- Leave your ego at the door
- Any search groupies out there?
- Just the beginning
- Inside the Foundry psyche
- After the no
- My new Netflix Roku rocks
- Don't be afraid of maps
- Me on w3w3
- Plugging my partners - Soul Patch in Boulder on June 21st
- Life without email?
- The role of company advisors (Part II)
- 7th Annual Bard Center Business Plan Competition
- Jason Mendelson Blogs!
- Grandpa
- Guest Post: The role of company advisors (Part I)
Leave your ego at the door - Top
My wife took me to kick-boxing class yesterday and if I was to be honest with you, I'd have to admit that I pretty much got my ass handed to me. Kickboxing is HARD. This isn't athletic club kick-boxing. This is Muay Thai kick-boxing at the local Thai dojo. My wife's been going for months and is really good (and before you ask - yes, she can clearly kick my ass any time she feels like it). She's been asking me to go for a while but I've resisted. Not because I didn't think it would be fun (and as it turned out it was even more fun than I thought it would be), but because I didn't know how to do it and I was seriously afraid of embarrassing myself (although as you can imagine, none of the excuses I used to avoid prior participation included this openness of reasoning). Finally, having run out of good reasons not to go along, I acquiesced. And it was great. I had fun. I sweat (a LOT). I beat the crap out of my punching bag. I learned the proper way to kick and punch. And occasionally I put it all together and actually looked like I knew what I was doing.
This post isn't really about kick-boxing, however. It's about trying. It's about putting yourself in situations that are uncomfortable or foreign and giving it your best shot. I made a ton of mistakes in class yesterday. And, as it turns out, didn't feel stupid at all. To the contrary, I felt great for having made the attempt. At the end of class we warmed down with a few minutes of meditation and breathing exercises. During this quiet time the instructor read a passage that started with the line "here we leave our egos at the door" and went on to talk about the virtues of challenging ourselves to our own level of ability and experience.
I think it's often true in business that we are reluctant to try new things. To leave our comfort zones and branch out to new area. And - perhaps most importantly - ask for help. In business (and in life), its extremely hard to leave truly leave your ego at the door. But think about how much more we'd get done if we did...
Any search groupies out there? - Top
I've been mulling over a few ideas in search advertising. Curious if anyone out there has come across any companies innovating in the search value chain (I'm thinking about things like Yield and Clickable).
Just the beginning - Top
In case there was any doubt how far advertising on the Internet has to go, consider that The University of Phoenix is the single largest brand advertiser on the Internet (with some $20m in monthly spend, which is pretty minimal in the context of brand ad spending) and that Internet advertising per household (dollars spend on online advertising divided by total US households) was $288. Compare that with $818 on newspapers (or just over $1k on "direct telephone") (sourced from Mary Meeker's TechTrends June 2008). We've got a long way to go, baby!
Inside the Foundry psyche - Top
There are a couple of posts up this morning that I'd like to point you towards.
The first is over at Mendelson's Musings (written by my partner Jason Mendelson) that talks about our work with Nancy Raulston, our team's executive coach (direct post link here). I'm fortunate to work with a group of partners that believe (as I do) that part of building a great firm is building a strong foundation for communication and feedback. We take this work very seriously (starting with the 360 degree review that Jason describes and continuing twice a year at team off-sites where we Nancy facilitates a group review) and even base a portion of our compensation on this work (literally putting our money where out collective mouths are).
The second is today's post on the Foundry Group blog titled "There is no "I" in Foundry" which describes our team approach to running Foundry and contrasts that with the more typical venture firm. While there wasn't a plan to release these two posts on the same day, they both point to an overall philosophy at Foundry that we are stronger and more successful investors as a group rather than as individuals.
For me these posts really highlight why I'm proud to be a part of Foundry and to call Jason, Ryan, Brad and Chris my partners.
After the no - Top
Last month I wrote a post that tried to share the venture perspective of turning down a deal (see "Saying 'no' can be hear to do"). In that case I was referring to a specific deal that was particularly hard for me to turn down, although in the post I was trying to generalize to the many potential investments that we take a serious look at but don't end up closing. While there's typically less anguish around it, saying "no" to deals is something that occurs with frequency inside any venture firm. The comments to this post got me thinking about the other side of the equation - specifically what should entrepreneurs who have built up a relationship with a VC over the course of a due diligence process do when that process ends in a "no".
