June 26, 2009

Cracking the Code on Patient Medical Record Search

Informatics for Integrating Biology & the Bedside (otherwise known as i2b2) is an NIH-funded initiative managed by the Partners HealthCare System here in Boston.  Over the past few months I've been spending time with a team of folks that is involved in various parts of this initiative helping them think about new commercial initiatives evolving from i2b2.  It really is an amazing world...hanging out with MD / PhD types and wandering the halls of a medical research hospital is a far cry from a typical tech startup.

Medical-records The background on i2b2 is that a few years ago the NIH invested something like $20 million into developing an open sourced platform that solves a major problem faced by hospitals (and medical researchers) which is that existing hospital information systems ("HIS") were not designed for search.  A typical HIS is great for finding information about a particular patient.  Type in medical record number 0123456 or a name and, boom, you have every bit of information from profile data, hospital visits, lab data, radiology, billing, etc.  But if you were to instead try to search for patients that were male, aged 37, Asian ancestry, under 6 feet tall and have a particular condition, the system would be unable to answer (actually you're unable to ask).  So that's what i2b2 was designed to solve and it's pretty good at it (you can play around with it here).

This is the real Google for medical records.

The technical challenge is daunting in and of itself, but that's just the tip of the iceberg.  When dealing with medical records there are the legal issues of patients' right to privacy so having an ability to de-identify or anonymize data is key.  And add on that a layer of bureaucracy almost unknown anywhere else and you've got yourself a hard problem to solve.

Apparently there are now 30-odd hospitals live in some fashion with i2b2 and later this fall (targeted for September) i2b2 v1.4 is slated for release and this version is dubbed the "enterprise ready" version. Program director Zak Kohane describes the next release as:

This release allows the entire set of patients from the enterprise to be exposed to the research community of the hospital while preserving patient privacy, providing the way for basic queries to funnel down to a set of patients interesting to the investigator. The chosen set of patients is matched to controls from the enterprise database and a project-specific mini-database is created. Major software enhancements of release 1.4 compared to release 1.3 include a hardening of the project management cell with a new, full featured client for managing enterprise users, a plug-in architecture for the data repository cell that allows complex server-side workflows, and streamlined project mini-database creation with processes to build sets of matched control patients for a given set of patients of interest.

Now there are many for profit companies also attempting to solve this problem including Microsoft, IBM and others but I think open source is a credible competitor in this sector as it has been in so many others.

So this coupled with a huge influx of public and private capital invested in "online medical records" is going to create some very interesting opportunities.  Hopefully I'll be able to talk more about this particular project soon.  In the meantime, if this is an area of interest or expertise for you, I'd love to hear from you.

June 23, 2009

F*** the Banksta!

I don't know where this came from, but I was reading this article and this one...it's late and well...I was reminded of a song from my college days by NWA called F*** the police, so I did a little rewrite:

Nwa

Right about now SEC court is in full effect.
Judge Geit presiding in the case of SEC versus the banksta's.
Prosecuting attorneys are MC Roubini, Chris Dodd and Eazy muthaf***in BernankE.
Order order order. Chris Dodd take the muthaf***in stand.
Do you swear to tell the truth the whole truth
and nothin but the truth so help your fat ass?

Why don't you tell everybody what the f*** you gotta say?

F*** tha banksta
Comin straight from the underground
Young banka got it bad cuz I'm down
And not the other color so politicians think
They have the authority to tax a minority

F*** that shit, cuz I ain't tha cleana
For a punk muthaf***a with an audit and a 'poena
To be beatin on, and throwin in jail
We could go toe to toe in the middle of a cell

F***in with me cuz I'm a real major
With a little bit of Goldman and a pager
Searchin my house, lookin for the product
Thinkin every banka is sellin exotics

You'd rather see me in the pen
Then me and Lorenzo rollin in the Benzo
Beat tha SEC outta shape
And when I'm finished, bring the yellow tape
To tape off the scene of the slaughter
Still can't swallow bread and water

I don't know if they fags or what
Search a banka down and grabbin his nuts
And on the other hand, without a won they can't get none
But don't let it be a black and a white one
Cuz they slam ya down to the street top
Black SEC showin out for the white cop

Chris Dodd will swarm
On any muthaf***a in an accrue uniform
Just cuz I'm from the NYSE, punk SEC are afraid of me
A young banka on a warpath
And when I'm finished, it's gonna be a bloodbath
Of props, dyin in DOJ
Yo Geit, I got somethin to say

F*** the banksta
F*** the banksta
F*** the banksta
F*** the banksta

June 20, 2009

Designing the Obvious

Error-creating-error

A friend of mine recommended this book (Designing the Obvious by Robert Hoekman) which I read today. It's a book about how to make great websites (and avoid common mistakes).  If you haven't read this book, it's well worth a read.  

