Month: January 2011

Jan 20 2011

The Quora For X

Suddenly the VC/entrepreneur meme for Q1-2011 is “The Quora for X.” Here are two examples from the past few days:

Lest you think this is a TechCrunch phenomenon, I’ve received a half dozen emails in the last week pitching companies as “Quora for X” or some derivative of this (often “The Quora for X”). Of course, Joshua Schachter very cleverly suggested last night via Twitter that we create the “Quora for XXX“. Given the presence of PornoTube and YouPorn in our universe, I expect some clever porn purveyor will quickly figure this one out.

This meme goes around regularly. Here are a few built off of success cases (which bodes well for Quora if you view meme development as a leading indicator of success. “The Youtube for X”, “The Facebook for X”, “The MySpace for X” (oops), “The Google for X”, “The Twitter for X”, “The LinkedIn for X”, “The Groupon for X”, “The FourSquare for X”, and “The Zynga for X.”

You’ll probably infer that “X” in each case is a specific (often tightly defined) vertical market. Each of the companies listed above are arguably several of the very few companies that have actually established enough critical mass of users to declare themselves a true platform. The “X’s” presume that specialization in a vertical market will result in unique functionality that the general platform can’t create.

Ironically, this thought process runs directly counter to another massively overused entrepreneurial meme – “I’m creating a platform for X.” Think about it for a sec – are you creating a derivative of a platform that is vertically focused or is the vertically focused derivative of a platform that you are creating going to also be a platform?

Now, step back and think about how many huge companies have been created using “The BigSuccessfulStartupNowPlatform for X” approach? While modest companies emerge out of this (and there’s nothing wrong with that), there aren’t very many really significant companies that emerge. The platforms – if they are real platforms – usually either extend into the vertical segments nicely or quickly acquire “The BSSNP for X”.

As an investor, I’m not really interested in any of the verticals that are derivatives of platforms. Other than a few specific cases, where we actually believe a platform company can be created, we stay away from vertical markets. And often, the driver of the decision is the entrepreneur and his obsession with and experience in the particular vertical market in question.

I expect that we’ll see many “Quora’s for X” get created and talked about in the next quarter. If I was an investor in Quora, I’d be encouraging the team to be focused on expanding quickly into every vertical that appears which seems like it would be easy given their existing infrastructure. And if I was an entrepreneur, I’d already be looking past “The Quora for X” meme for what’s going to be next.

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Jan 18 2011

Who’s LOLing Now?

Today we announced that Foundry Group took a bite out of Cheezburger as we led a $30m financing of the company that started out by bringing you cute cate pictures.

Ever since I met Ben Huh 18 months ago via an introduction from Micah Baldwin (see Micah – I do take you seriously – some of the time) I’ve had a major entrepreneur-crush (sort of like a man-crush, but, well, you get the idea) on Ben. C’mon – the guy wears a cheeseburger on his head – how can you not love him.

ben with cheez on his head

After meeting Ben, I decided to try out the site. My first LOL was my wife Amy’s car on fire – feel free to click on it and go vote it up.

.Hot Car

We’ve made this investment as part of our “Distribution Theme” which includes Zynga, Topspin, and StockTwits. I realize that I haven’t written about Distribution on the Foundry Group blog – guess I’ll go do it after I finish this post. Or maybe I’ll just surf around on some of the 50 Cheezburger Network sites.

I’m back – that was a not so short sojourn to My Food Looks Funny, I Has A Hotdog, FAIL Blog, and Very Demotivational.

Our co-investors are Madrona, Avalon Ventures, and SoftBank Capital. Ben and his team have built an awesome company. I’m really psyched to be a part of it to help it grow to the next level.

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Jan 17 2011

Entrepreneurs Unplugged With Pete Sheinbaum on 1/24/10

It’s time for Silicon Flatirons Entrepreneurs Unplugged to start up again. In case you don’t know what this is, I moderate a monthly interview series each semester with Brad Bernthal. We co-interview successful entrepreneurs – most of them local (Boulder / Denver). These interviews are done Charlie Rose style (one can dream) and generally last an hour followed by some Q&A.

