I did something this morning that falls into the category of ‘seemed like a good idea at the time’ but which upon reflection (or more accurately, upon understanding reality) falls into the category of “you dumb mother-fucker”. Put another way, I unleashed Plaxo on all my contacts this morning as I calmly sipped my first cup of coffee sitting comfortably in my pajamas at my kitchen island – oblivious to the hell I was setting free. I’ve been waiting years to do this, but something always held me back. I finally broke down and decided that I really did need to clean up my contact database (I keep a lot of contacts and its helpful to know what’s up to date and what’s not). So if you are in my contacts and I have your valid e-mail address, this morning you received a cheerful note from me asking you to update your information. THIS WAS NOT A GOOD IDEA. While I got some useful information back, there were some second order effects that I had not thought about. Here’s a few: 1)ont-size: 7pt; line-height: normal; font-size-adjust: none; font-stretch: normal;”> I basically just spammed my entire contact list. I wasn’t really thinking about this as spam at the time, but that’s essentially what it was 2)ont-size: 7pt; line-height: normal; font-size-adjust: none; font-stretch: normal;”> I got several hundred e-mails from Plaxo itself, clogging my inbox as people updated their information (fortunately Plaxo lists people in groups, so one notice would have 20 or 30 updates announcements in it – so I suppose it could have been even worse). 3)ont-size: 7pt; line-height: normal; font-size-adjust: none; font-stretch: normal;”> I got a bunch of e-mails from people telling me they hate Plaxo (mostly because they don’t trust it) and then giving me their contact information in e-mail form (which I had to enter manually – pretty much what I was trying to avoid). 4)ont-size: 7pt; line-height: normal; font-size-adjust: none; font-stretch: normal;”> Plaxo errantly sent some update requests to a few mailing lists that I’m on (and have permission to send to) – that was a bit embarrassing. 5)ont-size: 7pt; line-height: normal; font-size-adjust: none; font-stretch: normal;”> I reached out and touched a lot of contacts at one time, which resulted in a lot of people reaching out and touching me – I now have about 30 ‘catch-up’ lunches/coffee/meetings scheduled over the next month as a result (don’t get me wrong – I’m happy to catch up with these people – just not all at once) 6)ont-size: 7pt; line-height: normal; font-size-adjust: none; font-stretch: normal;”> I have a long list of contacts that couldn’t be reached. While this is what I was looking for when I set out on my Plaxo mission this morning, seeing them all listed out makes me wonder exactly what I though I was planning on doing with all this information in the first place (perhaps ignorance really is bliss) What I should have done was install the program and not sent out the update request (Plaxo has a reasonably nice way to manage your contacts as e-mails come in) – this would have gotten me about 98% of what I now realize I was looking for without any of the annoyance.

To everyone I Plaxo’d today –
sorry.

I’m an idiot.

I won’t do it again.

With VC blogs and technology blogs a dime a dozen these days, I’m always interested when I come across a new blog from a corporate development type.  Just such a blog came to my attention yesterday – Lorne Groe’s Confessions of a Corporate Dealmaker.

Check it out – very well written and thought provoking.

There was a lot of traffic on my recent post on the best time to sell your business (comments link here), including a few points that I wanted to highlight. Chris Zook sent me a graph with the following note that I think sums up the underlying driver of what I was describing in that post.

focusing more on the idea that while companies generally increase in value as they grow in size/revenue/customers (per your chart), there is often a period of accelerated value that diverges from the standard trajectory as a function of “strategic value perception” or “buzz” about a specific segment or product. The thought being that a given  company would optimally want to sell at or around the peak of the buzz period, as it would take them some time to get to a point where they could realize the same value after the buzz wears off. I’ve always thought this effect is particularly evident in acquisition activity within certain technology segments where a few dominant players are in a continuous battle to stay on top with the next new thing – thinking not only in relation to GYM but also security software (Symantec, McAfee, Computer Associates) or networking (Cisco, Juniper, Nortel). Always tend to see those companies scrambling for the same new technologies, and thus bidding up the other remaining technology providers, which tends to increase the value of public and private offerings for the rest… at least for a time. function of a normalized value curve (perhaps it looks more like a I agree, although I think that this is a cycle that repeats itself over time (i.e., there are several times in a company’s life where their perceived value accelerates away from some more linear stair step, but generally runs in the up and right direction for businesses that are executing reasonably well). Sometimes this acceleration is driven by external factors (i.e., buzz around Web2.0 technologies), sometimes its driven by internal factors (i.e., technical validation of a product, signing of certain new customers, etc.). If you’re a seller, the key of course is to try to figure out how to create that buzz around your company (Brad refers to this as ‘becoming a bright shiny object’) either with a specific partner or more broadly in a market such that potential buyers see you as unique, scarce, critical to some aspect of their business, likely to be bought by someone they don’t want to own you, etc. In this way you can accelerate your deviation from the normal slope and sell for maximum value. Along a similar thought process, Nate Redman pointed out in an email exchange that: as a company moves from proof of technology to proof of business, valuation metrics shift from “strategic value” (which equates to an internal business case and defensive maneuver) to more classic multiples.  In between is no-man’s-land. The other piece to this, of course, is the buy-side.  $25-50MM is an amount that can be initiated, if not approved, by business units.  Once you close in on $100MM and above, the CEO/Board and staff get involved; even Wall Street takes a critical eye.

