Brad Feld

Month: August 2011

Yesterday, we announced that we have invested in Occipital. You may know them as the creators of the popular iPhone app 360 Panorama, the creators of Red Laser (acquired by eBay), or just a gang of the smartest computer vision guys you’ll come across. And when I say “computer vision”, I don’t just mean the technical part, but also a vision of where it’s going. For example, from the Occipital blog post announcing the investment:

“Your smartphone’s computational reach into its surroundings ends at its touchscreen surface. To your device, the real world isn’t a canvas of interactivity. Instead, it’s little more than a grid of pixels that might as well be random. We’re changing that. We’re using computer vision to make real world environments computationally interactive and fun, thereby extending the computational reach of your device into the visual space around you.”

I met Jeff and Vikas in 2008. They are brilliant and have always had a huge vision. In Do More Faster, they wrote that you should Be Tiny Until You Shouldn’t Be. Red Laser was step 1. 360 Panorama was step 2. 360verse is step 3. And we are really psyched to invest and to help out with step 4.

Just for perspective, with my iPhone, I was able to create a pano of where I’m staying in Tuscany. It took 7 seconds and I’m a pretty mediocre photographer.

We now have three investments, starting with the letter O, in teams that just blow my mind with what they can make a computer do. We’ve talked about Oblong many times in the past. And our friends at Organic Motion just released an amazing new version of their markerless motion capture system.

Our good friend Manu Kumar from K9 Ventures joined the board as did Gary Bradski of Willow Garage.

Here’s to the letter O, as well as the machines getting a little bit smarter, every day, and in every way.

‘}” alt=”” />

One of my favorite conferences of the year is Defrag happening in Boulder on November 9th and 10th. Eric Norlin is gearing up for it and just announced several scholarships for Defrag, underwritten by the Kauffman Foundation. The Kauffman scholarships are for students and entrepreneurs who can’t afford to attend Defrag, but would receive significant benefit from doing so. Eric is making a concerted effort to get more women to Defrag so he’s allocating 50% of the scholarships to women. For information on applying, take a look at the Defrag scholarship post.

On a completely different note, I love rockets. I’m a boy – I can’t help myself. This video of the launch of Juno on the APOD site gave me chills.

Finally, if you are a video watcher, take a look at ThisWeekIn TechStars. The first episode, hosted by David Cohen with me, Jeff Clavier (SoftTech VC), and Ari Newman (Filtrbox – acquired by Jive) is up.

Amy and I spent the last week in Tuscany with some friends, including Howard Lindzon. Howard is the CEO of StockTwits, a company we’ve been an investor in for a few years. I was an investor in Howard’s previous company WallStrip, met Howard through an introduction from our mutual friend Fred Wilson (it’s a pretty funny story, as are many things with Howard), and have worked closely together on a bunch of things including TechStars where Howard has been a great mentor and investor since the beginning.

We had an incredibly wonderful week last week and Amy has a great post up on her blog titled Our Revels. If you know Howard, you know he’s an always on, mostly hilarious, sometimes crazy (like a fox), super high energy except when on ambien guy. After four days of Tuscany, Howard was completely chilled out and more relaxed than I’ve ever seen him.

But don’t let this totally chilled out Howard fool you. He was on his computer a lot. Whenever I looked over at him, he was on the Stocktwits web site communicating with the stock community he’s helped create and loves. As the market was gyrating around he tweeted up a storm, put up a bunch of content on StockTwits, did some trades in his hedge fund, and wrote a few insightful (and funny) blog posts about the market including his discovery that the Tuscany VIX is always less than 10.

Howard loves Stocktwits. He loves his business. He loves stocks. He loves the community of people that care about stocks. And he’s creating a company – a really interesting and important one – around his passion. It’s wonderful, infectious, fascinating, exciting, and awesome. And yes, today is adjective day.

While Foundry Group generally avoids investing in vertical markets, we make an exception for our Distribution theme. One of the key attributes of this theme is that the company must be led by an entrepreneur who is completely obsessed with a vertical market. They must be thinking – every single waking moment – about how they are going to change the way the world interacts with the vertical market they are attacking.

