Entrepreneurship Blog

Lessons About Not Getting Acquired

2010-08-27T18:00:00.000-07:00

Wow, very interesting post by Gleb over at Backblaze about the ups and downs of almost getting acquired. If you work at or are interested in startups, it really is a must read.

Double Your Money w/Google? ...I doubt it

2010-05-28T20:12:00.000-07:00

Google recently claimed to have generated $54B in economic activity last year in the United States. In coming up with this figure, one of their assumptions was that for every $1 spent on AdWords advertisers generated $2 in sales. I just don't buy that. There are way too many crappy ad campaigns out there, often without even an action on the landing page. The prospective customer is going to have to be pretty proactive if they don't have a clear action to take. Most advertising just seems sloppy and I suspect has a negative ROI on average.

Maybe its Pitching from the Stretch?

2010-05-19T12:54:00.000-07:00

In a post earlier this month, I wondered Why does batting average go down by number of outs in an inning? Since the average plate appearances must go up with each out, the likelihood of having runners on base must go up as well. If pitchers are more effective pitching from the stretch, which they do with runners on base, that would explain the decline in batting average. I'll have to poke around the web and see I can get ERA, WHIP and opponents batting stats for pitcher in the stretch vs. the full wind up.

If they are better, I wonder if we'll ever pitchers pitching from the stretch exclusively. I know Lincecum recently pitched from the stretch w/o runners on base, but that had more to do with him finding his mechanics in a game where he felt out of rhythm.

Home Microcell Towers... No Thanks

2010-05-18T15:48:00.000-07:00

Over the past several months I've gotten a number of promotions from AT&T touting their microcell devices, which are designed to improve cell phone reception in a small areas such as a home or office. AT&T service on my iPhone is terrible in my house, which is an annoying problem that I'd like to solve. However, these microcell offers are kind of irritating.

Ultimately, health is my biggest concern with the microcell. If standard cell towers have been linked to cancer, why would I want a miniature one in my home? I don't know much about the health issues, but they do linger in the back of my mind regarding microcells.

As a frustrated customer, I feel like poor coverage is AT&T's problem and the microcell solution is an effort to position network holes as my responsibility to fix. I'm generally a results oriented person (or at least try to be) so the blame game wouldn't normally be that important to me, but these feelings are exacerbated by AT&T seemingly attempting to make money off my patching of their network.

AT&T will sell me the microcell device for $150. If I'm not mistaken the device works by broadcasting a cell signal that is converted into VOIP. This means that the microcell is using my networks' bandwidth. While I certainly don't use all of my bandwidth all the time, VOIP is bandwidth intensive and call quality quickly degrades when it gets tight, so in addition to the cost of the device, I may need to buy more bandwidth.

If the microcell is offloading traffic from AT&T cell towers near my home to my home network, shouldn't my calls be free? Well, only if you pay $20/mo for unlimited microcell calling. I guess I don't mind using minutes from existing plan, but, for me, an extra $20/mo would never work out as a good value considering that most of my calls at home are nights and weekends anyway.

Maybe I'm being a little harsh on AT&T with this last point, but $20/mo really feels like they are trying to profit from their network problem. If I'm going to be forced to buy the device for $150, go through the hassle of setting it up in my home, risk getting cancer from it and provide bandwidth I want the unlimited microcell minutes to clearly be an outstanding value. Free would of course be ideal, but I could probably be satisfied with $5/mo. If MagicJack can provide unlimited VOIP calling for $20/year, I definitely don't think AT&T should be charging $20/mo.

Admittedly, I don't know what AT&T's costs are on providing microcells, but it feels more like a profit-center than a loss-leader to me. Customers that need microcells are probably unhappy with their AT&T service. Microcells could be great customer retention tool, but getting bombarded with marketing materials asking me to spend money to fix their problem is just building more frustration on my end.

Interesting Baseball Question

2010-05-03T01:35:00.000-07:00

Why does batting average go down by number of outs in an inning? In 2009, MLB batting average by out was:

.271 - No Outs
.267 - 1 Out
.248 - 2 Outs

I thought maybe it was a fluke, but in 2008 the splits were:

.275 - No Outs
.267 - 1 out
.249 - 2 Outs

and 2007:

.276 - No Outs
.273 - 1 out
.254 - 2 Outs

I really have no idea why hitters do so much worse with two outs. Concentration comes to mind, but wouldn't that play equally to pitcher and hitters?

Are You Our Sea Otter Winner?

2010-04-29T22:41:00.000-07:00

A few weeks ago I attended the Sea Otter Classic biking festival. As a marketing guy, I'm always keeping my eye out for creative ways to get folks attention so I was pleased to get an email yesterday titled "Are You Our Sea Otter Winner?" At the festival, I had signed up for a raffle with Cog Wild, an Oregon mountain biking tour company, and having run expo booths at IT conferences, I know the challenge of turning contacts collected into qualified leads. The conference attendees get carpet-bombed with marketing email by conference vendors after the event ends so its tough to make your company stand out. I was pretty sure that I wasn't the winner of Cog Wild's raffle, but with a teaser like "Are You Our Sea Otter Winner?" how could I not open the email to see?

I've always felt that the subject line of a marketing email message is the most important part because its a go or no-go point for the recipient... if they don't open the message it doesn't matter how compelling the content is. I also liked that Cog Wild referenced Sea Otter in the subject line rather than themselves. To be honest, I probably wouldn't have remembered Cog Wild by name, but I did remember entering several raffles at the Sea Otter Classic so it was a smart and humble decision on their part that got me to their next step. Don't get me wrong, the subject line is just the first step -- the content and actions in the message body matter -- and the actual "Are You Our Sea Otter Winner?" copy could be refined, but I love the concept and will probably use it the next time I run a raffle at an expo booth.

Brian Sabean: Please don't Bring in Uggla, LaRoche, Beltre or DeRosa

2009-12-19T16:16:00.000-08:00

Brian Sabean just doesn't understand the concept of replacement value. Blowing through the Giants salary budget on mediocre veterans is the hallmark of his tenure as GM in San Francisco. Mid-level veteran free agents rarely offer good value because their production typically isn't much better than younger cheaper players. Unfortunately, Sabean is at it again this year.

In his quest to improve the San Francisco Giants offense, Sabean has been consistently linked to Mark DeRosa, Adam LaRoche, Adrian Beltre and Dan Uggla in the hot stove rumor mills. While it would be nice to add some pop to the meat of the Giants lineup, none of these guys are worth bringing in because they just don't offer enough additional value beyond Travis Ishikawa.

Ishikawa is younger, cheaper and plays gold glove caliber defense. By adding an extra 200 ABs to project a full season, Ishikawa would have produced 16 2Bs, 15HRs and 63 RBIs. Factor in the AT&T power drain into DeRosa, LaRoche Beltre or Uggla and they all project to about 70-80 RBIs and 17-23 HRs, which just isn't a big improvement over a full season of Ishikawa. Ishikawa makes $400K. Given the salary demands (and prospects in the case of trading for Uggla), how could anyone possibly justify any these players for such small incremental benefits? I guess old habbits die hard.

	Bats	Age	Salary	AB	2B	HR	RBI	Walks	SO	AVG	OBP	SLG	OPS
Ishikawa	L	26	400K	326	10	9	39	33	89	0.261	0.329	0.387	0.715
DeRosa	R	34	$6-7M*	515	23	23	78	48	121	0.250	0.319	0.433	0.752
LaRoche	L	30	$10.5M*	555	38	25	83	81	142	0.277	0.355	0.488	0.843
Uggla	R	29	$5.35M**	564	27	31	90	96	150	0.243	0.354	0.459	0.813
Beltre	R	30	$10M*	449	27	8	44	20	74	0.265	0.304	0.379	0.683

--
*Rumored salary demands
**Uggla earned $5.35M in '09 but will likely receive a raise from arbitration

Free MiniDV Conversion From KinKast

2009-12-18T11:45:00.000-08:00

A couple friends of mine, Raul and Tom, recently started KinKast, a family video-sharing website. KinKast was designed for parents to make privately sharing video memories as-easy-as-123 with some neat features that minimize the need to edit footage.

In order to drum-up some initial awareness KinKast has an offer you really can't refuse: Free MiniDV conversion. Once the tapes are converted to .mp4, they can be downloaded from KinKast.com. KinKast is also throwing in 6 months free of their video hosting and sharing service so after the MiniDVs are converted, they can be easily and privately shared grandma, grandpa and Uncle Joe.

I gotta give Raul and Tom their props, there really are no catches with this offer...

No commitment to buy anything
No credit card required
No annoying accounts you have to remember to cancel
KinKast even pays to ship your MiniDV tapes back to you

Of course, they hope you'll love KinKast enough that you'll want to continue using their hosting/sharing service beyond the free 6 months, but they aren't trying to trick anyone into buying something they don't really want. Anyone whose got family memories trapped gathering dust in MiniDV tapes, would be crazy not to take advantage of this offer.

Dan Uggla is Pedro Feliz

2009-12-17T22:11:00.000-08:00

Dan Uggla won't help the Giants. Although the Gigantes clearly need to improve their offense, they would generate more wins from consistent hitters rather than a power bat. The Giants pitching is so good that consistently manufacturing 2-3 runs will win a lot of games. Uggla hits about 1 HR per week. How many games is that going to win?

To make matters worse, HRs are expensive and the Giants don't have the budgets to bid with the big boys so it imperative that Brian Sabean spends smarter.

What Uggla brings to the table is some pop (31 HRs) and the ability to draw walks, but don't confuse that for plate discipline... he struck out 150 times last year. Furthermore, Uggla absolutely cannot hit left handed pitching, his terrible .243 batting average falls to .225 with runners in scoring position and an abysmal .153 in late innings of close games. Now, about those HRs... Uggla hit twice as many at home as he did on the road, which won't translate well at the pitcher friendly AT&T Park. In fact, if one figures AT&T Park takes 5-10 HRs from Uggla his numbers start to look a lot like Pedro Feliz from 2004-7.

The Giants wouldn't even offer a contract to Pedro Feliz so why does it make any sense to trade a prospect for Uggla?

Sabean's Wasted $52M

2009-12-17T21:09:00.001-08:00

Its very frustrating that Brian Sabean got a new 2 year contract at the end of the season. As the sum of many years of terrible signings, Sabean spent 59% of the Giants 2009 payroll ($88M) on the following players:

$18.5M - Barry Zito
$9.6M - Aaron Rowand
$9.25M - Randy Winn
$8M - Edgar Renteria
$6M - Dave Roberts

And what did the Giants get? Well, Zito looked solid for a back of the rotation starter, which sadly is a win these days, but the hitters averaged a combined .257 avg, 7 HRs and 54 RBIs and 95 strikeouts.

To put this in perspective, if Sabean hadn't wasted the $52M the Giants could have signed all 3 of this years top free agents: John Lackey ($16.5M), Matt Holliday ($16M) and Jason Bay ($16M). Giants fans complain that ownership doesn't spend enough on player salaries but clearly that isn't the real problem.

Come to think of it Sabean's best signing was probably Omar Vizquel who was 38 at the time.

Does Wall Street Really Need More Regulation?

2009-12-16T18:12:00.000-08:00

Obama recently said on 60 minutes that Wall Street's irresponsibility caused the financial meltdown and therefore financial regulation is necessary to prevent additional crises. This might be true, but there are scenarios were it isn't.

For example, if the late-90's financial deregulation accelerated growth rates, its possible that 10 years later the increased gains are larger than the losses from the crash. In other words, if deregulation increased growth rates from 1% to 6.5%, but also led to a 40% crash after 10 years, the overall growth achieved would be about equal. Presumably then, deregulation (and its crashes) would be the better option if it pushed growth above 6.5%.

Personally, I have no idea how much deregulation accelerated growth and its definitely possible that regulation in response to the '08 financial meltdown could be smart and targeted enough to find a better middle ground of some increased growth with fewer crashes. However, its equally possible that exaggerated boom-and-bust cycles are an unavoidable reality of globalization. Furthermore, with markets having rallied dramatically since March, the crash downsides don't seem as bad today as they did last year.

