Posted by Tom Foremski - September 26, 2006
It is a busy week in San Francisco with the Intel Developer Forum (Intel is a sponsor of SVW), the Clean Tech California Awards, the software as a service conference, and in San Diego DEMO is happening.
I stayed close to home this week. Monday, I managed to miss a lunch time media roundtable about software on demand because I was trying to catch up with tons of stories, and trying to tweek my CSS style sheet on SVW.
. . . Cisco rolls its own instead of buying
I did speak with Cisco about their Digital Media Systems business, which they say could become a $1bn business group. It is being launched by an internal venture group.
This is a sharp departure from Cisco's normal way of growing business, which is to seek out companies for acquisition once the market horizon reaches that magic $1bn level. Internal development versus acquisitions? Does this mean acquisitions of private companies are getting a bit too richly valued for Cisco?
. . . enterprise software is turning into one big mashup
In the evening I ran over to the WebEx event at the W Hotel and spoke with David Knight, VP pf product Management at WebEx. This was the launch of the WebEx collaborative application platform.
I said to Mr Knight that every enterprise application seems to be turning into the same thing: collaborative apps linked into CRM, ERP and legacy systems. In a year or two, how will I tell the difference in features and capabilities between services from WebEx, Salesforce, RightNow Technologies, Siebel, SAP, Microsoft, and many other enterprise applications; all vying to be enterprise platforms built around collaboration tools.
Mr Knight said there will be a difference and I agree. The winner will be the one that can capture the most vital segment within a company and I think that segment is the salesforce. And do it with a killer user interface. WebEx has 2m users, that's a significant base to sell into.
. . . hunting stories from Greg Gianforte RightNow Technologies
I ran into Greg Gianforte, CEO of RightNow Technologies, one of my favorite executives in the enterprise software sector. I asked Mr Gianforte how his book "Bootstrapping Your Business: Start and Grow a Successful Company With Almost No Money" was doing.
He said it was doing well and he was enjoying letters and emails from readers who had taken his advice to heart, which is to raise money from your customers and not from VCs. [I'm republishing Mr Gianforte's column from last summer in SVW at the end of this post--it is worth reading many times.]
Go out and sell something encapsulates a lot of Mr Gianforte's advice, and it is true, many people find it hard to sell. But if you have a service or a product that can make someone's life better, then you have a responsibility to offer it to that person or company.
Mr Gianforte lives in Montana and he always has some good hunting stories to tell, and as he likes to remind me, he always eats what he kills. He is down in Silicon Valley a lot, but his Montana HQ provides a fresh perspective on our localized thinking.
Silicon Valley is a great place to be, it exposes everyone to cutting edge conversations and concepts. But sometimes we get too intoxicated by our own hot air, and get a bit ahead of ourselves. So it is always good to hear a fresh perspective from outside of the local echo chamber, and that's what a conversation with Mr Gianforte often provides.
. . . Soonr is better than later
I ran into the Soonr management team, also their very able representative Anastasia Marin from Connecting Point Communications.
I had a very interesting chat with Cindy Gordon, CEO of Helix, an e-commerce consultancy group based in Toronto, Canada. She introduced me to Mark Organ. CEO of Eloqua, also in Toronto. And Raghu Raghavan, CEO of Act On Software, based in Portland, Oregon.
. . . Back stabbing or back scratching?
I chatted with a lot of other people too, a lot of WebEx partners. And there are many of these platform + partner roll out events these days.
Everyone supports everyone's platform and turns up for each other's events but it seems there is little love lost between the partners and the platform providers. It may look like scratch my back and I'll scratch yours, but that's just on the surface ... :-)
. . .
Here is the excellent advice column from Greg Gianforte, CEO of RightNow Technologies. You should print it out and stick it on your bathroom mirror:
Reasons not to take venture capital
- If you start by selling your concept to potential prospects (rather than stock to VCs), you will either end up with initial customers or a conviction that your idea won't work. Why raise money and then find out which one it will be?
- Raising money takes time away from understanding your market and potential customers. Often more time than it would take to just go sell something to a customer. Let your customers fund your business through product orders.
- Adding VCs to the mix early gives you an additional set of masters you must serve in addition to your customers. It is always hard to serve two masters, especially in a startup.
-With no money you can't make a fatal mistake. This is a blessing. Without VC money, you are forced to figure out how to extract funds from your customers for value you deliver. Ultimately that is the only thing that really matters.
-Money removes spending discipline. If you have the money you will spend it - whether you have figured out your business model and market or not.
-Raising VC money determines your exit strategy. You will either sell the business or take it public. What if you end up with a very profitable, modest sized business that you want to just run? That is no longer an option once you raise VC money.
-You sell your precious equity very dearly before you have a proven business model. This is the worst time to raise money from a valuation perspective.
Don't forget Dell, HP, Microsoft all originally started without VC funding; you can build a big business with bootstrapping and without VC money.
At RightNow, we doubled our revenue and employees every 90 days for two years before we took any outside money, and even then the employees retained more than 75% ownership after raising $32m.
- - - Greg Gianforte : "Bootstrapping Your Business: Start and Grow a Successful Company With Almost No Money."
SVW affiliate link:
And he welcomes questions from SiliconValleyWatcher readers.Tweet this story Follow @tomforemski