The Fein Line

I listened to an interview with Bill Bishop, author of The Big Sort: Why the Clustering of Like-Minded America Is Tearing Us Apart.  This reinforced my belief that one of America's greatest strength is that we are a melting pot.  But, if we all gravitate to communities and social circles where everyone is just like us, we will all miss out on the benefits of the diversity.

When I think about entrepreneurship, I always associate it with new ideas, high energy, and commitment.  This is exactly what you get with new immigrants who come to the US to make their lives better.  My grandparents were immigrants, and my paternal grandfather was an entrepreneur.  He built up a pretty big wholesale and retail grocery business after coming the country with very little.  While there is nothing stopping native-born Americans from being just as entrepreneurial, our privileged upbringing probably removes some of the inner hunger that an immigrant who has to overcome large obstacles probably has.

But, even more important than making sure we continue to have a steady stream of immigrants coming into the US with new ideas and new energy, we all need to continue to expose ourselves to new people and new ideas to avoid complacency.  We tend to settle into our comfort zones where life is predictable and less challenging.  That's a recipe for stagnation.  Instead, we need to force ourselves to meet new people, from different backgrounds, and embrace new ideas.

Unfortunately, it seems that too many people are pulling back into a comfortable cocoon of familiarity.  Even our news sources are reinforcing this, with opinion and news being all mixed together so that our minds are made up for us.  You have to work hard to get multiple points of view on an issue.

The more we learn about other people, other cultures, and other ideas, the better we will be able to deal with the world's problems.  The more innovative we will be.  The better our solutions will be.  So, fight the tendency to stay with your comfort zone and push out of it once in a while.  Travel to really different places and countries.  Push into social circles with people of different backgrounds -- ethnic and financial.  And, make sure your kids do the same.  You'll understand the world in different ways.

This brings me to Barack Obama.  Despite my real disappointment that he zig zagged on the FISA/telco immunity issue, I still think that he is the rare candidate that can pull the different parts of the country together.  He's not perfect, and he's not as experienced as some people would like.  But, I think that we are all going to have to sacrifice somewhat to solve the big problems facing the US.  It will be easier to sacrifice with someone who really unites us at the helm.  I think that one reason Bush won in 2000 was his 'uniter, not a divider' line.  If only it were true. 

(PS - read the Salon article from the last link.  Is that really the same person who has been President for the past seven years?)

Posted by Mike Feinstein at 12:56 PM | Permalink | Comments (2) | TrackBacks (0)

Good2gether is getting a lot of traction.  I'm real happy for them.  They launched on Boston.com and will soon be launching in some other major cities on the largest local aggregation sites.

Boston's Fox 25 interviewed Bob Kempf from Boston.com about their DoGood channel, powered by Good2gether.  It's great to see the media partners take this on as if it was their own.

I first saw this on Greg McHale's Good2gether blog.  If you want to rack up some vicarious frequent flyer miles, track Greg's travel schedule on his blog.

Disclaimer: I am an advisor to Good2gether.

Posted by Mike Feinstein at 12:24 PM | Permalink | Comments (0) | TrackBacks (0)

Boston-Power is featured in the BusinessWeek cover story about American manufacturing.  The overall subject matter of how to reclaim American manufacturing jobs is important, but there are many factors which are beyond the realm of American cost competitiveness.  For example, Boston-Power manufactures laptop batteries.  The company may be able to make these cost effectively in the US, but the rest of the laptop supply chain is in Asia.  So, making laptop batteries in the US would still mean that they would have to be shipped to Asia to have them assembled into battery packs and laptops.  Until more of the supply chain shifts to the US, it doesn't seem likely that laptop batteries will be made here.

However, there are many other applications for batteries where more the supply chain is here, and those would be ideal areas to re-establish some American battery manufacturing capability.

Full disclosure:  I am on the Board of Boston-Power.

Posted by Mike Feinstein at 10:14 AM | Permalink | Comments (0) | TrackBacks (0)

I recently caught up with a couple of CEOs I know.  Both are at companies that are about the same vintage and have spent about the same amount of money over that time.  They have different amounts of progress, but both companies are at least somewhat behind the plans that they had pitched to investors when they last raised money.

However, at one company, the Board is very supportive of the business and, although concerned about some of the progress issues, is sticking with the company and working hard to make it successful.  At the other company, at least one member of the Board has lost patience and is pushing for an exit at a pace that doesn't feel natural to the CEO.  Of course, there are always two sides to each of these stories, and I am just hearing from the CEO in each case.

The CEO of the company under pressure was wondering why their Board member had changed his attitude about the company so quickly.  I don't really know, but one issue that most entrepreneurs overlook is internal firm dynamics.  It can be hard to tell from the outside, but many times decisions at VC firms are influenced by the status of the particular fund the investment is in, the status of the partner at the firm, and partner-to-partner dynamics.

If a particular fund won't return all of its capital to investors, or the deal in question can't make a big difference one way or the other, the VC firm may be ready to give up on a deal just to free up the partner time.  This can happen with an older, small deal in a big fund.  The outcome just won't move the needle, and the VC firm is probably focused on newer funds that can generate carried interest income for them.

