Intraneur

From the utopia department

Joel Spolsky — 28 Aug 2007 21:58:22 EST

“Basically a small company has a flavor to it, whereas a big company is sort of like checking into the Bellagio in Las Vegas. It's a nice hotel but it has 5,000 rooms, so don't expect anybody to remember your name. A small company is more like a bed and breakfast. You're going to have a great time because you get along with people and it's a much friendlier experience. You don't really mind that the bathroom is down the hall because the people made a special vegetarian meal for you and then showed you around town. On the other hand, you might be at a bed and breakfast where they have weird leather implements and lots of cats.”

-- From A Conversation with Joel Spolsky in ACM Queue.

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Even the Office 2007 box has a learning curve

Joel Spolsky — 20 Aug 2007 10:20:38 EST

I bought a retail copy of Office 2007 today (I'm loading up the new laptop I got for the world tour, which is a Thinkpad X61s), and I must be a complete spaz, but I simply could not figure out how to open the bizarre new packaging.

It's a hard plastic case, sealed in two different places by plastic stickies. It represents a complete failure of industrial design; an utter F in the school of Donald Norman's Design of Everyday Things. To be technical about it, it has no true affordances and actually has some false affordances: visual clues as to how to open it that turn out to be wrong.

This is the same box that Vista comes in. Nick White over at Microsoft seems proud of the novel design, but from the comments on the web it seems I'm not the only one who couldn't figure out how to open it. It seems like even rudimentary usability testing would have revealed the problem. A box that many people can't figure out how to open without a Google search is an unusually pathetic failure of design. As the line goes from Billy Madison: "I award you no points, and may God have mercy on your soul."

Wasting five minutes trying to get the goddamned box open is just the first of many ways that Office 2007 and Vista's gratuitous redesign of things that worked perfectly well shows utter disregard for all the time you spent learning the previous versions.

I've tested Office 2007 extensively, and find it a tolerable replacement for the previous version, although it's extremely frustrating every time I have to spend several minutes finding something that I knew exactly how to find in the previous version. Even though there's no reason to upgrade to Office 2007, if you're setting up a new system, it's just as good as the previous version, even a little better in some places. But Vista is another story.

I've been using Vista on my home laptop since it shipped, and can say with some conviction that nobody should be using it as their primary operating system -- it simply has no redeeming merits to overcome the compatibility headaches it causes. Whenever anyone asks, my advice is to stay with Windows XP (and to purchase new systems with XP preinstalled).

PS The FogBugz 6.0 World Tour is filling up fast. Austin is already full. Vancouver, Seattle, Kitchener, and Irvine have just a few seats left. Sign up now!

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World tour: North America

Joel Spolsky — 16 Aug 2007 20:12:09 EST

What's the point, exactly, of physically going to 21 different cities to demo FogBugz 6.0 in person? Why not just put a video up on the web and be done with it?

A long long time ago when Windows 3.0 first came out, Microsoft organized a huge, permanent "Windows Seminar" team of intelligent, charismatic young people who went from city to city giving demos of Windows, Word, and Excel. Back then, showing someone cut and paste from one GUI window to another was astonishing.

Since then, I haven't seen a lot of demo tours like the one we're planning. Travel just costs too much. Business hotels all charge ridiculous amounts for catering ($15 per person for coffee), audio visual equipment ($500 to rent a projector), and as many additional gougy-charges as they can think of. $50 for sneezing. $120 to have the window shut. And $92 to have the lights on.

When we did up our budget, including hotel rooms, meeting space, rental cars, airfare, food, a projector, coffee and tea for attendees, and a printed brochure to hand out, our estimate is that it's going to cost us somewhere between $60 and $70 per person.

So, OK, maybe I don't know what I'm doing.

The reason we finally decided to pull the trigger is that we don't have a sales force. None. We have inside sales people who handle incoming phone calls (very rare) and incoming email (we get a lot of it), but our software is just priced too cheaply for the traditional enterprise software sales system, where you have a bunch of commission-based suits flying around the country, staying in nice hotels, and taking clients out to lunch. That kind of sales force costs $50,000 to make one sale. With prices in the $21/month range, that model just doesn't work for us.

When you think about it this way, $60 to reach one person is cheap!

