No cats were harmed in the making of this joke.

Consumer Internet is fun and all, but these days you've gotta get really futuristic if you want to turn heads. Case in point: Quantum Wave Fund, a new VC firm that's raised $30 million to make early-stage investments in companies with new quantum technology products that are both exciting and viable.

Call it qwave, if you must.

An announcement released earlier this morning promises that, "When quantum communications and computation go mainstream, the Quantum Fund will be one of the pioneers to drive this opportunity."

So what do we mean when we talk about quantum technology? Apparently, less shooting for the stars than innovation in techie infrastructure. The wonky potential fruits of the firm's labors include: "safe data transmission networks, new materials with superior properties, optical sub-micron transistors, high-frequency optical electronics, new systems for ultrasensitive imaging of the brain, and compact and accurate clocks for navigation systems."

Heading up the effort are physicist Serguei Kouzmine as managing partner and computer scientist Serguei Beloussov as venture partner, and their team "is composed of a mix of physicists with PhDs in nuclear physics, computer science, and high-tech engineers who are also experienced entrepreneurs."

The fund will be headquartered in Boston, which means New York needs to get cracking on teleportation if we want to keep up.

(h/t Dan Primack)

Ms. Tilenius (Photo: LinkedIn)

The latest addition to the Kleiner Perkins team, according to AllThingsD: Google's Stephanie Tilenius, who'll be a new executive-in-residence. And we can't help but notice that she's the second splashy female hire since Ellen Pao filed her molotov cocktail of a discrimination suit. Last month, the firm poached Square's head of product, Megan Quinn.

We're obviously in the tank for XX in tech, and it's especially nice to see more women in venture capital, considering the dismal numbers we found in our firm-by-firm breakdown. AllThingsD is also careful to point out that "the firm has been talking about bringing her in for months." Ms. Tilenius comes with bona fides, too, leaving behind a gig where she spearheaded the creation of the Google Wallet. She told the site, “I wanted the ability to help scale a few start-ups, instead of building products in a large company.”

But we do hope that no one over at Sand Hill Road HQ thinks boosting their (already comparatively high) number of women on staff absolves the firm of dealing with that unpleasant little lawsuit. The brass at Kleiner Perkins would be wise to remember that "I've got lots of friends who are [X]" is perhaps the least-solid strategy for fending off claims of discrimination. Nor does it even entitle them to any cookies, considering that the firm's population of female partners still stands below 30 percent. You know what they say about the king selection process in the land of the blind.

Ms. Tilenius, for her part, didn't touch the lawsuit with so much as a ten-foot pole, apparently declining to comment on the matter.

(rso.cornell.edu)

An interesting question showed up in our Quora digest email this afternoon. "What is the worst part of being a VC?" one user wondered. No, "sexism" wasn't one of the answers, but apparently there are quite a few grievances for the partners on Sand Hill Road. The main complaint? Turns out there sure are a lot of assholes in the VC business.

An anonymous poster who claims to be "a VC general partner for nearly 10 years at a large brand name fund" posted the following missive:

But if forced to pick - the worst parts of the job are:

1. Dealing with your partners. At a large fund, there are lots of partners. And what it takes to become a partner at a big fund and stay there for years is often a high asshole factor, ability and desire to deal with firm politics and internal jockeying for power.

Don't get me wrong. There are some great great partners.  But I think 2/3rds of the people in the GP ranks at big firms have massive egos.

He added, "As one LP put it 'VCs have more ego per dollar of return than any asset class we know of.'" Dude's got jokes!

The poster continues to elaborate on the ways this assholery manifests itself, including being a partner in name but not actually have control, and "crazy backroom politics," where VCs agree, "'You vote for my deal at a Monday meeting and I will vote for yours.'"

The answer received 23 comments, almost all of them gushing in their approval of the poster's honesty. Roger Ehrenberg, a managing partner at IA Ventures, lauded it as "a truly brilliant and candid response."

We can't disagree. In fact, all of the answers to the thread provide some compelling insights into the walled garden of venture capitalism.

Ramy Adeeb, a principal at Khosla Ventures, was more blunt about the drawbacks: "Wasting your life cheering on the sidelines instead of making things happen." Do we detect a hint of bitterness, good sir?

Other cons mentioned:

• The fact that VC is an inherently lonely business.
• Having to say "no" all the time.
• Dealing with the failure of a company you invested in and really believed in.

