5 ways VC firms can stop shooting themselves in the foot

5 ways VC firms can stop shooting themselves in the foot

November 16, 2009 | Laura Grimmer | Add a Comment | 

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(Editor's note: Laura Grimmer is CEO of Articulate Communications Inc., a B2B technology and services communications firm. She submitted this story to VentureBeat.)

Over the past 20 years, I have worked with countless VC firms to promote their portfolio companies. However, it never fails to amaze me how ignorant those VC firms are about what marketing actually does.

Very few VCs invest either the time or resources to create basic credibility or market visibility for themselves. However, there are five easy ways VC firms can accomplish this. These methods will help them be perceived as credible thought leaders, reach their target audiences and build a better pipeline of higher-quality prospective portfolio companies.

Promote successes: There is nothing more powerful than a proven success story to demonstrate a firm's abilities.  VCs urge their portfolio companies to get case studies up on their Web sites and incorporated into marketing materials, so why do so many fail to do so themselves?  Create documented case studies on wins, highlighting fellow investment partners, management strategies and exit options.  And some ROI would be a good idea, too.

Maintain a healthy pipeline of things to talk about: Silence is not golden when it comes to business.  A healthy, burgeoning enterprise communicates with its core constituencies through social media forums, news releases, e-newsletters, media alerts and white papers.  Not only are these strategies smart ways to let portfolio companies and investors know that a VC's business is thriving, but they are also excellent marketing tools to drive Web-site traffic and help people (and potential customers) find those firms – which is a lot easier than having to find the customers.

Build a community around the firm: Think of social media as a very important and useful tool, not a marketing strategy.  It's the "how" to communicate, not "what" to communicate.  At its core, social media is an outbound manifestation of a face-to-face meeting.  It allows companies to be quicker and more nimble to respond. It's also more likely to more quickly build a relationship.

Get out of the office: Yes, conferences and networking events can be painful, especially if you're not comfortable speaking in public or a particularly extroverted person.  But speaking engagements for a VC firm's executives  - or having high-profile portfolio companies at VC, technology and business events – can promote thought leadership and open doorways to new business opportunities.

Be useful: In my profession, I've built close, long-standing relationships with journalists, analysts and key industry bloggers.  One of their biggest complaints is not having dependable and credible VC contacts to rely on as sources or subject-matter experts.  Build and grow relationships across traditional and new-media outlets so that when they're working on something, they view you as a trusted source and help spread the word about you and your firm.

There is a lot of competition to find the right companies and management teams to invest in.  "Stealth" venture professionals who do limited marketing will be late to the party, and with the economic recovery ahead, can you afford to take that risk?

 

--
- Best, Tan Yinglan    

Way Of The VC Contest Wk 1 - Red Molecule

As I have just signed another book deal, I have decided to start a contest. Every week I will name a theme, You submit your tip. I pick two finalists. Everyone votes. And the winner goes into the book. Not to mention you get to profile yourself/your company to thousands of venture capitalists, angels and potential customers.

This week's contest:
(i) IT for Green
(ii) Mobile Applications

SUBMIT BEFORE 12am ET 11/28/09

http://www.wayofthevc.com/2009/11/way-of-vc-contest.html

See entries

Red Molecule:
Mobile Application utilising 3G screensaver technology and location-based advertising. Technologists can also earn and also the service provider also can earn hence the cost of the technology is also marginalised. Suppose you are passing through the Champs Elysees and you really cna see all other restaurants but you cant see the Mc Donalds as its sign is cramped up opposite to the Cityrama office and people are more interested in seeing Musee de Louvre by the side hence if the advertisement appears on the screen of the user then he is aware of the location wise business interests.

How is your product a breakthrough or disruptively innovative?
Though sms campaigns have picked up but it hasnt made a break through its limited and depends on those data bases which at times is limited in reality and people may change the numbers at time or loose their handsets so forced to change the number itself. Hence this application can actuallygive u location wise information about the Hospital and historical monuments and can earn from the advertisemnts of the retail business interests. This requires a basic content and location wise syncronization and also very high quality of real time integration .



--
- Best, Tan Yinglan    
  

Way Of The VC Contest

As I have just signed another book deal, I have decided to start a contest. Every week I will name a theme, You submit your tip. I pick two finalists. Everyone votes. And the winner goes into the book. Not to mention you get to profile yourself/your company to thousands of venture capitalists, angels and potential customers.

This week's contest:
(i) IT for Green
(ii) Mobile Applications

SUBMIT BEFORE 12am ET 11/28/09

http://www.wayofthevc.com/2009/11/way-of-vc-contest.html



--
- Best, Tan Yinglan    

A Stock Exchange for Charities

A Stock Exchange for Charities

 

One of the biggest problems for philanthropists is finding the right nonprofit to support. One of the biggest problems for nonprofits is finding the right philanthropists to support them.

It's a basic problem of matching buyers and sellers. So why not solve it with a stock exchange?

A new online forum, called the Social Impact Exchange, aims to become a marketplace connecting top-performing charities with foundations and donors. Its goal is to develop standards for the charities listed on the exchange, akin to the NYSE's standards, for example, while virtually any and all donors will be welcome.

According to an article in The Chronicle of Philanthropy, the Exchange already has 500 members (membership is still free). At the site's "clearinghouse," donors can now make gifts to 11 charities.

The exchange was created by a charity called the Growth Philanthropy Network, and is being helped by $600,000 from the Robert Wood Johnson Foundation and a partnership with Duke University.

Members of the exchange include staffers at Morgan Stanley and Wells Fargo, who also advise wealthy clients on philanthropy.

Granted, it won't be the stuff of gripping CNBC coverage — "Make-a-Wish is up 5% today on news of another wish granted!" But it sounds like a logical idea.

Do you think a stock exchange for charities will work?

 

--
- Best, Tan Yinglan    

Fwd: FastPencil and Smashwords

I like Fastpencil though some essential features are tsill missing. Have to give Smashwords a try.

" Smashwords specializes in e-books. Thanks to deals with Barnes & Noble and Sony in the US and Indigo Books & Music's Shortcovers in Canada, self-published authors can get their e-books into traditional distribution channels, or sell their books directly on SmashWords."

 

FastPencil: Turn Your Blog Posts Into a Published Book

By FREDERIC LARDINOIS of ReadWriteWeb

Published: November 20, 2009

Writing a book will never be easy, but FastPencil's mission is to make things easier for authors by bringing this process online and to collaborate with others. FastPencil takes writers from idea to published book. The service offers features for collaboration, editing and design, as well as professional consulting services for authors. One cool feature of FastPencil is that it can import blog posts and turn them into books and e-books that bloggers can then sell through all the major book distribution channels.

Features

The areas where FastPencil exceeds are online editing, collaboration and distribution. Fast Pencil offers a surprisingly comprehensive online editing suite. While this editor isn't quite as fully-featured as Microsoft Word, OpenOffice or Apple's Pages - there is no feature to create headlines or tables of content, for example - it's more than enough to power the service's online collaboration tools.

In it's latest update, which launched earlier this week, FastPencil introduced a number of interesting new features. These include new templates, new roles for collaborators (co-authors, project managers) and forums for prospective authors to meet and discuss their work.

Turn Your Blog Into a Book

If you import your blog feed, FastPencil will turn every blog post into a chapter. The service also imports images from these posts. These images have to be inserted at the beginning or end of a post, however. You can't have your text flow around an image.

Publishing: Hardcover, Paperback, E-Book

Once you have finished your book, you can publish it as an e-book and printed book. These services, however, do cost. These paid services include printing, obtaining ISBN numbers, and organizing the distribution of your book on Amazon, Barnes & Noble, Ingram Digital and other retail partners. FastPencil also offers a number of editing services like design, illustration and editing services. Besides printing hardcover and paperback books, FastPencil can format books for virtually any digital platform, including DRM-free ePub e-books and the Kindle.

