Recently in Entrepreneurial Success Category

I was having breakfast this morning with Salil Deshpande from Bay Partners. Salil and I were talking about assessing company progress and how best to measure that progress. Salil invests in super early-stage deals and has his companies report to him on their progress on a frequent basis. He said that he had one CEO who would report on his progress in such florid language that eventually Salil had to forbid his use of adjectives in his progress reports. Salil said that he didn't want to hear that things were going great. He wanted to hear precisely how things were going.

I nearly jumped out of my seat. Salil had articulated one of my biggest pet peeves when it comes to company pitches (and board meetings for that matter). I hate adjectives. I don't want to hear that one of the company founders is a "fantastic sales exec." I want to hear that she was Presidents Club the last twelve years running. I don't want to hear that the product is "revolutionary and paradigm-shifting." I want to hear about the specific features of the product that are differentiated and how. I don't want to hear that the company has "massive market traction." I want to see a graph of progressive quarterly sales and a giant sales pipeline.

Adjectives are not convincing. Facts are convincing. I may not agree with the conclusions a company draws from those facts. But I will at least be in a position to appropriately assess those conclusions. Whereas adjectives are all about conclusions without the underlying facts. As an entrepreneur, you are far better off having me determine that your market is "massive," your founders are "brilliant," and your product is "elegant," than to tell me that your company has "an elegant solution serving a massive market designed by brilliant founders." So reread your pitch and remove all of the adjectives. It will go massively, monumentally, gargantuanly. colossally better that way.

An interesting debate has broken out between Glenn Kelman and Mike Arrington. Glenn is the CEO of Redfin, a Seattle-based startup that is trying to modernize the process of buying and selling homes. Glenn's a smart guy and a great entrepreneur. And he has always struck me as quite thoughtful. Which is why I was surprised to read his recent blog post entitled, "How Green Was My Valley." In that post, Glenn extolls the virtues of Seattle, while attacking Silicon Valley:

"the Valley's monomania is really just a kind of pubescence. What else could account for the Valley's self-righteousness, its congregations of frustrated dudes, its all-nighters, idealism, delusions of grandeur, mood-swings, longings, dramas, hero-worship and pranks? Anywhere else by contrast seems all grown-up."

Wow. Those are strong words. And the rest of his post is equally provocative. Glenn doesn't just praise Seattle. He berates the Bay Area.

When I first read Glenn's post, I almost took the bait. But I thought better of it. Mike Arrington, on the other hand, did not. Mike couldn't have Glenn badmouth the Bay Area as a "heartless amnesiac" without pointing out to Glenn that the Bay Area knows better than to waste its time focusing on the past. Mike couldn't let Glenn get away with praising the Seattle lifestyle without pointing out that it is just that, a lifestyle; the Bay Area has better things to do than worry about lifestyle. Mike couldn't let Glenn get away with baldly suggesting that Bay Area businesses are trendy and Seattle businesses focus on "what works" without giving a single concrete example; the Bay Area is all about specific examples, not baseless accusations. Mike couldn't let Glenn get away with any of it. That's just not something Mike can do.

I don't raise this to join in the rumble against Glenn. I am a fan of Seattle. My partners at August Capital have funded some great companies in Seattle, not the least of which is Microsoft. But I do want to take issue with one of Glenn's criticisms of the Bay Area. Glenn refers in a number of different ways to the obsessiveness of the Bay Area and suggests that the Bay Area's "monomania" is somehow a detriment to company building. I have to disagree. I love the obsessiveness of the Bay Area. It is the drug that fuels the Bay Area's startup economy. And it is the drug that fuels my every day as a tech investor. I love the fact that I can talk about entrepreneurship at AYSO. I love the fact that I can have conference calls with my CEO's at 1am. I love the fact that wildly successful entrepreneurs who could retire for life dive into their next venture within six months of leaving their last. I love the fact that Palo Alto's newest yogurt shop is a hotbed of tech recruiting. I love the fact that I funded a company after bumping into them at a local coffee shop. I love the fact that school auctions include items like "a tour of Facebook" and "10 hours with a trademark attorney" and "company logo design." Is it obsessive? You bet. Is it good for business? You bet.

