If you don't know the basics of the Facebook-Instagram acquisition already, here's the writeup from Alexia Tsotsis at TechCrunch:

"I’m as shocked as you are, namely because I was working on this as a funding story all morning. Anyways, right before its billion dollar acquisition from Facebook, Instagram closed a $50 million Series B round from Sequoia, Josh Kushner’s Thrive Capital, Greylock and Benchmark at a $500 million valuation. The round was led by Sequoia, as first reported by AllThingsD’s Liz Gannes.

"Investors, many of whom didn’t know about the Facebook acquisition, literally doubled their money (which was wired to Instagram last Thursday) overnight.

"Instagram last raised funding a little over a year ago, in a modest $7 million round from from angels Adam D’Angelo, Jack Dorsey, Chris Sacca, Baseline Ventures and Benchmark Capital."

As noted, it's smart to use an impending investment valuation to drive a higher acquisition valuation. Strategic/acquisition values are typically much higher than investment values. eg, as of today, Instagram is worth more to Facebook than it is to Sequoia, because Facebook gets strategic value in addition to market value. If the company was able to use the Sequoia deal to drive its Facebook acquisition value higher, then in theory the founding team's smaller share of a larger $ pie is greater than the larger share of a smaller $ pie. A nice play if you can make it.

What about Sequoia and the investor syndicate? Investors with a signed term sheet would be fully aware that acquisition discussions were taking place, as well as what valuation range they were in. I would be surprised if Instagram's investment group did not go into this with eyes wide open. Investors win either way - an instant 2X multiple on investment (and a crazy high IRR), or a highly desirable company that they believe has growth potential.

I'm even more green-eyed than usual today. Call me jealous impressed.

NOTE: To be clear, I am not privy to the boardroom conversations around this deal. I'm simply opining on why it could make sense, based upon experience with my own investments.

Towards that end, we're looking for great developers, UX designers, researchers, and marketers that have a passion for food. There's a great post by Kevin Fitchard on GigaOm that touches on Yummly's product roadmap:

"Yummly’s core technology, which breaks down recipes and ingredients into raw culinary data, from which it extracts everything from calorie and saturated fat content to more conceptual notions of saltiness, sourness or bitterness. If it knows you’re a vegetarian, the Yummly search engine will weed out recipes that contain an ingredient that once walked, flew or swam.

"...[CEO Dave] Feller said that the semantic technology Yummly has built has a lot more potential than the search engine lets on. Its current staff of 10 just doesn’t have the resources to build new products to tap into that potential. So Yummly plans to use its new $6 million to go on hiring spree and roll out new cooking applications and features. Some of those products will be the typical tablet apps and shopping list services we see proliferating on cooking sites and services today, but others will make more specific use of the vast food vocabulary Yummly has spent two years learning.

"Feller said Yummly first needs to build upon its core search engine, which he characterized as being more a proof-of-concept –- though it's a proof-of-concept that gets 4 million unique visitors a month. It currently aggregates more than 600,000 recipes from 15 sites, ranging from the Food Network to AllRecipes, but it will expand its scope into further culinary corners of Web."

As someone who loves to cook, I'm a happy user (you can find me under "tribal kitchen goddess") and eager to see the company's deep understanding of food extended into other services and across additional platforms. Can you help? Check out their jobs page and join the kitchen brigade!

1. 10 Minute VC  - Sunday 3/11, 2:00-5:00 PM. Hosted by Intel Capital (yep, I'll be hosting a table) and Blumberg Capital.

Are you an entrepreneur, someone thinking about becoming an entrepreneur, or a talented maker who would like to join a startup? Join Blumberg Capital and Intel Capital in Austin for 10 Minute VC, Texas-style. On Sunday, March 11th, Christine Herron, Carey Lai, and Lucy McQuilken from Intel Capital, along with David Blumberg, Bruce Taragin, Jon Soberg, and Ankur Jain of Blumberg Capital, will be your hosts in Austin. We'll be available for 10-minute chats, and you set the agenda. (Hat tip to Kent Goldman from First Round Capital for galvanizing the investor community around this concept!) Feel free to give us your quick pitch, ask questions, or just start a relationship. If you can't get a meeting time, then come join us for a drink - Vince Young's has five local beers on tap and the bar will be open.

Make sure to register to attend as capacity for both meeting and mixing is (sadly) limited. Grab your time slot when you register, and plan to arrive at least 10 minutes early so that the good folks from Venture Further can get you checked in and ready.

