Posts from June 2005

There’s a little rap on my top 50 list, but not much.

Dr Dre’s on the list with The Chronic.

The Fugees are on the list with The Score.

But that’s it so far.

Well this week’s choice is from my favorite rapper, Eminem.

I have enjoyed everything that Eminem has done.

But the Eminem record that we always put on is The Eminem Show.

From the day it was released in mid 2002 until the end of 2003, we must have listened to this record about a hundred times.

People will say that this music isn’t for kids.  That’s probably true but we have never censored our kids from the real world and aren’t going to start now.  The show on our street corner beats Eminem’s show every day for grim reality.

The songs people talk about on this record are White America, Cleaning Out My Closet, Without Me, and Hallie’s Song.  All of them are great.

But my favorites are Business, Square Dance, Sing For the Moment (with the great sample of Aerosmith’s Dream On), and Daddy’s Gone Crazy.

Welcome to the top 50 Slim Shady.

Have you ever lost a login because you didn’t write it down and the cookie that stored it for you was wiped by a spyware removal product?

Have you ever had to re-enter all of your credit card information into an ecommerce site you use all the time because the cookie that stored it for you was wiped by a spyware removal product?

Have you ever had to re-personalize your start page because the cookie that stored the information for you was wiped by a spyware removal product?

All three of these things have happened to me enough times that I have stopped using spyware removal products and instead rely on a personal firewall to keep spyware off my computer in the frst place.

The spyware removal software companies are getting a total free pass on this bullshit behavior because they are percieved as the "good guys" who are protecting the consumer.

Well I will tell you all something. They aren’t good guys and I am pissed off at them.

They know they’ve got an issue though and they are doing something about it.  They are asking the government (starting in California) to legislate this free pass into law with something called a "Good Samaritan" provision.

Good Samaratin my ass.

If the politicians are dumb enough to give them this free pass, they should have all their cookies wiped every morning at 2am for the rest of their lives.

Cookies may have privacy issues, but the answer is not to let spyware software companies wipe them without any liability.

I want my cookies protected.  I want them to stay on my computer, unless I choose to take them off.

If you agree with me, sign up to SafeCount and let the politicians know that we aren’t going to stand for such stupidity.

• MaxDelivery.com – Home
  (tags: food nyc delivery movie)

They did that in the office yesterday.

Everyone seems to think I’ve lost it over the promise of podcasting.

Sure its a niche inside a niche inside a niche.

But so was the homebrew computer club in the mid 70s.

Here’s how I see it:

iTunes is going to include a podcast aggregator in the next version, due out this summer.  Then everyone with an iPod is going to be able to get podcasts. That’s a lot of people, probably north of 6 million people by now.

There are a growing number of places you can record, store, and publish podcasts online; Odeo, LibSyn (no recording tools yet), ClickCaster, etc, etc.   I wouldn’t recommend trying to do this in TypePad, they just haven’t made podcasting easy enough yet.

While its not as simple to create a podcast as it is to create a blog, I think it will be before the end of the year.

So, you’ll have millions of people creating podcasts and tens of millions of people being able to recieve them simply in their primary music application.

That seems to be a recipe for something more than a niche inside a niche inside a niche.

Now let’s talk about the applications.

I went on a bike ride today.

The first thing I listened to was the most recent Mass Hysteria podcast.  This is a fantastic podcast.  I’ve written about it many times now.  Paul and Janine talk about their family and their life and play music. They played four songs on this podcast, all of which I have never heard, and all of which were great.  Really great.  So great I am going to have to go out and buy four CDs now.

Mass Hysteria is so good that a cool Boston radio station, like 88.9 (WERS) or 89.7 (WGBH), somewhere left on the dial, should pick it up.

And I am sure there are literally hundreds of shows like it.

While I am on the subject of traditional radio taking advantage of podcasting, let me suggest that NPR pick up Down In The Flood.  I think Jason’s tour of american roots music would be a huge hit on NPR.

Then there was the experience of listening to my "elevator pitch" podcasts on the way back from the GW Bridge.  I heard two solid pitches.  Please send more.

Everyone spends time in transit, whether its on the train, subway, car, or walking to work (like I do).  That is a time when most people listen to some sort of audio programming.

If you take the soon to be mass market availability of podcasts, the really high quality of some of them, the massive peer production economies, and the new applications that can evolve, you’ve got something really interesting.

That’s why I am a podhead.

I was a teenager in the late 70s and my musical and cultural tastes are a reflection of that.  Although I was only tangentially impacted by the skateboard culture, it had a much bigger imact on my younger brother Ted (aka Jackson) and his buddies.

Some of those guys comment often on this blog and one of them, Pat, uses Tony Alva as his handle when he comments on this blog and others.  That shows you how big an impact the skateboard culture had on those guys.

We went to see Lords of Dogtown last night.  We took the whole family.  It’s a great movie and really explains how these kids invented modern skateboarding and the impact that it had on them and their lives.

And the soundtrack is fantastic.  It’s worth seeing the movie just for that alone.

If you remember the first time you saw polyurethane wheels, go see this movie.

