The Investing Game

Venture investing is all too similar to the Dating Game (and if you got that reference, you might be old enough to be an investor). The Dating Game was a loathsome television product of the 1960s whereby a single woman would choose from three likely suitors through a blinded question and answer process (though occasionally a man would select from a trio of ladies). Being Hollywood, the show’s contestants were frequently publicity seeking entertainers, some of whom later actually made it in the business (Sally Field appeared one year before becoming a religious aviator). Mostly the program was a demonstration of showmanship over substance as several men attempted to sound suave enough to be datable. Much like an investor pitch session. The start-up/investor match making process remains a relatively unorganized mishmash, where waves of undesirable and ill prepared entrepreneurs seek the favors (and fortunes) of investors. For a match to … Continue reading

Funding Fumbles

About the time this blog post goes live I’ll be breaking the hearts of a handful of entrepreneurs. Sadistic as that sounds, my job is to insert reality into uncomfortable places. In my speech today I’ll be telling some tech innovators why no angel investor would ever give them a dime. Tears will be shed, anguished screams will be head, and I may get a new laptop if someone throws theirs at me. Entrepreneurs here in Silicon Valley are more common than belfry bats. They exist on the hope of changing the world and getting hit by the money truck. These two aspects mean that they are commonly irrational and unreasonable about their products and prospects. Some of them succeed because they are unreasonable – nothing important has even been accomplished by a reasonable person. Where they often fail is funding. Despite being digital demigods, they rarely put themselves in … Continue reading

Intent Investors

Angels and VCs meet a lot of liars. Not intentional liars, but overly optimistic and undereducated entrepreneurs who slap together business plans that are best filed under “fiction.” To egotistically quote from my own book on the art of propaganda “We accept a modicum of lying when the negative impact is limited.” Throwing away a few millions dollars of other people’s money is not “limited impact.” Hence, VCs and other investors have developed a large set of buncombe detectors. After all, they are in the risk business — risking money provided by other people on relatively long-shot bets in rapidly evolving markets. Investors have better odds in Vegas, but Sin City payoffs are not as big. Trying to cash-in on the next Google requires VCs to lose quite a few bets. But like the card shark who took you for your last nickel, they play the odds. Many start-ups come … Continue reading

Silicon Valley Bleeding

“Silicon Valley invented the technologies that will break apart Silicon Valley,” was the opinion of one Silicon Valley start-up founder in my cabal. Scott McNealy, co-founder of Sun Micro and the longest running ad lib comedy act in high-tech recently started a fresh round of discussions about the perpetually pending demise of Silicon Valley. He is heading a stealth start-up in Colorado, far from Stanford, Sand Hill Road and giant blimp hangers. This caught the attention of over seasoned Silicon Valley veterans, and apparently McNealy received a number of inquiries concerning the locale for his new technology empire.  In response he listed the “Top 10 Reasons it’s Better to do a Startup in Colorado than California.” Jerry Brown is spinning in his grave (What?  Not yet?  You’re kidding?  He looks older than Keith Richards’ grandfather!). Many things make Silicon Valley the incubator for new and world changing technology, but none … Continue reading

Start-up Strategy

BMW and Enzyte may have too much in common. While reviewing course materials for the CEO Marketing Boot Camp, I got a case of giggles. In the class we mention how BMW does branding. BMW has a legendary brand that was anything but accidental. In fact most readers can recite the BMW slogan from memory and yet never question it. That is how good BMW is at defining and communicating their brand — they have us all educated and convinced. The BMW slogan is interesting to marketing experts because it never mentions automobiles or technology (and BMWs are technology products). BMW claims to provide the “ultimate driving experience.” Ultimate means the best. Driving is a largely male oriented passion. Experiences are what we live for. So BMW offers a greatly enhanced male life, just like Enzyte claims. I’m sure the people at BMW are not happy about this comparison because … Continue reading

VC Vigilance

Agriculture is not a fad. That is what I said to the CEO of a company who is applying high tech to crop yield management, and who just landed a healthy round of VC money to grow an already proven business model. Agriculture is not a fad and thus it is a market in which to invest if risk reduction is part of your planning. VCs are much more risk adverse then they used to be. After the dot com bust many VC partners left the field and started working in the fields themselves (seriously, the number of former VCs who are now vintners is disturbing, and I suspect many are drinking their profits). I scanned a dozen recently reported VC deals from the web site. What I wanted to see was if VCs were chasing fads (as they did in the late 1990’s), were following trends (as they … Continue reading