I love a good rant.  I got one several months ago from Janet Stites in reaction to a post I wrote about financial projections.  I asked her if I could publish it and she said "yup."  Here it is.  Janet’s thoughts are her own and come from her experience, but I thought her perspective on entrepreneurship and VC’s was a useful perspective to ruminate on.

Dear Brad: I’m Janet Stites, cofounder/ former publisher of AlleyCat News now founder/publisher of Talent Pool New [east]. I came across your posting on the issue of projections always being wrong and how you mentioned (in a small way) the value of creating a business which scales. I wish you could open this dialogue on a larger basis with VCs and particularly early stage investors because one’s company can go under while taking the time to create these models. If VCs, early stage and particularly angel investors, would begin to ask for the revenue model, price point, universe of the market, competitive advantage and, from there, try to ascertain how flexible & creative, in terms of tweaking the b-model, the entrepreneur might be if the market changes, war starts, economy falters.  Investors might see a lot better deal flow in terms of quality and management in terms of tenacity and the entrepreneur might be able to avoid having to walk away from a potentially great company because his/her credit line has run out…spouse left…child starts college (I remember when the founders of iVillage thought, in 1995, chat was their model and TheStreet.com, thought, in 1996, they would make their fortune off of subscriptions.).

As you mentioned, it often takes one and a half to two years to start accruing revenue. I bet what stands between entrepreneurs and the finish line a few months out is often about $75,000 to $100,000–which may be too much to come up with personally after two years of no income and, no doubt, already a second mortgage, college fund diminished, etc.

I wonder how many viable businesses have had to fold because the entrepreneur wasn’t a trust fund baby or student just dropping out of Harvard (often the same) and able to live with 6 friends in a closet for a year or so (don’t forget the Teva’s and the bike!) What missed opportunities for investments and innovations in general? VCs might say that "if it was really worth it, you would make the time," but that is easy for them because VCs get a money management fee–you don’t have to wait until one of your investments has been acquired, gone public, or is simply in the black, to make your money. During the dot.com boom any number of VCs made a fortune as their portfolio companies were acquired or went public and they could cash out, even though the companies were never profitable and shareholders lost their shirts.

Also, often VCs –based on the many I know–are not the primary care takers of their kids so they are not choosing between making sure there is something fresh and green on the table for dinner, all the permission slips are signed, etc. or sitting in front of a computer all night creating multiple case scenario spreadsheets. One VC who has a blog once wrote that if he wasn’t writing the blog, he’d be changing diapers. My heart went out to his wife. What if she wanted to start a blog or a business? That would be one stinky baby.

Unlike the west coast, many early-stage or angel investors didn’t make their money as entrepreneurs —never even sweated payroll or signed personally for a credit line, so it’s hard for them to understand the time-value ratio of seeking money vs. credit card debt, vs. just calling it a day.

Anyhoo–I wonder what would happen if someone with your visibility in the financial community would encourage VCs/angels to re-think what they want in terms of projections (given they’re always wrong). You are in a position to create change…but your audience has to be your peers, not the entrepreneurs.

I’m looking for a new running log.

I’ve been using Cool Running as my log.  They were bought by Active sometime last year.  Last month Active discontinued Cool Running and migrated all the data to Active Trainer.  I was optimistic that Active had thought this through, as I like the Active folks and think they’ve generally done a great job integrating their acquisitions.

To my great disappointment, I discovered that Active Trainer stinks.  Cool Running was 95% of what I wanted to track my running.  Active Trainer is maybe 50%.  Clunky UI, missing data, hard to get at summary information, and a generally crummy user experience.

Oh well.  I’ve been on both sides of buying and selling companies (and web services) and I know that sometimes transitions don’t work out as planned for end users.  In this case I’m too impatient to wait a year for Active to get their service to parity with Cool Running, even if they chose to.  So – it’s time to look for a new running log.

Now – I might not find one.  I might end up staying with Active Trainer.  But I’m going to play the field and see what my options are.

I’m looking for suggestions from any runners (or other folks that track their workouts online) out there.

