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Hi, I’m Brad Feld, a managing director at the Foundry Group who lives in Boulder, Colorado. I invest in software and Internet companies around the US, run marathons and read a lot.

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The Great Internet Stock Correction of 1997, or 1999, or …

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Yesterday I read Kara Swisher’s post What Does the Recent Tech Stock Downturn Mean? The Truth Is Nobody Knows. It’s great. Go read it – I’ll wait for you.

In the last two weeks there’s been a flurry of articles about the implications of a 25% decline in the public market value of a bunch of Internet stocks. They range from “the sky is falling” to “the IPO market window is closing” to “there will be more stupid television shows about Silicon Valley” (I prefer Game of Thrones and 24, thank you very much.)

As many of the Cylons from BSG are fond of saying, “All this has happened before, and all of it will happen again.”

I remember a moment in time in 1997. We were in the middle of fundraising for Softbank Venture Capital (which became Mobius Venture Capital.) It was the first VC fund I’d helped raise. We probably had about $150m committed and were running around trying to get to $300m for what we had positioned as a dedicated Internet VC fund. I can’t remember the month, but I think it was in the summer, that all the public Internet stocks dropped a bunch (probably 25%). Suddenly every meeting we had turned cold with all of our potential LPs either asking how we were going to make money on the Internet or asserting that there was no way that we’d make money on the Internet. A few months later the public markets for Internet stocks turned around and we closed a $330 million fund which ended up doing extremely well.

In 1999 we filed an S-1 to take Sage Networks public. I was a co-founder and co-chairman. We were planning to go public in the early spring, but in February we acquired a company called Interliant which doubled our side. We had to grind through a refiling of our S-1 which cost us a month. We finally hit the road with the intention of going public by the end of April. Our underwriters (Merrill Lynch) told us not to worry that the SEC hadn’t cleared our filing yet – they always did it a few days before you went public. I spent three weeks on a road show with our president and CFO building the book. Day after day passed and we didn’t hear from the SEC. Two days before we were supposed to price, the book was 10x oversubscribed and our $9 – $11 price looked like it could move up meaningfully. They day we were supposed to price we still hadn’t heard from the SEC. “Don’t worry” said the banker at Merrill Lynch, “We’ll get it done.” The next day, when we were supposed to be trading, a fax came through from the SEC. It was 20 pages long and had about a month’s worth of work to pull together on the F-pages of the filing (we had acquired 20 companies.) That night we all drank a lot of scotch – we knew the IPO wasn’t going to happen that week and we’d just wasted a road show. I remember being completely numb the next day as I flew home from NY to Boulder, not completely understanding how we had just blown the IPO.

A few weeks later Internet stocks started to fall. I vaguely recall that eBay was one of the bellwethers at the time and I think it had a big drop. Suddenly the IPO market window closed. No one was interested in Internet stocks, let alone one that was being tortured by the SEC for accounting disclosure on a bunch of acquisitions of tiny companies.

At the end of June I went to Italy for a week vacation with my wife Amy and my parents. We did a walking trip which I remember being wonderful – 10 miles a day finished off with lots of food and wine in a beautiful Italian countryside. No phones, no email. Until Thursday, when I got a call at the villa we were staying at from one of my board members who said “you have to come home right now.” I responded with “I’m flying home Sunday and will be back on Monday.” He said, “No – now – the road show starts again Monday and you have to be at the printer on Saturday to sign off on the filing.”

I scrambled to find a flight home from the middle of Italy, got to NY by Saturday mid-day, re-started the road show on Monday, and we were public by the end of the week. We went out at $10 and traded up to $15. When I checked the market indexes, they were basically the same as they were two months earlier before things dropped.

Lots of folks are going to pontificate about what is going on in the public markets. Most have an agenda or a vested interest.

If you are an entrepreneur, ignore the pontification and go build your business. Pay attention to the dynamics in the macro, since they will impact you, but don’t get caught up in. Don’t create a narrative to justify something that is going on. Focus on the reality – your reality – and do your best operating in the context in which you can’t control.

All this has happened before, and all of it will happen again.

Interesting Tech / VC Stuff To Read on 4/10/14

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I’m bouncing around between a bunch of stuff and have a two board meeting day so I thought I’d just toss up a few interesting things I read this morning along with my thoughts.

Don’t let the regulatory past be the prologue for Uber: Phil Weiser, the Dean of CU Law and head of Silicon Flatirons has an excellent OpEd in the Denver Post about Uber in Colorado and the regulatory activity around it. I’ve been vocal with our state government to not behave in “incumbent protection mode” by over regulating Uber, Lyft, and other innovative new companies. It continues to be painful to watch our state government – which is so enthusiasm about innovation and entrepreneurship – keep stepping on their toes, and occasionally in shit, as they try to balance the incumbent / innovator dynamic. I’m glad Phil said what he said so clearly – it needed to be said.

Venture funding goes ballistic: VCJ: Some people are starting to call the top of the current cycle, at least in the context of flows of LP funds into VC firms. We had our LP Annual Meeting yesterday and I had a vibrant conversation with a few of our LPs about this topic at lunch. My view on the world continues to be simple – have a strategy and a set of deeply held beliefs. Evolve your strategy thoughtful and carefully, but never change your deeply held beliefts.

Understanding the Drivers of Success: Matt Blumberg, CEO of Return Path, reminds us that a rising tide raises all boats. He speaks from his own experience about some of the cycles he’s been through with Return Path over the past 12 years and how that masks potentials issues. Greg Sands from Costanoa, who’s been on the Return Path journey with me, Matt, and Fred Wilson from the beginning, weighed in with an email on the past that finished with a great punchline: “Finally, when the slow down comes, figuring out how to separate market dynamics from team team and know whether you have the mgmt team you need for the next part of the journey is *really* hard.”

