Getting cozy with VCs

Guy Kawasaki has posted some good wisdom on what VC’s like. My favs:

  • Build a real business.
  • Get an intro.
  • Obey the 10/20/30 rule.
  • Show traction.
  • Clean up your act.
  • Disclose everything.
  • Acknowledge, or create, an enemy.
  • Don’t fall for old trick questions.
  • Under promise and over deliver.

A very good read.

Where’s the earth-shattering kaboom?

2006 will be the year we all predicted that Web 2.0 will crash. The real question of course will be whether the prediction will be true or not. You’ll just have to watch this graph and see.

Posts that contain Web 2.0 Crash per day for the last 60 days.
Technorati Chart
Get your own chart!

Hat tip: Steve Rubel’s post on the pending Web 2.0 crash. “Sell GOOG!”

Patent Searches

I received an email recently:

I have a patent pending technology in e-commerce that deals with comparison shopping and would like to have a patent search done on it. Would you be able to recommend a company that can help me with this?

Here’s the answer:

Patent searches could and should be done by you first. Go to and do it. Google will actually be an even better patent search mechanism in that you can look around for things that may be prior art but not necessarily patented.

If you really want your patent to be good, you must become an expert in that field. Otherwise you’ll potentially spend a lot of time & money to patent something which is potentially worthless or has already been invented. You need to know about all the other techniques used to do things similar to what you’re doing.

I asked Patent attorney Leighton Chong what he thought about this and he added:

You might also include the importance of “literature” searching as well, i.e., white papers, industry proceedings, conference symposia, press releases, new product literature, etc. These commonly precede patent publications, and are far more diverse, wider ranging, and easier for anyone to publish than patents. Online searching for published literature is also made convenient through search engines like Google which are about as reliable as industry databases. Since published literature is just as usable for prior art as published patents, in my opinion it is far more important to search published literature than patents.

Entrepreneur red flag no-no’s

Guy Kawasaki put up another informative post, “The Top Ten Lies of Entrepreneurs” and has done a pretty good job of digging up “red flags” in a given pitch. Here they are:

“Our projections are conservative.”
“(Big name research firm) says our market will be $50 billion in 2010.”
“(Big name company) is going to sign our purchase order next week.”
“Key employees are set to join us as soon as we get funded.”
“No one is doing what we’re doing.”
“No one can do what we’re doing.”
“Hurry because several other venture capital firms are interested.”
“Oracle is too big/dumb/slow to be a threat.”
“We have a proven management team.”
“Patents make our product defensible.”
“All we have to do is get 1%% of the market.”

Just about every pitch will use several of these “lies”. (heck, my last company used all but the Oracle lie) That’s not necessarily a bad thing. But what IS a bad thing is when these statements made again and again, in great fanfare, in an effort to close a deal.

That’s a red flag.

My personal opinion is that when you do make one of these claims, first, make sure it’s 100% true. Second, don’t make a big deal about it. Why?

When you make a big deal out of any of these points, you’re making it an important component of your company’s success. If any of these points fail or fall through, you will lose credibility in proportion to the fanfare you made of it.

When you do make a statement like “big company X is talking to us about an acquisition”, it helps to add in something like, “but of course that’s a long shot and right now we’re in very preliminary talks with nothing in writing”. Stuff like this lets you speak the truth, yet also communicate that you’re realistic about it.

Honolulu-based Webjay acquired

This is really a great time to be a programmer. With the combination of all the Web 2.0 apis plus great OSS code sitting out there, one guy can hammer out cool services, create neat-o value, and then flip it to Yahoo.

Congrats to Lucas Gonze whose 1-man shop did it all w/ zero funding. Rock on baby! Too bad he’s going to relocate to the mainland. Damn.

Read Kevin Burton’s post on the acquisition.

Search through other blog posts on the acquisition

a good angel investment round story

If you’re talking to Angels and debating between things like Equity financing vs. convertible debt, read this nice post “Milk Money” from the simple, straight, and soon-to-be-successful people from Meebo.

Althought I admit other than ad placement I dunno what their revenue model is.

Did you get a Yes or No from the VC?

Did you just pitch to a VC and you think you heard a Yes? Are you sure?

Just read Guy Kawasaki’s “The Top Ten Lies of Venture Capitalists” and out of that list, three items are lies you hear when a VC is telling you they will not invest:

  1. “I liked your company, but my partners didn’t.”
  2. “If you get a lead, we will follow.”
  3. “Show us some traction, and we’ll invest.”

See his post for complete details.

If you can’t explain it to me, how can you explain it to customers?

Ed Sim wrote a great post, “Tips for the first VC Meeting“. Read his and then read an older post of mine “If you can’t talk about your product, you’ll never sell it” and you’ll (thankfully!) see a lot of similar thinking.

