Investors, employees, partners...everybody enjoys doing business with an entrepreneur who has successfully built multiple companies. If that serial entrepreneur kicks off a charity contest involving a bathtub full of cereal, even better.

Checkout what Ted is up to now. He's announced a contest to give away a bathtub of cereal (52 boxes) to one lucky participant and, if his post generates 500 comments, another 52 boxes of cereal to his local food bank. To enter, just blog, comment and tweet about the contest -- easy. Like many of the post comments, I also plan to donate anything I win to the local food bank. That's over 100 boxes of cereal for some hungry kids and families as we head into the holidays.

More details are included in this video...he even has a "making of" video over at his post.

So, check out Ted's post, comment, blog about it and retweet it. Everybody loves a cereal entrepreneur...

I've said it many times before, but people make or break any company. My "foxhole" post highlighted that teams grow in importance during the tough times. However, team cohesion doesn't just happen, it takes work.

"I will be watching you and if I find that you are trying to corrupt my first born child, I will bring you down, baby. I will bring you down to Chinatown." -- Jack Byrnes, Meet the Parents

If you didn't catch the Southeastern Medical Device Association's event earlier this week at Mercer, another is right around the corner, closer to home.  On Tuesday December 9, starting at 5:30pm, you can attend SEMDA's "Working with Physician Advisors - The New Paradigm".  The event is being held at the Gainesville Area Chamber of Commerce, 300 E University Ave.

By now you should have read plenty of entrepreneur/VC advice on surviving in the post-mortgage crisis world.  I won't rehash it here, but 2009 will be tough and today's difficult decisions will separate the next batch of startup winners and losers.  One topic I haven't seen covered much is the interpersonal opportunity that these tough times bring -- for entrepreneurs and investors.

You might call this an Old-to-NewMediaMonday post, bridging LPs to digital tracks. A couple months ago I found an old LP on eBay, composed by my grandfather (Jules Lavan) who used to be a big band/jazz composer. I hit 'Buy Now' and waited for it to arrive, and waited (it took awhile).

When it arrived, I was proud to show my daughters their great grandfather's name on the album cover, but bummed when they asked to hear it -- we don't own a turntable. Since that time I've been looking for a simple turntable I could plug into my laptop to play LPs and convert them to digital. Beyond Jules' LP, my dad has crates full of vinyl that I'd love to share with my kids. KISS, Bootsy - Funkadelic, Eagles - Hotel California, Styx and even Cheech and Chong sit silent until I can unlock the crackle and pop of their voices on vinyl.

Well, I'm happy to say my kids and I may be singing "Dōmo arigatō, Mr. Roboto" this Christmas. I found this USB turntable thru one of FVB's sponsors. It's going on my Christmas list and I'm guessing my Dad would like one too. If you or your parents have a box of old LPs that are just gathering dust, or you're an aspiring digital DJ who wants to capture some old-school sound, this might also be the answer.
Let me know if you give it a try. Ripping sounds pretty straightforward. I'm curious how the vinyl sound translates to digital...and welcome any tips to retain the original richness.
Related images: convert records, convert lps, rip lps, usb turntable, usbturntable

http://www.floridaventureblog.com/2008/10/twitter-icons-halloween-or-helloween.htmlWhoa...I just noticed some slick Halloween icons float thru my twitter feed and chased down these tweets from J. Adam Moore:

"Whoa, I just shat a bunch of halloween icons all over my twitter page. 18 minutes ago from web

19 minutes ago from web

20 minutes ago from web
I feel like 21 minutes ago from web"

It looks like various character patterns will result in icons in your tweets. The chart Adam provided looks as follows:

Twitter helloween icons

	>o<
	[:-]-I-
	<|:~(
	(|:|/)
	8-#
	+-(
	`O
	( | )
	∑:*)
	}:o{
	:-[
	X-/
	////Ö\\\\
	[TBD]

Slick! I want more twitter icons...

UPDATE: It appears Hajime KOBAYASHI is involved somehow, as the Halloween twitter image table is hosted on his site. Get 'em while they're hot, as they may not be around long.

UPDATE 10-31-08: I've found some additional icons, like , although I don't know the keystrokes. Comment here if you figure them out...

Google's better-than-expected 3rd Quarter earnings last week was welcome news to a nervous market and a valley on the verge of panic. There was a lot of juicy data to dig into, but one Q&A that caught my eye was:

Q: A little more clarification to improvement in margins. Was that through better AdSense deals, or through expense controls?
A: Across all categories of expenses people have been very diligent.....I am not aware of a change on the ad partnership side that would result in a margin change.

