One of the reasons I started this blog was to try to give readers some insights on life as a venture capitalist. I was reading some old posts and realized that I haven’t written on this topic in a while.

Funny thing about venture capital – something I’ve really noticed as I transitioned from supporting other partners on their deals to exclusively managing my own portfolio – it’s a pretty lonely business. I have an extremely close relationship with my partners and of course bounce thoughts, ideas and questions off of them on a regular basis (something I think we at Mobius we are extremely good at doing). But for the most part, I spend my days doing my own thing and generally have limited overlap with what they are working on (they manage their own portfolios; we intersect on fund management and looking at new investment opportunities, but that’s about it). My “colleagues” are for the most part other board members of the companies I work with and the management teams of those companies. I spend a huge amount of time with these two groups of people. I travel pretty often, but almost never with anyone else. My partners do the same. As a result we overlap in the office only one or two days per week. This kind of snuck up on me over the past years but I’ve been thinking about it a lot over the last few months. For my personality this works great – I love the autonomy and have never been the kind of person who wanted or needed close supervision. But it’s definitely different than any other work I’ve done and I can’t help but think how unusual a working structure it is – something I never considered before I got into the business.

I had the chance last week to speak to a group of non-profit executive directors from about 80 local Denver/Boulder/Longmont non-profit agencies as part of a session sponsored by the United Way on “Getting the Word Out – a Mass Communication Seminar”.  I sat on a panel with a bunch of local newspaper editors which consisted of an hour of the editors talking about the best way to fax or e-mail them stories so they’d get their attention followed by 15 minutes of me saying that instead of all of that, their organizations could actually be their own media, that there was larger conversation going on across a much broader community which they could/should tap into, and that perhaps rather than pitching stories to newspapers they should think of the newspapers as added distribution for the stories they’ve already created.   Don’t get me wrong – I think print media is great and I enjoy reading (on-line, of course) many of the local papers in my area.  But the power of new media is that it takes away the control that traditional media has on the flow of news (not to mention the determination of what is news-worthy) and puts it into the hands of the masses.  And while a story in the local paper may reach one set of constituents, a well organized (but not very costly) web site (or even just an organization blog that doubles as its web site) can get multiple messages out to multiple constituents (i.e., flickr photos of a recent fundraiser; a MySpace page to recruit college-age volunteers, dynamic web site or blog for posting updates, responding to national stories, etc.). My message was really that there’s a whole lot going on out there that non-profits (or any organization) can tap into to raise the profile of their group or cause and ultimately spread their word more broadly. The key take-away for me, however, was not all the great things that organizations can do to broaden the reach of their message or influence the media related to their work, but rather how foreign this all was to this group of relatively tech savvy execs.  Most had some kind of web-site, although the vast majority didn’t update the content on the site even monthly; and while more than half had heard of blogging (and other forms of new media), almost none had any experience either reading, commenting on or contributing. For me this was a fundamental disconnect and good to keep in mind for future conversations. I sometimes take for granted that this world in which I spend so much time has gone mainstream, but the reality is that it hasn’t yet. I was thinking of all these great Web2.0-ie  things they could do to broaden their web presence, engage their constituents in conversation and generally spread the good word; they were thinking “what’s blogging again?”

Slow and steady wins the race….

Dave Sifry, CEO of Technorati, has another of his series on the evolution of the blogosphere up on his site.  Most interesting to mere were the results on the dominant languages of blogging.

Here are his key takeaways (quoted directly):

Technorati is now tracking more than 57 Million blogs.

Spam-, splog- and sping-fighting efforts at Technorati are paying dividends in terms of the reduction
of garbage in our indexes, even if it does seem to impact overall growth rates.

Today, the blogosphere is doubling in size approximately every 230 days.

About 100,000 new weblogs were created each day, again down slightly quarter-over-quarter but probably due in part to spam fighting efforts.

About 4% of new splogs get past Technorati’s filters, even if it is only for a few hours or days.

There is a strong correlation between the aging and post frequency of blogs and their authority and Technorati ranking. The globalization of the blogosphere continues. Our data appears to show both English and Spanish languages are a more universal blog language than the other two most dominant language, Japanese and Chinese, which seem to be more regionally localized.

Coincident with a rise in blog posts about escalating Middle East tensions throughout the summer and fall, Farsi has moved into the top 10 languages of the blogosphere, indicating that blogging continues to play a critical role in debates about the important issues of our times.

Sean has obviously read some of my ramblings on how to present your business succinctly…

My partner Chris sent the following around.  Its a more lighthearted way of looking at the Google/YouTube deal…

The Boulder Museum of Contemporary Art puts on a fantastic (and very fun) art auction every year.  My wife, Greeley, and I have been regulars for several years and always have a great time.

This year Greeley is even more involved as the event chair (putting on an art auction is an incredible amount of work!).  I’m playing a more peripheral role as the stand-in event photographer (the regular event photographer is out of the country, so with the qualification of owning a brand new digital SLR camera – a birthday present from Greeley – the photo duties are falling to me).

