Man's Search for Meaning

I just finished Victor Frankl's book, "Man's Search for Meaning" This book is one of the most deeply spiritual books I've read. It's short and describes Dr Frankl's experiences as a prisoner in Auschwitz and other concentration camps across Europe. Dr Frankl is also a Neurologist and Psychotherapist and lays out in the second part of the book his model of psychotherapy he termed Logotherapy. The experiential part forms the authoritative basis for the second therapeutic section. As opposed to Freudian psychoanalysis which is based on man's need for pleasure or others founded on man's need for power, Logotherapy's basis is man's search for meaning in life and focuses on the future rather than the past. I'm certain that there are much more erudite reviews of this hugely important work, but I consider this to be one of those experiences or works that crosses ones path and depending on the timing can be a critical evolutionary influence on one's life, so thought I would pass on my own clumsy thoughts on the chance that others would pick it up and read it as a result.

Logotherapy encompasses an entirely new way to encounter life. It focuses on responsibility, responsibility to find meaning and live within the implied tenets of that meaning. It avoids judgement. Anyone is capable of great good and great evil it is their choice which path they follow. Someone having chosen a path of evil may yet change based upon their own cathartic experiences and follow a separate path later in life. Meaning in life is achieved through love and suffering. If you can avoid suffering you should do so. Abiding suffering with alternate choice is not heroic, but masochistic. When it is not a choice, such as in the case of having a terminal or disabling illness, the way in which the victim suffers is a choice and the way he conducts himself gives meaning to his life, "we are challenged to challenge ourselves."

"Love is the only way to grasp a human being in the innermost core of his personality. No one can become fully aware of the very essence of another human being unless he loves him. By his love he is able to see the essential traits and features in the beloved person; and even more see that which is potential in him, which is not yet actualized but ought to be actualized. Furthermore, by his love, the loving person enables the beloved person to actualize these potentialities. By making him aware of what he should become he makes these potentialities come true." This is a powerful concept. Through love comes understanding, understanding together with love breeds encouragement. And encouragement is all that is sometimes necessary to get a person moving towards their potential.

Logotherapy (it seems to me) is a way to point someone towards recognizing tangible meaning in their lives and as part of doing so will then realize their potential in actualization of that meaning. He will then knock down the stumbling blocks scattering the path to that actualization by the shear power and force of that vision.

Some of those stumbling blocks can be neurosis: fear of speaking, fear of bacteria, anxiety over not being able to sleep. Frankl describes a way of overcoming these neurosis using a Logotherapy technique described as "Paradoxical Intention" whereby the patient intends for a short time that which they fear. For example the person who has trouble sleeping and is dreading going to bed for fear that they will not sleep would use Paradoxical Intention to try not to go to sleep, in which case they will soon fall to sleep. I'm certain this is not as easy as it sounds, but makes a helluva lot of sense. The anticipation of the response becomes a greater problem than the problem itself. This is a way to fool the mind into diffusing the anticipatory anxiety.

"At any moment, man must decide for better or worse, what will be the monument of his existence."

slingboxmas

I just gave out SlingBox Pros to all of the employees at my company. It's always a fun thing to do and I get a kick out of picking out the gift each year and previewing it at home (to test its worthiness ;) before donning the Santa hat. It took me a little bit to get set up to work remotely, but once done, it works extremely slick. To those not in the know, the SlingBox location shifts your programming, so you can hook it up to your cable box, plug it into your router, and voila you can watch and control your cable from anywhere on the planet that you have connectivity. If you go the extra step of hooking to your Tivo (DVR) you are no longer constrained by time or space, just your television :)

Important safety tip: Comcast blocks port 5001 so I had to set up as 443.

SITI - Search for Intraterrestrial Intelligence

I posted on the corporate blog last night regarding the search for "mavens" in the blogosphere. The interesting tidbit is that it was in response to a post about Collective Intellect from an ex exec at Pfizer who we found through our intelligent filtering platform for institutional investors.

Business Travel and Bono

Business travel sucks in general. It is a tiring, arduous, lonely affair. Don't get me wrong, I love to travel as much as the next guy, but business travel is usually as fun as the sex you have when you've been trying to get pregnant for 6 months. Sure there are some fun parts, but it's over quickly and is according to someone else's schedule. I was in Chicago a few weeks ago and stayed downtown at the Hard Rock Hotel. It's a pretty cool place with rock paraphernalia everywhere. The floor I stayed on had a floor to ceiling close up of Mick Jagger pulling his shirt up in full strut. It also had the outfit Keith Richards wore during some particular tour. The best was the bathroom though. Over the toilet sat a triptych of Bono, one foot in the air, screaming into the mic. The other funny thing is the place was filled with accountants. I met one coming up the elevator. He had a drink in hand from the bar. I asked him where the bar was and after he told me, replied, "geez the drinks are expensive here." You can put the accountant in Rock and Roll but you can't put Rock and Roll into the accountant.

Company Blog

That is affirmative. Collective Intellect has officially jumped onto the corporate blog bandwagon. We are sharing some of the blogging duties, so hopefully will be a good mix of technical and business insights!

Entrepreneur's Idea Journal

As with most companies, I started mine with an idea. Ideas always seem great when they first arrive. Most are tossed around casually during conversation and never followed up. I try to keep a notebook of ideas and the ones which seem worth following up I will write down a hypothesis for. The hypothesis is a simple statement that captures the gist of the solution.

Mice can be driven away, eliminating the need for a trap.

I would then add a date, a few notes about the idea and a "next step." Most of these ideas never make it to the next step either, due to lack of time or dependence on a resource that is currently unavailable.

For those that do make it to the next step I would recommend starting a separate journal. This journal should be date stamped and the hypothesis restated as a problem/solution pair.

P. Mice are a problem and traps only provide a temporary and messy solution
S. Create a device that discourage mice from coming on the property

The next step then takes two paths dependent upon your personality type. If you are a solution oriented tinkerer then write down some ways to solve the problem. If the problem appears to have a feasible solution work towards creating a prototype, carefully noting the paths you go down in your journal. This invention chronology can be used later for the patent process. If you are market oriented then answer the following four questions and then go back and pursue the technology feasibility question

1. Who does the idea benefit
2. How much will they benefit
3. How many of these people are there
4. Is anyone else providing a solution

Logging all of this data in your journal will help give you the discipline to follow through and encourage the rigor to test your hypothesis.

