Apparently Digital Railroad, another storage provider of the digital photography market is in trouble. No surprise again, because the company never supported a free-market model for photographers and buyers. We blogged about that topic many times, and recently Dan Heller adds to that fundamental thinking (even though I remain in disagreement with the artificial classification of stock photography).

Since its founding, Digital Railroad primarily supported supply-side photographic capabilities, which if not seamlessly connected to the buy-side provides really nothing more than storage space and website make-up for photographers. A nice service, but similar services from Smugmug or Photobucket already exist to do just that. All these technologies fail to solve the most pressing issue for every commercial photographer: sell, sell, sell.

Photographers are not empowered by a storage service or nice looking web pages, they are empowered when they sell. Photography is an expensive job and if it does not yield $70,000 in yearly revenues (based on 2006 PDA numbers), you will not be able to make a living from it. We have yet to find a true marketplace that connects any seller with any buyer, using free-market principles that truly empowers photographers.

Free-markets are more than a fashion statement or a label you suddenly slap on the website. The implications of free-market principles (as listed in this blog) change a company, its execution and its funding strategy to the core. The devil is in the detail.

Digital Railroad’s and Photoshelter’s demise are examples of why investing in technology, without macro-economic impact - no longer works. The 150-year old photography marketplace, with the introduction of digital photography and the internet, has moved from a premium market model (with many walled gardens) to a free-market model.

Akin to Ratatouille (the movie), where a five-star chef, Anton Gusteau, declares that “Anyone Can Cook”, the photography market and its technology providers need to get used to the fact that in this new age, “rats” will take and purchase great photographs ($22B of them).

The irate response to my recent blog about Photoshelter from a Vice President of the American Society of Media Photographers reminded me of the angry cook in Ratatouille that hires Linguini, a clumsy youth hired as a garbage boy, who can still not accept that great taste in food is like the beauty of photography - in the eye of the buyer.

We should embrace all photography that move people to buy, regardless of who shot it and build a real marketplace to facilitate that exchange.

Tags: Photography, Consumer, Content, Marketplace

I received a lot of feedback and questions on my previous blog posting named Building efficiencies in tough times and the embedded presentation posted there. The danger of attaching a presentation is, that as a reader you may miss the rational that built the words.

Because of that I want to explain my sometimes condensed thinking a little further.



It may have appeared that I only care about the product, but nothing is farther from the truth. The diagram on the left of the chart is what I see a lot in technology companies, early and late stage - across the board. The diagram on the right is what I tried to convey with the words in my presentation. Let me clarify:

Many companies develop incremental innovation (to leapfrog their competitors) without a diligent (re-)assessment of the opportunity to change the battle field. Not surprisingly. Real disruptive innovation requires a certain amount of vision, faith and a compass combined with larger commitments and investments, all seemingly based on untested values.

The path of least resistance therefor is to start with an incremental product and throw inordinate amounts of marketing & sales at it, in order to push it beyond its competitors into the marketplace. That is a highly inefficient model (in any economy). But it is a model to which many companies are forced to comply because of risk adverse management and the stale investment criteria deployed by many Venture Capitalists (VCs).

So, it is somewhat ironic that the VCs are now telling their startups to be more efficient, right after they were pushed through the VC wringer of startup-commoditization.

I believe the market for cheap (bootstrap-to-market) technology companies, that yield a large early exit is gone. That model only worked in a bull market of technology (from the 90s that has not dissipated) and the investors that still cling to that model will get punished for it. The new opportunities are for companies that build real macro-economic value.

The starting point of the next wave of innovation, in my view, is to feed a macro-economic need, as depicted in the diagram on the right. That macro-economic need is directly attached to the way we behave as humans (which is relatively predictable). It is our need to express ourselves, live the life we want and be in control (rather than technology controlling us). Think free-market principles, think social, think benefits, think fundamentals.

The fundamental shift in thinking that needs to occur in Silicon Valley, is to develop technology with a fresh mind, looking from the outside in, and serve a larger, less specialized, constituent.

Apple comes to mind as a company that often completely ignores the current state of the technology industry and connects better to basic human needs than any other technology company. But Apple can improve/be beat at the macro level, but I digress.

We simply need to support human behavior with technology.

