A Forgotten Past, Dying Present and (No) Future | Orla, Texas | Feb 2009

Tom Friedman raised a few feathers with his article Start Up the Risk-Takers and the ideas about redirecting part of the US financial stimulus package to venture capital investors to invest in startups.

The basic idea about creating jobs and economic activity through supporting startups and new businesses is a concept that many in the venture industry have voiced previously. But this article stirred up a little debate as Fred Wilson, Roger Ehrenberg, Alan Patrick, Don Dodge, Brad Feld, Tom Evslin and others (including many, many insightful commenters) entered the scene with a range of opinions.

I’ll summarize and throw in a couple points along the way…

In a perfect world, “more money for entrepreneurs” would mean more businesses would get created. But it doesn’t work that way.

The title of Friedman’s article might be the most insightful part: “Start Up the Risk-Takers”.

That does not mean “start up the venture capitalists”: entrepreneurs are the true risk-takers in the venture industry.

Helping entrepreneurs create businesses in order to jump start the USA’s economy is a good idea: but simply giving money to existing venture capitalists is not the way to execute it.

Hopefully we’ve learned what happens when we give money to companies: they spend it how they see fit, not how we want them to.

The history of the government directly investing in startups is spotty at best, with In-Q-Tel as one of the possible success stories. But it’s unlikely that the USA government bureaucracy would be the most effective organization to invest in startups, and not surprisingly, few commentators advocate that approach.

That said, I would be curious to hear more about the examples of government-supported entrepreneurship in other countries. Examples? Thoughts?

But even more telling, more money doesn’t necessarily mean more (or better) businesses even if venture capitalists are the ones placing the bets.

Why?

The fundamental math behind venture capital works against:

• Early-stage investing. Roger has written about the subject of early-stage investing before, and Matt explained it particularly well in Roger’s post about the debate.
• Service-based businesses. As Don explained, “Service based companies create lots of jobs, but don’t get VC funding.”

  Fred also pointed out a role for government programs (using the example of current programs like SBA and SBIC as examples) to fund businesses that don’t fit the traditional VC economic model.

Incentives guide behavior; and the current venture capital models simply don’t create the incentive structures to invest in the early stages of new ventures, especially service-based businesses.

If you’ve read some of my past posts, none of this should be a surprise.

If “more money” is the path, where should it be directed?

Where are the needs?

• Traditional seed-stage, $200K to $1 M. We’ve developed effective ways to test ideas, but we’ve created a funding gap between “testing ideas” and “building businesses”

  Given Marc Andresson’s plans to start a venture fund and his thoughts on the industry from a recent interview with Charlie Rose, Marc might agree.

• Government programs or new private funds to “incubate lives”, focusing on service-based and “lifestyle” businesses. These companies won’t create big-hit investment returns, but they can generate cash flow and create jobs. The SBA and its programs are a start, but without other structural changes they are not the ultimate answer.

Should we focus or direct money towards specific industries, technologies or geographical regions? I’m open to thoughts, but I still believe the market, not the government, should decide which deals to fund. The big win is to focus on strategies instead of tactics, the system instead of the specifics.

The current needs will not always be needs; instead of plugging the gaps, let’s address what created the gaps.

Everyone is focused on pumping more money into the venture ecosystem. But why don’t we think more about removing costs?

My comment on Fred’s post:

Thank you. Dumping more money into the same structures, the same incentive systems, the same uses, is not the answer.

Instead, how about streamlining the legal processes behind creating businesses? Or reducing other transaction costs to starting new ventures?

Why don’t we invest in the underlying venture ecosystem by removing transaction costs and streamlining the processes in starting, funding and growing business?

A number of commentators touched on the issue:

• Fred explicitly noted the opportunity in investing in education; others added in thoughts about funding basic and applied research and development.
• Dan pointed out the opportunity to use existing structures like the SBA to increase the funding of the SBIC and SBIR programs.
• Brad pointed out the Seed Capital Tax Credit, a way for the government to incent seed stage investments. Chris Schultz mentioned similar programs in Louisiana specifically aimed at igniting post-Katrina economic growth when I met him in December.

