Kevin Warnock

Steve Blank at Commonwealth Club of California February 8, 2011. Photo by Kevin Warnock.

I got to briefly meet Steve Blank tonight. He addressed the Commonwealth Club of California, and I introduced myself to him after his remarks.

Steve Blank writes a great blog.

Blank also wrote what I consider perhaps the finest book I’ve read on how to begin and continue to operate a successful tech startup – The Four Steps to the Epiphany. This book made me feel like one of the luckiest guys in the startup world, because I sold my first Internet startup Hotpaper to Purple Communications and made money on it, even though I skipped Blank’s four steps and otherwise did what Blank would say was a shockingly poor job.

This book is superb because it gives clear instructions for what to do to dramatically improve the odds that your startup will make it. Perhaps the most useful advise is for founders to personally get out of the office and talk with potential customers before the product is even built.

It’s so easy as a founder to really believe that your vision makes sense and to just plow ahead, certain things will work out. Blank did that with some of his startups. Tonight he admitted losing $35 million dollars of venture capital money on a video game startup because he didn’t observe this fundamental step. Instead, he apparently relied on a cover story in Wired Magazine saying his company was great. He actually fired his director of sales because he reported three times to Blank that nobody wanted to buy his company’s products. Only after firing the director did Blank personally leave the building to talk with potential customers. These customers told him they would not buy, just as the recently fired director had accurately told him.

When I started my current company, Silveroffice, Inc., the makers of gOffice, the first true online office suite, I did not talk to any potential customers. I just assumed people would like to do their work online via a browser. This turned out to be correct in the end in a modest way, but in 2003, when I started the company, it was not obvious. At that point, gmail was still over a year away. Yes, the world had Hotmail and Yahoo mail, but that was before fast Internet connections became somewhat widespread. It’s no wonder gOffice is only a niche player today rather than an important destination as I hoped it would become.

I am trying to absorb the tremendous wisdom in Steve Blank’s book, and with any luck, I will pivot gOffice quickly and frequently until it flourishes.

I shot unprofessional, shaky video of the entire presentation this evening, and below I have embedded the full video so you can see Blank speak. If asked by Blank, his representatives or the Commonwealth Club I’ll take this video down. Blank is animated and persuasive. I wish I could take one of his classes he teaches at Stanford and UC Berkeley. He said he once suggested students try to audit his classes if they couldn’t get in by signing up. He said the schools didn’t appreciate that offer when 100 more people than his classroom had seats for were hanging out in the hallway trying to get in. I don’t know if Blank posts his lectures online anywhere, but if there’s that kind of demand, I sense a popular YouTube channel in the making.

If you consider yourself an entrepreneur, you must read Steve Blank’s The Four Steps to the Epiphany. It’s a tough read. It’s an important read. Acting on its advice will be VERY HARD WORK. Remembering all its lessons will require reading it many times. This is a book to own, not check out of the library, because you’ll need to refresh your memory of its lessons periodically. With many books, you can safely forget the details. With this book, forgetting the details puts you in peril. I give this book my highest recommendation.

I’ve been reading the famous book Getting Things Done by David Allen. I’m trying to get more organized so I can get seriously productive again.

Getting Things Done book cover

Allen advises getting a handheld label maker and using it freely to label manilla folders, which he advises using in great quantity. He disapproves of hanging file folders, and I see why, as I just removed all of them from my fire proof file cabinet, which I’ve moved right beside my desk. I now have lots of empty space, since manilla folders take so little of it. It’s a simple piece of advice, and it’s advice well worth taking, as I can buy 100 manilla file folders for $5.99. Hanging file folders are also $5.99 a box, but the box only contains 25 folders. So I save space and money.

Amazon has dozens of models of label makers for sale. They start at about $20. That I can deal with. What I can’t begin to fathom is how costly they are to use. They use cartridges of tape that cost about $25 each at Office Depot (less at Amazon). This would be OK if you could get a thousand labels out of a cartridge, but the cartridges only contain 26 feet of tape, or about 77 labels! After sales tax, this 1/2″ wide tape costs over a dollar a foot! So to label a file folder it takes 3″, or $.25 worth of tape. But the folder itself only costs $.06. So the label, which is tiny, costs 400% more than the folder, which contains far, far more material than the label.

