The New Generation of Tech in Silicon Valley

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Lest anyone forget, Silicon Valley remains a valuable tech hub. Recent investments, such as the Warriors’ Kevin Durant’s in cloud computing startup Rubrik, show that the tech industry is alive and strong. In the face of potential new policies, the landscape is likely to change, but growth continues.

In some cases, the old guard is providing guidance for the new Silicon Valley tech startups. For 37 years, investment banker Thom Weisel spearheaded investments in companies like Yahoo and Geocities. Post dotcom bubble, he’s expressing great faith in the new wave of social media, commenting that “the big difference is, these companies, in many cases, are enormously profitable out of the gate.”

New tech companies have certainly caught the eyes of up-and-coming investors. The Warriors’ Kevin Durant recently added tech to his portfolio by investing in cloud computing startup Rubrik. Durant is one of many professional athletes increasing their support of the Silicon Valley companies of today.

“Being in Silicon Valley, I play in front of [tech executives] and run into them at restaurants,” Durant said of expanding his tech investments with companies like Rubrik.

Durant’s umbrella corporation, the Durant Company, has also invested in the financial app Acorns and the on-demand delivery service Postmates.

Meanwhile, official policy may or may not support the new wave of Silicon Valley tech. A recent TechNet study found that cooperation between federal, state, and local policymakers could add one million jobs to the US economy each year if they work together to promote pro-startup policies.

In addition to hoping for more relaxed regulation and opportunities for rising tech companies, CEOs are also set to support expanded H-1B programs for highly-skilled workers coming to the US specifically to work in the tech industry.

However, with anti-immigration policies like the recent rescinding of the DACA legislation, Silicon Valley execs may be out of luck when it comes to adding more STEM-focused professionals to their teams.

Nevertheless, the Silicon Valley of today continues to grow, exhibiting more maturity and innovation since the days of the dotcom bust. Whether it’s taking cues from big names of the past or boldly moving forward with new tech opportunities, Silicon Valley is not about to let a few policy setbacks keep it from holding its position as the hotbed of the country’s technology innovations.

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Stifel Looking to Weather Fiduciary Storm

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Stifel Financial is one of many firms looking to weather upcoming regulatory changes. Though Stifel’s 2,282 financial advisors are currently in good shape, and the company doubled net income in the fourth quarter of 2016, the June 9 fiduciary rule could make or break recent progress.

Co-chaired by Thom Weisel and Ron Kruszewski, Stifel will “always look at good deals,” according to Kruszewski. And that’s likely to be the company’s saving grace in tumultuous times to come. Capitalizing on forward thinking, Stifel currently manages over $235 billion in assets, and the company’s net income doubled to $24.5 million, or $0.31 per share, with sales rising 14% in Q4.

But it’s not all champagne and roses, despite the robust health of the company. Some investors are cutting their stakes in Stifel, including Ameriprise Financial Inc., which reduced its shares by 23.7% during Q1 of 2017, according to its most recent filing with the SEC. And Instinet analyst Steven Chuback downgraded Stifel to “neutral” in late May, citing the cautious messaging coming from Kruszewski regarding the upcoming fiduciary rule.

“Our decision to downgrade SF does not come lightly,” Chuback noted, “as the company has executed well in recent quarters (bank growth, expense management, etc.). However, after hosting meetings with CEO Kruszewski earlier this month, his cautious messaging on the DOL rule…reinforced our view that this latest announcement/enforcement of the June 9 deadline could weigh on broker multiples (litigation risk) and slow advisor recruitment.”

Certainly the June 9 DOL rule is likely to shake things up. For Stifel, however, the future is still looking bright overall. Dimensional Fund Advisors LP, Macquarie Group Ltd., FMR LLC, and Bank of New York Mellon Corp have all recently increased their shares of Stifel stock. Dimensional raised its stake by 17.7%, Macquarie by 1.2%, FMR by 27.5%, and Bank of New York by 7% just within Q1 of this year. Institutional investors and hedge funds now own 84.09% of Stifel’s total stock, which was trading at $43.475 as of June 5. The company has also announced that their quarterly revenue is up 9% as compared to the same quarter last year.

While the effects of the DOL rule remain to be seen, for the moment, Stifel is looking good to weather the storm.

