Brad Feld

Month: August 2009

There is a great article by Timothy Lee, an adjunct scholar at the Cato Institute, out today titled The Case against Literary (and Software) PatentsLee, an adjunct scholar at the Cato Institute who is also a Ph.D. student in Computer Science at Princeton, totally nails it. 

Here’s the beginning:

“Imagine the outcry if the courts were to legalize patents on English prose. Suddenly, you could get a "literary patent" on novels employing a particular kind of plot twist, on news stories using a particular interview technique, or on legal briefs using a particular style of argumentation. Publishing books, papers, or articles would expose authors to potential liability for patent infringement. To protect themselves, writers would be forced to send their work to a patent lawyer before publication and to re-write passages found to be infringing a literary patent.

Most writers would regard this as an outrageous attack on their freedom. Some people might argue that such patents would promote innovation in the production of literary techniques, but most writers would find that beside the point. It’s simply an intolerable burden to expect writers to become experts on the patent system, or to hire someone who is, before communicating their thoughts in written form.

Over the last 15 years, computer programmers have increasingly faced a similar predicament. We use programming languages to express mathematical concepts in much the same way that authors use the English language to express other types of ideas. Unfortunately, the recent proliferation of patents on software has made the development and use of software legally hazardous. That’s why many of us are hoping the Supreme Court definitively rules out patents on software when it hears the case of Bilski v. Doll this coming term.”

And here’s the conclusion:

“The writing of software, like writing in English, is a creative activity practiced on a vastly wider scale than other activities commonly afforded patent protection. Small businesses and nonprofit organizations far removed from the traditional software industry have IT departments producing potentially infringing software. The Brookings Institution’s Ben Klemens has documented that this is not a theoretical problem. Entities as diverse as the Green Bay Packers, Oprah Winfrey, Kraft Foods, and J. Crew have been sued for developing or using ordinary business software.

Regulations that work well when applied to a handful of large, capital-intensive firms can become an intolerable burden when applied to millions of small organizations and individuals. It’s not reasonable to expect hundreds of thousands of small businesses to vet the software they produce for patent infringement, any more than it would be fair for them to face liability for publishing a brochure with an infringing turn of phrase.

The high overhead of the patent system demands that it be limited to relatively concentrated and capital-intensive industries in which most participants have the means to comply with the requirements of patent law. Patents on English writing would not meet this requirement. Neither do patents on software.”

There’s plenty of good stuff in between.  Go read it.  I just got invited to go to the Supreme Court and listen to re: Bilski.  Psyched!

I’ve been a long time practitioner of having “random meetings” where I meet with whomever wants to get together with me.  Some amazing things have come out of this over the years, including my first meeting with David Cohen which turned into TechStars.

I’ve decided to try something different for the next few months.  Rather than having random days in my office, I’m going to have “community hours” in the Bunker (the TechStars office) once a month.  The TechStars space is big enough for people to hang out and mingle (unlike my office) so it’s easier for groups to hang out and meet each other, in addition to spending time with me.  I’ve always loved the idea of “professors office hours” – this is the closest I could come to simulating it in my little section of the universe.

We’ve set up a self-service wiki for my Community Hours.  The rules for signing up are simple – just set up an account and then pick a date and time slot.  Put your name, email address, and a brief description of the meeting.  Given my ever changing schedule, there’s always a chance that we’ll have to move one of the dates around so having a valid email address is critical for us.  More extensive instructions are on the wiki.

My partners Seth Levine and Jason Mendelson are also giving this a try, as is David Cohen.  If it works, we’ll do more.  Feedback and suggestions are welcome.

My partner Seth wrote a short post earlier today about Trada titled Are you a PPC expert? Read on…  We funded Trada last year and Seth and I have an ongoing (and often entertaining) debate about “stealth companies”.  Well – Trada is one the edge of no longer being stealth – here’s a hint:

Trada is building the first crowdsourced marketplace for Pay Per Click marketing campaigns. On one side of our marketplace, advertisers create and fund PPC marketing campaigns for products or services they want to promote on the Google, Yahoo and Microsoft ad networks. On the other side of the marketplace, PPC experts like you (we call them Optimizers) select campaigns they’d like to work on and begin creating ad groups, ads and keywords, just as they would in Google AdWords.

If you are are a PPC marketing expert click here to find out more and sign up.  Especially if you are Google AdWords Qualified or SEMPO Institute trained.

The Cash for Clunkers program worked – at least according to our government. 

“The CARS program ended sales on the Monday night with nearly 700,000 clunkers taken off the roads, replaced by far more fuel efficient vehicles. Rebate applications worth $2.877 billion were submitted by the 8 p.m. deadline, under the $3 billion provided by Congress to run the program.”

Ok.  Whatever.  Now the Cash for Appliances program is coming.

