Future of the VC industry

I see that Dave Winer over at his blog has picked up the discussion on the need to "reform" the VC industry (see my November 20th post on this and the comments here) and, in his view, "disintermediate" the VC industry.

Writes Winer:

"1. One word: disintermediate. Take out the middleman. We don’t need the partners, limited or general, they gum up the works. We need money to start new ventures. Luckily we know the people with the money, they’re the users. And we need people to validate the ideas. Same people, the users."

A reminder back to bubble 1.0 for Winer: there were a couple of attempts at this. Draper Fisher launched a public MeVC vehicle (some interesting reminder links: here, here and here) that popped with the bubble. It is investing in other things now. There were a few more "Customer as investor" start up attempts at this around ecommerce as well.

Dave - Unfortunately, the VC industry is only slightly more complicated than being a user. While you are correct in asserting that much has changed and you can build companies on very little money, that is only part of the company building exercise. You see Dave, Sequoia, KP and Benchmark are not born of the "wisdom of crowds." They have a lot of skill in finding unique value before the masses find them. They spend lots of time cultivating relationships and recruiting executive talent to turn popular services into big businesses.

Think of all the flash crowds that use a service but end up fizzling out. In your model, you could lose a lot of dough that way. I also assume that in Winer's new VC world, the very popular Porn and gambling sites would get a lot of investment. That would be a terrible end to the VC industry and innovation brought on by the masses.

See scobleizer's post as well here

Virtual Back Pain? And non-standard ergonomics

I have been more or less flat on my back since Thursday of last week. Spending most of your day staring at the sky has given me more appreciation for the good old newspaper and book than I have expressed in past posts. It is a lot easier to read the newspaper than to trawl cyberspace from flat on your back.

Typing out this blog and reading my daily fill of RSS feeds from flat on my back is a tall challenge. If extended typing normally leads to carpal-tunnel then typing upright with the laptop against my bent knees leads to stiff and sleepy fingers. The fellows who developed the hinges on the laptop at least gave some thought to this possibility since I can position the laptop screen at about 170 degrees to be able to see it. Although, I think ceiling projection would be one step better.

Surfing the virtual world is at least some form of escape and distraction from the extreme pain these little discs have inflicted on me. However, as I left my third alternative medicine doctor of the week , having been poked, needled (I have had so many needles in me, I am starting leak), cracked and prodded yet again, I could only think of one thing: can't we somehow also make back pain and treatment virtual?

"Haste is from Satan"

There is a Hebrew expression "Haste is from Satan." Given that, why are Israelis always in a hurry. This is doubly confounding in the political sphere. Just four days ago, the Hamas surprised much of the Western world with their handy defeat of Fatah in the Palestinian elections. Since then, many Israeli politicians have already mouthed off with new and old suggestions on how to deal with Hamas, now that it will officially govern the Palestinian people. I am most astounded by some of pronouncements coming from the left wing of Israeli politics.

Here is Oslo architect Shimon Peres' from a Jerusalem Post Article:

Speaking Friday in Davos, where he was attending the World Economic Forum, [Shimon] Peres told The Associated Press that Israel would not talk to the group "if Hamas will not change the policy" - a reference to its use of violence and commitment to the destruction of Israel.

Why IF??

My favorite comment comes from diplomatic neophyte and Labor Leader Amir Peretz in this article in ynet.

יו"ר העבודה, עמיר פרץ, אמר אחר הצהריים (יום ה') כי "נמתין ונבדוק מה מתרחש ברשות הפלסטינית, כאשר אבו מאזן יחליט אם לאשר את הממשלה. אם נצטרך, ננקוט במהלכים חד-צדדיים ולא נסכים לקיפאון מדיני. ישנם הנושאים שתלויים רק בנו, והשינויים ברשות הפלסטינית לא יהפכו אותנו לבני ערובה".

Peretz says "We will not agree to a diplomatic freeze so if there is nobody to talk to will take unilateral steps."

What is with these people? Why the haste? I would refer these politcians to the rabbinic edict in Ethics of the Fathers "Silence is a fence for wisdom." Why can't they keep quiet and wait and see what transpires in the coming months and even years. Let's see what Hamas does. Maybe our negotiating hand will be strengthened? Maybe the world will finally see the true face of Palestinian terror? Why are we rushing to leave doors open to talk and showing more eagerness to relinquish more land?

