a lesson in venture capital

“Ann is on a roll, we are going to be late.” I texted to Phillip. Indeed she was. Ann Winblad was the first investor in my Company, Net Perceptions, back in 1996. She was an investor, a mentor, and a supporter of us for years. Today she was giving my students a lesson in the new economics and ecosystems of software development. I was taking notes as fast as I could to keep up with the stream of new companies and technologies that were must know things according to Ann.

After the lesson she opened up the floor to questions, and the stories began to flow. And flow, and when the students stopped asking questions she asked them questions and told them stories about their answers. We were long past the end of our scheduled time, and I noticed her long term assistant Katie, standing across the room arms folded, glaring at Ann. Heaven only knows what poor entrepreneur was downstairs sweating while she was entertaining us!

Ann repeated a number of themes we’ve heard throughout the trip. One I don’t think I’ve mentioned here but we have heard from several people: Don’t sweat your first job. or Your first job is just your first job, so don’t worry about it too much. This is such a change from when I graduated from college, and I think its a real shock for midwestern students to hear. But I think it is true. We tend to think of that fist job as a real important commitment whereas the truth is it is a chance to get experience for 2-3 years and then to help you really decide your direction.

One thing I’m not sure I agree with is Ann’s assertion that 90% of sofware will be assembled from already existing components. This may be true for some companies, but it seems to me that real, big, breakthroughs are still going to come from creating new and innovative components for other people.

This is continuing a trend/theme that we have picked up on in this trip, but that may also be a bit troubling. 1. It is so much cheaper for a software company to get off the ground these days. Amazon AWS, is just one contributor to this, Sonatype is another. 2. Automated sales and marketing software is yet another. Gone are the days when you need a big face to face sales force to sell enterprise software. 3. The result of this is that VC’s are able to make bets on software companies for a relatively small amount of money. The downside is that they may not be investing in the riskier, bigger companies that may result in really big breakthroughs.

For my own, and your convenience, here is a list of words of wisdom and interesting companies to check out:

  • You need to know Atlassian, Github, and Sonatype

  • Think about Engagement Moments These are the times that people are really paying attention to their devices and are good times to hit them up with an ad.

  • Learn Hadooop

  • Writing SQL is a requirement for everyone

  • Plumgrid

  • Hortonworks

  • MongoDB

  • Puppet and Chef

  • Nuodb

  • Baynote

changing the world, jterm 2014

The following is a republication of a post I wrote for Luther College’s “Ideas and Creations” Blog.

Changing the World: Understanding Entrepreneurship, January 2014

I have never been so glad to leave Minnesota as I was on January 6th. The temperature outside was -24 with a windchill that defied all logic. I was headed for Seattle with 11 Luther students to begin my course on “Understanding Entrepreneurship.” I really enjoy traveling with students. Their energy, their enthusiasm, their ability to eat a doughnut burger at the airport before getting on a three hour flight.

Our itinerary for the three-week course includes four days in Seattle, an overnight train ride, six days in San Francisco, four days in Silicon Valley, a continuation of the train ride to Las Angeles where we will conclude the trip. Notice the nice progression of temperatures, from -24 in Minneapolis to 48 in Seattle to 68 here in San Francisco today, to even warmer in LA.

The goals of the course are for the students to meet with people from a variety of companies, from early stage startups to very successful large companies, and everything in between. We’ll meet with technology companies, Venture Capitalists, Public Relations folks, managers, programmers, you name it. The point is for the students to hear stories. Sometimes the most interesting and valuable stories are the stories about failure. Sometimes they are about success. Almost always they are a combination of the two that demonstrate passion, persistence, and the willingness to take a risk. The students are from a variety of majors including CS, management, accounting, marketing, and communications.The mix of majors creates good discussion, and questions from a variety of perspectives.

Some of the companies we have visited you have probably heard of: Microsoft, Pinterest, Google, and Amazon. Many of the people we have talked to at those companies are veterans of smaller companies that have ended up in a large company. Some of the companies we have visited you maybe haven’t heard of, and may never hear of: Sqwiggle, Moovweb, Strava, Capsule, and Fullscreen. Some of these smaller companies are still in the “garage phase,” they are just a couple of people with a great idea and a huge amount of passion to change the world.

I have connections to many of these companies from my former life as a software entrepreneur, but what is even more exciting is that I am connected to some of these companies by former students, and other Luther Alums. What a great experience it is for the students to see Luther Alumni, here on the west coast, doing great things.

