Month: September 2004
Kim Davis King, a partner at IDG Ventures, just started a blog. I’ve known Kim for a number of years – we are on the boards of Quova and Newmerix together and I’ve had a long standing relationship with her partner (and CEO of IDG) Pat Kenealy.
When I started my blog in May, there were only a handful of VC and CEO bloggers (at least that I was aware of.) It has been fun to watch the ranks expand on a weekly basis. Kim’s first post is about how IDG Ventures is at a crossroads as they are starting to think about raising their first fund with LPs beyond IDG. For anyone that’s interested in how the VC fundraising process works (which I often refer to as “payback for VCs”), this should be interesting.
I love toilets. One of my primary criterias for evaluating office space is to go to the mens room and check it out – it’s a great indicator of how the landlord thinks about his building (and his tenants.)
I have one of those amazing Toto Washlet C100’s and even Amy now reveres my throne.
I came across this Trick Anything Toilet on Engaget. Something new an exciting to lust after.
Plus – a good excuse to try the flickr / Movable Type integration and see if it actually works (if this looks like a “clean” post, it did – although there is no place to put my category (oops)).
Note: Some post-Post editing required within MT Edit Entry – the flickr post works, but it’s not perfect
Get ready – here we come.
NewsGator announced three new partnerships yesterday – each which enhances a different aspect of the RSS platform we are building out. Expect a steady stream of announcements over the next two months as the fruit from the first few months of our investment starts to ripen.
In my original post on why we invested in NewsGator, I alluded to the notion that I viewed NewsGator as an RSS platform, not simply a newsreader. While we are moving toward a clearly integrated platform view for all of our products, we’ve decided to release components along the way rather than wait for one “big bang release” (I’ve long been a proponent of both in-line and incremental release approaches, which fits really nicely with some of the Agile development approaches I’ve been exposed to since I invested in Rally Software.)
Each of the partnerships that we have announced exercises a different part of the platform we are building.
The FeedDemon partnership enables FeedDemon users to use our NewsGator Online Services (NGOS) to synchronize their subscription information across machines and devices (desktop, web, mobile, Media Center, Outlook, and other email clients.) Some people may think this is weird since conceivably NewsGator Outlook competes with FeedDemon as a reader. However, we don’t view it that way – we think that some folks want their reader integrated into Outlook (hence NewsGator Outlook), some people want a standalone client-based reader (hence FeedDemon) – so they’ll co-exist (since we have no plans today for a standalone client-based reader.) However, we (and FeedDeemon) agree that everyone potential wants their feeds on any of their machines and devices – we can help make that easy today.
The Moreover partnership brings a superb aggregated news feed service to NewsGator Online Services (NGOS) as well as to our desktop and online products. NGOS already had an awesome set of feeds – it just got a lot better.
The SixApart partnership enables tighter posting integration between NewsGator Outlook and Typepad / Movable Type. While this is relevant for all NewsGator Outlook customers (you can now post directly to Typepad / Movable Type from within Outlook), it is especially compelling for our enterprise customers – as both SixApart and NewsGator expand their enterprise customer base, this integration enables a much easier to manage experience for enterprise (read – large number of users within a corporation) deployments – both by the end-user and the IT organization.
More soon – and thanks to the folks at FeedDemon, Moreover, and SixApart for being great partners.
I’m really proud of my Uncle Charlie (Charlie Feld – EVP of Portfolio Management at EDS.) He’s one of the most extraordinary managers and leaders I’ve ever met and had the pleasure of working with (and investing in.) He’s got an incredibly challenging task in front of him as he works with Mike Jordan and the rest of the EDS leadership team to turn around an IT institution that’s had a rough few years and in Jordan’s words, “I knew this company, and I knew the founders. This was the Marine Corps,” says Jordan, a former Navy officer. “But when I came here it was the Girl Scouts.”
Charlie has an easily accessible column on Leadership in CIO Magazine. His most recent article concerns the three skills a leader needs to get the job done: (1) Partnerships Need Reinforcement, (2) Decisiveness Demands Confidence, and (3) To Get Focused, Get Together. Part of the magic of Charlie is that his management theory isn’t impenetrable academic stuff or theoretical philosophy based on qualitative and quantitative analysis of a large data set – it’s common sense in simple language and concepts based on deep experience. And – it all holds together. Other articles in this series include “How to Read the Signs” and “How to Build a Great Team.” Go read them – they are short and worth every minute.
