I love playing around with Google Translate – mostly to look at web sites or read blogs that are written in other languages.  I’m also a big cycling fan and after this year’s Tour I decided to write to the German cyclist Jan Ullrich – one of my favorite riders and the third place finisher in this year’s contest.  I wrote my note in English but also translated it into German using Google. I had forgotten about this note until a few days ago when I actually received a note back from Jan (I’m actually pretty sure it was really from him – it certainly made my day!).  I translated it back to English also using Google, but decided that it was too important to leave to chance, so I forwarded it to a German friend of mine in Frankfurt for a second opinion.  Turns out Google did a pretty nice job translating his response, but was apparently too literal in translating my original note.  I found it pretty amusing and thought I would repeat it here – a good lesson in lexical vs. conceptual meaning.

My original note was meant to say:

Jan- You are a wonderful bicycle rider.  I’ve enjoyed watching you in this year’s tour (as every year).  You are a great champion.  Know that you have many american fans! (translated with Google translate – sorry if the translation is rough).

Your faithful fan,

Turns out I actually wrote:

Jan, you are a wonderful bicycle co-rider. I enjoyed being careful for you during this years Tour (as in previous years).  You are a big champion.  Did you know that you have many American ceiling-fans!

(translated with Google translate you – sad, if translate is coarse)

Your reliable ceiling-fan!

Apparently I’m Jan’s only talking ceiling fan <g>

(In case you were wondering, Jan’s response to me was: Thank you very much for your support!  You are helping me a lot! Sorry I am only replying to your letter now.  Best Regards, Jan)

Update below with the final email in the chain where the entrepreneur apologizes (and talks about some challenges around fundraising that led to his frustration).

I just tweeted about an unfortunate email exchange I just had with a company founder, but 140 characters isn’t enough to really do the matter justice. And more important than my venting (and to be clear this post is definitely part that) is the real issue that many entrepreneurs face about how to handle a “rejection” email from a potential funder. This is an example of how not to do it.

I pride myself on answering all the legitimate emails that I receive (punctuated by the point that it’s 8:24 on a Tuesday night and I’m sitting here at my desk doing just that). I think this is getting more common amongst VCs, but I do hear from a number of entrepreneurs that they send notes off and get nothing back. I figure everyone who emails me their plan is really excited about what they’re doing and deserves a response. Sometimes it’s a quick no, sometimes it’s more extensive if I have an idea that I think is worth sharing back.

From the entrepreneurs perspective I can understand the frustration of hearing that the idea that you’re so excited about isn’t something that whoever you emailed wants to hear more about (and I can relate – Foundry raised money from investors and got plenty of “no’s” before we managed to pull together a syndicate of fund investors). But the reality is that not everyone shares your passion, not everyone is at the right time in their fund, not everyone has time vs. other things their looking at to take a closer look, etc. And with most firms having some kind of focus, there are plenty of ideas that simply fall outside of a firm’s investment bounds. And, of course, the math makes it hard as well. At Foundry we see something like 5,000 business plans every year of which probably 500 or more are clearly plans that will get funded by someone. So there is no lack of really interesting things to take a look at. But there is a lack of time and money. In our case that means making about 8 new investments a year (give or take). I’m sure many firms have a similar funnel.

Nonetheless, handling a rejection is important. Done well it can keep the door open to further engagement (I’ve had plenty of companies that I’ve turned down drop me notes with updates on their progress and asking me questions or advice) and can sometimes lead to a later investment (we have a company in the Foundry portfolio that we (I) turned down that we funded several years later). I strongly believe in the “no assholes” rule and try to live my life by it.

Below is the exchange in question (personal details redacted), posted in all its glory. Ironically in this case it looks like this is someone I gave some advice to about a prior business plan (I don’t remember the details – it was one of thousands of these sorts of emails that I have responded to over the years). Oy!

_______________________________

Howdy Seth,

Our social site based on privacy never went anywhere.
www.[redacted].com

We were right about the privacy stuff. But no one cares. Oh well, win some you lose some. I’m proud we did it, no regrets.

Check out our site:
www.[redacted].com

We make money, been around a long time, our customers love us.

There’s a big opportunity we need help with (not sure if that’s the right lingo or not).

Any interest?

Thanks

My initial response:

Sorry that the [redacted] idea didn’t take off. It’s hard to get people interested in a new social networking idea these days (even those who say that privacy is important). Good for you for moving on to something else.

.[redacted] is definitely novel, but doesn’t really fit our investment focus (see www.foundrygroup.com/themes). Big opportunity is definitely the right lingo (and what you’re searching for…).

seth

And then this is what I get back:

Howdy Seth,

Be honest.Did you even look at the site?

