It’s the last day of the quarter and eerily quiet in my office. I’ve received very feel emails (and no phone calls) from CEOs of the companies I work with. Since I talked with a number of them yesterday, I know this means that they are busting their butts to drag the last few deals of the quarter across the goal line before this Friday ends. Good.
Following is an email I sent to Seth mid-afternoon.
I’ve heard this three times today. It’s got to be the current cliche. Gross.
I was referring to the phrase “technology companies are bought not sold.” This unquestionably belongs on Fred Wilson’s VC Cliche of the Week post. While Fred didn’t have a cliche post on it, he did have a post in early 2004 that linked to Ed Sim talking about it.
Now – there’s nothing wrong with the statement – it’s very relevant and often true. However, it’s starting to feel like an “honestly, to tell you the truth” type thing (whenever someone says this I immediately become suspicious.) When someone is trying to make a point, the tired old cliche that is being thrown around like a worn out tennis ball that my dogs have been chewing on doesn’t really do it for me.
Ah – snarkiness off. Time for bed.
I got the following email from firstname.lastname@example.org today.
Thanks for posting comments regarding CinemaNow on https://www.feld.com/archives/2006/03/cinemanow_is_ou.html.
With regards to the comments about pricing/Netflix towards the end of the review; just wanted to take the time to let you know that we are working as hard as we can to provide our customers with the best experience possible. We are working to try to convince the studios that there IS a market out there for this kind of consumption of video, but ultimately they own the rights to their libraries, and dictate how/when/where/why regarding the distribution of their titles. Your review, and the comments of more consumers helps us greatly in this cause!
I’d like to provide you with a couple of coupon codes for you and/or your IT guy Ross to use towards your next rental on our website for taking the time to review us so extensively.
Impressive. Of course, I forwarded the coupons to Ross.
Slate has an outstanding article on a great Powerade ad you won’t find on TV. The ad itself is worth looking at, but the story is even more interesting. Thanks to Matt Branaugh – the Business Editor at the Boulder Daily Camera (who is rapidly getting blogging religion) for pointing it out to me.
On Thursday April 6, 2006, I’m on a panel at the final Silicon Flatirons conference called “Re-examining The Patent System.” The conference is from 3:30 to 7:30. My panel – titled “The Uses and Abuses of Intellectual Property: Facilitating Startups or Entry Barrier?” – is from 5:50 to 6:50. My co-panelists are Steve Halsteadt (Managing Director, Centennial Ventures), Tom McGimpsey (General Counsel, McData), and Steve Rodgers (Director of Litigation, Intel).
If you happen to be in Boulder and like this kind of thing, please join us.
Sarah Arnquist just wrote an article for Gelf Magazine titled “Could a treadmill / desk mashup be the solution to America’s obesity problem?” She apparently stumbled up my Treadputer post and interviewed me for the article. Even though she quoted me as saying “As a venture capitalist, Feld sees a definite market for ‘treadputers,’” please don’t send me a business plan for one of these contraptions. However, if you can figure out how to make a portable one that I can travel with, give me a call, as I sure wished I had one with me today.
I stumbled upon a new program online put together by USA Track & Field (USATF) called America’s Running Routes. It’s a neat web app that uses Google Maps and a nice user-interface to let runners everywhere build a database of running routes throughout the country. I don’t know when they launched it, but it already has over 15,000 routes in the United States.
I tried it out by checking for runs in Seattle (where I’ll be for the next few days.) Seattle had 203 routes. I’ll actually be in Redmond, which had 18 routes ranging from 2.69 miles to 21.79 miles. Map creation is simple – it’d be super neat if it integrated with my Garmin 301.
I received the following question last week:
I’ve been thinking a lot lately about the manner in which VCs should hold their entrepreneurs accountable – what should be the proper measures. Most VCs with which I have experience rightly, I think, avoid making this a numbers-only analysis, as that’s a better measure for larger and more steady-state organizations but not for young and growing companies. Wondering what your thoughts are here and if you’ve seen anything out there which addresses these points – entrepreneurs should be held accountable, they shouldn’t get a pass simply because “it’s too early” “we’re building value that’s not yet measurable” “numbers don’t matter” etc., but then again, applying ready-to-wear and traditional metrics probably doesn’t work well either.
I’ve always found that quantitative accountability – while difficult in a young company – is critical. However, I’d add a simple thought – the quantitative accountability must be flexible and the time units used for measurement should be both short and long.
Flexible is a key word here. Every early stage company I’ve ever invested in had some sort of a budget. When companies are pre-revenue, they are often very proud of making their budget – which usually means “I have no revenue and I spent less then I said I would spend.” While this is good, it can be myopic as there are times when it makes sense to spend more then you said you would spend. Here’s where short and long come into play. Imagine that you had an annual budget. On day 1, you’ve got a pretty good idea of how much you are going to spend in the first month. However, it’s unlikely that you really know how much you should (not are going to – “should”) spend in the eleventh month. A twelve month expense budget for a raw startup company is too long – too many things will change. Hence the notion of “short.”
However, many (almost all) companies take longer to develop than expected. For many companies that I’ve funded, in the “good case”, the revenue curve in year three looks like what they expected the revenue curve in year two to look like. In a number of these companies, the year three revenue ramp was still very satisfying. However, if I’d taken a two year view, I would have said the company was failing. Hence the notion of “long.”