2. Startup Village. Daily during Interactive from 9:30 AM - 6:00 PM. Organized by SXSW.

Startup Village brings together the startups, entrepreneurs, investors, and cutting-edge digital tastemakers within the 2012 SXSW Interactive Festival. Located primarily on the fourth floor of the Downtown Austin Hilton, this space showcases the various startup events at SXSW Interactive (including SXSW Accelerator, as well as startup-related panels, Meet Ups, lounges, pitch events and mentoring / coaching sessions).

A new addition to the 2012 schedule, Startup Village consolidates much of what already happens at SXSW Interactive into one location. Current and future entrepreneurs will benefit from learning and networking with investors, technology trailblazers, media representatives, as well as digital creatives from the three exciting industries that come to Austin for SXSW (Interactive, Music and Film). Startups are an important part of the world economy as well as an important element of SXSW Interactive -- we are very excited about all that Startup Village will bring to the 2012 event.

3. Co-Founder Speed Dating. Saturday - Sunday 3/10-11, multiple sessions. Organized by Capital Factory and DreamIt Ventures.

What better place to find your co-founder than at SXSW where tens of thousands of like-minded people from around the world are mashed up together? On both Saturday and Sunday afternoon Capital Factory & DreamIt Ventures will be running multiple sessions of co-founder speed dating. You tell us what you are looking for and we will play the matchmaker. In just an hour, you’ll meet a dozen potential co-founders hand-picked for you.

4. SXSW Accelerator. Monday - Tuesday 3/12-13, 9:00 AM - 6:30 PM. Organized by SXSW and Microsoft Bizspark. (Yours truly MC'ing on Monday afternoon!)

The fourth annual SXSW Accelerator will take March 12-14 at the 2012 SXSW Festival in Austin Texas. A live audience, as well as a panel of expert judges will be discovering advancements in social media, mobile applications, web entertainment, and more. The best part? Product demonstrations by the most ambitious talents in the world with the most creative new ideas to change it. We will catch a glimpse of the industry's future, with a guided tour by our emcees and judges.

This competition will be unlike any other. On March 12, forty-eight companies battle for your taste-making, trend-setting attention, leading to a fireworks display of innovation. Connections will be made and careers launched. On Tuesday March 13, the top eighteen companies will be invited back, and at the end of the day winners of SXSW Accelerator will be announced. 

5. Startup America Live. Daily during Interactive from 9:45 AM - 6:00 PM. Organized by Startup America.

4 full days of programming featuring iconic entrepreneurs and brand new startups remaking iconic game shows like “The Price is Right,” “Who Wants to be a Millionaire” and “Minute to Win It”. Startups will compete for amazing prizes that will help their companies. Mornings with Jesse Draper recapping the coolest stuff going on in Startup Village. The chance to hang with people like: Steve Blank, Kay Koplovitz, Gary Shapiro, and Eric Ries. One on one time with leading experts during all-day office hours, schedule here: http://www.s.co/content/startup-america-live-sxsw-office-hours/

Note that I haven't posted private events...there are a bunch of these to attend as well, if you can wrangle invitations. Austin-based accelerator Capital Factory has also put together the Ultimate Startup Guide to SXSW 2012 - definitely check it out for more tips.

If you see other great VC-entrepreneur connection opportunities, please share in the comments. See you here in Austin!

It must be hiring season for venture capitalists - VC compensation talk has been coming up recently. If you're a partner, VC compensation is pretty straightforward - you get a piece of the partnership's profits, aka a "carried interest" in the fund. (See my presentation on VC 101 to dig in more on this.) But how can you provide the best incentives for your other investment staff? How can you get your analysts, associates, principals, and vice presidents to all contribute the success of the portfolio? In an ideal world, every person an entrepreneur talks to at a venture fund will have a stake in the entrepreneur's success.

I have the unique advantage of an inside view on non-partner compensation across multiple investment funds. There isn't one model established as best practice for the industry, but there are a few that are either common or make common sense. Not necessarily both at the same time. Here are the top three:

• Vested Interest. This model is very similar to stock options:
  • The fund creates a small pool of "carry points" that can be issued to associates (or other non-partner staff.)
  • An associate is a issued a set number of "carry points" each year. Like stock options, these points take four years to vest, have a one year cliff, and vest monthly or annually thereafter. They also disappear if unvested if/when the associate leaves the fund. Unlike stock options, the associate doesn't have to pay for them.
  • Each year is considered a vintage year, and each year the associate gets another batch of points that will correspond to the deals made in that year. Associate kicking butt? Increase the size of their grant. Slacking off? Decrease it.
  • The fund sets up the spreadsheet that keeps track of "vintage year" performance in addition to fund performance. (Most funds do this anyway.) 
  • Both during employment and after the associate leaves the fund, the associate gets payouts based upon their share of profitable, in-the-money (vintage year principal has been returned) exits.

