Oracle Layoffs Coming?

I got this from a source who is usually pretty reliable on all things Oracle. Personally, I’m inclined to think that there is reason to believe this rumor given their financial performance and the redundancy that all of the acquisitions have created.

  • No developers are being hired in the U.S., all new hires are in India.
  • As many as 7,000 developers in the U.S. could be laid off. The bulk of these layoffs will come from JDE and PSFT ranks as they are no longer eligible for large severence payouts (been over a year since the deal closed). Oracle’s CRM group is also a target, which I suppose isn’t that surprising.
  • The bulk of the layoffs will happen in Feb.
  • Large group in the Siebel FG&A group will be let go when that acquisition closes. About 16% of the total Siebel workforce will be let go.
  • Severence for Siebel employees will be 6 months, Oracle folks will get 1 week for each year of service.
  • No layoffs in sales, support, or consulting.

Also, a couple of weeks ago I heard another rumor that the Oracle Discover and BI teams were being “decimated” to make the way for Siebel Analytics to become the flagship offering operating as a standalone business unit under Larry Barbetta reporting directly to Chuck Phillips.

I always take these rumors with a grain of salt but in this case I think there are some fundamental business realities driving Oracle to consider these actions, if it’s true. Lastly, any layoffs of this size are bound to spike the stock I would think… maybe Jason could provide his take.

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More telco bitching and complaining

C’mon Ed, why don’t you just do it? Cut off access to content from all those “freeloaders” and tell your consumer customers that they can’t access the content that they want because the content providers are freeloaders who won’t pay AT&T’s tariff.

“I think the content providers should be paying for the use of the network – obviously not the piece from the customer to the network, which has already been paid for by the customer in Internet access fees – but for accessing the so-called Internet cloud.”

Actually, if you read the full article and are familiar with earlier quotes from this ass Whitacre you see that he’s making a subtle shift from his earlier position that access by content providers (including search engines) should be predicated on paying additional access fees, never mind that these entities are already paying for their T-1′s and the like. Now Whitacre is trying a flanking move by saying these companies should pay a quality of service premium to guarantee acceptable performance, whatever AT&T may define that to be. This is nothing but a thinly veiled attempt to extort higher access fees from the side of the market that is less visible than the consumer side.

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Ellison’s debt freight train

This certainly isn’t a flattering profile of Larry Ellison, but it is a fascinating look at how the guy manages his personal finances.

According to documents unsealed by a judge in the shareholder lawsuit, Ellison habitually pushes his credit limit of more than a billion dollars to its maximum to finance his yachts and homes. And that’s not even counting some $20 million a year he burns through in miscellaneous lifestyle expenses.

Anyone is right to argue that Ellison is certainly a good credit risk, but when you consider that all of these guys count their wealth in terms of their stock holdings and Ellison is famous for rarely selling his stock (some suggest that it’s paranoia reinforced by the “Job’sian coup” at Apple, referring to best friend Steve Jobs being ejected from the company he founded), one has to seriously consider the words of his accountant.

Simon tried to explain to Ellison the seriousness of his debt, saying, “We
have a freight train going down a track, hitting a debt wall,” he said in the
deposition.

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What bubble?

In reading some of the posts of the last couple of days the “broken VC model” I was half expecting to encounter a guantlet of entrepreneurs on the side of i280 this morning who were deserving of venture funding and unable to get it, or a mad dash by every VC in town to fund every possible company with the words “blog”, “RSS”, “Web2″, “Wiki”, “advertising revenue model”, or “community” in the business plan… what am I thinking, in a bubble we don’t do business plans, just powerpoints and napkins.

Much to my dismay, I saw neither on my drive into the office today.

To paraphrase, I think all this talk about bubbles is premature. There really aren’t that many of these companies that have venture investors, and the ones that aren’t getting interest from VC’s are suffering from a bigger problem, nicely summed up here.

“From conversations we’ve had with VCs, many don’t like Web 2.0
companies because they have low barriers to entry, and so far there
have not been overwhelming liquidity events.”

