4 hours of snow in Boulder

LOTS OF SNOW. Three pictures taken of a table on my back deck. 3:30pm, 5:30pm and 7:30pm. Check it out:

The Second Board Meeting

So, our second board meeting for ClickCaster was yesterday. We had everyone in attendance: Myself and two of my folks (Pete and Marsha) and our directors, Brad, Niel, Jerry by phone, and a guest (David, one of our investors) who's likely to join the board shortly.

We went over some of the mechanics (approving the minutes from the last meeting with some input on how they should be short and highlight via bullet points what was discussed, how to best report finances consistently, etc.) and then went over the current state of the business.

This was an excellent discussion. We went over our activities over the last month such as development, new product capabilities, growth, status of existing customers and contracts, and results of interviews with potential customers but we spent the bulk of our time talking about where the business should go.

We looked at competition and determined we were well positioned. We looked at and discussed other companies our board members were familiar with that had similar business models but were farther down the road in the market and we were able to draw excellent conclusions on what directions we should be taking with our product development, market focus and definition of what the business really was all about.

One thing that really stood out and isn't always obvious to a Web 2.0 type company is an obvious one: Are you a consumer business serving end users or do you sell the platforms and tools necessary to enable others who already have relationships with targeted customer bases? And who's, really, driving your development? The 'perceived' end users customers or the businesses who will actually buy your product and use it to reach their customers?

Are you building your feature set based on what your developers (and their friends) think are cool or on what paying customers are willing to pay for? I know, obvious right? Product management 101 stuff, but it's easy to let those 'cool' things take precedent over the less cool things you can actually sell. Often they overlap, but not always. It's something every resource constrained early stage company needs to watch carefully, and manage even more carefully.

This is a question that I think more and more of the current crop of internet startups will be facing. With the recent pull back from the market (and taking 'parts' out for other future businesses) that Odeo (a company similar to ours in some respects) recently announced, it's pretty clear that not all consumer focused businesses are standing on solid ground.

The first board meeting was great for setup of what's to come and this, the second board meeting, showed us how bringing the full intellectual, market knowledge and general experience of a group of seasoned investors and fellow entrepreneurs has immense value to a young startup.

Most of what was discussed are things we would very likely have gotten to without the boards help and direction, in about 3 months (if we were lucky) and more likely 6 months or more. And in our world, 6 months is, literally, a lifetime.

What's becoming obvious is that by having a highly engaged board that's looking hard at your business, meeting monthly and communicating alot in between meetings is that you have a focusing effect that's exceptionally difficult to get without a group like this helping you to clearly think through the issues.

Often it's simply easier to 'let that problem go' for another month or two with the belief that it'll work itself out. What we did was identify where the weaknesses are and come up with a clear plan on how to address them and shore up the problems, do it with some real discipline and focus, and get ahead of the market, just enough-not too much, to become a major player.

I suspect many boards are more like 'reporting' exercises where the companies execs run through status and what they're planning. There's alot of nodding, a few questions and everyone goes out for lunch.

Not so with our board. We did have lunch (during the board meeting) but what we came out with was a much better view of things like: what our real business is, where we sit in the market, who we need to focus our sales and marketing efforts on and how to get there, much more quickly, than we could have done without the direct input and hands on involvement of a fully engaged board of directors.

We have work to do, and some of it will be difficult and less than fun, but most of it's exciting stuff that moves us to where we need to be. Fast, and with multiple big brains guiding the ship. I'm loving it, and find myself already looking forward to the next board meeting.

Chaos

Oh baby, I love it. The big mondo media world is finding size, in fact, does not matter.

From today's Wall Street Journal:

The first round of bids for Tribune Co. have come in low, prompting the newspaper and TV company to notify bidders that it is now prepared to consider offers for parts of the business, say people familiar with the situation.

The brief story then talks about how 'wealthy individuals' like David Geffen are interested in buying parts of the Tribune Company like The Los Angeles Times.

We're seeing this in radio land as well. Rumors are afoot that Clear Channel, with flat profits and no more room to grow, is looking at selling off stations.

Could it be the value of these assets is dropping as they get farther and farther behind how real people are using media? Smearing ink on ground up tree's and sending out energy on a tiny slice of electromagnetic spectrum were once cutting edge technology for media distribution. No more. Geffen is in his 60's. He's interested because he has an ego and 'owning a newspaper' is one of those ego gratifying trophies that an older generation still think of as valuable.