Here's what you can expect if you show up. There will be some really, really expensive coffee and maybe a muffin or something if the hotel in particularly cheap. If you come a bit early, it'll be a great chance to meet some interesting software people in your city.

I'll show off some of my favorite features in FogBugz 6.0, but mostly, I'll talk about the software development process in general. I'll leave a lot of time for Q&A. There will be a member of the FogBugz development team with me and we'll also leave plenty of time afterwards for one-on-one questions if you have something to ask us that isn't of general interest. Then we'll pack our projector and rush off to the airport and on to the next city.

So far, we've planned 21 cities in North America. If you're in the US or Canada, you can register right now, in fact, you should, because we expect to fill up really quickly. If you register and can't make it, please cancel (you'll get a cancellation link in the confirmation email) so we can take someone else from the waiting list.

We are planning to visit international cities, but we haven't figured that bit out yet. We'll probably hit Europe, Australia, and New Zealand in November. If you're outside the US and want to attend, make sure you've filled out the survey with your correct email address so we can figure out where to go next and let you know when we're coming.

If you can't make it, we'll have a video of the New York City world launch of FogBugz 6.0 on our website sometime in September.

So. Click on the cute kiwi to register:

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Year-end chaos

Joel Spolsky — 25 Jul 2007 20:22:28 EST

Liz and I have been working to get ready for the FogBugz 6.0 World Tour, in which I travel from city to city (accompanied by a programmer) giving demos of all the cool features in the upcoming version. This is basically about the same logistical complexity as planning a family trip to DisneyLand, times 32.

Very little has been finalized, but it looks like the first round will hit Vancouver, Seattle, Chicago, New York, Princeton, Philadelphia, Boston, Toronto, Waterloo, Washington, Atlanta, Dallas, Austin, Denver, San Francisco, Berkeley, Newark (CA), Mountain View, Santa Monica, Irvine, and San Diego. The second round will hit Auckland, Christchurch, Brisbane, Melbourne, Sydney, Munich, Copenhagen, Amsterdam, London, Cambridge, and Dublin. Whenever my squirt nephew decides to have his bar mitzvah, we'll come to Tel Aviv.

Given the cost of flights, hotels, rental cars, meals, catering (we'll serve refreshments), printing (we'll pass out brochures), FogBugz polo shirts, etc., it looks like the cost for this trip is going to come to about $64 per attendee... that is, it's costing us $64 to put on a live demo of FogBugz for each person who attends. Phew. No wonder people do those crappy webinar things instead. I still think it's worth it, though.

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The universe aligns to prove my point

Joel Spolsky — 20 Jul 2007 14:25:00 EST

Clay: “...the sites that suffer most from anonymous postings and drivel are the ones operating at large scale. If you are operating below that scale, comments can be quite good, in a way not replicable in any ‘everyone post to their own blog’”.

Dave: “...he says that I don't allow comments on Scripting News. That's not exactly true, there are comments here, but you have to look carefully to find them. I find this ups the quality enormously -- people don't generally comment here to embarass anyone or to provoke a fight -- there isn't enough traffic to interest those people. But the people who want to add information to a thread here on Scripting News, and have been reading the site long enough to know what it's about, they find their way to the comments and add something to the mix.”

Both excellent comments. Thank you. This is an example of people posting their replies on their own site. There is a lot more value to them than the comments about this post on my own discussion forum. Why? Because I know who Clay is, I've met him, he wrote A Group Is Its Own Worst Enemy, which, to this date, is the most important, insightful, and brilliant understanding of group dynamics in online communities. Dave has something to add to the conversation; some thoughts he's had since the article I quoted him on. Great content, in their own spaces.

And you're not only hearing their replies because I'm telling you about them. You might be hearing about it from Techmeme, which has really cool algorithms to figure out where the conversation is, and put it back together. Look at Techmeme right now:

They reconstructed the conversation magically for you. Of course, Techmeme only works for the biggest, noisiest bloggers. But Bloglines will do it for anyone.

PS to Clay: I'm still in awe at:

Now, there's a large body of literature saying "We built this software, a group came and used it, and they began to exhibit behaviors that surprised us enormously, so we've gone and documented these behaviors." Over and over and over again this pattern comes up. (I hear Stewart [Brand, of the WELL] laughing.) The WELL is one of those places where this pattern came up over and over again.