Dan and John, Two smart guys

The students all have their own reasons for taking the course. Some want to see if the West coast is right for them. Some want to learn about the different job opportunities in the high tech area. Some are exploring. Some are looking for an internship for next summer at that one cool company.

It is the passion, and the willingness to take a risk on something you believe in that I really hope they take away from this course. Too often, our Lutheran midwest culture teaches us that failure is bad, something to be ashamed of. What they hear in Silicon Valley is that not trying is far worse. Everyone here has stories about failing. One, two, three or more startups that never made it. The reasons are as varied as the people. Something like 90% of newly started companies are not successful. But, people learn from their mistakes, move on, and do something new, sometimes they do something great. Always, they are trying to make a difference. If they learn nothing more than that, the course will be a success.

there is no cure for curiosity

Curiosity is the cure for boredom. There is no cure for curiosity. We began our day with a visit to PR firm, Schwartz MSL, Bryan Scanlon gave the group a great overview of the players in the PR space and how PR companies work. The tagline for their group may be something like “telling stories that matter.” I like this and it resonates well with a lot of the career advice people are sharing with the students.

In fact Bryan told a great story about his brother that really helped emphasize the message that you have to find a real world outlet for your skills and then use your skills to develop something real, something that you can tell a story about.

Bryan’s story was that at an interview for an engineering job his brother was asked to glue together two PVC pipes. A pretty practical, maybe even mundane, task for someone applying for an engineering job. However his brother took stock of the situation and said he couldn’t do it. “Why not?” asked the interviewer. “You don’t have any cleaning fluid” was the reply, “without cleaning fluid I can’t do a proper job and the joint won’t last.” He was hired.

Lunch time was great as Gage, Dylan, and I went to an Irish pub called Irish Times. The outstanding feature of this pub is that they had the Arsenal game on all of the TVs during lunch today. The arsenal were taking on Aston Villa, in a game we needed to win to retake “top of the table.” In a stroke of good luck I got to see both Arsenal goals before we had to take off for our afternoon meeting.

The afternoon meeting was at Hatch Today, a co-working space that houses many many small companies. We visited for over an hour with Eric, one of the co-founders of Sqwiggle. Eric is young, energetic, has a thousand side projects going, and is the epitome of young founders here in the area.

The software that sqwiggle produces is somewhat like Google Hangouts, but the video is only in black and white and only updates every 10 seconds, unless you are actively in a conversation with a co-worker. The idea is you can have sqwiggle on all day, without using a ton of bandwidth, and your fellow workers can see when you are in your office. If they need to have a quick conversation, they just double click on you. This allows for good interaction in a company that is totally distributed. Sqwiggle is a great example of such a company. One founder is in the UK, one in San Francisco, and one of their developers is Luther alum Cam Webb, currently in Atlanta, but soon to move to Des Moines. I think many of us were skeptical of the idea until we met with Eric, saw it in action, and learned a bit more.

Many of the themes we’ve been hearing about were repeated by Eric this afternoon, but I would like to highlight one that has not been mentioned yet. Measurement Eric showed us the company dashboard. Very cool, how many user, how many paying users, how many active users, revenue per month. All great metrics to run the business by. In addition he talked about other metrics they are collecting relative to the details of the software. This is a really important lesson. If you want to really improve something, you need to measure it. For example, bandwidth usage, number of active users in a conversation, you need to set goals, and then work on designing your software to meet those goals.

student blogs

A few people have asked for the links to the students blogs. Here they are:

a golden bike ride

What a great day for a bike ride! We rented some bikes at Blazing Saddles, right next to the hotel. Then took off for the golden gate bridge. It was a beautiful day and no surprise, the bike paths were very crowded with all kinds of people enjoying the outdoors and the scenery.

About half of the group above rode across the bridge and back. Here is me leading the pack.

The other half followed me further on into Sausalito, with the goal of making it to Muir Woods. The second half of the trek started off very nicely with a long downhill. which was quickly followed by a steep uphill. All well and good until my riders started to figure out that “what goes down must be climbed back up!” The ride flattened out through Sausalito and beyond so it was a nice easy ride for a while. But it was getting to noon, and we’d already ridden about 12 miles. I misunderstood the directions from the bike shop and thought we had about 12 more to go. So, since the guys all had tickets to Alcatraz and had to be ready to board by about 3:30 we decided to turn back short of our goal. It turns out we were much closer and could have made it to the redwoods! Bummer.

In any case, we rode just over 25 miles, and it sure felt good to be on a bike outside again!

the starlight coastal

A 23 hour train trip? At some point that seemed like a really charming idea. Eight hours in, I’ll say that the bloom is off the rose. Its been a nice ride, and a good chance to catch up on some reading and blogging but for the most part its just a long ride on a train full of people. The views have been OK, but it is now dark outside.

how many trees in the state of washington?