I, personally, read newspapers (from all over the country) daily. But not a single one is printed on paper. I dont' think I've read a physical world newspaper in several years. And I spend alot more time reading blogs that, often, reference a newspaper story. This gives me context (I trust the bloggers perspective which gives me confidence that reading the story is worth my time). 80% of the newspaper stories I read now are filtered THROUGH a blog entry recommending it. Hows that for role reversal?

And the same applies to radio. It used to be at the center of my music world, but no more. Now, I listen to podcasts of personalities playing music I like, or streams from services like Pandora and LastFM that let me create my own radio station on the fly or through linking with other like minded (or not like minded) music fans that recommend things I might like.

Even my favorite radio, NPR, is being supplanted by 'talk' podcasts like David Cohen's Coloradostartups, Diggnation, Web2.0show and some old NPR shows that are getting the podcasting religion like This American Life.

The media landscape is changing fast. Media consumers are rapidly shifting from atoms to bits. Long tails are popping up all over. Social networking is driving content creation and consumption more each day. Much of this was predicted back in 1995 when the web really took off, but it didn't happen quickly. But here we are, over 10 years later, and the tipping point may very well have just hit in earnest. As Gates says: we tend to overestimate what will happen in the next year and underestimate what will happen in the next 10.

Did I miss a meme or buzzword in that last paragraph? Yea, but I got the big ones.

It's a great time to be in the middle of the chaos. The Chinese character for chaos is a combination of two other characters : Trouble and Opportunity. I couldn't agree more.

Are early stage startups and normal lives incompatible?

I've been thinking about this the last few months. Much has been written about how todays startups are made up of a bunch of under 25 year old single guys living together in a house they rent to start an internet company.

Well, it's bascially true.

But there's another group that's also well suited for this lifestyle (and it's very much a lifestyle: it effects every part of what you do).

Who? Middle aged folks (between 40-60) who are either single/divorced or empty nesters. It’s not a large percentage of this group. But there’s a lot more potential startup guys in this group than you might think.

I'm in my 40's. I'm divorced. I'm in good health. I don't feel much different than I did when I was 25. I don't party like a 25 year old any more, but I have no problem staying up to 2am, working through weekends and doing whatever it takes. I also have no problem using my personal resources to make this fly, including my house as our office/development lab for the last year. Something tells me if I were married or had a live in girlfriend, that's not something that would have been possible (or, if it had, not gone on for anything close to a year).

In effect, I'm similar to those 25 year olds from a 'point in my life' perspective. I come and go as I please without checking with anyone. I get up when I wake up and go to bed when I'm tired (and the hours aren't even close to 'normal'). I have a social life, but nothing like what a 'normal' single guy in his 40's has. I'm seeing a women, but she'd be the first to tell you it's not a 'normal' relationship (we're lucky if we get one night a week to do anything). It's very much like when I was a 25 year old guy on my own. Only, now I'm a 40 something guy on my own.

The only real differences are financial (I'm at a place most 25 years aren't) and life experience, but that works to our advantage. Having the resources of a house to work from, effectively turned into a sort of residential office building (ahh.. back to that ‘frat house startup thing), not worrying about income for long periods of time and financing the costs of getting everything off the ground and running for a year or so is a real advantage in a startup. Also, having a broad set of experience helps to avoid at least some of the pitfalls, and brings some degree of adult supervision to the party. Some of my folks call me dad though, which both pisses me off and makes me smile.

The reality with a startup is the work comes first. The big difference for me between this and most 40 something's doing a 'day job' is it's also my play. Given a choice in what I'd do in my 'off time'.. well, this is it. So the two (personal and professional lives) merge and become one.

Many would say this is bad, unbalanced, a precursor to burning out. I disagree. Do I want it to always be like this? Well, maybe I'm just not cut from the same cloth as most, but yea, I do. Right now, assuming we succeed with ClickCaster and it goes to it's logical end (being acquired or going public), I would, absolutely, do it again (and again). This must be what they mean when they say 'he's got the bug'. It really does get in your blood.

And to all my 40 something friends who are married with kids still at home with day jobs, car payments and mortgages: you CAN do it, but it's more than a stretch, it's a commitment every bit as big as getting married or having kids. More so in some ways. It's a way of life, and it takes massive amounts of your time and, more importantly, your attention, than you ever dreamed going in.

