Tour de France Ruined: Basso & Ullrich Out

With the Lance Armstrong era coming to a close at the end of last years Tour de France, this years race promised to be very exciting. However, Ivan Basso and Jan Ullrich, the two clear cut favorites who finished 2nd and 3rd last year, were kicked out of the tour on doping charges today. Francisco Mancebo, who finished 4th in last years Tour was also among the 9 riders who were kicked out for allegedly using performance enhancing drugs received from the Spanish doctor Eufemiano Fuentes.

This is a tragic way for Jan Ullrich to end a career that has been so vastly over shadowed by Lance Armstrong. Ullrich won the Tour de France in 1997 and at the time was poised to become the next great cycling champion. Armstrong's miraculous return from cancer to win 7 consecutive tour victories derailed Ullrich ascension. However, Ullrich has finished in the top 4 of Tour de France 8 times including 5 times as runner up, 4 of which were second to Armstrong. This year, Ullrich was coming off a win in the Tour de Suisse and was reportedly in the best shape of his life.

Ivan Basso was cycling's rising star and 2006 looked to be the year where he claimed his thrown. Basso finished 3rd in the 2004 Tour and 2nd last year. This year Basso crushed the competition in the Giro d'Italia, which is cycling's second biggest event and clearly was in top form.

Basso and Ullrich were poised to battle it out in what was stacking up to be one of the most interesting Tours in years. I have no sypmpathy for any of the athletes that use performance enhancing drugs. However, I truly hope this is a mistake of some kind and that it can be rectified ASAP so that these two great cyclist can participate in this years Tour. Unfortunately, it doesn't look good. Ullrich has already proclaimed his innocence but his own team's spokesman said that the evidence against him and others was "clear enough and didn't leave any doubt."

Many other great riders are still participating and the favorites now include Alexandre Vinokourov, Floyd Landis, Levi Leipheimer and Andreas Klodden. However, the field is effectively wide open and I wonder how much satisfaction this years winner will be able take knowing they did not beat Armstrong, Basso or Ullrich.

Penalty Kicks Suck

Germany beat Argentina this morning in the quarter finals of the World Cup on penalty kicks. After playing a full 90 minutes and an additional 30 minutes of overtime the match came down to 5 penalty kicks for each team. The problem is that penalty Kicks involve too much luck to decide important games and goal keepers admit to routinely guessing which way they jump. I don't really know of a better to end a deadlocked match but it definitely sucks to see the best team in the tournament go out on penalty kicks. Hopefully the Italy vs. Ukraine match will be decided in normal course of play.

AIM vs. Nasdaq: What's with all the hype?

Chad Lynch of Pillsbury Winthrop has put together another interesting event titled "AIM vs. Nasdaq: What’s with all the hype?" as a part of his on going series for startups titled "Back Stage Pass."

More and more US based companies are choosing to go public on the the London Stock Exchange's Alternative Investment Market (AIM). The main draw of the AIM seems to be less regulation but the AIM also seems to be a friendly market for smaller IPOs, which could make it more interesting to relatively small companies. Admittedly, I don't know much about the benefits of AIM vs. the LSE, NYSE, or NASDAQ and the panel is star-studded (see below) so I'm very interested in attending the event.

Here are the basic details:

July 20th, 2006

Pillsbury Winthrop
2475 Hanover Street
Palo Alto, CA 94304
Directions

7:15am -8:15am Casual Networking & Light Breakfast
8:15am-10:15am Main program

Moderator:

• Gary Benton, Partner, Pillsbury Winthrop Shaw Pittman

Panalists:

• Michael Moe, CEO, ThinkEquity Partners
• Brian Bean, Co-Head Investment Banking / Head of Tech Banking, Montgomery & Co.
• Quentin Solt, Consultant Attorney, Pillsbury Winthrop Shaw Pittman
• Arthur Knapp, CFO, OCZ Technology Group, Inc. (just went public on the AIM)
• Philip "Flip" Gianos, General Partner, InterWest

Microsoft to Kill Pirated Copies of Windows in Q4?