On Monday 1/24/11 from 6:30 – 7:30 in ATLAS Room 100 at CU Boulder we’ll be interviewing Pete Sheinbaum. Pete is currently CEO of The Mandelbrot Project, a company that Foundry Group funded about a year ago. Prior to this, Pete was the CEO of DailyCandy from 2000 until the company was acquired by Comcast Interactive in 2008. Pete and I have become close friends over the past few years as he’s spent a lot of time working out of our offices along with engaging deeply as a mentor in TechStars.

Come join us for what I expect will be a fun and enlightening interview with a great local entrepreneur.

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Jan 17 2011

Book: The Startup Game

After writing Do More Faster with David Cohen, I have deep appreciation for the effort involved in writing a book. After reading a bunch of entrepreneurship books, I’ve decided there are three categories: (a) autobiographies, (b) consultant roadmaps, and (c) practitioner stories. I like the practitioner stories best, followed closely by autobiographies. I do not like consultant roadmaps and have decided I won’t read them anymore.

Bill Draper (officially William H. Draper III) has written a gem called The Startup Game. It’s a mix of practitioner stories with some autobiography mixed in. Draper is one of the original VCs – his father (William Henry Draper, Jr.) started Draper Gaither & Anderson, one of the first VC firms on the west coast that coincidentally was the first firm to use a limited partner (LP structure). His son, Tim Draper, started Draper Fisher Jurvetson. And William III started several firms, including Draper & Johnson, Sutter Hill Ventures, Draper Richards, and Draper International. Yup – lots of Drapers, but they’ve all collectively accomplished some amazing things.

In The Startup Game, Draper talks about the early days of venture capital, the creation and evolution of the industry, and many of the early players whose names are well known to any VC insider. Along the way he tells stories about companies he’s funded (or missed funding) and generally teaches at least one lesson in each story. This isn’t an autobiography – while he mixes in lots of biographical information, the chronology is self-admittedly random and he bounces between stories of his father and son along with his sojourn to Washington DC which he calls his lost years.

SF Gate published an interview on Sunday titled William Draper, veteran venture investor, reflects and SiliconValley.com wrote a review titled Venture capitalist Bill Draper adds ‘author’ to his résumé with ‘The Startup Game. Both capture the spirit of the book which I view as a must read for any practicing or aspiring VC or entrepreneur.

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Jan 12 2011

Snow in Seattle

I spent the day in Seattle yesterday, starting off with an awesome early morning run along the ocean near downtown and ending the day walking back with some folks from a bar at UW in a freak Seattle snowstorm.

I spent time with four different companies yesterday – two that I’m an investor in (BigDoor and Gist) and then two others that I’m working on interesting things with.  As I went from meeting to meeting, I reflected on the tempo of the Seattle entrepreneurial community and how it feels like it has really come alive in the past few years.

I’ve been coming to Seattle for a long time.  In the mid-1980’s when I was an undergraduate at MIT, Microsoft and Oracle were two of the hot companies at the time who were aggressively recruiting at MIT.  For a brief moment in time I thought about seeing if I could get a job at Microsoft in 1986 but I was already working on my first company and was about to start a master’s program.  That moment passed, but in 1990 when my first company was growing, we joined the very first Microsoft Solution Provider program (created by Dawayne Walker if I remember correctly) and as a result started coming to Seattle regularly.

Over the years I’ve made plenty of investments in companies here.  Today it’s a regular part of my monthly circuit due to investments in BigDoor, Gist, Impinj, and activity around TechStars.  I like it here a lot – the food scene appeals to me, the city is manageable, the people are smart and fun, and every now and then you get totally bizarre weather like we had last night.

