There's a famous moment in 1970s television sitcom lore when the super-popular "Happy Days" lost its mojo.  That moment is when the main character and hero, Arthur Fonzarelli ("The Fonze"), performs the improbable water-ski trick of jumping over a shark.  Now, I'm an avid water-skiier, and I've been known to jump a Loon or two, but jumping over a shark is so absurd its laughable.  The video clip, which I embed below, underscores how ridiculous the feat is with Fonzie still in his (dry) leather jacket.

In the common vernacular, "jump the shark" has come to symbolize that moment when something or someone has peaked and where the over-exposure gets to the point where it's all downhill from here.

I am beginning to wonder if Apple has jumped the shark.

First, they pass Microsoft in market capitalization to become the most valuable technology company in the world.  Then they purchase Quattro Wireless to enter into the advertising business, attempting to box out Google. Then they launch the iPhone 4 a mere few months after the iPad.  Both are heralded as the most successful product launches in the history of technology.  

But in the last few weeks, there have been a few signs that perhaps they have peaked and come to their "jump the shark" moment.  Here are few signs that stand out:

The iPhone 4 feels like a rushed product and, although selling well, is getting poor critical reviews.  Consumer Reports slammed it for the bad reception and took the company to task ("We can't recommend the iPhone 4").

Perhaps more worrying for Apple is Google's declaration of war and the success of Android.  Apple and Google are competing for the hearts of developers and advertisers as well as consumers, and the battle appears to be tilting.  Many commentators are ironically observing that Android may be to the iPhone what Microsoft Windows was to the Mac – an open platform that simply wins over time on volume because of its superior ecosystem.

Many people forget that Google acquired Android in 2005 – even before the iPhone was launched.  Google has been working on developing a dominant position as the open platform for mobile computing for many years, probably not even knowing that Apple would be their main rival (more likely Microsoft, in fact).  So it should not be such a surprise when people begin to recognize that Android is really working.  According to Quantcast, Android has 21% market share in June for smart phones as compared to Apple's 58%.  The Android numbers are growing fast, and this is just US figures.  Android arguably has already established a superior position in the international market given their breadth of OEM and carrier partners.

What has struck me most recently are the conversations I'm having with entrepreneurs and industry leaders about Apple.  Yesterday a mobile start-up CEO told me that when Apple declared that they would block app vendors from collecting device data to use for personalization and targeted advertising, he decided to pivot his start-up to focus solely on Android.  Android app numbers have been widely reported this week as growing remarkably fast and Android app usage is growing faster than Apple.

The president of a mobile advertising agency told me last week that he believes Google/Android will win the battle because it represents the more effective, and better-known, advertising targeting paradigm – search-based vs. apps-based.  The debate here is whether better targeted advertising will be based on what applications I'm using (and what songs I'm listening to on iTunes), which is what Apple is betting on, or will better targeted advertising be driven from search.  If Google succeeds in leveraging mobile search data on devices to inform mobile advertising within apps, it will be very powerful and both advertisers and publishers will flock their way.

A possible Trojan Horse in the mobile platform wars is HTML5.  Apple was quick to push HTML5 as a new standard on the iPhone over Flash, perhaps out of genuine frustration with what Steve Jobs refers to as a "buggy battery hog".  But in promoting HTML5, Jobs may be inadvertently encouraging developers to build cross-platform applications that are elegantly dynamic and browser-based rather than app-based.  If Android continues to get momentum, and HTML5 continues to gain in popularity, it might behoove application vendors to develop broswer-based applications that run cross-platform rather than silo'd iPhone apps.  Search-based targeting.  Browser-based apps built in an open, cross-platform environment.  Guess who wins that battle in the long run?  Strategy 101 says the arena in which you choose to battle a competitor is as important as how you conduct the battle.  Apple has chosen HTML5, an open platform, to battle Google for supremacy on mobile.  This seems like an unwise choice for Apple in retrospect.  

Apple has called a special press conference tomorrow, most likely to address the antenna issue for the iPhone 4.  Watch the body language carefully.  If it's defensive, closed and full of denial, you may be seeing another sign that Apple has jumped the shark.  That doesn't mean the company will decline quickly – after all, Happy Days continued for 7 more years after that ridiculous episode.  It just means the summer of 2010 will be remembered as the moment Apple peaked.