But it’s not enough.

How can we invest in streamlining the system?

• Create easier and quicker processes for researching, applying for and accessing government funding (SBA, SBIC, SBIR, research grants, etc.)
• Reduce transaction costs, including legal requirements, taxation policies, accounting rules and government regulation. How can we make it cheaper, quicker and easier for companies to start?

Let’s be clear: this is not about “propping up startups”. I’m not advocating creating more structures to help entrepreneurs, but instead removing the need for those support structures in the first place. Investing in creating better structures would mean less distractions, less costs and more productivity, right?

Entrepreneurs face the problem of navigating government bureaucracies all around the world: take Singapore as an example in the difficulty (and opportunity) in figuring out government funding programs.

At the end of the day, this is just the latest round of a debate over the future of the venture capital industry.

It’s all about money: who, what, when, where, why and how, and the traditional answers to those questions may not be the right ones for the current situation.

More money does not mean more businesses, better businesses or more jobs.

Blindly pumping more money into the existing system will exacerbate, not fix, the venture industry’s structural issues.

All industries go through cycles of creative destruction and resurrection: why would venture capital be any different?

One of the things I have enjoyed the most about my current road trip has been the opportunity to bridge the offline and online worlds and meet, in person, many of the people I regularly converse with online.

Last December in Los Angeles I was able to meet Mike Bonifer, co-founder of GameChangers and author of the GameChangers blog and book, GameChangers: Improvisation for Business in the Networked World (thanks Ethan!).

Throughout the book Mike uses the language of improvisation (players, games, scenes, roles, openings, issues, entrances, exits, gifts, etc.) to give us the frames of reference to understand the business world. The explanation and applicability is not strained: improvisation gives us “the tools to prepare for and participate in change, and make that experience an enjoyable and profitable one”. Change is with us everyday: we are either changing, being changed or standing by while change occurs around us.

Remember, inaction is a form of action.

Among the many lessons Mike points out is one that I find particularly meaningful in my own life (throughout my writing, consulting, photography and travels), the principle of agreement and “Yes-anding” (from the book):

Agreement.

If there is one principle of improvisation that has the potential to change not only the way business gets conducted, but to change lives, it is this one. … The process of agreeing is known as saying ‘Yes and’ or ‘Yes-anding’.

… A new idea comes alive when you ‘yes-and’ my idea, I ‘yes-and’ yours, and we suddenly arrive at what neither of use could have created on our own: an idea that is uniquely ours.

… [There is] an important distinction between agreeing to collaborate in the game being played and being a ‘yes-person’ who blindly agrees with everything. … Agreement does not mean rubber-stamping. It is not unquestioning, dogmatic acceptance. … the expression used to define the Agreement Principle is not yes. It is yes-and. With the ‘and’, an improviser supports his or her fellow players by acknowledging their contributions and building upon them. … ‘and’ becomes the bridge that connect players to one another and the team to its new;ly-created reality. … We keep advancing one another’s ideas and supporting one another’s actions until we arrive at the objective.

… the Agreement Principle means acknowledging the worthiness of every individual in the group and valuing the performance of the group over that of any of its individual members.

We apply the principle of ‘yes-and’ everyday in our range of online discourse: in our writing, linking, curating, commenting and sharing, we are ‘yes-anding’ our fellow creators and commentators. Rarely do we all agree with each other, but by agreeing to listen, share and discuss we build the discourse and exchanges we need to create change.

Destination or Journey | Santa Fe, New Mexico | Feb 2009

The destination is the same, but the journey is far different.

Given the choice, which route do you take?

Which is more important: the process or the result? The journey or the destination?

A reminder: How to Fail: 25 Lessons Learned through Failure…

From a week in the mountains and plains of Colorado…

• Larry Bowa reacts to Brad Penny:

  Put that on the (expletive) dot-com.

