Taking advantage of the horrible environment

My expectations for 2009 are that things will get worse before they get better.  On the portfolio company side, I would rather have my companies growing at a lesser rate getting closer to breakeven than growing too aggressively and burning lots of cash.  Once your house is in order (see some earlier posts I made on this topic), I do see opportunities to take advantage of this environment.

As we all know, in a distressed environment prices come down.  So while now may not be the best time to sell your business as multiples and valuations have come down significantly, it could be a great time to pick up technology to expand your product line. In a world where everything is cheaper, those who are strong enough to make moves can find some great opportunities.  One of my portfolio companies, netForensics just did that as it picked up High Tower Software in an asset purchase.  What this does is allow the company to offer its customers the ability to manage the entire security compliance lifecycle – from log management to a complete security operations center – for all sized organizations, from the smallest departmental installation to the largest enterprise.  In other words, this filled a huge gap in our product line and on our product roadmap and allows us to deliver these capabilities ASAP. 

So in a world where everything is cheaper, you may be able to pick up some great assets at great prices as long as you have your house in order.  Rather than being a distraction, this fit right into our product roadmap and accelerated our product strategy.  One other way to take advantage of this environment is by hiring great people.  There is lots of talent in the market, and it is clear that expectations for total compensation have come down over the last year.  Be on the lookout for these A players so you can continue building your business and be prepared for when the tides turn.

Cisco raises another $4b in cash and looking for acquisitions

Ashlee Vance from the Bits Blog has a nice piece on why Cisco raised another $4b of cash through a debt offering yesterday even though they have $30b in cash. 

"As word of Ciscoโ€™s debt sale hit Wall Street, the standard chatter surrounding possible targets began anew. As usual, companies like EMC, NetApp, Sun Microsystems, Red Hat and BMC were discussed as desirable properties."

Regarding Cisco I have heard the same acquisition rumors.  On the smaller private company side, my two cents would be platform consolidation opportunities in the security space (software that can help tie their disparate security products together), bolstering their Scientific Atlanta acquisition by adding more interactive and ad targeting products for the digital set top box, and tuck-in acquisitions for their EOS or social networking initiative (see CNET article for more on this initiative)

I would love to hear your thoughts on this as well.

Best iPhone Photo App – Phanfare Photon

It is great to see my friend Andrew Erlichson getting some rave reviews for Phanfare Photon, his iPhone photo app.  According to ReadWriteWeb:

"Phanfare's Photon is currently the best photo sharing and photo management app on the iPhone. It is important to note that Photon puts less emphasis on social feature than other services like Radar, which we reviewed last week. Instead, it concentrates mostly on giving you easy access to all of your photos, while also providing you with the option to share them with your friends.

Phanfare's CEO Andrew Erlichson strongly believes that the iPhone and other smartphones will disrupt the traditional point-and-shoot photo camera market in the long run and will allow new players like Apple to get a foot into this market. This app is Phanfare's first step in following the market in this direction by marrying the iPhone's camera feature with a very capable cloud storage and photo sharing service."

I first started using Phanfare in late 2004 and have been a fan since.  Andrew and I go way back as I invested in his first startup, Flashbase, which we subsequently sold to Doubleclick a year later.  As I wrote back in 2004, Andrew believed in the idea of client software which was network enabled and sought to create an iTunes like environment for photos with smart caching and local manipulation of media with smart synching so albums and photos could be viewed from anywhere.  As the online photo sharing market has become more competitive, I have watched Phanfare evolve from a pay only service for sharing photos with small groups to a more wide open version with more community and collaboration.  And now Phanfare has staked its claim in the mobile market with its iPhone app (get it here).  Once again, what I love about the iPhone app is its rich client interface which also has smart caching so my albums and videos can pull up almost instantaneously with limited wait time.  So Andrew's vision of rich network connected clients have moved from the desktop to the next battleground, the mobile handset. As you know, seasoned entrepreneurs know how to be flexible and make course corrections in their business model and distribution strategy as the market evolves. Andrew has clearly done that over the years and it will be interesting to see how his bet on the smartphone market and the iPhone in particular pays off.