One theme that surfaced for me at SxSW this week was the incredible amount of energy being expended trying to find developers for projects.  It certainly is a theme that should help the guys at StackExchange, if only they figure out how to reach this audience.  I was in so many rooms where the number of companies with ideas needing devs outnumbered the developers in the room – sometimes as high as 25x in a single room.

At first I thought that this was a systemic problem with SxSW.  I’m not sure I have the data to support that conclusion, but there was a different problem afoot.  Each and every one of these entities with ideas was going about their developer search completely wrong.  Showing up with an iPad with large font text saying “I need devs” is not a good marketing strategy.

I also met quite a few companies trying to hawk their API wares and didn’t know how to go about getting developers excited.  The skill set I have been building over my working career is understanding the mind of the developer, and how to reach them.  I wanted to share this out so that others can reduce what was perceived as frustration as a lack of ability to find developers or get them excited about a project they had.

Go Where Developers Are

It’s a bit of an obvious statement, but seriously, if you are a company looking for developers, go where they go.  If you are at SxSW, they may not be at the meetups.  Why?  Because they are off demoing/showing their apps.  They are at these broader events for the same reason you are – to do business.  Developers are in hot demand right now, and that supply/demand imbalance dictates that they are not only busy, but not partial to interruptions.

Go where they go.  Is there a local iPhone developer group in your area?  What about a technology specific show (PyCon FTW)?  If the developers are at the event to learn versus to do business, you are likely better off.

Be a Coder

I got called a “marketing douchebag” on a panel at SxSW.  I tried not to take offense.  I am a product manager after all.  However, I am a hobbyist coder.  How can you be a developer marketer and not be?  I love spending time writing code to make something cool.  Is my solution the most elegant and efficient?  Probably not.  Can I wax philosophically about string interpolation of C#?  I can now (thanks Miguel).

If you cannot speak the language, or understand the issues, how can you have a constructive conversation?  More importantly, it’s just not as hard as you think.  Seriously.  We have a Windows Phone series for absolute beginners.  I know the notion of downloading tools may seem scary.  Try it.  Most of the dev communities have walk throughs to make it mostly doable by anyone who can install Office.  If you can wrangle an XLS, you can likely get through some of the really beginner stuff.  You may even like it.  Net net, being credible in conversations in the dev user groups means at least being conversant.

Have a Prototype

Even if your design is awful, getting your concept across with working code is FAR FAR FAR more effective than PowerPoint slides or your highly polished 25 words or less routine.  Here’s a secret about developers – any one worth their salt will see what you have and want to make it better.  They may want to join your project, or they may just give you some tips on how to improve on what you are showing so that the next dev who sees it may get interested.  Either way, you get some good feedback which is actionable by you.  You are more likely to not change your slides or 25 word pitch, and just move on to the next developer, but getting actionable feedback from a developer is priceless.

The other benefit of having a prototype – a completely unpolished turd even – means you have had to communicate your ideas to the screen.  That will show you the flaws in what you are trying to explain in words or PowerPoint, and makes for a much more constructive conversation with potential devs.  Your idea gets better simply by trying to work through it on the screen.

So there you go.  I hope that’s helpful for all the non-technical types looking to get to the dev community.  It’s a great time to be a developer, and so much positive energy around projects.

I love Scoble.  I really do.  He’s a great source of content, and occasionally controversy.  In a post today, he suggests that developers should build for Android tablets.  I am left a little confused as to his overall logic train, so let’s poke at a few of his points.

The Bar is Low

Really?  The last time I checked, developers were not the types who wanted to walk into a room barely filled with mediocre people and declare themselves the best.  The lure of trying to unseat Angry Birds is a strong siren song.  Using Robert’s logic, the ones who couldn’t cut it are currently developing for Android tablets, so you should go hang out with them.

Crowds = Death

This is fairly well reasoned notion.  Having to deal with immediate scale is killer.  Robert is pointing to the Twitterati as the arbiters of a developer’s success.  What he doesn’t take into account is that editorial selection from the AppStore tribunal would result in a similar challenge to scale.