To tell you the truth, I don't actually think that the obsessiveness of successful startups in the Bay Area is any different from that of successful startups in Seattle. I happen to know that Glenn himself is completely obsessed with entrepreneurship and building Redfin into the next great company. What is unique about the Bay Area is the pervasiveness of that obsession. It is everywhere you go. And I don't think that's a bug. I think it's a feature.

Driving home from the city yesterday I was listening to a very interesting interview of Madeline Albright on NPR. Albright made a range of insightful observations about diplomacy, world affairs and the Presidency. During the course of the interview, one statement in particular jumped out at me. Albright said that she would rather have a President who was confident than a President who was certain. She noted that a confident President could take principled positions and stand for things that mattered, but would still have the good sense to listen to those around him and take counsel from a range of brilliant advisors. In contrast, a certain President would have no need for advisors because the appropriate course would be "clear" to him.

Madeline Albright's comments reminded me of a talk I heard Paul Graham give at Foo Camp a couple summers ago. Paul was discussing the attributes of successful enterpreneurs, and he argued that the best entrepreneurs were open minded and had good judgment. He contrasted that with failed entrepreneurs who were stubborn and had bad judgment. Paul stated that while having bad judgment could be a handicap for an entrepreneur, if you had both bad judgment and were stubborn, you would necessarily fail. I suppose in Graham's parlance, the President that Madeline Albright is looking for would be confident but open minded.

I am in complete agreement with Madeline Albright and Paul Graham. Startup success requires confidence but not certainty. I have worked with startup CEOs in the past who spent more time at board meetings defending their positions than listening to the board's feedback. Sure, some of the time those CEOs were right and some of the time the Board was wrong. But board meetings shouldn't be about certainty. The should be about confidence. The confidence to hear what other smart people have to say. The confidence to listen. The confidence to stand firm on things you believe are critical to the success of your company. And the confidence to change your position when clearer minds prevail. Like great Presidents, the best CEOs will have the character and the confidence to lead while listening. It isn't easy. But it can mean the difference between success and failure.

When I first started writing VentureBlog, I used to talk a lot about entrepreneurship. At the time, not a lot had been written about pitching VCs or the Venture Capital process, so there was lots of virgin territory. Since that time, dozens of VCs have started blogging and much has been said about what it takes to get a VC down the isle. Bits and pieces here and there -- a good Google archeologist can pull it all together. But having spent the week pontificating about PowerPoint and the likes, I've decided to take one more swing through the basics of pitching a VC.

As I thought about the process of pitching a business, it struck me that no matter what the stage, the information was essentially the same. A good elevator pitch contains the same content as a good executive summary contains the same content as a good PowerPoint contains the same content as a good business plan. The distinction among these business descriptions is not the substance, it is the degree to which the essential elements are fleshed out. Each document contains slightly more detail than the preceding.

Elevator Pitch --> Executive Summary --> PowerPoint --> Business Plan

This makes good intuitive sense. There is no reason that the things that are most compelling about your business would change based upon the nature of the business description. Nor would an investor be interested in different things by virtue of the form that description takes.

What, then, are the essential elements that make up a good PowerPoint, a persuasive elevator pitch, a compelling executive summary? I have no doubt that VCs will differ somewhat on the precise list, as well as the order and the emphasis. But at its core, I believe that a successful business description should include the following elements:

1. Introduction
2. Team
3. Product
4. Market
5. Business Model
6. Competition
7. Financials
8. Conclusion

If you are pitching a VC, start with these 8 slides. If you are writing an executive summary, start with these 8 headings.

Obviously some businesses will require additional information that is outside the scope of these basics. I am not suggesting for a second that you should always pigeonhole your business into these categories alone. But they are a great starting point from which to build a persuasive description of your business.

I was recently reading some old posts on Venture Blog and couldn't believe how short they were. One might call them pithy. Or one might also call them lazy. Either way, they were short. I should really try that again.