• Jan Chipchase, Lubing the Edges of the Internet:
  

  There is a place at the edges of the internet where the level of friction makes content and data grind to a halt. It’s largely unregulated. And it just got seriously lubed.

• James Gardner, What kind of innovation does your bank do?

  My comment (highlighted by JJ Hornblass):

  Whether you’re driving incremental or breakthrough change, they are both innovation. Honestly if it’s delivering value (short-term financial, long-term strategic positioning, etc.) it doesn’t matter what it’s called.

  The bigger problem is when we mislabel our efforts to try to position incremental innovation as breakthrough “Play to Win” innovation; the two types of innovation (although I admit it’s more of a continuum) require different operational, financial and strategic commitments. We’ve got to be honest about what bets we’re making and how we’re playing them, or we run the risk of tremendous intra-organizational resource misallocation.

• Lynette Luna in FierceWireless, A Nokia-Facebook combo is a no-brainer.
• Phil Goldstein in Fierce Wireless, Android’s absence: where was the platform at Mobile World Congress?

  There were conflicting opinions about the absence / abundance of new Android-powered devices at the recent Mobile World Congress. It’s interesting to watch handset manufacturers and carriers balance their product development, handset replacement and hardware and service rollout plans in an industry undergoing massive infrastructural and consumer usage shifts.

• Duke Stump, Building a Bonfire Brand. My comment:
  

  The odd thing is that if attempting to water down products and messages for the “mainstream” never creates the desired mainstream appeal and usually angers the core. I try to hold the phrase “Be Undeniably Good” in my head whenever I’m making a product, business or life decision, and it’s impossible to be “undeniably good” to everyone, especially the broad swath of the mainstream.

  Attempting to be everything to everyone is a guarantee of being nothing to nobody.

• David Hornik, The Evolution of TED.

  I wonder, as TED evolves and continues to grow, will it spawn a conference to replace the “old TED”?

• And I would be remiss if I didn’t mention:

  1) Umair Haque at the Daytona Sessions, “Constructive Capitalism” (video on Vimeo).

  2) Umair Haque, The Responsiveness Scorecard:

  Who can develop better kinds of ownership that create value for everyone? Advantage will flow inexorably to those economies – and companies – who can.

  … Whoever can invent better kinds of contracts for the 21st century will realize a tremendous advantage.

  …Responsibility, accountability, and transparency aren’t just buzzwords – they’re the keys to radically altering the costs and benefits of management.

  Organizations, incentives, compensation structures, measuring and valuing “externalities”: until we can change these underlying institutions and constructs then any stimulus will be vastly misdirected.

  We can’t go forward by trying to fill the holes of the past.

Alan Patrick and Nic Brisbourne both picked up on McKinsey’s recent report, Six ways to make Web 2.0 work.

Pretty interesting to see McKinsey’s take on the variety of Web tools and services; Alan’s commentary is particularly insightful.

Nic picked up on McKinsey’s estimate on the market size, and his opinion (“paltry”) and questioning of what the USD $1 billion comprises begs many more questions. Expanding on the market size estimate, my comment:

Nic, the market size estimate really jumped out at me. While spending may be only USD $1 billion, the value of the time invested by employees in using these web tools (for personal, official corporate and informal corporate use) must be far, far larger. Adoption (and moreso, attention) have far outstripped spending.

And that shift may have a far larger impact on companies than the levels of spending might suggest.

Which is more important? Attention or spending? Time or money? Connections or consumption?

Summary
Much of the “venture capital is dead / broken” cacophony focuses on how most angel and venture capital investors have been unable to adapt their investment and operational models to fit the new economics available to many entrepreneurs. Perhaps we just need an alternate investment structure to align incentives and economic models.

Not a replacement, but an alternative for some situations. Instead of accepting what is, let’s think about what could be.

