The Kauffman Foundation has re-released their “entrepreneur resource website” named eVenturing. In addition to the site – which is full of great information for entrepreneurs – they also have a blog that you can easily subscribe to.
In the 1990’s I had a very rewarding affiliation with the Kauffman Foundation. I was an “entrepreneur-in-residence” (a fancy word for consultant) and got to work with Jana Matthews and several other folks on a series of programs that the Kauffman Foundation did around high growth companies. In addition, I helped with the original launch of Entreworld, the predecessor site to eVenturing.
The Kauffman Foundation has always been a huge resource to the entrepreneurial community. Many VC’s know of the Kauffman Foundation through the Kauffman Fellows program (a “VC apprentice program”). However, the Kauffman Foundation is much larger than that (while the Kauffman Fellows is a successful stand alone program, it was a small part of the activity of the Kauffman Foundation.) Ewing Marion Kauffman (Mr. K – the founder of Marion Laboratories) was an incredible entrepreneur and his foundation serves his legacy well. I expect that eVenturing will continue to add to this legacy.
An MIT study delves into the reality of Aluminum Foil Deflector Beanies. Is it a great innovation? Is it a government plot? Is the FCC involved in some way? Or – is mind control in our future?
As a kid, my parents used to have a monthly gourmet group with a group of friends (they are still doing it monthly 35 years later) where they got together, cooked a fancy meal, and sat around late into the night talking. We joined up with about 15 friends several years ago and started a similar tradition in Boulder – we get together about six times a year for a fantastic evening we call Chez Gourmet.
Last night was Spanish Tapas Night at Chris Wand’s house. The food was magnificent (I cheated – $200 at Wild Oats buys a lot of tapas) but the conversation was even better. Rajat Bhargava and I were holed up in the corner of the couch talking about the incredible Kalamazoo Promise (Raj is from Kalamazoo – it was announced this week that any Kalamazoo Public School graduate has the opportunity to attend any public State of Michigan University or Community College for free due to the incredible generosity and vision of several anonymous donors). Our conversation rambled around and we ended up talking about a competitor of StillSecure’s (Raj’s company) that had been consistently lying to prospects and customers about their products’ capabilities (which StillSecure was benefiting from as the truth eventually came out.)
We quickly moved on to politics and as we bantered around how absurd it is that people lie, Raj said something that really stuck with me – “Truth Is The Absolute Defense” – which he attributed to Alan Shimel, who has worked with me and Raj for a number of years. I woke up thinking about how simple, yet profound, this is.
I can’t stand fluorescent lights. I literally can’t sit in a room with them on for very long without noticing them. For years, people walk by wherever I’m working and ask me if I like working in the dark (I’ve got a long list of catty responses – all various derivatives of “being in the dark.”)
Yesterday, I was a judge at the DaVinci Institute’s A Night with the Visionaries. I thought it was going to be a strange way to spend a Friday evening, but I ended up having a great time and being completely blown away by the inventions and inventors that were competing. The evening was extremely well done and Thomas Frey who runs the DaVinci Institute should be proud on the event his organization put on.
While I saw plenty of cool things including an infra-red pistol mounted camera, a self-tuning guitar, a personal cooling device, and an ambient light dome for photographers, my favorite was the Sky-Scape decorative fluorescent light diffuser. It’s a brilliant idea that is one of those inventions that the instant you see it, you get it, and fall in love with it.
Happiness for fluorescent light haters in now only $37.95 per light away.
If you like listening to me to talk (hi mom) or are interested in search, Eric Olson has his second VentureWeek podcast titled “Search” up. This one only had two Dave’s on it (compared to three on the first one). David Hornik (August Capital), Dave McClure (SimplyHired.com), and Jeff Clavier (SoftTech VC) provided some useful content while I tried to ignore the idea that it was 11:30 at night on the east coast and time for me to go to bed.
Eric Olson has started a venture/entrepreneur oriented podcast called VentureWeek. He recorded the first episode on Thursday night which included me, David Hornik (August Capital), David Cowan (Bessemer), David Sifry (Technorati), David David (David’s), JB “David” Holston (NewsGator), and Dick “David” Costolo (FeedBurner).
Eric did a nice job dealing with the large and somewhat unruly crowd and we had fun as we tried our hardest to mock ourselves as we talked entirely too much about Web 2.0. The best line was from Cowan: “If you are a known child molester, you have to explain why you are hanging around the playground.”
