How to Increase Google AdSense Revenue
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One of the best ways to earn money online is by using Google AdSense. If you are a blogger and your blogging/web software allows you to copy and paste HTML code, then you can implement Google AdSense. In this way you can earn extra income from your blogging hobby whether it is a part-time or full-time endeavor. This two-part article will help you maximize your AdSense income.
The most obvious problem faced by Google AdSense publishers is low AdSense revenue/income. How much you consider to be "low" depends on your expectations or target. Since one is not allowed to share or divulge detailed Google AdSense statistics with other person (see item seven in Google AdSense terms and conditions), we can only talk here about estimates, not actual data coming from a Google AdSense report.
As I mentioned in the introduction, this article is a two-part series that will hopefully increase your Google AdSense blogging income if you follow the techniques, methods and principles discussed here.
Setting Expectations and Assessing Situations
It is not a good blogging objective to earn a massive amount of Google AdSense income. In that situation, your blog is NOT a content-based blog; rather, it's more of an affiliate blog which can be classified as "spam" in an extreme case. You may have seen such blogs, which have only a few words per blog post, but are cluttered with ads, or have content that is copied from other sources and then have Google ads placed throughout.
Of course, since you are also aiming for blog authority, search engine rankings and online popularity, you as a blogger should continually be writing great content and posting it on a periodic basis as a means of providing information to help visitors looking for content.
Google AdSense should NOT be the only reason you blog. If it is, you lack the motivation to continue blogging if your AdSense income falls below your expectations. Sadly, most of the time, you have no control over this.
In fact, it can be true that if your website is VERY good, you will have a low click through rate (CTR) for your Google AdSense banners, which can result in low AdSense income. Why? When visitors come to your website, they are looking for information. When they find your content sufficient, good and satisfactory, they will not need to look around your website and click Google ads.
What should you do for income in a case like this? Consider offering some services for a fee, or enable visitors to make a Pay Pal Donation (add a "thank you" button). Lots of visitors may be willing to donate some money for your good content.
Saturday, February 12, 2011
Friday, February 11, 2011
VENTURE CAPITAL AS HUMAN RESOURCE MANAGEMENT
Paper presented by:
GOPIKRISHNAN K C
1. Introduction
The crucial role of small businesses in creating jobs and spurring innovation gives special importance to the financing of growth companies. The central problem of financing small, growing businesses is to find a way for outsiders to supply equity profitably to entrepreneurs with limited track records in the financial system. Small, growing businesses often need to invest quickly, long ahead of the expected stream of profits, and in a quantity far greater than their capacity to issue debt. But the risks faced by suppliers of equity can be prohibitive in the face of substantial adverse-selection problems in identifying worthwhile firms in which to invest, and the need to monitor and control the use of funds by entrepreneurs, to ensure that outsiders’ funds are employed to the advantage of stockholders rather than entrepreneurs. The combination of back-loaded profits, limited debt capacity, large growth opportunities, and adverse-selection and moral-hazard problems in the equity market make the provision of outside equity as difficult as it is important.
For the past four decades in the United States, venture capital funds (or, more generally, private equity funds)1 have been an important solution to this problem. Venture capital has been very successful in funding some of the most dynamic American enterprises, including Microsoft, Cisco, Intel, Compaq, Federal Express, Apple Computers, Genentech, and Amazon.com. About 30% of the companies that go public in the US received venture capital resources [Gompers and Lerner (1997)]. These results become even more impressive when we consider that the amount of capital raised by institutional venture capitalists in the United States between 1978 and 1997 has
1 In this article, venture capital and private equity are used as synonyms, but typically venture capital connotes the financing of new products, while private equity is a broader category including all types of equity investments (traditional venture capital investments, industry consolidation, leveraged buyouts, etc.).
averaged less than $3 billion per year and never exceeded $7 billion until 1997 (that compared with an average $8 trillion GDP and nearly $1 trillion in gross domestic fixed investment).
Most studies of the structure and function of venture capital funds have focused on the structure of private equity funds (their financial design), and their role in solving information and control problems for portfolio firms – i.e., the role of private equity funds in allocating control rights, and in ameliorating adverse selection and moral hazard problems [Admati and Pfleiderer (1994), Amit, Glosten, and Muller (1990), Chan (1983), Cornelli and Yosha (1997), Hellman (1998), Marx (1998), Repullo e Suarez (2000)]. In these papers, venture capital is viewed as a financial contract designed to give investors the necessary control, remunerate them for the high risk they assume, and solve incentive problems. Sahlman (1990) describes venture capital as an institution shaped to screen projects and provide monitoring [Gompers (1995) and Lerner (1995) present empirical analyses]. By being actively involved within the firms they fund, venture capitalists have access to information and mechanisms that enable them to deal with adverse selection and moral hazard. As a consequence, venture capitalists can provide financing to young businesses that otherwise would not receive external resources [Barry (1994)]. These various studies all view venture capital funding from the perspective of the financial problem solved by venture capitalists, namely permitting entrepreneurial companies to access external equity funding.
Does venture capital also bring non-financial benefits? There is anecdotal evidence that because venture capitalists frequently specialize in a particular technology or stage of development they can offer strategic, technical, and commercial guidance [Barry (1994), Byers (1997), Bygrave and Timmons (1992), Sahlman (1990), Sapienza (1992)]. However, to date, little research has been devoted to quantifying the non-financial benefits of venture capital.
A notable exception is the paper by Hellmann and Puri (2002), who show that venture capital influences the internal organization of portfolio firms. In particular, they show that venture-backed companies are faster to bring in outsiders as CEOs, and that this effect is more noticeable at the very early stage.2 The authors do not explore the theoretical foundations of why private equity finance should bring such advantages.
Our study describes a theoretical framework in which venture capital acts as a human resources management mechanism, accompanied by corroborating empirical evidence. The theoretical foundations of our framework are simple: Good management is important to the success of all firms, but it is essential for the success of young, fast-growing enterprises pursuing risky investment strategies. Managerial resources often are particularly scarce in young, growing firms; the most innovative entrepreneurs are not necessarily endowed with talents as managers. And, as the newly organized firm grows, its human resource needs become greater and more complex. Thus, it is often the case that realizing the potential of an entrepreneurial firm depends on its capacity to recruit high-level managers.
Venture capitalists may have a comparative advantage in recruiting management for portfolio firms by virtue of their “networking” capabilities and access to private information about managerial talent based on their previous experiences with managers. The extent of that comparative advantage may depend on various attributes of the venture capitalist and the portfolio firms. Different financiers may have different skills and resources for solving the human resource problems of portfolio firms. And portfolio firms may differ according to the difficulties they face in identifying and attracting the right managers to the firm.
2 That is, before the firm has a product on the market or has gone public.
Very risky firms may find it harder to attract managers who are risk-averse (and who, therefore, may prefer a safe job in an established firm to a risky job in the portfolio firm). The ability of the venture capitalist to use his or her network of industry connections to “recycle” good managers whose firms fail (for exogenous reasons) may permit the venture capitalist to attract skilled managers more successfully.
High-risk activities also make the process of screening managers more difficult. The managers of firms in new industries (where risk is higher) will be less well known to the market because of the relative absence of publicly traded securities (and, therefore, public information creation) for that sector. Greater risk also reduces the signal-to-noise ratio with respect to managerial ability. Thus, venture capitalists’ access to private information about managerial talent gives them an advantage in recruiting that is increasing in importance with the riskiness of the industry.
We hypothesize that venture capital brings non-financial benefits to new projects because it allows venture capitalists to use their human resource networking capabilities to transfer valuable information acquired in previous investments and to provide an employment “safety net” for managers. Both the risk aversion of managers, and the adverse-selection problem in identifying managerial talent imply that the comparative advantage of venture capitalists as human resource managers will be an increasing function of the riskiness of the portfolio firm. That hypothesis finds some support in the studies of Hellmann and Puri (2002) and Hsu (2004). Hellman and Puri find that the role of venture capital in attracting outsider CEOs is stronger for firms in their early stages (when the prospects for senior managers is riskier). Hsu (2004) finds that venture capitalists that are regarded as having superior network resources (including management recruiting contacts) are
more likely to succeed when bidding for portfolio firms, and that venture capitalists that possess superior network resources are more likely to be engaged in early-stage financing.
Our empirical examination of cross-sectional differences in the extent that venture capitalists act as human resource managers permits us to test this hypothesis, and other potential influences on the comparative advantage of venture capitalists in human resource management, more directly. Our empirical work is based on a nationwide survey of venture capitalists that identifies various characteristics of portfolio firms and venture capitalists, using objective and subjective measures. These characteristics include the riskiness of portfolio firms and the extent of venture capitalists’ involvement in human resource management, as well as many other attributes of portfolio firms and venture capitalists that are relevant to the comparative advantage of venture capitalists in human resource management (e.g., the size of the fund, and the subjective value attributed to the venture capitalist’s human resource network as a source of information).
The survey results confirm that human resource networking is an important activity. A majority of the venture capitalists confirm that their relationships with their colleagues include acting on their suggestions when hiring managers, and in turn recommending managers to each other. A substantial proportion of venture capitalists affirm that they adopt the strategy of recycling managers in their portfolio firms.
We find that the extent to which venture capitalists act as human resource managers depends positively on various factors, including: (1) the subjective risk venture capitalists attribute to their investments and observable attributes of the investments related to riskiness; (2) the value they attach to the information transmitted through their networks,; (3) the size of their funds (which should be positively correlated with their networking ability); and (4) the extent to which venture
capitalists believe that the firms that they finance would tend to have difficulty recruiting managers. Venture capitalists surveyed also provide evidence that their networking activities are motivated by perceived cost savings in recruiting managers. Venture capitalists report that greater networking results in an improved ability to attract managers due to the reputation venture capitalists acquire for recycling (assisting managers with job placement in the future).
This article is organized as follows: Section 2 discusses the operation of human resource networks within the venture capital industry, and their importance in creating information about managers ex ante, and the potential for recycling managers ex post. There we consider qualitative evidence of the importance of networks in transferring valuable information about managers, and managers themselves, across firms. Section 3 summarizes our model of the decision to network (which is developed in detail in Carvalho and de Matos 2003). Section 4 describes the survey and relates some of the survey data to the variables in the theoretical framework. Regression analysis of the incentives to network, hypothesized in the model, is presented in Section 5. Section 6 concludes.
2. Screening, Insurance, and the Role of Venture Capital Human Resource Networks
Firms receiving venture capital funding are typically very risky. More importantly, these firms are characterized by a high degree of asymmetric information. Managers frequently have more accurate information about the prospects of the firm than they may be willing to reveal. This information asymmetry makes project governance extremely important. Among the mechanisms venture capitalists adopt to deal with this problem are close monitoring and staging of the investment [Sahlman (1990), Gompers (1995), and Lerner (1995)].
To increase the likelihood of success and improve their information about the quality of projects, venture capitalists frequently become actively involved in the operation of their portfolio firms. For example, they sit on the board of directors, hire3 and recruit managers, help establish business strategies, provide industry knowledge, structure deals with suppliers and customers, and act as confidants to managers [Sahlman (1990)]. Because many of the firms suitable to receive venture capital funds are young companies lacking experience in human resources management, venture capitalists often become involved in selecting, recruiting and properly remunerating key employees.4
This involvement of venture capitalists within portfolio firms provides venture capitalists with expertise in selecting, recruiting, and properly remunerating managers, as well as in timing the development of the firms as organizations (e.g., deciding when the time is right to add a professional CEO or CFO). Furthermore, this involvement gives venture capitalists non-public information about the abilities and qualifications of the managers in the firms they fund.
Even though venture capitalists fund firms with potential to become publicly traded, more often than not, their investments end when their portfolio firms are either liquidated, merge, or are acquired by larger corporations. For example, Venture Economics (1988) reports that 34.5% of venture capital investments resulted in losses (result based on a sample of 383 companies funded 13 venture capital partnerships between 1969 and 1985). Black and Gilson (1998) presents data from 1984 to 1996 showing that a significant number of venture capital investments exit through acquisitions. In these cases, the portfolio firm generally becomes a division of the acquiring
3 For example, Baker and Gompers (1999) found that only 55% of the CEOs of venture capital-backed firms going public are founders. Hellmann and Puri (2000) found that 61% of firms funded with venture capital experienced a turnover.
4 The adjective “properly” refers to the design of contracts that gives the managers the right incentives, aligning his or her interests with those of the investors.
corporation and does not need a senior management team. Therefore, in many cases, senior managers leave their companies when they are sold or liquidated (this is not necessarily so if the firm goes public). The limited viability of senior managers in firms funded with venture capital means that many portfolio firm managers often are available for repeat hire by venture capitalists.
Venture capitalists bring to a project the expertise they develop in selecting, recruiting, and remunerating managers, and in timing the development of the companies as organizations. The nature of the involvement of venture capitalists within their portfolio firms provides them with the necessary means to acquire non-public information about suppliers, customers, and the management team of the companies they fund, and that information can be reused. For instance, when they exit an investment, they have the possibility of recycling competent managers by rehiring them to manage other firms in their portfolio. 5
Not only does venture capitalists’ involvement improve managerial quality through screening, the recycling of managers across portfolio firms reduces hiring costs via an “insurance effect.” Managers in small growing firms are exposed to a high risk of failure. As mentioned before, senior managers find themselves in a vulnerable situation when the firm does not go public. The fact that venture capitalists can offer another chance in another portfolio firm reduces the firm-specific risk
5 An example of this is given by Kleiner and Perkins, in Institutional Investor (June -1996), pp. 95-96: “The keiretsu conceit aside, the Kleiner partners' role in Silicon Valley may in some ways be closer to that of the Hollywood moguls of the '30s and '40s, whose success was built on their ability to lock up stars, directors and writers. Kleiner Perkins has similarly amassed a pool of talent. ‘If you're well regarded as a manager in their stable, you're going to be used over the years,’ says Frank Ingari, whom Doerr tapped to run networking software company Shiva Corp. in 1993.” “One way Doerr hardwires his network is by placing Kleiner CEOs on the boards of other corporate members of the keiretsu...The CEO of video game maker Crystal Dynamics, Randy Komisar, one of a number of Go veterans now running Kleiner companies, sits on the boards of two Kleiner-associated companies, Total Entertainment Network and MNI nteractive. CEO John Kernan of Lightspan Partnership sits on the board of fellow educational software company Academic Systems... “The network has been buttressed by the “CEO-in-residence'” program which brings temporarily out-of-work top executives into Kleiner and Perkins to review business plans, to do a little strategic thinking and help with recruiting...”
that managers bear when joining portfolio firms. This insurance effect may explain Hellmann and Puri’s (2002) finding that venture backed companies are faster to bring in outsiders as CEOs.
Both the screening and insurance effects depend on the possibility of consecutively employing managers in distinct portfolio firms. The possibility of the same venture capitalist redeploying the same manager are somewhat restricted since few venture capital funds are large enough to match job openings with the availability of managers. However, one factor that broadens the ability to reuse non-public information about managers is the close relationship among venture capitalists, which is an outgrowth of the syndication of investments.
Syndication of investments is commonly used to improve screening, achieve better monitoring, broader their sources of funds, and diversify their portfolio [Lerner (1994)]. The possibilities for syndication depend on both the connections a venture capitalist has, and on his or her reputation among other venture capitalists. Syndication creates strong bonds among venture capitalists and, therefore, allows reliable information to flow among them. The fact that reliable information can flow among venture capitalists gives them an unusual role as certifiers of senior managers' abilities (in the context of small growth firms financing), and allows them to operate an informal network to locate and relocate skilled managers.
