Will Be Interesting To See What Happens In Angel And Venture Investments In RSS Space

Interesting developments in the Really Simple Syndication (RSS) space. Interesting to think about how entrepreneurs, angels, and VC may proceed given the interest in RSS ads. For example:

  • Via Randy Charles Morin, Google has filed for a pretty broad patent covering syndication of ads (and thus, RSS ads)
  • Venture capital and investment activity (or buzz) has increased around RSS (e.g., here)
  • While people may have their own perspectives on patents, whether the claims in the Google patent will be enforceable, and whether research-to-date indicates that non-core science, etc. patents demonstrate any signifcant appropriability of returns for the patent holder, angel and VC investors commonly ask entrepreneurs about intellectual property protection as part of due diligence – patents being one of the strongest forms of legal protection.

BTW – there’s no ads when you subscribe to my blog via my current Feedburner feed. 🙂

Tribute To Torsten Jacobi

I thought that my Friday post should be dedicated to Torsten Jacobi, CEO of Creative Weblogging. Torsten helped to spawn blogger 2.0 in me as a blogger at The CIO Weblog, and Torsten also introduced me to Stefan Wiskemann who eventually approached me to join 21Publish (a hosted, group blogging service) as COO. In essence, I crossed the line to the "dark side" as a compensated blogger because of Torsten. I am also becoming more German every day because of these new relationships …

Torsten has some personal stuff going on this week (congrats BTW), so he’s unlikely paying attention to what I’m writing. That said, pay attention to what Torsten is writing. As starters, I think Torsten has two interesting and very personalized posts on entrepreneurship that are worth reflecting on (here and here).

#4 is classic Torsten as I know him … "Be realistic about revenues – even if you write bullish business plans."

Thanks, Torsten!

Thoughts On Comparing Venture Capital In Different Geographies

In a prior comment, Kisalaya asked if I would share some thoughts about US venture capital in a way that might provide some insights as to where one might look for macroeconomic levers in how venture funded companies develop within other geographies (e.g., in India).

Let me preface this by saying that I am not a venture capitalist, although I tend to be about small businesses, privately-held companies, venture capital- and angel-financed businesses as a matter of appetite.

From my experience at business school at the University of Chicago as related to the distribution of venture capital and entrepreneurial activities, the first thing that jumps out at me in the United States is that Silicon Valley and Route 128 (Boston) have the highest concentrations of venture capital and venture financed businesses. Areas like my former hometown of Chicago and current hometown in Dallas have sometimes been referred to as the desert wasteland of venture capital. Fewer early-stage venture firms, more mezzanine firms, etc. … this tends to be the makeup in the Midwest.

Yet focusing a little deeper on one phenomena may be instructive, and it has been researched a bit in universities at a more rigorous and statistical level (I cannot find the studies offhand, so this is off the top of my head – if anyone can confirm, great). The phenomena is this: Silicon Valley tends to swamp Route 128 in terms of the amount of capital and venture financed businesses. 

On the surface, this is perplexing as to why this is so. Both of the areas have large talent pools. They also both have good universities (e.g., Harvard, MIT, Stanford, Berkeley) very proximate to the center of activity. Both areas also have partnerships between industry and academia. Both also have capital investment infrastructure.

The way this discrepancy has been explained to me is that the employee-friendly laws of California over Boston have some of the biggest effects on the difference (in addition to the more litigious stances in Massachusetts). Non-competition clauses as part of employment agreements are much, much harder to enforce in California. As net result of legal differences, the network effects of a much more mobile workforce creates an environment that may be much more "entrepreneurial-friendly" in a sense.

Anecdotally from my own experiences with start-ups, when considering legal infrastructure documents (e.g., stock option plans) for areas like California, Illinois, and Germany, the California forms of agreements seem to be much more employee-friendly as a general rule too. Things like employee-friendly stock repurchase agreement and accelerated vesting clauses come to mind as being things that have become norms in California, but not necessarily in other parts of the country and perhaps not other areas of the world. While stock options did lose a lot of weight in the bubble, and thus leveling the playing field from a stock option differential perspective, things will start to open up again as the IPO and capital markets open up.

