In 2006 I ran the Boston Marathon as a Charity Runner for The Michael Lisnow Respite Center. I had a tremendous Experience At The Boston Marathon even though I got a nasty email from someone a few days before that was a Major Emotional Bummer for me. I learned plenty from processing the entire experience (good and bad) and wouldn’t trade it for anything.
A year ago I adopted Accelerated Cure Project for Multiple Sclerosis as one of my official 50×50 marathon sponsors. They are a great nonprofit based in Boston that is working to cure MS by determining its causes. It turns out that they have some extra Boston Marathon charity passes this year. They asked me if I wanted to run Boston again but since I’m still focused on one marathon in each state, I passed on this year’s race.
To qualify for the number, you don’t have to be located near their office or have an MS connection. You just have to be able to physically finish the marathon within 6 hours, and there is a required fundraising component (that ACP will help you to achieve).
If interested in running one of the *most* prestigious marathons and supporting a high impact, highly efficient nonprofit, please email Jane at or call her at 781-487-0010. I can’t recommend ACP highly enough – they are just great folks. Thanks Jane and crew for supporting the Boston Marathon Charity program!
My monthly column in Entrepreneur Magazine is up (and on the newsstands). This month’s article is titled VC or Angel Money? and has some suggestions for how to think about whether you should be approaching VC’s or Angel’s when raising a round of financing.
I’ve been involved in helping start a number of non-profits. One of them – National Center for Women & Information Technology – has surpassed my wildest expectations. Lucy Sanders and her team have done an awesome job of building a coalition of over 170 prominent corporations, academic institutions, government agencies, and nonprofits working to improve U.S. innovation, competitiveness, and workforce sustainability by increasing women’s participation in IT.
I’ve been chairman of NCWIT since its early days. As with most of the non-profits I’ve been involved in helping start, the board of directors evolves over time. Unlike for-profit companies, each stage feels like a step function as you add new board members who bring a new set of capabilities, range, and diversity to the board.
Stage 1 for NCWIT’s board was a group of early board members who simply helped get things going. There was a lot of evangelism for NCWIT, a lot of ad hoc help, and plenty of ambiguity about roles and responsibilities. The board members were extremely enthusiastic and supportive – we wouldn’t have made much progress without them.
Stage 2 for NCWIT’s board was an effort to build some formality into the board. We included several members from our larger investment partners, a handful of folks that played specific functional roles, and began to organize around a set of board committees. Some of these committees were effective; some weren’t. The consistency of board communication increased and while there was still plenty of ad hoc activity, in general things were more organized.
Stage 3 for NCWIT’s board has just been launched. We just announced the appointment of eight new board members.
It’s an incredible set of people that cross the boundaries between entrepreneurship, academia, and established technology companies. They are joining a well established board that has a great working tempo. I’m really psyched about the next stage of NCWIT.
Boulder AWS Anonymous held its first meeting last week, and there were eleven attendees despite the fact that the meeting had been inadvertently scheduled at the same time as Obama’s inauguration. Attendees represented a wide variety of uses and potential uses of Amazon Web Services, ranging from hosting popular websites and application development to load balancing, autoscaling, and internet telephony. The group is encouraging anyone in the area interested in getting updates to join their Google Group and/or to attend the next meeting at The Cup, 1521 Pearl St, at 10:00 am on Wednesday February 18.
Today’s Washington Post article titled Staff Finds White House in the Technological Dark Ages was no big surprise. However, while I was taking a shower (in a hotel in the Houston suburbs of all places) it occurred to me that this presents an incredible marketing opportunity for Apple.
If I were king of Apple (or say, a board member with deep White House ties), I’d be on the phone with “the appropriate person” with the offer of “a Mac on every desk in the White House along with an iPhone for every White House staffer.” I’m sure there is some law that prevents Apple from giving this away from free so I’d offer it “at cost” just to Mac-enable the White House.
You can’t buy better PR than “Apple computerizes the Obama Administration, displacing ancient PCs running Windows XP.” Plus, the leader of the free world then would carry around an iPhone and a MacBook.
