In the category of “big news that no one seems to be talking about”, two days ago IBM announced that it was launching a new licensing program with the venture community to allow easier access to IBM’s broad patent portfolio for start-up companies. This is actually a big deal (it is to me at least, which is why I’m shocked at the lack of press on the announcement). IBM is vastly simplifying how companies can gain access to its patent portfolio. It’s catered to the venture community (the program is intended to be administered through the companies’ venture investors) and was in part put together by IBM’s venture capital advisory board. In a nutshell if you are a company that has less than $10m in revenue you can access the entire IBM patent portfolio for $25,000 for a 3 year term. Companies with above $10m in revenue sign a customized five year agreement (the information I saw suggested that the license fee would be 1%).I’m not a big fan of our country’s IP laws – patent law is kind of like the IRS code (its overly complicated for the sake of being complicated, doesn’t do a good job of driving desired behavior, but works just enough for most people to figure its not worth the incredible pain in the ass of trying to reform it). But for the moment, at least, we’re stuck with the current system and moves like this one from IBM vastly simplify the process of navigating the patent waters. Hopefully more companies with large patent portfolios will follow suit.

I’m involved in a lot of capital raising conversations – companies looking for money. One thing that never ceases to amaze me is how narrow minded many companies are in how they approach this process. Forget the obvious stuff about doing research on local VC firms and their investment focus to make sure you are a match before sending them your “next generation toaster oven/microwave” business plan (yes –  I actually received this plan) or targeting VCs that are particularly knowledgeable about your industry or have made money investing in businesses with similar characteristics – I’ll assume (wrongly) that most people already do that. I’m talking about treating interactions with potential funders as relationships – listening to what they have to say in response to your pitch, taking notes about what whatever it is that’s on their mind when you’re meeting with them and then creating some kind of database to capture this information and plan regular follow-up. Many entrepreneurs treat a VC pitch as a one shot opportunity rather than the potential start to a relationship. Since the typical result of these meetings is a turn-down the relationship starts and ends there – perhaps taken up again when its time for the next round of funding or if you happen to bump into each other somewhere. This is a huge mistake. David Beisel correctly points this out in his recent post on the things smart entrepreneurs do when interacting with VCs. The kind of periodic follow-up that David talks about in his post almost never happens in my experience. It’s a shame, too, because some of my fondest entrepreneur relationships have started with me turning down an investment in their company. Venture deals can take time to come together and someone who turns you down for round 1 may be in a position to invest in round 2 (or in round 1 itself if it takes a while to come together). Reaching out to VCs that showed interest in a way that is meaningful (and as David points out aren’t overly intrusive) can only lead to positive outcomes.

In talking with the VP of Sales of a company that I recently turned down for investment I told him that he should treat his interaction with me like he would that with a sales prospect. I was extremely explicit that I was not shutting the door and gave him specific reasons I wasn’t going to pursue an investment in his company right now. I pointed out that he wouldn’t stop pursuing a sale if the decision maker said ‘interesting but not now” and he shouldn’t make that mistake with me or with other VCs that he was taking to. Hopefully I’ll hear back from him one of these days . . .

You can see from the comments to my post on company names yesterday that I actually heard from many of the companies listed (a few wrote me directly and don’t show up on the comments roster, but 3 commented directly). I was actually highly amused by the e-mail exchanges I had on the topic – everyone took it in stride (and thought it was extremely funny). It did get me thinking about how fast information travels in a WEB2.0 world. With one exception that I’m aware of, the people who contacted me were not a regular reader of this blog (despite my wishing that my reach was really that far . . .). Still within a few hours, they had all been alerted to the fact that I had posted about them.  There are no secrets in a world that connected . . .I suppose the downside to having a made up company name is that no one knows what you do. The upside is that when someone mentions you on the web, its pretty easy to figure it out (not too many cases of someone writing about the wrong “Nuvvo”, I’d imagine).

Effectively building and working with a board is a critical part of building any successful business. But there is a lot of nuance in doing both of these things effectively. Enter the second edition of Startup Boards: A Field Guide to Building and Leading an Effective Board of Directors by a trio of authors including my partner, Brad Feld; CEO of Foundry portfolio company Bolster, Matt Blumberg; and co-author of the original edition of Startup Boards, Mehendra Ramsinghani.

