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11/16/2005

RSS and Google Base: Google Feeds Off The Web

There has been a lot of talk about Google Base today on the web and much of the reaction appears to be either muted or negative.  The lack of enthusiasm seems to be driven by the fact that the GUI is pretty rudimentary and doesn't provide any real-time positive feedback (as Fred points out).  But people that are turned off by the GUI should take into account that Google Base wasn't designed primarily for humans; it was designed for computers.  In fact, I think if people were computers their reaction would be closer to jumping for joy than scratching their heads.

What's perhaps most interesting about the Google Base design is that it appears to have been designed from the ground up with RSS and XML at its center.  One need look no further then the detailed XML Schema and extensive RSS 2.0 specification to realize that Google intends to build the world's largest RSS "reader" which in turn will become the world's largest XML database. 

To faciliate this, I suspect that Google will soon announce a program whereby people can register their "Base compliant" RSS feeds with Google base.  Google will then poll these feeds regularly just like any other RSS reader.  Publishers can either create brand new Base-compliant feeds or with a bit of XSLT/XML Schema of their own they can just transpose their own content into a Base compliant feed.  Indeed I wouldn't be surprised if there are several software programs available for download in a couple months that do just that.  Soon, every publisher on the planet will be able to have a highly automated, highly structured feed directly into Google base.

Once the feed gets inside Google the fun is just beginning.  Most commentators have been underwhelmed by Google Base because they don't see the big deal of Google Base entires showing up as part of free text search.  What these commentators miss, is that Google isn't gathering all this structured data just so they can regurgitate it piece-meal via unstructured queries, they are gathering all this data so that they can build the world's largest XML database.  With the database assembled, Google will be able to deliver a rich, structured experience that, as Michael Parekh sagely points out, is similar to what directory structures do, however because Google Base will in fact be a giant XML database it will be far more powerful than a structured directory.  Not only will Google Base users be able to browse similar listings in a structured fashion, but they will also ultimately be able to do highly detailed, highly accurate queries.

In addition, it should not be lost on people that once Google assimilates all of these disparate feeds, it can combine them and then republish them in whatever fashion it wishes.  Google Base will thus become the automated engine behind a whole range of other Google extensions (GoogleBay, GoogleJobs, GoogleDate) and it will also enable individual users to subscribe to a wide range of highly specific and highly customized meta-feeds.  "Featured listings" will likely replace or complement AdWords in this implementation, but the click-though model will remain.

As for RSS, Google Base represents a kind of Confirmation.  With Google's endorsement, RSS has now graduated from a rather obscure content syndication standard to the exautled status of the web's default standard for data integration.  Google's endorsement should in turn push other competitors to adopt RSS as their data transport format and process of choice.  This adoption will in turn force many of the infrastructure software vendors to enhance their products so that they can easily consume and produce RSS-based messages which in turn will further cement the standard.  At its highest level, Google's adoption of RSS represents a further trimph of REST-based SOA architectures over the traditional RPC architecture being advanced by many software vendors.  Once again, short and simple wins over long and complex.

In my next post I will talk about Google Base's impact on the "walled garden" listings sites.  I'll give you a hint: it won't be pretty.

November 16, 2005 in Blogs, EAI, Internet, RSS | Permalink | Comments (18)

Nokia Buys Intellisync: Another Elephant Joins the Mobile E-Mail Party

The news out of Finland today is that Nokia, the world's largest manufactuer of mobile phones, has purchased San Jose based Intellisync.  Om posted on the acquisition and goaded me to make my own post, so I thought I would just try to answer the Top 5 questions about this deal:

