Don Dodge on The Next Big Thing

The Entrepreneurs Dilemma - Sell now for $Millions or holdout for $Billions?

If you had to choose between selling your company now for $100M or continuing on for another 5 years or more and maybe selling for $ Billions, what would you do? Every entrepreneur hopes to have this dilemma, but when it happens it is a difficult decision with many different factors.

This week I had the opportunity to talk with several entrepreneurs who faced this decision. The results were different in each case, but the major factors in the decision were the same.

Competitive environment - Are you in a leadership position? If you have already carved out a dominant position in one market and could move into other market segments or geographies, that would argue for staying private and going for the big exit. On the other hand, what if the big billion dollar players are  entering the market? What if the market is consolidating, and your competitors are being acquired by big players?

Financial structure - Is your company well capitalized and profitable? If so you could probably grow organically, without raising more money or taking dilution. However, even in this case you may not be able to grow fast enough to keep up with the competitors and market movement. If you need to raise more cash, or are not yet near cash flow break even, the decision is more complicated.

Economic environment - Is there a recession looming or is the market booming? If the market is booming and you have a good competitive position, you may want to raise more money and holdout for the big exit.

Age of company - Startups are full of enthusiasm, vision, and hope. After 7 years or more is the fire and passion still there? Most employees are fully vested by then. Are they still totally engaged or are they leaving? A startup can't stay a startup forever. The dynamics change. You need to keep a finger on the pulse of the whole company.

Founders - Are the founders still at the company and still passionate? Are the founders financially secure, or are the looking for an exit? Can the management team take it to the next level? These are the toughest questions to face and answer honestly.

Investors - Venture Capital investors need to answer to their Limited Partners each year. If the fund has already generated a nice return for investors they may be more inclined to holdout for a bigger exit. If the fund is not doing well they may push for an early exit.  You may have several VCs on your board who have opposing views and motivations.

Employees - After 5 to 7 years many employees are fully vested. They may want to buy a house or put away money for the kids college education. Engineers and creative people may be looking for a new challenge. Keeping key employees is always a factor to consider.

Alternatives to selling out now

Raise more money - You may be able to raise more money but the valuation is likely to be less than a buyout offer. Investors may demand onerous liquidation preferences that put prior investors and employees at a disadvantage. Raising more money also means your eventual exit valuation must be much higher to satisfy all investors. This is actually something to consider at every stage of raising money.

Take some money off the table - Many times the founders have not made any money previously. They want to cash in a few million dollars so they have some financial security for their family. Then they can push ahead another five years and hope for the big payoff. Most VCs don't like this idea. They don't want the founders taking "their" money out of the company. The VCs want the founders to be "hungry" and push for the long haul. Founders Fund, and a few others, think their interests are better aligned in they allow the founders to take some money off the table. As you might imagine there are some very strong opinions on each side of this question.

Give the founder a break - Sometimes the founders are tired after 7 years of pushing hard 7 days a week. Sometimes it is a good idea to rotate the management team and give them new challenges. There are cases where the founder / CEO moves to chairman or CTO, or even leaves the company but stays on the board.

New management to take it to the next level - Many times founders are great at starting a company but not so good at managing growth, hundreds or thousands of employees, international complexities, and all the other challenges of big companies. The skills required to go from zero to $10M are very different than those required to go from $50M to $500M. So the question becomes do we sell out now for millions, or do we reorganize the company to prepare for the billion dollar trajectory?

What would you do?

One CEO I talked to evaluated the situation and decided to sell now for about $150M. The VC investors agreed that it was the right decision. Employees are happy. The merger just made sense.

The company was not profitable. He said he could have raised another $30M, but at a valuation that was 20% to 30% below the buyout offer. Raising the additional money would have raised the acquisition envelope to $300M to $500M in order for the new investors to get the multiples they were looking for. He asked "How many companies sell for $500M?" Very few. So, the investor multiples worked at $150M, but they would need to be much higher if they took on new money. He also mentioned the competitive environment with new big players entering the market and consolidation happening all around him.

