Is Microsoft Innovative? Not as much as they use to be. Yet at least they are alive and not on life support. Is Yahoo innovative? How about RIM, or HP. These companies are a decade away from their last innovation.

What is it about these companies that mutated their innovative gene to boring?  I submit it is their initial public offering.  You see according to research outlined in Daniel Pink’s book, Drive, innovation for right-brained, conceptual tasks is stifled when the focus is narrowed by significant cash rewards or pressure.

Companies are either focused on Customer Intimacy, Operational Excellence or Innovation and for those companies focused on innovation I submit that the IPO is the start of their corporate slide to irrelevancy.

Instead of long term investment, the executive team turns their focus to stock prices movement based on the whims of short-term traders.  Traders more concerned with next quarters revenue and profit while discounting the value of long term R&D. Upon going public, employees of the company immediately feel the pressure to deliver quarterly results at the expense of all else.

Sales people desperate to produce their quarterly numbers will drag sales forward with discounts that could have been sold at list price had they finished in their natural cycle. Average selling price drops as focus shifts from the long-view to the what-have-you-done-for me-lately view lowering average sales price and placing additional pressure on revenue attainment. With more pressure, comes more narrowing of focus at the cost of innovation.

Apple is one of the few companies to drive sustainable innovation well past their IPO. Apple lost their innovative mojo when they pushed Steve Jobs out, replacing him with John Scully who quickly turned Apple to the prototypical post IPO firm.  Only Jobs return to the helm returned Apple to it’s pre-IPO innovative roots.

My theory on that? During Jobs second reign at Apple the company was more Jobs Inc than Apple Inc.  Apple became an extension of Job’s ego. Job’s company became a centralized corporation driven by a man who was not distracted nor motivated by the twists and turns of Wall Street.

With Jobs gone, it will be interesting to see if the company doesn’t go the way of Microsoft or Yahoo, or Google who is now trying to build a company with the introduction of me-too products like their “Facebook Killer,” Google+.

Will Facebook’s Mark Zuckerberg duplicate the success of the personality driven Apple or will Facebook join the list of skyrocketing companies that only fall to earth after reaching their IPO zenith.  Will Facebook create next Tech crater?

Which DC-area VC finished in the top 20 of The Funded’s Top VCs?  Here’s a hint, he’s based in VA, he invests nationally and is one of the most active VCs headquartered in our area.

The rankings were the result of a poll on the TheFunded.com which bills itself as an online community of over 17,000 CEOs, founders and entrepreneurs who gather to discuss fundraising, rate and review investors, and discuss strategies to grow a start-up business.

Of the 23 Venture Capitalists who made the Top 20, 13 were based in California (no surprise there), 4 were in MA, 2 were located outside the country in the UK and Israel. Don’t feel bad DC and MD for not having any partners making the list as only one state that’s two character abbreviation doesn’t end in A made the list and that was Florida.

John Backus finished tied with rock-star VC Brad Feld and ahead of legendary John Doerr. Congratulations John, DC entrepreneurs are fortunate to have you as part of our ecosystem.

You’re an entrepreneurial startup CEO problem-solving machine.  You take on and dispose of issues faster than Kim Kardashian goes through husbands. As soon as you sniff a problems it’s disappeared faster than a politician’s promise after election day. Which can be a good thing or…. at times could be the problem in itself.

How can solving problems create problems?  Here’s a real life and all too common example:  I’m talking to a crackerjack, multi-profitable-exited, serial CEO and he lays out a problem he’s trying to solve with his partner.  You see his partner has certain financial needs, craves security and other non-entrepreneur-like issues. This CEO, listened to his partner, thanked her for voicing her concern and then started working on the problem for her.

Great, right? No… not so much. Because what just took place was a game of hot potato. You see as standard operating procedure Mr. CEO accepted Ms Partner’s problems as his own.  Just picked it up, put it in his problem solving queue and committed to spit out an answer in the near future. My advice, give that potato back to Ms. Partner and have her come back with a solution.  Instead of wasting cycles on her need for security and more income, give her some parameters like:

“Right now it would be difficult for us to afford that. What can you do to help pay for that?  Why don’t you come to me with some possible solutions and lets talk.”

See what just happened there? We just freed up some CEO brain-cycles by passing back the potato.  Now here’s the good things that could happen.

