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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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Business Love

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“Passion is temporary. It doesn’t last long. Love is enduring. And that’s the important thing. If we all had love in our lives to the degree that we should, it would be much happier.”
— UCLA Anderson | John Wooden Global Leadership Award ceremony (May 21, 2009)

Last night I had dinner with my partners and our significant others. It was a wonderful evening with the three people I work most closely with, the people they love, and the most important person on the planet to me.

Earlier this year I had dinner with Jamey Sperans, one of our investors. Late into the night we talked about a variety of things at an outdoor restaurant in Philly under the heat lamps as a chilly spring night unfolded. Much of the conversation was personal, as in addition to being one of our largest investors, Jamey has become an incredibly close friend. I was struggling with my depression so we talked some about that, but that merely served as a launch point for a deeper conversation.

In that discussion, we talked about the concept of “Business Love.” For a long time, I’ve talked about “business intimacy” – it’s the relationship I try to develop with the entrepreneurs I fund and the people who I work with. It’s a level of emotional engagement that is much deeper than “friendship” or “respect”, is not easily developed, and can be quickly lost if one party isn’t interested in investing the energy or violates a fundamental principle such as trust or honesty.

Jamey and I agreed that “business love” was more profound and significant than “business intimacy.” We discussed the concept of business love in the context of Foundry Group with the unambiguous agreement that the four of us (Ryan, Seth, Jason, and I) have a “business love” relationship.

Once a month we have a full-day offsite. We try to keep our process to an absolute minimum, so we have lunch together on Monday’s and a once a month offsite. The rest of our interactions are continuous and real-time, including almost all of our investment decisions.

Yesterday’s offsite was a perfect example of business love. We spent the day sitting around Jason’s dining room table (the general location of our offsite), got calibrated on a few things that are new initiatives of ours including FG Angels, a new treat coming out next week from us, and a new project we are launching in January. We talked about a few deeper, long range things we want to get right, especially in the context of several of our very successful investments. And we argued about some stuff that we disagreed on in an effort to both understand the data and get aligned.

It was awesome and one of my favorite days of the month. When we split up around 3pm (we end when we are finished) I had a permagrin on my face. I walked home and spent a few hours grinding through email. I went to a meeting and then picked up Amy to head back to Jason’s for dinner. We had an amazing dinner as a group to end the day.

I woke up this morning thinking about business love. I remembered my conversation with Jamey. I recalled that Jo Tango had written a post on business love a while ago and went back and looked it up. I’m guessing that Jamey was the LP in the post that Jo is referring to, since the principles of business love, that Jo refers to, are exactly what we talked about.

  • Members of those firms really respect and like each other. They’re very tight. In fact, they love each other
  • They have a sense of mission. They want to make money, but that’s not the most important driving force
  • How they treat each other spills over to how they treat their entrepreneurs and investors

The process of creating and building new companies from nothing is hard. It’s incredibly rewarding when it’s successful, but the process can be an excruciating, chaotic, and messy. There are moments of extreme stress. Failure is always lurking in the background. Working alongside people you truly love makes a huge difference, at least for me.

Paul Berberian Interview on This Week In Startups

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I’m a big fan of Jason Calacanis’ show This Week In Startups. I usually run naked (no headphones) but when I listen to something it’s usually an interview or a book.

Amy and I had dinner last night with Paul Berberian and his wife Renee and Paul mentioned Jason had interviewed him at Techstars FounderCon in Chicago a few weeks ago. So – I grabbed my iPhone, downloaded the interview, and listened to it. Dynamite stuff.

Earlier in the morning I read Jason’s post on LinkedIn titled The Great Venture Capital RotationI think it was originally titled “The End of Venture Capital Sort Of” (based on the URL). In addition to being provocative, it lined up nicely along a few others posts on this topic from Fred Wilson (Leading vs Following), Hunter Walk (AngelList Syndicates Will Also Pit Angel Against Angel) and Howard Lindzon (So You Want to Angel Invest…Be Prepared to Lead and Follow.) Naval, Nivi, and the gang at AngelList have really busted some stuff open and it’s interesting to watch it play out.

