What's in Your IP?

Yesterday, Palamida listed the IP used in IP Amplifier 3.2 and launched IPIngredients.org, a Web site that includes other open source projects and applications that publish their IP components. Industry observers applauded the move.

Dana Gardner, principal analyst at research firm Interarbor Solutions, said the effort by Palamida is a good idea and is a bit surprised something like this wasn't brought up sooner. Knowing what's inside the code is a smart idea, he said, whether you're an ISV, hosting organization or an enterprise. "It makes so much sense based on liability, exposure to lawsuits, copyright issues, where you can go in terms of indemnifying your own customers," he said. "It's something of a coming-of-age issue with open source software in general and really across all software."

Gump's Utters "The L Word"

Gump's is one of a select number of high-end retail stores that will sell a fragrance inspired by The L Word, a popular TV series on Showtime. This "new" spin on product placement hearkens back to television's golden age, when sponsors developed shows to sell specific products.

Return of the Record Store Clerk

Check out this AP article on Pandora.

Music for the Masses!

From today's Pandora press release ...

Pandora Media today announced that it is adding a free ad-supported version of its breakthrough music discovery service. Music lovers who want to find new songs and artists to enjoy will now be able to choose between this free service and the commercial-free, subscription-based version that has been attracting heavy usage since its launch two months ago. Pandora is also significantly expanding the service with a number of new features, including personal pages where members of the Pandora community can post their new music discoveries by bookmarking favorite songs; and a station editing console that makes it easier for Pandora customers to refine their listening experiences.

So Sue Me

Lloyd's of London is offering an open source insurance policy. Just one more data point illustrating that the market that Palamida is attacking is large and growing.

It's a Numbers Game

"Web 2.0" seems to be all the rage these days. So much so that an entrepreneur who presented at our offices recently informed us that he is ahead of the curve: his business, he said, is "Web 2.1".

Glam Is a Necessity, Not an Accessory

Who says networking isn't glamorous?

"Women are emotional, aspirational shoppers," [Glam CEO Samir] Arora says. Men tend to shop in surgical strikes - visit a store, locate desired item, leave as quickly as possible - making the Web an ideal venue for them, while women prefer to meander through different departments and stores, sometimes with no particular purchase in mind.

But the Web has left women behind when it comes to online shopping, Arora says, throwing out the statistic that while 83% of real-world purchases are done by women, they do less than 50% of all online shopping.

Glam.com is out to change that, he says. The site looks like a digitized glossy fashion magazine, complete with celebrity shots, fashion runway photos and style advice. But unlike online versions of magazines such as InStyle and Vogue, Glam.com lets visitors click on and buy just about any item on the site - providing the missing link between female shoppers and the Web. "This is the way the Web was meant to be - it's entertainment-based shopping," he says.

Meet the Life Hackers - New York Times

A great article in the The New York Times Magazine on how to manage the constant din of distractions that technology has created ...

Information is no longer a scarce resource - attention is. David Rose, a Cambridge, Mass.-based expert on computer interfaces, likes to point out that 20 years ago, an office worker had only two types of communication technology: a phone, which required an instant answer, and postal mail, which took days. "Now we have dozens of possibilities between those poles," Rose says. How fast are you supposed to reply to an e-mail message? Or an instant message? Computer-based interruptions fall into a sort of Heisenbergian uncertainty trap: it is difficult to know whether an e-mail message is worth interrupting your work for unless you open and read it - at which point you have, of course, interrupted yourself. Our software tools were essentially designed to compete with one another for our attention, like needy toddlers.

More Glam News

alarm:clock also has good things to say about Glam.

It's TIME for Pandora

Pandora is TIME's Gadget of the Week.

The New York Times Goes Glam

In an article in today's edition, The New York Times profiles Glam, a new Web magazine funded by Accel Partners, Draper Fisher Jurvetson, and WaldenVC that helps consumers discover and purchase new fashion items. Industry observers apparently like Glam's chances.

