Venture Capital Journal
My Life as a Blogger
To blog or not to blog? That's the question Brad Feld, a managing director
at Mobius Venture Capital, asked himself last year before launching his
personal Web diary, dubbed Feld Thoughts. He wondered if anyone would
be interested in his musings about bear watching in Alaska, the latest
movies he's seen, and, of course, what it means to be a venture capitalist.
As an avid software investor, he was intrigued by the rise of blogs (short
for "Web logs") and the new wave of blog-related technologies and startups
hitting the market. He felt that the only way to understand the phenomenon
was to become a blogger himself.
Since starting his blog, Feld has made some startling discoveries. On
one level, his blogging activities convinced him of the worthiness of
blog startups, prompting him to invest in both Technorati, a real-time
search engine that keeps track of what is going on in the world of blogs,
and Newsgator, a content aggregator for Microsoft Outlook that retrieves
news from multiple sources, including blogs. But perhaps more importantly,
Feld believes the simple act of posting his thoughts on a regular basis
has made him a better venture capitalist.
One of the very first VC blogs is the aptly named VentureBlog, which
was started in February 2003 by David Hornik, a partner at August Capital
in Menlo Park, Calif. He realized that blogging was becoming an important
way to share information on the Web, and he wanted to play a part in the
Now there are a dozen or so venture-related blogs, including those written
by Steve Jurvetson of Draper Fisher Jurvetson, Jeff Nolan of SAP Ventures,
Ed Sim of Dawntreader Ventures, and Martin Tobias of Ignition Partners.
(See "Inside Bloggers' Brains," pages 27 & 29.)
The consensus among that group is that blogging represents a leap forward
for the venture profession. They say that venture blogs help to shed light
on some of the more arcane aspects of the industry, thus providing entrepreneurs
and others a rare glimpse into how things really work. This, say VCs,
is a very good thing because it demystifies the profession by providing
insights into everything from how deals are structured, to what entrepreneurs
should look for in a VC, to the finer points of "exploding term sheets"
and liquidation preferences. Beyond that, VCs say posting their thoughts
also helps with deal flow. That's because if you write a posting explaining
what you like or don't like about, say, nanotechnology, there is a much
higher likelihood of gaining the attention of serious people in the space
and actually being introduced to some decent business plans.
Dawntreader's Sim says that he has received a number of impressive resumes
from people who have responded to his posts. He has even forwarded some
of those resumes to portfolio companies if he thought there was a potential
fit. He doesn't know for certain if that has resulted in someone getting
But there are also a host of thorny issues that can arise from blogging.
To begin with, there is the unwanted perception that VC bloggers will
spill the beans about anyone who walks through the doors, even thought
that is rarely the case. Still, some entrepreneurs may take to holding
back details or simply avoiding certain VCs if they believe their private
conversations will later be broadcast to the world in the form of negative
The notion of publicly advertising your areas of interest-and the promising
startups in those areas-can also pose serious competitive challenges.
What if one of your blog postings is read by a rival VC, who then speeds
ahead of you and plops down a term sheet to a company you were considering
Think it can't happen? Just ask Tobias, a venture partner at Ignition
Partners in Bellevue, Wash. "I heard about an interesting company up in
Canada and wrote a post explaining why I thought it was so neat," he says,
declining to name the actual company (though you can check out his blog
and see for yourself). "I soon discovered that another VC who read my
blog had phoned up the company and put down a term sheet. That's the most
disadvantageous part about putting your good ideas out there for the world
to see-you invite competition." Tobias says from now on he will think
long and hard before writing about a company he hasn't ruled out as a
possible investment opportunity.
Still, Tobias insists that plenty of good has come out of his daily postings
on his blog, called Deep Green Crystals. He estimates some 10,000 people
visit it each month. Earlier this year, he noticed he was receiving very
targeted pitches from entrepreneurs who were actually reading his blog
and were surprisingly attuned to his way of thinking. "This was incredibly
helpful because these entrepreneurs were doing their research and knew
what I liked," he says. "This makes the entire venture process much more
efficient and eliminates a bunch of preliminary BS you usually have to
Recently, Tobias added a new category to his blog called "My Bets," where
he writes specifically about technologies he is championing-and those
he is avoiding. For instance, he expresses a clear disdain for Java, so
it's almost certain he will receive no more Java-related business plans
going forward. Conversely, he is a fan of BioIT and has written a number
of posts about what he's looking for in a potential investment and where
he thinks the sector is headed. "One firm contacted me six months ago
after reading one of my posts, but I didn't do the deal," he says. "However
this same firm has been following my musings on BioIT and now is very
current with my way of thinking. When we spoke again very recently, they
were much better able to address my issues." Tobias says he is seriously
considering an investment in the company.
