We hit a rainy stretch the past few days – good for reading; not so good for getting a sun tan.  In addition to The Big Six, I managed to finish four other books this week.  All of them were good, but for different reasons.

Hayduke Lives! was the funnest (and the only one that was fiction.)  I read The Monkey Wrench Gang a few weeks ago – it was my first introduction to Edward Abbey (thanks Dave.)  I loved it, so Amazoned Hayduke Lives! which was published posthumously, but was a continuation of the characters and stories in The Monkey Wrench Gang.  I had a difficult time getting into Hayduke Lives! (I imagine if Abbey had been alive he would have worked it over a few more times), but I was deeply hooked after 100 pages.  Abbey’s characters are insane, beautiful, hilarious, and brave – in an insane, beautiful, and hilarious way.

The Long Tail has been widely reviewed, praised, and discussed.  It earns its praise – Chris Anderson has written an excellent book that nicely balances analyzing what has happened in “the new economics of culture and commerce” (his words) while being instructive and predictive about how things will play out in the future.  It’s credible, well written, full of relevant examples, and thought provoking.  If it’s not on your bookshelf, it should be.

I’m not a huge fan of books on “how to sell”, but I liked The Little Red Book of Selling by Jeffrey Gitomer.  It’s part of Gitomer’s arsenal of sales stuff – extensively promoted on his website at Gitomer.com – and was surprisingly good.  A blog reader recommended it (thanks – leave me a comment so I know who you were) and it was worth the time.  If you are in sales, or a CEO of a startup, it’s worth a read, if for no other reason than to charge you up, clean off some mental cobwebs, and give you some fresh ideas and a kick in the ass.

Blueprint to a Billion was a mixed bag, but fundamentally good.  It’s being positioned as a Jim Collins like treatise on how to create great companies (which the author – David Thomson – calls “Blueprint Companies.”)  Thompson analyzed the 387 companies that have gone public since 1980 and have achieved $1 billion dollars in revenue looking for common characteristics that drive their success.  While there is plenty of data and solid analysis surrounding it, unlike Collins, Thomson ends up getting lost in the data in places and lets the numbers dominate his thought process, rather than stepping back and articulating profound and powerful conclusions.  Jim Collins is unmatched at this type of analysis, and – although Thomson falls short – Blueprint to a Billion was still very good.  Thomson’s web site has a blog, although there are only a few posts and then end on 4/30/06 – I guess Thomson is too busy running around doing consulting and giving his book tour to keep the blogging up.

Next week will have a lot more fiction in it – I promise (myself.)

I read less this week than I read last week (mostly because it was a busy week) but I still managed to get through five books.  Looking back on the week, four of them were business books, which is unusual for me – I think I was stalling reading the last Dennis Lehane book for as long as I could (it’s up next.)

The best book of the week – by far – was The Big Six.  I’m generally grumpy (that’s a nice euphemism) with the accounting industry these days, especially the Big Four.  The combination of the accounting scandals of 2001 – 2003, which led to extensive new government regulations such as SOX, had the unintended consequence of making the Big Four more arrogant, lazy, ineffective, and non-responsive to entrepreneurial companies.  In the late 1990’s, these firms would do practically anything to get audit work with early stage companies, promising that they would “grow with them.”  Today, not only do they have no interest in working with young companies (“we don’t have enough time – we are too busy working with our large public company clients, helping them deal with SOX and other regulations”), they behave incredibly inappropriately with regard to any sort of client transition activity (I have a long list of stories here – ranging from requests for $185,000 to transfer work papers to a new auditor (a 10 hour process) to cover “cumulative discounts over the past four years” to holding up merger accounting for a public company for 12 months “because we don’t have time”, resulting in the public company having no way to get the SEC to approach an S-3 registration statement.)  I could rant for a while about this – I suppose that should be the topic for another blog post (or seven).

The Big Six – subtitled The Selling Out of America’s Top Accounting Firms – was written in in 1991 by Mark Stevens and is a brilliant description of the Big Eight landscape at that time, the people (and personalities) that led these firms, the scandals that rocked them, and the market pressure that generated the first wave of accounting firm consolidation that resulting in The Big Six.  Included is a short narrative of each firm, which provided context for their history and culture that I had never read before.  In addition, the book has several stories of major accounting scandles in the late 1980’s, including the fraud of ZZZZ Best (and how they hoodwinked Ernst & Whinney – mostly displaying the incredible incompetence of the people involved at Ernst & Whinney) and the S&L crisis – most notably the story of the demise of the Beverly Hills Savings & Loan and the revolving door of audit firms involved in this.   

This book made me more – rather than less – grumpy (see euphemism above).  Fifteen years later, I think things are much worse.  The accounting industry had a major breakdown – again – in the beginning of this century with the apex possibly being the complete demise of Arthur Anderson during the Enron scandal, the one firm in the Big Eight that went out of business rather than merging with someone else.  Ironically, all of this simply resulted in extensive government regulation, which made the audit firms who participated in the debacle in the first place more powerful.  While some unintended consequences are at work here, it’s doesn’t take much of a cynical mind to question the validity of the entire system.

