Monthly Archives: February 2008

When the CFO leaves…Part II

Today’s headline from Silicon Alley Insider reads:
Google Disaster: Comscore Reports Awful January
Reading this article (and numerous other articles about slowing Google growth) and watching GOOG drop from its 52 week high of 747.24 to today’s price of 452.31, I thought back to my post from last September, When the CFO leaves… which I posted upon learning that the Google CFO was intending to leave.
I hate making predictions. I hate putting it out there like that because it sucks when I’m wrong. But looking at GOOG today and all the news over the last few weeks about the impending slowdown in Google revenue growth, I cannot help but wonder that perhaps I could be right on this one.
Now, this post is not about Google the company. Google is still a great company and is doing many great things. But as any person who knows anything about stock trading, stock prices are often more reflective of emotion and feelings about the company and not so much actual performance of the company. So we’re talking about sensing when a stock price has peaked and when it’s time to get out of a certain stock.
Who has great “stock sense”, especially the “stock sense” of their own company? The CFO.
Once again, I see the CFO of a great public company get out of a company whose prospects are riding high. But the CFO is a smart guy; he has access to both proprietary information within the company and also tons of analytical information from external sources about the company, its competitors, and the economy, and the opinions of all his buddies in the financial community. This is far more information than you or I could get hold of. Couple that with a great sense for money and he can predict when the stock is going to peak and, perhaps, when he should exit and take the gains off the table.
So when Google’s CFO announced his departure late last year, I could not help but wonder that GOOG was going to take a plunge within a year. It sure looks that way now.
When the CFO leaves, it’s time to sell all your company’s stock…NOW.

Guitar Hero III, Physical Therapy for Video Game Ailments

I just bought Guitar Hero III for my XBox 360. Wow, I was supremely impressed especially as a user interface person, having worked on physical products back in my Apple and frogdesign days.
The controller really gives the feeling of being a true head banger rocker with distortion guitar (since it’s shaped like a guitar). You hit keys which simulate the fingering on strings, and then you strum on this switch. I am barely through the tutorial now but can’t wait to get into Rock and Roll All Nite and Barracuda.
It’s an interesting device from the perspective of an user interface person. How novel is it to create controllers which mimic real life devices – we already have driving games where you can buy a whole steering wheel console plus accelerator pedals. The experience is that more enhanced when we change out the generic controller for something whose physical makeup enhances the whole playing experience. I love the fact that there are games like Rock Band out, and the impossible to get Wii with its wireless controller that you can use to simulate all sorts of real life objects.
One thing stood out. As I went through the tutorial, I felt some pain in my left thumb. Gripping the guitar and trying to hit the buttons was cramping it up! I had to constantly take breaks and stretch it out. Wow, I need training to play Guitar Hero III!
I went to my physical therapist last night for my usual triathlon fixup and remarked to him that Guitar Hero III was bugging my thumb. He then told me that he has seen an increase in patients with injuries caused by the Nintendo Wii, especially bowling and tennis!
How funny that people are now trying sports in the virtual sense, and getting injured because of that. Couch potatoes now have similar ailments as real athletes!

The Early Adopter’s Dilemma

I’ve been cleaning house and I just found this in one of my closets:

Sometime around year 2000, this service came into being by Motient, who used one of the first RIM Blackberrys to allow users to connect to Yahoo! Messenger IM via this device. It also allowed me to read/write Yahoo! Mail.
I bought one as soon as it came out. It was fantastic. We Yahoos depended on IM so much in our work day and I was now connected wherever I was. It was at a time when SMS wasn’t so prevalent in the US and there was no connection between a computer based IM product and a device. So now I could be pinged on Yahoo! IM anytime and anywhere! This percursor to SMS was a fantastic breakthrough in showing how being connected in real time could be an incredibly useful thing.
But alas, about a year or so later, Motient closed down and the money I paid for the device and steep monthly charges were all down the tube. It would be many years before SMS really gained traction in the US enough to where enough people would be contact-able via SMS, and this would have supplanted the Motient product and service.
It’s the dilemma of the early adopter. You see a real cool product and/or service from a brand new company, and you see enough value in it to actually buy one and use it. It’s so useful, so typically expensive, and so freakin’ cool; all of these factors drive the early adopter to get one simply to have one before everyone else does. But the risk of having the company, product, or service close down is super-high.
I bought an iPhone on the first day it came out. But it could have been a dud. Luckily it was not. I also bought an Apple TV and sweated through about 8+ months of whether Apple would close down that product line or not, despite its incredibly utility. Thankfully, that product has been rejuvenated as well.
Last winter, I bought myself an Amazon Kindle. It’s definitely on that high risk list of products that could just disappear by the end of the year if its business model doesn’t prove out. I’ve grown to love it thoroughly but keep wondering if Amazon will just close it down at some point.
Sony is probably the worst early adopter product creator. They keep products going for years and years before they really should be shut down. Their strategy is to brute force a new technology into the marketplace and sometimes it works and sometimes it doesn’t. At least you might enjoy it for a few years though, as it dies a slow, unpopular death.
It’s the dilemma of an early adopter. You can’t resist taking the leap of getting one but you also take the risk of wasting tons of money if it shuts down. All that to be the first one on the block and maintain that early adopter mystique…

Holding Someone’s Hands

It’s a shame.
Every week I encounter entrepreneurs. Given that I look at early stage internet deals, a high percentage of them are first timers. And practically all of them have nobody to help them or walk them through the details of creating a new company and funding it.
It’s a real shame.
I would be the first to say that I’m no expert on this. But I try to help as many people as possible. Yes, it takes a lot of time but I’m willing to give that time out, even if it’s for goodwill and I only get a positive relationship out of it. I just hate seeing people either stumble around on their own or worse, get bad or imperfect advice.
Investors give you advice, but sometimes they aren’t entrepreneurs and can’t really know what it’s like to build product and a company. Or you wonder if the advice they’re giving you has their interests wrapped up in there, especially where funding is concerned.
Other entrepreneurs give you advice, but many of them are bitter with past experiences of investors and tend towards telling you how to do things in investor unfriendly ways. Or they have ways of doing things that they like and these may or may not apply to your situation.
Lawyers are supposed to give you advice, but they are only giving you advice that protects you, which is very company friendly. Also, many of them don’t understand the different phases of a company’s life cycle; they may have only done big corporate financings and have not done early stage. As your experience grows, the things that are important are different based on the size and stage of the company. It’s frequently up to the entrepreneur to educate the lawyer on how they want to do things, with the lawyer supporting. But you can’t educate your lawyer until you educate yourself. Oh, by the way, you have to pay lawyers to talk to them….
I’m probably one of the few people around who are schizophrenic and can wear both an entrepreneur and an investor hat; my model of advising and investing has helped me understand both sides of the equation. I also try to lay it all out and talk as broadly as I can about the implications of as many things on the table, both company and investor friendly and unfriendly. On topics in which I do not have experience, I say so and try to point them in the right direction.
Yes, my experience base is relatively low, but I am still willing to spend that time with entrepreneurs, because it sure seems like no one else is willing to. In general, I find mentorship to be severely lacking in the hustle/bustle of Silicon Valley…