I’m going to head out for another run this morning before heading to LA for a few days and as I’ve tried to wake myself up from a very late night, I find myself reflecting on something I said at the UW lecture I gave last night at the MBA school.  Among other things, I talked about why I do what I do.  My answer was pretty simple – “because I love working with entrepreneurs and helping create new companies.”  But I could have just said “because I love what I do.”  Because I do.  And, bleary eyed at 5:51am, it’s really satisfying to both write those words and ponder that thought.

After my talk, a few of the folks in the audience asked me in different ways the question of “what should I do.”  Some of them presented me with two options; others presented with with a more open ended question.  The thought that guided my answer was “do what you love.”  It seems so simple and yet is often so hard.  But, as a guiding principle, I don’t know of any better one.

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Jan 10 2011

Avalon Ventures Raises A New $200 Million Fund And Gets A New Website

Congrats to my friends at Avalon Ventures on raising their new $200 million fund.  I’ve been friends with and co-invested with Rich Levandov, one of Avalon’s partners, since the mid-1990’s, most recently in Standing Cloud, Zynga, and NewsGator.  I’ve gotten to know several of Rich’s partners over the past few years and recently had a wonderful Do More Faster book tour dinner hosted at Avalon’s San Diego office by Kevin Kinsella (a fellow MIT-grad turned VC.)

In conjunction with their financing, Avalon just rolled out a new website designed by Slice of Lime.  Slice of Lime is a Boulder-based firm that we work closely with that was founded around 2000 by Kevin Menzie and Jeff Rodanski and then joined by my brother Daniel Feld a few years ago.  We love their work (they designed our Foundry Group website) and they’ve done other VC firms sites, including Bridgescale.

If you are a VC firm and want a refresh on your website, drop the guys at Slice of Lime an email – I’m sure they’d be happy to hear from you.  And keep your eyes out for some fun additional news from Avalon soon.

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Jan 8 2011

Implied Suspicion Versus Implied Trust

I just had an exchange with an entrepreneur that I don’t know.  It went something like the following via several emails over the course of a week.

Entrepreneur: I’m working on something really amazing that I’m looking for funding for.  Can we get together to discuss?

Me: Can you send me a short email overview so I can tell you whether or not it’s something we’d be interested in exploring?  I don’t want to waste your time if it’s not.

Entrepreneur: I’d much rather get together face to face.

Me: Can you send me a short email overview so I can tell you whether or not it’s something we’d be interested in exploring?  I don’t want to waste your time if it’s not.

Entrepreneur: My idea is special.  Will you sign an NDA first?

Me: I don’t sign NDA’s.  If you are unwilling to send me a short overview that you are comfortable sharing, then I don’t think I’m a good target for you.

<time passes>

Entrepreneur: Following is an email describing my idea.  Since you won’t sign an NDA, you agree that by reading beyond this paragraph you are agreeing not to share my idea with anyone, forward this email to anyone, or discuss the idea without my consent.

Me: I have not read past the end of the first paragraph (“<paragraph copied>”).  I have permanently deleted this email from my inbox.

Entrepreneur: Why aren’t you willing to read my email?

Me: I’m unwilling to have an implied NDA applied to me via your email.  You seem to be operating from a perspective of “implied suspicion.”  I don’t work this way – I much prefer to operate from a perspective of “implied trust.”  Since you clearly don’t trust that I’ll behave responsibly, then I don’t think I’m a good match for working with you.

I’ve written about my “fuck me once” rule in the past.  In the book Do More Faster, I have a chapter about this – Wiley made me change the title to “Two Strikes and You Are Out” but the rule is the same.  I enter every new relationship from the perspective of implied trust and allow this trust to be violated once (where it’s my responsibility to bring up and address the violation.)  If there’s a second violation of trust, I’m done with the relationship.