• Phantom Carry. A less-common model that looks like cashless angel investing:
  • For each investment, the associate is given a 'phantom investment' amount, as if they were a invisible angel investor in the deal. So this doesn't show up on the investment's cap table, but rather lives in the fund's back end accounting.
  • The amount of phantom investment varies based upon the role the associate is playing. For example: Sourced the deal? You get $25K phantom carry. Helped close it? $15K. Just on the team at the time the deal closed? $5K.
  • The fund sets up the spreadsheet that keeps track of "phantom carry" amounts assigned to each investment.
  • Both during employment and after the associate leaves the fund, the associate gets payouts based upon the return for each individual investment.

• Exit Bonus. This popular model is most like a traditional bonus:
  • The associate is given a share of carried interest in the current fund, and any future funds that the associate works on.
  • When the current fund begins returning a profit during the asociate's employment, the associate receives distributions according to his/her carried interest.
  • After the associate leaves the fund, they no longer receive any distributions.

Of these three, I believe that the vested interest model provides the best outcomes - the associate has a long-term incentive to provide ongoing support for companies, which benefits both the entrepreneur and the fund. The longer the associate is working at the fund to support the investment, the greater his/her reward (larger amount vested) based upon the company's success. The phantom carry model comes close to this, however, and is easier to administer. Though common, I believe the exit bonus model to be flawed - an associate or vice president in a three-year program is more incented here to find new deals as vs. to work towards the success of deals that may exit after they are no longer working at the fund.

Net-net: Entrepreneurs - don't be shy about asking if the associate that cold-calls you has an incentive for you to be successful! VC partners - there's a real competitive advantage in having your entire team work for your portfolio's success. The argument isn't to pay staff more, but rather to tie more compensation to portfolio success. A thoughtful approach here will be worth the overhead.

What other good approaches have folks seen? Ideas and comments welcome.

Boiling potatoes on the playa is nigh-impossible. Something about altitude and desert conditions...but if you just take an hour to prep these mashed potatoes at home, you'll be camp hero. Read on for playa-specific cooking tips.

Ingredients

• 15 pounds of peeled, cut potatoes (preferably Yukon Golds, though other types will do)
• 4 pounds of bacon (hickory smoked adds a nice touch)
• 2 pounds of butter, room temperature
• 2 cups of half-and-half
• sea salt and pepper to taste

Instructions

1. AT HOME: Fill a large stewpot half full of water and bring to a rapid boil. Note that if you're making this dish at full quantity, you will need two pots of boiling water.
2. Add your potatoes and half-cover. Let boil for 20 minutes, or until potatoes feel soft enough to eat when poked with a fork.
3. Drain water and discard. Add half of your dairy ingredients and a first round of seasonings. Mash until dairy is just mixed in. Taste and let your palate guide you as to how much more you want to put in. Mix in dairy and seasoning until it tastes good enough to serve as normal mashed potatoes. Just be careful not to overmash as you're mixing, or the potatoes will get gluey.
4. Scoop your finished potatoes into freezer ziplocs and make flat packs. Freeze them, along with the uncooked bacon. They will serve well to keep your cooler cold, and will stay frozen several days.
5. IN THE DESERT: When you're ready to serve this meal, let the potatoes and bacon defrost several hours ahead if you can. Then, fry up your bacon and set aside. Make sure to reserve the bacon grease. Stand a guard at camp perimeter, since the smell of bacon will attract packs of hungry burners. (Ever see Alfred Hitchcock's The Birds?)
6. Reheating potatoes on the playa can be challenging, but I've had good success with just stirring them in giant fry pans. Use bacon grease in the pan as needed. Microwaving not an option...the water molecules just don't seem to respond correctly for microwave heating.
7. Cut your cooked bacon into big chunks and mix into the potatoes.
8. While you have been in the desert your body chemistry has been changing, and your palate has adjusted accordingly. Go ahead and add bacon grease and salt until it suits your altered taste buds. It will be much more than you think, so try not to be horrified. Just eat and enjoy!

Shopping tip: You can buy Yukon Golds by the 15-pound sackful at Costco, along with both hickory bacon and butter in four-pound packs. Round it out with a half gallon of fresh half-and-half (just $2.99!) and you have the key ingredients needed for this taste treat.

Author's note: If you're making bacon mashed potatoes at home, you don't need to add bacon grease on top of the butter. Simply substitute bacon grease for one-third of your usual quantity of butter, and you'll achieve the right taste balance.