As Jason and I continue to wind our way through a typical VC term sheet, we thought we’d tackle the infamous “drag-along agreement.” This is one of those terms that has recently increased in importance to VCs due to the all the financing and exit dynamics that occurred during the downturn of 2001 – 2003. A typical drag-along agreement is short and sweet and looks as follows: “Drag-Along Agreement: The [holders of the Common Stock] or [Founders] and Series A Preferred shall enter into a drag-along agreement whereby if a majority of the holders of Series A Preferred agree to a sale or liquidation of the Company, the holders of the remaining Series A Preferred and Common Stock shall consent to and raise no objections to such sale.”

I decided to add a new category to my blog called “Pet Peeves.” Like most compulsive people, I have my share of these and I’m confident my therapist – if I had one – would suggest I share these with the world to get them out of my head. I wrote recently about the NY Times falling prey to using the word “freaking” instead of “fucking.” It’s depressing to me that the editors at this venerable institution would allow this to happen. Even if they were quoting someone (as they were) they should have said “freaking (sic)” to indicate they were aware of the erroneous word substitution.

I’ve never met Bo Peabody, but I know I’d like him. His half book – Lucky or Smart? – (Amy told me that if it only has 58 pages, it doesn’t count as a whole book) is a quick and delightful romp through his entrepreneurial brain. If you are too lazy to read a half book, you can try this Inc. Magazine article that will give you a feel for it.

I’ve been really busy so January was a slow reading month. I hurt my knee running today so I decided to lie on the couch, ice my knee, and chow down on some books. I consumed the second half of A Million Little Pieces by James Frey, which I had been slowly wading through the past two weeks. This is one of the most intense books I’ve read in a long time. It’s Frey’s autobiographical account of his six weeks in rehab. The fly leaf sets up the story with the following: At the age of 23, James Frey woke up on a plane to find his four front teeth knocked out, his nose broken, and a hole through his cheek. He had no idea where the plane was headed nor any recollection of the past two weeks. An alcoholic for ten years and a crack addict for three, he checked in a treatment facility shortly after landing. There he was told he could either stop using or die before he reached age 24.

I was on a phone call yesterday with a co-investor in one of our companies who asked “are you concerned that RSS / blogging is the long tail of the Internet – only relevant to millions of individuals, but nothing beyond that?” I responded with an emphatic no. I noticed two things this morning as I was poking around that reinforced this. Greg Reinacker’s blog post on NewsGator Outlook 3.0. Greg is the founder/CTO of NewsGator and on Wednesday afternoon he asked the question “what do you want to see in the next version of NewsGator?” We’re in the midst of the development cycle and still have room for some more features, so we’re looking to see what people think are today’s “killer feature” for the next version of the best RSS aggregator for Microsoft Outlook. By Saturday morning, there were 30 separate posts with over 75 suggestions. Many of these are features we are already incorporating, but some were new, and it was fascinating to see the patterns. I’ve long been a believer in the theory that users are the source of most innovation (this is one of the things I worked on in my doctoral program at MIT under Eric von Hippel and is obviously a huge driver of the open source revolution.) Peter Hoskins’ blog post on SpikeSource referring back to his blog post on open source stack management. SpikeSource’s news page has a section on it called “Blog Mentions of SpikeSource” (in addition to the normal “SpikeSource Articles” section from traditional media). Smart move – every company should put something like this up on their news page. It’s not a surprise that Kim Polese – the CEO of SpikeSource – has a clue – as she’s on the Technorati board. While different cases (case 1: use blog as user community to generate new feature requests for product; case 2: reference blogs as equivalent to traditional news sources about product / company), both are powerful examples of the quickness, ease, and leverage of blogs as a part of the corporate communication and information collection process. 

If you are Denver/Boulder based, my portfolio company – Rally Software – is in Denver on Friday, February 25th as part of their “Rally Agile Roadshow” to spread the message about Agile development and how to transform your software development organization to Agile processes. Attendees will also be registered in a drawing to win either a day of Agile Coaching or a free pass to the Agile 2005 conference.

When I run, my vision of myself is a lumbering hulk going “clomp clomp” down the road. Whenever Amy and I are driving over a road that I recently ran, I often cannot resist adding “clomp clomp” sound effects to our driving experience. In appreciation for my enunciating skills, Amy emailed me the following haiku from her Zen Page-A-Day Calendar 2005. Clomp clomp the monk’s feet through ice and dark drawing sweet water.

On Monday, Stratify announced release 5.0 of their Stratify Legal Discovery product. This is a major product release for them, as it incorporates a raft of new features and gives them a huge technology leadership position in the legal discovery software market. Today – Stratify announced that Merrill Corporation – the leading global supplier of diversified communications and document services – has signed a partnership to integrate Stratify’s products with Merill’s Discovery Navigator (Merrill’s proprietary electronic repository technology). Merrill is a huge established service provider to top law firms and Fortune 100 companies and this type of deal is – in the words of my partner Rex Golding – a classic transformational channel deal. 

I had a pair of situations recently with executives from two different companies that reminded me what a pleasure it is to work with A+ people. I won’t single them out by name in order to not embarrass them, but they know who they are. Both demonstrated what I call “an unexpected display of class” in completely unnecessary, but appreciated ways. Case 1: This person was promoted from controller to VP Finance. She had been with this company from their inception, is an incredibly hard and diligent worker, and is extremely capable. Her reaction to a quick congratulation note regarding her promotion can be summarized as “thanks, but a title change wasn’t necessary – I’ve been here since the beginning – I’m extremely committed to the team and the investors – I’m excited about the future.” I had to reread the email a couple of times, not because I was so surprised by her response (it was completely in character), but it stands out in stark contrast to the endless discussions I have had over the past 10 years about title inflation, desire for more “external recognition”, and general noise from execs about how important it is to have the right title to position themselves “properly.”