On the panel are Lanny Baker, William H. Janeway, Safa Rashtchy, Danny Rimer. John Battelle is moderating.

Q: Did the Google IPO get you guys excited?

A: It was remarkable to see the execution. It impacted the valuation and was a good opportunity for investors. Big investors wanted to know more about then auction model than the business model. Then they started asking about the lock-ups rather than the business numbers. The panel thinks the current valuation is reasonable and will increase nicely over time.

Q: Did this open the VC/IPO flood gates?

A: Google didn't need the money. The created money for their stakeholders. The next company that comes along with that kind of cash flow won't have a problem. This is not a bubble. Companies are making money, not going IPO on hopes and dreams without a business. We're not anywhere near a bubble. It all comes down to having a good business. And we're still in the early days.

Q: Is the eyeball metric coming back?

A: It's coming back in a big way because of search. Search traffic is directly related to revenue. That's different than random page views. But eyeballs aren't everything. User-created content is changing things, including the advertising models.

Q: What do you look for in new companies?

A: Look for businesses and services that pull the necessary data together to trigger transactions. Skype is "the fastest growing application on the Internet." Some big numbers just thrown out. 7% of Poland uses Skype. MySQL is another example company--charging 1/10th of the normal price for a database. Yahoo buying os MusicMatch is recognizing that music is a "pillar of activity", which I belive. Web 3.0 may be all about advertising. Web 2.0 is making money from services.

The bubble helped to overbuild the network (yeay!). We also funded lots of productive waste (trial and error, darwin style). Tons of lessons game out of that.

Q: Lots of small companies get to a certain size and then get bought by Yahoo, Google, Cisco, etc. Is that ecosystem taking way from IPOs?

A: Yes, things are changing now. For big companies, it's often easier to buy than build. So all these new little companies are helping to fuel some of the current growth and innovation. We have lots of scarred veterans from the bubble that now know what they're doing and get getting back into the game.

Q: How's it going being an analyst?

A: Lots of amusing disclaimers. ;-)

Q: So how's the job different?

A: Analysts are hand-tied. It's hard to get involved and start the process of getting money to folks who need it. But there's more time for fundamental research now too--and that's a Good Thing. People are far more sensitive to conflicts of interest.

Audience Questions

Q: [Marc Canter] Many folks who build great companies retired. The folks under them understand what it takes now. Is this really building the foundation we want?

A: Living through that sort of stress really does help. There is a pool of talent and experience out there as a result. And some of them want to do it again. Brief discussion of what it's like in Europe and other countries.

See Also: My Web 2.0 post archive for coverage of all the other sessions I attended.

Posted by jzawodn at October 06, 2004 10:03 AM

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