Art by Mike Lucas

Despite facing some hefty fraud charges, two co-founders of Canopy Financial are apparently planning to fight against allegations they defrauded investors and misappropriated millions of dollars. VentureWire reports that former Canopy President and Chief Operating Officer Jeremy Blackburn and former Chief Technology Officer Anthony Banas pleaded not guilty to the wire fraud charges, which seek a total of $94 million, or the $75 million that Canopy raised from venture investors plus the $19 million allegedly misappropriated. Each charge of wire fraud includes a maximum of 20 years in prison and $250,000 fine….

Plastic Logic seems to be having more delays than LaGuardia. The venture-backed company has been developing the first plastic-electronics reader for about a decade, and originally planned to hit the market in early 2009. But that schedule got pushed back, and so has a plan to release it in mid-April. In an email to customers who pre-ordered the much-anticipated QUE proReader, Plastic Logic says it’s fine-tuning the features and the device won’t be available until the summer, WSJ reports. We eagerly wait….

We wish more start-ups would do good for the world like Sproxil, which offers to companies and consumers in Nigeria a quick counterfeit-drug test. The Wall Street Journal reports that West Africa is flush with counterfeit drugs, responsible for thousands of deaths and a big problem for Nigerian drug makers. The company, started by a Ghana-born Ph.D. student at Dartmouth, hasn’t received venture funding yet, but he has won a $100,000 grant and some angel funding. “Initially it was challenging because venture capitalists run for the hills when they hear Nigeria,” Sproxil founder Ashifi Gogo told WSJ. “They don’t even care if you’re making gold.”….

It’s all about the people, people. David Hornik of August Capital explains how venture capitalists can best build their brand: Forget the speaking engagements and social media Web sites, you have to gain the support of entrepreneurs. ”No number of clever videos or slogans, or even speeches on the rubber chicken circuit, can replace the power of entrepreneurs singing your praises,” Hornik writes….

I’m not a fan of cash. Well, I like what it stands for of course, just not the actual paper and metal that I’m forced to shuttle around every day, nor the ATMs I must constantly visit or the cashier who takes forever to count the change when I’m in a hurry. I yearn for the day when we have a cashless society. And so apparently does Fred Wilson of Union Square Ventures who, like me, carries around a stack of cards but no cash. It’s probably a New York thing. But, Wilson says, “we need to take the next step” and store everything on to a mobile device.

Last year Amazon bought Zappos and many feared the change. Tony Hsieh, the CEO of Zappos, sent around a note to employees explaining the transaction, what would change, and what would not.

Since that time Zappos has been commended on its execution of customer service at a level that is now admired by many companies.

This past weekend, gearing up for SXSW, I bought my first pair of shoes from Zappos. I tweeted this fact soon after buying my sneakers and got some funny replies. Some friends couldn’t believe I did not have an account. My sister even welcomed me to the world of online shopping, as I am usually the one to tell her about the latest website touting some technical feat.

However, soon after my tweet, Zappos got back to me – upgrading me to a VIP customer and shipping my shoes overnight. Wow!

First let me say Thanks Zappos!

Second, this is the continued “Wow” affect that Zappos delivers to customers – even new ones like me. After fending off friends and family from poking fun – I shared this story with them. I then shared this story with a few other folks over the last few days. Now I am even blogging about it here.

Customer service is a powerful tool. If the goal is to get tweets and blog posts – you have failed. If the goal is to get the “wow” factor, then you have to open a dialogue with customers, deliver high quality service and support, and most importantly don’t expect anything in return. This results in customer loyalty, return customers (which in some ways is the same thing) and a powerful form of advertising you cannot buy; word of mouth.

Will my story and blog post make a meaningful difference? Probably not. Although all the little wins add up in a big way and you can be sure I will remember how Zappos treated a first time customer, even though I am late to the shoes via Internet game! You can be sure if I run into anyone from Zappos at South by Southwest I will be sure to say hello.

Post from: Marketing.fm - Eric Friedman

You should follow me on Twitter here

Zappos and the continued power of customer service

Police are the New Tax Collectors: Virginia hands out almost 7000 traffic tickets in one weekend to raise money for the government. (Economic Collapse via Clusterstock)

Regret Nothing? John Kay says it’s a bit disarming that Warren Buffet and George Soros are the only financiers to take personal responsibility for the financial collapse and bad performance numbers, rather than blaming it on “unprecedented” things like a “perfect storm.” (FT)

Need Those Soft Skills: If there is anyone in finance right now who feels the pain of lacking “soft skills,” its Harry Markopolis. (FINS)

$: A Trillion Dollar Pension Crisis Looms Large over America (II)

Servicey! How to handle the sovereign debt explosion. (FT)

Speaking of SWFs: (Not single white females) Around half of all sovereigns are investing in private equity, real estate and infrastructure. (Reuters)

Target Talk: Gamestop is a private equity target? (TheStreet.com sub. req.)

