Feld Thoughts

jsaxton86's Test Result's:
Input File:
Title: The Simpsons Movie - 1080p Trailer.mp4
Kind: MPEG-4 movie
Size: 147,399,359 bytes (147.4 MB on disk)
Video Dimensions: 1920 x 800
Codecs: H.264, AAC
Duration: 02:17
Audio Channels: 6
Output Cram:
Title: The Simpsons Movie - 1080p Trailer.mp4.cram
Kind: Document
Size: 113,620,340 bytes (113.6 MB on disk)
Time to Cram File:
Seconds: 3313.306152 (55 Minutes ~13.3 Seconds)
Memory Usage:
GB (Rounded): 24.67 GB
Hardware Overview:
Model Name: iMac
Model Identifier: iMac11,1
Processor Name: Intel Core i7
Processor Speed: 2.8 GHz
Number of Processors: 1
Total Number of Cores: 4
L2 Cache (per Core): 256 KB
L3 Cache: 8 MB
Memory: 16 GB
Processor Interconnect Speed: 4.8 GT/s
Boot ROM Version: IM111.0034.B02
SMC Version (system): 1.54f36

We're really proud to try our best on your test jsaxton86, and we know that test results from the person showing you something always come with a healthy pinch of salt. So we'll ask the community to give it a try, and back us up here. Scientific testing means repeatable parameters, so we urge others to take his test too. (--EDIT: Turns out this file is too big 50MB in the limit of Github push-- We're also making our Cram file available on github, check it out with the decompressor or in a Hex editor: https://github.com/Cramcore/Crams)

From these results you can clearly see areas we aren't happy with either. Time and memory, but this is just the beginning for…

There are many non-traditional routes to get to know investors besides the usual networking events/cold email/calling. I'm friends with the author (Charlie) outside of just the tech world. We became friends a couple of years ago when he tweeted out about needed volunteers for a kayaking program he helped start over at the Brooklyn bridge park (http://www.bbpboathouse.org/ for anyone in NYC that's interested). I had grown up kayaking so was mostly interested in having way to do so in NYC, but also wanted to meet Charlie. When I showed up, there were probably 10 or so people from the NY tech scene that wanted to get some face time with Charlie and over the course of the day he spent 1-on-1 time with everyone. Most only showed up for that one session, but a few have been back from time to time.

This isn't a strategy that you can use to get access to every investor because like Charlie said, it takes time to build up relationships and really get to know people. However, if you do have a few key people you want to get to know, getting to know they outside of the tech scene can be a great way to build a long term relationship. You need to figure out a non-creepy way of doing so (i.e. don't just start showing up where they check in on foursquare (http://www.feld.com/wp/archives/2011/03/did-someone-ruin-foursquare-for-me-yesterday.html) but at the end of the day, investors are people and they often have causes/activities that they're passionate about and may overlap with your…

To be clear for those who aren't following the salient detail here - the preferred stock does not convert to common if the liquidation preference is exercised. The investor gets up to their money back (1x preference), and no more.

If they choose to participate pro-rated they convert to common first, and participate equally with everyone, without the preference.

The investor would chose to convert to common when the sale price is greater than the post-money valuation of the deal. On this basis their pro-rated participation will be greater than the amount invested.

If the sale price is less than the post-money valuation of the deal, they would be sensible to keep their preferred stock, and exercise their 1x preference, meaning they get their original amount back 100 cents on the dollar. The remaining is then split between the common shareholders proportionally (in effect without the dilution from the investor that exercised their preference).

Mark Suster (@msuster) from GRP put together a good spreadsheet [1] that shows the preference effect on sale, including preferred non-participating stock and preferred-participating (PP) stock (essentially double dipping into sale proceeds).

Brad Feld (@bfeld) from Foundry Group has a good write up of the different types of participation on his blog [2].

[1]: http://www.docstoc.com/docs/47831420/Venture-Capital-Valuation-Spreadsheet
[2]: http://www.feld.com/wp/archives/2005/01/term-sheet-liquidation-preference.html

I want to preface this by stating that I have tremendous respect for all the people at EI^2, the folks of VentureLab, the people in ATDC and Flashpoint. I really I owe much of where I am now to you folks.

That being said, I think your rebuttal missed Chintan's initial premise, which is that Georgia Tech's startup culture is a little underwhelming for the respective technical chops of its student body.

The article is simply one student's (correct) assessment about the present level of entrepreneurial activity at the undergraduate level in Georgia Tech.
Talking about how great Flashpoint, ATDC, EI2 are as rebuttal against Chintan's premise is like saying that just because a MacBook Pro has a long battery life, you can go without charging it.

Surely you'd agree that the "build it and they will come" adage is entirely asinine in the context of a startup. Why should it be any different when it comes to communities? The "GT Establishment" has to market itself better and actively engage the entrepreneurial students where they are. In school.

This might seem like a ridiculous thing to ask but VCs and influencers elsewhere in the country do this:

----
Jason Mendelson of the Foundry Group:
http://www.feld.com/wp/archives/2012/11/new-online-courses-from-sympoz-on-starting-a-company.html

Peter Theil (no explanation needed here) taught CS183:Startup-Stanford
http://blakemasters.com/peter-thiels-cs183-startup

David Skok teaches Startup Secrets at Harvard's…

That depends on your definition of 'rationally'.

Sometimes preferred will be fully-participating preferred, and the investors will get their money back and then take a share of what's left equal to their ownership. Sometimes preferred will be non-participating preferred, and the investors can choose between getting their money back or converting their preferred to common and getting a share equal to their ownership. Never ever will a VC do a deal where they don't get at least 100% of their money back before common stock holders (aka you) see a dime.

Complicating this is that 'getting their money back' is actually just a 1x liquidation preference - and while 1x is common (the VCs get 1x their money back before you get anything), it's possible for this preference to be higher. If there's a 2x liquidation preference, the VCs get 2x their money back before the common gets anything. If there's a 2x liquidation preference and the stock is fully-participating preferred, the VC gets 2x their money back and then a share of whatever's left equal to their ownership.

Early-stage rounds are often relatively simple and more 'rational' - it's multiple rounds with many different investors that make things interesting.

Brad Feld's 'Term Sheet Series' is the best resource I know of for basic definitions of all this stuff:
http://www.feld.com/blog/archives/term_sheet/

Hey rbliss, article author here. I've been out of pocket all day. I was getting ready for bed when I saw my article on the front page of Hacker News!

Your comment is fair. It's late here, so I don't have the mental energy right now to write the 1000+ words I would like to on this matter.

It's totally worth writing another followup blog post explaining in more detail, which I'll aim for next week.

But, in brief:

-- Flattening yield curve

-- Ridiculously low unemployment ("full employment" is the term that's floating around)

-- Record high housing prices

-- Public corporations sinking profits into stock buybacks instead of acquisitions or capital investment (I find this a highly dangerous trend for the economy)

-- Consumer debt levels now higher than they were in 2008

-- Subprime auto loans being "tranched" and sold to investors much like subprime housing was in 2005-7 (and this is even worse, since cars are depreciating assets): https://www.bloomberg.com/news/articles/2018-07-16/riskiest-subprime-auto-bonds-shrug-off-consumer-lending-worries

And I saw this one yesterday: https://www.feld.com/archives/2018/07/early-stage-vcs-be-careful-out-there.html -- specific to the startup/tech field.

If anyone has any more questions, please feel free to ask me here, and as I said above, I'll aim to write a more detailed followup next week.