Month: July 2010
As I watch Amy scurry around and put the final touches on our Homer house before we leave to go home to Boulder, I thought I’d stay out of the way and write a quick final book post on The House Advantage. I read a bunch more books the past two weeks but ran out of gas reviewing them all – see my Shelfari bookshelf if you are interested. But The House Advantage was worth mentioning.
My friend Niel Robertson – the CEO of Trada (which we are investors in) introduced me to Jeff Ma (the author) and then also sent me a book. It turns out that I know Jeff and lived next door to his sister when I was at MIT. You also may know Jeff – he’s the main character in Ben Mezrich’s excellent book Bringing Down the House and the inspiration for he main character in the movie 21. It also turns out that Jeff is an accomplished entrepreneur. He’s had several successful companies, the most recent being Citizen Sports which Yahoo recently acquired.
The subtitle of The House Advantage is “Playing the Odds to Win Big in Business”. In it, Jeff takes on a topic that most business people avoid – statistics. He uses his experience with both the MIT blackjack team, sports statistics, and his friends experiences in these areas to explain very important statistics concepts in very clear and straightforward ways. He’s a great writer – rather than resulting in a dull book about business stats, it’s a spicy read full of stories of Vegas, sports, high speed car chases, airplanes exploding, terrorist drug lords, extreme dance parties, and … well – ok – Vegas and sports.
As I was reading it, I kept thinking “every CEO I work with and every investor I’ve ever met should read this book.” After I finished, I thought “every academic researcher who has ever written a paper should read this.” None of the statistics concepts are complex, but they are regularly misused, abused, and confused. Or ignored.
As a bonus, the book includes the Basic Strategy Chart for Blackjack. How many business books can claim that? Seriously, this is an outstanding book – Jeff – well done!
Ah – well – another day passed and there was once again a ton of chatter around angel investing. A lot of it was prompted by AngelConf 2010 which you can watch recordings of on Justin.tv (AngelConf 2010 Part 1 and AngelConf 2010 Part 2). While there continues to be plenty of negative VC tone and “disruptive change is here” (ala traditional VC is over), there were also some great nuggets, including my favorite line from Joshua Schachter of typical VC behavior of SHITS (Show High Interest Then Stall).
But I think the two best posts to come out of yesterday are Lead Investors, Dipshit Companies, and Funding Every Entrepreneur by Fred Wilson and MoneyBall for Startups by Dave McClure. While they come at things from very different angles, they are both very insightful and important. Importantly, they are willing to use words in their posts that Goldman Sachs has apparently banned in email as of yesterday.
We are packing up the Homer house today and I’m looking forward to diving back into the fray next week in Boulder.
Like most of the blogosphere, I’ve been trying to use Flipboard since its extraordinarily well executed (or well hyped – I can’t tell yet) announcement. But, like almost everyone I know, I can’t get it to authenticate Twitter or Facebook. Two days ago I entered in my email address to reserve my place in line. Today, at 9:55 AM AKDT I got an email titled “Your Flipboard is Ready to Customize” that said:
Hi there. We’re now ready for you to set up your Facebook and Twitter accounts on Flipboard. Try it out and let us know what you think. And thanks again for your patience and enthusiasm.
I went to connect up my Twitter and Facebook accounts. Nope – doesn’t work. At 10:34 AM AKDT I got an email titled “Apology, and Flipboard Confirmation”
We just sent you an email telling you that we were ready for you to set up your Facebook and Twitter accounts. We are sorry to say that our email system sent the wrong email. We were actually trying to send you an email confirming your place in line for you to setup your Facebook and Twitter sections.
You will receive another email when your reservation is ready. We are working around the clock to get you your invite and will send you your official invite soon.
Thanks again for your patience and support.
Oops.
In 2008 I was invited by Pamela Samuelson, who I met through several Silicon Flatiron events, to be on an advisory board at the Berkeley Center for Law & Technology. I attended the one meeting that we had and a subsequent symposium and wrote about it in the post Entrepreneurial Companies and the Patent System. As with most things like this, I found it fascinating, stimulating, and frustrating all at the same time and hoped that I’d contributed something useful to the discussion.
I read the paper titled High Technology Entrepreneurs and the Patent System: Results of the 2008 Berkeley Patent Survey when it came out at the end of June 2010. I thought it was a solid paper although there were some things that I struggled with which is typical for me in any academic paper, especially when I get bogged down in arguing with myself while trying to parse the footnotes. But I was optimistic that as the authors started talking about the article, some thoughtful and constructive discourse would result.
I was appalled when I started seeing soundbites emerge from at least one of the authors of the paper from weak conclusions buried in the midst of the data. My partner Jason took one of them on when he wrote his post 76% of Venture Capitalists Believe that Software Patents are Important (NOT!) In this post I think Jason does an excellent job of dissecting the data and explaining why this is not only an incorrect conclusion from the data, but a terribly misleading soundbite.
Fortunately, Pam Samuelson (one of the other co-authors) has set the record straight with her excellent summary of the Berkeley Patent Survey on her post on O’Reilly Radar titled Why software startups decide to patent … or not. Her essay is very digestible and focuses specifically on the issue of software patents and what she believes they reported in the paper. She reached the following conclusions which she states in her intro:
- Two-thirds of the approximately 700 software entrepreneurs who participated in the 2008 Berkeley Patent Survey report that they neither have nor are seeking patents for innovations embodied in their products and services.
- These entrepreneurs rate patents as the least important mechanism among seven options for attaining competitive advantage in the marketplace.
- Even software startups that hold patents regard them as providing only a slight incentive to invest in innovation.
Pam is balanced in her intro as she concludes by saying “While the three findings highlighted above might seem to support a software patent abolitionist position, it is significant that a third of the software entrepreneurs reported having or seeking patents, and that they perceive patents to be important to persons or firms from whom they hope to obtain financing.”