Our portfolio company Foursquare turned one year old yesterday. They posted about their birthday on the company blog. It is stuff like this that makes startups so fun to be around:

It was exactly a year ago when Naveen and I flipped the switch on foursquare.  It was the day before we headed down to SXSW - back when we were still feeling 50/50 on whether people would think the “let’s turn real life into a game!” idea was really interesting or whether they’d laugh us out of Austin.

We took separate flights.  I remember walking down the tarmac into the plane still on my laptop fixing the database.  Naveen landed in Austin and texted me something along the lines of “its still alive!”.  We made it though the weekend with a bunch of hiccups but nothing disastrous (special thx to friends in NYC who were keeping an eye on the melting database).

One year later, Dennis and Naveen head back to SXSW with a company of 16 people supporting them and 500,000 users checking in almost 300,000 times daily. It’s been really fun to watch them turn an idea into a service into a breakout mobile phenomenon, all in one year. Well done guys. Happy birthday.

VCs don’t often talk about brand. Brand is a dirty word in the venture business. Yet just today I had two different conversations about VC marketing. The first conversation was with Jennifer Jones. Jennifer has been working with VCs on marketing for two decades now. And she’s really good at it. I suspect that in a VC marketing death match, Jennifer would pretty handily crush ExecSense Webinars. She wouldn’t talk about generic speaking engagements and social media websites. She would talk about finding “your people” (my phrase) and how to reach them in genuine, engaging and unique ways. She would know that anything you can learn in a VC marketing webinar is insufficiently differentiated to have a real impact. She would know that Venture Capital is a people business and VC marketing is about connecting with people, not giving some soulless speech at an industry event.

The second conversation I had was at lunch with a couple of friends in the VC business. We were chatting about early stage investors and got to talking about Josh Kopelman. I made the assertion that Josh was the best marketer in all of venture capital, to which one of my lunch companions replied “he’s a marketing savant.” Trust me, it was pure admiration. If you want to appreciate what “people marketing” is all about, ask a few entrepreneurs what they think of Josh Kopelman and First Round Capital. Josh understands how to connect with “his people” and make a splash. Remember, this is the very same guy who convinced a little town in Oregon to change its name to “Half.com” and to feel good about it.

If you want to see what successful VC marketing looks like, take a few minutes and watch the First Round Capital holiday videos. You’ll see a group of entrepreneurs who like their investors so much that they are willing to do embarrassing things on their behalf (including dancing and singing). In a three minute video, you see the slew of great companies that First Round has backed, as well as the powerful relationship that the First Round team has with their entrepreneurs.

None of this is to suggest that you VCs out there should go make a dance video with your portfolio companies. Nor will I be convincing a small town in the Pacific Northwest to change its name to “August Capital, Oregon” any time soon. But it is worth thinking about how we as VCs are perceived by the entrepreneurial community and how we might better connect with those folks. The Venture business is a people business and VC marketing is all about the people. So there is no more powerful way to build a brand than to garner a well-earned reputation as a supportive, thoughtful, helpful participant in the company-building ecosystem. No number of clever videos or slogans, or even speeches on the rubber chicken circuit, can replace the power of entrepreneurs singing your praises. So forget the webinar and focus on what matters — bringing real value to the people around you. That’s what Venture Capital brand building is all about.

Yesterday I wrote a post about how much capital your startup should raise.  In that post I was talking about how it is a bad strategy to be underfunded.  In general when capital is available take it (provided it’s on the right conditions and from the best people from whom you can raise).  It’s also bad to raise too much, too early.  If you’re interested in that topic I cover it in the article linked previously.

I made a diversion in the article that I shouldn’t have taken.  I talked about the Silicon Valley memo that has been circulated for the past couple of years that says you should “fail fast.”  What I said was:

“I’ve even heard people repeat this bullsh*t Silicon Valley mantra about “failing fast” which is horse puckey.  The line goes like this, “well at least you know early that your business isn’t going to work and you didn’t have to waste 2 years and $1 million trying to bang your head against a wall.”  That is so self centered it winds me up.  Tell that to the person who wrote you the $50,000 of their hard earned money and entrusted you to try your best.  Fail fast?  How does your brother-in-law feel about that?

And how do you think the next person who’s thinking about writing you a check going to feel about that sort of cavalier attitude with their money?  Fail fast = quit and give up easy = spaghetti against the wall = no clear strategy going into your business = no ability / willingness to try and pivot as market conditions change = easy way out = today’s management mantra that will be laughed at in 10 years.  Who started this meme?  I say define a strategy, test it up front and pivot if you’re not getting the traction you had expected.  Fail fast on your own dime.”