"I think it's a very good time for this," said Heather Dougherty, an analyst with Nielsen/NetRatings, an Internet consulting firm. "The advertising market is obviously far stronger than a few years ago, and Glam is going after a lot of luxury brands that hadn't yet come online then, and who still might be hesitant about it, and offering them a very controlled environment to test the waters."

Take My Money - Please!

Business 2.0 solicited ideas for new businesses from the Valley's top VCs. See Matt Miller's suggestion for a company that he would like to fund. (For more information about Matt, please click here.)

The Future of Digital Media

In the immortal words of Washington Redskins coach George Allen, "The future is now."

Tuning in to Pandora

Pandora CTO Tom Conrad has created a del.icio.us bookmark with all of the latest and greatest news about Pandora. Check it out!

Pandora Sneak Peek

Savage Beast has changed its name to Pandora and launched a private beta version of its new product - a Web-based Internet radio player that instantly builds stations based on users' favorite artists. Robert Scoble, a technical evangelist for Microsoft and a well-known blogger, wrote about the company today in his blog. Apparently, Tom Conrad, Pandora's CTO, presented Pandora to attendees of an innovation conference called BAR Camp. Says Scoble,

Pandora is definitely the talk of the Barcamp ... and was the talk of the midnight dinner last night.

Tivo Enters the On-Demand Universe

Poor Tivo. This last gasp is too little, too late, I'm afraid. Comcast, et. al., have once again outmaneuvered the company. Nevertheless, this observation is worth repeating ...

Content on demand has long been a holy grail for Internet and cable companies as they try to create the next generation of television. No one yet has found a way to overcome key technological hurdles, such as finding a speedy way to pump two-hour movies through broadband, or convince Hollywood that it can profit from Internet broadcasts.

Still, broadband connections are picking up speed, and are moving closer to becoming a reliable delivery method for broadcast-quality video. Should the day come that video is downloaded at the touch of a button, some of the stakeholders in the sector foresee a vast video universe of endless variety.

The TIME Is Now

In its latest issue, TIME profiles SNOCAP.

Looking back over the past few years, Fanning has no regrets. "Everything that was done with Napster was a learning experience," he says. "What was learned helped create some of the inspiration for what Snocap would become."

Digital Filmmaking Costs Less Digits

From a Wired News article ...

"Shooting on 35-mm film costs about a dollar a foot," Bob Harvey, Panavision senior vice president of sales, told Wired News. "A thousand feet for a thousand dollars adds up to about 11 minutes of footage. But about an hour of footage on a Genesis 24P HD, for instance, costs under a hundred dollars."

Good News for VitalStream

VitalStream reported its second quarter results today.

"Revenues for the quarter ended June 30, 2005 were $3,957,000, a 72 percent increase over revenues of $2,302,000, in the same period a year ago, and a 16 percent increase over revenues in the first quarter of 2005. Revenues for the six months ended June 30, 2005 were $7,355,000, a 71% increase over revenues of $4,293,000 for the six months ended June 30, 2004."

Web Channel Surfing

Business 2.0 on the convergence of television and the Internet ...

Digital Media Attaining Critical Mass

Newsweek doesn't exactly break any news in this piece, but in characterizing the recent spate of interactive entertainment as "Digital Hollywood 2.0," it neatly captures the dawn of a new era in digital entertainment.


Shawn Fanning in Newsweek ...

"When I try to explain to people what I'm building, they'll ask, 'What do you mean? There's no central rights database?' They just can't fathom the idea that there isn't a single registry or some way to determine who owns what content."

Music for the Masses

From an Associated Press profile of Savage Beast:

"It's about understanding someone's music taste," said Savage Beast founder Tim Westergren. "Why does somebody like a piece of music?"

Computer Associates to Acquire Niku

Computer Associates International (NYSE: CA) and Niku (Nasdaq: NIKU) today announced they have signed a definitive agreement under which CA will acquire Niku in an all-cash transaction valued at $21.00 per fully diluted common share, or approximately $350 million.

Surf's Up

Interesting piece about new software that creates custom playlists for consumers. Music discovery is a fast-growing space, and Savage Beast Technologies is riding the wave.

Social Networking 2.0

It's interesting that The Facebook announced that it had received its first round of venture capital funding on the same day that Friendster dismissed its second CEO.

