Tuesday, August 30, 2011

Why are Women Funded Less than Men? - a new conversation

If you are thinking of starting a company, or raising venture capital, and happen to be female then Pemo Theodore's new ebook is for you.

Why are Women Funded Less than Men? a crowdsourced conversation presents a thoughtful collection of advice on how to do it and the challenges you face, drawn from a fascinating set of video interviews. Pemo interviewed VCs, entrepreneurs and advisors, asking them all to speak about the issues and challenges facing women trying to raise venture capital.

In a world more than 95% run by men, and 95% invested in by men, advice for the female entrepreneur is invaluable, and by presenting the advice in short video form, Pemo makes it very easy to absorb and enjoy.

Raising venture capital has never been a problem for me, and as I watched the videos I found myself thinking was I lucky, good, or just really ignorant of the challenge? I very much resonate with the advice to not be aware of your gender as you pitch, to be aggressive and to ignore that you know most VCs are not women friendly - your idea is still great.

I also resonate with the advice from Janice Roberts at Mayfield Fund that you can empower yourself by choosing the right VC. Finding the right investing partner is critical - my advice on how to pick a VC is in this post.

Many of the contributors speak about how important confidence is. So many women let themselves down by expressing self doubt. DON'T. VCs are already taking enough risk - they won't invest in someone that reveals their fears - and men don't let on no matter how scared they might be. Be confident, project confidence, and your investors will follow you.

As I said in my forward for the book:

While the facts are that only 3-5% of venture capital goes to female entrepreneurs there is simply no good reason for this to be the case. Women are as strong and smart as men, and often have the advantages of better management skills and stronger team building ability. But today's venture world is dominated by men looking for the classical male style of leadership and until that changes women need to adapt to the current rules of the game, get funded and win so they can change the game.

It take confidence, courage and authenticity and a healthy dose of advice and encouragement. This wonderful collection of advice, shared experience and often humorous stories will be an inspiration to any female entrepreneur. Pemo interviews across the spectrum: VCs, entrepreneurs, those who have succeeded, some that have failed, all that have learned and share their experience with you. It's a terrific resource if you are raising money from venture capital, plan to do so for your next brilliant idea or are a VC yourself wanting to unlock higher quality deals by tapping into the female advantage.

The complete videos of Pemo interviewing me on raising money are here and here too.

Monday, August 22, 2011

It's not a bubble - the difference between valuation and long term value

Living in Silicon Valley, running a software company with big ambitions I hear the question a lot. Is this another tech bubble? Isn't is going to burst again?

The short answer is no.

Pundits covering tech tend to confuse valuation with long term value. We may well be in a valuation bubble but unlike the 2000 tech bubble the companies in question have deep, sustainable revenue models.

There are certainly some high valuations - per Fred Wilson's view of frothy valuations in April - and these are driven by investor demand. As Father Guido Sarducci so wisely said in the 5 minute university, Economics is about supply and demand. When a few companies have sky high valuations in the public and private markets VCs are chasing good ideas with too much money again and so the early stage and later stage valuations may be getting silly for most companies, but some will be worth it.

Valuation is very different than long term value. Technology, and in particular software, is where long term sustainable value is being built. And when I say long term I am thinking hundreds of years. Marc Andreesen wrote very eloquently about this in the WSJ on Saturday in his essay Why Software Is Eating the World. We are at the beginning of a long era in which technology will reshape every aspect of our lives in ways we are just now beginning to see.

Just as the Industrial Revolution developed over more than 150 years in the 18th and 19th centuries and reshaped machines, industry, transport and the very nature of where people chose to live and work, technology is now reshaping the way we communicate, are entertained, where we live and work and shop and it is rewiring our kids brains for a new world. I've believed this for 20 years and the ups and downs of the tech world over that period have done nothing to dissuade me from that belief because technology is steadily, consistently and dramatically changing our lives. (Want to get some perspective on the 150 year change last time around - spend a day in Ironbridge in Shropshire, England.)

It's happening right now because the pieces are now in place. As Marc writes "Six decades into the computer revolution, four decades since the invention of the microprocessor, and two decades into the rise of the modern Internet, all of the technology required to transform industries through software finally works and can be widely delivered at global scale."