Ed Bott writes that Microsoft may be developing a method to turn-off illegal copies of Windows. Microsoft recently released a "patch" that validates the Windows license as part of their Genuine Advantage anti-piracy drive. Apparently Microsoft may have built a hook into the software that allows them to kill non-validated copies of Windows. Microsoft would not deny these intentions on the record with Bott and furthermore David Pollak writes that a Microsoft support representative told him that:

"In the fall, having the latest WGA will become mandatory and if its not installed, Windows will give a 30 day warning and when the 30 days is up and WGA isn't installed, Windows will stop working, so you might as well install WGA now."

I fundamentally believe that piracy is wrong but I'm not sure if this is the right way to fight it and this begs the question of whether or not Microsoft has the right to turn-off legitimate copies of Windows because their owners choose not to participate in the genuine advantage program. Piracy is a huge problem for Microsoft that some estimate to be just under 35% of all copies in use. Thus, I am sympathetic to Microsoft's campaign against piracy but this is clearly going to be a PR nightmare.

I agree with Bott's earlier post on the subject that it was wrong for Microsoft to include the genuine advantage patch as part of the automatic update system, which is designed for "delivering security updates right to your computer automatically.” Also, the genuine advantage patch does mimic the behavior of trojan malware by "phoning home," which has caused speculation as to whether or not the patch itself is spyware. Not using Windows Update (missing security patches) is one of the main reasons that viruses and worms are so wide spread amongst Windows users and this just gives skeptics one more reason not to try it. Furthermore, many users report problems with the Genuine Advantage patch. Others still report that the validation check is not 100% accurate and some legitimate copies are being identified as pirated. Personally, I have installed the patch and I haven't had any problems with it but I'd be pretty ticked off I had.

Yet, one positive benefit from a Microsoft crack down on piracy is that it could boost interest in open source alternatives like Ubuntu or Open Office.

Too Much Management?

Ed Sim, of Dawntreader Ventures, recently wrote that top heavy management teams can turn off early-stage investors. Mr. Sim writes that companies require different teams at different stages of development and hiring senior management too early can be problematic because:

• Hiring too early is worse than too late
• Investors would rather build a team around a vision than inherit a fully baked team
  
• Companies change often in their early days
• Sr. Managers have big egos
  
• Sr. Managers command high salaries
  
• Sr. Managers take lots of equity

Hiring the right management team is definitely a tough task, which is exponentially more difficult for first time entrepreneurs because they come under more scrutiny from investors as unknowns. It is really tempting to hire people with experience to hold titles in order to impress investors and I definitely would have made this mistake if some of the offers I've made had been accepted. However, I did wind up finding a happy medium by putting together advisory boards.

Establishing advisory boards lets entrepreneurs tap into the expertise and networks of senior executives with out giving away too much equity or stressing cash flows. Furthermore, while it may be too early to make a hire now, forming an advisory board will keep the prospective executives close to the company but still provide the flexibility to move in a different direction as the company finds its path.

Despite all of this if you have truly found the right executive, hire them as fast as possible.

The Socceroos Deserved Better

Today the Australian Socceroos were knocked out of the world cup in heartbreaking fashion by a questionable penalty kick that was awarded in extra-time. Soccer is a game where the referees have always had a strong influence because scoring is so low that free kicks, penalty kicks and red cards can change the dynamic of a game much more so than a 15 yard penalty in football, a 3 point play in basketball or an inconsistent strike zone in baseball. The referees in this world cup have been terrible. More yellow cards and more red cards have already been issued in this World Cup than any previous. Three games in particular (Italy vs. USA, Holland vs. Portugal & Italy vs. Australia) have been completely ruined by shockingly bad officiating.

Australia entered today's match with Italy as a heavy underdog. In fact, Italy has played in more world cup finals than Australia has matches. Yet, the Socceroos played Italy to standstill for 90+ minutes. However, in extra time Italy's Fabio Grosso made a great move to advance the ball past the last sliding Australian defender, Lucas Neill, just outside of the keepers 6 yard box. Rather than attempt to score from a very dangerous position with only the Australian keeper left to beat, Grosso intentionally tripped himself over Neill who was still on the ground. Italy was awarded a penalty kick, Francesco Totti scored the winner and 12 seconds later Australia's Cinderella World Cup run was over. As hard as Australia played they deserved the chance to take Italy on in overtime. I think Italy would have ultimately won the match but Australia deserved the chance to prove that these games aren't played on paper. Furthermore, I think it is totally pathetic that Grosso would rather play for penalty than take such a good chance!

