Posts from January 2004

New Music (Continued)

Kudos to Jason Kottke for turning me on to Broken Social Scene and their great album, You Forgot It In People.

This album is fantastic. 2003 was a great year for music and this album is up there with the best and would be in my top 10 too. Even though I didn’t buy it until 2004.

It’s hard to describe, a little like the Flaming Lips, a little like The Strokes. But not that much like either. If you like alternative pop music, just get it and listen.

#My Music

Dean vs. Clark (Continued)

I’ve been saying the democratic race is between Dean and Clark. Well I may be wrong. It looks like Kerry and possibly Edwards are still in it. Kery in particular has been picking up a lot of steam over the past week in Iowa and New Hampshire.

Although I think the NY Post is a terribly slanted publication, I am pointing to a piece written by John Podhoretz in yesteday’s Post. John’s analysis shows that Dean is slipping and there are a number of candidates who can beat him.

Another interesting thing to look at is the ARG New Hampshire tracking poll which shows Dean’s lead slipping and Clark and Kerry gaining quickly.

If Kerry wins Iowa, and that appears to be a real possibility now, and Clark, Dean, and Kerry come in a three way tie in NH, then its not Dean vs Clark anymore, its Dean vs Clark vs Kerry.

None of this changes my conviction that Wes Clark is the best guy in the race and the most likely to beat Bush. But in many ways Kerry is a lot better than Dean and I think democrats are waking up to that fact this week.

#Politics

Overfunding Companies

The biggest problem facing the venture capital business these days is that we can’t seem to stop overfunding businesses. The prevailing sentiment seems to be if its a good deal, let’s put in as much money as we can. Well I think that’s crazy and I wish we’d stop doing this.

I’ve got an investment in a really solid company. The management is smart. They’ve built a business that has a bunch of happy customers and revenues are doubling every year. They’ve done all this on less than $3 million in total investment. They probably need to do one more round of financing before they’ve got the business to the point where it can finance itself with profits. We were thinking that we’d raise maybe $4 million just to be sure we had enough money.

Well along comes a competitor who knocks off our business plan. That’s allright with me. This is capitalism. May the best company win. But today I heard that this knockoff competitor is in the market raising $20 million. For what purpose, I’ve got no idea. Maybe they can’t figure out how to build a business with less than that. Or maybe the VCs just want to pour a lot of money into this “big winner” they’ve got on their hands. Who knows why they want to do this, but I think its crazy.

I sure hope our management team doesn’t get spooked by all this money their competitor is going to raise. Because my experience tells me that more money doesn’t usually translate into a better business. In fact, most of the time more money has translated into a worse business. Sure you need enough to do what matters, but too much money leads to all kinds of mistakes that I expect our competitor will end up making.

Less is more in my mind. I am in the return on investment business. It’s always easier to make a good return when you have less money at work. And I think if you look back at the way the venture business operated in 70s and 80s, you’ll see that most of the really huge successes were built on relatively small amounts of capital invested. I think we need to return to that model. But its going to be hard if this overfunding craze doesn’t stop.

#VC & Technology

Bush In 30 Seconds (Cont)

Following up on my previous post on the MoveOn ads, they have selected a winner. It’s called Child’s Play and it wasn’t one of my favorites, but it’s a good ad that raises an important issue about the ridiculous budget deficits that the Bush Administration is running up. I guess the Bush Administration doesn’t care about defecits because as Dick Cheney told Paul O’Neill, “Reagan proved that deficits don’t matter”.

Well there is more to the story. Jeff Jarvis points to a story in Ad Age that says that CBS may not run the ad. That’s a travesty if that happens. This ad is the winner of a contest that was of the people, by the people, and for the people. As I said in my previous post, “These ads were written and filmed by citizens like you and me who are expressing their feelings about our political leadership. This is democracy in the age of digital video and the Internet.”

If you agree with me, post your thoughts on your blog and spread the word.

#Politics

You Are Only A First Time CEO Once

I heard myself say this yesterday at a Board meeting. It sounded kind of silly coming out of my mouth, but after thinking about it, I thought I’d expand a bit on it.

The hardest job in management is the “first time CEO”. I have absolutely no data on this, but I suspect that at least 75% of first time CEO’s fail at some level. Many get fired. Many go down with the ship when it sinks. Some quit. Many sell their businesses before they’ve realized their full potential because they just can’t figure out how to do the job right.

But in venture capitalism, among the most pure forms of capitalism there is, failure isn’t all bad. Because, as i said yesterday, “you are only a first time CEO once”. Most talented business people come up the learning curve quickly. And the next time, they don’t make the same mistakes. They move faster. They listen better. They spend less. They hire better. The list goes on and on.

So, what does this mean for VCs? It means back serial entrpreneurs who have done it before. But if you can’t do that, and are backing a first time CEO, recognize the risks of that. Mentor, coach, and pay a lot more attention.

What does this mean for entrepreneurs and managers? It means that the first time you run a business, you should admit what you are up against. Don’t let ego get in the way. Ask for help from your board and get coaching and mentoring. And recognize that you may fail at some level. And don’t let the fear of failure get in the way. Because failure isn’t fatal. It may well be a required rite of passage.

#VC & Technology

Digital Radio - The First Sale

This week in Cedar Rapids, IA, something more than presidential politics was going on.

The first digital radio was sold – to a 25 year old engineer.

The first song he listened to was, predictably, Hey Ya!

Check out CNN’s coverage of the story for a cool picture of the Kenwood KTC-HR 100 radio. Sure the sound is better, but the real deal with digital radio is going to be the radios. They will be able to do so much more.

#VC & Technology

Alternative Energy

I spent some time this week learning about alternative energy investment opportunities. Now I don’t really know very much about this subject and I certainly won’t be investing professionally in alternative energy any time soon, but I might make some personal investments because I think its a very interesting area with a lot of promise.

I was visited yesterday by a good friend who is a silicon valley serial entrepreneur. He was way out in front of the Internet and saw the need for things like content delivery systems, spam filters, and a host of other critical technologies. This guy is a real money maker. And he is spending all of his time on alternative energy now.

He’s looking at and investing in new and better ways to make photovoltaic cells (solar power cells), ideas to make wind power work across larger geographic distances, energy transportation systems, etc. Listening to him, I was struck that when these ideas turn into reality (and I am convinced that they will – it’s just a matter of time), our world will change dramatically and the owners of these technologies will benefit enormously.

Earlier in the week, I sat in on a pitch by a company that takes plastic waste from waste haulers and using a proprietary chemical process, turns it into diesel fuel. The plastic that is used in the process is not currently recyclable and the result is that less plastic ends up in dumps and less oil needs to be imported. That’s a lot of good that comes out of this new technology.

If you think that the world will eventually run out of oil – I do – and if you don’t want to go back to the stone ages – I don’t – and if you think that there are ways to use technology to solve this problem – I do – then Alternative Energy seems like critical technology. I have so much faith in the brains of the engineers and scientists of our world that I am sure we’ve solve these problems. The only risk is timing. And that’s a big one.

#VC & Technology

Email

As I’ve said in my previous posts on this subject, something is changing in the email business. Spam filters are starting to work. And there’s a lot of opportunity in helping legitimate marketers get the mail through.

I am happy to see that David Kirkpatrick is making the exact same point in his most recent Fast Forward column.

#VC & Technology

iPod Colors

These things look great.

I love the Green.

My daughter likes Blue.

My wife things Blue will be the best seller.

What do you think?

1000 songs on a device the size of a business card. Wow!

#My Music