The Post Money Value

From the Trenches - When They Get it Wrong

[slight edits, sorry for the repost]

One of the best parts about being a private company is (drum roll) being private. You can do what you want to do and pretty much ignore the outside world's opinions, views, etc.  Thanks to the spending of the U.S. Military, we all get to use (abuse?) the word "stealth" as it applies to companies working on something they aren't ready to go public with.

Of course, human nature being what it is, if you have a secret or are working on a secret project, the other guy just has to know. It's almost a genetic trait of our species that people gotta know what others already know so they can be part of the 'in the know' crowd.

Sometimes those two things (being private/wanting to know) clash and when they do, knowing how to handle it can make all the difference. 

Let's dive in.

JLA and my partners at Growthworks have been working on a project which has evolved into a company we will launch called PlanetEye. We spent some up front money doing some research, acquiring some technology, patents, and code from Microsoft as well as building up a team of folks who can execute on what we collectively believe is a great business idea.

Okay, that's basically all there is 'officially' known about PlanetEye. Anybody who comes by my office and asks, gets more.  Anybody who talks with an employee of the company, gets more.  It's not really 'secret' and not really 'stealth' rather not public because the company isn't ready to go public. Nothing much more to it.

Along comes that human genetic need to know. It arrives in the form of Jevon MacDonald who writes a blog about Canadian Start ups.  Being a slow Friday, Jevon decided to live out those genetic tendencies and write a blog about PlanetEye featuring all the normal buzz words like 'launch is imminent', 'stealthiest startup in Canada' and so on.  This creates a massive flurry of activity.

TV crews descend on the PlanetEye world headquarters.  Paparazzi swarm the employees, desperate for just a small, fuzzy photo. Helicopters hovered overhead waiting to see the lights dim as the 'imminent launch' causes a city block's electricity to get sucked up into PlanetEye's servers.

Well, not exactly. The CEO flipped me the blog link and said "what do you want to do about this", then went for a haircut and shoeshine.

I read the blog and was pretty surprised, entertained, and concerned all at once which makes situations like this tricky. I have a few guidelines/rules I use to determine if I am going to gain anything by actually reacting/responding to stuff like this.

• Rule one: Is there something written that is materially wrong about the business?
• Rule two: Is there a reputation at stake? Can some individual or group of individuals be materially harmed.

That's it.  Those are the rules I use to determine what, if anything, should be done.

First, the surprised part.

"What is PlanetEye? Well, you have to do some digging to find out, so that’s what I did."

Jevon then goes on to describe, incorrectly, what he thinks the site is.  He gets it wrong.  The home page of the web site tells you what they are doing.  Not in massive detail but you get enough information that you can pretty much figure out what it isn't.  The company has a blog as well.  Again, doesn't give you massive detail but you can tell what the company isn't doing.  Of course, all of this is fine, it doesn't hurt the company because people will see what Jevon says and, if they care, click the link to PlanetEye to get the correct starting information. They might say, Jevon's a goof and got it wrong or they might thank the guy for sending them the link. And they might sign up for the beta.  So, as far as the company goes, no biggie either way, clearly not worth responding to, clearing up, etc.  Most people that care, will check it out for themselves.  That's my opinion, PR people or others may disagree.  But responding with some flames to the blogger? Nope. 

Lesson for you: If it doesn't materially matter, don't respond. Facts like this generally self correct.

Next, the entertaining part.

"Planeteye first came to life out of a course at UofT.......He liked it so much in fact that he decided to put together a company based on their work"

Continuing his unblemished record of getting this story wrong, Jevon weaves a story together about VC firm coming to the University, plucking the unknown super star computer students out of anonymity, throwing bags of money at them, thus launching their start up career.  Now, this part I liked!  This makes my firm look good, the University look good, and the super star students look even better then already are.  Everybody's a winner. So, here, I'm loath to let facts get in the way of a good story. 

In fact, correcting this myth probably is more about ego.  Does it really matter where the original idea came from? What was underway before the students got involved? What the original/actual mission of the team was?  Actually, no. 

What matters is that I have a team of amazingly smart people over at PlanetEye. Anytime I want to get a nice fix of pure brainpower, I ping the PlanetEye team on the east coast and my genius team at MusicIP on the west coast. And for entertainment, I read b5 blogs while playing with RFID tags from SIRIT bought via Truition services and reviewing my medical records with technology from HealthUnity.  I think I've plugged em all. But I digress.

