Tag Archives: vc


What Makes a Community?

I normally write articles that carry a bit of authority. I usually write what I know about and have a high degree of confidence writing. I don’t write often because I want what I do write to carry authority and be hard-hitting.

This is not really one of those articles.

I haven’t done what people like Alex Hillman has done in creating collaborative working environments for independent entrepreneurs at Independent’s Hall in Philadelphia.

I haven’t been an organizer and champion of city-wide entrepreneurship like Josh Baer has in Austin.

I haven’t fostered a product community like they have over at StudioPress with the Genesis Framework.

What I have done is work within the context of a thriving WordPress community of developers, users, consultants and advocates.

I have lived in a city that has made it’s name on entrepreneurship and arts in Austin.

I have helped and supported entrepreneurs in their quest to build products in DC and find ways of succeeding both with and without investment money.

Moving Back to Baltimore

For some weeks now, I’ve made it clear that I’ve decided to move back from Austin to Baltimore. In 2008, I left Baltimore because I saw awesome things developing in technology in DC. At the time, there were guys like Peter Corbett who was just beginning to do technology advocacy work in the Nation’s Capital. By 2009, iStrategyLabs would launch the first Apps for Democracy contest that challenged contestants to create web and mobile applications with civic intent. That would morph into similar contest like Apps for America, etc.

You would also see some organizations that would flare out dramatically because of business model, ideas, weak leadership, lack of community involvement, etc.

I would then move to Austin where I would see a city immersed in technology. Lots of money flowing. Lots of incubator action, such as the products and entrepreneurs who would be graduated from the Capital Factory incubator. I would see ATX Startup Crawl occur several times a year as guests would have the opportunity to move around town and visit some of the great startups like TabbedOut, InfoChimps, uShip and more. Thousands of people would come through these offices and see the great technologies and ideas being built, all while enjoying local Texas beers and eats.

I would see awesome projects like We Are Austin Tech highlight influencers in that community (including myself) come up.

And I watched Baltimore grow as a technology community to the point where DC entrepreneurs started paying attention to their up and coming little brother 45 mins up I-95. I watched from afar as Dave Troy would put his heart and soul into building Baltimore as a center of entrepreneurship and tech. I’d watch as Greg Cangialosi would build his Blue Sky Factory marketing firm out and have a successful acquisition, all while continuing to personally invest more in the Baltimore scene.

I even watched great tragedies like the systematic destruction of Advertising.com by Aol.

I watched this all over the last 4 years and realized Baltimore was coming into it’s own. It had successes. It had failures. It had investors. It had bootstrap. It’s still not entirely cohesive, but from my seat, it looks promising.

So I’ve decided to move back to my home and put my money where my mouth is and see if I can take what I’ve gleaned from DC and Austin and apply it here in Baltimore. I may be one of those failures. Or I may not be, but I’ve got to try.

What Makes a Successful Community?

In the last few weeks, I’ve had several conversations with Baltimore business owners and entrepreneurs, and I’m finding a common question and point of discussion: What makes a successful community? The answers and opinions are intriguing. Again, I can’t say my opinion carries any authority. What I can say, however, is I’ve been in a bunch of communities and witnessed elements of success.

Some folks think a successful business community requires investors who are willing to commit their time and money. Anyone who has gone through the fundraising process knows that hands on investors are the best kind. If a VC or Angel investor can help a portfolio company supplement resources (human capital or otherwise) through their network, they bring quite a bit of upside to a startup. Investors who wire money and never pay attention to their portfolio companies, expecting the founders to execute according to plan, are in my opinion bad investors.

So in this light, some entrepreneurs here in Baltimore find the lack of investment money or engaged investors as detrimental to the community.

On the flip side of the coin, some entrepreneurs seem to be thinking that the mark of a good startup community is going to be in the number of entrepreneurs who are able to successfully bootstrap. There is some validity to this claim as well. The more you can do on your own, the less of your company you’re giving away (as I noted in the “Valleyboys” segment of this article a few weeks ago).

However, there is also value in bootstrapping and taking money, if the situation is right.

Other folks I’ve talked to feels the value is in the number of people attend professional meetups compounded by the sheer number of meetups. In Austin, we have a vibrant meetup community. From the Austin WordPress meetup to Austin on Rails to Austin Lean Startup to Refresh Austin and the list goes on.

My opinion is that a city startup community is built on all these things. It’s not money, really. Money will follow success. Perhaps Baltimore needs to have an IPO or high profile acquisition that allows the company to continue to operate and hire in Baltimore to put them on the map and in the conversation. I don’t really think it’s that, per se, but that certainly helps.

