TED Thursday Morning: Life Origami

One more item from TED Wednesday:

Alisa Miller discussed America's parochial, shallow perspective. She sampled news coverage one month, when the global news included a devastating flood in Indonesia and, in Paris, the release of conclusive data confirming the acceleration of global warming. In the U.S. these stories were completely dwarfed by coverage of Anna Nicole Smith's death, a story that received more coverage than all the news associated with every country in the world other than the US and Iraq.

Yesterday, the first session, What is Life?, began with Craig Venter, who had first sequenced the human genome. Craig presented his current work synthesizing life. First he described a 5,000 letter (ATCG) bacteriophage that his lab was able to manufacture by inserting the sequence into e.coli. His lab then developed strings of protein that glued different genes together, so that they could now stitch together any of the 20 million genes that have since been discovered. They have already crafted a life form 500,000 letters long, based on algae methanococcus, that transforms carbon dioxide into methane fuel. The lab hopes to ultimately increase the original bacteria's metabolism a million fold, a scale that can potentially serve our energy needs.



TED Curator Chris Anderson asked Craig, "Can you be accused of playing God?" to which he answered "Oh, we're not playing." Other applications of life synthesis include production of vaccinations, and hardier food. Craig views himself in part as a spokesman to pave the way to public acceptance of these technologies. "Europeans now want DNA-free food."

Next, Microsoft announced World Wide Telescope, a 2.5D rendering of the universe based on all the available astronomical photographs available. Users can fly through the universe and zoom in, building tours for others. Interesting.



Paul Rothemund, a molecular programmer, then ilustrated the art and science of DNA origami, an organic nano-technology. His team has demonstrated that long strands of DNA can be folded into any shape at all by mixing in short strands of protein that pinch the long strand at just the right point. He showed a schematic he had drawn for folding a strand into a smiley face (or rather, a circle missing only two holes for eyes and a curved trench for the smile). Then he showed videos of the tiny molecules that resulted when he folded the DNA strand according to his schematic. Amazingly, we saw little yellow smiley faces floating around.

Rothemund's team then developed software so that anyone can fold DNA strands into shapes. Lulu Qian, a student in Shanghai, used the software to spell DNA (using DNA). Rothemund used the software to build a tiny switch, the equivalent of a transistor. He aggregated the switches into counters and memory cells, crafting organic memory chips of any arbitrary size.

I don't even know what to say about such genius. As one of the interstitial musical performers put it, TED presentations both inspire and depress as you realize how relatively little you've done with your own life.

Dr. Dean Ornish gave a short lesson on the importance of lifestyle in overcoming our genetic fates (at least for a short time). My takeaway: stress and saturated fats kill brain cells; chocolate, tea, and blueberries stimulate new brain cell growth.

Susan Blackmore presented her perspective on memetics, a framework for describing evolutionary systems beyond simply the one organic system Darwin discovered. Blackmore's work, based on an afterthought Richard Dawkins shared at the end of The Selfish Gene, is an interesting perspective for looking at any system that includes reproduction, mutation, and competition. Critics of memetics like to point out that memetics is hardly a useful science. Still it's a fun one to exercise. Personally I have come to view startups as mutated scions of incumbent companies that compete for dollars in the economy. Like most mutations, new business plans are usually doomed, but occasionally one thrives and dominates, breeding similar entrants.

I can't recall the name of the person who gave the next brief presentation, but it was an impressive description of a new technology called neuroimaging therapy. By showing a patient an MRI of her brain in real time, the patient can learn, through biofeedback, how to head off thoughts or sensations that lead to pain, anger, depression, or addictive impulses. He claims a 50% success rate in curing chronic pain through neuroimaging therapy.



Doris Goodwin, a scholar and author of presidential history, gave a wonderful talk comparing Abraham Lincoln to Lyndon Johnson. She framed the talk around the claim that personal happiness requires a commitment to work, love and play. Borrowing from her latest book, she shared anecdotes about Lincoln's bout with depression in his twenties. Doris weaved in wonderful stories about her own childhood and her times working for President Johnson. The talk didn't really make any sense--the stories and points did not coherently tie together--but it was still worthwhile to bask in her clever and amusing collage of words.

The late morning session of TED was titled Is Beauty Truth? With such a new age sounding theme, I really expected little of this session, but I was pleasantly surprised...

The flu prevented the Harvard evolutionary psychologist Nancy Etcoff from attending, but a stand-in presented the purpose of her book Survival of the Prettiest. By examining people's ideas of beauty, the book identifies commonalities across culture, and demonstrates the extent to which beauty is hard-wired in human beings, as observed even in infantile reactions to a pretty face. "Even babies are shallow." Etcoff's moral is that if we understand the elements of human attraction, we can enjoy beauty without letting it obsess us.

Fashion designer Isaac Mizrahi came next. This time I was really ready to catch up on my email, especially as he began his rambling stream of consciousness. But the guy is amusing and he grew on me. He had lots of funny stories and he never took himself too seriously. "Style is great if it's amusing."

Particle physicist Garrett Lisi closed the session. Garrett is an avid surfer who lives and works in a van on the beaches of Maui. He compares physics experiments to startups, since they hold great promise but they usually don't work.

The connection to beauty is that Lisi is pursuing the grand unified theory of physics by advocating a mathematical model of the universe that isn't proven, but it's so elegant and beautiful that physicists like Lisi believe that it's most probably correct. (As Dr. Suess wrote about Horton's egg, "It should be, it should be, it should be like that.") Lisi proceeded to describe the 8-dimensional shape called an E8 that seems to frame the properties of the 226 different configurations of the known elementary particles. The vertices of an E8 also define several other particles that haven't yet been observed but, Lisi hopes, will be observed when the new 27-mile Hydron particle collider comes on line later this year. "If we don't find those particles, it won't be good for me personally."

