Whenever I see the success of Vodafone’s Zoozoos being celebrated or the iconic advertising that almost created brands from scratch (like Onida), I am bewildered about the context of the celebration. It’s almost feverishly praising the ‘idea’ and its execution while ignoring the wealth creation in the hands of the owners. It’s shocking how the agency then sells and transfers all this for a mere few lacs to brand owners. It’s an IP slavery model.

Advertising agencies are almost equal partners in some business creations and yet benefit the least. For the older and rock solid brands, they are the true ‘custodians’. I remember meeting an agency head to seek help on some confusing signals about a particular brand of toothpaste from a Unilever brand manager. He chuckled and said ‘These guys are new kids. They will grow and learn. The brand is about………’ and he gave me almost a Wikipedia like 1 hour plus analysis of the brand and what it stood for.

A case:

Imagine that you are the owner of a Rs. 1000 crore industrial air conditioning enterprise. The business is stagnating. Lots of small players are eating into your market share. You have to move from being a service business to becoming a product company that makes air conditioners for consumers – a business that is booming. All the assets to do this are in place. The business cash flow can support this logical expansion. It’s a giant leap but has to be made for you to survive and thrive.

Lots of questions remain unanswered – How will you create a new brand for ACs in the consumer space? What’s the product strategy? What’s your positioning and differentiation?? What is your consumer communication? Which media vehicles work best?  You have sold ACs to purchase guys in factories and malls – how will you sell them directly to discerning consumers?

Sure you could hire some professionals from existing consumer AC companies but that’s a path riddled with hits and misses.

Now, imagine that Advertising Agency ‘Olive & Mason’ that has helped sell ACs  for 50 years finds out about your plans & approaches you to help.  They have worked with over 10 leading AC brands in the past, made them market leaders, they have all the insights, research, market penetration data and the knowledge of what the market wants. Most importantly, they know what the market doesn’t want. Also they are not conflicted to work with you at this stage.

Their proposal is simple – they will charge you only their real costs in terms of research, media and creative costs that they will incur on your behalf.

Their upside is 2 % equity of your company’s extra valuation should this new business of yours succeed. So their entire profit is success based. The nitty-gritty of ‘success’ is of course negotiated hard between you and them and is a sure win-win for you and them.

If I were that owner, I would do that deal.

Your CFO however is much wiser and this is what he does:

Your company casually floats a general inquiry that you will be spending 200 crores in building a consumer AC brand. Of this almost 20 crores  (10%) will be spent only in consumer media (TV, Print etc) to launch the brand. In a few hours the 30 best agencies of India clamor to get into your reception door. Over the months, they pitch so sincerely and hard that you feel like hiring all of them. Finally, the best amongst the best is selected. The lucky agency crafts your product, strategy, creative and media plan. They wisely spend your 20 crores.

It was agreed between you and them that they will earn about 1 crores in the bargain (5% margin on the 20 crores as a blended commission on creative and media) but they secretly make 1.5 crores (ouch).  A few weeks later a media auditor calls your CFO and whispers about the 50 lacs extra surreptitiously earned and all hell breaks loose. You can now legally and morally strangle the agency anytime you wish.

At your end, the AC business has gotten off to a great start. The 200 crores investment is poised to create a 200-300 crore business in the next 3 years and your stock has risen to reward you with a market cap of an extra 500 crores (1.5x of revenue). Life couldn’t have been better.

The guy who fooled the ad agency is you.

If the agency had taken equity as compensation, their 2% would have been worth 6 crores and appreciating. They would have been your partners in many more milestones to cross. Today, they are a vulnerable vendor that has taught you everything and yet earned a negative reputation for themselves. This is classic win – lose.

The trade-off – fees vs. value creation.

Consider this:

* Zenith Optimedia report

** LiveMint report

# Assumed blend between creative and 1-3% media commissions

@ Assumed that 10% of the topline increase was thanks to improved marketing and communication of ads.

The new business model – Ad agencies becomes the Brand VC

The new business model would mean that Ad agencies get capitalized to run operations at their own costs (salaries and overhead expenses) and use the teams to then create and manage brands in exchange for equity. Its equity for knowledge just like VC operate using the equity for cash model. This creates a deeply valuable business model that not only can be externally funded but also create a deep synergy across the value chain – rather than being at conflict today (it’s well known that ad agencies need their clients to spend to survive – sometimes it’s not in the best interest of their clients to spend but that gets compromised). In a world that’s contracting spends and improving returns, we need partners in arms – not enemies in bed.

