Month: June 2011
I received an email from an entrepreneur today asking me about something that made my stomach turn. It’s a first time entrepreneur who is raising a modest (< $750k) seed round). There are two founders and they’ve been talking to a VC they met several months ago. Recently, the VC told them he was leaving his firm and wanted to help them out. This was obviously appealing until he dropped the bomb that prompted their question to me.
This soon to be ex-VC said something to the effect of “I can easily raise you money with a couple of phone calls, but I want to be a co-founder of the company and have an equal share of the business.”
In my email exchange with the entrepreneur, I asked two questions. The first was “is he going to be full time with the company” and the other was “do you want him as a third full time partner.” The answer was no and no. More specifically, the VC was positioning himself as “the founder that would help raise the money.”
I dug a little deeper to find out who the person was in case it was just a random dude looking for gig flow. David Cohen, the CEO of TechStars, has written extensively about this in our book Do More Faster – for example, see the chapter Beware of Angel Investors Who Aren’t. I was shocked when I saw the name of the person and the firm he has been with (and is leaving) – it’s someone who has been in the VC business for a while and should know better.
I find this kind of behavior disgusting. If the person was offering to put in $25k – $100k in the round and then asking for an additional 1% or 2% as an “active advisor” (beyond whatever the investment bought) to help out with the company, I’d still be skeptical of the equity ask at this stage and encourage the founders to (a) vest it over time and (b) make sure there was a tangible commitment associated with it that was different from other investors. Instead, given the facts I was given, my feedback was to run far away, fast.
Entrepreneurs – beware. This is the kind of behavior that gives investors a bad name. Unfortunately, my impression of this particular person is that he’s not a constructive early stage investor but rather someone who is trying to prey on naive entrepreneurs. Whenever the markets heat up, this kind of thing starts happening. Just be careful out there.
Today on Brad Feld’s Amazing Deals I’ve got a great offer for anyone with a touchscreen device.
The deal is for Joystickers – sticky arcade buttons you put on your touchscreen to make games easier to play. Joystickers is one of the Excelerate Summer 2011 companies (Excelerate is a TechStars Network member) – I met with them a few weeks ago and loved what they are doing.
You can buy three buttons for $9 (normally $20), or five buttons for $13 (normally $34). My friends at Joystickers have even agreed to throw in free shipping.
Check out a video of these buttons in action and get ready to level up.
If you have an iPad, go look at Feld Thoughts in the browser on it right now. I’ll wait. If you don’t have an iPad, it looks like the following.
As someone who loves magic services that dramatically improve my content, Onswipe is the king of the iPad so far. The key for me is that it be trivial to set up and work flawlessly. In this category, Onswipe has nailed it. And it’s beautiful – way better than trying to read my blog in Safari on an iPad.
If you are a publisher and you want your site to be beautiful on the iPad in one minute, go sign up for the Onswipe beta now.
It’s Sunday morning. Take a deep breath. It’s summer time. Go for a walk. Or a run. Play with your family. Take a nap this afternoon. Read a book. Go to a movie. Chill.
Last week, I had two close friends tell me some version of “I’m too busy.” One insightfully said “I have no time these days. I’m doing too much.” The other simply said “sorry I didn’t call back – I have no time.”
I too am intensely busy. And anyone who knows me knows that I eventually hit a wall, have short term burnout, need to rest / recover, and then get back at it. However, as I’ve gone through this cycle throughout my life, I’m getting smarter about how to handle it. My week a quarter off the grid helps. July in Alaska helps (although this summer has a fun, European twist). Running helps. Time with Amy helps. And recognizing that as one gets busier, more crap creeps into the schedule, is important.
I’ve deliberately slowed down in June. I’ve cancelled a bunch of unnecessary things. I’m rethinking how I approach board meetings which are a massive time suck for any VC. I’ve been a lot more hesitant to say yes to a trip somewhere to do something. I’ve been aggressively using Skype and Google Video Chat for meetings. And I’m scheduling a lot less throughout the day – trying to have more adhoc time to work on whatever I feel like or whatever comes up.
Basically, I’m trying to slow down. If I do this right, I believe I’ll be able to cover even more ground. I think this applies to any entrepreneur, or anyone involved in the entrepreneurial ecosystem. “Being really busy” is seductive – it has nothing to do with getting things done, or actually accomplishing your goals. But there’s something satisfying, or at least addictive, about being so busy that you don’t have time to think or reflect on what is going on around you. This is a big mistake long term as you’ll ultimately make crummy decisions.
Slow down to speed up.
Recently I’ve been on the receiving end of a bunch of due diligence calls. Some of them are for companies I’m involved in, some are for entrepreneurs I’ve worked with in the past, and some are for other VCs I’ve worked with who are raising new funds. I view these differently than reference calls (I won’t do reference calls for anyone) – these are not about “employment”, they are about investment and a long term working relationship.
