The HELLISH World Of Four, no 5, Browsers

Did they PLAN to make the lives of web focused services companies hell?

It does feel a little like they're picking specifically on us, but I'm sure there are thousands of other small Web2.0 developers saying the same thing right now.

I also think you've just seen the 'rapid' development on the web drop to half speed. At least for awhile.

Why? Because we effectively have to now develop for 4 browser environments. IE6 ,IE7, FF1.5 and FF2.0. And in reality, a 5th as well, Safari on Macs.

And, sadly, these bright shiny new versions of browsers did not bring everyone in line with agreed on standards. In particular IE7. Nothing is simpler, everything is more complex and, now, we have to develop 5 different set of hacks for each browser. At least for the next couple of years.

At least we have some time until Vista comes out.

Well damn, that took all 10 minutes. I wrote the above words and, in my mail I get this:

Like it or not, starting this morning every machine built by Dell, HP/Compaq, eMachines, Sony and many other will be installed with Microsoft Vista as the RTM (Release to Manufacturing) final was issued yesterday.

This means we'll start seeing Vista machines on store shelves in about 7-10 days. This also means with the holiday and tax return seasons just around the corner, we'll be seeing people using ClickCaster with Vista.

The next 6 months should be, if nothing else, interesting.

Is Angel investing good?

Great discussion with Kimbal Musk and Brad Feld, hosted by Podcaster, blogger and investor, David Cohen. Damned interesting stuff. Kimbal, apparently, told David that he no longer believed in angel investment at a tech meetup in Boulder and David decided he wanted to go deeper, and to podcast it. So the three of them met at one of Boulders best restaurants (which happens to be owned by Kimbal) and chatted about it over coffee. Check out David's blog here, and listen to the podcast on ClickCaster here. Or click on the title of this blog entry.

What follows is a recap of the podcast in my own words with some color commentary. If you're going to listen to the podcast, you can skip the rest of this (and I'd encourage you to listen.. it's short, about 22 min, and loaded with great info).

If you’re more of a reader than a listener, then read on…

Kimbal thinks a $500K investment is the same as a $50k investment (you get a prototype, but not alot more). Even with $500K, you don't take enough risk out (due to the cost of entry into your chosen market) to matter to VCs. He thinks some of them can do well with angel money.. they're 'hit's' driven (a pilot in effect). But he thinks as a rule your not going to get users or full technology infrastructure with a ‘real’ angel investment (defined at $500K).

I've got to disagree with him here. Without angel money, ClickCaster, when we launched in Jan, had about 7,000 unique visitors, did about 140GB of data transfer (podcasts being downloaded) and served about a quarter million pages in Jan., our first full month. In Sept., when we closed our angel round, we had several hundred thousand unique visitors, did just under 3 terabytes of data transfer and served a little under 7 million pages. Nothing spectacular, but pretty good considering we didn't spend a dime on building audience and we have yet to get slash-dotted, Dug or Techcrunched. Concerning infrastructure: with about $40K worth of recently purchased vanilla server hardware and no cost LAMR (Linux, Apache, MySQL and RoR ) software, we could handle several million users per month without breaking a sweat. And to add more, we just throw in more servers and bandwidth. That's, generally, pretty good infrastructure. Certainly enough to build a healthy business on.

Brad thinks the $450K extra, for a company that knows how to run cheap ($20K, $30K to $40K a month burn) is a real sweat spot. It allows you to really hone your idea. Especially if you have a business that you can get to revenue quickly. And you can really increase in valuation by doing this. Kimbal does agree with this, if you can get far with that $500K (some real products, some customers) and that's good and removes risk, but he still thinks that market momentum and a strong team require real money (i.e.VC level cash).

Interesting side note: Kimbal thinks that you give up more of the company than we believe needs to happen. In his model you've already given up over 70-80% of the company (or more) before you get to VC's. Personally, I don't think you need to do that. If you bootstrap to the point of having real products and services that get some traction in the market before taking angel money.

