David Cowan – a partner at Bessemer Venture Partners – has started a blog called Who Has Time For This?

Frighteningly, David and I have known each other for almost 20 years.  We met in college when David was at Harvard and I was at MIT.  He had written a piece of software called DataRoute for his dad’s law firm and I had started a software consulting company called Feld Technologies (first client – a fraternity brother step-father’s dental practice in California; another early client – my dad’s medical practice – see a trend – thanks Dads!)  I think I placed a stupid advertisement for our consulting services in some magazine (an early “Boston Tech Journal” type of thing) and got one phone call – David.  We got together and eventually cut a deal (which included a legal document – I think drafted by David’s dad – which I think I read carefully about 30 times) for Feld Technologies to resell and support the DataRoute product and pay David a royalty.  I think we sold about 10 copies at $500 apiece (although I fondly remember trying hard – it even found its way into an article in Legal Information Alert).  Our motto for the product was “Today is the day to route with DataRoute!”  Eek.

David’s had way more success as a VC than we had with DataRoute, having made a long series of successful investments since he joined Bessemer in 1992 including Verisign, Ciena, Flycast, Keynote, NetGenesis, ON Technology, PSINet, Register.com, and Trigo.  We’ve currently got one active deal with Bessemer (Postini) and hope to have another one soon.

David’s extremely smart (even though he went to Harvard), an excellent writer (ok, he went to Harvard), and never shy about speaking his mind – his blog promises to be a good one.  Welcome David!

I had good intentions earlier this week to try to crank out the balance of the term sheet series, but it turned into a busy week.  Since I’m still muddling through the set of terms that either don’t matter much and/or are hard to negotiate away (e.g. chose you battles wisely), I didn’t expect anyone would be waiting on the edge of their seats for these.  However, for completeness, it’s worth going through the stuff that shows up on the last few pages of a standard VC term sheet.  Jason and I aren’t quite done, but with this post, we are one (tedious) step closer.

Almost every term sheet we’ve ever seen has a “Restrictions on Sales” clause in it that looks something like:

“Restrictions on Sales:  The Company’s Bylaws shall contain a right of first refusal on all transfers of Common Stock, subject to normal exceptions. If the Company elects not to exercise its right, the Company shall assign its right to the Investors.”

Management / founders rarely argue against this as it helps control the shareholder base of the company which usually benefits all the existing shareholders (except possibly the one who wants to bail out of their private stock.)  However, we’ve found that the lawyers will often spend time arguing how to implement this particular clause.  Some lawyers feel that putting this provision in the bylaws is the wrong way to go and prefer to include such a provision in each of the company’s option agreements, plans and stock sales.  Personally, we find it much easier to include in the bylaws. 

Next up is the ubiquitous proprietary information and inventions agreement clause. 

“Proprietary Information and Inventions Agreement:  Each current and former officer, employee and consultant of the Company shall enter into an acceptable proprietary information and inventions agreement.”

This paragraph benefits both the company and investors and is simply a mechanism that investors use to get the company to  legally stand behind the representation that it owns its intellectual property.  Many pre-Series A companies have issues surrounding this, especially if the company hasn’t had great legal representation prior to its first venture round.  We’ve also run into plenty of situations (including several of ours – oops!) where companies are loose about this between financings and – while a financing is a good time to clean this up – it’s often annoying to previously hired employees who are now told “hey – you need to sign this since we need it for the venture financing.”  It’s even more important in the sale of a company, as the buyer will always insist on clear ownership of the IP.  Our best advice here is that companies should build these agreements into their hiring process from the very beginning (with the advice from a good law firm) so that there are never any issues around this, as VCs will always insist on it.

Finally, a co-sale agreement is pretty standard fare as well.

“Co-Sale Agreement:  The shares of the Company’s securities held by the Founders shall be made subject to a co-sale agreement (with certain reasonable exceptions) with the Investors such that the Founders may not sell, transfer or exchange their stock unless each Investor has an opportunity to participate in the sale on a pro-rata basis.  This right of co-sale shall not apply to and shall terminate upon a Qualified IPO.”

If you are a founder, you are probably asking why we did not include the co-sale section in the “really matter section.”  The chance of keeping this provision out of a financing is close to zero, so we don’t think it’s worth the battle to fight it.  Notice that this only matters while the company is private – if the company goes public, this clause no longer applies.

EDS recently started a blog called “EDS’ Next Big Thing Blog.”  The first post – Mania and the Next Big Thing – sets the tone for the blog.  Written by EDS Fellows, the blog is “dedicated to the exploration of these and other questions as we pursue the identification, investigation, analysis and understanding of the “things” that will manifest themselves as the next big thing in information technology.”  It’s a real blog – comments are open – and some of them are pretty interesting and relevant to the articles.  So far they are writing about three posts a week – most of them in essay format – on a variety of corporate IT thoughts and issues.

Alaska picture of the day.