A lot of what is written is, well, obvious, but so much of it is ignored (in that way it reminds me of Dale Carnegie's How to Win Friends and Influence People).  And it's not just for web designers or engineers.  If your business relies on the web and you're a CEO or senior executive, you should read this book.

Hoekman describes lots of small but important attributes of well designed websites giving real world examples of websites you're likely familiar with.


June 19, 2009

The Pig in a Ham & Eggs Breakfast

A while ago I spoke with Brandon Gadoci who had reached out to some friends of mine for advice on his startup, fabeetle.  At the time, Brandon had a "day job" at a large bank that paid well.  I always love talking with passionate entrepreneurs and Brandon was that in spades.  Having spent the past 8 years working as a financial advisor (and manager of financial advisors) for top firms he was speaking from experience when he explained the opportunity and what he wanted to do with fabeetle.

I got off the phone thinking that the idea for his business was pretty good, but I wondered whether he was committed enough to get it done (he's married with a small child, paid well and like many professionals at risk of getting comfortable).  In fact I had asked him that very question about the pig and the chicken and he had exactly the right answer. But I still wondered if he'd walk the walk.

Well, watch the video.  It's one of the best behind the scenes of starting a company that I've ever seen!
 

I love the line, "Am I nervous? Not really...I should probably be more nervous."  Spoken like a true entrepreneur!

Best of luck Brandon!

June 15, 2009

Exploiting a Position of Power

Last week there was a meme flying around about "things VCs would never admit to."  If you read TheFunded, a decent amount of the posts follow the same theme (although far less than many folks think).  While I've always been slightly annoyed by these "traits" of VC, I've never paid it much mind and frankly don't care.  First it's a sweeping generalization that is right as often as it's wrong and second I don't think it's unique to VC but rather is a symptom of a relationship between two parties with asymmetrical power/influence.  Naturally the "weaker" party complains and the "stronger" party dismisses.  I've always thought that entrepreneurs are equally guilty of exploiting asymmetrical relationships (which is one reason I don't sweat this as much as some entrepreneurs do).  Well, today I saw a brilliant YouTube video that captures my point.  If you're an entrepreneur and you cringe and see a little bit of yourself in this video, remember that the next time you get it back from a VC.

My view on this is to treat people like you would like to be treated and avoid doing business with those who do not. I've learned this rule the hard way but when I stick to it, I have no complaints.

June 13, 2009

If Entrepreneurs Really Told the Truth...

You knew this was coming.  Someone VC created the entrepreneur version of the VC non-admissions slide deck from last week.  I don't find it as funny...probably because it's hitting closer to home! ;-)

June 09, 2009

Successories' New Line of Posters for Venture Capitalists

Not really, but I had to chuckle when I saw this.  Of course like any good joke, there is enough truth to these to be funny.

June 07, 2009

Entrepreneurs on Twitter

I've been wondering how the previous list of entrepreneur bloggers I posted maps to Twitter so I redid the list (order is now by Twitter followers which is the number in parentheses).  80% of the bloggers on the list are on Twitter.  One thing that jumps out immediately is that several of the top bloggers are not (yet) on Twitter including: Seth Godin, Markus Frind, Linus Torvalds and Marc Andreessen among others.  I suspect there's a "sunk cost" argument driving this.  I think one of the reasons that Twitter is so popular is that it is a rare opportunity to redo the natural order of things (as evidenced by the changes indicated in the list below).  It is also a lot easier to Twitter than to blog. If you want to bulk scribe to all of these folks, see the instructions at the bottom of the list:

