The Shark Tank Blog
August 31, 2009
Or that is the new name a couple of you suggested for this blog. Sorry, not going to happen. However, I do have another Shark Tank post this morning. Did you see the latest Shark Tank episode? Me too. I decided to include a few of my favorite quotes from Kevin O’Leary. The guys is made for TV (and I think he knows it). Surely he isn’t like this in real life, or if he is ‘he is dead to me’…
“You are dead to me if you don’t take the deal” – Kevin O’Leary
“I don’t think you are worth what you think you are worth?” – Kevin O’Leary
“You made be a nicer guy than I wanted to be. And that’s bad.” – Kevin O’Leary
“I give you $300,000 and it doesn’t sell then I kill you?” – Kevin O’Leary
“Wake up and smell the coffee.” – Kevin O’Leary
“You have completely wasted my time.” – Kevin O’Leary
“ What are you thanking me for?” – Kevin O’Leary
“I wanted to fire him and he doesn’t even work for me.” – Kevin O’Leary
“I think I get 110% of your business for $350,000.” – Kevin O’Leary
“When you walk out of her I won’t even think of you.” – Kevin O’Leary
“You are dead to me! You are dead to me!” – Kevin O’Leary
“Opportunity knocked, no one was home, turn around, get out of here.” – Kevin O’Leary
“He’s dead now, he’s gone.” – Kevin O’Leary
“Ladies don’t be savages, we are the sharks.” – Kevin O’Leary
“I love these girls, they are crazy chicks!” – Kevin O’Leary
“You are a black widow in stilettos.” – Kevin O’Leary
“You are dead to me if you turn around.” – Kevin O’Leary
“Ladies it is over between us.” – Kevin O’Leary
First Friday Jelly is Friday (the 2nd Friday of Jan)
January 7, 2009
Just to keep it interesting, SpringStage is hosting our First Friday Jelly on the second Friday of January (the 9th). What do you need to do? Come spend the day and work with us. We will give you a desk, free wifi, a phone, lunch if you call ahead and put an order in with Teressa at 214.550.2002 and community. Get to know other entrepreneurs, designers and people who normally work from homw - work with them for the day. Come for half the day, come for the whole day. 9AM to 5PM - drinks to follow at the High Tech Bar downstairs from the office. We call it a Jelly - you are the peanut butter.
This Jelly will be a very special Jelly as it will be Muse and Ryan free. I won’t be there as I will be on my way back from Amsterdam and Scott will be on his way to San Francisco for the Crunchies (vote for us again: http://tinyurl.com/savvyvote. So if you have been staying away because you don’t like me, this is the perfect time to show up. Former employees, old girlfriends, past investors, creditors and plaintiffs - show up and enjoy the Jelly risk free.
Ryan Roberts (the startup lawyer) and Bradley Joyce (Fort Worth Startup Blog) will be your hosts. Come on down to the INFOMART and enjoy a Muse-Free event. Woot!
What is a Jelly? Think casual coworking as Wired described the idea. The idea is very simple: We invite entrepreneurs and developers from around the community to come work at our offices the first Friday of each month. We provide the desks, chairs, sofas, wifi and you provide your laptop and yourself. Our goal is to get people talking, collaborating and forming lasting connections. We have been tinkering with coworking at Big in Japan with varied success. Our hope is that the First Friday Dallas Jelly will offer a low risk way for people to check out the facility and see if they might like to join us on a more regular coworking basis.
PLEASE RSVP HERE: http://upcoming.yahoo.com/event/1418433/
ShopSavvy nominated for a 2008 Crunchie!
December 29, 2008
I am pleased to announce ShopSavvy, our mobile barcode scanning application, was nominated for a 2008 Crunchie in the ‘Best Mobile App’ category. Thanks to everyone who nominated us. The winner for each category will also be chosen by reader voting. Please vote for ShopSavvy. Voting ends on January 5, 2009 at Midnight PST. You may vote up to once per day.