While the first edition was great, this second edition is a well-needed and excellent update (it’s been 7 years since the original came out). I had the chance to read an advance copy a few months ago and loved the practical information and important updates to the new version. Startup Boards is a comprehensive guide on creating, growing, and leveraging a board of directors written for CEOs, board members, and people seeking board roles.

The first time many founders see the inside of a board room is when they step in to lead their board. As I wrote in my blog series, Designing the Ideal Board Meeting, boards are often not managed well and as a result, are often under-utilized. Startup Boards looks at the structure, management, and best practices for leveraging a board to get the best from it. The authors have collectively served on hundreds of boards over the past 30 years, attended thousands of board meetings, and encountered more crazy boardroom drama than most. They’ve poured this wealth of knowledge and experience into Startup Boards. Importantly, this new edition emphasizes the importance of independent board members, diversity at the board level, and openness to first-time board members. 

In this latest edition of the book you’ll learn about:

• Board fundamentals such as a board’s purpose, legal characteristics, and roles and functions of board members;
• Creating a board including size, composition, roles of investors and independent directors, what to look for in a director, and how to recruit directors;
• Compensating, onboarding, removing directors, and suggestions on building a diverse board;
• Preparing for and running board meetings;
• The board’s role in transactions including selling a company, buying a company, going public, and going out of business;
• Advice for independent and aspiring directors.

Startup Boards draws on stories from board members, startup founders, executives, and investors. Every CEO, board member, investor, or executive interested in creating an active, involved, and engaged board should read this book—and keep it handy for reference. I hope you’ll grab a copy. 

I wrote a post last year about conveying information effectively in which I talked about how difficult it is for someone to guess a song that you are tapping out with a finger (but how easy is feels like it should be when you are the one doing the tapping).  Its a true phenomenon, although I meant it as a metaphor for (or perhaps just an example of) how easy it is for people to overestimate their ability to clearly communicate their thoughts/ideas with others.

The internet being what it is, however, someone has actually put together a website that lets you tap in a song with your keyboard while it tells you what song you are tapping.  Its designed for people who have a song stuck in their head but can’t remember what it is, although its pretty fun to play around with even if that doesn’t describe your current condition . . .

Thanks for Charlie for sending this to me.

Many readers likely already know that I’ve been working on a book for the last several years – The New Builders: Face to Face with the True Future of Business. It’s due out in a few weeks and I’m really excited about it. Writing a book was challenging but in many ways, it was an unexpected pleasure. I thought it would be fun (and interesting) to post about the process a bit. Especially as we’re about 10 days away from its release on May 4th.

I have long been interested in looking at ways that we can support diverse entrepreneurs and connected with my co-author and friend, Elizabeth MacBride, around this topic some years ago. Main Street businesses – the ones that truly hold the fabric of their communities together – rarely make news headlines. But they are incredibly important to our economy and to their communities.  We both believed this passionately but wanted to uncover the stories and data behind those main street entrepreneurs. That led on a roughly year-long journey of researching and interviewing entrepreneurs throughout the country to find out their stories, where their struggles stemmed from, and what they needed to thrive. We had a chance to talk to a number of people supporting these entrepreneurs as well as researchers working on understanding the details and key trends in these industries. It was a whirlwind of information (and became quite a compilation of notes, documents, and research reports in an increasingly large Google Drive).

From there came the actual writing. Setting a goal of 5,000 words per week, I blocked off parts of 2 days in my calendar, all summer, to write. Some days, the words just flowed, while on others, I needed to muscle through. Interestingly, I could never tell when sitting down to write which kind of day it was going to be. Often it took me an hour or more to get into the writing flow and to determine which kind of day it was going to be (flowy and quick or a slog). Through this process, I found that I’m a pretty linear writer – I start in one place and keep going; typically writing a chapter in its final order. I loved writing with a partner and the contrast in styles was a particularly interesting facet of our collaboration. While my style was a little dry and very much writing in a straight line, Elizabeth wrote more in concentric circles. She not only taught me how to weave stories in and out of chapters, she wrote almost as if she was painting, laying down the foundation across a chapter she was working on, then layering in some of the key features, and finally coming back to fill in the details. Those chapters almost emerged from the mist, often coming to full form in a way that was somewhat surprising (I would be thinking we were weeks away from finishing, only to have her do a final pass, add some key details, smooth out the edges, and – voila – it was ready for editing!) I learned a lot through our collaboration. I also really enjoyed the process of editing her work and having her edit mine. I believe it added balance to the final product, even if it was sometimes a little hard to keep to a single voice across the book (typically, we would each be responsible for a full chapter at a time, although there are several that were much more collaborative where we each wrote pieces – I wonder if readers will be able to pick up on which ones those are).

