Month: October 2015
This is my last blog post of 2015. I’m taking a break from a bunch of things for a while.
#GiveFirst is the title of my next book, which will come out sometime in 2016. I’ve started working on it and realize that I have a finite amount of daily writing energy. Since I no longer wake up every morning at 5am (I don’t use an alarm clock anymore), I have a less predictable morning routine. As a result, my writing times are more random and chaotic, which I like, but means that it’s harder to have big chunks of time on a consistent basis.
For now, #GiveFirst wins over blogging.
But that’s not the only thing driving my blogging hiatus. After over a decade of almost daily public writing, I feel like I need a break. Some is boredom, some is a burdensome feeling around an obligation to an almost daily habit, and some is the lack of freshness I feel in my writing.
I’ve always enjoyed multiple forms of writing – micro (tweets), short (blog posts), medium (magazine articles), and long form (books). I also write a lot of other stuff all day long (mostly emails) and the majority of my communication is written, which I prefer much more than verbal. But I feel like I’ve hit a wall of some kind. And, whenever I hit a wall, my first instinct is to shake some things up.
As I approach turning 50, which happens on December 1st, I’m finding less enjoyment from short bursts of communication and more from just spending time with friends, with Amy, or by myself. So, through the end of the year, I’m going on a diet. No more blogging. No more twitter. No more commenting on blogs. No more social media of any sort. In addition to stopping generating content (and plenty of online exhaust fumes), I’m going to stop consuming it also.
I have no idea what will happen on January 1st, 2016 – that’s part of the fun of it for me. A ten week reset on this front will be interesting to me. For now, 100% of my public writing will be dedicated to working on #GiveFirst and I’ll explore a new rhythm by subtracting out a lot of other stuff.
See you in 2016.
Of all the podcast interviews I’ve done over the years, I think the one I recently did with Jerry Colonna on his Reboot podcast series is my favorite.
In the podcast show notes, Jerry links to a fun post by Fred Wilson titled Sixteen Years Ago (which is now 19 years ago…) We’ve known each other for a very long time and I treasure Jerry as one of my best friends on this planet.
Enjoy the week. Hopefully this will provide some thoughts as well as some fuel for you. And, if you aren’t a regular listener to the Reboot podcast, I encourage you to subscribe to it as a source of deep insights from Jerry every few weeks. There are 25 episodes so far since Jerry started it with his gang in September 2014 – I’ve listened to and benefited from every one of them.
This year’s local election in Boulder is a critical one. The city that we love risks shutting its doors. While the business community in Boulder has contributed immeasurably to the vibrancy, charitable contribution base, economic development, and success of our community, there is a faction in Boulder that feels that our city should stop moving forward and instead should live in the past. This faction believes in a less inclusive Boulder and aims to achieve this goal by literally shutting the doors to our city.
This is what is behind propositions 300 and 301 which are proposed amendments to the city’s charter.
This faction is well organized and well funded and the slogans make it sound reasonable. But make no mistake: the goal is to immediately freeze all development of all types around the city by enveloping the city a bundle of political red tape.
In the coming days, Boulder residents will be asked to vote on the following:
#300 – Neighborhood Right to Vote on Land Use Regulation
#301 – New Development Shall Pay Its Own Way
These initiatives must be voted down.
While innocuous sounding, the names of these initiatives completely misrepresent their intent and the dire consequences that would result if they are enacted. The truth is that neighborhoods already do have a say in projects that affect them, and developers already do pay some of the highest fees and taxes in the country.
Effectively, these proposals will create 60+ neighborhoods in Boulder. Can you imagine what would happen if we had that many homeowner associations that had the power to hold special elections and veto land use changes approved by city council? The smallest of those neighborhoods would be comprised of just 19 houses. That’s not “local control” (which already exists), that’s a deliberate attempt to create gridlock.
These initiatives will immediately freeze important infill development, including affordable housing, transit-oriented development, neighborhood serving retail, social service centers, and day care centers. The city manager has stated that the city will stop issuing permits of any kind for at least six months while they figure out what these initiatives mean and how to implement them. Once they do start reissuing permits, these initiatives will force the city to levy such high taxes and fees that development will effectively stop in Boulder. This will stop our city in its tracks and greatly exacerbate an already expensive housing market.