Ed’s (excellent) tips are:

  • Be flexible
  • Have a well-honed elevator pitch
  • 15-20 slides will do
  • Listen and ask questions
  • Have an alpha version of your product running
  • Ask about Next steps
  • Research the VC firm in advance
  • Don’t be late
  • Don’t be arrogant
  • Don’t ask for an NDA before you start the pitch

DSL editorial getting some responses

I wrote an editorial “DSL vs. cable: Those misleading ads are the last straw” that was published in the Star Bulletin this weekend.

I’ve been getting a good response from people who mostly have been saying that it was informative, and accurate writeup. It will be interesting to see how the rest of the week pans out on this.

Copy of article below:

YOU’VE SEEN the commercial: cable broadband Internet subscribers sharing a fat straw with some guy who has a cold. It’s making me sick.

Not because I’m catching the cold, mind you, but because the commercial implies sharing straws is something that happens only with cable Internet service. If you really want to gag a geek, just create misleading technology advertisements, like my DSL friends are doing over at Hawaiian Telcom.

The truth is, everyone “shares straws” on the Internet, no matter which technology they use. Any time you access a Web site, or any other public site on the Internet, you’re sharing bandwidth. It doesn’t matter if you’re using DSL, cable, dialup, wireless, satellite or mental telepathy (well, maybe the last one is dedicated if you’re at home by yourself).

In the interest of complete disclosure, you should know that the Roadrunner cable people sponsor “Your Computer Minute,” my computer advice spots on the radio. That being said, I’m not here to sell you on cable modems. It’s just high time a geek stepped up and put the facts forward on this whole “share the straw” outbreak.

What’s my beef? Simply put, the Hawaiian Telcom folks are making it sound like their users don’t share bandwidth. They use words like “your dedicated Internet access” and “stop sharing Internet” that I believe are misleading and confusing people. That ain’t right.

It’s time to set the record straight with some facts. Feel free to show them to your favorite geek for validation. See, what’s cool about geeks is that we can’t lie. In fact, our biggest problem is we keep yakking the truth when the marketing guys want us to shut up.

» What’s fastest, cable or DSL?

That depends. Roadrunner’s cable system is designed for significantly faster speeds than Hawaiian Telcom’s DSL can offer. Roadrunner’s maximum download speed is 5 million bits per second (referred to as “megabits per second,” or “mbps”). In contrast, DSL’s maximum download speed is 3 mbps, according to their own Web site.

One little detail our friends somehow forgot to mention is that with Hawaiian Telcom’s DSL technology, the farther away you are from the telephone exchange, the slower your service will be. Funny how those little detrimental details get left out of the cute ads, huh?

The actual speed you experience online will depend on a number of factors, including where you live, the computer hardware you use and the amount of spyware, viruses and other useless software that’s been installed behind your back.

» Does “sharing bandwidth” on a cable system raise special speed or security concerns?

No. All Internet users share bandwidth.

The Internet is a network of networks, shared by millions of users. DSL provides a dedicated line only to the nearest telephone exchange, after which DSL users share connections just like everyone else to enter and move around the Internet, which is where most slowdowns occur.

As for security, local cable traffic is encrypted and filtered to make it virtually impossible to eavesdrop on an individual data stream within the Roadrunner system.

» Which is a better value, DSL or cable?

It depends. DSL is generally a little cheaper, but the price of cable Internet service can be comparable when purchased in a package with TV and/or telephone service.

Contrary to what the DSL commercials say, Roadrunner subscribers can hook up multiple computers to a single cable connection at no extra charge by using an inexpensive wireless router, just as DSL users can.

» Which technology gets better ratings from consumers?

In PC World’s most recent survey of its readers, published in June, Roadrunner had better satisfaction ratings than any DSL provider. Roadrunner got a score of 78. DSL providers received scores ranging from 56 to 72. (Hawaiian Telcom Online DSL service was not in the survey.)

Similarly, Roadrunner got the highest marks of any Internet service in J.D. Power’s 2005 Major Provider Business Data Telecommunications Services Study. According to J.D. Power, “Roadrunner Business Class … ranks highest in customer satisfaction among broadband data business customers, earning high marks in all six factor areas,” which included performance and reliability, billing, cost of service and customer service.

» What’s the bottom line?

Advertising is all about hype. Ask any geek what they think about advertising or salespeople and you’ll instantly hear, “Liars!” Most of us understand and take the hype into account when we see commercials.

Personally, I don’t mind a good mud-slinging against brand “X” every once in a while. But I’m going to draw the line in this case because Hawaiian Telcom is guilty of the exact same thing — sharing an Internet connection — it is dissing the cable guys on. I’m going to draw the line because I believe the advertising is misleading and appears to be designed to confuse.

I can’t tell you whether DSL or cable is better for you. You will have to make that decision based on sound research and solid facts. I’m just here to point out the shibai, geek style.