It's a Jungle Out There the world of venture capital, that is

Sequoia Capital on startups and the economic downturn

Sequoia Capital recently made a presentation to its portfolio companies about how to try to survive an economic downturn. Here's the soundtrack:

Open Letter, for O8

Small is Beautiful!
  • Small(er) enterprise is better than (quasi-)monopolies;
  • Universal healthcare is both good and necessary;
  • Let wages converge lower;
  • Put money into the following infrastructures: education, energy efficiency, internet, transportation;
  • Encourage innovation and exports;
  • Encourage quality;
  • Bring smart people in, our universities should be the Ellis Island of the 21st Century!
The key to the above is Wall Street: How good of an approximation for market-based capitalism?

Idea For How Wall Street Will Morph

That Wall Street is transforming quickly goes without saying. How will it morph? Here's an idea from Barron's Michael Santoli:
The upshot is a massive capacity reduction in Wall Street. That won't matter for a while, until the business stabilizes, and returns may never get back to, say, 2006 levels. But before long, the brass at Goldman, Morgan and at a handful of smaller brokerage shops might allow themselves a smile at what the chaos has wrought.

Related to this, the wrenching markets are setting up an endgame for this phase of the hedge-fund boom, which will lead to a painful shakeout (1,000 funds closing?). It turns out -- Guess what? -- that there's not nearly enough "absolute return" to go around to drive incentive fees on a trillion bucks in assets when markets are weak. Everyone has the same software, and the easy trades get crowded an hour after they're discovered.

This will allow the largest elite hedge-fund shops to consolidate and continue morphing into fuller institutions
-- true counterweights to the Street.
How to verify such a hypothesis? Look for the professional trajectory of the biggest yesteryear names in investment banking! They either join the Blackstones of the world or go into early retirement. Indeed, can you see these guys working for/under the management of some commercial bank?

Dell: Subprime- vs. Sub[...]-casualty

Recently we've become familiar with the growing waves of pain on Wall Street. However, few should have expected more pain on at Dell after its founder returned to the company about a year ago. From NYTimes Bits we learn:
Dell on Monday announced that it plans to close a desktop computer manufacturing plant in Austin, Texas. The company said the closure is part of a massive reorganization effort to revive Dell while also cutting $3 billion in costs.
Dell's misfortune (being a one-trick shop) has been amplified by Microsoft's Vista non-event. Indeed, its exclusive reliance on an optimized supply chain and Wintel has consistently made for cheap products and increasing vulnerability to Vista-type of events. When Microsoft failed to give corporations a timely reason for an upgrade, Dell was found poorly prepared to capitalize on the consumer market.

As a side note, it's interesting to see how Michael Dell's second coming wasn't that much of a comeback since Dell had always been a Dell-Rollins show. On the other hand, Mr. Dell himself believed it was a comeback since he spent quite a chunk of his own money to buy shares in the company.

-more on the subject-

MicroYahoo, Cui prodest?

  • Google should only try to make it expensive for Microsoft (start a bidding war and leave the curse of the winner befall Microsoft);
  • Microsoft will finally have made the capital mistake--what will have been Microsoft's most significant loss/win? Mr. Ballmer himself.
  • Yahoo! will lose the game (beginning with R&D talent);
  • The financial community will stand to make great fees;
  • The regulators will make a mistake to let it happen (see the next point);
  • Per chance a deal goes through and a merger happens, the customers will be worse off for there are going to be fewer choices;
  • The smaller players in Silicon Valley will lose an exit strategy (i.e. being acquired by Yahoo! or Microsoft);
Then, why is it that some take so much to learn? Let's say it's the competitive advantage of others.

Ideally, Yahoo! will be given more time, but time looks like the ultimate luxury. Something that after the decline of private equity players only a sovereign wealth fund can afford?

Mobile-phone Wish list

Here's a mobile-phone (unordered) wish list I compiled from answers I got on LinkedIn:

  • It doesn't drop calls;
  • Being able to call my phone (from another phone) and redirect all incoming calls to a number I specify;
  • Better voice recognition software;
  • VoIP calls and service switching to a my Wi-Fi network when I get to the office or home automatically--without an additional fee;
  • A "cell phone station" where you plug in the cell phone and all regular phones connected to the station respond to the cell phone;
  • GPS, for one, paired with Google Earth or Mapquest or whichever makes the highest bid to get in bed with my service provider;
  • A to-do and task list that syncs with the lists on my computer;
  • A universal contact storage so it doesn't matter which phone you have, they all sink to it;
  • A telnet terminal program;
  • The possibility to remove useless applications from my mobile phone;
  • Audible indications when a call is genuinely connecting, when the phone decides to quit trying, and when a call drops;
  • A virtual assistant--a rule-based framework that can be trained to pick up calls and reply in some interactive way, for example to offer re-scheduling a call, making sure that schedules neither overlap with each other nor with important calendar events, or to speak out selected messages based on (for example) which number is calling.

And now, here's the best answer from Kevin Howe-Patterson, with Nortel:
Get me all the way from the airport front door (paying for taxi) to my hotel room without stopping at desks, kiosks, check-in stands or have to waive some type of crazy paper boarding pass, credit card, airline card, .... All-in-one electronic service. Give me that and I'll be happy. Checking out and getting back home the same way would be nice too.