Bottom line: Craig Venter and Paul Rothemund were Thursday morning's highlights.

As for the lowlights, I'd like to heckle but some of my neighbors have impaired senses of humor. Fortunately, Kedrosky has turned me on to Twitter... (twitter.com/davidcowan)

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TED Wednesday: Literally, a Stroke of Luck

Each TED is framed around a theme that allegedly drives the agenda, though most presentations can be adapted to the theme of the day. The theme of TED2008 is The Big Questions. Yesterday's afternoon sessions were titled Who Are We? and What is our Place in the Universe?

Louise Leakey started off with a history of our and related species, as developed from the fossil record. A third generation fossil hunter, Leakey shared stories of slowly and routinely combing over African landscapes for days at a time searching for that rare piece of ancient hominid skull.

Stanford particle physicist Patricia Burchat taught us, in clear and simple words, how it is that we identify and quantify the "dark matter" that comprises 25% of our universe's mass, and the "dark energy" that comprises 70% of our universe. She illustrated the way that stars cluster in spheres of dark matter, as evidenced by the rings we see around them from background stars whose light bends around them in radial symmetry.

Artist Chris Jordan presented his art, contemporary images that, upon closer scrutiny, are actually made up of thousands or millions of some other image. His aim is to assist us in getting our minds around the massive numbers that we cannot otherwise fathom, such as the eleven hundred Americans whom cigarettes kill everyday, the 4 million plastic cups used every day on commercial airlines, or the 2.3 millions uniforms issued in 2005 to US prisoners, who account for 25% of the world's prison population (partial zoom on the right).

Stephen Hawking presented next by televideo. From his specialized wheelchair he presented a talk on the history of our universe, the likelihood of finding alien intelligent life, and the importance of space colonization for the survival of our species. Incredibly, he presented his comments, and the answers to questions, through a voice-generating computer mechanism controlled only by Hawking's mouth twitches.

Anthropologist Wade Davis presented a collage of images and stories from disappearing cultures. Preachy, a little new age, and hardly memorable. Moving right along...

Paleontologist Peter Ward presented the thesis of his book Rare Earth, which paints a more pessimistic outlook for finding intelligent alien life than Hawking did.

As we contemplated our place in the universe, John Hodgman (John Stewart cast member who plays the PC in Apple's commercials) told the story of his four encounters with aliens. Hodgman kept us in stitches. I wish I could relay the highlights, but you'll have to watch it on TED's site or on their DVD. (Or you can buy his book.)

Another highlight of the day was the story of Harvard-trained Neuroanatomist Jill Bolte Taylor. Inspired by mental health disease in her own family, Taylor became a professor of brain anatomy at Indiana U. Med School. But in a literal stroke of luck that was both terrible and ultimately beneficial, Taylor suffered a stroke at home that took her eight years to recover from. Her recollection of that morning in 1996 is most enlightening: while she sensed the shutdown of her left hemisphere (the serial conductor of thought and language), she experienced first-hand a glimpse into the right hemisphere of the brain. In the spirit of neuropathologist Oliver Sacks (Man Who Mistook His Wife for a Hat, Awakenings, Musicophilia), Taylor examined her own pathology from the inside, developing a unique understanding of how the right hemisphere functions as a parallel processsor of our sensory inputs. Even in the the throes of a painful cerebral hemmorhage that deprived her the ability to speak or comprehend language, Dr. Taylor still deliberately observed and studied her cognitive experience. She keenly sensed internal bodily signals that normally fade into background. Relieved of temporal awareness, Taylor lost all sense of past and future, of stress and work, of responsibility and risk. It was fascinating to hear her description of feeling euophoria ("I felt at one with the universe") and dis-connectedness from her body--highly reminiscent of the feelings commonly reported in near-death situations when the left hemisphere is likely to have shut down.



Sri Sri Ravi Shankar the spiritual teacher was (I hope) the lowlight of TED. His yogic message "All you need is love" wasn't any more compelling than his new age breathing techniques. I want my 18 minutes back.

For the sake of blog etiquette, I'll refrain from reviewing the musical performances, Shakespearean monologue, and short stories that punctuated the feature presentations. But I will point out that these diversions greatly enrich the TED experience, breaking up the heavy regimen of mental exercise.

Bottom line: Stephen Hawking, Chris Jordan, John Hodgman, and Jill Taylor were the highlights of the day.

Photo credits: Bruno Giussani

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TED 2008

I used to attend a lot of conferences (e.g. Comdex, Network World, DEMO, Morgan Stanley Technology Showcase, NVCA, TechCrunch). Mostly I'd avoid the long, mind-numbing sessions, choosing instead to prowl the hallways and expo floors to serendipitously encounter familiar people and unfamiliar technologies. I found these events to be highly efficient venues for collecting and synthesizing information, for sharing ideas and taking a pulse on new markets.


But physical conferences simply can't keep up with the pace, volume and quality of content that is now available through online discovery and collaboration, which don't levy a heavy tax on our time for travel to and from Vegas (Who Has TIme For This?).

