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When I first met with the team at Splunk, they were working away on building a system that could accurately track a transaction as it traversed the entire enterprise stack. If the transaction broke somewhere along the way, their software could help IT discover the cause of that failure. While it was clearly a pain point for some businesses, there was no clear customer and the value proposition was a relatively hard one to articulate. But the technology they were building created a whole lot of intelligence built on the fumes of the data center (namely the log files). I was interested in what they were doing, but not interested enough to fund them. One day I got a call from Michael Baum, CEO of Splunk. He told me that they had "figured it out" and that we should meet up. I was certainly game to hear what they had figured out and we got together again a short time later.

So what had Splunk figured out? They had figured out that if they could track, manage and correlate log files across the entire data center in near real time, that they could create the killer IT Search Engine that would allow an end user to see into their enterprise stack in a way never before possible. The Splunk guys showed me a very simple example using Voip data and how one could track all systems that touched a particular extension by simply searching for that extension in the Splunk engine. I was an instant believer -- it was clearly a better way to manage the massive amounts of IT data that exist in enterprises today. I invested in the Series A and the Splunk team got to building the software that they had envisioned.

A short time after investing in Splunk, I was meeting with a group of managers from one of August Capital's biggest Limited Partners (the folks who invest in our fund). I was describing for them what Splunk was planning to build and they asked me "so what's the market size for that?" I quickly answered as best I could -- "I have no idea." Needless to say, this was not the most satisfying answer they had ever received and they stared back at me with a look that suggested perhaps I should come up with a better answer. But the reality was that I didn't have a better answer. Not because it was unclear if there was any market for what Splunk was building. But, more importantly, because once Splunk had built their search engine, it was unclear what market they would go after. I explained to my investors that Splunk had a number of multi-billion dollar markets in which they might play (management, compliance, BI, security, capacity planning, development, etc.) and the only question was which ones they would choose to go after first.

That conversation with my Limited Partners was over two and a half years ago. And since that time, the Splunk team has built precisely what they promised -- a large-scale, high-speed search technology for your data center. But despite the fact that Splunk's software has been downloaded by over 100,000 users and despite the fact that there are now more than 350 paying enterprise customers (including 21st Century Insurance, BEA, British Telecom, Catholic Healthcare West, Chicago Mercantile Exchange, Comcast, Dow Jones, FedEx, Fiserv, GE Consumer Finance, LinkedIn, Mantech, Mozilla.org, NASA, Shopzilla, Telstra, U.S. Department of Energy, U.S. Department of Justice, U.S. Department of State, Vodafone and Yahoo!), I would still have a tough time answering the question posed by my Limited Partner.

Splunk has not built an application. Nor is Splunk merely selling software. Splunk has created a software enabled platform that continues to be extremely broadly applicable. Is Splunk mission critical when it comes to maintaining availability of large scale enterprise systems? Yes. Is Splunk invaluable in the fight to maintain the security of your data center? Yes. Does Splunk uniquely simplify the process of data compliance? Yes. Can Splunk help you dig into your data and analyze it like no other solution? Yes. But, frankly, that's just the tip of the iceberg -- once you are able to query individual pieces of data across your entire data center in real time, the applicability of the platform is limited only by the creativity of its end users. And those end users are driving value back into the platform, creating applications we hadn't thought of before.

So what is the market for Splunk? i still couldn't say for certain. But I can tell you one thing -- it is awfully big. And in the venture business, that's big enough.

It appears that Shameless Self-Promotion Week has become Shameless Self-Promotion Month. Not that I am promoting any more companies than I had originally planned. I am still only talking about those businesses in which I have invested on behalf of August Capital. But, it turns out, it takes more time than I had anticipated to sing the praises of such a fantastic group of companies.

Just this past Friday, Craig Syverson and I recorded the latest installment of VentureCast at University Cafe in downtown Palo Alto. I had recently been discussing with a friend the fact that University Cafe has very much become a part of the startup economy again. Folks like Rajeev Motwani and Ron Conway spend a fair bit of time meeting with companies at University Cafe. Practically any time you're there you can look around a see deals getting done. In fact, shortly before Craig and I started recording VentureCast, the guys at the table next to ours were banging out the details of some sort of financing. Unfortunately, they had finished their negotiations before we started recording, or we might have captured the blow by blow on tape.