If a deal has lost its initial sponsor, or a partner at a firm sees some other deal as being the key for his or her ascendancy, it's possible that deals can get ignored by the partner on the Board.  Also, if partners are being tough on each other over deals in internal discussion, there may be retaliation where other deals are targeted to get even, rather than to maximize returns.

The fundamental issue is with deals that don't turn out to be as large as first thought.  However, these can still make some money for the firm and the entrepreneurs.  This kind of deal may not matter in some cases to the VC firm, but will matter a lot to the entrepreneur.  This misalignment of interest can cause problems.

What can an entrepreneur do about it?  First, do your best to know the people who will be involved in the deal, as well as to know the reputation of the firm.  Some people and firms can separate internal dynamics from how they manage deals.  Others can't.  Second, keep communications open so that if you sense these types of problems coming up, you can try to bring them into the open.  Most VCs won't acknowledge internal issues, but may be willing to minimize their time by appointing someone outside their firm to their Board seat.  This isn't ideal, but is better than getting pushed prematurely to the exit.

Also, you may be able to use other Board members and investors to keep each other honest.  No VC wants to look like the one who is the weak member of the syndicate.  Don't let a VC ringleader emerge if you can help it.  Instead, keep everyone engaged and have a lot of one on one conversations so that each person has to express their own opinion.

VC deals are like marriages, except that it is even more difficult to get out.  So, choose your partners very carefully!

Posted by Mike Feinstein at 01:43 PM | Permalink | Comments (0) | TrackBacks (0)

A company I advise, Good2gether, has just crossed a major milestone.  If you go to the Lifestyle section of boston.com, you can click on DoGood.  This will bring you to the DoGood channel which connects you with non-profit causes around Boston.  This is the first of a series of roll-outs for Good2gether around the country. 

Good2gether connects people to causes and makes money from sponsors who want to attach their brands to these connections.  As is the case with any web service, the business model only makes sense if you can get some meaningful traffic to your site.  It's very difficult and expensive to establish your own new brand in the mass market.  Start-ups need a business model that lets them leverage existing destination sites, like boston.com, that have their own traffic.  This has to make business sense for sites like boston.com as well. 

By going live with boston.com, good2gether has shown that they have a nice working product and that boston.com thinks that this makes business sense for them, too.  Hopefully, this will be the first of many roll-outs around the country.  Very few start-ups get a good partnership with such a large portal.  If you live in the Boston area and are looking for information and volunteering opportunities at a non-profit, check out the DoGood channel at Boston.com.

Posted by Mike Feinstein at 03:18 PM | Permalink | Comments (0) | TrackBacks (0)

Every company I have worked with has faced its share of problems.  If everything is easy, it probably means you aren't trying hard enough.  Whether you are trying to push technology into areas not yet explored, selling to customers who are wary of small companies, forging a partnership with a much bigger company, or just trying to be as productive as possible with a small amount of resources, every small company faces problems.

I don't judge companies by their problems (or lack of problems).  Instead, I look at their response to problems.  What communication style does the CEO and management team employ?  Does the CEO start making all the decisions, like a field general?  Or, does the CEO pull the team in close and forge consensus on the path forward?  You can find successful examples of both styles, but I bet that the second style has a higher chance of success.

One key to me is how much the company is willing to change in order to focus on its key priority.  Will they get employees to back off from their normal tasks in order to put more effort onto the big issue?  Can they keep up morale as people do jobs that aren't their top desire or main occupation?  During these times of crisis, you can learn a lot about how a company really works.  These are the times that the wheels can fall off of the bus if you don't have a strong team.

Another great indicator is how the CEO deals with the Board and other advisors.  Do they get defensive and keep information to themselves?  Or, do they open up and bring in outside help?  This is one of the trickiest questions because the outside help can also take up a lot of time and be a distraction.  There is usually no shortage of people who can offer help if only you can spend several hours bringing them up to speed.  If you do this a few times, you have wasted a lot of valuable time.  This is where the CEO has to triage with one or two key Board members to gain agreement on the action plan.  Bringing in a couple of key people from outside can make a huge difference in some situations.  But, bringing some partner from your venture firm up to date so that the person on your Board can cover their butt is a waste of time.

I usually like to have one or two engaged outside Board members on every company Board of Directors.  I like experienced executives who come from the company's industry and have good mentoring skills.  These people will already be up to speed on the company and can provide a lot of targeted advice during difficult times.  And, the CEO should already trust them and be used to opening up to them. 

One of the hardest things to do is to plan ahead for crises.  You can't be sure what type of crisis may come up, but at least make sure you have some good independent Board members and advisors who stay up to speed on the company so you can put them to use quickly when you really need them.

Posted by Mike Feinstein at 08:17 AM | Permalink | Comments (0) | TrackBacks (0)

I am so used to being online all the time, I take it for granted.  This past week I have been beset with an unreliable laptop and non-functional hotel Internet access.  I kept up with things on my Blackjack, but it's not a substitute for laptop access.  I hate falling behind on work, and there are some things you need your own laptop to do (writing and editing documents, etc.).  If someone sends you a long document that you need to read and edit, there is no substitute to having your own laptop on the plane to get it done. 

There are several online solutions that should let you use any computer to get access to documents that sit in the cloud.  Those services are great, but the world doesn't use them broadly yet.  If I knew in advance that I was going to have such problems, I may have been able to prepare something to make my online life this week easier.  But, going warm turkey (I did have some intermittent access, so it wasn't cold turkey), has shown me how hooked to being online I am.