Obviously it totally pissed me off (thus the tweet and the rant here). This was my response:

I’m debating whether to answer or not given the tone of your email. But I didn’t want to let your belligerent, tactless note pass. I did look at the site – and you have no reason to rudely call me out on having not done so. If you looked at our website you’d understand why this isn’t a fit for us (seewww.foundrygroup.com/themes – we’ve written extensively on what we’re interested in and what we’re not). And yes – if you had a cure for cancer we wouldn’t be a good target for you because health sciences isn’t in our investment focus (which, again, you would know had you done any research on us). We get over 5,000 business plans submitted to us each year (and fund about 8 new ideas). That’s why we’re so deliberate about what we’re interested in (and good at) and what we’re not. We have entrepreneurs of all ages and “pedigrees” (whatever exactly that is). And have funded people we’ve never met before or who don’t have 1 degree of separation with us. You can believe otherwise if that makes you happy. But there’s no need to be an asshole about it.

I recently wrote a blog – The Power of Location – about Quova (one of the companies I work with) and the idea of “place” on the Internet.  In response, Dimitar Vesselinov (who has a great blog) dropped a couple of comments to the post. My sense is that not everyone pays attention to the comments section of blogs, so I thought I’d post the links he suggests here. I also want to be sure I’m clear on the differences between digital identity (the subject of Dimitar’s comments) and geolocation (the subject of my post) as well as how the two ideas overlap.

First the comments. Below are some sites that Dimitar sent over for those interested in learning more about digital identity:

Schneier on Security
http://www.schneier.com/blog

The Identity Corner
http://www.idcorner.org

Identity Woman
http://www.identitywoman.net

Kim Cameron’s Identity Weblog
http://www.identityblog.com

Presentations & Audio :: Digital ID World 2004 Conference
http://conference.digitalidworld.com/2004/attendees/downloads.php

I’ve seen a couple of these sites in my travels on the Internet and checked the rest out after he sent along the comment – there’s good information here that’s worth checking out. The notion of digital identity, which seemed to lurk in the shadows for the past few years, is really starting to take off – especially now that the ever-feared Microsoft has given up on Passport (I don’t think I know anyone who actually used this service for anything close to what Microsoft intended; signing up for messenger or MSN through passport doesn’t count).

There’s clearly overlap with the world of geolocation – particularly in the realm of security and authentication (just as your digital id can be used to confirm that you are who you say you are, so can geolocation data be used to support your claim of who you are). There are important differences, however and the markets really aren’t heading in the same direction. Who you are is different from where you are. While its important at times to know who is involved in a transaction, its often just important (or more important) to know where they are (for example in validating taxes in an on-line transaction – in the off-line analogy, I don’t get charged Boulder taxes when I buy something in San Francisco just because I’m from Boulder – where I am is more important in that case than who I am).

Also, digital id is great for people who want other people to know who they are, but only works when they are part of the equation. Put it another way, digital id is for the most part an active technology – you (or your administrator) needs to actively participate in creating your digital identity. Very useful if for when you are trying to validate on a network or manage access to an array of applications. Its not useful at all if the user wants to remain anonymous or for whatever reason doesn’t want to participate in actively identifying who they are. Geolocation is passive – it doesn’t involve cookies or user defined parameters, just a look-up on an IP address. And while you can run your address through an anonomyzer service to mask your address, you ultimately have an IP address assigned to you (which may mean that a service like Quova can only tell that you are trying to hide where you are vs. telling where you are). This makes the potential universe of traceable events much higher – since every transaction on the Internet involves an IP address (even if its attempted to be masked or anonomyzed in some way) but clearly there will be only a small subset of events that involve digital id (and they will be easier to mask). I imagine that Damitar gets all this, however I wanted to add some context with which to look at the two markets.

My longtime friend Marion Jenkins, CEO of IT consultant QSE Technologies wrote what I think is one of the most eloquent and well thought out rebuttals to the proposed Colorado “Software Tax” (HB 1192).  With his permission I’m posting it here in its entirety. If you feel the way I do about this issue, I urge you to take a stand on this issue.

I urge you to oppose HB 1192, the so-called “Software” Tax.  It is bad legislation and it will add significantly to non-productive administrative and legal overhead and kill productivity within the technology sector in Colorado (including not only technology-related businesses, but virtually every business – and every consumer – who uses technology).  It will also lead to a mass exodus of key jobs and technology talent from Colorado, and it runs counter to many Federal initiatives aimed at creating jobs, improving job skills and implementing automation and efficiency to help the country get out of this recession. It will also lead to a massive expansion of government, whose only function will be to try to interpret and unravel an impossibly complex set of new tax rules.  Those new government jobs will not provide any benefits to citizens, and particularly not provide any benefits directly to underserved populations, they will consist of auditors, analysts, enforcers and the like.

First, some background and disclosure:

1. I run an 8-year old information technology company in Englewood, QSE Technologies, Inc..  My family and I have lived in Colorado (Centennial) for nearly 12 years.  I live in House District 47 (Spencer Swalm) and Senate District 27 (Nancy Spence).  Our business is located in House District 44 (Mike May), and Senate District 30 (Ted Harvey) and most of our ~15 employees live in these same or surrounding Districts in the South Denver area.

