Archive for the ‘Uncategorized’ Category

Upping Your Game in the Board Room: A Review of Startup Boards

Four years ago, at a panel discussion for my Founders’ Dilemmas course that featured a handful of experienced serial entrepreneurs, one of the questions raised by a student was, “What’s the most important piece of advice you’ve ever gotten from a mentor?” After thinking for a few seconds, one of the panelists said, “That the goal of every board meeting … is to end it.” My heart fell when I heard that answer. A board of directors can be an extremely valuable part of a startup’s foundation, filling in the team’s biggest remaining holes and helping the founders overcome big-picture challenges. Yet, this experienced entrepreneur had gotten burned by his prior boards so often that he chose to give up a board’s potential value by avoiding building or convening a board. Fixing such problems is a core mission of the book Startup Boards, by Brad Feld and Mahendra Ramsinghani. If you are pushing off creating your board because of fears like the ones expressed by the panelist in my course, or you have an existing board that you would like to manage more effectively, you should read this book, underline the key elements of its diagnoses, and put asterisks next to their prescriptions. Its content is most relevant to those who have investors on their boards, but much is also relevant to other types of boards, as I discuss below. Frank Diagnoses of Misalignment and Conflicts At its core, board relations problems are caused (1.) by a lack of knowledge of pitfalls and best practices, and (2.) by inherent misalignment between founders and the members of their board. Unfortunately, investors often paper over the fact that board dynamics can be extremely challenging for founders and CEOs, reinforcing both the knowledge and misalignment problems. They paint a simplistic picture of adding […]

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Read Startup Life!

A review of Brad Feld and Amy Batchelor’s Startup Life                 Halfway through Startup Life, married couple Brad Feld and Amy Batchelor suggest that, “Being in a relationship with an entrepreneur is hard, possibly harder than being an entrepreneur” (p. 78). This hard-learned gem of wisdom is richly conveyed throughout their excellent read. Through their own real-life examples, and those of others, Brad and Amy drive home the message that a founder’s spouse or life partner is the true cofounder, the one without whose support and contributions the startup could be dead or might have never been born to begin with. Startup Life is an invaluable resource not only for showing life partners their likely path ahead, but also for opening the eyes of the founders themselves to the stresses their partners are likely to experience. I appreciate how the book tackles the full range of the entrepreneurial journey, beginning with the initial decision to leap (e.g., when motivated by “not wanting to risk a life in a cubicle”), and culminating with a successful exit. However, their clear-eyed presentation of these events highlights the unexpected challenges that can accompany even the biggest success. For instance, the authors poignantly describe the aftermath of Brad’s successful exit from one of his startups as “the entrepreneur’s equivalent of post-partum depression.” Far from the jubilation we would expect to see, Amy and Brad’s raw reflection offers a sobering, honest view of the dark underbelly of what many expect to be the glorious Promised Land. Along the way, Brad and Amy impart a wide variety of practical lessons and suggestions, such as keeping a weekly digital “Shabbat” in which they are offline each Saturday. To ensure they have cast a wide net of experience, Brad and Amy pepper […]

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Founder Cases in the News: Evan Williams (Twitter) and Apple

One of this week’s more intriguing (and controversial) rumors in the IT industry was about Apple’s possible interest in acquiring Twitter. I was planning to use my next blog-post to give an overview of my new MBA course (“Founders’ Dilemmas: Money and Power in Entrepreneurial Ventures”), followed by posts on its individual case studies. However, given the Apple-Twitter rumors, I decided to jump the gun regarding two individual cases. As it turns out, the course’s introductory case is about the early founding fireworks at Apple, and the middle of the semester features a case looking at Evan Williams’ approaches to founding Blogger and to founding Odeo (which evolved into Twitter). If anyone is interested in seeing those cases, they’re available on the HBS Publishing site, with “Apple’s Core” here and “Evan Williams: From Blogger to Odeo” here. The broader course overview will be coming up soon!

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“Administrivia” Corner: This Blog is Now Email-enabled

For those who prefer to receive new posts via email, I have integrated email subscriptions into this blog. Just enter your email address into the field in the right-side column to be emailed each new post. My one request to email-subscribers is that when you see something relevant or interesting in a post, please hop into the blog to post your insights/comments on it. If you can do that on a regular basis, adding the email option will hopefully increase rather than decrease our interactive blog-dialogue about founding issues. Coming next: “How Much (Equity) is an Idea Worth?” and data on Rich vs. King around the world.

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Looking for (Movie) Suggestions: Your Favorite Founder Scenes?

On Friday in class, we showed — and discussed — a documentary about life inside a start-up. The movie, “Startup.com,” focuses on the birth and evolution of govWorks.com. In class, we showed scenes that focused on: How the founders’ relationships evolved as the venture grew, and as the two core founders had to buy out a third co-founder (see my “Quick Follow-up” note here about the relevance to equity splits). The founders’ experiences raising capital — most centrally, their negotiations with Bob Higgins of Highland (now a colleague of mine who came to class to give us his side of the story :->). I found these scenes a nice complement to our usual written-case discussions about the issues faced by founders and founding teams. For future classes, I would love to find other movie (or TV) scenes relevant to founders, whether or not the movies/shows themselves focus on new ventures (or even companies in general). So: What are your favorites of such scenes? What are the core founder-related lessons you learned from watching them?

