Martin LaMonica of Silicon.com offers an analysis on the long term sustainability of Web 2.0 companies. His take on the phenomenon? Companies that are launched just to be acquired by Google (or Yahoo) should be sure that their business plans are truly viable. Will the enthusiasm for these companies end? Of course, just like our need for five railroads in every city waned as the markets matured. That's the nature of business.

About three years ago an online technology reporter interviewed one of the founders of Six Apart. For those of you who don't know, Six Apart is the startup company behind the very successful blogging platforms, Movable Type and Typepad. The story went that the founders of Six Apart were having difficulty attracting the interest of the venture capital community. Given the groundswell of bloggers, it was obvious that the company was an ideal investment opportunity.

I sent an email to the two founders asking if they were in fact struggling. The reply? They were hiring an experienced CEO and their situation was changing.

Yesterday the company announced it had received a further 12 million in venture investment from a consortium including Intel. Why Intel? The company believes that bloggers will increase the demand for broadband services.

What can Canadian investors learn from Six Apart's story? Simply this: There are a host of new, early stage investment opportunities on the Canadian landscape as a result of this growing Web 2.0 phenomenon. Like Six Apart, local companies with good products are looking for the right combination of management and investment.

When local venture player Mark Skapinker of Brightspark said that the Ontario venture industry was underperforming the rest of Canada, people took notice. Ontario is home to Canada's foremost universities, Toronto's biotech resources and the Kitchener - Waterloo technology cluster. With assets like these the province should be leading the rest of Canada not following it. Is there a place for government involvement in the VC sector? Take a look at the role government played in Oklahoma:

A state authority created to build Oklahoma's venture capital industry has had an economic impact of nearly $1 billion, according to a study by a Phoenix-based consulting firm.

The study, conducted by Applied Economics, estimates that the Oklahoma Capital Investment Board has had an impact of $881.3 million on the Oklahoma economy as a result of its 13-year administration of two programs -- the Venture Investment Program and Oklahoma Capital Access Program.

Metaweb Technologies, Inc., has just received $15 million of funding. Led by Benchmark Capital, other investors in the round included Millennium Technology Ventures and Omidyar Network. Formerly known as "Applied Minds" Metaweb is building new infrastructure tools for the web.

Mr. Harvey of Benchmark Capital noted, "My partners and I are very excited to be working with the Metaweb team. This is a disruptive technology that puts a lot of power into the hands of individuals." Doug Solomon, vice president at Omidyar Network, Pierre Omidyar's mission-based investment group, said, "Metaweb enables individuals to pursue what matters most to them and dramatically expands their role in enhancing the value of online information."

UNC - Chapel Hill Sociologist Howard Aldrich studies successful entrepreneurial teams. Guess what he has found? Startups are often created by teams of two or more people who have complimentary skill sets and who know each other. Nothing too surprising in that. What is interesting is that startups often lean towards embracing cronyism while failing to allow for diverse viewpoints. This perhaps explains why professional venture capitalists must be prepared to manage the companies they invest in if for no other reason than to ensure the founders look beyond their existing web of contacts when expanding.

Aldrich recommends:

Think about the desired skill and experience requirements of the proposed startup before settling on people just because you know them well.

Broaden your search by using multiple sources to help compile a list of relevant individuals. Systematically assess not only persons with whom you have strong ties but also those you've known more casually or through a third party.

Explicitly consider whether team diversity should be one of your goals. If you find yourself with an "old boy" team, ask yourself whether you have been thorough enough in your search for relevant individuals with complementary rather than similar characteristics.

CNN's Money/Business 2.0 writes about the all too predictable Google acquisition:

Google's acquisition of Upstartle, the Silicon Valley-based provider of Writely, a Web-based word processor, is the surest sign yet that the company plans to take on Microsoft in the market for office-productivity software.

Writely is an Internet based word processor that is platform independent. It also allows online collaboration and document sharing. That said, Writely is an obvious product and could have easily been developed in South-Western Ontario - in fact, many local start ups are offering products with similar upside potential. Why do Silicon Valley start ups do so well? Partially it is what Business guru Michael Porter calls the cluster effect. More than that it is a culture of risk-taking that many of us regret to say is absent from the Toronto venture market.

It seems like the local VC community would prefer to be involved in Income Trusts with their nearly guaranteed stream of returns rather than in the "Venture" industry which involves risk. One of the reasons this site is called Gagglescape is that those of us who live or die by the availability of funding to make good ideas happen tend to follow the pack when it comes to looking for investment opportunities. That's the nature of this business but, like Malcom Gladwell argues in his book Tipping Point, their has to be some original catalyst that begins the trend.

What we need more of are people, companies, institutions, or governments who are willing to up their risk-taking quotient. That means 95 out of 100 ventures may fail. We have a tendency in Canada to stigmatize those who fail as somehow doomed to always failing rather than seeing them as involved in a process of experimentation and learning. Without failure we cannot move forward.

How (...read more...)