2. I grew up on a family potato farm in SE Idaho and I have a PhD in Engineering from Stanford (also known as The Farm).  So I feel I have pretty good mix of horse sense and formal education.  I have been in the technology industry for 30+ years. 

3. I serve as adjunct faculty at the University of Denver, where I head up a graduate program division in healthcare information technology within University College. I serve on the board of directors and many other committees of the South Metro Denver Chamber of Commerce.  I also belong to the Aurora Chamber of Commerce, CHIMSS (Colorado Health Information Management Systems Society), AHIMA (American Health Information Management Association), CMS (Colorado Medical Society), CMGMA (Colorado Medical Group Management Association), CHSM (Colorado Healthcare Strategy and Management) and other business/technology organizations.

4. Among other corporate positions in my career, I have been a Chief Information Officer, Chief Technology Officer, Chief Operating Officer and Senior Research Engineer for small private companies, and also some Fortune 500 and even Fortune 10 companies.

5. This bill will NOT affect our company.  It will not cause us to raise prices or lay off people, or relocate out of state.  That is because we do not sell, or use, anything other than “canned” software, for which we collect and remit appropriate sales taxes.  Therefore I am not trying to protect any personal or business rice bowl.

6. Along with about 15 colleagues from CSIA (Colorado’s technology association) and other groups, I testified in opposition of this bill on Wednesday night/Thursday morning.  (thank you for your time and attention to our testimony, by the way). 

7. Although you sat through our testimony, I don’t think you understood it.  I think you saw and heard the same kind of turf-war, rice-bowl protection that you had been hearing all day.  The purpose of this email is to clarify some facts, because this is an extremely confusing issue.

There are many reasons why I oppose this bill (the way it is crafted, which in my opinion is a net new tax, which should go before the voters; the way all these initiatives were pre-packaged and front-loaded at the beginning of the session, before most citizens knew what was going on; the hearings that stretched into the middle of the night, in an obvious attempt to “wear out” the opposition; the way they are all characterized as “business” taxes, but in reality they will merely be passed on to all consumers – and therefore these are net new taxes on citizens, not on businesses.)

(As an aside, I have lots of other objections.  I object to this “nibbling at the edges” of the state’s budget deficit problem by trying to implement taxes here and there in a piece-meal fashion and splinter any opposition and paint this as a “business” problem, which sets up a “business versus K12 education” issue.  If the state has budget issues, which I believe it does, and needs to raise tax revenue (which has other options available such as cutting staff, eliminating duplication and programs and implementing automation – all of which businesses have been doing for the last ~2 years), then let’s raise taxes.  Don’t set up dozens of new statutes that tax sodas and candy and vending machines and Styrofoam cups and ketchup packets, go ahead and come out into the open and craft a bill to tax everything sold in a grocery store, including food, and/or implement a tax on all services (including attorneys, accountants and consultants) and take the problem to the people and see what they say.)

However, the only thing I am going to address in this email is the enormous complexity that makes HB 1192 simply impossible to implement and enforce, and that is why it should be opposed.

When Representative Pommer introduced HB 1192 to your committee Wednesday night, he positioned the bill in an incredibly simplistic fashion.  He said that people who download “standard” software (like TurboTax) from the internet should pay sales taxes, just like someone who buys TurboTax in a box at BestBuy.  His premise was that the delivery method of software – and whether there was actual media involved (i.e., CDs) – shouldn’t change whether the software should be taxed.  I actually agree with and could support that idea, at least in principle.

The TurboTax scenario seems straightforward.  But at the margins – for really large and really small software packages – this bill is a disaster.  On the low end, think of a download of small mini-apps:  a $.95 ringtone, a $1 MP3 song, a $2 e-book, a $5 upgrade to your GPS.  How can you tax those things, and would it even be worth it to try?  Do you tax a business traveler from Texas who orders TurboTax on his WiFi at Starbucks in Cherry Creek or a tourist from Oklahoma who does so from his SmartPhone while sitting on the chairlift at Vail?  How about a person who moves here from Boston but keeps his Boston phone number on his SmartPhone and uses it to surf the web and order “software?”

These are tricky but important details.

At the other end of the size/complexity spectrum, it gets even worse.  This bill defines “standard” software as any software package – or portion thereof – that is sold to more than one person or entity.  All such “standard” software (or portions thereof) would be subject to tax.  That has huge implications for virtually any business, whose software purchases and implementations are infinitely more complex than a person downloading TurboTax from the Web.

As an illustration, let me share with you the list below, which came to me yesterday in an email solicitation from a company that collects this kind of technical information from big companies and markets it to companies like ours, hoping we will buy their marketing/intelligence lists. 

This is a list of all the technology used by a Fortune 500 Company (not Qwest) listing all their major
technology systems, subsystems and software. 

