Benjamin Kuo’s Blog

I’m often surprised by people I run into, who are very familiar with socalTECH — either through this blog, through the online news site, or our emails. But, I’m consistently surprised when people are unaware of the many different aspects of what we offer. For example, someone might know about the blog, but not about the continual news coverage we provide (see http://www.socaltech.com/News); I’ve run into people — who have been getting my email newsletter for years — who didn’t realize there was a web-site attached. And, I often run into people who aren’t familiar with the extensive database of Southern California technology companies and venture deals we have on our online venture database.

Tony Perkins (who founded Red Herring Magazine and now heads AlwaysOn) gave a great keynote at the Technology Council’s annual Technology Awards in Los Angeles last night, talking about how he got the idea for his first magazine (Upside) — from the late William F. Buckley, in the back of a limousine, while working for Silicon Valley Bank — as well as about six trends he saw happening in the world today in the technology area. Among the trends, Perkins showed a well-received video of 12-year olds talking about what is important to them in the world, and ranking the Internet, cell phones, iPod, and other technology in their world; he also talked about how instant messaging and cell phones are more important than email to the “under 25″ generation. (Interestingly enough, I heard the same exact trend cited by Marc Zionts in an interview we ran yesterday on Ortiva Wireless.) Perkins also talked about the effect technology is having on the entertainment industry, and also showed an HD clip of “Lost” using broadband streaming technology from Move Networks. (Unrelated to this blog, but by coincidence Techrockies, our site covering the Rocky Mountain technology industry, ran an interview with John Edwards, CEO of Move Networks last week.)

Photos from the event:

Below: Venture capitalist David Cremin (of Draper Fisher Jurvetson) with Tony Perkins before the event.

Below: Alex Quilici of YouMail and Luis Villalobos, founder of the Tech Coast Angels.

Make It Work’s “Guitar Hero” setup in the reception area.

William Quigley, a venture capitalist at Clearstone Ventures, has just started up a blog, “The Quigley Report.” William is one of just a very few angel and venture capital investors in Southern California with a blog. Some recent posts: What Startups Should Do About the Recession, the Value of Angel Investors, and The One Thing I Love To Hear In A Pitch.

Other blogging investors in Southern California you ought to be aware of:

• Marc Averitt - venture investor - Okapi Venture Capital
• Matt Ridenour - venture investor - Momentum Ventures
• Sid Mohasseb - angel investor - Tech Coast Angels
• Jim Butz - angel investor - Keiretsu Forum
• Frank Peters - angel investor - Tech Coast Angels
• Ken Hayes - angel investor - Pasadena Angels
• Michael Jones - angel investor - Userplane/AOL

(Disclaimer: Clearstone sponsors this blog, but I wasn’t aware of William’s blog until today when I discovered by happenstance…)

Three things, as a startup, you really need to own. Forget all the talk you hear about “virtual companies” and how you can “outsource everything,” if you don’t have these, no one will take you seriously. I thought these would be self-evident, but I’ve run into a few companies recently who lacked one (or all) of the following:

1. Domain name. This seems pretty obvious, but I’ve run into several entrepreneurs lately who told me they were going to raise capital and go acquire some popular generic domain name. Folks, a single domain name does not make a business; and no one is going to fund buying your “ultimate” domain name. Really–did Amazon.com before Jeff Bezos have anything to do with selling books? Conversely, having a generic domain name does not guarantee that what business you put there will be worth millions–it’s what you do with that domain, not the domain name.

2. Engineering talent. If you are a high tech startup, where technology/software/hardware/etc. is your competitive advantage, you have to own your architecture, engineeering, or software talent. If you don’t, your competition will out-develop you, your development will taken ten times as long, and will cost several times what having the right, in-house engineering team can. Sure, you can outsource some development, infrastructure, and other elements of the business–but if there isn’t someone in-house who owns, architects, and understands your technology, I wonder how “high tech” your company can be?

3. Source code. I thought this one was also a no-brainer, but I recently found a company which was in quite a bit of trouble because they did not own the source code to their fully outsourced software. Either through fault of hiring the wrong contractors, a bad contract, or bad faith from their outsourcer, they did not have actual source code for their web site and the software behind it. If you don’t own source code to your own software and web site, you don’t have a company.

I’ve covered the 101 Corridor — the stretch of the 101 Freeway running roughly from the north end of Los Angeles County up to Santa Barbara — ever since I started socalTECH many years ago, and I’ve always been surprised that this area–which is heavily dominated by Amgen–has a very paltry number of biotechnology startups. Amgen, which is headquartered in Thousand Oaks, is the perfect kind of company to spawn an entire industry worth of biotechnology firms in the region. However, to date, there have been very, very few companies spun out or started by ex-employees of the company. I would hazard to say — based on Amgen’s size and influence in the industry — it has a less than stellar record of startup activity.

