Memo to the world from Silicon Valley legend and power-VC Marc Andreessen: “I think that this is more of the theme that software is going to be eating all other industries.”

More like chomping through them with renewed gusto, with the announcement today that his venture firm, Andreessen Horowitz, has raised a huge new $1.5 billion fund to continue to fund “extending our capabilities to more disruptors,” according to Andreessen’s longtime partner Ben Horowitz.

And by capabilities, the pair means handing from $10,000 to $100 million to Internet entrepreneurs in all kinds of arenas — such as its previous investments in Airbnb, Pinterest and a plethora of others — from its new third fund.

This large amount brings Andreessen Horowitz’s total in just three years to $2.7 billion, which Andreessen said took about the same amount of time to raise as the previous one. The new fund is made up of largely the same limited partners.

“It is almost double, but it sets us up well,” said Andreessen, who said the LPs urged them to raise more. “Our first fund was, as it turns out, undersized in terms of the growth opportunity we found.”

The interest from the firms’ LPs aligned, said Horowitz, noting that he thinks their interest was because investors are becoming more selective about firms.

“I think a lot of LPs have begun to think that there are too many VCs not worth investing in,” he said. “Many of them want to then invest in what they consider the best, and if they can’t get in, to not invest at all.”

To be able to give them the kind of returns those investors are expecting, Andreessen said that the investments — which will still be pretty much limited to the Internet arena and in California — will be stepped up to keep the rate of innovation going.

“The opportunities continue to be very, very good, and we find that that continues to be true,” he said. “And there is a big supply of money, and that’s very good from a company standpoint.”

What Andreessen and Horowitz said they will do to continue to differentiate themselves will be to keep on focusing on backing founder/CEOs over all.

“We have a lot of respect for our peers, but we have a different philosophy,” said Horowitz. “The majority of the companies we fund will be run by their founders.”

Andreessen said that philosophy is a bit of a throwback.

“It’s kind of like venture capitalists were in the ’60s and ’70s, in a way,” he said. “We are operators who back operators.”

Man, have you ever really wondered
Like why are we here? What the meanin’ to all of this?
– OutKast, “Church”

Since Marc and I founded Andreessen Horowitz three years ago, we have raised $2.7 billion. That statement begs a few questions. The two most obvious are:

• Why did such a new venture capital firm raise so much money?
• How did such a new venture capital firm raise so much money?

To get to the answers, it’s useful to go back to the original motivation for starting Andreessen Horowitz.

After raising our first round of funding for Loudcloud in 1999, we went to visit our new venture capital firm and meet their full team. As founding CEO, I remember being quite excited to meet our financial backers and talk about how we could partner to build a great company. That excitement took a sharp downhill turn when one of the top partners said to me, in front of my co-founders, “When are you going to get a real CEO?”

I was completely stunned — the comment knocked the wind out of me. Our largest investor had basically called me a fake CEO in front of my team. I said, “What do you mean?” — hoping he would revise his statement and enable me to save face. Instead he pressed on: “Someone who has designed a large organization, someone who knows great senior executives and brings prebuilt customer relationships, someone who knows what they are doing.”

I could hardly breathe. It was bad enough that he undermined my standing as CEO, but to make matters worse, I knew that at some level he was right. I didn’t have those skills. I had never done those things. And I did not know those people. I was the founding CEO, not a professional CEO. I could almost hear the clock ticking in the background as my time running the company quickly ran out.

Could I learn the job and build my network fast enough, or would I lose the company? That question tortured me for months.

In the years that followed, I remained CEO, for better or worse. I worked incredibly hard to close the gap between what the partner had described and where I was at the start. Thanks to a lot of effort and help from friends and mentors, especially Bill Campbell, the company survived and ultimately became quite successful and valuable.

However, not a day went by when I didn’t think about that interaction. I always wondered how long I had to grow up, and how I could find help to build my skills and make the necessary connections along the way.

Marc and I discussed this often. We wondered aloud why, as founders, we had to prove to our investors beyond a shadow of a doubt that we could run the company, rather than our investors assuming that we would run the company we’d created. This conversation ultimately became the inspiration for Andreessen Horowitz.

Marc and I share a simple belief that became the basis for our new venture capital firm: In general, founding CEOs perform better than professional CEOs over the long term, and a venture capital firm that enables founding CEOs to succeed would help build the best companies and yield superior investment returns.

As we set out to design a venture capital firm that would enable founders to run their own companies, we began by asking: In what ways are professional CEOs superior to founder CEOs?

Professional CEOs bring two core advantages to the table:

• Superior skill set — Being CEO requires vast know-how that is very difficult to gain without extensive experience actually being CEO. Founders with no CEO experience naturally make many critical mistakes during their “on the job training” period. Excellent professional CEOs already have those skills.
• Superior network — Great professional CEOs know lots of outstanding executives and employees. They also know key reporters and analysts, important potential customers and top industry players. Founders tend not to have enough industry experience to know all these people, and need to build their networks almost from scratch.

Next, we asked: How might a venture capital firm help close those gaps?

Addressing the skill-set issue proved to be difficult because, sadly, the only way to learn how to be a CEO is to be a CEO. Sure, we might try to teach some skills, but I know from experience that learning to be a CEO through classroom training would be like learning to be an NFL quarterback through classroom training. Even if Peyton Manning and Tom Brady were your instructors, with no experience, you’d get killed the moment you took the field.

We decided that while we would not be able to give a founder CEO all the skills she needed, we would be able to provide the kind of mentorship that would accelerate the learning process. As a result, our first requirement for General Partners is to be an effective mentor for a founder striving to be a CEO. This is why so many of our General Partners are former founders or CEOs or both, and they are all highly focused on helping founders become outstanding CEOs.

Of course, not all founders want to be CEO — there are companies for which the right thing is to bring in a professional CEO. For those companies, we focus on helping the founders identify the right CEO, and then helping the CEO successfully integrate into the company and partner with the founders to retain their unique strengths.

Next, we went after the network.

Existing venture capitalists with whom we had worked had important industry relationships, but we found them to be lacking in the following ways:

• Siloed — As an entrepreneur, you can often count on the General Partner on your board to introduce you to customers or executives, but you can’t count on the venture capital firm itself. Each General Partner has his own distinct network, and it’s not really feasible or practical to access the other partners’ networks because those partners prioritize their own companies, and in practice you will never see them — they are not available to help you. So, there is no firm-wide network you can plug into.
• Hard to access — As CEO, it’s always a bit weird to say to your VC, “Please introduce me to some potential customers.” First, it seems like an inconvenience — VCs are clearly busy people, with many other things to do. Second, there isn’t any easy process to execute that introduction. Where will this introduction take place? Will the VC set up the meeting? Will you have to fly out to see the prospect? Will the VC come with you? Will the prospect be qualified well enough to do that? If not, then should you even ask? To make matters worse, the need to meet customers is not a one-time event. How do you ask your VC the second, third and tenth times? And at what point does your VC start to judge you as incapable of reaching customers (or partners, distributors, suppliers, investors or acquirers) on your own?
• Incomplete — Finally, VC networks tend to be incomplete. A certain General Partner might know a certain type of customer, like telecom carriers; but not others, like pharmaceutical companies or government agencies. They may know customers, but not have deep relationships with key reporters. They may know key reporters, but not know executives you would want to hire. They might know executives, but not engineers. As founding CEO, one tends to be busy. If you spend time trying to tap a network and come up empty, you probably won’t bother trying again.

To address these issues, we designed Andreessen Horowitz’s network to be firm-wide, dead simple to access, and comprehensive — supported by operating partners who work full-time to develop and manage each branch of the network.

This approach has already lead to some stunning results:

• In 2011, we hosted over 600 portfolio presentations to corporate customers and partners at our office in Menlo Park. These presentations resulted in more than 3,000 introductions between portfolio companies and prospective Fortune 500/Global 2000 senior executives.
• We’ve built relationships with over 4,000 engineers, designers and product managers, and we’ve made more than 1,300 introductions to our portfolio companies, resulting in 130 hires within the portfolio.
• We added over 550 executives to our network in 2011, and made more than 300 executive introductions to our portfolio companies.
• We’ve had nearly 400 interactions with media on behalf of our portfolio companies.

Through these practices, we’ve been able to help founders develop critical CEO skills and wield networks as broad and powerful as the best professional CEOs. And that is why we have become a popular firm among founders.

Our reputation with founders has then enabled us to invest in great entrepreneurs building the great new technology companies. Interestingly, the demand from entrepreneurs has come in all stages and sizes. From seed-stage entrepreneurs like JR Rivers at Cumulus Networks, to entrepreneurs with fast-growing enterprises like Brian Chesky at Airbnb, great founders everywhere want to be the best CEO that they can be, and work with us to help them do that.

And that’s both how and why we raised $2.7 billion. We are uniquely positioned to help the greatest technology entrepreneurs in the world build the best technology companies in the world, and that’s just what we’re going to do.

How green is Silicon Valley? Very, it seems.

As expected, and as has been widely reported (including here), Andreessen Horowitz finally announced its latest venture fund, raising $1.5 billion for venture investments. The huge amount is the Silicon Valley firm’s third.

Its investments in its previous two funds have included such high-profile start-ups as Airbnb and Pinterest.

Here’s the official press release:

Andreessen Horowitz Announces $1.5 Billion Fund III
Continues Focus on Helping Great Entrepreneurs Build Great Companies

MENLO PARK, Calif., Jan 31, 2012 (BUSINESS WIRE) – Andreessen Horowitz ( www.a16z.com ) today announced that it has raised $1.5 billion for its Fund III, continuing its mission of helping great entrepreneurs build great companies.

“a16z’s Fund III is all about extending our capabilities to more disruptors and pioneers,” said Co-founder and General Partner Ben Horowitz. “We’re remaking the modern venture capital firm, and entrepreneurs are responding to our unique approach.”

a16z has raised $2.7 billion since its founding in June 2009 and currently has a portfolio of 90 consumer and enterprise technology companies across all stages, including Airbnb, Box, Fab, Facebook, Foursquare, GoodData, Lookout, Lytro, Magnet Systems, Nicira, Pinterest, Silver Tail Systems, Tidemark and Zynga.

“Software is the catalyst that will remake entire industries during the next decade. We are single-mindedly focused on partnering with the best innovators pursuing the biggest markets,” said Co-founder and General Partner Marc Andreessen.

a16z provides entrepreneurs with direct access to six general partners — Jeff Jordan, Peter Levine, John O’Farrell, Scott Weiss, plus Horowitz and Andreessen — all of whom are experienced operators and company builders. a16z also enables entrepreneurs to utilize expertise from operating partners who specialize in business development, technical talent, executive talent, market intelligence, and marketing and brand building, plus the economics expertise of Special Advisor Larry Summers.

Fund III is available to be deployed immediately. Further detail about the firm’s new fund is available on Ben Horowitz’s blog: www.bhorowitz.com.

When you base your life on credit
and your loving days are done
checks you signed with love and kisses
later come back signed insufficient funds.
– Funkadelic

Thanks to Ward Cunningham, the metaphor “technical debt” is now a well-understood concept. While you may be able to borrow time by writing quick and dirty code, you will eventually have to pay it back — with interest. Often this trade-off makes sense, but you will run into serious trouble if you fail to keep the trade-off in the front of your mind.

There also exists a less well-understood parallel concept, which I will call management debt.

Like technical debt, management debt is incurred when you make an expedient, short-term management decision with an expensive, long-term consequence. Also like technical debt, the trade-off sometimes makes sense, but often does not. More importantly, if you incur the management debt without accounting for it, then you will eventually go management bankrupt.

Like technical debt, management debt comes in too many different forms to elaborate entirely, but a few salient examples will help explain the concept. For this post, I chose three of the more popular types among start-ups:

• Putting two in the box
• Overcompensating a key employee because she gets another job offer
• No performance management or employee feedback process

Putting two in the box
What do you do when you have two outstanding employees who logically both fit in the exact same place on the organizational chart? Perhaps you have a world-class architect who is running engineering, but she does not have the experience to scale the organization to the next level. You also have an outstanding operational person who is not great technically. You want to keep both in the company, but you only have one position. So, you get the bright idea to put “two in the box” and take on a little management debt. The short-term benefits are clear: a) you keep both employees, b) you don’t have to develop either because they will theoretically help each other develop and c) you instantly close the skill set gap. Unfortunately, you will pay for those benefits at a very high rate of interest.

For starters, by doing this you will make every engineer’s job more difficult. If an engineer needs a decision made, which boss should she go to? If that boss decides, will the other boss be able to override it? If it’s a complex decision that requires a meeting, does she have to schedule both heads of engineering for the meeting? Who sets the direction for the organization? Will the direction actually get set if doing so requires a series of meetings?

