Although it wasn't about sales leads, it was a huge success

As I mentioned a couple of weeks ago, for Albeo, Lightfair was not about sales leads. It was about our coming out as the only LED light fixture uniquely focused on the hardest problems in lighting: big, bright, efficient fixtures for industrial applications. From the perspective of showing the lighting world who we are and that we’re credible, it was a terrific show.

We had great press and analyst interaction. We had the best press kit in the press room, and appeared to go through more than anyone else. We participated in about press 12 interviews, which should generate 6 to 8 editorial pieces from now through September. I also had a terrific conversation with an LED lighting market analyst. Her firm published a large market analysis report in early 2007 which did not even mention the industrial market through 2012. I made the argument for the market opportunity and positioned Albeo as the one most able to serve that opportunity.

We had great investor engagement at the show. It was interesting to see so many venture capitalists walking the aisles of a lighting show. I'm sure it was the first visit to a lighting show for almost all of them. It was particularly valuable for Albeo to be able to encourage potential investors to visit all the other booths to see if they could find someone addressing a similar market need with the same set of capabilities.

We also connected with some strong reps in regions where we had no coverage (SoCal, New England). These new relationships are already paying dividends.

In summary, it was a successful opportunity to establish strong, clear corporate positioning with customers, competitors, and channels.

Having said all that, it wasn't a bad show for sales leads, either. Our booth was mobbed all three (exhausting) days. We came away with 200 to 300 leads, a mix of end users and potential channel partners, that we're currently going through and qualifying. We have found some valuable nuggets in there.

However, the most valuable aspect of Lightfair for Albeo may not have been raising awareness with customers, editors, channels, or investors, and may not have been generating sales leads, either. The most valuable aspect of this show was all about the team.

We're still a very small company, so putting together this kind of trade show presence, with all of the required products (several new products shown for the first time) and materials, was a huge undertaking for us. Every member of the company helped make this happen, and to have all their hard work pay off in such a big way helps to confirm the value of each individual's contribution. When they also saw how well we were received by the various audiences, it highlights that their continued efforts are likely going to help change the world in some way.

Did you miss me?

Yes, I'm back. As you can see, I haven't blogged for a year. I know my scores of readers have all put their lives on hold during my hiatus, and I deeply apologize for the resulting national economic slowdown.

So, let me explain why I disappeared for a year. As you know from several postings, I was working with Albeo Technologies when I disappeared, and I still am. However, I was doing so as a volunteer on my 'free time.' I had a day job the whole time, however, which happened to be in Colorado Springs, about 100 miles from my home in Boulder. Between Albeo, my day job, commuting, cycling, BSS and general parenting, blogging ultimately had to take a back seat.

Well, things have changed dramatically, and I am tremendously excited! First, my day employer sold the Colorado Springs division to another company, but retained my products. They requested that I relocate to California to work in the headquarters or at least work from my Boulder home. I decided against those options and agreed to a retention package through today, March 31. This set the stage for me to make a change.

As March 31 approached, another fortuitous thing happened. Albeo closed their first major funding round, which enables me, along with several others, to join full time and really hit the accelerator. I can now focus on executing for one company, rather than having such a schizophrenic work life.

In my next posts, I'll catch you up on other news and take a look forward at likely upcoming topics.

Thanks for sticking with me. I'm happy to be back.

The human capital VC

I was recently introduced to Brian Tsuchiya, the founder of FirstWheel Venture Group. FirstWheel is a unique venture firm that, rather than providing capital in the form of cash, helps you raise human capital, essentially employees that work only for equity (sometimes called angel employees).

While angel employees are pretty common in early startups, the FirstWheel model is much bigger. Brian developed this model for his own company, Walking Orbit, which hired almost 100 people working for equity only. These people were located around the world (I think they were mostly software developers), and he spent many dollars and hours assembling the legal, financial, and technical systems to implement the business.

The issues that Brian had to resolve are very complex. For example, if the equity is distributed based on the employees' ongoing contribution, then the IRS is going to view that as income and want to tax it, which is a big problem for employees. Also, the company's equity structure can become exceedingly complex with so many shareholders with dynamically changing ownership. The systems Brian had to put in place must have been very robust.

He has now taken these systems and started FirstWheel as a new alternative to a traditional venture firm. He was recently written about in the Denver Business Journal. I spoke with him on the phone the other day, and he mentioned that he's pursuing patents on some of the technology he developed, and that he has a 41-page contract that angel employees sign that defines their participation and compensation. More broadly, his intent is to help companies like ours to implement this model, rather than seeking cash only. In exchange, we would pay his firm fees and equity.