Walker Evans exhibit in NYC

I was in New York City this week visiting with VCs and our channel partner Soleil. I love coming to New York and am always amazed by the density and variety of the population, the vibrancy, the beauty of the skyline, and central park. I usually go for a Central Park run in the morning. It's a great place to clear my thoughts and soak in the vibe of the city before starting my work day. I also usually try to get in a couple of new things that I haven't experienced each trip. On this visit I stopped by the Walker Evans exhibit at the UBS building on 6th Avenue.

A couple of weeks before I left I was having coffee with someone in Boulder who mentioned the Walker Evans exhibit (thanks for the recommendation Dave). I am an art enthusiast but have never really followed photographic art, so I didn't know who Walker Evans was. The back ground from the brochure found at the beginning of the exhibit sums him up this way:

"His greatest single body of work was documenting the effects of the Great Depression on rural families for the Farm Security Administration in 1935-36. The FSA mission was to generate visual evidence reinforcing Roosevelt's New Deal programs. Evans loudly resisted anything political - right or left - but soon realized the futility of his denial. He wisely compromised and seized the opportunity to work incognito as a photojournalist, producing work satisfying his own vision plus the job's demands."

As I walked along the corridor the pictures jumped off the panels and grabbed something deep inside me. Seeing the faces of sharecropper families, knees, feet, and hands worn by careless circumstance, their expressions resolute, neither happy nor sad, struck a strong chord of reality. In most cases life is forced down the throat of the living and you just have to deal with it. There is something sublime about the non-biased view that the lens provides, taking the viewer voyeuristically back to a different place and time and shreds the perspective of today's assumptions.

If you get the chance, I would highly recommend taking in this exhibit.

CTU ringtone

Brad Feld had posted several weeks back about a CTU ringtone. Being a big fan of CTU I immediately downloaded the mp3 file and promptly forgot about it. Until today. I was cleaning up my desktop on my Mac PowerBook and found this file so decided to commit the time and figure out how to get it loaded on my Samsung a920 multimedia phone. I played around with bluetooth for a bit and tried to upload the file to no avail. It turns out Samsung blocks mp3 file types from being uploaded via bluetooth so I went to the web. After about 15 minutes of searching I found this comment on a blog entry back in February 2006.

you can set your mp3s as ringtones. first make a smaller version of the mp3 that is only about 15 - 20 secs long with the part that you want. (this should be about 100K with variable bit rate) Then goto funformobile .com and upload your ringer to your phone for free, you can also send pictures and games.

This link will take you straight to the upload page.

Agent Bauer here ;)

landmark blogger case

Are bloggers protected under the same rights as journalists from being forced to reveal sources? Josh Wolf hopes the answer to that question will set him free. Josh was imprisoned more than two months ago in a California case involving protesters who burned a police car. Josh authors a video blog entitled The Revolution Will Be Televised. The government would like him to turn over his unedited tape to identify persons that may have been witnesses to the event. This should have strong repurcussions in the blogging community as authorities try to use the blogosphere to discover, track, and indict evil doers. If bloggers are not afforded the same protection as journalists, people will have to be much more careful about that which they blog.

The entire story can be read or heard on NPR.

Helen Grenier and iRobot rock

I'm currently at the DowJones VentureWire Emerging Venture conference out in San Jose and have the privilege of listening to a keynote interview with Helen Grenier, founder and Chairwoman of iRobot. A couple of things struck me during the interview as hallmarks of successful startups. These are model adaptation and making the product easy to buy.

iRobot started out with an industrial vacuum cleaner that they worked on with Johnson Controls. It turned out that there were too many problems and too hard to sell in that environment. One of the engineers came up with the idea of doing a dirt simple (pun intended) robot for the home. They locked down the price point at $200 and only allowed features to be added that kept the price point intact. This caused them to create a bare bones housing with just features that enhanced cleaning (moving from hardwood floor to carpet, getting underneath furniture, moving around corners, etc.). iRobot then took this vacuum (called the roomba) to a focus group of housewives and they absolutely hated the idea of a robot in the house. In order to get sales off the ground they didn't call it a robot, instead it was categorized as a "floor sweeper". Keeping the product at $200 made it affordable and competitive with other sweepers. This is a classic story of a company adapting their business model on the fly to find the crossing of demand and value at a level that will sustain the business.

iRobot has since moved into the defense industry with their line of Packbots. Packbots are lightweight robots that can traverse all kinds of terrain and go into dangerous areas without the need to send in humans. For example, they can be sent in first to explore caves that are inhabited by enemy combatants to look for arms caches, etc.

You can also find an interview with Helen from 2004 on Engadget here.

Bottom line: smart executive with a passion for product + adaptive mentality = success

Those early customer meetings

I was reminiscing with my co-founder (Don Springer) the other day about one of the early customer meetings we had waaaaaay back in mid 2005. Early in the lifecycle of a company you often have "opportunistic" meetings. That is to say, you meet with anyone willing to meet with you, and use the feedback to try to hone your product and message. This can take you in a lot of funky directions and is the early crux move for a startup to survive and move to the next phase of existence.

We had scheduled several meetings during this particular week long trip to NYC, many with fairly large names in the hedge fund business, but one was a small hedge fund out on Long Island. This was our first meeting of the week and we literally had to catch a cab from the airport and go straight to the meeting. On the cab ride there we talked through the pitch for the 10th time in 2 days and were feeling fairly confident as we moved closer to our geographical target. The cab driver had a hard time finding the address (which should have been our first clue) and I think we got into a debate along the way on how many hedge funds were located on Long Island.