Stream On

VitalStream announced its quarterly results today ...

Revenues for the quarter ended March 31, 2005 were $3,397,888, a 71 percent increase over revenues of $1,991,437 in the same period a year ago, and a 14 percent sequential increase over revenues in the fourth quarter of 2004. In the four quarters through the recently concluded quarter, VitalStream has recorded increasing year-over-year quarterly revenue growth of 36 percent, 51 percent, 69 percent and 71 percent.

Name That Tune

Great article by Om Malik on obtaining music recommendations over the Web.

Could Online Advertising Be Underhyped?

More startling online advertising statistics ...

"According to Forrester, the online market is still largely untapped by advertisers. 'Despite significant changes in consumer behavior, there is a large disparity between the amount of time consumers are spending online and the money marketers are spending trying to reach them online,' explains Forrester Research principal analyst Charlene Li. 'When at-work internet use is taken into consideration, online consumers spend more than one-third of their time online - roughly the same amount of time they spend watching TV. Yet marketers spend only 4 percent of ad budgets online versus 25 percent on TV.'"

Vital Signs Look Good

Judging from Akamai's March acquisition of Speedera, the Content Delivery Network space is rapidly consolidating. Today, VitalStream announced that it has acquired PlayStream, which caters to small businesses.

Immigrant Point Overlook

This morning, George Sarlo and his wife, Sejong, dedicated Immigrant Point Overlook in San Francisco's Presidio Park in memory of this nation's immigrants.

[Here are some additional pictures from the event.]

Software 2005 Conference: Software Industry Confronts Mid-Life

Thanks to M.R.Rangaswami, the rich agenda of top industry execs, CIO’s and pundits at this year’s Software 2005 conference delivered a bird’s eye view of our $50 Billion industry.

The big picture that emerged for me was of an industry in transition. Not an industry shrinking, but one struggling to accept modest growth instead of meteoric growth. Again and again the themes that came through were customers rationalizing technologies and vendors protecting profits or searching for business models that actually work. In one session, industry analysts took turns predicting what percentage of software vendors will disappear over the next few years. Estimates ranged from 60%-80% failure rates from Gartner and Aberdeen. The only good news here in my view is that the analysts may consolidate even faster than the vendors.

CIO’s railed against quality problems, greedy vendors and the pain of an “annuity model” (i.e. paying 15% maintenance every year) for software vendors. They were clear that their main interest these days is not the next big innovation but rather making what they already bought work together. This is probably the 10th CIO session I have heard like this over the past few years. They also admitted to rising budgets and that they are trying some new things, even from startups. For their part, the big vendors all pitched stability, security, integration, etc, allowing us all some time for naps. Gone are the days of big vision.

As expected, Software as a Service (Saas) and Open Source Software (OSS) were the most interesting new directions. Still, the CIO’s were hesitant to endorse either, instead putting toes in the water. “A few experiments going” or “makes sense, so we are studying it.” Big vendors paid SaaS and OSS some lip service and were lucky to not get the tougher questions on the implications long-term. Still, these areas hold promise for the CIO’s and analysts. Unlike past years, no one (vendors, CIOs or analysts) was betting against SaaS or OSS.

There were some signs of industry impact from OSS. The low-end app server is already “gone” according to Forrester’s John Rymer. Everyone builds on Jboss or something free. Unilever runs an entire country’s operation on an open source stack…and it works. BP did a huge Linux server conversion and saved big bucks. I perceive that we are were close to some adoption tipping point on this topic. Only last year, the tone was more hesitant, with most vendors and CIO’s waiting for someone else to make the first move. Now they all seem a bit defensive that they are not doing more toward the OSS vision. Look for more motion here. Once the fashion leaders move, the lemmings follow quickly.

To the surprise of no one, off-shoring was another enduring trend in the industry. Aberdeen claims that 90% of firms surveyed are doing some work in China. Forrester sees the trend only just beginning. Look for more and more software companies to do more and more outside the US, while IT shops do the same.

