Amy and I spent as much of the summer as we can at our house in Alaska.  Today, Mt. Augustine, located about 75 miles southwest of our home in Homer, erupted. 

Amy has more links and information on her blog if you are interested.

The FeedDemon 2.0 Beta is officially up and ready for action.  As a special bonus, I got the alpha of NewsGator Outlook Edition 2.6 today (2.6.1.129) loaded with new features and appearing to be very stable.  I’ve got FeedDemon 2.0 Beta 1 syncing with NewsGator Online syncing with NewsGator Outlook 2.6 Alpha – all my read / unread states are being synced perfectly, I can modify a feed on one and have it ripple through, and all the platforms are running very quickly right now. 

Plus – I can now post a Technorati chart of posts per day of a keyword (in this case, “jack bauer”) on my blog.

I know I’m a nerd, but it’s really fun to see all this stuff come together – now if Brent can only get the NetNewsWire beta out my Mac can join in the fun.

One of my favorite entrepreneurial lines is “man – that was worse than going to the proctologist.”  It you need to understand this concept more graphically, my good friend Renee Berberian has a solid explanation.

I love it when I stumble upon new uses for features from companies that I’m an investor in.  This just happened with Technorati Mini.  While it’s a relatively new feature, I’ve known about it since inception and have played with it some.  However, I never really dug it until last week when my friends at FeedBurner say that they have it up on their screens all day when they make an announcement to see how it spreads throughout the blogosphere. 

Now – I have RSS feeds for all my companies set up as Technorati Watchlists so I see this info when I’m check FeedDemon.  However, there are times when you want to see this in real time.  Say – for example – when you want to see what people are saying about Jack Bauer prior to hours 3 and 4 today.  It’s really cool, especially if you have a three monitor setup.

I got a note from an entrepreneur (Steven Livingstone) who is pondering polyphasic sleep and asked the question: I’ve just blogged something looking for advice from successful people on sleeping patterns as an entrepreneur. I haven’t read much (if anything) on this and wondered whether you have an opinion on it.

Being clueless on what polyphasic sleep meant, I was fortunately that Wikipedia exists.  Stephen’s post pointed me to Steve Pavlina’s site where he’s 80+ days into a polyphasic sleep experiment.  I was immediately intrigued because I’ve always been fascinated by sleep.  Pavlina has a bunch of great writing on this – start on his Day 60 post and go to the older diary posts.  Wacky.

I have no idea if there are sleeping patterns for successful entrepreneurs, but I do know that many successful entrepreneurs like to brag about how little they have to sleep.  As someone who loves to sleep, I usually think this is bullshit and – while I can go for three or four days on relatively little sleep, I eventually crater and need 10+ hours.  Given my fascination with sleep, I’ve ready plenty (online and offline) and my personal conclusion is that everyone has to figure out their own patterns for themselves. 

Now that I’m running marathons regularly, I accept the importance of sleep as part of my overall routine and make sure I get enough.  I love to get up early, so I’m usually up between 5 and 6 in the morning, which gives me plenty of time to catch up on email, writing, and get a run in (if I want) before the “normal day starts.”  On normal days, I’m toast by 10 pm and try hard not to operate any heavy machinery after 8 pm.  I sleep until I wake up (often 10 or 11 am) on one of the weekend days; the other is my long run day and I usually get up at 6 to have an hour or two in order to wake up, eat something, and take a crap before the run.

After pondering it, I know that polyphasic sleep is not for me – I enjoy lying in bed with Amy too much.  It’d be interesting to find out if there are any real patterns among successful entrepreneurs, although I suspect there will be too much “ego-bias” in any actual study (e.g. “I don’t need sleep”) to generate anything that’s statistically correct.