Another CEO I talked to decided to take the plunge and go public now rather than wait for a better market and higher valuation. This company is a leader in their market. Going public was important for several reasons. First it gave them increased credibility with their customer base. Second, being public also gave them stock currency to make acquisitions. Third, it gave them access to raising more cash on the public markets with much lower dilution than they would get from VCs.

Another CEO said they decided to sell out in the $150M to $200M range. They had been at it for over 12 years and decided the acquisition made sense for many reasons. However, he did say the integration issues with the big company were a hassle, and that the culture of the startup company was changing.

The conversations with these founder/CEOs were fascinating. It was interesting that each of them, almost without recognizing it, had to deal with many of the factors mentioned above. I suspect that every company faces these issues when contemplating a buyout offer whether it is $10M, $100M, or $1B. No matter how many zeros you add to the number the basic issues remain the same.

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Guitar Hero a 10 year overnight success

Eran Egozy, co-founder and CTO of Harmonix Music Systems was on a panel at the Nantucket Conference entitled "Tipping Point: The keys to getting new ideas to take off". Harmonix is the maker of Guitar Hero, the wildly successful video game.

Guitar Hero was an instant...overnight success, 10 years in the making, selling over $1Billion to date. Harmonix was founded in 1995 but Guitar Hero didn't come along until 10 years later in 2005.

What did Harmonix do in the first 10 years? Harmonix founders met at the MIT Media Lab and their first idea was to create new ways for non-musicians to experience the joy of making music. Similar to another MIT Media Lab company called HarmonyLine, this idea never really took off.

Eran joked "For the first four years we couldn't sell anything but stock. We knew that wasn't a business model, but at least we had money coming in to keep us going."

Around 2000 they decided to try applying their music technology to video games. But it was 5 more years until they tasted success. They released eight video games over that period, with modest results. Eran said "The trick in the video game business is to make enough money from your game to keep you going until you can release your next game."

Most new video games don't make a profit. The game business is very much like the music business, or even the venture capital business, in that it is a "hits" driven business. One big hit pays for lots of losers.

Guitar Hero was the 9th video game produced by Harmonix, 10 years after founding the company, and it put them on the map with more than $1 Billion in sales. They recently sold the company to MTV Networks, a division of Viacom for $175M.

iRobot a 12 year overnight success. Colin Angle, founder and CEO of iRobot told a similar story. iRobot was founded in 1990 with the idea of creating robots to do interesting stuff. For 12 years they did projects and built products but never really achieved financial success. Colin said they paid employees once a month at the end of the month. They never had enough cash at the beginning of the month to meet the payroll at the end of the month. But they persisted in their dream.

September 11th 2001 changed everything. They decided to apply their robot experience to help the military in dangerous situations. DARPA, the research arm of the U.S. Defense Department paid out grants to lots of companies to develop proposals for new defense technologies. iRobot won a $200K grant to write a proposal for a battlefield robot.

Colin Angle said the company had never had $200K in the bank...ever. So, rather than use the money to write a proposal they just built the robot. What a concept!! DARPA had a big meeting to review all the proposals from various defense contractors. iRobot showed up with their robot and a tiny written proposal. They won the business and DARPA awarded them a $4M contract to build robots for use in Afghanistan. They have since sold over $150M of robots to the military.

Colin said that iRobot entered and exited 18 different businesses over their 12 year existence before finally landing on the military robot idea. They have since entered the consumer market with robot vacuum cleaners and swimming pool cleaners.

Persistence and tenacity are hallmark qualities of successful entrepreneurs. Harmonix and iRobot are excellent examples of that never die attitude. There is a fine line between success and failure. There is no secret formula or obvious path to success. Just one common trait...an indomitable desire to succeed against all adversity and doubt. Very few people have this drive and the leadership ability to attract great people to their cause. This drive is indefinable but we know it when we see it. It is sometimes misdiagnosed as being delusional and fanatical. The difference in diagnosis is success or failure. Succeed and you are a brilliant visionary. Fail and you are a delusional loser. The line between them is very fine.

