Quite a few readers have asked for more posts around Venture Philanthropy. This is consistent with what Peter Drucker predicted in the early 1990’s. In a variety of books and articles, he wrote that the there would be a growing base of people with wealth, much of it gained through entrepreneurial activity. He also said that this wave of new wealth would begin to look for ways to make an impact in more societally beneficial ways. They would realize that success and wealth are hollow without meaning. He said that we would see a wave of venture philanthropy, where people began to apply their entrepreneurial skills towards solving the ills of the world. The not-for-profit model is broken and there is a massive amount of new capital pouring into it. However, this time, it will have a lot attached to it.

As I have written, I think that Warren Buffett’s recent moves are a water shed event in Venture Philanthropy. In a very telling Forbes article on Pierre Omidyar’s Foundation, it lays out the justification for a new approach to Philanthropy. One in which time and involvement is, in fact, more important than just the money. As many have commented, unless things change, they could easily spend $100 million and have no impact on the world.

Entrepreneurs are successful in business not because of money or because of good intentions. They are successful because they will companies into existence through determination, vision and hard personal work. Why should we expect dealing with societal issues, which are often even more stubborn and difficult, to be any different?

This is a very exciting time in the world of philanthropy. This chapter will be right up there with the Robber Baron Era with Ford, Rockefeller and Carnegie. I will post tomorrow on what I think this model looks like.

Slowly but surely, I find myself becoming a commencement speech junkie. Perhaps it is because we all look for inspiration and affirmation in our lives. Anna Quindlen is one of the most talented columnists of our generation (in my humble opinion). I came across this speech by chance when I was trying to chase down the Lennon quote for my previous post (never underestimate the power of serendipity…). You can click on a transcript of her Villanova Commencement Speech here.

To get a sense of the flavor of her speech, I have an excerpt below:

"Don’t ever forget what a friend once wrote Senator Paul Tsongas when
the senator decided not to run for reelection because he’d been
diagnosed with cancer: “No man ever said on his deathbed I wish I had
spent more time in the office.” Don’t ever forget the words my father
sent me on a postcard last year: “If you win the rat race, you’re still
a rat.” Or what John Lennon wrote before he was gunned down in the
driveway of the Dakota: “Life is what happens while you are busy making
other plans.”

You walk out of here this afternoon with only one thing that no one
else has. There will be hundreds of people out there with your same
degree; there will be thousands of people doing what you want to do for
a living. But you will be the only person alive who has sole custody of
your life."

“Life is what happens while you are busy making other plans.”

                                                — John Lennon

Sorry for the delay in postings. I am out in Telluride on vacation with my family which is an internet challenged part of the world. I understand that the main ISP providing broadband to Mid-Mountain has gone under. I am very happy to be alive as my friend took me down the "Ridge" for my second mountain biking experience ever. This is a steep path with slanted rocks and exposed roots that winds through dense trees. I am a much more religious man from the experience. 🙂  Ironically, although he is a veteran rider, he went over his handle bars separated his AC on his shoulder.

Saw Lyle Lovett on Sunday. I have never listened much to him but our friends had tickets. We worked our way to about five rows out in the standing crowd. What a blast we had. I did not realize the breadth of music styles he and his 18 person band (yes, 18) kick out. As I was listening and watching the dedicated fans fully engaged in the show, I was struck by a couple of similarities to entrepreneurship.

1) Substance over style: no one would ever call Lyle handsome. Poor guy will always be known as the Julia Roberts’ 6 month husband. He does not promote or push a flashy image like most in the business, and yet he is an icon in the music world.  In short, he has figured out what his fan base (niche) wants and delivers it flawlessly. Too many entrepreneurs start focusing too early on with PR campaigns. The market will listen if you have something of substance to show or say. Focus on getting your product or service right and the Buzz begins to take care of itself. Apple gets its buzz because its products are so awesome. Push PR with a weak product and it will come back to bite you.

2) Enjoy what you do: it is clear that Lyle really enjoys performing and being with his band. He referred several times how lucky he was to be able to travel with his best friends. I was attracted as much to his attitude and ethos as I was to the music. Traveling from city to city can really be draining (like trying to get a company ramped). You had better enjoy and live for it or it will consume you.

