Steve Woda's blog

Thank you buySAFE!

Today, I am starting a new chapter in my entrepreneurial story. It is with both a bit of sadness and a lot of excitement that I share with you the news that I have left buySAFE to pursue other start-up and entrepreneurial interests. In addition, I have joined buySAFE’s Board of Advisors so that I can continue to assist the company in whatever fashion is necessary.  Click here to see buySAFE's announcement on the buySAFE blog.

After almost nine years of building buySAFE, I am leaving the Company in very capable hands, with fresh funding, and the brightest future that the Company has ever had. It has been a deeply satisfying experience to create something valuable, and I want to sincerely thank our customers, our partners, my colleagues and the many investors who made buySAFE possible. I am obviously looking forward to my next adventure, but I am also very much looking forward to buySAFE’s continued success over the coming months and years.

I founded buySAFE after getting burned in an online transaction on eBay. As a student, I didn’t have any extra money to lose to ecommerce fraudsters, and so I decided that there had to be a better way to buy and sell products online. buySAFE was born!

This adventure started for me while I was earning my MBA at Wharton in 2000, and as with all start-ups, there have been huge successes and great challenges. For me, both have proven to be invaluable learning experiences.

Developing buySAFE’s early business/technology plan, acquiring our major financial institution and strategic partners (including two major strategic partners to be announced in the coming months), and raising our $30 million in venture capital financing were all challenges that I ultimately found to be great learning experiences. Over time, I was able to lead almost every aspect of buySAFE’s business operations, and all of these experiences were amazing for me personally and professionally. I plan to share with you many of the lessons I learned at buySAFE over the coming months.

Perhaps the thing I am most proud of at buySAFE is our team. Early on, I recruited Jeff Grass, Tim Woda, and Hans Dreyer to buySAFE. Today, Jeff is buySAFE’s CEO, Tim is the VP - Sales, and Hans is the VP - Operations. They are the core of our team even to this day. The rest of our team is amazing as well, and it has been a pleasure working with each and every one of them.

I never intended to spend almost a decade working on my Wharton class project, but along the way, buySAFE provided me with an amazing opportunity to make great friends, to learn important new skills, and to see that anything is possible with persistence and creativity. It also taught me that you can’t build a company by yourself.

Although I could never hope to name all of the folks that deserve my thanks, I wish I could. A few folks in particular - my wife, my brother, and buySAFE’s employees, customers, investors, and advisors - have all obviously been invaluable to both me and buySAFE. To all of you, thank you! I sincerely appreciate your investments in time, capital, expertise, and support. There would be no buySAFE without you.

As far as the next chapter in my entrepreneurial story, I am not ready to share the details quite yet, but please stay tuned. I will share my adventures with you here on my blog, so if you are interested, please make sure to subscribe using the form below.

Thank you buySAFE!

Related posts:

"Steve Woda, Founder and Chairman of buySAFE, Pursues New Entrepreneurial Ventures" on the buySAFE blog

"Founder of buySAFE, Steve Woda, Steps Down" on AuctionBytes.com

Zenoss Closes 2008 with 100 New Enterprise Customers & $15M in Financing

Zenoss Inc., the leading provider of commercial open source systems and network monitoring, today announced tremendous momentum through the end of 2008. In addition to astounding growth in commercial enterprise sales throughout the year, the company raised an additional $15 million of financing, was recognized with many awards including being named a finalist for a Jolt Award in the Enterprise Tools category and secured twice as many downloads as its nearest competitor in commercial open source IT management for 2008.

Zenoss added 110 new enterprise customers during the year, including Carlson Travel, Tyco Electronics, Cap Gemini, Formica and iStockphoto. Others, such as UTStarcom, Medifast, OpSource, OmniPresence, Broadcom, Johns Hopkins and Rackspace, renewed their annual subscriptions. Zenoss has gained the most traction in financial services, federal government, and among leading managed service providers where Zenoss management solutions are now routinely replacing traditional products from the "Big 4" systems management vendors (IBM, HP, BMC and CA).

As a result of this significant growth, Zenoss secured an additional $4 million in new financing from Silicon Valley Bank in December bringing the total raised to $15 million for the year and over $20 million cumulative. Other funding partners include top-tier venture capital firms Grotech Ventures, Intersouth Partners and Boulder Ventures.