  1. Who in the world is Intellisync?
    Intellisync used to be called Pumatech and it was one of the pioneers of "syncing" or software that synchronizes data between desktops and handhelds.  Over the years Intellisync has made a number of acquisitions including Synchrologic, Starfish, Loudfire and Spontaneous.  Lately they have been spending a lot of energy on the wireless e-mail space and recently released a very cool unified messaging client for mobile devices.
  2. Why would Nokia buy Intellisync?
    Software, relationships and patents.
    • Software: Intellisync actually has some pretty decent software that has been widely deployed (they claim to have 500,000 people using their wireless e-mail solution).  Like most hardware companies, Nokia doesn't really understand desktop/enterprise software so by acquiring Intellisync they get significant software expertise to complement their hardware expertise.
    • Relationships: Intellisync has good relationships with a number of the major wireless carriers around the world and is experienced in certifying software to run on their networks.  Nokia obviously has great relationships with most carriers as well, but Intellisync will give them more credibility with carriers on the software front and an enhanced ability to customize software for each carrier which is something that carriers increasingly are looking for.
    • Patents:  Intellisync has been accumulating a large portfolio of synchronization-related patents for some time and has not been shy about trying to enforce their claims.  While Nokia has already settled with NTP, the addition of the Intellisync patent portfolio give Nokia a lot more protection from any potential patent suits and also gives them the option of making life very difficult for some of their competitors if they choose to.
  3. Is this a sudden marriage or have they been dating awhile?
    Nokia has had a relationship with Intellisync for awhile.  It seems to have started, somewhat indirectly, with Intellisync's early support of the Symbian operating system, and recently had intensified to the point where Intellisync was designing software for specific Nokia phones.
  4. Is this good news or bad news for the other Wireless E-Mail Software Providers?
    Bad news.  As some may know, I recently did a post on the huge amount of money that has flowed into some few private companies that are also focused on wireless e-mail middleware.  That level of investment looks even more suspect now in the face of Nokia's acquisition of Intellisync.  Not only does this likely eliminate Nokia as a potential customer/buyer (and with it 25%-30% of the handset market) but it also creates a very well funded and well connected competitor at the carrier level (assuming Nokia will continue to sell Intellisync's software for other handsets as well).  It's also bad news in that Nokia undoubtedly "took a look around the neighborhood" before buying Intellisync which suggests that they didn't see anything else they liked.  The one silver lining here may be that Nokia's move might force the hand of other handset manufactures, such as Motorola or Samsung, but given that Nokia paid only $430M to take out Intellisync it's hard to see a lot of M&A upside for the private companies as two of them have already raised more than $200M.
  5. Does this mean that Nokia is not going to buy RIMM?
    Yes.  Personally I don't think Nokia was ever going to buy RIMM, but this acquisition should put those rumors to rest once and for all.  With Intellisync, Nokia no longer needs RIMM's middleware software and all it would be acquiring is handset maker, and a relatively expensive one at that.  Besides, with RIMM trading at 26.5X EPS vs. Nokia's 17.5X any deal would be highly dilutive to start with. 

November 16, 2005 in Wireless | Permalink | Comments (0)

11/15/2005

Serial Persistence Follow-up

Just a quick follow-up to my recent post on the serial persistence of venture returns.  A reader kindly brought to my attention another study on serial persistence which is basically consistent with the University of Chicago Study I mentioned in my earlier post.  This study, a brief of which you can download here, was done by and LP advisory firm called Alignment Capital Group.  Alignment’s study, while less ambitious and less rigorous than the U of C study, is largely focused on the question of how likely a GP with a top quartile fund is to repeat that top quartile performance with their next fund.  According to alignment’s study, there is a 44% chance that a top quartile fund will repeat its top quartile performance.  This study’s chances of persistence are a bit higher than the U of C study, most likely because this study only covered funds with vintage years between 1980-1995 compared to the U of C study which included funds from vintages 1980-1997 plus a few others.

Even if you take the 44% at face value though, it remains a true statement to say that a GP with a top quartile fund has a better chance of not repeating that performance than they do of repeating it, in other words, the chances of a top quartile fund repeating that performance are even worse than a coin flip.

I submit once again that conventional wisdom holds that the chances of repeat performance are much better than a coin flip yet both of these studies clearly demonstrate that the chances are in fact significantly less.  These probabilities call into the question the almost blind faith that many people in the VC industry have in the ability of “top quartile” funds to repeat that performance.

All that said, in the absence of any other information about a fund, the fact that a prior fund managed b the same GP experienced top quartile performance is still obviously a very valuable piece of information that would be silly to ignore. It’s just not the only piece of information that one should consider.

One other interesting tidbit that the Alignment study noted was that “one off” funds, or GPs that only managed a single fund, handily outperformed GPs with multiple funds.  According to the study, one-off funds generated a mean IRR of 16.3% compared to a mean IRR of 9.3% for the multiple funds.  This is a highly counter intuitive result and one which I believe contradicts some of the U of C study’s conclusions which doesn’t really make a lot of sense given that both studies basically used the same data set (although U of C excluded funds with less than $5M AUM).  I’ll let the academics sort that one out.