Email, news, RSS feeds, podcasts, access to a Slingbox to watch the Yankees on my home TV (although that hasn't been worth doing this week!).  Even having a reliable PC to watch DVDs on a long plane ride is something I take for granted.  Without all this, I have, caught up on some reading.  But, I've also wasted a lot of time trying to troubleshoot things and limp along.

Ordered a new laptop, which should come in soon.  In the meantime, don't be concerned if I don't get back to you as fast as usual.

Posted by Mike Feinstein at 02:50 PM | Permalink | Comments (0) | TrackBacks (0)

Everyone talks about how start-ups have to move quickly.  And, if you have worked at a start-up company, you know that things move at a frenetic pace.  One of the strongest assets that a start-up has is a singularity of purpose.  Everyone knows (or should know) what the goal is.  There aren't competing objectives and hopefully no individual political agendas.  This helps the company operate at high speeds.

But, what happens when a more mature company has to make changes?  Both big and small companies can hit dead ends or come to the end of one growth path.  Changing direction, refocusing, or restarting can be difficult times at a company.  But this is the time when actions have to be the swiftest.

During the decision-making process when the Board and management are deciding what to do, it is natural for the rank-and-file employees to lose productivity as they engage in their own discussions and debates on direction.  Or, they wonder if the hard work they are putting in will see the light of day.  If the project looks doomed, why put in another long day of work on it?  This kind of attitude can quickly permeate an organization.  While I think it is best for management to be open with employees about the existence of a process to re-evaluate strategy, a message must also be delivered about the importance of carrying on with day-to-day work until a new decision is made.  Hiding the strategy evaluation from employees will lead to speculation that something far worse may be up.  The best way to keep productivity up is to squash rumors before they start.

But, there will inevitably be discomfort and uncertainty during this process.  So, make sure that it happens swiftly.  Set deadlines for gathering data and making decisions.  Then, stick to them.  The price of inaction is usually much higher than the price of a sub-optimal decision.

Once a new direction is set, take action switfly.  If the company is going to focus on a new direction, find a way to quickly get rid of products and projects that don't fit the direction.  Maybe they can be sold off or spun out.  Investigate this on a tight time frame.  If not, they have to be cut.  Make sure to deal with any people affected fairly.  No one likes participating in either side of a layoff.  But, if decisions are made in the context of the best long-term health of the company, resentment is usually kept to a minimum.  However, the way you treat employees on their way out will also set a tone for those who stay.  I've been involved with layoffs that, after a few days, reinvigorated a company with an exciting new focus.  And, I've been involved with layoffs that felt like one more step on a downward spiral to failure.  You need to reinvigorate a company if you want to retain the key talent.

Of course, slow decision-making is also a drain on the company's finances.  Projects that drag on for too long waste hard dollars.  But, they also waste the soft dollars of management attention.  Distractions probably exact a 25-50% penalty on the hard time they take up.  It takes mental and physical effort to shift gears, to stay abreast of unimportant projects, and to continue to evaluate options that should have been long since decided.

One trap is that entrepreneurial management and visionary board members may not be the best people to make decisions around a restart.  Entrepreneurs and early-stage VCs tend to be optimists.  But, cutting back on a company or making a radical direction shift requires some pessimism.  When faced with these situations, I have often felt that I should have cut a bit deeper and made decisions a bit faster.  Don't be afraid to bring in some outside help to objectively analyze the situation.

When making the hard decisions on a layoff, I would advocate cutting a bit deeper than you think you might have to.  Make sure you cut back on the workload to accomodate this, too.  But, it's good if the remaining people feel very busy.  And, if things start off OK, it's not a bad idea to hire a couple of new people a month or two after a layoff.  Chances are, when pursuing a new direction, you need some different talent than you had previously anyway.  Bringing in some new blood can reinforce the message that the company is reinvigorated and pursuing something exciting.

Overall, you have to measure twice before you make a cut or a change of direction.  Just make sure you measure quickly and move decisively.

Posted by Mike Feinstein at 07:35 AM | Permalink | Comments (0) | TrackBacks (0)

Wow, I can't believe another week has gone by.  I have always prided myself on time management.  I consider myself responsive and efficient.  I don't think I've lost that, but the number of things to get done has exploded.  One thing that has suffered has been my regular blogging.  I need to refocus on it as I am not yet ready to give it up.

This is the fun of being an entrepreneur.  You are never done.  When I come home late from work, my kids ask "Why are you home late?  Why couldn't you get your work done on time?"  My kids think that work is like school -- you have some tasks to do and, if you are focused and fairly smart, you can get your tasks done in the allotted time.  Although I don't have a boss these days, my kids assume that someone, or something, is assigning me some amount of work.  And, if i am home late, it must be because they gave me too much work or, perhaps, it took me too long to get it done.

I love the fact that being an entrepreneur means that you are never done.  You are always short on staff and long on work.  Your 'top priorities' still can't get done in a normal day.  Every day is triage, with vicious prioritization required to figure out what to do each day.  It's ever changing and exciting.

Couple that with sales dynamics.  Always prospecting, pitching, following-up, overcoming objections, and closing.  You go where you have to when you have to in order to get the deal done.  When you are making good progress, it's very satisfying.

