Focus is hard work

Just had a meeting with one of our portfolio companies. During the meeting, we decided again to stay focussed on the current market and improving all the foundations of the business. It's not sexy -- and at times -- not exciting but it's the hard work that's required to build a business that is worthwhile.  After the meeting, I said to the CEO -- the problem with business is that once success and profits come, we'll forget days like today when success wasn't so clear and it was actually hard to decide to stay focussed. 

Funny email miscommunication between Tony Wright and I

Tony Wright of Rescue Time and I had a major miscommunication over the past year.  Tony used to come to the Seattle Open Coffee's regularly at Louisa's Cafe on Eastlake on Tuesdays at 8:30AM -- yes, the open coffee's are still going on.  For about 6 months straight, we'd have coffee every Tuesday. We became quite friendly.  

At an Open Coffee about a year and a half ago, Tony asked me to invest in RescueTime. I can't remember exactly why -- but I chose not to invest. Shortly thereafter, he stopped attending Open Coffee.  At first, I didn't think anything of it -- I thought he was just busy. But as time wore on, I began to wonder if it was personal.  I emailed him. 

In April 09, I wrote Tony at his gmail address:

I've pinged you a  couple times without a response....thought I'd try again. 
Not sure how to interpret your lack of response....would welcome the opportunity to talk to you. 

The only reason I'm making this effort is because I liked you and your sudden absence strikes me as odd. Perhaps I'm just misreading the whole thing ....just let me know. 

In July 09, I wrote Tony again at his gmail address (You can tell I'm starting to get annoyed):

Tony,
I found myself talking about you the other day to a mutual friend. This is what I said -- "he (i.e. you) used to come to open coffee all the time and I thought we were friends. I'm sure I must have done something wrong -- probably around YC or his fund raising. I've pinged him a couple times to talk to him and get feedback....because I actually really liked him (i.e. you).  It's one thing to have the sense that you've hurt or bothered someone or done something wrong ....it's another, to ask and to get no feedback.  "

I prefer to deal directly with disconnects and miscommunications among people....your lack of response is discouraging. I thought higher of you.

If I did do something wrong -- I'd like to apologize for it.  

If you want to not respond, that's your prerogative. 

On Jan 5, 2010, Tony wrote me an email congratulating me on TechStars Seattle and said how great he thought it was.

Turns out, Tony had created a Gmail filter on my name to filter out my weekly reminder emails about Open Coffee -- he didn't want his inbox crowded with regular annoying emails. But the filter (accidentally) filtered out all emails I sent him. Thus, he never got any of my emails asking him what was going on. 

Kind of funny. Kind of sad. Be careful about modern day email miscommunication -- happens all the time!

Tony is now a regular again at Open Coffee -- Glad to see you there. 

Credit Card Roulette concludes most Founder's Co-op Dinners

We had a great Founder's Co-op dinner this past Wed night.  As investors we meet to discuss new deals and review the current portfolio. The meetings happen every other month -- this past Wed was the first meeting of the year.   Below is the agenda:

Welcome and Overview (Andy & Chris) - 4:00-4:15 (15 Mins)

Company Presentations - Updates 4:15 – 5:15PM (1 hr)

  • LookStat - 30 mins (ends at 4:45)
  • AppStoreHQ - 30 mins (ends at 5:15) 


New Deals - 5:15 - 5:45 (30 mins)

    • One yet to be named company


Other  - 6:00 - 6:30

    • Discussion


Optional Dinner 6:30 - 8PM (location TBD)


I could talk a lot about the meeting but the real meet of the founder's co-op meetings is the dinner and drinks afterwards. We've begun inviting all the founder's of our portfolio company (at least the ones located in the Eastlake office) to dinner. This past Wed we walked down the street and ate at Ravish. I can't say exactly what goes on at these dinners -- not because I'm trying to be secretive -- no, it's rather that the nights are lively conversations and drinks about the meeting, business, and life. Wednesdays meeting felt like it was the holidays again -- people are in good spirits and while business is never a straight line it feels like our companies and our little fund are making real progress.  The night always ends with a game of credit card roulette amongst the investors to pay for dinner. Special congratulations and thanks to Andy Liu for winning! Thanks to everyone for coming. Can't wait to the next LP / entrepreneur meeting in March!

