January 1, 2007

Happy New Year: Powerset in the New York Times

Powerset was featured in the New York Times today in an article by Miguel Helft entitled: "In Silicon Valley, the Race Is On to Trump Google". The article talks about the wave of startups going after aspects of the search market. I originally thought the article was going to be titled: "What are they thinking?", as the emphasis is on the mindset of the entrepreneurs and the investors going after a large market in the presence of such formidable players. The article begins and ends with a discussion of Powerset. In between, the search startups discussed in the article include Powerset, Hakia, Snap, A9, ChaCha, and Wikia.

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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.

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August 4, 2005

VC Taskforce on Next-Gen Tools in Global Software Development

Emerging Technology Forum

Global Software Development: Why next-gen tools matter

July 28, 2005

Abstract:

Software complexity has been steadily on the rise. Some persistent problems
have dogged programmers for 60 years, and still need solutions. New problems
arise as the landscape changes. What are the opportunities and maintenance
challenges ahead as teams work faster and collaborate across different time
zones, languages, and countries? What areas might be investable? This panel
of experts will explore these questions and new developments in a spirited
discussion on the state of software development.

Moderator:

Panel:

Notes and Comments by Barney Pell

This document contains my notes taken as an audience member attending this panel discussion. While it might look like a transcript, and I attempt to capture everything in real-time, I do also interpret, paraphrase and summarize as I type.

Personally, I thought this was a great discussion, and one that should be shared with entrepreneurs, investors, vendors and customers in the software development community. I worked hard to make this article readable so that others can benefit.

Highlights and take-aways:

  • John Mashley pointed out that, independent of all the improvements in software development tools, individual programmer productivity is always nonuniform. Some programmers are 10 or even 100 times as productive as others.

  • This has negative and positive implications for outsourcing. On the negative side, if you can assemble a crack team of programmers locally who are 10x more productive than you can find offshore, then you actually lose economic value by outsourcing. On the positive side, some of the best developers are not local. So despite the hassle, and even if the labor rates are not much different, you can gain economic productivity by taking advantage of these fine programmers wherever they live (whether in India or on a boat in the Carribean).

  • While outsourcing is increasingly becoming an imperative for businesses, the results of outsourcing are often disappointing. Steve Mezak discussed 7 major categories of mistakes in outsourcing and listed potential solutions (including methodologies and tools) for each.

  • A recurring theme in the panel was the difficulty and importance of getting software requirements right. Despite all the improvements in tools and processees for developers, there have been limited improvements in the way people create and validate the requirements in the first place. Errors in requirements ripple through the downstream flow and get more expensive to fix the later they are caught. N8's David Hartford brought up the statistic that requirements errors cost US companies $100 Billion per year in rework and cancelled projects alone. Steve Mezak listed a new generation of companies (including N8) that address different aspects of the requirements problem in different ways. I am very familiar with N8's Scenario product that David discussed and demonstrated at the meeting. I think it has the potential to address the requirements engineering problem in a substantial way for the first time. (I intend to write more about this in a separate post).

  • There was consensus that distributed development is now working. This has been one of the biggest problems with outsourcing, telecommuting, and large scale projects. There was discussion that open source tools have matured substantially and are now being integrated into cost-effective suites. In addition, VoIP (e.g. Skype) has enabled people to maintain open voice channels all day long at low cost. As Sam Jadallah said:

    I have a company with 2 people, on in Silicon Valley, one in Dublin. Skype sits open all day long, just like two people sitting in room together all day long talking whenever they want. The tools, workflow, process, and experience level is now working.

  • Sam Jadallah's discussion of VC investment in software development tools is great reading. His fundamental point is that the internet has changed the economics of the enterprise software business, and that this changes the success factors for companies. Big enterprise software companies are suffering, and most of the large software industry revenues are coming from maintenance. Sam covers several major trends in software development and in software business models and provides concrete suggestions for what software startup companies should do differently. He lists interesting investment areas for software tools, including: developer productivity, quality and security, application management, and process improvement.

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July 20, 2005

Snap.com raises $10M in VC Funding, led by Mayfield

Mayfield and Snap announced this week that Mayfield led a $10M venture capital investment round in Snap.com. I am proud to report that I helped to make this deal happen. My partner at Mayfield, Allen Morgan, will go on the Snap board of directors.

