The funding climate for early stage companies in April 2008

I just had another meeting with an early stage entrepreneur who was commenting that raising capital seems to have gotten harder. I think that's true -- the bar has been raised.  The current economic outlook, the mortgage and financial crisis, the crashing of consumer confidence all have an affect on investors willingness to do a deal for an early stage company.  So my advice to the entrepreneur -- who is a solid guy and has a good business was to focus on getting money from customers rather than investors.  My belief is that the companies that are built during this period of time are going to be stronger and better than the companies that are built during the next growth spurt (whenever that is!).

Feedback on Founders Co-op

I'm on the plane heading back from San Francisco. I had a number of good meetings with bay area venture capitalists. The two meetings that stood out were with David Sze of Greylock capital and with Stuart Davidson of Labrador Ventures.
Some feedback that has me thinking is to beware of funding just small ideas that only need small amounts of capital. While I know we don't have this problem with our current portfolio (both Cooler Planet and Orange Line Media are going to be very successful companies in my opinion), it's good advice. So, if you're an entrepreneur and applying to Founders Co-op be sure to tell us both how you're going to get your first 10 thousand in revenue as well as your first 10 million in profit. Well, hop[efully, you know what I mean.

By the way, sorry if this post is short or hard to understand. Writing posts on the plane on a blackberry is a little tricky.

golds gym customer service continues to suck

For those of you that remember my gold's gym customer service fiasco from a few years ago-- here's an update. I received a blog comment today with the advice "read the contract". It was a atandard cut and paste comment aime I assume at attempting to address the negative word of mouth that golds gym gets online. The email never said -- I'm sorrt you had a lousy experience-- we've changed and hope you'll try us again. That's all they need to say to get a second chance with me.
I wrote back to the email address on the log comment:
Reading the contract is good advice.

My advice to you is to do the same and take accountability for shitty customer service.

I'm not an ignorant or dumb customer. I have a graduate degree. I understand your desire to influence customer perception on blogs....but the best thing I can tell uyou is that in your processes of acquisition and employee trainoing you fail miserably.

Your email only serves to remind me of a horrendous customer service experience. One of the worst Ive ever had with a company (including the airline industry).

Customervice service rule.number 1 - the customer is right. Try saying sorry next time!
Andy

Why Founders Co-op sucks less than venture capitalists?

Disclaimer: I've personally been part of founding teams that have raised over $40,000,000 in venture capital. I've made a lot of money personally working with venture capitalists and plan to continue to do so.   For some ideas and some ventures, venture capital makes a ton of sense. That said, I co-founded Founders Co-op because I thought that the venture capitalist market has holes in it and I'd like to fill those holes.

So does founders co-op suck less (and yes -- as investors we still suck -- i.e. if you can bootstrap your company with no investors you should do so!!!)?

  1. We're entrepreneurs and founders too. We know what it takes to build companies and we know what it takes to raise capital.
  2. We strive to be responsive to entrepreneurs with quick decisions
  3. We're investing our own money
  4. We're willing to invest small amounts of money -- anywhere between 10,000 and 250,000. We don't need to invest at least $2,000,000 or own at least 20% of a company. You'll hear this from vcs.
  5. We're comfortable taking risk and even supporting the occasional flier. We don't have to justify our thinking to LPs.

Introducing Founders Coop

I've been passionate about high tech start ups and entrepreneurs since my career started on the web with Firefly in 1994. How's that for dating myself -- and others who remember what and who Firefly was (the first commercialization of collaborative filtering).
Well, I've just co-founded a seed stage investment fund that focuses on truly being entrepreneurial friendly.  While that doesn't mean, I'll invest in your start up for no equity. It does mean that my partner, Chris DeVore, and I are entrepreneurs first and investors second.  We are not venture capitalists. I'm going to write a lot more about Founders Co-op in the near future. For now, you can read more about us here in the Seattle PI.

Winding down a company takes time

It's been about 4 months since I started the process of winding down Judy's Book. During that time, we've sold the assets, had to settle up with creditors, and are now embarking on the process of dissolving the corporation.  My guess is that I'll be dealing with the remnants of the Judy's Book corporate shell (someone else now owns the web site and traffic) for the rest of the year and may well be dealing with it for a few years. It doesn't take a lot of time but it's a pain to have to keep on top of everything and to wind everything up neatly.  Especially when I'm ready to move on to the next thing...

Seattle Open Coffee is a success and here to stay

I started the Seattle Open Coffee on a trial basis almost a year ago (11 months ago). -- I thought Seattle needed more entrepreneurial culture and figured I'd give it a try.  You can read the opening post here  1 year later and I have to declare this event a success and have decided to make the event a formal part of my schedule for another year!

