Archive for the ‘Uncategorized’ Category

Getting it Right the 2nd Time (our investment in SEOMoz)

It’s not often in this business that you get a second bite at the proverbial apple, but with our funding of SEOMoz announced today we got just that.

I first met SEOMoz founder and CEO Rand Fishkin in late 2008. It was a pretty memorable meeting in the lobby of the Vitale. At the time I was deep into the SEM side of the search world and was thinking about whether we wanted to place a bet on the organic side of search (aided at the time by what seemed like a large number of SEO agencies trying to productize their service into some kind of software package). It was clearly a big opportunity.

I liked Rand a lot and while we’re often skeptical about services companies “productizing” their offerings, SEOMoz was never really built to be a services business and as Rand carefully explained, while early, they were clearly seeing product traction. Plus they had great tech and a solid team.

So, clearly we passed.

I actually don’t remember exactly what it was that made us not jump at investing (Brad talked with the company as well at the time). But whatever it was, with the benefit now of a few years hindsight it was obviously the wrong call.

To our luck (and to SEOMoz’s credit and benefit), the company grew organically (apparently we weren’t the only ones to have got this one wrong). And then even more to our luck (and at the time to the company’s dismay, but clearly to their long term benefit) an agreed upon large financing deal fell through at the last minute (Rand’s post on that experience is really worth reading if you haven’t already).

So here we are. Back at the table and with a second chance to get it right. The story of how we ended up investing this time around is a good one – and one described in detail on the company’s blog post this morning.

So welcome team SEOMoz to the Foundry portfolio! And thanks for giving us another chance.

Glue 2012 will be the best Gluecon yet

As you may know from reading prior posts on the subject the two days that comprise the Glue Conference (May 23rd and 24th, 2012) are some of the most information packed and interesting days of my year. To me what sets Glue apart is that it stands almost alone in the conference circuit as a show that’s neither company specific (Google I/O, Dreamforce, Chirp) or startup celebrity focused (DEMO, TC50, etc.). There are only a sparse few events that are developer focused  – which makes Glue that much more important.

Glue is an incredibly well run conference and you can tell by looking at both the substance and structure of the agenda that Eric and Kim have put a lot of thought into how to enable conference attendees to get the most out of being there. From the simple things that you’ll appreciate long before you realize that you rarely see them at other conferences (power strips at each table, blazing fast wifi, killer soundtrack, etc) to the break-out sessions designed to dive deeply into a subject or technology, to the ample networking, to the ALU DemoPods (see below), Glue is an event designed to enable every attendee to get the most out of their being there (Eric and Kim don’t believe that their job stops when you walk in the door; a great sign of this is that you’ll often see them roaming the floor putting people together that they think should meet).

Last year and again this year, we’ve partnered with Alcatel Lucent to bring the Glue DemoPod to the conference, enabling 12 early stage companies to the show to show off what they’re up to. This was a huge hit last year, with the conference attendees voting for their favorite new company among the bunch (with the winner getting the chance to make a keynote address to the entire conference on the last day of the show). Thanks to ALU, we’re doing it all again for 2012 with another great batch of companies:

New to this year’s Glue is a focus on the hackathon. We’ve done them each year of Glue, but never with the emphasis we’re placing on it in 2012. This year we’re bringing in a great group of hackathon sponsors to help us out (Alcatel-Lucent, AT&T, Pearson, Cloudspokes (Appirio), Mashery, Loggly), we’re extending the hackathon into day two of the conference, and we’re seriously upping the ante on prizes. Glue is about developers and developers like to build stuff. Come hack away!

So whether you’re an enterprise developer (staying current on technologies, checking out what start-ups can help accelerate your own businesses and internal development initiatives), a start-up developer (all of the above plus looking for a chance to interface, recruit and push the envelope with the next generation of technologists) or a C-level exec (in particular looking to see what’s 3-6 months out on the horizon) Gluecon is for you.

You can register for the event here. Or email me if you have any questions.


April 16th, 2012     Categories: Conferences, Uncategorized     Tags: , ,

Impressions of Android and the Galaxy Nexus

About a month ago I switched from my iPhone 4S to the Galaxy Nexus from Samsung. I was finally making the move from AT&T to Verizon and I couldn’t bear the idea of paying $450 once again for another 4S “upgrade”. I’d been meaning to try Android and figured now was as good a time as any. And since I wanted to run Ice Cream Sandwich that meant a Galaxy Nexus. I switched cold turkey and have been using the Nexus exclusively. Since a lot of people ask me how I like it I thought I’d post some thoughts.


