About Jean-Louis Gassée

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Posts by Jean-Louis Gassée:

The VC Money Pump: NAV

The acronym stands for Net Asset Values. Be forewarned: this is the more boring installment in the VC Money Pump series of columns (see part 1 and part 2 ). Worse than spreadsheets and compound interest calculations, today’s topic forces us to deal with FASB (Federal Accounting Standard Board) regulations. Expensive futility as far as we are concerned.

For perspective, let’s go back to the previous crisis: the Internet Bubble. Fortunes were lost when Cisco’s stock went down by 90% — with the entire high-tech sector. But new fortunes were about to be made.
First, there were the political fortunes of posturing solons. Seeing the damage done by accounting fraud at Enron and WorldCom, canny politicians seized the opportunity to harness the public’s ire to their career’s progress. Paul Sarbanes and Michael Oxley begat what we now call Sarbox (the Sarbanes-Oxley Act of 2002), a new set of much stricter accounting rules. To the angry investing public, to the recently fired as a result of the downturn the senators’ message was clear: We’re here for you, we’ll throw the Armani-suited thieves in jail and we’re putting in place the safeguards needed to avoid a repeat of such catastrophe. More

Inside a Venture Capital fund: Reserves

Last week, with Excel’s help, we looked at the “simple” computation of a VC fund’s rate of return. This week: Reserves, a most important sets of numbers.

As a rule, for every dollar initially invested in a company, we immediately set aside an additional $2 or even $3 as a reserve for future rounds, future injections of capital. Entrepreneurs often tell us they’ll only need one round, this round of financing before reaching the cash-flow positive nirvana. I know, when an entrepreneur, I did it (to) myself, several times… We don’t argue, we smile, nod and enter the appropriate reserve amount in a spreadsheet.
Next, we try to forecast the additional rounds: one round in 15 months, perhaps, and another one 18 months later.
As we do this for every company in our portfolio, the spreadsheet tells us how much capital we’ve invested so far and, as companies develop and need more capital, how much will be required and when.

Then, the hard work starts. More

The New Papyrus

Once upon a time, in 1986, Bill Gates commissioned a book, The New Papyrus, subtitled: The Current and Future State of the Art. I recall an animated conversation with Bill as we were having dinner on top of Seattle’s Space Needle. He was hard at work promoting the CDI, the interactive CD and pushing Japanese manufacturers to give momentum to the CDI-PC, a personal computer centered around the huge storage capabilities (seven hundred megabytes!) afforded by the new medium. Imagine: an entire encyclopedia would fit on just one CD-ROM. The New Papyrus was the future of paper. And, for a while, I thought Bill was right. I treasured the OED II (The Oxford English Dictionary, Second Edition) on CD-ROM. I had lovingly paid about $10K for the paper edition on night at the old Kepler’s bookstore in Menlo Park, happily loading the 20 volumes in my car’s trunk (boot for British readers). A few years later, the CD-ROM edition cost only $700 or so… This was the future. More

More on sensors [digital photography]

In the (now waning) days of analog photography, much was made of which film was best: Kodak’s Kodachrome, Ektachrome, Fuji’s, Konica, Agfa, Ferrania… to name but a few of the old standards. Today, a similar debate goes on regarding the altogether simpler digital sensors. In the April 5th Monday Note #80, I took a first pass at the sensor size question, one that is, I believe, deliberately obscured by manufacturers. Showing their always flattering view of our intelligence, they peddle the number of pixels in the sensor, regardless of the size of those pixels. Never mind that (everything else being equal) pixel size makes the most important contribution to image quality.

Fortunately, the Web comes to the rescue with tutorials, charts and even calculators. Cambridge In Color features nice tutorials such as this one. A French company, DxO Labs, offers a sophisticated sensor rating site: You’ll see what I mean by sophisticated as the site provides numbers for color depth, dynamic range and low-light ISO. More

The Apple Tax

Today, let’s have a little fun with Microsoft’s latest attempt at countering Apple’s “Get a Mac” campaign. Their premise is simple: for the same amount of computing power you pay more for a Mac, you pay an Apple Tax. As Steve Ballmer, Microsoft’s CEO, puts it: You pay $500 to slap an Apple logo on a laptop.
Microsoft is right: Macs cost more.
Pundits and advocates on both sides use contorted arguments to make a point either way, but the point remains: Macs cost more – at the time of purchase.

