Friday, April 19, 2013
Saturday, January 26, 2013
A great deal has been written about angel investing in recent years. Angel investing has become the sport of choice for many successful entrepreneurs in Silicon Valley (e.g., Dave Morin,Chris Michel, Ariel Poler, etc.). What's more, it has spawned a whole new class of venture funds -- once called Super Angels, now called Micro VCs (e.g., First Round Capital, True Ventures,SoftTech VC, etc.). And now traditional venture investors (e.g., Greylock Capital, Andreessen Horowitz, CRV, etc.) have created programs to invest small amounts of money in large numbers of startups. Unfortunately, as seed investing moves from a boutique practice to more mass market, its value is diminished dramatically.
As a general matter, I think that more seed funding is a great thing. It is certainly beneficial -- often times essential -- for small companies to raise a little bit of money to help validate an idea or market. But historically one of the most valuable things about angel investment was that it was accompanied by an angel. That angel wouldn't just invest in the company, he or she would serve as an indispensable advisor to the company as well. Not only did you get money to propel your business forward, you also got the help of someone who had run the startup gauntlet before you.
Regrettably, what once was a boutique business has in many instances become mass market. While there are some angels and Micro VCs can provide meaningful time and attention to their entrepreneurs, there are a number of folks out there who think that angel investing is a volume business. Needless to say, as the number of companies financed by any given investor grows, the amount of help that investor can give to each company diminishes proportionally. These investments become more about the placing of bets than they do about helping entrepreneurs succeed.
Sure, some of these stock pickers will make some good bets and even make some money. But it won't be any thanks to them. As a general matter, early stage entrepreneurs don't just need money, they need help and advice. And if help is no longer part of what you get from your seed investors, I believe the likely success of those investments will diminish.
Worse yet, taking seed investment from traditional venture investors can be counter-productive. It is impossible to imagine how a VC firm that is investing in dozens of early stage startups can find the time to be helpful while also working with their more traditional portfolio. You may get a little of their money and a little of their reputation, but you will get it at the expense of any real help in building your business.
So why have VC funds started investing in seed rounds? They do it because they think it gives them an option on future financings. By putting a little bit of money into a company's seed round, they get a seat at the table. And from that seat, in theory, they can keep track of how well it is going and preemptively finance the "best" companies that they've seed funded. The only problem with the theory is that these traditional VCs don't have the time or capacity to actually keep track of all the companies they've seed funded. So they aren't capable of being pre-emptive. Instead, they expect an early look at any Series A financing, despite the fact that they haven't earned the right by actually being helpful to the companies they have seeded.
More importantly, traditional VCs are incapable of providing one of the most important and valuable angel services -- introductions to future investors. As is becoming increasingly clear, investment is the life blood of the startup world. The problem that companies seed funded by traditional VCs have is that there is a natural assumption that any company that does not receive follow-on funding from its earlier VC investor is fundamentally broken. There is virtually nothing that a VC can say in his or her introduction to other investors that won't raise eyebrows. So taking angel money from a traditional venture investor is a bet on that firm funding your Series A. Unfortunately, if that doesn't work out, you're back is up against the wall. 
It is true that money is fungible. But investors are not. The choices you make when raising seed capital can have a meaningful impact on the long-term success of your startup. So find investors who will bring you value beyond the dollars in your bank account. Find investors with the time and inclination to help you. Find investors who will increase your chances of raising additional capital, not diminish those chances. Great angel investors are invaluable. So pick your partners well.
 On the rare occasion that my partners and I seed fund a startup, we work hard to alleviate the concerns I've described above. We only invest in a very small number of seed stage opportunities and we commit meaningful time and attention to those businesses, often going on the board (for example, I was the earliest investor in the likes of WePay and Splunk). Moreover, we take a substantial lead role in the seed financing, so there is no negative presumption when we introduce the company to our VC friends for the next round of financing. We will invest along side the new VC, but have no need to lead the Series A ourselves. Needless to say, this approach won't scale to dozens of startups. But it will increase the likelihood that those business we seed fund are successful.
