I don’t need to tell you about the devastation that has rocked Colorado over the past week. The rain started and it just wouldn’t stop. I’ve lived in Colorado for 17 years and I’ve never seen anything like it. People have lived here for their entire lives and haven’t. Our house and property only sustained minor damage (and we spent a few days without power and water; neither particularly difficult compared to what others are facing). It was heart wrenching to be glued to the news and local reports seeing pictures of our community – all around where we live; our neighbors; the places we go every day  – become ravaged by floods.

We have many friends who sustained real damage to their properties and homes (and like most people effected by this storm the vast majority don’t have flood insurance). A number have been forced out of their houses – some for months. Our house is only a few miles from the town of Lyons, which was completely cut off by the flood waters and totally devastated. The entire town will be shut down for months while they rebuild power, water, sewer and other critical infrastructure. Every single person in the town of Lyons has been forced to relocate. There is a message board at the evacuation center  with people searching for friends, family members and beloved family pets. It’s hard to imagine this kind of loss.

While Ryan, Jason, Brad and I started Foundry with a national vision, being part of the Boulder community was always core to the Foundry identity. We’re proud to call Boulder County home and fiercely loyal to our community. With this in mind Foundry is proud to join the relief effort by giving $100,000 through the Entrepreneurs Foundation of Colorado to the Foothills Flood Relief Fund. These funds will directly help victims of this catastrophe.

With this gift we’re also putting out the call to other funds who have connections to Colorado (either because they are located here or through their investments in the state) to match our gift of $25,000 per partner. To Colorado entrepreneurs and business people who have built their companies in this community, please do what you can to help. And a special shout-out goes to the Denver Broncos, who today announced that they were donating $50,000 to the relief effort. While that money will make an impact, I believe an organization as tied to the community and as successful as the Broncos can do better ($25,000 per player?) The team has the strong support of fans throughout Colorado. Now their fans need support.

If you have any questions about EFCO or your company or organization would like to direct a gift through them to help with relief efforts, please email me. If you’re interested in helping out directly, click on the “Donate Now” button at the top of this post. And, of course, if you’re interested in joining EFCO I’d be happy to talk with you about that. Together we can help rebuild.

Last week at the conclusion of the COIN Summit Colorado released an new brand for the state. The new branding effort was lead by Aaron Kennedy (of Noodles fame) with the help of a brand ‘committee’ (I was a member) and, importantly, a large network of ‘brand ambassadors’ around the state. The process was an interesting one and was designed by Aaron to be inclusive of opinions and ideas from around the state. The idea was to identify a unifying brand that could represent Colorado across a wide variety of uses (both inside the state and outside). The result is the image in the upper left of this post and the tag line “IT’S IN OUR NATURE”. The logo draws from the green on the Colorado license plate, using updated but similar mountain/peak imagery but also including CO and Colorado (I guess for the avoidance of doubt about what we’re talking about).

I think it’s impossible to undertake an initiative such as this and find any kind of true consensus. And I suspect that people reading this will have mixed reactions to the new logo and branding. That’s kind of the nature of the beast. You should see the size of the three ring binder that I received as part of the Brand Counsel that reviewed all sorts of information from focus groups and brand brainstorms (now would be a good time to point out that the funding for this project was all private – the state didn’t pay for the fancy binders and formal letterhead, etc that I received). Personally, I like the new logo a lot and I think it was time for Colorado to update its image. I also like that the state will be consolidating around the use of this logo but also be allowing companies from Colorado to use the logo to tag themselves as Colorado proud (there are derivatives of the logo that signify that products were Made in Colorado or Designed in Colorado, etc.).

I can’t help but point out the similarities of both the logo and the tag line to the Colorado Entrepreneurial by Nature initiative that I helped start with a handful of other local entrepreneurs (and that was announced about a year ago) – if you’re a Colorado business and you haven’t signed up and badged your website you can do so here. I think the similarities speak to the broad view of Colorado as a place where business and nature mix (and reinforce each other). And I’m really happy that the work that our small group did around EBN was validated by the much broader work of BrandCO.

Look for both the EBN logo and the new BrandCO logo to proliferate.

For years, many of our most high profile hardware investments have had a quiet partner. Dragon Innovation – experts at helping hardware ideas actually happen – have helped companies like Makerbot, Sifteo and Orbotix (all from the Foundry family) move from product idea to product reality. As the startup world shifts from an intense focus on bits to celebrating atoms and the “maker movement” of hackers who give those atoms life, there is bright light being shined on the ability of those makers not just to come up with cool ideas, but to take those projects from ideas, to prototypes to delivered product. This is where Dragon shines, and where they aim to completely change the way great ideas are planned, funded, made and sold.