Read more >> Zenoss Closes 2008 with Over 100 New Enterprise Customers, $15M in New Financing, and Numerous Industry Honors

 

Technorati Tags: Zenoss,Grotech Capital,Venture Capital

JackBe Fueled to Extend Market Leadership; Adds $5 million in Funding

JackBe, the leading provider of enterprise mashup software, today announced that it has closed a $5 million round of funding and appointed software industry veteran Wayne Jackson as its new Chairman of the Board. The funding and appointment confirm JackBe's industry leadership and ready the company for continued growth and success through 2009 and beyond.

The $5 million funding was secured from existing investors including Harbert Venture Partners, Core Capital Partners, Blue Chip Venture Company, Intel Capital, and Darby Technology Ventures. The investment will be used by JackBe to expand sales, marketing, and partner activities worldwide.

Learn more >> JackBe Fueled to Extend Market Leadership; Adds $5 million in Funding and 25-year Industry Veteran as Chairman of the Board - MarketWatch

JackBe Lands $5 Million, Names Wayne Jackson as Chairman - Silicon Valley Wire

JackBe jacks another round with $5 million - Startup Meme Technology Blog

Technorati Tags: Core Capital,Venture Capital,Pascal Luck,JackBe

Dancing with First Round Capital

First Round Capital's 2008 Holiday Card (video) proves once again why every early-stage entrepreneur wants to find a way to meet with this terrific investor group.  Check it out! 

These guys are creative; they have been in the trenches themselves (multiple times!); they have been successful (multiple times!); and most of all, they like working with entrepreneurs because they are entrepreneurs.

I have had the pleasure of working with and knowing lots of technology investors, and along the way, I have learned a thing or two about who you want to try and work with (and what you want to avoid).  These guys are good.  Period.  In addition, their holiday video is brilliant, low-cost, and fun, and it highlights their strengths in an intangible, yet powerful manner.

Let me share one quick story that illustrates why I like these guys so much.  Although they won't likely remember it, both Howard Morgan and Josh Kopelman provided me with a helping hand while I was trying to get buySAFE launched back in 2001.  I was introduced to Howard via a mutual friend, John Tedesco, and Howard offered to meet with me in NYC and provide me with feedback on my business plan.  At the time, the venture was called BondMyAuction.  I was not ready for primetime, and yet, Howard spent two hours listening to me and coaching me on how I could improve my plan.  Howard also introduced me to Josh Kopelman.  At the time, Josh was an executive at eBay because he had recently sold his business, Half.com, to the ecommerce giant.  For no reason other than to be helpful to me, Josh also spent almost two hours on the phone giving me feedback and advice on how to proceed. 

I will be forever grateful for their assistance since I was no more than an aspiring entrepreneur with a paper napkin business plan.  Their help was both gracious and inspiring.  In many ways, they (along with a few others like them) gave me the extra motivation and confidence that I needed to stick it out through the inevitable challenges of getting a business launched.  Since then, I have tried to return the favor with other aspiring entrepreneurs because of their good example (although I am quite sure that I could never be as helpful as they were for me).

Again, check out First Round Capital's holiday video, and I think you will agree with me.  These guys are authentic, and entrepreneurs clearly have good reason to want to work with them.

Nice job Howard and Josh!  For everyone else, enjoy!  http://holiday.firstround.com/

Roundbox Raises $20 Million for Mobile Broadcast Software

RoundBox, a provider of mobile broadcast software, announced on Monday that it has raised over $20 million in its third round of venture capital funding, led by Montagu Newhall Associates. Itochu Techno-Solutions Corporation, and previous backers Core Capital Partners, Polaris Venture Partners and RRE Ventures also participated in the round, which will be used to invest in product development and customer delivery.

Learn more >> Roundbox Raises $20 Million for Mobile Broadcast Software - Digital Media Wire

Roundbox Secures Over $20 Million in Series C Financing

Technorati Tags: Core Capital,Roundbox,Venture Capital

Infinite Power Solutions, a thin micro-cell firm, raises $13 million

Infinite Power Solutions Inc. (IPS), a developer of solid-state, rechargeable thin-film batteries, has said it has completed its Series B round of financing, raising $13 million to fund the ramp to volume production of its Thinergy micro-energy cell product family.

Existing financial investors D. E. Shaw Ventures and Polaris Venture Partners led the Series B round, and were joined by the company's other existing investors Core Capital Partners, Applied Ventures LLC, the venture capital arm of Applied Materials and In-Q-Tel, along with a unnamed strategic investor.

Learn more >> Thin micro-cell firm raises $13 million - EETimes.com

Technorati Tags: Core Capital,Venture Capital,Infinite Power Solutions

How Do You Win a Business Plan Competition?