The CEO panel was a good microcosm of our industry. The discussion centered on such entrepreneurial topics as SOX compliance, M&A for success, ensuring profitability and employee retention. These were not fun, but show that this industry is maturing just as it should. Big players are getting bigger (I think this was what Chuck Phillips took an hour to say in his keynote, but I might have dozed off), and the customers are trying to avoid being locked in and continue to look to new vendors for new capabilities. One survey cited said that only 35% of customers would trust their current large vendors to add new components.

In all, middle age may not be all that bad for the industry. We all knew somewhere in the back of our heads that markets don’t double every year for to many years. Maybe the world never really needed the 300 supply chain management companies the VCs spawned. But now that there are only a 30 or 40, perhaps some can actually make money…

Mary Meeker @ Ad:Tech

Mary Meeker's presentation at Ad:Tech. (Thanks, Justin.)

Software as a Service

I have been watching software pricing models struggle from my time on the Oracle pricing committee in the late 80's to being a CEO with a subscription model in 2000, to being a VC looking for SaaS investments today. I think this is both a very promising area for investment and also an area that requires careful selection.

1. The vast majority of enterprise software does not lend itself to SaaS pricing. I wish it did, but it doesn't. My thought is that the only time you are likely to succeed with a use-based model is when the vendor is continuously delivering new value and service beyond the traditional software upgrades. Many enterprise apps categories don't really do this. Companies buy an app, customize it to their unique needs, and try not to change it. This applies in general to Supply Chain (too much custom integration here to use a vanilla app) and ERP (also the need for secrecy and security favors a behind-the-firewall model). Why has CRM succeeded for SalesForce? Because the best practices sales process is very similar across many companies AND the hosted architecture is a natural for geographically distributed sales teams. I have bought SalesForce for 3 companies now and barely had to modify it ... perfect for SaaS. Other software types which do not favor SaaS are all forms of middleware or many infrastructure products like Network Mgmt.

2. The cheapest alternative for the customer is often a license. When selling subscription software, I have often been told by CIOs that "we can start off on a subscription, but if this thing really takes off, I will need to bring it in-house." This is due to both security issues as well as a realization that if the CIO can lock in a price one time, he will likely pay less in the long run. Hell, this is the way CIOs have been buying software for the last 20 years, so don't expect them to easily accept a perpetual stream of payments forever - especially when many subscriptions are set to one third of typical perpetual license prices. That math is pretty easy. CIOs often say that they simply need to have perfect cost visibility over time. While I understand all the arguments against this view, most still feel uncomfortable signing up to big annual subscription payments that will inevitably lapse and set up a renewal renegotiation wherein the vendor has too much leverage.

3. All this will change, but slowly. I have been looking for investments in SaaS over the last 3 years and have seen a few areas that truly do favor a subscription model. I have seen a few lead management companies like Blue Roads in San Mateo that offer a hosted system to track and distribute leads to partners. The hosted service is a perfect architecture for this problem, since the IT group really doesn't want 10,000 partner sales reps all tunneling through their firewall to get to their internal CRM system. There is high value in Blue Roads running this system 24 x 7, and for it, one pays a subscription fee. Similar stories apply to hosted PLM companies that allow design partners or supply chain partners to collaborate on products or bills of material. Our newest investment for WaldenVC is a company called Palamida. Every night, the Palamida system spiders the Internet to find more new software components, many of them open source. It then allows software developers to identify what components they have in their own code bases and what licenses might apply. As we all know, the dirty little secret of enterprise software is that no one really knows exactly what is in a large code base. Now there is a way to find out. Like an anti-virus system, the value of Palamida is only realized with a continuous process to audit code and look for newly added components. Thus, the system is purchased as a subscription just like anti-virus. Again, the architecture fits the SaaS model ...

I hope I see more markets start to accept SaaS, but progress will be slow, since many companies own their software outright and have fear about cost visibility or value. Look for SaaS to take off where it makes sense and in new areas where old investments are not still being depreciated.

Rx for Online Adverting - BlueLithium

BlueLithium has received a great deal of press attention around its recent funding announcement. We are pleased to be working with our partner 3i on this very exciting deal.