People keep talking about the decrease in venture investing, and how the VC financing model is out of whack:

"Because venture funds invest not just in all the wrong places, ignoring clear supply and demand signals - but, worse, in all the wrong and same places. Where one pioneer invests, a slew of imitators follow, and so tremendous amounts of cash are poured into the same business design or market space - ad exchanges, social networks, and blogging/vlogging platforms to name just a few recent fads. That striking homogeneity reflects an almost total lack of strategic imagination by venture players."

- Umair Haque via Kortina.

Umair wrote about this twice--here and here.  Umair's a smart guy, but, like a lot of other people, he keeps blaming this on VCs.  Is it me, or aren't the entrepreneurs the ones who are supposed to be innovating and creating markets, not VCs?  VCs don't innovate.  They fund the innovation of entrepreneurs.  When I hear "lack of innovation", I'd guess there's a problem with the source, not the source of funding.

He piles on with the VC finger pointing:

"Why does President-elect Obama have to invest a likely trillion dollars to renew... auto, energy, healthcare, education, finance, and agricultural industries... Because today's crop of apathetic, risk-averse venture investors didn't."

"How many new industries or markets have venture funds created in the last decade?"

"...tomorrow's sources of advantage remain largely unexplored - because venture investors have been systematically underinvesting in discovering them"

When I hear people complaining about VC's and the venture capital model, my first thought is, "Are there amazing, innovative companies not getting funded because there's something wrong with the VC model?  Is there a viable entrepreneur with a groundbreaking idea who can't get cash for it?  Who??"

Honestly, most people's ideas just aren't that good... and then even if you have a good idea, the chances the you have the means to turn it into a real business is pretty slim.  Frankly, I'm amazed that any profitible new and innovative companies *ever* get build--its not easy.  The idea, though, that such businesses exist, but outside of the scope of what "lemming" VCs tend to invest in is pretty ridiculous.

He keeps bringing up the auto industry, but aren't there a bunch of VCs in Tesla?  Is there reason why that's the only auto startup I know of a function of unwilling VCs or is it a lack of capable entrepreneurs willing, able or interested in starting a car company from scratch?

Umair has never sat on the other side of venture capital deal flow.  Trust me, it isn't pretty.  It's not the VCs that are myopic--it's us entrepreneurs.  We're the problem.  We're the ones coming up with the "me, too!" businesses, and before you say, "Well, that's because that's what is getting funded", if you're an entrepreneur who creates businesses based on what you think a VC will fund versus things like value creation, potential for distruption, your own passion, then I'm not really sure how successful an entrepreneur you're likely to be.

Just look at entrepreneurship education in this country.  We spend more time teaching entrepreneurs how to write business plans than we teach them about passion (or teach them how to fuel it) or about the underlying technologies they're supposed to innovate with in the first place.

When I look at stats that say that VC investment is down, I think first about how deal flow is probably down, too.  When the economy turns, the liklihood that someone with a good idea is going to take a risk and jump from their cushy job somewhere goes down, too--understandably so.  I see lots of people complaining about the lack of financing out there, but honestly, I haven't seen one single deal that cannot get financed because VC doors are shut, VCs are risk averse, VCs are stupid, etc.  There are some deals that got financed on previously screwy terms and entrepreneurs might not want to take a round that reflects current market conditions.  That's a different story.  But seriously, where are the amazing ideas that can't get money?

I've hardly seen any innovation in the education space.  This is not a VC problem.  Most of the education ideas I've seen are marketplaces for learning and the most innovation I've seen in learning recently is on YouTube and Slideshare.

The tendency to blame the people with the money in this country is rampant.  We blame the Wall St. collapse on "greedy CEOs" and "predetory lenders".  Seriously?  I don't recall any lenders physically threatening me to try and get me to take their balloon payment/ARM combo loan back in '05 when I bought my condo.  Silly me.  You know what I did?  I made myself a financial model to figure out what my payments would be and made sure I could afford my payments.

Even this Madoff mess.  The fact that people threw the bulk of their savings to one money manager, even though they couldn't explain how he was making money, is ridiculous. 

If anything is going to change in this country, it needs to start with personal responsibility.  Don't invest in things you don't understand.  Don't eat more calories than you can reasonably burn off.  Don't blame VCs for not backing you when your idea isn't particularly innovative or doesn't have potential. 

Umair's posts get quite a fair bit of traffic...  You'd think that he'd be seeing the occasional groundbreakingly innovative entrepreneur with a great idea and he'd post a few times and say, "Like this company... here's my example... great idea, but VC's are too stupid or risk averse to invest in it."

I think it's very telling that the people who complain that VCs don't invest in the right stuff can't put to exactly what ideas they should be investing in. 

"Detroit should take a page out of Pittsburgh's playbook. In the 1980s, the state used local universities to pour funds into technology research. What blossomed was a thriving entrepreneurial community. The largest industries? Computer software, biotechnology, education and health care, all of which have held up well of late.