Not long after Covid hit, we realized that this was a story that was crucial to tell now. In light of the disproportionate effect the pandemic was having on smaller businesses – particularly ones owned by Black, brown, and female entrepreneurs – we accelerated our writing pace.  What started two summers ago as a year of research and potentially 18 months or more of writing, editing, and reviewing turned into a frenetic 6 months of writing, followed by 3 months of development and copy editing. Those later processes were completely new to me and I was thrilled to have our publisher, Wiley, provide not just a copy editor but also someone to read the manuscript for a more thorough development edit first in order to make sure that the key concepts came through in our writing. That process resulted in rearranging some of the chapters and rewriting sections that were either unclear or where our point was lost in the text. At this stage we had a few close friends take a look at the draft as well – which for me included asking my partner, Brad to take a look. Feedback at this stage was extremely helpful. The copy edit process was easier (in part because we had already made heavy use of Grammarly), but laborious.

I was amazed at how quickly things progressed from there (Wiley fast-tracked the book, which made a huge difference). A few weeks after copyediting, we had the final proofs. That was actually the first time I printed out the book to read cover to cover. There were a surprising number of edits at this stage – some because we had just missed things, but many because it was the first time either Elizabeth or I had taken a step back from the book for more than a few days since we started writing (in this case it had been more than 2 weeks since we had last read any of it). And the nature of drafting a book isn’t a start-to-finish process, so we had often been reading and working on chapters in random order. Now we were reading the entire book from beginning to end, which gave us a different perspective. There were actually 2 rounds of this “final” proof stage before we had it nailed, but I’m glad we took the time to get it right. We also worked on a photo insert section at this stage – something that I hope will set the book apart and give readers a real flavor for the New Builders that we write about (in the fall and early winter, we hired several photographers to go out and take pictures of many of the people we wrote about; not an easy thing to accomplish during Covid, but the results were fantastic – you can see some of their pictures featured on our website already.

Marketing the book has been an entirely new experience and one we’re just beginning. Emails to friends; requests to blog or write about the book; podcasts galore; some great media hits (including a spot on NPR’s All Things Considered); a few OpEds in the works; events and readings; etc. – all to try to get the word out as much as possible.

The work of The New Builders was born out of a true passion for the importance of recognizing the breadth and depth of entrepreneurship across the US. I’m proud of how it came out.

Lijit quietly released a very cool new widget for users of their service (that’s you, right?). The new Lijit Welcome Wijit greets site visitors who come to your site via a search term and gives them a relevant roadmap of your site as it relates to the search query that brought them there. It’s great for your site visitors who now have additional context for their interest in your content. It’s also great for publishers who can now create a more sticky experience for their users and expand the cross pollination of their content. From Greg Keller’s post on the Lijit blog, the Welcom Wijit is about:

• Welcoming new readers to your site when they’ve linked in from somewhere else…e.g. a search engine, blogroll that includes your site, etc. They land on your property and they get a true ‘greeting’ to say thanks for stopping by!
• Better content discovery: Readers landing on your site for the first time will have an initial experience right off the bat of mining your content. What is old to you is all new to your new readers! Welcome Wijit will help them find it easily.
• Tools tools tools for your readers: The Welcome Wijit by design is about improved loyalty and return visits. The Wijit offers features to quickly add your feed to RSS readers, My Yahoo and iGoogle home pages to ensure they have you earmarked for return visits.
• Pre-selected search results: When a reader is searching the web for something and they stumble upon your site, Welcome Wijit knows that search term and will provide a pre-selected list of the top 3 relevant items fitting that search on your blog, within your content and throughout your network…given them a true ‘feel’ of the Lijit search experience.
• Advertising opportunities: We’re committed to doing what we can to make you more money! Similar to your Search Engine Results Page advertising, Welcome Wijit provides Google Ads to ensure more relevant ads are seen and clicked through by your readers.

Below is an example from VC Adventure, which shows what you might see if you come to my blog after searching about how to get a job in venture capital:

You can see the Welcome Wijit under the main nav bar – set up with a welcome message, easy way to subscribe and a search box set to expand the search term the user arrived on to the entire blog. Readers can easily see my Lijit Network, view my RSS feed and search my site. The reader also has the option to expand the wijit view for even more information (the search is then populated with results from my blog and tabs to expand that to additional content I’ve generated elsewhere and my expanded network).

