Silicon Bowery

RIP Maurice Sendak

Tue, 08 May 2012 18:38:41 -0400

RIP Maurice Sendak

Nobody Likes Math!

Tue, 08 May 2012 15:00:07 -0400

Nobody Likes Math!

If Ayn Rand Gave Advice

Thu, 03 May 2012 15:44:00 -0400

If Ayn Rand Gave Advice

New Foster the People vid by Daniel & Daniel is pretty damn...

Sat, 28 Apr 2012 16:12:51 -0400

New Foster the People vid by Daniel & Daniel is pretty damn creative.

Corporate VC Elements That Matter...

Fri, 27 Apr 2012 16:01:00 -0400

I’m fascinated right now with where the CVC business will go in the next 5-10 years relative to the increase in activity in new CVC units getting off the ground. It remains an amazing experience to get asked how AOLV operates and what lessons we have learned, but it begs the questions, will this component of the asset class continue to mirror the cyclic nature of the industry as a whole or is this time different? Will corporations adopt new CVC models only to re-think them years later after being victims of their own success or keep their new CVC unit as a foundation for future growth? Some folks appear to take very structured approaches to ideating on the key needs and aims of CVC units for the long term while others continue to simply issue PR releases largely at the barking of folks internally who think their company is not innovative enough (we’ll just figure out structure later!). What follows are the two buckets of elements that always seem to come up in my discussions and some thoughts on how we’ve strived to solve for them.

Structural Elements: Questions to ask yourself

Are you a corporate division or an independent partnership? Do you think like a portfolio manager or are you making investments ad-hoc? Does compensation resemble a typical agreement such as that between limited and general partners in venture funds, or are you paid just as corporate employees? Are you focused on maximizing returns on investment or on strategic value to the corporation, or are you a blend?

How we’ve strive to solve for these:

In today’s climate, and in our view, the success and failure of these elements correlates strongly with how much control and trust the parent company is willing to give up. Allowing for a partnership with a set amount of capital to be created that grants carry economics to the investment professionals and blends elements of strategic and financial returns seems the most optimal way to go structurally. The investment team is incentivized appropriatelyand can invest with some measure of real thesis relative to fundsizing. In turn the parent company acquires a blend of treasury ROI(cash on cash + IRR) and strategic ROI (brand, PR, BD, potential M+A,hiring, etc). As an aside, and from a raw structure standpoint, therereally is no more perfect a model than the old XTV that Lerner andGompers wrote about in 2000. Assuming their assumptions are correct,the fund blended treasury ($30M in - $219M out + 56% NET IRR) andstrategic (Documentum + Document Sciences are great examples of thestrategic) in a way no one else has publicly demonstrated.

Organization Elements: Questions to ask yourself

Who is your investment committee and how rapidly can you respond to investment opportunities? Do you have full autonomy when it comes to monitoring, exiting, or liquidating companies? How are you providing value to your investments and how well do you know your parent company and its employees?

How we’ve strive to solve for these:

Your parent company can be your best friend or worst nightmare and again largely it comes down to trust and control. Operating an autonomous investment committee seems most appropriate provided the parent understands exactly what it is the investment team is doing structurally. At the end of the day the parent company does not do this for a living nor is it their specialty and so it makes more sense for the investment team of investment professionals to make the investment decisions and monitor their investments. Beyond this element perhaps the single biggest knock on CVC is that there really is no value creation above and beyond a traditional fund and that CVCs are not really able to exploit complimentarities with their existing lines of business that give them an edge. For the most part we don’t agree and about 60% of our investments have active relationships with AOL (some are too early or we messed up) due to the fact that we really honed in early on the two problems that cause this: communication and improper time management.

On communication, CVCs really need to know the needed services, rentable technologies and other elements that help get your portfolio into the parent and start a relationship. If it doesn’t correlate at all then no matter what the deal will be tough to do even if you were an independent fund who knew the CEO of the company. On time management, corporations simply don’t move quickly. We don’t take external meetings 2 days weekly (not joking) and exclusively focus on helping our portfolio companies in general and with AOL relationships. Things always get stuck in legal, transferred to another division, changed around from a structuring standpoint and it is the CVCs job to mitigate and assist on this to get to the end goal.

Amazing photos from the newly released NYC Archive

Wed, 25 Apr 2012 13:33:27 -0400

Amazing photos from the newly released NYC Archive

Whoops…

Mon, 16 Apr 2012 10:27:59 -0400

Whoops…

Hard to beat this…

Wed, 11 Apr 2012 10:41:18 -0400

Hard to beat this…

“Instead of making their movie I spent the entire budget...

Mon, 09 Apr 2012 19:52:27 -0400

“Instead of making their movie I spent the entire budget traveling around the entire world with my friend Max.” Neistat Bros at it again.

"And what if that actually made you better able to recruit some of the best people in the world who..."

Tue, 03 Apr 2012 15:59:31 -0400

“And what if that actually made you better able to recruit some of the best people in the world who want to join you precisely because they know that you are sincerely thinking about what’s best for them, not just for the company they’re about to join?”

- Calipari’s Recruiting Style via Entelo

Decommissioning the Space Shuttles. Amazing but sad…

Thu, 29 Mar 2012 01:04:53 -0400

Decommissioning the Space Shuttles. Amazing but sad…

Don't Mess With Don Henley

Wed, 29 Feb 2012 10:08:32 -0500

Don't Mess With Don Henley

Awesome movie from @departarrive On an unseasonably warm...

Wed, 22 Feb 2012 15:00:16 -0500

Awesome movie from @departarrive

On an unseasonably warm November night in Manhattan on our way to get ice cream, we stumbled upon what appeared to be a vintage shop, brightly lit display window and all. As we began to walk in, a man sitting out front warned us that we were welcome to explore, but nothing inside was for sale. Our interests piqued, we began to browse through the collections the man out front had built throughout his life. This is a story of a man and his home.

Beautiful Use of AOL CDs...

Thu, 16 Feb 2012 23:18:19 -0500

Beautiful Use of AOL CDs...

What Happens When You Swear At Your Users?

Mon, 06 Feb 2012 13:58:37 -0500

What Happens When You Swear At Your Users?

Absolutely incredible.

Mon, 30 Jan 2012 09:00:05 -0500

Absolutely incredible.

Art in Bushwick

Tue, 24 Jan 2012 12:26:23 -0500

Art in Bushwick

David Lynch - Obsessed: Coffee

Fri, 20 Jan 2012 11:50:17 -0500

David Lynch - Obsessed: Coffee

Swap-O-Matic. This is such an amazing example of conscious...

Fri, 20 Jan 2012 10:00:05 -0500

Swap-O-Matic. This is such an amazing example of conscious consumption in a world of exactly the opposite.

bijan: tedr: laughingsquid: Construction of the Golden Gate...

Thu, 19 Jan 2012 15:28:25 -0500

bijan:

tedr:

laughingsquid:

Construction of the Golden Gate Bridge, 1933-1937

Even if it’s colorized it’s so helpful seeing color photos instead of only seeing the era in greyscale.

stunning.