Howard defines this type of entrepreneur. It was incredibly inspiring to be around. We had a blast doing non-Stocktwits / non-stock stuff, but when he was working he knew exactly what he was going to work on.

We have either recently closed (but not announced) or are about to close several other investments with entrepreneurs who have similar characteristics. None of them are in our Distribution theme, which is pretty cool, as the entrepreneurs are completely obsessed with the problem their business is addressing.

When an entrepreneur is trying to decide between a couple of different ideas, I often ask the question “which one are you in love with?” If there’s a quick response, then the answer is easy. If the answer is none of them, that’s the answer to which one he should pursue.

Howard reminded me of this again last week. Thanks Howard.

I’ve been railing against software patents for a number of years. I believe software patents are an invalid construct – software shouldn’t be able to patented.

For a while, I felt like I was shouting alone in the wilderness. While a bunch of software engineers I know thought software patents were bogus, I had trouble getting anyone else to speak out against software patents. But that has changed. In the last few month the issue of software patents – and the fundamental issues with them – have started to be front and center in the discussion about innovation.

There have been two dynamite stories on NPR recently – the first on This American Life titled When Patents Attack! and one on Planet Money titled The Patent War. If you have an interest in this area, the two are well worth listening to.

In the past week, the discussion exploded starting with a post from Google titled When patents attack Android. The word “patent” shows up in 20 of the Techmeme River articles from the last week. Martin Fowler, a software developer, had a well thought out article titled SoftwarePatent. And they kept coming, such as Why Google Is Right Yet Short-Sighted To Complain About Mobile Patents.

But my favorite was Mark Cuban’s post titled If you want to see more jobs created – change patent laws. He starts strong:

“Sometimes it’s not the obvious things that create the biggest problems.  In this case one of the hidden job killers in our economy today is the explosion of patent litigation.”

And he ends strong:

“We need to face the facts, patent law is killing job creation. If the current administration wants to improve job creation, change patent law and watch jobs among small technology companies develop instantly.”

I hope my friends in the White House are listening. And to all the software engineers who are co-authors on patents that they aren’t proud of, or think are bogus, or were forced to create the patent by their company, or were paid a bonus by their company to write a patent on nothing, or are now working for a company that is getting sued for a patent they co-authored that they aren’t even sure what it says, speak up!

Today is Finance Friday and post #2 has been drafted by the Finance Friday team from University of Chicago Booth and is waiting for my edits. I’m procrastinating so I thought I’d write one of my periodic public service announcement for entrepreneurs. This one is more specific than “ignore the macro economy” – instead, it’s “ignore the Dow and the stock market and get back to work on your business.”

Tom Evslin had a post up this morning titled Don’t Watch The Dow! that caused me to say “right on.” In 1999, 2000, and 2001 I had a page up with a bunch of stocks, including a number of companies I was an investor in, as my home page. I’d hit refresh 5,321 times a day, generating plenty of CPM-based revenue for Yahoo. I’ve written about the emotional ups and downs in the past so I won’t repeat myself here other than to say this activity had zero impact on the stock market (I couldn’t do anything about it), it didn’t change my short term decision making (I’m not a trader), and all it resulted in was sucking a huge amount of emotional energy out of me.

When the market went down, I felt sad. When it went up I got the emotional equivalent of a sugar high. When it went back down again, I was bummed. Up – smile. Down – depressed. Up – happy. Down – cranky. And this was all before lunch time. Maybe it was too much coffee or not enough sleep, but it got even worse when the market shifted from 1/8s too 0.01s.

As an entrepreneur, this was all noise. As a long term VC investor, it was also all noise. Sure – the broad cycles had impact, although lots of people disagree on what they actually mean (e.g. do VCs actually benefit long term from down cycles, are the best companies started in recessions when everything is cheaper and more available).

Over time, I’ve learned that none of the short term moves in the stock market matter at all in my life. It’s occasionally entertaining to turn on CNBC and see my friend Paul Kedrosky in the octobox telling all the other people that they don’t actually understand macro-economics, but it’s no different than watching McEnroe when he’s announcing a Nadal – Federer match. It’s just sport.

