Graeme Thickins on Tech

Reflections & analysis about innovation, technology, startups, investing, healthcare, and more .... with a focus on Minnesota, Land of 10,000 Lakes. Blogging continuously since 2005.

Tag: Silicon Valley

Chris Shipley Speaks: The Real Scoop on Why the DEMO Producer Is Moving On

February 26, 2009 / / 0 Comments

The DEMO conferences have a long, rich history, serving for some 19 years as "The Launchpad for Emerging Technology."  It's a brand like no other in the conference business.  And I can say that as someone who's been reporting on a wide range of technology conferences for more than a decade.  DEMO isn't so much a meeting or event as it is a spirit, a dedication, a community of people who celebrate new ideas and product innovations, and the thrill of building those into companies. (There's a lot more on the DEMO web site, and here's their About page.)

As closely as I follow all things DEMO (and I attend both their flagship U.S. events, spring and fall, every year), I was as shocked as anyone when a press release jumped out at me as I scanned my email inbox around midnight on February 18, saying DEMO was forging a long-term partnership with VentureBeat, and, after 13 years as executive producer, Chris Shipley was passing the torch to VentureBeat's Matt Marshall.

ChrisShipley-DEMOprphoto375w

The next day, I emailed Chris and asked if she'd consent to be interviewed.  I thought the week before DEMO '09 would be a good time (in the lull as we press and bloggers anxiously await the well-guarded list of who will be presenting at the event) to delve into the background behind this startling news announcement, and get Chris' own words on why and how it came about. She was kind enough to agree. I especially wanted to cover this story because a mini-firestorm had erupted in the blogosphere of conjecture and commentary on this news, and I felt a real need to clear the air. So, she and I conducted the following email exchange over the past couple of days. (Just as background, Chris is CEO and founder of her own analyst firm, Guidewire Group, and has been throughout her entire stint as DEMO's executive producer.)

DEMO-08-closingshot375w Tech~Surf~Blog:  Chris, how hard a decision was this to make?  Have you been considering it for some time?  What made this the right time? 

Chris Shipley:  Neither I nor Guidewire Group took this step lightly.  DEMO has been a big part of my career and a key client to Guidewire Group for a long time, and it's difficult to make a big change like this.  At the same time, I've been able to accomplish many of the goals I've set for DEMO, and while there is still a long and rich future ahead of the DEMO brand, Guidewire Group poses new and bigger challenges, challenges that I find very exciting.  Is there ever a "right time" to make a big change?  I'm not sure, but I do know that Guidewire Group's focus — working with young companies as they face significant points of transition — couldn't be more needed than now.   As we put our full attention on our clients, I believe we'll have plenty of opportunity to help companies through this tough economy.

Tech~Surf~Blog:  What did you think of a certain Silicon Valley tech blog that shall remain nameless running a story saying that "DEMO is in trouble"?  And what's been your take on the media interest in general that's resulted in your decision to pass the baton?  

Chris Shipley:  Honestly, I don't think much about it at all.  DEMO isn't in trouble; it's a strong brand that continues to deliver value to its customers.

Your question implies that last summer's market noise drove my decision to step down from DEMO, which is not at all the case.  I'm not leaving DEMO so much as I am going to a new and exciting opportunity.   

You know, there's a lot of "Inside Baseball" in the blogosphere and in Silicon Valley. I've really never been a big participant in those conversations because I don't find them particularly relevant to what I'm trying to do: work with young companies to help them deliver great products to customers who value the relationship with that company.  The vast majority of those customers don't care who launched what gossip about whom.  They care about solving real problems effectively and cost-efficiently.  So, it seems a much better use of my time to listen to the broader market rather than the echo chamber that the Valley can too often be.

Tech~Surf~Blog:  How long have you known your designated successor, Matt Marshall of VentureBeat?  How influential were you in his selection as your successor?  DEMO has stated it plans to delve into "deeper topics."  Will the fact that Matt has a Ph. D. in government mean the event will try to appeal more to policy wonks and academics?  Or what does that portend for the brand, really?

Chris Shipley:  I met Matt as he was founding VentureBeat in 2006, and immediately recognized him as a smart, ethical guy passionate about entrepreneurs and the venture ecosystem.  When I finally made the decision to step down, IDG asked me to help identify my successor and I immediately thought of Matt.  I approached him in the fall and worked closely with both VentureBeat and IDG to make the deal happen.

By "deeper topics," I think Matt's saying that the combination of the live event (DEMO) and the online media property (Venture Beat) creates the opportunity to continue a conversation across the two forums.  The DEMO events cover only about six days a year.  Now, with VentureBeat, DEMO can be a 365-days-a-year community, and that, fundamentally, will allow the conversation to dive deeper into themes and trends.