Sim Simeonov of Polaris Ventures is also at the Nantucket Conference and has a great blog post about "Top 5 suggestions for startups from IDEO". Lots of great speakers and content here at the Nantucket Conference.

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MatchMine leaps ahead

I first saw MatchMine at DEMO Fall 2007, just over 6 months ago. MatchMine, based in Massachusetts, is a media discovery service that delivers personalized recommendations for movies, music and other online content on the Web. I saw the potential in the service then, but they had some kinks to work out.

Today MatchMine announced new media partners, and improvements in the service. More on that later. First let me summarize what I think are the major leaps forward for MatchMine;

1. No more client download required. You can start using MatchMine with just one click on a partner web site.
2. Content partner sites can easily integrate MatchMine with a plug-in widget or by using their APIs.
3. The business model is a win/win. Free to consumers, and a revenue share from partners based on incremental revenue.
4. MatchMine preferences follow you to any new partner site. No more need to start from scratch building up your preferences for each new site.

Why is that important? MatchMine has lowered the barriers to adoption for both users and partners, and instantly increased the effectiveness of recommendations.

Users can sign up for a MatchKey as part of the registration process at a content site. Or, if you were already a registered member of a content site, with just one click you can add a MatchKey and automatically import all your preferences and ratings.

Partners can integrate MatchMine into their site in minutes by adding a pre-built widget or adding APIs to their site. This allows their users to get better recommendations, and potentially increase ad revenues or product sales. MatchMine shares in the incremental revenue. This makes it a no pain, no risk, proposition for the partner content sites.

OK, so how does MatchMine help me? We are all deluged with information and media. We want just the good stuff. MatchMine matches your preferences, both explicit and implicit, and delivers relevant media content to you.

How does MatchMine do it? Once you have signed up for a MatchKey they keep track of all your explicit ratings, votes, favorites, and import your previous preferences from sites like Netflix, Amazon, YouTube, LastFM, and the new partners announced today. They also track your implicit preferences like what you save or delete, if you watch a video to the end, or quit, if you click away from content, etc. These actions build a constantly evolving profile of your likes and dislikes, allowing MatchMine to deliver just the content you want.

The new media partners are;

• FilmCrave - a movie review site
• Fuzz - a music community
• Odeo - a music and podcast site
• Blogged - a blog discovery site
• Blogdigger - a blog search engine
• MediaMelon - HD TV for the Internet

Go to any of these sites, get registered, and see MatchMine in action.

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Boston startup events and resources

Boston loves startups. The Massachusetts Technology Leadership Council is doing a great job setting up events. Watch the MTLC site for future dates. MITX, The Capital Network, the Angel Capital Assoc, and others are also putting on events. Here are just a few of the upcoming events this week and next.

Tech Tuesday - is a regular monthly meet-up organized by Dan Bricklin, of Visi-Calc spreadsheet fame. Tech Tuesday is for geeks, tech savvy professionals, DIY-ers, press, and other industry luminaries for an informal gathering. Bring your laptops, robots, OLPC XO's, Amazon Kindles, new cell phones, gadgets, and other new-fangled devices. Tech Tuesday meets the second Tuesday of every month. Microsoft is a sponsor this month.

New England Angel Capital Conference - The Angel Investor groups of greater Boston meet once a quarter to review their best companies. Each group nominates companies to present. They are all looking for a round of funding that is bigger than any one Angel Group can handle. This meeting lets all the groups get a look at promising companies and pool their investment dollars.

Entrepreneurial Team Building - a panel of entrepreneurs that have built companies from the ground up and know the ins and outs of building great teams. What really makes a team come together? How can you be sure that you are bringing in the right folks? Who should be hired first, second, next? We'll talk about teams at the senior management level and at the BOD level.