The short answer is that you need to be very, very good.  There are a lot of terrific, aspiring entrepreneurs out there, and so a bit of luck is useful too.  Having said that, winning isn't everything. 

buySAFE is actually a product of the 2002 Wharton Business Plan Competition, but the plan was not the winning plan.  PayMyBills.com has a similar story.  The founders and my good friends, Jeff Grass and John Tedesco, were finalists, but not winners, in the 1999 Wharton Business Plan Competition.  However, they went on to raise tens of millions in venture capital and they built a really nice business in the process. 

Simply going through the business planning and critique process is the real benefit of these competitions in my opinion.  Business plans are funny things.  Business planning is a fairly simple exercise, but if you haven't previously developed a plan, the effort can seem very daunting.  Business plan competitions typically provide basic advice to the entrepreneurs on how to get started.  The competitions also have multiple stages with each stage presenting an opportunity to receive valuable feedback from the experienced entrepreneurs and investors that are judging and/or mentoring in the competition.

The following Business Week video does a nice job of covering the basics regarding what you need to know before submitting your business plan.

Winning a Business Plan Competition | The Businessweek Video Library

In the video, the University of Oregon's Randy Swangard talks about how to win that business plan competition -- what to keep in mind before you apply, and why it's sometimes better to come in second.

The Wharton Club of New York is running a business plan competition now, and here is all the information you need to enter as a participant.  I highly encourage you to participate if you can.

Also, you might find the following NY Times article interesting.  "Beyond Grades: Business Students Put Their Start-up Ideas to the Test" does a nice job of covering the ins and outs of business school business plan competitions.

Have fun, and good luck!

Core Capital leads venture round for RollStream

Core Capital Partners led a $6 million round of funding for RollStream Inc., a developer of supply-chain software. Fairfax-based RollStream said the latest round of funding from the D.C.-based venture capital firm will be used to bolster its portfolio of enterprise community software services.

RollStream's Web-based platform helps manage partner relationships, letting businesses cut the costs and time required partners, communicate operational changes, and unveil sales and marketing initiatives.

Learn more >> Core Capital leads venture round for RollStream - Washington Business Journal:

Technorati Tags: Core Capital,Venture Capital,RollStream,Will Dunbar

Core Capital Partners Invests in $14.5 Million Round for Trust Digital

Core Capital Partners, a leading venture capital firm that invests in high-growth technology companies, announced today it is participating in a $14.5 million funding round for McLean, Va.-based Trust Digital, a leading enterprise mobility management (EMM) provider.

The funding will be used to extend Trust Digitals platform to include Research in Motions BlackBerry devices, the Apple iPhone and Google Android. The funds will also go toward expanding direct sales and channel partner support.

Learn more >> Core Capital Partners Invests in $14.5 Million Round for Trust Digital

Technorati Tags: Core Capital,Pascal Luck,Venture Capital,Trust Digital

V.i. Labs Secures $4 Million in Additional Funding

V.i. Labs, a provider of software protection solutions, received $4 million in additional funding to accelerate its product development efforts and expand platform support for its CodeArmor software protection and intelligence solutions. Existing investors, Core Capital and Ascent Ventures, participated in the expansion round.

Learn more >> V.i. Labs Secures $4 Million in Additional Funding

Technorati Tags: Core Capital,Venture Capital,V.i. Labs

Does Your VC's Fund Have the Capacity to Do Follow-on Rounds of Financing?

Another great post on TheFunded.com....

When considering a term sheet from a prospective VC, it is key to understand whether they have have the means to fund follow-on rounds. Most VCs will not do cross over funding and often startups find themselves in trouble when their VCs can not provide subsequent financing. So, it is key to determine...

If your VC's fund is having problems (financial, political, hiring or retention, etc..) or if your VC's fund is at the end of its lifecycle, you may ultimately experience artificial, unnecessary problems that you will have to navigate in the future while running your business.  For entrepreneurs, this is a very serious issue to consider before you allow an investment, not after an investment has already taken place.

Read the rest of this article at TheFunded.com: Fund Diligence Item in order to learn the three critical questions you should ask your prospective investors before taking their venture capital dollars.

Technorati Tags: Venture Capital,VC Due Diligence,Follow-on Financing,Grotech,Core Capital,The Hartford Ventures,buySAFE,Steve Woda

Post Funding Advice for VC-backed Entrepreneurs

If you have ever raised venture capital, you know how important the post-funding relationship is with your venture capital investors.  Your pre-money valuation and financing terms are all important needless to say, but to be candid, the post-funding relationship you have (or are likely to have based on a VC's previous track record) is probably the most important issue for you to consider as an entrepreneur.

