The Post Money Value

The Coolest Business Plan Ever

I'm reading a business plan that I received. 10 honking megabytes of brainwaves put to paper. 115 carefully crafted pages which gets me deep, really deep, into the mind of the entrepreneur.  You are thinking to yourself, self, how could a simple business plan allow the VC to learn tons about me and my people.

Simple.

Make tons of changes to your document, pass it to your 'advisors' for advising, get back their edits, make more changes, save and send the document to me without accepting all changes and stripping out all the notes and comments.

Consider these choices tidbits left in the document:

• "Segal used work for Microsoft so skip the name dropping, save it for the afternoon meeting, they are clueless about Redmond."

• "When you talk through this point on your slides, make Chanukah jokes, he is Jewish and will get them"

• "I'd delete this section since we don't have these features on the roadmap and haven't figured out how to code this unless you believe the investors won't catch this."

• Scratched out "Exchange sucks resources like a vampire in heat", replaced with "Exchange is resource intensive under certain scenarios"

• Scratched out "Competitors are 10 years behind us and will never catch up", replaced with "There is competition out there"

• "VCs are typically stupid when it comes to this section so be prepared for a dumb question blizzard."

• Scratched out "Beta is in 6 months" replaced with "code is out there now"

Sweet, eh?

If you are so inclined, you might want to create what I call the "Yo! Are YOU DAMN SURE" macro for your copy of Word that checks a variety of things before you send it out the door.

I love this gig.

The Power of Restraint

I'm here in Kitchner in a speakers room waiting to do a talk with (among other notables) Chris Anderson of The Long Tail/Wired fame.  In walks a guy from one of the big banks.

Chris, being a polite and friendly guy, says hello and asks a simple question: "So, what are you going to be speaking about."  Friendly banker guy says "I'm the innovation guy and I'm going to talk about how we innovate at the bank."

Chris, in an amazing display of restraint simply says, "Gee, cool. I've got two companies running and I use PayPal to do payroll and basically run the place. Tell me more."  He then proceeds to be great in listening not wanting to pick on a 30 something MBA banker type.

But there is still, shall we say, a bit of adjustment going on at the bank.

When the conference organizers passed out the release forms for being recorded, our banker friend turned a shade of green that wasn't money.  He couldn't sign it without checking back with home office since he hadn't been media trained, etc, etc. Promised to get back the organizers. 

We both agreed, tho, that a bank giving a 30 something some power and influence to change things up, was a great sign. He did a great job at the conference.

Your Strengths

Tawfiq Arafat is probably one of the most important people in my business life. Taf, as we lovingly call em, is a world class monster brain when it comes to facts, figures, and math.  A genius to be sure.  Without him, my mistake count would be off the charts.  Nobody crunches numbers, remembers numbers, and makes magic out of numbers like Dr. Math.

Kevin Patterson is VC Taser when it comes to details. He doesn't miss anything and will stop, shock, -n- stun anything that isn't done correctly. No document, no agreement, no amendment, etc, leaves my hands without Kevin's review and approval.

These guys are the reason I have a prayer at being successful as a VC. And the jury is still out, to be sure.

I bring this up because the topic of teams consistently came up in the VC roundtables. I have one single and simple message that will improve your odds of success.

Surround yourself with people smarter than you, get out of the way, and focus on your strengths

• Jeremy Wright at B5 is building a world class team so he can focus on his strengths, bloggers and blogging.
• Marc Gingras at Tungle is doing the same so he can focus on his strengths, solving people's collaboration and meeting issues.

Both of these CEOs will proudly tell you what they suck at.  Ask them. They case studies in hiring smart people so they can do what they do best.

I can point you to many ex-VCs (speaking from the world I live in today) who were successful at some big software company but ended up flaming out in VC land because they weren't surrounded with smart people and they didn't check the ego at the door before writing checks.

What do you suck at and who's handling it?

VC Left and Right Hand Adventures

True story:

Small start-up has interesting service.  Selling well and doing well.  They decide to raise some expansion capital to open up some additional markets, do some additional development work, and generally speed up the company's progress.

The CEO goes in and pitches big VC firm.  VC firm has tons of cash, people, and offices.  Pitch goes well and the partner says "Let's continue the dialog" while starting to do some work on the file.

The sales guy, who knows NOTHING of this fund raising activity, calls HR department of said big VC firm and proceeds to give the sales pitch.

Two emails come in from said big VC firm.

Email one: "Sorry, we pass"

Email two: "Cool product, here's the signed contract, can't wait to start using it."

I think this is hilarious but I'm generally viewed as twisted so your humor meter may not go off.

