Fractals of Change

Hold the PowerPoint; Launch the Site

PowerPoint presentations won’t get you into the meeting room of most venture capitalists even though you may need a presentation once you get there. Working software that they can look at before they look at you, on the other hand, seems a great way to start. That’s the result of a very unscientific survey that I sent only to my favorite VCs.

What got me into this was looking at presentations entrepreneur friends were crafting for the dual use of getting an initial meeting and presenting at said meeting. After a while I realized that no one presentation can possibly be good for both standalone use and personal presentation. Standalone presentations are suspect to begin with; they have to be incredibly wordy to introduce a new idea and words don’t make good slides. On the other hand, presentations you deliver in person need to be very sparse with good graphics to SHOW what your words TELL: the shape of your projected hockey stick; the commanding lead you’ve built in the marketplace; the beauty of your website (but why not just show the site?).  If all the detail is on your slides, people won’t be listening to you.

So I said make the best presentation you can to deliver personally; DON’T email it; DON’T compromise by making it standalone. Then I began to wonder whether VCs REQUIRE a PowerPoint in advance. Haven’t pitched VCs myself for a while and things change so thought I’d better ask:

“As a VC, what do you expect to see from an entrepreneur whom you don’t know or have a casual introduction to before scheduling time to listen to a pitch?

“A one-pager? A complete pp? A classic business plan or a casual one?

 

“What’s the pre-pitch norm? what do you get? What do you want?”

Fred Wilson of Union Square Ventures answered:

“A working web site I can play with and engage with others on

“I am dead serious bout that

“Nothing else matters to me at the start of the discussion.”

That’s actually great news for us nerds. Wouldn’t you rather code up some cool AJAX and php than make a PowerPoint presentation? In the old days you needed serious money to get a website hosted but that’s simply not true anymore, especially at small scale.

Rob Shurtleff of Divergent Ventures is looking for the highlights:

“What I think is most useful is a very carefully crafted one page email overview. This should be more then an outline, but focus on the top level “why is this deal interesting” points.  Problem being solved, results to date, team, target raise.  Include links so the reader can dig if they are interested.

“I am looking to see if it pattern matches on prior deals, http://www.shurtleff.org/2008/venture-pattern-matching/. My buddies at Foundry look for deals that fit their theme, http://www.feld.com/blog/archives/2008/03/glue_our_sticky.html.  The bar for getting a meeting from a cold email is pretty high, most meetings come from our networks.  It is completely worth the time investment to try and figure out a personal connection with a partner or associate.

“We get a steady stream of unsolicited physical and email inbound pitches, the most annoying come with an NDA…   Almost all have more information then I want to read through…”

Making a good one-pager can be harder that a whole deck of slides – but it’s much more important. BTW, it should be a well-laid out graphic one-pager chock fill of information but NO mouse print allowed. Don’t miss Rob’s point on how much better it is to have an intro –even a distant one – than not.

Speaking of Foundry Group and Brad Feld,  he not only answered me in email but immediately posted the question and his answer on Ask The VC. You can follow the link there to see all of it but here’s an excerpt:

“While everyone is a little different, I'm pretty simple.  Optimally, I'd like something to play around with (e.g. a simple web site or software demo / prototype.) ….I have no interest in seeing a business plan or a financial model for an early stage company pre first pitch.”

Good luck.

Findability in the (un)Social Directory

If you don’t want to be found, you should have the right to remain a hermit. I can’t bring myself to pay Verizon several dollars a month to take me OUT of its 411 and white pages but I don’t want to be there, even though – or especially because – the number they list is attached to the alarm system and neither rings in the house nor has voice mail.

Even in the relative privacy of social networks, most of us do leave ways to find us open. The key distinction is that finding us doesn’t mean reaching us. For example, if you’ve registered for Facebook, even people who aren’t your certified friends can find you. They can ask permission to be your friends; they can try to communicate with you. But you don’t have to respond to these requests or accept communication from them.

