• The Hub For Revolutionizing The Way Startups Work

  • Startup Boards Review By HBS Professor Noam Wasserman

    Last year I co-authored a book called Startup Boards: Getting the Most Out of Your Board of Directors. It was a challenging book to write and we worked hard not to make it boring. We’ve gotten a lot of positive feedback on it from entrepreneurs and board members.

    Yesterday, Noam Wasserman, a professor at Harvard Business School who wrote the magnificent book The Founder’s Dilemmas, wrote an extensive review of Startup Boards. With his permission, I’m reposting it here.

    If you are an entrepreneur with a board of directors, a board member, or someone aspiring to be a board member, I encourage you to grab a copy of Startup Boards: Getting the Most Out of Your Board of Directors.

    ————-

    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 value to the venture, downplaying or even ignoring the risks they might heighten or the conflicts that might arise from their involvement. For good reason, CEOs are also often cautious around their boards: Feld and Ramsinghani quote CEO Paul Berberian that, “every time you are in front of the board, it’s an opportunity for them to judge you.” (p. 100)

    This book explicitly acknowledges that such conflicts exist, and reminds the reader of those challenges on a regular basis. The authors state, “While a great board can be a guidepost and a positive catalyst, a bad board can cause angst and frustration, destroy value, and occasionally kill a company.” (p.7) Soon after, they zoom in on investors in particular: “Since investor board members are also trying to make a financial return, conflicts of interest can arise at every step.” (p. 14) Echoing the core motivation for my own work – the finding that of the high-potential startups that fail, nearly two-thirds are due to interpersonal problems between the founders or between founders and the people brought on to complement them – they quote CEO Dane Collins that, “Board dynamics are 95 percent social and 5 percent financial.” (p. 75)

    A central area of conflict, who should be CEO, is highlighted in the book. After all, “the ultimate decision of a board is hiring and firing the CEO.” (p. 27) Too often, such transitions are not handled well by one side or another. When the high-stakes inflection point of founder-CEO succession goes awry, “The problem lies on both sides – while entrepreneurs are slow to recognize their own shortcomings and ask for help, VCs are often too quick to jump the gun and seek change of guard.” (p. 147) In the book, Micah Baldwin provides an interesting lens on board dynamics and successor: “If I don’t get fired, then I know I’ve had a good board meeting.” (p. 12) If anything, given both the importance of succession and Feld’s expertise in it, I would have loved to have seen even more in the book on the pitfalls he’s seen when the succession process isn’t handled well and the best practices that he has personally developed.

    Prescriptions

    Given this diagnosis, the authors detail some viable prescriptions. Impressively, they not only outline actions for founders and CEOs, but also demand actions from boards. For instance, on the board’s side, “At times … interests conflict with each other. The board ultimately is responsible for navigating any conflicts that arise.” (p. 11; emphasis mine) While inexperienced CEOs may back away from requiring action from board members facing a potential conflict, a savvy CEO earns a board’s respect by tactfully highlighting potential disconnects and fostering dialogue until matters are resolved to his or her satisfaction.

    Feld is particularly frank about the ways in which the structure of the VC industry can heighten conflicts. For instance, the authors push founders to recognize that when VCs face a conflict between a fiduciary relationship to their own investors, their LPs, and their legal duty to the company on whose board they sit, the “duty as a fiduciary to his investors will often take precedence. … this tension .. is typically not explained or discussed when it is happening.” (p. 70) Another example: They describe how VC syndication (when multiple VC firms share a round of investment) can lead VCs to make decisions that are best for themselves but suboptimal for their startups, how groupthink can harm decision making, the perils of the “walking dead” VC director, and why the supposed “Chinese wall” that VCs erect to prevent conflicts between investments “is virtually impossible in practice.” (p. 138)

    One remedy? Come right out and ask about how your potential VCs handle such issues, because, “You can achieve alignment of your board only if you understand your investors’ motivation for making an investment.” (p. 71) Other problems arise from the selection of the wrong person to chair the board. When VCs want to become board chairs, make sure you do your due diligence about their prior experience as chairs, whether they overplay their role, how decisive they are, whether they maintain the board’s culture, whether they are proactive communicators, and how they responded in challenging situations like running out of cash or having a down-round of financing.