It would help if the State of Maryland was more business-friendly to small businesses, as Texas is. People come to Texas, and more specifically Austin, from California and New York because the environment is notably friendly to small business. More business would be created in Maryland with better business policy. It might even attract out of state growth.

Beyond that though, meetups are important but meetups don’t create value if the conversations end at the meetup. The idea of building something – a prototype – as you might get out of a Startup Weekend is good… if it continues afterwards from prototype to business product.

But I think the biggest thing that makes community grow is collaboration and the willing to share ideas without being defensive, sharing resources without being possessive, sharing physical space without being prohibitive. It takes more that an entrepreneurs flying solo behind his Macbook Pro in a coffee shop, but it takes less than structured office space with prohibitive managerial org charts.

It doesn’t take sacrificing lifestyle on the altar of work, but it does take entrepreneurs willing to gut out ideas by working with other entrepreneurs and customers and transparently sharing war stories of success and failure while helping to mentor others new to the space.

It does takes the karmaic “pay it forward” approach without fiefdoms and regional rivalries to ensure that a rising tide raises all ships. What you put in to other companies you have no direct stake in, but can help with informal advice (when solicited) makes for a circle of life that encourages a community to exceed expectations and move from one level to the next. Mentorship is not an ROI term, but it is critical to the ecosystem.

Am I off-base in my thinking here?


Five Articles I Wish I could Take Back

Last night I was going through Google archives looking for a post (that I never found) from 2007-2008. I went through 30 some pages of search results and remembered some of the older content I wrote. Some of it is stuff I either wish I didn’t write or I don’t agree with anymore. So I figured I’d share some of these posts and explain why I feel differently today:

It’s a Read/Write/Execute Web and We Just Live in It.

In this post from 2009, I posit that the first generation of the web was a read-only web. It was website that were not engaged with outside of simply reading. The second generation of the web was a “read/write” web marked by social interaction. The third I called a “read/write/execute” web where I railed on the future of the internet being API oriented and that government should

Drawing by Romancement on Flickr. Used by Creative Commons.

get on board with open data initiatives at the time.

Where I have a modestly different view today and I did slightly alude to it back then, is that the next generation of the web would actually be mobile. That prediction would have been true, and while APIs have played a significant role in making that happen, the APIs were merely a means to an end.

There are hundreds of thousand apps on the Apple app store and Android Market, not to mention other available app stores out there. Games now are played largely on smartphones and tablets as the shift away from consoles, while mild, is undoubtable. Today, with HTML5 and CSS3, websites are being creative with “responsive” design that allows for appropriate displays on appropriate devices.

Fun Fact: In 2004, I mused about what a world look like if we were not dependent on keyboards and mouses. I think we see that world in front of us now.

Are People Talking About You?

Originally published in 2007, I rode a train of personal brand for a long time. Not in that I had it. Everyone has something and some people have more than others. It’s actually not personal brand. It’s just reputation. I have a reputation. I have a reputation as a no-BS guy that doesn’t have a lot of respect for drama professionally or personally. I’m a confidant and advisor and I know WordPress really well. I get clients via word of mouth because I have a reputation for great work that speaks for itself with a fairly in depth intimacy with the WordPress core code. That’s reputation, but if you must, you can call it personal brand.

Regardless, I wrote this in that article:

It’s important to create great “stuff” (define “stuff” for yourself). It’s really important to stand out above the crowd. It’s more important to get other people talking about you. You are a brand. You are a subject matter expert. Well, you have the potential to be a subject matter expert. But you’re not yet. Not if no one is talking about you when you’re not around.

Aaron, you had me until, “It’s more important to get other people talking about you.”

This is why I was completely wrong. Nobody knows Mike McDerment. Well a lot of people do, but he isn’t a household name in tech or startups. However, he is the CEO of the largest cloud accounting company in the world. He built Freshbooks from the ground up to solve a problem that he had in 2003 (I just read his back story today).

Similarly, do you know Jason Cohen? You might know him because I’ve mentioned him or because you use WP Engine but otherwise, Jason isn’t a flashy guy. When I got the call from Jason right before moving to Austin to come help start WP Engine, I was thinking he was another guy named Cohen. I had no idea how successful and amazing he was. He wasn’t worried about promoting himself. Product is everything and product speaks for itself.

So I entirely disagree with my 2007 theory of self-aggrandizement. The only reason you have to worry about personal brand is if you’ve got nothing going for you. Otherwise, shut up and do epic shit. The rest will follow.

Age of Exploration 500 Years Later

First of all, this story is all fluff. I tell a nice story of explorers and all but it takes me to the last paragraph to even make a point, much less a thesis statement. And even then, I’m unsure of my point.

