Wednesday, August 1, 2007

STVP-AlwasyOn Stanford Summit Coverage - Part 2

I'm here at the Stanford Summit Day 2. STVP hosts this technology trends conference with AlwaysOn. It was a non-stop parade of high-tech celebrities. Here are a few highlights from today.

View the program/agenda here.

View any presentation in full via the webcast archive here.

The Rise of Virtual Worlds

Just go see this session for yourself in the archives. Philip Rosedale, CEO of Linden Lab, opened with a demonstration of Second Life. If you aren't familiar with what Second Life is, you soon will be. It's fast becoming a household name on the order of You Tube. (Beyond the mere fun of creating an alternate existence, it's very tempting to go out there and start a business as an extra income stream! And now that I think about it, this could be a place for young entrepreneurs to go test their skills.) The panel discussion was also very interesting. There was a very compelling discussion about how virtual worlds will go mainstream, what drivers could affect that, and interesting behaviors of their users. The panel consisted of:
  • Irving Wladawsky-Berger, VP, IBM
  • Philip Rosedale, CEO, Linden Lab
  • Craig Sherman, CEO, Gaia Online
  • Chris Melissinos, Chief Gaming Officer, Sun Microsystems

Why Aren't VCs Happy?

This panel discussion was interesting. It started with a brief presentation by Paul Deninger, Vice Chairman, Jeffries & Company, who argued as to why VCs shouldn't be happy right now. He offered up many statistics to support his point of view. He also addressed what he considers a myth: That
the IPO market is back. In his view, it may feel like it's back compared to the crash, but it's still way behind the average pre-bubble level in the 1990s. He also said that about 90% of the current deals are M&A, and the majority of those are being done by only ten huge companies ($100 billion market cap). He noted that twice as much money is being poured into companies, yet the number of exits is the same ("exit" defined as an IPO or $100+ million merger or acquisition). He said that industry is mortgaging its future by selling its best companies too early.

With that, the rest of this impressive panel joined him on stage. The full panel consisted of:

  • Mark Stevens, Managing Partner, Fenwick & West
  • Roger McNamee, Partner, Elevation Partners
  • Erik Straser, General Partner, Mohr Davidow Ventures
  • Paul Deninger, Vice Chairman, Jefferies & Company
  • Bill Gurley, General Partner, Benchmark Capital
There was a lot of point/counterpoint during this discussion. Again, it's worth watching this one online, especially if you'd like a quick primer on capital market dynamics and interrelationships as they relate to new ventures. A few of the many viewpoints the panelists expressed:

  • Gurley sees a real problem: few executives willing to run public companies because of Sarbanes-Oxley
  • Straser sees an abundance of inexpensive money; the challenge is companies around the world taking advantage of it in a productive manner
  • McNamee argues that today's environment (low IPO count) is the norm vs. what was going on in the '90s (not the norm); it doesn't make sense to use the volume of the '90s as the bar
  • Companies on the leading edge of technology are of big interest for M&A right now
  • Another driver of M&A is that younger companies are easier to integrate; you also get more network effects with young Internet companies
  • McNamee says that in the near-term, we're going to "vaporize" a LOT of venture money, private equity money and public money first, then there will be a bull market (natural cycle)
  • Sarbanes-Oxley: Government is going to have to loosen up the enforcement in order to enable U.S. companies to compete in today's truly global capital markets
  • This is a great time to be an entrepreneur - just be prepared to bootstrap it for awhile and eventually the market will be right for accepting money and putting it to work
John McCain

Regardless of one's politics, it was interesting to hear John McCain's views up close and personal (in my case, about 20 feet away, to be more precise). He was in town for a fundraiser and came by the conference to share his position on some key issues and take questions from the audience. Up on the stage for a full hour, he was fully engaged and also expressed his appreciation for the impact that members of the audience have on the world through their contributions to technology.

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