Month: June 2004
I’m up in Alaska and have been sucking down books. Following are five flyby reviews for those of you with different tastes.
Chirunning – Good book on combining T’ai Chi and Running. If you are a long distance runner, it’s worth a look to explore some of the concepts the author talks about. I used some of it on my run today and it felt logical.
Teach Yourself Movable Type – Ah – there’s a book for everything. Pass on this one – not enough content to justify its existence.
Ten Big Ones – Mental floss par excellence. I’m a little burned out on Janet Evanovich and the Stephanie Plum novels (too formulaic at this point) – but since I read the other nine, I figured this one would help pass the flight from Denver to Anchorage.
The Da Vinci Deception – Disgustingly ironic. I picked this up randomly at the grocery store thinking it would be a thoughtful analysis of the factual errors in The Da Vinci Code (which I think most sentient beings recognize was a work of fiction). The author – an accomplished Christian writer – trashes The Da Vinci Code, but misses the point by taking it much too seriously. While I don’t know Dan Brown, I’m quite certain he was aware that he was writing a fictional account. Pass.
Rally provides an on-demand subscription service for Agile software development. I’ve written a little about Agile software development in the past – we’re finding many of our software companies are adopting various Agile development approaches. The “on-demand subscription service” is a key attribute of Rally’s product family – rather than heavy upfront licensing fees for software development tools, a customer can quickly and cost-effectively begin using Rally’s products.
If you or your company is using or considering Agile software development, I encourage you to take a look at what Rally’s products can do for you. If you are in the business of providing Agile products and services, consider becoming part of Rally’s ecosystem.
NewsGator announced our investment last week. I received a number of nice notes from folks in the RSS world. I also received a bunch of questions about why we invested, how the process worked, whether we were going to do other RSS investments, and where NewsGator is going now that we’ve made the investment. Suffice it to say that these are all relevant and good questions and in true blog fashion, rather than send individual emails answering them, I’m going to try to address some of the questions here as openly and transparently as I can to help anyone that is interested understand how and why this investment happened.
I thought I’d begin by talking about why we invested in NewsGator. To answer this question, I have to start by clearing up what appears to be a common misperception (and one we intend to fix quickly) about NewsGator. Interspersed in the feedback of “wow – neat investment – NewsGators’ Outlook plug-in is a phenomenal RSS reader” were comments that while NewsGator was a neat Outlook-based aggregator, there were other places people wanted to receive RSS feeds (e.g. web-based RSS readers) along with the question of “Gee – an Outlook plug-in – won’t Microsoft just crush that when they release their own?”
The misperception is that NewsGator is only an Outlook plug-in. While the most popular product from NewsGator is currently their Outlook-based aggregator, what really turned us on when we dug into NewsGator as a potential investment is NewsGator Online Services (NGOS). Greg Reinacker’s vision is much broader than simply an RSS aggregator – his goal is to provide RSS content on any device. NewsGator currently provides clients for Outlook, the Web, POP email, mobile devices (web-based and wap), and Microsoft Media Center (how cool is it to get an RSS feed on your TV?).
Following are several examples of how NGOS can be used today:
– I use a Tmoblie Sidekick – made by Danger – as my cell phone and wireless data device (web browser, email, AOL IM, wap browser, calendar). Using NGOS Mobile Edition, I can read my feeds via my web or wap browser on my Sidekick. These subscriptions are synchronized with my desktop, so I don’t have to do any set up on my Sidekick – I simply access my services.newsgator.com mobile edition account.
– NGOS has a custom search feed capability. I put in all of my companies as keywords (one per feed) and then get feeds for each company. This is similar to Yahoo! Alerts and Google Alerts, but also searches all of blogworld so I get any postings in these feeds also.
– A NewsGator / Gmail interface exists. Using this, you can route all of your feeds into your Gmail account and take advantage of Google’s search technology on your personal feed database.
Now – while Greg’s vision is broad and his technical skills amazing – he’d be the first to admit that NewsGator hasn’t packaged and promoted their various products in the most effective way. We’re already hard at work on this – expect a steady stream of product announcements in the next few months as we roll out new products to more clearly package and expose all of the technologies NewsGator has built. Existing NewsGator customers should expect to benefit broadly from this – we intend to be fanatically loyal to all of our customers – especially our early ones. We’re also extremely interested in finding out how people are using NewsGator and NGOS, as well as what they are looking for in the future products.