  1. Evan Williams, 0 (@ev) CEO @ Twitter (858,155)
  2. Kevin Rose, +13 (@kevinrose) Founder Digg (759,376)
  3. Tim O'Reilly, +3 (@timoreilly) Founder / CEO of O'Reilly Media (525,728)
  4. Rob McNealy (@robmcnealy) Entrepreneur (97,989)
  5. Jason Calacanis, +3 (@jasoncalacanis) CEO of Mahalo (68,583)
  6. Chris Pirillo, +9 (@chrispirillo) Geek, Internet entrepreneur, hardware addict, et al (65,181)
  7. Jerell Klaver, 0 (@jerell) Co-founder Salas Bath (60,578)
  8. Mark Cuban, +11 (@mcuban) Owner Dallas Mavericks; Founder Broadcast.com (59,888)
  9. Ed Stivala, 0 (@N3W_Media) Founder @ N3W_media (48,126) 
  10. Jeff Pulver, +13 (@jeffpulver) VOIP entrepreneur (26,538)
  11. Loic Le Meur, +20 (@loic) Founder / CEO Seesmic, Founder Le Web (26,499)
  12. Dave McClure, +20  (@davemcclure) Serial entrepreneur now adviser (20,100)
  13. Arianna Huffington, 0 (@ariannahuff) Founder Huffington Post (12,279) 
  14. Craig Newmark, +25 (@craignewmark) Craig from Craigslist (12,030)
  15. Jason Fried, -6 (@jasonfried) 37signals co-founder Jason Fried (11,475)
  16. David Heinemeier Hansson, -2 (@dhh) Co-founder 37signals (11,249)
  17. Paul Stamatiou, +29 (@stammy) Founder / CEO @ Skribit (11,204)
  18. Anil Dash, +25 (@anildash) Co-founder Six Apart (11,041)
  19. Ross Mayfield, +7 (@ross) Co-founder / President of SocialText (10,970)
  20. Joel Spolsky, -13 (@spolsky) Founder / CEO at Fog Creek Software (9,558)
  21. Mitch Kapor, +55 (@mkapor) Founder Lotus (9,287)
  22. Jason Shellen, +29 (@shellen) Founder / CEO at Plinky (7,555)
  23. Dharmesh Shah, -6 (@dharmesh) Founder / CEO of HubSpot (7,102)
  24. David Sifry, +6 (@dsifry) Founder / CEO at Technorati (6,713)
  25. Caterina Fake, +18 (@caterina) Co-founder Flickr (6,595)
  26. Steve Woda, +50 (@stevewoda) Founder buySAFE (5,792) 
  27. Elliott Ng, 0 (@elliottng) VP Marketing @ Kango.com (4,843)
  28. Maggie Fox, 0 (@maggiefox) CEO @ Social Media Group (4,797)
  29. Andrew Chen, -3 (@anderw_chen) Serial entrepreneur (3,971)
  30. Garrett Camp, 0 (@gmc) Founder / CEO @ StumbleUpon (3,576)
  31. Charlie O'Donnell, 0 (@ceonyc) Founder / CEO @ Path 101 
  32. Jonathan Schwartz, -13 (@SunCEOBlog) CEO at Sun (2,964)
  33. Christopher Carfi, +9 (@ccarfi) Co-founder Cerado (2,820)
  34. Eric Ries, +10 (@ericries) CTO and serial entrepreneur (2,639)
  35. Jon Bischke, 0 (@jonbischke) Founder / CEO @ EduFire (2,484) 
  36. Rahul Sood, +26 (@rahulsood) Founder VoodooPC (1,889)
  37. Nivi Babak, -15 (@nivi) Entrepreneurs helping entrepreneurs succeed (1,637)
  38. TheFunded, -3 (@thefunded) Various C-level executives at startups (1,582)
  39. Benjamin Yoskovitz, -7 (@byosko) Founder / CEO StandoutJobs (1,477)
  40. Rajesh Setty, +1 (@upbeatnow) Serial entrepreneur (1,405)
  41. Dan Bricklin, -7 (@danb) VisiCalc co-creater (1,365)
  42. Steve Blank, -5 (@sgblank) Retired serial entrepreneur now professor of entrepreneurship (1,304)
  43. Prasad Thammineni, +23 (@pixily_CEO) Serial entrepreneur and founder at Pixily (1,246)
  44. Mark Pincus, +26 (@markpinc) Serial entrepreneur / recovering VC (1,224)
  45. Gabor Cselle, +9 (@gabor) A blog about email and startups (1,175)
  46. Leon Ho, 0 (@leonho) Founder Stepcase & blogger @ Lifehack (1,193) 
  47. James Hong, +6 (@jhong) Founder Hot or Not (1,111)
  48. Tony Wright, +8 (@webright) Founder / CEO RescueTime (1,024)
  49. Mick Hagen, 0 (@mickhagen) Founder @ Zinch (968) 
  50. Jana Eggers, +28 (@jeggers) CEO of SPRD.net AG (879)
  51. David Cancel, +25 (@dcancel) Co-founder & CTO at Lookery.com (823)
  52. Sean Ellis, +7 (@seanellis) Serial CMO / VP Marketing (818)
  53. Daniel Tunkelang, +18 (@dtunkelang) Chief Scientist at Endeca (769)
  54. Naval Ravikant, -30 (@naval) Entrepreneurs helping entrepreneurs succeed (762)
  55. Pito Salas, +27 (@pitosalas) Founder BlogBridge; former CTO eRoom (754)
  56. Adam Wexler, 0 (@thewordpainter) Founder Rank'em (616)  
  57. Philip Hotchkiss, 0 (@philiphotchkiss) Founder / CEO @ BigCharts (564) 
  58. Steve Barsh, +14 (@sbarsh) Serial enterpreneur / interim executive (561)
  59. Barney Pell, +6 (@barneyp) CEO of Powerset (556)
  60. Laurent Feral-Pierssens, +34 (@lfp) Founder / CEO Silentale (532)
  61. Sean Lindsay, 0 (@rseanlindsay) Co-founder / CTO @ Viximo (517) 
  62. David Hauser, +30 (@dh) Co-founder ReturnPath; CEO Grasshopper (487)
  63. Jonathan Mendez, -20 (@jonathanmendez) Serial entrepreneur, online ad expert (477)
  64. Greg Reinacker, 0 (@gregr) Founder & CTO at NewsGator (477)
  65. Joe Krauss, -13 (@jkraus) Entrepreneur (473)
  66. Furqan Nazeeri, -13 (@altgate) Startups, venture capital & everything in between (428)
  67. Jules Pieri, +24 (@julespieri) CEO at Daily Grommet (414)
  68. Carson McComas, -36 (@carson) Entrepreneur (419)
  69. Jonathan Gross, 0 (@rubp) Founder / CEO @ BioDATA (393)
  70. Matt Blumberg, -13 (@mattblumberg) CEO @ ReturnPath (368)
  71. Alan Meckler, +17 (@alanmeckler) CEO WebMediaBrands (351)
  72. Dave Kellogg, -6 (@ramblingman) CEO of Mark Logic Corporation (349)
  73. Jeff Bennett, -2 (@dealsbennett) Entrepreneur (347) 
  74. Valto Loikkanen, 0 (@valto) Serial entrepreneur (339)
  75. Brian Balfour, 0 (@bbalfour) Co-founder / VP Product @ Viximo (287) 
  76. Various Entrepreneurs, +16 (@founding) Founder Institute (286)
  77. Doug Levin, +13 (@dalev) Entrepreneur / former CEO at Black Duck Software (258)
  78. Sim Simeonov, -4 (@simeons) Entrepreneur; recovering VC (248)
  79. Andrew Payne, -3 (@payne92) Serial entrepreneur (240)
  80. Angus Davis, 0 (@angusdav) Entrepreneur (199) 
  81. James Siminoff, -4 (@grid) Founder / CEO at PhoneTag (184)
  82. Alain Raynaud, +3 (@alain94040) Founder FairSoftware (182)
  83. Michael Gracie, (@michaelgracie) Serial COO / CTO (174)
  84. Alicia Rismach, 0 (@aliciarismach) Co-founder and VP @ SeerGate (163) 
  85. Colin Wong, 0 (@colinwong) CEO @ Zoecity.com (133) 
  86. Tom Keller, +15 (@tkeller) Founder & former CEO of Intense Debate (117)
  87. Matt Lauzon, 0 (@mattlauzon) Founder Paragon Lake (110)
  88. Jay Jamison, +19 (@jeremiahjamison) Serial entrepreneur (100)
  89. Bert Armijo, -12 (@barmijo) Co-founder & SVP at 3tera (81)
  90. Charles Teague, +1 (@dragonstyle) Technologist-in-Residence at General Catalyst (59)
  91. Jon Gillespie-Brown, +13 (@gillespiebrown) Serial entrepreneur (40)
  92. Brian Shin, -2 (@brianshin) Founder / CEO at Visible Measures (14)