Following is a question that I got from a reader of this blog on Friday.  “I have wondered about the dynamics of a restart company and how it affects employees, options and the dynamics between existing money and new money. My company took about 30MM during the boom years, did not get anywhere, and there was a restart financing round for a new product/market. However, I feel a “bad” history has an overhang even in a company’s new life. “

Since Jack Bauer got a restart last night I thought I’d take on the question today.  Restarts are a way of life in the world of VC-funded companies.  An entrepreneur starts a business.  A VC (or VCs) fund it.  Time passes.  The company gets fucked up and goes off the rails for a variety of reasons (the product doesn’t work, the market doesn’t develop, the executive team doesn’t gel, the entrepreneur gets kicked out of the company, the VCs push the company in a direction that makes no sense.)  Suddenly, a bunch of money has been invested and – while there might be something there (most notably a product or some customers) – the business has clearly stalled. The board tries to find a new investor to lead a financing or a buyer for the entire company and comes up dry.  While shutting down the company is one option, VC-backed companies often get a second (or third) life via a restart (it’s harder for most people to call the ball and declare failure then it is to put in a little more money in and keep trying.)

In a restart, some subset of the existing investors provide financing for the company.  While this can be done in conjunction with a new lead investor, in this case I’m describing the dynamics of an internally led restart.  Often this follows or is in conjunction with a change in the leadership team and a meaningful headcount and expense reduction.  In the cleanest restarts, the company is recapitalized via the new investment, reducing (or eliminating) the previous liquidation preference overhang and well as the previous equity ownership.  A “full recapitalization” (at a $0m pre-money valuation) will eliminate the value of all previous equity – this is the harshest case – typically the previous equity will receive some small share (5% – 10%) of common stock in the recapitalized entity.  There is often extensive negotiation around this since not all of the existing investors are participating in the new financing and – even though they don’t want to put any more money in – want to figure out a way to preserve some economics in the off chance that the company is ultimately successful.  This gets even more complex if the existing investors have been bridging the company with debt as some of the investors may not want to put any new money in, but want to get credit for their debt investment.  Ultimately this resolves itself because if the existing investors can’t figure out a structure that works for everyone, the company usually disappears into dust.

As part of this recap, the employees that are staying with the company will receive new options in a “refreshed” option pool that is usually between 10% and 20% of the equity of the company.  Since this is a restart, this equity also starts vesting again, although in some cases employees are given some vesting credit for previous service.

It’s kind of like Jack coming back from the dead.  Some people will think this is bad; some people will think this is good; most people will be suspicious.  While the company undeniably has an emotional overhang, a lot of companies address it by such simple things as changing their name and pretending the history doesn’t exist.  If the recap is clean (e.g. no big liquidation overhang, employees treated fairly, non-participating investors acting like big boys and girls and taking their medicine), then there probably isn’t much overhang on the restart.  If there’s a complex ownership structure with the non-participating investors and old executives hanging around trying to extract something out of their investment without continued participating, then the overhang will be meaningful.

Each restart is going to be different – as an employee, rather than default into “it’s good” or “it’s bad”, look under the hood and see if the company has a clean restart (financially and emotionally) or if it’s merely the same group of characters deceiving themselves that “a little more money will make us successful.”

I heard there was a performance by a legendary band called Full Ratchet in Atherton last week.  Can you identify the members of the band?

They were joined (or maybe they joined) Thomas Dolby who has been practicing ferociously for his upcoming tour.  Have you been Blinded by Science lately?

I get a lot of questions about “the best entrepreneurship / venture capital books.”  Q106 promises to be a good quarter for them as Tom Evslin’s hackoff.com: An Historic Murder Mystery set in the Internet Bubble and Rubble ships, followed shortly by Tom Perkins’ Sex and the Single Zillionaire: A Novel.

The Tom’s are both well known in entrepreneurial circles – Evslin for his most recent company ITXC and Perkins for being one of the founders of Kleiner Perkins Caufield & Byers.  While Evslin has been innovative in publishing his book on the web in advance, Perkins has taken a more traditional approach, including a fun puff story in the Wall Street Journal. 

I can vouch for hackoff.com – it’s a page turner that has me addicted to my daily hackoff.com RSS feed.  Perkins – who is the ex-husband of Danielle Steele – will be a new experience for me, although the preview does feel somewhat Steele-ish.

I bet you can guess what I’m doing tonight.