As I mentioned in my previous post about WAG, after our Saturday night feast up in Napa, we felt we had turned out a meal that would stand up well next to the efforts of the kitchen on Sunday evening at The French Laundry. Allow me to state for the record that upon tasting the first bite of Thomas Keller’s signature dish Oysters and Pearls, we all immediately agreed that “we’re not worthy” and that our efforts in the kitchen the night before, while impressive, were part of a different (and lower) culinary plane of existence. Keller truly deserves his place in the pantheon of the world’s greatest chefs.

I’ve also posted an image of the menu from the evening, which includes the wine pairings. One item that does not appear on the menu is a chestnut agnolotti with celery root cream sauce. My wife Katherine had requested a menu without red meat or poultry, and they served this dish for her in place of the beef course on our menu. We all took a taste of her chestnut-filled pasta and declared it one of the best courses of the evening. Overhearing this, our waiter had the kitchen prepare an extra course and served each of us a plate of the agnolotti. Nice touch.

A few weeks ago, Katherine and I spent the weekend up in Napa Valley at our friends Dan and Stephanie’s place along with four other couples for a long weekend to enjoy our quarterly gathering of our wine and gourmet club, known fondly as WAG. WAG has been gathering since we all met while Katherine was getting her MBA at Stanford in 1998. Initially the event started out as a relatively low-key potluck where each couple brought a dish and a bottle of wine. Over the years, the event has snowballed into an over-the-top feast propelled to new heights by epicurean one-upmanship that sometimes borders on gluttony. As William Blake observed, “the road of excess leads to the palace of wisdom.”

This weekend was no exception. We had our feast on Saturday night and then on Sunday we went to dine at the French Laundry. We typically choose a theme for each meal. Since we were in Napa we decided to serve Napa-influenced dishes using local ingredients and recipes from nearby restaurants, or, in some cases, each couple simply created a dish they felt was inspired by wine country. Here’s our menu from Saturday night:

Food Courses

Dungeness crab salad with avocado mousse, beets and ruby grapefruit (from the excellent Terra Restaurant Cookbook)

Sonoma Foie Gras and Roasted Chestnut Soup surrounding an island of seared Petaluma rabbit on a bed of green lentils in a crispy bacon cup

Ravioli stuffed with braised Napa Valley lamb shank, Cowgirl Creamery crème fraiche, and wild Napa Valley black trumpet mushroom duxelles with a slaw of green apples and Napa Valley mustard vinaigrette

Sonoma rabbit (from Polarica) two ways: seared loin wrapped in spinach and prosciutto on a carrot puree and braised rabbit paw stew with carrot gelee and roasted red carrots. Accompanied by steamed broccoli with chili garlic oil, solid broccoli jus, and roasted Romanescu broccoli

Crème Brulee of foie gras (from Polarica), Straus Family Creamery unpasteurized cream and Tahitian vanilla, served with butter-poached Peking duck hash and walnut fig compote

Homemade organic Straus Family Creamery ice cream sandwiches: Scharffenberger and Schokinag dark chocolate cookies with peanut butter ice cream complemented by peanut butter cookies with Scharffenberger and Schokinag dark chocolate ice cream

Wine Courses

One mangnum 1997 Viader

Two bottles 1998 La Gomerie from St. Emilion

Two bottles 2001 Viviani Cabernet Sauvignon “2003 Copa de Napa Napa Valley Wine Auction Selection”

Two bottles 1997 Neyers Syrah Hudson Vineyard

Two bottles (one corked, alas) 2002 Echezeaux from Domaine de la Perdix

One bottle 2002 Martinelli Gewurztraminer

One bottle 2001 Bryant Family Cabernet Sauvignon

One bottle 1998 Kongsgaard Chardonnay

One bottle 2002 La Crema Chardonnay

Two bottles 2003 Bella Vineyards Lily Hill Estate late harvest Zinfandel

After this meal, we were feeling pretty proud of ourselves, and decided that Thomas Keller at the French Laundry had his work cut out for him if he wanted to impress us on Sunday evening…

Dave Sifry of Technorati has done a great three-part (1, 2, 3) series of posts on the size and shape of the blogosphere where he provides some fun charts and graphs on the development of the world of weblogs over the past several months since he last posted on this topic after his presentation at last October’s Web2.0 conference. Since October, the number of blogs indexed and links tracked by Technorati has doubled to nearly eight million blogs and nearly one billion links. I’m happy to say that I am one of the new bloggers contributing the the growth, though sometimes that just makes me feel like a statistic.

My kudos go to the team at Technorati for scaling up to meet the torrid growth of the blogosphere thus far, all the while adding many new features along the way. And I wish them the best of luck to them as they rise to meet the challenge of another doubling of their universe over the next five months and contemplate a quadrupling of it by year’s end.

Yahoo is celebrating its tenth anniversary, which led me to reflect on the fact that a decade is a very long time in Silicon Valley, particularly when viewed through the lens of Moore’s Law. As Ray Kurzweil and others have observed, when humans contemplate exponential progress, we tend to overestimate what can be accomplished in the short term (where the curve is relatively flat), but we tend to underestimate progress in the long term (when the curve gets very steep, goes up and to the right, does a hockey stick, etc.). People tend to think more easily in powers of ten (as opposed to the powers of two prevalent in the technology industry), so a decade is a good duration to look back and consider what Mr. Moore has done for us lately, after we’ve had six or seven doublings of memory density, computing speed and bandwidth. The datacenter is a great place to look to see these trends converge.

