VV Show #39 - Guy Kawasaki of Garage Technology Ventures

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If technology entrepreneurs have a guru, it surely must be Guy Kawasaki. For about two decades, Guy’s been advising entrepreneurs in one way or another. First as an evangelist for Apple, he courted software entrepreneurs and developers to write code for the Macintosh. Guy later tried his own hand at entrepreneurship, and eventually returned to Cupertino as an Apple Fellow. In the late 90’s, Guy jumped ship from Apple again to launch Garage Technology Ventures. Garage went through several incarnations before turning into the venture capital fund that it is today. Guy spreads his vision of entrepreneurship though books including The Art of the Start, speaking engagements, investing and blogging. Now you can hear his story.

1:00 The seminal years

• Guy did his undergrad at Stanford in psychology.
  
• "After Stanford I entered the UC Davis law school and then I quit, I only lasted two weeks."
  
• Guy got his MBA at UCLA's Anderson School of Management.
  
• "I worked for a jewelry manufacturer, counting and selling diamonds."
  
• "Apple II was the first computer that I owned, which was an eye opening experience."
  
• "One of my friends from Stanford brought me into apple as the software evangelist."
  
• "Eventually I returned to Apple as an Apple Fellow."

3:00 Getting into the Apple Cult

• "I had no technical background, so I attribute my getting in the door basically to nepotism."
  
• "It's better to be lucky than smart sometimes."

6:00 Leaving the Apple Cult the 1st time

• "What got me to leave is basically I started listening to my own hype, and I wanted to start a software company and really make big bucks."
  
• "...And I had a job review and he told me that the reason they were not promoting me to a director level position at Apple was because Ashton Tate, Lotus, and Microsoft did not like me."

9:00 Guy's business ventures, a summary

• "I haven't had sort of huge success in any of [my businesses] which always fascinates me that people say that I'm this great entrepreneur because I don't consider myself a great entrepreneur. "

11:00 Back at Apple

• "I was the first non-technical non-engineering fellow - probably the first and last - and my job was to preserve the Macintosh cult."

15:00 Garage Technology Ventures, a brief history of Guy's current company

• "Then the bubble burst and nobody was writing checks, and so then we changed from being a broker dealer intermediary, helping entrepreneurs find investors, to becoming a direct investor ourselves."

17:00 Venture Capitalists are rolling in dough

• "You should never feel sorry for a venture capitalist... they all drive Mercedes and Porsches and BMW's, you don't bootstrap a venture capital firm."

18:00 Guy doesn't pity entrepreneurs

• "A pretty good analogy is professional sports, do the coaches or a general manager of the team feel sorry for the players? Generally speaking you get paid 2 million bucks a year to play hockey, life is good man."

19:00 Venture capital firms have a false line

• "If you look at the huge successes, they are zero for three, so I could more easily build a case that you should look for an unproven team with unproven technology in an unproven market, cause that's the billion dollar deal."

21:00 Guy's policy on funding

• "I basically make a decision of whether I'm interested or not in the first five minutes, I either love it or I don't care anymore."

23:00 Signal Without Noise: Guy's blogging ambitions

• "I really wanna be in the Technorati top ten but I figured out, I don't think I can get there, I really don't, because the people in the top ten, the kind of blogs they do are product or news oriented."

28:00 Experts

• "If you meet a person who says he's an expert in something, he's full of it."

29:00 Blogging demands heavy correspondence

• "I am going to hire an online assistant, because I just cannot handle my flow anymore."

31:00 Reality Checks vs. DEMO conference fees

• "On my blog from time to time I run a type of blog called a reality check, they reflect companies that have come to us for money and I don't know if it's good or bad, but I would like one more data point and I write a blog and tell people - thumbs up or thumbs down?"
  
• "VC's are so arrogant, I think most VC's would refuse to believe that they could learn something from another person."
  
• "If word got around that Guy did a Reality Check on his blog, and people from Kleiner Perkins and Sequoia, and Draper Fisher Jurvetson are following what reality checks are happening, I would be inundated with Reality Check requests, and then I would 25 grand to put up a reality check."

