Brad Feld

Month: February 2005

I’m at the Microsoft Partner Advisory Council (PAC) meeting (I’m on Microsoft’s Venture Capital PAC).  Simon Witts – the Corporate VP of the Enterprise and Partner Group – is keynoting the morning session.  It unbelievable (and extremely impressive) how much Microsoft measures about their business.  In his session, Simon has been extremely candid about positives and negatives based on what they forecasted for 1H05 (7/04 – 12/04), how they actually did, how this impacts their partner channel, the feedback loop that results, and what they are changing to perform even better.

While he was talking, I got my monthly status report from Rally.  It’s full of metrics – actual against forecast – and a discussion of the delta.  These metrics are across the entire business – it’s not just accounting, financial, or sales data – it’s information across the business.  Last night, I looked at my weekly report from StillSecure – same story – full of metrics along with discussion of what’s going on in the business.

While it’s easy to get lost in “data” rather than synthesizing and understanding “information”, I find way too many early stage companies measuring very little – thinking this is something that “only big companies both with.”  Microsoft shows how it’s completely ingrained in their culture – in my experience with them, they’ve been measuring everything forever. 

The value of building this discipline into the fabric of a startup is huge.  Automate as much as you can early in your life – turn “data” into information – and continually refine what you are measuring to make sure it’s the relevant stuff.  But measure it.


I recently agreed to be chairman of the National Center for Women & Information Technology – an organization run by Lucy Sanders (ex-CTO Avaya Labs) – whose mission is to ensure that women are fully represented in the influential world of information technology.  Lucy and NCWIT are the real deal – in its first year we’ve raised over $4.5 million from the National Science Foundation, Avaya, Microsoft, Google, and a number of other technology companies.  Lucy has an ambitious multi-decade vision which – when you sit and listen – makes you say “wow – that’s perfect – yes – absolutely” and other unambiguous affirmative phrases.

Several weeks ago, Larry Summers – the President of Harvard University – generated a predictable controversy when he suggested “that innate differences between the genders could help explain why fewer women succeed in science and math careers.”  I cracked up when I heard this for the first time since I figured he was simply being sarcastic and poking fun at his crosstown rival (my alma matter) due to the recent appointment of a woman (Dr. Susan Hockfield) as President of MIT.  But it was clear that he was deadly serious, and after an uproar, several apologies from Summers, and a lot of public discussion, the topic of the level of participation of women in IT has real visibility.

We had a NCWIT board meeting the week of Summers’ remarks.  At the meeting, we decided that the right approach was not to castigate Summers, nor join the “backlash”, but rather to invite Summers to get involved and help us better understand and address the issue (I suggested we ask him to join the NCWIT board).  To that end, Lucy wrote an op-ed the other day that follows.

As CEO of the National Center for Women & Information Technology, I’d like to thank Harvard’s President, Larry Summers. His recent remarks – that innate gender differences might explain the dearth of women in science and engineering – call attention to a critical issue even as they misconstrue it.

Innovation is inherently a creative and highly personal process: from Penicillin to iPods, the most influential innovations of our time reflect the perspectives and experience of their creators. Employing gender diversity in the innovation process yields different products and better ideas, contributing to stronger U.S. economic performance.

While women’s contributions have neared parity in biological sciences and math, women’s position in the information technology (IT) professions has slipped significantly. Women now earn only 28 percent of computer science degrees (down from 37 percent in 1984) and represent only one-quarter of professional workers in IT occupations.

This problem comes at a critical juncture for America: As IT globalizes, many of its products and services become commodities and even high-value IT jobs move off-shore. What will differentiate U.S. performance? Women can, and must play an important role in fostering new IT innovations if the US is to remain competitive.

The National Center for Women & Information Technology (NCWIT) is a growing coalition of over 40 respected corporations, academic institutions and non-profits working aggressively to understand and solve this problem. NCWIT intends to increase the participation of girls and women in information technology and, through their contributions, to help the U.S. remain at the forefront of IT innovation. From K-12 education to corporate careers, we know that certain approaches work to engage and educate this over-looked talent pool of creative women. We need to put these approaches into action. We are a community of change-agents committed to investing in research and education, determining best practices for progress, and implementing these solutions across the country.

