Josh Lerner**

Diller Fires 25% of Evite [Silicon Alley Insider]

2009-07-02T12:57:00-07:00

Evite, a unit of Barry Diller's IAC (IACI), has undergone a restructuring and cost-cutting meant to right the struggling ad-driven business.

Nine of 38 employees were laid off, paidContent reports, Rosanna McCollough, GM, and Lariayn Payne, VP of Marketing, were among the casualites.

The online invitation service finds itself back under John Foley, who ran it from 2002-2005, but as part of his Pronto division of IAC.

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Facebook Connect Is A Huge Success [Jeff Nolan]

2009-07-02T12:55:43-07:00

I’d go with that assessment. Connect has made identity/authentication so much easier for third party app providers and at the same time has struck a serious blow to Google in that these relationships are not transactional and it is a zero sum game. With FB adoption where it is and so much momentum on the Connect initiative, there is little incentive for third party service and app providers to go with any alternatives.

As much as Beacon was Facebook’s low point, that service’s replacement, Facebook Connect, is vaulting the company to new heights six months after its November 2008 launch.
[From Facebook Connect Is A Huge Success -- By The Numbers]

The long term strategic value of Connect is in layering on additional service offerings that can slipstream into application services. Identity and authentication are clear wins today, profile data is increasingly accessible, and long term that ability to build in payment services, advertising network extensions, analytics, and CRM capabilities is entirely within their grasp.

Washington Post Cancels Clever Plan To Make Money Off Of Expensive Reporters [Silicon Alley Insider]

2009-07-02T12:45:00-07:00

The Washington Post has canceled plans to host a series of "salons" that would have mixed Obama Administration officials and Post reporters with reps from companies and nonprofits paying as much as $250,000 to attend.

Politico reported the plans this morning after obtaining a flier inviting sponsorships.

Once the news broke, the Post newsroom quickly pulled back on the offer of reporters attending the events. This afternoon, the paper announced the whole even has been cancelled.

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Twitter Followers For Sale [Silicon Alley Insider]

2009-07-02T12:29:54-07:00

An Australian company uSocial is offering to get people Twitter followers for a fee, reports BBC.

The going rate is $87 for a 1000 followers.

While Twitter itself has yet to convert its hype into revenues, here is yet another business that's making money off the micro-blogging service.

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peHUB Second Opinion 7.2 [privateequityHUB]

2009-07-02T12:26:54-07:00

Happy July 4th!

Bloggers Gaining Steam: Goldman Sachs responds directly to blogger Zero Hedge. (Zero Hedge)

Lists: Dumbest Moments in Business, Mid-Year 2009. I think we could add a few buyout moves to this list as well… (Fortune)

Fighting Fund of Funds? “Private equity funds of funds are increasingly under fire. Not only do they reduce returns, but they do not minimise risks” (IP&E)

Hours Versus Heads: The decline in aggregate hours worked has been frighteningly consistent over recent months. (Freakonomics)

Student Loan Horror Story: How a law school grad that passed the bar is being denied admission because of his $400,000 student loan load. (Law Blog)

What Did You Buy This Year: Ya shoulda bought high yeild, the Economist blog writes. (Economist)

Running a Hedge Fund From His Dorm? “Now, in addition to attending Pomona College, Graves manages Caelum Capital, a five-man $4.7 million long/short equity fund.” (Dealbreaker)

Sheila Bair: She’s a hero for taxpayers. (Clusterstock)

Long Live Secondaries? Buy-and-hold is dead. What does that mean for private equity? (Minyanville)

Simple Solution for S&P and Moody’s? “The truth is that the buy-side also wanted inflated credit ratings.” (Clusterstock)

Novelty at Toys ‘R’ Us: The KKR-backed company’s new $950 million senior note offering’s structure “could prevent the new bonds -which will be Toys “R” Us’ largest and most liquid issue - from being deliverable into existing CDS contracts.” (Debtwire)

PE Likes Pipes: Old news, when is someone going to study the kinds of returns buyout funds have gotten on such deals (Note to self…) (Reuters)

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Bank Theft Highlights Downside Of Virtual Currencies [Silicon Alley Insider]

2009-07-02T12:17:04-07:00

Virtual currency is turning into a multi-billion dollar economy, and much of that money sits in virtual banks that exist outside normal government regulation.

So what happens when fraudsters wake up to the laissez-faire virtual economy?

And worse, what if the one of those fraudsters happens to be the bank CEO?

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Pay-With-Your-Phone Startup Raises $8 Million [Silicon Alley Insider]

2009-07-02T12:04:00-07:00

Bling Nation -- a real company -- has raised $8 million, reports Venturebeat.

Bling's RFID-based mobile payments program, Redi Pay Bling, allows users in the U.S. to pay for goods in stores with their phones.

Redi Pay Bling took two years to develop. It will compete with Visa and Mastercard.

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"My answer to that is that Daring Fireball is decidedly not free. It’s simply a question of who gets..." [BijanBlog]

2009-07-02T11:56:42-07:00

“My answer to that is that Daring Fireball is decidedly not free. It’s simply a question of who gets charged. Readers don’t, but sponsors and advertisers do. What makes it work so well (so far) is that this makes everyone happy. I’m earning a nice salary. Readers get to read my writing in exchange for a small portion of their attention which I direct toward ads. And sponsors and advertisers are happy to pay a fair price to reach an audience of good-looking, intelligent readers such as yourself. But there’s nothing free about it.”

- Daring Fireball

Stealthy Ground Truth Gets $2.6M [Xconomy VC/Deals]

2009-07-02T11:10:48-07:00

deals, VC, startups

Gregory T. Huang wrote:

Seattle-based Ground Truth, a stealthy startup led by Sterling Wilson and Michael Libes, has raised $2.6 million in equity funding, according to a regulatory filing. The company’s directors include Seattle venture capitalists Tom Huseby and Erik Benson, and Beau Laskey of Burbank, CA-based Steamboat Ventures.

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Advertisement: [Xconomy VC/Deals]

2009-07-02T11:10:48-07:00

Hat tip to Dave Winer [BijanBlog]

2009-07-02T10:33:00-07:00

Back in early 2007, I was itching for a way to automatically tweet links to my photos on Flickr.

A few months later, Dave Winer wrote a web service called Flickr-to-Twitter. Dave was nice enough to give me access back then and I wrote about it at the time. And for the past two years, that’s how I’ve been posting flickr links to Twitter for the most part.

Since then a number of 3rd party apps have emerged to post photo links on Twitter. Many of them are fantastic. Simple & fast.

Earlier this week, Flickr announced that they had officially integrated with Twitter. It provides much of the same functionality as Dave’s original application with some additional bells & whistles.

It’s terrific that Yahoo built this into Flickr. It will help many users tie together two great products in a simple way.

But right now I’d like to say thanks to Dave for building his app. I appreciated it then and I appreciate it now.

Ballard, IdaTech Sell 310 Hydrogen Generators [Xconomy VC/Deals]

2009-07-02T10:18:27-07:00

cleantech, Hydrogen, deals

Eric Hal Schwartz wrote:

Ballard Power Systems (NASDAQ: BLDP) and its partner, Bend, OR-based IdaTech announced today that they can now confirm the sale of 310 hydrogen fueled generators to a wireless infrastructure company in India. Ballard, based in Burnaby, BC, manufactures the FCgen-1300 fuel cell, which will be incorporated into IdaTech’s ElectraGen generators which provide backup power for wireless networks. ACME Tele Power will use the generators to maintain wireless networks even during power outages, a common problem in India.

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Bakersfield Firm Re-Energizing San Diego’s Pyron Solar [Xconomy VC/Deals]

2009-07-02T09:57:02-07:00

renewable energy, deals, cleantech

Bruce V. Bigelow wrote:

Bakersfield businessman Stan Ellis, whose Ellis Energy Investments recently acquired Pyron Solar, says he’s keeping Pyron’s headquarters in San Diego but he plans to outsource much of the manufacturing.