November 15, 2005 in Venture Capital | Permalink | Comments (3)

11/09/2005

$500M Folly: Wireless E-Mail Software Investing Peaks Just as Microsoft Brings Out The Big Guns

Over a year ago I wrote a post about the staggering amount of money that had been invested in the wireless e-mail middleware space.  At the time, about $250M had been invested in just the top three companies (Good Technology, Visto Software, and Seven Networks).  Well today the Wall Street Journal has an article in which they reveal that Visto Software has raised yet another $70M (subscription required), taking their total paid-in-capital to an astounding $230M (and this doesn’t even count the $35M+ in PIC invested in companies that Visto has acquired).  Visto’s round comes just 8 months after Good Technology closed yet another round of $65M taking its own paid-in-capital to $211M.  Not be left out, Seven Networks is rumored to be close to closing yet another round of capital which could take its paid-in capital to north of $75M.

For those of you keeping score at home, that’s now a grand total of over $516M invested in just three software companies all of whom are focused on the same niche of providing middleware software that enables mobile devices to use e-mail.  What’s more, the amount of capital invested in the space has increased by over 100% in little over a year.  Good lord.

Now $500M wouldn’t be a big deal if these companies were pursuing a long term market worth billions of dollars but there’s a decent chance that this market won’t even exist in 5 years.  That’s because wireless e-mail middleware has now gotten the full attention of a little company up in Redmond Washington called Microsoft.  Microsoft just happens to be the largest provider of enterprise e-mail software in the world.  As it turns out, much of the value-added provided by these wireless e-mail middleware companies has been simply to make Microsoft’s Exchange servers accessible from a mobile device.

At first Microsoft seemed content to let startups such as Research-In-Motion, Good, Visto, and Seven pursue this opportunity but as mobile devices and applications became more important to it’s long term strategy Microsoft started to pay more attention to the space.  Typically, Microsoft’s first efforts at their own wireless middleware software were pretty pathetic, but they kept at it and in October they released a major upgrade to their software which not only brings much of their functionality up to par with industry standards (at least for Windows Mobile phones), but it basically eliminates the need for any kind of middleware (other than a local client) to access Exchange Servers.  What’s more, in another tried and true tactic, Microsoft is offering all of this new functionality for the very competitive price of … free.  Finally, in the coup de grace, Microsoft included all of this new functionality as part of last month’s major Service Pack release for Exchange 2003, virtually assuring that almost every major Exchange installation in the world will have the new mobile functionality within 9 months because the Service Pack also includes lots of bug fixes that they normally have to install.  It’s such a heavy handed and devious strategy for dominating this space that one just has to laugh.

Consider the situation the average IT guy faces right now:  You can go with Microsoft’s embedded “Direct Push” technology that you have already paid for as part of your Exchange license and that you have already installed because you have to install the Service Pack anyway, or you can pay a lot of extra license fees to an independent wireless middleware company whose separate software you must install and manage on your own.  This decision is not even close. Carriers face much the same decision: lay out a bunch of extra money to support a middleware platform or just work with Micrsoft to license their client software.  Not a hard one either.

What does this mean for wireless e-mail middleware companies?  It means they are in for a world of hurt.  Yes, these companies will still have a window of opportunity to create software for non-Windows Mobile phones and non-Exchange environments, but that window is closing rapidly as Microsoft moves quickly to license it’s client side software to the other major mobile OS players such as Symbian and Palm, both of which Microsoft already had deals with for their prior-generation clients.

In the grand scheme of things, the elimination of the wireless e-mail middleware market should not be surprising as it was always clear that the need for the space would greatly decrease once wireless carriers provided fast generic HTTP connections and the mobile OS market consolidated around a few platforms.  However, what is surprising is that VCs would drop another $250M into a space that clearly is in the process of being, at the very least, severely marginalized by the largest, most profitable, and most aggressive software company in the world.

Such profligate spending in the face of impending doom perhaps confirms the theme of Wall Street Journal article which basically says that VCs are throwing tons of money at late stage companies because they have lots of money and it’s burning a hole in their pocket.  Of course, the VCs may also be betting that Microsoft’s aggressive moves will put pressure on others to make acquisitions, but if that’s the case than they are counting on some pretty rich deals given that, at least in two cases, the deals need to be over $200M+ just to get everyone’s money back.

