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Building Alliances Between Venture Capitalists and Corporations- A Consistent Imperative

Building alliances between venture capitalists and corporations has never been more important than in today's extraordinarily volatile capital markets. We may be looking at a Brave New World in finance when markets re-equilibrate (and eventually they will), but knowing how to partner with large corporations-- who are both strategic business development partners as well as potential strategic acquirers of emerging companies-- will remain a constant for venture capitalists.

The National Venture Capital Association (NVCA) kicks off a new corporate webcast series on Friday, October 17, 2008 with a special complimentary webcast featuring Claudia Fan Munce, Managing Director, IBM Venture Capital Group, and Dan'l Lewin, Corporate Vice President, Microsoft Corporation, who have generously sponsored Partnerships for Prosperity: Building Alliances Between Venture Capitalists and Corporations.

I will be moderating the webcast, and we will discuss some of the challenges and best practices that venture capitalists should follow in order to optimize their relationships with IBM and Microsoft. The models that IBM and Microsoft follow are by no means identical, as they are influenced by different corporate cultures and business priorities. Claudia and Dan'l will share helpful tips on how to best work with their organizations as well as more general insights on successful corporate partnering strategies for VCs.

The new webcast series will follow this special launch event with other relevant content featuring global corporate leaders whose organizations seek to partner with venture-backed companies.

This webcast is complimentary to all NVCA members-- to register CLICK HERE TO LINK TO THE NVCA WEBSITE

Aspen Ideas Festival: Peter Hirshberg Interviews Jim Steyer About How Children Must Learn Responsible Digital Citizenship on the Web

Technorati's Chairman,Peter Hirshberg, is on the move at the Aspen Ideas Festival-- his video blog provides an excellent forum for impromptu commentary from influential thought leaders in various fields who are attending the conference (link below). Globally, children are developing differently as a result of the pervasive influence of the Internet in their social relations. Jim Steyer, CEO of Common Sense Media, explains why it is imperative to define 'rules of the road' for every kid on the Internet and the role that his organization plays as a thought leader in this area. According to Steyer, "this is a huge issue of ethics and responsibility . ... kids get this, parents are clueless but know they should." Despite many challenges when it comes to media content regulation, Steyer is optimistic about the future. This important discussion that ties directly into the that we discussed at our Socrates Society seminar last week on issues of the Media and our Conflicting Values. to watch the video: click on the following link:

http://fora.tv/myfora/PeterHirshberg/clip/127/Aspen_Ideas_Festival_Interview_Jim_Steyer

Why I Love My Smart ForTwo-- A Rebuttal of Two New York Times Reviews of the Passion Coupe

I now officially beg to differ with two mis-guided New York Times reviews of the Smart ForTwo. While I do agree with much of the actual driving experiences cited, the odd thing is that both reviewers seem to be looking for reasons to say that, despite many positive elements, ‘something is terribly wrong with this picture.’ One of the reviews, by Lawrence Ulrich, was written for the New York market;the other , by Eric Taub, was the result of a test-drive in the Los Angeles market.

For example, Taub writes:

The interior has two supportive and attractive seats and a small shelf behind them, and that’s it. A clock and a tachometer, whimsically mounted like crustacean eyes on the fabric-covered dash, were cute and easy to read. The shelf is large enough to carry one standard suitcase and a carry-on bag, but not much else. You can increase carrying capacity by folding the passenger seat forward, though that requires pulling a lever awkwardly placed between the seats. My wife summed it up best: “This is a car for people without much of a life.”

In the mileage department, the Smart also failed to live up to expectations. Even with its tiny engine, the two tankfuls of gas consumed while I had the car worked out to readings of only 30 and 34 miles a gallon. That was less than the 36 m.p.g. E.P.A. rating for combined city/highway driving, and certainly not “amazing” as Smart’s press materials proclaim.

OK. If I lived in Los Angeles I would not own a Smart ForTwo. Why not? Because Los Angeles is full of freeways and the ForTwo is definitely not a freeway vehicle. To be clear, Mr. Taub’s wife could make the same point by saying, “This is a car for people who have more than one car and don’t need the ForTwo to do any serious freeway driving.” Last time I looked, there are a lot of places in America that don’t suffer from LA’s lack of urban planning where people still need to drive to get around.