Technologies:
Hardware/OS/Systems Environment

AT&T Sterling Commerce Yantra Warehouse, Cisco IOS, Citrix MetaFrame, HP-UX, HP-UX 11i, IBM AIX, IBM AS/400, IBM OS/390, IBM VSAM, IBM z/OS, INM CICS, Microsoft Active Directory, Microsoft Cluster Server, Microsoft Terminal Server, Microsoft VPN Servers, Microsoft Windows 2003 Server, Microsoft Windows NT Server, Norton Ghost, Novell NetWare, Red Hat Linux, Sun Solaris 8, Sun Solaris 9, Teradata Data Warehouse, Unix, VMWare, VMWare Server, Wyse Winterm, Avaya Intuity Conversant
Data Management / Business Intelligence
BEA WebLogic 8.1 / Oracle WebLogic Servers 8.1, BEZ Systems BEZPlus Data Warehouse Tool, DB2, File Aid, IBM Cognos, IBM Cognos PowerPlay, IBM DB2, IBM Informatica, IBM Informatica Builders WebFOCUS, IBM Informatica PowerCenter, JD Edwards World, Microsoft Access 2000, Microsoft SQL Server 2000, Microsoft SQL Server 2005, Microsoft SQL Server 7, Omniture SiteCatalyst, OmnitureHBX, Oracle 10g, Oracle 8i, Oracle 9i, Oracle Fusion Middleware, Oracle Hyperion, Oracle PeopleSoft Financials, Oracle PeopleSoft Financials 8.8, Oracle real Application Clusters, Qualys QualysGuard, SAP Business Objects Broadcast Scheduler, SAP Business Objects Crystal Enterprise 8.5, SAP Business Objects Crystal Enterprise XI, SAP Business Objects Crystal Reports 8.5, SAP Business Objects Set Analysis, SAP Business Objects Web Intelligence, SAP NetWeaver Business Information Warehouse, Security Innovation, Sun MySQL, Sybase 10, Teradata Active Enterprise Data Warehouse v2 R6,
Networking / Information Security
Connectria Integration Services, Progress Software DataXtend CE, Tuxedo, BMC Marimba 6, BMC Marimba 7, CA Unicenter, Cisco CiscoWorks LAN Management System, Citrix MetaFrame XP, Citrix Presentation Server 3.0, Citrix Presentation Server 4.0, Citrix Presentation Server 4.5, Citrix XenApp, EMC EmailXtender, HP Mercury LoadRunner, HP OpenView, Microsoft Internet Security and Acceleration server, Microsoft SCCM 2007, Microsoft SMS, Microsoft SQL Server Management Studio, Oracle Enterprise Manager, Oracle Identity Manager, Symantec backup Exec, Symantec Veritas NetBackup, Symantec Veritas Storage foundation, VMWare WorkStation, 123 EDI Shipping Outsourcing, Cisco PIX Firewall, ArcSight Log Consolidation system, Wavelink Avalanche server and client, Sygate Secure Enterprise Solution, Cisco Secure ACS Solution Engine,
Development / Programming Tools
Ab Initio, Adobe Coldfusion, Adobe Dreamweaver, AJAX, Altova mapForce, Altova XML Spy, Apache maven, Apache Struts, Apache Tomcat, Autonomy Interwoven sitePublisher, Autonomy Interwoven TeamSite, Borland VisiBroker 3.4, C, C++, CA ERwin, Citrix, COBOL, Compuware File Aid, Cywin, Eclipse, Embercadero Sapid SQL, Hibernate, HP Mercury Quality Center, HP Mercury Test Director, IBM Rational Clearcase, IBM Rational ClearQuest, IBM Rational Rose, IBM WebSphere Application Server, IBM WebSphere MQ, Java, Java Beans, JavaScript, JSF, JSP, JUnit, Microsoft .NET Framework, Microsoft ADO.NET, Microsoft ASP.NET, Microsoft C#, Microsoft Internet Information Services, Microsoft Office Communications Server, Microsoft SharePoint Server 2007, Microsoft Sybase T-SQL, Microsoft Team Foundation Server, Microsoft Visio 5, Microsoft Visual Basic .NET, Microsoft Visual Basic 6, Microsoft Visual Basic for Applications, Microsoft Visual SourceSafe, Microsoft Visual Studio 2005, Microsoft Visual Studio 2008, Open Text LiveLink 9.2, Oracle BEA JRockit, Oracle BEA Tuxedo, Oracle BEA WebLogic Application Server, Oracle PL/SQL, Oracle Primavera TeamPlay, Oracle SQL*Developer, Oracle SQL*Loader, Perl, Progress Software DataExtend CE, Red Hat iPlanet Web Server, Red Hat JBoss, ROBOT, SAP Business Objetcs Application Foundation, Spring, Sybase powerbuilder, Tibco rendezvous, TOAD, Vignette Builder, Vignette Content Server, Scrum Development,
Enterprise Applications
Amdocs Clarify CRM, Amdocs ClearCall Center, Amdocs Clearsales, Amdocs ClearSupport, AT&T Sterling Commerce Yantra Warehouse Management System, Descartes Mobitrac Transportation Execution System, EMC Documentum, Hodes iQ Talent Management, IBM Lotus Domino, IBM Lotus Notes, Lotus Notes, Microsoft Exchange 2003, Microsoft Exchange 2007, Microsoft SharePointServer, Open Text BlueBird, Open Text Hummingbird RedDot Enterprise Content Management, Oracle Financials, Oracle PeopleSoft 7.5, Oracle PeopleSoft 8.9, Oracle PeopleSoft 8.8, SAP Global Trade Services, SAP R/3,
Other Technologies / ITO Agreements / IT Intel
ABC has created a custom application server using Oracle Fusion Middleware and Oracle WebLogic Server called ABC Unified Strategic Information Optimization Network, or FUSION. It allows the company to eliminate the lines between their separate business units as well as improve customer satisfaction, 123 EDI Shipping Outsourcing, ArcGIS geographic authoring, BGT Partners consulting for B2B portal and CMS, Clarity Consulting for ABC QuickShip Application Development, Computer Aid, Inc. for managed mainenance automotive), Connectriaintegration Services, Cstomer Fsion Database, Dun & Bradstreet Dashboard, Google Analytics, IBM Global Technology services, Interknowlogy consulting for Application development, Loftware barcode and RFID Software, Microsoft Visio, Microsoftproject, Quad Graphics Parcel Direct, Six by Six, Telefonica Datacenter