3. The Decision to Network
Here we summarize the model presented formally in Carvalho and de Matos (2003). The venture capitalist conducts a cost-benefit analysis to determine whether to use a network of venture capitalists when hiring managers or use a headhunter to find managerial talent. The degree or probability of project success increases with the quality of the management. The venture capitalist establishes a desired profile for the manager. This profile includes verifiable characteristics such as
experience, industry knowledge, etc. It also includes some non-verifiable characteristics. For instance, very few managers can certify their ability to lead young, fast-growing firms into becoming large, well-structured organizations. Successful managers in large corporations may lack that skill. These non-verifiable characteristics define the managers’ type. The model assumes that beforehand neither venture capitalists nor managers know managers' types.
The cost of locating a manager depends on the means used. The cost of hiring a search firm is assumed to be the same for all venture capitalists. To locate managers through the network, the venture capitalist needs to establish relations with other venture capitalists. The cost of networking is equivalent to the monetary value of the time that the venture capitalist has to spend establishing connections. Once the venture capitalist is networked, he or she has access to suggestions coming from his or her network colleagues. The cost of networking when hiring varies across venture capitalists depending on the potential for networking that each venture capitalist has, which in turn can be related to factors like the size of the venture capital fund, the number of partners, how much the venture capitalist syndicates investments, etc.
The outcome of the project will become public information and influence the future salary that the manager expects to obtain in his or her next job. If the firm fails, the manager's future salary will be lower than in case of success. Managers are risk-averse and venture capitalists are risk-neutral.
In addition to using the network for hiring, venture capitalists who network can assist managers with job placement by suggesting managers to other venture capitalists.6 A possible
6 Only those who locate managers through the network have the option of actively suggesting managers. This dependence allows us to incorporate into the model the idea that venture capitalists who suggest managers have an advantage when recruiting managers because suggesting managers reduces the firm-specific risks to which managers are exposed (the insurance effect).
future referral works as an option that managers acquire when they are hired. If the project fails, with a given probability, the assistance can increase the future salary of the manager. In the model, if the firm succeeds, this assistance is irrelevant to the future salary of the manager. By suggesting managers venture capitalists incur a specific cost. This cost is equivalent to the monetary value of the effort and time that the venture capitalist has to spend contacting other venture capitalists to find a match for the managers. This cost varies inversely with venture capitalists' network connections.
In the model, the decision to network involves two aspects: suggesting managers and acting on suggestions when hiring a manager. The decisions to use the network for hiring and for suggesting are separate but related. First, the venture capitalist decides whether or not to participate in the network when hiring managers. If the venture capitalist chooses to use the network for hiring, then he or she has the option also to provide suggestions to the network. The decision to use the network for hiring does not imply that the venture capitalist must use the network for suggesting, but it does make suggesting possible. In turn, the option to suggest managers does affect the decision to use the network for hiring purposes in the first instance, because those who actively suggest managers have an advantage when recruiting managers: managers would accept a monetary salary below their reservation salary because the recommendation increases their expected future salary.
In the model, the benefit that venture capitalists create from suggesting managers is captured by them entirely in the form of lower compensation paid to the managers. When the venture capitalist suggests managers through a network, the manager's reservation salary is diminished by a given amount (reflecting the reduction in risk faced by the manager). That amount
represents the gain that the venture capitalist receives by suggesting managers. The venture capitalist will suggest managers whenever that gain is larger than the costs of suggesting.
The gain received by the venture capitalist from networking increases with the riskiness of the portfolio firm. Assistance with job placement has value to managers only if the firms they manage fail. Thus, the higher the chances of failure, the higher will be the value that managers attribute to the assistance, and thus, the higher the discount on the reservation salary that they are willing to accept. Venture capitalists stand to gain more from suggesting managers involved in risky projects.
In the model, the benefits from taking suggestions from the network when hiring managers can be decomposed into three factors.7 A first factor reflects the value to the venture capitalist of networking’s effect on higher managerial quality. Firms in which differences in managerial quality have greater consequences for firm performance will benefit more from locating highly skilled management, and will rely more on networks to do so to the extent that networks improve the accuracy of the screening process for hiring managers. With respect to this first factor, in the model, the benefits from improved managerial screening depend positively upon three physical parameters: (1) the relative profitability of a successful project outcome – i.e., the riskiness of the project (2) the effect of managerial quality on the probability of a successful outcome, and (3) the value of networking for identifying skilled managers. In the model, these three parameters appear in a multiplicative way such that the strength of each effect depends on the size of the other two parameters.
7 There is also a fourth factor highlighted in the model, which does not correspond to any observable variables in our survey, and which is therefore excluded from this discussion. The fourth factor is the possible additional gain to the venture capitalist from using the network if managers located through the network have a lower probability of being otherwise employed than those coming through headhunters. For the conclusions in this article, it is not important whether managers located through the network have a lower probability of being employed than those located through headhunters.
The second factor is the insurance effect. This is the benefit captured by the venture capitalist by being able to offer to recycle managers via the network, which takes the form of a reduction in the manager’s reservation level for compensation. The value of the insurance effect depends positively on: (1) the riskiness of the project, and (2) the credibility of the commitment from the venture capitalist to recycle. Note that the insurance effect, therefore, provides a second rationale for a positive relationship between risk and the decision by venture capitalists to participate in networks.
The third factor reflects cost savings to the venture capitalist from the difference between the physical cost of networking and the physical cost of headhunting. It is plausible to assume that using a headhunter has a constant marginal cost that is the same for all venture capitalists. In contrast, the cost of networking should decline with the size of the venture capital fund. Two conjectures relate the size of the venture fund to the costs of networking. First, large funds are managed by many venture capitalists. Therefore, the incidence of suggestions coming from partners or persons associated with them is more frequent. Secondly, other venture capitalists may have an interest in developing good relations with venture capitalists managing large funds. This may occur because of the interest that venture capitalists have in prospective syndications [Lerner (1994)].8 Moreover, well-established venture capitalists are opinion makers in the industry. Therefore, the flow of reliable suggestions to venture capitalists managing large funds can be more intense.
In summary, when one combines the effects of these three factors, the model predicts that a venture capitalist’s reliance on networking when hiring managers is positively related to several characteristics of the portfolio firm or the venture capitalist: (1) project risk, (2) the effect of
8 For instance, this can be related to what Lerner calls window-dressing: venture capital funds want to show that they financed successful enterprises in order to promote fund raising. Because of this, the opportunity to join a successful enterprise through syndication is extremely valuable.
managerial quality on the probability of a successful outcome, (3) the value of networking for identifying skilled managers, (4) the credibility of the venture capitalist’s commitment to recycle, and (5) the size of the venture capitalist. Note that project risk affects the benefits of networking positively through two distinct affects: the marginal productivity of managerial screening, and the insurance effect. Also, recall that the insurance effect (which is reflected in characteristics (4) and (1)) on the propensity to use networks for hiring is only relevant for venture capitalists that use the network for recycling managers, as well.
The same five characteristics listed above should predict the use of the network for recycling (suggesting) managers, as well as for hiring them. In the model, the insurance effect in the hiring decision is only operative if the venture capitalist chooses to participate in suggesting managers for recycling via the network. Conversely, in the model, suggesting is only physically possible if the venture capitalist has already decided to participate in the network for hiring purposes. This interdependence between the two endogenous networking decisions implies that any exogenous variable that directly influences the probability of deciding in favor of doing one also raises the probability of deciding in favor of the other.
4. Survey Data
Data concerning the existence and use of the hiring network among venture capitalists were obtained through two surveys of venture capitalists. The first (referred to as “the survey”) was answered by 160 venture capitalists and contains mostly qualitative information. The second (referred to as “the follow-up”), contains more quantitative questions, for which we obtained 68 responses. Creating these two new datasets through surveys permitted us to match the exogenous structure in the model to observable variables.
The survey was sent to 879 venture capitalists throughout the US, randomly taken from “Pratt's Guide to Venture Capital Sources (1994),” a publication that lists all the venture capital sources and their managers. Among the 160 respondents, 70 agreed to a phone interview and a follow-up survey, but we could reach only 68 of them. The survey and interviews were done in 1995 and 1996. Through the interviews we discovered that four respondents to the original survey were persons not directly involved in the investment process. These four responses were deleted, resulting in a final sample of 156 survey responses and 68 follow-up responses. Table 1 describes the variables derived from the survey and follow-up.
As a first step in our analysis, we investigate the perceived importance of human resource management by venture capitalists. In the survey, to assess the importance of recruiting managers, the respondents were asked to rank the three activities performed by venture capitalists that they considered most important. They were given a menu including (1) monitoring performance against goals, (2) helping with management decisions, (3) providing industry knowledge, (4) providing finance, (5) developing business strategy, and (6) recruiting managers. Respondents were also given two blank slots to fill in activities that they deemed important that were not included in this list. A significant proportion (16.7%) listed recruiting managers as the most important activity; 35.5% viewed it as one of the two most important activities, and 54.2% described it as one of the three most important (Table 2).
Survey respondents were also asked to quantify various aspects of their human resource management activities. Table 3 presents data on the number of executives that the venture capitalist has employed more than once or helped with job placement in the previous 5 years. Table 3 also provides data on the number of CEOs replaced in the previous 5 years. The mode and median of the empirical distribution for placement is 2. The mode of the empirical distribution for
replacement is 3, and the median is 4. Table 3 clearly shows that some venture capitalists are far more active than others, which may reflect either differences in the total number of portfolio firms across venture capitalists, or differences in the intensity of human resource management. To provide a clearer indicator of the intensity of human resource management activity, the bottom panel of Table 3 reports placement and replacement activity relative to the size of the venture capital fund (measured by the number of DEALS in the past five years).
Venture capitalists were asked to express their degree of agreement with the following propositions: (1) “venture capitalists operate informal networks involved in locating and relocating managers” (proposition NETWORK); (2) “it is common for me to suggest likely managers to others in the private equity industry” (proposition SUGGEST); (3) “it is common for me to act on suggestions from others in the private equity industry when hiring a top manager for a firm” (proposition TAKE SUGGESTIONS); and (4) “once I learn about the good qualifications of a manager, I try to keep him/her working for companies I fund, i.e., I entice him/her to leave a firm when I sell or liquidate it and take a position in another company I fund” (proposition RECYCLING STRATEGY). The follow-up also asked venture capitalists to state the number of managers that the venture capitalist had hired under recommendation and suggested in the previous 5 years both to/from partners and non-partners. The responses to all of these questions are reported in Table 4, where Panel A summarizes responses to the four questions listed above, and Panel B summarizes responses to the follow-up questions about networking.
Clearly, venture capitalists strongly believe in the existence of a human resource network. A large majority, 77.9%, agreed that they operate informal networks (proposition NETWORK, Table 4, Panel A); only 6.5% disagreed. Fully 56.2% agreed that it is common for them to suggest likely managers to others in the private equity industry; only 19.3% disagreed (proposition SUGGEST,
Table 4, Panel A).9 The results in the follow-up (Table 4, Panel B) confirm this last result from the survey. Only 24.6% had not suggested any manager to partners and 24.6% to non-partners. Finally, the proportion of venture capitalists that had not recommended any manager amounts to 12.7%, while those who had recommended more than 4 is 52.7%.
Most respondents (62.3%) agreed that it is common for them to act on suggestions when hiring managers (7.1% strongly agreed); only 11% disagreed (proposition TAKE SUGGESTIONS, Table 4, Panel A).10 The numbers in the follow-up (Table 4, Panel B) are consistent with these results: only 19% of the respondents had not hired any manager under suggestion (30.5% had not hired any manager under suggestion of partners and 52.5%, from non-partners). The proportion of those who hired more than 3 managers under recommendation is 30.2%. A considerable proportion of venture capitalists (37%) affirm that they adopt a recycling strategy (proposition RECYCLING STRATEGY, Table 4, Panel A).11
Summary statistics from our survey and follow-up show that a significant proportion of venture capitalists suggest managers to each other, act on suggestions when hiring senior managers, and have a strategy of recycling managers. It is particularly striking that a large proportion of venture capitalists agree that they operate informal networks involved in locating and relocating managers.
Survey responses also provide evidence on the motives of venture capitalists in using human resource networks. We hypothesize that an important element that may explain the
9 The answer given to this question by the subsample of those who answered the follow-up is very similar: 10.3% agree strongly, 52.9% agree, 22.1% are indifferent, and 14.7% disagree.
10 The answer given to this question by the subsample of those who answered the follow-up is very similar: 10.3% agree strongly, 52.9% agree, 32.4% are indifferent, 2.9% disagree, and 1.5% strongly disagree.
11 Through telephonic interviews, several venture capitalists recognized that the small number of deals does not allow them to implement this strategy, although they would be willing to do it.
motivation that venture capitalists have in networking is the relatively high value that they attribute to the information that they obtain from each other. More specifically, we hypothesize that venture capitalists have (or at least think they have) information about managers that search firms do not.
To address that hypothesis, venture capitalists were asked to express their degree of agreement with the following propositions: (1) “the success of the firms I fund depends mostly on their top managers” (proposition MANAGERIAL IMPACT); (2) ”as a venture capitalist I learn substantially more about the managers of the companies I fund than what can be revealed to outsiders by their track records” (proposition INSIDE INFORMATION); and (3) “to manage a firm funded with venture capital requires different skills from those needed to manage a company funded with other sources of capital” (proposition SPECIAL SKILLS).
The level of agreement with these propositions is presented in Table 5, Panel A. The overwhelming majority (93.5%) of respondents agreed that, through their relations with managers, they learn substantially more about the managers than what can be revealed to outsiders by the managers' records (proposition INSIDE INFORMATION). An even higher level of agreement (95.5%) is attained for the proposition MANAGERIAL IMPACT. Finally, 58.7% agree that to manage for venture capital investors require special skills (proposition SPECIAL SKILLS). Together, these responses support the hypothesis that information about managerial skills is important and not readily available.
Next, in Table 5, Panel B, we examine venture capitalists’ views of the challenges they face in recruiting managers, and the extent to which the operation of a human resource network can help to reduce the costs of hiring skilled managers. We asked respondents to express their degree of agreement with various propositions related to their activities as human resources recruiters. These
propositions are: (1) “it can be difficult to entice a manager to leave a stable position in a well established company and take a chance in a new firm with risky prospects” (proposition DIFFICULT HIRE); (2) “if it were not for their confidence in my personal commitments to them, some of the top managers of the companies I fund might not have accepted the job offer they received” (proposition PERSONAL COMMITMENTS); and (3) “having a reputation of helping good managers with job placement, in the event that the companies for which they work are liquidated, helps entice other managers to work for other companies I fund” (proposition REPUTATION).
The data in Table 5, Panel B, indicate that venture capitalists make personal commitments to managers, and rely on their personal reputations for helping managers to find replacement jobs, as a means of enticing managers to come to their portfolio firms, which managers may be reluctant to do because of the riskiness of those portfolio firms. The majority of respondents (54.5% agree that it can be difficult to entice managers to a risky portfolio firm, while 25% disagree. 68.7% of respondents emphasize the importance of their personal commitment to managers in getting them to accept a job, while 9.8% disagree. 44% agree that their reputations for assisting in recycling managers help entice managers to their portfolio firms, while 15.1% disagree.
5. Explaining Differences in Venture Capitalists’ Reliance on Human Resource Networking
The summary statistics described thus far demonstrate that venture capitalists tend to agree that: (1) human resource networking is an important activity, (2) information about managerial quality is important, (3) venture capitalists obtain unique information about their managers, and (4) participating in a human resource network is important for attracting skilled managers. Interestingly, however, the results in Tables 2-5 also show that there is a considerable amount of
variation in the opinions venture capitalists express about the importance of participating in human resource networks, and the importance of those networks for attracting skilled managers. In Section 3, we described a model (developed in detail in Carvalho and de Matos 2003) that suggests explanations for that variation in opinion and practice. Specifically, the model suggests that cross-sectional variation in the perceived importance of networks, or in the desire to participate in them, should be linked to factors identified in the model. This section explores the extent to which cross-sectional differences in the use of networks can be explained by observable characteristics of venture capitalists, as predicted by the model.
