Summation

walk faster and ignore the roses

people walk too slow. And drive too slow. Lots of people meander to and from different places. They enjoy travel, long drives, and routes that aren't always the most efficient.

I'm not that way. I like getting places quickly. Of all the things in science fiction, the thing I most want is a teleporter. I'd love to be zapped to work every morning to avoid my 10 minute commute. I'm planning a trip to India now ... a 24 hour travel experience ... and while I will benefit from reading a bunch of books and spending some time in deep thought, there is nothing I'd like more than to be zapped to my destination. but alas, we might not be able to expect this essential tool from science fiction in our lifetime.

People always say: "stop and smell the roses." That's often seen as good advice. They often say "don't work so hard" to people. the common thing I hear is the story of a man on his deathbed who never regrets that he didn't work hard enough but does regret that he did not spend enough time going to little juniors baseball practice.

But that's just the issue with regrets ... the accomplished often regret that they did not spend enough time with their family. The unaccomplished often regret that they did not spend enough time to be accomplished (and they often ALSO regret they did not spend enough time with their family).

People often look down on workaholics. They claim this isn't good for health, for the person, or for society. To that, I say ... baloney!

What does Martin Luther King Jr, Mahatma Gandhi, Alexander Hamilton, Bill Gates, Nathan Rothschild, and almost everyone else that changed the world have in common? It isn't that they spent tons of time stopping and smelling the roses. These people lived, eat, and breathed their work. Great people work really hard. Yes, they occasionally watch a movie, get lost in a mindless book, play with their kids, create art, kiss their spouse, cook a meal, and exercise ... and that's all good. but great people, almost all of them, work really really hard.

My advice is ignore the roses ... focus on changing the world. The roses will still be there when you're done.

Virgin America rocks

I'm writing this post while on a flight from SF to DC. Besides for the flight costing only $129, the planes are clean and comfortable. They also have a very snazzy in-flight entertainment system (with lots of Stevie Wonder and Beck tunes) and a cool design.

But the best feature of Virgin America (and possibly the simplest) is power outlets in coach. And not the weird plane power outlets that you need a special plug for ... Virgin has real outlets for real plugs. and in coach.

I'll probably fly Virgin in the future purely for the power outlets - this feature alone has won my heart. Instead of doing everything I can think of to conserve power (dimming the screen, not running any multimedia apps, etc) on the laptop for fear of the battery running out, I now can blast all my applications. And I can conserve my battery (I usually like to keep 25% of the battery so I can send emails queued on the plane through my EVDO card when I am in the cab).

Thanks Virgin!!!

Wine is a big scam

Everyone loves wine. People are always talking about this wine and that. How one is fruity and one has a bit too much bark. They’re earthy, chilled, or aged. Wine is a global fad that has been really big for generations. But why?

First, why is it so important to drink alcohol at a proper meal? I mean, is it so important that we need to alter our state-of-mind while we engage in discourse over a nice meal? Is the company of the others at the meal so bad that we need to mollify it with some alcohol?? Of course not. So why the attraction to ALWAYS have alcohol with a nice meal. Can you imagine a similar fad forming around grape juice (wine without the alcohol)? Imagine buying a bottle of grape juice for $200 … you’d be laughed out of town. (even when you retort, “but this grape juice was made by Baron de Rothschild!”)

Pretty much every time I go out to eat for dinner, almost everyone at the table (except for maybe the pregnant lady and the occasional practicing Mormom) is downing at least one serving of wine with their meal. Occasionally you’ll find someone ordering a beer or a martini … but invariable, people are drinking (and talking about) the wine.

In fact, there is a whole elaborate ceremony to drinking wine. First, you order it. Of course, you pick a bottle from a long list. And you try to impress your dinner attendees by pretending you know something about wine by asking really pretentious questions about the year and if it is a “reserved” label or something.

Then you get the wine served and you stick your nose in the glass, swirl it around and say something nonsensical like “let it breath”. Just imagine saying that about a can of grape soda.