We have anywhere from 8 to 20 people show up each week. There are some regular faces and new faces each week. It's a completely informal coffee networking event for Seattle entrepreneurs.  Overall, I think the event is a good low key and fun way to start out your Tuesday. Come join us every Tuesday of the week (I'm at about 90% of them) from 8:30AM till 10AM at Louisa's on 2379 Eastlake Ave E.  You can read about it on upcoming here and here. 

One more amazing note on apples retail store

I forgot to mention this in my previous post. I went to the store to exchange one product for another. I was escorted by one of the store greeters to one of the roving cash register clerks. These people roam the store with hand held cash registers. I was able to exchange the item without a problem. At the end of the transaction, the clerk asked if I'd like the receipt emailed to me. I paused and then promptly said yes. I gave them my personal gmail account. This makes receipt saving seamless and painless for me the consumer. It also builds a massive email list for apple. Win - Win ! Very simple and very smart....and surprisingly hard to accomplish in retail stores. I don't know of another firm currently doing this.

Apple retail store experience amazes

I went to the Apple store yesterday. I was truly impressed. As I was leaving the store, I saw one of the employees there approach a customer leaving at the same time. The employee said, "excuse Mam, I'm one of the managers here and I noticed that you were waiting for a long time. I wanted to make sure that you were satisfied with your experience and that there was nothing else we could do for you. " Basically the manager had noticed that this customer might be upset (turned out she was not) and the manager wanted to make sure that this customer did not leave the store with a strong negative consumer experience.
It's hard to appreciate this moment in a blog -- but  I was blown away by this moment of awesome customer service.  Why was I blown away?

  • First, in a land of shitty customer service, this manager had one eye and was king. It was a simple action that communicated a lot about how much Apple the company cares for the customer.
  • Second, I was impressed by the motivation of the individual manager who made this action -- he wasn't getting paid or compensated for going out of his way that much.
  • Third, the action totally avoids negative word of mouth and turns a possible negative into a postive experience.
  • Lastly, the action has network affects on others -- I just overheard the conversation and am now dedicating an entire blog entry to the topic!

blog serendipity

Blog serendipity happens all the time but in the last 24 hours I've had three instances that made me appreciate it:

  1. I was contacted from someone who reads I learned that my friend Tom happened to be in Seattle for 6 hours. He lives in Denver but flew in from San Francisco. I only learned about this from a twit via Facebook.
  2. I was contacted by an entrepreneur in NYC who goes to the NYC Open Coffee organized by a friend of mine -- Nicholas Butterworth. He told her to read my blog and contact me. We had a good conversation about her potential business.
  3. I was contacted by a Tacoma, WA angel who is a fan of my blog.

Thanks to all of you for reaching out. I love to hear from my readers in blog comment or email!

Some thoughts on Hillary Clinton's campaign

I actually think Hillary's campaign has improved over the last few weeks as she's gotten more desperate.  She's taken on the role of the "fighter" and the role of the "experienced one. These are roles that come naturally to Hillary and make her an appealing candidate. Hillary's TV ad with the telephone and children sleeping that is about national security is strong and works. The ad uses tactics that have been traditionally Republican in nature -- effectively, it's a strategy based on politics of fear.  It looks like Hillary's campaign is also trying to raise expectations for Obama, saying that if Obama loses any of the four contests tomorrow, that would mean Democrats are having second thoughts about him.  All these strategies are (imho)fairly effective even if they're a bit desperate. They're the strategies of a true scrappy political fighter.  That said, I think this is a case of a bit too little, too late.
My prediction is Hillary wins Ohio by a small margin, she continues to fight for the nomination, but ultimately loses. Obama is going to be the democratic candidate -- like it or not.

More good economic news

This just in from the NYT (full article here)

Americans are well-aware of their plight. Consumer confidence now stands at a 16-year low, according to a survey conducted by Reuters and the University of Michigan. The confidence index dropped to 70.8 in February, the lowest level since February 1992. Consumers also expect inflation to keep rising over the next year.

Businesses are also feeling the pain. A survey of activity at Chicago-area businesses plunged in February, according to the National Association of Purchasing Managers, falling to its lowest level since shortly after the Sept. 11, 2001, terrorist attacks. The group’s “business barometer” reached 44.5 in February after a 51.5 reading the month before. Employment and production levels fell sharply, as well.

I'm thinking about the implications of this economic environment to technology and venture investing.  No major aha's yet....but I'm noodling.