It turned out that the solution to my iMessage problem was relatively straightforward. That said, it only worked because I still had my old phone (it hadn’t been stolen; I hadn’t traded it in; etc.). It also worked when doing things like going to Apple’s site and deauthorizing my devices didn’t (which I still don’t understand). So the problem I pointed out really is a serious bug.

But for me, I had the phone and the solution (as a few people suggested in the comments to my post) was as simple as disabling iMessage on my device. Apparently this triggered a reset on the Apple server such that messages sent to me were no longer being routed through iMessage, thus fixing my problem. Problem solved.

Now if I could only stop incoming texts from coming in double (apparently a bug with the latest Handcent SMS build)…

I love the start-up world. I love working with founders and young companies. I love the excitement of working on business ideas that are new and different. I love seeing the success that often comes from this hard work. I’ve never before in my professional life seen a time of such innovation and creativity. At Foundry we see more business plans now than we ever have. And what’s more, more of those business plans are really interesting (and fundable).

It goes without saying that I love the business of venture capital. I love helping entrepreneurs work on their ideas. And I love helping companies figure out how to become as successful as possible. I love the challenge of trying to figure out the next great investment and the energy that comes from working with amazing and creative people.

But I’m worried and I wanted to get it out there.

I’m worried that in all the hype, in all the “we launched our company” events, and “we changed our name again” parties, and “we redid our website – come celebrate!” shindigs, and the SXSW parties, and the hoodies, and everyone who is “killing it!”, that we’re losing sight a bit of the really hard work that is creating and building a business.

I’m worried that in offering term sheets after a single 60 minute meeting, and in pricing early stage deals like they were already late stage successes and most egregiously by constantly running around self promoting and self aggrandizing, VCs are falling prey to a cult of personality about themselves and forgetting that their jobs are to help companies be successful. And as far as I can tell, very few seem to believe what I hold as a fundamental tenet of the venture industry, which is that entrepreneurs come first, not VCs.

Don’t get me wrong. I enjoy a good party (not to mention a good hoodie!). And I recognize the reasons to celebrate important company milestones and in going to industry events like CES and SXSW. And in bringing a bunch of customers, prospects and partners together at a social event. But I feel like I’m hearing less of “did you see XYX company’s great new product” and more “are you going to so and so’s party at ad:tech:”. I’m not exaggerating when I tell you that I’ve received 30 invites to SXSW parties but not a single invite to a panel session at the conference. And when someone tells me that someone is “killing it” (a phrase I think I hear 10 times a day these days), more often than not they mean “doing the job they were hired for”.

I hear more and more stories about companies making a pitch to a VC and having an offer before they walk out of the room (entrepreneurs: do you really want to work with someone who puts so little thought into their investment process that they would do this?). And the way VCs talk about the companies they work with has clearly shifted to be substantially more VC centric (lots of use of “I” and taking credit for company success as something they themselves created rather than participated in or helped with). And, of course, much has been written about rising valuations and the potential risk this poses to particularly early stage companies. Not to mention the increasing popularity of the “party round” where many VCs participate but no one actually takes ownership (also not good for entrepreneurs, in my opinion).

And it feels like a lot of this is for external show. I’m cool; I run a shit hot start-up; I saw [insert big name technorati here] at our company party last night. I’m in such and such company with [long list of other investors] and doesn’t that make me awesome. I’m awesome I’m awesome – look at me!! And not really about building great products or great businesses.

So by all means, lets keep having fun. But let’s also remember that the goal is to build great companies. And please – my fellow venture capitalists – can we take it down a few notches and remember that our role is a supporting one. If you wanted to be the star you should have become an entrepreneur.

If you’ve been following my twitter feed you’ll know that about a month ago I finally made the switch from AT&T to Verizon (brief conclusion: what took me so long? from my experience this month, the VZ network is vastly superior). At the same time I decided that I’d give Android a real try (I’d played around with it in the past, but never adopted it as my primary device). Enter the Galaxy Nexus. The slightly over-sized, slightly too much of a battery hog, but generally pretty well executed device from Samsung which at the moment is the only Android device running Ice Cream Sandwich (for those of you wondering why I didn’t just get another iPhone, the quick answer is that having paid $450 to “upgrade” to the 4S, I just couldn’t bring myself to take my total wasted spending on that device to almost a grand). I’ll drop a full post on my iPhone to Android experience in the near future.

