Month: December 2009
My dad sent me an incredible thirty minute interview of Ayn Rand by Mike Wallace in 1959 which I just watched on my iPhone during a treadmill run. I’m a fan of Atlas Shrugged and The Fountainhead and, while I’m intrigued by a lot of Ayn Rand’s philosophy and writing, I don’t consider myself an Objectivist.
One of the quotes I most love is John Galt’s statement “I swear by my life and my love of it that I will never live for the sake of another man, nor ask another man to live for the sake of mine.” A while ago my mom made a painting out of this quote (it currently hangs in my partner Jason Mendelson’s house.)
Regardless of my philosophical perspective, I thought this interview was fascinating. While it’s 50 years old, the format and content is timeless. I think Ayn Rand was brilliant in her articulation of her philosophy and her perspective and did an excellent job of engaging with Wallace without running him over.
As we exit 2009, I encourage you to watch this, if only to have it stimulate your thinking. I expect some of you will love this and some will hate it, but I challenge anyone to say that “it didn’t cause me to think or react.”
Yesterday I had a good conversation with Nivi, the co-author of the great Venture Hacks blog. He recently added me to AngelList, a directory of angel and seed investors that Nivi curates. Our discussion covered a variety of things, including trying to define the parameters that qualifies someone to call themselves an angel investor.
Historically, I’ve always said that someone can call themselves an angel investor only if they actually make angel investments! I’ve been exposed to many “angel investors” who have actually never written a check for an equity investment. These non-angels come in many shapes and sizes and often end up either offering to become “advisors” for equity (or worse – a retainer), “brokers” (where they help you raise money for a percentage raised), or employees (where the end up trying to get a job). Now, there is nothing wrong with this, other than them presenting themselves as “angel investors.” Oh, and some people just like to be in clubs with other people who presumably make investments hang out.
My historical viewpoint was an angel investor is defined as someone who makes at least one equity investment in a seed or early stage company each year of at least $25,000. So, if an angel investor has been investing for four years, they have at least four separate investments of at least $25,000 each for a total of at least $100,000 invested. Basically, if you can’t (or don’t) invest at least $25,000 per year, I don’t think you should call yourself an angel investor.
As we worked through the StartupVisa stuff, we realized this wasn’t a high enough threshold for the type of angel investors we thought should be able to sponsor a Startup visa. So, we came up with the definition of a “Super Angel.” A Super Angel is an angel investor who has been investing for at least three years and has made at least two equity investments of at least $50,000 each in each of the three years. This is a total of at least six equity investments totaling at least $300,000. Most of the people I consider Super Angels are substantially above this threshold.
What do you think of these definitions? Too strict or too loose? Any other thoughts on how to qualify someone as an angel investor?
At my last Boulder Community Hours (or Random Day, or Bunker Hours, or whatever the latest branding of “office hours” is), I spent 15 minutes with Joel Gratz who runs the great site Colorado Powder Forecast.
Even though we only spent 15 minutes together, Joel sent me a nice comment:
“Office hours is such an amazing resource – many thanks for making yourself and others available to the community. This must be a unique concept in the professional, non-academic world! “
Thanks Joel! And if you are a skier in Colorado, this is a must read site either by email, RSS, or Joel’s twitter stream. And Bunker Hours for me for 1/26 still has plenty of slots in case you are interested.
But wait, there’s more. Josh Larson, a TechStars graduate now working at NewsGator, also writes a great blog titled Colorado Weather. Josh has an uncanny ability to predict the weather on the front range better than – er – most weathermen. It could be that he used to work at the NOAA Climate Prediction Center – or maybe he’s just that good. Apparently, Ari Newman, another TechStars graduate and CEO/founder of Filtrbox asked Joel if he was more accurate than Josh. Joel graciously replied that they are good friends.
But wait, there’s more. When on a long, cold run with Kelly Taylor of The Fuel Team (now owned by PR Newswire), he told me about the new Vail iPhone app named Realski that is an augmented reality trail map of Vail Mountain. Since I haven’t skied on Vail recently, I haven’t been able to test it out but if you are an iPhone user on Vail, try it and tell me how it rates.
Update: The Boulder Daily Camera wrote an article today that lists Five iPhone apps that will help you plan skiing, snowboarding trips.