It turned out to be this guy's house. He was running money for one wealthy guy and was very into commodity trading, describing it as where the real money would be made over the next few years. His house was in sort of a middle class neighborhood and his "trading area" was a room off to the side of the living room that he shared with a hot tub and large screen television. As I recall, he was fond of the idea but not sure how he would use it in the commodity trading space and he talked to us for a good long time. In the meanwhile our cab driver who we had paid to wait, left us there. We were trying to figure out how to get out of there, had no cab, the conversation around how we might work together was exhausted, and then came the uncomfortable silence followed by rambling conversation. He offered us snacks and came back from the kitchen with some cold pop tarts and Hawaiian Punch. The cabbie no-showed and the guy finally drove us in his minivan to the train station.

Bear in mind that this was just prior to the huge run up in commodities in early 2006 so the guy probably made a trailerful of money.


what are your stories?

Software being developed to monitor US citizen sentiment

There was an article that appeared in the New York Times last week that outlined plans from the department of homeland security to develop software to monitor the opinions of US citizens towards their government. The article points out how Orwellian this process could become and states that the program could take "several years" to roll out.

My guess is that they are much closer than they are letting on and it will be used long before it is accurate enough for incrimination. The accuracy problem is in understanding context and detecting satire. These are very tough problems to crack.

Examples:

In a recent review posted on Rotten Tomatos about the movie, "The Queen" the reviewer writes, "Brilliant dissection of the rot at the top of British high society and politics" contains the adjective, "brilliant" w.r.t. the overall subject, "brilliant disection of the rot at the top of the British high society and politics." And also contains sentiment inside the subject, "rot at the top of the British high society and politics."

Or, as described in Bo Pang and Lillian Lee's paper, "Thumbs up? Sentiment Classification using Machine Learning Techniques", the sentences "How could anyone sit through this movie?" contains no single word that is obviously negative.

Or, in the following case that most algorithms would consider ambiguous, "This film should be brilliant. It sounds like a great plot, the actors are first grade, and the supporting cast is good as well, and Stallone is attempting to deliver a good performance. However, it can't hold up"

My company has been working on sentiment models like these for a couple of years now and much of the progress has been made using statistical language processing algorithms. Some of these are similar to algorithms used in email spam detection applications. Depending on the problem domain, I've seen upwards of 90% accuracy. This is acceptable in many commercial applications but will require a human net to cover the last mile of accuracy when perfect accuracy is required. I agree with the writer and think it is a bit Orwellian, and reflects the times in which we live. This may help in the war on terrorism but my guess is it will only catch the groups too stupid to cover their tracks.

dual temperature controls are useless

Why do auto manufacturers offer dual climate controls? Dual controls have got to be just about the worst feature ever invented for the automobile. The idea that you can actually create different environs less than 1 meter apart is ridiculous. This is, in fact, a great marketing idea. It symbolizes the ultimate in choice, like the sleep number mattress. You can have it your way while the person right next to you can also have it theirs. No need to even talk about it. What is wrong with it is that it does not work. It gives you a false sense of choice while complicating the controls of the vehicle.

I miss the simple controls in my 97 Forerunner. Give me a slider control for the temperature and a fan control. I'll actually communicate with my wife to agree whether it's too hot or too cold.

Collective Intellect podcast interview

David Cohen came by the other day and did an interview with the company. He has put together a media site to track the progress of Colorado technology startups. You can find David's site here, and the podcast here.

It was a lot of fun doing the interview and another data point of how easy it has become to unleash content into the world.

Smart People, Great Views

We recently moved the company to downtown Boulder, right on the walking mall. This has been wonderful for the company in many ways: close to 10 great coffee shops, book store, people watching, outstanding restaurants, bike paths and walking trails, nice views of the flatirons, convenient to shopping to pick up those "I'm sorry I've been working so much" gifts on the way home, not to mention the hammered dulcimer player with the operatic voice. The list goes on and on, and it's just an incredible energy and morale booster for the company as a whole. But probably the biggest plus is the number of really great and really smart people less than a bagel toss away.

I was having a coffee the other day with a friend of mine, Sandy Keziah. Sandy's a great guy and knows a lot of people in the area, particularly if they have a marketing bent. At the coffee shop we ran into John Winsor, the CEO and founder of Radar. Oddly enough, I had never run into John before. I say, "oddly" because I run into the same people often enough that when I attend a local VC or entrepreneur associated event it feels like a small town rotary club meeting ("Hey bob, catch any fish this weekend?").

I sat down with John this morning for a cup of coffee at my new favorite caffeine injection facility (Alison's near the corner of 15th and Pearl) and had a wonderful exchange of ideas with John. John has a very interesting business background and has written a couple of books (which I'm now planning to read and can be found on his blog via the link above) around engaging your customers.

Sandy, thank you for the introduction and John thank you for sharing your thoughts this morning. I love working in Boulder.

For Amy on her birthday

i am life,
the essence of all that is.
i am Sorrow, i am Joy
i am the light that lies upon the sand
i am the root,
the ingrown growth of all the land
Embodied in Cloud the Mountains stretch forth
i am the innocence of unkown days
i am rivers of feeling
their paths intertwined
my existence an element
in the passing of time

copyright Tim Wolters 1988

"Liberalism is a Mental Disorder"

I was recycling some cardboard this morning and someone had used a magic marker to pen, "Liberalism is a Mental Disorder" on the side of the recycle bin.

This sign of conservative bravado, striking at the heart of liberalism at the recycle center got me thinking about the heart of conservatism. Perhaps a liberal could pen something similar on a large corporate logo, the symbol of a corporation that puts profits above all ... but alas, Enron is gone.

Being a Founder

I've recently had some conversations around what it means to be a founder of a company and thought I would pass these thoughts along to the blogosphere.

A founder takes on more risk and more responsibility and puts the company first. A founder is the last one to go on salary and the first one to come off salary in hard times. A founder generally works longer hours than most of the staff while trying to find that something that will finally put the company over the top. If need be, a founder washes the dishes and takes the trash out. A founder rallies the troops to him. A founder keeps the communication lines open to all parts of the business, looking for holes to fill and ways to help out. A founder is cost sensitive and looks for ways to extend the company runway.

Being a founder is not an entitlement day to day other than the receipt of an accompanying sense of satisfaction in creating something new and useful in the world.