Thursday, January 24, 2013
Wednesday, January 16, 2013
by Ron Baker
On December 21, 2006, my mentor, George Gilder, wrote on his blog about the last time he saw Peter Drucker live. It is such a profound piece that goes to the heart of how accounting is becoming increasingly irrelevant to the spirit of enterprise, it is worth quoting in full:
“The last time I saw Peter Drucker, he was keynoting a Forbes conference in Seattle for CEOs. In the auditorium at the International Trade Center next to the bay, they had wheeled out the great man to the middle of the stage in a great fluffy easy chair.
“Close to 90 years old—at the end of the previous century gazing toward the next—he was the numinous name and Delphic presence at the conference. Everyone leaned forward to hear what he had to say.
“Then a gasp shook the rows of CEOs. The conference management stood there stricken, unable to move: ‘For the Love of Malcolm’s motorcycle...What is this?’ The CEOs sat popeyed.
“The hoary sage’s balding pate flopped back in the chair as if he had fallen asleep...or worse.
“Perhaps Forbes had erred in staking a major conference on an aging guru seemingly well over the hill and in parlous health.
“Then his entire body fell forward. I was ready to run up to catch him if he should tumble toward the crowd. But he somehow caught himself. His eyes opened, and he looked out intently at the throng of CEOs. Everyone sighed with relief. He was awake. He had their attention.
“Drucker growled: ‘I have just one thing to tell you today. Just one thing...’
“Wow, I said to myself, it better be good.
‘No one,’ he continued, ‘but no one in your company, knows less about your business than your See Eff Oh.’
“This was the era of the heroic Chief Financial Officer (CFO). Scott Sullivan of Worldcom, Andy Fastow of Enron, clever, inventive folk like that.
“You remember them. Across the country, CFOs were in the saddle. CEOs would not move without consulting them. What could Drucker have meant?
“He was stating law number one of the Telecosm. Knowledge is about the past. Entrepreneurship is about the future.
"CFOs deal with past numbers. By the time they get them all parsed and pinned down, the numbers are often wrong. In effect, CFOs are trying to steer companies by peering into the rearview mirror. Past numbers do not have anything much to do with future numbers.
“Moreover, CFOs tend to focus on internal problems. But most internal problems cannot be solved internally.
“Determining business outcomes are decisions made by customers and investors and both are outside the company and not directly managed by the company. Their views can change in an instant, casting all the existing numbers into oblivion.
“To reach customers and investors takes outside vision and leadership, not internal problem solving.
“Tech companies should not try to solve problems. Solving problems sounds good, but it is a loser. You end up feeding your failures, starving your strengths and achieving costly mediocrity.
“Don’t solve problems — that’s the CFO’s forte and pitfall. Pursue opportunities.”
A Deteriorating Paradigm
Approximately 70% of the average company’s value cannot be explained by traditional Generally Accepted Accounting Principles financial statements.
Adding more arcane and picayune rules to GAAP, requiring mark-to-market accounting, or converging existing GAAP with international accounting standards, will not solve this problem.
The accounting model is suffering from what philosophers call a deteriorating paradigm—it gets more and more complex to account for its lack of explanatory power.
In all fairness to accounting, it never was meant to predict value prospectively, only to record transactions retroactively. In effect, accounting can only measure the price of exchanges after they have taken place. Abraham Briloff, a professor of accounting, contended that accounting statements are like bikinis: "What they show is interesting, but what they conceal is significant." Accounting can audit the drunk’s bar bill but can’t explain why he’s an alcoholic.
This is why accounting can only record the “goodwill” of a business until after is has been sold. Accounting has no way to place a value on that goodwill until a transaction takes place. That is why my late colleague, and Chartered Accountant, Paul O’Byrne said goodwill is the name accountants give to their ignorance.