Entrepreneurial Series - Plain English Term Sheets - This is a webinar for startup entrepreneurs who want to understand the details of financing term sheets. What to ask for...and what to avoid.

MITX - Mass Innovation & Technology Exchange have lots of great events for technology based startups. The next session is "Building Social Applications and Widgets".

The Capital Network - TCN's network consists of entrepreneurs on their way, entrepreneurs who have lessons and talents to offer and investors who may have themselves drifted across the entrepreneurial line. TCN has 3 or 4 events a month. The next one is on Founders Equity Issues.

The 128 Innovation Capital Group -  The regular meetings are held on the second Thursday of every month at the Best Western Hotel on Totten Pond Road in Waltham. Every month an investor provides our formal program. After Q&A, our speaker generally remains to speak with audience members, one on one. After the meeting, a roster with the contact information of all attendees is made available to those who came to the meeting.

Web Innovators Group - WebInno was founded by David Beisel of Venrock Capital. Scott Kirsner is also deeply involved. WebInno has regular meetings. The usual format; early stage start-ups and individual innovators will briefly demo their product/service in two different forums. First, there will be a couple center-stage presenters giving five minute demos for the entire crowd (aka “main dishes”) at 7pm. In addition, there will be a number of tables set up at the periphery of the room for live informal demonstrations to smaller groups during the schmoozing sessions (aka “side dishes”). Each will help provide the community a glimpse of current local endeavors in the space and offer the basis for further conversation.

Nantucket Conference - The 2008 Nantucket Conference audience will consist of approximately 150 of New England's top entrepreneurs, investors, and tech executives. Rather than sitting through a series of speeches and PowerPoint presentations, the audience will be engaged in a dialogue - and sometimes a heated debate - with Conference presenters.

Boston based bloggers

Scott Kirsner, a writer for the Boston Globe, and a blogger at Innovation Economy is always organizing and promoting startup events. Watch Scott's blog for announcements of upcoming events.

Jeff Bussgang - VC partner at Flybridge Capital Partners (formerly IDG Ventures Boston). Jeff is a former entrepreneur and now a VC. His blog is appropriately called Seeing Both Sides.

Xconomy - Bob Buderi, Rebecca Zacks, and Wade Roush cover Boston based startups, technology trends, and VC investments.

Mike Hirshland - VC partner at Polaris Venture Partners in Boston.

Nicholas Carr - Nicholas is a former Harvard Business Review editor and author of several books.

Boston based entrepreneur bloggers - Ben Saren (founder & CEO of CitySquares Online), Matt Douglas (founder & CEO of Punchbowl Software), Pito Salas (former CTO of eRoom).

BlogString has an extensive list of Boston events. Thanks to Nathan Burke for the link.

Come on out to these events. I try to attend all of them, and would love to say hello. However, for the next two weeks I am working in Silicon Valley...my second home.

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Does your startup solve a problem? Vitamin or pain killer?

I saw 20 new startups at Y Combinator earlier this week, and 32 more startups at the Under The Radar conference today. OK, so how do you sort through all of these companies and pick winners?

There are a list of questions I ask entrepreneurs when evaluating start-ups. One of them is "Is your product a Vitamin (nice to have) or a pain killer (got to have it)? Of course everyone wants to think their product is a "must have" painkiller, but very few are. Another question I ask is "Who will pay for this, and how much will they pay?" The last question I ask myself is "Is this a product or a feature?" Meaning, will this product/service stand on its own and generate revenue? Or is it really a feature that should be incorporated into an existing product?

Many products fall into the vitamin category. Things like productivity tools, content aggregators, mashups, utilities, collaboration applications, measurement and monitoring tools, in fact anything that is a tool, development or otherwise, is by definition a vitamin.

Pain killer products are products that solve for a specific pain point. Sometimes the pain is measurable in terms of ROI, winning sales that could not be won before, or satisfying a regulatory requirement.