So – for all the entrepreneurs in my world, take Tom’s great advice. Don’t Watch The Dow! And if you think Scott Kirsner is being sarcastic in his post titled How the players in the innovation economy rationalize away stock market dives, take a deep breath and consider whether the use of the word rationalize is correct or not.

Now, get back to work on something you can have an impact on!

Yesterday there was solid progress on the Startup Visa Movement – specifically making it easier for foreign entrepreneurs to start their companies in the US. The WSJ had a good summary article titled U.S. to Assist Immigrant Job Creators that discusses two formal communications from the Obama administration.

There are additional guidelines listed in detail at the following links.

  • New guidelines on how entrepreneurs can qualify for an EB-2 green card with National Interest Waiver
  • New guidelines on how entrepreneurs can satisfy the employer-employee relationship requirement for an H-1B visa (see the second-to-last question about sole owners)
  • Implementation of enhancements to EB-5 immigrant investor program, including premium processing
  • Public engagement between entrepreneur community and USCIS to inform new training of USCIS adjudicators

I’ve been working on this issue since I wrote the post The Founders Visa Movement on 9/10/09 (all my posts can be seen in the category summary Startup Visa on my blog). A number of colleagues throughout the entrepreneurial community (entrepreneurs, angels, VCs) joined in on the effort as it became a formal grass-roots movement, resulting in several bills being drafted in Congress in 2010 and then 2011.

While I’ve learned a lot about politics, Congress, and how Washington works in the past two years, one thing that became painfully apparent to me was that Congress was completely stalled on anything related to immigration issues. While I’ve continued to view the Startup Visa as a jobs issue (we need more entrepreneurs in the US – anyone should be able to start a company here if they want to, and that creates jobs, which is good for our economy) that’s not how people in Washington see it (“visa” – that means “immigration”).

In parallel, a number of us have been talking to key people in the White House, including the amazing Aneesh Chopra, the White House CTO. Aneesh totally gets this issue as do a number of his colleagues in the White House and the Office of Science and Technology Policy and they’ve been working on non-legislative solutions that can be implemented with policy changes in USCIS. While the changes made yesterday don’t cover every case, they make a solid step in the right direction.

In the past six months, I’ve personally been involved in about ten cases of foreign entrepreneurs trying to get valid US visas so they could either start their company here or join a US-based company that they helped co-found. After being stymied for a variety of reasons, including extremely aggressive, negative, and inconsistent behavior at the border from U.S. Customs and Border Protection (CBP) officers, most of the folks I’ve been talking to and/or helping have been able to get visas. In all cases, they were willing to share their stories, in detail, with people on the White House staff, who I think have been extremely thoughtful and diligent about understanding what was going on, worked hard to figure out appropriate and legal solutions, and provided a constructive and empathetic ear to the very frustrated entrepreneurs.

I don’t feel comfortable naming names as most people are very concerned about confidentiality around immigration issues, but I’m proud of the efforts by many of these entrepreneurs. They didn’t give up, didn’t get angry even when they had plenty of reason to, and were willing to be very open with White House officials in trying to help figure out a more effective approach. I’m also very impressed with the folks at the White House and OSTP who I’ve been working with on this issue. The contrast between their efforts, thoroughness, and their “let’s solve the problem” vs. a “let’s be political” attitude is commendable.

There are plenty of additional things in the Startup Visa Movement that need to be addressed but I feel like we made some progress today. Thanks to everyone who has been involved – you are a force for good in the world.

Ever since David Cohen and I started talking about TechStars in 2006, one of our goals was to be open about everything we did in the program. We viewed TechStars as an experiment in building companies, creating entrepreneurial communities, teaching people (and learning ourselves) about entrepreneurship and what’s required to create a high growth company, and working hard at perfecting a vision David had which we now call a “mentor-driven accelerator”.

Several years ago we started getting approached to do a documentary, TV show, or reality series around TechStars. We’ve done lots of video that’s up on the web, including the awesome Founders Series (2010 and 2009) that our friend Megan Sweeney did with us.

