Brad Feld

Month: March 2009

As I read the Berkshire Hathaway 2008 Annual Report, a thought kept popping into my mind that had also come up over and over again while reading Bogle’s Enough: True Measures of Money, Business, and Life.  “Be an investor, not a speculator.”

As a venture capital investor, I have a long term time horizon on my investments.  Since I’m investing very early in the life of a company, I’m usually an investor for five or more years.  Sometimes I’m an investor for over ten years.  I’m rarely an investor for less than a year, although it happens occasionally.

I don’t invest directly in the public markets and I haven’t for a long time.  Periodically I end up with a public company stock as the result of the sale of a company I’m an investor in to a public company, or via that mythical thing called an “IPO”.  In these cases, I have a very specific strategy for exiting my position in the public company over time. 

I do have public market exposure, primarily through a combination of index funds (and equivalents) and some hedge fund investments with friends.  However, I pay zero attention to this on a daily, weekly, or monthly basis.  When I look at the aggregate performance over any meaningful period of time, it is irrelevant when compared to my performance as a VC and angel investor.

When I reflect on this, I realize that I spend 99.9% of my time as an investor and 0.01% of my time as a speculator.  Whenever I realize that I’m in a speculative thought process (such as noticing the Dow on CNN on the ubiquitous airport TVs), I immediately try to stop.  My goal is to spend 100% of my time as an investor.

Not surprisingly, there’s a huge amount of noise going around the system about speculation that is masquerading as investment.  Worst, the two get conflated on a regular basis in the context of what the government should be doing (e.g. incenting “investment” when they are merely either "incenting speculation” or “encouraging speculation”).  Of course, the endless stream of talking heads in the media don’t help this distinction.

When I read Buffett or Bogle, the distinction between investment and speculation is painfully clear to me.  I believe that much of the pain the global financial markets are feeling right now is a direct result of speculation.  As a result, I’m trying to come up with some simple parables for “investment vs. speculation.”  For example, “if you don’t understand what you are investing in, it’s speculation.”  Or, “if your time horizon is less than two years, it’s speculation.”

One of values I’ve always adhered to is that “I’m an investor, not a speculator.”  Now that the government is deeply in the mix, I think we need to spend a lot more “system time” thinking about how to incent and motivate investment, and how to avoid speculation.


I find trail running to be a magical experience.  I live behind Eldorado Canyon State Park just outside of Boulder and have a plethora of trail runs that I can start and finish at my house such as Eldorado Canyon Trail, Walker Ranch, Rattlesnake Gulch, Fowler Trail, Dowdy Draw, Mesa Trail (and all the branches), and South Boulder Creek Trail.

I’ve run them all – many times – in many different permutations.  Since Amy and I own a lot of property that is adjacent to Colorado State Park land and Boulder Open Space, I’m very respectful of staying on the trails as it makes me crazy whenever someone comes off of the Eldorado Canyon Trail or Rattlesnake onto our land.

So – it was with great pleasure that I discovered that Goshawk Ridge Trail is now open.  I ran it today from the Fowler Trail direction.

I have a standard 60 minute out and back run on Fowler trail.  I used to be able to stretch it to 90 minutes if I ran on Denver Water Board land up to the private property boundary.  With the opening of Goshawk Ridge I now have a great new 90 minute loop.  In addition, the trail system now connects up with the Spring Brook Loop and all the Dowdy Draw improvements.  I think I just got another 15 or so miles of trails to play around with, along with links to other trails that I previously had to run on the road to get to!

One of my favorite things about trail running is the serenity.  After about five minutes on the trail, I don’t even notice that the world – outside me and the trail – exists.  No cars, few people (I saw more deer today than I saw people), occasional wildlife (including – er, eek! – snakes), and periodic magical and mystical surprise moments.

I also don’t ever care about my time or pace on the trail run.  I just run.  I’ve never met a hill I couldn’t run up, but I’ve met some that I had to walk down because of my “racehorse ankles” (Amy loves to chide me about my thin ankles).  I don’t look at my watch – I just pay attention to my breathing and heart rate.