My transition was going reasonably well until I started hearing from people that I was no longer responding to their text messages. And with my iPhone still sitting in its stand plugged in at my desk, I noticed a few texts showing up on my old device. Strange. I had ported my number and couldn’t figure out why there were texts still showing up on my old phone (or from a network perspective how they could have even gotten there). I took the SIM card out of my iPhone. I noticed that I could send a text from my Galaxy and the response would come back to my iPhone. I borrowed my wife’s phone and manually typed in my phone number to text myself a test message and it would show up on my iPhone and not my Nexus. None of this made any sense, but it was seriously annoying.

Finally Ross, our director of IT, figured out what was going on. Users with iPhones were having their texts directed through iMessage. And the kicker is, that short of people actually turning off iMessage completely on their phones, there was no way to prevent this from happening when they were sending a “text” to me. TechCrunch wrote a story about this in early January and suggested a work-around where I could deauthorize my phones through Apple. But unfortunately this didn’t work either (at least it didn’t for me). It’s an incredible bug and hard to believe that Apple hasn’t already figured out a fix to (clearly the problem is on their side – they intercept the messages on the sender’s device and decide to route them through iMessage; in my case that means anyone who has iMessage enabled on their iPhone is sending their messages into the ether). So now I’m stuck trying to decide how badly I want to stay on Android, whether it’s worth traveling with my iPhone so I can pick up stray iMessages (although only when my iPhone is attached to a wifi network since I have no other connectivity on that device) or whether I should give up and buy a Verizon version of the iPhone. I had planned to at least consider switching back with the iPhone 5 but Apple is really forcing my hand here.

I’m curious if anyone else has encountered this problem and if so what they’ve done about it.

Is there much disagreement in your company? I’m not talking about where to head for lunch – I mean real, passionate, fundamental disagreement on product, marketing, operations, etc.

I hope so.

Even more so the earlier you are in your business. Running it is a messy business. There are tons of decisions to be made and each decision is amplified by factors such as your short runway of cash, new competitors entering the market and new team members joining your company. So a healthy amount of disagreement and discourse is not just a good thing, it’s inevitable. In fact I’d venture to say that if there’s not disagreement at your business, you’re not encouraging enough debate and people don’t feel free to speak their minds. Of course after listening to this robust debate you’ll ultimately have to make a decision and move forward (end of debate – don’t let it stretch on after the decision has been made), but I’d encourage you to create an environment at your company where differing opinions are both valued and encouraged. You’re hiring great people after all. Make sure you give them the space to speak their minds.

It’s been way too long since my last post. I was going to jump in with a post on not blogging, but thought better of it. Better to actually do than write about whether to do or not do. So much for my resolution to write/blog more this year… Hopefully this was just a January hiccup with too much travel and work to fit in regular blogging.

If you’ve read this blog you know I’m a pretty deliberate guy. I like to know where I’m headed and I like to be explicit about where that is, what’s working and what’s not. To that end, towards the end of last year I went through an exercise with each of the companies I work with to lay out both top level goals for this year as well as get some feedback on the interaction pattern between the company and me. I’ve always done some version of this, but this was the first year I was this explicit about it (and the first time I included a request for specific feedback on my working relationship with the CEOs that I work with). The email looked like this:

I’ve been thinking a lot about feedback loops recently and thought it would be helpful to touch base on how we worked together in 2011 and think a bit about anything that we need to change about our interactions in 2012 (talk more; talk less; more concentrated time together; etc.). And overlay onto that the key priorities/challenges for 2012.

With that in mind can you send me your thoughts on:
– what worked best working together in 2011
– what didn’t work (either specific situations where we weren’t on the same page or some overall interaction pattern that just didn’t work)
– what should we do differently in 2012
– what do we together need to focus on in 2012
– where can I be most impactful to the business in 2012

I appreciate your spending some time thinking about this. I’m doing the same and will respond to your thoughts with some of my own.

In terms of how I’m thinking about 2012 for Spanning I think about a couple of key ares of focus:
– [bulleted list for each company of the top 4 or 5 things I felt would really move the needle in 2012]

Obviously there are a million other things that are going to take place in the business in 2012, but these are the general areas as I’ve been thinking about it (would love your feedback on these as well).