This is robbery similar to that practiced by ink jet printer makers, which sell the ink at thousands of dollars a gallon. I understand the label makers are probably sold at a slight loss, but it’s not fair to make up for that loss on the first roll of tape purchased. I would much prefer to spend $150 for the label maker but have it include a 1,000 foot roll of tape that might last for years. Yes, this tape is probably more than just paper and glue, since these printers use a thermal technology to print. But so do cheap fax machines, and I can buy a roll of thermal fax paper that contains the equivalent of thousands of inches of 1/2″ wide labels for a pitance. Look at the size of the thermally printed receipts retailers routinely give out these days. My grocery store gives me a receipt a couple of feet long by 3″ wide. If that had been printed on a label maker, the receipt would cost tens of dollars to print in consumables.

I headed over to the part of the store that sells file folder labels by the letter sized sheet. There the price per label was about 3.5 cents per label instead of 25 cents. Still a fortune compared to white copy paper at $.0001 per label sized piece of paper.

One truly cost effective way to print nice labels is to go back to dot matrix printing, which lets you print one label at a time. One can buy a box of 5,000 5/8″ x 2 3/4″ white labels for $22.54, or $.0045 per label, less than half a penny per label. That’s more like it. I found a USB to parallel printer cable on Amazon for just $9.99. Now all I need is a dot matrix printer, easily found on Craigslist used for $25 – $50. I can set up a Word document to the size of label and just hit print, and one label should be printed out, not wasting anything. The big pain is that I would have another printer junking up my office. I already have an inkject scanner/fax/printer and a large black and white laser printer for economical printing. But I do have a nice Ikea cabinet I keep the printers in, and there is room in there for a small dot matrix printer. So this could be done for about $100, and I would never have to buy labels again, provided the adhesive didn’t dry out. I would probably have to throw out the unused labels every five years or so, but even so, my cost for essentially unlimited labels going forward would be less than $5 per year. Contrast that with potentially $5 per week with a ‘cheap’ label maker.

For now, I have decided to use a 10 cent ball point pen to hand write on my new manilla file folders. I like my handwriting, and my file cabinet is now neat, organized and handwritten, which is just great for now.

San Francisco Chronicle New Avenue Article Jan 11 2011

My friend Kevin Casey’s New Avenue, Inc. house that I’ve been writing about here was written about in today’s San Francisco Chronicle newspaper. This is the primary newspaper for San Francisco.

The story appears in the print edition and on the front page of the online edition in a story entitled Berkeley zero net energy cottage deserves study. Since the front page changes all the time, I made a screen capture SFGate_front_page_january_11_2011 so you may see the prominent coverage New Avenue received. I also made a screen capture of the article itself since the Chronicle may take down the article after some time, but I expect this blog will remain accessible indefinitely. Here’s the link to a PDF copy of the full article: SFGate Jan 11 2011 New Avenue article. Note that these PDFs have clickable links, so if you see something you like, you can click it and the link will take you to the same place the SFGate.com version will take you to.

Congratulations to Kevin and New Avenue!

Yesterday I attended the ribbon cutting ceremony for the first completed home built by New Avenue, Inc., which was founded by my friend Kevin Casey.

I estimate 200 people came by to see the 420 square foot backyard detached house. Kevin persuaded the mayors of Berkeley and El Cerrito to speak at the ribbon cutting. I introduced myself to both mayors after the conclusion of the formal event, and they were both very personable and warm.

I shot a lot of pictures and video, but I’ve not had time to edit it. So today I will just post the video of the formal spoken remarks. Later this week I will post the walkthrough video I shot, which is fascinating because you see all the attendees clamoring to examine every corner of this really charming house.

I spoke with many of the people in attendance, including a woman who lived recently in Hawaii in a house this size. She’s a graduate student at UC Berkeley now, and her enthusiasm for what New Avenue is trying to do was contagious.

