For several months now, I have been privately telling anyone willing to listen that search advertising, though incredibly effective, is over rated. At first glance, it would appear that advertising to someone in context of his search activity is an utter utopia for marketers. What better time to advertise a DVD player, for example, than when a consumer types "DVD player" into Google's search box.

I haven’t posted on any S-1s or IPOs lately, but I have been tracking the EMC spinoff, VMWare. Since its IPO about 2 months ago, the stock has been on a beeline toward the sky, trading at $101 today from an offering of around $30. A few colleagues of mine are working at the company and have been rewarded nicely in their stock options, making a lot of instant millionaires. This company’s valuation now at almost $39 billion is higher than a lot of well-known tech companies. This is all very Google-esque and seems to have come out of nowhere.

For those of you who don’t know, the company specializes in Virtualization which allows a computer to allocate hardware capacity and allow multiple operating systems to operate on one computer. When many computers are connected in this fashion you get a "Virtual" Smart Infastructure that can result in signficant cost savings.

Virtualization is not a new thing as there have been many startups that flamed out because they were too ahead of their time. But VMWare seems to be popularizing it and commoditizing it. As you know, I typically don’t buy IPOs and am not an active stock trader, but VMW seems to be blowing up. I’m not sure their earnings will support these types of valuations, but we all know that while being a trailblazer and first mover is not always the best thing in the private markets, it definitely is usually handsomely rewarded in the public markets.

I will admit that I am not the biggest fan of the self-promoting Guy Kawasaki, but occasionally I do find a good article by him. For those entrepreneurs who want to learn the ropes of the startup game, there is an excellent post on this topic by Guy at Always On. I have said this many times before in different ways – it is important to always set expectations low and to overdeliver. As most venture investors will tell you, it is the rare entrepreneur who does this.

Here is my favorite part of the post:

"Startups face one primary challenge: To never run out of cash. So when
projecting costs, we heeded Guy’s advice that “the three most powerful
words you can utter at a board meeting are, ‘We beat projections.’”
This convinced us to develop the worst possible financial model that
could still be used to raise money."

The most interesting aspects of this post is information provided by the entrepreneur behind Redfin. I don’t really know much about Redfin but Glenn Kelman provides rare insight into the actual numbers behind his financial models. I have spoken repeatedly many times about "metrics" – whether they be financial metrics or company metrics. Having metrics and analyzing them is essential to monitor progress and to gauge success.

For those of you that are looking for a benchmark to compare, please check out Mr. Kelman’s notes as many of them are dead on.

Silicon Alley Insider asked me to write about my trip to the West Coast (DEMO in San Diego, Podcast Expo in LA, meetings in Silicon Valley). Enjoy!