I've really enjoyed watching the World Cup this year but I have two suggestions to help the referees that I think would improve play dramatically. First I would have a neutral panel review all game film and award yellow cards after the match for all flops. Flopping ruins the flow of the game, its annoying to watch and makes the referees job much harder. Over time, post-match yellow cards would lead to more suspensions and thus create strong incentive for players to stay on their feet and play through ticky-tacky fouls. Second, I would create an instant replay for controversial calls. If implemented incorrectly replay could seriously disrupt the match's flow so here is how I would set it up to keep things moving:

• Each manager can only call for 1 replay per match
• Neutral officials in the "booth" can call for a replay at any time
• The officials in the "booth" have 90 seconds to review the play and make a decision
• The referees on the field are not involved in the replay decision
  

It just isn't fun to watch the referees take the game away from the players on the pitch.

Top VC Firms Not Blogging

In putting my list of 65 VC bloggers together I noticed that the most famous venture firms seem to be very under represented. Off the top of my head, Kleiner Perkins, Sequoia Captial, Accel Partners, Benchmark Capital, Menlo Ventures and Mayfield Fund are the most famous VC firms. Of these firms, I'm only aware of Rajil Kapoor (#26) and Allen Morgen (#31) of Mayfield who are bloging but between them they've only written 4 postings so far this year. [UPDATE: I forgot that Bill Gurley (#57) of Benchmark also writes a blog but he has only posted twice this year] I suspect this is because many VCs are at least partially motivated to write in order to raise their profiles and get better access to quality dealflow. The top firms usually have the best access to dealflow and thus one of the benefits of blogging may be less tangible to their partners and associates. However, if the pool of firms was expanded to say the top 25 most famous VCs a handful of counter examples could be found. I really don't want to get into a debate about whether or not XYZ VC firm is one the top 25 most famous so I'm not going to site any other blogs specifically but I don't believe there are enough to discredit this trend.

65 VC & Angel Investor Blogs

After the popularity of my top 10 VC blogs posting last week, I decided to post a list of all of the VCs and angel investors that I read. I'm sure there are more early-stage investors out there that I'm not aware of so please let me know who I've missed.

Also, please note that this list is only ordered based on how the blogs appear in my feed reader, which is pretty random outside of listing a couple authors together by their respective VC firms, such as Mobious or Union Square.

8/7/06 Update: Ken King recently created an OPML file for all the blog that I've listed below. He also uploaded it to Share Your OPML.

1. Feld Thoughts
2. VC Adventure
3. McInblog
4. Burnham's Beat
5. Our Man in Nirvana
6. Venture Chronicles
7. Will Price
8. Early Stage VC
9. Who Has Time For this?
10. Beyond VC
11. Oxyfish
12. Jeff Clavier's Software Only
13. Venture Blog
14. Signum sine tinnitu - by Guy Kawasaki
15. SF Venture
16. Texas Startup Blog
17. Mark Pincus Blog
18. Paul Kedrosky's Infectious Greed
19. Way Too Early
20. Redeye VC
    
21. A VC
22. This is Going to be BIG
23. Union Square Ventures
24. Tim Oren's Due Diligence
25. From Istanbul To Sand Hill Road
26. The VC in Me...
27. Nothing Ventured, Nothing Gained
28. TJ's Weblog
29. Now What?
30. Pure VC
31. Allen's Blog
32. Seeing Both Sides
33. Release1.0
    
34. The Perceptions and Reverie of a VC Investor and Entrepreneur
35. Genuine VC
36. Northwest VC
37. Geekfishing Blog
38. A Little Ludwig Goes A Long Way
39. VC Ball
40. Ego Ventures
41. Israeli VC on Sand Hill Road
42. Chritine.net
43. Venture Chicks
44. Venture Inside
45. VC Mike's Blog
46. Why VC?
47. VC Confidential
48. Florida Venture Blog by Dan Rua
49. The NVA Blog
50. Alsop Louie Partners
51. Seriously Clueless
52. Is this Israel?
53. The Post Money Value
54. Occam's Razor
55. NW Venture Voice
56. Cleantech Investing
57. Bill Gurley's Above the Crowd
58. Pascal's View
59. Ventureblogalist
60. Sacred Cow Dung
61. Class V
62. Paul Graham: Essays
63. Morten Lund
64. Life With Alarcity
65. Rodrigo A. Sepulveda Schulz
    