I apologize for falling into such a common pattern!

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Learning from Dave Winer

Joel Spolsky — 20 Jul 2007 02:59:34 EST

Even if you never read a single thing Dave Winer wrote in his 439 years of blogging, it's worth taking time to study his ideas about comments on blogs (he doesn't allow them).

"...to the extent that comments interfere with the natural expression of the unedited voice of an individual, comments may act to make something not a blog.... The cool thing about blogs is that while they may be quiet, and it may be hard to find what you're looking for, at least you can say what you think without being shouted down. This makes it possible for unpopular ideas to be expressed. And if you know history, the most important ideas often are the unpopular ones.... That's what's important about blogs, not that people can comment on your ideas. As long as they can start their own blog, there will be no shortage of places to comment."

The important thing to notice here is that Dave does not see blog comments as productive to the free exchange of ideas. They are a part of the problem, not the solution. You don't have a right to post your thoughts at the bottom of someone else's thoughts. That's not freedom of expression, that's an infringement on their freedom of expression. Get your own space, write compelling things, and if your ideas are smart, they'll be linked to, and Google will notice, and you'll move up in PageRank, and you'll have influence and your ideas will have power.

When a blog allows comments right below the writer's post, what you get is a bunch of interesting ideas, carefully constructed, followed by a long spew of noise, filth, and anonymous rubbish that nobody ... nobody ... would say out loud if they had to take ownership of their words. Look at this innocent post on a real estate blog. By comment #6 you're already seeing complete noise. By #13 you have someone cursing and saying "go kill yourself." On a real estate blog. #18 and #23 have launched into a middle eastern nuclear conflageration which continues for 100 posts. They're proving John Gabriel's Greater Internet Fuckwad Theory every day. Pathetic. On a real estate blog. Lockhart Steele, is this what you want Curbed to look like? Really? It's not fun, freewheeling freedom of expression, yay first amendment!. It's mostly anonymous hate speech.

OK, that's an extreme example... or is it? I don't know how many times I've read a brilliant article someone wrote on a blog. By the end of the article, I'm excited, I'm impressed, it was a great article. And then you get the dribble of morbid, meaningless, thoughtless comments. If the article, for example, mentions anything in anyway related to Microsoft, you get some kind of open source nuclear war. If the article mentions web browsing in any way, there's always some person without an outbound filter who feels compelled to tell you about how he uses Opera, so he doesn't have this problem, although, frankly, I could care less what Anonymous uses. He's not even human to me, he's anonymous. What web browser he uses doesn't amount to a hill of beans. It's not a single bean. It's not even the memory of last week's huevos rancheros. It's just noise. Useless noise. Thoughtless drivel written by some anonymous non-entity who really didn't read the article very carefully and didn't come close to understanding it and who has no ability whatsoever to control his typing diarrhea if the site's software doesn't physically prevent him from posting.

Dave is absolutely right. The way to give people freedom of expression is to give them a quiet place to post their ideas. If other people disagree, they're welcome to do so... on their own blogs, where they have to take ownership of their words.

I'm really losing patience with anonymous posts, "anon", "anon for this one," people who don't even have the energy to sign their messages with a made up name and leave the whole signature blank. Frankly if every anonymous post disappeared from the Joel on Software discussion group, the overall quality of the conversation would go up, way up, and the discussion would be way more interesting. Try this as an experiment: read through the last few dozen topics on the discussion group, and imagine that all the "anonymous" and signed-blank posts just disappeared. Would the quality of conversation be higher? Would that be a place you'd be more likely to want to spend time in?

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Open house today

Joel Spolsky — 19 Jul 2007 00:01:38 EST

Reminder! The annual Fog Creek open house is today (Thursday), so if you're in New York, I'd love to meet you in person and show you around.

Come on by between 5:00 pm and 7:00 pm to see our offices and meet the Fog Creek team including this years' interns, a.k.a. the caribou, the software management trainees, and me. Bring your boss to prove how private offices, 30" LCDs, and Aeron chairs are possible. See the fish. Drink free wine. Show off your new iPhone. No RSVP necessary.

Fog Creek Software is at 535 8th Ave., on the 18th Floor.

