Tech Coast Angels: Night at the Geffen

TCA-LogoOn June 21st, the Tech Coast Angels held its second Night at the Geffen Playhouse, in Los Angeles CA. The event was organized by Frank Peters, President of Tech Coast Angels, and the prolific podcaster of the Frank Peters Show (in his show, Frank engages prominent entrepreneurs, angel investors and venture capitalists in in-depth conversations about the state of innovation in southern California).

The Geffen Playhouse is housed in a historical building that was originally a Masonic lodge in 1929, and today stands as a reminder of the past association between the Freemasons (an organization that is hundreds of years old and believed to have roots in the medieval stone masons of Europe) and UCLA. It is one of the first 12 structures built in Westwood Village. The original building still stands today, but it has been extended through renovations to the tune of $17M that were completed in 2005.

10 TCA members and their spouses attended the intimate evening at the Geffen Playhouse. The event started with a tour of the Geffen followed by a private dinner in one of the original rooms of the Masonic lodge.

Gershwin Hershey logoThe highlight of the evening was the one-person play “George Gershwin Alone”. The play celebrates the genius of the composer George Gershwin. Hershey Felder, who has written and directed the production, also played the role of the intense and sometimes whimsical Gershwin to perfection.

At the end of the play, Hershey Felder led a sing along of some of Gershwin’s best loved songs, including the ever popular “Summertime”.

The evening ended with an intimate champagne reception , over which Hershey Felder answered questions from the Tech Coast Angels members (including what it is like to be married to a prime minister - Hershey’s wife is ex Canadian Prime Minister Kim Campbell!). Felder also described his experiences over the 3000 shows that he has staged around the world for “Gershwin Alone”, and talked about his newer productions based upon the lives of Chopin and Beethoven.

The evening ended with directors of the Geffen giving TCA members CDs of the Gershwin Alone sound track to take away as mementos.

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hershey felder gershwin alonegeffen playhouse terrace


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Clearmesh closes its doors

clearmesh logBuilding fiber networks in congested areas is difficult. Digging trenches and pulling the fiber between buildings is expensive and time consuming. Enter Clearmesh Networks, with an elegantly simple solution. Send data via infrared light waves from roof top to roof top, via transceivers. The main physical limitation is line of sight. Building out a network of these devices provides failure proof re-routing capabilities. Clearmesh held a lot of promise in campus type environments, like major office parks with tall buildings.

clearmesh network

Now it appears that Clearmesh, an Idea Lab spawned company is closing its doors. The company is up for sale. Idea Lab has apparently changed course, and is focusing its energies in the green tech area.

So why did Clearmesh fail? Clearly the product had received enough accolades. The optical network deployment had far less regulatory issues than RF networks.

This reminds me of Connexion, a billion dollar development of in-flight WiFi service, that was predicted to be a major revenue generator for Boeing. Early adoption from already cash strapped airlines was a problem, as was the high cost of the service.

Another company in a somewhat similar situation was Ricochet. Ricochet was wireless, way before wireless was cool. They gave you a small modem with an antenna which you plugged into your PC, and if you lived in the right places within the coverage area of their proprietary Micro Cellular Data Network, you would get get connectivity at a decent speed. I tried the model in 2000, driving up and down silicon valley, and got reception about 50% of the way.

The problem with the Ricochet network was that the usefulness was limited by the coverage, and providing coverage was, of course, expensive. After $600M poured in, in capital, the coverage was no where near the nationwide reach that was initially expected, and the company finally folded in 2001.

So it goes with grand ideas. You’ve got to respect the folks who go out on a limb to try to turn them into reality. Sure some of them crash and burn. But it is on those experienced shoulders that others need to stand on, if they are going to not only see, but also go further.


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A start-up called Google

I know we profile startups, and Google is not a startup anymore, but I got all excited when I heard that Google had recently released the beta version of Google Analytics, an application that allows web owners and marketers to view the revenue and conversion trends on their websites.

I have to admit that I am a bit of a Google Analytics addict, and I wondered, what there was to improve upon on an almost perfect, and not to mention free, product (brought in through their acquisition of Urchin) that was already chewing up market share from all the other Web Analytics operators in large chunks. But sure enough, they had managed to work in an even more spiffy and useful graphical user interface. But more on that later.