37:00 Editorial policy

• "I believe in polarizing people. If you don't like my blog don't read it. If you like it, read it."
  
• "If one person says, you should stop talking about your portfolio companies, that has as much impact as a raindrop hitting a battleship."

38:00 Guy's average day

• "I probably spend 2-3 hours a day answering e-mail, 2-5 hours a day blogging, 2 or so hours a day in some kind of Garage venture capital whatever, and two hours, on many days, playing hockey."

Posted by greg at 12:20 PM | Comments (4) | TrackBack

VV Show #24 - Bo Peabody of Village Ventures

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“Stock lockup” is a term remembered with horror by many entrepreneurs who weren’t allowed to sell their dot com shares before the bubble burst. Bo Peabody founded Tripod, which was sold to Lycos for $58 million in stock. The terms of the sale forced him to hold onto his stock for two years -- while its value happened to increase ten-fold. He also happened to sell his shares just two months before the bubble burst. This lesson in luck was not lost on Bo, who wrote a book titled Lucky or Smart? However, his luck didn’t come out of nowhere. In our interview, he describes the years he spent developing his business even before the Internet was commercially available. He’s now helping entrepreneurs build businesses in parts of the country where venture capitalists typically don’t tread through his venture firm named Village Ventures.

Show notes:

2:15 Starting Tripod during college

• “I spent plenty of time partying.”
  
• “You’re either born an entrepreneur or you’re not” as he says in his recent book Lucky or Smart? : Secrets to an Entrepreneurial Life

4:45 Starting a .com without a technical background

• “Business is fundamentally about getting other people to do what you want them to do.”
  
• “If you’re an entrepreneur you need to be a B student in a lot of things.”
  
• Team started with Ethan Zuckerman

6:25 Choosing a team

• “We actually, as a rule, didn’t hire computer science majors.”

8:45 Operating out of Williamstown, Mass.

11:30 Becoming a success

12:15 Where the homepage builder idea came from

13:30 Getting the word out

• “If there was one part of it that I regret, it was that both the press and me worked a little bit to make it [entrepreneurship] seem easier than it was.”
  
• “It was harder than how we promoted it.”

18:00 Life at Lycos

• Tripod was acquired by Lycos

19:30 When to sell the stock

20:40 Dilution

• “When someone wants to put money into your company at a fair price you should take as much as you can get, because you never know when the market is going to turn.”

21:45 Next step

• Had a friend who started Berkshire Capital Investors
  Started Village Ventures with Matt Harris

25:00 Starting businesses outside of major markets

• Best place to start a business: Boise, Idaho

28:30 Is venture capital still necessary to tech companies?

30:35 Google’s and Yahoo’s early aqusitions

32:00 Giving up equity

• “The right place to start is to look to give up 25% to 35%” in an A round.

34:20 Pitching to Village Ventures

• Make a business plan
  
• Excerpt an executive summary
  
• Try to get an introduction

37:15 Transitioning from entrepreneur to venture capitalist

• “The only time I miss [being an entrepreneur] is when I’m involved with a company where I look at the CEO and say ‘God, I know I could do a better job than him or her.'”

39:15 Luck in business

• “If you recognize luck then it humbles you a little bit.”

40:10 Entrepreneurial advice

• “Technology does more in 10 years and less in 2 years than we think it’s going to.”

Posted by greg at 5:22 PM | Comments (6) | TrackBack

VV Show #13 - Drew Clark of IBM Venture Capital Group

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Entrepreneurs who were doing business in the eighties might still remember IBM for its suits and corporate ways. Now Drew Clark, the co-founder of the IBM Venture Capital Group, has shed his tie and is changing that image. His group is opening up IBM's vast resources to startups. Unlike some of its competitors, IBM has embraced open source software which makes it easer and cheaper to deploy technology. While IBM offers all types of help to entrepreneurs, Drew stresses the IB more than the M: being international and helping with business development over just assisting with the machines.

Show notes:

1:10 Starting at IBM

• Joined in 1982.
  