    In almost all that he does, Feld excels at questioning conventional wisdom. Examples from this book include tackling the common perception that a VC is weaker for not having had operating experience (on p. 32 they say, “VCs who have never been entrepreneurs can have extraordinary amounts of entrepreneurial experience based on the companies they’ve been investors in.”), on whether having two or more VCs on a board is a good thing (on p. 30 they approvingly quote Fred Wilson that, “If you have a very experienced VC on your board, you really don’t need more of them. But you can never have enough peers on your board who have been where you are before. That is invaluable.”), and who should take ownership for raising a new round of financing (they say that, “A common mistake of first-time CEOs is to expect that ones they get a VC on board, they will have an easier time of raising money in the future. This is rarely true,” and quote Mark Solon, TechStars managing director, that: “make no mistake about the fact that raising additional capital is the CEO’s job.” (pp. 155-156)).

    Fighting Inclinations, Rich vs. King, and Communication Pitfalls

    Three other recurring themes struck me in the book: The ways in which founders’ natural inclinations about managing boards can cause problems for them, the centrality of Rich vs. King tradeoffs, and the prevalence of communication pitfalls.

    Regarding the first recurring theme, the authors highlight ways in which founders have to fight their natural inclinations or else risk mismanaging their boards. They assert that, “Rather than defaulting into whatever processes start to happen,” founders need to proactively structure their board by creating policies and procedures to establish which decisions require board approval or shareholder approval. They should tackle upfront whether existing directors can be removed and by what process. After all, with such processes, “in most cases, once you have them on your board, it’s difficult to get rid of them.” (p. 31) They emphasize the importance of bringing aboard independent board members “as soon as feasible,” but that “Unfortunately, this effort is often deferred.”

    Another natural inclination I have observed is founders who are hesitant to “give homework” to their boards. Feld and Ramsinghani try to push back against this hesitation from both the CEO’s perspective and the board’s perspective. First, they quote CEO Rajat Bhargava: “The board works for the CEO. What? Wait a second. Isn’t it meant to be the other way around? Technically, yes, but largely only during two key situations: when they hire and fire the CEO. Outside of that, every CEO should view their board as working for them, and every board member should have the same view – they are working for their CEO. … it is the CEO’s responsibility to maximize the value of the board. And that means partitioning work to each of them.” (p. 125) On the VCs side, they cite Feld’s VC partner, Seth Levine: “While the CEO serves at the pleasure of the board, a good board works for the CEO.” A particularly good practice is “making specific requests to board members for their help” (pp. 119-120).

    The second recurring theme is the tension between the founder’s remaining on the throne of the venture (“King” as I refer to it) and building the value of the kingdom (“Rich”). The authors state “the overall theme of this book: economics and control,” and recommend, “if you care about control, just bootstrap your business. Relinquishing control comes with the VC territory.” (p. 145) They cite Steve Blank’s advice to his alumni founders: “they should think about their board strategy as a balance between the amount of control given to outsiders versus the great advice outsiders can bring.” (p. 80)

    The third recurring theme: Communication pitfalls abound, including what to discuss, when to discuss it, and how the topic is presented. On the issue of what to bring up, they quote attorney Mike Platt: “There are times when matters should be dealt with in a properly convened board meeting, times when a matter should not be on the board meeting agenda until management has had independent discussions with each board member, and times when something is not ready for a board discussion at all.” (p. 43) On the CEO’s side, Chris Heidelberger admits that after first becoming a CEO, “The biggest mistake I made was going into board meetings with big open-ended questions. It’s not necessarily a group of advisers.” (p. 89) What should you do instead? CEO Todd Vernon says: “I think you can ask any question of your board that you want to, but the price of entry is you have to do some homework – show them your analysis. … [Otherwise,] they will think: Why is he asking us – it’s his company? It’s one of the biggest faux pas you can do as a CEO.” (p. 90)

