And now... Odious 2.0... Disclosure 3.0

The latest twist in the web 2.0 world is the PayPerPost story, nicely analyzed by TechCrunch (who also has a previous posting listing other companies doing more or less the same thing). PayPerPost pays bloggers to say nice things about products, as long as they only say nice things... and they do not require disclosure of the payments.

One of the characteristics of web 2.0, as I have mentioned, is that user generated content plays a prominent role. In many cases the value lies in conversation between end users with no big corporation managing, editing or censoring. The PayPerPost approach is harnessing this in ways that seem to me to be unethical and immoral, not because of the payment, but because of the lack of disclosure. My belief is that many (most? all?) conflict of interest situations can be neatly defused by full disclosure. Who cares who spends time with Dick Cheney, as long as we all know? Similarly, who cares if I am paid to write nice things about Dick Cheney, as long as you know I am being paid. Advertising is usually required to be properly labelled as such, and I see no reason why those regulations should not apply in this case as well. There seems to be a groundswell of concern, so my guess is that this will be a dynamic situation for a while.

Meanwhile, if web 2.0 leads to odious 2.0, then here is my disclosure 3.0:

This blog does not accept any form of advertising, sponsorship, or paid insertions. I write for my own purposes. However, I may be influenced by my background, occupation, religion, political affiliation or experience. The links in this blog have my affiliates code embedded in them which results in small amounts of commission payment (which I donate to charity).

Look for this on every page of my blog from now on.

I promise not to turn my blog into a jokes page... but did you hear the one about the guy who asked a shrub what we should do about Iraq? The response was "why are you asking a bush?"


Web 2.0, Jewish Social Scene 2.0, Idiocy 2.0

Web 2.0: I just read about a new site called, which is one of many locality based sites. I mention it because the web address "" is cute (using the Indian top-level domain .in), and they are a great example of web 2.0 at work. They clearly have a mechanism to match web articles to geographic locations (known as geo-spatial mapping), based on town names. When I put in my local zip-code, it produced articles from Newton and surrounding towns. It also allows users to add content to the site: for example, restaurant reviews. So this combines clever new "mashups" (the geo-spatial mapping), plus user-generated content, plus a bit of naming whimsy (or branding hopefulness). I would say that is web 2.0.

Jewish Social Scene 2.0: My good buddy, Ilan Segev, has no blog. (Does that make him Ilan 1.0?) So lacking the forum to break his own news scoops, he passed on a viral video ad for, which promotes itself as either the first or the biggest Jewish Social Networking site. As I mentioned the other day, social networking is "big news" in the web 2.0 world. Koolanoo (a hebrew word meaning "all of us") is certainly not the first Jewish social networking site (Jewish Geography, for one, has been around since 2000), but it is the first to look like MySpace or Facebook, and I guess that for this generation, that is the comparator.

Idiocy 2.0: Google issued an idiotic posting, no doubt prompted by their lawyers who are upset at being sued now they own the YouTube copyright problems, telling everyone that "google" as an everyday word is bad, Bad, BAD. They have a trademark to protect, and it is clearly more important to them than their reputation as a smart company. Their company motto is "Don't be evil". Perhaps they should add "Don't be idiots, either".

Transparency and the New Kosher

The requirements on a restaurant that wishes to maintain a kosher certification are imposed by a local certifying authority which is either an individual Rabbi or a Rabbincal Assembly or committee. In some communities, of course, there are arguments as to whose supervision is "more" kosher, or kosher "enough" (Editorial comment: Yuck!).

One aspect of Kosher certification relates to sabbath observance. If a restaurant is kosher in all respects but opens on Saturday (thus transgressing not food rules, but rules on sabbath observance), is it kosher? Generally the given answer is no, but there are exceptions, relating to restaurants owned by non-Jews, who are not bound by sabbath rules (as long as food prepared on the sabbath is not served at other times). However, Jewish tradition is always concerned about confusion that may ensue from rules that are applied with too much flexibility. The fear is that perhaps someone Jewish sees the restaurant is Kosher on a Saturday morning, and then goes in an buys a meal cooked on the Sabbath and pays with money (both forbidden by sabbath laws)? (Editorial comment: What?)

I have been very pleased to see that in some cities, a restaurant owned by non-Jews can receive a kosher certification that reads something like: "This establishment is kosher under the supervision of except during the Jewish Sabbath and Jewish Holidays". This tells Jewish customers who care about the certification that they can eat at the restaurant because it is kosher, but not to do so when rules that apply to them (but not the proprietors) prohibit cooking and commerce (Editorial comment: Clever, if a little annoying that is necessary at all).

However, once you realize that a certification can be dependent on things not directly related to food preparation, the notion suddenly becomes really exciting, and this applies to organic food labeling as well.

