Michael Moritz: Lessons from a Long-Ball Hitter

Yesterday, BusinessWeek published my profile/Q&A with venture capitalist Michael Moritz. The news cycle is insane these days, so I am reposting the top of the piece here as well as a link to the rest of the interview. Plus, Moritz doesn’t give many interviews, so it’s worth spreading the thoughts of perhaps Silicon Valley’s most successful investor.

Michael Moritz: Lessons from a Long-Ball Hitter
The journalist-turned-venture capitalist was early to ring the alarm bells about the weakening economy, but he remains optimistic

In 1984 a young British journalist named Michael Moritz wrote a short piece in Time magazine about the legendary venture capitalist Arthur Rock with the title “The Best Long-Ball Hitter Around.”" Today, the 54-year-old Moritz is the guy who swats investing home runs as a partner with the Silicon Valley venture capital firm Sequoia Capital. Moritz joined the firm in 1986 after leaving Time (TWX) and writing a book about Apple (AAPL), The Little Kingdom: the Private Story of Apple Computer.

The deal that made Moritz’s reputation as one of the top venture capitalists in the business came in 1999. That year he pushed Sequoia to make a $25 million co-investment with Kleiner Perkins in a little search company called Google (GOOG). When Google went public five years later in 2004, Sequoia’s $12.5 million investment was worth just over $2 billion—160 times its original bet. Before then, Moritz had put himself on the map with investments in Yahoo (YHOO), eToys, and Flextronics (FLEX), among other successful Web startups. Since the Google deal, Moritz has maintained his slugging percentage, scoring another big win with his investment in PayPal, which eBay (EBAY) bought in 2002 for $1.5 billion.

Moritz typically shuns publicity. But in early February I met him at his office on Sand Hill Road, in the last office park on the lane that serves as home to the kingpins of venture capital. A secretary ushered me into a conference room, but when Moritz showed up he invited me to sit in his office.

Efficiency, Even While Eating
Moritz wore the standard business casual uniform of the Valley: striped dress shirt and slacks, with a sport coat hanging on the wall. He has a small and simple office, with a desk and a table with a few chairs, and a window overlooking the woods. An old and weathered notebook case rested on the table. On his desk sat an Apple (AAPL) iMac computer, an Apple laptop, and a BlackBerry (RIMM), all plugged into the wall. Having visited China seven times last year, Moritz needs to recharge his batteries when he returns to the Valley.

When reporters interview people over lunch, they often can’t find enough time to eat. But Moritz was extremely efficient, downing a fruit plate and Cobb salad, even while picking out the eggs and bacon to set them to the side of the plate. As we discussed the history of Sequoia Capital, the state of Silicon Valley, and the future of investing, Moritz would stab a fork into a group of berries, stick them into his mouth, and gaze off into the distance, before offering up some quip or bit of insight.

Moritz’s presence belies his firm’s reputation for toughness. While Sequoia has made many bold bets over its 36-year history, it has also gained a reputation in some quarters for walking away from portfolio companies that fail to perform. As one head of an investment firm that invests in venture firms put it: “They take the portfolio out back and shoot it. They stop funding companies quickly if they are not working.” Moritz calls the criticism “unfounded” and says there are several instances when Sequoia and its startups “soldiered forward together when times were very bleak.”

Pivotal PowerPoint Presentation
Sequoia’s hard-nosed nature was accidentally put on display last year when Moritz’s firm put together a PowerPoint presentation detailing the coming economic downturn in stark terms. The 56-slide presentation advised companies to cut costs and become cash-flow-positive more quickly in order to avoid falling into a death spiral. Although the presentation leaked out on the Web, Moritz swears the leak was not intentional. “A couple of the CEOs asked us to send them the presentation to help them convince their management teams that this was the deal,” says Moritz. “It was not a cynical attempt to spread the Sequoia name.”

Even though Sequoia was early to ring the alarm bells about the weakening economy, Moritz says he remains optimistic. He is particularly excited about two recent investments he led. One was in digital camcorder maker Pure Digital Technologies, which he claims is the world’s leading maker of digital camcorders, having shipped 1.5 million units last year. He is also bullish about another investment in Green Dot, which he says is a leader in prepaid credit cards. And contrary to word on the street, Moritz says Sequoia still invests in young seed-stage companies from time to time.