Imperial Stout

Photo by Brostad. Used by Creative Commons

What I think I was trying to say is that technology and, more specifically, embracing technology and change makes us better business people, better communicators, better humans.

If I had to rewrite the end of this post, I’d say this:

All of these explorers that went before, discovered new lands, races, tribes, experiences and opportunity opened up the door to new innovations. They were able to lay the groundwork and stepping stones for new expansion of influence and find new technologies that would allow for growth into the Industrial age.

I would then use the example of the Imperial Stout created in England for the Queen of Russia:

Through the expansion of the Russian Empire, King Peter the Great of Russia discovered British Stouts. As they became popular among Russians, a problem emerged. There was no way to get these stouts in Russia because the trip was so long that the beer would spoil before arrival. In the 1800s, an English brewery, responding to demand, developed a way of “hopping” their stouts in such a way to allow the beer to be preserved and delivered to Queen Catherine of Russia. Thus, this more hoppy version of the typical stout became known as the Russian Imperial Stout, or just the Imperial Stout.

I would use that segue to explain that even in our technology-centric world, it takes innovators developing technology in order for other, new technologies to emerge. A classic example of this from the programming world is that of Ajax, an extension of JavaScript which has been around for years. Ajax is a technology that allows background communication with servers without the page reloading. Without Ajax being developed a few years ago, the interactivity we have come to expect on sites everywhere would not be able to exist.

So it’s not that I disagree with myself so much as I didn’t explore the real premise of the article enough.

Roadmap to Victory at the Washington Post

This article is still an interesting one. On one side, I saw the Washington Post, and traditionally print-based journalism, as a dying trade. On the other I made a naive assumption that newspapers exist for the sake of journalism.

Both of these premises are wrong. Let’s address both presuppositions.

Traditionally print-based journalism is alive and well, as it should be. It isn’t going anywhere, nor should it. Blogs and digital media are not in competition with newspapers. They complement newspapers. Both sides serve different roles. While it’s true that newspapers (print) can’t break news anymore, they should count their blessings.

There are no opportunities to destroy credibility with Dewey Beats Truman moments (or more recently, Mandate Struck Down, as famously misreported by CNN). There are plenty of opportunities for solid, in depth investigative reporting-style journalism. I know it costs money. So save money by not trying to break news and let the digital sources do that.

Secondly, my cynical take feeds right into that last sentence and is why the challenge lies in money. Journalism today is an art, and is a respectable skill, trade and profession. But news organizations aren’t run by journalists. They are run by business people. Many of them are not non-profits, so they are implicitly for-profit. That means the bottom-line, which is dictated by readership, circulation and sometimes the ratings of television sister networks, are what inform the decisions of the company.

Samuel Zell, owner of the Tribune Company, ran his media empire as an entertainment company and not a journalism company. Guess what? Tribune is still trying to emerge from bankruptcy protection.

Let’s get back to the Washington Post, though. When I wrote this story, WaPo was trailing in the digital race. Today, they did everything other than what I suggested in my piece and have become one of the foremost digital journalism centers around. Their blogs, including Capital Weather Gang and DC Sports Blog are stellar and I still read them regularly, even though neither pertain to me anymore.

Unlike when I wrote this post, WaPo’s digital and print operations are integrated, instead of separate. Online metrics are key and closely watched. Online traffic is the indicator of success at the Post. Circulation is not. Subscriptions are not. Traffic. Eyeballs on their apps, their blogs, their articles. That’s the important metric at the Post. No longer are digital operations a second class citizen. They are equal or greater than print.

Even the New York Times sees it:

They can look at where online visitors are when they read the site. And if their computers are registered with a government suffix — .gov, .mil, .senate or .house — editors know they are reaching the readers they want. “That’s our influential audience,” Mr. Narisetti said. “If a blog is over all not doing that great but has a higher percentage of those, we say don’t worry about it.”

The Washington Post is smarter than I am, clearly, and I applaud them for it.

Valleyboys: It’s All About the Money

Wow. How far off the mark can I be? This article, which matter-of-factly states something that was anything-but-fact, is a clear example o my lack of experience in 2007. In 2007, I apparently thought I knew everything there was about running a startup and raising funding. That from a perspective of someone who was  just over a year out of the corporate world working for my first startup. I wasn’t a founder nor had I raised money. I didn’t understand a thing about reputation (there’s that word again) of founders, the importance of co-founders, how to safely determine a valuation based on things like profit and loss, revenue, the value of burn, the value of users and more factors that go in to that process.