A couple years ago I was meeting with an executive from one of my portfolio companies at University Cafe. While we were talking, Rajeev wandered by and told me to come say "hi" before I headed out. Rajeev was talking with a smart group of guys about their new company in the local advertising space. Those folks were the founding team from DoneRight (at the time called Perform Local). I was intrigued by their business, impressed with the team, and a short time later I ended up funding their company.

The CEO of DoneRight was -- and is -- Paul Ryan. Paul is a phenomenal technologist. He had most recently been the CTO at Overture and, thus, had been part of the team that had pioneered the very concept of pay for performance. The idea at DoneRight was to create a pay for performance local advertising network that would allow local service providers to purchase valuable leads through DoneRight. By aggregating demand through on and off-line lead generation techniques, service providers could use DoneRight as their marketing arm, paying only for the leads they received. On behalf of the consumer, DoneRight would screen service providers for professional licenses, BBB complaints and the like, and only accept professionals onto the service that DoneRight was comfortable guarantying. Given this data-intensive, data-driven service, there was no one better to build DoneRight than Paul.

Because local services are . . . well . . . local, DoneRight has been rolling out their network on a city by city basis. With each new city, DoneRight gains more insight into how best to provide consumers with the information they need to make informed buying decisions, while providing service professionals with the channel they need to scale their businesses. The service launched in San Diego, and has rolled out to Denver, Chicago, Houston and Dallas over the course of this year. In 2008, DoneRight will expand considerably, using what they've learned in their first five metropolitan areas to optimize the DoneRight experience on a nationwide basis. To date, over 1,000 home improvement professionals have entered into prepaid performance agreements with DoneRight. While other online services have failed to gain meaningful sales traction with local businesses, DoneRight has been able to sign up its first thousand paying customers in record time, because it is providing real, measurable results for its business customers -- In the short time that it has been doing business in these few metropolitan areas, DoneRight has processed nearly 500,000 consumer requests for referral to a DoneRight certified service professional. And that number will scale dramatically as DoneRight expands nationwide.

DoneRight is another business in which I invested because of my love of data. Ultimately, the lead generation business is a numbers game. How much does it cost to acquire a lead? What will a service provider pay for it? Does it scale? Those were the questions that needed answering. And given Paul Ryan's background, I invested, confident that Paul would be able to produce the necessary infrastructure to answer those questions and create a scalable business. And he has. Better yet, as Paul and the company learn more about lead generation on a local level, they are able to apply that knowledge to each of their metropolitan areas, making each city more efficient and the overall business decidedly more profitable. If you live in San Diego, Denver, Chicago, Houston or Dallas and are looking for a guaranteed service professional, DoneRight.com is the place to go. And if you are living elsewhere, stay tuned. DoneRight will be coming to your neighborhood soon.

A lot has been said about Six Apart in the past, including by me. I have never been shy about making clear my love of MovableType (VentureBlog), TypePad (SaysMe) and Vox (Hornik, Hornik and More Hornik). I use each of Six Apart's platforms, which makes me an investor, a customer and an evangelist.

But what hasn't been said about Six Apart to date? Perhaps what hasn't been said is that when it comes to web traffic Six Apart is HUGE. According to Comscore, Six Apart's hosted properties (TypePad, Blogs, LiveJournal, Vox, etc.) put Six Apart in the 50 most trafficked sites on the Web. Six Apart has approximately 39 Million unique visitors a month and growing. Six Apart served just over 600 Million world-wide page views in April, of which over a quarter of a billion page views came from the United States alone. And those page views do not even include the massive traffic of the innumerable branded sites that live on Six Apart's hosted platforms, including TheSuperficial, SocialiteLife, Gothamist, BoingBoing, HuffingtonPost, AskDaveTaylor, TreeHugger, ZDNet Blogs, Celebrity-Babies, CuteOverload, Kottke, CoolHunting, and thousands more.

Where are all those page views coming from? There are nearly 20 Million Six Apart bloggers across the various platforms. In the US, they are posting on LiveJournal, TypePad, Vox.... Internationally, they are posting on Friendster, Nifty, NTT.... On nearly any topic on the planet that one might search, there will be results hosted by Six Apart. The number of bloggers is constantly growing, the number of pages is constantly growing, the number of page views is constantly growing. The power of blogging!