First, the conclusion (in case you don’t want to read any further). I like the Nexus and Android and it’s definitely a workable phone. But I’m likely going to switch back to the iPhone platform when the 5 comes out this fall (but stay on Verizon for sure).

What I like about my Galaxy Nexus:

  • First off, Verizon kicks AT&T’s ass. In a month I’ve maybe had one call drop on dial. On AT&T, calls failed to connect on the first try about 40% of the time. Overall network coverage was much better, data speeds were much better and I had coverage in more places (NY, SF, Boulder, etc.) than I did with AT&T (I’ll allow here that the test wasn’t apples to apples and that differences in the hardware itself may be partially responsible).
  • Swipe to answer. Swipe right to answer. Swipe left to send to voice mail. Swipe up and you can send one of a few pre-programed text messages back (or write your own custom message). Love this feature!
  • Screen yumminess. Simply put, the screen on the Nexus is beautiful. Stunning, actually. And large.
  • Flexibility. Android as an open platform is just way more flexible than iOS. I can arrange my screen as I’d like, there are more apps for any one thing you’re looking to do, you can customize your environment as you like. And I love the way you can nest contacts and have your favorite numbers grouped together logically and available on your home screen.
  • Batteries. I’ll talk about why this is so critical below, but I do like that I can swap my battery on the Nexus. I carry 3 batteries with me at all times (including one of the extended batteries) and when I run out of juice I can just pop another one in. Sadly, this happens all too often…

What I didn’t like so much about my Galaxy Nexus:

  • Battery life. Wow, does the Nexus suck down the juice. Depending on what you’re doing, you can run down your battery in an hour (for example, tethering the phone will discharge a fully charged battery in less than 60 minutes). I mentioned that I have 3 batteries for my phone – this is because owning a Nexus is an exercise in battery management. The phone needs to be plugged in at every opportunity possible. And I’d strongly recommend getting the extended battery as well as an external charger for your batteries (so you can plug the batteries in and charge them when they’re not in your phone). There’s no way I’d recommend getting this phone unless you’re willing to take on the task of power management.
  • Bugs. There are some bugs in Ice Cream Sandwich which make it a pain to use from time to time. I’ve had my phone freeze up on me a few times. If you’re in the video camera and you let the screen go to sleep, you will have to re-boot the phone (which takes about 3 minutes) before you can use the camera or video camera again. Dialing a number directly from calendar is really kluge and usually takes me about 5 attempts. The text database on my phone get messed up and this causes all incoming texts to show up in double. Full calendar items only show up when you enter the editor in the calendar. Bunch of little things like that.
  • Are you sure? There are a lot of things that you’ll attempt to do on Android where it will ask you to confirm your selection (are you sure you want to delete that; are you sure you want to dial that number, are you sure you want to power off, etc.). I found this really annoying.
  • Facebook. The Facebook app for Android is really bad. Mine consistently loaded slowly, sometimes didn’t load at all and generally was only usable if you were willing to be extremely patient (the app doesn’t cache any data and has to reload from scratch each time, although even that doesn’t explain the remarkable latency in the app). I don’t buy phones for one app. And to be clear, it’s not like I’m addicted to Facebook – honestly, I could quit any time. But it was a bummer that this didn’t work better.
  • Soft home key. The home key on the Galaxy Nexus is a soft key. And you’d think after a month I’d stop accidentally hitting it when I was typing. But you’d be wrong. I hit it all the time and have to go back into the app I was working in. I prefer a hard home key. Or at least a soft key spaced a bit further away.
  • Size. I found the Galaxy Nexus to be a bit big for my tastes. For some things this was great, but overall, I found it hard to use with only one hand and difficult at times to navigate because of it’s size and where the various command keys ended up being laid out because of that size

So there you have the highlights and lowlights. I’m glad I ran this experiment and I’ll definitely hold on to this phone while I wait to see what the next Apple release looks like. But I’ll probably head back to iOS in the next 6 months…

Would love your thoughts here if you’ve also made the switch.

April 3rd, 2012     Categories: Uncategorized     Tags: , , , ,

One platform to rule them all

I write often about my love of start-ups. And in truth, I really enjoy all stages of a company’s development – each for a different reason, of course (the early days, working closely with the founding team on product; mid-stage when maybe you’re helping with key management hires as the business scales; and later when hopefully the business has grown quiet large, working on strategic partnerships, overall strategy or maybe the sale of the business). And each stage has its own cadence (which, of course varies from business to business).

Most of the time, it takes years to validate an investment thesis as companies work methodically through product launches, and the stages of scaling a business. It’s only after time (and very often a few false starts) that we realize that our investment thesis was correct. But every once in a while I get to work with a company that takes off immediately after our funding it. It’s a rare pleasure to see an idea so quickly and immediately take off. And while there are plenty of companies that have a slower start to their lives that later become great successes, that early success (and here I’m talking about customer and revenue success, not funding or “user” success) often portends really good things to come.