... and, for all of his efforts, in the long run the founder hopes to be well rewarded financially

move over Entourage

I stuck with Entourage for almost 10 months, but no longer. There are several reasons for this: the Mac apps are easier to use and simpler, I like the threading feature in Mac Mail which shows all of the emails grouped together that were replies to the original email or replies to replies, The Mac Calendar is soooo much more aesthetically appealing, I can sync the address book and the calendar to my ipod (I gave up on my Treo 600 several months ago for a smaller simpler Samsung and really started missing the calendar functionality)

... and the coolest thing (drum roll here), you can bounce spam email messages :)

"To discourage someone from sending you email, you can reject, or "bounce" messages from that person, as long as the return address is valid. When you bounce a message, it appears to the sender that your address is invalid. This is useful for rejecting mass mailings from companies whose mailing lists you've been added to after buying products from them."

commitment to your passion

I watched the Agassi vs. Baghdatis 2nd round US Open match on Thursday night completely awestruck. The match will go down in history as one of the truly great matches of the Open, but the bigger story is the information before and after the match. You see, Andre is suffering from a herniated disc and sciatica. I personally know how much pain sciatica can cause. Some days you can't even get out of bed the pain is so great.

Agassi is retiring after this open and his commitment to see it through extends beyond the pain he is going through. After Monday's four set match against Pavel he received an epidural steroid injection to reduce inflamation. I've had three of these (you're only allowed three in a one year period due to the long term negative effects on the body). I don't know how he played as well as he did or even at all on Thursday after having the injection only Tuesday. It typically takes a week or so for the pain of the injection to go away.

Thursday's match was absolutely brilliant and became a war of attrition over five long sets (nearly 4 hours) with Agassi outlasting his 21 year old opponent who started having muscle cramps late in the fourth set. Point after point, Agassi grimaced in pain as he relentlessly pursued some very good corner and drop shots from Baghdatis . He certainly lost quite a few points, but came through when it counted, winning the match.

After the match the San Jose Mercury News reported that when Agassi was leaving the Billie Jean King complex at nearly 2am he was in so much pain that he had to lie on the ground while waiting for his driver to pick him up. He reportedly had an injection of Toradol after the match to help reduce inflammation. I am watching him now, playing again this morning and am utterly amazed at his tenacity and ability to play through the pain at an incredible level. I told my wife after the last match that he would certainly need to withdraw ... but here he is, back again.

Good for you Andre. You are truly an inspiration!

Mac Blogger Dashboard Widget

I just came across this useful little blogger Mac Widget.  I use a number of widgets that came with the default Mac install and have since found several others of use.  I particularly like the portfolio widget that shows stock quotes on a 20 minute delay basis.  I'm also currently using Yahoo Widgets as well, so you might say I'm a bit widget happy.  

This is my first test of the blogger widget though.  It seems to work fairly well and the only additions I would recommend right off would be some simple formatting and link creation tools within the widget.  Other than that it is simple and straight forward to use.  Happy blogging!

50 million and counting

David Sifry of technorati just released some new blog stats from Technorati on the growth of blogs. I won't go into the details, you'll have to read for yourself here, and they are quite amazing. The central piece of information is that blogs are doubling on average every 200 days, which, if continued at that blistering pace, would put us at over 100 million post the new year (supposedly the same number of Bon Jovi fans in the universe, hmmmmm :).

It would be interesting to track these numbers against releases of new blog services. For instance I now have 6 blogs, 4 of which I post on. The most recent is a Vox blog from typepad which is currently an invite only beta right now, but as soon as it gets released more generally how many people will switch over and leave their old blog orphaned (but still counting towards the technorati doubling)?

Is the doubling number artificially inflated by people abandoning older blog platforms for the new shiny blog platform?

Match Point review

Woody Allen is truly a sublime film maker. The movie is set in current day london, tracking two people who have managed to enter the privileged class through some chance encounters. I won't ruin the movie for you but suffice it to say that Woody Allen has created a nihilistic masterpiece that describes the overbearing role of chance in creating both positive and negative outcomes in life. He also throws in plenty of allen-aphorisms like, "they fell in love immediately, their neurosis perfectly entertwined"

3rd party software proviso

As you build out the next killer app, (perhaps we should bring that description up to date. How about "killer service") it is extremely likely that you will use off the shelf (ots) software. It is in fact unthinkable in this day and age of mash ups, social networks, and open source that you would build everything from scratch, any more than Toyota would build all the parts it needs for its cars.

Given the possibility of the sale of your company here are three major things to consider when licensing 3rd party software whether open source or no.

Distribution
If you plan to redistribute your application, i.e. sell it to a customer and have it reside in their place of business you must have the right to distribute the third party software. If the software library you are using is not open source your contract with them must give you the right to distribute their library along with your software. Depending on the nature of the business this may range from an OEM agreement in which you pay royalties to the third party software manufacturer to a royalty free arrangement where you just pay for development licenses. In either case (and those in between) it must be handled in the agreement. If the library is open source then your obligation is dependent upon the particular open source license the software was created under. The most popular open source licenses today are GPL, LPGL, BSD, and MIT. GPL is by far the most prevalent accounting for nearly 68% of the projects listed on Source Forge (according to Wikipedia). In GPL and LPGL you must distribute the source code with your software as well as placing the GPL copyleft notice at the top. GPL is the least permissive of open source licenses and claims that software that uses GPL software is also GPL. The LPGL (lesser GPL) is more permissive and is commonly found in libraries whereas GPL is commonly found in applications. LPGL allows distribution of the library as a linkable (harkening back to the world of linked languages, such as C) component. I believe you still must distribute the library source code with the product, but do not need to distribute the source for your proprietary part of the product. The most permissive of all are the BSD and MIT licenses which allow you free and unrestricted use to the software, although I think they require the author headers be maintained in any distributed source. BSD and MIT are starting to become more prevalent as I see more and more new libraries and tools pop up that were created under these licenses.

If you are running your software as a service with a thin client interface (html or flash, also the newer Yahoo Widgets would fall into this category as well) and the core of your software resides on your own servers you will still need to have some agreement in place with software vendors. They may only charge you for dev licenses but could also charge on a use model (number of users, number of servers, etc.). The open source arena is easier to deal with here because you're not actually distributing your software, instead only using it internally and exposing outward some set of functionality. No mess.

