Drakeview

ICG rises from ashes

Internet Capital Group, the 9 year old dot-bust wunderkind is making news by acquiring a large block of preferred issued by Qcorps Residential, dba WhiteFence.  Many may remember ICG from the heyday where they were among the high fliers which grossly over invested in internet software companies.  (Confirming the blind squirrel and acorn operating principle a couple of those 'investments' that realized a modicum of positive performance still sit in their portfolio - e.g. VerticalNet.)  Founded in 1996, growing respectable in its first 3 years, ICG morphed into the poster child of irrational exuberance with a portfolio stuffed with over-hyped, valuation inflated dreck.  They are still in Fed and State courts in class action proceedings from odd relationships with analysts and their economy with truth.  Let's hope they've learned some lessons but this PR sounds much like those issued during the run-up to the meltdown:

“After focusing intently on positioning our Core partner companies for success and profitability, and strengthening our financial position, we’re excited to apply the expertise and experience we’ve accumulated to acquire a stake in a new company,” said Walter Buckley, Chairman and Chief Executive Officer at Internet Capital Group. “With a very deliberate approach, we’ve spent significant resources evaluating potential acquisitions, and believe WhiteFence represents a valuable addition to the ICG network. With a web-enabled Internet software platform, a comprehensive, scaleable [sic] solution that captures important transactional data, and a very large market opportunity, WhiteFence is positioned to create long-term value for ICG and its stockholders.”

The Company generates revenue through customer acquisition payments from its network of over 400 service providers, which include the major phone companies, electric utilities, satellite providers and natural gas providers. In 2005, revenues are expected to be $9 million, representing an annual growth rate of over 70%.

I don't for a moment doubt that ICG has accumulated some valuable experience and expertise.  I also don't doubt that many of the touts and klingons that infested the organization are long gong.  And certainly ICG is not the only spectacular notorious flier/failure from those days in the late 90's through March of 01 that have survived though not necessarily prospered.  ICG is not rising like a phoenix but it is at least acting like a viable ongoing concern.  It remains to be seen if they have experienced enough, learned enough and improved enough to provide an adequate return for their shareholders.  Time will tell.

The good old days

As a grad student at USC I had the good fortune to work as a research associate for the University's  Institute of Marine and Coastal Studies.  The work involved an NSF supported grant to develop a towed array of acoustic sensors for assessing biomass that we used to study nearshore ecosystems.  The Office of Naval Research also provided some funding as they had an interest in propagation characteristics of high frequencies through water and the ability to discriminate size based on reflected acoustic energy.  I worked in the lab of Dr. Richard Pieper and today ran across a piece in the local paper that identified him as the director of the research lab doing some work in and around the southern California bight.  Sophisticated monitors help science track environment says he still is playing with some fun stuff.

The Terminal Island-based Southern California Marine Institute, a research and education facility, this fall is adding two near-surface monitors to the California State University-run ocean observatory network: the one in coastal waters off San Pedro, and another at Long Beach Harbor at the mouth of the Los Angeles River.

Next year, the hope is to add a unit to the mouth of the San Gabriel river, at Seal Beach. The units start gathering data as soon as they are put in the water and eventually they will be transmitting it so that it can be put online in real time.

Southern California Marine Institute Director Rick Pieper said in light of efforts to clean up the region's storm water runoff, it will be interesting to compare the data from the river's mouth to the relatively clean spot near the Palos Verdes Peninsula.

"We will be looking at it, and hopefully a lot of other people will be looking at it, too," Pieper said of the data.

Because of prevailing currents and the depth of sewage-treatment outfalls at the ocean bottom in the area, the buoy off the Peninsula is not expected to come in contact with the effluent.

Carnival arrives

Adam at Techronization hosts this week's installment of the itinerant blogging Carnival of the Capitalists.  The usual fine assortment from pundits, professors and professionals with their insights and observations on business, the economy, work, taxes, management and entrepreneurship.  They are all good, but these stood out: job growth, verbal imagery, log reading, statistics, damn lies and holiday shopping, leading indicators, corporate cash and parochial interest. 

If you want to contribute, submit your good stuff at Brian's CotC submission page.  Next week the carnival moves on to Rob's SamaBlog.  And be sure to check on Jay's latest blog - the CotC.

VC activity for the 3rd Quarter

The WSJ's Start-up Journal has an excellent overview of the current themes and focus of investment professionals.  Q3 financing trends continued at the $5B and 250 transactions level seen for the last 3 years.    What has changed is a growing appetite for Chinese, a renewed interest in Internet plays, a decreasing number of VC firms but larger funds and the emergence of clean technology as a viable investment category.  Where the Bets Are In Venture Capital using data from VentureOne is a good read.

