Microsoft Startup Zone

The 7 deadly sins and 10 lessons of a failed startup

Don Dodge — Sat, 19 Jul 2008 17:12:30 GMT

Failure is part of the maturing process in the startup world. If you haven't failed...you aren't trying hard enough, or you aren't "pushing the envelope" far enough. I have always said "Success is a terrible teacher. Success masks over flaws that may hurt you later."

Roger Ehrenberg - the co-founder of Monitor 110, wrote a story on the lessons he learned from this recently failed startup. [found via Fred Wilson] He lists "seven deadly sins" that lead to their demise.

The lack of a single, "the buck stops here" leader until too late in the game
No separation between the technology organization and the product organization
Too much PR, too early
Too much money
Not close enough to the customer
Slow to adapt to market reality
Disagreement on strategy both within the Company and with the Board

In my opinion there are two key reasons Monitor 110 failed; first, no clear CEO leader, and second, too much money. Trying to run a startup as a group of friends or make decisions by committee will never work. Too much money allows you to waste time, ignore danger signals, and continue down a wrong path for too long.

More Lessons - But here is the story of GameClay, another startup failure at the other end of the spectrum. They didn't raise any VC money...and still failed. [Found via Jeremy Liew]

1. If your idea starts with “We’re building a platform to…” and you don’t have a billion dollars in capital, find a new idea. Now.
2. It’s a marathon, but it’s a marathon made of sprints
3. Initial conditions matter. A lot.
4. Developing in a vacuum never works.
5. Beware the chicken and the egg.
6. Prototype any 3rd-party libraries that you’ll be depending upon, before you base your product on them.
7. If you’re doing anything other than building your project and getting users, it’s premature.
8. The product will take longer than you expect. Design for the long-term.
9. People have an incentive not to crush your dreams. Take everything they say with a grain of salt.
10. Know your limitations.

Building a startup is the most difficult, and most rewarding, thing anyone can do. Sometimes you can even make some money at the end of it all. There are so many things that can go wrong it is a miracle when a startup actually makes it.

It is important to celebrate our successes, learn from our failures, and value them equally. Failure is important...because success is a terrible teacher.

Microsoft revenues top $60 Billion

Don Dodge — Fri, 18 Jul 2008 12:58:00 GMT

Microsoft (MSFT) announced revenues topped $60 Billion for the year ended June 30, 2008, an increase of 18% over last year. This was the largest annual revenue growth since 1999. Profits were $17.6 billion, up more than 25 percent from a year ago.

Growing a Yahoo every year - Microsoft is strong and growing. Revenues were up $9 Billion over last year. Just to put that in context, Yahoo (YHOO) recorded total revenue of less than $7B for the whole year last year. Microsoft is growing more than a Yahoo a year. This is truly amazing.

All divisions reported strong increases. Here is the breakdown of the 4th quarter numbers by group;

Windows Client: Revenue $4.37 billion, up 15 percent;
Profit 3.23 billion, up 16 percent.

Server & Tools: Revenue $3.74 billion, up 21 percent;
Profit 1.37 billion, up 39 percent.

Online Services: Revenue $838 million, up 24 percent.

Business Division (Office): Revenue $5.26 billion, up 14 percent; Profit $3.34 billion, up 12 percent.

Entertainment and Devices (Xbox, Zune): Revenue $1.58 billion, up 37 percent. Profitable for the full year.

Strong Growth - Management offered the following guidance for the full fiscal year ending June 30, 2009:

Revenue is expected to be in the range of $67.3 billion to $68.1 billion.

Operating income is expected to be in the range of $26.3 billion to $26.9 billion.

Diluted earnings per share are expected to be in the range of $2.12 to $2.18.

All divisions are doing well and forecasting strong growth next year. Microsoft's cash balance stands at nearly $24 Billion, and is growing at over $1B per month.

Microsoft has been repurchasing common stock on the open market, totaling $12.5 Billion last year, and $27.5 Billion the year before. These stock buy backs lower the number of outstanding shares, which in turn, increases the earnings per share.

Newspapers take notice - blogs are the future

Don Dodge — Thu, 17 Jul 2008 16:11:53 GMT

Blogs are going professional and replacing newspapers for insightful, fast breaking, news and analysis. The same thing happened to network TV news years ago. Chris Mathews, Tim Russert, Bill O'Reilly, and others replaced the "just report the facts" news casts with more personal, insightful, opinionated commentary.

TechMeme has several blog articles over the past week that made me think about the parallels between TV news vs. Meet the Press, and newspapers vs. blogs. The direction is the same. More personal and more opinionated. Chris Mathews, Tim Russert, and Bill O'Reilly are personalities that make the news personal, interesting, and sometimes controversial. Blogs do the same thing for text based news and commentary. Newspapers and magazines should pay attention. The smart ones already are.

The Industry Standard says the TechMeme Leaderboard of "A-List" bloggers is being replaced by professional publishers.

"the old-school A-listers aren't being displaced by the many talented B-to-Z listers out there. Rather, the Leaderboard is increasingly populated by mainstream publishers, tech blog networks, and corporate blogs and PR sites."

Fred Wilson, an A-list blogger and VC, thinks blogs are personal and that is what makes them unique. Fred says;

"This blog is me and I am this blog. It's mine and will always be mine. I understand why many of the individuals who made blogging what it is are either moving on or turning their blogs into businesses. That's the way it is."

Blogs vs Newspapers - Big Differences - We are starting to see professional publishers (newspapers and magazines) get into blogging and make it a business. This makes perfect sense to me. But there are big differences. Blogs are personal. The author is the star, not the newspaper brand name. Blogs are news and commentary, not just news. Blogs are fast breaking stories that can be edited and updated later, not highly polished newspaper articles that get printed tomorrow.

There will always be a place for network TV news, newspapers and magazines. Blogs provide another channel for the big media publishers to leverage their talented writers and brand, with several advantages. Blogs have the advantage of instant delivery over the Internet, and basically zero cost of distribution. It is generally accepted that blogs will be fast, unedited, frequently updated, and opinionated.

Blogs are a conversation - Newspapers and print media are one way broadcasts. Blogs encourage conversation with comments and cross linking. The writers are accessible and responsive. This is why I get most of my news from online news sites and blogs.

Cloud Federation

Yi-Jian Ngo — Thu, 17 Jul 2008 05:18:00 GMT

Chinese mythology is replete with deities that ride clouds up into the heavens. Many startups similarly seeking nirvana on the back of cloud infrastructure have found their ascent rudely interrupted.

It seems unlikely that any single cloud infrastructure provider can be entirely immune to outages. The massive scale of such operations is unprecedented, so statistically catastrophes are to be expected. And there’s the Dark Side of the web, already capable of taking out the internet infrastructure of a small country. By comparison, crippling a cloud provider for fun or profit should be a walk in the park.

While starving startups have few alternatives, businesses are likely to take a dim view of such unscheduled downtime. Of course, they could choose to maintain a duplicate copy of their systems on-premise, but that will really screw up the economic advantages of using cloud infrastructure in the first place.