3) Find the best talent: Lyle has an amazingly talented group of performers in his 18 person band. He also let each of them get some recognition and/or solos during the performance (share the fame & success).  Interestingly, other than one or two, no one was under 50 years old. He did not go with the young, hot flashy performers but with proven veterans. His leadership was in getting all of them to perform as a team. Too often, CEO’s drive their teams hard with letting them share in the glory. Dick Costolo does a great job getting all of his core team out in the public eye. Also, too many companies hire hot resumes versus substance.  This requires a much deeper evaluation and care in picking team members as well as a strong focus on fit.

What all of this particularly reminded me of is that the best things in life (personal, work, business, etc) come when you least expect them and from directions you never expect. This is why persistence is so key in entrepreneurship…if you persist long enough, good things will happen. Too often, people either a) drop out before entering the concert hall or b) fail to actively seek to embrace all the opportunities that are out there…

I am a very frustrated Republican. As a result, I am violating a tenant here by throwing up a political post. The far right is pulling the party way too far to the right.The most recent incursion of this over-reaching is Bush’s veto of the recent stem-cell legislation. It is the first veto of his presidency.

Since having our children, my personal view on abortion have moderated. However, as our firm is an investor in one of the leading stem cell firms, Novocell, we have seen the incredible potential that stem-cell research has (and is manifesting). Diabetes, which affects an increasingly frightening number of children, can finally be brought under control. Alzheimers, Parkinson’s, the list goes on.

Bush first banned federally funded research on stem-cells except for a handful of grandfathered cell lines upon coming into office. Unfortunately, many of these lines have become contaminated and have limited value in future research.

Meanwhile, other countries in Asia and Europe push forward aggressively and threaten to surpass our Biotech industry. Also, every day, cells are destroyed from left over fertilization procedures. These are cells that will never become children. However, they have the ability to save the lives of thousands (if not tens of thousands) of children.

Popular opinion supports stem cell research by an enormous margin. Research, nationwide, is impeded significantly nonetheless. Research centers that have bought equipment in the past with federal funds, can’t use that equipment for stem-cell research. Since federal funding accounts for the vast majority of research funding, it is next to impossible to replace these lost dollars.

The elections can’t come soon enough…

For all you budding sociologists (or simple voyeurs), Google Trends is a must. You can type in a term of choice and it will return what region of the US has devoted the largest percentage of its searches to that term. Steve Rushin, at Sports Illustrated, points out that:
— Salt Lake City leads all for "nude volleyball"
— Portland leads for "marijuana" and "jock itch"
— and my backyard, Elmhurst, IL (for US cities) for "sex"
Dive in and enjoy…

Congrats to Dick, Steve, Matt, Eric, Brent, Rick and crew on their recent acquisition of Blogbeat. They say it much better than I so click on this article link for details.

Recently a reader sent me a follow-up email to my incubator post. He had a central question that goes to the heart of commercialization. Why are universities, who have such great research, so inefficient at commercializing it? We have thought long and hard about this very question. We have pulled technology out of well over 20 universities across the network including the University of Wisconsin, University of Chicago, University of Michigan, MIT, Stanford, Berkley, Cal Tech and the University of Texas. I believe that there are five challenges:

1) Difficulty – seed investing is the hardest kind of venture investing there is. You have a prolonged infant mortality phase where you are very vulnerable. Until your product is baked and you enjoy a ramping customer base, you are vulnerable to be being sidelined by the next New, New Thing. Unlike a cash flowing, old line company, technology spinouts walk on a tightrope and many things can wipe them from existence. Failure rates are high (over 50% for VC deals and much higher for non-VC backed efforts).

2) Visibility – not to sound like a broken record, but it is difficult to build a company if you are not sure where it needs to go or what challenges face it. Most university professors have two challenges. They are often regional isolated and they move in academic, not economic circles. It is very difficult to assess what customers want, what new start-ups are coming up or how to get access to strategic partners. Their connections and networks are great for research but lacking for business.

3) Experience base – professors have not done this before usually. The schools that do well have a number of professors who have  gone through the process and can mentor other professors and show them how it is done.  Just like VC’s are lacking in the detailed scientific matters, professors are usually very naïve about what it takes to commercialize their technology. Furthermore, they have great pride in their work and take exception to being told that it is not going to be the next Google or Cisco.

4) Ivory Tower – many professors are in universities because they are interested more in research than in business. Many universities feel that commerce often can corrupt research.   Publish or Perish is more prominent than profits. Culture plays a key role in all of this as do school policies around tenure track and promotion.

