I was recently interviewed by Larry Nelson from w2w3.com. That piece is now up on the w3w3 site, and is (in my humble opinion) worth a few minutes to check out.  I talk about what it’s like to work at Foundry Group with Brad, Ryan, Jason and Chris as well as about the role of company advisors (inspired by recent posts from this blog on that topic – here and here).  Enjoy!

While I’ve always dreamed of being a rock star (who hasn’t?!?), my partners Ryan and Jason actually are (at least when they are done with their day jobs).  I wrote about their recent Soul Patch album here. 

The guys are playing a gig on June 21^st at Redfish Brewhouse in Boulder.  They start at 930pm – sharp.  It’s a onetime event, as the band resides in Boulder, San Francisco and Los Angeles. 

I told them that I’d shamelessly plug their gig on my site as payment for missing the show.  Like Brad, my wedding anniversary is the 21st and I won’t be in Boulder that night.

If you go, take pictures so I can see what I missed!

For most technology professionals (really most professionals of any kind) email is so integrated into our work that we can hardly imagine life without it.  Sure, it can be a distraction at times and – especially if you carry a wireless device – hard to escape from.  But it also greatly enhances productivity, allows us to communicate quickly and effectively and to have asynchronous interactions with a great number of people.  I know in my own work life I send and receive between 200 and 300 emails a day.  And since I’m already tied up on the phone or in meetings for at least 5 or 6 hours in any given day, email allows me to be significantly more productive (and to process more information and communication with a far greater number of people) than without it. 

So it’s with much curiosity that I’m watching my friend Mark Solon – a partner at Highway 12 Ventures in Idaho – experiment with an email free summer.  He describes the heart of his thesis this way: If the people who sent the majority of those e-mails knew that I didn’t have an inbox, they would have either picked up the phone and called me or (and this is the heart of it) probably wouldn’t have bothered because it really wasn’t that important after all.  The link above will take you to the article he wrote about the project. I like Mark, but I’m skeptical that this is going to work.  Even with his secretary printing out important documents (board packages and the like), the limits of old school communication in my mind significantly outweigh the upside from people self filtering their communications with you.  Not to mention, I’d be perpetually worried that I was missing something.

We’ll see what Mark has to say at the end of the summer.  I’m curious in the meantime – could you live without email?

Part II of a series of guest posts by Gerald Joseph on the role of company advisors. If you missed it, see Part I here.

There are various types of advisors with differing skill sets and motivations. The key is to work with Advisors that have skill sets that help solve your company’s current and near-term problems. Here is a fractional categorization of the various types of Advisors Startups usually encounter in the Venture community.

The Researchers

– these are the inquisitive minds we find in Academia. They are our professors, faculty advisors, and fellow students. They ponder the proverbial "What if’s?" and "Why not’s?" that are responsible for much innovation. They are best utilized during the product/service development, design, and testing cycles. They handle the most onerous technical details well, but may not be suitable for ideation related to revenue models and monetization.

The Associates

– VC firm Associates can be tremendously helpful in pointing out the "third rails" or specific areas in need of improvement such as corporate governance, accounting, IP, employment contracts, founder agreements, etc. that act as impediments to VC funding. Associates can be instrumental in making critical introductions and giving Founders a sense of market analysis from the VC perspective.

The Idea Guys/Gals

– often in the development of early stage companies the first idea or product/service leads to an even better series of radically different products/services. It is worthwhile for startup founders to engage frequently with hyper creative types who possess unique perspectives and extremely innovative ideas. Idea people have very agile minds. They often make unusual theoretical judgments and technological juxtapositions that result in unique mashups of new and existing products/services.

The Serial Entrepreneurs

– the importance of culling folks that have "been there and done that" can not be underestimated. Many former entrepreneurs in a post-climactic phase after exiting a company or investment are very anxious to find "the next thing." Their proven track records and established networks can lend an air of credibility to your company and open up multiple funding options.

The Walking Rolodexes

– the world is full of opportunists with huge networks who work as consultants or investment brokers in many late stage deals (brokers are taboo for early stage companies). They know everyone you will ever need to know in your life as an entrepreneur. If you are an early stage company founder, these persons are often difficult to deal with since they are usually interested in cash not illiquid stock. However, it is necessary to seek them out since maintaining alliances with well-connected persons is a key element in the growth of your company.