But what if the duplicate copy lived at a second cloud provider, so if the first cloud provider went belly-up, the systems would automatically failover? Even better, how about an abstraction layer that knits together all cloud providers, so you can just deploy your systems to this “meta cloud” which would automatically distribute it across multiple cloud providers?

Well, we could wait years for cloud interoperability standards to (hopefully) emerge – kudos to Eucalyptus for starting the ball rolling. In the meantime, this feels very much like a wide open opportunity for aspiring cloud startups to step into.

Entellium Releases Rave CRM

Christopher Griffin — Thu, 17 Jul 2008 00:48:00 GMT

A recent uptick in coverage of Entellium’s new CRM applications continues with Marshall Lager’s post on destinationCRM.com.

With the release of Rave Plus, Rave Complete, and Rave Insight, Entellium is giving every small business owner considering a CRM solution—including SaaS offerings like Salesforce—an interesting option for leveraging the power of their existing PCs while delivering a highly engaging user experience. Entellium’s “Gamer-Influenced Design”—along with some really slick drag-and-drop customization features I saw during a recent visit to their Seattle offices—should have strong appeal for competition-oriented sales teams. Before jumping on the Salesforce bandwagon, give Rave a hard look.

I have been working with some of the folks at Entellium for a while now, and what I find inspiring about my contacts there is the simple fact that these guys know how to hustle, know how to go after customer wins, know that it takes more than a post on TechCrunch to build a company. Who knows how the story will end, but for now I have to hand it to these guys for staying in the game and taking some risks in not jumping on the pure SaaS model. (In fact, they’ve seen significant increases in application usage once they chose to leverage the power of client computing along with the power of the Internet—something I heard a good bit of at the recent Google IO Developer Conference.)

Congrats to Entellium on their Rave releases!

Here is a video from MIX08 (March 2008) of Jared Ruckle, Senior Director of Product Management & Design for Entellium, talking about his company and about working with the Emerging Business Team.

Video: Microsoft Startup Zone

Following is a transcript of the video:

JARED RUCKLE: I'm Jared Ruckle. I'm senior director of product management and design at Entellium.

We're an on-demand CRM company focused on small to midsized businesses, and we see a huge opportunity to help small businesses be more productive with well-designed software to meet their sales, marketing, and customer service needs.

There's a real problem in the industry today where small businesses can't find technology to help them really be more successful. On the very low end you have Outlook and Excel and Act and Goldmine that are great for certain things, but not really optimized to help businesses succeed in the age of the Internet today. Then on the high-end you have Salesforce.com, Oracle and SAP that offer a sea of technology; again, great for large businesses, but again not really appropriate for small businesses.

So, at Entellium we're trying to fit that niche with just right technology that helps small to midsized businesses succeed, acquire leads more effectively, win deals more often, and keep customers happier longer.

So, when we looked at the landscape of products out there, there was a real gap in the sense that all the products were too hard to use, they weren't very engaging, and frankly they were boring.

So, when Entellium looked to fill this gap, we turned to Microsoft and technologies like Silverlight and Windows Presentation Foundation to build very visually compelling applications on this technology that would be demonstrably clearer to small businesses about how they could run their business more effectively using these very engaging UI and applications.

So, working with the Microsoft Emerging Business Team has been critical to our effort in that area, because frankly we're on the bleeding edge of a lot of these tools, and so the technical help we've been able to get from Microsoft, helping our developers navigate all the ins and outs of the product roadmap, when we should be introducing new features, what's on the roadmap, has been instrumental to planning our technology now and for the future, as well as our back-end architecture.

On the marketing front Microsoft has been a powerful voice for us, allowed us to borrow their very large megaphone to go to the market and say, Mr. Small Business Owner, there is some technology out there today that will enable you to be more successful than you ever thought, with technology that's just right for you.

So, the Emerging Business Team has been very helpful technology-wise, as well as co-marketing-wise, and with all the exciting things Microsoft is doing with emerging user interface technologies, we're very confident that we'll be able to meet this market need now and in the future.

Web Innovators Boston

Don Dodge — Wed, 16 Jul 2008 14:18:23 GMT

WebInno, founded by David Beisel of Venrock, is a Boston based Web Innovators Group where startups can demo their stuff to the tech community.

Last night there were three startups that presented on stage (Main Dish) and eight other startups that showed their stuff at tables (Side Dish) around the perimeter of the room. There were hundreds of people, my guess is 800, in attendance.

Main Dish

Totspot - a place for parents to publish a page about their kids and share with family and friends.
Webnotes - a tool that helps you create and manage online annotations. Very similar to Onfolio.
Zeer - a grocery product community that helps people “believe in what they buy.” Connects people to product information, consumer communities, and buying advice.

Side Dish

211me - Personalized mobile mashups
WordChamp - Free online language learning
PaperG - Local online advertising
Creaturepark / Ingeeni Studios - Games
YouCastr - Interactive sports streaming
LuckyCal - Mixes together information from your calendar with public events to find events that might interest you.
Snipd - Stealth mode. No idea what they are doing.
Tikatok - Kids create their own stories – and publish those stories into books for friends and family.

The audience voted Zeer as the best presentation/idea. I liked WebNotes, but found myself comparing it to JJ Allaire's Onfolio, and asking what is different?

WebInno is a great Boston Web 2.0 networking event for upcoming startups and "all the usual suspects". I saw Dharmesh Shah (HubSpot), Ben Saren (CitySquares), Matt Douglas (Punchbowl Software), Shawn Broderick (TrustPlus), Karim Nurani (Trinet), Reed Sturtevant (Microsoft), Mike Tyrrell (Venrock), Mike Werner (Web Studio Project) and bloggers Chris Herot, and Pito Salas. I was surprised, and delighted, to see Kevin Marks from Google. Kevin is based in Mountain View and is the evangelist for Open Social. I am sure Scott Kirsner and David Cancel were there somewhere but I didn't see them in the masses of mayhem.

Thanks to David Beisel for organizing the WebInno event. In October I am organizing an event with David focused on web advertising networks - opportunities and challenges.

Upcoming Boston Events

Software Industry Conference 2008 - July 17-19 [Register] This is the Shareware Software conference hosted in Boston this year. Microsoft is a sponsor.

TECH Cocktail Boston 2, Boston - July 24th, 6:30PM
Tequila Rain by Fenway Park [ REGISTER ] I went to the Tech Cocktail last year and it was a huge success in terms of turnout. So many people it was hard to move around or carry on a conversation, but a great party, lots of technology people that you don't see on the conference circuit.

Advertising rates dropping, Social Networks lowest CPM

Don Dodge — Tue, 15 Jul 2008 15:57:50 GMT

PubMatic published its monthly AdPrice Index for July 2008 and it showed ad rates declining in most markets, especially Social Network sites. PubMatic draws its data from 4,000 Web sites that take ad network advertising, 85% of which are based in the U.S.

Surprisingly, small web sites can demand significantly higher CPM rates than larger web sites. This may be due to better targeting smaller niche markets that advertisers consider more valuable.

Advertising rates vary in each market space too. News sites and gaming sites traditionally have the highest ad rates...Social Networks have the lowest rates.