There is little doubt that TARP helped avoid a full-blown meltdown, that government stimulus dollars aided the stock market recovery (though to what degree won't be clear for years) and that a double-dip is still possible. However, from where we stand today, the S&P500 is only down 15% since its August '08 pre-meltdown value, which suggests that governance* worked on some level. If the old system succeeded enough to pull the economy back from the brink, its less clear what new regulations might be beneficial.

The point of this post is not to argue against Wall Street regulation, but rather to demonstrate that the issue is not clear cut and that a crash doesn't always mean regulation is the right solution. However, what is really scary is that American politicians don't seem to be considering any of these possibilities or even comprehending the issue at a basic level. Unfortunately, the increasing complexity of economic issues, such as financial regulations, makes it virtually impossible for voters to hold elected officials responsible, which is as big a threat as democracy has ever faced.

*Governance is both formal and informal, which isn't the same as government/regulation, which is inherently formal

Beat the Eagles and 49ers Make the Playoffs

2009-12-14T23:53:00.000-08:00

The 49ers victory over the Arizona Cardinals was huge this evening. Combined with the Giants loss to the Eagles last night, the 49ers hopes of making the playoffs are much brighter than they appear at first glance. In the NFL, the cards don't often fall the way they are supposed to, but if the 49ers can pull of an upset against Philly, and favorites win out in the Giants, Cowboys and Falcons games the Niners nab the last wildcard slot into the playoffs. Here is how...

Cardinals (Remaining schedule: Lions, Rams & Packers)
The 49ers NFC West hopes are finished. The head-to-head sweep gives the Cardinals the tie-breaker, which means they have to go 0-3 for the 49ers to have a chance at catching them and there's no way Arizona loses to both the Lions and the Rams.
Projected Finish: 10-6

49ers (Remaining schedule: Eagles, Lions & Rams)
The 49ers need to win their remaining 3 games. If they don't, its game over. That said, of their 3 games, with the Rams and Lions a combined 3-23, the Eagles are the only difficult opponent left. If the 49ers beat the Eagles they should beat the Lions and Rams too.
Projected Finish: 9-7

Cowboys (Remaining schedule: Saints, Redskins, & Eagles)
If the season ended today, the Cowboys 8 wins would claim the final NFC wild card spot, however, they are notoriously bad in December and their schedule is probably the most difficult of any of the teams in the playoff hunt. The Cowboys should be favored against the Redskins but they will be big underdogs against the Saints and the Eagles. The Saints and Eagles are both pretty much in the playoffs so they may begin to ease off the gas pedal, but luckily for the 49ers, the Saints, who still need a win to lock-up home field advantage, play the Cowboys next week. While the Eagles will likely have locked up the NFC East by the last week in the season, when they face the Cowboys, they may still have seeding on the line. The difference between 3 vs. 4 seeding in the playoffs only has home-field advantage implications if the 3 and 4 seeds meet in the NFC Championship game but on the other hand the Cowboys just don't ever seem to win the games they need to in the Tony Romo era.
Projected Finish: 9-7

Giants (Remaining schedule: Redskins, Panthers & Vikings)
At 7-6, the Giants currently sit one game ahead of the 49ers, but their 5-0 start masks their 2-6 performance since. For 49ers fans, the Vikings game at the end of the season is scary. Its really hard to see the Vikings playing the aging Brett Farve much if they have nothing on the line and being 2 games behind the Saints and 2 games ahead of the Eagles, they are virtually assured of the 2nd seed. But since this all predicated on a little luck and the favorites winning out...
Projected Finish: 9-7

Falcons (Remaining schedule: Jets, Bills & Bucs)
At 6-6, the Falcons are effectively 1 game ahead of the 49ers because they won the head-to-head game. The Falcons have 3 winnable games left, but with Matt Ryan's turf toe injury status uncertain, its difficult to predict how they'll do. With the Jets still firmly in the AFC playoff hunt and Matt Ryan's injury its easy to see how New York could be favored. That said, the Falcons will likely be favored against the 5-8 Bills and the 1-12 Bucs regardless of Ryan's status.
Projected Finish: 8-8

Final Wild Card Standings

49ers (9-7)
Giants (9-7)
Cowboys (9-7)
Falcons (8-8)

How the 49ers Win the Tie-Breakers
According the NFL playoff tie-breaking procedures, a 49ers, Giants & Cowboys 3-way tie would be determined in the following order:

Giants eliminate Cowboys through the first divisional tie-breaker of having won both head-to-head match-ups.
The 49ers eliminate the Giants by having a higher in conference winning percentage. The 49ers 8-4 NFC record barely squeaks by the Giants at 7-4.

Why is Boise State ahead of USC in the Polls?

2009-09-20T10:17:00.000-07:00

Boise State is #8 in the current AP poll. They could easily go undefeated with only 1 quality win (Oregon) on their schedule. The problem with the BCS is not its process, but rather the voter mentality that enables Boise State to move up in the polls after wins over low quality opponents. Does anyone believe that Boise State is better than USC, Ohio State, Virgina Tech or Oklahoma? If not, why is Boise State ranked higher than them? Teams in non-BCS conferences just don't face the week-in-week-out competition that SEC, Pac-10 or Big-10 do. For example, if Boise State and USC both win out, Boise State would likely go BCS championship game instead of USC. Yet, USC will have played 10 quality opponents to Boise State's 1.

Teams that play in the WAC, MAC, Mountain West, Sun Belt and Conference USA should be explicitly banned from competing in BCS bowls because no matter how difficult of a non-conference schedule they play, having 8 conference games simply makes their schedules too weak to take a BCS bid away from an SEC or Pac-10 team with 1 or even 2 losses. Any football team playing in a non-BCS conference that wants to compete for the national championship should only become eligible if they go independent and schedule at least 8 opponents from BCS conferences or join an existing BCS conference.

Obama's Tire Tariff Smacks of Special Interest

2009-09-17T11:29:00.000-07:00

Barack Obama won the election on a platform of change with particular reference toward minimizing the role of special interests in politics and he did some great work early in his term to reduce the influence of lobbyists, but whats up with his recent decision to impose a 35% tariff on Chinese tire imports?

The AFL-CIO and the United Steelworkers pushed for the tariff but the Tire Industry Association (TIA) strongly opposed it. Shouldn't the TIA have more say in tire trade than the AFL-CIO or the United Steelworkers? The issue isn't 100% clear cut because the the United Steelworkers do represent some tire factory workers and some of the tire manufacturers did want protection, but it sure seems like the special interests won at the expense of the general public.

An Idea for Bank Pay Reform

2009-09-15T21:59:00.000-07:00

In general government regulation hurts economic growth. However, there are circumstances where minimal controls may be necessary. Wage controls and banking/trading are particularly tricky because bankers and traders can easily evade national regulation by moving to foreign firms while still operating in domestic markets. Despite the public outrage at Wall Street, its not entirely clear if pay regulation is necessary, but if it is, here are a couple ideas on how to approach it.

First, lets clarify that the goal of any regulation should not be to punish. It doesn't matter how much bankers and traders earn relative to the general public or that they may be perceived as overpaid. Everyone loses if regulation disincentives economic growth so there is no point in capping pay if the goal is assuaging the public.

The goal of any regulation should be to add stability to the system without dampening growth. In this case the goal of pay regulation should be to more closely align the banker/trader's interests with the long term success of the firm they work for. The problem with compensation is not how much is made, but rather how its made.

The problem in a nutshell is that system rewards individuals for taking outlandish risks without much downsides. Barney Frank calls it "Heads I win, Tails you lose." For example:

Year 1: Trader nets $100M for the bank and receives a $3M bonus
Year 2: Trader looses $200M for the bank and gets fired

Net-net, the trader has lost $100M for the bank but got paid a handsome $3M over a 2 year period and while s/he was fired, finding a new job probably won't be too difficult. Heck, even if takes them 2 more years to get a job they'll still average $750K per year in compensation over the total 4 year period. Thus, it really doesn't matter how much of the bank's money a trader looses over the course of his/her career so long has s/he has a couple good ones to lock in multi-million dollar bonuses. Thus the individual is rewarded for destabilizing the system by gambling with the banks money in order to maximize their personal compensation.

An outright compensation cap would be problematic because it wouldn't reward those that go above and beyond and could lead top talent to flee to unregulated foreign banks. However, shifting compensation above and beyond a certain level from cash to stock grants on a vesting schedule would align the banker/trader with the long-term interests of the bank that s/he works for. By putting the excess bonus into a stock grant the banker/trader would be motivated to maximize the value of his/her firm's equity and by putting the grant on a vesting schedule the interests could be aligned over a number of years.

Its tough to say exactly at what level the cash bonus cap would be most effective or over how many years the vesting schedule should be. Getting it wrong could be ineffective and/or lead to talent flight. However, a $1.5M cash cap and a 3 year vesting schedule seems like good starting points for discussion purposes. While many analyst/associate level bankers make bonuses that are below the $1.5M level, the managing directors that they report to (and who ultimately decide the analyst/associate bonuses) will be effected by the compensation plan and therefore highly motivated to run their departments with the goal of maximizing the firm's stock value.

Going back to the two year scenario above, in year 1 the trader would get $1.5M in cash upfront and $1.5M worth of stock in his firm vesting over the next 3 years. In year 2 the trader is highly motivated to do what is right for the firm because if s/he is fired or leaves the firm for any reason a portion of the bonus will be lost. On the contrary, if the trader makes a positive contribution to the firm's growth, not only will they secure another great bonus in year 2, but they will also increase the value of the stock that they were granted in year 1.

Mechanically, this could mean that large portions of what the bank would have paid in bonuses will now go into buying their own stock, which could provide a nice initial pop in stock price if the bonuses are large enough relative to the firm's market cap. Although Wall Street will likely resist any wage controls, this could be a motivating factor to get on board with pay regulation.

One downside to this plan is that the stock vesting schedule would decrease financial industry labor flexibility because moving firms would always leave 2-3 years worth of grants on the table. An approach to this problem could be enabling hiring banks to offer a hiring bonus of equivalent value (or a fraction of) in their own stock on the same schedule as the unvested portion of the banker/trader's grants at the old firm. A fraction would probably be best in order to discourage taking outlandish risks and then simply moving banks before the shit-hits-the-fan.

Obama Speaks but will Bill Maher Listen?

2009-09-13T21:41:00.000-07:00

Earlier this evening on 60 Minutes Barack Obama said:

"In the era of 24 hour cable news cycles that the loudest shrillest voices get the most attention... And so one of the things that I'm trying to figure out is how can we make sure that civility is interesting... And that hopefully I will be a good model for the fact that you don't have to yell and holler to make your point and to be passionate about your position."

Hopefully this is a wake up call to fans of Bill Maher, John Stewart and Steven Colbert. Although rarely subjected to the same level of criticism, their influence degrades the quality of political discussion equally as much as their more notorious conservative counterparts, Rush Limbaugh and Michael Savage. Everyone could benefit from taking more time to understand the complex issues that we face today and the manipulations, sound bites, jokes and polarization that these pundits rely on are not helpful. Lets turn them all off and pickup a newspaper instead.

Taxes Paid by Income Level

2009-08-05T23:57:00.000-07:00

Land's End

2009-07-31T15:10:00.001-07:00

iPhone is my bookshop killer

2009-03-21T17:49:00.000-07:00

I really do love having local bookshops. Keplers in Menlo Park is definitely a favorite. But I really don't like paying full price when Amazon seems to sell most books at 40% off. I have an Amazon prime account and now that I have the Amazon app for my iPhone, it's just too easy and cheap to buy books. I hate to admit this, but I've started browsing in local shops and buying from my Amazon right there in the shop. It's the best of both worlds for me but kinda shitty for the local shops that I do want to support. I'm not sure how I'm going to reconcile this one quite yet.

Buy American Clause

2009-02-15T21:27:00.000-08:00

The inclusion of the "Buy American" clause demonstrates just how broken our political process is. Its amazing that congress leaned so little from the Great Depression. Protectionism doesn't work.

