Taking a break once in a while
If you’ve at all been trying to unplug once in a while – as I have been to mixed success, you’ll enjoy this article from last Sunday’s NY Times.
To stealth or not to stealth
We’ve announced four initial Foundry investments (Lijit, Memeo, Oblong and Zynga) – in press releases by the companies, on our personal blogs or on the new Foundry web site. Truth be told, we’ve made a fifth investment which we’re not talking about much. That’s because it’s in "stealth" mode (shhhh). There are varying degrees of stealth, ranging from companies that won’t tell anyone what they are up to, to companies (like the one I’m referring to)that don’t have a web site and haven’t made any announcement of their business intentions or funding but aren’t hiding what they are doing in daily industry conversations, etc. This stands in stark contrast to companies (such as Path 101), which are all buy live blogging their board meetings and actively talking about their product and development plans.
So what’s a business to do? The pro-stealth argument is based on the theory that the more people know about what you’re doing before you actually do it, the less likely you are to be successful and the more likely are you are attract competitors. The stealth-is-a-waste-of-time argument is based on the idea that at the end of the day, its all about execution anyway and that there are some benefits to letting the world in on what you’re up to in the form of increased exposure to potential customers, partners and investors and the collective input of those paying attention to what you’re up to.
I personally favor the pro-stealth argument, although I believe I may be alone among my partners in this view (we’ll see what their respective responses are to this post).
When a company is in a product development phase and has the financial backing it requires I just don’t see the upside of telling the world what its up to before it has anything to show for its efforts. In our case, StealthCo has the backing of two large investors (Foundry and one other), has several customers and partners with whom its is working to develop and refine it’s product and has at least two competitors whom we believe we will be able to surpass with our first product release (one of whom ironically came out of stealth mode itself in response to the other doing the same). We don’t have a web site and neither investor has announced the deal outside of reports to our respective investors. That said, we are actively engaged in conversations within our industry and have been recruiting a board of advisors and talking about our intentions at trade events, etc., so we’re not being entirely secretive about what we’re up to. For us, I think this is the right path to take. Given our access to early customers, our strong financial footing and a few competitors, I just don’t see the benefit in making a general public announcement of our intentions. Instead, our plan is to complete our initial product and "launch" with a handful of very prominent customers at a time when we really have something to shout from the hills about. You can be sure I’ll let you know here as soon as that time has come.
I’d love to hear your perspective on this topic. Please comment away!
Love revisited
I don’t write much about my kids on this blog – a little too personal and ultimately my wife and I think they should decide what and when they want to share online. I couldn’t resist this one, however. A few years ago I wrote about my own overwhelming feelings of love for my kids. Its great when they can return the sentiment! Below is a note from my 4 year old daughter. My wife helped her with the spelling, but she drew all the letters and picked the words herself.
And then there was Foundry . . .
There are a couple of very key dates in the history of Foundry Group. The day when Brad, Chris, Jason, Ryan and I actually formed the legal entity that is Foundry . . . the day last fall of the first close on our first fund, Foundry Venture Capital 2007 . . . the day shortly thereafter when we held our final close of that fund . . . and today – the day we’re launching a real web site. www.foundrygroup.com is now up and running and is much improved from the brochure-ware site we had as a stand-in during fundraising.
We think it represents our collective personality well with a front page blog, links to ask questions at askthevc.com and easy navigation to find out how to contact us. Jason has authored our initial blog post – Hello World and we also have a portfolio page that links to 4 of our initial investments. We’ve talked about Memeo (here and here) and Zynga (here) on our personal blogs in the past, but our investments in Oblong and Lijit are new. You’ll see us write more about those soon as well as some of the key investment themes we’re concentrating on in the coming weeks. So check it out; subscribe to our blog; and check back in to see what we’re up to.
The power paradox
Dacher Keltner (Psychology prof at Cal) has written a fascinating article that describes some of the important attributes of leaders. He discusses these attributes in the context of obtaining and maintaining "power" – really leadership if you’re reading the article from the eyes of a VC or entrepreneur. The title of his article refers to the fact that the attributes necessary to obtain positions of power and leadership are the very attributes that tend to be eroded by those positions themselves (i.e., once people obtain power, they tend to lose it by acting in a way that is antithetical to the reason they rose to that position in the first place).
