Bulldog Financial’s Bullblog

I know that’s it’s been a while (about 7 months) since I last blogged, but this is an event that has brought me out of retirement. South by Southwest, more commonly known as SXSW is a two-week juggernaut of an event held in Austin, while the University of Texas kids on on Spring Break. The SXSW conference is split into three distinct but overlapping sections - Music, Film and the most important to me, Interactive. SXSWi is unquestionably the Superbowl of tech related events in Texas. It’s a five day bacchanalia of 5000 (I hear 2008 has 8000 registered) Web luminaries, New Media Mavens, Web Designers and general tech geeks drinking Shiner and Twittering each other silly in between attending panel discussions. This will be my fourth SXSWi and I’m very proud to say that I spoke at the one in 2005 with my friend Blair Garrou of the DFJMercury VC Fund. Since a friend of mine, Imelda Bettinger (an accomplished photographer and Twitter Meetup planner) asked me to talk her into going this year, I put together a few links in an email that will hopefully help sway her decision to come up to Austin:
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I’m really glad that you are going to try to make it, since it’s going to be a blast. SXSW is pretty overwhelming and there is no way that anyone can do it all. I would suggest going with the flow and don’t hesitate to leave something if you don’t think it’s worthwhile. Here are three SXSW guides that should help you figure how to maximize the experience:

http://cruftbox.com/blog/archives/001488.html - short and sweet

http://www.jwphill3.com/2008/02/24/beginners-guide-to-sxsw/ - detailed and very good

http://www.airbagindustries.com/archives/airbag/hampton.php - long, but a bit negative in my opinion

As far as parties go, the best place to check them all out is on http://upcoming.yahoo.com/group/3519/ and http://www.facebook.com/s.php?n=-1&k=400000010&q=sxsw#

Here are two sites you should be on http://www.sxswbaby.com and http://sxsw.ning.com

Three parties that are not on the official SXSW radar, but you should definitely attend are BarCampAustinIII, Ewan Spence’s SXSW Social Media Breakfast and Laura Mayes and the Sk*rt ladies are putting on a coffee meeting at 9am on Sunday at Austin Java in Downtown. They haven’t put out the invite yet, but I spoke with her about it yesterday.

I also think that you’ll probably want to join the Worldwide Flickrite meetup on Saturday:

Not that you’ll get to do everything you want or planned, but this is a good start.

There is this little gadget that no one seems to be talking about from an obscure technology company called Apple (formerly Apple Computing) named the iPhone. I am not going to buy one for a variety of reasons - cost, locked carrier, EDGE internet - but it is undeniably a cool device. It is also a “game-changer” in terms of what it means to the consumer electronics industry, even in the very first day of it’s release. The hype surrounding the iPhone is arguably well-deserved, but no other company on earth could produce such a vortex of public interest and media coverage. I have heard rumors that Apple will sell 1 million units this weekend alone at a unit cost of $500 or $600. Whether that is true or not, the fact that that idea is even plausible is a testament to how large Steve Jobs “reality distortion field” is in the scope of the business and popular culture.

Because I wanted to check out the hype for myself, I took a little field trip to three places in the Houston area selling the iPhone.

The first was the Galleria Mall - I got there around 1:30 and found the line around the Apple store wrapped around center walkway all the way to the elevators - about 90 people overall. I ran into a friend, Imelda Bettinger, who took this picture of me on the phone with Ed Schipul who was traveling and needed someone to buy him an iPhone (Imelda ended up doing Ed the favor). I sent a message that the Apple employees were shutting down the store at 2pm and Dwight Silverman picked it up in his blog.

I then went by the big AT&T store on 59. There were maybe 40 people camped out at 2:30pm with lawn chairs and umbrellas in the heat of a Houston summer. There were also two live camera trucks - ABC 13 and NBC 2 with some on the spot reporting.