What? There is no real way to know the answer to this question, but it is one that was posed to the group today. How do you handle uncertainty? How do well do you think on your feet? This is a typical interview question used by many high tech companies. At Luther we might ask prospective faculty, “how many cornstalks in the state of Iowa?”

This question definitely stumped a few people in the room, but others got the idea quickly. This question isn’t about getting the right answer. There is a right answer, but nobody could tell you exactly what it is. There is definitely a wrong answer: “I don’t know,” or “Its not possible.” are two examples of the wrong answer to this question.

So what do you do? You have to make some assumptions. What fraction of the state of Washington is forested, what is the density of trees in the forested area. If you use some reasonable numbers for those two items you can make a reasonable, and defensible estimate. That is something that startups have to do every day. Use the information they have available, and make their best guess. Check the assumptions, and be ready to refine the answer. This is not just true of startups, it is true for all businesses, projects, and life.

Here are a few more highlights and themes from today:

  • When you interview, have a story. I’ve been telling my students this for the last several years, but it is much more compelling when you hear it from someone who is actually making hiring decisions. The story should be based around something you have built or designed yourself.

  • You can have the best technology and still fail in many different ways.

  • What is the one core competency of your company? Starbucks was not coffee, it was training, so that customers had a consistent experience. McDonalds was not making burgers, but rather distribution.

  • Finally, it takes four kinds of people to make a successful startup:

    • The Visionary

    • The Builder

    • The Designer

    • The Closer

One person may take on multiple of these roles, but you have to have them all in order to be successful as a company. The Visionary is of course the person who is looking ahead five years and setting the direction. The Builder, owns the solution space. Builders are part of a spectrum. Architects – Hackers. Architects want to have a good strong lasting implementation, and tend to plan the whole system out before coding. Hackers, tend to code as they think, and the best of them have an idea coded by the end of the meeting where it was first introduced. Where are you on that spectrum? The Designers interpret the vision to the builders, they own the problem space, and understand the user experience. In the best case, the builder and the designer are the same person. Finally, the Closer, usually a sales person, often also the CEO is the person who can close the deal.

  • The better a company is at serving their customers, the less likely the are to change. This of course goes against every lesson Steve Jobs and others like him taught us. You need to make yourself obsolete before someone else does. In an aside, I think this lesson right here is the achilles heel of higher education.

jterm 2014 - day 1 at amazon

Jeff Bezos likes to talk about technology and civilization and where we are at in terms of the analogy that we are still at “Day One.” He recently observed that we are so early in Day One that the alarm clock hasn’t even gone off yet.

With new technologies, it’s very tempting to think that you’re further along than you are. But usually, you’re more primitive than you think. My guess is we’re still pretty primitive. We as a society, as a civilization. I doubt we have figured out the new technologies very well yet. At Amazon, we’re doing our part in trying to push things forward, but I have the feeling it’s Day One.

And so it was that we found ourselves in the building called Day One South, meeting with our very gracious host Sam. This was a great way to start, and although Sam had not been prompted in any way about what to say, he hit on some of key themes for the students to take away from the course:

  • Passion – You are going to work long hours, so you want to find a place to work and a job to do at that place where you are passionate about whatever it is. If you aren’t excited about it, keep looking.

  • Culture – This part of the discussion brought back both great memories and ulcers in my stomach from the days when Amazon was a Net Perceptions customer. I’ve never been pushed harder than I was by Jennifer Jacobi (JJ) when she was my primary contact at Amazon. She challenged us, held our feet to the fire, threatened to dump us, and ultimately helped us create a better product. Apparently this is how Amazon treats all its suppliers.

  • Risk – High tech companies are full of risk takers. Sam was no exception as a young graduate who simply moved to Seattle in search of a job. Years later he is still at Amazon. Many more years later than he expected.

After our meeting with Amazon we found a coffee shop where we could take over a large table and had some group discussion. I told my own story of Net Perceptions, which I should probably write down here soon, and tried to relate my own experience with the themes I want the students to look for over the next three weeks.

envisioning the future

Today was a big day. The Microsoft mother ship.

