Overheard
April 24, 2007
- Boulder-based Intela (previously on our “attention” podcast) acquires its neighbor CrispAds, a blog advertising network.
- Me.dium this months tech startup of the month.
- Anybody want to buy McAfee’s Colorado estate? I decided to pass. ;-)
What is an “active” angel investor, anyway?
April 24, 2007
I just got back from the Boulder Open Coffee Club. I met a ton of people there, it’s a great bi-weekly event that you should check out.
I was talking to someone there today about active vs. passive angel investing and what that really meant. Strangely, I had this exact same conversation yesterday at lunch with the guys from Eon Business. I think the vernacular of “active” vs “passive” falls a little bit short in this context - here’s why.
In my view, I am generally (but not always) an active investor. To me, “active” means that I stay in regular communication with the company by e-mail or in person, and that I know the challenges the business is facing, what its needs are, and am actively looking to help the company in any way that I can on a very regular basis.
I have some “passive” investments where I pretty much just read the quarterly investor email and perhaps offer a few comments or suggestions. But I’m not thinking about those businesses on a regular basis. I’ve found that this style of investing conflicts with my personality, and I plan to do less of these in the future. In one case, I’m trying to convert my passive investment into an active one.
But I think there is a third type of investor engagement that is often confused with “active.” I call it “participating” but I’m sure there is a better word for it. I am on the board of one company that I’m an investor in - I think such active roles (board member, employee, consultant, acting CTO) are a whole different level of “active” and deserve their own categorization. In cases like this, I’m much more involved in the operations of the company and can have a much larger influence on what happens from month to month.
When you’re talking to an angel investor, you should try to get an idea of how involved in your business they want to be and make sure it’s a match. I’ve been guilty of saying vague stuff like “I like to be an active investor.” I now realize that it’s best to clarify what that really means and have started to say stuff like “I’m an active and interested investor, but I generally don’t participate in the operation of the business. However, I would consider an advisory or board seat in certain cases.”
Are your angel investors active, passive, or participating? Which do you prefer? Do you use different terms?
Mr. and Mrs. RouteSmith
April 24, 2007
Denver-based RouteSmith and I make such a good looking couple. Yeah, not that good looking, but still….
I’ve recently invested in RouteSmith, which provides delivery, dispatch and route optimization software as a service. The typical RouteSmith customer is someone like Mattress King or Spencer’s TV and Appliance who does home delivery and wants to save their employees time, reduce fuel costs, and limit driver frustration. I have a background in logistics and fleet planning, and I know the value of efficient vehicle routing and happy drivers who don’t feel like they’re driving back and forth all day long on inefficient human-generated routes.
RouteSmith attacks a very real problem that has long been serviced with high-end software systems that require large up front investments and can’t effectively reach operations with small to medium sized fleets. The SaaS model is perfect for these cases - RouteSmith can deliver real value to customers with very little up front investment of time and money. Customers can usually justify these types of purchases by thinking about the simple ROI involved with minimizing route planning time, but the ROI can really shoot through the roof when you can utilize your existing fleet more efficiently and not have to do things like hire extra employees and purchase more trucks.
When I first met the RouteSmith founders - Jeff Smith and Matt DeWolf - I was impressed by their straightforwardness, honesty, and up-front analysis of the risks in their business. They often stopped to challenge their own assumptions and it was obvious they were thinking critically about their business on a regular basis. In addition, they had done quite a bit with very few resources (one of the signs of good entrepreneurs) and had landed several customers with only one of the founders working full time. They were also interested in finding “active/interested” investors with a background in their space (or at least a tangential space) who would meet with them regularly and help develop strategies for their business. Best of all, they had that really cool web 2.0 looking mirrored image logo and… bonus… there is a real business model and everything!
As part of my extremely sophisticated due diligence process, I asked Matt all the really tough questions such as “How did RouteSmith get started?”
“RouteSmith started when Jeff was approached by a friend who knew about his background in development and applied mathematics. He introduced Jeff to a small company that delivered and installed products for Sears stores all over Dallas. The owner of the delivery company was spending 3 hours per day organizing and planning his routes. Jeff�s initial application cut his planning time down to 30 minutes.” - Founder, Matt DeWolf.
Matt went on to talk about some early success.
