Brad Feld

Month: February 2007

I’ve been investing in Internet-related email stuff since 1995.  I still remember when I got my first Internet email address (brad@id.wing.net) back in 1994 – shortly before I figured out I could set up email on brad@feld.com.  Email has evolved in some amazing ways over the last 12 years while at the same time standing still in others (thanks Mr. SMTP – both directions.)

In 2000, I started noticing spam again.  I think the first time I heard “spam” was in college – one of the guys in my fraternity (John Underkoffler) loved to do all kinds of bizarre things with spam (except eat it) – at some point in the mid 1980’s I learned what email spam was.  Between 1995 and 2000 I occasionally got some spam, but it usually just pointed me to an online porn site which was still a novelty at that point in time.

I can’t remember what eventually slapped me in the face, but one day I woke up and realized that spam was going to be a huge problem.  A gang of us got together (me, Chris, Ryan) – all who had done lots of things with email – and we ended up making two investments – Return Path and Postini – that addressed different parts of the spam issue (and have both been extremely successful, exciting, and well run companies that I’m proud of.)

When I started blogging in 2004, it was obvious to me that comment and trackback spam would be a problem.  So far almost all the solutions to “blam” (my word for “blog spam”) have been weak and similar to several of the early and not particularly durable solutions to email spam.  Akismet moved things up a level, but still has its share of issues, especially when faced with a new type of attack.  Oh – and the attacks so far are very unsophisticated (although getting more so quickly.)

Today, I noticed Rick Klau’s (from FeedBurner) post on Salesforce.com spam.  It’s great and has a lot of details about the issues he is facing in his Salesforce.com fight with spam along with details about his current solution.  It’s a little surprising that Salesforce.com doesn’t view this as “their problem”, but then again Microsoft said spam would be gone by 2004.

The endless war against the Internet Axis of Evil continues.  Where is Jack Bauer when you need him?


The MIT Enterprise Forum has an annual program called Venture Capital Outlook.  If you are in Colorado, you can see a 40 minute digital presentation of this from MIT/Cambridge and a panel of Boston-area VC’s followed by a live panel of Colorado VCs discussing the same questions, namely the trends from 2006 and what they see happening in 2007.

The Colorado–based VCs (in the flesh rather than digitally rendered) are:

  • Jason Mendelson, Mobius Venture Capital
  • Catharine Merigold, Vista Ventures
  • Kyle Lefkoff, Boulder Ventures
  • Chris Scoggins, Sequel Venture Partners

If you are interested, you can register online.  The coordinates for the event follow.

Date:  Wednesday February 28

Time:  5:30-7:30pm (doors open at 5pm for networking)

Location
   The Main Auditorium, ATLAS Building
   CU Boulder Campus
   18th Street and Euclid
   Boulder, CO  80302

Cost
   $25 General Admission
   $15 MIT Alumni Club & Ivy League Club Members (and their guests)
   $20 MIT Graduates & CTEK, CIK, CSIA, DTP, TiE, YEO (and their guests)
   $10 (cheap) for CU/DU/CSU MBA or Law students


Paul Kedrosky has an excellent summary of Mark Gilbert’s theories of modern finance using the two cow metaphor.  He ends with his own special version for the venture capital industry.


If you go to Feld Thoughts, you’ll see a little widget on the right hand side that looks like the following:

This is my “badge” for the FeedBurner Venture Capital network.  This a network of all of the Venture Capital bloggers that I could find – I’m the coordinator so if you are a VC blogger and not part of the network, drop me an email.  There are now 62 VC bloggers in the network with a daily subscriber reach of over 150,000 people (if you are an advertiser and want to target this audience, my friends at FeedBurner will be happy to help.)

This morning, I noticed a new shiny box in the widget that says “search this network.”  That’s the integration of Lijit and FeedBurner which allows you to search across the entire network of VC bloggers.  Type “term sheet” in “search this network” and hit go to see how it works.  Or try “Apple DRM”.  Or maybe “Google Youtube” (or ”Sequoia Envy”).  Or even “Suck” (a favorite word of several VC bloggers – ostensibly linked to one of my favorite mottos – “We Suck Less.”)

Vertical search across venture capital blogs.  Automagically brought to a computer near you by Lijit and FeedBurner.


When CTO’s Talk

Feb 09, 2007
Category Investments

One of my core strategies as a VC has always been to aggressively facilitate conversations between the entrepreneurs that I work with.  Over the last 13 years, this has paid off in numerous ways, endless times.  A while ago I realized that, in addition to being a lot of fun (usually for all involved), it was a way for me to learn an incredible amount by just watching where the entrepreneurs took the conversations.

I’ve always been fascinated by “CTO’s talking.”  Whenever two or more CTO’s are in the room, I want to be part of the conversation.  Some of that may have come from my pre-VC life, but I think it’s because there is rarely any gloss on the thought processes as my CTO friends dig deep into whatever topic they are discussing.

It’s even more fun when the CTO turned CEO hangs out with his CTO and talks with another CTO (did you follow that)?  Todd Vernon and Tim Wolters two great, experienced CTO’s in Boulder.  Todd is now CEO of Lijit (after being the CTO and co-founder of Raindance) and partners with the founder / CTO – Stan James.  Tim is the co-founder / CTO of Collective Intellect (after being the co-founder / CTO of Dante Group which webMethods acquired in 2003).  Yesterday, Todd, Tim, and Stan spent some time together and “the long tail of vertical search” popped out.  Lots of people have been working on “vertical search” – but not many (as far as I can tell) are really focused on the second order effects of vertical search, which is where I think the real money is.  Yeah – that’s an abstract statement – but that’s the fun of it.