PWC's Moneytree (as .pdf file) has a complete breakdown of investment for the period.  Even with an increasing number of offshore investments, Silicon Valley remains the favorite locale of investment professionals - 219 deals and $2.1B followed by New England with 89 deals and $610M.  Los Angeles/Orange County (44 deals and $340M) falls just behind the Southeast (49 and $360M).   And for the third quarter the top 3 themes software (185 deals, $1.0B), Biotech (94, $1B) and telecom (65, $600M) combined represent half the deals and dollars invested.  By stage during the 3rd quarter there were 49 start-up financings ($96 M), 168 early stage ($900 M), expansion (250 deals, $1.6 B) and later stage investments (248, $2.6B).   

Corporate blogs

Does Your Company Belong in the Blogosphere? asks this article from the Harvard Business School's Working Knowledge online newsletter.  It recognizes that blogs are a growing part of a firm's communication strategy and offers some suggestions on how to do it well and what not to do - e.g. let your PR people do it.

What [GM Vice Chairman Bob] Lutz and other executives recognize is that a blog is an incredibly effective yet low-cost way to:

• Influence the public "conversation" about your company: Make it easy for journalists to find the latest, most accurate information about new products or ventures. In the case of a crisis, a blog allows you to shape the conversation about it.
• Enhance brand visibility and credibility: Appear higher in search engine rankings, establish expertise in industry or subject area, and personalize one's company by giving it a human voice.
• Achieve customer intimacy: Speak directly to consumers and have them come right back with suggestions or complaints—or kudos.

The article provides some examples of companies that have successfully launched blogs and have made the effort to sustain an online presence.  And it should be noted that it may be a cheap distribution method, keeping a blog and maintaining the conversation is not an inexpensive commitment of time.  The one point that seems to be glossed over is that senior level people are taking their time to do these things, which is laudable, but begs the question of what their people who are paid for communications are doing.  Blogs will be part of the corporate landscape but it is unrealistic to expect that more than a few senior level executives will spend their time online having these conversations.  And their shareholders should expect that once the novelty wanes that C-levels will get back to work!

Carnival continuity

Tony Gill hosts this week's installment of the Carnival of the Capitalists at the Gill Blog.  Gill Advisors offer continuity planning for private and public organizations.  The usual fine selection of posts with a special emphasis on disaster recovery following a natural disaster.  A few suggestions:  price gouging, price controls, SMB holiday sales forecast, soap and whiskey, founder equity and a matter of choice.  But it is all good, so check it out.

To contribute your posts to the carnival, use Brian's easy submission form.   

Gender based selling strategies

Marketers have long targeted males in their pitches for cars or computers or digital cameras. The financial services organizations traditionally sell their mutual funds, credit and debt instruments and advisory services to men - just look at the ads in the business press or on television. And the approaches used to sell beer work just as well as when selling DVD players. But as women become head of households, assume more executive roles, participate in business ownership and entrepreneurial activities companies that produce consumer products and services are reasonably shifting their focus. 

About 10 years ago, marketers began to realize the growing influence of women in two income families on purchasing decisions.  This trend has accelerated and marketers of product and service categories traditionally focused on men are evolving to push more information at women.  Women are the fastest growing segment of buyers for tech based products according the Consumer Electronics Association and still remain underserved.  While guys are thought to evaluate gadgets based on technical attributes women prefer style, convenience and ease of use.  Marketers are altering their pitch and placement of advertisements and information accordingly.  Meet Jane Geek from Business Week Online provides this bit about Dell's efforts to get favorable treatment in women targeted publications.

It was the choice of magazines that was unusual, including Oprah Winfrey's O at Home, Ladies' Home Journal, and CosmoGIRL -- not exactly publications on the company's regular radar screen, despite the obviously large number of women tapping keyboards in offices and cafés. In barely six months, though, Dell's laser printer, plasma TV, and notebook computer were featured as must-haves in gift guides in shelter magazines Real Simple and O at Home. And in August, CosmoGIRL gave Dell's 700m, 4-lb. notebook a "kiss of approval."

Women control a vast amount of purchasing power as both direct consumers and primary influencers.  51% of the population, they influence 80 - 85% of $7 trillion in personal purchases. 55 million women work.  In another 10 years, women are expected to control over $1 trillion in purchasing power and over 60% of the country's wealth.  Women are already earning half the accounting degrees, 40% of legal degrees and almost as many medical degrees. Independent women without families are a $200 billion market. 