Last night I had a long ranging conversation with Amy and a pair of close friends about the singularity and the future of human and machine. The conversation centered around the notion of consciousness and what happens if (or – in my opinion – when) non-biological entities have more reasoning and processing power than biological entities, especially if this is combined with the notion of consciousness. We didn’t reach any conclusions, but we made an hour disappear really quickly.
I woke up to a fun blog post from one of my favorite biological entities (Fred Wilson) listing his Top Records of the Decade. I brought up one of my favorite non-biological entities (Pandora) and created a new channel called “Fred Wilson 2000 Decade” that consisted of the artists behind these records (I find it intriguing that Fred calls them “records” instead of “albums” or “CDs” or “disks” – it definitely dates him.) I then tweeted the Fred Wilson 2000 Decade Pandora Station and shared it with him via email. Here’s the response I got from the non-biological entity masquerading as Fred.
From: Fred Wilson
Sent: Monday, December 28, 2009 8:36 AM
To: Brad Feld
Subject: Re: Brad Feld thought you would be interested in this station
Dear Pandora Visitor,
We are deeply, deeply sorry to say that due to licensing constraints, we can no longer allow access to Pandora for listeners located outside of the U.S. We will continue to work diligently to realize the vision of a truly global Pandora, but for the time being we are required to restrict its use. We are very sad to have to do this, but there is no other alternative.
We believe that you are in Argentina (your IP address appears to be 220.127.116.11). If you believe we have made a mistake, we apologize and ask that you please contact us email@example.com
If you are a paid subscriber, please contact us at firstname.lastname@example.org and we will issue a pro-rated refund to the credit card you used to sign up. If you have been using Pandora, we will keep a record of your existing stations and bookmarked artists and songs, so that when we are able to launch in your country, they will be waiting for you.
We will be notifying listeners as licensing agreements are established in individual countries. If you would like to be notified by email when Pandora is available in your country, please enter your email address below. The pace of global licensing is hard to predict, but we have the ultimate goal of being able to offer our service everywhere.
We share your disappointment and greatly appreciate your understanding.
I know Fred is on vacation in Buenos Aires with his family. I even know that they got hosed last night at La Cabrera. Suddenly I was thinking about the mix of human and machine here – Pandora (machine), Geolocation (machine), my knowledge of their vacation (human), their dinner experience (human), the description of their dinner experience (written by a human, coded and transmitted by machine), and Fred’s Records of the Decade List (human, but coded by machine – the post and the music). The level of interaction of human and machine is high, although the level of sophistication is pretty low.
In an effort to be subversive, I forwarded the email to Fred with a note that said “Wild how the music licensing stuff is stupid.” He responded immediately with “Yup. Rights holders fuck everything up.” I wonder what the machines think of that?
We’ve run TechStars in Boulder for three years. So far each year at least one of the teams ends up with a runaway success on a bootstrapped business. In year one it was J-Squared with their Facebook (and now MySpace) apps. The bootstrapper of year two is Occipital with their awesome RedLaser iPhone app.
RedLaser has been at the top of the iPhone App Store paids apps listing for over three months. Rather than review the app here, I’ll just point you to a recent TechCrunch article about it reaching over 750k downloads and a recent WSJ article about Price Checking: Finding Deals With a Phone. Or just download RedLaser – it’s only $1.99 and you’ll love it.
When Jeff Powers and Vikas Reddy, the founders of Occipital, were accepted to TechStars, we chose them not because of their great idea (I thought the original idea was stupid), but because of their incredible technical talent. As David Cohen and I went through their application and saw the demos they had done, our immediate reaction was “these guys are great – they’ll do something amazing if they land on a good idea.” So – we accepted them into TechStars.
On day one we told them we hated their idea and encouraged them to think hard about other things before going deep on building something. They resisted for a few days, but listened as they heard this from a number of other mentors. They quickly discarded their original idea and started working on something else that leveraged their skills. During the program, they built some cool demos and started making progress on their new big idea. They reinforced their position as “super smart software engineers” but as the summer ended they struggled to get investors excited.
Shortly after the summer ended, they found themselves with a very ambitious technical project, some demo code, and no funding. I worried about them a little because I knew how much talent they had. True to character, they regrouped and started hacking on the iPhone. They also – in their words – developed a “huge chip on their shoulder” since they hadn’t been able to raise money. They decided “we don’t need no stinking investors” and went after bootstrapping the business.