• Was the IBM 'Search Czar.'
  
• Started Venture Capital Group in fall of 2000.

4:40 IBM's history

• 'I'd put these times up against those times [mid-80s] any day.'

6:00 Advantages of open standards

• Joe Kraus also mentioned in a previous show how easy it is to start a business based on open source.

10:20 Why work with IBM?

• 'Business life is very difficult, technology is relatively easy.'
  
• Mentions IBM's developerWorks and alphaWorks.

13:40 Startups IBM is working with

• Working with Yeepay in China and Laszlo Systems to name a few.
  
• 'Chances are, if it's a top-tier venture-backed startup, we've worked with them.'

16:05 IBM Virtual Innovation Center

21:45 Measuring success

• IBM has 850 partners.
  
• 'We're hungry for partners.'

26:25 IBM's venture team

• About 25 people in Menlo Park.
  
• Virtual team around the world.
  
• Mentions sister organization, IBM's PartnerWorld.

29:20 Other big tech firms

• 'It's becoming harder to get some of those top people because Google is famous for fighting for them.'

32:25 The I in IBM: international

34:50 Just launched a VC Advisory Council

• Walden International, Lip-bu Tan, Chairman
  
• U.S. Venture Partners, David Liddle, General Partner
  
• 3i, Jo Taylor, Head of Venture Capital
  
• Hummer Winblad Venture Partners, Ann Winblad, Co-Founder and Partner
  
• Accel Partners, Peter Fenton, Partner
  
• Darby Overseas Investments, Ltd, Richard Frank, CEO
  
• Draper Fisher Jurvetson, Timothy Draper, Founder and Managing Director

36:50 Pitching to IBM

• Visit the IBM Venture Capital Group.

Official bio:

Drew Clark is responsible for driving external innovation into IBM business units and identifying and developing new business opportunities. A member of the corporate strategy team, his focus is on emerging markets. A 20-year IBM veteran, Clark has held a variety of key positions in software development and technology, product marketing and emerging-business development and strategy. He has led several intrepreneurial initiatives,including the formation of IBM's Internet Division. Before working withIBM's Venture Group, Drew led IBM's search, text mining and knowledge-management initiatives for IBM Software. Drew has been awarded two patents in software testing and Artificial Intelligence, holds a BS in physics from Western Carolina University and has completed all coursework toward a PhD in plasma physics at University of Texas at Austin.

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VV Show #12 - Deborah Farrington of Starvest Partners

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Statistically speaking, Starvest Partners shouldn't be in business: Few venture capital funds raised in 1998 survived the dot com bust, first-time partners are a huge bet, and no other venture capital firms are run by women. But don't tell that to Deborah Farrington, the founder and co-chairman of Starvest. Her firm's performance has excelled in the past several years and is headed into the top quartile of its field. Debby's got a number of big hits under her belt now, but she's not about to stop taking risks.

Show notes:

1:45 Career start

• Went to Harvard Business School.
  
• Worked at Merrill Lynch doing corporate finance for 10 years in New York, Hong Kong and Tokyo.
  
• 'They [the investment firm Debby where used to work] kept saying 'Why don't you do it like this.' Like many entrepreneurs, I said no no no no no. I had a vision I wanted to pursue.'
  
• In 1998, four partners who'd never worked together before raised a $150 million fund. Starvest Partners, L.P. was born.

7:45 Cold calls and building relationships

• 'Being able to set forth an idea in a succinct fashion and not wasting the other person's time was important.'

11:50 Raising a venture fund

• 'We knew in order to get in the game we had to give up something. We don't have to do that today.'
  
• Strategy was focusing on investing in business services, which was not traditionally a hot industry for venture investing.
  
• 'And also, let's face it, luck generally plays a role as well. It was a super time for fund raising.'
  
• 'We made one investment in 1999 because we could not find anything that met our criteria' Often we asked ourselves, 'What's wrong with us?'' That discipline paid off big in the long run.
  
• 'The largest companies definitely require 5 to 6 to 7 years to build, and there's really nothing to get around that.'