technorati tags:VCs, Venture Capital, Angels, Angel Investors, Startups

Maxi Rodriguez Scores Best Goal of the World Cup

Yesterday, in the 98th minute of a closely contested match against Mexico, Maxi Rodriguez of Argentina received a long cross just outside the near corner of Mexico's penalty box. Rodriguez controlled the ball in the air with his chest, turned and hammered a shot across the top corner of the goal, past the keeper and into the back of the net. The ball never touched the ground.

On pure skill alone, this is the best goal of the 2006 world cup so far, but when considering the context, that Rodriguez scored in overtime of the loser-go-home round of 16, it is definitely one of the best world cup goals ever.

Best Goal of the World Cup (Spanish)

...and here are the spanish broadcasters

Sales & Proving the Biz Model

This morning I had one of those totally coincidental moments where my original lunch meeting called to reschedule but within 10 minutes a friend from out-of-town had called to see if I could grab lunch on short notice. It was great catching up and hearing how well his startup is doing.

My friend has managed to bootstrap a software project off of the back of a very successful consulting business he's built. Now that he has his first paying software customer, which happens to be a very big one, we discussed the possibility of raising venture capital. My friend is smart and has enough runway right now that while venture capital would allow him to expand rapidly he does not need it to keep the lights on. Thus, his goal is to land another major customer in order to increase his pre-money valuation before raising capital.

There is no question that the more milestones he can hit, the higher he will push his valuation. The first major customer is a major accomplishment because it demonstrates that the entrepreneur has solved someone's actual pain, which takes a lot of risk out of the investment decision. However, after thinking about it more this afternoon proving out his business model is really his next major milestone. I think his first major customer puts him squarely into the seed category and if he wants to raise money from angels I'm very confident that he can do this now.

Yet, in order to raise a series A round, I think that he needs to demonstrate that his business model is repeatable, which probably means focusing on getting multiple customers rather than just one more big fish. Getting one customer or even a handful of customers can be the result of dumb luck, timing or even the entrepreneur's personal network. However, venture fundable businesses require many more customers than even the most charismatic CEO can bring to the table. Thus, investors want evidence that leads can be generated and sales closed by employees who do not necessarily share the founder's passion or network of contacts.

How does the company get new customers? Inside sales, outside sales, channel sales, direct marketing, viral marketing? The more data my friend has about how many cold calls it takes to set an appointment, how many appointments it takes to close a sale, how much the average sale is worth and how long the process takes the more evidence he will have that his business model is repeatable. Of course, a repeatable business model also adds credibility to the financial projections... or rather reduces the factor by which the VC is discounting the financial projections. ;)

Management team, product development, barriers to entry and other market factors definitely influence whether or not a startup can raise capital at seed or series A valuations. However, for first time entrepreneurs with out $100K patent portfolios or out of control viral growth the bar for raising a series A round is still fairly high. Once a company has sales, the odds of raising capital increase dramatically, but I believe it is a repeatable looking business model that pushes startups from seed stage into series A.

Problems w/ My Yahoo

Over the last 2 months I've been having lots of problems with my.yahoo. Increasingly I get an error message (see below) when I attempt to check my blog/news feeds. Sometimes, I get lucky and "Click Here to try again" option works, but other times I can't access my account for several hours, or in one case even days at time. The strange part is that I don't have any problem with the main my.yahoo.com until I sign in. I've asked friends to test their my.yahoo accounts when the problem flares up but they never seem to be effected. My Yahoo account is registered as a UK based account and I've wondered if that has something do with the problem, or at least why friends never seem to be affected when I'm experiencing problems.

I really like Yahoo and I'd love to stick with them but its really tough to manually browse to all the feeds that I read and not know when they've been updated. For the more obscure feeds its not too far from being virtually cut off because a) I can never remember all of the feeds I subscribe to and b) I definitely can't remember their urls.

Netvibes seems to have the most buzz about it and I've signed up for an account to check it out. Re-subscribing to all of the various feeds is going to be a major pain in the butt but the more problems I have checking my news sources the less daunting it seems.