Amy and I are proud to announce that we’ve completed the fundraising for Boulder Building New Orleans.  Our goal was to raise $50,000 to fund a high quality / low cost house in New Orleans for someone displaced by Hurricane Katrina.  Due to the generosity of many of our friends in Boulder (and several from outside Boulder), we’ve accomplished this goal.  The Community Foundation Serving Boulder County was instrumental in helping us manage this effort.  Thanks to everyone involved!  Following is the press release that the Community Foundation issued last month.

Boulder Building New Orleans

Local giving builds a home for a New Orleans family

BOULDER COUNTY (November 12, 2007) – A little over a year ago Amy Batchelor and Brad Feld had a discussion about how they could directly contribute to rebuilding New Orleans in the aftermath of Hurricane Katrina.  They had made financial contributions and underwritten several trips of students to the city, but Batchelor and Feld were looking for something tangible to do. A close friend and nationally known architect, Coleman Coker, told the couple of a project he was working on with his Tulane architect students building contemporary, sustainable, affordable housing in New Orleans.

“Coleman connected us with the folks at the Neighborhood Housing Services of New Orleans (NHS), a New Orleans based non-profit that helps first time home buyers,” said Feld. “After a little study, we determined that Coleman and his students could provide a high quality house for a family for a $100,000. As a result, we put together a program, in conjunction with The Community Foundation, that we call Boulder Building New Orleans (BBNO). Our goal was to raise half of the purchase price through donations and then have the family take out a mortgage for the other half. With the contributions of others in the Boulder area, we have raised our $50,000 goal.  Amy and I are covering all administrative costs of the program so 100% of the donations are going toward the house.”

Architects are currently finishing construction drawings of the “Boulder House” and are on schedule to break ground the first of the year. NHS is providing the line of credit to finance the construction.

Coleman’s students at Tulane University and NHS are building multiple houses with the help of donors like those here in the Boulder area.

“We hope the BBNO house will inspire other cities to build a house just like ours. Just think of what New Orleans would look like if every city builds just one house,” said Feld.

Donations to the Boulder Building New Orleans Fund through The Community Foundation are 100% tax deductible.

The Community Foundation exists to improve the quality of life in Boulder County, now and forever, and to build a culture of giving. The Foundation connects the resources of local donors with non-profit organizations to facilitate philanthropy in meaningful and useful ways, for good and forever. www.commfound.org

One of Kenai and Brooks’ favorite thing to do is to destroy any dog toy we give them.  Apparently Micah Baldwin’s dogs have the same tendencies (as does my brothers dog Nevada, although she only goes after the dog squeaky things inside the toys.)  I guess most dogs enjoy death and destruction of toys (presumably that’s one of the drivers for the rapidly expanding dog toy industry – one of my 2008 predictions is that the dog toy industry will surpass the cat toy industry.)  To address this issue, we decided to get Kenai and Brooks a giant granite brick for Christmas this year.

Ah – it’s the 2008 tech predictions time again.  Mark Andreessen has a hilarious post dissecting the Economists 2008 tech predictions titled When non-technologists write about technology … They’re so CUTE!  Mark’s commentary is brilliant and has much more useful information than the predictions.

I predict 2008 will be the year that bloggers decimate all the 2008 tech predictions and reveal their fundamental flaws.  Hey Mark, can you take on the Read/WriteWeb 2008 Web Predictions next?

I’ve periodically engaged in the debate about who actually owns your email.  The assertion that email sent from your corporate email address is owned by the company is a difficult one for me to deal with, especially since email has become a ubiquitous means for communication.  As a result I find the entire thing tiresome – but important. 

I’m a big believer in private property rights.  I also know the risk of the government granting a property right inappropriately (for example, the evils of software patents.)  Today, the New York Times reported that The National Labor Relations Board Restricts Union Use of E-Mail.

The National Labor Relations Board has ruled that employers have the right to prohibit workers from using the company’s e-mail system to send out union-related messages, a decision that could hamper communications between labor unions and their membership.

In a 3-to-2 ruling released on Friday, the board held that it was legal for employers to prohibit union-related e-mail so long as employers had a policy barring employees from sending e-mail for “non-job-related solicitations” for outside organizations.

The ruling is a significant setback to the nation’s labor unions, which argued that e-mail systems have become a modern-day gathering place where employees should be able to communicate freely with co-workers to discuss work-related matters of mutual concern.