Having said that, there is still one conference I try to never miss. TED was founded in 1984 by Richard Saul Wurman as a dinner party among intellectuals (Marvin Minsky, Benoit Mandelbroit, Nicholas Negroponte...) to explore the convergence of technology, entertainment and design. It has since blossomed into a multi-location summit engaging 1,100 attendees around presentations by many of the most interesting and respected people in the world from science (Steve Pinker, Daniel Dennett, Richard Dawkins, Jane Goodall, Murray Gell-Mann), entertainment (JJ Abrams, Julia Sweeney), technology (Craig Venter, Jeff Hawkins, JImmy Wales, Sergey/Larry), art, literature (Dave Eggers), journalism (Saul Hansen), music (Peter Gabriel, Thomas Dolby), business (Richard Branson, Jeff Bezos), and government (Clinton, Gore, Queen Noor). The sessions now cover topics far broader than the original agenda, confronting the biggest challenges facing our species--global warming, terrorism, genocide, disease, education, human rights. The presentations range from 3 to 18 minutes, punctuated by chances to mingle with the speakers.

But TED is more than a conference. TED now hosts a series of events around the world in Africa, India, Europe... TED operates a rich web site that features the lectures delivered in the events. Every year TED awards a $100,000 prize to three recipients who leverage the TED community to pursue a specific proposal on improving the world. For example, Bill Clinton is using his prize to bring basic healthcare services to Rwanda, and E.O. Wilson has used his prize to launch the Encyclopedia of Life, an online repository of information about the species on Earth.

Perhaps the best and most lasting benefit of TED is the chance to meet new friends among a community of everyday people with a common characteristic: an active ongoing interest in improving one's intellect and one's planet--people like my friend Erik Gordon, who overcame much personal adversity to launch an investment firm with the mission of funding commercial space exploration.

Last year I blogged a bit about TED but this year I plan to share more details in the coming days with these objectives: share some interesting ideas, identify which presentations you may wish to watch on the web, and help you assess TED as an event you might wish to attend.

UPDATE: Here are links to my 6 reports on TED 2008:

TED Wednesday: Literally, A Stroke of Luck

Highlights: Dr Jill Taylor-- Brain scientists decvonstructs her own stroke; Stephen Hawking

TED Thursday Morning: Life Origami

Highlights: Craig Venter and Paul Rothemund on developing CAD tools for synthesizing complex life forms.

TED Thursday Afternoon: Helpful Tips to Survive a Nuclear Explosion

Highlight: Author Dave Eggers

TED Friday Morning: Music, Shrooms and Crows

Highlight: Josh Klein on how smart crows really are. Definitely worth watching.

TED Friday Afternoon: Shining Eyes

Highlight of the Week: Ben Zander leads TED in German choral singing

TED Saturday: Thank You For Being Here

Highlight: Al Gore with more inconvenient slides.

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A Very Bad Book and a Very Good Book

Are you poor? Sick? Old? Fat? Lonely? Well if you ever feel that life is imperfect, remember there’s only one explanation for such unfairness in the world: Someone out there is deliberately screwing with you--some lazy, greedy, immoral bastard who somehow caused your misery for personal benefit.

This atavistic wisdom now drives sales of Kevin Trudeau’s latest masterpiece The Weight Loss Cure THEY Don’t Want You To Know About. Even after the FTC censured Trudeau multiple times for deceptive advertising--most recently for his conspiratorial expose on Natural Cures (which I generously reviewed)--Trudeau has triumphantly returned to the NY Times bestseller list with the good news that it’s not your fault you’re fat. Government and Big Business are actually to blame for hoarding the secret of how to eat all the yummy foods you like and still look like Jessica Simpson. Trudeau's infomercial hails his regimen as the "easiest [weight loss] method known on planet Earth" (even though the book prescribes daily injections of drugs not approved for weight loss by the fat-loving FDA).

Now party-pooping scientists would tell us that it takes exercise and dietary restraint to lose weight. But these same Chicken Littles see the whole universe succumbing to a relentless entropy that will eventually break down everything from my plasma TV to the sun in Heaven. They would say that we must continually expend our energy to sustain our health, not to mention our friendships, marriages, families, jobs and intellects. Well, those buzz-killing nerds are welcome to follow the Second Law of Thermodynamics if they wish to, but that’s one law I never voted for (and I’m pretty sure it ain’t a Commandment).

And that’s why Trudeau’s book is selling like matzoh on Passover. Americans have faith in the fair, just and wonderful design of our Creator (aka God, Jesus, Allah, Yehovah, Flying Spaghetti Monster, Zeus, Vishnu, Lou Dobbs…). Patient prayer will always prevail. And although He is the source of the very genetic variation that dictates much of our lot in life, the All-Teflon Holiness gets credit only for the good stuff (“Thank God that shark didn’t eat my other arm, too!”). The bad stuff must be the fault of some sinner defiant of the Lord’s benevolent plan.

To protect us from these heretics, Trudeau is already hard at work on these guaranteed bestsellers that will expose conspiracies at the highest levels:

• The Secret to EASY PARENTING 'They' Don’t Want You To Know

• The IMMORTALITY PILL Funeral Parlors Don’t Want You To Take

• Why Rich People Never Pay Taxes, And You Don’t Have To Either!!

• Perpetual Motion Machines the Arabs Don’t Want You To See

• How the French Are Secretly Making You Ugly

• Global Warming—The Alien Plot to Colonize Earth

Yes, Trudeau continues to enrich himself by playing on the suspicions that people harbor toward governments, big business, and rich people. Why do these suspicions so pervade our society?