The risks in this model as Punitha Arumugam – CEO of Madison Media explained to me are manifold: The business of clients (and hence their stock) declining due to reasons other than good marketing; the inability of the agency to really control or influence a client like a financial VC; having the deep cash pockets required to sustain long term cash burns in the hope of accumulating equity etc.

Well, this is the brave new digital world and that calls for brave hearts. If google, twitter and facebook are the new media powers, it’s knowledge over brute media power that will win. More the reason to trade IP – not sell it to the highest bidder. As a starter, the big 5 agencies could incubate a VC agency model to service new start-ups and less risky business models as an experiment.

Mr. Martin Sorrell – are you game to become VC yet?

I was reviewing a linked in email today from LinkSV and noticed a new profile for http://www.milo.com/ which is another site enabling shoppers to research stores, best buys and purchase locally.  That in and of itself was interesting but what was really interesting was the investors.  Traditionally in a $4.0m raise you would generally see 1 or 2 VC’s that would be in the investment to ensure they had good leverage and would not unnecessarily dilute their equity position.  However, in this case there were over a dozen investors from the Wharton School, to Angels to standard VC’s.  A fairly eclectic mix to what we would normally see in a social marketing venture.

So this begs the question, is there a new trend starting where the inside Angels are looking to get into bigger rounds with smaller chunks of capital replacing the traditional VC model?  Stay tuned this maybe worth watching.

Nikon D300s + Tamron 17-50mm f/2.8 VC at 50mm f/5.6 ISO200 1/30 Second, Post in LR3 Beta and Photoshop CS4

Until today (literally), I’ve tried my hardest to stay away from using Photoshop to edit my photographs. I’d open up the program and think “Oh man, what in the world do I do with all these tools….what’s this layer thingo? Agh, forget it,” and that’s as far as I’d get.

Today I had a lot of time on my hands. I’ve got a fever and sore throat that kept me away from work, so between naps and copious amounts of tea, I’ve begun studying how to use Photoshop CS4. The result is the image you see above. This one of Bridget’s favorite close-ups from our little impromptu shoot on Saturday evening (being out in the cold that evening is probably what made me sick!).  Most of the editing and retouch was actually done in Lightroom 3 Beta, including brightening the eyes and spot removing blemishes, as well as minor adjustments to color.

In Photoshop CS4, I quickly fell in love with the stamp tool, which allowed me to very easily remove lines on her face, particularly under her eyes, and bring out a little more detail in her hair. Here’s the shot straight out of the camera for reference:

Nikon D300s + Tamron 17-50mm f/2.8 VC, same settings as above, SOOC

Huge difference here! (Bridget still looks very lovely of course). This image was a great catalyst for my beginnings in the world of Photoshop. In all, the entire process took only about 10-15 minutes from start to finish, showing how a little touch-up work can go a long way in portraiture. What really impressed me is how seamlessly Lightroom works with Photoshop. Once I was done with initial editing in Lightroom 3 Beta, a Command + E keystroke (Mac) opened the image in CS4. When I finished with CS4, I simply saved the image and closed the window, which brought me right back to Lightroom 3 Beta with the CS4 edits applied. Doesn’t get any easier than that!

Here's the touched-up version (top) right over the out-of-camera image for easier comparison

Her nose is a little red from the cold, but I’m sure that’ll be fixed as WordPress seems to desaturate my photos! What gives, WordPress?! They look how I want them too while I’m editing the HTML, but as soon as I publish the post, the colors look off. Different browsers seem to render the colors differently as well, so I’m really not sure what you’re seeing if you’re reading this! Oh well….

And so, with my fear of Photoshop gone, I’m going to hit the books and see if I can’t really see what this program can do. I’m excited!

*Cough Cough*

]]> http://martyncrew.wordpress.com/2009/11/23/stay-tuned/ Mon, 23 Nov 2009 11:50:10 +0000 martyncrew http://martyncrew.wordpress.com/2009/11/23/stay-tuned/

While I’ve been in the UK, I’ve been thinking about and researching why UK technology companies seem to do so badly in the US. I’m presently working on an article on this theme and will be blogging about this early in 2010. If you want a sneak preview, let me know!

Superman and the Magic got the best of the Raps

Thanks for showing up, Hedo “fourth quarter” Turkoglu, and thanks for bringing your buddies. The Raps entered the final 12 this afternoon tied, but watched a crew of Orlando scrubs led by J.J. Redick run wild and put it away before Superman and Vince Carter got back on the floor, winning 104-96. Turkoglu, Toronto’s supposed difference maker this season, finished 3-of-11 for 12 points against his former team.