You know, I don't see Matt as a policy wonk or academician so much as I view him as a thoughtful, hard-working journalist.  I think he'll bring that energy and integrity to the DEMO event, infuse it with his own style and interests, and ultimately make the event his own.  That's what I hope for him, for DEMO, and for the DEMO community.

Tech~Surf~Blog:  How much time will Matt devote to DEMO versus running his own company (which isn't even three years old yet)?  How much time did you personally devote to DEMO versus running your own longstanding firm, Guidewire Group?

Chris Shipley:  Ultimately, that's a question for Matt, so I'll leave it to him to answer.  DEMO is, however, a big job and it is time consuming.  Like every other entrepreneur, I had to get smart about how I spend the limited resource that is my time.  I think I was able to do that reasonably well.  Ultimately, though, I determined that the exciting and energizing work ahead for Guidewire Group is work I want to be dedicated to full time.  And that's what drove the decision to step down from DEMO.

Tech~Surf~Blog: As DEMO's executive producer, it's no secret you travel a lot, worldwide, to meet one-on-one with startups.  Did this demanding travel schedule have anything to do with your decision?  Or did other aspects of doing the same thing for 13 years enter in?

Chris Shipley:  I love the travel because I love meeting entrepreneurs in their business environments, no matter if it's an office in Mountain View or one in Taipei or Madrid or Adelaide.  It's critical, I think, to understanding local market constraints and opportunities.  And it puts Silicon Valley in appropriate perspective.  Guidewire Group has international reach and international clients.  It is, in no small part, what differentiates us from other analyst firms.  So, I don't think the travel demands are going to change very much, and I'm not sure that I'd want them to.

The subtext of the question, really, is "what drove you from DEMO?"  It seems people want the "real story" behind my departure.  The true and remarkably non-salacious answer is "nothing."  DEMO is a great property.  It is a tremendous platform.  And it has been an honor to oversee this event and work with so many passionate entrepreneurs over the last 13 years.  DEMO never got boring, and I am not tired of DEMO, or run down by the travel, or discouraged by competitive or even economic pressure.

I'm not leaving DEMO so much as I am going to a great new challenge: building Guidewire Group into a world-class analyst and advisory firm, focused on early-stage companies that, at times of transition and critical decision, need a fresh perspective to help form and validate their strategies and positions.  Working intensely to help startups succeed.  What could be more fun than that?

Tech~Surf~Blog:  What's your take on the health of the technology startup mindset?  Has it changed with the recession, now increasingly a worldwide one?  Have you observed differences, now or over the years, between U.S. entrepreneurs and those in other countries?  Is there a reason more non-U.S. startups seem to be increasingly pitching at DEMO conferences?

Chris Shipley:  Are you testing my ability to parse a multi-part question? 😉 This is, without question, the deepest recession in the technology market I've experienced in the 25 years I've been covering the industry.  It is affecting every company, not just one over-inflated sector, and it is global in scale.  Without question, the recession will cull the flock. Companies that lack the resources, leadership, and vision to manage through this crisis will go away.  And those that are just a little bit smarter, a little bit faster, a little bit more courageous will win the day.  That's true whether they are in Silicon Valley, the United States, or in any other part of the world.

I used to see a pretty big capabilities gap between U.S. and non-U.S. technology entrepreneurs.  That gap has closed pretty dramatically.  While there are still many cultural and business structural differences that separate U.S. and foreign entrepreneurs, I think I could argue successfully that the barriers that non-U.S. entrepreneurs face are exactly the conquests that make them smarter, more adaptable, and ultimately more successful companies.  Think of it: it's relatively (and I stress "relatively") easy to create a business in an environment that offers all the support and infrastructure an entrepreneur could need. It's a whole lot harder to do that same work without the support systems. So a company that is successful without the support is, arguably, going to be very successful when given the full comfort and care of a nurturing environment like Silicon Valley, even if it is also more competitive.

We consciously went looking for non-U.S. companies to bring to DEMO for exactly that reason.  This is a global market.  Competition can come from anywhere.  Great new ideas aren't bound to Silicon Valley. I've tried to reflect that in the DEMO lineup.

Tech~Surf~Blog:  Please tell us about Guidewire Group.  How many employees do you have?  Who are your clients?  What is your mission?  And what if anything will change about Guidewire Group now that you've stated it will become 100% of your focus, once you transition fully from your role at DEMO after the fall 2009 event?