Overcome trust inflection points with openness to get business deals done

I was thinking about trust yesterday -- and then I heard President Obama talk about our country's need to overcome the trust deficit we have. I think he's right about the nation's need and his comment made me reflect further on the role of trust in politics ....and in business deals. 

I'm negotiating a number of deals and throughout the course of negotiations there are many "trust inflection points".  It's important to have a sense as to when these points are arising for the other side and to be sure to address them with actions that reinforce trust.

One current example might help: I'm part of a team negotiating a deal with an institutional funding source. Just recently, there was a material change to the team that would affect the institutional funding source perspective -- it might make the perspective more positive and it might make it more negative....but there would clearly be an opinion and a reaction. 

I made the decision to risk the deal -- and reveal the new information asap. I am a firm believer in the "no surprises" clause of partnerships.  i.e. you don't want to surprise or blindside your partners. I admit - I was nervous. I was uncertain what the funding source partner might think and do. I figured if he overreacted -- and the deal went away....well, the deal and partnership weren't meant to be. But I am excited about doing this deal and didn't want it to go away -- thus, my nervousness. I gave the partner the information on Monday -- and gave him full disclosure on my knowledge. 

He appreciated the openness and I believe that this interaction was one of those "trust inflection points". In this instance, the trust pendulum swung forward. I still don't know if the deal is going to get done -- but I do know that overcoming these trust inflection points is critical and necessary in getting any deal done. 

If I had a nickel for every groupon copycat....I'd have at least a buck

If imitation is the greatest form of flattery, then Groupon should be flattered.  I keep getting pitched on various forms of the groupon model.  No wonder -- the site has been nothing short of a cash phenom. If you don't know what I'm talking about you should check the site and the business model out. It's  a super simple online deal of the day site. 

Groupon just goes to prove that as soon as someone figures out a simple way to make money online, people are going to copy you.  Copying plus innovation is the way online innovation happens so I don't have a real problem with it.  

Some good response to PR is dead - pun intended

There's been some good tweets and emails re: my post earlier today about PR being dead.  The two I liked most are:

The post from Micah about social media being dead

and Nate Murphy writes:

"I agree with the underlying tenets of your post, but a few points I would put forth:

  1.  The PR industry is far from dead. In fact, the top 10 global agencies brought in well over $1B last year, and spending on PR actually increased last year. Early-stage companies write off traditional PR and agencies at their own peril, even in a rapidly changing media environment.
  2. Social media is not a ‘silver bullet’ approach to promoting a small business, and I don’t believe it ever will be. Having said that, you are absolutely correct – an astute entrepreneur can get pretty far on their own if they go about it the right way.
  3.  “PR agencies of the past will have a hard time adapting…” You are absolutely right. The majority of today’s top PR agencies operate according to an outdated paradigm and business model, and the industry is ripe for the right entrepreneur to erode a sizable portion of their business.

PR is dead

Just found myself in a conversation with one of our portfolio companies. I declared PR (public relations) dead. It's the past. It's all about social media now. And social media is a more complex, more fragmented game to play. PR agencies of the past will have a hard time adapting -- in my opinion. 

How to create buzz online? Ask my friend Buzz Bruggeman of ActiveWords....he says:

Make a list of the top 10 influencer you are targeting.  Work backwards from 10 to 1 and start engaging that list in any way you can. By the time you get to #1, you should have your pitch and engagement down so you have the greatest chance of success. 

Using fortune cookies to woo investors

I received this photo as part of an email from an entrepreneur pitching me for investment.  Below are the contents of the email. Fortune_cookie
 

"I hope your 2010 is off to a great start! I had Chinese for lunch today -- they accidentally gave me the fortune cookie intended for you (photo attached).

Do you have time to catch up in the next couple weeks?"

He accomplished a number of things with this simple email:

  1. He made me smile
  2. He demonstrated that he knows how to stand out from the crowd of normal investment inquiries. I'm assuming he can use this same skill with customers. 
  3. From an emotional perspective, he is someone that I would likely enjoy working with and supporting.  A big part of early stage investing is connecting emotionally. 

