Ready, Fire, Aim! - Mihail's Public Blog

Another venture fund has raised a new fund. In March Squoia Capital which funded Yahoo and Google, raised a $395M fund, which was 43% smaller than its previous one raised in 2000. Now ComVentures has rasied a $300M fund that is 45% smaller than its last fund raised in 2000. According to this San Francisco Chronicle story:

As of the second quarter of 2003, more than $70 billion raised by venture funds hasn't been invested, Taylor said. That figure, known in the industry as "dry powder" or "overhang," suggests that venture capitalists are hard-pressed to find opportunities they believe will yield profit.

...In the second quarter of 2003, venture capitalists invested $4.3 billion in 669 transactions, for an average deal size of $6.4 million, according to the venture association's Taylor. That's down from an average deal size of $13 million in the first quarter of 2000, when venture capitalists invested $28.6 billion in 2,164 transactions.

I find it really irritating when Internet Explorer takes me to a search engine when I've typed in the wrong URL for a website. I'd rather not get anything so that I can correct the typo. According to this Wall Street Journal story (subscription required) millions of people do the same thing every day:

This "trash traffic," as some call it, may seem worthless. But a growing number of companies are finding creative ways to, in effect, recycle it. AOL Time Warner Inc.'s America Online and Microsoft Corp., for instance, direct users who botch some Web addresses to the companies' Internet search engines, where they often display advertisements.

...In a potentially significant development, VeriSign Inc. is privately testing a service that could let it direct large portions of trash traffic to Web sites of its choosing, according to people familiar with the matter.

The Mountain View, Calif., company operates the largest Internet "registry" -- a master directory with listings that enable Web users and e-mails to reach Internet addresses ending in the popular ".com" and ".net" suffixes...In effect, VeriSign will be capturing error-prone users before the software from companies like Microsoft and AOL can nab them, potentially shifting significant sums of traffic away those sites.

George W. hits the road to promote his economic recovery plan as the White House begins to panic with no end in sight in Iraq (or remember, Afghanistan?!) and George W.'s re-election bid coming up rapidly. According to this New York Times story (registration required)

Mr. Bush said the economy was showing signs of promise, and he cited near-record levels of home ownership and greater investor confidence in the stock market, though he said too many people were still looking for work. He laid the blame for the persistent joblessness on the Sept. 11 attacks and the recession that began in early 2001, and said his three enacted tax cuts, totaling some $2 trillion over a decade, had saved the United States from even more job losses. So far, some 2.7 million jobs have disappeared since Mr. Bush became president.

"Had we not taken action, this economy would have been in a deeper recession," Mr. Bush said. "It would have been longer, and as many as 1.5 million Americans who went to work this morning would have been out of a job."

To back up Mr. Bush's assertion, White House officials cited a Treasury Department analysis but provided no details.

Miguel Estrada withdraws himself from consideration to the United States Court of Appeals for the District of Columbia, second in importance only to the Supreme Court, after trying for two years to get confirmation. He would have been the first Hispanic to serve there and it is well known that George W. was hoping to also install the first Hispanic Supreme Court judge in order to appeal to the Hispanic vote.

Democrats challenged his nomination by the Bush White House since he was unwilling to come clean on his views on abortion etc. according to this New York Times story (registration required). The Democrats. although in the minority, were able to prevent confirmation votes by "threatening to hold an extended debate or filibuster, which can only be ended by 60 votes. Republicans, with 51 votes, were unable [in this case] to attract the support of the nine Democrats needed to break the filibuster."

Senator John Cornyn told reporters that Hispanic voters in his state of Texas would certainly question why the first appeals court nominee in history to be blocked from having a direct floor vote on his nomination was of Hispanic heritage.

When he was pressed if he was asserting that Democrats blocked the Estrada nomination in part because of his ethnic heritage, Mr. Cornyn declined to say if that was what he meant to imply.

..."Senator Charles E. Schumer, a New York Democrat who helped lead the opposition to Mr. Estrada, said: "The implication that anyone has blocked this because of Mr. Estrada's background is cheap and low. The Republicans can't seem to win the argument on the merits so they resort to below-the-belt tactics."