Transferability
If you are a startup and you believe there is a good chance that you might be bought someday then the software that you license as part of your overall product or service must be transferable or assignable to the purchasing entity. Open source transferability follows the same conventions as distribution, so there are no additional considerations here (unless of course, you've open sourced your software as a result of embedding GPL and your buyer wants to make this software proprietary. In this case you will need to swap out the GPL code for your own or more permissive open source code). For non open source libraries and applications you will often see something like the following in a software vendor's license agreement:

Subject to the terms and conditions of this Agreement, Software_Company_X grants to Licensee a personal, nonexclusive, non-transferable, non-assignable and non-sublicenseable, limited license to use the software identified in the product schedules attached to this Agreement

This will not work for you. The provision you will want to carve out will say something like:

Licensee may assign this Agreement in its entirety in the event of a merger, acquisition or sale of all or substantially all of its assets, without Software_Company_X’s prior written consent; provided, however that for any proposed assignment Licensee may not assign or transfer this Agreement to any competitor of Software_Company_X that develops and/or sells similar technology and is listed on Exhibit A.

Companies will want the competitive carve out. Just lock it down to a limited set listed in an exhibit, otherwise the word competitive is open to interpretation.

Intellectual Property Ownership
If the intellectual property you create is built upon 3rd party software this is considered a derivative work. Again, GPL will not work for you. This is somewhat tricky overall depending on how important the role of the 3rd party software is in the creation of the IP. The best you can do here is to carve out a provision in the software license agreement that clearly defines your rights as follows.

Subject to Software_Company_X’s IP Rights in the Product and any derivatives thereto, title and ownership of all proprietary rights, including any copyright, patent, trade secret, trademark or other intellectual property rights, in and to any software created by Licensee will at all times remain the property of Licensee.

After this, pricing negotiation is easy ;)

Blue Ocean Strategy Maps

I recently read the book Blue Ocean Strategy and while the book is more focused on figuring out how to change an existing business to explore new opportunities (blue oceans, instead of red oceans where there is already much competition bloodying one another) I really liked the strategy maps concept.

Here is a blurb about Strategy Maps that I copied from the Tech Talk blog whom I think copied it from elsewhere:

Blue Ocean Strategy offers both a process and a set of supporting tools that practitioners can use to navigate. It begins with a �strategy canvas� that visually maps the current industry environment in two dimensions. The horizontal dimension includes the range of factors on which an industry currently competes and those factors in which it invests. The vertical dimension shows levels of performance against each factor, measured qualitatively. A strategy canvas is a conceptual tool remarkable in both its simplicity and its usefulness. It can be used to understand the current strategy of a company and its competitors, to communicate the strategy, and to imagine business directions. To do the latter, Professors Kim and Mauborgne recommend that a company create several alternative, radically different strategies, each aimed at delivering superior value to potential � not existing � customers by:

• Reducing cost by eliminating some factors that the industry takes for granted and reducing other factors below the industry standard
• Enhancing differentiation by raising some factors well above the industry standard and creating additional factors that the industry has never offered.
  

I think the strategy map concept might be even clearer as a spider diagram, especially if you only map yourself to a single competitor. The strength however is in the ability to quickly discern where the key opportunities lay and how you might change the playing field to your strategic advantage.

I used the strategy map with fairly powerful results recently in a board level strategy meeting.

The Deadest Guys in the Room

In the movie, "Enron, The Smartest Guys in the Room", Ken Lay is depicted as the disconnected fatherly figure who doesn't quite know, or want to know, what his son (Jeff Skilling) is up to when the son arrives with keys to a new Caddie (see scene where he is picking out the color of drapes for his private jet).

Lay was as culpable and probably more so than anyone at Enron for fostering the culture which ultimately resulted in bilking Enron investors and employees of billions of dollars. I think there is a danger in trusting one system (in this case the free market) to cure all ills. It reminds me of evangelicals who come up with crazier and crazier rationals as to why dogma is correct in the face of incontravertible evidence as the spool begins to unravel behind them.

Bottom line is that these guys believed what they were doing was good and their own hubris prevented them from admitting mistakes and adjusting their view of the world and their own business.

I believe the US and especially the US markets needed someone to go to jail and these guys were perhaps scapegoats to that end. But sometimes the goats are guilty, and for a brief shining moment, justice is served.

Ken, I hope you like the curtains for where ever the afterlife takes you :)

the holy wiki

I wrote a post a long while back about the use of Groove as an intra-company bulletin board. Well, we started having some problems with Groove back in late 2005, especially with synchronizing (auto copying of updated files up to people's computers when they login). It would pretty much lock up the computer and was overall a pretty big resource hog. Now I still like the features and think it's a pretty cool overall product, the performance characteristics became a barrier for us.

Early this year, we moved to using Jotspot. It is a fairly simple Wiki product that is easy to get started on and easy enough to use by the entire organization. JotSpot is Joe Krause's (of Excite and Long Tail fame) company and I believe they were bought by Yahoo just a couple of months ago, so their longevity is fairly assured. You can edit docs as wysiwyg or use the simple wiki markup for editing, easily create pages, and even create mini-apps by importing spreadsheets. There is a fairly low startup cost as well. I believe it's $99/year for a small group (<=10 users) and 100 pages.


We've used it a lot for asynchronous brainstorming and keeping large grained tabs on projects.

So far it's the best/easiest tool I've found for an intracompany interactive bulletin board. If you haven't used wiki's before I would highly recommend giving them a try and this is a great place to start.

The flys around the tail

or virtual communities, smart gatherings, etc.

For every subject of interest there exists a community of people connected to the value chain around the topic. These consist of the evangelists, the experts, the producers, the consumers , and the nearest neighbors and their communities. These communities are often distributed, with the various participants not knowing, perhaps never knowing, and thus, never being able to interact with the breadth of the community.

What is required is the ability to carve out dynamic communities around an ad-hoc topic and track this for the life of the topic. Search and even persistent search go part of the way there, but the extra bits are the interactivity or crowd sourcing that raise relevant information to the top ala Digg.