“Beginning late this fall, the program authorizes rebates of $50 to $200 for purchases of high-efficiency household appliances. The money is part of the broader economic stimulus bill passed earlier this year. Program details will vary by state, and the Energy Dept. has set a deadline of Oct. 15 for states to file formal applications. The Energy Dept. expects the bulk of the $300 million to be awarded by the end of November. (Unlike the clunkers auto program, consumers won’t have to trade in their old appliances.)”

Yeah, well, whatever.  Let’s deal with the real opportunity – cash for bad conference wifi.  From Eric Norlin over at the Defrag Conference blog:

“Defrag’s “cash for bad conference wifi” is based on a simple premise: some tech conferences can’t manage to have good wifi, but over here at Defrag, we know how to get it right. And we’re gonna help you trade in your bad conference wifi experience for a good one! Here’s how it works:

1. Just email me (enorlin AT any type of proof that you went to a conference and include a statement to the effect of “Hey eric – I went to this conference and the wifi SUCKED.”

2. I’ll respond to your email with a discount code that will save you some greenbacks on defrag registration, and help you trade in your bad conference wifi experience for a brand new good conference wifi experience.”

Now that’s something you can really use.  The Defrag agenda is evolving nicely – it’s going to be here sooner than we think (11/11 – 11/12 in Denver, Colorado).  Don’t miss this opportunity to stimulate your brain.

Venrock – one of the oldest venture capital firms (40 years old and going strong) has released a magnificent book titled Shaping the Future: 40 Years of Innovation.  While self promotional, they’ve done it in such a clever and powerful way that all it does as you read through it is smile and get excited about the promise of entrepreneurship.    I encourage you to put it up full screen and take your time reading through it.

The focus is on 40 startups and the entrepreneurs that created them that Venrock has funded over the past 40 years.  Sprinkled throughout are some pearls from Laurance Rockefeller, the founding force behind Venrock.

Great stuff – and very nicely done.

I retweet a lot of stuff – hopefully it’s useful to the folks that follow my twitter stream.  I try to keep the retweets relevant – either useful business stuff, funny things my friends said, or stuff from companies I’m an investor in.

As more and more companies start using twitter as a promotional channel, I have one simple piece of advice. 

Make the maximum length of your tweet 130 characters minus your username

The reason to use this simple formula is that there is currently no standard for “retweeting”.  I use Twhirl, so a retweet ends up being RT @username: the_tweet.  TweetDeck uses the same format.  But sometimes the retweet is something slightly different (e.g. RT the_tweet (via @username)). 

Using the RT @username the_tweet approach, you essentially use up 5 characters (R,T, two spaces, and a colon) plus the length of your username (e.g. mine is 5 – bfeld).  So – the longest tweet I could do that can be automatically retweeted is 130 characters.  But, since this isn’t the standard, give your retweeters a few more characters to play with (hence the 130 characters – username).

For example, earlier this morning Return Path, a company I’m an investor in tweeted the following:

Need a quick refresher on deliverability? Join us for a 30 minute webinar tomorrow on why emails get blocked at the gate.

Here’s what my effort to simply retweet this in Twhirl looked like:


15 characters too long.  Oops.  So I had to manually shorten it.  Here’s what I came up with:

RT @returnpath: Need refresher on deliverability? Join for a 30 minute webinar on why emails get blocked at the gate.

Same general message, but it took me about a minute to edit it, make sure it fit, and make sure I didn’t lose any of the message.  I’m seeing this regularly now and know I bail out of retweeting stuff because I don’t feel like spending the minute getting the size right.  So – leave me at least five characters + <username> for the RT<space>@<username><colon><space>, but preferably 10 – <username> until this gets standardized.

And – if you need a quick refresher on deliverability and why emails get blocked at the gate, check out the Return Path webinar tomorrow –

Ancient MS-DOS Tricks

Aug 26, 2009
Category Random

I had a dream last night.  In it, I was sitting in front of an old PC.  I typed:

copy con config.sys

I can’t remember much more of the dream.  But – I do remember typing this.  My dream must have been about something in 1991.

Suddenly the blogosphere is talking about the need for a standardized first round term sheet.  The latest iteration of this seems to have blossomed when TheFunded Founder Institute released a “Plain Preferred Term Sheet” (developed with WSGR).  According to the article in TechCrunch, the goal is to (a) protect founders and (b) reduce legal fees.  Kudos for yet another shot at this – between all the blog posts that have been written about this over the past few years, term sheets are no longer a mysterious thing to an entrepreneur.

However, let me suggest that the problem is not “the idea first round term sheet.”  We now have a bunch of these – the YCombinator one, the TechStars one, the NVCA model docs, and several from law firms (WSGR did the YCombinator one, Cooley did the TechStars one.)

