Why we didn't cancel our Holiday Party ..

Hope you had a wonderful Thanksgiving and beginning to the Holiday season.

I look forward to seeing our OCTANe "Family" for our Holiday Party on Dec 2nd. However I have gotten a few comments on "why aren't you cancelling your party given this environment." Certainly a legitimate question; so I thought about it, thought about it a little more and then decided to give my ..."Top 10 reasons OCTANe did not cancel its Holiday Party." (In semi-random order).


10. It is a FREE reception for our members, partners, supporters who have been working with us for years to develop OCTANe into a true, national "innovation development" best practice that continues to grow and get results. PLUG INTO something special if you haven't yet.


9. We tucked the costs into the AIG bill at the St. Regis (and still weren't a line item)

8. Related to #9, the reception will be bare bones and modest ... exactly how OCTANe is run (we don't do hype, BS or overhead here! ... everything supports our mission).

7. I like Mistletoe better than garlic.

6. There is never a #6 (please someone get this one).

5. The show must go on... innovation and bringing talented "minds and money" together to network, form new companies etc. IS our primary economic driver in this country. One day soon I hope we (as a country en masse) invest in Science and Tech instead of saving dinosaurs who ride on corporate jets. I am a dog lover (my 2 labs are 10 and 12) but sometimes a dog ain't sleeping; it's dead.

4. I saw Bolt recently with my kids and got all misty...then watched Bad Santa after they went to bed to balance and remind myself I will not have to wear a Santa Suit.

3. OCTANe had double digit growth AGAIN in 2008 (thxs to our supporters/members! This reinforces the notion that if you stay laser focused on creating value and results, you will always rise at the end of the day), so we will be lowering our membership price next year...stay tuned!

2. It's been a "dramatic year" on all accounts; from Wall St. stock drops, to real estate drops to Obama being elected (incredible on so many levels) to recession, to well, you get the picture. Taking a step back to spend a little time with friends to celebrate the fortune we STILL have is both warranted and healthy as we head into a challenging 2009.

1. OC venture capital investments in 2008 is already the highest in four years!!!! ... and OCTANe absolutley played a tactical role; certainly worth at least one glass of egg nog.

A safe and happy holiday season to all.


Gary

Friends,

I sit here one week before the Presidential election and am thinking about the state of the country, but not so much the candidates to be honest. Not sure what that means but here is what I see (and do not see):

1. We are going through the worst economic mess since...well before I was born.
2. The US is the 3rd best performing country stock index over last year...ouch.
3. We are throwing around TRILLIONS of dollars like they are pennies...twelve 0's in a trillion.
4. Over 20+% of US mortgages are “under water”...but long-term, is this a bad thing?
5. Unemployment should be at 7-8% within 9 months...and those numbers don't include people NOT looking.
6. States are on the cusp of bankruptcy...or “pulling an Iceland” as it is now called.
7. Goodbye Princeton, hello University of Illinois...college fund/401K drops and Risky Business reference for everyone my age.
8. The Fed will be lowering borrowing rates to at or BELOW 1% tomorrow...and it is irrelevant due to credit blockage.
9. I attended my first home auction in my “McNeighborhood” recently...auctioneer was from Oklahoma City, the least expensive city in US. Go figure.
10. And on and on and on...it really is amazing the amount of news every day that matters.

But one thing I don’t see...where is ANY government help and investment in what REALLY drives the US: education, innovation and infrastructure? We are quick to bail out the mortgage industry (don’t think we aren’t) and Detroit (now there is a great return) and aggressively throw into the bailout ridiculous things about arrows and other stuff I am too insulted to comprehend. Some say that this is the democratic process....well I think it’s [editor's note: explicative removed].

Therefore, I am calling for a 1% “Innovation Tax” for the US effective immediately. Imagine what that could do to spur growth. Did you know we could have seeded 700,000 entrepreneurs and start-ups (at $1 Million each) with that 700 Billion dollar (which is now about double by the way) bailout? Think that would create more high-paying jobs than the bailout? Think we could invest 10X more in University commercialization and tech transfer and get a better return? Think we can train more people in science and technology? Yes I know we have some STEM initiatives going on and they are helpful, but why not THINK BIG and develop an innovation platform for which the NEXT generations can prosper? 1% should do it.