New York Times and CB Insights Name Sandy Miller to Top 100 Venture Capitalists for Second Year

 

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For the second year in a row, Sandy Miller of Institutional Venture Partners has been named as one of the top 100 venture capitalists in the world, according to The New York Times and CB Insights. The list is determined using data analytics focusing on investments, consistency, and reputation, among other factors. Miller is joined on the list by fellow IVP General Partner Todd Chaffee.

In addition to co-founding Thomas Weisel Partners with Silicon Valley investment banker Thom Weisel, Miller has 35 years of experience in venture capital and technology investment banking. He’s served on more than 25 public, private, and philanthropic boards. In his work he has led investments in companies such as AddThis, Constant Contact, Datalogix, OnDeck, Zynga, and many more. He was also a Managing Director at Montgomery Securities, Merrill Lynch, and DLJ, as well as a strategy consultant at Bain. Since 2006, Miller has been a Managing Director and General Partner at IVP. He ranks at #41 on the list.

Todd Chaffee, also of IVP, has been a Managing Director and General Partner since March of 2000. He has more than 25 years of experience with operating and investment, including investments in Akamai, Ariba, Business Insider, Netflix, Pandora, Yahoo, and many more. Prior to his work with IVP, Chaffee was Executive Vice President of Visa, overseeing Visa’s Advanced Technology, Strategic Planning, Corporate Development, and Equity Investment divisions. He ranks at #97 on the list.

IVP was one of the first venture capital firms on Sand Hill Road in the Silicon Valley. Founded by Reid Dennis in 1980, IVP focuses on financing later stage companies and helping with overall strategy to ensure company health.

This is the second year CB Insights and The New York Times have put together this list using CB Insights’s Investor Mosaic Algorithm. The algorithm uses straight data as well as submissions to determine the best firms and individual professionals in the venture capital market. Determining factors include investor exits, network centrality, illiquid portfolio company value, and recency of performance. Putting it all together, CB Insights and The New York Times are able to come up with a list of the current best-ranking VC professionals.

If You Can’t Beat ‘Em, Buy ‘Em Out

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It’s not an uncommon occurrence: two companies duking it out in the marketplace, their battle only ending when one buys out the other. Whether it’s GoDaddy buying up European rivals to expand its reach or Billtrust taking its competition, Invoice Connection, out of the game to do away with constant low ball pricing scares, there are plenty of reasons why a company might choose to buy out a rival.

Of course, ideally, the situation is more of an amicable, strategic merger. San Francisco investment banker Thom Weisel is no stranger to this sort of development: his Montgomery Securities was sold to NationsBank in 1997, and in April of 2010, Stifel Financial purchased Thomas Weisel Group.

Montgomery Securities, a privately held investment bank that focused on lucrative IPOs of high tech companies, ultimately became a subsidiary of NationsBank called NationsBanc Montgomery Securities Inc. Weisel continued to serve as the unit’s chairman. This came after Weisel announced several months earlier that Montgomery was looking for strategic partners. So rather than a foundation of anger and distrust, this deal was made based on a desire for compromise.

“The combination of our two companies is a great fit and will allow us to reach our goal of providing one-stop shopping to our clients,” Weisel said at the time.

As for Stifel’s acquisition of Thomas Weisel Partners, the all-stock transaction, involving more than $300 million, definitely sweetened the deal. And while Stifel did basically buy Thomas Weisel Partners out, Stifel made the purchased investment bank a fairly autonomous subsidiary with Weisel himself a co-chairman of the board.

Unfortunately, not all buyouts are this smooth. Flint Lane’s Billtrust, an electronic and paper billing service aimed at plumbing, electrical, and lumber supply wholesalers, suffered from years of bitter rivalry with Invoice Connection, a rival company who consistently went after Billtrust’s clients by offering much lower prices.

Still, Lane wasn’t going to let the simmering animosity affect his business decisions. He met with Invoice Connection co-founder Earl Beutler, and on June 6, 2011, the two companies signed a letter of intent for Billtrust to buy out Invoice Connection. The deal closed in September of that year.

The world of mergers and acquisitions is, at least in theory, a realm of utmost professionalism. Companies make decisions about expanding, partnering, and buying based on the market and what’s best for each individual business. But there’s always the cutthroat underbelly, where sometimes the best solution to the problem of competition is to…well, buy it out. No matter what unpleasantness may (or may not) occur during the actual handoff, the positive outcomes are usually worth it: the subsequently formed businesses are stronger and can offer their clients more services and opportunities.

