One of our recent investments, Gnip, has launched its first service. Gnip is all about making data portability suck less. Remember our friend the Ping server? Gnip is the next generation of it designed specifically for the many-to-many webservice-to-webservice world.
Data sharing between two services is no big deal. It happens every day using RSS, Atom, XMPP, and open APIs. Two years ago this was still a novel idea and the power of an API could project a company like Twitter into geek mainstream overnight since it was easy to write a web app that could read and write from it. Or you could grab someone’s RSS feed and go to town with it. A ping server was really helpful here – rather than having to constantly check everyone’s RSS feeds, you could check the ping server and when something you cared about changed, go to the RSS feed.
One-to-one wasn’t a problem. Many-to-one shouldn’t be a problem, but it started to be uncomfortable at scale. Web services that became popular overnight had performance issues, especially when their APIs were getting hammered. The solution for some was to simply turn off specific services when the load got high, or throttle (limit) the number of API calls in a certain time period from each individual IP address.
Hmmm. Many-to-one started to break at scale, but then it got worse. Everyone realized how important it was to have an API and allow for data portability. The many-to-one problem morphed into a many-to-many problem. With this, things started to get hairy. In addition to having to deal with performance and scale, every web service has its own special API format. If you were a new web service and wanted to talk to a bunch of other web services, you had to write a bunch of code – after understanding exactly what you wanted to do with each service.
Gnip plans to sit in the middle of this and transform all of these interactions back to many-to-one where there are many web services talking to one centralized service – Gnip. Kind of like a ping server. Kind of like a CDN (Content Distribution Network). But different. Yet equally important. Maybe more important.
Gnip’s first service is a free centralized callback server that notifies data consumers (such as Plaxo) in real-time when there is new data about their users on various data producing sites (such as Flickr and Digg). Gnip’s callback service accepts a variety of existing standards including XMPP, Atom, RSS, and REST and provides pre-written convenience libraries for the most common development languages (including PHP, Perl, Python, Ruby, and Java.) If you are a data provider, it’ll take you less than an hour to integrate; if you are a data consumer you can start receiving notifications within a day.
Gnip has a lot more coming that builds on this first service in their quest to make data portability suck less. If you are interested in playing along, head over to the Gnip Community.
There is no “I” in Foundry
Among our core beliefs at Foundry Group is the idea that we bring more value to our business as a team than as individuals. We believe that as a group we have more impact on our portfolio companies, are better at making investment decisions and are more thoughtful about the themes in which we invest.
This is somewhat of a departure from the typical venture capital model, in which venture partners are often islands unto themselves – free to pursue their version of venture capital in whatever way they see fit and to whom their fellow partners function less as a sounding board and more as an arbitration panel through which they must pass deals before they can be officially approved. While we recognize that our business will still be built on individual reputations and that it’s simply not practical (or wise) to have every partner involved in every aspect of the businesses in which we have investments, we believe that our team philosophy will ultimately drive better returns for the companies in our portfolio and subsequently for our investors. For us – who each bring different expertise and backgrounds to Foundry – this is a core operating philosophy and one that we believe characterizes the next evolution of the venture capital business.
As a practical matter, this philosophy results in different behavior than one finds in a typical venture firm. For starters, we don’t have a concept of “my” deal, and as a result we are quick to share new opportunities across the firm. The person who is the initial contact on an investment isn’t necessarily the one who ultimately takes the lead on working with that company. Typically, we very quickly get several partners involved in potential investments – both to share opinions and feedback, but also so investments don’t become sponsored in a way that makes any one person feel that he needs to lobby for “his” deal. When we get serious about a potential investment, we strive to get the company in front of all five Foundry partners early in our evaluation process. This surfaces potential issues early in the investment process. We often then have the partner with the greatest concerns take the lead on exploring those areas further. This is in sharp contrast to the typical venture model where a single partner typically works on a project through the point when they decide they’re serious about an investment, then brings in a partner or two for a quick second look and finally brings the company in for an up or down vote by the full partnership. (In many venture firms, it’s not unusual for this full partnership meeting to be the first time any of the other partners has had an opportunity to review the investment.) We believe that by involving the full group earlier in the decision making process we make better informed investment decisions in which each of the five of us has had meaningful input.
Our team approach doesn’t end once we’ve made an investment. While it’s not practical for all five of us to share responsibility for every deal (and we do have individual board responsibilities), we typically have several partners involved with each of our investments. For us, this starts with fluid information sharing at the firm (the topic of a future blog post) so that each of us knows in some detail the key priorities for our portfolio. In some cases several partners attend board meetings (one as the board member, another as a board observer). It also means that we are thoughtful about which partner takes a given board seat and that our thinking on that may change in through the life of an investment. In fact, we’ve already had one example where we made a change in our board representation based on where that company was in its lifecycle and the relevance of our individual partners’ skill sets. While this won’t be a frequent occurrence it underscores our belief that we best serve our investors and our companies by thinking of our investments as “Foundry” investments, rather than as individual partner investments.