I have been teaching a class at Harvard Law School this winter semester called Venture Capital and the Technology Start-up with John Palfrey, the Executive Director of the Berkman Center. It is really fun to be back at the law school and working with John. I have been blown away by the energy that the law students are bringing to the topic of Entrepreneurship and Venture Capital. Sadly, I never had a VC or Entrepreneurship class in law school. Lets see, I had torts, contracts, criminal law, federal courts, administrative law, property, intellectual property, corporations, securities regulation, constitutional law . . . but no entrepreneurship. Then again, I don't know that I would have had the sense to actually take a VC or Entrepreneurship class back then. So its presence would have been wasted on me.

Today my students had to actually pitch business ideas to real live VCs from the Boston area. And they did a great job. As I was discussing with them how to think about company building and pitching, it struck me that much like the law, building great companies is all about applying precedent. Only, instead of the applicable precedent being case law in this instance, the applicable precedent is a business case. Pitching your business is all about finding the right business analogs and describing how they apply to the company you're building (e.g., "we're the Amazon.com of funeral supplies."). That isn't so different from finding the right case analogs and describing how they apply to the lawsuit you're defending. So there may be hope that we lawyers are able to figure out this entrepreneurship stuff yet.

A lot has been said about Six Apart in the past, including by me. I have never been shy about making clear my love of MovableType (VentureBlog), TypePad (SaysMe) and Vox (Hornik, Hornik and More Hornik). I use each of Six Apart's platforms, which makes me an investor, a customer and an evangelist.

But what hasn't been said about Six Apart to date? Perhaps what hasn't been said is that when it comes to web traffic Six Apart is HUGE. According to Comscore, Six Apart's hosted properties (TypePad, Blogs, LiveJournal, Vox, etc.) put Six Apart in the 50 most trafficked sites on the Web. Six Apart has approximately 39 Million unique visitors a month and growing. Six Apart served just over 600 Million world-wide page views in April, of which over a quarter of a billion page views came from the United States alone. And those page views do not even include the massive traffic of the innumerable branded sites that live on Six Apart's hosted platforms, including TheSuperficial, SocialiteLife, Gothamist, BoingBoing, HuffingtonPost, AskDaveTaylor, TreeHugger, ZDNet Blogs, Celebrity-Babies, CuteOverload, Kottke, CoolHunting, and thousands more.

Where are all those page views coming from? There are nearly 20 Million Six Apart bloggers across the various platforms. In the US, they are posting on LiveJournal, TypePad, Vox.... Internationally, they are posting on Friendster, Nifty, NTT.... On nearly any topic on the planet that one might search, there will be results hosted by Six Apart. The number of bloggers is constantly growing, the number of pages is constantly growing, the number of page views is constantly growing. The power of blogging!

On top of that, there are hundreds of thousands of users of MovableType, which represent innumerable millions of page views which Six Apart does not host and does not track. MovableType is the predominant platform for enterprise blogging. Many corporations use MovableType for external blogs, many more are using MovableType internally. While in no way comprehensive, check out this list of companies using MT for their own blogs: ABC, CMP Media Conde Nast, Gannett, Hearst, NBC Universal, NPR, Playboy, USA Today, Time, Walt Disney, Washington Post, Warner Brothers, FedEx, Interpublic, Ogilvy, Organic, UPS, Adobe, Cisco, Intel, Microsoft, Nokia, Oracle, SAP, Symantec, Verizon, GE Heathcare, GE Medical Systems, Genetech, Johnson & Johnson, Pfizer, American Express, Deutsche Bank, the Federal Reserve Bank, Intuit, Standard & Poors, Wells Fargo, American Eagle Outfitters, American Girl, General Mills, L'Oreal, Mattel, Miller Brewing, Mike, P&G, Patagoinia, Wal-Mart, Whole Foods, General Motors, Boeing, Lockheed, Brown, Columbia, MIT, NYU, Princeton, Yale.... And, of course, VentureBlog!

