Thursday, July 05, 2001

The Cyber Scene in Denver ~ by Suzanne Lainson

With the Fourth of July falling right in the middle of last week, no one scheduled any tech events. That left ample time to take in some music and I ran into others doing the same. On July 5, while at the Boulder Theater hearing Wendy Woo ( open for Karla Bonoff, I ran into Brian Nevin, drummer for Big Head Todd and the Monsters ( After saying hi to Wendy, he was headed over to the Fox Theater to hear Blues Traveler (they had already done Red Rocks the night before). Another person at the Bonoff/Woo concert was John Robinson of design/ad firm ProMotif (

On July 6, the blues band Tempa and the Tantrums ( were in Boulder playing to a full house at En Vie. At their show I ran into Jim Primock, vice president of the Colorado Blues Society (, who is a big fan, as am I. About Tempa he has written, "She has character and expression like I've heard only in singers like Lannie Garrett and Koko Taylor." (Taylor, being, of course, the queen of Chicago blues.) I'd describe Tempa's voice as sultry and her range extends to blues, jazz, R&B, and cajun. She and her band can hold their own in environments as diverse as biker bars, blues festivals and jazz clubs.

Over the weekend, there was the Cherry Creek Arts Festival, featuring three days of live music. Wendy and her band were at that event so I stopped by and ran into Steve Swoboda of Ereo and Alex Teitz of ( Then on July 10 Jen Hofmeister, of LH3 ( which does PR for the Denver Film Society (, invited everyone to head to Red Rocks to hear Opie Gone Bad ( and see the largest public showing ever of The Rocky Horror Picture Show. I didn't make it, but she told me that more than 2,500 braved the rainy weather that eventually cleared and left. As Jen noted, the "witching weather" was perfect for the movie. The event featured four different Rocky Horror Picture Show casts, which she described as amazing! "They performed perfectly in sync with the movie. They sold little packets of rice and bread and other Rocky Horror accoutrements. Various cast members walked through the crowd shouting out call back lines. The crowd was very into it. Nobody left early." Then she added, "It was a true cinematic experience, complete with retro 'snack bar' advertising and a Woody Woodpecker cartoon." I've already got tickets for the next Film on the Rocks, July 16, which features blues singer Nina Storey ( (whom I would describe as Aretha Franklin on overdrive) and From Hear to Eternity. Five bucks. Such a deal.

July 10 was also the night that the Rockies Venture Club ( had its monthly meeting in Denver and the Rocky Mountain Internet Users Group ( and the Colorado Internet Keiretsu ( held a combined meeting at the National Center for Atmospheric Research, which sits atop Table Mesa Road and offers a spectacular view of Boulder. Sponsor MicroStaff ( provided the pizza and let it be known that while there are fewer jobs, they are still placing people in them. Among those mingling were Dan Murray of Persona (, Scott Price of CustomerCentrix (, and Stacey Alexander of FourThought ( Dan Lubar of dataDistributions talked about his book on wireless text messaging and that various magazine editors were calling expressing interest. Carl Kalin of The Jedi Group ( mentioned he had extra tickets to the Dave Matthews concert (more about that next week).

The topic of the meeting was "Internet Startups - the Next Generation."  First up was Daniel Feld, executive director of SOFTBANK's Hotbank Incubator ( He gave an overview of SOFTBANK ($2.5 billion under management with a portfolio of more than 160 companies) and said that Internet technology companies, including infrastructure, messaging and communication and services were its investment focus. So far SBVC has invested $130 million in Colorado with sixteen portfolio companies, five of which are in Hotbank. The incubator exists, he noted, to provide value-added services for SOFTBANK's existing investments, not to give birth to SOFTBANK-conceived companies. He said the bad news in today's market is that it is a lousy time to find financing, it is nearly impossible to get the attention of VCs (who are focusing on existing investments rather than new ones), valuations have contracted tremendously, and no one has any idea when or where the bottom will be. The good news is that shaky firms are being weeded out, the build-to-flip entrepreneurs are fleeing and the good entrepreneurs are staying, and start-up valuations are more reasonable, which works in favor of VCs. The focus is returning to long-term investments with a 5-to-7 year lifecycle. Companies are again being judged on value-based metrics such as revenue and profitability.

Next came Eric Kirby, CEO of Veripost (, an email change-of-address company that resides at Hotbank. He compared and contrasted his experiences with an Internet start-up during the peak,, with a company started after the decline, Veripost. got VC money to sell posters online. One of the products the company developed was Image Catcher, which offered free screensavers. Within six months there were more than two million registered users. Excite acquired the company for $75 million in stock and transfer of debt. Veripost was started in May 2000. Among the changes he has seen in the business environment:
1. Early mover advantage.
2. Spend whatever it takes.
3. Expensive marketing deals, rapid growth, large office spaces.
4. Eyeballs have value.
5. Speed is important.
6. Internet companies are different. It's a new economy.
7. When are you going to do an IPO? When the paperwork is filed.
1. Grow cautiously.
2. Make the money last.
3. Targeted marketing, controlled growth.
4. Solving problems has value.
5. Focus on products and services.
6. Internet companies are companies. The old rules still apply.
7. When are you going to do an IPO? We want sustainable revenue and cash flow first.
David Jilk, CEO of Wideforce (, created the concept for this remote workforce and workflow management company during his recent tenure as a development officer for SOFTBANK Venture Capital. Among his points:
    Being an investor had been fun but required the ability to do a lot of parallel processing.
    He used to participate in "pitch day" where entrepreneurs could come in and make presentations. It was very easy to see which companies made sense and it was usually apparent within 30 to 60 seconds.
    SOFTBANK is more interested in investing in people than business plans. Different VCs have different interests; entrepreneurs should take that into account. SOFTBANK, for example, has a strong interest in and knowledge of email services and technologies.
    At some level VCs are similar to day-traders. The purpose of a venture fund is to invest, make the investment successful, and then sell. VCs are like lemmings and now many of them have what one described as a "stinking mountain of shit to clean up." In 2000 entrepreneurs were realizing in the spring that the market collapsed. The VCs didn't realize it until fall. The limited partners are just waking up to that fact now.
    Angel investors are fleeing. Last year they were talking about making money on all their investments and now they are hoping to get their money out of at least one. The way for new entrepreneurs to survive is to bootstrap. Have a day job and start your new company on the side.
    As for running a company, the down times make it possible to find Java engineers to hire and to find office space.

At the event I ran into David Hieb, whose big news was that his company, Namewise  (, has just done its hard launch. Considering the fact that there are 10 million business names already registered in the U.S., and 16 million Internet domain names already taken, finding something new and different can be a daunting task. (Just ask some of those companies which have had to rename themselves after finding out they didn't have legal claim to the names they were already using.) Currently Namewise offers a brainstorming tool and a domain tool and, when the full roll out is completed, will consist of five integrated naming tools, including two for generating new names, one for market-testing name effectiveness, and two for securing domains and trademark rights. In many respects Namewise is a full service branding company. Experts, for example, are available to help in the name development process. One of those experts is co-founder Stacey Schuham, whose company, Word for Word, has a long track record developing corporate names, including Circadence, Solista, Nike InnerActives, SmartPoint, and Namewise is offering a nifty package deal of 100 strategic name candidates in three business days for a fee of $950, considerably less and done much more quickly than what is available from other naming services.

And finally I also ran into Grassroots Initiative ( organizer Larry Nelson who told me about a gathering the next night of high tech bigwigs talking about the environment. That report will be in next week's column.