Similarly someone can find you on Skype if they make a few lucky guesses or know your email address – but they can’t see your online status or complete a call to you without your permission. Some people may want to remain truly anonymous, visible only to those to whom they have explicitly given contact permission. Most people, I suspect, want to be findable enough so that a stranger or a long lost friend can ask permission to reach them - something I’d very much welcome your comments on.

Assuming that you do want to be findable, then it makes little sense that a seeker have to wander through multiple walled gardens looking for you. Are you on Skype? Facebook? MySpace? Are you a friend of a friend?

The (un)social directory we are working on at FWD will span social networks in an attempt to find you using only that information that you have already made public through those social networks. If someone does find you through us, all he will be able to do is ask your permission to contact you. You can, of course, say no or ignore the request. You can also tell us not to forward anymore requests from this individual or from anyone. If she is someone you want to hear from, you can specify how she is allowed to reach you – text, voicemail, voice on your landline or cellphone etc.

As we (with your permission) know more about your social graph, we’ll also be able to tell you how many contacts you and this person have in common across a variety of social networks and who those mutual contacts are.

At the moment, this is vaporware not yet implemented in software. Consider this post a request for comments.

This thinking about findability owes much to old friend and one time competitor Jacob Ner-David, cofounder of Delta Three and now, among many other things, the Managing Partner of Jerusalem Capital.

The (un)Social Directory

I want to be in an (un)social directory. I want to be accessible to some people, want to be findable by most people, but want to keep complete control of who communicates with me by what method.

The (un)social directory is the inverse of the kind of directories we’ve been living with throughout our lives; that makes it hard to think about initially.

A traditional directory is a collection of information about other people which you own - your Outlook directory, your collection of business cards, a phonebook, the phonebook in your mobile phone. Each entry gives you one or more ways to reach those other people. The information is static. If it changes, you have to both know about the change and take the time to enter the change or the directory will be out of date.

When you give people information about yourself to put in their directories, you are implicitly granting them permission to access you with that information. Once someone knows your mobile number he knows it; you can’t revoke that. You can refuse to answer when you get a caller ID you aren’t interested in but you have to change the number to revoke the privilege of calling it. On the other hand, if you do make a change, you have to find a way to notify all the people whom you do want to be able to reach you that the information changed.

Prepare to invert.

You maintain one copy of your master contact information in the (un)social directory – all of the possible ways to contact you. Everyone else has a similar master contact page which is visible only to her. When two people meet and exchange (un)social contact info, what they are actually doing is exchanging permissions but NOT contact information. Permissions are always revocable. This needs an example.

We meet for the first time at a tradeshow. You decide that you want to allow me email access to you because you may want to buy what I’m selling. I want to allow you both email and phone access as well as IM because I’m very eager for you to buy what I have to sell. We both do something online or on our mobile phones (UI TBD) to grant each other these permissions. Note that we do NOT exchange actual email addresses, IM handles, or mobile numbers.

We now each have two entries in our personal directory. The contact entry I use to reach you has nothing but permissions in it and the address of your contact page (which I can’t see but can get connected to you through). The other entry is the permissions I granted you which are to a subset of the possible ways to reach me. I can enhance, change or revoke these at any time – like if you don’t buy anything but keep calling to tell me about your golf game.

If I change phone numbers or email addresses, it makes no difference to you because you didn’t know what they were in the first place. As long as the address of my contact page remains the same, you’ll be able to get to me. And vice versa.

When you want to call me, you click on my name (whatever name you gave me) and a connection is made through my contact page. There’s some smarts in the directory application so you get the best permitted connection given the media you want to use – real time voice in this case – and the media I’ve permitted you and am available through at the minute. Maybe you’d like to leave voice mail if you can’t get me in real time; maybe you want to IM or email me. You may want me to call you back and can give me temporary permission to do that (remember, you didn’t give me general permission to call). But, since you are leaving just a permission and not a call back number, you don’t have to worry that I’ll pester you forever just because you asked me to call once.

How we get to the nirvana of the (un)social directory is coming up. So is findability.

Posted on my professional interest in this at My New Gig.