It might seem puzzling why you would invest in a general search company (perhaps as opposed to vertical search companies that might have more specific focus and could be acquired and merged into offerings by the incumbents), in the presence of so many giants. The article about Snap in USA Today suggests that Snap only wins if they can unseat Google. However, I think Snap represents an good investment, without any need that they become the new #1 or #2 general search engine. Below are my thoughts about the general search landscape and some major themes that Snap addresses. (Disclaimer: I am currently an Entrepreur in Residence at Mayfield and have a personal interest in Snap; the thoughts below are my own and should not be taken to represent the thoughts of Mayfield or Snap).

Online advertising is today a massive market that continues to grow rapidly. The U.S. paid search component of this market was $4B in 2004 and is predicted to grow to $6B by '06, with a worldwide paid search market growing to $23B by 2010. The paid search market comprises both search portals (e.g. Google Adwords), where users go specifically to search, and contextual advertising, where users are exposed to ads in the context of viewing publisher's websites (e.g. Google Adsense ads on NYT.com). The contextual advertising market is growing even faster than search portals (a desktop client advertising market is also growing quickly, but represents a much smaller portion of the market).

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Marc Cuban at AlwaysOn05

Fireside Chat with Marc Cuban, interviewed by Allen Delattre

At Always On 2005

July 20, 2005

I thought it was an interesting discussion. Here are the points I found most noteworthy:

Below are my (mostly raw) notes from this session.

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June 26, 2005

Allen Morgan's Blog in Time Magazine's 50 Coolest Websites

Time Magazine published a list of 50 Coolest Websites for 2005. Recognizing the growing importance of blogs, they broke out blogs as a separate segment within that list (50 Coolest Websites 2005: Blogs).

My Mayfield colleague Allen Morgan's Blog was listed as the coolest blog/website for entrepreneurs:

Allen Morgan, managing director at Mayfield—a venture capital firm in Menlo Park, California—backer of Beatnik, PlanetOut, Tribe and Pluck —guides entrepreneurs on how to pitch ideas and get financing. The recent "10 Commandments" series on how to handle those critical meetings with VCs is a must-read.

I agree with Time's endorsement -- Allen's 10 commandments series is great. I also agree with Dave Panos, CEO of Pluck, who commented to Allen, "I am particularly impressed that you pulled off such a feat with a mean-time-between posts of five weeks." It shows that focus and quality can matter more than freshness even in the blogosphere; at least this true for media critics.

Allen was actually an inspiration for me to start blogging, right around the time he convinced me to join Mayfield. I imagined that I would have lots of content about insights from an Entrepreneur in Residence, kind of like an entrepreneurial undercover agent sharing how things really happen on the other side of the funding table. When I later brainstormed with Allen about how to achieve both substance and discretion in such a blog, Allen summarized along the following lines: "As long as you don't specifically identify any of the companies, entrepreneurs, or Mayfield partners, and you only say good things about Mayfield, you should feel free to blog about anything you like!"

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June 6, 2005

Searching for VC Investments: Multiple strategic dimensions

Bill Burnham has a post on "Deal Flow Is Dead, Long Live Thesis Driven Investing. He argues that the amount of VC money chasing companies today means that the traditional strategy of relying on deal flow is no longer successful except for the few firms with the very highest reputation or a lock on local markets. He summarizes the old strategy with an analogy:

It’s as if Venture Capitalists were Grizzly Bears: Just stake out a good position in the middle of the best salmon run, watch the fish go by, and occasionally swat the best looking fish out of the air. In this model VCs are cast as true renaissance men, capable of doing a communications equipment deal one day and an alternative energy deal the next. They have no need to be experts in specific industries but instead pass judgment on the quality and pedigree of start-up teams with the belief that their connections and experience can help get any company off the ground.
I agree with his observation that successful VCs will not be able to simply rely on broad deal flow but will have to be more focused, thesis driven, and proactive. However, I think this evolution it not so much a shift from one approach (deal flow) to another (investment thesis) as it is an increase in the amount of work VC's have to do. The discussion actually points at a framework for investment strategy.

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