While the percentage of unemployed dipped to 6.1% from 6.2% (which I find suspect since this number may be dependent on accounting for only those people actively looking for jobs vs those who've given up and are taking time off doing other things) there are no signs that jobs are coming back. So George W. and his Republican management team should continue to do what it is doing: that is, not much, when it comes to the economy. According to this New York Times story (registration required):

In its monthly employment survey, which it said was probably not impacted by the August 14 blackout in the Northeast, the Labor Department said that non-farm payroll employment fell by 93,000 last month. It is the seventh consecutive decline in employment, and was the biggest monthly decline since March.

...The fact that rising demand is not prodding employers to add workers suggests that the economy may need to expand at a much more rapid rate than previously thought in order to generate job growth.

Interesting differences amongst US and British law when it comes to libel lawsuits according to this New York Times story (registration required):

Whether The Financial Times, already hurt by an advertising slump, has to pay damages will depend on the courts. British libel laws are far stricter than those in the United States. The defendant must prove that what has been published is true. In the United States, a plaintiff in a typical libel case must prove that published reports are false, and that the publication knew they were false when it printed them. When plaintiffs bring cases to British courts, they often win.

In the United States, nearly all court documents that a reporter acquires legally about a company are fair to report on, while in Britain, newspapers must tread carefully. Thus, the success of the suit hinges on a judge's opinion of whether The Financial Times should have published Mr. Middleweek's 32-page report to the regulatory agency at all, lawyers said.

There's much confusion in the aftermath of the first price cut since CDs were released as a format several years ago. Universal was in a strong position to make this price change since it sells some 30% of all music in the US (BTW, interesting stat on CNN yesterday: when a CD was priced at $18, only $1.60 out of that actually made it to the band as music royalties -- yike! That's less than 10% to the preson mainly responsible for creating that album!). According to this New York Times story:

The Universal Music Group's decision to lower the prices of its CD's left the rest of the music industry scrambling to respond, with some arguing that the long-term effects could hurt struggling specialty chains and independent music stores and favor discounters like Wal-Mart.

...Music industry executives say companies like Universal typically offer stores about $1.20 in promotional subsidies for each CD sold to retailers for $12. Now Universal is keeping that $1.20, but lowering the wholesale price to $9 instead of $12.

Google keeps growing as a portal, now providing Google News Alerts (the kind that the New York Times calls the Times News Trackers and now charges you for) for its Google News section which is growing in readership each day:

Some handy uses of Google News Alerts include:

• monitoring a developing news story
• keeping current on a competitor or industry
• getting the latest on a celebrity or event
• keeping tabs on your favorite sports teams

According to this Online Journalism Review article quoting Greg Bloom, senior Internet analyst at Nielsen//NetRatings which currently does not include Google News in its rankings:

Google News is a channel within Google, which has enormous reach. We have Google News with 3.4 million unique users in July. In this category, we have CNN at 21 million, MSNBC at 20 million. ... So 3.4 million would place it about 20 spots down the list....

With hundreds of companies slogging away in Silicon Valley, slowly turning themselves into profitable ventures, the taste of an IPO seems closer than ever before according to this Fortune story:

The best examples are Google and Salesforce.com. Google, less than five years old, now powers more than 200 million web searches per day, employs over 1,000 people, and by many accounts (though not its own; it won't comment) is nearing $1 billion in annual revenues, with hundreds of millions in profit. Salesforce.com, the Siebel Systems competitor that makes online tools for managing the sales process, is younger than Google and smaller, but growing rapidly. Benioff says that the company is in its second profitable quarter and that sales, which have been doubling annually, are running at a $100-million-a-year clip. Neither company is allowed by the SEC to discuss it, but many investors and techies expect both to go public within a year.

There's no question that a new hunger for dot-coms is building. Revenues and stock prices are soaring for public stars of the Net like Amazon, eBay, and Yahoo. And though fewer than 15 venture-backed firms have gone public since mid-2000, roaming-Internet access provider iPass tested the market in July and lived to tell about it. It garnered a valuation of over $1 billion and has seen its stock rise from an opening-day $14 to a recent $19.50.

Unbelieveable what things we waste our energy on in this country. According to this ABC News story:

The Atlanta Journal-Constitution is apologizing for putting Madonna and Britney Spears kissing on the front page.

