Month: September 2013
I got to work closely with Luke Beatty this summer while he was running the Techstars Boulder program. In one word, he’s “awesome.” Deeply, truly awesome.
I knew Luke from a distance – we’d crossed paths a few times but never worked together. I watched him build a real company with Associated Content and sell it to Yahoo for $100 million. When David Cohen asked me what I thought of him for Managing Director of Techstars Boulder, I responded “Awesome if you can get him.”
Luke ran an amazing program this summer. I spent at least an hour a week with him and all the CEOs in the program in our top secret weekly CEO session. We worked together on the Intuit acquisition of GoodApril. And a bunch of other things.
I wasn’t surprised when Tim Armstrong at AOL made him an offer he couldn’t refuse and Luke joined AOL as Head of Strategic Partnerships. I knew Luke and Tim had gone to school together, were close friends, and that Tim was the first investor in Associated Content. While I’m bummed that Luke isn’t running Techstars Boulder anymore, I’m psyched I got a chance to really know him over the summer. Plus, it amuses me that he now has to use AOL Mail as his email system.
Come join us at Entrepreneurs Unplugged on Monday 10/7 at 6:15 at ATLAS. Register here.
I’m a big fan of Jason Calacanis’ show This Week In Startups. I usually run naked (no headphones) but when I listen to something it’s usually an interview or a book.
Amy and I had dinner last night with Paul Berberian and his wife Renee and Paul mentioned Jason had interviewed him at Techstars FounderCon in Chicago a few weeks ago. So – I grabbed my iPhone, downloaded the interview, and listened to it. Dynamite stuff.
Earlier in the morning I read Jason’s post on LinkedIn titled The Great Venture Capital Rotation. I think it was originally titled “The End of Venture Capital Sort Of” (based on the URL). In addition to being provocative, it lined up nicely along a few others posts on this topic from Fred Wilson (Leading vs Following), Hunter Walk (AngelList Syndicates Will Also Pit Angel Against Angel) and Howard Lindzon (So You Want to Angel Invest…Be Prepared to Lead and Follow.) Naval, Nivi, and the gang at AngelList have really busted some stuff open and it’s interesting to watch it play out.
But – if you know me, you know I’m not satisfied with just watching. So I dove in and joined a few syndicates on AngelList, including Jason’s, Dave Morin, and Naval’s.
And – if you’ve read this far, the new Sphero 2.0 is out and is amazing. Get yours today.
Our new video is almost out. Let’s do over / under bets on whether it’ll be here before Twitter goes public. In the mean time, enjoy the teaser.
If you’ve forgotten what you are in for, or never saw the first video, take a look at I’m A VC.
We believe great companies can be created anywhere.
When we started Foundry Group, we hypothesized that 33% of our investments would be in Colorado, 33% would be in California, 33% would be “everywhere else”, and 1% would be on Mars.
We still haven’t done the Mars one, but we remain optimistic about the possibility.
Today we’ve announced that we’ve made new investments in LeadPages (a company in Minneapolis) and 3D Robotics (a company in Tijuana, San Diego, and Berkeley). They were joined by our friends in Boulder at VictorOps (across the street from our office) who just raised a $6.5m financing.
Need a drone? That would be 3D Robotics.
Need split-test landing pages, launch pages, sales pages, and other conversion pages? That would be LeadPages.
Need your DevOps life to be less hellish? That would be VictorOps.
I love what we do.
I get demos every day. Multiple times a day. I don’t want to see a powerpoint deck – I want to play with something. I don’t want to hear a description of what you do – I want to see a demo. I don’t want you to tell me your background, where you went to school, or where your grew up. I want to see what you are working on.
I still remember my first meeting with Bre Pettis at MakerBot. I walked into the Botcave in Brooklyn and was confronted with a long, narrow Brooklyn-style industrial building where I could see people working away in the back. But before I got to them, I had to walk through a 1000 sq. ft. area of MakerBot Thing-O-Matics printing away. This was an early “bot farm” and it probably took 15 minutes before I walked the gantlet. They were printing all kinds of things, there were display cases of other stuff that had been printed, and a vending machine for Thing-O-Matic parts.
When I got to the back where people were working, I totally understood what MakerBot did and what was possible with 3D printing.
We are lucky to be investors in a bunch of companies creating amazing new products. One of them, Oblong, as been working on spacial computing since John Underkoffler’s early research in the 1990’s at the MIT Media Lab. For a number of years they were described the “Minority Report” technology (John was the science/tech advisor to Spielberg and came up with all the tech in the movie.) The following video is John showing off and explaining the core G-Speak technology.
