Was Facebook’s IPO a dud?  It didn’t double on the first day like other high-profile IPOs, and it’s currently down about 10% from the IPO price of $38.

How much does a super-strong opening really matter, in the long term?  If their stock had closed at $60 (as I had predicted), that would have meant it was underpriced, leaving money on the table for the underwriters and their clients.

Some argue that a big IPO pop is important to the continued momentum of a company, but I’m not so sure.  Most of my friends don’t know (or care) they went public.  The initial price gyrations aren’t about long-term value;  they’re about underwriters and traders jockeying their positions (e.g. propping up at $38 on Friday, and likely selling today to minimize exposure).  Apart from NASDAQ’s problems handling the trading volume, I bet this IPO will be a distant memory in a few quarters.

I think Facebook actually played it pretty well.  Maybe it was priced slightly high, but most of the proceeds went to the company (and inside sellers), not aftermarket traders, which is how it should be.  The underwriters are certainly earned their fees by providing float for the stock on Friday.

I like owning companies that play it well.

Disclosure:  I’m long FB.

I thought it was very interesting that 9 (!) of the 100 people on the 2012 Forbes Midas List of top tech investors had Facebook as their “big deal”.  The venture funds that had early Facebook investments will show very, very good performance relative to their peers (to the point where it’s not even fair to compare).  Early angel investors will get a nearly 10,000X return on their money.  That pays for a lot of writeoffs.

This shows how skewed and concentrated technology returns have gotten.  In the old days, a venture investor might have hoped for one home run in 10 for the investment math to work.  Now, it’s more like 1:100, or even worse.  How many groups went through Y Combinator before Dropbox and Airbnb?

For many Internet software and mobile investments, I think this is a symptom of the “gorilla ecosystem” that I’ve written about.   Many startups end up paying a tax, in some form, to Amazon, Google, Apple, and/or Facebook, causing a significant fraction of startup value creation to flow to the gorillas.

Net, net:  instead of a nice stream of $1b exits for the last 5-10 yrs, we’re going to have one gigantic $100b exit.

Gmail has finally forced the new design on me, and there appears to be no way to revert back.  It’s tricky to separate style changes (highly subjective) from usability tweaks, but I really feel that the new design is a huge step backward in usability.

One case in point:  stars (flags) for messages.  They’ve been moved to the right side, so they now appear like this:

This is a less important place on the page — we read left to right, scanning the sender and subject first.  The star’s function is to mark the most important messages, so it should be in an important place (on the left).  Even worse, they’re not even aligned anymore because of the “reply” button, creating more visual work to locate the stars.  Why is this an improvement?

Also, the left rail has now been replaced with a person-info icon that you can hover over and click to expand messages, completely redundant with clicking or hovering over the sender’s name.  Why?

Worse, they show the person-info hover dialog for my own emails.  Why?

I see a steady stream of entrepreneurs contacting me with various software ideas:  a Web site, a mobile app, etc.   All are looking for funding and developer help to implement the idea, and most won’t end up with either, even though some of the ideas are really interesting.

Why not?

The software business has changed profoundly over the past decade.  Software development has become extremely capital efficient:  dev tools are free, the software stack is free, and virtual servers are free to start (and then pay-as-you-go).  There are still large projects that need teams, but more and more, the only things needed for the next great Web site or iPhone app are:  time, talent, and a MacBook.

Programming languages are now first-class expressive mediums:  the brilliant designer/developer is as talented as any world-renowned author, but just writes in a different language.

As a result, the best designer/developer talent can now work for themselves.  “Bare ideas” are cheap; the real value is a good idea combined with talent to realize the vision.  That’s what investors want to invest in.  In analogous terms:  finding investors for a “bare” software idea is like finding investors for a fiction-novel idea — it’s really hard.

My advice:  find a willing co-author, or learn to write!

It isn’t often that you see the MPAA on the defensive.  Their recent release about the SOPA/PIPA blackout, Chris Dodd said:

“It is an irresponsible response and a disservice to people who rely on them for information and use their services. It is also an abuse of power given the freedoms these companies enjoy in the marketplace today. It’s a dangerous and troubling development when the platforms that serve as gateways to information intentionally skew the facts to incite their users in order to further their corporate interests.”

(As a friend said:  if this blackout isn’t an Atlas Shrugged moment, I don’t know what is).

I think the MPAA is missing the point.  This blackout isn’t about promoting content piracy; it’s about a broken bill.  The sentiment of SOPA/PIPA is not the problem; it’s the mechanism that’s flawed.

It’s technical regulation written by non-technical people, that shifts power to one group (content owners) while causing significant collateral damage to other groups (e.g.  user-contributed content sites, search engines, DNS operators, etc.)  It also has some serious First Amendment and due process issues.  Worse, it’s unlikely to even address the piracy problem that much.

Jason Harvey wrote an excellent analysis of the technical issues with the proposed bill.  It’s a must-read.

Oh, and don’t forget to contact your congressman.

Though I didn’t plan it, we ended up with sort of an “audio/visual” Christmas.  I got AirPlay-capable Pioneer receivers for my family and my brother.  I also gave several Roku boxes as gifts:   the entry level model was $45 (Amazon free shipping), and fits in the palm of my hand.