On top of that, there are hundreds of thousands of users of MovableType, which represent innumerable millions of page views which Six Apart does not host and does not track. MovableType is the predominant platform for enterprise blogging. Many corporations use MovableType for external blogs, many more are using MovableType internally. While in no way comprehensive, check out this list of companies using MT for their own blogs: ABC, CMP Media Conde Nast, Gannett, Hearst, NBC Universal, NPR, Playboy, USA Today, Time, Walt Disney, Washington Post, Warner Brothers, FedEx, Interpublic, Ogilvy, Organic, UPS, Adobe, Cisco, Intel, Microsoft, Nokia, Oracle, SAP, Symantec, Verizon, GE Heathcare, GE Medical Systems, Genetech, Johnson & Johnson, Pfizer, American Express, Deutsche Bank, the Federal Reserve Bank, Intuit, Standard & Poors, Wells Fargo, American Eagle Outfitters, American Girl, General Mills, L'Oreal, Mattel, Miller Brewing, Mike, P&G, Patagoinia, Wal-Mart, Whole Foods, General Motors, Boeing, Lockheed, Brown, Columbia, MIT, NYU, Princeton, Yale.... And, of course, VentureBlog!

When I invested in Six Apart, I was excited about the incredibly broad applicability of Six Apart's technology. If anything, I've been surprised by just how broadly Six Apart's platforms have been applied. From Standard & Poors to Playboy to CuteOverload to BoingBoing to NPR to my mom's Vox blog, Six Apart has enabled a distributed media "empire" that is truly vast, and growing. It will be exciting to see how Six Apart continues to flourish in the coming years. I am thrilled to be a part of it.

I am a bit of a broken record when it comes to my "its all about the team" mantra. But I really believe it. Yes, it is important to have a good idea. Yes, it is important to be chasing a big market. But as important as both of those things are, they pale in comparison to the need for great entrepreneurs.

I've also written a fair bit about what it means to be a great entrepreneur. Some founders are incredibly good entrepreneurs by virtue of their sheer fanaticism and determination -- they thrive on the challenge of building a businesses out of whole cloth and hate to lose. Some founders are "serial entrepreneurs" and get the benefit of the doubt because they have done it before -- they have managed to run the startup gauntlet and make their investors a bunch of money. And other founders are incredible domain experts -- if anyone is going to figure out how to build an interesting business in their particular field, it will be them. If an entrepreneur falls into any one of these categories, you will do well to back them.

A few years ago I was approached about backing a company called Nomis Solutions. The idea behind Nomis was to apply modern price optimization techniques to the financial services sector. While banks and insurance companies do a great job of measuring and optimizing risk, they have historically done less well at measuring and optimizing pricing. As a result, the industry as a whole has left a lot of money on the table. The founders of Nomis intended to build a software solution to help financial institutions engage in profit-based pricing -- pricing that would create the greatest profitability on a product by product basis (auto finance, mortgage, home equity, personal lending, etc.).

Was it a good idea? You bet. Any time a piece of software can increase your profitability by 10 to 20%, it is a good idea. Was it a big market? Monstrous. Financial institutions are historically very difficult to sell software into, nonetheless, they are monumentally large accounts if you can find your way in. So my investment decision came down to the question of how was the team. While there were four fantastic entrepreneurs when I funded Nomis, and I do not in any way want to slight Nomis's other spectacular founders, I want to take a closer look at Nomis founder Dr. Robert Phillips.

Bob Phillips personifies the best characteristics of a great entrepreneur. He thrives on company creation and refuses to lose (when I made diligence calls on Bob, I was assured that he was a killer entrepreneur and that I would do well to back him but that I should never ever play him at Trivial Pursuit). Bob is also a serial entrepreneurs who has made a bunch of money for his investors in the past. As the founder and CEO of Talus Solution, Bob created the worlds largest price optimization company in its day, which he sold to Manugistics for hundreds of millions of dollars. And Bob is the guru of price optimization -- there is no bigger domain expert. If you have been annoyed by the fact that the guy sitting next to you on a plane paid significantly less for his ticket than you did, you have Bob Phillips to blame for that. He introduced revenue optimization to the airline industry many years ago. He literally wrote the price optimization text book and teaches it at Stanford and Columbia Business Schools.