Here's the video.  Enjoy!

In the face of all the hoopla over the VC industry contracting, Flybridge Capital Partners is hiring an associate to join our investment team.  You can read the job description and learn how to apply for the associate position here.

Please feel free to pass this news around.  We would love to run an open process, as many other VC firms have done so successfully, to find a terrific candidate.

A cry for more VC bloggers is crazy, right?  There are already 150 or so who are actively blogging – which I estimate means 15% of all active VCs serve as bloggers.

Yet, we need more.  We need the life science and cleantech VCs to start blogging.

I was leafing through the NVCA's 2010 Yearbook last week while on vacation (go ahead, call me a geek) and was really struck by the amount of dollars that go towards the life sciences and cleantech portion of our industry as compared to IT.  Of the $17.7 billion of venture capital invested in 2009, only $8.3 billion – less than half – went into IT-related companies.  $6.1 billion (35%) was invested in life sciences companies and $3.3 billion in other companies.  Industrial/energy investments represent 13% of VC dollars.

Yet, When you look at the VC-entrepreneur dialog that's going on online, t's probably 90% IT-related.  Very, very few of the 150+ VC bloggers and Tweeters are from the life sciences or energy sectors.

It's really a shame, because we need to hear their voices.  

Take the following example – when the NY Times recently wrote a cover page article criticizing the human genome project as part of a 10-year look back, there was silence in the VC/entrepreneur blogosphere.  Imagine if the article were:  "Social media found to be useless" or "Broadband totally over-hyped, has no impact on innovation."  Whether the article is right or wrong, at least it would have stirred vociferous debate!

Another example – I was at the AlwaysOn/HBS conference yesterday listening to a lean start-up panel and Eric Ries claimed:  "lean methodologies can be applied equally to life sciences and clean tech start-ups".  Really?  That would be a great debate amongst VCs and entrepreneurs from those fields.  Who's going to lead the Fred Wilson vs. Ben Horowitz fat vs lean start-up equivalent debate?

There are a few standouts.  I applaud Rob Day (his blog is GreenTechMedia) of Black Coral Capital, Tom Pincince from our portfolio company, Digital Lumens, Bilal Zuberi and others who are beginning to add their voices to the mix in the energy sector.

But life sciences is really a black hole, with 35% of the dollars and probably <5% of the dialog.  Christoph Westphal's recent piece in the Boston Globe on how to address the continuingly high costs of drug development was excellent.  But because it was in a traditional media outlet, there was no dialog.  It's a shame the top 10 life sciences investors aren't taking the time to make their voices heard. 

Who out there from these sectors can we convince to start blogging?

The news headlines are grim.  Oil spills, sovereign defaults, choppy stock markets. tepid employment.  It's no wonder that the global capital markets seem spooked.

Yet, here's the strange thing, many of us in the technology sector have never been more bullish about what lies ahead.

It's like a tale of two cities.  Wall Street and the City of London are hand-wringing and doom-saying while Silicon Valley, Cambridge and Silicon Alley have never been rosier.  I attended my 15th Harvard Business School reunion last weekend and the contrast was striking.  On the one hand, capital markets professor Andre Perold was pointing to the jump in volatility as sign of the fear in the markets and bemoaning the fact that $60 trillion of global wealth had been wiped out since the peak.  On the other hand, my classmate Sheryl Sandberg (COO Facebook) was claiming that the Valley has never been crazier and, "Everyone I know is getting funded."

I was asked to give a presentation today at the Association for Corporate Growth (ACG), a group of 600 or so bankers and deal makers across a wide range of industries.  I think they asked me to speak because of my book, but I decided to focus instead on this question of whether the world is coming to an end, or whether there is reason for optimism in the long-run.  After wallowing in the data for the last few weeks, I've come down firmly on the side of optimism (no surprise?).  There are just too many positive secular trends that suggest the developments in wireless technology, human genome mapping, synthetic biology, energy technology and globalization won't continue to have an enormously positive impact on our planet in the decade ahead.

In fact, I would argue that the next decade will see an acceleration of innovation as compared to the previous decade, which itself has been dizzying.  I think we are entering a Golden Age of technology and innovation, despite the short-term economic clouds.  I end the presentation with a local view – that Massachusetts and the Innovation Economy is very well-positioned to take advantage of the opportunities ahead.  I would argue the same case could easily be made for New York City and Silicon Valley and perhaps other innovation centers as well.