Lesson for you: Watch your ego.  Resist the temptation of responding if that response is driven by some ego issues of who's idea it was, who thought of this or that first, etc.  Do you really need to set the record straight to that level of detail?

Finally, the concerned part.

There is a big chunk in Jevon's post about the financing of the company.  It's wrong and materially wrong. It's wrong in the timing, the amounts, the who, completely wrong.  That would be fine since it isn't public information except that when Jevon goes on his fishing expedition, he bring a pellet gun and puts a shot into my partner, Growthworks. So let's set the record straight.

Since day one, Growthworks has been my partner in this endeavor.  We are equal partners and have been since day one. Growthworks never passed on any round of financing because there never has been any additional round(s) of financing to pass on.  Growthworks's paperwork was completed after mine because they are bigger, have a different process and it took longer.  But, to be clear, they have always been my partner in PlanetEye.

There has been only one allocation of capital into PlanetEye to date.  It is unfortunate that there was confusion with respect to the financing of the company to the extent that this confusion would imply Growthworks passing or there being additional rounds of capital.  And it is also unfortunate that Jevon used that confusion in his speculation.  He got it totally wrong.

Growthworks has been and continues to be right along side of JLA with respect to PlanetEye. (Cue the Barney Song)

Jevon got the amount wrong as well but that's not public and I'm fine with people thinking whatever re: amounts.

It is this part of the blog post where Jevon had an opportunity to simply pick up the phone and call me (or Growthworks).  Given Jevon has been in my office before, the country is fairly small and I'm not hard to reach, he could have asked about the financial arrangements.  At worst, I could say no comment, at best I could correct what he was going to write. Jevon chose not to do this.  Jevon made the call to 'put it out there' and see what happens.  That's fine, that's his call and he owns the results of what people think, care, etc.

Lesson for you: Correct it and move on.  Growthworks doesn't need claims they passed/walked on a start up when it isn't true.  Correct it and move on.

Jevon will tell you that he sent me 'heads up email."  He did. After the blog posting.  I view that process as, well, as not exactly an attempt to get facts before actually writing something.  But, I want to be clear.  I am in the camp that says bloggers can do whatever the heck they want.  Everything a blogger writes gets examined, dissected, and put under the microscope of public opinion.   Over time, a blogger's writings get examined by lots of people and those people draw conclusions both positive and negative about the individual.  To me, that's exactly the way it should work.

Lesson for you: Let the blogger do his or her own reputation building (or destroying). Don't attack the person, stay with the issues that truly matter and ignore the rest.

As Doc Searls has told me a number of times when these things come up: Let the Wookie win.

So, there you have it.  When your start up launches or while you are slaving away in your garage on that next super thing, remember everybody wants to be in the know, everybody wants to kibitz, and everybody will usually root for the rational, sane nice person or company.

Finally, sign up for the PlanetEye notification on the home page.  The "kids" have worked really hard and I'm proud of both what they've accomplished to date and will continue to accomplish.  Stay tuned.

 

"More tea anyone?"

                     -Captain Ramious aboard the ballistic missile submarine Red October

The Geek Trap

For many of the companies I take a look at, there is an overwhelming amount of super/highly technical people in the room.  They tend to parse words exactly, view things in a very literal sense, and can sometimes miss the boat when it comes to the business objectives of the company.  No indictment by any means just simply a matter of focus.

Last week, I got caught in that trap myself.  I wanted to share this story with you because I hope to provide you some observations help your own business efforts. The story is a bit long but the set up to the point is important so stay with me.

The fine folks at BabyTel  dropped by to give us an update on the company and show off some new services.  They are out of Montreal and are a really great group of people.  They had a fairly new product lead with them who proceeded to give us the run down on what was happening.

After the big picture, Michael hits the new Facebook application.  This app is going to give the FB users a phone, with voice mail, etc.

He says two things which, to be transparent, were like fingernails going up and down on the chalkboard.

• "No Download!"
• "Works completely inside Facebook."

My inner geek went bonkers.

Me: No download, eh? Really.  What's this puppy coded in?

BT: Our egg phone gadget is a Java app.

Me: Doesn't the user download your app?

BT: Yeah, but it's a JAR file since most computers already have the Java runtime.

Me: Yeah, but that's a download. It's not like a web application.