Hard Earned Dollars Results in Scrapiness

This is a true statement.  However, the uber point is lost in his analysis.  Android is a more difficult platform on which to monetize.  No amount of scrapiness is going to overcome flawed platform decisions.  You can be pretty scrappy when you are making no money on a platform designed to enable marketplace transactions too, and you have the benefit of knowing that as you succeed, the dollars are a result of your actions, and not failings on the part of the platform provider.

Build Unique Stuff

That’s an interesting statement.  I am sure it’s true to some extent, but most developers are looking for interesting scenarios to that lead to sales, not gee whiz factor.

Define Google’s Marketing

One of the core principles of our team is to make sure we are 100% focused on the success of the developers.  We give them whatever they need to be successful, and engage with them wherever we can to find out what we can be doing better.  Robert is making a suggestion that Google is going to reach out to the dev community for help in this regard.  Unless he has inside knowledge, I haven’t seen this actually occurring in the market.  He does make one very good point – Google hasn’t figured out how it will sell its tablet.  The same can be said for the how they promote developers on their platform.

Access to Lacking Features

See point above about unique stuff.  I am confused.  Using widgets + getting on Oprah means your app is more polished than Flipboard?  That’s a damn polished app.  I am not sure widgets would make it more so.  Notifications certainly enable an entirely new way to interact with customers – we’ve got them on Windows Phone 7 and devs are making some cool uses of them.

“Smooth” is Harder

I get that if you figure out how to optimize on the platform, and figure out all kinds of neat tricks, you will be a better programmer.  Totally agree.  You know what else makes you a great programmer?  Getting to focus on your algorithms and overall experience, and not dealing with ridiculous, time consuming, soul sapping optimizations which shouldn’t have to be discovered in the first place.  Developers universally tell us that they love working with the Windows Phone Developer Tools because of the maturity of the tools, the smoothness of the UI, and the ability to focus on the experience, and not nonsense.  You shouldn’t need an additional toolkit for dealing with fragmentation.

Get Noticed

I don’t buy this.  I am not likely to pay more attention because someone has something I don’t.  It may work for the first 2 people to come up to me with a Xoom, but after that, it won’t.  At SxSW, this will not be the case.  Too many plugged in people.  Getting noticed is about having something of value, or being able to cut through the clutter.  Having a Xoom is not a marketing strategy.  Being awesome is.

Fandroids

The fans matter.  Absolutely.  Do they have influence?  That’s the question.  There’s quite a lot of fans of the WebOS as well.  Getting more people to yell into the Techcrunch/Scoble echo chamber is not a marketing strategy.  It’s simply not.  Robert highlights the very difficult part of being a mobile app developer: getting noticed.  The fan boys are fine for an initial early adopter push, but to really get noticed, there’s a much larger problem to be solved.  What is the “backrub algorithm” equivalent for apps?  That’s a post for another time, but the company that figures that out is going to be unbelievably wealthy.

Iterate Faster

Being able to publish faster into a broken marketplace is not a suitable replacement for a broken marketplace experience.  There’s a reason Robert pointed out that people are having a hard time monetizing on Android.

At the end of the day, developers want sockets.  Android tablets will lag iPad for some time in that regard.  As they will also lag iPhone/iPod Touch and Android handsets.  Android hasn’t clearly demonstrated you can make money on their platform when they are supposedly activating 300,000 handsets a day, what makes Robert think that targeting a smaller target market (Android tablets) is a more viable alternative when the underlying marketplace flaws around monetization remain?  That’s not to say developers aren’t making money on Android.  It’s just not as easy as other alternatives in the market.

I was listening to the most recent TWiT where there was discussion about the recent algo change at Google.  During the conversation, there was an off-hand comment about whether or not the following relationship held water:

Google:Social as Microsoft:Search

That one kind of bent my mind around a bit.  There isn’t any new thought here.  Social is presenting all kinds of problems for Google, and despite their success in South America and some other locales with Orkut, they really haven’t made much of a dent in social.  A fact made more known by the recent additions of the talents of Marissa Mayer to the task.