We recognize that our philosophy towards managing our firm may be different from others, however we strongly believe that our team approach yields better investment decisions and broader, more meaningful impact on our portfolio of investments.
Our Investment in Smith & Tinker
It is time to announce the newest member of our portfolio: Smith & Tinker. Consider this more of teaser announcement since S&T is not quite ready to describe in detail just what it is they are up to. As a preview, we’ll say this much: they fit within our human-computer interaction (HCI)theme and the tagline on their web site reads, “reinventing play for the connected generation”. To quote further from their site, S&T says the following:
We see a future in which unconnected products like toys, games, books and movies will not be able to compete with the dynamic and exciting world of the internet. To meet this future, Smith & Tinker is creating connected entertainment products that move seamlessly back and forth from online to offline and immerse the audience in a community of fellow participants from around the world.
We should also mention that the three founders of Sling Media, Blake Krikorian, Jason Krikorian and Bhupen Shah helped us out and lent their opinions and expertise when we were performing our due diligence on the company, and that the three of them were impressed enough with what they saw that they became personal investors in the company, an endorsement that meant a lot to us at Foundry Group and to the fine folks at S&T.
Intrigued? We can’t wait to talk more about S&T when the time is right, and we look forward to aiding and abetting them in their quest to reinvent play. This will be fun…
Boulder’s Culture of Entrepreneurship
If you saw our prior post about what Jason and Ryan learned by moving to Boulder, you read about the vibrancy of Boulder’s entrepreneurial spirit. We decided to follow that post up with some specifics regarding the startup culture of Boulder and some of our related activities within it.
TechStars: If you are a frequent reader of Brad’s blog, you’ve probably seen some of his posts on TechStars. Brad’s not the only Foundry Group partner, however, who is involved. We are all mentors along with many other local and nationally known entrepreneurs and venture capitalists. It’s been great getting to know the TechStars teams and help build some interesting businesses. As part of our “evil plan” we figured that many of the teams would fall in love with Boulder and then decide to permanently relocate here. We’re happy to report that our evil plan is succeeding. We think it’s been important to the continued vibrancy of the Boulder community to not only grow, but to also import great entrepreneurial and software development talent. TechStars has also become a large hub of activity to stay in touch with the great Boulder community.
Boulder Open Coffee Club: Following on the success of Saul Klein’s creation of the London based Open Coffee Club, we decided to give a Boulder version a try. The premise was simple: get a group of people together who were all interested in technology, entrepreneurship and the like and have coffee every other week before work. The meeting would be short on agenda (e.g. “none”), but hopefully the energy of the group would prove to make for interesting meetings. There were a couple of challenges going in: 1) it was unknown whether the idea of a regular, non-agenda meeting with a bunch of people who may have never met would attract high-quality folks and be sustainable over time and 2) Jason, who took the lead in creating the group, doesn’t drink coffee. One year later, we are happy to report the BOCC is alive, well, thriving and growing in both quality and size. Jason, however, still sticks to fruit smoothies.
So what is the BOCC? It’s a regular gathering place for entrepreneurs, technologists, service providers, investors and voyeurs of all the aforementioned to come hang out and chat. Sometimes, someone raises an interesting topic (are patents evil? should Microsoft buy Yahoo!?), or perhaps comes with a problem (my company is experiencing “X” what do I do now?), or maybe uses the forum as the first time they pitch their new idea in public. And, of course, it’s a great place to meet new people and expand connections in the Boulder entrepreneurial ecosystem.
Perhaps the best quote from a regular BOCC attendee: “The great thing about these events is that you can just be yourself. Unlike the neighbor’s barbecue party, everyone here will not only ‘get you’, but they’ll probably even understand you, ask intelligent questions and create an engaging experience.”
We are already on our third coffee shop, as we’ve needed to upgrade in size. We’ve had several folks start companies together, find folks to partner with and one company even made a software sale to Foundry to help us manage our finance department. We look forward to seeing how this group continues to grow. An interesting note is that many other places that have attempted to start similar groups have not found the support that we have found in Boulder.
Colorado Governor’s Innovation Council: Last fall, Brad helped create and now co-chairs the Colorado Governor’s Innovation Council. This is a group of about 30 local computer, telecom, and software technology executives and entrepreneurs who are working with key members of Colorado’s state government to help promote computer technology based innovation, entrepreneurship, and broadband throughout the state of Colorado.
Entrepreneurs Foundation of Colorado: As part of an international initiative to promote philanthropy among entrepreneurial companies, Brad co-founded the Entrepreneurs Foundation of Colorado (EFCO) early 2007. As of today, there are 20 member companies representing around 1,000 employees, including Foundry Group. EFCO is a great way for companies, their employees, and their investors to give back to the Colorado community. If you are interested, please see our prior posting on EFCO for details.
Startup Weekend: Startup Weekend is an experiment that started in Boulder created by Andrew Hyde. The mission of Startup Weekend is to recruit a highly motivated group of developers, business managers, startup enthusiasts, marketing gurus, graphic artists and more to a weekend event in cities around the world that builds communities, companies and projects. The concept is to create the building blocks for applications and companies in an extremely short period of time – specifically a weekend. It started with the supportive, creative and talented community in Boulder, which is the only city to have hosted two weekends. All of us at Foundry have been supportive of the efforts.