The day I met him, in fact, he said he was talking to a 20-year-old about investing $500,000 in an embryonic idea. (He wouldn’t discuss the venture in detail.) “It’s as easy for me to be excited today by the unknown 23-year-olds as I was in the past,” he says. “Those sorts of encounters lift your spirits in imagining what is possible.”

Here’s an edited version of my interview with Moritz:

Can great companies be built in bad times?
Some of that is true. In bitter and cold times only the brave are going to venture out into the cold and the lily-livered posers are going to stay tucked into their bed clothes. It makes life easier for us. The people we are meeting are the genuine article as opposed to the pretenders. The only people who venture out are on a mission, which is what you need.

Click here to read the rest of the interview.

Survey Says: More Pain for Startups and Venture Capitalists in Q4 2008

Today, BusinessWeek published my story based on an early and exclusive look at Fenwick & West’s survey of trends in venture capital financing from the fourth quarter of 2008. It’s the first survey I know of that digs into the gory details of the venture world from the end of last year when the recession gripped the economy.

Here’s the top of the story:
Venture Capital and Startups Feel More Pain, Study Says
Startup valuations are falling and venture capitalists are driving harder bargains, according to a survey by California law firm Fenwick & West

Like the rest of the economy, the world of venture capital and startups is starting to feel more pain from the deepening global financial crisis.

That’s the main takeaway from a new survey detailing trends in venture capital investments during the fourth quarter of 2008 by the California law firm Fenwick & West.

The survey, which analyzed the terms of venture deals for 128 companies headquartered in the San Francisco Bay Area, found that valuations are falling for startups and that venture capitalists are driving harder bargains. The silver lining: The fallout so far is not nearly as bad as it was during the dot-com bust, when hundreds of companies went under and stratospheric valuations came crashing down to earth.

DOWN ROUNDS ON THE RISE
Sure, there were some startups last quarter that secured a higher value on their latest investment round, such as online vacation rental site HomeAway. But, of the 128 companies that received financing, 33% of them experienced so-called down rounds, or an investment that placed a lower valuation on the company than it received in the previous round of investment. More ominous, the percentage of down rounds rose every month at year’s end, hitting 45% in December. “Each month things got worse in the fourth quarter,” says Barry Kramer, the Fenwick & West partner who runs the survey. The highest percentage of down rounds occurred in the first quarter of 2003, when 73% of the companies surveyed by Fenwick & West suffered down rounds.

With the recession worsening, most financiers and lawyers do not expect the situation to get better anytime soon. They predict valuations will continue to decline until the overall economy begins to improve. “Private values really do lag,” says Kate Mitchell, managing director with Scale Venture Partners. “More down rounds will come in 2009.”

Click here to read the rest of the story.

Startups in a Downturn

Today, BusinessWeek published my feature story, “Startups in a Downturn.”

It’s about the idea that great companies can be built during bad times–an idea I’ve been talking about a lot lately on my book tour. It seems to have struck a bit of a nerve. It was the most emailed story on the site and the third most read story. This historical oddity occurred to me during the research for my book when I realized that American Research and Development invested $70,000 in the 1957 recession in Digital Equipment Corp., which turned out to be its best investment ever.

Here’s the top of the story:
Startups in a Downturn
Entrepreneurs who helped build their startups into tech stalwarts—companies like Cisco, Oracle, and Google—share lessons on how to thrive during tough times

December 1987 was no time to be raising money for a startup. Computer engineer Len Bosack was trying to attract funding for a young enterprise called Cisco Systems (CSCO). But the stock market had just crashed and the Dow Jones industrial average had plummeted 40% since October. Gun-shy venture capitalists either didn’t get the newfangled technology or deemed it too risky.

Making matters worse, Bosack was running low on the savings he had used to bootstrap the business, and competition was gaining steam. It wasn’t until this 75th meeting that he found a receptive audience. The willing financier was Donald Valentine of Sequoia Capital, a venture capital firm in Silicon Valley. On Dec. 14, two months after Black Monday, Sequoia invested $2.5 million in Cisco. “Valentine’s reasoning was pretty simple,” recalls Bosack, now CEO of telecom gear-maker XKL. “It doesn’t matter what they are. They are selling stuff in a bad market. With a little bit of capital and more experienced help they should be able to do better.”

Better is just what Cisco did. By the time of its initial share sale three years later, in February 1990—during a recession—the maker of telecom networking equipment was worth $224 million. Within a decade, Cisco Systems had become one of the world’s most valuable companies.

