.: on the frontiers of venturing and venture investing :.

Wednesday, July 25, 2007

The beauty of good online services --- unfolding.

I've been actively trying different online services and tools lately, one of which is www.wesabe.com. It was a particularly interesting test for me as it deals with personal financial data (for most people one the most sensitive data streams) and I've been a long-time user of Microsoft Money.

At first I found it interesting but it was an effort to use it. Well... they just launched a firefox browser extension which makes my uploads even easier than they were with the version of Money I was using.

So... what does this have to do with unfolding? Well this is a great example of a company that has been very actively engaging and asking their community 'how can we make wesabe better'. Well this was one of the highest priorities and so here it is.

What's fascinating too is that they can handle any bank and if they can't they'll add it as soon as you ask. Tremendous responsiveness.

More... the basis of the site which was the wisdom of the collective of users means that there are suggested tags for pretty much every transaction popping up in my transaction histories... and those confusing transaction names on the bank records... well they are sorting themselves out more and more as people translate them for themselves.

All this means the tool gets easier and smarter all the time. And this only cracks the surface... they've published an API... and I haven't even begun to get the possibilities of leveraging the community wisdom through this tool.

By basing their business and service on this community participation/wisdom model is going to have incredible strengths going forward. I don't think any of the traditional financial software companies are going to be able to compete (at least not with the growing audience that is embracing online services).

Now I'm just waiting for their small business service to open up!

Tuesday, July 24, 2007

Systemic interventions --- the fun stuff!

I've linked to this on the left, but can't seem to say it enough...

Donella Meadows' description of places to intervene in a system is the best guide I've come across for this stuff. I don't necessarily use it as a way to categorize the type or degree of systemic intervention an initiative is taking on but rather as a prompt to help me feel for the where an intervention may be most effective and what shifts may be prompted by the intervention being contemplated.

Watch out though... it gets addictive.

Catalysts of systemic intervention.

I've been doing some work with some great folks that are doing/working on amazing regional transformations through a systems approach. It's occured to me that they're using two seperate catalysts in making that happen. One is using financial capital and the other community empowerment.

In our current society, financial capital is one of the most powerful constructs in society and for now and always the empowerment or uprising of community is the other.

What's also interesting is that the transformation comes simply from the interactions that those initiatives are having within the regions they are working with... which comes from interacting from a different mindset.

The catalysts serve to allow interactions to happen and set the condition that the interactions are heard with a different intensity.

It's amazing to see effect of the simplest interaction in prompting tremendous transformation. Kind of life butterfly wings.

Wednesday, July 11, 2007

The tension of the two stories.

It's becoming more and more clear to me that our society is going through a major and accelerating transformation from the currently established 'linear' mindset toward a 'systems' mindset. There are countless ways to describe it but it is increasingly evident and felt particularly among those who are working on solutions to address the growing social and ecologcial threats our society is facing.

The tension of those two models colliding is palpable. The art of bringing them together is beautiful. The potential for it is limited and spontaneous. It's not always possible and it's sometimes unexpectedly possible.

I feel the tension incredibly strongly right now - at this moment and in our society... in the media... in the projects I'm drawn to. While my comfort wishes it away, it is what informs me and guides me deeper. If it's not there there's no progress and yet its presence isn't an indicator of progress.

With quickening heart I go back in again. A part for my own awakening and as part of the broader awakening.

Hmmm... onward...

Seed venturing toward systemic interventions - deal funnel: screening, conditions, and structuring.

Seeding ventures focussed on systemic interventions needs to be come at with an approach that is grounded in systems thinking. Conventional wisdom in venture investment has come from theory and experiences often based in working with business systems that are working within and dependent on the current system itself. What I've found is that the earlier the stage of investment and the more oriented the venture is toward a systemic intervention the more 'gut instinct' is used a guide to making investment decisions and supporting the growth and success of those ventures.

My thoughts have been going toward what would something that focuses on seed venturing toward systemic intervention look like and how would it work. What I'll be posting on for a few posts is going to be my emerging ideas in this.

First off... what would be the filter for projects that it would take on? What would the 'deal funnel' be?

