The (Mostly) True Story of Helvetica and the New York City Subway, by Paul Shaw

I know I haven't updated this blog in forever, but with good reason. We've been working our asses off at TickerHound -- I wish I could share the big secret with you now but you'll just have to wait a bit longer.

In any case, I was finally inspired to write a new post as I was on the train this morning.

I had my headphones on and two of my favorite songs played back to back:

Big Pun's: You Aint a Killer
The Notorious B.I.G's: Warning

Aside from the fact that they both have "Big" in their names (and rightfully so), the other thing these two talented artists have in common is that they've both passed away -- too young, might I add.

But here I am -- along with thousands of other hip-hop fans -- listening to these young men weave rhymes that are over 10 years old and still thinking to myself, "Damn, these guys are good". I'll be 90 years old one day (god willing) and I'll still be thinking, "Damn, these guys are good".

And that right there is the LEGACY these two men have left to this world. Their ability to take concepts, events and emotions from their lives and craft beautiful rhythmic sentences out of them.

The same applies to many creative people:

• Visual artists
• Film makers
• Actors and Actresses

These people, 100 or 200 years after they're gone, will have left a legacy here on earth that all future generations will be able to appreciate.

But what about us?

The rough and tumble entrepreneurs who are creating, crafting and weaving beautiful web experiences and products each and every day.

Sure, we make an impact now but what about 100 years from now?

Will our works of art (read: "our web sites") even be around then? What happens if we have to close up shop and shut down our sites?

All that creative energy just fades into oblivion.

And I know what most people would say: "that's business". And while I agree to an extent I have to imagine that the web is more than just business. The very nature of it makes it so that content can persist.

Our designers and developers put just as much creative energy into building a site as a Director would into making a film -- where's their legacy?

Sure, the "Portfolio" section of a designer's personal page or an item on an entrepreneur's resume/bio gives a viewer a brief glimpse into a product that no longer exists...but don't we deserve more than that?

Shouldn't someone be able to EXPERIENCE the sites and products we've built as we originally intended? Shouldn't they be able to ask a question on TickerHound, or vote for a story on Digg or find a great wine on Snooth?

I think sites like The Way Back Machine do a decent job at preserving a site's content, but not so much the experience.

I also think sites like Blogger, Wordpress, Flickr and YouTube have also greatly helped keep legacies alive - albeit in a static form.

But I think we need a new type of web archive -- one that allows a site's experience to persist throughout time. I want my grand kids to be able to go to TickerHound (even if it no longer exists as a business) and experience something I created when I was in my 20's.

What would a "legacy" service like this even look like? How would it function? Is it even possible?

I don't know.

All I know is if there were a way to make it so a young man, 25 years from now, could use TickerHound, Digg or Snooth (whether or not the businesses were still "alive") and say, "Damn, these guys are good", then I'd be one happy entrepreneur.

NYConvergence ORIGINALThe men's interest e-newsletter hosted its three-year anniversary party last night at the nightclub Greenhouse on Varick Street in NYC's Hudson Square neighborhood last night. In addition to the more well-known members of NYC's blog and Tumblr scenes, Thrillist...

In my recent post, The State Of Venture: The Ugly, The Bad And The Good, I focused on how the current economic environment will impact the venture industry. What I did not do in that post was discuss DFJ Gotham's investment intentions. After having received a number of emails from entrepreneurs asking if DFJ Gotham is actively investing, I realized that I should write a separate post that outlines our investment strategy in this market.

In a nutshell, we're actively making investments now and will continue to actively invest going forward. There's good reason for this: based on the arguments I made in my The State Of Venture post, now is great time for us to make investments. Here's why:

We're at the beginning of our latest fund, the investment cycle, meaning we are at the right stage of the fund to be investing aggressively. We have only made 7 of the 20-25 investments that we plan to make out of this fund. Our investments have ranged from Drop.io and ExpoTV (B2C companies) to Worktopia and IZEA (B2B companies).

We believe that, in the current environment, companies that we capitalize will have a unique competitive advantage. As I stated in my prior post, while entrepreneurs will have to make the money last, access to capital over the coming years will afford companies the opportunity to build their operations, acquire talent and generally get ahead while many of their competitors are under-funded.

This market has also created a favorable investment environment for VCs. The market is filled with very smart, newly-minted entrepreneurs who recently left their day jobs due to the absence of bonuses or rolling layoffs.

