After a magnificent long weekend in the Bahamas, my return to American soil was via the Miami Airport. Blech. The best part of the airport was the landing on the runway.
We taxied for a while, eventually ending up in the middle of the airfield next to an active runway (holy shit – did that plane just take off next to us?) A bus pulled up, we got off the plane and crowded on it, and then drove around in a circle for 10 minutes, enjoying the smell of exhaust mixed with jet fumes, eventually ending up at a terminal. We went up an escalator and wandered past a huge number of gun-toting security dudes. Eventually we made our way through the very nice and tidy customs area (I didn’t understand a word the custom agent said to me – he definitely wasn’t speaking English), down another escalator to a dingy baggage claim area, where we walked past rows of doors that were locked. Eventually we found the one open door (hint: it was the one with the long line of people), waited a while, and got waived through the bag check area.
The door magically opened into another huge space – this one not so dingy – but with completely incomprehensible signage. Now – I’m a good traveler – I travel a lot – and usually just do it by feel, but this time I had to stop and think about what to do next. We found a departure monitor, but the flights were listed alphabetically by airline and then by time. We didn’t remember which airline we were on so a manual scan of the monitor eventually turned up Denver as our destination city near the last entry (yes – we were flying on United / Ted). Eventually, a disheveled looking woman guarding the elevator from a plastic chair grunted “check in floor two” at us and it dawned on us that we should take the elevator up a level.
Voila. Another huge space. For some reason we weren’t checked in all the way through to Denver, so we wandered over to the United check in counter. The computer kiosk worked fine and we went in search of the next line. This one was only 100 or so people long waiting for another escalator up. We waited and eventually had our boarding pass scrutinized by another person that spoke to me in a language I didn’t understand. Up the escalator we went, to face another line, this one 200 or so people long. Ah – security, TSA, line – cool – I’m in familiar territory. Apparently in the Miami airport “keep your baggage with you at all times” means “leave your bags wherever the hell you want – we won’t do anything to them” which was even more entertaining after we told the TSA guy about the stray baggage (I’m not sure he understood the language I was speaking, which I’m certain was English.)
Eventually we cleared security. Almost there, or so we thought. We wandered down a dingy looking hallway (Terminal F), noticing the holes in the tiles, ceiling crap all over the floor, and stuff that looked eerily like asbestos coating the carpet. You could smell the mold even before you saw it and everything in this hallway felt damp, except for the stunning black and white photographs of people lying mostly naked on the beach that adorned the wall (at least they have an appreciation of art in Terminal F.)
We finally got to the gate – a sea of purple chairs in the midst of a handful of crappy food stores. Remarkably, they had free WiFi, but no power outlets anywhere (unless you were willing to stand up next to the pay phones, far away from everyone else). A weak excuse for a strawberry smoothie allowed me to deny reality for a little while – I’m on the plane now and will be home soon.
What is this “Ted” thing anyway? This feels like a bad excuse for Frontier.
On Sunday, I discovered via The New Yorker (11/14/05, p. 38) that “… ‘Samuel Alito’ is an anagram of ‘I am a sellout’ …”
Last week, Judy’s Book announced that Mobius led an $8 million Series B financing with existing investors Ignition Partners and Ackerley Partners and that I joined the board of directors.
The founder and CEO of Judy’s Book – Andy Sack – is a long time friend and colleague. I was the lead investor in Andy’s first company Abuzz – which had a very successful outcome when it was acquired in 1999 by New York Times Digital. Andy has been involved in several other projects with me, including successful ones like Quova and not-so-successful ones like BodyShop Digital (what were we thinking – two American guys who rarely to use deodorant and often wash our hair with bath gel investing in the dotcom spinoff of a UK-based health and beauty company?) So – we’ve definitely had our ups and downs together.
