Spartina 2014! Assembly of Spartina-backed startups

Last week I attended the 9th Annual Spartina Offsite – a two-day retreat hosted by David Hehman and Howard Love.  I have known and worked with David and Howard for almost two decades, having first met David in the mid 90’s when he was fresh out of Berkeley and starting his first successful startup, HealthDesk.  Through David, I met and started working with Howard as well.  And, over time the three of us have worked together supporting and co-investing in an assortment of startups.  Our first “liquidity event” came from an investment in a startup called Mongo Music (which MSFT bought in 1999), and we have had the good fortune of enjoying seed investments in OpenTable, Trulia, Hotel Tonight, among others.

“Spartina” is an umbrella under which Howard and David house the investments they co-fund.  And, with a portfolio of dozens of companies, the agenda for the retreat included hourly sessions allocated to each founder/CEO during which each company gave a brief update, and then posited one significant business challenge for the group to discuss.  Mind candy!  And, the conversations this year were incredibly frank, candid and illuminating.

In any event, one of the more memorable conversations involved the market for that “second infusion” of early-stage capital.  Keep in mind that all of the attendees have already raised some seed capital.  But, the bulk are facing the need to raise a new round over the next 12-24 months.  So, our conversations centered around raising that second chunk of funding.

To start, we discussed the clear shift over the past decade by traditional VC funds toward later staged investments.  Series B is the new Series A after all!  So, we discussed where early-stage entrepreneurs find that second infusion of capital to help fuel that critical stage of market penetration and expansion.

Manu Kumar of K-9 Ventures ( Continue reading

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Is Early Stage Investing Binary?

I am attending the 9th Spartina Summit, which is a two day off-site hosted by David Hehman and Howard Love, two brilliant entrepreneurs and angel investors with whom I have had the privilege of counseling and co-investing over the past 16 years. Founders of their portfolio companies and an assortment of angels are attending.  We had a fantastic discussion today about seed investing.  The topic – how much do terms matter?   My take:  the vast majority of returns on a reasonable portfolio of seed investments are driven by a subset of “breakout” companies.  The rest rarely move the needle.  Pick well – that is the priority.  Terms should be sane, but are much less important.  Thoughts?

Malcolm Gladwell – why we need more lawyers

I had the privilege of lunching with Mr. Malcolm Gladwell last Friday in Manhattan.  He was the guest speaker for our firm’s (Perkins Coie LLP) annual partner retreat which was held at the Grand Hyatt in NYC last week. With over 400 partners, who flew in from our 19 offices worldwide, it was quite an assembly.  The venue = a stunning dining room across the street from Grand Central Station.

Mr. Gladwell spoke to us for over an hour about why the world needs MORE lawyers!  Here is a summary of his argument:

In the olden days most problems were puzzles, which MG defined as problems for which the information was incomplete.  An example:  a middle-aged man starts suffering from hip and lower abdomen pain and blood in his urine.  After visiting his physician, the doctor concludes he may be facing a prostrate issue.  The patient then undergoes some testing including perhaps a biopsy.  And, if the tests reveal indications of prostrate cancer, the recommended route was singular – prostrate removal.

Nowadays, most problems are mysteries, which MG defines as problems for which we have an abundance, perhaps too much, information.  An example:  we now routinely run PSA tests on middle-aged men, which gives us predictive indications of elevated PSA levels which can be markers for pre-cancer prostrate behavior or one of three types of prostate cancer.  With this, the doctor may collect even more information, starting with an ultrasound and maybe concluding with one of a variety of biopsy types – lots of decisions for the doctor to make.  After that, the doctor needs to assess what type of cancer or pre-cancer is emerging, and then make a recommndation based on this and the age and condition of the patient.  Some prostate cancer is slow growing and unlikely to ever pose a health issue.  Another type can be very aggressive and highly fatal irrespective of the preventative treatment.

MG argues that in the latter scenario the physician’s job is much more difficult.  He needs to not only be able to sort through the abundance of data, but also know his patient and be able to make a customized recommendation, , which he then needs to deliver tactfully to the patient  and be highly consultative (e.g., what is the right solution?? for this indication?? and for this patient?? —   prostrate removal, radioactive seeding, radiation therapy, nothing?).

From this MG argues the skills and training for this new challenge – to solve increasingly complex mysteries (as opposed to puzzles).  He then recited the list of skills that lawyers are trained to develop in and after law school:  deep data analysis, crafting arguments and counterarguments from both sides of an issue, excellent communication skills (both verbal and oral), attention to detail, pragmatism, economic balancing, moral triangulation, law compliance, and interpreting complex messages, etc.

The macro point of MG’s talk was that we live in a world that has an increasing number of mysteries (an abundance or over-abundance of data) and fewer puzzles.  Yet, other than in law school, our schools do not train us to sort through and make sense of this abundance of information.  MG’s book Blink talked about following your gut when making decisions.  But, it was predicated on a crisp understanding and prioritization of the relevant facts.

To do this, go to law school!!!  As I was told before I enrolled at the University of Illinois in 1989, “it’s the best education you can get!”

Swimming Alcatraz!

This past Sunday I was able to cross off another item on my “bucket list” — swimming Alcatraz!  I swam in the South End Rowing Club’s Alcatraz Invitational Swim (see http://georesults.racemine.com/South-End-Rowing-Club/events/2014/Alcatraz-Invitational-Swim—2014/results) and did pretty well.  There were purportedly 903 swimmers; I placed in the top ten for my division (“skins”) and 5th in my age group.  It was quite an experience — swimming mid-Bay with hundreds of yellow swim caps and twice as many arms splashing all around me in the water.   And, the magnificence of the Bay Area once again was awe-inspiring.  Having lived here for almost 21 years, I am still humbled by the beauty of the Bay Area and having a completely unobstructed view of the Golden Gate to my right as i thrashed away in the 66 degree was indelible.  Next up:  the swim around Manhattan – perhaps….  By the way, in the photo from left to right: me, Matt Glickman, Kurt Buechler, Daniel Mitz, and Alex Kaplinsky – nice work boyz!!!!