Brad's Books and Organizations

Books

Books

Organizations

Organizations

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.

« swipe left for tags/categories

swipe right to go back »

Raving Fans – How Our Themes Evolve

Comments (287)

We had our Foundry Group annual meeting yesterday. I enjoy our annual meetings – we get to spent a focused chunk of time with our investors. We have a straightforward meeting – a dinner for our advisory board the night before, drinks after for all LPs, our advisory board meeting first thing in the morning, and then the full meeting until lunch time. There’s no crazy party, no big events – just substance on our part and direct interactions with the investors supporting us. Our goal is simple – provide a clear update about what is going on in our funds, talk about what we are thinking about, and get direct feedback from our investors.

We spend the day before the meeting as a team putting the final touches on our presentation and reflecting on the previous year. We always talk about our key principles that we established when we started Foundry Group in 2007. One of these key principles is a “thematic investing approach.” An important part of our themes is that they are continuously evolving (if interested, we publish details on how we are currently thinking about themes on our Foundry Group website.) Our LPs understand this well and always like to hear how we are currently thinking about themes at our meeting.

On Tuesday, we realized that we have made several investments yesterday that have a concept in common – that of raving fans. I first thought of raving fans when I read Ken Blanchard’s book by the same name in 1993 when I was CEO of Feld Technologies (my first company). The message rang true for me then and still does today. The tl;dr version is “Your customers are only satisfied because their expectations are so low and because no one else is doing better. Just having satisfied customers isn’t good enough anymore. If you really want a booming business, you have to create Raving Fans.”

Our investment in Sympoz (owners of Craftsy) is an example of a company built on raving fans. Craftsy is a community of people who love to make things  - knitters, quilters, sewers, jewelers. If you know a knitter (I do – Amy is a fanatical knitter as is my mom Cecelia) you know that knitters are “raving fans of knitting.” We invested in Sympoz in our Distribution theme, but it has this special characteristic around its community that felt a little different to us.

We classify our investment in SideTour as “Other”. We say that we aren’t slaves to our themes – we’ll occasionally do something outside of a theme if we love the entrepreneurs and have a special connection to them. In the case of SideTour, they were one of our favorite companies in their TechStars New York class and we were infatuated with the types of experiences they were talking about providing in their marketplace. As we were talking about Sympoz (which is doing extraordinarily well) and SideTour, we realized that the “raving fans” concept applies to each of them.

I had a call yesterday with another entrepreneur running a company that we passed on the seed round. We all like the entrepreneur a lot, but the company didn’t feel like it fit in any of our themes and was too vertically oriented for us. The company is doing great and as we were talking about it a week or so ago we said “it feels a little like Sympoz, but has some characteristics of SideTour.” Yesterday, when I was talking to the entrepreneur, I realized it also was about a community of raving fans.

I love raving fans as the phrase for this theme since it sets an incredibly high bar of the dynamics of the people in the community these companies appeal to. These aren’t “vertical social networks” or “vertical exchange marketplaces” – there is something deeper going on in the relationship between the people and the company, and the people and community. And it’s something that is magically enabled by the current state of technology – mobile, video, real-time social – a bunch of things have come together than make this work.

Look for more on raving fans from us as it evolves. For now, you have a little bit of a window into how we think about themes.

Update – My partner Seth reminded me that our investment in CrowdTap (in our Adhesive theme) is all about helping brands interact with their raving fans, Todd Sawicki said “dude – how about Cheezburger” (in our Distribution theme) and Jeff Malek, the co-founder of BigDoor (in our Glue theme) said “ahem!” So it seems like we’ve got a lot companies involved in the construct of raving fans!

Adhesive – A Sticky New Foundry Group Theme

No Comments

Today Seth posted a new blog on the Foundry Group site titled Foundry Group’s AdTech Investing: Adhesive. While we’ve seen a billion AdTech related investments, we’ve only made a few of them over the past three years. We are huge believers in the macro of digital advertising, but we think the morass of much of the online ad world is just that – a morass. So we’ve avoided large swaths of the digital advertising world, instead focusing our energy on the ones that fit in our Glue theme.

We realized a while ago that we really had two types of companies in our Glue theme. The first set are companies that provide a key layer of software on the Internet, much of it at the application or machine to machine level, such as Gnip and Standing Cloud. The other set are companies that provide glue between systems in the AdTech universe, such as AdMeld and Triggit.

We’ve resisted talking about being AdTech investors since there is so much of AdTech that we avoid. However, when we realized that we were investing in a lot of “Glue for AdTech”, it seemed logical to categorize these investments in a new theme – Adhesive.

The companies we’ve invested in that we categorize as in the Adhesive theme are AdMeld, Lijit, Trada, Medialets, Mandelbrot Project, Triggit and Integrate. For more on how we are thinking about this, take a look at Seth’s post titled Don’t call it AdTech. It’s “Adhesive”. And if you want to see how we’ve categorized all of our investments by theme, take a look at the new portfolio page on the Foundry Group website.

Distribution – A New Foundry Group Theme

Comments (5)

We’ve put up a post on the Foundry Group site about a new theme of ours we are calling Distribution. We’ve been investing in this theme for a while but have continued to formulate exactly how we think about it.

I’ve talked about our thematic approach to investing many times in the past.  Every now and then it feels like it’s worth a quick post on our current themes. They are:

Human Computer Interaction: The way humans interact with computers 20 years from now will make the way we interact with them today look silly. Sample companies include Oblong, Organic Motion, and Fitbit.

Glue: Computers love to talk to one another. The amount of “computer to computer interaction” is increasing at a dramatic rate. There’s a software layer that “glues” this together. Sample companies including Gnip and Standing Cloud.

Digital Life: We believe that people own their digital assets and should be able to access them anytime from anywhere. Sample companies include Cloud Engines and Memeo.

Protocol: Many protocols – both formal and informal ones – support extensive software ecosystems. We’ve been investing in protocols like SMTP, RSS, XML, and SMS for years and expect to continue doing this. Sample companies include SendGrid and Urban Airship.

Distribution: Giant existing online markets can be completely disrupted by new distribution methods like Facebook, Twitter, Mobile, and User-Generated Content. Sample companies include ZyngaTopspinStockTwits, and Cheezburger.

We’ve got one additional theme that we’ll be talking about shortly. We’ve decided to split our Glue theme into two different themes as we’ve realized a particular pattern in our investment dynamics around this theme. Look for another post on this shortly.

Blur is Coming

Comments (12)

I’ve been hinting about a new conference that we’ve been working on with Eric Norlin that complements Defrag and Glue.  Eric is about to launch it and the splash page for the Blur Conference is up.

If you are familiar with Defrag and Glue, you know they are built around two of Foundry Group’s themes (Protocol and Glue respectively).  Blur is being built around our Human Computer Interaction theme, but with a twist.  Instead of simply being able to “see cool stuff up close”, our goal with Blur will be to create an environment where you can actually use and work with this stuff.  We’ll have user-oriented demos, hackathons, and tons of crazy shit no one has ever seen before.

Plus, we’ll give away a lot of cool toys, have a ton of smart people who are working on the next generation of HCI in one place, and have some fun surprises.  And we are doing it in an environment that is especially tuned for a conference like Blur.

I’m incredibly excited about what Eric has put together for this year’s Glue Conference (as I wrote about the other day).  He’s setting a high bar for Blur, where the goal will now be to have a few brains explode!  Get ready – it’s never dull around here.

Build something great with me