When Andy founded Judy’s Book with his co-founder Chris DeVore, I didn’t really get what they were up to. I understood CitySearch and the emerging local.yahoo.com / local.google.com – so I thought I got local search. I also understood the power of the lead fee model through my investment in ServiceMagic. However, for whatever reason, I couldn’t synthesize these ideas into what Andy and Chris were thinking about. So – I passed on investing in the first round, even though I hate to pass on investing in an entrepreneur that I’ve been successful with in the past.
Over the last year, I’ve paid attention to what Andy, Chris, and team have been up to. I’d periodically go deep with them on their business and had a very productive day with them on a trip to Seattle several months ago. We spent a lot of time talking about the challenge of user-generated content from a user-centric point of view (e.g. mine) and I described my fantasy world for creating content on the web. As an active blogger, I obviously have a vehicle for generating content, but if I want this content to end up anywhere else (e.g. book reviews on Amazon or restaurant reviews on local.yahoo.com) I’m reduced to a stupid cut-and-paste approach that typically loses all formatting and links. I described a “write-once, publish-many” approach that I lusted after in my quest to populate Google’s carnivorous index with the word Feld.
During this same trip, Andy and Chris showed me two things – their traffic numbers and the v1 user-interface (Judy’s Book is currently in beta). Both blew my socks off. As a Judy’s Book beta user, I’d had plenty of complaints (and “constructive suggestions”) about the UI. Even with the limitations, the traffic numbers – especially the growth – were stunning given the tiny investment that had been made in driving traffic to the site. However, the v1 UI – which is coming out in Q106 – was spectacular and addressed many of the issues that I’d raised over the previous months of feedback.
As I pondered their progress and vision, I started thinking about what drove ServiceMagic’s success. ServiceMagic started out in an unbelievably competitive market segment – with over $300 million of venture capital being invested in their competitors. At some point, the founders of ServiceMagic turned their entire business into an algebra problem and became obsessed with figuring out the math. At one point, one of my favorite partners referred to ServiceMagic as a “shitty little business” (at the time, they were loosing $500k / month, their revenue was anemic, and their projected revenue ramp was hard to believe). Two years later they were profitable, growing 10% monthly, generating a prodigious amount of positive cash flow, and were the only company left standing as all their competitors has spent their money without any benefit, while ServiceMagic nailed the math. We now regularly joke that we are always looking for “shitty little businesses” to invest in.
Judy’s Book is in the same position. “Local search” is trendy and overpopulated – both with older and newer players. “Reviews” have been around forever. The “lead fee” model isn’t new (although it is rarely mastered). User-generated content is quickly overtaking Web 2.0 as an user-overused buzzword. Data “at the core” vs. “at the edge” is entering into the debate. Lots of VC money is getting poured into this type of problem.
Fundamentally, whenever you are thinking about supply and demand on the Internet, you have a math problem to solve. Effectively creating the drivers for both supply and demand – at the right price – and then figuring out how to turn it into money is hard – eBay, PayPal, and Google AdSense / AdWords are brilliant examples of getting this right. Ironically, many new companies are focused on only one key variable (either supply or demand) with the expectation that “once we get big enough the other will take care of itself.” One lesson I learned from ServiceMagic is that this is a fundamentally incorrect assumption. Most of ServiceMagic’s competitors only focused on one of the variables (and most of them never actually sat down and figured out the equation that described their business premise.) It’s not as simple as supply and demand needing to be equal – you have to start with the math problem, treat supply and demand as variables, and then iterate on the equation. Not surprisingly, this isn’t a linear equation (especially when you add time into the mix), so you’ve actually got to put some thought into it.
While Judy’s Book is a long way from having things figured out, it’s a great start with a super-capable team that is now well-financed. Enjoy the beta cycle for the next few months (and offer feedback) – when they launch v1 you’ll start to see what I’m talking about.