Look through this list and ask yourself this question…do you think your 0.95 FTE employee in the DOR (which was claimed to be the only headcount needed to implement/oversee HB 1192) would even have a clue as to half of what these software packages are, how they are used, and which ones are “standard” and which ones are custom, or how and to what extent some standard modules may be embedded inside of the corporation’s customized software systems?  I have been in technology for 30 years and I recognize barely about 75% of them.

It would take a small army of experts to figure this out.  The other night I gave you a SWAG number of 25 DOR FTEs to oversee this.  After further thought my slightly more educated SWAG is now well over 100.  An equal number of non-productive administrative/audit people would be needed on the other end, within businesses who use technology, as well as their technology partners.  Every software project would have to be separated into “standard” (taxable) and “custom” (non-taxable) categories.  You would literally have to go through the software code line by line to determine compliance.  And, by the way, software code isn’t even written or measured “line by line” any more.

Any similar company (Colorado currently has 11 Fortune 500 Companies) would have a similar list.  Obviously a smaller company would have a smaller list, but even a 20-person company can easily have dozens of software applications, some “standard,” some custom, and some a mixture.

This is a nightmare.

As a result of your other tax proposals, will people go to Cheyenne or Salt Lake for a Pepsi or a Snickers bar or Chinese takeout?  Will Colorado businesses close down or move out of state if some of their supplies now get taxed?  Will Colorado consumers stop buying things on the Web if they have to pay taxes on them?  Those are debatable. 

Would technology jobs leave the state as a result of HB 1192?  Not only is it a definite yes, but you must understand that it is relatively easy to do so.  Moving a manufacturing facility is hard.  Moving a technology platform is easy.  Any sizable company would find it easy – as well as advantageous – to move their technology to Seattle or Omaha or Minneapolis to avoid the brain damage of auditing and accounting for and paying the taxes under HB 1192.  Not only would that company’s technology jobs move along with the technology platforms, but the jobs of any outside consulting/implement
ation partner would move out of the state as well.  And no large or growing company – and definitely no high-tech company – would consider moving into or investing further in Colorado if faced with this imposing and formidable barrier to technology, automation and efficiency.

There are many other technical issues…SaaS (software-as-a-service).  Cloud Computing.  Virtualization.  Managed Services/Hosting.  Object-oriented development.  Data center hosting.  Disaster recovery and remote/hot site services.  Software re-use.  Service-oriented architecture.  Software toolkits.  Telecommuting and virtual workforce.  Hosted telecom apps and VoIP services.  These are just some delivery methods and technology concepts that are at the leading edge of the technology frontier, and Colorado is at the forefront of these and other innovations.  Every one of them has special circumstances that will have to be investigated – and analyzed and unraveled – to comply with HB 1192.  So instead of spending time on productive efforts like innovation and implementation, companies will have to invest significant time in non-productive audits and compliance.

I want to emphasize again that this doesn’t just negatively impact technology companies like QSE and our peers, it affects every business who uses technology in their business.

