Peter Chun

This morning, Fred Wilson of Union Square Ventures discloses to the world his failure rate as a venture capitalist of 17 years (20 percent over 32 investments, which is enviable in VC circles). He’s also had 11 deals (40 percent) with 5X+ returns, so it more than balances out.

Wilson is more at ease talking to the world (through his blog) than most VCs. But all venture capitalists should have to disclose their personal failure rates. After all, measuring performance should go both ways between VCs and entrepreneurs, not to mention venture investors. Sometimes, you can learn a lot more from failure than from success. Wilson shares what he’s learned from his failures. Either a business turns out to be a dumb idea, he says, or, more likely:

It was a decent idea but directionally incorrect, it was hugely overfunded, the burn rate was taken to levels way beyond reason, and it became impossible to adapt the business in a financially viable manner.

. . . Of the 26 companies that I consider realized or effectively realized in my personal track record, 17 of them made complete transformations or partial transformations of their businesses between the time we invested and the time we sold. That means there a 2/3 chance you’ll have to significantly reinvent your business between the time you take a venture capital investment and when you exit your business.

So it’s pretty clear to me that most venture backed investments don’t fail because the business plan was flawed. In my experience at least 2/3 of all business plans we back are flawed.

Most venture backed investments fail because the venture capital is used to scale the business before the correct business plan is discovered. That scale/burn rate becomes the cancer that kills the business.

We’ve all heard variations of that be-nimble-or-die philosophy, but it bears repeating.

What have you learned from your business failures? Comments, as always, are open.

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Nowadays, that person sitting on the bench next to you engrossed in their cellphone screen is more likely than ever to be watching videos or reading a newspaper. This is especially true now, with AT&T’s announcement this week (via CenterNetworks) of their expansion of broadband cell phone service in Brooklyn, Queens and Northern New Jersey. 200 new cell sites will offer high speed, third generation technology, or 3G, joining downtown Manhattan and the airports, which have enjoyed the technology since June last year. Users will need to subscribe to a plan to use the new technology, and they must have compatible phones. (The iPhone is not compatible, by the way.) While users can enter any web address, not all sites are formatted for mobile phones. Verizon, the national leader in 3G technology, has offered the service here since 2005. Maybe one day soon the person on the bus next to you will be reading the Eye Opener mobile edition?

It is now official. Google has confirmed earlier reports that it will bid in the upcoming wireless spectrum auctions. Already, it is toying with other prospective bidders, waiting until next Monday, the last possible day, to file its application with the FCC.

In mid-December, the FCC will release its list of eligible bidders. The auction itself begins on January 24, and could continue through March. Google exec Chris Sacca also notes that because of anti-collusion rules, Google will not be saying anything else about the auction until it is over.

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Google’s “Blogger in Draft” program that tests functionality for Google’s popular Blogger blogging platform has rolled out OpenID support for comments.

The new service will allow anyone with an OpenID account, including LiveJournal and TypeKey services to log in and validate a comment on blogs running under the Blogger in Draft service. Google notes that the feature is a test and that they will seek user feedback, but all things being equal this will end up being provided on Blogger itself.

The bigger news, particularly for rabid OpenID advocates is a suggestion from Google that they are “working on functionality to let Blogger’s URLs (both Blog*Spot and custom domains) be used for commenting elsewhere on the web,” which sounds a lot like code for Google is looking at turning Blogger logins into OpenID log ins in a similar way that AOL did with its user base.

It doesn’t take Sherlock Holmes to know who is driving this, and Google even drops a hint in the example link: “http://brad.livejournal.com/”; LiveJournal founder and former SixApart employee Brad Fitzpatrick joined Google in August and is credited as the founder of OpenID.

OpenID advocates are passionate about the potential of the idea, but despite the noise and companies such as Digg, Yahoo and even to some extent Microsoft adopting OpenID it has failed to capture the broader public’s imagination. If the 1000 pound Gorilla in the room decides to adopt OpenID across its range of products, presumably with Blogger being only the first step of a broader rollout, OpenID may finally take off outside of the first adopter and tech communities.

Thanks to David for the tip

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When Facebook took a $240 million investment from Microsoft last month at a $15 billion valuation, they became, in theory, one of the most valuable Internet-only companies on the planet.

But that valuation was tenuous at best. Microsoft and Facebook expanded their year-old advertising relationship as part of the deal. And Facebook was unable to get a third party to pony up cash to justify the valuation. Only a single (financially conflicted) entity was willing to say Facebook was worth $15 billion - that wasn’t good enough supporting evidence for the valuation.

Until now, that is. Kara Swisher is reporting that Facebook has grabbed another investor - $60 million from Hong Kong billionaire Li Ka-shing.

Facebook has now raised just shy of $340 million in capital. That’s enough to keep them going as a private entity for years, if they choose to do so. Their $15 billion valuation may or may not be real, but they certainly have a lot of cash to fiddle with.

Facebook

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New Israeli startup IRSeek is indexing public Internet Relay Chat (IRC) channels at the rate of 6 million conversations a day. 300 million conversations have now been indexed by the company. The most popular networks, including EFnet, DALnet, Freenode and QuakeNetUndernet, are all being monitored - IRSeeK is now “listening” to 2000+ channels across 10 networks.

