Gumption

Richie Hazlewood joins Strands Labs Seattle for the summer

Richie Hazlewood arrived a few weeks ago from the School of Informatics at Indiana University to work with us on our next generation proactive display applications this summer. Richie has been working with Yvonne Rogers, Kay Connelly and others at Indiana on a variety of interesting and relevant projects involving ambient information displays, data mining, information visualization, and using handheld devices for collaborating with people and interacting with physical artifacts.

Most recently - and relevantly - he has been working on Twitterspaces, an ambient display application that offers a dynamic visualization of "tweets" posted by the Informatics group - though it can be easily customized for any group - on Twitter. Tweets, and thumbnail images of their authors, scroll horizontally, and the vertical access represents hours of the day. I'm including a screenshot to the right (a real-time view can be found by clicking on the image).

In addition to his own work, he is co-organizing the Second Workshop on Ambient Information Systems (which is still accepting submissions thru July 11) to be held at UbiComp 2008 - he was also a co-organizer of the First Ambient Information Systems Workshop at Pervasive 2007 - and [thus] brings a broad range of awareness and interactions about designing and using ambient displays to promote awareness and interactions.

We're delighted to welcome Richie, who helps fill key gaps in the team - and team space - as we move forward on our new applications, about which I'll write more in the near future. Meanwhile, I'll include a couple of recent photos of our space, after Richie's arrival.

New Faces at Strands Labs Seattle

Yogi and I have recently been joined by some wonderful new people at Strands Labs Seattle, and our new office space has some new surfaces that make it increasingly habitable.

Sameer Ahuja, a graduate student intern from Virginia Tech, arrived May 12, and will be spending the summer with us. Sameer has been working with the Digital Government Research Group under Dr. Manuel A. Pérez-Quiñones and Dr. Andrea Kavanaugh, where they have been researching and developing social software, visualization tools, and content aggregation tools with the purpose of enhancing citizen awareness and promoting greater participation. We are delighted to have him participate in our efforts to research and develop new tools for enhancing awareness and promoting interactions in other contexts.

Shelly Farnham, co-founder and Social Architect at Waggle Labs, joined us as a part-time consultant on May 15. Shelly brings a wealth of experience in prototyping, deploying and evaluating social technologies designed to enhance communication, community, social networks, identity, knowledge sharing, and social coordination. Before co-founding Waggle Labs, Shelly was a Researcher with the Social Computing, Community Technologies, and Virtual Worlds Groups at Microsoft Research. She is also an accomplished artist. I've known Shelly - and admired her work - for over 5 years now, and I'm thrilled to have an opportunity to work directly with her.

Frank Kemery, principal at PPM Wireless, LLC, also joined us as a part-time consultant on May 15. Frank brings deep and broad expertise in identifying new market opportunities, strategic planning, business development, alliance building, product planning, development and management in startup and mature environments. Earlier chapters of his career include senior positions at Real Networks, InfoSpace, and Activate (which was acquired by Loudeye (which was acquired by Nokia)). Frank is our point man in addressing one of the principles outlined in our innovation manifesto for Strands Labs Seattle: aligning innovative social technologies with viable business models.

In addition to the new people faces, the lab itself also has a new face. The front area, facing University Way, has fresh paint, new carpeting and a new deck overlooking "the Ave". We are still sitting at temporary folding tables, using chairs that will eventually be moved to a conference room, and using 8' x 4' laminated melamine boards propped up against the walls as temporary whiteboards. The main thing, though, is that we have a nice open area with big windows with lots of light ... an increasingly conducive space in which our growing team can effectively collaborate on designing and developing new social technologies that bridge the gap between people - and the places we inhabit - by bridging the gaps between our online life streams and the physical spaces we share with others.

[BTW, speaking of life streams, Strands has a new feed (or lifestream) aggregator in private beta that will likely play a significant role in our projects in Seattle. I'll write more about that once it is publicly available. Meanwhile, as with nearly all major developments in our company, more information can be found on our corporate blog; ReadWriteWeb also has a review ... and a private beta invitation code to give away.]