I think the focus should be on standardizing the docs and having a handful of fill in the blank terms for a first round financing.  I’ve done my share of financings with a set of bullet points in email (I just proposed one today) and I’ve stated that the only things people should care about in the first round financing is (a) valuation and (b) the amount raised.  That said, there will always be a handful of other things to argue about in a first round investment – most notably vesting dynamics, change of control issues, and option pool size (which is really just valuation).  However, you should be able to do this off of a one page checklist that everyone understands.

But let’s get back to the real issue – standardizing the docs.  I read through the protective provisions in TheFunded Founder Institute (TFFI) term sheet and they are a version that leaves a few things out that are important to me.  I like a tighter version.

First is the TFFI version:

“So long as 25% of the aggregate number of Preferred shares issues in the financing are outstanding, consent of at least 50% of the then-outstanding Preferred will be required to (i) alter the certificate of incorporation if it would adversely alter the rights of the Preferred; (ii) change the authorized number of Preferred Stock; (iii) authorize or issue any senior or pari passu security; (iv) approve a merger, asset sale or other corporate reorganization or acquisition; (v) repurchase Common Stock, other than upon termination of a consultant, director or employee; (vi) declare or pay any dividend or distribution on the Preferred Stock or Common Stock; or (vii) liquidate or dissolve.”

Following is the standard we use in all of our financings:

“For so long as any shares of Series A Preferred remain outstanding, consent of the holders of at least a majority of the Series A Preferred shall be required for any action, whether directly or through any merger, recapitalization or similar event, that (i) alters or changes the rights, preferences or privileges of the Series A Preferred, (ii) increases or decreases the authorized number of shares of Common or Preferred Stock, (iii) creates (by reclassification or otherwise) any new class or series of shares having rights, preferences or privileges senior to or on a parity with the Series A Preferred, (iv) results in the redemption or repurchase of any shares of Common Stock (other than pursuant to equity incentive agreements with service providers giving the Company the right to repurchase shares upon the termination of services), (v) results in any merger, other corporate reorganization, sale of control, or any transaction in which all or substantially all of the assets of the Company are sold, (vi) amends or waives any provision of the Company’s Certificate of Incorporation or Bylaws, (vii) increases or decreases the authorized size of the Company’s Board of Directors, (viii) results in the payment or declaration of any dividend on any shares of Common Preferred Stock,  (ix) issues debt in excess of $100,000, (x) makes any voluntary petition for bankruptcy or assignment for the benefit of creditors, or (xi) enters into any exclusive license, lease, sale, distribution or other disposition of its products or intellectual property.”

Details, but important ones.  The protective provisions in the TFFI term sheet include the word “adversely” in section (i) – this is simply “lawsuit bait” if it ever comes to pass as an issue.  I also want a protective provision to disallow increases in Common Stock.  And – given the board size, I want a protective provision that doesn’t allow the board to be increased without my consent.  Finally, I want a protective provision against making an exclusive deal or license for the assets – this is another way of selling the company out from under the investor.

Now, I guess I’ll negotiate on these, but I can’t imagine why anyone would struggle with any of this.  Except for the lawyers.  Remember – we are still in the term sheet – just wait until the lawyers expand this into the actual financing documents.  I’m sure the WSGR lawyers might have a different point of view, as might my lawyers, or any other lawyer that looks at this.  Or, if the WSGR lawyer is on the other side of the deal (representing the VC) he might have an issue with the TFFI version.

Standardizing the deal documents would solve a huge part of this.  Also, if the lawyers acknowledged that they aren’t adding much value at this level (e.g. it’s a simple negotiation and a straightforward thing to document), you could get to a place where lawyers should be able to do this for a low fixed price (say, $10,000).  However, this has to be done at the legal level, or you don’t really solve the fundamental issue.  Sure – you theoretically can streamline the process by starting with a better “form” that has been “pre-negotiated” (e.g. take it or leave it), but until you standardize the legal stuff behind the deal, you are always going to have lawyers armed with word processors redlining things.

I’m not unhappy about the effort to simplify this – quite the opposite – I’m delighted even more people like TheFunded are getting in the mix.  However, I encourage everyone, especially the lawyers, to recognize the value in standardization of the underlying docs (with the appropriate “fill in the blank negotiated terms”).  I’m not sure how to get this to a standard point, but it’s got to be easier than figuring out if universal healthcare is possible and – if so – solving for it.

Dave Jilk, my first business partner (Feld Technologies) and I have settled into a nice annual tradition of climbing a 14er each August.  This year we climbed three in one day – Mt. Democrat, Mt. Cameron, and Mt. Lincoln.  We started at 6:15am Saturday morning.


By 8:15am we were at the top of Mt. Democrat.


The purists don’t count Mt. Cameron as a 14er since there isn’t enough descent between Mt. Democrat and Mt. Lincoln.  But I count it because by the time you get to the top of Mt. Cameron you definitely feel like you’ve climbed another big mountain.  Plus, I was powered by my TechStars socks.


After 6 hours, we made it back to the bottom.


What an awesome way to spend a Saturday!