The average CPM rates across all web sites and market segments is just $.36 per thousand page views.

How many page views are required to generate $1M in advertising revenue? Based on this average CPM of $.36 it would take 2,777,777,777 page views, or about 2.8 Billion.

Now you know why Steve Ballmer says the advertising business is all about scale. It takes billions of page views to make any money. The more page views and scale you have, the more advertisers want to advertise on your ad network. The more advertisers you have competing...the higher the ad rates.

Bambi Francisco's VatorTV launches Newsroom

Don Dodge — Tue, 15 Jul 2008 15:03:52 GMT

Bambi Francisco left CBS MarketWatch about a year ago to launch her own company, Vator.TV. Last week VatorTV announced a new design and new contributors to its Newsroom. I am one of the new contributors along with Mark Cuban, Fred Wilson, and several others.

The new design will make it easier for users to uncover the hundreds of video interviews, blog posts and community comments that have made the site a go-to resource for startup news and information. For instance, VatorNews has a couple hundred videos of lessons from entrepreneurs and investors, sharing advice about what it takes to be a successful entrepreneur and what investors look for in an entrepreneur.

The newsroom will also highlight video and text-based content generated by Vator's growing community of contributors. Recent contributors include venture capitalists Jeremy Liew and Fred Wilson, and technology executives like Microsoft's Don Dodge. Each contributor will now have their own channel that readers can subscribe to.

I wrote an article "Does Web 2.0 = Bubble 2.0?" that has generated a lot of interest and comments on VatorTV. You can find my "channel" on VatorTV here.

CTO Interview—ATG Srinivas, DiVitas

Startup Superstars — Mon, 14 Jul 2008 23:09:00 GMT

Founded in 2005, DiVitas Networks has rapidly become a leader in Mobile Unified Communications. DiVitas offers the first solution to mobilize corporate voice and messaging (desk phone, contacts, IM, presence and push-to-talk) applications for business by unifying them onto a smartphone. DiVitas “seamless roaming’” enables its solution to operate transparently over any mobile network—WiFi, cellular, or both. DiVitas does all of this while allowing company IT to retain complete control over its mobile solution. DiVitas provides IT the ability to customize features and implement policies while selecting the PBX, network, handsets and service plans that best meet their needs.

Here is our conversation with ATG Srinivas, Vice President of Engineering.

Microsoft Startup Zone: Why and when did you first choose the Microsoft platform?

ATG Srinivas: We were founded in 2005. Right from the start, we realized that dual-mode phones are key to the success of our solution. Microsoft was the first platform to come out with dual-mode phone support, and the penetration that Microsoft now has in North America and in Asia-Pacific is significant. As a pioneer in the converged mobile market, we chose to support Microsoft technologies because of the ubiquity of the Microsoft Windows Mobile platform for dual-mode pocket PCs. In addition, solutions from Microsoft offer key development tools and are supported by the leading handset manufacturers around the world.

MSUZ: We understand that you were using a number of key Microsoft technologies such as Microsoft Visual Studio, Live Communications Server 2005, and providing support for Microsoft XP Professional and Windows Mobile, can you elaborate on this?

Srinivas: When we start development on a mobile platform, the most critical things to consider are the underlying platform development tools and the platform itself. It is a little different from development projects where people are much more focused on a particular technology like .NET or Windows Media or Silverlight. For us, what Microsoft brings to the table is an extremely well documented platform layer, which supports telephony, socket layer, and connection manager. The speed of the development is a key aspect of this platform for us. Tools such as Visual Studio are extremely important.

We are trying to mobilize enterprise applications (deskphone, IM, Contacts and presence) on smartphones. For that to happen, there are two things that are important. First, the penetration of the platform into business accounts; and second, how well does the platform integrate with the rest of the business applications. The beauty of Microsoft is that a lot of people are already familiar with Calendar, Outlook, and all that comes integrated into the platform itself. For us, having access to things like contacts, calendars and email is extremely important. So to summarize, the key advantages of using Microsoft technologies are speed to market and the wealth of information that is available for development.

MSUZ: What other Microsoft technologies have you looked at?

Srinivas: One of the latest things that we plan to use is the Mobile Device Manager. This gives us the capability of remote management of devices. For a mobile platform, which is business controlled, this is a key aspect. In the future, we are also looking at .NET and we have something in the plan for Office Communications Server.

MSUZ: Anything that Microsoft could do to help you more with technology solution?

Srinivas: Yes, definitely. Since we are a phone application on top of a mobile device, we would like much closer integration with the lower layers, as well as the telephony stack and WiFi stack. It would be extremely useful for us to get access into those layers from the API perspective, and also technical support in terms of issues that we face. We are a mobile application and because of that there is a lot of emotion attached to it by the end user, and the closer and more seamlessly that we work with the native platform, the better the user experience is.

ATG Srinivas' Background

Prior to DiVitas, Srinivas spent 12 years working for startups in networking and telecommunications including Sycamore Networks and Cascade Communications. At Sycamore, he was part of the core team that developed Sycamore’s first optical switch. Srinivas also led Sycamore’s Network Management Systems group. Previously, he was a consultant with Infosys where he led several projects for Cascade Communications. He graduated from IIT Kanpur, India with a Bachelors of Technology.

For more information, visit Divitas online, or the success story "DiVitas ‘Unwires’ the Enterprise."

Lessons from the Met: A Turn-around Story for All of Us

Kris Olson — Sat, 12 Jul 2008 19:41:00 GMT

Sometimes when you join a startup, you are joining an existing company that needs help desperately. The product needs help, the marketing effort could be more strategic and effective, or new business models could be developed.

I found this blog by Ben Rosen [former chairman of Lotus and Compaq—remember them? – and also of my first startup, Ansa Software (Paradox, relational DB—still marketed 20+ years later by Corel—“ Who woulda thunk it?” to quote Ben)] to be a wonderful case study of turning around an organization. Granted, the organization (the Metropolitan Opera) that Ben writes about is BIG compared to most software startups, but I think there are insights that all of us can glean from in this story. Ben was on the board of the Met during this story and head of the marketing committee—applying what he learned about creating very successful, large tech companies to a cultural icon. When he was still a VC, Ben used to teach a class at Columbia business school on entrepreneurship and venture—thus the case study format for his tale.

I really enjoyed this story -- let me know what you think!

Here are some highlights from the story—but do read the whole blog. It’s also filled with photos and before-and-after charts and graphs.

Met Opera sets at Saks Fifth Avenue

The situation analysis

Okay class, pay attention. Here’s today's business problem:

It’s 2006. You’re hired to run the largest performing arts organization in the world, a 125-year-old household name. Every year, you stage over 200 performances per year of a couple of dozen different operas. Your performances are heard by millions of radio listeners around the world. And until the year 2000, your ticket was the hardest to score in New York City.

But in the last six years, everything’s gone awry. Attendance has declined sharply. Costs have risen every year. Philanthropic contributions have flattened out. The endowment is woefully inadequate. Competition for the cultural dollar is soaring. There are signs of organizational complacency. And even though your audience is disappearing, you have no marketing organization in place to try to offset the decline.

