Posts from April 2005

I’ve been a LinkedIn member since late 2003.

LinkedIn is a service that allows you to post your bio/resume on the web and link to other professionals who are also on the service.

I have always been intrigued by the potential of the service but until recently the only time I used it was to accept or reject requests to link to me.  At one point over a year ago, I became frustrated by the amount of LinkedIn spam I was getting and posted on my frustration.  Reid Hoffman, LinkedIn’s CEO, commented on my post and promised some new protections to reduce LinkedIn spam.  He lived up to his promises and while I still get spammed, its not as frequent or as annoying as it once was.

Slowly but surely my network on LinkedIn has expanded.  I have been very strict about who I let into my network and I reject or ignore most of the requests.  But even so, I still have 49 connections, all with people I know well and respect.

So what changed?  Well we hired Charlie.  And we asked him to find some "off list" reference checks on a company we were looking at.  He went into LinkedIn and came back with a bunch of people we knew that we could call.  That blew me away. I am a huge fan of "off list" reference checks, particularly where we have a relationship that we can leverage into a candid conversation.

Then we wanted to help one of our companies do some hiring in a senior position.  Again, Charlie suggested LinkedIn. Within 10 minutes, he’d identified some really high quality candidates via LinkedIn.

So that got me thinking. What LinkedIn has built is this huge resume/bio database of high level professionals in the IT, Media, and Telecom sectors.  And connected everyone inside the database.  If you think of it in that way, its amazing what you can accomplish with it.

So we are big fans of LinkedIn now.  We are using it all the time for due diligence, hiring, contacts, relationships, etc.  Networking is one of the most important factors in deal sourcing and due diligence and LinkedIn is helping us do that.

If you are a LinkedIn member who never uses it (like I was), I suggest you give it a shot. And if you aren’t a LinkedIn member but do a lot of networking for your job, I suggest you become a member.

Now, in all of this activity we have been doing, we have never done anything that makes money for LinkedIn so I suspect they are still working on monetizing this vast database they’ve built. That is their challenge and I suspect they are up to it.  But for us, it has become a great tool.

This is my blog.  It is my thoughts, my links, and my work.

I have the right to do anything I want on this blog.

Generally speaking, I leave all the comments up with the exception of comment spam and blatantly offensive stuff.

But tonite, I deleted a comment from a person who posted a comment with a misleading name.

They used the name of a company that was mentioned on my blog.  A company that I respect.  They insinuated that they were from that company and the comment represented the thoughts of that company.  The CEO of that company asked that I take it down and I did.

If you want to leave a critical comment, that’s fine.

if you don’t like something I say, please say so.

But don’t hide behind some other company, person, or name.  Do it in your own name or some consistent handle.  I may not like what Hector has to say, but he’s consistent and he’s not hiding behind any fake name.  I respect what he has to say even though I don’t agree with it.

So, here is an addition to my comment policy. 

If you make a comment and sign it with a blatently false attribution, its coming down, regardless of the comment.  That’s lame stuff that has no place on my blog.

• John Battelle’s Searchblog: Open Media Network Launches
  (tags: bittorrent media video)
• John Battelle’s Searchblog: Also: Google Ads Are Coming to RSS
  (tags: feedburner rss)

I have been misquoted in the press.

And I hate it.

It is one of the most unpleasant experiences that I have ever had. 

You have to explain to everyone that you did not mean to call them "stupid" or some other painful thing.

And you have no good way of taking the misquote back.  Sure you can ask for a retraction, but we all know that is a lot of work for fairly little value when the damage has already been done.

So one of the things I love about blogging is the fact that I can recheck my words, edit them myself, and if I don’t like the way it came out, I can re-edit the post after it goes up.  I can be my own editor and there is nobody between me and the audience to mess it up.  And if it is messed up, its entirely my fault.

I like that so much that recently when a journalist called me to talk about VCs and blogging, I asked her if she could just read my blog and take quotes from there so that I did not have to talk to her. She said she couldn’t do that.  That’s too bad because it seemed like a great solution to me.

Yesterday, John Batelle felt that Saul Hansell misquoted him in a New York Times piece on Google’s new graphical ad program.  John had a new outlet to share his pain, his blog.  But an interesting thing happened.  Saul came and read John’s words and then commented on them. 

That’s progress on two fronts.  First, John can reach a sizeable audience with his own words to be clear about what he thinks about Google’s new program.  He doesn’t have to rely entirely on Saul to get them out to the market.  In fact, I didn’t read Saul’s piece, but I did read John’s post.