Yogi Patel joins MyStrands Labs, Seattle, as Innovationeer

I'm delighted to announce that Yogi Patel has joined MyStrands Labs, Seattle, as Innovationeer! Yogi's arrival doubles the size - and probably quadruples the productive capacity - of our new innovation team. He brings 5 years of development and program management experience, most recently in the area of wearable computing, contributing to the U.S. Army's Land Warrior system. As an example of walking the talk, Yogi was actually a land warrior himself - an infantryman (rifle and anti-tank leader) with the U.S. Army. In addition to his talents with non-traditional designs and deployments of technology, Yogi brings a passion for social media and using technology to help people connect in new ways. He has also inspired - or perhaps inadvertently instigated - two recent blog posts, on The Paradox of Choice and Dark Nights of the Soul.

I met Yogi during a guest lecture on proactive displays I gave at Ankur Teredesai's class on Social Networks at University of Washington, Tacoma, in February. I was immediately impressed with his curiosity and knowledge of both the social and technological issues involved in some of the proactive display applications I presented ... insights that would typically only arise through actually working on such systems. We continued the conversation after class, and I found myself thinking how great it would be for him to be actually working on such systems (with me) ... and I'm really happy we are now continuing the conversation into our planning for the next generation of proactive displays.

We discussed a number of prospective titles (as a self-titled principal instigator, I enjoy interesting titles). Yogi's official title is Innovation Engineer, but we both rather like the mashed up version of Innovationeer.

As I'd noted in my initial announcement of the new lab, I'm hoping to avoid writing job descriptions, but from our planning so far, it's clear that we will need one or more people with keen design skills who can help engineer ambient but engaging user interfaces for our new proactive display applications. We welcome opportunities to expand the conversation with other talented and passionate parties!

Everyone's a Nerd About Something: The Network Effects of Social Mobile Media

Marc Davis, Social Media Guru at Yahoo!, gave a far ranging presentation on "Mobile Media: Connecting Context, Content and Community" at the Stanford Mobile Computing Seminar this week. Marc started out highlighting the imbalance between the proportion of people who currently consume and produce text and consume other types of digital media (music, photos, videos), and those who produce non-text digital media. and claimed that one of the core problems behind this imbalance is the relatively ineffective provisioning of metadata for these richer types of digital media (in comparison to text). Marc went on to present a series of research projects -- and products -- that use context and community to help fill in some of the gaps for this often missing content.

Marc posited the "4 W's" of social media metadata -- where, when, who, what -- and claimed that knowing 3 of them gives you a pretty good idea on the 4th. He presented results from experiments showing that using contextual information alone (where, when, who) can outperform deeper content-based computer vision techniques for analyzing images. [Links to papers he and his colleagues have published on much of the work he talked about are available on Marc's web site.]

Marc observed that with respect to the predictability of human behavior, the two ends of the spectrum might be denoted "prisoner" and "lunatic" ... and sugested that most people -- or at least those who work for a living or go to school -- tend to dwell closer to the "prisoner" end of that spectrum with respect to the periodicity of their patterns.

Another observation, giving rise to the title of this post, was that everyone is a nerd about something, i.e., everyone has at least one thing about which they are passionate and knowledgable. Thus, even though only a small segment of the population may be cameraphone nerds -- having the latest technology such as mobile cameraphones with Bluetooth and GPS, and/or manually specifying meticulous tags for their photos -- the actions of such people can be pooled with larger communities to enable others to benefit. This exemplifies a theme Marc mentioned several times during the seminar -- [with respect to [mobile] digital media], stop thinking so much about individual users and start thinking more about the network -- and brings to mind a variation on one of my favorite quotes (by Margaret Mead):

Never doubt that a small group of thoughtful, committed nerds can tag the world.

Toward the end, Marc showed a great slide depicting the four quadrants of media and metadata, distinguishing producers and consumers of media on one axis, and the creation of implicit and explicit metadata on the other, with some suggestions about how the interactions among these groups may, in fact, change the digital media world. [If I can get a copy, I'll post it here.]