What to do? Can anything be done? Is there a solution?

The dire situation outlined above is not hypothetical; it’s real. It’s what faced the Metropolitan Opera just two years ago.

The problem – the virtual perfect storm

Read the blog to see how complex the problem was. Ben says: Then came the millennium, and everything changed, and for the worse -– attendance, philanthropy, competition, subscriptions, and the bottom line. There are a lot of reasons for this collapse. For the Met it was a virtual perfect storm.

Turning the battleship around

To turn the ship around – i.e., fill the house -- three major initiatives were undertaken: (1) improve the product, (2) create a major marketing effort, and (3) add new sources of revenues and audience development.

Ben just cuts through the complexity to boil the solution down to three seemingly easy -- but clear-- goals. Gotta love that!

The product improvement story is terrific. But I’ll skip to a marketing insight that many of us, I am sure, have been asked to ignore in favor of creating demand for unfinished or weak products:

Rule One of marketing is, Great marketing starts with a great product. Rule Two is, See Rule One. As noted above, the overriding effort of management is to make the entire opera experience better than it has ever been. Once that has been achieved, marketing can go to work and help fill the house. But if the product isn’t any good, no amount of marketing can make it succeed. As Bill Bernbach, the founder of legendary advertising agency Doyle Dane Bernbach said, “Good advertising makes a bad product fail faster.”

So what did the Met do? Engaged in some marketing techniques that reached out into the community and built word of mouth -- hmm, that sounds familiar!

Times Square opening-night live telecasts
Opera sets displayed in Saks Fifth Avenue windows
Red carpet opening nights
Free opening-performance dress rehearsals
Creation of an art gallery
Met signs and banners and posters everywhere-many featuring very attractive stars
Narrow-focus marketing techniques to create demand for specialized operas
Live high-definition telecasts to theaters around the world. After just two years, more people now watch the Met Opera in movie theaters that in the opera house itself (around 850,000). The PR from this has been huge. Creating a new generation of live opera viewers?

Case Study Conclusion: The Battleship Has Turned

There seems to be enough data now to demonstrate that the Battleship Met has indeed turned around. Just two years ago, every indicator for the Met Opera was pointing down. And now they’re all pointing up -- attendance, subscriptions, sellouts, philanthropy. And if one looks at that ephemeral quality associated with success -- buzz -- the Met now has it again. In fact, the Met has become the hot cultural ticket in town.

Yes, it’s costing more money to effect these changes, but the increases in revenues -- from philanthropy, box office, and telecasts – are likely to offset these costs in the future.

Even though opera is an anachronism, a centuries-old art form replete with some of the creakiest plots imaginable, in 2008 opera – at least the Met Opera-- is where the action is. The Met has begun a new act. Who woulda thunk it?

Microsoft Research Technologies Available With Less Overhead

Tony Bailey — Wed, 09 Jul 2008 15:06:39 GMT

The Microsoft Intellectual Property (IP) Licensing team helps facilitate the licensing of Microsoft’s research technologies to startups, entrepreneurs and ISVs. There are several technologies in the long list that can help you create your next big thing with just a few clicks. Take a look at the site and here are some these “low-touch licensing” two-or-three click steps technologies:

www.microsoft.com/iplicensing

1. Cross-Device Image Viewer
http://www.microsoft.com/iplicensing/productDetail.aspx?productID=12

2. Interactive Image Cutout
http://www.microsoft.com/iplicensing/productDetail.aspx?productID=2

3. Microsoft Mobile Video Optimization (Portrait)
http://www.microsoft.com/iplicensing/productDetail.aspx?productID=40

4. Mobile Picture
http://www.microsoft.com/iplicensing/productDetail.aspx?productID=29

5. Photo Auto-Cropping
http://www.microsoft.com/iplicensing/productDetail.aspx?productID=32

6. Detours
http://www.microsoft.com/iplicensing/productDetail.aspx?productID=14

Fast Tracking Your Next Big Thing

Tony Bailey — Wed, 09 Jul 2008 14:53:47 GMT

Microsoft’s Intellectual Property (IP) Licensing Team Can Mean Fast Tracking Your Next Big Thing.

The Intellectual Property (IP) Licensing team facilitates licensing Microsoft research and technologies to ISVs, entrepreneurs and startups.

We’ve launched a web site at www.microsoft.com/iplicensing

We’ve also published some strong evidence of the momentum behind our efforts.

1. Licensing Watermarking Technology Positions Small Company for Market Leadership

2. Licensing Exchange ActiveSync Attracts Mobile Manufacturers and Customers

3. Licensing Exchange ActiveSync Helps to Further Distinguish Mobile Innovator

4. Inrix Keeps Drivers on Track with Predictive Traffic Information

5. Nokia Integrates Business Mobility with Exchange ActiveSync, Expands Consumer Choice

6. Chinese Company First to Market with Technology That Turns Photos into Cartoons

7. Mobility Start-Up Zooms to Market in Just 18 Months

8. Data Protection Software Company Creates Next Big Thing to Protect PC and Laptop Data

Auto Startups: The Road Ahead

Yi-Jian Ngo — Wed, 09 Jul 2008 06:56:00 GMT

Purveyors of plush mattresses are quick to point out that since you spend 8 hours per day on their product, their eye watering prices are fully justified. Rarely mentioned is the fact that you’re unconscious for most of those 8 hours.

Less well known is that the typical US commuter spends 1.5 hours per day in their car, which is about 3x the average time spent on the internet. Multiplied across 600 million vehicles, that’s a huge chunk of “dead time” that folks are wasting stuck behind the wheel.

In parsing the market opportunities for tech startups building consumer products/services for the automobile, I find it helpful to think of the car simply as a very big consumer mobile device, with many parallels in particular to the mobile phone. The usage scenarios are similar – location based services (navigation, local search, traffic, tracking/SOS), entertainment (audio, video, games) and communications (diagnostics, maintenance alerts). Both even have a similar bugbear with distribution – while mobile startups have the wireless carriers, auto startups have to contend with the auto manufacturers.

Of course, there are important differences between the car and other mobile devices – in particular, the user is always multitasking & has restricted freedom of motion. While it will be foolhardy to speculate on what the next auto-based killer app will be, I believe there are a handful of factors that will increase the probability of an auto startup’s success.

First, user interactions with the service should primarily be auditory – perhaps you could talk to your car and ask it to play a time-shifted radio program. While I’ve come across intriguing systems that can project various images onto the windshield, I personally believe that visually distracting interfaces can be fatal for the driver.

Second, the ability to execute with zero help from auto manufacturers. This does not mean ignoring them – they are a crucial part of the value chain that will need to be engaged at some point – but rather that the business should not pivot entirely on “winning that big distribution deal with GM”. So perhaps making some sort of device sold through retail channels, or maybe software that allows existing devices (e.g. mobile phones) to perform something useful with respect to a car, such as enabling the user to pipe music from a virtual jukebox in the cloud through a car’s audio systems.

