Brad Feld

Month: April 2005

I miss my wife Amy – she’s been in Paris since mid-March learning French, enjoying the Parisian lifestyle (she’s was born in Paris in another life), and wandering around one of the best spring time cities in the world.  Oh – and she’s eating amazing meals – she put up a detailed post on two of them as well as her top 10 list – especially aimed at foodies and people who like to live vicariously. Yum.

Amy and I have been collecting contemporary art for a number of years.  If you’ve even been to our house, my office, or The Nature Conservancy in Boulder, you’ve seen some of our collection.  I attribute this vice to my mom the artist, who always had a great eye for art and surrounded me with it from a very early age.

We’re also big supporters of the Denver Art Museum and are hugely excited about the new Hamilton Building by Daniel Libeskind.  So excited that when we heard from a friend of a showing at The William Havu Gallery of several paintings by Rick Dula of the museum under construction, we bought one.


There was a great article on tax day about the show and Dula’s work as it pertains to the Hamilton Building in the Rocky Mountain News article titled On the edge of hyperrealism If you are in Denver and into (a) art, (b) the Hamilton Building, and (c) things that get you “culture points”, swing by The William Havu Gallery and check out the exhibit – tell Nick Ryan I sent you.

Mark Pincus has finally put up a blog (ok – he had one at Blogger – but it’s just his bio.)  Mark’s been a successful entrepreneur for a number of years.  Mark’s latest company – Tribe – is squarely in the middle of all the Web 2.0 stuff going on.  Mark has a history of successful companies – we were investors in two of them (Freeloader – bought by Individual in 1996 and SupportSoft – currently public.) 

Mark always has strong opinions, is super smart, tireless, and has a broad range of interests.  If you are into hearing directly from successful entrepreneurs, his blog is well worth following.

6.6 Billion Hours

Apr 14, 2005
Category Random

I heard on NPR today during their series this week on income taxes that according to IRS calculations, American’s spend 6.6 billion hours doing their taxes each year.  We apparently also waste 6.6 billion gallons of gas annually while waiting in traffic, there is a 6.6 billion pound gap in AIDS funding, mail volume dropped by 6.6 million pieces in the month following the terrorist attacks in 2001, and the Pak Mun Dam cost 6.6 billion Baht (actually 6.507 billion, but the budget was 6.6 billion.)

Back to the tax thing.  According to the CIA, the current US population is 293,027,571 (estimate as of July 2005).  That’s 20.48 hours per person.  Eek (especially since all the kids under 12 in the US don’t do taxes yet.)  Now, it takes Windows 60 seconds a day to boot.  Assume there are around 200 million PCs in the US and they get booted on average of twice a day (yeah – I know – I (re)boot my various computers at least five times a day – you can have real fun with Windows Math facts if you want.)  That’s 8.30 hours per person.

So – annually, each person in the US spends 20.48 hours on taxes and 8.30 hours rebooting their computer.  Since the average household is around 2.5 people, this is 51.2 hours on taxes and 20.75 hours rebooting their computer per household per year, or three days / household wasted per year. Yeah – I know these numbers are just directionally correct, but they are the right order of magnitude. 

I love numbers – and these are just scary ones.  Good luck on your taxes tomorrow.

I created some custom M&M’s for Amy and surprised her with them when I was in Paris a week ago.  While they aren’t cheap, they were worth it (you get to choose your own colors and two different messages of two lines by eight letters.)  In my continued effort to spread romance throughout the world, I highly recommend this as a gift from a chocolate lover to his/her significant other that is also a chocolate lover.

I’ve gotten plenty of humorous feedback on my post about abolishing the words traction, space, and thrilling from my vocabulary.  Someone asked why I was so mean to words – although this was someone who prefaces each major point he makes with “to tell you the truth” (no, please don’t tell me the truth – lie to me.)

The best note so far was from Ryan Sabga, the CEO of who donated a really cool scooter to the Boulder Philharmonic Fundraiser we had on Saturday.  He said:

Why not try and introduce a new word to the VC world? I have yet to hear someone mentioned how “gruntled” they are, as in, “great work negotiating that contract, Saunders. I’m positively gruntled.” Sure, I hear “disgruntled” just about every day but what about it’s shorter, stockier antonym? That guy gets ignored more than the high school quarterback at a Back Street Boys back stage party. I think that perhaps you have a higher purpose, and that’s to introduce the world to your buddy “gruntled.”

I’m definitely gruntled by this – thanks Ryan!

Today is my periodic Fred Wilson blog love fest.  Fred’s characterization of the Internet Axis of Evil, which currently consists of Phishing, Click Fraud, DNS Hacking, Comment Spam/Link Spam, Adware/Spyware, Spam, and Viruses is awesome.  In sympathy with Fred and in an effort to help reign down terror on these evil fuckers, I’ve created a new category in my blog called Internet Axis of Evil.

As I a went through my daily early morning ritual of feeding the dogs, drinking some tea, reading various papers on line, and deleting trackback spam (who really responds to “poor credit loans” and “military cash loans”) I came across an article in the Denver Post on Scott Richter, the CEO of the spam firm  Scott’s making a ton of money spamming people ($19.6m in revenue in 2004; Scott took down $1.2m last year), but the company filed for bankruptcy to help protect itself against a variety of law suits, including one from Microsoft / Hotmail.  C’mon guys, the company is “absolutely profitable” (Scott’s dad and lawyer Steven’s words), but y’all go bankrupt to protect against lawsuits – could it be that you are actually concerned that the lawsuits are legit?

Fortunately, there are plenty of good guys fighting the bad guys.  Today, the Email Service Provider Coalition added a number of members, including our company Return Path.  ESPC also expanded their steering committee to including Return Path.  ESPC exists because the folks involve “recognize the need for strong technological anti-spam solutions that ensure the delivery of legitimate email.” 

