Baseball is my favorite sport. I was fortunate to be living in NY during the later half of the 1980s. I was even more fortunate to have witnessed Game 6 of the 1986 world series with my own eyes. I also played baseball in high school. I was a mediocre hitter, to be honest, not really disciplined and with some technique flaws. My batting average was ok, but I had too many strikeouts (patience!) and too little home runs (technique!). However, I was a great fielder. I played a mean shortstop (great glove) and was often used in center field as well (good sped and arm). Not a trivial combination. At 36, I still reminisce on the few home runs I managed to pull 20 years ago. I follow the game closely, I have written about it and I still get heartbroken every time the Mets collapse.

Which is why I almost get angry when I see baseball being abused.

Shai Tsur, in his recent posts, has taken a brave swing at explaining the VC model. While Shai has done well explaining the rational of VCs, he has brought to my attention a Marc Andreessen’s post in which he compared the VC model to the game of baseball:

“The whole structure of how the technology industry gets funded — by venture capitalists, angel investors, and Wall Street — is predicated on the baseball model. Out of ten swings at the bat, you get maybe seven strikeouts, two base hits, and if you are lucky, one home run. The base hits and the home runs pay for all the strikeouts.”

In other words, it’s about slugging percentage.

Yeah well.

That’s the only similarity I can find. The differences, however, are more striking. the game is so fundamentally different I don’t really know where to start.

First of all, a baseball hitter doesn’t choose his at at bats. When you’re up to the plate you have got to face the pitcher, be it Johan Santana or Roger Clemens. You can choose your hitting strategy - wait off some pitches and see if you can get ahead in the count, or be aggressive and jump on the first pitch - but in each case you HAVE to perform. VC’s choose their pitchers, pitches, teams, fields, leagues, arenas. Imagine what kind of batting average a decent Major League would pile up if he had such privilege.

The second difference is even more fundamental. In baseball, your goal is to win as many games as possible during the season. Not a single game or a single at bat, but a pennant. This is the source of terms such as pitching rotation, sacrifice, intentional walk, middle relief, etc. Slugging percentage is nice, but it doesn’t really say that much. Barry Bonds had a great slugging percentage but San Francisco hasn’t won anything in who knows how many years.

The third difference is with the true meaning of stats. Baseball is all about stats. If you hit .320 with 35 home runs this season, chances are you’ll hit more or less the same next season. In the start up industry your last at bat doesn’t mean much. In baseball terms, you can have an MVP season and then follow up with a sub mandoza line season. You can find yourself with seed stock at Google and be considered a genius. You can pass on the opportunity to have invested in Facebook and go down as a fool. It’s much more about the guts than about the stats.

VC’s are not baseball teams. A typical VC is a group of talented individuals who work at a firm whose sole purpose is to wisely invest other people’s money. Everybody likes hitting home runs, but striking out in this case could mean hurting someone else’s pension fund. It’s different than waiting for your next at bat. It’s different than losing today and winning tomorrow. In this case, sadly perhaps, every loss counts. You could argue that the law of averages takes care of that, but in reality when it comes to making decisions about investments VCs are much more risk averse than baseball players. The think many times before they swing, a privilege a 95 MPH fastball doesn’t grant.

I’m not saying the models don’t count. They do. VCs do try to make intelligent investments and earn the highest returns they can. But human factors count just as much, which is why people tend to invest in entrepreneurs they already know from past experiences. Images count, which is why VCs look to invest in big names. Job security counts, which is you need to be safe when its time to explaining killing a portfolio company. Nobody knows which company is the next Google and honestly, very few people trust their own judgment when it comes to making such predictions. In the end, the system works its way to its own optimum. It’s only natural, but don’t compare that to baseball.

      

Serendipity Technologies is a unique web 2.0 company. It has earned a poll position within the Enterprise 2.0 space for a few good reasons.