Reading the piece through the eyes of a VC, there are a couple of great lessons for those in leadership positions and Keltner really nails a few very common traps that CEOs – particularly first time CEOs – fall into as they navigate the complicated management dynamic with their management and board. As the former manager of a large organization (before becoming a VC I managed a 250 person organization) I see some of the rookie mistakes that I made as I navigated my first really meaningful management position (which is to say managing more than a dozen or so people). A couple of points stand out (but be sure to read the whole article):
[O]ne’s ability to get or maintain power, even in small group situations, depends on one’s ability to understand and advance the goals of other group members. When it comes to power, social intelligence—reconciling conflicts, negotiating, smoothing over group tensions—prevails over social Darwinism.
One of the key jobs of a CEO is to manage and guide organizational conflict and disagreement – on product direction, on time-lines, on strategic direction, etc. While a firm hand is often required – the hammer is generally not. Being a dictator – and putting your opinions and feelings above those of any and everyone else is a quick way to erode one’s standing as leader and diminish the respect for you from your management and board.
Time and time again, empirical studies find that leaders who treat their subordinates with respect, share power, and generate a sense of camaraderie and trust are considered more just and fair.
Successful leaders not only recognize their own limitations and hire people around them to fill in the gaps, they tend to be consensus builders and somewhat hands-off delegateors. They "share power" and show respect to their teams by empowering decision making and individual action, rather than micro-managing and second-guessing every decision. Thoughtful managers define general course and direction and for the most part allow their teams to run their respective areas. If you’ve hired well, this should be the natural dynamic amongst a management team (and with each other, not just with respect to their interaction with their superiors).
[P]ower is [not] acquired strategically in deceptive gamesmanship and by pitting others against one another.
This is particularly true at the board level, but also clearly relevant amongst any group of company managers. Selectively managing information flow to support a specific, pre-determined outcome; engaging in a series of one-off conversations with the intent of lobbying your position or picking off the group one at a time eventually back-fires. Acknowledging group differences, understanding the various perspectives brought to the table by your management team and making your case out in the open are much more effective ways to drive a process of decision making.
I look forward to other thoughts on the subject – please comment away!
I dropped my cholesterol 70 points in two weeks
This post is going to sound like an infomercial except this is 100% true and I’m not trying to sell you anything.
About 8 months ago my doctor told me that I had high cholesterol (242 in total) and that it needed to come down or he wanted to put me on a statin (Lipitor, or something like that). Apparently cholesterol runs in my family (my dad and sister both have high cholesterol) and despite eating pretty well and being in descent shape, mine was high too.
I’m completely against the use of statins for someone like me (see this Business Week article for a good summary of why – I’ve done quite a bit of additional research online that supports this conclusion as well). Overall, I’m skeptical of society’s current obsession with one’s cholesterol number. That said, when a friend told me about a program that he used to cut his cholesterol quickly I thought I’d check it out.
Fast-forward a few months of procrastination ("I’ll start that thing next month!") and I finally signed up for BalancePoint. The idea behind the program is to change your metabolism from burning carbs to burning lipids (fats). To do this, you consume 65% of your calories in fat, 10%-15% from protein and the remaining 20%-25% in simple carbs. No grains, no sugar, no dairy and at least during the first two weeks, no dietary sources of cholesterol. Oh – and you have to log everything you eat, and restrict your calorie intake (in my case to between 1500 and 1800 calories a day). In practice this means eating a huge amount of olive oil and a lot of egg white omelettes, salads and tofu stir fry.
The first few days – in a word – sucked. My body wasn’t used to burning fat and protein for energy and my head was in the clouds. Plus, not eating any bread, pasta, rice or cereal was a huge change for me. Slowly, however, my body got used to my new diet and for the most part enjoyed what I was eating. I quickly dropped about 7 pounds (not exactly what I had in mind, but 1800 calories a day just won’t cut it for me) but felt pretty energized (and had much more even energy throughout the day rather than the highs and lows of the typical diet). Despite the taunting from friends and co-workers (other than Ryan who was on the program with me), I felt pretty good.