We also were pretty lucky in that we have an incredible group of angels. And our board, made up or our angels, is deeply engaged.

The consensus seemed to be that there are two types of angel investment. The first is where the investors put in some money and then walk away; passive angel investment in effect, and as Brad calls it "for profit philanthropy". The other is a deeply involved set of angels where, as Brad says, "they take an active and emotional role in the business". I'd call that engaged angel investing. In our case, Brad was our lead investor, is our chairman and he brought along several of his friends who trust his judgment and know he's more deeply involved than a passive investor would be.

Interestingly, about 2/3rds of the way through the discussion, Kimbal and Brad seemed to come to agreement that the right type of angel investment (the second of the two types above) is, after all, a good thing all around.

Ahh.. so we get to the heart of it: Do it right (right idea, right group, get deeply involved), and angel investing IS something to believe in. Engaged angel investing. So, as with everything else, it's about quality. Kimbal doesn't believe in passive angel investment. Brads view is: just put them into the right category. Passive (the for profit philanthropy)... what Kimbal considers bad angel investment is what it is, and take it for what it is. One thing it isn't: a place to make money. Sort of 'social sport', as David calls it.

Just separate the two and when you invest know which is which.

Just for reference on how they filter angel investments, Kimbal says: Value of the idea and then, the people. Brad says value of the idea (plus, needs to be in a domain he's interested in), then the people, then the geography (if it's not local, it needs to be someone he's worked with in the past).

Interestingly, they pretty thoroughly trash one of my own beliefs which is, 'All I need is one angel round and I'll never need to raise more money". Brad called this, in his usual delicate and succinct way: 'bullshit". His view is you're going to have to either sell your company when the next step is reached (to become something more substantial then they are), or you're going to need to go for institutional investment. Very rarely does a company get to eight figures of revenue without going the institutional investment route (or, at the very least, gets the existing angel network to double down on the first round of investment).

Call me a dreamer (or an idiot), but we're pretty tenacious and I'm keeping my eye on that 'one angel round is all we need' ball. Call it a fantasy, but I believe it can be done. Just because it's nearly impossible to do, doesn't mean you can't do it. I've seen a lot of companies do the impossible and there's no reason we can't be one of them.

I'm not a fool though; we'll develop a plan for future institutional investment, among other things. You've got to have a plan B (and if possible, a C and a D).

Like the Cheshire cats says: If you don't know what path to take, any path will do. Better to have at least an idea of what path you'd like to take (and in what order) before the decisions are made for you.

To David, Kimbal and Brad: Great job. I wish I'd heard this before I'd gone looking for angel money (and, at the same time, I'm really glad I didn't). And THAT, makes it a excellent podcast. I’ve just hit the high points (for me) here. If you’re interested in hearing how real angel investors think, you owe it to yourself to check out this podcast.

Full Disclosure: Brad and David are angel investors in my company, ClickCaster. Kimbal, sadly for me, is not.

The First Board Meeting Redux

Well, that was an experience.

In my last post, I talked about the run up to our first Board of Director's meeting. We had that meeting on Friday.

Sooo... Things I learned from my first board meeting as a first time CEO:

Tell your CMO not to try out his EVDO highspeed wireless card with Skype (for the first time) to call into the meeting.

Make sure you've checked every single one of your spreadsheets and that all the numbers match up perfectly, because your directors are going to find the ones that don't quite jive, guaranteed.

Make sure you have enough time. If you need 3 hours (not, say, 2) Schedule 3- not 2.

If the meeting time gets changed, make very sure all the directors know about it at least a week beforehand, even if you're not setting up the meeting personally. You should, personally, check to make sure everyone's on the same page on day and time. This seems obvious (and like a small thing). It's not.