“After a few months of marketing we picked up a few more customers, including Mattress King of Colorado. They had been manually planning their routes which took approximately 6.5 hours per day. By implementing RouteSmith, they were able to reduce their planning time to less than 1 hour. In addition to time savings, they gained flexibility in their scheduling process which dramatically increased customer satisfaction.” - Founder, Matt DeWolf.
RouteSmith has also recently released RouteMeNow, which is a mashup “designed to socialize the the concept of route optimization into the SMB marketplace” and drive leads to RouteSmith. RouteMeNow is very different in nature from Mapquest or Google Maps, which can provide simple directions, even for multiple stops. They key to RouteSmith, and what they’re showing in RouteMeNow is the idea of optimized routes (where stop order is not the driving factor, if you’ll excuse the pun). RouteMeNow can quickly and effectively show small businesses how it optimizes arbitrary stops into the most efficient routes. RouteSmith doesn’t do this with just a simple traveling salesman algorithm - it actually employs and blends genetic algorithms (that are beyond me) into the equation.
I’m rooting for this one. ;-) And so is the mysterious 5280 angel.
What’s up NavDog?
April 20, 2007
At first glance, I thought NavDog was just another Google map and event mashup. But it’s not - While NavDog is based on Microsoft Virtual Earth, it also has a layer of user interface on top of the map that shows real promise. You can easily recenter the map on surrounding communities, and floating windows provide context like the number of nearby events and their details. I liked this easy way of inspecting the events, but I was wishing they were ordered and displayed by date (at least optionally) so that I could get a sense of when all of this stuff was going on without clicking on each event one at a time.
I found some interesting events by inspecting my neighborhood. But because the events on NavDog are user generated, I sometimes came across stuff like “40 acres for sale” - someone had figured out how to get free advertising by putting in this “event” that zoomed to the location of the property they wanted to sell. NavDog’s blog seems to support and even perhaps encourage this sort of thing when it says “… you can find or list just about anything. We use the term event but that really covers more than just traditional events. You can list a business, a store or a year round market as well as anything you would consider an event.” NavDog may want to at least think about categorizing these types of content and providing simple filters - otherwise, I can see the system becoming a messy jumble of map-based “stuff” that’s, well, all over the map.
I asked NavDog founder Shawn Fredrickson about the decision to go with user content instead of event feeds. Shawn told me that while they’re currently seeding some events into the system, the “goal is to be 100% user generated content with a few exceptions.” From where I sit, I think the service would be more useful if it offered both user generated content and feeds from sources such as TicketMaster or Upcoming, perhaps with filters.
The site appears to be gaining a little momentum and has attracted about 1,500 registrations so far. Folks in the GIS and Virtual earth community seem to be buzzing a bit. The service was “officially” launched just a few weeks ago on March 30th and Shawn told me that the “traffic is beginning to skyrocket as people all over America begin to discover this great site and the fun bit of Americana it delivers.”
Thoroughly amused, I asked Shawn what got NavDog started.
“I began to look around the Internet for flawed systems and sure enough, I began to see silos everywhere - not only silos but gaps in information, inefficiencies in the user experience. Newspaper classifieds were a joke with 3 meager lines of text for some $45.00 that forced you to call the host of the sale and whip out a pen and write down directions, ask them what they were selling and so on. The event classified websites were merely an online extension of the same flawed model. Naturally I took a step back and looked at the entire space from the thousand mile view and instantly I saw a common thread that connected all of these systems, a thread that connected all of us, it was geography. So I began to model a system that would use the common thread of geography to tie vertical markets, silos and information gaps together and what emerged was and is NavDog, a living marketplace on a map.” - NavDog founder, Shawn Fredrickson.
NavDog’s blog also gives some hints about where the company is headed with this: “In the coming months and year our service will incorporate an integrated messaging system, Real-time route planning, and with a GPS enabled smart phone our system will allow you to quickly add an event to the map while you are at the event.” and goes on to tease us with “If this isn’t enough there are numerous advances I can’t tell you anything about because of the hyper competitive nature of the business.”
NavDog is based in Littleton and is currently seeking venture capital to expand marketing efforts and complete development.
What’s in store for the kiosk plays?
