WOW: Big Bend National Park - March 2008

Laurel and I just returned from a week in Big Bend National Park. We spent part of the time with her parents and part just the two of us. In a word, "WOW!"

At almost 1,000,000 acres, Big Bend is big. And the terrain is quite diverse - from the Rio Grande, to canyons, to mountains, to forests, to deserts. Sort of like Texas, I guess.

We drove 1,200 miles in the week - it's a long way there and back - and saw a whole new part of Texas (new to us). Beautiful. Inspiring.

Spring has sprung...and I am looking for a princess

There is no mistaking it is spring here in central Texas. The mountain laurels and bartlett pear trees are in full bloom and fields of blue bonnets are starting to sprout.

March is upon us.

I have spent the first two months of 2008 kissing frogs...looking for that proverbial princess. Now I know it was frog turning into a prince in the fairy tale, but that doesn't work for me...it's a princess.

After taking a very serious look at two companies on the West coast (Bay Area and the Pacific Northwest) in the Fall of 2007, I passed on both. My bar for leaving central Texas is high: something extraordinary; something I simply MUST do. Although both of these companies are great and will, in my opinion, be successful, neither one rose to the level of extraordinary...for me.

Neither one turned into a princess.

During January and February, I spent a significant amount of time on a buy-out opportunity right here in Austin. Great SaaS company (people), wonderful niche, strong cash-flow, good growth prospects - completely boot-strapped with no outside capital. Perhaps a princess? I'll never know as my private equity partners and I were outbid by a "strategic" (e.g. a public company) buyer at the last minute.

Spring is (usually) a rainy season here in central Texas. And sometimes when it rains, it pours. Four other opportunities occupy my time as I write this. Will one be that princess? Perhaps...

2008 - Three Key Technology Trends to Watch

2007 is about to end. 2008 is a new year.

I believe there are three significant technology trends that are behind the best company formation and growth opportunities in our industry:

1. The monetization of search by way of Internet-based advertising. This trend started with Overture and others but is best embodied by Google's AdWords and AdSense offerings and the attendant amazing revenue and profit growth Google has generated in the lst four years.

2. Software-as-a-Service(SaaS) or delivering the functionality of application software such as CRM or ERP over an Internet connection from a hosted, typically multi-tenant, instance of an application. This trend has not only created a new business model for new SaaS companies such as Salesforce.com and NetSuite but also spurred traditional software vendors such as SAP and Oracle to offer their solutions in this same fashion.

3. Virtualization or the simulation of an entire server or PC in software. This trend has driven the incredible growth of VMware culminating in a spectacular 2007 IPO and a $30 billion valuation for the company (which is 85% owned by EMC.) A large number of venture-funded companies have been (and are being) created to capitalize on this trend.

Dartmouth Class of 1978 - An Amazing Group of Men and Women

President James Wright made the following remarks during his Tenth Annual Report to the General Faculty this week:

"And I am delighted to be able to announce today that the Class of 1978 Reunion Giving Committee, made up of Bill Daniel, Elissa VonHeill Hylton, Steve Mandel, and Barbara Dau Southwell, has committed to meeting two goals by the time of their 30th reunion next June. Now we need to understand that the Class of '78 broke all previous reunion records in 2003 when they raised over $14 million for their 25th reunion. They have agreed to do this again! They have committed to raise the $40 million necessary to name the College's new Life Sciences building and contribute at least $3 million in unrestricted gifts supporting the student experience. This current commitment raises the bar for class gifts to an unbelievable height. I am so pleased that we will be able to name the Life Sciences building for the Class of 1978."

I am thrilled. It really is astounding that this group of men and women has had such financial success and yet remains as generous and committed to giving back to Dartmouth at the same time. It is a honor to be a part of such a group.

VMWorld 2007 - Thoughts

11,000 attendees. Incredible "buzz." Huge success for VMware.

Some companies I thought were interesting...

ManageIQ. Former Novadigm (acquired by HP in 2004) execs, bootstrapped (self-funded), product not yet released. This is a complete systems management solution - a framework e.g. Tivoli or BMC. Focusing on virtualized infrastructure. No VC funding yet. No revs. Very limited traffic or buzz at VMWorld.

Innovawave. They have built a driver that accelerates I/O between the hypervisor and the physical I/O devices. Just got the VMware ESX version working - won't be generally available until early 2008. No revs. No customers. Good VCs - Matrix and Silverton (which is Bill Wood formerly of AV). Chris Ostertag (CEO) has a great track record in direct sales but this has to be a channel/distribution model so we'll see if he can do that. Very early days. Lots of interest from VMware folks....maybe they want to acquire them or kill them or both.

Q-Layer. Belgium company. Funded by Partech (whom I know - OK VCs). Trying to boil the ocean - "data center virtualization" is a HUGE set of problems to go solve. I am skeptical. Also, selling to service providers (hosters) which is not a great market in my opinion. I don’t like European-based software companies trying to sell into the US - rarely works. Good amount of traffic/buzz at the show.