Oh well, enough of my soapbox, just some random musings on what I consider important, I guess more than who the next President will be.

Gary

The Need for Innovation Association reform

Greetings and salutations fellow members of the innovation, entrepreneur and capital society.

I was going through my schedule last night for the next several months and there are a lot of upcoming programs/initiatives; I mean a lot. This led me to think .... "Do we have too many innovation focused, entrepreneur, trade associations, lobbying, and venture capital support organizations? Would less be more, and is more...well, less?"

I read recently where AeA is in talks to merge with ITAA (article). And I thought, good for them! That makes a lot of sense. There is power in scale, consolidation and a common voice, particularly for advocacy issues, purchasing and the other trade groups. (As a note at OCTANe, we decided not to focus in this area (we partner instead!) and focus on pure company development; the ONLY full-time model in OC/So Cal laser focused on this!)

Some people think consolidation is a bad thing; I am not so sure. Having scale, focus and working together to "move the needle" is what innovation support groups should be about. Right? Having less money spent on admin/hotels and more helping to create, grow, support, staff and fund innovative companies should be the goal for any business support organization. Shouldn't it?

Is there harm in having a plethora of volunteer or other business support groups? Probably not. But imagine if there were a few strong ones working more together (more partnering) and applying resources to solve (not just report on) our innovation economy problems; this is what is needed.

Additionally, there is an inherent urge for a successful support association to expand (I get asked all the time why not do OCTANe in LA or SD or AZ or Guam). This is the easy/overhead route. What is hard (and needed) is for organizations to continually innovate (yes non-profit business groups should innovate themselves) and focus on developing local IP driven companies and jobs ...minds and money are our future economic drivers here in Orange County.

We are in unprecedented economic and financial times here in the US. We have some serious issues but developing and growing innovative companies and high paying jobs needs to be one of them!!!!!! We must develop a robust, efficient, RESULTS ORIENTED local/national innovation ecosystem to help grow our regions and industries.

So how does everyone think we are doing?

PS: I'm not alone in my thoughts...check out a recent LA Times blog that shares my views.

The drought is OVER ...

The drought has officially ended. While many of you may have thought I had been on vacation for months, a fugitive from the innovation law, still recovering from my Celtics winning the NBA championship or "gee another blogger who starts fast and fades like the French swimming relay team anchor" but I have been waiting to blog for a reason. My last blog was about little to no venture-backed IPO's in the US this year; so I thought I would wait and blog when the next IPO went to market. Hence, I waited, waited, and waited.



The wait is now over. Rackspace went public last week; the first venture backed IPO since Cardionet on March 19th; first technology IPO since Valentine's Day ish (sorry Hallmark).



So does this mean the flood of IPOS will begin now? Will the "pearly gates of liquidity" open freely? Some thoughts:



1. No



2. Rackspace is a company with size $300+MM in revenues and profits. It also has been around awhile and has a model of hardware and services that makes sense. Will it commoditized soon? maybe, but for now it's the best we got.



3. One of the uniqueness of my job at OCTANe is to hear "what is going on in the trenches and on the street" .. from hi-tech to biomedical to clean tech. Softness in consumer technology started mid last year, consumer oriented medical products within the first half of this year, clean tech? .. still sexy and getting money like women's based reality shows. (question is what will last?).



4. Early stage money is still not flowing in earnest, but you HAVE to consider this as an opportunity for asset allocation advantages now that the bloom is off real estate (my 2 cents .. another 12 months of real estate weakness for you investors).



5. Now for the good news, for you entrepreneurs and the community, innovation driven businesses that solve real problems are getting funded and I think, always will. During times of softness, focus on the science, the technology and develop value in the business. You can not predict or time the end game, just create value and ultimately you will be rewarded.