I’ve had a hard time getting in a consistent gear since running the Huntsville Marathon.  I had some great runs at the end of 2008, but then twisted my ankle hard in mid January and have been struggling to get in a groove for the last few weeks.   After the last few runs, I’ve found that groove.  And – I’ve found some great new trails.  Thanks Boulder Open Space!


Congrats to all my friends at Kerpoof – it was announced a few weeks ago that Kerpoof was acquired by Disney.  Krista Marks – the CEO and co-founder – emailed me the Kerpoof mouse ears photo which inspired me to blog about them.  It’s another great example of a local Boulder software / Internet company that had a passion, made something happen, and had a great exit.

I met Krista and her co-founders at a CSIA event and then again while they were gearing up for the 2007 TechCrunch 40.  I gave them feedback on their presentation, started playing around with Kerpoof, and decided that Krista was a star.  They weren’t raising money at the time (they were self funded through consulting work they were doing while building out their service) so I gave them feedback whenever they asked and stayed close to them.  I encouraged Krista to have Kerpoof join the Entrepreneurs Foundation of Colorado – which they did.

Last spring, Krista told me they had been approached by a large company that was interested in acquiring them.  She was looking for advice – both business and legal – on the deal.  I connected her with Mike Platt at Cooley – one of the best entrepreneurial M&A lawyers I’ve worked with.  I also provided friendly feedback to Krista and her partners during the process.  Mike turned out to be the perfect fit for them as a deal lawyer and helped them navigate an extended negotiation very gracefully.

The acquisition closed last fall, but Disney and Kerpoof wanted to do some integration before announcing it.  I’m glad the news is out – Krista can now wear her Mickey Mouse ears and PJ’s in public.  And I especially appreciate Kerpoof’s contributions – through the Entrepreneurs Foundation – to several local organizations, including the National Center for Women & Information Technology.

Oh – and keep being innovators!


When I was on vacation last week, I read John Bogle’s book Enough: True Measures of Money, Business, and Life.  In addition to be a superb book, it had a bunch of tasty little nuggets in it.  One of my favorites was “the three i’s – innovator, imitator, and idiot” that was attributed to Warren Buffett.

I thought of this nugget this morning when reading Fred Wilson’s post When Government Funds BusinessIn it, he concludes “When government funds business, it messes everything up.”  One of his examples is the delicious irony that Citi – which just got more government money – is running traditional print ads in the NY Times.

Fred’s wife Joanne’s reaction to this is "We are paying for that ad. In a newspaper that less and less people read every day. No wonder they are in trouble".  Yup – I’d put that behavior in the idiot column.

However, I’m aware of some things going on at Citi that I’d put in the innovator column.  They aren’t public so I don’t think I can talk about them, but I’m amazed at how forward looking, innovative, potentially transformational, and relatively inexpensive these activities are.  They are the kind of fundamental investments that you’d hope major companies are making to stay relevant in the next decade.

While most people aren’t innovators, that’s ok.  Many American’s understand the importance of them and – when the innovators take leadership roles – they motivate the non-innovators to follow them.  In a twist on Buffett’s line, I’d suggest that if you apply it to leadership, you can segment leaders into three categories: innovators, imitators, and idiots.

When I think about my experiences with large companies, I see Buffett’s quip all over the place.  Their leaders include innovators, imitators, and idiots throughout the organization.  Same with government.  The challenge is the innovators – especially when they are in a culture that is playing defense or simply trying to survive – often get drowned out, discouraged, or marginalized.

I believe that one of the key foundations that America has been built on is the innovator.  At all levels of society, throughout history, the innovator has led, created change, and inspired greatness throughout our history.  People love to follow the innovator.  While the innovator is willing to take risks that might result in failure, not taking the risks often results in even greater failure.

My appeal to all leaders in big companies – and in government – is to innovate.  Play offense. If you don’t know how to do this, look around for the innovators in your organization and team up with them.  Challenge the imitators to step up their game.  And don’t tolerate the idiots in any way, shape, or form.