Month: June 2012
Amy – we have been married for 19 years today. Some of our friends chose today to get married such as my partner Seth and his wife Greeley. Other close friends are celebrating anniversaries, including Fred and Joanne (25th yesterday) and my parents (49th a few days ago). We are in good company even though we are still newlyweds compared to them. And, as a bonus, 19 is a prime number as is the sum of the digits of the date (06/21/2012).
When I reflect on my life, getting married to you is the best decision I’ve ever made. The great moments – which are frequent – are awesome. When we have issues we always work through them. And figuring out why we had the issue in the first place makes us better partners.
I’m your biggest fan, and I know you are mine. I can’t imagine tackling things like doing a marathon in every state without your support. I’d never be able to sustain the pace of my work if I didn’t know you were there for me. The victories and celebrations are so much sweeter since I get to share them with you.
Whenever I’ve been down, broken, defeated, or depressed, you’ve always been a safe person for me to be with. You listen when I need to talk, and you let me hang out in my man cave when I need to be alone. You know what makes me tick better than any other human on this planet and never make me do things I hate. As a bonus, you do things you hate, like clean up the dog poop when accidents happen, since you know how devastatingly difficult it would be for me to have to deal with it.
Last summer we got to spend 60 days in a row together – the longest stretch we’d ever been together so far in our life. It made me want to spend even more time with you and I’m having such a blast spending the whole summer with you this year.
I can’t imagine life without you. I love you and look forward to many more anniversaries together.
TechStars Patriot Boot Camp is an intense three-day program that will educate and mentor Veterans and Service Members to innovate, build technology companies, and create jobs. TechStars hopes that participation in the Patriot Boot Camp will be the catalyst for Veterans and Service Members to kickstart a company, find co-founders, and advance as entrepreneurs. Veterans, spouses of Veterans, or companies comprised of 50% or more Veterans are encouraged to apply to the July event in D.C. and 75 qualified applications will be accepted.
The deadline to apply is June 24th, this Sunday at midnight Eastern time. Apply now!
If you have questions or want to help out as a mentor, drop TechStars a note.
Yesware just announced a $4 million financing. I’ve joined the board. If you are a salesperson who uses Gmail, go download and try it now.
I’ve been using Yesware since the first alpha release. While I’m theoretically not a salesperson, I believe every CEO and professional plays the role of a salesperson. And many people, especially in young, fast growing companies, are salespeople even if that’s not their title. As far as I’m concerned salespeople are the unsung heros of most US companies.
The brilliance of Yesware is that it was conceived and built by salespeople, for salespeople, from the perspective of living in email. Most salespeople I know live in email, hate their CRM system, and are constantly switching between the two while bemoaning the idiocy of the whole thing. The whole CRM thing is for sales managers who want to actually track what the salespeople are doing. But it’s all about email for the salespeople. And that’s what Yesware is focused on.
As a seed investor in Yesware, it has been pretty awesome to watch the product evolve and and the user growth spread to over 40,000 users through word of mouth only. As a result of our word of mouth approach, the product has to be great and responsive to the users.
As an investor, I’ve encouraged the team to push a new release once a week, focus on both registrations and daily active users, and instrument every aspect of the product so we can see what’s happening at a very granular level. While Yesware is only available for Gmail, it’s been an outstanding platform to iterate aggressively on and get this kind of feedback. Now that Yesware has nailed the use case with the seed financing and has a serious user ramp happening, it’s time to go after Outlook.
I’m psyched for the Yesware team and proud to be involved with them.
This week I’ll be kicking off the second day of Big Boulder with a talk about how the Boulder startup community has come to be what it is today. Big Boulder is a conference on social data held by our portfolio company Gnip.
Last year Chris Moody wrote a blog post about how companies should pursue thought leadership. To me, Big Boulder is the embodiment of this. Gnip believes that social data will change the world. To that end, they’ve brought together some of the biggest players from social media publishers including Facebook, Twitter, Klout, LinkedIn, StockTwits, Disqus, Tumblr and WordPress. They’ve put together a killer agenda talking about the many uses of social data and how publishers are thinking about it and what is enabling people to do.
Part of Boulder’s ability to grow as a startup community is our ability to bring high-level events to Boulder. To that end, Foundry Group has worked hard to bring and keep Defrag and Glue in Boulder. We’re excited to have Big Boulder as another high-profile event attracting people to our city. This affords more people to see everything Boulder has to offer a startup community and for our community to interact with attendees. I know that some Big Boulder speakers like Daniel Ha of Disqus are also sticking around to speak to the TechStars teams.
If you’ll be at the conference, please come and say hi.