Johathan Keats on Art, Science and Religion

Jonathan Keats gave a curiously engaging presentation on "Extraterrestrial Aesthetics, Divine Genetics, and Other Thought Experiments" at the Art, Technology and Culture Colloquium of UC Berkeley's Center for New Media Monday night. Jonathan noted that both art and science are too inwardly focused, so he uses art to tease out nuances in science, and science to tease out nuances in art, with a style of conceptual art that was introduced as a "purposeful rejection of pragmatism."

Among the projects he covered was the quest to pass a law that couldn't be broken (collecting petition signatures in Berkeley for Aristotle's law of identity), the creation of a futures market for neurons in his brain (a new type of brain trust), the founding of the International Association for Divine Taxonomy (an attempt to genetically engineer God) and the buying and selling of real estate in the extradimensionalities identified through string theory.

Jonathan has raised some interesting questions in each of the projects he has undertaken. What I found most interesting, though, were the more general insights Jonathan shared about art, science and religion. His observation that art is interesting for its ambiguity, its open-endedness and the questions it raises contrasts with the goals of science, which are more focused on certainty, decisiveness and the questions it answers.

These distinctions reminded me of themes raised by James Carse in his book Finite and Infinite Games: A Vision of Life as Play and Possibility, in which the author notes that

A finite game is played for the purpose of winning, an infinite game for the purpose of continiuing the play ... Finite players play within boundaries, infinite players play with boundaries ... Finite players are serious; infinite players are playful.

At first, I pondered how science might be considered a finite game, and art might be considered an infinite game. But upon further reflection, this distinction breaks down. While much of science might be described as incremental -- filling in the details within boundaries (previously defined by other scientists) -- some scientific advances represent paradigm shifts where boundaries are shifted in signficant ways. And although the many notable works of art also stretch boundaries, I believe that much art is rather incremental as well.

Curiosity is a trait that Jonathan emphasized several times during his talk, a trait that is shared by both artists and scientists. The differences may lie more in the way that curiosity is channeled, and in the perspectives that people adopt in facing the unknown(s).

Jonathan's observations about openness and embrace of ambiguity suggest that the distinctions are largely attitudinal -- how one goes about creating art or science ... or religion, which seems much more closely aligned with science, and its quest for certainty, decisiveness and answering questions, differing primarily on what constitutes a basis for declaring victory ... the kind of declaration that is absent from art and other infinite games.

Love is the Killer App, Blogs are the Killer Platform

Tim Sanders, author of the book Love is the Killer App: How to Win Business and Influence Friends, has a new blog, Sanders Says.  I was reminded of Tim's lovecat way (or what I call bizlove) several times while reading the book I just finished (and blogged about), Naked Conversations: How Blogs are Changing the Way Businesses Talk with Customers, by Robert Scoble and Shel Israel.  Tim's lovecat way espouses sharing your knowledge, your network and your compassion freely with all of your bizpartners.  The priming effects of Naked Conversations together with the announcement of Tim's blog got me to thinking (and now blogging) about the prospect of blogs being the ideal platform for sharing the love, whether for business or non-business purposes ... what I might call BlogLove.

The passages that really jumped out at me were during the chapter on Survival of the Publicists, in which Robert and Shel are are talking about Steve Rubel, who champions blogs as [authentic] public relations tools.  They report on how Steve helps his PR clients adopt a listen and participate (vs. command and control) model of public relations -- and, I would argue, demonstrates the lovecat way:

Instead of positioning himself as a gatekeeper in the middle of the conversation, Rubel connected the parties directly to each other [through the client''s blog] and then stepped back to let them talk on their own.

This beautifully illustrates the approach to networking that Tim espouses in his book: collecting [contacts], connecting and disappearing. 

A little later, Steve provides one of the most inspiring quotes in the book:

Blogging is the best connection tool ever invented.

Indeed, blogs provide fabulous features to enhance connections ... and share love. 

For example, blog authors can create links to people, places and things they reference in their posts (Robert and Shel's Tip #9 in the section on "Doing it Right" is "Be Linky").  Referencing someone is a form of showing appreciation or love ... perhaps tough love in the case of a post that is critical of the referee -- reference need not imply reverence.  At the very least, taking the time to create a link demonstrates that the author cares about the object being referenced.

