Brad Feld

Month: December 2009

I’m not on an airplane again until 2010 (1/6/10 to be exact when I head to Las Vegas for CES) which is a relief since I flew 87 segments 2009.  Ok – not as much as Ryan Bingham in Up in the Air (very good BTW) but enough to decide to boycott United whenever possible.

One pleasant surprise on a flight from DEN to OAK on SWA was the presence of Wi-Fi.  I paid my $12 and worked online for two hours instead of using my airplane sleeping superpower.  Little did I know that I was on one of the four planes in the SWA fleet of 500 that had Wi-Fi according to the Gizmodo Complete Inflight Wi-Fi Cheat Sheet.

I think 2010 is the year that Wi-Fi will finally roll out across the domestic airline fleet.  It’s been in the works since 2000 and I remembered waiting, and waiting, and waiting for Connexion to roll out.  And then forgetting about it.  Until sometime earlier this year when Virgin America started offering in-flight Wi-Fi and quickly became my (and many of my friends) method of transport between the east coast and the west coast.  Todd Dagres from Spark Capital nailed it when he tweeted (presumably from an airplane) “True fact – planes with WiFi travel 2x faster than planes without.”

There is something magical about sitting on a seat in a giant metal tube that is flying 30,000 feet above the earth and playing FarmVille.  It finally feels like this is going to happen in 2010.  Hopefully there will be a lot more FarmVille than Skype on airplanes, although if everyone on the plane is on Skype at the same time it probably won’t bother anyone – too much. 

If you are traveling on a flight using Gogo Inflight Internet, My Money Blog has published a set of promotional codes that will give you free Wi-Fi through 1/7/10.  Oh – and join the Gizmodo Mile High Club while you are at it.

And one final question – is it “Wi-Fi” or “WiFi”?  That’ll keep the airline marketing weenies busy for a while trying to figure out the right answer.

Bijan Sabet started it with a great post titled We Gotta Do A Deal Together and Fred Wilson followed with an equally great post titled Trading Deals, A Lost Art?  I’m going to try to add to the mix with this post by describing our strategy at Foundry Group around syndication and explain a little of where it came from.  Please read both Bijan’s and Fred’s posts as it’ll provide a lot of context for this one.

At Foundry Group, we describe ourselves as syndication agnostic.  Specifically – we are delighted to work with a syndicate of other investors and we are equally delighted to invest by ourselves.  Another way to say this is that we are indifferent as to whether or not we have co-investors in a company with us at any stage of the investment cycle.  I realize this isn’t the classical definition of agnostic but I think it’s an appropriate use of the adjective form. 

Here’s what this means in practice.   In an early stage investment we decide whether or not we want to invest and then leave it up to the entrepreneurs if they want to add anyone to the syndicate.  If so, and they are someone we like working with or would like to try working with for the first time, we encourage it.  If the entrepreneurs just want to get going with us, that’s fine also.

Now, assume there is no syndicate for the seed or Series A financing (e.g. it’s just us).  Well in advance of when the company needs to raise the next round we’ll decide whether or not we’ll make another investment.  If we are supportive, we are direct with the company, figure out a price we are willing to do it at (we are willing to invest by ourselves at a higher price if we believe the progress of the company merits it), and give the company the choice of having us invest in another round by ourselves or add another investor to the mix.  Again, it’s up to the entrepreneur, but we signal our intent clearly and early, are willing to put a term sheet down, and lead the financing with or without a new investor.

Two things make this strategy work for us.  We only invest in software and Internet companies.  We have a deeply held belief that we can figure out “if things are working” by the time $10m is invested in a company.  As a result, we are willing to invest up to $10m on our own to play out the early to medium stages of a company.  By the $10m point we have to make a theoretically harder decision, although ironically it’s usually a pretty easy one.  The company is either unambiguously on a success path, at which point adding additional investors to the syndicate is easy (since it’s a highly desirable later stage investment) or it’s a tough situation that’s not working out.  Occasionally it’s in the middle (e.g. unclear and ambiguous), but not very often.

Some recent examples help illustrate this:

Next Big Sound: We led the seed round and co-invested with Alsop Louie (Stewart Alsop) and SoftTechVC (Jeff Clavier) – two VCs that we love to work with.  We could have easily invested by ourselves, and Next Big Sound had a long list of VCs that wanted to invest (more than 5, less than 10).  The founders chose the syndicate.

StockTwits: The seed round was led by True Ventures.  We decided proactively that we wanted to invest in StockTwits as part of a new theme we are developing and approached Howard Lindzon (the founder/CEO).  He was in the midst of closing a follow-on with True.  We have enormous respect for True but hadn’t done a direct investment with them (I’ve personally invested in several companies with them) so were extremely interested in doing something together.  They reciprocated and we put together a bigger financing than planned (although still a relatively modest amount as Howard isn’t interested in raising a lot of capital) that allowed everyone to be happy with their stake in the company.