The cost structure is right, the technology base is ready. In FirstRain's case we have built a highly disruptive technology that changes the way business people use the web for their critical decision making. As Roger McNamee says in his thought provoking talk "Everything is Changing", Google's approach to indexing has peaked. People want apps designed for their specific need (he cites his investments like Facebook and Yelp), not one app for all needs, and they want it on their device of choice - which is a smartphone or an iPad. In our case the business need is even more specific than that. Our users want a business web app so they can tap into the breadth, currency and power of the web as a data source, but they want it tailored to their specific business and role, and they want it in a cost effective way.

Marc and Roger are just two rockstars in silicon valley but most people here agree with them (and not just because we are all drinking the same koolaid). Yes we are dealing with some higher valuations, maybe that is a bubble, but the long term value being built in technology is real, and software is where it's at. And what makes it even better is it a continuously exciting place to build a career, or even a company.

Tuesday, August 16, 2011

Google just took the alien onto their ship

Yesterday's news about Google buying Motorola Mobility has set the twittersphere on fire - and generated humor at the same time. Case in point this morning's tweet from nikcub "If you are a motorola employee and do not want to lose your job, I suggest you show up to work dressed as a patent"

This tweet speaks to the core question about what Google's acquisition really means. Google paid a 60% premium for a hardware business, purportedly to get access to their patent portfolio. Anyone who lives in the IP licensing and litigation world (as I do as a board member of Rambus), especially in the US software patent world (as I do as CEO of FirstRain) knows that the US patent system is pretty badly broken and it is very hard and extremely expensive to defend and protect your inventions from the idea thieves.

Google was feeling extreme IP licensing pressure from Apple - even going so far as to accuse Apple and Microsoft of a "hostile, organized campaign" against Android - and buying up their own defensive patents was the only way to go. They are just too young a company, and too newly into the mobile phone world to build up enough of an arsenal to defend themselves in court - and Motorola Mobility has 17,000 patents.

Google may simply not have had any other choice than to buy the patent portfolio to fight with - and so they brought the alien onto their ship.

They paid $12.5B for a hardware business and that is so very different than a software business. A hardware business takes a very different kind of DNA. It takes discipline, cost management and high precision supply chain management. It takes strong controls of inventory turns and the cash conversion cycle. All things Google is not known for.

Larry Page has stated that Android will stay open and free, and the cell phone companies, for now, are supporting Google's move, but for how long? How long until Google realizes that to get a return on their $12.5B (which is a big purchase even for Google) they need to develop a deep integration of OS and phone to compete with Apple and Microsoft? How long until Larry's promise that "Together, we will create amazing user experiences that supercharge the entire Android ecosystem for the benefit of consumers, partners and developers" leads to a move to give Google a product advantage over HTC and Samsung, causing them to develop their own operating systems as Samsung is now doing with Bada?

Remember Google's snafu with the Nexus phone, when they demonstrated very publicly how little they understood the business of selling hardware products (especially to consumers). While I am sure the Google management team has thought about all the possible outcomes I wonder if arrogance and the lack of hardware DNA will lead them into the world of unforseen consequences?

How long will it be until Google either a) creates a proprietary version of Android for their own phones - while protesting vociferously that they will take care of their Android partners or b) shut down the phone business, ending thousands of engineering and production jobs while creating more work for IP litigators? (and those jobs were going to be on the chopping block anyway with the decline of Motorola's market share).

Like the crew of the Nostromo who allowed their crewmate Kane back onto their ship to save him from the alien attached to his face, only to find it killed all the crew except Ripley, who then blew up the ship, has Google taken on an alien business that can eat into it's market position and profitability? Will they, in the end, chose option (b) and blast it out of their ship?

Tuesday, August 9, 2011

Are you an energy source or energy sink for your coworkers?

Everyone interacts differently in the office, based on their role and personality, but most people sort into one of two types with respect to their impact on other people: energy sources and energy sinks. The CEO has to be open to all, and to motivate and energize all, and so I become very aware of the net gain or drain of interaction with my coworkers - and everyone at all levels of the company is consciously or unconsciously impacting the energy level of the people around them.

Energy sinks:
- Bring you problems for you to solve. They'll arrive with a problem, dump it on you and ask what you are going to do about it. Particularly sink-ish when they phone you up with the problem on Friday afternoon and get it off their chest so you can worry about it all weekend.

