Greg Foster’s Blog

Tonight, I want the President to do something that only the President can do.  I want him to inspire us…  Here’s what I would love to hear from President Obama…

1. To the American Worker - Government’s efforts to end the recession will continue in a coordinated fashion, HOWEVER, government is not the solution to the current crisis.  This is a crisis of faith in our system.  Let me assure you the American People and the people of the world – American capitalism is alive and well.  We are open for business.  While the problems facing us are serious, they still pale in comparison to the larger, healthy system in place here in America.  I ask you, the American worker, to go in tomorrow with a renewed vigor for what you do.  Help provide real evidence to those who invest in America that their investment is a solid one.  That power rests with you. 
2. To the Business Community - As the President, I am making a very important request of everyone in the business community – it’s time to get out from under the desk and start growing again.  To our country’s business leaders, I need you all to step up.  Tomorrow when you go in, look at your plans to grow and make the necessary investments to meet those plans.  Be bold, take this opportunity to gain competitive advantage.  Hire that extra worker, buy that piece of equipment you need to improve productivity.  Over the next several months, we will be constructing a comprehensive tax incentive program to make those decisions even easier.  You make a commitment to me tonight and I will follow up with mine tomorrow.  We’re going to lessen government’s burden on your back so that you can help carry more weight for all of us. 
3. To the Investment Community - To those of you who are afraid of putting money to work in our public markets, I tell you tonight that there has not been a better time to invest in nearly a decade.  Do your homework and I can assure you that you will come to the same conclusion I have come to – hundreds of publicly listed companies are trading at levels that do not reflect the true value of their equity.  We can all change that… we can all be part of a self-fulfilling prophecy.  But we have to do it together.  I know this is risky because there will be short term profit takers looking to take advantage of our collective optimism.  But if we stick together, and if we stick it out, we will all win in the end. 

Stay tuned…

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Yeah, I read Tom Friedman’s NYTimes article over the weekend.  Granted, I was sitting in the backseat of our car coming home from RTP trying to get my 8 month old to take a nap, but I did read it.  I thought the Twitter traffic over the weekend and several other posts around the topic were interesting in that some people took Friedman’s thoughts literally and others took them to represent a few larger points.  Here is my basic POV on what I took as Friedman’s larger points:

1. Stop throwing taxpayer money down the drain - stop wasting tax dollars by giving it to a domestic auto industry that is dying.  Here in the South, we lived through the death of the domestic textiles industry – the result was capital shifting to other industries and a resurgence of a new textiles industry based on real comparative advantage.  The auto industry needs to die a controlled death and come back in a different form, a more competitive form. 
2. Plow money into VCs who know how to invest in growth industries – not sure if he was serious about this point or not but I think the larger issue is that government should be removing the friction from the start-up ecosystem.  So, a few important steps toward that end:
   1. The President needs to kill the idea that carried interest should be taxed as regular income.  That reduces the incentive for VCs to make big, interesting bets. 
   2. State pension funds allocating money toward alternative investments should push some of it toward local or regional funds and make a condition that some of that money be invested inside the state.  This provides for a potential double return for the state – good upside for the pensioners and an investment in high wage jobs inside the state.
   3. Get creative about other interesting tax incentives at the federal level for companies getting started in the industries that Friedman points to – CleanTech, General Technology, Health Care IT, etc.
3. America needs to get back to thriving, not just surviving – this is maybe the most important point in the article.  Friedman is 100% right here – we are so focused (with the recent stimulus and our political discourse) on saving the past that we are failing to see this as an opportunity to build a new future.  When so many things are so broken at the same time, it’s a chance to clear away all of the old thinking; it’s a time to renew.  I see America as a desperate, out of work, middle-aged, overweight man (who wasn’t always that way) looking in the mirror – the road he’s on is a dead end.  He can’t just change one or two things, he has to overhaul his life.  He’s gotta stop drinking so much, he’s gotta stop eating pizza every night, he needs to get on the treadmill more than once a year, he needs to quit smoking once and for all, he needs to spend more time with his kids, he needs to pray more, and he needs to pick himself up and get back in the game.  The cycle of trying to make the old ways work, believing that everything will eventually work out – that’s a losing strategy.  He knows it, and he knows that an overhaul will pay huge dividends, it’s just hard to take that first step. 