Finally, an effective method for in-car advertising that can sustain the business. The reality is that most auto startups’ products will fall in the “vitamins” rather than the “antibiotics” category, and charging a subscription can really crimp adoption. All that excitement around satellite radio seems to have petered out of late, and anecdotal evidence suggest that ONSTAR’s renewal rate is rather dismal.

Michael Arrington is Flat-Out Wrong on This One

Christopher Griffin — Tue, 08 Jul 2008 18:18:58 GMT

Michael Arrington posted an interesting take on the Microsoft-Yahoo conversation today, and I think he’s mistaken in both his assumptions and his conclusions. The full post is here, but I’ve pasted his final paragraphs below:

“Yesterday’s shenanigans, however, clearly crossed a line. Microsoft and activist Yahoo shareholder Carl Icahn jointly announced that they’ve been talking, and that Microsoft may be willing to entertain a full buyout offer once again. But only on the condition that Yahoo’s board of directors is replaced: “We confirm, however, that after the shareholder election Microsoft would be interested in discussing with a new board a major transaction with Yahoo!, such as either a transaction to purchase the “Search” function with large financial guarantees or, in the alternative, purchasing the whole company.”

“Icahn explained further, saying that Microsoft can’t be expected to let Yahoo stay in current management’s hands during the months-long closing period after a transaction is consummated. He added: “Jerry Yang and the current board of Yahoo! will not be able to “botch up” a negotiation with Microsoft again, simply because they will not have the opportunity.”

“This is largely complete nonsense. During the transition period after a merger agreement Microsoft and Yahoo would be working closely and Yahoo would be unlikely to take any actions that jeopardize the deal. What’s far more likely is that Microsoft, led by CEO Steve Ballmer, have taken Yahoo’s rebuffs entirely too personally. It’s no longer just about business, it’s about destroying and humiliating the people who embarrassed Microsoft. And sadly, that has nothing to do with creating a balance of power in search.

“Just as I criticized Yahoo for not quickly accepting Microsoft’s offer in early February before the mass executive exodus and destruction of shareholder value, I now point the finger at Microsoft. Yahoo is standing at the alter waiting for you to say “I do,” Microsoft. Time to put up or shut up.

I’m all for a merger. But I won’t stand by quietly while Microsoft destroys what’s left of Yahoo just because it can.”

I posted my own, unofficial views on this deal a while back. Again, I remind folks that both Steve and Jerry have fiduciary responsibility to their respective shareholders. There is absolutely no reason for Steve to try and “destroy what’s left” of an asset for which he may consider paying billions. It just doesn’t make sense. For the entire duration of this conversation, however, Jerry’s behavior has fallen right in line with classic founder’s syndrome. Let’s face it: Jerry & Co. tried to play hardball, and it didn’t pan out. So now, according to Arrington, Steve should just play nice and violate his own fiduciary responsibility to Microsoft shareholders? I don’t think so.

Hey, we all like Jerry. What a guy. But does anyone expect to see him ever run a multi-billion dollar company again? No. Now ask that question about Steve. Steve has the experience to step into any multi-billion-dollar company and run it. It’s a straightforward comparison that really doesn’t need a lot of elaboration. And to be honest, what you're seeing right now is what happens when someone with far less experience and a personality not suited to the situation tries to play ball with the pros on the court. I know that I have been in similar situations, in some cases as the hack, and in other cases as the pro. We all know how this story goes.

Arrington is suggesting that Yahoo should somehow get a reward—an “A for Effort”—in its negotiations with Microsoft, in the form of an offer to the same management team that created the current situation. From my unofficial perspective, that doesn’t make much sense to me—nor to Steve, it appears.

What Makes a Community Meaningful?

Kris Olson — Fri, 04 Jul 2008 17:14:00 GMT

In early May, at Startup Camp in San Francisco, I had the chance to talk to two startups about their open source projects and how community plays a role in these projects. I have been thinking about the best kind of community we could create on the Microsoft Startup Zone for .NET companies worldwide.

One entrepreneur was not "religious" about open source vs. non-open-source. In his first job in Australia, working for a large firm, he did not have the skills to pick up Java quickly, but for his types of projects discovered PHP, learned it quickly, could apply it quickly and so fell into the world of open source. When he came to start his startup, he realized that the functionality of the online service he wanted to create could be met by using an existing blog platform, as opposed to custom development. After some research, he chose WordPress MU and tracked down a specific community that is supporting this open platform. Word Press also discovered Beau, since he was really pushing the platform, and thus a great synergy was born with lots of exchanges and helping each other. My take away is that what worked for Beau about this community was the size and intimacy of it. They learned to know each other through the online community, respect each other, helped each other. Beau's company is www.myBabyOurBaby.com -- sort of a collective record keeping for a baby by all the adults in his or her life. Shutterfly on steroids; an online baby book (you know, the thing you create for your first child and have nothing for your last one. My mom did that for my brother and me, and I have nothing to show for my second two children. Where was Beau when I needed him?)

The second entrepreneur I talked to had a similar experience with community. He initially worked for a software company using Java in the US and was asked to file a patent for his work. Philosophically, he was opposed to patents, and this experience led him to the world of open source software. After a failed startup during the dot bubble era, Roy Feldman moved to Bangkok, where he has started another software company, also using open source, called OpenSoft Solutions. Its product, Open Software Factory, "turns UML models into executable application code. It currently supports the rapid development of web service enabled J2EE applications that run on any J2EE server." They are now developing a new module which will support .NET developers.

Roy's perspective on community is that the quality of the input and participants matter -- not necessarily the size: "In the case of open source developer communities, size becomes a problem when the number of "new users" grows significantly without a comparable growth in developers and power users that are willing and able to respond to the "newbies". All things being equal, I personally prefer communities that are small and highly focused. However, some large developer communities can be very helpful, they just aren't as much fun."

Roy added that early communities often exsist as a group of developers on an email group, with some of the real experts participating. When the open source project gets more successful, the community gets switched to an online forum. At that point, one can simply do a web search for the problem he/she is trying to solve and get taken right to the answer on any forum; you don't need to join and participate in a formal community to get the answers he needed. This discussion raised questions for me about how many communities can we each join and participate in meaningfully? How do we choose those around our business projects?

Roy mentioned that he refers to a site called Ohloh to check the health of a community. Anyone can register an open source project. Perhaps surprisingly, the site was started by some ex-Microsofties and is in Bellevue. Their goal when they founded the company in 2006? To create a directory of open source projects that would help people find open-source projects and compare them. The site presents clear information about each project, including information that helps developers make build vs. buy decisions by offering code analysis, # of active developers on a project, licensing information, etc.

My take-away from these conversations is that for community -- intimacy, focus and size matter. The value is more around having "real people" offer real insight to the community; smaller size and quality improve the experience. It's probably the relationships as much as the content that matter.

We are always looking at what support we can offer for Microsoft-based startups on this site. At this point, we are headed towards providing more content that helps startups (any startup) become successful instead of a structured online forum. The goal of this site (www.microsoftStartupzone.com), by the way, is to create conversation around the business value of working with Microsoft, not to duplicate all the tech discussions that already exist on MSDN, Channel 9, etc.