TeamQuest. 15 years+ old company, profitable, 57% employee owned, based in Clear Lake, IA (where Buddy Holly died in a plane crash). Showing new product for reporting and Analysis of Virtual Machine performance. Very niche. Have about $25 million in revs from existing products for physical machines - performance reporting and analysis. Good traffic at their booth.

VKernel. 15 people, no revs. Have created a virtual appliance (a packaging mechanism where you combine your app with the VZN bits and it can run directly on VMWare with out installing anything else) that does charge back and capacity analysis/planning. Have had 2,000 downloads in last 30 days (since they released the product) and 100 are actively playing with the product. That is impressive. No VCs yet - bootstrapped. Lots of traffic/buzz.

FastScale. Creates the equivalent of virtual appliances - slimmed down packages that can be run directly on VMware ESX. Claim to fame is they make these very, very small - small disk footprint and memory footprint - by stripping out all the extraneous stuff the application being packaged does not really need to run. 10 beta customers, based in Sunnyvale, 2 VCs (ones I did not recognize). These guys were in the area of the show floor where you can rent a "stand" - a single station to demo your product. So, they were not getting much traffic.

Conclusions. Overall, lots of "features" masquerading as products and/or companies. But that is normal for this stage of a nascent market. VMware ESX 3 is the equivalent of Windows 3.1 (the first version of Windows that really worked well) - meaning it has just reached critical mass and the real big growth is in the future. Also, like the first working version of Windows, VMware ESX needs a lot of tools and other things around it to work better in a production data center environment. That means some of these things above are going to be successful in spite of their short comings or narrow focus. But, eventually, VMware will provide most of these things "in the box." The first "killer app" that uses virtualization as an enabling technology is not out there yet or at least not obvious to me.

The Summer Is Over...

As the founding CEO of Surgient, Inc., I spent the past 4 1/2 years creating and leading the "new" Surgient. The story of the new Surgient is a wonderful "phoenix rising from the ashes" tale. In June of this year, I began transitioning my duties to our new CEO, Tim Lucas. I have spent the summer assisting Tim in the transition and helping to forge relationships between Tim (as the new CEO) and Surgient's key customers and partners.

The Summer is over.

Next week is VMware's - of newly heroic, blockbuster IPO fame - annual customer conference/partner called VMWorld. This should be a veritable feeding frenzy of small and new virtualization-technology focused companies, all hoping to bask in the glow of VMware's post-IPO halo. I believe this conference also signals a new phase in the ever-changing technology landscape. Virtualization is one of those disruptive technologies that changes the market landscape and this fall is a point in time when, I believe, we hit a tipping point.

We shall see.

Evil in the world...how does it make any sense?

On Monday, July 23, 2007 a college friend from 30 years ago became one of those people who helps us understand how to answer this question.

I lived across the hall from Bill Petit in a dorm at Dartmouth College from September 1974 until December 1975. Bill was and is an outgoing, gregarious, and wonderfully warm person. After Dartmouth, Bill became a doctor, married, and raised his family of two daughters in Connecticut. Although we never lived near each other and rarely saw each other (only every 5 years at reunions), I still to this day have a wonderfully warm spot in my heart for Bill. He is just that kind of person.

From the Hartford Courant newsapaper:

"Petit's home life was that of a man pleasantly outnumbered by women. On Monday (7/23/07), that home was destroyed in every sense. Steven Hayes, 44, and Joshua Komisarjevsky, 26, are charged with breaking into the home and beating Petit with a baseball bat. They are accused of raping Jennifer Hawke-Petit and at least one of their daughters, strangling the mother and lighting the Sorghum Mill Drive house on fire. They left the girls to perish upstairs, one still tied to her bed while Petit - having been tied up in the cellar - managed to make it up the stairs and escape through the flames."

An awful, horrible, tragic event. No way can I even imagine the pain and heat ache Bill feels.

On Saturday, July 28th, 1,800+ people attended a memorial service for Bill's family. It was an amazing testimony to the indomitable human spirit and the power of hope.

Bill's wife Jennifer's father, Rev. Richard Hawke spoke. One of 50+ cousins the two girls shared spoke.

"We have much to rejoice about, because of the precious memories we have, " William Petit's sister, Johanna Petit, said, "My brother Billy is a good, strong man. His wife, Jen, was equally good and strong....If any good can come from this tragedy, it's going to have to come from you," she said to those at the service. "It's going to have to come from all of us."

The Bill himself rose to speak. His face showing the signs of the savage beating with a baseball he endured when he confronted the invaders. But Bill did not talk of death. Instead, he talked about the life he shared with Jennifer and his daughters. And as Bill spoke, the answer to how he will be able to carry on with his life began to become obvious.

Bill said, "I guess if there is anything to be gained from the senseless deaths of my beautiful family, it's for us all to go forward with the inclination to live with a faith that embodies action, help a neighbor, fight for a cause, love your family...Live well," he said, "spread the work of these three wonderful women."

Words to live by...

We make a living by what we get, we make a life by what we give. (Winston Churchill)