The demo is iconic and amazing, but it takes too long and is too abstract for their corporate customers buying Oblong’s Mezzanine product. The short five minute “overview video” follows.
While this gives you a feel for things, it’s still showing the “features and functionality” of the tech, applying a general use case. For several months, I kept banging on them to set up a simple use case, which is the how I use the Mezzanine system in our office. I use it every day and it’s been a huge factor for me in eliminating all of my travel.
A few months ago, Oblong had a sales off-site to go through the progress they’ve made this year and to focus on the balance of the year. They’ve had a great year, with a strong quarter-over-quarter sales ramp for Mezzanine on both a dollar and unit basis. The customer list is incredible, their classical enterprise land and expand strategy is working great, and new high-value use cases are being defined with each customer. So I smiled when I the following slide popped up on my Mezzanine during our weekly leadership team call.
While a little abstract in writing (I don’t expect you to understand the first three bullet points unless you know how Mezzanine works), when it’s shown in the first five minutes of a demo it simply blows your mind. And you totally get all three of the core technologies that Oblong has incorporated in Mezzanine (spatial computing, pixel virtualization, and data pipelining.) Your next reaction is “I want one.” And then you are ready for the feature / function discussion, which can easily go on for 30 minutes.
There is endless talk about product development and getting “personas developed” while you figure out how to build your product for them. This approach is equally useful for demos, but it is so often overlooked. I can’t tell you the number of times people start just showing me stuff, rather than saying “here’s the problem I’m going to solve for you that I know you have” – BOOM – and then I’m totally captured for the next 30 minutes.
Try it. The first five minutes is the most important with someone like me. Don’t waste it.
Techstars has launched another “powered by” accelerator, this time with Sprint around mobile health. It’s based in Kansas City (Sprint’s headquarters) and is our fourth powered by Techstars accelerator, joining Nike, Kaplan, and R/GA.
I’m an enormous fan of four things about the Sprint Accelerator – what we call “PBTS” (powered by Techstars), mobile health, Kansas City, and Sprint.
The PBTS strategy is one we started working on in 2012. We knew that we would continue to expand Techstars geographically (in 2013 we’ve added London, Austin, and Chicago). At the same time we were talking to a lot of large companies with outstanding brands about building accelerators specifically around their ecosystems. It dawned on us that the dynamics of an accelerator could work as well for building innovation and new company’s around a particular company/product ecosystem as it could for a city. So far the results have been awesome with outstanding companies coming out of the Nike+ Accelerator and the Kaplan EdTech Accelerator.
As an investor in Fitbit, I’m an enormous believer in quantified self. As the son of a doctor who is obsessed with repairing the healthcare system I’m regularly subjected to hearing about the massive flaws in today’s healthcare system. My dad has beaten into my head that my healthcare is my responsibility, and I’ve become an enormous believer in consumer-driven healthcare. I’ve never been interested in investing in medical devices, but I’m very interested in the consumerization of the medical device industry. And the intersection point of many of these ideas for me is mobile health.
Kansas City has a special place in my heart. I’ve spent a lot of time there over the years, going back to the mid-1990s when I was an entrepreneur-in-residence at the Kauffman Foundation. I bought a house there last year to experiment with Google Fiber in the middle of the Kansas City Startup Village. While I don’t like BBQ or the Kansas City Chiefs, I like the people a lot and think it has one of the most exciting growing startup communities in the United States.
Sprint makes me smile. Many of you know that I have a long history and relationship with Softbank, which just acquired Sprint. I’m very loyal to my friends at Softbank and love any opportunity to work with them – directly or indirectly. Sprint was my first long distance carrier – if I think hard enough I can probably remember my Sprint calling card number – and I used it many times to call my parents and my ex-wife when I was at school at MIT. And Sprint is a great US entrepreneurial story that traces its roots to the Brown Telephone Company in Abilene, KS in 1899.
This is going to be a fun one! Applications are open.
Last week, in the midst of Denver Startup Week, we had a full day Foundry Group Exec conference. Ben Deda from FullContact convened about 100 execs from our 60 or so portfolio companies for the day. We had seven topics of one hour each, led by a different set of execs. The result was an incredible range of discussions across an amazing group of people.
One of the attendees was Jeff Malek, the CTO of BigDoor. Jeff is super passionate about what he does and mixes humor with intensity with math. Following is something from Jeff to kick you in the ass this morning and get you charged up.