Even if you agreed with the Gaza pullout, should we not wait and see how these dramatic geographic and political changes affect Israel? Kassam rockets continued to rain down on southern Israel after the Gaza Pullout. Should we believe that they will stop now that Hamas terrorists are officially in power. Have other openly terrorist governments such Iran and Syria curbed their blood-thirsty appetites because they are in power?

We can sit back and watch for a while. Acting Prime Minister Olmert is being smart in siezing the moment to create a wall to wall coalition against Hamas and the Palestinian Authority. However, we should be aware that these coalitions are historically short-lived. We need to take a time-out in our dealings with the Palestinians. We need to have zero tolerance even for terrorists rhetoric, let alone kassam rockets and other forms of terror. And, most of all, let's be patient - for a long while. We have earned that privilege with the Gaza withdrawal. Let's understand the new neighborhood before proceeding with negotiations or unilateral anything.

I think you would agree that having the Hamas in Abu Dis is most disconcerting.

House-sitting in Jerusalem

Our Shabbat table conversation today turned to the ever-controversial topic of tourists buying homes in Jerusalem. Ever since I wrote a post on the topic (link to original post) last month, family and friends continue to raise the topic. Most American residents express surprise at any negative reactions to the rows of empty apartments ("but it is so good for the Israeli economy they often say") and Israeli residents bemoan the astronomic prices.

As I turned on my computer this evening the following comment appeared on that blog post from a month ago.

"If anyone of these house owners is looking for a house sitter, my wife and me will be more than willing to help. We just married and we are trying to save enough money to buy a place of our own in the Jerusalem surroundings. To contact me: www.volcoff.com/housesit/"

So anyone who wants to take this guy up on his offer -- go for it. I won't charge a commission. It is good for the city.

Google Vs Yahoo & MSN...and Big Brother

See these 3 posts on Google's refusal to hand over search histories to the US justice department. What do you think?

Washington Post Article
Don Dodge
John Batelle quoting Felten

Technology Vs. Publishing

I was struck by this Headline on Tom Foremski's blog

"The publishing industry is the new technology industry"

This follows a flurry of blogs and articles on new publishing paradigms and technology including this one on Publishing 2.0 and this one in The Economist on New Media vs Old Media.

I suggest you read all of the pieces above. There are two points here: One which I have made in a previous post and the other which I think is a really important debate topic for the online content industry.

1. We are in the early stages of a new phase of our industry where many more layers of the technology industry have commoditized. If we can think of a previous era where the microprocessor commoditized and the OS commoditized and then value moved to the app layer. Now the hardware, OS, apps infrastructure and browser have commoditized and the value moved to the content. This low cost technology platform is revolutionizing the content/publishing industry very rapidly as it radically lowers both the cost of distributing content AND the cost of creating content. The value going forward is in the content and publishing and not the technology used to create it. Think about companies such as Yahoo and Google running on commodity servers and OSes and companies like Vistaprint revolutionizing the printing industry in similar ways to the way Dell revolutionized the PC industry.

2. The key question in this new industry is whether more value is being created at the level of filterers/aggregators or content creation. Clearly in these early days, the aggregators are out ahead. Seekingalpha, the financial content aggregator, just took a Forbes Best of Web award; techmemeorandum, the blog conversation aggregator, is a must read for all technology people; and our portfolio company Metacafe is growing by leaps and bounds as are their competitors Youtube and Revver (and check out techCrunch's review of FireAnt). But licensing and rights issues are coming to the fore and differentiation may require more content creation. Also, unique content that can develop an audience has big advantages as a stand alone business although it may be less scalable.

This quote from Foremski's blog is salient:

"The first wave of technology-enabled media companies are corporations such as Yahoo, Google, AOL, Amazon, EBay, and Craigslist. They publish pages of content and advertising. Except that most of their content is obtained for as low cost as possible; it is harvested by servers and algorithms or their content is contributed by their communities of users, such as at EBay or Craigslist.

Content can also be spidered from other sites, collected, and spun into an index. Publishing the index provides Google and others with cheap content, much cheaper than the New York Times using its journalists to produce a page of content.

[BTW, my web site is spidered by 17 bots every day (a number that is increasing.) The bots suck up one third of my bandwidth and deliver about 5 per cent of my traffic. More than 90 percent of my readers come direct, they know where I live, which is a great position to be in and not have to rely on search engines for traffic. The bots slow down my server, so that means they must be slowing down the internet experience for millions of people as they visit sites like mine. I wonder how long that situation will last.]