Marketers, product designers and strategist in consumer oriented industries will need to consider, expand and focus on women as their primary audience.  Their companies will need to enhance their appeals and methods to develop messages and approaches that resonate with women.  Communications will have to become a conversation rather than simple recitation and comparison of qualities and attributes.  Women will have to be treated with the respect their professions and careers demand.  Information will have to be tailored to emphasize what matters to this segment of consumers with a sensitivity to context and priorities often far different than the simplistic competitive pitches that characterize current marketing of guy things - cars, computers and gadgets. 

Research into buying habits online highlight some of the differences between men and women shoppers.  (See Gender Matters from internetretailer.com.)  Brands will have to work diligently to insure that the message and appeal is consistent.  The relationships between brands and women are built on trust, value and loyalty.  Being clever has to give way to providing appropriate content and clarity and brands must be ever mindful that lifestyle matters more than product.  Women need to feel empowered rather than pitches that make men feel powerful.  Efficiency and novelty attract men's attention while women explore and seek personal validation through their purchasing activities.  And research suggests that women are more opportunistic while shopping online, finding digressions and tangents useful while guys stick to the task at hand. 

Carnivals up

Brian Gongol hosts this week's installment of the Carnival of the Capitalists.  Some of the best entries:  1925 This Ain't, Delivering on your promises, Auction sales: Business equipment at low cost, BlogAds Analysis - Executive Summary, Impossible Returns? Hardly . . . and Jane Gets Educated.  Of course there are many more worth your time and examination.

As always, to participate, simply submit your good stuff at Brian's CotC Submission page.  Next week the carnival moves on to the Gill Blog.  And to learn more about CotC, visit the new home site of the Carnival of the Capitalists.

Learning to be an entrepreneur

Problem: Good Jobs Are Scarce. Solution: Become Your Own Boss. from the NYT offers some insights into the students and the local B-school programs (USC, UCI, Loyola Marymount) they attend.  Entrepreneurship and especially innovation are currently popular foci of B-school curricula on these campuses and throughout higher education in the states.

IF there is one place where the idea of the ownership society is taking hold, it is America's colleges and universities. More than 1,600 colleges offer courses in entrepreneurship, up from 1,050 in the early 1990's and a mere 300 schools in the 80's.

Experts see the surge reflecting profound changes in the American economy. It is a response to globalization and the fact that "two billion people in the world want to do the same job you do," said Paul Merage, an entrepreneur and philanthropist who endowed the business school at the University of California, Irvine, this year with $30 million.

The transition the schools have made in subject matter reflects the shift to a service oriented economy (perhaps moreso than to globalization) and recognition of the value of innovation as an engine of profitability.  And as the article indicates, many students have applied their learning to grow business concepts into operating firms. The success of individuals who have created businesses leads to further demand for these programs and curricula. 

But I wonder what impact this orientation on entrepreneurship and innovation has had on students pursuing traditional management oriented coursework.  Many MBAs are earned courtesy of corporate training budgets and the knowledge these students need to learn is different.  An understanding and appreciation of the value of innovation is needed here.  But the confines of corporate structure, existing operating practices and focus on efficiency rather than effectiveness introduces challenges that start-ups don't encounter.  To remain competitive, corporations will have to innovate, not just re-organize or restructure which is what the last generation of MBAs learned.  Universities and their B-schools need to make innovation core to all their course offerings, not just for those who want to start a business.

$3.5M Series A dream for pajamas media

PR Newswire is reporting that a group of bloggers, journalists and authors operating under the name of Pajamas Media has secured seed financing from an investor group led by technology entrepreneur and angel investor Aubrey Chernick.  The bloggers and authors involved include Roger L. Simon, Charles Johnson, Tim Blair, Tammy Bruce, Cathy Seipp, Michelle Malkin and others.  These individuals are well known online for conservative political posture.  The name Pajamas Media comes from CNN president Jonathan Klein's description of bloggers following Dan Rather's goof with phony docs. 

Pajamas Media plans for the investment include operations, marketing and expansion of news and opinion coverage.  Pajamas Media will launch in New York tomorrow.  Currently the organization is based in the southern California south bay community of El Segundo (adjacent LAX). 

But rather than the political leanings of the group, what is fascinating is the self-assembly of these loose confederations of bloggers and the VC community's interest in funding them (assuming that the money is invested for financial gain rather than just feeding a political machine).   We've thought for awhile that blogs would be a significant means of connecting and communicating with constituents, clients and customers.  Yet the greatest promise was for organizations and companies to use blogs for internal communications. 

I have discounted blogs potential to be monetized - even with the popularity of Google and Yahoo paid word advertisements.  So Pajamas Media may represent a turning point in the way blogs are used and developed.  It very well may become a media archetype that will compete for dollars and eyeballs with traditional media as Roger Simon believes.   Or they may just another tool to stir the political pots that get to boiling rapidly online.  Time will tell.