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Splunk: A Software Enabled Platform for Data Search

When I first met with the team at Splunk, they were working away on building a system that could accurately track a transaction as it traversed the entire enterprise stack. If the transaction broke somewhere along the way, their software could help IT discover the cause of that failure. While it was clearly a pain point for some businesses, there was no clear customer and the value proposition was a relatively hard one to articulate. But the technology they were building created a whole lot of intelligence built on the fumes of the data center (namely the log files). I was interested in what they were doing, but not interested enough to fund them. One day I got a call from Michael Baum, CEO of Splunk. He told me that they had "figured it out" and that we should meet up. I was certainly game to hear what they had figured out and we got together again a short time later.

So what had Splunk figured out? They had figured out that if they could track, manage and correlate log files across the entire data center in near real time, that they could create the killer IT Search Engine that would allow an end user to see into their enterprise stack in a way never before possible. The Splunk guys showed me a very simple example using Voip data and how one could track all systems that touched a particular extension by simply searching for that extension in the Splunk engine. I was an instant believer -- it was clearly a better way to manage the massive amounts of IT data that exist in enterprises today. I invested in the Series A and the Splunk team got to building the software that they had envisioned.

A short time after investing in Splunk, I was meeting with a group of managers from one of August Capital's biggest Limited Partners (the folks who invest in our fund). I was describing for them what Splunk was planning to build and they asked me "so what's the market size for that?" I quickly answered as best I could -- "I have no idea." Needless to say, this was not the most satisfying answer they had ever received and they stared back at me with a look that suggested perhaps I should come up with a better answer. But the reality was that I didn't have a better answer. Not because it was unclear if there was any market for what Splunk was building. But, more importantly, because once Splunk had built their search engine, it was unclear what market they would go after. I explained to my investors that Splunk had a number of multi-billion dollar markets in which they might play (management, compliance, BI, security, capacity planning, development, etc.) and the only question was which ones they would choose to go after first.

That conversation with my Limited Partners was over two and a half years ago. And since that time, the Splunk team has built precisely what they promised -- a large-scale, high-speed search technology for your data center. But despite the fact that Splunk's software has been downloaded by over 100,000 users and despite the fact that there are now more than 350 paying enterprise customers (including 21st Century Insurance, BEA, British Telecom, Catholic Healthcare West, Chicago Mercantile Exchange, Comcast, Dow Jones, FedEx, Fiserv, GE Consumer Finance, LinkedIn, Mantech, Mozilla.org, NASA, Shopzilla, Telstra, U.S. Department of Energy, U.S. Department of Justice, U.S. Department of State, Vodafone and Yahoo!), I would still have a tough time answering the question posed by my Limited Partner.

Splunk has not built an application. Nor is Splunk merely selling software. Splunk has created a software enabled platform that continues to be extremely broadly applicable. Is Splunk mission critical when it comes to maintaining availability of large scale enterprise systems? Yes. Is Splunk invaluable in the fight to maintain the security of your data center? Yes. Does Splunk uniquely simplify the process of data compliance? Yes. Can Splunk help you dig into your data and analyze it like no other solution? Yes. But, frankly, that's just the tip of the iceberg -- once you are able to query individual pieces of data across your entire data center in real time, the applicability of the platform is limited only by the creativity of its end users. And those end users are driving value back into the platform, creating applications we hadn't thought of before.

So what is the market for Splunk? i still couldn't say for certain. But I can tell you one thing -- it is awfully big. And in the venture business, that's big enough.

DoneRight: Pay For Performance for Service Professionals

It appears that Shameless Self-Promotion Week has become Shameless Self-Promotion Month. Not that I am promoting any more companies than I had originally planned. I am still only talking about those businesses in which I have invested on behalf of August Capital. But, it turns out, it takes more time than I had anticipated to sing the praises of such a fantastic group of companies.

Just this past Friday, Craig Syverson and I recorded the latest installment of VentureCast at University Cafe in downtown Palo Alto. I had recently been discussing with a friend the fact that University Cafe has very much become a part of the startup economy again. Folks like Rajeev Motwani and Ron Conway spend a fair bit of time meeting with companies at University Cafe. Practically any time you're there you can look around a see deals getting done. In fact, shortly before Craig and I started recording VentureCast, the guys at the table next to ours were banging out the details of some sort of financing. Unfortunately, they had finished their negotiations before we started recording, or we might have captured the blow by blow on tape.