Ok – hopefully I’ve cleared up the misperception that NewsGator is simply an RSS reader for Outlook (although it is a damn good Outlook-based RSS aggregator!). Let me move on to why we invested in NewsGator. When I started really digging into RSS and blog technology, I began by actively playing with and trying as many different products and services as I could find. I had three goals: (1) figure out which were the most interesting products available today, (2) determine what the segments of the RSS / blog universe were, and (3) determine the “analog analogs” from the evolution of other segments (publishing, email, web, and ecommerce).
The first was fun for me as its appeal to my inner-nerd was very tactile. In many of the market segments that I invest in (such as IT infrastructure software products – companies like Cyanea, Newmerix, Oxlo, Rally Software and Xaffire) I can’t actually use the software in a sustained way. Sure – I can look at demos – but I’m not the target customer or user – so any real use case is contrived. In the RSS / blog universe I could set up a blog, read blogs, use RSS syndication, explore the tools, look at and think about my stats, and play with new search and advertising technologies as they appeared. Once I got into this, I ran across a number of interesting new companies.
Once I became “a user” (meaning I was no longer in demo mode, but I was actually using this stuff every day), I starting figuring out which segments each company fit in and correspondingly began to rank the companies in terms of my perception of their future potential. The segments I came up with in hindsight are not that surprising, so I’m happy to share them here (and take constructive feedback from anyone that’s bothered to read this far). The segments I identified are content management systems (CMS), readers (aggregators), tools, hosting, content, search, analytics, and advertising. There is obviously overlap between these segments (e.g. a company could be in more than one segment – search and advertising are a natural pairing, as are readers, tools, and analytics).
I decided that rather than try to find one “ultimate investment” in RSS that spanned all the segments (I don’t think this will exist), I wanted to make investments in several segments. I’ve been working closely on this with Ryan McIntyre who was previously a founder of Excite and knows many of these segments well from his experience there (and – hence – another view on the analog analog). We identified several companies in different segments that excited us and have been systematically exploring working with / investing in them. In several cases these companies overlap in various segments, but when in the same segment (e.g. search), they are complementary to each other rather than competitive.
NewsGator was at the top of my list for readers and tools and NGOS complimented search and analytics. Per the misperception discussed above, NewsGator is currently thought of as only a reader – and an Outlook-based one at that. In fact – today – NewsGator (through the Outlook client as well as NGOS) has capabilities that cross all four segments. Clearly the emphasis is readers and tools – but if you dig into NGOS – you can see how NewsGator could be very complimentary to other companies that have their emphasis on search and analytics.
I was introduced to Greg by Karl Florida at Return Path who had been talking to him about RSS and how it fit within Return Path’s world. Greg and I got together and I immediately liked him. He passed the “15 minute test” (in 15 minutes I believe you can make a directional decision on whether or not you want to pursue working with someone you have met for the first time). Over the next month, we met several times for increasingly long periods, talking about NewsGator, RSS / blogs in general, and his vision for what he wanted to create as an entrepreneur. This corresponded with an increase in my use of blog / RSS technology – I began actively using NewsGator and NGOS as my only aggregator technology (dumping all the other ones I had been playing around with), set up a Typepad blog (which I transitioned to Movable Type after about a month), and incorporated the reading and writing of blogs into my work habits.
In mid-May, I’d reached the point where I had a clear view that I wanted to pursue an investment in NewsGator. Greg and I started discussing this seriously and I started working through my deal approval process within my partnership. By the end of May we had a deal and officially became partners last week..
We hope NewsGator is the first of several investments we make in the RSS / blog world. I encourage you to give me feedback on NewsGator, your view of the way the market segments break down, and – if you are involved in what you think is in an interesting company in this universe, my door (ok – my “email box“) is always open.
I’ve looked at thousands (tens of thousands?) presentations pitching new businesses since the mid 1990’s. The vast majority of them suck. Unfortunately, it’s not Powerpoint’s fault (no – it wouldn’t be better if Freelance has become the standard).
It’s the content creators fault. Edward Tufte – a master of The Visual Display of Quantitative Information, thinks Powerpoint is evil and corrupts absolutely. Blogs like Beyond Bullets help reduce the corruption, but given that I’m trying to get a very specific set of information in a short period of time (usually 30 – 60 minutes), more specificity about what I think is “good” is probably helpful.
Several years ago, Chris Wand (one of the guys that works with me at Mobius Venture Capital) put together a list of questions that a pitch to a VC should address. The world would be a better place if all entreprenuers could automagically incorporate this outline into their pitches – at least to me.