Personally, I think that the wireless e-mail middleware companies face a huge uphill battle just to get their paid-in-capital back and that they will likely add to the trail of tears that has been blazed by other software companies that have raised more than $100M.  For me, by definition, any software company that needs $200M+ to build a sustainable business is a bad venture investment.  That people would continue to throw money at these deals despite what is clearly a dramatically changed (for the worse) competitive environment makes me worry a lot about the venture market in general.

I suspect that most of this is being justified by the fact that Research-In-Motion still has a $12BN valuation and that the VC investors are simply multiplying their own users bases by RIMM’s market cap/subscriber and thinking “hey we’re worth $XBN if you comp us against RIMM”, but this of course neglects to consider the fact that RIMM is in the same boat as the private companies when it comes to Microsoft, but that only RIMM has a handset business it can fall back on.

My prediction:  RIMM will see its value cut by 30-50% in the next 12 months as investors realize that the Exchange 2003 SP2 is basically the Death Knell for RIMM’s own middleware business.  This in turn will lead to a dramatic souring on the prospects for the private wireless middleware companies (no doubt right in the midst of their IPO process) which will end up closing the markets to them and forcing them to sell, for less than paid in capital, to some large public company scavengers such as IBM, Oracle, and Motorola.

Of course I could be wrong, so feel free leave a comment if you have a different take!

November 9, 2005 in Venture Capital, Wireless | Permalink | Comments (11)

11/03/2005

Software Stocks Update: October 2005

The Software Stock Index was unchanged in October which means software stocks just slightly outperformed the NASDAQ which was down 1.5%.  However the average software stock was down 2.3% indicating that small caps significantly underperformed large caps. The best performing sectors were Digital Media (+8.5%), thanks to strong earnings from Adobe, and Operating Systems (+7.8%), due to continued strength at RedHat. The worst performing sector was E-learning (-11.3%), which saw widespread weakness, followed by Healthcare Applications (-8.1%), led by weakness at Healtheon.

There were no software IPOs in October but three more software acquisitions were closed with Plumtree going to BEA, Ephiphany going to SSG Global and Extended Systems going to Sybase.

For a detailed breakdown of all the stock statistics including a record of all of the M&A in the space, click here to download an Excel spreadsheet with the data and click here to get Microsoft's automatic stock quote downloading plug-in for Excel if you don't already have it.  I improved the spreadsheet last month and it now includes fundamental data and financial ratio's for about 85% of the companies in the index.

November 3, 2005 in Software, Stocks | Permalink | Comments (0)

Internet Stock Update: October 2005

The Internet Stock Index was up a 3.5% in October vs. the NASDAQ's 1.5% decline. The average stock was down 3.2% though indicating that large caps had a much better month than small caps.  Real Networks was the month's big winner, up 36.6% thanks to a favorable settlement of its long-running suit with Microsoft which involved a very large cash payment to Real.  The month's big loser was UK-based online poker site Empire Online, down 38.8%, which saw its value crash when Party Poker decided to change the terms of a partnership between Empire and Party.

At a sector level, Information Services was the leading sector, up 12.7%, thanks largely to Google while Online Gambling was the worst performing sector for the 2nd month in the row down 15.3%.

There were no Internet related IPOs in October and the only M&A deal completed was Valueclick's acqusition of Fastclick.

For a detailed breakdown of all the stock statistics including a record of all of the M&A in the space, click here to download an Excel spreadsheet with the data and click here to get Microsoft's automatic stock quote downloading plug-in for Excel if you don't already have it.  The spreadsheet has been improved lately with detailed fundamental financial data and ratios for almost all of the stocks.

November 3, 2005 in Internet, Stocks | Permalink | Comments (0)

Virtual Stock Portfolio Update: October 2005

October was a good month for the virtual stock portfolio.  The portfolio was up 8.7% compared to the NASDAQ's 1.5% loss thanks to some rebalancing I did last month as well as some paticularly good picks on the short side.  My short picks were up 9.0% and my longs we off just 0.3%.  I started the month about 18% net short on an beta adjusted basis, so the strong short performance is somewhat to be expected, but I was happy that my longs generally held up as well.