Obviously when a meme like “fail fast” forms and conventional wisdom builds in support of it you’re likely to get attacked for saying, “the emperor has no clothes.”  But I just said it.  Naked.  I shouldn’t have covered it in the last post because I should have stayed focused on the topic of how much money to raise.  Here’s an example of one comment I received,

“So you think it’s better to plan and build for years without testing it on the market and then make a big splash release and hope for the best?”

Nice logic, hey?  If I say “fail fast” isn’t the right strategy then it must be a long, slow release process, right?  I’m not attacking anybody’s religious beliefs.  I’m trying to enter the debate with what I found to be a very destruction guiding principle that young people have started to believe.  The following highlights what I do believe and why fail fast is wrong:

What is the right way to build a startup?

• Define a market problem that you believe you can solve
• Research this market by doing market sizing, looking at existing products, talking to customers and deciding how you will make money
• Validate that you can make money before starting. This means looking at what your buyer pays for similar products now, what the history of other people who have tried to monetize in this way have experienced, what your costs to acquire customers will be and what you believe you can make over the customers’ lifetimes.  These are all assumptions – nothing more.  I believe passionately that if you don’t do a financial model you shouldn’t spend any time or money building a product.  You want to talk about the ultimate “fail fast” – how about if you fail before you’ve spent any money building product because you validate there isn’t a big enough market or you can’t make money?
• If you believe there is a market then build a prototype product that you can show customers, investors and potential employees.
• From there build the MVP (minimum viable product).  I believe in launching with a small set of features and learning from the market before you spend too much money building out a feature rich product or before you put serious capital to work.
• If you validate that there’s a market then go for it!  If you don’t believe that your product is resonating then pivot and find one!

Why fail fast is wrong, irresponsible, unethical and heartless:

• I’ve read all of the fail fast, fail cheap articles.  I’ve heard the insufferable speeches at conferences.  I understand that many people argue that “fail fast” just means launch products and learn from customers.  Fine.  Then let’s call this “launch and learn” as well as “adjust and pivot” when adoption doesn’t happen.
• The problem is that when you brand something that will be interpreting differently by people who weren’t part of the zeitgeist when the memo went out about what “fail fast” meant then we educate the next generation of entrepreneurs to do things the wrong way
• How do I know this?  Because I have met so many young entrepreneurs who tell me, “we don’t need business plans anymore, there a waste!  We’re going to put our product out there and fail fast!” [note: business plan to me does not equal long Microsoft Word document.  It means a financial model that sets a strategy for how you'll make money and spend money] or they tell me, “we’ll launch a bunch of products and see what works.”  That is the old “throw spaghetti against the wall and see what sticks” approach.  It’s intellectually lazy and I doubt many great companies are born this way.
• Worse still I’ve actually heard the following from somebody that is reputable and whom I actually like, who has raised $1 million, “we don’t want to raise $3 million to get to the next round.  Either this thing has legs and will grow fast and we’ll raise at a very large price or we’re going to ‘fail fast’ .”  Me, “What?  Really?  What about the money you raised?  Aren’t you worried about that?”  Him, “Well, what do you want us to do, stick around for 3 years trying to build something that we know isn’t working?”  I can’t make this stuff up.  People think that way these days.  It’s wrong.  It’s immoral.  It’s irresponsible.  That’s hard earned money you’ve raised, not house money at a casino that you get to put on lucky number 16 and see if it comes up.
• We have taught a generation of young entrepreneurs that “failing fast” is ok.  It’s quick and easy.  It’s a way out so that you can focus on your next big business idea.  Why waste your time on this one?  Don’t get me wrong – failure is OK in my book.  I’d rather you try something that doesn’t work and learn from it then to never have tried before.  I personally think that second-time entrepreneurs are better because, as I’ve written, “good judgment comes from experience, but experience comes from bad judgment.”
• But my message to young folks – if you take somebody’s money you have a responsibility.  I raised too much money at my first company and regretted it.  Long after the Dot Con 1.0 party was over and I knew that I personally wasn’t going to make as much as I thought I would – I stuck around.  I felt a moral obligation to spend this money that I had raised responsibly.  The market changed totally so my assumptions were all off.  Goldman Sachs had told me we would IPO in a year.  That wasn’t going to happen.  But I signed up for making the company work and sometimes that commitment trumps your current economic incentives.  Not forever – but for a period of time.  Taking money = obligation and commitment to try your best to make a return.

How should you deal with a business that isn’t working?  I’m not talking about when your product isn’t working, but your company.  When you know that you don’t have a future.