Feedback Requested: A Flexible Structure for Partnering with Entrepreneurs

Conversations around the best structures for pre-venture capital Series A investments often focus on convertible debt and preferred equity. It’s not a simple question: the “best” structure really depends on the specific situation and often comes down to a value judgment over which structure is more “fair” or “easy”.

Structures create incentives; perhaps what the venture industry needs is an alternate model to align incentives and economic models.

In response to a couple business opportunities I’ve been evaluating, I’ve been playing around with some ideas for an investment and compensation structure that could work for the type of fluid investor, consultant and entrepreneurs partnering relationships that new organizational and economic models are making more possible and more common.

Goals

• The fundamental problem: how can investors and consultants help entrepreneurs start businesses and get fairly compensated for the value they create?
• Establish the rules and create more interactions: what’s the hardest problem in starting a new venture? What decisions need to be made in the beginning?
• Create structures that enable flexibility, create more intermediate decisions and tie payments to actions, not to negotiations.
• Allow consultants and investors to contribute as needed to help entrepreneurs.

Structure
The structure has two key parts to create compensation and investment agreements for investors / consultants and entrepreneurs:

1) Compensation: Convertible Preferred Shares granted under a Kudos Model.

• Convertible Non-Participating Preferred Shares.
• Granted by the entrepreneur to the consultant / investor under a version of a Kudos Model: the entrepreneur selects the number of shares to grant every three months based on their estimate of the value created over the past three months. The entrepreneur cannot retract granted shares.
• Shares are priced at $X per share (price TBD: set at same for all shares).
• Share holder holds the decision to convert (portion or all) of shares to 1) Equity at next qualified investment round or 2) Convertible Debt at any time under the terms in the instrument detailed below.
• Shares are convertible at 1:1 ratio for shares bought by the next investor at the next round (common, preferred or whatever form of equity negotiated).
• “Next round” traditional VC sets the pricing and terms of the shares.
• The shares vest immediately.
• Cash compensation: the holder of the shares holds the option to be paid cash compensation whenever the company reports a cash flow positive month (or whenever the entrepreneur draws cash from the business), commensurate with the share holder’s % equity ownership of the company. Repayment will reduce the amount of Preferred Stock held by the Consultant / Investor. E.g. if the preferred stock holder owns 10% of the granted shares in the overall company, whenever the entrepreneur draws cash compensation from the business the preferred stock holder will be paid 10% of the cash compensation.

2) Investment: Convertible Debt

• Consultant / investor invests capital into the business through a convertible note.
• Note carries an interest rate of 10%. Interest is not paid as cash but is added to the contributed capital in the note.
• Multiple closings: the note is “open” for continued investment for one year from date of issue. This is so that the investor can continue to gauge progress and invest money into the business depending on capital needs and continued interest and commitment to the business.
• The note converts at a discount to the conversion price on the next round. The discount will be a maximum of 25% (five percent per month, depending on how long it takes to close the financing, up to the maximum) off of the per share price.
• Debt repayment: the holder of the convertible debt holds the option to be repaid portions of the debt whenever the company reports a cash flow positive month (or whenever the entrepreneur draws cash from the business). Repayment will be X% of the positive cash flow or X% of the cash flow drawn by the entrepreneur (% TBD, to be negotiated).
• No personal guarantee of the note by the entrepreneur.
• Weighted average anti-dilution protection.
• Investor holds the right to participate equally (pro-rata) in further investment rounds under the same terms as the next investors.
• Basic protective provisions: no pre-payment of the note by the Entrepreneur, pre-specified payment if there is a change of control prior to a venture round, and a cap on the amount of additional debt a company can take.

Other Terms:

• Financial statements: entrepreneur is required to send a monthly CEO update; unaudited financial statements available upon request.

Starting the conversation…

• A little confusing? Perhaps.

  As you think through the terms and the necessary improvements, consider one of my basic thoughts: How can we let continuous interactions and decisions, rather than scheduled commitments, determine the flow of attention, talent, time and capital? How can we introduce elements of game theory into our investment and operating structures?

