Curious Office participated in the seed funding for CoolSpotters and were are thrilled with their launch and fantastic press coverage. Good job everyone!
Archive for the 'Uncategorized' Category
So this morning we completed one of our early Series B pitches to a prominent local venture capitalist. From my perspective, there weren’t any real surprises to come out of the conversation but I thought it might be interesting to share a few bits of commentary from the investor that I knew to be typical explanations for those times when you get a “NO” from an investor (we didn’t get that by the way).
Venture investors tend to evaluate these opportunities against two “risk” perspectives. The first perspective is the actual market risk that your plan may or may not face. That is, the investor tries to understand whether your efforts represent a “feature or a business” and whether or not the magnitude of the opportunity is really as big as you say. They additionally evaluate competitors in the space and your ability to gain a reasonably large slice of the total market pie.
The second “risk” that the investor is trying to determine is the balance of their own portfolio. In our conversation, we spent some good time talking about other companies in this VC’s portfolio to try to determine whether or not our proposition was sufficiently differentiated enough from other firms also doing work in imaging and photography. To use the words of this investor (whom I have a great deal of respect for and with whom I have worked in the past), “we try avoid situations where water may be running on the same side of the hill”. This was his way of trying to explain portfolio management to us. He elaborated on the idea that experienced VC’s have realized over the years that two companies doing very different things but in a similar, larger market segment will often gravitate to where the revenue opportunities are and wind up in the same puddle at the bottom of the hill. I agree that this phenomenon happens more often than not and I think his verbiage paints a good visual to explain it.
As ‘market leaders’ in our print-on-demand social network, we know that our story was compelling. But this conversation reminds me to think about future meetings with other VCs based on other companies already in their portfolio. Do you schedule those meetings at the top? Later? At the very least it is a good idea to get familiar with the other portfolio companies that could be considered - even broadly - as being in your same space. In this case, we are sufficiently differentiated enough that it was a valuable meeting for all parties to take.
In response to a comment left to the last post from Paul Brown at http://mult.ifario.us/a where Paul asks about this tricky scenario:
Entrepreneur: “We’re going great guns; this validates our thesis.”
Investor: “Why do you need my money now? Why aren’t your existing investors falling over themselves to reinvest?”
Paul is basically asking two things: first, ‘why are you raising money if you don’t need it’ and, second, ‘if you do need it why don’t your original investors just put in the money’?
The answer is because most investors have a certain investment stage criteria that they adhere to. Some prefer to only invest in seed and Series A stages and therefore invest smaller amounts of money to buy bigger percentages of the company while accepting that there is more risk to accomplish this. Other firms choose to invest more money at later stages and hope for lower risk factors as a result. So, depending on the stage you’re in you would probably be talking to two different kinds of firms. That is our case.
Having said that, it does seem more common than not that existing investor would also participate with new investors in later stage rounds. That isn’t always the case but it is good when existing investors prefer to do it and indicate as such because new lead investors will try to take as many ‘confidence cues’ from existing investors as they can.
Not everyone reads comments on a blog but I felt the two comments to my last post “What’s wrong with the Seattle start-up scene anyway?” were insightful and I didn’t want them to get lost in the comment basement. I think the theories here seem as good as any others I’ve heard. For a “business guy” I believe I’m more technical than most at least insofar as I can actually DO some things myself and I don’t rely on devs to handle every tiny request for me. I generally understand what devs are telling me in status meetings and I’m able to have a reasonable two way dialog with them to arrive at decent solutions. So, I love technology. That said, I still need to think about whether or not founders themselves need to be technical. I think we as entrepreneurs need ready access to world class development resources. But, I don’t think the world needs more technical founders. Most projects simply will not require, or benefit from, a CEO who is a developer. Just my two cents. But the comments here are good and the links from Glenn’s response are worth following.