Another criticism raised in both reviews is the lurching that occurs in the automatic transmission’s shifting cycle. I concede this is an issue, but a small one. You can switch to ‘manual assisted’ mode and wind out the transmission yourself much more smoothly than the D setting. I think that’s fun, but I can see why many would not want to deal with it. My 16 year-old daughter has no trouble driving it in normal automatic mode without inducing passenger vertigo-- the key is to accelerate gradually, which minimizes any lurching.

Not only did I drive my ForTwo on Interstate 280 at 65 miles per hour without incident, the “ intrusive wind noise” cited by Lawrence Ulrich’s review is a fiction. To be clear, the car is maxed out at speeds over 60 miles per hour and you can certainly feel it,. I wouldn’t want to face down an 18-wheeler coming the other way at 60 miles per hour on a two lane road in the Smart, nor would I want to do the slalom test in a Smart car (I would worry about rolling it ).

But I had no problem putting a carry-on suitcase and my briefcase in the storage area with room to spare. I had no problem doing errands like going to the dry cleaners and the grocery store. The car is incredibly easy to drive in the city. I have yet to put any gas in the car, so I am going to calculate my exact mileage and post it on the blog when I experience my first visit to the gas station.

Again, Taub of The New York Times concludes “the consensus was that a car this size should go 50 to 60 miles on each gallon. Learning that premium fuel is recommended was an added downer.” Well, with its form factor the Mini Cooper should at least do 40 to 50 miles per gallon—instead it does under 15 miles per gallon in the city and under 30 on the highway. And the Prius should look really cool…

I’ll trade my $15,000 Smart ForTwo in for the next version that does 50 miles per gallon or for the all-electric version that I’m sure is in the works. In the meantime, I’m at least doing something to change my behavior and to be more efficient in my energy consumption. What are you doing?

Smart Car Scores Exceptionally Well in IIHS Crash Safety Tests

The Smart ForTwo, which is the smallest "micro-car" ever tested by the Insurance Institute for Highway Safety (IIHS) scores very well in safety crash tests!

According to the reviewers at IIHS:

The ForTwo is the smallest car the IIHS has ever tested. "All things being equal in safety, bigger and heavier is always better," said institute president Adrian Lund in an statement. "But among the smallest cars, the engineers at Smart did their homework and designed a high level of safety into a very small package."

The car scored extremely well for frontal and side crashes but did not do as well in protecting passengers from whiplash. Comparing the IIHS data to the National Highway Traffic Safety Administration (NHTSA):

In the NHTSA front crash test, the ForTwo earned the top rating of "Five Stars" for driver protection, but just "Three Stars" for passenger protection. Few vehicles today get ratings as low as three stars in NHTSA's front crash tests.

The IIHS uses a different type of front crash test and does not place a crash test dummy in the passenger seat. While NHTSA tests vehicles by crashing them straight into an immovable barrier, the institute crashes vehicles into a deformable barrier so that just part of the vehicle's front end strikes it.

My takeaways: This car is an ideal urban vehicle and should not be driven at high speeds. See my forthcoming post on the maiden voyage of my Smart ForTwo (including my first experience with ForTwo highway driving)!

Sarah Lacy, Silicon Valley Host of Yahoo! Finance Tech|Ticker, Interviews Pascal, Sharon Wienbar (Scale Venture Partners), and Jessica Canning (Dow Jones/VentureSource) on Current VC Industry Trends

Last Thursday I joined Sharon Wienbar, Managing Director of Scale Venture Partners, and Jessica Canning, Director of Global Research for Dow Jones/ VentureSource, on Yahoo! Finance's Tech|Ticker program, hosted by Business Week's Sarah Lacy. We discussed issues ranging from opportunities in Clean Tech investing and the current state of tech IPO's to the implications of recent VC industry funding statistics and how entrepreneurs should manage their companies through an economic downturn. Two of the segments were posted this morning and can be accessed at http://finance.yahoo.com/tech-ticker

Kissinger Eulogizes William F. Buckley and Comments on Knowledge and Faith

Anthony Ramirez of The New York Times published an article on April 5 describing the funeral service at St. Patrick's Cathedral in New York for William F. Buckley, who died on February 27th at age 82. One of the most influential American political conservatives of his generation, Buckley is widely respected for his powerful intellect. The founder of The National Review, he is recognized for the central role he played in shaping the blend of anti-communism and libertarian economics that became the core american political ideology of President Ronald Reagan.