In what follows, we use respondents’ answers to the propositions SUGGEST and TAKE SUGGESTIONS (both from the survey), the number of managers hired under suggestion from non-partners (from the follow-up), and the number of managers recommended to non-partners (from the follow-up) as alternative endogenous variables to measure the extent of the reliance by venture capitalists on networks. TAKE SUGGESTIONS and the number of managers hired under suggestion are alternative measures of the propensity to network when hiring. SUGGEST and the number of managers recommended are alternative measures of the propensity to supply managers to the network. In the model, these are separate decisions. The model suggests factors that should explain variation in the reliance on networks for both hiring and suggesting. We measure explanatory factors using observable variables based on responses to propositions in the survey and follow-up, and then test to see whether these observable explanatory variables can explain cross-sectional variation in our measures of reliance on networks.
At the end of Section 3 above, we described the empirical predictions of the Carvalho-de Matos (2003) model. According to the model, there should be a positive association between the propensity to rely on networks, for both hiring and suggesting, and the following characteristics: (1)
Paper presented by:
GOPIKRISHNAN K C
1. Introduction
The crucial role of small businesses in creating jobs and spurring innovation gives special importance to the financing of growth companies. The central problem of financing small, growing businesses is to find a way for outsiders to supply equity profitably to entrepreneurs with limited track records in the financial system. Small, growing businesses often need to invest quickly, long ahead of the expected stream of profits, and in a quantity far greater than their capacity to issue debt. But the risks faced by suppliers of equity can be prohibitive in the face of substantial adverse-selection problems in identifying worthwhile firms in which to invest, and the need to monitor and control the use of funds by entrepreneurs, to ensure that outsiders’ funds are employed to the advantage of stockholders rather than entrepreneurs. The combination of back-loaded profits, limited debt capacity, large growth opportunities, and adverse-selection and moral-hazard problems in the equity market make the provision of outside equity as difficult as it is important.
For the past four decades in the United States, venture capital funds (or, more generally, private equity funds)1 have been an important solution to this problem. Venture capital has been very successful in funding some of the most dynamic American enterprises, including Microsoft, Cisco, Intel, Compaq, Federal Express, Apple Computers, Genentech, and Amazon.com. About 30% of the companies that go public in the US received venture capital resources [Gompers and Lerner (1997)]. These results become even more impressive when we consider that the amount of capital raised by institutional venture capitalists in the United States between 1978 and 1997 has
1 In this article, venture capital and private equity are used as synonyms, but typically venture capital connotes the financing of new products, while private equity is a broader category including all types of equity investments (traditional venture capital investments, industry consolidation, leveraged buyouts, etc.).
averaged less than $3 billion per year and never exceeded $7 billion until 1997 (that compared with an average $8 trillion GDP and nearly $1 trillion in gross domestic fixed investment).
Most studies of the structure and function of venture capital funds have focused on the structure of private equity funds (their financial design), and their role in solving information and control problems for portfolio firms – i.e., the role of private equity funds in allocating control rights, and in ameliorating adverse selection and moral hazard problems [Admati and Pfleiderer (1994), Amit, Glosten, and Muller (1990), Chan (1983), Cornelli and Yosha (1997), Hellman (1998), Marx (1998), Repullo e Suarez (2000)]. In these papers, venture capital is viewed as a financial contract designed to give investors the necessary control, remunerate them for the high risk they assume, and solve incentive problems. Sahlman (1990) describes venture capital as an institution shaped to screen projects and provide monitoring [Gompers (1995) and Lerner (1995) present empirical analyses]. By being actively involved within the firms they fund, venture capitalists have access to information and mechanisms that enable them to deal with adverse selection and moral hazard. As a consequence, venture capitalists can provide financing to young businesses that otherwise would not receive external resources [Barry (1994)]. These various studies all view venture capital funding from the perspective of the financial problem solved by venture capitalists, namely permitting entrepreneurial companies to access external equity funding.
Does venture capital also bring non-financial benefits? There is anecdotal evidence that because venture capitalists frequently specialize in a particular technology or stage of development they can offer strategic, technical, and commercial guidance [Barry (1994), Byers (1997), Bygrave and Timmons (1992), Sahlman (1990), Sapienza (1992)]. However, to date, little research has been devoted to quantifying the non-financial benefits of venture capital.
A notable exception is the paper by Hellmann and Puri (2002), who show that venture capital influences the internal organization of portfolio firms. In particular, they show that venture-backed companies are faster to bring in outsiders as CEOs, and that this effect is more noticeable at the very early stage.2 The authors do not explore the theoretical foundations of why private equity finance should bring such advantages.
Our study describes a theoretical framework in which venture capital acts as a human resources management mechanism, accompanied by corroborating empirical evidence. The theoretical foundations of our framework are simple: Good management is important to the success of all firms, but it is essential for the success of young, fast-growing enterprises pursuing risky investment strategies. Managerial resources often are particularly scarce in young, growing firms; the most innovative entrepreneurs are not necessarily endowed with talents as managers. And, as the newly organized firm grows, its human resource needs become greater and more complex. Thus, it is often the case that realizing the potential of an entrepreneurial firm depends on its capacity to recruit high-level managers.
Venture capitalists may have a comparative advantage in recruiting management for portfolio firms by virtue of their “networking” capabilities and access to private information about managerial talent based on their previous experiences with managers. The extent of that comparative advantage may depend on various attributes of the venture capitalist and the portfolio firms. Different financiers may have different skills and resources for solving the human resource problems of portfolio firms. And portfolio firms may differ according to the difficulties they face in identifying and attracting the right managers to the firm.
2 That is, before the firm has a product on the market or has gone public.
Very risky firms may find it harder to attract managers who are risk-averse (and who, therefore, may prefer a safe job in an established firm to a risky job in the portfolio firm). The ability of the venture capitalist to use his or her network of industry connections to “recycle” good managers whose firms fail (for exogenous reasons) may permit the venture capitalist to attract skilled managers more successfully.
High-risk activities also make the process of screening managers more difficult. The managers of firms in new industries (where risk is higher) will be less well known to the market because of the relative absence of publicly traded securities (and, therefore, public information creation) for that sector. Greater risk also reduces the signal-to-noise ratio with respect to managerial ability. Thus, venture capitalists’ access to private information about managerial talent gives them an advantage in recruiting that is increasing in importance with the riskiness of the industry.
We hypothesize that venture capital brings non-financial benefits to new projects because it allows venture capitalists to use their human resource networking capabilities to transfer valuable information acquired in previous investments and to provide an employment “safety net” for managers. Both the risk aversion of managers, and the adverse-selection problem in identifying managerial talent imply that the comparative advantage of venture capitalists as human resource managers will be an increasing function of the riskiness of the portfolio firm. That hypothesis finds some support in the studies of Hellmann and Puri (2002) and Hsu (2004). Hellman and Puri find that the role of venture capital in attracting outsider CEOs is stronger for firms in their early stages (when the prospects for senior managers is riskier). Hsu (2004) finds that venture capitalists that are regarded as having superior network resources (including management recruiting contacts) are
more likely to succeed when bidding for portfolio firms, and that venture capitalists that possess superior network resources are more likely to be engaged in early-stage financing.
Our empirical examination of cross-sectional differences in the extent that venture capitalists act as human resource managers permits us to test this hypothesis, and other potential influences on the comparative advantage of venture capitalists in human resource management, more directly. Our empirical work is based on a nationwide survey of venture capitalists that identifies various characteristics of portfolio firms and venture capitalists, using objective and subjective measures. These characteristics include the riskiness of portfolio firms and the extent of venture capitalists’ involvement in human resource management, as well as many other attributes of portfolio firms and venture capitalists that are relevant to the comparative advantage of venture capitalists in human resource management (e.g., the size of the fund, and the subjective value attributed to the venture capitalist’s human resource network as a source of information).
The survey results confirm that human resource networking is an important activity. A majority of the venture capitalists confirm that their relationships with their colleagues include acting on their suggestions when hiring managers, and in turn recommending managers to each other. A substantial proportion of venture capitalists affirm that they adopt the strategy of recycling managers in their portfolio firms.
We find that the extent to which venture capitalists act as human resource managers depends positively on various factors, including: (1) the subjective risk venture capitalists attribute to their investments and observable attributes of the investments related to riskiness; (2) the value they attach to the information transmitted through their networks,; (3) the size of their funds (which should be positively correlated with their networking ability); and (4) the extent to which venture
capitalists believe that the firms that they finance would tend to have difficulty recruiting managers. Venture capitalists surveyed also provide evidence that their networking activities are motivated by perceived cost savings in recruiting managers. Venture capitalists report that greater networking results in an improved ability to attract managers due to the reputation venture capitalists acquire for recycling (assisting managers with job placement in the future).
This article is organized as follows: Section 2 discusses the operation of human resource networks within the venture capital industry, and their importance in creating information about managers ex ante, and the potential for recycling managers ex post. There we consider qualitative evidence of the importance of networks in transferring valuable information about managers, and managers themselves, across firms. Section 3 summarizes our model of the decision to network (which is developed in detail in Carvalho and de Matos 2003). Section 4 describes the survey and relates some of the survey data to the variables in the theoretical framework. Regression analysis of the incentives to network, hypothesized in the model, is presented in Section 5. Section 6 concludes.
2. Screening, Insurance, and the Role of Venture Capital Human Resource Networks
Firms receiving venture capital funding are typically very risky. More importantly, these firms are characterized by a high degree of asymmetric information. Managers frequently have more accurate information about the prospects of the firm than they may be willing to reveal. This information asymmetry makes project governance extremely important. Among the mechanisms venture capitalists adopt to deal with this problem are close monitoring and staging of the investment [Sahlman (1990), Gompers (1995), and Lerner (1995)].
To increase the likelihood of success and improve their information about the quality of projects, venture capitalists frequently become actively involved in the operation of their portfolio firms. For example, they sit on the board of directors, hire3 and recruit managers, help establish business strategies, provide industry knowledge, structure deals with suppliers and customers, and act as confidants to managers [Sahlman (1990)]. Because many of the firms suitable to receive venture capital funds are young companies lacking experience in human resources management, venture capitalists often become involved in selecting, recruiting and properly remunerating key employees.4
This involvement of venture capitalists within portfolio firms provides venture capitalists with expertise in selecting, recruiting, and properly remunerating managers, as well as in timing the development of the firms as organizations (e.g., deciding when the time is right to add a professional CEO or CFO). Furthermore, this involvement gives venture capitalists non-public information about the abilities and qualifications of the managers in the firms they fund.
Even though venture capitalists fund firms with potential to become publicly traded, more often than not, their investments end when their portfolio firms are either liquidated, merge, or are acquired by larger corporations. For example, Venture Economics (1988) reports that 34.5% of venture capital investments resulted in losses (result based on a sample of 383 companies funded 13 venture capital partnerships between 1969 and 1985). Black and Gilson (1998) presents data from 1984 to 1996 showing that a significant number of venture capital investments exit through acquisitions. In these cases, the portfolio firm generally becomes a division of the acquiring
3 For example, Baker and Gompers (1999) found that only 55% of the CEOs of venture capital-backed firms going public are founders. Hellmann and Puri (2000) found that 61% of firms funded with venture capital experienced a turnover.
4 The adjective “properly” refers to the design of contracts that gives the managers the right incentives, aligning his or her interests with those of the investors.
corporation and does not need a senior management team. Therefore, in many cases, senior managers leave their companies when they are sold or liquidated (this is not necessarily so if the firm goes public). The limited viability of senior managers in firms funded with venture capital means that many portfolio firm managers often are available for repeat hire by venture capitalists.
Venture capitalists bring to a project the expertise they develop in selecting, recruiting, and remunerating managers, and in timing the development of the companies as organizations. The nature of the involvement of venture capitalists within their portfolio firms provides them with the necessary means to acquire non-public information about suppliers, customers, and the management team of the companies they fund, and that information can be reused. For instance, when they exit an investment, they have the possibility of recycling competent managers by rehiring them to manage other firms in their portfolio. 5
Not only does venture capitalists’ involvement improve managerial quality through screening, the recycling of managers across portfolio firms reduces hiring costs via an “insurance effect.” Managers in small growing firms are exposed to a high risk of failure. As mentioned before, senior managers find themselves in a vulnerable situation when the firm does not go public. The fact that venture capitalists can offer another chance in another portfolio firm reduces the firm-specific risk
5 An example of this is given by Kleiner and Perkins, in Institutional Investor (June -1996), pp. 95-96: “The keiretsu conceit aside, the Kleiner partners' role in Silicon Valley may in some ways be closer to that of the Hollywood moguls of the '30s and '40s, whose success was built on their ability to lock up stars, directors and writers. Kleiner Perkins has similarly amassed a pool of talent. ‘If you're well regarded as a manager in their stable, you're going to be used over the years,’ says Frank Ingari, whom Doerr tapped to run networking software company Shiva Corp. in 1993.” “One way Doerr hardwires his network is by placing Kleiner CEOs on the boards of other corporate members of the keiretsu...The CEO of video game maker Crystal Dynamics, Randy Komisar, one of a number of Go veterans now running Kleiner companies, sits on the boards of two Kleiner-associated companies, Total Entertainment Network and MNI nteractive. CEO John Kernan of Lightspan Partnership sits on the board of fellow educational software company Academic Systems... “The network has been buttressed by the “CEO-in-residence'” program which brings temporarily out-of-work top executives into Kleiner and Perkins to review business plans, to do a little strategic thinking and help with recruiting...”
that managers bear when joining portfolio firms. This insurance effect may explain Hellmann and Puri’s (2002) finding that venture backed companies are faster to bring in outsiders as CEOs.
Both the screening and insurance effects depend on the possibility of consecutively employing managers in distinct portfolio firms. The possibility of the same venture capitalist redeploying the same manager are somewhat restricted since few venture capital funds are large enough to match job openings with the availability of managers. However, one factor that broadens the ability to reuse non-public information about managers is the close relationship among venture capitalists, which is an outgrowth of the syndication of investments.
Syndication of investments is commonly used to improve screening, achieve better monitoring, broader their sources of funds, and diversify their portfolio [Lerner (1994)]. The possibilities for syndication depend on both the connections a venture capitalist has, and on his or her reputation among other venture capitalists. Syndication creates strong bonds among venture capitalists and, therefore, allows reliable information to flow among them. The fact that reliable information can flow among venture capitalists gives them an unusual role as certifiers of senior managers' abilities (in the context of small growth firms financing), and allows them to operate an informal network to locate and relocate skilled managers.
3. The Decision to Network
Here we summarize the model presented formally in Carvalho and de Matos (2003). The venture capitalist conducts a cost-benefit analysis to determine whether to use a network of venture capitalists when hiring managers or use a headhunter to find managerial talent. The degree or probability of project success increases with the quality of the management. The venture capitalist establishes a desired profile for the manager. This profile includes verifiable characteristics such as
experience, industry knowledge, etc. It also includes some non-verifiable characteristics. For instance, very few managers can certify their ability to lead young, fast-growing firms into becoming large, well-structured organizations. Successful managers in large corporations may lack that skill. These non-verifiable characteristics define the managers’ type. The model assumes that beforehand neither venture capitalists nor managers know managers' types.