While I’m sure this post will generate lots of comment spam, I’m trilled (shit, someone’s going to throw something at me today) that there are plenty of good guys in the world fighting the Internet Axis of Evil.

Fred – I’ll see you and raise you two. 

Fred Wilson had a delightful post on the word “traction” today as part of his VC Cliche of the Week series.  In it, Fred suggests that he’d like to hear the word traction used less in our business.  I’ll go a step further.  I’ll never mention the word traction again.  It has become so overused as to mean nothing (since it’s used to refer to everything and is a placeholder for “we are making progress, whatever the hell progress is.”)

There are two other words that I am abolishing from my business vocabulary effectively immediately.  If you catch me using any of them, please call me on it (feel free to throw something at me, spit on me, or just break out laughing.)

The first is “space.”  Like traction, the word space is used constantly by VCs and entrepreneurs.  This space, that space, we play in this space, we’re going after that space, we’re looking for white space (why doesn’t anyone ever look for purple space?)  Humans used to use words / phrases like market, business, customer segment, product opportunity (and plenty that are actually specific).  Die you generic words.  I’m banishing space to … space.

“Thrilling” is my last annoying as shit word of the day.  I can’t read a press release anymore (including a bunch from my own companies) without seeing how thrilled someone is about something.  Matt Blumberg sent me the draft of the Return Path / IronPort / Bonded Sender press release and voila – there is was – Matt was thrilled.  Matt’s a smart dude so when I told him he should limit being thrilled to his time with his wife Mariquita he got it and appropriately modified the press release.

My grandpa Jack used to have a blast massacring words to make his point.  He was never “thrilled” – he was “trilled”, and my uncle Charlie and I were “typhoons” instead of “tycoons.”  I’ll take it step further – I’ll simply delete them from my vocabulary.

As I watched 24 last night, I kept thinking to myself “Why the fuck does Jack have his cell phone ringer on – hasn’t he ever heard of vibrate?” immediately after his cell phone rang but right before he got shot at because the bad guys now knew where he was. I had a parallel thought this morning – “Why do we make all this term sheet stuff so long, verbose, and tedious.” The answer – word processers. If we had to type all this crap on a typewriter (or write it out by hand) it’d be a lot shorter. In both cases, technology is working against us. But – then again, we wouldn’t have blogs (and I can hear a few of you (and I know who you are) saying “and that would be a bad thing because?”)

While there is a lot to negotiate in a term sheet (as you can see from the series of posts on term sheets that Jason and I have written), a term sheet is simply a step on the way to an actual deal. Term sheets are often either non-binding (or mostly non-binding), and most investors will load them up with conditions precedent to financing. Entrepreneurs glance over these – usually because they are in the back sections of the term sheet and are typically pretty innocuous, but they occasionally have additional “back door outs” for the investor that the entrepreneur should watch out for, if only to better understand the current mindset of the investor proposing the investment.

A typical conditions precedent to financing clause looks as follows:

Conditions Precedent to Financing: Except for the provisions contained herein entitled “Legal Fees and Expenses”, “No Shop Agreement”, and “Governing Law” which are explicitly agreed by the Investors and the Company to be binding upon execution of this term sheet, this summary of terms is not intended as a legally binding commitment by the Investors, and any obligation on the part of the Investors is subject to the following conditions precedent: 1. Completion of legal documentation satisfactory to the prospective Investors; 2. Satisfactory completion of due diligence by the prospective Investors; 3. Delivery of a customary management rights letter to Investors; and 4. Submission of detailed budget for the following twelve months, acceptable to Investors.”

Notice that the investor will try to make a few things binding – specifically (a) that his legal fees get paid whether or not a deal happens, (b) that the company can’t shop the deal once the term sheet is signed, and (c) that the governing law be set to a specific domicile – while explicitly stating “there are a bunch things that still have to happen before this deal is done and I can back out for any reason.”

There are a few conditions to watch out for since they usually signal something non-obvious on the part of the investor. They are:

1. “Approval by Investors’ partnerships” – this is super secret VC code for “this deal has not been approved by the investors who issued this term sheet. Therefore, even if you love the terms of the deal, you still may not have a deal.

2. “Rights offering to be completed by Company” – this indicates that the investors want the company to offer all previous investors in the company the ability to participate in the currently contemplated financing. This is not necessarily a bad thing – in fact in most cases this serves to protect all parties from liability – but does add time and expense to the deal.

3. “Employment Agreements signed by founders as acceptable to investors” – beware what the full terms are before signing the agreement. As an entrepreneur, when faced with this, it’s probably wise to understand (and negotiate) the form of employment agreement early in the process. While you’ll want to try to do this before you sign a term sheet and accept a no-shop, most VCs will wave you off and say “don’t worry about it – we’ll come up with something that works for everyone.”  Our suggestion – at the minimum, make sure you understand the key terms (such as compensation and what happens on termination).

There are plenty of other wacky conditionals – if you can dream it, it has probably been done. Just make sure to look carefully at this paragraph and remember that just because you’ve signed a term sheet, you don’t have a deal.

Fred Wilson calls it one of the members of the Internet Axis of Evil.  You know it as spam.  Several of our companies (Return Path and Postini) are hard at work every day eliminating it from our inboxes.

Matt Blumberg, the CEO of Return Path made a pre-announcement on his blog today about Return Path’s acquisition of the Bonded Sender Program from IronPort.  While this is huge weapon in Return Path’s arsenal, it’s also another big step forward in the war on spam.  Rather than repeat what Matt said, I’ll simply refer you to his excellent post on why this matters and how it works.