1. Ms. Partner might just drop it meaning it really wasn’t that important.
2. Ms. Partner will analyse the situation, have a better understanding of the issue and learn to be a problem solver instead of creator.
3. Ms. Partner will buy-in to the solution and take some ownership in the outcome.

Or Ms. Partner can come up with a totally ridiculous, unrealistic solution in which case you have a real problem…. is Ms. Partner really a partner or an employee and do you need an employee?

Look, just because we are fixers doesn’t mean we should fix everything.  If you want to improve the capability and learn to trust your team….. next time you’re handed the potato problem, don’t give into instinct, take a breath, and hand that potato back.

Elana Fine, Dingman Center – Elana’s quietly building a entrepreneurial juggernaut at the University of Maryland’s Dingman Center for Entrepreneurship. Under her leadership the Dingman Angels have become the most active Angel Group in the region. The Dingman Center is positively impacting this regions technology entrepreneurs and Elana’s driving the Dingman Center in the right direction.

Michelle Hoffman, Hoffman CFO Consulting – You may not know Hoffman CFO yet but I guarantee that if you pay attention to DCTech you know many of her customers. Michelle is the outsourced CFO for many of DCTech’s most visible small to midsize startups.  Michelle’s gained the trust of the regions top startup CEOs who need the strategic guidance and discipline of a Fortune 500 CFO on a Startup Budget.

Antigone Peyton, Cloudigy Law – Antigone’s built a cloud-based, virtual Intellectual Property Law firm after practicing with Finnegan, Henderson, arguably one of the countries largest and most prestigious Intellectual Property Law Firms. She describes herself as a  recovering BIGLAW lawyer. She’s built a company that delivers the results of the big firms while providing a more practical fee structure for her customers and a more sustainable life style for her employees.

Tracy Betts, Balance Interactive – Early in her Tech Career Tracy was presented with the choice of career or family life and she decided to redefine the question.  She started Balance Interactive, a company where career advancement and satisfaction didn’t mean sacrificing family and personal life…. that’s the Balance in Balance Interactive.  Balance specializes in building the online presence of large organizations with complex content management needs and multiple constituencies. Tracy’s believe is that a happy team delivers better results which translates to satisfied customers.  Judging by her low staff turnover and customer satisfaction ratings and the companies impressive growth, her strategy is working.

Melanie Spring, Sisarina – Melanie’s a twitter diva who I first noticed by following her frantic, accurate twitter coverage of local events. Sisarina’s another firm that balances lifestyle with delivering customer value. The companies mission: give small businesses & non-profits the tools they need to express who they are through creative branding & marketing. (It doesn’t hurt that we’re ridiculously fun to work with!). Melanie’s active in the DC Tweet-up community and donates much of her time to charitable causes.

If you raised seed capital from a DC VC last quarter you are part of an exclusive club.  Only 3 firms raised seed capital from DC firms last quarter from VCs headquartered in our region and 2 of those companies got money from Virginia’s CIT. CIT is a state-sponsored fund chartered to make early stage investments and doesn’t represent the standard risk profile of a traditional VC.

John Backus and the New Atlantic Venture team were the only greed-based, non-state-sponsored fund laying down startup seed-stage bets last quarter with two investments of $3.2M each in American Honors College and Quad Learning Inc.

DC-based VC’s making investments anywhere in the world made a total of 3 seed, 16 early, 14 expansion and 15 later stage bets of the total 48 investments they made in and out of region last quarter.

I’ve included a list of the DC Headquartered VCs and the investments they made in the 1st quarter.  I’ve also listed the earliest round out of all their investments last quarter in which they participated.  That data gives you some idea if the firm.  It’s an indicator of are they making new bets, do they have dry power, are they investing new money or are they simply following on to legacy deals.

For instance, Third Security made a 14th round (really 14th round? Seems like that would be more risky to me than any 1st round.  A 14th round kind of sounds like welfare.)  Core Capital made 2 later stage deals last quarter; both were 10th round later stage deals.  It’s likely that these investments are follow-on rounds for these firms.

Image courtesy of likemkg.com

Here’s a infographic courtesy of Microsoft regarding people’s summer travel technology plans.