NOTE: Please don't misinterpret this post and start sending me fortune cookies to my office. I actually don't like them. Theo's chocolates are great but I'll likely be on a diet and won't be able to eat them.  

An email from a friend: Terrorism in America and the lack of response

The following was forwarded to me from a friend. It struck a nerve with me -- perhaps because I was just in NYC and am generally more paranoid than the average American about terrorism.

Juval Aviv was the Israeli Agent upon whom the movie ' Munich ' was based. He was Golda Meir's bodyguard -- she appointed him to track down and bring to justice the Palestinian terrorists who took the Israeli athletes hostage and killed them during the Munich Olympic Games.

In a lecture in New York City a few weeks ago, he shared information that EVERY American needs to know -- but that our government has not yet shared with us.

He predicted the London subway bombing on the Bill O'Reilly show on Fox News stating publicly that it would happen within a week. At the time, O'Reilly laughed and mocked him saying that in a week he wanted him back on the show. But, unfortunately, within a week the terrorist attack had occurred.

Juval Aviv gave intelligence (via what he had gathered in Israel and the Middle East ) to the Bush Administration about 9/11 a month before it occurred. His report specifically said they would use planes as bombs and target high profile buildings and monuments. Congress has since hired him as a security consultant.

Now for his future predictions. He predicts the next terrorist attack on the U.S. Will occur within the next few months. Forget hijacking airplanes, because he says terrorists will NEVER try and hijack a plane again as they know the people onboard will never go down quietly again. Aviv believes our airport security is a joke -- that we have been reactionary rather than proactive in developing strategies that are truly effective.

For example:

  1. Our airport technology is outdated. We look for metal, and the new explosives are made of plastic.
  2. He talked about how some idiot tried to light his shoe on fire. Because of that, now everyone has to take off their shoes. A group of idiots tried to bring aboard liquid explosives.. Now we can't bring liquids on board. He says he's waiting for some suicidal maniac to pour liquid explosive on his underwear; at which point, security will have us all traveling naked! Every strategy we have is reactionary.
  3. We only focus on security when people are heading to the gates. Aviv says that if a terrorist attack targets airports in the future, they will target busy times on the front end of the airport when/where people are checking in. It would be easy for someone to take two suitcases of explosives, walk up to a busy check-in line, ask a person next to them to watch their bags for a minute while they run to the restroom or get a Drink, and then detonate the bags BEFORE security even gets involved.

In Israel , security checks bags BEFORE people can even ENTER the airport.

Aviv says the next terrorist attack here in America is imminent and will involve suicide bombers and non-suicide bombers in places where large groups of people congregate. (I. E., Disneyland, Las Vegas casinos, big cities ( New York , San Francisco , Chicago , etc...) and that it will also include shopping malls, subways in rush hour, train stations, etc., as well as rural America this time ( Wyoming , Montana , etc.).

The attack will be characterized by simultaneous detonations around the country (terrorists like big impact), involving at least 5-8 cities, including rural areas.

Aviv says terrorists won't need to use suicide bombers in many of the larger cities, because at places like the MGM Grand in Las Vegas , they can simply valet park a car loaded with explosives and walk away.

Aviv says all of the above is well known in intelligence circles, but that our U. S. Government does not want to 'alarm American citizens' with the facts. The world is quickly going to become 'a different place', and issues like 'global warming' and political correctness will become totally irrelevant.

On an encouraging note, he says that Americans don't have to be concerned about being nuked. Aviv says the terrorists who want to destroy America will not use sophisticated weapons. They like to use suicide as a front-line approach. It's cheap, it's easy, it's effective; and they have an infinite abundance of young militants more than willing to 'meet their destiny'.

He also says the next level of terrorists, over which America should be most concerned, will not be coming from abroad. But will be, instead, 'homegrown' -- having attended and been educated in our own schools and universities right here in the U.. S. He says to look for 'students' who frequently travel back and forth to the Middle East .. These young terrorists will be most dangerous because they will know our language and will fully understand the habits of Americans; but that we Americans won't know/understand a thing about them.

Aviv says that, as a people, Americans are unaware and uneducated about the terrorist threats we will, inevitably, face.  America still has only have a handful of Arabic and Farsi speaking people in our intelligence networks, and Aviv says it is critical that we change that fact SOON.