This caught my eye because I've been researching marketplace margins for some time, including GOOG. While there may not have been a noteworthy AdSense partner margin change this quarter, the longer-term trend is eye-opening. In fact, if my calculations are right, Gross Margin for GOOG Network Revenues has dropped around 20-25% since Q3 2006. Given how slim those margins already are, that's a shift worth watching. You wouldn't see that if you focused on the deceptive Traffic Acquisition Cost (TAC: roughly the inverse of GOOG Network margins) chart GOOG shares each quarter:

That chart looks like TAC is dropping and, thus, margins are rising. However, TAC is largely driven by GOOG Network partner payouts -- but the chart compares to all GOOG revenues, not just those from GOOG Network partners?!?

Given that my research has been focused on Google's Network, rather than their proprietary properties, I charted GOOG's Gross Network Revenue, Net Network Revenue and Gross Network Margin below. I didn't include proprietary revenues and I only included TAC from AdSense Partner payouts -- providing a better apples-to-apples comparison of revenues and margins.

The result, contrary to GOOG's official TAC slide, this chart shows GOOG Network gross margins dropping over time -- from 25% in Q3 2006 down to 20% in Q3 2008. Gross margins of 25% are already considered low in technology circles, shave off another 5% and I start wondering if something important is happening in GOOG's Network (e.g. competition for publishers).

It also makes me question what the market is telling us about appropriate margins for online marketplaces -- should they be 50%+, like many other technology businesses. Once you take GOOG proprietary properties out of the mix, AdSense is essentially a marketplace between advertisers and publishers -- with GOOG providing an opaque venue. Publishers are getting 80% of each click and GOOG is getting 20% of each click. With over a billion a quarter flowing through the marketplace, that's a strong datapoint for marketplace margins.

Are there other marketplaces that could provide a sanity check to GOOG's numbers? The largest is probably eBay, although EBAY provides much more marketplace transparency for its participants. More transparency might suggest lower margins, because it's harder for EBAY to hide their cut the way GOOG does. The following chart confirms that suspicion -- EBAY's Gross Marketplace Margin has grown by almost 50% (unlike GOOG's dropping Network Margin), but overall magnitude is smaller at 9.3%.
Therefore sellers are getting 91% of each sale and EBAY is getting 9%. With over $60 billion of Gross Merchandise Sales projected for 2008, that's another strong datapoint for marketplace margins. Note, although EBAY may use other terms for gross or net revenue, using Gross Merchandise Sales provides the best apples-to-apples comparison to Gross Network Revenues in an advertising marketplace like Google -- one marketplace sells physical goods, the other sells advertising.

That gives us two substantial datapoints for online marketplace gross margins: 6-9% and 20-25%. Do you know others? Is my math wrong (probably)? Should they both jump their margins to the 50%+ expected of technology companies? All thoughts appreciated...

"Celsia Tehnologies is developing new coolers that will send conventional heat-pipe technology into oblivion"

I like the sound of that, and it's not even my words. They're from Theo Valich, who reviewed the recent partnership announced between AMD and Inflexion portfolio company Celsia. The announcement was also covered by Anton Shilov at X-bit labs. Celsia CEO, Joe Formichelli, had this to say about the AMD efforts:

"Working with AMD, we were able to meet all of the design criteria for a new GPU cooler. Namely, it had to be lighter, perform better and be lower cost than the current heat pipe based design. Unlike thermal modules using heat pipes, our two-phase NanoSpreader comes in direct contact with the heat source whereby removing costly, heavy base plates."

Setting aside all the technology details, Celsia's vapor chamber innovations mean higher performing graphics processors, which means better graphics, virtual worlds and gaming. Although Moore's law suggests we'll continue packing more processing power into chips, keeping that power from burning up your chips, graphics cards and laps will require comparable advances in cooling. Cooler chips = kewler games...

When I first invested into IZEA, I liked the parallel between Google's sponsored search (pioneered by GoTo/Overture) and IZEA's sponsored content. Google's sponsored search pays for all the other cool free stuff they offer, and is the foundation for much of the internet ecosystem -- it's arguably the most successful online business model to date. Sponsored content holds similar promise.

I've followed Jim Kukral since well before he called one of my entrepreneurs a f*cking marketing genius, and really enjoy his unique blend of social media advice and humor. As I was reading his "Do Not Give Up" post for entrepreneurs, I noticed this subscribe banner on the bottom.


The man is funny...

A couple memos are making the rounds today that are worth sharing. Uber-angel Ron Conway and Sequoia both delivered portfolio-wide guidance to raise money sooner (if possible), cut expenses ASAP and survive (forget about thrive). The only no-BS color I'll provide is that during the tech bubble, West coast firms felt this pain about 3-4 months earlier than East coast firms. As a result, the East coast companies that internalized the message early were in the best position of all -- getting lean while still having a window of funding options.

