Posted on Techdirt - 25 March 2005 @ 3:48pm
Back during the boom years, newly minted MBAs seemed to believe that the only way to start a company was to take their cocktail napkin scribble to a VC and get startup cash. The VCs didn't mind getting in early. They claimed their connections and know-how were necessary, but a bit of ancedotal evidence and some research suggests entrepreneurs are realizing that's not the way it needs to be done. In all honesty, it's always been the case that most startups are not right for venture capital -- but even those who will need it eventually can do quite well for themselves by bootstrapping. The recent sales of Topix and Bloglines are two cases in Silicon Valley where seasoned founders (who know both the upsides and downsides to VC funding) bootstrapped companies, passed on the VC money and sold their companies instead. The deals appear to give the start-ups access to capital to grow their businesses, some upfront payout for their hard work and continued control over the business. Going the acquisition route as opposed to taking funding and shooting for an IPO may have limited the upside of the founders, but the entrepreneurs are still making out well. VCs may discover that they need to rethink the "value proposition" they offer to a new generation of hot startups that seem more skeptical of the typical VC route.
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Posted on Techdirt - 11 November 2004 @ 11:47am
We're starting to see advertisers take aim at the internet with video ads, but do websurfers really want them? Jupiter Research found that advertisers spent $77 million in the U.S. for online-video ads last year and projects that the number will jump to $657 million by 2009. Since it's easy (and very cheap) to format TV ads for the web, some advertisers are likely to use the same ads and see the net as just another channel to peddle their wares. The problem with this approach, of course, is that web users aren't TV watchers. Many don't want to be encumbered by slow-to-load ads that suck up bandwidth. Others don't want to be bothered with any ads at all. Then there's the Jeff Bezos approach over at Amazon where they're offering online ads that don't really sell anything, but drive traffic to the site. Will the people who watch these on Amazon (assuming any do) actually buy anything from them afterward or will they just watch and leave? There's no question that video will become more pervasive on the internet and that it can be an effective advertising medium. Will advertisers figure out how to tap into this different medium or will they create a backlash similar to the one triggered by pop-ups? Or, will online-video ads be largely ignored by the surfers they seek to reach?
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Posted on Techdirt - 10 November 2004 @ 2:23pm
In the past, we've shared several stories about cyberchondriacs, people who surf the web, learn about exotic diseases and then become convinced they've been stricken with some terrible ailment. Now, however, comes the case of a concerned mum over in the UK who searched the internet to help determine what was ailing her ten-year-old son after the ointment a doctor gave the kid failed to help a bug bite. It turns out this was no ordinary bug bite and her child was one of only 200 people a year diagnosed with Lyme disease, which can lead to some very nasty ailments. The search helped doctors properly diagnose the boy's condition and quickly get him on antibiotics.
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Posted on Techdirt - 7 September 2004 @ 12:25am
Yet another indication of how the faulty patent system is doing serious damage to our society comes in the form of a new book that looks at the drug industry and all its shady practices. The book, The Truth About the Drug Companies: How They Deceive Us and What to Do About It, by Dr. Marcia Angell, an MD and former editor of the New England Journal of Medicine, claims the industry was kept in check until the 1980s when the government changed the rules so that the pharma industry could conduct research with public funds, then patent the findings and keep all the profits. Instead of innovating, the warped system encourages them to spend on lots of marketing and gimmicks. Why plow a lot of money into the high-risk proposition of trying to cure cancer when you can use that money instead to keep your lock on the allergy medicine market? So, when your patent on Claritin runs out, you do some research and marketing, and bingo, you've got Clarinex which works on indoor allergies as opposed to outdoor allergies.
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Posted on Techdirt - 2 September 2004 @ 11:07pm
Privacy advocates worry about the impact RFID could have on consumers while labor unions fear the technology could cost jobs. Both groups had better brace themselves, because RFID is moving into the mainstream and it's probably too late to stop it. Metro Group, a major retailer in Europe, has just completed a test of the technology and plans to rapidly introduce it to help them squeeze costs out of their supply chain. In their tests, use of the tiny tags increased efficiency, decreased theft and allowed the store to more easily get their hands on merchandise, offering more choice to customers. The tests were not a total success as liquids and some metals continue to hamper detection of the tags, mainly when they were used on individual items as opposed to crates and pallets. High costs and technology shortcomings will probably keep the tags off individual items for quite some time, but not forever. The test results show that RFID can help deliver lower prices and more choice for consumers. So rather than oppose the technology under the vague notion that it is going to harm consumers and workers, it's time for those who are opposed to it to work together with those who are adopting the chips to ensure that legitimate privacy concerns are addressed. The potential risks of RFID can be solved with technology. Better ability for individuals to read and adjust their own RFIDs once out of the store is one solution, for example, but not enough work has been done in that area so far.
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Posted on Techdirt - 30 August 2004 @ 2:36pm
Are IPOs becoming less attractive? In the post-bubble economy with higher costs, more government scrutiny and all the work that goes into an IPO, some are questioning if the IPO still should be the liquidity event of choice for entrepreneurs. The story uses the example of one dot com CEO realizing the process was too stressful and distracting from the work at hand, and decided to sell out instead. The story contains a litany of experts who attest to the fact that it is growing more expensive and more challenging to run a public company, but struggles to find more solid examples of companies that could have done an IPO but opted for a sale instead. The perception is still that the IPO is the way to go. In part, this is because VCs, the press, and plenty of others still seem to promote the IPO as the only viable "exit strategy" (not necessarily ever asking why an "exit strategy" is needed), and partly because, indeed, you are much more likely to make gobs and gobs of money that way. So, it's going to have to get a lot more expensive and troublesome to become and run a public company for them to sell out when they can IPO instead.
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Posted on Techdirt - 19 August 2004 @ 3:49pm
U.S. companies don't always do so well when it comes to knowing their geography. When Delta Airlines bought Pam Am's famous international route network in the 1990s, they had to hand out atlases so the employees and company executives would know where the airline was flying. Now comes a story in the Guardian about the costly blunders Microsoft has made through geographic ignorance. Their gaffs cover not only geography but also political and cultural sensitivity issues. While some of the errors probably couldn't be avoided, what is surprising is that others could have and should have been caught, but Microsoft took a lackadaisical approach. Working worlds away in Redmond, the issues probably seemed trifling compared with the importance of getting the software out the door on time. Microsoft acknowledges that those errors cost real money and more importantly tarnished the company's reputation. Given the arrogant way they acted in the past about such things, it's almost nice to see them publicly admitting to messing up, and agreeing that they need to be more culturally sensitive (even if, yes, it should help them avoid multi-million dollar blunders involving having their own software banned or their own employees tossed in jail).
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