An experienced entrepreneur posted a great article on the subject on TheFunded.com, and here is an excerpt of the article...

There are a lot of postings here about getting the initial term sheet and getting the VC on board. However, just like marriages, many of these courting periods can be quite different from the month to month evolving operations and business that we face a year or two down the road. Remember that often these VCs will sit on your board, and direct your business in different ways and depending on your dilution can dictate how operational decisions should be made. Thus, it is important to get an early feel from your VC dialogue, especially how they would respond if the actual business is less than the wonderful picture we sometimes paint in our pitches.

If I can give you piece of advice that you need to follow religiously in your quest for venture capital, it is that you MUST speak to the entrepreneurs and CEOs that have previously taken money from and worked with the VC firm and the VC partner that you are considering.  Do not limit your discussions to the entrepreneurs and CEOs of the successful deals, but rather, you should talk to the entrepreneurs and CEOs of the unsuccessful deals as well.  In my experience, the VCs play a critical role in both outcomes, and you need to make sure you get the full, unedited scoop before you take money from a VC.  This is absolutely critical to your success or failure as a startup.

Speaking of which, I am always happy to share my insights on this subject with folks that are interested, so don't hesitate to email me with your questions.

You can read more of the original article here >> TheFunded.com: The post funding experience

Technorati Tags: Venture Capital,Post Funding Advice,Grotech,Core Capital,The Hartford Ventures,buySAFE,Steve Woda

Grotech Ventures Leads a $6.6 Million Series B Round of Funding for Collective Intellect

TechCrunch reported last week that Grotech Ventures has led another round of financing for Collective Intellect.  The following is an excerpt from TechCrunch.

Collective Intellect, a service that can be used to track what people are saying around the net about certain topics, has raised an additional $6.6M in a Series B round led by Grotech Capital Group with participation by Appian Ventures, Croghan Investments, and Crawley Hatfield Capital.

You can read more about the financing here >> More Money for Collective Intellect to Keep Fingers on Pulse of Internet

Technorati Tags: Grotech,Collective Intellect,Venture Capital,Appian Ventures,Croghan Investments,Crawley Hatfield

From Messes To Successes

One of my favorite VC bloggers is Fred Wilson, and he wrote another great post this past week.  "From Messes to Successes" is an interesting article about his experiences with "problem" portfolio companies.  As you would hope would be the case with any good venture capitalist, he and his team have helped turn many of these "problems" into fabulous outcomes.

Here is an excerpt from his article...

When I look back at my 20+ year history of venture investing, it's certainly true that the biggest successes have been big messes at some point in their life. My most successful venture investment at Euclid, Multex, almost went bankrupt before the Internet came along and provided a cheap way to get it's service to its customers. Geocities, which was our most successful investment at Flatiron, was a total mess in mid/late 1997, about a year after we first invested. And our most successful investment to date at Union Square Ventures, TACODA, was a mess multiple times including when the first build of its software totally failed on them. Delicious also had plenty of messy moments in its brief period in our portfolio.

The core point of Fred's article is that startups are often messy due to the hyper-focus on the product and the market.  He goes on to argue that this may be what ultimately makes them companies great companies once they finally get their act together on process and operations.

I agree.  Building a great product is a pre-requisite for success.  When you get the product right, you can build a company around it.  Without a great product, you will end up throwing a lot of money at something that won't ultimately succeed.

Start with the product.  Make it great.  Build the team the processes and operations around that great product.  That is how you build a great, successful business.

You can read more of Fred's article here >> A VC: From Messes To Successes

Technorati Tags: Fred Wilson,A VC,Venture Capital,Union Square Ventures,Messes to Successes

Daily Roundup for 2008-04-17

• Targeting, Ad Network Spending Increase - eMarketer
  More than nine out of 10 US advertising agencies and advertisers buying online media plan to work with ad networks in 2008, according to Collective Media's "Ad Network Study 2008."  Nearly three-quarters of respondents said that they planned to spend more with ad networks in 2008 than they did in 2007.


• ISPs meddled with their customers' Web traffic by Robert McMillan, IDG News Service
  In a paper, set to be delivered Wednesday, the researchers document some troubling practices. In July and August they tested data sent to about 50,000 computers and discovered that a small number of ISPs were injecting ads into Web pages on their networks. They also found that some Web browsing and ad-blocking software was actually making Web surfing more dangerous by introducing security vulnerabilities into pages.