In addition, you have removed all accountability. If schedules slip, who is accountable? If engineering throughput becomes uncompetitive, who is responsible? If the operational head is responsible for the schedule slip and the technical head is responsible for throughput, what happens if the operational head thrashes the engineers to make the schedule and kills throughput? How would you know that she did that? The really expensive part about both of these things is that they tend to get worse over time. In the very short term, you might mitigate these effects with extra meetings or by attempting to carve up the job in a clear way. However, as things get busy the mitigation will fade and the organization will degenerate. Eventually, you’ll either make a lump sum payment by making the hard decision and putting one in the box or your engineering organization will suck forever.

Overcompensating a key employee because she gets another job offer
An excellent engineer decides to leave the company because she gets a better offer. For various reasons, you were undercompensating her, but the offer from the other company pays more than any engineer in your company, and the employee in question is not your best engineer. Still, she is working on a critical project and you cannot afford to lose her. So you match the offer. You save the project, but you pile on the debt.

Here’s how the payment will come due. You probably think that your counteroffer was confidential because you’d sworn her to secrecy. Let me explain why it was not. She has friends in the company. When she got the offer from the other company, she consulted with her friends. One of her best friends advised her to take the offer. When she decided to stay, she had to explain to him why she disregarded his advice or lose personal credibility. So she told him and swore him to secrecy. He agreed to honor the secret, but was incensed that she had to threaten to quit in order to get a proper raise. Furthermore, he was furious that you overcompensated her. So, he told the story, but kept her name confidential to preserve the secret. And now everyone in engineering knows that the best way to get a raise is to generate an offer from another company then threaten to quit. It’s going to take awhile to pay off that debt.

No performance management or employee feedback process
Your company is now 25 people and you know that you should formalize the performance management process, but you don’t want to pay the price. You worry that doing so will make it feel like a “big company.” Plus, you do not want your employees to be offended by the feedback, because you can’t afford to lose anyone right now. And people are happy, so why rock the boat? Why not take on a little management debt?

The first noticeable payments will be due when somebody performs below expectations:

CEO: “He was good when we hired him, what happened?”
Manager: “He’s not doing the things that we need him to do.”
CEO: “Did we clearly tell him that?”
Manager: “Maybe not clearly …”

However, the larger payment will be a silent tax. Companies execute well when everybody is on the same page and everybody is constantly improving. In a vacuum of feedback, there is almost no chance that your company will perform optimally across either dimension. Directions with no corrections will seem fuzzy and obtuse. People rarely improve weaknesses that they are unaware of. The ultimate price you will pay for not giving feedback: systematically crappy company performance.

In the end
Every really good, really experienced CEO I know shares one important characteristic: they tend to opt for the hard answer to organizational issues. Faced with giving everyone the same bonus to make things easy or sharply rewarding performance and ruffling many feathers, they’ll ruffle the feathers. Given the choice of cutting a popular project today because it’s not in the long-term plans or keeping it around for morale purposes and to appear consistent, they’ll cut it today. Why? Because they’ve paid the price of management debt and they would rather not do it again.

Special thanks to my friend Joanne Bradford who came up with the idea for this post and coined the term “management debt.”

As bidders ready their offers for all or parts of Yahoo this week, a lot of the eyes for one of the more aggressive ones will likely be on well-known Silicon Valley entrepreneur and powerful VC Marc Andreessen.

That’s because he’s deciding whether or not to play a significant role — as a key board member and even possibly as chairman — in an effort by private equity firm Silver Lake to buy part of the troubled Internet giant and attempt a dramatic reversal of its waning fortunes.

Andreessen, who now runs the Andreessen Horowitz venture firm with Ben Horowitz, has visited Yahoo execs, as I reported last week, part of a weighing of whether to deeply enmesh himself in turning around the iconic Web property.

He has been, as was also reported several months ago, allied with Silver Lake on a Yahoo effort since September and worked with the firm on its purchase and then sale of Internet communications service Skype.

For Andreessen — who serves on the board of Hewlett-Packard and has a lot on his plate running a major venture firm with investments at key companies throughout the tech sector — the decision to join with Silver Lake is a tough one, given that the possibility of failure is not unheard of.

“The question is whether Yahoo can be a growth company again,” said one person close to the situation. “And that is still unclear.”

In meetings with Yahoo execs, several sources noted that Andreessen was unusually blunt about the problems Yahoo faces and its mistakes in the past. They noted as well his reticence over the amount of work required to make a difference.

“He seemed very negative on the idea of whether anyone had what it took to turn it around,” said one exec.

Another factor: Possible friction with Yahoo co-founder and Andreessen friend Jerry Yang. The pair have discussed the issue on friendly terms. “Marc would not do this without Jerry being okay with it,” said one source.

That’s because observers expect the entrance of the Netscape co-founder — who has enormous clout with engineering talent across Silicon Valley, which Yahoo dearly needs — to overshadow and even minimize Yang’s involvement.

One thing is clear: Major shareholders, who are wary of any deal that would keep the current regime in place at Yahoo, told me in multiple interviews last week that the only way they would accept a partial investment by a private equity firm — called a PIPE — would be if there was new leadership in any deal.

And the first name mentioned by almost every Yahoo investor as a key get? Marc Andreessen.

Andreessen declined to comment on any of the 53 emails I sent him asking to.

Best-run company in technology. … (Mark Zuckerberg) is probably the best new CEO that I’ve seen. He is incredibly thoughtful about how he has constructed that company.

– Venture capitalist Ben Horowitz at the Web 2.0 Summit

“Better check yo self before you wreck yo self”
– Ice Cube

Everyone in the technology industry seems to agree that people are paramount, yet nobody seems to be on the same page about what the people organization — Human Resources — should look like.

The problem is that when it comes to HR, most CEOs don’t really know what they want. In theory, they want a well-managed company with a great culture. They know instinctively that an HR organization probably can’t deliver that. As a result, CEOs usually punt on the issue and implement something that’s suboptimal, if not worthless.

Interestingly, one of the first things that you learn when you run an engineering organization is that a good Quality Assurance department cannot build a high-quality product, but it can tell you when the development team builds a low-quality product. Similarly, a high-quality Human Resources organization cannot make you a well-managed company with a great culture, but it can tell you when you and your managers are not getting the job done.

The employee life cycle
The best way to approach management quality assurance is through the lens of the employee life cycle. From hire to retire, how good is your company? Is your management team world-class in all phases? How do you know?

A great HR organization will support, measure and help improve your management team. Some of the questions that they will help you answer:

Recruiting and hiring

• Do you understand the skills and talents required to succeed in every open position?
• Are your interviewers well-prepared?
• Do your managers and employees do an effective job of selling your company to prospective employees?
• Do interviewers arrive on time?
• Do managers and recruiters follow up with candidates in a timely fashion?
• Do you compete effectively for talent against the best companies?

Compensation

• Do your benefits make sense for your company demographics?
• How do your salary and stock option packages compare to the companies that you compete with for talent?
• How well do your performance rankings correspond to your compensation practices?

Training and integration

• When you hire an employee, how long does it take them to become productive from the perspective of the employee, her peers and her manager?
• Shortly after joining, how well does an employee understand what’s expected of her?

Performance management

• Do your managers give consistent, clear feedback to their employees?
• What is the quality of your company’s written performance reviews?
• Did all of your employees receive their reviews on time?
• Do you effectively manage out poor performers?

Motivation

• Are your employees excited to come to work?
• Do your employees believe in the mission of the company?
• Do they enjoy coming to work every day?
• Do you have any employees who are actively disengaged?
• Do your employees clearly understand what’s expected of them?
• Do employees stay a long time or do they quit faster than normal?
• Why do employees quit?

Requirements to be great at running HR
What kind of person should you look for to comprehensively and continuously understand the quality of your management team? Here are some key requirements:

• World-class process design skills: Much like the head of quality assurance, the head of HR must be a masterful process designer. One key to accurately measuring critical management processes is excellent process design and control.
• A true diplomat: Nobody likes a tattletale, and there’s no way for an HR organization to be effective if the management team doesn’t implicitly trust it. Managers must believe that HR is there to help them improve rather than police them. Great HR leaders genuinely want to help the managers and could not care less about getting credit for identifying problems. They will work directly with the managers to get quality up, and only escalate to the CEO when necessary. If an HR leader hoards knowledge, makes power plays or plays politics, he will be useless.
• Industry knowledge: Compensation, benefits, best recruiting practices, etc., are all fast-moving targets. The head of HR must be deeply networked in the industry and stay abreast of all the latest developments.
• Intellectual heft to be the CEO’s trusted advisor: None of the other skills matter if the CEO does not fully back the head of HR in holding the managers to a high standard of quality. In order for this to happen, the CEO must trust the HR leader’s thinking and judgment.
• Understanding of things unspoken: When management quality starts to break down in a company, nobody says anything about it, but super-perceptive people can tell that the company is slipping. You need one of those.

Acknowledgement
I would like to give a very special thanks to my head of Human Resources, Shannon Callahan, who taught me everything that I know about this subject.

A range of major players interested in acquiring all or a large piece of Yahoo have been prepping possible bids and have been in touch with the Internet giant’s board over the last several days.

While Yahoo has publicly said it was not for sale, according to numerous sources both inside and outside the company, it has been receptive to the interest and its Chairman Roy Bostock and Co-founder Jerry Yang have spoken to several.

Among the possible players: Silicon Valley venture firm Andreessen Horowitz, which is working with private equity firm Silver Lake, in a deal that also might include Russia’s DST Global and Yahoo’s Japanese partner Masa Son; former News Corp. exec Peter Chernin, who is partnered with Providence Equity Partners; and the possibility that Yahoo’s Chinese partner, Alibaba Group, might consider entering the fray in what could be a reverse merger of sorts.

Also being rung up by some of the parties: Microsoft — Yahoo’s advertising and search partner — which is being seen as a possibly moneybags in any deal.

The movement among these investors is against a backdrop of increasing pressure for Yahoo’s board, after it fired CEO Carol Bartz last week. In the wake of the dramatic move, shareholders have upped criticism of Bostock and the board and have been looking hard for alternatives.

Today, that included hedge fund investor Daniel Loeb of Third Point, which has a 5.1 percent stake in Yahoo. In a filing this morning, he said he might increase that amount, and described a testy hour-long phone call he had earlier this week with Bostock that ended abruptly with a hang-up from Yahoo.

Sources said Loeb called Bostock a “fool,” among other not-so-nice names, on the call and asked for Yang’s help in dumping him.

This comes as exactly no surprise, given his previously strong letter in which Loeb called for Bostock’s ouster.

Loeb has been calling out Bostock — who is also on the boards of Morgan Stanley and Delta Airlines — for a series of gaffes at Yahoo since he became chairman in 2008 (he’s been on the board since 2003).

Those have included: Yahoo’s bungled effort to stave off a takeover by Microsoft several years ago; the too-long enthusiasm for Bartz, who was hired in early 2009 and fired last week; sitting unusually still as competitors such as Facebook, Google and more have out-innovated and outgrown Yahoo; and, of course, the falling knife of a stock, which has dropped precipitously since Bostock has been in charge of the board.

As Loeb wrote in a letter he sent to the company last week:

“It is time that certain members of this Board were held accountable for its past failures and their individual roles. Accordingly, we insist that Mr. Bostock, who championed Ms. Bartz’s hiring and led the charge against the Microsoft deal, promptly resign from the Board.”

Loeb is likely to add to that later today at a high-profile investor conference in New York, where the colorful but tough-talking investor is sure to add more logs to the fire.

But it not only him. Other major shareholders of Yahoo are also in touch with possible outside buyers, seeking a change at the long-troubled company, after its shares have remained in the doldrums, its attrition rate of employees has spiked and its product pipeline has slowed to drip.

This has all been taking place — of course — during one of tech biggest and most innovative booms, in which Yahoo competitors have grown strongly.

Enter Marc Andreessen, the well-known entrepreneur who has transformed himself into one of Silicon Valley’s most powerful venture capitalists.

He and his partner Ben Horowitz recently pulled off another similar deal — with Silver Lake — to take control of a then-troubled Skype. They later flipped it to Microsoft for a large return.

Sources familiar with the situation said the pair have become increasingly intrigued by the situation at Yahoo and believe that its assets and brand are still strong, despite its management turmoil in recent years.

One problem is the huge cost of almost any kind of takeover and also the complexity, given much of Yahoo’s $18.5 billion valuation is due to its Asian assets.

The sale of those shares, as well as the selling off of some of Yahoo’s less core properties, makes for a very complicated situation for anyone.

Said one person looking at the company: “It is one of the more massive hairballs around.”

That is a common sentiment among many of those looking at Yahoo, which has hired Allen & Co. to manage the process.

Also of worry is a bid that would include too many players. Yahoo has long been plagued by indecisiveness on the part of its execs and, mostly, its board.

But one thing all the possible buyers of Yahoo, as well as an increasing number of its shareholders, agree on: The Yahoo board needs a major shake-up.

