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July 23, 2009

What's So Hard About Saying You're Sorry?

The arrest of Harvard professor Henry Louis Gates by the Cambridge police has turned into a much bigger story than I expected.  Even President Obama weighed in.  I think that was ill-advised as he almost certainly did not have all the facts in this case.

I'm very sympathetic to minorities being targeted by police.  I'm sure it happens, and we shouldn't tolerate it.  But, just because it does happen doesn't mean that it happened in this case.  We need to have an open mind.  It would be great if both participants in the case did, too.

There's an interview with the Cambridge police sargeant on Boston's WEEI this morning.  The interviewers are very sympathetic to Sgt. Crowley, and he does most of the talking.  He certainly sounds like a reasonable guy.  But, he refuses to apologize as he thinks he did nothing wrong.

Professor Gates undoubtedly feels vindicated as charges against him were dropped.  He certainly won't apologize for anything he did that day, either.  And, for me, the lack of apology from both of them is an indicator of a problem in our society right now.

From everything I have read and heard about this, my sense is that both people were at fault at some level.  That's almost always the case in these types of situations.  Professor Gates probably jumped to conclusions about the motives of Sgt. Crowley.  He may have not been as composed and cooperative as he could have been.  And, it's likely that Sgt. Crowley should have shown even more restraint before arresting Professor Gates for disorderly conduct.  Once Sgt. Crowley determined that a crime was not occurring and that Prof. Gates wasn't going to cooperate, he could just turn his back and walk away, despite any verbal harrassment he may have been receiving. 

We should all treat police officers with respect, but, unfortunately, they have to have very thick skin to deal with those of us who don't.  However, given Professor Gates's age and physical condition, he probably didn't represent anything other than a verbal nuisance to Sgt. Crowley.  It must have been clear pretty quickly that a crime was not occurring.  If, as Sgt. Crowley says, he was also concerned that Professor Gates may encounter a criminal in the house, he could have told that to Professor Gates.  Who would refuse help from a police officer in that situation?  But, if he does, then Sgt. Crowley could just leave.

What disappoints me most is that one of these men should approach the other and say "let's both agree that this situation got out of control and that we both share at least some of the blame.  Why don't we shake hands and mutually apologize.  Getting this incident behind us is in everyone's interest and actually sends a stronger message of tolerance than any hardened position that either of us would take."

Instead, neither one wants to back down.  They are 'right' and so the other person has to be 'wrong'.  And, you'd never apologize if you thought you were right.  I don't buy that.  The better person is willing to put their ego in their pocket and look for higher ground.  How powerful would it be in calming race relations to have a press conference where they mutually apologize and shake hands?  Both can admit some level of fault, without having to argue about whether it was 50/50 or 99/1.

Things have become very polarized in our world.  Obama gets attacked when he says he's willing to talk to some of our enemies (even attacked by his now Secretary of State Clinton).  Politicians view every issue as a winner-take-all moment.  Admitting some level of fault, even 1%, is perceived as a sign of weakness.  But, this type of intransigence makes it almost impossible to resolve issues.  Whether it is a personnel issue, a business dispute, a civil matter, or a diplomatic issue, there is much to be gained by taking the high ground.  Suprisingly, we usually admire those who have the courage to do so.  We call them leaders.

July 20, 2009

Non-compete non-starter

As Bijan wrote, the Massachusetts House was greatly watered down House Bill 1794 which was written to make Massachuseets law on non-competes similar to the law in California.  The new version, which Bijan describes, restores much of the effect of non-competes.  These stifle innovation and mobility of entrepreneurs in Massachusetts.

When this issue first came up in 2007, my initial reaction was to oppose the change.  As a VC, I saw how non-competes gave us piece of mind that our entrepreneurs and other employees couldn't leave our companies to start a competitor.  As someone who was actually sued under one of these agreements in 1990, I understood this from the entrepreneur's point of view.  So, I always made sure that our non-competes were narrow and targeted.  I initially thought that narrow and targeted non-competes should be allowed.

I was wrong.  When I read all the arguments in favor of eliminating non-competes in Massachusetts, I was convinced.  The most compelling argument is that entreprenurship and successful VC-backed companies abound in California where such agreements are not allowed.  Note that agreements protecting intellectual property and prohibiting people from soliciting employees once they leave are enforceable in California and would be in Massachusetts.  We are just talking about the ability to leave and practice your employment at a different company in your field.  As long as you don't solicity your fellow employees and protect your former employer's intellectual property, I think it is healthy to encourage such movement.