Ellis, who announced the acquisition of Pyron’s assets and intellectual property Tuesday, declined to disclose Pyron’s purchase price in a telephone interview yesterday. But he says Pyron, which raised between $4 million and $5 million in venture capital since 2004, fell victim to the economic downturn. “They were behind in several of their obligations, and they were out of money,” Ellis says.

With fresh capital from Ellis, Pyron plans to move ahead with a demonstration of its concentrating solar power technology in San Diego under an agreement with San Diego Gas & Electric. Pyron also has prototypes in China, Korea, and Spain. Ellis says the San Diego renewable energy startup now has five employees and “we’ll probably gear up to about 12.”

Ellis, whose energy holdings have focused until now on the oil and gas industry in and around Bakersfield, says he was impressed with Pyron’s patented “high-energy” solar concentrating design. The utility-scale solar system consists of three 30-kilowatt arrays floating in water. Each array features specially designed lenses that concentrate sunlight into optical chambers, which house glass designed to diffuse and direct light evenly onto a proprietary, multi-junction photovoltaic cell. The water acts as a “heat sink” that absorbs thermal energy. Ellis estimates Pyron’s conversion rate of solar energy to electricity is currently “17 to 18 percent,” and with modifications will reach 25 percent.

“The technology is so much more efficient than flat-panel solar,” Ellis says. “We have a 50-foot diameter concentrator that generates as much energy as a flat panel that’s as big as a football field.”

Pyron, which was founded in San Diego five years ago by German physicists Johannes “John” and Inge Laing, said last September it had added to its Series A funding round. (Laing retired from Pyron the following month). That round was reportedly $1 million in addition to $2 million in venture funding Pyron has raised since 2007 from NEI, New Energies Invest, a renewable energy fund established in Basel, Switzerland by the Sarasin Bank. According to Ellis, Pyron has raised an additional $1 to $2 million from individual investors.

Ellis Energy Investments’ principal holdings primarily consist of two Bakersfield companies—Sierra Process Systems, which recovers oil from refinery solids and sludge, and Global Mastics, which uses a proprietary process to develop cement-type compounds from petroleum refinery waste solids. Ellis says moving into renewable energy is the future for the oil and gas industry. “We have nowhere else to go,” he says. At the same time, he adds, “It’s that [oil and gas] economy that’s keeping us whole so we can drive off into some of these other areas.”

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Everything You Wanted To Know About Facebook's Revenue But Didn't Know Who To Ask [Silicon Alley Insider]

2009-07-02T09:49:00-07:00

We get a lot of questions about how Facebook makes its money, so here are our best estimates.

We've heard from a couple reliable sources that when it was looking for its latest funding, Facebook told investors 2009 revenues would reach $550 million.

If that's true, Facebook is growing quicker than even people inside to the company thought. Only a couple months ago, a source close to the company told us 2009 revenues would be closer to $400 million. But let's take the $550 million figure and break that one down.

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Murdoch Calls Twitter Worthless, Says CNBC Talent Not That Good [Silicon Alley Insider]

2009-07-02T09:31:29-07:00

News Corp (NWS) chairman Rupert Murdoch's media tour continues, and he gives Dan Freed at TheStreet.com some typical juicy morsels to gnaw on in a Q&A.

On buying the New York Times: "Nonsense. . . I haven't even thought about it. I would imagine that it would be legally and politically almost impossible, so I'm not thinking about it."

On the recent MySpace shakups, he says the division "sort of grew out of control and really out of size. I blame myself and it had to be brought back in size."

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Craigslist Sued For Trademark Infringement [Silicon Alley Insider]

2009-07-02T09:24:00-07:00

Craigslist is being sued by a Texas real estate company First Call for trademark infringement, reports Mediapost.

First Call began to place ads on Craigslist in March. Soon after, its rival AAA Apartment Locating began posting ads using the key words "first call," "call first," and "call us first."

First Call says AAA is using those phrases to confuse customers, and has sued AAA and Craigslist. It holds Craigslist responsible because it says the company failed to stop AAA's ads despite being aware of the trademark infringement.

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Virtual Currency In China Is A $2 Billion Economy [Silicon Alley Insider]

2009-07-02T09:20:02-07:00

The Chinese government is a little worried about how much virtual cash is being traded in the country, The New York Times reports.

In fact some virtual currency, like the QQ coin, is actually affecting the market for the renmibi, China's actual currency.

Much of the $2 billion in virtual currency is used to play games, but significant chunks, David Barboza writes, are now being traded for real physical goods, like clothes, food and services.

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Weekly Downgrade Wrap-Up (Two More Withdrawals) [privateequityHUB]

2009-07-02T09:06:32-07:00

As usual, we have a week’s worth of ratings actions on buyout-backed companies from Standard & Poor’s and Moody’s Investor Services. This week was slow with two little downgrades and two withdrawals.

Company: Yell Group PLC
Sponsor: Apax Partners
Downgrade: S&P lowered its long-term corporate credit ratings to ‘B’ from ‘B+’.
Highlights: “The downgrade reflects our concerns about the faster-than-expected deterioration of Yell’s operating performance and liquidity profile, which is no longer commensurate with a ‘B+’ rating,” said Standard & Poor’s credit analyst Manuela Gabetta.

Company: Talecris Biotherapeutics Inc.
Sponsor: Cerberus Capital Management and Ampersand Ventures
Upgrade: S&P raised the company’s corporate credit rating from ‘B+’ to ‘B’.
Highlights: “The action reflects Talecris’ improving operating performance and the removal of plasma supply constraints, due to the company’s successful efforts in developing its plasma collection platform and a supply agreement with CSL, that previously limited its production volumes,” said Standard & Poor’s credit analyst Arthur Wong.

Company: Broder Bros.
Sponsor: Bain Capital Inc.
Withdrawal: S&P withdrew its ‘SD’ corporate credit rating and ‘D’ issue rating on the company’s $225 million senior notes because it no longer files public financial statements.

Company: Jobson Medical Information LLC
Sponsor: Wicks Group
Withdrawal: Moody’s confirmed the company’s ratings and withdrew its ratings “for business reasons.”

Previously:
Weekly Downgrade Report 18
Weekly Downgrade Report 17
Weekly Downgrade Report 16
Weekly Downgrade Report 15
Weekly Downgrade Report 14
Weekly Downgrade Report 13
Weekly Downgrade Report 12
Weekly Downgrade Report 11
Weekly Downgrade Report 10
Weekly Downgrade Report 9
Weekly Downgrade Report 8
Weekly Downgrade Report 7
Weekly Downgrade Report 6
Weekly Downgrade Report 5
Weekly Downgrade Report 4
Weekly Downgrade Report 3
Weekly Downgrade Report 2
Weekly Downgrade Report 1

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Apple Patents Reveal Future iPhones Will Work For The Blind, Tone Deaf [Silicon Alley Insider]

2009-07-02T08:43:00-07:00

Future iPhones might have a Karaoke application, fingerprint ID and RFID, reveal Apple patent applications MacRumors dug up.

Apple also filed a patent for something called "haptic tactile feedback," which will help users operate their phones without looking at the screen.

The patent claims that with the help of a "grid of piezoelectronic actuators, a user will 'feel' different surfaces as their finger moves across it."

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Protect the Abusers By Punishing the Rule Following Majority [Jeff Nolan]

2009-07-02T08:35:12-07:00

There’s a lot of this going around this year.

An FDA panel’s recommendation to withdraw Vicodin, Percocet, and other opioid-plus-acetaminophen painkillers seems calculated to “sacrifice the interests of consumers who follow instructions for the sake of consumers who don’t”, says Jacob Sullum.
[From “”If you keep track of what you’re taking, none of this is an issue for you”]

The Federal government has pushed for mortgage bailouts for people who borrowed money they could not afford to pay back, as evidenced by Fannie’s recidivism rate of 70% on their HomeSaver Advance program which was aimed to help people overcome hardship in making their loan payments. These programs are paid for by the U.S. taxpayer, who by an overwhelming majority does not default on their mortgages.