The widely asked question of “what does it take to have a strong startup ecosystem?” generally is responded to in a variety of ways: good schools, plenty of engineering and management talent, services support and available investment capital. However the one trait that cannot be acquired is the culture of entrepreneurship. Boulder certainly has that culture and we are happy to be a part of it. Not to be outdone, of course, is our adopted University of Colorado’s role in all of this. In fact the University is a key anchor in all of this activity and in a future post we’ll dive into specific initiatives that we are involved with over there.
Our Investment in Lijit
As we’ve previously written, one of the things we intend to do with our blog is highlight the companies and entrepreneurs in whom we’ve invested. While it’s always nice to give our portfolio companies some exposure, it’s also a good way to provide concrete examples of the investment themes Foundry Group is pursuing.
The purpose of today’s post is to introduce one of those companies—Lijit Networks. The company fits into our Implicit Web theme, which focuses on tools and services that help users manage the information overload created by today’s Internet. The goal of the Implicit Web is to identify relevant content in a more efficient, intelligent and proactive manner and to present it in more insightful and actionable views. (You can read more about our thoughts on the Implicit Web in this previous post.)
Foundry co-led an investment in Lijit last year with Boulder Ventures shortly after we closed our fund, though our involvement with Lijit goes back to the original formation of the company. Brad Feld helped connect Todd Vernon and Stan James, Lijit’s co-founders, and led an angel round in the company prior to our raising our fund. Shortly after the angel round closed, High Country Venture invested alongside Lijit’s angel investors, giving the company plenty of capital to get to its first venture round.
We’ve known Todd, Lijit’s CEO, for over a decade (and were investors, via a prior venture fund, in another company that Todd co-founded). During that time we’ve come to appreciate Todd as having that compelling mix of proven entrepreneurial skills, a sharp mind and a combination of both technical prowess and business acumen. He’s also an all-around great person to work with. Once we closed our fund, we were delighted to invest in Lijit and back Todd again.
Lijit provides search tools to bloggers and other information publishers. These tools help readers search a blogger’s site for specific topics and content while also providing the blogger/publisher with a wealth of metrics and statistics about their readership and their interests. Even more compelling—this is where the Implicit Web theme comes in—Lijit also allows a blog’s readers to simultaneously search that publisher’s entire online ecosystem, whether it be a blogger’s blogroll or content that blogger has created elsewhere, such as bookmarks on del.icio.us, photos on Flickr, videos on YouTube, etc.
If you want an example of Lijit’s search widget, look at the upper right-hand corner of this page; the search box you see there is powered by Lijit.
The theory behind Lijit’s goal of enabling search beyond an individual publisher’s site is that content that is interesting and relevant to a reader’s search query often extends beyond that individual publisher’s site. In the blogosphere, conversations and content are often interwoven across multiple locations and, for any given blogger, his or her blogroll is a clear manifestation of affinity with other bloggers. That affinity might be a result of a similarity in the types of topics being covered, similarity in mind-set, or professional or personal relationships.
Using relationships among information publishers to generate and filter search results is a terrific example of how the Implicit Web should work. Rather than force the reader to laboriously identify relationships between multiple blogs, search each blog individually and manually aggregate the results, Lijit automatically discovers and exposes those relationships and the resulting relevant content—all in one simple step.
Regardless of the reason for the affinity, it stands to reason that if a reader is interested in, say, AskTheVC’s coverage of venture capital term sheets, the reader may also be interested in Brad Feld’s, Seth Levine’s and Fred Wilson’s views on that same topic. Why? Because Brad, Seth and Fred are all well-known VC bloggers who openly share their opinions drawn from their experience as venture capitalists.
One could argue that an AskTheVC reader might discover Brad’s and Seth’s blogs on his own—after all, we all work together at Foundry Group, so how hard should it be to connect those dots? But for a casual reader, discovering Fred Wilson’s blog might be more difficult given the lack of an obvious direct connection. Lijit intelligently bridges that disconnect by recognizing that Fred Wilson, Brad and Seth are all members of AskTheVC’s blogroll and thus all represent potential sources of relevant, searchable content for AskTheVC’s readership.
While we think that Lijit’s better search tools are, in and of themselves, a big step forward, we also believe that they form the foundation of other equally compelling opportunities. For example, combining a map of the blogosphere’s social graph with the ability to discern the expertise of individual bloggers and publishers (after all, a broad enough reader base is unlikely to consistently search a particular site for topics outside of that blogger’s expertise) can yield interesting insights into what pockets of expertise exist and where they reside on the web. Alternatively, the same data are very relevant to identifying various affinities and interests across a wide swath of blogs and content sites for the purpose of highly targeted advertising.
If you have a blog or are a content publisher and don’t yet have Lijit’s search widget installed yet, you’re missing out—give it a try and we bet you’ll be impressed.