So what was Google like, as a start-up? To find out I went to Google’s first web page archived in the shadowy recesses of Wayback Machine.

This is what the Google.com Home Page looked like on Nov 11, 2021

Behind that demure front page, was, of course the little search engine that could, and then some!

 

Since then Google has consistently spawned out innovative applications, “Googlets” if you will, each of which could be a company in its own right - Google Adwords, Google Images, Google Maps - the list is endless.

Google Analytics is one more of those “thank you for figuring out just what I needed” applications that, in terms of versatility and usefulness, is a generation beyond other apps in its class.

Their recent additions included:

1. A cleaner, more graphical interface that got the big thumbs up from me

2. Simpler way to compare data (like how your website did this month vs. last month)

3. A customizable dashboard that gives you an “at a glance” website report.

Besides that, they fixed a couple of bugs from the last system such as when you change the date range, the display does not go back to the default dashboard, but stays with the data and graphs that you are currently viewing.

Alas, I don’t think we shall be seeing any new companies get funded in the Web Analytics arena, in the near future - unless they can think up a really cool feature that Google has not gotten to - yet.


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The New Venture Capitalist: Not your Dad’s VC

The paradigm is shifting in VC land. In his blog post Deal flow is dead, Bill Burnham draws the funny and highly apt parallel with VCs being akin to bears fishing in a salmon run. In the old days, there were few VCs and many entrepreneurs looking for cash, and finding deals was like standing in the middle of a salmon run, and swatting a few of the best picks, at will.

Deal flow is becoming passe. Not that deals don’t still flow. Some do. But there are a whole lot more bears fishing in the stream. Pickings are getting slim - or so you would hear if you talked to VCs.

Now change phase to the entrepreneurs. They are still complaining that it is hard to fund a company. So where is the big disconnect?

Talking to VCs at small funds reveals a deal acceptance ratio of about 1:50. The ratio goes up to about 100 for mid to large funds and about 150 at the top tier. While these numbers are not exactly small, the quality of deals does not seem to be up to the expectation of most investors.

The mid tier funds face a double whammy. They not only see fewer business plans for each company that they fund, they are not privy to the best deals, which tend to go to the top tier funds.

In time, we will see a cycle where the smaller or lesser known funds will see fewer of the good deals, and have a harder time returning a decent ROI to their investors. This will make it even more difficult to raise their next fund, and might ultimately result in an even larger chasm separating the smaller funds, and the monolithic ones at the top.

So is there anything that VCs can do to reverse this trend?

1. Start a hatchery: The best way to spur innovation is to seed it at a formative stage. Recently, Mark Stevens at Sequoia Capital, gave a generous $22M gift to the University of Southern California, to establish the Stevens Institute for Innovation. Creating the right enviroment is a great head start towards ensuring that more and better ideas will get to the marketplace, to create the next wave of successful companies.

2. Find new rivers and streams: Many VCs of small funds are doing this already. They realize that it is no longer possible to sit still and wait for the deals to come to them. Several have found non traditional ways of finding new deals before they come to the market and bidding between funds makes them unattractive investments. Some firms such as Venture Farm in Irvine, CA are finding companies while they are still in the idea stage, and carrying them into the next stage in their life cycle where they will become investable companies.

3. Grow a stronger run: Mentorship is absolutely critical in carrying a company from its idea stage, into one that is ready for success. The Tech Coast Angels has set up mentorship programs with Universities, to help spur not only the commercialization of technology into viable companies, but also to support budding entrepreneurs so that they are able to take their companies to the next level. In order to generate future successes, VC firms might find it worth their while to take on and mentor would-be entrepreneurs (in the same way attorneys are expected to spend a certain amount of their time doing pro-bono cases), so that for every deal that they invest in today, there are 5 more that will form viable companies for them to invest in tomorrow.

4. Support the environment: Surprisingly, many entrepreneurs whose companies were passed up for investment by the top VC firms said that the partners at these firms were very good at keeping in touch with them. Smart VCs know that entrepreneurs are very resillient; The same person who presented a half baked idea today, will be back in a year’s time with a better idea and a better plan. Continuing to support the ecosystem is not just a good idea, it makes great business sense.

Perhaps we should heed the wisdom of the American Indians: Whenever you take from nature, put something back in its place.


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