Fellow FWD-er CEO Daniel Berninger has more to say about directories here.

Aswath of EnThinnai shares the vision but differs on the business path to implementation.

Amazon S3 – Very Cheap Storage in the Sky

When I was building the Vermont Telecom Authority’s broadbandwiki web page, I had a problem: where do I store the information that users provide? Obviously, the data has to be somewhere that is accessible from anywhere on the web; it has to be reasonably secure against accidental or malicious destruction; and there has to be enough space and Internet connectivity to that space available for an unknown amount of use. The answer turned out be a Amazon’s Simple Storage Service (S3).

Because Amazon is sharing its buying power with you, the storage is very, very cheap. My bill for the couple of weeks I was testing on it (granted, small volumes) was $.04 – and I suspect there is some rounding up to the nearest penny in that.

With a little more packaging by Amazon and a lot more promotion, there could be a whole wave of Internet innovation enabled by the availability of S3. Note to developers: I did not use any application server; all the communication is directly between the web pages of the application and S3. There’s no PHP; no LAMP stack, no use of Amazon EC2. The web pages themselves are hosted on S3. More in a subsequent howto post.

When you use S3 your data is stored on Amazon’s servers. In fact it’s replicated (copied) to a number of different Amazon servers to make it both more secure and more accessible. You pay for the amount of data you actually store and the amount of access there is to that data. You DO NOT reserve any amount of storage or access in advance so your costs are not affected by the fact that you don’t know in advance the quantity of resources you’re going to need or what your usage is going to be. If you should be so lucky as to have a huge spike of interest, it’s unlikely that Amazon’s servers will notice the difference.

One alternative to using Amazon would have been to buy a server, put it under my desk, and make it accessible through my Internet access. That would have been at least a thousand dollars up front, more as more capacity is needed, and would not have provided either redundancy or reliability. Moreover, I would have had to do some additional programming to get my server to talk to the browser application.

More realistic would have been to have my server hosted at any one of a number of hosting services or to rent access to a server at a hosting service. Still, I would have had to make a minimum volume commitment and would be restricted to using the amount of capacity – both storage and bandwidth – that I reserved. Relatively easy to set up (I hear) but almost certainly more expensive and more limited than Amazon. This is, however, the way most new Web applications are launched.

LocalReplay.com, a company in which I’ve invested, has its very professional and very large data store including video clips hosted on S3. They’ve been as happy with it as I am. They’ve experience less outages than any other startup service I’ve been involved with. Moreover, when traffic is low between sports seasons, their costs go down. When a tourney gets huge attention, costs are up some but the capacity is there.

In the future, I’ll want to know why any web application company I advise or invest in DOESN’T use S3 (or a competitor should they emerge). If providing storage is NOT a key talent of a company and a key differentiator, it’s hard to see why it would want to compete with Amazon. No Amazon brand at all needs to show through, just quality and price. There’s even a mechanism for having Amazon bill your customers on your behalf if that’s appropriate.

Even companies which are not in the web business but use the web as part of their business should think about S3 as an alternative to both self-hosting and traditional hosting services. Here are the rates for storage including access in the US (Europe slightly higher).

Storage
$0.15 per GB-Month of storage used

Data Transfer
$0.10 per GB - all data transfer in

$0.18 per GB - first 10 TB / month data transfer out
$0.16 per GB - next 40 TB / month data transfer out
$0.13 per GB - data transfer out / month over 50 TB

Requests
$0.01 per 1,000 PUT or LIST requests
$0.01 per 10,000 GET and all other requests*
* No charge for delete requests

Planning for Failure

There have been a numbers of good posts lately on failure: Fred Wilson kicked it off with Failure Rates In Early Stage Venture Deals; fellow VC Seth Levine picked up the riff with Failure; Brad Feld says It’s Better to Fail Quickly and Mitchell Ashley says Fail Early, Fail Often. They’re all right, of course: failure happens; failure teaches lessons; failure builds character; and failure sucks. But none of them have posted the eight sure steps to failure.