Watch CBS Videos Online

Hourly Wage @ Walmart

2009-01-25T00:33:00.000-08:00

According to an NY Times article, Walmart's average hourly rate for full-time employees is $10.83. Most people seem to believe that Walmart pays only minimum wage but apparently thats not true.

An Auspicious Start

2009-01-22T00:05:00.000-08:00

Barack Obama starting his first day in office by increasing government transparency and erecting barriers to lobbyists was a great move. The more secrecy and the more lobbyists the more distorted the politics becomes. Now this could lead to real change.

Best & Worst of Obama's Inauguration Speech

2009-01-21T02:44:00.000-08:00

Barack Obama is unquestionably a fabulous speaker and while his election night speech was much better, his inauguration speech didn't disappoint. The best line from his speech was:

"Our economy is badly weakened, a consequence of greed and irresponsibility on the part of some but also our collective failure to make hard choices and prepare the nation for a new age."

And the worst:

"Yet, every so often the oath is taken amidst gathering clouds and raging storms."

...not only super cheesy but don't gathering clouds happen before raging storms rather than at the same time?

Obama & the Status Quo

2009-01-21T02:12:00.000-08:00

Barack Obama's inauguration represents "change" in several important ways. However, it is equally important to recognize several key ways in which his election victory also represents the status quo:

The candidate that raised the most money won
Charisma was exponentially more important than policy
Change was a key campaign promise of non-incumbents

An Intro to Ubuntu for Non-Techies

2009-01-11T10:33:00.000-08:00

The NY Times has a good intro article on Ubunutu for any non-geek that's interested in learning what all the fuss is about.

Fife's Law

2008-11-23T18:53:00.000-08:00

Fife's Law:

Whatever a channel partner can confuse will be confused

What Would You Pay for Wikipedia Access?

2008-11-16T15:02:00.000-08:00

I use Wikipedia virtually everyday. Its an incredible resource that frankly I often take for granted because its free. I've skimmed past the donation button at the top of their content pages for a while now, but it dawned on me today, that this incredible resource depends upon donations to stick around. Imagine Wikpedia's infrastructure cost of hosting, servers, bandwidth and electricity.

Seriously, what would you pay for Wikipedia access? O'Reilly's Safari service ranges from $23 to $43 per month and thats for a lot less content. (Though this is an outstanding value as well)

Anyway, I made a small donation today and I encourage everyone that finds Wikpedia useful to consider doing the same here. There isn't a minimum donation so give what ever makes sense for you.

Lessetarian

2008-10-20T01:51:00.000-07:00

I've eaten less than an ounce of meat over the last 2 weeks. I ate vegetarian for a year in college and haven't had much of a desire to go back since. I don't plan on eliminating meat 100%, but thanks to veggie burritos I'm really not struggling without it at the moment.

Vote for Andrew

2008-10-18T09:37:00.000-07:00

I've come to the conclusion that the 2008 Presidential election offers no electable candidates so I am writing myself in on the ballot. Both candidates have major flaws that I can't get past.

Newman

2008-09-14T18:58:00.000-07:00

Newman is definitely my favorite Seinfeld character.

Doh!

2008-09-11T22:53:00.001-07:00

Okay maybe I owe jawbone an apology... It's pretty easy to turn the thing off. All it takes is holding down the side button for several seconds. Could have sworn I tried that, but I guess not.

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Not Liking Jawbone

2008-09-10T00:02:00.001-07:00

I can't ever seem to have my cell phone headset with me in the car when it's charged. It's either on my desk at home or in my car out of juice.

One of the problems is that I can't seem to tell if the darn thing is off or not so I seem to kill the battery in less than a day. Seems like it should have a sleep mode to conserve power. A car charger might help as well.

I guess I haven't read the manuel so maybe I'm doing something wrong. But then again consumer electronics really should just work these days.

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Trying Lifecast App

2008-09-08T21:48:00.001-07:00

Trying out blogging from my phone. If this works okay, I may start blogging more often again.

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Feeling Great About Moutain Biking

2008-04-23T00:40:00.000-07:00

On Friday night, I picked up a new Fuel EX9 mountain bike from Trek and I've managed to get at least a quick ride in 3 of the last 4 days since. I used to road bike all the time, but over the last year, I haven't been disciplined about making time to exercise regularly and I've really gotten out of shape.

Right now I'm feeling so good from putting my legs to work that I can't understand how I ever got out of my riding groove. Unfortunately, I'm heading to Linuxfest Northwest tonight, so I won't be able to ride again until Monday but I'm already itching to get back on the bike! ...now I just need to figure out how get through a ride without falling off the bike...

Dophins Virtually Guarantee Unsuccessful Draft

2008-04-23T00:20:00.000-07:00

In advance of this weekend's NFL Draft, the Miami Dolphins announced today that they had signed Michigan tackle Jake Long and will select him with the number one pick. Offensive and defensive line are the most important (and under appreciated) parts of any football team, so I like the pick in that sense. However, the reported $57.5M contract with $30M in guaranteed money makes Long the highest paid lineman in the league.

I'm excited about Jake Long, but the odds are really low that he'll become the best lineman in the league, so why make him the highest paid? Compared to the opportunity cost of signing veteran players with far less risk on the free agent market it just doesn't make any sense to risk a Robert Gallery or Tony Mandrich type bust when the salary cap makes dollars scarce in the NFL.

The #1 pick in the draft has negative value. The only time top draft picks have value is when the bigger fool theory kicks in and another team is willing to trade for it.

Always Trade the #1 Pick in the NFL Draft

2008-03-20T20:36:00.000-07:00

Why give $50-60M to an unproven player? Thats All-Pro money. I'd trade the #1 pick every time.

1977 - Ricky Bell - Bust
1978 - Earl Campbell - Stud
1979 - Tom Cousineau - Good not great
1980 - Billy Sims - Injury
1981 - George Rogers - Injury
1982 - Kenneth Sims - Bust
1983 - John Elway - Stud
1984 - Irving Fryar - Good not great
1985 - Bruce Smith - Stud
1986 - Bo Jackson - Injury
1987 - Vinny Testaverde - Bust
1988 - Aundray Bruce - Bust
1989 - Troy Aikman - Stud
1990 - Jeff George - Bust
1991 - Russell Maryland - Good not great
1992 - Steve Emtman - Injury
1993 - Drew Bledsoe - Good not great
1994 - Dan Wilkinson - Bust
1995 - Ki-Jana Carter - Injury
1996 - Keyshawn Johnson - Stud
1997 - Orlando Pace - Stud
1998 - $48M - Peyton Manning - Stud
1999 - $44M - Tim Couch - Bust
2000 - $45M - Courtney Brown - Bust
2001 - $62M - Michael Vick - Bust
2002 - $60M - David Carr - Bust
2003 - ???? - Carson Palmer - Stud
2004 - $54M - Eli Manning - ???
2005 - $49.5M - Alex Smith - Bust
2006 - $54M - Mario Williams - Stud
2007 - $61M - JaMarcus Russell - ???

Interview on the CBS/KPIX News

2008-03-13T22:20:00.000-07:00

Earlier this month I was interviewed on the morning news at CBS/KPIX Channel 5 about the Installfest for Schools, which was a great success. We recycled 350 computers with Ubuntu that will be donated to Northern California schools. The interview took place the morning of the event on March 1st. I was a little bit nervous, but it was a lot of fun. One really strange thing about being in studio is how few people there were... all of the cameras are robotic and the place feels really empty and ridiculous... If you didn't know they were broadcasting live on T.V. you ask yourself "why are these two people sitting behind the desk talking to an empty room?" Its weird.

Not a Republican, but Impressed by McCain

2008-03-09T23:44:00.000-07:00

I was impressed with John McCain on 60 Minutes earlier this evening. I really like McCain's willingness to take an unpopular position on Iraq. I don't really know what to do about Iraq, but Hillary Clinton's "plan to bring our troops home starting with the first 60 days of her Administration," strikes me as populist policy making at it worst. Look, I didn't support going to war with Iraq and I don't like the human lives that have been lost or billions that have been wasted on the war. But we can't undo the war, so the question is what is the best course of action now? We have to balance the following requirements:

Responsibility for starting the war and at least some level of debt to the Iraqi people for the upheaval that war has caused them
Protecting American troop's lives
Keeping the Middle East stable enough not to collapse into a regional war
Preventing Iraq from becoming an terrorist state funded by oil revenue
Keeping oil flowing freely
Stopping the bleeding of military spending

Given how much of a mess Iraq is today, I really can't see how starting to pull troops out in March of 2009 is going to accomplish any more than 2 of these 6 objectives. I'm tired of Hillary Clinton and Barack Obama manufacturing positions based on what they think people want to hear rather than what they believe in. How does pulling troops out of Iraq help promote stability in the Middle East? How does a chaotic Iraq, potentially governed by Al Queda, reduce terrorism? Don't get me wrong, the war in Iraq has probably done more to increase anti-American terrorism than anything else in the last 50 years. But whats done is done. The questions is "how can we improve the situation from the position we are already in today."

Democracy is about giving the people what they want. But democratic leaders with integrity will find a way to communicate why they are making unpopular decisions and I don't see any signs of Obama or Hillary doing this.

I also like McCain's commitment to campaign finance reform. Ultimately, campaign finance reform is the single most important political issue. Campaign finance distorts the political process towards special interests like wealthy and/or organized groups like oil companies, defense contractors, unions and senior citizens. The United States loses when any special interest (including unions and senior citizens) distorts the political process.

Lastly, I like McCain's willingness to address the Republican party's terrible record on government spending under the Bush administration. This is another example of McCain's willingness to stand up for what he believes in despite potential political consequences.

Reasons against voting for McCain are:

I strongly dislike the Republican Party
Barack Obama's message is inspiring some people, which is a good thing even though I personally find it to be quite shallow
Electing Barack Obama would send a great message Internationally and domestically about how tolerant the United States really is and what kind of opportunity exists for all citizens
Electing a Democrat (i.e. regime change) would send a message about how the Bush Administration's actions are not acceptable
McCain's environmental stance does not seem strong enough

I'm not sure where I will end up, but I am leaning towards McCain for now. I am formulating my vote on a handful of issues essentially in this order:

Conservative economics (low spending & low taxes)
Protecting the environment and making tough choices about climate change
[UPDATE:]Liberal foreign policy ...not the same as liberal in the domestic sense follow the link for more info (can't believe I forgot this in the original post!)
Liberal social policies (free personal choices, tolerant immigration policy, preserving separation of church & state)
Perceived personal integrity... but this is a very slippery slope so I don't put much stock in it

Is Amazon Kindle Really a Successful Product?

2008-02-16T18:16:00.001-08:00

Is Amazon Kindle really a successful product? Given all of the prime real estate that Amazon has given it on their homepage, I'm not sure that Kindles sales are all that impressive. Amazon.com is currently the 33rd most popular website according to Alexa, and Kindle has been parked on the home page for 3 months. Moreover, they've given Kindle its own sections under the "Electronics & Computers," "Books" and "Digital Downloads" tabs and it seems like they merchandise it on many book web pages as well.

What product wouldn't sell well with this kind of placement?

Open Source Installfest for Schools

2008-02-14T22:09:00.000-08:00

Untangle and the ACCRC are organizing an installfest to donate hundreds of open source computers to Bay Area schools on recycled hardware.

http://www.untangle.com/installfest

Why its Cool:

Helps spread F/OSS (Ubuntu, Firefox, OpenOffice & more)
Helps bridges the Digital Divide with underprivileged users
Keeps toxic computer equipment out of landfills
Is a cool community effort

How You Can Help:

Signup and join the installfest!
Help get the word out by blogging about it
Donate an old computer at one of the 4 locations: Berkeley, San Francisco, San Mateo & Marin County

Thank Goodness for the Giants

2008-02-03T22:11:00.001-08:00

Man I'm sick of people talking about the Patriots as both a dynasty and the greatest team ever. Given the beating the Giants dished out to them today in Superbowl, hopefully thats over now. It was an exciting game and the score was close, but the Giants clearly outplayed the Patriots. And Tom Brady as one of the best QBs ever? What a joke.