I have to tell you that I'm shocked by the failure rate of companies I've engaged with to stay in touch. I'm usually pretty direct when I've seen a potential investment that I like, but for one reason or another I've turned down the chance to invest. While the vast majority of the time I'll simply turn town the chance to invest (and try to give my full reasoning why), sometimes I'll say something more like "please keep me updated on your progress," or "I'd really like to stay in touch," or "please put me on your 'friends of xyz company' mailing list so I can hear what you're up to". This isn't a throw away comment and I don't do it often - mostly for companies where I'd consider an investment in the future after the company has made more progress or where I had a personal affinity for the entrepreneur and I sincerely want to help them be successful, even if I didn't feel I could do so as an investor. I NEVER say this if I'm just searching for a nice thing to say (if you've learned nothing from this blog, I hope its that I'm direct in my interactions). It's a balancing act, I know - I don't want to lead anyone one (as Gerald noted to me: how can you say "no" while a) protecting your reputation as an open minded deal maker, b)remaining open to appropriate future considerations, c) being honest concerning the reason or reasons that affect your decision making, d) respecting the cost of opportunity that all parties have bore to participate in the pre-deal exploratory process, and e) remaining empathetic in a healthy way while defending and protecting your interests and positions - not easy, but certainly what we strive for).
So apologies if my disbelief seems vain, but if 25% of the companies I ask to stay in touch with me actually do, I'd be surprised. They may feel that either I wasn't sincere or its a waste of their time to bother with keeping me up to date, but I think that view is extremely shortsighted. The friction of maintaining a "friends of my company" email list or one of "potential next round investors" or just "people I care to keep informed" is so low that it seems to me crazy not to do so. The companies in the 25% group that do this well have figured out how to provide regular, informative, short and to the point updates that make me (and the rest of the group they are communicating to) feel that they are getting the inside scoop on the company. Sometimes they ask for specific help. Sometimes they are just basic updates. Always, I enjoy hearing what these companies are up to.
My new Netflix Roku rocks - Top
Pardon me for believing that Netflix introduced their new movie streaming box just for me, but with my DVD player recently dying and my Netflix account basically wasting away how could I think otherwise when Netflix rolled out the ability to stream movies directly to my living room. The fact that it had an HDMI output (which happens to be the only spare cable I have running from my TV at the moment) was just gravy.
Seriously though, I was pretty stoked to add this to my account (and for only the cost of a $100 piece of equipment). I know the hard core Apple users out there are going to tell me I should have bought the AppleTV thing, but I want my content rented and streamed, not owned and impossible to access if I don't follow the Apple DRM rules.
It could not have been easier to set up (less than 10 minutes - fully half of which was me trying to figure out how to crimp on a new end connector on the CAT5 cable running from my media cabinet to the router). Once online, I plugged the device in, it game me a code to type into my Netflix account and in about 30 seconds I was ready to go. Streaming quality is excellent and the buffering delay is generally less than 10 seconds at the start of each show. And I've only had one major blow-up (the system dropped and reset itself) in over 10 hours of watching content.
My only complaint is the one everyone seems to have come up with already - there's just not enough content available on demand (for example not a single movie in our queue was available for streaming). I have to believe the people at Netflix are frantically working on this problem. Once they solve it they'll have one rockin' service.
Don't be afraid of maps - Top
I've spent a bunch of time with a handful of the TechStars teams in the last few weeks. The first week of TechStars was a complete whirlwind (lots of new people to meet, presentations from a bunch of big tech vendors, learning the lay of the land in Boulder, etc). Now the teams have caught their collective breath and are starting to realize just how quickly the summer rolls by when you're creating and building a business.
While it's fun to run and gun during the early stages of business formation, I've always been insistent that the teams that I work closely with map out their work for the summer early on. It's not something that's set in stone but is a good guide of where we think we can get to in a 12 week period. These roadmaps get modified on a regular basis throughout the summer but the overall framework generally remains the same (in part because each team is striving to make discernable and demonstrative progress by the final "pitch" day at the end of the program).
I've been around plenty of start-up businesses. Some have been more methodical than others at planning out where they were going and what they were doing; at collecting data early on in their dev process from prospective users and working that into their product thoughts; at working their dev cycles to allow key issues to be surfaced earlier rather than later; at thinking through scale before their first users hit their system; etc. Others, not so much. I bet you can guess which ones have the higher success rate...