5) Applicability – the lion share of research makes much better licensing candidates than start-up fodder. It is usually very niche and addresses a very specific characteristic or component of an business product. It is more feature than company. Not knowing how to assess the difference is an issue so  lack of visibility exacerbates this.

More and more universities are addressing these challenges. They are creating more business savvy commercialization/licensing organizations. Many are also creating small commercialization teams or funds. Trying to find prosing research in a vast universities is like finding a needle in a haystack. These screeners and “guides” are very helpful in a) identifying the technology from the shadows and b) taking a first stab at packaging and prepping it.

People thinking about going into universities often have many of the same challenges. In particular, few have the national visibility, start-up experience or history battling with research cultures & professorial egos.

Suggestions:
1) target professors who are clear thought leaders (nationally/globally renowned in their field)
2) pick a few academic segments and become very knowledgeable about them. For example, if you find LED’s interesting, identify and visit the top universities working in this field (including Asia in this case). Talk to researchers in the biggest commercial players (GE, etc). Talk to analysts, possible customers, etc.
3) pull together deep pockets. Most plays are under-capitalized and often get “crammed-down”. It takes much longer and much more money than you expect. Don’t run out of gas before the finish line. Find out how much similar plays had to raise before getting to self-sufficiency.
4) get one person, who is experienced in doing university start-ups, to run the effort day to day. You need an experienced hand at the wheel early on. This doesn’t need to be a  domain expert but rather a process one.

Good luck!

John Funk and I have been going back and forth regarding Patent Trolls resulting from his posts on In Defense of the Trolls. He jokingly just pointed out a recent Bridge Troll incident (really) in Boulder where a misguided LSD enthusiast set up a Troll Tollway.  

Have I mentioned that I hate Vonage? After all of those witty ads and promising benefits, I was suckered into signing up. I even ported our main line over. How much do I dislike thee…let me count the ways:
1) after 6-8 minutes, calls are often dropped. Really great when you are on hold with Vonage tech support for 30 minutes to work on why your calls keep dropping. You lose that call and have to go back to the queue.
2) it drops callers half-way through voice mail messages so they have to call back twice
3) it takes 1-2 seconds for the Phone Adapter to hook up the IP to the POTS network when people call in. You answer and say "Hello", but because the connection was not made, your caller doesn’t hear you. You have to say Hello multiple times.
4) call waiting from hell. Instead of discretely beeping once or twice, it beeps loudly every 4 seconds until the voice mail picks up. You have to stop talking until Big Ben is done chiming.
5) occasional echo
6) it goes down when our Internet goes down…this has been happening recently as we are having DSL modem issues
7) my wife is extremely displeased with all of this and wants to go back to SBC. However, getting Vonage to give up our number will be quite an ordeal…it is a number hostage.

Am I alone here or does VoIP really stink? Other experiences?

"We must hang together, gentlemen…else, we shall most assuredly hang separately."
                                                        — Benjamin Franklin

Just a reminder that Jason Rexilius’s BarCamp is this Saturday (from 12pm) to Sunday (8pm) at  648 W. Randolph, 3rd Floor. Over 90 people have signed up, with another 30+ as maybe’s. Why is this a key event? Well, pardon me while I diverge…

Evolution is driven by emergent behaviour. This happens when a number of simple entities (agents) operate in an environment, forming more complex behaviours as a collective. This often leads to unexpected consequences. Evolution, as our partner Steve Jurvetson often points out, occurs at the edges this way. The power of the collective (or network) grows exponentially (some would argue actually n times the logarithm of n) with the number of connected members (Metcalf’s Law). The Valley is drowning in networked collectives. Chicago is dry as a dessert. No one in the tech community knows anyone else here.

I have been keen on getting a series of Hack-a-thons and other similar events for developers and techies to get to know each other. Everyone in tech here works in isolated islands. It makes sharing best practices, recruiting, passing industry buzz that much easier. Hack-a-thons are much more than just a social event. People bring their projects and work and co-create/share. The topics are driven by the community and have meat to them. As a VC, I am tired of our local companies searching for months to find a good DBA or coder because our developers don’t have legions of other developers they know/hang out with. This isn’t their fault, but the community’s.

I hope that this is the beginning of a new generation of tech-related, self-forming networking events. If you are tech inclined, attend…