The Microsoft Accelerator (Powered By TechStars) Is A Hit And It’s Expanding
The first cycle of The Microsoft Accelerator, powered by TechStars, is in its final run up to demo day. The first program has focused on Kinect applications and has some super teams, such as Gestsure (they control operating rooms with motion control) and Ubi (they turn any surface into a touch screen.)
Demo Day is in Seattle on June 28th. If you are an investor (angel or VC), send me an email and I’ll get you an invitation.
TechStars and Microsoft have been so pleased with the program that a second cycle of the Microsoft Accelerator in Seattle has been added focusing on cloud-based applications. The applications are open now through July 13. Each company gets $20k in funding, mentorship from top entrepreneurs, investors and Microsoft executives, $60K in Azure credit, office space, training and support, and demo day to pitch to investors, media, and industry influentials.
As you may know Microsoft has really made some awesome improvements to Windows Azure. Most notably it’s much more open source focused. Want to run Linux? No problem. Python? No problem as Microsoft has embraced open source with this update of Windows Azure. While you need not be using Azure to apply to the Microsoft Accelerator, if you’re playing in the Microsoft ecosystem at all I’d really encourage you to take a look at the latest news about Windows Azure.
If you are an entrepreneur working on something cloud computing related, especially in the Microsoft ecosystem, consider applying to the Microsoft Accelerator today.
Ben Horowitz from Andreessen Horowitz has a beautiful post up titled The Struggle. He captures – in words – what many entrepreneurs, especially entrepreneurial CEOs go through. I’ve heard variants of it many times over the years and have experienced it myself in several companies where I’ve been the entrepreneur and many companies where I’ve been the investor. Ben states that there is no answer to The Struggle but offers some things that may or may not help.
I’d like to take it one step further and explain the brilliance of The Struggle. And I’ll begin at the end, by starting with one my favorite John Galt quotes.
“It’s not that I don’t suffer, it’s that I know the unimportance of suffering.” – John Galt
When you accept the complete and total unimportance of suffering, you can actually enjoy The Struggle. It’s just a step along the way, another experience in life, of the cumulative experiences before we ultimately die. Suffering, The Struggle, disappointment, failure, and self-doubt – these are all part of being an entrepreneur. And that brings to mind the famous Nietzsche quote.
“That which does not kill us makes us stronger” – Friedrich Nietzsche
Remember always that we all will die. And it’s unlikely that The Struggle will kill us. If we approach it the right way it will make us stronger. Here are a few examples from my first company, Feld Technologies (1987 – 1993).
Hyperion: While Feld Technologies was a software consulting company, the companies that installed the networks that our software ran on (mostly PC-based Novell Networks) were so shitty that we set up our own small network installation group. Some of our clients wanted to buy everything from us so we also sold them the hardware. We made about 20% margin on the hardware so this was worthwhile, especially since we were able to bill by the hour for all the time we spent on this stuff. People liked working with us – all of our new business either was “random” or “word of mouth.” We ended up working for a bunch of Boston-based VC firms and several of them referred us to their biotech investments. In the early 1990’s, biotech was white hot – these companies raised tons of money and spent it on crazy wet lab facilities, which included lots and lots of hardware. I can’t remember much about Hyperion other than they were out on 495 somewhere (it was a long drive) and they bought a bunch of hardware from us. They paid intermittently and one day we realized they owed us around $75,000 and hadn’t paid us in over 60 days. For another 30 days I called and kept getting promised checks, which never came. I vividly remember The Struggle – I was lying in bed with Amy in our apartment at 15 Sleeper Street (Apt 304 in case you were curious). It was the middle of the night and I couldn’t sleep. Amy could feel the wheels turning in my brain and asked me what was wrong. I told her I was worried Feld Technologies wasn’t going to make payroll because Hyperion owed us $75,000. I then went in the bathroom and threw up. It’s important to realize that it wasn’t that we were out $75,000, but the hardware had cost us 80% of this and we’d already paid our hardware vendor so we were really out over $125,000. We were a $1.5m-ish self-funded business at the time so this was a devastatingly large amount of money for us. After a sleepless night, on a totally empty stomach, I got in my car and drove out to Hyperion. They were still there (thankfully) – I then sat in the lobby until the CFO would meet with me, and I stayed in his office until he brought me a check for whatever they owed us. They went out of business a few months later.