Failure’s easy to achieve; all you have to do is plan for it. Here’s how:

1. set only low goals; then you’ll fail even if you meet them.
2. when you get behind schedule, revise the goals down; that’ll incent everyone not to break his or her neck trying to catch up.
3. revisit goals frequently; you may have accidentally set them too high.
4. don’t monitor progress; you might scare yourself.
5. form a committee to revisit the goals; that’ll protect against undue enthusiasm and deflect blame (and responsibility).
6. make sure you’re the first to cry “uncle”; then failure won’t be your fault.
7. never revise the strategy for achieving goals; it’s much easier to move the goalposts.
8. make sure everyone knows that you know the goals are unachievable; that’ll help assure that you’re right.

Very seriously, it’s better to get most of the way to an audacious goal than to achieve a slam dunk. On the other hand, failing at a slam dunk really sucks. If you want to be a success, you have to set your goals very high (and then, as I know well, often you’ll fail).

If you’re an entrepreneur, you have no choice. You have to achieve something audacious in some dimension (technology, marketing, financing, customer support, scale… something) or you aren’t going to distinguish yourself from those who are already entrenched and you’re going to be overrun by those who were braver.

If you’re dealing in technology in any type of organization, you also have no choice. Technology changes so quickly that anything that doesn’t get done at outrageous speed will be obsolete before it’s finished. That’s just the way it is.

You can’t just set a high goal and then bury your head in the sand, either. Chances are your plan to achieve any worthy goal will slip at one point or another. Then it’s time to revise the plan. That’s something you want to do very quickly. You may even find a few features you can trim from the goal to protect its essence.

Plans were made to be changed; goals were made to be met. Real failures come from giving in to fear of failure.

Why WiMAX?

The chart above tells part of the “Why WiMAX” story. WiMAX is yet one more standard (IEE 802.16) for the wireless transmission of data. The most recent rev, 802.16e, provides for very good mobile access to data. At speeds up to 75mph you can receive at rates “up to” 1 megabit per second and, at slightly lower speeds, much higher data rates. So, unlike WiFi (802.11), WiMAX competes with various cellular technologies for use in a moving vehicle. Not only voice but receipt of traffic conditions, weather, and entertainment will be coming to your car soon over your Internet connection and WiMAX is a contender to be that mobile Internet connection.

But WiMAX is also a contender to be your fixed connection to the Internet – even if you have DSL or cable available. Clearwire communication has already deployed a very limited WiMAX network in the US which it has promised to expand rapidly. Sprint is piloting its planned national rollout in a couple of locations and, if bankers don’t stand in the way, plans widespread coverage. WiMAX speeds can be faster than most DSL and rival cable in some locations. But, more importantly, you can use the same account both for Internet access at home and while roaming – if it’s a WiMAX account. That’s not important now when there’s not a significant WiMAX network to roam on but will matter if and when there is a nationwide and global WiMAX rollout – assuming that does happen.

Perhaps the most significant fact about WiMAX is that it IS a public standard. Most wireless ISPS (WISPs) today deliver service over proprietary precursors to WiMAX.  Because the transmission standards are proprietary to the radio manufacturers, a WISP which uses one brand of radios on its towers MUST use the same brand of radio at all its customers’ premises. With a standard-based protocol (and after testing and certification) radios from different manufacturers should interoperate freely and competition should quickly bring down the price of these radios. Note that WiFi cards and modems and USB dongles are very, very cheap BECAUSE WiFi is a standard. Moreover, WiFi gets built into laptops at almost no incremental cost. Cheap and builtin WiFi radios created the market for WiFi services at places like Starbucks which led to more demand for WiFi radios.

Learning from its success in pushing WiFi by building it into chipsets, Intel has an aggressive program to get OEM computer manufacturers to build WiMAX into laptops. Codenamed Echo Peak, the chipsets combine WiFi and WiMAX so that a single antenna and other components serve both – clearly Intel understands that users’ll be switching from WiFi to WiMAX and back for some time to come. And clearly Intel is committed to building a market for WiMAX as it did for WiFi; however, you can’t buy a laptop with WiMAX preinstalled today. “Should” be available 3d quarter of this year.