Given my background, it is perhaps not surprising that I’m a big fan of consumer-oriented web services such as Google and Yahoo, as well as recent Mobius VC investments Technorati and NewsGator. I’m equally enamored with enterprise-focused software-as-a-service businesses such as RightNow, Salesforce.com and Mobius VC portfolio companies Postini, Quova and Rally Software Development. Another cool software-as-a-service startup offers a hosted application wiki and is called JotSpot, which was founded by Joe Kraus and Graham Spencer, two of the guys with whom I co-founded Excite back in 1993. Though these enterprise and consumer oriented companies have different revenue models, their delivery model and back-end architectures for serving their customers are fundamentally similar.

Each of the companies I have mentioned above have benefited greatly from the drastic increase in the amount of storage, computing power, bandwidth and datacenter rack space that a dollar buys in 2005 versus what a dollar bought for the same thing in 1995, back when Yahoo and Excite launched their sites. I spent some time poking around the web trying to find 1995 prices for CPUs, RAM, storage, bandwidth and colo space, but it turns out that this kind of pricing archaeology is difficult to practice online, as all searches for these things turned up advertising and commerce sites focused on selling me these commodities today, not ten years ago.

I related my problem to my colleague Jocelyn Ding, who is the SVP Business and Technical Operations at Postini, and she was able to track down some old price lists from a variety of vendors from 1995, 1998 and 2000 for bandwidth, cage rental, one and four CPU servers and storage systems. Thanks go to Jocelyn for helping me put some real numbers behind my somewhat obvious assertion that a dollar goes much further in today’s datacenter than it did a decade ago. I also dug up a good whitepaper detailing costs of enterprise storage since 1992 which includes projections to 2010, which can be found here. For some items, the prices didn’t go back to 1995, so in those cases, I have extrapolated the price trend to estimate 1995 costs based on 1998 or 2000 costs relative to today’s costs:

Bandwidth: $1100/megabit/month in 1995 vs. $128/megabit/month in 2005

Cage Space: $175/sqft/month in 1995 vs. $25/sqft/month in 2005

Disk Storage: $1,300,000/TB in 1995 vs. $3,300/TB in 2005 (SCSI RAID)

1-CPU Server: $25,000 in 1995 vs. $1,000 in 2005 (web server class machine)

4-CPU Server: $360,000 in 1995 vs. $38,000 in 2005 (with 16GB RAM)

In addition to the price reductions, we also have to look at the compute performance of a web server class machine in 1995 vs. today. Given five or six performance doublings since 1995 courtesy of improvements in clock speed, bus speed, architecture changes from 32 to 64 bit, additional cache memory and faster RAM, a conservative estimate would be that today’s single CPU 1-U “pizza box” web server is roughly fifty times faster than last decade’s model. Couple that with the 25x price difference for this pizza box, and your 2005 dollar buys you more than one-thousand times as much compute power as it did in 1995. Bandwidth is at least ten times cheaper than it was in 1995, floor space in the data center is seven times cheaper and enterprise-class storage is at least four hundred times cheaper than it was only a decade ago. With some smart software and network engineering, the cost per gigabyte of storage can be brought down an order of magnitude further still using a distributed filesystem based on low-end IDE drives. Finally, with the rise of Linux, Apache, MySQL and open source in general, software license costs can also vanish from the equation when running a large-scale web service.

What does this mean for a web-services company? The cost to deliver an application to an end-user has dropped dramatically for these companies and the cost to operate their data centers therefore has much less of an impact on their costs of operations and capex budget than it used to, which means their gross margins for delivering their product have improved significantly since 1995. For companies like Yahoo, Google and more recently, Technorati, this means the cost to deliver a page view or search results page has gone down dramatically, while the average size of a search-results page is perhaps only marginally larger since 1995. Even considering the size of a search index (Google’s 8B pages today vs. Excite’s 10M in 1995) has grown nearly one thousand-fold, the costs of computing power and storage have accommodated this expansion while bandwidth costs and rack space have fallen nearly tenfold.

For enterprise-focused companies like Salesforce.com, Postini, Quova and Rally, the story is similar. Add in a subscription-based recurring revenue stream and you have a business model that has all the benefits of a dependable revenue stream and profit margins that can approach those of a traditional software company. Thanks to the low cost and high performance of today’s hardware coupled with an elegant service architecture, Postini is able to process several hundred million email messages per day for its customers with an extraordinarily light hardware footprint and does so quite profitably as a result.

The fun thing about doing a retrospective like this is to realize that when I write about this again in 2015, the increases in CPU speed, memory density and bandwidth will make today’s costs and capabilities look as quaint as 1995’s do today. Thus the environment will continue to become more hospitable to the software-as-a-service model, more entrepreneurs will create meaningful businesses based on this model, VCs will continue to invest in these ideas (myself included), and we’ll all be able to enjoy some mind-blowing applications a decade from now that are simply not possible today.