How Cheezburger Recovered From Their Hiring Blunder: Ben Huh, CEO of Cheezburger, has an outstanding and very open article about some very hard decisions he had to make a year ago, how and why he made them, and how he and Cheezburger have recovered from some bad choices. I love working with Ben and especially enjoy how honest and internally consistent his brain is with what happened.

Heartbleed: What Is The Correct Response? I was going to write a post yesterday on Heartbleed but didn’t get to it. Fred Wilson wrote a great one this morning including searching for the correct response for him personally. There’s lots in the comment thread – go weigh in if you have thoughts or suggestions.

Ignoring Anonymous Coward and a Rant on Anonymous Apps

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Suddenly anonymous apps are all the rage again. Secret and Whisper are the two that have recently made headlines, but there’s a cockroach like proliferation of them being funded by VCs.

Anonymous Coward

As one of my favorite BSG quotes goes, “All this has happened before, and all of it will happen again.”

I was generally ignoring this until I read a long post by Austin Hill titled On your permanent record: Anonymity, pseudonymity, ephemerality & bears omfg! It was outstanding and referred to a tweet stream by @pmarca on the same topic.

I’ve been trolled since I first started interacting with other humans online in the mid-1980s. The first time it happened was shocking to me. I was young (under 20), on a Usenet thread, and was part of what I thought was an interesting conversation. I no longer remember what the comment was that shook me up, but it was the equivalent of “go fuck yourself with an axe, chop out your liver, and die.”

Yeah – I wasn’t ready for that. After a few years of being trolled, I learned to completely ignore it. I recall discovering “anonymous coward” on Slashdot and – after thinking someone had come up with a particularly clever user name, I realized that was their label for all “guests” who commented anonymously.

When FuckedCompany.com came out in 2000, it was startling at first, but then it quickly became predictable. If you were part of a company that was fucked, you knew it. But when confidential information started appearing on a daily basis, especially in contexts where companies were trying to do the right thing, it became upsetting. Eventually, like being told to go fuck yourself with an axe, I became numb to it and started ignoring it.

At this point in my life, I realize that it is all just noise. So, for me, I just ignore it.

It’s the same kind of noise that destroys lives. It’s so much easier to be cruel when hiding behind a wall of anonymity. We already know how much easier it is to be cruel over email versus in person. Now put up an anonymous wall. Say anything you want. Release any confidential information you want. Lie about anything, since there is theoretically no way to trace it back to you. You are no longer accountable for what you say or do. You can say whatever you want, whether it is true or not. You can perform systematic character assassination without any consequences.

Every now and then one of the anonymous apps gets hacked. All the user data gets revealed. In the past, there wasn’t enough critical mass of this for anyone to care. But this time around, there might be. And, and Austin says in his post, there is merely the illusion of anonymity here.

“FALSE EXPECTATION OF ANONYMITY: The security model for both these applications is horrendous and irresponsible. The give the user an illusion of privacy, encourage users to say things without the burden of identity (both in good or bad cases) — but then provide no real anonymity or privacy is deceptive.” 

Go read the whole thing – I won’t repeat it here. But if you think what you are putting up on these apps is really anonymous, then keep doing it at your own peril.

But why are you doing it? What is the value to you? What is the value to society? What is the value to anyone else? And what is the cost?

This isn’t a moral question. Do whatever you want. But ask yourself the question “why”.

If you think this is new and exciting, just remember all this has happened before, and all of it will happen again.

A DevOps Tent Big Enough for Everyone

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My partner Ryan McIntyre says that any company doing business on the web should be practicing some form of DevOps. One of the biggest trends in tech today is DevOps, which is closely tied into Agile, Cloud, PaaS, and SDN.

If you remember Gene Kim’s guest post on the importance of DevOp post, or recognize some of the investments we’ve made in our Glue and Protocol themes that are focused on DevOps, such as JumpCloud and VictorOps, this will be a familiar topic.

Last fall, JumpCloud and Softlayer/IBM hosted a DevOps Conference in Boulder for the companies we’ve invested in.  At this conference, I heard of an effort to put together a new community site that would pitch a tent big enough for anyone interested in DevOps. This would be a place where technical folks could learn and communicate, where novices could find out more, and where business people could understand why and how DevOps matters.

Alan Shimel, who I have known for over 15 and has been writing for Network World and a bunch of other places was heading up the effort.  In typical Shimel fashion, Alan simultaneously put together a top flight collection of content providers while doing a deal and partnering  with Martin Logan who had a blog over at the domain, DevOps.com. If you are going to have a DevOps community media site, it is hard to imagine a better domain to for it to live at.

Since that time Alan and Martin have been working hard retooling the old blog into a full-fledged online community e-zine.  They launched the site this week with SoftLayer and JumpCloud as founding sponsors.  Another one of our portfolio companies, VictorOps is a sponsor and VictorOps CEO Todd Vernon has a regular blog on the DevOps.com site.

The list of contributors to DevOps.com reads like a who’s who of the DevOps world with a goal of having over 100 unique content pieces a month at DevOps.com. But media content is not the only mission.  Alan, Martin and team are planning to help amplify the DevOps grass roots efforts around the world through conferences and community events.

I am jazzed to see what Alan makes of it, but I am even more excited to watch the continued growth and influence of DevOps.

My Message About The Singularity: Be Optimistic

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I did a really fun hour long interview with Nikola Danaylov – who goes by Socrates – on the Singularity Weblog. We covered a wide range of topics around humans, machines, the singularity, where technology is going, and some philosophy around the human race and it’s inevitable Cylon future.

This was one of the more stimulating set of questions I’ve had to address recently. My fundamental message – “be optimistic.” Enjoy!

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