Don't let this be one of those "Didn't you get the memo?" moments for you and your board/investors:

Conway Memo: (via TechCrunch)
——— Forwarded message ———-

From: Ron Conway
Date: Tue, Oct 7, 2008 at 12:12 PM
Subject: IMPORTANT PLEASE READ ASAP …..REGARDING CURRENT MARKET CONDITIONS…Confidential

We have all been absorbed by the turmoil in the financial markets the past few weeks

Unlike the turmoil of 2000 when the “action” was centered right here in Silicon Valley this time is it centered on Wall Street…..but it has rippled to the west coast quickly and we will not be “immune” to its drastic effects.

I was an active investor in 2000 when the “bubble burst” and remember it vividly and want to give you the SAME EXACT advice I gave to my portfolio company CEOs back then.

I have pasted in the emails I sent on April 17th 2000 and May 10th 2000 and every word applies today.

Unfortunately history DOES repeat itself but I hope we can learn from history and prevent the turmoil from occurring again.

The message is simple. Raising capital will be much more difficult now.

You should lower your “burn rate” to raise at least 3-6 months or more of funding via cost reductions, even if it means staff reductions and reduced marketing and G&A expenses. This is the equivalent to “raising an internal round” through cost reductions to buy you more time until you need to raise money again; hopefully when fund raising is more feasible. Letting go of staff is hard and often gut wrenching. A re-evaluation of timelines and re-focus on milestones with the eye of doing more with less will allow you to live many more days, and the name of the game in this environment in some
respects is survival–survival until conditions change.

If you are in a funding cycle, you should raise your funding as soon as possible and raise as much as possible but face the fact that if you can’t raise money now you must cut costs.

While I do not own a large percentage of your company I hope you will consider this thoughtful advice.

I was here in 2000 and want to share what I learned through many years of experience and historical “pattern recognition”!

Here are the two emails from the year 2000 that I referred to above and all the statements apply in today’s market:

To: Angel Investors, L.P. Portfolio CEOs
Date: 04/17/2000 05:24 PM
From: Ron Conway
RE: Market Conditions Effect on Angel Investors, L.P. Portfolio
Companies

The down draft in the stock market sends us some obvious “signals” and we can’t help but mention them.

1. If you are in a funding cycle, you should raise your funding as soon as possible and raise as much as possible.

2. Many companies are ignoring certain VC leads we’ve provided in order to concentrate on the top tier only. While we have preached that in the past, this is no longer the case. Currently, top-tier VC
bandwidth constraints, coupled with the market down draft, make it very important to take meetings with any VCs where you can get their attention. We have been working hard to open up this new bandwidth.

3. You must aggressively examine and pursue M&A opportunities (unless you have over 12 months of cash reserves!) ro insure you have critical mass (including funding, customers, rolodex power, market
share, cash, synergy, etc.).

4. Be realistic on valuations - they will fall so be ready and willing to co-operate.

5. Look for corporate partners to invest so you can raise more money. You should also consider a sale of your company to your corporate partners.

6. If you are entering a funding cycle start raising money sooner rather than later.

7. While it’s safe to say entrepreneurs have had negotiating leverage with the “down draft” in the market, the VC community will start exercising their leverage.
—————————————————————————-
—————————————-

To: Angel Investors, L.P. Portfolio CEOs
Date: 05/10/2000 05:23 PM
From: Ron Conway
RE: Market Conditions Effect on Angel Investors, L.P. Portfolio
Companies

I want to “touch base” again; given the continued uncertainty in the capital markets.

As the market turmoil continues, we must underscore the advice that we have provided since mid April and it boils down to just a few points:

1) The capital market window is shut, including IPOs and VC Funding (VCs are looking at their existing portfolio funding needs - not new opportunities). Basically the market is now looking for PtoP (Path to Profitability) instead of BtoC, BtoB, etc! PtoE will prevail price to sales ratios! You must lower your “burn rate” to raise at least 3-6 months more of funding via cost reductions, even if it means selective staff reductions and reduced marketing and G&A expenses. This is the equivalent to ‘raising
an internal round” through cost reductions to buy you more time until you need to raise money again; hopefully when fund raising is more feasible.

2) If you have $10M or less in the bank you must do #1 above plus look at M&A options for your company; especially if your company is BtoC, content, advertising model, community, commerce, and even BtoB. An M&A transaction will allow you to gain critical mass and to get two sets of funding sources and rolodexes working on your behalf. M&A transactions take over 90 days so you need at least that much cash to fund your company. You must attend our M&A day on May 24th at the San Mateo Marriott at 3:00 PM. We will have investment banks there in addition to entrepreneurs who have
successfully accomplished M&A transactions. We will send you details.

We are still developing many new funding sources for our portfolio companies that are in funding cycle.