As Loeb wrote last week, which many I interviewed also echoed:

“This letter details our principled demands for sweeping changes in both the Board of Directors (the “Board”) and Company leadership, and outlines the hidden value of Yahoo, which has been severely damaged — but not irreparably — by poor management and governance.”

Vanity Fair magazine put out its high-profile “New Establishment” list of the top 50 people, who are “an innovative new breed of buccaneering visionaries, engineering prodigies, and entrepreneurs, who quite often sport hoodies, floppy hair, and backpacks.”

The hoodie part would be referring to Facebook CEO and co-founder Mark Zuckerberg, who topped the list — which is in the just-released October issue — for the second year in a row.

The Vanity Fair list was packed with Silicon Valley luminaries.

The No. 2 spot went to the hopelessly conjoined twins at Google, CEO Larry Page and his co-founder Sergey Brin. Amazon’s Jeff Bezos was No. 3, followed by newly born CEO Tim Cook and top product guy Jonathan Ive of Apple at No. 4, with Twitter creator and Square founder Jack Dorsey at No. 5.

Interestingly, super-VCs Mark Andreessen and Ben Horowitz clocked in this year at No. 6.

The digitally fast-forward Lady Gaga was the top woman on the list at No. 9, in front of “Harry Potter” author J. K. Rowling at No. 16.

And, clocking in at No. 40? Why, me and my partner-in-crime at AllThingsD, Walt Mossberg. He is apparently a “kingmaker” of tech and I do “juicy exclusives.”

That actually is pretty accurate. More importantly, we were ranked higher than Justin Timberlake and Ashton Kutcher. In other words: Mission accomplished!

We also beat the Angry Birds dudes at No. 49, whom my two kids would nonetheless have voted tops over their mom any day of the week and twice on Sunday.

In addition, Vanity Fair broke off a list of 25 “Powers That Be,” which is made up of a lot of longtime “New Establishment” folks, as well as another list called the “Hall of Fame.”

“These are the people who have shaped the world we live in today — and continue to wield enormous influence,” said Vanity Fair, which translates into dustier moguls.

Topping the powers-that-be, of course, is Apple’s co-founder and Chairman Steve Jobs. And outgone Google CEO and now Executive Chairman Eric Schmidt is now enshrined in the hall of fame.

As Walt and I head to a good table at the Minetta Tavern to meet the cool peeps for a celebratory drink, here is the official press releases from Vanity Fair:

FACEBOOK FOUNDER MARK ZUCKERBERG TOPS VANITY FAIR’S NEW ESTABLISHMENT LIST FOR THE SECOND YEAR IN A ROW

Sergey Brin and Larry Page Take No. 2 Spot, Lady Gaga Jumps to the Top 10 of Tech-Dominant List

NEW YORK, N.Y. — “The Age of Information gives way to a burgeoning Age of Technology,” announces Graydon Carter, remarking on the “seismic shift in interest and influence” that has occurred in the 17 years that Vanity Fair has been ranking America’s power players. The magazine’s 2011 New Establishment list identifies the top 50 of an innovative new breed of buccaneering visionaries, engineering prodigies, and entrepreneurs, who quite often sport hoodies, floppy hair, and backpacks.

Mark Zuckerberg, founder of the inescapable social-networking site Facebook, maintains his perch at the top of Vanity Fair’s 17th annual New Establishment List ranking for the second year in a row. With a possible I.P.O. on the horizon by 2012, which could value the company anywhere between $50 and $100 billion, Facebook has enough clout to worry even the unshakable Google. Zuckerberg is still the youngest person ever to top the list.

Sergey Brin and Larry Page, co-founders of Google, are in the No. 2 spot this year, closing in on Zuckerberg as they jump up one spot, from No. 3 in 2010. Eric Schmidt, who appeared on the list last year with the duo, has since been pushed out of the C.E.O’s office, replaced by Page. Despite reports of an anti-trust investigation, Google has been setting its sites on Facebook by concentrating on strategic initiatives, such as engineering social-networking features.

Rounding out the top five are Jeff Bezos, of Amazon, at No. 3, Tim Cook and Jonathan Ive, of Apple, at No. 4, and Twitter and Square founder Jack Dorsey, at No. 5.

Lady Gaga makes an appearance for the second year in a row. Coming in at No. 9, she is the highest-ranking woman on the list, in front of J. K. Rowling at No. 16, Sheryl Sandberg, of Facebook, at No. 26, Angela Ahrendts with Christopher Bailey, of Burberry, at No. 30, Natalie Massenet at No. 32, and Kara Swisher with Walt Mossberg at No. 40. At 25 years old, Gaga is also the youngest person on the list — not a surprise for someone whose fans managed to crash Amazon’s servers in their desperation to download her third album.

Youthful energy is spread throughout this year’s list with 15 members under the age of 40, including Zuckerberg, Brin and Page, Dorsey, Lady Gaga, Andrew Mason, Sean Parker, Ryan Kavanaugh, Jeremy Stoppelman, Ashton Kutcher, Dennis Crowley, Daniel Ek, Mikael Hed and Niklas Hed, and Justin Timberlake.

There are 14 billionaires on the list: Zuckerberg, Brin and Page, Bezos, Mark Pincus, Michael Moritz, J. K. Rowling, Jim Breyer, Reid Hoffman, Herbert Allen III, Yuri Milner, Robin Li, Parker, and Peter Thiel.

Five member of the New Establishment are actively involved in space exploration, including Brin, Elon Musk, Bezos, Thiel, and Dennis Crowley. Eight of the New Establishment nominees can count themselves members of the ever growing Stanford Mafia; they include Brin, Page, Reed Hastings, Jim Breyer, Hoffman, Musk, Thiel, and John Hennessy.

The New Establishment, Vanity Fair’s annual ranking of the top leaders of our time, is made up of owners, creators, buyers, thinkers, and innovators — the movers and shakers in the worlds of technology, media, business, politics, entertainment, and fashion. These men and women are the taste-makers and trendsetters, opinion formers and agenda creators, not to mention empire builders. Entry into the ranks of Vanity Fair’s list is based on a number of factors: wealth, influence, and philanthropy, as well as such intangibles as vision and the x factor.

The October issue of Vanity Fair will be on newsstands in New York and L.A. on September 1, and nationally and on the iPad September 6.

THE VANITY FAIR NEW ESTABLISHMENT

1. Mark Zuckerberg, Facebook
2. Sergey Brin and Larry Page, Google
3. Jeff Bezos, Amazon
4. Tim Cook and Jonathan Ive, Apple
5. Jack Dorsey, Square, Twitter
6. Marc Andreessen and Ben Horowitz, Andreessen Horowitz
7. Reed Hastings, Netflix
8. John Lasseter, Pixar, Walt Disney Animation Studios
9. Lady Gaga, singer
10. Dan Doctoroff, Bloomberg L.P.
11. Dick Costolo, Twitter
12. Mark Pincus, Zynga
13. Jim Breyer, Accel Partners
14. Tim Burton, Johnny Depp, and Graham King, Movies
15. Michael Moritz, Sequoia Capital
16. J. K. Rowling, Harry Potter
17. Trey Parker and Matt Stone, South Park
18. Reid Hoffman, Greylock Partners, LinkedIn
19. Herb Allen III, Allen & Co.
20. Judd Apatow, Apatow Productions
21. Jay-Z, Roc Nation
22. Todd Phillips, Green Hat Films
23. Yuri Milner, DST Global
24. J. J. Abrams, writer, director, producer
25. Robin Li, Baidu
26. Sheryl Sandberg, Facebook
27. Andrew Mason, Groupon
28. Jon Stewart and Stephen Colbert, television
29. Mark Wahlberg and Stephen Levinson, Leverage
30. Angela Ahrendts and Christopher Bailey, Burberry
31. Elon Musk, Tesla Motors, Space X
32. Natalie Massenet, Net-a-Porter Group
33. Paul Graham, Y Combinator
34. Sean Parker, entrepreneur
35. Fred Wilson, Union Square Ventures, Flatiron Partners
36. Peter Thiel, Founders Fund, Clarium Capital Management
37. Peter Jackson, Wingnut Films
38. Ryan Kavanaugh, Relativity Media
39. Mike Allen, Politico
40. Walt Mossberg and Kara Swisher, All Things D
41. John Hennessy, Stanford University
42. Jeremy Stoppelman, Yelp
43. Ashton Kutcher, actor, investor
44. Tyler Perry, director, producer, writer, actor
45. Dennis Crowley, Foursquare
46. Kevin Ryan, Gilt Groupe
47. Daniel Ek, Spotify
48. Henry Blodget, Business Insider
49. Mikael Hed, Niklas Hed, and Peter Vesterbacka, Rovio
50. Justin Timberlake, singer, actor

STEVE JOBS HOLDS THE TOP SPOT ON VANITY FAIR’S LIST OF THE POWERS THAT BE

Embattled News Corp. Chairman Rupert Murdoch in the Top 5

NEW YORK, N.Y. — This year Vanity Fair inaugurates a list of the Powers That Be. These are the people who have shaped the world we live in today — and continue to wield enormous influence. Many are longtime New Establishment members, and their destinies are intertwined with the members of this year’s New Establishment.

Steve Jobs, of Apple, holds the top spot on the list of the Powers That Be. Since Jobs took control of the company 14 years ago, the stock’s share price has risen more than 6,500 percent. At the height of the debt crisis in late July, Apple had more cash on hand than the U.S. government.

Bernard Arnault, of luxury-goods company LVMH, ranks in the No. 2 spot. As an overseer of countless enduring luxury brands, Arnault has left his mark on the industry. Last year he spent $2 billion to accumulate a 20 percent stake in family-controlled but publicly traded Hermès.

Mayor Michael Bloomberg is No.3 on this year’s list while News Corporation chairman Rupert Murdoch comes in at No. 4. The tumultuous News of the World scandals this year have shaken the media baron, but also shown his staying power in the face of just about anything. Brian Roberts and Steve Burke, of Comcast, NBCUniversal, who recently acquired the U.S. media rights to the Olympic Games through 2020, are No. 5.

Jill Abramson is the highest-ranking woman out of six on the list, at No. 9. She is followed by Angelina Jolie with Brad Pitt at No. 11, Sue Naegle with Richard Plepler and Michael Lombardo at No. 15, Anne Sweeney with George Bodenheimer at No. 22, Bonnie Hammer at No. 24, and Arianna Huffington with Tim Armstrong at No. 25.

Because some power is permanent, Vanity Fair nominates a number of regulars to the Hall of Fame this year. Warren Buffett, of Berkshire Hathaway, joins Barry Diller and Diane von Furstenberg, Tom Ford, actor Tom Hanks, and designer Karl Lagerfeld. Network impresario Oprah Winfrey, Jeffrey Katzenberg, of DreamWorks Animation, and talk-show host Charlie Rose all make the ranks as well.

The October issue of Vanity Fair will be on newsstands in New York and L.A. on September 1, and nationally and on the iPad September 6.

THE POWERS THAT BE

1. Steve Jobs, Apple
2. Bernard Arnault, LVMH
3. Michael Bloomberg, mayor, New York City
4. Rupert Murdoch, News Corporation
5. Brian Roberts and Steve Burke, Comcast, NBCUniversal
6. François-Henri Pinault, PPR
7. Bob Iger, Walt Disney Company
8. Jeffrey Bewkes, Time Warner
9. Jill Abramson, The New York Times
10. Steve Ballmer, Microsoft
11. Brad Pitt and Angelina Jolie, movies, philanthropy
12. Diego Della Valle, Tod’s
13. Roman Abramovich, investments
14. Mickey Drexler, J. Crew
15. Richard Plepler, Sue Naegle, and Michael Lombardo, HBO
16. Larry Gagosian, Gagosian Gallery
17. Harvey and Bob Weinstein, the Weinstein Company
18. Marc Jacobs, designer
19. Lorne Michaels, Saturday Night Live
20. David Zaslav, Discovery Communications
21. Jean Pigozzi, investments, art
22. George Bodenheimer and Anne Sweeney, Disney Media Networks
23. Vivi Nevo, NV Investments
24. Bonnie Hammer, NBCU Cable Entertainment and Cable Studios
25. Tim Armstrong and Arianna Huffington, AOL Huffington Post Media Group

HALL OF FAME

Edgar Bronfman Jr., Warner Music Group
Warren Buffett, Berkshire Hathaway
Ron Conway, angel investor
Philippe Dauman, Viacom
Barry Diller and Diane von Furstenberg, IAC, DVF
John Doerr, Kleiner Perkins Caufield & Byers
Larry Ellison, Oracle Corporation
Tom Ford, designer/filmmaker
Ted Forstmann, IMG Worldwide
Tom Freston, Firefly3
Brian Grazer and Ron Howard, Imagine Entertainment
Tom Hanks, actor
Jeffrey Katzenberg, DreamWorks Animation
Vinod Khosla, Khosla Ventures
Karl Lagerfeld, Chanel
Ralph Lauren, Polo Ralph Lauren
John Malone, Liberty Media
Ron Meyer, Universal Studios
Leslie Moonves, CBS
Ronald Perelman, MacAndrews and Forbes
Miuccia Prada, Prada
Charlie Rose, talk-show host
Eric Schmidt, Google
Terry Semel, investor
Oprah Winfrey, OWN

(Full disclosure: Readers who look closely at the list will notice that all things ATD senior editor Peter Kafka is listed as a contributor. This is true! Also true: Peter wrote biographical entries for several people on the list, but has zero input on its composition. He tells us he had no idea that we were being considered for inclusion, and we believe him. He also says that had he been asked for his opinion, he would have voted for us, his bosses, to be included. We also believe that.)