The long tail is a great concept and there are many companies that service the constituents in a variety of ways but they are mostly disconnected. Thus the flies buzz around the tail, sometimes running into each other but often times never even knowing the other exists.

The Perfect Moment

Ever since watching Spalding Grey's monologue, "Swimming to Cambodia" I've always kept a look out for those perfect moments in life. They exist on some ill defined emotional plane (perhaps a wikipedia entry is warranted), outside of logic or some conventional notion of happiness. Spalding's perfect moment was on a beach in Thailand up to his thighs in the surf and the sun touching down on the turquoise meridian of the earth.

One of mine came recently on a trip to New York City. Earlier in the day I had downloaded "Best of the Doors" into iTunes. I have been a fan of the Doors and Morrison's hedonistic transcendental rants since the early 80's but had not listed to them in a while.

I did some work on my flight then queued up my new purchase. As we flew toward the big apple I closed my eyes and let the music wash over me, letting pleasant memories associated with those songs resurface in a sort of auditory delicious tagging sense.

The last song in the collection is "The End." As we descended through the clouds on approach to LaGuardia this song began, "... this is the end, beautiful friend, the end...", we were circling low over Manhattan, near sunset, reflecting brightly off of the skyline and streaming through the airplane windows, almost blinding. For those ten minutes, the tumblers of life all fell into place and everything didn't have to make sense or have purpose. It just was.

Prediction Markets

I just attended a one day seminar in Chicago covering the topic of prediction markets. So what are they? PM's are securities based on the possible outcomes of an event or question. The wisdom of crowds, or crowdsourcing is used to try and discover the probability that the event in question will occur. This has been used in sports betting for as long as anyone can remember, but is now being used to predict all sorts of things. The popularity of this phenomena has risen exponentially since the publication of James Surowiecki's book, The Wisdom of Crowds. Another good, although unstructured, source of information is Chris Masse's site.

I've logged a few of the notes here that came out of the meeting:

• Market participants can bet on future outcome of question or event, question is packaged as a stock in a market, betting is buying and selling the stock.
• Learns by weight updating like a neural net: those who are right get rewarded (wealth), and those who are wrong get punished, so on the next round, those with good info have a higher weight (more wealth to put in “stock”)
• Reasonably good predictors when majority have better than even chance of getting it right. Even if this is not the case, those with low chance get weeded out and weighed down in early runs, and those with good chance get wealthy, until good players control the wealth-weighted majority of the vote
• Important to provide enough incentive for participants to try their best to predict outcome
• There has been limited success with some internal trials by companies (Corning, HP). Other examples are the Iowa Electronic Markets, InTrade (run by TradeSports), and the Hollywood Stock Exchange.
  
• The market requires enough traders to provide liquidity in order to work. How many is enough. Someone's study showed that it didn't have to be a large number, just an active and informed group, perhaps as small as a dozen?
• Don't charge participants to play. If you do it will be subject to gambling laws.
• Rewards + Recognition + Relevance = Participation
  

Given the current momentum and people working in this area I believe there is enormous potential. I'm just not betting on it :)

hedging the pump

Feeling the pain of rising fuel costs? Oil is around $70 a barrel and with instability in the vast majority of large oil producing regions (Iraq, Iran, Saudi, Nigeria, Venezuala, Russia) causing supply shortfalls I think we're all painfully aware that oil is very unlikely to decline to the $15 - $20 per barrel with equivalently low gas prices we've seen over the last few years.

So what can you do? How about locking in the price of gas at something reasonable? This is essentially what energy companies do today. They will buy gasoline in the futures market as a hedge to lock in a particular price point. I'm not familiar with the details of how the big guys do it but have at least the beginnings of an idea about how you and I can do it.

Let's say oil producing regions stabilize and production goes back up, enough to make gas fall to $2.00/gallon. Also, in our sample scenario assume our hedger (H) has a car that gets 20mpg and drives 15,000 miles per year. With a little 3rd grade math that comes to 750 gallons of fuel and at the current price would be a spend of $1500/year. Let's also assume our protaganist can find a stock in the equities market that moves in a highly correlated fashion to either oil or gasoline (company A). H purchases $1500 in company A's stock. Now if gas prices rise by 10 or 20 or 50 percent, H's stock will also rise in lockstep. The critical point now lies in profit taking and averaging down. I haven't got all of this worked out yet, but am thinking that if H were to take profits around 5% intervals over the initial purchase price and average down by buying more stock when the stock falls on 5% increments from the purchase price, discounting transaction fees and taxes, H's total fuel costs - stock profits + stock losses would end up with an average cost per gallon near the locked in price.

Anyone out there have more ideas on this?

No Quarter

It's Saturday afternoon. My son is sleeping upstairs, my daughter is at a birthday party, my wife's working out. What do I do? I work. I feel compelled, almost relieved to work. There is a huge tension that comes with the exhiliration of the startup. That is a certain implied willingness to get the job done, at any cost. Long hours, travel, your friends become your friends at work. Your family lives with your obsession of pursuit of a dream.

We just had our second child a few weeks ago. I feel guilty for not putting in the requisite 80-100 hours per week. Not from my co-workers however. They've been more than supportive and I've been proud of the way the entire team has stepped up over these last several weeks to deliver an initial version of our html product to market.

In a startup, there is no quarter, no place to hide. You are always on and the company depends upon every individual contributor to deliver their best every day, night, and weekend. I wouldn't have it any other way most of the time. My wife knows that I go absolutely nuts if I'm not running 100mph (kinda like I drive). But it would be nice to pause and recharge once in a while.

Maybe in the fall, after we've got the next product pushed out, sales starting to ramp, strategic relationships firmly in place, and next round of funding nearly secure. LOL. Maybe in the fall. ;)


"Walking side by side with death
The devil mocks their every step
The snow drives back the foot that’s slow
The dogs of doom are howling more
They carry news that must get through
To build a dream for me and you
They choose the path where no-one goes.
They hold no quarter, they ask no quarter."
-- Led Zeppelin

Landing Venture Capital

There was a recent article posted on TheStreet.com entitled Landing Venture Capital. This is a fairly good article outlining the state of Venture Capital funding. 2005 was the first year in three years that venture capital funding has increased, yet the odds of getting funding remain bleak for early stage companies. It goes on to describe how the VC's essentially moved into triage mode after the dot com crash in 2000 and even though the money has started flowing it is still primarily focused on either later stage companies or early revenue companies, i.e. you won't get funding for a couple guys in a garage with a business idea. It does outline the re-emergence of angel investing. Because VC's are not focused on as many early stage deals, there are more of these deals available to angels. A great example of a new sort of VC firm taking advantage of this trend is Paul Graham's Y-Combinator.

