Carolyn Curiel wrote an editorial yesterday in the NY Times titled “Let’s I.M. as You Read This.”  A friend sent it to me with the suggestion that Carolyn might have been thinking of my treadputer when she said “Still, something feels missing. I think of the executive who positioned his office computer above a treadmill, so he could walk constantly, keeping fit as he ran a business.”  If only she knew how much more I actually concentrate on my three hour conference calls when I’m on the contraption.

NCWIT had a “town hall” event at the National Academy of Sciences Auditorium last Wednesday.

Along with the NCWIT participants were a number of special guests, including Senator Barack Obama (D-IL), Rick Rashid (SVP Microsoft Research), and Senator Mark Udall (D-CO).  The agenda included a keynote address from Padmasree Warrior (EVP and CTO of Motorola), an Executive Branch Panel, and a Congressional Panel.  I wasn’t able to attend because of my trip to Paris, but Lucy Sanders (NCWIT’s CEO) told me the event went extremely well.  Thanks to everyone who participated.

A reader asked me the other day if – in the words of Charlie Munger – I have a “mental model” for investing in early stage companies.  I do, but I’d rather give examples of the two best approaches I’ve heard of from other people.

This first approach is David Cowan’s Road Map investing at Bessemer.  He recently wrote a short “road map post” on Television 2.0.  While it’s really just a pithy overview of what David is starting to think about, it gives a good feeling for what the executive summary of a new road map might look like.

The other approach is Jerry Colonna’s “Analog Analog.”  When Jerry was actively investing in stage one of the commercial Internet (1995 – 2000), his premise was that every technological innovation (or technology business) has a real world, non-digital analogy.  It’s not the “nothing new is ever invented” paradigm – rather it’s the “learn from the past” paradigm.

Lots of VCs talk about their “process”, “investment thesis”, “company building model”, “value add model”, or other such cliche-ish phrase.  Some of the great VCs really do have a mental model that they can articulate; the balance of the great VCs don’t have one that they can (or choose) to articulate.  However, most of the not so great VCs will have “something else” that they use to frame their investing.  As with everything in life, “beware of a man with a hammer as everything will look like a nail to him.”

Jason and I occasionally get asked “why are the majority of companies incorporated in Delaware, regardless of their actual physical location?“  Besides being difficult to spell (c’mon – you thought there was an “e” instead of an “a”, didn’t you), Delaware offers some tangible advantages over incorporating in other states.  While we aren’t experts on state laws outside of California, Colorado, and Delaware (e.g. feel free to offer “my state is better than Delaware to incorporate in” comments), we thought we’d summarize a few of the reasons below.

First, Delaware’s large body of business laws helps a company plan carefully to avoid a lawsuit.  Certainty is “power” and one can generally be “more certain” about a particular legal outcome in Delaware compared to other states.  While we might not agree with a decision made by Delaware courts, it is at least nice to know what the ground rules are, which are much less clear in most other states.

Next, Delaware courts have the ability to deal with complex cases.  In general, their reputations is at least as good, if not the best, in the country.  Some of the courts adjudicate with jury trials, so in addition to the mitigated expense factor, their decisions are generally well-developed and easy to read.

Furthermore, most corporate attorneys are clued into Delaware law in addition to the particular state they practice in.  For instance, Jason assures me that he is as comfortable with California legal issues, as well as Delaware law, despite the fact that he has never set foot in the state (quick – name the bordering states.) 

Finally, the infrastructure of Delaware allows for most administrative functions and filings to occur at a much more rapid pace and at less expense than other states.  For instance, Delaware was among the first to accept faxes as legally binding, thus greatly improving the speed of incorporations and amendments to corporate documentation. 

As you can see, many of the advantages are due to the court system and case precedents in Delaware.  Many investment bankers will demand that their clients are incorporated in Delaware before going public.  Some of this is just “tradition,” but a lot of it is the clearly legal picture that Delaware law paints and the comfort zone that insurers have insulating boards subject to Delaware law.

Keep in mind that regardless of where you incorporate, you may still have to comply with laws of the state that you reside in.  For instance, California has a code section that is called the “long arm statute” that basically says:  we don’t care where you incorporate, if your primary place of business is California, then you need to abide by X, Y and Z. 

Al Gore on SNL. 

I have no idea if this is legal or not, but it’s hilarious.  Thanks Don and Rick, my liberal friends.

A little more than a year ago, Amy and I had a legendary dinner at Le Cinq in the Four Seasons Hotel George V in Paris. Last night we had another amazing experience – this time at Restaurant Guy Savoy with our long time friends Warren and Ilana Katz.  In fact, last night’s meal was so incredible that I’ve spent most of the day laying around the apartment recovering and keeping myself distracted from feeling full by doing email and phone calls.

We entered our own private food sanctuary and emerged five hours later.  I don’t drink, so a five hour meal can be especially long, but in this case the food was so spectacular that the time passed fluidly.  We had our own room – complete with a very disconcerting sculpture with Madonna “Blond Ambition Tour” breasts that had very little to do with the food.