Next came credit card “relief” which is proving to be anything but relief as lenders jack interest rates in anticipation of the new rules and contract lending as a result of the Federal government’s intervention. The chargeoff rate for credit card companies is about 12%, really high, but 40% of American credit card holders still pay off their balances monthly. The interest rates hikes won’t affect that group but it will dramatically increase the cost of borrowing for people who maintain reasonable balances on their credit cards, and the fee increases that banks are instituting more broadly affect everyone. In effect, Congress and the President created a law to protect that abusers of credit cards that is ending up costing everyone who uses credit cards.

Now we have the FDA stepping into multi-ingredient painkillers because a small percentage of people abuse them. Not to make light of any single death, but the fact remains that 400 deaths a year in a nation of over 300 million people is a rounding error on a rounding error… on a rounding error. It’s almost like they want to create reason to intervene and project regulatory power when in fact the cause is not the drugs themselves but people who refuse to follow the instructions. Getting beyond acetaminophen for a moment, what does this suggest for future medical advances that are premised on personalized drugs which combine many ingredients based on the unique physiology of a single patient.

News Corp. COO Chase Carey Could Make $43 Million This Year [Silicon Alley Insider]

2009-07-02T07:56:30-07:00

News Corp.'s new President and COO Chase Carey could earn $43 million this year, says WSJ.

Carey resigned as COO of News Corp (NWS) after an eight-year stint in 2002, and later joined DirecTV Group as CEO.

WSJ provides details of his compensation:

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Escape from New York (Part II) [privateequityHUB]

2009-07-02T07:54:44-07:00

Andrew Cuomo vexes me. For the third time since the New York pension fund scandal began, he has allowed a private equity player to buy its way out of trouble. I know the state has a fiscal crisis, but is this really the best way to move from red to black?

The latest insult to legal accountability came yesterday, when Cuomo announced that PE consultant Pacific Corporate Group had agreed to: (a) Pay $2 million, and (b) Sign Cuomo’s much-ballyhooed Code of Conduct. In exchange, PCG was promised that Cuomo would not pursue criminal or civil prosecution related to PCG’s past activities in New York or anywhere else (like, say, California – although sources say that Jerry Brown is beginning to look into that state’s placement agent skeletons).

What had PCG done wrong? Well, officially nothing – since PCG was required to neither confirm nor deny any of the AG’s findings. Kind of like how The Carlyle Group didn’t do anything wrong, even though it cut a $20 million check. That Cuomo must be awfully persuasive. Maybe he actually could resolve the budget mess, by squeezing cash out of every other PE firm doing business in New York, given that no actual wrongdoing is needed as a prerequisite…

Unofficially, PCG was accused of helping enrich indicted “placement agent” Hank Morris. Specifically, Morris was given an undisclosed 5% ownership stake in a $750 million co-investment vehicle funded by New York State Common Retirement Fund, and formed/managed by PCG and hedge fund The Clinton Group. Basically a kickback, in that Morris’ involvement was required in order to secure the $750 million commitment.

This is where it gets a bit tricky. PCG and Cuomo say that former PCG executive Steve Moseley was aware of Morris’ involvement, and concealed it from both PCG and New York pension fund overseers (neither uses Moseley’s name, but we’re all friends here). Moseley declined to comment yesterday, but said last month that he had “been assured by the Attorney General of New York that I am not a target of the ongoing industry investigation.”

Moreover, a separate source tells me that he does not believe Moseley knew about Morris’ involvement. How could that be? The argument is that Morris’ stake was actually coming from Barrett Wissman, a Texas hedge fund manager who held a 10% position in the co-investment vehicle (and sat on its investment committee). As such, Moseley could have been aware of Wissman without being aware of Morris (I’m a bit agnostic toward the whole situation right now).

The irony here is that Wissman was supposedly brought into the co-investment fund as a sort of overseer, because of staffing instability at PCG. As the fund was being formed, Moseley and three other senior PCG execs all bailed (part of a long line) – although only Moseley was allowed out of his non-compete agreement (he went to Clinton Group, in order to keep working on the co-investment fund).

Wissman has since plead guilty to securities fraud, and is almost certainly the source of Cuomo’s belief that Moseley was aware of the situation. But, again, we have Moseley saying he’s not the target of an investigation. If Cuomo believes his own argument, then why no indictment against Moseley or PCG as a whole? Ditto for Steve Rattner and Quadrangle? Or David Leuschen and Riverstone? Or pick a name at Carlyle?

Could it be that Cuomo is being a bit too loose with some of his punches, because he needn’t prove them in a court of law? Or does he just want to use these “code of conduct” signees in his next political campaign?

Make no mistake: I’m thrilled that Cuomo is bringing a lot of dirty secrets out into the open. What I don’t understand is what he’s doing post-exposition. Again, vexing.

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Alex's News Picks: July 2nd [Mark Peter Davis]

2009-07-02T07:54:25-07:00

The Case Against CNN, By The Numbers [Silicon Alley Insider]

2009-07-02T06:56:00-07:00

Nielsen's second-quarter numbers are in and they are very bad news for CNN.

For starters, CNN is now the third-place behind Fox News and MSNBC among the coveted 25-54 demographic.

Not helping matters, CNN's top stars, Campbell Brown and Anderson Cooper can't seem to hold on to their audiences, which have declined for three straight quarters.

Read the rest of this story »

A note for those that read this blog and use Twitter [BijanBlog]

2009-07-02T06:02:00-07:00

For the past several months I’ve replaced the MyBlogLog reader roll on the right side of this blog with TwitterRemote.

TwitterRemote shows Twitter users that recently visit this blog.

The first version of the widget required your Twitter username and password to sign in. The latest version uses Oauth which is a cleaner and secure way to do it. And you just have to sign in once and you are done.

And once you sign in here, you won’t have to sign into other blogs or websites that have the TwitterRemote widget either.

I’d love it if you could take the time and sign in if you haven’t done so already. It would be great to see your face and will also help me find you on Twitter.

Thanks.

update: whoa, thanks everyone. loving all those faces. awesome. already started following a bunch of new folks.

AOL CEO Armstrong's First 100 Days Are Almost Up [Silicon Alley Insider]

2009-07-02T05:58:00-07:00

After he was hired in April, new AOL CEO Tim Armstrong wrote that his first 100 days "will end in Dulles with an All-Hands meeting in mid-July."

"At that meeting, we’ll review the feedback we’ve received–both internal and external. We’ll also discuss our strategic direction for the coming years, and highlight areas that will bring AOL and AOL properties into the next decade of digital leadership. Most importantly, we will set a course and focus all of our resources to make that course a success.”

86 days into his job, Tim's time till that big meeting is just about up.

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The Future Growth Challenge For Gilt Groupe And Other Private-Sale Companies [Silicon Alley Insider]

2009-07-02T05:54:00-07:00

Yesterday, we reported the impressive success of Gilt Groupe, a two-year old ecommerce company that expects to generate about $150 million in revenue this year.

Specifically, we reported that Gilt is raising another $40 million or so at close to a $400 million valuation from General Atlantic and Matrix.

We also noted that Gilt's business, private sales, has developed into a big and burgeoning sector of the ecommerce industry. The sector is led by France's Vente Privee, which is now a $750 million business.

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Ban Blogs From Linking To Newspapers, Says Judge [Silicon Alley Insider]

2009-07-02T05:30:00-07:00

Famous and respected New York Judge Richard Posner says maybe we should ban links to save newspapers.

From his blog: Imagine if the New York Times migrated entirely to the World Wide Web. Could it support, out of advertising and subscriber revenues, as large a news-gathering apparatus as it does today? This seems unlikely, because it is much easier to create a web site and free ride on other sites than to create a print newspaper and free ride on other print newspapers, in part because of the lag in print publication; what is staler than last week's news.

Expanding copyright law to bar online access to copyrighted materials without the copyright holder's consent, or to bar linking to or paraphrasing copyrighted materials without the copyright holder's consent, might be necessary to keep free riding on content financed by online newspapers from so impairing the incentive to create costly news-gathering operations that news services like Reuters and the Associated Press would become the only professional, nongovernmental sources of news and opinion.

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Maximising productivity in venture capital [The Equity Kicker]

2009-07-02T05:04:58-07:00

Brad Feld posted a couple of days ago about Saying No In Less Than 60 Seconds in which he talks about the 10-50 times a day he has to say no to deals and meeting requests, and that as a result he has to do so quickly.