The 2008 Crunchies is the second annual competition and award ceremony to recognize and celebrate the most compelling startups, internet and technology innovations of the year. The Crunchies are co-hosted by GigaOm, VentureBeat, Silicon Alley Insider, and TechCrunch. Best of all, the internet community is invited to choose who wins.
Want to learn more? ShopSavvy™ is a shopping assistant developed for Google’s Android mobile phone platform and is one of T-Mobile’s featured applications in their 2008/2009 US and EU launch. Users can scan the bar code of any product using their phone’s built-in camera. ShopSavvy will then search for the best prices online and through the inventories of nearby, local stores using the phone’s built-in GPS. ShopSavvy won Google’s Android Developer Challenge and is available in Google’s Android Market. Follow us on twitter. (more…)
Are you going public?
December 22, 2008
I get emails almost daily from people asking, “Is Big in Japan publicly traded?” When I respond that we are private the most common reply is, “Do you plan to go public?” Finally I began asking why people cared. The answer? They wanted to invest.
When I was in my twenties my goal was to be the CEO of a public company; getting my face on the cover of Fortune. Now that I am in my thirties my goal is to generate cash. The Wall Street Journal had a great article explaining why I would NEVER consider taking my company public:
In the name of “fairness,” preventing future Enrons, and increased oversight, Congress, the SEC and the Financial Accounting Standards Board (FASB) have piled burdens onto the economy that put entrepreneurship at risk.
The new laws and regulations have neither prevented frauds nor instituted fairness. But they have managed to kill the creation of new public companies in the U.S., cripple the venture capital business, and damage entrepreneurship. According to the National Venture Capital Association, in all of 2008 there have been just six companies that have gone public. Compare that with 269 IPOs in 1999, 272 in 1996, and 365 in 1986.
Faced with crushing reporting costs if they go public, new companies are instead selling themselves to big, existing corporations. For the last four years it has seemed that every new business plan in Silicon Valley has ended with the statement “And then we sell to Google.” The venture capital industry is now underwater, paying out less than it is taking in. Small potential shareholders are denied access to future gains. Power is being ever more centralized in big, established companies.
For all of this, we can first thank Sarbanes-Oxley. Cooked up in the wake of accounting scandals earlier this decade, it has essentially killed the creation of new public companies in America, hamstrung the NYSE and Nasdaq (while making the London Stock Exchange rich), and cost U.S. industry more than $200 billion by some estimates.
$100,000,000 in early stage cash for Dallas & Houston!
December 20, 2008
With all of the crazy economic news you might have missed the news that Austin Ventures just raised a new $900 million fund in October. Tom Ball and Mike Dodd stopped by our offices on Friday and described their plan to get active in the Dallas and Houston areas. Austin Ventures has reserved $300MM of the new fund for early stage deals. Assuming around $200MM goes to early stage deals in Austin, the remaining $100MM will be focused on companies located in Dallas and Houston. Lets see if Dallas can get more than Houston, deal?
This is AMAZING news. We are hoping to hold a few SpringStage events with Tom and Mike in early 2009. My thought was that they could invite two or three founders from startups who might be interested in talking about their businesses and their experiences with Austin Ventures. If you are interested in an intro or if you have an idea for an event (i.e. that includes Austin Ventures) please ping me directly.
About Mike: Mike Dodd joined Austin Ventures in 2008 and focuses on early and expansion-stage software and web-enabled business and consumer services. Most recently, Mike was SVP of Corporate Development with Omniture, Inc. (NASDAQ: OMTR), a publicly traded analytics and online business optimization software company. While there Mike led the identification, acquisition, and integration efforts around Omniture’s acquisition of two domestic and two international companies which totaled approximately $500 million in consideration. Prior to Omniture, Mike was Senior Vice President and General Manager at MyFamily.com , a consumer online content subscription business. He was also a Partner with Europatweb, a venture capital firm where he worked with companies such as Liquidity Services Inc (NASDAQ: LQDT) and MyFamily.com, and a technology investment banker with Robertson Stephens in San Francisco. Mike received an MBA from Harvard Business School and a B.S. in finance from Syracuse University.