Here is the presentation with the data to support this thesis.  Special thanks to my colleague Robin Lockwood for helping me put this together.  I'd love to hear your thoughts (view this video first, which I used to tee it up):

Golden age for technology and innovation http://static.slidesharecdn.com/swf/ssplayer2.swf?doc=goldenagefortechnologyandinnovationvfinalacg-100610085454-phpapp01&stripped_title=golden-age-for-technology-and-innovation-vfinal-acg

View more presentations from Jeffrey Bussgang.

Dan Primack calls them the "rock stars" of the start-up ecosystem.  If you are a young start-up and aren't plugging into the myriad of angel investment vehicles percolating around the country, you are either clueless or one of the few who are super-wired already into the "Do Not Pass Go, Go Directly to $5M Series A" venture capital game.

Here are home, the angel community in New England is really starting to flex its muscles.  Thanks to Scott Kirsner's arbitrary declaration (and admirable leadership), June is Innovation Month in New England and there is a ridiculous amount of activity going on.

It started off on June 1st with Angel Boot Camp, a confab that gathered over 200 angels, VCs and start-ups.

Last night was Tech Stars Boston Investor Night, which continues to gain momentum heading into its second season, as well as the big annual the MITX Awards event.  Every night this month, there is something going on.  You can see the master schedule at www.neinnovation.com.

Many of these venues didn't exist 3-4 years ago – Mobile Mondays, Web Inno, Open Coffee, etc.  New events are coming to Boston this month, including the Open Angel Forum, which is June 18th.

And new institutions are popping up all over the place.  New seed funds, incubators (e.g., Project11 – which you'll hear more about in the coming days), the Founders Institute, etc.  And when you visit the local campuses, it's amazing how prominent entrepreneurship and getting access to the angel community has become.  Every school has a business plan contest.  HBS just completed a business plan contest not just for students, but for alumni as well.

Like I said, there's a ridiculous amount of activity going on, and the angels appear to be out in front.  At Flybridge we always joke that we treat our entrepreneurs like they're rock stars.  Kudos to the angel community for emerging as the new rock stars of the start-up ecosystem!

I swore I would go offline for much of Memorial Day Weekend.  But I cheated and peeked at my email late Saturday afternoon and discovered an email from a friend saying, "I'm surprised to see you take such a public stance on the capital gains tax rates," with a link to a New York Times article on the topic.

I read the article in The New York Times on the carried interest debate and was shocked to see my name and a reference to me that read:

"As the Senate Democrats sent signs that they were open to a tax increase, investors and their lobbyists mobilized quickly, warning that the proposal could stifle investments that create jobs.  A group of 80 venture capitalists traveled to Boston to urge Senator John Kerry and Representative Barney Frank, Democrats of Massachusetts, to exclude their business from the tax change, according to Jeffrey Bussgang, a partner at the Boston venture capital firm Flybridge Capital Partners."  

Um…here's the problem.  I never spoke to the reporter, David Kocieniewski, who wrote the article (although I later found a voice mail from him).  Other than the fact that my name and firm name are accurate, nothing else in that sentence is correct.

I guess this is just another example of sloppy reporting, but I expect better from the New York Times.  

Since the reporter never spoke to me, I can only assume that the reporter was referring to a blog post I did regarding a trip to Washington DC (not Boston) with 80 business leaders from Massachusetts regarding an organization I co-chair called the Progressive Business Leader Network (PBLN).  In fact, the trip had nothing to do with carried interest taxes and there were only three or four VCs as part of the business delegation from PBLN.  If he had actually read the blog post, he would have realized that it was a trip with a wide range of topics, including cap and trade, innovation investment, deficit reduction and financial reform.  We did not meet with John Kerry, although I did report that we talked to Barney Frank about financial reform and that he did articulate his own position that venture capital would be exempted from the carried interest tax.

If I had actually been interviewed for the story, I would have given a more nuanced position.

Because of the Bush tax cuts, two wars, and the recent economic crisis, we are facing the worst long-term structural deficit in US history.  If we want to avoid the path of Greece or Spain, we need to act quickly with a blend of (unfortunately) higher taxes and lower spending. The only question is what taxes should go up and what spending should be cut.  