• Valuation: Why aren’t the convertible shares or the convertible debt properly priced to a % ownership of the company at the time of grant or issuance?

  Establishing valuation at this stage really isn’t worth it. The intention is to push the valuation decision to when all parties have more information.

• Can’t the entrepreneur choose to “underpay” the consultant / investor by not granting enough shares?

  Yes, but that will make the working relationship pretty short, and that’s probably not in anyone’s interest.

• What if the entrepreneur will never be able to sell the business or achieve a qualified investment?

  The consultant / investor has the continuing option to take cash or hold shares; if the business turns out to be a cash-flow based business, then the consultant / investor will want to convert their ownership into whichever instrument maximizes their return.

  Yes, that means the investment may turn out to just be a loan.

• Keeping an accurate share register is very, very important to track the conversion options and current shares / debt structure.

  No question. And while this is a bit more complex, is it anything more than a couple extra lines in our Excel models?

• Why are the grant timelines set for every three months? Why don’t the grants only occur at investment rounds?

  Because for some “lifestyle” startups there may never be qualified investment rounds; the economic models simply won’t fit. Why three months? No particular reason, open for ideas.

• This is way more complex than the typical convertible debt or preferred equity structure; investors, entrepreneurs and lawyers understand those agreements and this type of agreement will create large legal costs for investors and entrepreneurs. Legal agreements are already too large of a transaction cost (time, money and focus) in starting businesses.

  Really? Seriously? We are nowhere close to a set of industry standard documents. A huge variety of structural decisions, terms and clauses are negotiated on a case-by-case basis. Legal fees are a pretty hefty transaction cost in raising capital and and creating option / equity structures. Is this really that much harder to structure?

  The goal of this idea is to create a standard structure and a set of interactions and less-standard decisions after the agreements are signed and the business starts, instead of focusing on the decisions before the business starts. Legal agreements are important; let’s help figure out ways to get them done sooner and quicker to let people start creating businesses.

  In addition, this structure effectively “punts” on many decisions and pushes the negotiations over pricing and other terms to the next investors, the next round or the later stages of the company, at which point the entrepreneurs and investors will be in better position to pay the necessary transaction costs and additional investors will be involved to help set terms.

• We (investor and entrepreneur) know exactly how we’re going to work together, how we’re going to balance our time and capital contributions and how the business will make money for both of us.

  If you know all of that, awesome.

  But there’s a good chance you don’t, and a better chance you’ll be wrong.

  Why create a structure that won’t allow you to adapt and change your relationship, time commitments and capital contributions over time?

Disclaimers

• It’s not meant to work for all situations. It probably won’t work for traditional angels or venture capital investors: in my mind it is best suited for the $0 to $100K “friends and family” pre-seed stages. But more importantly, it might work for consultants / investors and entrepreneurs that need a flexible, multi-facted, non-priced investment and compensation model to fit their fluid organizational model and “the great unknowns” of the future for their businesses.
• I’m not an expert. I’m not a VC. I’m not even an entrepreneur, really. But by sitting in the middle I see a both sides to similar arguments. I’m trying to imagine something different. Maybe I’m wrong: I’m fine with that, but I’m interested in learning why I’m wrong.
• This is not fully baked; it’s lacking many necessary terms, covenants, warranties and representations; I haven’t introduced the “Qualified IPO” concept,or “drag-along” rights and protective provisions on sale, I’m not sure about the nature of the convertible shares and liquidation preferences (participating? preferred or common?), maximum conversion clause, there are decisions to make on share vesting schedule, anti-dilution, Board of Directors, tax implications, etc… I’m looking for the discussion to help flesh out the details, point out holes and hopefully add new ideas that may help investors, consultants and entrepreneurs.