I joined the Commonwealth Club of California on January 6, 2011. Hours after I joined, I was at their Market Street, San Francisco headquarters watching Tim Ferriss be interviewed by a reporter for Bloomberg BusinessWeek magazine. Ferriss is the author of the best selling book The 4-Hour Workweek, which I read last year on the advice of my friend Gleb Budman. I have dismissed books of this genre in the past, but I don’t dismiss this book. There is a lot of wisdom in this book, and I came away from watching the interview thinking even more favorably of Ferriss. Yes, he is an outstanding self-promoter who’s even been voted the most effective self-promoter in the world. Yes, he has done some questionable things I don’t approve of. But he makes a strong case that there is a valid path to success that does not require working round the clock. As far as I can tell, Ferriss works far more than 4 hours per week, and I take the title of his book as being more provocative than literal.

The Commonwealth Club is a public affairs forum, and all speakers volunteer their time to talk at the forum. Thus Ferriss was not paid, although he probably commands a hefty speaking fee in other contexts. Perhaps as a result of the Commonwealth Club’s public mission, there were no requests to shut off cameras or recording devices. In fact, the moderator gave explicit instructions on how to Tweet most effectively about the event so the messages would be discoverable by the Club. As a result of the above, I shot video of the interview with my handheld camera, and part 1 of 3 appears above in this post. The quality is marginal because I can’t hold a camera steady, but the audio is good, and you can still see the action up close despite my less than good camera work. I am not intending to take away from income due Ferriss by posting this here, and if asked by the Club or Ferris or his representatives, I will remove this video immediately. I think that on balance, I help Ferriss by spreading the word to my readership about his work, and it’s in the spirit of helping Ferriss that I post this video here today. I will post parts 2 and 3 over the next week.

Tim Ferriss talks about his latest book, The 4-Hour Body, in this interview. I have not read that book, but I plan to. I flipped through it in the lobby, and it looks worth reading. It’s a large book, probably twice the size of The 4-Hour Workweek. Ferriss is both an entrepreneur and a health advocate, and his passion for both rings true. I got to meet Ferriss at the reception that followed the interview, and he sure makes a great effort to be personable and helpful. He had a swarm of people around him for well over an hour, and I got to meet him toward the end of that time. He was still cheerful and helpful even after what must have been an exhausting several hours for him.

My impression of the Commonwealth Club is great so far, and I look forward to seeing Michael Milken speak later this month.

Kevin Casey's first New Avenue home. Outside view. Berkeley, California USA

One of the advantages to my sponsoring the Business Plan Competition at University of California at Berkeley is that I get to meet interesting, bright, motivated students. How does this work exactly? I’m a judge for the competition, and that puts me into regular contact with the student organizers. In about 2007, Kevin Casey was one of the organizers, and we got to know each other just a little bit. But I remembered him, and when he got into the tiny house movement, I took notice and contacted him.

He’s taking a different approach than I plan with my Green Homes venture I haven’t started but probably will at some point. But his approach is valid and he’s making solid progress.

Kevin Casey’s company is New Avenue, Inc. Here’s their mission statement, which I copied directly from their website for precision:

“In the United States 40 million of the 70 million single family homes have just one or two people living in them. These under-used homes were designed for easy building, not quality living, and they drive a seemingly endless list of negative effects such as sprawl, traffic congestion, lifelong “homeowner” debt, and costly energy use. This incredible waste of space is the result of the traditional model of accommodating growth through suburban tract home development. The US Census projects a need for 12.5 million additional homes by 2020 and we need a new way of creating these homes.

New Avenue is an alternative development model that enables communities to grow internally as opposed to externally. We do this by building homes on underutilized properties within existing neighborhoods. Our homes are designed to accommodate the true diversity of our family types, namely those of us that live in one or two person households. We call this the small plot development model and it can end suburban sprawl as we know it, accommodate the demand for 12.5 million new homes we need and bring financial and environmental sustainability to families.

Kevin Casey's first New Avenue home, inside view. Berkeley, California USA

New Avenue delivers a turnkey solution for building these one and two person homes. We have unique expertise in design, land use rights, financing, permitting and pre-fab manufacturing that allows us to create building opportunities where it is either illegal or unprofitable for the old fashioned banks, builders and developers to operate.

By creating new legal and financial products we eliminate the barriers that foil the old way of building and enable the creation of tens of thousands of right-sized homes that are energy efficient, attractive and healthy to live in. The homes we build provide financial security to landowners and strengthen our communities without consuming any additional green space.

