Israel Venture Capital 2.0

Gemini’s new investment - Outbrain

Today we announced our new investment – Outbrain, founded by Yaron Galai and Ori Lahav. Yaron founded it last year right after selling Quigo to AOL for $350M+. What is the company about? First of all, off their official blog: 

"We love reading blogs, but the signal-to-noise ratio makes it impossible to find the good content anymore. We're looking to build the standard platform for discovery of high-quality, personalized blog content on the web. We want to give readers their personalized recommendations at all those places where they are already consuming content - blogs, news sites and RSS aggregators. There are quite a few companies doing different flavors of collaborative filtering on the web, but we're focused on doing one thing and doing it very well - making the best personalized recommendations of blog and news content."

If you have been checking this blog in the past, you are probably familiar already with the Outbrain widget. It's the simple rating widget at the bottom of each post. I love this widget for 3 important reasons:

1. It provides real value for my readers. They can give feedback in addition to comments, and they can leverage the ratings across various blogs to discover relevant new content.
2. It's easy to install, and it has a very "minimal" implementation. In other words, it's very easy to use, in the spirit of "do no evil".
   
3. It provides real value to me as a blogger, simply because I get a better feeling about what works and what doesn't. In addition, I get more traffic to my site, since Outbrain recommends blog posts that are part of the Outbrain recommendation network.
   

With a great product and a great entrepreneur, this investment is a no (out)brainer. I can also add that there is a lot more coming from Outbrain that will reveal the amazing potential of this company.

Read more on this

Finally, this new investment is exciting for us as it is the first company that successfully graduates from the LgiLAB, the Lightspeed Gemini Internet Lab headed by Ouriel Ohayon. In addition, I can definitely say that there many other exciting projects growing in the lab. 

Microsoft Buying Yahoo 2.0 (or Shpigler 2.0)

Have you seen the 2 Shpigler videos? 5min et al. have created 2 great videos, one about VCs (7 months old, check it here) and one last week, giving Jerry Yang some tips in regards to the Microsoft acquisition.

Although this is a week old, I had to publish it. Why? 3 good reasons:
1. It's related to my previous post on MSFT/YHOO.
2. It's Internet related and Israeli related, relevant to this blog.
3. It's simply great.

Enjoy.

How to Negotiate - Tips for Yahoo!
Watch more DIY videos on 5min.com

Foo Fighters – Live in Oakland!

Last Saturday (Feb. 2^nd), we went to see the Foo Fighters in Oakland. It took me a whole week to summarize that event, but I have some good excuses. After all, I had to recover from the super bowl (Check my previous post), and then the Israel Web Tour was here (Check my future post, coming up Monday or Tuesday).

It's been a while since I saw a band playing at its prime time. After all, my previous concerts were The Police (20 years post retirement) and Bruce Springsteen (Great new album, great concert, but his debut album came out when I was 4). Based on that, it was great to see a modern rock band giving a great show, full of excitement and energy. The flip side of this – the crowd was full of much younger fans, including some kids that came with their parents…

Regarding the actual show and music, I had a great time. The Foo fighters played songs from all 6 studio albums, including: All my life, This is a Call, and my all time favorite: Everlong. Clearly, the best part of the show came when the band moved from the main stage to a side stage, and played some acoustic songs such as Skin and Bones. That side stage part of the show ended with the highlight of the concert, an acoustic-to-rock performance of But, Honestly (See it on video here). Jim Harrington wrote a great piece on the Oakland show. He claims that Dave Grohl is one of the last real rock stars on this planet. I would have to agree with that.

Finally, a word about Nirvana. Although I spent a full summer in Seattle 1991, I never had a chance to see them live (They are part of a long list, including the Beatles, the Doors and the original Led Zeppelin). I was disappointed that the Foo fighters didn't play any of the Nirvana songs. I thought it would have been a great gesture, and a nice reminder of old times.

Lessons Learned from Super Bowl XVII

A couple of months ago I wrote about my love to the Patriots, and how odd it is to support such an amazing winning team. Till yesterday, they had an amazing ability to overcome any situation and be the first at the finish line. Every time you would watch a Patriots game you would know, that no matter what, the end result will be a victory.

Till last night.