And so, I take Friedman’s thoughts as a more complex editorial about the test we face as a nation – will we solve this problem using the best things, the rare things that are uniquely American and uniquely at our disposal, or will we retreat into the old ways of thinking?  Thinking that says government can solve our problems, it’s not our fault, we’ve just gotta save this industry or that industry… that’s the thinking of failed, less relevant economies in the Old World.  I hope we ultimately choose the road less traveled – the one that faces these challenges with courage and new thinking and sees an opportunity to come out of this mess in a stronger position.  That’s the America I know! 

Stay tuned…

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With a visit by the Governor of Florida and even a chimpanzee from the local petting zoo, the Florida Venture Capital Conference put on by the Florida Venture Forum, held this past week in Naples, FL, did not disappoint. 

Here’s the monkey…

And here’s the Governor…

For years now, this has been the key annual VC event in Florida.  When I walked in on Monday night to the VC dinner, I saw nearly every VC with an office south of the Mason-Dixon and several other big named funds from Boston, NY, the mid-Atlantic and the Valley.  The event was very well designed and I took a few notes:

1. There was a lot of “unprogrammed” time.  VCs like this – it gives us a chance to talk informally with a lot of people and set up meetings with local start-ups looking for funding.
2. The event is fun – the moment you step into the event, you make a mental note to make sure to come next year.  This is important for the VCs, yes, but just as important to the start-ups as they are assured to get exposure to a ton of VCs who really want to be at this conference every year.
3. The selection of presenting companies was managed very well and those companies got a chance to showcase their company through the duration of the conference, not just at the presentations.  This allows for follow up conversations between investor and entrepreneur.
4. Everything was confined to a very small space and there was no reason to leave the resort. 

Given the fact that so much activity in Florida is spread out between Tallahassee, Gainesville, Jacksonville, Orlando, Tampa and Miami, it’s a minor miracle that this conference was able to provide both a wide and deep exposition of start-up opportunities from across the state.  Kudos to the Florida Venture Forum on a fantastic event!

Stay tuned…

P.S.  I saw Allyson Eman at the conference.  Allyson is the Executive Director for Venture Atlanta.  Last year’s Venture Atlanta was an awesome event.  I was impressed that she took the time to come down to the Florida VC Conference to take some notes of her own.  Knowing Allyson, this year’s Venture Atlanta event will be even bigger and better. 

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Note the “Skribit” widget below my blogroll.  Skribit is a start-up based in Atlanta.  The idea is very cool – it allows blog readers to contribute topic suggestions to the blogger…. Great cure for writer’s block <grin>. 

My first suggestion came from Lance Weatherby.  Lance is a Venture Catalyst at ATDC (Advanced Technology Development Center) here in Atlanta.  He’s got a great blog.  His suggestion was that I write about my pathway to becoming a VC.  So here’s my story (abridged version)…

I’m sure there are VCs out there who went to college with the specific goal of one day becoming a VC, still others who went to business school with the same goal.  I’m not one of them.  My parents didn’t go to college, so I had limited context for any career outside of doctor, lawyer, preacher and teacher.  After finishing Georgia Tech (where I maintained my sanity as a Mechanical Engineering major by minoring in Political Science and American Literature and working in Student Government), I became a business consultant (great job when you don’t really know what you want to do) and spent most of my first year out of school contemplating law school.  I didn’t know much about business school, but I was fortunate enough to work for a guy who would become a mentor.  Marco Bonilla, a Partner at Deloitte Consulting, allowed me to really engage with client problems (coolest assignment I had was to help the NYC Transit Authority figure out how to lease a ton of lit fiber they had pulled through their stations in the early 90s) and I learned to love business as a discipline.  He was also building the firm’s “Networking” practice which was the name given to the early beginnings of the Internet as a business tool.  I got hooked on the wave of innovation that was beginning to build in the mid-90s. 