April 17, 2007
There are a couple of startups in Colorado that are working on in-store kiosks that provide intelligent touch-screen oriented “guided selling” capabilities to retailers. You’ve probably seen kiosks like these in a few places - they help consumers compare products and make decisions based on their needs. This type of technology is not yet ubiquitous, but these companies hope to change that fact.
It was about a year ago that I first saw KioskTree. Seagate was hosting the CTEK Colorado Entrepreneurship Competition in February of 2006, and KioskTree was the entrant from CU-Denver. This was a college-oriented competition so when I never again heard of or crossed paths with KioskTree, I just figured they had simply died at birth. Then, just recently (randomly, through friends, on the way to a Mammoth game) I had dinner at the soon-to-be-viewless but still very fun Lola with Dan Krueger of KioskTree. Dan told me they’ve been in test mode with an early customer for about a year, and have refined the product based on their feedback. He also said that the next stage for KioskTree is to potentially raise some money and then to recruit a sales force to take the product to the market.
Now, a new company called Simple Decisions has sprung up and is targeting the same market. Simple Decisions seems to have some momentum. It’s being supported by the Bard Center for Entrepreneurship at CU Denver (a curious coincidence that I suspect there is more to) and has an investment from the affiliated Rutt Bridges Venture Capital fund. It was recently founded by Josh Churlik (CEO) who told me that the software can run as a part of the retailers web presence or it can be used to establish an in-store kiosk.
“In either instance the benefit to the consumer is on-demand high quality customer service. While the retailer benefits by providing a consistent level of customer service across multiple channels, driving sales with accurate product recommendations, and lowering the frontline operating costs associated with employee staffing and training.” - Founder & CEO of Simple Decisions - Josh Churlik
Josh wasn’t able to tell me about current customers specifically, but its sounds like they’ve landed a couple of early adopters. At least for now, there appears to be a heavy professional services component where the company customizes the look and feel of the software to match the brand of each retailer it brings on. I would imagine that over time the plan would be to create a more template driven experience.
Josh says Simple Decisions is “looking to raise $200k to $500k in the coming months”.
From an angel investors point of view, both of these businesses are a little tough to get your mind around because of the limited acceptance of in-store kiosks so far, the fuzzy ROI proposition, the very nature of having to depend on or work with hardware, and the large professional services component. These are things that these businesses have to watch out for since they can severely limit their ability to scale. Of course, landing one big fish of the Target or WalMart variety would quiet the nay-sayers.
Overheard at the Googleplex
April 16, 2007
- For startup founders, selling out to Google = good. But maybe working at Google = not so good? The Dodgeball guys finally left “Scroogle”. Congrats Dens, go do it again!
- Double click acquisition - organizing the worlds information and making it more accessible? Devin thinks Not.
- Google MyMaps is awesome. The TechStars incoming founders are already using it to mark up Boulder left and right. I love it.
Ask the VC: A multi-sensory experience
April 16, 2007
Last week, I blogged about the Ask the VC event held by the Colorado MIT Club. I promised some audio and video and here it is courtesy of Brian at OnSight Media. You can either listen to the full audio, or watch the five video segments.
Audio only, full session (videos are below):
Video, in five segments you can watch here (or grab the downloadable ones at the bottom of the post if you prefer to watch offline):
Segment one is mostly introductions of the panelists, their funds, etc.
Segment two is my favorite. Jason and Chris (two VCs who recently moved from Silicon Valley) talk quite a bit about how Boulder and Denver are just awesome places to do a startup, even when compared to Silicon Valley, Boston, or elsewhere. They also point out that our biggest weakness in the area is a lack of strategic marketing expertise.
Segment 3 answers questions such as “what do VCs look for” and where the money that the local firms are raising is coming from.
Segement 4 - the VCs talk about how the deal enviornment “feels good” right now and what sorts of deals they’re seeing.
Segment 5 addresses some questions such as “what is early stage?” and what the VCs think is “hot” right now.
If you want to download these for offline viewing, all of these segments are here: 1, 2, 3, 4, and, of course 5.
LinkedCells - Collaboration from within Excel
April 12, 2007
Today, there are two main ways that people collaborate on spreadsheets. There are those who email excel spreadsheets around to each other. Then there are those who just do it all online with Google spreadsheets. LinkedCells (of Denver) wants to give you a third way that’s better than either of these.