There’s no doubt that women are creative innovators. Debating whether their cognitive abilities match those of their male counterparts is a waste of time; it is in fact our differences that make women’s contributions so essential to our economy and society, no less in IT than anywhere else.

Read it carefully.  It describes the core of what NCWIT is trying to accomplish, why it matters, and how the differences between men and women can impact the innovation process.  Lucy – this is fun!


My friend Larry Nelson – who runs w3w3 with his wife Pat – had a nice article in the Denver Post yesterday.  Larry and Pat are total gems (they even “bought” my parents for a day at the Boulder Philharmonic gala last year when I guest conducted and also was the auctioneer).  w3w3 has been around through the Internet boom and bust and Larry has shown that he’s got real staying power for a vision he and Pat have.  If you are into the Colorado tech and business scene, w3w3 is a great source of continually interesting, entertaining, and useful content. 


Google Maps

Feb 08, 2005
Category Technology

Wow.  That’s about all I can say to the new Google Maps.  I’ve been a long time Yahoo Maps user – but no more.  My friend Bruce Wyman – the Director of New Technology at the Denver Art Museum (who is involved in one of the most amazing art / architecture related projects happening in the country as part of the creation of the new Fredric Hamilton building by Daniel Libeskind) turned me on to it after emailing me about Googlezon’s Epic the other day.

If you haven’t seen it yet – don’t pass go – try it now.


Googlezon’s Epic

Feb 06, 2005
Category Technology

In 2014 the New York Times goes offline and becomes a print-only newsletter for the elite and the elderly. The press and the fourth estate as we know it today has ceased to exist and Googlezon rolls out EPIC (Evolving Personalized Information Construct). Find out how it happened here.


As Jason and I continue to wind our way through a typical VC term sheet, we thought we’d tackle the infamous “drag-along agreement.”  This is one of those terms that has recently increased in importance to VCs due to the all the financing and exit dynamics that occurred during the downturn of 2001 – 2003.  A typical drag-along agreement is short and sweet and looks as follows:

Drag-Along Agreement: The [holders of the Common Stock] or [Founders] and Series A Preferred shall enter into a drag-along agreement whereby if a majority of the holders of Series A Preferred agree to a sale or liquidation of the Company, the holders of the remaining Series A Preferred and Common Stock shall consent to and raise no objections to such sale.”

As transactions started occurring that were at or below the preferred liquidation preferences, entrepreneurs and founders – not surprisingly – started to resist doing these transactions since they often weren’t getting anything in the deal.  While there are several mechanisms to address sharing consideration below the liquidation preferences (e.g. the “carve out” – which we’ll talk more extensively about some other time), the fundamental issue is that if a transaction occurs below the liquidation preferences, it’s likely that some or all of the VCs are losing money on the transaction.  The VC point of view on this varies widely (and is often dependent on the situation) – some VCs can deal with this and are happy to provide some consideration to management to get a deal done; others are stubborn in their view that since they lost money, management shouldn’t receive anything.

However, in all of these situations, the VCs would much rather control their ability to compel other shareholders to support the transaction being considered.  As more of these situations appeared, the major holders of common stock (even when they were in the minority of ownership) began refusing to vote for the proposed transaction unless the holders of preferred waived part of their liquidation preferences in favor of the common. Needless to say, this “hold out technique” did not go over well in the venture community and, as a result, the drag-along became more prevalent.

I’ve heard founders and early shareholders say a variety of things with regard to a drag-along, but the most inane is “it’s not fair – I want to be able to vote my stock however I want to.”  Remember that this term is one of a basket of terms that are part of an overall negotiation associated with injecting money into your company.  There are tradeoffs in any negotiation and nothing is standard – so “fair” is an irrelevant concept – if you don’t like the terms, don’t do the deal. 