Blogrolls represent more enduring links to other people, places and things, both in their technical implementation -- they typically exist in a sidebar, and so are visible outside of any specfic blog post -- and their social interpretation -- they typically imply that the blog author(s) derives inspiration, or at least information, from the referees.  Thus, blogrolls bestow an enhanced level of appreciation and love beyond links in individual posts.

Comments are another common connection feature in blogs (Tip #6: "Add Comments"), which enables the audience to participate in a conversation with the author(s) -- I was going to say they enable "readers" to participate in conversation with the "writers", but in a blog that enables comments, anyone can be a reader or a writer (or both).  By enabling comments, bloggers are showing openness and vulnerability, and by writing comments, the audience is offered an opportunity to demonstrate their appreciation and love (though again, it may be "tough love").  And when a blog author adds a comment, he or she is demonstrating an additional level of appreciation and love by engaging in conversation with the audience.

Unfortunately, some blogs exhibit vestiges of a command-and-control mindset, by disabling HTML in comments, constraining the voices of the audience, who are not able to embellish their comments with italics or bold, or [gracefully] refer to other people, places and things (via HREF links) -- or by moderating comments -- requiring every comment to be manually approved by the author(s), which can delay the appearance of comments, thus diminishing the conversational aspect (to me, comment moderation says: "I'll get around to you when I damn well please").  Some blogs only moderate comments that have HTML.  In any case, whenever I see these kinds of limitations imposed, I have to ask "Where is the love?".

I recognize that some blog tools include these "protections" as default settings, but as Robert and Shel point out in several places in their book, blogging is all about taking risks, playing the edge, and overcoming fear, uncertainty and doubts.  For what it's worth, whenever I've taken the time to post a comment, and the blog strips out my HTML and/or tells me "your comment is awaiting approval", I rarely post another comment on that blog ... and [thus] am much less likely to return to read the blog.

So, why am I ranting about these protections?  Because while Tim Sanders writes about the lovecat way -- and I believe he believes in the lovecat way -- he is not demonstrating the lovecat way through his blog.  As in his book, which is a one-way communication medium, he is writing about his knowledge, network and compassion through his blog posts.  However, by disabling HTML in his comments, and [see below] not taking the time to respond to any comments posted by his audience, I don't believe he is walking the talk as effectively as he might.  This could simply be due to his unfamiliarity with this new medium, or it could be due to his history as an author and a speaker (primarily one-way media).  However, Kathy Sierra's Creating Passionate Users blog provides a bright shining example of someone who is an author and a speaker and a fully engaged conversant on an inspiring blog.  I feel a sense of love in all of Kathy's posts and comments ... and want to feel -- not just read about -- more of that love through Tim's blog.

I wrote a comment on Tim's first blog post, entreating him to more fully engage the blogosphere in demonstrating the lovecat way through his blog.  However, I don't know if he is even reading his comments (since he has not replied to any on his blog).  Emboldened by the examples of "open letters" in blogs shared by Robert and Shel in their book, I decided to emulate that in my own blog.  Even if Tim never reads (or responds to) this posrt, perhaps it will encourage other bloggers to think about how much they are opening up to the love and appreciation available through the blogoshere.

[Update: Oops!  I just noticed that a more recent comment on Tim's first post does have embedded HTML, and verified through a new comment on a more recent post that HREF links work.  So, perhaps Tim is reading his comments ... but I see that Gene Becker has still not approved a comment I attempted to make on one of his blog posts over a week ago ... ironically, my comment included a reference to the David Crosby song "Music is Love".]

Revolution: the Business and Brand of Sustainability?

The Seattle Times recently ran a Washington Post article on how Steve Case pushes symbiotic relationship of business principles, green ideas.  This was particularly interersting to me, given that a few days earlier, Case's new company, Revolution, LLC, had flexed its muscles to grow Flexcar, whose [now] former CEO, Lance Ayrault, had shared some of his insights into and experiences with social entrepreneurship at a Northwest Entrepreneur Network breakfast a few days before that.  During the Q&A session at the NWEN breakfast, Lance had noted the delicate balance of being a small (and growing) business with a majority stakeholder (Case / Revolution) with an entirely different sense of scale ... and, from the announcement, it looks like that balance may be shifting.

