Posts from VC & Technology

I really like how Tumblr publishes some key stats publicly every month in their own stylized dashboard.

  

I also like the way they foreshadow upcoming product features:

 

As the old saying goes, a picture is worth a thousand words.
 

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• Tumblr Hits Major Milestones, Plans to Start Generating Revenue (mashable.com)
• Tumblr Is Growing Fast: Perfect Tool for Quick Blogging (crenk.com)

A couple weeks ago I went down to Miami for Future of Web Apps (FOWA). It was a great event and I highly recommend it to web developers and entrepreneurs. I did a keynote talk and the next day I did a three and a half hour workshop. I knew the keynote was being recorded and I had that in my head as I was talking on the stage. I did not know the workshop was being recorded but it was.

After the workshop was over, Ryan Carson, the founder of Carsonified which puts on FOWA and a number of other interesting events, asked me if he could post the 3.5 hour workshop video. My immediate reaction was "hell no" but instead I said, "let me look at it first." 

On Friday I posted two videos that came from the talk I gave at InSITE last wednesday. The entire 1.5 hours of conversation was recorded and is available here. Again, I did not know that the entire talk including Q&A was going to be posted on the web and friday morning, I spent 1.5 hours of time I did not have watching each and every minute of that video to make sure it was cool to have it on the web.

If I seem paranoid about this stuff, I am. I watched what happened to my friend Mark Pincus when he said something highly candid and off the cuff last year in an impromptu talk to entrepreneurs that was unfortunately being filmed. Some entrepreneur asked Mark about keeping control of your startup and Mark said that the only sure way to do that is get revenues early. He went on to say that they were so focused on revenues in the early days of Zynga that they did some things he didn't like. He then mentioned the Zwinky toolbar and said he installed it on his machine and couldn't get it off. And then went on to say that he told his developer to take that lead gen offer down.

Of course, that's not what everyone saw when TechCrunch posted a clip from that unfortunate video. They just saw the comment about the Zwinky toolbar without the context. 

So when I see a video of me on the web, I watch the entire thing and look at every minute in that light. I am paranoid about someone taking a 30 second clip and leaving out the rest. If I see anything that is risky in that way, I ask them to take down the video or better yet I ask them not to put it up.

That's why I wasted 1.5 hours of my time on Friday morning at 5am watching a video of myself. And that's why I may have to waste 3.5 hours of my time watching my FOWA workshop at some point. I was highly candid in that FOWA workshop and asked people not to Twitter some things I said. That's how I can provide the most value to the people in attendance (as Mark was trying to do). So that FOWA workshop video is risky in my mind.

Of course, I can simply ask people not to videotape me or ask them not to post it on the web. But that's not a great option either. There were thirty or forty people in the room at the InSITE talk the other night. Almost 1000 people have watched the first video on YouTube and over fifty have watched every single one of them. That's the power of the web, to reach way more people that can attend in person.

So that's the world we have to live in now. One that assumes when you talk in public, it will be recorded and posted on the web. One that assumes that someone will look at that video and seek an opportunity to pull a clip out of context and post it. And so if you do a lot of public speaking, you simply need to speak with that in mind. It makes me feel like a politician to tell you the truth. It's a horrible feeling but honestly I don't know if there is any other way.

There's been a battle going on between the "broadcast" TV networks and the cable networks over something called "retransmission fees." Cable networks have traditionally paid for "cable network programming" but not "over the air programming." But that is changing and the broadcast TV networks are demanding these retransmission fees from the cable companies.

At the end of last year, there was a fight between Fox and Time Warner Cable that made some headlines. It was settled on new year's day.

The latest spat is between ABC/Disney and Cablevision and it has turned personal, pitting Disney's chief Bob Iger against Cablevision's chief James Dolan. 

Of course, the losers in all of these spats are the consumers who get jerked around and risk missing things they love like the college bowl games or the Oscars. Most of these spats get settled at the last minute, but the whole exercise gives everyone a black eye.

The reason we have to put up with nonsense like this is that cable providers are still operating near monopolies. There are other options like satellite TV or services like Verizon FIOS. But most consumers get their video services from the incumbent cable provider.

And when a content provider, like ABC or Fox, wants to get more money for its programming and the cable company balks, it is the cable company's customers who are stuck.

There's a better way and we'll have it someday, but not soon enough for me. We'll go "over the top" for our video programming, getting it via a broadband connection to the Internet. Content owners like Fox and ABC will negotiate distribution deals with dozens, maybe hundreds of providers. And we'll be able to subscribe to one or more of those providers over the internet through platforms like Apple TV, our portfolio company Boxee, and many others.