This was a tough game, but one the Raptors could’ve won if they’d played to their strengths. Chris Bosh drew a couple first quarter fouls on Dwight Howard, then decided to loft jumpers the rest of the game. CB finished with 22 points on 10-of-22 shooting and grabbed five boards. Andrea Bargnani, in foul trouble most of the day and ineffective offensively when on the floor, led the Raptors with nine boards.

Turkoglu’s the guy that’s really getting to me, though. Early in the fourth with the game tied, Jason Williams found Marcin Gortat underneath for a layup that Turkoglu didn’t even both contesting, despite Gortat missing a pair of free throws minutes earlier. Yeah, and thanks Matt Devlin for pointing out that we brought him in because he shot 42% in the playoffs last year. That’s an impeccable number.

After a rough first half, Carter did his usual second half damage against Toronto, finishing with 24 points — 18 on 7-of-12 in the final two quarters. Redick had the second-best game of his career (the best coming at the ACC a few weeks ago), finishing with 19 and five assists.

The loss drops the Raptors to 6-8, with the Pacers coming to Toronto on Tuesday.

below is a one-line note i got one friday afternoon from a friendly entrepreneur who wanted advice over the weekend:

“Is it hard when people love you for your money ?”

He whined his way out of Toronto nearly six years ago, with very little to show for himself since. A player that was once touted as the next Michael Jordan has never really lived up to his potential as an NBA superstar. Today, Vince Carter is probably best known for a dunk he made in the 2000 NBA Slam Dunk Competition while still a member of the Toronto Raptors (which is pretty sad for someone with his talent).

Yet, when Vince Carter returns to Toronto, he always seems to have a flare for the heroics. He torched the Raptors as a New Jersey Net on several occasions and looks poised to do it again as a member of a very talented Orlando Magic squad.

Carter is best known for a slam dunk competition.

Raptor fans loath him and the rest of the league (except for Orlando) seem to realize his indifference to winning makes him more of a problem than an asset. He is a figure of the past, yet every time he returns to Toronto, he gets booed. As a Torontonian, I understand the hate, the disappointment, the feeling of abandonment Carter has caused – but booing him only adds fuel to the fire.

It’s clear Vince Carter is anything but a self motivated individual, so let’s not give him a reason to want to win. Rather than reminding him that we still remember, why not let him know that we forget? In the grand scheme of things, Vince Carter will never be a true difference maker in the NBA. Let’s let him finish out his career knowing we don’t care.

//……………………………………………………

#include<stdio.h>

#include<windows.h>

#include<time.h>

#define n rand()%13+1

void main()
{
srand(time(0));
printf(“%d”,n);
}

//……………………………………………………

随机数的应用，因为自己想做一个猜数字的游戏，但是游戏性需要用到随机数，

于是找到了这个，可以很好的说明随机数的运用。

notice：

1.rand()%13+1 是让全范围的随机数经过“%”（求余数）运算式变化成生成1-13的随机数

2. srand(time(0));是让每次的随机数都重置，不会每次的随机数都一样

3.注意运用随机数的时候，需要声明的东西（#include）

Nikon D300s + SB-900 (Camera Left) + Tokina 11-16mm f/2.8 at 14mm f/5.6 ISO100 1/200 Second

Bridget and I attended a wedding today that was right across the street from the beach. I didn’t take any photos at the wedding, but I seeing as I always have my camera with me, I decided to take some photographs of my lovely wife after the event with a beautiful sky and ocean as a backdrop.

Nikon D300s + SB-900 (Camera Left) + Tokina 11-16mm f/2.8 at 16mm f/9.0 ISO100 1/250 Second

The above shot reminded Bridget of a CD album cover. I really like the warmth in this photo, which gives it a very “golden sunset” appearance.

Nikon D300s + Tamron 17-50mm f/2.8 VC at 17mm f/5.6 ISO200 1/20 Second

There’s a reason why Bridget is so bundled up here. It was really cold, no more than around 50 degrees. There were also lots of cold and annoying gusts of wind that kept threatening to topple over my lighting rig. I used a smaller shoot-through umbrella to prevent this, but as you can see, there were times when Bridget had to step in and save my SB-900 from falling into the dirt. I’d post all the pictures of Bridget making miserable faces due to the cold, but I’d rather spare her the embarrassment (more like spare my myself a butt kicking!).

Nikon D300s + Tamron 17-50mm f/2.8 VC at 50mm f/5.6 ISO500 1/13 Second

This shot (above) was the last one for the evening, and I was running out of light fast at this point. I started having to nudge my ISO up to avoid shutter speeds I couldn’t hand hold. Plus, at this point, we were freezing! I love the coat Bridget is wearing here too. I actually picked it out and bought it for her at a store in Ginza, a large and beautiful shopping district in Tokyo.