Because WiMAX chips will be cheap and WiMAX mobility can be implemented on a low power budget, enthusiasts predict that it will quickly show up in cameras, phones, GPSes, and all kinds of other devices.

The chicken and egg problem, however, is that there still needs to be enough WiMAX coverage available to make such devices useful.

WiFi vs. WiMAX is more about the differences between the two protocols and a little about creative chaos.

Raising Money in Tough Times

The best time to SUCCEED in raising money is when money is hard to get - like now, for example. When capital is easy to get, your competitors (who are, of course, much less deserving) will have plenty of capital, too. Dumb spending or pricing by them may “force” you to do the same. In the end, easy capital may not give you any advantage at all and you pay for it with part of your company.

Capital is a coward; the sound of popping bubbles sends it burrowing under the mattress for safety. Your tech startup is not in any way related to the sub-prime housing market or to the imploding debt of leveraged buyouts. Nevertheless, if you go out for money now, you are searching for a spooked commodity. You may just be wasting your time. But, if you get the money, it puts you at a huge advantage to unfunded competitors. BTW, your competitors include everyone else jockeying for attention in the new product and service marketplace whether they compete directly with you or not.

There is a fundamental difference in what scared investors look at compared to greedy, bold investors.

Greedy, bold investors (which is what you have while bubbles inflate) don’t worry much about fundamentals; they are too busy making sure they get seats at the table – any table. That strategy actually works at the beginning of bubbles (and Ponzi schemes); those who get in AND OUT early get rich – they really do: that’s what attracts everyone else. Obviously this happens not only in high tech but also in residential real estate and tulip bulbs: it’s a fundamental part of the economic cycle.

But frightened investors (which is what you have when bubbles pop) are worried not only about the fundamentals of the company but also all the external things you, the entrepreneur, don’t control. What if your market implodes through no fault of yours? What if the time comes to raise your next round and, even though you’ve met and exceeded all your objectives, ALL the money in the world is in hiding? Oh, dear.

So, if you’ve decided to raise money now (or have no choice), you have to address these fears. Here’s a few suggestions:

1. present a plan of reasonably achievable singles and doubles, not home runs. Remember you’re selling against fear, not to greed.
2. present a plan which is a believable projection of what you (either as a company or as principals) have already achieved.
3. instead of the automatic assumption that another round of financing’ll be available at a reasonable price when you need it, have a Plan B which includes going forward with NO additional financing.
4. consider making Plan B above your Plan A. If the market opens up and the company has done as well as you think it will, you can always change your mind.
5. show the investors how the addition of their money to your already excellent company will create a virtually unassailable position vs. potential competitors.

There is money out there; it’s just hiding. There are venture funds which have commitments for funds they’d dearly like to put to work. Credit is cheap for the most credit worthy (which doesn’t usually include startups), because credit is unavailable for everyone else and banks have to put their money somewhere. The terms you’ll get now are not as good as the terms you can get when there’s more money than ideas; but the money may be worth much more if you get it.

Good luck.

See a related post by my friend VC Rob Shurtleff on the perils of Bridges to Nowhere - on the perils of funding rounds that are too small to cross a chasm with.

Being First IS The Business Plan

So you want to start an Internet business. You look around to see what kind of businesses are succeeding. You read in the WSJ about someone who had a unique and clever idea and is now turning down eight figure acquisition offers; he only has a small share of the potential market and you can do what he’s doing better: his site isn’t even that well designed.

You show your potential investors how quickly a business like this can grow. If you’re UNlucky, they DO invest. Then you fail even though your predecessor with the same business plan succeeded.

Why?

Because the important part of his business plan is that he was first, not the other specifics. craigslist is a huge success; if you try to start joeslist, you fail. Craig was first.