Don't Need All These Services? Try SmashWords

If you don't need all of these services from Fast Pencil - or if you have already finished your book - another service worth looking at is SmashWords. Smashwords specializes in e-books. Thanks to deals with Barnes & Noble and Sony in the US and Indigo Books & Music's Shortcovers in Canada, self-published authors can get their e-books into traditional distribution channels, or sell their books directly on SmashWords. Smashwords acquired the New Zealand-based e-book self-publishing service BookHabit earlier this week.

 

--
- Best, Tan Yinglan    

Beverage served in a book.

--
- Best, Tan Yinglan    

Congratulations to my friends who are on Venture Capital 100

The 2009 Winners

 

[Name] Bob Ackerman
[Title & Firm] Founder and Managing Director, Allegis Capital
[Website] www.allegiscapital.com
[TheFunded.com Rating] 3.17
[Sector Focus] Internet
[Notable Exits] StepUp Commerce, IronPort Systems, LGC Wireless

 

[Name] Edward Anderson
[Title & Firm] Managing General Partner, North Bridge Venture Partners
[Website] www.nbvp.com
[Sector Focus] Clean Technology
[Notable Exits] Starent Networks, A123 Systems

 

[Name] Brian Ascher
[Title & Firm] Partner, Venrock
[Website] www.venrock.com
[TheFunded.com Rating] 3.69
[Sector Focus] Software
[Notable Exits] Simple Star, DATAllegro, Adify, Unicru

 

[Name] K.P. Balaraj
[Title & Firm] Managing Director, Sequoia Capital
[Website] www.sequoiacap.com
[Sector Focus] Energy, healthcare, IT, infrastructure
[Notable Exits] Edelweiss, Manappuram Finance

 

[Name] Chris Baldwin
[Title & Firm] Partner Emeritus, Charles River Ventures
[Website] www.charlesriverventures.com
[Sector Focus] Storage
[Notable Exits] EqualLogic

 

[Name] David Barrett
[Title & Firm] General Partner, Polaris Venture Partners
[Website] www.polarisventures.com
[Sector Focus] Software
[Notable Exits] mValent, LogMeIn

 

[Name] William Baumel
[Title & Firm] Co-Founder and Managing Director, RWI Ventures
[Website] www.rwiventures.com
[Sector Focus] Wireless, telecommunications equipment
[Notable Exits] Infinera

 

[Name] Woody Benson
[Title & Firm] General Partner, Prism VentureWorks
[Website] www.prismventure.com
[Sector Focus] Consulting
[Notable Exits] M:Metrics, Maven Networks, LogMeIn

 

[Name] Aneel Bhusri
[Title & Firm]Partner, Greylock Partners
[Title & Company] Co-CEO, Workday
[Website] www.greylock.com
[Website 2] www.workday.com
[Sector Focus] IT
[Notable Exits] Cape Clear Software, OutlookSoft, PolyServe, Data Domain

 

[Name] George Bischof
[Title & Firm] General Partner, Meritech Capital Partners
[Website] www.focusventures.com
[Sector Focus] IT
[Notable Exits] Wily Technology, EqualLogic, SpringSource, Isilon Systems, G-Log

 

[Name] James Boettcher
[Title & Firm] General Partner, Focus Ventures
[Website] www.focusventures.com
[Sector Focus] Semiconductors
[Notable Exits] P.A. Semi, Pure Digital Technologies, Starent Networks

 

[Name] Tom Bogan
[Title & Firm] Venture Partner, Greylock Partners
[Website] www.greylock.com
[TheFunded.com Rating] 4.40
[Sector Focus] Networking
[Notable Exits] Mazu Networks, Ounce Labs, iConclude, Oat Systems

 

[Name] Roelof Botha
[Title & Firm]Partner, Sequoia Capital
[Website] www.sequoiacap.com
[TheFunded.com Rating] 4.16
[Sector Focus] Internet
[Notable Exits] YouTube, Insider Pages

 

[Name] Jim Breyer
[Title & Firm] Managing Director, Accel Partners
[Website] www.accel.com
[Sector Focus] Software, networking
[Notable Exits] Maven Networks, BBN, Groove Networks, Datasweep, ChinaInterActive, GoDigital Networks, BrassRing

 

[Name] Jeff Brody
[Title & Firm] Founding Partner, Redpoint Ventures
[Website] www.redpoint.com
[Sector Focus] Semiconductors
[Notable Exits] Mobilygen, FraudSciences, Danger, Zing

 

[Name] Todd Chaffee
[Title & Firm] General Partner, Institutional Venture Partners
[Website] www.ivp.com
[Sector Focus] Mobile
[Notable Exits] Hands-On Mobile, Mobile365, ArcSight, comScore, Omniture, @road

 

[Name] Ronald Chwang
[Title & Firm] Chairman and President, iD Ventures America
[Website] www.idsoftcapital.com
[Sector Focus] Semiconductors
[Notable Exits] Centrality Communications, iRobot

 

[Name] Stuart Collinson
[Title & Firm] Partner, Forward Ventures
[Website] www.forwardventures.com
[Sector Focus] Pharmaceutical
[Notable Exits] Proprius Pharmaceuticals, NovaCardia

 

[Name] Ron Conway
[Title & Firm]Founder, SV Angel
[TheFunded.com Rating] 5.00
[Sector Focus] Internet
[Notable Exits] Mint, Haute Secure, Sendori

 

[Name] David Cowan
[Title & Firm]Partner, Bessemer Venture Partners
[Website] www.bvp.com
[Sector Focus] Internet and security
[Notable Exits] Counterpane Internet Security, Cyota, Netli, Postini

 

[Name] Alan Crane
[Title & Firm] General Partner, Polaris Venture Partners
[Website] www.polarisventures.com
[Sector Focus] Biotechnology
[Notable Exits] Adnexus Therapeutics, Sirtris Pharmaceuticals

 

[Name] Yogen Dalal
[Title & Firm]Managing Director, Mayfield Fund
[Website] www.mayfield.com
[Sector Focus] IT, digital media
[Notable Exits] PostX, BeVocal, Affinity Labs

 

[Name] Sean Dalton
[Title & Firm] General Partner, Highland Capital Partners
[Website] www.hcp.com
[Sector Focus] IT
[Notable Exits] Covergence, Casero, Virtual Iron Software, Starent Networks, PA Semi, Optasite Communications, CCTV

 

[Name] Scott Darling
[Title & Firm]General Partner, Frazier Technology Ventures
[Website] www.fraziertechnology.com
[Sector Focus] Digital media
[Notable Exits] IntelliVid, Managed Objects Solutions, Virtual Iron Software

 

 [Name] Robert Davoli
[Title & Firm] Managing Director, Sigma Partners
[Website] www.sigmapartners.com
[TheFunded.com Rating] 3.67
[Sector Focus] Networking
[Notable Exits] m-Qube, Virtusa

 

[Name] Neal Dempsey
[Title & Firm] Managing General Partner, Bay Partners
[Website] www.baypartners.com
[Sector Focus] Software
[Notable Exits] Celequest, Nuera Communications, IPWireless, WhereNet, Silverstorm, Exeros

 

[Name] Sunil Dhaliwal
[Title & Firm]General Partner, Battery Ventures
[Website] www.battery.com
[Sector Focus] Internet, hardware
[Notable Exits] CipherTrust, Netezza

 

[Name] Dixon Doll
[Title & Firm] Co-Founder and General Partner, Doll Capital Management
[Website] www.dcm.com
[TheFunded.com Rating] 3.83
[Sector Focus] Wireless networking
[Notable Exits] Colubris Networks, IPWireless, Neutral Tandem

 