Some have argued that social isn’t in the DNA at Google, and that’s the source of their problems.  It’s not too hard of a stretch to make the same claim about Microsoft: that we never had search in our DNA.

The analogy, however, breaks down when you spend a bit more time thinking about the subtleties of the companies.  Microsoft, at the core, is a platform company.  This is an important distinction, and one we will revisit in a little bit.  Microsoft started with dev tools, moving to operating systems, into desktop publishing and productivity, into the enterprise with OS and database, and branching ever more from there into mobile, cloud, web, etc, and of course into search.

Microsoft has had many successful forays beyond what is viewed as it’s knitting.  I have tried, quite unsuccessfully, to drive home the following point to people: Microsoft is a tremendous business even without Office and Windows Client.  Think about these businesses:

1. Windows Server
2. SharePoint
3. SQL Server
4. Project
5. Visual Studio
6. System Center
7. Exchange
8. Xbox

Those are businesses which are very, very large.  As in, start thinking about three commas.  Think about that for a moment.  Let that wash over you.  What else does Google have?  Search is their hit.  It’s a master stroke sort of hit, but really, what else have they done?  Android is big business, to be sure, but it exists to serve search.

In one way or another, each of the above MSFT big revenues businesses exists to create wealth for other participants in the ecosystem.  That’s how we think about things.  That’s what being a platform company is all about.

It’s for this reason that our approach to search (note: I have no inside specific knowledge of our search strategy – completely different group, management chain, etc) renders the analogy incorrect.  We will pursue opportunities for search that make our partners money; not to use it as a gravity well which is meant to extract value and perhaps share some of that with partners.

Let’s look at this another way.  Microsoft did a deal, in theory, with a social networking company (Facebook) to benefit our other businesses.  Search is a primary beneficiary, but things like docs.com and Windows Phone are immediate beneficiaries from this closer relationship.  Facebook stands to gain as well, with increased usage and traffic.  There’s shared value.  Google would have to fundamentally rethink their reason for existence to do the same.  They are not shy about saying that all value accrues to search.  Everything they offer is to get you to search more.  Searches have an expected revenue, and Google wants you to do more of them, and do them with Google.  Ask any AdSense partner, and they will tell you Google isn’t in the business of equitable sharing of that value creation.

So as a company casting about to bolster it’s position in social, Google would have to have something on offer for trade.  Microsoft did a deal with a social company which bolstered our search business.  Who, then, would Google do a deal with to bolster their position in social?  They have nothing to offer other than search, and they don’t want to share that.

Microsoft, as a search company, can do a deal with a Facebook (social), and there are many surface areas for equitable value transfer.  Same thing with Nokia – listen to Elop and Ballmer from the press conference.  How many times did they say the word “ecosystem?”  Google cannot offer the same.  This problem is further exacerbated by the fact that Google’s core search business is under attack by social.  Microsoft didn’t have a social business under attack by search.  We had a search business under attack from the search incumbent, and we had value to trade with other partners to bolster out position.

Back to Google’s core business: the content on which Google seeks to chew, and from which they seek to generate relevant links for their customers, is being generated more and more behind the worst kind of pay-wall; one for which there is no price of admission.

The Google bot assimilates any unstructured data it can find for its own benefit.  The beneficiaries in this relationship are those who create the unstructured data.  StackOverflow is a great example of a company being built on the search platform.  So is Demand Media.  StackOverflow is a company you would want to be in the search results.  Demand Media, and the content farms, have debatable quality content which don’t exist to make their customers raving fans, as SO.com does.

Google, unfortunately, finds itself as Germany did in 1944 – in a two front war.  Social on one side, the content farms on the other.  The value creation has proved too rich a honey pot, and the content farms are gaming the hell out of the algorithm to the detriment of the Google customer experience.  So what does Google do?  They can’t “fire” all the content farms – there’s not enough StackOverflows to backfill that lost content.  The longer the content farms exist to the detriment of Google’s customers, the less revenue available in that honey pot.  It’s a mutually destructive symbiotic relationship.  Social has the curated link content which could backfill the content farms, but they exist in an unreachable land.