The cost of locating a manager depends on the means used. The cost of hiring a search firm is assumed to be the same for all venture capitalists. To locate managers through the network, the venture capitalist needs to establish relations with other venture capitalists. The cost of networking is equivalent to the monetary value of the time that the venture capitalist has to spend establishing connections. Once the venture capitalist is networked, he or she has access to suggestions coming from his or her network colleagues. The cost of networking when hiring varies across venture capitalists depending on the potential for networking that each venture capitalist has, which in turn can be related to factors like the size of the venture capital fund, the number of partners, how much the venture capitalist syndicates investments, etc.
The outcome of the project will become public information and influence the future salary that the manager expects to obtain in his or her next job. If the firm fails, the manager's future salary will be lower than in case of success. Managers are risk-averse and venture capitalists are risk-neutral.
In addition to using the network for hiring, venture capitalists who network can assist managers with job placement by suggesting managers to other venture capitalists.6 A possible
6 Only those who locate managers through the network have the option of actively suggesting managers. This dependence allows us to incorporate into the model the idea that venture capitalists who suggest managers have an advantage when recruiting managers because suggesting managers reduces the firm-specific risks to which managers are exposed (the insurance effect).
future referral works as an option that managers acquire when they are hired. If the project fails, with a given probability, the assistance can increase the future salary of the manager. In the model, if the firm succeeds, this assistance is irrelevant to the future salary of the manager. By suggesting managers venture capitalists incur a specific cost. This cost is equivalent to the monetary value of the effort and time that the venture capitalist has to spend contacting other venture capitalists to find a match for the managers. This cost varies inversely with venture capitalists' network connections.
In the model, the decision to network involves two aspects: suggesting managers and acting on suggestions when hiring a manager. The decisions to use the network for hiring and for suggesting are separate but related. First, the venture capitalist decides whether or not to participate in the network when hiring managers. If the venture capitalist chooses to use the network for hiring, then he or she has the option also to provide suggestions to the network. The decision to use the network for hiring does not imply that the venture capitalist must use the network for suggesting, but it does make suggesting possible. In turn, the option to suggest managers does affect the decision to use the network for hiring purposes in the first instance, because those who actively suggest managers have an advantage when recruiting managers: managers would accept a monetary salary below their reservation salary because the recommendation increases their expected future salary.
In the model, the benefit that venture capitalists create from suggesting managers is captured by them entirely in the form of lower compensation paid to the managers. When the venture capitalist suggests managers through a network, the manager's reservation salary is diminished by a given amount (reflecting the reduction in risk faced by the manager). That amount
represents the gain that the venture capitalist receives by suggesting managers. The venture capitalist will suggest managers whenever that gain is larger than the costs of suggesting.
The gain received by the venture capitalist from networking increases with the riskiness of the portfolio firm. Assistance with job placement has value to managers only if the firms they manage fail. Thus, the higher the chances of failure, the higher will be the value that managers attribute to the assistance, and thus, the higher the discount on the reservation salary that they are willing to accept. Venture capitalists stand to gain more from suggesting managers involved in risky projects.
In the model, the benefits from taking suggestions from the network when hiring managers can be decomposed into three factors.7 A first factor reflects the value to the venture capitalist of networking’s effect on higher managerial quality. Firms in which differences in managerial quality have greater consequences for firm performance will benefit more from locating highly skilled management, and will rely more on networks to do so to the extent that networks improve the accuracy of the screening process for hiring managers. With respect to this first factor, in the model, the benefits from improved managerial screening depend positively upon three physical parameters: (1) the relative profitability of a successful project outcome – i.e., the riskiness of the project (2) the effect of managerial quality on the probability of a successful outcome, and (3) the value of networking for identifying skilled managers. In the model, these three parameters appear in a multiplicative way such that the strength of each effect depends on the size of the other two parameters.
7 There is also a fourth factor highlighted in the model, which does not correspond to any observable variables in our survey, and which is therefore excluded from this discussion. The fourth factor is the possible additional gain to the venture capitalist from using the network if managers located through the network have a lower probability of being otherwise employed than those coming through headhunters. For the conclusions in this article, it is not important whether managers located through the network have a lower probability of being employed than those located through headhunters.
The second factor is the insurance effect. This is the benefit captured by the venture capitalist by being able to offer to recycle managers via the network, which takes the form of a reduction in the manager’s reservation level for compensation. The value of the insurance effect depends positively on: (1) the riskiness of the project, and (2) the credibility of the commitment from the venture capitalist to recycle. Note that the insurance effect, therefore, provides a second rationale for a positive relationship between risk and the decision by venture capitalists to participate in networks.
The third factor reflects cost savings to the venture capitalist from the difference between the physical cost of networking and the physical cost of headhunting. It is plausible to assume that using a headhunter has a constant marginal cost that is the same for all venture capitalists. In contrast, the cost of networking should decline with the size of the venture capital fund. Two conjectures relate the size of the venture fund to the costs of networking. First, large funds are managed by many venture capitalists. Therefore, the incidence of suggestions coming from partners or persons associated with them is more frequent. Secondly, other venture capitalists may have an interest in developing good relations with venture capitalists managing large funds. This may occur because of the interest that venture capitalists have in prospective syndications [Lerner (1994)].8 Moreover, well-established venture capitalists are opinion makers in the industry. Therefore, the flow of reliable suggestions to venture capitalists managing large funds can be more intense.
In summary, when one combines the effects of these three factors, the model predicts that a venture capitalist’s reliance on networking when hiring managers is positively related to several characteristics of the portfolio firm or the venture capitalist: (1) project risk, (2) the effect of
8 For instance, this can be related to what Lerner calls window-dressing: venture capital funds want to show that they financed successful enterprises in order to promote fund raising. Because of this, the opportunity to join a successful enterprise through syndication is extremely valuable.
managerial quality on the probability of a successful outcome, (3) the value of networking for identifying skilled managers, (4) the credibility of the venture capitalist’s commitment to recycle, and (5) the size of the venture capitalist. Note that project risk affects the benefits of networking positively through two distinct affects: the marginal productivity of managerial screening, and the insurance effect. Also, recall that the insurance effect (which is reflected in characteristics (4) and (1)) on the propensity to use networks for hiring is only relevant for venture capitalists that use the network for recycling managers, as well.
The same five characteristics listed above should predict the use of the network for recycling (suggesting) managers, as well as for hiring them. In the model, the insurance effect in the hiring decision is only operative if the venture capitalist chooses to participate in suggesting managers for recycling via the network. Conversely, in the model, suggesting is only physically possible if the venture capitalist has already decided to participate in the network for hiring purposes. This interdependence between the two endogenous networking decisions implies that any exogenous variable that directly influences the probability of deciding in favor of doing one also raises the probability of deciding in favor of the other.
4. Survey Data
Data concerning the existence and use of the hiring network among venture capitalists were obtained through two surveys of venture capitalists. The first (referred to as “the survey”) was answered by 160 venture capitalists and contains mostly qualitative information. The second (referred to as “the follow-up”), contains more quantitative questions, for which we obtained 68 responses. Creating these two new datasets through surveys permitted us to match the exogenous structure in the model to observable variables.
The survey was sent to 879 venture capitalists throughout the US, randomly taken from “Pratt's Guide to Venture Capital Sources (1994),” a publication that lists all the venture capital sources and their managers. Among the 160 respondents, 70 agreed to a phone interview and a follow-up survey, but we could reach only 68 of them. The survey and interviews were done in 1995 and 1996. Through the interviews we discovered that four respondents to the original survey were persons not directly involved in the investment process. These four responses were deleted, resulting in a final sample of 156 survey responses and 68 follow-up responses. Table 1 describes the variables derived from the survey and follow-up.
As a first step in our analysis, we investigate the perceived importance of human resource management by venture capitalists. In the survey, to assess the importance of recruiting managers, the respondents were asked to rank the three activities performed by venture capitalists that they considered most important. They were given a menu including (1) monitoring performance against goals, (2) helping with management decisions, (3) providing industry knowledge, (4) providing finance, (5) developing business strategy, and (6) recruiting managers. Respondents were also given two blank slots to fill in activities that they deemed important that were not included in this list. A significant proportion (16.7%) listed recruiting managers as the most important activity; 35.5% viewed it as one of the two most important activities, and 54.2% described it as one of the three most important (Table 2).
Survey respondents were also asked to quantify various aspects of their human resource management activities. Table 3 presents data on the number of executives that the venture capitalist has employed more than once or helped with job placement in the previous 5 years. Table 3 also provides data on the number of CEOs replaced in the previous 5 years. The mode and median of the empirical distribution for placement is 2. The mode of the empirical distribution for
replacement is 3, and the median is 4. Table 3 clearly shows that some venture capitalists are far more active than others, which may reflect either differences in the total number of portfolio firms across venture capitalists, or differences in the intensity of human resource management. To provide a clearer indicator of the intensity of human resource management activity, the bottom panel of Table 3 reports placement and replacement activity relative to the size of the venture capital fund (measured by the number of DEALS in the past five years).
Venture capitalists were asked to express their degree of agreement with the following propositions: (1) “venture capitalists operate informal networks involved in locating and relocating managers” (proposition NETWORK); (2) “it is common for me to suggest likely managers to others in the private equity industry” (proposition SUGGEST); (3) “it is common for me to act on suggestions from others in the private equity industry when hiring a top manager for a firm” (proposition TAKE SUGGESTIONS); and (4) “once I learn about the good qualifications of a manager, I try to keep him/her working for companies I fund, i.e., I entice him/her to leave a firm when I sell or liquidate it and take a position in another company I fund” (proposition RECYCLING STRATEGY). The follow-up also asked venture capitalists to state the number of managers that the venture capitalist had hired under recommendation and suggested in the previous 5 years both to/from partners and non-partners. The responses to all of these questions are reported in Table 4, where Panel A summarizes responses to the four questions listed above, and Panel B summarizes responses to the follow-up questions about networking.
Clearly, venture capitalists strongly believe in the existence of a human resource network. A large majority, 77.9%, agreed that they operate informal networks (proposition NETWORK, Table 4, Panel A); only 6.5% disagreed. Fully 56.2% agreed that it is common for them to suggest likely managers to others in the private equity industry; only 19.3% disagreed (proposition SUGGEST,
Table 4, Panel A).9 The results in the follow-up (Table 4, Panel B) confirm this last result from the survey. Only 24.6% had not suggested any manager to partners and 24.6% to non-partners. Finally, the proportion of venture capitalists that had not recommended any manager amounts to 12.7%, while those who had recommended more than 4 is 52.7%.
Most respondents (62.3%) agreed that it is common for them to act on suggestions when hiring managers (7.1% strongly agreed); only 11% disagreed (proposition TAKE SUGGESTIONS, Table 4, Panel A).10 The numbers in the follow-up (Table 4, Panel B) are consistent with these results: only 19% of the respondents had not hired any manager under suggestion (30.5% had not hired any manager under suggestion of partners and 52.5%, from non-partners). The proportion of those who hired more than 3 managers under recommendation is 30.2%. A considerable proportion of venture capitalists (37%) affirm that they adopt a recycling strategy (proposition RECYCLING STRATEGY, Table 4, Panel A).11
Summary statistics from our survey and follow-up show that a significant proportion of venture capitalists suggest managers to each other, act on suggestions when hiring senior managers, and have a strategy of recycling managers. It is particularly striking that a large proportion of venture capitalists agree that they operate informal networks involved in locating and relocating managers.
Survey responses also provide evidence on the motives of venture capitalists in using human resource networks. We hypothesize that an important element that may explain the
9 The answer given to this question by the subsample of those who answered the follow-up is very similar: 10.3% agree strongly, 52.9% agree, 22.1% are indifferent, and 14.7% disagree.
10 The answer given to this question by the subsample of those who answered the follow-up is very similar: 10.3% agree strongly, 52.9% agree, 32.4% are indifferent, 2.9% disagree, and 1.5% strongly disagree.
11 Through telephonic interviews, several venture capitalists recognized that the small number of deals does not allow them to implement this strategy, although they would be willing to do it.
motivation that venture capitalists have in networking is the relatively high value that they attribute to the information that they obtain from each other. More specifically, we hypothesize that venture capitalists have (or at least think they have) information about managers that search firms do not.
To address that hypothesis, venture capitalists were asked to express their degree of agreement with the following propositions: (1) “the success of the firms I fund depends mostly on their top managers” (proposition MANAGERIAL IMPACT); (2) ”as a venture capitalist I learn substantially more about the managers of the companies I fund than what can be revealed to outsiders by their track records” (proposition INSIDE INFORMATION); and (3) “to manage a firm funded with venture capital requires different skills from those needed to manage a company funded with other sources of capital” (proposition SPECIAL SKILLS).
The level of agreement with these propositions is presented in Table 5, Panel A. The overwhelming majority (93.5%) of respondents agreed that, through their relations with managers, they learn substantially more about the managers than what can be revealed to outsiders by the managers' records (proposition INSIDE INFORMATION). An even higher level of agreement (95.5%) is attained for the proposition MANAGERIAL IMPACT. Finally, 58.7% agree that to manage for venture capital investors require special skills (proposition SPECIAL SKILLS). Together, these responses support the hypothesis that information about managerial skills is important and not readily available.
Next, in Table 5, Panel B, we examine venture capitalists’ views of the challenges they face in recruiting managers, and the extent to which the operation of a human resource network can help to reduce the costs of hiring skilled managers. We asked respondents to express their degree of agreement with various propositions related to their activities as human resources recruiters. These
propositions are: (1) “it can be difficult to entice a manager to leave a stable position in a well established company and take a chance in a new firm with risky prospects” (proposition DIFFICULT HIRE); (2) “if it were not for their confidence in my personal commitments to them, some of the top managers of the companies I fund might not have accepted the job offer they received” (proposition PERSONAL COMMITMENTS); and (3) “having a reputation of helping good managers with job placement, in the event that the companies for which they work are liquidated, helps entice other managers to work for other companies I fund” (proposition REPUTATION).
The data in Table 5, Panel B, indicate that venture capitalists make personal commitments to managers, and rely on their personal reputations for helping managers to find replacement jobs, as a means of enticing managers to come to their portfolio firms, which managers may be reluctant to do because of the riskiness of those portfolio firms. The majority of respondents (54.5% agree that it can be difficult to entice managers to a risky portfolio firm, while 25% disagree. 68.7% of respondents emphasize the importance of their personal commitment to managers in getting them to accept a job, while 9.8% disagree. 44% agree that their reputations for assisting in recycling managers help entice managers to their portfolio firms, while 15.1% disagree.
5. Explaining Differences in Venture Capitalists’ Reliance on Human Resource Networking
The summary statistics described thus far demonstrate that venture capitalists tend to agree that: (1) human resource networking is an important activity, (2) information about managerial quality is important, (3) venture capitalists obtain unique information about their managers, and (4) participating in a human resource network is important for attracting skilled managers. Interestingly, however, the results in Tables 2-5 also show that there is a considerable amount of
variation in the opinions venture capitalists express about the importance of participating in human resource networks, and the importance of those networks for attracting skilled managers. In Section 3, we described a model (developed in detail in Carvalho and de Matos 2003) that suggests explanations for that variation in opinion and practice. Specifically, the model suggests that cross-sectional variation in the perceived importance of networks, or in the desire to participate in them, should be linked to factors identified in the model. This section explores the extent to which cross-sectional differences in the use of networks can be explained by observable characteristics of venture capitalists, as predicted by the model.