Legal Notice: I am a Windows Champions blogger and I received loan of a laptop and may receive other awards from Microsoft to post my opinions about Microsoft products. At times Microsoft supplies prizes for use in contests like this one. I am free to offer an unvarnished opinion and the incentives are not intended to have me offer anything other than my truest grumpiest thoughts.

Tech Cocktail polled readers asking the question who are the Top Angels in the US.  The results. (As Seen In Tech Cocktail)

I’ve worked with many a CEO who acted and failed as their company’s Chief Revenue Officer…. spelled S A L E S P E R S O N. The problem with that is while most entrepreneurs have the ability, the drive and audacity to sell, few of them have the patience to stick with the grind of repeatedly making cold calls and deal with rejection.

Entrepreneurs like to blaze new trials, figure out puzzles, innovate.  Entrepreneurs don’t get their jollies from walking down a well worn path.  Sure they can do the work for a short period of time, but it’s a rare entrepreneur who can sustain high sales performance over a long period of time. If they were willing to toil day after day cold calling for dollars they’d still be working for the man instead of aspiring to be the man (I’ve written about some of this in “Playing Hide and Seek With the Revenue Nut.”)

I’ve worked with multiple CEOs to help them realize they won’t fire themselves for not making quota, for not making enough cold calls, for not being great salespeople. These folks realize they need to hire someone who they can hold accountable to drive revenue.

A poll of early-stage CEOs who recently hired sales leads asking them to rate their sales engine on a scale where 1 is the lowest and 5 is the highest over 80%  of those polled rated their engine as 2 or lower.  When digging into the why there was one common thread.  The CEOs had hired someone to be held accountable for sales…. and hadn’t held them accountable.

So here’s a little trade secret….. CEO’s can suck at sales just as effectively as a sales person who can’t sell and at only a fraction of the cost. Sales people are not fire and forget weapons. They need guidance, goals, follow-up and most of all to be held accountable.

So, find a good sales person. Set some short term goals.

1. On what date should they be able to talk about or demo your product?
2. How many calls should they make per week?
3. How many qualified leads should they have in the first 3 – 6 months?
4. What’s a qualified lead look like?  Can the sales person tell you and do you have confidence in their answer regarding the following prospect questions:
1. is there budget
2. is there a decision timeframe
3. how and by whom will the decision be made
4. who’s your company’s sponsor

When you hire a sales person, visualize success.  Determine when is the earliest date you can confirm if you hired right and how? What would success look like, in terms of revenue and then back into the activity that will produce those results.  Make those expectations clear to the new hire.

Then monitor, coach and decide as fast as possible whether you got the right butt in the sales hot seat. If the answer is no, turn up the heat.  This is costing more than money…. your competitors are out there courting customers that should be yours.

Every one knows that more companies raise money in Silicon Valley than any other US region.  How about by sector. In every sector Silicon Valley outperformed Metropolitan DC and New York.

Maryland’s concentration on health sciences seems to be paying off as Biotech is consistently the strongest performing sector in the DC region and the only sector to out perform the New York Region.

No VC did more deals last quarter than New Enterprise Associations (NEA), which isn’t unexpected since the bi-coastal firm with US offices in Chevy Chase, Baltimore, New York and Sand Hill Road, is arguably the number one Venture Firm in the world.  NEA completed 4 out of their total 24 transactions in the DC region last quarter.

The most active investor in DC companies continues to be Virginia’s CIT GAP fund. CIT invested in 9 area companies last quarter, adding on to the 6 Virginia companies in which they invested in Q4 last year.

Maryland’s state-run funding vehicles went silent last quarter placing no new Q1 investments. Hopefully this is a digestion issue after making 5 Maryland investments in Q4.

One notable, high-viability,  yet stealthy fund, Steve Case’s Revolution, came out of the closet this quarter finally showing up in the PWC MoneyTree survey making 4 total investments all based around the beltway.  Previously Revolution’s investments were not tracked by or reported  to MoneyTree.

New Atlantic Ventures continues their frantic investment pace making 2 in-region investments and 5 total investments.  Grotech was close behind with 2 of their total 4 investments being in-region. Novak Biddle followed closely on thier tails with 2 out of their 3 total Q1 investments in area companies.

DC-based or Venture Capitalists with offices in the DC region (highlighted in blue). Total investments and investments in the DC Region.