Additionally, in Colorado and elsewhere, there is a shortage of students entering STEM – Science, Technology, Engineering and Math.  There are many formal and informal initiatives aimed at training and re-training both youth and adults to enter or shift to the technology workforce.  Several Federal jobs training programs are focusing on these efforts.  In addition, information technology is at the core of green/sustainable energy initiatives.  HB 1192 runs counter to those efforts, and would undoubtedly stifle future growth of talent here in the state, and cause the loss of federal education and training funds.

And lastly, the ARRA/HITECH act earmarks $19.5 billion in Federal funds for the implementation of IT in healthcare, which has shown to help lower our outrageous healthcare costs, reduce costly medical errors and improve patient outcomes.  Providers and other entities are reluctant to adopt automation and technology, primarily because of costs and other barriers.  By taxing software, HB 1192 increases those barriers, and would definitely cause the State of Colorado to miss out on some of those federal funds…they would go to other healthcare entities in other states. 

This issue isn’t about the software industry, or even the technology industry.  It’s about every business and every consumer in the state.  Technology is one of the few industries that is helping to lead the recovery, and helps all businesses become more efficient.  Colorado has grown in talent, infrastructure, and status to become recognized as a critical technology hub, and this bill will absolutely reverse that trend and shift the jobs and the capital investments to other – and eager – states.  But our testimony earlier this week, and this email, isn’t to protect the technology industry from further taxes.  Although the citizens and businesses of Colorado don’t realize it, my CSIA colleagues and I are working on their behalf.  Most of them don’t even know yet that HB 1192 exists, or what negative impact it would have on them.

In summary, I urge you to oppose HB 1192.  Its unintended consequences and confusing definitions are anathema to the economic health of Colorado.

Here are a few links worth taking a look at: Google Trends – www.google.com/trends (thanks to Jason for the pointer).  I played around with this a while ago – they’ve improved it so you can compare search trends for different terms at the same time and also see what region the searches are coming from. Woot – Think you can’t make a business based on one product sale at a time? See www.woot.com. splunk’d – You may have heard that AOL released their search database (that actually had customer identifying information attached to the search terms – oops).  www.splunkd.com will let you search against this database to see what people were actually looking at – compare your searches to the population at large.

Enjoy!

AdExchanger just posed an interview that I did with them that touched on some of our ad-tech investments as well as our overall investment philosophy. I’ve cross posted an unedited version of that interview below.

1. Why get into the venture capital side of the business? Do you ever get the entrepreneurial "itch"?

I first got into venture capital about 10 years ago and I love my job. I was running a few business units for a small public company and while I enjoyed the operational side of my job, I was also responsible for M&A and partnerships and had a particular affinity for the transactional side of my job. While I consistently have the entrepreneurial itch, I actually think this makes me better at investing – it reminds me of why I’m in business (to support entrepreneurs who are the real stars of the show). I’ve also co-founded a few companies (including Trada which is a company in the Foundry portfolio that helps advertisers better execute paid search campaigns; I wrote about that experience recently on my blog: https://www.sethlevine.com/wp/2010/08/trada-from-the-beginning) and I’m very close to many of our portfolio companies at an operational level which helps to satisfy the entrepreneur in me.

2. What is Foundry Group’s investment philosophy?

Unlike many venture capital firms that invest in certain geographic regions or specific technologies and sectors, Foundry Group’s investing activity is largely driven by a thematic approach. The themes we pursue tend to be horizontal in nature and are often driven by underlying technology protocols and standards or emerging market trends and customer needs. Rather than looking for short-term hits, we focus on themes that have the ability to drive a cycle of innovation (and hence provide multiple investment opportunities) over a period of five to ten years or more. My partners and I have written extensively about this thematic approach on the Foundry Group blog: https://www.foundrygroup.com/wp/category/themes/

3. You’ve invested in AdMeld, Triggit, Lijit, Medialets and Trada among others in the ad space.  Foundry Group is an advertising start-up "bull" it would appear. Thoughts?

I’m extremely excited about the portfolio of companies my partners and I have put together at Foundry Group which includes some great ad tech companies which you list above. We think of these investments as part of our “Glue” theme – meaning that they’re all essentially connective technologies that help increase the velocity, accuracy, transparency and availability of online advertising. I believe that online advertising is going through an important transition with the rise of real-time bidding platforms and advertisers increasing ability to buy audience vs sites. Our investments in many of the companies above follow that idea. Additionally, mobile is becoming an increasingly important platform as devices become more powerful, more flexible and better connected. Obviously our investment in Medialets – the market leader in rich media mobile advertising – reflects our belief that mobile in general, and rich media on mobile specifically (which is really the kind of advertising that mobile was made for) is a rising area in advertising. We’ve been fortunate to be able to work with some of the companies and people that are at the leading edge of digital media and I think we’ve put together a great portfolio of companies in this area (and I’d add Mandelbrot Project to your list above, although we’re not talking much about what they’re up to yet).