The best an accountant can do is to extrapolate the past into the future, and unless one’s theory is that the future is going to be the same as the past, this technique is fraught with hazards. This was Drucker’s point at the CEO conference in Seattle.
CEOs and entrepreneurs have to create the future, not relive the past. The only way to effectively do that is with a theory of the business, which requires one to get outside of the four walls of the organization and connect with external reality — where all value is created.
Sunday, September 16, 2012
How to Fabricate Biocompatible 3D Microstructures in Seconds? A Quantum Jump in Nano Manufacturing & Regenerative Medicine
Nano-engineers at the University of California, San Diego, have developed and demonstrated a novel and highly innovative technology that can fabricate three dimensional (3D) micro-structures out of soft, biocompatible hydrogels in a matter of seconds. The Chen Research Group — spearheaded by nano-engineering professor Shaochen Chen — is bringing nano and structural engineers, medical device labs and visual artists into a collaborative environment under one roof to pioneer a 21st century renaissance in next generation technology. The synthetic fabrication of complex natural structures like spirals, flowers and hemispheres, has now been demonstrated via this new technology.
Regenerative Medicine: Repairing Damage caused by Heart Attacks and Replacing Organs by Printing Them
1. The goal of many biomedical researchers is to find a way to grow new tissues or even organs for those patients who need them. To do that, the cells involved need to have a structure they can grow on, like plants growing on a cage or trellis.
2. Near term, the 3D microstructures technology which is now being pioneered, could lead to better systems for growing and studying cells, including stem cells, in the laboratory.
3. Medium term, the goal is to be able to print smaller biological tissue patches for regenerative medicine. For example, in the future, doctors may be able to repair the damage caused by heart attacks by replacing damaged tissues with newly printed biocompatible synthetic tissue.
4. In the long term scientists hope to see this new technology, or indeed an evolution of this technology, used to actually print complete tissues and organs, ready for implanting into patients.
5. The key future goal in the development of this innovative technique is for humankind finally to acquire the capability of biological tissue and organ printing for use in full fledged regenerative medicine and advanced body repair. This could extend the average life span of human beings by decades.
Quantum Jump in Speed of Fabrication
The key benefit of this brand new technology is the ability to print microstructures in a few seconds whereas up until now other three-dimensional fabrication techniques — like two-photon photo-polymerisation — used to take hours to fabricate a similar structure. This type of new technology has already been the subject of science fiction: many “replicants” have been fabricated instantaneously via “3D replicators” using advanced laser controlled technology. Are we almost there?
Significance of Biocompatible 3D Micro-Manufacture
Why is this new bio-fabrication technique “Dynamic Optical Projection stereo Lithography” or DOPsL so significant? The immediate application of this technique lies in the growth and study of the cells of living organisms, especially stem cells in laboratories. DOPsL has three main advantages over photolithography and micro-contact printing, the two main techniques currently used to build microstructures:
1. Operates with high resolution which is needed when trying to mimic fine details found in nature, such as blood vessels;
2. Creates complex 3D structures, instead of the simpler 2D patterns the other methods are mostly limited to; and
3. Fabricates faster than other methods to produce 3D micro-structures.
How does DOPsL work?
The bio-fabrication technique called “DOPsL” uses a computer projection system and precisely controlled micro-mirrors to shine light on a selected area of a solution containing photo-sensitive biopolymers and cells. This photo-induced solidification process forms one layer of solid structure at a time, but in a continuous fashion, like a 3D printer.
Existing Fabrication via Printing
Micro-contact printing and photolithography are existing fabrication techniques which can only produce two-dimensional structures and simple geometries. Another technique that can print three-dimensional structures called stereo lithography is best suited for large objects such as car parts and tools. The new DOPsL technology leap-frogs all these existing solutions both in terms of refinement of 3D resolution at a micro-scale and speed-of-delivery of manufacture or fabrication via high speed printing!