3 Superbowl wins by 3 points each, the tuck rule against the Raiders, the confirmed cheating this year, the allegations of cheating in prior Superbowls, increased parity in the league and a heck of a lot of breaks going their way... The Patriots just haven't ever been dominant the way that 49ers, Cowboys, Steelers and other dynasties were. Even this year, they really got lucky to beat the Colts, Eagles, Chargers, Ravens and Giants. Sure great teams pull-out tough wins, but when the breaks always go one team's way, its time to start moderating their greatness with a little bit of fortune.

Both Brady and the Patriots are good, in fact they are very good, but they're not great. And definitely not all time great.

Thank you New York Giants.

You Can Call Me Al

2008-01-28T01:44:00.001-08:00

Apple Announces Service From SFO to JFK

2008-01-15T02:53:00.000-08:00

I predict that Steve Jobs will announce a new Apple airline venture in his keynote at Macworld today.

I love Kirkwood

2008-01-13T21:08:00.000-08:00

I just got back from a weekend skiing with Adam and Powell. I hadn't been in a couple years so I was pretty rusty and my trip ended a bit prematurely with hard fall, but I had a great time nonetheless. I'm hoping to head back up again in a couple of weeks.

I liked Juno

2008-01-04T23:38:00.000-08:00

Juno was a cute movie. I dislike ~70% of the movies I watch, but I like Juno. At first I found the characters' dialog to be a bit too polished to feel real, but as the movie progressed it became really easy to identify with the Juno. Anyway, I enjoyed it.

PageRank wrecked the web

2008-01-02T21:06:00.000-08:00

"PageRank wrecked the web" (via TechCrunch)

Now thats a quote I can get behind... Go Blekko! I'd be rooting for my friends at Blekko anyway, but taking on Google with statements like this is great stuff! With all the recent nonesense about Google employees becoming angel investors and vc investment "judges," its great to see someone doing something other than fall all over themselves to kiss Google's butt.

Sun Microsytems: Most Delusional Company Ever?

2007-12-24T22:32:00.000-08:00

Sun has got to be one of the worst run and most delusional companies on the planet. This banner ad has been cropping up all over the blogsphere, no doubt in some attempt to influence the influencers.

So Sun is now supposed to be relevant because they've finally hit a price point that makes sense for anyone other than NASA to purchase their servers. Wow, $2,180 for a quad-core box!!! A powerful focused message at a targeted audience in a banner ad. How would I sum up this banner campaign in one word?

....GREAT!

After seeing that small businesses can buy quad-core servers from Dell for $1,098, how would I sum up this banner campaign in two words.

....NOT GREAT!

Somebody needs to wake Sun Microsystems up. The company has been asleep at the wheel for nearly a decade. How can you run a campaign about new value price points, when you're twice the cost of you're biggest competitor? You'd think with marketing budgets big enough to buy this many banners, they at least have an intern to check Dell's prices.

Pathetic.

Any Excuse to Link to Your Buddy

2007-12-17T01:20:00.001-08:00

Must admit, I'm a bit tired of the semi-conflict-of-interest stuff going on in the blogsphere. Checkout TechCrunch attempting to stir controversy out of nothing between a friend of Mike Arrington's and one of the startups that he has invested in. Is it really a story that Loren Feldman was less than polite or that Loic Le Meur responded with this?

"Thank you Loren Feldman of 1938 Media for treating us as idiots like this, reality check is always good. You know what ? We are idiots that enjoy talking to each other and that really is what I like. We are happy idiots who like to hang out together. Let the happy idiots in peace !"

It feels like Arrington is trying to manufacture something here to drive traffic to two sites he has personal ties to because I don't get that Le Meur "didn't take it very well" or was "frustrated" from his response above at all. In fact, in Le Meur's update to his post, he says he had fun watching Feldman's video.

For me, it is not okay to manufacture a story and then justify it with a disclosure midway through the article. For bigger blogs like TechCrunch I expect nearly the same editorial standards as mainstream print media. I feel like Michael Arrington pushes this boundary a lot. IMHO, the professional thing for him to do would be to not invest in consumer oriented websites.

As someone who enjoys keeping up on startup news, I probably won't boycott TechCrunch all together, but when I see that the similar stories getting coverage on TechCrunch & it competitors, I'll direct my pageviews elsewhere.

Great Amazon Kindle Conversation

2007-12-06T22:08:00.000-08:00

Just a heads up that there was a great Amazon Kindle conversation sparked by Tim O'Reilly on the Radar blog. The original post is quite interesting and so are the comments from readers, most of which Tim responded to.

Self Reflection: Sportswriters & the BCS

2007-12-02T10:45:00.000-08:00

Sportswriters have been whining for years about the BCS's selection process for determining which college football teams play for the national championship. For me this is a classic example of not reflecting on how one's own behavior impacts outcomes... particularly reflection regarding self-improvement. I find this very annoying so I'm venting with this blog post.

Several years ago, I read the following statement on the chalk board in the bathroom of the Crossroads Cafe in San Francisco:

"You Must Be the Change You Wish to See in the World."

I think the media itself is the problem with the BCS. The problem is the voting mentality of the participants in the various polls. How is that an average team like Kansas ever cracks the top 10 with out having any quality wins on their schedule? The Big 12 is awful this year and Kansas didn't play Oklahoma or Texas and lost to Missouri. Even if they had beaten Missouri, they don't deserve to play in the national title game. Going undefeated simply is not enough to play in the title game. And the arguments about "you can only beat who you play" or locking out non-BCS schools are complete B.S. If you want to be have a shot at the national championship you have to schedule solid non-conference opponents. Kansas's non-conference schedule was pathetic:

Central Michigan
Southeastern Louisiana
Florida International
Toledo

...and they only have 2 victories against opponents with winning records:

Central Michigan (8 - 5)
Texas A&M (7 - 5)

So the problem with the BCS is not their formula, but rather with voters who mindlessly shuffle teams up the rankings based on record alone. The BCS system is heavily weighted towards the sportswriters polls, so if these guys just voted for who they thought was the best team in the country rather than who has the best record in the country, the system would work. Why is it that Missouri (then #1) was an underdog against Oklahoma (then #9)? Clearly, sportswriters were ranking a team #1 that they didn't believe would beat #9... which makes no sense at all. (No, betting lines and rankings aren't the same thing, but they usually tightly linked) And back to bashing Kansas... They're currently ranked #8, but how many top 25 teams would they really be competitive with? In my opinion they would be underdogs against every top 25 team except Hawaii, BYU, Cincinnati, South Florida & Boise State. If Kansas is the 8th best team in the country, shouldn't they be the favorite against all 17 teams behind them in the top 25?

So bottom line to sportswriters... stop whining for a playoff system and change your silly voting practices.

P.S. Here is my personal top 10:

LSU
USC
Ohio State
Florida
Georgia
Virginia Tech
Oklahoma
Tennessee
Illinois
Arizona State

Facebook's Impact on Birthdays

2007-11-28T18:34:00.000-08:00

I've been experiencing the true power of Facebook today... grillions of happy birthday messages.

Amazon Kindle Magnifies the The Long Tail

2007-11-26T23:43:00.000-08:00

One of the reasons that Chris Anderson suggests for Amazon's success was that it's online sales model tapped into the long tail of book demand because it separated the limitations of shelf space from inventory and reduced transaction costs (i.e. sales processes).

In a retail setting floor space is expensive and inventory is inherently limited because shoppers will only buy books that are on display. Furthermore, a customer has to physically walk into a store to make a purchase and up-selling opportunities are narrowly limited to shelf takers and employee recommendations, which touch relatively few customers.

In contrast, Amazon.com has nearly infinite shelf space and dramatically lower cost of inventory because their books are stored in warehouses rather than expensive retail locations. The transaction costs of browsing the web are also much lower than getting up off the couch to walk into a store. Lastly, up-selling mechanisms touch many customers through surprisingly popular recommendation algorithms.

Yet, Kindle takes this to an even further extreme by removing physical media from the process, which virtually eliminates all inventory storage costs and dramatically reduces transaction costs associated with delivery & wait times, which then increases power of impulse buying and the effectiveness of up-selling.

	Book Store	Amazon.com	Kindle
Cost of Inventory	Printing + Retail	Printing + Warehouse	Electronic
Cost of Transaction	In Person	Web + Shipping	Web

Given this perspective, I think Amazon is making a mistake by keeping the price of Kindle high and the format proprietary. An inexpensive and open electronic book reader would reach an wider audience and unlock more of the long tail, which Amazon is positioned to be the primary beneficiary of. Others, like Jason Epstein, offer some insight into why the costs of Kindle might be so high, but I always contend that pricing should be based on value, not cost and I suspect that his cost assumptions might a little bit high.

Why am I Wearing a Tie?

2007-11-26T23:27:00.000-08:00

It just dawned on me that I should probably get around to changing my profile picture. In fact, a couple of friends have been bugging me to do this for a while but thats more because they think its a crappy picture. I kind of like wearing a tie but virtually never wear one to work. I would almost go so far as to say that ties are actually unwelcome at most startups in Silicon Valley and, moreover, its just not representative of who I am or how I normally present myself.

Its a bit ironic to me that the symbol of success on the East Coast is so rare out here that I'd be willing to bet the there are far more people wearing suits & ties to work in a retail service positions (hotels, Nordstrom, car dealers, etc.) than corporations where the culture expects it.

I do like the weird quality of the photo, but it probably isn't the best way to present myself to potential readers that I've never met either. Odds are I will either change the photo sometime this week, or forget about it entirely.

Google: Do All AdWords Customers Hate them?

2007-11-19T23:29:00.000-08:00

I can say that I truly detest Google AdWords. Google's search has nearly 3X the margin of Yahoo!, yet they can't seem to get support right. If their product worked well, that would be one thing, but for me, AdWords and Analytics have been pretty flaky.

First they do everything they can to hide the phone number (866-2GOOGLE) and then their army of college intern support reps do an absolutely terrible job of following up. I've literally had conversations that go like this with them:

Me: So you're going to get back in touch about XYZ right?
Google: Yes, definitely.
Me: Well, I hate to tell you this but Google reps never follow up when they say they are going to
Google: Wow, I'm really sorry to hear that. I'll definitely follow up on this issue.
Me: Great, thanks for taking care of this issue for me.

And the results... probably a 10% follow up rate on average. Terrible. Google should be ashamed of themselves.

The other thing that drives me nuts about Google is their ridiculous decision-making method for determining who gets a dedicated account rep. And the irony for me is that after several months of asking for an account rep, they finally gave me one... but thus far my customer support experience has actually worse!

One Laptop Per Child... Give 1, Get 1 Starts Nov 12th

2007-10-07T22:51:00.000-07:00

One Laptop per Child (OLPC) is starting their "Give 1, Get 1" promotion on November 12th. $400 gets you 2 of their laptops, 1 for you and 1 that gets donated as part of their project.

For anyone not familiar with OLPC, they are trying to build Linux based laptops for children in lesser developed nations. Their goal is to build a rugged laptop that is mesh networked and powered by a hand crank for $100. They've also been working on a streamlined version of Linux to reduce the hardware requirements. IMHO its quite an interesting social and technological experiment.

Wilson Sonsini Entrepreneurs College

2007-09-20T10:03:00.000-07:00

Silicon Valley's most famous law firm, Wilson Sonsini Goodrich & Rosati, is hosting a free 14 week series of seminars for entrepreneurs to learn about raising capital and running an early-stage startup. One unique & cool thing about what WSGR is doing, is that they are using many of their branch offices (Austin, New York, Washington D.C., San Diego, San Francisco, & Seattle) to syndicate the content, which is great for folks that don't live in Silicon Valley. The first event is on Valuation and takes place on October 2nd and you can register here.