4. What are some key overall, characteristics that Foundry companies share?

I’ll resist the temptation to answer with some superlative VC cliché about how great all our management teams are or disruptive the underlying technologies are becoming.  Rather, I’d say that the one truly common trait across our portfolio of companies is the obsession these businesses have with their product. This product obsession starts with the CEO and pervades the management teams and operations of our companies. They eat, sleep and breathe product.  From my perspective the results of that obsession is obvious when you look at what each of our companies is doing to change their respective markets.

5. Can you identify a couple of common errors that entrepreneurs make when raising funds?

I think there are two relatively common mistakes that entrepreneurs make when fundraising. The first is trying to do too much in the first meeting. The goal of that meeting isn’t to sell the investor on making an investment, it’s to whet the investor’s appetite and leave them wanting to learn more. Entrepreneurs should structure that first interaction to do exactly that. The second most common mistake is not asking what the process is on the investors side and as a result mistaking activity for progress. Every firm (and angel) has their own process – understanding that process and making sure you know how a firm reaches a decision (who has to be won over, in particular) is extremely important. The adjunct to this point is that while relatively few entrepreneurs methodically do it, it’s important to perform due diligence on the investors you’re talking with, just as they’ll be performing due diligence on you. Find entrepreneurs they’ve worked with before, in particular those at companies that didn’t work out as planned, and ask how the firm and the specific partners were to work with. You can also use this as a chance to understand from a third party both the partnership dynamic within the firm as well as what their perspective of the investment process looks like.

6. Given the scope and size of Foundry Group’s investments today, it would appear you’re at an inflection point.  At the very least, your current group can only manage so many investments after all and the fund itself is nearly fully-invested is it not? What’s next?

We have a very specific, and somewhat non-traditional view of the firm we’re building at Foundry. Our intention is not to create a legacy or have a business that survives the 4 founding Foundry partners. We have no associates at the firm and all do our own work. Our current fund is $225m and our intention is to raise a series of funds of the same size and then be done. As we like to say: “last one finished shuts off the lights”. To be clear about where we are as a fund and a firm, we have plenty of capacity to continue to make new investments.

7. Can you talk a little bit about the growth of the Boulder startup community and what makes it unique to other startup communities such as Silicon Valley, NYC, Boston, etc.?

I think Boulder is increasingly becoming known as one of the leading start-up cities in the United States (for example, here’s a recent BusinessWeek story naming Boulder the #1 city in the country for start-ups). And I can tell you from living here that there is a ton of great energy in this community – from TechStars (which started here) to the Boulder Open Coffee Club, to our local NewTech Meetup to Ignite Boulder. Interestingly (and somewhat different than other markets) the Boulder start-up scene is both very distributed (there are a large number of leaders in the Boulder start-up community) and collaborative. I don’t know that I’ve ever been in a city where people involved in start-ups were as willing to help each other out as they are in Boulder.

8. What are your thoughts about M&A and IPOs – and a successful exit for ad tech startups? Do you see a window developing?

We’ve all seen the global statistics – August was an unusually strong month for mergers and acquisitions. The interest rate environment as well as the relatively large cash balances of many large corporations appear to be driving somewhat of a resurgence in acquisition activity. I’m cautious that these high level data (driven by large global transactions) will be both sustainable and mean an more favorable overall environment for venture backed businesses. The time I’ve been in the venture capital business has been perhaps the worst IPO environment since the venture asset class came into being, so I’ll refrain from making any predictions about whether we’ll see any kind of sustained resurgence of the IPO market (but we can all hope together….)

9. If a startup wants to get a meeting with a VC for potential investment, any tips? Any tips on pitching Foundry Group in particular?

If you have a direct (or indirect) path to an introduction – through another entrepreneur or someone else you know – that’s always the best way in to any VC. It provides additional context which is helpful. That said, many VCs these days (Foundry included) are pretty open about what they’re interested in. I always appreciate it when people engage with me on topics that I’m writing or tweeting about. And to give this some additional context, Foundry has funded several companies that first reached out to us because of a blog post (including one company where our first communication was through Twitter).

I have to admit that when I set up my Twitter account I thought I’d be turning it off after a few days for lack of interest. Instead I was calling up T-Mobile ordering a higher volume sms package.

I have to say there’s something addicting about it – I like the short message format; I like hearing what my friends are up to; I like the record of my day that it creates for me and for people that are following me; in short – it’s just fun. My Twitter ID is Sether (www.twitter.com/sether) if you want to see what I’m doing.

A few quick comments, in case this post finds its way to the Obvious gang (creators of the Twitter app):

• it’s too hard to find users and even harder to add them to your network. seems like this should be much much easier. and while we’re talking about it, what’s the difference between friends and followers?
• i’d like to be able to reply to the individual sender – replying to a twitter message sends a note back to twitter (meaning it gets broadcast as a twitter message to your friends and followers) rather than sending a message back to the poster. at a minimum a reply should trigger a ‘comment’ like feature (that would keep it w/in the twitter ‘system’ if that’s what the issue is), but ideally, you could reply directly to the message originator.
• it would be great to be able to twitter pictures.