Nikon D300s + Tokina 11-16mm f/2.8 at 11mm f/5.6 ISO200 1/30 Second

Can you tell I’ve been experimenting with hot shoe flashes? I thought I’d finish this post with this goofy shot I took of Bridget in our home last night. She has this great umbrella that we got at the Museum of Modern Art in San Francisco. It has a blue sky with white cloud design on the inside. I lit Bridget with an SB-900 on camera left and kicked some light into the umbrella from behind her with my SB-800, both fired wirelessly using the built in flash on my D300s as a commander. Please excuse the mess in our living room! (it was a very impromptu shoot)

I went to see Tim Draper, 3rd generation VC from Silicon Valley speak in Trinity College, Dublin last night. He took a 10 million foot view of the world (from Mars actually) and told us that anything is possible. Everything will probably happen eventually but the question is when. It’s easy enough to predict that all horses which start a race will finish but if you knew the finishing order beforehand that’s where the money is. Those who get the timing right make the money and that’s the VC’s job. They want as many entrepreneurs as possible to participate and they will pick the winners. It’s no mean feat to pick the winner and Tim didn’t really tell us how he can predict the finishing order except to say that he has a very good team to do that for him. Overall it was an inspiring talk and great encouragement on a Friday night – something entrepreneurs need at the end of the week.

I attended Telekom’s Innovation Day a couple of weeks ago and joined a discussion on European Entrepreneurship. The other people joining this discussion were from different backgrounds: Finance, product management, startups, entrepreneurs. After a short while the discussion centered around two questions: what is the reason Europe seems to be creating less successful startups and how do you successfully start a company internationally?

How do you start a startup to become big internationally?
I think a great comment came from Sebastian Wallroth who pointed out the difference between the business and the developer perspective. Developing something to be internationalized and building something for international use might be seen differently by these two parties. I personally believe that it is important to start your company close to your initial users/customers. It is crucial to get as much feedback as possible–especially in the beginning. Facebook’s Net Jacobsson also repeated this theme at the very same event, stating that he attributes much of Facebook’s growth in applications to Facebook’s developer garage events which were held locally to strengthen the community and gain insights into what developers wanted.

Having been a software developer for several years, I know how tempting it can be to build the best, most robust and extensible application right from the start. And while I certainly agree that web applications should be built with internationalization in mind, I can also see the threats of over-engineering and getting tied up in details. Starting a company in a European country (aside from the UK most probably) almost demands rolling it out in the local language first. However, if your application has global applicability, it might be worth considering a first beta version in English.

As Julie Meyer from Ariadne Capital put it in a panel discussion earlier at that event: there are many startups which think small but then need to grow big quickly.

What about Europe?
As there are more than enough examples of highly successful European entrepreneurs in the US, the logical inference was that it might be Europe which is limiting the growth in new companies. While many agreed that the lack of sufficient seed and early stage capital might be a factor, I doubt that the underlying problems can be solved by just providing more cash for young entrepreneurs. On the other hand, I do not neglect that Germany should provide a better soil for more VCs. However, an entrepreneur who wants to work at a startup just for the salary is probably not all aware of the difficulties ahead.

I certainly believe that the attitude towards taking risks is different in Europe. Having spent two years in the heart of Silicon Valley, I am pretty sure that rewarding risk is almost unique to the most vibrant startup scene on this planet. Risk-taking is a vital part in startup life. Europe lacks this sort of entrepreneurial thinking. This thinking also includes the idea that people who have been out of the large corporate setting for some time are still able to adapt and thus capable of switching to a different working environment. Unfortunately, this is just not (yet) part of our thinking.

Selling too early?

Another, very interesting point came up shortly before the discussion ended: what about the statement that a lot of companies in Europe are not able to develop fully before being sold? The hypothesis was that a lot of investors in Europe are also still not willing to take larger risks and hence hinder greater exits. Thus, the lightning rods like the ones in Silicon Valley with high valuations are lacking and in turn not creating enough interest for people to pursue an entrepreneurial career. I found this to be a really compelling statement. Too bad it is most probably going to remain a hypothesis for the lack of actual data.