Me on w3w3 - Top
I was recently interviewed by Larry Nelson from w2w3.com. That piece is now up on the w3w3 site, and is (in my humble opinion) worth a few minutes to check out. I talk about what it's like to work at Foundry Group with Brad, Ryan, Jason and Chris as well as about the role of company advisors (inspired by recent posts from this blog on that topic - here and here). Enjoy!
Plugging my partners - Soul Patch in Boulder on June 21st - Top
While I've always dreamed of being a rock star (who hasn't?!?), my partners Ryan and Jason actually are (at least when they are done with their day jobs). I wrote about their recent Soul Patch album here.
The guys are playing a gig on June 21st at Redfish Brewhouse in Boulder. They start at 930pm - sharp. It’s a onetime event, as the band resides in Boulder, San Francisco and Los Angeles.
I told them that I’d shamelessly plug their gig on my site as payment for missing the show. Like Brad, my wedding anniversary is the 21st and I won't be in Boulder that night.
If you go, take pictures so I can see what I missed!
Life without email? - Top
For most technology professionals (really most professionals of any kind) email is so integrated into our work that we can hardly imagine life without it. Sure, it can be a distraction at times and - especially if you carry a wireless device - hard to escape from. But it also greatly enhances productivity, allows us to communicate quickly and effectively and to have asynchronous interactions with a great number of people. I know in my own work life I send and receive between 200 and 300 emails a day. And since I'm already tied up on the phone or in meetings for at least 5 or 6 hours in any given day, email allows me to be significantly more productive (and to process more information and communication with a far greater number of people) than without it.
So it's with much curiosity that I'm watching my friend Mark Solon - a partner at Highway 12 Ventures in Idaho - experiment with an email free summer. He describes the heart of his thesis this way: If the people who sent the majority of those e-mails knew that I didn't have an inbox, they would have either picked up the phone and called me or (and this is the heart of it) probably wouldn't have bothered because it really wasn't that important after all. The link above will take you to the article he wrote about the project. I like Mark, but I'm skeptical that this is going to work. Even with his secretary printing out important documents (board packages and the like), the limits of old school communication in my mind significantly outweigh the upside from people self filtering their communications with you. Not to mention, I'd be perpetually worried that I was missing something.
We'll see what Mark has to say at the end of the summer. I'm curious in the meantime - could you live without email?
The role of company advisors (Part II) - Top
Part II of a series of guest posts by Gerald Joseph on the role of company advisors. If you missed it, see Part I here.
There are various types of advisors with differing skill sets and motivations. The key is to work with Advisors that have skill sets that help solve your company's current and near-term problems. Here is a fractional categorization of the various types of Advisors Startups usually encounter in the Venture community.
The Researchers
- these are the inquisitive minds we find in Academia. They are our professors, faculty advisors, and fellow students. They ponder the proverbial "What if's?" and "Why not's?" that are responsible for much innovation. They are best utilized during the product/service development, design, and testing cycles. They handle the most onerous technical details well, but may not be suitable for ideation related to revenue models and monetization.
The Associates
- VC firm Associates can be tremendously helpful in pointing out the "third rails" or specific areas in need of improvement such as corporate governance, accounting, IP, employment contracts, founder agreements, etc. that act as impediments to VC funding. Associates can be instrumental in making critical introductions and giving Founders a sense of market analysis from the VC perspective.
The Idea Guys/Gals
- often in the development of early stage companies the first idea or product/service leads to an even better series of radically different products/services. It is worthwhile for startup founders to engage frequently with hyper creative types who possess unique perspectives and extremely innovative ideas. Idea people have very agile minds. They often make unusual theoretical judgments and technological juxtapositions that result in unique mashups of new and existing products/services.
The Serial Entrepreneurs
- the importance of culling folks that have "been there and done that" can not be underestimated. Many former entrepreneurs in a post-climactic phase after exiting a company or investment are very anxious to find "the next thing." Their proven track records and established networks can lend an air of credibility to your company and open up multiple funding options.