Daily Roundup for 2008-04-16

• Does Your Company Need a Chief Blogger? - Advertising Age
  It's a question marketers are still grappling with years after the first waves of corporate blogging flooded the web. But for better or worse, it seems corporate blogging -- and the title of chief blogger -- is beginning to hit its stride. Companies such as Coca-Cola, Marriott and Kodak all have recently recruited chief bloggers, with or without the actual title, to tell their stories and engage consumers.


• Brands Partner With Consumers Online - eMarketer
  These days, online consumers and companies are collaborating on a range of activities, including R&D, marketing and after-sales support.  Here are a few examples of how brands and consumers are working together online.

Daily Roundup for 2008-04-08

• Just What We Needed, Google on Speed - Google Everflux
  Is it just me or has Google gone into overdrive? As a professional full-time online marketer I have to keep my mind firmly placed on what Google is doing. As much as I try not to because Google has probably driven more people around the bend than Chrysler and Mercedes-Benz put together. Like any professional marketer, I monitor my numerous keywords on a daily basis - especially my major targeted keyword phrases that bring in the most sales and subscribers. For years now, I have had top rankings in Google for my chosen phrases; they move up and down, but mostly they don't leave the first page.


• Beam it up: Tiny projectors to magnify cell-phone cinema - Technology Review
  Recognizing that it is not much fun to watch movies on a tiny cell phone, a number of companies are racing to develop gadgets that project what's playing on the small screen onto walls, table cloths and other handy surfaces. ''Pico projectors'' that are small enough to carry around in a shirt pocket are expected on the market later this year. Eventually, the technology will be tiny enough to be built into phones and portable media players, the companies say.

Daily Roundup for 2008-03-25

• Region's Venture Capital Rank Slips - washingtonpost.com
  Regions of the West Coast and Midwest moved ahead of Washington as top destinations for venture capital in recent years, as the local venture economy grew more slowly than the national average, a Washington Post analysis shows. In 2001, the year the technology bubble popped, Washington ranked sixth among top destinations for venture capital, after Silicon Valley, New England, the New York metro area, Texas and the Southeast. Last year, it was ranked 10th, overtaken by the Northwest, San Diego, the Midwest and Los Angeles/Orange County.


• Hammering out Wikipedia's financial future, argument by argument - Technology Review
  Scroll the list of the 10 most popular Web sites in the U.S., and you'll encounter the Internet's richest corporate players -- names like Yahoo, Amazon.com, News Corp., Microsoft and Google. Except for No. 7: Wikipedia. And there lies a delicate situation. With 2 million articles in English alone, the Internet encyclopedia ''anyone can edit'' stormed the Web's top ranks through the work of unpaid volunteers and the assistance of donors. But that gives Wikipedia far less financial clout than its Web peers, and doing almost anything to improve that situation invites scrutiny from the same community that proudly generates the content.

Daily Roundup for 2008-03-21

• Report ranks Washington and Baltimore hotbed for investors - Washington Business Journal:
  The Washington and Baltimore region was the nation's fifth fastest-growing area for venture capital funding in the last decade, according to a report released Tuesday. In 2007, 180 Washington and Baltimore companies received nearly $1.3 billion in venture capital backing, the MoneyTree Report by PricewaterhouseCoopers, Thomson Financial and the National Venture Capital Association said. That number is up 130 percent from $558.24 million put into 105 companies in 1997.  The report lists Timonium, Md.-based Grotech Capital Group and Chevy Chase-based New Enterprise Associates as the most active investors in the region. The top industries for investments around the region were software, life sciences and telecommunications.


• Affluent Hobnob on Social Networks - eMarketer
  The rate of affluent US Internet user participation in online social networks increased dramatically to 60% in January 2008, from 27% in January 2007, according to The Luxury Institute's latest WealthSurvey "The Wealthy and Web 2.0."  "While some in the luxury industry are still debating e-commerce, search and banner ads, the majority of their customers have leaped into the online dialogue," said Milton Pedraza, CEO of the Luxury Institute. "Luxury needs to catch up quickly."

Daily Roundup for 2008-03-19

• Woman to record industry: Stop spying
  A woman who claims the recording industry's anti-music piracy campaign threatens and intimidates innocent people has filed a new complaint accusing record companies of racketeering, fraud and illegal spying.


• Startup RatePoint bets that people want user reviews refereed - Technology Review
  One of the great things about the Internet is the way people post reviews on just about anything you are considering trying, whether it is a movie, a new restaurant or the local florist.  This also introduces one of the worst things about the Internet: trying to figure out which reviews to trust. Was that effusive praise written surreptitiously by the merchant? Was that anonymous online slam posted by a devious competitor?  The dilemma might be unavoidable in this age of abundant user-generated content, when we have to be smarter about separating signals from noise. But a startup called RatePoint Inc. begs to differ. It wants to play referee, giving consumers more clarity into a business' reputation and protecting the business from unwarranted blights on its credibility.