Today, Dragon is opening up a platform focused entirely on great hardware projects and their makers. With the expertise of their years of consulting and hundreds of products they’ve helped come to life, they’re applying a different filter on the traditional hardware crowdfunding model (which is rife with failure due to improperly scoped projects and overambitious and unrealistic expectations). They’re building what they hope will not just become the platform for makers to launch their projects, but ultimately will become the center of the maker community – where makers come to get help from each other, learn about new products and get feedback on their ideas. 

Of course the Dragon marketplace is also about the other side of the funding equation – the backers. The company believes the experience of backing a a company should be about both the project and the maker and they’re building tools into their site to allow makers to better interact with their backers, simplify and make more meaningful the project tiers and, most importantly, to back projects that have a high likelihood of actually delivering.

The company has launched with 8 initial projects (including a special edition of the Pebble watch). The company is also partnering with companies like GE and Qualcomm to help put more muscle behind what they bring to the table (look for more partnership and some innovative twists in the coming weeks). Go check them out!

Reputation matters. You know that and so do I. But it’s easy to forget that you’re either building or destroying that reputation in every interaction you have. Not to mention widespread reputation travels in our ridiculously connected world.

I was reminded (again) of this today from an exchange on our CEO email list (which includes about 75 CEOs of Foundry portfolio companies). The email read:

To: FoundryExec
From: [CEO of Foundry portfolio company}
Subject: Have you done business with anyone on this list

I’m on my way back from [an] investor conference where we met a bunch of VC & Private Equity guys.

The event was really useful. Not only did I discover a whole bunch of folks wanted to speak with us about investing, but I feel like I’ve been through an intensive two day course on Series B/C financings. Plus, it was useful to network with a bunch of CEOs and I think we made a few sales in the process 🙂

If any of you have ever had any dealings with the firms and/or individuals below I’d appreciate your feedback/tips.

[this was followed by a list of 20 or so firms and individuals]

The response was close to instantaneous – probably 20 messages exchanged in the course of an hour or so listing out people’s experience with various firms. Responses ranged from positive: “Good guys, and super smart.  Happy to take meetings.” and “He was nice, quick to provide feedback, clearly smart.”; to practical: “They want $5m run rate before investing” and ” Very good investors but super picky. Min check size $25M”; to negative: “The most negative experience I’ve had with a VC. …the partner was totally disengaged, dismissive, and rude.” and “Generic VC.  Another friend has him as main investor and every board meeting is “Why can’t you grow faster.”; and “He came late to the meeting. Came off as arrogant and bored”

There were tons of other comments, but you get the drift. The point is that people talk (in this case the topic was VCs but you could imagine the same thread on larger technology company partnerships or the best tools for managing metrics across your business, etc.). And while there are always two sides to a story (and certainly everyone can have an off day) it’s important to remember that with every interaction you’re either building or harming your reputation. I forget this plenty. And this morning was a reminder of why I shouldn’t…

A well instrumented business will have literally hundreds of metrics that they track to understand the key parts of their business. Each group within an organization likely has a key metrics dashboard that guides their department functioning and informs their decision making. These dashboards then roll up to other dashboards to form the core of the key metrics that an executive team or CEO look at daily (or more) to keep their pulse on the functioning of their operations.

But what if you didn’t have the luxury of having all these data sources at your fingertips? What if you were forced to decide on one number that was THE number. A single metric with which to keep your pulse on the health of your business.

I’ve asked this question to many CEOs and what’s surprising is how difficult it is to come up with the right answer. But also how illuminating it is once you do. It’s almost universal that your first response isn’t really the right answer upon further reflection. I’d encourage you to try this exercise yourself. You’ll likely focus in on something that is driving your business right now – something you’re keenly focused on and that gives you some kind of insight into future performance. Maybe a sales funnel number. Possibly cash burn. But think more deeply about it. At the core of what you do as a company, underneath the veneer of the business itself is typically an underlying data point that is at the heart of the product or service that you’re providing. That may be the number of domains that you manage, the number of emails that you send out daily, the number of unique website visitors that your business generates. Rarely is this number an input, nor is it generally a forward looking statistic. It’s also likely not a financial number – you won’t find this metric on your income statement. It’s generally an operationally derived output to the running of your business. Surprisingly (and this is part of the power of this exercise) in many cases it’s not something that you’re already tracking on your highest level dashboard. This last point shows the real value of thinking through the “one metric” question thoroughly. I’ve been amazed at how often the answer to the question of what metric would your business track if you were only able to track one thing is something that companies aren’t necessarily watching that closely.