While I agree with the state of VC funding, the article contains an underlying assumption that your primary goal is to achieve funding. Your primary goal is to deliver a product to an identified market that will find value and pay you more for it than it costs to produce. There are a number of companies today, especially in the Software as a Service space (Web 2.0) that are growing their business organically and bypassing VC funding altogether. One of the poster children in this area is 37 Signals, the creators of Ruby on Rails and authors of several popular web hosted products such as Basecamp, Backpack, etc.

So while the article isn't exactly bullish on venture funding prospects, don't lose heart. Focus on the primary goals of driving value and getting paid for it, network heavily in the funding communities (both angel and VC) and the rest will take care of itself.

Mason and big sister

polyphasic sleep

My son was born just 10 days ago now and I've been experimenting a bit with sleep deprivation, or rather the prevention of. We're getting about 3 blocks of 2 hours worth of sleep each night, which when taken together is really not that bad. But the fact that it is interrupted seems to make a big difference. I do get up and do a bit of work while Mason is satisfying the most primal of infant urges, which probably keeps me up longer than if I were to be very efficient with helping and then lapse immediately back to sleep but what fun would that be :)

I have noticed in this short time that if I can take two power naps (20-30min) during the day, one in late morning and one late afternoon, I am none the worse for wear. 1 nap and I'm fairly sluggish, 0 naps and I'm about as productive as dubya in times of crisis.

financing

To finance or not to finance, that is a constant question in the startup world. Many would advise to take the money if it is there, but it's a multi-faceted decision that will have you creating spreadsheet after spreadsheet in order to run what-if scenarios.

Some of the things to be considered are:

• Capitalization Risk - how long will current capital last with projected sales? Can you get to cash flow neutral before the current cash runs out? How close will you have to cut it? What if you do a lower revenue number than projected? When do you run out of cash in the worst case scenario? Will you need to lay people off? How will that affect morale?
  
• Dillution - What will your likely pre-money be (you'll need to do some comparisons by talking to other local entrepeneurs as well as banks and attorneys to get some idea of what the market will bear). Does the dillution to the current shareholders seem to be a reasonable trade-off for reducing capitalization risk?
• Opportunity Cost - Are forces mounting that require you to accelerate some portion of your business: product development, business development, sales? Perhaps you don't have time to grow organically. Is competition increasing or the market heating up to the point you need to hire up personnel to capture more market share and support the onslaught of new customers? If so, you might want to take in more cash. New investors will also bring new networks with them that should be able to accelerate some aspect of the business.
  
• Terms of Financing - You may find that current financing terms are too oppressive. In addition to the dillution, this might include: liquidation preferences, loss of control of the board, management changes required, or reverse vesting of founder shares.

Think carefully b4 you jump, but once you do, go aggressively down your chosen path. It always takes longer than you think to raise money.

sorry for the long delay

I've been quite busy lately growing the business, raising money, and growing the family (new child on the way). For those interested in the technology side, we have started a new company blog that will describe our journey with Ruby and Ruby on Rails. Check it out here.

We have finished raising our series A financing with a mix of Angels and VC money. It was a fairly easy and straight forward financing, as financings go :) I'll write a bit about some of the issues in the near future.

Threat Assessment

I was watching the most recent hair raising hour of 24 this monday and it provided a lesson that is very translatable to business. Terrorists have obtained canisters of military grade chemical weapons and plan to use them very soon. The only lead is a phone call that was picked up between the terrorists and an expert in these sort of weapons. Jack rushes to the residence of this man and captures him, only to find a 15 year old girl being held as a sort of sex slave by the increasingly despicable terrorist helper. Jack talks to the girl and tells her everything will be fine now, but the man requires a full pardon, transportation to another country, and given the girl back to comply. Now I've seen Jack break other prisoners in shorter order than he has available in this situation, even ignoring orders to do so, but that's another blog entry. Anyway, the girl, left free to roam around the apartment, and very lucidly grasping her dire probability of being handed back over to this man, finds a gun and shoots him.

Jack did not assess the threat in this situation properly endangering the mission. The girl acted fairly predictably and while she wasn't a direct threat, she became one by pursuing her best interests which were put at cross purposes with Jack and his mission.

The lesson here is to not ignore indirect threats even from sources that would almost never pose a threat. Always recognize the interests of every party you will encounter on the journey to your goal and act accordingly.

Term Sheet Terms: repurchase rights == reverse vesting

When a company is incorporated the founders set up the ownership structure. This structure may include a vesting schedule for founder's shares. The reason for the vesting schedule is to assure future investors in the company that the founders are in it for the long haul. A typical vesting schedule that isn't too aggressive and the one I used in the case of my current company is to vest 25% up front and the remainder in 1/60 increments per month over the next four years.

When taking in institutional money, the new nvestors will assess the percentage of vested shares the founders have and may ask for a reset on some percentage of these shares. One way this happens is that they will add a "repurchase right" term to the term sheet which enables the company to repurchase a certain amount of the founders shares at a nominal price for a period. This number of shares will diminish over time, essentially creating a new vesting schedule for founders.

My advice is that if you know you will be taking in money, find a happy middle ground between something aggressive that will undoubtedly be reversed and a vanilla four year vesting schedule. Starting the company is certainly worth a chunk of up front vesting.

walk the line

I just saw Walk the Line, last night. Joaquim Phoenix and Reese Witherspoon both post stellar performances in this well written drama about the life of Johnny Cash. The story describes a complex emotional tragedy that builds steam as layer by layer of events compound leading to Cash's eventual addiction to pain killers and then salvation by June Carter who is fighting her own demons of relationship/commitment.