Daily Roundup for 2008-03-08

• Jeremy Siegel on Politicians, Prices and a Potential 'Buying Opportunity of the Decade' - Knowledge@Wharton
  The U.S. Presidential race has reached a critical juncture. The Republicans have a confirmed nominee in John McCain; as for the Democrats, Hillary Clinton has bounced back, while Barack Obama retains a marginal lead in terms of delegates. How the presidential race evolves will be shaped in part by the increasingly worrisome state of the U.S. economy. Consumer prices are rising, oil has crossed $103 a barrel and gold is nudging $1,000 an ounce -- suggesting that the economy could be entering a phase of 1970s-style stagflation. Fed chairman Ben Bernanke, however, told Congress last week that he doesn't anticipate stagflation, and he continues to indicate his willingness to keep cutting interest rates. What lies ahead for the U.S. and world economies? Knowledge@Wharton discussed these questions and more with finance professor Jeremy Siegel, author of The Future for Investors.


• Ecommerce Blogging: Who, What And When: Well-written blogs create credibility, interest
  Last month I talked about blogging platforms and the value blogging can bring to ecommerce sites. When a website makes the decision to begin a blog and decides upon a blogging platform, it will then have to decide who will blog and how often. Time allotted to blogging is also a relative issue, as is subject matter. So why bother at all?  Relative to static ecommerce sites, search engines consider blogs more real and trusted because blogs tend to have fresh content and there is a less financial, more informational link between a blog and its readers. An ecommerce site should take advantage of this tendency by adding a blog to augment the overall site.

Daily Roundup for 2008-03-02

• The Psychology Of Buying - Behavioral Insider
  The recently launched 7 Billion People is an intriguing application to e-commerce of the real-world psychology behind buying behaviors. As CEO Mark Nagaitis tells us, his new Web analytics system tries to discern in a site's audience different "buying personalities" that marketers can talk with in very different ways.


• InternetNews Realtime IT News – Americans' e-Commerce Conundrum
  A new study from the Pew Internet Project casts light on the love-hate relationship many Americans have with e-commerce. In response to the survey, 78 percent of U.S. Internet users said that online shopping is convenient, and 68 percent said it saves time. Yet, 75 percent said they don't like giving out personal information like a credit card number over the Internet.  The security risks, real or perceived, are hampering the growth of the Internet economy, said John Horrigan, associate director of the Pew Internet Project and author of the report.

Daily Roundup for 2008-03-01

• Google Muscles Further Into Business Software - Forbes.com
  Google is launching Web-based collaboration software that aims to make it easy for groups to share and edit materials such as documents, photos, video and spreadsheets on a single site. Easy enough, Google hopes, to make selling software applications to enterprises a bit harder for the likes of IBM and Microsoft.


• Use of Google for Data Triggers Fears
  It's called "Google hacking" - a slick data-mining technique used by the Internet's cops and crooks alike to unearth sensitive material mistakenly posted to public Web sites.  And it's just gotten easier, thanks to a program that automates what has typically been painstaking manual labor. The program's authors say they hope it will "screw a large Internet search engine and make the Web a safer place."

Daily Roundup for 2008-02-29

• New York Comes to Silicon Valley
  The relationship between the venture capitalists of Sand Hill Road and the securities firms and power investors of Wall Street has long been a cozy one. VCs hoping for a return on their investments will need banks eventually, while Wall Street needs VCs to nurture the most promising startups until they're ready to go public.  Or do they?  Lately, some of New York's biggest players have been cherry-picking the best pre-IPO investments for themselves.


• Yelp Critiques Heard and Heeded in D.C. - washingtonpost.com
  Although the tiny, family-run Joy's Spa and Nail Salon in Adams Morgan may never get a critique in a newspaper, it's received 42 reviews on Yelp.com.  Reggie Tull, the owner's son and a massage therapist, said he noticed an increase in traffic with every new review posted on the recommendation site. He's also surprised by the time writers invest in each posting.

Should Entrepreneurs Worry About the Loyalties of Their Lawyers?

Should entrepreneurs worry about the loyalties of their lawyers?  That is the question posed in a recent article on TheFunded.com, and to be honest, it is a fair question.