Installation is a breeze (it took me about 2 minutes) and can be done from your Lijit account (if you’re already using Lijit search there’s no new code to insert into your blog. Check out the Welcome Wijit page at Lijit for more info.

I’ve been involved with the Boulder ESPRIT Awards for the the last 8 years. ESPRIT is put on by the Boulder Chamber of Commerce to “celebrate entrepreneurship” in Boulder county. Each year ESPRIT honors a handful of entrepreneurs who embody the best attributes of the Boulder business community.

This year is the 25th anniversary of the awards and the program will celebrate the last 25 years of innovation in Boulder valley and look forward to some of the people and programs that are serving as catalysts for innovation for the next 25 years.

I’m the event chair this year, which means for the first time since I’ve been involved, I actually don’t have that much to do although I will be emceeing the awards dinner (which promises to be both fun and funny). In addition to the dinner there are a handful of events that are worth checking out:

• The Technology Alliance Breakfast. A showcase of new and emerging technology from the CU Tech Transfer offices.
• Breakfast/Lunch Series. 3 separate events with panelists representing the past, present and future in different industry segments.
• Onsite  Tours. Featuring Sterling Rice Group and People Productions

The action all takes place on October 6th. You can find more on the ESPRIT site or you can email me directly for more information.

Hope to see you there!

Online technology magazine Xconomy wrote an article yesterday that focused on the controversy surrounding Boston based Revolutionary Angels – the angel group that is sponsoring a business plan competition in which companies are charged a $4,995 “entry fee” and vie for a $250k investment from the group. I wrote extensively last week about my distaste for the “pay to pitch” practice in general and Revolutionary Angels’ spin on that practice in particular. The Xconomy article picked up that post and used it to effectively represent one side of the story.  They also talked to Chris Hurley, the CEO of Revolutionary Angles, who defended the group and their practices. Clearly this question has struck a chord with VCs, angels and entrepreneurs (it’s worth checking out the comments to my blog, the Xconomy story as well as the original NY Times blog that kicked off this round of discussion) and I thought it was worth addressing Hurley’s views with another post here.

Hurley had a few key responses – let me break them down.

Companies actually get consulting help for their entry fee. Xconomy reports Hurley saying that “Revolutionary Angels panel members are acting as consultants” and that “every startup that enters the competition “gets support and help with their business plan and their strategy.” (a benefit so great that companies should be willing to pay the $4,995 even if there was no chance for a prize, he says). Here Hurley hits on one of my main pet peeves of poorly run angel groups – that they really are just comprised of out of work executives looking for consulting fees. Consulting projects are consulting projects. They should include a clear scope of work, deliverables, project timeframes, etc. To me Hurley’s “we’re really consultants” argument is a poor rationalization. How do you justify charging companies to enter your competition? Talk about all the feedback you give them, of course! You’re a successful business person – just put a dollar value on the few hours you plan to spend with each company and voila! Your “entry fee” is justified! Not so. Business people who are attempting to support their local entrepreneurial ecosystem should be liberal with their time and provide feedback and advice to startups without looking for cash or equity. I do this all the time – and not just with companies that we’re looking to fund (although everyone who gets in to pitch a VC gets feedback in my experience) but with people in the community who seek me out, with companies that we’ve turned down but who stay in regular contact as well as with people whom I’ve never met before but who take the time to email me and ask a question. All of my partners do the same, as do most of the VCs I know and, importantly, most of the successful executives I know. While not everyone can respond to every request (nor will they all have the background to be relevant) but the kind of “support” that Hurley refers to is given out for free thousands of times a day. To be clear, I’m not saying that there isn’t a role for paid consulting work or equity compensated advisers – just that there’s a difference between a longer term consulting or advisory relationship and “providing feedback.”

