(Photo: Indiegogo)

"How Much Would You Pay To See A Photo Of Ryan Lochte’s Alleged Penis?" begs a headline on the irreverent sports blog, Deadspin. The post, which went up a little over an hour ago, is illustrated by a photo of Gawker Media employees clustered around a computer screen looking (and laughing) at an alleged photo of Olympic swimmer Ryan Lochte's penis.

The pic, which is "a neck-down bathroom-mirror self-portrait, in which the tip of the penis almost but not quite reaches into the sink basin," was provided by a source, who is demanding a fee. Deadspin has decided to start a fundraising campaign on Indiegogo, probably because Kickstarter doesn't consider dickpics "art" (subjective!).

Unable to decide just how valuable a photo of Ryan Lochte's penis might be--both in cold hard cash and cold hard pageviews--the editors of Deadspin put the question to a crowdfunding test:

Do you want to see Ryan Lochte's alleged penis? Rather than bidding on some hypothetical market value of the photograph, let's establish a real market value. Call it Cockstarter: Our offer price will be whatever you collectively pledge to the cause, plus a contribution from our own budget. Based on your pledges, we will make a final determination on the photo by next week.

We decided to reach out to ff Venture Capital partner and Indiegogo investor David Teten to gauge his opinion on this important story.

"The adult content industry is suffering because of a surplus of free content," Mr. Teten told Betabeat via gChat. "That implies the market value of this photo is near-zero; creating an equivalent photo in Photoshop would take 1 minute."

"That said, I think the management team at Fitocracy should support this Indiegogo project, and perhaps hire Ryan Lochte," he added.

Additional reporting provided by Nitasha Tiku.

Mr. Teten

This guest post was written by David Teten, Koen Bremer, Gyorgy Buslig, and Adham Hussein. David is a Partner with ff Venture Capital and Founder and Chairman of Harvard Business School Alumni Angels of Greater New York.  Koen, Gyorgy, and Adham are all Columbia Business School MBA 2012 students and former consultants with McKinsey and BCG.

Even the best VCs and entrepreneurs have a painfully high failure rate.  Lowering that failure rate would be highly impactful on venture capitalist returns, if we could figure out how to do it.  In addition, in light of increasing competition in the startup funding space, a methodology  for helping portfolio companies consistently is a strong competitive advantage.

In an effort to address this, we launched last year a formal study of best practices of VCs in improving portfolio company value. The objective of the research is to define a blueprint for how investors can help portfolio companies succeed through operational (non-financial) support, including  but not limited to facilitating shared services, recruiting, knowledge sharing, and enhancing management skills. To do so, we are working to understand what the best practices in the industry are, as well as what the correlation is between providing this kind of support and start-up success.

We’re now in the midst of surveying VCs and entrepreneurs for this research.  We’ll feature in our published work the most effective firms and practices we identify, subject to the interviewees giving us permission to use their names and data.  We’d greatly appreciate you taking a few minutes to fill out our survey:

VCs please click here.

Entrepreneurs please click here.

The value creation study draws on a wide range of research:  in-depth interviews with over 50 venture capital investors, entrepreneurs, startup incubators and advisory service providers; a proprietary database and survey of VCs’ portfolio value creation practices; a wide scan of academic and practitioner publications focused on the topics of entrepreneurship and venture investing; and the authors’ experience working in venture capital, early-stage technology companies, and strategy consulting.

This study is effectively a sequel to the study David Teten led with Chris Farmer of General Catalyst on best practices of venture capital and private equity funds in originating new deals, published in Journal of Private Equity, Harvard Business Review, Institutional Investor, etc.  Similarly, we plan to publish this value-creation study in a few different major journals.

If you have any questions, you can contact the team at vcbeyondthemoney(@)gmail.com

We’ve summarized below some of our preliminary results. This is the first in a series of articles as our research findings unfold.

Are VCs a different breed of “investors”?

The conventional school of thought argues that investors –generally- should be creating value by selecting the “right” companies, business plans, and teams into which to invest. We argue that on top of that selection function, venture investors have a wider role to play beyond funneling financial resources with a high-risk appetite.

