I've decided to periodically point you to cool companies I come across. 43 things is one of those cool companies. In a recent blog post, Josh Petersen the CEO talks about passing the 1 million registered user mark and going platinum. This company is not exactly undiscovered....but they're really a study in new net organizations: 7 people rumored to be doing about 400K per month in revenue!
Serendipity from Boston
I had a phone call with a guy who was operating in the technology scenes in Boston in the mid to late 1990's. We hadn't really spoken before but knew lots of people in common. He mentioned a store called Cybersmith which was a retail operation that opened in Harvard square around 1994. I remember it like it was yesterday. Lots of buzz around it -- a cool retail concept that I don't think ultimately worked. Do you remember it?
It was fun to reminisce with him about that time
LineBuzz Rocks
I just installed a new widget on my blog called LineBuzz. It's a simple but very powerful concept for bloggers: it allows inline commenting on a blog post. I just installed it and am pretty excited about the application ....please try it out and let me know what you think. My hunch is that this thing has viral legs....let's watch it run together. It was created by a new friend of mine in Seattle -- Mark Maunder....a cool guy I met at the Seattle OpenCoffees.
Google as the new Microsoft
We just had a management meeting and someone said, "Google owns the internet and let's not forget that". Anyone who doesn't deal with that reality in the startup world, isn't dealing with reality.
Google's deal with Double Click only increases their market share and they're already using their position to their advantage. I don't think it's good when companies get this powerful -- but it's the facts, gotta deal with it.
I predict more and more law suits for google and more and more attorneys for google's payroll. This is very similar situation to Microsoft in the 1990's.
Kefta acquired by Acxiom
This past week Kefta was acquired by Acxiom for an undisclosed amount (it was a good exit).
The story is one that is filled with good karma and good entrepreneurial lessons. The most notable part of the company story from my perspective was the founder perseverance. In the face of market and financing (i.e. venture capital) adversity, the founders managed to bring the company back from the brink of bankruptcy in 2004! Philippe, Michael, and Fazal should be congratulated for a outstanding job!
I'm going to blog about this story over the next few days....stay tuned.
Time as the enemy
I wrote yesterday about time being the enemy....people want to know why?
It's simple. Judy's Book is onto a new evolution of its business. I'm feeling good about what we're doing but we've got to move faster. I think there's a real opportunity to grow a business in the local shopping space and we're very well positioned to execute on the opportunity ....we just need to move more quickly on that opportunity. More product evolution, more consumers, more traffic, more revenue....yesterday.
There's a second reason time is the enemy. As a company that is evolving it's business model fairly significantly and approaching it's 3rd birthday, there's an even greater sense of urgency to get it right and make substantial progress quickly. Everyone's patience (including mine) for getting it right is that much thinner than when you just start out -- that's just a reality that I deal with each day and in that way, time is the enemy.
I want to be clear -- my post about time was not as some reader has suggested that we are running out of cash (we've got plenty of runway thankyou) or out of business.
The Rodriguez family dynasty in boston: 2 acquisitions, 1 family, 1 month
One of my partners at abuzz recently sold his recent venture to Hitachi ventures for a cool $120,000,000. Read about it here. I knew at the time that Andres was a super talented guy and now he's gone out and proven it big time. Way to go Andres -- my only question for you is not how you did it but rather...how in g-ds name did I not participate in the A round of financing on this deal!
Then just this past week I was reading techcrunch and read this post about tabblo being acquired by HP. At first I wasn't sure whether this was Antonio's photo company or not but -- I followed the links and sure enough ...it was. Truly impressive guys -- 2 companies sold to massive companies that begin with the letter H in one month. My hats off to you and the beginnings of a true Boston dynasty. Hope I can celebrate with you soon.
Timing of joining a start up company
I was on the phone with the CEO of one of the companies I have an investment in last week. We were talking about the timing of hiring a new VP of Sales. We had talked to this candidate 2 years ago and for a number of reasons it wasn't the right time for him to join the company. At that time, the company had a lot of organizational, management and business development that it needed to do -- in some respects, the candidate was more mature than the company was at that time. Well, now may be different. We've re-engaged the hiring conversation with him (we never really lost touch) and are actively discussing him joining the company. I think we'll offer and I think (hope) he'll accept. It's interesting to think about all that he's missed at the company in terms of maturation.
Everyone tends to think it's best to join a company at the beginning. And personally, I prefer it -- I've got a passion for those birthing days. But as I think about the situation with this candidate, I gotta say, there's a lot to be said to coming in when the birth is over and the business is early and clear. I'd recommend anyone who is considering joining an early stage company to give thought to what age and level a company is at prior to joining. Some of this analysis is economic -- revenue and profit and some of this analysis is management and founder maturity.