Yahoo has tried to produce its own content in the past, such as its financial news channel, which was scrapped. And more recently, Yahoo has tried again and hired editors such as Patrick Houston from Cnet, to create some content in-house.

By and large, this first wave will give way to a second wave of technology-enabled media companies because of the effect of what I call "you can't get there from here." (This is a characteristic of all important transitions in industry.)"

Can I have a minute of peace and quiet?

With cellphones, email, IM, Crackberrys, home phones and work phones, it is hard enough to hide out for quiet moments with your kids. Now comes news of a new start up (Business Week summary) called Tello backed by Jeff Pulver of VON and VOIP fame and Craig McCaw of cellular fame. Tello is creating a presence server that will let people know if you are online anywhere. Yup, cellphone, office phone, home phone, email, IM etc......

It is bad enough that people can guess how to find me anywhere. Now they will know how to find me. I don't think I will sign up.

Here is Om Malik's write up

Kudos: Prof. Auman Speaks Up on The Refugees from Gush Katif

See this article from Ynet describing Nobel Prize winner Prof Jonny Auman's lecture at the Herzlia Conference last night. During the lecture, Prof. Auman attacked the government for its handling of the people who were evicted in the disengagement this summer. No matter what your politics are, we should be horrified as a people for the hell the residents of Gush Katif have been put through after they were thrown out of their homes.

We forget that these people were salt of the earth, working people who built flowering communities, held jobs and owned farms. They developed high tech agriculture and made the desert bloom. The government, having made a decision it is allowed to make, moved them like cattle into hotels without basic conditions for a human being to live decently and hold his head high. There is insufficient food, diapers etc and no work for many of these farmers. The government has not paid out most of the money nor found permanent places to live for them.

Kudos to Prof. Auman for using his stature to bring this to everyone's attention and shame on the government its ineptness and on the so-called activist press for its silence of the lambs.

And why the heck should they share?

As I have written before, Google is building its own access network anyway (seekingalpha article here). That helps explain the comment below by Google in response to one of the RBOC's plans to tier service. (See Om's full post on the topic here and Jeff Pulver's post here.)

"Google is not discussing sharing of the costs of broadband networks with any carrier. We believe consumers are already paying to support broadband access to the Internet through subscription fees and, as a result, consumers should have the freedom to use this connection without limitations."

Public School Un-Education in Jerusalem

Education is a topic that I am absolutely passionate about. It is our future as a family, culture, economy and country.

Public School education is always a thorny issue. I am sure readers in California and New York will sympathize with my Public School travails in Jerusalem.

We send our children to public school in Jerusalem because we think it is important to be part of the system and to interact with children from a broad range of social circles and socio-economic backgrounds. We also believe in the school's Philosophy and like the families it attracts.

Officially and unofficially, I have served on the "board" of my children’s school for the last 5+ years. A group of parents, of which I was one, banded together to save our childrens' school after a rift caused by a disagreement between the school’s founder and its principal. Following that “crisis,” the school lost approximately 200 students and we found it with a major deficit and hole in the budget.

Over 5 years, we helped recruit a new principal, built the school back to a point where it is much bigger than it was 5 years ago, paid off the deficit and balanced the budget. While the official public school day only lasts until 1:30, our school has classes until 3:30PM. We need to collect extra money for that and for the separation of the sexes we have throughout the day (an additional expense). I am very gratified that despite the relatively high cost of the extras the school offers, we have created an environment where those who can afford it, cover the costs for those who cannot and the school has a liberal scholarship policy. I think this should serve as a wonderful example of blind charity that other schools should emulate.

We view the school not merely as a place to educate our children but as an opportunity to educate as many of Jerusalem’s children as we can in an environment of deep commitment to Jewish law, tolerance, love of your fellow man (that is the schools name) and general studies. To this end, we have an enormous waiting list of children waiting to gain entry into the school and the school continues to show improving results on national tests.

That is where the good news ends. It is common sense and elementary priniciples or management 101 that you need to let a manager manage. Somehow, that lesson seems to have escaped the Israeli Public School system. Unions, Ministry of Education politics and meddling school supervisors all conspire to ensure that unworthy teachers stay in the system and that the principal cannot put together a staff he can work with and the staff he needs to succeed. If that was not enough, they force the Principal to take on teachers who are unsuitable for the schools environment because they are lying around in the "unemployed pool" for whom they need to find jobs.