As Brad describes it there are a couple of things wrapped up in here, firstly his goal of being accessible to everyone that reaches out to him, which means both making himself contactable and responding to contacts, and the second is a time management point. The goal is laudable and the time management is a practical necessity.

Turning to myself, I have a similar goal of having contact with as many interesting people as possible. This is inevitably a time consuming process and as such competes for my time with my portfolio, the internal operations of our partnership, deals I am pursuing, and last, but by no means least, my family. Unsurprisingly there is never enough time to go around and at any given point I am most likely feeling guilty about neglecting one of these constituencies, right now it is my portfolio where in the last week I have had two senior execs remark that they haven’t seen much of me lately.

My point in all of this is that for VCs optimising the use of their time is a big deal, as any extra that can be squeezed out can be profitably put to use. Brad’s focus in the post above is minimising the time to say ‘no’, while still doing it well, and in this previous post he talked about how he likes to keep meetings short (often less than 30mins). That resonated with me, as when I look at my working life and try to figure out where I can find time to meet with more entrepreneurs and spend more time thinking about our investments the obvious place to go is reducing the time I spend with companies once it becomes clear that we aren’t going to come to a deal.

US VCs have always been better at this than we are in Europe. The culture of the 45 minute meeting is well established over there, but over here the custom is for meetings to last an hour or more. Moreover, it is sometimes the case that people perceive it as rude, or some kind of sleight, or comment on their business if a meeting is shorter rather than longer. I have had cases of more arrogant entrepreneurs wanting to schedule 90mins or 120mins for the first meeting.

In order to create time to see more companies I have been thinking about reducing the length of first meetings to 45 minutes. I think that is enough for both sides to figure out whether we want to move forward together, but I’d be interested to know what you think. From the entrepreneur side is 45 mins enough?, is it rude to schedule meetings this short?, and any other thoughts.

Cities Where They're Hiring (Slideshow) [Silicon Alley Insider]

2009-07-02T05:00:00-07:00

Using a supply/demand ratio, Wanted Analytics created a series of maps that show the best places for jobs in the US. Here, we've collected their maps for workers in various tech professions.

Start the slideshow →

Join the conversation about this story »

peHUB First Read [privateequityHUB]

2009-07-02T04:55:55-07:00

* Bill Gross: “Greed will come again. But for now, the trend is the other way and it promises to persist for a generation at a minimum.”

* David Callaway: Time to worry. Banks are recommending each other’s shares again.

* Q2 data dump: 32 pages of M&A and private equity deal data, league tables, etc.

* Morning Call: U.S. futures lower ahead of June jobs data, London falls early, European shares drop, the Nikkei closes down 0.6% and Chinese stocks hit 13-month high.

* New photos of the Madoffs at play. Could be worse, I guess. At least they’re not nude photos of the Madoffs at play.

* The EVCA has released a new code of conduct for placement agents. Here you go.

* Kip Kirkpatrick’s decision to run for Illinois State Treasurer won’t trigger a keyman vote at Water Street Healthcare Partners, the private equity shop he co-founded and is now leaving. Apparently the only listed keyman is fellow co-founder Tim Dugan. Kinda odd, but ok. Still doesn’t mean all LPs are thrilled that Kirkpatrick is leaving less than a year after Water Street closed on a new $650 million fund.

* VC Bail Alert: Vineet Buch is leaving BlueRun Ventures to join Like.com.

* Where in the World: I’ll be moderating a session at the Fortune Brainstorm Tech conference later this month in Pasadena. Great agenda. Hope to see some of you there.

* Rational markets skeptic Justin Fox was on The Daily Show, filling in for an ill Henry Waxman. Here’s the video:

The Daily Show With Jon Stewart

Mon - Thurs 11p / 10c

Justin Fox

www.thedailyshow.com

Daily Show
Full Episodes

Political Humor

Jason Jones in Iran

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Michael Jackson Is The First To Sell 1 Million Downloads In A Week [Silicon Alley Insider]

2009-07-02T04:28:00-07:00

New Corp COO Chase Carey could earn $43 million this year [PaidContent]
Sling Cofounder Blake Kirkorian could be DirecTV CEO [PaidContent]
Michael Jackson is the first artist to sell 1 million downloads in a week [Wired]
Child porn is the iPhone's latest problem [Wired]
Tim Armstrong's first 100 days are almost over [BoomTown]
MySpace logo changes [TechCrunch]
Hunch is doing "pretty well" says cofounder [SEL]
Richard Posner says maybe we should ban links to save newspapers [Becker-Posner Blog]
PlayFish has 100 million of its games installed in 18 months [IndustryGamers]
37% say TV ads a helpful, 14% says search engine ads are [MarketingCharts]
The canceled Moneyball movie didn't get MLB approval [Gawker]
Anil Dash doesn't see a difference between Chris Anderson and Malcolm Gladwell [Anil Dash]
Facebook revenue needs to grow 8-fold for it to reach a $10 billion valuation [WSJ]
Murdoch calls speculation that he plans to takeover the NYT "nonsense" [Romenesko]

Join the conversation about this story »

Hacker News and the NoSQL Movement [A VC]

2009-07-02T03:44:58-07:00

I love Hacker News (aka news.ycombinator.com). I read it at least once a day and it sends this blog more traffic than anything other than Google and Twitter. This is the refer log for AVC for the past month.

But like every great web service out there, it's the community at Hacker News that makes it so great.

This morning I read a Computer World article about the "NoSQL" movement. It was interesting to me because we have an investment in this market sector, an open source cloud based document store called MongoDB (which is mentioned in the computer world story).

There are three comments at Computerworld.com and there's 43 comments on the story at Hacker News. If you are interested in database issues, you'll find the discussion at Hacker News interesting and informative.

The SQL vs NoSQL debate is important, serious, and deeply technical. I am not going to even attempt to weigh in on it (other than to say we've got an investment in a NoSQL data store). But plenty of people are weighing in on it at Hacker News right now.

Of course there are other tech communities out there where discussions like this one have been going on for years. I am not saying they aren't vibrant and important. But Hacker News brings that together with a "techmeme style" blog aggregator and focuses very much on the startup entrepreneur (which is why it drives so much traffic to this blog).

Hacker News is a great service. If you are involved in tech startups and you don't read it regularly, you should.

saw fred’s post today and did a vanity search of my own my... [BijanBlog]

2009-07-02T03:30:00-07:00

saw fred’s post today and did a vanity search of my own

my tweets getting some “bing-juice”

Queen Bitch - David Bowie Last night lauren and i watched... [BijanBlog]

2009-07-02T03:25:36-07:00

Queen Bitch - David Bowie

Last night lauren and i watched “Run Fat Boy”. I liked it. Sappy but had some funny scenes. Pretty good soundtrack too including this song by David Bowie.

Hats Off To Microsoft For Adding Twitter Search To Bing! [Silicon Alley Insider]

2009-07-02T03:22:00-07:00

The problem with trying to compete with Google in search is that search isn't broken: Most users find what they're looking for quickly and have no idea whether one search engine is any more "relevant" than another.

Also, search is seriously habit-based. If you hear about some cool new whizzy search engine, you might try it once or twice (Ask, Wolfram Alpha, Bing). But once you discover that the results are pretty much the same as you would get using Google, you'll quickly go back to your old habit of using Google again.

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Gannett Celebrates "Promising Signs Of Recovery" By Firing 1400 [Silicon Alley Insider]

2009-07-02T02:55:00-07:00

More Prozac for the newspaper industry, please.

AP via MediaGuardian: Newspaper publisher Gannett plans to cut 1,400 jobs in the next few weeks, about 3% of the workforce, as it faces a prolonged slump in advertising revenue.

Read the rest of this story »

Dave Robbins-- BigFix CEO, on Top Priorities for Protecting U.S. Critical Infrastructure [pascalsview]

2009-07-01T20:25:10-07:00

Last Thursday I moderated a panel on the implications of America's Innovation Crisis for Cybersecurity at the National Press Club in Washington, D.C. The full transcript of the slides integrated with my prepared remarks is now posted at www.levp.com . This event was sponsored by the non-profit Security Innovation Network.