About Tom: Thomas Ball joined Austin Ventures in 2005 and focuses on software investing. Most recently, Tom was CEO and co-founder of Openfield Technologies which merged with Razorgator Interactive Group. While there, he played a key role in securing partnership deals including Yahoo, MSN, eBay, and Knight Ridder. Prior to Openfield, Tom was the Chairman, CEO and Founder of eCoupons (acquired by Lifeminders, NASDAQ: LFMN). Tom also has experience in private equity investing and strategy consulting from his time as a Principal at Discovery Capital and as an Engagement Manager at Mitchell Madison Group. Tom received an MBA from the Stanford University Graduate School of Business and a BS in Finance with honors from the University of Florida.
About Austin Ventures: For nearly 25 years, Austin Ventures has successfully partnered with visionary entrepreneurs and startup executives to build category-defining technology companies. We focus on seed and rapid growth opportunities in:
- Enterprise application, Internet, and infrastructure software
- Datacenter and communications systems
- Semiconductors and components
Our venture capital team typically becomes involved early in a company’s development. The majority of our initial investments occur prior to product availability. Our investments range in size from $100,000 proof-of-concept projects to $20 million expansion capital rounds.
We maintain a rigorous investment process and a commitment to work closely with our portfolio companies. We understand that promising companies need more than financial backing to succeed. As a partner, Austin Ventures provides emerging technology companies with a long-term investment approach, a proven ability to build value at the early stage, affiliate fund support, and access to an unparalleled network of executives, capital sources, and technology professionals. We also work with a specialized affiliate fund focused on early-stage medical technology, healthcare services and healthcare IT companies to explore further opportunities.
Dragons’ Den, annoyingly accurate!
December 15, 2008
Several weeks ago a friend turned me onto a show on BBC America called Dragon’s Den. The premise is fairly simple, five ‘dragons’ (investors) listen to investment pitches from entrepreneurs deciding on the program whether or not they will invest. The show is ridiculous in that it offers real time feedback and negotiation. If entrepreneurs could only be so lucky - i.e. to know if they had a deal before the end of their first meeting. The negotiations for ownership share are hilarious, but ironically true to life. Anyone looking for angel financing should watch this show!`
SpringStage Event Schedule for 2009
December 14, 2008
2008 was a great start for SpringStage. We held fourteen Startup Happy Hour events (total of 800 attendees over the course of the year), AndroidDevCamp, PitchCamp and our First Friday Jelly. Our plan for 2009 is to hold a happy hour the first Monday of each month and a Jelly the first Friday of each month. Additionally, we plan to hold a Saturday learning-style event each quarter. My hope is that you will be able to join us throughout the year.
SpringStage Dallas 2009 Schedule
SpringStage Startup Happy Hour (first Monday of the month). The happy hour is a monthly get together for entrepreneurs interested in building a local startup community. Held at the INFOMART’s High Tech Bar between 5PM and 8PM, the event is the perfect way for DFW entrepreneurs to start each month. Pictures. Address: 1950 Stemmons Freeway, 1st Floor High Tech Bar, Dallas, Texas 75207.
- January 5, 2009 - please click to RSVP
- February 2, 2009 - please click to RSVP
- March 2, 2009
- April 6, 2009
- May 4, 2009
- June 1, 2009
- July 6, 2009
- August 3, 2009
- September 7, 2009
- October 5, 2009
- November 2, 2009
- December 7, 2009
SpringStage First Friday Jelly (first Friday of the month). What is a Jelly? Think casual coworking as Wired described the idea. The idea is very simple: We invite entrepreneurs and developers from around the community to come work at our offices the first Friday of each month. We provide the desks, chairs, sofas, wifi and you provide your laptop and yourself. Pictures. Address: 1950 Stemmons Freeway, Suite 2022, Dallas, Texas 75207.