If you really get into the service, check out TinyTwitter (www.tinytwitter.com) – an app written by my friend Kevin Crawley which will save you the hassle (if you think of it that way) of constant IM pings. Very slick and in typical Kevin fashion both simple and extremely useful at the same time.

Nietzsche has so many famous quotes it’s sometimes hard to choose just one (most have heard that which doesn’t kill you makes you stronger although I suppose few realize that it was the German philosopher who first penned it). My favorite, perhaps, is: there are no beautiful surfaces without a terrible depth. I like it in particular because in many ways it describes Nietzsche himself. His writing is often beautiful, but with a depth that sometimes takes time to fully recognize.

In their new book, The Entrepreneur’s Weekly Nietzsche: A Book for Disruptors, Brad Feld and David Jilk pick out some of their favorite Nietzsche quotes and form chapters around business lessons from them. It’s a brilliant construction and one that adds context and meaning to Nietzsche and his writing. You’ll recognize many of the contributors to the book – Reid Hoffman wrote the introduction (I didn’t realize that Reid studied philosophy before turning to technology as a career), and many entrepreneurs contributed chapters (I wrote one as well, in fact).

There are many lessons to be learned from the last year – of the importance of connections to those around us; of how fragile our economy is – especially in certain sectors; about what’s really important. One of the most important to me was the power of slowing down. I’ve always known this – and strove to create space in my life to do it (often failing). But Covid forced it in ways that were unexpected. Especially from this perspective, the timing of The Entrepreneur’s Weekly Nietzsche is perfect. I’ve had a pre-release copy for a few weeks now and it’s how I start my day: quietly contemplating a Nietzsche quote and considering its meaning for my personal and work life. Thank you to Brad and David for this gift.

I hope you’ll consider buying the book and trying a similar routine. Nietzsche isn’t a philosopher to be devoured. Rather, his writing is meant to be contemplated and considered. The Entrepreneur’s Weekly Nietzsche is a wonderful, guided way to do just that.

You can purchase the book on Amazon and other sites. The book’s website with more information can be found here.

Sorry – meant to have this one up a little more proximate to the actual event . . . You go to Gnomdex? Me neither.  I was bummed I missed it, so I spent some time rummaging around on Google and Technorati looking for some links.  Here’s a few that I found that, while they don’t replace the experience of attending in person, at least give you a little bit of the flavor.

Here’s the conference site. – http://gnomedex.com/

Here’s the conference update site (scroll down and track the action) – http://gnomedex.com/updates/ Here’s the conference blog roll (links to attendees who blog) – http://www.gnomedex.com/updates/2005-04.phtml

Here’s some photos put up by “laughing squid” – here and here.

Of course the big announcement at Gnomdex was Microsoft’s broad support in Longhorn for RSS. Nick Bradbury had a great review here.

I’ll see you there next year. <g>

One of my favorite services is unsubscribe.com. It’s a gmail plug-in that with one click lets you rid your inbox of unwanted newsletters. I recently analogized newsletters to tending a garden. You have to stay on top of the weeds or they get out of control. Unsubscribe.com lets you do that.

With this as a backdrop, I was pretty surprised to receive the following in my inbox last week:

Thank you for being one of our paying customers, your trust and support helped propel us to where we are today.

With that being said, I’m excited to tell you that beginning yesterday, August 4th, 2011, we have made our full suite of products (Email Unsubscribe and Social Monitor) completely free, which means we owe you the pro-rated amount of $9.62 and have discontinued any further billing.

Please fill out this quick form on your Account Settings page so that we can send you a refund check. We would like to simply refund your card, however that is not something we can do with our current payment processor so we will instead have to send you a physical check, sorry.

Thank you again and we look forward to keeping your inbox clean and your social networks secured.

Team Unsubscribe

I was blown away. Here was a company that was deciding to stop charging for it’s product. That’s not all that uncommon (although see my post with some thougths on free models here for a few ideas on pricing). But giving back my pro-rated unused account balance? Now that’s really taking it to another level. Here was my response:

Hi. You guys rock. Seriously. I love your product. I think it’s great that you have a model that will now allow you to offer the unsubscribe product for free. I think it’s even greater that you decided that if you were going to make the product free that you should grandfather in existing customers (even though we all signed up with no expectation that we’d receive a later discount). I’ve personally received much more value out of the unsubscribe.com service than I realized I would at the time I signed up (I’ve even tweeted about my love of unsubscribe.com a few times!). You’ve saved me countless hours either deleting emails I never had an interest in reading or trying to navigate the labyrinth of dozens and dozens of companies “unsubscribe” processes. Please keep the balance on my account. I couldn’t be happier with you guys and I couldn’t possibly accept anything back given the tremendous value I’ve received by using your product.

I love it when companies do the right thing. Even if I’m not planning on taking them up on their offer…