There is another set of products that are "vitamins" (nice to have) until you feel the pain. Then they become "pain killers" (got to have it). There are actually lots of products that fall into this category.

In the past, corporate governance and compliance applications were "nice to have". Then Sarbannes-Oxley (SOX) legislation went into effect. Suddenly these applications that were "vitamins" became "painkillers". You had to have them to comply with the new law.

Back-up and restore products for small companies or individual users are vitamins until the first time you lose a disk or significant data. Then they become "must have" painkillers. I am sure you can think of lots of products that fall into this scenario.

So, the new questions I have added to my list are; "What catalyst or event causes your prospects to actively seek your product or solution?" "When you look at all the sales you have won versus all the sales you didn't win, what was the main reason?" "Did they buy a competitive product, or not buy anything and just continue business as usual?"

Understanding what makes your product a "must have" painkiller versus a "nice to have" vitamin is the key to successful marketing. Identifying the key pain points and how your product solves them in a simple value proposition is job one. There are sometimes "trigger events" that cause these pain points. These "trigger events" cause your product to convert from a "vitamin" to a "painkiller" for customers. Qualifying your sales leads by trigger events and pain points will help focus your sales and marketing efforts and result in much higher win ratios.

Think real hard, right now. Make a list of the pain points your product solves. Make a list of trigger events that cause the pain to happen. Now think about how to identify these "trigger events" as they happen among the hundreds or thousands of potential customers. Get this right and your sales productivity will sky rocket. Get it wrong and your sales people will end up "dialing for dollars" and wondering why they are not being successful.

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Y Combinator Demo Day - which one will be the next Google?

Paul Graham, Jessica Livingston, and the Y Combinator gang held their Demo Day yesterday for 21 hopeful startups. In most cases these "companies" are only 3 months old, have two or three founders, and are just launching a beta product/service.

Google was once a two person startup - So was Microsoft, Oracle, Sun, Apple, and every other successful company. They all started with a couple founders and an idea. It is truly amazing to see how much these Y Combinator companies have accomplished in just 3 months.

What is Y Combinator? - Y Combinator is a seed stage investor/incubator with a large network of entrepreneurs, VCs, and all the people you need to start a company. It is hard to explain but it is a cross between a startup boot camp and a traditional startup incubator. The best description of Y Combinator is on its application page. BTW, they are accepting applications for the next round of companies now. Deadline is April 2, 2008.

Y Combinator success stories? - There have been a surprising number of exits/acquisitions. They include; Reddit.com, Zenter.com, TextPayMe, Anywhere.FM, and Parakey. Several have also closed Series A or B financing rounds and have gained significant traction. Examples are; Loopt, Xobni, Scribd, Justin.tv, Weebly, Disqus, Wufoo, and Virtualmin.

Best of Show? - There were 21 companies presenting. TechCrunch did a short review of all of them. Here are my picks for most interesting or promising.

Omnisio - Video editing, sharing, tagging, and annotating made easy. Omnisio lets you take a YouTube video you like and create a clip, add tags, comments. You can easily embed your custom clip in a blog or web site. Omnisio creates a link to the source video and starts playing it where you want. There is an obvious advertising play here. Omnisio could insert a short video ad anywhere in your custom clip. It also collects lots of meta data (tags, comments, links) that help describe the video for better ad targeting.

BaseShield - Provides security and virus protection by running applications virtualized, isolated environments. BaseShield effectively quarantines viruses, spyware, and malware inside the virtual environment where they can do no harm. I have seen this idea before but it is hard to get the right balance between usability and protection.

TipJoy - Makes it easy to click a tip button to donate or pay a small amount. Visitors are not required to create an account. Just click the button and type in your email address. TipJoy separates the financial transaction steps from the act of tipping, so it only takes on click. Their demo showed that PayPal takes 8 clicks to complete a payment, while Amazon takes 7 clicks. So, how does it work? When you have accumulated $5.00 in tips or payments TipJoy sends you an email and asks you to "settle" your account by paying with a credit card or PayPal. No one will chase after you if you choose not to honor your tip. TipJoy makes money by charging a 3% fee for transactions...much the same way PayPal or credit cards work.