[Name] Tim Draper
[Title & Firm] Founder and Managing Director, Draper Fisher Jurvetson
[Website] www.dfj.com
[Sector Focus] Software
[Notable Exits] Xfire, IntelliVid, Ingenio

 

 [Name] Bruce Dunlevie
[Title & Firm] General Partner, Benchmark Capital
[Website] www.benchmark.com
[TheFunded.com Rating] 4.00
[Sector Focus] Semiconductors
[Notable Exits] NetXen, Orchestria, Matrix Semiconductor, Good Technology, Pure Digital Technologies, Unicru

 

[Name] Kevin Efrusy
[Title & Firm] General Partner, Accel Partners
[Website] www.accel.com
[TheFunded.com Rating] 3.00
[Sector Focus] Software
[Notable Exits] SpringSource, Hyperic, XenSource

 

[Name] Barry Eggers
[Title & Firm] Founder and Managing Director, Lightspeed Venture Partners
[Website] www.lightspeedvp.com
[Sector Focus] Software
[Notable Exits] Calista Technologies, D2Audio, Ellacoya Networks, Traverse Networks

 

[Name] Irwin Federman
[Title & Firm] General Partner, U.S. Venture Partners
[Website] www.usvp.com
[Sector Focus] Wireless
[Notable Exits] Vivato, BeVocal, Mellanox Technologies

 

[Name] Peter Fenton
[Title & Firm]General Partner, Benchmark Capital
[Website] www.benchmark.com
[TheFunded.com Rating] 3.78
[Sector Focus] Internet
[Notable Exits] FriendFeed, SpringSource, Hyperic, XenSource, Wily Technology, Reactivity, JBoss

 

[Name] Kevin Fong
[Title & Firm] Partner and Special Advisor, GSR Ventures
[Website] www.gsrventures.com
[Sector Focus] Software
[Notable Exits] Cemaphore Systems, ONStor, Tasman Networks, MovieBeam

 

 [Name] Jim Gauer
[Title & Firm] Managing Director, Palomar Ventures
[Website] www.palomarventures.com
[Sector Focus] Networking
[Notable Exits] AlterPoint, Network Physics, RealOps, Cerebra

 

[Name] Michael Goguen
[Title & Firm] General Partner, Sequoia Capital
[Website] www.sequoiacap.com
[TheFunded.com Rating] 3.75
[Sector Focus] Wireless networking, telecommunications
[Notable Exits] Syndesis, Santera, Navini Networks

 

 [Name] Andy Goldfarb
[Title & Firm] Co-Founder and Executive Managing Director, Globespan Capital Partners
[Website] www.globespancapital.com
[Sector Focus] Networking
[Notable Exits] Covergence, m-Qube, Virtusa

 

[Name] Mike Gordon
[Title & Firm] Founder and Managing Director, Meritech Capital Partners
[Website] www.meritechcapital
[Sector Focus] Software
[Notable Exits] Sourcefire, BigBand Networks, TeleAtlas, Vonage, FiberTower

 

 [Name] Mark Gorenberg
[Title & Firm] Managing Director, Hummer Winblad Venture Partners
[Website] www.humwin.com
[TheFunded.com Rating] 3.36
[Sector Focus] Networking
[Notable Exits] Tizor, Omniture

 

[Name] Kent Gossett
[Title & Firm] General Partner, SR One
[Website] www.srone.com
[Sector Focus] Healthcare services
[Notable Exits] Morphotek, Alere Medical

 

 [Name] Gregory Gretsch
[Title & Firm] Managing Director, Sigma Partners
[Website] www.sigmapartners.com
[TheFunded.com Rating] 4.11
[Sector Focus] Storage
[Notable Exits] EqualLogic, Postini, Slim Devices

 

[Name] Bill Gurley
[Title & Firm] General Partner, Benchmark Capital
[Website] www.benchmark.com
[Blog] www.abovethecrowd.com
[Sector Focus] Mobile and entertainment
[Notable Exits] Jamdat Mobile, OpenTable, Business.com

 

 [Name] John Hamm
[Title & Firm] General Partner, VSP Capital
[Website] www.vsplp.com
[Sector Focus] Semiconductors and storage
[Notable Exits] SiliconStor, Centive, IronPort Systems, Encentuate

 

[Name] Fredric W. Harman
[Title & Firm]Managing Partner, Oak Investment Partners
[Website] www.oakvc.com
[Sector Focus] Internet
[Notable Exits] U.S. Auto Parts Network, Talisma

 

 [Name] Stephen Harrick
[Title & Firm] General Partner and Managing Director, Institutional Venture Partners
[Website] www.ivp.com
[TheFunded.com Rating] 3.75
[Sector Focus] Business services
[Notable Exits] Teros, Business.com, MySQL

 

[Name] Kevin Harvey
[Title & Firm] General Partner, Benchmark Capital
[Website] www.benchmark.com
[Sector Focus] Internet
[Notable Exits] Zimbra, Ingenio, Tellme Networks, MySQL

 

[Name] Bob Higgins
[Title & Firm] Co-Founder and General Partner, Highland Capital Partners
[Website] www.hcp.com
[TheFunded.com Rating] 4.00
[Sector Focus] Biotechnology, software
[Notable Exits] Helicos BioSciences, Conor Medsystems, WordWave

 

[Name] Bob Hower
[Title & Firm] General Partner, Advanced Technology Ventures
[Website] www.atvcapital.com
[Sector Focus] IT, digital media, software
[Notable Exits] e-Security, Acme Packet

 

[Name] Gary Hromadko
[Title & Firm] Venture Partner, Crosslink Capital
[Website] www.crosslinkcapital.com
[Sector Focus] Telecommunications
[Notable Exits] Yipes Enterprise Services, Good Technology

 

[Name] Ron Hunt
[Title & Firm] Partner, Sprout Group
[Website] www.sproutgroup.com
[Sector Focus] Pharmaceutical
[Notable Exits] Aspreva Pharmaceuticals

 

[Name] Tom Huseby
[Title & Firm] Venture Partner, Oak Investment Partners
[Website] www.oakvc.com
[Sector Focus] Software and mobile
[Notable Exits] SNAPin Software, Qpass

 

[Name] Ross Jaffe
[Title & Firm] Managing Director, Versant Ventures
[Website] www.versantventures.com
[TheFunded.com Rating] 4.64
[Sector Focus] Medical devices and instruments
[Notable Exits] Ablation Frontiers, St. Francis Medical Technologies, Insulet

 

[Name] Deepak Kamra
[Title & Firm] General Partner, Canaan Partners
[Website] www.canaan.com
[Sector Focus] Telecommunications equipment
[Notable Exits] SuccessFactors, Acme Packet

 

 [Name] Vinod Khosla
[Title & Firm] Founder, Khosla Ventures
[Website] www.khoslaventures.com
[Sector Focus] Energy, infrastructure, IT
[Notable Exits] Infinera

 

[Name] Steve Krausz
[Title & Firm] General Partner, U.S. Venture Partners
[Website] www.usvp.com
[Sector Focus] Software, Internet security, storage
[Notable Exits] Vontu, CipherTrust

 

[Name] Michael Kwatinetz
[Title & Firm] Founding General Partner, Azure Capital Partners
[Website] www.azurecap.com
[Sector Focus] eCommerce
[Notable Exits] Bill Me Later

 

 [Name] Lisa Lambert
[Title & Firm] Managing Director, Intel Capital
[Website] www.intel.com/capital
[Sector Focus] IT
[Notable Exits] DATAllegro, MySQL

 

 [Name] Douglas Leone
[Title & Firm] General Partner, Sequoia Capital
[Website] www.sequoiacap.com
[TheFunded.com Rating] 3.44
[Sector Focus] Business services
[Notable Exits] Netezza, Rackspace Hosting, Parakey, inCode Wireless, Netezza, Idea Cellular, Aruba Networks

