Sun Hosts San Francisco Startup Camp

Sun is hosting a free event called Startup Camp in San Francisco May 4-5, 2008. Startup Camp allows startups to participate in an un-conference networking event and hear from web/enterprise 2.0 experts, meet other startups and apply to Sun’s Startup Essentials program.

The event also includes SpeedGeeking, where startup founders can compete in the Best Startup Contest by presenting a 5-minute pitch of their business to VC led groups of peers. Confirmed guests include: Pete Cashmore, Jonathan Schwartz, David Berlind, Om Malik, Matt Marshall etc.

This event should be a great way for startups to network and discuss ideas.

Social Networks Are Not A Business

One of my favorite financial magazines; the Economist, published an article that convincingly argues that social networks are not a business.

This is probably not news to the management and investors of most social networks but should serve as additional fodder for those who see an end to the Social Networking/Web 2.0 valuation & funding gravy train.

The Economist article equates social networks to free email such as Hotmail or Google mail and predicts that social networks have quickly come to be an expected and free part of any internet portal.  In this context social networks such as LinkedIn and Facebook should not be a destination in themselves, but the components of the social networking sites should be part of a users everyday internet experience.

I agree in that in these trying economic times the advertising model that most if not all of these social networks are built upon is not a sustaining business model. Advertising revenue for established media companies is and has always been cyclical in nature and even with the lower cash burn rates that today’s Web 2.0 companies have compared to their Web 1.0 predecessors, wont provide enough recurring revenue to stay in business after the venture funds runs out.

Venture funding in itself is a bit faddish and indications are that Social Networks/Web 2.0 are no longer the VC flavor of the month as VC’s move to investing in Green/Clean Energy and Renewable Technologies.

Will be interesting to see if some of the venture funding that was wildly invested in Consumer Social Networks/Web 2.0 will now invest in Enterprise and Enterprise 2.0 Software firms. Most of these firms actually have a real revenue producing business model and are;  in the case of Enterprise 2.0 software firms, in the process of rearchitecting packaged solutions to Software as A Service.

Release of Coloring Outside The Lines

Darren Herman’s new book; Coloring Outside The Lines is being released next week on 12 March 2008.  Darren’s book will focus on lessons he has learned while building up and mentoring very successful digital media and technology companies in Silicon Alley.

I first had a chance to converse with Darren about a year ago when I was researching a new web designer for Applation. I have found Darren to be an extremely bright and well connected entrepreneur and what really sets him apart is that he is truly interested in working with and helping other entrepreneurs.

The proceeds from the book will be invested in entrepreneurs in Asia and Africa.

Venture Capital begins to understand SaaS

A recent article in the Wall Street Journal outlines how some VC firms are slowly beginning to understand the business model of On Demand Software as a Service Companies.

Most VC’s have traditionally concentrated on investing in companies after the seed stage of funding. VC’s normally look for a seat on the board, preferred stock and control of a firms operations in exchange for a multimillion dollar later round investment.

The catch with todays Enterprise 2.0 - Web 2.0 - SaaS companies is that with a dedicated team and a great idea, $500,000 is in most cases plenty to get a beta product introduced via the internet. With OpenSource development tools low cost storage options like Amazon S3 and SaaS delivery models it is much easier in 2008 to develop a software solution than it was 5 years ago. 

Also having heard stories of how Facebook and other Web 2.0 - Enterprise 2.0 companies were able to get a successful beta product developed without the overbearing presence of a traditional VC firm, many of the current crop of SaaS companies are for the first time NOT considering spending a substantial amount of time and effort seeking VC funding.

Investments in the $100,000 to $500,000 range were until recently the sole province of Angel Investors. But many VC’s; fearing that they will be shut out completely from some of the up and coming Enterprise 2.0 and Web 2.0 companies, have changed tack and now consider the smaller investments worth their time. 

These developments bode well for most SaaS entrepreneurs as they will conceiveably have access to additional sources of funding that were until recently not available to their firms.