From Glenn Kelman of Redfin:
Kelly, in my opinion, the most important change Seattle could make is to invest more in the University of Washington’s computer science department so that it competes with Champagne-Urbana and Irvine if not Stanford, MIT and Berkeley. Most entrepreneurs here have been imported from elsewhere by Microsoft and Amazon, and many are not technical founders. The entire investment thesis of, say, a Sequoia Capital (fund computer scientists under 35 attacking large markets), is more difficult to implement here as a result.
See:
http://blog.guykawasaki.com/2006/06/how_to_kick_sil.htmlAnd of course! http://blog.redfin.com/blog/2008/02/the_next_silicon_valley.html
And, thanks to Todd Dean of Keiretsu Forum NW
I have many comments on the topic “what’s wrong with the Seattle start-up scene.” First I would like to address that the Northwest is one of the most active areas if not the most active area in the country for entrepreneurship and companies being funded currently. We (Keiretsu Forum) have a very clear view on what is going on locally, nationally, and internationally regarding start up companies. So let me address a couple of the questions above. 1) Entrepreneurs lack the resources and capital they need. 2) Entrepreneurs have more access to capital and resources due to the climate of the communities in for example Silicon Valley. 3) As for the comparison of Facebook and YouTubes we do have Amazon, Microsoft, Starbucks to name a few. 4) We do have many education resources but in my opinion we still have a ways to go in the area. I’m happy to elaborate further if you should have a meeting, forum, or get together to collaborate and share our points of view??
I’ve been switching the site over to a new design, consolidating two Wordpress installations into one, moving the blog into a different directory and hacking a theme to make it do what I want. The site has been a bit of a mess over the last two days. Hopefully I’ll have it all finished in between the real work I have to do. Lets see how it goes.
This is a problem of epic proportions and yet we in the West aren’t seeing Congo nightly on our mainstream news channels.
OK, I tripped over this link today and got a pretty good laugh. Thanks to the folks over at Woot for throwing this together. Check out some of the funny things you may have missed at CES. For example:
Most Ridiculously Unpractical Oversized Tote Bag
If you can’t find a hotel room, curl up in this carry-all – and we do mean all.
Best Handmade Sign
There wasn’t much else to do on that long flight over from Shenzhen.
Least Appealing Display Video
You’ve never seen the inside of your colon in such sparkling color before.
Worst Digital Photo Frame
At least the picture’s halfway decent…
I just posted this over on my personal website today. Maybe some of you readers will get a kick out of this compilation. Did you even KNOW there were this many media types out there??
This just hit my inbox. Might be interesting for someone out there. If so, contact Halley Bock [halley at fierceinc.com]
Company: Fierce, Inc.
Job Title: VP, Business Development
Description: Description
This is a unique opportunity to be part of a fast-growing and successful leadership
development company. Fierce, Inc. is looking for an experienced, poised,
well-spoken and self-driven sales executive with a 5+ year track record of
achievement in corporate sales.A successful candidate will present the Fierce suite of offerings to senior
executives and line leadership within targeted corporate accounts, and will build
beneficial business relationships based on mutual interests, make compelling
presentations, and close business. This is a sales role for an executive with a high
degree of business maturity.The company offers paid holidays, paid vacation, benefits, profit sharing, incentive
programs, and employee ownership.Fierce, Inc. is a globally recognized leadership development firm based in Bellevue,
WA and was founded by best-selling author Susan Scott. Our clients span the globe
and cover a broad array of corporations, educational, non-profit and government
organizations. They rely on us to design and deliver programs that transform
cultures and provide a common global framework for achieving measurable results.Essential Job Functions:
1. Serves as key initiator of new business development to target medium and large
sized corporate accounts for long term and strategic penetration.
2. Independently calls on mid-level and senior-level executives and other
representatives to generate product, program, and consulting sales.
3. Diagnoses and assesses client needs. Designs and implements strategic roll-out
plans using the full range of existing or custom Fierce content, products, and / or
programs.
4. Writes and oversees effective business proposals.
5. Closes business consistently within the Fierce guidelines developed for product
and services mix and pricing.
