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VC Mike on Internet Investing and Startups

January 29, 2006

vcmike

As a VC jumping into the blog community, I suppose it only makes sense to start off by sharing some of my thoughts on the sectors I tend to focus on, namely Internet/Digital Media related opportunities (for more on me and my investment areas go here).

First, though, a disclaimer: while I, like all my VC brethren, have thoughts, observations and hypotheses about the markets I invest in, let’s not kid anyone — I for one learn much more from the entrepreneurs I meet and work with than from my own research, analysis and navel gazing. So I guess what I am saying is that you are advised to take my rants and ruminations with the grain (or small boulder) of salt that I do.

Also, I plan to use this blog not just to offer general thoughts and observations, but I am also going to take a crack at spelling out some of the thinking that goes into the particular investments I am making.  We’ll see how it goes — I am hoping the combination of general discussion together with specific investment rationales will be of some interest to those of you good enough to visit my blog.  But I am going into it with an open mind, and would love any suggestions on what works and what is a waste of time. 

Enough of that. Here is what I am thinking these days about the Internet and Digital Media startup world.

First, I fully agree that we are going through a wave of innovation at least as significant and important as Internet 1.0. We may all be polyannas, but I think it is an incredibly exciting time for those of us in Internet/digital businesses.

Second, while most of the attention out there (including my own) tends to focus higher up “the stack,” I do believe that the mass adoption, and mobile-ization, of broadband, will continue to generate infrastructure opportunities.

My partners Bob Metcalfe, who did that ethernet thing, and my other partner George Conrades, who ran and currently is Chairman of our portfolio company Akamai Technologies, both know just a tad bit more than me about moving bytes and bits around, but suffice it to say that our partnership will continue to look for Internet infrastructure opportunities.

Third, there will be new opportunities in the emerging “Web 2.0” software layer.

While my partners and I have enjoyed backing software companies that help folks take advantage of new computing platforms (including the likes of Powersoft for the client-server platform and Allaire for the Web 1.0 platform), I think this is a trickier game with regard to Web 2.0 software companies. 

Whether it be business model, the fact that really robust software can be built relative quickly and inexpensively, or the existence of many more mature, cash laden companies in the industry, it seems to me that most Web 2.0 software startups are best served raising seed capital and then selling fairly quickly to a Yahoo! or Google. This does not bode well for the so-called “venture returns” we look for.

That said, I am confident a couple important new platform companies will emerge from the Web 2.0 entrepreneurial soup, and I have spent much of the last year trying to find real contenders. (Stay tuned, I have some more specific ideas on this…).

Fourth, I love the fact that so many Web 2.0 companies are at once both technology and media companies. While Internet 1.0 companies like Yahoo! and Google clearly have figured out how to make decent money, I think alot is still up in the air regarding how Web 2.0 companies can maximize this dual business model. Those who figure it out early, though, stand to profit greatly, and I hope to be there when they do!

Fifth, and finally, I passionately buy into the belief that all this stuff we are talking about promises to fundamentally change the media world and what it means to be a “media company.” 

Alot of my time these days is spent with companies that are participating in this transormation, either by enabling the new platforms or by developing and delivering content for them. In fact, I just closed an investment with a broadband content company, which will be the subject of my next post. Until then…

 

21 Comments

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  1. January 29, 2006

    Welcome to the blogosphere, Mike. Looking forward to reading.

  2. January 29, 2006

    great to see a VC blogging

  3. January 29, 2006

    your links on the about page are all broken !! Oops .. i think you missed the http://

  4. January 29, 2006

    Mike, Welcome to the blog world. I look forward to reading your posts. I have been blogging for about 6 months and have built up quite a following. You can see my blog “Don Dodge on The Next Big Thing” at http://dondodge.typepad.com/the_next_big_thing/

  5. January 29, 2006

    Hi Mike, I too think that the future direction of digital media is being mapped out as we speak and will take off in the very near future. I’ll be interested to get the VC point of view.

  6. January 29, 2006

    Hi Mike – Welcome to WordPress and blogging!

  7. January 29, 2006

    Mike, I look forward to your east coast perspectives!

  8. January 30, 2006

    interesting insight

  9. January 30, 2006

    Hi Mike,

    Welcome to blogging. Looking forward to know how a VC thinks.

  10. January 30, 2006

    Hey Mike> Good to find you in the blogosphere and look forward to seeing you again soon.

  11. January 31, 2006

    Hi Mike,
    Great blog! I think this is a model for how VCs should be blogging. I’m looking forward to your postings.

    — bkm

  12. February 15, 2006

    Mike, good stuff. I can’t wait to bring http://www.helpshare.com east!

    user generated content — meets search — meets micro-outsourcing — meets highly targeted advertising opportuniites all ina bundle that can be integrated into existing web sites to drive greater connection with their customers

  13. February 16, 2006

    Very good site. You are doing great job. Please Keep it up… .!

  14. RamB #
    March 3, 2006

    Thanks Mike,

    It is nice to see Polaris VC blogging, we feel good, since it is nice to see top-tier VC using the modern OPEN vehicles.

    It will be interesting to see your thoughts on the digital internet infrastructure companies, and how far they can be seggregated from services-infrastructure companies. Looking very much forward to your vision, thoughts and investment strategies and tactics

  15. July 12, 2006

    Watch out for web 3.0 – that’s when we take back control

  16. December 8, 2006

    It’s important to pay off credit card debt and live above the zero line. Then get 6 months living expenses in a savings account, and be making max contributions to a 401K or IRA. After that, one can start saving into an aggressive trading account as well – and that can make all the difference in your retirement age.

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