Well – I gave Fred 36 hours to put up a post about the fun we had at dinner with Wikipedia and – since he hasn’t yet – you’ll get it from me.
Once a year, Return Path has a board / management retreat (from Thursday noon to Friday 2pm) that serves as our October board meeting and annual planning session. It’s one of – if not the best – board meeting I have each year. Matt and his team do a superb job – very effectively using this meeting to pull together their proposed annual plan, present it in a setting where we can tear it apart (constructively) and give real time feedback, which then gives them a few more months to lock down the plan, budgets, and comp structure for the next year.
In addition, we spend plenty of social time as a team, including dinner and some event (last year bowling at Chelsea Piers, this year pool somewhere that I punted on because I was wiped out and wanted to go back to the hotel room and lay in bed with Amy). Dinner is always a lot of fun – this year we did it at the Turkish Kitchen.
After about an hour, someone suggested that VCs were shylocks. Someone else suggested that – no – they were shysters. There was some debate about the difference, resulting in my whipping out my Sidekick and going to Wikipedia. Fred – bless his intellectual heart – actually remembered that the word shylock meant moneylender and came from a Shakespeare play (thankfully he didn’t remember which play). I regaled my friends – via Wikipedia – with the story of Shylock from Shakespeare’s “The Merchant of Venice” while only being moderately defensively when asserting that VCs were neither con artists nor were they the NATO reporting name for the R-5 theater ballistic missile. Of course, when I returned to the hotel room and asked Amy the difference between shylock and shyster, she simply started reciting Merchant of Venice to me.
We couldn’t stop there. I can’t remember who suggested it (it couldn’t have been me – probably Greg Sands from Sutter Hill) but like all overaged peurile boys (oh – and several of the women at the table joined in) we started looking up swear words on Wikipedia. Remarkably, their definitions are rich, detailed, and include a wild amount of historical context, including one that we fondly referred to throughout the next day as the “violation of the taboo of incest.”
Who says board meetings can’t be fun?
I had an awesome day on Saturday. I spent the weekend with my fraternity at MIT (the Lambda Phi Chapter of Alpha Delta Phi) on an undergraduate retreat called ADPrentice (be patient, you’ll get it in a minute). I co-sponsored this with two of my frat brothers – Sameer Gandhi (a partner at Sequioa Capital) and Mark Siegel (a partner at Menlo Ventures).
As I look back 20 years later, our fraternity generated a number of very significant entrepreneurs in a short period of time (the graduating classes from 1984 to 1990). Several companies that effectively started in the house (at 351 Mass Ave in Cambridge) included my first company (Feld Technologies – co-founded by me ‘87 and Dave Jilk ‘84), Art Technology Group (started by Joe Chung and Jeet Singh ‘85), iRobot (started by Colin Angle ‘89). Sameer Gandhi ‘87 and Mark Siegel ‘90 are prominent VCs. Ross Ortega ‘87 has started several companies. And – while the 1984 to 1990 period was rich with entrepreneurship, it didn’t stop there – Pehr Anderson (I think originally ‘96) dropped out to start NBX which was acquired by 3Com in 1999 (Pehr eventually got his degree).
This activity all happened well before the Internet bubble. MIT has always been a huge generator of entrepreneurial activity and the fraternity system / independent living groups (FSILG) at MIT – which used to be critical to the Institute as there wasn’t enough dorm space to house all the students – was a uniquely vibrant source of entrepreneurial activity. In recent years, MIT has shifted emphasis away from FSILG as they’ve built more dorm capacity, been concerned about liability issues associated with the FSILG system, and generally wanted more control over the behavior and experience of the undergraduate community.
Last year, Sameer, Mark, and I decided to contribute a modest amount of money to the chapter. Since Lambda Phi is chartered as a “literary society”, we were determined to do something intellectual as part of our gift. We wanted to impact the house in a meaningful way, especially since all three of us had been disengaged for some time. It took a while before several of the alumni and undergraduates engaged and during this process we started to learn about the challenge that our fraternity – and others at MIT – are having with the new rules and constraints that MIT has imposed on FSILG. I won’t go into them here, but we were surprised and as a result more motivated to try something different to get the undergraduates excited and reconnected to several of us.