GREATNESS CAN EMERGE FROM A SLUMP
Today, some of America’s sharpest financiers and entrepreneurs say Cisco’s story holds a profound lesson easily forgotten amid financial turmoil: Great companies can be built during tough times. “For us, Cisco is always the company we think of when we think about bad times,” says Michael Moritz, a general partner with Sequoia Capital who was a young associate when the firm made its investment.

Cisco is just one example. In the history of technology, many other great companies either were founded during downturns or forged business models during bad times. In 1939, at the tail end of the Great Depression, two engineers started Hewlett-Packard (HPQ) in a garage in northern California. During the recession of 1957, Digital Equipment, the first computer company to challenge IBM (IBM), set up shop in a Civil War-era wool mill, sparking a high-tech boom in Massachusetts. “It makes sense to do research and development counter-cyclically,” says Tom Nicholas, associate professor in the Entrepreneurial Management Group of Harvard Business School. “Recessions can be really useful strategic opportunities.”

Click here to read the rest of the piece.

Andreessen & Friedman: Start-ups and VCs to the Rescue!

I gotta hand it to Marc Andreessen and Thomas Friedman–they both nailed it this week and repeated a message I’ve been preaching for the last year on this blog, in my book talks and in my work for BusinessWeek.

It is the idea that the entrepreneurial economy will play a key role in lifting America’s economy out of the recession. But each of them addressed the challenge in a slightly different though related way.

Andreessen broke the news during an interview with Charlie Rose that he is starting a new venture capital fund focused on investing in young and unproven companies with big ideas. I find it really fascinating that the best entrepreneur of his generation has decided to take off his operating hat to become a full-time venture capitalist.

Andreessen must believe, as I do, that this is actually a very good time to be in venture capital, as long you are able to raise money, of course. Although Andreessen has never been a professional VC, I am sure he’ll be able to easily raise a modest to large-sized first fund based on the reputation of himself and his partner, Ben Horowitz, and the fact that he’s gained a lot of experience the last few years doing dozens of angel investments. This is great news for entrepreneurs, and I can’t wait to see how Marc shakes up the industry.

One of the things I’ve been saying on book tour is that one of the great ironies of venture capital is that an industry all about promoting innovation has not been very innovative itself the last 30 years. So I hope that the financial crisis will lead us to try to experiment and create new approaches that can help finance and stimulate innovation.

Which brings me to New York Times columnist Thomas Friedman. In his column today, titled “Start Up the Risk-Takers,” Friedman boldly proposed that the federal government should temporarily get into the business of venture capital and help finance a new generation of biotech, info-tech, and clean-tech companies.

“When it comes to helping companies, precious public money should focus on start-ups, not bailouts,” wrote Friedman. “You want to spend $20 billion of taxpayer money creating jobs? Fine. Call up the top 20 venture capital firms in America, which are short of cash today because their partners — university endowments and pension funds — are tapped out, and make them this offer: The U.S. Treasury will give you each up to $1 billion to fund the best venture capital ideas that have come your way. If they go bust, we all lose. If any of them turns out to be the next Microsoft or Intel, taxpayers will give you 20 percent of the investors’ upside and keep 80 percent for themselves.”

Friedman suggested a new motto for the stimulus program: “Start-ups, not bailouts: nurture the next Google, don’t nurse the old G.M.’s.”

This is actually not a totally crazy idea. While I largely agree with VC Fred Wilson that the top VC firms do not need and probably would not take government money, I bet more second and third tier firms in need of capital, or young promising firms without a track record, would consider taking on the government as an LP–especially if it came with no strings attached.

We’re not that far away from this right now. Many venture-backed startups have already said they would take and apply for various bailout funds. Wireless provider Clearwire is an obvious beneficiary of the $7 billion in broadband grants, and many clean tech startups are going to tap into the tens of billions in bailout funds dedicated to smart grid and renewable energy.

Even if the plan doesn’t fly, I applaud Friedman for making a creative proposal and focusing the discussion on the need for supporting the new, rather than bailing out the dinosaurs.

Silver Spring: A Growing Presence in Green Tech

Today, BusinessWeek published my story on Silver Spring Networks–the most important green technology company you’ve never heard of. Silver Spring makes digital power meters that utilities are buying up by the millions to lay the foundation for a smart electricity grid.