In another instance, Tobias was contacted by a company that makes a software
application that runs on a USB device. He asked the team to send him a
product before they formally pitched him. He also told them he would write
a review on his blog, which would give the company a good idea how he
felt. He was less than gushing, and a follow-on conversation was unnecessary.
"This kind of product review exercise makes me more prepared before I
even hear the pitch," he says. "It also lets companies know exactly where
I stand, which really helps elevate the conversation when we do speak."
VCs agree that anything that makes their jobs easier-anything that matches
their interests with those of an entrepreneur-is a very good thing indeed.
They are also in agreement that the VC industry is not as transparent
as it could be, and that it has operated within a black box for too many
years. "There is no book called VC for Dummies," quips Jeff Nolan, investment
director for SAP Ventures, the venture arm of enterprise software developer
What he means by that is most entrepreneurs do not know why VCs demand
preferred stock over common stock. They do not understand what constitutes
a good liquidation preference-and whether a 4x preference is actually
too high or too low. They do not think about the kinds of intangibles
VCs look for in a partnership. They don't even know what to look for when
searching out an appropriate VC partner. And they don't understand why
VCs ask such confrontational questions and perform what can often appear
to be overzealous due diligence.
By addressing these very subjects, venture blogs in a small but important
way are opening up the industry and ushering in a new era. "The more information
that is out there is better for both VCs and entrepreneurs," says Feld
of Mobius. "There are a lot of entrepreneurs who think they got screwed
by VCs because they didn't understand the terms of the deal they were
signing." Feld is tackling this problem by writing a series of blog entries
on venture capital math. So far, he's covered the ins and outs of pre-
and post-money valuations, preferred preference, and deal algebra. He
says that after each post he's received a number of comments and private
emails echoing the same theme: "Tell me more about how VC investments
Hornik of August Capital covers even more basic issues on his popular
VentureBlog site. Issues like how to pitch a VC. One of his very first
posts was entitled, "I'm a VC. Who the hell are you?" The post was inspired
by the fact that even smart entrepreneurs can get 30 minutes into a pitch
without introducing themselves or their team. "Even my waiter at Denny's
starts off with Hi. I'm Dawn and I'll be your server,'" says Hornik. "It's
not a bad model. Hi, I'm Dawn and I'm a serial entrepreneur.'"
He has also tackled such topics as "Putting the Power in PowerPoint,"
which spells out in detail the kinds of things VCs look for in a presentation.
He even reveals some pet peeves on his blog: "I hate it when entrepreneurs
use the word conservative' to describe their financials," he fumes. "I
much prefer realistic,' because I would rather know what the company really
thinks it is going to be able to achieve."
Nolan, for his part, recently wrote a provocative post on how to pick
a VC. In the posting, he outlined the different types of VCs and their
motivations for investing. Somewhat controversially, he also warned entrepreneurs
not to get caught up in brand names. "Startup execs who are inclined to
take an investment from an A-list fund but don't like the partner are
setting themselves up for conflict that will result in long-term harm,"
he writes. He also advises entrepreneurs to conduct the same kind of due
diligence on VCs as VCs do on them. "I'm always surprised that maybe 1
in 10 deals I look at seriously will call my references," he observes.
"We make a big deal about calling the company's references and, indeed,
the personal references of the executives. Why not for the investors as
well?" Nolan says he was particularly proud of this post because it was
widely read and linked to extensively from other blogs.
But how far can VC bloggers really open the kimono? Paul Kedrosky, academic
director of the Von Liebig Center of Entrepreneurism and Technology Advancement
at the University of California, San Diego, says VCs can get into trouble
if they write specifically about companies that come through the door
or if they broach sensitive topics, like raising money from limited partners.
"It's a tricky issue because you don't want to jot down some opinion or
belief that will come back and haunt you six months down the road," he
says. "Once you commit your thoughts to a blog, they can't be erased,
largely thanks to the way Google caches Web pages. This means VCs have
to impose a great deal of self-censorship."