Serendipity goes for for the big prize. Its Flagship solution, WorkLight™, is already helping global 500 and other enterprise customers catch up with web 2.0. The solution is a secure server-based software product that provides workers and consumers with “Web 2.0-style” access to corporate data stored in enterprise information systems and applications. Timely information is delivered using technologies such as RSS, Ajax, desktop and web-based gadgets and widgets, personalized homepages, social bookmarks, application mashups and instant messaging. 

In other words, it ports “traditional” IT systems to the latest and greatest of web 2.0, making it more manageable, natural to use and yes, sexier. Early stage execution was impressive and Serendipity have secured significant early stage funding. This created a working environment that is anything but common in web 2.0 start-ups. Being an Enterprise solution provider makes it even more impressive. The Enterprise software market, while naturally more promising in the long run, is naturally much more complicated and cautious when it comes to embracing web 2.0 technologies.

I sat down with Shahar Kaminitz, Founder and CEO of WorkLight for a holiday eve Q and A session which is hereby brought to you.

Could you tell us a bit about WorkLight, how old is the company, where are you on the corporate and product life cycle?

Shahar: The company was established in the beginning of 2006 by Yuval Tarsi and myself, at which time we also raised our first round of financing, totaling over $5M. We are backed by leading venture capital funds – Genesis Partners and Index Ventures – and Shlomo Kramer, co-Founder of Checkpoint and Imperva’s CEO. We have officially released our product, called WorkLight, in January 2007 at the DEMO conference, and it is now generally available. WorkLight is currently implemented and being used at several Global 500 corporations. We operate from our offices in Boston, MA and Yakum, Israel.  

What is your vision as the founder?

Shahar: For the last 18 years, I have been involved in different aspects of enterprise software as an engineer, manager and Venture Capital investor. The general direction enterprise software took during these years is towards more functionality but also great complexity. Information systems have become extremely complex to implement and offer a very poor user experience. In striking contrast to that, on the consumer side of the internet, things have gone drastically towards simplicity, as far as the end-user is concerned. Google, for example, has taught us all a lesson about the power of simplicity, which hides a lot of complexity “under the hood”. My vision is that employees will be able to enjoy the fun and productivity associated with all the new “web 2.0″ tools and services in their work environment. We introduce new ways of access to enterprise data, which are taken from the consumer world. For example, sales, inventory, orders and financial information will be accessible to employees in a personalized and convenient way, just like getting blog updates through RSS, building a Personalized Google page or creating a Yahoo widget.

What is the biggest challenge a modern organization needs to face in terms of information management today? How does WorkLight help solve it?

Shahar: Employees increasingly rely on information to do their job. This information is available from multiple enterprise applications, each one coming with its own proprietary, and often cumbersome, user interface. Workers need to login to each relevant application, search for the appropriate data record, and only then use it in the context of the business task at hand. The typical result is that employees either are not using the applications altogether, or suffer from what IDC calls “death by navigation”: a deadly effect on worker morale and productivity. Finding and consuming information is exactly what the Internet does so well for us as consumers. With WorkLight, people at work use the same services familiar to them at home to access enterprise data. WorkLight harnesses web 2.0 technologies to solve the information access problem. Enterprise application data become just like web content; accessible in the same form as web content and by means of the same web technologies. Furthermore, application data and web content can be freely mixed. We constantly add more web 2.0 interfaces to enterprise data to our current collection, which includes RSS, gadgets and widgets, popular personalized homepages, Instant Messaging and Social Bookmarking.

There is heavy debate regarding the maturity of enterprise 2.0. WorkLight is a Marquis company in that respect and one of the first to have raised significant early stage funding.  Would you define WorkLight as an enterprise 2.0 company?  Was it hard to rally quality investors behind the vision?

Shahar: There is indeed a lot of debate what is scope and definition of Enterprise 2.0, and I’m not sure that I have a clear position on that subject. Our customers are mostly unaware of the Enterprise 2.0 theme, but are very much aware of the widening gap between the “at work” and “at home” computing experience. What is important for WorkLight is that we solve a known and substantial business problem, and as result have a solid business model. This made things quite easy for us on the fund-raising front, not our association with a hot trend.

