OCTOBER 2003

Welcome to the Rockbridge Global Village, Inc. Newsletter. We hope that you find information and topics within this newsletter interesting and useful.

Topics in this newsletter:

VC Guru on Coming of the 'Next Big Thing'
E-Commerce's Hottest Items for the Holidays
Microsoft in standards battle with W3C
Microsoft Tweaks Problematic Security Patch
Marketers to Ask Feds to Quash California Anti-Spam Law

VC Guru on Coming of the 'Next Big Thing'
October 24, 2003
By Sharon Gaudin

What will be the next big thing?

What will be the follow-up to the Internet boom? What will have people ready to forget the bursting of the dot-com bubble and the kamikaze-like fall of their stock portfolios? Or will another technology really erase all those bad memories?

There will be something to wipe away those memories -- or at least most of them, according to Guy Kawasaki, CEO and a founder of Garage Technology Ventures, a venture capital investment bank for emerging technology companies. The next 'big thing' is on its way. It's probably being cooked up in some college lab or dorm room right now. Kawasaki, who is a former Apple Fellow at Apple Computer, Inc. and an initial evangelist for the Macintosh, says of course there is another life-changing technology on its way. That's just the way of the world.

And as for the cynical nay-sayers who lost their shirt -- and probably their Palo Alto house and BMW -- in the dot-com melt down, Kawasaki says by the time the next big thing comes around, they'll be over it. And they'll be ready to invest again. Maybe they'll just be a little wiser this time.

In this one-on-one interview with Datamation, Kawasaki talks about what might be coming down the road, if investors will still back some kid with a cool idea, and what he learned from the dot-com bust.

Q: So, Guy, tell me... what will be the next big thing?
Almost by definition that is in the hearts and minds of young people in educational institutions. The job of the early stage investors is to find those people, and not necessarily to know what that thing is. People have hazard at guesses -- a real explosion in biotech or wireless, but the wireless journey has already begun. That may already be here so I don't know if you can call it the next big thing. Those are the ones mentioned most often -- wireless and biotech.

Q: Come on... what do you think it will be?
I think I just need to find those people in the universities. If you could get most people to admit it, they would say when they were in the presence of what became the next big thing, they at first didn't realize it. They could say, 'I knew it was the personal computer.' or 'I knew it was the Internet.' You can look back and say that, but the trick is to see it coming. Not many people can say they saw any of it coming.

Q: Do you think it's coming soon?
It's not really predictable. It's not that precise. I can tell you right after though.

Q: After so many people lost their shirts a few years ago, do you think people will be hesitant to invest in yet another college kid with a cool idea?
To a very large degree, that will be true. We've gone from a period of irrational exuberance to irrational depression. You need a proven idea, a proven team and a proven pipeline... That's what you have to look for.

Q: But what will that kid need to do to get venture capital at this point?
The stock answer is to put together a team and put together a prototype and get some buyers. That's like saying if you want to become a professional basketball player, you need to practice a lot and get a decent jump shot. Well, duh. They should pick a product or service that they love, as opposed to reading somewhere that this is the hot sector. Just get going with the product. Don't worry about the money. Get the product going. People want to see a product. The 'back of the envelope thing' isn't flying these days.

Q: Do we need the 'next big thing' to get us out of this economic slump?
In a social psychology sense, the answer is yes. People need heroes and saviors. On a purely rational basis, it wasn't rational to get as exuberant as we did and to get as depressed as we did. Things are not as good or as bad as they seem. I think it's picking up already without it. People need to buy stuff and sell stuff. Can you imagine a world without Amazon.com and e-commerce anymore?

Q: Will we ever see another dot-com-like craze again?
I hope so. I need just one more in my life. Now I know what to do.

Q: So what would you do?
I'd cash out. If anybody tells you differently, they're lying. Everybody would cash out. Seriously... People aren't, jaded. They just won't believe again that it will go on forever, like they did last time. I think it's going to take more and there will be a dampening effect, but I think it's going to happen.

Microsoft Tweaks Problematic Security Patch
October 23, 2003
By Ryan Naraine

Microsoft (Quote, Chart) on Thursday issued a "major revision" to a security patch released earlier this month, warning that it caused a compatibility problem with third party software.

The original patch (MS03-045), included in the company's first monthly advisory, plugged a buffer overrun vulnerability in the ListBox and ComboBox controls that could lead to harmful code execution. The flaw carried an 'important' rating.

However, after the patch was released, Microsoft learned of compatibility issues with third-party products and released a new advisory with updated patches (New patch available here). The company did not say which third-party software had compatibility issues.

"The compatibility problems only affect (certain) language versions of the patch and only those versions of the patch are being re-released," Microsoft said, noting that the new security patches support both the Setup switches originally documented as well as a set of new Setup switches.

The language versions affected include Brazilian, Czech, Danish, Finnish, Hungarian, Italian, Norwegian, Polish, Portuguese, Russian, Spanish, Swedish and Turkish.

The English language version of the patch is not affected.

Additionally, Microsoft said the updated language versions support Windows 2000 Service Pack 2, Windows 2000 Service Pack 3, and Windows 2000 Service Pack 4 in a single security patch.