In debating what taxes should be increased, we should take a strategic approach.  Personally, I'm willing to and expect to pay higher taxes.  But having those higher taxes be levied against venture capital investments in small businesses strikes me as self-defeating when it is the single largest job growth area.  I'd personally rather see us put in place a carbon tax and/or a gas tax.  Perhaps we should reduce the mortgage exemption in order to shift incentives away from home ownership (how'd that work out?) towards investment and job creation.

Anyway, that's what I would have said if I had actually been interviewed by the New York Times.  Next time, I hope they either actually get my point of view, or leave me out of it and let me enjoy my Memorial Day weekend.

No, this post isn't about achieving four wins in the NBA Playoffs.  It's about a historical anomaly in start-up compensation that I'm struggling with.  Although I know this risks being an unpopular post with entrepreneurs, I confess that I no longer get why we have four year vesting schedules for stock option grants at start-ups.  Let me explain.

Vesting is known as the time period during which you unconditionally own the stock options that are issued to you by your company.  Until you vest the stock options, you forfeit them if you were to leave the company.  Typically, that time period is four years.  There is typically a one year "cliff", which means that you don't vest for a year and then "catch up" by vesting 25% of the stock options on the one year anniversary.  Subsequent vesting happens monthly or quarterly, depending on the stock option plan your company has put in place.

I was explaining to a friend the typical vesting at venture capital firms is 8-10 years.  That is, if you leave a fund before 8-10 years from the start of the fund, you risk forfeiting some of your unvested profit interest in the fund, or carry.  I explained to my friend that this vesting schedule made sense given venture capital funds take 8-10 years from managing initial investments through to exits.

Then I realized that vesting at start-ups should also logically match the time it takes from inception to exit.  In looking at the data, it appears that the average time to exit in start-ups during the 1990s was 4-5 years, so the traditional 4 year vesting period made sense.  But since then, the average time to exit has creeped up meaningfully from 4-5 years to 6-8 years.  So why shouldn't vesting schedules reflect this reality?  Why shouldn't the vesting schedule for stock options be 6 years?  Boards are finding that they have to reissue options every 3-4 years because once an employee is fully vested, they naturally come back to the table with their hand outstretched asking for more incentive options to stick around.

In fact, why can't vesting schedules be flexible and simply a part of the overall compensation negotiation?  A CEO would benefit from having the tools at their disposal to adjust vesting dates alongside share amounts and other compensation levers.  In the very early days, you might have six year vesting on stock options.  After a few years, that date might be reduced to four or five, depending on the situation.  Some form of accelerated vesting upon change of control (i.e., a sale) is often a part of the package for senior executives, so if a quick exit were navigated, there wouldn't be a meaningful penalty.

So maybe you can explain it to me, but I just don't get why our industry clings to a historical magic figure of four years.

Barney Frank was crystal clear in his briefing with a group of CEOs that I participated in this afternoon:  he is going to make sure that the final Financial Reform bill that gets worked out with the Senate won't mess with the angel or VC communities.

I came to Washington DC today with the Progressive Business Leaders Network (PBLN) group that I co-chair.  It was our group's annual trek to DC where 80 CEOs and business leaders from Massachusetts had the opportunity to dialog with the leadership from the congressional and executive branch.  We met with Congressman Markey to talk about cap and trade (Senator Kerry is releasing his bill tomorrow and one of his staffers briefed us on its content), Senator Warner to discuss innovation investments and deficit reduction, and Congressmen Frank and Capuano to talk about financial reform.

On Financial Reform, Barney Frank was very direct when I pressed him on the myriad restrictions that are being discussed in the Senate bill around angel investing and the discussions about taxing carried interest.  Here's what he said:

• "We will exempt venture capital from the carried interest tax."
• "We will not tighten the regulations on angel investing."
• "We will fight back on any attempts to regulate or register venture capital funds."
• "When this is passed, we will look to loosed RegA to facilitate IPOs."

He confidently stated that the Senate would pass a bill by Memorial Day and that the reconciliation process would be done such that the President would sign a bill by the 4th of July. 

Encouraging support from a powerful source – let's hope he follows through!