Avatar: My parter Dave Jilk and I were at a gas station filling up his red Ford Tempo with gas on our way to Avatar in Hopkinton. We knew it was going to be a terrible meeting and each of us was incredibly anxious. We were in the middle of The Struggle. We’d taken on our first Mac custom software project and were using an RDBMS called ACI 4D which was new to us. It was one of the two choices on the Mac at the time (the other was Blythe Omnis) – each had their own version of suckage especially when compared to the PC-based 4GL called Clarion that we used for most of our clients. We we’re really struggling with 4D – performance on the Mac was awful, the networking dynamics were weak (and the Mac networking software was terribly slow at the time), and our understanding of how to really tune it was non-existant. We had heard of some successful 4D implementations but they were hard to find out much about. We knew this was likely our final meeting where we’d get fired, even though that rarely happened in our world. We were meeting with Tom Bogan, the CEO, and a few other people on his team. We liked Tom a lot – he was a very direct and thoughtful CEO and we knew we were failing him. Over the preceding months, we had tried extremely hard and worked many unbillable hours trying to get things working, but just couldn’t. I don’t remember the ACI folks being very helpful and I remember a number of conversations with Dave about “the fucking Macintosh.” We were deep in The Struggle. Tom eventually fired us (I don’t remember if it was at that meeting or not). He and I lost touch over the years (I’m sure he was glad to be rid of us) until I had breakfast with him in Boulder in 1997 when he was first looking at investing in Rally Software. I started out the meal by saying “hi – sorry we did such a crummy job for you at Avatar” and he responded, graciously, with “that was a long time ago, wasn’t it.”
I’ve got a lot more stories like this from Feld Technologies and several other companies I co-founded, including Interliant and Email Publishing, along with long stretches of time at Mobius Venture Capital. All of them share The Struggle and when I reflect on it from my perch at 46.5 years old, I recognize the unimportance of suffering.
Brad Burnham (Union Square Ventures) and I were in Iceland a few weeks ago for the Startup Iceland event. Bala Kamallakharan organized the event and moderated the discussion (and was an amazing host.) We talk about the Boulder and New York startup communities, why we were hanging out Iceland, what we thought about Iceland as a startup community, how to “organize the future” (since the future doesn’t have a political lobby), innovators vs. incumbents, leaders and feeders, and what to do if you want to create a lasting long-term startup community, As a bonus, around minute 17, you can find out how to get me to come to a conference in your city.
Amy and I had an awesome week in Iceland and have decided to go back again next year.
This is a post by Dave Jilk, a long time friend, business partner, and CEO of Standing Cloud. While the words are his, I agree 100% with everything he is saying here. I continue to be stunned and amazed by both the behavior of our government around this and the behavior of “us” (companies and individuals) around their data given our government’s behavior. But Dave’s point is not only around the actions of government, but the broader risks that exist in the context of multi-tenant services that I don’t think we are spending enough time thinking or talking about.
While I was in Iceland a few weeks ago, there was a set of discussions driven by Brad Burnham of Union Square Ventures about trying to make Iceland and “Internet Neutrality Zone” similar to Switzerland and banking. While I have no idea if this is feasible, the need for it seems to be increasing on a regular basis.
I encourage you to read Dave’s post below carefully. While neither of us are endorsing or defending Megaupload, it’s pretty clear that the second order impact and unintended consequences around situations like the government takedown of it have wide ranging consequences for all of us. And – it’s not just the government, but mother nature and humans.
Suppose you live in an apartment building, and one day the federal government swoops in and takes control over the building, preventing you from entering or retrieving any of your belongings. They allege that the landlord was guilty of running a child prostitution ring in the building and, while you are not accused of any crime, they will not give you access to your property. They suggest that you sue the landlord to get your property back, even though the landlord no longer controls the property.
This seems like a fairly obvious violation of your rights, and it is unlikely that the government would be able to maintain this position for long. Yet this is exactly what it is doing in the Megaupload case, and in relation to the rather lesser crime of copyright infringement. Somehow – perhaps because of the pernicious influence of large media companies on the government’s activities – rights to your digital data are taking a backseat to any and all attempts to enforce the copyright laws. This is what the online community was trying to prevent with its opposition to SOPA/PIPA, and the government seems to have elected to implement a de facto SOPA by simply trampling on the Constitution.
While I could rant further about the government’s egregious behavior, let’s talk about the practical implications of this situation. The primary implication is that there is a new risk to your data and your operations when you use multi-tenant online services. Such risks have always existed: if you do not have both an offsite backup of your data and a way to use that backup then any number of black swan events could disrupt your operations in dramatic ways. Earthquakes, wars, power brownouts, asteroids, human errors, cascading network failures – yes, it reads like the local evening news, and though any one situation is unlikely, the aggregate likelihood that something can go wrong is high enough that you need to consider it and deal with it.