You’ll hear more about the other four books in my next post.

Fred Wilson has a great, thoughtful post up titled “Scars From The Last Bubble.”  If you are a VC or an entrepreneur, I recommend you read it slowly.  Remember, it’s not a success until you can buy beer with the cash.

Will Herman has (yet another) great post up about failure in his first startup.  His company – DataWare Logic – looked like it was on a path to success – until it ran out of money and – in Will’s words – “… didn’t have time to get new customers while supporting my existing ones and my company virtually augered itself into the planet in an instant.” 

I guess it’s my week for having people email me clever things on YouTube and ifilm.  Bill Gates and Napoleon Dynamite spend some time together in their apartment and on the Microsoft campus.  Priceless. 

I was pondering the early days of Feld Technologies tonight, thinking about what mistakes we made (and boy did we make a lot of mistakes.)  I wound the clock all the way back to the beginning (sometime in 1987) and tried to figure out what the first major mistake we made that could have killed the company.

Both Dave Jilk and I started working full time on Feld Technologies in the summer of 1987.  I had just gotten my undergraduate degree from MIT and Dave had recently quit Viewlogic to help start Feld Technologies.  We decided to rent an office across the street from our fraternity (the fourth floor of 875 Main Street) and go for it.

We rented 1600 sq. ft.  We borrowed someone’s pickup truck and went and bought some shitty used furniture somewhere for a couple of hundred dollars.  We went to Service Merchandise (I think that’s what it was called) and bought a few phones.  We called Nynex and got some phone lines.  Dave brought his old college half refrigerator into the office.  We “borrowed” a plant or two from somewhere.

We then hired about a half dozen people.  I remember all of them – Pat (who was already working for me and had worked for me the previous summer on our one major client – Bellflower Dental Group), Mike (a friend from Petcom who lived in Texas but moved to Cambridge for the summer to work on our first product – DOSBox – a bunch of DOS API calls), Mike (a frat brother who was usually stoned, but was an outstanding programmer), Dan (another frat brother who was also frequently stoned, but was an equally amazing programmer), and Rob (I can’t remember where we met Rob.)

We had some business – beyond Bellflower – but not much.  I think we broke even for a month or two but then lost $10,000 in August when we had an office full of people but no business.  Ever the optimistic entrepreneurs, we didn’t panic.  We figured we’d find some business somewhere.  We lost $5,000 or so the next month (I’m making the numbers up – these are the approximate ones.)  Our “team” went back to school (including me – I was doing the second year of my masters degree) so we rationalized our costs would be lower because people wouldn’t be working as much.  True – but they also didn’t produce anything and since we were doing everything on a fixed price basis, we kept losing money.  On Monday October 19th, 1987 the stock market lost 22.6% of its value.  I remember sitting around in Dave’s office listening to the radio.  I took the T home that night, wondering if the world was going to come to an end.  I didn’t have any stocks of significance, so this didn’t really impact me, but this was my first real awareness of financial panic.

We realized we couldn’t keep losing money because we had none (duh).  We also realized that we (Dave and I) were doing all the work, but paying everyone else.  Now – they were good guys – but they were going to school and our clients and our business weren’t their top priority.

We fired everyone a few days later.  We somehow got out of our lease, put almost all the crap we had bought (except a few desks and phones) into storage in Somerville, and moved our offices into the spare bedrooms in our respective apartments (we both lived in One Devonshire Place in downtown Boston.)  We started paying $50 / month for an office share in Faneuil Hall Marketplace so we could have a real business address (6 Faneuil Hall Marketplace.)  We had no overhead (I think we used the same desks and phones for a couple of years.)  It took us another year before we hired our “next first” employee (Shawn).  By that time, we were making a profit of $10,000 / month after paying ourselves decent salaries.

Hiring too early almost killed us.

The Big Lebowski is in my top 10 favorite movies of all time (ok – I admit it – so is Caddyshack.)  Paul Kedrosky pointed me to The Big Lebowski: F*cking Short Version that lasts about two minutes.  I always wondered why I loved this movie so much – now I know.

Today, FeedBurner announced that Matt Blumberg has joined their board of directors.  Matt – the CEO of Return Path – has a good post about his perspective on joining the board.  Matt has always been an advocate on the value of CEO’s sitting on other boards and has benefited greatly by the CEO’s that have been on his board (thanks Scott, Bob, and Ben.)  As a long time investor (and past board member) for Return Path, it’s been fun to work with Matt as he’s grown the company.  It’ll be fun to work with him side by side to help the FeedBurner guys.  Welcome Matt!

I’ve had a rash of friends and colleagues struggle with various forms of cancer (most notably, but not limited to, breast cancer) the past 24 months – I guess I’m of the age where this starts to be a real part of one’s life (fortunately I haven’t lost anyone to this, which is a testament to progress since “cancer” is no longer an automatic death sentence.)

Derek pointed me at MyCancerPlace – an online community for people with cancer.  It’s another twist on the resurgence of the rapidly spreading community model.  It looks like it has just launched and there’s not much content yet, but at first glance it’s well put together.  If you – or a friend / family member has cancer, it’s worth taking a look.