Month: October 2004
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NewsGator Online includes subscription level synchronization with NewsGator Outlook Edition, allowing you to manage one set of feeds across multiple machines (I have four different computers, plus the web version with synchronized feeds.) As a result, I don’t have to worry about making sure my feeds are the same on all machines – whenever I change something on one machine (in Outlook or on the web), it synchronizes to the other machines.
There are lots of other cool features – along with a bunch of UI improvements – and more premium content relationships.
Check it out and tell us what you think.
I screwed up.
I was involved in a merger of two companies in Q4 last year. Post merger, I let both companies slip on completing their audits. I figured we’d do the 2003 combined audit after audit season. In an attempt to save money, the company let it slide into the fall. This isn’t a governance issue – I’m comfortable that both companies are clean – it’s a timing issue – we figured we’d get it done later in the year to save money and just hadn’t gotten around to it.
Recently, this company was approached to be acquired. Due to their concern about SOX, the acquirer is insisting on a 2003 audit (not a surprise). However, their accountants also want final 2002 independent audits through close and 2002 combined stub period audit. A little surprising, but not unreasonable given the size of the transaction.
Independent of cost, we have a time delay as a result of the audits. In addition to the complexity of the various audits required, my company’s previous Big 4 auditor decided that they didn’t have time to continuing auditing this company. There were no technical or legal issues – I’m experiencing this throughout my portfolio – the Big 4 auditors are so busy with public / SOX work that they are billing ridiculous amounts for that they no longer care about VC-funded private company work (or the relationships with the venture firms that they worked so hard to develop between 1997 and 2002.) Our new auditors – one of the next 50 firms – is doing a great job – but they had to start from scratch and come up to speed on the company. The end result is that we’ll probably lose a month in the deal process due to the audit work.
So – the simple lesson if you are a venture funded company is to get your audits done by mid-year every year, no matter what. Since you’ll likely need previous year audit for a Q3 or Q4 transaction, you’re better off getting it done so it doesn’t hang you up in a transaction. Note that you don’t need a previous year audit to close a Q1 transaction and occassionally (but not always) don’t need one to close a Q2 transaction.
So – eat your wheaties. Do your audits early.
According to my mom, this is a “brag”, not a “blog”.
Deloitte & Touche has an annual “Colorado Technology Fast 50” ranking. They rank the top 50 technology companies in Colorado based on their revenue growth over the previous five years. This year four Mobius-related companies made the list. I’m obviously proud of all of them.
#2 ServiceMagic: 5500% growth. IAC acquired ServiceMagic in July. We invested in 1999 – ServiceMagic had “a little” revenue then. ServiceMagic was every VCs dream – they defined “hockey stick growth” – once they found it (in 2002) there was no stopping them.
#4 Raindance Communications: 3044% growth. We invested in Raindance when it was three guys, an idea, and no revenue. Raindance went public in 2000 and survived the dotcom implosion to be the solid, successful company it is today. In addition to making some money, I got two incredible friends – Paul Berberian and Jim Lejeal – out of the deal.
#14 Level 3 Communications: 682%. We didn’t actually have much to do with Level 3, but they acquired one of our companies (Corporate Software) in 2002. Corporate Software – and its subsequent acquisition of Software Spectrum – contributed significantly to Level 3’s growth, so I’ll be gratuitous and list this one also. Fortunately, after Howard Diamond – the CEO of Corporate Software – retired – he got bored enough that I was able to entice (beg, plead, guilt) him into becoming chairman of ePartners.
#33 Gold Systems: 107%. I joined the Gold Systems board in 1996 shortly after I moved to Colorado. Mobius invested in 2000. The company has made steady progress through a difficult environment. After two years of flat revenue, they’ve started to grow again (profitably!) – Terry Gold and his team have done a great job hanging in there and building a real business.
While revenue growth doesn’t define success, it’s a key indicator for a venture-backed company.