]]> http://jonathanfleming.wordpress.com/2009/11/20/nightlife-at-the-academy-of-sciences/ Fri, 20 Nov 2009 20:29:07 +0000 Jonathan http://jonathanfleming.wordpress.com/2009/11/20/nightlife-at-the-academy-of-sciences/

Nikon D300s + Tamron 17-50mm f/2.8 VC at 17mm f/5.6 ISO500 1/8 Second

Every Thursday night from 6:00pm – 10:00pm, the California Academy of Sciences museum in Golden Gate Park, San Francisco, opens its exhibits to the 21+ crowd. The event is called “Nightlife” and includes live DJ music, cocktails, and food. I decided that Nightlife was the way for us to experience the Academy of sciences for the first time since its recent renovation. So Bridget bought a couple tickets and we met at the museum after work. This was a few weeks ago by the way. I haven’t had a chance to post any images from that evening until now.

The dark venue had me thinking about how awesome it would be to have a highly sensitive full-frame sensor, but the D300s was up to the task. This was also a great opportunity to test the practical use of the reworked version of my Tamron 17-50mm f/2.8 with Vibration Control (VC).

Nikon D300s + Tamron 17-50mm f/2.8 VC at 17mm f/2.8 ISO640 1/8 Second

The new building for the Academy of Sciences features tons of open space in its interior. This huge courtyard was a nice place to hang out and people-watch as we ate dessert and enjoyed some drinks.

Nikon D300s + Tamron 17-50mm f/2.8 VC at 17mm f/11 ISO200 1/60 Second

The images above and below were taken inside the Academy’s huge, four-story rainforest exhibit, contained in a massive glass dome. As soon as we stepped into the sealed enclosure, both my glasses and camera lens fogged up heavily. The temperature and humidity are both very high inside the dome to simulate a rainforest climate. In the above image, you can see a fog-like haze in the upper left of the frame from the misting system that keeps the dome’s humidity at a sweat-inducing, lens-fogging 75%. This climate, combined with an enormous amount of light pouring in from dozens of skylights and large metal halide lamps, makes a perfect environment for the growth of many kinds of tropical plants from around the world. There were hundreds of animals in the dome as well, from amphibians to reptiles, bats, birds, and butterflies, to name a few.

Nikon D300s + Tamron 17-50mm f/2.8 VC at 17mm f/11 ISO200 1/15 Second

I liked how these spiraling pathways (above) don’t just wrap around the edges of the dome but take you through the center as well. Can you see fish swimming in the water below the platform? That body of water is actually an aquarium that you can view from below, one floor beneath the dome. It’s called the “Flooded Forest” :

Nikon D300s + Tamron 17-50mm f/2.8 VC at 17mm f/5.6 ISO200 1/13 Second

There were some massive tropical fish in the aquarium….like scary-large. One thing that I definitely kicked myself about all night: I should have brought my ultra-wide Tokina 11-16mm in addition to the Tamron. Using it would have helped me take in more of the modern, interesting architecture inside the building. There’s always next time!

Nikon D300s + Tamron 17-50mm f/2.8 VC at 19mm f/5.6 ISO200 1/8 Second

Bridget wanted to take pictures that evening as well, so I equipped her with the Lumix Lx3, which she had a lot of fun with:

Nikon D300s + Tamron 17-50mm f/2.8 VC at 17mm f/4 ISO1100 1/8 Second

The following two shots are courtesy of Bridget with the Lx3 set to High Dynamic, a new function included in the latest update to the camera’s firmware:

Panasonic Lumix DMC-LX3 at 5.1mm f/2.0 ISO400 1/8 Second, High Dynamic Scene Mode

High Dynamic was a perfect mode for this area of the aquarium, with its dark, wavy, electric blue walls framing brightly lit tanks filled with aquatic life.

Panasonic Lumix DMC-LX3 at 9.1mm f/2.5 ISO400 1/8 Second, High Dynamic Scene Mode

I offered for her to claim the Lx3 as her own from now on, but she hasn’t used it since, so I guess it’s mine again!

Nikon D300s + Tamron 17-50mm f/2.8 VC at 17mm f/2.8 ISO360 1/8 Second

After visiting the aquarium, we enjoyed a show called “Fragile Planet” at the Academy’s Morisson Planetarium, which is apparently the world’s largest all-digital dome. Without my ultra-wide, I couldn’t get the whole dome in one shot, but you get the idea. It’s huge! The complex relies heavily on natural light for interior lighting anyway, so a shot of the entire dome would have been very dark. Perhaps we’ll come back during the day next time.

I actually have a ton of shots from that evening, but I’ll have to upload them later.

Every week I read thousands of blog posts. Here, for your weekend enjoyment, are some highlights from my recent reading, for you.