The VC Partner/Angel Investor

– this is the best Angel investor and Advisor an entrepreneur can have. Along with a highly developed network and sophisticated knowledge of sourcing/structuring deals, many VC’s are best at advising/mentoring entrepreneurs. They have great interpersonal skills and unusually accurate "bullshit detectors" that can help startups avoid unnecessary difficulties.

The key is to try to get at least one Advisor from each category to round out your Advisory Board, then add additional Advisors to the mix as needed.

One overlooked factor in Advisor/Startup relationships is compatibility. Startups should work with Advisors that share their communication styles, work ethics, interests, and curiosities. It is extremely important to work with people you like and respect. Founders should never choose an Advisor that they do not like. Moreover, all Founders have to be convinced unequivocally that the prospective Advisor can make a substantial contribution to the company.

I’ve been on the board of the Bard Center at CU Denver for several years now. One of the things I enjoy the most about my work with the organization is our annual business plan competition (in fact it was through judging this competition that I first connected with the Bard Center).  Each year six finalists are selected to present to a panel of judges and $25k is awarded among the 6 finalists (in addition to prizes for 1st-6th place there are also cash awards for the top plans in specific categories (bio-science, non-profit, etc.).  The event will take place on June 11th at the Hyatt in downtown Denver (finalist presentations from 8:30 – 12:00 and the awards lunch from 12:00 – 1:30).

In addition to the usual fun, this year my partner Brad is the keynote speaker at the award luncheon. I’d encourage you to come if you are in Denver that day. In fact I have  a couple of extra seats left at my table, so email me directly if you’re interested.

I know what you’ve been saying to your self: “Self – I’ve been looking to read a blog written by a reformed drummer, software guy and lawyer who is now a venture capitalist. Where can I find one of those?!?”
All joking aside, I’d encourage you to check out the blog that my partner Jason Mendelson (who is all of those things and many more) has just started. Jason is actually a long time blogger – writing regularly on Brad’s blog and as one of the founders of and main contributors to AskTheVC. Mendelson’s Musings will have a more personal flair (although will continue to cover investing and venture capital topics as well). Along those lines be sure to check out his music page for great new music suggestions.
There are many things I admire about Jason – he’s an extremely interesting and creative guy (especially for a former lawyer!). He’s also an excellent writer. I think you’ll enjoy what he has to say.

My grandfather passed away 5 years ago today (I can’t believe it’s bee that long…). I think about him a lot, but especially today on his Yahrzeit. I wrote a post a few years ago on one of my favorite sayings of his here. Today I’ve been thinking about the approach he took to his career.
I recently wrote a post offering some suggestions about getting a job in venture capital. While I think its great to have career goals and an eye toward the future, my grandfather is a great reminder that sometimes the right path involves following the path that lays out in front of you. He left school to help raise money for his family during the great depression (he was one of 11 children and a first generation American) and never returned to finish high school. Eventually he enlisted in the air force and served for years overseas in WWII. Grandpa had an eclectic career – one that included selling vending machines, owning a mens clothing store, working for an auto dealer, selling check-writing machines and repping children’s toys. Not exactly a straight line path (although most of his jobs were related to sales in one way or another) and certainly not something he sat down to think about when he was in his 20’s to figure out what he wanted to do with his career. He didn’t have the luxury and in any event I don’t think for him laying out a 10 year career path was in his DNA.
It’s so easy to get caught up today in where your career is headed and whether you’re “on plan” or not. Sometimes the right thing is to just go where life leads you.

One of the things I enjoy the most about writing this blog is the discussion I engage in with readers – both through blog comments and in direct emails.  Over the past month I’ve had a particularly enjoyable exchange with Gerald Joseph.  One of the topics we’ve discussed is the role of advisors in the life of a start-up.  I generally think of advisors as non-paid "friends of the company" and as you’d probably guess, advocate a pretty deliberate organization and use of advisors.  Gerald’s view is a little more expansive as he thinks of "advisors" as the larger ecosystem that surrounds (or should surround) a start up company – one that includes people you pay (attorneys, CPAs, etc) and the people who pay you (your angel investors) in addition to the business and industry experts that are the typical "advisors" to young companies.  I like this line of thinking and offered Gerald the chance to put his thoughts into a post.  He took me up on that idea and came up with a four part series on the topic that I’ll put up over the next few weeks.  After the final post I’ll summarize some of my thoughts as well as comments from readers (and please – comment away!).

