Trading Futures

And here's Avery's latest film, "Trading Futures" which he wrote and directed. This courtroom drama features Avery's whole family, and also debuts the talented Sunil Nagaraj. (Sunil was working at his desk last Saturday afternoon when Avery was shooting and needed another actor, so Avery roped him into it.)

Science Fair

I found this story on my laptop. My son write it in sixth grade, and since it's about computer security, I thought it qualified as blog content. (Any resemblance to real persons, living or dead, should not be too surprising.) Enjoy.

“Back so soon?” the school’s secretary asked rhetorically, “I’ll tell the principal you’re back.”

As John waited for what seemed like a long time, he scored a kind smile from Kelly Barrett, the Vice-Principal. “Hi, John,” she said as she passed by.

Finally, Principal Melon poked his head out the window and commanded in an annoyed tone, “John will you come in here?”  An annoyed John walked in the office of an annoyed Principal.

Once they were seated Mr. Melon told John, “Your teacher says you have been misbehaving again. Instead of reviewing your STAR test answers you were just sitting there reading.”

“I already checked them,” John replied.

“Well you should have checked them again. These scores - I mean the tests, are very important to our school. Now give me the book. You’ll get it back in a week,” said Mr. Melon. He then took the book from John’s outstretched hand. “Rules are there for a reason John.”

After school, John rushed over to his afterschool class in the computer lab and logged on to one of the computers and started to work on his science fair project. To prove or disprove his hypotheses, “most computers are highly vulnerable to attacks”, he tried different ways of hacking the school computers. He thought that it should be fine if he tried school computers because it was a school project. He started with a basic worm. He got onto Mr. Melon’s Computer and saw three files. After putting a little marker on the computers, he walked home.

The next Thursday did not go well.

“I’ll tell Mr. Melon you’re back.”  The school secretary went to Mr. Melon’s door and told him something. Mr. Melon seemed upset.

 “This is not all right. As a consequence for doing your homework during recess instead of at home, I want you to stay 30 minutes after school on Thursdays and clean up the eating area.”

“Is there any other day I could do this?”

“No.”

“I have a Computer Lab class then.”

“I know. That’s why I chose Thursday”

“I need that time for my Science fair project”

“Well then you’re banned from the science fair. Problem solved. And remember, rules are there for a reason.”

“One question”

“What?”

“Can I please have my book back?”

“NO!”

Vice-Principal Barrett watched John leave, looking as glum as he did.

On Wednesday night John showed up at the Science Fair even though he was banned. Mr. Melon saw him right away.

“What are you doing here?”

“I’m here to prove or disprove my hypotheses.”

“Well go away and take your hypotheses with you.”

“My Hypotheses is ‘School is improving with Mr. Melon’s great principal skills’.”

“Fine, you can present.”

John got up on stage and explained, “ Hello, My hypotheses is ‘The School is improving because Mr. Melon is a great principal’. This is a common belief among the staff.” He pulled out a piece of paper and asked his Science teacher, “Ms. Billiard, have you seen this before?”

“John, what are you doing?”

“Yes,” she answered, “It was the new policy sheet. We all had to sign it”

John pulled out another sheet, “Ms. Billiard, have you seen this before?”

“Don’t listen to him”

“Yes,” she answered again, “It was the STAR Test Monitor sheet.”

John held the papers close to each other and looked at the judges.

“John, come over here!”

“While I was in Mr. Melon’s office, I saw some STAR Test Envelopes open and in the trash bin. I thought they were extras but now I realize not.”

By now Mr. Melon was almost dragging John off the stage.

“I see now that Mr. Melon has been replacing the test envelopes with new ones and using the signatures from the policy sheets on them. He must have been changing the answers to improve he school’s test scores.”

“John, this is an outrage!”

“You’re right, Mr. Melon. My science fair project failed to prove its hypothesis, since I had to throw out all the bad test data.”

The judges were shocked. Mr. Melon slumped. “John, why would you do this?”

John replied simply, “Rules are there for a reason, Mr. Melon.”

One week later, John found himself once again sent to the Principal’s office. The secretory wasn’t there so he knocked on the principal’s door and heard “Come in.”

Sitting at Mr. Melon’s old desk was the new Principal, Kelly Barrett. “Hi John. Tough day?”

“I guess so.”

“Sorry to hear it. You know I never congratulated you.”

“For what?”

“For winning the Science Fair! I think that earns you a free pass today. But try to pay more attention to your teachers, John, okay?”