Additionally, our new investments are not likely to be significantly impacted by the current exit environment.  While exceptions exist, many of the companies entering our portfolio in the near term will not be seeking an exit until 2012 or beyond - a period which will likely have a very different exit environment.

The bottom-line is that I believe that it is a great time to make early stage investments. We plan to invest actively and I hope other early stage firms do too – that’s the best thing VCs can do for the venture community and the economy at large.

We originally covered Boxee when they presented a demo of their open-source social media center this past September. Last week the company announced a $4 million round of funding. This morning I headed over to the Boxee NYC office and met with co-founder  Avner Ronen.

We discuss the product, how the company plans to use the funding, mobile access, comparisons to Apple TV and Microsoft media center, Joost and NYC versus the valley. We also briefly discuss the Boxee business plan.

Oh yea and if you want an invite, just head over to:
http://www.boxee.tv/centernetworks

Dan Rollman and Corey Henderson are on a mission to bring Guinness Book-style records into the 21st century. Last week they launched their Universal Record Database at Web2NewYork.

Monday night Rollman and Henderson hosted their first monthly event at a Chinatown karaoke.

CabEasy is a new NYC-based startup that aims to help people share cab and taxi rides inside NYC. For example, a taxi ride to JFK airport from Manhattan can run over $60 -- if you could split the ride in half, now it becomes a bit more reasonable.

When you browse the current ride requests on CabEasy, you are presented with a map and information about the ride request along with information on the emissions that would be reduced by sharing with another person. Here's an example using a ride from the upper west side to JFK airport, "By sharing this cab, you could reduce by 15.71lbs / 7.13kg (est.) the emissions of CO2 of this cab ride !"

The concept behind CabEasy is great and it would be awesome to see a full list of available rides and riders on the service. While I am not sure it will work for short city trips, longer trips to the three city airports and beyond could see more usage. Adding other transportation options would help as well - for example, there are a variety of shuttle bus companies that pickup and dropoff -- could be an excellent addition to the site overall. So if there is no cab to share, there are alternative options to get from point A to point B.

Jamison Tilsner, editor of Tilzy.TV - online web TV guide, interviewed Paul Kontonis, CEO of For Your Imagination, after the Spring 2009 Web Video Upfront last week in New York City. In the article, "For Your Imagination’s Upfront", Tilsner asks, "How can you communicate ROI to a brand that’s considering building custom entertainment?" Kontonis responded, "We able to deliver ad impressions levels that are comparable with major media outlets but with much higher effectiveness - recall and call to action rates industry wide are very high and proving that high quality original video is very effective...we can develop an original web series for a fraction of the budget and deliver millions of views with informative metrics." Thanks Jamison!

There is one topic on the minds of all entrepreneurs right now: the impact of the economy on their startups. The economy is the centerpiece of every networking event and panel, and it even consumed the Q&A session after my speech at VANJ last week on how to raise VC. It’s inescapable.

The financial crisis has and will continue to effect the venture world. Despite how bad things have become, however, there is a silver lining for the best startups. Here are my thoughts on the good, the bad, and the ugly of the current economic environment.

The Ugly: Economy In Shambles
We all know how troubled the financial markets are right now. The public markets are in an irrational downward spiral, the gears of our credit machine haven’t unlocked despite being greased by the government bailout and the exit environment is as slow as it has been anytime in the last 30 years . In a nutshell, our economy is undergoing a substantial realignment that is leaving the weakest to be killed off quickly by the consummate predator – the global financial community (Thomas Friedman’s so-called "electronic herd”). The casualties have included most facets of the American economy, including financial institutions (Bear, Merrill Lynch, Lehman, WaMu), big corporations (Automakers, Linens ‘N Things, Circuit City), millions of households and, yes, the government, which is watching corporate tax revenue evaporate while the cost of providing life support to the ailing economy is climbing.

The Bad: Venture Market – An Innocent Bystander
While the industries in which venture capital firms traditionally invest (IT, life sciences and, more recently, clean technology) are not directly in the line of fire of this economic downturn (as they were in 2000), the venture space has and will continue to be adversely affected.

An investment banker I know recently stated his view that it will take at least six months for our economic wizards to be able to quantify the size of the financial correction; we don’t even know how bad it is yet. Uncertainty drives corporations and consumers alike to hedge all bets by cutting their spending on everything from advertising to autos. As pockets tighten, it becomes more difficult for companies (whether B2B or B2C) to generate revenue, creating the need to reduce costs or take more capital from investors.