What this particular case illustrates is that a company that provides your online service is a single point of failure. In other words, simply offering multiple data centers, or replicating data in multiple locations, does not mitigate all the risks, because there are risks that affect entire companies. I have never believed that “availability zones” or other such intra-provider approaches completely mitigate risk, and the infamous Amazon Web Services outage of Spring 2011 demonstrated that quite clearly (i.e., cascading effects crossed their availability zones). The Megaupload situation is an example of a non-technical company-wide effect. Other non-technical company-wide effects might be illiquidity, acquisition by one of your competitors, or changes in strategy that do not include the service you use.
So again, while this is a striking and unfortunate illustration, the risk it poses is not fundamentally new. You need to have an offsite backup of your data and a way to use that backup. The situation where the failure to do this is most prevalent is in multi-tenant, shared-everything SaaS, such as Salesforce.com and NetSuite. While these are honorable companies unlikely to be involved in federal data confiscations, they are still subject to all the other risks, including company-wide risks. With these services, off-site backups are awkward at best, and more importantly, there is no software available to which you could restore the backup and run it. In essence, you would have to engage in a data conversion project to move to a new provider, and this could take weeks or more. Can you afford to be without your CRM or ERP system for weeks? By the way, I think there are steps these companies could take to mitigate this risk for you, but they will only do it if they get enough pressure from customers. Alternatively, you could build (or an entrepreneurial company could provide) conversion routines that bring your data up and running in another provider or software system fairly quickly. This would have to be tested in advance.
Another approach – the one Standing Cloud enables – is to use software that is automatically deployed and managed in the infrastructure cloud, but is separate for each customer; and further, it is backed up on another cloud provider or other location. In this scenario, there is no single point of failure or company failure. If the provider of the software has a problem, it doesn’t matter because you are running it yourself. If the cloud provider has a problem, Standing Cloud has your backups and can re-deploy the application in another location. If Standing Cloud has a problem, you can have the cloud provider reset the password for your virtual server and access it that way.
As long as governments violate rights, mother nature wreaks havoc, and humans make errors, you need to deal with these issues. Make sure you have an offsite backup of your data and a way to use that backup.
I discovered Josh Breinlinger’s blog this morning via a tweet from @stefanobernardi. I added it to the Ask the VC blogroll, read carefully through his post VCs are liars. And so am I, and declared it the VC post of the day.
And – Josh is right – it’s super hard to say “you suck” or “your team sucks” as a reason for passing. Most VCs aren’t willing to do this as they either don’t want to deal with it, don’t have the emotional constitution for it (it’s hard to say no constantly throughout the day, every day), or don’t recognize that’s the actual reason they are passing.
At Foundry Group, our most common reason for passing is that what you are working on doesn’t fit within our themes. We try to pass on these companies in less than 60 seconds. If you assume that you are one of the 1,000 or so companies a year we see that fit within our themes, we quickly narrow it down to about 100 companies that we spend real time on based on one of three reasons.
- We don’t like the team
- We aren’t excited about the business
- You are too late stage for us
We usually figure this out in the first meeting. You’ll rarely get past interacting with one of the four of us if one of these three is the case. I’ll come back to this, especially point #1, in a minute.
If you end up in one of the remaining 100 companies a year we look at, recognize that we’d probably like to invest in your company. So by this point we like the team – that’s the not the reason we end up passing. Nor is it the business. Our challenge is that we can only invest in a dozen companies a year. We’ve purposefully constrained the number of companies we invest in a year to 12 +/- 2 (our fund is $225m, we have four partners, and have no interest in ever growing bigger.)
100 companies a year we love? 10 – 14 potential investments a year. How do we choose? At this point it’s completely qualitative. We just spend time going deep, individually and together, on every company in this set. We dig into the people and the product. It’s usually pretty obvious when all four of us are off the charts excited about investing. If we aren’t, then we don’t.
The toughest cases are the ones where we are excited, but something qualitative is holding us back. This is always either people or product. But it’s not because we think the people (or the product) suck – we are way past that point. Rather it’s something that just doesn’t catapult it into our “we are out of our mind with enthusiasm about investing.”
So – in our case, the equivalent of “the people suck” happens early – as we narrow from 1,000 to 100. In those 900 that we pass early in the process on, often people issues are the drivers. It’s not necessarily that the people suck, but it’s often the team doesn’t inspire us, we don’t click with them, we think there are weaknesses somewhere that are significant, or we just don’t get the right vibe. We are often wrong on this, but if asked will be blunt about it. It’s hard, so it’s more “reactive” when someone asks rather than “hey – we’ve decided to pass because you suck”, but we try to never hide behind something else when someone asks for feedback.
Having now done this for 18 years (eek) and said no to people about investing somewhere between 10,000 and 100,000 times, it’s really hard to tell someone the reason is them. But, when asked, I try. And I’ll keep trying.