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There’s an amazing amount of bad activity going on in the world of tech right now. It’s predictable – when things start going well the switch flips from fear back to greed and all sorts of craziness ensues. One of the things I see appear is a steady stream of crap aimed at innovators. Patent trolls are an easy one, but heavy handed regulatory activity by incumbents and random lawsuits around acquisitions are also part for the course.
I was going to write about how the FCC’s potential action on net neutrality could seriously jeopardize Internet innovation, but Fred Wilson beat me to it (he’s got an east coast time advantage over me) with a phenomenal post titled The Fast Lane, The Slow Lane, and The No Lane. I love the phrase “permissionless innovation” as well as the way Fred describes the issue:
“But that period of “permissionless innovation” is likely to come to an end soon if we all let it. The FCC has responded to a court ruling by proposing a convoluted set of rules that will allow fast lanes, slow lanes, and what’s even worse, no lanes. The FCC’s proposal will allow the telcos and cable companies that provide the last mile connection to your home or office to prioritize some bits over others. That’s how they create the fast lane and the slow lane. It also allows discrimination in which they can decide not to allow your bits through at all, creating a “no lane”.”
Go read Fred’s post The Fast Lane, The Slow Lane, and The No Lane and then hit the back button to continue here. I’ll wait.
If you wonder who is driving this, it’s the telcos and cable companies who control the last mile. Please don’t pretend that you are surprised.
But that’s just one category of bad activity that falls in the “incumbents trying to use government regulation to control their industry and suppress innovation.” Nothing new here – it’s been going on since the beginning of time.
A different version of this popped up last week. If you recall, a month or so ago Facebook announced that it was buying Oculus Rift for an eye popping $2 billion. Amazing and congrats to everyone involved in Oculus Rift. I’ve long been a John Carmack fanboy since I first played Doom and realized id Software was based in Mesquite, TX, near where I grew up. I’ve always loved his hacker spirit, amazing ability to do things no one else could envision, and willingness to open source a lot of his work to lead the way for others. So I thought it was pretty awesome when he went to be CTO of Oculus Rift to pursue the next generation of virtual reality software.
Now, I don’t know John, I’m not an investor in Oculus Rift, or Facebook, or Zenimax, but I wasn’t particularly surprised when Zenimax decided to assert that it owned part of Carmack’s brain. You can read an enormous amount of chatter about the situation, and form your own conclusion, but mine is that Zenimax is a bad actor here. Given that Zenimax wouldn’t let Carmack pursue any virtual reality work while at Zenimax resulted in the logical conclusion that he’d leave and do something else. Asserting that whatever was in his brain while employed at Zenimax belongs to Zenimax is nonsense. There’s a phrase for that: “intellectual slavery” and it’s not one I support.
If you are interested in this situation, here are some good links to understand what is going on and being asserted.
- Virtual reality nightmare: ZeniMax challenges Facebook, Oculus for Rift intellectual property
- Virtual Legality: Legal Letters Claim Oculus VR Made The Oculus Rift Using ZeniMax IP
- Virtual Legality 2: Oculus VR Responds Comprehensively To Zenimax Legal Letters
- Oculus denies John Carmack stole VR tech from his former employer
- Oculus says ZeniMax canceled Doom 3 VR support over equity demands
Now that I’ve been clear about what I think, I’m curious what you think.
Congrats to my friends at Gist for being acquired by RIM.
I met TA McCann, the CEO / founder of Gist at the first Defrag Conference when he took me for a pair of runs along the Denver Creek Path and it’s been a blast to work with him and the Gist team ever since.
Also, congrats to RIM for picking up an awesome team that’s been thinking about and building software for the intersection of social and email since before talking about it was in vogue.
I’ve been involved in Rally since the very beginning and it has been incredibly rewarding to see them grow from an idea that the founder/CTO Ryan Martens had to the market leader in Agile application lifecycle management. Rally updates quarterly their “by the numbers page” which gives a nice overview of the scale of Rally.
In Q4 of 2008 we started getting some inbound calls from other software companies that were in related markets to Rally. These calls were from companies that had developed significant software assets, but hadn’t really had much market success. In several cases they were companies that had worked with Rally; in other cases they were from folks that thought they might be complimentary to Rally.
In response, Rally’s leadership team identified a number of areas on their roadmap that they could accelerate (or bring forward) by acquiring a small company. They’ve used this to quickly decide whether or not it is worth spending time with the inbound inquiries they were receiving.
One of them – 6th Sense – fit great. Rally has a significant amount activity on their product roadmap in 2009 around development metrics and analytics. Rally and 6th Sense engaged in a serious discussion and within 45 days had closed an acquisition. Internally, Rally went through a detailed build vs. buy analysis; adding the 6th Sense folks to the overall team and incorporating their software into the mix was a no-brainer decision for us.
I’m seeing this pattern with a number of the established companies I’m an investor in. Having gone through this cycle several times and had success and failure with acquisition driven strategies, I’ve got a clear view on when and how it can work successfully. I’m not interested in garbage truck mergers (two crappy companies that get jammed together to hope something good comes out of it) – all of my energy is focused on having a market leader pick up a complementary technology or market “asset” that helps accelerate the product or market roadmap.
Look for a lot more of this in 2009.