At the end of the panel I asked each of the panelists, Bob Ackerman of Allegis Capital, Professor Randy Katz of Berkeley, and Dave Robbins of BigFix, to answer the following question:

"In closing, I would like each of our panelists to comment on the most important change that they would like to see implemented in order to promote the protection of our nation’s critical infrastructure."

Dave Robbins’ answer follows:

"First, I would like to see all federal IT groups focus on building a stronger foundation within their core network. Often, an IT organization gets caught up in the purchase and implementation of a myriad of tools that don’t really solve key and basic problems. In order to be more secure, you have to have better real time situational awareness: how many assets do we have; where are the assets located; where in the world are those assets now; what applications are running on the asset; what non-approved applications are on the asset; what is the patch level; is AV running. Secure your core configuration and the rest of the task of security becomes much easier.

Second, make the entire process of selling to the U.S. government easier. I find it sad and ironic that it is easier to sell governments throughout the world compared to my own. Far too many complicated buying processes and far to many acronyms and archaic terms (skivvy-skree is actually patch management!?!) create an impenetrable wall between young innovative companies and selling to the government. Dealing direct with the government would make it easier instead of being forced to work through resellers and integrators that have little real knowledge of what makes an innovative company special.

You have to remember, if you want access to new innovative technology, you must find ways to work with smaller companies. Large companies don’t innovate, they increment, which is the antithesis of innovation. Patents don’t equal innovation...products equal innovation."

How to Use Alltop to Add Content to Your Website, Blog, and Feed Reader ["How to Change the World" by Guy Kawasaki]

2009-07-01T19:57:35-07:00

We’ve enabled people to access and repurpose the website and blog feeds that we’ve curated at Alltop:

Widget. Create a widget of any Alltop site by going here. Then you can deploy these widgets in your blogs. These widgets display the five most popular stories from the respective topic. This is a great way to add fresh content to your website or blog with very little work. To see a list of “all the topics” that may be relevant, go here.

RSS feed. Grab the RSS feed of any Alltop topic by clicking on the RSS symbol in your browser’s navigation area. Then you can use a feed reader to read all the posts from that Alltop topic. You can also build your own widgets from our RSS feed.

OPML. Add “opml” to any Alltop URL to obtain the OPML file of that topic—for example, http://mac.alltop.com/opml. This file contains all the RSS feed addresses of the websites and blogs in the respective topic.

Badges. We also have badges if your website or blog is listed in Alltop. Go here to grab them.

How to Achieve Revenue ["How to Change the World" by Guy Kawasaki]

2009-07-01T19:05:11-07:00

The harsh reality of the startup scene today is that revenue is the best, and maybe only, form of funding. While many conferences focus on gaining the attention of investors, we’ve put one together that focuses on generating revenue.

It’s called Revenue Bootcamp. It’s on Friday, July 10th, at the Microsoft Mountain View, California campus. Click here to learn more about it and to register.

The topics include increasing traffic, selling advertising, and utilizing other revenue streams. There is also a keynote and booksigning with Chris Anderson, the author of Free: The Future of a Radical Price.

The final session is a fireside chat with Mike Moritz of Sequoia Capital (think: Google) and Paul Graham of YCombinator. Again, click here to learn more. Use this discount code to get $50 off: “FGK09.”

Sites Used at San Diego Venture Group Speech ["How to Change the World" by Guy Kawasaki]

2009-07-01T19:02:54-07:00

These are the sites and applications that I used in today’s San Diego Venture Group speech about using social media as a marketing tool.

Make Me Happy – There’s An App for That [Feld Thoughts]

2009-07-01T17:06:20-07:00

I’ve been a delighted iPhone user since they upgraded the software to have mail / contact / calendar sync with Exchange. With the 3.0 version of the software, I’m even more delighted. I’ve had an iPhone 3GS since the day they came out (thanks Ross for standing in the non-line at the AT&T store for me) and – with the exception of the crappy AT&T 3G network – I find new little magic happy things every single day.

As my app portfolio continues to radically expand and I endlessly fiddle with placement, I thought it might be useful to reflect (and memorialize) the apps that are currently on my first screen. Here’s goes – left to right, from top row to bottom row.

Calendar
Messages
Maps
IMExchange: Finally, someone got Outlook Task syncing with an iPhone app. Worth the money.
Camera: Much improved – actually good pictures!
Photo
Weather
Kindle: Yes, I can actually read books on this.
Brightkite: I use this to post pictures to Twitter. And occasionally log where I’m at.
Clock
100 Pushups: Damnit – I will get stronger.
FlightTrack: Indispensible when used with TripIt.
Vlingo: Apple Voice Control is good, but Vlingo is great.
iPod
App Store
Settings
Phone
Mail
Safari
Tweetie: I’ve tried them all and this one is the best.

Page Two are my “less regularly used, but at least once a week” apps (like Fandango). Page Three are apps from our portfolio companies (have you played Mafia Wars on the iPhone yet? or Vampires? or used your Pogoplug?) Page Four is a bunch of random other junk, although I’m pretty aggressive about deleting apps I never use.

I wonder what Page One is going to look like a year from now? Any gotta-have-em apps that I’m missing that you guys out there in blogland would recommend?

Six Quick Questions with Navin Chaddha of Mayfield [privateequityHUB]

2009-07-01T16:56:06-07:00

Navin Chaddha joined Mayfield Fund less than three years ago, but he is already one of the firm’s most recognizable faces.

The 38-year-old got his start as an entrepreneur at the age of 25 and successfully co-founded three VC-backed companies that were eventually acquired or went public: VXtreme, a VC-backed streaming media software company; iBeam Broadcasting, an Internet streaming media provider; and Rivio, which provided Web-based services to optimize operations for small businesses.

Chaddha made the shift to venture in 2003, joining Mobius Venture Capital as an EIR, then transitioning to venture partner. A year later, he became a general partner at Gabriel Venture Partners, then joined Mayfield as a managing director in September 2006.

Chaddha was named No. 11 on Forbes’ Midas List this year, down one spot from the prior year, and in May he was given a Young Global Leader Award from the World Economic Forum.

I caught up with him in San Francisco at last month’s Venture Capital Investing Conference, where he was was co-chairman, and asked him six quick questions (three that were business related and three that were just for fun).

JUST BUSINESS

Q: What do you mean by the term “energytech” and how does it differ from cleantech?

A: Energytech is the application of technology to the energy industry, which produces $6 trillion in revenue. Cleantech, or investing in renewable energy sources, is a subset of energytech. We believe an end-to-end approach of leveraging technology to make the entire value chain more efficient is the right way to go—from generation to distribution to consumption of energy.

Q: Do you think most cleantech investments are misguided because they rely so heavily on government policies or subsidies?

A: Some cleantech investments that are capital intensive and require project finance or rely on government policies or subsidies are not looking suitable for VC investments in the long run. The ones that make sense are economically viable without any subsidies, such as energy-efficiency investments.

Q: Do you think the venture industry is overcapitalized?

A: I think the industry is overcapitalized and it has to shrink from the current $25 billion to $30 billion in annual investment. A healthy level would be around $15 billion annually.

JUST FOR FUN

Q: Where do you plan to go on vacation this summer?

A: Banff [in Alberta, Canada] or Switzerland. I have family coming in from Delhi, where it’s 120 degrees, so they want to go somewhere cooler.

Q: You played competitive cricket in college. Do you still play?

A: Yes, I play on and off about every two weeks or so. Some of my friends are trying to get me to join the Indian Cricket League, which has about 50 teams and plays once a week.

Q: What position do you play?

A: I’m an allrounder. I do bowling [pitching] and batting.

(This item originally appeared in the July issue of Venture Capital Journal. For a free trial, click here.)