Kawasaki = Sausage

In editing my previous post with Blogger, spell check failed to recognize "Kawasaki" and instead offered to replace it with "Sausage." How on earth did Blogger get sausage from Kawasaki? Mr. Kawasaki, if you are reading this please be warned that Blogger thinks you are sausage... but I suppose sausage is better than chopped liver.

My Top 10 VC Bloggers

There are a ton of VCs on the web and as an entrepreneur I try to read all of them. However, a handful of VCs really have outstanding blogs that I'd like to praise and highlight as some of the better writers do seem to fly under the blogshpere's radar. All of these VCs post regularly with very insightful thoughts on startup issues and raising capital. Some are new, some are old. Some are gaining momentum and others are loosing it, but if I could only follow 10 VCs' blogs these are what I'd choose today. Keeping track of these 10 blogs is definitely a well invested 20 minutes each day for any entrepreneur.

6/26/06 UPDATE: Here is a list of all 65 VC blogs that I read

So with out further delay, here are my favorite VC's blogging on the web:

1) Brad Feld - Mobius Ventures
Brad Feld is the king of VC blogging. He is both prolific and insightful, which is a rare combination.

2) Jeff Nolan - formerly of SAP Ventures
Jeff Nolan is a really interesting read who writes about enterprise software, web 2.0 and the nexus of the two sectors.

3) Will Price - Hummer Winblad
Will Price is without question the most underrated VC blogger in the blogsphere. There is no fluff in his blog at all, every single post he writes offers entrepreneurs astute advice. If Will posted a little bit more often he would seriously challenge Brad Feld's monarchy.

4) Peter Rip - Leapfrog Ventures
Another incredibly insightful VC blogger, I only wish he would post more often. Peter is sometimes a bit vague but he is a must read for early-stage entrepreneurs.

5) David Cowan - Bessemer Venture Partners
David Cowan is a fun and informative read. He doesn't provide the same level of detail that Will Price or Brad Feld do, but his sardonic wit is always entertaining.

6) Tom Sheilds - Woodside Fund
I just recently discovered Tom's blog. I've only met Tom once, but he is an interesting and knowledgeable person, which really comes through in his blog.

7) Jeff Clavier - Angel Investor / SoftTech VC
Jeff is another must for early-stage entrepreneurs... and as of the time of writing he seems to be on an angel investing rampage!

8) Matt McCall - DFJ Portage Venture Partners
Doesn't post as much advice for entrepreneurs as other VCs on this list but he writes frequently about technology issues and always has something interesting to say.

9) Tim Oren - Pacifica Fund
If I were writing this post earlier in the year Tim Oren would have easily taken 2nd place on my list. Yet, his posting has slowed to a crawl over the last couple of monthsn and has been reduced to "roaming eye" posts (his favorite links) and more recently "archival" posts. Mr. Oren has recently written that he is in the process of transforming his blog so I will cut him some slack. However, his inclusion in this list is largely due to his backlog, which is packed with so many insightful posts that he will probably remain an must read through 2008 without ever having to post again.

10) Guy Kawasaki - Garage Technology Ventures
Like most entrepreneurs, I have a small man-crush on Guy Kawasaki. He is a fantastically entertaining speaker who manages to interject a fair amount of insight in between his jokes. Mr. Kawasaki jumped out of the gates like a lighting bolt when he started his blog late last year. However, his post cadence and quality seems to be waning now that he is running out of existing material from his previous books and speeches. That said, every entrepreneur should either a) read The Art of the Start or b) read Guy's first 3 months of blogging before even considering speaking with an investor. Guy is currently going through the blogging equivalent of baseball's sophomore slump but I'm confident that he'll find his groove again shortly.

So while this represents my favorite VC bloggers, there are many many others worth reading and I'm definitely curious to hear who else other people enjoy. So please drop me a line and let me know who you think I've missed because I'm especially interested in learning about lesser-known VC blogs.

Al Gore: Creating a More Convenient Truth

This past weekend I watched Al Gore’s movie titled “An In Convenient Truth.” The movie is very good and I applaud Al Gore’s attempt to bring awareness to the issue of climate change. However, the movie could have been easily improved and I was highly disappointed with the politicization and the lack of emphasis on/direction to action items for movie-goers to help reduce carbon emissions.