    Another communication pitfall is the natural inclination to avoid sharing bad news with your board or chairman, one I have seen firsthand and work actively from the time of board formation to counteract. VC Greg Gottesman observes: “I think many CEOs have a tendency to want to communicate only if there’s good news. If there’s bad news, you try to fix things. I think the best CEOs are ones who step up the communication when things are difficult.” (p. 121)

    ***

    We would hope that board challenges would get easier as first-time founders gain experience and move on to their next startups. However, this may not be the case, as suggested by the serial entrepreneur I mentioned above who was a panelist for my course: when first-time founders get burned by the board issues described above, they may react in their next venture by avoiding building one, or only building one they can control. Startup Boards goes a long way toward solving the first of the twofold challenge of education and resolving misalignment, and contributes to reducing the risks posed by the second. The result will hopefully be more founders who can found a board and harness it, rather than running in the other direction when they see a board member approaching.

  • Ireland Startup Community Report

    The Entrepreneurship Forum recently published a report on the Ireland startup community. By focusing on improving their culture of mentorship and how community members interact with each other, they are investing in the long-term growth and sustainability of their startup ecosystem.

    Big kudos to their use of “give before you get” – a core theme in Brad Feld’s Startup Communities – on page 5 of the SlideShare below.

  • The Story of Dallas Computer Visionaries

    This is a guest post by Skip Howard. Skip is the founder of Computer Vision–Dallas and Spacee, the next generation of interactive digital signage using computer vision, natural user interface and virtual touch screens. Follow Skip at @sphoward.

    I was a lone-coder. In most of 2012, I was building a computer vision application, turning 2D surfaces into virtual touch screens in a way that hadn’t been done before.  But I ran into a problem. I couldn’t get my computer vision engine running. I wasn’t sure if I had a math problem, a software problem or a combination of both. For almost the whole year, I worked on this problem alone, believing that there were no other resources in Dallas to turn to. At least, that was the perception. So I did what most solitary programmers do, and I took a break.  I was sure that I was the only one that understood my problem and had the capacity to solve it.  About a week into my break, I registered to attend a speech by Brad Feld. He came to Dallas in the fall of 2013 to speak about building startup communities.  I have had one of Brad’s books and came alone just to check out his speech, not knowing what he was going to cover.  Needless to say, after the talk was over, my mind was blown. My major take-aways were:

    1. If you have a problem finding resources for a specific topic or industry, then start a meetup. It’s ok if it starts with a handful of people. Start it anyway. It will grow.
    2. Be inclusive in your meetup. Make everyone welcome, no matter what the skill level. Be inviting.
    3. Give to people around you if you want to get from people around you.

    I realized that my core problem wasn’t just my software, but that we didn’t have a community around computer vision. I talked this idea over with a friend, Jennifer Conley from The Dallas Entrepreneur Center (the DEC) and she encouraged me to start a meetup. The DEC is a co-working space in Dallas, TX and Jennifer is a co-founder. She immediately donated space for the group to meet. So, in January 2014, I started Computer Vision – Dallas and had about 18 people sign up and join. We have a growth rate or 20 members Month over Month, with a very high attendance rate. Thanks to the members of this meetup, I was pointed in the right direction to solve my problem. Now I have a working engine. But it doesn’t stop there.  In June of 2014, Microsoft saw our success and offered to sponsor a Kinect hack-a-thon. We are calling it Computer Visionaries (www.computervisionaries.org). They are flying their entire Kinect for Windows engineering team to work with Dallas developers hand-in-hand.  Microsoft is paying for all food, prizes, and giveaways.  Dallas is one of four cities in North America chosen to host an event like this in 2014 and the only city south of New York City chosen in the United States. With future support pledged from Microsoft, we plan on converting this hack-a-thon into an annual conference centered on Computer Vision, which in turn will transform the developer landscape in Dallas.