Following are the questions to address.
1) WHAT IS YOUR VISION?
– What is your big vision?
– What problem are you solving and for whom?
– Where do you want to be in the future?
2) WHAT IS YOUR MARKET OPPORTUNITY AND HOW BIG IS IT?
– How big is the market opportunity you are pursuing and how fast is it growing?
– How established (or nascent) is the market?
– Do you have a credible claim on being one of the top two or three players in the market?
3) DESCRIBE YOUR PRODUCT/SERVICE
– What is your product/service?
– How does it solve your customer’s problem?
– What is unique about your product/service?
4) WHO IS YOUR CUSTOMER?
– Who are your existing customers?
– Who is your target customer?
– What defines an “ideal” customer prospect?
– Who actually writes you the check?
– Use specific customer examples where possible.
5) WHAT IS YOUR VALUE PROPOSITION?
– What is your value proposition to the customer?
– What kind of ROI can your customer expect by using buying your product/service?
– What pain are you eliminating?
– Are you selling vitamins, aspirin or antibiotics? (I.e. a luxury, a nice-to-have, or a need-to-have)
6) HOW ARE YOU SELLING?
– What does the sales process look like and how long is the sales cycle?
– How will you reach the target customer? What does it cost to “acquire” a customer?
– What is your sales, marketing and distribution strategy?
– What is the current sales pipeline?
7) HOW DO YOU ACQUIRE CUSTOMERS?
– What is your cost to acquire a customer?
– How will this acquisition cost change over time and why?
– What is the lifetime value of a customer?
8) WHO IS YOUR MANAGEMENT TEAM?
– Who is the management team?
– What is their experience?
– What pieces are missing and what is the plan for filling them?
9) WHAT IS YOUR REVENUE MODEL?
– How do you make money?
– What is your revenue model?
– What is required to become profitable?
10) WHAT STAGE OF DEVELOPMENT ARE YOU AT?
– What is your stage of development? Technology/product? Team? Financial metrics/revenue?
– What has been the progress to date (make reality and future clear)?
– What are your future milestones?
11) WHAT ARE YOUR PLANS FOR FUND RAISING?
– What funds have already been raised?
– How much money are you raising and at what valuation?
– How will the money be spent?
– How long will it last and where will the company “be” on its milestones progress at that time?
– How much additional funding do you anticipate raising & when?
12) WHO IS YOUR COMPETITION?
– Who is your existing & likely competition?
– Who is adjacent to you (in the market) that could enter your market (and compete) or could be a co-opted partner?
– What are their strengths/weaknesses?
– Why are you different?
13) WHAT PARTNERSHIPS DO YOU HAVE?
– Who are your key distribution and technology partners (current & future)?
– How dependent are you on these partners?
14) HOW DO YOU FIT WITH THE PROSPECTIVE INVESTOR?
– How does this fit w/ the investor’s portfolio and expertise?
– What synergies, competition exist with the investor’s existing portfolio?
– What assumptions are key to the success of the business?
– What “gotchas” could change the business overnight? New technologies, new market entrants, change in standards or regulations?
– What are your company’s weak links?
Every now and then, a VC runs across an entrepreneur that has enormous vision, the mental agility to tune his idea to the market reality, and the chutzpah to pull it off. Randy Adams from AuctionDrop is one such guy.
I met Randy for the first time when he came in one Monday to our partners meeting to pitch us on the idea for AuctionDrop. At the time he had a average looking powerpoint presentation that pitched a big idea – a national chain of drop off centers for eBay. The premise was that it’s a pain in the ass for the average Joe to sell something on eBay, that people would pay to have someone else do all the work for them, and that eBay would embrace this as one of their continued growth constraints is “supply of goods”.
We bit on the premise and my partner Heidi Roizen led a seed investment. Heidi had known Randy for a long time and had worked with him several times in the past. “If anyone can figure out how to pull this off, it’ll be Randy,” said Heidi.
That was over a year ago. After a few months, AuctionDrop had several company-owned stores up and running in the bay area and was doing a meaningful number of auctions each week. Within a year of being founded, AuctionDrop had five stores and had run over 14,000 auctions. AuctionDrop had focused obsessively on pleasing its customers – which is one of the keys to success on eBay – and had a superb rating. This has enabled it to be the first (and currently only) eBay Drop Off Center to receive Titanium PowerSeller status.