You can find the answer to this and similar questions in a new bestseller by Michael Shermer titled Mind of the Market: Compassionate Apes, Competitive Humans and Other Tales From Evolutionary Economics (you can read the Prologue here). Shermer, the Scientific American columnist and Skeptic Magazine editor, is the world’s expert on Why People Believe Weird Things. During his illustrious career, Shermer has exposed cognitive frailties that characterize the brains our species evolved in times when simple pattern matching—not complex analysis—contributed to our reproductive success. Selective recall, false memories, wishful thinking, and an ignorance of the scientific method lead to all kinds of pseudo-scientific conclusions, such as UFO abductions, holocaust denial, medical quackery, and 9/11 conspiracy theories (brief video). Shermer’s latest book focuses on the mistakes we make around money, and how human irrationality confounds the classical economist.

Trudeau’s books exploit just one of the cognitive artifacts of our evolutionary past: Prior to the relatively recent rise of civilization, variations in wealth stemmed from force, not industry and innovation, and so, as Shermer explains, we naturally developed a healthy distrust and fear of anyone with substantially more resources:

"Because humans evolved in small groups of a few dozen to a few hundred individuals in hunter-gatherer communities, in which everyone was either genetically related or knew one another intimately, most resources were shared, wealth accumulation was almost unheard of, and excessive greed and avarice were punished. Thus we naturally respond to a free market system in which conspicuous wealth is paraded as a sign of success with envy and anger…

Market solutions are generally received with skepticism. Businessmen are distrusted, corporations looked at askance. There is also a well-known resentment against those who have most benefited from markets… Folk economics leads us to disdain excessive wealth, label usury a sin, and mistrust the invisible hand of the market. What we do not understand we often fear, and what we fear we often loathe…"

The non-classical notion that human beings do not behave as perfectly rational agents in a market economy is young but not new. The new generation of economists (led in large part by my college roommate) embraces behavioral studies as a necessary step toward building micro- and therefore macro-economic models. Shermer doesn’t pose as an economist himself, but he does bring his unique expertise to bear on the more fundamental question of how these cognitive anomalies developed, basing his research in part on the findings of neurologists who study brain scans that expose how we make decisions.

But Shermer’s book is not just for behavioral economists. It’s a warning for us all not to react instinctively like warring tribesmen, but to recognize the modern reality of a single tribe sharing the planet.

And for anyone who does ever feel poor, sick, old, fat, or lonely, Mind of the Market reminds us that we are but products of nature. There’s no point wiling away our lives waiting for an Omnipotent School Principal to make everything fair in the end (Who Has Time For This?). We make the most of our brief, glorious existence, and then we die.

Perhaps my favorite aspect of living in Silicon Valley (even more than the weather) is the prevailing sense that individual contributions can in fact re-shape the world around us. Indeed, this drive to organize small teams of people into highly effective agents of the free market is what defines an Entrepreneur. Or should I say “Entropy-Nerd”?

Now if you, too, live in Silicon Valley, before you order Shermer’s book online consider buying it instead from Kepler’s Bookstore in Menlo Park (directions) this Tuesday evening at 7:30pm, because Michael Shermer will be there himself (for the second time) to inscribe it for you. (Otherwise catch Shermer elsewhere on his US speaking tour, or request an autographed copy when you buy the book here.)

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Bessemer Tops the Midas List

Since 2000, Forbes has taken an admirable crack each year at recognizing the most successful dealmakers in high-tech venture capital. Its Midas List attracts some controversy (and whines from VCs) since Forbes must craft its list based on incomplete and somewhat self-reported information. Clearly some folks get too much credit (e.g. I've been ranked as high as number 6, although this year I lost ground) and some star performers are neglected, such as Chris Gabrieli (Sirtris IPO), Gus Tai (sold Photobucket to FIM), and Kevin Harvey (sold MySQL, TellMe, Ingenio), who should have fared better than number 86.




With that disclosure, I wish now to point out that five Bessemer investors (including Bob Goodman, Rob Stavis, Rob Chandra and Felda Hardymon) made this year's list, once again making Bessemer the #1 represented firm.

OK, I'm done gloating. Back to work now--must move back up the list in '09...

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Hospital Corners

As the chill of the winter solstice creeps into our homes, am I the only one who likes to gather up the blanket around my body for warmth? We all shift positions at night, and I know that as my limbs wander, I need my down-feathered companion to effortlessly move with me. So who, then, was the demented Nazi that invented hospital corners?

Surely the evil goddess Insomnia herself cursed us mortals with those tightly tucked in corners that pin us down for the count, relentlessly pressing down upon our toes. And just as clearly, she has charged her minions in Hotel Housekeeping to prosecute the nightly terror. Euphemistically deemed a “turn-down service”, their mission is to (i) maximize tension in the sheets just prior to bedtime; (ii) heap layers of heavy bedcovers upon the real estate designated for our feet—defying us to handle the germy, never-been-washed bedspread ourselves; and (iii) deposit tasty (but caffeinated!) chocolate on our nightstands to pharmaceutically reinforce wakefulness.

What else is there to do but squeeze into bed and try to kick the quilted bed-weight off with our feet, racing to find some mobility in there before the maids’ handiwork crushes our lungs? And then the hardest part: wedging my whole body down as far as I can go for maximum leverage so I can execute the leg press of my life to separate the top sheet from those damned hospital corners. It’s actually a good workout, though I often fear that my femurs will snap in the process. “Did you break your leg skiing?” they will ask, and I will answer, No, I was subdued by linen.

Can technology save us? I have developed an extensive road map around this investment hypothesis but I have yet to encounter any new technology powerful enough to overcome the hospital corner. Not even a web2.0 travel site that ranks hotels for Flexible Bedding.

No, like any terrible plague, hospital corners can only be remediated through prayer. So please join me in this bedtime hymn…

“Oh merciful and all-cheesy Flying Spaghetti Monster!
Tonight, on the longest night of the year, your noodly children
beseech you to deliver us from Insomnia’s paralyzing clutches.”