I'd love to hear your thoughts! What support would you like for community for startups on this site? Also, should we move to more videos or are text blogs OK? (Some on our team think they are faster to read, definitely cheaper and faster to create, but others prefer pictures. Your thoughts?)

Zino Society -- Some Startup Will Begin the Day with a Pitch and End it with $100k

Christopher Griffin — Fri, 04 Jul 2008 00:29:13 GMT

Yesterday I met with Mary Holmes from Seattle's Zino Society, an interesting group whose mission, among hosting a high degree of wine-oriented social events, includes supporting the growth and success of entrepreneurial ventures. The Society's history is an interesting one; I'll let you read more about them on their website.

One of the 40-odd events that the Zino Society runs throughout any given year, the Zino Zillionaire Investment Forum provides small startups to vie for up to $100,000. The interesting part of this competition is that the decision of a funding winner is made on the same day as the presentations--talk about instant gratification (or instant depression).

Here is Mary's note about applying to present at the event:

We are now taking applications for presenting companies for ZINO Zillionaire Investment Forum. If you know of any companies who are looking early-stage or expansion capital, please direct them to apply. Applications will be accepted through July 25, 2008.

http://www.zinosociety.com/entrepreneurs/applytopresent/zzif2008/.\

ZINO Zillionaire Investment Forum

September 16, 9am-5pm at the Fairmont Hotel, Seattle.

28 companies will be selected to present. At the close of the event Fund Investors will award $150,000.

$50,000 for Best Technology Investment

$50,000 for Best Non-Technology Investment

$50,000 for Best Overall Investment (CG -- this basically means that one of the top two winners gets $100k, and the other gets $50k.)

I haven't attended any of the Zino Society's events before, but look forward to checking this event out.

What Half of Your Brain and Google Have in Common

Christopher Griffin — Thu, 03 Jul 2008 08:04:09 GMT

Several weeks ago I read a short profile in the Wall Street Journal about Charles Wolf, a man who, while suffering left-brain damage from multiple bouts with cancer, has managed to build an investment portfolio that has beaten the DJIA and doubled its assets since 2003. For me, the most intriguing parts of the story concern various observations by researchers studying the behavior of individuals with various forms of left-brain damage, “some of whom,” writes author E.S. Browning, “have developed artistic, musical, and other talents, apparently using right-brain capabilities that ordinarily are hard to tap.”

Recounting his conversations with Bruce Miller, professor of neurology at UC-San Francisco, Browning writes thus:

“An almost obsessive focus is characteristic of people with left-brain damage who are using their right brains more. Research suggests that the left brain ordinarily serves as a traffic cop, imposing order on the vast information available from the right brain. Researchers believe left-brain damage may allow people to bypass preconceived ideas.”

The general idea is that, while the left brain is key to providing context and meaning around a given data set (like, um, our life experiences for example), its algorithmic quest for pattern recognition (and its accompanying assignment of data to a particular theory, belief, or other “frame”—be it economic, stylistic, linguistic, religious, etc.) is just as likely to fall for false patterns (theories, beliefs, etc.). By letting the data simply “be,” so to speak, left-brain damage may slow down or eliminate the rapid assignment of meaning to the data, giving it a chance to reveal its own patterns.

It just so happens that in the latest Wired magazine’s cover story, “The End of Theory: The Data Deluge Makes the Scientific Method Obsolete,” Chris Anderson proclaims the arrival of “The Petabyte Age” in which “the new availability of huge amounts of data, along with the statistical tools to crunch these numbers, offers a whole new way of understanding the world. Correlation supersedes causation, and science can advance even without coherent models, unified theories, or really any mechanistic explanation at all.” [In] a world where massive amounts of data and applied mathematics replace every other tool that might be brought to bear . . . out [goes] every theory of human behavior, from linguistics to sociology. Forget taxonomy, ontology, and psychology. Who knows why people do what they do? The point is they do it, and we can track and measure it with unprecedented fidelity. With enough data, the numbers speak for themselves.”

I find this incredibly interesting:

1. Google and similar algorithmic, data-intensive processing systems are lauded as a paradigm shift away from classical theoretical science, going so far as to proclaim the irrelevancy of “the model”. This is conceptually heralded as a good development.

2. Analogous brain function—which, were it an evolved behavior, would (one assumes) be hailed as similarly portentous for the future of cognitive processing—in fact emerges under conditions of otherwise significant disability and illness, e.g., in cases of left-brain lesions or other left-brain damage.

From an evolutionary perspective, ruling out all berries that look like the poisonous berry that killed your brother is a pretty good theory, a trade-off involving increased safety in exchange for decreased discovery, e.g. you miss out on a bunch of yummy berries that aren’t poisonous, but hey—you get to live another day/month/year). What Anderson’s article—and, oddly enough, the behavior of brain-damaged individuals like Charles Wolf—suggest, however, is that our own evolution has been a non-optimizing trade-off, and that future humans, evolving beyond the tyranny of frameworks, theories, and contexts levied by the left brain, may emerge with processing powers far beyond any we have yet seen . . . but without, perhaps, the contextual framework to understand why the results might ever matter in the first place, and lacking the ability to communicate what any of it means.

Stepping away from this very-real sci-fi digression, what can an entrepreneur learn from both stories?

1. Strive to maintain an “awareness of your awareness” – question yourself about what you think you see happening in your market, with your customers, with yourself.

2. Maintain a healthy skepticism about broad-scale prognostications (except mine, of course).

3. Don’t be too quick to ascribe causation. Sure, swift decisions and action are critical in many situations, but consider the advice an old friend and M.D. used to say to his newly graduated, over-eager medical residents: “Sometimes instead of telling yourself “Don’t just stand there; do something!”, you should tell yourself: “Don’t just do something; stand there!”

4. Recognize the difference between decisions that can benefit from more data and analysis, and decisions that can’t. This, of course, is where that ol’ left-brain might come in handy, even if Google doesn’t appear to use it.

Why Powerset is important and different

Don Dodge — Wed, 02 Jul 2008 14:35:00 GMT

Microsoft announced yesterday the acquisition of Powerset, a natural language search engine. Techmeme has lots of stories about the acquisition. Today the stories are all about Microsoft/Yahoo potential deals. But lets take a step back and look at how Powerset works and why it is an important development in search.

There are two key things to consider;

Powerset technology is more about indexing the content and understanding its meaning, than the query itself. This has enormous implications.
There are many lucrative markets for this technology...not just consumer web search.

How does natural language search work? There is a lot of linguistic rocket science to this but basically it breaks the search problem into two parts. First, understanding the intent of the user's query by using (NLP) natural language processing. Second, training their search index algorithm to parse the structure and context of individual web sites, and add meta data about the pages to the index.

Powerset is using linguistics and (NLP) to better understand the meaning and context of search queries. But the real power of Powerset is applied to the search index, not the query. The index of billions of web pages is indexed in the traditional way. The big difference is in the post processing of the index. They analyze the indexed pages for "semantics", context, meaning, similar words, and categories. They add all of this contextual meta data to the search index so that search queries can find better results.

