The Post Money Value

The Inside Scoop on Due Diligence

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Originally uploaded by PC Virus.

I was asked about the whole Due Diligence process and what's it like. Rather than fumble with words.

Segal was Rude, Film at 11

I know, I know. I'm going to get hate mail for this but here goes anyway.

I'm at the Mobilize Conference yesterday. As I was sitting outside waiting for the van to take me to the airport, two really full blown, Type A personalities come flying at me. 

"We LOOOOVEEDD your panel!!!" (I said maybe 4 minutes worth of verbiage on the panel but fine, thank you). "We've decided we will allow you to fund us because unlike those other guys, you get all this."

"Uh, what do you do", says I.

"We have the answer to every Web 2.0 problem. Our software is specifically designed to allow Web, Mobile, Embedded and Windows programmers to re-architect their services and applications for Web 3.0 and the Mobile Internet all at the same time! And with NO PROGRAMMING REQUIRED! We believe we have 18 possible patents and we can translate this into 6 languages with offshore PhD Linguists from India and Romania."

The Van pulls up.

"That's phreaking amazing and exactly the type of projects we would die for. I have to catch this plane but here is my business card. Send me the full plan in email and somebody will be in touch!"

I gave them Matt Murphy's (iFund) card and the van sped off.

 

(As they say over at Xobni: gniddik ma i)

Zemantra - Good Support Example

(I'm still waiting for the plane, sorry, more writing)

When you go to the download page of Zemantra for Windows Live Writer, you are presented with the download link but also this helpful support box:

 

Nice. Personal touch, real name, etc.  It's a small thing that gives a take a little bit of the edge off.

Very nice.

More on Apple and Open

I almost forgot. Go read Howard Lindzon's September 13th blog post (well,  rant actually). Then scroll down and read the comments.  Not exactly a ringing endorsement of open.

Fred Wilson made the same observation in the comments that I just posted (he's always ahead of the curve):

"you are wrong about that howard, the so called nerds which is very disrespectful of you (these are the people who are building the stuff we love to use) know all too well about apple's abusive relationship with developers. they've been dealing with it for years. one of these days, apple's going to pay. i think google is going to hand it to them in mobile, but it will take some time"

(note: Fred was busting Howard's chops for using the word nerd is a bad connotation. As I said, go read the whole post/comment thread.)

Mobilize- the Myth of Open (and why iPhone Developers should cheer for Android)

I'm here at the San Francisco airport waiting for a flight up to LA. It's late and I know I'm just going to hate myself in the morning but I just can't hold back.  Om Malik did a great job of putting on a very packed one day event. It is almost impossible to do a one day event justice but Om did it with a top notch team. And whomever ever was doing the AV and handling the back stage stuff? Go hire these people. They were amazing.

That's the good news.

I was on a panel with a number of my colleagues from the venture capital world. One of these fine folks was Matt Murphy from the iFund (KPCB).  Matt is a great guy, wonderful speaker, smart, and thoughtful. Except for one pesky item mentioned today. 

Matt's use of the word open to describe Apple's iPhone platform and the application store.  With the disclaimer that I'm one of the co-managers of the BlackBerry Partners Fund, my gut response: What utter nonsense.  Apple's platform is so far from open, I can't even begin to get my head around the comment.  Matt made the comment about Apple having a great developer relations group, helping all the developers with all this openness and love.  I should have pounced on this during the panel but, well, I didn't. I'm getting wimpy in my old age.

Michael Arrington said it best in a blog post recently when he said Apple (like Facebook, MySpace, and everybody else with a platform) can make any rules they want and developers will suck it up so long as the numbers are there to justify putting up with Apple's nonsense.  I have a number of portfolio companies doing iPhone apps and there is a single consistent theme, Apple is a giant pain in the ass to deal with but zero choice, gotta do it and deal with them.

RIM is more open. Microsoft is more open. Nokia is more open. Google and Facebook are more open. Apple? Open? Please.

But there is hope. Android.  Android is going to do "open" and have an "open" application store.  Today, Rich Miner from Google toned down the religious zeal and made the reasonable point that if nothing else, Android will bring some choice and an 'open' platform for others to consider. Once they launch, all the other guys will pile on with their version of open.

This, hopefully, will spur the Apple folks take it up a notch with respect to developers. Or not.

They may be quite happy being who they are today. Which is fine as long as other folks don't try to use a Steve Jobs reality distortion field on the term open. Apple is anything but open.

Good to see you Matt and well done, Om.

[Bonus note: I'm a VC, I really don't care. Bring me an application/service that can make you and me some good money and you can be closed, open, up, down, Android, Mars, Venus, Blackberry, Blueberry, or Strawberry. The point above was my brain having a serious cramp over the words Apple and open used in the same sentence.]

Mobilze Conference note one

I'm at Om Malik's Mobilize conference today. Here's the first option if you are hosting or going to a conference.

Make sure the name bags can be seen. The ones used here are the standard crappy ones with a rope around your neck. The problem is fully 90% of them are turned around so you can't see the person's name. Just happens as people put them on. They twist and back side is blank.

If you are going to be at a conference and want to network, wear a name badge. If you are doing a conference, print both sides.

More later....

The "No" Dialog and Some Observations

Here's some dialog with respect to a company I turned down recently. I'm pointing this out because this kind of back and forth can turn into that dangerous (and endless) "Let's continue the dialog" insanity.  I've cleaned this up a bit for readability and changed some stuff so as to avoid compromising the company or founders.