Most venture financings have closing legal expenses in the mid-five figures, and I know of Series B deals where the closing expenses have approached a quarter million dollars (yes, you heard me right... $250,000).  At the end of the day, these expenses are ultimately paid for by investors.  In addition, within local venture ecosystems, the venture lawyers obviously do many deals with the venture capitalists in their area over the course of time.  These factors certainly create the potential for major conflicts of interest, and according to many entrepreneurs, the conflicts of interest are real.

My team has always had the benefit of terrific legal counsel, and we haven't personally struggled with this issue.  However, if you honestly assess the dynamics of the venture relationships as well as the economics of where and how corporate lawyers get paid, you will have to agree that entrepreneurs probably should be keeping a close eye on your lawyers.

As I mentioned, there was a terrific post on this subject at TheFunded.com - Venture Legal: A Conflict of Interest and a Complicated Mess.  The author of this post hit the issue right on the nail.

How to Answer the VC Valuation Question

Over the last few years, I have presented to dozens of venture capital firms while fundraising, and inevitably, the venture capital investor always asks you what valuation you are looking for.  This reminds me of that job interview question we have all been asked... "What are your biggest weaknesses?"  There really isn't a right answer, but there sure are a lot of bad answers.

Stu Phillips does a nice job of explaining how to answer this important VC question on his blog, Soaring on Ridgelift. 

One hint... Don't answer the question! 

Well, there is actually more to that conclusion, but you can read the details in Stu's blog post, The Valuation Trap.

Nice post Stu!

Core Capital Invests in $20M Round for NextPoint

Core Capital Partners, a venture capital firm that has invested in a number communications infrastructure companies particularly focused on the IP and VoIP, announced its participation in a $20 million round of funding for Gaithersburg, MD-based NextPoint™ Networks, Inc.

According to the investment announcement , NextPoint will be the result of the recently announced merger between NexTone Communications Inc., a software-centric session border controller and session management provider, and Reef Point Systems, Inc., a mobile access universal convergence gateway provider. In addition to Core Capital, other investors in this round include the round lead investor, One Equity Partners, the private equity arm of JP Morgan Chase (NYSE:JPM), as well as American Capital Strategies (NASDAQ:ACAS), Jerusalem Venture Partners, Safeguard Scientifics (NYSE:SFE) and Summerhill Venture Partners.

Read more about Core Capital Partners >>
Read more about NextPoint >>

A Few Interesting, Recent eCommerce and Entrepreneurship Articles

Good morning everyone!  If you know me well, you know that I am a voracious reader of anything and everything that I believe is interesting or useful either personally or professionally.  My colleagues will attest to the fact that their Inbox usually has at least one article that I have recent found that might be useful for them or buySAFE. :)

Today, I have been catching-up on my reading list, and I thought I would share with you a few articles that I found interesting.  Hopefully, you will some of the info interesting as well.

Steve

Google is an advertising cheapskate!

What is the most valuable brand in the world?  Google is the number one brand in the world with an estimated value of $66 billion according consulting firm Millward Brown Optimor. 
This got me thinking... How did Google become the most valuable brand in the world in just a short nine years?  As the Founder of a consumer-focused internet company, I find this question very interesting.  Conventional wisdom would suggest that Google must spend billions of dollars in advertising every year to accomplish such an impressive feat.

Well after a bit of research, one thing becomes clear... Google is an advertising cheapskate!

The Wharton School and Entrepreneurship

The Wharton Business Plan Competition took place earlier this month, and NP Solutions was the big winner for 2007. The new venture took home the $20,000 grand prize for a business that provides a polymer based injectable hydrogel treatment for back pain.  Obviously, I wish these folks a bunch of luck with their new business.

As you may already know, I am a big fan of these collegiate competitions.  buySAFE (formerly known as BondMyAuction) is a product of the Wharton Business Plan Competition, and so I can speak from experience when I say that these events can be very useful in getting entrepreneurial ventures launched.  I actually entered the business plan competition in 2000 and 2001 with different ventures as a student.

Then after graduation, I teamed up with Peter Niessen, a 2002 MBA grad, to enter BondMyAuction in the 2002 Wharton Business Plan Competition (You need at least one current student on your team to participate, but the rest of the team can be alums, etc...).  Peter was a terrific teammate, and he and I were able to make it to the Finals of the competition.  Again, it was a great experience, and you can read about it in this recent article by the New York Times - "Beyond Grades: Business Students Put Their Start-Up Ideas to the Test"

One last interesting note for you...

Jeff Grass, buySAFE's CEO, was also a finalist in the Wharton Business Plan competition in 1999 along with his business partner, John Tedesco (John is currently the CEO & President of Guardian Mobile Monitoring Systems).  Jeff and John launched PayMyBills.com shortly after graduation, and they ultimately sold the company to PayTrust in 2000.  Today, the company's service is owned by Intuit, and it powers the bill payment and management solutions for some of the country's largest financial institutions.