_____________________________________

Is an Advisory Board or Advisors necessary?

Well, Advisors and Advisory Boards are not an absolute necessity for all startups. Their usefulness and necessity has to be evaluated on a case by case basis. Having Advisors or an Advisory Board is a completely voluntary decision. Advisory Boards are not legal entities like the Board of Directors.

Many experienced entrepreneurs keep their Advisor relationships very private and informal. They have plenty of Advisors that they speak to whenever the need arises and no formally declared Advisory Boards.

Successful serial entrepreneurs usually have a network of influential friends who are greatly interested in their personal success. They do not need formally declared Advisory Boards. Serial entrepreneurs often have the luxury of receiving assistance from their Advisors irrespective of the merits of their ideas and without the promise of equity.

However, this is not the case for your average Startup Founder. Many Founders are recent grads, college dropouts, or young professionals with no track record, no network, and a good idea in need of a supportive environment to germinate.

In these cases, Advisors help "round out" the strategic thinking/planning of early stage Startup Founders and C-level managers.

Capacity building is sporadic at best in early stage startups. It is very difficult for startup founders to train themselves and get up to speed on every critical issue concerning a startup company’s development. Good Advisors can fill this gap by lending their skills to solve problems that fall outside of the Founders areas of expertise.

What do good Advisors do?

Well, essentially good Advisors do what needs to be done. If your startup is operating in a complex market with plenty legal entanglements such as IP drama, then your startup would benefit greatly from having a Venture or Patent Attorney as an Advisor to draft legal strategy, contracts, and act as an in-house repository of legal info.

In addition to completing a specific scope of work, good Advisors usually do most of the following:

Reduce or eliminate the risks associated with "blind spots"

– startup founders usually lack knowledge in numerous areas not related to the technical development of products/services. The implementation and management of financial systems is customarily a significant "blind spot" for most entrepreneurs. This is a complicated area where advisors with finance expertise can roll up their sleeves and implement standard practices that make it easier to track the company’s financial well-being. A CFO or CPA with venture experience can be invaluable as a Finance & Accounting Advisor working on a part time or flex time basis until the operational budget allows for the hire of a fulltime CFO.

Provide "actionable" advice

– it is critical that Advisors provide straightforward, down-to-earth information. This info must be readily digestible and easily implemented into the existing operational infrastructure of the company. Advisors should present startup Founders with ideas or information that is fully fleshed out and easily applied to their unique situation. An Advisor’s idea for a new revenue model or product feature should be presented in an easily understood format illustrated with pertinent industry forecasts, assumptions, metrics, risks, and projected results.

Make important introductions

– Advisors introduce Founders to reputable prospective investors, employees, partners, and customers. The evolution of a startup from concept to seed stage to exit is partially dependent on the quality and reliability of the Founders’ network.

Make ‘way too early’ investments

– often in early stage Startups, Advisors and Angel investors are one in the same. It is not uncommon to see a CEO/Advisor relationship crescendo to include a significant pre-prototype investment of cash and non-cash resources (servers, office space, etc.). In many cases, Advisors are investors of first resort during the early conceptual phase of a startup when very few VC’s or Angel Investors are usually interested.

Provide informed consumer-centric validation of core value propositions

– in most cases, Advisors are current or prospective prime consumers of the company’s products or services. One of the most significant perspectives that many advisors bring to the table are strategic thoughts and usability innovations based on their informed experiences as consumers and/or analysts within the Startup’s target market.

I think it is always best for Startup Founders to actively pursue relationships with prospective Advisors and Mentors. Building a network of confidants is an ongoing endeavor that reaps long-term rewards before, during, and after the lifespan of your association with your Startup.