I think if you mix these ideas together – keeping flexible while recognizing that your perspective should often be shortened or lengthened – you can actually use many traditional quantitative measures to hold entrepreneurs accountable. Of course, the magic is in the application of the modifiers – namely flexibility, longness, and shortness.
I can’t wait until July. Amy and I spend a big chunk of the summer at our house in Homer, Alaska. We only have about 5,000 other people hanging around (it surges to about 10,000 at the high point of summer.) Up until now, most people that I mention Homer to say “huh?” Men’s Journal just determined that Homer, Alaska is the #1 Up and Coming city in the US (runners up are Newport, VT; Logan, UT; Walla Walla, WA; and Gualala, CA.) Now – I’m not sure this is a good thing – Amy’s immediate reaction to hearing this was “well, I guess we need to move to Cordova or Kotzebue now to get away from the coming hordes.”
My favorite quote from the article follows:
“It just doesn’t feel like the lower 48,” says Katie Bennett, a local sea-kayaking guide and drop-dead gorgeous, unmarried blonde. “You can still work hard and get a piece of the American dream.” Campbell, meanwhile, points out a different sense of possibility: the weird abundance of smart, beautiful women like Bennett. “There aren’t a lot of great guys here,” he says. “If you can hold a conversation and not just stare at their boobs, you do pretty well.”
That kind of says it all. Do me a favor – ignore this article and go visit the California place instead.
They joy of having an “IT guy” (aka Ross) around is that he willingly expresses his opinion whenever given the chance. Since he plays around with even more stuff than I do, one of the ways I learn to is listen to him rant and rave about things he’s played with. A few weeks ago, it was his lousy experience with the iTunes Music Store for video. That post generated some useful comments – especially around DRM. Ross fired off another rant – this time a positive one about his experience with CinemaNow – along with a general response to the comments on the previous post. Again – I’ve lightly edited to fix spelling and grammar, but left the IT guy essence intact. Ross follows…
First, I’ll respond to some of the comments on why I support DRM. Let me be clear, I support DRM in concept – that concept being that you should be able to purchase something and use it anywhere you want. Your iPod, your smartphone, your TV, your computer, whatever. You should not be able to share that file with anyone else, period. That’s how DRM should work, and if it did work that way no one would really have any reason to complain. However, DRM does not work that way, which is why all current DRM technologies are flawed. Fred Wilson put it well saying that it’s all about “dial tone” – you pay your monthly fee to get your pipe of media and that’s it. The rest should be transparent.
The other comments that stuck with me were about the about the quality of music on iTunes and that while I’m savvy enough to have a serious media room setup that I didn’t know going in that this would suck. On the first point let me clarify that I think the quality of music purchased through iTunes is excellent. It could be better, but it is good enough for my iPod and good enough for most people’s uses. What I mean by good enough is that most consumers will notice zero difference between an iTunes file and a ripped MP3. Most consumers just don’t care and they don’t have the ears that I have (and I was a music major in college so I have pretty tough ears.) Regarding knowing going in that this would suck – I should have known. I figured it would, but I fell victim to a sudden bout of optimism and I wanted to go into it without any preconceived notions.
Ok – enough old stuff – let’s get to my point for this week. Yesterday Melanie and I were out of movies. We’d sent back our Netflix movies earlier in the week and were expecting more to show up on Saturday. For the first time Netflix failed us and we had nothing new to watch. Being lazy (c’mon – give me a break – I’m an IT guy) I didn’t want to drive to Blockbuster so this gave me the perfect opportunity to try out CinemaNow to watch a movie. While Melanie was, uh, less than thrilled about this idea (after our iTunes mess) but she agreed to give it a try. I ran to my PC and started setting up a new account.
Setting up a new account was. Within two minutes I was ready to purchase a movie. We started looking through them and found the first problem, a very limited selection. We eventually settled on Junebug (which was not a comedy despite the claim that it was – but it was very good.) I proceeded to purchase it ($3.99 seemed steep to me) and download it. My home theater is built around a HP z545 Media Center PC connected to my HD projector (720p) and then connected to my high end Onkyo receiver for 7.1 surround sound. This was going to be the real test – could we watch a movie, downloaded over the net on this system, and have it look great?
After purchasing the movie it started to download. After this began I got a count down timer letting me know that the movie would be ready to watch in 30 seconds. That’s smart – progressive downloading – we weren’t expecting that – so we let it download the entire movie while we got ready.
Ok, so now it’s time to watch. It’s downloaded, I’m ready to go, Melanie’s ready (as are our dogs) so let’s hit play. Guess what – it didn’t play! It needs to download some security update for Windows Media Player. I’m thinking, “damn it, not this again!” 10 seconds later the download is done and it’s starting to play. Not only does it work, but it looks outstanding – very close to DVD quality. During the entire movie I didn’t see a single compression artifact, the video didn’t skip, and the sound was perfect (but it was NOT Dolby Digital 5.1 – something had to fall short.)
Overall, I was delighted. CinemaNow has this figured out and knows how to deliver something of real value to the consumer – congrats guys, you’ve won a customer. Now, get the price down or offer an unlimited or capped subscription and I’m 100% there and dropping Netflix. Oh, and add some more movies while you’re at it (studios listen up, this is how consumers will get movies in the future.)