So in the end, having a rival might not be such a bad thing after all.

Highlights of Yahoo’s History as a Digital Pioneer

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Verizon’s recent $4.8 billion acquisition of Yahoo this year shows just how much has changed in the multinational technology company’s 22-year history.

Yahoo went from being one of the world’s largest companies in online search to a digital company that has struggled in recent years to expand beyond display advertising. With Verizon’s help, they hope to rebuild a media and digital advertising company to rival long-time competitor Google.

“The acquisition of Yahoo will put Verizon in a highly competitive position as a top global mobile media company and help accelerate our revenue stream in digital advertising,” said Verizon CEO and chairman Lowell McAdam in a statement.

The timeline below shows some of the company’s acquisitions, mergers, highs and lows, and other noteworthy events. The history of Yahoo represents a story of potential pitfalls of establishing a digital powerhouse that’s continuously forced to reinvent itself, especially when it comes to relying on advertising for funds.

1994: Stanford University graduate students Jerry Yang and David Filo launch the website “Jerry and David’s Guide” as a catalog for managing websites. It was later renamed to Yahoo, an acronym for Yet Another Hierarchically Organized Oracle.

1996: Valued at $848 million, Yahoo goes public with huge stock gains. Led by Thom Weisel, Montgomery Securities, one of the biggest investment banks at that time, helped maintain Yahoo’s IPOs.

2000: Thanks to the dot-com boom, Yahoo’s stock hits an all-time high and closes at a pre-split price of $475. Yahoo’s stock trades at approximately $38 per share.

2008: Yahoo rejects a $44.6 billion acquisition deal from Microsoft in an effort to compete with rival Google.

2012: Yahoo hires Google executive Marissa Mayer as CEO to help rebuild the struggling company. Display advertising revenues slip.

2013: Yahoo acquires social network Tumblr for $1.1 billion. Mayer’s first big acquisition deal is aimed at reaching a Millennial audience.

How Banking Culture Has Changed since the 90’s

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“Culture, more than rule books, determines how an organization behaves,” said Warren Buffet.

Culture shapes the way people act (and don’t act) on a daily basis and it can be influenced by people inside and outside an organization.

A workplace environment shouldn’t be something that people dread every day; employees should look forward to going to their jobs. In fact, employees should have a hard time leaving because they enjoy their team, the challenges they’re faced with, and the atmosphere. Work may be difficult at times; however, the culture should not add to the stress of the work. Instead, company culture should alleviate the work related to stress.

Culture encourages employee enthusiasm. At Montgomery Securities, an investment bank founded by Thom Weisel, it is believed that companies should have an entrepreneurial culture that “encourages stars and yet still work as a team.”

Back in the 1990’s, banks were places of trust. Inside the big marble interiors and solid pillars sat tellers, loan officers, and other executives dressed in suits and ties. Sound was muted and people spoke in quiet voices. Money was serious business and it was a time when “protecting a bank’s reputation was like protecting a woman’s honor,” said a former senior banker at JP Morgan. They were a prestigious industry with good principles.

Retired bankers say that the ‘short-term’ mindset became evident due to the disappearance of teamwork and a sense of loyalty towards the profession. Organizational spirit was present in the old days where people had to collaborate with others in order to support a bank’s long-term reputation. If you joined a certain company, you were expected to stay there all your life. Now, people often hop around from bank to bank without question. Because loyalty was so important back then, many banks were reluctant to fire employees.

“How people are fired and how they are hired says so much about banking culture. People may be gone in five minutes not just because they were fired but because they were hired elsewhere,” says banking blogger Joris Luyendijk. Most people today switch jobs after being somewhere for between 18 months and three years.

So how can culture change?

Many banks are trying to clean up their image and win back public confidence by hiring new resources. Company culture doesn’t change overnight, as it will take time to adapt to new leadership and structure.

“Cultural change can come from multiple strategies – there’s no one way to catalyze change. But even having a space for people to talk is important – because talk can lead to action. If you are all having the same issues you may catalyze that into change. It’s important to have spaces that are created outside the formal structure,” says Melissa Fisher, author of Wall Street Women, a book that highlights the history of women in finance.