Fast forwarding a bit – I left consulting and went to Harvard Business School for my MBA.  Fantastic experience and I finally learned about Venture Capital, mostly from the VC analysts in my class all hoping to be Partners one day.  I also learned a lot about VC from entrepreneurs in my class.  I fell in love with what it is VCs do, the role they play not just in business, but the broader world.  I had been looking for a career path in which I could pair up two passions – business and public service – and I came to realize that VC is just that.  I knew that VC was what I ultimately wanted to do, but I also knew my pathway would be very different from many of the young VCs I met in school.  I realized I would have to go down the entrepreneurial path toward a career in Venture Capital.  After all the requisite recruiting activities in my 2^nd year at HBS, I made the decision (thanks to some good advice from professors and fellow students) to take a job with a start-up in Atlanta called iXL (high flying internet consultancy in the late 90s – went public in 99)  When I met with the CEO, Bill Nussey, I just knew that this was where I belonged.  Sure, the salary was half of what McKinsey offered me, I stayed at the Holiday Inn on Howell Mill the night before my interview, not the Ritz-Buckhead I stayed in prior to my McKinsey interview, but I just felt like I had a chance to do something special at iXL.  Turns out it was the best career decision I could have ever made.  At iXL, I got to do a ton in a short period of time – going from the position of head lackey to the CEO to the GM of our office in Spain to the SVP of Corporate Development for a public company, all in less than 3 years… craziness. 

Bill Nussey became a mentor, brought me along as he transitioned from iXL to Silverpop, and convinced me to hunker down again, this time in a smaller business facing tougher economic times.  There I ran business and corporate development, worked to build our initial sales team, and learned how to pitch a product nobody had ever heard of.  He knew I wanted to eventually work as a VC (few people in Atlanta know that Bill worked for Greylock for several years before iXL), and he convinced me that living the experience within a high growth company would make me a better VC when the right opportunity came along.  Having been the bridesmaid a couple of times, I decided it was time to be the bride (ok, that’s a bit funny when I see it written out).  I built a business (Southern Direct) that provided an e-commerce platform for cable networks.  When I sold that business to Turner Broadcasting, another opportunity presented itself – I was hired to run Corporate Development there and we built a formal process to make venture investments on behalf of the company (Turner New Media Investments).  My time there was invaluable – I learned how to be a venture investor the hard way, without a lot of guidance.  Three years into my time at Turner, I felt like I was finally ready for a VC opportunity, should it present itself – member of the mgt team of two successful start-ups, founder and CEO of my own company which I later sold, corporate venture investor for 3 years. 

All of this led up to a discussion over breakfast last Fall with Noro-Moseley Partner Alan Taetle.  I had known Alan for many years, and knew NMP and several of its other Partners, too.  For me, Taetle was the gold standard when it came to technology investors in the Southeast (I’m already here, so no need to butter him up, I’m just speaking the truth <grin>).  He told me they were raising their 6^th fund and they were talking about adding a Partner.  That began a discussion that ultimately led to me joining the firm in early 2008.  When the opportunity was presented, I couldn’t have been more thrilled.  And the last year has been an incredible experience.  Our community has spoken about the dearth of Venture Capital in Atlanta and the Southeast.  During the ups and downs, NMP has always been there and yeah this is a shameless plug for our firm (like most of the last few sentences or so), but I am proud to be a part of a group of folks who have dedicated themselves for so many years to the growth of our city and region. 

Whew… it didn’t seem all that circuitous or disjointed when I was actually on the journey. For me, my arrival as a VC (in my home town – bonus) was a nearly 15 year effort.  I am thankful to my mentors, to the Big Man upstairs, to my wife, and to serendipity.  Yeah, I said serendipity (fancy word for luck)… if you don’t think luck has anything to do with accomplishing your goals in life, you need to wake up and smell the coffee.  The question isn’t whether you will need luck to accomplish your goals, the question is will you be prepared to take advantage of that good luck when it arrives on your doorstep.  OK, Tony Robbins has left the building.