There is also the notion that blogs can be either a marketing bonus for
a VC-or a marketing liability. On the one hand, a good blog can attract
deal flow and impress potential investors in a fund. On the other hand,
a poorly executed blog can alienate good companies and potentially turn
off limited partners. The idea that LPs can conduct a Google search and
instantly scrutinize the activities and thought patterns of a particular
VC is anathema to many in the industry.
Hornik, for one, believes it is possible to write about the industry
in an open and honest way without limiting the possibilities. But he says
he tries to address topics that are useful without exposing the family
jewels. Yet, on one occasion, he recalls how an entrepreneur approached
him at a conference and assailed him for using his blog to badmouth certain
companies. "I have never done that," he says. "But it worries me that
some entrepreneurs may have the perception I'll write something negative
after they pitch me."
All VC bloggers insist they have a high regard for confidentiality. Nolan
says he won't write about his personal reactions to a pitch meeting, and
that if he doesn't like a company he simply won't mention them in his
blog. "In this business you are only as good as your reputation," he says.
"If people think I'll spread whatever I hear or feel, they will be more
cautious with me and I won't have access to the kind of information I
need to do my job." Still, Nolan says he won't hold back when writing
about a particular market sector, especially if it has some glaring holes.
For instance, when writing about open source software, he wonders aloud
whether "any software package or tool that is brought into the mainstream
by a community of dedicated users can ever evolve to a traditional pay-me
kind of software license model without alienating the very user base that
brought you to the party?"
Indeed, the essence of any good blog is the author's ability to convey
opinions and passion in a forceful, engaging manner. That's hard to do
if you're overly sensitive to the concerns of others. "It's really important
to keep my edge and write what I think," insists Ed Sim, managing director
at Dawntreader Ventures in New York City. Sim's blog is called BeyondVC
and gets about 500 page views each day. "I like it when other people disagree
with me and write back to let me know." Sim says he struggles to write
in general terms and avoid naming names, while still getting a strong
One of his recent blog entries, for instance, chastises young companies
that blindly add new features and functions to their products in a futile
attempt to be all things to all people. "In the long run, having too many
of the wrong customers can kill your business," he writes. Sim explains
that it is not his goal to piss off anyone in his portfolio, but if there's
a point to be made, they shouldn't be surprised to read about it in his
blog. "In any case, it's more than likely they've already heard from me
in the board meeting," he says.
Ultimately, Sim and his brethren believe blogging makes them better VCs,
otherwise they wouldn't do it. Feld, for instances, laments that VCs often
become nothing more than professional emailers and meeting takers who
approach industry issues in a superficial manner. "By contrast, blogging
forces me to be more thoughtful and really think deeply about the issues
and trends I write about," he says.
Nolan says he's hopelessly disorganized and his blog acts as a personal
archive, allowing him to bring greater order to his professional life.
"I've written about 800 posts that I can search by keyword," he says.
"I recently met with one company, and I remembered writing about something
similar eight months before. I was able to go into the meeting with a
better understanding. My blog has been incredibly valuable simply from
a knowledge management perspective."
Most VC bloggers are also voracious readers of other people's blogs.
Nolan says he can skim through as many as 100 a day, including other VC
blogs as well as those targeted at particular industry segments, such
as consumer devices or broadband technology. He says this is actually
a very efficient way to stay abreast of trends and gain insightful viewpoints
he would not normally find in an average newspaper or trade magazine.
Clearly, blogging is not for everyone. It requires a significant time
commitment. Some, like SAP's Nolan, like to spend an hour each day no
matter what. Others may spend only five or 10 minutes each day, and some
may post every day for a month, and then not make a single entry the following
Of course, some may just get bored with the entire exercise and only
post sporadically or when inspiration strikes. The problem with that is
visitors will lose interest if they don't see fresh posts at least once
a week. The repercussion is that no one will come to your blog after a
It also requires a love of writing and the ability to express one's self
in print-a skill that eludes many intelligent people. But as the art of
blogging catches on with more VCs, it is sure to have a profound and lasting
impact on the entire industry.
Tom Stein is a freelance writer who specializes in venture capital.
He can be reached at firstname.lastname@example.org.
Pick Your Blog
A VC: Musings of a VC in NYC.
Ed Sim's blog on venture capital,
technology, the markets, and life in a
Deep Green Crystals
Martin Tobias musings.
Tim Oren's notes and opinions on
technology, venture investing, Silicon Valley, life, the universe and
The J Curve
All the news that I see fit to print.
Steve Hall's "notes to self" and anyone else who happens to read this
A random walk down Sand Hill Road.
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