I don’t really know why I was so pissy at the Valley, but in 2012, let me go on record and say that it’s not all about money in the Valley and there are a lot of people working hard to create value. Many do raise money, but many bootstrap as well. There’s pros and cons to both, and that’s left to a different article.

In my defense, there is some absurd money flying around not just in the Valley, but everywhere. For instance, I still don’t see the reasoning behind a $30M raise on an 8x valuation for Path, a round that included Virgin empire mogul Sir Richard Branson. That company has pivoted so many times and still doesn’t seem to have a clue what it’s doing. Nor do I understand the $1 BILLION Instagram buyout by Facebook.

Here’s the money line (see what I did there?). Whether there’s a lot of money flowing or not is not the question. It is a question, but not the question. The question is whether there are good, innovative products being built that create value in the marketplace. If that can be done with no money, great. If it requires funding money on orders of magnitude, that’s a decision that the investors and entrepreneurs have to make. Money doesn’t come without strings. Big raises with low revenue and no profit generally mean the investors get more of the company and if the company sells, then the founders get less. But then big raises for profitable companies with low burn and high user numbers could also mean that the investors just want a piece of the action, even if they don’t get a big piece of the pie. But there’s always strings and the amount of money matters less than the percentage of ownership and the length of runway as it relates to a burn rate and overhead.

So if I believed in deleting articles entirely, this one would be a prime candidate. :)

In the spirit of making sure I’m not perceived as a douchebag, here are some good article I wrote many moons ago. Enjoy!

Friends vs. Fans, The Most Expensive Question, Social Media: How Much is Too Much?,

Aaron Brazell, Featured

Venture Capital Irony, Bubbles and Booms

Photo by epsos

Late in 2008, after the rest of the economy crashed and burned due to the housing crisis, the tech sector seemed to be fairly resilient. Maybe it’s the nature of the industry… less money at stake, generally, in tech VC deals than other industries. For instance, Biotech.

That all went out the window when Valley-based VC behemoth, Sequoia Capital, gathered a now-infamous meeting of all its portfolio companies and gave them what can only be described as a “the sky is falling” lecture.

In that lecture (that presentation is shown below), they advised their companies to buckle their seatbelts, lay off employees, and get rid of non-essential expenditures. They said it would be a dangerous ride ahead and that only the companies that had enough forward-thinking prowess to survive, would do so.

The presentation opened with an ominous title slide with the words: “RIP Good Times”. The presentation instructed CEOs to look for M&A deals as quickly as possible, raise new cash now (i.e. late 2008) if they were looking to raise a new round, and have at least a year of cash in the bank.

Pretty ballsy move that, frankly, spelled the beginning of the tech sector decline. If Sequoia was instructing their companies in this way, then something must be severe, thought many other VCs who followed suit with their respective companies.

In some ways, Sequoia was correct. It would be a long road to recovery. In other sectors of the economy, the recovery is ongoing or is just beginning.

The tech sector is not that way, however. In the past year, we’ve seen huge investments in 2010. Twitter raised $200M+ on a $3.7B valuation. Zynga, the social gaming company, raised $147M on an estimated $5B valuation. Tumblr raised $30M.

The bubble has been gaining full steam. And then there was yesterday.

Yesterday, you might ask? Yes… yesterday. Yesterday it was announced that Sequoia Capital led a $41M Series A round (Yes, you heard that right… Series A!) for new mobile social photo sharing company, Color.

I’ll let you read about what Color is because, though it’s a bright, shiny object that is interesting in some ways, it’s not, to me, a $41M play.

Sequoia seems to be taking the approach that many smart VCs these days, including Mark Suster from GRP Partners, said last week when describing investment strategy relating to teams and not products.

Whatever you’re working on now, the half-life of innovation is so rapid now that your product will soon be out-of-date. Your existence is irrelevant unless you continue rapid innovation. Your ability to keep up is dependent on having a great team of differing skills. Individuals don’t build great companies, teams do.

And while I fully agree with Mark, I do have to question Sequoia making a $41M play less than three years after they virtually single-handedly drove the nail into the coffin of the tech sector. To me, it seems Sequoia made an opportunistic opportunity to drive the market rates down on valuations, to eventually make a big play like this at lower valuations (Disclaimer: I don’t actually know the terms of the Color deal). With a lower valuation, they can throw more cash and own the lion share of the available stock ownership. You know… waiting for a slam dunk, as it were. Mission Accomplished!

However, it’s notable that the Color team is truly a notable team. The former Chief Scientist at LinkedIn. The guy who sold Lala to Apple in 2009. Five other notable experienced entrepreneurs and successful startup people.

I’m sure Sequoia knows what it’s doing. It’s certainly interesting to watch investors defend them. There’s just very practical questions about how the company that started the tech recession could come out guns blazing on this one.