The borders between personal and corporate information are getting shadier. For example, you see personal blogs by executives becoming a legitimate part of the corporate and marketing strategy. But it also redefines information flow and security requirements inside the organization. What is your view on the expected evolution in that area?

Shahar: I am a big believer in blurring these boarders and eventually eliminating them completely. There is no reason why the employee needs to go back into the “dark ages” when at work. The corporation needs to take care of the infrastructure to enable this consumer-like experience in a secure and scalable way, and let the users do the rest.

Who do you believe you would eventually be “selling to”? The CIO? IT? Marketing? HR?

Shahar: Even from our first few sales an interesting picture arises: we are selling to the business units, where the business problem is painful. Often, end-users themselves are the drivers for change and incorporation of web 2.0 technologies in their workplace, facilitating a “grass-roots” process. This can be the sales, marketing, HR or finance department. IT is then engaged in the process to verify that the product adheres to corporate policies, mainly security.

At the personal level, as a start-up-ist, what are the most fulfilling moments you have? most challenging?

Shahar: The most fulfilling moments are when you see that something so young and fragile as a start-up company is able to impact people. This can be your customers, for whom you are able to generate real value and change the way they work. It can be industry analysts or potential business partners that positively react to your new technology. And it is certainly your employees who get engaged in something adventurous and innovative. Challenging moments are mostly related to the lonely feeling of a small company with limited resources “fighting” against the whole world.

How do you deal with the “chicken and egg” situation of the early stage - getting the product ready for the customers in parallel to getting the customers who define the product?

Shahar: We did not really suffer from this problem. We were able to get enough customers engaged in a very early stage, before the product was ready, just based on their need for a solution and the innovative nature of our technology. There are organizations, notably in the financial services sector, that have a strategic goal to identify and incorporate new technologies, and these people are great partners for a company in its first year.

What would make 2007 a successful year for WorkLight and for you?

Shahar: 2006 was the year of company setup and initial product development. We were delighted to be able to implement the product at several huge organizations and garner a lot of interest in our offering. 2007 is dedicated to extending our reach into more customer organizations in more markets and enriching the product with more “web 2.0″ capabilities. If at the end of the year our solution will be used by tens-of-thousand of people and will significantly impact their work experience, I will regard it a success.

      

I was aware of the fact that ePayments were going through the most significant revolution since the invention of the credit card, but Payoneer managed to blow me away. It’s one thing to solve a real problem. Managing to simultaneously address an array of real problems, on and off the web, is a totally different story. Payoneer mastered a way to put sticking glue on both.

Payoneer’s offering is for businesses, but it is an end user product - a prepaid rechargeable debit card. The card (by MasterCard), is connected to a personal, secure, web based “checking account”. Card holders can use the card on and off the internet, collect and make payments, withdraw cash at ATMs, transfer funds in and out at their will and so forth.

Businesses, on the other hand, can use the cards to avoid the huge headache involved in managing payments. Instead of paper checks, eChecks and wire-transfers, which altogether are complicated to manage, expensive and insufficient, they can opt for a much simpler solution – issue a debit card to each payee and just credit it.

Payoneer offers the solution as a one stop shop, including issuance, management and support and all for a very cost effective price.  The company has announced this week that it has raised $4M led by Greylock Partners. It’s customer and early adopter base already includes names such as MetaCafe, oDesk, ROI Rocket and Plimus. I sat down with Moshe Mor of Greylock Partners and with Yuval Tal of Payoneer for a discussion that turned truly inspiring.

Can you pinpoint your target market?

Tal: “The sweet spot is clearly with web related companies who need to pay both companies and individuals. These companies  can now put together an effective business environment. Managing payments to a global array of individuals is close to impossible. eChecks and direct deposits are not a popular payout method even in the US and then there are all sorts of international banking and currency issues which just kill the whole thing. The result is a market that remains mostly paper based. The web 2.0 economy is dependent on the need to manage payment relationships with people all over the world. Think about paying bloggers for their journalism, for example, or about experts offering their services at expert networks. They all need a pay-out solution as a fundamental component of any business environment. Our customers have a very simple solution – they issue debit cards and then reload it on an ongoing basis without worrying about anything else”

What about the end user?