If you want to bulk subscribe to all of these folks, one way is to use NinjaFollow.  You can copy these screen names and paste them into NinjaFollow, press submit and voila! 

Lastly, I'm sure there are many entrepreneurs on Twitter that didn't show up in this list (which was originally created as a list of entrepreneur bloggers).  Post comments here with my omissions.

June 01, 2009

Directory of Blogs by Entrepreneurs

This post was inspired by Fidelity Ventures Partner Larry Cheng who recently compiled a list of VC blogs and ranked them in order of Google Reader subscribers.  I have a few hundred feeds that I follow in Google Reader and the way that I find new ones is a random process of discovery so Larry's post was great in that he not only provided a rank-ordered list but also a convenient way to mass subscribe.

VC bloggers are fascinating to follow.  But I also love to follow blogs by entrepreneurs.  It's an unique viewpoint and one that I find that I learn a lot from.  So with that in mind, I created a list of entrepreneur blogs.  The criteria for inclusion on this list is rough but basically boils down to the primary author of the blog has to be a founder or C-level executive at an entrepreneurial organization and write relatively frequently about entrepreneurial stuff.  In compiling the list I made several exceptions.  For example, I included TheFunded which is not a single author blog but rather a feed from a members-only network of entrepreneurs and I included Marc Andreesson who has great stuff on his blog but he just hasn't written anything new in a while.

My list has many biases.  For example, it's tilted toward authors in the US who write about "tech" companies but I would love to expand and grow the reach.  So if you know of other blogs that should be included on this list, post a comment here and I'll update the list.

Lastly, here is a Google Bundle for the list.  Full disclosure: I included this blog in the bundle which you can feel free to delete.