Venture Files

Working the Workshops

Web 2.0 Expo New York 2008

There are tons of informative sessions at Web 2.0 Expo. I especially like the Day 1 workshops. Maybe it’s the no-break, three-hour block . . . the fewer tracks . . . or the reduced traffic, since a good many folks opt out of Day 1 to save money. Shame.

If you’re a coder, there are solid technical workshops. But even though I’ve started up several companies, today I made a beeline for the startup and financing workshops. Why? Mainly because the scene/climate is constantly changing. But also because, just as with a pitch meeting, you always come away with some useful nuggets.

At the Web 2.0 Expo in San Francisco in April, it was ‘Starting Up: Strategies for Financing & Growing Your Web 2.0 Startup,’ put on by Rob Hayes of First Round Capital and Jeff Clavier of Softtech VC. Today, it was ‘Casing the Startup Joint: Real Life Examples of Startup Opportunities, Issues, and Strategic Decision Making,’ presented by Albert Wenger of Union Square Ventures, along with Charlie O’Donnell of Path 101 (Charlie was formerly an analyst with USV).

[Fellow East Coast startups take note: Both USV (New York) and First Round (just outside Philadelphia) are early-early stage VCs. Both are on my radar for CHALLENJ — but despite what First Round says about investing on Powerpoints, I don’t plan to approach either until our app is built; USV makes it clear they want something working.]

Here are a few random nuggets from today:

– Shift from hard-coded documents to live ones Although crafting a clear (if not pretty) business plan is still advised (if for nothing else, it gets everyone in the company on the same page, so to speak), VCs would rather see your competitive analysis in a wiki. “It also tells us that you have an ongoing process for tracking competitors,” according to USV’s Wenger. And if your .ppt deck doesn’t change nearly every time you deliver it, by definition it’s stale.

– Reduce your risks before applying Be mindful of the four buckets of risk before you approach any investor: 1) Team, 2) Technology; 3) Market; and 4) Capital Requirements. Says Wenger: “We can handle one — maybe two — but that’s it. (I’m working on my team — any killer PHP coders out there?)

– Rejection by one VC firm has no reflection on your business Suck it up. Firms like USV do fewer than 20 investments a year (and some of them are later stage). If they pass — presuming you’ve been sufficiently persistent — move on. (The corollary to this of course is, if 40 firms pass on your deal . . . it’s time to retool.)

– State of angel investment The thin g to remember — and it’s good news — is that the number of angel investors is 10x the number of VCs. But you have to work a lot of venues to find them, since most don’t hang out a shingle with wings on it — uncles, friends of the family, doctors, they all count. The bad news? When Wall Street flails (as it’s doing right now), even the wealthy get skittish. As O’Donnell puts it, “The rich tend to write fewer checks when they feel less rich.”

Lastly, it’s always interesting to hear the war stories from other startup CEOs. To be honest, I’ve made enough mistakes that I don’t learn all that much in these ‘true-confession’ sessions . . . but there’s something comforting in knowing that really smart people also did some dumb things.

Venture Files

Do you really want to work in Venture Capital?

I have heard this from many people I have met “I really want to be a VC”. First, why are you asking me when I am not one and don’t have a desire to be one? Let me direct you to some people in the industry and a few who left it to get a good perspective on the business. So I went ahead and asked the question “do you think people should really become VC’s”. Surprisingly, many said no. Why? I will tell you.

The origins of this post were motivated by Seth Levine’s post today How to get a job in Venture Capital revisited his earlier post, How to become a VC and it seems to hit on the same advice that I got from my VC friends in the business.

The gist of it seems to revolve around either going to a top B-school, being a banker or consultant, working in a startup or starting one of your own.

So instead of telling you how to become a VC, let me take a different angle and tell you why you don’t want to be one.

Everyone acts like they want to be your friend but all they really want is your money

When you are an entrepreneur you go to networking events in the hope of meeting investors, you leverage VC networked lawyers and accounting firms to get you introductions. What are you there for? To get money. As a VC you are just on the other side of the table and now when you go to dinner parties you are faced with the “Doctor’s dilemma”. That is when they find out you are a doctor and then they tell you something hurts them and expect a free diagnosis and prescription write up. As a VC you might suffer through people with “hey, I have this business looking funding” or “I have a really great idea, would you fund it?” crap. Just tell them you sell insurance and they will stay away from you.

You get stuck in board meeting hell

As a VC you will sit on boards to meet with the company on a regular basis to see if they are meeting their milestones and vote on critical issues (i.e. stock options, new key hires). The only problem is that this most of your interaction with a company and as a former entrepreneur you will have a tendency to want to be more involved. You can’t. You must keep the deal flow coming through for the firm to make the investments that will create good exits for great payoff to the fund’s limited partners. Yeah, I think that kinda sucks too.