The company, which for several years has been quietly building a new type of camera, revealed its technology this week. The Mountain View company is using an approach known as light-field imagery, which offers a number of advantages over traditional photography, most notably the ability to focus and refocus an image after it has been taken.

Guests at Lytro’s San Francisco art gallery launch event on Wednesday night had a chance to appear in their own light-field portraits, striking a pose alongside circus performers. The crowd featured many of those responsible for Lytro’s technology, including the Stanford professors that guided CEO Ren Ng’s early research, the company’s early funders and advisers, and the team that helped it pull off its splashy launch, which had Lytro featured all day Wednesday as the top tech story on Google News.

At the event, I had a chance to catch up with Ng, as well as some of the company’s early investors, including Andreessen Horowitz partner Ben Horowitz, Intuit founder Scott Cook and former Greylock partner Charles Chi, who is now the company’s full-time executive chairman.

Speaking to the crowd, Chi recalled his seemingly crazy decision, several years ago, to invest in a company with an academic at the helm and a bizarre business model. The positive response the company got to its launch, Chi said, showed that maybe it wasn’t that crazy after all.

“I wasn’t totally delirious all those years ago making that first investment,” Chi said.

Related posts

• Meet the Stealthy Start-Up That Aims to Sharpen Focus of Entire Camera Industry
• BlackBerry’s Fuzzy Forecast and Pictures That Never Are (Video)
• Its Goal in Focus, Camera Start-Up Lytro Takes a Moment to Celebrate (Video)
• All Lytro coverage

]]> http://allthingsd.com/20110623/its-goal-in-focus-camera-start-up-lytro-takes-a-moment-to-celebrate-video/feed/ 0 http://allthingsd.com/20110510/microsoft-buys-skype/ http://allthingsd.com/20110510/microsoft-buys-skype/#comments Tue, 10 May 2011 12:34:29 +0000 Ben Horowitz http://voices.allthingsd.com/?p=40842

“All these bitches and niggas still hatin’
I used to be ballin’, but now I’m Bill Gate-in’”
–Lil’ Wayne

Shortly after we started Andreessen Horowitz, we, along with our partners at Silver Lake Partners and Canada Pension Plan Investment Board, bought Skype from eBay for slightly more than $2B. The investment generated a tremendous amount of controversy for us. Marc and I were known as angel investors, so investing $50M of our $300M fund in one deal surprised people. While consistent with our stage-agnostic strategy, it was a very big deal very early on in the fund. To make matters more exciting, other investors and writers broadly criticized the deal. Joe Nocera of the New York Times wrote:

“Many people on Wall Street–and a number of telecommunications experts I spoke to this week–were stunned by the price Skype sold for, and not just because we’re in the middle of a recession.”

That controversy ended this morning when Microsoft announced that it was buying Skype for $8.5B less than two years after we bought it from eBay.

Let’s look back at the original decision and see why it turned out well. At the time, people criticized us for two primary reasons:

1. Ebay might not have owned Skype’s underlying intellectual property. Skype’s founders, Niklas Zennstrom and Janus Friis, held an IP claim against Skype. Many speculated that the founders would use their claim to shut down Skype and leave investors with nothing. This made the company theoretically impossible to buy.

As Nocera wrote:

“And so, the mystery of the Skype deal: why were the winning bidders willing to pay so high a price for a company whose very existence could be threatened by this lawsuit? One possibility is that they have nerves of steel. The other is that they know something nobody else does.”

2. The shifting technology landscape would tilt the playing field away from Skype. While Skype won the original Internet telephony wars, they did so with a fat desktop client. From a technology standpoint, at the time, it was technically impossible to field a high-quality web client or mobile product, but that time wouldn’t last. Many observers believed–as the world inevitably transitioned to mobile and web–Skype would be left in the dust.

With a company as complex as Skype, investors draw different conclusions about the same facts. In this case we had the same data as everybody else, but we had a radically higher opinion of Skype’s founders and employees than the investors who passed on the deal. We believed that we could work with rather than against the founders. More importantly, we believed that Skype’s engineering team, led by the original Eastern European wizards who created the service, could compete and win against anybody.

We thought that Niklas Zennstrom and Janus Friis wanted Skype to be a huge success and would do everything in their power to make that happen. As a result, we did not think the doomsday scenario that greatly concerned other investors–that the founders would attempt to shut down the company through the courts–was an actual possibility. Based on the founder’s motivations, we felt that we’d quickly settle the IP litigation. Both sides wanted to get on with the business of making Skype more competitive and could not afford to waste time bickering about IP ownership.

We couldn’t have been more right about that. After quickly settling the litigation, both founders immediately made major contributions to the business through their energy, insight, and intellectual prowess. And boy did we need them to do that, because we soon faced full frontal assaults from both Google and Apple.

When giants attack

In a direct attack, Google offered a free competitor to Skype’s U.S. paid product and a heavily discounted competitor to Skype’s international product. Google then aggressively promoted these cheap products to their enormous Gmail user base by forcing every Gmail user to view Google’s Internet telephony advertisement before allowing them to access their email. What was the result of this effort? Skype new users and usage growth has accelerated since Google’s launch culminating in:

· 500,000 new registered users per day
· 170 million connected users
· 30 million users communicating on the Skype platform concurrently
· 209 billion voice and video minutes in 2010

On the mobile front, Apple built video calling right into the iPhone, making their product the default offering for iPhone users. How did that impact Skype’s usage on the iPhone? 50 million users have downloaded Skype’s iPhone product since the release of Apple’s Facetime.

In retrospect, it was easy for people to underestimate the quality of the Skype engineering team and the power of Skype’s network effect. When we bought the company from eBay, many thought that Skype, like so many acquired technology companies, had lost its technical talent. Through our research we found that Skype had a core group of engineers who were completely dedicated to the mission. They stayed through the eBay acquisition and were determined to make Skype the communications company of the future. Over the past decade, this team consistently introduced groundbreaking technologies ranging from highly resilient and scalable peer-to-peer networking to radically higher sound quality through dramatically superior codecs. In doing so, Skype out-innovated the competition in the most important areas. When combined with its powerful network effect–how valuable is a video calling service if there is nobody to call?–Skype became a formidable competitor.

Smart move, Microsoft

Today, I tip my hat to an old rival, Microsoft. By acquiring Skype, Microsoft becomes a much stronger player in mobile and the clear market leader in Internet voice and video communications. More importantly, Microsoft gets a team, led by the exceptional Tony Bates, that can compete with anyone.

Ben Horowitz is co-founder and general partner of Andreessen Horowitz. He co-founded Loudcloud, later renamed Opsware Inc., in 1999 and served as CEO of the company before it was acquired in 2007 by Hewlett-Packard. He was most recently vice president and general manager of Hewlett-Packard’s Business Technology Organization Unit.

]]> http://allthingsd.com/20110510/microsoft-buys-skype/feed/ 0 http://allthingsd.com/20110503/exclusive-opentable-ceo-jordan-likely-to-head-to-silicon-valley-vc-firm-andreessen-horowitz/ http://allthingsd.com/20110503/exclusive-opentable-ceo-jordan-likely-to-head-to-silicon-valley-vc-firm-andreessen-horowitz/#comments Wed, 04 May 2011 05:28:00 +0000 Kara Swisher http://kara.allthingsd.com/?p=43519

Jeff Jordan, the president and CEO of OpenTable who unexpectedly stepped down from his job today at the online restaurant reservation leader, is set to take a job at a major venture firm in Silicon Valley.

Sources said Jordan has spoken to several major VCs about moving to their firms recently.

While Benchmark Capital was a big funder of OpenTable before it went public in 2009, sources said the likeliest home for the well-known Internet player–Jordan has also been a major exec at eBay–is Andreessen Horowitz.

The move would be a coup for the firm, which has been busy adding partners since its founding only a few years ago by Web icon Marc Andreessen and his longtime business partner Ben Horowitz.

Jordan’s announcement that he was leaving OpenTable today during its first-quarter earnings call caused the stock to decline precipitously today, even though he said he would remain active as executive chairman.

CFO Matthew Roberts was named as his replacement.

Explaining the move, Jordan said:

“I’ve been managing Internet businesses since 1999. That’s 12 years of being in the tornado, and it’s pretty exhausting. I’ll be looking at the next challenge, but in terms of operating an Internet business, I’ve scratched that itch very well.”

It’s an itch that he will be scratching as a VC apparently and likely at one of tech’s hottest firms, which has investments in everything from gaming phenom Zynga to social buying service Groupon to microblogging start-up Twitter.

A spokeswoman for Andreessen Horowitz declined to comment and Jordan has not responded to an email query.

]]> http://allthingsd.com/20110503/exclusive-opentable-ceo-jordan-likely-to-head-to-silicon-valley-vc-firm-andreessen-horowitz/feed/ 3 http://allthingsd.com/20110427/magnet-systems-lands-12-6-million-round-from-andreessen-horowitz/ http://allthingsd.com/20110427/magnet-systems-lands-12-6-million-round-from-andreessen-horowitz/#comments Wed, 27 Apr 2011 20:30:40 +0000 Arik Hesseldahl http://newenterprise.allthingsd.com/?p=5507 Alfred Chuang was the A in BEA Systems, the software company that was acquired by Oracle in 2008. His new venture is an outfit called Magnet Systems, which is making a play in social enterprise, but it’s a little different from all the others out there going after that same space.

Enterprise applications themselves, Chuang says, have to change. And that requires a platform to build new applications that are social from the start. The company has built what it calls the Workplace Interaction Network, or WIN. It’s a development platform that lets companies build and deploy their own cloud-based enterprise applications that take into account the connections that employees have within the company and with customers and partners on the outside.

The company is announcing today that it has landed a $12.6 million Series A funding round led by Andreessen Horowitz, the VC fund led by Opsware founders Marc Andreessen and Ben Horowitz. Also involved in the round are Chuang himself (pictured) and another angel investor, Bill Janeway, former vice chairman of Warburg Pincus. (Andreessen Horowitz is having a busy week.)

Millions of Facebook and Twitter and LinkedIn users implies there’s a huge amount of value in bringing the social factors into existing and still-to-be-created kinds of enterprise applications. It’s a crazy area of interest in the marketplace right now. That Salesforce.com chose to launch Chatter with an ad during the Super Bowl and that companies like Jive Software are attracting funding and seriously eyeing an IPO suggest that a fundamental shift in enterprise applications is underway, but it’s still early days. Most businesses, Chuang writes on his blog, still don’t get it.

“It’s almost impossible to believe, but after hundreds of millions of people worldwide have embraced social applications in nearly every aspect of their personal lives, businesses are still resisting social applications,” he writes. “In fact, many enterprises have not made any significant investment in social applications despite obvious use cases for customer service, HR, marketing, product development, recruiting, sales, training and much more.”

Like it or not, he says, employees are using these new lines of communication to get work done, and companies can either turn this trend to their advantage or get left behind. “When you stop to think about it, an employee’s network (and their ability to communicate and collaborate) is what really fuels business,” Chuang writes.

AH partner Ben Horowitz writes on his blog announcing the funding deal, and describes Chuang as the CEO he “admired most during the last decade.” Why? For getting behind and pushing through–over the objections of a skeptical board of directors–BEA’s 1998 acquisition of a little company called WebLogic. It was an early leader in the application server market and went on to grow into a significant portion of BEA’s business. His board convinced, Chuang was promoted to BEA’s CEO in 2001. Ultimately–and as Horowitz puts it, thanks to shortsighted shareholders–BEA became part of Oracle in 2008.

“The transition from today’s Web back-end architectures to tomorrow’s cloud computing will result in profound benefits,” Horowitz writes. “Over time, every existing application will be rewritten to take advantage of the cloud and these benefits. In addition, an incredible new class of never-before-possible applications will be developed.” Change is coming. Get ready.

