VentureBeat

Once a year venture capitalist Heidi Roizen and her husband Dave Mohler open up their Woodside villa to host the SD Forum’s Visionary Awards honoring pioneers of Silicon Valley. Each time I attend, I’m mesmerized by the estate and its furnishings, from the Moroccan guest house with its old rifle collection to the Tuscan villa architecture with its zany mix of animal head trophies.

Upon walking up the long driveway into the foyer of the mansion, I was greeted by Ann Winblad of Hummer Winblad and met with some of the night’s honorees: tech writer Steven Levy (who just moved from Newsweek to Wired), Qualcomm founder Irwin Jacobs, Netflix founder Reed Hastings, New Enterprise Associates general partner Forest Baskett, and Diane Greene, founder of VMware. They were the latest to join the Visionary list for the group, which promotes tech entrepreneurship in the valley and has given out the awards for 11 years now.

This was one of those events where the who’s who of Silicon Valley shows up, though gray hair was fashionable since the list included a lot of past visionaries. San Jose Mayor Chuck Reed told the crowd they were welcome to set up their innovative companies, particularly cleantech firms, in his town.

Baskett, former chief technology officer at the once-high-flying graphics supercomputer company Silicon Graphics and an ex-Stanford professor who played a big role in getting MIPS Computer Systems and Sun Microsystems off the ground, said he was as enthused as ever about tech in the valley. Cleantech is his latest investing obsession. Read the rest of this entry »

Kleiner Perkins Caufield & Byers, the Silicon Valley venture capital firm that backed companies like Genentech, Netscape, Amazon.com and Google, said it has hired well-known Sun scientist John Gage as partner.

Gage, an early employee at Sun Microsystems, who more recently had become that company’s chief scientist, will provide “counsel to the firms’ global network of entrepreneurs, scientists, academics and government leaders,” the firm said in a statement.

Gage becomes the latest in a string of Sun alumni at the firm. John Doerr, the firm’s leading partner, years ago walked the halls at Stanford, found the Sun co-founders and invested in them, in what became the first success that was to earn Doerr a reputation for solid investments. Sun co-founders Vinod Khosla and Bill Joy later became partners at Kleiner Perkins, though Khosla has since moved on start his own firm, Khosla Ventures.

Joy claims Gage was the first person to show him a web browser.

Gage was responsible for Sun’s relationships with world scientific and technical organizations, for international public policy and governmental relations in the areas of scientific and technical policy, and for alliances with the world’s leading research institutions, Kleiner said in a statement.

Gage catalyzed the company’s popular Java One conference, and created NetDay, a volunteer project by high-tech companies to connect schools and libraries to the Internet.

Here’s the latest action:

Another Google exec heads to Facebook – Elliot Schrage, Google’s vice president of global communications and public affairs will become the vice president of communications and public policy at Facebook, BoomTown’s Kara Swisher has learned. “This is a really important role for us and one that we’ve been trying to find the right person for a while. Elliot’s role will be critical to helping us scale based on our culture that values transparency, openness, and honest internal communications,” Facebook chief executive Mark Zuckerberg said in a memo to employees.

Schrage becomes the latest in a string of Googlers who have left for Facebook. As one commenter joked on FriendFeed earlier: “Facebook now imports Google execs…” Valleywag caught wind of Schrage’s interview at Facebook first.

Mosso to add more storage to the cloud — The cloud computing division of hosting provider RackSpace will be launching a new online storage service called CloudFS later this year, according to CNET. Developers will have access to almost limitless amounts of storage at the cost of 15 cents per gigabyte. This will compete against similar services from Amazon and eventually Google.

AP launches news site geared towards iPhone — The Associated Press and the 100+ newspapers it services will allow owners of the device to type in their zip code and get personalized news. Apple gave the service pointers about how to best build such a site. So you know the integration is good.

Sun gives developers OpenSolaris, wants apps in return — Sun Microsystems gave away OpenSolaris, the open source version of its operating system, at the CommunityOne developers conference on Monday. Sun hopes open source will help it regain relevance in the within the community, according to CNET. The main rival here it thought to be Linux.