You only really work day-to-day with a startup when it is having trouble

As I mentioned above, you are really only working with them in a board capacity when things are going well. When things start to go bad you have to spend more time and usually have to be the bad guy. You might have to kick out the founder, recommend budget cutting strategies, etc. Yep, that sucks too.

You have to read the most insane business plans

The average VC firm sees about 2000, that’s right 2000 business plans a year. Do the math. If you are an associate you have read around 50-100 per week depending on the size of your firm as an associate. You have to filter the crap from the interesting and then further find the fundable in the interesting ones. Many people blindly send plans that don’t fit the investment size or focus of the firm so they are immediately tossed. Still, you have to find the ones that are good and then have a phone conversation with them. If the chat goes well, they will come and pitch you so can report to the partners about the ones that they should really sit in on. If they end up sucking it reflects badly on you.

Do you like Excel?

When you join a firm as an associate you are analyzing deals from every perspective tearing apart an entrepreneur’s business model to see if it is actually not full of shit. You are also looking at it from various bad-to-great scenarios to understand the risk exposure the firm would be taking in the deal. I hate excel and the thought of living in it just makes me shudder.

You have to work insane hours to close a deal

You work insane hours as an entrepreneur but there is a long term payoff that can be huge. To get a deal done especially if it is syndicated or there is competition from other firms means you have to work insane hours to get it closed. If you don’t you risk losing the opportunity and looking like a lazy idiot to the partners. What is the upside? Maybe a bonus when the fund exits? Maybe. At least as an entrepreneur you can have a little more control over getting a big pay day.

Limited Partners are worse than investors

Investors in a startup expect risk and are betting on you to succeed. They hedge their bets and usually 7 out of 10 deals funded crash and burn. The remaining 2 get a good exit and the remaining one you hope will be the next google. Limited Partners have a long term outlook (7-10 years) for a fund to complete. But boy do they expect results. You might return a solid 20-30% return which is fantastic for any other investments but they might just bitch. Especially if the previous fund had better returns. Yeah…I would love to have that to deal with.

Are there any VC’s in the house?

Many people read the blog and hopefully there are some who are VC’s and could comment. It would be especially great if there are a few out there that have been in the business and left it.

Venture Files

TECHcocktail DC – The DC Tech Scene is definitely back

I have seen my share of networking events. Back during the dotcom era it was full of open bars and crazy companies with the latest software to change your life in some way. Then it was all about buying stuff on the web or a portal for something or another.

After the bubble burst most people were just trying to hold on and all that you had a choice between in the DC area were NVTC (Northern VA Tech Council) and Potomac Officer Club events. NVTC was very government focused and who mostly showed up were service providers (I have the 100’s of insurance and lawyer business cards to prove it). POC events were big events with well known people but not alot of good networking.

One good networking event I liked was the Tech Prayer breakfast but that was only once a year. What most of us were left with was going to conferences, usually not here, to get our networking on and find fellow entrepreneurs and real innovative thinkers.

Lately, there has been a change in the winds here in the DC area. With events like PodCampDC and Social Media Club’s events we are starting to see our cutting edge tech scene finally re-emerge. Last Thursday night it was totally confirmed with the TECH Cocktail DC event. It was held at MCCXXIII (1223) in DC. A swanky place that is over-priced for my usual weekend partying but this event had cheap drinks (thank you drink tickets) and about 300 people.

Below is a picture of the scene at the height of the evening.


While there have been many events that have drawn 400 people, this was different. Almost everyone was doing something startup related that was really cutting edge. There were social media people there (Technosailor and me included), innovative startups and actual investors looking to network.

There were also a great group of sponsors with great products to demo. Here is a great list from Jimmy over at EastCoastBlogging:

AwayFind – a product aimed at helping combat the email problem by letting your contacts get in touch with you via an online form.

iGala – a digital photo frame with a touchscreen interface that connects directly to Flickr and Gmail to stream photos to the frame like a slideshow.

Loladex – offers local recommendations from your trusted network of Facebook friends.

Odeo – launched a new beta verision which offers both search and personalized content (audio and video) recommendations.

Voxant – a free licensed content offering for publishers which offers a pageview based revenue share to anyone that embeds the content on a their site.

WhyGoSolo – a new social networking site aimed at helping you to create spontaneous new connections so, as its name implies, you won’t go solo any longer.

A huge amount of thanks go out to Frank Gruber and Eric Olson who do the TECH Cocktails around the country and they need to do it more than once a year here.