I’ve generally decided not to engage in new relationships with people that approach things from a perspective of “implied suspicion.”  Yes, I know there are plenty of people in the world that behave badly, but I try really hard not to be one of them and when I do, I own my bad behavior, apologize, resolve things, and try to learn from the situation.  It’s easy to find out about me (both the good and the bad) if you are concerned about starting a relationship from a position of “implied trust” and – if you are interested in a relationship and unwilling to do the prep work to start from this perspective, I don’t really know what else to do other than disengage.

I spent some time thinking about whether this was an inappropriate, arrogant, or naive position from my perspective and decided it’s not.  I’m already completely maxed on “new relationships” so setting a certain type of expectation for the entry into a new relationship (namely one of “implied trust”) helps filter out relationships with people who I likely won’t connect with anyway since they have a 180-degree difference in their view of how to approach a new relationship.

I know there is an enormous amount of noise around the system about “how to protect your idea” and “how VCs behave around your idea” although in my experience the noise is completely disconnected from (and much louder than) the actual signal.  I’m curious what entrepreneurs think about this in the context of a first engagement with a potential VC investor that they don’t know.

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Jan 7 2011

24 Hours In Las Vegas With My Dad

Last night during my two mile post dinner walk from the Hard Rock (where I had an awesome dinner at Nobu) to the Venetian (where I subsequently had a very short night of sleep), my mind wandered around about the great time I had with my dad at CES.

My dad and I have developed several annual traditions including a really delightful father-son weekend.  Our annual 24 hours (usually more like 30) together in Las Vegas every January for CES is another one.

My dad is a retired doctor.  He’s also a computer nerd – he has loved playing around with computers since I got my first Apple II computer 32 years ago.  He’s an endless tinkerer and a gadget guy – always curious and excited about the latest, greatest (or not so great, but still brand new) technology gizmo.

My Foundry Group partners and I have been coming to CES together for the past few years.  We’ve discovered new investments at CES (such as Cloud Engines – for the long version of the discovery process check out my dad’s post on it titled I Love My Popoplug!!) as well as have companies we’ve invested in be at the show such as Orbotix and Sifteo this year.  We keep it short (two nights, one day) but have a lot of fun together.  And my dad tags along.

Each of the two nights we are there we have a great dinner with a bunch of the execs in companies we’ve invested in as well as friends of Foundry Group (other VCs, some journalists, angel investors, other entrepreneurs who are friends.)  The first dinner is always somewhere fancy (this year it was at Bouchon).  The second night is sushi orgy at Nobu.

As I walked home from the sushi orgy, I kept thinking how lucky I was to completely adore my father.  With the exception of several months when I was in seventh grade (and was a complete pain in the ass), we’ve been best friends.  I have enormous respect for him, have learned a ton, and even when I get frustrated with him (as any son will), I usually end up in an semi-amused state about whatever is going on.

And – as far as I can tell, my friends and close work colleagues also love hanging out with him.  This is icing on the cake, because I know he’s having a blast with them and vice-versa.

Dad – thanks for coming to CES again this year – I love you.

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Jan 6 2011

Orbotix Sphero at CES

Today’s fun “company at CES that Foundry Group has invested in” is Orbotix.  They’ll be in their booth #4419 in the North Hall iLounge.  Orbotix makes Sphero, the world’s first robotic ball controlled by a smartphone.

sphero-in-hand.jpeg

Here’s Sphero in action.

 

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Jan 5 2011

Sifteo’s Revolutionary Tabletop Games

Several of the companies we’ve invested in are launching products at CES this year.  The first one up is Sifteo.  Today, Sifteo launched and you can preorder Siftables as part of their early access program.

You may be familiar with them from a well known TED Talk that co-founder David Merrill did in 2009.

Or maybe the recent TEDxMonterey Talk that David did earlier this year with a more in-depth demo.

We invested in Sifteo in May 2010 along with our friends from True Ventures.  Sifteo is another HCI investment with its roots in the MIT Media Lab, joining Oblong and EmSense in this part of our portfolio.  If you are at CES, check them out in North – 3317A.

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