It's been great starting up a new investment firm.  It couples the investing I love with the entrepreneurship I have missed.  I thought that being a VC would keep me in touch with entrepreneurship, but I think that there is no substitute for being on the firing line yourself.

Posted by Mike Feinstein at 03:38 PM | Permalink | Comments (0) | TrackBacks (0)

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. 

Posted by Mike Feinstein at 11:52 AM | Permalink | Comments (0) | TrackBacks (0)

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!

Posted by Mike Feinstein at 10:30 AM | Permalink | Comments (0) | TrackBacks (0)

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!

Posted by Mike Feinstein at 09:19 PM | Permalink | Comments (0) | TrackBacks (0)

I really enjoyed Jeff Bussgang's post about American Idol in the Boardroom.  I think that he cleverly captured the personality types you need on a Board -- domain expert, cheerleader, and truth teller.  The truth teller is usually the person who the entrepreneur gets mad at the most.  But, they are the most valuable -- you need people on your Board who will bring objective input to the company from the outside and who will challenge assumptions.  You have to remember that investors and Board members are not your friends.  You want to have a good, open relationship with them, but you don't want them pulling any punches or worrying about your feelings.

I've often thought that investors tend to bring three types of skills to a company, each person with their own combination.  Note that this is different than the personality types that Jeff described.  In general, when you finalize outside investment and put your Board together, you want to get representation from all three personality types and all three types of skills below.

Skills from VCs:

1. Raw intellectual horsepower.  There are many VCs who are just super smart.  They can connect the dots faster than anyone else and think through the outcomes of various courses of action.  They often may be linked to the truth teller as you want the smartest person to not pull any punches.
2. Deep contact network.  Most VCs have deep rolodexes and close contacts with people in the industry -- potential partners, acquirers, other entrepreneurs, other investors, etc.  You should certanily expect to leverage these networks from your VC.  Make sure that the individual you bring on the Board has these connections directly, rather than representing connections that their firm has.  Most entrepreneurs will tell you that VCs are generally poor at leveraging relationships that their partners have.
3. Attention to detail.  You want to have an investor or Board member who will read everything and try to understand everything.  A lot of VCs are so busy that they don't have time for the details.  But, the management team needs to focus on the details, and, hopefully, one investor or Board member will be digging into these details to make sure that management stays on track.

As you put your Board together, make sure you have a good mixture of these skills and the personalities that Jeff Bussgang described.  Think about each prospective Board member along these dimensions and make sure you know how you score them on these scales.

These days, many entrepreneurs are raising angel money rather than VC money.  That's a good thing, but it doesn't mean you shouldn't think about your Board.  You can still put a Board together with some angel investors or industry people to give you an independent, outside perspective.  Too many times I see very early stage companies that don't put a real Board together.  These companies tend to 'breathe their own exhaust' for too long and lose site of where the real market opportunity really is.

Are there other styles or skills that you would like to see from Board members and VCs?

Posted by Mike Feinstein at 09:20 AM | Permalink | Comments (0) | TrackBacks (0)

Don't get upset.  I'm not advocating some level of undress for business meetings.  Instead, I'm glad to see that some businesses are declaring that meetings should be free of laptops (or 'top'-less), PDAs, etc.  This was written up in today's Boston Globe.

Now, sometimes a laptop is necessary in a meeting.  That's the case where the presenter or meeting leader needs the laptop to display a presentation or as a focus point of collaboration.  I could imagine some types of meetings where you are brainstorming and want people to be able to do their own searches while you come up with ideas.  All very good.

But, the cases where people bring their laptops and PDAs in order to sneak a peek at their email or otherwise be distracted are very damaging.  If some people aren't paying attention, then others won't either.  This makes the meeting even more of a waste of time.

I don't like meetings.  I think that they can be very inefficient.  I remember having a meeting-hating boss who used to count up the annual salaries of all the people involved in a meeting and announcing every once in a while how much money the meeting had cost.  In a big company where everyone feels that they have to be part of every meeting, the cost skyrockets.

Meetings work when there is a clear leader, a defined agenda, crisp discussion and decision making, and well documented action items.  A well run meeting can take less than half the time of a poorly run one.  And, it can get better results.

If people aren't paying attention, it sends a message that the meeting isn't important and that one person's time is more valuable than the rest.  This is very divisive.  I'd rather make sure that the meeting is run efficiently, and then let people get back to their office, and the laptops, in order to plug back in to their email, IM, and social networks.  You could argue that for some jobs these activities don't add value anyway.  So, why would you let people do them in a group setting, dragging down everyone else's productivity?

Posted by Mike Feinstein at 07:19 AM | Permalink | Comments (0) | TrackBacks (0)

Today's Wall Street Journal had an article about how businesses can weather and even succeed during a downturn.  If you are blocked from reading the article due to the lack of a subscription, here are the highlights:

First, don't panic.  You can't predict how long or deep a downturn will be.  So, plan for the long term.  Hopefully, your business is not so highly leveraged that you have some economic cushion.  Debt-ridden companies or those that are thinly capitalized are a the most risk.

Seize opportunities while you can.  JP Morgan's purchase of Bear Stearns is a great example.  It looks today that they will have to pay more than they first thought in order to satisfy existing shareholders, but the price will still be pretty cheap.  JP Morgan moved fast to take advantage of a very unique situation.