Venture capitalists are financiers of a special nature. They fund highly uncertain projects that usually operate within a very fast moving environment and within consistently shifting technological paradigms. The company teams they work with are usually highly motivated entrepreneurs trying to engage in extensive product and customer development efforts for a product they don’t typically have a full vision of, for a customer whose needs are opaque, and for a use case which is ambiguous. This is a very different world than traditional corporate lending.

Almost every VC will say, “I respond to the CEO’s requests, I put him in touch with someone in my network when he asks me to”.  We view that as the bare minimum.  We think that VCs can add tremendous value by systematically actively supporting their portfolio companies.

So how can VCs help their startups?

We have interviewed over 50 entrepreneurs and some leading VCs around the US about their experiences and pain points while building their companies. Our in-depth interviews have led us to define a framework (TOSCAN) for early-stage investors to systematically support their entrepreneurs, which we believe will in turn increase success and valuations.

-      Team Building: accelerating hiring to help startups build their most important asset; people

-      Operations: minimizing entrepreneurs’ burden in admin, accounting and legal

-      Skill Building: building the right skills, especially for top management, and ensuring they develop inline with the early-stage company’s life cycle

-      Customer Development: identifying the right customers and gaining access to them

-      Analysis: how entrepreneurs measure, understand and report the performance of their early-stage companies

-      Network: helping entrepreneurs building relationships with networks key to their company success

What is important, useful, new, or counterintuitive about your idea?

So far, there are two particularly innovative techniques we found VCs to be using:

• Dedicated teams: Some of the investors we interviewed have started building dedicated business support teams, led by Partner-level experts. We are particularly interested in learning how these teams are organized, their interaction patterns with portfolio companies, and the company’s perception of their value-added.  Andreessen Horowitz, First Round Capital, and ff Venture Capital are all examples.

• Portfolio companies’ networks: Many VCs said that the people who know the most about building a company are the portfolio CEOs.  In order to enable information-sharing, VCs must build very strong online and offline networks between portfolio companies, which organically provide a wealth of knowledge and support to each other.  All of the firms above have online networks for their portfolio executives.

According to ff Venture's—the fund insists on the cummings-style "ff"—Form D filing, which sneakily offers a Roseland, New Jersey address, rather than its Midtown headquarters, the company filed an intent to raise on November, 29, 2010. Partner John Frankel says the firm was already deploying capital from the new "silver" fund even as it was raising the dough. Of the 23 investments, which includes startups like Klout, ThinkNear, Livefyre, Voxy, and Kohort, four have had up rounds. "So, it looks like performance is accelerating," he told Erick Schonfeld in a video interview.

But ff has another feather in their cap, their previous $6.3 million fund, raised in 2008 "two months after Lehman collapsed," as Mr. Frankel, a Goldman Sachs refugee, points out. According to him, Prequin ranked that fund, called "ff blue," the top-performing VC fund through the end of 2010.

David Teten, a partner with ff as well as a former entrepreneur and banker, said despite the firm's obvious concentration in social, the firm's philosophy is not to think thematically:

"I'm new to VC, I just joined this side of the table in the middle of last year and what I've seen is a a lot of VCs say, 'This sector is hot, therefore I'm going to find a company in that sector.' We think that's not a healthy approach. If the sector is defined, that means there's already some players in it, so you're probably investing in player four and someone else has defined it and is going to take the lead. Our approach is the people who know the most about the growth sectors of 2017 are the entrepreneurs. As they come to us, we filter the ones that are really promising with a promising  industries and then we'll invest in them.

It happens to be that Internet companies have great economics, so we're very happy to invest primarily in Internet companies, but our mandate is invest where there are growth opportunities which will produce great returns for our investors and of course for the entrepenrue who have most of the equity."

So invest in people, not themes and the future, not the present. Yeah, we think we got that. Earlier this week, Betabeat dropped by the ff offices for one of the firm's rousing idea dinners. The discussion was certainly future-facing covering outer space, health informatics, lucid dreaming, but, we're sorry to report, off-the-record.

In Adrianne Jeffries' feature this week on start-up fever affliciting New Yorkers with a bad case of  wantrepreneurship, we listed what we thought was already a high number of networking spinoffs from the original New York Tech Meetup. Dumbo Tech Breakfast, UWS Startup Meetup, and the New York Technology Bathhouse Meetup come to mind. But none of the options on that growing list meets the particular specifications of ff Venture Capital's David Teten. He and venture partner Mike Yavonditte from Hashable are launching "a periodic Meetup for people who work in the innovation community and who are parents of pre-teen children." Sorry, Fred Wilson, your kids are too grown.