Who is the best ballplayer of all time? Powerset breaks this query down very carefully using linguistic ontologies and all sorts of proprietary rules. For example, they know that "ballplayer" can mean Sports. Sports can be separated into categories that involve a "Ball". Things like baseball, basketball, soccer, and football. Note that soccer does not include the word ball, yet Powerset knows this is a sport that includes a ball.

Powerset knows that "ballplayer" can mean an individual player of a sport that includes a ball. They know that "best of all time" means history, not time in the clock sense.

Powerset understands the intent of the query, but more importantly, it understands the meaning and context of all the relevant web pages. Rather than just match keywords from the query, Powerset looks for "semantic" matches in its index of billions of web pages.

Why hasn't this been done before? Powerset uses all these rules and linguistic approaches to analyze billions of web pages, and adds "meta data" hooks into each word on each page. As you can imagine this is a huge scaling problem, that has been impossible to solve economically until now. With Moore's Law applied to constantly reducing the cost of computing, storage, and bandwidth, it is now possible to solve this problem, although it is still very expensive.

Where else could Powerset technology be used? Consumer web search is one obvious market, but there are many more.

Enterprise search, companies searching their own internal documents and information, is a huge market that would benefit from Powerset technology. Enterprise search is a multi-billion dollar market.
Advertising targeting. It is easy to target ads to search terms, but extremely difficult to target ads to general web content or User Generated Content. Today ad targeting technology does a poor job of understanding the context and meaning of a news article, a blog post, or magazine article. Powerset technology could be used to better understand this content and better target more relevant ads. This is a multi-billion dollar opportunity.
Vertical Search - News search, medical search, people search, resume search, and basic knowledge search could be dramatically improved with Powerset's "semantic" search indexing.

I am sure you can think of many other places Powerset's semantic technology could be used. The technology will improve and expand over time. There is enormous potential here, more than a small startup with limited funding could hope to address. This is why Powerset joining forces with Microsoft makes so much sense.

Lanchester's Laws for Startups

Yi-Jian Ngo — Wed, 02 Jul 2008 06:40:00 GMT

Interesting rule of thumb based on military operational research performed by Frederick Lanchester during World War I:

If you’re trying to enter an existing market where the dominant player has greater than 40% market share, you will need to spend at least 3x the sales/marketing budget of that leader to succeed in a head-on attack.

However, if the largest player has less than 25% market share, all you need is 2x the sales/marketing budget of the leader to succeed – the cost of entry is much lower.

Thus, if you're a startup confronting a formidable incumbent that you lack the financial wherewithal for a frontal assault, consider re-segmenting the market to create a submarket where your product can be unique or substantially different. As an agile but (usually) dirt-poor startup, it’s crucial to pick your battles carefully.

Marc Andreessen Joins Facebook Board

Kris Olson — Wed, 02 Jul 2008 02:00:00 GMT

The news today was Marc Andreessen's joining the board of Facebook. From Netscape to Facebook, some interesting ironies along the way. Marc is also a founder of Ning, a social networking application. So why is this important to startups? It's because Marc will be a terrific mentor to Mark Zuckerberg. Having the right board members is so important to your startup's success. This is Mark's quote"

"I know Marc will be a great mentor to me and our leadership team. He has experience that is relevant to Facebook in so many ways: scaling companies that are experiencing extraordinary growth, creating successful technology platforms, and building strong engineering organizations."

Marc (the "c" Andreessen variety) writes a wonderful blog for startups with great thoughtfulness on what it takes to build a company. While I don't know Marc personally, I have been impressed by his writing and speaking. Having someone of his caliber and experience on your board is a great coup. He may not be the board member for a Fortune 500 company, I don't know, but he will be perfect for today, and probably have a blast while he is at it.

The Microsoft Emerging Business Team is apparently fond of Marc Andreessen, having written 5 or 6 blog posts on him before.

Congrats to Mark and Marc.

Go Public? (Why Would Anyone Want To Do That?)

Christopher Griffin — Tue, 01 Jul 2008 20:11:42 GMT

Over the last few weeks I’ve seen an uptick in news articles citing the lack of tech IPOs (my colleague Don Dodge wrote on this just days ago).

Don mentioned some of the macro-economic factors driving the dearth of tech IPOs. But there is another key factor that I haven’t seen discussed much in the major press outlets: CEOs simply no longer see any value in going public.

Ever since Sarbanes-Oxley (and other restrictive regulation around publicly marketable securities), smart CEOs have observed that, unless the market is exceptionally hot, the costs of going public simply outweigh the benefits. If executives of a promising, high-growth company want to take some risk off the table, they can almost certainly negotiate a share sale to private investors with far greater ease and lower costs than the reporting strictures they would face in a public filing.

In today’s Wall Street Journal, Rebecca Buckman writes about the situation, touching briefly on the issue of regulatory burden for small, high-growth companies seeking greater capitalization and/or liquidity. Peter Falvey from Revolution Partners sums it up by admitting that “the economics have been destroyed for small-cap IPOs.”

“Destroyed”—it’s a strong word, and it’s probably not strong enough to convey what over-zealous reporting requirements have done to any previous CEO enthusiasm toward taking small, high-growth companies public.

The implications for venture capital returns are large: The WSJ article reports that the average time for a VC-backed startup to go public is now 8.6 years. If things don’t change, the long-accepted yardstick of “5-7 years” may need to be extended a bit. What’s interesting here is that the time span now matches or exceeds the typical market ramp needed to move a company from first round to public exit successfully. At 8.6 years, unless a VC times its investment perfectly, the odds of a good company getting caught in a macro-level trough are much, much higher. And since delayed liquidity = delayed returns to LPs, one could see a longer gap between fund-raising for VCs in the long run, with a longer-term impact on available capital for startups down the line.

Microsoft acquires Powerset

Don Dodge — Tue, 01 Jul 2008 19:57:00 GMT

Microsoft has agreed to acquire Powerset, a Natural Language search engine, founded by Barney Pell. Satya Nadella, Senior Vice President, Search, Portal, and Advertising said on his blog;

Powerset will join our core Search Relevance team, remaining intact in San Francisco. Powerset brings with it natural language technology that nicely complements other natural language processing technologies we have in Microsoft Research.

More importantly, Powerset brings to Live Search a set of talented engineers and computational linguists in downtown San Francisco.

Powerset said on their company blog post;

"With any start-up, the challenge is to take the seeds of an idea and grow it into a viable company," he wrote. "At Powerset, we transformed our idea into a world-class semantic search platform, demonstrating the future of search with our Wikipedia search experience. But building a large-scale semantic search engine is expensive, requiring an engineering effort and computing resources beyond what most start-ups could ever imagine...We believe that this is the fastest way to bring our technology to market at a large scale."

Information security weakest link? Stolen laptops and cell phones

Don Dodge — Tue, 01 Jul 2008 15:55:00 GMT

Over 600,000 laptops are reported lost or stolen every year at US airports according to a ComputerWorld story. The story, based on a survey by the Ponemon Institute says that 65% of them are never recovered. Laptops are most often lost at security checkpoints. Hotels and taxi cabs are also prime locations for losing laptops and cell phones.