“Okay.”

“And before you go, I have one question.”

“Um, okay.”

“I found this in my desk. Is it yours?”

John smiled as he reached over and retrieved his book.

“Thanks!”

Turning Lemons into Lemonade!

Eliot is reading Gary Paulsen's Hatchet, so the question arose tonight at dinner: if you were shipwrecked on a barren desert island and you could wish for three things, what would they be?

 The two boys suggested many variations on the themes of a radio and an airplane. Finally someone asked my daughter, who replied: "I would want wildlife, trees, and my family."

Ringing the Bell

Disclosure: Bessemer is the largest shareholder in LifeLock, but like our co-investors Kleiner Perkins, Goldman Sachs and Symantec, we did not choose to sell any stock in today’s offering. I serve on the company’s Board of Directors, as I have done since our Series A investment in 2006. The following is my personal opinion.

Today I stood by Todd Davis’ side as he rang the NYSE bell to begin the trading session, marking the day of LifeLock’s IPO. Although I don’t expect to be out of Lifelock stock any time soon, I already consider it one of my proudest investments. At a time when digital technologies increasingly expose our private data to theft, Lifelock provides security directly to millions of Americans, and indirectly to over a hundred million Americans through the company’s enterprise services. LifeLock is leading the way to cloud-based protective services, the inevitable future of data security.

Our Series A investment in LifeLock shows off Bessemer’s road map methodology at work. Before we ever heard of the company, we had developed an investment hypothesis around the need for services that authenticate consumer transactions, in order to stem the rapid rise of financial identity theft. We had learned a lot from watching Cyota defend online bank accounts (before we sold it to RSA), and realized that similar out-of-band authentication technology was needed more broadly. (At the time, we identified fraud alerts as the best way to authenticate transactions, but today there are more effective, comprehensive, and less intrusive ways to do it.)

So we actually met every other startup in the space – most of whom were rich in Silicon Valley credentials. But we couldn’t find the combination of technology, service and marketing that you need to sell consumers, which was discouraging.  We finally heard about a small team in Tempe working on the problem, so James Cham, Brian Neider and I flew out to Arizona to meet them.

There we met Todd and the other 9 employees. What immediately distinguished them from their competitors is that LifeLock prioritized the customer experience. They prided themselves on their young but high touch service department. They lived for customer testimonials, and displayed them proudly on the wall. This service orientation really forced the company early on to meet the challenge of simplifying the message around a complex technology product. Rather than try to solve all the technology problems up front, they outsourced as much of their infrastructure as they could to cloud providers, and then proceeded over the years to thoughtfully develop (or acquire) proprietary secret sauce, as they grew. In most successful startups, innovation plays a large role early on, while sales and marketing have to catch up; LifeLock has executed the reverse – the Company is investing more today in proprietary product development than ever before.

The team also impressed us with their transparency, and hunger for criticism. They weren’t getting calls from other VCs, and so they resolved to use our meeting to learn what they can from us about online consumer subscription models, potential partners in the security space, and general startup questions. To this day LifeLock enjoys a culture that marries ambition and humility – they are never afraid to admit their mistakes, and they do not get discouraged.

And there were times they might have been discouraged. LifeLock has disrupted an industry that had been dominated by reactive credit monitoring products from providers who actually sell customer data for a living.  These deep pocketed competitors challenged LifeLock legally, and said some nasty, untrue things about the company and founders that provoked a lot of scrutiny from regulators, investors, journalists and partners.

Lifelock rose to the occasion, embracing every criticism as an opportunity to improve. Lifelock moved past fraud alerts (which relied on the creditor or merchant to call a consumer), developing an ecosystem of data partners who provide Lifelock with real time alerts to commercial transactions as they happen. Earlier this year, Lifelock acquired the largest of these partners, ID Analytics, which applies predictive analytics to spot fraud using 750 billion consumer identity elements collected over a decade from their enterprise clients. Lifelock now indisputably provides broad, real-time protection that no one else can provide.

At LifeLock we got the chance to work closely with the team on strategy (including some IP we contributed) and recruiting – between Bessemer’s GC Scott Ring and me, we’ve exchanged nearly 10,000 emails with the LifeLock team. Although Todd had startup experience, and sales experience at Dell, he had never run a large company. I think a lot of VCs would have just hired a “professional CEO”, but I’m now a richer man for having bet on a founder who has been absolutely relentless in his passion to stamp out identity theft. Todd overcame his own inexperience by hiring world class executives like Marvin Davis (former CMO Comcast), Chris Powers (CFO/COO Netqoute, Salary.com, Monster), Prakash Ramamurthy from Oracle, former White House lawyer Clarissa Cerda, Larry McIntosh (SVP McAfee), and most recently Hilary Schneider (EVP, Yahoo!).