These measures are opposed by six former mayors, all nine City Council members, numerous former city council members, Boulder Housing Partners, The Daily Camera, and numerous civic groups like Open Boulder, the Boulder Chamber, Better Boulder, and others. Open Boulder executive director Andy Schultheiss has called them “among the worst pieces of public policy I’ve seen in almost 25 years of observing and participating in local policy-making.”
It’s critically important that we defeat these measures. To do that we need to get the word out to those in our community who want Boulder to continue to be a vibrant city. The sad irony is that those promoting these measures have the time and organization to put towards pressing their backward and closed agenda while many who oppose it are busy helping keep Boulder prosperous by creating jobs and economic growth.
This is a battle we can’t afford to lose. Please take a minute to help us get the word out. Send it to your friends via email and social media. Urge your neighbors to vote and make sure you vote yourself. With ballots mailed out this week many in our community will be voting in the next seven days (over 50% of ballots are returned within a week of their being sent out).
Seth, Jason, Brad, Ryan
Below are some suggested tweets or Facebook posts should you chose to share them:
Click to Tweet: I agree with @foundrygroup. 300 and 301 will have devastating effects on boulder. VOTE NO on both! #keepboulderopen https://bit.ly/1ReQamJ
Click to Tweet: I stand for keeping the doors to boulder open. VOTE NO on 300 and 301. #keepboulderopen https://bit.ly/1ReQamJ
Click to Tweet: In boulder’s upcoming election we’ll decide if we want to live in the past or continue to thrive. #keepboulderopen https://bit.ly/1ReQamJ
When I was 14, my dad gave me a copy of Alvin Toffler’s book The Third Wave
It blew my fucking mind.
I then read the prequel – Future Shock – which was good – but since my mind was already blown, it was anticlimactic.
If you don’t know the arc of Toffler’s waves, they go as follows:
- The First Wave: agricultural society
- The Second Wave: industrial society
- The Third Wave: post-industrial society
Future Shock was written in 1970 and The Third Wave was written in 1980. While the idea of post-industrial society seems obvious in hindsight, in 1980 it was a completely new idea.
Ever since then I’ve been wondering what the next wave would be. While Kurweil’s The Singularity Is Near is probably the closed book I’ve read that stimulated me the way The Third Wave did when I was 14, at some point I just felt hollow and disappointed when I read the latest futurist manifesto. Instead, I ventured further into the future with the science fiction that I have always read on a regular basis and used it as my stimuli.
Recently, a bunch of smart and famous tech entrepreneurs have been talking about AI and the impact of AI on civilization. I’ve read a few of the books that get tossed around, like Bostrom’s Superintelligence, and a bunch of the articles that people have written. But none have spoken to me, or blown my mind the way Toffler did 35 years ago.
I’m on a search for the “Third Wave” of this generation. Any ideas for me?
There is a cliche in the financial world that has been around forever.
“Two things drive decisions: Greed and Fear”
For the past few years, we’ve been a zone where greed has been dominating. Every now and then a little fear creeps in and then gets squished into the corner by chants of “things are different this time” and “that’s just PTSD from the Internet bubble.”
Recently, the fear seems to be sticking around. There are plenty of people trying to kick it away, shake it off, or ignore it. But it lingers. And the smell of it gets stronger.
I had an exchange with a CEO the other day who was at an event in the bay area and commented on the attendees at the event. The telling line was:
They’ve never read the RIP Good Times deck, they don’t remember the Bin 38 fiasco, they think it’s the first go round.
I once again rolled out my favorite BSG line.
All this has happened before and all of it will happen again.
I’m a strong believer that you can build great companies in time of both greed and fear. But you have to be paying attention and operating under the right assumptions. You don’t have to believe history repeats itself, but you should accept that history rhymes. And one big rhyme is that the shift from greed to fear happens much faster than the shift from fear to greed.
If you are a founder running a high growth, VC backed company, here are a few questions to ask your investors today.
- What is the maximum amount of monthly net burn you are comfortable with for us right now?
- Based on our current course and speed, we run out of money in X months. If we can’t find a new lead investor, will you write us a check? How much and on what terms?