I needed a break so Amy and I hopped on a plane and flew down to Hope Town, Bahamas (next to Marsh Harbor – where the airport is) to hang out with some friends. Hope Town is far enough off the grid where my cell phone didn’t work and while our friends had high speed Internet, I couldn’t get my computer configured correctly to use their cable connection so I chilled out instead and gobbled down some books, only occasionally checking my email via the web.
I started with The Real Story of Informix Software And Phil White: Lessons in Business And Leadership for the Executive Team. Steve Martin (no – not the funny guy who played a mean banjo on last night’s TBS special “Earth to America“) has written a thoughtful and balanced account of the rise and fall of Informix Software and its charismatic CEO Phil White. There was a point – in the mid-1990’s – where the real software industry battle was between Oracle, Informix, and Sybase for database dominance. Sybase fell first (they shipped a product that simply didn’t work, missed their numbers, and never recovered). Informix had Oracle on the defensive for a while, but then bought Illustra for $400 million, announced a product that didn’t exist, and then shipped a product that didn’t work. Predictably they missed their numbers and fell apart. In the middle of this, they did a few marginal accounting things which White got caught up in and our friendly, neighborhood government decided to make an example of him. Martin digs beneath the surface and explains the actual accounting and legal issues that tripped up both Informix and White – after reading the book it definitely seems like White got a much harsher treatment than he deserved.
Bootstrapping Your Business: Start And Grow a Successful Company With Almost No Money by Greg Gianforte was next. I was on a panel – with two other VCs – that Greg moderated recently. He started the panel out by asserting that entrepreneurs don’t need venture capital, that VCs add very little to the entrepreneurial ecosystem, and that many VCs are marginal excuses for a collection of protoplasm. Greg has created several successful companies – including RightNow Technologies – and – as the self-proclaimed “nation’s top bootstrapper” – asserts that bootstrapping is the future of business. Once you cut through the hyperbole, the book has lots of good advice for starting and growing a business – which apply to both bootstrapped and non-bootstrapped (e.g. venture-backed) businesses.
Next up was The PayPal Wars: Battles with eBay, the Media, the Mafia, and the Rest of Planet Earth. As a happy PayPal user and sometimes eBay purchaser, I vaguely remembered the rise of PayPal in the collective consciousness. Eric Jackson – Confinity (PayPal’s original name) employee number 27 and the first marketing guy – has written an entertaining book on the creation of PayPal. It’s a quick read that I expect will be an enduring part of the history of the Internet 100 years from now.
I finally gave in to the inevitable and stopped reading business / tech stuff. Stephen Hawking’s new A Briefer History of Time stared imposingly at me with its Salvador Dali clock cover. When I read Hawking’s original A Brief History of Time : From the Big Bang to Black Holes, I only understood parts of it and its half life was about 24 hours. This version promised that it was “The Science Classic Made More Accessible, More Concise, Illustrated, and Updated with the Latest Research.” It lived up to its billing – the pictures were great. I don’t know if it was that I really understood more of the original than I remembered, had a better understanding of physics from Mr. Taylor, my high school AP Physics teacher, or Hawking just did a magnificent job of making this book accessible (ok – it was the latter) – I thoroughly enjoyed A Briefer History of Time and when I put it down, I actually felt like the information would stick with me for at least a week.
I’m out of books and now that I’ve infected our Bahamian hosts with Suduko puzzles via Sudoku Easy Presented by Will Shortz Volume 1 : 100 Wordless Crossword Puzzles, I’ve been reduced to running, relaxing, and blogging about my long weekend.
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Affiliate programs are nothing new – Amazon has one that is well known to bloggers. Software reseller programs have been around since the beginning of PC-time. Co-promotion programs were made popular by the web in the mid–1990’s. NewsGator has combined all three into their global partner program. It’s easy to sign up for any or all of these programs.
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I’m at CMU today for the National Center of Women & Information Technology semi-annual meeting (I’m chairman). We just had a fantastic keynote from Nick Donofrio – EVP of Innovation and Technology at IBM, a 42 year IBM veteran, and a strong supporter / advocate of woman in information technology.