It would be hard to find a better example of a fundable entrepreneur than Bob Phillips. So it will come as no surprise to you that Bob and his co-founders have managed to build an incredible company at Nomis. Their customers are literally a who's who of the banking industry, from Ford Motor Credit to HBoS to GE Consumer Finance to Washington Mutual. And their results have been nothing short of spectacular -- by installing Nomis's software, a bank can increase the profitability of its business by between ten and twenty percent. On a multi-billion dollar loan portfolio, that adds up to real money quickly. As a result, Nomis has been able to make great inroads into a really tough market.

I don't want to ignore the excellent work of Bob Phillips' co-founders. Nor do I want to understate the degree to which great hiring has helped make the company a market leader. But Bob Phillips remains the world's expert in revenue optimization and I would sooner bet with Bob than against him when it comes to price optimization. It truly is all about the team.

I was chatting with my good friend Bill Trenchard this morning. Bill was one of the founders of LiveOps and is currently the Chairman of the company. He and I were talking about my LiveOps post from last night and I realized that while I had talked about some great applications of the LiveOps platform, I didn't discuss the thing I found most interesting about LiveOps technology. So before I move on to another one of my portfolio companies, let me share one additional thought about LiveOps.

I am a huge believer in the value of using software and data to optimize transactions. And the more data and the better the software, the more value you can extract from each transaction. In many ways, that is precisely what each one of my portfolio companies is trying to do -- unleash the power of the underlying data to produce the most value. LiveOps is no different. By leveraging the IP underpinnings of its call center platform, LiveOps is able to optimize the experience for its customers in ways that give the company an unfair advantage over traditional call centers and traditional call center management software.

The key to the LiveOps platform is that it tracks and manages each individual answering phones as an autonomous agent. And each agent is characterized by a set of data that makes up that agent's profile. So imagine that my mom decides to make some extra money by becoming a LiveOps agent. When she first starts to answer calls, the system will have very little information about her. But over time it will gather data about the job she is doing. The LiveOps platform will learn things like how quickly she answers a ringing phone, how many minutes is her average phone call, how satisfied are the callers with the outcomes from her calls, how many of her calls result in sales, what is the average amount of money spent on a call she takes, how often does she manage to up-sell the caller, etc. Using all of this data, when a call comes in, the LiveOps platform is able to rout the call, not to the next available operator, but rather to the best available operator. And that is LiveOps' unfair advantage.

LiveOps is in essence AdWords for people. The platform is able to measure and manage each individual agent in real time and route calls based upon the performance of each agent. And that routing doesn't simply rely upon data about the agent. It also relies upon information about the call coming in. If a call to the LiveOps' service is to sell a Ginsu Knife, the agent with the best track record of selling and up-selling will get the call. If, on the other hand, it is a call concerning front line product support, a different agent may have the best record of quick and effective resolution of support matters. Yet another call may come in that is a simple pizza order and get routed to the agent who is the most efficient and most accurate order taker. LiveOps software is designed to manage a large pool of agents and optimize their performance in real time based upon the nature of the call and the characteristics of the available agents. As a result, not only is LiveOps able to provide the low cost solution (by allowing agents to work from home throughout the country), but it is also able to provide the most effective solution by routing calls based upon the specific performance metrics defined by the client.

It is this real time, performance-based call routing that I think has led to LiveOps massive success to date. LiveOps customers include large enterprises that want to use the LiveOps platform to manage their own call centers and their own agents, as well as companies that want to leverage LiveOps' agents and software to provide an end to end solution. Either way, LiveOps customers are guaranteed the most efficient and effective "call center" experience possible. And, to my mind, that's pretty exciting stuff.

When I first met with LiveOps' CEO Maynard Webb, I asked him what it was about LiveOps that would get him back to work. After all, Maynard had just recently retired from Ebay where he had served as COO. While head of technology at Ebay he was credited with stabilizing a platform that, at the time, was on the verge or implosion. His reward for fixing the technology mess was a license to fix everything else as COO, which he did with great aplomb. Maynard had a well earned reputation as a tireless worker. Clearly he had earned himself a summer or two (or ten) off. But when Maynard heard the LiveOps story, he found himself back in the saddle.