Nine Inch Nails keep the free music coming — The rock band has a new album, The Slip, which is it giving away entirely for free on its website. There is no catch, it’s simply a gift for the fans, frontman Trent Reznor explains. Users can choose between a variety of formats and quality. This follows the band giving away the first part of its Ghosts I-IV album and other bands such as Radiohead and Coldplay giving their music away for free over the Internet. The album can also be streamed right from the social music site iLike.

LiveProcess Corp. takes a $3.62 million series A — The Verona, N.J.-based company is a provider of an online application to manage a hospital’s disaster preparedness plans and response. No institutional investors were disclosed, according to PEHub. The company says it’s the only disaster preparedness software endorsed by the American Hospital Association.

EA fires back at Activision — The world’s two leading video game publishers continue to go at it. Activision’s chief executive said that EA “did a very good job of taking the soul out of a lot of the studios it acquired.” EA’s response in an interview with Newsweek’s LevelUp blog: “The truth is, everyone laughed.”

TomCruise.com launches — And thank God. The actor is celebrating the 25th anniversary of his first starring role in Risky Business. Luckily the site has nothing to do with Scientology and everything to do with movies (though there is an interview with Oprah where he discusses the controversial religion). This site can be my wingman anytime.

Private equity firm teams up with environmentalists: Green really does mean green, as in money, these days. Kohlberg Kravis Roberts has teamed up with the Environmental Defense Fund to create a “green portfolio” partnership of companies that can help improve the environment and get a return for investors. As of Sept. 30, 2007, KKR’s investments were worth $86 billion. It could make a big difference if it throws some of that weight behind environmental investments, and it’s interesting that it was announced on the same day that Kleiner Perkins started a new green fund.

Sun reports a quarterly loss: Although he was quite happy at the Web 2.0 Expo last week, Sun Microsystems CEO Jonathan Schwartz didn’t have the greatest news today. Sun reported a loss for the third fiscal quarter ended March 31, noting that the weakening U.S. economy and financial sector woes overshadowed the big gains it had in overseas markets for its corporate computer servers. The loss of $34 million compared with net income of $67 million a year ago. Revenue was down half a percent to $3.27 billion from $3.28 billion a year earlier. During the quarter, Sun paid $1 billion to buy open-source database company MySQL. Any time Sun reports a loss it makes analysts and investors nervous that the bad days of a few years back might return.

An empire divided: Time Warner announced it would spin off its cable company, separating its media business from its cable TV services and dismantling one of the biggest conglomerates. Jeffrey Bewkes, who took over as CEO from Dick Parsons in January, has made his mark in deciding to separate content — TV shows, films, and web operations — from the means of distributing it into people’s homes. After the separation is complete, the odds are good that Time Warner will double down on its media properties.

Intel’s push into low-power chips doing well: Intel said that demand for its Atom low-power processors is taking off and that the company is working closely with its customers to fulfill demand. The Atom chips are at the heart of new “mobile Internet devices” with broadband wireless connectivity and the full power of a PC in a handheld device. Intel is targeting markets such as Brazil, Russia, China and India.

AT&T is launching TV on cell phones: AT&T is launching a new video service for cell phones that will cost $15 a month for 10 channels. It’s not clear people really want to pay for something they can get for free on a bigger screen, but the cell phone providers are rushing into the market. AT&T’s service will rival Verizon Wireless’ Vcast Mobile TV service and is operated by Qualcomm. The service will be available in 58 markets and will be available on a couple of phones from LG and Samsung. Channels include CBS Mobile, Comedy Central, ESPN Mobile TV, Fox Mobile, MTV, NBC2Go, and Nickelodeon. Two channels, Pix and CNN Mobile Live will be exclusive to AT&T.

RIAA still chasing co-eds: The Recording Industry Association of America is filing a flood of lawsuits against colleges and universities around the country for illegally downloading copyrighted music. At the University of Cinncinnati, the number of noticed rose 13 percent in the past two weeks. The RIAA hinted that it is getting better at tracking down offenders.

Oz Communications receives loans: The Canadian mobile messaging company has received $10 million in venture debut from specialty investment firm Wellington Financial, VentureWire reported. The company makes middleware for handsets that enables instant messaging on a variety of phones from Nokia, Motorola, and Ericsson. It will use the funds to expand its social networking offerings on phones. Oz has raised more than $60 million, including $34 million in 2006.