And then, not to be outdone, the entire table must talk about the wine and comment on its flavor, aroma, and origin (“those Argentines have a lot of trouble managing their currency, but they sure know how to make a fine wine”). And then, just when you think the dinner as about to settle in, some people at the table use the wine to give themselves a hidden compliment (“this bottle is the same one I shared with the King of Sweden at Davos”).

There are tons of studies on wine drinkers. They all think they are better wine experts then they really are. Poll 20 of your friends and most of them will be able to tell you why they prefer a $100 bottle to a $10 bottle. But if the labels were switched, they might give you a similar answer. Is it all just a fad??

My answer: yes. Wine is a giant fad. It is surely popular and has been going on since the beginning of civilization … but the height of its popularity is now. It seems that so many people have nothing better to do than to take classes on how to “appreciate” wine.

In fact, it is a scam. I’m not saying wine is totally useless and that no one likes it … but I am saying that the great majority of people that like wine, like it because so many other people around them like wine. In this case, the Emperor might have some cloths, but it ain’t more than a speedo and some sandals.

book: The Black Swan

The Black Swan: The Impact of the Highly Improbable
By Nassim Nicholas Taleb

I’m a big fan of Nassim Taleb and loved his first book, Fooled by Randomness.

His second book, The Black Swan, was given to me by Patrick McKenna. While the book was occasionally a little too intellectual, it is definitely one of the best books I have read this year. Read more about it on Amazon. Highly recommend it.

Practicing failure

Over the weekend I had a great opportunity to go flying with Seth Sternberg, CEO of Meebo. Seth is an accomplished pilot who has been flying ever since high school. He’s now the proud owner of a great 4-seater plane that he flies almost every weekend (and often does practice flights at 6a before work.

To get a pilot’s license, Seth and every other pilot need to practice failure. They practice the engine blowing out by cutting out the engine and landing the plane. They practice all sorts of potential mishaps including intentionally diving the plane, spinning, toward the ground and then seeing how they recover (all of these with a trained instructor). Essentially, they try to simulate anything that can go wrong so that they are practiced on how to deal with it when it does.

Practicing for failure saves lives when you are a pilot.

But outside of a few vocations, people rarely practice for failure. That type of thing is rarely practiced in the business world. Occasionally big businesses will have a disaster recovery plan, but it is rarely drilled. And start-ups rarely have time to practice anything … we’re so busy doing. Something like crisis management or planning what will happen if a key member of the team leaves is rare in the world of entrepreneurs.

Or imagine planning for failure in your personal life … like role playing what you would do if your spouse cheated on you. Of course, that’s absolutely absurd, but most people are too busy to even do a fire drill.

In flying, planning for failure is essential for success. Flying with Seth – who is meticulous, calm, collected, studious, and very practiced – is reassuring. And I have no doubt that being a licensed pilot makes Seth a better CEO and allows him to react better in a crisis.

book: Geography of Thought

Geography of Thought
How Asians and Westerners Think Differently … and Why
By Richard Nisbett

This book was a very insightful collection of psychology studies comparing people in the United States and Europe to counterparts in Asia (mostly Japan, Korea, and China). The book was given to me by Courtney Smith last year and I finally got around to reading it. It was a quick read (one airplane ride) and the book was quite insightful. I recommend picking this up – especially if you are doing business in Asia.

Congrats to Chris Alden

Super congrats to Chris Alden who was named as CEO of Six Apart today. Chris was previously EVP of Six Apart and before that was CEO of Rojo (which Six apart acquired).

Six Apart runs Typepad (which runs this blog), Moveable Type, LiveJournal, and Vox.

Yahoo causes epileptic seizures

According to section 19e of Yahoo's Terms of Service, a small percentage of Yahoo "users may experience epileptic seizures". Is this lawyer's gone crazy???