- January 9, 2009 (second Friday due to New Year)
- February 6, 2009
- March 6, 2009
- April 3, 2009
- May 1, 2009
- June 5, 2009
- July 3, 2009
- August 7, 2009
- September 4, 2009
- October 2, 2009
- November 6, 2009
- December 4, 2009
SpringStage Saturday Events (quarterly). Each quarter we will hold a learning event in the vien of AndroidDevCamp, Barcamp, PitchCamp or WordCamp.
- March 21, 2009 - SpringStage BizSpark Day (Dallas)
- June 12, 2009 - TBD
- September 18, 2009 - TBD
- November 21, 2009 - TBD
Lots of money for startups that don’t need it…
December 13, 2008
Fred Wilson has a post titled, “There’s Plenty of Oxygen in the Air” where he suggests there is plenty of money for startups. I found the post after Scott Whigham commented on my last post suggesting, “Fred Wilson says “There’s plenty of oxygen [cash] to go around”: http://www.avc.com/a_vc/2008/12/theres-plenty-o.h…”
When I suggested that “Entrepreneurs need to stop partying like its 1999” I was referring to early stage startups such as the ones I listened to at the Rice Alliance event. Many of these entrepreneurs needed money to take their idea from prototype stage to production. My point was that they should stop acting like it is reasonable for an ‘idea-stage’ company to raise millions of dollars. If entrepreneurs would, instead, act as though there was no money for their idea and get started building despite of this fact they would be much better off.
Fred’s article refers to later stage deals. First, his most interesting comment is that we aren’t seeing mass business failures this time. Why? He points out that web service companies CAN be terribly capital efficient. With cloud computing available, offshore developers chomping at the bit and fewer and low cost social marketing. It is easy to go into low or no burn-mode. Ironically, when investors see REAL startups with REAL products/services burning little or no cash they are desperate to invest.
So I agree with Fred and Scott, there is plenty of money. My own comment on my post suggested, “Just to be clear, there are lots of investors who want to make investments in cool startups. If you build your business assuming you can’t raise the money, the irony is that investors will be beating down your door. Think: DATING…”
Tomorrow: Speaking at Rice Alliance in Houston
December 10, 2008
Several months ago I agreed to sit on a panel at the Rice University. Located in Houston Texas, the Rice Alliance has launched over 225 technology companies and raised more than $500MM in funding. I will be speaking on the Texas Web 2.0 Bloggers and Innovators Panel - since I write (well sort of) the Texas Startup Blog I guess it makes sense that they asked me. Anyway here is the schedule:
8:00 a.m. Registration
9:00 a.m. Welcoming Remarks
9:15 a.m. Opening Keynote – Jeff Dachis, The Dachis Corporation
9:45 a.m. Business Plan Presentations
12:00 p.m.Lunch and Networking
1:15 p.m. Afternoon Keynote – Jaime Casap, Google, Inc.
1:45 p.m. Elevator Pitches, Session I
3:00 p.m. Elevator Pitches, Session II
3:30 p.m. Texas Web 2.0 Bloggers and Innovators Panel
4:15 p.m. Keynote Address – Bruce Dunlevie, Benchmark Capital
5:00 p.m. Company Showcase & Networking Reception
I should arrive just before lunch, if you would like to connect just send me an SMS at 214.558.1079 (I won’t be checking voicemail and who knows what my email box will look like by noon).
Acqusition Update: Architel and SevenLayer
December 9, 2008
Over the past month I have been working on a deal that has the potential of making Architel (our IT services business) into a very interesting company. As a result (not to mention Big in Japan/ShopSavvy stuff, Whitebox fund raising and even some pending ServiceGuy news) my SpringStage activities (i.e. this blog) have suffered. Of course, that being said I don’t expect that to change until January. In the meantime I thought I would share with you the details of the SevenLayer business (I wrote the following as a blog post on the Architel blog).
On Friday we completed the purchase of SevenLayer™, an enterprise application support business based in Seattle, Washington. The company’s primary assets are a) its Onboarding Team - highly skilled software/infrastructure engineers who specialize in ‘onboarding’ software and b) its proACT and reACT software platform.