But – if you know me, you know I’m not satisfied with just watching. So I dove in and joined a few syndicates on AngelList, including Jason’s, Dave Morin, and Naval’s.

And – if you’ve read this far, the new Sphero 2.0 is out and is amazing. Get yours today.

Entrepreneurial Density and Venture Capital

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Richard Florida continues to write amazing stuff about Startup Communities in The Atlantic Online. Two of his latest articles talk about entrepreneurial density and venture capital.

For a long time I’ve suggested that an interesting measure of entrepreneurial density would be ((entrepreneurs + employees of startups) / total population). I asserted in my book Startup Communities: Building an Entrepreneurial Ecosystem in Your City that I thought Boulder had the highest entrepreneurial density in the world. I qualified this by staying I had no real empirical data – it was merely an assertion based on my experience.

Richard took this notion a step further in his article High-Tech Challengers to Silicon Valley and actually did some math. In it, he looked at Venture Capital financing (total dollars and number of deals) on a per-capital basis. Boulder came in third, behind “San Jose-Sunnyvale-Santa Clara, CA” (what most of us think of as “Silicon Valley”) and “San Francisco-Oakland-Fremont, CA” (what most of us think of as San Francisco.)

Venture Capital investment per capita

 

The comments are fascinating and generally miss the point. One in particular, called Richard unethical, although it was from “WithheldName” (also known as Anonymous Coward).

“It’s totally unfair to make Boulder separate from Denver. Combine Boulder and Denver. It’s called the Denver-Boulder Metropolitan Statistical Area for a reason. Was Cambridge separated from Boston? Of course not. The author was from Boulder. This data was slanted to Boulder. It was totally unethical.”

This particular person doesn’t understand that Boulder and Denver are separate startup communities. In contrast, Cambridge and Boston are one startup community, consisting of six startup neighborhoods (three in Cambridge, three in Boston, all within a 15 minute drive of each other, even in traffic.)

More importantly, the author of the article wasn’t from Boulder. I’m from Boulder. I didn’t write the article – Richard did. And – he was pretty clear about all of that, so our friend needs to rethink his definition of the word “unethical.”

That said, the more interesting study is by zip code, not by city or MSA. Mixing MSAs and cities creates a comparison that isn’t precise. And Richard acknowledges this:

“I’ll continue to track the evolving geography of start-ups and venture capital in future posts. Next week, I’ll look at the economic, demographic and social characteristics of metros that are associated with venture capital and start-up activity. In future posts, I’ll delve more deeply into all of this, using detailed data by area code and zip code level to tease out the changing geography of venture capital and start-up activity and its distribution across cities and suburban areas.”

I think the real magic in the analysis around entrepreneurial density will happen at the zip code level on a per capita basis. Look for 80302, 02139, and 10003 to show up high on the list along with some starting with 94xxx.

Something Ventured: The Founding of the Venture Capital Industry

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Last night Amy and I watched the movie Something Ventured: Risk, Reward, and the Original Venture Capitalists. This was my reward (I got to choose) since she watched both football games yesterday (and today). We have a 15 minute and 30 minute rule on any movie – after 15 minutes the chooser asks “still into this movie?” If the answer is no, we stop. This question gets asked by the chooser again after 30 minutes. If the answer is yes, we go for the duration, even if someone falls asleep. For example, after 15 minutes the other day, Amy said “still in” on my choice of The Hebrew Hammer. After 30 minutes, we were both “no’s” and that was the end of that.

I figured Amy would veto Something Ventured after 15 minutes. I’d heard from a number of VC friends that it was really good, but the idea of watching a documentary on the history of the creation of the venture capital industry doesn’t sound like an awesome Saturday night movie choice. But after about ten minutes, Amy said, “Wow – this is great!”