Integrate – who today announced an $11M Series B financing with Comcast, Liberty Global and Foundry – is one of those rare companies. Launched in April of 2010, the company was scaling quickly even during the time when we were first looking at at and later working through the details of our initial investment ($4.25M which closed in the fall of that year). Founders Hart Cunningham and Jeremy Bloom have been fantastic to work with and together, they’ve built a substantial business.

Integrate brings together advertisers performance marketing campaigns in one platform. The company’s platform allows any B2B and B2C advertiser to plan, execute, track, analyze and optimize an integrated marketing strategy.  The marketplace combines thousands of quality-vetted online and offline media sources (internet, print, out-of-home, television, radio and call centers).  To me it represents the future of performance marketing. Not just in its breadth of offerings, but also in the fraud and other controls they’ve put in place to help enable a safe environment for traditional, more brand oriented, advertisers.

I’ve embedded a video below of co-founder Jeremy Bloom talking about the company and the new funding round on Reuters this morning. And I’m looking forward to continued success at Integrate and welcome Sam from Comcast and Bruce from Liberty Global to the team!

March 21st, 2012     Categories: Uncategorized    

Hiring between portfolio companies – playing nice in the sandbox?

I put up a post this morning over on the Foundry Group site which I thought I’d repost here with some additional comments. It concerns whether companies in a shared venture portfolio should have any special rules of engagement about hiring from other companies in the portfolio. The question of whether Foundry has a “policy” around this has come up a few times and we wanted to clarify very clearly that we  absolutely don’t (nor could we – not only would such a blanket rule be to the detriment of our portfolio, it would also likely be illegal). That said, I do know that a few of the CEOs in the portfolio have a “no poaching” policy when it comes to friendly companies. That may include companies backed by the same investors (Foundry or others), or it may just apply to a few companies where the businesses have a tight relationship and the CEO feels that actively recruiting from that company would be detrimental to that relationship and therefore detrimental to their company. To me, this is the real key. Arbitrary rules around hiring and, in particular, recruiting practices seem spurious. Altruistic in their ideal, but flawed in execution. And in any event I think the lens here should be a business one. Companies with which you have an important connection are in a different class relative to recruiting efforts than other companies. There’s no real moral line to be decided – the business relationship itself is what drives the decision. Curious what other companies do in regards to their recruiting practices. Comment away!

The question of how we handle companies within the portfolio company hiring from each other has come up a number of times recently and we thought it would be a good idea to hit the subject head on, publicly.  With over 40 companies in the Foundry portfolio, and with many of these companies concentrated in specific geographies (in particular Boulder, San Francisco, Seattle and New York) there are often times when an employee from one company in which Foundry has an investment applies for a job or is approached by another company in which Foundry has an investment.

To be absolutely clear, Foundry has no policy relating to the hiring of employees by one portfolio company from another. We believe in the free and fair movement of people and ideas and we don’t ask that portfolio companies refrain from hiring employees from each other. Ultimately it’s up to each company to determine their own hiring practices based on what they believe to be the best interests of their business.

March 20th, 2012     Categories: Uncategorized    

I’m getting sick of the bullshit

I love the start-up world. I love working with founders and young companies. I love the excitement of working on business ideas that are new and different. I love seeing the success that often comes from this hard work. I’ve never before in my professional life seen a time of such innovation and creativity. At Foundry we see more business plans now than we ever have. And what’s more, more of those business plans are really interesting (and fundable).

It goes without saying that I love the business of venture capital. I love helping entrepreneurs work on their ideas. And I love helping companies figure out how to become as successful as possible. I love the challenge of trying to figure out the next great investment and the energy that comes from working with amazing and creative people.

But I’m worried and I wanted to get it out there.

I’m worried that in all the hype, in all the “we launched our company” events, and “we changed our name again” parties, and “we redid our website – come celebrate!” shindigs, and the SXSW parties, and the hoodies, and everyone who is “killing it!”, that we’re losing sight a bit of the really hard work that is creating and building a business.

I’m worried that in offering term sheets after a single 60 minute meeting, and in pricing early stage deals like they were already late stage successes and most egregiously by constantly running around self promoting and self aggrandizing, VCs are falling prey to a cult of personality about themselves and forgetting that their jobs are to help companies be successful. And as far as I can tell, very few seem to believe what I hold as a fundamental tenet of the venture industry, which is that entrepreneurs come first, not VCs.