Microsoft used to get compared to the Borg. That time has largely passed. The Google-bot is the new Borg.  Facebook, in this particular versioning of the Star Trek polemic, is Picard.  However, at the risk of causing a level of nerd rage which is unquantifiable, I would suggest that Facebook is not only Picard, but that he is also made out of Kryptonite.  It’s not enough to simply stop the Google-bot at their front door, but the mere co-existence of the two creations causes one to wither.

The incessant probing and attempts to gain entrance to this walled garden of socially curated web essence is an exercise in futility.  Worse, there is no retreat point.  If we got search wrong, we at least had safe harbor in any of the handful of large, other, businesses.  The proverbial light at the end of this tunnel for Google is so bright that, despite being so far off, it feels just within their reach.  Sadly, it’s not.  Reversing course is impossible, and the only egress is forward through this abyss layered with energy sapping detritus.

One more nerd reference: Admiral Akbar said it best: “It’s a trap!”

To throw one more analogy onto the blog-fire, think about the following chart:

If you don’t know it, click on it and learn (perhaps one of the greatest graphics ever).  Google is Napolean, marching into Russia in the dead of winter.  Their social endeavor has the risk of moving them along the path of resource losses, only to reach some point where they call it quits, and follow the retreat line out, badly depleted, and a shell of what they once were.  It’s an extreme pronouncement, but I don’t think it’s crazy.  Disagree?  Let me know.

The only way out of this is for Google to buy Twitter.  Sad as it makes me to suggest such a thing, that’s the only current viable alternative.  Maybe Tublr or Posterous, but Twitter is the only logical choice.  And it will cost a shit ton of money (that’s a technical term).  This will only serve to temporarily stave off parasitic destruction by the content farms.  How long before the Demand Media for the Twitter platform rises?  Without credentialing like Facebook, all of the relevant metrics from Twitter are ultimately subject to gaming, and we repeat the cycle anew.

It must really piss Google off that Facebook can ride on the back of every Android phone, and that those users are 2x more active for Facebook than through the website, and there’s nothing Google can do about it, and they can’t benefit from it.

I have to make sure I don’t take 4 months off from blogging again.  Having re-read this for editing, I had a lot to say, but more importantly, I enjoyed the mental exercise it put me through.

I am not sure that I am going to tread much new ground in simply covering the weekend news of Yuri Milner and Ron Conway basically blanket offering $6M to the Y!Combinator crop.  There’s been plenty of analysis and moaning about this being the beginning of the end for the tech market.

As a former founder, and venture capitalist (late stage, but investor in private companies nonetheless), I wanted to touch on a few points I hadn’t seen elsewhere.

Yuri is a genius.  Why?  Think about what you need to do when you are an angel investor.  You have a little bit of money (relative to the overall venture pie) that you want to get into deals.  There are quite a few more angels then there are venture funds.  Competition is fierce and getting into deals is really all about who you know.  As a venture investor, your primary concern is “proprietary deal flow.”  In English, that means having sources of deals that other guys don’t have.  That problem is somewhat exacerbated when there is fierce competition for deals.

Further compounding the problem of the angel investor is the high beta nature of the deals.  In short, you have WAY more company failures than wins.  You just hope to make the winners payout more than the losers.  You expect to be compensated for that risk.  So even if you have proprietary deal flow, you need to get into good deals to reduce your risk.  Investing is supposed to be about risk management after all.

Paul Graham acts as a (so far) pretty good filter function for deals.  By just writing a check to all the companies in the portfolio, Yuri solved two problems in one swipe – Paul did the work to get the a good portfolio of angel deals, and Yuri now has access to all of them.  Further, he has put money to work evenly in a portfolio of deals which are more or less not competitive.  He didn’t have to spend 2 years putting money to work in 40 deals.  He did it one shot, effectively enabling himself to have a nice angel mutual fund.  Genius.