• Get your cost base as low as you can as quickly as you can
• Communicate early to investors that you don’t think the business can be successful.  Make sure you say you haven’t given up and that you’ll stay to help find a way to find the best possible outcome for the company.  But that you don’t want to raise any more hard earned money if you’re convinced that new money won’t have a good return
• Consider whether there are any buyers for the company.  If not, are there buyers of the intellectual property?
• In the worst case scenario is there a “face saving” exit for $1 somewhere?  This will save everybody from the time, expense and risks of a bankruptcy
• Remember that legally the order of payments (I’m not a lawyer, double check with a bankruptcy lawyer) is employees, creditors, equity holders
• Better that you handle things until the bitter end and preserve your most valuable asset – your reputation
• There is nothing wrong with saying respectfully to investors, “if I can find a buyer for this asset would you be willing for me to take a very small piece of the purchase price so that I can incentivize my team to stay together through this difficult period?
• If the company needs a very small amount of money to get through this shut down period make you should ask your investors for it.  Make sure to tell them that it is for a shut down and/or attempt to recover value for the assets.  Tell them you’ll only ask once.  Only ask once.
• Make sure your employees know what is going on.  You have an ethical responsibility not to surprise them.  MAKE SURE that you pay all of their expense reports that are outstanding.  In the dark days of shut downs I’ve seen many junior members get burned.  This is wrong.

So can somebody with better branding skills than I have please come up with the new term that we can all use for what we all know we want to see – customer development, MVP, rapid iteration, pivot and learn.

OK, now you can attack me …

Speaking of rockets, I did just that at BIL, an expanded version of the talk I gave at TED.

It was an excellent adventure.

Saw flickr friends Todd Huffman and Photonquantique there.

Photo is from the 62MileClub article.

Here is Michael Lind on the subject of this “boring age”:

We like to believe we live in an era of unprecedented change: technological innovation is proceeding at a rate with no parallel in all of human history. The information revolution and globalization are radically disruptive. Just as Barack Obama would like to be a transformational President, so the rest of us like the idea that we live in a thrilling epoch of transformation. But the truth is that we are living in a period of stagnation.

Surprisingly, this stasis is most evident in an area where we assume we are way ahead of our predecessors: technology. In fact, the gadgets of the information age have had nothing like the transformative effects on life and industry that indoor electric lighting, refrigerators, electric and natural gas ovens and indoor plumbing produced in the early to mid-20th century. Is the combination of a phone, video screen and keyboard really as revolutionary as the original telephone, the original television set or the original typewriter was?

…Technology has been remarkably stagnant in the areas of transportation and energy. As energy expert Vaclav Smil has pointed out, global jet transportation relies on the gas turbine, which was developed in the 1930s, and global shipping uses the diesel engine, invented in the 1890s. The fastest commercial airliners ever to fly reside in museums. The most cost-effective forms of mass transit everywhere, except for a few dense urban areas, are buses and planes.

Whether the heat source is coal, natural gas or nuclear energy, most electricity today is generated by a variant of the steam turbine that has been around since the 1880s. The wind turbine and the solar-thermal and photovoltaic technologies beloved by greens are old enough to qualify for Social Security. And these elderly technologies are limited to those privileged enough to live in industrialized countries. A substantial minority of the human race still derives heat and warmth from wood and dung.

More here. 

Excited for Wall Street 2? Well you’ll have to wait. The movie, which was slated to come out in April, has been pushed back to the fall now that it may get invited to Cannes. (Variety)

Tricky Tricky: Is the Kabel Deutschland IPO an ambitious IPO or a cunning ploy to smoke out trade buyers? (Reuters)

In the weirdest news you’ll see today: Wondering what to do with leftover breast milk? This guy decided to make cheese out of it. Just, wow. (Reuters via WSJ)

Who Hates Avatar the Most? I felt a little robbed after seeing Avatar (shouldn’t it have been Pocahontas II?), but I certainly didn’t hate it as much as these whiny mining executives. Reuters reports:

Happy Birthday: VC-Backed Foursquare turns one today. Use that as a cheap excuse to try for the “Sweet 16″ badge. I did! (Foursquare)
“Let me put it this way, my kids saw the movie, and my kids know I’m a miner, and they didn’t say anything to me,” said Peter Kukielski, head of mining operations for ArcelorMittal, the world’s largest steelmaker. (Reuters)

Why Teams Get Locked into Behavior Patterns: Like brothers and sisters at a family reunion, coworkers tend to fall into intragroup behavior patterns, melding into a smoothly functioning yet uncreative team. (Harvard Business Review)

We’d like to imagine you’re reclining in your Pacific Heights abode, sipping from a glass full of Dom Perignon Œnothèque and reminiscing about old times with the likes of Sergey Brin, Jerry Yang, Chad Hurley and others whose companies have made you and your firm, Sequoia Capital, filthy rich.