In what follows, we use respondents’ answers to the propositions SUGGEST and TAKE SUGGESTIONS (both from the survey), the number of managers hired under suggestion from non-partners (from the follow-up), and the number of managers recommended to non-partners (from the follow-up) as alternative endogenous variables to measure the extent of the reliance by venture capitalists on networks. TAKE SUGGESTIONS and the number of managers hired under suggestion are alternative measures of the propensity to network when hiring. SUGGEST and the number of managers recommended are alternative measures of the propensity to supply managers to the network. In the model, these are separate decisions. The model suggests factors that should explain variation in the reliance on networks for both hiring and suggesting. We measure explanatory factors using observable variables based on responses to propositions in the survey and follow-up, and then test to see whether these observable explanatory variables can explain cross-sectional variation in our measures of reliance on networks.
At the end of Section 3 above, we described the empirical predictions of the Carvalho-de Matos (2003) model. According to the model, there should be a positive association between the propensity to rely on networks, for both hiring and suggesting, and the following characteristics: (1)
Thursday, February 10, 2011
Dream: Poisoned
I always dream about my dad. He appears but I can vaguely remember anything.
Last night I dreamed of a ruler of a kingdom. With soldiers, a fortress and all...
Let's name this ruler King Mike.
King Mike was getting the best wood for trade. It was really good wood.
He was profiting really well on the wood.
Then another ruler from another kingdom wanted this wood for himself.
He came to Mike's fortress one day.
King Mike knew there would be some kind of trouble and asked his guards to be on the look out for an imminent attack.
King Mike got out of his fortress to greet the guest.
When shaking hands, the guest took out a poisoned knife and stabbed King Mike, immediately killing him on the spot!
What is this dream about!!!???!!!
I always dream about my dad. He appears but I can vaguely remember anything.
Last night I dreamed of a ruler of a kingdom. With soldiers, a fortress and all...
Let's name this ruler King Mike.
King Mike was getting the best wood for trade. It was really good wood.
He was profiting really well on the wood.
Then another ruler from another kingdom wanted this wood for himself.
He came to Mike's fortress one day.
King Mike knew there would be some kind of trouble and asked his guards to be on the look out for an imminent attack.
King Mike got out of his fortress to greet the guest.
When shaking hands, the guest took out a poisoned knife and stabbed King Mike, immediately killing him on the spot!
What is this dream about!!!???!!!
Wednesday, February 9, 2011
பொà®™்கலோ பொà®™்கல் என்à®±ு கூவி அதை வெà®±ுà®®் இனிப்பு பண்டமாக உண்பது மட்டுà®®ே இன்à®±ைய நடைà®®ுà®±ையாக உள்ளது.
தை பிறந்தால் வழி பிறக்குà®®் என்பாà®°்கள். அதன் பொà®°ுள், நெல் பயிà®°ிட்ட காலத்தில் அது வளர்ந்து வரப்பு பாதையை à®®ூடிவிடுà®®்.
தை பிறக்குà®®் தருணத்தில் நெà®±்பயிà®°் à®®ுà®±்à®±ி பாà®°à®®் தாà®™்காமல் சாய்ந்துவிடுà®®். அதோடு பயிà®°ுக்கு நீà®°் பாய்ச்சுவதையுà®®் நிà®±ுத்தி விடுவாà®°்கள்.
à®…à®±ுவடை காலமான தை பிறக்குà®®் பொà®´ுது நெà®±்பயிà®°் விழகி மற்à®±ுà®®் நீà®°் இல்லாமல் களைகள் வாடி வரப்பு பாதை தெளிவாக தெà®°ியுà®®்.
இதை தான் நம் à®®ுன்னோà®°்கள் 'தை பிறந்தால் வழி பிறக்குà®®்' என்à®±ாà®°்கள்.
ஆனால் அது மட்டுà®®ே அல்லாமல், தை பிறந்துதானே நெà®±்பயிà®°ை நமக்கு ஈற்à®±ிக் கொடுக்கிறது. அடுத்த தை வருà®®் வரை இந்த நெà®±்பயிà®°் தான் நமக்கு நம் வாà®´்வை வழி காட்டுà®®் வாà®´்வாதாà®°à®®ாக உள்ளது. இதையுà®®் கருத்தில் கொண்டு தான் நம் à®®ுன்னோà®°்கள் 'தை பிறந்தால் வழி பிறக்குà®®்' என்à®±ாà®°்கள்.
அதனால் தான் நம் à®®ுன்னோà®°்கள் தை à®®ுதல் நாளை தமிà®´à®°்களின் புத்தாண்டாக கொண்டாடி தமிà®´ுக்கு பெà®°ுà®®ை சேà®°்த்தாà®°்கள்.
தாய்க்கு பெà®°ுà®®ை சேà®°்ப்பது தானே மகனுக்குà®®் பெà®°ுà®®ை. தமிà®´ின் à®…à®°ுà®®ை தெà®°ிந்தவர்கள் நம் à®®ுன்னோà®°்கள்.
இன்à®±ு நாà®®் ஆங்கில அப்பன்களுக்கு ரகசியமாய் பிறந்ததை போல் அவர்களின் புத்தாண்டை நாà®®் 'பீà®°்' குடித்துà®®் வெடி வெடித்துà®®் கொண்டாடுவோà®®்.
பொà®™்கலன்à®±ு உண்டது செà®°ிக்க தொலைகாட்சி சிà®°ிப்பு பட்டிமன்றத்தை பாà®°்த்து தமிà®´் à®…à®±ிவை வளர்ப்போà®®்.
தமிà®´à®°ின் கலாட்சாரத்தை பெà®°ுà®®ை பேசுà®®் வெà®±்à®±ி திà®°ு மகனாய் உலா வருà®®் நம் இளைஞர்கள் இந்த திà®°ுநாளின்போது 'ஹாப்பி பொà®™்கல்' கூà®±ி தமிà®´ுக்கு பெà®°ுà®®ை சேà®°்ப்பாà®°்கள்.
தன் à®®ுறத்தால் புலியை விரட்டிய தாயின் வழி வந்த யுவதிகள் குà®±ுஞ்செய்தியால் தமிà®´ை சிலிà®°்க்க வைப்பாà®°்கள்.
ஆதலால் தமிà®´ை இப்படியுà®®் வளர்ப்போà®®்.
இனிய தமிà®´à®°் புத்தாண்டு வாà®´்த்துக்கள்.
தை பிறந்தால் வழி பிறக்குà®®் என்பாà®°்கள். அதன் பொà®°ுள், நெல் பயிà®°ிட்ட காலத்தில் அது வளர்ந்து வரப்பு பாதையை à®®ூடிவிடுà®®்.
தை பிறக்குà®®் தருணத்தில் நெà®±்பயிà®°் à®®ுà®±்à®±ி பாà®°à®®் தாà®™்காமல் சாய்ந்துவிடுà®®். அதோடு பயிà®°ுக்கு நீà®°் பாய்ச்சுவதையுà®®் நிà®±ுத்தி விடுவாà®°்கள்.
à®…à®±ுவடை காலமான தை பிறக்குà®®் பொà®´ுது நெà®±்பயிà®°் விழகி மற்à®±ுà®®் நீà®°் இல்லாமல் களைகள் வாடி வரப்பு பாதை தெளிவாக தெà®°ியுà®®்.
இதை தான் நம் à®®ுன்னோà®°்கள் 'தை பிறந்தால் வழி பிறக்குà®®்' என்à®±ாà®°்கள்.
ஆனால் அது மட்டுà®®ே அல்லாமல், தை பிறந்துதானே நெà®±்பயிà®°ை நமக்கு ஈற்à®±ிக் கொடுக்கிறது. அடுத்த தை வருà®®் வரை இந்த நெà®±்பயிà®°் தான் நமக்கு நம் வாà®´்வை வழி காட்டுà®®் வாà®´்வாதாà®°à®®ாக உள்ளது. இதையுà®®் கருத்தில் கொண்டு தான் நம் à®®ுன்னோà®°்கள் 'தை பிறந்தால் வழி பிறக்குà®®்' என்à®±ாà®°்கள்.
அதனால் தான் நம் à®®ுன்னோà®°்கள் தை à®®ுதல் நாளை தமிà®´à®°்களின் புத்தாண்டாக கொண்டாடி தமிà®´ுக்கு பெà®°ுà®®ை சேà®°்த்தாà®°்கள்.
தாய்க்கு பெà®°ுà®®ை சேà®°்ப்பது தானே மகனுக்குà®®் பெà®°ுà®®ை. தமிà®´ின் à®…à®°ுà®®ை தெà®°ிந்தவர்கள் நம் à®®ுன்னோà®°்கள்.
இன்à®±ு நாà®®் ஆங்கில அப்பன்களுக்கு ரகசியமாய் பிறந்ததை போல் அவர்களின் புத்தாண்டை நாà®®் 'பீà®°்' குடித்துà®®் வெடி வெடித்துà®®் கொண்டாடுவோà®®்.
பொà®™்கலன்à®±ு உண்டது செà®°ிக்க தொலைகாட்சி சிà®°ிப்பு பட்டிமன்றத்தை பாà®°்த்து தமிà®´் à®…à®±ிவை வளர்ப்போà®®்.
தமிà®´à®°ின் கலாட்சாரத்தை பெà®°ுà®®ை பேசுà®®் வெà®±்à®±ி திà®°ு மகனாய் உலா வருà®®் நம் இளைஞர்கள் இந்த திà®°ுநாளின்போது 'ஹாப்பி பொà®™்கல்' கூà®±ி தமிà®´ுக்கு பெà®°ுà®®ை சேà®°்ப்பாà®°்கள்.
தன் à®®ுறத்தால் புலியை விரட்டிய தாயின் வழி வந்த யுவதிகள் குà®±ுஞ்செய்தியால் தமிà®´ை சிலிà®°்க்க வைப்பாà®°்கள்.
ஆதலால் தமிà®´ை இப்படியுà®®் வளர்ப்போà®®்.
இனிய தமிà®´à®°் புத்தாண்டு வாà®´்த்துக்கள்.
Tuesday, February 8, 2011
Monday, February 7, 2011
Friday, February 4, 2011
A GIRLS The Game of Love and Missing someone..
I know not..
I have experienced the love that I feel for my parents.. for my sister..
I feel affection and care for and towards my friends.. but when it comes to romantic love i fail to understand/measure/feel its depth.
I do not mean that its not deep, its just that I donno how deep.. how long lasting..
people say romantic love is nothing but a temporary stage of hormonal changes in one’s body.. but is love only about the quantity of adrenaline, dopamine, fenylethylamine, endorphin and oxytocin in our body? or is it something more, deeper? more permanent? eternal?
How does one distinguish between love, affection, infatuation or attraction?
How does one decide if what appears as love at a particular moment is really love and that the feeling will remain same always for that person?
I can find no answers… probably no one can.. everyone can only have their own assumptions and live their lives based on them calling them their philosophy.
And Why Not!
If these questions had one universal answer, the world would not be an interesting mystic place like it is now!
Things will become more predictable, the exploratory fun will be absent, there will be no pain.. since people will not commit mistakes out of ignorance.
And in absence of pain there will be no realization of happiness…
Life is beautiful the way it is.. it opens a new chapter each day, where you feel you know whats going to come on the next page but not always you get to read the same what you expected..
Life looks like a game of putting efforts to increase probability of the events you want to happen in future.. nothing is certain, it cannot be, future always remain out of control and unpredictable, but we do make attempt to control it, and if not a full control we are able to shape it and direct it in someway to what we want.
Love is difficult to understand.
When we love someone, we ‘miss’ them infinitely without reason. Apart from love, whenever we miss something, we know the reason why we are missing it, we know what will happen if we find that thing. But if its just love, we miss without any reason, when we find the person, we know not what to do, because there was nothing we were actually missing that person for.
So is this kind of “Missing..” love?
Is this permanent?
Can you have same feeling for more than one person?
Studies say, it is possible to have that feeling for more than one person but not all at a time..
Its confusing to answer a question like: “Do you REALLY love me?”
A person might love someone, but does s/she “really” is in love.. no one knows.. even that person may not know..
So what should be done? How do you know for yourself as well as for the person you love, that are you two really in love?
May be these questions are impossible to answer.. so just live in the moment, enjoy reading each page of life as it opens.. Just swing and sing in the beautiful feeling of love without questioning it..
I know not..
I have experienced the love that I feel for my parents.. for my sister..
I feel affection and care for and towards my friends.. but when it comes to romantic love i fail to understand/measure/feel its depth.
I do not mean that its not deep, its just that I donno how deep.. how long lasting..
people say romantic love is nothing but a temporary stage of hormonal changes in one’s body.. but is love only about the quantity of adrenaline, dopamine, fenylethylamine, endorphin and oxytocin in our body? or is it something more, deeper? more permanent? eternal?
How does one distinguish between love, affection, infatuation or attraction?
How does one decide if what appears as love at a particular moment is really love and that the feeling will remain same always for that person?
I can find no answers… probably no one can.. everyone can only have their own assumptions and live their lives based on them calling them their philosophy.
And Why Not!
If these questions had one universal answer, the world would not be an interesting mystic place like it is now!
Things will become more predictable, the exploratory fun will be absent, there will be no pain.. since people will not commit mistakes out of ignorance.
And in absence of pain there will be no realization of happiness…
Life is beautiful the way it is.. it opens a new chapter each day, where you feel you know whats going to come on the next page but not always you get to read the same what you expected..
Life looks like a game of putting efforts to increase probability of the events you want to happen in future.. nothing is certain, it cannot be, future always remain out of control and unpredictable, but we do make attempt to control it, and if not a full control we are able to shape it and direct it in someway to what we want.
Love is difficult to understand.
When we love someone, we ‘miss’ them infinitely without reason. Apart from love, whenever we miss something, we know the reason why we are missing it, we know what will happen if we find that thing. But if its just love, we miss without any reason, when we find the person, we know not what to do, because there was nothing we were actually missing that person for.
So is this kind of “Missing..” love?
Is this permanent?
Can you have same feeling for more than one person?
Studies say, it is possible to have that feeling for more than one person but not all at a time..
Its confusing to answer a question like: “Do you REALLY love me?”
A person might love someone, but does s/she “really” is in love.. no one knows.. even that person may not know..
So what should be done? How do you know for yourself as well as for the person you love, that are you two really in love?
May be these questions are impossible to answer.. so just live in the moment, enjoy reading each page of life as it opens.. Just swing and sing in the beautiful feeling of love without questioning it..
Wednesday, February 2, 2011
Established in the year 1794, College Of Engineering Guindy has an inexorable tradition in grooming the brightest minds of the nation into smart engineers and executives who can think on their feet. The sprawling campus with cutting edge infrastructure has been the Alma mater to many a successful engineer, scholar and leader. With close ties to industry, excellent research practices and multiple extra-curricular options, the institution provides for ample growth of spirit of the individual student while promoting collaborative practices and team efforts too. The world-class faculty along with the excellent student population make the campus one of the best places to study in the nation. Being consistently ranked in the Top Ten Engineering Colleges in India has further strengthened the formidable reputation of the institution.
India as a Nation has traversed a long way to be amongst one of the fastest growing economies in the world. The Entrepreneurs have played a major role in shaping the Indian economy. Today the Indian Entrepreneur is aiming high and big.
The Entrepreneurship Cell, IIT Bombay presents Entrepreneurship Summit 2011, a conglomerate of eminent Speaker Sessions, highly efficient networking Events and nail biting pitching Competitions and much more.
Endorsing the theme of “Connecting the dots”, the 5th Edition of the E Summit ’11 will be hosting events specifically designed to facilitate efficient networking. It aims to empower you with all the necessary know-how required for you to prosper now and into the future.
The Entrepreneurship Cell, IIT Bombay presents Entrepreneurship Summit 2011, a conglomerate of eminent Speaker Sessions, highly efficient networking Events and nail biting pitching Competitions and much more.