The vibe around this region is changing and since we will never will be Silicon Valley and never want to be, it is fantastic to see that there is a refreshed ecosystem of entrepreneurship here in the region.

Photo courtesy of jgarber

Editor’s Note: Some comments don’t seem to apply to this post as viewers of a show I was on were instructed to leave comments on this blog to get an invite to BrightKite. These comments will be approved but do not necessarily go with this post. Sorry!

Venture Files

The Jolly Green Bubble

Earth Day was yesterday. I my college years all that meant to me was that the band Green Day was coming to town to play. Now it means “save the planet, if it can make us money”.

“Greed, I mean Green is Good”

CNN, the New York Times, Business Week, Advertising Age, “Good Morning America,” the Sundance Channel, Reuters, the Discovery Channel, Marketplace radio, and a slew of local papers. Newpapers? You kill trees to create a huge insert about Earth Day. Is that not the stupidest thing you have ever heard. And a surprising number seem to have some variation of the same two questions:

“Is all of this focus on the greening of business merely a fad? When will the bubble burst?”

Green tech and marketing means green dollar signs for companies like GE, Disney and BP. NBC has created this load of crap called “green week” for their TV shows which is a thinly veiled attempt to sell their “green” products sold by their parent company GE. Disney announced a new “green movie” division which will capitalize on people’s concern with the environment so they can get more ticket revenues and DVD’s sold. BP is all about alternative energy these days and while they have been the most progressive when it comes to solar and natural gas they are really doing it to hedge their position as oil prices rise and people are ready for an alternative that must come within the next five years. I mean have you filled your tank lately? Bought a loaf of bread? It is crazy and things definitely must change.

There are motivating factors that support the argument that “Green is Good”. Here is the bullet list from a post by Joel Makower:

  1. The problems aren’t getting any better.
  2. The political will is finally emerging.
  3. Consumers are waking up.
  4. The supply chain is gaining power.
  5. The environment has become a fiduciary issue.
  6. The bar keeps moving.
  7. Companies are moving beyond “sustainability.”
  8. More companies are telling their stories.
  9. Clean technology is changing the game.
  10. There’s money to be made.

The bubble is growing

I am the farthest from a bleeding heart liberal, tree-hugging, save the polar bears person you will find. Although Polar Bears are just so darn cute I am not turning my air conditioner down during a heat wave in the DC area this summer to save them. I am also not a cold-blooded oil junkie who thinks that this global warming thing is a myth. I just think that the real intentions of being concerned for our environment has caused the investment community to pop its head out of its butt and see greedy potential to fund investments in everything “green”.

Since most of us survived the tech bubble we have learned our lessons and despite the Web 2.0 wave causing a mini investment bubble, we still have kept most of our sanity because the IPO market really hasn’t returned and the M&A wave is slowing down too. Most who couldn’t get jobs when the tech bubble burst left the industry and you guessed it, become real estate agents and mortgage brokers. As some people bounce from bubble to bubble, we will probably start seeing “Environmental
Consultants” and “Green Advisors” to, and pardon this one, “advise and recommend to companies how they can become more green and offset their impact on the environment”.

With the rising price of oil we are near a tipping point where many technologies are on par with the cost of traditional fuel so it will start to make economic sense in some cases. Where it doesn’t make sense is to stop growing wheat so you can grow corn for Ethanol (which takes 2/3 of a gallon of gas to produce a gallon of ethanol) causing wheat and rice shortages around the world. Right now in developed nations people spend 10% of their income on food and in developing nations it is around 80%. We have enough food to feed the planet but we just can’t afford to get it there. If we start diverting resources in the name of “green living” to make ourselves feel better the ramifications might be worse than we could imagine.

Oh crap, the Government is getting involved

The state of the government getting involved is a mess. I think Thomas Friedman sums it up well. “Some lawmakers are pushing corn ethanol from Iowa, either because they hail from that area and are looking to give more welfare to farmers by wasting money on an alternative fuel that will never reach the scale of what is needed, or because they plan to run in the Iowa caucuses. Others are pushing huge subsidies to turn coal into gasoline, because they come from coal states. Those who don’t come from Michigan want higher mileage standards imposed on Detroit, while those who come from Michigan prefer to continue their assisted suicide of the U.S. auto industry by blocking tougher mileage requirements.”

So you ready to call me “chicken little” yet?

You really call this “Green Investing”?