    Thanks to a speech and a book by Brad Feld, today I lead a cutting edge meetup, host Computer Visionaries sponsored by Microsoft, have a patent pending prototyped software finished, and am part of the story to bring bleeding edge technology to the Dallas development community.

    Skip Howard
    Skip@spacee.co

  • Pakistan Startup Report

    You might have caught the Brazil Startup Report that was published on Startup Rev a week ago. This time, it’s Pakistan. Bowei Gai and his team have put together another informative set of slides that show how Pakistan’s startup ecosystem is quickly growing. With a population near 200 million, the percentage of creative class individuals rivals that of India and other ecosystems near their geography.

    Cities such as Karachi, Islamabad, and Peshawar have laid the groundwork for entrepreneurship – they have well regarded engineering and research university as well as incubators and accelerators to make sure that innovation is top of mind. There are a lot of Pakistanis currently living and working in Silicon Valley which imports some of that culture back to Pakistan.

    Check out the full deck below, or find it here on SlideShare.

  • Revolution

  • Communities

  • Life

  • Boards

  • Metrics

  • Startup Hub

The Harmony and Disharmony Between Relationships and Business



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This recent Inc. article, entitled “The Start of a Company, the End of a Marriage,” dives into the correlation between entrepreneurs and failed relationships. Through a series of stories that serve as informal case studies, the effects of stress due to entrepreneurship and operating an early stage business are examined.

One of the relationships profiled in this article is that of Brad Feld and Amy Batchelor, the co-authors of Startup Life.


What Would Jane Do?



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3D BookCoversm What Would Jane Do?

 

Guest post by Catherine Compitello

Conversation is the best kind of foreplay. Since leaving my job on Wall St. to start a rooftop farming business I’ve had lots of conversations with my mentors about what it means to be an entrepreneur and the challenges of running a successful business. My network is one of my most valuable assets. Senses are heightened as an entrepreneur. I find myself thinking through everything. As my plan develops, conversations with my mentors and colleagues help me keep a clear head, be open and flexible, take risks, and navigate challenges

Jane Miller’s Sleep Your Way To The Top is like a good friend you reach out to for advice. Or when you need a good laugh about a ridiculous situation at work. At some point we all get caught in weird situations or put our foot in our mouth. We all decide it’s time to take risks, to take on new challenges, to learn new skills. How do you play it? How do other people play it? How does Jane play it?

Jane, CEO and founder of JaneKnows, has become the highest-ranking woman at every company she’s worked for, including: Pepsi Co, Heinz, and Rudi’s Organic Bakery. Sleep Your Way To The Top is her first book and an entertaining how-to for others wanting to make it to their top. Jane asks questions as you navigate your way up, wherever up may be for you: “What’s important to you in your career?  What does success mean to you?  What is your top and how in the world do you get there?” Sleep Your Way To The Top is good for any reader but especially suited for those in the early stages of their career that need to ask themselves these very questions.

Step 1? Buy a journal. Then use it as your “What Obviously Works” journal to “build your confidence and be in control.” Get to know what you want and what your strengths are by writing them down. And continue to do this throughout your career. Get to know your weaknesses too. Knowing your weaknesses means you can get them to work with you and not against. It can give you the strength to know when to say “this isn’t the path for me,” as Jane did when she walked away from a career that was the wrong fit for her when she talks about the Myth: You can have it all. This, by the way, happens to be the only myth Jane doesn’t discredit. And I agree: it’s unfalsifiable. Instead she invites the debate to begin. Or continue, really. Also known as the myth of the work-life balance, this one is hotly debated. And one I’d love to hear more of Jane’s thoughts on. Is this myth a mislabeled (as a gender issue) problem with social and economic policy? Do we agree on what it means to lead a successful life? Are we asking ourselves if we are living the kind of life we want to lead? How do you define that?