There will no doubt be companies that achieve impressive valuation premiums for early stage rounds, but I’d wager that those valuations have as much to do with the team behind the company as anything to do with the technology or markets.

All of the postings back and forth about the VC business being broken would be better to focus on whether or not the Web 2.0 business model will result in sustainable high growth companies across a large swath of the market.

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Wikipedia editing process and oversight

Here’s what I don’t understand about Wikipedia, Rob can’t add his name to a list of natives for his hometown:

I posted my name under the “natives” section, which lists natives of my
town, and someone removed me. I posted again, someone removed my name
again. More due to a stubborn streak than anything else, this process
has gone through 8 cycles over the last month of me posting, being
erased and posting again.

But this politician (who you would think would have a higher profile than Rob) can have his staffers update his bio and nobody notices.

Members of U.S. Rep. Martin Meehan’s staff have
acknowledged they deleted unflattering information about a broken
campaign promise from an online encyclopedia, according to a published
report.

WTF is going on over there?

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The “broken” VC model

There’s a whole bunch of discussions going on about “a new VC model” that supposedly fixes what is “broken” about the current model. You can’t stumble into Memeorandum right now without getting hit square in the forehead with all these posts.

Here’s a couple of them… here, here, here, here, and here. There’s actually a bunch more posts worth reading but it’s not my job to create a laundry list of all the links, just go over to technorati and do it yourself.

After that spectacular setup I am not even going to bother writing about any of these posts.

After 8 years in the venture capital business, which I think still makes me a rookie, I have the following observations to share with you:

  • Venture capital is a cottage industry and whenever too much money comes into the system there is an imbalance which shifts the investment model from demand driven to supply driven. Enter the bubble.
  • When functioning at it’s best, the VC business depends on a fairly predictable mix of serial entrepreneurs, “startup folk”, super smart CTO-types, consultants, academics, MBA-types, limited partners (the “money”), and service providers (mostly lawyers).
  • The serial entrepreneurs are key to the whole mix and really have a lot of power. Their market power increases exponentially as they bring additional people with them, in other words transitioning from a serial entreprenuer to a serial team. They have pricing power and can often pick from several funds competing to get into their deals.
  • The best venture funds are well ahead of the curve, case in point is Brad Feld and his investments in companies like Newsgator and Feedburner… he wasn’t sitting around talking about how great RSS was, he was out putting money to work when most VC’s were googling RSS to find out what it was.
  • Venture funds work best when the limited partners are veteran investors. A corollary to that is that the retail investor has no place investing in venture funds, there’s a reason why the SEC places limits on venture funds in this area. The risks are too great and the value of qualified LP’s goes well beyond the money, but quite often money is the only thing they bring. Most people would be surprised to learn that the richest source of capital for venture funds is from insurance companies, pension funds, universities, endowements, banks, and other institutions. The name brand funds that have raised more than a couple of funds typically don’t take a lot of new money in a new fund, it’s the same people investing over and over again. By the way, recent court rulings have forced publicly held institutional investors to publicly disclose their venture investments and their performance, the result has been that many powerful venture funds are telling their public LP’s that they are not welcome in their new funds.
  • Partners in venture funds are a mixed bag, as an entrepreneur your success with any individual fund is entirely dependent on the partner you are working with. I’ve worked with some partners that were honestly the hardest working people in the company, worked with others that could pick up a phone and make something significant happen for a company, and I’ve worked with others that simply showed up a board meeting in order to ask some questions to make themselves look smart.
  • It wouldn’t surprise anyone to learn that conflict between startups and their investors is often rooted in conflict between the CEO and/or founders and the Board. It was surprising for me to learn, from experience, that the second deadly source of conflict is between the individual investors in a given deal. Either of these conflicts can be very disruptive, but the latter can be deadly.
  • The overwhelming majority of deals that any venture fund will do are a result of relationships the partners have with serial entrepreneurs and other professional investors. This network effect is the reason why the first point is so important.
  • The industry has standardized on much of the documentation that goes with a venture deal. Seriously, you can look at the docs from one company to another and pretty much just change the company name and the investor names.
  • The terms are really (really) important if you want to make money doing venture deals. Things like liquidation preference and seniority can literally mean the difference between making money and losing money in most of the deals that a venture firm will find an exit on.
  • There is friction between younger partners and the old guard. This friction comes from the fact that the software industry is changing on multiple dimensions (technology, amount of capital required, revenue model, tech platforms) and many of the older guys just don’t “get it”. However, a lot of venture funds invest in more than a couple of sectors and manage a diverse portfolio so this friction isn’t always fatal. In fact, the portfolio of diverse investments is probably the single most compelling reason for keeping the current model
  • The “diverse portfolio” concept can be a point of friction, not because these funds are investing in multiple technology sectors but rather because they are investing in different kinds of investments. Trust me when I say that there are a number of venture firms with serious issues because one group of partners is saying “hey we can do buyout deals and get venture returns, why do we need to keep doing $5-6m tech deals?”