A couple years ago I was meeting with an executive from one of my portfolio companies at University Cafe. While we were talking, Rajeev wandered by and told me to come say "hi" before I headed out. Rajeev was talking with a smart group of guys about their new company in the local advertising space. Those folks were the founding team from DoneRight (at the time called Perform Local). I was intrigued by their business, impressed with the team, and a short time later I ended up funding their company.

The CEO of DoneRight was -- and is -- Paul Ryan. Paul is a phenomenal technologist. He had most recently been the CTO at Overture and, thus, had been part of the team that had pioneered the very concept of pay for performance. The idea at DoneRight was to create a pay for performance local advertising network that would allow local service providers to purchase valuable leads through DoneRight. By aggregating demand through on and off-line lead generation techniques, service providers could use DoneRight as their marketing arm, paying only for the leads they received. On behalf of the consumer, DoneRight would screen service providers for professional licenses, BBB complaints and the like, and only accept professionals onto the service that DoneRight was comfortable guarantying. Given this data-intensive, data-driven service, there was no one better to build DoneRight than Paul.

Because local services are . . . well . . . local, DoneRight has been rolling out their network on a city by city basis. With each new city, DoneRight gains more insight into how best to provide consumers with the information they need to make informed buying decisions, while providing service professionals with the channel they need to scale their businesses. The service launched in San Diego, and has rolled out to Denver, Chicago, Houston and Dallas over the course of this year. In 2008, DoneRight will expand considerably, using what they've learned in their first five metropolitan areas to optimize the DoneRight experience on a nationwide basis. To date, over 1,000 home improvement professionals have entered into prepaid performance agreements with DoneRight. While other online services have failed to gain meaningful sales traction with local businesses, DoneRight has been able to sign up its first thousand paying customers in record time, because it is providing real, measurable results for its business customers -- In the short time that it has been doing business in these few metropolitan areas, DoneRight has processed nearly 500,000 consumer requests for referral to a DoneRight certified service professional. And that number will scale dramatically as DoneRight expands nationwide.

DoneRight is another business in which I invested because of my love of data. Ultimately, the lead generation business is a numbers game. How much does it cost to acquire a lead? What will a service provider pay for it? Does it scale? Those were the questions that needed answering. And given Paul Ryan's background, I invested, confident that Paul would be able to produce the necessary infrastructure to answer those questions and create a scalable business. And he has. Better yet, as Paul and the company learn more about lead generation on a local level, they are able to apply that knowledge to each of their metropolitan areas, making each city more efficient and the overall business decidedly more profitable. If you live in San Diego, Denver, Chicago, Houston or Dallas and are looking for a guaranteed service professional, DoneRight.com is the place to go. And if you are living elsewhere, stay tuned. DoneRight will be coming to your neighborhood soon.

VideoEgg: Three Quart of a Billion Served

While I'm talking about user statistics, I might as well talk about VideoEgg. When I first started meeting with the team from VideoEgg, they had all but no traffic. They had a fantastic video upload tool. Their solution was really elegant. But they were serving thousands of videos at best. The discussion within my partnership was about the degree to which they could compete in a market that was dominated by YouTube and a group of fast followers. Nonetheless, I was really impressed with the team and was excited to see how we might be able to put the VideoEgg software and service to good use.

Having determined that creating another video destination site was tantamount to suicide, the VidoeEgg team decided to partner with various services across the web to provide them with the necessary infrastructure to ingest, manage and serve video onto their respective sites. Because the VideoEgg technology and business proposition were so compelling, they quickly signed up a large number of partners, including: Bebo, hi5, Piczo, Consumating, Current TV, Flixster, AOL, Glam.com, Military.com, BlackPlanet, MyYearbook, ringo, Tagged, AsianAve, theU.com, Dogster, MiGente and many more. The results have been staggering.

