08.31.06

Startup team competence

Posted in Technology Ventures at 1:03 am by Ray Wu

I have been thinking about what makes a startup successful. One of the dimension is the overall team competence which is different for different type of solutions and markets. Below is a table on what I come up, share with me your comments and thoughts…

Seg / Needs Tech Inno -vation
 Initial Capital Usability req
 Mkting ability
 Channel Needed
 Direct Sales Needed
Consumer Low to High Low to Medium High Extremely High Medium to High Low
SMB Medium Medium Medium to High High Extremely High Medium
Enterprise High High Low to Medium Medium High High

08.30.06

Risk Considerations

Posted in Technology Ventures at 9:04 pm by Ray Wu

As an investor, it is critical to look at risk and reward ratio and compare various investment options. As the first step, it is important to categorized risk into various categories: firm specific, sector specific, market wide and global.

  • Firm specific risks are primarily associated with a single company. These risks have a wide range of dimensions from misjudgment of customer demand to improper setup of a company’s supply chain. Firm specific risks could be reduced or potentially eliminated by properly understand the firm and its operations.
  • Sector specific risks expand beyond a single company and have impacts on a particular sector (i.e. transportation, automobile or retail). For example, when oil price rises, it has a significant dampening effect on airline sector where fuel expense is a main component of operation expense. In this case, oil price increase will have major impact on airline sector, some impacts on retail, but very limited impact to gold mining. Sector specific risks could be reduced somewhat, but less so compare to firm specific risks.
  • Market wide risks such as interest rate movement are more pervasive and affect many if not all companies. Market wide risks could be predicted somewhat, but not eliminated
  • Global risks are new type of risks we see in the market place. Because of the globalization, change from one part of the world will have major impacts on the other part of the world. For example, India or China political uncertainty will have a direct impact to companies around the world that outsource their manufacturing facilities or call centers to these countries. Global risks require specific regional knowledge and could be reduced by involving regional experts.

When we look at investment options, let’s be sensitive to all the risk factors and then find the best value to compensate for that risk.

08.25.06

Office 2.0

Posted in Technology Ventures, Events at 4:21 am by Ray Wu

I am going to be a panelist for Office 2.0 conference coming up in San Francisco in Oct. I think the logistics is being worked out right now, but we have a good list of speakers lined up. What’s different between Office 2.0 and Web 2.0 is that Office 2.0 is SMB focused vs consumer. It is funny to see the full circle of centralized computing. When I first started my career, I was a programmer on MVS and VMS with those hunky mainframe machines with dumb terminals. Now, the dumb terminals are being replaced by thin clients, cell phones and web browsers, and hunky mainframes are being replaced by server farms with LINUX and Open Source stacks. The difference is that software is being delivered more and more as service on demand or just free open source download with support contracts (* join me at another event on open source business model). What this means is that more and more computing power and intelligence is shifting back to the center and it presents huge opportunities for the technology providers such as HP with a combination of hardware, software and services to provide value.

08.23.06

The $100 million giveaway

Posted in Technology Ventures at 4:23 am by Ray Wu

Here is an interesting article on business 2.o that talks about what VC would fund today. Some of the ideas are defensible; a lot of them are not. Overall, it is a good read.. http://money.cnn.com/2006/08/21/technology/100milliongiveaway.biz2/index.htm

08.10.06

Solution Selling

Posted in Technology Ventures at 12:54 pm by Ray Wu

For a hardware equipment vendor like HP, one of the most important challenges is to understand and apply solution selling vs hardware selling strategy. When I started in Cisco in 1998, Cisco was facing a similar challenge: most of its sales relationships were with the IT department vs CIOs or CxOs of customers. Customers did not view network as strategic nor understand the impact of networking architecture in the Internet age. One of the brilliant moves John Chambers made was to create a pure cost center called IBSG (Internet Business Solutions Groups), which grow from less than 10 in 1998 when I joint that group to 250 in 2000 when I left to be part of Cisco’s M&A team. IBSG’s mission was to help engage and build relationships with CxOs of the fortune 1000 companies, and help sales team on a global basis with reusable solution and knowledge so that they can understand customers’ business problems and carry on a business dialogue with top management vs a technology conversation with IT department. IBSG was formed with top external business consultants from McKinsey and big 5 (at that time) who can provide either horizontal technology expertise or domain vertical industry expertise. In parallel, Cisco started change its sales force DNA to shift sales force from channel sales experts to solution sales experts who know how to partner with SIs and ISVs. Typically, a customer would define a business problem and start engagement with large consulting firms such as Bearing Point or ISVs like SAP before providing RFP to equipment vendors to get the fastest or cheapest gears. Through solution selling and IBSG, Cisco lifted itself from the bottom of the food chain. It partner with SIs and ISVs and position itself as the “trusted advisor” to its customers. This inner circle relationship and trust with customer started with free consultation on customer business planning and strategy development, and eventually influence real dollars from RFP to budget allocation. This helps Cisco maintain its high margin, and more importantly, visibility into the customer demands before its competitor moves in. Again, I got to give John Chambers top credit for his vision and commitment to fund such a large “cost center”. Now, when I look HP, I think this is a company that needs to have this thinking and approach in order to fight well with its competitors…

08.04.06

Seeking Penguin Gold: Open Source Business Models

Posted in Technology Ventures, Events at 4:25 am by Ray Wu

I am going to be a panel speaker for a CSPA event coming up on 09/13/06. Open Source has been a topic dear to my heart and I wrote a blog entry a while back on various business models I see out there.

The panelists are terrific:

I think I am going to enjoy this. If you are into this space, I would encourage you to come.

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