Speaking at the funeral service, former Secretary of State Henry Kissinger made emotional comments about how Buckley had come to reconcile the gap between objective knowledge and religious faith:

'Over a decade ago,'' he [Kissinger] said, clearing his throat, ''Bill and I discussed the relationship of knowledge to faith. I surmised it required a special act of divine grace to make the leap from the intellectual to the spiritual. In a note, Bill demurred. No special epiphany was involved, he argued. There could be a spiritual and intellectual drift until, one day, the eyes opened and happiness followed ever after. Bill noted that he had seen that culmination in friends. He did not claim it for himself."

I was struck by these comments, both because of the speaker and the context. Secretary Kissinger, himself a man of powerful intellect and a German Jew whose parents fled the Holocaust, has clearly considered deep questions of God and religion and was touched by the loss of a long-time friend. It is interesting to me that he focuses on the notion that, for individuals who are intellectuals and very data driven, perhaps an epiphany or revelation of some kind is necessary to bridge the gap between faith in the existence of God and knowledge of objective reality.

As I think of this perennial debate, the oft-repeated motto of the New New Atheists comes to mind-- "I don't need to believe in God to have a moral conscience." The atheists, in my view, totally miss the irony of their own assertion. That little voice in your head that tells you the difference between right and wrong is evidence of a little bit of God that's inside every one of us. No epiphany required.

"The Untold Cyber War"-- Huffington Post Reports on Upcoming 2nd Annual IT Security Entrepreneurs Forum

I was recently interviewed by Karen Salmansohn, who writes a regular column for the Huffington Post, while I was at the Aspen Institute attending a Socrates Society Forum seminar on Energy Security.  Her article, 'The Untold Cyber War' , comments on an area of increasing personal and professional interest for me-- protecting our nation's vulnerability to a cyber attack that could cripple our critical data and communications infrastructure.

We are engaged in a full-on cyber war right now-- and the bad guys aren't just laptop-toting 17 year-olds fueled by Red Bull in the Ukraine.  Well-funded, organized groups (translates to state-sponsored) are constantly probing for exploitable weaknesses in our data network infrastructure, and they are not discriminating between the private sector and the government.  We must collaborate and share best practices to win this war-- the costs of losing it will be severe, pervasive, and will wreak havoc across our socio-economic system very quickly.

To learn more about how to promote public private partnerships and see the agenda for the second annual IT Security Entrepreneurs Forum, go to www.publicprivatepartnerships.org.

"We are Robbing Posterity to Live Today."

I am at the Aspen Institute to attend a Socrates Society seminar this President's weekend, and the headline for this post is a quote by Zeke Emanuel, Chair of the Department of Bioethics at The Clinical Center of the National Institutes of Health, who is moderating a session on "Resolving Bioethical Dilemmas" (believe it or not, his session is exclusively for teenagers-- see Teen Socrates).

Zeke made this comment during our opening dinner panel discussion in the context of answering the following:

"What is a key question that you believe the next President of the United States should consider upon taking office?"

This simple statement is a profound and concise rendering of the American malady.  Think about it-- American society has devolved to the point where virtually everything we experience is driven by a lust for instant gratification-- from the mainstreaming of pornography to celebrity-seeking reality TV shows; from hasty tax stimulus packages to hedge funds; from inscrutable financial derivatives to ignorant day traders.

The popular media is consumed with the NOW.  The basic concept of long-term stewardship in public policy, of the obligation that we have as a society to bear responsibility for our children and their children, is a novelty.  Many people debating the impact of accelerating rates of climate change on the future of the world are missing the point-- it's all about posterity.  Have we truly forgotten that we are here on earth for something more than just our brief and individually insignificant moments of existence in time? 

I come to the Aspen Institute, where I currently co-chair the Socrates Society Advisory Board with Laura Lauder, for the luxury of being able to learn, for the gift of being able to step outside the narrow hallway of thinking that governs my everyday business life.  I come to the Aspen Institute to be able to hear truly insightful observations from brilliant people like Zeke Emanuel.

Tonight, 65 of us who are participating in four different seminars were fortunate to be able to hear other answers to this question from former CIA Director Jim Woolsey, senior fellow for U.S. foreign policy at the Council on Foreign Relations Isobel Coleman, former Republican congressman from Oklahoma Mickey Edwards,  and Princeton University Professor of History Sean Wilentz. 

Now what are we going to do to get more people who can impact the future to remember that posterity matters?