BT: Yeah, but it isn't the 30 meg, takes forever, Skype like download, it's a simple jar file that works with the runtime already on the computer.

Sensing this could go around and around forever, I let it drop.  Off we went to land of the face for a demo.  His machine was on our network and one of our ace analysts had his laptop in the room ready to rock.

The made friends with each other and we are off to the races.  Michael wisely avoids the words "you have to download" the app and merely says "it needs to initialize" to work. 

Next up, Michael goes to make a call to Jacou our own super geek.  And, sure enough, the java app, the egg phone, pops up onto the screen with the VoIP call working just fine.

Lord, give me strength, I say silently.

Me: That's a pop up app, it's not in FB.

BT: Right, but the user starts up the phone call process from within FB, all the status/contact information is within FB, only the actually call itself is a simple Java applet.

Me: Right, but your application is -and I'm not saying anything is wrong with it- a downloadable Java app that acts as a pop-up when you attempt to make a phone call from within FB. It isn't a 'no download' nor 'stay within' FB offering.

BT: Right, but to the user they are in FB and with fast connections, Java runtime on 95% of all machines, there really isn't anything meaningful being downloaded.

Again, I resist the temptation to stay on this topic and we move on.

I decide to do some research and grab some folks out of our portfolio companies to do show -n- tell.  I targeted the whole gambit, old, young, technical, non-technical, administrative people, etc. I explained it was a no download, integrated FB app.

Here are the data points.

With the number of people I showed this to and/or had them try is, nobody (zero) got caught up in either of the issues I've raised above.  In fact, it was just the opposite.

"Wow, I get to stay in FB"

"Cool, no downloading anything and I stay in FB"

"Excellent, a FB phone where I don't have to change applications to make a call like with Skype."

And so on and so on.

Well, except for two of my friends.  Super tech types who both said, gee Java app download, pop up application, okay, it isn't 'integrated' nor a no download exercise. "Skype me" nets out the same effect as an example.

The trap.  It didn't matter. Nobody cared.  The way the application was laid out, people from a UI and usability perspective got it.  Nobody saw a bunch of Active-X warnings/dialogs, etc, so it must be 'no download."  What mattered was people liked the application and it fit what they perceived were the definitions of 'stay in FB' and 'no download.'

This lesson is pretty powerful.

It's not about the parsing of words or if the company is being precise in terminology; we can argue it all day long.  Nope, this is about the users and user's realities.  When you look at menus, options, features, colors, etc, all of these places have Geek Traps. You have to be vigilant in watching out and making sure you don't get stuck arguing things that don't matter.

BabyTel is getting ready to roll out this FB app to a wider audience shortly and I'll let you know when it is available.  See what you think.

Bet you stop laughing when it works.

Sometimes high tech stuff and their associated solutions just get in the way of basic, simple solutions to everyday problems. Let's say your Boeing 757 aircraft has some maintenance problems which in turn cause some service suspensions.  You might  think to breakout a tool kit, manuals, certified parts, licensed mechanics, etc, but you'd just be doing the same old normal routine that everybody does.  Costly, boring, and certainly not in keeping with your creative juices.

Why not take a page from the maintenance program of Royal Nepal Airlines:

"Officials at Nepal's state-run airline have sacrificed two goats to appease Akash Bhairab, the Hindu sky god, following technical problems with one of its Boeing 757 aircraft, the carrier said Tuesday."

The full story is here.

More from the Trenches

About a month ago, I met up with a young entrepreneur who had just graduated from university. He had developed an interesting piece of code/social app widget that a couple of east coast Venture guys were giving out one of those 1 million dollars on a 1 million valuation, preferred shares, ESOP pre, etc, etc.  Basically, he was giving up over half the company when hhe was looking for about 100 grand to get commercial, etc. 

When he came into our office and gave me the demo, I said, wow, amazing, this should be part of any one of these three products and not really a stand alone application, in my opinion.  If you'd like, I know a bunch of these other folks and would be happy to introduce you.  My guess is that you'd get bought for some cash, a gig inside that entity, some options, and the the ability to score one in the victory column. 

He showed me the proposed (unsigned) term sheets and I said you have a decision to make.

If you believe you can and want to build out the company and you are okay with the valuation, take a shot and good luck to you.  If you want to basically take a shot at value adding another thing and getting some reasonable cash/options out for a short investment of your time, happy to help you.