Inspirations and Resources:

• Yokum Taku, Startup Company Lawyer. Fantastic resource, easy to spend a day or two or ten just digging through the posts on the legal details behind venture capital investing.
• Basil Peters, The One Page Term Sheet for Angel Investors. Great resource for angel investors.
• Michael Lewkowitz, Kudos for Equity. The inspiration for the Kudos for Compensation idea.
• Ted Wang in VentureBeat, Reinventing the Series A
• NVCA Model Venture Capital Documents
• The CRV QuickStart Seed Funding Program
• Fred Wilson, CRV Quickstart
• David Cohen of TechStars, TechStars Model Seed Funding Documents
• Y Combinator Series AA Documents
• Sachin Agarwal, Quick Compare-and-Contrast of the Y Combinator and TechStars Series AA Model Documents
• TechCrunch, Y Combinator To Offer Standardized Funding Legal Docs
• Discussion on Tech Stars Documents on Hacker News
• Yokum Taku, What is upgradeable Series A preferred stock?
• Brad Feld, What’s the Best Structure for a Pre-VC Investment?
• Venture Hacks, Should I raise debt or equity?
• Dick Costolo, Convertible Debt Jeopardy
• Josh Kopelman, Bridge Loans vs. Preferred Equity
• Basil Peters, Exchangeable Shares
• Jeff Clavier, Debt or Equity in your seed round
• Julien Wallen, Web funding norms are a context, not guidance
• Mark MacLeod, Is Web 2.0 the great VC return equalizer?

Updated: Mentioned in the Wall Street Journal online Venture Dispatch column The Daily Start-Up.

Three connected Monday afternoon thoughts:

• JP Rangaswami, Monday morning musing about social networks; Why do the “digital implementations of social networks” get so much attention even though the basic activities have existed for centuries? Three reasons: standardisation, persistence and exposure:

  And finally we have exposure, openness. APIs and their equivalent. What do I mean? It’s about … A way of building things for a community to use, without having to belong to that community in the first place; without having deep knowledge of that community. Most importantly, an ability to build things for a community, things that lower the friction of communication and scheduling and sharing and belonging.

• Hutch Carpenter, Forget Dunbar’s Number, Our Future Is in Scoble’s Number:
  

  Here’s how I differentiate interactions between Dunbar’s Number and Scoble’s Number:

  In the top graph for Dunbar’s Number, you’re aware of a fuller range of what’s happening in someone’s life. … This is the stuff of warm friendships. You internalize a lot more information about someone, and they know a lot more about you. You develop short-hand ways of talking, and can call on older experiences to relate to new information and developments.

  The bottom graph is for Scoble’s Number. Here, you only intersect socially with someone periodically. This happens when the stars align:

  * Someone is talking about a topic of interest to you
  * You happen to see this topic being discussed

  Scoble’s Number is a our new reality. By maintaining a larger number of weaker connections, you can tap a wider range of opinions.

• Tim Leberecht, Generation G: Wired to Care, Wired to Share:
  

  For corporations seeking to engage Generation G two things are key. One is empathy or as Jump Associates’s Dev Patnaik posits in a recent book: Today’s corporations need to be “Wired to Care.” Empathy must not be confused with sympathy: Sympathy is literally “feeling with” – compassion for or commiseration with another person. Empathy, by contrast, is literally “feeling into” – the ability to project one’s personality into another person and more fully understand that person. You feel sympathy when you haven’t been there; empathy is when you have.

  The other critical ability for engaging Generation G is “sharing.” In a digital economy where most of the transactions are for free (or expected to be free), value is mainly created through the act of sharing. This means replacing outdated concepts of ownership, control, and coordination with concepts of open source, open IP, and open innovation. It also means open conversations in the spirit of what Clive Thompson labeled “Radical Transparency.” As they are increasingly replacing traditional media companies, brands’ foremost task is to share information. The message for Generation G is loud and clear: As much as transparency can underscore that you have nothing to hide, it can also highlight that you have a lot to give.

After a couple weeks in San Francisco, it was time for me to reboot the Drive-By cross-country trip.