But we know better. The understated Welshman that you are, you probably just shrugged your pinstripe-suit clad shoulders and got back to re-reading your copy of T. E. Lawrence’s “Seven Pillars of Wisdom.” In fact, unless your name is Donald Trump, that’s probably the reaction of most of the world’s financial elite when this list comes out each year.

While us thousandaires shake our heads with envy, the billionaires know that many of the rankings are based on estimates, and that much of the wealth is on paper. That creates wild fluctuations in dollars that most of us will never earn in a lifetime.

But let’s not spoil the fun. We’ll play along, and salute Moritz on his newfound billionaire club status. He dropped off last year’s list after being ranked at No. 897 in 2008 with a fortune of $1.3 billion. Now he’s back on at No. 655 with $1.5 billion.

Moritz can apparently thank Zappos Inc. and Pure Digital Technologies Inc., two of his portfolio companies that were bought by Amazon.com Inc. and Cisco Systems Inc., respectively, for a combined $1.4 billion-plus.

Perhaps more personal to Moritz, if he cared just a tad, is that he’s now riding the coattails of his old rival, John Doerr of Kleiner Perkins Caufield & Byers, who rose slightly in the rankings to No. 582 with a total wealth of $1.7 billion. The pair’s fortunes are largely attributed to their co-investment in Google Inc., one of the most profitable venture exits of all time.

Whether or not these numbers are entirely accurate, they highlight just how exclusive this feat is for venture capitalists. There are only three other VCs among 937 billionaires on the list (excluding No. 488 Andreas von Bechtolsheim, a co-founder of Sun Microsystems and an angel investor who made an early bet on Google):

No. 655: Ram Shriram, Sherpalo Ventures, $1.5 billion
No. 828: Peter Thiel, Founders Fund, $1.2 billion
No. 880: Vinod Khosla, Khosla Ventures, $1.1 billion

Colorado and other states have tried to fix this for a couple primary reasons. The first is simply money. They’d like to collect more revenue. The second is to level the playing field for in-state companies. It’s not fair competition if local companies effectively have to charge buyers more for a product because they have to charge tax while online retailers do not.

Colorado first tried to tackle this problem by widening the description of a nexus to the state that would trigger collection obligations for sellers. They apparently kicked around the idea of requiring the seller to collect tax if the seller had any affiliate relationships within the state. That caused a backlash from companies like Amazon and its affiliates, so the final legislation made that more or less an irrelevant issue. The bill that passed basically says that out-of-state sellers do not have to collect tax at the time of sale, but do have to notify all buyers that they have an obligation to pay the use tax themselves. These sellers also have to mail a report by January 31 of each year to each purchaser marked “Important Tax Document Enclosed” that outlines the purchases made, the dates of purchase, and if known, whether such purchases are exempt from taxation. This report must also reiterate that Colorado requires a sales or use tax return to be filed and a sales or use tax to be paid, presumably by the purchaser. Finally, these sellers have to send separate reports to the state for each in-state purchaser outlining sales that were made to that purchaser. It’s sort of like 1099’s for consumers. It may prove to be effective, but is obviously pretty burdensome.

The odd turn of events, however, came with Amazon’s reaction. Amazon promptly terminated all of its affiliate relationships within Colorado, but said that it will continue to sell directly to Colorado consumers. That does nothing to relieve it of the burdens of the new law that would seem to be most objectionable or costly. As long as the law stands, Amazon will still have to comply with all the notice and reporting obligations regardless of whether it has affiliate relationships in the state. The only way it could eliminate that problem would be to stop shipping products into the state. Amazon’s reaction seems simply to use its affiliates as pawns to put pressure on the legislature, with the apparent thought being that if they inflict enough pain on enough local businesses, the government will cave. There is some evidence this may be having its intended effect as the finger pointing and emergency meetings have already commenced within the legislature.

There are several issues with this legislation, but Amazon’s reaction of “wife yells at husband, so husband kicks dog” is claiming a lot of innocent victims.

Paul Koenig is a co-founder/managing director of Shareholder Representative Services (www.shareholderrep.com), which serves as a professional shareholder representative following the acquisition of a VC-backed portfolio company.

Ten years ago, Rosensweig was still president of Ziff Davis, where he spent a total of 18 years. He then went on to become the chief operating officer of Yahoo; a principal at the private equity firm Quadrangle Group; and the president and CEO of Red Octane, the Activision unit responsible for Guitar Hero.

In February, Rosensweig made another move, becoming the CEO and president of three-year-old Chegg.com, a startup that claims to be “number one in textbook rentals,” and that has raised a stunning $144 million in cash and debt to secure that position, including from Kleiner Perkins, Foundation Capital, and Insight Venture Partners.

