In my attempt to read all of Stephen Frey’s books in record time and subsequently rate an entry in Guiness Book of World Records, I read The Inner Sanctum today.

Not so good. Don’t bother. Enough said.

There has been some buzz over the last two weeks about VC investments in RSS-related companies including our recent investment in NewsGator.

One company that was overlooked is MessageCast.. MessageCast was founded in late 2001 by Royal Farros, David Hodson, and Mike Rubin. My partner – Heidi Roizen – provided the seed investment (Heidi and Royal had previously worked together for a long time at T/Maker – the company that brought us the wonderful invention of “clickart”.

MessageCast provides a platform for publishers to provide their content via IM technologies – specifically MSN Alerts. Suddenly, instead of publishing via email, content providers can cause an MSN Alert to appear on your screen. This – of course – is only opt-in – so you (the user) have complete control (and LiveMessage is completely CAN-SPAM compliant).

“Why should the RSS world care” you ask? MessageCast is in beta on their MessageCast Syndication Edition for RSS publishers. To try it – if you are an MSN Messenger user – simply click on my LiveMessage link right here or on the top right side of my blog under Syndicate Me.

Now – MessageCast won’t be a replacement for your RSS reader (hopefully it’s NewsGator or NGOS Web / Mobile / POP / Media Center Edition). Instead, you’ll use MessageCast for your urgent feeds – the one’s you want to know about the minute they are posted. MessageCast is provided to the publisher as a service – no software is required and it takes less then five minutes to configure for an RSS feed.

Give it a try and give me feedback on what you think.

The Republican Noise Machine : Right Wing Media and How it Corrupts Democracy was a depressing book. I first noticed it from a post by Jerry Colonna. I had it shipped up to my house in Alaska where I settled in for a long read yesterday after my run.

In some ways, it seemed appropriate to read this over the fourth of July weekend. I read a bunch of mental floss on Friday and decided I needed to chew on something serious. I’m back to mental floss…

Until recently I was very apolitical. For whatever reason, I just didn’t engage – I felt that things worked themselves out over time and – rather than get wrapped up in the endless political debate – I figured I’d focus on issues that I cared about and support them, independent of their political affiliation. As a result, I told whoever asked that my political affiliation was “my own little party of one.”

A couple of years ago, I stuck my toe publicly into the political scene in Colorado. A close friend of mine – Jared Polis – decided to run for the Colorado State Board of Education (he won and is now the chairman). Jared is an unabashed democrat and has become a strong force in the otherwise very conservative state of Colorado. Several friends were running for office in the 2002 election cycle as democrats and I decided to get more actively involved. Everyone (except Jared) lost and – in addition to being bummed out by the candidates that were elected – I was disgusted by the way both parties acted near the end of the election cycle. I remember telling my wife “that’s it – I give up – I’m done with organized politics” (of course, that lasted about a week).

The Republican Noise Machine had me sitting in my chair with my mouth hanging open. Brock – a former right-wing insider – has written an incredibly substantive book that tells the story of how the GOP has systematically co-opted the media over the last few decades – starting wtih Nixon and rolling forward to today. This is not a “balanced book” (“balanced view” being one of the fallacies that Brock does a superb job of demolishing) – Brock is unapologetic as he tells his story.

It’s quite amazing how organized, effective, and ultimately successful the Republican Right has been. I’ve experienced this directly in Colorado. A year ago, JB Holston called me and told me about the Independence Institute, a conservative Colorado “think tank” that I was vaguely familiar with. While the Independence Institute isn’t mentioned in Brock’s book, it’s equivalent to many of the conservative “think tanks” that Brock discusses. JB suggested that Colorado needed a “progressive alternative”. I agreed and helped rally a crew of folks, including Jared and Rollie Heath (who lost his run for governer against the incumbent Bill Ownes in 2002), to help start the Rocky Mountain Progressive Network. It’s a year later and RMPN has done a great job of counterbalancing the Republican Right in Colorado. My experience watching from the background (and learning about the antics – expecially those in the media – by organizations like the Independence Institute) made the story Brock tells even more poignant.

This is a powerful book for anyone that is open minded about the political dynamics in our country. If you are conservative, read it to get an ex-conservative insider’s view on what is going on. If you are progressive or liberal, read it to get a much deeper historical understand of how things played out so that you can be more effective contending with them in the future. If you aren’t open minded, don’t bother – it won’t matter to you anyway.

The fourth of July weekend seems like a good time to clean out the brain with some fun summer reading. I recently read my first Stephen Frey book (Shadow Account) and enjoyed it enough to pick up the rest of his books.

I just finished two of them – The Vulture Fund and The Takeover. Very satisfying.