The Need: More and more companies are able to secure the services of highly skilled software developers at more and more reasonable prices. Agile development techniques have brought the cost of onshore development to very low levels with offshore development costs being even less. Development outsourcing to India, Philippines, China and Eastern Europe have been a boon to productivity here in the United States and in the West in general. Business owners can use software to solve complex business problems that ‘off-the-shelf’ software can’t handle. More and more companies are using these custom applications to create a competitive advantage. The problem, these applications are orphans.
These orphan applications have lots of parents (developers, internal IT, third-party integrators, external IT and business users). The original developers may be onshore or offshore, but if they are worth their salt they have moved on to new projects. Keeping a developer around for a custom application is very expensive and very frustrating to the developer. However, most are willing to keep their toe in the water, but it is usually very difficult to engage them. Specifically, the internal IT department is filled with highly skilled engineers and technicians who have no idea how and why software functions the way it does. They understand servers, operating systems and off-the-shelf applications like Exchange and SQL, but they don’t necessarily understand HOW they work. They install complex and sophisticated monitoring tools, but rarely do these tools have visibility into whether or not the application is actually functioning correctly. The server may be up, but the transactions it is generating may be getting lost. Third-party integration specialists may understand how the application works, but only at a very highly hourly cost. Business users often become very frustrated because no single party will take responsibility - internal IT suggests, “We didn’t write this thing.” - the developers suggest, “It is a problem with your SQL cluster.” - the third-party resource suggests, “This is going to be great!”
In the past most companies hired their own ‘onboarding’ person ($100K+) who was responsible for purchasing an application monitoring system - usually costing more than $100,000 and $25,000 per year in licensing and support costs. This ‘onboarding’ resource would then ‘onboard’ the application and recruit two or three ‘help desk’ people ($30K+ each) to answer alerts related to the software. Typically these alerts are generated more by the infrastructure than by the application itself and the resulting ‘application’ support is still a frustrating and expensive proposition for the company. Costs approaching $300K year one and more than $200K each year after that.
The Solution: SevenLayer has developed a two-stage model for supporting custom applications. The first stage is called Onboarding. SevenLayer’s onboarding team works with the developers, business users and internal IT to understand how the application works. Once it has a firm grip on the application’s function and purpose the next step is to determine how and where hooks can be made within the software. These hooks are used to connect to SevenLayer’s proACT system. The onboarding team then writes knowledge articles for each ‘hook’ explaining a) what has happened if the ‘hook’ is triggered and b) what to do about it once it as been triggered. The initial target is to have complete knowledge articles for 20% of all possible alerts. The remaining 60% are written over the first few months of engagement. Finally, we build SLAs for various aspects of the application.
SevenLayer’s reACT system becomes key for determining who is responsible for which alerts as well as how quickly (per the SLAs) issues need to be resolved. The onboarding team determines which alerts and tickets are the responsibility of the developer, in house IT and Architel’s support team. reACT allows multiple parties to have varied levels of responsibility over a certain application and avoids much of the finger pointing and blame associated with traditional support. reACT organizes and distributes inbound alerts and user generated tickets based on rules created during the onboarding process. Once an alert or ticket is sent to the appropriate team the agent is then presented with live access to the proACT monitoring system so they can see in real-time how the application is functioning. They are also presented with the knowledge article related to the issue they are dealing with. In many cases the agent can simply confirm the issue and follow the instructions in the knowledge base to resolve the ticket or alert. In the event an issue isn’t covered in the knowledge base, the agent is requested to create a knowledge article related to the resolution or to escalate the issue to our tier three team who will then resolve and document the solution.
Conclusion: More and more companies are building custom applications and these applications are becoming more and more integral to the competitive advantage of these businesses. Architel’s new SevenLayer business can help enterprise clients safeguard these ‘application’ assets at a significantly lower cost. Typical cost for onboarding is $10-20K per application and $5-10K per month for proACT/reACT plus tier 1&2 support - total first year cost between $70K and $140K, with future costs between $60-120K.