The system finances schools based on this scheme as well. Instead of budgeting per student and encouraging schools to compete for students, the "System" budgets based on teaching hours. So, you end up with a situation that in order to employ all of the teachers (that of course is the goal of the system), you have schools with 14 kids in a class getting the same budgets and schools with 35 kids in a class. This keeps whithering schools open and denies Israel's children the ability to get educated in better schools and take their budget with them.

Our school has expanded rapidly in conjunction with our mission statement to service Jerusalem's children and the school's success. The Jerusalem Municipality and the Ministry of Education, however, have decided that other children in Jerusalem do not deserve access to this quality education. Despite years of requests to move to a bigger school-building, our school remains in a building suitable for 350 kids. Additionally, we battle for months and years with the Ministry of Education to receive the funds due to the school under law. We still have not received the funds.

Finally (albeit this is not an exhaustive list), Ministry of Education supervisors and bureaucrats continue to assert that the extra money we collect to provide education in the afternoon and duplicate resources to enable separate boys and girls education is inappropriately high. It amounts to ~400 NIS per month (~$90). That is somewhat high by Jerusalem standards but not for the education the school provides. Moreover, since more well-to-do parents essentially subsidize anyone that asks for a scholarship, one would think that this would serve as a model to emulate for socio-economic diversity and co-existence. Instead, the Ministry of Education continues to demand that we reduce it and places roadblocks in the Principal's path which inhibit the proper functioning of the school.

Is it any wonder that Israel's educational system is deteriorating every year. The beureacrats heading the Jerusalem school District and the Ministry of Education Supervisors are diluting, if not destroying, our childrens' education.

If you need more proof, here is a link to a letter (in Hebrew) sent by the head of the Jerusalem Parents Association to the Director General of the Ministry of Education targeted at the supervisor of our childrens' school and his failings (I received the letter writer's permission to publish it).

Public School education is very important but we need to find a way to focus on the children and not the "System". More than once I have been told by a beureaucrat that he or she needs to do something for the "good of the system" such as placing an under-employed teacher in our school. The Government would do well to rapidly implement many of the suggestions in the Dovrat Report. (kudos to Shlomo Dovrat for taking a 1+ years of his life to work for our children's future).

1. We need more school autonomy. Let Principals hire and fire teachers and administration. The supervisors and bureacrats should stop meddling. Give parents more of a standing in the school heirarchy.
2. Schools should be encouraged to recruit students of different socio-economic backgrounds and the government should provide tax incentives for wealthier parents to contribute to scholarship funds at the schools.
3. We need to give schools a semi-private mandate to schools. the market economy works. If many parents want to send their kids to a school, there must be a reason for that. This is easy to measure. It is a function of demand and objective results such as national tests. The Government and municipalities should focus financial and structural (read: buildings) support to successful schools so they can accomodate more children.

See this link from Ynet for more reports of failed reform

Yahoo's Strategy

In what appears to be a nod to Google's superiority in ad networks, Yahoo CEO Terry Semel had this to say about Yahoo's plans for Yahoo Publishers Network (Yahoo's full conference call transcript is available on SeekingAlpha's InternetStockblog.

"In search marketing, our monetization efforts can be grouped into 3 categories. First, we are expanding our content match services through the Yahoo Publishers Network to take advantage of the growing number of small publishers on the web. We plan to add new features to beta over the coming quarters including search and enhanced ad targeting. We believe the service will ultimately position Yahoo as one of the preferred advertising partners for small and medium-sized publishers. Second, we are focused on improving RPS to better matching in relevance algorithms. While our matching initiatives will largely benefit coverage, we’re also focused on improving tools to drive higher relevance and click through. And third, we are increasing the number of easy-to-use tools for advertisers and publishers, so they can buy more keywords, touch more creative and add more listings faster. "

In my opinion, Yahoo has other issues as well in its search ads given its reluctance to give up paid inclusion.

WZO Elections

I thought I should re-publish this email sent out by Rav Aharon Lichtenstein to alumni of Yeshivat Har Etzion. Rav Lichtenstein is well-known and respected in Israel and the Diaspora for his thoughtful positions on all matters of politics and his ardent support for religious zionism. I have had a couple of conversations with Rav Lichtenstein in which he stressed the responsibility of people living in democracies to vote in elections of all types. Recently, on hearing some people say they felt there was nobody to vote for in the upcoming election for Knesset, Rav Lichtenstein was firm that people should exercise their democratic right and not "cop out." I think you will find this letter interesting.