But also, there is a conversation happening about what John really meant.  And its a good one, without a lot of anger and hostility, and its up on the web for everyone to see.

That’s progress.

But I’d still prefer that journalists read my blog and quote from it instead of getting me on the phone and subjecting me to the risk of a misquote.  I guess that’s too much change to hope for.

A reader asked me an interesting question via email today that I thought I’d answer out loud on this blog.

He told me that he has a signed term sheet with a VC (congratulations to him) and asked if it is common for a VC firm to "pull" a term sheet.  This means that the VC firm decides, after signing a term sheet with a company, that it does not want to close the transaction.

Is it common?  No, not common.

Does it happen?  Yes, it does.

And for many reasons.  Some good, some bad.

We were taking a bit about this issue in our office yesterday.  When do we feel comfortable signing a term sheet with a company? 

Well, it depends. 

On an investment where we have a lot of market and product due diligence to do, we would not be comfortable signing a term sheet before we completed that work.  The same is true with background and reference checks on a management team we don’t know well.

On an investment where we really understand the market, the product/service, and know the team well, the diligence is primarily double checking the facts as described to us by the entrepreneur.  In this situation, we would move more quickly to a term sheet.

I guess that’s a roundabout way of saying we don’t want to mislead an entrepreneur by signing a term sheet when we still have concerns about the opportunity.  If we are sold on the opportunity and just need to do our own third party verification work, we’ll move more quickly because if there is a surprise, it means the entrepreneur misled us in some way and then a "pulled" term sheet is a fair and reasonable thing to do.

The other thing that leads to "pulled" term sheets is a hot deal or a hot market.  If a company is out raising capital and there are a lot of interested investors, the investors have an incentive to get a signed term sheet to "lock up" the deal.  In that instance, it is often the case that a VC firm signs a term sheet well before they have been able to do the required work.  And then they get in and do the work and find out they don’t want to do the investment or want to do it on different terms.

This is a bad thing for everyone involved.  So my advice in these situations is for the company to cool the situation by forcing the investors to get their work done before signing a term sheet.  And that may be hard advice to follow when the investor is waving the term sheet at an attractive price in the entrepreneur’s face. 

But I think it’s important for the entrepreneur to have confidence that a term sheet will get to close.  The best way I know to insure that happens is to wait until the VC firm has done its work and is completely comfortable with the investment before signing the term sheet.

It is not a bad idea for the entrepreneur to ask for a term sheet from the VC firm to understand the basic terms of the deal and then to sit on it while the VC firms does its work.  This can work to both sides’ advantage.  They both understand where the deal will get done but the commitment is not formalized until the work is completed.

There are also issues around "no shop" clauses in term sheets that are worth discussing.  Some term sheets require that the entrepreneur stop talking to other investors.  Some term sheets do not have this provision.

In my opinion, it is a sign of good faith on both sides to have a "no shop" in the term sheet.  But it means that both sides, including the VC firm (even though the "no shop" is only an obligation of the entrepreneur), are serious about getting to a close.

Even if the term sheet doesn’t have a "no shop" in it, the reality is that the entrepreneur is going to have their hands full getting a deal closed and is not likely to want to shop the deal around during that process.

So I think "no shops" are mostly just words to describe what is going to happen with or without them.  Term sheets are made to be taken seriously by both sides.  They should not be waved around like flags.  And they should not be signed without a serious committment by both sides to get the deal done.

• Expensive Clutter: The Next Inventory Problem
  (tags: advertising behavioral media tacoda)
• bpurcell.org – Converting Itunes protected files m4p to mp3 files
  (tags: apple music)
• John Martin’s Blog – Thoughts on del.icio.us
  (tags: delicious tags comscore)
• This is going to be BIG! – My 50 Favorite Movies
  (tags: movies)

I love The Eels.

Their new record comes out tomorrow and its called Blinking Lights and Other Revelations.

I’ve only heard one song off the record so far, its called Hey Man.

It’s my MP3 of the Week.

• Another hapless victim of e-mail overload
  (tags: emailoverload)
• Economist.com | The future of journalism
  (tags: advertising blogs classifieds newspapers media)
• Feeding Feedster with Scott Rafer: Tag Spam
  (tags: tagspam)

The Gotham Gal and I are normally in New Orleans for Jazzfest at this time of year but Passover and other things have gotten in the way this year and we’ll be missing it for the first time in five years.

I am listening to a great Rhapsody Jazzfest playlist.  No po boys and beer.  No sweat and sun.  No New Orleans.  But its the best I can do this year.