...In yesterday's edition, managing editor Hank Klibanoff apologized, saying it belonged inside the paper but not on the front page.

With the 22-year old Britney having to deal with this hoopla over a simple (OK, simple but long! ;) kiss, Madonna gifts her a diamond necklace:

"Madonna thought the necklace was a nice way of saying thanks.

She already has one with the letter M and wanted Britney's to be a B so it was like a friendship necklace," The Sun quoted an insider as saying.

Sony, the company behind the most incredible consumer entertainment products, is planning an online music download store according to this Dow Jones story (although they have to do something about the not so consumer friendly name). Apple always wanted to be the Sony of computers. Seems like Sony's going to be the Sony of computers, entertainment and the Internet if the first few products (such as the beautiful Sony Clie PEG UX-50) are any sign of things to come.

Speaking on the sidelines of the Sony Dream World exhibition, which opens Saturday, Mr. Stringer said the service would be called the "Net Music Download Initiative."

...Sony Music Entertainment, a unit of Sony, is the world's second-largest music company after Vivendi Universal SA's Universal Music [which yesterday announced the slashing of CD prices in an effort to jumpstart slowing CD sales worldwide].

Yep, it is official. Suburban sprawl isn't just bad for the environment, it is also terrible for your waistline. According to this New York Times story (registration required):

A wave of new research on sprawl's effect on health emerged last Thursday when two journals, the American Journal of Public Health and the American Journal of Health Promotion, jointly released special issues on the subject that indicate a significant connection between sprawl and obesity and between sprawl and hypertension.

...The results of the obesity study — which accounted for variables like age, gender, race, diet and physical activity — suggest that people in more sprawling suburban areas, like Geauga County, Ohio, and Walton County, Ga., weigh more (as much as six pounds more in the most sprawling areas) and have higher blood pressure than people in more densely developed areas like New York City.

Universal, which may soon be known as NBC Universal, has announced price cuts in new CD prices in an effort to lure back the music-buying public that has stopped spending its dollars at the music store. According to this New York Times story (registration required):

Under the new pricing scheme, Universal would lower its wholesale price on a CD to $9.09 from $12.02. The company said it expected retail stores to lower CD prices to $12.98, from the $16.98 to $18.98 they now charge, and perhaps to as low as $10. When CD's first arrived on the market they cost $15.98, and have climbed from there.

..."This is a step toward realizing the reality of what business conditions are today," said Hal Vogel, author of "Entertainment Industry Economics"(Cambridge University Press, 1998). Mr. Vogel said that some estimates indicate that the record industry's revenues worldwide had declined to $30 billion from $40 billion a year in the late 1990's. "The cuts are going to put a squeeze on profit margins but it will allow them to start building a relationship with the public again," he said.

I'm not surprised. When it has become so darn easy to get so much information online on anyone this was bound to happen. According to this AP story in the Wall Street Journal (subscription required):

More than 27 million people have been victims of identity theft in the last five years, costing them $5 billion and businesses and financial institutions almost $48 billion, the Federal Trade Commission said Wednesday.

The FTC released a survey showing that in the last year alone, 9.9 million people were victims of identity theft.

Friendster, the online social networking site that sees itself as challenging the existing matchmaking sites such as Match.com, announced new investors and key advisors today (former Yahoo CEO Tim Koogle, former Paypal CEO Peter Thiel et al) with much bravado about building a new Internet company the size of eBay. We'll have to see! While their free members have grown to 1.8M since launching in March, their business model, if there is one, seems pretty suspect so far. According to this Wall Street Journal story (subscription required):

"The plan for Friendster is to build the next big Internet company or brand -- like Google or Amazon or eBay -- and so what we're doing is assembling a team of the most experienced investors and advisers who can help us with it," said founder Jonathan Abrams. Last week, Friendster announced that Sean Parker, co-founder of Napster, joined the site's advisory board.

...Friendster is currently a free site, and Mr. Abrams said Friendster has been experimenting with selling advertising, although advertising isn't intended to be the site's primary stream of revenue. Mr. Abrams wouldn't disclose revenue or profit/loss figures. Within a year, he said, the site plans to start charging for some kind of subscription content.