LinkedCells (feel free to try the beta if you use Windows) plugs in to Excel and lets you share spreadsheets, areas, or even just cells with others for purposes of online collaboration. That’s pretty cool when you think about it. I could set up a spreadsheet on my desktop and give access to each department manager to update their numbers. And this can work across the web, not just in my office. LinkedCells lets me do stuff like this with no servers or IT infrastructure.
Sure, this is already easy to do with a Google spreadsheet, but there are drawbacks. For advanced uses, Google’s spreadsheet is no Excel. The other advantage that strikes me is that using the LinkedCells approach, I can access my own desktop based address book for easy collaboration. The company has a nice comparison chart for the various methods of sharing spreadsheets that Excel makes available. It would be nice if they’d update the format of this to more of a “bubble gum” chart showing what they do that Excel and Google spreadsheets can’t do on their own.
Many companies use Excel as a simple database. This is one reason you see a proliferation of online database systems such as QuickBase, DabbleDB, and Colorado’s own TrackVia. It’s because spreadsheets are not naturally built for collaboration, sharing, and security. LinkedCells aims to fill some of these gaps. Some of the resistance to moving away from internal spreadsheet based tracking systems into online databases stems from the fact that databases seem complex and Excel seems so damn easy. LinkedCells figures you don’t want to change the way you’re working now, you just want to have more ways to share and collaborate with your current tool, namely Excel.
LinkedCells is self-funded at the moment and wants to test their theories a bit more before deciding if they’ll raise capital or not. To this end, they’re seeking Colorado companies right now who want to try their software. They’re offering some pro-bono consulting and professional services to get them going in exchange for early feedback. If your shop employs a bunch of Excel monkeys, it might be worth a look.
UPDATE: A commenter referred me to Xcellery.com, which has similar tools. If anybody compares these, I’d welcome further comments.
On Angels Wings
April 12, 2007
I didn’t see much local discussion of the Wall Street Journal article that came out on March 19th called “On Angels’ Wings” (sub). This article talked about proposed legislation, being led by Earl Pomeroy (D, North Dakota) and Don Manzullo (R, Illinois) and is being supported by the Kaufmann Foundation but has the Angel Capital Association staying “neutral”. This seems to come up each year in some form or another.
The Access to Capital for Entrepreneurs Act proposes to give a 25% tax credit on the front end to accredited investors. As great as this sounds, there are some possible unintended consequences. Some have argued that it will get investors to do less due diligence and invest in worse companies. Screw that - it’s survival of the fittest. If you’re gonna make dumb investments just because you can offset the risk with a 25% tax credit, you’re still throwing away a bunch of money. You’ll learn, or really you should know better already. Others say the government should just stay out of trying to influence how people invest their money. I generally agree with that and think the free market should be able to sort things out.
But this sure sounds good for entrepreneurs and angel investors on the face of it. I’m just wondering what everyone else thinks. Let me know. I need more data.
Ask the VC (the event, not the blog) was good (so is the blog)
April 12, 2007
The MIT Club of Colorado put on “Ask the VC” at the beautiful ATLAS building at CU last night. Jim Pollock admitted he swiped the name from the well known blog, but it was a very appropriate name. We watched about 45 minutes of a video from MIT where this guy made a bit of an ass out of himself a couple of times much to our amusement.
The Boston panel talked about private equity and hedge funds and all kinds of crap that while generally interesting, didn’t have much to do with the entrepreneurial scene here in Colorado.
Then the fun began. The audience started quizzing the live, local, and far more P/C panel (consisting of Jason Mendelson, Catherine Merigold, Sandy Keziah, Derek Pilling, and Chris Scoggins) about topics ranging from how Denver/Boulder compares to Silicon Valley on various fronts to what the hot topics are for VCs these days to how to get in the door to see them. The Q&A period went on for about 90 minutes. The panel did a great job of addressing some common myths (like they always immediately replace management teams) and talking about the differences in the market and talent here in Colorado vs Silicon Valley, Boston, and elsewhere. The panel seemed to think the technical and general management talent here is as strong as anywhere (or perhaps stronger on some fronts) but felt that one skill generally lacking here is in the area of strategic marketing.
We captured the whole event on video, and once Brian over at Onsight Media finishes editing (thanks Brian!), we’ll post it here for you to watch.
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