So, what can America do to protect itself? From an intelligence perspective, Aviv says the U.S. needs to stop relying on satellites and technology for intelligence. We need to, instead, follow Israel 's,Ireland 's and England 's hands-on examples of human intelligence, both from an infiltration perspective as well as to trust 'aware' citizens to help. We need to engage and educate ourselves as citizens; however, our U. S. government continues to treat us, its citizens, 'like babies'. Our government thinks we 'can't handle the truth' and are concerned that we'll panic if we understand the realities of terrorism. Aviv says this is a deadly mistake.

Aviv recently created/executed a security test for our Congress, by placing an empty briefcase in five well-traveled spots in five major cities. The results? Not one person called 911 or sought a policeman to check it out. In fact, in Chicago , someone tried to steal the briefcase!

In comparison, Aviv says that citizens of Israel are so well 'trained' that an unattended bag or package would be reported in seconds by citizen(s) who know to publicly shout, 'Unattended Bag!' The area would be quickly & calmly cleared by the citizens themselves. But, unfortunately, America hasn't been yet 'hurt enough' by terrorism for their government to fully understand the need to educate its citizens or for the government to understand that it's their citizens who are, inevitably, the best first-line of defense against terrorism.

Aviv also was concerned about the high number of children here inAmerica who were in preschool and kindergarten after 9/11, who were 'lost' without parents being able to pick them up, and about our schools that had no plan in place to best care for the students until parents could get there. (In New York City , this was days, in some cases!)

He stresses the importance of having a plan, that's agreed upon within your family, to respond to in the event of a terrorist emergency. He urges parents to contact their children's schools and demand that the schools, too, develop plans of actions, as they do in Israel .

Does your family know what to do if you can't contact one another by phone? Where would you gather in an emergency? He says we should all have a plan that is easy enough for even our youngest children to remember and follow..

Aviv says that the U. S. government has in force a plan that, in the event of another terrorist attack, will immediately cut-off EVERYONE's ability to use cell phones, blackberries, etc., as this is the preferred communication source used by terrorists and is often the way that their bombs are detonated...

How will you communicate with your loved ones in the event you cannot speak? You need to have a plan...

 

I love New York: a diary of my day

I arrived in NY yesterday morning after a JetBlue redeye. Landed at 6:04AM. Came out of JFK airport into a blazing sunny cold manhattan winter day.  Slept for 90 minutes. Had a productive business meeting. During the meeting, the guy said he had spent most of his career at Lehman Brothers. I recalled interviewing with the very same guy 15 years earlier when I was graduating from MIT business school and was thinking about going to wallstreet. Ate matzah ball soup. Went to the Metropolitan Museum of Modern Art  to see the Art of the Samurai.

I should note here that if you know me then you know that attending museums is highly unusual. But I went and had a great time. Went to dinner at Tabla for Indian food. Great restaurant with an exceptional desert to the prix fix meal.  Cab to meet with Jerry Colonna, former partner of Flatiron Partners and now good friend. Home and asleep at 10:33 PM EST. 

Today is colder than yesterday and there's a light dusting of snow on the streets. Beautiful in a different way than yesterday. Breakfast at Gramercy Park Hotel with Fred Wilson, the other partner at Flatiron Partners and now at Union Square Ventures. Ate egg whites and wheat toast. Drank 2 single shot low fat lattes.  Cab to friends home on Central Park West. Lunch at the Boathouse in Central Park. Working on a computer back at my friends house. Heading home tomorrow on Jet Blue flight out of JFK. 

NYC used to overwhelm me. It's a dense city. Today - I'm filled with love for the city -- in part because it's an amazing place and in part because my wife loves it more than any place in the world. 

Why TechStars Seattle?

I moved to Seattle in 2000 after selling abuzz technologies to the New York Times Digital in 1999. When I arrived in Seattle, I scoped out the entrepreneurial landscape.  I met the Madrona folks -- more specifically, Matt McIlwain and Greg Gottesman.  I remember talking to them about the Seattle entrepreneur landscape.  Compared to Cambridge, MA -- the landscape was barren. Sure there were a few venture capitalists and a few angels and some awesome companies -- but the landscape for supporting entrepreneurs was non-existent.