Look overseas for growth.  If you export, then your US-dollar denominated products should look cheap these days.  And, many international markets will continue to grow even if the US is slow.  Lastly, there are different technology requirements in different markets.  Your product may very well be a better fit in some international markets than it is in the US today.

Keep debt low.  I have always been a believer in this.  I think that businesses that keep their debt level low and manageable have the most flexibility.  Similarly, they will have the cash around to take advantage situations which arise from weaker companies in distress (see Bear Stearns).  These cash-strong businesses can also invest more in new product areas while their weaker competitors can not.

Get your resume on the street.  If you haven't been an active networker, now is the time.  I have met many 40+ and 50+ executives lately who have been in one job for a while and are now looking for their next opportunity.  In some cases, they haven't been actively networking and have to establish relationships from scratch.  That's tough to do, particularly if you want to break into a new market sector, like clean energy.  I always advise people to devote some of their time to networking events in whatever sectors interest them.  You have to make a conscious commitment to this, perhaps attending at least 2-3 events per month.  Find the groups you like that have the most dynamic membership.  Don't fall into the trap of just sitting down for coffee with the same group of 10 or so people every time.  Although that might be enjoyable, if you aren't meeting new people through this effort, it's friendship and not networking. 

I use Outlook to capture my contacts.  Every once in a while, I go through and look at how many new contacts I have added each month.  If I see that the numbers are down, I know that it is time to push myself out into some new networking events.  No one knows everyone!

Posted by Mike Feinstein at 09:09 AM | Permalink | Comments (0) | TrackBacks (0)

There are a few times when my love of entrepreneurship overlaps with my love of sports.  Here are a couple of those stories.

I first met the founder of Dugout Central when it was called BaseLine Report.  The idea was to creat a baseball-specific community oriented around highly detailed content that would appeal to the rapid, stats-oriented fan.  The founder was working with former Yankee Mike Pagliarulo.  As a Yankee fan, I was intrigued.  However, I had big concerns about how big you could build such a specialized community.  And, it wasn't clear how you could make money from such a community.  i suggested to the founder that he try to bootstrap the company before he raised VC funding.  They had some deals to syndicate some of the scouting content that Pags was generating.  I thought they could use this revenue to get the site started.

Although the founder didn't really want to hear this, that's what they ended up doing.  In fact, by coincidence, they hired another friend of mine to design their site in exchange for equity.  Luckily, my friend had outside consulting income which gave him the flexibility to design the Dugout Central site in his spare time.  And, as a baseball nut, he was motivated to work on this.

Now, they seem to be building some traffic, have an interesting site, and are in business.  I am still not sure of the revenue model, but, like many web sites, starting off on a shoe string is the way to go.

Although I don't have the same type of connection to this one, I've also met the founders of Fancaster.  This is an interesting marriage of YouTube and play-by-play.  Users generate live play-by-play accounts of games that they are watching.  Other people can listen in while they watch the same game.  I think that there are some potential legal issues here, but I also see the potential for some budding broadcasters to make a name for themselves.  I wish them well.

As baseball season is about to begin, hope springs eternal.  My Yankees have made some moves to get younger, but probably not enough for my taste.  I don't expect them to win this year, but I hope they are building a good young foundation for the future.

Posted by Mike Feinstein at 04:15 PM | Permalink | Comments (0) | TrackBacks (0)

Congratulations to my friends at the former IDG Ventures, now called Flybridge Capital Partners.  In reading about how they picked their name, it was reminiscent of how we picked the name for Sempre Management:

• Easy to say; easy to spell
• The name has some meaning that you can tie to the business and positioning
• The trademark is available in your target market -- the more creative you get, the more likely this will be the case.
• The domain name is available in a basic format (avoid hyphens, abbreviations, acronyms, etc. in the URL as no one will remember them).  Ideally, buy a bunch of domain names that are similar to your main one so people who guess wrong will still find your site (and your email).
• I like the name Flybridge in that it does tie into their business (once you learn the meaning of the boating term).  And, the short form (flybridge.com) was available as a domain name.  Although people may not know what it means, it is easy to say and spell.

We like Sempre for similar reasons -- a musical term meaning "to perform in the same manner throughout".  Hopefully, it will be music to an investor's ears!  People confuse it with Semper, the Latin word from the same root.  Hopefully, this won't cause us spelling problems in the future...Also, they think we must be ex-Marines -- Semper Fi!

The Wall Street Journal had an article today about naming a small company.  They point out that most people don't put the time into picking the right name and regret it later.  Like most things, it pays to get it right the first time.

If you can't read the Journal article because it is behind their subscription firewall, here are some tidbits (the web site says that the article is on page R7 of the March 17, 2008 Journal if you look in the hard copy):

But many small companies don't understand the basics of choosing a good name. They put little thought into the process, says Peter Montoya, president of a financial-services marketing firm in Tustin, Calif., and end up settling on names that are meaningful to them but not clients.

Find the Unique

But, Don't Be Obscure

Avoid The Mundane

Get Reactions -- Ask Friends and Clients before you finalize a choice

One other thing I have learned over the years in naming companies and products -- you may not like it the first time you hear it.  Let it sink in for a while before you make a final choice.  That's where reactions from others, over time, can be very important.  Don't rush the decision process -- you'll be living with the results for years.