280 North - They have developed a new way to build web applications that has the "look and feel" and performance of desktop apps. Their first application is 280 Slides, an online presentation tool, that looks and feels something like Powerpoint...if you squint and imagine what it can eventually be.

Others companies have tried to implement a PowerPoint like application in the browser...and they all come up short. 280 North has many more features and feels more like a desktop app. Most importantly, once you are finished creating your presentation you can export it to PowerPoint and present in full screen mode. The founders pointed out that it is very distracting to watch a presentation from a browser with all the tool bars visible. Presenting in full screen PowerPoint is much more engaging and professional.

The 280 North people are building a "platform" for developing lots of online applications that "feel" like desktop apps.

Other notable ideas - Capturing user data, click streams, and attention data, for better ad targeting, was a common theme among many of the companies. Addmired, MightyQuiz, Mixwit, Deluux, Wundrbar, 8aWeek, and WebMynd are fun, engaging applications,with ad targeting as an underlying monetization scheme. Each one of these applications is interesting in its own way, and will evolve into much bigger ideas than what we see today. Which one will be a big hit? Nobody knows. But, we do know there is a profitable market for good attention data for ad targeting. Someone will figure this out and make a lot of money.

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How to make your startup successful

Mike Arrington at TechCrunch wrote "Startups must hire the right people and watch every penny, or fail" This was in response to a blog by Jason Calacanis, founder & CEO of Mahalo, who wrote "How to save money running a startup". Both stories stirred up a ton of comments, mostly negative, on why they were wrong, and trashing Calacanis for being a ruthless task master.

I agree with much of what Arrington and Calacanis say, and I love this picture that Mike used in his post to illustrate failure. It is very important for a startup to hire the right people and watch every penny. Bigger companies can make a few mistakes and spend too much money on things, and still do just fine. Startups have no margin for error.

I have worked at five startups (Forte Software, AltaVista, Napster, Bowstreet, Groove Networks), and helped hundreds more. There are some common success factors like;

1. Build a product or service people want
2. Customers are willing to pay for it
3. Competitors can't easily replicate it
4. Assemble the best management team
5. Hire only the best people

Those are all obvious points...but extremely difficult to get right. It only looks easy in retrospect. Most successful startups are unique, one of a kind, at a certain point in time, non-repeatable events. If it was easy or obvious everyone would have already done it, or just copy what has already been successful.

Tony Wright, cofounder of RescueTime, a Ycombinator company, has a great post showing that for every example of success there is a counter-example. Tony points to the following examples;

• “Release Early and Listen to your users” VS “Ignore your Users and Build for Yourself.”
• “Seek out Press early and often” VS “go guerrilla until you have a brilliant product“
• “Failure to scale kills” VS “you can have tons of downtime and still grow like gangbusters“
• “Take more funding than you need” VS “overfunding kills“
• “Viral always wins” VS Google Search (which is not REMOTELY viral).
• “Design is critical for user engagement and trust” VS um…. MySpace. CraigsList. Google.
• “Starting a business on Microsoft technologies is ridiculous” VS MySpace or PlentyOfFish (2-3 people, classic ASP, a few MS servers = millions of bucks)
• Headcount! VS Keeping your team lean to force scarcity (CraigsList and 37Signals)

I talk to hundreds of startups every year. They all have some of the elements of success. VCs invest billions of dollars in startups every year. Every entrepreneur and every VC believes they are going to be successful. Very few are.

There is no secret formula or obvious path to success. Just one common trait...an indomitable desire to succeed against all adversity and doubt. Very few people have this drive and the leadership ability to attract great people to their cause. This drive is indefinable but we know it when we see it. It is sometimes misdiagnosed as being delusional and fanatical. The difference in diagnosis is success or failure. Succeed and you are a brilliant visionary. Fail and you are a delusional loser. The line between them is very fine.

