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Internet VC Activity in India

Posted on Friday, Feb 3rd 2006

InfoEdge, which owns some of India’s hottest Internet properties including the largest job portal Naukri.com, Real Estate search engine 99acres.com, and matrimonial site Jeevan Sathi has got funding from KPCB and Ram Shriram of Sherpalo Ventures. InfoEdge did $10 million last year with profits of $1.8. Revenues are expected to more than double this year, and the company expects to go public this year.

The Indian stock market has traditionally valued outsourcing services companies very high, and for the longest time, it made a lot of sense for relatively small companies to go public in India. Cybermedia, a publishing company that owns some of the top IT related magazines in India like Dataquest, went public last year, also on a relatively small revenue in the range of $12 Million.

I had to raise my eyebrows, however, to read that Kleiner buys into the strategy of an IPO that is so small. Something doesn’t compute. There is some speculation that since both John Doerr and Ram Shriram are on the Board of Google, Google may consider buying them as part of their India strategy, as well as their need to diversify revenues.

Who knows? Good news, however, is that some viable Internet businesses are getting built in India, and they are getting attention from the top rung of US VCs. After all, as far as consumer markets go, in the next decade, India will emerge as one of the top ones!

Featured Videos

Author Blogs at Amazon

Posted on Wednesday, Feb 1st 2006

Amazon invites Authors to blog. Good idea, with a few caveats.

Let’s say I am an Author of a book on parenting. I would be better off having my Blog associated with an online community where the parents hang out, for example, the Parenting Magazine’s web site.

With generic categories like Fiction, however, it may be just fine for an Author to blog within the Amazon eco-system, and generate buzz and search engine traffic.

Overall, it is a further validation of new media’s democratic nature.

My instincts are with Bill

Posted on Tuesday, Jan 31st 2006

Microsoft thinks cell phones are a better way of bringing computing to the poor, rather than the $100 laptop.

I think he is right.

The largely illiterate poor need to communicate by voice apps like phones, video-phones, etc. and have less need for “computing” per se. Internet browsing and Email are both possible from cell phones, and those are the next layer of apps that the slightly literate segments of this vast world population would use.

And what’s very attractive is that Microsoft can put some of its massive cash reserve to use, and subsidize the effort to reach the poor, rendering giant strides in Development. Negroponte simply doesn’t have that kind of deep-pocket to reach into.

Video FAQs

Finally!

Posted on Tuesday, Jan 31st 2006

A much anticipated event has happened. Media’s darling Google has done two things: (a) Disappointed Wall Street and (b) Disappointed its fans as the champion of democracy and free thinking.

Google’s profit and sales both surged in the fourth quarter, but the results disappointed investors, who were expecting another blockbuster quarter. Shares plunged as much as 19% in after-hours trading. (Read WSJ article for details.)

Earlier, Google’s position vis a vis China has been deeply criticized in all business media.

This was bound to happen.

A couple of 30-year olds refusing to give any credit to history and humanity’s lessons learned over many years, and choosing to reinvent the wheel in multiple domains – had a naivete about it that many found distasteful. They have wanted to reinvent the process of going public. They have wanted to reinvent management and organizational development. Unclear, to what great benefit to humanity.

Well, it’s time to grow up, Larry and Sergei …

You guys are brilliant. Let’s see how you handle the process of growing up, and the inevitable beating and slapping around that life provides, along the way!

Media builds personalities. Media, unfortunately, also, relishes the process of destroying personalities.

Watch out, lest it hurts!

3D PDF: Analysis

Posted on Tuesday, Jan 31st 2006

Adobe announced Acrobat 3D, finally. This is their first foray into 3D. I wrote earlier that they are missing the boat on 3D.

The premise of Acrobat 3D is to enable smooth collaboration amongst various non CAD users within the organization’s workflow i.e. sales, marketing, visual merchandising, channel management, etc. who traditionally could not view designs in 3D. With 2D pictures of 3D products, much data is lost, making the process inefficient and unproductive.

For a while now, CRM and PLM vendors have been looking for a good bridge. The only one that existed so far was Autodesk’s DWF, which works with AutoCAD / Inventor design files.

However, in the Mechanical Design marketplace, the major houses are:

1. Dassault, which owns CATIA (high-end 3D CAD), Solidworks (mid-market 3D CAD), a PDM called SmarTeam, and a PLM product called Enovia, which IBM Global Services sells and integrated.

2. Parametric, which owns ProE (high-end 3D CAD) and Windchill (PLM)

3. Autodesk

4. UGS (recently LBO’d by SIlverlake and Bain)

5. think3 with ThinkDesign, ThinkID, ThinkTeam – all mid-range products.

Given that any 3D Viewer product such as Acrobat 3D will need to pass through a CAD-engineer’s hands, to be written into an Acrobat readable format, it is safe to assume that having deep-pocket CAD relationships would be immensely valuable.

So, let us see who has what in terms of viwers:

Autodesk has DWF. No one else has anything else. However, there are some independent viewers out there, Right Hemisphere and TornadoVIZ. In fact, it is Right Hemisphere’s technology that enables Acrobat 3D, Adobe Ventures has an investment in the company along with Sequoia Capital, and it would be safe to assume that Adobe will buy this company eventually.

I have heard, however, that Acrobat 3D is a very heavy product. In comparison, TornadoVIZ has a very light-weight technology, which would, by and large, need to be an essential characteristic of any 3D viewer such as the ones under discussion.