Cloud Engines: Cloud Engines had raised some angel money (from well respected angels) prior to our investment.  We did the first round by ourselves and recently did a second round by ourselves.  We did this quickly because we were thrilled with their progress and this allowed the company to ramp up production to meet demand.  We left the financing open for a strategic co-investor although we are perfectly happy to take the remaining piece for ourselves.

The common two themes from this for us is: (a) we only co-invest with people we like, trust, and respect and that like, trust, and respect us and (b) we view it as our responsibility to make a decision about whether or not we want to invest independent of any other investors (VC or angels) at the table.

For completeness, we love investing with Union Square Ventures (we are co-investors in Zynga) and Spark (we are co-investors in AdMeld) and we hope to make additional investments with both of them in 2010. 

Ultimately the syndicate is the entrepreneurs’ choice.  And our goal is to make the discussion simpler, cleaner, and crisper, so the entrepreneurs aren’t having to guess, or jump through bizarre hoops, or play a difficult VC-centric game as they finance their company.

Regular readers of this blog know that I’m Chairman of the National Center for Women & Information Technology.  In five years, NCWIT has become a prominent national organization helping encourage, inspire, advocate, and educate women (and girls) to get involved in computer science based on the following belief:

“We believe that inspiring more women to choose careers in IT isn’t about parity; it’s a compelling issue of innovation, competitiveness, and workforce sustainability. In a global economy, gender diversity in IT means a larger and more competitive workforce; in a world dependent on innovation, it means the ability to design technology that is as broad and creative as the people it serves.”

One of the disheartening things I’ve learned in the past few years from my involved in NCWIT is the abysmal state of computer science in K-12 in the United States.  It’s just awful – I’ve looked at some of the curriculum, the AP test, and some of the courseware and it’s so bad it makes me want to crawl under my desk and curl up in a ball.  Here are a few scary facts for you:

  • More than 1.6 million students took Advanced Placement (AP) exams in 2009, but barely 1% of the AP exams taken were in computer science.
  • The portion of high schools offering rigorous computer science courses fell from 40% in 2005 to 27% in 2009.
  • The U.S. Department of Labor estimates that nearly one million information technology jobs will be added to our workforce by 2016, but U.S. universities will produce only half the computing graduates needed to fill the new jobs.

As one of its major initiatives, NCWIT is taking on reforming computer science education.  Help us out by making a tax deductable donation to NCWIT for our DC Campaign.  And help us spread the word – our friends at Google (great supporters of NCWIT) have sponsored an all expenses-paid trip to Australia to meet with the Google Wave team and have lunch in the Google Sydney office (ok – and three nights for two people) for anyone that forwards this message on.

I’m really pleased that FeedBurner has finally implemented a Socialize feature.  With a few settings, I can now connect my Twitter account to my FeedBurner profile and, when I post something to my blog, have it automatically tweeted out.  There are plenty of nice options to help me format this and the traffic data is supposed to show up in my Google Analytics account, but I haven’t seen it yet.

While I love that I no longer have to do anything to tweet my post (no Mom, that’s not an obscene thing to do, although it sure sounds like it) one thing annoys me.  The short URL.  It’s…  That’s both (a) not so short and (b) not what I want.  I want  That’s my happy short URL that I get from using

I’ve now gone through the following Short URL evolution with Twitter.  I started with TinyURL and manual shorted my URL’s before I tweeted them.  That was a long time ago.  Then Twitter started automatically shortening them with TinyURL and that made it a little easier.  Then Twitter started using to shorten URLs so I switched to  Then I started using TweetDeck with automatically shortened things using and that made it even easier.  But then we got our own customer URL shortener ( via  And I shortened things manually for a while.  Then I installed Tweetmeme on my blog and shortened things using again for a few days until I figured out how to using the API to use at which point I started using again until FeedBurner Socialize came out.  Now I’m using

Confused yet?

Oh – and my stats are totally foobared.  I’ve got partial stats about click throughs in,, and Google Analytics.  I realize this is totally self imposed as I shift from shortener to shortener, but I’m just trying to get to the nirvana of (a) using a shortener that I want (, (b) not having to do anything to shorten a URL  (e.g. I want it integrated into my workflow), and (c) having stats about click throughs.

When I went looking around to see how many distinct URL shorteners there are, I was surprised at how lame the Wikipedia page for URL shortening is.  I expected a comprehensive directory – no suck luck. A Google search on URL shortener  wasn’t much help either.  A Bing search on URL shortener was a little better (eek!) and ironically pointed to a Google Knol on URL Shorteners.  Of course, Joshua Schachter’s fantastic rant On URL Shorteners was appropriately at the top of Bing’s search results (Joshua now works at Google if you missed the irony of that one.)

