About Me 0014: Making Money Opportunities

Bing Gordon, a partner with Kleiner Perkins Caufield & Byers, says that his venture capital firm has to gear up for the coming tech boom. That’s one reason that his company hired famous Morgan Stanley analyst Mary Meeker as a new partner on Monday.

Meeker’s investing focus at the firm will be on the Internet and how the shift to mobile will create huge new opportunities, Gordon said in an interview.

Gordon is sitting pretty himself as the backer of Kleiner’s investments in mobile gaming firm Ngmoco, which was bought by DeNA for $403 million, and Zynga, the hot social gaming company that is valued at $5.6 billion.

“She thinks big and thinks global,” Gordon (pictured right) said. “Among the analysts, she is my favorite personality. She makes fearless macro bets and is right most of the time.”

Gordon said he sees a big boom coming, not a bubble, much like Kleiner’s managing partner John Doerr, who said that we’re in the midst of yet another boom for internet investments at the recent Web 2.0 Summit. The reason is that he sees a lot of technologies that are changing the way we live.

“The world of digital media is being transformed,” Gordon said. “A bunch of new businesses can be reinvented, thanks to social graphs, the mobile internet, and the new shopping habits of the young. Those are going to create a whole generation of cool new companies. Mary has the right stuff to help people take advantage of the opportunities.”

As for his own focus, Gordon said he is fascinated how users are dealing with the information overload from the social internet and how users are building their own social capital. He is also interested in the “new algorithms, data structures and network topologies of the social web.” He is looking at the intersection of mobile operating systems, the social web, and entertainment. He is also interested in gamification, or making non-game applications more fun and engaging by making them more game-like.

Beyond spotting trends, Meeker will now have to pick the right companies and entrepreneurs that are riding those trends. Meeker will focus on Kleiner’s digital investments, which largely means the social and mobile Internet. But Gordon said that renewed emphasis on internet companies doesn’t mean that the company is backing off completely on big cleantech investments.

“If you look at our cleantech and life science press releases, you can see there are other partner recruitments happening there too,” he said.

Kleiner has a new fund, the sFund, to invest in social Internet companies. But Gordon said it isn’t easy to predict whether Kleiner will invest more money in 2011 than it will in 2010.

[photo credit: SF Business Journal]

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Optimism can kill your business. There, I said it. Let the comments and rants begin (and if they are anything like those written in response to my Why "Be Passionate" Is Awful Advice post, I'm sure another great debate is on the horizon). But before you say that I'm clueless, out-of-touch with Gen Y, or a detriment to entrepreneurs, allow me to explain my position.

When I started my first business in 2003 - one that ended up being a colossal failure that almost bankrupted me (which I now refer to as "the company that shalt not be named") - I was optimistic about everything. Every "creative" marketing idea was touted as if it was destined to be a "guaranteed winner" capable of generating tons of high quality leads right out of the gate. My partners came out of every sales meeting as if we had been victorious (we even foolishly spent money on mini-celebrations at the local pub after most presentations). Our business plan's seven figure financial forecasts seemed like certainties to us (we even made them "more reasonable" and scaled them back from our original eight figure forecasts). However, there was only one thing true about each of these scenarios.

They were all false, utterly unrealistic, and ended up playing a large role in the company going belly up.

In truth, our marketing campaign results were beyond subpar. Rarely did "the company that shalt not be named" convert sales - even after "great" meetings. And the fact that the company went bankrupt, well, that just shows you how credible our projections were.

The company folded in a little over a year as the result of my partners and I being overly optimistic every step of the way. Had I thought through our marketing campaigns more, learned from my selling mistakes or been more grounded with my financials - instead of being in the clouds and "hoping for the best" - the company that shalt not be named might still be in existence today.

In the new economy where the fight for market share and revenue is more fierce than ever, young entrepreneurs cannot afford to be overly optimistic about any of their goals, tactics, or initiatives. Excessive optimism leads to phrases such as "it will all work out somehow" rather than realistic mindsets such as "how can we make this work at all costs." In many cases, having a "the glass is half full" mentality blinds an entrepreneur from seeing all of the true challenges and issues that surrounds his business and decisions. In business, as in life, things don't always work out - and almost never work out as planned.

In my opinion, the best entrepreneurs are business owners who have an optimistic attitude coupled with a pessimist's viewpoint and rationality. Having an ever-present "glass is half full" mentality is dangerous and might very well lead your start-up or business down the toilet.

Mind you, I'm not advocating that you need to walk around acting as if there is a rain cloud following you. Nor am I telling you to be a Debbie Downer when it comes to growth opportunities. However, from a purely decision-making perspective, I advise you to be a cautious closet pessimist instead of an eternal optimist as you guide your business toward success - and your business will be better and stronger as a result.

eric seiger do

Wednesday, December 1, 2010

Making Money Opportunities

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