 

[Name] Shmil Levy
[Title & Firm] Partner, Sequoia Capital
[Website] www.sequoiacap.com
[TheFunded.com Rating] 3.40
[Sector Focus] Internet, mobile
[Notable Exits] Topio, Qumranet, Port Authority

 

[Name] Barry Maloney
[Title & Firm] General Partner, Balderton Capital Management
[Website] www.balderton.com
[Sector Focus] Internet
[Notable Exits] Bebo

 

[Name] Tom Mawhinney
[Title & Firm] General Partner, JAFCO Ventures
[Website] www.jafco.com
[Sector Focus] IT and Internet
[Notable Exits] Postpath, DATAllegro

 

[Name] Matthew McCall
[Title & Firm] Co-Founder and Managing Director, DFJ Portage
[Website] www.dfj.com
[TheFunded.com Rating] 3.25
[Sector Focus] Internet
[Notable Exits] FeedBurner, TicketsNow, LeftHand Networks, Everdream

 

[Name] Terry McGuire
[Title & Firm] Co-Founder and General Partner, Polaris Venture Partners
[Website] www.polarisventures.com
[TheFunded.com Rating] 5.00
[Sector Focus] Biotechnology and pharmaceutical
[Notable Exits] Remon Medical Technologies, GlycoFi

 

 [Name] Matt McIlwain
[Title & Firm] Managing Director, Madrona Venture Group
[Website] www.madrona.com
[Sector Focus] IT
[Notable Exits] iConclude, Farecast, World Wide Packets, Isilon Systems

 

 [Name] Kevin McQuillan
[Title & Firm] Co-Founder and General Partner, Focus Ventures
[Website] www.focusventures.com
[Sector Focus] IT
[Notable Exits] DATAllegro, Centrality Communications, Kazeon Systems, Berkeley HeartLab, Matrix Semiconductor, Sandburst, inCode Wireless, eHealth, Aruba Networks, Virtusa, Infinera, Zappos, Atom Entertainment

 

 [Name] Peter Meekin
[Title & Firm] Managing Director, Trident Capital
[Website] www.tridentcap.com
[Sector Focus] IT
[Notable Exits] iRobot, Thor, Cymfony

 

 [Name] Sandy Miller
[Title & Firm] Partner, Institutional Venture Partners
[Website] www.ivp.com
[Sector Focus] Business services
[Notable Exits] Data Domain, Vonage, USinternetworking, SkyStream

 

[Name] Michael Moritz
[Title & Firm] General Partner, Sequoia Capital
[Website] www.sequoiacap.com
[TheFunded.com Rating] 4.24
[Sector Focus] Software
[Notable Exits] Plaxo, Pure Digital Technologies

 

[Name] Peter Morris
[Title & Firm] Venture Partner, New Enterprise Associates
[Website] www.nea.com
[Sector Focus] Networking
[Notable Exits] Tasman Networks, IronPort Systems, Yipes Enterprise Services

 

[Name] Sherrill Neff
[Title & Firm] Managing Partner, Quaker BioVentures
[Website] www.quakerbio.com
[Sector Focus] Pharmaceutical
[Notable Exits] Amicus Therapeutics, Medmark, BioRexis Pharmaceutical

 

[Name] Rory O'Driscoll
[Title & Firm] Managing Director, Scale Venture Partners
[Website] www.scalevp.com
[Sector Focus] IT
[Notable Exits] OuterBay Technologies, Picolight, Good Technology, Omniture

 

[Name] Arnold Oronsky
[Title & Firm] General Partner, InterWest Partners
[Website] www.interwest.com
[Sector Focus] Pharmaceutical
[Notable Exits] Aspreva Pharmaceuticals

 

[Name] Larry Orr
[Title & Firm] General Partner, Trinity Ventures
[Website] www.trinityventures.com
[Sector Focus] Software, services, systems
[Notable Exits] Aruba Networks, Bix.com

 

[Name] Dennis Phelps
[Title & Firm] General Partner, Institutional Venture Partners
[Website] www.ivp.com
[Sector Focus] Digital media
[Notable Exits] Quigo, Synchronoss Technologies

 

[Name] Theresia Guow Ranzetta
[Title & Firm] Partner, Accel Partners
[Website] www.ivp.com
[Sector Focus] Internet, Software
[Notable Exits] Zimbra, AdECN, Interlace Systems, Xoopit, Aceva Technologies

 

[Name] Joanna Rees
[Title & Firm] Founder and Managing Director, VSP Capital
[Website] www.vspcapital.com
[Sector Focus] Internet, digital media
[Notable Exits] Truveo, Danger, Affinity Labs

 

[Name] Lisa Reeves
[Title & Firm] General Partner, Vista Ventures
[Website] www.vistavc.com
[Sector Focus] Software
[Notable Exits] MySQL

 

 [Name] Gene Riechers
[Title & Firm] General Partner, Valhalla Partners
[Website] www.valhallapartners.com
[Sector Focus] IT
[Notable Exits] RealOps, LeftHand Networks

 

[Name] Scott Rocklage
[Title & Firm] Managing Partner, 5AM Ventures
[Website] www.5amventures.com
[Sector Focus] Pharmaceutical
[Notable Exits] Miikana, Ilypsa

 

 [Name] Bruce Sachs
[Title & Firm] General Partner, Charles River Ventures
[Website] www.crv.com
[Sector Focus] Networking
[Notable Exits] Acopia Networks, BigBand Networks

 

 [Name] Scott Sandell
[Title & Firm] General Partner, New Enterprise Associates
[Website] www.nea.com
[Sector Focus] Hardware, semiconductors
[Notable Exits] Dexterra, Data Domain, Spreadtrum Communications

 

[Name] Shirish Sathaye
[Title & Firm] General Partner, Matrix Partners
[Website] www.matrixpartners.com
[Sector Focus] Telecommunications equipment
[Notable Exits] Aruba Networks, Solidcore Systems

 

[Name] Neil Shen
[Title & Firm] Founding Managing Partner, Sequoia Capital
[Website] www.sequoiacap.com
[Sector Focus] Healthcare, Internet, mobile
[Notable Exits] Renhe, Peak Sport

 

[Name] David Silverman
[Title & Firm] Partner, 3i Group
[Website] www.3i.com
[Sector Focus] Internet
[Notable Exits] Speakeasy, BlueLithium

 

[Name] John Simon
[Title & Firm] Managing Director, General Catalyst Partners
[Website] www.generalcatalyst.com
[Sector Focus] Mobile
[Notable Exits] Hands-On Mobile, Maven Networks, m-Qube

 

[Name] Thomas Smith
[Title & Firm] Partner, Mid-Atlantic Venture Funds
[Website] www.mavf.com
[Sector Focus] Networking and telecommunications
[Notable Exits] sentitO Networks, Colubris Networks, NexTone Communications

 

 [Name] Marc Sokol
[Title & Firm] General Partner, JK&B Capital
[Website] www.jkbcapital.com
[Sector Focus] Networking
[Notable Exits] AlterPoint, CITTIO, CounterStorm

 

[Name] Alan Spoon
[Title & Firm] General Partner, Polaris Venture Partners
[Website] www.polarisventures.com
[TheFunded.com Rating] 4.50
[Sector Focus] IT, digital media, eCommerce
[Notable Exits] TechTarget, Cushcraft Corporation

 

[Name] George Still, Jr.
[Title & Firm] Managing Partner, Norwest Venture Partners
[Website] www.norwestvc.com
[Sector Focus] Business services
[Notable Exits] Website Pros, Rackspace Hosting

 

[Name] Jim Swartz
[Title & Firm] Founding Partner, Accel Partners
[Website] www.accel.com
[Sector Focus] Software, telecommunications
[Notable Exits] Leapstone Systems, Riverbed Technology, 2Wire