I re-started the trip by meeting Sean Tario (@eurotario) in Santa Cruz, California to learn about his passion in building authentic communities and engaging the local Santa Cruz geek community to drive local economic development.

Sean and I originally connected at a SXSW party in San Francisco (another reminder that a big part of life is in showing up), and I immediately loved his passion, energy and authenticity. Given what I’ve learned about local entrepreneurial communities throughout my current cross-country trip, I couldn’t pass up his gracious offer to show me around the Santa Cruz scene.

What’s Happening in Santa Cruz?

In short, people are organizing, getting involved and finding productive ways to drive economic change by focusing on the local community. Santa Cruz has some great assets: a great climate, beautiful surroundings, a deep talent base, proximity to the Valley “over the hill” and growing community support. The foundation for attracting and supporting the creative class is in place.

But it’s not perfect: the proximity to the Valley clouds the opportunities and “realness” of the entrepreneurs in Santa Cruz. Even successful entrepreneurs living in Santa Cruz may not know about the depth of entrepreneurial activity in the area, yet another reminder that organizing, building and promoting local communities can play a huge role in driving economic change, particularly entrepreneurial activity.

Even though we often focus on business leaders, building the community requires a broader focus on business, culture and politics.

Good Times Santa Cruz | New Blood:

Santa Cruz Next [is] an organization that is determined to get more twenty- and thirtysomethings involved in Santa Cruz civic life.

… “Since Santa Cruz Next has gotten started we’ve had dozens of people in our generation get off their butts and start applying to local positions in government and industry, to local boards and organizations,” says Sean Tario, a SC Next member who works for a tech company over the hill. “That’s a testament to what we’re trying to make happen.”

What’s awesome?

Lots:

• Coworking “entrepreneurial catalyst” NextSpace. The kind of place I have always wanted to create (or lacking that, work from).
• Customer feedback service UserVoice, a simple, easy way to capture customer feedback and empower innovation. Richard White, Marcus Nelson and Scott Rutherford were kind enough to take an hour out of their day to riff on business models and web innovation, topics I could have discussed all day, keeping them from, well, actually doing it.
• Sol and Jacob from 12 Seconds.tv, a place to share video status updates online. Why only 12 seconds? “Because anything longer is boring.”

And lots more: if you want to learn more about Santa Cruz and its economic, entrepreneurial and community evolution, I’m sure Sean would love to help you out, or start with the links below:

• Sean Tario
• Santa Cruz Geeks and the corresponding Google Group
• Good Times Santa Cruz | New Blood
• Santa Cruz Summit 2009
• Santa Cruz Next
• Santa Cruz Business Portal, and Cruz Business: 2008 was a Great Year for Santa Cruz Geeks
• NextSpace
• UserVoice
• 12 Seconds.tv
• Richard Florida, the Creative Class and The Rise of the Creative Class

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Do you have a suggestion on people and communities I should check out on my way back to Virginia? Drop me a line…

This might be taking the idea of a “transparent life” and openness a bit too far, but so it goes…

I’ve mentioned a couple times that I’ve been tracking my expenses during my current “Drive-By” road trip to meet interesting entrepreneurs, investors, photographers and “change agents” across the country.

A couple weeks ago I wrote about How to Live a Nomadic Lifestyle, primarily focusing on the attitude and approach to living a flexible, nomadic lifestyle. Jay Cuthrell and Joel Mark Witt have both reminded me about my earlier promises to release some expense details behind the trip, and so today, 77 completed days into the trip (Nov 30 to Feb 14), I’m releasing a pretty extensive amount of details about the trip, available for viewing, editing and downloading (CSV).