Gore starts with an excellent and simple explanation of the science behind climate change and the correlation between carbon emissions and average annual global temperatures. As anyone who has ever written an executive summary knows, it is difficult to explain complex ideas to those who aren’t subject matter experts and Gore does a great job of clearly explaining what climate change is and why it is important. The movie also provides powerful images that hammer home the point that global warming is happening now. The examples of Lake Chad drying up to nothing and the ice shelves of the South Pole disappearing were truly moving. Another dramatic set of examples were American automotive fuel economy standards vs. those of China, Europe and Japan. European and Japanese fuel economy standards are nearly twice that of the United States. Even China, a country that is rarely thought of as pro-environment, has fuel economy standards that are significantly higher than ours. Gore also demonstrated the how entrenched America is against higher fuel economy standards when he pointed out that the state of California is being sued for legislation enforcing fuel economy standards that will only begin to approach those that China has already implemented today… over the next 10 years! The movie provides a lot of evidence that something needs to be done about climate change and I think it would be hard for any open minded person to leave the theatre without being moved.

Yet, when it comes to politics most people are not open-minded and Gore undercuts the power of his examples by politicizing the movie. Politicizing the movie simply gives skeptics more reason to doubt an otherwise tight argument. The most blatant politicization was a segment on the 2000 election where Gore implies that he should have won the election while attempting to paint himself as graciously and stoically conceding defeat despite the films clear implication of a negative environmental impact due to Bush’s. Pointing the finger at Bush, not matter how deservedly, made Gore look bad and certainly won’t convert any of Bush’s supporters. Additionally, linking America's lack of environmental will power to the executive office does not make Gore look good because he had 8 years as VP to push for a stronger environmental agenda. Gore also uses the film to show the strength of his own morality. First he uses his son’s infamous car accident as the turning point in Gore's own rededication to a life of making meaning. Second Gore describes a friend’s death from lung cancer to his father’s decision to stop growing tobacco. Both of these incidents provide an interesting insight into Gore’s humanity but I don’t see what either example has to do with educating the public on climate change and they exacerbated my feelings that the film’s ultimate goal was launching another presidential run. Gore’s argument would have been much more powerful and converted a greater number of skeptics without the politicization.

Furthermore, for those who agree with Gore’s argument, the movie didn’t leave many solid action items. A few suggestions were made while the credits were rolling but at least 50% of the audience at the showing I attended had already left their seats and it just wasn't powerful at all. In fact, I had to take the following list from the movie's website because I couldn't remember exactly was written during the credits.

1. Change a Light
2. Drive Less
3. Recycle More
4. Check Your Tires
5. Use Less Hot Water
6. Avoid Products with lots of Packaging
7. Adjust Your Thermostat
8. Plant a Tree
9. Turn Off Electronic Devices
10. Encourage Your Friends to see “An Inconvenient Truth”
    

What’s the point of getting people fired up about reducing carbon emissions if nobody changes their habits? It would have been much more effective to at least run these suggestions before the film ended so that the audience knew they was supposed to stay in their seats. Moreover, it could have been really powerful to interject them throughout the film with examples of their impact. For instance, instead of suggesting that Americans turn down the thermostat by 2 degrees during the credits, why not mention this and how many tons of carbon emissions it would save during the segment in which Gore describes existing environmental technologies? Wouldn’t that be a powerful message? Who couldn’t turn their thermostat down by 2 degrees? What an easy and simple suggestion for taking action. Yet, I doubt more than 1% of the audience will adjust their thermostats as a result of the film, which represents an unfortunate opportunity lost. Additionally, many of the suggestions were too vague. Drive less, recycle more, and avoiding products with lots packaging are not powerful messages. I think suggestions focusing on concrete/specific actions such as making your next car purchase one with over 30mpg or pushing your local city government to start a curbside recycling pickup program would have been more effective.

“An Inconvenient Truth” is definitely a great movie that I would encourage everyone to see, but it certainly could have made a much greater impact if it were less politicized and spent more time delivering concrete action items for the audience to take.

Microsoft Website Defaced (And it Isn't Fixed Yet)

Microsoft's French website was recently defaced by a group of Turkish hackers. As of 1pm PST on 6/18/06 the website is still defaced. Here is a link to the original site and here is a link to a mirror that will continue to show what the hack looked like after Microsoft fixes the problem.