I experience two types of due diligence calls: (1) confirmatory calls and (2) investigative calls. The confirmatory calls result when someone has clearly made their decision and is just checking the box of “I’ve made my due diligence calls.” The investigative calls tend to be much more substance – these often happen well before a decision has been made and someone is in exploratory mode.
In most cases there is either a script or standard set of questions. The interesting calls are the ones where the person on the other end clearly knows how to interview or uses a method like five whys to really get at the core of something they are interested in. I especially enjoy the ones where the person on the other end of the phone is actively developing a relationship with me, rather than just collecting data.
But on many of the calls, there is a weird question at the end. It goes something like “Is there anything I didn’t ask you that I should be asking?” For a while I used to try to be polite and engage with the question. But at some point I realized it was a stupid question that someone included on a “how to do due diligence” form from 1961. So now I answer it simply with “nope.”
Here’s why I think it’s a stupid question. You are calling me for diligence on someone. Presumably you have specific things you are interested in. You’ve either done research on our previous relationship or you want me to fill you in on that. You then use this to pursue whatever line of questioning you have. If you are inquisitive and capable of reasoning, my answers will open up more questions. Eventually you will have enough information or will have reached a conclusion. If I’ve been doing my job I’ve been concentrating on answering your questions, not trying to follow your path of inquiry.
Now, while we are at the end of the inquiry, you ask me an open ended question in search of something magical. Maybe I’ll finally tell you the deep, dark, negative secret about the person that I’ve been withholding. Or I’ll come up with some incredible insight about the person that hadn’t come out in your previous line of questioning. I suppose this happens occasionally, and maybe it’s worth asking the question just on the off chance that something yummy will pop out. But I just find this an annoying way to end the conversion, so my answer from here on out is “nope.”
I’ve worn glasses since I was three years old. I was trying to look at something on my iPad yesterday without them on and I heard Amy burst out laughing with “you really can’t see a thing without your glasses.” True – my eyes are defective. I’ve contemplated getting LASIK’s a few times but chickened out each time – if 42 years of glasses have worked, I expect another 42 will be just fine.
For years I’ve fantasized about getting glasses that have a heads-up display (HUD) integrated into them. This HUD would be connected to a computer somehow, which would of course be connected to the Internet, which would then give me access to whatever I wanted through my glasses. I can’t remember a sci-fi movie over the past decade that didn’t have this technology available and since my jetpack now seems like it’s finally around the corner (I’m hoping to get one for my 46th birthday), I have hope for my HUDglasses.
The pieces finally exist since I’m carrying a computer in my pocket (my iPhone or my Android) that’s always connected to the Internet. My glasses just need bluetooth to pair with my phone, an appropriate display, a processor, a camera, and the right software. Optimally I could control it via a spatial operating environment like Oblong’s g-speak.
I’m interested in investing in a team going after this. The magic will be on the software side – I want to work with folks that believe the hardware will be available, can integrate existing products, are comfortable with consumer electronics products, but are obsessed with “assembling the hardware” and “hacking the software.”
If this is you, or someone you know, please aim them at me. In the mean time, I tried to hunt down Tony Stark but don’t have his email address.
I had a board update call recently that inspired me to write the first of my Reinventing the Board Meeting posts.
The call was for a company that is doing great, is extremely well managed, and extraordinarily transparent. Two days before the call a very detailed update package was sent around to the board. It covered the operating characteristics of the business extensively and in a format that is consistent with all of the other reports. It was clear and unambiguous.
The company does a very nice job with the board update call. They don’t force the board to sit through a page by page discussion of the package. Instead, there’s a short overview for each section followed by any Q&A that board members have. This is a pretty good approach. After about an hour of this we spent another 30 minutes on a handful of governance and board related issues. Overall, the call lasted two hours.
When I reflect on the call, we didn’t cover any strategic issues, nor did we discuss anything that would materially impact the company. In addition, there was nothing discussed that couldn’t be handled in email back and forth or flagged for a deeper discussion at the next board meeting.
This board meeting update call is an artifact and is typical of the many board update calls I’ve been doing since I joined my first board (other than my own company) in 1994. I don’t even want to think of the number of hours of my life (which is probably cumulatively measured in years at this point) hanging on the end of the phone trying to stay intellectually engaged in a board update call.
I’ve come to believe that the board update call is worthless. There tend to be three parts – all which are easily separable:
- Business Update: At the minimum, this can be a monthly report that goes out to the full board. Assuming that all of the board members can read and are capable of writing an email, any questions can be surfaced via email. The best companies I’m involved in actually do this weekly and, if you follow Steve Blank’s “Boardroom as Bits” hypothesis, you can turn this into real time info where the board is incorporated into the information stream of the company.