The installation of small second homes can create community, enhance health, produce renewable energy, and provide a financially sustainable alternative for property owners and investors to shape the future of our communities.”

Kevin’s New Avenue has built its first home, close by in Berkeley, California. It’s in the back yard of a detached house that belongs to a UC Berkeley professor. I’ve toured Kevin’s tiny house twice, once while about half done and once after it was completed. It’s a charming, warm and livable home. It’s a mere 420 square feet, but I think a single person could comfortably live in it for years. The only thing it really needs that it doesn’t have is a washer and dryer.

Kevin arranged for no less than the mayor of Berkeley to be on hand for the ribbon cutting ceremony, which is scheduled for tomorrow, Saturday, January 8, 2011 at 2:30pm. The preliminary festivities start earlier at 1pm. I plan to attend, and if you’re in the area, I encourage you to attend as well. Kevin has BIG plans for New Avenue, and I wish him the best of success in his ambitious entrepreneurial adventure.

My friend Sara Olsen likes what Kevin’s doing as well. Here’s an article she wrote for GreenBiz.com entitled The Social ROI Green, Affordable Housing. She writes that Kevin plans to build a stunning 10,000 tiny houses in the next few years. Kevin shared that detail with me as well, but I didn’t know if it was a number intended to be publicized. Since Sara published it, I’ll emphasize her point here. Kevin certainly thinks big. Maybe I’ll one day be talking about shipping 10,000 shipping container Green Homes… I hope so.

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Financially Stupid People Are Everywhere

Yesterday was New Years Eve – a fitting time to finish reading a good book by Jason Kelly – Financially Stupid People Are Everywhere, Don’t Be One Of Them. This book hammers home the notion that most people are stupid about money and need to radically change their view towards it and approach to getting and making most valuable use of it. I have made plenty of mistakes with money, for which I am embarrassed and not proud. Had I read and followed the advice in this book when I sold Hotpaper.com, Inc. and made a substantial pot of money, I might now have several times that pot of money. Instead I have less than all of it remaining, which Kelly would frown on I’m sure.

Jason Kelly uses blunt, provocative language to make his points. It’s unlike any financial book I’ve yet read. The message of the book is that the system is designed from every angle to quickly and completely separate people from their money, and that one must forever change behavior if one is to avoid having their money drained.

There is no particular great wisdom in this book, but even so it’s a good book and worth reading. In particular, people with lots of debt, little savings and little hope should run to the library and check out this book and read it in a day or two. It’s a quick read, and hard to put down. I have already adopted many of the suggestions in the book like paying cash for my vehicles and not carrying any balance on credit cards. But I still have a long way to go before Jason would give me a clean financial bill of health.

It’s the first day of 2001 today, so it seemed fitting to write about a book that has more potential to unshackle millions from their debt induced indentured servitude than any other single book I’ve read. Highly recommended.

The law firm Orrick LLP puts on an outstanding free event series it calls Total Access. The events are organized by Chad Lynch, Orrick’s Director of Corporate Business Development. I met Chad around six years ago when I was working really hard on my startup gOffice.com, then the world’s only true online office suite. I haven’t seen Chad in years, but I reintroduced myself today, and he remembered meeting me and remembered the year. He knows thousands of people I’m certain, so he sure has a good memory for faces.

Chad Lynch used to have the comparable job at the law firm Pillsbury Wintrop, an Orrick competitor. That’s when I met him. I’ve stayed in touch via his emails, and today I went to my first Total Access event in years. They begin at 7:15am in Menlo Park, California, and I live in San Francisco, so I have to wake up really early to get down there on time, particularly since the direct route is Highway 101, which is particularly congested during rush hour compared to the other major North/South route, Interstate 280.

I’m glad I  braved the traffic this morning, as the event was worth my while. The subect matter was ‘Cleantech Opportunities and Outlook: The Investors’ Perspective.’ There was a panel of four venture capitalists, including one I know from my days raising venture capital for my first Internet startup Hotpaper.com, which I later sold at a profit to Purple Communications (then GoAmerica, Inc. – NASDAQ GOAM).

