Month: March 2012
On the heels of Yahoo suing Facebook for patent infringement followed by Tim Armstrong at AOL saying “hey Wall Street – look at me – I’ve got great patents also“, Andrew Parker (Spark) wrote a post that brought me out of my “intellectual property depression” titled Open Source and For-Profit Companies.
I’ve been thinking about advancing innovation in the software industry since I was in a PhD program at MIT Sloan School in the 1980’s studying under Eric von Hippel. Eric is one of the best thinkers I’ve ever encountered around this topic and Andrew’s post – which articulates a trend of for-profit companies open sourcing core pieces of their products – is powerful support of many of Eric’s theories.
Andrew’s money quote is:
“But, the most important part of Dan’s observation is that open sourcing the product inside a business is now becoming normal, and that’s wonderful. Dan seems to be slightly pessimistic about this new world of corporate-controlled open source projects (I take that hint from his desire to rename this phenomenon), but it’s 10X better than having 5 companies all building the same product independently of each other in a closed manner, like what we saw in the column-store DBMS market over the past decade (Vertica, and companions).”
The construct of “intellectual property” – and the government’s right to grant an exclusive license to companies (e.g. a patent) as a way of “promoting innovation” has completely broken down in the software industry. Interestingly, this is happening at the same time that “being open with source code instead of protecting it through trade secret” is also occurring and both accelerating innovation as well as enhancing value in many new companies.
We are in a very complicated place in the evolution of the software and Internet industry. I hope we don’t fuck it all up. Thanks Andrew for weighing in with a clear example of something that is very positive for the ecosystem.
Oh – and if you want a dose of sarcasm beautifully written, check out Mark Cuban’s argument that he hopes Yahoo Crushes Facebook in its Patent Suit. His money quote:
“This is what patents are for, right ? To protect companies with original IP from smarter, faster, aggressive companies who catch the imagination of consumers and advertisers. What else could patents be for ?”
Mark’s serious comments are worth reading carefully.
“Seriously, there are industries where patents are used fairly to protect intellectual property. The technology industry is not one of them.
Change is needed. However, its not going to come from our government. The lobbyists have taken over. One of the symptoms of the illness patents have caused the technology industry is the explosion of lobbyists pushing the agenda of big patent portfolio holders. They are not going to let our lawmakers give an inch.
Rather than originating in Congress, its going to take a consumer uprising to cause change. What better way to create a consumer uprising than to financially cripple and possibly put out of business the largest social network on the planet ?”
Fred Wilson (USV) must not be at SXSW because he’s got a great post up titled The Board Of Directors – Selecting, Electing & Evolving. While having a great post up and being at SXSW don’t have to be mutually exclusive, all of the other VC Posts that I saw this morning said something like “here’s where I’m going to be at SXSW – come find me.” Or they are tweeting “I’m still awake and I’m at an epic party.” Or they are asleep and hung over. But they are definitely not writing posts about boards of directors.
Fred talks about why a company should have a board, how the board evolved over time, and what the high level function of the board is. Having been on some boards with Fred, I hope he goes deeper in a series about boards on what boards should and should not do, especially in cases where the company is doing well, or not doing well.
As a bonus, he snuck in a tidbit near the end about the dynamics of the Twitter board. I wonder if anyone will notice.
There were very few VC posts today – I’m guessing most VC bloggers are either sleeping late, at SXSW (and possibly sleeping late due to their hangovers), or not blogging today (yeah – I know the third one is – well – a tautology).
Mark Suster (GRP) has a great post up titled Never Negotiate Piecemeal. Here’s Why. It’s great advice and perspective on the art of negotiating.
As I sit here in Boulder watching MI-5, taking care of Amy, avoiding SXSW, and catching up on RSS and email, I came across a post from Albert Wenger (USV) that rang true. It’s titled A Rational Internet Venture Valuations Bubble and is insightful, clever, and though provoking. Easily the best VC post of the week.
Ryan McIntyre, one of my partners at Foundry Group, has a delightful post up this morning with a short (4 minute) video about the founding and startup of Excite on his blog titled Ctrl+Alt+Compete Documentary. Ah yes, Excite, one of the first search engines (can you name the very first one? I’ll give you a hint – it was created at SIPB.) I love this story – it serves as Saturday morning inspiration for anyone in school thinking about starting a company. He even references Gopher which made me chuckle out loud.
My favorite phrase – “we were unencumbered by reality.”
I loved Bijan Sabet’s (Spark) post today titled Patience & Persistence. In it, he talks about how OMGPOP’s new game Draw Something is blowing up after nearly four years of making some, but not a ton, of progress. He starts out strong:
“When you go to a tech meetup, tech party, or read tech headlines, it’s easy to get swept away into thinking things are soaring for a number of startups. Company xyz now has a zillion users, another company just went viral, overnight sensation, etc. It’s easy to fall in love with those headlines or worse, it’s easy to be distracted. The truth of the matter is that it hardly ever goes straight up and to the right.”
Go read the post to hear the story. This is very consistent with our view at Foundry Group that it often takes up to three years for a new company to figure out where the magic is going to be. As investors, we are very patient through those first three years, keeping the burn rate low but continuing to fund by ourselves if necessary as long as we believe in the entrepreneur. One of the reasons we love working with Bijan and his partners at Spark is because they share this point of view.
Remember – it can take a long time. Be patient. And persistent.