If you like Ludlum / Grisham style books with a finance / Wall Street backdrop, check ’em out. They’re good mental floss for a lazy summer afternoon.

A true story. From the flyleaf, “In early 2000, the bottom dropped out of the life of New Yorker writer David Denby when his wife announced she was leaving him. To make matters worse, it looked as if he might lose the beloved New York apartment they shared with their children. Determined to hold on to his home and seized by the “irrational exuberance” of the stock market, then approaching its peak, Denby joined the investment frenzy with a particular goal: to make one million dollars so he could buy out his wife’s share of their place.”

Denby’s subtitles on his chapters tell the tale:

Chapter 1: Quarterly Report (QR), January 1, 2000: Cumulative Net Gain: $0
Chapter 10: Tremors: QR, April 1, 2000: CNG: $237,000
Chapter 15: Wavering: QR, July 1, 2000: CNG: $110,000
Chapter 21: Crash: QR, October 1, 2000: CNG: $85,000
Chapter 23: Pants on Fire: QR, January 1, 2001: Cumulative Net Loss: $155,000
Chapter 24: The Cancer Show: QR, April 1, 2001: CNL: $395,000
Chapter 25: September 11, 2001: QR: July 1, 2001: CNL: $251,000
Chapter 26: The End of Investing?: QR: January 1, 2002: CNL: $800,000
Chapter 27: The End of Capitalism?: QR: July 1, 2002: CNL: $720,000
Chapter 28: Slowing Down: QR: October 1, 2002: CNL: $900,000

So – from $0 to up $237,000 to down $900,000 in 21 months. The book is extremely well written and brings back lots of memories of the financial insanity (good and bad) of the turn of the century. This is a remarkably personal tale – Denby lays it all out as the self proclaimed American Sucker.

Dan Burgin – CTO and co-founder of Finali – has just started a blog.

Finali provides next generation customer care outsourcing services. I’ve been an investor since they were founded in 1999 – co-funding the company with Sequel Venture Partners and Boulder Ventures. Dan and his brother Bob – the CEO of Finali – have built a call center outsourcing and analytics company that has significant relationships with customers such as Western Union and Cendant.

Given Finali’s focus on outsourcing, expect Dan to provide lots of interesting thoughts and ideas around the issues surrounding offshoring labor, working in a cross-border environment, and building and growing an entrepreneurial company.

Welcome Dan to the blogland.

Earlier this week Return Path announced that it has acquired Netcreations. As a result of this merger, Return Path now has over 1,500 U.S. marketers as clients, 500 top web sites and ISPs as data partners, 650 channel partners, and a registered user base of 41 million active consumers.

Both Matt Blumberg (Return Path CEO) and Fred Wilson (Return Path board member, managing director of Union Square Ventures) have written blogs on the deal. Rather than repeat what they’ve said (beyond – of course – congratulating both the Return Path and Netcreations teams), I’d like to talk about two key events that have occured in the Return Path’s history as a way to illustrate how acquisitions can play a key part in the creation of a startup.

Return Path Acquires Veripost – Creating a Leader in an Emerging Segment

I can’t really speak to the initial creation of Return Path as I was only aware of it shortly after I funded a company called Veripost (it was originally called IECOA – “Internet Email Change of Address” – thankfully we changed the name). The analog analog for Veripost (and Return Path) was that of the NCOA (National Change of Address) program provided by the USPS (if you have ever moved and filled out the change of address form in your post office, you are likely in the NCOA database).

Both companies came into existance in the 1999 – 2000 time frame. Veripost was a raw start up at the time that was founded by Eric Kirby (now at Doubleclick), George Bilbrey (see the comments on George below in the Assurance story), and Kevin O’Connell. Veripost spent the first twelve months of its life building its email change of address (ECOA) product. Return Path did the same and both companies launched at about the same time. We knew we were competitors, but initially didn’t realize how direct the competition would be. Even though both companies were very young, they instantly began slugging it out. There were a few other folks trying to put together ECOA systems, but they weren’t very visible.

In the summer of 2001, both Veripost and Return Path hit the road for a second round of funding. Interestlngly, they ran into each other at several venture firms who were looking at making an investment. I knew Fred was an investor and either I reached out to him or he reached out to me (I can’t remember which). If you recall the late 2001 funding environment, it was pretty bleak as the Internet bubble had burst and VCs were rapidly retrenching to work on their existing companies. In the context of this, Fred and I quickly broached the idea of merging the companies and then backing the combined enterprise. Given our past relationship (which was extremely positive and high on trust), we were open about strenghts and weaknesses on both sides. Fred has reminded me several times that at the end of our first conversation, I said something to the effect of “We can fund these companies separately and they’ll continue to beat the shit out of each other. At some point, one of us will have picked the right one and the other company will be dead. Or, we can merge them together and – worst case – we’ll have one shitty company to worry about…” (probably reflecting the emotional low that most VCs – and technology entrepreneurs in general – were feeling after the Internet bubble burst).