As I grew up, I heard from my dad, my uncle, and their dad (who we called – simply – Jack) to tell it like it is. Jack used to say “I’m surrounded by typhoons (he lived in Florida – we never made it to “tycoon status” with him) – just spit it out and say it.” Charlie exemplifies this and provides a model that all CIOs, IT leaders, and managers can learn from.
Jeff Nolan from SAP Ventures has an excellent post titled Pick Your VC Carefully. This is a must read post for anyone that has either taken or is considering taking venture capital money.
I’ve co-invested with a wide range of VC’s in all of the categories Jeff describes. Some have been outstanding partners, some have been horrifying, and some have been in-between (shocking, I know.) However, in almost all cases, I couldn’t have predicted where they would have fallen out based on my shallow perception of their reputation prior to getting to know them. Of course, there’s nothing like working with someone to decide whether they are useful or not, but often that’s not an option – especially for a first time entrepreneur or someone who is developing a new entrepreneur to VC (or VC to VC relationship.)
Partnership is a two way street, so I always encourage entrepreneurs and potential co-investors to talk to anyone about anything concerning me. I try to be completely open book about my strengths, weaknesses, interests, and desires. Surprisingly, very few people go really deep in advance of developing a relationship. Yeah – there’s plenty of “due diligence” – but usually that’s a series of relatively useless reference checks from the “first list of people” that provide little to no insight (I’ve been on the receiving end of a number of these calls lately and it amazes me how much time “serious, experienced people” waste on simpleminded, “check the box” reference calls.) In contrast, I try my hardest to “force” entrepreneurs who are considering working with me to meet with entrepreneurs that have deep (and often – multiple company) experiences with me – a phone call doesn’t qualify – go build a relationship (and – your worst case is that you now have another entrepreneur in your network.)
I’ve learned that I don’t want to work with someone who I don’t have a real feeling for – both in good and bad situations. Fortunately, most everyone now has had some bad experiences (or else they checked out and farmed sheep in New Zealand from 2000 to 2002) so it’s a lot easier to get detailed information about potential business partners. I’ve learned that how someone explains their failure is much more enlightening than how they explain their success, and a real conversation (and potentially shared experiences – but please, not bowling) – rather than a series of “interview questions” – can provide real insight.
A prime example of this done correctly is an experience I had recently with Dave Sifry at Technorati. The company was one that was very interesting to me and in an area that I had both domain knowledge and another investment (NewsGator). My partner – Ryan McIntyre – was uniquely qualified to help this company due to his entrepreneurial experience as a co-founder of Excite and was extremely excited about an investment. I supported Ryan (and shared his excitement) and watched while Dave shook him down pretty hard – spending a lot of time evaluating Ryan, his potential contribution to Technorati, and his cultural and functional fit with the team. However, he didn’t stop there – I spent three hours on the phone on a Saturday talking to Dave in the middle of this process. An hour was “get to know you chit chat”, the balance of the time was a real discussion about where the market his business was in was going, his vision, what I thought about it, why I cared, how I could help, and how I / we thought about companies like his. I’m the back seat driver on this investment (it’s Ryan’s investment), but Dave still went after me hard as part of his evaluation as to whether or not he wanted Mobius as an investor in his company.
While all the usual cliches about people apply, I don’t think “knowing your potential partners before you do a deal with them” can ever be over-emphasized.
Ross Wehner – a new writer for the Denver Post – had a nice article in the paper this weekend titled Colorado high-tech industry shows some signs of revival. There’s been some perception in Colorado that we got hit harder than other states – primarily due to our emphasis on telecomm – although I think Colorado has experienced roughly the same tech dynamics (boom – bust – normal renewal) that other states have seen.
