Monday, October 14, 2013

Venture Capital and Private Equity Around the Glorious Roundtable

I get invited to the most mind-blowing events.  My definition of "mind-blowing" is highly intellectual and does not involve anything illegal or unethical, so most human beings probably won't want to hang out with me.  That's okay.  They'd cramp my style anyway.  Check out how I roll.  Yo!  I attended a Silicon Valley roundtable event last Friday that must remain nameless because it was organized by private parties who do not seek publicity.  There wasn't even a round table in the room.  Several entrepreneurs and investors attended by invitation only and the organizer allowed me to attend as a guest.  Wonderful topics lined the agenda and I shall discuss them in oblique terms.  Prepare to be entertained.

Flying cars have been on the dream list of inventors since the Jetsons were on TV.  I got to examine real working prototypes of flying cars at the US Army Transportation Museum in 1995.  None of them ever had serious capabilities.  Entrepreneurs are now developing flying cars that convert from ground mode to airborne capability.  Modern contraptions remind me of the Bell-Boeing V-22 Osprey program with propellers to switch from VTOL to horizontal flight.  Rotary wing aircraft can autorotate into the ground in the event of a mechanical failure, which saves lives but isn't pretty to experience.  Twin-rotor aircraft have no such option if something fails while hovering during a VTOL event.  A ballistic parachute that deploys automatically upon engine failure may solve the problem.

I no longer believe the bull story for further miraculous economic growth in China.  Many others still do and that's okay.  Someone needs to be long in case I ever go short.  China joined the WTO in 2001 and is now inextricably linked to the world market.  Its role as the world's factory is ending because its increasing wages have priced it out of low-cost manufacturing.  China needs to pay more attention to WIPO if it wants credibility.  San Francisco may become the first renminbi trading hub in North America once China makes its currency fully convertible.  Western investment banks are opening offices in Shanghai and that city is the first in mainland China to have a free trade zone.  My MBA alma mater USF has a strong interest in China and it is hosting a conference on China's financial reform in a couple of weeks.  I have already registered to attend because I love learning stuff.  The conference is free to USF-affiliated people.  Stolen Valor frauds who prey on veterans will not be allowed to enter the event.  You know who you are, and so do I.

There are such things as credentials in business valuation.  NAVCA offers certification in business valuation and appraisal.  This knowledge comes in handy for business brokers who buy and sell privately owned businesses.  I think it also comes in handy for fraud investigators.  I'm not saying there's any fraud in Silicon Valley.  No sir-ee-bub, not me.

Santa Clara University has a Global Social Benefit Incubator (GSBI) that launches non-profits.  One such non-profit is Literacy Bridge.  They distribute single-touch audio books loaded with knowledge of agribusiness and sanitation in developing countries with low literacy levels.  The device is meant to be shared via a local subscription.  Literacy Bridge collects use case data on the number of activations, volume level, and playback times from each audio book.  This proves that big Data can reach rural areas that do not have WiFi or landline telecom infrastructure.  Societies with oral traditions have different connectivity speeds.

Executives from large publicly-traded companies will share their growth lessons with pre-revenue stage startups.  Non-dilutive financing options include licensing and royalties, but my readers have heard me mention that in other blog posts.  The caveat is that non-dilutive financing takes longer to grow a company.  The IPO must have a good rationale; it can't be just to return capital to early investors.  Entrepreneurs must tell early investors that growth takes a long time, to set their expectations for a realistic timeline.

Freedom House near San Francisco provides a refuge for victims of human trafficking.  Poverty is a supply-side problem driving women into servitude and exploitation.  California law now recognizes underage solicitors as victims rather than criminals.  Freedom House's aftercare referrals come from law enforcement.  They do important work.  I believe Somaly Mam would approve.

Space . . . the final frontier.  It won't be that way for long.  Space Tango is an incubator for space-oriented startups, although it's quite a ways from where I hang out in NorCal.  The Silicon Valley Space Center is hosting a conference on "Launching Commercial Space Enterprises" this coming weekend.  I can't attend due to prior commitments and I don't normally pay entrance costs higher than zero.  It's probably worth the time of some VCs.

I would like Venture Capital Journal to publish more stories on the unfulfilled promise of the mobile / Big Data / cloud trifecta.  If they don't, I certainly will.  My theory as of today is that the Holy Grail of Big Data remains unrealized because too few IT practitioners have applied ROI-type metrics to compare their investments in Big Iron and the cloud.  It's like my experience with portfolio managers in finance.  Almost all of them rely on folk wisdom, unguided guesswork, and rumor instead of applying the metrics I read in Buffettology books on Warren Buffett's deep value investing.  I think the IT crowd is the same way.  IT pros rely on their subjective preferences for technology instead of the hard metrics of Cloudonomics.  Buffettology and Cloudonomics are often cited, sometimes read, and rarely implemented.  That's why Wall Street holds as much unfulfilled promise as mobile Big Data in the cloud.  That's also why the few people who do read those books can win in life.

These topics appear to be unrelated.  Entrepreneurs and their investors can track them all and make sense out of unrelated matters.  That's just how we think.  Great minds are divergent and polyphasic.  Genius investors in venture capital and private equity discuss these things all the time, even when we're not around a glorious roundtable.