3:47 p.m. — Henry Blodget 2.0: Only in America
If you believe in second chances, then you’re happy for Henry Blodget. I just saw him for the first time since Internet 1.0 swirled down the toilet, and he looks healthy and happy.
Anyone who took part in the first round of Internet insanity in 1999-2000 should be able to relate to Blodget, former Merrill Lynch Internet Analyst and now a journalist of sorts at Silicon Alley Insider, a site which he owns. Regardless of what you think of the hypesters and hucksters who “pulled the wool over the eyes” of America in those days, I think you’ve gotta respect this guy, who’s made it back to some semblance of respectability and, even, shockingly, credibility.
Remember, folks, we pulled the wool over our own eyes, too. And Henry is the perfect example of that. Now, he’s the perfect example of Web 2.0 representing the idea of second chances. He’s proof that no matter how much of an ass you made of yourself then, today is a different day.
To appreciate the return, you have to understand the severity of the exile. For a number of years, Blodget all-but personified the Dot.com Bubble Charlatan. His reputation was shot to hell, his name mud. He was the guy who told you to buy [Insert Favorite Failed Internet Company Stock Here] at $377 and then the company went out of business the next day and you lost $20,000.
Henry was a pile. Henry was an idiot. Henry was a liar.
In any honor-bound culture—Japan, for instance— Blodget would have never been heard from again, after what he (read: we) did back then, unless it was news coverage of his ritual suicide.
But in America, Henry slowly crept out of his hole, starting his own blog (InternetOutsider.com) and then eventually was allowed back into e-civilization. Why? Because he has good insights on the tech world, and, as he shows each day in Silicon Alley Insider, the man can write. And now, unlike then, he has some humility. He seems to know he doesn’t know it all.
So here’s to Henry Blodget, and here’s to the second chance he represents. Each of us may need that same second chance someday.
3:03 p.m. — Startup Scene: No Exit StrategyI just attended a lively panel entitled, “Starting Up in Silicon Alley.” Fred Wilson’s vehement admonition to please, guys please stop using that derogatory term apparently hasn’t taken yet.
The panel was comprised of David Rose, a longtime angel investor, Kevin Ryan, former CEO of DoubleClick, and Softbank venture capitalist Karin Klein. The moderator was Nate Westheimer, Entrepreneur-In-Residence at Rose Tech Ventures, contributor to Silicon Alley Insider, and a young buck on the NYC startup scene.
Remember “incubators?” CMGI and its ilk? These were companies that would hold stakes in startups and give them office space and beanbags and salaries and stuff. There’s one here in New York City. It’s headed by David Rose (his office is on the top floor) and called “Rose Tech Ventures.” It has three floors of a building in Manhattan – so at least someone still cares for the babies.
Anyways, it was an interesting and spirited conversation on NYC vs. Silicon Valley/Bay Area. It seems to be a discussion that never ends around here – and never begins in the Valley. This go-round, panelists seemed to feel that, in choosing a location to start a company, NYC was a strong candidate because in Silicon Valley, you can’t retain talent. People leave to go to the hottest new startup before you’ve even gotten to know them.
Karin Klein sees the smaller egos in New York tech community as a competitive advantage. Smaller egos in New York?! News to me until I thought about it: yeah, Silicon Valley is pretty cocky.
This NYC love session was rudely interrupted, however, when a former New Yorker, a seven-time entrepreneur well-known to all the panelists (cue inside jokes), told about how he moved out to Silicon Valley recently and the only bad thing about it is that the real estate is more expensive than in New York.
Other than that, the man berated the panel, everything out West is 10x what is here in terms of tech. 10X the engineers, 10X the smart people, 10x the money…10X the everything.
The people onstage went silent.
Needless to say, the conversation then took a quick turn—as noted in my other posts, today’s one of those dark cloud follows you days—to the disasters on Wall Street. Karin Klein felt like that was going to be an opportunity for New York startups to snatch up talented and nearly-unemployed finance whiz types – yeah, like anybody wants them. Kevin Ryan predicted that the economy will continue to tank well through next year. David Rose is an excitable man who speaks extremely rapidly, and he said a variety of sentences that were hard to follow logically.
I do know that there was something about one of his startups, Magnify Networks, selling ads to Sri Lankans.
Everyone on the panel and in the audience finally agreed on one fact: The biggest problem from the perspective of an investor in startups these days is that you have no exit. The IPO market is deceased (Karin blames Sarbanes-Oxley, as does Edgelings) and even private equity people don’t have enough money to just throw some at the next potentially big idea.
Also, even if you do have funding from a first round, you’re likely not going to get a second. Venture capitalists are being forced to prop up the companies they’ve already invested in, because they can’t get out of them and move on to the next crop. No one will take the investments off their hands.
You know it’s a vicious cycle when the usual trope “it’s a cycle, it’s all cyclical” is the closest anyone can come to telling these hopeful entrepreneurs that they’re not going to be poor forever.
On the upside, David Rose told us that he took a survey of his angel investor pals at their usual Wednesday morning meeting, and of the 50 investors present, seven said they were going to invest more in startups in the next 12 months than they did in the last 12, three said less, and 40 said the same.
So maybe the sky isn’t falling. It’s just not something we aim for anymore.