Mission Statements with meaning
In today's world of business, every business seems to have adopted the practice of creating a mission statement. But creating a mission statement and bringing that mission alive are two very different things.
Passion for the mission of a business is critical. It's what keeps you going on the long days of hard work. Here at Judy's Book -- passionate mission is easy because of my relationship with Judy -- my deceased mother in law. She was a great lady! And I'm even more excited today because today was a day that mission came alive -- we have had to make decisions about our business that are consistent with our mission. These decision are defining, exciting, and rewarding to our future customers (hopefully). I'd tell you what the decision was -- but then there wouldn't be a surprise for you when we actually launch the live beta product. In other words, if I told you I'd have to shoot you :-)
The important thing to remember is that it's not the words of the mission statement that can create business success but rather the decisions that the mission statement requires that creates success.
Indispensable
The key for any early stage product is to become indispensable. My Nokia cell phone, nike running sneakers, starbucks coffee are all indispensable....the objective in technology development is the same. Microsoft Outlook, Salesforce.com, CNN.com, Powerpoint, Google, are all indispensable for their respective customers. The challenge for a start up is seeing the indispensable before it exists. Now if we can just do the same thing here at Judy's Book, I'd be happy.
Recruiting in Seattle: An ad for disgruntled people in Redmond
We've been recruing at Judy's Book without immediate success. We've taken the standard online recruiting steps and now we're going guerrila.
First, we are offering a TIVO as a reward to anyone who refers us to a .net developer candidate that accepts a full time position that we offer.
Second, I've been reading about how the blogoshpere is becoming a good way to recruit talent so as an experiment I've decided to post the job description here.
If you know an experienced .net developer who wants to be part of a hot new start up technology company located in Seattle -- please pass this blog offer along.
Business therapy
My partner and I have hired a business therapist to "consult" for us. The therapists job is to help my partner and I communicate better and as a result, make better decisions with fewew unintended consequences. I've learned over the years in my various companies that internal conflict is the largest source of stress, distraction and ultimately failure for small start-up businesses. We've been working with this consultant for a few months now and already have found it to be effective and practical.
I arrived at the idea of using a business therapist after my first venture failed because of personal issues between my partner and I. Since that time, I often have used a business therapist. I used a business therapist thoughout my time at abuzz and found it very valuable. The therapist helped my two partners and I navigate the terrain of high tech start up in 1996. The person was a good reminder that a start-ups battle should be external on the marketplace -- and not internal focussed on each other.
Great online promotions
Seth Godin mentioned Judy's Book today. Not sure how he heard about us -- but I've long been a fan of Seth Godin's work and writing....dating back to 1996 when he was at Yoyodyne and was one of the early masters of online promotions.
I'm trying to come up with a great contest to promote Judy's Book....
Today I heard about a great online promotion by a t-shirt company. They are running a "best political slogan" contest to be printed on their t-shirts. Internet users everywhere are writing slogans and then voting on the best slogans. One of the more unique thus far : "Vote for abstinence in 2004; no bush, no dick"
It makes me think about other great online contests that business are running to get people to contribute and spread the word. If you've got some to suggest -- please let me know.
The top 5 tips for closing a Series A financing with a venture capitalist
Date: Sept 7, 2004
It's been almost 2 months since my last entry. Funny what happens when you fall off the blogging band wagon. Over the course of this week, let me try to catch my reading public up on events that I have omitted. First, Judy's Book successfully raised 2.5 MM with Ignition Partners and Ackerley Partners as investors. The deal itself went very smoothly. Between my last blog entry and Friday, July 23 I negotiated a term sheet with John Ludwig. I've known John for about 3 years and yet had never done a deal with him. In retrospect, he was a gentleman and a scholar during the process. The term sheet negotation was relatively painless: Ignition wanted to put more money to work and wanted to own more of the company. We ended up deciding to take more money than we had originally set out to raise -- not necessarily a bad thing for the business. And I managed to communicate the issues I had around control and emotional dilution to John and Rich Tong, and to their credit they listened and responded graciously and prudently. Once we had a signed term sheet, it was off to the races to close the financing round. Ignition's attorney was Steve Yentzer of Perkins Coie and Judy's Book attorney was David Wickwire of Gray Cary. If I had been writing my blog during that week, I'm sure that I would have had a posted a blog entitled top 5 tips for closing a Series A financing with a venture capitalist....