- Business / Strategy Issues: For whatever reason, the vast majority of board update calls don’t have a deep discussion on any substantive issues. They are often flagged along with a shallow conversation but then deferred either to the next in person board meeting, left for interactions between individual board members and the CEO, or dropped on the floor and quickly forgotten.
- Legal / Governance Issues: Inevitably there are minutes to approve, options to approve, and other legal / governance issues to deal with. These almost always can be handled at the next in-person board meeting or by a UWC (“unanimous written consent” sent around by email.)
There were a dozen people on the call I was on including management team members. That’s a full person day of time spent on something that didn’t need to happen. Expensive.
CEO’s – reconsider how you are doing this. And to my fellow board members – challenge the CEOs and the boards you are on to engage in a more effective, continuous way. And to the CEO for every board I’m on – I’m happy to work with you to abolish the board meeting update call if you’d like.
Every now and then my mom sends me a pile of old photos of me and my brother Daniel. Here’s one.
Notice all of the cameras. I’ve got two (I’m the shaggy haired guy on the right) and Daniel has one (he’s the short shaggy haired guy on the left.) I have no idea how old I was but I’m going to guess around 11 based on my white knee socks and light blue short shorts. I’m 99% sure the cameras are a Contax (the smaller brown one) and a Pentax. Oh – and check out that cool camera strap.
My mom is a great photographer and when we were kids we hung out in the dark room a lot. I remember how cool I thought the red light was, how bizarre the chemicals smelled, and how our washing machine and dryer made perfect tables for the printing process. Developer, stop bath, and fixer – remember that?
I stopped taking pictures when I went to college, but I can’t remember why. Maybe in the next phase of life I’ll rediscover this, possibly with a Lytro camera. I can only imagine how cool it would be to combine that with Occipital.
Many of the tech blogs / news blogs that I’m reading are suddenly about deals. financings, IPOs, valuations, and bubbles (or not bubbles). Several years ago, there was a lot more about “how to startup a company”, especially around product, vision, and team. Now a lot of that focus has shifted to deal making and exits.
It was with this backdrop that I read The Lean Startup by Eric Ries over the weekend. If you don’t know Eric, he’s the pioneer of the Lean Startup Movement, building on the great work of one of his mentors, Steve Blank who wrote the seminal book The Four Steps to the Epiphany. Both Eric and Steve have must read blogs and Eric’s new book will join Steve’s as a critical book for any entrepreneur working on a tech startup.
The Lean Startup is focused on the early stages of a company, but apply throughout the lifecycle of any business as all product initiatives, especially new ones, benefit greatly from the Lean Startup approach. We spend a lot of time on this at TechStars and you see a lot of the lean startup principles reflected in the stories in Do More Faster: TechStars Lessons to Accelerate Entrepreneurship. While Eric’s book isn’t out until September, I encourage you to preorder it now and gobble it down when it gets to you.
I’ve been a fan of Eric’s for a number of years ever since I first started reading his blog. We’ve worked closely together on the Startup Visa Movement and I put him on my short list of people who I’d support in any endeavor that was important to him based on his attitude, vision, deep thinking, and great style and approach to things.
As the world becomes fascinated with exits, I’m going to keep focusing on startups because without them, nothing else matters in the entrepreneurial chain. As part of this, I’d like to put together a great bookshelf of “startup books” – books aimed at the startup phase of entrepreneurships.
If you’ve got any favorites, please mention them here and – if I haven’t read them – I’ll go grab them.
Amy and I have been married for 18 years. On the summer solstice in 1993 we went to the top of Ester Dome in Fairbanks, Alaska and exchanged vows. Earlier that day we went to Pay ‘n Save and bought our wedding rings (I think we got six for $1.99). I wrote the word “vows” on a piece of paper twice, tore it in half, and gave one of the vows to Amy to give to me when we got to the top. We never had a formal wedding because we never wanted one, although we did visit the Boulder County Courthouse on June 21, 1996, paid our $20, assured them that we weren’t brother and sister, and made it official. But we count years from that date on top of Ester Dome in 1993.
I can’t image having a better life partner. Like all couples, we’ve had our ups and downs, although the only real downs that I remember are the ones that catalyzed me into action to change my behavior. The list of amazing things Amy has brought into my life is extraordinarily long, but the greatest is the joy that I get from spending time with her, learning from her, and just being myself around her.
The journey through life on this planet is a complicated one. Many years ago I decided that I had no idea when the lights were going to go out so I was determined to live every single moment as fully as I could. As I get older, I want to spend more and more of these moments with Amy. We’re going to be together every day for the rest of this summer – and I’m ecstatic!
Amy – you are the most awesome person I’ve known. Thanks for choosing me.