While Adobe will try to be Switzerland, and not take a preferred CAD system position, it is likely, they will get locked out of the Autodesk eco-system. If I were Dassault, then, would I want a proprietary viewer (perhaps via a Tornado acquisition), or would I be okay with Adobe’s neutral position?

DFM Vision

Posted on Monday, Jan 30th 2006

Many EDA startups got funded in the last 3 years to address Design For Manufacturability of Chips. Catena, however, was an internal Cadence project that finally sees light of day.

Catena does post-layout optimization on shape-based parameters (vias, wires) to arrive at a better interconnect design, before handing off to the Fab or the Foundry.

As chips gets denser and denser, the pressure on layout engines intensifies, to accomodate all this functionality within a tiny perimeter. The victim, naturally, is yield.

Hence, the chip industry has been looking for ways to handle yield issues at the design stage.

This step is one in the right direction.

However, it is still a long way from being able to do predictive modeling using parameters of the manufacturing process before and during layout. Setting constraints and catching violations or risks pre- and during layout are still more valuable than correcting things after, as the degrees of freedom tend to go down dramatically as the process progresses.

Catena, therefore, is only a tiny step in the direction of a massive and ambitious vision that many in the industry harbor. My articulation of this vision is as follows: An exhaustive Design Rule Checker (DRC) that contains in its heart an Expert System that understands the manufacturing Process and Equipments, Properties of Materials, Temperatures, Signal Integrity, Power and Voltage issues, etc. This uber-DRC will then run through its rule-base – every Layout decision, make estimates about downstream Layout options/decisions (like a Chess Player), and help along the Layout optimization process.

And a lot more!

Musings on the Restaurant Business

Posted on Friday, Jan 27th 2006

Did you know restaurant services in the US is a $430 Billion per year industry? I didn’t.

Common sense would suggest that good restaurants be placed in high-income areas such as Silicon Valley. Why then does PaloAlto – Menlo Park – Los Altos have so little to offer? After all, the population here eats out a lot, and with the tech-generated wealth in the hands of relatively younger people, the demand is certainly there.

Here are some San Francisco restaurants that I would like to see in the valley:

-Thep Phenom : A wonderful Thai restaurant in the Haight-Ashbury district of the city, on Fillmore Street.
-Chez Nous : A French-Mediterrenean fusion restaurant, also on the Fillmore, but further up North in Pacific Heights.

Of course, given the Stanford student population, some cheaper alternatives could also be great to have around. Pakwan is perhaps the best Pakistani-Indian restaurant in the Bay Area, but is conspicuously absent from the valley. In the cheap-eats category, this would be my pick.

In the last couple of years, a few good additions have happened to the restaurant scene in Palo Alto, Coupa Cafe being a notable and very successful example. We were at a dinner party this week with the owners, Nancy and Jean-Paul, and listened to their plans for a new Coupa Cafe on North Canon Drive in Beverly Hills. These are ambitious entrepreneurs.

Another successful one is Tamarine from The Vung Tau Group. The group’s Vietnamese cuisine blends gained its initial popularity with a loyal following among Vietnamese people. The original Vung Tau restaurant, a twelve-table eatery, opened in 1985 on San Carlos Street in San Jose, Calif. In less than two years, proprietors Nhan Huynh and Anthony Le moved the restaurant to its current location at 535 East Santa Clara Street, and went from serving 32 guests to 150.

The family opened a second Vung Tau restaurant in Milpitas, Calif. in 1996, and four years after that, opened a third Vung Tau in Newark, Calif. Tamarine, the family’s first contemporary Vietnamese restaurant in Palo Alto is run by proprieter Anne Le (the prodigal daughter), and chef Tammy Huynh.

The Le family and the Vung Tau group offer a great example to follow for the likes of Thep Phenom. Chez Nous and Pakwan are both on expansion paths. Pakwan has chosen Fremont as the place to go after the city. Makes sense, because of the density of Indians. They could also go the Tamarine route, and open a classier version in Silicon Valley, rather than the dives they currently have.

And if you have spare capital, and want to buy a promising restaurant concept, all of these have their basic right.

Great food, I mean.

IPO: Tougher

Posted on Thursday, Jan 26th 2006

WSJ article IPO Obstacles Hinder Startups offers a good coverage of how IPOs are becoming tougher for small venture-backed companies.

This raises the question, what should CEOs and early-stage VCs do, once a company has reached $100 M+ in annual sales? (Below this threshhold, it is absolutely undesirable to go public; investor courting, ongoing investor management, Sarbanes-Oaxley compliance related paperwork and massive expenses – being some key distractors …)

In general, by year 5 or year 6 in a company’s history, the Series A investors, the Founders, and the early executive team that is still around – get itchy to extract some liquidity. Today, given the sophistication, the available money, and the level of activity in the Private Equity industry, a late-stage / LBO fund could easily step in and provide the necessary liquidity.

Liquidity, I believe, is no reason to go public prematurely. An enterprise that has built-in scalability should stay private, stay on course, and execute, execute, execute. If, however, the business does NOT have built-in scalability – and most don’t – they should absolutely NEVER go public. They should get acquired, and become part of a larger portfolio.

Last year, 41 start-ups backed by venture-capital investors became publicly traded U.S. companies, down from 67 in 2004 and 250 in the boom year of 1999, according to research firm VentureOne.

I would say, the recent numbers are much closer to what they should be.

After all, how many enterprises really have built-in scalability in their business model?

Most companies simply go public and then struggle, giving smart investors absolutely no reason to touch them, and hence, giving analysts no incentive to cover them!

Rather, a secondary exit market for private placements of a chunk of the company’s shares held by early shareholders – is a far better alternative.