This is all well and good for Yuri, but Paul has a couple of problems as far as I can see it.  He has done a great job of building his brand as the go-to place for the young entrepreneurs who might hatch the next big thing.  There’s been plenty of criticism about the features masquerading as companies in the Y!Combinator portfolio, but Paul’s business isn’t finding great companies.  Paul’s business is investing in great talent.  He has a recipe for how he identifies and invests in talent.  Over time, that recipe has proven out a bit, and the winners beget higher caliber talent looking to get in on it.  Better talent means better possibility for an exit, which means more VCs come to Paul to look at the deals at the end of the program.  It’s a very solid feedback loop.

Where does the talent pool end?  A casual viewing of American Idol these past 2 weeks would lead you to the same conclusion as you would have from would be “next Herokus” looking for funding.  You have quite a bad signal to noise ratio when you have too much success.  The proverbial ants coming out of the woodwork.  Can Paul scale his machine to work through the all but inevitable crushing deluge of applicants with increased success?  How can he keep his batting average high enough to continue his virtuous loop?  It just got a little bit harder with this new pile of money.

There was a comment on the TechCrunch article announcing 90% of the applicants had accepted the deal which caught my eye.  “Am I the only one who finds Y combinator predatory? It preys on 20 year old kids who think they’re building the next Google. Am I crazy?”  I’m not going to touch the comment other than to use it as a back drop to blow your mind a little bit.  Y!Combinator is great for the young’uns because they can afford to spend a summer hanging out, coding, etc, and get by on the $12K-$18K Paul gives them for a 2-3 person team.  With the $150K coming in from Yuri (or whomever comes next), the mortgage and kids become WAY less of an issue.  Two guys could put $84K in their pocket and enjoy a 6 month work holiday.  You’ll work hard, yes.  And you won’t put all that money in your pocket, since you will need to fund the business, but man, talk about risk reduction.  Carwoo notwithstanding (bunch of old men running that show <g>), my impression of the Y!Combinator set has been that they are quite young.  Did Y!Combinator just go from being MySpace to Facebook?  This Yuri deal could very well skew the demographic to the older set.

So imagine a world in which you have early to mid 30 somethings with solid work experience but perhaps just come from a different education background, socio-economic situation, whatever, and have never started their own thing.  You could potentially have a team that knows how to execute, could potentially have been working together for years, and they can now afford the risk associated with a Y!Combinator summer.  The more I think about it, the more that sounds like a slightly more risk averse Carwoo management team.  That management team is executing quite well.  Experience for entrepreneurs matters.  Kids have balls because they don’t know any better, but I bet on experience every time.  Sometimes the startup CEO inside of us just needs a little kick, and $150K extra is a hell of a kick.  Just because you haven’t been an entrepreneur CEO by the time you are 25 doesn’t mean you will never, or aren’t suited.

What of Yuri?  I doubt he gets the pole position on the next crop.  In fact, I’ll bet there is a dinner happening at some point this week at Bin38 to figure out how to kneecap this guy.  The terms on his deal were quite favorable.  In fact, I am scratching my head trying to come up with a way that someone could 1-up him on the next go round short of offering more cash.  He’s certainly upset the angel community with his uncapped Convert note.  That one left me speechless.  It’s entirely possible Paul has a similar meeting with the companies the next year, but it’s a bunch of angels looking to write checks, and the YC companies get to choose.  That drives up the check amounts, removes the incentives for the angels (uncapped converts…really?) and doesn’t really allow any one angel to take the mutual fund model, which means they would be investing with no due diligence.  Yikes. The only way this works is if one angel (or syndicate) can write all the checks.

There are some angels who have already spoken out on this.  I bring up Chris Yeh if for no other reason he and I went to grade school together (and I think he’s a pretty smart guy too).  He brings up a point that the concentration of talent decision making in too few hands is bad.  He’s right.  He moans a bit about some other things in the article, but this point isn’t the one that landed with me.  In fact, I think he missed the more important point.  Paul has singlehanded foisted the convertible note on the VC community through Y!Combinator.  Talent selection in the hands of too few is one sort of problem, but financial engineering concentrated in the hands of too few, especially those who think of themselves as smart, is really, really dangerous.  This has the potential to turn into a game of who can concoct the most esoteric and interesting funding investment.  In a world where Paul would rather things be easy than hard, he may win out.  Entrepreneurs appreciate simple.  I don’t know if I am more worried about how the angels will try to circumvent this, or what kind of behavior response this will get from the venture community.