  1. Joel Spolsky, Founder / CEO at Fog Creek Software (64,598)
  2. Seth Godin, Founder of Yoyodyne; creator of "permission marketing" (41,957)
  3. Jason Fried, 37signals co-founder Jason Fried (and other 37signals employees) (31,595)
  4. Tim O'Reilly, Founder / CEO of O'Reilly Media (10,269)
  5. Jason Calacanis, CEO of Mahalo (10,000) [note: this is an email list & not in Google bundle]
  6. Linus Torvalds, Creator of Linux (8,436)
  7. Jonathan Schwartz, CEO at Sun (7,750)
  8. David Heinemeier Hansson, Co-founder 37signals (7,000)
  9. Nivi Babak & Naval Ravikant, Entrepreneurs helping entrepreneurs succeed (6,897)
  10. Dharmesh Shah, Founder / CEO of HubSpot (6,723)
  11. Sergey Brin, Co-founder Google (5,782)
  12. Chris Pirillo, Geek, Internet entrepreneur, hardware addict, et al (5,437)
  13. Marc Andresseen, Co-founder of Netscape, Loudcloud, et al (5,116)
  14. Kevin Rose, Founder Digg (4,496) 
  15. Carson McComas, Entrepreneur (4,064)
  16. Mark Cuban, Owner Dallas Mavericks; Founder Broadcast.com (4,062)
  17. Andrew Chen, Analysis on viral marketing, freemium, design & online ads (2,407)
  18. Markus Frind, CEO of Plentyoffish.com (1,966)
  19. Jeff Pulver, VOIP entrepreneur (1,709)
  20. Benjamin Yoskovitz, Instigating discussion, ideas and better business (1,477)
  21. Ross Mayfield, Co-founder / President of SocialText (1,248)
  22. Dan Bricklin, VisiCalc co-creater (1,159)
  23. TheFunded, Various C-level executives at startups (1,137)
  24. David Sifry, Founder / CEO at Technorati (1,093)
  25. Steve Blank, Retired serial entrepreneur now professor of entrepreneurship (1,062)
  26. Jonathan Mendez, Serial entrepreneur, online ad expert (1,087) 
  27. Loic Le Meur, Founder / CEO Seesmic, Founder Le Web (855)  
  28. Dave McClure, Serial entrepreneur now adviser (796)
  29. Rajesh Setty, Serial entrepreneur (683)
  30. Wil Schroter, Founder Go Big Network (781)
  31. Christopher Carfi, Co-founder Cerado (761)
  32. Shai Agassi, Musing on alternative energy, electric cars and other topics (670)
  33. Eric Ries, CTO and serial entrepreneur (627) 
  34. Craig Newmark, Craig from Craigslist (609)
  35. Joe Krauss, Entrepreneur (578)
  36. Furqan Nazeeri, Startups, venture capital & everything in between (508)
  37. Caterina Fake, Co-founder Flickr (479)
  38. Anil Dash, Co-founder Six Apart (472)
  39. Matt Blumberg, A first-time CEO writes about entrepreneurship and email (438)
  40. James Hong, Founder Hot or Not (426) 
  41. Paul Stamatiou, Tech News, Reviews & Guides (379)
  42. Gabor Cselle, A blog about email and startups (337)
  43. Tony Wright, Founder / CEO RescueTime (291)
  44. Jason Shellen, Founder / CEO at Plinky (281)
  45. Sean Ellis, Serial CMO / VP Marketing (266)
  46. Tom Szaky, CEO at TerraCycle (263)
  47. Greg Reinacker, Founder & CTO at NewsGator (240)
  48. Dave Kellogg, CEO of Mark Logic Corporation (210)
  49. Barney Pell, CEO of Powerset (165)
  50. Rahul Sood, Founder VoodooPC (159)
  51. Antonio Rodriguez, Founder / CEO at Tabblo.com (142)
  52. Bert Armijo, Co-founder & SVP at 3tera (133)
  53. Sim Simeonov, Entrepreneur; recovering VC (115)
  54. Jon Bischke, Founder / CEO @ EduFire (114) 
  55. Prasad Thammineni, Serial entrepreneur and founder at Pixily (111)
  56. James Siminoff, Founder / CEO at PhoneTag (94)
  57. Steve Barsh, Serial enterpreneur / interim executive (92)
  58. Daniel Tunkelang, Chief Scientist at Endeca (91)
  59. Mark Pincus, Serial entrepreneur / recovering VC (91)
  60. Adeo Ressi, Entrepreneur, environmentalist & founder of TheFunded.com (70)
  61. Terry Gold, Serial entrepreneur (57)
  62. Andrew Payne, Serial entrepreneur (50)
  63. David Cancel, Co-founder & CTO at Lookery.com (41)
  64. Alain Raynaud, Founder FairSoftware (41)
  65. Jana Eggers, CEO of SPRD.net AG (36)
  66. Brian Shin, Founder / CEO at Visible Measures (34)
  67. Charles Teague, Technologist-in-Residence at General Catalyst (30)
  68. Michael Gracie, Serial COO / CTO (30)
  69. Pito Salas, Founder BlogBridge; former CTO eRoom (23)
  70. Doug Levin, Entrepreneur / former CEO at Black Duck Software (21)
  71. John Nesheim, Engineer & veteran of Silicon Valley (20)
  72. Mitch Kapor, Founder Lotus (20) 
  73. Various Entrepreneurs, Founder Institute (20) 
  74. Jeff Bennett, Experiences as an enterpreneur with social media and eCommerce (18)
  75. Mick Hagen, Founder @ Zinch (16) 
  76. Aaron Cohen, Serial entrepreneur (15)
  77. Apolinaras Sinkevicius, Startup ops guy (14)
  78. Steve Woda, Founder buySAFE (11) 
  79. Jules Pieri, CEO at Daily Grommet (10)
  80. David Hauser, Co-founder ReturnPath; CEO Grasshopper (10)
  81. Leon Ho, Founder Stepcase blogger @ lifehack (10)
  82. Alan Isfan, Co-founder / CEO at FaveQuest (8)
  83. Tom Keller, Founder & former CEO of Intense Debate (6)
  84. Laurent Feral-Pierssens, Founder / CEO Silentale (6)
  85. Jon Gillespie-Brown, Serial entrepreneur (6)
  86. Alan Meckler, CEO WebMediaBrands (4)
  87. Edward Daciuk, Investing, entrepreneurship, music, reading & life (3)
  88. Jay Jamison, Serial entrepreneur (3) 

