I had planned to title this post “If you have a data intensive business, don’t forget to look at your data.”  But when I thought about, really all businesses are (or should be) data-intensive. And as a result all businesses should be obsessed with the data their systems generate. Measure. Track. Analyze. Adjust.

Years ago I remember sitting in ServiceMagic board meetings when Rodney or Mike (the co-founders) would pull out a Blackberry and announce: “in the 45 minutes since this meeting began, we’ve made 62,135 dollars and 37 cents!” They were obsessed with their system data and they had designed their platform from the very start to allow them to pull out any and all data they wanted. They had access not just to revenue data, but to leads, customer contacts, call center calls, sales funnel changes, site visitors, marketing spend, etc – really anything that had an impact on their company. As a quant-geek myself, I really appreciated what went into the design of their systems that would allow them to surface these operating metrics so easily (not to mention the mindset of Rodney and Mike to insist that they had access to this information at all times).

Fast forward to today and many of our companies have a similar attitude towards the data that drive their business. From the daily digests that report progress on key metrics, to obsessively watching data to look for early warning signs of system problems that their operations alerting hasn’t caught, to posting key operating and engineering data in the lobby of the office, these companies realize that the patterns revealed in the data around their companies will help make them more successful. Several of our particularly data intensive businesses have hired business analysts whose entire job function is to comb through databases and pull out interesting stats and trends. In one of my favorite examples, one of our portfolio companies includes not just business metrics on their lobby data-monitor but also tracks the latest engineering build and bug list. In another of our companies weekly meetings they’ve instituted a “data first” policy, where each department lead reports on their key metrics (against the plan for that week). There’s plenty of time to talk about the meaning behind the data, but by reporting the metrics first the company 1) reinforces it’s data-driven culture and 2) gets the entire company on the same page about what they are tracking and how they’re doing.

Love your data. They’ll love you back!

Our Glue conference is finally upon us. The agenda and speakers are locked down and all the final details are being attended to. We have a great group of speakers lined up this year across a number of different tracks:

The  ”Hacking Identity” track  – which highlights user managed access (Eve Maler), federated provisioning (Nishant Kaushik), XAuth (Chris Messina), and Webfinger (Brad Fitzpatrick) and follows it up with a discussion moderated by Ian Glazer (of Burton Group, now Gartner).

“Integrating Drizzle” with Eric Day from Rackspace. Rackspace brought most of the Drizzle guys on board when the Sun-Oracle merger happened. I’m anxious to learn more.

“On Hadoop” with Todd Lipcon from Cloudera. Hadoop is about as dominant as it gets at the moment, and I profess to knowing far less about it than I should. You?

Three sessions on scalability and the cloud stack — from Bradford Stephens (Hadoop, HBase, Zookeeper), Oren Teich (of Heroku, on scaling apps), and Sebastian Stadil (Scalr).

The good news for those of you who haven’t signed up yet is that it’s not too late! Seriously – you have plenty of options. There are still reasonably priced flights from both coasts to Denver. And if you live in CO, you have even less of an excuse not to be there. Sign up before hand – you can still use “seth12” to get 10% off the ticket price, but there will be NO DISCOUNTS AT THE DOOR.

See you at Glue!

My partner Jason has an impassioned post up about the carried interest debate currently taking place in Congress. No matter how you feel about Congress’ efforts to change the tax classification of VC profits from capital gains to ordinary income it’s worth a read (and keeping an open mind).

Obviously this issue is important to me and to all VCs. And while I know there are differences of opinions on the subject (clearly given the intense debate going on right now) I think Jason does a nice job of talking through the personal (this feels overstepping), professional (there are other markets where innovation is taking place where investor are actually being completely exempt from taxes that will draw talent away from the US) and legal (how do you differentiate between a VCs partnership interest from other partnership interests not subject to the proposed tax change?) arguments against the tripling of tax on the long term profits of investors.

While I wouldn’t say that I’m a “fan” of government, I’ve always been of the mind that some level of government safety-net is appropriate. I’m even, generally speaking, ok with a progressive income tax and as a relatively high wage earner understand that I have a certain burden living in our society to pay a much greater share of the overall tax burden. I point this out not to get into a political debate about the benefits of taxes, the proper level of tax  or even the correct taxing system but to be clear that my views on carried interest are not part of some larger agenda around reforming the tax system or eliminating it all together.

I have many of the same concerns that Jason outlines in his blog post about the move to change the tax treatment on carried interest. I’ve even considered whether the change will either shorten or radically change my own career path.