Sequoia Memo: (via Slyce of Carnet and others)

Today, Sequoia Capital hosted a mandatory CEO  All-Hands Meeting on Sand Hill Road (where else?). There were about 100 CEO’s in  attendance and let me tell you, the mood was somber. I’m not one to perpetuate  doom and gloom or bad news, but let me underscore this for you: We are in a  serious economic downturn and this is just the beginning. Immediate, decisive  and swift action is required, along with frugal, day-to-day management of  expenses and our business is required.

Speakers:
Mike Moritz, General Partner, Sequoia Capital (he moderated the speakers).

・ Eric Upin, Partner, Sequoia Capital (Eric ran the $26-Billion Stanford Endowment Fund and knows a few things about Economics and investing.)

・ Michael Beckwith, Partner, Sequoia Capital (Michael was recruited to start Sequoia’s very first hedge fund, coming from Maverick Capital and Robertson Stephens. I know him from my BEA days.)

・ Doug Leone, General Partner, Sequoia Capital

Slide  projected on the huge conference room screen as people assembled inside the  conference center to take their seats: a gravestone with the inscription:  RIP, Good Times.

Mike  Moritz:

· The only time  Sequoia’s assembled all CEO’s like this was during the dot.com  crash.
· We are in drastic times. Drastic times  mean drastic measures must be taken to survive. Forget about getting ahead,  we’re talking survive. Get this point into your heads.
· For those of you that are not cash-flow positive, get there  now. Raising capital is nearly impossible if you’re too far off of cash flow  positive.
· There will be  consequences for those who hesitate. Act now.

Eric Upin:

· It’s always darkest before it’s pitch black.
· Survival of this storm means drastic measures must be taken now, so you  will have the opportunity to capitalize on this down turn in the  future.
· We are in the beginning of a long  cycle, what we call a “Secular Bear Market.” This could be a 15 year problem.  [many slides on historical charts of previous recessions, averaging 17 year  cycles.]
· The credit market [versus the Equity  markets] are the issue and will take time to recover.
· Inflection point: Make changes, slash expenses, cut deep and  keep marching. You can’t be a general if you turn back.
· This is a global issue and not a ‘normal’  time.
· There is significant risk to growth and  your personal wealth.
· Advice:

o Manage what you  can control. You can’t control the economy, but you can control everything  else.

§ Cut spending.  Cut fat. Preserve Capital.
§ Don’t trust your  models and spreadsheets. All assumptions prior to today are  wrong.
§ Focus on  quality.
§ Reduce  risk.

Michael  Beckwith:

· Note: Michael  had a lot of slides that were charts, data points and  comparisons.
· A “V” shaped  recovery is unlikely [√]
· Cuts in spending will accelerate in  Q4/Q1. Look at eBay—this is just the beginning.

Doug Leone:

· This is a different animal and will take years to  recover.
· Getting another round if you’re not  profitable will be rough.
· Do everything  possible to get to cash flow positive. Now.
· Nail your Sales and Marketing message.
· Pound your competitors shortcomings. They’re hurting and they will be  quiet. Take the offensive.
· In a downturn,  aggressive PR and Communications strategy is key.
· M&A will decrease dramatically and only lean companies, with proven  sales models will be acquired.
· Spectrum discussion:

o Capital Preservation ß----------------------------------à Grab  Market
o Everyone should  be far to the left (capital preservation)

· Requirements of our companies:
o You must have a proven product
o You must cut expenses. Now and deep.
o Your product should reduce expenses and drive  revenue
o Honestly assess your solution vs. your competitors.
o Cash is king [have  you gotten this message yet?]
o You must get to profitability as soon as possible to weather this storm  and be self-sustaining.

· Operations review:

o Engineering:  Since you already have a product, strongly consider reducing the number of  engineers that you have.
o Product: What features are  absolutely essential? Choose carefully and focus.
o Marketing: Measure everything and  cut what is not working. You don’t need large Product Marketing, Product  Management teams.
o Sales & Business Development:  What is your return on this investment? The Valley has gotten fat with Sales  people: Big bases, big variables. Cut base salaries on sales people, highly  leverage them with upside (increase variable) and make people pay for themselves  via increased sales productivity. Don’t add sales people until you’ve achieved  your goals with sales productivity. Be disciplined.
o Pipeline: Scrub the shit out of it and be honest with  yourself.
o Finance: Defer payments, what is essential? Kill cash  burn.

· Death Spiral (Nobody moves fast  enough in times like these, so get going and research  later.)

o The death spiral  sucks you in, you’re in it before you know it and then you die.
o Survival of the quickest.
o Cutting deeper is the formula for  survival.
o You should have  at least one year’s worth of cash on hand.
o Tactics:

§ Assess your situation. Drop your assumptions, start with a blank page and  start zero-based budgeting.
§ Adapt  quickly
§ Make your  cuts
§ Review all salaries
§ Change sales comp
§ Bolster your balance sheet—if you can add $5M to your coffers, take it and save  it.
§ Spend like it’s your last  dollar.

· Get Real or Go Home.