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April 24, 2008

Congrats to Geezeo

Geezeo announced today that they have taken a $1.2M strategic investment from thestreet.com (TSCM).  The formal announcement gives some of the details.  And, this blog post from Geezeo gives some hints of what is to come from this partnership.

The founders of Geezeo, Shawn and Pete, have really done a great job in bootstrapping the company with only a modest amount of capital.  They have built a nice product and received a lot of great press about it.  Now, with this new partnership, they can reach many more users and provide them an even better service.

If you are considering getting started with Quicken or are looking for a free online personal finance service, you should really check out Geezeo. 

April 22, 2008

Jon Stewart Gets In on the Act

I received a lot of online and offline comments to my post last week about the Yankees avoiding the curse of the buried David Ortiz jersey.  For those of you who don't troll through all my comments (how could you not?), I am including a link I posted in a comment to that post.  Last night on The Daily Show, Jon Stewart jumped into the Red Sox-Yankees rivalry to say that Manny Ramirez would take out the Pope with a spike-high slide if His Holiness was wearing a Yankee mitre.

April 19, 2008

Funniest Colbert Video of the Week

This is the funniest Colbert video in a long time.  As a spoof to Stephen's 'The Word' segment, John Edwards makes an appearance doing 'The EdWords'.  And, Edwards is probably the most sought after Caucasian male vote in the country!

 

P.S. Rajon Rondo

I had to add a postscript to my last post.  Rajon Rondo, the Celtics point guard, has probably been the reason the Celtics have been great, and not just good this year.  He is young, but fast, tough, and athletic.  He's a candidate for Most Improved Player in the NBA this year.  He is definitely the key to how far the Celtics go in the playoffs.

Enjoy this video of his top 10 plays.  Make sure you watch all the way to number 1, which shows how tough Rondo is.  No one intimidates him, including the Pistons.

 

Showtime!

The Celtics playoff run begins tomorrow vs. the Hawks.  Although there always seem to be doubters about the Celtics ability to win it all, they were, by far, the most consistent and strongest defensive team in the NBA throughout the year.  They have a veteran team and a deep bench.  Down the stretch, their reserves played a lot, giving the starters some rest, and they continued to win.

They won't have an easy path to a championship.  One of the only teams they struggled against was the Wizards, a potential 2nd round opponent.  If they get past them, they will probably face Detroit in the Eastern Conference finals.  And, in a potential run to THE Finals, they would have to face whomever comes out of the West, which is so competitive that almost anyone can win. 

The most anticipated Finals matchup would be Celtics-Lakers.  Not since the Showtime Lakers of the 80s vs. the Celtics Original Big Three of Bird, Parish, and McHale has this rivalry had some juice.  I think it would be great for the NBA if this came through.  And, if the Celtics managed to win, it would be so satisfying for their New Big Three of Garnett, Allen, and Pierce.

I've loved watching Paul Pierce this year.  He is getting the recognition that he has probably deserved for the past few years when he toiled for such a bad team.  Now, his defense and all around game is noted throughout the league.  And, although knocked for being immature earlier in his career, he was part of the unselfish team chemistry that has keyed the Celtics success this year. 

Enjoy this video of Paul Pierce's Top Ten plays from this season.

 

Less is More

Today's Boston Globe has an article on the drop in VC funding both in the US and especially in New England in the first quarter of 2008.  We've been conditioned to think that when some number goes down, it must be a bad thing.  In this case, I don't agree.

Sure, it's nice when the number of start-ups and the amount of funding goes up and up.  But, that only works if the number of successful exits is also going up and up.  I've been concerned for some time that the amount of funding and the start-up valuations have been rising much faster than the number and size of the VC exits.  It's healthy if there is a breather.  It's a good thing for existing start-ups as they'll have to learn how to make less money go farther, a healthy dynamic.  And, it's a good thing for new entrepreneurs looking for money.  Having the bar a little higher means that entrepreneurs have to have a better story, a more refined plan, and a more compelling advantage in order to get funding.  Not every start-up and every entrepreneur deserves to get money.  In fact, when they do, it waters down the results for everyone.

Given the high levels of funding for the past year or so, we need a breather.  To really guage the health of the start-up world, you need to look at the health of the portfolio companies, not the amount of new money funding new start-ups.  I see more start-ups finding ways to stretch their cash and generate revenues from innovative business models and interesting partnerships.  That's the real health of start-ups.

After the dot com and telecom meltdowns, start-ups found it almost impossible to get anyone to buy anything.  That made a bad situation even worse.  Customers didn't want to bet on start-ups with uncertain futures.  These days, I am seeing a resurgence of start-ups being able to sell products and services to both consumers and enterprises.  And, with increasing capital efficiency, that revenue can go farther to help a start-up grow.  In fact, if start-ups find ways to be more efficient, they need less cash, which also puts downward pressure on the aggregate funding numbers.

