Powerset Case Study: Managing 22 Investors
This post examines the company Powerset as an atypical first round company. Powerset’s LinkSV Company Summary or LinkSViewer Information Window reveals that Powerset is a first round company founded in November, 2006 ($12.5M), with 4 VC investors and 18 Angel investors.
Powerset is a Silicon Valley company building a transformative consumer search engine based on natural language processing. Using these advanced techniques, Powerset is building a large-scale search engine that breaks the confines of keyword search. Powerset is currently operating in semi-stealth mode. Source: Powerset Web Site.
I am interested in Powerset because its capital network is complex. The goal is to apply LinkSViewer as illustrating and unfolding the capital complexity of the company. Hopefully, this can provide some insight on potential alliances, support, and strategic ties. I first examined its Relational Map including current and former relations + direct tie connections.
Powerset Relational Map. Counts: VCs = 4; Angels = 18; Board Members = 2; Management Team Members = 3; Related Active Companies = 8 (6 Private; 2 Acquired). Source LinkSV.com
Powerset Relational Map (Pendants dropped): (1) Company Ties: PayPal, Melodis, RapLeaf, Jaxtr, Friendster, Facebook, Xoom; (2) VC Co-investors: Amidzad & Felicis (Melodis); and Felicis & Founders Fund (RapLeaf); (2) Angel-VC Co-Investors: Lloyd & Felicis + Founders Fund (RapLeaf); Amidzad & Thiel (PayPal); Tenenbaum & Felicis (Melodis); Hoffman & Founders FUnd (Jaxtr); and (3) Angel Co-Investors: Hoffman & Thiel (Facebook & Friendster); Dyson & Tenenbaum (Medstory). Source LinkSV.com
Powerset Relational Map (Pendants dropped, MinLink=3). Common Strong Ties = 3 or more common company ties: Facebook: (Hoffman & Thiel as Investor + Board Member); and RapLeaf (Alexander, Felicis, & Founders Fund). Source: LinkSV.com
Network Analysis: Powerset has connections in each map: (1) Relational Map: Shows all of the 1st and 2nd degree ties for the company - it is used to map the field; (2) Relational Map (Pendants dropped): Shows all of the 2nd degree ties for the company - it is used to highlight all relationships; and (3) Relational Map (Pendants dropped + MinLink): Shows 3 or more similar company ties - it is used to focus in on stronger company relations
Organizational Structure Analysis: Powerset has unique organizational characteristics based on the structural patterns observed from each map: (1) Relational Map: Two separate patterns are evident based on the pendants with no other relations (toward right hand side of Map1) and dyadic and triadic interlocks (toward left side of Map1); (2) Relational Map (Pendants dropped): Forms an 8-sided star connected by 8 investors and people. Note that the VCs are connected to 4 related companies, while the Angels are connected to all 8 related companies. Individuals are connected to all 8 related companies, while People (Management Team & Board Members) are connected to only 2 related companies; and (3) Relational Map (Pendants dropped + MinLink =3): Forms a structurally equivalent box network of strong company ties. How might Powerset use stronger company ties to its strategic advantage? Facebook is interesting because Peter Thiel forms both an investor and board member tie - this underscores his importance in the network as a potential liaison between Facebook and Powerset. Operationally, perhaps there is a role of natural language searches in social networking? RapLeaf (Online peer rating system) has three common investor ties. Maybe there is a way to rate people’s expertise based on their most popular natural language search criteria? In any case there are natural linkages for Powerset based on already existing ties - the goal would be to effectively utilize such resources toward mutually beneficial success.