Tim Marman's Loosely Coupled

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• Serial Entrepreneurs and High Valuations

  I wrote in the past that sometimes you can take too much money - doing so creates certain expectations for an exit that might not be achievable and limits your flexibility. In the context of the discussion last week, I think it's important to highlight that these economics are not always the fault of the venture capitalist. For example, Jason Calacanis said you should take as much money as you can get and Marc Andresseen said “ in general, [you should raise] as much as you can ”. Billions or Bust Another one of my favorite recent examples is Slide, founded by Max Levchin of PayPal fame. Slide recently raised $50M from T-Rowe Price and Fidelity - giving up 9% for a pre-money valuation of roughly $500M. Granted, T-Rowe Price and Fidelity probably aren't quite expecting the same kind of returns over the same time frame as a VC, but it still sets a ridiculous high floor for an exit. That is, in part, the plan. As Sarah Lacy put it , "Levchin, who co-founded and later sold PayPal... Posted Jun 09 2008, 09:06 AM by Tim with | with no comments Filed under: Web 2.0, Business, Entrepreneurship, Startup, Venture Capital, NextNY

• Distinguishing between a platform and a destination

  Charlie says that "the whole idea that you have a main site is dead". I couldn't agree more - I strongly believe that platforms are the future of the Internet. One clarification I'd like to make in this whole discussion is Facebook is both a destination and a platform. It's important to understand that these are discrete things - something can be a platform without being a destination and vice versa. Clearly, Facebook offers a nice API for integrating your code into theirs, but this to me is not what makes Facebook a platform. MySpace, iGoogle, and a plethora of Web 2.0 portals allow you to "embed" your code - Facebook just allows you to do it more seamlessly. If anything, these are all simply platforms - or rather, vehicles - for traffic. Of course, as Charlie and myself and countless others have said, traffic does not give you a business model. On the other hand, Facebook is getting flak for not being open enough with their data . As Fred says, being open... Posted Aug 21 2007, 06:15 AM by Tim with | with 2 comment(s) Filed under: Software Development, Web 2.0, Business, Blogging, Entrepreneurship, Startup, NextNY, Notches

• What's the best state to incorporate in? (Hint: Delaware)

  AskTheVC recently addressed the question of what was the best state of incorporation . The short answer is one of 3 preferred states: "Delaware, whatever state the company is in and whatever state(s) the VCs are located in." Obviously, the last is hard to determine if you're going to incorporate before you close financing. California is notoriously employee-friendly so it should be avoided. Some of those laws may still apply if you are based in California, but if you are elsewhere you should definitely assume those burdens. New York is also undesirable. It's fairly balanced when it comes to dealing with owners vs. employees, but the one big red flag is Section 630 of the NYS BCL. This section states that the top 10 shareholders are liable for employee wages if the company goes out of business and employees aren't paid. This statute does not apply to foreign companies (i.e., those incorporated in other states) even if they're doing business in New York. Considering... Posted Jul 23 2007, 05:53 AM by Tim with | with 6 comment(s) Filed under: Web 2.0, Business, Law, Entrepreneurship, Startup, Venture Capital, NextNY

• How is IP split between separating founders?

  AskTheVC addresses the question of what happens to IP rights when the founders go their separate ways . "Bottom line, you have a strong incentive (as does your former partner) to settle this amicably, otherwise, you both are going to be worse off." I thought it was worthwhile to dig into this a little further, though, and discuss what happens with the various IP rights a startup might acquire. Often you'll hear 3 founders say "we want everything split 3 ways", but joint ownership of IP can be tricky. Rights and duties with joint ownership are poorly misunderstood, even by many lawyers. More importantly, the rights and obligations of each owner vary by the type of intellectual property and from country to country. A joint owner of copyright in the US has different rights from a joint owner in England, and a joint owner of copyright has different rights from a joint owner of a patent. Both copyright and patent rights vest in the original author(s) or inventor(s) respectively, and both can... Posted Feb 12 2007, 06:47 PM by Tim with | with no comments Filed under: Intellectual Property, Copyright, Web 2.0, Patent, Business, Law, Entrepreneurship, Startup, NextNY