With “free” distribution of information through the Internet, psychographics - not demographics - matter. Four-hundred year old free-market principles, The Long Tail, and marketplaces like eBay prove that the traditional rules of marketing do no longer apply. In my thirty years in technology I have never met anyone who truly understands markets. And market definitions have changed, they comprise no longer of buyers that fit an artificial model (I cringe when I hear people debate for hours how many users delineates the SMB segment), but because they subscribe to the pain or gain from which subsequently, marketers can extrapolate a larger pool. Bottom-up.

We do not all need to be economists to create the next successful technology company, the material is all around us. All it takes is a healthy interest in the actual behavior of human beings, compare their offline and online behavior and fill in the gaps. So, stop supporting companies that just build nifty technologies, but focus on companies that create larger macro-economic differentiation. More impact to everyday people.

No company will be more efficient by simply cutting cost (as suggested by the recent doom-and-gloom VC messages), it will just take longer to die. The real efficiency comes from a more disruptive value that attaches more people to better technology. On top of that, macro-economic value is very resistant to economic downturns.

Tags: Performance, Commodity, Consumer, Marketing, Markets, Marketplace, VC, Macro-economics, Psychographics, Apple, Distribution

Two days ago we got word about the demise of the Photoshelter collection marketplace. Not surprising because Photoshelter was not a marketplace. Technologists have a tendency to slap the marketplace label on anything they build, without understanding what it truly means.

Marketplace models, criteria, funding and execution are fundamentally different from premium market models. Photoshelter was really nothing more than a replica of Getty Images without Getty’s money to buy inorganic growth.

Here is how Photoshelter failed to meet marketplace rules:

Marketplace violation 1: Photoshelter artificially arbitrated supply, through a lengthy subjective signup process in which Photoshelter arbitrators determine whether you get to play.

Marketplace violation 2: Photoshelter artificially arbitrated demand, as it aimed to sell it to “the industry’s top buyers”, not to everyone.

Marketplace violation 3: Photoshelter gave preference to images they liked, rather than simply connecting any supply with any demand.

Marketplace violation 4: Photoshelter deployed a sales-force (from Getty and other photo agencies) that promoted a premium market model, like any sales-force driven by quotas would.

But CEO Allen Murabayashi makes a few damaging statements in his blog on why they failed and tries to blame that on the market as a whole:

“Licensing photography is fraught with clearance issues”
150 Years of photography exchange has resolved the fundamental issues of rights management quite effectively. Getty-Images, Corbis and others have gone through a well defined process in order to clear rights in their move from analog to digital exchange. Photoshelter has relied too much on a model that requires people intervention, while the majority of rights and enforcement can be embedded in and enforced by technology and made the responsibility of the asset owner. In the same way eBay sellers are responsible for the fulfillment of transactions. That enforcement guarded by a true meritocracy will quickly weed out bad behavior (that plagues any marketplace).

“Stock photography is a slow growing market dominated by a single player”
Nonsense, the term stock photography is an artificial classification (made up by its current participants) that bares no value. Today $22B of photography is exchanged of which less than 10% is transacted electronically. Growth through the premium market model of Photoshelter is limited because the photography market requires a free-market.

“Research Requests move too quickly for individuals to react in a timely fashion”
Perhaps they do in the “top buyer” segment, but certainly not in all. Since Photoshelter artificially limited the demand characteristics, any assessment of market traction and behavior should be taken with a grain of salt.

“Buyers desire more diversity, but convenience (aka subscription deals) triumphs this desire”
Absolutely, buyers deserve diversity, and buyers should be presented with the ultimate experience (subscriptions are not the answer). What has fundamentally changed in a 150 year old analog photography market is that demand does not come from a few buyers, but a highly fragmented buyer market that will want to use an image for any purpose (not just for your average advertising purposes).

“A crowd-source model for stock will likely never work”
Absolutely disagree. Photoshelter deployed a premium market model on a market that requires free-market principles. It failed for the same reason Getty Images fails to become a market-leader in the un-arbitrated exchange of digital photography (identified by roughly 30% market ownership). Getty Images grew by inorganic growth and acquiring other photo agencies with staff photographers that create the majority of images it sells (less than 7% come out of third party supply according to a statement by its CEO in 2006).

Photoshelter, as lovers of photography, seemed to have their hearts in the right place but not their execution. And they neglected to respond to our offer for help one year ago, when we saw their demise coming.

Tags: Photographers, Photography, Getty-Images, Growth, Free-market, Marketplace

From time-to-time I hear from investors: what if Google decides to build it?