- If companies start failing left and right, do you think it will impact us in a meaningful way (either good or bad)? If yes, how?
There are no correct answers to these questions but they’ll give you a sense of how your investors are thinking along the greed – fear spectrum. You get bonus points if you ask the investor to walk you through what they were doing the last time things shifted from greed to fear and to tell you stories about things that went well for them, went poorly, and what they learned.
Don’t be afraid to explore what could happen well before it does. Our history rhymes with the famous John Galt quote “Nobody stays here by faking reality in any manner whatever.”
Yesterday, Dan Shapiro and I did a video of me creating a Foundry Group coaster out of a piece of wood. It was done remotely – I did all the design work on my computer in Boulder, uploaded it to the Glowforge cloud, and printed it on a Glowforge in Seattle. As a bonus, you get to see a VC (me) struggle with Adobe Illustrator, which – while being ubiquitous – is one of those pieces of software that can only be described as “a beast.”
If you haven’t ordered a Glowforge yet, use my referral code to get 50% off + another $100 dollars off. Given my experience with Dan and team so far, I think this is going to be one of the amazing products of 2016.
Yesterday, I gave a talk and then did two breakout Q&A sessions at EO Alchemy 2015. It was a lot of fun and many of the questions were thought provoking to me, which I enjoy greatly.
One of them caused me to pause and answer extra deliberately. Near the end of the second breakout session, I was asked “What Do You Want Your Legacy To Be?”
I don’t think I’ve answered this question before publicly and I realize I never think about it, so I took a few seconds to roll the question around in my mind and make sure I agreed with what was about to come out of my mouth.
“I don’t care about what my legacy is.”
My original thought was “I don’t give a shit about legacy”, but it came out a little cleaner and crisper. I riffed for a little while on why I didn’t care and gave evidence of me not caring. Two big things are (a) Amy and I don’t have any kids and (b) we plan to give away all of our money while we are alive. But there were some others, especially around intrinsic motivation (which I’m driven by) vs. extrinsic motivation (which I’m not).
When I got home last night, Amy and I talked about our respective day over dinner. I mentioned this question to her and asked her what she thought. Her immediate response was “You and I don’t care about legacy.” She then when on to explain this in detail, which mirrored most of what I had said earlier in the day.
I was clear in my answer that this wasn’t a judgement. Some people care deeply about legacy. That’s great. But others, like me and Amy, don’t. The more interesting thing to me is how one’s view around legacy drives behavior. The question stimulated a lot of thought by me over the last 18 hours – I hope it does with you also.
It’s here. And you know you want it. You can buy just the Rock Band 4 software (if you have your old instruments) or, if you are like me and you’ve given your instruments away, you can buy a new full bundle of everything.
And, in case you missed it, Spark Capital joined us an investor last week with a few other long time friends in a $15 million round.
I originally invested in Harmonix as an angel investor in 1995. It’s rise was well chronicled in this awesome Inc. Magazine long form story titled Just Play. Basically, Harmonix tried to go out of business every year between 1995 and 2005 and just managed to fail at that, always coming up with a new revenue deal or a small amount of financing to stay alive before it became an overnight success in 2005 with the original launch of Guitar Hero.
MTV acquired the company in 2006 for $175m plus an earnout, which after a long “discussion” that ended in 2013, resulted in a total purchase price over $700m. MTV decided to get out of the video game business in 2010 and sold the company back to the founders (Alex and Eran) and a small investor group.
In 2013 Alex and Eran asked me to join their board. We arranged a financing that made sense for both parties so Foundry Group could invest. Harmonix is easily the most accomplished video game company in the world around music and rhythm games and with the eventual, and long awaited emergence of VR, I can think of no better company around our HCI theme to work with. Spark Capital, which was one of the original investors in Occulus, agrees, which makes me very happy.
Rock Band 4 is now out. In states like Colorado where a certain substance is now legal, I expect we’ll have a new marketing tie in. In the rest of the world, let me just suggest that having played the new game, you’ll want to get a copy and dust off your old equipment.
And get ready for some stuff that is just going to blow your mind – now and over the next 12 months – from my friends at Harmonix in Boston.
We’ve seen several M&A deals collapse unexpectedly in the past two months. Each was at the signed LOI stage. There was no warning or evidence of an issue until the moment the CEO got the phone call from the acquirer saying the deal was off. In both cases, the explanation was vague.