In addition, I see an executive order coming that completely changes the stupid, archaic, and limiting rules about archiving communications within the White House. This is a regular excuse that is used to explain why it’s “hard” to use things like Blackberries if you are president. Baloney – there are plenty of straightforward approaches that solve for whatever you want to do. It’s not like someone archived all of Rumsfeld’s Snowflakes (or maybe someone did – if so – egads.)
While we are at it, did anyone notice that Apple reported record revenues and profits in the quarter ending 12/27/08? Yeah, I guess you did but it’s worth repeating the numbers since all we’ve been hearing is bailouts and losses. These are quarterly numbers. Revenue: $10.17 billion. Net Income: $1.61 billion. These numbers are lower than reality because of the bullshit GAAP rules that force accounting for the iPhone to be reported ratably over the life of the iPhone contract. If you actually accounted for this in a way that made sense, Revenue would be $11.8 billion and Net Income would be $2.3 billion. As every good MBA knows, the key rule is to “follow the cash” which increased by $3.6 billion in the quarter. It’s worth saying again – $3.6 billion. Wowza. Well done Apple.
Are you a VP or C-level exec at a Boulder (or Denver) based startup? Eric Marcoullier, the CEO of Gnip has created a Boulder Startup Exec Email List. It’s open to people that fit the following criteria.
Eric moved to Boulder from San Francisco last month and is getting deep in the startup scene here. He promises that VCs will not be invited to participate in this list – I tried and was solidly rejected.
While the criteria don’t include “profitable companies that never received any financing”, I’d encourage anyone that is self-funded / bootstrapped that is generating over $500k of revenue a year to get involved also.
In December, I wrote a post titled Give Your Sales People All The Knives. While I let you draw whatever conclusions you wanted from the post, I thought I’d follow through and give you a little more detail about what I meant by the statement.
I framed the problem with the struggle many software companies have been going through over the past few years (or decades – depending on who’s version of history you believe) around selling perpetual licenses vs. subscriptions. I inadvertently included the construct of the deployment model (desktop, server, or SaaS / hosted) which, while a key part of the evolution of the software business, was not the part of the problem I was referring to when I suggested you should give your sales people all the knives.
A few people wrote me concerned that I was suggesting that the sales organization should determine the deployment model and that I was suggesting a company shouldn’t differentiate between desktop, server, or SaaS. Don’t be concerned about this – it isn’t my argument or suggestion.
Instead, I’m focused entirely on the licensing and pricing model (which I’ll simply refer to as the “licensing” model – which includes price.) I’ve been in more conversations that I care to count about how to price software, regardless of the deployment model. The licensing model and the deployment model inevitably get tangled up when they shouldn’t.
In 2009 (and going forward) customers will buy software using both perpetual licensing and subscription licensing, regardless of how the software is deployed. In addition, customers will buy perpetual licenses but pay periodically (monthly, quarterly, annually) and customers will buy subscription licenses but pay in single payments up front. If you can parse all of that, this is the exact opposite of the theory of how the software licensing and deployment were intended to line up. Of course, this is nothing new as software leasing has been around since the beginning of the software business, as have prepaid services.
While I know all of this gives the auditors great pleasure because it means they get to spend more time lecturing companies about revenue recognition and enforcing accounting policies that distort the true financial picture of the company under the guise of complying with GAAP, it’s irrelevant. Your goal as a company is to create great products that your customers will pay you for. The goal of your sales organization is to sell these products; they shouldn’t care how the customer wants to license the products.
That’s the essence of what I mean by Give Your Sales People All The Knives. While it makes good business sense to have a religious point of view about the deployment model (there are fundamental differences between a SaaS deployment model and a software license / behind the firewall / on premise / whatever you want to call it deployment model), customers buy each deployment model a variety of different ways and your licensing model should accommodate.