I would approach it as follows:

  1. Is systemic intervention the goal of the venture?
  2. Are the readiness indicators favorable?
  3. Are the conditions for accelerated growth present or practically possible?
From that stage the deal funnel would move into deal structuring which focuses on what is necessary to create the conditions for growth:
  • Basic
    • Basic financial stability
    • Core competency coverage
  • Catalytic
    • Venture alignment
    • Active and appropriate network
A key intersection point is that a financial investment is a powerful catalytic moment in the emergence of a venture. That catalytic power can be most productively harnessed if it is focused on encouraging the conditions as opposed to ensuring rigorous controls are in place. It also hopefully leads to much simpler deal documentation that focuses on establishing and orienting the relationship that is being created and how this investment can be used to create the conditions that will most accelerate the growth of the venture... the intensification of the vortex.

That felt good. Let's see if makes any sense.


Friday, July 6, 2007

A Venturing Model

I've been wanting to post on this for a while now. It's a snapshot of my latest understanding of the venturing process. It's early draft and the writing below is pretty much stream of consciousness but I'm being drawn to just get it out:

We're in an interesting point in history where there is a transition from a mindset based on seeking to understand the smallest components of things (reductionist thinking, command and control models, 'the great clockwork', world/problems as 'complicated') toward a mindset that looks at systems in terms of the relationships/context in order to understand them (systems, ecological, 'complex').

I've been finding the early-stage venturing process as an interesting place to explore this transition and what it means for those who are using venturing as an approach to addressing issues that are becoming increasingly important to people and the planet.

Where I've come to is a visual model that helps me understand the forces at play in using a venturing as a tool to move things from one place to another, from one system to the envisioned system, from the no longer to the not yet.

I consider venturing as a vortex... a complex phenomenon that excels when it finds itself in a stable state far from equilibrium. In other words when it's functionally stable on the edge of big changes in a marketplace.

There are 3 major contributing forces/dynamics that shape the vortex: internalities, externalities, and ideology. The conditions that lead to the creation of the vortex can be described as the trio of clarity, trust, and momentum. The conditions that then sustain, strengthen and accelerate the vortex are the conditions of basic financial stability, core competency coverage, the alignment of the vortex itself internally and within the 3 dynamic forces, and finally the availability of an appropriate, active network.

Moving into the vortex moves is where the process of rationalization enters. It is the balancing act of moving from core ideology (which describes the plane that the venture is being asked to operate in) to the theory of change (a rationalization of what you believe needs to be changed for the system to change --- for your big, hairy audacious goal to be achieved), to the business system which translates the theory into a functional operational model that will perform the functions and deliver the services necessary to act on that theory of change. From there the more conventional strategic planning approaches enter in informing areas of activity that will most likely result in the organization moving toward the BHAG. Finally come the set of actions (action plan) that the organization is actually doing which are hoped to contribute to achieving the goal.

Conventional business school education has focussed on developing theories based on employing a command and control approach to moving organizations operating more closely toward equilibrium, which naturally is also where financial resources are most greatly employed. The farther from equilibrium something is... the harder it is for command and control approaches to work with predictable effectiveness. The proxy then in the capital markets has then naturally become the trust of the entrepreneur/management and the angel community which are not burdened by the same fiduciary duty that fund managers have (which is consider best served by the tried and true command and control model).

It's not surprising then to see the emergence of 'social entrepreneurs' as the magically/mystically powerful icons they are becoming. In trying to tackle systemic shifts there is little in terms of approaches that are acknowledged as 'tried and true' because these shifts inherently are working at a place of being far from equilibrium and so are seen as 'complicated', 'risky', and inherently slippery when put under the conventional investment or reductionist rigor. Social entrepreneurs inherently are adept at intuiting their way through a complex endeavor and take on that responsibility internally. The trust in them to manage this is the proxy for the command and control model when it is recognize that conventional analysis and theory is too cumbersome, inconsistent, and unpredictable.

The attempt here then becomes one of unpacking what happens intuitively within the social entrepreneur and those advisers and contributors that have developed a good 'gut' for navigating a venture vortex from the no longer to the not yet. My hope with this is that we can begin to broaden the understanding of this complex process and thereby broaden society's ability to employ the venturing process to evoke the systemic shifts that are and are asking to unfold as part of the history we are creating.