The dinner (if you include the four dessert courses) was a 16 course meal.  The main segments included:

• Morilles etuvees
• Tout petit pois
• Soupe d’artichaut a la truffe noire, brioche feuilletee aux chamignonset truffes
• Homard beton etuve aux bouillons et racines
• Volaille de Bresse confite et laquee

Remarkably, the food just kept coming and coming and coming.  Every plate was beautifully done.  Amy and I are a pain in the ass at meals like this since neither of us drink wine (she’s allergic) and I’m a fishaterian.  The folks at Guy Savoy performed marvelously.  It’s 24 hours later and I’m still not hungry.

One of my oldest (as in “known for the longest time”) friends – Dave Jilk – recently started a new company called eCortex with his business partner, CU Boulder Professor Randall O’Reilly.  I – along with several other friends and The University of Colorado (through their Proof-of-Concept Investment program)  – participated in the angel financing.

I’ve known Dave since my second day at MIT.  I was a lost and lonely freshman during the madness known as MIT Rush (MIT used to have fraternity rush the first week of school – this has since been modified for a variety of reasons – some good, some not-so-good) when Dave walked up to me and said something like “hey, want a beer?” (this was probably one of the “good” reasons since I was 17.) This started a 20+ year friendship that includes starting a successful company together (Feld Technologies), marriages and divorces, moves (we both ended up in Boulder), an unsuccessful entrepreneurial adventure (Wideforce Systems), several salvage operations (planetU, Xaffire) and lots of time spent exploring and learning new things. Dave was always one of the most intellectually capable people in the room (a 4.9/5.0 in Course 6 at MIT means something – I think the B was in psychology) and – while the startup company thing suited him well, he was never in love with the thing he was working to create.

Several years ago, Dave started taking some Cognitive Science classes at CU Boulder and hooked up with Randall O’Reilly. I remember seeing him light up one of the first times we talked about the research he was exploring and thought to myself – “this is it – he’s found what he wants to work on.”  Last summer when he was visiting me in Alaska we talked about this idea a lot and I continued to encourage him to just go for it.

He did.  Dave and Randy have started a new software company called eCortex to commercialize the visual object recognition technology that Randy and his team have been working on at CU Boulder.  The technology is essentially a neural network model of the human visual system, including numerous biologically realistic characteristics, which allows it to see things much like we see them. Applications include surveillance (security cameras as well as luggage scanning), satellite photo analysis, military target identification, online image or video search, optical character recognition, and manufacturing. In one test, this system was trained on a sampling of 100 different objects, and successfully recognized the objects 96% of the time, even when shifted in the image, scaled down to as small as one-tenth the size, and rotated within a small range.

Now – there have been many attempts to create object recognition systems.  While I don’t understand any of the science that Dave and Randy are working on, I do understand that much of what exists is basic pattern recognition algorithms rather than the magic of neural network simulations.  I sat in a conference room recently and watched as Randy walked me through some examples using PDP++ (a neural network simulation system written in C++) explaining how eCortex is approaching the problem differently.

A few weeks later I sat in the same conference room and listened as a visiting VC told me that he’d heard there are no real computer science people in Boulder.  I choked down my chai and mentioned a number of examples, including these two dudes working on this neural network thingy.

Barry Eisler – one of my favorite authors – made me laugh out loud this morning.   Amy and I had a legendary dinner at Guy Savoy last night with our friends Warren and Ilana Katz (more on that later when enough blood returns to my brain from my stomach to write about it) and we had the experience that this language was designed for.

Barry’s blog has moved up into the list of “read the full post every day rather than skim” category.

There was a gang of bloggers at SAP’s SAPPHIRE conference that was organized by SAP’s Jeff Nolan.  The wiki has a bunch of context and links to the various folks that were part of this gang.  Niel Robertson – the CTO of Newmerix (one of my portfolio companies) – has started to trickle out missives from the conference.  Ross Mayfield – the CEO of SocialText – covered the keynote nicely (eliminating my need to be there) and – well – if you just had to see some pictures of the conference, they even existed on the web.

I received the following question recently:

Just want to ask you a question. I’m looking to bring in a couple of advisors for my startup, how much stock and the approximate % of equity should I give that’s fair to the advisors for their invaluable advice? I was thinking of 100,000 shares each that equates to 1% company equity. Can you advice me on what’s the norm?

1% is rich.  In the past, I’ve given some ground rules for equity grants for directors – 1% vesting over four years is at the top end of the range.  Advisors typically (although not always) contribute much less value to a company than directors and their equity grant should correspondingly be less.  Of course, the amount you give depends on a number of factors, including things like your expectation of what the advisor will provide, how much you value this involvement, and the existing capital structure of the company (e.g. larger grants if you are younger, smaller grants if you are a more mature company.)

Usually, you’ll be granting stock options (non-qualified stock options – “non-quals” or NQSO’s) to the advisor.  As a result you should think through vesting carefully.  Many advisors contribute much of their value early in the life of the relationship so rather than giving a grant that vests over four years, you might consider making an annual grant and then revisiting things in a year to see if the relationship is living up to expectations.  A savvy advisor will prefer to get a bigger grant that vests over four years since it will allow them to lock in a strike price at today’s fair market value (FMV) of the stock (which – in the success case – will likely be lower than the FMV in the future).  At the minimum, this will facilitate a conversation about revisiting things annually to make sure everyone’s expectation is being met with the relationship.