Session 1: Valuation

Breakfast & Networking: 8:30 a.m. - 9:00 a.m. PDT
Program: 9:00 a.m. - 10:30 a.m. PDT

Wilson Sonsini Goodrich & Rosati
950 Page Mill Road, Terrace 2D
Palo Alto, CA 94304

Fall 2007 Program
Most sessions will take place from 9:00 a.m. – 10:30 a.m. and will include a breakfast program with additional time for networking. The December 19 program will start at 4:30 p.m., followed by a networking reception. All programs will be held at the firm's offices at 950 Page Mill Road in Palo Alto and videoconferenced to our offices nationwide. The program series will be repeated in Spring 2008.

October 2, 2007	Valuation
October 17, 2007	Business Plans & Fundraising
October 24, 2007	Biotech Session
October 31, 2007	Forming and Organizing the Start-Up & Founders Stock
November 7, 2007	Clean Tech Session
November 14, 2007	Intellectual Property
November 28, 2007	Compensation & Equity Incentives
December 12, 2007	Term Sheets
December 19, 2007	Exits & Liquidity

$350M Congrats to Zimbra!

2007-09-17T22:46:00.001-07:00

Zimbra was acquired by Yahoo! earlier this evening for $350M in cash. Congrats to the team at Zimbra for executing so well. This is yet another data point confirming that open source software is a mega trend sweeping IT. Its an exciting time to be at a company like Untangle that has embraced open source philosophies so wholeheartedly. Who knew free software could be worth so much money?

Am I a Cat Man?

2007-09-17T10:04:00.000-07:00

A couple of weeks ago, a friend posed a question: "Andrew, are you a cat man?" While I have always liked cats, my answer was of course no. However, Mae Ling has uncovered startling new evidence to the contrary which suggests that I may in fact be a cat man.

Caught on Tape with a Green Mowhawk

2007-09-10T22:51:00.000-07:00

Here is a video that was taken at LinuxWorld of me explaining what Untangle does. I didn't really have the Mohawk gelled up, but you'll get the idea. Anyway, LinuxWorld was lots of fun, Dirk & Robert also died their hair green and Untangle was named the best security product of the show.

A Great Place to Meet Angel Investors

2007-09-05T15:30:00.000-07:00

The Churchill Club is hosting an interesting breakfast event about the top trends in angel investing on Friday morning (9/7/07). If you're looking to raise money from angels, this should be a great place to make a couple of great connections because the panel features several prominent angels and its a safe bet that many more will be in the audience. Its a breakfast event at Dinah's Garden Court Hotel in Palo Alto at 7:30am. You can buy your tickets here.

Angel Investing: Top Trends and Opportunities

Moderator:
Richard Brenner, Chief Executive Officer, The Brenner Group, Inc.

Speakers:

Casey McGlynn, Founder & Secretary, Life Science Angels; Chairman, Life Sciences Group, Wilson Sonsini Goodrich and Rosati
Peter Redford, CEO, Chairman, TV Interactive Corp
Steve Stephansen, President and Founding Member, Sand Hill Angels; CEO, Agoura Technologies
Jeff Yu, Managing Director, The Angels' Forum

Untangle Goes Open Source (GPL)

2007-06-26T14:39:00.000-07:00

Earlier this morning we formally announced that we are open sourcing Untangle's network gateway platform. Untangle is a virtual networking platform, which runs network based applications that make it easy for businesses to Block Spam, Block Myspace, Block Spyware, provide secure remote access and run 9 other Untangle apps. In building the Untangle Platform and applications, we used more than 30 open source projects like SpamAssassin, Snort and OpenVPN, and now we're proud to be joining the GPL club ourselves.

Untangle isn't about kinda-sorta-PR-splash open source either. We're going whole-hog GPL for the Untangle Platform and 12 of the 14 applications that run on it, which represents 95% of Untangle's source and 500K+ lines of code. And we believe that truely embracing open source means embracing transparency so we're also posting our bugtracker and making it easy to download and build the sourcecode. We've benefited greatly from other open source projects and we wanted to give something back to the community that had real value.

The secret sauce is the Untangle Platform which is about “virtual pipelining” and management features. Untangle's virtual pipelining enables a data packet to be processed by all of its applications (spam, virus, web filters etc.) without requiring CPU context switches between the processes. The net result is that Untangle runs on any cheapo Intel/AMD compatible off-the-shelf x86 PC with 2 NICs. (For example, you could almost certainly turn the desktop you are using to read this post into an Untangle server by simply adding a second NIC.) We think its crazy that other vendors lock their customers in with proprietary hardware appliances when off-the-shelf-hardware prices have been falling so dramatically.

The Untangle Platform is also about management because the best open source technology isn't always the most user friendly. So we built a GUI for all 14 applications based on an intuitive "virtual rack" metaphor, network & user based reporting and automatic signature updates into our platform. Furthermore, Untangle supports SNMP and Syslogs for ease of management in deployments with multiple servers. While we do offer live support and some additional advanced management features as a commercial add-on, the GUI, reporting, logging, SNMP and Syslogs are all open source.

We've leveraged open source software to build what we think is a pretty remarkable virtual networking platform and we hope that the community will further innovate upon our contributions.

Taxing VCs' Carry as Income Won't Shift Behavior

2007-06-26T13:40:00.001-07:00

To me the important question in the debate over whether or not VCs "carry" should be taxed as income rather than capital gains is "will increasing taxation levels change VC behavior?" The answer to this question is clearly no because there is no other industry that provides the same lifestyle to compensation ratio that venture capital does. But hey, I grip about paying my taxes also, so who can blame VCs for trying to protect their loophole.

Looking for an Web Interface Developer

2007-06-21T11:36:00.000-07:00

Here at Untangle, we are looking for a developer to join our team to help build our web interface. We've got a really fun team (across all departments) that works hard and gets things done. We are an early-stage startup with about 25 employees, so the expectation levels and commitment required are high but there is also tremendous opportunity to have a large impact on development. The most compelling thing I can write about the company is that I was so impressed with the team and product vision that I decide to join myself in February and there is no question that Untangle has best working atmosphere that I have experienced so far.

I'm posting the formal job description below, but the most important attributes that our engineering team is looking for is high intellect and horsepower to handle the fast pace of development here at Untangle. It would be great if you do have AJAX and Ruby on Rails experience, but the soft skills of intelligence and work ethic are valued much more than any specific programming language. The compensation is good with a six figure salary, healthy chunk of options and a great benefits package.

If you are interested in the position, please feel free to contact me directly:

Job Description:

You will be responsible for creating the web-based face of our network security product. You will expand our targeted customer base by providing a new level of product interaction and feature set for us. You should be hands on and work at a rapid pace. Expect to work in a fun and fast-paced startup environment, where you will make a key contribution and expand your skill set. This role is crucial to the company’s future success.

Compensation:

We have a full benefits package, six figure salary, stock options, medical, dental, 401K and company lunches every Thursday and a boundless supply of Poptarts.

Requirements:

5+ years of building customer facing, scalable web applications
Good knowledge of Web 2.0 technologies
Experience with AJAX frameworks (Protoype, Dojo, …)
Programming experience in interpreted languages (Python, Ruby, etc.) and solid shell scripting
Basic database design, implementation, and usage (Postgres, MySQL, Oracle)
Systems management and performance tuning
Significant hands-on web experience
Release management experience utilizing CVS, svn, etc.
Must be passionate about understanding customer needs and solving them effectively
Highly intelligent, quick learning, with good problem solving skills
Must be a proactive, intelligent, motivated individual, with the ability to work in groups or individually
Bachelors in CS or equivalent degree. MSCS is a plus

Additional desired skills and experience:

Experience in Portal Technology or current web frameworks (Rails/ Django) a plus

About Untangle

Our company, Untangle, enables small businesses (10 – 150 employees) to protect, control, and monitor their networks. Through a single device that runs locally on the network, Untangle provides over a dozen on-demand services including anti-spam, anti-spyware, virus protection, remote access, web-content filtering, and more. The services are designed specifically to address the needs of small business.

GREAT Article by Bob Walters on VentureBeat

2007-06-19T00:22:00.000-07:00

Bob Walters wrote a GREAT article on VentureBeat earlier today titled "Leadership - Annapolis Style." Bob has been a successful serial entrepreneur in Silicon Valley for the last 20 years and yet some of the most valuable lessons that he learned about leadership came from his time as a midshipmen at the Naval Academy. In a world of high tech startups, it is easy to write the military off as irrelevant or out of touch with Silicon Valley's leadership styles. However, given Bob's experiences, it is clear that the Naval Academy teaches timeless leadership lessons.

As someone who has worked on Bob's team for the past 4 months, I can attest that he is truely a great leader. In fact, it was one of these very lessons that Bob described when I first encountered him, which inspired this post that I wrote in February of 2006 and ultimately started the chain of events that lead to my joining Untangle earlier this year.

How Startups Forecast Revenue for VCs

2007-06-18T01:06:00.000-07:00

One item that I've never really seen covered well in any of the entrepreneurship events that I've attended is forecasting revenue. Most folks seem to either over-simplify or over-complicate forecasting. Anyway, Will Price has a great explanation of how to forecast revenue for an enterprise sales business model. The key take away is that investors do not find top down forecasting credible. If you want to impress an investor, you need to think through how you build repeatable sales processes and that requires a bottoms up approach. But you don't need to pay a consultant to do this for you. A quick read of Mr. Price's explanation and a spreadsheet is really all you need.

Killing Widgets

2007-06-18T00:46:00.000-07:00

I decided to kill 3 widgets on my blog earlier this evening. I dropped the SideFlicks video widget, the Swapthing swapping widget and the CoComment widget that lets readers see my comments elsewhere in the blogsphere. In theory, I really like all 3 widgets, but in practice the don't seem to get used much. I'm hopping that dropping these widgets will make the pages look a little bit cleaner and load a bit faster.

VCs Can't Keep the Lights On

2007-06-17T21:14:00.000-07:00

I just got wind of a funny story in the LA Times earlier this week about power outages on Sand Hill Road. Apparently there have several major power failures in the last couple of months leading to confusion and lost data from unsaved documents. It makes me laugh that "captains of Silicon Valley," as the LA Times calls them, aren't tech savvy enough to have UPS, remote backup, and power generators in place. For folks who have been investing in IT for years and energy technology more recently, you wouldn't think they'd get caught with their pants down like this.

Apologies for the RSS Ads

2007-06-15T17:34:00.001-07:00

I am going to join Feedburner's Advertising Network, which means that the RSS feed of the Entrepreneurship Blog is going to start carrying ads. I am generally opposed to advertising on my blog, however, I want to create a Feedburner Network and they only let folks who let them advertise in their feeds do this. Although I don't want the advertising, I believe it is a fair deal. Feedburner provides a good service that I want to use and they deserve to be able to monetize it. I apologize in advance to RSS subscribers who doesn't like the advertising but it is pretty common these days and I'm optimistic that it won't be too intrusive.

Ron Conway on Entrepreneurs Cashing Out with Venture Financing

2007-06-14T23:32:00.000-07:00

VentureBeat reports that Ron Conway is upset about Entrepreneurs taking cash bonuses when they raise rounds from VCs. Mr. Conway argues that all of the capital should stay inside the startup and be used to grow the company as quickly as possible, that entrepreneurs and investors should make money together when the company exists and that lesser know VCs are using these bonuses to steal deals away from KP and Sequoia.

Philosophically, I agree with Mr. Conway that capital's efficiency should always be maximized. However, in practice entrepreneur and investor interests do not always line up because most VC business models necessitate that they shoot for large wins and balance risk through out their portfolios. Take 10 big swings and hope to hit a couple out of the park. On the other hand entrepreneurs have all of their risk in one company and might prefer a garaunteed double instead of a risky home run. Thus, I am tempted to suggest that letting entrepreneurs cash-out a couple of million bucks would be a good way for both parties aim for the fences every time.

The problem with this approach is balancing motivation with financial need. There are some entrepreneurs who could stay focused, but a couple million bucks is a life changing event for most and could easily be a major distraction. On the other hand bootstrapping entrepreneurs in financial need would undoubtedly be more focused if they didn't have to worry about their creditors.