January 5th, 2006

ה' טבת תשס"ו

To all friends of the Yeshiva,

The World Zionist Organization (WZO) and its partner, the Jewish Agency, served as the acting government o the State of Israel prior to 1948. Since 1948, these organizations have worked to preserve and enrich Jewish life around the world—strengthening and supporting Jewish and Zionist education; promoting Aliyah, and rescuing Jews from distressed countries.

We are in the midst of the registration and election of the United States representatives to the 35th World Zionist Congress, which will elect the leadership of the WZO and the Jewish Agency. These men and women will establish priorities and policies that will affect you and every Jew throughout the world. Over $1 billion for Jewish education, Aliyah, and outreach are at stake. Many different points of view and interests, especially in the realm of the religious character of the State of Israel, will be represented. During this period of internal and external strife, we, who are, committed to an Israel dedicated to the values we received at Sinai, must be especially, concerned about this Congress.

We must do our utmost to insure that representatives who will stand up for Torah will be elected.

Voters around the world will decide who gets to go to the Congress and who does not. Those who register and vote will choose the American delegation, the largest group of delegates from the Diaspora. The strength of the Religious Zionist delegation will determine the level of support for Orthodox institutions and schools in Israel and the Diaspora.

I urge you to register and vote the Religious Zionist slate for the sake of Torah and for the spiritual integrity and vibrancy of Israel.

www.votetorah.org

בברכת התורה והמצוה,

Sincerely,

Aharon Lichtenstein

Google and World Domination

Click here for an interesting article in the Economist on Larry Page, founder of Google and Google's plans for re-creating the world. I wonder if this is crationism or evolution?

Trees and the information age

I really enjoyed this Op-ed by Michael Kinsley on the future of the newspaper industry. Below is an excerpt of a fabulously well-written article. When you read the article, think about sites like SeekingAlpha and gawker and now Scoop in Israel and decide yourself whether newspapers still have the content. Basically, I do not read Newspapers any more.

"The trouble even an established customer will take to obtain a newspaper continues to shrink, as well. Once, I would drive across town if necessary. Today, I open the front door and if the paper isn't within about 10 feet I retreat to my computer and read it online. Only six months ago, that figure was 20 feet. Extrapolating, they will have to bring it to me in bed by the end of the year and read it to me out loud by the second quarter of 2007.

No one knows how all this will play out. But it is hard to believe that there will be room in the economy for delivering news by the Rube Goldberg process described above. That doesn't mean newspapers are toast. After all, they've got the brand names. You gotta trust something called the "Post-Intelligencer" more than something called "Yahoo" or "Google," don't you? No, seriously, don't you? Okay, how old did you say you are?

And newspapers have got the content."

1999? Google's Stock Price and B2C VC investments

Read this skeptical article from Christopher Byron in the NY Post (registration req'd) on Google's stock price. I see some similarities to the venture capital business.

Here is an excerpt of Byron's article:
"Last week the cheerleading from Google's proselytizing analysts was all but deafening, as each tried to outbid the other with ever more extreme and bullish forecasts as to where Google stock is headed.

From Goldman Sachs came a 25 percent increase in the analyst's 12-month "target price," to $500 a share. More boldly still, Bear Stearns pegged Google's price at $550 by year's end, while an analyst at Piper Jaffrey threw caution to the winds and went for a year-end target of a full $600.

And anyone hungering for some good old-fashioned shoot-the-moon forecasting reminiscent of Henry Blodget and the worst excesses of the dot-com era, could have placed his money with Caris & Co. That firm's Google analyst offered a target price of $2,000 (though it wasn't quite clear when exactly the wondrous moment would be reached).

What's wrong with forecasts such as these? Plenty — which is why young Master Blodget is no longer a securities analyst at Merrill Lynch and is trying to reinvent himself as a stock market "commentator."

But before getting into the details of what is now happening in the world Blodget left behind, first a bit of background to help remind us as to how even well-run, profitable businesses — which Google certainly is — can nonetheless become rocket rides to ruin . . . not just for individual investors, but ultimately for the whole market.