California is a very employee-friendly place (perhaps aside from housing costs …) from my perspective. Although this may be shooting a little low, if the unemployment security filing regulations for employers is any example, I’ve found the filings for CA employees to be the most burdensome of any of the states I’ve filed for. That type of structure protects the employee as well at the cost of higher administration for the employers.

Stepping back a bit, I suppose other things to look at that could influence venture capital activity:

  • how do the venture capitalists get liquid (what are the mechanics of getting to the public markets)
  • industry variations due to local geography (e.g., Chicago does not have as much high-tech)
  • talent pool for management (aside from just line workers)
  • proximity of capital to ventures (VC have historically invested closer to where they are located than farther away [because of deal management and deal sourcing concerns])
  • exchange rates (can the VCs both make enough money and invest enough money relative to the pre-money valuations of the companies and size of fund they are working)

Other than the fourth bullet point above, I’ve not seen any academic research on the topics. Not to say it isn’t there or that it couldn’t be researched more rigorously, I just haven’t seen it.

Internationally, other areas to study that come to mind may be Japan and some of its protectionist policies in the past surrounding electronics. China, in terms of of the recent transfer of wealth to entrepreneurs by the giving away of state property, is also noteworthy.

Other areas to look at may be New York and Colorado in terms of venture capital (especially since Fred Wilson and Brad Feld are prominent VC bloggers in those respective geographies). I’m less familiar with those areas of the US, but what comes to my mind readily is that Colorado made some good telecom modernization investments in the mid- to late-90s. New York is the home of a lot of publishers, advertising, etc. firms. New York City doesn’t have much in the way of financial markets though, right?

Update (Sept. 2005): Venture capitalist Fred Wilson focuses in on a special area of this post.

Thoughts On Leadership From A Person With A Right-Hand Man MO

Based on a request from a reader, I posted on the topic of leadership over at my 21Publish blog. I guess I would add that while leadership may stem from having vision, finding a person’s personal style of leadership may not stem from vision. It’s not like making red wine where one may set out from the get go to develop such and such spicy-type of red Zinfandel or a Syrah/Cabernet blend. To develop my style of leadership, I found that I needed to first become aware of my underlying style. It then became a lifelong craft to hone that style.

But in another sense, leadership may be like wine making. One can’t just set out to make "wine". Similarly, you can’t just say that I want to make a "leader". If you are going to try to make a leader, at some point you need to have a more refined model of what you want to make.

Update (7/28/05): Andy adds on to this thread and refers to some prior posts he’s done on leadership that are also good.

Couldn’t Save This For Friday

Perhaps I’m a little out of touch with the world these days.

Jenny Jet is a new action adventure for your cell phone. People can blog about, hmmm … well SMS Media Group is launching it, and they say it best in a media alert forwarded to me (as connected to The CIO Weblog?):

Launching this fall on cell phones, television, and the Internet is a new character and series called Jenny Jet. Featuring Alien Greys, Reptoids, the Feds, and a 17 year-old girl named Jenny Jet whose parents were abducted by aliens!

Produced by SMS Media Group Inc., Jenny Jet is an interactive sci-fi adventure that uses text message alerts to get the story out, and then subscribers are able to blog and interact with others on the web. People can post their UFO sightings, share ideas, and any information they might have about the alien/government conspiracy.

I suppose if one doesn’t know what to do with his/her time and if one’s SMS bills aren’t high enough, then the value prop is just right. As for CIO and corporations paying for corporate cell bills, if similar services to Jenny Jet start cropping up, there may be more challenges ahead monitoring telcom service usage these days beyond the day-to-day craziness.

Continue reading “Couldn’t Save This For Friday”

Making The Client Cry

This is a bit of a tough post for me to write as it can easily be misinterpreted. There’s probably a slew of management consulting jokes surrounding this one too. Nevertheless, I’ll press on.