What if the food is prepared in farms or factories where the workers are exposed to unsafe working conditions? Should that be kosher, or organic? Should we require a higher standard of worker treatment, that is also supervised by a certifying authority, before purchasing food?

What if the packaging and processing is wasteful, non-recyclable, energy inefficient or who knows what. Can we hope to certify that the packaging and processing meets standards of safety, environmental responsibility, and energy efficiency? Is it kosher (or organic) if it is wastefully packaged or prepared?

What if the food is shipped across the country, and so consumes huge amounts of petroleum and creates huge amounts of pollution compared to public good of having that food in our supermarket? This is a key question asked in The Omnivore's Dilemma by Michael Polan, and points to the growth of the movement to support local farmers and buy local produce. Perhaps, like that flexible kosher certification I mentioned, the labels on organic food should read "Organic if purchased and consumed within 200 miles of ", or "Organic if purchased and consumed in due to fuel efficient delivery fleet".

How about an interim step... some extra transparency on these issues. Instead of "Produce of USA", label produce to the county level where it was produced and processed (possibly two locations), and how it was transported. Label processed foods with the energy used to process it, the location of the factory and how it was transported. If people could see just those facts, perhaps it would change the conversation.

Jewish Social Action Month

We are now in the Hebrew month of Cheshvan – between the many fall holidays of Tishrei and the flickering lights of Chanukah in Kislev. Cheshvan has no holidays, and so has been called Mar Cheshvan by tradition, meaning the bitter month of Cheshvan. We read the story of Noah during Cheshvan, and it was during this month that the great destructive rains began to flood the world. However, an organization called Kol Dor (which translates as both “Voice of the Generation” and “Every Generation”) has recreated Cheshvan as Jewish Social Action month, now in its second year.

Jewish Social Action Month calls on Jews and the Jewish people to look beyond our own community at what needs fixing in the world, to look at these contemporary issues through a Jewish lens, to engage with a regard for what unites us, to get on the right side of these issues and to do something about them.

Please share the urgency of being involved in social action with your communities whenever you can.

VC:VC Social(ly Active) Networking

Continuing my sporadic VC:VC series of postings comparing life as a venture capitalist with life as a venture cyclist, here are some thoughts on social networking, and socially active networking.

Social networking is a term that has some academic background, but venture capital types know that it means the internet phenomenon that links people together according to something that ties them together: high school, college, employer, friend-of-a-friend, shopping preferences and so on. An early icon of this phenomenon was the six degrees of separation websites that allowed you to register and invite your friends, and for them to do the same. You could then see if you had a connection to anyone else in the network stepping through connections registered on the website. Linked-In seems to have become the most successful of the professional oriented sites that provides this service. I have over 100 contacts registered with my profile, and I can search to see, for example, if I could connect through a network of connections to a vice president at Google or a programmer at EMC. Facebook and MySpace are analagous sites aimed squarely at the hip young market with lots of features for sharing information about yourself, your favorite photos, music, videos, hangouts, friends and so on.

Many startup ideas now come with social networking features, either thinking they are de rigueur or that, no matter how irrelevant, they make it easier to get funding. Social networking is part of the cluster of ideas that have been rolled together under the banner of Web 2.0 (or for jaded commentators: internet bubble 2.0). If I had an idea to create an online business by selling accessories for cycling, I could add the ability to find other cyclists who like my kind of bike in my area, and I would have a social networking component.

In the venture capital world, we have been doing social networking without the internet for years, but it does break down beyond one or two steps. I might remember to ask my partners if anyone knows someone at such-and-such company for a background reference on an entrepreneur, but I don't know if lurking just one connection away is exactly the right person. When one VC meets another for the first time, we generally see whom we know in common based on deals we have worked on. Similarly, when one Jew meets another for the first time, we often play "Jewish Geography", looking for mutual friends (or relatives). The Jewish community is small enough (even though larger than the VC world), that we often find some connection that exists. This is yet another example of non-internet social networking (although here is the on-line version).
In her keynote address to the Hazon 2006 NY Bike Ride on September 1st of this year, Anna Stevenson concludes with a marvellous poem:

The Long Road
by Marge Piercy

Alone, you can fight,
you can refuse, you can
take what revenge you can
But they roll over you.
But two people fighting
back to back can cut through
a mob, a snake-dancing file
can break a cordon, an army
can meet an army.

Two people can keep each other sane,
can give support, conviction,
love, massage, hope, sex.
Three people are a delegation,
a committee, a wedge. With four
you can play bridge and start
an organization. With six
you can rent a whole house,
eat a pie for dinner with no
seconds, and hold a fund-raising party.
A dozen can hold a demonstration.
A hundred fill a hall.
A thousand have solidarity and your own newsletter;
ten thousand, power and your own paper;
a hundred thousand, your own media;
ten million, your own country.

It goes one at a time,
it starts when you care
to act, it starts when you do
it again after they said no,
it starts when you say We
and know who you mean, and each
day you mean one more.