 

[Name] Daniel Turner
[Title & Firm] Managing Director, Montreux Equity Partners
[Website] www.montreuxequity.com
[Sector Focus] Pharmaceutical
[Notable Exits] NovaCardia, Cerexa, Orexigen Therapeutics, Transcept Pharmaceuticals, NeurogesX, Somaxon

 

[Name] Scott Ungerer
[Title & Firm] Managing Director, EnerTech Capital
[Website] www.enertechcapital.com
[Sector Focus] Semiconductors
[Notable Exits] Intellon, Comverge, Circadiant Systems, Enerwise Global Technologies, Cablematrix, Fuelquest, Catch the Wind, Catalytic Solutions, Clean Air Power

 

[Name] Peter Wagner
[Title & Firm] General Partner, Accel Partners
[Website] www.accel.com
[Sector Focus] IT
[Notable Exits] Trapeze Networks, Acopia Networks, Airgo Networks, Topspin Communications, Peribit Networks, New Edge Networks, Entrisphere, GO Networks, Infinera, Transitive, NetXen, Wichorus

 

 [Name] John Walecka
[Title & Firm] Founding Partner, Redpoint Ventures
[Website] www.redpoint.com
[Sector Focus] IT, energy and materials
[Notable Exits] Entropic Communications, Trapeze Networks

 

[Name] Rob Ward
[Title & Firm] Managing Director, Meritech Capital Partners
[Website] www.meritechcapital.com
[Sector Focus] Internet and security
[Notable Exits] Counterpane Internet Security, Reliant Technologies, Acopia Networks, Netezza

 

[Name] Steven Weinstein
[Title & Firm] Managing Director, Novartis BioVenture Fund
[Website] www.venturefund.novartis.com
[Sector Focus] Medical devices and instruments
[Notable Exits] Ablation Frontiers, Visiogen

 

[Name] Jim White
[Title & Firm] Managing Director, Sutter Hill Ventures
[Website] www.shv.com
[TheFunded.com Rating] 3.67
[Sector Focus] Internet, hardware
[Notable Exits] Farecast, Data Domain

 

[Name] Bryan Wolf
[Title & Firm] Managing Director, Intel Capital
[Website] www.intel.com/capital
[Sector Focus] Software
[Notable Exits] DataSynapse, LogMeIn

 

 [Name] Ben Yu
[Title & Firm] Managing Director, Sierra Ventures
[Website] www.sierraventures.com
[Sector Focus] Semiconductors
[Notable Exits] AuthenTec, SemEquip

--
- Best, Tan Yinglan    

One of Zhuge Liang's most beautiful (and useful) innovation.

--
- Best, Tan Yinglan    

Painting in MRT? - look again, it is a LCD monitor framed in a painting in Xin Bei Tou

--
- Best, Tan Yinglan    

Advertisement at its best

spotted this in Shilin night market, in Taipei, Taiwan.

--
- Tan Yinglan    

--
- Tan Yinglan    

Advertisement at its best

spotted this in Shilin night market, in Taipei, Taiwan.


--
- Tan Yinglan    

Way Of The VC (15th - 22th Nov)

We have moved to revamped website at http://www.wayofthevc.com.
(Please update your bookmarks. )
Our Facebook Fan Page (http://www.tinyurl.com/wayofvc)
Twitter (http://www.twitter.com/yinglantan)
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Funding Opportunity:  Those looking for a personal loan for their venture, can check this highly-recommended lending club, have recommended a few people there who have given great feedback on the quality of service (You can try our referral code (wayofthevc) to get $40 credit)

• Online Loan To Start a Business
  
• Private Student Loans
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These are the ventures which have approach Way Of The VC for funding assistance:

• Online ID, a single phone number for contact
• Meta Social Network for all your social networks
• Online ticketing agent in the same way as OpenTable
• Apparel Supply Chain Intelligence
• Mobile Food ordering platform
• Real estate investments in Brazil and other opportunities
• New Fashion brand
• Delivery of diesel for generators
• Low Cost Production Movie

Travel: Am in the following countries:

Taiwan: Nov 11~ Nov 22
China: Dec 7 ~ Dec 13

Entrepreneurs / VCs / LPs who would like to catch up, please sign up
here: http://www.wayofthevc.com/2009/10/travel-china-and-taiwan.html

Posts
The Way of the VC 风险投资之道 Tinkering Makes Comeback Amid Crisis
The American tradition of tinkering the spark for inventions from the telephone to the Apple computer is making a comeback boosted by renewed interest in ...

The Way of the VC 风险投资之道: Government Funding for Startups ... By Yinglan ... the innovation economy, to provide a quantitative perspective on what is happening in the worlds of VC and angel investment. Look for additional posts leveraging ChubbyBrain data in the coming days and weeks. -- - Tan Yinglan ... The Way of the VC 风险投资之道 - http://www.wayofthevc.com/

The Way of the VC 风险投资之道: Origins of Israel's Tech Miracle By Yinglan Tan Yinglan The Way of the VC: Having Top Venture Capitalists on Your Board (On Amazon) http://tinyurl.com/wayofthevc. Origins of Israel's Tech Miracle. The Origins of Israel's Tech Miracle 05 Nov 2009 08:57 am ... The Way of the VC 风险投资之道 - http://www.wayofthevc.com/

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Deal Of the Week: To get a loan, try lendingclub.com ((You can try our referral code (wayofthevc) to get $40 credit)

Exit of the Week: Chinext - Initial gains of companies up 100x

Quote of the week:  Pressure point technique - the technique used by chinese businessmen to pry open chinks in armour of foreign business by cost-innovating in their neglected area.

Yinglan
Way Of The VC

--
- Tan Yinglan
The Way of the VC: Having Top Venture Capitalists on Your Board (On
Amazon)
http://tinyurl.com/wayofthevc

--
- Tan Yinglan    

We need to tinker more. More playtime for my daughter

·         NOVEMBER 12, 2009, 4:27 P.M. ET

Tinkering Makes Comeback Amid Crisis

 

By JUSTIN LAHART

The American tradition of tinkering -- the spark for inventions from the telephone to the Apple computer -- is making a comeback, boosted by renewed interest in hands-on work amid the economic crisis and falling prices of high-tech tools and materials.

The modern milling machine, able to shape metal with hairbreadth precision, revolutionized industry. Blake Sessions has one in his dorm room, tucked under the shelf with the peanut butter on it.

The Massachusetts Institute of Technology junior has been using the mill to make prototypes for a bicycle-sprocket business he's planning. He bolts down a piece of aluminum plate, steps to his desk and, from his computer, sets the machine in motion.

"It's kind of a ridiculous thing to have," says Mr. Sessions, 20 years old. But "in today's marketplace you can't only offer a technical aptitude. You have to be able to provide something more."

Occupying a space somewhere between shop class and the computer lab, the new tinkerers are making everything from devices that Twitter how much beer is left in a keg to robots that assist doctors. The experimentation is even creating companies. With innovation a prime factor in driving economic growth, and corporate research and development spending tepid, the marriage of brains and brawn offers one hopeful glimmer.

Engineering schools across the country report students are showing an enthusiasm for hands-on work that hasn't been seen in years. Workshops for people to share tools and ideas -- called "hackerspaces" -- are popping up all over the country; there are 124 hackerspaces in the U.S., according to a member-run group that keeps track, up from a handful at the start of last year. SparkFun Electronics Inc., which sells electronic parts to tinkerers, expects sales of about $10 million this year, up from $6 million in 2008. "Make" magazine, with articles on building items such as solar hot tubs and autopilots for robots, has grown from 22,000 subscribers in 2005 to more than 100,000 now. Its annual "Maker Faire" in San Mateo, Calif., attracted 75,000 people this year.