But as a capitalist and a realist I’d simply point out that taxes shape behavior. Our tax code has examples of this everywhere. Want people to buy houses? Allow them to write off their home mortgage (but don’t let them write off credit card debt – we don’t want consumers to have too much of that…). Want people to give to charity? All them to write that off too. Want to encourage longer-term investing? Tax that at a lower rate than short term investing. Need to encourage people to save for retirement? That’s a good one for tax exemption. Invest in education? Check on that one two.

My point is that tax code changes have real world economic and behavioral consequences. And the consequence of tripling the tax on the carried interest of investors will be decreased investment, less innovation and fewer jobs (and I would guess an overall reduction in tax receipts given the 2nd and 3rd order effects of the measure – which completely defeats the purpose of the proposal which is 100% to raise revenue and “fund” the extension of other tax initiatives).

The US currently leads the world in the innovation economy. From our universities, to our entrepreneurial ecosystem, from the belief that it’s ok to step out and try, even if you fail, to our system for nurturing and funding companies, we have a huge global competitive advantage in innovation that has lead to some of the greatest advances in modern society coming from within the US. Venture Capitalists have been an important part of this trend (companies that are or were once VC backed account for 11% of the US workforce and over 20 of US GDP).

The sky is not falling and the day after the tax code is changed (if we’re not successful in convincing lawmakers what a bad idea this is), little will be different in my job or in the jobs of most investors (although no doubt the lawyers will be hard at work figuring out new investment structures). But there is no doubt in my mind that this massive alteration in how we tax the work of a group of people who nurture and fund innovation in the US will radically change the long term trajectory of the our country’s innovation economy. With the focus on job growth and job creation and with countries like China and India knocking at our door trying to be the growth engines for the next millennium’s global economy, is now the time to put shackles around the building blocks of what’s allowed the US to lead the world in technological innovation? I, for one, surely don’t think so.

One of the great joys of working with entrepreneurs is the energy, enthusiasm and aspiration they bring to their businesses.

But don’t forget to consider your business for what it is, not what you hope it will be.

Which is to say that there’s a balance between planning for the future and recognizing where you are today. And striking this balance is part of what makes a great entrepreneur – the ability to consider in all aspects of your business (sales, product development, engineering, etc.) the right mix of practical current reality and future aspiration.

As you can see from the date of my last post, I’ve been a bit tied up. Not to worry – new content coming soon. Including some more thoughts leading up to our Glue conference. In the meantime here’s a repost of some thoughts from Eric Norlin as we near 3 weeks out from Glue.

Yes, we are “rounding the bend” — 23 days until Gluecon. I feel like I’ve droned on endlessly about how great it’s going to be (I probably have), so let me just take a different approach by highlighting some things I’m looking forward to — starting at the END of Day 2 and working backwards a bit.

David Linthicum’s closing keynote: I’ve never met David, but he has the reputation of being super smart — having been around SOA architecture stuff, and now cloud stuff for quite some time. David told me he’s more comfortable speaking to a technical crowd, and I said, “perfect.” I’m looking forward to his thoughts where we go from here.

The  ”Hacking Identity” track  – which highlights user managed access (Eve Maler), federated provisioning (Nishant Kaushik), XAuth (Chris Messina), and Webfinger (Brad Fitzpatrick) and follows it up with a discussion moderated by Ian Glazer (of Burton Group, now Gartner).

“Integrating Drizzle” with Eric Day from Rackspace. Rackspace brought most of the Drizzle guys on board when the Sun-Oracle merger happened. I’m anxious to learn more.

“On Hadoop” with Todd Lipcon from Cloudera. Hadoop is about as dominant as it gets at the moment, and I profess to knowing far less about it than I should. You?

Three sessions on scalability and the cloud stack — from Bradford Stephens (Hadoop, HBase, Zookeeper), Oren Teich (of Heroku, on scaling apps), and Sebastian Stadil (Scalr).

That’s just one possible “track” of sessions that runs from Lunch to the end of Day 2. That’s an extra-large helping of information. In one afternoon. And you can make your own choices.

I’m really proud of what we’ve got going, and when I look around at what else is out there – be it 1 day unconferences (that cost the same as gluecon), or large tradeshows (that cost 2-3x gluecon), and exceedingly happy about the value that we’re offering developers. So, get your butt to Gluecon!

[Updated with the new video link/embed]

You may not have realized this, but Niel Robertson is not only building a unique SEM marketplace, but he’s also a passionate knitter. The video below shows off both of these passions and is well worth watching.

On a more serious note, I’m a big fan of companies producing these sorts of fun but informative videos. People respond so much better to highly visual, straightforward media such as this.