I suggest a hybrid solution... let entrepreneurs cash out, but not more than $250K. This is plenty of cash to do at least one of the following:

Pay for a wedding
Comfortably start a family
Make a down payment on a modest home in a nice neighborhood
Pay off debts used to self-fund
Buy a Porsche

$250K should be enough to give the entrepreneurs a bit of breathing room and have a bit of fun, without being so much money that it becomes a distraction.

Brooklyn is Crazy about Pizza

2007-06-12T10:17:00.000-07:00

According to the NY Times Di Farra Pizza in Brooklyn has been shut for the second time since March 15th, by the health inspector. The article quotes several forlorn customers who lament the loss of their favorite pizza and yearn for Di Farra to re-open. One customer even goes so far as to say that if Di Farr doesn't reopen "we’ll be losing not only a Brooklyn landmark but a national treasure.”

What I don't understand is, who in their right mind would want to eat at a restaurant that was closed by the health inspector twice within 3 months. Shouldn't their customers be worrying about whether or not they've been food poisoned?

Malware Targeting Multiple Operating Systems

2007-06-11T22:08:00.000-07:00

According to ZDNet a new worm is targeting OpenOffice. Worms are nothing new but this one has a macro that targets Windows, Linux and Mac OSX. As far as I am aware, this is the first time malware has targeted multiple operating systems and I think it could be an ominous sign for Linux and OSX users that have essentially been untargeted by malware writers. Writing zero-day exploits is difficult but most operating systems are behind on patches, which means that if it is now easy to load multiple exploits into malware, the next generation of virus and worms could spread much more quickly as they infect everything they touch. Furthermore, Linux and Mac users may have some bad habits that make them susceptible to malware. Many Linux users don't use anti-virus on their desktops and Mac users may not be in the habit of updating patches as Apple historically hasn't released nearly as many as Windows.

From ZDNet:

"Once opened, the OpenOffice file, called badbunny.odg, launches a macro that behaves in several different ways, depending on the user's operating system.
On Windows systems, it drops a file called drop.bad, which is moved to the system.ini file in the user's mIRC folder. It also executes the JavaScript virus badbunny.js, which replicates to other files in the folder.
On Apple Mac systems, the worm drops one of two Ruby script viruses in files respectively called badbunny.rb and badbunnya.rb.
On Linux systems, the worm drops both badbunny.py as an XChat script and badbunny.pl as a Perl virus."

Andy & Kathrine's English Countryside Wedding

2007-06-06T00:16:00.001-07:00

The weekend before last two friends of mine, Andy & Kathrine, got married in her home town of Much Wenlock. Much Wenlock is a beautiful countryside English village, located about and hours drive West of Birmingham. Flying to England for a weekend was pretty rough, but catching up with friends that I rarely see these days was really great.

Cell Phone Telemarking from Sprint/Nextel

2007-06-05T10:55:00.000-07:00

This morning I got a cold call from Sprint/Nextel. It was the second time in the past month or so that I've gotten a call from them offering me a free wireless access card if I subscribe to the service. I am a Sprint/Nextel business customer, but there is something that really irks me about receiving telemarketing calls on my cell phone. I wasn't charged for the call but it feels like an invasion of privacy.

Don't get me wrong, this isn't another I hate telemarketers rant. In general, I am a huge supporter of cold calling and inside sales because they are sales tactics that work. Many Silicon Valley tech companies are built on inside sales so as much as it might be annoying to receive sales calls, I understand that it is part of the ecosystem and I always try to be polite and give callers 60 seconds.

Is it just me or do you agree that cold calling cell phones crosses a line?

How Guy Kawasaki Could Have Saved $4,800 on Truemors

2007-06-04T16:10:00.000-07:00

Guy Kawasaki wrote a post yesterday with detailed data about his launch of Truemors. Its really interesting to see the exact breakdown of the $12K that he spend launching the company and the initial results in terms of pageviews, visitors and posts. I'm very glad that Mr. Kawasaki did this because it provides and interesting set of benchmarks. What is a mention in Techcrunch really worth? Well apparently 3 mentions are worth about 250,000 pageviews.

Another interesting detail was the fact that he spent $4,800 on legal fees. Mr. Kawasaki writes:

"The total cost of the legal fees was $4,824.14. I could have used my uncle the divorce lawyer and saved a few bucks, but that would have been short sighted if Truemors ever becomes worth something."

Yet, most of the top corporate law firms will defer fees for startups until after they raise their first round. I definitely agree that working with a discount lawyer is a bad idea, but why spend scarce capital when it isn't necessary?

On a side note, these law firms do evaluate the startups and only defer fees for the companies that they believe have a reasonable chance of getting funded, which means that process of finding a law firm to defer fees is a good litmus test of whether or not a startup is ready to raise venture capital. If the law firms won't defer fees, the company has very little chance of raising capital from professional investors. Furthermore, once the law firm agrees to defer fees, the startup creates a well connected partner with an interest in getting them funded who can facilitate introductions to prospective investors.

TechCrunch: Biting the Hand that Feeds It

2007-05-22T10:24:00.000-07:00

Michael Arrington recently posted on TechCrunch that Silicon Valley needs a downturn. He writes:

"Times are good, money is flowing, and Silicon Valley sucks... People become more anxious, and more likely to snap at someone in anger or jealousy. Rumor mongering spikes, and a crucial balance is lost. It’s no longer about beautiful products and genius developers. It’s about the money and the status, and hot PR chicks and marketing departments."

This is a legitimate position to take (that I personally disagree with), but it does seem to me that TechCrunch is one of the biggest beneficiaries of the Silicon Valley startup hype cycle. More venture money means two trends that TechCrunch would seem to benefit from:

More startups get funded, which generate more pageviews for TechCrunch as they write about new products resulting from the funding
Larger marketing budgets to fund advertising and conferences

Valuation aside, I can't think of a company that fundamentally relies on the swelling interest in web 2.0 more than TechCrunch.

On a side note, I don't really understand the animosity for marketing departments that he associates with the boom. I'm obviously a little bit biased, but I think marketing plays vital role in any startup. There are many examples of bad technology companies that are successful because of great marketing, but few examples of great technology companies that are successful despite bad marketing.

Set a 30 Minute Meeting w/ Stu Phillips

2007-05-21T21:07:00.000-07:00

Setting meetings with VCs can be a daunting task for first time entrepreneurs. Sure, Silicon Valley is teeming with advice that its easy to meet with VCs... all you need is an introduction... but first timers inherently have small networks and often don't can't get to VCs.

In a recent blog post, Stu Phillips, a general partner at Ridgelift Ventures, is offering entrepreneurs a 30 minute "no harm, no foul" meeting to give feedback on ideas. He writes "If I like the idea, I'll do what I can to help… funding, brainstorming, strategy…" This a great opportunity for entrepreneurs to get advice from a technical investor with nearly a decade in venture capital. You can find Stu Phillips email address on his firm's about us page.

Even though Mr. Phillips is opening up his calendar, its still important for entrepreneurs to do their homework before meeting with him. Does Ridgelift invest in the stage of development and industry which your startup is at? Do they have any competitive investments? These are questions that need to be answered before meeting with any VC.

Ridgelift Ventures is a new firm and there isn't much information on the website about their investment philosophy. However, in their initial press release last year, they wrote of their intent to invest in "early-stage investments in the Internet, information technology, wireless, and networking marketplaces."

I think its great that Stu Phillips is doing this and I wish more VCs dedicated some time to meet with first time entrepreneurs. If you meet with Stu Phillips and you're looking for more meetings, check out this series of posts that I wrote on setting intro meetings with VCs.

Truemors Launches on Just $12K

2007-05-16T09:37:00.000-07:00

According to an article in the Wall Street Journal this morning, Guy Kawasaki was able to launch his latest startup, Truemors, on just $12K by using free software and outsourcing development to North Dakota based firm.

"Apparently, Web businesses now aren't much harder to make than YouTube videos.Mr. Kawasaki says he has been working on Truemors for just three months. Because it uses free software, with programming done by a for-hire outfit in called Electric Pulp located in the high tech mecca of South Dakota, the costs are minimal. Mr. Kawasaki says to date, he has spent $12,000 on Truemors."

Starting a business for $12K is dirt cheap. I thought we were cheap at Cryptine, but we were no where near $12K. One big advantage that Guy Kawasaki has is that he is famous and anything that he does will get more attention that 99.9% of entrepreneurs. The fact that such a silly website even got mentioned in the WSJ clearly demonstrates just how famous Guy Kawasaki really is. Don't most companies have be remarkable in some way (successful, unique, controversial, etc.) to get this type of press?

Nonetheless, Call it $50K to hire a PR firm and do some marketing and its still dirt cheap.

Yahoo! Mail Broken?

2007-05-10T13:40:00.000-07:00

I've been trying to send out an email from my Yahoo! account for the last couple of minutes and the site seems to be totally broken. The send button doesn't work at all and while the link to my address book does work, the page is completely messed up.

Great OpenID Site

2007-05-07T17:53:00.000-07:00

Security Roundtable has a great list of links about OpenID.

Baron Davis: Something You Probably Didn't Know

2007-05-04T14:41:00.000-07:00

I have a pretty low opinion of most professional athletes' off the court behavior and given Baron Davis's history as a malcontent at previous teams, I didn't think he would be an exception to my stereotype. However, in getting to know more about Baron, through various articles and interviews since he was traded to the Warriors, he clearly doesn't fit my pre-conceptions. Baron comes across as articulate, thoughtful, positive and always seems to be having a good time. His smile seems to be 3 feet wide. Anyway, his day working at McDonalds was something else that I didn't expect. Check out the video and pictures they're pretty cool.

The Warriors playoff series against the Mavs was one of the most entertaining basketball that I have seen in years. The basketball on the court was fantastic, but rooting for players that actually are suitable role models has been a good feeling that I haven't experienced in a long time.

Bay Area Sports Twilight Zone

2007-04-09T22:17:00.000-07:00

The Giants are 1 - 6 and the Warriors hold the 8th seed in the playoffs with just 4 games left to play. The Giants have been pretty good on the whole the past 15 years. On the other hand, the Warriors have been terrible during the same time period. This role reversal is just too weird. What next... Stanford losing the Directors' Cup?

Ask VCs to tell you "NO"

2007-04-05T00:42:00.000-07:00

Rick Segal wrote a post a couple of days ago about entrepreneurs misunderstanding VC's intentions. I found that most VCs are quite flattering with compliments and will rarely give entrepreneurs a flat out "No." Usually, the VCs say they would be interested if certain milestones are met and they nearly always offer to keep in touch. I don't blame VCs for taking this approach. Why wouldn't they want to invest if the entrepreneur hits the milestones they are looking for? I found knowing what the VC felt were important milestones to be helpful and one of my goals in meeting with investors became setting the stage for milestones I felt that I could hit. That said, it is clear that most entrepreneurs are overly optimistic and misinterpret these statements as signs of actual interest.

I think the best way to gauge a VC's interest is by their actions. Some basic signals include whether or not they respond to your email and if yes, how quickly? Do they want more information? Are they willing to take additional meetings? Do they want to speak with a customer? Better signs of interest would be their willingness to introduce you to people they know and getting partners involved.

Asking a VC what immediate next steps they would like to pursue is a pretty good proxy for asking them to tell you "no" and is probably something that should become a standard part of investor pitches. If a VC doesn't have any immediate next steps in mind, don't hold your breath.

Why Question Venture Hacks?

2007-04-02T23:05:00.000-07:00

VentureBeat posted a story earlier this evening about a new entrepreneurship blog called Venture Hacks. The blog is written by two entrepreneurs that have played key roles in venture backed startups including Vast, Songbird and Epinions as well as working on the other side of the table in non-partner positions at blue chip VCs like August and Bessemer.

Despite these qualifications, I was surprised to read a negative comment on the VentureBeat article questioning the validity of the authors experiences. The comment's author wrote:

"Should a couple of unproven dotcommers really be dispensing advice about how to deal with VCs? Vast.com? Music browser Songbird? These guys are the gold standard?"