This isn’t an immutable rule. Google wasn’t the first search engine (remember Alta Vista?), but it had a better search algorithm AND quickly combined it with a better advertising model than anyone else had. Excel was hardly the first spreadsheet (remember VisiCalc, MultiPlan, and Lotus 1-2-3?). #1 can blow their lead through complacency and a lead can be overcome by a better mousetrap AND a big budget.

But nothing beats first mover advantage for starting on a shoestring and winning big. It was being #1 that got the hypothetical early mover you read about back in the first paragraph of this post into the WSJ. They’re not going to write about you being #2 (unless you’ve got a great publicist).

The first bloggers had a good shot at becoming famous bloggers – not because they started famous but because they were first. Then blogging, like most many-player phenomena, settled into a power curve, the notorious long tail; and it became very difficult to break into the rank of top bloggers unless you are already famous or well-connected to the top bloggers.

The Internet is no longer a small community – hardly! Getting attention in cyberspace is at least as hard as getting attention in the real world. Even first movers need to be well-connected, well-known, or well-represented (or very lucky) to get noticed.

It’s an oxymoron to use a first mover as a model for your me-too business because you’re missing the essential ingredient; you’re not first.

Morph of a Nerd CEO – Selling Past the Close

You: “Don’t buy our product just because it is the cheapest alternative available. In fact, the money you save and the opportunities you gain because our product is so easy to use will dwarf the savings in initial purchase price. Moreover we have features that our competitors haven’t even begun to think about copying; we have patents; we have more users than anyone else…”

Prospect: “I’ll buy. I’ve got a limited budget and your product is the cheapest one on the market….”

You: “That’s not why you want to buy our product. We…”

CUT

You’re selling past the close. You’d rather be right than make the sale. Pretty soon you’ll talk the customer out of buying altogether. One correct answer is: “Thank you very much for your order. How would you like to pay for that?”

Arguments provoke arguments. It was hard for you to learn to sell in the first place; now you have to learn when to stop selling. But, if you’re really confident in your selling ability, then, when you get an order, go on to sell something else.

You: “That’s great. Thank you very much for your order. You know, we can save you even more money [note this incorporates what the prospect told you was his hot button – price] if you buy the extended maintenance contract at the same time. In fact I can give you an additional 10% off on the whole order if you prepay both for the software license and two years of extended maintenance including FREE priority phone support, all upgrades, and special discounts on addons. Shall I write it up that way?”

The previous paragraph is for extra credit only and can be risky. The most important thing to do is cement the sale you already got.

Don’t sell past the close. Also a good rule when you have a boss and convince her of something: stop arguing immediately.

Other posts in this series:

Morph of a Nerd CEO - The Power of Silence

Morph of a Nerd CEO – The First Employees

Morph of a Nerd CEO – The Close

Morph of a Nerd CEO – First Sole Practitioner

Morph of a Nerd CEO – Yuk, Selling

Morph of a Nerd CEO – Sick Days are Sick

Trains and Planes

At 1PM, someone trusted by our driver at the train station in San Rafael, Mexico “knew” that the 1:20PM train to Chihuahua wouldn’t arrive until 2PM. In fact, it didn’t arrive until almost 3PM. No one seemed to know about the full delay since there were both vendors and railroad employees waiting for the train from 2PM on. Such delays are common on the Chepe Express; two days before the train hadn’t run at all.

While we waited on the platform, we had plenty of time to notice that only one wire went from the utility poles on the street to the houses and businesses. There was power but no telephone. On top of the train station there is a mast for radio telephone which some people use. Along the railroad track there are old telegraph wires, but they are apparently no longer in use since they hang to the ground from some poles and make a trellis for vines. The trains spend a lot of time on sidings of the one rail line, waiting for each other to pass.

“Communications problems,” I said with a superior air knowing that Telmex’ effective monopoly has retarded telecommunication development in Mexico.

Almost exactly a day later we were in O’Hare waiting for a flight to Burlington. Half an hour prior to the scheduled 7:05 PM United departure, all the fancy displays at O’Hare said “on time”. When we got to the gate, a big LCD with Burlington weather said there were just two minutes until boarding. Mary has this habit of looking out the window instead of at the electronic screens; “there’s no plane here,” she said. She was right.