Here’s the top of the story:

Silver Spring: A Growing Presence in Green Tech
Its smart energy meters are winning big customers in California and an investment from Google

California’s ambitious green agenda is swiftly pushing startup Silver Spring Networks into the black. In July 2006, the Golden State leapfrogged to the forefront of the environment-friendly tech movement when regulators gave the state’s largest utility the go-ahead to spend big on so-called smart meters that can moderate energy use. Once a dumb electro-mechanical machine that garnered little attention outside a once-a-month reading, the lowly meter has become a cornerstone of energy innovation by morphing into a two-way communications device.

And thanks to a measure approved by the California Public Utilities Commission, Pacific Gas & Electric (PCG) had $1.7 billion to spend on them. To fulfill its mandate, in July 2008 PG&E tapped a digital meter technology from Silver Spring Networks in Redwood City, Calif. Over the next four years, PG&E plans to replace all 5 million of its electric meters with Silver Spring’s technology.

Smart meters are part of what’s known as the smart grid, an upgraded national power infrastructure designed to dole out energy more efficiently and make both consumers and companies more knowledgeable about their use of electricity, gas, and other utilities. The government stimulus package signed into law on Feb. 17 includes billions of dollars for smart grid technology. “Smart grid is pretty critical to the future of our company,” says Andrew Tang, senior director of PG&E’s smart energy Web division. Rolling out millions of Silver Spring meters will mark “the beginning of a smart grid solution.”

A Green Startup You Never Heard Of

Demand for smart meters in particular may make six-year-old Spring Networks the most important green technology startup you’ve never heard of. Thanks to contracts from PG&E, Florida Power & Light, and other utilities, Silver Spring boasts a backlog of orders for meters and related technology worth $500 million, a princely sum for a company of Silver Spring’s age. The company is on track to generate positive cash flow in the second half of 2009, says President and CEO Scott Lang. “We are trying to transform the power industry for the 21st century,” Lang says.

Before the government announced plans for smart grid spending, Lang says Silver Spring was on track to hit $75 million in sales this year. The company now is revising those estimates “significantly upward,” Lang says, though he won’t say by how much. Silver Spring’s backlog is expected to double in the next 12 months, he adds.

Some of the most powerful players in Silicon Valley believe Silver Spring could be one of the first home runs to emerge from the clean tech boom. The latest sign: On Feb. 9, Google (GOOG) confirmed that it made an investment in Silver Spring. Representatives from Silver Spring declined to comment, but a source close to the company says it was in the range of several million dollars.

Google Investment Builds Confidence

Last October, Kleiner Perkins Caufield & Byers, an early investor in Google, led a $75 million investment in Silver Spring. According to the National Venture Capital Assn., that brings the total raised by Silver Spring to $167.5 million. That money will help fund a global expansion and should give utilities more confidence to form a partnership with the little-known player on a critical project. “This company is potentially one of the largest outcomes in clean tech,” says Warren Weiss, a Silver Spring director and general partner with Foundation Capital, one of Silver Spring’s early investors.

Click here to read the rest of the story.

Ericsson and Alcatel-Lucent Win the Verizon Wireless LTE Sweepstakes; Clearwire Talks Trash

The battle for the fourth generation wireless networks is officially on.

At the Mobile World Congress trade show in Bareclona today, Verizon Wireless announced that it has selected Ericsson and Alcatel-Lucent to provide the bulk of the telecom equipment for its new fourth-generation wireless network. Verizon also tapped Starent Networks to provide some gear as well. This win can translate into billions of dollars in business over the next few years.

The stocks of all three companies jumped 1.5% today, while the major indexes were flat or down slightly.

There were a few losers as well. The decision is a blow to other equipment suppliers that participated in trials with Verizon and Vodafone but weren’t selected to build the network: Nortel Networks Corp., Motorola Corp., Huawei Technologies Co., and Nokia Siemens Networks, the joint venture between Nokia Corp. and Siemens AG.

Nokia Siemens wasn’t a total loser, though. It got picked to be a supplier for one of the network’s subsystems that will run multimedia applications.

Known as Long-Term Evolution, or LTE, the new technology will give wireless consumers a true broadband experience on their cell phones and handheld devices so they can watch high-quality video and listen to music without delay or interruption.

Verizon plans to offer the so-called LTE network starting in 2010. Field trials of the network in Minneapolis, Columbus, Ohio, Northern New Jersey and Europe have demonstrated download rates of 50 to 60 Mbps.

Verizon’s announcement also spooked investors in Clearwire, which is offering a service on a competing technology called WiMax. Verizon Wireless’ 4G LTE deployment uses the company’s recently acquired 700 MHz spectrum. WiMax, which is backed by Sprint, Clearwire and tech industry heavyweights such as Intel and Google.