A Coder Worth Hiring

A guy over on rentacoder.com has this up as his motto:

"Always code as if the guy who ends up maintaining your code will be a violent psychopath who knows where you live" - Martin Golding

Ya gotta love that.

Have a great weekend, folks.

EverNote and Some Lessons for You

There is an interesting product out there called EverNote (thx, Ken).  When you go to the web site, you get nice page and a video which you can view in order to get a view of the product.

This video tour feature is rapidly becoming a must have so people can figure it what you have quickly.  So, some tips are probably in order:

1. Volume.  If you play the video tour for EverNote on a simple laptop with no mondo-speakers or whatever, it is very difficult to hear.  Sounds obvious but it in scanning a bunch of these around the web, this is a more common problem than I would have guessed.

2. Get to the Problem/Solution set quickly.  You can use flash (Tungle did) or a video like EverNote. Either way, doesn't much matter but the messaging remains the same. What's the problem and show me your solution.  The problem is explained in Tungle's demo in the form of meet this person and here is her problem, Tungle to the rescue. EverNote dives immediately into clipping something off a web page and tossing it into big pile of stuff.  In showing this to people, I got "big deal" a bunch of times and had to say, "no, wait, this is cool, check this part out."  The cool part is searching/finding text in pictures. This meant take a bunch of pictures with your camera phone and then you can search this stuff just like it was text.   The ding here was that the "quick" demo took a almost 60 seconds to get to the 'cool' part.  Get to the point, quickly.  60 seconds is a lifetime on the Internet and the 'big deal' factor is an ever present danger.  In this case, the people I showed the video to, assumed it was yet another screen clipping service missing the point of all the other features. 

3. You shouldn't be in show business.  EverNote's voice over is poor. The person speaks too fast, mumbles a bit, and has the volume problem I've already mentioned.  Now, you'll hammer me because this was probably the founder in a garage, no money, 'free' service, etc.  Sorry, that doesn't cut it.  Unless you are a loner living in a cave (with a DSL connection), you have friends, family, etc, that can help/will help for that same 'free' we talk about.  I would argue that there are tons of students out there wanting to be in radio/TV who would gladly help you for a chance to put this on their resume.  In the case of Tungle, she was okay, but used the car phone to record it which somewhat detracts from the message.  My point here is that in both cases, Tungle and EverNote, the demo is an opportunity to get people to go, cool!, and sign up.  Having anything that detracts from that objective is bad.

4. There are no Emmy Awards for this stuff.  As a counter point to item 3, don't get nuts here.  Get to the problem/solution set, do it without distracting the viewer, do it quickly and you will be fine.  This is not, in my opinion, the place which requires millions of dollars to be spent.  The simple thing is to simply put the video/flash demo up and get feedback before it goes live.  I'd argue that both Tungle and EverNote could have (long before the product was available) put their respective demo's up on their blogs for feedback. There is a balance against doing the Vaporware thing and letting your competition know what you are doing/saying, but feedback from the normal person, not the echo chamber and your mom, is important.

EverNote looks cool hope I can try it, Tungle is saving me hours of headaches with scheduling. 

Note: Tungle is a JLA Investment.

More Mail I Love

Embrace failure is a phrase I've been using a lot these days.  When it doesn't work out, dust yourself off, and press on.  These are the kinds of emails I want more of. These are the kinds of folks that are now "seasoned" and now "get it", having their on set of failure points that make them smarter.  Yes, I'm taking the meeting with some enthusiasm.

---------------------------------

From: Scott 
Sent: Wednesday, April 23, 2008 9:00 PM
To: Rick Segal
Subject: Re:

Hi Rick,

I hope things are well with you.  It was great to meet you last year to discuss [].  As you may recall, [] was essentially a laboratory project that we worked on internally and rolled with a ton of organic momentum. 

For a number of reasons that I can speculate, it seems that since launching the product, the growth trajectory stalled.  

I guess that's how it rolls sometime.  I've still been working on the service based customer projects that have been paying the bills all along. 

The reason for reaching out is that I'm in the middle of working on a []

I'm wondering if you'd be willing to vet the business concept and provide early critique/input. 

I'm not looking for capital now but am close to getting the product dev/concept far enough along that I'm looking to a few smart people like yourself who can see through the presentation layer and provide real input.

Let me know if you have some time.  I could send you a short introduction first and setup a call or a meeting to discuss.

All the best,

Scott

------------------------------

Scott's first idea didn't make the cut but Scott hung in there and is still at it.  My kinda guy. 

In my humble opinion, every VC out there should block off a couple of hours a week to simply help out the farm team.  If you are jetting off to France, planning that dinner party, picking out the leather for the jet, that's even more of a reason to help out the next generation.  It was people like Scott that got you where you are and put that expensive car in your driveway. 