Year to date the portfolio is up 28.1% vs. a decline of  1.1% for the NASDAQ, which is a little bit better's than last year's 24.4% gain by the end of October.  I am not going to make any changes this month as most of the picks still have some decent room to improve, but I will probably have to do a bunch of changes next month.


Long Picks

Company: Microstrategy Ticker: MSTR
Sub-sector: Business Intelligence
Investment Thesis: I like the BI space in general and have been keeping my eye on Microstrategy.  This has recently been one of the cheaper stocks in the space, yet it also has one of the better product portfolios and market positions.  Businesses are still spending big bucks on BI and MSTR should be a big beneficiary.
Performance: Since 3/31/05: +31.3%,  Oct. vs. Sep.: 1.3%
Comments: Dodged a bullet this month on MSTR when they missed their Q3 numbers but not by enough to shake long term confidence dramatically.  While the stock got hit on the miss, there is so much of the float short that covering rapidly drove the stock price back up after the miss and allowed me to eek out a small gain.  I need to do some deep drilling to see if this will stay in the portfolio much past this month.

Company: FireOne Group Ticker: FPA.L
Sub-sector: Financial Services
Investment Thesis: FireOne operates an Internet payment service very similar to Neteller. It is used primarily by on-line gamblers to transfer money around.  I I added FireOne to the portfolio because I wanted to maintain overweight exposure to the these kind of Internet payments plays without putting all my eggs in one basket (Neteller). Now that I have closed out Neteller this will be sole exposure to Internet payments.  I am holding on to FPA because it trades at a discount to Neteller.
Performance: Since 7/31/05: -8.7%,  Oct. vs Sep.: -8.7%
Comments: Worst performer of the month thanks to the continued implosion of valuations in the online gambling space.  Did not do as poorly as some others, but still not great.  I will hold this month as I expect valuations to recover a bit as people realize that gambling is not going away.

Company: Actuate Ticker: ACTU
Sub-sector: Business Intelligence
Investment Thesis: Acutate is a business intelligence company with a particular focus on enterprise reporting.  I had a long postion in ACTU in 2004 and lost money on it, but I think the stock is back on the upswing now thanks to an improved product line and focus.   ACTU trades at a healthy discount to rest of the BI group (kind of like SPSS did at one point) and every penny of upside in its EPS could really move the stock.
Performance: Since 9/30/05: +13.8%  Oct. vs. Sep.: +13.8%
Comments: Very good performance in a tough market for long picks thanks primarily to a nice upward surprise on Q3 earnings.  Q4 numbers look very makable as well.  This stock is easily headed above $3/share.

Company: OpenText Ticker: OTEX
Sub-sector: Content Management
Investment Thesis: OpenText is a content management company that went on an acquisition binge in 2003 and 2004.  The stock suffered from all the M&A related charges and fallout but managment now claims that they are going to resolutely focus on EPS growth.  OTEX trades at a healthy discount to the rest of the content management group and has a broad product portfolio.  Integration snafus could trip them up, but the low multiple on the stock should limit any potential damage.
Performance: Since 9/30/05: -2.0  Oct. vs. Sep.: -2.0%
Comments: Not a great first month in the portfolio, but given its strong September the stock was likely to take a breather.  I still like this stock over the next few months.

Company: Cryptologic Ticker: CRYP
Sub-sector: Gaming Software
Investment Thesis: Cryptologic is a provider of gambling software to online casinos and poker rooms.  They license their software to numerous companies in return for a cut of the take.  About 70% of their revenues are from casino related software sales and about 30% from poker related sales.  Since they are a technology provider and not an operator they actually are listed in the US and do not appear to be in danger of violating any online gambling laws.
Performance: Since 9/30/05: -4.4%  Oct. vs. Sep.: -4.4%
Comments: Caught up in the turmoil affecting the online poker stocks even though 70% of its revenues are casino related.  I like the stock even more at these valuations.   I have no idea why people are now trading the online gambling stocks at 30-40% discounts to the mature casino companies despite the fact that the online stocks have about 2X the margins and 4X the growth.  Reason should ultimately prevail here.