Internet bean counter reports own earnings: comScore played havoc with Google’s earnings with an outlook that didn’t match Google’s own internal reports. But comScore itself is doing pretty well with first quarter earnings up 35 percent. Seems that everybody wants to hear about what comScore is counting.

Hulu moves to YouTube? Hulu.com has started a channel on YouTube, which is weird because Hulu’s network backers removed their content from YouTube and put it on Hulu.com instead. Hulu says its for promotional purposes, despite the competitive nature of YouTube. Your enemy can be your friend?

GTA IV set to shatter records: Video game analysts are saying that Grand Theft Auto IV sales are expected to shatter records. Sony hasn’t released any numbers yet, but the maker of the PlayStation 3 said it expects that its hardware sales are going to get a boost from last Tuesday’s release of the big game. Previous GTA franchise titles have sold a collective 30 million copies in the U.S. The game is also expected to give a boost to Microsoft’s Xbox 360 sales.

Avast ye pirates! The Bush Administration is accusing China, Russia and seven other countries of failing to protect American producers of movies and other entertainment from piracy. The question comes to mind: why did it take so long for the U.S. to figure this out? Also included on the list are Argentina, Chile, India, Israel, Pakistan, Thailand and Venezuela. Somehow it seems like this conversation should have taken place, oh, maybe 10 years ago?

Don’t expect Wii price cuts: Nintendo’s CEO Satoru Iwata said the company has no plans to cut the price of its popular Wii video game console, which costs $249 in the U.S. Demand for the Wii has been so strong that the company has been able to keep it at the same price since its launch in the fall of 2006. The same goes for the Nintendo DS handheld, Iwata told Reuters. The company said earlier this week that said its operating profit more than doubled in the year ended March 31. It forecast a further 9 percent gain this year to 530 billion yen ($5.08 billion). Clearly, Nintendo is just as happy as Microsoft and Sony to milk gamers dry.

Sun swallows Montalvo: Sun Microsystems confirmed that it bought the assets of Montalvo Systems for an undisclosed price. The high-flying microprocessor design company had tried to develop low-power chips to go up against Intel, but it ran into delays finishing its chip and had to sell out for a fire-sale price. Peter Glaskowsky, former editor of the Microprocessor Report and an executive at Montalvo, mourned the end of Montalvo in a blog post. Sun declined to say how it will use the Montalvo assets. Now what is Sun going to try? It could use Montalvo to go to war with Intel, protect itself with patents, or get a good engineering team. Glakowsky, by the way, has interesting analysis of Apple’s $278 million purchase of PA Semi.

EA to release Spore creature creator June 17: Spore is the next big game coming from Electronic Arts’ game design master Will Wright. The Spore Creature Creator tool will allow gamers to start designing their own creatures ahead of the Sept. 17 release of the big game. Gamers will be able to show off their creations and EA will get a lot of free labor. That’s because it will use the creations as rival creatures inside Spore. Thus, when you play the real game starting in September, your character will have square off against other creatures created by all of the people who use the tool. It’s another brilliant move by Wright.

Fashion venture moves forward: Online fashion company Indochino has received an undisclosed investment from Burda Digital Ventures, the venture capital arm of German media company Hubert Burda Media. Indochino will use the financing to build up its operations, according to a release from the company. Visitors to the company’s Web site, Indochino.com, can order custom-tailored men’s suits for home delivery. Boris Wertz, a principal at W Media Ventures, previously invested in Indochino and introduced the company to Burda Digital Ventures, according to the release. Indochino has offices in Victoria, British Columbia, and Shanghai.

AT&T boots T-Mobile: Clearing the way for Apple’s iPhones and iPod Touch handhelds to be used in Starbucks, AT&T began replacing T-Mobile as the Wi-Fi service provider in the Starbucks coffee houses in San Antonio. AT&T will talk more about how it will replace T-Mobile in Starbucks stores in other markets.

Skype guys raising a new fund: Skype co-founders Niklas Zennström and Janus Friis, as well as former Skype veteran Geoffrey Prentice, are raising a new venture fund of as much as $450 million. GigaOm reports that they plan to raise a total of 300 million euros.

Dell says ignore XP end-of-life deadline: Dell said that it would keep selling Windows XP as long as customers want it, despite a deadline from Microsoft, which wants everybody to start buying new systems with Windows Vista. Microsoft has set June 30 as the deadline for selling XP to consumers.