Posted by Mike Feinstein at 08:18 AM | Permalink | Comments (0) | TrackBacks (0)

Jeff Bussgang from IDG Ventures wrote recently about a breakfast sponsored by AlwaysOn to promote their upcoming AlwaysOn - East conference.  Jeff points out that many entrepreneurs play 'Blame the VC' when their business plans don't get funded.  It's true that some entrepreneurs are so enamored with their business plans that they feel that the VC who passes on the deal must be stupid.  And, if 50 VCs pass on the deal, they all must be stupid.  But, I haven't found this view to be very prevalent in the entrepreneur community.

I was at that breakfast, too (and had the pleasure of sitting next to Jeff).  My view of the entrepreneurs' tone was slightly different.  There were quite a few entrepreneurs who spoke up about the fact that their business plan had been funded, but not by Boston VCs.  Perhaps their plan was funded by angel investors, corporate investors, or the ever looming West Coast VCs.  I have some expereince helping out entrepreneurs whose plans I think deserve to be funded by VCs. Some of them have a lot of commercial traction.  Despite some introductions, Boston area VCs haven't moved ahead and funded these entrepreneurs.

But, these entrepreneurs aren't deterred.  They have raised money from angel groups and individual investors.  They are courting VCs that are out of town.  And, they have modified their plans to take less initial capital in order for them to prove some commercial viability before they go try to raise more money.

If these entrepreneurs succeed, it doesn't mean that Boston area VCs are dumb.  Maybe they are too conservative.  Maybe they don't understand the market segments that these entrepreneurs represent.  Maybe they are unwilling to back first time CEOs or willing to build out a team after they fund the company.  Maybe they can't justify a small initial investment.  The best entrepreneurs won't let this stop them.

Instead, these top entrepreneurs with their strong plans will let the marketplace show who is right.  There is a lot of capital out there from many sources.  A great entrepreneur has to be a great sales person.  If you can't sell your plan to anyone, then either you aren't good at sales or the plan really is flawed.  The whole world can't be dumb, can it?

Since we are raising money now for our new investment fund, I have a front row seat for these types of meetings.  Some of our target investors have strategies that don't line up with ours.  Others only look for funds with a certain profile that perhaps we don't meet.  It's our job to find investors who are the right match for our fund.  There seem to be more than enough out there of this type that we can get our fund off the ground.  We're very encouraged by the response and optimistic about our success.

But, if we aren't successful, it will be because of a shortcoming of our team or strategy, not the fault of our target investors.

Posted by Mike Feinstein at 07:37 AM | Permalink | Comments (0) | TrackBacks (1)

My good friend, Stacy Swider, has started another company, Talkphoria.  Stacy is co-founder of GateRocket, a company I have been advising since its inception.

Talkphoria is starting out in the best way a company can.  Stacy saw a market opportunity from her own life.  She's an avid reader and a member of a book group, along with a bunch of other suburban moms.  But, moms are busy these days and have varying interests.  It's hard sometimes to get everyone together in person and to agree on what books to read.  So, Stacy had the idea of hosting virtual bookgroups at Talkphoria.  Hosts post the books they are reading and set times for conference calls.  The conference calls are hosted by a third party provider at a very low cost (each caller pays).  Visitors to the site browse for books they are interested in discussion and join the calls they are interested in.

Like all new consumer-oriented start-ups, you have to work hard to get the word out.  Stacy is exploring many types of partnerships to get some exposure.  Who knows how big this can be?  But, I love the entrepreneurial spirit that sees an opportunity and is willing to pull this together on her own time and money (not a lot of money so far). 

You can follow Stacy's progress on her blog.  As Stacy is juggling multiple jobs (mother, wife, entrepreneur), you get a flavor of all of this on her blog.

Posted by Mike Feinstein at 11:40 AM | Permalink | Comments (0) | TrackBacks (0)

For a variety of personal reasons, I was feeling blue today.  Just one of those days.

But, while sitting in my office in the Foley Hoag Emerging Enterprise Center, an entrepreneur I know happened to walk in.  He and one other business partner are considering starting up a new business.  Foley Hoag is hosting them while they do their initial diligence on the idea.  Although not something that Sempre would invest in (we are focused on later stage opportunities), it was great to discuss the market opportunity with him.  His enthusiasm was infectious.  There is nothing like the motivation of a great entrepreneur.

And, it snapped me out of my glum mood!

Posted by Mike Feinstein at 01:02 PM | Permalink | Comments (0) | TrackBacks (0)

I wrote recently about how the money will keep flowing into venture capital, perhaps diluting good returns before they happen.  If you are an entrepreneur, what should you do in this environment, particularly if you believe that an economic slowdown is coming, too?

First, resist the temptation to 'lower the bar' and pursue a sub-par opportunity because capital is available.  Although it is always nice to draw a salary, most entrepreneurs really want to make a difference and start something that has the chance to be big.  A 'me-too' opportunity has less of a chance of that.  So, be honest with yourself during your own diligence on a new opportunity.  Of course, as the entrepreneur, you have to love your new idea.  But, is it defensible against inevitable competition?  Can you be capital efficient?  Can revenues grow faster than expenses?  Does the business model fit well into the market environment?