Pair Trades
Long: Party Gaming Ticker: PRTY.L
Short: SportingBet Ticker: SBT.L
Sub-sector: Online Gambling
Investment Thesis: Party gaming is the largest online gambling company in the world with an exclusive focus on poker.  Party went public this summer at 100p and got up to 140p before getting creamed when it talked down its revenue growth prospects on its 1st earnings call.  The stock is now below its IPO issue price and at this level it is not only at 12X earnings, but 12.4X cashflow (of $500M/year) for a cash flow yield of over 8%.  In comparison to Party, SportingBet is trading at a substantial premium (21X vs. 12X) even though much of the excitement surrounding SBT has to do with its acquisition of Paradise Poker (the #5 poker room).  It will be tough for SBT to sustain the premium to Party given Party's superior margins, cash flow and growth rates.  With the paired trade the legal risk facing the sector is minimized because both would likely suffer equally from any legal action.  Up until now these kinds of trades didn't make sense because all the names traded pretty much in line with each other, but with Party's somewhat unwarranted implosion this is a perfect opportunity to put on such a trade.
Performance: Since 9/30/05: +3.0%  Oct. vs. Sep.: +3.0%
Comments: This trade started out disasterously in the beginning of the month, but cooler heads prevailed and the inevitable multiple compression looks like it is now underway.  After seeing Party's Q3 update, I have no idea how SBT can sustain a premium PE.


Short Picks


Company
: Wave Systems Ticker: WAVX
Sub-sector: Security
Investment Thesis: I first encountered Wave when I wrote my initial analyst report on Wall Street in the mid-1990s. Wave has remained in business largely by claiming that it is developing revolutionary security technologies, kind of like a bio-tech company that never gets out of trials. With a grand total of $1.4M in revenues over the last 3.5 years, a $4M/quarter cash burn rate and only $4M or so in the bank, a day of reckoning is fast approaching.
Performance: Since 10/1/04: +5.5%  Oct. vs. Sep.: 7.5%
Comments: The stock got yet another delisting notice at the end of the month and with cash running out (yet again) in the next month or so, shareholders will undoubtedly be looking at yet another highly dilutive PIPE transaction.   It took a 24% discount to market on non-restricted fully registered shares to get the last PIPE done and yet the stock is trading almost 10% below that issue price less than 3 months after that deal.  It will be interesting to see what kind of terms they have to offer to get this one done.   The funny thing is, I could get wacked on this short if revenues for Q2 are more than a couple hundred K above last quarter's even though the company will still be losing millions as the hard core retail investors holding this stock inexplicably don't seem to be focused on the bottom line.  It's amazing to me that the board hasn't fired the obviously inept management team yet, but until they do that's good news for my short.

Company: Citadel Security Software Ticker: CDSS
Sub-sector: Security
Investment Thesis: Citadel offers a subscription service to help companies spot security vulnerabilities.  It's a good idea, but a lot of other companies including a number of private companies offer the same service.  Lately Citadel's business has been falling off a cliff.  They are buring cash to the tune of $5M/quarter and yet the management team hasn't done any major cost cutting.  As a VC, I can tell you first hand that it is incredibly difficult to turn around this kind of situation even if you get some product momentum.  I haven't seen a single company in this kind of shape pull it out.
Performance: Since 9/30/05: 28.3%    Oct. vs. Sep.: 28.3%
Comments: Better late than never I guess.  The stock traded off strongly in October as the remaining retail investors realized that the company was approaching "the wall" at 100mph.  The company postponed judgement day by doing a financing with a former board member which essentially paid off the bank debt (which was in default) and provided enough cash to make another payroll cycle.  This company needs to close a major (highly dilutive) financing or be sold by the end of the month.

Company: Emerge Interactive Ticker: EMRG
Sub-sector: Vertical Applications
Investment Thesis: Do you need software to help trade and manage cattle?  Apparently not many other people do either, otherwise EMRG wouldn't have generated only $335K in revenues last quarter.  With cash finally running out after $205M in losses this company should be headed for the slaughterhouse shortly.
Performance: Since 9/30/05: 30.8% Sep. vs. Aug.: 30.8%
Comments: Stock traded down sharply on no real news which seems to indicate that there are no buyers left.  I feel like it would be greedy to hold this stock another month, but I don't see any reason why things will get better.

