Re: Cloud Computing & Venture Capital

As Director of Research at a venture-capital firm, one of my jobs is
to come up with an investment thesis on cloud computing.

I do that, in part, by listening (and occasionally contributing) to a
boatload of discussion threads, reading, and using my judgment to
decide what's interesting, what are good waves to catch, and which
waves have already crested and broken.

The meme "cloud computing" is clearly cresting in the hype cycle, a
moment where everyone wants you to believe that whatever they are
doing is associated with the meme. A bad time to parse the various
meanings of cloud, grid, utility, etc., IMHO. A good time for the
various players in the field to find one another and begin to build
real relationships and partnerships.

Which includes partnerships with venture capitalists. The VC
business, like many others, is undergoing what I think is a profound
structural change driven by some of the same forces impelling us to
cloud computing. As better information becomes available, the
information-arbitrage angle of venture capital loses its power. As
cheaper software development is enabled by the world network, the
financial power of venture capital shrinks. But there's still
business value, rolodex power, and brand value in venture-capital
backing, which are not negligible factors. And VCs vary (as do
entrepreneurs) in our savvy, insight, and knowledge.

Dan Gordon

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