Last year I put together a slide deck for what the FAAAC was all about. Amongst other things, it describes a start-upper’s most valuable core attributes: fire, ability, agility, adaptability, and clear, concise communication skills.
A couple of months later FAKEGRIMLOCK published his incendiary work BE ON FIRE. As I read this wonderful post, I got very positively charged up. I thought : what the FAAAC is up there, with FAKEGRIMLOCK? Yes, it seemed to me: it is totally up there with FAKEGRIMLOCK!
AWESOME.
Was I somehow channeling the King of Awesome? Could I be some sort of supernatural vessel, carrying the same caliber of limbic wisdom as the great, giant robot dinosaur? After asking around, the consensus was “probably not”. Someone even mentioned that I might be confusing “vessel” with “vassal”.
Still, I felt compelled to reach out to Brad and pointed out this cosmic parallel. Brad asked if I’d like to write a guest post. I thought, “hmmm…lucky FAAAC opportunity…” and began a mental draft immediately, in tandem with other P0 efforts I had in the works at the time (e.g. sharding our database systems).
One year and fourteen pounds of irony later, I’ve completed my assertion of reasonable ridiculosity for the FAAAC.
Behold, the Fire in the FAAAC Proportionality Theorem:
Which can be read per line thusly:
- There’s a unit of awesomeness comprising fire, ability, agility, adaptability, and good communication
- A good start-upper exhibits unusually high, varying degrees of each trait.
- An impressive academic pedigree doesn’t predict startup awesomeness (although it’s always impressive)
- Fire is the most important aspect of them all, composing up to 80% of all the awesome. Fire can drive learning (ability), help you duck punches (agility), and get you off the ground when you’re hit (adaptability). This is all just paraphrasing what Edison said about perspiration, and what FAKEGRIMLOCK drew about bears, bombs and arrows.
- If fire is compensating for lower levels of the other traits, then to be a great start-upper you’ll need a proportionally large sense of humor to get you through acerbic code reviews, failed biz-dev deals, and communication breakdowns.
- That’s what the FAAAC fire has to do with anything and everything.
It may seem like I’m just pointing at the clear connecting lines between myself, Brad , Edison, and FAKEGRIMLOCK. Fishing lines, maybe even.
But seriously, we have a rigorous process at our startup that tests new job candidates for these traits, making it easy to determine whether they should be leveled-up to the next interview stage. It involves running through our sprint process on a compressed timeline, working with a hypothetical customer, in a typical solution space. After 30 minutes a ruleset is produced in English, and supporting code is produced within an hour. The whole point is to determine whether the candidate is someone we could work with, and whether they have fire, agility, adaptability, ability, and good communication. I don’t care if someone can figure out why manhole covers are round. I want to know how well they’re going to perform in the context of our team, and our business. The best candidates rock these qualities out, just like the most successful entrepreneurs I’ve met do the same.
Did you know Twitter is going public? Of course you did – it’s all the mainstream media could seem to write about last week after the now infamous twitter tweet about it.
We’ve confidentially submitted an S-1 to the SEC for a planned IPO. This Tweet does not constitute an offer of any securities for sale.
— Twitter (@twitter) September 12, 2013
After all the speculation about valuation, who owns what, what it’ll price at, how much money will be made, is Twitter growing or shrinking, what is a tweet after all, will their stock symbol be TWIT?, and all the other nonsense that seemed to consume the business press, I noticed a perplexing thread from some people expressing how indignant they are they Twitter is going public in secret.
I watched it play out and tried to understand what people were reacting to. Eventually, I realized it was two things. The first is a misinterpretation of the JOBS Act and what a confidential S-1 filing actually is. Somehow there was the view that there wouldn’t be the normal public disclosure prior to Twitter going public, which is just incorrect. The second was some weird reaction to Twitter suddenly being “secretive” and a view that this was in fundamental philosophical conflict with what Twitter is.
After four days of chatter about this, Dan Primack wrote the first definitive article I saw that made sense of all of this titled Twitter’s IPO will not be done in secret. As is typically the case, Dan wrote a super clear and fact based article about what was going on with the confidential filing, how it would work, and why – in Dan’s words – “Twitter’s decision to file confidentially is neither bad nor good. It’s largely irrelevant.”
I won’t repeat Dan’s awesome article – go read it if this topic interests you.