Nano-engineering specialist Chen Research Group has essentially demonstrated the capability of printing three-dimensional blood vessels and tissue in mere seconds out of soft, biocompatible hydrogels. Being able to print blood vessels within tissue is essential to achieving the promise of regenerative medicine because this is how the body distributes oxygen and nutrients. An engineered biomaterial without the blood vessels is not of much use to a living organism including human beings.
Saturday, September 15, 2012
by Tamsin McMahon
So you want to do business with Americans, but worry about overcoming the cultural nuances that separate us from our neighbours to the south? HSBC bank has a handy Expats Guide to doing business in different countries that offers an (unintentionally) hilarious glimpse at the subtle differences between Canadians and Americans, including Canadians’ apparent unease with giving their dinner guests a house tour and Americans’ love of using sports analogies in business negotiations.
Here are some of the cultural traits HSBC recommends you keep in mind when doing business across the border (and we are quoting):
ETIQUETTE FAUX PAS
Avoid the “V” for victory and the “thumbs-down” gestures.
Use your entire hand to point, not just your finger.
Don’t compare Canada with the US
[Avoid] anything that might be misinterpreted as sexual harassment
[Don't] boast about your accomplishments and achievements, salary, income or belongings
[Don't] stand too close to someone you’re speaking with, lest you impose on their sense of personal space
People from the Atlantic Provinces (Nova Scotia, New Brunswick, Prince Edward Island and Newfoundland) tend to be a bit more reserved and provincial.
Ontario is Canada’s business hub, and its inhabitants are generally businesslike and conservative.
Western Canada (Alberta, Manitoba and Saskatchewan) tends to be open, friendly and relaxed.
British Columbia can be thought of as being somewhat unconventional, and often is touted as the future of the nation.
Quebec’s people have a proud French cultural identity, and tend to be highly independent.
People from the north retain a strong pioneer spirit.
Americans are raised from childhood to see themselves as distinct, separate individuals who create their own destinies and are responsible for their own lives. As such, they consider themselves accountable for their decisions. They view themselves as independent and self-reliant, and for this reason can appear self-centred to those from less individualistic cultures.
ATTENDING A DINNER PARTY
Be punctual, though 15 minutes late is fine for a small gathering or party.
Offer to help prepare before or clean up after.
Don’t ask for a house tour, since Canadians are private and only allow guests in their public rooms as a rule.
Don’t rest elbows on the table, and always keep your hands visible.
Continental style reigns, with fork in left hand and knife in right, though American style (switching your fork from hand to hand) is permissible.
Be on time for dinner, and no more than 10 minutes late for small gatherings.
You may be told to make yourself at home, and you’re expected to do so, and to ask for anything you require.
You may be given a tour of the house.
American table manners involve holding the fork in the right hand and using it to eat. Hold it tines up. The knife cuts and spreads things. To use it, switch the fork to your left hand. To eat, switch your fork back to your right hand.
Most Canadians prefer business to be concise, and meetings begin with a minimal amount of small talk. However, there may be more time spent on relationship-building in Quebec.
Meeting with Anglophones are more democratic. Meetings with Francophones may include less involvement of lower level employees.
Feelings are not considered important in business. It is better to state information with the words “I think” rather than “I feel”.
Meetings generally start with little or no small talk.
Americans may be blunt when countering ideas that others put forward, and interruptions may be common in an animated discussion.
When Americans say “Yes” or “No” they mean it. “Maybe” means “It might happen”; it does not mean “No”.
Communication is generally direct. Canadians have no difficulty saying “no.”
Strive to create compromises.
French Canadians will carefully analyze every detail of a proposal, regardless of how minute.
American negotiators can become frustrated if too much time is devoted to relationship building rather than negotiating.
Unlike many cultures where eloquence is important, Americans are more concerned with making their point.
It may at times seem that American negotiations are run by lawyers. This is because there is strict government legislation concerning many facets of business.