Second, if the projected glut of capital occurs, raise money even if you don't need it.  It is a very rare CEO who says after a successful exit, "I should have raised less money."  Having financial reserves before a downturn is a fantastic advantage.

Third, don't mix-up raising money with spending money.  If you can convince your investors to invest money without you having to spend it too quickly, you are in good shape.  I think that being tight with spending gets embedded in a company's make-up.  If you start off being cheap, it will be easier to stay that way.  Of course, as a company gets big and profitable, it can and should spend more money.  But, efficiency should always be the watchword.  There is never a company size that makes it OK to waste capital.

Fourth, keep your workforce as variable as possible.  These days you can buy so much as a service.  Only hire the core people you need.  What would your company look like if you had to cut expenses?  Try not to commit to more than that as permanent staff.  Beyond that, you can hire outside services, contractors, etc.  If you have to cut these back in the wake of a downturn, it won't feel anywhere near as bad as a layoff does.  This is a fine line to walk, but worth doing.

Fifth, if things get bad, there will be competitors and complementary companies that will fold.  See if you can use your common stock to pick up some technologies and people that add on to your company.  Although this is a bit dilutive for you and your investors, if you can pick up something valuable at a fraction of what it would cost you to develop it yourself, then you are investing your equity wisely.  Most of the technology from companies that wind down ends up rotting on a shelf somewhere, so use your strong negotiating skills to avoid overpaying.

I'd be interested in other ideas that people have on this.  Please post some comments with additional thoughts.

Posted by Mike Feinstein at 08:25 AM | Permalink | Comments (0) | TrackBacks (0)

Alot of people are talking about whether the potential acquisition of Yahoo! by Microsoft will be good for the start-up world or not.  Some say it's bad.  Others say it's good.

I'm in the latter camp.  I think that these types of big combinations are much more likely to produce opportunity than to shrink the number of buyers that start-ups can sell to.

In fact, I think that this will increase the number of buyers for start-ups in the online space.  Google is already a big media company.  So is Yahoo.  Microsoft wiould become an even bigger media company if it is able to buy Yahoo.  But, there are plenty of other media companies that are smaller players or almost non-existent players in the online world that we think of as Google and Yahoo -- IAC, News Corp., Disney, NBC-Universal, Viacom. 

I think that all these media types will continue to converge, meaning that these big media companies need to bulk up their online offerings.  So, there will be at least as many acquirers out there, if not more, as there are today.

Second, a big merger like Microsoft/Yahoo will take a long time to complete and optimize.  Development will slow down in these two big companies as everyone worries more about their job than their product or service.  After the dust settles, there will be gaps in their offering that will have to be filled in order to catch back up.  Again, start-ups are likely to fulfill these needs.

Last, the convergence of all this media is bound to create more new opportunities.  Start-ups are more likely to identify these and capitalize on them quickly than big companies.

If Microsoft/Yahoo created a real monopoly, that would be bad for start-ups.  But, then again, everyone thought search was 'over' when Google started.  In technology, things are never done, you just have to look a bit further ahead.

Posted by Mike Feinstein at 11:01 AM | Permalink | Comments (0) | TrackBacks (0)

I watch a lot of the TED video podcasts.  On this one from Jaime Lerner about urban design, there was a great quote:

Creativity starts when you drop a zero from your budget.  It's even better when you drop two zeroes.

That's part of the beauty of start-ups.  If you are forced to live with tight constraints, you have to come up with creative solutions.

Posted by Mike Feinstein at 08:51 PM | Permalink | Comments (0) | TrackBacks (0)

As I mentioned a few days ago, good2gether presented at DEMO today.  Greg did a nice job with the demo.  You can't ignore a company that has the traction they have with media partners, consumer brands, and non-profits.

Posted by Mike Feinstein at 07:51 PM | Permalink | Comments (0) | TrackBacks (0)

I've written about Good2gether a few times before.  Tomorrow is their offical launch at DEMO.  If you check out their web site, you can see all the official positioning.  I really like what Greg is doing.  He developed the concept by talking to all of his potential partners, then partnered with a great development team to get the initial implementation done.  He's raised enough money to get the company launched, but he's been frugal about spending it.  He's done everything right.  And, he's a tireless traveler, building partnerships across the country.

It's great to see all the traction he has with large media properties and non-profits.  I think that good2gether will really change how non-profits communicate with their constituents, and will also provide another significant source of revenue to the large local web sites.

Greg spent a long time developing his business model so that everyone wins.  The non-profits get exposure on large local web sites which have reach that the non-profits couldn't get on their own.  And, at no cost.  The media properties get unique local content that will engage users and get sponsorship revenue from large consumer brands who want to be associated with Doing Good.  And, these brands get the halo effect from associating with good causes, but also get a way to connect with consumers and tie their brand and promotion to the users interests and activities.  There is no direct competition today, and no one 'loses' if good2gether succeeds.

There's a lot of execution ahead for good2gether.  But, this is an exciting start.

Posted by Mike Feinstein at 07:41 PM | Permalink | Comments (0) | TrackBacks (0)

After reading this post from GigaOm on collaboration tools, I thought it would be worth sharing some of what our new firm, Sempre Management, has done to get our own IT infrastructure off the ground.