This turned out to be a more positive exercise than I ever imagined it would be. While I’ve always talked to the companies I work with about the key goals of their business (and, of course, this is an ongoing conversation), being this explicit really helped spur some interesting conversations. More importantly I’d never asked in a systematic way to all companies in my portfolio how our working relationship and communication pattern was working for them. In the past these tended to either come up on occasion (but never aligning across the portfolio), or be something that was discussed when some kind of problem arose. I’ll write a separate post (hopefully sooner than 6 weeks from now!) about communication patterns between companies and their investors and some of the explicit things I learned through this exercise, but I’d encourage anyone reading this to consider engaging in this conversation with their investors. It changed how I thought about interacting with a number of the companies I work with, reinforced some behavior and forced me to change other behavior. And my relationships became stronger and the goals for 2012 that much clearer.

Today Congress is holding hearings on what, if passed, would effectively become a censorship system for the internet. The threat comes in the form of two bills, currently making their way through the legislative process – Protect IP Act (PIPA – S.968) and Stop Online Piracy Act (SOPA – H.R.3261). Below is a video that describes the bills and their potential impact (and you can read more at http://americancensorship.org/):

PROTECT IP Act Breaks The Internet from Fight for the Future on Vimeo.

The effective censorship of websites (by blocking or slowing access to them) is what I find particularly disturbing. We already have a fundamental access problem on the internet. As internet access becomes increasingly important to society – truly part of the fabric of our democratic society – lack of access to the internet (and lack of high speed access) is becoming an increasing social and economic issue. Lack of internet access contributes to an increasing gulf in our society. And it’s a problem that government has recognized – for example when it required Comcast to offer low income households favorable rates on internet access in exchange for granting approval to the Comcast/NBC merger. I’m not arguing (at least in this post) for some kind of universal service fund for broadband access (and as a “capitalist” by title, I hope that the primary solution to this can be a market driven one). I’m pointing out that we already have some challenges around access to the internet that we haven’t even addressed. And now we’re talking about layering on an access hierarchy on the other side of the equation. The vast majority of the increase in the productivity of the american worker that we’ve seen over the past few decades has been driven by technological innovation (we’re working smarter, more than we’re working harder). Do we really want to take a primary driver of that technology innovation – the internet – and set up a system that effectively stifles the ability of new companies and new technologies to reach users? A system that rewards the embedded power structure of big business in the United States? I’m not arguing in favor of web piracy. I’m arguing for common sense. And against trusting the people who sued to block the VCR and MP3 players from coming into existence (two technologies, which they later ended up significantly benefitting from) by giving them the power to effectively shut down new businesses and censor our access to new technologies.

There’s a reason that the backbone of the internet is governed by “peering” relationships. We’re all peers on the internet. Let’s not forget that.

I’ve written a few times about Trada – a business that vastly simplifies search marketing for advertisers through a platform upon which Trada’s crowd of SEM experts build and manage campaigns on behalf of advertisers. The results to far have been impressive. The company has been helping advertisers increase the effectiveness of their search marketing and lower the amount of time required to manage search campaigns. And they’ve done this for companies spending as little as a few thousand dollars a month on search to as much as $500,000 per month. The result has been a rapidly growing company that is increasingly looking to expand the reach of its platform.

Today Trada announced that it has expanded its marketplace to Facebook, allowing advertisers to leverage the Trada crowd of expert optimizers to manage Facebook campaigns. To do this they’ve also launched a creative marketplace that will allow designers to contribute to campaigns on a performance basis. More on that a bit later.

The Facebook opportunity is massive (Facebook generates somewhere around 25%-30% of all display advertising impressions on the internet), but relatively nascent – supported by a limited toolset, requiring very different strategies than search or traditional display marketing, and as a result to date much more difficult for advertisers to take advantage of. The beauty of the Trada model is that it uses humans to perform tasks that are uniquely human in nature. We’ve found this to be effective in search, and expect that the same will hold true for leveraging the unique, but often very disparate data that Facebook enables marketers to make use of. And while entire companies are being built to try to help marketers better take advantage of advertising on Facebook, Trada is using all of their learning in search to extend their marketing capabilities into Facebook – a distinct advantage.