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Xobni demo by Bill Gates at Office Developers Conference

Xobni is a Microsoft Startup Accelerator Program partner. There are lots of benefits to the program like free software, consulting help, press releases, introductions to Microsoft people, partners, and even VCs. But this is one benefit that we didn't anticipate...a demo by Bill Gates at the Microsoft Office Developers Conference. Check out this 2 minute video of Bill talking about Xobni;

 

I knew the instant I first saw Xobni at the TechCrunch40 Conference that we should be partners. I talked to Adam Smith immediately after his presentation, and had dinner with Adam and his partner Matt Brezina that night. We sketched out how Microsoft could help Xobni, and started executing on the plan the very next day.

Microsoft is a big company, but we care deeply about startups. We can move fast and bring real value in the right situations. It doesn't always work out this well...but we try.

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Me.dium - a social web browsing experience

Me.dium is a web browser plug-in for Microsoft's Internet Explorer that turns web browsing into a social experience. It gives you a personalized map of the Internet showing where you are, and what web sites your friends are visiting in real time. You can use it to discover new people and places that are relevant just to you. It also allows you to surf with friends in real-time. It's just like hanging out in the real world, but online. 

How it works

Go to Me.dium.com and sign-up for a free account. Download the plug-in and install. You will be up and running in minutes.

After your account is set up you can add friends by either finding them on Me.dium or inviting them to join via an email invitation.

See where your friends are. Once you have built your friends network, and they have Me.dium installed, you can see what web sites they are on, and watch them as they move from site to site. You can go to the same site, see what they are looking at, and start up a chat discussion...all in real time.

It is fascinating to watch the Me.dium cloud change as your friends move from site to site. We already follow our friends with Instant Messaging, RSS feeds, email, Twitter, and other ways. But to see them move in real time in your browser is amazing.

Microsoft Startup Accelerator Program

Me.dium is part of Microsoft's Startup Accelerator Program. Listen to what David Mandell, VP at Me.dium has to say about the program;

Getting direct connections to developers within Microsoft speeded our own internal development time significantly, I would estimate about a 50% velocity increase. In addition, gaining exposure to some of the Microsoft MVP’s gave us critical product feedback that we simply didn’t have the manpower to gain on our own. Getting on the Windows Marketplace site quickly took our customer mix from almost completely Firefox users, to a ratio of 75% IE to 25% Firefox, all through new customer acquisition. 

The Emerging Business Team and The Microsoft Startup Accelerator Program have truly turned into an invaluable resource for Me.dium.  We would never have imagined that a company as large as Microsoft would have the desire to focus on a small startup such as Me.dium, but we were completely blown away by the attention and access to people that we were given and owe much or our current success to that relationship.

Me.dium has an All-Star management team. Founded by Robert Reich, Peter Newcomb, and David Mandell. Kimbal Musk, a serial entrepreneur is the CEO.

The investors are top shelf too. My good friend Brad Feld was an early investor. Another good friend, Elliot Katzman of Commonwealth Capital was a major investor in the second round. Spark Capital and Appian Ventures are also investors.

Check out Me.dium and let me know what you think.

Robert Kraft and Mark Cuban have the best of both worlds - business and sports

The Super Bowl, for me, reinforced some lessons about business and life.

Experts are often wrong. Nearly every expert picked the Patriots to win. Las Vegas had the Patriots as 13 point favorites. Venture Capitalists and well known business experts are often wrong too. Work hard for what you believe in. Don't give up. You can succeed.

Records only matter for the history book. An 18-0 record doesn't guarantee your next victory or scare your competitors into laying down. I'm sure you have heard the expression "That is why they play the games". Meaning, just because based on the win/loss record the opponent seems to have no chance doesn't mean they won't surprise you and beat you. Unknown startups win business from big market leaders all the time.