I’ve also seen several financings fail to close recently. Two of them were late stage financings that were pulled by the investor at the last second. One of these investors is highly visible for doing late stage deals. The other was an investor I didn’t know much about. The explanation I heard from the founder in each case was again vague.
In contrast, we closed a deal in two weeks last month. The person on the other side was willing to give us a lower price in exchange for “deal certainty”, explicit words that she used. We are very pleased with the deal and the price and appreciated that our reputation for just getting it done resulting in a significantly lower price. Deal certainty has always been important to me and I expect it’ll become even more important in the next year.
You will be seeing a lot more deals that don’t get closed after the handshake, verbal agreement, or even a signed non-binding LOI. This is natural in this part of the cycle, when prices feel high to investors, there is a lot of competition for deals, and a goal of some investors and acquirers is to get an LOI or term sheet signed with an exclusivity period in order to give them time to make a decision.
There are also a lot of unsophisticated buyers and investors out there. They generally don’t value deal certainty, especially if they come from other industries where lots of deals fall apart.
At this stage, it’s very important that the founders, whether they are selling their company or raising money, know the experience of the buyer or investor. You need to know their process. You need to know their investors, especially if it’s a private company buying another private company. Understand the history of their deal execution. Ask about, and understand the process from LOI / term sheet to close.
Basically, don’t be naive. There are lots of investors and acquirers out there who have low to medium deal certainty. There are others how have high deal certainty. Do your work and know who you are dealing with before you engage in the process for real.
I spent the day yesterday doing Denver Startup Week stuff. I was on a bunch of panels and during one of the Q&A sessions someone asked something to the effect of:
“Now that things are moving faster than ever before, how do you deal with / keep up with them?”
I thought about it for a second and responded that I wasn’t sure the assertion was correct. I don’t think things are moving faster than ever before. I paused to make sure I believed that. Then I continued with my answer.
I was a freshman in college in 1983. It felt like things were moving at an extremely fast pace. I started my first real company in 1987. The pace of things was incredible. After I sold my first company, I started a company called Intensity Ventures to make all my personal investments from. The name kind of says it all. When I started making venture capital investments in 1997, the pace of things, and the amount of work I did, was massive. In 1999 things were moving so theoretically quickly that everything was a total blur.
After riffing on this for a while, I suggested we approach it differently. It’s not that things are moving faster, it’s that information is much more available and there’s much less friction around communication. My communication mechanisms in 1983 were a landline telephone, letters, newspapers, magazines, and an airplane. The only constant in that equation 32 years later is the airplane, and as far as I can tell it takes about the same number of hours (six) to get from Boston to San Francisco that it did in 1983.
By 1987 I was regularly using faxes and Federal Express (the only overnight mail I was aware of), but a mobile phone and email didn’t really show up until around 1993 for me. The web appeared in 1994 and a completely different method of communication started its long march into integrating in our universe.
While all of this was different, the pace of things – at least the intensity of how work got done – didn’t feel much different. I was young and had a huge amount of energy and ambition, so 100 hour work weeks were typical. Redeyes were the norm for me as I wanted to spent the least amount of waking hours on airplanes. By 2001 when the Internet bubble burst, I was completely exhausted, and then I began a relentless grind for several years of cleaning up the mess I had created, followed by another relentless grind of working to get Mobius Venture Capital into a steady place and ultimately starting Foundry Group.
I never once felt that things were moving slowly. Instead, as time passed, my approach to communicating with people changed, although lots of humans in my world still want to get together face to face or fly to meet me for 30 minutes when a video conference would be perfectly adequate.
But more significantly, when I calmly observe the world around me, we want to feel, like every other generation, that what we are facing right now is more complicated, more important, and changing faster than ever before in human history.
On an absolute basis, it might feel this way because of communication mechanisms. But if you take the first derivative, I think you’ve got a flat line, as the relative pace (when normalized for communication mechanisms) feels constant to me, at least during the 1983 to 2015 time period that I’ve experienced as an adult.
Remember – All this has happened before and all of it will happen again. Ponder this the next time you get on an airplane, even if it has WiFi.
Agree or disagree?