Ride herd on the time spent on each agenda item. Directors will be happy to go deep and you're almost certain to run out of time before you run out of agenda items you wanted to go over

Make sure all your directors have all the same information in hand when or before you start the meeting, assuming somethings been added since the directors package went out. This is especially true if one or more of your directors is remote.

The more well processed and organized information you have for your directors to work from, the better your output from your directors will be. The opposite of this is also true.

Most of your directors are great at dealing with a lot of data (they do this a lot, they're masters at it really- almost certainly better than you). Don't water it down, don't make it as dense as plutonium; find your board of directors 'data happy place'.

You will get this wrong the first time.

Let them help you. If they want to directly engage in different aspects of your business, your first reaction might be to step back from it: Don't. You cannot buy the kind of help they can give you.

This last one (above) is really important: If you're a new first time CEO, you're used to running the show and doing it your way. And you're most likely used to making all the calls. If you've got a great set of directors, they can multiply your strengths and they can help you (quickly.. maybe a bit painfully.. but quickly) identify where you're weak and help you fill in the gaps.

Identify your directors personality types. You can do a short hand version on a sliding scale with pure metrics/numbers on one end and touchy/feely on the other end.

Director B Director A Director C
<-------|--------------|----------------------------|-------->
Metrics on X How ya feeling about X?

Each of your directors is likely to be able to operate at any point on the scale, but they're most comfortable in one area, most likely weighted toward one end or the other.

Plan your presentation of information (and the help/direction you're going to ask for) to cover the personality types of each of the directors.

Did I do all this? Nope. But I learned from the meeting that, to have a great board meeting, this is (some) of the stuff you should be thinking about and putting in place before the meeting.

How did it go? You'd have to ask my directors, but I'd rate it a C- C+. I clearly have a lot to learn. Luckily, I'm a pretty quick study. We have a lot of work ahead of us, but with this group, I'm absolutely certain that we're going to have a much, much more successful company with this board than we would have had without it.

The First Board Meeting

Our First Board of Directors Meeting is tomorrow.

It's been an interesting experience. The board is made up of 3 of our investors (Brad Feld, Niel Robertson and Jerry Colonna) along with Marsha Davis, our CFO and myself.

Brad and Jerry have been on the boards of, I would guess, hundreds of companies. They've been to thousands of these. Niel's started several companies and been to more than his fair share himself.

Me? My first. At least as a CEO.

Yes, I've been one of the guys who presents to the board before (usually some staid group of industry luminaries at a Fortune 50 company). I always knew they were just tolerating me though. They generally weren't really sure what I was talking about (the curse of being the guy in a big company who's presenting the 'vision' and future directions). You'd think they'd find that interesting... oddly, these companies tend to shy away from things that change their businesses. Even really good companies. Like Mike "the Diesel" Spindler, then CEO of Apple, saying to me in a side conversation in the early 90's 'ya, vell...dis Internet ting.. I don't know.."

This is different. These are guys I really like and respect. People that have built or been instrumental in creating very real and successful entities from nothing. Folks I've spent some time with. Guys I'm getting to know. And damned smart.

The process of getting this first meeting together has been interesting, thought provoking, fun and slightly uncomfortable. Most of all, it's been very useful.

The majority of it's been done via email and a get together or two. Niel, Jerry and Brad gave us some area's they wanted to get familiar with, including our latest P&L's, current revenue, our 12 mo. proforma, information on our revenue models, metrics we should be tracking, strategies for dealing with user generated content, product roadmaps and thoughts on cash/funding now and out in the future.

We send them some info, they asked questions, then some more questions. We'd followup with more info. A few more questions and it's the day before the meeting! Just like that. This happened over a two week period. No way would we have been able to go over this much info and have the give and take, ability to answer with reasonably complete answers and the depth in a single board meeting. What do we get from this? A board that's reasonably up to speed on a new business in a new market with a new technology, right out of the gate.