This shows the power of socially active networking, which is similar but slightly different. When I meet you, my goal is not only to find out who we know in common, and to whom else we might connect each other, but it is also to enlist you in a cause (hopefully a good one). When I meet you, expect me to play some variant of six degrees, and also to encourage you to get on your bike and join me, join us, next year on the Hazon 2007 NY bike ride.

Think globally, think locally

Dear Newton Community Farm CSA members,

Its been an interesting year, weather wise, to start a farm. But we've made a pretty good go of it, I think. I hope you do too. Thank you for supporting the farm in our inaugural season. I couldn't have done so much without all of your help.

I'm writing to let you know that the pick ups for [this week] will be the last pick ups for the 2006 season. We've been hard hit by frosts so things are winding down quickly for the farm. Our fields are low and surrounded by the large berm, so we get frosts even when no one else does.

This is the beginning of an email sent out today from Greg Maslowe, the farm manager at our CSA program at the Newton Community Farm. I am struck by how truly local food can be. Greg starts by reminding us of the spring and summer rains (and rains) under which the first season floated into existence. He then reminds us of the micro-topography of the farm, at a low point in the surrounding landscape. Just like heat rises, cold air falls, which is why being at a low point, surrounded by rising slopes and a berm, the cold, frosty air falls into the farm fields and has nowhere else to roll down. This is a true microclimate laid bare.

Sometimes, environment is global, but it can also be really local.

The food from our CSA has been amazing this year. If you are have not considered enrolling in one before, I recommend you do so for next year.

Rejoicing with the Bike

All Synagogues share a yearly calendar for readings from the Torah (Five books of Moses: Genesis, Exodus, Leviticus, Numbers, Deuteronomy). Each week Jews in Synagogue read the same section from the Torah, and during the year we go from the beginning of the cycle "In the beginning God created heaven and earth." to the end "And there has not arisen a prophet since in Israel like unto Moses, whom the LORD knew face to face..."

Today was Simchat Torah (Rejoicing with the Torah), the last of the fall holidays in the Jewish calendar, which marks the end of one Torah reading cycle and the beginning of the next. We read the end of Deuteronomy and the beginning of Genesis. There is a lot of rejoicing (hence the name) with singing and dancing. This is reinforced with much wedding imagery. The Torah is often compared to the wedding contract between God and the Jewish people. The reading is conducted under a makeshift chuppah (wedding canopy), and the reader of the end of Deuteronomy is called the Chatan Torah (bridegroom of the Torah) and the reader of the start of Genesis is called the Chatan Bereshit (bridegroom of Genesis).

Simchat Torah is, by my count, the seventh holiday starting from Rosh Hashanah just three weeks ago. At most three of those can coincide with a Saturday (which happened this year), so we have at least four, and in other years up to seven, extra days in Synagogue. Even on a "light" year, with three overlapping Saturdays, this is lots of extra Synagogue time, and I know I am not the only one who finds this fairly exhausting.

However I was able to cap off this year's festival season this afternoon with a wonderful bike ride with my friend Hillel Bromberg. He led me on a 20 mile route out to Weston and back which was 80% overlapping with the route of the ride Jason Glasgow and I took last Monday. It was an afternoon ride, and so at the warmest time of the day, but at 60 degrees (F), about the same as last Monday at 8am. We had sun and clouds, lovely fall colors, and light traffic. I was about as out of breath at the Campion Center as I had been last week, and noticed that I really am stronger about an hour into the ride (or is it after the first hill, I still don't know). I am strongly aware that these rides are among the last I will get this year before the real cold sets in, and am grateful for each one ... Thanks, Hillel!

Furthermore, I am really enjoying extending my connections with friends by riding with them, which is structured yet relaxed, and has a route but not a goal. Venture Cycling has its rewards.


VC:VC Follow-on rounds

After receiving a venture capital investment, a young start-up will use the funds to grow and will either need further investment or will not. Very rarely, a young company becomes so profitable using just those first dollars, that it doesn't need any more funding to go on to a successful outcome. Alternatively, some young companies fail, and hence don't need any more investments.

The majority of companies which get a first round of financing do need more, called follow-on rounds, of financing. There are basically two distinctions we make regarding follow-on rounds.

First, is it an up-round or a down-round (or flat)? Second, is it an inside-round or an outside-round?

At the time of the first round of financing, the company sells shares to the VC firm(s) at an agreed price per share. If a follow-on (subsequent) round of financing involves selling shares below the first-round price, then it is a down round. Selling at the same price gives us a flat-round, and a higher price (best of all) is an up-round.