Communication is moderately indirect. Although most Canadians can disagree, they prefer to do so with tact and diplomacy. They prefer to maintain an understated demeanour. Their communication style is pragmatic and relies on common sense rather than aggression. If you come from a more direct culture, you may wish to soften your demeanour and tone so as not to appear threatening.
Greetings tend to be relatively informal, which demonstrates Canadians’ belief in egalitarianism.
Canadians enjoy debating issues. Being able to argue your position with informed opinion will help you gain respect.
Making eye contact during conversation adds to the credibility of the communication. Sustained eye contact throughout a conversation is expected.
For the most part, Americans do not hesitate to ask direct questions. These are not meant to be offensive. Their reliance on speaking concisely and relying on facts can make American speech seem rude, aggressive, blunt or impatient to people from cultures that are more relationship-oriented. Since many Americans speak only English, they are not always sensitive to the challenges someone faces when communicating in a foreign language. Americans often used sporting analogies that are not easily understood. The following are ones frequently used in business:
Ballpark figure: Give a good estimate
Play hardball: Compete well
Drop the ball: Make a serious mistake
Monday morning quarterback: Someone who tells you what you should have done after the fact.
Bring me men to match my mountains, Bring me men to match my plains,
Men with empires in their purpose, And new eras in their brains.
-- Sam Walter Foss, from "The Coming American", July 4, 1894
Y K Alagh, former member of planning commission and a long time associate of Verghese Kurien, has an interesting anecdote to share if you ask him how Kurien was different form the several intellectuals India has produced.
“Once Kurien told me, ‘You are a friend and you are very good but you are much too general Yoginder – you don’t concentrate on one thing.’”
To which Alagh replied, “I know, you are a Spartan and I am an Athenian! I think.”
While both Spartans and Athenians belonged to Greece, Spartans were a militaristic race, which believed in expanding their area of control and preferred the rule of few (or even one) over many. Athenians, on the other hand, were a more democratic lot.
As a person, Kurien was a man in hurry. He had a vision and he was out to achieve it. He laid a lot of stress on covering the last mile. As such, he was known to start in the reverse order when planning for a new venture like introducing a range of cheese.
He was very hands on with everything he did. In fact, once when a crane went out of control, Kurien flung himself and avoided any mishap. He did not care that in doing so he actually cut his thigh and bled profusely.
“That typified the man,” recalls Alagh.
The Kurien Doctrine
Kurien’s main emphasis was on improving the marketing opportunities for the Indian farmer without which the farmers were dependent on middlemen, who cornered most of the profits and stunted the growth of rural India.
Therefore, he not only worked hard in creating the best marketing platform for farmers himself, he also founded the Institute of Rural Management at Anand (IRMA) in 1979 to create a cadre of professional managers imbued with his understanding of the rural India.
Many young professionals like Sanjiv Phansalkar, Program Leader at the Sir Dorabji Tata Trust, started his career from IRMA just to be associated with Kurien.
“The simplicity and power in his argument that unless you put the means of production in the hands of the producer you cannot change their fate was simply great,” says Phansalkar who joined IRMA in 1982.
Ironically, it is this very thought that was questioned towards the fag end of Kurien’s career when there was a push to delinking production and marketing functions of the co-operatives.
His protégé, Amrita Patel, who succeeded him as the Chairman of NDDB in 1998 was spearheading the move to turn co-operative to producer companies and hiving off marketing side of business into separate entities.
Kurien bitterly opposed the move as he feared the private players like Nestle and Britannia will eventually take over the marketing yet again. In a sense, he felt his life’s work was being destroyed.
But the relative weakness of the cooperative movement in other parts of the country as well as the newer trends of business management only underline the fact that the success of Kurien’s model in Gujarat was both a product of his own leadership as well as the existing economic climate in the country.