12:04 p.m. — Risky Business, Morbid ThoughtsDrew Bartkiewicz sells business insurance for The Hartford. He thinks Web 2.0 is gonna need that insurance in a big way. And after hearing his talk this morning, I’d have to agree.Noting the increasingly powerful and sophisticated “social graphs” being assembled on and by participants in this Wild West Web 2.0 world, Bartkiewicz remarks, “I just pity some of these teenagers and 20-somethings. They are literally putting their social life in your hands.”So you’d better insure those hands, like the Lasik doctors that work on people’s eyeballs – i.e., if they make a mistake and blind someone, an insurance company pays for it.O’Reilly started it and Bartkiewicz continued it: the scary side of tech. Gmail’s “contextual advertising” is, looked at it another way, a form of surveillance. Cloud computing, because it diffuses data throughout a network of computers rather than holding it all in one secure database, exposes that data to possible misuse, even thievery. It happened to Visa, UCLA, and many others.
Oh yeah, and then there are those pesky things called LAWS. And, worse yet, LAWSUITS. When these kids grow up and find out they can’t get a job because their prospective employers check their Facebook pages and see them taking beer bongs and flashing their tits at Mardi Gras, whose fault is that?
Did these 14-year old kids really sign up for that?
Or you use Linkedin, say, and have cultivated a smorgasbord of connections. But twenty of your connections are drug dealers and three are full-fledged pedophiles. Is that your fault, if you didn’t know? Then again, what you did know? What if Linkedin knows that you know? What if Linkedin can be used to prove it in court?
Bartkiewicz even brought up that poor girl on MySpace who killed herself because another girl’s mother (disguised as a boy) humiliated her on the Internet. Talk about a buzz kill.
With Wall Street showing, daily, that interconnectedness is a risky business, Bartkiewicz recommends that users first wise up, and second, that Web 2.0 companies take a hard look at their stated terms of service versus what they actually enforce as a user practice. In other words: think about what can go wrong, because it probably will. Think about what the culture of your company promotes and encourages.
Bartkiewicz also recommends, of course and by way of conclusion:
“Run! Don’t walk to insuring your Web 2.0 business.”
Because:
“You could be the Enron that creates a whole market for Sarbanes-Oxley.”
And by that he means: you could be breaking laws that aren’t even laws yet.
10:48 a.m. — O’Reilly Drops Bucket of Cold Water on Everyone’s Head: Good Morning!
It started about warm and fuzzy, with fun concepts such as your washer and dryer Twittering their status to you so you don’t have to go check them. But then it turned into something of a scold. I can only conclude that Tim O’Reilly, organizer of this conference, widely renowned for his civility and kind intelligence, might be distantly related to Bill O’Reilly.
O’Reilly’s key point was that ‘Ambient Technology’, the new model of sample-and-modify has replaced starting –from-scratch, location-based services, corporations should let customers into their back office, etc., etc. as the hot new paradigm.
But then Mr. O’Reilly got to the point: the world is going to hell in a handbasket, and what are we in this room going to do about it? He began pulling up headlines like “Wall Street Faces the Next Great Depression” and “U.S. Financial System Crashing and Burning.”
Next, O’Reilly asked, “Meanwhile, what are our best and brightest working on?”
O’Reilly answered his own question, showing a Facebook application called “Throw Sheep at Your Friends” and the ‘drink beer on your iPhone’ deal as examples of…well, misused talent.
He then proceeded to dis the ad-based consumer Internet, gently ridiculed Ray Kurzweill’s latest fever dreams, and recommended to all the book A Demon of Our Own Design, by Richard Bookstaber.
Then he fairly shouted: “Work on stuff that matters!”
People were awake now, but not necessarily pleased. But O’Reilly, looking casual in khakis, black T-shirt, and New Balance running shoes, wasn’t done. He warned, “If you’re trying to ride a wave, you could just as easily be caught out. Gary yesterday talked about doing what you love. I want to go further than that. Because we may be coming into a time where we need to work on things that we don’t love, but that need to be done. Create more value than you capture.”
And there was more, including a now-familiar metaphor:
“Clearly, over the last decade, these Wall Street firms have captured a lot more value than they were creating. And now the chickens have come home to roost.”
And:
“Your lifestyle is the equivalent of burning 114 light bulbs at all times.”
America is losing its edge in science and technology, has a dysfunctional Congress, and there are more slaves in the world today than there have ever been in human history—27 million!!
“We have to get everyone involved.”
“You better be working on something that can make a real difference. Because this latest ‘me-too’ idea, you’re not going to get funded. If you are funded, you’re not going to get a second round.”
“We don’t always win.”
Then he started reading from a Rainer Maria Rilke poem! Rilke, if you’ll remember was a guy who wrote poems while free-loading on the estates of rich women – so much for making difference. Looking around, I noticed that three out of the four other reporters within eyeshot were checked out, playing on Twitter. The fourth was checking his email.
“Let’s fight for things that matter,” O’Reilly concluded.
And then, almost inevitably, the conversation turned to politics, and we had to raise our hands if we were registered voters. “Personally, I’m a strong supporter of Barack Obama,” O’Reilly proudly announced.
Yeah dude, no shit.
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