The panel answered about three dozen questions over an hour. The consensus is that Cleantech is now past its baby steps, but still a toddler. The group was upbeat about the prospects for starting and funding cleantech companies in 2011. Interestingly, the panel did not see any new solar panel companies getting funded unless the panel efficiency is to be over 20% and the cost per watt is to be under a dollar! These requirements represent a very high bar, from the little I know about that industry. I sure wouldn’t want to be trying to get a solar panel company funded today.

What made the event so worthwhile is I gave my elevator pitch for the ‘green homes’ idea I’m kicking around in my head as a possible venture to work on. The VC panelist I know actually seemed interested and asked me to email him an executive summary. I wasn’t even planning on telling him about green homes, but he saw my new green homes business card and asked me about it, even though there was a line of people twenty minutes deep waiting to shake his hand. We had a nice chat about it, and he was familiar with California AB1866, the law that gives ‘green homes’ potential legs to stand on.

As soon as I finished talking with this VC, a cleantech attorney pitched his boutique cleantech law firm to me, and said he had experience with land use issues I would be sure to encounter. While I’m very loyal to Eric Jensen, my corporate attorney since the mid 1990s, I might schedule a lunch with this guy to hear what he has to say, since I don’t think Eric knows much about land use issues and real estate in general. Eric’s an amazing attorney though, and for high tech ventures it’s unlikely you could do better. I’ve known Eric since 1989 when he was a brand new associate at Cooley LLP. Now he heads their business department.

Orrick Cleantech Panel Dec 16, 2010 Menlo Park, California. Left to right: Erik Strasser, Ravi Viswanathan, Warren Hogarth, Don Wood, Jeffrey Adams, Mitch Zuklie

Orrick Cleantech Panel Dec 16, 2010 Menlo Park, California - Audience

As you can see from the above Apple iPhone 3GS photos (sorry for the low quality) I took at the event, there is a lot of interest in Cleantech. There were people standing in the aisle to my left out of camera view. Remember, this was early in the morning, so I found the turnout to be amazing. Chad told the audience that Orrick has signed up 90 new clients from these events, which, again, are free to attend, and all you need is an invitation which you can get by signing up online at Orrick’s website.

The panelists were from well known and well respected firms. Erik Strasser is General Partner at Mohr Davidaw Ventures. Ravi Viswanathan is General Partner at New Enterprise Associates. Warren Hogarth is Partner at Sequoia Capital. Don Wood is Managing Director at Draper Fisher Jurvetson. Jeffrey Adams is Managing Director at Goldman Sachs. The moderator was Mitch Zuklie, Partner at Orrick LLP. I introduced myself to all the panelists except Mitch, who ducked out before I had a chance to say hello.

Note that while Orrick is staging these events to market themselves, they soft pedal that aspect, and I think only about 60 seconds of the event was spent on asking for business.

The subject matter covered by these events is broad, and it’s certainly much broader than cleantech. I recommend Total Access events without reservation.

Old LinoType typesetter, in the lobby of the San Francisco Chronicle newspaper, 5th Street, San Francisco, California, December 6, 2010

When I was a student in 6th grade at Laboratory Schools in Chicago, we went on a field trip to a printing company. One of the machine operators there made each student a lead impression of their full name using a machine similar to the one pictured above. I don’t think these are used anymore because of the lead fumes, and because a computer can do a much better job, generally. I am particularly fond of this LinoType typesetter since I have devoted a fair part of my life to electronic typesetting, through my work with TeX, LaTeX and ConTeXT at my startup gOffice.com. I saw this machine December 6, 2010 in the lobby of the San Francisco Chronicle newspaper on 5th Street in San Francisco.

First page of Kevin Warnock's patent for online typesetting

I invent lots of things.

One of the things I’m most proud of is online document creation. I started this work in 2002, founded the first true online office suite company, Silveroffice, Inc., in 2003, and launched the first true online office suite in 2004. The suite continues operating to this day, although it’s not ‘a success’ like I hoped for when I began. But I continue to have high hopes for the site, and I still devote energy to it. I haven’t done much with the site for years now, but just recently I’ve started working on it again, in the last few weeks. Great things are happening again.

I own a patent for online typesetting, and I thought my readers might like to actually read the patent, so I’ve loaded it on my blog here: US20040073708. While this appears to be just an application, the patent has been issued.