I finally found a Mashable directory on URL Shorteners (90 of them) but it’s from January 2008 – ergo very obsolete.

This is now officially a complete mess.  And it’s going to get a lot messier with the brand spanking new Facebook short URL  I can’t wait to see Microsoft’s URL shortener – I’m guessing something like Microso.ft/bing/.

Someone please stand up and help stop the madness.  Al Gore, where are you when we really need you.

I have to keep reminding myself that some things just take a long time.  My rampage against software patents continues and, while my efforts around the StartupVisa have dominated my “government time” in the past quarter, I’ve still got my eye on the ultimate goal of rendering the construct of a software patent invalid.

I smiled yesterday when I saw the short article titled 3D Computer Graphics Patents Deemed InvalidThe key line from the article is “Though the calculations may be performed on a computer, they are not tied to any particular computer. For these reasons, the claims of the [patents-in-suit] fail to pass muster under the Bilski machine implementation test for patentability under 35 U.S.C. § 101.” 

This is super important because the vast majority of software patents have this problem.

In addition, the Federal Circuit issued an opinion in Hewlett-Packard Co. v. Acceleron LLC that makes it much easy for a company to file a declaratory judgment action when threatened by a “nonpracticing patent owner” (also known as an – ahem – patent troll).  The law firm Morgan Lewis has a great summary of this up on the web and the opinion is online.

I am an optimist.  And I am optimistic that progress will be made against software patents and for a Startup Visa in 2010.

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I really miss Jack Bauer.  Hopefully he’ll be back on my giant screen in my living room soon.  In the mean time he interrogates Santa Claus.

You can see that Jack is getting soft.  Santa Claus has always stood up to a lot of scrutiny.  We all know that one day the Santa Claus Sex Scandel will hit, but I expect Ms. Claus will stay by his side.  Jack – I was hoping for better from you on this one.

TechStars Seattle

Dec 17, 2009
Category Techstars

Yesterday, TechStars announced that it is a launching a new program in Seattle.  This will be the third program that TechStars runs – with the other two being in Boulder over the summer and Boston in the spring (we are currently accepting applications for the Boston program.)  The Seattle program will be run this fall.

There’s been some great initial press on this including TechCrunch, ReadWriteWeb, PEHub, and Seattle’s TechFlash.  Greg Huang – who writes for Xconomy (which has also done a great job of covering TechStars Boston) covered the launch well and had a nice follow up post linking the Boston and Seattle programs origins.  It’s really satisfying to read the articles as pretty much everyone gets that a key part of TechStars are the mentors – and the Seattle mentors are just awesome. 

After year two of the Boulder program, David Cohen (the founder of TechStars) and I spent a bunch of time in various venues – at bars and restaurants in Boulder, in the Bunker, in our conference room at Foundry Group, on a vacation in Italy together, and even in the presence of our wives (much to their annoyance) – talking about David’s long term vision for TechStars and how best to operationalize it. 

TechStars Boston – which I wrote about when we launched it in February 2009 – was the first expansion.  TechStars Seattle is the second.  One decision that we made when we thought through a third city was timing and we decided to stagger the timing of the programs.  So Boston is spring, Boulder is summer, and Seattle is fall.  For those that are skilled at reading between the lines, that leaves winter open – for now.

It’s also super exciting to welcome Andy Sack to the TechStars leadership team.  Andy will run the TechStars Seattle program while Shawn Broderick runs the TechStars Boston program.  I’ve known and worked with Andy for around 15 years (and Shawn for about 20) – back when we were all first time entrepreneurs – so it’s really satisfying to be working together on TechStars.

And a huge thank you to the Seattle entrepreneurial community.  I’ve spent a lot of time there the past few years and I’ve got several investments there, including Gist and Smith & Tinker (via Foundry Group), Impinj (via Mobius Venture Capital), and AdReady (via Intensity Ventures).  Seattle is perfect for a program like TechStars and the response from everyone we’ve talked to about it has been dynamite.

We are deep in budget season as the last board meeting of the year typically includes the 2010 Budget – or at least the “2010 Draft Budget” or “2010 Budget – Draft”.  This is also known as “the joy of cramming a spreadsheet into a powerpoint presentation.”

The budgets I see generally fit into one of the following five categories.

  1. Pre-Revenue: We are pre-revenue and won’t generate revenue in 2010.
  2. First Year of Revenue: We are pre-revenue but will generate our first revenue in 2010.
  3. Growing Revenue: We are on a revenue growth curve in 2010 but will lose money every month.
  4. Becoming Profitable: We are currently losing money but will become profitable in 2010.
  5. Profitable: We are profitable every month this year.