Here’s the event flier (see link below).  If you’re around Boulder on October 19th, I’d highly recommend coming by for a great night of art, food and fun.

Download auction_ad2.pdf

“Successful people spend the majority of their time on major things.

Unsuccessful people spend the majority of their time on minor things.”

Relayed to me by my good friend Chris, who is dutifully following this advice…

Everyone deserves to have one truly outstanding dog sometime in their lives. For us this dog was Beau – our 100lb yellow lab. Beau was a truly sweet dog.  It’s hard to describe what this really means to those who never met him, but Beau was gentle despite his size and sweet in a way that sets him apart from all of the other dogs we’ve known.  His favorite pastime was to present people with a series of toys (typically stuffed bones and animals) when they walked into the house while vigorously wagging the entire back half of his body – just before making several laps between their legs.  Much to our amusement and unlike most labs, Beau didn’t enjoythings like swimming (which he never learned to do), hanging out outside (when we would leave the door to the back open, he would sit just inside the house – choosing to be inside rather than out) or fetching a ball (he preferred to watch as you retrieved the ball yourself, jumping up and down upon your return in an attempt to egg you on to once again throw the ball so he could watch you retrieve it). His   great pleasures were the hikes we all took together and sleeping(preferably on a sofa or futon).  He was a good companion to our other dog, Rosie, and the two would sleep together on the same doggie bed – spooning each other through the night.  He had this funny habit of cocking his head  to the side when you would talk to him – turning almost completely sideways the more you raised the pitch of your voice.  My wife used to joke that if he could talk, he would have a Barry White voice – very deep, but kind and soft.  We would often talk in this voice for him around the house (as in “I could not possibly eat another piece of hamburger . . . well, on second thought maybe I could”).  She gave him an appropriate Barry White-esque theme song in St. Germain’s Sure Thing– and would joke about the things he would do in his music video to that song. Beau had endless patience wit  children. First with our next door neighbor’s daughter (who would sometimes fall asleep when we were watching her using Beau’s stomach as a pillow) and then with our daughter, who would use Beau as a jungle gym – climbing over him, pulling his ears and tail, pretending to ride him like a horse, or kissing him on the head. Beau loved the attention and would lie with his tail wagging, tongue out, smiling doggie-style.
Beau died yesterday at the age of 14.  He was a good boy . . .

I get quite a few questions sent in by readers and am going to make more of an effort to post some of the ones that I think would be of general interest (please – keep them coming). Recently Jonathan asked: Do you have any reference regarding recent pre seed, seed, and first round valuations for B2C companies? We had several back and forth e-mails about this over the past week and I thought they were worth summarizing here. First, some additional background from a subsequent e-mail from Jonathan: I am actually doing two simultaneous rounds: one for 125K and another for 1.4 million. The first one aims at testing the viral potential of the application. We will focus on improving our site, doing PR and furthering our relationship with bloggers in the field. The distinctive aim of the second – 1.4M – round is to do conventional online advertising. The idea is that if our 122K round is successful (meaning we acquire users at a very cheap rate and manage generate some income early on) we can improve our barging power for the 1.4 M round or skip it altogether and take it to the next level. The main problem with this process is in the valuation. Here was my response: Classically in this type of situation you’d probably try to structure the first $125k as a bridge that converts into the next preferred round at a slight discount (from 10-20% depending on risk and timing of the second round).  That way you essentially punt the value conversation until later and if you execute well on the first set of money you get the benefit of your stellar execution in the form of less dilution when you put together the big round (and at the end of the day from your perspective this is all about getting money into the business so you end up with as much of your company as possible). HOWEVER, if the money for both rounds is coming from the same set of investors, you need to be careful here because they’ll have the ability to foreclose on the business because of the debt structure of the financing instrument in this case.  If that’s the case, I’d look at trying to roll this together into a single round that is traunched based on your hitting milestones (so the first $125k funds at closing but the $1.4m doesn’t fund until you hit some level of traffic or something like that).  You’ll have to have the valuation conversation up front in that case, but the benefit is that you’ll have a deal for $1.525m instead of just $125k.  As for valuation, it varies a lot depending on the type of investor you are bringing in, the amount of money you are raising and the region of the country in which you are located. If you were just raising a $125k angel round, you pre-money value would be ~ $1.5m – $2m.  If you raise $1.5m you could probably push that a bit – maybe to $3m.  First round venture deals (true institutional Series A – product with some interest, but not yet generating any real revenue) are generally in the $5m range.  BtoC is in favor again, so there’s some room to push your valuation based on market interest, but that’s likely for your next round and based on strong execution (and lots of subscribers).

Here are a few links worth taking a look at: Google Trends – www.google.com/trends (thanks to Jason for the pointer).  I played around with this a while ago – they’ve improved it so you can compare search trends for different terms at the same time and also see what region the searches are coming from. Woot – Think you can’t make a business based on one product sale at a time? See www.woot.com. splunk’d – You may have heard that AOL released their search database (that actually had customer identifying information attached to the search terms – oops).  www.splunkd.com will let you search against this database to see what people were actually looking at – compare your searches to the population at large.

Enjoy!