While it may be tempting to just throw out the first thing that comes to your mind as you read the preamble to this chapter and then be done, that’s not the way to do this exercise. And like many things, the journey to the answer is half of the reason to ask the question in the first place. This is a brainstorming exercise that requires some thought and attention. And preferably the help of your management team and even some outside advisors who aren’t as close to the day to day business and can offer you the feedback that only that outside perspective can provide. As you come up with your list and pare it down you might even try focusing on just one of those metrics each day. Force yourself to live the exercise (at least at the CEO or department manager level) and really test out whether you feel that what you’re measuring is really getting to the heart of your company.

Why do this exercise?
Confining yourself to a single metric – even if it’s just for the purpose of a simple exercise – is a chance to remember what it is that your business does at its core. What’s the lowest common denominator of the service that you provide and how can you measure that? What were some of the other numbers you considered and why? Ideally this is an exercise conducted with your entire executive team. And like a Rorschach, the process of choosing a single metric to measure your business by can help you gain insight into the types of managers you have around your executive table and what their biases are. A good CEO can use this information effectively to better manage not just their business but also their executive team.

Should you run your business on a single metric?
Now that you’ve boiled down your company to a single, measurable metric it’s natural to consider whether you can shed all of the other clutter on your dashboard and simply focus on the one thing that really measures the heartbeat of your company. I have another post coming about how the best financial plans actually limit the number of operational inputs they consider in an effort to better focus the power of their model on the small number of things that actually matter (and to more easily run sensitivities on those inputs). Operational metrics can work the same way. And while I wouldn’t argue that you should pare your dashboard down to one large blinking number that is your “one metric”, consider using this exercise as a way to remind yourself what really matters in your business and focus on those things that most effect that number.

The power of simplicity
There’s a great story that Atlassian tells about how they leveraged the power of a single metric into meaningful data that changed the way they ran their business. In this case they were measuring employee happiness (we’re departing here from the “one metric” concept above, but the story illuminates how a single, relatively simple metric can be quite powerful). Outside of conference rooms, bathrooms and the break room this company placed a bunch of iPads on which it asked a single simple question: “Are you happy today?” There was no sign-in. No tracking of who said what. No 1-10 scales. Just a single question with a binary answer. And it was amazing how powerful this exercise was to the operations of their business. Participation was high (it was easy and anonymous to take part) and the company found that it was much more predictive and a better guide to behavior than the longer survey they sent around once a year. The point of this story isn’t that employee happiness is likely your “one metric” (it isn’t), nor even that you should consider doing this same thing in your company (you should; it is easy and cheap and very effective) but rather that sometimes the simplest of metrics has the power to meaningfully inform your understanding of your business.

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.

Maybe it’s because I always love the back story of how an idea came together or because I’m particularly partial to team stories, but I love checking out the “About Us” or “Team” pages on websites. And while many (too many) are really bland, some companies really take the opportunity to show off their story, talk about their mission or present their team in an interesting way. I’ve been polling people for a while for pages that people particularly like. Here are a few that I think are really great. Please add to the list in the comments section. I’m also always curious about the right balance between mission driven About pages that talk about the higher calling of the company and team driven About pages that highlight the people that work for a business. I don’t know that I necessarily prefer one to the other, but it’s always interesting to see which a company chooses to highlight.

Kickstarter‘s team page is fantastic. Funny. Quirky (no pun intended there!). Definitely original. I love this team presentation as it really brings forward the personality of the company.

MondoRobot has the same idea, but with separate images. Be sure to mouse over the pictures. Same thing for sumall.

I like both the Team and About pages of Maptia, both of which I think do a nice job of relaying the story of the company.

Synapse has a great about us page packed with a bunch of history and cool graphics. A little surprising, frankly, for a 10yr old company.

The minutes and hours stats to the right of each bio turn the team page for Harvest from a pretty standard team page into something that was fun to read (and kept me scrolling down to see more).

I don’t bring this up for kicks. I actually think how a company presents itself online is important. It conveys a certain personality (or lack there of) to potential customer, partners and employees (and investors) and if done right really offers an opportunity for a business to present itself in a way that’s quite different from its peers.

Quick note here before I jump in to remind you that I’m not your lawyer (in fact I’m not a lawyer at all). I’m not offering legal advice. You have your own lawyer for that…

I’ve seen all sorts of variations on vacation policies over the years (some harsh, some that famously pay you to take time off and everything in between). And I’ve come to a conclusion on the best PTO and vacation policy: none.

Of course I’m not suggesting that you not let employee take time off, nor am I suggesting that you not have a formal policy. But after seeing all the variations – and importantly have had to unwind companies with various PTO policies – I think the best practice is to have a formal policy of not having a formal policy. In such a plan employees don’t have a set number of days that they can take off; there’s no difference between a day you take off to go to the doctor or sit on the beach; there’s no need to track days off; there’s just an agreement between the company and employees that they’ll take time off appropriately (and after checking with their manager). Here are a few reasons why I like the “no policy” policy:

– There’s no need to track days. In my experience most companies do a horrible job of tracking employees vacation usage. Having a policy of not having a policy eliminates the need for this. There’s also no difference between a sick day a personal day and a vacation day. They’re all just days out of the office.