Amy and I spent the weekend in New Hampshire. We stayed at a Stepping Stones – a bed and breakfast we used to stay at regularly when we lived in Boston – and hung out, read, slept, and looked at leaves.
Once we crossed the New Hampshire border (from Boston – where we spent the night at XV Beacon – one of my favorite hotels in the world), we saw plenty of pumkins, corn, and leaves (yellow, orange, and red). However, my Sidekick immediately stopped working since apparently New Hampshire doesn’t have any cell phone towers (according to the locals.) Our B&B didn’t have high speed Internet either, so I decided to punt on email for the long weekend and read instead.
I had started Another Bullshit Night in Suck City: A Memoir so I gobbled that one down first. It was intense – it reminded me of a book I read this summer called Learning Joy from Dogs Without Collars : A Memoir. Both are books about homelessness, written by children (Joy: daughter; Bullshit: son) of chronically homeless parents (Joy: mother; Bullshit: father). Bullshit was much more abrassive – in addition to being homeless, the father was portrayed as a generally unpleasant human (compared to the mother in Joy – she had her problems, but at least she seemed to try.) Both authors struggled to figure out their lives and these books were clearly a reflection on their experiences while simultaneously being a catharsis of sorts for them. Bullshit knocked me out – the author Nick Flynn is an awesome writer and – when I was done – I needed something very different.
Rich Karlgaard’s Life 2.0 : How People Across America Are Transforming Their Lives by Finding the Where of Their Happiness was next. I don’t know Rich, but I fondly read his Forbes column (he’s the publisher and rates a nice column at the front.) The first section of Life 2.0 is delightful – Rich pilots his own small plane across America (in Richard Bach-like fashion) and meets with entrepreneurs and executives who are reshaping their lives by fleeing the big coastal cities (San Francisco, Boston, NY) to find a more rewarding life in small town America. I identified with many of these stories – which are fun and inspiring – since I left Boston ten (yes 10) years ago to move to Boulder. While I still spend plenty of time on the coasts, I try to live my life in Boulder and Homer, Alaska – two places that definitely fit in the small town category. In the second section of the book, Rich tries to – in his words – “pull together the meaning of these individual portraits of people and places and to examine the long-term economic, technological, and spiritual implications of the move to a saner style of life.” He does an ok (not great) job here – it feels more like the obligatory “I just told some stories – now – here are my conclusions” section. The third section is a fun list of 150 “cheap cities” which I think is a misnomer – they are 150 “small cities worth paying attention to and knowing about” – along with Rich’s commentary. Overall, a very worthwhile read if you are stuck on either coast and wondering why you’re (a) struggling to make ends meet and (b) frustrated with big city life. Of course, if you love big city life, don’t bother with this book.
Next – Term Sheets & Valuations – A Line by Line Look at the Intricacies of Venture Capital Term Sheets & Valuations. Yeah – I know – pretty dry. I grabbed this book hoping I could recommend it to you. I can’t – I was really disappointed. While it’s an ok primer for anyone faced with a VC term sheet, it’s very shallow, somewhat disorganized, and lacking in clear anecdotes and examples. I was intrigued by the publisher – Aspatore – which has a whole series of VC books – and claims that this one was the best selling venture capital book of 2003. Egads.
I finished with Breaking Ground: Adventures in Life and Architecture. Amy and I had the honor of having dinner with Daniel Libeskind on Wednesday night with a small group of folks from the Denver Art Museum (I’m on the technology advisory board for the museum and we are long time supporters.) Daniel is an amazing person – if you don’t know of him – he’s the master plan architecture for the World Trade Center Reconstruction Site. He’s also the architect for the extension to the Denver Art Museum – which will be his first constructed building in the United States. Amy and I love architecture – we’ve done a few designs with Coleman Coker (the “eldorado canyon” project is one of them) – and jumped at the opportunity to have dinner with Daniel. Amy fell in love with him (she got to sit next to him in the seat of honor) – I had to remind her on our way home that he was already married. His book exceeded my expectations – it’s beautifully written, tells an incredible story, and blends his philosophy, vision, life history, and architectural journey in a very accessible way.