Don’t get me wrong. I enjoy a good party (not to mention a good hoodie!). And I recognize the reasons to celebrate important company milestones and in going to industry events like CES and SXSW. And in bringing a bunch of customers, prospects and partners together at a social event. But I feel like I’m hearing less of “did you see XYX company’s great new product” and more “are you going to so and so’s party at ad:tech:”. I’m not exaggerating when I tell you that I’ve received 30 invites to SXSW parties but not a single invite to a panel session at the conference. And when someone tells me that someone is “killing it” (a phrase I think I hear 10 times a day these days), more often than not they mean “doing the job they were hired for”.

I hear more and more stories about companies making a pitch to a VC and having an offer before they walk out of the room (entrepreneurs: do you really want to work with someone who puts so little thought into their investment process that they would do this?). And the way VCs talk about the companies they work with has clearly shifted to be substantially more VC centric (lots of use of “I” and taking credit for company success as something they themselves created rather than participated in or helped with). And, of course, much has been written about rising valuations and the potential risk this poses to particularly early stage companies. Not to mention the increasing popularity of the “party round” where many VCs participate but no one actually takes ownership (also not good for entrepreneurs, in my opinion).

And it feels like a lot of this is for external show. I’m cool; I run a shit hot start-up; I saw [insert big name technorati here] at our company party last night. I’m in such and such company with [long list of other investors] and doesn’t that make me awesome. I’m awesome I’m awesome – look at me!! And not really about building great products or great businesses.

So by all means, lets keep having fun. But let’s also remember that the goal is to build great companies. And please – my fellow venture capitalists – can we take it down a few notches and remember that our role is a supporting one. If you wanted to be the star you should have become an entrepreneur.

March 5th, 2012     Categories: Startups, Uncategorized, Venture Capital     Tags: , , ,

Let’s agree to disagree

Is there much disagreement in your company? I’m not talking about where to head for lunch – I mean real, passionate, fundamental disagreement on product, marketing, operations, etc.

I hope so.

Even more so the earlier you are in your business. Running it is a messy business. There are tons of decisions to be made and each decision is amplified by factors such as your short runway of cash, new competitors entering the market and new team members joining your company. So a healthy amount of disagreement and discourse is not just a good thing, it’s inevitable. In fact I’d venture to say that if there’s not disagreement at your business, you’re not encouraging enough debate and people don’t feel free to speak their minds. Of course after listening to this robust debate you’ll ultimately have to make a decision and move forward (end of debate – don’t let it stretch on after the decision has been made), but I’d encourage you to create an environment at your company where differing opinions are both valued and encouraged. You’re hiring great people after all. Make sure you give them the space to speak their minds.

February 28th, 2012     Categories: Company Creation, General Business, Uncategorized    

Fight for your rights! American Censorship Day (that’s today!)

Today Congress is holding hearings on what, if passed, would effectively become a censorship system for the internet. The threat comes in the form of two bills, currently making their way through the legislative process – Protect IP Act (PIPA – S.968) and Stop Online Piracy Act (SOPA – H.R.3261). Below is a video that describes the bills and their potential impact (and you can read more at

PROTECT IP Act Breaks The Internet from Fight for the Future on Vimeo.

The effective censorship of websites (by blocking or slowing access to them) is what I find particularly disturbing. We already have a fundamental access problem on the internet. As internet access becomes increasingly important to society – truly part of the fabric of our democratic society – lack of access to the internet (and lack of high speed access) is becoming an increasing social and economic issue. Lack of internet access contributes to an increasing gulf in our society. And it’s a problem that government has recognized – for example when it required Comcast to offer low income households favorable rates on internet access in exchange for granting approval to the Comcast/NBC merger. I’m not arguing (at least in this post) for some kind of universal service fund for broadband access (and as a “capitalist” by title, I hope that the primary solution to this can be a market driven one). I’m pointing out that we already have some challenges around access to the internet that we haven’t even addressed. And now we’re talking about layering on an access hierarchy on the other side of the equation. The vast majority of the increase in the productivity of the american worker that we’ve seen over the past few decades has been driven by technological innovation (we’re working smarter, more than we’re working harder). Do we really want to take a primary driver of that technology innovation – the internet – and set up a system that effectively stifles the ability of new companies and new technologies to reach users? A system that rewards the embedded power structure of big business in the United States? I’m not arguing in favor of web piracy. I’m arguing for common sense. And against trusting the people who sued to block the VCR and MP3 players from coming into existence (two technologies, which they later ended up significantly benefitting from) by giving them the power to effectively shut down new businesses and censor our access to new technologies.

There’s a reason that the backbone of the internet is governed by “peering” relationships. We’re all peers on the internet. Let’s not forget that.