I’m not a fan of unions, but this is stupid.  Solution #1: Union members all get a Google Apps account (member@unionname.com) and use that for union communications.  Since it’s a union email account, shouldn’t that be ok even thought it’s being sent via a web browser on a work computer?  I don’t know union rules well enough, but do they prohibit interaction with other union members on work facilities during work hours?  If not, then this should work.

Stupid Company Trick #1: If the company believes it owns the email, doesn’t it actually want the email on the company’s e-mail system?  If the company has made every employee sign a little thing saying "we own your email", this would give the company the right to read all the union-related email which seems to give the company a big advantage here!

Stupid Government Trick #1: Why is our government wasting tax payer dollars on this? (Hint – this is a rhetorical question.)

My switch to the Mac is not going well.  The evidence for this is that both Amy and I are continuing to work on our PCs even though we have beautiful new Mac Laptops loaded up with software and fully configured.  Every few days I try again – and then bail after an hour or so of frustration.

One of my biggest barriers is Exchange integration.  Since we use Exchange extensively (including Tasks), there’s a meaningful switching cost to move off of it.  Microsoft Entourage 2004 sucks.  I’ve been a beta tester for Microsoft Entourage 2008 which is better, but still doesn’t support a bunch of basic Exchange integration (like Tasks) and has numerous UI yuckiness.

Yeah – I know that I can use Mac Mail and sync with Exchange, but that doesn’t get me very far in a mixed use environment (Calendar, Contacts, Tasks anyone?)  I know I can use Parallels or Fusion to run an XP or Vista image on my Mac to run Outlook, but if I’m going to do that I might as well just live with my PC.  And I know we could switch off Exchange, but I’m not going to begin to try to fathom that (although Ross is playing around with it.)

As I watch all my Mac friends "deal with this" (e.g. Ryan), they make it work but the cost is non-trivial.  It’d be so much easier if Apple would just decide to really support Exchange natively within their apps (and on the iPhone.)

Hmmm – maybe they are. 

I’ve worked with my good friend Heidi Roizen at Mobius Venture Capital since 1999.  Heidi transitioned out of her role this year and has decided to do something completely different.

When someone leaves a VC firm, they usually say something like they are "following their passion."  I accept that the passion of some ex-VCs is to run a software company, but it’s not much of a "passion shift."

As long as I’ve known Heidi, she’s been passionate about her weight.  Or rather – passionate about getting rid of some of it.  Most of our serious discussions were on a walk either at the Dish or around her neighborhood.  So – I wasn’t that surprised when she told me about her idea for SkinnySongs.

I came up with the idea for SkinnySongs because I wanted great music to keep me motivated about losing weight and getting in shape — and I couldn’t find any. I wanted fun but empowering music, like Pink’s 18 Wheeler or Carrie Underwood’s Before He Cheats, but I wanted the lyrics to be about taking charge of my weight and getting in shape. And I didn’t want preachy or corny music — I wanted first class, radio-hit-quality music to listen to while walking, running, hiking, working out, driving — even while just sitting around if that’s when I need to hear it.

Heidi’s inner rock star is finally coming out.  She wrote all the lyrics on her first SkinnySongs album.  The composer and producer for the majority of the songs is David Malloy, a heavyweight in the music industry with over 40 number one hits to his credit as a producer and two Grammy nominations as a songwriter.   The artists are the real deal (Tania Hancheroff, Kaleo Sallas, Larkin Gayl, Susan Ashton, and Rachelle Byrne).  And the whole project was executive-produced by George Daly, CEO of About Records, whom Heidi first met through my other partners Ryan McIntyre and Jason Mendelson. 

SkinnySongs works great – Heidi has dropped a ton of weight and looks awesome.  Pick up the music and a couple of t-shirts for post-holiday ‘resolution support’ gifts for your friends that will soon be dieting again after the endless holiday food.

I received the following the other day from Micah Baldwin, who is now running business development at Lijit (and is a deliciously hysterical person when he wants to make a point.)

If I hear “Tell Brad his blog loads way too slowly” one more time (it has now surpassed “Are you too legit to quit”) I will shove a hot stake into my eye. Just thought you would like to know that you will be the cause of my soon to be eye-patch.

Since this is the 4,271st time I’ve heard this in the last 173 days, I promise I will do my best to have some performance improvements implemented by 2008.