Amen, and good night.

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SaaSy Security Suits SMB

In 2006, even as overall venture investing in the U.S. expanded 12% over 2005, venture investment in security startups that year plummeted more than 50% (Venture Source). It’s no secret that too many "best-of-breed" startups are chasing the ever more elusive enterprise IT security budget. And while hackers have shifted their sights to the juicier consumer segment--selling private credentials to ID thieves and renting bots to spammers--IT departments have resolved that their checklist of must-have security products is long enough. They no longer crave super-duper startup technology, turning instead to the large vendors (Symantec, McAfee, Cisco...) for integration, vendor viability, and security that's, well, good enough. A few pioneers like Arcsight and Tripwire have reached critical mass in the large enterprise market, but the majority of security startups today struggle to sustain field sales reps with less than a million dollars a month in sales. Now that the VCs have turned off the fuel tap, these babies just won't make it off the runway.

So why did my partners at Bessemer just last month let me cut the biggest check of my career ($24 million) in another business IT security company?

According to surveys conducted by the Computer Security Instiutute (CSI), employees of large corporations naturally enjoy far more extensive levels of information security than in businesses with fewer than 1,000 employees. Not only are the corporate PCs more rigorously updated with anti-spyware signatures, but IT locks them down inside a fortress of intrusion prevention systems, application firewalls, policy compliance agents, encrypted SANs, vulnerability scanners, VPNs, etc. Obviously, it takes a large IT shop to assess, integrate, deploy and manage that kind of infrastructure--the kind you don't find in a 200-person medical clinic.

And yet small and medium sized businesses (SMB's) own the majority of business PCs, inviting computer parasites that thrive in vulnerable hosts, armed with admin privileges! Doesn't it bother the SMB owners that they spoil internet hygiene for everyone?

Perhaps not, but contrary to what many believe, SMBs understand full well that they face the same risks and regulations as large corporations. In fact, the CSI survey included a surprising result: even though small businesses lack the IT resources to deploy most security technologies, they spend as much as 8 times what the Fortune 5000 spend for security per capita! I suppose it's because their product choices are limited by their VARs, and each invoice they pay represents a tiny fraction of the vendor's revenue, so SMBs enjoy no pricing leverage at all. Furthermore, the "scalable" appliances they buy (designed for 10,000 Citibank employees) don't amortize well over a law
firm's 300 PCs.

This unmet market need represents an enormous opportunity for the new generation of security companies developing on-demand solutions, or Software-as-a-Service (SaaS). Instead of deploying their own servers and infrastructure, SMBs can now subscribe to security solutions priced by the drink (so we can buy a quart of milk instead of the cow). The simpler deployment alllows SaaS vendors to replace their field reps with web and telephone sales, so now they can afford to sell smaller accounts.

Indeed, the first generation of security SaaS has fared remarkably well, and I've been fortunate to participate as an investor: Verisign's SSL business trounced Entrust, and Postini (now Google, as of yesterday) thrived in the densely crowded spam filter market. Qualys leads the market for vulnerability assessment, and Cyota quickly dominated the banking security sector (before RSA bought it). Counterpane pioneered security monitoring, but performed only moderately well because we focused on high end security instead of easy and affordable deployment. Meanwhile, several security SaaS winners I didn't fund, like Websense and Riptech, now populate my anti-portfolio of lost opportunities.

Unfortunately, I don't think we'll see too many more winners, because consolidation will come and go faster this time around. Even more than large corporations, SMBs will gravitate toward suites, rather than hire IT resources to buy subscriptions and manage portals from multiple vendors (Who Has Time For This?). They won't be easily sold on whiz-bang novelty.

That's why the vendor(s) who can integrate security services from soup to nuts will ultimately dominate the SMB security market. The winner(s) will pay once to acquire a customer but sell multiple services, pushing down sales costs as well as prices. Meanwhile, the incumbents (Symantec, Cisco...) are stuck in the licensed software world, and they can't patiently invest in building recurring revenue streams when Wall Street values them at normal software multiples (In his most recent earnings call Larry Ellison proclaimed that he can't justify investment in a SaaS business given the lower up-front margins.) So the field is open for new entrants to integrate on-demand services for SMBs who want a single portal to manage their security.

Of course, no single company can develop a winning product in every category, and so the winner(s) will have to grow through acquisition, following in Symantec's footsteps. The early favorite in this race is my latest investment, Perimeter eSecurity. Slowly and surely, Perimeter has acquired and integrated nine SaaS companies, fully integrating a portfolio of over 50 services that the Company supplies to several thousand businesses. Their portal manages AV, anti-spyware, spam filters, content filters, VPNs, firewalls, application firewalls, IDS, IPS, remote backup, email archiving, Exchange hosting with encrypted web access, vulnerability assessment, monitoring, and many other services. Nothing else out there comes close, and customers like it. Perimeter's own organic growth has financed the acquisitions--all except the last one, USA.Net, creating the opportunity for Bessemer and Goldman Sachs to invest.

Whether or not this particular bet pays off, SaaS promises a major disruption for the industry and its investors. Starting new companies to develop more and more advanced technology will never solve the security problems of our local accountants, banks and realtors. The internet remains woefully insecure--not because our technology is insufficiently advanced, but because it's insufficiently deployed.

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There Once Was A Founder Named Scott

I've been asked three times now for the text of my toast at last night's closing dinner for the Postini/Google deal. Here it is (the heroes mentioned in this ballad are founder Scott Petry, CEO Quentin Gallivan, board director Ryan Mcintyre, and lead investor John Johnston):

There once was a founder named Scott
Who invented a messaging bot
That filtered out spam--
be it virus or scam--
Now we never get spam (not a lot).