The Walking Rolodexes
- the world is full of opportunists with huge networks who work as consultants or investment brokers in many late stage deals (brokers are taboo for early stage companies). They know everyone you will ever need to know in your life as an entrepreneur. If you are an early stage company founder, these persons are often difficult to deal with since they are usually interested in cash not illiquid stock. However, it is necessary to seek them out since maintaining alliances with well-connected persons is a key element in the growth of your company.
The VC Partner/Angel Investor
- this is the best Angel investor and Advisor an entrepreneur can have. Along with a highly developed network and sophisticated knowledge of sourcing/structuring deals, many VC's are best at advising/mentoring entrepreneurs. They have great interpersonal skills and unusually accurate "bullshit detectors" that can help startups avoid unnecessary difficulties.
The key is to try to get at least one Advisor from each category to round out your Advisory Board, then add additional Advisors to the mix as needed.
One overlooked factor in Advisor/Startup relationships is compatibility. Startups should work with Advisors that share their communication styles, work ethics, interests, and curiosities. It is extremely important to work with people you like and respect. Founders should never choose an Advisor that they do not like. Moreover, all Founders have to be convinced unequivocally that the prospective Advisor can make a substantial contribution to the company.
7th Annual Bard Center Business Plan Competition - Top
I've been on the board of the Bard Center at CU Denver for several years now. One of the things I enjoy the most about my work with the organization is our annual business plan competition (in fact it was through judging this competition that I first connected with the Bard Center). Each year six finalists are selected to present to a panel of judges and $25k is awarded among the 6 finalists (in addition to prizes for 1st-6th place there are also cash awards for the top plans in specific categories (bio-science, non-profit, etc.). The event will take place on June 11th at the Hyatt in downtown Denver (finalist presentations from 8:30 - 12:00 and the awards lunch from 12:00 - 1:30).
In addition to the usual fun, this year my partner Brad is the keynote speaker at the award luncheon. I'd encourage you to come if you are in Denver that day. In fact I have a couple of extra seats left at my table, so email me directly if you're interested.
Jason Mendelson Blogs! - Top
I know what you've been saying to your self: "Self - I've been looking to read a blog written by a reformed drummer, software guy and lawyer who is now a venture capitalist. Where can I find one of those?!?"
All joking aside, I'd encourage you to check out the blog that my partner Jason Mendelson (who is all of those things and many more) has just started. Jason is actually a long time blogger - writing regularly on Brad's blog and as one of the founders of and main contributors to AskTheVC. Mendelson's Musings will have a more personal flair (although will continue to cover investing and venture capital topics as well). Along those lines be sure to check out his music page for great new music suggestions.
There are many things I admire about Jason - he's an extremely interesting and creative guy (especially for a former lawyer!). He's also an excellent writer. I think you'll enjoy what he has to say.
Grandpa - Top
My grandfather passed away 5 years ago today (I can't believe it's bee that long...). I think about him a lot, but especially today on his Yahrzeit. I wrote a post a few years ago on one of my favorite sayings of his here. Today I've been thinking about the approach he took to his career.
I recently wrote a post offering some suggestions about getting a job in venture capital. While I think its great to have career goals and an eye toward the future, my grandfather is a great reminder that sometimes the right path involves following the path that lays out in front of you. He left school to help raise money for his family during the great depression (he was one of 11 children and a first generation American) and never returned to finish high school. Eventually he enlisted in the air force and served for years overseas in WWII. Grandpa had an eclectic career - one that included selling vending machines, owning a mens clothing store, working for an auto dealer, selling check-writing machines and repping children's toys. Not exactly a straight line path (although most of his jobs were related to sales in one way or another) and certainly not something he sat down to think about when he was in his 20's to figure out what he wanted to do with his career. He didn't have the luxury and in any event I don't think for him laying out a 10 year career path was in his DNA.
It's so easy to get caught up today in where your career is headed and whether you're "on plan" or not. Sometimes the right thing is to just go where life leads you.
Guest Post: The role of company advisors (Part I) - Top
One of the things I enjoy the most about writing this blog is the discussion I engage in with readers - both through blog comments and in direct emails. Over the past month I've had a particularly enjoyable exchange with Gerald Joseph. One of the topics we've discussed is the role of advisors in the life of a start-up. I generally think of advisors as non-paid "friends of the company" and as you'd probably guess, advocate a pretty deliberate organization and use of advisors. Gerald's view is a little more expansive as he thinks of "advisors" as the larger ecosystem that surrounds (or should surround) a start up company - one that includes people you pay (attorneys, CPAs, etc) and the people who pay you (your angel investors) in addition to the business and industry experts that are the typical "advisors" to young companies. I like this line of thinking and offered Gerald the chance to put his thoughts into a post. He took me up on that idea and came up with a four part series on the topic that I'll put up over the next few weeks. After the final post I'll summarize some of my thoughts as well as comments from readers (and please - comment away!).