]]> http://allthingsd.com/20110427/magnet-systems-lands-12-6-million-round-from-andreessen-horowitz/feed/ 1 http://allthingsd.com/20110427/exclusive-whats-former-omniture-ceo-josh-james-doing-since-leaving-adobe-raising-money/ http://allthingsd.com/20110427/exclusive-whats-former-omniture-ceo-josh-james-doing-since-leaving-adobe-raising-money/#comments Wed, 27 Apr 2011 13:30:13 +0000 Arik Hesseldahl http://newenterprise.allthingsd.com/?p=5486 It’s not unusual for founding CEOs to hang around only for a little while after their companies have been acquired. Even so, Josh James, the founder of the Web analytics powerhouse Omniture, seemed eager to hit the road faster than most. After Adobe Systems acquired Omniture for $1.8 billion in September of 2009, James resigned the following July.

What’s he been doing since then? Gearing up for another venture, I’m told. Some time last year, James, flush with the $80 million and change he made from Adobe as one of Omniture’s biggest shareholders, hit the eject button on his gig as an Adobe exec and acquired/bought out Corda Technologies, a business data dashboard start-up based in Lindon, Utah. Corda forms the basis of James’ new venture, but its vision is substantially bigger, I’m told.

Until recently, James has been bankrolling the venture out of his own pocket. But in recent weeks he’s been raising money for a seed round. And as seed rounds go, it’s unusually large. I don’t know a precise amount, but it’s somewhere north of $5 million and less than $8 million.

I’ve confirmed that Andreessen Horowitz, the venture capital fund run by Netscape creator Marc Andreessen and his partner Ben Horowitz, the former CEO of Opsware–the software company they sold to Hewlett-Packard–have ponied up about $1 million, betting that James can strike gold once again.

Corda specializes in pouring all types of company performance data into a dashboard for executives. It will have a new name, still undecided. In fact, the Corda Web site doesn’t even mention the fact that James has acquired it. Still, James has started assembling a team in Utah.

His acquisition of Corda and his an offer to hire a former Adobe employee caused a legal spat between James and Adobe, as reported by The Salt Lake Tribune. Adobe claimed that James violated non-compete agreements he signed when he left the company in buying Corda and hiring trying to hire away a former Adobe employee. The Utah case is over, ordered stayed by a judge, while a case that James and Corda brought in a Santa Clara County court in California against Adobe alleging unfair competition is still pending.

Update: Since I first published this story we’re learning more about who’s investing in this still-unnamed Josh James-helmed venture. A source familiar with the matter says that aside from the $5 million-plus seed-round, which should be announced officially within the next few weeks, James is already pretty far along in the process of raising a Series A round that will be announced later in the year. A source familiar with the situation says that Benchmark Capital–which has backed companies like Mint, the personal finance site acquired by Intuit last year, and others as varied as eBay, Instagram and Jamba Juice–has committed up to $30 million to the new company.

A Second Update:I’ve just confirmed that Ron Conway’s SV Angel is investing in the seed round.

]]> http://allthingsd.com/20110427/exclusive-whats-former-omniture-ceo-josh-james-doing-since-leaving-adobe-raising-money/feed/ 2 http://allthingsd.com/20110401/ben-horowitz-the-next-big-thing-will-be-a-surprise/ http://allthingsd.com/20110401/ben-horowitz-the-next-big-thing-will-be-a-surprise/#comments Fri, 01 Apr 2011 07:00:14 +0000 Deborah Gage http://voices.allthingsd.com/?p=38427 When Andreessen Horowitz Co-Founder Ben Horowitz took the stage at the Web 2.0 Expo Wednesday in San Francisco, he was expected to tell audience members which technologies they should invest in and which ones they should build.

Horowitz and co-founder Marc Andreessen have been investing since last year from a $650 million fund, so the audience would have loved to hear Horowitz’s opinions. But he didn’t like that idea.

Instead, in just 10 minutes, he gave a history of the great technology shifts that have occurred in the computer industry over the past 50 years and what they mean.

Read the rest of this post on the original site

]]> http://allthingsd.com/20110401/ben-horowitz-the-next-big-thing-will-be-a-surprise/feed/ 0 http://allthingsd.com/20110323/bubble-trouble-i-dont-think-so/ http://allthingsd.com/20110323/bubble-trouble-i-dont-think-so/#comments Wed, 23 Mar 2011 23:31:59 +0000 Ben Horowitz http://voices.allthingsd.com/?p=38035

“I’m going back to Cali, Cali, Cali
?I’m going back to Cali . . . hmm, I don’t think so”?
—LL Cool J

Lately, everybody seems to be talking about a new technology bubble. Many very smart CEOs, VCs, reporters, and analysts can’t seem to stop worrying about the second coming of the dot com bust. Are the prognosticators correct? Will we head mercilessly into another crash? I don’t think so.

A Comparison Between Today’s “Bubble” and the Last Tech Bubble

Since so many distinguished people report a broad variety of qualitative bubble signs, let’s attempt to pattern match the quantitative data. As we do so, keep in mind that the relevant bubble statistic is not valuation. It’s the valuation:value ratio. High valuations are fine if the underlying value is there. Let’s look at public market comparables and venture capital flows to see if we can find a match.

1. Public market comparables
In the great bubble of 1998-2000, the boom in public valuations mirrored the boom in private valuations. Similarly, in recent high profile private financing rounds for private technology companies with valuations over $1B, the valuation multiples were at or below corresponding multiples for publicly traded companies such as Google. This has generally been the case for the bulk of deals that we’ve seen at Andreessen Horowitz. If publicly traded technology companies are not at bubble-like prices, then private technology valuations aren’t either because they are roughly equivalent.

To find out whether or not today’s public technology companies have hit bubble valuations, let’s compare some companies that survived the great bubble with their bubble era valuations:

The Enterprise Value-to-Revenue multiple (EV/Rev) and Price-to-Earnings multiple (PE) are commonly used metrics to tell the valuation:value story. Companies that produce little value today might still receive high valuations due to high growth expectations. The PEG Ratio normalizes the valuation:value ratio for growth expectations by tracking the valuation:value ratio per unit of expected earnings growth.

Bubble era valuation multiples were more than 10 times higher than current comparable multiples. As you can see, not all of these multiples are comparable as some of the bubble era multiples were NM—not meaningful—due to negative earnings. This means that the valuations ascribed to these companies were not quantitatively based on the earnings they were generating or projected to generate.

The valuation:value ratio of today’s private and public technology companies look nothing like the bubble ratios.

2. Venture capital flows
A basic driver for a private technology market bubble is the over-supply of venture capital into the sector. If too much venture capital hits the streets, valuations will bubble up. The inflation-adjusted data from the last bubble tells the story:

In the three-year period from 1998-2000, venture capital firms raised more than $200 billion, which represented about 0.55 percent of the national GDP. To put that in perspective, that’s more money than the entire venture industry raised collectively over the prior 18 years.

Flush with lots of capital, venture capital firms naturally invested at historically high rates–from 1998-2000 alone, venture capital investments also topped $200 billion. Again, more dollars were invested in this single 3-year period than in total over the prior 18 years.

Now let’s take a look at the current version of the same inflation-adjusted data:

Total venture capital raised from 2008-2010 was just shy of $55 billion, about 0.12 percent of the national GDP, with the trajectory of capital raising declining in each year. In fact, 2010 venture capital fundraising is at the same level as it was in 1995 and 1996.

Approximately $90 billion has been invested by the venture capital industry from 2008-2010—less than half of the 1998-2000 level. More significantly, total capital invested should continue to remain constrained in light of the significant reduction in new venture capital dollars raised over the last 3 years. Keep in mind that because the life of a venture capital fund is generally 10 years, it takes a while to see the impact of lesser fundraising on total dollars invested.

The inflows don’t actually look that bubblicious.

The Long Awaited Arrival of the Internet Boom

Looking at the numbers in the previous section, you may be wondering: “how in the world did people get so totally out of control in the last bubble?” The short answer is that the expectations of the great Internet boom vastly outstripped the actual activity. Specifically, the market wasn’t nearly as big as anticipated and the products were not nearly as good as imagined–at the time.

When Netscape peaked in the late 90s, we had 90 percent market share and 50 million users. The total Consumer Internet market was 55 million people. That’s about 36X smaller than today’s 2B. Worse yet, over 1/2 of those 55 million were dialup users. In addition, to horrible bandwidth and latency, the technology products were very crude in other ways. Programming languages were radically less functional, hardware was literally a hundred times more expensive, and there was no virtualization or cloud computing or AJAX. Constrained by such an early and weak technology platform, companies built poor applications. As a result, the expectations of what the Internet would be radically outstripped the reality of what it was. And hence the great crash of 2000 and 2001.

Since then and over the last 10 years, everything has gotten better. Much better. Servers moved from proprietary systems made by Sun, IBM, and HP to commodity hardware at a fraction of the price while radically improving in performance. The open source movement dramatically reduced the cost and improved the quality of systems software. Average consumer bandwidth increased 100 fold due to cable modems, DSL, and high-speed wireless networks. Cloud computing, which was not available then, now enables companies to build massively scalable products with very little initial capital outlay. The combination of the Internet and open source transformed the functionality in modern programming tools, increasing developer productivity 10 fold. The resulting applications have been so easy to use that even older generations of consumers now rapidly adopt new technology like Facebook. And there are 2 billion people on the Internet. All of these factors have led to an exciting new set of leading companies, including a special few which grew to over a billion dollars in annual revenue in less than 5 years. Welcome to the great Internet Boom of 2011.

At this point, you may still be worried about the startling rise in valuations of privately held technology companies. As I mentioned before, privately held technology companies trade at reasonable valuations vs. publicly traded comparable companies. These public companies trade at reasonable valuations vs. historical precedents.

In addition, these companies are significantly more mature–in terms of revenue and profit generation–than their counterparts in the last bubble. For example, the 1998 IPO class had average revenue of $120 million (and net losses of $65 million to boot). If you just look at the tech IPOs that have been completed year to date from 2010, the average revenue of this group is north of $300 million.

What about companies with reportedly very little revenue and very high valuations such as Twitter? A good investing rule of thumb is that any company that simultaneously saves Charlie Sheen’s career and starts a revolution in Egypt may be on to something. While Twitter doesn’t make that much money yet, historically media companies that capture hundreds of millions of highly engaged users tend to make money.

Where do we go from here?

You still may be thinking that Twitter and Zynga are great, but now it’s really over–there is no new opportunity. If you think that, you’d be wrong again.

In addition to the unprecedented number of people now reachable via the Internet, we are at the very beginning of a gargantuan new technology cycle: the move from Web/PC computing to cloud and mobile.

Back when I was a youngster in the early 80s, the technology landscape shifted from Mainframe to Client/Server computing. Interestingly the biggest opportunity wasn’t investing in the lighter weight computers that replaced the mainframes, but rather in new products created due to other results of the change. When you don’t have to pay for computing cycles on a MIP/minute basis, developers can change the way they program. The first major change was the move to relational database technology. Relational databases notoriously wasted CPU cycles vs. the old hierarchical databases such as IMS. However, if you didn’t care about CPU cycles, then you could easily cut your database development time by a factor of 10 or more and radically reduce the level of expertise required. By moving to the relational model, developers were released from the tedium of navigating hierarchical databases and used their new found freedom to rewrite every existing application from financial systems to HR applications and wrote a whole set of new systems like Customer Relationship Management. The relational database and application boom created hugely valuable new companies such as Oracle, Siebel Systems, and PeopleSoft. It didn’t stop there. As a result of the shift in application architecture, the old computing infrastructure became inappropriate and created new companies in Networking, Storage, and Management Software like Cisco and EMC.

The shift to cloud computing will have a more profound impact on the computing ecosystem than the shift to client/server. As with client/server, one of the first technologies to break has been the database. Application developers, no longer constrained by the massive administrative costs to set up servers, can solve previously impossible problems by seamlessly adding more hardware–except at the database layer. As a result, dozens of new exciting companies have emerged to replace the old “scale up” relational technology with new scale out solutions. Moving up the stack, everything about today’s application architectures suffers from the performance, scale, and programming model constraints of relational databases. Much like in the days of hierarchical databases, there is a large and important set of functionality that developers dare not tackle due to these limitations. New application companies like WorkDay and Proferi that take advantage of the cloud to deliver never-before-possible solutions, will devastate their old school RDBMS-based competitors.

While server virtualization enabled cloud computing on the server tier, it broke the current networking and storage architectures leading the way for the next generation of decabillion dollar companies in those categories. In the cloud, where applications have been completely decoupled from the underlying infrastructure, the old network and systems management software no longer works, leading to an opportunity for a new company to grab that $30B market.

The greatest beneficiary of the mainframe->client/server shift was a software company called Microsoft which took full advantage of the switch from dumb ASCII terminals to personal computers. Microsoft broke the mold by delivering solutions to both consumers and enterprises and leading the original consumerization of the enterprise. As today’s clients move from PCs to mobile devices, a huge set of opportunities will emerge for new companies to solve important problems.

The very largest opportunities will likely come from companies for which there are no analogy or precedent. Profound new platforms open the market to ideas never before imaginable.