For those of you who don't remember how we got to where we are now in the stock market — and that would apparently be just about everybody — it was almost exactly six years ago today, on Monday, Jan. 10, 2000, when the airy enthusiasms of the dot-com bull market finally reached the point of total incomprehensibility and even Wall Street's wisest of the wise began speaking in tongues.

We refer, of course, to that moment, captured for posterity at a Midtown press conference, when Gerald M. Levin, the chairman and CEO of the largest media conglomerate on earth, Time Warner, stepped to the microphones to unfurl what will surely be remembered as one of the most astonishingly stupid business deals of modern times."

Truthfully, I find myself feeling similarly about B2C internet investments these days. Many VCs are rushing into this space again and paying up big valuations for features and deals without traction. I have seen more than one enterprise software VC re-invent themselves into a consumer internet investor in the last 12 months. Feels like 1999 in the VC business as well.

What the Middle East Conflict is Good For

I was driving down HWY 280 yesterday in California when this tidbit came on KCBS Radio from a guy named Ross (last name).

Apparently, the US is proposing to change daylight savings time so that it will start 3 weeks earlier and end 1 week later. This is causing much angst and confusion among consumer electronics manufacturers. The CBS reporter wondered whether his VCR will record shows one hour earlier during those weeks? Fear not, said Ross, the US is not the first country to encounter this problem. Israel, who for years has treated daylight savings time as a political hot potato, switching the time as frequently as it switched governments, turns out to be a beacon of hope for this vexing problem. Said Ross (I paraphrase), 'Microsoft did not put automated daylight savings time updates for the Jerusalem time zone because of the changes in Israeli time. In addition, one of the ways Palestinians asserted their independance was by changing the clocks on different dates than Israel did.' So you see, Israel is a world leader in complicated Daylight Savings time challenges.

Ross then interviewed an employee at Sakal (an Israeli consumer electronics retailer), asking him what Israelis do to make their electronics work right when daylight savings time moves around. Said "Mr. Sakal" 'Israelis get up from their couches, read the manual and adjust the VCR time clock with their own fingers.'

Shabbat and the Internet

See this article from the New York Times on keeping Shabbat (Sabbath) and the Internet. This is an issue that comes up frequently. The nature of the internet clearly affords many technical halachic (Jewish Law) ways to address and even circumvent the prohibitions of working on the Sabbath. However, one must always keep in mind the spirit of the law and when one owns 100% of a business, like Mr. Gniwisch in the NYT article, I think there is tremendous merit in staying closed on shabbat. (I also appreciated his very halachic practical approach to what happens when you take on outside shareholders who have different beliefs.)

We lead hectic lives where there is little time to clear your mind and spend time with your family. Shabbat affords us that respite and clearing your head from sundown Friday to sundown Saturday from the frenetic pace of the internet is a tremendous gift to us and our families.

postscript: I found this academic paper on the topic (I have not read it yet)

Ever wonder who was the last person to use your Vegas hotel room?

For those of you who do not know me personally, I am not a big fan of Las Vegas. But this sticker on my bathroom mirror in my smelly Riviera Hotel room in Las Vegas raised my horror to an entirely new level. Here is what the sticker said:

"Please Help Protect Our Employees

If you are in need of a disposable container for hypodermic needles
please call housekeeping"

nuf ced.

CES

I just left CES. I was only there for a day, so my wisdom on the show is somewhat limited. I have two takeaways I wanted to share and they come out of one observation. Many of the booths and products were focused on making technology more livable and integrated into our daily lives. There was Panasonic's expensively framed Plasma TVs. All sorts of wearable devices. And, my personal favorite, Hannspree's branded and personal LCD televisions.

The two takeways are:
1. Technology really is part of our everyday lives so it had better be comfortable. Comfortable to watch, from comfortable chairs. Comfortable to wear (LV iPod cases etc.) and fashionable. And, perhaps, most of all for the fiercely independent young generation, highly personalized. This trend will accelerate even more over the coming years.

2. This is a net negative trend for CE vendors. Because their other motivation is profits. To wit, the products have become so similar and the technology so commoditized that the only place they can seek profit margin is in enhancing the plastic or livability (if there is such a word) of the product. So Panasonic makes increasingly lower margins on the 42" plasma but can make $400+ on the fancy frame. Hannspree can make nary a buck on the LCD TV but can charge upwards of $500 for the branded and personalized MLB TV with your favorite team's logo on it.