Keeping a journal is something Jane recommends you adopt early on in your career, so it naturally comes at the beginning of the book. But you can read through the myths in any order you please. And a lot of myths are covered: Networking Is Sucking Up; Leaders Are Born Leaders; Only Extroverts Win In The Corporate World.

As we all know, some of the most unpleasant lessons in life are learned hard and quick. When discussing one of the shorter myths in the book: “TMI is appropriate in an interview,” Jane tells an embarrassingly funny story that’s quick to the punch. Her writing pulls on her years of success in guiding businesses to deliver a light and funny read with a smart and clear voice.

*Catherine Compitello is an alternative investment marketing specialist turned entrepreneur. She founded The Farm Above, a sustainable rooftop farming business. She recently moved to Boulder, CO from Wall St., she is excited to collaborate with other entrepreneurs in the community.


The Shift: The Entrepreneurs and Companies Bringing Africa Online



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A story about blossoming technologies and entrepreneurial communities in Africa. The gist: there is a large movement to bring Africa online which will empower entrepreneurs and a new wave of innovation.




I just finished watching the 9th lecture in How to Start a Startup class. The guests today were Marc Andreeseen founder of Andreesen Horowitz, Ron Conway the founder of SV Angels and Parker Conrad ...




I love it when David Hornik – one of the very first (maybe the first) VC bloggers writes a post. Today’s is Want to get funded? Get an introduction! So simple, yet so often overlooked or ignored. The punch line – it’s the transitive property that we learned about in elementary school math: So how do you […]

Startup Boards Book Review on Your Story



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Your Story, a site built for entrepreneurs in India, published a review of Startup Boards: Getting the Most of Your Board of Directors. The review is quick to point out that this book is a critical read for entrepreneurs that are about to take on institutional funding and need to understand investor dynamics.

The post also contains a chart that summarizes the high level themes of the book.

Read the full review here.


Startup Boards Review – Christoph Trappe



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The Authentic Storytelling Project recently posted a review of Startup Boards.

Christoph Trappe, the reviewer, notes its easy to comprehend writing style and the book’s necessity for entrepreneurs  wondering about the value of starting a board as well as those who already have a board.

Read the full review here.


Seth Levine on the Boulder Thesis



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In early February, Seth Levine, Managing Director at Foundry Group, talked through the Boulder Thesis with a group in Minneapolis. The segment includes an interview with CEO Clay Collins and his perspective on startup communities.

Find a write-up and some video on the event here: http://tech.mn/news/2014/02/09/video-seth-levine-on-startup-communities/




If anyone understands the concept of first-mover advantage, it’s venture capitalists. With this week’s announcement that it’s setting up an office in Waterloo Region, iNovia Capital hopes to take full advantage of being the first mover among VC firms in our large-and-growing startup community. Given the competitive nature of investment, it’s unlikely iNovia will be […]


Tax Comments on Startup Boards



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I write books not to be the authority on an issue but to lay a foundation for an informed conversation. Below are the welcome additions to Startup Boards from David Thomas, a partner at WSGR in Palo Alto. These comments will join an errata when it becomes necessary.

You suggest that the idea of an executive session is useful for board discussion because it’s an attorney / client privileged discussion.  But you don’t explain until later that the presence of the lawyer at the meeting is what makes it privileged.  You clearly know this, but could be people who don’t.

The discussion of 280G isn’t as clear as it could be.  A few comments on that:

  • I’d drop a footnote that any payments in connection with a change in control could be parachute payments, not just carveouts (e.g., if acceleration is approved)
  • I’ve never heard the term “280G election”.  It’s always referred to a “280G vote” or a “280G cleansing vote”.  From a pattern recognition perspective, you’re on your side of the votes much more than I am, so it could be phrasing that board types use.
  • This one I’d strongly urge you to make—you say that 75% of shareholders not affected by the vote get to vote.  This implies that the common holders who are the shareholders most affected are not counted in your 75%, which is absolutely not true.  You meant to say 75% of shareholders not benefiting from the carveout.