A few years ago, talking with many ex-Amgen employees, I heard many stories on why there aren’t more Amgen-related startups. They ranged from burnout — Amgen is known for a fairly intensive work environment with long hours and lots of responsibility–to litigation — I had heard from more than one potential startup how their plans for a startup were torpedoed by over-eager lawyers and unfriendliness to licensing any kind of IP. Plus, it appears that the company has done so well lots of employees have taken their stock options and simply retired, rather than jump into a startup. Even Amgen’s own venture capital arm - Amgen Ventures - is headquartered not in Thousand Oaks, but instead in San Diego.

However, it looks like Amgen’s recent financial difficulties and layoffs may be changing this, and the tide might be turning. A few people — including Brent Reinke of Gold Coast Business Forum/Musick Peeler & Garrett, and John Dilts of Maverick Angels — have kick-started an effort to bolster the regional biotech industry, in part to tap into the wealth of knowledge and employees out of the area.

They’ve just announced a The Biotech Forum, a conference coming up on March 27th, focused on connecting executives, entrepreneurs, investors, engineers, researchers and scientists in the area. The keynote of the forum will be from  Beth Seidenberg, Partner at Kleiner Perkins Caufield & Byers, and a series of panels that will also include venture capitalists from DFJ Frontier, Prospect Ventures, and others. It should be interesting to see how the efforts turn out.

(disclaimer: socalTECH is helping to sponsor this event.)

The Technology Council of Southern California (formerly the Software Council of Southern California) has generously passed on a code for a great discount to hear Tony Perkins of AlwaysOn speak at their annual Technology Industry Awards next week. The event is being held at the Millenium Biltmore in Los Angeles, February 28th, from 6-9pm.

Tony, as most of you know, was the founder of Red Herring magazine and a well regarded Silicon Valley speaker. The event also features recognition of a great set of area technology firms. It’s always a great event, and an opportunity to get out and network with CEOs, executives, and others in the community.

If you’re interested in going, they’ve provided me with a discount to allow readers of this blog and web site to register at their member rate, $79 (a $71 savings). Go to: http://www.tcosc.org/awards/index.html

Use discount code:  TECH08.

I’ll be at the event, feel free to say hello…

The Los Angeles Business Journal’s Booyeon Lee writes on the newspaper’s “Who’s Who of Banking” in their latest issue, with a focus on the “movers and shakers” who are helping to shape the Los Angeles high tech industry. Good quotes from, and profiles of Randy Churchill at PricewaterhouseCoopers, Greg Martin at Redpoint Ventures, Jim Armstrong at Clearstone Venture partners, Dave Berkus and Richard Morganstern of the Tech Coast Angels,Todd Gitlin of Safire Partners, Scott Alderton of Stubbs Alderton & Markiles LLP, Stephen Hughes of Silicon Valley Bank (among a few others).

(PwC, Redpoint, Clearstone, Safire Partners, Stubbs Alderton & Markiles, and SVB are all sponsors of socalTECH.com).

Brian Deagon of Investor’s Business Daily has two good pieces published today on the growth of the technology industry on LA’s west side, along with an overall piece on the surge in informal networking groups (Lunch 2.0, TwiistUp, etc.) in the area.

There was a good interview with Idealab’s Bill Gross on NPR yesterday. Interview starts around 4/5ths through the podcast version. (I talked with Bill Gross last year in an interview here…)

There’s been a lot of startups I’ve seen lately, focused on creating standalone companies around Facebook. The rush to create applications for Facebook reminds me a lot of the plug-in market. For those who aren’t familiar with plug-ins, those are the various software widgets that plug into larger applications — for example, in the photo editing world, for Adobe’s Photoshop.

The plug-in market for Adobe Photoshop is one where there are lots of innovative, cool companies creating software which creates neat visual effects, allows for modification of images, and other great added features to Photoshop. There are dozens and dozens of companies generating plug-ins, but one thing you soon realize — is that they’re mostly small shops, probably profitable, but not really an ideal firm for venture capital.

There are very, very few “platforms” where independent companies can be created which have the opportunity to break out–simply because your growth and market is limited and highly restricted by the platform you attach to. Among the few “platforms” which enable this are things which are very broadly applied (i.e. Sun’s Java language) and industry dominating leaders (Microsoft’s operating systems and some–but not all–of their applications, Oracle databases). For example, Microsoft’s email platform, Microsoft Exchange, is so widely deployed you regularly see companies developing solutions around Exchange who are able to create substantial, and sustainable business. Another effort (stil early) is Salesforce.com, which is trying to create their own ecosystem of indepenent providers with their Force.com program. But, even with well adopted platforms — think the Apple Macintosh — it’s difficult to grow a substantial company out of the confines of that platform. I wonder (and I’d love some examples) if there truly is a Facebook enabled business which can seriously turn into a substantial standalone company.