It is well put together, has good cinematography, great acting, and absolutely dead-on soundtrack by T Bone Burnett.

Go see it! (I wish I could make the song play as you're reading this ... I keep my eyes wide open all the time, because your mine, I walk the line...)

Term Sheet Terms: anti-dilution clauses

These provisions are commonly required by sophisticated investors to protect themselves in the case of a down round. A down round occurs when new money comes in at a lower pre-money valuation (or price per share) than the previous round post-money valuation. For example, if you close an angel round of $1M and agree upon a pre-money valuation of $4M, the post-money valuation will be $5M (pre-money valuation + money in). This means the investors will have purchased 20% of the company.

If you raise a subsequent round of $3M but can only negotiate a pre-money valuation of $4M the initial investors have essentially lost 20% ($5M-$4M = $1M, $1M/$5M = 20%) on their original investment.

Two types of anti-dilution are commonly used: Full Ratchet and Weighted Average.

If the original investors negotiated for a full ratchet anti-dilution then the common shareholders will have to dilute further in order to make the series A preferred shareholders whole. In the example above if the common shareholders held 1 million shares, this would be equivalent to giving up 200,000 shares to the series A preferred shareholders as a result of the additional dilution hit of the down round in order to maintain the original stake at the level they invested in the A round. This is a fairly simple explanation of the effects. For a more in depth analysis take a look here.

In the case of a weighted average anti-dillution, the series A investor is not made whole but are compensated. Their share price is reduced to the new price and the anti-dilution redistribution of shares is based upon the number of shares they currently have vs the total number shares in the company. Weighted Average Anti-dilution is, I believe, the most common form of anti-dilution provision and certainly the least onerous to founders.

In short: common shareholders are dilluted twice when a down round closes: first to make up for the down round dillution that occured to series A shareholders and second for the normal dillution that occurs when you take in new money.

Lesson: always involve your attorney when negotiating these terms and never accept full ratchet anti-dilution unless your back is completely against the wall. Obviously everyone hopes for subsequent rounds to increase the valuation of the company. Post bubble this has frequently not been the case. I believe the terms pendulum is currently swinging back in favor of the entrepeneur but it is always best to negotiate from a position of knowledge.

In the future I will cover liquidation preferences, reverse vesting, dividends, class voting rights and any other terms that have bitten me on the ass before. :)

RDoc Widget

My latest favorite widget is the RDoc widget by Precision Information Services out of Australia. Sure you can pull it up in your favorite browser but the ease of pulling up the dashboard and scrolling through the ruby class docs is soooo much simpler and cooler (I have a desktop corner set to bring up the dashboard, so all I have to do is scroll to the upper right and voila, RDoc). This widget was brought to my attention by master coder Louis De La Rosa, author of the Happy bookmarking app. Thanks for the tip Luis.

RSS readers

In the dog eat dog world of RSS reader competitors the one I've settled on for now is Wizz RSS. It fits neatly in the sidebar of firefox as a plug-in. Wizz also adheres to one of the mantras the 37 signals guys always talk about: simplicity. Make the software simpler so that it does a few things really well and then gets out of your way.

mac conversion #3

Wow, got all the development environment up and running, sans a cvs gui client. I tried Mac CVS but never got it working. But aside from that hiccup (am able to use the cvs command line interface without a problem), everything is humming along. I had a brief foray into using Eclipse as a development IDE instead of Textmate but it would occasionally crash. After the Eclipse problems and figuring out a portion of the Textmate Ruby bundle, made this the obvious IDE choice.

Now for the rest of the story.

First there's Microsoft Office. I do a lot of work in Excel and Powerpoint, and am *much* more comfortable with Word and Outlook than the corresponding Apple editor and email/calendar (even though I like the look and feel of iCal much more than Outlook's calendar). So, the obvious choice was to purchase Office for the Mac. This is an expensive package, but worth it based upon the amount of time I spend with these tools (about $400). After installing I needed to get my contacts, calendar schedule, and saved email folders over to the Mac. As a side note I also purchased the excellent book Switching to the Mac by David Pogue. This book covers all the basics of switching and getting comfortable inside apple's skin. One of the recommendations it made for this very task was to look at Little Machines.

Little Machines offers a $10 product that will export your Outlook information into a format that can be imported by a variety of Mac applications. There were other suggestions on how to do this for free but suggested they might take much longer and add to the frustration. I opted to go the recommended route and after configuring which calendars, which contacts, and which email folders to export had a set of export folders ready to push to the Mac in about 15 minutes. I followed the directions but probably due to some mis-step ended up importing into the native Mac apps instead of Entourage (the Mac version of Outlook). This was easily corrected by just dragging the necessary events/folders into Entourage from those apps.

I have not been that impressed by Entourage and may end up reverting back to the Mac apps. I get dup copies of some of my incoming mail messages and attachments from certain people come across as winmail.dat instead of what they should be (some weird MIME problem). Some of my outgoing email messages get random characters cut out. I also get some attachements as The calendar app is not nearly as appealing as iCal and I like Outlook's contact management better than Entourage. I'll give it a few more weeks.

Powerpoint, Excel, and Word all seem to be very good and I like the Mac "Formatting Palette" much better than its counterpart toolbars in MS.

I'm using Adium for instant messaging. It has the Mac aesthetic down and is much cooler than other open source programs (like gaim) that I've used on Windows.

I've transferred all my iTunes stuff over with a brief hiccup in recognizing a couple of music videos I purchased off the iTunes site (need to import, then try to open in iTunes at which point it will give you a dialog that tells you that the file can be used on up to 5 computers and whether this is one of them). I also forgot to set my podcasts to automatically update so after not getting them to transfer after 2 synchronizations, finally figured that one out.

The dashboard widgets are one of the coolest aspects. By setting a hot corner in the dashboard setup I can very quickly pull up the dashboard. I've installed the calendar, sticky notes, stock ticker, dictionary, Monkey Business organizer, itunes, clock, and yes, a lava lamp!

I started a couple of weeks ago a fish out of water but am now Mac functional. I'm sure there are many new adventures out there in Mac land ... and I'm looking forward to them.

viva le mac!