Stay tuned…

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Pull out your Democratic or Republican membership cards and put them aside for a second.  Today is special – Republicans and Democrats marched with Martin Luther King, Jr. in the 60s, and his dream is realized (at least to some extent) at a few minutes before noon.  Democrat Barack Obama will be sworn in as President using the same bible that the 16^th President (and most well known Republican) used when he took office.  Tomorrow is historic – soak it up, whether you voted for the guy or not.  Change, whether you agree with this President’s change agenda, means a fresh start, and those of us who rely on optimism and growth in the economy to make a living, welcome the fresh start that this new administration represents.  We need optimism; we need a push for the next level.  As I stated in an earlier post the day after Obama was elected, while some things will surely change, others will not.  We in the investment community will still live by the same rules we’ve always lived by, knowing that our most worthy pursuit is to build companies that endure, companies that grow, companies that employ good people and create shareholder value every day.  As VCs, we thrive when growth is the agenda, when our portfolios have unfettered access to success.  I think it’s safe to say that most of us (if not all of us) will support our new President and wish him the best of luck.  We will hope for him what we hope for our Partners and the businesses in which we invest – longevity and prosperity.  We can all come together to celebrate what tomorrow means for the world at large and for the piece of the world for which we are caretakers. 

Stay tuned…

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OK, everyone, maybe if we all close our eyes and concentrate, we can make 2009 the year that everyone wants it to be – the year when the Dow returns to 5 digit territory, the year when the real estate market finally recovers, the year when IPOs outnumber Brad and Angelina’s kids.  Or maybe our hope for the year shouldn’t be that ambitious.  Maybe we just want a year of stability, one free of the drama on Wall St and Main St that became so commonplace in 2008…. Ah, look… the Yankees just signed CC Sabathia… weekend weather looks good… hmm… the federal government just bought AIG, that’s interesting.

It is said that psychology moves the market, so it doesn’t seem all that far fetched to believe that if investors will just wake up happy 3 business days out of 5, the bull market will return in no time.  The problem with that argument is that while investors may want to be happy and optimistic about the future, there are fundamental breakages in the economy that will continue to disappoint and disillusion even the most ebullient bulls out there.  And so the answer to my little question up there is a resounding NO.  We will not get out of this mess by hoping or thinking or wishing.  The only cure for our sickly economy is good old fashioned doing… and while I certainly don’t presume to have the entire exercise regiment figured out, I thought of a few things that might help:

1. Banks and lending institutions of all shape and size – yes, you had a tough 2008… <insert slapping sound> now get over it and start lending again.  You just got $350 Billion in hard currency.  Tweak your models or your divining rods or whatever it is you use to determine the credit worthiness of a business, but start doing what it is you exist to do.  Start lending.  Your industry is acting like Tom Cruise did after Goose died in Top Gun – you gotta shut it out and get in there, Maverick!
2. My fellow Venture Capitalists – now is the time to be supportive of your portfolio companies.  This is the time when you earn your fees – roll up the sleeves and help.  A CEO needs help thinking about a client pitch, get your backend down there and help him/her think about it.  This is also a time to be prudent – the character of the deals you strike in this environment will, in large part, determine the kind of return you can expect.  Good entrepreneurs know that the world has changed – if the public markets are down 40%, the private markets don’t somehow get a pass.  And to the entrepreneurs out there saying “no, you greedy VC, you shouldn’t be asking for tougher terms”, I say this – if the venture capital industry has a 5 year period like it had after 2000, there will be fewer and fewer firms out there with fewer and fewer dollars to invest in your next company.  Demand for capital stays the same, supply dwindles – hmm… what happens to the price you will pay for capital (in the form of percentage of your company)?
3. Government – yes, we all know you’re going to be spending like a drunken sailor for quite a while.  Couple of requests – 1) say no to somebody just to show us that there’s a limit to your beneficence and 2) remember that before all of this mess, socialism in Europe and socialism-lite in America were on the precipice of extinction.  Marx was wrong; we are all capitalists and capitalists we will remain.  Have fun as an owner of an industry or two, but give them back to the market when all of this is past us. 
4. Entrepreneurs and Innovators – sorry, but yet again, the burden is on you to help us grow out of this mess.  Drink more coffee or Mountain Dew or whatever it is you drink, and keep building great companies.  We all need you now more than ever. 

I know, I know – it’s not this simple.  But here is something simple that we can all do – take your game up a notch, whatever it is you do.  Work the extra hour, use the Draw-Align/Distribute function in Powerpoint a little more often so your slides look more professional, cut your fingernails more than once a month.  We may not be able to will ourselves into the black, but we can certainly work ourselves in that direction. 