A quick note on the creative marketplace. Trada CEO Niel Robertson and I have been talking about this idea for the better part of 2 years. We knew that we’d need something like this to extend the Trada platform to Facebook (and beyond). “Creative” in search involves the relatively straightforward creation of text ads. Creative on Facebook involves the greater complexity of images and additionally needs to be constantly refreshed (the decay curve of Facebook ads is extremely rapid). I’ve wondered if a business could have been built around this kind of creative marketplace – using performance incentives to reward the creation of various display ad types. Ultimately for Trada, they built their own system (the fact that it is closed loop within the Trada platform solves a number of key issues vs having built this as a stand-alone business). We’ve actually had a version of it up and running for our tests with Facebook for several months now and it works beautifully.

There was great coverage today of the Trada announcement, including mention in The New York Times, Techcrunch and MarketWatch.

I’d encourage you to check out Trada if you’re interested in extending your advertising to Facebook or looking for better performance out of your search campaigns.

The title of this post is meant to be taken literally, not metaphorically. Do you control your domain?

Last Friday one of our portfolio companies briefly lost control of its domain. It wasn’t the fist time we’ve seen this happen and, as you can imagine, the result could have been disastrous (in this case we were able to lock down the domain before anything nefarious happened, but people don’t steal control of your domain for anything other than doing bad things, so it was lucky that we were able to avoid a serious issue). Different registrars have different rules for transferring domains around. In this case all it apparently took was someone writing the registrar and claiming the domain was in fact theirs. We believe (but aren’t positive) that the registrar did send an email to the contact listed in our account stating that the domain was to be transferred unless action was taken by us (that the process is that simple is a matter for another post altogether). But this email either didn’t get to us or was not acted upon promptly enough to prevent the transfer. The company then jumped through hoops for several hours to get the domain first locked down (so the party who stole it from us couldn’t redirect it) and ultimately transferred back.

We rarely (really never) talk about domain security when we’re talking about other security measures that companies take to lock down their data, transact securely, etc. But clearly it’s extremely important to make sure that you have (and always maintain) control over your domain. This starts with making sure your domain is a corporate asset – meaning that it’s not in the account of a founder but in an account that is owned and controlled by the company itself. It’s also extremely important to make sure the contact information in this account is up to date. And that you pay attention to any notices that your registrar might send you (in a timely mannor).

So seriously. Make sure you are the master of your domain.

For the past several years Shareholder Representative Services (SRS) has been publishing aggregate data on trends in M&A. These aren’t just high level observations, but rather are nitty gritty, details around the some of the most important terms contained in purchase agreements. As a self proclaimed M&A geek, I live for this stuff. And if information is power, this study dishes out plenty. And as a result helps level the playing field for companies (who transact very infrequently), their investors (who transact a bit more often) and buyers (who often have dedicated M&A practices who do nothing but execute transactions).

I’ve been fortunate to be involved in a number of Foundry related transactions in the past year. Knowing market trends (and in some cases – and here’s where your VC may really be able to help you – knowing details of a specific buyer’s historic willingness to negotiate around certain terms) is extraordinarily valuable.

You’ll find the full SRS report here. There’s a brief statement about their methodology at the beginning that’s worth taking a quick perusal through before you dig in (the data are based on the 196 transactions on which SRS acted as representative).

A couple of trends that stood out to me:

– 86% of all transactions were all cash. With a favorable borrowing environment and many companies holding on to large cash reserves an increasing number of deals are all cash.
– 24% of transactions contained an earn-out. I’m generally not a fan of earn-outs and the continued relatively frequent use of them is a little surprising to me (this figure was 25% last year).
– Average Escrow period was 15 months. The detail here is pretty interesting. The most common escrow period was 18 months (44% of deals), and 12 months was the 2nd most common period (24% of deals).
– Escrow size averaged just under 13%. This is always a hotly debated issue in transactions. Interestingly the median escrow size was over a point lower at 11.7%. There’s a chart below showing the distribution of escrow size.

One item that wasn’t covered in the study but which I think would be interesting is to see the % of transactions where there is a buyer initiated management incentive plan of size (say above 10% of the total consideration). We’re seeing more and more buyers use this tactic to either incent management (nice view) or separate management from their investors (the not nice view). Either way, they can be significant and I’d love to see how common they are and what percentage of deal proceeds are set aside for this purpose.

Remember when I said that Brad can’t sing? Here’s the proof – a recording session in Jason’s studio for our I’m a VC video (Brad is wearing headphones with the music track piped in – all the better for us to clearly hear Brad himself in this outtake). Enjoy!