Clearwire’s stock fell more than 2% on the news, as well as the announcement by Comcast that it took a $600 million write-down on its $1 billion investment in Clearwire.

Clearwire even put out a release in response to the Verizon news, trying to spin a negative into a positive. In the statement, Clearwire made the bold claim that “today, Clearwire customers experience better speeds and bandwidth than what is being described as next year’s LTE networks.”

Let the trash talking begin!

ItchyStartups.com Gives Creative Capital a Thumb’s Up

Got a Google alert this morning notifying me of a cool blog called Itchystartups.com that reviewed my book.

The blog is a news site and resource for entrepreneurs by an Australian fellow named Andy Ley, who describes himself on his Twitter feed as an “Entrepreneur, Investor, Blogger and Adventurer.”

As I wrote on Andy’s blog, I thought he really zeroed in some key themes and ideas that other reviews totally missed.

Here’s the beginning of the review:

Posted by Andy Ley on Monday, February 16, 2009
Creative Capital: Georges Doriot and the Birth of Venture Capital By Spencer E. Ante. Published 2008. Review based on Hardcover.

“The son of a bitch has charmed them all.” And that’s the success of Georges Doriot… A man that began his journey as a foreigner in the U.S. with no one, and died having impacted the lives of everyone he met.

Spencer E. Ante’s portrait of Georges Doriot is sold as the man who pioneered the venture capital industry. But what we don’t realise from the outset, is exactly what sort of man it took to build the venture capital engine that continues to spur possibility and innovation today. Georges was certainly a twentieth-century maverick and Renaissance man.

“A commercial bank lends only on the strength of the past… I want money for things that have never been done before.” Georges Doriot’s life illustrates that by developing the impossible we become creators of the future. His story also shows that as a maverick you need stickability to overcome the efforts from the believers in the old.

The hard work in laying the foundations for venture capital go further than developing innovative investments… Creative Capital teaches us about developing innovative people. Georges Doriot took the view – bet the jockey, not the horse. “Products are less important than ideas, and ideas are less important than people.” Venture capital then started by recognizing the need to nurture and not just the furnishing of money.

“When a man has a stable of horses, and one wins the Grand Prix, do people say ‘What a good stable this man has?’ Or do they say, ‘You should get rid of your winner and develop the others.” Georges Doriot believed in fully developing investments and his success in capitalizing on the greater possibility rather than immediate returns was well recognized with his firm’s landslide returns.

Read the rest of the review by clicking here.

Phrase of the Moment: Stress Test

If I hear the word stress test one more time today I think I am going to hurl.

“Before Stress Testing Banks, Find a Pulse,” reads the headline for Gretchen Morgenson’s New York Times column in the Sunday Business section. Listening to the Sunday morning talk shows, I heard the word stress test used at least three times. My editor at BusinessWeek recently inserted the words stress test in a story I wrote about a company’s finances that were under pressure.

What’s going on? Well, the global financial system is in a crisis, so we’re inventing new phrases to describe the horrific situation. In fact, part of Treasury Secretary Timothy Geithner’s plan to fix the banking crisis actually involves a stress test of every bank to determine its financial health. So I guess we’re going to be hearing these words a lot more over the next few months.

A CreditSights analysis, reported in the Times blog DealBook, found that according to its “severe” case situation, all the major banks and brokerages — Citigroup, Bank of America, Wells Fargo, JPMorgan Chase, Goldman Sachs and Morgan Stanley — might require further capital injections from the government. The future losses for some banks are staggering by CreditSights’ estimates: Wells Fargo, $119 billion; BofA, $99 billion; JPMorgan, $124 billion; Citi, $101 billion; Goldman Sachs: $47 billion; Morgan Stanley, $34 billion.

It’s not such a bad metaphor, given that our financial system is clogged up like a bad artery with all these toxic assets. The concept of a stress test actually derives from the medical field. Stress tests are given to patients with heart problems to determine the ability of the patient’s heart to pump blood.

It also has other uses. Apparently, there are tests that can gauge the level of stress in your life. I suppose a lot of people are taking these tests right now with the economic implosion. And engineers do stress testing to figure out the strength and durability of physical structures.

Ok, now that I am stressed out talking about all these stress tests, I am going to go to the gym and get rid of my stress.