We began our visit with an hour in the Envisioning Center, this is Microsoft’s take on the future, 5 years out. There was some pretty cool stuff in there. If you’ve ever drooled over the fancy table on Hawaii Five-O where they can flick things from phone to table, table to screen, etc. You have a pretty good idea of where Microsoft thinks the workplace of the future is headed. I’m there, I want it. I’m already imagining myself walking into the classroom, iPad in hand, and flicking a copy of where we left off last class from my iPad to the board. Wait, thats a bit of a mixed vision, I’m pretty sure they were surface pads, not iPads. But you get the idea.

After the Envisioning center we moved to another of the 128 buildings on the Microsoft campus where we had time to have our daily group meeting and book presentation. We were escorted by Tina Wang, and she joined in to the discussion of Sara Lacy’s Once you’re Lucky, Twice you’re good. Tina works as part of Enwe’s group, but is the only one here in the US. After our lunch we had a really fun talk with Neil Leslie, who shared a lot of wisdom with the group. And finally Dave Maltz joined us for a final hour on scaling up the data center. Its fair to say that by the time Dave was done everyone had soaked up about as much information as is possible for brain to take in one day.

A couple observations. This is not the Microsoft of the 90’s. The Microsoft that I knew and worked with at Net Perceptions were, well, to be blunt, they were bullies back then, because they could be. I get a real sense that is gone. Instead they talk of change, how they need to compete, and if you’re comfortable, you shouldn’t be there.

Returning to key themes:

  • Passion: I don’t think I need to say more about this.

  • Projects: I’ve told my seniors this for a few years now, but it has a lot more credibility coming from an outsider. You need to have a project to show when you go to interview. Bring an app you have built on your phone. Show a website you have developed on the browser. Be prepared to talk about the challenges, trade-offs, and succeesses you have had in developing your project.

  • Linked In: This is a critical tool for finding a job. If you are a CS junior or senior and have not created a LinkedIn profile. Do it now.

  • Failure: We heard a lot of stories about failure today, and we will continue to hear of them. Startups, started and ‘buried,’ products and projects that failed and never saw the light of day. The most important message, that I hope students get from this trip, and talking to a bunch of successful people, is that failure is OK. Fail Fast, and learn from your mistakes. It is a cliche to say that you learn more from failure than success, but it is true.

In the evening it was fun to unwind with our first group dinner. We met up with recent Luther Alum Jake Nowosatka at Cutters Crabhouse. Its at the far end of Pike Place Market.

chapel talk - 11/4 nehemiah 13 1-3, 23-31

This is the text from my chapel talk yesterday. The video (mostly of the top of my head) can be found on the Luther Portal. Make sure you go to the On Demand tab and look for me on November 4.

I’m going to begin today with a slightly different opening litany than we have become accustomed to: When my friend Ann Highum asked me to switch days with her I said “sure” after all one days reading can’t be that much harder than another. Then I got the email from Pastor David. It contained three very ominous words: “these troubling texts”. Not to mention that our reading today is from the book of Nehemiah. Lets begin with our reading:

On that day they read from the book of Moses in the hearing of the people; and in it was found written that no Ammonite or Moabite should ever enter the assembly of God, 2 because they did not meet the Israelites with bread and water, but hired Balaam against them to curse them—yet our God turned the curse into a blessing. 3 When the people heard the law, they separated from Israel all those of foreign descent.

OK, discrimination, xenophobia, that sounds troubling enough to get started. We’ll come back to versus 23-31 in a moment. This is not your typical sunday school reading. Who are the Ammonites or the Moabites? What did they do to deserve getting kicked out? I think we might need a bit of context.

Now it turns out that the book of Nehemiah is essentially a blog written by Nehemiah himself, who was the cupbearer for King Ataxerxes. So I thought as a public service I would try to give some context to todays reading by condensing Nehemiah’s blog posts into a series of tweets. A sort of Twitter translation of the bible with commentary from yours truly. Nehemiah himself goes by @cupbearer21 in case you want to follow him on Twitter later today.

Posts from the month of Chislev:

Brother Hanani came to Susa today, brought visitors from Judah

OMG the wall of Jeursalem is broken and the gates destroyed by fire! #JerusalemFire

I’ve been weeping, fasting, and praying for days. Still distraught over the fire in Jerusalem. #WoeIsMe

Next, we get some insight into the incredible guilt and potentially inflated sense of self importance that @cupbearer21 must feel:

Can’t help but feel that the #JerusalemFire is my fault! Me and my family must have offended @God.