The juiciest conclusion is about halfway through the essay and is “One of the most striking findings of our study is that software firms ranked patents dead last among seven strategies for attaining competitive advantage identified by the survey.” Another one was “We were surprised to discover that the software respondents reported that patents provide only weak incentives for engaging in core activities, such as invention of new products (.96) and commercialization (.93).”
I’m glad Pam took this on and put this out there. I look forward to more studies she does from this research set.
This week’s special guest are Jeff Clavier from SoftTech VC and Rob Hayes from First Round Capital. Among other things, you get to hear Jeff define the Three Asses Rule and Rob explain what happens after you finish the TechStars program. As a special bonus, there’s a cute clip of me near the end watching the incredible record tennis match between Isner and Mahut. And some funny running footage. And a glider. And Ari Newman and how sandpaper and rubbing alcohol intersect with the fundraising process.
“People Product Market” The Founders | TechStars Boulder | Episode 10 from TechStars on Vimeo.
I got a note from Nivi, the creator of AngelList, over the weekend saying that he’d put up a special page for angel investors in Boulder. He’s looking for the local Boulder angels to add their names to the list. Gang – let’s get ’em up – if you are an angel investor and based in the Boulder area, sign up!
There’s been an enormous about of blog and news chatter about angel investors, especially seed investors and the emergence of super angel / micro VCs, in the past few months. I’m a huge fan and supporter of the super angel / micro VC phenomenon and have watched with delight as it has built momentum.
However, in the past few weeks I’ve started to see a rant start to emerge that I’ll simplify as “VCs suck as seed investors – the only path to happiness are angels or super angels or micro VCs.” This rant bugs me as I think it’s incorrect and isn’t very helpful to entrepreneurs. While I know many VCs that I would categorize as terrible seed investors, I know plenty that are excellent seed investors. And while I know many angels who are terrific seed investors, I also know some who are abysmal.
The thing that started to bug me last week wasn’t the discussions about the characteristics of what makes a VC a bad seed investor, but that the comments, including some from super angels, were becoming generalizations that all VCs were bad seed investors. As I read through them, they started feeling like statements of “hey entrepreneur, trust me, I’m just trying to save you from Mr. Evil VC and here’s the answer, the answer is me.”
As a VC who has been a very active angel investor (I’ve made over 75 angel investments), an active seed investor as a VC (I just counted and 7 of the 25 investments we’ve made out of Foundry Group since we started our fund in Q4 2007 are seed investments), a co-founder of a “mentorship-driven seed stage investment program” (TechStars), and an investor in several super angel / micro VC funds, I believe both angels and VCs can be excellent seed investors.
There is a lot more transparency than there ever has been, the structural dynamics of early stage investing are moving around a lot, and entrepreneurs have more clarity on their choices, ways to figure out who is good and who is bad, and ways to get access to great choices than ever before. Fred Wilson wrote two excellent posts on this over the weekend titled Angel vs. VC and The AngelList as well as an earlier post titled Some Thoughts On The Seed Fund Phenomenon. Until last week I didn’t feel like I had a ton to add to the discussion, but I felt like it was time to weigh in as I saw the tone shifting to “VCs are bad seed investors.”
While I completely agree with the phrase “many VCs are bad seed investors” especially around VCs simply trying to create option value for themselves or the issues around signaling risk, I felt like there wasn’t enough discussion about why and when VCs were effective seed investors. So I thought I’d take some of this on over the next few weeks. Hopefully my perspective and examples will be additive to the conversation and helpful to early stage entrepreneurs, especially first time ones.
In the mean time, if you are a Boulder angel (or seed) investor and you are still reading, sign up on AngelList already!
While I still don’t have my jetpack, I do have my picturephone.
I was four when the AT&T PicturePhone appeared on the scene. This dude went through a lot of iterations over the year – my favorite is in this Western Electric ad.
This morning as I was drinking my coffee, waking up, and trying to get motivated to go running in the rain (I think I’ll go swim instead), my dad called on Skype. I answered and we had a nice video chat. I heard about my mom’s newly rediscovered Corvette lust (go mom!) and the hike they were going to do. I saw the study in my Keystone house where they are staying which made me smile. And then I said a quick hello to my mom.
I really hate the phone. I always have – and spend much too much time on it. But for some reason I like the videophone. Maybe it’s the novelty of it, maybe it’s a different way it grabs my attention because I really engage fully with it.
Regardless, the future is catching up with my childhood in interesting ways.
Last week there was a kerfuffle over Standing Cloud’s use of the Papyrus font for their logo. It was kind of cute and endearing and my pals at Standing Cloud reacted with appropriate contrition over offending the font police.
Today I came across a brilliant McSweeney article (thanks to @daveschappell) on Comic Sans titled I’m Comic Sans, Asshole. My wife Amy is sitting next to me as I type this laughing her ass off. As a special bonus, our friend Comic Sans makes fun of Bauhaus and then goes and parties with Papyrus.
Eric Ries is this week’s guest star on The Founders. Eric is an incredible speaker and is traveling the world on a mission to help people stop wasting other people’s time. If you don’t follow Eric’s thoughts on Lean Startups on his blog Lessons Learned, you should.
You get a little taste of the shift Omniar is making while they wander around the Boulder Museum of Contemporary Art along with a surprise birthday party for David Cohen at The Lazy Dog on a beautiful Boulder evening. And a few special bonus visitors. And some great shots of Boulder in the summertime. I love Homer but I’m starting to miss Boulder.
“Conditions of Extreme Uncertainty” The Founders | TechStars Boulder | Episode 9 from TechStars on Vimeo.