Highlights:

• Overall I’ve driven 9,079 miles over 77 days, for a median of 58 miles and an average of 118 per day (130 removing the 7 days I didn’t drive at all). That’s actually far less than I drove during my summer 2007 trip.
• The longest single-day drive was 687 miles.
• Expenses have averaged to $49 per day (not counting auto and medical insurance).
• Major expenses were “rent” at $18 per day, $10 per day in food and $7 in travel (gas).
• The most I spent in one day was $167 and the least was $0.
• I’ve spent 27 nights in hotels, 22 nights in hostels (in CA, LA and CO), 22 nights at friends’ places and 6 nights in campgrounds. [1]
• 46 of my 77 nights have been spent in California; I’ve spent just a single night in 6 states.
• I’ve been to Las Vegas on three separate trips, despite any strong liking of the city.
• I’ve gotten gas 36 times, washed my car 3 times, gotten 2 oil changes and made 7 trips to airports (none for me).
• I’ve gone to bars 29 times, been to parks (national and state) 14 times and been to 19 restaurants.

And there are a lot more in the details.

But more importantly, I’ve had fun.

Your chance to analyze the details.
Click here to access the editable sheet: it’s open for anyone to play with and create charts, graphs, visualizations, or to pick out embarrassing details: just add them to the “Charts” sheet (just click on the “Edit this page” link at the bottom of each sheet) or leave your thoughts in the comments below.

I’ll add any interesting graphics or charts that people create to the post.

What else would you like to know?
Drop questions in the comments if you want to know anything that isn’t in the spreadsheet: maybe I have actual data, maybe I don’t, but feel free to ask.

Why have I done this?
For starters, I’m an Excel geek. But more importantly, I wanted to show (with very hard data) that it is possible to live this way. I know few people will choose to travel or live like I do, but the goal isn’t to show my life as a blueprint for anyone but simply to open the mind and the eyes to the possibilities.

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The Google spreadsheet embedded below is locked for editing and only available to view. The editable version is available here.

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[1] Many of the hotel nights were spent at various Marriotts using points, thus the zero expense, if you’re wondering.

Nicholas Carr, The writing is on the paywall:

It’s a fantasy to believe that the production of all the kinds of news that people value, particularly hard news, can be shifted over to amateurs or journeymen working for peanuts or some newfangled journo-syndicalist communes. Certainly, amateurs and volunteers can do some of the work that used to be done by professional journalists in professional organizations. Free-floating freelancers can also do some of the work. The journo-syndicalist communes will, I suppose, be able to do some of the work. And that’s all well and good. But they can’t do all of the work, and they certainly can’t do all of the most valuable work. The news business will remain a fundamentally commercial operation. Whatever the Internet dreamers might tell you, it ain’t going to a purely social production model.

I believe that people (non-commercial journalists) will have a role to play in producing and disseminating news, and I do believe that people are great filters of information. The social production model will play a large role in distributing and marketing news, but professional news sources and commercial journalists will still play an important role: to think that commercial news sources will not adapt is pretty short-sighted.

Most of the today’s technological and cultural changes impact how we distribute information and news (and perhaps that’s why we spend most of our time “talking about talking”). But the big question is how information and news will be created, and I would be surprised if professional, commercial news sources did not play a defining role in producing and filtering information. What are all the “citizen journalists” going to link to?

Continuing with Carr:

The newspaper industry is in the midst of a fundamental restructuring, and if you think that restructuring is over – that what we see today is the end state – you’re wrong. Markets for valuable goods do not stay disrupted. They evolve to a new and sustainable commercial state. Tomorrow’s reality will be different from today’s.

Perhaps; but instead of evolving towards a “sustainable” equilibrium, tomorrow’s reality might be more change.

Instead of trying to define a single answer, let’s start thinking about multiple models of information creation and dissemination to fit our variety of cultures, styles, methods, use cases and models of interaction.

But in any case, to think that today’s trends will continue in some straight-line, continuous path is a terribly misleading way to think about the world. To think that the rules of tomorrow are set today is incredibly short-sighted. Instead of focusing on what is, why can’t we think about what can be?

We’re living through an inflection point: for us, tomorrow is today. Let’s have fun with it.

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Yes, I know I said I would leave this topic to others. C’est la vie.

Credit for the title goes completely to Umair Haque…