A team of folks – led by Manish, Ruben, and Zach – put together an incredible event. We spent Saturday at MIT’s Endicott House – MIT’s fantastic off campus retreat facility – and had an Apprentice-like day (now you get it: ADP + Apprentice = ADPrentice). This acted as the “fall retreat” – most fraternities have something similar where all the undergraduates go away for a weekend and do something together. Usually (at least 20 years ago when I was in college), the retreat devolved into a drunken bash that – while it included some “activities” – was primarily social, often a lot of fun, but rarely intellectual.
ADPrentice had three discrete challenges:
In between challenges, Mark, Sameer, and I gave the following lectures.
During the day, Mark, Sameer, and I observed the teams and scored them on each challenge. At the end of the day, we totaled up the scores and picked the winner. We awarded the first place team with $1,000 – second and third received $500 each.
I was completely blown away by the quality of work these guys did. Remember – we are talking about undergraduates with no real work experience (albeit they are MIT undergrads). The quality of what they did was unbelievable and reminded me how incredible MIT is at teaching people to think.
As the day wore on, we were worried that the energy level would start to wane. The opposite happened – folks became more engaged, the competition became more intense, and the level of conversation increased. Now – this is a Saturday – these guys didn’t go to sleep early Friday night (well – some of them didn’t bother going to sleep since they had to be ready to leave at 8am) – but they just powered through. Awesome.
Sameer, Mark, and I had plenty of time to talk about entrepreneurship. One of the things this day reminded us of was the incredible raw material that exists in the US. While there is endless talk about China and India – and undoubtably the US is no longer undeniably at the top of the heap in the innovation game – we shouldn’t forget the quality and potential of the kids currently in our top tier schools in the US. In addition, as a guy approaching 40, it’s just a blast to hang out with 20 year olds, remember what it was like to be 20, and participate in influencing these guys’ lives, even if only a little bit.
I didn’t go to Web 2.0 – I hate attending conferences (although I enjoy speaking at them) and try my hardest to avoid them. I’ll go if the conference is relatively convenient to my travels and I’m speaking (like I did at WeMedia – I was already in NY for other stuff), but generally I enjoy hearing about what’s going on from a distance through blogs (it is Web 2.0 after all, right?), the web, and the people from companies I’m invested in that attend. Then – I like to sit in front of my computer and actually play around with the stuff.
The most profound thing I read this week was from Fred Wilson. Read it slowly and carefully. Jason Calacanis’ What now? post is also important – read the seventh paragraph twice (the one that starts “Mark Cuban …”; BTW – congrats Jason on your sale to AOL.)
The overwhelming attempt at pattern matching from 2001 (Bubble this, bubble that) completely misses the point. There were a number of very successful companies founded between 1999 and 2001 that didn’t implode when the bubble popped, with entrepreneurs who kept their heads down, built real businesses, and then started to reap the gains in 2003 and 2004 when the markets became more receptive to younger tech companies, especially ones that had built business engines that generated real positive cash flow (e.g. long term economic value).
My favorite example of this that I was involved in was Service Magic – a company we funded in 1999. The company found themselves in a market segment that raised over $300m of VC money and had several early IPOs that raised even more money. The entrepreneurs – Mike Beaudoin and Rodney Rice – were extraordinarily focused on figuring out how to build value into their business, obsessed with solving the fundamental calculus of how to make money in their market segment, and then implementing and scaling up a business that did this. By 2003 they were the unambiguous leader in their market, most of their competitors has evaporated, and they were generating cash at a ferocious rate (I remember having regular “holy smokes – what amazing numbers” moments.) In 2004, they were acquired by IAC, who very respectfully valued what they had accomplished.
So much of what I’m seeing in Web 2.0 are – at best – what Fred calls “second derivatives.” VCs are once again throwing money at this stuff just to “get in the game” – I saw a quote somewhere from a VC that said something to the effect of “if the company can’t identify its four likely acquirers, I’m not interested in it.” This is craziness and – like all irrational things – will end badly for many VCs (and unfortunately for the entrepreneurs they back.)
This isn’t an attempt to throw cold water on the current enthusiasm around web-based applications. I think it’s extremely exciting, a ton of fun to be involved in, and hugely interesting to play with. However, there is a big difference between building companies that have value vs. simply creating incremental features. As you look at your business, think about where the fundamental value is. If the answer is “I’m just hoping to get bought by GAMEY” (one of Google / AOL / Microsoft / eBay / Yahoo), think harder.