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WTC Awards $375K to UW, WSU [Xconomy VC/Deals]

2009-07-01T16:25:17-07:00

deals, Technology, Awards

Eric Hal Schwartz wrote:

Five researchers from the University of Washington and Washington State University, Vancouver, working together with Washington companies, received a total of $376,454 in state funding through Washington Technology Center, according to an announcment today. The university researchers are working with property data solutions company Data Data in Vancouver; biomaterials firm Healionics in Redmond; pressure instrumentation manufacturer Paine Electronics in East Wenatchee; nanostructure material builder Modumetal in Seattle; and medical simulator developer Simulab, also in Seattle.

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Why Did I Unfollow You [Jeff Nolan]

2009-07-01T16:18:44-07:00

I’ve been cleaning up my Twitter-roll and unfollowing a bunch of people, here’s why:

1) You don’t tweet. I don’t think anyone really needs to pump out 50 tweets a day to be interesting… but the corollary is true as well, if the only tweet you have posted in the last 2 months is “going for lunch, indian food” don’t be surprised if you get unfollowed. Twitter is a stream, not a feed.

2) You pimp your company, and then do it some more. A lot of people seem to think that Twitter exists solely for them to tweet out press releases about their company, or every tweet is cheerleading on behalf of their company. Balance people, balance. It’s all well and good to tweet out news about the great things your company is doing, but balance it out with interesting links to news from around your industry. The odds are pretty damn good that you know more about what your competitors, partners, and other interesting companies are doing than I do, and that’s why I followed you in the first place. I would expect a company twitter profile to be exclusively focused on company news, but not a person working for that company.

3) You are rude. It’s okay to disagree but to do so in a condescending or offensive manner is not appropriate, and just because it’s online doesn’t mean you can say things to me that you would not say to my face. Interestingly, this is the least frequent cause for unfollowing… most people I encounter online are actually more polite and civil, even if in violent disagreement, than the average person walking down the street in SF.

4) Serial retweeters. I’ve noticed that some people are following thousands of people with the intent of getting followed themselves, and then retweet nonstop to gain prominence. I’m not sure what the end game is here beyond building an authority ranking on third party services but it is not interesting. Some of this behavior is bot driven.

5) You tweet about inane bullshit. I really don’t care that you are “going for lunch, indian food” but if that is mixed in with interesting links, substantive tweets, good retweets, and other meaningful stuff, well I can skip over the meaningless stuff… but if the only thing you are tweeting about is inane bullshit, I’m unfollowing you. Signal to noise ratios, too low is a problem.

Copyright Boogeyman Returns: RIAA wins suit against Usenet Newsgroups [Silicon Alley Insider]

2009-07-01T15:13:17-07:00

RIAA was looking pretty bad there for a while, going after college kids and housewives for millions, and accepting multi-thousand dollar settlements over illegally downloaded MP3 files. The thousands of downloads found them writing threatening letters and filing lawsuits against their very own customers: us.

So it appears a change in tactics has worked. The RIAA took on Usenet.com, which provides access to Usenet newsgroups, and just won a case against them in Federal court.

Usenet was a fat target-- unlike P2P networks like BitTorrent, Usenet newsgroups store complete copies of music files, as attachements to messages, for download. A host of tools was making the downloading easier and faster, and most broadband customers unknowingly got Usenet access for free with their accounts.

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Tyrannosaurus Debt [Jeff Nolan]

2009-07-01T14:57:09-07:00

via The Corner

Overstock Follows Amazon, Drops Affiliates in Four States [Silicon Alley Insider]

2009-07-01T14:26:00-07:00

First Amazon paved the way for ecommerce sites like Overstock.com to exist and do business. Now it's paving they way for them to stick it revenue-hungry state governments. Overstock today followed Amazon and severed links with affiliates in four states.

Residents of California, North Carolina, Hawaii and Rhode Island will no longer be receiving referrer payments for Overstock.com products sold through their websites. The whole issue revolves around sales tax.

The states want Overstock to collect sales tax when an affiliate sells an Overstock item, as if the affiliate was actually a physical store selling its products. Overstock and Amazon beg to differ, since the affiliates are just that-- affiliates, not links in their supply and distribution chain.

Read the rest of this story »

Michael Jackson Tribute from the Hansen Report [HANSEN REPORT]

2009-07-01T14:23:41-07:00

Won’t we all just miss the King of Pop?

Here is a video I made to commemorate this very fragmented individual.

Prometheus Energy, Maker of Liquid Natural Gas from Waste, Raises $10M from Shell Oil [Xconomy VC/Deals]

2009-07-01T14:00:05-07:00

deals, cleantech, startups

Gregory T. Huang wrote:

Redmond, WA-based Prometheus Energy has closed a $10 million financing from Netherlands-based Kenda Capital, which manages the Shell Technology Ventures Fund that’s part of the Dutch oil giant. A second tranche of financing, worth an additional $10 million, will be part of the deal if Prometheus meets certain milestones.

Chief executive Kirt Montague co-founded Prometheus in 2003 with the idea of converting waste gases from landfills into liquid natural gas for clean-burning fuel. After raising more than $20 million in venture funding, the company went public on London’s Alternative Investment Market (AIM) in 2006, but was de-listed in 2008.

Last September, Prometheus was bought by Black River Asset Management, a private equity firm based in Minnetonka, MN and San Mateo, CA. Black River used the placeholder name “Heracles Energy” for the company when it acquired its assets. (Which is why Prometheus Energy’s SEC filing for the deal is under the name Heracles Energy—but the company’s operating name is still Prometheus Energy.)

With the new investment, Prometheus Energy is part-owned by Shell, the world’s largest liquid natural gas producer.

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Startup2Startup Panel [McInblog]

2009-07-01T13:43:08-07:00

Last night, I had the pleasure of being on a panel discussion with Dave McClure, Jeff Clavier and Howard Lindzon, moderated by David Cohen of TechStars. This was a Startup2Startup event, graciously imported to Boulder for a night by Señor McClure, that guy with all those hats. We started the evening off with margaritas and dinner at Tahona and then retreated to the TechStars bunker for the panel.

Entitled "The Ultimate Platform Hotness Smack Down", the purpose of the panel was to compare and contrast the strengths and weaknesses of four platforms: Facebook, the iPhone, Twitter and the native web / search ecosystem. Each of us represented one of the platforms, and I was the one who championed the native web / search ecosystem, no doubt given my history as a founder of a now-defunct first-gen internet search engine and portal. It was a fun event and it was great to hang out and talk platforms with folks from the Boulder/Denver tech community as well as my fellow panelists. Dave put up the slides from the panel, so take a look:

Ultimate Platform Hotness Smackdown (Twitter, Facebook, iPhone, Native Web / Search)

View more documents from Dave Mcclure.

facebook, iPhone, openweb, panel, startup2startup, twitter

Cleantech Venture Funding Brightens for All But Solar [Xconomy VC/Deals]

2009-07-01T12:32:56-07:00

cleantech, Venture Funding, surveys

Bruce V. Bigelow wrote:

The clouds may be parting for cleantech startups. Venture capital funding for renewable energy and cleantech startups (which plunged from last October through March) rebounded in the second quarter—but the $1.2 billion invested in 67 countries is still down 44 percent from the same quarter in 2008.

Cleantech venture investments were strongest in transportation—specifically, vehicles ($236 million invested), biofuels ($206 million), and advanced batteries ($165 million), according to the Cleantech Group, the San Francisco, CA, research and advisory firm, and Deloitte, the financial services firm. Researchers say the $1.2 billion total was invested in 94 companies, with an average round size of $12.9 million. A spokeswoman for the Cleantech Group says the results reflect VC deals in areas where the Cleantech Group has established offices with local researchers, and therefore represents the most accurate and comprehensive global survey of cleantech investing trends. Roughly two-thirds of the deals were in North America, mostly the United States.

Brian Fan, the Cleantech Group’s senior director of research, tells me the biggest cleantech deals in Xconomy cities during the quarter that ended June 30 occurred in San Diego, where V-Vehicle got $100 million, and suburban Boston, where A123 Systems also got $100 million. The biggest financing in Seattle was $6 million for Powerit Holdings.