The first product they shipped was an iPhone app called ClearCam. It was popular and sold enough copies that all of a sudden Occipital had some cash coming in. A few months later they released their next iPhone app – RedLaser – and had a monster hit on their hands.
Obviously, I’m super proud of Occipital. And I’m carefully watching the TechStars 2009 class – both in Boulder and Boston – for who is going to be the bootstrapper of year three.
If you are interested, applications for the TechStars Boston 2010 program (which runs in the spring of 2010) are currently open until January 11th, 2010 at 11:59:59 PM Eastern Time. There is plenty of room for bootstrappers, as well as folks that want to raise angel or VC financing, in the program.
Speaking of brilliant photographs, my mom sent me two yesterday. The first one is her dressed in PJ’s reciting “Twas the Night Before Christmas” to her kindergarten class. I remember having to sing Christmas Carols as a kid but I stopped in seventh grade when I started declaring to my teachers “I’m Jewish – I don’t have to do this.” But kindergarten was probably fair game.
The second was her class picture from kindergarten.
I love looking at these old photographs, especially in digital form. In addition to being photogenic, my mother has integrated photography into her art. Regularly readers of this blog probably know that my mom is an artist (see a nice collection of her work on line at Studio 7310) but you might not know that she is a master with a camera and Photoshop. If you are into photography, take a look at two of her exhibitions: Faces and Places (4/5/08 – 5/3/08 at the Mesquite Art Center) and Near and Far (9/4/04 – 10/1/04 at 416westgallery).
When I’m at my house in Keystone, I work my way through my infinite pile of physical books rather than reading on my Kindle. It’s always a mystery as to what has made it to the top of the pile (I don’t select anything particular – I just read whatever is “on top” and, since it’s an infinite pile, “top” doesn’t actually refer to any particular place in the pile. Two of the ones that I gobbled down in the past few days were spectacular.
If you are any sort of solo athlete (runner, swimmer, biker, triathlete) you must read Matt McCue’s An Honorable Run. This also goes for anyone that is a coach, a mentor, or an entrepreneur that has a mentor. It’s a great running story, a great coach story, a great human being story, and a great Colorado Buffs story. Plus, McCue is an excellent writer.
The other book, American Power, is by Mitch Epstein. Amy gave this to me as a present. You might remember Epstein by my review of his incredible book Family Business which Amy gave me about five years ago. The book inspired me to post a long essay about my dad’s dad (Grandpa Jack) which – after just reading the post again – brought me chills, especially against the backdrop of An Honorable Run.
Epstein is brilliant photographer. In American Power he travels the United States and takes photographs where he investigates the notion of power (both electrical and political). I love great photography when it is tied around a particular theme and Epstein just nails it. It is mostly photographs, but finishes up with a crisp essay about his experience of putting together the book, travelling the US, and running into all kinds of issues with cops and security guards as he photographs public buildings, or non-public buildings while on public property.
I’ve got another week up here to read a few more books from the infinite pile. You’ll hear from me if I read any other excellent ones.
As we finish up the year, I’m really pleased with the progress the Startup Visa gang is making. I started thinking about, writing, and working on this on 9/10/09 when I wrote the post The Founders Visa Movement. One quarter later, we’ve:
- Put together a core group of entrepreneurs, angels, and VCs who are working on this.
- Received a tremendous amount of positive feedback from entrepreneurs and investors who have struggled with this issue.
- Verified that this is a real issue, there is no current solution under the existing visa system, and even though there are plenty of immigration lawyers who say “no problem, I can get around this”, there aren’t clean solutions.
- Engaged with a number of Congressmen in both the house and the senate.
- Found a member of the house who is sponsoring a bill addressing the issue.
- Talking to several folks on the senate side to find a sponsor.
- Codified a first clean draft of language around this.
- Build lots of grassroots support and enthusiasm.
- Gotten plenty of discussion going in the blogosphere and mainstream media.
Shortly after I started talking to people in Congress about this it became clear that this wouldn’t be a 2009 legislative issue given the massive financial and health care reform issues being worked on in Congress. So – we decided to use Q409 to “figure this out” with a goal of launching aggressively in Q110 with the goal of having this be part of whatever immigration reform activity happens next year, especially in the context of a renewed push for job creation activity in the US.