Last year we decided to work with Bloomberg on a six episode project documenting the first TechStars New York program. Rather than describe it, I encourage you to watch the trailer.

TechStars Trailer 8/01 from Vortex Media on Vimeo.

David Cohen talks more about it on the TechStars blog titled TechStars on Bloomberg TV. The first episode is launching on 9/13 at 9:30 EST on Bloomberg TV (and the web). We are going to have a bunch of events around the launch – look for more info on them in the coming days.

This was an amazingly fun project to be involved in. Our goal with it was to give a deeper view into the experience of creating a company from scratch. Having spent a lot of time with the Bloomberg folks who worked incredibly hard on this, I’m optimistic about the outcome.

Recently I wrote a post titled Competition where I listed out a set of topics that summarizes my philosophy around competition. I’m involved in a lot of companies, many of which are either the market leader in their segment, fighting head to head with a few other companies for clear market leadership, going after an existing incumbent, or creating a new segment entirely. As a result I spend a lot of time thinking and talking about competition, as well as executing a variety of strategies to address competitive dynamics.

The first topic I want to address is the idea of being the first mover. Several people challenged this idea in the comments and there are many investors that like to invest in “fast followers” (I’m not one of them.) There’s also a well worn cliche that you can identify early leaders as they are the ones with arrows in their back. While I understand the convention wisdom around this, especially in the context of corporate strategy and general innovation theory, I take a different approach, especially in very fast moving markets like the ones I invest in.

When I talk about first mover, I don’t think of being a broad “market” first mover, but rather a “category” or “segment” first mover. In an article I wrote recently for Reuters titled Note to entrepreneurs: Your idea is not special I made the point that “the products and their subsequent companies became great because of execution.”

“Google? Not the first search engine. Facebook? Not the first social network. Groupon? Not the first deal site. Pandora? Not the first music site. The list goes on. Even when you go back in time to the origins of the software industry: MS-DOS – not the first operating system. Lotus 1-2-3 – not the first spreadsheet.”

So, when I talk about being the first mover, I don’t mean “being the first person to come up with the idea.” Rather, I mean that when you begin executing your business, you need to aggressively be the first mover in the current phase of the innovation cycle. While Facebook wasn’t the first social network in the Web 2.0 era, they out-executed everyone else dramatically, and cemented their first mover advantage when they launched the Facebook platform at their first F8 developers conference in 2007. The iPhone wasn’t the first smartphone, but once it established itself as the first real computer in your pocket with a tightly integrated app economy, there was no looking back until Android started to challenge it.

When I go through our portfolio at Foundry Group, I consider many of the companies we’ve invested in to be first movers in their current segment. Others are fighting with a few other companies to be clear leaders, and, as a result, first mover status is ambiguous. In these situations, I encourage the companies I’m an investor in to Do More Faster, right now. If you are in a fight to be in the pole position, you have a few choices:

  1. Invest targeted resources more aggressively in areas that you think will put you in the lead. Basically, double down on your bets.
  2. Buy one of your competitors or a complimentary company that will leapfrog your business ahead.
  3. Change the game, usually by redefining the segment you are playing in.

If you aren’t the first mover, and one of your competitors is steadily leaving you behind in their dust, changing the game is usually the best approach. My measurement window here is usually six months, not five years. Assuming the markets and products evolve rapidly, you have a lot of chances to change the game early on in your life. That ability changes when you’ve clearly defined your path and competitive universe. But don’t be afraid to weave around as you are looking for the segment where you can become the first mover.

In my little corner of the universe, the ultimate first mover was Steve Prefontaine, one of my heroes. The dude always raced from the front. Early on, his coach and Nike co-founder, the amazing Bill Bowerman, encouraged him to “change the game” by running the 3 mile (5k) instead of the mile. Pre rarely lost (usually only in the mile) and always put in an amazing performance. In the process of running from the front, he demoralized his competitors.

As I said in the intro post, these are my ideas and I’d love to hear different perspectives. Challenge me on anything you disagree with.