In the venture community we are seeing new funds popping up dedicated to “Green Investing” which in a diversified portfolio is good for funding innovations that will only help our world. What is really scary is many funds without the proper background to invest in this sector are jumping all over anything with buzzwords like “alternative energy”, “biofuels” and “eco-friendly”. VC’s like John Doerr cry when they talk about the environment and are dumping millions into companies that do things like nano-solar and grid optimization technologies. Hedge funds like Winslow Green Growth Fund are seeing their portfolios transform with the rush of new companies and new investments.

I hear a popping sound….

There are two popping scenarios:

1. Green will index within the mainstream and become ubiquitous.
It sticks. People keep pushing corporations to deeper levels of sustainability. Greenwashers fall on their face because it’s an unfulfilled promise, and then they mean it and real change happens. Green becomes ubiquitous. Smaller, plucky green companies struggle to regain any competitive advantage. When everything is green, green means nothing. (The study of green language is already there.)

2. It’s a fad and will vanish back to the margins of our society.
Green Fever goes away because it is a trend, a fad. News stories drop off, the chasing arrows shrink smaller on the back of packaging again, people stop bragging that their letterhead is 100% FCS Certified and Acid Free. Some small vestiges will still remain, and progress will have been made. New products were launched and the consumers will be more aware. But the trend died… popped.

Final thoughts…

I do believe we are economically in trouble as a country and I do believe that we are beginning to see the beginnings of a “green bubble”. However, as with bubbles like the tech bubble we saw massive innovation that benefits us to this day. So while there will be many bull**it artists and charlitans convincing investors they can solve the planets problems there will be innovation that will benefit us and the entire planet. I would just caution people on two things – don’t invest in every “Green IPO” when the fundamentals don’t work and don’t transfer your career into this field unless you are already in it or willing to passionately stay in it the rest of your life. We don’t need armies of unemployed “green consultants” trying to come back to tech in five years when the bubble bursts, because it eventually will.

Please leave your comments below, I want to hear from the evil oil people, the treehuggers and especially the Polar Bear lovers.

Aaron Brazell

Venture Files Joins Technosailor

vflogo.jpgOver the weekend, we have been hard at work integrating Venture Files into Technosailor.com. As you know, Technosailor has largely been focused on business and technology with a focus on social media and the internet technologies we enjoy today.

As part of the continuing debate surrounding venture capital, particularly here in the District, the content of Venture Files and the enthusiasm of Steve Fisher in writing it is a strong complement to the content already produced here.

As part of this integration, you can expect to see regular venture related content from Steve as he provides his own analysis on the venture ecosystem from the perspective of an entrepreneur. Previous content can be seen here and you can subscribe to the Venture Files feed as well.

I am a particularly strong fan of Steve’s 7 part series on Business Plans.

Welcome Steve and Venture Files to the Technosailor family.

Aaron Brazell

Valleyboys: It's All About the Money

Late last night I was finishing up a presentation for a class I’m taking when Jeremiah Owyang from Forrester made a statement on Twitter which made me cringe. The statement, though profound to someone living in the heart of Silicon Valley, is completely absent any reason to the observer outside of the Valley. Keep in mind the Parable of the Three Bloggers as I quote him.


We work really hard in Silicon Valley, why? It’s not the money (only a few strike it ‘rich’) I think it’s the passion for creating new

Someone should remind Jeremiah of the 140 character limit of Twitter. ;)

I take a lot of exception to this statement because it is exceptionally wrong. Not only exceptionally wrong, but naive.

First of all, as an insider it’s easy to say everyone is just working to create and innovate. While that’s true to a certain extent, it was much more true two years ago. As the outsider to the Valley that I am, I’d say the Valley is one of four North American hotspots for money flow – Boston, New York, Canada (Toronto) and the Valley.

That places these four locations on the map as one of the four places every entrepreneur in North America wants to be. The reason why DEMO and TechCrunch 40 were so successful is because entrepreneurs want money!

Yes, they need money. This is true. But the drive for more money is beyond what it was when the interactive web was in its infancy and companies really were sprouting up because people wanted to work passionately on a project. They discovered some idea and the technology had matured enough that the idea could be pursued.

Today, we are talking about San Francisco-based Automattic valuating at numbers well in excess of $200M, Palo Alto-based Facebook (along with some fuzzy math) weighing in at some $15B. GigaOmniMedia, the parent company of GigaOm and the rest of Om Malik’s empire getting $1M+ for hardware, or something…

Everyday, new companies are being funded and it’s mostly in the Valley.

I love the Valley. I love the entrepreneurs in the Valley. I wish I was there living but no job has taken me there yet. But it’s a very introspective and naive thought to believe that the Valley is full of people who just are passionate. Yes, passionate people make the best companies. That I will not argue with. I think there is more passion to get the big exit than to build a solid product.

I could be wrong. Feel free to correct me. ;-)