Close to 10,278 laptops are reported lost every week at 36 of the largest U.S. airports, and 65% of those laptops are not reclaimed, the survey said. Around 2,000 laptops are recorded lost at the medium-size airports, and 69% are not reclaimed. The institute conducted field surveys at 106 airports in 46 states and surveyed 864 business travelers.

Millions of dollars are spent each year on sophisticated information security products. Simple things like stolen laptops and lost memory sticks / thumb drives are a major security vulnerability.

The Washington Post reports that data breaches are up 69% this year.

The Identity Theft Resource Center in San Diego tracked 342 data breach reports from Jan. 1 to June 27. More than one-third of the reports came from businesses, a 27 percent increase over business breaches for all of 2007.

The center found that data breaches among health-care providers and banks also increased. They now account for 15 percent and 10 percent of the breaches, respectively. Breaches from educational institutions, government entities and the military declined for the third year in a row, the center found.

Hacking was the least-cited cause of data breaches in the first six months of this year. Instead, lost or stolen laptops and other digital storage media remain the most frequently cited cause of data breaches, accounting for more than 20 percent of all reported cases, the center found. The inadvertent posting of personal and financial data online prompted roughly 15 percent.

The Industry Standard reports that losing cell phones is even more common. And, the newer Smart Phones contain contact lists, pictures, documents, confidential emails, links to sensitive information, etc.

I didn't mean for this to be an alarming post about information security breaches. I just did a simple web search and these were the top three links in the search results. It looks like there is a lot of work yet to be done in the Information Security area.

Where Are They Now—IP Commerce Revisited

Startup Superstars — Mon, 30 Jun 2008 23:20:00 GMT

IP Commerce

DENVER, COLORADO
http://www.ipcommerce.com/

IP Commerce Has Raised More Than $34 Million in Funding, and Secured Key Financial Institutions and Software Companies As Customers

IP Commerce is the creator of the world’s first open commerce network delivering on-demand access to the next-generation of commerce services. Referred to as a “services grid for the payments industry,” its technology was built on the Microsoft .NET Framework and a service-oriented software architecture (SOA) that enable financial institutions, merchants, and consumers to radically improve the way payments are made. Founded in 2005, the company has created a fresh approach to payment systems, one that will benefit both businesses and consumers.

The Microsoft Connection?

According to Chip Kahn, Founder and CEO, the Emerging Business Team provided a lot of directional guidance early on. “We were able to cultivate some relationships on our own building off the contacts I had from working with the Dynamics group for several months, plus we actually have a person based in Seattle who focuses on the Microsoft relationship.”

In 2006, the company was selected as a strategic launch partner for the Windows Vista operating system release. Since then, as a Microsoft Gold Certified Partner, the company has focused on the channel and marketing side of its relationship with Microsoft. Explains Kahn, “That has proven really valuable. It has helped us drive credibility in the marketplace with software ISVs.”

Explains Kahn, “We’re not a consumer, Web 2.0-based play, we’re an Internet infrastructure play. And our success will be largely invisible to consumers, but visible by the success of our partner companies. Our big vision is to create the first open payment network over the Internet that has all of the major payment players and software connected and collaborating.”

Where are they now?

Kahn says they are reaching a ‘critical mass’ in the U.S. market with its payment service relationships and software companies. Says Kahn, “We don’t sell to a merchant, we sell to software companies, banks, big payment processors, and big channels such as Best Buy.”

IP Commerce maintains partnerships with some of the world’s most respected financial institutions and softwrare companies, including Microsoft, PayPal, Chase Paymentech, CIT Group, TransFirst, Dialect (now part of TNS), Internet Commerce Corporation, BankServ, and AmbironTrustWave. In addition, it implemented with two of the 10 largest acquiring banks in 2006. Acquiring banks (also known as merchant banks) facilitate a credit card transaction between the merchant and the card issuer. Chase Paymentech is the largest acquiring bank in the U.S.

In January 2008, the company introduced its IP Commerce Platform—an open commerce network and backend technology that connects financial institutions, service providers, software development companies and established distribution channels to create and distribute new commerce solutions.

"The IP Commerce Platform takes the pain out of the development and delivery of payment solutions for small businesses," explains Kahn. "By making the process of payment application development more intuitive, everyone involved in the process—from the software company to the distribution channel—can cut costs, increase speed to market, and grow their channel. It gives our partners unprecedented flexibility that's never been seen before in the payments industry."

In early June 2008, the company raised $17.5 million in Series C funding. The round was led by Venrock, the venture capital firm founded by the Rockefeller family. To date, IP Commerce has raised more than $34 million in venture funding, and plans to use the funds to accelerate adoption of its IP Commerce Network, particularly in the software development community and the financial services industry. It also has funding from two Colorado-based VC firms, Meritage Funds and Appian Ventures.

In the coming months, IP Commerce plans to offer commerce-enabled versions of additional Microsoft products. Says Kahn, “We’re working through some of the native capabilities in Office Accounting 2008, and want to have private-label versions so a bank could extend their brand to the desktop and enable the same authentication.”

Neurologically Based Advice for Acquiring Risk Tolerance: Start Early

Christopher Griffin — Mon, 30 Jun 2008 21:25:43 GMT

A recent study published in the journal Neuron, as reported in Ars Technica, has particularly relevant conclusions for the entrepreneurial mind—both positive and negative.

John Timmer reports in Ars Technica that “in the brain, neural activity associated with a novel choice occurred in an area identical to that activated when a known image triggered the expectation of a positive result. In essence, the test subjects chose novelty because their brains—specifically, the right ventral striatum—interpreted it in a manner similar to a known positive result. To confirm that this was specific to novelty, the authors determined that the degree of activity in specific test subjects correlated with the frequency that they choose a previously unknown image. The activity also correlated with novelty-seeking behavior when the subjects filled out a personality survey. Overall, the researchers build a pretty compelling case that people try the new in part because they view a novel choice as its own reward.”

Entrepreneurial advisors often speak about risk tolerance and, more specifically, how the more entrepreneurial among us tend to possess a higher degree of it. Many suggest that, like similarly elusive qualities of successful “leadership,” these traits or risk profiles can be learned.

I used to argue passionately against the idea that these qualities could ever be learned. I’d like to revise my position a bit. After 20 years, I think that if those skills (or a tolerant/positive perspective regarding risk) aren’t learned early, there is little to suggest that later training will remake an individual in any substantive way. By the time you’re in your twenties (and maybe earlier than that), you either have it in your blood or you don’t. But in both cases, what’s “in your blood” are learned patterns of perception and behavior. This isn't quite the same thing as Warren Buffet's comment about being careful to choose one's parents wisely, but it reinforces the huge impact of early experiences on future psychological profiles.

In short, acquiring most skills—including entrepreneurial ones—is much like acquiring a second language—nothing beats starting early.

On the negative side, there is an interesting note toward the end of John Timmer’s article: “The authors note that there are limits to this behavior. Nearly any animal humans have tested will learn to avoid novelty if it is frequently associated with negative outcomes.” Thus we have a base neurological rationale explaining why some cultures that punish failure more severely may tend to perpetuate more risk-averse perspectives among its citizens.