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The Roundup July 6

There’s a new VC in town and he’s taking down names . . .

Marc Andreessen and business partner Ben Horowitz launched a boutique VC fund Monday with an initial capitalization of $300 million that the pair intends to invest in “anything that involves chips and computers” at a clip of $50,000 to $50 million per startup. . . .

Andreessen and Horowitz, who have privately invested in such familiar ventures as Facebook, Digg, LinkedIn and Twitter, clearly relish the small-is-the-new-black aspect of their lean operation. Andreessen hopes his new shop will be “almost a throwback” to the small, focussed venture capital firms that seeded Silicon Valley in its earliest days.

(“Marc Andreessen Forms Boutique Venture Capital Firm,” Wired, July 6) There are several distinguishing aspects of this new firm that you should take note of. First, they are not investing in anything they “don’t understand,” which includes green technology, biotechnology, and, well, just about everything else VC firms invest in. These are the guys that took significant stakes in Facebook, Twitter, Digg, and LinkedIn, so you can pretty much guess what kind of pitches they’re looking for. Second, there is no top-heavy management team here. It’s Marc Andreeson and Ben Horowitz, period. You’re pitching them, not some hotshot Stanford Biz School MBA, and, like powerful people everywhere, will have arrived at thumbs up or thumbs down before you’ve finished your PowerPoint. Third, these guys expect you to act like a start-up. No frills, no waste, macaroni-and-cheese for dinner types of start-ups. Now, if they can only get the revenues thing down — both Twitter and LinkedIn are, in my opinion, investor-financed giveaways for the rest of the world. Finally, Marc and Ben will only meet with friends of friends. If you’re a worker, not a networker, you’ll probably be out in the cold.

That was a short chapter . . .

U.S. Bankruptcy Court Judge Robert Gerber issued an order late Sunday approving the sale [of GM’s good assets to a “new” GM], saying it was “necessary to avoid immediate and irreparable harm.”

(“Judge OKs sale of good assets to new GM,” Detroit Free Press, July 6) 850 litigants — that’s 850, as in 750 more than the courtroom can hold, oppose the sale. These are the poor folks who, after the sale, will have claims only on the “old” GM, with its “bad” assets and a few billion from the sale of the “good’ assets. (Needless to say, new GM is getting a firesale deal on its purchases of old GM’s good assets.) Meanwhile, the Feds have testified in court that the bailout lifeline goes dark after July 10, so it’s put up or shut up in the appeals court.

Best Buy cribs your ride.

In May, the Richfield, Minn., company quietly began selling electric bicycles, scooters and Segways at 21 of its West Coast stores, 12 of them in California. This month it will broaden its electric vehicle offerings with the first electric motorcycle to be sold in a brick-and-mortar store — the Enertia by Brammo Inc., an Ashland, Ore., company in which Best Buy Co. Inc. has invested $10 million. . . .

When the Enertia motorcycle joins the lineup this month, it will fill out a model range that varies widely in price ($299 to $11,995), speed (12 to 55 mph) and distance per charge (eight to 45 miles).

“It’s a new department, so it’s kind of slow,” said Jackie Martinez, the sales associate in charge of electric vehicles there.

(“Best Buy takes electric vehicles for a spin,” Los Angeles Times, July 6) It’s brilliant foresight or blatant foolishness, but moves like this should tell you something. I’m not going to go into all the potential pitfalls (liability, servicing — do you really want Geek Squad to service your motorcycle, core competencies, and so forth), but it does show you that widespread retailing of affordable electric vehicles is pretty near upon us. This story shows that retailers are willing to move in new, unprecedented directions, and make fortunes for well-placed entrepreneurial firms. In one of the greatest fallacies about entrepreneurship being peddled by the MSM, the most disheartening is the “overnight” success (and by overnight I mean success within a few years). In point of fact, some of the most successful startups struggle for years and, by simply remaining for all those years, are there when the big opportunity hits.

ZenithOptimedia said Monday it now expects worldwide ad spend to fall 8.5 percent to $456.5 billion. In April, after first-quarter results fell below expectations, ZenithOptimedia had slashed its forecast to a decline of 6.9 percent, sharper than the 0.2 percent drop it had projected in December.

Nearly a third of the 79 markets covered by ZenithOptimedia still shows growth this year, with China and India as the heavyweights among those mostly younger and smaller growth regions.

(“Advertising forecaster says 2009 global spend to fall 8.5 percent, but sees signs of bottoming,” Associated Press, July 6) A lion’s share of the decline are marketing cutbacks in automotive (number one advertiser industry in the world) and financial (number three). What the numbers don’t tell you is the big cuts in advertising by small- and medium-sized businesses, where the trend should be in the other direction. There’s a window of opportunity here for entrepreneurs, small businesses, and other larger businesses that have always considered advertising, especially traditional media advertising, but have never really bitten at that apple. As long as ad placement numbers are trending downwards, it’s possible to get deals unthinkable a mere year ago. I have helped clients place local television ads for as low as a couple hundred bucks per placement — and I did one radio ad campaign where we were paying tens of dollars for excellent coverage. These ads were put on indeterminate schedules — they were broadcast whenever they had an empty slot suddenly open up — but we were getting 20% or better placement in prime viewing or listening slots. Downturns are never the time to cut back on advertising and marketing; they are, in fact, the time to go out there and negotiate hard for a deal. You’ll be turned down 90% of the time, but the 10% of the time you get a eye-popping deal makes it all worth it. Now, once the banks and auto companies start slamming ads at the hoi polloi again, dealmaking time will have passed.

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