Endorsing the theme of “Connecting the dots”, the 5th Edition of the E Summit ’11 will be hosting events specifically designed to facilitate efficient networking. It aims to empower you with all the necessary know-how required for you to prosper now and into the future.
Friday, January 28, 2011
Sri Lanka - Ambassador reports Sri Lankan President responsible for "alleged war crimes"
WikiLeaks Staff, 1 December 2010, 19.00 GMT
Sri Lankan President Mahinda Rajapaksa and his family are responsible for alleged war crimes against the Tamil, according to a cable sent by US ambassador to Sri Lanka Patricia Butenis.
Butenis said complicity in alleged war crimes by the president and leader of the opposition was stalling progress in launching investigations into the country’s civil war.
The long running conflict between the government of Sri Lanka and the LTTE, also known as the Tamil Tigers, was ended in May 2009 after the Sri Lankan army defeated LTTE leaders in an area known as the “no fire zone”.
The cable, dated 15 January 2010, updated the Secretary of State on war crimes accountability following the end of the country’s long and bloody conflict.
Ambassador Butenis noted there had been some limited progress in investigating potential war crimes, but noted:
“There are no examples we know of a regime undertaking wholesale investigations of its own troops or senior officials for war crimes while that regime or government remained in power.
“In Sri Lanka this is further complicated by the fact that responsibility for many of the alleged crimes rests with the country’s senior civilian and military leadership, including President Rajapaksa and his brothers and opposition candidate General Fonseka.”
With regard to alleged LTTE war crimes, Butenis noted:
“Most of the LTTE leadership was killed at the end of the war, leaving few to be held responsible for those crimes. The Government of Sri Lanka (GSL) is holding thousands of mid- and lower-level ex-LTTE combatants for future rehabilitation and/or criminal prosecution. It is unclear whether any such prosecutions will meet international standards.”
The revelations coincide with a visit by President Rajapaksa to the United Kingdom. Rajapaksa, who has been in the UK since Monday, is due to meet with UK Defence Secretary Liam Fox.
Rajapaksa was also scheduled to speak at the Oxford Union on Thursday until the university issued a statement cancelling the event on Wednesday afternoon. The statement cited “security concerns” due to the large number of protestors expected to picket the event.
WikiLeaks Staff, 1 December 2010, 19.00 GMT
Sri Lankan President Mahinda Rajapaksa and his family are responsible for alleged war crimes against the Tamil, according to a cable sent by US ambassador to Sri Lanka Patricia Butenis.
Butenis said complicity in alleged war crimes by the president and leader of the opposition was stalling progress in launching investigations into the country’s civil war.
The long running conflict between the government of Sri Lanka and the LTTE, also known as the Tamil Tigers, was ended in May 2009 after the Sri Lankan army defeated LTTE leaders in an area known as the “no fire zone”.
The cable, dated 15 January 2010, updated the Secretary of State on war crimes accountability following the end of the country’s long and bloody conflict.
Ambassador Butenis noted there had been some limited progress in investigating potential war crimes, but noted:
“There are no examples we know of a regime undertaking wholesale investigations of its own troops or senior officials for war crimes while that regime or government remained in power.
“In Sri Lanka this is further complicated by the fact that responsibility for many of the alleged crimes rests with the country’s senior civilian and military leadership, including President Rajapaksa and his brothers and opposition candidate General Fonseka.”
With regard to alleged LTTE war crimes, Butenis noted:
“Most of the LTTE leadership was killed at the end of the war, leaving few to be held responsible for those crimes. The Government of Sri Lanka (GSL) is holding thousands of mid- and lower-level ex-LTTE combatants for future rehabilitation and/or criminal prosecution. It is unclear whether any such prosecutions will meet international standards.”
The revelations coincide with a visit by President Rajapaksa to the United Kingdom. Rajapaksa, who has been in the UK since Monday, is due to meet with UK Defence Secretary Liam Fox.
Rajapaksa was also scheduled to speak at the Oxford Union on Thursday until the university issued a statement cancelling the event on Wednesday afternoon. The statement cited “security concerns” due to the large number of protestors expected to picket the event.
That's because the cover letters I see usually fall into one of three categories:
The recap: The résumé in prose form. It's redundant, harder to read than the résumé, and provides no additional insight.
The form letter: This says, essentially, "Dear Sir or Madam: I saw your ad in the paper and thought you might like me." And it's clearly a form letter where maybe they got my name and company right. If they're lucky, I will still take the time to read their résumé after being insulted with a form letter.
The "I'm crazy": This one's rare, and it expands on the résumé of experience with some personal insights. Examples range from the merely batty ("I find batik as an art form has taught me to become both a better person and project manager.") to the truly terrifying ("I cast a pentagram hex and the central line pointed towards your job listing. I know you will find this as comforting as I do.")
There are really only a few times to use a cover letter:
When you know the name of the person hiring
When you know something about the job requirement
When you've been personally referred (which might include 1 and 2)
Under those conditions, you can help your cause by doing some of the résumé analysis for your potential new boss. To illustrate, here's the best cover letter I ever received:
Dear David:
I am writing in response to the opening for xxxx, which I believe may report to you.
I can offer you seven years of experience managing communications for top-tier xxxx firms, excellent project-management skills, and a great eye for detail, all of which should make me an ideal candidate for this opening.
I have attached my résumé for your review and would welcome the chance to speak with you sometime.
Best regards,
Xxxx Xxxx
Here's what I like about this cover letter: It's short. It sums up the résumé as it relates to the job. It asks for the job.
The writer of this letter took the time to think through what would be relevant to me. Instead of scattering lots of facts in hopes that one was relevant, the candidate offered up an opinion as to which experiences I should focus on.
And that means the writer isn't just showing me skills related to the job, he's showing me he'll be the kind of employee who offers up solutions — instead of just laying problems on my desk.
What do you think? Have you ever secured a job thanks to a cover letter? What's your view on the value — or lack thereof — of cover letters?
The recap: The résumé in prose form. It's redundant, harder to read than the résumé, and provides no additional insight.
The form letter: This says, essentially, "Dear Sir or Madam: I saw your ad in the paper and thought you might like me." And it's clearly a form letter where maybe they got my name and company right. If they're lucky, I will still take the time to read their résumé after being insulted with a form letter.
The "I'm crazy": This one's rare, and it expands on the résumé of experience with some personal insights. Examples range from the merely batty ("I find batik as an art form has taught me to become both a better person and project manager.") to the truly terrifying ("I cast a pentagram hex and the central line pointed towards your job listing. I know you will find this as comforting as I do.")
There are really only a few times to use a cover letter:
When you know the name of the person hiring
When you know something about the job requirement
When you've been personally referred (which might include 1 and 2)
Under those conditions, you can help your cause by doing some of the résumé analysis for your potential new boss. To illustrate, here's the best cover letter I ever received:
Dear David:
I am writing in response to the opening for xxxx, which I believe may report to you.
I can offer you seven years of experience managing communications for top-tier xxxx firms, excellent project-management skills, and a great eye for detail, all of which should make me an ideal candidate for this opening.
I have attached my résumé for your review and would welcome the chance to speak with you sometime.
Best regards,
Xxxx Xxxx
Here's what I like about this cover letter: It's short. It sums up the résumé as it relates to the job. It asks for the job.
The writer of this letter took the time to think through what would be relevant to me. Instead of scattering lots of facts in hopes that one was relevant, the candidate offered up an opinion as to which experiences I should focus on.
And that means the writer isn't just showing me skills related to the job, he's showing me he'll be the kind of employee who offers up solutions — instead of just laying problems on my desk.
What do you think? Have you ever secured a job thanks to a cover letter? What's your view on the value — or lack thereof — of cover letters?
Thursday, January 27, 2011
Friend --
Tonight I addressed the American people on the future we face together.
Though at times it may seem uncertain, it is a future that is ours to decide, ours to define, and ours to win.
I know we will.
Because, after the worst recession in decades, we see an economy growing again.
Because, after two years of job losses, we've added private-sector jobs for 12 straight months -- more than 1 million in all.
Because, time after time, when our resolve has been tested, we, as a nation, have always prevailed.
Overcoming the challenges we face today requires a new vision for tomorrow. We will move forward together, or not at all -- for the challenges we face are bigger than party, and bigger than politics.
Yet the story of America is this: We do big things.
Just as the progress of the past two years would not have been possible without your hard work, we will not realize the agenda I described tonight without you.
So as we continue this great mission together, and we set out the plans for how far we can go, I need to know that you are ready to work side by side with me once more.
Will you stand with me as we strive to win the future?
The last two years have been marked by unprecedented reforms and historic progress.
But there is much more work to do.
Moving forward, America's economic growth at home is inextricably connected to our competitiveness in the global community. The more products American companies can export, the more jobs we can create at home.
This vision for the future starts with innovation, tapping into the creativity and imagination of our people to create the jobs and industries of the future. Instead of subsidizing yesterday's energy, let's invest in tomorrow's. It's why I challenged Congress to join me in setting a new goal: By 2035, 80 percent of America's electricity will come from clean energy sources.
It means leading the world in educating our kids, giving each of our children the best opportunity to succeed and preparing them for the jobs of tomorrow.
We must build a 21st century infrastructure for our country, putting millions of Americans to work rebuilding roads and bridges and expanding high-speed Internet and high-speed rail.
We must reform government, making it leaner, smarter, and more transparent.
And we must take responsibility for our shared debt, reining in our long-term deficit so we can afford the investments we need to move our country forward.
That is the vision I laid out tonight. That is how we win the future.
It is going to take a lot of work -- but I have no doubt we are up to the task.
Half a century ago, when the Soviets beat us into space with the launch of a satellite called Sputnik, we had no idea how we'd beat them to the moon. The science wasn't there yet. NASA didn't even exist.
But after investing in better research and education, we didn't just surpass the Soviets. We unleashed a wave of innovation that created new industries and millions of new jobs.
This is our generation's Sputnik moment.
Please stand together with me:
http://my.barackobama.com/WintheFuture
It is because of each of you, who define the will of a people, that the state of our union is strong in the face of tough challenges. You are the reason our future is still bright in the face of deep uncertainty.
And you are the reason I believe that future is ours to win.
Thank you,
Barack
Tonight I addressed the American people on the future we face together.
Though at times it may seem uncertain, it is a future that is ours to decide, ours to define, and ours to win.
I know we will.
Because, after the worst recession in decades, we see an economy growing again.
Because, after two years of job losses, we've added private-sector jobs for 12 straight months -- more than 1 million in all.
Because, time after time, when our resolve has been tested, we, as a nation, have always prevailed.
Overcoming the challenges we face today requires a new vision for tomorrow. We will move forward together, or not at all -- for the challenges we face are bigger than party, and bigger than politics.
Yet the story of America is this: We do big things.
Just as the progress of the past two years would not have been possible without your hard work, we will not realize the agenda I described tonight without you.
So as we continue this great mission together, and we set out the plans for how far we can go, I need to know that you are ready to work side by side with me once more.
Will you stand with me as we strive to win the future?
The last two years have been marked by unprecedented reforms and historic progress.
But there is much more work to do.
Moving forward, America's economic growth at home is inextricably connected to our competitiveness in the global community. The more products American companies can export, the more jobs we can create at home.
This vision for the future starts with innovation, tapping into the creativity and imagination of our people to create the jobs and industries of the future. Instead of subsidizing yesterday's energy, let's invest in tomorrow's. It's why I challenged Congress to join me in setting a new goal: By 2035, 80 percent of America's electricity will come from clean energy sources.
It means leading the world in educating our kids, giving each of our children the best opportunity to succeed and preparing them for the jobs of tomorrow.
We must build a 21st century infrastructure for our country, putting millions of Americans to work rebuilding roads and bridges and expanding high-speed Internet and high-speed rail.
We must reform government, making it leaner, smarter, and more transparent.
And we must take responsibility for our shared debt, reining in our long-term deficit so we can afford the investments we need to move our country forward.
That is the vision I laid out tonight. That is how we win the future.
It is going to take a lot of work -- but I have no doubt we are up to the task.
Half a century ago, when the Soviets beat us into space with the launch of a satellite called Sputnik, we had no idea how we'd beat them to the moon. The science wasn't there yet. NASA didn't even exist.
But after investing in better research and education, we didn't just surpass the Soviets. We unleashed a wave of innovation that created new industries and millions of new jobs.
This is our generation's Sputnik moment.
Please stand together with me:
http://my.barackobama.com/WintheFuture
It is because of each of you, who define the will of a people, that the state of our union is strong in the face of tough challenges. You are the reason our future is still bright in the face of deep uncertainty.
And you are the reason I believe that future is ours to win.
Thank you,
Barack
'The Social Network' nominated for eight Oscars
The claim by Facebook co-founder Eduardo Saverin that he was unduly ousted from the social network's early executive team formed the basis for "The Social Network," the controversial yet acclaimed film about the birth of the company. Perhaps with a touch of unintended irony, when nominations for the 83rd Academy Awards were announced this morning, the actor who played Saverin was snubbed.
"The Social Network" netted eight nominations for the 83rd Academy Awards. Among them was the coveted Best Picture category--but actor Andrew Garfield, expected to be a shoo-in nomination and even a favorite to win Best Supporting Actor for his portrayal of Saverin, was left off the list.
Garfield's co-star Jesse Eisenberg was nominated for a Best Actor Oscar for playing Facebook CEO Mark Zuckerberg; director David Fincher was nominated for Best Director; and the screenplay by Aaron Sorkin was nominated for Best Screenplay Adaptation. The film was also nominated for Best Cinematography, Best Film Editing, Best Sound Mixing, and Best Original Score for its music by Nine Inch Nails' Trent Reznor and collaborator Atticus Ross.
In the Best Picture category, "The Social Network" will go up against "Black Swan," "The Fighter," "Inception," "The Kids Are All Right," "The King's Speech," "127 Hours," "Toy Story 3," "True Grit," and "Winter's Bone." Though not a heavy favorite to win, it does have a good shot.
But Eisenberg will have a tougher uphill battle in the Best Actor category. He'll go up against some heavy hitters, like Javier Bardem in "Biutiful" and Jeff Bridges in "True Grit," as well as acclaimed performances from Colin Firth in "The King's Speech" and fellow young actor James Franco in "127 Hours."
Despite being one of the most talked-about and well-received movies of the year, "The Social Network" did not lead the pack in the number of nominations announced today by the Academy of Motion Picture Arts and Sciences. "The King's Speech," a drama starring Colin Firth, was in first place with 12 total nominations, and Ethan and Joel Coen's remake of classic western "True Grit" followed with 10. "The Social Network" was tied for third place alongside the Christopher Nolan-directed "Inception."
Earlier this month, "The Social Network" won a Golden Globe award for best drama.
Read more: http://news.cnet.com/8301-13577_3-20029434-36.html#ixzz1CCczfWNI
The claim by Facebook co-founder Eduardo Saverin that he was unduly ousted from the social network's early executive team formed the basis for "The Social Network," the controversial yet acclaimed film about the birth of the company. Perhaps with a touch of unintended irony, when nominations for the 83rd Academy Awards were announced this morning, the actor who played Saverin was snubbed.
"The Social Network" netted eight nominations for the 83rd Academy Awards. Among them was the coveted Best Picture category--but actor Andrew Garfield, expected to be a shoo-in nomination and even a favorite to win Best Supporting Actor for his portrayal of Saverin, was left off the list.
Garfield's co-star Jesse Eisenberg was nominated for a Best Actor Oscar for playing Facebook CEO Mark Zuckerberg; director David Fincher was nominated for Best Director; and the screenplay by Aaron Sorkin was nominated for Best Screenplay Adaptation. The film was also nominated for Best Cinematography, Best Film Editing, Best Sound Mixing, and Best Original Score for its music by Nine Inch Nails' Trent Reznor and collaborator Atticus Ross.