Anyway, this is just another example of how difficult security is to keep on top of for even the most technologically savvy organizations. Organizations that are targeted by hackers have it 1000 times worse. Targeted organizations tend to be primarily financial services organizations were hacking can lead to immediate financial gain for the hackers. However, Microsoft seems to hold a special spot in the ire of hackers across the globe and being apart of their security team must be a nightmare. Given how many people want to exploit Microsoft, it is a wonderful testament to their internal security team that they haven't had more of these types of incidents.

USA Jobbed in Draw with Italy

Team USA tied Italy 1-1 in the World Cup earlier this afternoon. Italy is one of the great soccer nations and a draw to get 1 point is objectively a great result for the US Squad. However, the US actually seriously outplayed Italy in the first half and clearly deserved the win.

Unfortunately, at the end of the first half the referee took over the game, robbed the US on 3 key decisions and quickly created one of the worst officiated soccer matches I've ever seen. First Pablo Mastroeni was sent off in the 45th minute and then Eddie Pope was sent off in the 47th minute reducing the USA to just nine men. Both of the red cards were absolutely ridiculous. Fouls maybe but certainly not card and Pope even got the ball. Fortunately, Italy's Daniele De Ross had previously been sent off for a nasty elbow to Brian McBride face but whereas the US should have been up a man they found themselves playing with 9 vs. Italy's 10.

Despite the disadvantage US continued to play well and 65th minute DeMarcus Beasely found the back of the net and the US appeared to have taken the lead. However, Brian McBride, who was not involved in the play, was flagged for offsides. McBride clearly was offsides and from such a position is not allowed to participate in the play but the referee's assertion that he obstructed the view of the goal keeper was weak at best and I've seen far far more obstruction from players in offsides positions that did not lead to offsides calls. It should have been a goal. Later in the match Team USA clearly tired and Italy had several scoring opportunities but it still remains one of the best match performances I've ever seen the US put in.

Moving forward, a win over Ghana and an Italian victory over the Czechs will put the US team through to the next round. Technically, a victory over Ghana by more than 4 goals could put the team through on goal difference regardless of the Italy - Czech result but I wouldn't pin much hope on that scenario.

Tim Draper & Viral Marketing Stats

Viral marketing seems to be a part of every startup's business model these days. The bottom line is that viral growth is easy to talk about but hard to execute. In fact a good deal of luck is involved in any successful viral marketing campaign. Many entrepreneurs would like to believe that their product will grow virally because it takes the burden off of them to build a more credible business model. Check out these slides from a talk that Tim Draper recently gave (via Paul Kedrosky), which show interesting stats on page 5 (of the pdf) detailing the month-by-month growth of Hotmail and the a comparison chart of the month-by-month growth of ICQ, Hotmail, Skype and Kazaa. Both of the graphs show amazing growth and all of the companies had at least 5M users within 12 months.

These numbers are both outstanding and totally unattainable for 99.99% of startups. Most products just aren't viral in nature the way that Hotmail, Skype and ICQ were and its a lot easier to spread the word when the current users facilitate the recruitment of new users simply by using the product. Sure there are a couple of other similar wildly successful stories like Facebook and MySpace, but even LinkedIn, which is a great viral growth story took nearly 3 years to hit 5M users. Anything that has a social networking component will lend its self to viral marketing more naturally, however, the social networking space is getting pretty crowded.

My advice to all entrepreneurs is build a business model based on inside sales, channel sales, direct sales or direct marketing. Viral marketing should be encouraged through "tell a friend" buttons and other more creative ideas but relying on it as the primary driver of growth is totally unrealistic. If viral growth takes off, great, but don't hold your breath.

6/7/06 UPDATE: I'm not suggesting that startups shouldn't employ viral marketing tactics. In fact, I believe that all startups should employ viral marketing tactics because they are so inexpensive to deploy that the cost of customer/user acquisition will still probably be the lowest of any sales/marketing efforts even if the campaign is relatively unsuccessful. My point is that most venture fundable startups will not be able to achieve the type of growth rates necessary to sustain their businesses without deploying another business model (inside/channel/direct) as the primary driver of growth.