In the month of June, VideoEgg will serve in the vicinity of 25 million videos per day or nearly three quarters of a billion videos per month. Those videos will be watched by approximately 23 million unique visitors, a number which is growing by 15% month over month. If that trend continues, VideoEgg will serve about 53 million unique visitors by years end. What's more, VideoEgg is able to leverage the distribution across its network to promote original content. For example, in partnership with Motorola, VideoEgg will stream more than 14 million views of The Burg throughout the VideoEgg network. As the network continues to grow, the opportunity to act as a meaningful channel for original content will grow as well. Which is precisely why I view VideoEgg as a next generation television network.

I was just asked today on a panel if I thought that the market for online video was approaching saturation and my answer was an emphatic "no." I am not predicting the demise of television in the near term by any means. But I am predicting exponential growth in online video as the next generation of media consumers spends an increasingly large percentage of their time online. And I anticipate that VideoEgg will play an important role in that media evolution.

Changing Titles

In an incredible breach of blogging etiquette, I have decided to change the titles of my posts from Shameless Self-Promotion Week. When I started writing this set of posts, I thought it would be nice to have a unified look to the titles. Thus, I adopted the "Shameless Self-Promotion Week: [Company X]" title format. But I have decided that I really hate it. It doesn't say anything about the posts. It is hard to understand out of context. It was just a bad decision. So my apologies but I'm changing titles.

Six Apart's Traffic is Huge!

A lot has been said about Six Apart in the past, including by me. I have never been shy about making clear my love of MovableType (VentureBlog), TypePad (SaysMe) and Vox (Hornik, Hornik and More Hornik). I use each of Six Apart's platforms, which makes me an investor, a customer and an evangelist.

But what hasn't been said about Six Apart to date? Perhaps what hasn't been said is that when it comes to web traffic Six Apart is HUGE. According to Comscore, Six Apart's hosted properties (TypePad, Blogs, LiveJournal, Vox, etc.) put Six Apart in the 50 most trafficked sites on the Web. Six Apart has approximately 39 Million unique visitors a month and growing. Six Apart served just over 600 Million world-wide page views in April, of which over a quarter of a billion page views came from the United States alone. And those page views do not even include the massive traffic of the innumerable branded sites that live on Six Apart's hosted platforms, including TheSuperficial, SocialiteLife, Gothamist, BoingBoing, HuffingtonPost, AskDaveTaylor, TreeHugger, ZDNet Blogs, Celebrity-Babies, CuteOverload, Kottke, CoolHunting, and thousands more.

Where are all those page views coming from? There are nearly 20 Million Six Apart bloggers across the various platforms. In the US, they are posting on LiveJournal, TypePad, Vox.... Internationally, they are posting on Friendster, Nifty, NTT.... On nearly any topic on the planet that one might search, there will be results hosted by Six Apart. The number of bloggers is constantly growing, the number of pages is constantly growing, the number of page views is constantly growing. The power of blogging!

On top of that, there are hundreds of thousands of users of MovableType, which represent innumerable millions of page views which Six Apart does not host and does not track. MovableType is the predominant platform for enterprise blogging. Many corporations use MovableType for external blogs, many more are using MovableType internally. While in no way comprehensive, check out this list of companies using MT for their own blogs: ABC, CMP Media Conde Nast, Gannett, Hearst, NBC Universal, NPR, Playboy, USA Today, Time, Walt Disney, Washington Post, Warner Brothers, FedEx, Interpublic, Ogilvy, Organic, UPS, Adobe, Cisco, Intel, Microsoft, Nokia, Oracle, SAP, Symantec, Verizon, GE Heathcare, GE Medical Systems, Genetech, Johnson & Johnson, Pfizer, American Express, Deutsche Bank, the Federal Reserve Bank, Intuit, Standard & Poors, Wells Fargo, American Eagle Outfitters, American Girl, General Mills, L'Oreal, Mattel, Miller Brewing, Mike, P&G, Patagoinia, Wal-Mart, Whole Foods, General Motors, Boeing, Lockheed, Brown, Columbia, MIT, NYU, Princeton, Yale.... And, of course, VentureBlog!

When I invested in Six Apart, I was excited about the incredibly broad applicability of Six Apart's technology. If anything, I've been surprised by just how broadly Six Apart's platforms have been applied. From Standard & Poors to Playboy to CuteOverload to BoingBoing to NPR to my mom's Vox blog, Six Apart has enabled a distributed media "empire" that is truly vast, and growing. It will be exciting to see how Six Apart continues to flourish in the coming years. I am thrilled to be a part of it.