I regularly hear the argument that the economics aren’t the same. Baloney – they are approximately the same. A typical perpetual model is $x in year 1 with 0.2x in year 2 and year 3. A typical subscription model is 0.4x in year 1, year 2, and year 3. Tweak this however you’d like; you get a roughly equal cumulative payment stream over four years. I understand the cost of capital argument – you’d rather get the money up front, but remember that some customers want to pay for the subscription model up front (three year pre-pay for the subscription – or a single check of 1.2x) while others want to pay for the perpetual model in equal payments over three years (0.467x / year).
Cash flow follows this logic. The customer wants to pay in different ways to manage their cash flow. Some want to pay monthly; some quarterly; some annually. The deployment model doesn’t matter; the license model doesn’t matter – how the customer wants to pay is what drives this.
Fundamentally, the customer is managing two things. First is cash flow. If the customer has a use it or lose it budget, they want to pay now. If they have no (or minimal) budget but really need the software, they want to pay monthly and try to bury the expense in a cumulative budget, or get a budget exception for a small monthly payment. Second – and more subtle – is how the customer accounts for the purchase. Many companies (whether they should be or shouldn’t be) want to capitalize the software purchase and put it on the balance sheet to manage short term earnings, especially in down markets. Others are perfectly happy to have the purchase be an income statement item. The two issues drive customer purchase behavior much more than your licensing model does. As a result, I’m suggesting you should set up your licensing model to be flexible to accommodate your customer’s needs, rather than the other way around.
Bottom line – if you make software for a living, regardless of your deployment model, you should be able to provide either a subscription or perpetual licensing model, with any type of payment approach.
Many companies have only been giving their sales guys the brown handled knives (e.g. they are limited to using one type of licensing model.) Selling software into a downturn is always harder. Now is the time to give your sales people all the knives. If they don’t carve up enough business, they’ll at least have enough knives to put themselves out of their misery.
Applications for the 2009 TechStars program are now open. If you apply before March 1st, you’ll be eligible to receive an invitation to TechStars For A Day on March 3rd. The applications deadline is March 21, 2009 at 11:59:59 PM MDT.
For an example of one of the TechStars 2008 companies, take a look at the recent article in the NY Times titled An Online Farmers Market. It’s a great profile of Foodzie – one of last year’s companies which was founded by Rob LeFave, Emily Olson, and Nik Bauman. Foodzie recently raised $1m from First Round Capital and SoftTech VC, have launched a dynamite site, and are off to the races.
Hint: Foodzie applied early, came to TechStars For A Day, got into the program, and knocked the cover off the ball.
Apply now. ‘Nuff said.
If you read one book in 2009, read Daemon.
It’s unusual for me to recommend a book so early in the year. Daemon is only my fourth book of 2009. It’s a first novel. And it’s mental floss. But it’s as close to flawless for a book of its genre.
I first heard about Daemon in December from Rick Klau. I got to know Rick at FeedBurner; he’s now at Google running Blogger. Rick told me that I had to read this book. He pointed me to a blog post he had written in 2007 about it.
“I can remember the feeling I had, sitting in the audience as the credits rolled after seeing The Matrix on opening day. I knew I’d seen something that was different, important, and something that I’d want to see again. And again. When I finished Daemon this afternoon, I had that same feeling. Daemon is to novels what The Matrix was to movies. It will be how other novels that rely on technology are judged.”
I immediately one-clicked it on Amazon. It wasn’t available for the Kindle so the hardcover showed up a week or so ago. I devoured it this weekend. Rick’s assessment was correct – this is by far the best techno-thriller I’ve ever read.
The author – Daniel Suarez (also known as Leinad Zeraus) describes himself as “an independent systems consultant to Fortune 1000 companies … An avid gamer and technologist, he lives in California.” He doesn’t mention that he is a magnificent writer and brilliant storyteller.
I won’t ruin any of it for you. It’s got everything you’d expect in a fast paced book that will appeal to anyone that likes Crichton, Brown, Clancy, or my newfound friend David Stone. The tech holds together well and is completely accessible to non-nerds and nerds alike. It’s a page turner with very little wasted plot or character development. And it sets up the sequel (Freedom) superbly.
Yum.