"We've had this merging of DIY [do it yourself] with technology," says Bre Pettis, co-founder of NYC Resistor, one of the first hackerspaces, in Brooklyn. "I'm calling it Industrial Revolution 2."

The financial crisis played a role in taking a nascent trend and giving it increased urgency, says Michael Cima, an MIT engineering professor. "I've been here 23 years and I definitely see this trend back to hands-on," he says. "A lot of people are pretty disappointed with an image of a career in finance and they're looking for a career that's real."

Access to the tools to tinker is getting easier. "Computer numerical controlled," or CNC, tools -- which cut metal and other materials into whatever design is plugged into the computer attached to them -- now cost as little as a tenth of what they did a decade ago. Mr. Sessions, the MIT student, says he first looked at such mills on a lark, assuming the price would be well out of his reach. But his mill cost about $7,000 to buy and set up.

He sees the bike-sprocket business as a springboard for developing more complex products, such as a device to increase mobility for arthritis sufferers or an energy-efficient car transmission. He thinks his interest in tinkering will give him an advantage in a global marketplace.

"If it doesn't have that creative aspect to it, it may not be worth doing, because your job can be outsourced," he says.

Innovation in the U.S. is peppered with examples of tinkerers who started out small, but came up with big ideas, says Naomi Lamoreaux, an economic historian at the University of California, Los Angeles. "The really dynamic times in our history are times when you have lots of ordinary people who think they have a chance to make a difference."

Through much of the past century, however, developing new products required increasingly complex and expensive tools that were out of reach of most individuals -- the Wright brothers built an airplane in their bicycle shop, but the first jet-powered aircraft were built at well-funded corporate and government labs. As a result, large firms came to dominate innovation.

That trend was disrupted in the 1990s when low-cost computers allowed Internet and software start-ups to compete with giants. But when it came to developing innovative physical products, high prices kept high-tech machine tools and materials out of most tinkerers' reach.

"There have always been hobbyists, but it was really hard to go from being a hobbyist who built hot rods to becoming a car company," says Erik Kauppi, a member of at A2 Mech Shop, an Ann Arbor, Mich., workshop where tinkerers pool tools they own. "But now, all of a sudden a guy or a couple of guys have a lot more leverage."

The electric scooter that Mr. Kauppi, who is 49, developed at the workshop is now in production. His business, Current Motor Co. in Scio Township, Mich., plans to begin shipping its scooter, with a starting price of $5,500, this month.

At engineering schools, the drop in costs is putting tools once accessible only to senior researchers into the hands of undergraduates. The Hobby Shop at MIT, once mainly a wood shop, has been accumulating advanced equipment, some castoffs from MIT laboratories, some bought.

"Now you can build sophisticated robots and things like that with all these new pieces of equipment they have," says Greg Schroll, 23, a 2008 MIT engineering graduate.

He hopes to eventually start a company around a spherical robot he built at the MIT shop, which he sees being used to gather information in places too hazardous for humans. Projects made by MIT students in the Hobby Shop now in commercial production include a LED system to create lighting effects for film and a machine to salt the rim of a margarita glass.

Hands-on is catching on at other schools. There were 27% more undergraduates who earned mechanical-engineering degrees in 2008 than in 2003, according to the American Association of Engineering Societies. Over the same period, the number of computer-engineering graduates slipped by 31%.

Students at Carnegie Mellon University asked to stay at school for a week after exams last spring so they could hang out and build things. Ed Schlesinger, a professor there, says that after a long period where theoretical work dominated at engineering schools, "when students talk to each other now, it's 'So, what cool project are you working on?' It's not enough to say I took these classes and got an A." Stanford University's Product Realization Laboratory, where students learn machining, welding and other hands-on skills, has seen membership jump to 750 from 450 over the past five years.

As a junior at Stanford in 2004, Carly Geehr thought she was headed for medical school. Then she took a course on manufacturing and design at the Stanford workshop.

"I'd never held a drill in my life, but working with the milling machine -- I was just blown away," says Ms. Geehr, who is 24. She changed her major to engineering and, as a doctoral candidate in engineering, is now a teaching assistant for the course that gave her the bug to build. On a recent day, she cheered students on as they prepared molds for sand-casting bronze, occasionally donning a protective fire suit to skim red-hot dross from the crucible before pouring molten metal into the molds.

Giulio Gratta, a senior in Stanford's engineering school, has been using the workshop to build a panoramic camera. Even though Stanford is in the heart of Silicon Valley, he says software and Internet development don't hold as much interest as before. "It's no longer the thing to do," says Mr. Gratta, who is 21. "People have to figure out something else. Maybe...physical things."

Until the 1950s, economists thought how fast the economy grew was mostly a matter of how much money was spent and how much work was getting done. But in a 1957 paper that helped him later earn a Nobel Prize, MIT economist Robert Solow showed capital and labor only accounted for about half of growth. The remaining half he attributed to innovation -- an area where the U.S. has long had an advantage.

In recent years, however, U.S. spending on research and development has led some economists to worry that innovation will no longer provide the boost it once did. Corporate R&D spending grew an average of 2.6% annually from 2000 to 2007, down from an average of 6% in the 1980s and 1990s, according to the most recent figures from the National Science Foundation. Chief financial officers surveyed in September by Duke University's Fuqua School of Business and CFO Magazine said they expected their companies' R&D spending to grow by just 0.4% over the next year.

Tinkering represents innovation outside such figures. TechShop in Menlo Park, Calif., for example, is a for-profit workshop and operates like a gym, except that the members who pay $100 a month are milling iron rather than pumping it.

Founder Jim Newton tallied a list of all the tools he could imagine needing. Now TechShop, opened in 2006, has $500,000 worth of lathes, laser cutters and other equipment.

There are 600 members at TechShop's original location, up from 300 a year ago, and it has opened workshops in Durham, N.C., and Beaverton, Ore. Projects under way include a liquid-cooling device for computer servers and an electric two-wheeled car.

NYC Resistor, the hackerspace in Brooklyn, is funded by members and fees from classes it offers. It opens to visitors every Thursday. Recently, a group gathered around Ben Combee, who demonstrated the laser cutter. He put a piece of Plexiglas into place, started the air compressor, pushed a button and shouted, "Fire the laser!"

At a table strewn with laptops, wires and circuit boards, Eric Skiff showed off a robotic arm that twitches when a hand is passed near it. In a corner is the Barbot, a robot that, when it works, pours and stirs an absinthe cocktail called a Sazerac.

Such projects -- not to mention a giant Lite-Brite and a toy piano that plays Philip Glass's "Modern Love Waltz" -- may seem frivolous. But Zach Hoeken Smith, a NYC Resistor cofounder, thinks something important is going on. The computer kits sold by companies such as Apple in the 1970s were demeaned as toys, he says, but ended up launching the personal computer revolution.

Mr. Smith, 25, studied computer science at the University of Iowa, and worked as a Web developer. But a few years ago, he started playing with an "Arduino" -- an open-source microcontroller. These are used as the "electric brains" for everything from wall-avoiding robots to a hat that pokes the wearer's heads if the person stops smiling. "I was hooked," he recalls.

Intrigued by the idea of making a machine than can build its own parts, Mr. Smith got interested in "rapid prototyping machines" -- 3D printers that lay down layers of materials like plastic to form objects. The technology is used by manufacturers to make prototypes, with industrial machines typically costing tens of thousands of dollars.

Mr. Smith's NYC Resistor friends Mr. Pettis and Adam Mayer joined the project. Using off-the-shelf electronics and parts, along with a laser cutter, they came up with a machine. Now they're selling kits to make 3D printers.

Their company, MakerBot Industries, has shipped 350 of the $750 kits so far. They hired two employees, started paying themselves, and are building another 150 kits for their next shipment.