I talked with Rosensweig yesterday morning about his recent trajectory, what Chegg is planning to do about the iPad, and how he’d rate Yahoo’s performance these days.

Can you provide a sense of how big a company Chegg is right now?We have about 120 employees in Santa Clara [Calif.]; almost all are full-time employees except for those in our 6,000-square-foot warehouse in Kentucky [where Chegg recently took over an old Linens ‘n Things property that houses its books]. It’s a combination of engineering, marketing, customer service, customer advocacy [employees] and backroom stuff.

You’ve raised a lot of money. Can you share any revenue numbers?

No, but if you think about it, the college textbook market is about a $10 billion market, and we’re really going after 50 percent of it, which is the used book market. Most of the students we get are kids who couldn’t have afforded new books.

[Through a partnership with the nonprofit conservation organization American Forests] we plant a tree for every order, and we’ve planted 2.5 million trees in our almost three years of existence, so you can start to size this up and understand [our sales].

We’re trying to create incredible value for American families and students by making education affordable. On top of that, the fact that we’re able to be environmentally friendly, both through our rental program and by planting a tree for every order, is very much in the spirit of the company we want to be.

Is the company profitable or has it been at any point?

We don’t discuss that, but all the cash we’re raising at this stage is to fund growth by acquiring more books. It’s not necessarily to run the operations, so you can take from that what you like.

You have more than 4 million titles. Where do you get your books?

We get them from multiple sources, including direct from publishers, from wholesalers, and from the marketplace. We have very sophisticated algorithms that let us know what books we have in the warehouse and the best place to source those books, which we think is a competitive advantage.

I’ve read that you sometimes adjust your pricing more than 6 million times a day at times, using what are perhaps those same algorithms. Is there any concern that you could alienate your customers by incrementally raising, as well as lowering, prices based on supply and demand?

Our algorithms allow us to predict demand on a nationwide, campus-wide basis to ensure that our prices are always the most competitive.

As for alienating customers, I think we’ve learned this from eBay and Amazon and Yahoo that the world is a demand and supply market run on variable pricing. And the lower we can source things, the less we can sell them for. We’re very much pinned to [this] marketplace model, and we think we can win because we can create the greatest value. We’re generally a lower price model than others.

Speaking of competition, a lot of startups are now competing in this same space, including Bookrenter.com, a company that has raised just $6 million so far. I read on TechCrunch that Chegg’s attorneys sent Bookrenter a threatening letter over Bookrenter’s claims to be number one in textbook sales, a move that some see as a bullying and unnecessary tactic. Why did Chegg bother?

To be frank, I hadn’t even started at the company yet, but we feel it’s important that the consumer has all the facts, so whenever we believe that facts are being contradicted, we want to make sure we clarify them.

Consolidation in your industry seems inevitable. Do you see acquiring some of these smaller competitors that you’re trying to keep honest?

A roll-up strategy? This is a whole, new emerging category, and frankly, the more competitors right now the better, because it really does educate the marketplace. We also think competition makes us a better, smarter company, and we think we have tremendous advantages because of our market share, our scale, our funding, and our leadership. So we’re extremely comfortable that a competitive market works to our advantage at this point and that the market will take whatever turn it will take.

Markets generally consolidate when growth stops. The rental market is a small subset of the used book market, but we’re all seeing meteoric growth at this point in time, so consolidation doesn’t make sense right now.

What do you make of Barnes & Noble now getting in to the textbook rental game too?

It validates the marketplace. I think it suggests that it’s going to continue to be competitive. But if you look at the landscape, across about 8000 campuses, we’ve rented at least one book at 6,500 of them.

How are you reaching students?

We have a sophisticated e-commerce group of people, then we get a tremendous amount of referrals because we have such a high satisfaction rate. We also have a series of programs by which students make money by selling us their books and [a marketing program called] Chegg Champions [that pays students $5 every time they refer a new customer to the company].

Naturally, there’s a lot of talk that those same students will eventually be toting all of their textbooks around in one device, possibly the iPad. How are you preparing for that possibility?

There’s no doubt, particularly when you live in Silicon Valley, that you should bet on the inevitable. It will happen. There are a lot of variables around when, though. Lots of people have been projecting the same for Netflix for nine years.

We know that online textbooks will be a part of the market and a growing part of the market. It won’t happen right away, though. More, the audience we deal with now is trying to save money. They aren’t going to buy an expensive device then fill it up with content. But we’ll eventually be able to provide them content in whatever format they want and in fact we think it’s exciting. It might expand the market a little bit.

By then will you be a public company? Given how much you’ve raised, is that something that you’re now tasked with trying to make happen in a certain timeframe?

No, we’re on a mission to help American families get access to the tools and information that their kids need, at prices they can afford — and to help the environment while we do that. IPO, private fundraising, debt — these are all things that are available to a company that’s growing the way we’re growing, but we’re not focused on any particular outcome right now and our investors are supportive of that.