Brad and I got together to talk about it over some great Sushi (if you ever go to Sushi with Brad, let him order, you'll be more than happy with his choices). Jerry, Brad and Niel, based on our information, how we answered, and with what information, quickly zero'd in on the areas they thought we could use the most help and direction. And they nailed it. Brad shared that with me and now I'm going in knowing what the issues are and what we need to work on.

So, the meeting tomorrow will focus primarily on those areas. I doubt we'll spent much time reviewing numbers (we've already done that), and some of the ways our business works (like dealing with content issues ) and other data/reporting oriented tasks. Mostly Covered.

What do we get by being so interactive with the board before hand?

We'll get a full on blast of about 50 years of world class strategic and tactical expertise directly focused on our business. This from guys who've seen just about all of it (from the heights of the dot.com boom to the crash and moribund years following it), and still love doing what they do.

We don't get a meeting where half or 3/4th of the available time is spent going over the numbers and what are really 'reporting' type topics. Special thanks, again, to Andy Sack of Judys Book who talks about how to avoid things like through the painful experience of doing it first. I read, and I learned. Check out his blog for alot of other great insights as well.

Of course, we haven't had the meeting yet, could implode, but I doubt it. Everyone involved is all about making it successful and, after all the prep and interaction, I'm looking forward to it.

Andy's got some magic

Judy's Book Insights

This is cool, and I'm going to do it with ClickCaster at our next group meeting.

Andy's the CEO of Judy's Book (click here for the Seattle version of the site: JudysBook ) and he's got some great approaches to business.  I've only been reading his blog for a little over a month now and I've already gotten some incredible insights from some of the shortest of posts.  Very Zen Andy... keep it up man!

On deadlines and director meetings

All I can say is shit.

Our first Board of Director's meeting is Friday.  And we have a big deadline for delivery of a custom podcasting site for one of our customers, and, of course, we rolled out a slew of new features and capabilities, all this week.  And, of course, all the fun that goes with it (ton's of directors questions;  requests for more info; oh.. yea, that's a serious bug we didn't catch before rollout; you want that new server farm up and running when?  That's funny Scott;  the artist and the developer fight, all of it at once).

Always seems to work that way doesn't it?

The good news is the team is pulling together well, and we're identifying (and addressing) the holes in our communications systems, processes and methodologies for getting things done.

Sometimes, even though it's damned frustrating some days, overall, I can't think of anything I'd rather be doing than getting this startup company from 'emerging' to real.  I haven't worked so hard, slept so little or had so much fun in years.

Gas Price Manipulated To Influence Nov. Elections?

Noticed how drastically the gas prices have come down the last month? I get gas as Costco, and go sometimes 3 or more weeks before filling up (thank you Toyota Yaris) and I keep my receipts. The last price? $2.97 for regular in Mid Sept. Today? $2.29. That's a significant drop. Think there's any connection between that and the upcoming elections? Did you know that Bush's popularity rating is more directly tied to the price of gas than just about any other single polling measure out there? It is.

Ahh.. come on. That can't happen right?

From Lew Rockwells blog (www.lewrockwell.com):

An article appeared this Saturday in the New York Times pointing to some unusual trading by Goldman Sachs in the gasoline futures market. As Raymond Keller, who spotted the article, points out, "They always hide the good stuff in the low circulation Saturday edition."

The article's worth reading. One telling paragraph from the New York Times article is worth repeating:

President George W. Bush nominated Henry M. Paulson, Jr. to be the 74th Secretary of the Treasury on June 19, 2006. The United States Senate unanimously confirmed Paulson to the position on June 28, 2006 and he was sworn into office on July 10, 2006. Before coming to Treasury, Paulson was Chairman and Chief Executive Officer of Goldman Sachs. So what does Goldman do just weeks after Paulson is sworn in as Treasury Secretary? It announces a subtle move that drives down gasoline prices, short-term. Nice move, coming just months before the election.

Give it a read. It's titled "Change in Goldman Index Played Role in Gasoline Price Drop" by Heather Timmons. The article is here (signup required).