So what was it about LiveOps that Maynard found so exciting? In his words it was the ability to do well while doing good. That may seem surprising when you consider that LiveOps is a call center software and services platform. At its core, LiveOps is an incredibly sophisticated VOIP software platform that allows a customer to route, track and manage calls in ways that none of the traditional systems allow. And one of the most important byproducts of LiveOps' all-IP system is that agents can be located anywhere that there's a web connection. They may all be located in a call center in Ohio, or they may be scattered throughout the country in their homes.

LiveOps is the biggest customer of its own call center software. Along with selling its platform to big corporate clients who are looking to better manage the performance of their agents (wherever they may sit), LiveOps uses its own software to manage the LiveOps distributed call center that now encompasses 13,000 active agents and growing rapidly. LiveOps agents on the whole tend to be stay-at-home moms and home-bound individuals who are looking for a way to make money while maintaining the flexibility to work where and when they choose, as may be dictated by their own personal circumstances. Which is precisely what appealed to Maynard. As he told me, one of the things he was most proud of with Ebay was that it empowers a whole host of entrepreneurs to create businesses that best suit their particular life circumstances. The same is true of LiveOps. Rather than outsourcing jobs to other countries, LiveOps insources opportunities to underemployed, but well-educated, individuals who need the flexibility to control their own work environment. And, as Maynard pointed out, the more successful LiveOps is at serving its customers with the most efficient and most effective call center available, the greater the number of individuals the company can empower to take control of their own circumstances.

There is another byproduct of this massive distributed phone force; LiveOps is the only call center in the world that can massively scale in short order to suit the needs of virtually any customers. One great example of this capacity to scale came immediately after the Hurricane Katrina disaster. The American Red Cross was inundated with requests to donate on behalf of the victims of the hurricane. In an effort to support the generosity of the country, the Red Cross went out looking for a call center that could field the enormous volume of calls for donations. Ultimately, only one company could deliver the necessary scale to support the overwhelming call volume, and that was LiveOps. In a matter of hours, LiveOps was able to route the Red Cross's 800 number to thousands of agents throughout the country, who immediately were able to service the generosity of hundreds of thousands of donors.

LiveOps recently put that capacity to good use again when American Idol had its Idol Gives Back campaign. During two separate American Idol shows, the stars of the show promoted a charitable giving program that included an 800 number on the screen and on their website. While the producers of American Idol suspected that the volume of giving would be quite large, they could not scope the scale of the participation with any specificity. That was no problem for LiveOps. They were able to scale the size of their phone force with demand, continuing to take pledges long into the night, and were unencumbered by the limitations of traditional call centers. What's more, they were able to give the American Idol producers instant feedback as to the scale and velocity of the program. In the end, LiveOps deployed over 3,400 agents who answered approximately 200,000 calls and collected more than $6 Million for charity. That's the sort of thing that makes Maynard Webb excited to come in in the morning. And it is the sort of thing that makes me thrilled to be an investor in LiveOps.

This year was the 5th addition of Walt Mossberg's and Kara Swisher's "All Things Digital" conference. I'm sure that it will come as no surprise to you that I have attended all five and intend to attend the next five as well. They say that first year conferences are a huge crap shoot because of the chicken and egg problem of attracting fantastic speakers and a fantastic audience -- you need one to get the other but can't get one without the other. By force of personality and reputation, Walt and Kara blew that away the first year by simply getting the most amazing speakers ever. The fabuloous audience quickly followed. But they created a problem for themselves.

The speakers at their first "D" were just too good: Gates, Jobs, Diller, Larry and Sergey, Meg Whitman, Terry Semel, Mark Cuban. I mean, give me a break. Year two: Gates, Jobs, Ellison, Carly Fiorina, Masa, Henning Kagermann. Year 3: Gates, Jobs, Mel Karmazin, McNealy, Zander, Diller, Jerry Yang and Dave Filo. Year 4: Gates, Al Gore, Howard Stringer, Terry Semel, Vinod Khosla, Bob Iger (Jobs couldn't make it and was sorely missed). So what were Walt and Kara going to do to make their 5th anniversary "D" a special one? They touted the answer on their homepage -- "Bill Gates and Steve Jobs to Make Historic Joint Appearance at D5."

Now I have to admit that, as much as I looked forward to seeing Gates and Jobs spar on stage, I thought that perhaps Walt and Kara had gone a bit too far calling the Gates/Jobs smackdown a "historic joint appearance." The cardinal rule of showmanship is to under-promise and over-deliver. It is hard to imagine that calling a chat "historic" could be viewed as under-promising, and harder still to imagine that after advertising a talk as "historic," one could possibly over-deliver. But I was wrong.