Jim Estill is a legend in Canada's technology scene. CEO of SYNNEX Canada he also is on the Board of RIM. His personal blog is a good resource on how to manage both time and companies. We've borrowed this from Jim Estill's site (apparently joining a long list of borrowers).

"I played duplicate bridge tonight. For me this is a great way to relax. It requires total focus so takes my mind off of all other things.

The following is an article I wrote for Profit Magazine a while ago. It was edited by my friend Rick Spence. It still seems relevant today (and it also appeals to my sense of efficiency - re-use good material to make for a quick blog posting).

THE 12 RULES OF TIME

By Jim Estill

My business experience has taught me one true thing: That maximizing your productivity, happiness, peace, or impact can best be accomplished if you clearly understand the 12 Rules of Time.

1. Have goals

Being more efficient with your time is irrelevant if you don't know how you want to spend it. In managing time, the compass is more important than the clock. Know where you want to go and spend your time on the things that get you there.

Many people spend energy trying to be more efficient without first doing what's important: setting goals. It's like being lost on your way to a new city. Driving faster doesn't help if you are going in the wrong direction. Figure out what direction to go in and head that way.

Once you've prepared it, your list of goals will reveal what is important to you.

2. Analyze how you spend your time

It is always good to know how you're spending your time right now. You can track this by setting (...read more...)

If you wanted proof that American VC firms will fund almost anything that moves, take a look at the investment in Bag Borrow or Steal.

Bag Borrow or Steal, the leading online service for fashion-savvy consumers who wish to borrow rather than buy, today announced that it has raised $8.25 million in a Series B round of funding. The financing was led by Madrona Venture Group, with existing investors Impact Venture Partners and Valence Capital Management also participating in the round.

The Wi-Fi cloud is finally descending on our city and we have to celebrate. Toronto Hydro is announcing a new service that will blanket the city with wireless Internet access. Rumour has it that one of the city's largest provider of wireless services, Ted Rogers, is not happy. We can't feel too sorry for Rogers and Bell though. They have long known that ubiquitous connectivity is inevitable and I'm sure they've planned for it.

They may go to the CRTC and claim that government institutions like city electric companies should not compete with the private sector in the convergent media space. Normally I'd agree. The government is a poor supplier of non-essential consumer services. But this is different. Internet connectivity is as much an essential part of life in the 21st century as water and electrical services. Cities around the world are opening their wireless gateways. If Torontonians don't have the same kind of infrastructure then we'll be at a competitive disadvantage. So, if government makes the decision to impede the democratization of wireless there is a good chance that our economy will suffer in the long term.

There are other reasons to celebrate. The poor will now have equal access to wireless. There will be an explosion of products and services for the new market. The venture capital and entrepreneurial sectors will experience an upsurge in new opportunities. More on the economics of this decision later.

The Ontario Genomics Institute is entering a partnership with Amorfix Life Sciences Inc. to develop the first effective blood test for alzheimers. The deal is structured as follows:

Pursuant to a term sheet executed December 22, 2005, OGI has executed a subscription agreement to
invest $100,000 in Amorfix to accelerate the EP-ADTM project. OGI will, upon closing, invest $50,000
receiving 100,000 common shares of AMF and 50,000 warrants to purchase shares for $.90 for a term of
two years. Upon the achievement of a defined research milestone, OGI will invest $50,000 at market
price and receive a one-half warrant for each share purchased to purchase a share at the then market price
within 2 years. This transaction is subject to acceptance for filing by the TSX Venture exchange.

Want to know where the hottest Web 2.0 development is taking place? This site uses GoogleMaps to tell the story.

BubbleShare

Dogster

Flock

Goowy

Kaboodle

Loomia

Meetro

Riya

Sphere

TailRank

Wink

Writely

Let's face it. If all companies knew how to manage innovation GM would still be worth investing in and WestJet would be no better at making a profit than Air Canada. It has been my experience over the years that financial barons so highly touted in the business press are good at managing resources once there are resources to manage but generally are not good at creating value where no value previously existed. That takes true innovation. So, when I saw this article on how Canada's "Flickr" started the revolution in online photo sharing, I recognized a certain honesty that is rarely seen in media. They tell the truth: Flickr came from an attempt to solve another problem. Call it the penicillin approach to innovation where hard work, good luck, and preparedness come together to create a success story. Take a look.

This article explores the growing markets created by an aging "Boomer" generation. Over the next ten years we'll see billions generated - especially in infrastructure related products - by products and services for this demographic phenomenon. Two years ago I spent a three or four months working on a product for this market. I.T. based, it was slightly ahead of its time but social networking technologies may have matured enough to reintroduce the idea. Is there anyone else providing I.T. driven services for aging Boomers?

Business 2.0 has a useful article on how to find angel investment. Did you know Google started off with a $100,000 investment? Not a bad return.

Amazon (Research).com, Apple (Research), the Body Shop (Research), Kinko's, and Starbucks (Research) all got their starts with the help of angel investors, as did current rising stars such as Digg, LinkedIn, and Simply Hired.