Company: Entrust  Ticker:  ENTU
Sub-sector: Security
Investment Thesis: Entrust started out providing Certificate Authority software for use in public key encryption and now has a broader line of identify management products.  I know them from my days covering the security sector on Wall Street.  They seem to disappoint at least once a year and given that the stock has now fully recovered from their last dissapointment they should be due again.  It doesn't help that most of the major software players, including IBM, Oracle and CA, have made their own identity management acquisitions in the past 18 months either.
Performance: Since 9/30/05: +20.5% Oct. vs. Sep.: +20.5%
Comments: A good first month in the portfolio.  Hit their quarter but guided down leading to a sell-off.  Seems as though investors are realizing that growth won't be particularly easy now that they face competition from the big boys.

November 3, 2005 in Internet, Software, Stocks | Permalink | Comments (1)

11/01/2005

Feed Overload Syndrome: 5 Reccomended Ways To Cure It

Looks like there has been a major outbreak of RSS inspired "Feed Overload Syndrome" and it's spreading faster than the Avian flu.  First Fred Wilson admitted that he was fully infected and then both Jeff Nolan and Om Malik confessed to similar symptoms.  At this rate Feed Overload Syndrome may soon become an Internet-wide pandemic.  Perhaps the government will divert some of that $7.1BN to establish the CFC or the Centers for Feed Control.

Some may recall that in the past I have posted about the dangers of Feed Overload Syndrome and I admit to having one of the first confirmed cases (at least confirmed by me).  While I am still dealing with Feed Overload Syndrome (you can never cure it, just control it), I have made some progress fighting it and with that in mind I would like to offer my Top 5 Ways To Combat Feed Overload Syndrome:

  1. Direct Multiple Feeds to the Same Folder.
    Many RSS readers or plug-ins allow you to create user specified folders.  While the default option is usually one feed per folder, in most instances you can direct multiple feeds to the same folder.  By consolidating multiple feeds into a single folder you can dramatically cut down on the overall clutter of your feed list.  For example, I subscribe to about 6 poker related feeds.  All these feeds post to one folder called, creatively enough, "poker'. I have done the same thing for a number of other subjects as well.  You don't have to do this for all your feeds, but it is especially good for feeds that you read infrequently and/or that post infrequently.
  2. Subscribe to meta-feeds.
    Metafeeds are RSS feeds that are composed of posts from a number of individual RSS feeds.  For example, I like the business intelligence feed provided by Technology Updates.  This feed contains articles about business intelligence from a wide variety of other feeds.  I also subscribe to keyword based meta-feeds from sites such as Pubsub and Technorati.  Meta feeds are rapidly increasing in popularity and can now found in places such as Yahoo! where you can, for example, subscribe to all the news on a particular stock or all of the articles on your favorite football team.   Once you subscribe to meta-feeds make sure to eliminate any old feeds that are now covered by the meta-feed.
  3. Increase your publisher to distributor ratio.
    A very coarse way to segregate feeds is as publishers or distributors.  Publishers tend to publish relatively few posts that are longer than average and filled with original content.  Distributors (also called linkers) tend to generate many posts a day and typically republish short excepts of other people's post with a short commentary of their own.  Each has their place on the web, but you will find over time that as you feed list grows, the distributors will provide less value to you because you will already be directly subscribing to many of the same feeds that they tend to republish.  Selectively eliminating just a few distributors/linkers can dramatically lower the number of posts you have to read each day.   
  4. Regularly purge and organize your feed list.
    You should review you feed list once a month with an eye towards removing old feeds you no longer want to read, consolidating existing feeds into shared folders and substituting meta-feeds for primary feeds that you read infrequently or selectively.
  5. Support efforts to create true metafeed services.
    As I have written about before, RSS is in danger of becoming its own worst enemy thanks in large part to the fundamental factors driving Feed Overload Syndrome.  The best hope for controlling this affliction is to support the growth of both metafeed and metatagging services.  I personally do not believe that unstructured "democratic" tagging methodologies stand much of a chance as tags without a standardized and consistent taxonomy are not much better than simple keyword based meta-feeds.  Creating metatags and metafeeds that are logically consistent and easily integrated into a well formed taxonomy will only be accomplished once the necessary intellectual horsepower and financial resources are focused on it.  Interestingly enough, Google long ago hired many of best minds in this area and has more than enough money, so they probably have the best shot of anyone of curing or at least controlling Feed Overload Syndrome.

Following these 5 steps is not guaranteed to cure Feed Overload Syndrome, but I guarantee it will start to control it.

November 1, 2005 in Blogs, RSS | Permalink | Comments (5)