When I invested in Six Apart, I was excited about the incredibly broad applicability of Six Apart's technology. If anything, I've been surprised by just how broadly Six Apart's platforms have been applied. From Standard & Poors to Playboy to CuteOverload to BoingBoing to NPR to my mom's Vox blog, Six Apart has enabled a distributed media "empire" that is truly vast, and growing. It will be exciting to see how Six Apart continues to flourish in the coming years. I am thrilled to be a part of it.

I am a bit of a broken record when it comes to my "its all about the team" mantra. But I really believe it. Yes, it is important to have a good idea. Yes, it is important to be chasing a big market. But as important as both of those things are, they pale in comparison to the need for great entrepreneurs.

I've also written a fair bit about what it means to be a great entrepreneur. Some founders are incredibly good entrepreneurs by virtue of their sheer fanaticism and determination -- they thrive on the challenge of building a businesses out of whole cloth and hate to lose. Some founders are "serial entrepreneurs" and get the benefit of the doubt because they have done it before -- they have managed to run the startup gauntlet and make their investors a bunch of money. And other founders are incredible domain experts -- if anyone is going to figure out how to build an interesting business in their particular field, it will be them. If an entrepreneur falls into any one of these categories, you will do well to back them.

A few years ago I was approached about backing a company called Nomis Solutions. The idea behind Nomis was to apply modern price optimization techniques to the financial services sector. While banks and insurance companies do a great job of measuring and optimizing risk, they have historically done less well at measuring and optimizing pricing. As a result, the industry as a whole has left a lot of money on the table. The founders of Nomis intended to build a software solution to help financial institutions engage in profit-based pricing -- pricing that would create the greatest profitability on a product by product basis (auto finance, mortgage, home equity, personal lending, etc.).

Was it a good idea? You bet. Any time a piece of software can increase your profitability by 10 to 20%, it is a good idea. Was it a big market? Monstrous. Financial institutions are historically very difficult to sell software into, nonetheless, they are monumentally large accounts if you can find your way in. So my investment decision came down to the question of how was the team. While there were four fantastic entrepreneurs when I funded Nomis, and I do not in any way want to slight Nomis's other spectacular founders, I want to take a closer look at Nomis founder Dr. Robert Phillips.

Bob Phillips personifies the best characteristics of a great entrepreneur. He thrives on company creation and refuses to lose (when I made diligence calls on Bob, I was assured that he was a killer entrepreneur and that I would do well to back him but that I should never ever play him at Trivial Pursuit). Bob is also a serial entrepreneurs who has made a bunch of money for his investors in the past. As the founder and CEO of Talus Solution, Bob created the worlds largest price optimization company in its day, which he sold to Manugistics for hundreds of millions of dollars. And Bob is the guru of price optimization -- there is no bigger domain expert. If you have been annoyed by the fact that the guy sitting next to you on a plane paid significantly less for his ticket than you did, you have Bob Phillips to blame for that. He introduced revenue optimization to the airline industry many years ago. He literally wrote the price optimization text book and teaches it at Stanford and Columbia Business Schools.

It would be hard to find a better example of a fundable entrepreneur than Bob Phillips. So it will come as no surprise to you that Bob and his co-founders have managed to build an incredible company at Nomis. Their customers are literally a who's who of the banking industry, from Ford Motor Credit to HBoS to GE Consumer Finance to Washington Mutual. And their results have been nothing short of spectacular -- by installing Nomis's software, a bank can increase the profitability of its business by between ten and twenty percent. On a multi-billion dollar loan portfolio, that adds up to real money quickly. As a result, Nomis has been able to make great inroads into a really tough market.

I don't want to ignore the excellent work of Bob Phillips' co-founders. Nor do I want to understate the degree to which great hiring has helped make the company a market leader. But Bob Phillips remains the world's expert in revenue optimization and I would sooner bet with Bob than against him when it comes to price optimization. It truly is all about the team.

