Explaining Southern California's economy

Venture capital has shifted to funding business software

CFF VC Panel

Venture Capital in Southern California panel, moderated by the DeBord Report's Matt DeBord. These guys may be looking for different types of startups to invest in.

Fred Wilson, in typical clear and direct fashion, nails the shift as venture capitalists withhold additional rounds of funding from consumer-web companies and pivot toward the search for "enterprise" opportunities — ways to invest in software for businesses, not for the masses. Here's Fred:

[I]nvestors have moved from consumer to enterprise. there is a large pool of money in the venture capital asset class that is opportunistic, momentum driven, and thesis agnostic. this pool is driven largely by the public markets. this pool of capital was "all in" on consumer web/social web in the 2009-2011 time frame. it drove a lot of activity throughout the venture capital markets because each layer of the VC stack...needs to be aware of what the next layer up wants to fund. when the momentum/late stage wanted web/social, the layers below gave them web/social. Now that the momentum/late stage wants enterprise, we should expect the layers below to give them enterprise.

The combination of these three factors is making it harder for consumer internet companies (web and mobile) to get funding.

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Dell buys Quest for $2.4 billion, and the enterprise market gets hotter

Dell Opens New R&D Center In Silicon Valley And Holds Career Fair

Justin Sullivan/Getty Images

The new Dell research and development facility in Santa Clara, California. The Texas-based tech firm announced that's it's buying Orange County's Quest Software for $2.4 billion.

Texas-based Dell Computer just announced that it's buying Orange County's Quest Software, for a very respectable $2.4 billion, roughly a $422-million premium on what the company was considered to be worth a few months back, when Dell offered $23 a share and kicked off a bidding war that pushed Quest's value to $28 a share.

The consensus view is that Dell is buying future growth. The so-called "enterprise" market is getting hot, as the consumer Web space has become a lot more crowded, both for desktop software and new mobile applications. Businesses have more complex needs, however, and often seek out custom solutions — and they do it often enough to make this a roughly $250-billion market, according to Gartner, an IT advisory company.

Oracle, IBM, and SAP are well-known in this field. But Microsoft is actually the biggest player. Dell, on the other hand, made its name for building PCs to order. And with the advent of smartphones and tablets, that market is fading. It may take a while to completely vanish, but established PC makers are eyeing other lines of business and spending aggressively to acquire them. Dell alone has been buying at a decent clip, spending down $15 billion in cash last year to around $13 billion in the first quarter of this year.

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We're not ready for the end of email yet

Mercer 12865

Nicholas Kamm/AFP/Getty Images

A man checks his email on a Blackberry.

Thanks to Felix Salmon for pointing me to this Financial Times post by Maija Palmer about the end of email. Yes, that's right — it's yet another argument that email is outdated, badly designed, and the death of all things productive. Here's a taste:

The ability to track email is increasingly becoming a turn-off. Anecdotal evidence suggests that in an age of heightened regulation, bankers are eschewing email in favour of less traceable forms of communications, such as hand-written notes...

However, for many companies, it is simply that email is seen as inefficient. “We believe email is fundamentally unproductive, you need to sift through too many documents and things get lost,” says Leerom Segal, president and chief executive of Klick, a Canadian digital marketing company. “It has no prioritisation, no workflow, and assumes that the most important item is the one at the top. My business partner became so frustrated with how dumb email was, that 14 years ago he began to build better tools for us to manage workflow.”

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