“Minutes until boarding” disappeared from the display; I had sort of thought it might go negative.

“The plane is coming from the hanger,” the gate agent announced. “It’s had some maintenance but it’s on its way over now.” She had lots of communication equipment: a landline phone, a computer, two cell phones one of which also had walkie-talkie capabilities, and a PA system to talk to us with.

Half an hour later there was still no plane at the gate. O’Hare’s big but it’s not that big. I was going to question the gate agent more closely but noticed that she was looking out the window the same as I was to see whether anything was parked at the gate. On the LCD, new departure and estimated arrival times were posted every ten minutes – always ten minutes later than the previous post. Once the boarding clock ticked down from fifteen to one again but that didn’t bring any plane. Twice the agent told us that she had been told that the plane had now left the hanger. Once, inexplicably, she’s said it just landed – maybe it flew across O’Hare.

Finally a plane did arrive. We boarded quickly and were assured that we would get a speedy clearance and have a speedy flight because of stronger than usual tail winds. What the pilot didn’t know and couldn’t tell us was that a problem with the evacuation slide indicator lights had been fixed but not yet tested. Not sure I want to go down a slide into Lake Champlain in January but no one asked me. That test (which didn’t involve deploying the slide) took forty minutes. Then we went home.

So, with all the modern communications technology in the world available, United didn’t do any better at telling its passengers when they could expect to depart than the operators of the Chepe Express did. Anyone who flies frequently knows that this isn’t an isolated failure.

Moral is that both Mexico and the US have a lot of modernizing to do if we North Americans are going to compete in a global economy. I know the Chinese railroads had there own problems last week but China is getting better fast at the information technology needed for a huge economy and its infrastructure to function. Trains and planes ought to run on time; the whole economy suffers when they don’t. When they’re late, people need to know. I think we’re buying a lot of gadgets but don’t have the will to put them to good use.

Happy Hour

Next Tuesday, Feb 5th, I'll be a guest on the Happy Hour show hosted by my friend Cody Willard (2d from left). The show is on FoxBusiness Network every weekday from 5 to 6 PM; appropriately, it's broadcast from the Bull and Bear Bar in the Waldorf Astoria. Below is an episode from last week.

Note: If you can't see the video below, link here.

Even if your local cable or satellite network doesn't carry Fox Business (DirecTV channel is 359, not on Dish) all segments from the show are available as video at www.foxbusiness.com. Trick is to go there, click on VIDEO in the horizontal menu bar, then scroll down to the Search for Videos box in the middle of the new page (don't use the search box at the top of the page), enter "Happy Hour", and click Search.  Each segment (guest) of each Happy Hour show is then accessible. Since it's broadcast live (and then, again, at 11 PM) the segment obviously won't be on the web until after it appears on the air but they do seem to go up almost immediately after they happen.

Don't know quite what we'll talk about but Cody is good at making almost anything fun and puncturing pomposity in guests. Hope you'll join us on TV or on the Web. BTW, you can rate the segment on the web. If you come to the bar, we can have a drink and you can tell me how I did in person.

Outside Chair

Longtime friend Rob Shurtleff, now a VC among many other endeavors, has started blogging. I take some of the credit for that which is only fair since he gets all the credit for my having gone to Microsoft a million years ago. Rob has interesting things to say: he recently posted that a board of directors should evaluate the CEO and give her or him feedback after each board meeting.

“…who should deliver the review? In my experience this is best done by the Chairman/women of the board, aka the Chair. In my experience the Chair can provide a key mentoring and organizing role that makes a CEO’s job easier.”

Implicit in Rob’s recommendation is that there IS a Chair of the Board separate from the CEO. Thinking back on having been both CEO and Chairman of my own startups, I think I would have done better with a separate Chair once the companies took in outside money even though I probably would have fiercely resisted the suggestion that I not hold both roles at the time.