The "historic" joint appearance of Bill Gates and Steve Jobs wasn't just historic, it was, in fact, awe inspiring. I envisioned a half-hearted quarrel, punctuated by clever but cynical jabs at one another. What I got was a history lesson taught by the principal protagonists of the story. As I sat and listened to Gates and Jobs recount their 30 year journey to bring the best possible personal computers to the world, it struck me that no two living humans have had a bigger impact on my quality of life than they (case in point, I am typing this blog post on my MacBook on Microsoft Word).

It would be hard to replicate the energy and mood of the room with simple words. It may even be hard to replicate with video. Nonetheless, I strongly urge you to watch the videos of the conversation over at Kara and Walt's great new "news and opinion site" called AllThingsD.com. In the videos you will see a pair of mature, thoughtful moguls. Bill Gates was erudite, statesmanly, and utterly charming. Steve Jobs remained the consummate performer, yet managed a bit more humility than is his norm. They traded fours like an old married couple. And their recounting of the history of the personal computer industry had the cadence of an on-again off-again romance. In the end, Jobs had the turn of phrase that brought us to our feet -- a snipped right out of a love letter -- "There's that one line in the Beatles song, 'You and I have memories longer than the road that stretches out ahead,' and that's definitely true here."

Great conferences are all about great theater. And I have never seen better theater than Jobs and Gates on stage together, modestly recounting how they changed all of our lives, in incalculable ways, forever. Hats off to Walt and Kara for orchestrating this once in a lifetime event. When can I register for D6?

I spent today at the Web 2.0 Expo and am just stunned at the scale and scope of the event. Let me make one observation to start -- the venue of an event really makes a difference. It sets the tone of the event and sets the stage for the sorts of interactions you are likely to have. So the mere fact that the Web 2.0 Expo is at the Moscone Center says a lot. There are conference center events (Expo, SXSW), there are big hotel events (Etech, Demo), there are fancy hotel events (D: All Things Digital), and there are theater events (TED, Poptech). Each one has a different feel. No one is inherently good or bad. It simply sets the expectations for the conference that is to follow. As you can imagine that there is a different vibe in a fancy hotel conference than in a conference center event.

I took part in a panel today called "Venture Capital 2.0: Bright Future or Broken Forever." It was moderated by Mike Arrington and included some good friends from the investment biz, including Josh Kopelman and Jeff Clavier. It was one of the larger audiences I've spoken in front of before -- I'm guessing there were as many as 800 people in the room. Crazy. Mike tried hard to get the traditional VCs (me included) to fight with the angel guys (Josh and Jeff). His thesis was that angel investors will ultimately get all of the returns because there is so little money required to build a big internet business these days. While it isn't an unreasonable assertion, I obviously disagree whole heartedly. As I've said before, while it is certainly the case that it takes less money for a web startup to demonstrate traction, I believe it still takes significant capital for a successful internet startup to scale. Nonetheless, the entertainment value was high (which was likely Mike's real intention). And we had a great time agreeing with each other and disagreeing with Mike.

Speaking of entertaining, Mike took some time out of our panel to shamelessly plug his new conference, the TechCruch20. The idea behind the conference is to gather some of the most interesting new startups and products, and have them critiqued by a group of smart, entertaining and often-times controversial tech experts. He's already lined up Marc Andreessen, Chris Anderson (Wired Magazine), Mark Cuban, Dave Winer, and, of course, himself and Jason Calacanis (with whom he is organizing the event). The TechCrunch20 is going to take place at the Palace Hotel in San Francisco on September 17th and 18th. I have no doubt that it will be a really entertaining event and look forward to attending. If you're interested in attending as well, I strongly recommend you register sooner rather than later because the conference is already well on its way to sold out (here's a LINK to the official TechCrunch20 website).

In 1991, Andy Rappaport, my partner at August Capital, wrote an award winning Harvard Business Review article entitled, "The Computerless Computer Company." As described by HBR, Andy's paper argued that:

By the end of the century, the most successful computer companies will be buying computers rather than building them. Defining how computers are used, not how they are built, will create real value. Three new rules will guide the computer industry's strategic transformation: 1) compete on utility, not power; 2) monopolize the true sources of added value; and 3) maximize the sophistication of the value delivered, while minimizing the sophistication of the technology consumed.