So much has been written about this game. I decided to take the VC view (BTW – I am not the first one, check out Furrier.org). If E.T. would land on this planet today, and hear that a team had an 18-1 record, he would assume they are the champs. After all, why lose the last game, when you can lose one of 16 regular season games and still be champions (and the best team in the history of football). Clearly, the Pats should have lost the last game of the regular season (to the Giants) and not the last game of the Playoffs (to the Giants). What is the VC analogy to this? It reminds me of a company that receives a huge up-round valuation and then goes out of business. That's the big lesson of the day. Focus on the end game, not optimizing on the milestones along the way.

One more thing: I love playing "what if" in sports. Till today, my #1 "what if" moment was the goal missed by Rensenbrink at the 1978 World Cup finals. This will now be replaced at #1 by the "almost tackle" on Eli Manning with 1:05 remaining on the clock. If he would have been tackled, it would have been a very different outcome.

See you next year.

Supportspace @ Demo

Supportspace (a Gemini portfolio company) launched their new site at Demo 08. Below you can see their 5 minute video clip, taken from the Demo website. It provides a good overview of their product offering and their strategy. Clearly, the highlight of the video is the following statement: "Supportspace takes tech support out of the Stone Age".

Needless to say, I believe that's exactly what's going to happen.

Also, Tech Confidential ranked Supportspace is the 6th most interesting company at Demo.

Microsoft Buying Yahoo

Earlier this week I wrote about the departure of Meg Whitman, and how the "last men standing" of Web 1.0 are slowly leaving the stage. Only 48 hours later and Microsoft is finally making its highly expected move – a bid to acquire Yahoo.

If some strange reason this is news to you, check out all the financial details here. Beyond the details, here are some thoughts regarding this acquisition:

1. Microsoft is Oracle envy: Finally, after many rumors about Microsoft "planning to", "offering", "in conversations with" the big industry players, they have finally put an offer to buy a huge industry player. The biggest Microsoft acquisition to date was Aquantive, back in Q2 2007. The bid for Yahoo is almost 8x larger. What business-as-usual for Oracle almost every quarter (Hyperion, Siebel, BEA, Peoplesoft), is quite new for Microsoft. In the past there were rumors about Microsoft merging with SAP (Would have been a larger merger, SAP is currently worth almost $60bn), but that did not happen.
2. Late Move: Microsoft is in chase mode for a long time. They want/need to compete with Google, and have not been successful on most fronts. In the search space this seems to be a move that is a bit too late. The combined market share of both Yahoo & Microsoft in search is small (18% + 12% = 30%), and has been declining. Combining 2 failing search engines will probably not help against the market leader.
3. Early Move: The other side of this acquisition is upcoming battle in other areas of advertising, beyond search related. With Google buying Doubleclick, Microsoft is trying to gather forces to be a fair competitor in display advertising and potentially new and upcoming ad formats (in-game, video, etc.). It seems that Microsoft/Yahoo will have a strong offering in the non-search related advertising world.
4. The IT World is Consolidating: Overall, there is strong consolidation in the Information Technology world. Large players are been taking off the table (Cognos, Business Objects, Yahoo. In 5-10 year perspective, remember Compaq, Siebel, Peoplesoft). This reflects the maturing part of the industry. It is also a blessing and a curse for the venture capital industry. On one hand, these huge players are becoming so fat, that their ability to compete in fast emerging markets is declining. The market is being opened for new startups that may have the ability to grow $1bn companies. On the other hand, the number of acquirers is reduced. Yahoo and Microsoft were competing on the Web 2.0 startups, pushing prices up. With one of the big buyers out, the ability of VCs to make money declines.
5. Israeli angle: Just this month, Yahoo announced the opening of an R&D center in Israel. This was an important move for the Israeli Internet scene. With an "on-the-ground" presence in Israel, the probably of Yahoo to acquire an Israeli company went up. If Microsoft gobbles up Yahoo, the Yahoo R&D office in Israel will become part of Microsoft Israel, an organization that has been around for at least 15+ years. In other words, the "Yahoo Israel" news from earlier this month becomes irrelevant.
6. AOL: Any buyers?

And a final word about Web 1.0. It's amazing how the big names of the late 90s have all disappeared or disappearing. The 2 names that come to mind are Excite and Netspace. Amazing that Yahoo is on the way to join this group.