Setting up a possible brawl with Intel, Sun Microsystems is rumored to be acquiring the assets of stealth microprocessor design company Montalvo Systems, according to a source familiar with the matter.

Sun, based in Menlo Park, Calif., will acquire Montalvo’s patents, intellectual property and hire the remaining employees. The Santa Clara, Calif.-based start-up had raised $73 million in venture capital but failed to raise more money as its plans for an Intel-compatible microprocessor fell behind schedule. That’s why it had to sell off its assets to the highest bidder. Sun and Montalvo declined comment.

The Sun rumor, also reported yesterday by CNET’s News.com, is the likeliest so far, but other companies would clearly benefit by acquiring Montalvo. The obvious ones are Nvidia and Advanced Micro Devices. For antitrust reasons, Intel itself is unlikely to get such a purchase past the Justice Department. Nvidia makes graphics chips but those might one day be subsumed into the PC’s microprocessor. Hence, Nvidia needs a processor of its own to combine a graphics chip and a processor into a single chip — or it may get swallowed up itself. AMD has its own architecture but isn’t in the best financial shape.

Montalvo tried to create an innovative processor with four cores – two big ones and two small ones – to more efficiently handle the small and big processing tasks. The theory was that such chips could operate with lower power consumption – a key requirement in a variety of computing products in the modern era of high energy prices.

Earlier this week, Montalvo cut two-thirds of its staff (our coverage). The company had tried to raise a round in the past weeks but failed (our coverage).

Read the rest of this entry »

Sun said today it will acquire open source database company MySQL for about $1 billion, a deal that would keep Sun at the center of the thriving open source software industry (see the announcement here).

The deal is for $800 million cash and $200 million in stock.

Simultaneously, in big news for the corporate “enterprise” industry, database software giant Oracle said it had reached an agreement to acquire middleware giant BEA for $8.5 billion, a few months after its original offer offer of $6.7 bilion was rejected by BEA.

Both deals are significant for the Internet industry, but the first is most important for the start-up industry VentureBeat covers.

MySQL has become increasingly popular as a low-cost database (its basic version is free) for Web applications. The database is the core of a Web company’s information system, a sort of container of software. VentureBeat itself, for example, uses MySQL, for its database. VentureBeat uses the Wordpress blogging software, to manage the content of articles, which works hand in hand with MySQL. MySQL claims 10o million copies have been downloaded, though some users are bound to have downloaded several versions, and the active number is likely smaller. Still, 50,000 copies are being downloaded each day, the company says.

The flip side of this, though, is that MySQL has never been a major generator of revenue. The database market is huge, with Sun estimating it as worth $15 billion. However MySQL has gotten only a sliver of that. We use MySQL, but we aren’t required to pay for it, and so we can’t be considered a “customer.” Its ubiquity has served it well, however, and it has tried to make money from offering support services. While some questioned whether it had the muscle to do well in the public market, insiders said it had the chops to do so. Last year, it signaled it planned to go public.

“MySQL clearly could have gone public,” Kevin Harvey, partner at Benchmark Capital and chairman of MySQL told VentureBeat this morning in a call. “Everyone felt that this [Sun acquisition] was a better outcome for the MySQL community, and better financially as well.”

With his investment in MySQL, Harvey (pictured left) has solidified himself as the venture industry’s leading investor in open source. He also previously backed Zimbra and RedHat, two big wins.

With MySQL part of the modern infrastructure software being standardized in company data centers, Sun’s reach into large corporations with its server products makes it the best partner to help push MySQL’s adoption, Harvey said.

This also keeps Sun in the heart of the thriving open source movement, and the growing Web application business centered around MySQL. MySQL has become the dominant database within the most popular “stacks” of open source services. It is the “M” in the LAMP, MAMP, and WAMP platforms (Linux/Mac/Windows-Apache-MySQL-PHP/Perl/Python). That’s where most of the growth is. Modern companies are designing their servers with this Web 2.0 stack from the beginning. MySQL, for example, counts Facebook, Google and Yahoo as its customers.

