Union Square Ventures Blog
Not surprisingly, Fred Wilson and Brad Burnham have turned their corporate website (Union Square Ventures) into a blog. If you follow the venture capital business, it’s a “must subscribe” site.
Book Review: Hard Driving
Hard Driving is the story of John DeLorean and DeLorean Motor Company (DMC) through the eyes of William Haddad. While it’s a 20 year old book that I found at the Strand Book Store, it was better than most murder / intrigue / terrorist / thriller books of today. And – best of all – it’s non-fiction.
As a teenager, my dad had a good friend – Dr. Casey (a pediatrician by day) – who had a hobby of fixing up smashed up sports cars. He went through phases – for a long time he was into Corvettes (we had two of his – a 1975 and a 1978 that I got to drive in high school), then TR-7s, then Porsches. At one point he got into DeLoreans – I still remember the first time I saw one. Teenage boys were always hanging around the Casey’s house – I could never figure out if it was the cars or his three very attractive teenage daughters. Nonetheless, there was plenty of car repair action to be had – day and night.
The stainless steel DeLorean always stuck in my mind. When DeLorean was busted for dealing coke (proportedly to try to save DMC) and then acquitted because he was entrapped, all I could think was that I’d never end up with a DeLorean.
Of course, the end game of DeLorean’s failure never really scratched the surface of the story. Haddad – who was friends with DeLorean going back to DeLorean’s GM days, and then went to work for DMC as VP Communications and Planning, tells an incredible entrepreneurial tale set in a very different time then today (the late 1970’s and early 1980’s). The pacing and interaction is radically different then we deal with in business today, but the underlying issues, problems, interactions, and opportunities feel very similar.
Fundamentally, DeLorean comes across as a completely self-centered, manipulative, semi-delusional person that is gifted with immense charisma, vision, and desire yet struggles with right and wrong. The line between success and failure for him is narrow and he almost pulls it off, but doesn’t quite get there, at which point everything implodes.
There are many lessons in this book, both about entrepreneurship and ethics. Haddad is an excellent writer and does a great job of injecting his own emotions at the appropriate points while hanging back and telling the story at others. Refreshingly, he lets DeLorean’s actions tell the story rather than feel the need to moralize.
This was a powerful and enjoyable book.
Brad, The Book, and The Baseball
Now that the Red Sox and the Yankees are out of the playoffs, there doesn’t appear to be any reason to pay attention to baseball anymore (unless, of course, you live in Chicago like my friends from FeedBurner and StartSampling do). I’ve never been a huge baseball fan – the most memorable part of the Texas Rangers games I used to go to as a kid was the traffic jam on the drive home. I lived in Boston for 12 years – within a five minute walk of Fenway for the last three – and while I’d occasionally catch a game, I never got sucked into the Red Sox Nation (although I admit to watching last years Red Sox / Yankees series and rooting for the Red Sox.)
I was in Dallas at a board meeting a few weeks ago and Howard Diamond – a close friend and CEO of ePartners – decided that the best way to introduce me to a few members of his leadership team that hadn’t met me before was to tell the story of Brad, the book, and the baseball. It goes something like this (oh goody, I get to practice writing in the third person and taking some editorial liberties that I’m sure Howard would be ok with.)
Brad’s wife Amy loves to go to live sporting events – especially baseball, football, and hockey. Brad would rather stay home and play with his computer, but he usually tags along just to be in Amy’s presence.
Several years ago, Amy decided she was going to go to a bunch of Rockies games. Now – Amy doesn’t do anything half assed. So – she found someone that would sell her a dozen tickets to several games which included two seats behind the first base dugout. I mean directly behind the first base dugout – row one – right in the middle of the dugout. Perfect seats.
Now – Rockies games are like football games – you rarely have the winner score less than 10 runs due to the thin air. So – these aren’t dull games. However, Brad knew he’d be bored out of his mind by the third inning, so he brought a book. I think it was a biography of Howard Hughes. Stimulating stuff.
After a few innings, Brad tucked into his book. Coors Field has a special feature – a bunch of guys in the stands wearing funny outfits that act like security guards / policeman in between innings. They wander up and down the stairs, making sure people like Brad don’t put their feet up on empty chairs or their beer on the dugout.
In between innings, one of these guys (let’s call him Joe) wandered up to Brad and said, “Sir, it’s very dangerous to be reading a book here – you might get hit by a fly ball.” Brad looked quizzically at Joe and responded, “Huh? If a fly ball is going to hit me, it’s not going to care whether I’m reading a book.” Joe harrumphed and wandered back up the stairs.
Another inning (and another chapter) passed. Joe wandered back down the stairs to try again. “Excuse me, but you really shouldn’t be reading here. It’s very dangerous. I’m just looking out for your safety.” Again, Brad was confused. “But you don’t even know me – why do you care? Plus – I feel very safe here – I’m sitting next to my wife Amy.” Joe grimaced and wandered off.
