The noise about RSS bandwidth jams finally made the NY Times today. However, that’s not what this post is about.
In the article, the NYT quotes blogger Steve Main who writes on his blog. “The whole purpose of an RSS aggregator is so that I don’t have to open my freaking Web browser to 100 different pages. By having the content right there in my aggregator, I can skim an entire article in the time it takes to open up a new Web browser. By not including full content in the RSS feed, you take away some of the productivity gains that RSS offers.”
Steve’s point is right on the money. But why did he say “freaking” instead of “fucking”. And when did “freaking” become an acceptable and uncensored substitute for “fucking” as an adjective? Now, I’m not an editor, nor do I want to be, but when I hear 10 years olds walking around saying “freaking this and freaking that” I’ve just got to wonder. I’m also not a prude – I can use the various forms and usages of the word fuck with the best of them. Freaking is just such a lame substitute for the real thing.
I’m an unashamed South Park fan (if Colorado wasn’t a swing state I’d consider writing in Cartman for president.) Amy and I watched South Park – The Passion of the Jew tonight and rolled around on the floor in laughter. The DVD included two bonus tracks – Christian Rock Hard and Red Hot Catholic Love.
If you aren’t a South Park fan, can’t handle “clearly over the reasonableness line” satire and sarcasm, or are easily offended, this is not for you. However, if you are a South Park fan, couldn’t ever figure out what was the big deal about The Passion of the Christ, or just love 90 minutes of non-stop, non-PC satire – this is it. As one would expect from the titles, each episode does actually have a moral at the end.
NewsGator announced another RSS content relationship yesterday – this time with uclick, the online arm of Universal Press Syndicate (UPS). You can now get Doonesbury, Cathy, FoxTrot, Garfield, Ziggy comics via RSS (god – I loved FoxTrot – I forgot it existed…)
Greg Reinacker (NewsGator’s founder) also put up a post discussing his thoughts about changing the NewsGator name. He’s looking for feedback – go to the post and tell him what you think. As a board member, I can assure you that your opinion will count here as we’re currently pondering what to do.
Tim Robbins is a genius. In 1994, he made a satirical movie called Bob Roberts that documented a fictional right-wing candidate’s (Bob Roberts – played by Tim Robbins) run for senate in Pennsylvania against a 30-year incumbant democrat (played by Gore Vidal) in the 1990 election cycle. Amy and I saw it in Boston when it came out and both “kind of remembered it.”
We watched it tonight. We’re both tired from the week and I’m sick, so it was an easy decision to lay on the couch and melt our brains with a movie. Oops – wrong movie.
Bob Roberts is incredibly handsome, charismatic, a son of hippies who runs away and goes to military school, makes a fortune on Wall Street, and then becomes a folk singer who decides to run for office while trading Nikkei futures (“you can always get information before everyone else – you just have to know how and work for it,”) travelling around in a campaign bus that says “Roberts PRIDE” on it, and starting each day with a fencing match of indeterminate length before hopping on his motorcycle to lead the tour bus to the next campaign stop.
It’s magnificent. And frightening. And depressing. The songs are poetry (in that sick, twisted way) – Robbins performs them all. As a character, Bob Roberts is incredible and goes to any end to get elected, including faking his own attempted assasination. Robbins plays him flawlessly, which is deliciously ironic given how liberal Robbins is.
It’s amazing that 10 years later it’s right on the money. Bob Roberts is a winner when you get sick of watching the CNN or Fox election coverage.
I have a close friend – Jenny Lawton – who is a long time, extremely talented, and irrepressible entrepreneur. For a decade she ran a high-end network integration company that was doing Internet stuff well before Internet stuff was cool. She sold that company to a public company that was a large application service provider and stayed on for several years, playing a number of different leadership roles in that company.
She retired (burned out, got tired, decided to move on) and – rather than dive back in to technology – bought a bookstore called Just Books in her home town of Old Greenwich, CT. Several months later, she decided to expand and opened a second book store (Just Books, Too).
Today she announced that she is buying the coffee shop next to one of the bookstores.
Viva entrepreneurship – way to go Jenny! If you are ever near Old Greenwich (or Greenwich where their other store is located), stop in, tell Jenny hi, and buy some books (and coffee) from her.
If you follow my Read Recently list, you know that I plowed through a lot of books this summer. However, I’ve been stuck on What Einstein Told His Cook for two weeks. It’s not a bad book (in fact, if you are a foodie, it’s a very interesting book.) However, as I’ve been crushed with work the past two weeks, I haven’t been reading much and the book hasn’t pulled me in to escape from the world.
When I was a teenager (and reading a ton – remember the “bookworm” – ok – that was me) I decided that it was ok to simply stop reading a book when I wasn’t getting through it. I know a lot of folks that seem to be unable to bail on a book – I’ve never completely understood this as I think it feels liberating to decide that a book wasn’t meant to be finished.
On to the next one – Blue Mountain: Turning Dreams into Reality – Susan Polis’ story of how she, her husband Stephen, and her son Jared created a greeting card giant that spun off Bluemountain.com – one of the most financially successful Internet bubble-era exits.
I love tennis. When I was a kid (age 10 – 14) I was a serious junior player until I burned out from too many 10 hour, 100 degree plus days of banging my racquet against the ball (and the fence, and the ground, and my head) in the Texas heat. I still love to play and – instead of fighting to win – I’m delighted to go for every shot and see my old amazing strokes and ball placement every one out of ten shots.