I don’t think we need to remake the venture capital model, the basic concept still works well, as it has for over 35 years (actually longer if you take into account 3i, which was formed by the syndicate of British banks following WWII as a vehicle to fund and develop reconstruction).

There are precious few boostrapped startups of any meaningful size and even though startups today are able to build a company with a lot less capital than previous generations I would be reluctant to toss out the VC model on that observation. The simple fact is that while companies like Flickr and del.icio.us are impressive, they didn’t demonstrate that they could be viable self-sustaining companies over time. It may take a lot less capital to build a technology platform, but it still takes a lot of capital to build a company.

My last thought has to do with the intoxication that many of the most exciting technologies today are capable of inducing, however just like I wouldn’t make any important decisions while intoxicated, I don’t think I would opt to “reform” the venture industry on the observations of the last couple of years alone.

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Sam Maloof

In the world of architecture, names like Frank Lloyd Wright and I.M. Pei inspire respect and admiration. In the world of woodworking that same reverence is reserved for a man named Sam Maloof. His influence on American furniture designers and craftsman is so significant that he is recognized by the Smithsonian, and many more institutions of note, with one his signature rocking chairs in their permanent collection.

A couple of days ago Maloof broke ground on a Arts and Crafts education center and gallery on his ranch in the San Gabriel Mountains. The guy is 90 frickin years old and he breaking ground on an education center in his name dedicated to his craft! That kind of drive and dedication simply can’t go without notice, so it’s with that introduction that I point you to the Sam and Alfreda Maloof Foundation for Arts and Crafts.

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China and Google, a final thought

I’m going to get off the Choogle (that’s China+Google) soapbox but I did have one final thought. Scott Adams wrote on the Dilbert Blog:

One of the things I love about China is that they set high goals, as in
“Let’s build a wall around the entire country” and more recently “Let’s
have Internet access but without the part where people can access the
Internet.”

While that’s funny to read it does bring to mind an interesting thought. China is hanging it’s future on developing technology that will not only enable it’s manufacturing businesses to move up the food chain but also compete globally as new low cost labor markets emerge, and at the same time develop their own technology economy with a goal of being a global leader in developing homegrown innovative technology.

Here’s the thought: how can a country hope to develop into a technology leader while at the same time denying their citizenry of the very technology that inspires innovation? The appeasers will say “but they are just filtering search results, users in China can still use Google”, among other justifications. But this is just flat out wrong because at the end of the day what it really means is that Google et. al. will be required to have the PRC stamp of approval on any new service or upgrade of existing services and what that means is that the government in China, not Google, is going to decide what innovations the people of China get.

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An Open Letter to Google

Now this open letter in the form of a blog is a fascinating idea.

This blog is an “Open Letter to Google” consisting of one post only. As
soon as we have an impressing number of comments, we will send the
letter to Google. If you agree with the content of the post, please add
your comment. If you agree that this is an important issue, please tell
your friends about it. The more comments we can collect, the better it
is. What do you think, will the blogosphere succeed to collect 10’000
comments which we can send to Google?
Thanks a lot for participating.

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