This wasn’t nearly enough for Randy. We all agreed that this was working and wanted to go national. Randy wanted to go national. eBay wanted us to go national. We wanted to swing for the fence with this investment and go national. Randy had two approaches – build out a national footprint ourselves or create a franchise model. For a variety of reasons, neither of these were compelling – building a national footprint was incredibly expensive (“That’s a scary as shit amount of money required,” said one of my partners) and would take too much time; a franchise model seemed marginal from a financial perspective and lacking from a quality control perspective (which we continue to believe is key to success on eBay).
About four months ago, I got an email from Heidi saying “Randy is talking to UPS about doing a deal where all UPS stores will be AuctionDrop enabled. We’d be national overnight and it’d be a huge deal for UPS since they want to continue to expand services through the stores.” This is the essence of the kind of thinking a VC wants. Goal = be national. Overcome all barriers – figure it out – then do it.
A month later Randy had a signed deal with UPS. Today the deal was announced (although it was covered in depth last week after the WSJ broke the story on it – an article even showed up in The Denver Post, one of my local papers.).
AuctionDrop is now live with UPS. If you’ve never sold anything on eBay, grab last years digital camera (you know – the one you replaced with this years model), find the nearest UPS store, and give it a try.
Amy finished The Kite Runner the other day and immediately called me on my cell phone and said “I just read the best first novel that I’ve read so far this year.” NPR’s Susan Stamberg had a great piece on summer reading and first novels this morning and – as Amy has been working on her first novel – she reads a lot of them. So – when Amy says “this one is the best”, I immediately put it on the top of my reading pile.
Wow! The Kite Runner is stunning. It’s the story of two boys growing up in Kabul. The special relationship between them unfolds throughout the book in unexpected ways. They grow from young boys to adults with the backdrop of the final days of the Afghanistan monarchy (mid 1970s) to the evilness of the Taliban in the late 1990s. As the narrator – Amir – grows up, the culture and beauty of Afghanistan is slowly destroyed. The combination of culture, beauty, tragedy, fear, self loathing, and evilness are intertwined in a way that grabs you and won’t let you go. All the threads of the book magically come together in a powerful 100 page climax that thankfully, leaves you with hope.
I know very little about Afghanistan beyond what I learned (or think I learned) post 9/11. This story gave me a new feel for what Afghanistan used to be like and the level of devastation humans can wreak on each other and a society. The story is magnificently told and the writing is almost flawless for a first novel. I agree with Amy – The Kite Runner is the best first novel I’ve read so far this year.
When Raj Bhargava came up with the idea for Quova in 1999, one of his initial examples was that law enforcement would eventually focus on the Internet as a way to track bad guys that did bad things. Quova has had good success in the government marketplace and today announced that it was partnering with a company called Forensic Explorers to launch a new product called GeoLookup.
Forensic Explorers NetWitness product models what users do with computer networks. Quova’s GeoPoint software instantly determines the real-world geographic location of a web site visitor. The combination enables NetWitness to incorporate real-time geolocation into their product – immediately helping identify the geographic location of an Internet attack or suspect based on their IP address.
Both the Internet and the world is a big place. Hopefully products like GeoLookup help make it a safer place when used correctly.
I predict that the upcoming national election activity will put blogging on the map as a broad populist activity.
The Associated Press just ran an article titled Democrat Convention Credentials Bloggers. The Dems seem to be embracing blogging while the GOP is still trying to figure it out (per a statement from GOP spokesman Leonard Alcivar).
A year ago, I helped fund the startup of an organization in Colorado called the Rocky Mountain Progressive Network. RMPN’s mission “is to provide an independent, credible voice to counter the policies of the far right, hold our elected leadership accountable, and promote concrete solutions to improve the quality of life for the Rocky Mountain region.”. From the beginning, the organization has extensively used blogging as one of its central communication mechanisms. RMPN has found their use of blogging to be incredibly effective.
In the last major cycle, email played a big part. In the primaries, everyone was startled by the huge early fundraising success that Dean had using the Internet. I think blogging is going to be the central technology theme in this cycle.
Thank god Al Gore invented this Internet thing.
My wife Amy – who is a writer – decided she wanted to try blogging (both reading and writing). She’s intrigued by my fascination with blogging and thought it might be easier than trying to get her novel published, especially since she’d have to finish it first.