So Paul has to decide how he is going to scale his sorting algorithm.  He has to tweak it to ensure that the all but certain increase in older applicants is in some way accounted.  He’s allowed a big money bag man a seat at the table, and has to decide what, if anything, he is going to do for the next batch of YC companies for this sort of investment process.  Paul also has to take responsibility for his actions as they pertain to the angel community.  It’s not enough to hide behind saying that any angel could have made this deal.  It’s done, and it’s good for his companies…now.  Paul, as a leader, has to now own up to what could potentially come next, and start planning for that future.  The ecosystem is important, but there needs to be diversity in that ecosystem.

UPDATE – one thing was bugging me when I posted.  I couldn’t quite sort it out until this morning.  Does Yuri have a provision in his funding documents that prices his money if there is a liquidation or change of control?  If not, wow.  If so, I would love to understand that better.  Anyone out there know?

I was watching Colbert the other night, and caught the very tail end of an interview with author Annie Leonard.  She was promoting her new book, “The Story of Stuff.”  I didn’t catch enough of the interview to know if I wanted to buy it, but did catch enough to grab my Kindle to order up a sample chapter.

The subtitle of the book is: How Our Obsession with Stuff Is Trashing the Planet, Our Communities, and Our Health-and a Vision for Change.  Let’s stop and think about that one for a second.  The author is railing against how the obsession with consuming, ostensibly, atoms is ruining the planet.  OK, I get that.

Imagine my surprise when I could only purchase her book in atom form.  Not available on the Kindle.  Wha?  Look, I get that not everyone has a Kindle, and that reading devices aren’t quite mainstream, but doesn’t this hypocrisy sort of negate her whole message?  Dave Ramsey rails against the use of debt for anything.  He’s a man who stands by his principles.  You cannot use a credit card to purchase wares from his site.

What principles is Ms. Leonard standing by when her book is not available at ship date in any form other than atoms?  The lesson here for entrepreneurs is pretty clear.  Know what you stand for, and why, and stick to it, lest you ruin your credibility.  This is an epic fail.

I have long held that our current system of taxation is a bad one.  It’s oppressive, is changed too often, and encourages cheating.  Further, the more complicated the tax code, the more likely you are to have to spend more time, and in many cases money, sorting out what you do and don’t owe.  It’s onerous and I hate the current system.  I want to hack it.

With that out of the way, it was with some interest that I was reading this article about the multitude of tax programs which are being enacted to help students get out of debt post school.  When thinking about any program, I view it in the same lens as I would a product that I would take to market.  First is who is my customer, but second is how do they become aware of the product.  For the average person, staying on top of all of these government programs is challenging at best.  In times like these, I prefer to opt for simplicity.  With that, let me propose some assertions, and then a potential solution:

1) As a country, we should aspire to have a more educated work force

2) The cost of college, university, and graduate education is rising faster than the rate of inflation, making it more un-affordable with each passing year

3) With the current tax system, a higher paid, and more productive, work force should, ceteris paribus, generate more tax revenues

If we can all agree on those assertions, then I propose this simple tax plan:

If you borrowed money to attend college or graduate school, and are now working full time, you do not pay taxes.  All federal taxes that you would have paid are instead diverted to paying down your student debt.  There are no exemptions allowed to reduce tax burden, and by extension extend the debt repayment schedule.

Simple right?  There needs to be some teeth in this, and fleshed out a bit more, but I am offering this one up to Congress for free.  Why?  Because I don’t have the ability to move the ball forward short of throwing this out there and having the community at large comment on, improve upon, and forward this to someone who might be able to something with it.