In the Best Picture category, "The Social Network" will go up against "Black Swan," "The Fighter," "Inception," "The Kids Are All Right," "The King's Speech," "127 Hours," "Toy Story 3," "True Grit," and "Winter's Bone." Though not a heavy favorite to win, it does have a good shot.
But Eisenberg will have a tougher uphill battle in the Best Actor category. He'll go up against some heavy hitters, like Javier Bardem in "Biutiful" and Jeff Bridges in "True Grit," as well as acclaimed performances from Colin Firth in "The King's Speech" and fellow young actor James Franco in "127 Hours."
Despite being one of the most talked-about and well-received movies of the year, "The Social Network" did not lead the pack in the number of nominations announced today by the Academy of Motion Picture Arts and Sciences. "The King's Speech," a drama starring Colin Firth, was in first place with 12 total nominations, and Ethan and Joel Coen's remake of classic western "True Grit" followed with 10. "The Social Network" was tied for third place alongside the Christopher Nolan-directed "Inception."
Earlier this month, "The Social Network" won a Golden Globe award for best drama.
Read more: http://news.cnet.com/8301-13577_3-20029434-36.html#ixzz1CCczfWNI
Monday, January 24, 2011
Earth ‘to get a second sun’
on January 24th, 2011
The Earth could soon have a second sun, at least for a week or two.
The cosmic phenomenon will happen when one of the brightest stars in the night sky explodes into a supernova.
And, according to a report, the most stunning light show in the planet’s history could happen as soon as this year.
Earth will undoubtedly have a front row seat when the dying red super-giant star Betelgeuse finally blows itself into oblivion, the Daily Mail quoting the Australian website news.com.au. reports.
The explosion will be so bright that even though the star in the Orion constellation is 640 light years away, it will still turn night into day and appear like there are two suns in the sky for a few weeks. The only real debate is over exactly when it will happen.
In stellar terms, Betelgeuse is predicted to crash and burn in the near future. But that doesn’t necessarily mean you have to rush out and buy sunglasses.
Brad Carter, Senior Lecturer of Physics at the University of Southern Queensland in Australia, claimed Saturday that the galactic blast could happen before 2012 or any time over the next million years.
“This old star is running out of fuel in its centre,” Carter told news.com.au.
“This fuel keeps Betelgeuse shining and supported. When this fuel runs out, the star will literally collapse in upon itself and it will do so very quickly.
on January 24th, 2011
The Earth could soon have a second sun, at least for a week or two.
The cosmic phenomenon will happen when one of the brightest stars in the night sky explodes into a supernova.
And, according to a report, the most stunning light show in the planet’s history could happen as soon as this year.
Earth will undoubtedly have a front row seat when the dying red super-giant star Betelgeuse finally blows itself into oblivion, the Daily Mail quoting the Australian website news.com.au. reports.
The explosion will be so bright that even though the star in the Orion constellation is 640 light years away, it will still turn night into day and appear like there are two suns in the sky for a few weeks. The only real debate is over exactly when it will happen.
In stellar terms, Betelgeuse is predicted to crash and burn in the near future. But that doesn’t necessarily mean you have to rush out and buy sunglasses.
Brad Carter, Senior Lecturer of Physics at the University of Southern Queensland in Australia, claimed Saturday that the galactic blast could happen before 2012 or any time over the next million years.
“This old star is running out of fuel in its centre,” Carter told news.com.au.
“This fuel keeps Betelgeuse shining and supported. When this fuel runs out, the star will literally collapse in upon itself and it will do so very quickly.
Getting started with Galileo
Before you begin developing your Facebook SimpleRestaurantSearch application, you need to download and install the Galileo package of Eclipse (see Resources). In this section, you'll learn how to set it up.
Downloading Galileo
The Galileo package represents the next incremental release for Eclipse, and as such, means a new installation of the Eclipse platform. As with all Eclipse releases, there are a number of packages to choose from, depending upon your development needs.
Download the Eclipse IDE for Java™ EE Developers version, as it has everything you need to develop and deploy a Facebook application. Choose the version for your operating system, select an appropriate mirror, and download it (see Resources). The file is quite large — close to 190 MB depending on your platform — so be patient.
The Eclipse Web site provides a comparison chart, shown in Figure 1.
Figure 1. Package comparison chart
When the download is complete, unzip the package where you want Eclipse to be installed, then double-click the Eclipse icon to run it. Select a workspace, and Eclipse will take you to the welcome page. From here, choose the Workbench icon (the arrow on the far right of the welcome screen shown in Figure 2).
Figure 2. Eclipse Welcome screen
Setting up Tomcat in Eclipse
Eclipse Galileo allows you to integrate variety of servers so that any Web applications can be developed, debugged, and deployed. For the current Facebook SimpleRestaurantSearch application, you would use Tomcat as the application server (see Resources). Download Tomcat to a local folder and extract it.
Switch to Eclipse and open the server view (see Figure 3).
Figure 3. Server view in Eclipse
Right-click on the server view and select New > Server menu option (see Figure 4).
Figure 4. New server menu option
Define a new server by selecting the appropriate options. Select the Tomcat V6 Server option under Apache category. You can name the server as anything meaningful for the application like EclipseBook-Host, then click Next (see Figure 5).
Figure 5. Defining a new server
In the next wizard window, enter the Tomcat installation directory, select the required JRE, then click Finish (see Figure 6).
Figure 6. Setting the installation directory
Once Tomcat is properly configured, the server appears in the server view. By default, the server port is set to 8080 (see Figure 7).
Figure 7. Server appears in the server view
Next, we'll set up the Dynamic Web Project so you can work with your application's Web interface from within Eclipse.
Setting up the Dynamic Web Project
Click on the Project Explorer, and right-click and select the Dynamic Web Project (see Figure 8).
Figure 8. Setting up the Dynamic Web Project
Give the project a name and set the target runtime to be the Tomcat Server name. Remember that you name the Tomcat Server as EclipseBook-Host. Click Finish to create the Web project configured to use the Tomcat server and default Web configuration (see Figure 9).
Figure 9. Creating the Web project
Back to top
Downloading and setting up the Facebook Java API
As of May 2008, Facebook has discontinued any support of its official Java client, directing users interested developing Facebook applications in Java technology to use one of the various third-party clients out there. One of the popular Facebook Java APIs is available on Google (see Resources). As such, the purpose of this project is now to maintain, support, and extend the abandoned code base to provide a high-quality, up-to-date version of the Facebook API client for Java developers (see Figure 10).
Figure 10. Facebook Java API
Download the latest Java Facebook API (V3.0.0) into the local folder and extract the files (see Figure 11).
Figure 11. Downloading the latest Facebook Java API
The Facebook Java API contains all the libraries related to the Facebook Application API and other dependent JARs (see Figure 12). See Download for the source code of our sample application. Note that the JAR files aren't included in that ZIP file, since you download them here with the Facebook Java API.
Figure 12. Libraries related to the Facebook Application API and other dependent JARs
Copy all the Facebook Java Client JARs to the lib folder of the SimpleRestaurantSearch application. This will now enable the project to use the Facebook APIs (see Figure 13).
Figure 13. Copy all the Facebook Java Client JARs to lib folder
Back to top
Creating a Facebook application
Almost everyone has a presence on Facebook, including Web developers, business managers, and social geeks. Creating applications on the Facebook platform that leverage the Facebook Application API opens a window of visibility for users of all stripes, whether they wish to advertise a product or service or simply share information with friends.
To create a Facebook application, you first need to obtain a Facebook Platform API key. Follow these steps to create an application with the Facebook Developer application.
Go to the Get Started site to get an overview of the steps for setting up the application (see Resources). Click on Developer App in the Helpful Links to go to your user profile and add this developer application. If you are not already logged in, a login screen will prompt you for login. Otherwise, the application asks for authorization and will add the application to your profile (see Figure 14).
Figure 14. Get Started
The developer's home page contains the news, updates, and articles about the Facebook Platform API.
Enter a name for your application in the Application Name field (see Figure 15). If you have already created the icon and logo for your application, you can enter this information at this time in the same screen. Accept the developer terms of service, then click Save Changes.
Figure 15. Naming the application
In the next screen shown in Figure 16, important information is displayed. It is important to note the Application ID, API Key, and Secret Key for future application development.
Figure 16. Application ID, API Key, and Secret Key are displayed
Once you enter the required information and save the new application, an overview of the RestaurantSearch application information is displayed (see Figure 17).
Figure 17. Overview of application
By now, you have created and registered an application named SimpleRestaurantSearch with Facebook. The next step creates a simple servlet and adds functionality to authenticate the Facebook API key. In the Project Explorer, go to the SimpleRestaurantSearch project, then create a servlet in the src folder. Name the servlet RestaurantSearch and enter the package name as com.devworks.facebook. Click Next to enter the servlet initialization parameters (see Figure 18).
Figure 18. Creating a simple servlet
In the next screen shown in Figure 19, enter the Initialization Parameters API_KEY and the value as the API key in our initial steps of Facebook application creation.
Figure 19. Entering the Initialization Parameters API_KEY
On the next screen, enter the Initialization Parameters SECRET_KEY and the value as the secret key in our initial steps of Facebook application creation.
This is the time to use the API_KEY and SECRET_KEY to authenticate the Facebook application, and if the login is successful, print a simple Hello World message.
Listing 1 is the critical segment of the doGet method of our RestaurantSearch servlet.
Listing 1. doGet method
01 protected void doGet(HttpServletRequest request,
02 HttpServletResponse response) throws ServletException,IOException {
03
04 String apiKey = getServletConfig().getInitParameter("API_KEY");
05 String secretKey = getServletConfig().getInitParameter("SECRET_KEY");
06 HttpSession session = request.getSession();
07 String sessionKey = (String) session
08 .getAttribute("restSearchAppSession");
09 String authToken = request.getParameter("auth_token");
10
11 FacebookJsonRestClient client = null;
12
13 if (sessionKey != null) {
14 client = new FacebookJsonRestClient(apiKey,
15 secretKey,
16 sessionKey);
17
18 } else if (authToken != null) {
19 client = new FacebookJsonRestClient(apiKey, secretKey);
20 client.setIsDesktop(false);
21 try {
22 sessionKey = client.auth_getSession(authToken);
23 session.setAttribute("restSearchAppSession", sessionKey);
24 } catch (Exception e) {
25 e.printStackTrace();
26 }
27 } else {
28 response.sendRedirect("http://www.facebook.com/login.php?api_key="+apiKey);
29 return;
30 }
31 response.getWriter().println("HelloWorld");
32 }
Lines 4 and 5 get the initial parameters such as API_KEY and SECRET_KEY from servlet configuration.
Line 7 gets the session key from the session if it's already present, else it would be null.
Line 9 gets the authentication token from the request parameter. It could be null if the session is not authenticated.
If a sessionKey exists, Line 14 creates a FacebookJsonRestClient and needs the apiKey, secretKey, and sessionKey as constructor arguments (see Figure 20).
Figure 20. Creating a FacebookJsonRestClient
If a sessionKey does not exist, create a FacebookJsonRestClient with only the apiKey and secretKey. On line 20, make sure to set the correct client mode.
It's important that your application is set to the correct mode. If it is set to "desktop mode is false," the Facebook server will understand when you try to pass a session secret.
In lines 22 and 23, create the sessionKey with the help of authentication token and set it to the session attribute restSearchAppSession.
If there is no sessionKey and no authentication token that implies that the user needs to log in to the Facebook and get a new session and auth key. Thus, the Line 28 redirects to Facebook login.
Finally, print Hello World on the output writer, as shown in line 31.
Once the RestaurantSearch application is complete, you can start the Tomcat server. Remember that in the initial steps of cresting the SimpleRestaurantSearch application, you have already associated this project with the Tomcat server EclipseBook-Host. From the server view, start Tomcat. This will start the Tomcat server in Eclipse and will deploy the application (see Figure 21).
Figure 21. Starting the Tomcat server in Eclipse and deploying the application
Once the Tomcat server is started, browse to http://localhost:8080/SimpleRestaurantSearch/RestaurantSearch. This will take you to a Facebook developer page that informs you that the site is under construction and suggests you that the application Callback URL is not set. Click on the applications settings editor (see Figure 22).
Figure 22. The applications settings editor
In the application settings editor, go to the Canvas tab and enter the Canvas page URL (http://apps.facebook.com/devrestaurantsearch), Canvas Callback URL (http://localhost:8080/SimpleRestaurantSearch/RestaurantSearch), and Bookmark URL (http://apps.facebook.com/devrestaurantsearch). Save the settings (see Figure 23).
Figure 23. Application settings editor
Once the new settings are saved, the Application Overview page is displayed (see Figure 24).
Figure 24. Application Overview
The real power of Eclipse is the integrated Tomcat and hot deployment capability. You can simply restart the server now and see if the saved application properties are in effect (see Figure 25).
Figure 25. Restarting the server
Now when the server is restarted within Eclipse Galileo, the RestaurantSearch servlet will redirect you to the app login page (http://www.facebook.com/login.php?api_key=). Once you enter your Facebook's e-mail ID and password, the servlet will write the response out.
From the Facebook application screen, it can be understood that the API_KEY is used to log in to the appropriate application. In this case, it is SimpleRestaurantSearch (see Figure 26).
Figure 26. Application login
Finally, the Facebook application is authenticated, and once the sessionKey and authKey are generated, Hello World is displayed on the screen (see Figure 27).
Figure 27. Hello World is displayed
Log off from Facebook and try to access the application on http://www.facebook.com/apps/application.php?id=144078916555. Facebook displays the application information, and you can access it by logging in (see Figure 28).
Figure 28. Login page
In the next steps, you will use the Google Search API and integrate it into a simple JSP.
Back to top
Integrate Google Search API into the Facebook application
The Google Ajax Search API lets you put Google Search in your Web pages with JavaScript. You can embed a simple dynamic search box and display search results in your own Web pages or use the results in innovative, programmatic ways. You do not need a key to use this API. Using a key in your application/site is completely optional. However, it is useful to have one.
Go to http://code.google.com/apis/ajaxsearch/signup.html and agree to the terms and conditions. Click on the Generate API Key (see Figure 29).
Figure 29. Generating the API key
Google generates API key and shows the URL for which this API is good. This Web page also provides examples to get started (see Figure 30).
Figure 30. Google-generated API key
Copy the provided example code from the above Google Search to RestaurantSearch.jsp in the WebContent folder. Save the JSP and make sure to change the code in SimpleRestaurantSearch from writing the response Hello World to dispatch the request to the RestaurantSearch.jsp.
Change the code from response.getWriter().println("Hello World"); to request.getRequestDispatcher("RestaurantSearch.jsp").forward(request,response);.
The moment the JSP is saved, the entire project gets redeployed to the Tomcat server automatically. In the previous steps, you set the Canvas URL (http://apps.facebook.com/devrestaurantsearch) and also the Canvas Callback URL (http://localhost:8080/SimpleRestaurantSearch/RestaurantSearch) (see Figure 31).
Figure 31. Settings for the Canvas URL and the Canvas Callback URL
If you access the Canvas URL, and once you have successfully logged in, RestaurantSearch.jsp starts the RestaurantSearch application (see Figure 32).
Figure 32. Starting up the RestaurantSearch application
The application bookmark is in the bottom left corner of the application toolbar. You can enter a search string for a restaurant search (see Figure 33).
Figure 33. Application bookmark in the application toolbar
Change the default location in the Google Maps and set the default maps view to NORMAL View in RestaurantSearch.jsp (see Listing 2).