Nomis Solutions: Price Optimization Guru Focuses on Financial Services

I am a bit of a broken record when it comes to my "its all about the team" mantra. But I really believe it. Yes, it is important to have a good idea. Yes, it is important to be chasing a big market. But as important as both of those things are, they pale in comparison to the need for great entrepreneurs.

I've also written a fair bit about what it means to be a great entrepreneur. Some founders are incredibly good entrepreneurs by virtue of their sheer fanaticism and determination -- they thrive on the challenge of building a businesses out of whole cloth and hate to lose. Some founders are "serial entrepreneurs" and get the benefit of the doubt because they have done it before -- they have managed to run the startup gauntlet and make their investors a bunch of money. And other founders are incredible domain experts -- if anyone is going to figure out how to build an interesting business in their particular field, it will be them. If an entrepreneur falls into any one of these categories, you will do well to back them.

A few years ago I was approached about backing a company called Nomis Solutions. The idea behind Nomis was to apply modern price optimization techniques to the financial services sector. While banks and insurance companies do a great job of measuring and optimizing risk, they have historically done less well at measuring and optimizing pricing. As a result, the industry as a whole has left a lot of money on the table. The founders of Nomis intended to build a software solution to help financial institutions engage in profit-based pricing -- pricing that would create the greatest profitability on a product by product basis (auto finance, mortgage, home equity, personal lending, etc.).

Was it a good idea? You bet. Any time a piece of software can increase your profitability by 10 to 20%, it is a good idea. Was it a big market? Monstrous. Financial institutions are historically very difficult to sell software into, nonetheless, they are monumentally large accounts if you can find your way in. So my investment decision came down to the question of how was the team. While there were four fantastic entrepreneurs when I funded Nomis, and I do not in any way want to slight Nomis's other spectacular founders, I want to take a closer look at Nomis founder Dr. Robert Phillips.

Bob Phillips personifies the best characteristics of a great entrepreneur. He thrives on company creation and refuses to lose (when I made diligence calls on Bob, I was assured that he was a killer entrepreneur and that I would do well to back him but that I should never ever play him at Trivial Pursuit). Bob is also a serial entrepreneurs who has made a bunch of money for his investors in the past. As the founder and CEO of Talus Solution, Bob created the worlds largest price optimization company in its day, which he sold to Manugistics for hundreds of millions of dollars. And Bob is the guru of price optimization -- there is no bigger domain expert. If you have been annoyed by the fact that the guy sitting next to you on a plane paid significantly less for his ticket than you did, you have Bob Phillips to blame for that. He introduced revenue optimization to the airline industry many years ago. He literally wrote the price optimization text book and teaches it at Stanford and Columbia Business Schools.

It would be hard to find a better example of a fundable entrepreneur than Bob Phillips. So it will come as no surprise to you that Bob and his co-founders have managed to build an incredible company at Nomis. Their customers are literally a who's who of the banking industry, from Ford Motor Credit to HBoS to GE Consumer Finance to Washington Mutual. And their results have been nothing short of spectacular -- by installing Nomis's software, a bank can increase the profitability of its business by between ten and twenty percent. On a multi-billion dollar loan portfolio, that adds up to real money quickly. As a result, Nomis has been able to make great inroads into a really tough market.

I don't want to ignore the excellent work of Bob Phillips' co-founders. Nor do I want to understate the degree to which great hiring has helped make the company a market leader. But Bob Phillips remains the world's expert in revenue optimization and I would sooner bet with Bob than against him when it comes to price optimization. It truly is all about the team.

Networking the Old Fashioned Way: Dodgeball

There are a lot of networking events in the Bay Area every day of the week. If you wanted to be a professional networker, this is undoubtedly the place to do it. But not all networking events are created equal. The massive gathering at a local bar may result in you rubbing shoulders with lots of like minded individuals but it will be loud and crowded and not particularly conducive to building real relationships. The nighttime panel on the startup topic of your choice is equally dubious when it comes to growing your professional network. While the conversation afterwards will require less shouting, it will probably be with other startup neophytes -- it is hard to attract seasoned professionals to take part in such events. The monthly trade organization gathering may well get you chatting with a number of similarly situated professionals, but it will do little to expand the breadth of contacts you have.