In the last 10 years, I've seen that landscape change.  When I look around today -- I see TechFlash, Seattle 2.0, Lunch 2.0, OpenCoffees, Hops&Chops. There's WTIA, alliance of angels, NWEN, UW center for commercialization. The landscape is active -- sprouts in lots of places. That's good. But the landscape is fragmented and at times unnecessarily competitive. I would also say that when talking to people in the Seattle area -- people had 2 concerns:

  1. where the next BIG company was going to come from
  2. attracting more entrepreneurial talent to Seattle (as opposed to MSFT or AMZN or other big company recruits)

When I heard that TechStars was expanding to Boston in Jan 2009, I emailed Brad Feld and David Cohen and suggested that if they ever wanted to consider Seattle as a place for TechStars -- I'd be interested in talking to them.  Why? Seattle needs TechStars!

I had been tracking TechStars since it started and in fact, TechStars was an inspiration to me when I co-founded Founder's Co-op with Chris DeVore in 2008. In fact, Chris and I had thought about trying to compete with TechStars and Y-combinator by creating a similar model in Seattle. We decided that we'd rather have a seed stage fund that engaged more directly and long term with companies than TechStars and Y-combinator did. Much more recently, we made a conscious business decision to partner with TechStars rather than try to do a similar program under the Founder's Co-op brand.

Why? Seattle needs TechStars!  I became very clear that this wasn't about me, Founder's Co-op, or any deal or local venture capitalist. This was about Seattle and the opportunity to unify and energize the early stage technology scene in Seattle. I saw how TechStars had done this in Boulder and Boston and wanted this for Seattle. This resonated with others -- you can already see evidence of the power of TechStars in the list of mentors and investors supporting the program. This is the first deal where nearly all the local venture capitalists are investing together -- they saw the same thing. Seattle needs TechStars. 

TechStars Seattle is addressing the 2 concerns I mentioned above. The program attracts national talent to the area (about 50% of the companies come from outside Seattle). The program attracts local and national mentors to Seattle. The program may well give birth to the next BIG company in the Seattle area. Moreover, the program will act as a unifying force and will collorate with all the other green sprouts of activity aimed at supporting early stage entrepreneurship in Seattle. I'm super excited for Seattle!

Date your ideas before going to bed with them

I had coffee with an entrepreneur yesterday. He's got a very small niche business that he's been working on for a year. It generates about 2K per month in revenue. He has some ideas for a business that he thinks could be big.

I asked him if he had a girlfriend. He did. I asked him if thought other women were hot. He did. Well, you know where this metaphor is going. I never met an entrepreneur running a business who didn't have other ideas for other businesses. In fact, I think that some of entrepreneurs best ideas for businesses come while they're running a business. The reason is obvious -- they're in the flow of a market and a set of problems and they can see opportunities relatively clearly.

The real issue is not having the ideas -- it's what to do with them....and if they're really compelling what to with the existing business. I told the entrepreneur I was meeting with to have coffee with his idea and maybe even dinner. I told him he didn't know enough about his idea to know whether he should break up with his current business to get into a relationship with the new idea. You get it. Date your ideas before going to bed with them.

These guys are onto something -- check out untitledstartup.com

There's a new company that has incubated itself at Founder's Co-op and I'm super excited. I can't say much about it -- not because they're in stealth mode. Nope -- they're in anti-stealth. Check them out here -- it's just that they're better at telling you what they're up to than I am....let me correct that, you're better at telling them at what they're doing than I am. Go to the site...you'll likely be confused today but watch these guys. They're onto something. Cool new startup in Seattle. Happy 2010!

Being right and wrong at the same time about Judy's Book

I received emails from 2 of my former investors this week.

Brad Feld wrote me:

Re: you were ahead of your time

It took Google a while but they finally built Judy’s Book.  At least the data side.

Brad

2) Chris Ackerley wrote me:

re: Google to scoop yelp

Click here.

Chris

Chris sent me an article from Fox news speculating that Yelp had $30MM in revenue and might be valued at $500MM.  If you heard that sound -- it was me swallowing hard or saying WTF.

This start up stuff isn't for the faint of heart -- and it's an easy game to play in the rear view mirror. I'm going to sleep on this one and write about some new lessons learned -- they just keep coming !!