May 14, 2009

"What's Next in Tech" Event in Boston

Boston Globe tech columnist Scott Kirsner is organizing an event here in Boston next month where the theme will be technology innovation in New England.  

A few weeks ago when I was talking with Scott about the event he asked what I thought was "next in technology."  I think one of the biggest new opportunities is going to be a new class of companies that are now viable investments because of improvements in capital efficiency over the past few years.  Until relatively recently, the capital requirements of technology businesses were quite large.  You would have to spend millions of dollars hiring software developers, renting real estate, buying hardware, etc. just to build a product which you could then start selling (and in reality test whether there was a market at all).  Rarely did you get it right the first time so you would have to repeat the cycle until you had a complete solution the market wanted.

An entire entrepreneurial ecosystem was built up around this model including venture capitalists who would fund the big investments provided there was a big market, entrepreneurs who would start the companies and seasoned executives who would take over once the business outgrew the founders.
S-curves

The "old" model is represented in the blue curve above: lots of money in and (hopefully) lots of money out.  What's happened (#1 in the chart) is that improvements in capital efficiency have "bent the curve" so that less money is required to get to positive cash flow.  In some cases dramatically less money is required.  What this means for entrepreneurs and investors is that you can now pursue opportunities that have smaller potential outcomes (#2 in the chart) and get the same (or better) return on investment.

What has caused this improvement in capital efficiency?

Many folks, including me, have written about the trends that are driving down costs. Some of the big ones are open source, cloud computing and virtual office infrastructure.  In some cases costs today are 1/10 that of even 5 years ago.  AWS is a great example.  The virtual office tools today are so impressive that you can source talent globally and simultaneously improve productivity while cutting costs--unthinkable 10 years ago.

It is important to remember that this doesn't mean the big market opportunities meriting large investments have gone away.  I fully expect the market for big ideas to continue to grow.  Rather, what it means is that there is a *new* opportunity to invest in companies pursuing smaller opportunities but the manner in which you pursue them (as an entrepreneur or investor) needs to change.  On the investment side, it means putting in less money, being more on-par with management in terms of rights and preferences, having less control.  The investment won't work if you spend $80K on legal fees preparing investment documents that include things like registration rights and all those other terms that will never get used.  As an entrepreneur it means bootstrap, bootstrap, bootstrap.  Spend nickels like they were manhole covers.  In some ways it reminds me of that Michael Lewis book Money Ball and how the Oakland A's found ways to win with a small payroll.

Anyway, so that's my crack at "what's next in tech."  What do you think Scott?  And, oh, by the way, come to the event on June 25.

May 03, 2009

Vivid Dreams: Larry Page Describes Google's Origin

Yesterday Larry Page gave the commencement address at the University of Michigan. Larry and I went to Michigan at the same time and in fact Larry was briefly a member of the Solar Car Team where I was team leader (I often joke that I'm one of the few people who can say that "Larry Page worked for them.").

He tells a great story about the origins of Google:

You know what it’s like to wake up in the middle of the night with a vivid dream? And you know how, if you don’t have a pencil and pad by the bed to write it down, it will be completely gone the next morning?