	On Starting Up… http://venturehacks.com/articles/sean-ellis Great tips from the guru of startup marketing.
	On Design & Product Experience… http://www.noupe.com/how-tos/web-design-trends-testimonials-design.html The trending shape of testimonials to come.
	On Modular Innovation… http://blogoscoped.com/archive/2009-11-19-n30.html Modular Innovation wars… heating up.

Have a great weekend!

Jeremy Horn
The Product Guy

Add to Social Bookmarks:

Take the following code:

	CString str1("Startt"),
			str2("Start\0");
	str1.SetAt(str1.GetLength()-1, '');

	str1 += "End";
	str2 += "End";

What would you see when watching the resulting strings? Probably not what you expect:

This is a simplified version of a much dirtier, very real bug I dealt with recently. Several string and debugger features joined forces to cause this behaviour.

First – the debugger: it apparently watches CStrings as c-strings – displaying their essentially-LPTSTR member m_pszData.  Thus, any null embedded in the string (well, the first null, really) is treated as a terminating null – anything past it would not be displayed. When we force a watch on the full CString buffer, a fuller picture is revealed:

So the ‘End’ suffix was added to str1 after all – but why the difference between str1 and str2?  How can initializing a string with an embedded null be any different than setting that null in the next line? The next clue is obtained by observing GetLength() for both strings. Note that GetLength returns the length of the allocated string buffer, not the strlen of the underlying c-string. (It is utterly unimaginable that such a basic behaviour goes undocumented.)

So, str1 and str2 are indeed somehow different before adding the ‘End’ suffix. In fact, they are fundamentally different even before manually setting the null in str1:

	CString str1("Startt"),
			str2("Start\0");

	int len1 = str1.GetLength(),	// gives 6
		len2 = str2.GetLength();	// gives 5 !

The issue now has nowhere left to hide. Stepping with the debugger into the CString ctors reveals the root cause: the constructor used for both CStrings accepts a char*-type as argument (in retrospect – how could it be otherwise?). So, just like in the debugger itself, the first embedded null is treated as a terminating null – anything past it would never make it into the CString. Try the following and see for yourself:

	CString str3("First\0Second"); // str3 now contains only "First" !

Once this root cause was understood, the bug was a half-line fix.

Thanks and kudos go to Alexander M. of wordpress support, who found and fixed within 1 hour (!) a wordpress bug that I reported, to make this post possible: until yesterday, wordpress would ignore explicit nulls (backslash + zero) between quotes, in a sourcecode section.

from wikipedia

A mask is an article normally worn on the face, typically for protection, concealment, performance, or amusement.

This stone mask from the pre-ceramic neolithic period dates to 7000 BCE and is probably the oldest mask in the world (Musée de la bible et Terre Sainte )

i have written previously what not to do in a VC presentation

i would like now to flip the coin and tell you what to do.

to perform. to succeed, to get good money. so your idea can spring into life.

here is my first rule, or piece of advice

before your start your performance, your presentation with a VC, decide

are you putting on a mask, or taking off a mask?

So I switched my thesis topic today.  Originally I wanted to write on social media and its affect on financial markets.  More specifically I wanted to look at StockTwits tweets its effects.  Unfortunately since StockTwits is so recent and we have such a short period of time to write our thesis my advisor and I decided that this was a little bit too ambitious of an undertaking.

My new topic:  How has the financial crisis affected the venture capital industry?  In a previous paper about the financial crisis and venture capital Joern Block and Philipp Sandner found that on average companies that raised funding after the financial crisis raised 20% less than those that raised funding before.  Interestingly they found that this difference in funding was not found in early stage seed funding, but rather in Series A or later.

The hypothesis explaining this was that entrepreneurs that hadn’t already raised seed capital could simply wait for a better economic climate, but firms that had already raised some capital had pressure to execute and could not simply put off their need for capital until the economy turned around and must accept funds on worse terms.

For my paper I hope to look at the effects in even more detail.   I think looking into if the location of the startup influences in any way the amount of funding or the valuation pre and post financial crisis.  One theory I have is that since start ups outside of the entrepreneurial hot spots are already under immense pressure and scrutiny by VCs the ones that do survive and were funded after the financial crisis are already the best of the best.  Because of this I believe the financial crisis will have had less of an effect on start ups located outside of the entrepreneurial friendly cities such as Silicon Valley, New York, and Boulder.

Of course I am still very early in my thesis process and my ideas are constantly evolving.  I would love any input anyone has on my idea or suggestions as far as interesting hypotheses to test.

(Another old post – trying to get all my writings in one place.)