Adam Elkins and members of a hackerspace in Philadelphia, called Hive 76, bought one kit and built the machine. Mr. Elkins, a 28-year-old system administrator for a software company, says he doesn't have access to a lot of space, so he goes to the hackerspace to build. "There's no man-cave I can go to and do things."

The first thing he made on the 3D printer was a black plastic ring topped off with white plastic jewel. Last month, he presented it to his girlfriend, along with a marriage proposal. She said yes.

Write to Justin Lahart at justin.lahart@wsj.com

 

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- Tan Yinglan    

Government Funding for Startups Really Does Exist, Uncle Sam Ponies Up $2.5B in Q3

BY: CHUBBYBRAINThu Nov 12, 2009 at 12:52 PM

Amid the spam, books, and late night TV infomercials promising inside information about little known government programs and free money, there actually is cash out there for your business. In fact, in Q3 2009, ChubbyBrain, which tracks venture capital, angel investment and several other types of investment in private companies, tracked $2.3B going to 65 young companies from various governmental or government-affiliated entities. These programs and government sponsored public-private partnerships offer funding via loans, grants and equity investments to promising young companies and technologies.

 

The average deal was $36.2M, but this aggregate number is misleading; several large fundings by the Department of Energy distort it. The more interesting highlight for early stage entrepreneurs is seen in the chart below. The great majority of investments are under $5 million, with the median across the 65 deals standing at $1.1 million.

Before getting too excited about Uncle Sam's deep pockets, considering government funding in relation to venture capital investment in Q3 2009. ChubbyBrain tracked $6.1 billion in venture capital investment over 680 deals in the quarter. Keeping things in perspective, it is clear that venture investment dwarfs governmental funding. But for an entrepreneur looking for capital to grow, these public funds may be worth considering as a supplement to the angel investment or venture capital funding sources that they may be pursuing. (Note: Download the 44-page Fast Company-ChubbyBrain Q3 2009 Venture Capital activity report for a quantitative view into VC activity in the quarter.)

Now let's take a closer look at government funding to startups in Q3 2009.

First, the 65 deals ChubbyBrain tracked in the quarter were spread across 12 sectors with seven sectors accounting for over 80% of the deals as shown below. The Energy and Health care sectors led among sectors, accounting for almost 50% of the deals.

 

In terms of where the government funding is going, it was spread across ventures in 21 different states. Interestingly, California and Massachusetts which are the top two destinations for venture investment also saw a large number of government funding deals representing 13% and 11% of such fundings (based on number of deals), respectively. Interestingly, however, Ohio took the top spot with 14% of deals. Rounding out the top five were Texas and South Carolina. Interestingly, despite the inclusion of perennial venture capital hubs California, Massachusetts, and Texas in the top five, the government funding does show activity in states which are not among the usual suspects, including the aforementioned Ohio and South Carolina but also states like Maine and Michigan.

 

 

Entrepreneurs may be interested to know that, unlike angel investors or venture capitalists who take a stake in the company, almost 70% of the government financings were in the form of grants to the startup companies.

 

Startups looking for money would be well-served to look at governmental funding vehicles in addition to the more traditional angel and venture capital investment sources. With federal stimulus money in play and local and state governments spurring entrepreneurship and economic development, such funding sources may continue to grow.

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Fast Company has partnered with ChubbyBrain, an information services company tracking the innovation economy, to provide a quantitative perspective on what is happening in the worlds of VC and angel investment. Look for additional posts leveraging ChubbyBrain data in the coming days and weeks.

 

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- Tan Yinglan    

Origins of Israel's Tech Miracle

The Origins of Israel's Tech Miracle
05 Nov 2009 08:57 am
Dan Senor and Saul Singer, the authors of the new, best-selling Start-Up Nation, have done the impossible: They've written a book that doesn't examine Israel through the prism of its conflict with the Arabs. Instead, they've produced a fascinating and illuminating look at the reasons Israel has become one of the world's prime incubators of technological innovation. This is a story about Israel, of course, but it's a story with universal implications. "Start-Up Nation" is, among other things, an indispensable business book. I wish I had thought to write it. I spoke with Dan Senor by phone last week, and here is an edited version of our discussion.

Jeffrey Goldberg: This book is a reminder that Israel, despite its many problems --  many of them inflicted from the outside, some self-inflicted -- is a remarkable success story, and I'm wondering what sparked your curiosity about Israel's technological achievements.

Dan Senor: Originally the idea was not to do a book -- when I was in my second year of Harvard Business School in 2001, I took a group of thirty students to Israel, three of them were Jewish, twenty-seven were not, and had no connection to Israel. The idea was to look at the economic opportunities in Israel and also study the history and the politics. It was at a pretty depressing time -- there was a good entrepreneurial economy story there, but it was during the Second Intifada. And I took all these students - to their credit, none of them pulled out even though literally the day we were leaving things were blowing up -- and my classmates were all saying to me, "I get it. There's huge economic opportunity here for people who are willing to invest here and do business here." But even more than that, I was struck by the question of how they pulled it off.  It's a very young country, very difficult environment, there are no natural resources, no access to regional capital or regional markets. If you were to paint a picture of the circumstances under which you're not going to have a successful economic developing country, it would be Israel.

JG: One thing about the book that's interesting to me is that it seems that you're trying very hard not to say, 'Well, of course if you put a bunch of Jews in a room, that weird Jewish brain will create something."

DS: We were very self-conscious about that.

JG: Because it's wrong? Because it's stereotypical? Because you don't believe it?

DS: We believe that there are lessons that developing and developed economies can learn from Israel, and that there are prescriptions for the U.S. that can be taken from Israel, and if it is simply about the fact that Jews are smart, well-educated and good at business, it completely undermines the notion that there is anything transferable. We really believe that. We're not naïve; there are certain dynamics that are unique to Israel that cannot be, and should never be, tried elsewhere.

JG: Judaism: Don't try this at home.

DS: Exactly, but we think that's only part of it. There are many elements that absolutely are prescriptive and the moment it becomes about 'Jews are smart,' no one's going to pay attention to the other part. And the other parts are extremely important. For example, we're writing the book, it's September of last year, Lehman blows up, and there's a big debate among economists about productivity gains and how all our economic growth over the last five or ten years was not at all about productivity gains -- it was all about speculative credit, near-zero interest rates -- and we were watching a reversion back to a discussion on the need for basic innovation as the juice for economic growth. And, by the way, the only way you get true innovation into the economy is if it's dominated by small enterprises. And we were struck by this debate, because that's exactly what we were writing about.

JG: One of your arguments is that it's not necessarily Jewish culture that created this, but Israel Defense Force culture, that many of the great entrepreneurs and innovators come out of the Air Force, out of the technical branches of the IDF. And that this is replicable. Is that fair to say?

DS:  One, we believe in an anti-hierarchical tolerance for self-criticism -- not only tolerance, almost encouragement.

JG: By the way, it's a well-known Jewish trait.

DS: Shimon Peres told us that Jews have a tendency throughout our history to be dissatisfied. That's a big theme, so this is obviously a big part of IDF culture. I'm of two minds on how applicable this is to the American military. On the one hand, I feel that the Israeli military is just a more entrepreneurial military than any military I know of or that we've studied. I mean, it's just so much more built around improvisation. The fact that when you're being promoted in the Israeli military, your subordinates have input, or can have input, in those decisions. So it's a very entrepreneurial, start-up military. There are very few bosses.  The only way you can cultivate that culture and ethos is if you have very few bosses, because the moment you have a lot of bosses, you have a lot of people who need to justify their existence, and they justify their existence by giving commands. I saw this on military bases I've worked on and when I've been in government --  the U.S. military is top-heavy, and you have a lot of people standing around giving orders to sort of justify their existence. We do believe, though, that the American military is changing, it is becoming more entrepreneurial -- not nearly as much as the Israelis, and quite frankly it should never be as entrepreneurial as the Israelis because the Americans have to fight different kinds of wars than the Israelis. Israelis fight all their wars in their own neighborhood, it's a different dynamic. You really need Fed-Ex logistics more than you need Fraud Sciences, which is one of the start-ups we profiled.