Things continue to look gloomy in the solar sector. Venture investment in solar technologies fell to its lowest level in three years, with just $114 million invested. VC funding in solar startups peaked at $1.2 billion during the third quarter of 2008. “We don’t see solar as dead,” says Brian Fan, the Cleantech Group’s senior director of research. “Solar has strong support in the venture community and among investors. What they’re doing is taking care of their existing portfolio companies. So they’re not making new investments and adding to their portfolio companies.”

The researchers say the largest deals in each sector were:

—Vehicles: San Diego-based V-Vehicle, which is building a fuel-efficient and environmentally friendly vehicle in Northeast Louisiana, raised $100 million from Kleiner Perkins Caufield & Byers and T. Boone Pickens. Fisker Automotive of Irvine, CA, raised $85 million from Eco-Drive Partners and Kleiner Perkins to fund development and manufacturing of its Karma plug-in hybrid. Norway’s Think Global raised $39 million, and Israel’s ETV Motors raised $12 million.

—Biofuels: Agri.capital, a European developer of biogas plants, raised $82 million from TCW Group and others. Solazyme, a renewable oil producer based in South San Francisco, CA, raised $57 million from Braemar Energy Ventures, Lightspeed Venture Partners and new investor VantagePoint Venture Partners.

—Advanced Batteries: A123 Systems of Watertown, MA, raised $100 million from GE and others. Deeya Energy of Freemont, CA, raised $30 million from new investor Technology Partners and existing investors BlueRun Ventures, DFJ, Element Partners and New Enterprise Associates.

—Solar: Cobol Technologies, an Indian solar developer, raised $30 million from Pangea Capital. Ausra, a Mountain View, CA, startup developing technology that concentrates solar energy, raised $25.5 million from Khosla Ventures and Kleiner Perkins, among others. Infinia, a Kennewick, WA, vendor of technology that combines a Stirling engine with concentrating solar dish, raised $14.1 million in convertible debt, as part of a plan to raise $50 million.

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PCG Pays $2 Million To Escape New York Probe [privateequityHUB]

2009-07-01T11:27:52-07:00

Pacific Corporate Group, a La Jolla, Calif.-based private equity consultant, has agreed to pay $2 million as part of a settlement related to the New York state pension kickback scandal.

PCG also has agreed not to use placement agents to solicit business from public pension funds, although it can continue to use placement agents when securing fund commitments for public pension clients (except when banned by a client, like the New York State Common Retirement Fund). In exchange, NY Attorney General Andrew Cuomo said that he has ended the investigation into PCG, although did not specify if the termination was to all of PCG’s activities or only to its New York dealings (PCG has major business with state and municipal pension systems in California, and word is that Cuomo was taking a look via The Martin Act). [Update: Cuomo spokesman says that the agreement "ends this office's investigation into PCG."]

In a statement, PCG said: “We are taking these steps to make the public whole for the improper actions of a former executive, to put this episode behind us and to move our business forward.”

That former executive is Steve Moseley, who in late 2006 helped form a $750 million co-investment vehicle funded by the New York State Common Retirement Fund. It was done in partnership with hedge fund The Clinton Group (where Moseley later went to work), and allegedly included an undisclosed participation by indicted “placement agent” Hank Morris. The vehicle also included a partial ownership, and investment committee seat, for Barrett Wissman, a Texas hedge fund manager who has plead guilty to securities fraud.

There have been no charges filed against Moseley, who said in May that he had “been assured by the Attorney General of New York that I am not a target of the ongoing industry investigation.”

As a side note, the co-investment fund itself has been well in the black, despite being focused on mega-buyout transactions.

Cuomo’s office is expected to publish an Assurance of Discontinuance later today, but peHUB has obtained some of the relevant language [Update: Here's the whole thing]:

23. In or about February 2001, PCGCP secured a $150 million commitment from the CRF to manage a co-investment vehicle, known as the New York State Retirement Co-Investment Fund (”Fund I”). PCGCP did not use a placement agent to obtain this initial investment; nor did PCGCP use placement agents with respect to any subsequent investments it obtained from the CRF.

24. By in or about the fall of 2005, PCGCP had deployed substantially all of the capital committed by CRF to Fund I. PCGCP had enjoyed approximately 30% returns on Fund I, and so PCGCP anticipated that it would receive an additional allocation from the CRF. PCGCP initiated conversations with CRF investment staff regarding such allocation. These discussions were led by a partner of PCGCP who has since left the firm (”PCGCP Partner 1″). PCGCP Partner 1’s main point of contact at CRF was David Loglisci, the Chief Investment Officer at that time. Very early in their discussions, Loglisci explained to PCGCP Partner 1 that he wanted to continue the CRF’s co-investment program, but wanted to do so in the context of a joint venture involving PCGCP as well as a second firm, the Clinton Group, a hedge fund manager headquartered in New York.

25. In or about February 2006, Loglisci informed PCGCP Partner 1 that he had set up a meeting for PCGCP Partner 1 with a certain Dallas-based hedge fund manager (the “Dallas Manager”), whom Loglisci identified as a friend and an informal advisor to the CRF. PCGCP Partner 1 traveled to Napa, California at Loglisci’s direction to meet with the Dallas Manager, and an executive from the Clinton Group (the “Clinton Executive”). At the meeting, the Dallas Manager informed PCGCP Partner 1 that it was Loglisci’s intention to include the Dallas Manager alongside PCGCP and the Clinton Group as a partner in the joint venture. Further, the Dallas Manager informed PCGCP Partner 1 and the Clinton Executive that the Dallas Manager would be splitting his share of the proceeds of the joint venture with Hank Morris. The Dallas Manager explained to PCGCP Partner 1 that Morris would be a concealed participant in the deal, and that there would be no CRF investment without the inclusion of the Dallas Manager and Morris.

26. When PCGCP Partner 1 reported back to his partners at PCGCP, he explained only that Loglisci had proposed a joint venture comprised of the Clinton Group, PCGCP, and the Dallas Manager. At no time did PCGCP Partner 1 reveal to his partners the fact of Morris’s participation in the joint venture. Further, PCGCP Partner 1 did not reveal to his partners that the proposal from Loglisci had been communicated through the Dallas Manager as a take-it-or-leave-it proposition dependent upon the Dallas Manager’s participation in the deal.

27. PCGCP agreed to move forward according to the terms that PCGCP Partner 1 had explained. In or about spring 2006, PCGCP and the Clinton Group worked to finalize details of the joint venture, which came to be known as Strategic Co-Investment Partners (”SCP”). The economic split that the parties agreed to was 45% for PCGCP, 45% for the Clinton Group, and 10% for the Dallas Manager.

28. Loglisci selected Aldus Equities (”Aldus”) to vet SCP for the CRF, instructing Aldus that this was to be an expedited project. At PCGCP’s suggestion, Aldus instructed all parties to the joint venture to sign officer’s certificates. By signing the certificate, the signatory swore on behalf of his employer that he would not pay any third parties on the SCP transaction, and that he did not know of any third parties that were to be paid on the SCP transaction. PCGCP Partner 1 executed an officer’s certificate on behalf of PCGCP. PCGCP Partner 1 represented that no third parties would be paid on the SCP investment. He knew this to be false, because he was aware from his discussions with the Dallas Manager that Morris would receive 5% of the economics on SCP. PCGCP’s founding principal (the “PCGCP Principal”) also executed an officer’s certificate, indicating his understanding that no third parties would be paid on the SCP investment. The PCGCP Principal’s officer’s certificate was properly executed, as he had no knowledge of Morris’s participation in SCP.

29. In or about June 2006, Aldus concluded its analysis of SCP. Shortly thereafter, the CRF informed members of SCP that it planned to commit $750 million to SCP. At the time, this represented the largest single commitment CRF had made in an alternative investment.

30. In or about September 2006, on the eve of CRF making its formal commitment to SCP, three partners, including PCGCP Partner 1, resigned their positions with PCGCP. At the urging of the Clinton Executive and Loglisci, PCGCP Partner 1 went to work at the Clinton Group. Subsequently, CRF investment staff, at Loglisci’s direction, contacted the participants of SCP and informed them that the economics on SCP had changed. Instead of a 45-45-10 split, the Clinton Group would now take 70% of SCP, the Dallas Manager would retain his 10%, and PCGCP would be left with 20%.

