From the Partnership

Introduction

We've been busy over the summer and early fall with staffing up and continuing our strong 2011 investing pace. Our newest non-seed deals, Yelli and Domain Holdings, are discussed below. Domain Holdings was co-founded by John Ferber, who, together with his brother Scott, founded Advertising.com. See our interview with John Ferber below.

We introduce the newest addition to the Investment Team, Farah Giga, below. Farah has been described in the New York Times as "Valhalla Partners' new storage whiz kid".

Also check out Dan Gordon's observations from VM World 2011.

As always, we welcome your comments and questions. Please email to editor@valhallapartners.com.

Valhalla's New Principal: Farah Giga

I'm really proud and pleased to be part of the Valhalla team.

I'm still overwhelmingly in learner mode, but what strikes me as most interesting about the Valhalla position is the integration of investment theses up and down the stack.

At Hewlett Packard I was very focused on the transformation of the IT infrastructure that is taking place now, a transformation that is only partly captured by buzzwords like "cloud" and "scale out".

Valhalla has a deep interest and history in infrastructure investments, but also has expertise and interest in areas further up in the stack: digital media and Big Data are application areas that require a global infrastructure and in turn present very interesting investment opportunities. My personal goal is to bridge the two levels in the stack and find investments for us that make a "virtuous circle" of increasing adoption and traction that will lead to great returns.

Valhalla CEOs: John Ferber

How did you get the idea for Domain Holdings, and what convinced you it was a winner?

I've been involved with domain names in some way since 1996, but I didn't truly realize the value of a domain name until my experience founding Advertising.com, which in 1999 was called Teknosurf. Figuring that an easier-to-remember name would add value to our company, we acquired the "Advertising.com" domain name for $100,000, and renamed our company, which was acquired for $496 million dollars in 2004. Advertising.com was a real company with more than 600 employees and several hundred million dollars in revenue when it was acquired, but I believe that at least some of that exit value came from our name change. I am a firm believer that domain names are the "location location location" equivalent for businesses on the Internet, and my co-founders and I formed Domain Holdings to be the best Domain Life-Cycle Management Provider in the industry.

What does Domain Holdings do for its customers?

We provide a full suite of solutions centered on our proprietary technology platform called "DomainPower" (www.domainpower.com). DomainPower is an enterprise class domain management, development and monetization platform. We also provide services centered around analytics and consulting as well as acquisitions and divestitures for our clients. Simply put, our objective is to help our clients maximize the value of their domain portfolios through monetization/development and acting as a broker to facilitate the buying and selling of domains.

What did you learn from Advertising.com that's serving you in good stead at Domain Holdings?

First and foremost, a company is only as good as the people who run it and how important it is to attract and hire the best people possible.

Secondly, I learned from Advertising.com how important it is to strive to deliver a world class service experience for your customers as well as have a data-driven analytical approach for internal decision making as well as for how our products and services are delivered to our clients.

How do you think the domain name system needs to change in order to support robust user acceptance in the future?

I think the current system is actually pretty well conceived and evolved. ICANN recently approved the ability for hundreds of new Domain Extensions to be launched in the upcoming years, this will open up the opportunity for millions of new applications and opportunities for businesses and domain investors to take advantage of.

Dan Gordon: VMWorld is the core show for emerging IT infrastructure

We've noticed a turn away from the infrastructure trade shows of the last decade.  SNW is a shadow of its former self. Interop is somnolent. If you have to pick one show to go to in order to see what's happening in next-generation infrastructure, it's VMWorld today.

This year's VMWorld struck me in three aspects, two of them recurring and one of them new:

1. First of all, it's interesting that VMWare has been able to do such a (brilliant) job of positioning themselves at the heart of the cloud. This may seem obvious, but two or three years ago it wasn't clear how virtualization and the cloud interacted. VMWare's strategy -- chasing cost savings for initial server virtualization, transitioning to IT mobility through virtualization, and eventually achieving business advantage through dynamic use of cloud infrastructure -- has been directly on the mark, and the company has benefited from it.
2. As often happens in a new ecosystem, there are too many vendors supplying too many peripheral solutions. VMWorld this year was chock full of cloud performance management wannabes of all kinds. There needs to be some consolidation.
3. What struck me as new this year is the new player in the ecosystem, the service provider. Two kinds of service providers: "thick" ones with their own data centers, and "thin" ones who re-sell capacity (a bit like MVNOs, but maybe that's a catty comparison). They act like enterprise data-center buyers in some ways, but in some ways are quite different. This new class of customer demands careful study by investors.

Portfolio News

New Investments

Yelli, Inc.

On July 22, 2011 the Partnership participated in a $1.0 million seed financing for Yelli, Inc., contributing $0.5 million. Yelli is developing a next generation SAAS platform for local merchants, and simultaneously a twitter-like service for consumers to follow their favorite merchants.

Domain Holdings, Inc.

On June 24, 2011, the Fund invested $1.0 million in Domain Holdings, a Florida-based firm offering custom development for premium domain names and efficient development of non-premium names. The company was founded by John Ferber, a co-founder of Advertising.com and the brother of Scott Ferber, the founder and CEO of the Partnership's portfolio company, TidalTV.

Q & A

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