_____________________________________
Is an Advisory Board or Advisors necessary?
Well, Advisors and Advisory Boards are not an absolute necessity for all startups. Their usefulness and necessity has to be evaluated on a case by case basis. Having Advisors or an Advisory Board is a completely voluntary decision. Advisory Boards are not legal entities like the Board of Directors.
Many experienced entrepreneurs keep their Advisor relationships very private and informal. They have plenty of Advisors that they speak to whenever the need arises and no formally declared Advisory Boards.
Successful serial entrepreneurs usually have a network of influential friends who are greatly interested in their personal success. They do not need formally declared Advisory Boards. Serial entrepreneurs often have the luxury of receiving assistance from their Advisors irrespective of the merits of their ideas and without the promise of equity.
However, this is not the case for your average Startup Founder. Many Founders are recent grads, college dropouts, or young professionals with no track record, no network, and a good idea in need of a supportive environment to germinate.
In these cases, Advisors help "round out" the strategic thinking/planning of early stage Startup Founders and C-level managers.
Capacity building is sporadic at best in early stage startups. It is very difficult for startup founders to train themselves and get up to speed on every critical issue concerning a startup company's development. Good Advisors can fill this gap by lending their skills to solve problems that fall outside of the Founders areas of expertise.
What do good Advisors do?
Well, essentially good Advisors do what needs to be done. If your startup is operating in a complex market with plenty legal entanglements such as IP drama, then your startup would benefit greatly from having a Venture or Patent Attorney as an Advisor to draft legal strategy, contracts, and act as an in-house repository of legal info.
In addition to completing a specific scope of work, good Advisors usually do most of the following:
Reduce or eliminate the risks associated with "blind spots"
- startup founders usually lack knowledge in numerous areas not related to the technical development of products/services. The implementation and management of financial systems is customarily a significant "blind spot" for most entrepreneurs. This is a complicated area where advisors with finance expertise can roll up their sleeves and implement standard practices that make it easier to track the company's financial well-being. A CFO or CPA with venture experience can be invaluable as a Finance & Accounting Advisor working on a part time or flex time basis until the operational budget allows for the hire of a fulltime CFO.
Provide "actionable" advice
- it is critical that Advisors provide straightforward, down-to-earth information. This info must be readily digestible and easily implemented into the existing operational infrastructure of the company. Advisors should present startup Founders with ideas or information that is fully fleshed out and easily applied to their unique situation. An Advisor's idea for a new revenue model or product feature should be presented in an easily understood format illustrated with pertinent industry forecasts, assumptions, metrics, risks, and projected results.
Make important introductions
- Advisors introduce Founders to reputable prospective investors, employees, partners, and customers. The evolution of a startup from concept to seed stage to exit is partially dependent on the quality and reliability of the Founders' network.
Make 'way too early' investments
- often in early stage Startups, Advisors and Angel investors are one in the same. It is not uncommon to see a CEO/Advisor relationship crescendo to include a significant pre-prototype investment of cash and non-cash resources (servers, office space, etc.). In many cases, Advisors are investors of first resort during the early conceptual phase of a startup when very few VC's or Angel Investors are usually interested.
Provide informed consumer-centric validation of core value propositions
- in most cases, Advisors are current or prospective prime consumers of the company's products or services. One of the most significant perspectives that many advisors bring to the table are strategic thoughts and usability innovations based on their informed experiences as consumers and/or analysts within the Startup's target market.
I think it is always best for Startup Founders to actively pursue relationships with prospective Advisors and Mentors. Building a network of confidants is an ongoing endeavor that reaps long-term rewards before, during, and after the lifespan of your association with your Startup.
One thing that we all seem to overlook is that there is life after a Startup. Especially for serial entrepreneurs who go from one startup to another, building relationships with influential people that you like, trust, and can learn from is essential. Your network will work for you personally and professionally for a lifetime