19:45 NetSuite investment

• Made an investment in NetSuite, founded by Larry Ellison of Oracle fame.
  
• When asked if she wanted to invest: 'I, with stars in my eyes, said absolutely.'
  
• 'When he approached us, he said, 'Debby, you're about the only venture capitalist that I know that I think is really smart but also nice, so I'd like to work with you.'
  
• Starvest committed $6.7 million to NetSuite before it had any revenues and couldn't get any West Coast venture capitalists to back it. Now NetSuite has $40 million in revenue going on $100 million and is going public soon.

22:50 Be nice?

24:35 Board involvement

• 'The majority of our companies have CEOs they did not start with.'

29:00 CEO's abilities to scale

• 'If we've had a failure as a firm, it's been not changing out CEOs soon enough.'

36:00 Giving up control by taking on investors

• 'If you had 10% of a billion dollars, that's not too shabby.'

42:10 Pitching to Debby

• 'We're funding someone now who had a prior company that failed, but we think it's terrific because he learned on somebody else's nickel.'

49:40 Women in venture capital

• While Debby attended Harvard Business School, women accounted for only 10% of the class.
  
• 'I've always liked being a pioneer.'
  
• 'I think there definitely will be more women venture partners.'
  
• 'This is a very tough business. I've always gravitated toward things that I thought were difficult to do. Perhaps something perverse in my personality.'

54:35 Women in the firm

• 'Politics completely leaves the room. Testosterone completely leaves the room.'
  
• 'Three attractive women walk in and nobody forgets you.'
  
• 'All of our portfolios are headed by men except one. It's [gender] really not an issue.'

58:40 Harvard PresidentLarry Summers controversy

• 'My advice to Larry is remember you're never off the record.'
  
• 'I think the whole gender argument is overdone.'

63:03 The title 'Chairman'

63:20 Starvest's promising portfolio companies and future

• NetSuite: planning on going public in mid-2006.
  
• Newgistics: planning on going public in mid-2007.
  
• ComparisonMarket: owns insurance.com, largest insurance operation on the web, planning to go public in mid-2007.
  
• Mazu.
  
• MessageOne.
  
• Blazent.
  
• Starvest expects to raise a second fund in 2006. The goal for next fund is $200 million.
  
• Required reading for the Starvest team's off-site retreat: Tom Friedman's The World Is Flat and Malcolm Gladwell's Blink.

Official bio:

Deborah Farrington is a Founder and Co-Chairman of StarVest Partners, L.P., a $150 million New York City based venture capital fund formed in 1999 to invest in e- business services and software.

Ms. Farrington's 25-year career in financial services encompasses private equity investing, investment and merchant banking, both in the U.S. and abroad, and securities analysis. Her focus during the past several years has been on investing in business services companies; she has significant experience in business services, e-Business and application service providers. She has worked with many private and public companies as a director, officer, investor and advisor and has special expertise in financial strategy, analysis of growing companies and corporate governance. She has operational and management experience having served as Chairman of the Board and COO of both public and private companies.

On behalf of StarVest, Ms. Farrington is currently a director of NetSuite, Inc., a San Mateo, California based company that provides an integrated web based accounting and other business services to small businesses and of which Larry Ellison is founder and former Chairman; ComparisonMarket Inc., a Cleveland, Ohio company that provides comparative insurance quotes over the Internet and is the largest independent insurance agent in the U.S.; and Fieldglass Inc., a Chicago based software company that provides spend management services to large enterprises. She is also a director of Collectors Universe, Inc. (NASDAQ: CLCT) the largest grader and authenticator of high-end collectibles, including coins, stamps, sports cards and autographs.

From 1993 to1997, Ms. Farrington was President and CEO of Victory Ventures, LLC, a New York-based private equity investment firm. During her tenure with Victory, she was a founding investor and Chairman of the Board of Staffing Resources, Inc., a diversified staffing company, when it grew from $17 million to $250 million in revenues.