Chris Shipley:  Guidewire Group is a global analyst firm that works with early-stage companies to effectively build and execute their business strategies. We've identified opportunity in working with young companies at key transition points, to develop and deliver business strategy, monetization plans, and market validation.  Through custom projects, retained analyst services, events such as Innovate!Europe, and Guidewire Studio, our exclusive in-residence program, we're doing the work we love most — helping startups thrive.

We work with a range of clients, both startups and large companies that want to build their relationships with early-stage companies.

We are a small team today, although I suspect that will change a bit over the next year.  We have so many ideas that we want to pursue, and with full focus, time, and passion, I know we'll be able to bring the best of those ideas to life for the benefit of our clients and community.

Tech~Surf~Blog:  Many thanks for taking the time, Chris.  Best of luck in the next, exciting chapter of your career.  And I'll see you at DEMO '09 in Palm Desert.  I'm so looking forward to that opening reception Sunday night…

Chris Shipley:  Thanks, Graeme. I really do appreciate your support. See you in a couple of days.

Photo credits: 1) DEMO PR photo, 2) my own photo as I left DEMO '08, January 30, 2008.

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Angels and VCs Working More Closely? Signs of Hope…

April 8, 2008 / / 0 Comments

In the technology startup world, angels and VCs have at best been seen as different camps, with separate perspectives, and even being at odds with each other many times. One is from Venus, the other’s from Mars. One tends to be a cocky MBA, the other’s an entrepreneur with real operational experience. Armwrestling_2

One pounds spreadsheets all day, the other’s a cowboy. As a minimum, they certainly don’t have a record of working closely together. They can compete for deal flow, they often distrust each another, and it’s frequently heard that angel investments can foul up the chance for later VC rounds because of unrealistic valuations or poor cap structure, or whatever.

There was a time when "venture capital" was synonymous with seed-stage investing. But, with the trend in recent years toward larger and larger funds, some approaching $1 billion, "You don’t have to do much math to realize that such firms are forced to make bigger and bigger investments to generate adequate returns for their limited partners," says Sramana Mitra in her recent column in Forbes: The Real VCs of Silicon Valley. (Mitra is an experienced technology entrepreneur and strategy consultant in Silicon Valley.) An excerpt from the column:

"…if you are an entrepreneur, especially a first-time entrepreneur,
you need to look for the ‘real’ VCs who are willing to take risks and
invest their time in mentoring you, not those big names that the term
venture capital normally conjures."

And who does Mitra say those real VCs are?

"So-called ‘angels.’ While VCs primarily invest other people’s money,
angels invest their own. An entrepreneur working on a fledgling idea
needs investors who not only provide valuable business advice but also
connect the dots to make business development partnerships happen, help
recruit key team members and help move the venture from concept to a
fundable company. Angels tend to have the operational background
necessary to play such a role."

Angels investing is no small phenomenon. One study found that that angels invested $25.6 billion in
2006 in the U.S. in 251,000 mostly early-stage deals (for an average investment of
about $100,000).

In her piece, Mitra seriously questions whether and how the gap created by VCs moving to larger and larger investments is being filled. Her closing line: "In capitalism, gaps generally get spotted and filled. This one–and the entrepreneurs in it–is still waiting."

Clarion Call
Mitra’s point comes early in her column: "we need to create a sort of microequity program for start-ups." It’s getting to be a common refrain; angels are clearly being expected to pick up more of the slack, as VCs leave early-stage investing behind and entrepreneurs get increasingly frustrated. Yet positive things are starting to happen, with more and more sophisticated, managed angel groups forming (or becoming more formalized), all across the country.

Note: this is not just a Silicon Valley phenomenon. That may be the epicenter of the VC industry, and where most of their money is invested, but not so for angel investors. Their is no epicenter. Sure, there are some notable angel groups in the Valley. But the distribution of these groups is much more even across the country. If anything, the Midwest rules. The Angel Capital Association is located in, are you ready? …Kansas. Of the organization’s approximately 150 member groups (see their directory), it’s the Midwest region that has the largest number of such groups (40), by a wide margin. So, yes, it’s fair to say that angel investing is more a heartland thing.

Reactions from Both Sides
Seeing the column in Forbes inspired me to do another blog post on angel investing. (See this category of my blog for lots more I’ve written on the topic; I also did a recent post on the new blog Minnov8.) After reading the Forbes piece, I reached out to three of my contacts whom I thought would have something to say in reaction.  First, from the angel side:

"I really think that linking the angel and VC markets really hurts both models," said Pete Birkeland, CFO of angel network management firm RAIN Source Capital, St. Paul. "The VCs get hammered for not investing early enough, and the angels get hammered for scattershot investing. These are two complementary but distinct activities. They’re both needed to continue to grow companies and innovate. As we run our angel groups, we want to be able to look at opportunities that are early and risky, and invest in those that have a potential for a return.  That return may be 3-5x, and we may be able to live on a seven-year horizon —  that (scenario) wouldn’t even get past a first screen by a VC. We need an ‘angel manifesto’ that breaks us away from VCs, and the mindset that we have to all become VCs.  However, with the view of limited partners and the dollars involved, it’s tough to escape the gravitational pull of the VC model."