Remembering GeoCities and How It Helped Shape the Internet

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Long before the existence of Facebook (even before MySpace, iPods, and Y2K) and before the first dotcom bubble burst, there was the Internet. Unlike newer technologies, the Internet had no single “inventor.”

However, there was GeoCities, which helped shape the Internet.

Once the Internet’s third most-visited domain, GeoCities was responsible for the development of millions of websites. Years after the free web-hosting service was launched in 1994, Thom Weisel’s wealth management firm advised Yahoo! to acquire GeoCities for $3.5 billion.

The company’s goal was to give everyone who had Internet access a free place on the web. Although there were just a few million people online during that time, the idea of owning an online space was a strange (and exciting) new medium. Other free web-hosting services such as Tripod and Angelfire also launched around the same time, but these platforms proved to be far less popular than GeoCities.

”We are not an in-and-out service like a search engine. It’s a place for people to meet. We allow for self-expression through self-publishing. We’re it, in terms of being a major content-entertainment site whose editorial strategy is solely based on the members creating the content themselves,” said GeoCities co-founder David Bohnett.

In its original form, GeoCities users selected a “city” in which to launch their web pages. GeoCities wasn’t sure how to handle the whole idea of an online community and decided to divide the content up into “cities” or “neighborhoods” where you and your neighbors should ideally have the same core interest. The “cities” were named after actual cities or regions according to their content. For example, many computer-related websites were placed under “SilliconValley” and those in the entertainment industry were assigned to “Hollywood.”

Eventually, however, the “home page” fad was overshadowed by blogs and social-networking websites. In 2009, approximately ten years after the merge with Yahoo!, GeoCities announced that it would shut down its 38 million free user-built pages in the United States.

Although many people thought the platform inspired a lot of terrible web design, GeoCities was the first big venture built on what is now considered the Web 2.0 boom of user-generated content. It gave people tools to do amazing things on their websites, including adding animation, music, graphics, and other HTML wizardry.

Imagine yourself back in 1996. You’ve created your free GeoCities account, and you’ve been given a blank page with 15 megabytes to tell the world about yourself. What would be on your page?

Then and Now: IPOs, Private Equity, and the Next Generation of the Tech Boom

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IPOs and the kinds of technology behind them have changed since the golden days of 1990s Silicon Valley.
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The Dot Com bubble of the 90s changed the face of tech and finance in ways that are still affecting these realms today. As the hot new kind of business, tech companies proliferated in the 90s, with the IPO as a rite of passage into the “adulthood” of a “real” business. Some companies, like Apple, Yahoo, and eBay, live on; others crashed and burned when the bubble burst.

Today, tech companies shift to IPOs in different ways and for different reasons than they did in the 90s. Silicon Valley is still booming, but startups are far more likely to turn to individual investors as opposed to IPOs when trying to fund growth. The number and the value of technology IPOs are both way down from the 90s, more resembling what the market saw in the early 80s, albeit with higher amounts of money raised.

Funding in the heyday of the 90s tech bubble came from sources like Thom Weisel’s Montgomery Securities, a private equity firm built on the idea of supporting smaller, more individualized businesses. Like many of those tech superstars of the 90s, however, Montgomery Securities no longer exists—though Weisel himself has moved on to other private equity endeavors in the same vein as the company that started it all.

Part of the reason there was so much energy and enthusiasm behind tech companies of the 90s is that their stock prices soared without any real plan on how to live up to the related, absurdly high expectations. Nowadays, stock prices for tech companies rise or fall based on company profits. In fact, tech company stock is now a bit cheaper than it was then.

Modern investors are also different from their 90s counterparts in that they seem statistically more interested in investing in companies that aren’t already profiting by the time they reach their IPO. According to Bloomberg, of the 206 companies that had IPOs in the US in 2014, 71% had had no profits in the year before their offering.

Unlike the 90s, biotech seems to be where it’s at in terms of rising tech companies these days. Biotech companies tend to have IPOs similar to what you’d see in the 90s: small companies with no revenue but lots of promise, going public to raise the money they need to bring a product to market. That’s pretty specific to today’s biotech IPOs, though; in the rest of the IPO market, Bloomberg says, companies are waiting longer to go public, which is why there are fewer IPOs over all.