So, unless there is a huge long-term drop-off and start-ups find it difficult to get customers to adopt their products and services, I'll continue to think that less funding is more.

The Purity of Sales

When I was a kid, I never envisioned that I would enjoy sales.  I was pretty shy and not willing to approach strangers or speak up.  I did have a newspaper route, but that didn't require any selling skills.  If you lived in my neighborhood and wanted the morning paper delivered, you had to get it from me.  Nothing quite like monopoly power to diminish the need for good sales skills.

Early on in my career, I got bored with engineering and volunteered to move into sales when the start-up I was at had an abrupt change of business strategy.  I wasn't shy at this stage, and I really enjoyed working with customers.  I liked consultative sales -- finding the right solution for the customer's problem.  I have hired people who can sell anyone anyting, but that's not me.  If I can solve your problem (or if I think I can), I can be pretty aggressive in getting you to agree.  Persuasion, not arm twisting.

Sales skills are useful throughout life.  You have to be really subtle if you use them on your spouse.  But, they are helpful in negotiating and navigating your way through almost any situation.  Can you position what you have so it solves the problem that your boss/customer/partner/vendor has?  I have always recommended that marketing people go into sales for a time.  Most marketing people don't have an appreciation for how hard it is to get a customer to actually agree to buy something.  It's so much easier to generate some level of interest (marketing) than to get a customer to part with their money (sales).

As we are raising money for our new fund, I am in sales mode all the time.  Also, for our investment style, I have to sell my way into deals.  I love the challenge of trying to understand what your potential investor/portfolio company is looking for and positioning our skills and capabilities as the solution.  You have to build trust, think on your feet, listen well, and follow through.  Nothing is as challenging as overcoming objections (or indifference).  But, when you make progress and 'get the order', nothing is as satisfying.

There is a purity to sales that is unlike any other role.  You are measured only on results.  Trying hard and taking direction is nice, but doesn't matter.  If you succeed, you are the biggest hero.  If not, you're outta there.

One of my favorite movies is Glengarry Glen Ross.  This is an absolute must-see for anyone in sales (and that's more of you than you think -- every entrepreneur, CEO, and consultant is in sales in my book).  There is a scene when Alec Baldwin announces a sales contest for these hard luck sales guys.  It's part of a 'motivational speech' (language is not safe for work).  The contest goes something like this:

1st prize -- a new Cadillac

2nd prize -- a set of steak knives

3rd prize -- you're fired!

 

April 13, 2008

Curse Averted

According to ESPN, the Yankees have unearthed the buried David Ortiz jersey that was supposed to curse the new Yankee Stadium that will open next year.  The construction worker, a Red Sox fan, was too excited about his potential curse and couldn't keep his mouth shut.  He should have waited a few years and then said something, making it harder to find.  Maybe this uncursing of the curse will curse the Red Sox?

I know that my Red Sox-loving friends will squawk, but I do think that the Red Sox fans lack some class.  This may sound like sour grapes from a Yankee fan, but despite the intense rivalry, you never hear 'Red Sox Suck' at Yankee Stadium.  If you tried to sell or wear or shirt that said that at Yankee Stadium, you would be kicked out.  Outside Fenway, vendors sell shirts that have really vulgur anti-Yankee sayings that are clearly not family friendly.  How do I explain 'Posada Sucks and Jeter Swallows' to my 10 year-old kid?

Yesterday, when the Yankees took a lead vs. the Red Sox, the cries of "Yankees Suck" immediately went out in Fenway.  The Red Sox ended up winning a close game, but the Red Sox fans need to show more class.  When they were the loveable losers for 86 years, I could understand the frustration.  But, now they are the recent winners and have outperformed the Yankees this century.  Perhaps they should adopt the class that Yankee fans have shown for some time.

Now, I know that Yankee fans can be obnoxious.  They love their team and think that they are great.  They root against the Red Sox and reveled in the 86-year curse.  They will boo their heads off.  But, that's a lot different than yelling "Yankees Suck" at the ballpark (not something I want my kids to mimic).  Or, yelling "Yankees Suck" at football and basketball games vs. NY teams (which I have heard). 

I was proud of Joe Torrre and the Yankees at the Red Sox home opener in 2005.  They all stayed in the dugout to watch the Red Sox get their rings, which came after the huge Yankees collapse of 2004.  They even clapped for the Red Sox.  I'd like to think that the Red Sox players would have done the same if the situation was reversed.  I really doubt that the Red Sox fans would have been able to handle it.

Get over the frustration.  Your curse is over.  Act like classy winners.

April 10, 2008

Finding the Exit

Fred Wilson wrote this morning about finding a "new path to liquidity" for start-ups.  He is fundamentally conflicted between being a VC and being a user of web services.

As a VC, Fred makes his money by either taking his companies public (harder and harder to do, particularly in the Internet sector) or by selling the company to some sort of acquirer who can pay cash or liquid securities.  Fred needs this liquidity to deliver a return to his investors.  By all accounts, he has done a great job at this.