Needless to say, collegiate business plan competitions can provide aspiring entrepreneurs with a generous leg up on the formidable challenges of starting up a company out of school.  For me, the Wharton Business Plan Competition experience was invaluable.

The Three Qualities of Great Entrepreneurs

Entrepreneurship is one of the most exciting things that you can choose to do as a profession.  It is also tough to be an entrepreneur.  Entrepreneurship is definitely not for the faint of heart.  I ran across this quote recently, and I thought it perfectly describes the attributes of successful entrepreneurs.

"Top people, especially entrepreneurs, seem to have these three qualities: First, they learn more things. Second, they try more things. Third, they persist longer than anyone else."

I can't source this quote unfortunately because I did not write it down at the time I originally heard it.  However, I did find it mentioned on the NVTC website with a quick Google search. The quote is right on point.  I could not have said it better myself. 

Great entrepreneurs are extremely curious people.  They are constantly seeking to learn about new stuff.  That is how they innovate and develop new ideas.  That is also how they successfully manage their ventures. 

Great entrepreneurs know that although the goal is always success, failure is to be expected as well.  If you try twice as many things as your competitors, you are twice as likely to hit on the right formula.  This requires creativity, speed and action.  It also requires a confidence to weather those pesky failures.  Again, great entrepreneurs continue working the problem until they find a solution.

Most of all, great entrepreneurs never quit.  They keep at it much longer than most folks.  They fail, but they get right back up and try again.  In my opinion, persistence is by far and away the most important quality that great entrepreneurs possess.

These also happen to be the qualities that I most admire in the folks that I hire to work in my organizations.  In start-up ventures, entrepreneurship cannot solely be the role of the founders.  Every employee needs to be entrepreneurial.  In my opinion, I would take an entrepreneurial employee over others almost any day. 

The entrepreneurs thrive in startups.  They plow new ground, and take ventures to a place they could not have been imagined before.  The "big" resume folks typically do the same things that worked in their last organization.  Unfortunately for them, most great startup ventures are doing something completely new.  That requires entrepreneurship. 

You show me a team of talented entrepreneurs working well together as a team, and you will probably also be showing me an organization that has a great chance at success.

While I am on the subject, let me also recommend a book for you to read that illustrates my last point.  "Entrepreneurial Marketing: Lessons From Wharton's Pioneering MBA Course" by Len Lodish, Wharton professor and marketing guru, is one of my favorite books.  For marketers, I believe Entrepreneurial Marketing is required reading.  The following article will give you a brief overview of the book as well as an introduction to Len and his philosophies on teaching marketing to the MBA students at Wharton: Cheaper-Better-Faster.

Enjoy and have a great weekend!

eBay Merchant Economics

I recently asked Michael Beveridge, buySAFE's Sr. Director of Business Intelligence, to share with us some of the interesting eCommerce data that buySAFE has developed over the last eighteen months.  We consider data and analytics to be critical to buySAFE and our merchant customers' businesses, and obviously, every merchant is interested in having solid, reliable data on the ROI associated with buySAFE.  At the request of hundreds of our merchant customers, buySAFE has invested heavily into developing an amazing data and analytics platform that can deliver incredible insights beneficial to buySAFE Merchants.  We will be sharing some of our new insights with you over the coming months, and I hope you enjoy the content. With that intro, here is Michael Beveridge's first contribution to this blog...

The "Beltway Money Man"

Forbes Magazine recently called Core Capital's Jonathan Silver the "Beltway Money Man".  Jonathan is an investor in buySAFE and on our Board of Directors, and so I thought the article was a pretty interesting read.  Here is the link to "Beltway Money Man: Jonathan Silver".

Legendary VC and Entrepreneur, Vinod Khosla, on Entrepreneurship

I recently spoke at Wharton, and one of the students asked if I could periodically post on my experiences as an entrepreneur.  I thought it was a great idea, and so here is my first of many thoughts on entrepreneurship.

Core Capital Leads $10 Million Financing for Covega Corporation

Core Capital Partners, one of buySAFE's venture capital investors, is pretty active this quarter.  It was announced last week that Core is leading a $10 million round of financing in Covega Corporation.

Grotech Portfolio Company, MEDecision, Files for its IPO

One of buySAFE's investors is Grotech Capital located in Timonium, Maryland.  It looks like Grotech might well have exit with one of its investments, MEDecision.