Tal: “For the individual the situation is even more painful. Take user generated content, for example. Think about what it takes to actually benefit from it as an individual. Cashing international checks is a very complicated matter for many people in many countries. Very few publishers would transfer money to personal bank accounts. This whole situation sets the bar at a point which is not cost effective or time worthy for most people and therefore withholds the huge economic potential”.

So how can another card solve a complicated issue?

Tal: “The card is the best mechanism because it’s simple and universally accepted. MasterCard cards can be used at any store, website or ATM, worldwide. Unlike pure online solutions like PayPal, you don’t need to worry about how to withdraw your earnings. The global economy has created a dire need for fluent payments from US publishers to international contributors, for example, a need that presents a huge and limiting challenge and that is easily addressed by us.”

Mor: “Let’s take a look at the big picture for a minute. The web economy started mostly as a one-directional payment flow; people paying for stuff they buy online. Over the last few years, the web economy has developed to encompass many more payment flows: people paying people (which gave rise to PayPal), people getting paid for directing traffic to web sites (affiliate networks) and more recently, for generating content. While the pay-in flow has been around for a years and therefore has been addressed by multiple solutions, the pay-out flow hasn’t. The globalization of the web added a layer of complexity that required innovative solutions like prepaid cards. So we have an underserved and a growing need”

How can you compete with better established solutions like PayPal?

Tal: “I get this question a lot but you need to understand that Payoneer does not compete with PayPal. It is the credit card companies’ strategic interest to establish position in the pay-out market and they do it with partners like us. PayPal is a great solution but it is also limited. It is much more dominant in the US domestic market and with US bank account holders. You can’t use your PayPal account to get an ATM in India, for example, but you can easily use your MasterCard card and get an ATM card there. Our solution is good for individuals that are practically “unbanked” and for people who prefer not to use their day to day back account to get paid”

This seems like an opportunity for new entrants. What is Payoneer’s secret sauce?

Mor: “Payoneer is coming into this opportunity with what we believe is the first easy-to-use and comprehensive solution. I believe that the main barrier to entry is credibility and domain expertise. Very few teams have the breadth of experience that this unique space requires. It took Payoneer almost two years to develop a platform that can provide a reliable and credible solution and they started with a team that already knew what they were doing! “

Tal: “We needed to rally a major bank behind us, then get through MasterCard and this is before addressing any “regular” start up issues. Both needed to feel very comfortable with our ability to manage this type of operation. Our deep experience with online banking was necessary just to get started. This isn’t a space you simply walk into”

What is your longer term vision?

Tal: “I believe the real benefit businesses begin to realize is the upgraded relationship they will have built with their users. An ongoing billing relationship with an individual is a very meaningful asset. It means your customer carriers your logo in her pocket, literally and metaphorically. It means your customer pay regular visits to your website. Transforming any engagement to a sustainable billing relationship carries much deeper potential for brand attachment and for additional business.

Evidence shows that people tend to spend on the web what they earn from the web. This sets the stage for much bigger economics and our customers already begin to realize that. Check out Plimus, for example. A market place for user generated software that has integrated our solution. A classic example of a web 2.0 service provider that gets it” 

Look, this market will clearly happen, the only question is whether it’s going to be us that get to lead it”

I remembered it was not too long ago that PayPal was a young, promising start up too. I have a strong feeling I will sit back and reflect on this post in a few years when Payoneer will long be a household name.

      

We all know this problem. How can we get our hands around the research that is relevant to our business? Research tracking has become impossible, particularly in an Internet start-up where the full time job is already filled with several full time tasks.

Danny Cohen of Gemini decided to grab one bull by the horn. He opened a research library that covers web 2.0 and Venture Capital. In the process he has also spun his eSnips account very cunningly, showing that the potential for sharing is basically infinite given the right environment. The folder can be reached here:

I personally plan to use it.