In the end, we're more partial to VC Mark Suster's response: "You'd have to be a pretty big baby to complain about being a VC." It does seem like a pretty cushy gig, at least for dudes.

Mr. Graham (flickr.com/pragdave)

Startup soothsayer Paul Graham penned a letter to Y Combinator's portfolio companies about withstanding the fallout from Facebook's poorly-performing IPO. [Business Insider, Hacker News]

Fred Wilson wants to put Mr. Graham's musings in perspective. [A VC]

Apple will yank Google Maps from iPhones later this year, which is just another reason why we're quite happy with our Galaxy Nexus, thankyouverymuch. [Wall Street Journal]

GigaOm rounds up what we know about Shawn Fanning and Sean Parker's video startup, Airtime, set to launch at a press event this morning. [GigaOm]

Oh good, there is an Instagram for animated GIFs. [Wired]

What did you sign?

The recent acquisition of Gowalla by Facebook is just the latest incidence of the potential tension between investors and founders when a company is acquired primarily for the team rather than for the technology, product or business that they’ve built. People around the web will take the opportunity to observe that in situations where a company is acquired in this way, the founders typically get a package of equity to motivate them to join (and remain at) the acquiring company, while investors usually get anywherefrom zero to a small return on invested capital. Look around and you’ll find people willing to condemn the founders for unethically “selling out” their investors and you’ll find people who say the exact opposite, that such a company didn’t have saleable assets anyway, and so investors are owed nothing because the business failed.

Having been on the selling end of several of these types of acquisitions in the past few years, I can say with confidence that it’s extremely realistic to walk from these deals with both founders and investors feeling good about what happened and maintaining strong relationships. But I think some of the nuances are non-obvious, and I think it’s worth it for founders to think through the likely sequence of events that may arise before there is urgency and emotion and a deal is imminent.

Personally I think that in the specific fact pattern where a business has very little traction, cash is running out and you have exactly one acquirer willing to take on the team but unwilling to pay investors for a business in which they have no interest (which seems to be the pattern at play with Facebook/Gowalla) the ethical conundrum actually isn’t – the SV Angel perspective that there is no business and therefor no harm to investors is fairly self-apparent. But there are a whole bunch of ways to tweak the fact pattern to make the ethical question far more complex and more interesting. Two that are worth considering:

· What if the company still had ten months of runway when an acquirer comes knocking on the door looking to acquire the team? What obligation, if any, does the company have to continue to try to create a positive outcome for shareholders?

· What if there was a different buyer who was willing to buy the business or its assets for a 2-3x multiple of invested capital paid back to shareholders, but didn’t come with as sweet or as compelling a deal for the management team? What obligation, if any, does the company have to consider and execute this transaction rather than one that sets the founders up in a way they like?

And…

· Different but related (and by far the most common) – what happens when an acquisition offer is presented that is really interesting for the founders but a disappointment to investors who were hoping for a big outcome?

Each of these, taken in turn, is worth a longer discussion but they are all connected by a common question – when you take investor money, particularly venture money (whose business model is to fund plenty of companies that fail but to have a few tremendous outcomes that make up for them), do you also take on a measure of obligation to consider the best interests of your shareholders and how important is that obligation relative to others (to yourself, to your cofounders, to your employees…).

Legally, of course, there is an obligation as set out by Delaware law. That obligation comes with the founders’ seats on the Board to consider the rights and outcomes to all shareholders. But setting that aside, in a particular and challenging set of facts, how should founders think about investors and their rights?

The answer, of course, is that it depends on the circumstances. But there are a few elements of a framework that make sense to employ if you face this decision.

1. You probably told your investors that you were trying to build something world-changing when you took their money. Sure, they know this only happens in a few cases, but don’t ignore the commitment you made to try to build a big business.

2. The world of startups is small and involves repeat interactions. You can (and should) make the decision that is best for all stakeholders, not just shareholders, but understand that there are reputational consequences to dismissing the needs (or perceived needs) of your investors.

3. You can’t possibly communicate too much with the people who have bet on you. I can cite plenty of situations where people were unhappy with an outcome not because the outcome was wrong or irrational, but simply because it was presented to them by fiat and they weren’t part of the decision process.