My replies are as follows:

1/ Google is the king of web-based advertising derived from search, and it does so extremely well and profitably. Yet Google is a pretty monolithic animal. While the company is capable of building virtually any technology outside of its core competency and brings a bright sparkle of innovation to Silicon Valley, it is consistently unsuccessful in turning that innovation into great Billion dollar businesses (which reminds me of Oracle, before Chuck Phillips came on board).

2/ Google is not a true marketplace, nor does it seem to understand free-market principles as witnessed by their actions. Google is a premium market for search-based advertising placements and it will continue to drive premium market DNA to the adoption of technology. Nothing wrong with that, unless they portray a more liberal character. So, you’ve got little to fear if a free-market platform is what you are building.

3/ Google does not understand any software category that doesn’t derive its revenue from advertising. While there may be a great future for software (as a service) that no consumer ever pays for directly, today that is not the reality. Desktop software, proprietary enterprise applications, software-as-a-paid-service are examples of what Google is highly inexperienced and generally unsuccessful with.

4/ It would be a great sign if Google decides to build a similar product or service, as it would produce a rhetorical blessing of the proposition and an impromptu acquisition play by its competitors. Isn’t that what you want as an investor.

Google’s relatively young age, massive growth and company DNA are probably the best reasons why it hasn’t succeeded financially in many areas it operates in. But I greatly admire their drive to invest a large part of the difference between their (Wall-street) valuation and real value in new technology development.

Beyond search, Google is in essence a giant research institute with the limited financial successes that come with that model. But Google lays important development groundwork that has and will continue to do us all good. They also provide valuable incubation of new technology ideas a commoditizing VC market rarely picks up on.

My startups have a different charter; turning great technologies into great businesses, now!

Tags: Google, Wall-Street, Innovation, Markets, Marketplace

When Facebook decided to integrate new application capabilities that were first available as a third-party application from a marketplace participant, they broke the cardinal rule of marketplace meritocracy. When Getty Images’ staff-photographers allegedly took new pictures similar to previously top-selling pictures from participants they too broke a fundamental marketplace rule. When Amazon.com optimized sales results based on margins requirements they too broke many of the free-market rules as described in “Look, but don’t touch”.

By calling themselves platforms or marketplaces those companies misled their participants and engaged in what I would characterize as false advertising. Not only did the suppliers expect to be treated equally and become successful based on a true meritocracy, buyers expected to get an untainted view of that meritocracy to make informed purchasing decisions.

Technology platforms need to obey to a simple macro-economic marketplace definition:

A marketplace connects unrestricted supply with unrestricted demand through an un-arbitrated and transparent exchange.

Marketplaces thrive because they support free-market principles, and as a result they level the playing field for all participants. No longer are unfair advantages for participants defined by geographic location, subscriptions, volume or other artificial boundaries, but simply by the value and the price of their products.

Here is what platform vendors, to maintain free-market principles and thrive, should stick to:

1/ Don’t employ sales people that sell marketplace content. Sales people give preference to specific content which violates the integrity of the marketplace. Sell the effectiveness of the marketplace mechanism instead.

2/ Don’t market specific content, but market the effectiveness of the exchange. Unfair advantage is an attribute of a premium market not a free-market.

3/ Don’t arbitrate. Anyone should be able to participate, participation fees (that anone in the target group can afford) are okay.

4/ Don’t hide sales results. Transparency of the effectiveness of the marketplace is crucial to invite new entrants on the supply and buy side.

5/ Don’t participate in the marketplace yourself. Clearly seperate yourself from the participants, platform vendors should just build the platform, not the content.

Technology companies that are building platforms should check out our cardinal marketplace rules and investors should measure their platform companies on the compliance to those rules. Investing in a premium market business is fundamentally different from investing in a free-market platform business. Funding requirements and use-of-proceeds differ dramatically.

I’ll make the point again that investors should understand macro-economics impact before they invest.

Marketplaces are not for-free and still support capitalism, but the money will be made by platform owners from a transparent margin on the exchange (and sometimes carefully applied advertising opportunities). Diligent consumer marketplaces achieve winner-takes-all participation levels and massive exchange volumes and revenues. eBay and the Apple AppStore are great examples of more disciplined marketplaces.

Because of the virtually unlimited global reach of the Internet we have an incredible opportunity and obligation to present the world with free-market platforms that treat all participants fairly and with respect.

Let’s stop whining about the authenticity of our presidents, and instead, as the creators of the technology industry show the world how we turn authenticity, embedded in our technology, into a massively sustainable advantage.