One thing that we all seem to overlook is that there is life after a Startup. Especially for serial entrepreneurs who go from one startup to another, building relationships with influential people that you like, trust, and can learn from is essential. Your network will work for you personally and professionally for a lifetime

I participated in a panel presentation last week on corporate blogging.  While each of the panelists brought a slightly different perspective, the overall message to the group of a few hundred local small business execs that were in attendance was that blogging can help their company.  Specifically blogging can allow them to participate (or lead) conversations in their industry; increase significantly the meaningful content on their site; provide a way for them and their key customers to evangelize their products; help their search rankings across their site; allow a platform for talking about corporate culture (to both an internal and external audience) and in many cases save hard dollars spent on press releases and certain marketing activities. Here are a few ideas from the panel on how to get started:

1. Listen first.  There likely are a handful of good bloggers (either individuals or companies) already writing about whatever it is that your company does.  Spend some real time searching for and then reading what these influencers are saying.
2. Participate.  Before you even think about putting up your first post, start commenting on other blogs and becoming a part of the conversation already taking place in your industry.  Reach out to other bloggers in your community for their advice and counsel.
3. Plan.  Good blog posts don’t just happen (especially at the corporate level) – they take real thought and planning.  Pick topics that are of real interest to your industry and customers; write thoughtful pieces that reflect you and your company’s view of the current topics in your market; have a real editorial calendar (a fancy way of saying make a list of the posts you are going to write, when you want to publish them and who in your company is responsible for writing them).
4. Engage.  Don’t stand on your soapbox and shout for the hills (or simply use your blog as a place to post your press releases).  Instead pick interesting topics that are timely and relevant to your community of readers and take a point of view.  Encourage your readers (customers, employees, etc.) to comment, write their own posts in response, etc.
5. Keep it up. It takes a little while to get going and even longer to really build a readership.  Keep posting and keep posting regularly (a few times a week is ideal).

Good luck!

At the risk of opening myself up to a landslide of snide comments expressing sympathy for the "difficult" job a VC has saying no to so many potential investments, but in the interest of being open about the experience of venture capital from the inside I offer up the following thoughts:

Sometimes it’s very easy to decide to decline a company’s request for financing (and we see literally thousands of plans a year, so we’re pretty well practiced at it).  Many times the company simply isn’t a fit for our investment focus (we get a few "invest in our [pick one] manufacturing/car wash/custom painting/etc business" requests ever year).  Or the business plan is clearly off base (my personal favorite from this genre was the company that planned to colonize the moon for the purpose of reducing the cost of launching satellites – which they were going to build from materials they were to mine from the moon).  Lots of others are potentially interesting but for one reason or another just don’t make the cut.  The ones that pique our interest we start a dialogue with, which typically involves several meetings, background due diligence, etc.  Some of these businesses we will relatively quickly decide are not a good fit and they fall off the list.  Then there are the ones that we really dig into.  While we pride ourselves on moving quickly through our investment process, being quick doesn’t mean not being thorough – we do a lot of work looking into investment opportunities before we make our final decision to invest. 

As we’re moving through this process there continue to be a meaningful percentage of companies that we ultimately decide not to pursue an investment in.  I like to think our process is a pretty open one (specifically that we’re very clear with the entrepreneurs that we’re working with what our outstanding questions/areas of concern are).  But even when it’s clear that we’re just not "there" on a deal it can be difficult to turn down an investment late in the game.  I’m not talking about reaching the decision to say no – we have a well exercised process and a very open patter of communication at Foundry that I think allows us to make very good decisions throughout our deal process. I’m talking about actually making the phone call to someone you’ve been working with for months, who has been answering your questions, putting up with your requests for more data and with whom you’ve likely been engaged in pretty detailed business planning.

I had a particularly challenging example of this about a month ago when I turned down an investment in a company that I was really close to saying yes to.  In this case I particularly liked the founder (we had both a great personal and professional connection) and the business was in an area that I know extremely well.  I did a ton of work on the opportunity and as a partnership we had many conversations about the business (while I had been leading the work all of my partners had spent real time looking into the business and had met the founder several times).  Ultimately I couldn’t get over a handful of concerns about where the market (and in this case specifically competition) was moving and as a result turned down the chance to invest.  Probably the hardest "no" that I’ve ever had to give . . . .

Note: the company in question had another source of funds and is off and running on executing against their plan.