According to the Post article, Case, and his CEO, Michael Crooke, want to position Revolution as a meta-brand of environmentally friendly but mainstream products and services, targeting consumers who value "lifestyles of health and sustainability."  However, the company web site describing what Revolution is about focuses on control and convenience, with no mention of the environment or [planetary] sustainability.  While the article quotes Case as saying that he wants to avoid any product or service that is "too fringy", the web page states "We don't play it safe - we play to win".  One of the investments that Revolution has made is in Gaiam, "a provider of information, goods and services to customers who value the environment, a sustainable economy, healthy lifestyles, alternative healthcare and personal development" whose founder reportedly lives in a shack without running water; another is Miraval Resort, an exclusive "destination for body, mind and spirit", which appears to be at the opposite end of the housing spectrum from a shack ... and very distant from the dramatic stories of social entrepreneurship highlighted in the PBS series The New Heroes.

It will be interesting to see whether and how Case, Crooke, et al., can bridge the gaps between the ecology and the economy, and between alternative lifestyles and mainstream business.  I'm reminded of "The Tough Choice", a great essay by David Batsone in the March 2005 issue of Worthwhile Magazine, in which he reviews the tradeoffs between profitability and conscience faced by a number of founders of socially responsible businesses, with segments on each of the following:

• Gary Hirschberg, "CE-Yo" of Stonyfield Farm, now majority owned by Groupe Danone: "Looking at the Big Picture"
• Ben Cohen, co-founder of Ben & Jerry's, now majority owned by Unilever: "The Soul Has Been Lost"
• Gary Erickson, founder of Clif Bar, who rejected a bid from Quaker Oats to buy the company: "Clinging to Independence"
• Greg Steltenpohl, co-founder of Odwalla, who was forced out when the Odwalla board sold the company to Coca-Cola: "The New Gospel"

In each case where an [initially] socially responsible company chose a path of "growth" -- several of which are also covered (and available online) in an article on "To Drink or Not to Drink?" by Brooking Gatewood in The Dartmouth Green Magazine -- the price paid for growth was a diminishment of the commitment to social responsibility that motivated the founders.  It will be interesting to see what happens in this Case ... and whether the eco-friendly brand sought by Revolution is achievable ... and sustainable.

Chaordic Leadership Principles

In anticipation of the possibility that week's Seattle Times article about Interrelativity might generate increased interest in the company, I updated our web site ... including my curriculum vitae (CV, aka resumé), both the short and long versions.  I decided to include a section in the latter document about my approach to leadership, which I have assembled by consciously and unconsciously adopting the best practices, and avoiding the worst practices, of the leadership I have subjected myself to over the years ... much as I believe my approach to parenting and teaching have evolved (which, I suppose, are simply instances of leadership).

My approach to team building is to bring together people with complementary skills, experiences and perspectives, who share a strong passion and aspiration toward a common goal, provide them with as many resources and as few constraints as possible, and essentially stay out of their way as they engage their creative energies in innovative ways that maximize the positive impact of the entire team.

As I mentioned in my recent post on Intelligence, Advice, Investment and Politics, I remember being inspired by a quote from Dee Hock, the founder of Visa International and co-founder of the Interra Project, that I read about in Guy Kawasaki's book, The Art of the Start:

It is essential to employ, trust, and reward those whose perspective, ability, and judgment are radically different from yours. It is also rare, for it requires uncommon humility, tolerance, and wisdom.

Googling around for the context of this quote led me to an article on The Art of Chaordic Leadership written by Dee in Leader to Leader, 15 (Winter 2000): 20-26.  This is one of the most powerful, succinct and sensible descriptions of how to lead I've ever seen ... and I was happy to see that the approach that I thought I've been making up as I go along had some firmer ground on which to stand.  As with my recent post on entrepreneurial proverbs, I won't go into a more full analysis here, but simply note the bullet points in the summary from the original article:

On Chaordic Leadership

Many convictions about leadership have served me well over the years. Although each of these few examples could benefit from pages of explication, a few words may provide insight to chaordic leadership.