Tags: Platform, Amazon, FaceBook, Getty-Images, Photography, Macro-economics, Meritocracy, Marketplace, Markets, Premium

With the proliferation of the new iPhone, Mobile Applications as a viable VC investment category is dead.

Companies like Digital Chocolate (founded by software gaming pioneer Trip Hawkins) are now painfully aware of that. Recenty switching gears, it is debatable whether they can compete with the endless supply of a new free-market.

The future of many companies like Aeroprise, still basking in the glory of a proprietary Blackberry environment and tucked away in the enterprise mobile markets, will be severely threatened by standards-based technlogy running on any internet capable device, very soon.

The premium market of mobile applications protected by walled gardens has been changed to a free-market by Apple’s iPhone and the App Store. Macro-economics, discussed in this blog many times before, at work again.

Rather than single minded companies being able to protect their turf with a collection of proprietary applications (usually aimed at businesses), now individuals will start to create applications for other users. By the people, for the people. N/N :the airplane code for Steve Jobs’ Gulfstream. Get it already?

User-generated-content (one of those awkward Silicon Valley attempts of describing content that resides in a free marketplace) has a brand new companion, it is called: applications.

But these applications are no longer mobile applications, they are internet applications - that happen to run on a great mobile internet device. And they will run on many other internet devices, hard-wired or mobile. Think of them as the big brother of widgets, task oriented applications that remove the need to use a browser to benefit from the Internet. They target regular consumers, not internet savvy technologists and they self-configure, based on location and other user preferences.

So the investment model for mobile has changed dramatically and the recently announced $100M iFund (by top investment firm KPCB) and a similar one by BlackBerry - the vehicle of purportedly investing $1M per application vendor - makes no sense at all. Here is why:

1/ User-generated content does not provide a great foundation for large upside - let alone an acquisition or IPO that is priced to produce interesting VC returns.

2/ The value to the VC is in the “winner-takes-all” platform, not the content (albeit that produces great value and choice to the consumer). Apple, with the App Store platform for distributing applications using free-market principles (although still not perfect, check out our marketplace rules) will again walk away with the same benefits it reaped from the iTunes store, direct and halo.

3/ Application development is a very high cost business, especially in a highly competitive marketplace. The gaming industry wrapped in a slower transition from premium to free-market is finding that out too.

4/ Mobile used to be a proprietary, and protectable, path to the internet. No longer. The intelligence of the backend service, accessed through a mobile of hard-wired computing device is where the value is.

So, i suggest to rename the iFund in Software-As- A-Service fund, agnostic to access paradigm.

Nokia and Blackberry (RIM) will have to follow quickly. But they would need to start hiring people that understand macro-economics, not just technologists that create poor copies of Apple’s implementation.

All phones need to have a real operating system inside, and Roger McNamee’s investment in Palm may make sense in that way, but they better step it up quickly. Nokia is off playing with Symbian, Microsoft has its own concotion. All of them pretty much asleep at the macro-economic wheel.

Yet for individuals, on the supply and buy side, all this disruption leads to new opportunities that are derived from a meritocracy. Fantastic applications are being developed and used in massive numbers. The world is indeed flat after all.

Tags: Apple, Nokia, Blackberry, Free-market, Marketplace, Meritocracy, SaaS, Proprietary, Gaming, Funds, Wall-Street, ITunes

We can look at Microsoft and Apple and compare them strategically: Microsoft is the plumbing for a commoditized desktop computing market where Apple delivers a unique computing experience based primarily on its proprietary technology stack. Microsoft as the complacent market leader, Apple as the wannabe - fighting hard to win share. Apple, in tune with today's computing lifestyle as the innovator, Microsoft as the raw execution machine, buying innovation where needed.

But for me, in the shoes of an end-user, all of that is summed up in a simple way:
Type in CNN in Safari (without url etc, just as we wrote it here) and then type in CNN (again without any internet "grammar") in Explorer. Here is what you get:

Microsoft (standard installation Windows XP):


Apple (standard installation OS10.4+):


Bottom line: with Apple you get what you expect, with Microsoft you get spun into their web, literally.

Maybe this is Microsoft's tactic to produce page hits to compete with Google: any user that doesn't know how to type in a URL will be rerouted by default to MSN search. I call that cheating, Microsoft. But even with those tricks, you still need Yahoo!

