94 posts from May 2005
I have blogged about this Venture Fratricide concept on a number of occasions.
Venture Fratricide is when other VC firms back companies that compete with an existing venture-backed company.
Venture Fratricide is very common and it is one of the most disturbing aspects of the venture business to me.
In my first post on this subject back in March of last year, Giordano commented:
Uhm... forgive me for asking, but isn't that called "free market"?
Right you are Giordano. Capitalism is about darwinian survival. And maybe it is a good thing that venture capitalists are free to fund whatever strikes their fancy.
Entrepreneurs are also guilty of entrepreneurial fratricide. When they see one of their brethren doing something interesting, they jump in and try to do it better.
So possibly all this competitive frenzy is a good thing.
But what do you do when you have invested in a company which has worked for years to attain a position of leadership in a market which is now developing nicely and you see your friends in the business thinking about funding some new entrants?
Do you sit back quietly and watch them do it?
Or do you actively try to convince them that they are making a mistake?
Or would that just backfire and convince them even more to make the investment?
It's a tricky issue.
I used to take the former approach which was to sit back quietly.
But I am not going to do that anymore.
If other firms are doing their diligence on a competitor to one of our companies, I want to be called by those firms. In return, I am going to attempt to talk to the VCs that are behind any competitors to companies that we consider investing in. I think that is the right way to handle this issue.
I also think it is smart to call or visit the CEOs and/or founders of the companies that a potential investment will compete with. That's the best way to assess the competitive dynamic. You can learn a lot that way.
This all might sound like collusion to entrepreneurs, but I think its the right way for the VCs to behave. And it might just reduce some of the crazy overfunding of market sectors that has plagued the venture business in recent years.
UPDATE: This post caused a lot of controversy and comments. At some level, I like that because it means it struck a chord. But after reviewing all the comments, its clear that I did not communicate my point very well. I am not advocating "club investing" or even "collusion" of any sort. My point was simply that the venture business is full of investors who don't do enough diligence on potential investments, who don't spend enough time assessing the potential size of a particular market, and who don't take the time to understand the extent of the existing competitive dynamic with any degree of care, and therefore pump money into a "hot" market segment until it is grossly overfunded. I think that's a bad thing to do and I am simply advocating more communication and diligence in the VC community to avoid that in the future.
The Gotham Gal is moving to a Mac this evening.
She's got her email figured out with Entourage and Exchange.
She's got Office for the Mac working.
She's got Firefox and Safari working.
She's got TypePad working.
But the one thing that she hasn't figured out how to replace is Rhapsody.
If anyone knows of a unlimited music service that supports the Mac, let us know.
I am getting increasingly more blog spam these days;
email spam driven off my blog
So, I wasn't surprised to see an ad on my blog this morning that says:
Send an Ad to 1500 Blogs
If you see this ad on my blog, do me a favor and click the hell out of it to teach this jerk a lesson.
I posted about serial entrepreneurs last week and got some great comments.
Understanding the mind of the entrepreneur, particularly the successful serial entrepreneur, is a hard thing to do. But it is one of the most important things a VC can do.
To that end, here is a post from Mark Pincus on weighing the pros and cons of doing another startup.
I'll go back to the tag line from my podcasting post and say to Mark, "Just Do It".
We were playing the May 22nd Mass Hysteria show on the iPod in our new minivan on the way out to long island on friday.
The whole minivan was singing and rocking to it. It's a great song.
Link: May 28th Playlist.
1. I Turn My Camera On - Spoon
2. Feel Good, Inc. (single edit) - Gorillaz
3. Going Fetal - Eels
4. Speed Of Sound - Coldplay
5. Three Marlenas - The Wallflowers
6. Stranded - Van Morrison
7. Run Joe - Neville Brothers
I wrote a post earlier this month about why Adsense image ads suck.
In that post, I promised to take image ads off of my account and report back on the impact.
It took almost a week before the graphical ads stopped running but they were gone by the middle of May.
And guess what? My click thru rates are back up nicely since then.
I honestly think the sharp dropoff in click thru rate in my adsense results from the middle of April to the middle of May was directly related to the graphical Dodge ad that was running on my blog.
I don't know if Google sold that an ad on a CPM basis but if they did and then ran it on my blog on a CPC basis, that is evil and I don't know why Adsense users put up with it.
Even though I think the spam crisis is mostly over as a result of filters and other tools in the email ecosystem, I still get spammed every day by lots of people. I figure it comes with the territory and just hit the delete key.
But Mark and Charlie decided to take things into their own hands when they got spammed last week.
Mark Pincus (who is blogging with a fury lately) outed Michael Bluckman (and called him a dickhead to boot) for taking his business card at a conference and putting his email address on a list without permission. Michael deserves it and I hope he learned a lesson about email etiquette.
Charlie also had the experience of going to a conference and getting spammed as a result. And he also outed the company, Trylon Communications, that spammed him.
As Charlie says at the end of his post, "don't spam a blogger."