And from an individual angel: "Founders, especially those without prior startup experience, need strong advisors, even operational advisors," said Doug Henrich, a former Microsoft executive and angel investor now living in the Twin Cities. "For an angel to be successful, I feel he or she needs to be active in the startup. The money of course is needed, but the experience and counsel are more valuable in successful startups. The experience has to come from somewhere…I wonder how large VCs can make money in the software space these days."  I read that last comment of Henrich’s to mean that, for software startups, angel investors are naturally a better fit — that such firms need the type of mentoring that comes from angels in their early stages. In other words, VCs’ big money isn’t the answer; it doesn’t tend to produce the desired result.

One Big Sign of Hope
From the VC side, I very much wanted to get a comment from a firm I know well — one that started in Minneapolis, still has close ties here, but has been headquartered in Palo Alto for several years: Crescendo Ventures. Davidspreng
David Spreng is the Managing General Partner of the firm, and has been on the board of the NVCA (National Venture Capital Association) since 2005. He recently launched a great blog called "Lightbulb," and here’s his About page there. But the most interesting thing is that David was recently tapped by the NVCA board to be the organization’s liaison to the angel community. That, to me, is very cool — a sure sign the two sides will be coming closer together in the future.

David was jumping on a plane when he I caught him, but pointed me to a recent blog post of his titled Angels and VCs Find Common Ground. In it, he reprints an article he co-wrote a couple of months ago with a board member of the Angel Capital Association. I had heard wind of this article before, and told him I bet I could get some good insights of his from it. I was right. I encourage you to read the full article, but here’s an excerpt:

While both angel groups and VCs have issues to improve in our relationships and processes, establishing strong relationships with quality angel groups can be extremely valuable to a venture firm’s deal flow and ultimate returns.

At $250,000 to $1 million, the average size round for an angel group is often below what most venture capitalists would consider investing in a Series A round. However, respected angel groups may well have the next generation of promising early stage companies that a venture capitalist is not ready to invest in but also doesn’t want to lose track of.

The ACA and the NVCA are both committed to working together to improve the relationships between angel groups and venture capitalists by sharing best practices and enhancing communications between the two associations.

Transitions from angel groups to venture capitalists should be seamless and considered a valued relationship for all the stakeholders, including entrepreneurs, co-investors and limited partners.

As I said, signs of hope. And it can all only be good for you entrepreneurs out there.

UPDATE (4/11/08): Well, maybe not as much hope as I thought. Just saw Sramana Mitra’s new column this morning in Forbes:  Fund Envy: Venture funds are getting bigger all the time. This is bad news for aspiring entrepreneurs. Yes, she says, taking a poke at the name of a well-known VC’s blog, "Greed, indeed, is infectious."

 

Time for “Life 3.0” in the Valley?

May 23, 2007 / / 2 Comments

Back in late 2002, in the doldrum years after the Tech Crash, my friend Rich Karlgaard (the Publisher of FORBES) became compelled to start writing a book about a phenomenon he’d been observing in Silicon Valley. People were leaving in droves — entrepreneurs and other business people, tech workers of every stripe. Good people, successful people, and so many of them disallusioned. Life20cover They’d had it with the expensive living and the rat race up and down the 101, and they were determined to find a better life elsewhere. It’s a great book — called “Life 2.0” — and it’s on my recommended reading list in the right sidebar. He came to Minnesota to interview me when he first began writing it.

Well, hold on, but another book could be in the offing here, from somebody, based on what we read yesterday from two leading Valley-based technology bloggers. First, Michael Arrington launched this bomb on Tech Crunch: Silicon Valley Could Use A Downturn Right About Now…the most telling sentence of which was this: “Times are good, money is flowing, and Silicon Valley sucks.” Here’s another excerpt, his concluding paragraph:

I left Silicon Valley at the peak of the insanity last time around, and I was pleasantly surprised when I returned in 2005 to see so much goodwill and community surrounding innovation. Now, it’s just like the old days again, and Silicon Valley is no longer any fun. In fact, it’s turned downright nasty. It may be time for some of us to leave for a while and watch the craziness from the outside again. In a few years, things will be beautiful again. The big money will be slumbering away, and the marketing departments will be a distant memory. We can focus, once again, on the technology. And the burgers and beer.