Oracle’s database products, meanwhile, are becoming more and more the domain of large companies that require extremely robust service. In the late 1990’s, you weren’t taken seriously as a company if you didn’t have an Oracle database. Now, if you’re a new company, its not worth spending resources on Oracle. For 90 percent of new “quick and dirty” applications, MySQL is the way to go. “Oracle has the innovator’s dilemma,” Harvey said. “They have a business model that doesn’t fit the new web economy. They’re a prisoner of their business model.”

Will Oracle buy Sun? “They’re so acquisitive, I wouldn’t rule anything out,” Harvey added.

BEA, Oracle’s latest target in a string of 30 companies acquired over the last three years, is one of the market’s leading application servers, and is popular mainly within large companies. But still, it isn’t part of the fast-emerging, low-cost open source movement. JBoss (bought by RedHat) is a major player there, and there are others, such as Interface21.

Sun, meanwhile, has a range of open source products, from the office application suite OpenOffice, to the server product OpenSolaris and application language open Java.

One question is how Sun will deal with MySQL’s licensing. MySQL is owned by the for-profit company MySQL AB, headquartered in Sweden and Silicon Valley (Cupertino, Calif.) which is owns the copyright to the codebase. However, the MySQL project’s source code is freely available under terms of the GNU General Public License.

Sun said MySQL will be integrated into Sun’s software, sales and service organizations, and will be distributed through all of Sun’s channels including its OEM deals with IBM and Dell. MySQL’s CEO, Marten Mickos (pictured here), is expected to join Sun’s senior executive team. The deal is expected to be finalized in the third quarter.

MySQL was backed with about $40 million in venture capital since 2001, led by Benchmark Capital, which should earn a smart return from the acquisition. Other investors included Intel, Red Hat Ventures, SAP, Scope Venture Capital, Index Ventures, and Eficor Oyi.

What the deal also removes doubt that open source is great area for venture investing. Benchmark, in particular, has benefited from the trend, having invested, as mentioned, in Redhat and Zimbra. Benchmark partner Peter Fenton also backed JBoss, but did so while he was at Accel.

Roundup of Silicon Valley news:

Google’s Larry and Sergey were more interested in technology than Yahoo founders — There’s a revealing 2000 interview with venture capitalist Michael Moritz posted by PodVentureZone, comparing Google’s co-founders and Yahoo’s. He was an investor and on the board of both, and says Larry and Sergey were closer “to the sheet metal, closer to the hardware.” He calls Sergey a “tough, little guy”:

I think Larry and Sergey have a much more pronounced interest in the core technology than Jerry and David. I think Jerry and David had and have an extraordinary and fervent interest in having a fabulous service for their customers, but they’re less interested in developing the raw underlying technology that I think Larry and Sergey are. I think there’s a reason that Larry and Sergey stayed longer grinding through their PhD stuff at Stanford than Jerry and David. And Larry and Sergey are much closer to the sheet metal, closer to the hardware. Don’t forget, Yahoo has never had its own search technology….

Google leases San Francisco office, finally — The search engine has been looking for an SF property for some time, in order to retain young workers who prefer to live and work in the City — instead of trekking down to boring Mountain View. It has now leased 210,000 square feet, for about $35 a square foot, at the waterfront property south of Market St., Hills Plaza. It could host 800 of Google’s employees.

Berkeley regulates nanotechnology — The city of Berkeley, Calif. is regulating nanotechnology, fearful of the new properties generated by the clusters of atoms or molecules sized at a billionth of a meter. At that small size, compounds can take on different, sometimes unpredictable characteristics, leading scientist and Kleiner Perkins venture capitalist Bill Joy, among others, to fret about the potential for nanotechnology — when combined with biology — to self-replicate uncontrollably. This threatens to make humans an endangered species. Here are more details (via NYT) on Berkeley’s efforts to regulate the “molecular foundry.”

NetSuite appoints Billy Beane to board — Netsuite, the maker of online software for small businesses, is considering going public, and has added Billy Beane, the Oakland A’s general manager, to its board. Beane was made a legend in Michael Lewis’ book MoneyBall: The Art of Winning an Unfair Game, which explained Beane’s strategy of picking players using unorthodox metrics and minimal amounts of cash. Beane says he is drawn to Netsuite because it is backed by Larry Ellison, and has an unorthodox means of selling software — doing it online, instead of via disks that must be installed on PC. We hope Beane doesn’t really think selling software online is that revolutionary. It’s been around for a while.