I’ve come to realize that a lot of young people who are just starting out in the business world and have an interest in venture capital read this blog. I love that this blog can be a place where they can learn something.

I also realize that many of them struggle with the choice about whether to get an MBA or not.

I think MBAs are worth getting if you want to make a serious career change or need to take a couple years to figure out what you want to do with your business career.  However, if you are sure about what you want to do and are on a track that can get you there, I think MBAs are less useful.

I went to business school because I wanted to be a VC when I got out of college and everywhere I asked, I was told that I needed an MBA.  So I went and got one. I went to Wharton which is one of the top schools and I had a good experience there.

But it wasn’t like MIT, where I attended undergraduate.  At MIT, I learned so much that I could never blog all of it.

I learned five things in business school.  They are five important things, but there are only five that I can list.

I told them to Charlie a couple weeks ago and he seemed to get something out of hearing the list so I figure others might as well.

Here they are in no particular order:

1 – A dollar today is worth more than a dollar tomorrow. I knew about interest rates and such before I went to business school, but the concept of the time value of money and present values were foriegn to me until I got my MBA.

2 – You will make more money if you take more risk.   I did not understand that there was an explicit relationship between risk taking and expected return before I went to business school.  I do now 🙂

3 – You can value an asset if you know its cash flows, the timing of them, and can quantify the risks of acheiving those cash flows.  The whole area of the capital asset pricing model and modern portfolio theory was my second favorite thing I learned at business school.  It made sense to me and given my engineering background, I found the math around these theories fascinating.  I don’t use the formulas very much any more, but my brain is now hard wired with these theories and I don’t think of value any other way and never will.

4 – Markets are made up of speculators and hedgers.  You can’t have one without the other.  Speculators take risk and hedgers reduce risk.  You can do some amazing financial magic by mixing and matching these concepts.  I loved speculative markets. It was by far my favorite class at business school and it is the one class that I find myself going back to regularly for inspiration.

5 – The best price to sell something isn’t always the lowest price.  My favorite case study was the champagne producer who couldn’t sell his product in the US until he tripled the price. Then his sales went through the roof.  Tom Evslin has a post on this topic on his blog today and it was the inspiration for this post.

That’s it. Two years and who knows how much money got me five concepts.

But they are a big five concepts.  I find that my MBA gave me incredibly strong fundamentals in finance that I use every day (at work and in my personal life).

I am glad that I went to business school but I also recognize that its not a "must" for the venture business or any other business. 

I honestly don’t look to see if someone has an MBA when I look at a resume.  I look at the track record and the person, not the pedigree.

• Who Will Google Buy Next? || kuro5hin.org
  (tags: google read_later delicious)
• Finally – An RSS Feed for My VC and Technology Posts
  (tags: avc/vc/tech)
• Fall 2005 VON – Voice on the Net – brought to you by pulver.com VON Events
  (tags: voip events)

This blog focuses a lot more on technologies and markets than the people side of the venture capital business, but people are by far the most important aspect of an investment opportunity.

The person who gave me more cliches than anyone else was a partner at my first venture capital firm, Bliss McCrum.  He was the king of the cliche.

And he had a saying about investing with bad people that I find myself using all the time.

Bliss would say, "If you lie down with dogs, you’ll come up with fleas".

If I look back at the biggest mistakes of my career, and there have been plenty, it’s pretty clear that investing with bad people, no matter how good the opportunity was, has been a bad move.

There is this common view that if the VCs don’t like the management, they’ll simply replace them.  It’s not that easy.  You can do that, but it takes a lot of time and energy to make a management change. And it can be expensive in terms of the carnage that a management change can cause in the company culture and focus.

And the really bad people (the dogs in Bliss’ cliche) are the hardest to get rid of. They tend to hire weak people all around them and manage the board instead of managing the company. It’s often too late to save the company by the time the problems are well understood by the Board.

And then there are the issues of fraud and unethical business practices.  If you invest in a company and join the Board, you are putting your reputation into the mix (lying down with dogs).  If the management is cooking the books or ripping off their customers or lying to wall street, you’ll be sucked into it along with them (coming up with fleas).

There are things you can do to protect yourself (D&O insurance), getting good lawyyers, conducting an investigation, firing the management, etc, but by then the damage is done and you are screwed.  Trust me, I’ve been there.

So, the best thing to do is avoid bad people at all cost.  It has gotten to the point that we’ll pass on a deal if we have even the slightest hint that there are people issues.  It’s just not worth taking the risk on the people equation.  We’ll take risk on technologies and markets all day long, but not on people.

Because if you lie down with dogs, you’ll come up with fleas.

UPDATE: As Hank says in the comments to this post, the same rule applies to entrepreneurs raising capital. Not everyone in the venture capital business is on the up and up and you need to do your diligence.

• Tracking Dealflow with Web Applications
  (tags: VC read_later dealflow)
• Introducing: The VC Channel
  Cool – One RSS feed for all the VC blogs
  (tags: VC blogs rss)
• Jeff Tweedy – Outta Print Outta Site – – Love and Mercy live Golden Smog.mp3 (audio/mpeg Object)
  (tags: for:jdawg)