Give back a little, it won't kill you.

Attention: Newfoundland and Labrador

My friend and investing pal at Growthworks, Scott Pelton, wanted me to let you know that Growthworks would really like to get some cash working in some start-ups located specifically in Newfoundland/Labrador.

As I've mentioned before, the Atlantic Canada workforce is amazing, the ideas are amazing and the opportunities are there.  If this is of interest to you, contact Scott over at Growthworks or me and I'll forward your information.

Get those business plans in today; operators are standing by.

[updated to correct the New in Newfoundland, sorry!]

Five Big Lessons from the VC Roundtables

I'm back in Toronto after a couple of weeks touring Canada.  While there are some other dates/cities planned, here are five big things I got from all the super smart people I met. These things are from a Canadian viewpoint so factor that in as you read.

1. VC's don't respect entrepreneurs according to entrepreneurs.  Wow, do we have some work to do.  After getting people to open up, there were lots of comments about not returning emails, phone calls, ignoring them in meetings, etc, etc.  We clearly have to do better and treat the entrepreneurs, at a minimum, like customers and fix this perception.
2. Entrepreneurs need the straight goods. All of us can update our respective web sites with very clear guidance on the process and the odds. People were shocked at the 800 deals to 4 funded ratio, for example. Fast no, open process, etc, all can do wonders to improve this environment.
3. VC's and entrepreneurs need to talk early.  I made the case that the early you speak with me the better which apparently was counter to everything others are saying.  I believe that early is better because I can give you feedback, guidance, etc, as the process evolves. I can help you avoid taking angel money and then crushing them in a financing.  People believed I'm the only guy in town that will talk early and that's simply not true.  Ventures West, Celtic House, Growthworks, Brightspark, and many others in this country, are happy to talk with you and give you essentially the no harm, no foul type attention.  Seek them out; you'll be pleasantly surprised.
4. We're in it for the money: that message was not obvious. Lots of folks didn't really understand the venture capitalist are in the business of making money and that means investing into an idea that will turn itself into a pile of money with a 5-7 year timeframe; sooner would be better.  Lots of questions about how to buy us out causes me to make the point here  I made in meetings: If you aren't into taking an idea, giving up some equity and getting to a liquidity event, we shouldn't be an option for your funding.
5. Canada remains the best place on the planet for start-ups and talent.  Not much else to add. I was truly impressed coast to coast, with the talent, ideas and enthusiasm encountered everywhere I went.

More cities coming up.

Random Acts of Sucking Up (or I b Easy)

Meet Leah Plaxton, Marketing Manager for Projjex a web service for project management, collaboration, document sharing, and assorted dating services.  She sent me an email message letting me know that she "read my web 2.0 blog with interest."

The product is very nicely done.  The web site has a nice tour, a blog, and a very fast way to sign up.  The other interesting thing is the fact they keep that tour big and bold on all the pages to try and get you to press the play button.

The company also has some very important elements as well.

 

1. A bald, web 2.0 kinda guy, with those black styling glasses.

2. The obligatory web 2.0 geek who wants to be a rock star, strumming himself.

3. The obligatory web 2.0 open beam, rustic, we spent no money, office look.

4. The enduring mystery of just who is Leah Plaxton.

I had a couple of folks try this product and I'm happy to report they really like it. People I trust so I'm passing it on to you.  I would encourage you to take a peek at the site even if you are happy with your present stuff.  This is a nice clean design, good call to action, and a very good approach to trying to encourage you to play the video tour on the site. 

One nit was that with all these cool, hip, rock star types, your expectations for an amazing video tour are set a little high.  It's all business and points to the problem/solution set as well as a fast walk through of the product. Nicely done, if a bit, err, dare I say, dry.

Back to my email pen pal, Leah. (and some lessons for you, kind reader)

1. I read your blog and thought you'd be interested in... This is good enough. Linking my VC blog to Web 2.0, while flattering, isn't really what I'm about and it tends to make me think I'm being tossed in with the zillion other "web 2.0" bloggers you are trying to reach.  Generic, in my opinion, beats making a boo boo.

2. Canadian Company!  Put that in the email, at least for me, as that's a priority for me.

3. Put a link to your web site in your email. I know, sounds lame, but it is a friction free way to get me there. Note: Leah did this, I'm mentioning it to the folks that make me chase the site down by hacking their email address or using Google to figure out who/what. Most people won't do this including me when I'm busy.

And, finally, to all of you out there that think sending me a note telling me you like my blog will get me to look at something, yeah, it works, I love this stuff.

Okay, I am now off to steal somebody's coat for the trek into Calgary. (And, no, Projjex doesn't really have a dating service but I have confirmed that the air guitar -number 2 above- is looking)