This is the first of a new series on Venture Voice where we ask a bunch of past show guests a simple question and post their answers.

How'd you raise your very first round of financing?

Scott Rafer: The first money I raised was for Fotonation in 1996. We just had a cashflow issue, so borrowed $25k off a friend of mine in NY, paying him back the principal plus interest and warrants. It was the right thing for the situation. My mistakes were later.

Over at Silicon Alley Insider, Hank Williams is arguing that VCs are supporting free services that ought to be paid for on the hope advertisers will foot the bill down the road -- thereby eliminating the opportunity for noble paid services to make a couple honest bucks by charging users. It's a dubious argument, as pointed our by the site's own editor (ouch).

If we accept the argument that free is a bad thing, then wouldn't Google be to blame? It's acquired several companies such as Urchin and VC-backed Feedburner (our first guest) that offered paid services and made them free. Google also acquired VC-backed Jot (their CEO talked about plans to charge users on Venture Voice) and GrandCentral, then accelerated their development into free services.

Google understands there's at least two ways to make money from "free" services. Ads, which are time tested and Wall Street approved. And data. Data has tremendous value, especially to Google (as opposed to VCs), as Google can use it to decide on new services to launch and to choose acquisition targets. (Who even needs to do due diligence on an acquisition target if you already are running its analytics?)

What's next? Look to the past. When Google acquired Urchin, Google was working on its own analytics product that it dumped in favor of Urchin's battle-tested service. Urchin had a hosted stats product that was turned into the free Google Analytics service, and a downloadable product with a license fee. Now, Google has its own ad server in development but just closed an acquisition of DoubleClick (their founder interview here) that charges for its industry standard hosted ad serving service and downloadable ad server. Why not dump the Google's beta free ad serving product and just make DoubleClick's hosted ad server free?

To most companies, it'd be a fine strategy to have different product lines for different market segments (e.g. Microsoft Works vs. Office, Toyota vs. Lexus), but not to Google. The beauty of Google has been allowing the same service to scale to companies of any size, most famously in the case of AdSense/AdWords. Will it break this tradition to preserve DoubleClick's hosted ad serving revenue, which is already under attack from many competitors and from an open source solution (OpenX)?

Disclosure: This blog entry is free.

We just received this e-mail from Sydney Mfuniselwa who gave us permission to post it:

My name is Sydney from South Africa, I am really moved by the interviews on show. I wish we had something like this here in South Africa because I think my country needs stuff like Venture Voice as it still developing.

My point is I am 25 young black man as software developer, trying to go on entrepreneurship but its hard in this part of the world because most of the people cannot even use a computers and I already made my mistake by planning and planning for a long time in developing a database for the company I work for which i did developed and presented to my senior manager but just heard the company has already sign up for a new system to be implemented because of this I felt so down for a while up until i manage to put my hands on one of venture voice interviews. Two things I have highlighted from the entrepreneurs you interviewed are:
1. Do not waste time trying to plan a perfect product execution is the key.
2. And do not let million rejections wear you off.

Now I am trying again because i believe I should be an entrepreneur and i just open internet cafe on one of historical known building in Carlton in the Johannesburg CBD.

I truly appreciate Venture Voice.

Silicon Alley Insider asked me to write about my trip to the West Coast (DEMO in San Diego, Podcast Expo in LA, meetings in Silicon Valley). Enjoy!

We took off for the summer from Venture Voice. E-mails like these from loyal fans made it a painful experence:

Great show, have you taken the summer of? I hope to hear you back on the pods soon.

Cheers!

pb
Penticton, BC

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I talked with Joel Spolsky recently and he said that you are no longer doing Venture Voice! I have learned so much from your podcasts and was disheartened to hear this news. I do hope that you continue VV. I wish you the best in what you are now doing. Diwant

I can explain!

I was busy launching a new business called News Groper, a network of parody first-person blogs. For example, if you want your fix of business news, you can read blogs "by" Tom Perkins, Ben Bernanke, Stephen Schwarzman and Jeff Skilling.

But fall's upon us. Venture capitalists are back from vacation, customers are ready to do deals again and entrepreneurs are more than ready to pounce. As such, we're ready to give you the content you need.

I'm very excited to announce that Eddie LeBreton has joined the Venture Voice team to help take things to the next level.

Now we need your help: What can we do better? Who should we interview? Any other great ideas for us? Want to sponsor Venture Voice? Please post in the comments or contact us.

I had the pleasure of being in the very first Facebook generation. My college was one of the first 13 to be added to Facebook, and we were all jazzed just to see photos of each other and occasionally get a "poke" -- the implications of which are not clear to this day.

I only have a couple of friends from college who are not on Facebook. The rest are. And I went to a college without a computer science department.

Generally the way new technologies spread, according to Geoffrey Moore's Cross the Chasm, are by starting with early adopters and spreading to the early majority. The early adopters are visionaries and do things simply for the sake of trying a new technology (e.g. being at the leading edge of "social networking"). The early majority are pragmatists who try something when they're sure of it's value (e.g. seeing what your friends are up to). Crossing from one to the other is a huge and often fatal challenge.

LinkedIn took this challenge and started with the early adopter Silicon Valley scene. They started to invite their friends, VCs, lawyers, bankers, etc. until it eventually spread so that many professionals -- even here on the East Coast -- know what it is. Reid said on my show that he doesn't think it's hit its "tipping point", but I believe it's crossed the chasm.

Facebook's another story.

Their first few thousand users included most of the college kids at the original 13 schools allowed in. While college students are more computer literate than many, most of that audience could not be considered early adopters. I had friends on Facebook in those days who didn't know what a blog was.

Facebook didn't start with the traditional early adopters, or if they did they only started with a small subset of them and didn't stay there long.

Moreover, they didn't even allow in the typical Silicon Valley/TechCrunch 53,651 early adopters in until recently (unless they happened to be in college).

Now, after Facebook has launched its API and the tech world has taken notice in a big way of the business opportunity in Facebook, you're starting to see lots of typical early adopters -- tech entrepreneurs and VCs (e.g. Fred, Josh, Roger, Dave, Howard, Andy) -- experiment with Facebook.

What does it mean that the early adopters are giving their two cents only after the early majority (at least among 18-30 year olds) have already adopted?

I usually don't like to give hints about who's coming up on Venture Voice, but I can't resist breaking news: Ryan Allis -- who left college early to start his business iContact -- just raised a $5.35 million for his already profitable company. Stay tuned to hear the story.

I was reminded of how immigration policy affects all parts of the economy while reading Fare is Fair, one of my favorite columns in The L Magazine that's a collection of quotes from those most in the know in NYC: the cabbies.

A number of our past guests on Venture Voice are immigrants. How does the immigration policy affect entrepreneurship in the US?

Bill Gates gave a very provocative Harvard Commencement speech. I was struck by this passage:

But I also want to be recognized as the guy who got Steve Ballmer to drop out of business school. I’m a bad influence.

Anyone who's worked with venture capitalists knows that they have a language of their own -- and for the most part it's quite fun. Terms like "burn rate", "first-mover advantage", "monetization" and "defensibility" never get old. But I've noticed that many VCs I respect are using the term "unfair advantage" to simply describe an advantage. Jeremy Liew describes having the best news coverage as an "unfair advantage". Susan Wu calls having a community and leveraging network effects an (outdated) "unfair advantage".