Newspaper industry forms two opposing camps — The newspaper industry remains in decline, but the newspaper companies can’t seem to stop squabbling. It appears two rival camps have emerged. The three largest newspaper publishers, Gannett Co., McClatchy Co. and Tribune Co., are reportedly forging plans (WSJ sub required) to sell advertising jointly on their newspapers’ Web sites — to attract big advertisers that don’t want to hassle with dealing with each company separately. Currently, national advertisers buy the bulk of their online display ads from folks like Yahoo, Time Warner’s AOL or Microsoft’s MSN, the story correctly reports.

However, Yahoo has announced plans to work with nine other newspaper publishers to build a similar one-stop-shopping spot for advertisers, as we reported. And ClickZ reports there’s bad blood between these smaller publishers and the big three, stemming from the fact that the Yahoo group was excluded by the big three from their CareerBuilder and Cars.com/Apartments.com properties.

OpenView Venture Partners spams web sites — A bizarre thing for a venture firm to do, but maybe not. Gossip site Valleywag reports that Boston’s venture firm, OpenView, spammed it. It seems OpenView sent a computer generated email to Vallewag, saying the firm wanted to invest without really knowing what Valleywag does. This is the modern version of the cold-calling that many later-stage firms have done over the years. We’ve sent emails and made calls to OpenView to confirm, and will report if we hear back.

Venice Project, based on Mozilla framework, but where will it get content? — More details from Om and the WSJ on the Venice Project, the TV-video company being created by the Skype/Kazaa co-founders. We can’t shake the feeling, however, that this project is deluged with competition in ways that Skype and Kazaa were not when those services became popular.

Flock co-founder Geoffrey Arone leaves — Arone, who was holding the fort at the new browser company, Flock, after former CEO Bart Decrem left last year, and other key developers departed, has also gone. We haven’t talked with Flock, but this may suggest the new version of the Browser, due out soon, may not be everything its investors had hoped. We’ve tried reaching Arone, but he did not respond. He is becoming Entrepreneur in Residence at Bessemer Venture Partners (via Techcrunch).

Music recommendation service, Pandora, ruins it, with advertising — Ads on a Web page are fine, but not when they are spliced into music you’d like to listen to. Geek Limit has the latest on Pandora, which tailors music to your tastes, which is inserting short audio commercials inserted into your audio streams. This is part of Pandora’s effort to experiment for ways to make revenue, at a time when music sites are consolidating (see news on AOL Music and Napster)

Second Life hype spurs odd behavior — Banks Wells Fargo and ABN AMO bought islands recently within the virtual world. Feeling the pressure, BNP Paribas decided it needed to buy an island too, VentureBeat has learned. More bizarre is the answer given by Sun Microsystem chief executive Jonathan Schwartz, when asked by the NYT about why Sun bought land in Second Life. He essentially didn’t have an answer, making vague references to how Sun was a new media company and needed to have presence online (read whole response here). His conclusion:

…I’m not going to advertise during the Super Bowl. What a waste of money. Where am I going to advertise? I’m going to buy land in Second Life.

iPhone reality setting in — Some good coverage lately of the Apple iPhone’s similarity to the Macintosh Computer which, like the iPhone, was designed in secrecy, introduced with wild hype and at a high price. But the shortcomings of the Mac eventually cost chief executive Steve Jobs his job. The Mac’s predicted sales never materialized in part because of expansion limitations, and now people are pointing to the iPhone’s limitations. It won’t allow third party applications to be installed. According to Jobs in the NYT, “These are devices that need to work, and you can’t do that if you load any software on them.” He said some outside software may be introduced, though it will be controlled by Apple. Others say this may not be a big deal. Install an Adobe Flash player that allows a bunch of Web services, for example, and Apple may get around some of the shortcomings.

Skype a disappointment? — Here’s a good summary in BusinessWeek of how Skype may not qualify for the $1.5 billion in earn-outs that were part of its deal with eBay, given lackluster performance. This is off-topic, but we also noticed an intriguing ad placement in the BusinessWeek story. Check out screenshot below, which shows an ad for Branson’s Virgin right next to a paragraph staying Branson is a visionary. Has contextual advertising really gotten this good? Or did this involve a human being?