The post had 210 comments(!) at last count, so it’s obviously hitting a nerve. But, as if that wasn’t enough, Robert Scoble then chimes in essentially seconding the motion. I like Robert — he’s one of the nicest, most likeable, down-to-earth guys you will ever meet in this business. (And his wife, Maryam, is a real sweetheart, too.) So, when Robert talks, I listen. I respect what he says. Well, yesterday, he further enlightened all us unwashed masses of Valley outsiders with what it’s really like to be an insider there these days. And it does not sound particularly pleasant. His post was titled Why I’m in a malaise…, and here’s an excerpt:

I too look wistfully back at the days when we had almost the entire Social Software industry in one little coffee shop back in 2002 — none of whom were talking about making billions of dollars. Back then it was more like the Homebrew Computer Society, where geeks came to show off their stuff (and everyone was pretty much not getting paid anyway so of course we were doing it just for the love of it).

It seems to me that both Robert and Michael are tired of the grind — the relentless parade of me-too companies and legions of PR people and VCs trying to get their attention, and the hellish treadmill they’re on producing content day after day, night after night. You can only do that for so long before you get burned out — and it seems both of them have reached that point.

Then again, who knows, maybe they just need a vacation? What I do know is that I wouldn’t want either of their jobs. Sure, I’m a blogger, but these guys are hardly your typical bloggers anymore. They’re both part of serious, money-making publishing businesses (Robert also being a VP at PodTech), and both inextricably caught up in the big-money world of tech VC. Now it seems they’re both wondering, “Is this all there is?” And it begs the question: is this crazy Web 2.0 startup world getting closer and closer to a bubble burst?

Makes me glad I live in Minnesota, where things are a great deal more sane. And I know Rich Karlgaard would be the first to agree with me.

UPDATE: To add book link.

Dan Gillmor on Silicon Valley’s Declining Image

October 12, 2006 / / 0 Comments

Speaking of the options-backdating debacle, Dan Gillmor wrote an incisive piece recently in PR Week, where he has a regular column. I met Dan several years ago at an O’Reilly conference, and I have much respect for the man. Few journalists have a better perspective on the Valley than he does, after so many years covering the tech beat for the Merc News. His latest PR Week column was entitled Silicon Valley’s image troubles run a lot deeper than just PR. Since that link is behind a paywall for most of you, let me provide some excerpts:

Like most others in Silicon Valley, I’ve watched Hewlett-Packard’s slow-motion train wreck – its unethical and probably illegal anti-leak spying program – with awe….

The current management is trying hard to spin its misbehavior into something that will let the company go back to business as usual. Good luck.

HP’s woes have shifted focus away from another corporate ethical debacle, namely the stock options scandal. That, you’ll recall, involves corporate chieftains and their obedient (or incompetent) directors, who’ve abused shareholders to further enrich the executives.

As a Silicon Valley resident, I’m sorry to say these affairs have the Valley and its longstanding arrogance in common. The 1990s stock bubble and its predations were bad enough. The latest news has made things worse…

Then he goes on to cite a metric that reminds us we’ve hardly heard the end of this saga….

…when the Valley’s most venerable big company gets caught running a sleazy spying operation, and when roughly half of the companies known to be under investigation for stock options shenanigans are in the tech business, you can’t just ignore reality…

He also mentions the troubles of a man who was previously one of the most renowned, iconish names in the Valley — top tech-industry lawyer Larry Sonsini:

….Sonsini’s role in the Valley’s dual debacles may be the most intriguing. As outside counsel for HP, he offered advice – not to worry, we’re doing nothing illegal, he effectively told the board as its spying operation neared public disclosure – that met a low standard indeed: What’s acceptable is what you can get away with, not what’s right.

Sonsini’s firm has also represented many of the tech companies under investigation in the options matter. No big surprise, given that the firm has been the Valley’s most influential and powerful for years, but it does raise more questions. Handling PR for Sonsini and his colleagues right now must be nightmarish, too.

In his closing, though, Gillmor succinctly lays out the real challenge for the tech establishment:

No doubt, the Valley’s image will recover eventually. But making that happen will require some honest introspection in executive suites and boardrooms, not just clever PR. How likely is that?

Makes one think of the company motto adopted not long ago by a certain new tech leader (whose name starts with “G”). Maybe that motto — “Don’t Be Evil” — wasn’t just window dressing? Maybe these kids had a deeper knowledge and insight about Valley culture than we realized….

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