The whole purpose of VC funding is that the company uses the funds to add more value than the dollars that were added, and so if we achieve that purpose we always have up-rounds. Everytime we sell shares there is a dilution (more of the pie is given away), but if the share price more than makes up for it, everyone can feel good. Obviously we don't feel so good if it is a down round. The earlier investors have paid more for something that is now worth less. A flat round is generally a fudge to make people feel that "at least it wasn't a down round". However, if we invested several million dollars a year or two ago, and now the share price hasn't changed, we clearly have not made great use of the original money.

VCs will "protect" themselves from down rounds with what are called anti-dilution agreements, that allow them to claw back some shareholdings in those circumstances (at the expense of management and founders). This is based on the premise that management is responsible for running the company and responsible if it does not achieve its targets.

On the matter of inside vs outside rounds, the question is whether a new investor is "leading" the round. To lead a round of investing generally requires an investor to offer a significant amount of the funds and to offer a price. An outside up-round is what we all aim for. An outsider (not an existing investor) comes in, sizes up the company and the opportunity, and with no axe to grind offers their opinion as to the value of the company, and backs it up with several million dollars of their own money. Previous investors can boast that someone from the outside has validated the growth of the company and the value that has been created. It is all still on paper, since previous investors are not selling their own shares for the new cash ... rather the company is getting the new cash to fund the next round of growth.

An inside round is where existing investors take the lead, name the price, and invest the funds. No-one can say the round comes from disinterested investors. Perhaps the price was chosen to make the company seem more valuable than it really is, or perhaps to make it seem less valuable. There are situations when existing investors could desire either outcome. Sometimes investors are so excited about the promise of the company, they prefer not to let outsiders invest, and so keep more of the ownership themselves. Sometimes investors have no choice, if they believe there is any chance of success, or don't want to give up on the company (yet), and they have to do an inside round for lack of an outsider offering acceptable terms. There are lots of complicated possibilities, but this gives you the gist.

So how does venture cycling compare to venture capital in this regard?

The first round for me was the work up to the Hazon bike ride. The follow-on has been an inside up-round. I have been cycling on my own and with friends, and have enjoyed the benefits of the investment earlier: I am fitter, faster, more comfortable on my bike - but that is basically my own evaluation.

What about the next round? My venture cycling will not take me to Israel in May 2007 because in my venture capital life we will have our annual meeting at the same time. I certainly plan to be at the 2007 New York ride, and I see that will be the next "outside round" where disinterested parties can see how I have progressed (if at all). I wonder whether it will be an up-round or a down-round?

On the road to Damascus

My good friend Jason Glasgow took me up on an invitation to go out on a morning bike ride on Monday (Columbus day). The traffic was light, and we went from Newton Centre out to Weston almost to Lincoln and then came back on a parallel track, covering over 22 miles in all. Jason was a great guide ... Thanks, Jason!

It was a glorious, glorious morning. The air was fresh and crisp, the sun was shining and some of the roads had been recently repaved. What more could a venture cyclist ask for? Although I am not as fit or as young as Jason, I felt like I didn't hold him back too much (I hope to do something about one of those distinctions). Going uphill, I managed to keep up better on the second half of the trip ... I seem to warm up over the first 45 minutes or so (or perhaps after the first good climb). On the downhills, the extra weight and better aerodynamics of my recumbent meant that I was faster than Jason, with less pedalling on my part.

Jason saw my 5th gear problem first hand. Many seconds after shifting up into 5th, the chain would slip up and down, seemingly for no good reason. Oh, well, Wheelworks will keep trying.

As we completed the climb up one of the more challenging hills, we stopped in the driveway of the Campion Jesuit Center in Weston. I noted that some of the more colorful language a cyclist might use to describe how out-of-breath they feel right at that location could be considered a religious plea by a charitable Jesuit who overheard, or perhaps an epiphany.

I have no plans to cycle to Damascus.


Chain of Events

Still suffering somewhat in 5th gear, I have been conversing regularly with Scott at Wheelworks. He wondered if my gear changing technique was correct. I wonder that as well. The evidence that it is fine would be the fact that I only suffer these problems in one gear, not the other eight. He then wondered whether this happened in all of the chain rings (the front 3-gear cassette) or just one. I tested that question and found the same problems in 5th gear for each of the three chain rings.

A day or two later Scott called me and said he had woken up in the middle of the night thinking it might be the chain. I will be bringing my bike back in sometime soon to see if replacing the chain fixes the problem ... Ideally I will have Scott come out for a ride with me to see if he can observe the phenomenon in vivo.

In a second chain of events, Dorit's grandmother passed away earlier this week. Dorit and Hannah are, as I write, flying home from the funeral in Glasgow which was yesterday. Their trip to Glasgow meant that my business trip to New York was cancelled (so I could be around for Asher and Rina). This meant that I had the chance to get out for a bike ride yesterday in the beautiful fall weather, which would otherwise not have happened.

Of course, all this threw me off my blogging rhythm. If a blog post doesn't fall in the woods...?