December 9, 2005

Entrepreneur Ex Residence: Powerset

My blogging infrastructure was broken for about 2 months, so this update is by now rather old. But better late than never…
After spending much of this year having a great time as an Entrepreneur in Residence at Mayfield, I have left and started a new company! The company, called Powerset, is going to be in “semi stealth mode” for a while. I call it “semi stealth” because I don’t want potential competitors to know what we’re doing too early. That’s the “stealth” part. But at the same time, I want to let my friends (and more generally, my extended network) know at a high level what I’m up to, so everyone can help. I find it continually amazing what kind of help you get when people know what you’re trying to do.
So here’s the high-level story, which should come as no surprise to folks who know me:

Powerset will be developing advanced AI technology to make significant improvements in search.

In case you’re wondering about the company name, “powerset” is a concept from mathematical set theory. The powerset P(S) of a set S is the set of all subsets of S. So if you have a set {a,b,c}, the powerset is: {{a},{b},{c},{a,b},{a,c},{b,c},{a,b,c}}.
If there are N elements of the set S, there are 2^N elements of P(S).
That’s a very large number.
I plan to write more about how I came up with the vision for Powerset , the transition from EIR to Entrepreneur on the street, and ongoing steps in the adventure so far. For now I’ll just say that I’m totally excited, incredibly busy, and having the time of my life.

Posted by barney on December 9, 2005 at 11:30 pm | 6 Comments

December 9, 2005

Barney moderating panel on “Venturing in Online Search, Advertising and Sales” at Caltech

I’ll be moderating a panel on OPPORTUNITIES FOR INNOVATORS: Venturing in Online Search, Advertising & Sales at the December Caltech/MIT Enterprise Forum, December 10th.
The abstract for the event:

In 2005 acquisitions of online companies involved with sales, search and allied technologies have been striking: IAC/Interactive bought Ask Jeeves; Scripps paid $560 million (cash) for ShopZilla; E-Bay swallowed Shopping.com; Yahoo! bought tiny Konfabulator; AOL grabbed Weblogs; and Rupert Murdoch is on the prowl with billions of dollars. All this activity testifies to entrepreneurial opportunities for ventures that improve technology, and enhance e-commerce success: the big guys are hungry for innovation to help them compete with each other. Moreover, with its renewed vigor e-com has diversified, as both online companies that grew in situ and traditional media giants are snapping up even the smallest of enterprises.
In this context – today’s keynote speaker, entrepreneurs and panelists will share their perspectives on future trends and opportunities in online advertising and sales, search, blogs and other e-phenomena, as well as what makes a company a likely target for acquisition.
Keynote Speaker: Farhad Mohit, Co-founder and Chief Strategist, ShopZilla (now a Scripps Company)
Moderator: Barney Pell, Entrepreneur-in-Residence, Mayfield Venture Capital
Panelists/Entrepreneurs:

  • David Hughes, CEO, The Search Agency (former Senior Vice President, Corporate Development, United Online)
  • Craig Ogg, Co-founder, ThisNext (former Vice President of Research & Development, Stamps.com)
  • Joel Toledano, Director of Business Development–Search, Yahoo!

Producers: Michael M. Krieger, Willenken, Wilson, Loh & Stris LLP, and Richard C. Hsu, Townsend and Townsend and Crew LLP

While we planned this event a few months ago, the topic is perfectly timed, in light of even more recent string of acquisitions in this space (Brainboost acquired by Answers.com and Del.icio.us acquired by Yahoo, to name just two in the last week) and coverage in the media of the topic of search acquisitions in general.
The recent article in Business Week on Googling For Gold points out the new trend for large search companies to try to acquire companies early on, preferably before they even raise VC funding. One reason: the work that companies do after raising VC funding is largely about building a brand and an audience, including sales and marketing teams. Since the large search engines already have all of those, they don’t view that as adding value. Far better to just acquire the company when they have the first promising product and a strong team that can easily integrate into the new parent company. The incumbents get the company at a low price, and the entrepreneurs get a great return much earlier and with less work.
At Mayfield, we met with a team from Yahoo! Search and discussed exactly this topic. They were interested in companies that we liked but didn’t want to invest in because the market opportunities were too small, or it was too easy for someone like Yahoo to compete.
That’s where I met Joel Toledano, who I invited to be one of the panelists for this event. It will be interesting to hear his take, and perhaps he will talk about Yahoo’s acquisition today of Del.icio.us.
The “acquire before VC funding” logic raises two related questions:

I expect these quetions to generate interesting discussion at the paen, and perhaps in the blogosphere at large.

Posted by barney on December 9, 2005 at 10:41 pm | No Comments