In addition to the Startup Visa OpEd that Paul Kedrosky and I wrote and published in the Wall Street Journal, several other high profile thinkers have written great essays on this issue.
The Startup Visa And Why The Xenophobes Need To Go Back Into Their Caves: Vivek Wadhwa (Visiting Scholar at UC-Berkeley, Senior Research Associate at Harvard Law School and Director of Research at the Center for Entrepreneurship and Research Commercialization at Duke University) wrote a great piece in TechCrunch.
Immigrant Scientists Create Jobs and Win Nobels: Susan Hockfield (MIT President) wrote a WSJ OpEd that – while not talking directly about the Startup Visa – clearly supports that overall effort and also reinforces my belief that any graduate with an advanced degree from a US college or university should get a green card stapled to his diploma.
While there are plenty of other articles in the mainstream media swirling around, ones in CNN Money such as Want to create jobs? Import entrepreneurs does a good job of laying it all out.
Many of you have asked how you can get involved. Look for a variety of easy ways to do this in Q1. And – a huge thank you for everyone out there that has helped in any way so far. In the mean time, feel free to add to the Wikipedia page of American Startups with Immigrant Founders.
After having a few conversations yesterday about the Startup Visa, I realized that I never posted the Wall Street Journal OpEd on the Startup Visa that Paul Kedrosky and I wrote and had published on 12/2/09. I don’t know the rules about reposting OpEd’s – I assume that since we wrote it I can republish it. If that’s not true, I’m sure some one will tell me. In the mean time, here it is:
Start-up Visas Can Jump-Start the Economy
Immigrant entrepreneurs are an engine of jobs and growth. We need more of them.
While fast-growing companies have long been the main source of new jobs and innovation, this country makes it outrageously difficult for immigrants to launch new companies here. This doesn’t make any sense. After all, Google, Pfizer, Intel, Yahoo, DuPont, eBay and Procter & Gamble are all former start-ups founded by immigrants. Where would this country be today without their world-changing innovations?
Immigrants have not only founded big, well-known companies. Foreign-born residents made up just 12.5% of the U.S. population in 2008. But nearly 40% of technology company founders and 52% of founders of companies in Silicon Valley.
Yet we don’t seem to care. We send recent, foreign-born university science and engineering graduates back to their own countries after their student visas expire—unless these creative sorts are willing to spend some of the most entrepreneurial years of their lives working in a big company under an H-1B visa after they finish their studies.
For those who studied elsewhere, but who nonetheless want to bring their job-creating ideas here, American policies treat them—the job-creating, trouble-making innovators that they are—as a cross between deadbeats and queue-jumpers. Why can’t they wait in line like everyone else to get a visa in five years or so? What’s their hurry?
Their hurry is Joseph Schumpeter’s hurry: They want to hustle out and disrupt markets when the opportunity arises.
In the 21st century those opportunities don’t wait for our interminable, employment-based visa programs. As a result rather than saying "Come and create jobs here" we, in effect, tell them to shove off. Come back when you have a few million in sales— at which point they will be rooted elsewhere and creating jobs somewhere else.
That needs to end now. Immigrants who come here to create companies create jobs. We need the jobs.
One good idea to make this process easier is to create a new visa for entrepreneurs, something that is increasingly being called by venture capitalists, entrepreneurs, and angel investors a "start-up visa." It might work like this: If immigrant entrepreneurs want to start a company in the U.S. and are able to raise a moderate amount of money (perhaps as little as $125,000) from an accredited U.S.-based venture capital firm or qualified U.S.-based angel investors, we should let them start a company here. It could be a couple of founders with an idea—that’s it. We would give visas to the founders and welcome them in to our country.
Would it work every time? Of course not. It would fail more often than not. Start-ups often fail.
But having failed, the immigrant entrepreneurs could try again, and again. And as long as they are trying, raising money, creating jobs, and making sales, we would let them stay here. Founders of new companies are precious for a vibrant economy, and we should welcome them. Indeed, the country would be better served to find more of them.
Some will say a start-up visa program will be abused. They will say that it will become a way to end-run immigration rules, to jump the queue if you have money.
There are at least two answers to these objections. First, to get such a visa you would have to raise money from real investors. Second, Canada and other countries already allow entrepreneurs to start a company in their country. Shouldn’t the U.S. stop worrying so much about keeping these people out, and start worrying about bringing them in?