1) Get everyone to agree to a timeline, especially the venture partner and investor council. Send an email around and manage everyone to that timeline
2) Don't let the attorneys run the deal. There's a healthy balance that you need to strike in managing your attorney as well as investor council. On the one hand, you want to keep your eye on the closing of the financing and keep everyone moving forward expediently. On the other hand, you don't want to annoy or offend the attorneys -- they can make your life tough.
3) Stay in close communication with the lead vc partner -- in this case, I tried to talk with John Ludwig every day just to make sure he wasn't getting frustrated with the process.
4) Know when to give and when to hold-- in every deal I've done, you inevitably have to give on points that seem important but in retrospect aren't. If there's an easy point to give on -- do so. It'll build credibility and flexibility (hopefully)
5) Get it done -- the most important thing to remember is the deal isn't done till the money is in the bank. In the case of the Judy's Book financing, I kept saying to my team that the biggest risk I saw to the financing was the unforeseen world event -- another Sept 11 if you will. If that had happened while I was trying to close, inevitably the entire deal is at risk...so it's important to keep one's eye on getting to the finish line.
Tomorrow I'll write a post on what happened post financing.
The venture capital all partner meeting for Judy's Book
July 8, 2004
The meeting with Ignition went fairly well. It was the standard all partner meeting. 8 white guys and 1 female sitting around a big conference room. The meeting was at 12:30PM. Lunch time. I've found that lunch time is a good time to present to partners. Generally, people are perkier at lunch time even if they're distracted by their food. My partner and I gave our powerpoint presentation. I must admit it wasn't my best performance. I was a bit rusty from the long July 4th holiday weekend. I warmed up though as the presentation went on -- I could tell that we were getting buy in from enough of the room. I got a bit worried when Martin Tobias seemed unusually negative and then he gave me the dreaded crossed arms signal -- fortunately, he later relaxed and by the conclusion of the meeting we were having a good conversation about online local search. What is going to get small to medium sized businesses comfortable with moving their marketing spend online. Was Judy's Book a platform that consumers would endorse and gravitate toward -- and if so, why? While the answers weren't there -- it's the lively debate and conversation that shows that they're engaged and bought in. The meeting ends abruptly. Rich tells me he'll call tomorrow - -i.e. today. It's 2PM and he hasn't called yet. I'm feeling unloved and a little annoyed. Patience isn't my strong suit though it's important in this process. At 3PM I break down and call Rich - -he tells me that he's on another call and he wants to call me back. He also tells me that it was a good meeting and that Ignition wants to move to the next level -- i.e. I interpret that to mean that they'll send us a term sheet. It's now 4PM and he still hasn't called. Patience my friend. Patience.
Raising Venture Capital in Seattle for Judy's Book: an entrepreneurs' perspective on dilution
Date: July 7, 2004
Today I'm sitting in the waiting room of Ignition Venture capital in Bellevue, WA. This is the venture firm that consists of primarily ex-Microsoft guys. I'm waiting to pitch my hot new "local search" start-up idea -- Judy's Book. I arrive 15 minutes early. Venture capitalists don't like tardiness. I'm feeling confident. I know I'm going to get a term sheet as long as I don't blow it. An hour ago, I met with an angel in Seattle who said he'd invest up to 200K -- if and only if I decided to do solely an angel round. He told me that his model is to invest in companies that solely do not take money from those "thieves". His perspective reinforced my own internal debate about the investor syndicate I'm forming. Should I take venture money? I know I can close an all angel round today for 1 million dollars.
The debate about venture money comes down to two things in my opinion. First, Ignition has clear technical and operating expertise that other venture capitalists don't have. Second, venture capitalists in general offer risk reduction. For Judy's Book, risk reduction comes in two forms -- first venture money allows us to raise more money in this round -- instead of raising 1.0 million we could raise 2.0 million dollars. This extra money may provide us with the extra time and roadway to get to a successful exit. Second, the venture money in general provides us with financial coverage in the event the company goes sideways and we need additional funding but don't have the success that we hope or anticipate.
That said, venture capital comes has its costs. There is the financial dilution that occurs -- and with venture capitalists -- it's expensive money. Arguably, more expensive than financing that comes from customers -- i.e. that would be sales and revenue. And, even more importantly, and certainly less discussed in public -- is the potential for "founder passion" dilution. This emotional dilution is impossible to quantify -- and varies widely with the emotional fit between venture capitalist and entrepreneur. In the case of venture capitalists I've worked with before it's easy for me to assess this dilution and have it be a non-issue. In the case of Ignition, a firm that I haven't done a deal with before -- it's harder for me to assess.
Time will tell.