Conclusion

While we can see many signs of a bubble these days, it’s important to keep in mind that signs of a bubble look almost exactly the same as signs of a boom. In fact, it’s usually not a bubble until everyone agrees that it’s a boom. As Warren Buffet said about the housing bubble:

“The basic cause was, you know, embedded in, partly in psychology, partly in reality in a growing and finally pervasive belief that house prices couldn’t go down. And everybody succumbed, virtually everybody succumbed to that. But that’s, the only way you get a bubble is when basically a very high percentage of the population buys into some originally sound premise–and it’s quite interesting how that develops–originally sound premise that becomes distorted as time passes and people forget the original sound premise and start focusing solely on the price action. So the media, investors, mortgage bankers, the American public, me, you know, my neighbor, rating agencies, Congress, you name it. People overwhelmingly came to believe that house prices could not fall significantly. And since it was the biggest asset class in the country and it was the easiest class to borrow against it created, you know, probably the biggest bubble in our history. It’ll be a bubble that will be remembered along with South Sea bubble.”

Will all the excitement around the opportunities created by the Internet and the shift to cloud/mobile computing eventually lead to a bubble? Absolutely. Are we in a bubble today? I don’t think so.

]]> http://allthingsd.com/20110323/bubble-trouble-i-dont-think-so/feed/ 7 http://allthingsd.com/20110321/peter-levine-veritas-veteran-and-data-center-guru-joins-andreesen-horowitz/ http://allthingsd.com/20110321/peter-levine-veritas-veteran-and-data-center-guru-joins-andreesen-horowitz/#comments Mon, 21 Mar 2011 19:32:01 +0000 Arik Hesseldahl http://newenterprise.allthingsd.com/?p=4190 Venture capital firm Andreessen-Horowitz said today that it has appointed Peter Levine, a veteran of the enterprise software company Veritas that’s now a part of Symantec, and the former CEO of XenSource, now part of Citrix, as its first venture partner.

Levine is the third partner to join AH in recent months. In January it named HP and Opsware veteran Mark Cranney as a partner for market development. And in March it added IronPort’s Scott Weiss.

“Adding Peter makes us smarter at the firm on a certain class of products where he is much more experienced and goes much more in depth than we do, in areas like virtualization and storage,” AH co-founder Ben Horowitz told me. A key area of expertise is one that Levine developed specifically at Veritas, he said, that of working with manufacturers of infrastructure products. “Veritas was probably the most successful company in the history of enterprise software at the OEM model except for Microsoft,” Horowitz said. “It’s a very complicated thing to do–and a very complicated thing to do correctly–so he brings a specialized skill set to the table.”

Horowitz also said Levine will help AH expand its reach and find deals in places where it hasn’t had a presence before, places like the Massachusetts Institute of Technology where Levine is a lecturer. One example: Bromium, a stealth startup that AH says it is investing in. While Horowitz didn’t disclose the amount the firm is investing, he did describe Bromium as a “security plus virtualization company.”

“It’s the kind of deal we wouldn’t have known about without working with Peter,” Horowitz told me.

“We’re at the second generation of what you can do with virtualization,” Levine told me. “Companies like Citrix and XenSource did a lot of the hard rock-breaking to get chipset support from companies like Intel to support virtualization, and once they did that there was an opportunity to take virtualization to the next level. Bromium is a company that takes advantage of all that.”

Levine is continuing in his role as a vice president of Strategic Development at Citrix and will continue teaching a class on Technology Sales at MIT’s Sloan School of Management. Previously, he was senior vice president and general manager of the Data Center and Cloud Division at Citrix, having joined that company in 2007 by way of its $500 million acquisition of XenSource, a provider of open-source virtualization sofware, where he was CEO. XenSource’s customers included Microsoft, Symantec, HP, NEC and Dell.

This will be Levine’s second go in the venture capital ring. He spent three years as a general partner at the Mayfield Fund and in that capacity served on the board of Consera Software, which was purchased by HP. He sat on the advisory board of VMWare and was an investor in Actona, which was ultimately acquired by Cisco Systems.

Levine first rose to prominence as an early employee of Veritas Software, and during his 11-year stint there helped to grow it to 5,000+ and more than $1.5B in annual revenue. His last job at Veritas was executive VP, where he was responsible for worldwide marketing, OEM sales, business development and several product divisions. Before that, he was a software engineer at MIT and worked on Project Athena, an early-1980s research project to build a campus-wide distributed computing network that turned out to be a forerunner of the kind of corporate networks we now use every day.

]]> http://allthingsd.com/20110321/peter-levine-veritas-veteran-and-data-center-guru-joins-andreesen-horowitz/feed/ 0 http://allthingsd.com/20110316/little-speakers-big-bet-andreessen-horowitz-invests-49-million-in-headset-maker-jawbone/ http://allthingsd.com/20110316/little-speakers-big-bet-andreessen-horowitz-invests-49-million-in-headset-maker-jawbone/#comments Wed, 16 Mar 2011 23:00:50 +0000 Peter Kafka http://mediamemo.allthingsd.com/?p=30811 Little speakers, big bet: VC shop Andreessen Horowitz is putting $49 million into Jawbone, the company best known for its slim mobile headsets.

There aren’t any other investors joining Andreessen Horowitz in the round. The firm is perhaps best known for its high-profile bets in Web/media/software companies like Foursquare, Skype and Twitter (via secondary markets).

Partners Marc Andreessen and Ben Horowitz had both previously invested in Jawbone as individual angels; Horowitz will get a seat on the company’s board.

Jawbone has now raised around $100 million over a 10-year period. Most of the other money in the company has come from Sequoia Capital and Khosla Ventures.

Jawbone CEO Hosain Rahman won’t spell out what the new money is earmarked for, other than products that fit into the “total mobile experience.”

But the company’s product history may suggest a roadmap: It started out with a single Jawbone headset, has since added two more, and then branched out with the Jambox, a wireless speaker box. Most recently, it rolled out a free “Thoughts” app, which lets users dictate quick messages and send them out via email or text.

“They have quite an advanced software platform, and the company has evolved, from an intellectual property standpoint, into what’s essentially a software company,” Horowitz says.

Here’s video of the company showing off the Jambox and its Thoughts software at the D: Dive Into Mobile conference last December:

]]> http://allthingsd.com/20110316/little-speakers-big-bet-andreessen-horowitz-invests-49-million-in-headset-maker-jawbone/feed/ 0 http://allthingsd.com/20110128/seven-questions-for-sunny-gupta-ceo-of-apptio-a-cios-new-best-friend/ http://allthingsd.com/20110128/seven-questions-for-sunny-gupta-ceo-of-apptio-a-cios-new-best-friend/#comments Fri, 28 Jan 2011 14:30:23 +0000 Arik Hesseldahl http://newenterprise.allthingsd.com/?p=2535 All CIOs say they want to get a deep understanding of the costs and benefits of all the IT gear and services they buy. Yet too often the information they need to make decisions about how to spend precious IT dollar is murky.

It was a complaint that Sunny Gupta heard often around the time that the company he was working for, Opsware, was being acquired by Hewlett-Packard. “CIOs kept pulling me aside and telling me their jobs were changing,” he said. “A job that used to be about managing technology was quickly becoming one of managing costs.”

It was a rare opportunity to launch a service that numerous big companies were clamoring for. His response is Apptio, a cloud-based service that tracks IT costs and other metrics for CIOs who are constantly under pressure to justify their budgets to CEOs. Backed by $41 million in venture capital funding from Greylock Partners, Madrona Venture Group, Shasta Ventures and Andreessen Horowitz–the venture firm run buy Gupta’s former Opsware colleagues Marc Andreessen and Ben Horowitz. It’s growing like crazy, and customers include Cisco Systems, Starbucks, Facebook and J.P. Morgan Chase. Cisco liked it so much it joined with the venture firms in a $16.5 $20 million Series C round of funding that closed last November, and it also resells Apptio to its customers.

I caught up with Gupta by phone while he was on a trip to London to talk about Apptio’s business and how it’s shaping up.

NewEnterprise: Sunny, let’s start at the top. What does Apptio do?

Sunny Gupta: IT has a lot of raw materials like labor, hardware and software. A lot of these things are tracked at the company level. But the CIO’s job is managing the IT products. We aim to help the CIO really understand the cost structure of all their IT assets. We do this by producing what we call a Bill of IT. It captures the supply and demand of IT resources to the business. It helps the CIO show what the levels of demand and spending really are. We also help them with planning and budgeting and forecasting. And then we help them make cost-reduction decisions and benchmark their performance against other companies in their industry.

How many customers do you have?

We have about 60 customers, and we are managing more than $50 billion in IT spending.

So every company does a return-on-investment analysis on its IT spending. This sounds like it’s a lot more detailed than that.

You can think about it as a detailed ROI, but the way our customers think about it is as an ongoing management system that tracks the fully loaded cost structure of the products and services they provide to their businesses on a month-to-month basis. It tracks costs, but also utilization, so you can see how the resources are being used, and whether or not it makes sense to, say, consolidate a data center.

You said Facebook is a customer. Can you tell me a little about how it’s used there?

The CIO there uses Apptio to track monthly telecom expenses, and to help understand costs and to make decisions around getting the most out of what they spend.

A lot of companies are struggling with decisions about moving their IT to the cloud or keeping it on-premise, or some mix of the two. How does Apptio fit in a situation like that?

We’re seeing a lot of hybrids. At the large companies, the biggest portion of their costs are still in-house. Without naming names, some of our largest customers have 50,000 or 100,000 servers. These are systems that have been in use for a long time and they’re critical to the business. But we also see large enterprises adopting external cloud services. It may be Amazon Web Services or something from Rackspace, or they may be using a software-as-service like Salesforce.com. The trick is to get a handle on what the costs are and if you think it might be time to move something to an external provider so you can make an objective decision.

A lot of the time a CIO has to decide between something that’s really good and really expensive or something that’s good enough and less expensive. Can you help in cases like that?

That’s one of our prime use cases. If you talk to Rebecca Jacoby, the CIO at Cisco, she says she’s stopped asking “Why not IT?” and started asking “Why IT?” If what you have is good enough based on the cost structure and utilization, you get the granular visibility into all those metrics so you can make decisions. For example, it may be that you don’t need as much storage as you think you do, and so the best move isn’t to switch to the cloud but to stop paying for some of the storage that you’re not using. For the first time, executives are able to make business decisions around technology based on true business metrics. We find on average that customers are able to save 5 to 6 percent of their spend, and over 12 to 18 months they can reduce it by 10 to 15 percent.

What’s involved? If it’s a cloud based service, I presume there’s nothing to install at the customer site.

It’s fully cloud-based, so there’s nothing to install. It takes the financial data from enterprise resource planning software, like SAP or Oracle, and it also takes IT operational data, support tickets and other data. It combines them with the financial data. Once you have all that data you can start working on what-if scenarios and make decisions about what to do–or not do–next. If you want to control or reduce costs, having that detailed visibility is the first step.

]]> http://allthingsd.com/20110128/seven-questions-for-sunny-gupta-ceo-of-apptio-a-cios-new-best-friend/feed/ 3 http://allthingsd.com/20110122/why-andreessen-horowitz-models-itself-after-a-hollywood-talent-agency/ http://allthingsd.com/20110122/why-andreessen-horowitz-models-itself-after-a-hollywood-talent-agency/#comments Sat, 22 Jan 2011 22:02:31 +0000 Deborah Gage http://voices.allthingsd.com/?p=35451 Marc Andreessen and Ben Horowitz have raised nearly a billion dollars in the 18 months since they founded their Silicon Valley venture firm, Andreessen Horowitz, even though they’ve never been venture capitalists before.

How’d they do it? The obvious reason is that the two partners are incredibly successful entrepreneurs – Andreessen co-founded web-browser pioneer Netscape Communications Corp., hiring Horowitz as one of the company’s first product managers, and the pair founded software company Opsware Inc., selling it to Hewlett-Packard Co. for $1.6 billion. As a result, entrepreneurs trust their expertise, so they get access to the best deals.

Read the rest of this post on the original site »

]]> http://allthingsd.com/20110122/why-andreessen-horowitz-models-itself-after-a-hollywood-talent-agency/feed/ 0 http://allthingsd.com/20110120/juniper-engineering-vp-joins-stealth-networking-start-up-nicira/ http://allthingsd.com/20110120/juniper-engineering-vp-joins-stealth-networking-start-up-nicira/#comments Thu, 20 Jan 2011 17:47:37 +0000 Arik Hesseldahl http://newenterprise.allthingsd.com/?p=2026 Rob Enns, vice president of engineering at Juniper Networks, has joined Nicira Networks, a networking start-up in stealth mode that’s backed by an investment from Andreessen Horowitz, which invested $9 million in the company earlier this month. It’s also backed by VMware founder Diane Greene.

Enns had spent 11 years at Juniper and oversaw the unit in charge of its Junos network operating system. Before that, he spent 10 years at Berkeley Networks, FORE Systems and IBM.