The Wall Street Journal story put it aptly when it noted the skeptical response from analysts:

Despite the site's popularity, many are skeptical about start-up companies making lofty claims, especially in this post-Bubble era.

"That's a tall order, to make another Google or Amazon," said Safa Rashtchy, an analyst with U.S. Piper Bancorp Jaffray Inc. There is room for another big Internet company, he said, but "for a new brand to make a big impact as Amazon or Google has, it has to be a totally revolutionary service."

Thanks to the RIAA threatening and/or filing lawsuits againsts those who allow copyrighted songs to be shared with others, universities are cracking down on college students engaging in this popular activity according to this Wall Street Journal story (subscription required):

Sharing of music files is a crucial issue for the industry. It says the practice is largely responsible for a 25% drop in CD sales since 1999. Revenue from album sales has declined from $14.6 billion in 1999 to $12.6 billion in 2002, according to the RIAA.

...It's estimated that people download more than 2.6 billion copyright files every month on file-sharing networks.

Another example of how the Federal Government is not supporting the expenses of states such as California. Not when it comes to protecting the Golden Gate bridge from terrorist attacks. Not when companies like Enron manipulate electricity prices. And not when it comes to Medi-Cal, California's version of Medicaid. According to this San Francisco Chronicle story:

State and federal governments share the costs of the Medicaid program -- known as Medi-Cal in California -- according to a formula that relies on state per-capita income. This formula is intended to lessen the state-by-state variation in the ability to fund Medicaid. However, because the formula is flawed, it creates budget problems for the state and forces unnecessary restrictions on services or reductions in payments to health care providers. Because the formula measures the wrong thing (per capita income), it does not take into account the large numbers of people living in poverty in California and therefore, California does not receive enough money to take care of the poor people who live in this state. Wisconsin, for example, receives twice as much money per person in poverty ($7,532) than California ($3,731).

There are barely any of the major book stores in San Francisco because of the anti-business local government. While it is a great idea to support your local small business the fact is that most of us want the choice that only a Barnes & Noble or a Safeway supermarket brings with its massive scale. I see lots of local bookstores and the larger chains thriving side by side in NYC so maybe there is a place for both kinds of businesses to coexist.

And if not, then it should be the consumers' choise whether they help a small business thrive or force a large chain to close down due to a lack of customers. But Matt Gonzalez, the most recent candidate for SF Mayor goes one step backwards according to this San Francisco Chronicle story, inspired by Los Gatos, my new home town. Sheesh.

The bill takes aim at "formula retail businesses" -- companies with four or more stores that have such similar characteristics as merchandise, employee uniforms, signs and logos. Gonzalez already introduced legislation that focuses on coffee stores and pharmacies, such as Starbucks and Walgreens.

Deputy City Attorney Sarah Ellen Owsowitz, who helped draft the new bill, said it was modeled after similar laws in Los Gatos and Coronado (San Diego County).

Battles over chain stores and restaurants have a long history in San Francisco. In 1995, Blockbuster video store was blocked from opening in the Inner Sunset. Three years later, Borders bookstore lost its bid to open on Union Street in the Marina District. Burger King opened an outlet in the Inner Sunset in 1996 after a long run-in with neighbors, and Home Depot cleared a key hurdle at City Hall last year in its ongoing bid to open on Bayshore Boulevard, with surrounding neighborhoods bitterly divided over the project.

"Now is not the time to make it more difficult for businesses to come in and do business in San Francisco," said Lee Blitch, CEO and president of the San Francisco Chamber of Commerce.

Archaeologists have discovered the foundations of an adobe structure in the Presidio according to this SF Chronicle story. This discovery is quite significant because it represents "the first venturing out of nonnative civilians from an established military post, said Stanford Professor Barbara Voss, director of the project."

"It's the first urbanization of San Francisco," she said. "It wasn't just a military or religious community but a secular, civilian community."

The structure, which is believed to have been built around 1810, and its surroundings offer a rare glimpse into local civilian life before the village of Yerba Buena was founded in the 1830s on the northeastern tip of the San Francisco Peninsula.

...The Presidio was established in 1776 by the Spanish and then fell under Mexican control in 1821 after Mexico gained its independence from Spain. The U. S. Army took over in 1848, evicting the existing Mexican families at the Presidio.