- Have a negative outlook. Every solution you come up with they shoot it down without chewing on it first, and they drag down other people in the discussion who are trying to find a positive solution. Some people are consistently negative - about movies, about food, about their spouse. It's exhausting!

- Take cheap shots up. Some people think it's OK to be positive down their organization, positive to peers and attack up. The logic is something like "well you wanted the job so you just have to take it". Very negative to other people in the room and, inside, very tiring for the leader. Equally draining are people who are obsequious - also does not move the business forward.

- Are non interactive. They sit silent in a problem solving discussion. Especially frustrating when you know they are smart and have ideas to contribute so you work extra hard to help them participate and overcome whatever inhibition is holding them back.

In contrast energy sources:
- Bring solutions with the problems. Even if they don't have a good solution to some killer problem you are facing together, they try get the brainstorming going until the team comes up with a reasonable idea.

- Bring smart, out of the box solutions. The people who are willing to listen to an issue, think and then take the risk of an unusual or creative solution are particularly energizing, even if half their ideas are bad ones. They open up the solution space for everyone.

- See issues as bumps in the road, not roadblocks.

- See you a fellow traveler on the road (whatever level of management you are at), working together to move the company forward. They don't take cheap shots or kiss up.

- Have a positive outlook. Some people know how to look for the silver lining - it's in their nature - and these people often become leaders of their teams, whether they have an official manager role or not.

- Understand that executives are human. Everyone makes mistakes, everyone gets stumped at times and energy sources know that and detect when to be demanding and when to offer an ear to listen. As CEO you can never expect support from below, you need to be self reliant, but it sure is helpful sometimes when it's offered no strings attached.

Think about which are you in what circumstances - and is your behavior and impact on your coworkers conscious? And if you behave differently with co-workers who are at or below your level in the org chart than you do with coworkers above you why is that and is it justified or helpful to your company?

The top image is of Centaurus A which is two colliding galaxies around a super massive black hole. The bottom image is our Sun.

Saturday, August 6, 2011

Another ugly stereotype of women in the workplace

Sometimes I read articles about women in tech that make me angry, sometime they make me laugh. They rarely make me sad but this one did.

Penelope Trunk wrote a piece for BNET titled: Are Startups Better as Single-Gender Affairs? Based on the author's experience in three startups it reinforces the stereotypes that women and men can't work together because they are too different and just can't get along.

This is just simply not true, but feeds the confidence of the men who don't want to bring women into the workplace, or who want to pigeon hole them into safe roles. Why do women do this to themselves? Why do they reinforce stereotypes that hold women back?

Penelope cites that while she cried, the guys threw a fit, and this was too much drama for a small company. Ugh. Women cry, and trust me men cry too. Women use anger, and so do men. Everyone is emotional under pressure, male and female, and they show it in different ways. Some are overly timid, others are assholes. The tension certainly shows up but it's not gender related.

Maybe I should not give her opinion credence by reacting to it, but BNET published it so it's out there. Maybe I should ignore BNET from now on?

Diverse teams are simply more effective in small and large companies. They produce better results most of the time. But like any creative force they take management and leadership. Without that any team, all men or all women, will not succeed. And as female leaders we need to be very skilled because there are still too many people who are biased or ignorant of the benefits of women in leadership positions alongside of men.

And instead of hurting women's chances in new ventures, women need to help other women until we have a decent balance in tech.

Monday, August 1, 2011

Amazing Crowdrise - and raising money for ovarian cancer research

If you want to see a great example of quality, humor and ease of use combined look no further than Crowdrise. I discovered this site as I prepared to raise money for ovarian cancer research in the run up to doing the Maui 'Aumakua Swim - a 2.4 mile open water swim off Maui on Labor Day.

Ever the over achiever, I want to beat the amount of money I raised doing the Aquabike in 2008. That time I raised over $10,000 using an email campaign. This time I want to seriously beat that and so I asked around looking for a site that would make it easy for my friends to give and track my progress at the same time and found Crowdrise.

In just a few minutes I had my site up. It took me a few more minutes to find and add photos of the ladies in my life who are my inspiration, including my mother who is fighting the disease, but then it was ready to go. Follow that with a couple of hours on Saturday morning to build out email lists of the friends I am hitting up for donations and I had a fundraiser up and running.