To be sure, Pittsburgh reinvented itself during a run of prosperity. It didn't happen overnight and it didn't happen without a tremendous amount of federal, state and local support and vision. Skilled workers who couldn't make a living in Pittsburgh moved elsewhere, to thriving cities like Phoenix and Vegas."

L A Z E R O W . COM: Will you be Pittsburgh or will you be Detroit?

So I've been chatting with a lot of local city government folks about ensuring that NYC thrives as an innovation center--and I've yet to hear how any of these plans tie into education at all.  All the governmental types are worried about money and space, but if there are no brains to feed with the money and no brains to put in the spaces, what good will it all do?

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If there are any extremes about my personality, it's my lack of social tolerance.  I don't mean about people's backgrounds or lifestyle choices--I mean personalities and actions.  If I don't want to be somewhere or don't want to be around someone, I have less tolerance than anyone I know for putting up with people I don't particularly care for. 

And that often means I tend to make bigger deals over things that other people don't see the harm in--particularly in relation to the NY tech community.  I'll call out people that I think are self-interested and I don't feel the need to "network" with anyone because I think they can do something for me.  I just try to spend time with people that I actually like, respect, find interesting--which is why I'm never surprised when people compliment me on who I know.  I get a lot of "Hey, I met so and so... they're really great..."  

Yeah... um... that's why I'm friends with them--not because I think they can do something for me.

I'd rather spend the majority of my time with people who have the right motivations and intentions and that I just really really like.  Life's just too short and there's not enough time to feel overly socially obligated to be "friends" with everyone--even the people you feel so-so about.

Contrast my near unwillingness to bite the networking bullet with people I don't care for with my willingness to help--to bend over backwards for--the people I do care about, and you'll get what I imagine to be very contrasting opinions of me depending on who you ask.  Just about everyday, I get at least one instance of someone thanking me for my help or for being nice, and at least one instance of someone saying I'm being mean, grouchy, or unfriendly.  Time and time again, I've been willing to help out entrepreneurs who take the time to actually get to know me, build a relationship, or whose efforts I actually have some relevant knowledge about.

This is how I want it.  It's because I agree with Ayn Rand when she said, "[T]he person who loves everybody and feels at home everywhere is the true hater of mankind. He expects nothing of men, so no form of depravity can outrage him." 

I really love a good number of amazing people in my life, but love and admiration has no meaning if you really think everyone is great in their own way.  Sorry, some people are just taking up space--a net negative on their environment.  Some are dangerous, and others are just distractions and time sinks.  Because of this, I very actively seek out great people to spend my time with, and actively weed out, call out, and refuse to engage with those that add little, no, or negative value.

It's like the a long/short hedge fund.  If you really want to go long on some people--build relationships, engage, spend more time on--then why won't people go short, and cut people off.

Too many of my friends get caught up with people they'd rather avoid, but don't want to make waves or cause trouble.  We're so obsessed with trying not to hurt people's feelings that we're willing to spend disproportionate amounts of time on people that drag us down or just sideways, but definitely not boost us up.  This happens in relationships all the time...and we think there's no cost, until we realize all of the other people, like family, and activities, that we could have otherwise spent time on instead of someone that doesn't make your life more fantastic with every second you spend with them.  It's like TechCrunch.  How many people feel like they have to read it, even though they don't have the least bit of respect for the behavior of the guy behind it? 

Social media magnifies the cumulative effect of this exponentially.  If you're following over 500 people on Twitter, how many amazing people are you not paying enough attention too?  The incremental effort it takes to pay attention to the least additive 20% of your network could add up to a weekly or monthly extra phonecall or personal email to the most amazing people in your life--and that could make a huge difference in your most important relationships. 

If you're running groups and communities, focusing on aggregate numbers versus quality, signal to noise, or engagement can bring down the whole network.  You don't need 100 people to show up to your Meetup--20 fantastic and extremely relevant people will do.  Part of the equation here that makes this work is that word of mouth has never been so fast and so cheap, so what you really want is a strong initial signal, because it will indeed get magnified, and received by right folks in a hyperconnected world. 

2009 is going to need to be a year of focus for people--to spend their limited resources on the things that matter most of them.  I hope that people realize that their time and emotions are some of the most precious resources they have, and that they become a little more discerning about how they spend them.

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"Heart disease, diabetes, prostate cancer, breast cancer and obesity account for 75% of health-care costs, and yet these are largely preventable and even reversible by changing diet and lifestyle."

Deepak Chopra et. al.: 'Alternative' Medicine Is Mainstream - WSJ.com

IMG_2359, originally uploaded by ceonyc.

How do you submit to Cute Overload?

How many of you live in fear of the day when your favorite media sharing service, be it a blog or a photo or video site, sends out the dreaded "Download your crap before Tuesday because  we're shutting down" message?

With monetization of many sites proving somewhat difficult, its only a matter of time before more of them go belly up.

Or what if it's not a belly up--but just a fuckup.  You think your photos are safe at Yahoo?  Given all the upheaval and turnover at Yahoo!, Flickr is nothing short of a PR nightmare waiting to happen. 

"All your photos are gone.  Ooops!"