31. On or about October 3, 2006, the CRF formally committed $750 million to SCP in its new incarnation.”

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Cleantech: What GE’s Skillern Said [privateequityHUB]

2009-07-01T11:26:14-07:00

There are few companies quite like General Electric. After all, it’s not standard to employ 1,200 PhDs and have a hand in every aspect of energy from generation to transmission to lightbulbs?

GE has also been active in investing alongside venture capitalists in promising startups, backing 33 companies over the past five years, according to Thomson Reuters (publisher of peHUB). Among the more notable is A123 Systems, the battery maker that recently filed to go public.

It’s easy to understand why GE would be excited about the company, especially if you talk with Kevin Skillern, the managing director of GE’s venture capital operations.

Kevin Skillern, managing director of GE’s venture capital operations, last week spoke at VCJ’s Financing the Cleantech Vision event in Palo Alto last week. He talked about how best to approach his corporate parent, and was kind enough to send over his notes, which you can download here:

09_07_01_skillern

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Happy Canada Day [Paul Kedrosky's Infectious Greed]

2009-07-01T10:57:48-07:00

On a personal note, Happy Canada Day to all my Canadian friends and family.

Balancing California’s Budget: The Home Game [Paul Kedrosky's Infectious Greed]

2009-07-01T10:54:32-07:00

Think you can balance California’s budget and save the nation’s largest state from issuing IOUs starting tomorrow? The L.A. Times has up an interactive graphic whereby you can try to balance California’s budget, albeit in broad-brush form. It is worth a look, as it gives a sense of both the immensity of the gap and the commensurate cuts required in the three biggest line items: education, health, and justice.

What Went Wrong With Joost? [Jeff Nolan]

2009-07-01T10:48:49-07:00

Om very succinctly yet thoroughly lays out what has led to the demise of Joost. One point that I disagree with my good friend Om on is that a white label strategy is the last refuge of a failed strategy when you don’t set out from the beginning to become a white label business… Brightcove has done well white labeling streaming video services.

When I read about all the planned changes at the company earlier today, the first thought that crossed my mind was: Stick a fork in it; Joost is done. After all, this whole white-label video strategy is like a leaky lifeboat in the middle of the Pacific Ocean. The NewTeeVee crew sums up the situation very succinctly: “Becoming a white-label video provider was what a business did when all other strategies failed.”
[From What Went Wrong With Joost?]

I’ve written about Joost a couple of times since it launched in 2007 and my experience apparently mimics that of what the broader majority of their users experienced. The service began with great enthusiasm among consumers because at the time it was apparent that Youtube had reached an apex in terms of quality and distribution of feature content. Joost promised to improve on both and the video experience itself was pretty damn sweet and given the early phase of the company I was willing to be patient on the content front… yet mainstream feature content never arrived and the result was that there was no reason to stay with the service.

At the end of the day Joost was a content business but they never seemed to understand that, which is reflected in their management team which strategized around a technology roadmap. In many ways Joost is a textbook example of so many things that a startup should not do, and whatever strategy they have now is tantamount to capitulation because as Om so aptly puts it, stick a fork in it. Done.

U.S. Carbon Emission Declines: Recessions Beat Cap-and-Trade [Paul Kedrosky's Infectious Greed]

2009-07-01T10:35:59-07:00

Given the year-over-year economy-induced decline was saw last year in U.S. carbon emissions, maybe we should gun for a longer and deeper recession/depression. It would certainly outpace anything we’re likely to get from cap-and-trade and another such expensive and complex stuff. The following is based on data from a recent Netherlands report:

As an aside, by my calculations U.S. carbon emissions declined last year roughly on par with the entire annual emissions of Spain. Maybe we should make that the new unit of measure: We’re going for a Spain in emission reductions.

Debt, Class Warfare and Entrepreneurship [Paul Kedrosky's Infectious Greed]

2009-07-01T10:23:32-07:00

There is an uneasy relationship among debt, democracy and capitalism, as a new FT column ably makes clear. Here are some excerpts, starting with why debt in the U.S. has passed the levels of the Depression:

The answer is capitalism’s dirty little secret: excessive lending was the only way to maintain the living standards of the vast bulk of the population at a time when wealth was being concentrated in the hands of an elite.

The amount by which the elite has benefited is startling, and illustrates the problem with lightly regulated free markets: the rich get much richer while the rest do not get richer at all. According to Société Générale economists, the inflation-adjusted income of the highest-paid fifth of US earners has risen by 60 per cent since 1970, while it has fallen by more than 10 per cent for the rest. As was recently pointed out in the New York Review of Books, the Walton family, of Wal-Mart fame, is wealthier than the bottom third of the US population put together – about 100m people. These are staggering statistics, confirmed by measures such as the US and UK’s ever-rising Gini coefficients, which estimate income disparity. Another way of putting this is that the share of profits in gross domestic product is at a 100-year high, or was until very recently.

The preceding is such an important point. We became indebted, in large part, because of a structural imbalance in society, one that skewed incomes, redirected wealth, and encouraged companies and individuals to lever up instead of seeking out and earning higher incomes. At the same time, our unwillingness to say no to great society programs, without raising taxes to pay for them, meant that we became beholden to the bond market for funding ongoing operations, this creating an elevated base of required income to service our rising debt.

The solution is messy, multi-part and painful, but he closes on two notes with which I agree strongly:

…we should all come to terms with the fact that these are structural issues needing structural solutions; they need to be enforced over a longer time period than any one government’s term. So we need a new political consensus, one aimed at reducing overall debt levels while reducing inequality by encouraging education, entrepreneurship and investment in innovation.

Read the whole thing here.

Economic Imbalances, 101 [Paul Kedrosky's Infectious Greed]

2009-07-01T10:15:55-07:00

Great (wonkish) post by Brad Setser up putting U.S. economic imbalances in historical context, as well as explaining, in graphical form, the latest twists and turns. Highly worth reading.

More here.

Steven Chu on Energy Research: Very Nervous Times [Paul Kedrosky's Infectious Greed]

2009-07-01T10:08:14-07:00

White House Energy point man Steven Chu’s talk at MIT is worth watching. He rightly calls this “very nervous times” in the world of energy research, with innovation rabbits required, but none showing up in a timely way.

More Samuelson [Paul Kedrosky's Infectious Greed]

2009-07-01T10:00:56-07:00

A few more quotable quotes from that new interview with 94-year-old economist Paul Samuelson:

On Greg Mankiw and Ben Bernanke

The 1980s trained macroeconomics -- like Greg Mankiw and Ben Bernanke and so forth -- became a very complacent group, very ill adapted to meet with a completely unpredictable and new situation, such as we've had.

On Robert Lucas and his acolytes

Those guys were useless at Federal Reserve meetings.

On Alan Greenspan

But the trouble is that he had been an Ayn Rander. You can take the boy out of the cult but you can't take the cult out of the boy.

On Milton Friedman

He was a libertarian to the point of nuttiness.

Ob bubbles

And I'm not sure most of the people that get caught up in the middle of a bubble can be described as irrational. It seems pretty rational to buy a house and flip it in the next few weeks at a profit when that's been happening for along time. It works both ways.

On the dollar

I think it's almost inevitable that, with a billion people in China wide awake for the first time, and a billion people in India, there's going to be some kind of a terrible run against the dollar. And I doubt it can stay orderly, because all of our own hedge funds will be right in the vanguard of the operation.

Newsflash: Economic History Matters [Paul Kedrosky's Infectious Greed]

2009-07-01T09:54:16-07:00

Gosh, here is a surprise: Economist history matters. From an interview in The Atlantic with Paul Samuelson:

Q: Very last thing. What would you say to someone starting graduate study in economics? Where do you think the big developments in modern macro are going to be, or in the micro foundations of modern macro? Where does it go from here and how does the current crisis change it?

A: Well, I’d say, and this is probably a change from what I would have said when I was younger: Have a very healthy respect for the study of economic history, because that’s the raw material out of which any of your conjectures or testings will come. And I think the recent period has illustrated that.

More here.

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