Might you raise more?

We have more than enough capital to do what we need to do.

You didn’t stay long as the CEO of Activision’s business unit RedOctane. How would you characterize that experience, and why did you leave?

The experience was a blast, every aspect of it. I’m a music freak and Activision is an incredibly powerful growth company.

It’s every guy’s dream to feel like you’re part of the music industry, and my expectation was to stay there. But a once-in-a-lifetime opportunity came along [with Chegg]. I didn’t know after Yahoo if another of these great opportunities would be available.

Who recruited you?

Silicon Valley is a small place, and everyone knows everybody. It was a combination of Ted Schlein and Juliet Flint of Kleiner Perkins and John Doerr and Paul Holland of Foundation. They’re all people who know me, and I know them, and they make unbelievably amazing investments and when this group comes around and pitches you hard, you listen.

You also spent a couple of years at Quadrangle Group. What did you learn as an investor?

Being an operator you have a perspective and it’s an incredibly valuable lens. At Quadrangle, you also learn about financial discipline and understanding market position and how to invest in the future, things that have helped me feel really comfortable about Chegg’s opportunity. The experience also really solidified my belief in being associated with fun growth companies that are using technology to their advantage.

There was some speculation that when Jerry Yang left Yahoo, you’d be asked to come back and replace him. Were you?

You might have noticed that I never comment on anything relating to Yahoo. I love Yahoo. I’m in touch with all the former executives I worked with. It’s the greatest professional experience I’ve had — until this one. I’m proud of those five years; I enjoyed my time there.

What would you rate [CEO] Carol Bartz’s performance thus far?

I don’t think it’s appropriate for anyone who has been there to comment. I will say I wish them a lot of success and that I’ll continue to spend a lot of my ad dollars at Yahoo because I know it works. [At RedOctane] I switched 60 percent of our TV budget to the Internet, and Yahoo and Facebook were the beneficiaries of that because they work and I want them to succeed.

Monday night, I’ll again be the co-host of Entrepreneurs Unplugged where we will be interviewing Tyler Tysdal, the Managing Director of Mantucket Capital.  We’ll start at 6pm at the CU Boulder ATLAS center.  Tyler has a neat background as both an entrepreneur and investor and I expect this will be another fun and enlightening session.  Tyler’s background follows:

Mr. Tysdal serves on the Board of Directors for the following Mantucket Capital portfolio companies: BrandJourney Capital and PRN Medical Services. His investment background includes venture capital, buyouts, restructurings, hedge funds, real estate, public equities, bonds and several entrepreneurial ventures. Prior to joining Mantucket Capital, Mr. Tysdal founded a private equity firm primarily focused on healthcare, media & entertainment and secondarily on real estate and construction services. Mr. Tysdal is also the founder of Sports Shares, a fractional luxury suite club. He began his career in investment banking with Alex. Brown & Sons, focused on corporate finance and mergers & acquisitions. Mr. Tysdal graduated with an MBA from Harvard Business School and a BSBA in Finance from Georgetown University

Register and come join us.

Clearly, there are many successful VCs that are active bloggers.

But there are plenty of great venture capitalists that don’t blog at all.

I believe it really comes down to personal comfort. I believe VCs should blog if they truly enjoy it and not because they feel it’s about marketing or a way to show entrepreneurs how thoughtful they are (or think they are ). I suppose its like everything else in life - do what you love.

As someone that started in the venture business less than 5 years ago, I can’t imagine not blogging, participating, and showing up every day. It’s too much fun, too much learning and too much I want to share to ever give this up.

That doesn’t mean you can’t travel in the luxury to which you’d like to become accustomed. Indeed, if you aren’t averse to land travel, an affordable yet sleek alternative may be the Opera trailer, a uniquely stylish camper that was designed by Belgian architect Axel Enthoven and is handmade in the Netherlands.

I know, a camper modeled after the Sydney Opera House isn’t exactly what you’ve had in mind. But before you dismiss it, consider the following features: electrically adjustable slats and mattresses with not one but two comfort zones; a compact kitchen equipped with stainless steel sink, mixer faucet and pull-out faucet head; top loading refrigerator; coated teak floor and veranda; and LED lighting.

The color palette is also elegant, even if the name choices –  Koala Grey, Dingo Beige, Quokka Brown — are not.

If you believe the hype, making Opera your “travel companion” will open up a “whole new world to you,” one in which you can “ enjoy the luxuries of a comfortable hotel against the backdrop of your favorite natural landscapes,” a world in which you “have the freedom to go, or stay, wherever you wish, while relishing the purity of the outdoors in style.”