Getting and keeping customers is about integrity and authenticity, not sneaky monetization techniques to squeeze every cent out of every visitor - leading them down the endless path of search. I am glad Apple is around and here to stay. There is nothing better than getting what you want, quickly.

BTW: talking about Microsoft's complacency, does it still not have anti-aliasing sorted out - or is that the big improvement in Vista?

Tags: Investment, European, Private Equity, VC, Angels, Marketplace, Markets, Silicon Valley, Palo Alto

If you've read my previous blog on marketplace rules, you would agree. Amazon.com is a Super Store which, by expanding the relationship with other premium suppliers mimics the appearance of a marketplace. And because Jeff Bezos associates Amazon.com with a marketplace frequently, I stand to correct him:

Marketplace rules.
Rule #1: Failed. Amazon limits the supplier participation to their premium strategy.
Rule #2: Failed. Limited suppliers means limited transactions are available
Rule #3: Failed. Amazon regulates the process of how a transaction takes place, conforming to Amazon pricing models
Rule #4: Failed. Once you book an order from a different supplier than Amazon, all bets are off with regards to transparency, shipping, returns etc
Rule #5: Failed. There is no way for new buyers to see who bought what at what price and equally for sellers who sold what.
Rule #6: Failed. User opinions are irrelevant if they are not borne out of a transaction.
Rule #7: Perhaps not relevant here.
Rule #8: Failed. Amazon is "competing" in the "marketplace" with its suppliers

Amazon will have a much harder time to sustain growth and meet Wall Street expectations, as a lot of growth through premium suppliers will become non-organic (or sell through revenues). Amazon has plenty of opportunity to migrate to a real marketplace without losing its footing, but it better hurry. In the meantime, Jeff, please call Amazon what it is: earth's premium selection.

Tags: Marketplace, Oracle, Microsoft, Apple, Google, Android, Enterprise, Networks, Eco-systems, Meritocracy

There is a lot of misconception about marketplaces and I wanted to summarize my response to benefit more entrepreneurs.

Real marketplaces are much more powerful than just a collection of stores. Amazon, for example is a Super Store not a marketplace today. EBay, FaceBook and YouTube represent more fundamental marketplace principles - and as a result - fascinating growth.

Marketplaces are a favorite topic these days, perhaps spawned by sky high valuations for social-media platforms such as FaceBook and Bebo. A social-media platform, you know, is nothing more than a marketplace in which personal attributes are traded (through the use of social applications).

Marketplaces are interesting because, if implemented successfully, provide massive user adoption and winner-takes-all leadership positions. Great traits for any investment portfolio. A marketplace is highly disruptive in a market where the premium opportunity, the Super Store model has been exhausted - or simply does not exist. Some markets, because of their highly fragmented nature, cannot be captured by high margin and proprietary access and a marketplace is the only way to leverage its total size.

I have written extensively about marketplace criteria in specific markets and its origination about 600 years back, so I won't cover that specifically here. But so many other markets are ripe for marketplace macro-economics delivered by technology. Virtually any market characterized by unique transactions between large amounts of sellers and buyers is a candidate for free-market principles. The life-cycle of proprietary markets is dramatically shortened by the Internet, a distribution medium that instantly removes artificial boundaries such as geographic location and limited access.

Here are 8 rules that make a marketplace succeed:

1/ Un-arbitrated participation
No seller or buyer should be banned from participating in the marketplace. A key fundamental of a marketplace is that it grows itself and that the quality of the buyer and seller is a reflection of the market, not controlled by the market. After-all, the purpose is to connect The Long Tail of supply with The Long Tail of demand.

2/ Un-arbitrated transactions
Apart from exchanges that are illegal by law, no transactions should be banned. People come to a marketplace to perform a unique transaction, one they could not act on in a premium market.

3/ Free pricing mechanisms
Pricing models and terms are defined either by the seller or buyer or by both. Not by the marketplace. Pricing models can include such transactions as sell, auction, reverse auction or subscription - or even a combination of those. Pricing, including free, is completely and independently determined by or between seller and buyer, predetermined or negotiated. The marketplace takes a simple transaction fee off of the transaction value.

4/ Predictable behavior
Marketplaces need to establish trust in order to survive and thrive. Pricing models and behavior of the marketplace need to be predictable and follow (not dictate) the goals of buyers and sellers. The marketplace should follow the needs of the market not the other way around.