John, who led us with class,
Thought a quick IPO would be crass.
But Cowan kept cryin'
To Quentin and Ryan
Which gave John a pain in the ass.

For spam and archive retrieval
Google came, and caused upheaval!
Are we now Googlini,
Postoogle, Gostini?
All they told us is just: Don't Be Evil.

Congratulations and thanks to the Postini team for executing so well and for inviting Bessemer to be a partner in your business.

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A Carbon Footprint Reduction Plan

Today, my partners and I announced an extensive plan to:

• offset 100 percent of our firm's estimated 728 tons of carbon-dioxide equivalent emissions beginning this year;
• to purchase offsets for our young portfolio companies (the dozen or so with 15 or fewer employees, and probably 3 to 5 more startups each year); and
• to reduce our total carbon emissions 25 percent by 2013 (and continue to purchase carbon credits to offset the balance).

We follow in the tradition of our namesake, Sir Henry Bessemer, whose inventive process dramatically reduced both the carbon and the energy required to refine steel. The culture and values of a business most often take root early in its life cycle, so we will instill environmental awareness in startups at the time of inception. Our goal is to fund a new generation of companies committed to constructive carbon policies that reduce the harmful emissions which cause global warming. And our hope is that other investment firms will follow suit.

Justin Label (head of Bessemer's CleanTech practice):
 

"While we have set aggressive targets, we also recognize that energy is critical to the economy and that for the foreseeable future, most energy will have a carbon footprint. Therefore, being 'carbon neutral' is not our ultimate goal. Rather, we hope this initiative will serve as a way to stay engaged on carbon issues and add to the pool of capital available for creative solutions."

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Vimo's TV campaign

with real customer testimonials...

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Scratching the Surface at Microsoft

This morning I got to play with a prototype unit of Microsoft Surface. The new gadget addicts among you have already seen videos of it, featuring families and friends seamlessly sharing their digital content across cameras and phones. The concept intrigues, but the actual experience exceeded my expectations, in a Wow-I-Want-This! kind of way.

Infra-red cameras beneath the Surface track physical objects like fingers, mobile devices, paint brushes and "optical tags," so Surface can engage the user in new kinds of applications with physical movements and objects. But more importantly, those applications can be used by more than one person at the same time, enabling a level of collaboration and play that, psychologically, cannot be achieved through separate networked computers. For example, the paint program and the photo manager accommodate simultaneous actions on different parts of the Surface. I imagined an implementation of Flock on Surface where users branch off the same page in different directions, sliding their discoveries back and forth. The most fun example of a physically collaborative app was the video jigsaw puzzle, enabled by marked lucite tiles that trigger videos beneath them for assembly into a single image. Two of us worked together to identify the right position, orientation, and side of each piece (when the tile is on the wrong side, the video snippet is reversed).



I can also attest that the Surface handily withstands Coke spills. (What can I say? I was feeling naughty.)

The platform obviously does have challenges to overcome, such as initial manufacturing cost, security friction in pairing mobile devices to it, an immature developer community, and the lack of power outlets in the middle of our living room floors. But the Microsoft folks seem to have lined up enough retail and hotel partners to nurse the baby platform through its early growing pains. By Q4 next year, you'll have seen units deployed in public places (and, with any luck, my family room).

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How I Lost 160 Pounds

Yesterday I was free of Earth's gravity for 8 full minutes aboard G-Force 1, the airline of X-Prize founder Peter Diamandis that induces weightlessness through parabolic flight. Parabolic flights have been used for decades to train astronauts (and shoot film scenes like in Apollo 13), and G-Force has recently completed its 100th flight (an important milestone for me as I assessed the risk of this adventure).

Esther Dyson, an active supporter of commercial space filght and an investor in the business, had recruited Second Life founder Phil Rosedale and VC Chris Hadsell to try out this experience, and Chris in turn recruited me. I figured that if Stephen Hawking could do it, so can I. Still, I was quite anxious leading up to the flight, certain that I would spark a puke fest on board--but a single dose of scopalamine completely warded off the nausea. (Warning: scopalamine is also a truth serum, so never operate a blog while medicated!)

G-Force 1 is a hollowed out 727-200 with a re-inforced steel frame, cushy mats along the bottom, no windows, and 30 seats way in the back. After a brief training video, we boarded the aircraft and 15 minutes after taking off we reached air space off the coast where the FAA allows G-Force to swoop up and down like a roller coaster.

For the climbs, we lay down still on the mats, barely able to lift our limbs as the plane's acceleration exerted 1.8g on our bodies. I found the feeling quite restful--not unlike being pinned down by my kids sleeping on top of me. As the plane started to crest the first time, the pilots followed a course that induced "Martian gravity", or 1/3 Earth gravity. For the next 30 seconds, we all performed stunts like one-armed push-ups.

As Peter called out "Feet Down" we all found a place on the mat for the next climb. the next two parabolas were shaped to induce lunar gravity, or 1/6 that of Earth's. During these episodes we easily pushed ourselves to a standing position with our fingers, and leapt through the cabin like gold medal gymnasts.

The next dozen parabolas all simulated zero gravity. For the first one we simply enjoyed the serenity of floating. In the second parabola we released M&Ms in the air and floated around trying to catch them. Another time we squeezed globs of water out of our bottles, and watched them float around--some of them into our mouths--like levitating soap bubbles. Once we played catch--with other passengers, who curled up into balls as we tossed them through the cabin. Once I launched off the bulkhead to fly like Superman through the cabin, and another time I just sat on the ceiling. I completed a full circle by crawling up the walls and over the ceiling, and I accomplished a quintuple somersault in the air. And each time we heard "Feet Down" we'd play a variation of musical chairs, scrambling for floor space before gravity kicked in.

