VC:VC It's not about the hands you don't play

VC Truism: Like poker, it’s not about the hands you don’t play, it’s about the hands you do play. No-one went broke folding before the flop.

I have been twittering over the last few months, and am enjoying just laying out VC truisms, aphorisms, or even stupid-isms. You can catch this on my twitter feed http://twitter.com/rdale.

Entrepreneurs understandably, and to some extent correctly, take away a message that their startup isn't "good enough" if we turn down the opportunity to invest. Clearly if some of the problems we see in the deal were absent we might well do the deal. On the other hand, sometimes it really is a matter of our own workload, or interest areas, or geographic constraints, or any number of factors which have more to do with us than with the deal at hand.

Coming back to today's truism, Venture Capitalists are like poker players. We are not playing directly against others, but we get to decide when to invest, like a player decides when to bet on a hand. And just as poker players don't go broke on the hands they don't play, we VCs don't go broke on the deals we don't adopt.

We try to see the best potential in the deals to which we are introduced, and we try to be rational and reasonable about our decision making, but we are much less emotional about a no decision than we are about a yes decision. Saying yes means investing considerable time and money in a deal and this incurs all of those deal-specific risks as well as the opportunity costs related to spending our resources here and not elsewhere. Once we say yes, that is when we are in the game and playing to win, with all our emotional energy as well as everything else we try to bring to support the company. To entrepreneurs this often seems backwards: a no decision is a let-down and more, and a yes decision is clearly rational and appropriate!

On the venture cycling (philanthropic) side of my VC:VC life, we have other dynamics at play. Here, the choice of philanthropic or social justice causes which we do not support may be just as important as those we do. Without our support, or our voice, will a moral imperative fail? Will our silence (on the environment, on Darfur, on civil rights, on human rights) mean that someone is made homeless, beaten, imprisoned, tortured, or will die? Will we "go broke" 0n a hand because we don't play?

My 3rd Hazon NY Jewish Environmental Bike Ride

It's that time of year, and already a few friends have shown great generosity in sponsoring me for what will be my third annual outing in the Hazon NY Jewish Environmental Bike ride. I am riding again with my daughter Hannah. You can read about my 2006 and 2007 rides to get a flavor for the fun (better than sponsoring me would be to register as a rider or crew member yourself).

Click here to donate

There are lots of ways to describe the importance of Hazon ... my personal favorite is that Hazon brings Jewish voices to the environmental movement and environmental voices to the Jewish community. Over the years the Jewish people have tried to be on the right side of big issues, and I think this is one of those times.

You can click here to sponsor me or if you prefer, you can click to sponsor my daughter, Hannah.

From laid back to laid forward

I love the Bicycle Bell Curve from a recent post on the EcoVelo blog.


I am just drawn in by the design of this graphic and how it magically puts all bikes on a continuum. This simple diagram shows so much, I guess the artist is a disciple of Edward Tufte.

On another note, sad to say *my* Starbucks did show up on the list of stores to be closed, as Chris noted in a comment on my previous post. If anyone has any ideas on how to reverse this please let me know!

Do not close *my* Starbucks

Today I sent the following letter to Starbucks HQ... let's hope they listen.

Starbucks Coffee Company
PO Box 3717
Mailstop R-CRI
Seattle WA
98124

July 15, 2008

Dear Sir or Madam

I am a regular customer at one of your two Newton Centre, MA stores. This is the store at 70 Union Street, Newton, Massachusetts 02459, in the fabulous old station building. I am writing to implore you NOT to close this store. When I asked the staff at this store if it was one of the stores to be closed, they were cagey enough to make me feel very concerned which is why I decided to write.

Did you know a nationally best-selling author writes her novels in this Starbucks?

This store, “my” Starbucks, really is my “third place”. I often work from home (nearby) and have business meetings in this Starbucks. As well as buying for myself, I am buying drinks for one, two or three others … generally several times a week.

This store has much more character than any other Starbucks I have visited. It is in an old station building, and has amazing wood paneling, and lots of room to sit. If you are truly committed to returning to quality and to the tenets that made Starbucks great, you will not close this store. I even created a special Google map to show folks how to get to my Starbucks (see http://tinyurl.com/66t47u).

The other store in Newton Centre is much smaller, and has much less character. I guess it might have “more sales per square foot” but that is because it is smaller! If you closed that other store, I bet most of the traffic would move to “my” Starbucks.

I have no plans to spend time in your other store in Newton Centre. There is now an independent coffee shop in the area (“Pie Bakery and Cafe”) and if you close “my” Starbucks, I would encourage all my friends and my blog readers to go there instead. Newton residents are an “ornery” lot and remember fondly the Coffee Connection chain you bought many years ago. My Starbucks on Union Street is one of those original Coffee Connection locations, and has a loyal following. Please do not disappoint us.

Yours sincerely

Facebook to remove all third party apps?

I heard a rumor "from a usually reliable source" that Facebook is about to announce that they will be removing all third party applications, and only providing Facebook apps to users from now on. No more Causes, Friendwheel, Superpoke, Funwall, Bookmooch, ... and thousands of other third party apps.