Another episode when he found himself swimming against the tide was in the late 1990s when there was a growing demand to amend the Milk and Milk Products Order (or MMPO), which regulated the milk processing business in the country. As the head of NDDB, Kurien had restricted the milk processing business to the existing co-operatives. The Gujarat Co-operative Milk Marketing Federation (GCMMF), which he headed, and its brand Amul benefitted hugely from such a restriction. But it was an untenable stand in an increasingly liberalized economy were many private players who wanted to enter the business.
Ultimately, after prolonged deliberations the NDA government diluted the MMPO in 2000. Experts who were close to the deliberations believe it helped increasing the productivity by 5% to 10%.
A Reluctant Start
In her book, “The Amul India Story,” Ruth Heredia states that Verghese Kurien was actually quite an “unlikely recruit” in the field of dairying.
It was 1945 and the Second World War had just ended. The government in India approved 500 new scholarships in UK and US for young Indian professionals who would be required in the post war reconstruction.
24 years old Verghese Kurien, a mechanical engineer from Madras University had barely completed a year of apprenticeship with the Jamshedpur based TISCO (Tata Iron and Steel Company). But he wasn’t enjoying his time there.
As he sat before the interview board, he was hoping to get an opportunity to study metallurgy.
“What is pasteurization?”
A surprised Kurien gave a half-baked reply, “A process of boiling milk at a certain temperature.”
“Thank you,” said the interviewer. “You have been selected for ‘Dairy Engineering’”
Reluctantly, Kurien said yes since it was the only scholarship left available by then and went on to complete his Masters from Michigan State University.
However, no one could have imagined how this odd event would shape the future of millions of farmers in Independent India.
Upon his return to India, Kurien was sent to a remote district of Gujarat to help a milk co-operative under instructions of Sardar Vallabh Bhai Patel, India’s first Home Minister.
The little known town, Anand in the Kaira district, did not hold a lot of promise for the young and impatient Kurien. But at the last moment, he was persuaded to stay back by the founder of Kaira District Co-operative Milk Producers Union Ltd., Tribhuvandas Patel, a tall leader in his own right. After this there was no turning back for Kurien.
He dedicated himself to the task of strengthening the co-operative and relieving the milk farmers from the clutches of intermediaries. It was not an easy task. India had just gained independence and there was a natural suspicion surrounding anything that resembled the colonial rule. Moreover, there were deep-set caste divisions and gender biases that Kurien and his team had to deal with. Not to mention the resentment among the existing middlemen who tried everything in their power to derail the nascent efforts.
“It was nothing short of a miracle,” says Shreyans Shah, editor and publisher of Gujarat Samachar
By 1955, Kurien led to the development of the iconic Amul brand for selling the milk of the co-operative. In 1965, Kurien’s leadership caught the attention of the Prime Minister Lal Bhadur Shashtri, who was great sympathizer of the farmers. He asked Kurien to lead the National Dairy Development Board (NDDB) and replicate the Co-operative success story of Amul across the country. In 1970, with the help of the World Bank, the NDDB started “Operation Flood” which, over the next 26 years, transformed India from a milk importer to world’s top most milk producing country.
Kurien came to be known as the “Milkman of India” and the “Father of White Revolution” apart from being awarded the Magsaysay Prize (1963), Padam Shri (1965), Padma Bhushan (1966), Wateler Peace Prize (1986) and the World Food Prize (1989).
Today close to 14 million farmers are organized in over 133000 village co-operatives and produce over 25 million litres of milk everyday. Milk production in India has risen from just under 21 million tonnes annually in 1970 to 117 million tonnes in 2010. In comparison China’s production could only rise from 2 mn tonnes to 41 mn tonnes over the same period.
Veteran filmmaker, Shyam Benegal, regards Kurien, along with M S Swaminathan (father of India’s Green Revolution), as the two greatest heroes of independent India. Benegal directed the Oscar nominated movie on the rise of milk co-operative movement from Gujarat.
“His work was charged with idealism and he completely changed the economics of milk production in the country,” says Benegal.
Read more: http://forbesindia.com/article/special/v-kurien-indias-white-knight/33719/1#ixzz26XVoHaUp