When I look back at 2004, I'll remember Google and Salesforce.com going public, and I'll remember Oracle buying Peoplesoft, Symantec buying Veritas, and Sprint buying Nextel. Some notes:
- SJ Mercury News: "Initial public offerings and merger-and-acquisition activity quietly surged this year to levels not seen since 2000. This past week alone, there were $85 billion in announced deals, including Symantec's $13.5 billion purchase of Veritas Software and Oracle's $10.3 billion purchase of PeopleSoft in Silicon Valley; and Sprint's $35 billion acquisition of Nextel Communications. It was the busiest week for mergers in four years.
"...So far this year, 216 IPOs have raised $43 billion, exceeding the total raised through the 221 IPOs from the previous three years combined, according to Renaissance Capital's IPOhome.com. By comparison, there were 486 IPOs in 1999 and 406 in 2000. The rise in activity is taking the IPO market back to more ``normal'' levels after several lean years... The pipeline of companies waiting to go public remains strong; [analyst Kathleen] Smith [of Renaissance Capital] expects 2005 to see about 250 IPOs that will likely raise more than $50 billion."
Merger activity has been slowly climbing back to pre-recession levels, with 7,700 deals so far this year valued at $742 billion, according to Thomson Financial. The number of deals is up only modestly over last year, when there were 7,500, but their value has risen significantly, up from $543 billion in 2003. At the merger market peak in 2000, deal value came to $1.6 trillion. The total fell by more than half in 2001 to $743 billion and slumped further in 2002 to $429 billion, before picking up momentum last year.
- Yahoo absorbed its 2003 acquisitions of Overture, Inktomi, AltaVista, and Fast, making it competitive in search technology with Google; also in 2004, Yahoo acquired some media expertise, and added email and digital music as strategic assets, with purchases of Oddpost / Stata Labs and MusicMatch, respectively.
- I believe Google's most interesting forays this year were not acquisitions. Rather, I believe they were rolling out Gmail, which is significant because it changed the way many people think about what is possible with web applications; and Google Desktop, which started an important race for the Holy Grail of "search my stuff" that includes Yahoo, Microsoft, Apple, Ask Jeeves, Lycos, and a few dozen startups as competition. We will see Fisher as a product category continue to evolve in the coming years as new innovations take hold. Mind you, there were a few Google Acquisitions this year, but with the stock price as high flying as it is, I gotta believe that acquisition will be a much more important part of Google's strategy in the coming year than it was in 2004, where the goal was just to get public and acquire a handful of interesting but small companies (Ignite, Neotonic, Picasa, and Keyhole).
- eBay acquired a quarter of Craig's List and announced this week they'll be acquiring Rent.com. (Rent.com's web site has 18,212 properties comprising more than 4 million rental units nationwide presently.) Both of these moves are brilliant reinforcements of eBay's business model -- the SJ Mercury News reported that the classified marketplace is worth $100 billion a year globally. eBay's long-term strategy has got to be growth in all classified marketplaces -- not just merchandise -- and these moves, as well as purchases this year of German classified site Mobile.de and Netherlands classified site Markplaats.nl , seem really smart and focused.
- Cisco has quietly been acquiring about a company a month, most of which I've never heard of. BCN, Jahi, Perfigo, dynamicsoft, NetSolve, P-Cube, Parc Technologies, Actona, Procket, Riverhead, Twingo. Hmmm. Cisco is the poster child for growth-through-acquisition, so whenever Cisco's buying, it makes for a healthy environment in Silicon Valley for startups in general.
And that last sentence is what's exciting. We've been waiting for several years for growth at the top of the funnel in the number of tiny startups seeking seed funding. 2004 seems like a nice little turning point for the tiny startups who represent the heart and soul of Silicon Valley's innovation; hopefully this trend will continue into 2005 and 2006 as more would-be angels -- flush with cash from the Google IPO and recent acquisitions -- start to invest in more such tiny startups.