Luddites, Technology, and the Gini Coefficent

  A recent article in the January 26th edition of The Economist, "Briefing: The world's silver lining",  cited interesting data on globalization and the contribution of technology to rising inequality in developing countries.  The data is drawn from the IMF's World Economic Outlook October 2007 and focuses on something called the Gini coefficient, an unfamiliar concept to me prior to reading the article.

What is the Gini coefficient?  According to Wikipedia, "The Gini coefficient is a measure of statistical dispersion most prominently used as a measure or inequality of income distirbution or inequality of wealth distribution. It is defined as a ratio with values between 0 and 1: the numerator is the area between the Lorenz curve of the distribution and the uniform distribution line; the denominator is the area under the uniform distribution line. Thus, a low Gini coefficient indicates more equal income or wealth distribution, while a high Gini coefficient indicates more unequal distribution. 0 corresponds to perfect equality (everyone having exactly the same income) and 1 corresponds to perfect inequality (where one person has all the income, while everyone else has zero income). The Gini coefficient requires that no one have a negative net income or wealth."

One of the most interesting points to me in The Economist article is that the influx of new technology into developing countries initially exacerbates inequality in those countries.  Why? Because initially only a small number of local people in those countries are sufficiently educated to take advantage of the technology to make money.  Local elites continue to grab the low hanging economic fruit with new technology tools, and you experience an immediate greater concentration of wealth as the whiole economic pie also grows, or, in economic parlance, a higher Gini coefficent.

This reality only reinforces my view that we are still in the early innings of the globalization game.  21st century Luddites who claim to be looking out for the welfare of the least advantaged ignore the fact that technology, by catalyzing change, also contributes to the initial socio-economic dislocation that will ultimately erode the economic status quo.

As The Economist points out "technology in its broadest sense-- the flow of new ideas-- is the only way of getting growth rates up to 5-10% a year, the rate which enables poor countries to catch up with the West.  Without it, growth would be dependent on labour and capital inputs, and growth would be just a few percent.  To reduce technological progress-- even supposing one could do it-- would be to condemn poor countries to stay poor."

Those who decry globalization and the transfer of technology to developing countries are missing at least two key points: (1) that the absolute income level of the bottom fifth of these countries is rising steeply and has been since the mid-1990s (coincidentally the dawn of the Internet age); and (2) that this overall increase in income from sustained high economic growth rates will reach a tipping point that reverses the initial negative readings from the Gini coefficient. 

So much for the Luddites, again.

Confusing Common Sense with Cultural Sensitivity-- Are We Staring into the Orwellian Chasm?

A friend of mine recently brought to my attention an article originally published April 2, 2007 in the The Daily Mail which revealed the following highly disturbing trend among teachers in England:

"Schools are dropping the Holocaust from history lessons to avoid offending Muslim pupils, a Government backed study has revealed. It found some teachers are reluctant to cover the atrocity for fear of upsetting students whose beliefs include Holocaust denial. There is also resistance to tackling the 11th century Crusades - where Christians fought Muslim armies for control of Jerusalem - because lessons often contradict what is taught in local mosques. ... The study, funded by the Department for Education and Skills, looked into 'emotive and controversial' history teaching in primary and secondary schools. It found some teachers are dropping courses covering the Holocaust at the earliest opportunity over fears Muslim pupils might express anti-Semitic and anti-Israel reactions in class. "

Every blog comment or follow-on article that I've read on this topic condemns this "sidestepping" approach to the unpleasant historical truths that make up the Human Journey as fundamentally flawed.  But it's not enough.

We need to be outraged at the lack of leadership that allows spineless fear of difficult discussions to bury reality.  We now live in a digital world where anyone with a keyboard can falsify history or advocate hate on the Internet and remain largely unfettered in the name of free speech.  In societies where the Government monitors and controls Internet content, we are more likely to see this control used to suppress dissent, force conformity. and paint a thin veneer of social harmony over underlying currents of instability and unrest.

We are increasingly buried under an avalanche of unverifiable data that can be manipulated to suit unscrupulous ends by groups with wide ranging hidden agendas.

Ignoring the truth of global history condemns us to ignorance and opens our societies to manipulation which, left unchecked, could send us back to the world of Hobbes.

"If both the past and the external world exist only in the mind, and if the mind itself is controllable – what then?"

George Orwell, 1984

To learn more about the truth of the Holocaust, go to http://www.adl.org/education/edu_holocaust/default_holocaust.asp