Net Neutrality and Google

The Wall Street Journal has an article on Today's front page about the RBOCs (Verizon, SBC etc) getting ready to charge content providers for carriage and/or guaranteed bandwidth as a way to pay for their pipes. This is terrible for consumers who will now, essentially pay twice for the same service: Once for their DSL access and once for the cost the content providers will inevitably have to pass along. This point was made by Om Malik in today's post.

In my opinion, this an important but secondary ramification of this announcement by the RBOCs.

The two major points this highlights in my opinion are:
1. As I have said in a previous post, access matters. Those carriers with the dumb pipes essentially have the ability to control what I will see. The access providers (Cable companies and RBOCs), by pre-choosing the home page or differentiating what content can be seen at what speed, will have a major say in the success of the portals and other content players. Paid placement for home page rights as in the Yahoo/SBC partnership will become increasingly important. This will also become truer for smaller content providers as well and will have an impact on early stage internet video players who might lack the financial muscle for these kinds of deals.

2. This is potentially a double positive for Google (on a day where Piper Jaffray's Safa Ratshcy upgraded GOOG's target price to $600 (Click here for internetstockblog post on Safa's upgrade). Why do i say a double positive? First, Google has been buying up dark fiber. They saw this run-in with the RBOCs coming. They will build their own network with access points (remember SF WIFI) so that they can have access on the consumer side and not need to pay ransom to the RBOCs. Second, remember that AOL deal. What people forget is that AOL is in the access business. They have ~20,000,000 customers that they provide access services to and control the home page for. Google is now that default search engine for a while. Yahoo will now also pay for that privilege as the RBOCs move to this model.

PM Sharon in the Hospital again - Ramifications

This time it is serious. We can only wish a refuah shleima (speedy and full recovery) to the Prime Minister. A word on the potential ramifications in the midst of elections.

There is a saying in Israeli politics that elections are decided in the last two weeks of before the election. Four months is indeed a long time in Israeli politics. (see previous post on this topic)

However, the situation reminds me a lot of the last time Benjamin Netanyahu was elected. Terror is on the rise with Kassam rockets raining down on Israeli cities daily and credible intelligence reports that the Palestinians have obtained longer range and more damaging missiles. The Lebanese border has heated up again with Al Qaeda infiltrating. Finally, we have an essentially incapacitated prime minister. For even if Sharon fully recovers, it will be tough for him to return to the Prime Minister race.

You will recall that Netanyahu was elected last time on the heels of the assassination of Prime Minister Yitzhak Rabin and a rising wave of Palestinian terror. With Sharon, easily the most liked, respected and electable of the leaders, sidelined, the race will primarily be between Netanyahu and the untested Amir Peretz. Say what you want about Netanyahu as a leader, he is certainly good at getting elected. And, demagoguery aside, Netanyahu did a great job with the economy during his term as Finance Minister. He is also considered experienced and tough on terror and it is becoming increasingly clear that post-disengagement, the Gaza Strip will be a cesspool of terror for the foreseeable future.

Whatever we might think, 3-4 months is STILL a long time in Israeli politics. Never a dull moment.

Family Vacations!

Well the blog and I are back from a wonderful family trip. You will note the difference between the headline and the opening sentence. My dad once remarked that after four children he stopped calling these "time outs" family vacations and began calling them family trips. After this one, I think I know why. As my wife says, you may go on vacation but we still have 6 kids, that is, 6 kids to dress in the morning, remind them to get dressed in the morning ( 4 times minimum); shower them (remind each of them to shower 3 times) and, did I mention, throw them out of your bed multiple times at night because they are not used to the surroundings.

All kidding (although I was dead serious) aside, it is critically important in these hectic lives we lead to take time off and spend with the family. We find these winter vacations particularly good bonding experiences because there is little to do at night so we can all spend time together. I used my blackberry once a day to check if there was anything urgent. There was no internet access where we were so I could not use my PC so I did not see attachments. It was a real break from work (and blogging). My wife did not have to cook and carpool for a week.

These are critical years that ones children grow up. They don't come back. We need to cherish them and while being productive at work, still take time to spend with the children. One of my partners remarked to me a few weeks ago that he noticed his wife hugging their child more at night as he grew up, as if she was holding the moment because soon he will leave home. It was a great reminder. Life is fragile and we are all busy. Cherish these years and moments; take time off and spend with your kids and family, and give your kids an extra hug. There is nothing more important.