Me:

Mike, thanks for letting me take a look at []. It's a pass for me.  I've three issues here. First, I talked to 10 kids in the teenage range over at the local high school and this app was 0 for 10. None of them would even come close to giving me a scenario where they would pay for it while also thinking the sponsored games part was weird based on what I showed them.  Second, this is too hit or miss and requires mass numbers before there is scale to interest an advertiser.  Finally, the dollars you are asking will not, in my opinion, achieve the milestones required to get a later round done in the up direction. You simply won't get far enough to prove it out.  I appreciate you letting me take a look and hope the fast no, while not what you wanted to hear, gets you onto the next person.  Now, go prove me wrong, make a ton of money; my feelings wont be hurt.

Mike:

Rick, I appreciate the fast turn around and candid feedback.  If we can get a trial going and show some trending toward mass adoption and some advertisers, could we get you to revisit?  Again, thank you for the fast turnaround, it really is appreciated.

Me:

Generally speaking if you prove me wrong, get great traction, etc, etc, and de-risk the opportunity, you won't need me and/or you will have a zillion guys throwing money at you. I don't want you on a treadmill which has me constantly giving you the next hurdle to jump over.  I would take another look, but it would have to blow me and my partners away and, as I said, I'm guessing somebody smarter than me will scoop you up.

Mike:

Thanks, we will keep plugging away.

Saying no is always tricky. I struggle with this issue at least 10 times every single day. I think it is super important to give feedback but, as you can see, this feedback is a bit of problem.  In the example above, some people could argue 10 people wasn't enough. Some could argue it was the wrong 10, etc.  So there is the possibility that the entrepreneur dives into a rat hole trying to deal with my feedback.  The endless set of hurdles is always a problem and I try, hard, to avoid this.

Typically, you'll get the sorry, not a fit for us answer without much else. The translation of that 'no' can be anything from they were in a bad mood when they read it all the way to they don't get it.   Many VCs/Angels will tell you they don't want to make enemies or close doors, etc.

So what does all this mean to you? How can you get a fast pass but some actual feedback?  Here are some thoughts for you.

Ask For the Fast No:

As weird as it sounds, you telling them (me), your feelings aren't going to get hurt, you recognize the deal flow to close ratio is not in your favor, and a fast no with the three things you didn't like would be sincerely appreciated, can get you some feedback.  This type of approach can help lower the formality of the process.

Accept Email Dialog for What it is:

Email is a wimpy cop out for not having a phone call to explain the no. Guilty as charged and if most people would be honest, they would say the same. All of us, you included, believe email is way more efficient and we can be productive on our BlackBerry devices, etc. It's true but it is impersonal and is a crappy way to interact with somebody you don't know very well.  Again, I'm guilty of this. 

On this flight to San Francisco, for example, I've read 24 executive summary plans/Power Point Presentations.  Of those, 6 are getting a request for more information. The rest would never make it through process for all the standard reasons. So, I've cranked out 18 pieces of email which have tried to layout the reasons why.  Some are easy. We don't do chicken franchises so the plan for new competition to KFC (I'm serious) is getting an immediate pass with a very easy, we don't do chicken.  We don't do wet lab/medical stuff, again, easy pass.  The new search company that is 100% better than Google gets a pass with we would not invest in a direct, overt competitor to Google commentary. It's as straight up as possible. 

The point here is that you are likely to have your communications via email and should plan accordingly. Try to preface your stuff with the request for feedback and, hopefully, you will get some.

Make Your Business Points Clear:

This is linked to the fast no.  Most of the plans/presentations I've been getting have the basic business thesis points and from that I can comment directly on. Typically, you can do the "Here's what believe" or the "In order to invest you have to believe" slide(s) so my feedback can directly respond to these points.  For me, the crisper this part is, the more likely I'm able to give that feedback you might want.

Balance Speed for Details:

Lots of times you will get pass quickly. In this crazy world, it is way better to at least get the no then the silent treatment or (in my view) worse the "let's continue the dialog" stuff. If you have given some opening that says you really are receptive to the feedback, the fast no with some feedback later is a good outcome for you. I will tell you that while there are stories about jerks everywhere in every business, most people in the VC business try to do the right thing. The simple law of averages should work in your favor. (He says, hopefully.)

Don't Expect Names:

It simply is not going to happen. No VC will say, we pass, here is an intro to somebody else based on a plan sent into the firm.  It just won't happen.  The absolute best you could ever, ever, hope for would be for the VC to say something to another VC that they know was hot on a particular thing.  Then that VC would contact you.  Asking for the names of other VCs is a silly request which will not get honored.  Just so you are aware, sorry.

 

No sucks.  In my view, the best 'no' outcome is a no with some feedback. Hopefully, you will be successful an never need to worry about a 'no'!

What's Wrong with This Picture

Back up here at 32,000 feet, I'm reviewing a slide deck sent to me.  It is a Power Point 2007 deck saved in the PPTX (latest) format.  It was built on a PC.  I received it and attempt to open it with Power Point on the Mac.  It opens yet barfs on a number of slides with a "I can't read this" error.  I close it and open the file in Keynote. Opens fine. All slides can be read, no problem.  From Keynote, I export a copy into Power Point.  Power Point on the Mac now opens the exported version perfectly.

Amazing.