Ross quoted me a few times. When he called to fact check, he said “hey – I ran across this quote from 2000 about bowling – can I use it?” I told him I wish people would forget about it, but it was fair game since I’d said it and it had been printed. I explained to him that the quote was intended to emphasize that people are my highest order sort when I evaluate an investment (e.g. if I don’t like the people, forget it), but that it had been repeated so many times as to have lost its focus. The quote that’s getting repeated is:
Back in the go-go days of the dot-com boom, Feld used to evaluate the people he was funding by taking them bowling. “The reason I chose bowling is because it’s a stupidly absurd sport,” he remembers saying. “You don’t sweat, you wear funny shoes, you usually eat cheesy nachos and then (you) stick your hand in a heavy ball.”
The quote certainly qualified as pithy and memorable since it resulted in me being the recipient of a bowling ball with my name engraved on it, free passes to a variety of bowling events (with the entrepreneurs who wanted to pitch me), an occassional pre-meeting lunch of bad nachos, an a variety of other bowling related items (I have a really nice velour shirt with my name on it.) And NO, I’m not a particularly good bowler, nor do I like bowling very much.
However, I think it’s a bad quote because it doesn’t capture the essense of what I was trying to say, which was “When I evaluate a new investment, the highest level filter for me is the people. Once I get interested in someone, I like to do something unusual with them to get to know them better. Bowling is one of those things …” You get the picture.
I’m a month away from my next marathon (Duke City Marathon – Albuquerque, NM) so I thought I’d do an easy run today since I have a three hour run tomorrow.
I decided to head up Fowler Trail and check out the fire we had in Eldorado Springs last week. About 15 minutes into the run I hit a “Mtn Trail” sawhorse with a sign that said the trail was clue due to fire and trespassers would be subject to a fine or jail.
I’ve spent enough time the past few weeks at the Boulder Jail visiting my ex-running coach (yeah – it’s a little uncomfortable the first time you go to visit someone at a jail and the reception person asks you for your drivers license and social security number – at which point she types it into a computer and the only thought that can possible run through your mind is “why am I here – am I SURE I want to do this?”) So – I decided to head up the trail away from the fire thinking that I could at least explore a part of the trail I never run on. The trail eventually looped around and it occurred to me that I might be able to hook up with Fowler Trail on the other side of the burn area.
Suddenly, I was in the middle of the burn. I knew the smell since we’ve had a fire on our land and near us on Walker Ranch and I’d hiked the area extensively. It’s always amazing to be in the middle of a burn with some trees completely toast and others untouched. I kept going, thinking that if I was going to get arrested, it was kind of too late to turn around. Fortunately, I was paying attention because within a minute of entering the burn area, I heard a rattling noise. I looked toward the noise and saw a coiled rattlesnake 10 feet away (upon which I was closing fast.) I’m not sure if it’s possible to execute a 180 degree turn in mid-stride – but I came as close as humanly possible.
After my heart rate settled down, I realized that I had almost run right into a rattlesnake. I wound my way back down the trail, noticing every stray sound. I’ve run extensively in these mountains over the past two years and never seen a rattlesnake (although logically I figured they exist since one of the trails I run is called “Rattlesnake Gulch Trail.” I was daydreaming about snakes (what else would you expect me to do after almost stepping on one) when I came across another one! This one was stretched out on the road – I couldn’t tell whether it was alive or deal – but I didn’t stick around to see.
The fire must have flushed out these rattlesnakes from their normal home. When I got home, I decided it was time to cool off with a “Colorado Rattlesnake” (although I don’t drink, so I merely thought about it while I composed the following Rattlesnake Haiku.)
A rattlesnake sat
In front of me on my trail
I ran away fast
There was plenty of good chatter several years ago when salesforce.com started publicizing their foundation’s vision of being a “global leader in fully integrating business and the community by proving an inspiring and innovative service model for integrated philanthropy.” They committed to give 1% of their employees time, 1% of their equity, and 1% of their profits to the salesforce.com foundation.
While lots of companies have a philanthropic side to them, it’s unusual for early stage companies to have much focus on this. When we funded Rally Software (previously known as F4 Technologies), the founder Ryan Martens created a “1% Fund” with the Community Foundation Serving Boulder County modelled after what salesforce.com had done. Ryan did this proactively – we obviously supported him and are extremely proud of his initiative – but it was his idea.