As I’m deep into writing book three of the Startup Revolution series (titled Startup Boards: Reinventing the Board of Directors to Better Support the Entrepreneur) I’ve been thinking a lot lately about what makes a great board of directors, and what characteristics of different VCs contribute to this. It ended up being super helpful to see direct interviews with a number of legendary VCs, including Arthur RockTom PerkinsDon Valentine, Dick Kramlich, Reid Dennis, Bill Draper, Pitch Johnson, Bill Bowes, Bill Edwards, and Jim Gaither. They covered a wide range of experiences, but were all there at the beginning of the VC industry and shaped many of the fundamental structures of venture capitalists, VC firms, how they interact with entrepreneurs, how the companies (and investments) are structured, and how boards work.

The entrepreneurs who were in the documentary were equally awesome. They included Gordon Moore (co-founder of Intel), Jimmy Treybig (founder of Tandem), Nolan Bushnell (founder of Atari), Dr. Herbert Boyer (co-founder of Genentech), Mike Markkula (president/CEO/chairman of Apple for many years), Sandy Lerner (co-founder of Cisco), John Morgridge (early CEO of Cisco), and Robert Campbell (founder of Forethought). The interplay between VC and entrepreneur as the story of the founding and funding of their companies was told was very powerful.

After 30 minutes, when asked if she was still in, Amy emphatically said “yeah – definitely.” While I thought I knew all of the history, I learned a few things I’d never heard before, but more importantly I got the nuance of the stories directly from the participants. And all of it was rolling around in the back of my head this afternoon as I spent three solid hours on Startup Boards.

If you are a VC, or aspire to be a VC, do yourself a favor and watch Something Ventured right now. And, if you are an entrepreneur who is interested in how the VC industry got started, I think you’ll also find this fascinating. The film ended with all of the VCs echoing the powerful reminder that without the entrepreneurs, there would be no VCs. It made me happy that it ended on that note.

I Give You Permission To Hate My Feedback

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Last night Amy and I had an awesome dinner at Perla with Fred Wilson, Joanne Wilson, Matt Blumberg, and Mariquita Blumberg. Fred and I have been involved in Return Path for a dozen years and this has become an annual tradition for us when Amy and I are in NYC. At 12 years of service, Return Path gives a six week sabbatical and a pair of red Addidas sneakers as a “get ready for your sabbatical” gift. Fred and I got the sneakers, but not the six week sabbatical.

I sat across from Joanne and since the restaurant was noisy our table ended up having two separate conversations going. Joanne is awesome – if you don’t read her blog, you should start right now, especially if you are interested in NY entrepreneurship, women entrepreneurs, food, and the thoughts of an amazing woman. I still remember meeting her for the first time around 1995 and thinking how dynamite she was.

Oh – and if you are a seed stage company in NYC looking to raise money, you are an idiot if you don’t immediately reach out to Joanne and try to get her involved. She is one of the most thoughtful angel investors I’ve ever met.

We talked a lot about seed stage investing during our part of the conversation. Joanne has done about 25 investments in the past few years and has a very clear strategy for what she invests in. She works incredibly hard for the companies she invests in, is deeply passionate about the products and the entrepreneurs, and clearly loves what she does.

During the conversation we had a moment where we were talking about feedback. I told her about my approach of saying no in less than 60 seconds. She told me a story about giving entrepreneurs blunt feedback in the first meeting, which I always try to do also. And then she said something that stuck with me.

Joanne will often start a meeting by saying something like I give you permission to hate my feedback. You can decide that you want to tell me ‘fuck you’ after the meeting. But I’m going to tell you what my direct and honest reaction is.

Now Joanne is a New Yorker through and through. Aggressive, direct, and clear. But never hostile. Ever. And a deeply loyal supporter. So this feedback, while direct, is incredibly powerful. It’s often extremely hard for someone to hear, especially if they are in “I’m trying to convince you to fund my company mode.”

I play the same way. At Foundry Group, one of our deeply held beliefs is that we always be intellectually honest, no matter how difficult it may be. At TechStars we pride ourselves on providing direct feedback, but always saying “this is only data”, letting the entrepreneur make their own decision about what to do.

These are versions of Joanne’s permission to “hate her feedback.” It’s a powerful way to frame any discussion. And I know I’ll be using the phrase “I give you permission to hate my feedback” many times in the future.

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