There are a lot of networking events in the Bay Area every day of the week. If you wanted to be a professional networker, this is undoubtedly the place to do it. But not all networking events are created equal. The massive gathering at a local bar may result in you rubbing shoulders with lots of like minded individuals but it will be loud and crowded and not particularly conducive to building real relationships. The nighttime panel on the startup topic of your choice is equally dubious when it comes to growing your professional network. While the conversation afterwards will require less shouting, it will probably be with other startup neophytes -- it is hard to attract seasoned professionals to take part in such events. The monthly trade organization gathering may well get you chatting with a number of similarly situated professionals, but it will do little to expand the breadth of contacts you have.

What is the solution to these networking woes? Dodgeball. After contemplating the profound networking opportunities on the dodgeball court, YouTube's Hunter Walk, Mint's Noah Kagan and I went about organizing the "First Annual Labor vs. Capital Dodgeball Tournament." And it was a big success. Lots of smart, fun entrepreneurs and venture capitalist came together to throw balls at each other's heads. And in between games of riotous ball-chucking fun, there were lots of opportunities to get to know each other. When folks headed back to work (or home) on Friday afternoon, there were lots of requests for the next Labor vs. Capital event on the circuit. We are still in planning mode but are contemplating Labor vs. Capital miniature golf, or Labor vs. Capital Paint Ball. Whatever it is that we choose, I think the result will be a pile of fun and some good clean networking on the side.

For those of you who didn't make it to the First Annual Labor vs. Capital Dodgeball Tournament, check out the latest installment of VentureCast. Craig and I recorded it at the dodgeball courts. You can even get the play by play of the finals of the tournament. It may well be our best remote VentureCast yet. And if audio from the dodgeball court isn't scintillating enough, check out the great video the folks at the Mercury News made.

It really was a pile of fun. I look forward to the next in the "Labor vs. Capital" series of networking events. Perhaps Labor vs. Capital curling.

I was chatting with my good friend Bill Trenchard this morning. Bill was one of the founders of LiveOps and is currently the Chairman of the company. He and I were talking about my LiveOps post from last night and I realized that while I had talked about some great applications of the LiveOps platform, I didn't discuss the thing I found most interesting about LiveOps technology. So before I move on to another one of my portfolio companies, let me share one additional thought about LiveOps.

I am a huge believer in the value of using software and data to optimize transactions. And the more data and the better the software, the more value you can extract from each transaction. In many ways, that is precisely what each one of my portfolio companies is trying to do -- unleash the power of the underlying data to produce the most value. LiveOps is no different. By leveraging the IP underpinnings of its call center platform, LiveOps is able to optimize the experience for its customers in ways that give the company an unfair advantage over traditional call centers and traditional call center management software.

The key to the LiveOps platform is that it tracks and manages each individual answering phones as an autonomous agent. And each agent is characterized by a set of data that makes up that agent's profile. So imagine that my mom decides to make some extra money by becoming a LiveOps agent. When she first starts to answer calls, the system will have very little information about her. But over time it will gather data about the job she is doing. The LiveOps platform will learn things like how quickly she answers a ringing phone, how many minutes is her average phone call, how satisfied are the callers with the outcomes from her calls, how many of her calls result in sales, what is the average amount of money spent on a call she takes, how often does she manage to up-sell the caller, etc. Using all of this data, when a call comes in, the LiveOps platform is able to rout the call, not to the next available operator, but rather to the best available operator. And that is LiveOps' unfair advantage.

LiveOps is in essence AdWords for people. The platform is able to measure and manage each individual agent in real time and route calls based upon the performance of each agent. And that routing doesn't simply rely upon data about the agent. It also relies upon information about the call coming in. If a call to the LiveOps' service is to sell a Ginsu Knife, the agent with the best track record of selling and up-selling will get the call. If, on the other hand, it is a call concerning front line product support, a different agent may have the best record of quick and effective resolution of support matters. Yet another call may come in that is a simple pizza order and get routed to the agent who is the most efficient and most accurate order taker. LiveOps software is designed to manage a large pool of agents and optimize their performance in real time based upon the nature of the call and the characteristics of the available agents. As a result, not only is LiveOps able to provide the low cost solution (by allowing agents to work from home throughout the country), but it is also able to provide the most effective solution by routing calls based upon the specific performance metrics defined by the client.