Well, that century has come and gone and Andy hit the nail on the head. The real value in computers was all about utility. Dinosaurs like Digital Equipment Corporation and Wang that were unable to evolve to deliver utility rather than compute power disappeared in the 1990's, while companies like Microsoft and Lotus thrived. Computers were no longer viewed as valuable independent of the software they ran. They became commodities, upon which value was created through applications.

In the context of Andy's description of the computer industry in the 1990's, I believe that a new era is upon us in the 2000's. I believe that we have progressed from the "Computerless Computer Company" to the "Softwareless Software Company." Taking the evolution of computer company one step further, "computer" companies are no longer about selling software, but rather about delivering services. Hosted services have the distinct advantage of meeting all three of the "new" rules suggested in the Computerless Computer Company: 1) they compete purely as a utility; 2) they monopolize the true sources of added value; and 3) they are designed to deliver the greatest possible sophistication with the simplest possible user experience.

Perhaps the best evidence that we are entering this era of Softwareless Software Companies is Microsoft's "Live" push. At a recent VC Summit, numerous Microsoft execs, including Steve Balmer himself, talked about Microsoft's focus on rolling out service offerings under the moniker of "Live." They are now offering LiveDesktop, LiveSearch, OfficeLive, LiveExpo, LiveMeeting, etc. And in support of their massive push into the services space, Microsoft has just opened a new datacenter that will ultimately span just shy of half a million square feet (I hope to write more specifics about this some time soon).

In the era of the Softwareless Software Company, in which value is measured by utility, simplicity and reliability, the greatest asset may ultimately be the near infinitely scaling data center. It will certainly be important that the new computer company deliver great utility through its software-delivered service. But the most significant differentiator may ultimately prove to be the capacity to scale with massive demand. And those companies best situated to deliver that scale will be the winners. Thus, it is no surprise that just up and down the river from Microsoft's new datacenter in Quincy Washington, both Yahoo and Google are contemplating building their own gargantuan datacenters. The Softwareless Software Company may have come full circle from the Computerless Computer Company and be more about hardware and infrastructure than about software after all.

After reading a post by Nelson Minar about Google's Webmaster Tools, I ran on over to Google to see what I could learn about VentureBlog. The setup and verification process for the Webmaster Tools was really simple. After having demonstrated that I was the rightful owner of VentureBlog, I was able to see an interesting analysis of those searches and clicks on Google that point to VentureBlog.

Not surprising, four of the top six Google queries that include links to VentureBlog are "venture capital," "venture," "venture capitalist," and "venture capitalists." The Google tools also tell you the average top link position held by your site for any given search (in other words, what was the highest position held by a link to your site for that search). For all of these "venture capital" related terms, VentureBlog is in the top ten organic links. That makes perfectly good sense to me given my natural tendency to write about Venture Capital. In contrast, however, there is not a single search in my top twenty that includes the term "VC." Not "VC" or "VCs" or "What's a VC" or "Ninja VC" or "Sand Hill VC" or "Tech VC," and certainly not "A VC." Nary a single "VC" search term in the VentureBlog top twenty.

For the life of me, I can't figure out why that is. Admittedly, I don't have "VC" in the title of my blog, like Redeye VC or BeyondVC. But I certainly reference the term "VC" often enough, even occasionally in the titles of my posts. So what's keeping me down? Hopefully as I spend more time looking at the Google Webmaster Tools, I'll be able to better understand the dynamics of page rank.

I thoroughly enjoy writing VentureBlog. As I've said many times before, it gives me the opportunity to engage in a conversation with a really smart community of entrepreneurs. But it also affords me an incredible education. How else would I get an inside view of things like page rank, search dynamics, linking, referral traffic, viral growth, advertising dynamics, etc.? The understanding of each of these elements is invaluable when evaluating Internet businesses and VentureBlog has afforded me a front row seat to the show. I look forward to continuing to use services like Google's Webmaster Tools to make the most of that front row view.

Update: A commenter below writes "Couldn't you be a little less obvious for fucks sake?" Jeesh. Of course I could. In fact, I don't think that I could be any more obvious. That was the whole point. So much for irony.