 Stay tuned…

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The city of Atlanta, and the Southeast generally, has been in need of more sophisticated seed stage capital.  So I was thrilled to hear about the formation of Shotput Ventures.  I don’t know a ton about the fund at this point, but the group’s site has the following description:

“We are a technology startup accelerator fund that focuses on capital-light web services companies and assists in the conception phase.  We invest $5,000 per team and $5,000 per founder as part of a coordinated program that will have eight companies in the summer of 2009 in Atlanta.”

While I don’t know much more than that, I do know several of the fund’s partners well.  All are impressive veterans of the Atlanta tech community - David Cummings is the founder and CEO of both Hannon Hill and Pardot and is an expert in building marketing automation solutions.  Sanjay Parekh was the founder and CEO of Digital Envoy and is also the founder of Startup Riot and Startup Dinner, both important institutions in the Atlanta start-up community.  Allen Graber founded Hypermart, and as a founder of Atlanta Technology Angels, has been an investor in several successful start-ups including Spi Dynamics and SearchIgnite. David Wright founded GameSpy which was later sold to IGN where he served as CTO.  He moved to Atlanta from the Valley and founded JungleDisk which was recently sold to RackSpace.  Wayt King was a founder and General Counsel at N2 Broadband which sold to Tandberg a few years back.  Suleman Ali founded Esgut which sold to Social Gaming Network a few months back.

We wish them much success and look forward to working with them in 2009!

Stay tuned…

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Unless you’ve been living under a rock the past few days, you no doubt saw the “shoe thrown half way round the world” over the weekend.  Amid the esoteric political analysis that immediately followed the incident (i.e. this is symbolic of the failed Bush administration’s policy in the middle east, blah, blah, blah), I think the media is missing the real analysis of what happened.  This was an exhibition of athletic prowess rarely seen in your typical press conference. 

We all know President Bush is an avid runner and while running doesn’t necessarily contribute to enhanced reaction time (or maybe it does, I don’t really know), there’s no question that George W Bush may have one of the quickest reaction times of any President in recent history. 

Before Malaki even knows what is going on, Bush has avoided two flying shoes zooming directly at him with blinding speed.  Here’s how it went down…

First shoe thrown…

You can see that the shoe barely misses Bush as he busts a move to avoid it… 

And then Bush pops back up and gives us a Texas smile like nothing just happened… I won’t go into an analysis of the throw itself, but it was a strike across the plate.  Both men now steady themselves for the 2^nd shoe salvo…

Second shoe thrown.  This 2^nd shoe was thrown, unlike the first, a bit like a QB throwing off their back foot while being sacked.   Not a lot of zip on it, ripe to be picked off.  And indeed, as you can see below, had Malaki not interfered, Bush would certainly have gotten the interception.  I think he would have caught the 2^nd shoe.  It’s really too bad we didn’t get a chance to see that happen. 

Now the attention shifts from the dignitaries to the crowd around the thrower.  Fantastic sorta semi-horse collar from behind by an audience member, totally sacking the thrower.  He didn’t see that coming. 

Not to be a Monday morning QB, but two shoes have been thrown, and where’s the secret service guy?  Ah, there he is (see below)…  thanks, man, for helping out.  He must have been checking his fantasy football scores on his blackberry when the first shoe was thrown. 

And when he finally does get up there, Bush pulls a Desmond Howard and gives him the Heisman.  Nice, Mr. President, nice.

Hope you enjoyed my analysis.  I welcome your comments.

Stay tuned…

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Along with Imlay Investments and Buckhead Investment Partners, we closed a $3 M round of funding in 2080 Media last week.  The company has completed the acquisition of PlayOn Sports, a division of Turner Broadcasting.  The CEO, David Rudolph, was the architect of the business while he ran product development at Turner.  The company will extend PlayOn’s current efforts in supplying local media affiliates with an end-to-end solution for producing and distributing live events, with a particular emphasis on high school sports content.  2080 will also sell directly to high schools looking to produce their own events.  Unlike several other players in this space, 2080 will take advantage of the large investment Turner has made in building out the platform.  Moreover, Turner will maintain an ownership stake in the company and will continue to provide guidance and support. 

Congrats, 2080 Media!

Stay tuned…

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