By the time I got to the Meyerland Plaza AT&T store, 25 or so people had already set up on the sidewalk. I left around 5pm and the mood was upbeat, especially when they saw several boxes of pizza being delivered.

I went home and had to watch some of the live coverage over the internet - most notably the Higginbothams and iJustine in the Mall of Americas. After a quick trip for gelato with the family, I dragged them back to the Meyerland AT&T store so I could actually play with the phone itself. It worked as advertised from the moment you pick it up. The learning curve is effectively zero. My wife, not the most technically oriented, even remarked that it was cool and the interface was intuitive - which was a pleasant surprise. By 7:15pm they were completely sold out which indicates that the 1m unit number might not be so far off.

Overall, I thought it was fun to be a part of a historic moment in consumer electronics history, but I still think that I’m going to wait for version 2.0 before I buy one.

Houston Chronicle Moneymakers

I was interviewed by our local paper and it came out mostly accurate. I am not a “Venture Capitalist” in the strictest sense, but I am an Angel investor - otherwise the article was all me. I don’t think that I came across as too arrogant or too flippant but you be the judge:

Business
“I’ve come to learn that it’s much better to be really smart in one small niche, rather than be kind of smart in a lot.”
KEVIN FUJII: CHRONICLE

June 26, 2007, 8:16PM
Moneymakers
Five questions with Marc Nathan
Failures help this venture capitalist
By BRAD HEM
Copyright 2007 Houston Chronicle

In an era when technology startups are constantly trying to convince the masses that their new Web site, gadget or software is the next big thing, the first person they need to convince is often someone with money, someone who can invest a few hundred thousand or a few million to get them to the next step.

Someone like Marc Nathan.

After college Nathan went to work for Houston-based ClearWorks.net, providing high-speed Internet connectivity and on-demand video rental for neighborhoods and businesses.
When League City-based Eagle Broadband purchased ClearWorks in 2000 for $137.5 million in stock, Nathan got a “decent payday.”

Since then, he has become a venture capitalist, using his money and that of his friends to help make the dreams of inventors and innovators come true — and make more money.
Although some venture capitalists do only multimillion-dollar deals, Nathan’s firm is still growing, and he focuses on investing up to $500,000 in startups.

Nathan spoke with Houston Chronicle technology reporter Brad Hem about what gets his attention and what new CEOs should never say when they’re hitting up potential investors.
Q: How does someone become a venture capitalist?

A: The very best way to make a small fortune in the venture business is to start with a large fortune. I wasn’t that lucky. I don’t have a rich uncle. I really cut my teeth on doing small investments with many different investors into dot-com deals. I wasn’t particularly a dot-com player, but everything back then was a dot-com deal. I had been there and done that at such a young age. One of the investors on that deal who we were lucky enough to make a ton of money for asked me to look at another deal, and it cascaded from there. What I do is find businesses that need help, and I help them by finding investors that want to help them. I get intimately involved with the companies themselves and grow either their sales, their marketing, their PR, their investment profile, and then manage my personal friends who are the investors, making sure that what they bought is what they get.

Q: What’s hot now? What’s getting your attention, and on the flip side, what won’t you touch?

A: There’s a great deal of biotech in this town. That’s not for me. I’ve done a few biotech and life science deals, but they’ve never turned out all that great. I’ve come to learn that it’s much better to be really smart in one small niche, rather than be kind of smart in a lot. I’ve got one company here in Houston that I love called Podcast Ready. It’s obviously a podcast-oriented company in new media. I tend to focus on what’s called Web 2.0 and new media. Web 2.0 is a conglomeration of a lot of ideas. Essentially to me it means user-generated content on the Internet. I’ve sort of established myself here in Houston through pure dumb luck as sort of the expert to do those sorts of deals.

Q: You must get a lot of cold pitches. Do those turn into deals or are you more likely to seek a company out yourself?

A: I do both. Just today alone I had three separate pitches. I tend not to do deals with companies that pitch me cold. Most investors don’t for obvious reasons. What I tend to do is get pitches from trusted sources.

