On March 13 I was off to the monthly Rockies Venture Club at Denver's Marriott City Center. (The hotel is being remodeled, so the atmosphere in the public areas leaves something to be desired, but the valet parking makes up for it.) Cocktails start at 5:15 PM, and even at that early hour the turnout is good. It's the dressiest crowd I've seen at any local networking event; virtually everyone wears a suit (including the relatively few women in attendance). http://www.rockiesventureclub.org
The first person I ran into was Jeff Jensen, CEO of Dealer Parts Online. We've chatted about blending old economy and new economy businesses. Then I spotted Ty Bohannon, chief strategy advisor for eBusiness Strategies, who graciously bought me my whiskey sour. We were joined by Lauren Stevens, the company's strategic relationship manager. Our conversation centered around local economic conditions. As an example of a company that is simultaneously laying off and hiring people, Ty cited Navidec, an ebusiness solutions and services provider with whom eBusiness Strategies is working in an advisory role to create a strategic business unit. It's more a matter of shifting priorities rather than an across-the-board cut.
Fredda Krinsky, president of Krinsky & Company, came over and suggested I meet Bud McGrath, business development director of the Recycling Development Incubator. He and I talked about the importance of alternative energy research to Colorado and how it is one of the areas targeted for budget cuts by President Bush. Later in the evening I met Richard Stuebi, president of NextWave Energy, a consulting company specializing in emerging electrical energy technologies. Alternative energy technology has, for the most part, been flying under the VC radar, but that may change. Colorado is well-positioned to benefit if it does. I wouldn't mind seeing a few eco-billionaires hanging out in Golden or Boulder. http://www.nextwave-energy.com
When it was time for us to go into dinner, I spotted Allan Roth and decided to join him. He's based on Colorado Springs, so we only see each other at events like this. A financial consultant, he is also serving as CFO for MedLogic, which makes SuperGlue-like products to seal up wounds and protect skin. Among the others at our table were David Hieb, CEO of NameWise, Liz Shields, account executive for co- location provider ViaWest, Jesse Young, a principal with Catalyst Partners Executive Services, an offshoot of the Colorado Springs-based VC firm, and Matthew Messter, CEO/president of eProbe, which develops online communities for outdoor recreation enthusiasts. Another tablemate, Andrew Spaulding, regional VP for Goleta National Bank, had an interesting comment. His bank hesitates to lend to companies growing faster than 25% a year because rapid growth combined with inexperienced managers is usually a prescription for failure.
The evening's program started off with an announcement that Lu Cordova, the new president of the Boulder Technology Incubator (and a recent Silicon Valley transplant who helped to start @Home), is forming a networking group for angel investors. This was followed by five-minute pitches from three companies: Digital Office Solutions, Sportsman's Lair, and R. G. Rincoe and Associates. We learned about leasing color copiers, hunting supplies, and bionic ankles. http://www.btionline.org
Then we moved into the main presentation, featuring execs from four local Inc. 500 companies: Joel Appel (president/CEO, Orange Glo), Tom Redder (VP, marketing, Cytomation), Scott Burt (president, Integro), and Greg Jacobsen (president/CEO, XOR).
Most of my notes involved XOR, a Boulder company which builds and runs websites. It was started in 1991 and then acquired in 1999 by RedShift, where Greg was CEO. His job was, as he put it, to "create wealth in a prescribed period of time." He provided a "layer of adult supervision" by hiring people he knew from his 25 years in business. The company then embarked on an aggressive growth plan, acquiring six firms.
RedShift/XOR raised $32 million and could have used more but was limited by the size of the VC fund. The plan was to do an IPO within twelve months. But before that was accomplished, the bottom fell out of the market and now neither public nor private money is friendly. The VC community is paralyzed. This rapid change of events illustrates the need for a flexible capital plan. XOR must continually adjust its capital strategy, as it did when it quickly shifted its attention from revenue growth to profitability.
The benefit of bringing in experienced management is historical perspective. They see the cycles and know how to hunker down and be patient. The challenge is finding ways for these corporate types to work together with 20-something employees. Getting the culture right for both groups is important. XOR has the foosball table, the dogs, the bikes, the climbing wall, the ski days. There's even a "beat-the-CEO day" where any employee who can out-race Greg on the slopes wins options.
Later, while we were both waiting for our cars, Greg mentioned to me that he had been a ski team member and skied competitively during his days at the University of Colorado. That certainly intrigued me and I wanted to find out more, but unfortunately my car arrived. Maybe another time.