Think about who this serves.  As a student, you worry less about debt that you are taking on, because the mountain of debt waiting you at the end of your scholastic journey is now much, much more manageable.  As a body politic, we benefit from having a generally up leveling in the education level of our population because more people will find the prospect of continuing their education more economically feasible.  Unlike these other programs which seek to essentially allow for debt forgiveness, each person is responsible for their debt until it is paid off.

Someone looking at this might say that there would be a huge revenue hole to the government if all of the sudden you removed the tax revenues of debt repaying students.  I see that as an investment by the government in the population.  The notion that the better educated population will generate more tax revenues should be simple enough for them to understand.

Why is this good for business?  First, we have the better educated employees.  Second, you have an employee base that has more carefully considered their options.  No 18 year old really knows what they want to be when they grow up.  If you could go back to school at 25, knowing that the debt you are taking on will get repaid first before tax dollars, you are far more likely to make that decision.  As an older employee, with more work experience, and life experience, you are more likely to know what you want/ought to be doing with your life, and if that requires more education, it’s better for everyone that you remove yourself from a job you didn’t want (opening that position for someone else), and positioning yourself for a job you do want without fear of how you are going to pay for it.

How about looking at this from a numbers stand point.  The average student graduating in the class of 2008 will owe $23,200 for their efforts.  That’s a painful number.  I found this study which claims the range for post-secondary debt levels ranges between $27,000 and $114,000.  Yowsa.

For the sake of this discussion, let’s take a WA state resident, making $40K per year, but deciding that going back to school for a degree which will enable them to make $75k per year.  The difference in annual Federal taxes withheld (filing as single and no exemptions) is $5,268 for the lower income, and $14,164 for the higher.  Now, assume you jump from $75K to a $150K per year job (which is not crazy if you get an MBA).  The annual Federal tax liability jumps from $14,164 to $35,135.

See what I am getting at here?  A smart, thrifty student would pay down their debt the same way they were before this plan was enacted, but get the additional paydown accelerator afforded by this plan.  I am guessing most people would actually just have their taxes pay down the debt, which would free up disposable income, which is likely to be spent on taxable items.

Is my reasoning sound?  Am I missing something?  I am not a tax expert.  This is simply an idea that has been rattling around in my head for a while that I would love to see explored more.  Please, prove me wrong.  Tell me why this won’t work.  More discussion can only lead to more ideas.

This week I have been spending time at a corporate offsite.  It’s been a pretty amazing experience, and I have seen/learned a ton of things about which I cannot speak.  That’s a bummer, because I was blown away by some of the stuff I have seen, but it’s internal only for now.  However, should you want to see some of this stuff, you might want to consider being at our Professional Developers Conference in Los Angeles in a couple of weeks.

That said, one thing I can share is a story from a partner.  The presenter was awesome, and shared some interesting pivots on things that his company was doing with data.  It wasn’t data, but rather how they approached their customer support that really inspired me.  To make his point, he showed us a video of a storm chaser – the implicit statement was that for anyone who has ever been on a call with a Fortune100 customer when the service offering goes down, it was very much like being a storm chaser.  Just about the scariest thing you can do.  I would argue that it’s not the scariest environment imaginable, but that’s just me.

In order to think through how they were going to tackle customer support on a go-forward basis they decided that they would talk to the experts.  They arranged meetings with firefighters and emergency & disaster site workers.  They wanted to get into the heads of the very people who have to manage the crisis, calm the locals, and solve the problem.  How ingenious!

I don’t want to give away too much of what they shared, but I will share this tid-bit.  The best plan of action for learning how to handle support of irate, and expensive-to-lose customers?  Drill often.  Think about that for a minute.  How often do you drill your customer support team?  This reminds me of the movie Apollo 13, when Jack Swigert is getting a run in the simulator and blows it, and Lovell makes a joke along the lines of “if I had a nickel for every time I was killed in the simulator.”  The point here is that if you drill for it, you can solve the crisis when it arises with calm and focused effort.

What are you doing to train and audit your customer support?