6. Acquires and maintains expertise on the Fierce suite of offerings.
7. Designs account strategy and business development to develop new and existing
accounts.
8. Develops and executes on marketing and management plan to meet and exceed monthly
revenue targets.Requirements:
Five+ years experience in corporate sales, preferably in a professional
services environment selling to Fortune 5,000 companies. A stable work
history and track record of personal sales performance in a large corporate
environment is essential. You must have a consultative sales background and
demonstrate skills in the core areas of relationship-based sales, building solid
pipelines, working a forecast, aggressively prospecting, and efficiently driving
opportunities to closure as well as exhibiting excellent personal maturity and
character.BA/BS in business or related field or equivalent experience required. A well
developed pattern of achievement, collaborative teamwork, energy, motivation,
enthusiasm, and integrity is critical to success in this role. Very strong verbal
and written communications skills are essential; must be able to create and deliver
compelling, polished sales presentations to both line leadership and senior
corporate executives within target companies.
So it was great to see some familiar faces at the Picnik party last night. The crew has done an amazing job executing on this thing. I’d go so far as to say that it is one of the most polished web apps I’ve ever seen. If they weren’t so busy with Picnik they could probably make a fortune hosting their own brand of rich media development conferences.
The Picnik premise is pretty straightforward. The system provides the most comprehensive way to get creative with your images short of using a big desktop app like Photoshop. Now, I’m quite certain that the Picnik guys would never argue this is a Photoshop competitor and that’s good because we all know that Photoshop a sledge hammer when you sometimes just want a ball peen. It is, quite simply, the best web-based image manipulator ever developed. It is also one of the best flash applications ever developed. The system lets you import and edit photos from almost any location they may live…from your own file system to flickr and facebook. The newly launched Premium version gives you a wickedly fast and easy way to add cool image effects, type and blemish correction. This application is fast, powerful and sure to get even more popular than it is already. The flash implementation proves that Ajax isn’t the best approach for every problem. One could debate market size and revenue potential all day long for a product like this. But my position is that people will come to rely on Picnik in great enough numbers such that the founders will do just fine on this project and they will have had a great deal of fun along the way.
Ajax to the max. Check it.
Was just updating my personal contact page over on kellysmith.com and figured I’d share all my coordinates here too.
You can’t very well be a web groupie without being on “the other internet” now can you? Link to me if you want. My screenname is tansunnytrip.
I used to work at RealNetworks for 5 years but that was a long time ago and I admit that I have no inside information at all. However, I’m fascinated with the current price of RealNetworks given the fundamentals. Let me point out a few things.
In the Q1 2007 Earnings report they indicated the following:
1) The company is buying its own stock
Quote from the earnings call:
“Now, turning to our balance sheet, unrestricted cash and equivalents at March 31st were approximately $663 million. This amount includes the proceeds from $100 million of convertible debt and also includes the final payment under the terms of theMicrosoft agreements.
As Rob mentioned, during the first quarter we repurchased 9.8 million shares for an aggregate amount of $78.5 million, or an average of $7.99 per share. This completed the remaining amount authorized under our program.
However, we are also announcing today that our Board of Directors has authorized an additional $100 million repurchase program. “
Granted, the new program does not require RealNetworks to acquire a specific number of shares and may be terminated under certain conditions. One could also surmise that RNWK doesn’t have any better ideas has to how they want to deploy the cash and equivalents of approximately $663 million.
2) Core business lines are still growing.
In particular, RealNetworks said revenue from its games unit grew 28% for the quarter to $23.9 million. Music online is a pretty tough business but Rhapsody is the fourth largest site on the web. Perhaps more important is a seeming shift toward DRM-free music. Last month one of the major labels, EMI, announced its move to DRM-free music. This is interesting because Apple has enjoyed a near monopoly on sales of digital music with their iPods, which represented over 70% of the MP3 player sales in the U.S. last year.
If the future is a place where you can play A LOT more music on your iPod…not just stuff purchased on itunes…then Real’s music business shouldn’t erode. It should grow.