I came home late tonight after a long day. Amy had Tivoed the Johansson vs. Roddick US Open Match. She told me I had to see it (she’d watched the first two sets but was happy to rewind and watch again with me.) I settled into the couch and within 15 minutes the stresses and challenges of the day were gone. Johansson’s first two sets were absolutely unbelievable. Roddick played like the US Open champion that he is, but Johansson just creamed him.
In the third set, Roddick caught fire and crushed Johansson’s spirit. You could see Johansson lose it – all the momentum shifted to Roddick. The NY crowd – which is always great at night – came alive. The fourth set was more of the same – Roddick won something like 20 service points in a row. Johansson started making him work for points again, but Roddick looked invincible.
Johansson had never played a fifth set in a major tournament, but he came alive again in the first game of the fifth set. Suddenly, the damn Tivo recording ended (based on the pre-set time) and we were done. Grrrrr. We wandered downstairs to look up the results on the web – both of us were sure that Roddick had won.
We were greeted with the headline “Johansson Stuns Roddick.” 6-4 in the last set. Outrageous. Delicious tennis – Federer vs. Henman and Johansson vs. Hewitt for the mens semis. Even if you aren’t into tennis, it’s worth a look tomorrow and over the weekend as these guys are incredible athletes. Oh – and the women are awesome as well – I’d love to see Capriati win this one.
The famous “Do No Evil”, of course. Given some of the recent negative chatter on Google, I’ve been thinking of what bold move they could do that would cause most of the technology industry to stand up and cheer for them. How about buying SCO?
1. It’s cheap, only $60m or so.
2. Fire everyone (ok – maybe it’s $100m when you get done with all the winddown costs and golden parachutes).
3. Open source / GPL all of the SCO products in exchance for settling all the lawsuits.
4. Be done with all the SCO nonsense.
Disclaimer: I’m not a shareholder of either Google or SCO nor do I have any non-public information about either company.
Author: Seth Levine, Mobius Venture Capital
Brad’s given me permission to co-opt his blog for the day. I work for Brad (and had a great time recently up in Alaska “working”) which gives me an unusual vantage point from which to consider some of his posts on the world of VC. After reading several of these posts (and of course living in this world with him) I came up with the great idea of suggesting to Brad that he write a post about deal splits and the notion of what investing “pro-rata” actually means. Brad had an even better idea which was to have me write the post (which, of course, made my original idea seem not quite so brilliant).
The question of what “pro-rata” means in the context of a deal seems, on its surface, pretty straight forward. Simply put this question asks how much each investor intends to invest in a financing round. However, as is often the case when you get two VCs in a room and ask them to decide on something, actually agreeing on what this is becomes another matter all together. One investor’s view of the meaning of “playing their pro-rata” is often different from that of another. Unfortunately, in many cases this isn’t discovered until late in a financing process leaving an entrepreneur scrambling to reset expectations and either make up a gap in a capital raise or placate an investor who believed they would get the chance to invest more in a round. Ask most VCs and they’ll tell you everyone knows what pro-rata means (try this – its can be amusing); end up with confusion around this in the 11th hour of a financing and you’ll realize that this is definitely not the case.
The best way to illustrate the complexity of this concept is to take a look at a couple of examples. Take the case of a Series A round for ProRata Corp. Assume the post money on the deal is $8m and each investor, having invested $2m each, ends up owning 25% of the business. Fast forward to the Series B financing and consider two scenarios. In the first scenario there is no outside investor and the company raises $6m. Logically, each investor would contribute $3m to the financing, as each was responsible for 50% of the prior financing round. Note that this would leave them each owning just under 36% of the business post financing – meaning that by some definitions they actually played above their pro-rata amount because they have each increased their ownership in the business. Now consider the same case where a new investor is brought into the mix in the Series B. Assuming this investor takes $2m of the $6m round, is the pro-rata for the remaining investors $2m (half of the remaining $4m)? It could also be $1.5m (which, in the $6m round would allow the investor to retain their 25% ownership). Of course in that case there would be a shortfall. I know this sounds crazy, but this exact situation happened to us about a month ago (and plenty of times prior to that). Each of Mobius and the other existing investor was talking about contributing our pro-rata amount to the financing – our believing that this meant that the two existing investors would split the remainder of the round based on their relative ownership percentage; the other investor believing that they would retain their ownership percentage in the business. In that case Mobius made up the difference – we were strongly supportive of the business and happy to increase our ownership – however if we had not been in a position to do so, the company would have been left with a gap in their financing plan.
This example was actually pretty straightforward. Things start to get much more complicated for a company that has raised multiple rounds of financing, has shareholders who own several classes of stock (common, junior preferred, senior preferred (perhaps with a change in their conversion ratio due to anti-dilution), warrants, etc.). In those cases, what constitutes pro-rata? Even in our relatively simple example where all of the new money in a round is coming from existing investors this a complicated question. Do the shareholders split the round based on their total as-converted common ownership? Do they only count their senior preferred in the calculation? Do they include their entire preferred ownership position? The different methods of calculating pro-rata in this case can lead to vastly different views on investment amounts. This is important by itself, but becomes even more so in the case where a company is doing a down round financing where failure to participate pro-rata will lead to losing preference rights or some other penalty. Interestingly within venture funds this is also an issue, as funds that have made cross fund investments (that is investments in the same company from more than one of their funds over time) also need to determine how to split an investment between funds.
There is no neat conclusion here. The concept of pro-rata participation is something that sounds in theory like it should be pretty straightforward, but in practice rarely is. Out of this confusion, the important point for entrepreneurs and investors alike is to make sure they have a discussion about participation amounts early in the investment process. Discrepancies in expectations can always be dealt with more constructively if there is time to spare, rather than at the last minute.