The afternoon was thrilling and eye-opening. I had the chance to experience something I had only dreamed of, and without the risk of a rocket launch. It was fun, pure and simple, and I highly recommend you try it.

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Experiencing Nature

My family didn't pick the Big Island of Hawaii to be adventurous--it was supposed to be a relaxing vacation. But this morning our jet lag awoke us before dawn to see meteors relentlessly pelt the earth's atmosphere. During the day we couldn't venture outdoors as high winds rehearsed for tomorrow's visit by Hurricane Flossie with 120+ MPH gusts. And then about 15 minutes ago, an earthquake registering somewhere between 5 and 6 on the Richter scale jostled our dinner, chasing us out onto the windy lanai.

We find ourselves in mortal danger from meteorites, earthquakes, flash floods and high winds. But as Maxwell Smart always said, "And loving it!"

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Arnold's Angels

Driving up scenic highway 280 yesterday reminded me of my first, glorious day ever in California, when my friend Ken Rudin recruited me to Oracle. (Ken, who was also my T.A. in CS141 Hardware Architecture, now runs Lucidera a SaaS B.I. startup.) Ken confessed to me that on his first day in California, he had mis-understood some advice that if he wanted to take the highway, "he could drive up to 80."

So that's what I was doing in the fast lane when suddenly my car started shaking as though I was driving on rubble. I tried changing to a non-rubbly lane but my car still shook like the '89 world series. It finally dawned on me that the problem might not be the road, so I pulled onto the shoulder as wisps of smoke drew my attention to the few remaining shreds of tire that had once protected my rear left wheel.

I smoothly finished the phone call I was on, yielding no hint of a problem and steeling myself to change the tire as traffic whizzed by. But just as I said my goodbye, a shining white tow truck pulled up behind me. At first I thought I was in for a negotiation. I certainly didn't need a tow, but perhaps I could enlist some assistance...

Well, there turned out to be no need for negotiation. The driver Steve Pauley politely introduced himself and the Freeway Service Patrol--a fleet of 83 contracted tow truck operators patrolling 550 miles of Bay Area freeways during peak traffic for motorists in need of assistance. Sponsored by C.H.P. and Caltrans, the Freeway Service Patrol tows disabled vehicles, supplies gasoline to poor planners, and tapes hoses and refills radiators all for free. When Steve saw my problem, he immediately descended from his chariot, jacked up my car, and installed my spare tire faster than I could say, "Now what does this doo-hickey do again?"

The good Samaritan accepted my thanks, but refused to accept a gratuity. I couldn't have been more impressed by the whole experience. It was yet another wonderful day in California, as glorious as my first nearly 20 years ago. Maybe this year I really will file those state tax returns!

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SPIT and SPAM

As a guest today on Talk of the Nation, I covered a variety of topics relating to spam, which is growing faster than ever.

Responding to a call-in question about open source software, I speculated that Firefox is no more secure than IE. I based this on theoretical arguments that might apply if Firefox were as popular a target as IE, and if the settings were as flexible, but in reality what I said is wrong. Contrary to the suspicions of one angry podcaster (who issued a fatwa on my head!) I have no financial motivation to "lie" about Firefox. In fact, as an investor in Flock which builds on the Mozilla code, I am happy to be corrected about the security of Firefox.

I guess I also provoked disagreement from the other guest, Dechlan McCullagh of CNET, who was articulate, well-informed, and clearly more comfortable on radio than I. I made the prediction that one day email spam will pale in comparison to SPIT (SPam over Internet Telephony). With free VOIP calls, spammers can now use computers overseas to generate voice messages that they broadcast to every 10 digit telephone number in North America.

"Press 1 to join Party Chat! Sexy Singles are standing by..." "You've been pre-approved for a low-rate credit card! Press 1 to complete your application..." "Why pay so much for prescriptions? Press 1 to get a free month of medicine from Cayman Islands Pharmacy..."

They needn't pay for the calls, the human reps, or the lists of valid phone numbers (so unlisted cell phones are vulnerable). Email spam is bad enough, but when our phones ring constantly, the intrusion on our lives will be profoundly greater, and unlike email spam, SPIT will carry payloads that cannot be examined until after we accept the call.

Anyway, I predicted that one day we'll be forced to turn off our ringers altogether, marking the end of real time telephone conversations. Dechlan pointed out that we could simply choose to ignore calls from people we don't know, as one of his buddies does. Good idea, except that the spammers will use our friends' and family's phones to call us, just as they do today with email.

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Business Weak

I hate to poke at a well-read journalist (again), but I must take issue with the way in which Aaron Ricadela mis-quoted me, obviously to support the hypothesis of his recent Business Week article titled "Fogeys Flock to Facebook."

Here's what I said to him:

"Clearly, Facebook has lots of traffic and a lot of that traffic is from the same group of users as on LinkedIn. But Facebook is a social application--it doesn't offer the same professional tools that make LinkedIn so popular, and so we see very little effect on the usage and growth at LinkedIn. In fact, LinkedIn continues to grow beyond the numbers Reid had projected at the time of our investment."