All of which rolls up to a simple set of guidelines, if not conclusions. The decision to accept failure (or too-modest success) is always going to be challenging. If you are a high profile startup and have raised money on the back of a big dream (as Gowalla did), recognize that you have stakeholders around your company and consider not just the outcome they will achieve in a particular transaction, but the full arc of your relationship with them, from the point of investment through the discussion you may have three years from now about your next company. Professional investors (VC’s and angels both) are adults, understand the range of outcomes and (if you chose them well) will work with you to find a good situation for the founding team. As with all things in our ecosystem, mutual respect, over communication and a view toward enduring relationships will serve you extremely well.

Smixx

Amazing new track from Corey Smith, aka Smixx, a musician, freelance iOS/WP7 developer and co-founder of Cardinal social music sharing platform. Smixx has been spinning tech raps for a while now, like "Developers feat. Steve Ballmer" and "One More Thing featuring Steve Jobs from WWDC 2011."

But start-ups are where Betabeat's heart really lies, so this track was the first to catch our attention. That, and @aplusk tweeted it out. Enjoy below the jump.

Takin' VC Money (Money Cash IPO's) by Smixx

Q: You always remember the ones that got away. Tell us about the startup you regret passing on the most.

A: That's easy. Twitter. It's not really fair to say that we passed, but we did not fight hard enough to get in to their Series C round.

Q: The last thing you want to hear from a founder is...

A: "It's a massive market and we only need to get 1% of it to succeed!"

Q: What “me too” trend should we avoid or invest in?

A: Transaction advertising and local commerce are real markets and are trendy right now, deservedly so. True, I wouldn't do a series A in a Groupon clone these days, that ship has sailed. But there are definitely ways to invest in me-to markets and still do well. I think the fascination with new ways to share photos is awfully over-heated and likely over-stated as a market opportunity.

Q: What’s the strangest pitch you've heard?

A: Those are usually the best ones. The ones that stretch your imagination and border on the unbelievable. When Cloudflare pitched us several years back, they were a bunch of security guys, saying that customers would be willing to send all their data to an external service in order to have it secured. At the time, it sounded nutty, but that is kind of what defines a great entrepreneur, they see things differently.

Q: What’s the best way to ride out a bubble?

A: As you know, Venrock is a VC firm that has been investing in startups for more than 40 years. Needless to say, this firm has seen many cycles come and go. Our approach is to keep our bar really high and invest in approximately the same number of companies each year, regardless of economic conditions or where we are in a cycle.

Q: Explain, without jargon, what the word pivot means to you?

A: First version didn't get traction, trying another approach.

Soon we’ll be able to receive bus arrival times via text message, the MTA says. [NYDN]

Offensive advertisements aren’t group-buying sites’ only problem. [WSJ]

Cell phones will be credit cards and everyone wants a piece. [NYT]

Dorsey mulls a return to Twitter. [NYT]

Foursquare readies for new funding round. [BI]

We're gonna party like it's Geocities time!

It would be easy to assume that 1999 is the kind of year Fred Wilson would like to repeat.

In January of that year, Yahoo bought the web hosting service Geocities. Wilson and his first firm, Flatiron Ventures, were an early Geocities investor.

1999 was near the peak of the dot-com bubble, and Yahoo paid a staggering $3.57 billion for Geocities. The $8 million Wilson and Co. invested in Geocities in 1996 was worth $234 million after the Yahoo purchase.

"It was the first rocket ship ride I had in the venture business and it will always have a special place in my head and heart because of that,"Wilson wrote on his blog, A VC.

1999 popped Wilson's cherry with a big exit, but it's not a rocket ride he'd care to take again. "When I look at where we are right now, it reminds me so much of 1999 and frankly it scares me," Wilson wrote  over the weekend, continuing to hammer home the point that there is a bubble building in tech investing, especially for consumer facing web services and mobile apps.

Couldn't Wilson look at this as an opportunity? After all, in this frothy market, an investment like Foursquare could easily sell for a high price. Who wouldn't mind hitting another home run?

Wilson's issue is that he's in the game for the long run, not  a single inning. And the bubbles which produce big exits also make it hard to generate good returns over time.

"We made greater than 5x on that first fund," Wilson wrote. "Eleven years later, we will be lucky to make 2x on the $350mm second fund."

Still, Wilson says he's not going to sit by the sidelines, like he did back in 2000. He doesn't think it's possible to time the markets. The best strategy, he's now decided, is to keep a steady pace, investing slowly and carefully, trying to spread his bets out over the unpredictable cycles of tech boom and bust.