Recently Dan Frommer over at the Silicon Alley Insider wrote about the reemergence of “stealth mode”. While I’d argue that it never really went away in the first place, it seems that more people are seeing the virtues of staying under the radar as they build the basics of their business (despite TechCrunch’s declaration that stealth was stupid…). After some hazing from my Foundry partners about several of the companies that I work with remaining silent about their operations (and in some cases off of our website so as not to attract attention to the fact that they’ve been funded) I wrote a post on the topic here.

With one of our portfolio companies, Trada, recently emerging from 18 months of quiet operations, we’re taking the subject up once again (very timely if Frommer’s post is any indication). In the case of Trada, staying quiet about the expert SEM marketplace they were building allowed the company the room to develop their platform in relative quiet and without tipping off any actual or potential competitor to what they were doing. To be clear, we weren’t completely secret about it. We launched with a large number of customers and an active marketplace – we were just selective about who we told what we were up to. This allowed us to both work out the kinks in the system before we put it under the load of the public eye and to be able to launch and talk about not just what we were planning on doing, but what we were actually doing (and had been for some time) for many advertisers who had been users of the company’s platform for months.

Niel Robertson, the CEO of Trada, wrote one of the best articles that I think I’ve read on the subject of stealth on the Trada blog that further describes our thought process around operating the business stealthfully for a number of months. I’d strongly suggest you take a look at it.

And with all this discussion of “stealth” I think Niel and I may have won over at least one of my partners. Brad put up a post yesterday talking about how a number of companies in the Foundry Portfolio have benefitted from keeping all or parts of what they were working on under wraps and then announcing with a bang what they were up to (AdMeld, Oblong, Zynga as well as at least one more that still hasn’t announced it’s existence).

Perhaps all this conversation leads to the conclusion that stealth isn’t the problem – it’s how companies use it.

Someone at a meeting I was in a few weeks ago made a statement to the effect that he valued management (sales management in particular) following this mantra.

I couldn’t disagree more.

While it makes for a great VC cliché it seems to me that it’s not a good plan to set an expectation with companies that you work with that you want them to essentially lie to you about the results they expect. Following this down the management line – from board to CEO to VP of Sales to Sales Manager to Salespeople – and you’ll completely cloud your view of what’s really happening in a business (where at every step of the way each person tries to set up an expectation that is lower than what they actually believe they deliver).

Instead, how about setting a realistic expectation for performance, lay out the factors that influence success and then try like hell to beat the number.

That sounds like a better plan to me.

Earlier this week, Medialets made a significant announcement: the launch of their universal mobile ad SDK. This is an initiative that the company has been working on for months and is truly groundbreaking in the industry. The Medialets universal ad SDK allows app developers to have complete flexibility in how they manage the ad inventory available through their applications. Publishers can serve Medialets rich media ads, ads from other mobile ad networks as well as ads from their own first party ad server – all from one SDK. The Medialets SDK is already up and running with major publishers (Washington Post, NPR, Variety, Fandango, etc.).

This represents not just an achievement for Medialets, but a step forward in the evolution of mobile advertising (which is much too fragmented). We’re excited that Medialets is in the middle of the mobile ad revolution.

I can’t help myself at this time of year but to remind you that you probably haven’t registered for Glue yet and that you need to get on it. Glue is one of three conferences that Foundry helps facilitate with Eric Norlin (the others are Defrag and Blur, the latter of which is still in development but coming this summer). Glue is an in depth discussion about the web as a platform and the future in a world where most (all?) apps live in the cloud (either public or private). Once again, Eric has put together a fantastic agenda (you can see the full list of topics here). This year’s speakers include:

• Michael Barrett, CISO, PayPal
• Professor Eric Brewer, creator of the CAP Theorem
• Chris Hoff, Dir. of Cloud Solutions, Cisco
• Ryan Sarver, Dir. of Platform, Twitter
• Jonathan Ellis, Lead on the Cassandra project

In addition, you’ll hear about:

• The Cassandra Database: Inside Twitter’s Choice
• What’s up with OAuth/WRAP?
• 5 Things I Hate about your API Terms of Service
• The Apache Cloud Stack (Hadoop, HBase, Zookeeper, etc)
• App PaaS vs. Enhanced Cloud System Infrastructure
• Inside MongoDB: the internals of a NoSQL database
• Understanding User-managed Access

Glue runs May 26th and 27th and is being held this year at the Omni Interlocken (in Broomfield, CO).  If you register now you still qualify for the early bird rate of $525 (regular price is $695). In addition, this year Glue is sponsoring CloudCamp the day before the conference. CloudCamp is free, but space is limited (you can sign up here).

Note to CO readers: We’re really pushing hard this year for greater local attendance. We’ve chosen to run all of our conferences here in Colorado in an effort to push the region as a leader in innovative thinking around emerging technology trends. This is a great opportunity to participate in a national conversation about key themes in technology right here in your back yard. Show up and represent!