On Business Insider, Mr. Teten writes, "We envision organizing activities that our kids, partners, and we will all jointly enjoy."

Ironically, Mr. Teten felt the need to create this new targeted meetup vertical because of the proliferation of events that leaves New York's tech set in a constant state of FOMO. For VCs with growing broods--they're probably a little more insulated from the cost of raising a kid in the city--that FOMO is particularly acute. Says Mr. Teten:

Now that I’m up to my 3^rd child, effectively all of my weekend/spare time is spent with the kids. That’s great, but it also means that I’m somewhat cut off from some of the great activities that the NY innovation community organizes every week: the classes, panels, presentations, networking events, pitch contests, etc. That’s why we’re working on this initiative.

Hmmm, come to think of it, we're feeling sort of feverish about a location-aware babysitting app that disrupts the venture capitalists with pre-teen kids market.

Not here yet, but getting close.

When GroupMe co-founder Steve Martocci threw out his desk chair for a Bosu ball to lose "the founder fifteen," we had an inkling it was only the beginning. After all, at least some of those early Fitocracy adopters had to be coming from inside the tech scene. Then we found out Michael Galpert--Aviary's own, personal self-quantifying fiend--was trying to foster (healthy!) competition in the workplace through a shared employee database measuring weight loss down to the pound.

But ff Venture Captial partner David Teten has really gone and done it. He emailed Betabeat to let us know that that ff's new ergonomically-optimized 5,000 sq. ft. office space on 6th Avenue can basically tell GroupMe's single Bosu ball can suck it, although not in so many words.

In a blog post that reads not unlike a motivational sermon, Mr. Teten explains that, like any good techie, ff was aiming for disruption, namely of the broken white collar model of sitting at a desk for 8-12 hours and thinking that three gym sessions a week can offset that. (Based on the massive crick in our neck that doesn't show any signs of healing, we're with him on that.)

Mr. Teten explains that since they had the luxury of building the space from scratch for ff's team and portfolio companies like Parse.ly and Phone.com, they did it with a few maxims in mind. Motion over statis. Standing over sitting. No added costs to living well. And flat surfaces. Did you know, for example, that "up to a third of women suffer permanent problems as a result of their prolonged wearing of heels, ranging from hammer toes and bunions to irreversible damage to leg tendons"? We wish we could forget it!

In any case, here are just some of the amenities ff staffers and its start-ups can expect: "a standing desk with anti-fatigue comfort mat," conference rooms with ball chairs, hand grippers (for flexing during tense term sheet phone calls), pedometers, wobble boards, and "walking meetings." Although those are technically outside the office.

Did we say the craze was official? Maybe we meant officially crazy.

Who wants t0 #FF ff Venture Capital?

Betabeat will be getting some new neighbors! Hopefully the air has cleared and we can all grab lunch.

John Frankel, who has been an angel and VC since the dot-com days, announced today that his ff Venture Capital is building out 5,000 square feet of new office space at W. 36th. It will be the home base for Frankel and his new team, partner David Teten and venture partner Mike Yavonditte, who are joining the firm.

Portfolio companies like Parsley will be using the space too, with twelve desks free for funded companies in all, but don't call it an incubator! "I hate that word. I can't tell you why, I just do," Frankel told Betabeat by phone.

ff Venture Capital is more than halfway to raising its second fund, pegged around $25 million. One of its biggest wins was Quigo, where Mike Yavonditte served as CEO, which sold to AOL for $340 million back in 2007. It's made 11 investments in 10 companies since December says Frankel.

"We have a 15-person deal screening committee, whose members have prior experience in venture capital, private investing, investment banking, early stage corporate management and a variety of other disciplines...

"We hold one meeting each calendar quarter, at which we bring together three selected companies and our Angels...

"For those who are interested in learning more and potentially investing in a company, we form teams that work together on due diligence, review of deal documents and negotiation of terms. Most private investors are on their own."

The group, chaired by David Teten, is currently accepting applications from angels who plan to invest at least $25,000/year in early-stage investments, although there is no contractual obligation to do so. The application, due Monday, is here.