As part of the program I had my cholesterol taken on my first day and then again on my 14th (I’m on day 22 now, although after the 14 day intensive program I’ve slightly modified my diet to add in lean meats and fish and upped my calorie count a little bit in an effort to stop losing weight). The results were fantastic. My initial cholesterol dropped from 243 (up a point from my test at the doctor’s 8 months ago) to 175. My detailed analysis showed that all of my levels that were flagged as high (7 in total) were back in the "normal" range.
It’s definitely a commitment to keep this up, but I’m giving it a good go . . .
vc ware
In case you’re looking for this season’s latest VC styles. Note that Brad’s "treadputer" made the cut.
Hat tip to Jason for sending this over
Explicit goals
Regular readers of my blog know that I’m a big fan of deliberate action. And while I’m not a huge "make a daily list and check the items off" kind of guy (since like many VCs I’m somewhat scattered in my day to day work) I’m a huge fan of regularly checking in against a set of explicit goals or outcomes.
To that end, I like to make myself a quarterly list of large "to-do’s" for each of the companies with whom I work. These aren’t general things like "talk to XYZ CEO more often" – they are specific outcomes for each company that I’m trying to drive towards. They range from "Hire a banker to sell the business" to "Develop a partner program" to "Close the Series C financing". Clearly they aren’t things that I plan to accomplish alone and they are often developed in conjunction with management. I like the discipline of having to write out for each company I work with the main thing that I’d like to work on to really make a difference.
The same type of goal-setting can (and should) be done at any level of an organization. Replace "company" with "department" or inside of a department with "key project". And don’t forget to check back in at the end of the quarter to assess how you’re doing.
Failure
I hate failing. But in the world of venture capital it happens – and on a somewhat regular basis with between 1/5th and 1/3rd of venture backed companies failing to return capital invested (see a great Union Square Ventures post on the subject here).
It’s an excruciating experience.
While the actual “failing” part generally happens very quickly the “leading up to failing” part takes forever. Typically the company goes through a handful of rounds of layoffs and pay cuts. A sale process is initiated to find a buyer for the business and perhaps an investment banker is hired. If the company has secured creditors (like bank debt or an equipment line) there are endless calls and negotiations to try to keep the lights on long enough to see the company through to a transaction. Analysis is done and re-done to figure out what the company’s obligations are if the business is liquidated. Tuff questions are asked about the payment of severance to employees, how to stretch payables and minimize future liabilities. Towards the end, as things accelerate, there are many emergency phone calls and sometimes heated and emotionally charged conversations. There are last minute hopes of some kind of sale, hail mary attempts to entice a buyer and last minute negotiations with potential sources of new capital.
And the pay-off for all this work is, at best, a partial recovery of capital (often very limited) and the feeling like you did the best you could for the company and its employees. In the really bad cases the employees are fired and the company simply shuts its doors. While I’ve never been involved in the latter situation, I have had the experience a few times of the scramble for partial recovery of an investment. I’m told I take this process way too personally which is in part why I’m writing this post – a little catharsis through blogging.
Failure sucks. But its a part of being around early stage companies. I like to think that all of my investments will be wildly successful, but even the very best investors don’t get it right 100% of the time . . .
Sorry Fraser. You’re cold, but not the "icebox of the nation"
I have no idea why Fraser, CO (our adopted 2nd home) would want the tag-line "the icebox of the nation" given its focus on outdoor activity (its next to Winter Park, has a great fishing stream running through town and has miles and miles of back-country skiing, hiking and cycling trails). But apparently that is indeed the case. Fraser has been involved in long legal battle with the city of International Falls, MN for rights to the coldest place in the US. Yesterday, International Falls won out (it really is colder there!).
INTERNATIONAL FALLS, Minn. – International Falls is officially the "Icebox of the Nation."
The city on the Canadian border had been fighting the ski town of Fraser, Colo., for the legal right to the trademark. International Falls claimed victory when the U.S. Patent and Trademark Office sent the city attorney a certificate granting the community Reg. No. 3,375,139.
Here’s the full article: http://www.msnbc.msn.com/id/23096109/