– There’s no vacation accrual. As a result of not tracking vacation days, there’s no vacation accrual (which is inevitably wrong – see bullet 1 above). Vacation accruals in my experience turn into a perverse – and often unearned – “bonus” when employees leave a company. And they’re a huge pain to deal with if things turn south. But most importantly I think they set up the wrong incentive/expectation. Companies shouldn’t put employees in the position of choosing between the monetary value of time off and actually taking time off. Companies have vacation policies because employees who take vacations are better employees (this is at the heart of FullContact’s paid paid vacation policy that I referred to above). The value of vacation is the actual vacation, not in some artificial bank account that grows as you grow more miserable in your job.

– It’s better for employees. It’s good for people to get out of the office once in a while, for sure. But the other benefit of having a no policy policy is that you’re saying to your employees that you trust them to make good decisions. You’re empowering employees and managers to do their jobs and to manage their time off appropriately. That’s a powerful message to send to the people who work for you.

– It’s easier. For all the reasons above, not having a formal policy is simply easier. There’s no tracking, no accounting, no paperwork.

The vast majority of the companies I work with have formal vacation and PTO policies (this includes Foundry Group itself, actually). But a few don’t (as is true at many other companies I know) and I think that’s best.

Would love to hear your thoughts on this.

I should preface this post with the caveat that a VC describing what it takes to be a good VC runs the obvious risk of falling into a trap of vanity and lack of self-awareness. I hope I haven’t, but you be the judge…

There’s been a real uproar over Andy Dunn’s recent missive slamming venture capitalists. In it Dunn asserts (I’m paraphrasing here and I’d encourage you to go read the full post) that 98% of VCs suck. And his last line pretty much sums up his feelings: “98% of VCs who read this post self-identify as being in the top 2%. The other 2% are actually the top 2%.” There have been some good rebuttals of his overall critique – and especially of the 98/2% split (which, interesting, is perhaps an admission that certainly by track record, and implicitly by some of the other critiques Andy offers, there is some split between good and bad VCs -or Dumb and Not Dumb in Andy’s parlance; by the way, his math is completely wrong – the majority of venture returns are generated by an order of magnitude more than 2% of VC firms). I particularly like what Mark Suster had to say on the topic in his response – especially his opening point, about liking the VCs you know and hating the rest (Andy calls out his own VCs as being great in his post, to Mark’s point).

But this post isn’t a further rebuttal to Andy. Instead I’m interested in starting a conversation around what makes a good VC – specifically from an entrepreneurs perspective. Why might an entrepreneur choose to work with one VC over another (and as Andy suggests in his post there’s plenty of information out there to help entrepreneurs make informed choices). And in what ways can VCs actually be impactful on a company’s business (Andy suggests that this is by staying out of the way, although implicitly he suggests that his own VCs actually are quite involved with his company – I strongly disagree that being uninvolved is the answer).

Here are a few idea

It’s easy to get lost in the celebration of high flying companies that quickly take an idea to market, scale and sell. It’s exciting, financially lucrative and makes for great reading. We’ve been fortunate enough to have a few companies like that in the Foundry portfolio (Zynga, AdMeld and Gist all went from idea to sale/IPO in a relatively short period of time). But the reality is that most companies take years (and years and years) to develop – the average time from company founding to exit event is now approaching 10 years. And in many respects, being a great entrepreneur isn’t about coming up with company ideas and executing against an initial product spec. Its really about the perseverance, dedication and stubbornness that is required to see a company from that point just after the initial exuberance of getting a product into market and having a few people use it, through the realization that building a scalable business is going to be really freaking hard (I called this period the “trough of disillusionment in a post years back), to the point where you (hopefully) have proved the skeptics wrong and despite the obstacles, mistakes and miscalculations find yourself with a real scale business.

Years 3-10 in a business are the real heart of entrepreneurship. Figuring out how to scale an organization, realizing that you need to bring in a set of managers above many of your initial key executives, playing with product market fit that you thought you’d already figured out 10 times, going through a downsizing of the business after you ran a bit too hot, having a co-founder leave, trying um-teen different sales and marketing ideas as you struggle to create a scalable sales model, all the while trying to make sure you don’t run out of money in the process. This is the meat of company building. And it’s hard. And messy. And rarely pretty.

So here’s to those entrepreneurs who are toiling away because they truly believe passionately in what they are doing and are going to make their idea a success whatever it takes. Building a business is crazy hard. You’d have to be half insane to even think about trying. So kudos to those who are out there toiling away at it. You are the real stars of the entrepreneurial world!