Well, I had one of those dreams when I was 23. When I suddenly woke up, I was thinking: what if we could download the whole web, and just keep the links and… I grabbed a pen and started writing! Sometimes it is important to wake up and stop dreaming. I spent the middle of that night scribbling out the details and convincing myself it would work. Soon after, I told my advisor, Terry Winograd, it would take a couple of weeks to download the web — he nodded knowingly, fully aware it would take much longer but wise enough to not tell me. The optimism of youth is often underrated! Amazingly, I had no thought of building a search engine. The idea wasn’t even on the radar. But, much later we happened upon a better way of ranking webpages to make a really great search engine, and Google was born. When a really great dream shows up, grab it!

Unfortunately the audio drops out for about a minutes from 0:43 to 2:28 (can you say "Nixon tapes"?) but the video is worth a watch nonetheless.  Michigan is a great school and you can really tell how much of an impact it had on Larry watching this...Go Blue!

 

May 01, 2009

More on the "VC Math Problem"

Fred Wilson started this thread with a couple of great posts on why the VC industry is having problems scaling.  The real interesting part of Fred's post is the volume and quality of comments.  I've never seen such a focused (in time or topic) discussion that creates value.  The bottom line take away (for me) is that VC is capacity limited by the value of exits (M&A plus IPOs).  I'm a visual person so here's how I see it:

Vc_math_problem
Entrepreneurs start companies and the founders ("F" in my chart) invest capital which they grow with sweat equity and then limited partners ("LPs") invest capital via VCs which in turn grows the pie to the eventual "exit" (which comes in the form of M&A or IPOs).  In order to increase "A" or "B" you necessarily have to increase "C."  

According to Fred's posts, the "math problem" in VC is that LPs have been investing capital in VC funds at the clip of about $25 billion per year for the past decade (excluding 1999 and 2000 which were strange years).  But based on a bunch of different estimates of the "exit" market, it would seem to be that only justifies an investment by VC of about $10-15 billion annually...thus the "math problem."

Over on TheFunded, there's a thread which attempts to make the argument that VCs are bad "stock pickers" and that, in fact, the market could be 2X its current capacity if they were funding more companies.  I've taken some heat over there for being skeptical of that claim.  I'll be the first to admit that I'm wrong....but show me the data!

April 26, 2009

2009 Startup Executive Compensation Survey Opens

I've mentioned this survey several times before, but this time I bring news of the 2009 survey opening to participants.  This year the survey covers five countries (China, India, Israel, UK and US) in two industries (technology and life sciences).  If you are CEO or CFO of a startup company in any of these countries/industries then I encourage you to participate in the survey.  It doesn't cost anything to participate (other than the 30-60 minutes it takes to complete the survey) and the benefit is that you get the full results once they are published.

In years past, the results were published in a PDF and a hardcopy book, but starting in 2009 the results will be published online via a password protected, members-only site (so participating is really the only way you can get the results).  I think the 2009 data will be very interesting as it will reflect the effects of the overall economy as well as provide global comparisons.  Don't miss the opportunity to get the 2009 data...take the survey now!

If you haven't seen the results of this survey before, I'm including both of last year's unabridged reports results below.  It's actually pretty simple, yet since the data is otherwise so hard to find it's pretty powerful.  Basically the survey collects salary, cash bonus and equity information for the top executives in private companies (mostly venture- and preventure-backed companies).  The survey also collects information about the background of the executives and of the company (like location, size, funding, industry, etc.).  The report is then able to give ranges of compensation based on these attributes.  

First, there is the 2008 report for the technology industry focused on the following positions:

Technology

  • CEO
  • President / COO
  • CFO
  • CTO
  • Head of Engineering
  • Head of Sales
  • Head of Marketing
  • Head of Business Development
  • Head of HR
  • Head of Professional Services
  • Board of Directors


And here is the full 2008 report for the life sciences industry focused on the following positions:

Life Sciences

  • CEO
  • President / COO
  • CFO
  • Chief Scientific Officer / Head of R&D
  • Chief Business Officer / Head of Biz Dev
  • Head of Clinical Research
  • Head of Regulatory Affairs
  • Head of Manufacturing
  • Head of Sales (& Marketing)
  • Head of Marketing
  • CTO
  • Head of Engineering
  • Head of HR
  • Board of Directors



There are some things that immediately jump out of the data.  One is that company founders have a significant discount in terms of cash compensation (but obviously a premium in equity).  Another point is that the equivalent role in a technology company is compensated at a lower level than in life sciences.  
So if you are a startup CEO of CFO (whether you have venture backing or not) please take the time to go complete the survey and you'll get the 2009 results for free.  And also you can do a friend a favor and forward this post to them so they can fill out the survey as well.

April 22, 2009

Law Firm Wilson Sonsini Now Preparing Term Sheets For Free

No, this isn't a recessionary move to give away unbilled lawyer time nor is it some sort of shift to being a pro-bono only firm.  Today, Wilson Sonsini announced the launch of a "term sheet generator."  It's basically a web tool that creates draft preferred financing term sheets for startups.  I got a preview of it a couple of weeks ago and my review is that it is really impressive!