Success is a terrible teacher. You learn from adversity and failure. You learn nothing from success. In fact, you "learn" some bad things. You attribute success to the wrong things, which can mask underlying issues. How many times have you seen the early innovator become a market leader only to get overtaken by a fast follower imitator? See "Innovate or Imitate...Fame of Fortune?"

So why do sports captivate millions of fans? I think because sports are the ultimate one on one match up in a winner take all contest. The winner goes into the history books. No one remembers the loser. The biggest moments in sports all come down to one play...one moment...one player.

Bill Buckner - the mere mention of his name makes Red Sox fans groan and curse. Buckner let a routine ground ball go between his legs...and with it a probable World Series win.

Carlton Fisk - his home run in game 6 of the 1975 World Series won the game for the Red Sox and tied the series. The Red Sox ultimately lost, but this play extended the series to game 7.

Larry Bird - with one second left and Boston behind, Bird stole the ball on an inbounds pass from Isiah Thomas of the Detroit Pistons. Bird spun around, almost falling out of bounds, and passed the ball to Dennis Johnson for an easy lay-up as time expired. Celtics win the 1987 Eastern Conference championship.

Magic Johnson - hit a running hook shot from the foul line over the outstretched arms of Robert Parish and Kevin McHale to beat the Celtics in game 4 as the clock expired. The Lakers went on the beat the Celtics 4-2 in the 1987 Finals.

Eli Manning - somehow escaped the grasp of Jarvis Green, an almost certain game ending sack, and throws a pass to seldom used David Tyree, who catches it on top of his helmet with Rodney Harrison trying to pull it away. Two incredible feats in one play. There were 132 offensive plays in the Super Bowl; 63 for the Giants and 69 for the Patriots. The winner was decided on this one play.

Adam Vinatieri - kicked a 48-yard field goal on the final play to give the New England Patriots their first Super Bowl victory, a 20-17 win over the St. Louis Rams.

Business and life isn't like this. Businesses rarely compete head to head for all the marbles. Most businesses have lots of competitors and hundreds or thousands of customers. A single customer win doesn't change the outcome that much. The financial results for one quarter are announced, and the next day everyone is hard at work on the next quarter. No celebrations. No parades. No agonizing depression. The great thing about business is that you don't need to wait another whole year to gain redemption. There will be another big sale or another new product next quarter.

Robert Kraft and Mark Cuban have the best of both worlds. They are enormously successful businessmen and they own two of the most successful franchises in professional sports. But it wasn't always this way.

Both Kraft and Cuban were successful in business long before they became involved in professional sports. Both were huge sports fans. Both bought struggling sports franchises that hadn't won in years.

Mr. Kraft bought the New England Patriots, hired a new coach, built a new stadium, and took the Patriots to four Super Bowls in seven years. Mr. Kraft is the most respected owner in the NFL, maybe all of sports.

Mark Cuban bought the Dallas Mavericks basketball team when they were a laughable bunch of losers. Mark hired a new coach, made some incredible trades, and turned the franchise around. The Mavericks had the best record in the NBA last year, and the 6th best of all time.

The Mavericks came within a couple plays, and a couple bad calls, of winning the 2003 NBA championship. With the best record in the NBA last year they headed into the playoffs favored to win the championship. They lost in the first round to the 8th seeded Warriors.

The Patriots were a perfect 18-0 going into the Super Bowl and were heavily favored to win. You know the rest of the story.

Will heart breaking losses defeat them? No way. They come back next year stronger and more determined than ever. Just like in business, they will look at the results and make the necessary changes.

Entrepreneurs are like that. Losses and defeats are just learning experiences. They don't agonize or despair. They learn, make changes, and charge ahead. It is no mystery why Bob Kraft and Mark Cuban are the best owners in professional sports. They were businessmen first...and still are.

As Red Sox fans always say..."Just wait 'til next year".

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