In the end, he sold to one of the big guys. Small (super rounding error small) deal, all hush hush, nice chunk of cash, options and some love from BigCo. He is extremely happy, kids are happy with the new bikes, etc.

The other two VC's went bouncing off the walls (mostly on me), not happy that I gave out that advice and helped him vs. syndicating a financing.  They believed that with a bunch of pref shares, etc, we could all have had a nice flip after a year.  Maybe.

My view, however, is that he will no doubt do other great things and I'm confident JLA will be a first stop for financing. 

In addition, I believe that giving an entrepreneur straight up advice and seeing that entrepreneur have a positive outcome trumps all because we VC's are supposed to be in a long term game.

I wish more people in my industry thought like this but: I could be totally wrong, stay tuned.

Sometimes You Just Have to Wonder

Someone once told me that for the most part, advertising is a combination of the law of numbers and repetition continually tuned for optimal results.  Burger King, Wendys, Wal-Mart, etc, are among the many which play the ad game.

On the Internet, most ad experts have said that this process/theory is alive on steroids because of the multiplying effect and the sheer volume of people looking at web pages.

I don't think I've found an Internet user who doesn't know about Classmates.com.  They are everywhere when it comes to web advertising. 

Even so, you have to wonder about Classmates advertising on FaceBook.

When you speak to FB users of various demographics, they universally say the same thing. Actually, they laugh and point out the "nobody on FB is going to every sign up for Classmates". 

Maybe it's just part of a mass ad buy of which FB pages are part of it (a lot of it, from what I can tell) but still, you have to wonder if his is pressing the theory a bit.

A Case for Control Phreaks

Up front, let me say I love my Dyson vacuum.  The product is so amazing, I beg the dogs to shed extra just so I can clean the carpet.  Our experience in buying it, well, let's just say there are some lessons and observations in here for you.

Here in Canada, like the U.S., there is a variation of the home shopping channel.  The vacuum was being offered at a good price with some extra goodies so out comes the credit card. 

About a week later the box shows up.  Inside the box are the main parts as you have to put this product together. No problem, there is a picture on the box as well as a manual that, rumor has it, some people actually read.

Like any normal male, I spread out the parts, look at the picture and begin to piece this puppy together.

Take a look at this picture:

You can see the handle/grip faces to the back.  This picture was on the box and the cover of that thing called the instruction manual.  Basically, the handle gets shoved into a hole, you put some other pieces together and you are done. 

All good except for one minor problem, mine wouldn't fit as shown in the picture above. 

Try as I might, I could not make my pile of parts look like the picture.  And this was no ordinary try harder exercise, I even -brace yourself- read the manual to see if there was some secret decoder ring like thing I was supposed to do. 

The only way I could make the parts come out was to have it look like this: 

 

As you can see, not like it was supposed to be.  Time for reinforcements.  I call the toll-free line and attempt to get this sorted out and after waiting close to 35 minutes:

Dyson: Thanks for calling, what can I do for you.

Me: My vacuum doesn't go together correct. I think I got a bad part or something was made on a Monday as it won't go together correctly. The handle is backwards.

What's your model number?

XYZ-123

No sir, you have it right.

It doesn't look like the box or the pictures in the instruction manual.

Yeah, we know. The company changed that awhile ago and there are still old boxes and manuals around.

So, if I got this straight, I'm wasting my time, your time, and tying up the toll-free line asking about this when all the company could have done was put a note in the box saying ignore the pictures, we made a change.

Ah, yup, the company is kinda goofy about stuff like this. We get a bunch of calls on this all the time and have complained to management but everybody keeps saying it is cheaper to just deal with the calls then making a box change.  I figure I have to put up with this for another 4 months or so and then on to the next silly thing.

Clearly, there were some things the company could have done, the simplest being a note with the instruction manual. But even assuming that was expensive or problematic for some reason, a simple recording on the toll-free line saying if you are calling about the handle, etc, would have saved me 45+ minutes and some frustration.

The lesson for you and your product/service, is to spend the time walking through what the mere mortals are going to do.  Get others, not close to the project, to do the walk through and give you feedback. 

Dyson's product is so amazingly good that I'd recommend it despite the so-so customer service.

You, with all of your competition, might not have that edge so it is wise to ensure all facets of your operation are customer friendly and take into consideration what the average Joe is going through.