I decided that rather than set her up, I’d watch while she went up the learning curve. Amy’s comfortable with computers (she’s no luddite), but she lusts for the days of DOS and WordPerfect (“DOS was good enough – what was wrong with F7 to exit WordPerfect – Lotus Agenda was so cool!”). So – this would be an interesting experiment and would be insightful for anyone who is a non-techie and is thinking about creating a blog.
We sat down in front of her computer at 11:15am this morning. I suggested that she start by setting things up to be able to get RSS feeds and read blogs. I recommended NewsGator since she spends much of her time in Outlook doing email or in Word writing stuff.
From the NewsGator site, she went to download the trial software. NewsGator determined that she needed to update her Windows configuration (she’s still running Windows 2000 Professional), so we started that process. The magic Microsoft technology ground away for a while updating “critical” things and eventually rebooted her computer (boy – her computer is slow – Ross – defrag, more RAM!)
Back to the NewsGator site to download the trial (11:40am). Lots more downloading (.NET Framework, NewsGator, etc.). “So far this hasn’t been super-exciting,” says Amy. Finally, it’s done.
(11:50am) We open Outlook. The NewsGator trial page comes up and Amy digs in. She got about halfway through the NewsGator tutorial and decided that was enough and it was time to start using it.
“How do I find blogs about writing?” asks Amy. I suggested she try searching Google. “You won’t believe this, but I don’t think I’ve ever used Google.” Google gets another new user and Amy immediately finds a bunch of things that are potentially relevant. We surf around writingblog.org and writtenroad.com. “I have a hard enough time keeping up with the stuff I’m already reading,” ponders Amy.
She’s got it (12:25pm) – time to go create a blog.
I showed Amy some Typepad sites and some Blogger sites. She chooses Typepad because it both looked nicer and had a bunch of list options (she loves lists). “Will this mean that anyone can see my blog?” Amy asks with trepidation. After I respond yes, she says “well – then I won’t put anything interesting on my blog yet until I decide whether I want my thoughts to be public.”
We go to Typepad (12:40am) and set up a trial account (we chose Basic for $4.95 / month rather than Pro at $14.95/ month, even though Amy wanted “the best one”). There is a little agony over the name – she settles on anchorpoint.blogs.com (“It feels so permanent to have to choose this now.”).
The first obvious option is “Create a Weblog”. Amy decides to name the blog “Thoughts in Random Patterns“. Weblog folder stymies her for a while as she thinks of something better than “thoughts_in_random_patterns”. She settles on “amythoughts”.
It’s time to create a post – she titles it “First Thought, Best Thought”. She creates a category called “Writing”. “This is kind of fun”, says Amy (the first time so far this morning that she has used the happy Amy voice). Her first blog is a typical “hello world / testing” type of post. She hits publish (and the anticipation of the blog taking shape).
We “View Site”. “How do I change my colors and stuff?” I suggest she try “Design”. “I’m going to spend more time messing around with formatting than writing.” She settles on Classy. Amy notices the “Email me” link. “I don’t want people to email me – what if they send me horrible stuff?” We go to Design->Contents and delete the “Email me” link.
I suggest she gets rid of the “Powered by Typepad” link (“It’s a stupid link”). “But doesn’t it help them?” says Amy (ok – she’s a girl and I’m a boy).
We struggle with category archives a little. Eventually, she figures out that she needs to go to Configure->Archives. She also changes from Monthly to Weekly archives.
Amy starts playing with Typelists (“What’s a Typelist – I like lists”). Being a writer, she immediately starts playing around with book lists. (1:00pm). “Cool – let’s create a new list”. She now has “First Novels” and “Good Books” as lists.
We finally get to “Ordering” the page. She understands this immediately (having looked at a few blogs) and moves stuff around to put in it in a nice layout.
I get up to go to the bathroom and when I come back Amy is editing her first post to make it a little deeper than “Hi – here I am”.
“How do I put in the HTML stuff?” I describe why she’d want to create a link which she figures out quickly (she once helped write a book on HTML), gives it a shot and says “got it – that’s fantastic” – as she links to Jerry Colonna’s blog.
It’s 1:20pm. She’s madly typing away at the first blog entry – editing it, twirling her hair as she thinks – staring pensively at the monitor. I power up my Movable Type page and edit my “Blogs I Read” list to include Amy’s new blog.
At 1:25pm, she hits Save. After reading the blog after it’s published, she decides to make some changes and fiddles around a little more. By 1:30pm, she’s done.
Welcome, my love, to the world of blogging.