Listing 2. Changing the default location in Google Maps
// change the default location in the Google Maps
map.setCenter(new google.maps.LatLng(37.773,-122.417),13);
// set the Map to Normal view
map.setMapType(G_NORMAL_MAP);
map.removeMapType(G_HYBRID_MAP);
map.addMapType(G_NORMAL_MAP);
Save the JSP to hot-deploy and retest it to make sure that the location and map type are changed (see Figure 34). We have now chosen San Francisco as the default search location. Once this application is running in Facebook, when a user searches for a type of restaurant, he can add a ZIP code for the location, and the application will return mapped restaurant results in that location.
Figure 34. Redeploying and retesting the application
Now you can test further by navigating to your Facebook profile and searching for the SimpleRestaurantSearch application in the search box in the top right corner (see Figure 35).
Figure 35. Searching for the SimpleRestaurantSearch application from your Facebook profile
Application Search will take you to the SimpleRestaurantSearch application (see Figure 36).
Figure 36. Application Search takes you to the SimpleRestaurantSearch application
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Integrating the Facebook Connect API
Facebook Connect allows you to leverage Facebook for your own off-Facebook applications. You could use the Facebook connect API on your site and let your viewers share content on their own profiles.
You will need to create a cross-domain communication channel file called xd_receiver.htm and place it in a directory relative to the callback URL. You should create the xd_receiver.htm file in the directory from where you'll be serving your Connect Web pages (WebContent folder in our example). See Figure 37.
Figure 37. Creating and saving a cross-domain communication channel
An example of a cross-domain channel file is shown in Listing 3. You can copy the following content and create the xd_receiver.htm in the WebContent folder. Without a cross-domain channel file, Facebook will not be able to communicate correctly with our application server (see Listing 3).
Listing 3. A cross-domain channel file
The quickest way to start using Facebook Connect on your server is to use the JavaScript API library. The two essential properties of connecting to the library are setting the correct document type and loading the JavaScript library at the end of your Web page, near the
Before you begin developing your Facebook SimpleRestaurantSearch application, you need to download and install the Galileo package of Eclipse (see Resources). In this section, you'll learn how to set it up.
Downloading Galileo
The Galileo package represents the next incremental release for Eclipse, and as such, means a new installation of the Eclipse platform. As with all Eclipse releases, there are a number of packages to choose from, depending upon your development needs.
Download the Eclipse IDE for Java™ EE Developers version, as it has everything you need to develop and deploy a Facebook application. Choose the version for your operating system, select an appropriate mirror, and download it (see Resources). The file is quite large — close to 190 MB depending on your platform — so be patient.
The Eclipse Web site provides a comparison chart, shown in Figure 1.
Figure 1. Package comparison chart
When the download is complete, unzip the package where you want Eclipse to be installed, then double-click the Eclipse icon to run it. Select a workspace, and Eclipse will take you to the welcome page. From here, choose the Workbench icon (the arrow on the far right of the welcome screen shown in Figure 2).
Figure 2. Eclipse Welcome screen
Setting up Tomcat in Eclipse
Eclipse Galileo allows you to integrate variety of servers so that any Web applications can be developed, debugged, and deployed. For the current Facebook SimpleRestaurantSearch application, you would use Tomcat as the application server (see Resources). Download Tomcat to a local folder and extract it.
Switch to Eclipse and open the server view (see Figure 3).
Figure 3. Server view in Eclipse
Right-click on the server view and select New > Server menu option (see Figure 4).
Figure 4. New server menu option
Define a new server by selecting the appropriate options. Select the Tomcat V6 Server option under Apache category. You can name the server as anything meaningful for the application like EclipseBook-Host, then click Next (see Figure 5).
Figure 5. Defining a new server
In the next wizard window, enter the Tomcat installation directory, select the required JRE, then click Finish (see Figure 6).
Figure 6. Setting the installation directory
Once Tomcat is properly configured, the server appears in the server view. By default, the server port is set to 8080 (see Figure 7).
Figure 7. Server appears in the server view
Next, we'll set up the Dynamic Web Project so you can work with your application's Web interface from within Eclipse.
Setting up the Dynamic Web Project
Click on the Project Explorer, and right-click and select the Dynamic Web Project (see Figure 8).
Figure 8. Setting up the Dynamic Web Project
Give the project a name and set the target runtime to be the Tomcat Server name. Remember that you name the Tomcat Server as EclipseBook-Host. Click Finish to create the Web project configured to use the Tomcat server and default Web configuration (see Figure 9).
Figure 9. Creating the Web project
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Downloading and setting up the Facebook Java API
As of May 2008, Facebook has discontinued any support of its official Java client, directing users interested developing Facebook applications in Java technology to use one of the various third-party clients out there. One of the popular Facebook Java APIs is available on Google (see Resources). As such, the purpose of this project is now to maintain, support, and extend the abandoned code base to provide a high-quality, up-to-date version of the Facebook API client for Java developers (see Figure 10).
Figure 10. Facebook Java API
Download the latest Java Facebook API (V3.0.0) into the local folder and extract the files (see Figure 11).
Figure 11. Downloading the latest Facebook Java API
The Facebook Java API contains all the libraries related to the Facebook Application API and other dependent JARs (see Figure 12). See Download for the source code of our sample application. Note that the JAR files aren't included in that ZIP file, since you download them here with the Facebook Java API.
Figure 12. Libraries related to the Facebook Application API and other dependent JARs
Copy all the Facebook Java Client JARs to the lib folder of the SimpleRestaurantSearch application. This will now enable the project to use the Facebook APIs (see Figure 13).
Figure 13. Copy all the Facebook Java Client JARs to lib folder
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Creating a Facebook application
Almost everyone has a presence on Facebook, including Web developers, business managers, and social geeks. Creating applications on the Facebook platform that leverage the Facebook Application API opens a window of visibility for users of all stripes, whether they wish to advertise a product or service or simply share information with friends.
To create a Facebook application, you first need to obtain a Facebook Platform API key. Follow these steps to create an application with the Facebook Developer application.
Go to the Get Started site to get an overview of the steps for setting up the application (see Resources). Click on Developer App in the Helpful Links to go to your user profile and add this developer application. If you are not already logged in, a login screen will prompt you for login. Otherwise, the application asks for authorization and will add the application to your profile (see Figure 14).
Figure 14. Get Started
The developer's home page contains the news, updates, and articles about the Facebook Platform API.
Enter a name for your application in the Application Name field (see Figure 15). If you have already created the icon and logo for your application, you can enter this information at this time in the same screen. Accept the developer terms of service, then click Save Changes.
Figure 15. Naming the application
In the next screen shown in Figure 16, important information is displayed. It is important to note the Application ID, API Key, and Secret Key for future application development.
Figure 16. Application ID, API Key, and Secret Key are displayed
Once you enter the required information and save the new application, an overview of the RestaurantSearch application information is displayed (see Figure 17).
Figure 17. Overview of application
By now, you have created and registered an application named SimpleRestaurantSearch with Facebook. The next step creates a simple servlet and adds functionality to authenticate the Facebook API key. In the Project Explorer, go to the SimpleRestaurantSearch project, then create a servlet in the src folder. Name the servlet RestaurantSearch and enter the package name as com.devworks.facebook. Click Next to enter the servlet initialization parameters (see Figure 18).
Figure 18. Creating a simple servlet
In the next screen shown in Figure 19, enter the Initialization Parameters API_KEY and the value as the API key in our initial steps of Facebook application creation.
Figure 19. Entering the Initialization Parameters API_KEY
On the next screen, enter the Initialization Parameters SECRET_KEY and the value as the secret key in our initial steps of Facebook application creation.
This is the time to use the API_KEY and SECRET_KEY to authenticate the Facebook application, and if the login is successful, print a simple Hello World message.
Listing 1 is the critical segment of the doGet method of our RestaurantSearch servlet.
Listing 1. doGet method
01 protected void doGet(HttpServletRequest request,
02 HttpServletResponse response) throws ServletException,IOException {
03
04 String apiKey = getServletConfig().getInitParameter("API_KEY");
05 String secretKey = getServletConfig().getInitParameter("SECRET_KEY");
06 HttpSession session = request.getSession();
07 String sessionKey = (String) session
08 .getAttribute("restSearchAppSession");
09 String authToken = request.getParameter("auth_token");
10
11 FacebookJsonRestClient client = null;
12
13 if (sessionKey != null) {
14 client = new FacebookJsonRestClient(apiKey,
15 secretKey,
16 sessionKey);
17
18 } else if (authToken != null) {
19 client = new FacebookJsonRestClient(apiKey, secretKey);
20 client.setIsDesktop(false);
21 try {
22 sessionKey = client.auth_getSession(authToken);
23 session.setAttribute("restSearchAppSession", sessionKey);
24 } catch (Exception e) {
25 e.printStackTrace();
26 }
27 } else {
28 response.sendRedirect("http://www.facebook.com/login.php?api_key="+apiKey);
29 return;
30 }
31 response.getWriter().println("HelloWorld");
32 }
Lines 4 and 5 get the initial parameters such as API_KEY and SECRET_KEY from servlet configuration.
Line 7 gets the session key from the session if it's already present, else it would be null.
Line 9 gets the authentication token from the request parameter. It could be null if the session is not authenticated.
If a sessionKey exists, Line 14 creates a FacebookJsonRestClient and needs the apiKey, secretKey, and sessionKey as constructor arguments (see Figure 20).
Figure 20. Creating a FacebookJsonRestClient
If a sessionKey does not exist, create a FacebookJsonRestClient with only the apiKey and secretKey. On line 20, make sure to set the correct client mode.
It's important that your application is set to the correct mode. If it is set to "desktop mode is false," the Facebook server will understand when you try to pass a session secret.
In lines 22 and 23, create the sessionKey with the help of authentication token and set it to the session attribute restSearchAppSession.
If there is no sessionKey and no authentication token that implies that the user needs to log in to the Facebook and get a new session and auth key. Thus, the Line 28 redirects to Facebook login.
Finally, print Hello World on the output writer, as shown in line 31.
Once the RestaurantSearch application is complete, you can start the Tomcat server. Remember that in the initial steps of cresting the SimpleRestaurantSearch application, you have already associated this project with the Tomcat server EclipseBook-Host. From the server view, start Tomcat. This will start the Tomcat server in Eclipse and will deploy the application (see Figure 21).
Figure 21. Starting the Tomcat server in Eclipse and deploying the application
Once the Tomcat server is started, browse to http://localhost:8080/SimpleRestaurantSearch/RestaurantSearch. This will take you to a Facebook developer page that informs you that the site is under construction and suggests you that the application Callback URL is not set. Click on the applications settings editor (see Figure 22).
Figure 22. The applications settings editor
In the application settings editor, go to the Canvas tab and enter the Canvas page URL (http://apps.facebook.com/devrestaurantsearch), Canvas Callback URL (http://localhost:8080/SimpleRestaurantSearch/RestaurantSearch), and Bookmark URL (http://apps.facebook.com/devrestaurantsearch). Save the settings (see Figure 23).
Figure 23. Application settings editor
Once the new settings are saved, the Application Overview page is displayed (see Figure 24).
Figure 24. Application Overview
The real power of Eclipse is the integrated Tomcat and hot deployment capability. You can simply restart the server now and see if the saved application properties are in effect (see Figure 25).
Figure 25. Restarting the server
Now when the server is restarted within Eclipse Galileo, the RestaurantSearch servlet will redirect you to the app login page (http://www.facebook.com/login.php?api_key=
From the Facebook application screen, it can be understood that the API_KEY is used to log in to the appropriate application. In this case, it is SimpleRestaurantSearch (see Figure 26).
Figure 26. Application login
Finally, the Facebook application is authenticated, and once the sessionKey and authKey are generated, Hello World is displayed on the screen (see Figure 27).
Figure 27. Hello World is displayed
Log off from Facebook and try to access the application on http://www.facebook.com/apps/application.php?id=144078916555. Facebook displays the application information, and you can access it by logging in (see Figure 28).
Figure 28. Login page
In the next steps, you will use the Google Search API and integrate it into a simple JSP.
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Integrate Google Search API into the Facebook application
The Google Ajax Search API lets you put Google Search in your Web pages with JavaScript. You can embed a simple dynamic search box and display search results in your own Web pages or use the results in innovative, programmatic ways. You do not need a key to use this API. Using a key in your application/site is completely optional. However, it is useful to have one.
Go to http://code.google.com/apis/ajaxsearch/signup.html and agree to the terms and conditions. Click on the Generate API Key (see Figure 29).
Figure 29. Generating the API key
Google generates API key and shows the URL for which this API is good. This Web page also provides examples to get started (see Figure 30).
Figure 30. Google-generated API key
Copy the provided example code from the above Google Search to RestaurantSearch.jsp in the WebContent folder. Save the JSP and make sure to change the code in SimpleRestaurantSearch from writing the response Hello World to dispatch the request to the RestaurantSearch.jsp.
Change the code from response.getWriter().println("Hello World"); to request.getRequestDispatcher("RestaurantSearch.jsp").forward(request,response);.
The moment the JSP is saved, the entire project gets redeployed to the Tomcat server automatically. In the previous steps, you set the Canvas URL (http://apps.facebook.com/devrestaurantsearch) and also the Canvas Callback URL (http://localhost:8080/SimpleRestaurantSearch/RestaurantSearch) (see Figure 31).
Figure 31. Settings for the Canvas URL and the Canvas Callback URL
If you access the Canvas URL, and once you have successfully logged in, RestaurantSearch.jsp starts the RestaurantSearch application (see Figure 32).
Figure 32. Starting up the RestaurantSearch application
The application bookmark is in the bottom left corner of the application toolbar. You can enter a search string for a restaurant search (see Figure 33).
Figure 33. Application bookmark in the application toolbar
Change the default location in the Google Maps and set the default maps view to NORMAL View in RestaurantSearch.jsp (see Listing 2).
Listing 2. Changing the default location in Google Maps
// change the default location in the Google Maps
map.setCenter(new google.maps.LatLng(37.773,-122.417),13);
// set the Map to Normal view
map.setMapType(G_NORMAL_MAP);
map.removeMapType(G_HYBRID_MAP);
map.addMapType(G_NORMAL_MAP);
Save the JSP to hot-deploy and retest it to make sure that the location and map type are changed (see Figure 34). We have now chosen San Francisco as the default search location. Once this application is running in Facebook, when a user searches for a type of restaurant, he can add a ZIP code for the location, and the application will return mapped restaurant results in that location.
Figure 34. Redeploying and retesting the application
Now you can test further by navigating to your Facebook profile and searching for the SimpleRestaurantSearch application in the search box in the top right corner (see Figure 35).
Figure 35. Searching for the SimpleRestaurantSearch application from your Facebook profile
Application Search will take you to the SimpleRestaurantSearch application (see Figure 36).
Figure 36. Application Search takes you to the SimpleRestaurantSearch application
Back to top
Integrating the Facebook Connect API
Facebook Connect allows you to leverage Facebook for your own off-Facebook applications. You could use the Facebook connect API on your site and let your viewers share content on their own profiles.
You will need to create a cross-domain communication channel file called xd_receiver.htm and place it in a directory relative to the callback URL. You should create the xd_receiver.htm file in the directory from where you'll be serving your Connect Web pages (WebContent folder in our example). See Figure 37.
Figure 37. Creating and saving a cross-domain communication channel
An example of a cross-domain channel file is shown in Listing 3. You can copy the following content and create the xd_receiver.htm in the WebContent folder. Without a cross-domain channel file, Facebook will not be able to communicate correctly with our application server (see Listing 3).
Listing 3. A cross-domain channel file
The quickest way to start using Facebook Connect on your server is to use the JavaScript API library. The two essential properties of connecting to the library are setting the correct document type and loading the JavaScript library at the end of your Web page, near the