The way the tool works is that you answer a bunch of questions (north of 100) and then when you are complete it gives you a perfectly formatted Word file term sheet.  Most of the questions are structured as "select from" several options often with an optional to "write your own."  The beauty of having the option to select from "standard" options is that WSGR has included some market data, e.g. what percent of term sheets in up rounds in 2008 included this term.  Last year, I spent a lot of time attempting to reverse engineer this data based on a small personal sample size.  Obviously, WSGR has a much larger sample size and the fact that they make it public (in aggregate) is impressive.

The Term Sheet Generator originated as an internal tool for WSGR attorneys to rapidly generate draft term sheets which they would polish up and then deliver to their clients.  Not surprisingly, WSGR Partner Yokum Taku, who I've previously written about, is the key co-conspirator behind making this tool public.  I exchanged email with Yokum about this tool and I wanted to excerpt a few take aways from that conversation:

  • Apparently this is the first of many online document generator tools that WSGR intends to make publicly available on the web.  There are three categories (startup, equity financing and bridge loans) so we can expect more to come.
     
  • I would have thought that internally there would have been a debate about giving away for free what they used to charge for, but Yokum insists this did not come up.
     
  • The biggest challenge in building this tool is that each branch in the question tree is associated with unique verbiage.  Building that must have been crazy.

So I think this is a brilliant step toward "open source law" which I've been advocating for a while.  I am certain there will be hundreds (ne thousands) of lawyers who will use the WSGR Term Sheet Generator to create draft term sheets for use with their clients.  In fact, I bet Google Analytics will quickly show Yokum and his colleagues at WSGR that his real userbase for this tool will be other attorneys both at firms and inhouse.  What this tool really wants to evolve to is having an open, wiki-style back end where practitioners can change and comment on the myriad of options and verbiage which would keep the tool evergreen based on the best crowdsourced legal opinions.

In the meantime, I wouldn't be surprised to see some sort of watermarking of term sheets created by the tool that would allow WSGR to offer discounted legal fees if they created the draft term sheet using the tool.  It would certainly reduce WSGR's time/costs as they would know the underlying terms

April 20, 2009

There is Too Much Venture Capital...Not Too Little

Over the weekend I saw a report from the NVCA about the amount of money US venture funds had invested in the first quarter which Adeo at TheFunded summarized well.  The bottom line is that VC funds invested a total of $3 billion in startups which is the lowest amount since at least 1998 and significantly lower than after the dot-com crash.  The knee jerk reaction would be to conclude that the credit crunch has made its way to the private equity asset class and they are simply investing less because they have fewer funds available.

But I'm not so sure that is the case.  According to TechCrunch, the amount of capital that VC and private equity firms have raised over the past few quarters exceeds that invested.

Net_vc_money
I plotted the two sets of data which are basically the amount of money that goes *in* and comes *out* of VC.  The green bar is the quarterly net of the two, i.e. it shows whether money is accumulating in funds or not and the purple line is the cumulative net flow.

What you see is that aside from Q4 of last year, money has been accumulating in venture funds for the past 2 years; to the tune of about $6 billion dollars.  If these data are correct, then it would mean that the problem is not having enough capital to invest, but rather not having enough companies to invest in.

So what would cause this kind of imbalance, i.e. an excess of capital relative to companies to invest in?  The first thing to check is are there fewer companies.  I couldn't get great data, but at the macro level the answer is no (the US Census Bureau shows 370,000 more companies in 2006 than in 2000).  My hypothesis is that, while there are more companies seeking funding, their are actually fewer companies in total that meet the VC's investment criteria, specifically the companies need less money than the VCs want/need to invest.  What is driving this is three things:
  1. Open source.
  2. Cloud computing. 
  3. Virtual office infrastructure. 
These three forces have dramatically cut costs over the past few years and in turn hugely improved capital efficiency.  No longer do companies have to hire armies of programmers and buy buildings full of hardware to launch a business.  And the virtual office powered by Skype, Basecamp, Gmail, WebEx, et al is at least as efficient in terms of productivity as a traditional office but at a fraction of the cost.  The bottom line is that companies no longer need millions of dollars for real estate, hardware and employees which they would have needed even just a few years ago and this in turn takes them out of the VC's consideration set.

How ironic is that the one thing (capital efficiency) that VCs promote above all else is the thing that threatens their business model?

So this could explain why VCs have been accumulating capital over the past couple of years.  They basically have fewer companies that meet their investment criteria (which, by the way, means there is a huge, growing class of companies that need an alternate form of funding).  Now, I know someone is going to post a comment saying that the VC funding numbers are over estimates because they do not factor in failures to meet capital calls.  That could be true.  I've heard the anecdotes too, although it's a recent phenomenon which wouldn't explain the net funding imbalance 2 years ago.  And until I see the numbers I'm not sure how to plot a story on the chart above...
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