I just read Good-Bye to Venture Capital (link via Brad Feld) and the whole thing seems to stand in stark contrast to what I’ve been seeing. I tend to agree more with Fred Wilson. A couple of odd things have happened directly to me over the last few weeks. Mind you, my take on this might be a bit skewed compared to other folks in Silicon Valley. I wasn’t here for the boom, I kinda missed that whole thing. I moved here mid 2001, when most people seemed to be headed out of the area and not into it. I’m not quite sure how the whole boom got started or what it looked like from the inside. But I can tell you that the previous 4 years here were nothing like the last 2 months.
First of all, there’s the requests that come through Mobile Monday. We started up the group because we thought there wasn’t all that much innovative work happening in the valley with respect to mobility. It seemed like Europe was way ahead on this one, they have the huge penetration they must have the innovation. I was wrong. After starting the group innovative companies just came pouring out of the woodwork. They were out there, they just weren’t making much noise. They were below the radar of even someone like myself, who has worked in the area for a while and in general decently in tune with the technologies. Then I went over to Europe for a conference on mobility and saw the things they’re working on. The innovation is here, I’m now completely convinced. A lot of those innovators aren’t looking to VCs for funding however, and for some reason the VCs aren’t looking for them. There’s a disjoin between innovative technologies and the markets they best serve - I thought that’s what VCs were supposed to help with in part. I think some of the folks are smart enough to pull off some amazing runs. But they’re probably going to be doing it on their own.
The second odd thing is the number of calls I get. In my former life I did a shitload of Linux embedded systems programming, and my resume is still slanted pretty heavy in that direction. I’ve been getting unsolicited calls and emails at an increasing pace lately from folks looking to kill some existing business model using open source. The concentration seems to be pretty heavily on the networking and appliances side. I talked to three different companies yesterday alone, one of whom specifically says they’re “going straight for Cisco”. Now, granted, plays like this are pretty rational market. Open source for something like a networking device is more of an optimization than a disruption at the market level. But what happens in the adjacent areas should be pretty interesting. I think that in a few months the buzzwords might shift from the long tail to the conservation of modularity ideas that Clayton Christensen presented at the Open Source Business Conference.
So maybe that means nothing from the VC side. I’ve never had a few million to invest any way my little heart desires. I’ve only been on the other side of the table, where I’m sure the same world looks completely different. But from where I’m standing the opportunities seem fantastic - the problem might not be the market. Maybe VC has to (GASP) shift tactics in order take advantage of the current opportunities. Us folks you’ve been funding have been doing that for a while, I think the proper term for it is “business”. Take a step back, clear your mind of the millions of dollars at your disposal, and realize that you’re in business yourselves. You think you can spot innovation in the markets you’ve been investing in? Good. Cause you’re gonna have to start doing it in your own.