Saturday, January 28, 2006

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...)

Sunday, January 15, 2006

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. :)

Wednesday, January 11, 2006

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.

Wednesday, January 04, 2006

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!

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