A separate Chair makes reviews possible; everyone needs to be reviewed.

By necessity, a CEO provides most of the content of a board meeting; that’s a good reason why he or she should NOT also be moderating the meeting. A good Chair can assure that there’s a good agenda for meetings; that materials are distributed beforehand; and that time is left for important discussions. Moderation of a meeting is best done by someone who is NOT doing most of the talking.

A separate Chair provides an instant (if not long term) successor or replacement for the CEO in case of emergency.

A non-executive Chair can be more effective in getting other Board members to fulfill Board responsibilities and NOT try to manage the company than the CEO can. If the CEO is also Chair, she or he is effectively managing the Board which is oxymoronic although common.

The non-profit boards I’m on now and the Vermont Telecommunications Authority of which Mary is Chair have separate Chairs and CEOs. They function well this way, I think. The tension between CEO and Chairman is largely constructive. Here I think the private sector has something to learn from the public sector.

Obviously doesn’t make sense to have separate CEO and Chair when you’re a one person band and also the janitor, plumber, and receptionist. But the roles should split at the time you expect to have Board with real fiduciary responsibility which is presumably when there’s money in the venture besides your own. At that point you’ll have a better Board and a better company if you’re not the Chair (unless you want to be the Chair and have someone else be the CEO – that can work although founder/Chairs deserve a post of their own).

Rob’s post was in response to a post by Seth Levine on CEO reviews with lots of how-to in it.

HD Voice

The bandwidth of the telephone connection between our homes and the telephone network hasn’t changed in my long lifetime. Although some noise has been eliminated in long distance calls (sometime and if we’re not on a cellphone), voices on the phone still sound like they did sixty-five years ago. We’ve trained ourselves to accept the clipped quality of a telephone voice with its lack of emotional overtones.

You wouldn’t dream of listening to music over the phone. You expect and get much better sound quality from almost any radio and on TV. Movies have Dolby sound. But the telephone is still the telephone.

Guess what? It doesn’t have to be this way. The answer to telephone voice is voice over IP (VoIP) – so long as both parties are NOT on the public switched telephone network.

In the early days of VoIP, we had to save scarce bandwidth and contend with uncertain Internet delivery so we compressed voice even further than the phone network does and made quality even worse. But, today, bandwidth is relatively plentiful and cheap processing power usually lets us overcome any short delivery glitches (technically called jitter). Now high definition voice is not only possible but it’s also being delivered.

My friend Daniel Berninger’s been telling me this for a long time. As CEO of FWD International (in which I’m an investor), he’s insisted that all our new voice applications (like Facebook VoiceMail) be high definition. But, since I have a tin ear and had a cheap set of earphones, I didn’t realize how important high definition voice is.

Yesterday I had a phone call to make to someone in Israel. I tried to place the call on my Vonage phone (cheap rate to Israel). Since Vonage is designed to interface with the traditional phone network and since I was calling an ordinary phone, I would have gotten the usual phone quality if I’d connected. But Vonage said it had no circuits available. I knew the Skype ID of the person I wanted to contact so I put on my brand new headset and called that ID through my computer.

Fortunately the person I was calling is an active Skype user and he was on his computer and saw and answered my Skype call. He apparently had a decent quality headset as well. Skype devotes extra bandwidth – you’re paying for it, not them – to making call quality good when the call is between two Skype users. The quality was not only good – it was superb. Usually when I speak to someone for whom English is not his native language, there is a lot of “what” and “please say that again” and “I didn’t quite understand you” in both directions. None of that. We were on Skype an hour and sound quality made the conversation much better than a phone conversation has ever been.

I used to think the reason I have a hard time understanding people on the phone is because I can’t see their lips and their expressions. Now I realize much of the problem is the terrible audio quality – which we’re so accustomed to – of a traditional phone call.

As more and more of our communication goes over abundant Internet bandwidth and bypasses the telephony last mile and as the handset and headset manufacturers have an incentive to spend a little extra on speakers and microphones to support HD voice, we’re going to start insisting on getting what we’ve been missing.