What is the solution to these networking woes? Dodgeball. After contemplating the profound networking opportunities on the dodgeball court, YouTube's Hunter Walk, Mint's Noah Kagan and I went about organizing the "First Annual Labor vs. Capital Dodgeball Tournament." And it was a big success. Lots of smart, fun entrepreneurs and venture capitalist came together to throw balls at each other's heads. And in between games of riotous ball-chucking fun, there were lots of opportunities to get to know each other. When folks headed back to work (or home) on Friday afternoon, there were lots of requests for the next Labor vs. Capital event on the circuit. We are still in planning mode but are contemplating Labor vs. Capital miniature golf, or Labor vs. Capital Paint Ball. Whatever it is that we choose, I think the result will be a pile of fun and some good clean networking on the side.

For those of you who didn't make it to the First Annual Labor vs. Capital Dodgeball Tournament, check out the latest installment of VentureCast. Craig and I recorded it at the dodgeball courts. You can even get the play by play of the finals of the tournament. It may well be our best remote VentureCast yet. And if audio from the dodgeball court isn't scintillating enough, check out the great video the folks at the Mercury News made.

It really was a pile of fun. I look forward to the next in the "Labor vs. Capital" series of networking events. Perhaps Labor vs. Capital curling.

LiveOps: From Next Available Agent to Best Available Agent

I was chatting with my good friend Bill Trenchard this morning. Bill was one of the founders of LiveOps and is currently the Chairman of the company. He and I were talking about my LiveOps post from last night and I realized that while I had talked about some great applications of the LiveOps platform, I didn't discuss the thing I found most interesting about LiveOps technology. So before I move on to another one of my portfolio companies, let me share one additional thought about LiveOps.

I am a huge believer in the value of using software and data to optimize transactions. And the more data and the better the software, the more value you can extract from each transaction. In many ways, that is precisely what each one of my portfolio companies is trying to do -- unleash the power of the underlying data to produce the most value. LiveOps is no different. By leveraging the IP underpinnings of its call center platform, LiveOps is able to optimize the experience for its customers in ways that give the company an unfair advantage over traditional call centers and traditional call center management software.

The key to the LiveOps platform is that it tracks and manages each individual answering phones as an autonomous agent. And each agent is characterized by a set of data that makes up that agent's profile. So imagine that my mom decides to make some extra money by becoming a LiveOps agent. When she first starts to answer calls, the system will have very little information about her. But over time it will gather data about the job she is doing. The LiveOps platform will learn things like how quickly she answers a ringing phone, how many minutes is her average phone call, how satisfied are the callers with the outcomes from her calls, how many of her calls result in sales, what is the average amount of money spent on a call she takes, how often does she manage to up-sell the caller, etc. Using all of this data, when a call comes in, the LiveOps platform is able to rout the call, not to the next available operator, but rather to the best available operator. And that is LiveOps' unfair advantage.

LiveOps is in essence AdWords for people. The platform is able to measure and manage each individual agent in real time and route calls based upon the performance of each agent. And that routing doesn't simply rely upon data about the agent. It also relies upon information about the call coming in. If a call to the LiveOps' service is to sell a Ginsu Knife, the agent with the best track record of selling and up-selling will get the call. If, on the other hand, it is a call concerning front line product support, a different agent may have the best record of quick and effective resolution of support matters. Yet another call may come in that is a simple pizza order and get routed to the agent who is the most efficient and most accurate order taker. LiveOps software is designed to manage a large pool of agents and optimize their performance in real time based upon the nature of the call and the characteristics of the available agents. As a result, not only is LiveOps able to provide the low cost solution (by allowing agents to work from home throughout the country), but it is also able to provide the most effective solution by routing calls based upon the specific performance metrics defined by the client.

It is this real time, performance-based call routing that I think has led to LiveOps massive success to date. LiveOps customers include large enterprises that want to use the LiveOps platform to manage their own call centers and their own agents, as well as companies that want to leverage LiveOps' agents and software to provide an end to end solution. Either way, LiveOps customers are guaranteed the most efficient and effective "call center" experience possible. And, to my mind, that's pretty exciting stuff.