Now – back to work.
I gave a lecture on “Profitable Exiting” at the 30th Annual Venture Capital Institute in Atlanta on Tuesday. This is the major professional education event for the venture capital industry, co-sponsored by the National Venture Capital Association (NVCA) and the National Association of Small Business Investment Companies (NASBIC).
I had never been to a VCI event and didn’t really know what to expect. I was pleasantly surprised – I sat through several high quality lectures from very credible folks – aimed at an audience of 180 or so VCs. Most of the attendees were younger and/or relatively new to the venture business, although there were a number of corporate VCs in the audience also. The VCI event was extremely well organized and the content was substantial – covering a wide range of issues faced by VC firms and entrepreneurs. I was pleased to be involved in what I thought was successful event that definitely helps educate new VCs on the business they are in.
The speaker before me was Lewis Jaffe who is known for rescuing PictureTel as it was going down the tubes. Lewis gave a fun speech about how to turn around a company and used what he did at PictureTel as an extensive example to support his approach. In addition to being content-rich, Lewis’ speech was clever and engaging as he presented much of his management theory in simple, accessible, and entertaining ways.
One of his slides started out as a question. “If there are five frogs on a log and four decide to jump off, how many frogs remain on the log.” Of course – the instinctive answer of “one” is wrong. Five frogs actually remain on the log, as deciding to jump and jumping are different things.
In an entrepreneurial context, intentionality is important, but results are what really matter. Lewis reinforced this in a memorable way – as the point he was making is “just because you decide, doesn’t mean you do.” He stressed that one of the main problems he sees early in his tenure as CEO of a company that is failing is paralysis – everyone has ideas about what to do, but no one is willing or able to do them.
Remember – just because a frog decides to jump, doesn’t mean he will. Be careful not to confuse intentionality with results in your business (or your life.)
Several months ago, I posted an article that I’d written for the Kauffman Foundation’s Entreworld web site called “Financial Fitness for Entrepreneurs.” It discussed some of the basic financial issues entrepreneurs starting a company should pay attention to.
ChangeThis just republished the article as one of their manifestos. It’s in a very friendly format – if you liked it, please feel free to circulate it. If you haven’t read it, take a look. And – if you have any comments about topics you think I missed, feel free to post them here or email them to me.
Ed Roberto – CEO of Newmerix – has started a blog. He joins Matt Blumberg (Return Path), Jim Lejeal (Oxlo), and JB Holston (NewsGator) as CEO bloggers in my current portfolio. I’ve added Ed to the CEOBlogList – which is a fun evolving list of CEO bloggers.
I’ve known and worked with Ed since 1998. I fondly recall the first time we met – at Dot’s Diner on the Hill in Boulder. We got together to talk about starting a company to buy up ISPs throughout Asia. Ed ended up co-founding this company – called Asia Online – which we funded with a host of other VCs. Ed was the M&A guy – we bought about 25 companies in Australia, New Zealand, Hong Kong, China, and India – putting together a $50m (going to $100m) south Asia-based ISP (we were the biggest ISP in Australia for a while.) CSFB was in the process of taking the company public in the summer of 2000 when the bottom finally completely fell out of the IPO market.
The failure of the IPO was the first of what became a series of body blows to the company. While we still had plenty of cash at the time the company was trying to go public, like many other telecom companies, we were burning a prodigious amount of it each month. After an emergency board meeting in Hong Kong (it’s never too much fun to fly from Colorado to Hong Kong and back in three days, but hey, it was 2000) we decided to replace the existing CEO with Ed and aggressively move to stop doing acquisitions, integrate the business, and get cash flow positive as quickly as we could.