While I’ve written about this before, it’s worth noting that “profitable” is often used to mean either EBITDA positive, Net Income positive, or Cash Flow positive.  These are three totally different things and you aren’t really in a happy profitable place until all three are true.

Of the five types of budget categories above, three (#2, #3, and #4) typically have the “hockey stick problems.”  Specifically, the revenue curve in the budget model looks like a hockey stick throughout the year with steep revenue growth in Q3 and Q4.

The hockey stick revenue helps justify additional head count and an overall ramp in expenses.  If the revenue plan is correct, this is fine.  But the revenue plan is rarely correct, especially in Q3 and Q4.  As a result, the expense base in the budget is much too high.  One of two things happen – the budget breaks (and gets ignored) or the company continues to operate on the expense budget (or some approximation of it), resulting in a much bigger loss and cash spend than forecasted at the beginning of the year.

There’s another issue – hiring is often front end loaded and the timing is somewhat unpredictable.  It’s also hard to “unhire” a month after you’ve hired someone because you are below budget.  While some people talk about people as a “variable cost”, it’s a tough variable cost to immediately turn to zero shortly after you’ve hired someone.

Each case is a little different, so let me spend some time on how I think about each one.

First Year of Revenue (#2): The problem in this case is that the company will burn through its capital faster than expected.  You can solve for this by forcing the expense budget to look like a pre-revenue budget (e.g. assume no revenue).  When revenue starts to ramp, then you rebudget, even if it’s mid-year.  Basically, discount all revenue to zero until you start generating it.

Growing Revenue (#3): This is the trickiest of the three cases.  You have revenue.  You want to spend more money to grow revenue (this is rational).  You expect revenue will grow nicely (maybe, maybe not).  In this case, I suggest you build the budget and then shift your expense plan forward by one quarter.  This delays the spending ramp by 90 days which enables you to see if you are ramping revenue as expected. I’ve rarely seen this slow down the revenue growth and, when it’s clear that revenue is ramping ahead of plan, you can always layer in some expenses explicitly ahead of plan.

Become Profitable (#4): Similar to #3, you start by lagging your expense ramp by a quarter.  Equally important, you should manage to a net cash number (cash + borrowing capacity – debt) and make sure you never fall below a threshold that is set as part of the budget process.  Once you start generating positive cash flow, you can rebudget, just like case #2.

I find that Pre-Revenue and Profitable companies typically don’t have the hockey stick problem in the budgets.  Pre-Revenue don’t by definition since they have no revenue!  Profitable companies have usually been through the cycle so many times that (a) they understand how to be realistic about revenue growth and (b) they are so happy to be profitable and self-sufficient that they err on the side of under-budgeting revenue and then expanding their expense base as they exceed plan.

Be smart – avoid the hockey stick.  Even when you are playing hockey!  It hurts when it hits you in unexpected places.

I’ve introduced two new devices into my personal human instrumentation experiment.  In addition to my Zeo, I am now carrying around a FitBit and using a Withings scale.  I’ve discovered the mild embarrassment associated with having a scale mis-tweet your weight by 10 pounds too much (e.g. “Brad – you gained a lot of weight recently – everything ok?”)  But I suppose that is part of the experiment.

The comparison on the Zeo and FitBit sleep data is fascinating.  Take a look.  Zeo from last night first.


Now the FitBit from last night.


The Zeo breaks things down into four categories: Wake, REM, Deep Sleep, and Light Sleep.  The FitBit only has two: Active and Asleep.  My FitBit time setting is wrong (it has me going to sleep at 9:17 but I went to bed at 11:10 – I’ll need to figure out how to fix that).  But both have me in bed for a little over 9 hours, although the FitBit thinks I was only asleep for 8:17 of it.  The Zeo has me asleep for 97% of the time; the FitBit has me at a Sleep Efficiency of 95%.

I need a few more nights of comparative data to completely understand the differences, but I thought I’d toss up a baseline to get started.    Oh – and I slept in this morning – I felt kind of crummy and decided to just sleep to try to shake off whatever was creeping up on me.

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Jon Hansen from PI Window on Business had so much fun with me a few weeks ago that he asked me to do another interview – this time on the dynamics around foreign investments.  We covered plenty of ground, including what country, state, and local governments do to slow down investments, along with a bunch of my own philosophy around why I only make VC investments in the US and Canada.  Buried deep in the interview is my track record making VC investments in European companies (hint: not pretty).

Entrepreneur Magazine made a swing through Boulder recently and did short interview videos with a bunch of the Boulder entrepreneurs.  If you aren’t exhausted after listening to an hour of me (or if you punted), take a quick two minute tour with Ari Newman of Filtrbox

Ari finishes strong with a great line – “If you aren’t doing something you love, life’s too short – there’s an opportunity cost.”  As a special bonus, Matt Galligan – the man who manages to be everywhere – is hanging out over Ari’s left shoulder.