There are few IRC search engines today, and most focus on specific niches or single networks, the Company says. Nearly two decades worth of data contained on IRC servers has effectively been lost. IRSeek wants to make sure that future conversations are properly indexed and and searchable. It’s a huge untapped knowledge-base.

So if you want to see what people are saying on IRC about, say, iPhone unlocks, now you can. The most popular search terms populate a query could on the front page of the site.

The company was founded by Eran Cohen (CEO), and Ariel Berkman (CTO). Development began in mid-2006.

The company says a channel is dropped when file sharing activity is detected and private conversations are not eavesdropped in anyway. Still, some IRC users, who have a possibly unreasonable expectation of privacy, may be troubled by IRSeeK. Personal information is often revealed in IRC chats. That information is now indexed and searchable. Searches can also be conducted by IRC nicknames, and all conversations involving that nickname (or even if they were just in the room) are linked. Of course, nicknames aren’t unique and many users may choose the same nickname over time. But even so, the knowledge that everything being typed can be later found by others may have a chilling effect on users.

IRSeeK

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The Wall Street Journal is quoting “people familiar with the matter” saying that Google will announce a bid for the 700 MHz wireless spectrum Friday.

Google first expressed interesting in bidding in July, when it sent a letter to the FCC demanding that the new bandwidth have four requirements: open applications, open devices, open services and open networks. The FCC only adopted two of Google’s recommendations when it released the terms for the auction July 31, with support for open applications and open devices, but with no requirement for open services or open networks.

With the auction due in January and bidders having to declare their intentions to bid by December 3, there has been no shortage of speculation as to whether Google would or wouldn’t participate.

The ongoing mystery is exactly what Google plans to do with the spectrum. Since we last wrote about the auction Google has announced the Open Handset Alliance (Android) which includes T-Mobile and Sprint Nextel; in effect Google has an existing partnership with two of the four major existing mobile players in the United States. If Google is seeking to become a cellphone operator in its own right, this wouldn’t be well received by T-Mobile or Sprint Nextel; unless of course Google is already talking about partnerships where by one (or both) of their partners provides the towers and service provision whilst Google maintains spectrum ownership, whilst presumably dictating access terms that would favor open access and/ or Android itself.

From a consumer viewpoint Google entering the auction process is a positive step forward, even if we don’t know Google’s intentions yet. Competition is always good, and Google owned spectrum would provide downward pressure on cell phone rates that will benefit users on all networks, not just those using a Google owned service.

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Google has released two new features for its RSS reading product, Recommendations and Drag-and-Drop.

The Discovery recommendation feature suggests new sites a user may wish to read based on current subscriptions and (interestingly) browsing history. Google has previously offered feed bundles based on subjects, but this is the first time it has offered customized recommendations in this way.

The drag-and-drop functionality allows users to re-order or move subscribed feeds within a folder or to another folder. This style of functionality isn’t unique, and as Google itself points out, RSS readers such as Bloglines and NewsGator already provide drag-and-drop functionality.

Google thanks a number of interns and ex-interns for the new features, a nice thing to do.

As a Google Reader user I know I’m certainly going to use the drag-and-drop functionality, and I’m even looking at some of the suggested feeds as well, but I’ve got to ask: how is it that we can get drag-and-drop in Reader and not Gmail? Surely Gmail could do with this functionality. Maybe the Gmail team needs some interns as well

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With Facebook making changes to its Beacon program, users will see a new set of options every time they interact with a “Beacon Affiliate”. This is what you’ll see:

Notification

Facebook users will see a notification in the lower right corner of the screen after transacting with a Beacon Affiliate. Options include “No Thanks” that will immediately stop the transaction from being published. Alternatively closing or ignoring the warning won’t immediately publish the story, but it will be put in a queue
Second Warning

Presuming you’ve ignored or closed the first notification, Facebook warns users again the next time they visit their home page. A new box reminds you that an activity has been sent to Facebook. Like the first notification you can choose to not publish the activity by hitting remove, or you can choose to publish it by hitting ok.

Per the original statement from Facebook at this stage, presuming you’ve ignored the warnings and not selected to publish the activity or told Facebook no, it won’t be published. Here’s the kicker though: they’ll keep annoying you until you finally make a decision:

If a user does nothing with the initial notification on Facebook, it will hide after some duration without a story being published. When a user takes a future action on a Beacon site, it will reappear and display all the potential stories along with the opportunity to click “OK” to publish or click “remove” to not publish.

But there is hope should you not wish to have your Facebook experience consumed by messages asking you to publish or not publish an activity, you can opt out permanently

Opt Out
Found via the “External Websites” section of the Facebook Privacy page, this allows users to permanently opt in or out of Beacon notifications, or if you’re not sure be notified. The downside is that there is no global option to opt out of every Beacon affiliated program; it has to be set per program. Better this than nothing I suppose.

Update: second screen shot is updated. Thanks to Facebook for the more up to date shot.

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Andrew Monfried’s presentation was the most interesting at tonight’s Ad Club Meetup. The founder/president of Lotame talked about advertising in social networks.

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