When ABC wants more money from it's distribution partners in this scenario, some will pay up and others will not. And if you want to watch the Oscars, you'll simply be able to drop your subscription to one provider, light up another, and/or possibly get it directly from ABC if you want to.

Most industries work that way today. Walmart might stop carrying Puma Sneakers but you can certainly find them in hundreds of other physical and online stores if you want a sweet pair of Clydes. A three tier distribution model from the manufacturer to the distributor to the retailer works very well to insure that there is always product available in the market to customers who want it. And I believe we are going to see that model develop in the TV (and Film) business soon.

InSITE is a group of business and law school students from Columbia and NYU who provide free consulting services to startup companies. I’m a big fan of InSITE for a bunch of reasons but particularly because it is one of the few programs that I am aware of that operates across school networks here in NYC. We need more of that.

Once a year, I spend an hour and a half talking to the InSITE group and then we go out for beers afterward. It’s a fun night and I really look forward to it. We did that on Wednesday night of this week. 

The talk was recorded and I’ll embed two videos that capture my talk which lasted about 15 minutes. We did about an hour of Q&A and all of that was captured as well and is available on InSITE’s YouTube channel.

Here’s the first part of my talk where I talk about the venture capital business.

Here’s the second part of my talk where I talk about sectors that I’m excited about and a bit about NYC’s role in the tech/startup world.

Mark Suster, who writes the best VC blog out there right now, has a post about sitting on panels. He gives the following advice:

• Educate
• Entertain
• Discuss and Debate (have a dialog)
• Build Awareness of your firm/company/brand
• Make connections with your other panelists and follow-up with them
• Avoid panels that are too big
• Don't over promote
• Don't give a long winded intro
• Don't hog the microphone
• Don't try to moderate the panel

Excellent advice Mark. I agree with all of it. Read Mark's post for the details.

All that said, I really hate panels. I hate watching them and I hate being on them even more. I think it's a lazy way to participate in a conference. You show up, answer a few questions, sit up on the stage with a bunch of other people, and then go home.

I much prefer the 15-20 minute talk with Q&A afterward. I think I'd prefer even more a 10 minute talk with longer Q&A afterward.

Panels rarely turn into interesting discussions. If you want an interesting discussion, have someone good do an on-stage interview. I've done on stage interviews with people like John Battelle, John Heilemann, and Alan Murray and they are fantastic discussions. I'd like to do more of them.

I'm on record that I don't like big time conferences. Now I'm on record that I don't like panels.

But I do like small conferences focused on a particular group or sector. And I do like to see a short presentation or a well done interview and I also like to deliver them as well. I'd love to see more of all of those things.

There was a lot of noise in VC/startup land earlier this week about the Series Seed documents that can be used to close a seed round. Marc Andreessen told PE Hub:

It’s like open source software. If it’s developed by IBM, there’s no
reason for another company not to use it. The documents aren’t owned or
controlled by Fenwick. Fenwick isn’t getting paid for them. I don’t
think there’s a reason for another attorney not to use them, except if
they’re concerned over reduced billings. Lawyers have a financial
incentive to make things more complicated because they are paid more.

I'd like to differ with Marc on this one. First, as Brad Feld points out, there are now four sets of "open source" seed documents:

• TechStars Model Seed Funding Documents (by Cooley)
• Y Combinator Series AA Equity Financing Documents (by WSGR)
• Founders Institute Plain Preferred Term Sheet (by WSGR)
• Series Seed Financing Documents (by Fenwick & West)

I will add a fifth of sorts; Gunderson has set up a "Simple Series A" set of forms that our firm has used a few times. I am not aware that they have been published on the Internet yet though.

There are no shortage of "standard forms" out there. TechStars uses one set. Y Combinator uses another. Founders Institute uses a third. Andreessen Horowitz uses a fourth. And USV and other firms uses a fifth.

The problem, as Brad Feld points out, is that nobody has done the work to get all the various players in the room and standardize on one form. Ted Wang showed me the Series Seed documents last year and while I am hugely supportive of his intent here, I can't and won't get behind the Series Seed forms because they leave out some critical stuff that we simply won't do a deal without.

I guess it's like open source software in that there are many flavors of it out there. One project might choose MongoDB for their project. Another might choose Cassandra. A third might choose Hadoop. All will get the job done and all are open source. But each one has its strengths and weaknesses and there is no standard. That's ok with me as long as everyone understands it.

Charlie O'Donnell asked me last week about lessons I learned on my first venture capital investment. I'm not entirely sure what my first investment was but I know what my first board seat was. It was a company called Upgrade Corporation of America (UCA), founded by Jordan Levy and Ron Schreiber and located in Buffalo, NY.