Ed did an amazing job of working with the hand he was dealt. Remember the time frame – 2000 to 2001. Within six months, Ed cut the burn rate from $6m / month to slightly over $1m / month, reduced headcount by 50%, but kept gross margin contribution steady. He consolidated his senior management team, cutting out half the folks and adding a few new key people – who dove in aggressively to try to turn around a business that was clearly spiraling toward disaster.
In the summer of 2001, I spent a week with Ed going to all the company locations to formulate a plan as to what to do (put additional money into the company, or sell it for whatever we could get.) The entire telecom sector was in the process of disintigrating and it was clear to us that it was unlikely that we would be able to get much for the company if we sold it, especially given all the contingent liabilities we had taken on as a growing telecom company. To Ed’s credit – he called the ball. At dinner in New Zealand at the end of the week, he looked at me and said “let’s sell this for whatever we can get – I can’t in good conscious ask the investors for more money because I don’t think we can get a return on the new dollars invested.” So – he started a process of selling and liquidating the company – which was incredibly complex due to the disparate geographies we had offices in. Ed has been able to return some of the invested capital – albeit a modest amount – to the last round investors – which is a huge achievement given that many of the telecom companies that blew up in the 2000 – 2001 time frame simply went splat.
As a result of how Ed handled this experience, he earned my lifelong trust and respect. While we’ve created a strong “business intimacy” (my true measure of a deep relationship in a business context), I also adore Ed as a human. There are a few folks on this planet – besides my wife Amy, my parents, and my brother – that I would do anything for – Ed is one of them.
Today, Ed’s doing a spectacular job of leading Newmerix. Not surprisingly, he’s incorporated many lessons from the Asia Online failure and he’s building a company methodically and systematically. Cash is precious this time around and he and his partner Niel are obsessed with building a real company, rather than just slapping a bunch of pieces together and hoping it all works out.
Ed’s a deep thinker, strong personality, feerless human, and loyal friend. I expect his insights and thoughts to be stimulating and worthwhile. Have fun!
Several months ago I had a massive spyware problem. Today, I have none.
Before switching to Firefox, I went through the cycle of hell of trying the various anti-spyware programs while continuing to use IE. None of them worked – in most cases I’d get rid of “some” of the spyware on my computer, but within 24 hours it’d be back. The daily scans were time consuming (and often ridiculous – all my GOOD cookies would get deleted, IE settings would get changed, random weird things that never happened before would start happening, and I was constantly downloading “updates” that – in many cases – seemed worse than their predecessor. I played with the three most popular – Adaware, Pest Patrol, and Spy Sweeper – with no real satisfaction. I kept coming back to Spybot as the only one that consistently cleaned everything up, although it just got bad again within a day or two.
Ross (my IT guy) told me to try Firefox. I did. Problem solved. Within a week I was totally addicted to Firefox and my spyware problems were completely gone.
Last week, Bill Gates was quoted as saying “This malware thing is so bad,” he said in a speech at the Computer History Museum here. “Now that’s the one that has us really needing to jump in.” “I have had malware, (adware), that crap” on some home machines, he said.
After seeing this quote, I decided to run Spybot on my home machine and see what was on there. I hadn’t done this in a month. The result – I had three “bad cookies” – all benign. Obviously, Gates quote (and revelation) is hugely ironic since the vast majority of spyware is infecting machines due to security holes (and features) of Internet Explorer. I imagine that some of the spyware nasties will target Firefox as it gets more popular (there have already been a few mentions about Firefox security holes that got plugged quickly), but so far my personal experience has been remarkably positive.
I’ve used IE since version 3. I’m a loyal and happy Microsoft customer and partner (many of my companies are partners with Microsoft and I’ve always been a huge Microsoft fan.) But – I’m done with IE for now. And – thankfully – I’m done with the spyware circle of hell – including having to deal with all the anti-spyware programs on the market that don’t really work.