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A Look Back, A Look Forward … and a Request

Thank you to everyone who has played a role in building the dialogue within this blog over the last 14 months! I’ve really enjoyed reading your observations and experiences regarding the most critical issues and choices faced by founders and those who work with them. A Look Back Since its launch in mid-September 2005, the blog has had almost 29,000 unique visitors, who have been responsible for more than 43,000 page views. Taking a step back to reflect on the past year-plus, here are a few quick snapshots of where the blog has been and currently stands. The first “snapshot” includes 3 maps, each taken a week apart, of the locations of the two dozen most recent blog visitors at the time. In addition to the readers who come directly to the blog, the number of people who subscribe to the RSS feed has also increased steadily, as shown by the chart below. (Raw data is care of FeedBurner, whose founder-CEO, Dick Costolo, was kind enough to post a comment on his founding experiences a few months ago.)   # of RSS Subscribers Within our blog-dialogue, the post that attracted the most blog-comments from readers was “Founding with Friends,” with 37 comments (to date). The three most popular issues in the blog (measured by the frequency with which people pull up those specific pages) have been: Splitting the Pie (post, post, post, case) Rich vs. King (post, post, paper) Founder-CEO Succession (post, post, post, paper, case) For more on each of these issues — and on other co-founder, compensation, equity, hiring, board, and investor issues — see the latest “Topics Covered in This Blog (So Far)” post below. A Look Forward, and a Request In the immediate future (beginning later today), my next posts will include a lot more regarding […]

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Upcoming Posts: Summer 2006

Here’s a preview of some upcoming posts to this blog: “Rich versus King” paper, short version — My “Rich vs. King” paper (past postings: core concept and charts and discussion) was recently selected for the Best Paper Proceedings of this year’s Academy of Management meeting. The good news for anyone who might be interested in reading the paper is that, for the Proceedings, I have to create a 6-page version of the (much-longer) original paper. I’ll post a link to the short version. “Golden Handcuffs” paper — This focuses on the different vesting terms used by boards to increase retention of founders (who have their own psychological handcuffs keeping them at their ventures) versus non-founders, executives with more versus less years of work experience, anticipated exit (acquisition vs. IPO), and other factors. I’ll be posting initial econometric results and charts, along with my interpretation of the core results. The VC Value-added Gap — To help them identify opportunities in early-stage VC, two of my MBA students, Matt Louie and Cali Tran, did a study this year to identify the biggest areas where — from the founder’s perspective — VCs are under-delivering in their potential value added. I’ll be posting charts, tables, and text from the executive summary of their final report. Splitting the Pie data — Initial charts and descriptive data from the equity-split data collected in this year’s survey. I’ll have further postings on this as the paper evolves over the summer. I may also post some mini-cases of the equity-splitting approaches and negotiations experienced by founders I have studied. This is in addition to several summary charts and discussions from the non-salary parts of this year’s Entrep Survey. Feel free to continue to post requests here….

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Back Online!

We wrapped up our semester last week, so I’ll now have more time to crunch numbers, write and revise papers and cases … and, hopefully, do some blogging! Thank you to everyone who either posted comments or emailed me over the last couple of months. I hope to reply to as many posts/emails as I can, and will also start rolling out new posts about the founder issues I’m studying. In the next couple of weeks in particular, I will be posting another “upcoming features” list and an update on this year’s Entrepreneurship and Compensation survey, which has gone great. Hope all’s been well by you over the last few months. Good to be “back online” again!

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Upcoming Keynote: October 12th in Boston

I will be giving a keynote presentation at the “Emerging Ventures” conference in a couple of weeks. Title: “Founder Frustrations” (surprised?). Love to hear from anyone who attends. Feel free to post comments on the talk (or, if posting isn’t appropriate, to email me directly).

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Preview of Upcoming Posts

In addition to the studies described in posts below, my other Founder Frustration research includes the following studies: Building a Board – In new ventures, do CEO characteristics (prior years of work experience, functional background, founder status) and equity holdings affect Board characteristics (board composition, frequency with which the board meets, board size)? Splitting the Pie – Does the initial equity split among the founders (the standard/”easy” equal split versus the more-contentious unequal split) affect the stability of the founding team as the venture grows, the venture’s growth/valuation, and its ability to attract outside investors? Entrepreneurial Handcuffs – What factors affect vesting terms in new ventures? After the Firing – How does the timing of founder-CEO succession affect the company’s post-succession growth and survival? Is it affected by whether the replaced founder-CEO remains in the firm as an executive, stays on the board as a director, or leaves the firm? VC Founders and Firm Structure – How do general partners who are founding their own VC firms decide to structure their firms? In particular, how do their strategic choices affect internal firm structure? Does the fit between strategy and structure affect investment performance? Once they choose their initial structure, can VCs change it easily? I’ll hopefully be posting results for each of these in the coming weeks, IY”H…

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