In management consulting, I’ve referred to a number of change management techniques, some of the most prevalent being the use of either a stick and driving people to change or a carrot and leading people to change.

I suppose the next technique is an offshoot of the stick variety, and the method can be intense to the point that it makes the client "cry" (not out of happiness).

It involves cornering down line workers and line management and forcing them to work with the consultant until microtasks in an important project are completed. In some client situations, one may find that workers are used to coasting along when change is needed. Attitudes of "coasting along" can come in various forms – they manifest themselves via the worker or manager "creating excuses" or "raising objections" to a course of action without providing or suggesting feasible alternatives. A "coasting along" attitude may manifest itself as a person that has a "Levi’s 501 attitude" … at 5:00pm they are lined up … by 5:01pm they have left the office (be careful not to misinterpret someone who has legitimate time schedule considerations versus someone who is not mentally committed to excellence).

A key to making sure that workers get transitional project things done may involve sitting alongside them and doing the (painful) task with them, whether that task be creating a formal product specification document where none existed before, specifying a new managerial report that they should prepare on a regular basis, completing a portion of a competitive analysis and business plan document, combing through and revising customer survey documentation, etc. Sometimes, without intervention by an outsider or by management, complacency will go on for weeks and bottleneck an important project. In some cases, the consultant try to resolve things by preventing the worker from even leaving the premises until the job is done (e.g., order in food, coffee). A key to balancing things out is frequently by ensuring that the consultant is also doing and contributing to the task at hand versus casting stones – may require management consultant with broad skills.

So the title, "Making the Client Cry" is a bit of a sick joke in some sense. But I’ve seen consultants use this micromanagement technique, and it can be effective when appropriate. Uncomfortable, but effective.

Work Life Balance

Venture capitalist Brad Feld has a good post on work life balance. Brad’s post has some extra significance for me as this weekend my wife and I had one of my groomsmen and his family over for dinner. As we both have kids, and as both of our families have dual working parents, work life balance was a big topic for the day.

In traditional management consulting (which generally involves lots of travel – some people rent a car more than 200 days in a year), there are some sad, but frequently common tips for managing lifestyle:

  • meeting your spouse in the airport as you catch a connecting flight
  • buying two copies of kids story books so that you can read your children books over the phone while you are away
  • making video tapes of yourself so that your kids could watch the video and remember what you look like and sound like (my kids loved watching me on VHS reading "The Very Hungry Caterpillar")
  • flying one’s spouse out to the client site for the weekend as opposed to having the management consultant travel back to his/her home town
  • getting a health club membership or other for the road (I played night golf before 9/11 and it was OK to bring singleton clubs as carry-on luggage).

Having moved to doing consulting on my own (and performing more fractional management services), I have reached better balance of 1) controlling what jobs keep me in-town and 2) taking on functions that do not require so much travel. I still work tons of hours being involved in small businesses and entrepreneurial settings, but actively trying to reduce the amount of travel has made things much easier.

But I constantly struggle with getting the work life balance right. I’m not sure if one can ever get the balance right.

Although you may never know when the balance is right, you need to do something when you know things are not right. Letting things go is a probably a mistake, especially if you let it go for years. And it is easier to say "no" to something when you can say "yes" to something else. Finding that "yes" in one’s personal and professional life has always been ongoing for me.

Update (7/26/05): Venture capitalist Fred Wilson also has a good post on Work Life Balance.

Update (7/26/05): Zoli Erdos shares a relevant chain-mail email he received on work life balance (I’ve not seen this story before, but it made me smile). Thanks, Zoli!

Found A CIO Blog!

Pretty proud of myself for locating a CIO’s blog (Will Weider, CIO of Affinity Health Systems). I posted about Will’s blog here at The CIO Weblog during my weekly sponsored post. It’s pretty rare to run across CIO blogs compared to CTO, CEO, etc. blogs.