Revolutionary Angels offers an above-market equity deal to the winner of their competition. The article paraphrases Hurley as defending the group’s practices because the deal they offer to the winning company is, by venture and angel standards, a really good one: “By funding Revolutionary Angels’ investments from the entry fee pool, he says, the group has the ability to invest in startups that may never provide returns on the scale angel or venture investors usually expect.” Basically the gist of this argument is that because RA suckers companies into funding the actual investment that the group makes (not to mention leaving a large sum left over presumably to cover the group’s fees and expenses on top of the investment) they can offer a really good deal. He’s correct that by national standards the deal that they say they will offer is probably above market (they claim that the winner of the competition will receive $250k in exchange for 10% of their business). But the argument falls short. Scam 100 companies into contributing to your investment pool, pick one to win the lottery and call yourselves the champions of entrepreneurs? And then justify this activity as some kind of community welfare (funding startups that may never have the chance to get funded)? And this may not actually be all that good for the winning company either. While $250k for 10% of your business may sound like a good deal, it may create the start of a cap structure that prevents other investors from wanting to participate (because they’re actually funding the investment themselves) and could just as easily act as a market disruptor rather than a lottery win for the chosen company.

There’s simply too much demand for quality feedback. Revolutionary Angels is filling a key gap in the market. “These investors don’t understand the scale of the demand, Hurley says. “If people think everybody has access to experienced entrepreneurs, that’s just not true,” he says. “In my talking to entrepreneurs, not enough of them are getting access to the people who have been there and done that. There is a much larger pool of people who aren’t being served.”” Not surprisingly, I don’t buy this argument either (and think it argues that Revolutionary Angles is very clearly preying on those that just don’t understand the entrepreneurial economy). While I agree that there is a large demand for feedback and agree that not all entrepreneurs are receiving the feedback they’d like I don’t think this is a supply and demand issue – it’s a connection issue. Too many entrepreneurs don’t know where to turn (and thus are susceptible to the kind of scheme that Revolutionary Angels has set up). I want to be careful about placing too much blame on the victim here, but I do believe that entrepreneurs sometimes don’t think broadly or creatively enough about how to expand their networks and gain access to people who can give them advice and feedback. This is really the topic of another post (which I’ll try to get up this week). In the meantime Micah has a few ideas on his blog here.

Fundamentally my issue with Revolutionary Angels and groups like them is that I don’t believe that they put the entrepreneur first (which I believe is how the dynamic should work). Instead they ride the backs of entrepreneurs to fund their “investment” and take advantage of their respective position in a market in which both sides don’t have the same access to information. The CEO’s of the companies that participate simply don’t know where else to turn – Hurley and the Revolutionary Angels are taking advantage of this. And hiding under the guise of a “business plan competition” rather than just hanging their hat out as business consultants suggests that they’re simply preying on the aspirational dreams of entrepreneurs.

I took a poll of the Foundry portfolio this morning to check in on the shift to Work From Home. As of today, about 1/3 of our portfolio companies have implemented a mandatory work from home policy. The vast majority of the rest are recommending people work from home but are not mandating it (meaning they’re not physically closing their offices). Only a couple are still operating with their offices fully operational.

We’re living in unprecedented times. Children are out of school. We’re shifting work patterns. Many of us have parents, partners or others that we’re close to who are immune-compromised or in some other class of person who is at higher risk for Covid-19. It’s a time of great emotional and physical uncertainty.

As we retreat into our homes and bunker down it’s important to consider the challenges many among us will face with that kind of forced isolation. There is a great deal of research on how we’ve slowly been creating a society that is less and less connected. The results are greater instances of depression, anxiety and other forms of illness. Humans are social animals. We need connection and our “tribe” in order to survive and thrive. Johann Hari did a wonderful job outlining the research behind this in his book, Lost Connections (there’s quite a bit of information on this on his LostConnections website as well).

I had this in mind as we were talking to everyone who works at Foundry yesterday, telling them that the office would be closed for the foreseeable future. I’ve been talking to many of the CEOs I work with about how to best support their employees through what can be an isolating and scary time. It’s critical in times of stress – and especially in times where we’re physically isolating ourselves – to foster a sense of community and belonging. We talked about this explicitly as a group in our discussion at Foundry and are taking extra steps to make sure we’re not just checking in with each other, but also that we’re creating a sense that we’re working together even though we’re working in separate places (this morning that resulted in a bunch of photos of our various dogs working with us; silly but it gave us the sense that we were all working together; we’ve also significantly stepped up our use of Slack and Voxer so we’re all in touch more than we were when we were physically next to each other in some cases). I think this is important for all of us to keep in mind. While its important to check in on how people are doing, creating a sense of normalcy to working apart; creating community and connectedness – at work, with our neighbors, with our children’s classmates and with our friends – is just as important as what we’re all doing to physically isolate ourselves to slow the spread of Covid-19.

Let’s make sure that we’re not confusing social distancing from social isolation.