Positive trending
I was thinking earlier today about one of the more subtle litmus tests that I use when considering an investment opportunity – my excitement trend line. My partner Ryan really helped me think through this a few months ago (I had been doing it but hadn’t been explicit about it). For every investment opportunity we dig into there are always multiple meetings, due diligence calls, research reviews, partner debates and other chances to interact about a company or idea. It’s obvious when I write it out here – although I think more subtle when you’re actually in the middle of evaluating an opportunity – but the trend line around a potential deal should be pretty clearly rising as you spend more time on it. I’m not saying that every meeting has to be better than the last or that you can’t dig up issues that require further work or clarification. I am saying that overall your enthusiasm for a deal should be increasing (and clearly so) over time rather than going down or even staying the same. It’s not a reason in and of itself to make an investment, but is a pretty good barometer of when you’re on to something or not.
May 5, 2008· 1 min read
How do you make money on the Internet?
My partner Brad Feld was interviewed yesterday on NPR’s Talk of the Nation on the topic of how companies make money online. [You can listen to the broadcast here](javascript:NPR.Player.openPlayer(89119306, 89119302, null, NPR.Player.Action.PLAY_NOW, NPR.Player.Type.STORY, ‘’)). The key take-away ultimately is that is you aggregate enough traffic you have a handful of options for turning those eyeballs into cash (probably worth of a full post about the pros and cons of these various models, but no time today to get that down on paper). …
March 27, 2008· 1 min read
Why I don’t sign NDAs
An entrepreneur started a meeting with me a few days ago by asking me to sign a non-disclosure agreement. I politely declined and thought I’d back that up with a post on the subject (I recall reading a few other VC blogger’s views on NDAs in past years – there’s certainly no lack of thought on the subject, although it does seem to consistently come up every year). VC’s, as a general rule, won’t sign NDAs. No – we’re not trying to steal ideas from entrepreneurs or pass confidential information along. We’re just not in a position to review, negotiate and keep track of literally thousands of NDAs that would result if we started signing them on a regular basis. Here are a few specifics from my point of view: …
January 26, 2008· 3 min read
Digital Analog
A few years ago, my partner Brad Feld suggested that entrepreneurs “take a giant step back” and look for a non-technology based analog for describing their business/idea (the “analog analog“). Today at a board meeting we spent some time working out our analog as a way of describing our young company. It occurred to us that the best analogs were all technology ones, which made me think: Have we come far enough in technology that digital analogs are now acceptable (or even preferred in some cases)?!? Perhaps we’re enough generations along the technology curve (Web 3.0?) that it’s now ok to switch our analogs to digital ones . . . …
January 17, 2008· 1 min read
CEO Reviews
Probably the most consistently overlooked “best practice” in venture backed companies is the CEO review. In my experience most companies provide little, if any, structured feedback at the CEO level. Perhaps the board or the members of the compensation committee might provide the CEO with limited (and mostly ad hoc) feedback at the beginning of each year when/if a CEO’s bonus for the previous year is awarded. More often the CEO review is essentially a review of the numbers vs. the financial plan. While that step is important, so is a meaningful discussion of the strengths and weaknesses of the CEO and ways they can improved their performance based on the collective input of the board and other mangers at the business. …
January 14, 2008· 4 min read
What do you do for a living?
It’s not that I’m ashamed of being a venture capitalist, but I do find that when people I don’t know ask me what I do, rather than say “I’m a venture capitalist” I typically say “I work for a finance company”. Writing this, I suppose that probably makes me sound like I sell mortgages or something, but for some reason I prefer it to the more direct answer. We were talking about this at a Foundry partner offsite earlier this week and it turns out that I’m not the only one of the group that tends to do this. We decided that it probably doesn’t stem from a deep seeded psychological problem (although perhaps we’re in denial about that) but rather is a result of geography. On the coasts who you are is much more tightly associated with what you are – vocationally speaking – but here in Colorado (as Chris eloquently put it this week) when someone asks you “what do you do,” you’re much more likely to talk about mountain biking or skiing than you are to answer what you do as a vocation. It’s not that people here don’t work hard (or that people on the coasts don’t do things outside of work), it’s more a question of how you want t the outside world to see you (and in what order). …
November 30, 2007· 2 min read
The 20 worst venture deals of all time
InsideCRM has compiled a list of the 20 worst venture deals of all time. Not sure the methodology (I can think of a few that I might have added to the list . . .) but the deals mentioned are for the most part worthy of the designation. You can see the story here – definitely amusing reading.
November 20, 2007· 1 min read
You’re burning too much money
I don’t know much about your business but I’d guess that you’re burning too much cash. Ok – that’s an over generalization but it’s also probably true. Businesses – and particularly early stage businesses – have some kind of gravitational pull towards spending too much money. Some of this is just the nature of entrepreneurship – entrepreneurs tend to be optimistic people who believe strongly in their business idea and their ability to grow their company. Some of this is that spending less money by definition means making trade-offs and potentially slowing down. Some of it may be left over exuberance from the internet bubble when businesses were rewarded for spending cash faster and looser. I don’t know all the causes, but it’s almost universally true. …
July 3, 2007· 3 min read
The start-up office revisited
A little while back I wrote a post on how much I love start-up office space. It’s messy, it’s small, it might not have a window and it might smell a little bit funny, but it’s the best office space you’ll ever have. I received a bunch of emails, comments and pictures from people with whom the post resonated. I really liked the following picture sent to me by Darrin Husmann who has a start-up company making intelligent irrigation systems with offices in both Oklahoma City and Baghdad (“Strange how war can bring two people from across the world together to work on sprinklers, eh?”). …
June 6, 2007· 1 min read
Is title inflation an acceptable recruiting/retention technique?
I’ve had a few people ask me about this recently and it felt “blog worthy”. At issue is the question of whether it’s ok to use title as an incentive to either keep someone at a company or attract them there in the first place . . . is playing to someone’s ego an acceptable employment practice? I know some people who get really bent out of shape about this stuff, but my view is that using title as part of a ‘comp package’ is ok –in certain circumstances and with a full understanding of the potential pitfalls. Most importantly, this can only be used in “bubble cases” where someone is truly on the line between senior manager/director or senior director and vp (the most common case in my experience where this becomes an issue – getting a vp title is seen as a big step). Promoting someone too early or hiring someone in at an inflated level where they are clearly not up to the standards of the rest of the team at that title grade is a mistake – people see through it and it causes an internal mess. Along those lines, titles like CFO, COO and President are not to be thrown around lightly – it sends a very specific message to an organization, investors, clients, etc – and a decision to hire at this level (vs. a VP of Finance or VP of Operations, etc.) is too important to play around with. That said, bringing someone in as your “VP” of Engineering when they are on the bubble of accepting an offer and where the issue is your desire to call them the “Senior Director” of Engineering shouldn’t cause you any heartburn. And while your first move should probably be to convince someone to take the tile you think is fair and review and promote them later (I’ve had great success with this in many of the companies I work with), when title becomes a real issue in a comp negotiation I think it’s ok to use it to your advantage. …
May 14, 2007· 2 min read