We also think science and engineering graduates should get visas stapled to their diplomas. You complete your higher education here, you get to stay so that you can get out and create jobs, innovate, and grow the economy. Uncle Sam wants you, if you’re a prospective entrepreneur.
The U.S. remains one of the most attractive countries for entrepreneurs. It has a culture of risk taking, capital formation, and an economic dynamism that is the envy of the world. This gives us a competitive edge that we should not let slip through our fingers.
There were some great comments on my post from Sunday titled Being Syndication Agnostic. One of them was from Kevin Vogelsang – he asked the following question:
What are the downsides to syndicating a round of financing for the entrepreneur/startup (assuming the relationship with all investors is a good fit of course)? By syndicating a deal, the entrepreneur gains access to a larger network. This seems to be a big positive. However, there must be downsides (less attention, more interest groups, etc.) Love to hear more on the topic.
While there are plenty of downsides, I’m going to take on five common ones in this post.
Too Many VC’s on the Board: Most VC’s want a board seat when they invest in a company. At the early stages this is usually manageable (although not necessarily desirable). However, once a company has raised several rounds of financing and built increasingly large syndicates, this can quickly get out of control. The largest board of a VC backed company I’ve ever been on was 11 (8 VCs, CEO, founder, one outside director). It was a completely ineffective board. Now, the board size problems can be dealt with by a strong CEO and a strong lead investor who will help the CEO organize the board in a manageable way, but it has to be done proactively.
Too Many People in the Room: This is a corollary to “too many VCs on the board.” If the VC doesn’t get a board seat, they’ll want an observer seat. In addition, most later stage VCs or strategic investors want observer seats. Suddenly even though you’ve managed the size of the board effectively, there are a bunch of people in the room. I’ve been in board meetings with over 20 people in them (I don’t know the exact max, but I’m going to guess it’s around 25 since eventually you run out of chairs.) Not surprisingly, these tend to be weak or inefficient board meetings with separate “executive committee meetings” where the real board meeting happens, and then another three hour song and dance for the benefit of the 15 other people.
Both of these are a natural result of most investors in private companies wanting to have a seat at the table. While a reasonable expectation, it’s important for the CEO and founders to set an appropriate tone and expectations with their investors early on so that there’s actually an effective board, investor, and company dynamic as the syndicate gets large.
Misalignment of Interests: With each round of investment and each new investor comes new expectations. As the syndicate size grows, the chance of interests between parties getting out of alignment increases. This is especially true when each round has different dynamics beyond price (such different preference structures, protective provisions, voting thresholds by class of stock, and various participation caps.) When everything is going well this isn’t an issue, but the minute the business goes sideways (or worse) strange things start to happen. As the situation degenerate, the knives (or flamethrowers) come out. I’ve been involved in situations that resulted in the destruction of companies that deserved to live another day because the investors around the table (which included me) couldn’t get their collective shit together.
Decision Vacuum: This is a corollary to “misalignment of interests.” It’s similar to when I lived in a fraternity at MIT and a dozen of us would stand in the hallway trying to figure out where to go out to eat. This drill could go on for a while, especially if we had a keg of beer (or, er, something else) nearby. Eventually someone stepped into the decision vacuum and said “I’m going to Mandarin – come with me if you want” (well – that was what I usually said – others had different choices). Whenever you’ve got at least four VCs sitting around a table, you run the risk of a decision vacuum forming (queue snarky jokes here). If you are a CEO of a company and you see a decision vacuum developing, grab a bunch of matter and get in the middle of it.
Lame Duck Syndrome: There has been plenty of personnel changes in the “VC business” in the past five years, including plenty of firms that are winding down, have shrunk in size (and let partners go), and have disbanded. However, they are still investors in your company and some of them still sit on your board. In some cases they are just hanging around to “protect their investment” although they have no ability or interest in putting additional capital into your company. Now – some folks in this position are incredibly helpful, but many don’t do much more than show up. And – the more of them like this around the table, the less fun it can be.
Now, there are plenty of other downsides as well as plenty of advantages of large syndicates. If you’ve got additional ideas, or stories to share (especially horrifying ones showing the downside), comment away even if you change the names to protect the not so innocent.