If you are faced with a drag-along, your ownership position will determine whether or not this is a relevant issue for you.  An M&A transaction does not require unanimous consent of shareholders (these rules vary by jurisdiction, although the two most common situations are either majority of each class (California) or majority of all shares on an as converted basis (Delaware)), although most acquirers will want 85% to 90% of shareholders to consent to a transaction.  So – if you own 1% of a company, while the VCs would like you to sign up to a drag-along, it doesn’t matter that much (unless there are 30 of you that own 1%.)  Again – make sure you know what you are fighting for in the negotiation – don’t put disproportionate energy against terms that don’t matter.

When a company is faced with a drag along in a VC financing proposal, the most common compromise position is to try to get the drag along to pertain to following the majority of the common stock, not the preferred.  This way – if you own common – you are only dragged along when a majority of the common consents to the transaction.  This is a graceful position for a very small investor to take (e.g. I’ll play ball if a majority of the common plays ball) and one that I’ve always been willing to take when I’ve owned common in a company (e.g. I’m not going to stand in the way of something a majority of folks that have rights equal to me want to do.)  Of course, preferred investors can always convert some of their holding to common to generate a majority, but this also results in a benefit to the common as it lowers the overall liquidation preference.


I decided to add a new category to my blog called “Pet Peeves.”  Like most compulsive people, I have my share of these and I’m confident my therapist – if I had one – would suggest I share these with the world to get them out of my head.

I wrote recently about the NY Times falling prey to using the word “freaking” instead of “fucking.”  It’s depressing to me that the editors at this venerable institution would allow this to happen. Even if they were quoting someone (as they were) they should have said “freaking (sic)” to indicate they were aware of the erroneous word substitution.

This morning, I awoke to an email from Chris Wand with the eleven acceptable times in history to use the “F” word (which his email fondly responds to as @#$% – I’ll go ahead an use that usage below to try to avoid spam filters – oops, RSS doesn’t have spam filters yet, oh well – freedom of speech.)  Of course, I think it’s acceptable in virtually every fucking sentence, but I thought Chris’s eleven times were priceless enough to pass on.  If you disagree with any of these usages, please feel free to take it up with Chris.

11. “What the @#$% do you mean, we are sinking?” – Capt. E.J. Smith of RMS Titanic, 1912
10. “What the @#$% was that?” – Mayor of Hiroshima, 1945
9. “Where did all those @#$%ing Indians come from?” – Custer, 1877
8. “Any @#$%ing idoit could understand that.” – Einstein, 1938
7. “It does so @#$%ing look like her!” – Picasso, 1926
6. “How the @#$% did you work that out?” – Pythagoras, 126 BC
5. “You want WHAT on the @#$%in ceiling?” – Michelangelo, 1566
4. “Where the @#$% are we?” – Amelia Earhart, 1937
3. “Scattered @#$% showers, my ass!” – Noah, 4314 BC
2. “Aw c’mon.  Who the @#$% is going to find out?” – Bill Clinton, 1998
1. “Geez, I didn’t think they’d get this @#$%^ing mad.” – Saddam Hussein, 2003

So – next time – use the real thing – some of the greats in history have.


I’ve never met Bo Peabody, but I know I’d like him.  His half book – Lucky or Smart? – (Amy told me that if it only has 58 pages, it doesn’t count as a whole book) is a quick and delightful romp through his entrepreneurial brain.  If you are too lazy to read a half book, you can try this Inc. Magazine article that will give you a feel for it.

Bo’s first company – Tripod (the one he sold to Lycos for $58m – maybe that’s why the book has 58 pages – and then was locked up for two years while Lycos stock went up 10x) – is still around.  We were investors in Tripod’s competitor Geocities – also still around (and part of Yahoo) – which are both logical predecessors to the things we now call blogs.

Enough history – back to the book.  Since it’s a short one, I’ll summarize by listing the table of contents.  If you can’t figure out why you’d like this book from the table of contents, then it’s not for you.