So, what does this all mean from the perspective of a VC? Certainly there are trade-offs to selling a company early in its lifecycle vs. holding on for a more substantial (but much later) outcome.  While going for broke can bring the big return that most funds rely on to anchor their portfolio, a large number of smaller returns can be equally attractive. To steal one more quote from Nate:

Implications? Increases the importance of low capital intensity, choice of market, and timing.  A portfolio of 3-5X returns leads to a great outcome, but if you are only spending $2-5MM each, it makes it difficult to put $500MM to work.  Teams may be smaller but you need to work with high-leverage entrepreneurs (previous relationship, market experts, etc.) in order to increase the number of boards that you can effectively manage at any one time. I’m going to expand on this last concept as the subject of another post – as it really goes to the heart of the economic model of being a successful VC.

Brad . . . if you’re reading this, I really am working today . . . honest . . .

Yes, yes video

drunk-dialed

lazy monday (from chris)

Greg Galanos, one of the Mobius partners, likes to joke around by creating tee-shirts with people’s images superimposed into a theme. He created an extremely amusing Jack Bauer tee shirt for Brad (see Brad’s post on it here), which reminded me that I had been meaning to post my own Greg tee-shirt.

This is me as the angel of death. I’m a bad-ass <g>

Be sure to click the image to see it in all its glory.
Thanks Greg

I’ve had an ongoing series running on my blog dealing with various topics related to mergers and acquisitions (link to the full serieshere). As part of that group of posts, Daniel Benel wrote a  guest column from his perspective as an m&a professional at Verint. Yesterday he dropped me the following note: I was in a negotiation last week where the bankers on the other side had googled me and found my blog posting on your site and then started complaining that I NEVER believe projections! I thought it was pretty funny — not sure if it helped or hurt. While it’s amusing that this happened it brings up a good point about preparing for any negotiation (or fundraising pitch or customer meeting, etc.) which is that you should take a little time to figure out who it is you are meeting with. Sounds obvious, but sometimes the obvious advice is the best advice (plus I’d say that this level of preparedness is the exception rather than the norm in my experience).

Most people won’t go out on a blind date without Googling their prospective dinner partner. Don’t walk into a meeting – particularly one as important as a negotiating session to buy or sell a business – without doing some prep work. Figure out what they like; what they’ve written about; what books they are reading; what articles have been written about them; where they went to school; who they know that you know; etc. Then use this information wisely to make a better connection with the people you are dealing with. A little upfront work can lead to large dividends around the negotiating table.

Among the companies I poked fun at yesterday was Fleck. Turns out they have a blog. Also turns out that their latest post was a really good one – an entrepreneur’s perspective on how to give a good venture pitch. I wrote a post about a year ago on the same subject.  This is a great companion to that post – from the perspective of someone on the other side of the table. By the way, be sure to take a look at the description of the business on their splash page – very amusing!

You can see from the comments to my post on company names yesterday that I actually heard from many of the companies listed (a few wrote me directly and don’t show up on the comments roster, but 3 commented directly). I was actually highly amused by the e-mail exchanges I had on the topic – everyone took it in stride (and thought it was extremely funny). It did get me thinking about how fast information travels in a WEB2.0 world. With one exception that I’m aware of, the people who contacted me were not a regular reader of this blog (despite my wishing that my reach was really that far . . .). Still within a few hours, they had all been alerted to the fact that I had posted about them.  There are no secrets in a world that connected . . .I suppose the downside to having a made up company name is that no one knows what you do. The upside is that when someone mentions you on the web, its pretty easy to figure it out (not too many cases of someone writing about the wrong “Nuvvo”, I’d imagine).

At the risk of throwing stones from a glass house, what’s up with the names of next generation web companies? Catching up on some of my TechCrunch reading this morning I was struck by how crazy the company names were. Here are just a few from posts in the last week:

YouTube
Kaboodle
Tinfinger
Fleck
YubNub
Podzinger
Eurekster
Nuvvo

As Charlie Wood points out – say them together and these names sound “like an incantation.”

Now I know that it’s hard to find domain names these days, but wow – these names are really out there. Remember the good old days when company names actually told you something about what they did?

Here’s a great idea:

David Jackson has started posting transcripts from company conference calls on his web site (he’s actually been this for a while, but now has pretty extensive coverage of tech company earnings calls).

I try to listen to a handful of earnings calls each season, but invariably I get to fewer than I want to, or miss the key moment of a call – even when I’m listening to the replay (which is almost always what I end up doing).  I’d much rather peruse the transcripts. Much easier to consume quickly.  Much easier to search.  Much easier to quote from (if you’re into that sort of thing).

Thanks David.  Nice work.