January 01, 2005
Software Scorecard - January 2005
Warning! Fun Stuff Ahead in 2005, Jeff Becker
I’ve got to tell you, this is about the most fun I’ve had in this business in the past five years. Obviously 2000 was fun too, but much of it was fun in a “what happens in Vegas, stays in Vegas” vacation kind of way. Yes, we were having a great time, but it was in an environment that wasn’t real, it was only temporary, it was full of various kinds of debauchery and we knew there’d be hell to pay once we got back to the real world.
It was fun, but I personally also felt like it was a guilty pleasure, because while we were playing by the rules (the vast majority of us at least), the rules had recently been rewritten and the game barely resembled the way it had been played for a long time. It moved too fast, was too crazy and didn’t make any sense, which made it difficult to truly enjoy. However, the activity over the past few months and the indicators for the near future lead us to believe quite strongly that we are at the cusp of another boom period for growth companies and for software companies as well. (more...)
Thoughts from the Field: Untying the Preference Knot, Tod Loofbourrow
In their article “Houston, We Have a Problem” (November 2004), the ThinkEquity M&A team identified a serious but under-reported problem. Excessive liquidation preference for venture capital investors is crippling many of the companies that received funding during the 1990s. These companies survived the bubble bursting and the economic downturn but are prevented from truly succeeding because their venture capital investors have far too much preference. This reduces the likelihood of a successful outcome for everyone. (more...)
ThinkEquity Research Insights: Innovation Isn’t Dead – It’s Just Free, Seihun Kong
Many would have you believe that technology innovation appears to be floundering. The lack of a “killer app” or compelling new technology has dried up a software recovery over the past few years. Headlines are dominated by news of big new mergers instead of big new ideas. There is silence in Silicon Valley about the next NEW thing, eerie for an industry chock full of marketers. We get a strong sense of déjà vu as many of the buzzwords from previous years get rehashed – web services, open source, composite applications and such. After all, aren’t those yesterday’s news? From the sound of it, tech innovation seems a long way from healthy …
Hogwash. Technology innovation is alive and kicking. While the spirit of innovation may have evaporated from the hallways of Big Software (along with foosball tables and free-flowing Mountain Dew), we believe innovation is quietly circling the globe in the open source community. A year ago, Evans Data estimated there were over 1.1 million developers in North America alone contributing to open source projects. With big corporations and big tech companies now putting their weight behind open source projects as well, we believe the total number of developers is far, far higher. More importantly, the backing of big tech helps dispel the myths that open source is for amateurs. Sure, open source development is not really a new buzzword, but we believe it has matured substantially and is now ready for prime time. The Linux penguin, it appears, is sitting on a much bigger iceberg.
Posted by ThinkEquity News at 01:21 PM | top^ | back to main blog | Comments (0)
[Back to Main Blog]November 01, 2004
Software Scorecard - November 2004
Lessons Learned from Think Tomorrow, Today, Jeff Becker
Last month we held our first Think Tomorrow, Today conference, a summit for private companies and venture capitalists. We were very proud to see how well the event turned out and we’ve already scheduled next year’s, once again in October at the fabulous Ritz Carlton in Half Moon Bay, California.
In keeping with ThinkEquity’s mission to look ahead at the trends that will create the stars of tomorrow, this was not a conference comprised of the standard fare of 20 minute canned company PowerPoint presentations. Instead, the focus was on two tracks of panels. The first involved prominent industry experts and venture capitalists debating the future direction of areas such as nanotechnology, health care, China, the internet and, of course, enterprise software, among others.
The other track featured public and private company executives, venture capitalists and ThinkEquity professionals discussing their views on topics highly relevant to the later-stage companies in attendance, such as: lessons learned during the IPO process, the state of the private capital markets, the requirements for companies to go public these days, views from the buyside on what makes a good IPO candidate, and more. I’m happy to report that the feedback from the hundreds in attendance was overwhelmingly positive as most found the content helpful in framing where we are today, and more importantly where are we headed in term of growth industry trends and the capital/M&A markets.
While far too much was discussed to relay it all here, below I will summarize some highlights from some of the panels more relevant to this publication.