The news comes only a day after Juniper announced that it had hired Brad Brooks, a vice president of Microsoft’s Windows business unit, as its new vice president of enterprise marketing. Juniper has also been acquisitive in recent months, and bought three companies late last year.

Nicira is working on creating software that it says “virtualizes the network.” The company was founded by researchers from Stanford University and the University of California, Berkeley. Its CTO and co-founder, Martin Casado, did his Ph.D. work on the technology that Nicira hopes to bring to market. Its other two founders are Nick McKeown and Scott Shenker, professors of electrical engineering and computer science at Stanford and Berkeley, respectively. Its CEO is Steve Mullaney a veteran networking executive who’s worked at Palo Alto Networks, Shoretel and Cisco Systems, among others. AH co-founder Ben Horowitz sits on Nicira’s board of directors.

]]> http://allthingsd.com/20110120/juniper-engineering-vp-joins-stealth-networking-start-up-nicira/feed/ 0 http://allthingsd.com/20110118/should-you-sell-your-company/ http://allthingsd.com/20110118/should-you-sell-your-company/#comments Tue, 18 Jan 2011 23:14:43 +0000 Ben Horowitz http://voices.allthingsd.com/?p=35305 “Sittin’ up drunk shuffling thoughts
Got paper but I’m lost
Losing focus what a n#%$a still hustin’ for?
My seed is straight the family’s settled
Idle time get the man in trouble”
—Nas

One of the most difficult decisions that a CEO ever makes is whether or not to sell her company. Logically, determining whether selling a company will be better in the long term than continuing to run it stand-alone involves a huge number of factors, most of which are speculative or unknown. And if you are the founder, the logical part is the easy part.

Indeed, the task would be far simpler if there were no emotion involved. But selling your company is always emotional and deeply personal.

Types of Acquisitions

For the purpose of this discussion, it is useful to think about technology acquisitions in 3 categories:

• Talent and/or Technology–when a company is acquired purely for its technology and or its people. These kinds of deals typically range between $5 and $50M.
• Product–when a company is acquired for its product, but not its business. The acquirer plans to sell the product roughly as it is, but will do so primarily with its own sales and marketing capability. These kinds of deals typically range between $25M and $250M.
• Business–when a company is acquired for its actual business (revenue and earnings). The acquirer values the entire operation (product, sales, and marketing) not just the people, technology, or products. These deals are typically valued (at least in part) by their financial metrics and can be extremely large (e.g. Microsoft’s $30B+ offer for Yahoo!).

This post is most applicable to business acquisitions with some relevance to product acquisitions and will be fairly useless if you are selling people and/or technology.

The Logical

When analyzing whether or not you should sell your company, a good basic rule of thumb is:

IF
a) You are very early on in a very large market
AND
b) You have a good chance of being number one in that market

Then you should remain stand-alone. The reason is that nobody will be able to afford to pay what you are worth, because nobody can give you that much forward credit. For an easy to understand example, consider Google. When they were very early, they reportedly received multiple acquisition offers for more than $1B. These were considered very rich offers at the time and they were being offered a gigantic multiple. However, given the size of the ultimate market, it did not make sense for Google to sell. In fact, it didn’t make sense for Google to sell to any suitor at any price that the buyer could have paid. Why? Because the market that Google was pursuing was actually bigger than the markets that all of the potential buyers owned and Google had built a nearly invincible product lead which enabled them to be number 1.

Contrast this situation with Pointcast. Pointcast was one of the first Internet applications to catch fire. They were the buzz of Silicon Valley and the technology industry in general. They received billion dollar acquisition offers that they passed on. Then, due to flaws in their product architecture, their customers started to turn off their application. Overnight, their market collapsed and never returned. They were ultimately sold for a relatively tiny amount.

So, the judgment that you have to make is a) is this market really much bigger (more than an order of magnitude) than has been exploited to date? b) Are we going to be number 1? If the answer to either a) or b) is no, then you should consider selling. If the answers to both are yes, then selling would literally mean selling yourself and your employees short.

Unfortunately, these questions are not as simple to answer as I’ve made them out to be. In order to get the answer right, you also have to answer the question: “what is the market really and who are the competitors going to be?” Was Google in the search market or the portal market? Clearly, in retrospect, they were in the search market. Most people thought they were in the portal market at the time. Yahoo was a tough competitor in the portal market, but not so much in the search market. If Google had really been in the portal market, then selling might have been a good idea. Pointcast thought that their market was much larger than it turned out to be. Interestingly, Pointcast’s own product execution (or lack thereof) caused their market to shrink.

Let’s look at the case of Opsware. Why did I sell Opsware? Another good question is why didn’t I sell Opsware until I did?

At Opsware, we started in the Server Automation market. When we received our first inquiries/offers for the Server Automation company, we had less than 50 customers. I believed that there were at least 10,000 target customers and that we had a decent shot at being number one. In addition, although I knew the market would be redefined, I thought that we could expand to networks and storage (Data Center Automation) faster than the competition and win that market as well. Therefore, assuming 30 percent market share, somebody would have had to pay 60X what we were worth in forward credit to buy out our potential. You won’t be surprised to find that nobody was willing to pay that.

Once we grew to several hundred customers and expanded into Data Center Automation, we were still number one and were more valuable stand-alone than any of the prior acquisition offers. At that point, both Opsware and our main competitor Bladelogic had developed into full-fledged companies (world-wide sales forces, built out professional services, etc). This was significant, because it meant that a large company could buy one of us and potentially execute successfully (big enterprise companies can’t generally succeed with small acquisitions, because too much of the important intellectual property is the sales methodology and big companies can’t build that).

At this point, it became clear that BMC was going to buy either Opsware or Bladelogic. As a result, the calculus, or whether Opsware was going to be number 1 in the market, needed to be redefined as follows:

1. We had to be number one in the Systems & Network Management market rather than the Data Center Automation market, because like the word processor market, the Data Center Automation market was going to be subsumed by a larger market that contained it.
2. In order to be number one, we had to beat BMC+Bladelogic which was a significantly more difficult opponent than either company stand-alone.

Finally, the market itself was transforming due to an underlying technological shift: virtualization. Virtualization meant that the entire market needed to be re-tooled, so we were embarking on a new R&D race to build the best management for virtualized environments. This meant deferring earnings for a very long time.

Based on all of these factors, it made sense for us to at least consider the possibility of acquisition and run a short process to understand the interest in the M&A market. Through that process, 11 companies made acquisition offers of some form. This told me that we were at a local maxima in terms of the market price for Opsware. I.e., the set of potential buyers was convinced that the market was very important and there was no extra premium that we could hope to achieve through better awareness. In the end, based on a lot of analysis and soul searching, I determined that the current local maxima was higher than we could expect to achieve in the next 3-5 years and I sold the company to Hewlett Packard for $1.65B. I think and hope that was the right decision.

The Emotional

The funny thing about the emotional part of the decision is that it’s so schizophrenic.

How can you ever sell your company after you’ve personally recruited every employee and sold them on your spectacular vision of a thriving, stand-alone business? How can you ever sell out your dream?

How can you walk away from total financial independence for yourself and every member of your close and distant family? Aren’t you in business to make money? How much money does one person need?

How can you reconcile Dr. Stay-the-Course and Mr. Sell-the-Thing? Clearly they are irreconcilable, but the key is to mute them both.

A few keys on muting the emotions:

• Get paid (a salary)–Most venture capitalists like entrepreneurs that are “all in”, meaning that the entrepreneur has everything invested in the company and will have very little to show for her efforts if the company does not succeed. As part of this, they prefer that the founding CEO have a very low salary. In general, this is a good idea, because the temptation to walk away when things go poorly is intense and total financial commitment helps one keep his other commitments. However, once the company starts to become a company rather than an idea then it makes sense to pay the CEO at market. More specifically, once the company has a business (as defined above) and becomes an attractive acquisition target, it makes sense to pay the CEO, so that the decision to keep or sell the company isn’t a direct response to the CEO’s personal financial situation as in: “I don’t think that we should sell the company, but I live in an 850 square foot apartment with my husband and two kids and it’s that or divorce.”
• Be clear with the company–One question that every start-up CEO gets from her employees is: “are you selling the company?” This is an incredibly difficult question. If she says nothing, the employee will likely interpret this to mean the company is for sale. If she says “at the right price,” the employee will wonder what that price is and may even ask. If the company ever reaches that price, the employee will assume the company will be sold. If she dodges the question with the standard “the company is not for sale,” the employee may feel betrayed if the company is ever sold. More importantly, the CEO may feel like she is betraying the employee and that feeling will influence her decision making process. One way to avoid these traps is to describe the analysis in the prior section: if the company achieves product/market fit in a very large market and has an excellent chance to be number one, then the company will likely remain independent. If not, it will likely be sold. This is one good method to describe the interests of the investors in a way that’s not at odds with the interests of the employees and is true.

Final Thought

When faced with the decision of whether or not to sell your company, there is no easy answer. However, preparing yourself intellectually and emotionally will help.

]]> http://allthingsd.com/20110118/should-you-sell-your-company/feed/ 1 http://allthingsd.com/20110114/meet-andreessen-horowitz%e2%80%99s-newest-partner-mark-cranney/ http://allthingsd.com/20110114/meet-andreessen-horowitz%e2%80%99s-newest-partner-mark-cranney/#comments Sat, 15 Jan 2011 00:01:41 +0000 Arik Hesseldahl http://newenterprise.allthingsd.com/?p=1838 Venture capital firm Andreessen Horowitz has named Mark Cranney–a veteran tech executive with more than 20 years of experience in senior positions at Hewlett-Packard, Opsware and Parametric Technology–as its newest partner today. He’s been entrepreneur-in-residence at the firm for about seven months.

His role will be a little different from that of most other VC partners. As AH’s partner for “market development,” rather than evaluate new deals he’ll spend his time on developing the sales and go-to-market strategies of companies that the firm has already invested in.

AH co-founder Ben Horowitz said it’s all part of the firm’s preference for founders becoming CEOs. “The thing that’s most difficult, especially for a technical founder, the most difficult thing to learn is sales. It’s the most difficult thing to learn operationally,” Horowitz told me. “If you don’t have experience with sales, it can cause you to fail as a founding CEO.”

It turns out that Cranney knows a thing or two about sales, and his history with Horowitz and AH’s other co-founder Marc Andreessen runs deep. Cranney spent four years as vice president of worldwide field operations at Opsware, which Andreessen and Horowitz sold to HP in 2007 for $1.65 billion. During that time Cranney’s team grew from 10 to 350 and sales grew from $18 million to $150 million. Horowitz wrote last year about how he came to hire Cranney at Opsware and how he possesses what Horowitz calls “the right kind of ambition.”

Cranney said that sometimes new companies get so focused on selling their new product or service that they forget to consider the larger backdrop of what’s going on inside a potential customer’s operations. “You want to help them avoid looking like a hammer in search of a nail,” Cranney told me. “There’s a systematic way of helping companies identify what’s going on in particular industries and companies and how they can tie what they do to projects already underway.” He’s also building out a network of contacts at large companies–including the Walt Disney Company, FedEx and JPMorgan Chase–that could become potential customers of the companies in the AH portfolio.

He’ll be focused on helping companies in the AH portfolio build their sales talent, and help them grapple with tricky issues like moving from “freemium” to premium business models, working with partners, identifying customers and responding to competitors.

One company he’s already worked with is Apptio, which helps companies manage their IT costs. It’s also notable for being the first investment that AH made. “They’ve had explosive growth in the last year and have been staffing up their sales teams,” Cranney said. “They had been a little concerned that these teams weren’t ramping up fast enough,” he said. Cranney helped Apptio develop a sales training program.

Besides Opsware, Cranney’s prior jobs include time at Aster Data, where he was executive VP of worldwide field operations, and a position as vice president for the Americas at Hewlett-Packard’s software and solutions business. He was also a vice president at Parametric Technology.

It’s another sign of growth at Andreessen Horowitz, which debuted in 2009 with a $300 million fund, then raised a bigger one of $650 million in November. It has recently taken positions at Groupon and Facebook on the consumer side. Its enterprise investments besides Apptio have included stakes in Okta and Fusion-io.

]]> http://allthingsd.com/20110114/meet-andreessen-horowitz%e2%80%99s-newest-partner-mark-cranney/feed/ 0 http://allthingsd.com/20110107/live-twitter-ceo-dick-costolo-at-dces/ http://allthingsd.com/20110107/live-twitter-ceo-dick-costolo-at-dces/#comments Fri, 07 Jan 2011 23:49:28 +0000 Peter Kafka http://mediamemo.allthingsd.com/?p=27773 Twitter has crossed the threshold from Web novelty into something substantial. Now Dick Costolo’s job is to turn it into a business–one big enough to justify the sky-high valuation investors have given the messaging company.

He’ll talk to Kara Swisher about the company’s efforts to sell advertising on the service, and if we’re lucky, he’ll give us a glimpse of his improv comedy roots, too. Don’t be shy, Dick!