Massachusetts employers who oppose the elimination of non-competes are being disingenuous.  They have significant presences in California where these agreements are not enforceable.  And, they thrive there.  Bijan includes some examples, such as EMC.

If you agree, you should join the list of supoprters.

There are some Boston VCs on the list, but not many.  I'd love to hear the arguments from those who are against making this change.  If you know where some of these arguments are posted, please put a link in the comments.  Otherwise, I think that all Boston VCs should take a stand one way or the other.

July 16, 2009

Still bailing

In light of the huge profits announced by Goldman Sachs and JP Morgan, I continue to feel that we've been taken for a ride by our Treasury Department (under both Paulson and Geithner).  They rushed through big bailouts for these banks, and these banks were probably in trouble.  But, if you believe Elizabeth Warren (she heads up the Congressional panel that is overseeing the bailout), we're continuing to subsidize these banks.

First, her team's analysis showed that the initial bank investments we all made were done at a 34% discount.  That means that the moment that the money was transferred from the US Treasury to the banks that we lost 34%.  This was before any stock moves up or down, etc.  We just gave them a bunch of free money and didn't get enough value back in return.  Keep in mind that we made these investments at a 34% discount AFTER their stocks had already dropped alot due to investor fears.

Now, the banks are repaying the money and looking to buy back the warrants that they issued to the government.  These warrants were our 'upside' to reward the taxpayers for being the bailer-outer of last resort.  According to what I heard on NPR's Hear and Now yesterday, Elizabeth Warren now also estimates that the government is selling back the warrants to these successful banks at a 34% discount.  No wonder these banks have such huge profits so fast!

I'm glad that the banks are healthy.  There is no doubt that they have returned to health due to the large government bailouts, including money paid to AIG that went right out to banks such as these as part of AIG's obligations.  But, with such financial health, we shouldn't be cutting our share of the upside.  We need people in the Treasury who hold the line for taxpayers.

I'm glad that Ms. Warren is so outspoken.  You can find her on all kinds of shows, including this two part interview from The Daily Show (Part 1 and Part 2).  Let's hope she keeps it up.


The Daily Show With Jon StewartMon - Thurs 11p / 10c
Elizabeth Warren Pt. 1
Daily Show
Full Episodes
Political HumorJoke of the Day
The Daily Show With Jon StewartMon - Thurs 11p / 10c
Elizabeth Warren Pt. 2
Daily Show
Full Episodes
Political HumorJoke of the Day

July 15, 2009

Xobni Goes Pro

I infrequently write about products on this blog.  I don't want to get inundated by PR people hoping that I mention their product.  I get enough of that already.  But, there is a product I have been using that I do want to mention.  I've got no connection to the company other than as a user and, now, a paying customer.

Xobni (that's the word 'inbox' backwards) is an add-on for Microsoft Outlook.  If you use Outlook to read your email, Xobni is pretty much essential.  The free version has a ton of features and they just announced a Pro version, which I purchased today.

So, what is Xobni?  Xobni integrates with Outlook and indexes all of your email messages.  It pulls out all of the email addresses and lets you search your email by any of the words in the messages or the names or email address of the senders or recipients.  It can also do this with your online Yahoo mail, integrating those results with your Outlook search results.  It shows you who all the people are who are in email exchanges with any of your contacts.  And, it lets you pull up all the email threads or attachments from these search results.  In addition, it integrates with Facebook and LinkedIn to show you the profiles of any of your email contacts.  It's super fast and very reliable.  I've been using it since its Beta period, and have had a couple of technical issues along the way.  The product includes extensive diagnostics that allow their support staff to resolve problems very quickly.  The current version is 1.8.

The Pro version is worth the price if you live in your Outlook email as I do.  It adds several new features, but the two that got me to buy it are 1) using all the email addresses in the Xobni index in the auto complete feature that Outlook uses to guess the email address you want when compsing a message, and 2) indexing your calendar appointments in addition to everything else.  It costs $25.95 for your first machine and just $9.95 for each additional machine.  If you have multiple users, they have volume user discounts, too.

Xobni is for you if you often find yourself trying to dig up that old email that you can't quite remember when it was sent or who sent it.  Or, if you want to come up with the older emails that form the conversation thread with the message you just received.  Or, you want to find all the documents that you and another user have exchanged.  Once I started using it, it just became part of how I work with my email.  Frankly, I'm surprised that Microsft hasn't bought these guys yet.