I feel the same way about Typepad.  It's pretty hard to replace nearly five years of blogposts, and I'm sure there's probably some way I can export them every so often, but that's a pain.

The major flaw is built into the hosted web services model--the hosting is always tied into the service.  I recently rediscovered the awesome editing ability of the Motionbox service--but do I trust they'll be around forever and be a safe place to keep my stuff?  Not so much--and that's the hurdle that a lot of these startups face.  People aren't willing to trust their valuable bits to an unprofitable startup.  Enterprise startups face the same issue, with corporate CIO's telling companies "Sure I'd like to roll you out across the company, but what happens if you guys don't make it."

I'd like to see more companies start reselling me storage at Amazon.  I trust that Amazon, tied to a boring old e-commerce cash cow, will be around.  I'd be more willing to try new media sharing services if I knew that they were all just a layer on top of my existing choice of cloud storage.

As an alternative, how about a service that backs up all of my online media to Amazon automatically.  We already have Mozy for desktop docs, but more and more of our lives are going online.

As it turns out, my friend Rob May is building just that--Lifestream Backup.  The service isn't live yet, but it will be soon.  So if you're concerned about your Flickr photos, Facebook shots, videos, blogposts, etc... Check out their quick survey and sign up to get notified when they're live. 

I want my face on my next cake, originally uploaded by ceonyc.

At my friends' kid's 1st bday party.

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The whole idea of Salesforce--a hosted, scalable service that grows with you from a single user to thousands of people--is great, but in practice, it's really not conducive to being used at a startup.  I logged into Salesforce today for the first time in a while... and I'm very close to just cancelling my account and considering it a failed experiment--at least for this startup.

The Professional Edition I'm using is advertised as "Full-powered CRM without complexity", but because it's not full-powered, some of the tools out there that could make it less complex to use aren't available to me.

Salesforce is undoubtedly a great product for larger organizations.  I've seen it implemented with great zeal at Oddcast, where the name of the game was sales to agencies, and everyone had Salesforce plugged into Outlook.  Return Path, the company that we're squatting at, uses it, too.  In fact, they have a couple of people dedicated to managing it--and they have a very organized process for converting lists of leads into sales opportunities. 

I'm in a very different situation now.  I'm the one non-coder at my startup--and hence the only person with a Salesforce account.  Most of my "deals" are more about strategic partnerships than revenue, and so it's hard to quantify the value of using a CRM.  Even so, I put a lot of effort into loading and tagging all my contacts so I could use it, and setting up custom fields.  I was determined to be very organized about our opportunity management.

It didn't work, for a couple of reasons--mostly having to do with the creation of new contacts.

One of the most valuable features of Salesforce is to be able to attach e-mail interactions to contacts.  The only problem is they have to be existing contacts.  When you're a startup, however, most of your interactions are going to be with new people.  Constantly adding new contacts to Salesforce when you're the lone business guy at your company is a tremendous time sink, not to mention difficult to keep up with. 

But there's hope--but only if you can afford it.

For one, Salesforce is easier to use if you can plug it into your e-mail client--only how many startups do you know that are using Outlook?  Tons of startups are using Thunderbird, but Salesforce doesn't support it.  Granted, Thunderbird doesn't have nearly the installed base that Outlook does, but the base that it does have is a key innovation community that Salesforce should want as clients.   There is an effort for a community developed plugin, but it only works with the set of APIs that Salesforce makes available to its Enterprise and above versions...  i.e. at $1500 per year per user.  Sorry, I just can't afford that.

It's odd because the very features that make it easier to use are only available to companies who can actually afford to have someone managing and inputting contacts.

That's not the only useful tool that can only be accessed with that version.  The awesome folks at iHance have created an automatic contact creator.  I saw it demoed and it's nothing short of a Godsend!  You bcc your in and outbound e-mails to it (solving the lack of Thunderbird support issue) and for any e-mail contacts it doesn't recognize, it keeps them all in a holding pen for you to create new contacts with a dropdown and a click.  So, what used to take almost a minute for each new contact, can now take a minute in total for all your new contacts.

Unfortunately, the APEX API's needed to make this functional don't work in the Professional version I'm using, which isn't cheap either. 

If you've ever signed up for Salesforce, you'll realize why there's no freemium version--everything they do is insanely high touch.  You can't even sign up without getting a phone call from them.  I wanted to try to add on Windows Mobile support, and I have to type my name and number into a field so someone can call me.  I'm one person!  Trust me, Salesforce, it's not worth the phone call--especially if you don't have a level of service most startups can reasonably afford and tools they can use.

I'm currently looking into PipelineDeals, which looks pretty cool, but they've got that same contact creation issue.  I don't want to spend all my business development time typing new contacts into a database.  To their credit, though, they have a much more startup-friendly pricing structure and no contract lock-ins, unlike Salesforce. 

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"The discrepancy between the grandeur of the failure and the stature of the man is a puzzlement. We are still trying to compute it."

Op-Ed Columnist - A President Forgotten but Not Gone - NYTimes.com

"Try to frown on a waverunner..."