This week, StillSecure announced that they are taking a similar step and donating 1% of revenue through 12/31/04 to the Lance Armstrong Foundation. Like Ryan, Raj Bhargava – StillSecure’s CEO – has a strong personal philanthropic philosophy. With this action, he’s integrating this philosophy and awareness into his company with an immediacy that is impressive. StillSecure is still a young company so it doesn’t have the infrastructure to create a foundation, but Raj and his team are laying the groundwork today for having StillSecure have a component of its business that is philanthropically aware and subsequently more tightly integrated into its community.
I applaud all of these efforts. While I think it’s up to each company and individual to determine how they want to participate in their community, I strongly support innovative efforts like the ones taken by salesforce.com, Rally Software, and StillSecure. My hat is off to everyone involved.
PeopleSoft made a brilliant move this week when they announced their strategic alliance with IBM. PeopleSoft is obviously under attack from Oracle. IBM has simultaneously been positioning themselves as the ultimate middleware player via their WebSphere products.
IBM’s software strategy is to be complementary to enterprise application software providers rather than competitive to them. I got an email from IBM’s VC group about the PeopleSoft deal that said “Importantly, today’s announcement remains consistent with the software strategy you have become accustomed to when working with IBM and exemplifies the type of relationship we strive to achieve with our business partners. We remain firmly committed to building best-in-class middleware and leading the industry in platform innovation. Because of our focus on building middleware in an open standards environment, we continue to build relationships with a broad range of partners in the industry. We will continue to openly seek new ways to collaborate with you to develop an ecosystem that delivers profitable returns for IBM and all of our business partners, as well as maximum return to clients for their IT investments. “
With one move, PeopleSoft says another “fuck you” to Oracle, IBM deeply reinforces their position in the enterprise application ecosystem, and the two companies stir up the enterprise application consolidation pot a little more.
I watch this carefully because we have a number of enterprise application investments. One of my infrastructure software companies – Newmerix – provides software to help optimize packaged application change and quality – PeopleSoft is their key partner and they just announced a deeper relationship with them. Our view is that the chaos and uncertainty in the enterprise app market – while bad for customers – is good for infrastructure software companies like Newmerix and – as the ultimately consolidation plays out – good for our companies that can get in the mix before the music stops.
One of my friends and co-board members (an entrepreneur that knows the big players in the enterprise app market well) dropped me a note post PeopleSoft / IBM announcement that said “I think this is a precursor to an acquisition announcement – IBM+PSFT. Then the real consolidation begins – Oracle + Siebel, MSFT + SAP.” Oracle, PeopleSoft, IBM, Microsoft, SAP, and Siebel certainly have an interesting chess game going.
NewsGator has a new CEO – JB Holston. Greg Reinacker and I are extremely excited to welcome JB to the team.
When Greg and I first started talking about Mobius investing in NewsGator, the topic of CEO came up early. I’d had a few meetings with Greg, thought he was awesome, but also felt that – given his (our) ambition for the company – it would be a misuse of his talents for him to be CEO. In the words of one of my partners, Greg is “a CTO from central casting” – fantastic vision, extremely articulate about the technology he’s into and its business impact, passionate about what he does, and an unbelievably capable software developer (one of those 100x everyone else guys).
Once I’d decided that I was serious about an investment, I broached the topic of CEO with Greg. I was direct – telling him that I wanted to invest – but wanted us to hire a CEO that could be his business partner. After describing the respective roles I felt Greg and the CEO should play, I encouraged Greg to talk to a number of other entrepreneurs – including some that are founding CTO’s and some that are founding CEO’s – to better understand the respective positions and responsibilities. In addition, I was clear that while the requirement of hiring a CEO was a condition of my investment (I was willing to make the investment in advance of identifying the person, but I wanted a commitment that we would hire a CEO), the choice of CEO was ultimately Greg’s (we’d both work on finding someone, but I gave him veto power.) After a few more conversations, Greg was willing to sign up for this and we moved forward with the investment.