JG: We know that Israel excels at innovation, but why is there no Nokia in Israel, a huge manufacturer of hi-tech products?
DS: This is a big debate within the Israeli business world, where's our Nokia?

JG: Why can't they seem to scale-up?

DS: Some people say it's a real problem in Israel, that they've created this sort of radical, very experiment-oriented business community, but they're not training serious, senior, high-level managers who can build not just start-ups that pop into Nasdaq or get bought by some American company, but can actually become an institution over the long run. Some people argue, who cares? Why do we need it? We're doing well. If you do what you're good at it--

JG: From your personal perspective, which is better for Israel? To have the thousand little innovators?

DS: Absolutely. You're in a constant mode of creative destruction and it's such a perfect fit for the Israeli culture.

JG: Spontaneity is an appropriate word. You tell the joke in your book about the Israeli who asks a girl out, and she says, "'What time?" The assumption in Israel is that everything is meant to happen today.

DS: This is a very big part of why we believe the Israelis survived and navigated so well the crisis of 2008. If you think about it, one could have argued that 2008 should have been a disaster for Israel because two things happened: one, export markets -- which is the entire Israeli economy, because there is no domestic market -- basically shut down. And two, so much of the Israeli economy has been fueled by global venture capital, which shrunk dramatically.  A lot of venture capital just dried up. Loss of export markets and loss of access to venture capital should have basically destroyed the Israeli economy. But Israelis survived for a number of reasons, but most important was the fact that they wake up every day and say, "Alright, we're not quitting." These start-ups were working for nothing, and saying, "We'll figure it out, we'll get through this. They wake up every day and say, "Let's solve new problems and let's be resilient."

JG: Can the hi-tech industry solve the problem of the economic disenfranchisement of Arab citizens of Israel? Did you find much integration of Arabs into this high-tech industry? If not, is there a way to bring them in?

DS: There's not a lot of it happening.

JG: Because a lot of these human capital networks are built in the army?

DS: We found a few really interesting stories of Israeli-Arab doctors and researchers who are  working with Israeli. Where it's happening, it's pretty amazing. There was one amazing story in nanotechnology happening at Hebrew University that I wanted to write about, it was a great start-up between an Israeli-Arab and an Israeli-Jew, but for security reasons for the Israeli-Arab, we couldn't write about it. We talked about changing his name, but people would have been able to piece his identity together.

The bigger problem is that there's a level of discrimination, let's be honest. But an even bigger problem is they just don't have the network and the entrepreneurial training that one gets in the IDF and they don't have the IDF-based network. So it's a major impediment.

JG: There was a fascinating statistic you have in the book, about how many more thousands of patents get awarded to Israel than to most Arab states, which accumulate very small numbers of patents. What explains that?

DS: In the Gulf, they're spending a lot of money to try to create this atmosphere of innovation.  Whenever I go to the Gulf, it's all they want to talk about, they're so intrigued by the Israeli model. But everything about the economic strategy of these Gulf countries is about spending money. It's all about building fancy schools. Yes, Israel spends a lot on research and development, but they've also developed some very interesting ways to focus companies and universities on how to absorb R&D money. It's not just about throwing money at the companies and throwing money at the universities, but it's about teaching these institutions how to absorb it. Ricardo Hausmann, a former Venezuelan development minister who's now at Harvard, is the author of this Leap Frog theory about how developing economies truly do take off, and Israel is one of his case studies. He said that the key to economies that do take off is that they are innovation-based.  How do you teach people to use money smartly, how to take well-thought-out gambles?

JG: The implication is that the Arab state-system suppresses development and creativity.

DS: Absolutely. I would say there are two issues we try to deal with that often get conflated. There's innovation and there's entrepreneurialism, and people mix them up. There are many parts of the world, many countries in the world, that are very entrepreneurial--

JG: But they're selling somebody else's things.

DS: Right, or they're bazaars. And then there are many parts of the world that are very innovative, and not entrepreneurial at all, and so what's unique about Israel is this combination of entrepreneurialism and innovation. That's the turbo charge, because you have a combination of these very scrappy, small start-ups that are coming up with ideas to turn industries upside-down. Now, in the Arab world, I actually think there's as much of an entrepreneurial culture as there is anywhere, but there are no seeds of innovation because for innovation, you need some basic things that are missing. One, women. You just can't compete if you're immediately losing half of your brains, so that's a killer. Two, immigrants. I don't mean temporary laborers from South Asia. These are people who can never truly participate in every aspect of the society. Even elite academics who are brought in, they're writing big checks to them, but these academics are depressed because they're treated like second-class citizens. The third thing is a tolerance for questioning. There's no tolerance for experimentation in these countries.

JG:  In a way you're talking about the rougher side of Israeli society, a high tolerance for insults and offense.

DS: I have a friend in New York who's an executive of a major commercial real estate company, and they were involved in a potential transaction that was huge. And they lost it, they got outbid and outmaneuvered by a competitor, and my friend happened to be reading the galleys for our book when this happened, and he said to his colleagues, you know, let's do something we've never done before, let's actually do a debrief. It didn't hit him until he read how many American companies, large and small, just don't do that, sit down and be really critical, not for the purposes of having it documented, for deciding whose fault it was, but figuring out how to make it better.

JG: Go to one final thing, something that struck me when I was reading this book.  You have a boycott movement in Europe, but in the U.S., too, you have forces that want to delegitimize Israel. I realized in reading this that it would be quite something to go tell Intel or Google or IBM to divest from Israel.

DS: They'll never do it. I mean, it's impossible. What various companies told us is that if they had to shut down operations in India tomorrow, they could survive because it's basically a lot of outsourcing and a lot of call centers. They said if we had to shut down our operations in Ireland, we could survive. But what one person after another told us is that the one place in the world that would devastating for them to have shut down would be Israel, because they put so much of their mission-critical work  and R&D in Israel.  The Intel story we tell is amazing, this key chip that was central to Intel taking off was designed and then manufactured in Israel, so it would be devastating to these companies to lose Israel. And one more thing -- the most interesting data point on all of this is that European venture capitalists invest more in Israel than they do in any single European economy.

JG: Is that true?

DS: Yes and, to me, that says it all. For all the ranting from Europe about boycotts and attempts at boycotts, that's not what European capital is doing. In terms of the U.S., this is even more true. I don't want to oversimplify, but who do think is more important to Barack Obama: The head of J Street or Eric Schmidt at Google? And if Eric Schmidt said that his company would be devastated if Israel came off-line -- and we interviewed Schmidt and he talked about the importance of Israel -- then I think I know the answer.

JG:  But people can move away from Israel. Isn't this one of the root fears of an Iranian bomb, not that Iran will drop a bomb on Israel, but that investors, thinking that Israel lives under this Iranian nuclear threat, might think twice about coming to Israel.

DS: That's one fear, and another fear is that a lot of these Israeli talents will say, 'What do I need this for? Why do I need to be living under a nuclear cloud? That just may be the tipping point for a real brain-drain.

JG: I had this conversation once with Ehud Barak, in which he said that he hoped that the brightest young American Jews will look to Israel not as a place to go on a free trip or a place to bring their kid eventually for a Bar Mitzvah, but as a place to invest in and a place to even come and work because the opportunities are so great.

DS: For the longest time, American Jews would not invest in Israeli start-ups. They would give to UJA and they'd give to all these other philanthropic organizations, but they kept a firewall up between their business activities and their philanthropic activities. I think for the last three to five years you are, for the first time, really seeing American Jewish investors investing in Israel.
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- Tan Yinglan    

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