Help us launch ShopSavvy in the EU!
December 6, 2008
You may have noticed that I haven’t been writing much over the last few months. There have been a million reasons why, but perhaps the most exciting reason is that we have been busy launching ShopSavvy in the US and UK. Things have been going well, so well in fact that we are gearing up for our EU launch (Germany, Austria, Poland, Czech Republic and Holland). I have hired contractors in each market to help with the translation and localization, but I need more help identifying local and online retailers in each country (especially Austria, Poland, Czech Republic and Holland).
We need your help (i.e. if you live in the EU, have a unique understanding of the retail landscape or work for an online or local retailer located in the EU). Helping us out is VERY simple. Just add the retailer to this form:
http://spur.wufoo.com/forms/eu-retailers-to-include-in-shopsavvy/
Prediction: Angel investing in 2009 will be up?
December 1, 2008
The angel investment market hovers around $12 billion each year. I predict that the turmoil on Wall Street will actually improve the ability of startups to access investments from angels. The logic is fairly simple, wealthy individual investors no longer trust Wall Street, but they still need to invest their capital. Interestingly, the last thirty years have been an aberration for Wall Street’s reputation as a safe place to invest capital. History is less kind to the ’stock broker’ profession; throughout the last two hundred years ’stock brokers’ have had a very shoddy reputation on Main Street. That negative reputation is coming back. With the failure of the major brokerage houses investors may start looking locally to invest their capital. They may seek out ventures in their own backyard where they can exercise some level of control and oversight.
More and more angels I know have been moving more and more funds out of their brokerage accounts and into their bank accounts. This flight to safety will continue for a time, but soon the spector of inflation (i.e. you can’t print $5 trillion in currency without some inflation) will rise and investors will look to invest their money. The lack of professional private equity will only increase the opportunities for angels to make great investments and their access to greater percentages of their own capital will mean startups will get more. What are your thoughts?
Federal Bailouts for Startups?
November 30, 2008
Starting next week I will focus 100% of my writing on positive things happening in North Texas related to entrepreneurship, but until then… I came VERY close to putting my deposit down on a Tesla electric sports car. Check this car out:
According to the New York Times, the company “is requesting $400 million in low-interest federal loans as part of the $25 billion loan package for the auto industry passed by Congress last year.” Really? Telsa, started by one of the PayPal co-founders has burned through more than $145MM in venture capital and delivered 80 cars to date. Does this make any sense? Why would ‘we’ (the taxpayers) invest $400MM in this startup without receiving any equity in return? Is Congress really this stupid? Come on guys, get a grip. And, Mr. Musk, shame on you for asking the question…
Facebook has lost 80% of its value?
November 24, 2008
If the reports are accurate, Facebook executives offered Twitter’s investors $500,000,000 in Facebook stock to purchase the microblogging company. Half a billion for a startup without any sort of revenue model - amazing. The deal fell through for a ver simple reason: Twitter’s investors weren’t sure $500,000,000 in Facebook stock as worth $500,000,000. Twitter’s investors have bet $20,000,000 on the company and would surely accept a 10x return in today’s market (i.e. $200MM in stock). So I suspect Twitter’s investors didn’t think the stock was worth even 50% of that number or they would have taken the deal. The walkaway number would likely have been $100,000,000 - i.e. I don’t think Twitter’s investors would have taken the deal at that number. Facebook’s most recent valuation was $15 billion - Twitter’s investors assumed the company was worth around $3 billion.
Startup Happy Hour NEXT Monday!
Several of you have indicated you will be seeing me TONIGHT at the happy hour. Our next Startup Happy Hour is next Monday, December 1st (the last event of the year). Please RSVP: http://upcoming.yahoo.com/event/1207882/. Of course, you are all perfectly welcome to show up at the High Tech Bar this evening - I suspect there will be more than a couple of people who show up (i.e. people who don’t read my blog); the only difference is that I won’t be buying the drinks.