RealNetworks said revenue from its games unit grew 28% for the quarter to $23.9 million.
3) In fact, when they buy other companies…they are pretty good at it. And they have cash to do more buys.
Not all purchases were a slam dunk. But by and large, when Glaser makes a “buy bet” on other companies he does well. Consider Rhapsody. It’s become a cash cow since 2003. Remember…they only paid $36 million for Listen.com!! In the Q1 2007 report, the company boosted the number of subscribers to its music service to 2.675 million from 2.5 million at the end of the fourth quarter. Part of this boost came from a co-promotion deal with retailer Best Buy, which sells Sansa digital music players branded with the Rhapsody service.
They have managed to integrate WiderThan successfully into their Technology Products business which in itself is growing. Technology products and solutions, or TPS, had revenue of $44.4 million a 277% growth over Q1 2006 results a year prior. This DID NOT include WiderThan revenue (yet). On their own (for the six months ended June 30, 2006) WiderThan achieved US$61.9 million in revenue, an increase of 39% over the same period in 2005. As part of the WiderThan buy, Real gets more footprint with major operators such as SK Telecom and Verizon Wireless.
Together, ringback tones (RBT) and Music-on-Demand (MoD) constitute key emerging services in a mobile entertainment market, which according to Juniper Research will grow from $15 billion in 2005 to $38 billion in 2009, a compound annual growth rate (CAGR) of 25%. According to industry analyst firm ABI Research, RBT will grow from $65 million in 2005 to $2.5 billion in 2009, a CAGR of 149%. Today, WiderThan and SK Telecom have achieved approximately 43% RBT penetration of SK Telecom’s approximately 20 million subscribers.
Mobile entertainment services is a massive market and Real knows it. MUCH more importantly…these buys show that Real knows how to move into new areas when they need to. When Microsoft started giving away media servers and media players, Real moved into consumer music & games distribution. When Apple’s wildly successful iPod took off (and took 70% of the online music business with them), Real started this move toward mobile. It’s a very good bet. Apple does little to help huge operators like SK Telekom make money. Now, Real also just bought Sony NetServices (for a measly $9 million), which provides European mobile networks with digital music services. Founded in 2000, Sony NetServices’ personalized streaming music platform lets consumers download full songs or stream music to 3G phones and PCs, and has been deployed by carriers including Vodafone and TeliaSonera Finland. Following the transaction, RealNetworks will count 12 mobile partners, with a combined 196 million subscribers in 11 countries.
Criticisms: Having said all of the above I’d like to point out a few observations to the negative as well.
1) Real’s Board of Directors has had MANY chances to approve the sale of Real for billions already. Mr. Glaser clearly didn’t want to sell on those occasions and it cost shareholders a lot of money.
2) Real can blame Apple for their iPod monopoly but the fact is that Real tried to build an MP3 device of their own through at least two internal initiatives and failed both times. In fact, before joining Apple, the Sr. Vice President of the iPod division, Tony Fadell used to work at RealNetworks. Guess what he was hired from Philips to do? Build an MP3 player. Bet you didn’t know that did you? In fact few people do and its even missing from his Apple bio. I assure you that Rob is an extremely smart guy. But not infallible by any means. Real is just as guilty as Sony was when the “Walkman” ceased to become synonomous with portable music.
3) Real’s market cap is $1.29 billion. Bear in mind they have $663 million in cash or equivalent is sitting in the bank! So…the question is…do you know more than the heavy hitters on Wall Street? Is this truly a bargain that the big guys aren’t aware of? Or are smarter people than you and me just not believing that this company can be more than another Netscape story? Is the market telling us that the actual operating components of the stock aren’t actually all that exciting? Perhaps.
Netscape didn’t reinvent themselves. Real has. The stock is trading at mid 2003 levels. I own RNWK and I’m probably going to start buying more on dips over the next few weeks.
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Here’s the definitive list of ways to push big stuff around the net…almost always free.