So we are thinking of raising a round of angel investment in the next few months. While we’ve been reading up on Cap Tables, Executive Summaries, Slide Decks, and things needed for official suit and tie meetings, we aren’t sure how to get that first cup of coffee with potential investors. Here’s some great advice our adviser told me:

You Are The Star:
Think of yourself as a talented high school quarterback. Maybe you aren’t the best of your state, per say, but you are clearly ahead in your team and ready to try for the big leagues. Before you start applying to colleges and selling yourself to recruiters, you first visit the schools you are interested in and see if they would be a good fit for you. You should start the same way with investors: they should want YOU by the time this phrase is done, not vice versa.

Pick your schools: The Ideal, The Acceptable, and the Fallback
Ask around and get a long list of investors (angel or otherwise.): at least 15, but 20+ would be safe. Research ALL of them: get an idea of what sort of companies they invest in and if they appear, on the surface at least, to be a good fit for your company or idea. Categorize them as Poor Fits, Decent, and Ideal. Your first coffee meetings should be with the investors you know you don’t want. This is just to get you practice, and to spread the word in the investor world about you. Don’t meet with your top choice investors until you really feel ready and have had at least 5-10 practice rounds.

Introduce Yourself in a Neutral Environment
Next, see if you can find someone in your contacts who can get you a personal introduction to them. If not, don’t be afraid to blind email them. Let them know you are working on a new idea, have XX amount of experience, and want to ask them about the investment industry, their experience, etc. Be sure you do NOT meet them in their office. This sets a precedent for professional attitudes, poker faces, and non-disclosure crap. Buy them a coffee, be laid back and conversational, be polite but not reverent.

Interview Them
At this meeting, ask them about their interests, what they are looking for, how involved they like to be with their companies, how much money they have invested in the past, and, if they can share it, what sort of success their portfolio companies have encountered. If they are at ALL interested in investing in new companies, they will inevitably ask what you are working on. Here you should have one sentence that sums up everything concisely, but leaves them wanting to know more. If it feels right, you can follow this up with a brief description, under 2 minutes. If they dont ask about your company, they probably aren’t worth your time.

A Subtle Sale
Inevitably they will then ask, “Well, when are you looking to raise money?” Your answer should be about 2-3 months further out than you truly think, so you don’t sound desperate or needy (IOW: “Oh, in 4 – 6 months). They will then ask “Well, how long could you go without funds?” You respond, “Well, money isn’t really an issue. My (last company, parents, relatives, loans) are supporting me for a fair amount of time.” They look surprised, “Well then, why are you interested in raising money?” You calmly retort, “Well, I don’t want people to look at this as just some pet project of mine. I want it to be legitimized, able to stand on its own to feet. We are working with (list companies they may have missed out on funding) already, and I know we can get even stronger people with the right funds.” This keeps you from sounding like you are begging for money, but also lets them know specifically how an increase in funds would help you.

Network
As you wrap up, be sure to ask if they can introduce you to anyone they think would be interested in the idea. This not only lets them know that you are talking to other investors and people, but also gets you some great new contacts, and lets them feel especially helpful and more invested in the idea.

Make sure you are aware that, from these meetings to the moment you receive the cash can take anywhere from 3-6 months (and that is, of course, assuming you raise funds in this economy.) It certainly isn’t impossible, but it’s pretty damn hard.

Last night I attended a Yes Circle event at TeqCorner, where a book called A deliberate pause was presented by its author, Larry Robertson.

For me, the three panelists, John May, Rick Toren and Eric Olsen were the highlight of the evening, and these are the bits of info that stuck.

On Angel and VC investing:

• 52% of Angel investor-funded companies fail
• Only about 1,000 VC deals are done per year, and there are only about 12,000 VC funded companies in the country
• VCs will see 1,000 companies to make one investment, Angel investors will see 100.
• The bulk of Angel investing is done by non-organized angels (“at the golf course”)

On success in enterprising:

• Every successful entrepreneur says that luck played a part in their success, only to follow up with how hard they had prepared to take advantage of the luck.
• Sometimes it takes several failures to get to a success… so make sure none of your failed ventures totally wipe you out

On organic vs VC funded growth:

• There was a stark contrast between Rick (several successful VC backed ventures) and Eric (who took his mom’s passion and turned it into a family business).
• They both seemed happy people who enjoyed their projects, could speak energetically about them and are probably enjoying the fruits of the success they’ve created.
• But it seemed that Rick was very focused on the exit, and Eric very focused on the mission. I am personally very torn about these two approaches. Eric reminded me a lot of Paul Hawken.