Joe realized this approach wasn’t going to work – apparently Brad had a risk profile that was different than other baseball fans. At the next break, Joe decided to try to something different. “Sir, you are sitting in fantastic seats. I’m sure that if you don’t appreciate them, someone else up a little higher would love to switch with you.” Once again, Brad tilted his head and responded, “Huh? I appreciate these very much – they cost about the same as my running shoes and – while they aren’t as comfortable, I’ve got a great view of the sky, there’s no shade so I’m getting a nice tan, and it’s really easy to read since there’s such good light here.”
Once again, Joe stomped off. This time, Brad turned to the baseball fanatic sitting to his left who – by now – was laughing his ass off every time Joe departed. “Dude – what’s going on with this guy?” asked Brad. Our friend, Mr. Fanatic, choked down some of his beer and said, “Look – this game is on national TV. Every time a lefty gets up to bat, you’re on TV reading your book. I’m sure Mr. Big Man Upstairs told Joe to get down to row one and get that asshole reading a book to either put the book away or move.”
“National TV huh? I wonder if my dad’s watching. He’d be proud of my reading skills.”
Next time you see me, feel free to ask me about the time I fell asleep in Howard’s box at a Bronco’s game.
Dear Qwest – An Orange Bag is Not A Solution
It’s inevitable. Every year we have our “first real snow” in Boulder. That would be – today.
Coinciding with the first snow – 100% of the time – is an Internet outage at my house and at our office. Since we use IP phones, are connected to our infrastructure in our California office via point to point, and my T1 line from my house is direct connected into the office, and outage is – well – a major pain in the ass (did you know you can’t make a phone call on an IP phone from your house if your network is down – duh – yeah I’ve got a land line in this server room somewhere, now where the hell is it?)
I got home Saturday afternoon from being on the road for 18 days. I was looking forward to a mellow weekend with Amy catching up on stuff, including a bunch of random things that I wanted to get to on the web. Wrong. No Internet. Qwest dispatched someone to my house Saturday night (kind of a drag, but at least they were trying) but he couldn’t do anything because no one was “at the other end of the line” to troubleshoot things.
Ok – well – that’s not such a big deal – I went to Amy’s office in Boulder with her on Sunday and we camped out there (she has a beautiful office in downtown Boulder close enough to the Rio for some awesome huevos rancheros (no – not the Ranchero/NewsGator kind.)) We punted the “Qwest: we’ll try again on Sunday night” thing and just decided to have an Internet-less Sunday at home and an early night.
Not knowing access to my email was out in my office (due to the CO – CA point to point being down), I got to the office bright and early at 7am ready to catch up on the weekend stuff I didn’t do. Wrong again. My poor embattled IT guy (Ross) rolled in at 8am cursing and muttering as he went after the Qwest guys to try to figure out what was going on. Did I mention that it was snowing?
It’s 3:45pm and everything is back up. The problem – apparently over the weekend someone ran over one of the Qwest pedistals with a car exposing the wires inside. The solution – put a big orange bag on it.
Now, while that’s a technical solution that will appeal to someone, apparently the bag wasn’t waterproof an the lines got “wet”. My reaction (and Ross’s) – “you’ve got to be fucking kidding me.” It only took two days to troubleshoot that one (and I don’t know how many truck rolls).
Brent Simmons / Greg Reinacker Interview
It’s last week’s news (literally) but if you are interested in hearing directly from Brent Simmons (NetNewsWire) and Greg Reinacker (NewsGator) on NewsGator’s acquisition of NetNewsWire, Niall Kennedy has a good interview online.
Look for more M&A news this week – everyone knows that Moreover has been acquired – the current rumor is that it’s Verisign again (who acquired Dave Winer’s Weblogs.com last week).
Working for Microsoft
As part of the VC Advisory Board for Microsoft’s Emerging Business Technology group, I like to say that I work for Microsoft three days a year (this is how often the EBT VC Advisory Board meets). We have a meeting coming up this week and – as I get ready to trek up to Redmond – I was pondering the meeting agenda when I came across Dan’l Lewin’s (who runs EBT) recent post titled “Should Microsoft Invest in Startups?”
I have huge regard for Dan’l and have always really enjoyed working with him. While I’m not a Microsoft shill, many of the companies that I’ve been involved in – going back to the very first company that I started – have had “deep and meaningful” relationships with Microsoft. While I’ve been on the wrong end of things with them at times, the benefits of the relationship have far outweighed the costs. Today, Microsoft is a huge place and understanding how to navigate them, work with them, and be effective is non-trivial. Dan’l and his team do a great job of helping VCs and VC-backed companies – it’s rewarding to see some of the ideas and philosophy that we bandy around in our Advisory Board meetings come out in Dan’ls public thoughts.
Web 2.0 – Building Features or Value?
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.
Entrepreneur Exchange Wiki
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!
If you aren’t an avid Scobleizer reader you might have missed the GooglePark cartoon series. Hysterical.
- Scoble goes to Google.
- The Inevitable Sequel — the Plot Sickens.
- The Umpire Strikes Back.
- The Conclusion
It just feels so real. Web 2.0 fans, beware the underpants gnomes.