But, since the IPO market is very tight, most companies get sold.  And, most acquirers don't realize the initial vision that the start-up had for its service.  Maybe they just want the technology and not really the product or service.  Maybe they lose focus and move onto the next corporate priority.  Or, perhaps they just can't execute well because of their size.  This doesn't always happen, but Fred reveals his frustration as a user of services that have been bought, and sub-optimized, by big acquirers.

Fred also mentions some new liquidy options for private companies, Goldman Sachs's GS True Market and Opus-5.  While I don't have any direct experience with these, the idea is that these are marketplaces where private company stock can be bought and sold between qualified investors.  Private equity firms can buy start-up positions from VCs, for example.

This type of exit can provide some liquidity and get a VC out of a position that they no longer want to hold.  But, I am skeptical that it will provide the high-multiple returns that VCs need to deliver the results that their investors expect.  Private equity firms like to value companies based on cash flow.  Most private companies that can't go public or be sold at a nice price to a strategic buyer probably don't have financials that will support a high exit price.  So, this may be liquidity, but it isn't a substitute exit that VCs really need.

And, the private equity buyers may allow the stand-alone services to grow on their own longer, perhaps realizing the vision that Fred the user is looking for.  But, if the company can't generate sufficient cash, it will go by the wayside.

On a cynical note, one point that Fred missed is that he needs the big strategic buyers to sub-optimize their acquisitions.  That creates gaps in the market that become opportunities for the next wave of start-ups to capitalize on.  If the big companies did a great job, then start-ups wouldn't thrive.  An example might be Cisco.  Although far from perfect, they did such a good job in the enterprise router market that there just wasn't much business left for anyone else.  Now, start-ups really struggle in that space and only a few get funded.  If Cisco screwed it up, there would be plenty of opportunity.

In the end, the only real exits that deliver VC returns are ones where the hype exceeds the reality, at least temporarily.  This would either be a nicely priced IPO, where the price is baking in a lot of future growth, or a sale to a strategic buyer who is willing to pay much more than what the financial statement justifies on its own.

April 07, 2008

Trust the System?

If you have any concerns about having the superdelegates decide the Democratic nomination, this should reassure you that the superdelegates are qualified to make the right choice.  What a system!

 

Spring!

Although Spring arrived officially on March 21, today is the first day that feels like Spring to me.  I have suffered with an early Spring flu for the past 11 days, and today is the first day that I feel almost all better.  I was even able to exercise!  Thanks to all of you who put up with me coughing, sneezing, and feeling out of it.

Also, the gigantic snow bank at the end of our driveway is down to this:

snow

I expect this snow to be gone today.  And, our perennial flowers are coming up in our front yard:

Flowers

Between that and the start of the baseball season, I know that Spring is finally here!

April 05, 2008

Can't the government get anything right?

It's been frustrating to me that there seems to be news almost every day about our government's ineptitude.  Katrina, poor execution in post-war Iraq, the FAA not taking action against Southwest's lack of maintainence, and now this:

5th-Grader Finds Mistake at Smithsonian

It turns out that an exhibit at the Smithsonian has been wrong since 1981 -- spanning several administrations.  Luckily, a 5th grader spotted the problem and received a nice letter from the Smithsonian.

Unfortunately, the letter got the boy's last name and hometown wrong...

April 01, 2008

Beauty and the Geek -- relief!

Man, am I relieved.  As I wrote earlier, my next-door neighbor, Jim Babcock, has been on Beauty and the Geek.  If by some chance you are watching this show and didn't see the episode tonight, April 1, read no further.  I am going to reveal the outcome...

OK, spoiler alert is over.

Although we wanted Jim to make it as far as possible, I am glad that he was eliminated tonight.  Watching this show is painful.  I've never watched a reality show before.  I can understand how people get sucked in, but the 'reality' is so staged.  This isn't real.  Real is turning this stuff off and doing something yourself rather than watch other people engage in staged competitions.  When I see Jim, I'm going to ask him how much of the interactions were staged.  But, it certainly didn't seem real to me.  Or, even close.

Sadly, my daughter really wants to watch the series through to the end...

 

Boston-Power is #1 in New England

Since I am still getting over the last vestiges of my (now) six day flu, I couldn't be there.  But, I am happy to say that Boston-Power has been named #1 on the New England AlwaysOn private company list.  There was an event tonight to recognize the winners, and they will also be celebrated at the AlwaysOn Venture Summit East to be held on April 7-9, 2008 at the Four Seasons Hotel Boston.

Boston-Power has a great team that has worked very hard trying to crack a very tough market -- laptop batteries.  They've had their share of challenges, but continue to make great progress.  They've been able to raise sufficient capital to make their plans come to fruition.  They have the potential to be a very large and interesting company.  I'm happy that I have been able to contribute to the company on their Board.

Christina and team:  Congratulations!


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