It is this real time, performance-based call routing that I think has led to LiveOps massive success to date. LiveOps customers include large enterprises that want to use the LiveOps platform to manage their own call centers and their own agents, as well as companies that want to leverage LiveOps' agents and software to provide an end to end solution. Either way, LiveOps customers are guaranteed the most efficient and effective "call center" experience possible. And, to my mind, that's pretty exciting stuff.

When I first met with LiveOps' CEO Maynard Webb, I asked him what it was about LiveOps that would get him back to work. After all, Maynard had just recently retired from Ebay where he had served as COO. While head of technology at Ebay he was credited with stabilizing a platform that, at the time, was on the verge or implosion. His reward for fixing the technology mess was a license to fix everything else as COO, which he did with great aplomb. Maynard had a well earned reputation as a tireless worker. Clearly he had earned himself a summer or two (or ten) off. But when Maynard heard the LiveOps story, he found himself back in the saddle.

So what was it about LiveOps that Maynard found so exciting? In his words it was the ability to do well while doing good. That may seem surprising when you consider that LiveOps is a call center software and services platform. At its core, LiveOps is an incredibly sophisticated VOIP software platform that allows a customer to route, track and manage calls in ways that none of the traditional systems allow. And one of the most important byproducts of LiveOps' all-IP system is that agents can be located anywhere that there's a web connection. They may all be located in a call center in Ohio, or they may be scattered throughout the country in their homes.

LiveOps is the biggest customer of its own call center software. Along with selling its platform to big corporate clients who are looking to better manage the performance of their agents (wherever they may sit), LiveOps uses its own software to manage the LiveOps distributed call center that now encompasses 13,000 active agents and growing rapidly. LiveOps agents on the whole tend to be stay-at-home moms and home-bound individuals who are looking for a way to make money while maintaining the flexibility to work where and when they choose, as may be dictated by their own personal circumstances. Which is precisely what appealed to Maynard. As he told me, one of the things he was most proud of with Ebay was that it empowers a whole host of entrepreneurs to create businesses that best suit their particular life circumstances. The same is true of LiveOps. Rather than outsourcing jobs to other countries, LiveOps insources opportunities to underemployed, but well-educated, individuals who need the flexibility to control their own work environment. And, as Maynard pointed out, the more successful LiveOps is at serving its customers with the most efficient and most effective call center available, the greater the number of individuals the company can empower to take control of their own circumstances.

There is another byproduct of this massive distributed phone force; LiveOps is the only call center in the world that can massively scale in short order to suit the needs of virtually any customers. One great example of this capacity to scale came immediately after the Hurricane Katrina disaster. The American Red Cross was inundated with requests to donate on behalf of the victims of the hurricane. In an effort to support the generosity of the country, the Red Cross went out looking for a call center that could field the enormous volume of calls for donations. Ultimately, only one company could deliver the necessary scale to support the overwhelming call volume, and that was LiveOps. In a matter of hours, LiveOps was able to route the Red Cross's 800 number to thousands of agents throughout the country, who immediately were able to service the generosity of hundreds of thousands of donors.

LiveOps recently put that capacity to good use again when American Idol had its Idol Gives Back campaign. During two separate American Idol shows, the stars of the show promoted a charitable giving program that included an 800 number on the screen and on their website. While the producers of American Idol suspected that the volume of giving would be quite large, they could not scope the scale of the participation with any specificity. That was no problem for LiveOps. They were able to scale the size of their phone force with demand, continuing to take pledges long into the night, and were unencumbered by the limitations of traditional call centers. What's more, they were able to give the American Idol producers instant feedback as to the scale and velocity of the program. In the end, LiveOps deployed over 3,400 agents who answered approximately 200,000 calls and collected more than $6 Million for charity. That's the sort of thing that makes Maynard Webb excited to come in in the morning. And it is the sort of thing that makes me thrilled to be an investor in LiveOps.