Bold Smurf...and other interesting investments.

I read an article today in the Financial Times (Article Link) that reminded me of something that I think can be forgotten about angel investing...it can and should be fun!

And over the course of my (relatively young) life, some of my favorite family stories revolve around investments. There was the plucky race horse "Bold Smurf" (a purported descendant of Secretariat), the short lived Nascar race team that came along with another deal (it had a pink car and at about 10 or 12 years old, I was embarrassed to tell anyone about it) and this list goes on.

Of course we have now entered the age of the nerd (a term I may resemble), the internet and Web 2.0 etc., but just because some of the investments may have changed, they should still be fun. After all, if you can't smile about it, then it probably isn't worth doing.

Lack of Revenue will Kill your Company

My dad once told me that the biggest hurdle that many companies face is the failure to be profitable. I would completely agree.

After my last post on Minimum Functional Units, I would suggest that the failure to be profitable causes much of the scope creep that many startups and small businesses experience. The appeal is understandable..."I'm not making enough with service A, so let's add another service."

Unfortunately, scope creep dilutes the marketing message and spreads sales resources even thinner. Often the result is that owners end up overwhelmed with work and without much result, so they go out of business.

A much better outcome can be achieved if the company can stick with the original offering,focus on getting the MFU cashflow positive then scaling.

Of course, some MFUs just don't cashflow and in that case owners are much better off with a small failure than if they have tried to build a diversified structure on a faulty foundation.

What is a minimum functional unit and why should I care?

I'm not certain where I first ran across the concept of a "Minimum Functional Unit", it was probably is a software engineering book or maybe in a biology blog. Basically, the concept for a business refers to the simplest revenue producing activity that may be sustained in a given market space.

Wherever it initially came from, I have certainly jumped on the bandwagon, at least as it relates to start-ups.

You ask, "Why is it such a great concept for start-ups?" Because most entepreneurs have ADD. Most are creative, go-getters with an abundance of energy. Unfortunately, many have a really nasty habit of starting projects, getting a feel for the major issues, then getting bored or distracted by some new project.

Getting distracted and losing focus for a start-up can mean death because there isn't enough time or money to get everything done anyway, so success depends on focusing all available resources on the highest impact activities.

Additionally, focusing on a core activity and doing it great simplifies almost everything else.

Once that minimum functional unit is operational, the goal is to continue systematizing and perfecting the unit, it is also time to consider scaling the business, which is where a small business starts toward becoming a big business.

So...what is on tap for 2010?

Almost every project I had (or heard about), across multiple industries, had to trudge for most of 2009. Amazingly, a few of our portfolio companies that boot strapped like crazy are poised for launch in the first quarter of 2010, including:

a Premium Tequila Importer,
a Wide Area Wifi company, and
a Web Asset Integration Interface service.

There are a few more that are hanging around and could get into the starting gate if a few things break the right way.

Of course, I know that eventually some are going to have to raise some capital, but it has been impressive to see how far creativity and determination can take a company.

Interesting Post by Brad Feld on the Future of Human Computer Interaction

Brad's post is particularly interesting because we have some companies in Birmingham that are working on some of these very issues and it will be really fascinating to see which solutions and competing technologies end up taking hold.



Speech Recognition Is Only Part of the Future - Brad Feld

"A week or so ago, Fred Wilson Dictated a Blog Post.  In it he dictated a blog post on his Nexus One phone.  He then discovered Swype which now has an unofficial Android app.   As usual the comment threads on AVC were very active and had lots of thoughts about the future (and past) of voice and keyboard input.

When I talk about Human Computer Interaction, I regularly say that “in 20 years from now, we will look back on the mouse and keyboard as input devices the same way we currently look back on punch cards.”

While I don’t have a problem with mice and keyboards, I think we are locked into a totally sucky paradigm.  The whole idea of having a software QWERTY keyboard on an iPhone amuses me to no end.  Yeah – I’ve taught myself to type pretty quickly on it but when I think of the information I’m trying to get into the phone, typing seems so totally outmoded.

Last year at CES “gestural input” was all the rage in the major CE booths (Sony, Samsung, LG, Panasonic, …).  In CES speak, this was primarily things like “changing the channel on a TV using a gesture”.  This year the silly basic gesture crap was gone and replaced with IP everywhere (very important in my mind) and 3D (very cute, but not important).  And elsewhere there was plenty of 2D multitouch, most notably front and center in the Microsoft and Intel booths.  I didn’t see much speech and I saw very little 3D UI stuff – one exception was the Sony booth where our portfolio company Organic Motion had a last minute installation that Sony wanted that showed off markerless 3D motion capture.

So – while speech and 2D multitouch are going to be an important part of all of this, it’s a tiny part.  If you want to envision what things could be like a decade from now, read Daniel Suarez’s incredible books Daemon and Freedom (TM)"

Full Post - Click Here

Surfing the Digital Wave...Birmingham on the Board

If you sometime wonder where we may be headed with all of the technology advances that are being made, these links may give some insight.

The Future Internet: Service Web 3.0

Bionic Software

With that as a backdrop, I think it is worth noting that we have a lot of activity in our region, and in Birmingham specifically, related to Web 3.0 and the like. This wave of development includes hardware, software and all manner of industry specific applications.

I would love to see this area take advantage of the democratization of the start-up ecosystem that ubiquitous internet is bringing to fruition and there is already some real momentum.

Over the coming months, there are a number of projects that look like they could pop and probably a good many more that I have yet to hear about. It is an exciting time and one that most Alabamians are highly unaware of, but it has the potential to really shake things up.

Stay tuned...it should be a lot of fun.

Welcome to the future - 2010

After another full year in the books, it seems proper to recap just a bit and look forward to the year ahead.

2009 was a tough year for the world and US economies, wall street, main street and many personal pocketbooks. Yet, despite the headwinds, we have continued to see the entrepreneurial spirit push forward and seek out opportunities for success.

As we head into 2010, I see a number of groups poised to take advantage of their hard work during the broader turmoil. Some of these are raising capital and some are commercializing, but the opportunities for success are clearly still available.

What trends are we seeing now:

1. Web 2.0 progressing into bionic software
2. Seamless integration of digital technology
3. Globalized opportunities

Probably the biggest trend seems to be the merger of trends together into a broader digital innovation wave.

It also seems to me that we have a rather fortunate circumstance for innovation because at a time that outside investment is more difficult, the internet and digital resources are making it easier to bring innovation to a broad audience. This also has the benefit of decentralizing innovation and adding real opportunity for regions, such as the southeastern US, that have not historically participated in the US innovation economy.

Of course we still have headwinds, but opportunities abound for those that persevere and stay focused on bringing real value to the consumer.

Now go build something.