Posted by ThinkEquity News at 01:14 PM | top^ | back to main blog | Comments (0)
[Back to Main Blog]September 01, 2004
Software Scorecard - September 2004
"It’s Wabbit Season!! … No, It’s Duck Season!!”, Jeff Becker
Long before the days of six different Disney channels on satellite TV and a seemingly unlimited number of SpongeBob Squarepants DVDs playing to my kids in the back of our mini – uh, family car –, my friends and I had a mere seven TV channels to choose from, and on Saturday mornings my personal favorite was good ole Bugs Bunny. One of the most memorable episodes in my mind was the one where Bugs and Daffy Duck are being chased by Elmer Fudd and his shotgun.
Elmer wants to shoot Bugs, thinking it’s rabbit season, much to Daffy’s delight but Bugs starts an argument with Daffy over whether its not actually duck season (hence, the title of this article). As usual, Bugs outsmarts both of them, and Daffy repeatedly gets shot by Fudd, which of course requires Daffy to spin his bill around from the other side of his head back into place once again. Well, (yes, I’m actually going to try to draw a relevant analogy here) that’s kind of what it must feel like now for many small and mid-sized software companies after the latest development in the Oracle vs. PeopleSoft saga.
Last week, the District Court effectively granted a hunting license to larger enterprise software companies when it rejected the government’s claim that an acquisition of PeopleSoft by Oracle would stifle competition. While the DOJ can still appeal and PeopleSoft still (for now) has a poison pill in place, it’s now up to the Board and shareholders of PeopleSoft to determine its fate. Of course, this is after we made fun of Larry Ellison in this space last year for comparing the software business to the automotive industry, and now we hear that SAP and Microsoft had gotten together after the original PeopleSoft bid to begin to discuss a merger.
Posted by ThinkEquity News at 12:58 PM | top^ | back to main blog | Comments (0)
[Back to Main Blog]June 01, 2004
Software Scorecard - June 2004
The Return of the IPO Market: Rational Exuberance?, Jeff Becker
We have tried for as long as we could to resist weighing in with our thoughts on the IPO market, but the time has come for us to add our two cents, since many of you know that we are not shy about this subject. Last May, well before it was accepted that the IPO market had returned, we wrote in the cover article that we believed there was an IPO market lurking in the background for software companies, and that market would expand during 2004 as the IPO “bar” was lowered from its artificially high levels at that time. We also wrote in early 2003 that there were many public and private software companies that were emerging out from the dark days of the post-Bubble era (our “Deep Sea Creatures”) that had spent the past few years building more solid, vibrant businesses, and that these companies would be among the first to be able to crawl through the opening IPO window. If you’ve seen the weather graphic on the top left of the front page of this publication each of the past several months, you will have noticed that we’ve been forecasting fairly sunny days for the IPO market. In fact, there have been 71 IPOs completed this year, including nine in the broad technology sector with no software IPOs priced yet. From these facts alone, we seem to have been partially correct with our original predictions.
Thoughts From the Field,
Each month, this section of the ThinkEquity Software Scorecard features an article or a Q&A session with a notable software company executive, investor or other industry participant who will provide his/her own take on the thoughts from our previous month’s cover article (or on anything else that interests him/her). This month, we are publishing a few of the responses we received from last month’s article about the evolution of Human Capital Management Software and the current focus on transforming human capital into a competitive advantage.
Posted by ThinkEquity News at 01:33 PM | top^ | back to main blog | Comments (0)
[Back to Main Blog]May 30, 2004
Software Scorecard - May 2004
HCM - Humans Can Matter, Jeff Becker
During the past decade, growth and innovation in the enterprise software market has been driven by the need for automation and optimization of critical business functions. Over the past few years, many pundits have said that all critical business functions had already been automated and optimized, that there is no “next big thing”. The “next generation” Human Capital Management (“HCM”) software vendors and their respective backers would disagree with that premise. With roots in traditional Human Resource (“HR”) systems, HCM serves as the platform for the HR department to maximize its contribution to the strategy of the overall enterprise. The HR department should no longer be viewed as just an administrative cost center, but is being transformed into a strategic business unit within the overall organization. Sometimes, the next big thing is just doing the old things a whole lot better.
Posted by ThinkEquity News at 12:39 PM | top^ | back to main blog | Comments (1)