But, before we go on, a few words on the color of my skin. Especially the operating system layer.I’ve been in the high-tech industry for 41 years this coming June and I’ve used (or even caused at Apple and Be) system software of many flavors. Regarding Microsoft, I’ve been a DOS and, later Windows user; a happy customer, an occasionally proud one as I acquired the skills to fix or quickly re-install systems in my family or at the office. Naturally, after leaving Apple, I continued to use Macs, even after my company, Be, lost the Apple opportunity to Steve Jobs’ NeXT. More

Revenue Model Breakthrough?

Micro-payments are an old idea, some say a bad fantasy. Chief, we’re rich: I found a way to get a millicent per page view…

So far, not much has happened. Unless you look at a tidy, not tiny, little billion-dollar business called iTunes. Three years ago, in February 2006, 1 billion songs served, sold, cashed in, since 2003. July 2007, 3 billion. June 19th, 2008, 5 billion songs. January 2009, 6 billion. Tidy it is at 99 cents for every song. A little so now, with three stages, 69, 99 and 129 cents, without DRM, without copy protection.

But, you’ll justifiably object, this is a unique phenomenon, it doesn’t replicate elsewhere. How can we draw lessons from Apple’s idiosyncratic, proprietary, ferociously monolithic, militantly anal practices? True when it comes to Apple’s style, but less so when it comes to substance, to the replicability, to the potential for use elsewhere. Apple’s competitors are rushing to build their own App Store; for their smartphones, they yearn for their own applications distribution platform. This certainly makes the case for the idea’s replication.

But what idea?

What Apple did was lowering the mental cost of the transaction. More

Pixels: Size vs. Number

OMG, says the blogger, the next iPhone’s camera will have 3.2 million pixels instead of today’s measly 2 million! The blog entry gave me the final push for an occasional, meaning at irregular intervals, series of columns on digital photography. The idea is to find insights into what’s really going on in this very dynamic industry, to extract a few useful ideas from the flow of markitecture BS coming from hardware and software vendors on a daily basis. As you’ll see, these columns are intended for the ‘interested’ digital camera user and, on occasion, for the technophobe, but not for the pro – they use cameras to make money, not to have fun like we do. More

The Future of Netbooks

You the attentive reader might ask why VCs like yours truly are interested in netbooks. Hardware made in Taiwan, running Linux or Windows, low prices, even lower margins…Where are the opportunities for entrepreneurs, and for those of us who invest in their creations?

This is a different question from: Why are netbooks successful? We know the answer to the latter: price and, to a smaller degree (no pun intended), size. This picture and this list show how this new incarnation of the personal computer has proliferated. Because of the recession, yesterday’s manly “must-have” features are now suspect frills. Small has become virile. Users who wouldn’t be seen with less than a “plus-size” keyboard have now received cultural permission to travel with a 10” netbook, perfect for flying (the rediscovered) Coach class. More

Somber Sober Energy Thoughts

This is what happens with looooong conference calls: you’re sitting in front of your speakerphone, on mute so other participants can’t hear your typing or other asocial activities; your PC displays the PowerPoint under discussion.  You get bored, distracted, or, in the best cases, antsy.

So, as I was listening to one more paean to the electric car, I decided to do a little bit of math and googling. Specifically, I wanted to get an idea of the electric power required to recharge electric cars instead of pumping gas into today’s tanks.  This because, for years, I have harbored a vague, undocumented feeling that electric cars would create interesting problems for today’s antiquated, frail electric grid. (Europeans might not realize how often we experience brownouts or outright outages, even here, in the Vatican of high-tech – I used to write Mecca but, you know…) More

Google Voice: Did Carriers Miss An Opportunity?

Let’s start with what Google Voice is: Grand Unified Telephony, as in physics Grand Unified Theory. Imagine all your phones (home, mobile, work…) linked together to one number, and all data (calls, voicemail and SMS) also “webbed” together.  Add a few wrinkles such as transcribing your voicemail into text, personalized greetings for your mother or the boss, when different, conferencing, cheap international calls and you have a quick list of Google Voice’s features.  For more, see David Pogue, the NYT’s always articulate and fun gadget exper. More official: Google Voice’s “About” page with many example while we wait for the service to open to all comers “in the next few weeks”. More