After wandering around enemy territory (the CMU computer science and robotics buildings – as an MIT grad, I kept expecting someone to notice that a spy from another school was snooping around – they didn’t notice me, they were too busy looking at all the Google flyers advertising for jobs) I settled into the conference room at Newell Simon Hall. I noticed this huge building out the window and overheard someone mention that it is called The Cathedral of Learning and was the second tallest academic building in the world. A quick search on Wikipedia turned up an awesome amount of information on this building which was commissioned in 1921 and finished in 1937 (fundraising started in 1925 – I hope the money was raised before October 1929). The building is on the University of Pittsburgh’s main campus and the view is stunning from the third flow of CMU’s Newell Simon Hall.
I love the idea of a building called “The Cathedral of Learning”, regardless of which campus it’s located on.
The Kauffman Foundation has re-released their “entrepreneur resource website” named eVenturing. In addition to the site – which is full of great information for entrepreneurs – they also have a blog that you can easily subscribe to.
In the 1990’s I had a very rewarding affiliation with the Kauffman Foundation. I was an “entrepreneur-in-residence” (a fancy word for consultant) and got to work with Jana Matthews and several other folks on a series of programs that the Kauffman Foundation did around high growth companies. In addition, I helped with the original launch of Entreworld, the predecessor site to eVenturing.
The Kauffman Foundation has always been a huge resource to the entrepreneurial community. Many VC’s know of the Kauffman Foundation through the Kauffman Fellows program (a “VC apprentice program”). However, the Kauffman Foundation is much larger than that (while the Kauffman Fellows is a successful stand alone program, it was a small part of the activity of the Kauffman Foundation.) Ewing Marion Kauffman (Mr. K – the founder of Marion Laboratories) was an incredible entrepreneur and his foundation serves his legacy well. I expect that eVenturing will continue to add to this legacy.
NPR had an emotionally devastating segment on the story of the Transorbital (or “Ice Pick”) Lobotomy created by Dr. Walter Freeman in 1946. It was told by Howard Dully, who received an Ice Pick Lobotomy by Freeman in 1960 when Dully was 12 years old.
In Dully’s words: “If you saw me you’d never know I’d had a lobotomy. The only thing you’d notice is that I’m very tall and weigh about 350 pounds. But I’ve always felt different — wondered if something’s missing from my soul. I have no memory of the operation, and never had the courage to ask my family about it. So two years ago I set out on a journey to learn everything I could about my lobotomy.”
I remember joking about lobotomies as a kid, but I have never really thought hard about them. I doubt I’ll joke about them again after listening to this story.
Back when I was 21 years old I figured you had to start somewhere. Our business plan started with a “charter statement” which – in hindsight – was roughly equivalent to a vision statement.
1 CHARTER
Feld Technologies intends to become the industry leader in semi-custom software. It will do this by understanding and addressing all of the components of database application software for small businesses, thus defining the industry.
Feld Technologies is also a vehicle through which to tap the productive abilities of its founders, with the intent of creating a “world” for its employees.
The Company is established for their benefit. The Company will act as a mechanism to leverage the founders intellectual and implementational talents in an attempt to make them authorities in the software industry.
In 1987 the software industry was still pretty young (guess how big Microsoft was – if you don’t know, you’ll find out in the next post in the series. Hint – Lotus was about the same size.) So – it was probably conceivable to us that we could “define the semi-custom software” industry (since it didn’t exist). I remember spending a lot of time trying to figure out a unique label for what we were going to do (we hadn’t thought of Web 2.0 in 1987) and ultimately settled on “semi-custom software.”
We were young and idealistic so we were determined to “create a world for our employees.” While our world ended up being modest (we sold the business when we were 20 people), we did create something that was unique and impactful to the lives of most of our employees (including us). A little idealism never hurts. It’s not quite as pithy and elegant as “don’t be evil” but you get the point.