We have four people working in our firm, with a shared office that we use part of the time.  We also all currently work part time from home or elsewhere.  We are still funding this out of our own pockets, so we are sensitive to fixed expenses.  Of the four of us, I have taken on the role of interim IT Manager.

In our little group of four, we have 2 PC guys, one Mac guy, and one guy who has both.  We also have a mixture of Blackberry and Windows Mobile PDAs that need to get their Sempre email and their personal email.  All of us also have personal email addresses where we get the bulk of our email as the sempremanagement.com email is new.  We also all have some existing email, calendar, and contact data that needs to get integrated into whatever new system we pick.  Lastly, we wanted to pick something that would be easy to migrate away from if we ended up going in a different direction later.

We decided to go with a hosted Microsoft Exchange service.  I checked out a few providers, but decided to buy the service from SherWeb.  After using this type of service for a while now, I can't imagine why any small company would buy and host their own Exchange server for email.  SherWeb has lots of features and is very flexible:

• Only $8.95 per month per user, with a month to month contract.  No minimum commitment, other than they will want to make the first charge to your credit card $50.
• 3 GB of Exchange 2007 storage per user
• Free Windows Moble synchronization, free anti-virus and anti-spam, free public folders, free SharePoint, free Outlook Web Access, and one free copy of Outlook 2007 or Entourage for each user.
• Optional Blackberry synchronization for an extra $9.99 per user per month (expensive compared to the rest of this service)
• No initial set-up fee.
• Very detailed FAQs on how to get everything set up.
• Support so far has been good, by both email and phone (rarely).

After we bought our domain, we redirected the mail to SherWeb (as they described) and got everything setup.  The SherWeb admin web application is pretty basic, but covers everything you need.  I would definitely recommend this hosted service.

In addition to giving each other access to each of our Outlook Calendar and Contacts, we set up some common Exchange public folders for some shared contacts and a shared calendar.  I also set up SharePoint as a way to organize and manage shared documents.  I had never used SharePoint before, but it is pretty full featured as a collaboration tool -- shared documents, discussion groups, shared calendar, task assignment and tracking, synchronization with Outlook, etc.  We don't use much of this yet.

It took some tweaking to get everyone's data from their stand-alone setups to the Exchange server.  We had several bouts of data duplication when we made mistakes, but there are some nice free tools to fix this.

Overall, it feels like we have an enterprise-class Exchange infrastructure, with minimal management and a low, variable cost.  One more reason why start-ups today need less money to get going without having to sacrifice functionality.

Posted by Mike Feinstein at 03:28 PM | Permalink | Comments (0) | TrackBacks (0)

Today I updated my bio to include our new investment firm, Sempre Management.  Although we are still somewhat stealthy, we are starting the formal process of raising money.  No web site yet.

My partners and I are not going to be doing typical venture capital investing, but we intend to create value as VCs do, through direct action.  We'll do this in investment segments that are much less served than venture capital, and in a market segment that is inefficient -- prices don't always match inherent value.  More details to follow.

Why Sempre?  Here's our definition:

Sempre  (sĕm'prā) adv. Music.    Always. Without varying. In the same manner throughout. To perform in a consistent manner.

We like Sempre because it connotes steadiness and consistency, performance we strive for.

As our strategy becomes more widely known, I'll steer the investment focus of this blog to line up with Sempre's focus.  But, I continue to be interested in entrepreneurship and will still comment on the VC and entrepreneurship space, particularly in the Boston area.

Posted by Mike Feinstein at 05:40 PM | Permalink | Comments (1) | TrackBacks (0)

Last night I was on the panel at the MIT Enterprise Forum Start-Up Clinic.  One of the companies I advise, Zync, was presenting as well.

I came away feeling very good about the spirit of enterpreneurship in the Boston area.  Despite all the concerns about the market being overfunded and not having strong anchor companies in the technology sector, there is no question that entrepreneurs remain optimistic and are continuing to try new ideas and get new companies off the ground.

It is great that it takes relatively little capital to get a new company going.  Both companies last night had developed their initial technology with less than $500K each.  That gives them a shot to find out of their ideas will click with some market segment and become worthy of more significant capital for scaling.

Despite the forecasters predicting an economic downturn, I think that the technology sector will remain solid, particularly for smaller companies that are more nimble and able to attack emerging niches.  Informal indicators like traffic on Route 128 and how full parking lots are in start-up haven office parks still seem robust.

Like the New Hampshire primary, I expect the 'experts' to be wrong.

Posted by Mike Feinstein at 09:49 AM | Permalink | Comments (0) | TrackBacks (0)

Bijan Sabet responded to my recent post about non-competes with his thoughts on unilateral disarmament -- companies no longer requiring their employees to sign non-competes and using that as a competitive hiring advantage.

I think that philosophically the environment will be better when non-competes are gone and companies can take advantage of the freer movement of employees.  However, until then, investors still have to take advantage of local laws to protect their investments.  I think that a narrowly crafted non-compete should be something you can sell to a prospective employee.  Until that becomes impractical in the marketplace, I would stick to that to protect my investment.  If Bijan and Nabeel are at the forefront of a wave of the lowering of the non-compete bar, things may change quickly.

Posted by Mike Feinstein at 08:30 AM |