The World’s Hardest Problem: Harvard Prof’s Plan for Saving the Financial System

Now that Obama has pushed through a stimulus package, his administration has to crack a much tougher nut: Putting the banking system on sound financial footing and re-opening the credit markets.

We all know that TARP I has not worked out as planned. Yes, it averted a total catastrophe. But the banks are still not lending that much and the credit markets remain closed to all but the most stable companies. Our capitalist system remains a giant clogged artery in need of major bypass surgery.

So far, I have not heard any great ideas that could help solve this incredibly complex challenge. And there is no consensus emerging around how to get the banks to sell off the hundreds in billions in toxic assets clogging their balance sheets–unlike the stimulus program, which was a far easier problem. CNBC’s Dennis Kneale just floated an idea from an unnamed stock trader to turn the toxic assets into exchange traded funds.

But yesterday I got an email from Harvard touting a new plan and paper from Harvard Law School professor Lucian Bebchuck. His proposal to establish a “significant number of competing funds that will be privately managed and dedicated to buying troubled assets – not on creating one, large public-private aggregator bank” is the best idea I have yet to hear.

I think it has a shot at working because it designed to introduce much more competition in the market for these distressed securities–unlike one single “bad bank” that would only inject a limited amount of competition.

One myth about the current financial crisis is that there is no market for these troubled assets. That is just not true. Some of the smartest hedge fund managers in the world are trawling through these assets and scooping them up for super-cheap prices. Hedge fund kingpin John Paulson, for example, believes some of the best investment opportunities in 2009 and 2010 are in distressed mortgages.

So there is a market. It just needs to be far far bigger and more active and liquid so the majority of these assets can be bought and taken off the balance sheets of the banks. Bebchuck’s plan to use public money to create 25 or so new subsidized but privately run and financed funds designed to purchase these assets just might be able to spur the creation of that market.

“Establishing competing funds, I show, is necessary both to securing a well-functioning market for troubled assets and to keeping costs to taxpayers at a minimum,” writes Bebchuck.

“Each new fund will be partly financed with private capital, with the rest coming (say, in the form of non-recourse debt financing) from the government’s Investment Fund planned by the Treasury. One important element of the proposed design is a competitive process in which private managers seeking to establish a fund participating in the program will submit bids as to what fraction of the fund’s capital will be funded privately.

The government will set the fraction of each participating fund’s capital that must be financed with private money at the highest level that, given the received bids, will still enable establishing new funds with aggregate capital equal to the program’s target level. Overall, I show that the proposed design will leverage private capital to the fullest extent possible and will provide the most effective and least costly mechanism for restarting the market for troubled assets.”

Click here to read the entire paper.

Twitter Gets Shorty (What’s Next? Best Status Updater Awards?)

Last night I was getting ready to leave the office and go home when my colleagues Doug MacMillan and Arik Hesseldahl asked me if I wanted to go with them to the Shorty Awards.

“The hooty-hoos,” I said, having no clue what they were talking about.

“It’s the first award show for Twitter people,” said Doug.

Doug and I schlepped out to Brooklyn. When we walked up to the bar, there was a line of about 50 people snaking down the block. That was a shock. People will do anything to promote themselves–especially in a recession.

I won’t bore you with a recount of the evening other than to say, it was not as bad as I expected it to be. The biggest surprise was that the sponsors of the event shrewdly got some mainstream media organizations to sponsor it and buy in. CNN anchor and Twitter-lover Rick Sanchez was the host, MC Hammer made an appearance to promote his online venture and the Knight Foundation actually sponsored the event.

I also got to meet Howard Lindzon, a hedge fund manager who co-founded Wallstrip. I’ve been following Howard’s Twitter posts and enjoying them. He pulls no punches. Howard is actually trying to build a business on Twitter, using the messaging service as a sort of virtual order flow system where people can eavesdrop on what stock traders are buying and selling. The name of the company is stocktwits.

Howard made an interesting point when he told me that the first Blackberry devices took off because brokers and traders would message their friends with their trade orders when their internal networks went down. Now he is trying to revive that idea via Twitter.

The irony is that even thought Twitter has yet to figure out a way to generate revenue from its growing popularity, entrepreneurs like Howard are trying to build a business on it. Howard told me he is going to start charging a monthly subscription fee to get some sort of premium access to this info.

But on the whole the idea of giving out awards to the best twitterers is kind of absurd and reductive. What’s next?

Best Facebooker?
Best Status Updater?
Best Text Messager?
Best Emailer?
Best Instant Messenger?

What silly award show would you like to start?