One of my favorite VC bloggers, Josh Kopelman, has an interesting piece on the VC math problem as first envisioned by Fred Wilson.  Having gone through the fund raising process, and hearing this nonsense from VCs, I always gnashed my teeth when a VC was setting valuations based on what they needed to own.  Not any intrinsic value of the business, but rather what they felt their ownership percentage needed to be.  This was much more of a problem with the earlier stage VCs, and, interestingly enough, with some of the spray and pray VCs, where you would think they might care less about overall percentage due to the fact that they were investing everywhere.

Josh references a paper by Paul Kedrosky which takes a very detailed research approach to examining this issue.  The paper has been downloaded and will be read tonight.  However, the math that blew my mind was contained in the following section of Josh’s post:

Take a $400M venture fund.  In order to get a 20% return in 6 years, they need to triple the fund — or return $1.2B.  Add in fees/carry and you now have to return $1.5B.  Assuming that the fund owns 20% of their portfolio companies on exit, they need to create $7.5B of market value.  So assume that one VC invested in Skype, Myspace and Youtube in the same fund – they would be just halfway to their goal.

My head just exploded.  Despite my own please for my co-workers to be more intellectually curious with their jobs, I had never done this math.  I am left absolutely shaking my head at the reality that is facing any VC not in the top 5 (as in top 5 VCs, not 5%).  Good luck.  The tactical play for a fund is to invest early and small.  This is at odds with the 2 and 20 model.  I mean how are VCs going to feed their Cayenne Turbos?

Worse, I worry about the companies that the other VCs are funding.  With such a challenging economic model now staring them in the face (hey, at least before they didn’t have to answer to the data which could refute ridiculous forward looking statements about future “internet” or “new economy” fund performance), are they going to just start swinging for the fences?  Will they just pile on the risk and do whatever they can to justify the fees?  Or will they find a way to raise money and do next to nothing, and simply collect their management fees?  I wonder if LPs will now start wanting to have claw-back mechanisms in place when returns fall below a certain threshold.

The really hard problem facing entrepreneurs is that while it costs less and less money to start a company, VCs have more and more money piling up in the form of capital call commitments due to a dearth of deals over the past couple of years.  They want to deploy more capital, and that leads to capital inefficiency within small companies.

What does a guy have to do to get his StackExhange site set up and running? I put my submission in a while back, but I am probably way down on the list.  So in a creative attempt to convince Joel and Jeff that I am worthy, I figured I would give them something to read.  I spent this past week at the TechCrunch50 conference listening to developers talk about why they don’t use the Microsoft stack.  It was a great set of conversations, but I also spent a good bit of time talking with some of the business guys.  Many similar topics of concern came up over and over again, and I really want to help solve those problems.  Q&A for founder types anyone?  Let’s get this thing started already.  I will be a tireless promoter, and I can bring a pretty powerful ally to the table in making sure the site is funded and gets promoted.  Jeff, Joel, I beg you…please get my site rolled.

I have been waiting to write this post for a long time.  There are a great deal many resources on the web for entrepreneurs looking to learn, such as Hacker News, Andrew Warner’s Mixergy, and Eric Ries’s Lean Startup Blog.  However, I have always felt there was a gap in the the resources that really would help an upstart.  Having a really good base Excel model, fully built, and flexible (think Basecamp but for your financial/ operational model), would be extremely helpful.

Another resource I have always wanted to see were the actual decks which were used to get companies funded.  For obvious reasons, those are pretty hard at which to get a look.  Now that I am three years on from the initial funding of IMSafer, I have decided that I would post the slides that we used when we went out to raise angel funding.  Beyond just throwing the slides over the wall, as part of my community book The Failing Point, I have an entire essay dedicated to the content of the slides, and what it means with regard to putting together a long form business plan.

These are the actual slides, with no edits, save a few names removed for privacy reasons.  Please send questions.  Don’t be afraid to ask.  They biggest take away most of you will have is that there is no magic bullet for content, but there is good form to follow, and more than anything, at this early a stage, investors are backing people first, ideas second, slide content third.