Brad Feld

Category: Entrepreneurship

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 (, 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?


Oct 16, 2005

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:

  1. Marketing Challenge: Present teams with a product or service. Their task will be to market or sell this product/service to a group of investors. They will need to focus on the product’s features, realizing its full potential, and communicate that effectively. This challenge will culminate in a power-point presentation to the VC panel to be judged. A/V equipment will be available.
  2. Hiring / Interview Challenge: Teams will be given a ‘resume book’ of possible candidates to hire for a pre-described position. They will be asked to consult and pick 3 resumes they’d like to interview. Short mock interviews will be conducted with organizers role-playing as the candidates. After the interviews teams will pick a candidate to hire. They will have to defend their choice to the VC Panel.
  3. 5-Year Plan & Budget Challenge: Teams will be presented with a business concept and 5-year budget. They will have to come up with what they perceive as the best course of action for a 5-year plan, and budget accordingly. Plans will be critiqued and judged. (Since teams aren’t expected to have much previous knowledge in creating business plans, perhaps this event should come after a seminar.)

In between challenges, Mark, Sameer, and I gave the following lectures.

  • Mark: How Does Venture Capital Work
  • Sameer: Business Plan 101
  • Brad: Do You Have The Balls To Start A Company?

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.

Ross Mayfield – CEO of Socialtext – just put up a new wiki called Entrepreneur Exchange.  He’s seeded it with a number of links from around the VC / entrepreneur blogging set – see the Venture Capital and StartUp Kit categories for examples.  Contribute freely!

Yesterday, I wrote about my day exploring entrepreneurship in Fairbanks, Alaska.  Today, while reading MIT’s Technology Review (the paper copy – in the bathroom – where all paper magazines should be read) I came across a very timely article titled The Entrepreneurship Ecosystem.

One of my recommendations to the folks in Fairbanks was to rally around the University of Alaska Fairbanks as a focal point for entrepreneurial activity in the local community.  I used the examples of Route 128 / Cambridge / Boston (MIT, Harvard, BU) and Silicon Valley (Stanford, Berkeley) as examples of major entrepreneurial communities that grew up around great universities (Ed Roberts covers this issue extremely well in his seminal book on entrepreneurship titled “Entrepreneurship in High Technology: Lessons from MIT and Beyond.”)

The Tech Review article summarized – very effectively – the entrepreneurial ecosystem at MIT and how it works.  The print article also included the following links to resources at MIT that don’t seem to be included in the online article.

While this isn’t a comprehensive list of the MIT entrepreneurial ecosystem, it’s a good start.  It’s important to recognize that many of these organizations have been around for a long time, have ebbed and flowed in popularity and influence, but have clearly demonstrated staying power in the entrepreneurial action surrounding MIT.

I’ve written enthusiastically about the Deshpande Center for Technological Innovation at MIT in the past.  I think it’s an awesome example of a university program that funds novel, early-stage research, connects innovators with the business creation infrastructure – including VCs and entrepreneurs – and actively helps new startups to be created out of fundamental early stage research.

As the Deshpande Center enters their fourth grant cycle, they just released the data on what happened with research teams that they have funded to date. 

  • 44 teams have been funded since 2002
  • $4.9m of grant money has been awarded
  • 9 companies have been formed
  • $23m of angel and first round VC funding has occurred
  • 7 other teams are forming new companies and actively raising money

This is an incredible hit rate – 20% of the teams have already started companies and 36% of the teams that received grants have either started or are starting companies.  Congrats to all these teams, Charles Cooney (MIT Professor) and Krisztina Holly (Deshpande Center Executive Director), and Desh and Jaishree Deshpande who underwrote the program.

As an added bonus, if you want a quick trip through my blog archives, take a look at a reason why scientists and engineers end up on the wrong side of the value equation.  The Deshpande Center is working hard to modify the outcome of this equation.

Greg Galant – who does the Venture Voice podcast – just posted an interview he did with me on Monday.  We did it over Skype which – while noticeable – was really effective. 

Greg gives good interview – we covered a lot of ground which Greg did a nice job of summarizing in the show notes.  We had a short discussion about the difference between a consulting business and a product business and the corresponding challenge of transforming a consulting business to a product business. We also talking about the transition I made from entrepreneur to investor and I found – as I listened – that these situations were eerily analogous.

While the first half was about entrepreneurship; the second half was about venture capital.  Greg probed around how to think about and evaluate VCs as well as issues surrounding raising money.  We covered some deal stuff and I even said something nice about lawyers about 27 minutes in.  At the end, I talked some about life before email and voice mail (egads – that feels like forever ago – but it was just 1991).  I also talk about the critical importance of listening to one’s wife (at least mine).

Verbal tick alert: “Ya know” seemed to creep deeply into this podcast.  As least it wasn’t “honestly, to tell you the truth…” 

Entertainingly, as I was writing this post, I got an IM from Jeremy Hague at Skylook who had just been talking to Greg (I’ve been playing with Jeremy’s Skype Outlook plugin) and Jeremy mentioned that he’d recently been interviewed on Venture Voice also.  “Small” world.