We may not be experiencing the sort of tech boom that became an emblem of the 90s, but there are still plenty of opportunities for small companies to make their mark on the world. Whether it’s through individual investors or IPOs, cutting edge tech will always have a place in the market. It’s just that the details of that place are likely to change over time.

3 Videos to Inspire Collaboration and Teamwork

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These 3 videos encapsulate what it means to collaborate in business.
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Teams at work are expected to produce results, but performance is often restricted when team members don’t work well together. A collaborative team environment is fundamental for success.

To help build a collaborative work environment, team members must develop and practice certain skills, especially if the work is being done on a long-term basis. Collaboration and teamwork require a combination of problem solving, interpersonal, and communication skills needed for a group to work together towards achieving a common goal.

Need some inspiration in creating a collaborative and effective teamwork environment? Check out these three videos:

1. Thom Weisel – Montgomery Securities

Thom Weisel founded Montgomery Securities in 1978. It was one of the largest investment firms in operation during that time. Montgomery Securities was an organization that valued and encouraged team collaboration, commitment, and communication. The finance giant helped launch Weisel’s long career of entrepreneurship and leadership in finance and investment banking.

In this 11-minute video, Weisel and the Montgomery Securities team discuss the teamwork, dedication, and entrepreneurial spirit that inspire their business.

2. Tom Wujec: Build a tower, build a team

In this 6-minute video, Tom Wujec presents some deep research on the “marshmallow challenge,” a teambuilding exercise that involves one yard of tape, dry spaghetti, and a marshmallow. The concept sounds simple, but his study gives us great insight into the nature of collaboration.

Who can build the tallest tower with just these ingredients?

This exercise is a great way to illustrate that jockeying for power can disrupt teamwork. It also demonstrates that sometimes the best way to see if something works is trial and error.

3. Jon Petz – Levitating People

Jon Petz is a high-energy keynote speaker who inspires people with his enthusiasm and humor. In addition to engaging his audiences at events, he also re-engages them in their own lives, careers, and goals. The spirited, motivational, and entertaining video illustrates the importance of each team member’s contribution and the power of team support.

Where Are They Now: Silicon Valley Edition

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Where are the big names from the days of Silicon Valley now?
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Every industry has its golden days—especially the tech industry, which is always rapidly changing. The dynamic tech industry has seen its share of extreme highs and lows, successes, and fails. With such a rich history, Silicon Valley represents a core part of the American dream and identity. So many entrepreneurs, thinkers, and innovators paved the way for the industry we know today. So who are those legends, and where are they now?

One of the most crucial sectors of Silicon Valley has always been finance. Without it, all those shiny tech companies would never see the light of day. At the beginning, there was Thom Weisel, founder of Montgomery Securities, one of the largest investment firms then in operation. Montgomery Securities, founded in 1978, valued a culture of collaboration, commitment, and self-expression. A finance giant, the company helped launch Thom Weisel’s long career in finance and investment. He went on to found other firms like Thomas Weisel Partners, which remain operational. Today, he is an avid athlete and art collector.

Like Weisel, Mark Cuban is one of the tech boom’s biggest names. Cuban began a career by founding Broadcast.com, a site that allowed users to listen to radio broadcasts over the internet. However, because so few people had access to broadband internet in 1998, the business never really took off and eventually folded. But in 1999, Yahoo bought Broadcast.com for a whopping $5.7 billion, giving Cuban the seed money he used to launch his own career. Today, Cuban owns the NBA team the Dallas Mavericks, Landmark Theatres, and Magnolia Pictures. He is also a “shark” investor on the television series Shark Tank.

At one time, Geocities, founded by David Bohnett, was the third most-trafficked site on the internet, just behind Yahoo and AOL. The site provided users a way to create and customize their own websites, working from templates. Users could add links, music, text, and images. In many ways, Geocities was the first step towards the site metrics and measurement we have today. In 1999, Geocities was also purchased by Yahoo for $3.57 billion. It was never really clear if Geocities was profitable, but it was everyone’s favorite site.

Today, Bohnett is a tech investor with a stake in Fab.com. He is also the Chairman of the Board at the Los Angeles Philharmonic Association.

The tech industry certainly looks different today than it did twenty or thirty years ago, but founders and innovators like these made it all possible.

 

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