Q: How do you decide what’s worth investing in, what’s going to stick?
A: A lot of it is based on very extensive experience. Writing checks and having them lose — that’s what tells you what’s right and wrong. Those failures actually give you the experience to know what’s right and wrong. Listening to the same story this month of the same guy who gave you the same story last year that didn’t work makes you understand a little more about the world.
You never know if something’s going to be a true success until you get the checks written. All of them have potential to become tremendous successes. The other side is you never know which ones are failures until they declare bankruptcy. Out of 100 deals that you look at, you’re looking at getting involved with maybe 10 of them. If you get involved with 10 of them, you know that maybe one is going to be a home run that’s going to make up with nine either total losers or deals where you get your money back. We are looking for blockbuster deals.

Q: Are there red-flag words that companies say when they’re pitching you? What should pitchers never say?

A: No. 1 is ‘I don’t have any competition.’ When I hear that, my shutters go up. I put the note on the door that says closed for business. When somebody says that, it means two things: They don’t know who the competition truly is, or they don’t have any competition because nobody wants what they’ve got.

No. 2 red flag is you tell me your numbers are conservative. I automatically cut them in half anyway, so we could go around in circles. At the end of the day, don’t tell me anything. Just show me what you’ve got.

And No. 3 — and there are so many of them — but No. 3 is probably saying that you as a management team or CEO are going to be with the company for the life of the company. The opposite of that is telling me that your CEO is going to step aside when more talent comes on board.

brad.hem@chron.com

I enjoy tracking some pretty obscure internet niches. One of them is webcomics which is a different sub-genre than digital comics, which is differentiated further still from the copyright-flaunting, underground world of scanned comics.

Something popped up on one of my RSS feeds that bears repeating. A fan of the Simpsons re-imagined an iconic picture of the characters in her own (manga-esque) drawing style. It came to the attention of creator Matt Groening (Simpson’s triva - it rhymes with ‘Braining’) when it was voted to the front page of the massively popular DeviantArt site - and subsequently dugg. He liked it so much that he contacted her and commissioned her to produce her own comic under his Bongo Comics label and is now in discussions to work on the relaunch of his other wildly creative show (and one of my personal favorites) show, Futurama.

The question I have is why can’t other big media industries embrace this kind of thinking instead of suing their customers like the RIAA has been doing for years with music samples, then re-mixes, then mash-ups?

Here’s the story told better, along with the picture itself - which I think is pretty good:

Really good news for the startup community in Houston: Josh Tabin has joined the www.houstonstartup.com blog. I met Josh through a mutual friend a few months ago and I can tell you that he is both experienced in technology startups and passionate about the Houston community - two ingredients that will make for wonderful and insightful coverage of our fair city’s vibrant tech community.

When Google bought a company called Keyhole and integrated it’s library of satellite maps into Google Maps and launched Google Earth, it was a ‘game changer’ in the geolocation and location based service industry.

Finding interesting anomalies and strange items in Google Map images has become a hobby for many people and lists like this and this can be found all over the net.

Since Google has given the maps away for free (OK, ad-supported) - their maps and resolution have become the baseline for how most of the world perceives the online mapping world. There are of course other alternatives and premium paid services that have much higher resolution and therefore more information. One example that I stumbled upon (but not StumbleUpon-ed) was this company, Pictometry, that takes oblique, or angled pictures at high resolution.

The difference between free and paid can be summed up in this brilliant billboard promotion that we would unfortunately never see in Google:

This is Google’s Image. You can tell it’s a billboard from the shadow it produces.

This is Pictometry’s Image. You can read the billboard which clearly states: “Play Tic-Tac-Toe With A Live Chicken” Now that’s the level of information I want to see.

I was fortunate enough to attend the first meetup of MamaDramaConQueso - a very nice blend of the Houston Chronicle MamaBloggers and .