• Power: True power is never used. If you use power, you never really had it.
• Human Relations: First, last, and only principle -- when dealing with subordinates, repeat silently to yourself, "You are as great to you as I am to me, therefore, we are equal." When dealing with superiors, repeat silently to yourself, "I am as great to me as you are to you, therefore we are equal."
• Criticism: Active critics are a great asset. Without the slightest expenditure of time or effort, we have our weakness and error made apparent and alternatives proposed. We need only listen carefully, dismiss that which arises from ignorance, ignore that which arises from envy or malice, and embrace that which has merit.
• Compensation: Money motivates neither the best people, nor the best in people. It can rent the body and influence the mind but it cannot touch the heart or move the spirit; that is reserved for belief, principle, and ethics.
• Ego, Envy, Avarice, and Ambition: Four beasts that inevitably devour their keeper. Harbor them at your peril, for although you expect to ride on their back, you will end up in their belly.
• Position: Subordinates may owe a measure of obedience by virtue of your position, but they owe no respect save that which you earn by your daily conduct. Without their respect, your authority is destructive.
• Mistakes: Toothless little things, providing you can recognize them, admit them, correct them, learn from them, and rise above them. If not, they grow fangs and strike.
• Accomplishment: Never confuse activity with productivity. It is not what goes in your end of the pipe that matters, but what comes out the other end. Everything but intense thought, judgment, and action is infected to some degree with meaningless activity. Think! Judge! Act! Free others to do the same!
• Hiring: Never hire or promote in your own image. It is foolish to replicate your strength. It is stupid to replicate your weakness. Employ, trust, and reward those whose perspective, ability and judgment are radically different from your own and recognize that it requires uncommon humility, tolerance, and wisdom.
• Creativity: The problem is never how to get new, innovative thoughts into your mind, but how to get old ones out. Every mind is a building filled with archaic furniture. Clean out a corner of your mind and creativity will instantly fill it.
• Listening: While you can learn much by listening carefully to what people say, a great deal more is revealed by what they do not say. Listen as carefully to silence as to sound.
• Judgment: Judgment is a muscle of the mind developed by use. You lose nothing by trusting it. If you trust it and it is bad, you will know quickly and can improve it. If you trust it and it is consistently good, you will succeed, and the sooner the better. If it is consistently good and you don't trust it, you will become the saddest of all creatures; one who could have succeeded but followed the poor judgment of others to failure.
• Leadership: Lead yourself, lead your superiors, lead your peers and free your people to do the same. All else is trivia.

Virtues, Goals, Plans and Aspirations

I recently wrote about goal-free living,  and the value of non-attachment to outcomes ... and in a subsequent comment, how this might apply to plans.  Shortly after making the original post, I read about Benjamin Franklin's 13-point "plan" (via BoingBoing), through which he achieved great happiness throughout his 79-year life. He maintained a weekly chart for how well he adhered to the 13 virtues ... which suggests [to me] a certain amount of attachment.  This reminds me that I only read halfway through Walter Isaakson's book, Benjamin Franklin: Am American Life, before it got submerged under other books ... including Stephen Shapiro's book, Goal-Free Living.  I suspect these two books may offer very different perspectives on the topics of setting and achieving goals.

In any event, here is his plan ... or goals ... or aspirations:

1. Temperance: Eat not to dullness and drink not to elevation.

2. Silence: Speak not but what may benefit others or yourself. Avoid trifling conversation.

3. Order: Let all your things have their places. Let each part of your business have its time.

4. Resolution: Resolve to perform what you ought. Perform without fail what you resolve.

5. Frugality: Make no expense but to do good to others or yourself: i.e. Waste nothing.

6. Industry: Lose no time. Be always employed in something useful. Cut off all unnecessary actions.

7. Sincerity: Use no hurtful deceit. Think innocently and justly; and, if you speak, speak accordingly.

8. Justice: Wrong none, by doing injuries or omitting the benefits that are your duty.

9. Moderation: Avoid extremes. Forebear resenting injuries so much as you think they deserve.

10. Cleanliness: Tolerate no uncleanness in body, clothes or habitation.

11. Chastity: Rarely use venery but for health or offspring; Never to dullness, weakness, or the injury of your own or another's peace or reputation.