Todd and Stan’s business (Lijit) is banging away trying to figure this out, as is Tim’s business (Collective Intellect).  I’m an investor in both of them and am fascinated and delighted with the evolution of their ideas and products.  The are working on fundamentally hard stuff – both conceptually and functionally – and when they deliver it in a way my dad will understand and use it – they’ll be on to something really big.


Cisco just announced that they are open sourcing their network access control client (known as Cisco Trust Agent.)  While on the surface it might seem like a generous move, Alan Shimel (at one of my portfolio companies – StillSecure) has a somewhat different point of view.

I’ve noticed an increasing trend of large companies embracing the open source movement by “open sourcing” their lousy software that doesn’t work very well and that has little to no adoption.  An optimist would say “this is good – at least the open source community can fix that crap.”  My view is that this just pollutes the efforts of companies that are legitimately trying to work effectively with open source communities.  “Open sourcing orphaned software” as a marketing strategy just doesn’t feel effective or useful to me.


My friends at the Enthusiast Group are about to launch a new series of sites over the next two months to add to their growing network of enthusiast web sites.  YourCycling launched today and is edited by Enthusiast-in-Chief Whitey Debroux, a Boulder, Colorado-based professional road and cyclocross racer who is riding for Team Einstein this season.

YourCycling joins YourRunning (check out my running blog – 50×50 if you care about such things – especially if you want to be amused by my challenges of maintaining any sort of base while traveling non-stop), YourClimbing (for rock climbers), and YourMTB (for mountain bikers.)

If you are into any of these sports, come join the fun.


I’ve been pleased to see that the reaction to TechStars has generally been very positive. We’ve been pleasantly overwhelmed with quality applications for the program – over 75 to date for the 10 spots.  There are still 52 days to apply, so if you are thinking about it, I encourage you to give it a shot.

Of course, there has been some debate about whether or not TechStars is “worth” giving up 5% of your equity. I thought I’d take a crack at addressing this and further explaining what we are trying to do with TechStars.

The answer to this question depends on your situation. If your company is funded, or clearly worth millions today, then TechStars is probably not for you.  Perhaps some people might think that their idea alone is worth millions, and so they won’t apply. I can tell you from first hand experience that your idea is not worth much until you execute in such a way that you create real value. On their own, ideas are usually not worth the napkin they’re scribbled on.  I am exposed to thousands of ideas every year (and often have several each morning while I’m in the shower) – only a handful of entrepreneurs will successfully build something around their idea and create meaningful value.

Perhaps when you consider the opportunity presented by TechStars, you will calculate that the initial valuation of your company is between $100,000 and $300,000 (based on the share of equity TechStars gets for the cash it puts up.)  Some entrepreneurs will naturally argue that this is a low valuation. Conversely, many investors will argue that it is quite high. In time, one will be proven right and the other proven wrong. But if you’re looking at TechStars and the only value you see is the seed funding, then you’re missing the point of what we are trying to do.

You can’t easily assign a value to what TechStars provides, but we believe it goes well beyond the value of the seed funding. The educational opportunities alone are potentially life changing. What’s the value you’d place on access to the mentors who are involved? How long will it take you to assemble the large investor audience that we’ve lined up for you to pitch to at the end of the summer? What’s the benefit of an experience like this really worth?  Hopefully, the answer to each of these questions is “much more than the seed funding alone.”

The value of TechStars is even more compelling if your company will need to raise more money. You’ll be in a great position to pitch to investors at the end of the summer, due to the coaching, advice, and mentoring provided by TechStars. Investor day brings active angel investors and venture capitalists right to you, and maximizes your chances of getting further funding.  Because TechStars is vested in your success, it’s in our best interest to help you obtain more funding. Our initial 5% equity will be diluted by this further financing because we don’t ask for any dilution protection, rights of first refusal, or special controlling provisions (we will have common stock, just like you.)  But we’re ok with this dilution because it’s fair, equitable, and further increases your chance of success, which again, is what it’s all about for both parties. 

Think of TechStars not as a source of capital, but as a co-founder that brings a little money to the table.  TechStars will be successful if your startup becomes a huge success, adds value and meaning to the world, and creates wealth.  In the end, your company will likely either be worth something or nothing. Once you start thinking about this in binary, you should quickly realize that the whole game is really all about improving your odds, especially early on.  We think TechStars can greatly improve your chance of success.


While running on the treadmill this morning, I was flipping through the channels as I couldn’t manage to run while watching Billy Madison.  Morning TV is such crap, but I’m in Cincinatti and the roads are covered with ice so I’m treadmill bound. 

I never stay on CNN or CNBC because watching news while running is possibly the most tedious thing I could imagine, but the CNN headline caught my eye.  I can’t remember it exactly now, but the essence was “Ethanol Demand Up, Corn Supply Depleted.”  I stopped and listened to the story which was a long and winding discussion where the main points were:

  • Bush just said “we need alternative fuels (e.g ethanol)”
  • Ethanol comes from corn
  • Corn prices have risen from $1.80 / bushel to over $3 / bushel
  • Corn prices are going to keep going up
  • Oil prices are going to keep going down
  • Ethanol will become more expensive and – as oil becomes less expensive – we’ll keep using it
  • This will impact lots of other things – like the cost of beef – which are going to go up

Um – yeah – high school macroeconomics.  I love the broad “the market will take care of this” discussion.  Er, um, government subsidiaries anyone?