Crowdrise is easy, it's funny - every message they send you will make you smile - it prompts you and coaches you every step you take and it has a terrific energy about it . But most importantly it works. I had over $5,000 of donations within 24 hours (including 2 anonymous donations of $1000 each - simply marvelous) and now 2.5 days later the total is over $8,000. I am confident my swim is going to raise well more than $10,000 and I hope to raise my goal within a day or two.

Thank you to everyone who has given so far. Thank you to the anonymous givers who I cannot reach out to. And thank you to the givers who only used their first name because they are too well known to have their full names up on a site like this - but I can guess and so call you!

And if you want to encourage me to complete the swim, or more importantly have license to give me endless grief about how lame my time is, please DONATE HERE!

Me swimming off the Maui shoreline in February getting used to the chop

Another marketing organization rip up and retry

How to organize marketing of B2B high tech products is always challenging. The best products rarely come from marketing people and the deeper the technology the more the R&D team is in the inventive role and driving marketing.

As a result, where to have marketing report is an ongoing political battle in many companies - and Cadence Design Systems marketing revolving door is a fresh example of this. According to the online gadfly DeepChip.com, editor John Cooley reports "Cadence CMO Bruggeman rumored ousted in unexpected palace coup", confirmed also by Gabe Moretti on his EDA blog because of the decision to put "product marketing within the three divisions responsible for product development. According to Pankaj [Mayor, chief of staff to the CEO], who will act as Head of Marketing in addition to his other role in the interim, this is the event that precipitated John's departure".

Product marketing belongs close to R&D, but as companies grow they often oscillate between a functional org chart (all R&D in one team, all marketing in another) and a BU org chart (all R&D and marketing for a business line working in one unit). Having been a part of this oscillation more than once in my tenure in marketing I have seen both sides. There are advantages and disadvantages both ways, but the deeper the technology the more important it is that R&D and product marketing work very closely together and so I favor marketing within the business unit.

The reason for this is that in very complex technology products R&D is leading the customer, not the other way around. The classical view that product marketing goes out and talks to customers, figures out what they need and then comes back and specifies a product for R&D to build is the road to a mediocre, losing product.

With breakout products customers don't know what they need. Sometimes they know the problems they are going to face, sometimes they can describe the performance, time-to-market or cost problems they are facing but they can rarely describe how to solve the problem.

Consider Salesforce. Did CRM users know they needed a cloud based product they could easily configure themselves? No, when Salesforce was emerging customers were asking for more and more features on their Seibel systems. And yet Salesforce dramatically reduced the cost of deployment and support of CRM systems.

Consider Synopsys. Did logic designers know they needed to radically change the way they described chip logic by moving up to the RTL level instead of drawing gates? No, they asked for more and more features to draw gates faster within their Daisy or Mentor systems and yet the move to RTL based design dramatically changed the complexity of designs that were possible.

Centralized marketing makes sense for all the cross functional responsibilities. Communications needs to be one voice with common positioning and messaging. Third party business development - coordinating partnerships and industry initiatives - needs to present the company as one entity to partners. Market research and competitive intelligence is more cost effective and can serve the sales force with one set of tools and content (like FirstRain) if the intranet and intelligence are run centrally.

But product marketing needs to be close to R&D, sitting with R&D and not confused about their role. Design collaboration with R&D, interface specification, customer introduction, field training and support all need to be done working hand in glove with the R&D team that is pushing the envelope of the technology. Org charts should not, in theory, change behavior but they do.

Organizational change is also almost always good and keeps people on their toes - and shows you a lot about the organization. Holden powerbase selling methodology teaches sales people that change illuminates the power structure in an organization. Any time you see a reorg someone wins and someone loses. If you want to really understand where the power lies take note of which executives build a little bit of power every time. Subtle, continuous, increases are a sign of someone strategically building power.

It's true that product marketing has an important role to play. Much of the time the work to be done is incremental, and then it does not really matter where product marketing reports. But when you are building a product that has to leapfrog your competition and stay on the bleeding edge you are reliant on the R&D and conceptual brains to figure out the leap and product marketing needs to be part of the leaping team.

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