My guess is only a small percentage of marriages can survive it (and yes, some can). I know though I would not be doing this if I were married. I would not have turned down that mid six figure executive job at the fortune 50 company with my (now ex) wife looking over my shoulder. The privilege of creating something from nothing but your mind, and turning it into something real, useful and valuable in the world doesn’t carry the same weight as the big title and paycheck for many spouses. Nor does the possibility of crashing and burning with zilch to show for it in a couple of years give your significant other a warm fuzzy feeling.

The one's the do make it work, at least that I've seen, have both spouses involved in the business. That, or they have a full and engaging professional life of their own keeping them occupied when you’re working a 16 hour day.

At that point, you have to ask: why are we doing this again? I’ll bet you a day of Iraq war expenses your spouse will.

And kids? Well, that's a tough one. You're going to miss a lot of their lives. Period. You can tell yourself no, I'll make that work, I'll find the time to get to Heather's play or Bobby's soccer game, but more often than not, you won't. The servers will go down. A key customer will show up at the airport 'on a stopover' and want to meet. Something pressing only you can handle will pop up and you’ll have to handle it and miss that play. It WILL happen.

I know this is going to piss off some people. And it's likely to be skewered by some of my own family and friends as well as many who think it can be done (and are trying to do it). But, I've been there (Married, with a kid) and there's simply no way I, personally, could have done a real startup with all the overhead (yea, I know... it sounds cold, but it's accurate) of a marriage, a family and all that requires in the equation.

Much of what I write about here are the experiences of being a first time CEO and startup guy 'later in life', and this is very much part of it. Most people my age (married and divorced) take the easy route of staying in their good paying jobs, doing something they don't particularly like for a company they don't particularly believe in. It really is easier, more comfortable and a lot less scary than starting a company from scratch.

For me, though, it feels a little like being chained up. Really nice pretty shiny velvet lined chains, but chains nonetheless.

Doing a from scratch technology startup isn't for everyone. I'd say, maybe, 5% of the population can do it; and only a small percentage of that group can actually be successful at it. Society makes it hard for us to break the social contract of getting a good job, finding a mate, having kids and retiring to our 'hobbies'. And for that 95% of the population, it’s a good life. My dad is one of those guys. He’s had a good full life. He’s happily retired from a lifetime job at IBM. He doesn’t fully understand what I’m doing, but he tells me he’s amazed and proud of me for doing it. I’m pretty sure he even means it.

Someone has to start things. Someone, somewhere, sat in a garage or basement or an employers office and thought up IBM, HP, Ford, Apple, CitiBank and all the other big companies millions of us work for today.

We've got to have it, and that small percentage of under 25 year olds who don’t know better and (mostly single, divorced or empty nester) middle aged guys who do know better but have the balls to do it anyway are what it takes to make it happen.

SEO and politics= just a matter of time.

in Online Media Daily today:

A GOOGLE SEARCH ON THE name "George Allen"--a Republican U.S. Senator from Virginia running to retain his seat--now returns his official Senate page as the top organic result. But if some bloggers have their way, the top result will instead be "New 'N Word' Woe For George Allen," a CBS News article from September, highlighting the Senator's alleged use of a racial slur.

This is an interesting development. The Dems manipulating SEO (Search Engine Optimization) for their candidates benefit?

If you think of it, also makes complete sense. People likely to vote are also likely to use the internet. If you use the internet a lot, what do you do if you want to know more about someone? You Google them.

the Dems have been getting their butts kicked for years now by Republican media manipulation (Fox News anyone?), but this is an area where they might actually have a chance to level the playing field a bit.

Is it good? No. It sucks. Is it inevitable? Yes. Is there another way? Only if everyone agrees to play fair and that's clearly not happening with the current state of politics. As much as I hate thinking the only way for the Dems to really have an impact is to get down into the mud with their Republican counterparts, who have raised mudslinging to an art form, I don't see any other way for them to have a real shot at reversing their current impotentance in government.

So, a little virtual Viagra for the Dems it is.

Full disclosure: I'm a registered independent (just like my Ma and Pa). Yea.. I know, weird to 'register' as an independent isn't it? That's Colorado for you.

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.