According to the revised bulletin, the software compatibility issue is unrelated to the security vulnerability previously addressed. "Customers who have applied the patch are protected against the vulnerability discussed in this bulletin," the company assured.

Marketers to Ask Feds to Quash California Anti-Spam Law
October 22, 2003
By Susan Kuchinskas

As e-mail marketers prepare clients for the worst and continue self-regulation efforts, they're marshalling their forces to lobby Congress to sign one of two bills that will supersede California's tough new anti-spam law -- and leave the door open for third-party commercial e-mails.

The legislation spurring marketers to action is California's SB 186, which was signed into law at the end of September and goes into effect on January 1, 2004. The law totally bars the sending of unsolicited commercial e-mail to and from the state, and it allows individuals to sue not only someone who sends an unsolicited commercial e-mail, but also the advertiser on whose behalf it was sent. So, an over-enthusiastic or ethically-challenged affiliate marketer who harvested e-mail addresses off the Web and used them to send marketing messages touting an online retailer's specials could put that retailer in the way of a lawsuit. It defines unsolicited commercial e-mail as any commercial e-mail that a recipient hasn't given "direct consent" to receive from an advertiser.

That last provision seems to preclude common customer acquisition marketing practices, including affiliate marketing and the renting of opt-in e-mail lists to third parties.

But e-mail marketers see customer acquisition as a vital part of their businesses. Michael Mayor, president and COO of list management firm NetCreations, says the California law's author, Senator Kevin Murray, didn't intend to preclude this type of marketing.

"The legislator had customers in mind, not customer acquisition," Mayor said, "which is a huge piece of direct marketing." Mayor said he had talked with Murray and, "Clearly, banning third-party commercial e-mail or newsletters was not his intention. We're trying to figure out a way to correct things."

Preparing for the Worst

NetCreations builds double opt-in e-mail lists on behalf of list owners, including Jupitermedia, the parent of this publication. Mayor says that, with SB 186 in effect, his entire business would be illegal if it were based in California. As it is, because consumers on his company's lists have not opted in to receive e-mail from specific advertisers (having only agreed to receive e-mail from "sponsors" or "partners"), his company has begun to cull any e-mail address that can be tied to a California resident, as well as any that have unknown states of origin. That's the only way Mayor sees of protecting his company and its clients, as things now stand.

Industry Self-Regulation

As Mayor talks to legislators and prepares clients for the law coming into effect, three interactive marketing associations -- the Interactive Advertising Bureau, NAI's E-mail Service Provider Coalition and TrustE -- have continued work on industry self-regulation. They've created an anti-spam pledge that they're asking direct marketers to sign. The pledge contains the group's own definition of spam, stepping in where the Direct Marketing Association's (DMA) Association for Interactive Marketers (AIM) declined to tread in releasing its e-mail marketing best practices. According to the associations, unsolicited commercial e-mail, or spam, is defined as "commercial e-mail sent without an existing business relationship or prior informed consent."

The associations' pledge states that:

• Commercial e-mail must not be sent to an individual's e-mail address unless there is an existing business relationship between the sender and the addressee or the sender has obtained prior informed consent from the individual.
• Every commercial e-mail must include an opportunity for the recipient to unsubscribe from receiving such e-mail in the future.
• Commercial e-mail must not include address fields, subject lines and message bodies that are misleading, false, or deceptive.
• E-mail addresses must not be gathered through surreptitious methods.

The main difference between California's definition of spam and that of the associations is that the sender must have obtained "informed consent," rather than "direct consent".

Counting on Federal Legislation

While preparation and industry self-regulation are important, e-mail marketers are truly hoping for federal legislation to save the day. Trevor Hughes, executive director of ESPC, said that having a uniform definition of spam and regulations at the federal level is critical for the interactive marketing industry. The ESPC, IAB and NAI are lobbying Congress to quickly pass one of two anti-spam bills that are less restrictive than California's and that would preempt the state anti-spam laws now on the books.

"We currently have 37 states with spam legislation, none of which are consistent," Hughes said. "That creates a cacophony of state legislation that needs to be harmonized." He said that state attorneys general that try to prosecute spammers are flummoxed by contradictory rules in other states. "E-mail does not recognize or understand state borders," Hughes said. "We need the broadest, most consistent level of enforcement possible, so that an attorney general or U.S. prosecutor can bring a case in Florida against someone who is spamming from Mississippi."

NetCreations' Mayor has started a letter-writing campaign, asking the owners of the lists his company manages to fax federal legislators and press for passage of three of the eight bills under consideration, H.R. 2214, the Reduction in the Distribution of Spam Act, S. 1293, the Hatch/Leahy bill, or S. 877, the Burns/Wyden bill.

Hughes said his organizational coalition is also lobbying for passage of these bills: "We continue to work on particular issues, but we're hopeful that one of bills will see a presidential signature before the end of the year."

These e-mail marketers hope that this time, legislators will listen as they explain the nuances of the e-mail marketing business, rather than trying to appease consumers by legislating with broad strokes. "This is what happens when you have good intentions, but you don't take time to learn about the business before you enact a law," Mayor said. "Had there been some discussion up-front about the direct marketing business, I'm sure this could have been avoided."

Rockbridge Global Village, Inc.
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