One of the first “potential CEO’s” I introduced Greg to was JB Holston. I first met JB when I moved to Colorado in the mid-90’s – he was connected to the Softbank consellation through his roles as President of Ziff Davis International (owned by Softbank at the time) and his involvement in starting up Yahoo! Europe. We took an instant liking to each other and kept up over the years. JB took a role as CEO of a company called NetSage and over the next few years he pitched me a few times on investing (I turned it down each time, much to his chagrin). Eventually, I introduced him to one of my companies – Finali – as I thought there might be an interesting strategic fit between NetSage and Finali. There was and Finali ended up acquiring NetSage and incorporating the NetSage technology into its vision of a next generation call center. JB worked on the Finali executive team for a year and then left to write a book and enjoy some time with his family. A year and a half ago, he called me with an idea for a Colorado-based progressive advocacy organization. Within six months, he’d rallied funding from me, Jared Polis, and a number of other folks and created the Rocky Mountain Progressive Network. An integral part of RMPN was its blog – which was my first real exposure to the blogosphere. I also got to see JB in startup mode and was blown away.
Greg took an instant liking to JB. I reinforced that I wanted Greg to make sure he was completely comfortable with whoever we chose as CEO – and was equally clear with JB that it was ultimately Greg’s choice. The two of them came up with a two month “trial period” – where JB acted as a consultant to NewsGator. This gave them a chance to get to know each other in a work context, understand their respective styles and goals, and make sure they were in alignment. Obviously, this trial period was a success.
I’ve heard (and seen) numerous ridiculous VC / founder / CEO stories over the last decade. I learned an extremely hard lesson in my first venture funded deal (where I was the entrepreneur, not the VC). I was the founding angel investor of NetGenesis and chairman of the company. My close friend Raj Bhargava was CEO and co-founder (with three others – it started with five others, but that’s another story). Raj was 21 at the time and NetGenesis was his first company. We had great early success and were a hot young Internet company in the 1995-1996 time frame. When we went out to raise our first round of venture capital (after raising about $2m from angels, McAfee, and Tivoli), we got four term sheets – all very attractive for an early stage company. One of the firms (and VCs) did an incredible job of romancing Raj and convinced him that he’d mentor Raj and help him become a successful CEO post investment. We chose that firm to lead the financing. Two weeks after the financing closed, the VC in question asked me out to breakfast (I was still chairman post financing – and – at that moment – a pretty optimistic and happy chairman.) At breakfast – after a little chitchat (I didn’t know the VC very well – I assumed we were starting to build a relationship) – he came out and told me he wanted to replace Raj with “an experienced CEO”. He was clear that he wanted Raj to stay in the company (“there must be some logical role for him,”) but that this was too important an investment to have a young, inexperienced guy like Raj at the helm. This evolved in a predictable way – after the initial negative emotional response from me and Raj, we both accepted (Raj much faster and more gracefully than me) that the VC was calling the shots and we lined up behind helping the VC recruit an experienced CEO. Three months later an “experienced CEO” (who ultimately was fired by the board and replaced by another experienced CEO – who ended up making the company very successful) was hired and three months later Raj left the company (he had nothing to do) and I left the board (I couldn’t bear to interact with the VCs involved at that point and decided I had better things to do so I “took my marbles and went home.”)
The lesson – which as I write this still riles me up – is that it’s much more effective to be upfront about any issues prior to an investment. In my experience, about half of the VCs believe this (and it’s not firm specific). Now – I’ve fired plenty of CEO’s (and founders) after an investment – that’s a different issue. However, as a VC is deciding whether or not to make an investment, and an entrepreneur is deciding whether or not to take a VCs investment, it’s my strong belief that both sides should be direct, honest, and clear about their views and motivations as they will have to live with each other post deal. Unfortunately, in the desire to “sell the other side,” people often cut corners, aren’t upfront and direct about what they are thinking, or feel that they can finesse the situation after a deal is done. In the words of my 15 year old niece “gross, icky dude.”
I’m very happy with how Greg and I approached this issue. Interestingly, it strongly reinforced my desire to work with Greg as it increased my confidence that we could be clear and honest with each other about even the most sensitive issues. I got to see his thought process in action as he thought through my request. Hopefully, I built the same level of trust with him as a result of being completely open about what I thought we should do an why. JB and Greg now have their own relationship (independent of me) and it’s cool to watch them work together to build this company.
Welcome JB – today the the blogosphere has another extremely strong leader and Greg has a new partner.