12. Tranquility: Be not disturbed at trifles, or at accidents common or unavoidable.

13. Humility: Imitate Jesus and Socrates.

[The title of this post is intended as a riff on Schank and Abelson's book, Scripts, Goals, Plans and Understanding ... which was one of the first books I read about artificial intelligence ... Franklin's plan might be a regarded as a recipe for emotional intelligence ... which may be something noted in Daniel Goleman's book on Emotional Intelligence ... which is even further down in my book stack.]

Working with Angel Investors: It's the Relationship, Stupid!

Susan Preston, Of Counsel at Davis, Wright, Tremaine, LLP, and Entrepreneur-in-Residence at the Ewing Marion Kauffman Foundation, shared her insights and experiences on how entrepreneurs can build and maintain successful relationships with angel investors at yesterday's Northwest Entrepreneur Network Venture Breakfast.

Sue started out by presenting a number of statistics on angel and venture capital investments over the past few years.  In 2004, venture capital groups made 2,800 investments totalling approximately $21B; the trend for VC investments appears to be fewer, larger, later (= safer?).  In contrast, there were a total of 48,000 angel deals for a total of $22.5B in 2004.  She estimates that there are 225,000 active angel investors right now, which represents a tiny fraction (perhaps 1 / 7) of the total number of accredited individuals (with financial means and sophistication as well as risk tolerance) who are potential angel investors.  Angels tend to invest between $25K - 500K, with an expectation of return on investment on the order of 5 - 7 years.  A typical angel investment round for a company may bring in somewhere on the average of $1M - 3M ... although angel investment is not typical -- only 1% of companies obtain angel investment (compared with 0.1% of companies that receive venture capital investment, and 0.01% that go public -- Sue led us in an exercise "Altogether now, nod your head: IPO is not an exit strategy").

Sue provided a list of criteria that most angel investors [should] apply when considering investment opportunities, which might be summarized as "keep it simple, be open, and be real".  Specific factors include the business (scalability, novelty or disruptiveness of the concept and/or technology), the people (passion, skills and experience of the core team and their advisors), the plan and the opportunity for financial return.

The statistics were fascinating, and the criteria are very helpful, but I was most inspired by the similarities between entrepreneur / investor relationships and [other kinds of] personal relationships, e.g., between spouses, parents and children, and teachers and students.  While Sue emphasized that an angel investment is a business relationship, with an expectation of financial reward, it involves a number of other factors that transcend business (although I increasingly see fewer distinctions between business and other aspects of life), such as social responsibility and a number of factors that I would characterize as karma: a desire to give back to the community and pass on what they have learned to the next generation of entrepreneurs (Sue characterized many angel investors as "recovering entrepreneurs" ... and I would not be surprised if she counted herself in that category).

Sue spoke of the courtship process (3-6 months) between an entrepreneur and prospective angel investor, where open, honest and relatively frequent communication is critical (as in dating, or a marriage). Her emphasis on the mentoring and advising, and even nurturing (which was not a term she used, or perhaps even intended, but it seems very apt to me) role that angel investors often want to play in a company, parallels my conception of what an ideal parent/child or teacher/student relationship should be.  She also noted that the "coachability" of an entrepreneur -- his or her willingness to ask for and receive advice ... and act on it -- is a key factor in her assessment of an investment opportunity ("when the entrepreneur is ready, the investor appears").  I see this as yet another manifestation of one's willingness to open up to the abundance of the universe, and see even more clearly why these types of investors are called "angels".

One final note: the subtitle for this post, "It's the Relationship, Stupid!", was chosen specifically to channel the wisdom of Kathy Sierra's recent post on "It's the [?], Stupid!", where she emphasizes the importance of focusing on the meaningful benefits that a product or service really offers, which are often overlooked by those who are providing them -- shining a laser beam on what really matters to one's customers (or voters) ... or, in Kathy's rather irreverent and pithy way of expressing this, how to help your users kick *ss!  My intention in invoking this terminology is to reflect the idea that many aspects of the relationships between angel investors and entrepreneurs -- above and beyond the financial aspects that often constitute the primary (or sole) focus, at least on the part of some entrepreurs -- are often overlooked, but these less tangible dimensions of angel investments may, in fact, be the most valuable to the ultimate success of a venture.