How noble to train up a child in the direction he or she should go, one day when they are older, they wont depart from what they were taught.   Wow… that would get me a hardy amen in any church service.  I remember a time when Sunday school was their to teach us (young and old alike) the basics and fundamentals of salvation and the practical application of the lesson. But most important was the Sunday School review, this taught students how to stand up in front of people, recall what was learned and present it.  This was a great platform to teach our children basic presentation skills, confidence, character and many other vital skills they can use throughout life.

I can not help but to wonder where we (the church) got off track. Most of our young men desire to be RAP/Hip Hop artist, ball players and for most,  college is not a thought. Our young ladies will often go to college or desire to be models, dancers or hair stylist.  I realize that most of this sound either sexist or stereotypical but consider the previous. I cant fault our youth, we could have dedicated more time in trying to be examples to them to inspire them for greatness. It is also unfortunate that our youth consistently witness our failures;  failures in ministry;  failures in the home and how we treat each other in the church.  They hear the gossip from home and they see the results in the church.

Its not too late, prayer will still change things. When we are done praying we must then act. It will be difficult (because we created this mess), but the time is well invested. Its not about the numbers in the church (we must care for those already in the church), the total responsibility is not that of the pastor, we are all ministers of the gospel. Train them up in the home, it should not be left up to the church; I’m not anti church, I am anti do nothing and anti say nothing, I realize that I’m going against the grain.

Just back from a jam-packed week on the West Coast. Great meetings with some old and new colleagues alike to discuss bringing the V2 brand to San Francisco, and a successful presentation on measuring the business value PR at the NVCA’s Strategic Communications meeting. We are looking forward to exciting new developments to report in the New Year so stay tuned. . .

Just back from a jam-packed week on the West Coast.  Great meetings with some old and new colleagues alike to discuss bringing the V2 brand to San Francisco, and a successful presentation on measuring the business value PR at the NVCA’s Strategic Communications meeting.  We are looking forward to exciting new developments to report in the New Year so stay tuned. . .

I’ve had several interesting conversation following the article on negotiating a better series A deal. Entrepreneurs write and ask for advice on a specific situation. Unfortunately, it’s really hard to give specific advice in these cases without a fair amount of additional information. There are too many variables and a lot depends on the goals of the entrepreneur.

I wish there was a standard questionnaire, like one of those pop psych personality tests, that entrepreneurs can fill out to get the background information out. However, I’m not interested in whether someone wants to be an entrepreneur (they are rarely talking to me if they are not entrepreneurs already). I’m more interested in what they consider a success, what type of company they want to build, the impact they want to create, etc.

Here is some of what I’ve found.

• Personality tests for entrepreneurs
• Online personality test for entrepreneurs

Have you found a test you’ve liked? Have you seen a test that goes after what I’m interested in?

A few days ago, WSJ’s startup & VC blog referred to an NVCA study where entrepreneurs complained about the lack of operational experience in some VC board members.

I’ve been an entrepreneur as well as a VC. The biggest travesty that VC firms can visit on a portfolio company is putting an inexperienced representative onto its board. Too many VCs have no real operating experience (sorry, having been a I-banker or recruiter does not count as experience).

I think this is an overly simplistic way of looking at things. Here is a quick test. Which one would you choose as your VC board member for your pre-product Series A startup:

• A really experienced former CEO who can’t get used to being a board member and thinks he can run the company better than you
• An really experienced former head of sales who has scaled companies from $10M on several times but who has never been in a pre-product startup
• A former lawyer or banker or accountant who’s had more than a decade of experience as a VC and a fantastic early stage investment record.

Not sure about you but, assuming the personalities work out well, I’d go with the VC w/o operating experience any day of the week. In fact, my first startup, Allaire, went exactly this way.

Two take-aways:

1. Comparing between board members is very, very hard. Especially if you don’t have competing offers to compare. Do not underestimate the impact that your investor board member will have on your life. First and foremost, talk to good people with good track records. Do not get tempted by the cash. I know this is very hard to say in the abstract but it is true. Go talk to CEOs of companies who’ve had a serious falling out with their investor board members. Listen closely to what they tell you.
2. There is no simple rule of thumb for comparing between investor board members. The key is to understand what you are comparing. You are not looking for a CEO or an exec. You are looking for one board member who’s part of a larger board. Boards are about strategy, governance, fundraising, exits and supporting the CEO. They should not be a crutch for your team, unless this is by design, e.g., with an executive board member.

from Start-Up CEOs Gripe About VCs’ Lack Of Operating Experience – Venture Capital Dispatch – WSJ.