From 1987 to 1993, Debby was managing director with Asian Oceanic Group and its affiliates, a Hong Kong-based merchant bank, which invested side by side with its Asian entrepreneur clients. From 1991 to 1993, she was Executive Vice President and a Director of Tigera Group, Inc., a NASDAQ listed public company affiliated with Asian Oceanic and she also served as a director of VideoTech.

From 1976 to 1987, Debby was with Merrill Lynch & Co. where she had a variety of international and domestic assignments in investment banking, securities analysis and management, while based in New York, Hong Kong and Tokyo. At Merrill Lynch, she worked on numerous public and private offerings and mergers & acquisitions for U.S. and international clients. She also held positions with responsibility for international planning, strategy and human resources.

Ms. Farrington is a 1972 graduate of Smith College and received an MBA in 1976 from the Harvard Business School. She has been active in fund raising and alumni affairs for both Smith and Harvard, and currently serves as on the Board of Directors of the Harvard Business School Alumnae Association. She is a member of the Committee of 200 and is President of her New York City Co-op.

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VV Show #10 - Brad Feld of Mobius Venture Capital

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Some venture capitalists keep a low profile, preciously guard their e-mail addresses from needy entrepreneurs and put on a jacket for publicity photos. Not Brad Feld. Brad started his career building his own technology consulting company with nothing but $10 and a 19-year-old's ambition. He grew his business to the level that it was an appetizing acquisition target, worked a bit for the company that acquired his firm doing acquisitions for them, did some angel investing, and is now a managing director at Mobius Venture Capital. All along, he's been vigorously growing businesses -- and sharing his know-how through his popular blog -- and now on this show.

Show notes:

1:15 Life as an entrepreneur

• Started first business, Feld Technologies, in Boston and sold it in 1993.

1:55 Growing a consulting firm

• 'We determined that the profit level we were generating at 20 people, well, if we grew to 40 people we'd obviously double the revenue, our profit would probably be exactly the same.'

6:45 Sold first business

• 'I acquired my way out of a job.'

9:50 Entrepreneur or investor?

12:00 Working with a CEO as an investor

13:45 Mobius Venture Capital

• All partners have founded or have run companies themselves.
  
• 'With the exception of really two decisions, I'd like to think that we work for the CEO of the company. The two decisions we really get to make are, one, the capital allocation decision (Do we want to keep funding the company or not?), and the other is do we support the CEO (Do we support the CEO or not?).'

16:00 Pitching your business to Mobius

• Currently investing a $1.25 billion fund that's 80% invested -- still a lot of money left to invest.
  
• The best way to get their attention is to get an introduction.
  
• Happy to take a quick look at anything someone e-mails him.

17:55 The business plan

• 'I personally don't care about the business plan at all -- especially for an early stage company.'
  
• 'However, I think the business plan is a really, really useful tool for an entrepreneur in terms of framing out what he or she is thinking about building.'

20:20 What to look for in a VC

• 'Honesty and integrity is paramount.'
  'Intellectual horsepower has to be tempered with experience. If you've got a really, really smart person that's very inexperienced, that's often way, way more dangerous then an experienced person who's still obviously intelligent to be in the venture business, but not as smart.'
  
• 'I look for people that are genuinely excited about creating companies.'
  
• 'Having been doing this for a while, I look for people that are fun.'
  
• 'I've worked with people that are at top tier firms that are just disasters.'

23:45 Term sheet

• Brad's blog has lot of information about term sheets.

26:45 Lawyers

• 'An experienced attorney that knows how to work with VCs and entrepreneurial companies will never hold up a deal.'

28:20 Geography

• Everyone in Mobius is in Palo Alto except for Brad who's in Superior, Colorado.
  
• Spends summers in Homer, Alaska.
  
• 'I've been an investor on both coasts, and it's cliché-ishly different.'

34:00 Always on?

35:30 Style

• 'I always wear a t-shirt.'
  
• 'My wife likes to say there's only a few things she wished were different about me and one was that I actually had some fashion sense.'
  
• 'Much to my father's chagrin I still don't dress up at weddings and funerals.'

37:00 Today's agenda

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