Dave Winer connected the dots yesterday that Philip Greenspun was up in Homer, AK (as am I).  I didn’t know Philip, but took a quick look at his site, vaguely remembered ArsDigita, made the MIT connection, and dropped him an email.

In perusing Philip’s blog, I noticed that he had flown up here in his Cirrus SR20.  My close friend Paul Berberian flew up here last summer (pretty Alaska pictures here) in his Cirrus SR22 and I dropped Paul an email about Phil.  He responded immediately that he was a silent Philip Greenspun blog lurker / fan – I connected Philip and Paul – I imagine they’ll have some bizarre email exchange about airplanes. 

I surfed around a little more and noticed that Philip had written a book called Software Engineering for Internet Applications with Eve Andersson and Andrew Grumet.  I spent a few hours with Andrew a several months ago at MIT talking about MIT Sloan’s implementation of .LRN using OpenACS (ah – there’s the linkage to ArsDigita).  I dropped Andrew an email and he quickly responded and pointed me to this cool song from Ellis Paul about Homer and Alice’s Champagne Palace (which I’d heard before – I think Kevin Menzie had sent it to me – but smiled when I listened to it again.)

Philip responded a few hours later by email and Amy and I took him out to dinner at The Homestead (and no – it’s not in the middle of Beluga Lake even though Google Maps thinks it is).  We had a great time – who needs social networking when you have blogs and email.

Dave – thanks for writing a sentence about us yesterday – look at all the good karmic energy that was unleashed on the world!

If you like to read, think, or even breathe, you must read Extremely Loud & Incredibly Close.  After Amy finished it the other night, she told me it the was best book she had read this year (and she reads more than I do.)  I think she was being understated. 

I’m sitting here looking at the ocean and the mountains in the late evening Alaska dusk.  When I think about 9/11, or the recent London Bombings, or any number of other tragedies that humans perpetrate on each other, I am grateful to be alive and relatively sane.  You’ll laugh, you’ll cry, and, most importantly – you’ll feel – as you read this book.

The author, Jonathan Safran Foer, is a literary genius.  And – he’s young – so hopefully he’s got plenty more where this came from.  Wow.  Between Foer, Rawicz, and Frey, I’ve had an awesome summer of reading so far.

I manage feeds (using FeedBurner) for three blogs – Feld Thoughts (my stuff), Mobius Venture Capital (headlines from our companies), and Thoughts in Random Patterns (the blog of the most incredible woman in the world – she told me not to be so smarmy, but I can’t help myself.)

I’ve wanted to put the Mobius headlines on my site for a while, but I didn’t feel like figuring out how to deal with it.  Fortunately, FeedBurner did it for me – today they announced BuzzBoost – yafs (“yet another free service”) which – in addition to being super cool – shows off how easy it is to put together stuff now that their Feed Awareness API is out.

If you click through to Feld Thoughts and page down once, you’ll see a sidebar called “Mobius News” with five headlines.  Click through any of them and you are at the Mobius Venture Capital Headlines feed.  Subscribe to the feed if you desire.  Click on the title at the top and you are at the Mobius Venture Capital site.  Oh – and if you click on the “Mobius News” title – you’ll go straight through to the full headlines list (not just the top 5).

One simple line of HTML that FeedBurner automagically generates for me. All the content is live – as the Mobius headlines change, so will the list on my blog. I’ve got control over a bunch of variables if I want (and – I imagine after this gets used some, there will be more) but I kept it simple and just did everything within FeedBurner.

Fred Wilson had some content from his blog ripped off today.  Michael Parekh had some content ripped off also (same dudes). That sucks.  And – the problem is going to get worse.  However, there are lots of legitimate people who want to incorporate content from their friends’ blogs (or other blogs they control).  With FeedBurner’s BuzzBoost, I control how someone else would format my content and all the links click back to my site.  So – I now have a safe and easy way for having my friends (e.g. good people) republish my content. 

I don’t have to deal with this shit.  If I had a kid, he’d sound like Oskar in Extremely Loud and Incredibly Close: “Succostash my cocker spaniel, you fudging crevasse-hole dipshiitake!”  Or maybe my non-existent son (or daughter) would regularly say “Hey Dad – go shit in a fucking hat.”

Thanks Steve.  And Dad – thanks for teaching me how to swear like a Texan.

For the last few days, I’ve been puzzled that “Stewardesses Stripped” was the most popular link on my blog according to MyBlogLog.  This was from a post I did in May on a clever calendar from some United Airlines stewardesses.  So – for the hell of it – I did a Google search on Stewardesses Stripped.   Voila – I’m number 1.  I’m number 3 on Yahoo and number 5 on MSN (c’mon MSN – get with it!) 

How bizarre.  It’s especially ironic since my only reaction to this morning’s Denver Post article titled “Aim is leverage, not to close United” concerning the United Airlines flight attendants new “CHAOS” (Create Havoc Around Our System) intermittent walkout system was “these people are so stupid” (see my earlier reference to Atlas Shrugged (Cliffs Notes)).