Mike Hirshland, Paul Hammer, Jackie Kimzey, Ellen Levy, James
Suroweiki

"No More Rear-View Mirrors: Investing in a Changed Environment"

Impressionistic transcript by Cory Doctorow

doctorow@craphound.com

July 8, 2003

Supernova Conference

Washington DC

--

Ellen Levy:

We have to keep working with the companies we've already invested
in, we need rear-view mirrors.

Valuations are hard to overcome -- we overvalued some of our
companies and it's an anchor.

Competitive landscape: perception is more detrimental than actual
competitive landscape. Customers who've been burned are gunshy.
Companies that overestimate the competition may shy away from
opportunities.

--

Mike Hirshland:

Current investment is back to basics. Unlearning bad habits that
we lapsed into. VC 101. Motherhood and apple pie. Big markets,
strong products, great teams, customers who are willing to pay to
have their problems solved.

--

Jackie Kimzey:

Rear-view mirrors are useful. We've had lots of bubbles.

Our job is to invest as little as possible for as much ownership
as we can get. [Ed: translation, in a seller's market for
capital, entrepreneurs get screwed].

We've eliminated the pretenders and gotten back to real
entrepreneus who put up their own money and work without pay. We
don't have as many me-too projects -- everything is new and
unique.

--

Moderator: What do you bet on? Entrepreneurs, bizmodel,
customers?

--

Ellen:

We've been looking at ultrawideband -- but this is more about
policy than technology, and the risk from policy dwarfs all other
biz-risks.

Adding another risk-variable overwhelms the equation.

--

Mike:

We spend a lot of time looking at customers: who's buying, why,
and on what basis?

The management team: it's trite, but in tough environments, we
retreat to the sure thing. The best way to protect your
investment is to invest in management [Ed: Yeah, like Ken Lay].
We do early-stage investment and try to build a management team:
if the idea is strong enough to attract good managers, then we
know we're onto something [Ed: Go lemmings go!]

--

Jackie:

We suck at evaluating management teams, though [laughs from
audience].


--

Paul:

Startups can start with 500 customers, lots of subscribers, lots
of capital. Realize what kind of comapny you want to be and match
your funding to it.

Security services are a crap biz: you rearchitect the network,
design it all to work, and then you staff it 2/47 with people
making $8/h and everyone's impression of the service is that it
blows.

--

Panel dissolves into tedious baseball metaphors and platitudes.


Apparently some people missed the memo on the use of the word
"space" as a substitute for "sector" or "industry," as in "The
wireless space." Like chewing tinfoil.