Here's what he wrote:

Even Facebook's competitors acknowledge change is afoot. "Clearly, Facebook has lots of traffic and a lot of that traffic is from the same group of users as on LinkedIn," says David Cowan, a managing partner at Bessemer Venture Partners, a LinkedIn investor (see BusinessWeek.com, 1/29/07, "LinkedIn Reaches Out"). Yet during Facebook's most recent growth spurt—it has added 1.3 million visitors since May, according to ComScore—LinkedIn's audience hasn't declined, Cowan says.

C'mon, Aaron. Next time please just report what I really said, instead of paraphrasing it to suit your story.

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Is BVP too Flashy?

When Henry Phipps established his family office a century ago, he kept his name off the door, choosing instead to honor the scientist Henry Bessemer who invented the technology that he and Andrew Carnegie had commercialized. Ever since, Bessemer has followed a tradition of quiet privacy, settling in the shadows of our entrepreneurial partners. We’ve had no PR agent. No splashy sponsorships. No publication of our results. (And no promotions for our blogs.)

But for those entrepreneurs who consider sharing their dreams with us, we need to share our story with them. As early as 1998 we published a web site celebrating our entrepreneurs’ successes (and lamenting our failures) in a graphical motif that evoked our turn-of-the-19^th-century roots. Since then, BVP.com incrementally sprawled, as web sites do, into an aging maze of unmarked avenues and back alleyways. Pre-occupied with our portfolio companies’ online presence, we neglected to renovate our own internet lobby.

But recently we crossed the point where we invest more venture capital internationally than we do domestically. Engaging new communities of entrepreneurs curious about our practice, we asked our IT Director Fred Shilmover to streamline our web site with 21^st century technology and a Googlish respect for the web user.

Our design objective was to tell our story without getting in the way of what a visitor wants to find. Even with 6 offices around the world, 100+ IPOs under our belt, and 96 years of history, we strived, above all, for clear, simple navigation.

With help from web designer Twig Gallemore, we crafted a tight site map around three simple menu options (TEAM / PORTFOLIO / CONTACTS) and filtered portfolio search options, to deliver quick answers. But to satisfy the entrepreneur who wishes to stroll around and browse, we also incorporated sliding photo albums in the header, as an alternative navigator through our history, team and offices. (Technical kudos to Flash god Erik van der Neut.)

There are clear tradeoffs to building our site around a Flash element. We have critical performance issues to resolve, browser support varies (it’s best viewed in Flock!), much of our content lies hidden from search engines, and we still need to redirect many links.

But I think that the newly launched www.BVP.com achieves our design goals. Do you agree? Is it what you’d want to see from your venture capital partner?

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Three Sealed Envelopes

BVP Operating Partner Christopher Risley recently had to relocate 3,000 miles for family reasons, forcing him to resign a CEO position and leave the company in the hands of its very capable President. Chris jokingly tells that (in the spirit of psychohistorian Hari Seldon of Asimov's Foundation) he left his successor three sealed envelopes to open each time he found himself at a complete loss as to what to do.

In the first envelope, the note reads, "Blame me."

In the second envelope: "Cut your burn and re-structure."

In the third envelope: "Prepare three envelopes."

(Before anyone cries plagiarism: Chris did disclose that it's an old joke.)

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Dinner with Dawkins and Hitchens

On Saturday night I had the great pleasure of pulling together a small dinner in which there were no Blessings or Grace recited. But we did have tri-tip, halibut, peach pie, Clos Du Bois PInot and probably the world's two most influential living atheists--Richard Dawkins and Christopher Hitchens. (The rest of my Top Ten list would include Pinker, Harris, Jillette, Shermer, Randi, Sweeney, Kurtz and PZ Myers!)

The dinner brought the two bestselling authors together for the first time--a chance for them to collaborate on responses to their common critics (see image right, courtesy Jurvetson). For example, just two hours earlier following his address at Kepler's Bookstore, Dawkins had been asked , "Weren't the worst atrocities of mankind perpetrated by atheists like Stalin and Hitler?"

Dawkins had responded that not only is there substantive debate regarding the faiths of Stalin and Hitler, but there are good and bad atheists and good and bad believers--there is no historical correlation between atheism and atrocity any more than there is correlation between faith and atrocity (and probably less so). A stronger correlation can be shown between heinous dictators and mustaches. Is a flexible worldview based on evidence and reason, Dawkins asked, more or less likely to incline someone to murder than a religious approach based on a holy book from a divine authority? "The question answers itself."

During dinner, Hitch (as his beautiful wife endearingly calls him) offered an additional rebuke: faith and church aligned the German and Russian populations behind Hitler and Stalin, while a skeptical , evidence-oriented population would have likely resisted the quasi-religions of their atrocious leaders.



The dinner capped off a successful event at Kepler's Bookstore in Menlo Park, where Dawkins once again filled the house. Watch the video of his address, and the Q&A session that followed.

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Buy Gringott's Bank Promissory Notes by Tomorrow!

As the Deathly Hallows beckon, wizards and muggles alike count down to Friday night with giddiness and panic (Stephen King says it best).

Celebrate the final three hours before the witching hour strikes with Dumbledore, Lucius Malfoy and the rest of Hogwart's at Kepler's Midnight Magic and Wizardry. It's the ultimate Harry Potter gala! Practice catching the snitch amid Quidditch World Cup Booths featuring fortune tellers, henna artists, magicians, and jugglers. Prowl for treats in the Death Eaters Enclave (catered by Cafe Borrone). Hear Hagrid tell stories in the Gryffindor Common Room, and vie for prizes in the Potter Trivia Contest.

But the midnight stash of Potter books can be redeemed only by holders of the Gringott's Bank Promissory Notes, available here or at the store until Friday morning. (After midnight Friday, available inventory will be sold on a first-come basis.)

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