So, I am back to blogging on my semi-regular basis. Out.



Gary

Quiz time: The last venture-backed IPO in 2008 was when? How many in 2008 YTD?

I was reading the daily Venture Wire blurb last Friday. Usually these are "quick reads" and sort of a mix between a story in the LA Times and Food and Wine, but the content in this one was particularly fascinating and alarming at the same time.


The last IPO this year was on March 19th. It was CardioNet , which is a great company Jim Sweeney started/runs down in San Diego (and participated in OCTANe's CA Medical Device Forum in 2006) at the intersection of health care and wireless data. (Congrats, Jim). However, that was MARCH 19th and it's June now!! There have been hundreds of venture-backed investments since March 19th, but none of the existing investments have gone IPO?

Sure many have been bought or "monetized" by VCs, but what is going on? The total number of IPOs is six for 2008 per the article and no "tech ones" since Valentine's Day? How much love is that? The trend is alarmingly getting worse as detailed below. Some points to ponder....

1. Is this tied to the subprime mess? Does a "spooked" capital market in one asset class bring down the whole capital chain as far as investment capital realization and availability?

2. Is an IPO not a real relevant option for VCs anymore and companies are being "built to be sold; not built to prosper?"

3. Will global, non-US markets with less regulations, be the choice going forward for IPOs?

4. Are we producing just "incremental innovation companies" instead of TRUE disruptive innovative companies? (Everyone these days talks innovation and brands it, but where is it?)

5. Or is it just one heck of a St. Patty's Day hangover....

Well 12 companies are filed and ready to go and let's wish them well as risk taking venture capital needs liquidity options to prosper; staying private usually does not pay the bills.

Interesting factoid ... last time there was this IPO lull was 2003, oil was about $25-$30 a barrel. Here in 2008 it is around $130. So while we lament our VC-backed IPO drought, we also get to regret not buying the oil futures index 5 years ago.


Thoughts?

Is Obama Technology's first Presidential Candidate?

I was watching a great movie called Recount on HBO last week. The movie stars Kevin Spacey, Dennis Leary and others and is about the Bush-Gore paper "hanging chad" fiasco in Florida during the 2000 election. Really entertaining TV in a day when if it were not for animated movies, we would have little to watch. Reality shows for me are for people without a reality. But I digress.

It got me to thinking, "what if technological advances in voting" had been around in 2000 like they are now in elections? Who would have won? Would Al "Green" Gore have been our President? Possible. Can't "hang a chad" online until 3-D virtual reality comes around. One thing I wouldn't want to see is Catherine Harris in virtual reality, but I digress.


Fast forward to today, Obama (funny how he has elevated to "one name" status with Prince and Madonna) gets the great majority of his fundraising war chest (it is 3X Hilary Clinton) through use of the Internet and the concept of "social communities meet giving". One of the early founders of Facebook has helped design this "technology driven community and donation model".

Hence, since more money brings more votes in most cases, can you make the case that technology, the non-use in year 2000 and the extended use in 2008, is influencing our Presidential election? Could Obama become America's first "technology president"?

Wonder what the future holds for us in the electoral process? Come hear these discussions at the So Cal Digital Tech Forum on June 9 - 10 However, at this pace of technology advancement, I will be voting for an Avatar for President by 2020.

Thoughts?

Stem Cells: The Holy Grail, The Jury's Still Out, or Somewhere in between?

Stem Cell money and grants are starting to work their way into California universities and communities, as it has in many other states and countries (congrats to UCI being awarded $27.2M for the new stem cell building) most of the initial expenditures, of course, are on critical facilities, training and faculty. This is how core, fundamental developmental research is ignited.


Normally the public would not look for a direct, economic benefit from such research (translational is another story), but would the public feel short changed if stem cell research does not have a direct impact and create the "next greatest drug or medical advance"?


I think they might. Are Stem Cells being 'set up for the fall' years from now? Will stem cell methods and processes further develop? Of course they will; but quickly enough? Or does it really matter as fundamental research is paramount?