 UCA was in the business of providing outsourced sales, fulfillment and tech support services to the desktop software business. Ron and Jordy had previously built the largest software distribution business and had sold it to Ingram. They saw their former customers like Lotus and Microsoft starting to offer upgrades to new versions of their software programs directly via telesales. And since those upgrade campaigns happened once a year, it was ideal to outsource the upgrade sales and fulfillment to a third party. That third party was UCA. It became a large business and was eventually sold to SOFTBANK Corporation of Japan. It was a very good investment.

I was in my early 30s at the time and the classic "wet behind the ears" VC. Ron and Jordy were concerned that I was going to give them all kinds of worthless advice because I didn't really understand the business like they did. I told this story a long time ago on this blog, so I'll just cut and paste the rest of it from the original post.

I went to the first board meeting. It was in Buffalo, NY and the two entrepreneurs were Ron Schreiber and Jordan Levy, both of whom have become good friends and great VCs.

After the meeting, Jordan took me aside and said "Freddy (he still calls me that), if you want us to listen to anything you say in these meetings, you are going to have to spend some serious time getting to know our business".

I guess Jordan and Ron didn't like the idea of some wet behind the ear VC trying to tell them how to run their business.

I quickly recognized that I had to earn the right to tell them what I thought they should do.

So a couple weeks later, I cleared my calendar for 2-3 days and flew to Buffalo.

Jordan had arranged for me to spend time in every part of the business, from help desk to finance to sales and everything else.

I rolled up my sleeves and got my hands dirty.

I met almost every employee and learned what each job entailed. I even did some of the jobs.

By the end of my stay in Buffalo that week, I had a much better idea of what the business was all about.

And it made me a much better Board member.

I have Jordan Levy to thank for that lesson. He forced me to really understand the business. And I've taken that lesson to heart in my career. I don't like to invest in businesses unless I really understand them. And when I invest in a business that I do understand, I like to "roll up my sleeves and get my hands dirty." I like to engage with the management team and help them build the business.

There is a fine line between "getting your hands dirty" and meddling. You have to let the entrepreneurs and management team operate the business and make all the key decisions. But that doesn't mean you can't help them. And to help them you need to understand the business. So roll up your sleeves and get your hands dirty and you'll be a better investor.

I posted about The Blue Sweater recently and said:

I have always believed in the power of entrepreneurs and for profit initiatives to change the world.

So I am really excited about an event next Thursday night where I get to talk more about that idea. Joining me will be Jacqueline Novogratz, author of The Blue Sweater, Roger Ehrenberg, Jacob Gray, and Scott Edward Anderson (aka greenskeptic). 

The event is being put on by goodcompany ventures, an incubator for "socially conscious entrepreneurs" and it will be held at Green Spaces, a co-working space in Tribeca for "environmental entrepreneurs."

If you'd like to attend, here's a link to the RSVP page. Tickets are $35. I hope to see some of you there. Should be an interesting discussion.

Facebook has received a patent on the idea of "Dynamically providing a news feed about a user of a social network."

As if this was a novel idea whenever the patent was filed. 

Here's a comment I read on the story linked to above:

This is weird news. I run a small local social community and also use some kind of newsfeed system. Yet the earliest version of my newsfeed dates from 2003, way before facebook’s feed. If they wanted to, they could easily crush me with this patent as I dont have the judical knowledge and financial power to enter a legal battle with facebook. The could close me down, although everyone would know that it’s only because they have this patent, not because I copied the newsfeed from them.

Weird news indeed. But not surprising. As another commenter on that story wrote, "Shoot, I’ll patent “friendship”." 

Software patents make no sense. Like music, art, and other creative pursuits, software is almost always derivative work. There is not a chance in hell that Facebook invented this idea. I am certain there have been social news feeds around for at least a decade or more. I am not going to spend the time finding all the prior art, but I am sure there are patent lawyers doing that already for various social networks who are now potential subjects of patent litigation from Facebook.

Don't take this post as a slam on Facebook. They have done an incredible job of executing on an entirely obvious idea. I was chatting this past week with a tech journalist who was in college when Facebook launched. She was not at Harvard but at another ivy league school. She told me that there were "facebooks" launching all over the ivy league that year. Facebook out executed everyone and took the market. That's how it is done. But they did not come up with the idea that "we should take a facebook and put it online". They simply did it better.

Same with social news feeds. They are the dominant provider of social news feeds in the world. Because they out executed everyone else. But not because they invented the idea. Giving them a patent on this idea is lunacy. But the whole idea of software patents is lunacy. We need to eliminate software patents and we need to do it now.