I’d like to tell you how much the innovative camper will set you back, but the company, which is producing the trailers in limited numbers this year, has yet to publicly disclose its price. Whatever its cost, I’d guess it’s still cheaper than a yacht.

You can check out a video about the camper here. (Wine glasses and cheese plates not included.)

Eric Wiesen

Back when I was at Columbia, my friend Mark Davis decided that part of getting involved in the venture/startup ecosystem here in New York meant actively building a community that could support and foster entrepreneurs and their companies. Looking just around Columbia there was a terrific collection of talent without a lot of infrastructure in place to support their efforts.

Being the terrific builder of organizations that he is, Mark decided to start the Columbia Venture Community. I was a minor helper of sorts, but Mark has been the driving force behind this initiative since Day 1. Now, a couple years later, this community has teamed with the similar community at NYU to put together the NYC Startup Job Fair.

Many of us have bemoaned in recent years the observable phenomenon of smart college grads going to Wall Street or big consulting firms instead of joining startups. This job fair is a step in the right direction toward giving upcoming and recent graduates exposure to NYC startups and the potential jobs they might do inside of these companies. I have long believed that most students just do whatever they are tracked to do by their school’s career services apparatus. This is why most law students become lawyers, most MBA students wind up at banks or consulting firms. By creating a “track” for startup employment, groups like CVC and NYUVC are building important foundational pieces to encourage the best and the brightest to join our ecosystem.

If you’re a startup, participate in the fair. If you’re coming out of school or recently graduated and have thought about startups, this is a good way to see a bunch in one place. Nice work, guys.

Filed under: Uncategorized

Since founding the Columbia Venture Community a few years back, I have watched the group continue to thrive due to the efforts of the talented leaders that have taken it upon themselves to drive the organization forward.   It has indeed come a long way. 

Initially the group was focused on creating a vibrant entrepreneurship community within the Columbia population.  Now that the group has become increasingly institutionalized in the fabric of the university culture, the organization is now working towards fulfilling its broader community responsibility:  helping to build the startup ecosystem in NYC.

I’m very proud to announce, a major step in that direction, our first NYC-wide startup career fair for job seekers from any university.  We’re also very excited to take this step in conjunction with the NYU Venture Community.

Special thanks to AOL for hosting the event and to the event’s organizers (especially Alex Horn, Dave Whittemore, Mike Brown, Nick Hurley and Chris Gimbert) whom have worked hard to pull this together.

If you’re a startup seeking talent or a student seeking a job this is the event for you.  The details of the event are below. 

NYC Startup Job Fair
The Columbia Venture Community and NYU Venture Community
are thrilled to present the first annual NYC Startup Job Fair. The fair
will bring students, young alumni and startups together to connect
bright, motivated individuals with exciting and innovative New
York-based companies. Our hope is that the NYC Startup Fair will foster
grassroots awareness for startups throughout campuses across New York
City.

Where: AOL HQ (770 Broadway)
When: Friday, April 9th 2010
What Time: 1:00PM – 4:00PM

The event will be opened to all students and recent graduates; please RSVP if you would like to attend.

If you are a local startup interested in participating in the fair, please fill out the following application and submit it to NYCStartupJobFair@gmail.com.
 While we would love to accommodate all startups, we are unfortunately
constrained by the size of the venue. Our goal is to have a diverse
range of companies and opportunities available for job seekers.

For inquiries, concerns or if you would like to help promote the event on your campus, please email Alex at NYCStartupJobFair@gmail.com.

You can find the website for the event here: nycstartupjobfair.com.

Harbourvest launched fundraising just over a year ago with a target of $150 million and hard cap of $250 million. peHUB first flagged the fund in March 2009. The management company, called HarbourVest Cleantech Associates, was formed in April 2008. Harbourvest declined to comment.

The most interesting part of Jakob’s experiment to me is the economics of it.  It cost Jakob $0.08/reblog to run this experiment.  Yet, if you asked the average Tumblr how much you would have to pay them in order to insert a marketing post into their Tumblelog, my guess is it would be closer to $8.00, not the $0.08 in actually cost Jakob.

Turning the advertising into a game (in this case, the game metaphor is The Lottery) reduced the cost of advertising, increased good will, and got the benefit of residual posts analyzing what he did after it was completed (just like this one!).

jakelodwick:

So this little viral contest thingy is over. I originally estimated 1,000 reblogs by yesterday and it’s up to 1,219. It seems to have really caught on at the end.

There’s no deep thinking behind it — I just wanted to see what would happen, out of curiosity. If 100 people reblogged it, or 10,000 did, that says two different things about the Tumblr userbase.

The randomly selected winner is jaaaaaayr. Congratulations! Send me your address and I’ll send you a check.

(I was supposed to post this yesterday; my apologies)