It has been a unique pleasure to work with Todd. Last night I had the pleasure of meeting his parents, and I realized how informative it would be for me to meet the parents of every founder I back! It’s clear to me now that Todd’s extroverted charm, humor and humility are inevitable expressions of his genes. His mother quietly told me how the family had sacrificed to support Todd’s enrollment in Baylor’s entrepreneurial program, and his early startups, but that “Now, it was worth it!” When their son arrived to meet us, worn from seventy investor pitches around the country, proud tears graced her cheeks.

Based on our experience in LifeLock, Bessemer has been able to refine our road map in consumer security and privacy. We are now also lead investors in Reputation.com, which helps its customers take control of what the internet says about them, and BillGuard, which protects users from credit card fraud and other unwanted transactions.

I’ve been fortunate to see twenty of my startups go public, but I’d never before come to New York for the event. (Maybe it’s because most of them went public during The Bubble, when IPOs were too easy!) But somehow this one was different, and I just had to be there personally to hear this bell ring. It was a sweet sound indeed.

Lessons Learned from a TV Interview

I accepted an invitation to chat yesterday on a real time video multicast - a medium formerly known as Live Television. The program was Money Moves on Bloomberg TV, and I was invited as an expert on cyber security. I learned a few lessons about the medium.

1. I'm an Expert!

No one told me what questions I'd be asked;  I was expected to impart wisdom to millions of viewers without the benefit of forethought, since dead air is apparently a major bummer.

I was hoping to talk about Bessemer's outlook on cyber security - our interest in startups like BillGuard and Nominum that facilitate trusted online experiences so we can all shop, play, job hunt, date, work, rally, and whatever else we do on the internets. That means mitigating the cyber scourges that repel us from the web (malware, cyber attacks, identity theft, online stalking, privacy intrusions, spam...) and helping us take control of our identities, reputations and data.

But instead the hostess Deirdre Bolton asked me about her topic of the day, Palo Alto Networks. I am not an investor in Palo Alto Networks (though I wish I were). I don't work there, and I'm not a customer. But apparently I'm an expert on them.

2. There's no Delete key on TV.

I did get a chance to talk about some of my favorite companies - Skybox, Lifelock and Reputation.com. I also said some nice things about Endgame, except that I forgot to mention their name!
 

So I learned that it's really hard to think on your feet. Blogging is way easier than live interviews.

I do have to say that Deirdre is impressive. I knew you had to be way more attractive than me to be on TV, but I didn't realize that you could also be wicked smart. Before I went on the air, I watched her juggle stories and guests with aplomb. I know there's a research staff behind her feeding her background data, but she ingests all those notes in real time and formulates her own probing questions. During commercial breaks, she talked with me quite intelligently about cyber security, and when I recognized her ability to keep all these conversations going, she quipped that it's great to make a living out of what used to get her trouble in school.

3. Never sit on a swivel chair when on TV.

My 9-Year Old Entrepreneur Speaks at WWDC Meetup

"We had a fantastic Party in the App Lab this month, gathering useful insights from our future players. A special thanks to Eliot for making our session such a success!"    

- Margaret McCormack, CEO Girl Power Media

It started out as a crazy idea he had for his fourth grade Student Council speech. But then he actually made it work, and now he's on the Silicon Valley speaking circuit!

My 9-year-old son Eliot wanted a way to raise enough money for his school to buy Kindles for every classroom. So he came up with App Lab - an after-school activity where the students test out apps for local software companies. Eliot's schoolmates signed up weeks in advance hoping for a chance to test out and even influence the hottest kids' apps before they're released. Then Eliot invited Disney, Smule and others to participate, and now, after 6 App Lab sessions, Eliot has raised over two thousand dollars from his corporate guests - enough to get all the Kindles, stocked with a hundred titles.


You can read all about it in the San Jose Mercury News, which featured Eliot's picture on the front page of the LIVING section. And now Eliot has been invited to speak at tonight's WWDC Meetup in Palo Alto, an after-party celebrating kids' apps. I'm hoping he can get me in...

UPDATE: Here's the video of Eliot's talk.