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Mitchell Kertzman session

<![CDATA[Mitchell Kertzman is founder of Powersoft and web programming developer Liberate, now a partner in VC firm Hummer Winblad. Kertzman is asked about the rumored run for governor of Massachusetts he considered after leaving Powersoft. He says that he did not want to become a full-time fund-raiser so that he could run negative ads to […]

<![CDATA[Mitchell Kertzman is founder of Powersoft and web programming developer Liberate, now a partner in VC firm Hummer Winblad.
Kertzman is asked about the rumored run for governor of Massachusetts he considered after leaving Powersoft. He says that he did not want to become a full-time fund-raiser so that he could run negative ads to win office.
The VC business is in the midst of a shake-out. There is a generic problem in having too much money available. The long-term players have extreme discipline about the money they manage while young VC firms can make many mistakes, including giving young companies way too much money. They can hurt firms by encouraging overspending. Cites example of entrepreneurs who are primarily concerned with valuation to explain how smart businesspeople are much more concerned with building long-term business relationships.
Alex Vieux: Is the VC industry returning to the poor practice of herd investing?
Mitchell: What you see today is the companies that should have failed have failed. So, most VC firms are no longer in triage mode and have returned to building. In social software, we see a kind of mini-bubble. We haven’t pulled the trigger on a social network investment, because we can’t see the business model.
Just because you can’t see the revenue model, doesn’t mean there won’t be one. But because you can’t see a business model also doesn’t mean one will appear.
Alex Vieux asks about Google: Kertzman responds that every company doing business with Google thinks it is easier and better than working with Microsoft.
Refers back to the bubble years and the tendency of the press to focus on “visionaries,” which distracted them from running their business. The Google attitude, that there is no way to know the future, will serve it well.
Market caps (like Google’s projected valuation), are set by buyers not sellers, so the price is what it is…. When Kertzman was at Liberate, which never had revenues of more than $80 million and was never profitable, the market cap was $12 billion — “that number scared the hell out of me and I expect it will scare the hell out of [Google CEO] Eric [Schmidt], too.”
I think the reason we’re seeing an increase in deals is that there are some terrific companies out there.
This year there is a year-end rush in venture capital. That’s driven by companies.
HummberWinblad is focused on very early stage companies. So, when we invest we are not thinking in terms of short-term liquidity. But the economic environment is much better and companies are planning to grow, which is driving deals.
Geographic investing: It has to be a great deal to make us go outside the Bay Area, but we’d go anywhere for a great company.
In the 1970s, you could start in the U.S. and sell only in the U.S.. Then, a year or two later, you could go to Europe. That’s because the Europeans knew nothing that was going on around here. This has changed — when companies are global by their very nature.
Kertzman thinks private companies should not have to disclose information about confidential decision-making.
Today, if you are a public company the best thing to do is not talk to the market. The market has been dumbed down to the lowest level.
Too much money in the market eliminates the Darwinian function of the market, companies that should fail don’t fail.]]>