Why would anyone would want to discourage entrepreneurs from writing about their experiences? Dealing with VCs and building a successful startup are not necessarily the same thing. Also, one can learn a lot from failure. I know I did. Neither of the Venture Hacks authors have had a runaway success but that doesn't mean other entrepreneurs can't learn from their experiences. Furthermore, I believe that the bar for raising capital from professional investors is much higher than most people realize. Venture capitalists perform extensive due-diligence on there prospective investments and one of the most important things they look for is talent on the management team. Thus, there aren't many slouches who have successfully raised venture capital and I'd be willing to bet that the Venture Hacks guys are pretty sharp.

For me the bottom line is that I want to encourage entrepreneurs to share their experiences so that we can all help demystify the process of raising capital. Misinformation about the process of raising capital leads entrepreneurs and investor to both waste lots of each others time. Understanding what an executive summary looks like or what issues to address in an investor power point presentation isn't rocket science and there are no rational reasons to be secretive with this information. Everyone in Silicon Valley benefits from lowering the transaction costs of funding startups, which means more companies get funded, more jobs get created and tax revenues increase without raising taxes.

Shouldn't executing disciplined business plans around new technologies be the challenge of entrepreneurship? Contacting prospective investors and understanding what they want to hear should be the easy part.

Freddy Kreuger + Hannibal Lecter = Al Davis

2007-03-27T22:42:00.000-07:00

Wow, I know Al Davis's (on the right) health is failing him these days but he really looks awful. He looks like a cross between Freddy Kruegar and Hannibal Lecter. Seriously, he has the complexion of Freddy Krueger and the facial expression of Hannibal Lecter. I can't claim to be a fan of Al Davis, but I certainly hope he is doing better than he looks. Davis has a long history with the NFL and, love him or hate him, he really has made a big impact on the league.
Yet, his football decisions seem to be getting crazier and crazier and his downward spiral has gone beyond the point of sadness to just plain pathos. There are some admirable qualities to Mr. Davis's persistence, but it really is time for him to let go and enjoy whatever remains of his health.

Bill Joy's Law

2007-03-27T22:02:00.000-07:00

I attended SDForum's Platform 2.0 earlier this morning where I heard a great line. According to Richard Probst, Bill Joy's law is:

"Most smart people don't work here... for any definition of here"

I hadn't heard this "law" before and I love it! One of these days I need to come up with my own law... Fife's law. I like the sound of it already, but I'd better get cracking on deep thoughts.

The Worst Day to be Sick

2007-03-14T10:13:00.000-07:00

I must have eaten something bad yesterday because I haven't been able to keep food down since about 9pm. I'm feeling a little bit better this morning and I'm pretty sure this is one of those 1 day kind of things but being sick is still annoying... especially when the timing is this bad. If I could have just been sick tomorrow I would have been able to watch all the NCAA Tournament games. Curses!

Stanford vs. Ohio State

2007-03-12T10:15:00.000-07:00

The Stanford Cardinal Men's Basketball team limped its way into the NCAA tournament this weekend. The team has been very inconsistent this year, with a couple of impressive wins and several depressing losses. During the first half of the season, their star freshman, the 7 foot Lopez twins were still finding their way on the court. Brook Lopez had a breakout game against USC and has played like an animal ever since. Yet, despite the Lopez twins emergence, Stanford has lost 4 of its last 5 games heading into the NCAA tournament and they play Louisville (ranked #12) in the first round.

I don't think Stanford will get past Louisville, but if they can somehow string a run of wins together, a really interesting match up against Ohio State could happen in the elite 8. Ohio State has Greg Oden, the 7 foot 280 pound freshman phenom who is the sure fire number 1 pick in the NBA draft lottery. Oden is regarded by many as the best big man prospect since Shaq. Watching Oden battle the Lopez twins would be an awesome match up. Ohio State is the number 1 team in the nation but if there is any team in the nation that matches up well against Ohio State, it just might be Stanford.

I hate Joomla (okay not really)

2007-03-09T10:52:00.000-08:00

At the moment I am trying to design a landing page in Joomla. Admittedly, the real problem is that I have no idea what I am doing, but Joomla's WYSIWYG editor is extremely frustrating. The editing tools are great when the work, but they are so inconsistent. I'm trying to do simple things like change column widths with tables and sometimes it works and others it doesn't. Argh! Then again, I have only the most basic html skills to begin with so its actually quite cool that products like Joomla and Nvu allow non-developers to even attempt to work on websites. Its just really frustrating be so close to getting what I want out of the software, but not quite be able to finish my project.

Jeff Nolan's Voting Guide

2006-11-07T00:17:00.000-08:00

Jeff Nolan has posted his thoughts on the candidates and measure in today's election. While I don't agree with everything he has written, it does serve as a good cheat sheet for anyone who doesn't have time to research the issues in depth.

Contrary to popular belief, local elections do have the greatest impact on our lives. Yet, paradoxically, they always have the lowest voter turn-out. Now that Mr. Nolan has provided everyone with a cheat sheet there's no more "I didn't have time to research the issues" excuse, so get out there and vote!

Louisville & West Virginia are Both Overrated

2006-11-02T22:44:00.000-08:00

Louisville's victory over West Virginia earlier this evening gives them a clear shot at making the national title game but does anyone really believe that either team can play with the rest of the top 10? The real problem with the BCS system is not how the points are calculated but rather how the voters rank teams. Why do close losses against powerhouses move teams down in the rankings? How is it that a team that would be an underdog against every other top 10 team can wind up playing in the Championship game?

Voters in the human polls just don't place enough emphasis on strength of schedule. Going undefeated is not enough to deserve a spot in the national championship game. I would rather see the national championship game feature teams that both have two losses coming out of power conferences like the SEC, Big 10 or Pac 10 than Boise State or Louisville. Schools that play in weak conferences have to schedule big time non-conference games if they want to be taken seriously.

Before playing each other this evening neither Louisville nor West Virginia had played a current top 25 team and both had only beaten 1 top 50 team. I just don't believe that unproven teams deserve such high rankings nor do I believe that playing each other demonstrates much about the victor.

According to CBS Sportsline's rankings West Virginia and Louisville have played the easiest schedules of any of the other top ten teams. (Note: I used a value of 120 for all non D1 teams)

39.33 USC
45.33 Tennessee
49.08 Michigan
49.42 Florida
51.08 Cal
55.42 Texas
55.58 Auburn
57.17 Ohio State
58.92 Louisville
62.25 West Virginia

Yet, these rankings hide the benefit that both teams strength of schedule rankings get from playing each other and Rutgers, which is also clearly overrated at number 12. Removing tonight's game and the Rutgers game from Louisville and West Virginia's schedule drops their average opponent's ranking to 69.3 and 73.0 respectively.

One could argue that it isn't fair to drop the top two teams from Louisville or West Virginia's schedules but the rest of the top 10 averages 58.73 average opponent ranking even after dropping their top two teams. Thus, it seems clear to me that this wider gap actually demonstrates how much weaker Louisville and West Virginia's schedules really are.

Here are a couple more ways to look at the data:

Average Opponent Ranking Less the Worst Two Opponents

51.30 Louisville
53.00 West Virgina
39.86 Rest of the Top 10

Average Opponent Ranking Less the Worst Two and Top Two Opponents

62.38 Louisville
64.13 West Virginia
47.78 Rest of the Top 10

Number of Games Played Against Top 50 Opponents

4 Louisville
4 West Virginia
6.5 Rest of the Top 10

Off to Cape Cod

2006-10-24T23:26:00.000-07:00

Well, I'm off to Cape Cod Wednesday morning. I'm attending my friend Doug's wedding in Harwich, which should be a lot of fun. Also, my grandparents used to have a house in Chatham and I spent many weeks there in the summer growing up, but I haven't been back since I was about 12 years old. I'm definitely looking forward to seeing two friends get married and re-living some of my old memories from Chatham like Oyster Pond, the wind mill, the Ben Franklin toy store on Main Street and the Chatham Athletics baseball diamond. It should be a fun couple of days.

Movie Masher Launching to Sell???

2006-10-20T00:24:00.000-07:00

VentureBeat reports that a new video editing startup called Movie Masher simultaneously launched and put itself up for sale on VentureBoard last week. Most web 2.0 startups are looking for angel or venture money around the time of their launches so advertising for an outright sale is unusual and I am curious to see the outcome. Here are some of my initial thought-bites:

1)I’m not a heavy video watcher or editor but Movie Masher does look cool. I haven’t used its competitors like Jumpcut or Eyespot, but Movie Masher seems to (or at least claims to) have more advanced editing features and given the current interest in video (and despite the fact that editing seems like a feature rather than a full blown business) I do think there is room for more than one video editing exit.

2)Launching with the intention of selling strikes me as a bad idea because it reduces the startup’s leverage in any acquisition conversation. The ability to say “no” or walk away creates leverage during negotiations. Normally, startups have two ways to say “no” to potential acquirers:

Staying independent (bootstrapping, raising venture capital and/or IPO)
Having multiple prospective acquirers join the bidding

Movie Masher has told the world that they don’t want to bootstrap or raise venture capital so now they can only create leverage in their negotiation by finding multiple prospective acquirers. (Of course I do wish them the best of luck and as I wrote above, I am very curious to see how this turns out.)

3)My observation of the current environment is that consumer internet startup valuations are derived primarily from user growth, management team and advertising revenue because web 2.0 technology is not generally to be considered deep, valuable or protectable. Given that Movie Masher just launched with virtually no traffic compared to Jumpcut or Eyespot and that its investor prospectus implies that the founder does not want to stay with the company beyond a “negotiated deployment contract,” it is hard to see much value in the company through current market measurements.

4)I don’t understand the valuation method in the investor prospectus, which focuses on the potential cost of development. While M&A transactions are fundamentally about the prospective acquirer’s decision to “build, borrow or buy,” the old sales saying that pricing is based on value not cost certainly comes to mind in this situation. In fact, I don’t think that I’ve ever heard of a company valuing itself based on how much it cost to get itself to its current state. Typically value is derived from some form of DCF projection, competitive bidding or some other industry specific metric (which is essentially a long-term proxy for some variation of DCF anyway), as is the case with users and web 2.0. Furthermore, the cost estimates are based on hourly development rates of $80 and $100. I don’t know much about outsourcing, but I have heard that talented Indian software developers earn about $12K per year, which would imply significantly lower hourly development costs. If I were going to use cost to think about valuation, my thought process would be more likely to focus how much it would cost me to add Movie Masher’s unique features if I were to buy Eyespot, which wouldn’t get me into the $2M range that the prospectus suggests.

5)However, Jumpcut was acquired by Yahoo for a reported $15M at the end of September. Alexa reports that Jumpcut had exponentially more traffic than Movie Masher at the time of acquisition Jumpcut wasn’t exactly a major Internet brand or destination either. Furthermore, the video space is really hot and I could see someone wanting Movie Masher’s technology despite everything I’ve written previously. If a sale were to be negotiated today, my gut feeling is that a value of $250-500K would be fair… but getting any kind of user traction over the next couple of weeks/months would change everything… and again, I truly hope the founder gets as much as possible for his hard work.

6)Lastly, does writing about a startup posting on VentureBoard represent another conflict of interest at VentureBeat? To me this issue is not clear-cut. On one hand, VentureBeat is definitely bringing extra publicity to a company while it is also selling them services. On the other hand, I do think this is an interesting startup development and I obviously believe that it is newsworthy as I’ve take the time to write about it myself.

Gonna Need A Lot of Flowers

2006-09-24T20:51:00.000-07:00

Jay Gibbons, a designated hitter for the Baltimore Orioles, lined a foul ball into the stands earlier this afternoon. Unfortunately, the foul ball hit a spectator in the ribs. Even more unfortunately for Gibbons, the spectator was his wife. Thankfully Mrs. Gibbons is reportedly bruised but okay overall. On the other hand, Jay Gibbons will be sleeping on the couch until 2019.