I haven't yet met with Brian, but am planning to do so within the next week or so. I'm not yet convinced that this makes sense, either overall or for SharedPlan.

For instance, we coincidentally met a woman who had worked as a project manager at Walking Orbit. Her comments on the model were pretty mixed. On the negative side, she said that some potential employees either balked at the 41-page contract, or at least were concerned enough about it to feel the need to pay an attorney to review it for them. She also described the challenge of trying to manage projects to completion when her human resources all had other jobs and were working on her stuff when they could. Their availability was never very predictable.

I'll be interested in learning more when I meet with Brian.

The need for a lead

I had been considering writing a post on some of the challenges we at SharedPlan have faced on the fundraising front. Specifically, we have worked hard to find a lead investor that 'gets' our segment and business model.

David Cohen has just written an inciteful post on the "emotional angel investor," which pretty much exactly describes who we have been looking for. Of course, it's easy to understand the process to find that person, it's another to execute ... and still drive the business forward.

Tech financing trends in Colorado

I recently posted that I went to a Rockies Venture Club meeting. The main event of the evening was a panel discussing the state of technology financing in Colorado. The panel included Seth Levine of Mobius Ventures, Gary Held of CTEK, and Alice Kotrlick, Colorado Office of Economic Development and International Trade.

I won't bore you with a synopsis of the evening, but the panelists made a couple of points that I thought were significant.

Seth spoke a little about the cost of starting a Web 2.0 company. Part of why he mentioned this is because I had just pitched SharedPlan as such a company. It has been a bit of a challenge to estimate how much cash we will actually need, so I was keenly interested in these comments. He first stated that enterprise software companies always require $25 million got get going; that's just what they cost. (Salesforce spent about $50 million before generating positive cash flow.) However, the social network dynamics of Web 2.0 let those companies have significantly smaller marketing budgets than traditional companies. Seth stated that these characteristics might mean that they need $8-10 million, rather than $25 million. Sharedplan has some social aspects, since we're building online project communities, but it's difficult to predict the benefits of communal viral activity on our cash flow.

Gary also made an interesting point. He started by describing the growth of organized angel investor groups like CTEK, stating that there are something like 90 of them nationwide now. But then he went into the funding success rates of those who pitch to these groups. Nationwide, the average less than 2%, and West Coast Angels, probably the best known of these groups, last year examined over 600 investment opportunities, but only funded 3. Gary was quite proud that CTEK funded 5% of the companies they saw in the last year. I find those numbers remarkably low. Are there really that many problematic startups out there, or is the process broken?

Picking up the crap

I recently attended a Rockies Venture Club monthly meeting, in part to pitch SharedPlan to potential investors. The event included four or five companies pitching for 5 minutes each, then featured a three-person panel to discuss angel and VC investing in Colorado. The panel made some very interesting points, which I will describe in a later post.

However, I wanted to highlight the most entertaining pitch I think I have ever seen. Actually, I haven't seen a lot of pitches, but I have seen an endless number of PowerPoint presentations, and this was one of the most fun.

I think the presenter's name was Barney (Barney, if you're reading this and I got that wrong, I apologize and please email me with a correction), and he was not a polished speaker. However, he spoke with true enthusiasm for his product, Crap-on, and that made all the difference.

Crap-on is a doggy waste bag that does not require the user to 'handle' the mess. I'm not a dog owner, but I have seen the procedure used all-too-infrequently on my own front lawn. The owner inverts a plastic bag on her hand, reaches down and picks up the poop, then pulls the bag back over the pile and ties a knot in it. All fine, except for that unpleasant picking-up-the-poop part.

That's the problem that Crap-on is solving. Crap-on is a bag that holds a circular shape so that, when the dog "assumes the position" (Barney's term), the owner quickly places the bag on the ground in the target zone. Even better, the bottom of the bags have pictures of squirrels, cats, or other animals that drive dogs crazy, right in the bottom center. I guess the dog is supposed to derive particular pleasure by pooping on his nemesis. The owner then grabs the Crap-on by the draw-tie handles and is good to go.

I loved this pitch! I have been in technology my entire adult life, and I have very little exposure outside of this world, so when I see a product idea like Crap-on, presented with such fervor by a true believer, I find it tremendously refreshing. I have no idea if Barney will be successful, but I'm certainly rooting for him. His website, as I remember it, was www.crap-on.com, although it doesn't appear to be up yet. If any of you see it, please support Barney.