Unfortunately, right when companies need the investment community’s support, venture purse strings will be tightening. There are a few reasons for this conservatism. First, later stage investors (the growth stage venture firms) know that companies that they invest in today won’t be able to exit as quickly as they once might have because the public markets are sick and the corporate buyers are conserving cash until they understand how bad things are going to get. An increased time to exit means lower effective returns.

Second, many VCs expect growth stage capital to become less accessible (for the reasons described above) and, as a result, are increasing their capital reserves for their portfolio companies.  VCs hope to fill part of the follow-on financing gap, enabling their companies to stay afloat while holding out for growth capital. While this is good for portfolio companies, it does mean fewer deals in the portfolio. VC funds are fixed in size, therefore allocating more to each company generally means fewer new investments.

Third, some limited partners (the investors in venture funds) are reducing their allocations to venture capital, despite the fact that venture capital traditionally performs well in recessionary market environments. With the net asset value of nearly all liquid assets devastated by the market crash, many limited partners are now experiencing what is being referred to as the “denominator problem.” For example, if an institution had originally planned to have 10% of its assets in venture, the decline in value of the other 90% of its assets effectively increases the percentage of the portfolio that venture capital represents. An LP may have seen the percentage of his/her assets in venture capital increase from 10% to 14%, leading him to pull away from the very asset class that is likely to provide the best returns in this environment. The magic of this math is that it encourages LPs to invest more in the most troubled asset classes, not the healthiest. While some LPs will follow this logic and cease to make investment in venture until the value of their other holdings rebounds, others will invest more in venture because the fundamentals of the venture sector are even more attractive now. Without new commitments from LPs, there will be less fresh capital coming into venture funds. The net effect is likely to be fewer investments at all stages of the venture market.

In sum, revenues are going to be lower and less capital is going to be available. This of course leaves entrepreneurs with one option: reduce costs. Coincidentally, reducing costs often means making layoffs, exacerbating the downward spiral of consumer spending. It’s hard to buy Christmas gifts without a job. Additionally, the decline in capital means that valuations will drop substantially–a trend that is already visibly taking hold in the market. Times in the venture world are challenging. As any good entrepreneur knows, however, change creates opportunity.

The Good: The Weak Will Die Quickly; The Strong Will Win Big
In this new economic environment, access to capital will become an increasingly important differentiator. If venture investing contracts substantially, a strong balance sheet will no longer simply be a means of staying with the pack, it will increasingly become a substantial advantage, enabling some companies to get way out in front of their competition. While many startups are deploying limited resources, trying to manage costs and weather the storm, the few well capitalized players in each market segment will be positioned to invest for the future, laying deep roots into their markets that can support rapid growth with the drought ends. Furthermore, as layoffs continue to take place at the corporate giants (such as American Express), startups that are well capitalized will have an opportunity to hire high caliber people now looking for work, increasing their advantage and mitigating the human capital constraint that traditionally plagues new ventures in booming economies.

This is a virtuous cycle for the winners. As competition becomes more polarized, the leaders will eat even more of the laggards’ lunch making it even more difficult for the back of the pack to compete. Customers naturally gravitate towards the financial stability of the winners and in tight economic times the second tier players may not be able to reduce their margins to win over the more price sensitive buyers, limiting their means of catching up. These dynamics will likely kill the weak off more quickly, enabling the winners to more quickly separate themselves from the pack.

While I believe the frontrunners will come out of this downturn positioned to win big, the story isn’t entirely bleak for the second and third tier players. Once the end of the downturn is in sight, corporations will likely exploit the financial woes of startups to make low cost acquisitions. The hunters will be coming. For some entrepreneurs this could yield decent (if not life altering) returns.

Conclusion
There is no doubt about it—times are tough for the overall economy and that has, and will continue to, impact the venture marketplace. The companies that are not going to succeed will likely discover their fate more quickly (a blessing in disguise), the companies that might have otherwise squeezed by in a better economy should be sure the corporate sharks smell their blood and the winners should be opportunistic and cautiously thinking big. In sum, I think it’s a great environment for the best entrepreneurs. While at today’s valuations it will likely cost founders a pound of flesh to acquire the capital they need to win, they’ll be able to turn a pound of flesh into a mountain of gold.

NYConvergence ORIGINALPreviously in SoHo, the magazine opened its new pop-up store on 15 West 18 Street last night. The opening was attended by Entourage star and Brooklyn resident Adrian Grenier, whom we were told curated the "green" section of the...