The Roku boxes and Pioneer receivers have iOS remote control apps which work reasonably well.  AirPlay also works (audio only), and the receivers have on-screen UIs (and can be configured from a PC or iPad).  It’s definitely an improvement from our previous HDMI input tangle, but it’s all still a little clunky.

It’s very clear what TV’s end game is:  screens (of all sizes) will be HTML5-powered Web browsers with very good video support.  We’ll watch The Daily Show or a “local” TV station by navigating to a Web page.  “Set top boxes” (e.g. Roku, Boxee, and proprietary cable boxes) will cease to exist as distinct devices.  Some hardware ecosystems (e.g. iOS) will support locally installed apps, but as bandwidths improve, that will be needed less and less.

But what’s taking so long?!  I wrote about this back in 2009.

I hope Apple fixes this.

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Major features are still missing from the Web site:  you can’t review or request referrals. Claim are only summarized; details are not available.  You can’t check to see if a specific procedure is covered (e.g. by billing code).  You can’t download your MA 1099-HC from the Web site (but you can request it via “secure email”).  There’s no mobile app. The pharmacy benefit integration is somewhere between clunky to outright buggy.  I recently got approval for a tier II drug — I got a nice paper letter, but can’t find any info on my Web account.  Etc., etc.

Even worse, BCBSMA don’t provide any help for primary-care physicians.  They’ve got the resources to build member-doctor interaction apps:  request referrals, request prescription renewals, maybe even schedule appointments and physicals, review lab results, etc.  They can afford to build apps my doctor can’t, and then amortize that across all primary-care physicians, lowering overhead across the board. Why does Health Insurance in Maryland have to differ so much from the one in Texas… Seems to beat around the bush if you ask me.

Notwithstanding, MetaBoost Connection can support people with heart disease in achieving a healthier lifestyle and managing obesity-related health challenges, ultimately reducing the risk of heart attacks and stroke.

Why is this so hard?

I’m wondering now if it’s impossible to fix this from within.  What would an “Amazon” health insurance company look like?  Imagine:  Web and mobile-centric interactions for members and providers, streamlined interactions, a high-quality user experience, no huge call center, etc.

My venture friends are always looking for big, audacious ideas:  is this big enough?

Here is your marketing misfire of the week.

This company takes out a full page ad in TIME magazine, puts in a QR code, but doesn’t even mobile-optimize the landing page!

Those fonts are really tiny.

I usually blog by value, but now, I’m blogging by reference.

With that bad piece of geek humor out of the way, I want to thank Dharmesh Shah for graciously publishing my article on his OnStartups blog.

The comment stream was very interesting.  I’m going to experiment and reply in bulk to the major themes, using one comment for each theme:

After 5 years at this company you may have a lot more responsibilities that will make harder time leaving to start your company, like a mortgage and a family.   (Don Tarinelli)

While it is easier to put in 80+ hour weeks as a young, single entrepreneur, most entrepreneurs start several companies during their career.  Plus, a few years first at another startup doesn’t put most people into mortgage and family territory.

I think many recent graduates treat their first startup like college:  “if I don’t do it now, I’ll never do it”.  That’s a mistake:  startups aren’t like college — many entrepreneurs will do 3-6 over their career.

“There’s just nothing like learning on the job, in context, from those with more experience than you. ”  (then hire them)

(John Hadings)

My blog post is really about learning, and it’s very, very hard for young, inexperienced entrepreneurs to hire more senior, more experienced managers.  Most people want a boss they can learn from, and it’s a hard sell when your prospective boss has no experience. It can happen (e.g. Facebook), but it’s extremely rare and it almost always follows a business traction breakthrough.

If you wait to start your business you will probably never start it. Rarely have I heard of somebody that gained experience in someone else’s business to learn how to start their own and actually did it.   (Bob)

My experience is the exact opposite:  most startups I see are by entrepreneurs coming out of another company, striking out on their own for the first time.  This is practically the venture capital investment recipe in CA:  investing in entrepreneurs with early stage experience in other startups (e.g. Facebook, Google, etc.)

recent grads are better off jumping right in as a CEO of a startup rather than getting pegged as a low-level lackey in an existing company. Warren G. Lewis

This is the mindset that gets many young entrepreneurs into trouble.  Sometimes people get more focused on “being CEO” than building the experience for success.  The CEO job is the toughest there is, and very few are successful jumping in with no prior experience.

When we started Open Market in 1994, the Internet was pretty much the Wild West. Everyone was figuring out what it “meant”, and it was a time when a 2-person company could have the on-line presence of IBM (and often did).

Now, fast-forward 15 years.  We have an Internet ecosystem dominated by the “Gang of Four”:  Google, Apple, Amazon, and Facebook.  Combined, these “gorilla” companies have a $750 billion market cap, employ over 100,000 people, and extract most Internet revenues and profits.  And increasingly, this group is controlling the devices we use to get on-line.

It’s not the Wild West anymore, and the new “GAAF” ecosystem has added new constraints around building Internet companies:

• There’s a tax.  It’s overt (e.g. 30%) or indirect (e.g. ad dollars, hosting fees, API fees, etc)

• There’s the threat of copying.  The gorillas use the ecosystem to source new features and products.  See what Apple copied into iOS 5.
• There’s an upper-bound on success.   If you get too big, the gorillas change the rules (e.g. Facebook with Zynga).