November 16th, 2011     Categories: Uncategorized    

Trada… bringing crowdsourced marketing to Facebook

I’ve written a few times about Trada – a business that vastly simplifies search marketing for advertisers through a platform upon which Trada’s crowd of SEM experts build and manage campaigns on behalf of advertisers. The results to far have been impressive. The company has been helping advertisers increase the effectiveness of their search marketing and lower the amount of time required to manage search campaigns. And they’ve done this for companies spending as little as a few thousand dollars a month on search to as much as $500,000 per month. The result has been a rapidly growing company that is increasingly looking to expand the reach of its platform.

Today Trada announced that it has expanded its marketplace to Facebook, allowing advertisers to leverage the Trada crowd of expert optimizers to manage Facebook campaigns. To do this they’ve also launched a creative marketplace that will allow designers to contribute to campaigns on a performance basis. More on that a bit later.

The Facebook opportunity is massive (Facebook generates somewhere around 25%-30% of all display advertising impressions on the internet), but relatively nascent – supported by a limited toolset, requiring very different strategies than search or traditional display marketing, and as a result to date much more difficult for advertisers to take advantage of. The beauty of the Trada model is that it uses humans to perform tasks that are uniquely human in nature. We’ve found this to be effective in search, and expect that the same will hold true for leveraging the unique, but often very disparate data that Facebook enables marketers to make use of. And while entire companies are being built to try to help marketers better take advantage of advertising on Facebook, Trada is using all of their learning in search to extend their marketing capabilities into Facebook – a distinct advantage.

A quick note on the creative marketplace. Trada CEO Niel Robertson and I have been talking about this idea for the better part of 2 years. We knew that we’d need something like this to extend the Trada platform to Facebook (and beyond). “Creative” in search involves the relatively straightforward creation of text ads. Creative on Facebook involves the greater complexity of images and additionally needs to be constantly refreshed (the decay curve of Facebook ads is extremely rapid). I’ve wondered if a business could have been built around this kind of creative marketplace – using performance incentives to reward the creation of various display ad types. Ultimately for Trada, they built their own system (the fact that it is closed loop within the Trada platform solves a number of key issues vs having built this as a stand-alone business). We’ve actually had a version of it up and running for our tests with Facebook for several months now and it works beautifully.

There was great coverage today of the Trada announcement, including mention in The New York Times, Techcrunch and MarketWatch.

I’d encourage you to check out Trada if you’re interested in extending your advertising to Facebook or looking for better performance out of your search campaigns.

November 9th, 2011     Categories: Uncategorized    

Trends in M&A Deal Terms

For the past several years Shareholder Representative Services (SRS) has been publishing aggregate data on trends in M&A. These aren’t just high level observations, but rather are nitty gritty, details around the some of the most important terms contained in purchase agreements. As a self proclaimed M&A geek, I live for this stuff. And if information is power, this study dishes out plenty. And as a result helps level the playing field for companies (who transact very infrequently), their investors (who transact a bit more often) and buyers (who often have dedicated M&A practices who do nothing but execute transactions).

I’ve been fortunate to be involved in a number of Foundry related transactions in the past year. Knowing market trends (and in some cases – and here’s where your VC may really be able to help you – knowing details of a specific buyer’s historic willingness to negotiate around certain terms) is extraordinarily valuable.

You’ll find the full SRS report here. There’s a brief statement about their methodology at the beginning that’s worth taking a quick perusal through before you dig in (the data are based on the 196 transactions on which SRS acted as representative).

A couple of trends that stood out to me:

– 86% of all transactions were all cash. With a favorable borrowing environment and many companies holding on to large cash reserves an increasing number of deals are all cash.
– 24% of transactions contained an earn-out. I’m generally not a fan of earn-outs and the continued relatively frequent use of them is a little surprising to me (this figure was 25% last year).
– Average Escrow period was 15 months. The detail here is pretty interesting. The most common escrow period was 18 months (44% of deals), and 12 months was the 2nd most common period (24% of deals).
– Escrow size averaged just under 13%. This is always a hotly debated issue in transactions. Interestingly the median escrow size was over a point lower at 11.7%. There’s a chart below showing the distribution of escrow size.

One item that wasn’t covered in the study but which I think would be interesting is to see the % of transactions where there is a buyer initiated management incentive plan of size (say above 10% of the total consideration). We’re seeing more and more buyers use this tactic to either incent management (nice view) or separate management from their investors (the not nice view). Either way, they can be significant and I’d love to see how common they are and what percentage of deal proceeds are set aside for this purpose.

November 3rd, 2011     Categories: Uncategorized