If you want to lend your support on this issue, keep track of the NVCA's activities and write your own representative.  Mark Heesen, NVCA executive director, wrote an email to thousands of VCs today stating: "This morning we delivered the letter to every U.S. Senator with more than 1700 signatures from 41 states plus the District of Columbia. You can view the letter here and our corresponding press release here."

President Obama's staffers told us:  "We understand that start-ups and entrepreneurs are the key to leading the US out of the recession."  Again, let's hope both sides of the aisle get the message.

The book wars are really now in full swing and the publishing industry will be changed forever.

Google announced yesterday that they were going to become a book retailer.  Crazy, right?  What's a search engine company that derives its revenue from advertising doing aspiring to become a book retailer?  But the world's largest source of information "gets it".  Content is king and if they are the source for great content, they will attract more advertising dollars.

Amazon's Kindle was the first disruptive force, but Amazon effectively had the market to themselves and had the market power to dictate terms to publishers and set terms with retailers.  Then, Apple's iPad was released, and suddenly the power shifted away from Amazon to the publishers.  With 1 million iPads in the market after only a few short weeks of sales, it is clear that the iPad is going to be a highly utilized book reading device.  Suddenly, the publishers had a bit more leverage, even though 3 million Kindles have been sold and not all iPads are being used as reading devices…yet. 

The negotiations between the various parties have started getting nasty.  I'm a victim of that, as are other authors.  My book, Mastering the VC Game, is published by Penguin and not available on the Kindle.  That's right, a technology venture capitalist writing a book about entrepreneurship can't produce a book available on the Kindle.  Idiotic, right?  But Amazon and Penguin are locked into contract negotiations and so an April 1st deadline has come and gone and all books released after April 1 are now blocked from Kindle access.

Now, Google is getting into the act.  Their announcement yesterday at a panel entitled "The Book on Google: Is the Future of Publishing in the Cloud?", indicated that Google was still deciding whether it will allow the publishers to set book prices or whether Google gets to set price.  That's a big part of the issue with Amazon as well – who gets to set price?  Does Amazon get to set $9.99 as the retail price or does the publisher set price, just like any manufacturer would with a typical retailer?

Books in the cloud.  Music in the cloud.  Video in the cloud.  Multiple devices accessing diverse content irrespective of location.  The future we've all envisioned is finally here.  The winner in all this?  The consumer.  Now could you just settle up on that Kindle edition thing, already?

My book, Mastering the VC Game, is officially available today (and 40 pages of excerpts are available for free if you want to preview it), yet I'm kind of grumpy.

I've gotten nice reviews (see AVC, Boston.com and YoungEntrepreneur for a few examples) and TechCrunch, BusinessWeek and Upromise have done really nice excerpts.

But I confess I'm a bit of a perfectionist (when I'd come home with a 95% on a test, my parents would ask me what happened on those 5% points – I wonder if that has anything to do with it?) and so I find myself mulling about the mistakes I made with it.  Tangible, print products are tough because, unlike a blog post or a piece of software code, you can't just change it on the fly.

Here are the top three things I've been stewing on:

• I regret that I didn't spend more time discussing the recent phenomenon of super-angels, as covered nicely in a recent VentureWire article.  Guys like Chris Sacca, Roger Ehrenberg, Dame McClure and Ron Conway as well as small seed funds like Chris Dixon's Founder's Collective and Mike Maples' Floodgate are worthy of more treatment than I gave them although I do cover First Round and profile their co-founder Howard Morgan.  There are pros and cons for entrepreneurs who take money from these groups and I'd like to expand on these in future blog posts.
• I'm sorry to have left out any great cleantech entrepreneurs.  With yesterday's announcement of Cape Wind going forward, it's another reminder that the energy sector is brimming with entrepreneurial opportunities and I should have included a few stories about some of the emerging starts there, like EnerNOC, A123 and Silver Spring.
• I'm annoyed that my publisher, Penguin, and Amazon.com are locked in a battle over royalties, resulting in my book not being available on the Kindle.  As a result, all new authors are getting punished.  The book is available on iPad, Sony e-Reader and the Nook, but I've been getting tons of complaints from folks that they want to download it on their Kindle and can't.  What kind of a technology VC writes a book that isn't available on a Kindle?  Yeesh.

Those are my top three.  I have a few other smaller ones, but I guess that's why they print second editions.  Let me know if you spot any more.

you can follow me on Twitter at www.twitter.com/bussgang