Xobni seems to be the kind of company I like.  Their product is full of features, integrates and installs cleanly, is very reliable, and has great support.  The free version is really great and useful on its own.  If you use Outlook, you really should give it a try.

July 10, 2009

Where to Start

Fred Wilson blogged today about how areas outside Silicon Valley seem to have an inferiority complex about whether you can build a successful start-up if you aren't in the Bay Area.

I agree with Fred that you can be successful almost anywhere, as long as the area has what you need (more on that below).  Realistically, there have been more really big wins in Silicon Valley than elsewhere, but Fred lists plenty of non-Silicon Valley big successes in his post.  And, there are many more.  Silicon Valley will probably always have the most as that's where there is more investment.  But, it also has the most competition for people and capital.  So, your chance of success might be higher there due to the overall critical mass there, but you also have a higher chance of being beaten by a local competitor.  I think that in terms of odds, it's about even.

So, don't blindly move to Silicon Valley because you think that's where you have to be.  You almost certainly need a sales and/or business development presence in Silicon Valley if you are in the information technology business.  That's a big market, and there are many big partners there.  Plan on having someone with those skills based there, or traveling there very, very frequently.  But, what about where to base the rest of the company?

1) Founding team location.  The founders are the most important people in the company.  They have the vision, make the biggest sacrifice, build the culture, and provide the early momentum.  I don't like virtual companies where people are scattered all about from the start.  You lose many of the benefits that being small and nimble provide you as you spend time and money getting together.  It can work, but the odds of success are lower.  You probably can't move all the founders to one place without upsetting family life, etc.  That wears on the founders, too.  Hopefully all the founders are in a place that meets the other criteria below.

2) Access to qualified people.  You'll need to build a team, and you don't want to count on people all having to move to some remote location.  Your company should be based in a place where there is a pool of qualified people that have worked in similar companies.  And, you'll need people at all levels and across all skill sets -- engineering, sales, marketing, operations, etc. 

3) Access to capital.  Most investors like to invest locally, so it will be much easier to get funded if there are sufficient local VCs or angel investors to give you a good chance of getting funded.  Areas that have a good base of VCs include Silicon Valley, Boston, New York, Austin, Atlanta, Washington DC, Seattle, North Carolina, Chicago, and more. 

4) Feeder companies.  I find it very helpful if there are other companies in your area that are in similar or adjacent markets to yours.  This helps with the talent pool, but it also means that all other service providers (lawyers, accountants, bankers, real estate brokers, etc.) understand the basics of your business model.  And, feeder companies are great training grounds for your future hires.

5) If you aren't in a major area, it's really helpful if you have good access to an airport that can get you there quickly. 

There are probably other factors, so feel free to comment with your thoughts.

The most important thing isn't where you locate, it's the quality of your idea and of your founding team.  If that's strong enough, you can be successful.  And, being a strong player in a less-frequented location can actually make you stand-out much faster.

July 07, 2009

Corporate Cult of Personality

Back from Japan, I'm finally able to look around and see what's happening in the world.  I came across this great article about AIG Financial Products Group in Vanity Fair by Michael Lewis.

The article was spurred on by Jake DeSantis from AIG's Financial Products Group, whom I previously wrote about when he wrote an op-ed for the New York Times.  It describes how things evolved at AIG's Financial Products Group and now the risk level grew so large that it dragged down the company and many of the large Wall Street banks.  Behind this increase in risk was group head Joseph Cassano.  In Lewis's article, you can read how Cassano's lack of understanding of how their underlying business worked and his over-aggressive personality drove AIGFP to take on way too much risk.

There is an important lesson here for any executive and board of directors.  Companies take on the personality and the ethics of their leaders.  If you have an executive who will 'win at all costs,' you will end up with a company that will also win at all costs.  And, the costs may be more than you are willing to bear.  When I hired CEOs, I always focused on ethics and responsibility since those were characteristics I wanted to see throughout the organization.  Being aggressive and driven is also very important, but you have to keep those in check with some responsibility.

No one in the article accuses Cassano of being corrupt.  But, he didn't understand the risk he was taking, and didn't seem to care when it was pointed out.  That's when the greed overran the responsibility.  That's a bad trade-off.  But, that's what you get when that's the personality of the person running the company.

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