It was focused of course on the mommy bloggers, but a handful of men (and Houston Internet Celebrities) were in attendance including: Ed Schipul, Lawrence Simon, Ed T., Robert Nagle , and the Houston Chronicle’s own Dwight Silverman.

It was Dwight’s blog post listing all of the major local Houston technology community meetups that alerted me to the event in the first place. I am very proud to say that I have either attended or been part of the planning committee for every one of these events, except Science Cafe - something I hope to fix in September. I’ve always thought that Houston had a vibrant tech community, but local awareness of events like this has hampered our growth.

The event itself went very well, with lots of interest being generated about forming a new organization for Texas bloggers. I was able to meet and chat with one of the co-hosts - Laura Mayes who launched a “Digg for Women” called sk*rt with smashing success early last week. I was happy to see that she had the opportunity to speak with the OpMom founders Carrie and John Pacini.

Although I’m a dad and a semi-competent blogger, I’m not a DaddyBlogger by any strech - but I was very glad to be able to socialize with this terrific group of MommyBloggers and I’m looking forward to the next one.

As an infographics (or Data Visualization) aficionado, I stumbled across this map that overlays US States with the names of countries with similar GDP’s from this site: http://strangemaps.wordpress.com/

Texas has a similar GDP to the entire country of Canada, which makes sense considering similar populations - 22m vs. 20m

Just a quick recap of the 2pm Starbucks version of Houston’s OpenCoffee Club.

1) roughly 35 participants - several whom I didn’t personally know - which means that the idea is becoming viral.

2) Of the people that attended the first OCC, many of them made new contacts and were able to follow up further with people they met earlier.

3) There were a lot of new faces for OpenCoffee which keeps the ideas fresh. I believe that Tim Black of the Social Network site developer Intellimar Solutions traveled the furthest to attend - all the way from Dallas. Rakesh Agrawal, the founder and CEO of TV to PC recording software SnapStream gave out T-shirts for his new venture Couchville, an online, real-time TV listing service (I personally use both). Some other dotcoms represented were www.greenlightusa.com - a niche online store for energy efficient light bulbs, www.zcubes.com, a browser-based modular social network development platform, and www.agoric.com a well-known Houston-based business management and collaboration software developer.

4) The spirit of OpenCoffee Club was very obvious - I saw very seasoned VC’s speaking enthusiastically to just-graduated dotcom developers. I witnessed entrepreneurs speaking with “super-connectors” like the Houston Technology Center’s own Robert Brackenridge about availability of programmers. Social Media Community Leaders such as Erica O’Grady learned about newly launched web applications like wiki collaboration site www.openteams.com and subsequently recommended the site to Social Media Club in San Francisco.

5) A handful of people were conspicuously absent - Ed Schipul was speaking at a conference. A handful of people like Reid Pennebaker, Tyson Weihs and Larry Estes had real work to do at the time we held the event. Kelsey Ruger and Daniel Glover - who is working on a stealth Web 2.0 start up both claimed they ‘forgot’ - but I’ll give them a pass since they are both extremely busy.

6) I think that we’ll have to move the time back to early morning since the general consensus was that time worked for more people. There was also a strong desire to morph OpenCoffee to OpenBeer for an after hours bar mixer. We also completely overtook the Starbucks from 2pm to 3:30 much to the chagrin of the other patrons so we’ll have to look for another venue. Attendee Stephen Newman offered his home and the MindOH! crew offered their office as alternatives.

7) Special thanks to Scott Stolz who added OpenCoffee Club to the Meetup calendar for multiple groups and brought a number of new people who weren’t on the original list.

Overall Score = another complete success that will warrant another function next month.

I’m going to send this link to entrepreneurs that risk falling into these investor pitch traps.

Top 10 Investor Pitch No-No’s

I love this post since it seems so obvious to me, but that’s because I’ve dealt with these situations dozens of times.

Also I’ll add “We’re going to capture 1% of the market”.