5/ Transparency of transactions
Marketplaces rely on a vast new influx of sellers and buyers to grow to massive size. That means the marketplace must operate with a transparency that shows new buyers or sellers how to become successful as most of its users are greenfield participants.

6/ Meritocracy builds reputation
Trading favors and segmentation can be established but only based on mechanisms that are derived from real transactions, not plainly from user opinions. Opinions are useless if not supported by a proven reputation within the marketplace. Transactions based reputations provides long-lasting stickiness to the marketplace.

7/ Support for intermediaries
For existing markets moving from premium to a free-market, its existing intermediaries need to be able to continue to represent their sellers or buyers. A new technology marketplace should not want to disintermediate or alienate those agents.

8/ Non-compete
The marketplace cannot itself participate in the marketplace by providing its own transactions or even participate in - or act on behalf of - transactions between sellers and buyers. Apart from the fact that the business models don't jive, a marketplace cannot be trusted when it simultaneously participates and facilitates an impartial exchange.

So, a simple method to determine whether a marketplace has massive market potential is to hold it up against the rules provided here. These rules are macro-economic principles that dictate how markets behave and grow, the technology implementation must support those principles to have a chance of making it big. It's a free world after all.

Tags: Marketplace, Amazon, Bezos

Over the last 10 years I've also been closely involved with early stage technology funding (advising VC firms and Angels) and have invested personal time and money in early stage ventures. That has given me a unique perspective of the challenges between entrepreneurs and investors.

I've written about my Top 10 fundraising lessons for entrepreneurs, and dare to follow up with my Top 10 investment strategies that may be useful to investors and entrepreneurs, here:

1) Invest in the founders, but be wary if the company consists of technologists only. The ones that come in without an operating plan clearly do not understand what you as an investor are looking for. Get a real operator in early.

2) Invest in the business, don't invest in technology. The statistics prove it: ninety-nine out of a hundred of the most innovative technologies never turn into successful businesses. Especially investors (both VC and Angels) that made their money in the hay-days of technology have a tendency to underfund the business side, providing a weak foundation for any technology to succeed.

3) Don't invest in an early stage company with more than one product or service. Let the company become the King-of-One, rather than the King-of-None. Multiple products or services require more money to support successfully and dramatically dilutes the focus of the company. Multiple products or services also "invite" a larger group of competitors, making it hard for customers to perceive true differentiation and unknowingly, slows down adoption.

4) Don't invest in an early stage company with more than one business model. Keep it simple. Multiple revenue models sound good, but usually don't yield the projected outcome. The company should make all of its money in advertising or in subscriptions, not in both. Dilution of focus is costly and provides yet another reason for failure.

5) Don't invest in companies that rely heavily on partner support early on. This is the typical David and Goliath phenomenon. Partners sell once the company does in overwhelming numbers. The company should always have direct control of its own business model first, before they allow any partner to reduce its margins.

6) Invest money or time, don't do both. I very much relate to Carl Icahn in an interview with Dan Primack (on PEhub) with regards to CEOs responsibility to make the numbers work, and not to rely on investors to "add value". The CEO is in the driver seat, take him out if he doesn't produce.

7) Look for fundamental changes in customer experience. The Ultimate Driving Experience is what sets BMW apart, not just the timing in their engines. Customer experience is much more than a pretty user interface, it is an overall experience that spawns disruptive purchasing.

8) Watch how professional the team operates pre-funding as an indication of their interaction post-funding and with customers. Real professionals do everything with a purpose and I have mastered the art of detecting them. So well that I can tell from a visit to a trade-show floor whether a company is going places.

9) Don't categorize investment allocations based on past investments or trends. Every company is unique and requires an amount of money unique to their assets: people, timing, market and ecosystem. If you don't think you have a unique scenario, you probably don't have a valuable investment opportunity.

10) Invest with passion but don't fall in love with the company. Investing is the ultimate flirting game, but it is usually a bad idea to get really involved. Your asset value is the selection and performance of all the companies in your fund. Stick with what you do best.

From an investment perspective I see many "sub-optimizations" but not a lot of real great innovations these days. I do blame the current investment model for that sometimes. We, in Silicon Valley, have too many technology investors using the same rearview-mirror investment criteria. Although I have a lot of admiration for Apple, it is a bad sign when we need to leave real innovation in the hands of large companies like theirs.

The landscape for investors is about to change dramatically, no longer can they just continue to invest in proprietary technology silos at single digit valuations. They'll soon nee