  1. Lucky or Smart?
  2. Entrepreneurs Are Born, Not Made
  3. Entrepreneurs are B-Students.  Managers are A-Students.
  4. Great Is the Enemy of Good
  5. Start-Ups Attract Sociopaths
  6. Practice Blind Faith
  7. Learn to Love the Word “No”
  8. Prepare to Be Powerless
  9. The Best Defense Is a Gracious Offense
  10. Don’t Believe Your Own Press.  In Fact, Don’t Read.
  11. Always Be Selling Your Stock
  12. Know What You Don’t Know

I’ve been really busy so January was a slow reading month.  I hurt my knee running today so I decided to lie on the couch, ice my knee, and chow down on some books.  I consumed the second half of A Million Little Pieces by James Frey, which I had been slowly wading through the past two weeks.

This is one of the most intense books I’ve read in a long time.  It’s Frey’s autobiographical account of his six weeks in rehab.  The fly leaf sets up the story with the following: At the age of 23, James Frey woke up on a plane to find his four front teeth knocked out, his nose broken, and a hole through his cheek.  He had no idea where the plane was headed nor any recollection of the past two weeks.  An alcoholic for ten years and a crack addict for three, he checked in a treatment facility shortly after landing.  There he was told he could either stop using or die before he reached age 24.

The first half of the book is just fucking bleak.  I’m fortunate that drugs, alcohol, and addiction have not had a meaningful role in the play called my life.  While I’ve got a friend who became addicted to drugs 20 years ago and I spent a decade trying to help him before giving up, the vast majority of my “one degree of separation” friends and family have not had any addiction issues.  As a result, the impact of the book on me might have been amplified as the landscape was so unbelievably foreign to me.  I worked my way through the first half slowly during the past two weeks – both because I was concentrating on other things – and it was hard to move through it very quickly.

The second half is a story of renewal.  Slowly – painfully slowly – Frey starts to make progress.  As the period of time that he’s sober and clean lengthens, he starts to address – with the treatment counsellors and lawyers – his legal issues, his parents, and some of his real demons.  He is incredibly stubborn, yet extremely insightful, and admirable in how he takes responsibility for himself.  When one of his counsellors – in treatment with his parents – suggests that the core of his problems may be a combination of genetics and a severe / chronic ear infection he has for the first few years of his life (unbeknownst to his parents) he rejects it.

James: It’s an interesting theory.  It probably holds some weight.  I can accept it for what I feel it is, which is a possibility.  I won’t accept it as a root cause, because I think it’s a cop-out, and because I don’t think it does me any good to accept anything other than myself and my own weakness as a root cause.  I did everything I did.  I made the decisions to do it all.  The only way I’m going to get better is if I accept responsibility for the decision to either be an Addict or not be an Addict.  That’s the way it has to be for me.  I know you’re going to try and convince me otherwise, but you shouldn’t bother.

Joanne (counsellor): … you are the single most stubborn person that I’ve ever met.

James: I just won’t let myself be a victim.  … People in here.  People everywhere, they all want to take their own problems, usually created by themselves, and try to pass them off on someone or something else.  I know my Mother and Father did the best they could and gave me the best they could and loved me the best the could and if anything, they are victims of me.  I could say I’m flawed in my genetic makeup, that I have this disease and my addictions are caused by the presence of it, but I think that’s a lot of shit.  I’m a victim of nothing but myself, just as I believe that most people with this so-called disease aren’t victims of anything other than themselves.  If you want to call that philosophy stubbornness, go right ahead.  I call it being responsible.  I call it the acceptance of my own problems and my own weaknesses with honor and dignity.  I call it getting better.

This exchange reminded me of my favorite quote from Atlas Shrugged, “Nobody stays here by faking reality in any manner whatever.”  Buried in this emotionally devastating and ultimately awesomely inspiring 400 page book about one man’s effort to overcome his addiction is a component of my own personal philosophy – “take complete responsibility for all of your actions.”  Intense.