Having been involved in numerous IPOs, I can tell you that the JOBS Act confidential filing process is a great thing and improves the overall process of taking a company public. Anyone who has been through taking a company public knows that there are numerous steps between the first S-1 filing with the SEC and the final filling where the SEC says “ok – you are ready to go public now.” This process is almost never smooth, is unpredictable in terms of timing, and often ends up being an bizarre and byzantine interactions between the SEC, accountants, lawyers, investment bankers, and management team members who scratch their heads and realize that the process isn’t really making anything any clearer, it’s just racking up massive fees for the lawyers and accountants.
The end result is a fully vetted S-1 filing. When a company has this cleared by the SEC, it is ready to go public. Prior to the JOBS Act, you made your first filing before any feedback from the SEC and then spent the next three to six months wrestling with the SEC – on their time frame and their rules – to get the filing finalized. If you didn’t time it right, you’d have to do new financial disclosure. If the SEC was slow because they had a backlog, it would take longer. If the SEC didn’t agree with your auditors on revenue recognition, you’d end up in a crazy escalating set of discussions. And – each amendment to the S-1 (basically a new filing) was done in public, so everyone – including your competitors – got to see everything that was going on. And dissect it. And criticize it. And analyze it. And act on it. And say anything they wanted about it.
During this time, you were in a “quiet period” so you couldn’t say anything in response. Your competitors attack you based on data in your S-1 filing through a plant in an article in the WSJ – nope, you can’t say anything. The NY Times writes a long article and misinterprets a bunch of the data – nope – silence. A blogger tears you apart for something buried on p.123 of the S-1 which ends up getting changed in a future filing anyway – nope silence.
Or worse – for some reason the IPO window closes and you don’t go public. You withdraw your filing. But the public data is still out there for everyone – especially your competitors and customers to see. Oops.
Under the new rules you do all of this work to get to a final filing in confidence. You make it public three weeks before you go on the roadshow. You make all the documents public, but the only one that really matters is the final one. The sausage got made in private and now you are ready to go public. All the expected articles come out. Everyone dissects all the data. But you are ready for this since you are now ready to go public.
I’m glad Twitter used the new confidential filing process. We’ve already used it for companies in our portfolio, and will continue to. In a few years, the process of taking a new company public will be much cleaner as a result. And while there will always be a huge amount of noise around the process, especially for high profile companies like Twitter, at least there will be a clearly defined timeframe for all the pre-IPO noise.
Yesterday Yesware announced that Battery Ventures led a $13.5m round that we participated in. A few days ago Xconomy wrote a great article about the very first Yesware board meeting on April Fools Day, 2011. When I reflect on the journey of Yesware over the past 2.5 years it’s a pretty awesome example of a company going from a seed investment with three founders (Matthew Bellows, Cashman Andrus, and Raj Bhargava) to a rapidly growing 40 person company.
On 4/1/11 Yesware had a vision, a crappy prototype (that we threw away immediately after the financing), and a huge obsession around a vexing problem that no one was addressing effectively. Today they have over 300,000 users, a broad product set that includes a recently released deep integration with and between Gmail and Salesforce, and a leadership team and culture that is clear about what it is trying to accomplish and is true to itself.
In March, I wrote a blog post about Shifting My Focus To Scaling Up. When I look at our Foundry Group portfolio of over 60 companies, I see many of them in two distinct scaling up phases. The first are companies like Yesware that are rapidly growing revenue and customers, are in the 30 to 100 employee range, are dealing with balancing resources to accomplish their goals, but have an incredible amount of open ground in front of them. The second are companies like Fitbit that are clear leaders in their market, are on the 100 to 500 person ramp, and pacing the innovation in their market segment. Many of them are companies that aren’t overhyped because they are Silent Killers, a particular type of company we love to fund and work with.
Yesware has now shifted from the startup phase to the scaling up phase. There’s an entirely new level of organizational development, different set of challenges, leveling up of leadership and management skill sets, and massive opening of new opportunities given the resources that the company now has.
I find this a particularly exciting time in the life of a company. And a very challenging one. Fortunately, Matthew continues to surround himself with amazing people, such as his first outside board member, Dave Girouard, who recently ran the entire Google Apps business and is now CEO/founder of Upstart and his newest board member Neeraj Agrawal from Battery Ventures.
Plus, Matthew has a bunch of peers in our portfolio to talk to. We are together with many of them today in another Foundry Group summit – this time for full executive teams across our portfolio right in the middle of Denver Startup Week. Like all of our internal events, our goal is an extremely high signal to noise ratio. We leave the pomp and circumstance to others.
The enormous and powerful conversation around “startups” will continue. But as I turn more of my attention to “scaleups” I believe the next phase is even more powerful.