Now we skip to the month of Nisan

AtaXerxes told me to buck up. I guess he can tell I’m still sad over #JerusalemFire

Just days later we get the following:

Holy career path! @ataxerxes granted my request to go to Judah and rebuild the walls of Jerusalem! #ClimbTheRoyalLadder

Now to be sure that he does not encounter opposition on the journey he tweets:

If anyone doubts me here’s a link to letters from @ataxerxes granting me safe passage and timber from the royal forest. #TheKingsGotMyBack

But Nehemiah’s glee is short lived, just days later we learn:

Curses! @TobiahtheAmmonite is not happy with me. He will try to foil my plans for rebuilding the wall!

Ahh, so we have a bit of dramatic foreshadowing on this deal with the Ammonites. Our story continues:

Snuck out tonight to inspect the walls on my own. #ThisPlaceIsAMess

Following the inspection, its time for the work on the walls to begin in earnest, but Nehemiah needs workers so he tweets out a plea for help:

Join me! we are going to rebuild the walls! The hand of my God is gracious!

 To which there are hundreds of replies of the form @cupbearer21 count me in!  @cupbearer21 tools ready to go, The hashtag #RebuildTheWalls was definitely trending that day.

But not everyone was on board with Nehemiah’s plans: @SanballatTheHoronite and @TobiahTheAmmonite and @GeshemTheArab who basically responded

@cupbearer21 WT——H

@cupbearer21 Who do you think you are? Are you rebelling against the King?

Nevertheless, Nehemiah we can tell work is proceeding by the status updates:

High priest @eliashib doing good work on the sheep gate

Sons of @hassenaah rebuilt the fish gate today

and so on with tweet after tweet of progress from around the city.

Of course in typical twitter flamewar fashion we see some retweets from our old friends @SanballatTheHoronite and @TobiahTheAmmonite

Ha! what are these feeble Jews doing? Do they think they can rebuild the wall in a day1?

And from Tobiah,

That stone wall they are building — any fox would break it down! #I’llHuffAndI’llPuff

To which Nehemiah replies

Oh @God, do not blot out the sins of @Tobiahtheammonite #FireyPitForYouDude

Some days later:

Big day today!! Walls back to half their original height!

But even with all of that progress those darn Ammonites stirring up trouble again.

Emergency! We need families NOW to guard the walls against @sanballat and his ilk. #NeedMoreSpears.

And although you might think I’m making this one up, Nehemiah has been so busy that he tweets:

I’m starting to smell, its been weeks since I put down my spear and changed my clothes!

After all that, Nehemiah shows that he is a guy who can get things done. After just 52 days he tweets

At last, the wall is done! #PartyAtMyHouse

With the wall rebuilt, Nehemiah gets an interesting assignment:

From @God: Hey! @cupbearer21, You should use your analytics and do a genealogical and demographic analysis of the people

At this point there are several chapters of names of Levites, and prophets and lineages of various families. Clearly ancestry.com could have saved a bunch of time.

So, rebuilding the wall is clearly the signature accomplishment of Nehemiah, But even with all of his success as governor, Nehemiah doesn’t take advantage of food and land allotments that were allowed him, because there was already such a great burden on the people. He also made the other nobles and officials forgive all outstanding debts and ordered them to return all land and money that had been taken as taxes so the people would be able to feed themselves and their families. To keep everyone happy he organizes covenant day which is summarized in the following tweet:

Covenant day! #TithingIsGood #OfferingsRock #FirstBornSonsToGod #FirstOfEverythingToGod

Which brings us again to Chapter 13 and these troubling tweets:

Much reform is needed @Elishib and @Tobiah have made a mess of things #NoMixedMarriages #KeepMarriagePure

Kicked out the foreigners #KeepTheIsreaelitesPure #PureJerusalem

And in what must have felt like the ultimate victory for old Nehemiah:

I chased @Jehoidia son-in-law of @SanballatTheHoronite away! He is gone from the city!

To which I now might imagine a response out of the future:

From @JCSofG, Wait, What!? No No No! #EatWithTaxCollectorsAndSinners! #BadNehemia

So, does our story for today all come down to Nehemiah getting his revenge on the Ammonites for trying to thwart his efforts to rebuild the walls of Jerusalem? It sure sounds like it. The sad thing is that In many ways this story seems all too familiar. Take out Nehemiah and Insert the name of your favorite ruler:

  • Humble beginnings

  • Great accomplishments and rise to power

  • Power goes to the head

  • Stupid policies

Whats maybe more interesting to me is why this particular verse is the verse for the day, with all of the good things Nehemiah did, why highlight this one idiotic policy? Maybe simply to remind us that tolerance is a good thing even when times are tough.

I’ve spent a lot of time this last week trying to answer the question, where’s the grace in this story? I think maybe for us and for Nehemiah it really does come down to his final tweet:

Remember me @God for the good I have done!