Supporting this rumor is weird behavior of Facebook disabling third party apps for no clear reason as reported regularly by Techcrunch. Also, there is some belief that the Facebook folks are clueless, and that the new management there is desparate to try anything.

I don't believe it. I don't believe it because it would be moving Facebook back to being a walled garden, would remove fabulous functionality (along with lots of silly functionality), and would make the platform significantly less interesting to users. Evidence for a continuing robust support for third party apps is the Facebook developer website and conference, and Facebook's stated commitment to open access.

However, the mere fact that such a rumor is out there is an interesting comment on the tech industry and Facebook itself. Why would we even believe such a possibility? Do we really believe there may be some sane reason for such a move? Could there be? That frisson of possibility keeps the rumor alive, just like the possibility that Exxon will switch from oil wells to renewable sources such as algae.

Here is my conjecture: if Facebook is really looking to do something shocking and possibly ground breaking, they will start charging third party apps for access. If I was doing this as Facebook, I would charge per user per month. I would give each app six months free up to 50,000 users (ie if you reach 50,000 users before 6 months the free period is over). Upon reaching the end of the free period I would charge you some number of cents per user per month, and then leave it to you, the app developer, to come up with a monetization strategy.

F8, the developers' conference is in a couple of weeks... let's see what happens.

A window into VC work

Brad Feld's blog pointed me over to a posting by Rick Segal, 3 VC questions you should not answer, on which I commented. For those who want a reasonably accessible window into some aspects of VC work, have a look at Rick's article and the comments.

My 1st 2.0 30 4 bike ride

Some relatives are visiting on Sunday, so I wanted to take advantage of low traffic on the roads (for the July 4 holiday) and ride today. My regular riding partner, Guy, was otherwise occupied and so I made plans with Lee, Sammy and Elisa to do the 30 mile Lincoln loop bike ride.

Since it was not clear if everyone would be up for the full ride, I made up a route and cue sheets for everyone which would allow for some to go ahead and some to cut the ride short if needed. I used the Bikely website because it allowed for me to create a route by "drawing" on a map or downloading a file from my GPS. Once the route was in place, you can add notations on the route (mostly at turns) and then it creates a cue sheet - with distances calculated automatically - for you to be able to share turn-by-turn instructions. Here is the route, click the title bar to see the ride and cue sheet on the main Bikely site.

Newton-Lincoln-Newton 29 miles

http://www.bikely.com/

Also, I should mention, that Guy is normally the guide, and although I was pretty sure of the route, this time I would be the navigator and I wanted to be sure I didn't lead anyone astray.

We started around 9am; it was cool, misty and cloudy. However, the weather forecast showed it clearing up at the latest by 10am. The clouds were not reading the forecast, because it rained for about 20 of the 30 miles, sometimes pretty hard. However, despite this, or even because of it, we all had a blast on the ride. The route is beautiful, even in the rain, and we were all thrilled to be out enjoying the elements, and the physical activity. The pace was a little slower than usual given the weather and the fact a couple of the group were newer to this length of ride, but it was still a blast and a work out for all of us.

So this is my first Web 2.0 bike ride (using Bikely), and as a 30 miler with 4 of us riding together we have the 1st 2.0 30 4 bike ride.

P.S. It also happens to be my 2 year biking anniversary. I bought my bike on July 3, 2006 and started riding, training up for the Hazon ride, on July 4 of that year. I did not realise this until I was chatting with Sammy half way through today's ride but I know am still enjoying it all as much now as when I started.

A flask of electrolyte enhanced water, a simple energy bar, and thou

The Rubbayat of Omar Khayyam as translated by Edward Fitzgerald includes the lovely quote "A Jug of Wine, a Loaf of Bread--and Thou", extolling the virtues of the simple pleasures. As a venture capitalist, my translation is related to how I look at business plans that come in:

A Jug of Wine -- a heady vision, a well structured flavor complicated enough to stand on its own, but simple enough to understand, and never causing a hang over.

A Loaf of Bread -- real substance, probably a strong technology base, with a great recipe to produce something that smells good right out of the oven and will bring customers back again and again

And Thou -- yes you, the most important part of any business plan: the entrepreneurs - energetic, passionate, hungry, and willing to live on energy bars and electrolyte water until the first round of funding closes.

As a venture cyclist I can close out this circle:

A Jug of Wine -- a flask of 365 brand electrolyte enhanced water from Whole Foods ... this tastes like water and gets a TEN out of ten on my search for the perfect electrolyte drink.

A Loaf of Bread -- a YouBar ... the nirvana of energy bars ... putting the others to shame ... not cheap, but really worth it. YouBar allows you to make up your own recipe for energy bars. You get to choose which base, protein powder, nuts, fruits, sweeteners, seasonings, grains and infusions go into the bar. Most ingredients are organic. There are no preservatives, so the "use by" date is pretty close... but they freeze fabulously... just put them in your bike bag straight from the freezer and they will be ready to eat by the time you are getting peckish. The company will even answer the phone and help you make up a recipe that will work.

And Thou -- yes, you ... I love company on bike rides, although even riding alone is great. Join me on the Hazon NY Jewish Environmental Bike Ride this Labor Day weekend.