3 Additional Investor Preso Tips

2006-09-21T23:58:00.000-07:00

Guy Kawasaki's 10/20/30 rule of investor power point presentations is a great guide on how to pitch your startup to a venture capitalist. If you are preparing to pitch and investor, Mr. Kawasaki's post is a must read and rather than rewriting his article I'll just add three quick tips that I learned from my experiences with Cryptine Networks.

1) Never send your power point slides in advance to anyone

If you follow the 10/20/30 rule, your slides don't convey the entirety your key points without explanation. Sending your slides in advance allows your audience to build assumptions without your guidance. This bit me a couple of times at Cryptine Networks in two different ways. First a VC asked me for the slides, in addition to my executive summary, in advance of our introductory meeting. I was happy to send my slides to him, but it really wound up disrupting the flow of the meeting. The problem was that the VC felt he understood my pitch from the get go and asked me to skip several slides. This is kind of a catch 22 situation because if you don't skip the slide(s) you risk losing the VC's attention while you bore him/her with information they think they already know and if you do skip them you risk the VC missing key points. I skipped the slides but it was clear the VC hadn't really understood the points I was trying to make and that hurt me for the rest of the presentation.

The second case where I really lost a great opportunity was when a VC asked me to send my investor preso to one of his experts as initial due-diligence after my second successful meeting with him. After his expert had a negative reaction, I was able to convince the VC to share his feedback with me anonymously. To my dismay the expert was skeptical over issues that I always address in the spoken part of my presentation but not directly in text of the the slides. In fact, I agreed exactly with what the expert was saying and felt that I had legitimate answers to his questions but unfortunately there was no way for me to discuss the issues with him directly. If I had pushed for a webinar instead of just sending my slides I just might have raised my seed round from one of Sand Hill Roads most famous VCs. That mistake really hurt.

The point in both cases is that your investor presentation is not merely the slides. Its what you say, how you emphasize it and the dialogue that ensues with your audience. While the slides themselves are important, they are not sufficient alone and sending them in advance has no upside. If an investor asks you to send your pitch slides in advance, a perfectly legitimate response is "I use a sparse presentation style so my slides are meaningless without my explanation and I'd prefer to wait until we meet to share them." Executive summaries are much more appropriate to share in advance. But that said, if an investor will only meet you if you send the slides in advance, by all means take the meeting.

(I think Mr. Kawasaki may have addressed this issue in the Art of the Start, but I can't find my copy for confirmation and my experience suggests that the point is worth repeating.)

2) Make the most of your meetings

In the first example I mentioned above where sending my slides to the VC in advance derailed the meeting, I was still able to get valuable introduction to a prospective CEO for Cryptine Networks from the VC even though he didn't want to invest. I knew that as a group of first-time entrepreneurs, management team (and myself as CEO) was going to be viewed as a weakness. Thus, when I explained the management team slide I got in the habit of asking the VCs if they knew of any potentially good CEOs for the company and I was surprise how often I got favorable responses. It is definitely possible to use this strategy for almost any weakness. For example, one could say: "Here is the business model that we are considering, but I'm curious to know how you think we can maximize our ability monetize traffic?" By addressing potential weaknesses as open questions you can also help establish key milestones with the VC even if s/he isn't ready to invest. After I established key milestones I sent follow up emails every time I knocked one of them down, which allowed me to turn mediocre initial meetings into positive second meetings several months later. If you have a bad meeting with an investor, at a minimum you can benefit greatly from simply attempting to understand why it all went wrong, but I believe that much more opportunity is always on the table.

3) Wednesday at 10am

VCs are fickle because they see a lot of bad pitches and it is really easy to lose their attention. The best way to keep a VC's attention is to have a great pitch. However, there is no need to stack the odds against yourself by scheduling a meeting for 4:30pm on Friday afternoon. Everyone is starting to think about the weekend late on Friday afternoon and if your pitch falters the VC is going to be that much more anxious to get of the meeting early. 11am and 1pm are also bad times because venture capital is a relationship business and going out to lunch is common. 9am isn't great because the VC maybe just getting into the office and therefore be 20 minutes late to the meeting instead of just the mandatory 10. Mondays are bad because most VCs have staff meetings and many people are grumpy and/or hung over from the weekend anyway. Tuesday is much better than Thursday, but long weekend trips can effect both days. If the VC is running to catch an afternoon flight you've got a short leash on Thursday morning. If the VC stayed in Tahoe for an extra day than your Tuesday is his/her Monday. But everyone is in the office on Wednesday. Thus, Wednesday at 10am, 2pm and 3pm are the time slots most likely to optimize your VC's attention span. Tuesday at 10am, 2pm and 3pm is an acceptable substitute followed by Thursday at 10am, 2pm and 3pm. To keep this tip in perspective, if an investor can only schedule a meeting at 4:30pm on Friday, by all means take it. However, if you do have flexibility shoot for 10am, 2pm or 3pm on Wednesday.

Google's False Lesson for Entrepreneurs

2006-09-21T00:08:00.000-07:00

Over a couple of Oreo Cookies and glass of milk earlier this evening my mind wandered to the subject of why I dislike Google so much. I've written previously about how I don't think there are many (any?) lessons for early-stage entrepreneurs to learn from Google, how I believe so much of the company's success is derived from luck and how much their hubris turns me off. However, I've never been fully satisfied with the post because it doesn't quite express exactly where my feelings come from. Yet, somewhere between dunking my Oreo in milk and stuffing my face, it dawned me that Google really bugs me because it seems like so many entrepreneurs in Silicon Valley misinterpret a key lesson from Google's success.

Google is routinely sited as an example of a company that won because it had the best technology. I couldn't disagree with this statement more... No company ever wins because they have the best technology. Success is built upon creating a meaningful value proposition, communicating it effectively and executing in sales. Having the best technology may or may not be a part of this formula.

This false lesson from Google seems to be most dearly held by entrepreneurs with engineering backgrounds. Its rare that I meet a software developer in Silicon Valley that prefers Windows to Linux or Unix, which ironically means that the most glaring example that the best technology does not always win is staring them in the face 8+ hours per day.

There is no doubt that some of my feelings towards Google are irrational and therefore I'll probably never be to fully explain them but this post helps me get a little bit closer and vent on a day when another Googlite has started making angel investments.

VentureBeat Controversy

2006-09-20T11:14:00.000-07:00

VentureBeat posted an article that is drawing a lot of criticism for being blatant self promotion. The guest post by Auren Hoffman is a rant of why the author dislikes evite. Many people share the belief that evite's service isn't up to par. However, the post's criticism of slow servers and poor user profiles seems weak, but more importantly it fails to mention that Mr. Hoffman is an investor in a new evite competitor until the very end when he plugs his investment as a possible solution. Furthermore, his description of why his investment might be a plausible alternative is merely his statement of "I love this site." There is nothing wrong with Mr. Hoffman explaining why he made his investment, but the post should have been titled as such, rather than "Why I hate Evite."

This brings up the question of how standards of journalistic integrity apply to blog media sources. It is clear to me that this post would not have met journalistic integrity standards for a traditional media source like the San Jose Mercury News. On the other hand, I have no problem plugging a friend's company on this my personal blog. If I like a service or want to help a friend out, that is my business. However, I do expect objectivity from traditional media sources. Yet, do blog media brands like VentureBeat, TechCrunch, GigaOm and SiliconValleyWatcher represent a new middle ground?

One great aspect of the blogsphere is that there doesn't have to be a definitive answer to this. Matt Marshall can have one take and Michael Arrington can have another. Personally, I think its great that Blog media sources have been able to adopt the informal and conversational nature of blogs but I do expect them to uphold the same standards of journalistic integrity as traditional media.

I think Matt Marshall is an excellent reporter. He did a great job at the Merc and I've read almost every article he's written for SiliconBeat and VentureBeat this year. Mr. Marshall has enough credibility with me that I can get over any single incident. That said, I have no intention of continuing to read VentureBeat if he does not continue to up hold the same standards of journalistic integrity on VentureBeat that he maintained at the Merc.

Here is what others are saying about the article:

Paul Kedrosky - The Trouble with Investor Bloggers
ValleyWag - How Not to Publish a Guest Post
The Digital Taco Stand - Tainted Commentary?
Matt Ingram - The Honeymoon Seems to be Over, Matt

After a brief Technorati search, I wasn't able to find any positive links to the article, but if anyone else finds them please let me know.

Matt Cain is the Hottest Pitcher in Baseball

2006-09-14T22:50:00.000-07:00

The Giants rookie pitcher Matt Cain is quietly putting together an unbelievable performance down the stretch that is helping the team claw (or limp?) their way back into the NL WildCard and NL West races. Cain hasn't given up any earned runs in his last 4 starts for a total of 29 2/3 shut out innings. I don't want to jinx Cain, but it really isn't too early to start talking about Orel Hershiser's record of 59 consecutive scoreless innings pitched. In fact, Cain's only given up 1 earned run over his last six starts and 42 innings pitched. During the 6 game stretch Cain has 5 wins, 42 strikeouts, an era 0.11 and a whip of 0.79. Amazing.

Searching For Andrew Fife

2006-09-14T13:17:00.000-07:00

According to sitemeter, 2.4% of recent traffic to this blog comes from searches using the phrase "Andrew Fife" or the same phrase w/o quotes. I find it both amusing, flattering and disturbing that random people are searching for information about me. On the one hand its flattering to know that people are interested in learning about me. On the other hand, I've always considered my self to be a relatively private person and its a little bit disturbing to not know who or why people are digging up information about me.

I always do quick searches on people before I meet with them to get an idea of their backgrounds, skills and interests. I'm sure that this accounts for some of the search traffic but there are a lot more searches going on than I have meetings these days. There is no doubt that I am bringing publicity to myself by writing this blog and that probably explains the rest of the searches.

As I think while I write, its not that I mind people searching for information about me, its more that I am curious to know who and why people are searching. The good definitely out weighs the bad in this case, so its not really something that I am losing sleep over. However, I am curious to know what other bloggers experiences are with this. If you track your blog stats, what percentage of your visits come from searches of your name? Is 2.4% high, low or average?

SideFlicks Video Widget is Pretty Cool

2006-09-13T22:11:00.000-07:00

This summer I've had the pleasure of meeting several people in person who I'd previously gotten to know via the blogsphere. Obviously its not possible to meet everyone, but I'm always interested in finding new ways to connect with other bloggers and I was really excited when my friend Dave told me about his latest project called SideFlicks. SideFlicks is a widget that allows readers to post video messages for each other without having to bother setting up any fancy equipment or even worry about uploading.

I've added SideFlicks to my side bar and posted my first message. If you have a webcam, please introduce yourself, I'd love to get to know you!

I Disagree w/ Paul Kedrosky on VC Bubble Data

2006-09-13T14:36:00.000-07:00

Paul Kedrosky wrote a post earlier today disputing VentureOne's claim that the latest funding stats indicate a bubble in venture funding. VentureOne reported that median pre-money valuations rising from $15m in 2005 to $20M in 2006, brought valuations back to bubble levels of 2000. Mr. Kedrosky digs deeper to dispute the implication of a bubble by breaking the numbers down by round. As it turns out first round funding valuations stayed flat at $6M and Mr. Kedrosky writes:

"First-round valuations, the place where bubbles are born, were flat in the quarter. Nothing changed. It is later rounds where valuations are going up, which can be read as a positive sign: Business are delivering results, and investors are paying up for those results. I'm hard-pressed to see why that's a bad thing."

The problem that I have with this is that second round funding valuations jumped from $12.5M to $20M. Not only is that a big jump, but very few startups that raise a first round are unable to raise a second round because the signs of success are rarely clear at this stage. The bar is much higher for raising a series A round than a series B. Few startups look like run away successes or total failures at this juncture so it generally makes sense to invest more capital at this stage to see how things play out.

A 60% jump in second round valuations could mean that the signs of first round startup success appear to be so clear that the perceived reduction in risk has pushed prices upward. However, it seems more likely to me that larger funds are simply bloating second round valuations.