Dick starts off by insulting Kara’s vest. “Matador casual,” he calls it. Good one! Kara responds by asking him why he’s hanging out at CES.

The same reason everyone else is, Dick says: To talk to industry people. For example, he’d like to get device makers to preload some features like “Fast Follow.”

Kara wants to know if Dick would like a “Twitter button” installed on phones. No, says Dick. But he’d like Twitter to work the same way on different platforms.

So how do you make that happen?

Dick: We’re assigning a product team to make sure that this happens.

Kara: And you’re talking to TV people, too? What’s that about?

Dick: Yep. Because mainstream TV viewing, more and more, they have a device in their hand when they’re watching TV. Like on “Glee.” The characters tweet while the show is on. [This baffles Kara.] When “Glee” starts, tweets per second for “Glee” shoot up, and stay up 100 times that level until the show ends, and then they drop.

That has interesting implications. Like, it takes the DVR out of the mix, because you have to watch in real time to make it worthwhile.



But we don’t know if all of this means Twitter while you watch TV, or Twitter actually on your TV screen.

Kara: Is it important for you to be on the screen?

Dick: We’re already on the screen. But we don’t know if that will be the mainstream experience.

Kara: We had Steve Levitan from “Modern Family” talking about how the Web doesn’t help him, but that he and his team like Twitter.

Dick: Sure! “I was having a conversation with Conan O’Brien, as one does” and he was talking about the importance of Twitter to him, and how the 140 character limit is the right length for a joke. It’s definitely the case that network TV people like Twitter, because it gives them feedback, like they’re in the theater, watching how the shows play out.

Kara: Keep talking about celebrities! I love celebrities.

Dick: Sure! The folks that we’ve hired to work with talent and agencies, etc., we think of those people has high-value publishers. They have a huge following. A lot of people are on Twitter just to hear what those folks have to say.



The interesting thing about the top 200 to 300 tweeters–a lot of them are musicians, actors, etc. LeBron James, etc. I think Lady Gaga is number one. But! They’re not all celebrities. There’s CNN Breaking News. And the New York Times. And other brands like Gary Vaynerchuk, who aren’t really that known outside that world.

And Twitter is disaggregating some of those businesses. Like a third of all the players in the NFL playoffs are using Twitter actively. And many players have more followers than their teams. [Here Dick explains football to Kara.] That’s fascinating.

Kara: Let’s go back to phones. Whats the most important device? Tablet? PC? Phone?

Dick: Mobile is a more and more and more common use of Twitter–40 percent of all tweets created on mobile devices. That might seem low, but it was 25 percent a year ago. 50 percent of active users are also active on mobile.

But Twitter ought to work platform to platform. We want to be agnostic.

Kara: What about what’s coming out from Palm? Working with them?

Dick: Not yet.

Kara: What about games? Talking to those guys?

Dick: Yep. Like with Microsoft on their Xbox, you can see integrating tweets into people who have discussions on Xbox.

Dick: You lost interest in the answer to your question. [True!]

Kara: You’re so annoying.

[Some laughter. Not a lot, though!]

Dick: Anyway, the important thing for us is consistency across device to device to device.

Kara: Speaking of working consistently, how’s that going for Twitter?

Dick: Right. So, we raised a bunch of money. We’re hiring “tons of engineers and operations engineers” in the last year. We hired 100 people in Q4, out of about 350 total. And we’re working very hard on erasing our “technical debt.”

Kara: “That’s a great word for fuck-ups”



Dick: Anyway, we’ve got a guy assigned to this pretty much exclusively. And there used to be a tolerance for this, and now there isn’t. If someone fires a pistol next to your ear every hour, after a while you stop flinching when you hear it. It’s crucial that we do this, both for our users and our engineers, who shouldn’t have to get up at 3 am all the time.

Kara: Time for a vision question, which stumps Yahoo. What is Twitter? What is your vision?

Dick: “We want to instantly connect people everywhere to what’s most important to them.”

See, that’s a good statement. We’re not just a social network that’s connecting people. It’s connecting for a purpose.

So some people meet girlfriends on Twitter. And other people get tickets to shows they like on Twitter. Etc.

And you don’t have to tweet to get a lot of value out of it.

Kara: What’s the percentage of people who just read Twitter, and don’t tweet themselves?

Dick: Rising. And we have to make that easier to do. “We’re going to spend a lot of time making that consumption experience much better.”

Kara: What’s your business plan?

Dick: To continue to raise money!

[hohoho]



Dick: I’m going to steal Jeff Weiner’s line. We’re a technology company that’s in the media business. Our business model is an advertising model [cough, cough, that's familiar! You're welcome!] So we’re selling ads, and we’re letting people promote their accounts, etc. And we really don’t have to do anything else. Our engagement rates on these ads are ridiculously high. When we saw our stats this last spring when we launched, the numbers were so big we thought we were measuring it incorrectly.

Kara: Is that a big enough business to be a standalone company and/or IPO?

Dick: It’s enough to be a standalone company.

Kara: Sell or IPO?

Dick: We want to be a standalone company. It’s my sincere hope. We’ve accomplished 1 percent of what we want to do.



Kara: You like to sell companies, though.

Dick. Yes, I had two companies that I sold. But that doesn’t mean we’ll sell this one. I’ve had two kids too. But I shouldn’t get a reputation for having kids.

Kara: What’s up with people buying and selling secondary shares of Twitter. It’s an issue for Facebook. What about you?

Dick: We keep an eye on it, and talk to employees about it. But I just think that there are other people that are focusing on it and paying attention, and I’ll let them talk about it. But I just don’t think about that stuff on a day-to-day basis.

Questions and Answers

Q: [sorry missed it].

But answer seems to be about whether Twitter is a platform company or not. Dick quotes Ev Williams by saying they’re not a platform company–they’ve had an API. They want people to be able build off Twitter and build into Twitter. Which requires a more robust API.

Kara has more questions. How do you look at yourself as a leader?

Dick: As a very bald leader.

Kara: But you’re very different than Evan.

Dick: Right. Two components. Three founders at company: Ev, Jack, Biz. They all come at it from a different angle. Jack thinks about simplicity and elegance and the mobile experience. Ev thinks about the user. Biz is “the protector of the brand and the guardian of the culture.”

Kara: He’e the guy who goes on Colbert.

Dick: And he’s great at it. Anyway, those guys are great. My focus is on operational greatness. I try to emulate operators like Ben Horowitz (Opsware) and Susan Wojcicki (Google).



Q: What’s up with that internal page rank for each user? asks Ben Parr from Mashable.

Dick: Your’re not exactly right. We play around with stuff like that. But there’s nothing robust that we would think of productizing anytime soon, and we don’t use it for things like resonance, which we use in ads.

Q: [Sorry, couldnt quite understand.]

Dick is talking about WikiLeaks in general, says there was something specific about WikiLeaks today that he can’t talk about. In general, he hates government mandates to keep things quiet. And he hates that a woman in China was punished for retweeting something. He reiterates Twitter’s desire to connect people with useful information. “We’re going to lash out at things that prevent us from doing that, as aggressively as we can.” The proof is that we’re banned in China. “We’re not going to sacrifice what we’re trying to do to, you know, get into this country over here.”



Q: How will you work with brands in the future, vs. advertising?

Dick: Our promoted suite of stuff doesn’t simply let advertisers use a giant bullhorn. This stuff has to be organic. “It almost is like a quality-assurance program.”

[Some context for what Dick wouldn't talk about: Feds Subpoena Twitter Seeking Information on Ex-WikiLeaks Volunteer].

Dick is now talking about Twitter and international growth and language. Twitter is growing fast in the U.K. but not in Germany. Why is that? Because German has really, really long words. “There’s a bunch of stuff we want to do, and have to do” just to make things usable in those languages.

Last question, from Kara: What’s the most interesting thing you’ve seen at CES?

Dick won’t give a one-word answer. CES is a “quantum conference.” Some years are transformational, some are incremental. “This seems like it was an incremental year.”

And we’re done! Thanks all for your patience. We’ll have video up over the next few days, which should help fill in the gaps left by my lousy note-taking.

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]]> http://allthingsd.com/20110107/live-twitter-ceo-dick-costolo-at-dces/feed/ 3 http://allthingsd.com/20101221/the-men-and-no-women-of-web-2-0-boards-boomtowns-talking-to-you-twitter-facebook-zynga-groupon-and-foursquare/ http://allthingsd.com/20101221/the-men-and-no-women-of-web-2-0-boards-boomtowns-talking-to-you-twitter-facebook-zynga-groupon-and-foursquare/#comments Tue, 21 Dec 2010 22:44:05 +0000 Kara Swisher http://kara.allthingsd.com/?p=38810

In one memorable episode of the famous old short films “The Little Rascals,” after not getting invited to a party, the Our Gang little dudes decided to form their own group, comically called “The He-Man Woman-Haters Club.”

In other words: No girls allowed!

While it was wink-wink cute when Spanky, Alfalfa and Buckwheat huffed and puffed about keeping out Darla–which they never ever could do–back in the last century, it’s not quite as adorkable when it comes to the boards of all the major Web 2.0 hotshots these days.

That would be Twitter, Facebook, Zynga, Groupon and Foursquare, none of which have any women as directors.

As in zero.

What’s most remarkable is that most of these start-ups are run by what I consider enlightened and open-minded entrepreneurs, mostly young enough to be part of a generation more inclined to value equality and diversity in the workplace.

In addition, each of these companies has a massive base of women consumers, in some cases well over 50 percent of its audience.

Thus, it would seem logical that in casting about for those to help guide these companies, one or two women leaders might slip in.

To be fair, it’s not for lack of trying, but of completion, as was the case with Twitter’s recent addition of three new board members.

They were longtime Silicon Valley exec Peter Currie, Flipboard CEO and co-founder Mike McCue and former DoubleClick leader David Rosenblatt.



All are deeply qualified for the Twitter board, which is obviously prepping for its next stage of growth and maturity.

But in its search, the San Francisco microblogging site did not manage to cast the net quite wide enough.

While sources said at least one prominent online woman exec was considered, there were some legitimate issues with her appointment, and it was not completed.

Still, one might imagine Twitter could have tried harder to find other workable choices.

Currently, the Twitter board is made up of the new trio, as well as Benchmark Capital’s Peter Fenton, Union Square Ventures’ Fred Wilson, Bijan Sabet of Spark Capital, CEO Dick Costolo and co-founders Evan Williams and Jack Dorsey.

Things are not any better over at Facebook, which has several prominent women execs running the show, most especially its high-profile COO Sheryl Sandberg.

But, inexplicably, though she does attend board meetings, she is not yet a director of Facebook, nor is any other woman.

In fact, here is Sandberg on topic at a recent TED event for women, in an eloquent speech titled “Why We Have So Few Women Leaders”:

Instead, the Facebook board is all men, all the time, composed of CEO and co-founder Mark Zuckerberg, prominent techie and venture capitalist Marc Andreessen, investor Peter Thiel, Accel Partners’ Jim Breyer and Washington Post head Don Graham.

It is no better at three of the most prominent recent Web 2.0 start-ups, which one source attributes to the lack of woman VCs, who are often the first board members after major investment rounds.

At Zynga, the hot social gaming company in San Francisco, it continues, with an all-male board, despite a very heavily female audience for its casual social games.

That would be co-founder and CEO Mark Pincus, COO Owen Van Natta, investor Bing Gordon of Kleiner Perkins, investor Reid Hoffman and Brad Feld of the Foundry Group.

The same is true at woman-targeted–spas, spas and more spas–social buying site Groupon, which has an unusually large board for a start-up and made up of–as per usual–all men.



The list: Co-founder and CEO Andrew Mason, Accel Partners’ Kevin Efrusy, former AT&T President and COO John Walter, New Enterprise Associates’ Harry Weller and Peter Barris, former AOL exec Ted Leonsis, 37Signals co-founder Jason Fried and early investors Eric Lefkofsky and Brad Keywell.

And, much smaller, is Foursquare’s board, which is the trio of co-founder and CEO Dennis Crowley, co-founder Naveen Selvadurai and Union Square Ventures’ Albert Wenger.

New investors–Ben Horowitz of Andreessen Horowitz and O’Reilly AlphaTech Ventures’ Bryce Roberts–have observer status and both are, needless to say, dudes.

There is no question it is tough to make sure there is a good balance of qualified women leaders to men in tech–it is an issue we wrestle with every single year for the program of speakers at our own All Things Digital conference, although we are most excellent on this issue on our Web site and conference staff.

But it can be done, especially at public tech companies. Google has two women on its board of nine directors; Yahoo has three of 10; even Oracle has two of a dozen.

But a grand total of zero at the leading companies of Web 2.0 is not just a coincidence.

It’s a shame.

Tomorrow, BoomTown will post a list of great women who would be superb directors for any of these companies, but until then, let’s not follow in Spanky’s steps:

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