Simultaneously, Eric and Matt had started talking to see if combining the companies made sense. They had a typical “hush hush” meeting at a trade show (one of the DMA shows, if I remember correctly) and both came away excited about the idea of merging the companies. Since both the CEOs and investor groups were aligned on the idea, we started working on it in earnest.

In short order, we came to terms on a deal to merge the companies and put together a single financing. Both Fred and I have done a lot of mergers so we insisted that the two management teams work out the combined vision and team before we pulled the trigger on the deal. As part of this, Eric and Matt did a superb job of rationalizing the senior team and the operations of the company – leaving the CEO, finance, and sales in NY (where Return Path was located) and engineering, operations, and customer support in Colorado (where Veripost was located). Pre-merger, Veripost had about 15 employees; Return Path had about 25. Post-merger, the combined company had around 20. We were nervous about the split geography, but in hindsight it has worked out remarkably well. The integration was very smooth – hopefully Matt will blog about it at some point.

Greg Sands from Sutter Hill had been looking at both companies. He very much liked the idea of merging them together so he led a financing that Mobius, JP Morgan, Flatiron, and Doubleclick participated in.

Return Path Acquires Assurance Systems – Extending an Established Company into an Adjacent Market

Return Path’s ECOA business took off nicely. However, after about a year (end of 2002), the ECOA market was growing slower then we had anticipated. Since we had an excellent customer base and reputation / relationship with these customers, we started thinking through other potential services that we could add to the platform we had created. Spam had become a key issue for the email marketing industry and our clients (legitimate opt-in direct marketers like Williams-Sonoma) were struggling to insure that their email got through to their customers. Coincidentally, one of the Veripost founders – George Bilbrey – had started a new company called Assurance Systems. George had bootstrapped his company – working out of our offices in Colorado – and was growing the business very quickly.

We starting talking about Return Path acquiring Assurance Systems. George was still an observer on the Return Path board – as a result he was very aware of where we were as a business as well as the strategy discussions we were having. George, Matt, and Karl Florida (Return Path’s VP of Operations) went deep on the idea and we quickly agreed that the fit was superb as the functional strategy made a lot of sense and we felt confident that we could cross sell Assurance’s products to existing Return Path customers (we were already doing this). Geography was easy – George and Assurance were in the same office as the Return Path Colorado office. The cultural fit was also easy – George would be rejoining a team that he had helped create at Veripost.

Once we decided to do the deal, we were able to complete it in about 30 days. A year later, the delivery assurance segment of Return Path’s business has grown to be the same size as the ECOA business and shows no sign of slowing.

Act 3: Return Path Acquires Netcreations

Return Path’s acquisition of Netcreations is our most significant deal to date. Return Path now provides the email marketing market’s largest and most trusted permission-based customer acquisition solution. We also provide the leading market research solution to direct markers. We believe that as a result, Return Path now offers marketers an unparalleled suite of best-in-class e-mail marketing solutions to improve the performance of their customer acquisition and retention e-mail programs.

Matt Blumberg, Michael Mayor, and the combined Return Path / Netcreations team – congrats and let’s go get ’em!

I’m up in Alaska and have been sucking down books. Following are five flyby reviews for those of you with different tastes.

Chirunning – Good book on combining T’ai Chi and Running. If you are a long distance runner, it’s worth a look to explore some of the concepts the author talks about. I used some of it on my run today and it felt logical.

Triumph over Turbulence – Awesome entrepreneurial autobiography of Jim Magoffin – the founder of Markair – one of Alaska’s original airlines.

Teach Yourself Movable Type – Ah – there’s a book for everything. Pass on this one – not enough content to justify its existence.

Ten Big Ones – Mental floss par excellence. I’m a little burned out on Janet Evanovich and the Stephanie Plum novels (too formulaic at this point) – but since I read the other nine, I figured this one would help pass the flight from Denver to Anchorage.

The Da Vinci Deception – Disgustingly ironic. I picked this up randomly at the grocery store thinking it would be a thoughtful analysis of the factual errors in The Da Vinci Code (which I think most sentient beings recognize was a work of fiction). The author – an accomplished Christian writer – trashes The Da Vinci Code, but misses the point by taking it much too seriously. While I don’t know Dan Brown, I’m quite certain he was aware that he was writing a fictional account. Pass.

My wife Amy sent me the following Voltaire quote (via A Word A Day).

It is forbidden to kill; therefore all murderers are punished unless they kill in large numbers and to the sound of trumpets.

Something to chew on…