In case Yahoo deletes this clause, i have reprinted it here in full:

A SMALL PERCENTAGE OF USERS MAY EXPERIENCE EPILEPTIC SEIZURES WHEN EXPOSED TO CERTAIN LIGHT PATTERNS OR BACKGROUNDS ON A COMPUTER SCREEN OR WHILE USING THE SERVICE. CERTAIN CONDITIONS MAY INDUCE PREVIOUSLY UNDETECTED EPILEPTIC SYMPTOMS EVEN IN USERS WHO HAVE NO HISTORY OF PRIOR SEIZURES OR EPILEPSY. IF YOU, OR ANYONE IN YOUR FAMILY, HAVE AN EPILEPTIC CONDITION, CONSULT YOUR PHYSICIAN PRIOR TO USING THE SERVICE. IMMEDIATELY DISCONTINUE USE OF THE SERVICE AND CONSULT YOUR PHYSICIAN IF YOU EXPERIENCE ANY OF THE FOLLOWING SYMPTOMS WHILE USING THE SERVICE: DIZZINESS, ALTERED VISION, EYE OR MUSCLE TWITCHES, LOSS OF AWARENESS, DISORIENTATION, ANY INVOLUNTARY MOVEMENT, OR CONVULSIONS.

(special thanks to Vivek Sodera to pointing this out to me)

Rapleaf at burning man??

A friend of mine that was at Burning Man last week reported:

There is a theme camp called Rap Leaf that had a killer rave in a huge geodesdic dome.

:)

legal fees: most important term sheet clause

when most entrepreneurs get a term sheet from a venture capital firm or a group of angels, they tend to focus on the valuation, share price, liquidation preference, option pool, board member set-up, etc. All of those are really important.

But if you are trying to get the deal done quickly and want to save your company some money, you should also focus on the clause about the legal fees of investor’s counsel. Typically, start-ups have to pay the legal fees of the venture capitalists. This is a great deal for VCs to save some money when they invest in deals.

In the companies I am involved in, I’ve seen a huge range of dollar amounts for the legal fees for investor’s counsel. an angel deal typically is $10k. VC round is likely $20-30k. the longer the company has been around, the larger the amount (because that usually correlates to the more corp governance issues a company has and the less vanilla its structure is).

As an entrepreneur, you should fight hard to reduce this legal fee clause. Here’s why:

First, you want to save your company money.
VCs typically are not great stewards of cash. They typically pay more for everything than an entrepreneur would ... they always pay full price. Plus, if you are paying their legal fees, they don’t have enough incentive to haggle with the lawyer over hours billed. I can’t prove this empirically, but my guess is that the ultimate bill from investors counsel is usually within 3% of the cap in the term sheet. So if your clause says you will pay up to $30k to investors counsel, expect to pay at least $29k.

Not to be outdone, your counsel will use investor’s counsel’s fees a barometer for their own fees. Your lawyer will typically charge 150% of investor’s counsel (since they are doing a lot more work). So if you are paying investor’s counsel $30k, you’ll likely pay your own counsel $45k – for a total of $75k. if you are only raising $3.5 MM, you just paid a 2% fee off the top to the lawyers.

Now if you were able to negotiate $20k to investor counsel, you may only pay your own lawyer $30k – for a total of $50k – thereby saving your company $25k for the same deal.

Second, a much more importantly, the time it takes to close your deal will vary on how much you pay your investor’s counsel.
If you cap investor’s counsel’s fees at $30k, they will have a much greater incentive to nit-pick over little items than if you cap them at $10k. my formula is:

Time it takes to go from term sheet to close = 20 days + 1 day for every thousand dollars you spend on investor’s counsel.

You probably can never close a venture deal in less than 20 days (assuming the company has at least some history). And for every thousand dollars you pay investor’s counsel, they essentially can postpone the deal from closing one more day to increase their fees.

This might sound cynical and anti-lawyer. It isn’t meant to be. There is no proof of this theory – only from my own personal observation. And I’m sure this doesn’t apply to ALL lawyers. And it might not apply to YOUR lawyer (who you presumably like and think highly of). But you don’t know the investor’s lawyer and thus should be wary that they might postpone closing to increase fees. Not consciously, of course. But subconsciously, humans tend to go to the right wall boundary.

With this in mind, as an entrepreneur, you should fight to lower investor’s counsel. This, of course, is the one clause YOUR lawyers will almost never advise you on (they’ll probably do a good job on advising you on the other important clauses). Which is why it is so important that you, the founder, spends a lot of time on this.