Following are some nits around the Section 409A discussion:

  • “Artificially low” implies that it has to be really discounted to be a problem, when in actuality 1 cent low and 1 dollar low have the same effect once the IRS audit starts.
  • I’d also point out that serial acquirers are likely a bigger risk than the IRS. Google, Cisco, and Oracle look at this stuff closely.
  • This and the next one are personal nits, IRS didn’t establish Section 409A, that was Congress.
  • It actually happened October 4, 2004 “a day that will live in infamy” not in 2005

 




Tom and Tony of tastytrade talk with Brad about Foundry Group, Techstars and Bootstrapping… Related articles Startup Life Interview With Sandy Grason The Kentucky Thesis How Is Your Q1 Going? ” Feld Thoughts Feld Thoughts

Does Geography Matter? The Value of Clusters and How to Engineer One



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This post originally appeared on Will Price’s blog. Find it here.

In a world of high-speed data and voice networks, web-enabled applications, and a global talent pool, does geography matter?

Will technology break down traditional industry clusters and distribute innovation, wealth, and opportunity across an increasingly flat world?

As a resident in the Valley, to me it is an important question.

Should company founders leverage the benefits of operating in a high-tech cluster and pay the cost premium of doing business here, or should they leverage the benefits of enabling technologies and remain in lower cost geographies, while working to recreate clusters?

The work of Michael Porter helps think through the issues. In his HBR article, “Clusters and the New Economics of Competition,” he lays out a convincing argument for the long-term viability of clusters.

He defines clusters as,

geographic concentrations of interconnected companies and institutions in a particular field. Clusters encompass an array of linked industries and other entities important to competition. They include, for example, suppliers of specialized inputs such as components, machinery, and services, and providers of specialized infrastructure.”

His core thesis is that advantage in the global economy lies, ironically, increasingly in local things – knowledge, relationships, and motivation.

Traditionally, competition centered on input-cost advantages – natural and human resources. Today, however, competition rests more on the productive use of inputs, which requires continual innovation. He writes, “modern competition depends on productivity, not on access to inputs or the scale of individual enterprises.

He defines the following characteristics of a cluster that accelerate productivity:

  • sourcing of information, technology, talent
  • coordinating with related companies
  • measuring and motivating improvement
  • better access to employees and suppliers
  • access to institutions and public goods (venture firms, lawyers, universities)
  • complimentarities
  • co-optition, cluster promote both competition and cooperation

Clusters also directly support new business formation. Porter argues that working in a cluster allows individuals to more easily identify gaps in the current market offerings, enables efficient access to talent, institutions, partners, etc, and a home-grown exit market (i.e. established members of the cluster are the likely acquirer).

The most important insight for me is that the modern economy competes on innovation and that operating within a cluster shortens the cycle time to identifying, resourcing, and realizing areas of need and opportunity.

Michael Porter’s thoughtful analysis helps me better understand why the Bay Area “cost premium” is well worth it. Market cap is a function of innovation and growth, and innovation is a function of access to ideas, talent, and supporting resources that eliminate frictions and catalyze connections and progress.

08cfae6 Does Geography Matter? The Value of Clusters and How to Engineer OneIronically, in an increasingly globalized economy the Valley is gaining not waning in prominence. The valley takes ~40% of total US VC, with CA taking well over 50%.

What about people, however, who are committed to building companies outside of the Bay Area? Given Porter’s work on clusters, it is clear that people outside of a major cluster must work incredibly hard to overcome the evident disadvantage of geography.

Fortunately, a real world example of kickstarting a cluster is underway: Bend, OR. Steve Blank’s recent posts on Bend highlight the work of Dino Vendetti, a former Bay Partners GP, who moved up to Bend. The most recent post,Engineering a Regional Tech Cluster, summarizes Dino’s strategy:

  • Encourage entrepreneurial density
  • Leverage the local university
  • Lobby for direct flights to major markets
  • Develop local venture capital sources
  • Invest in connection via local entrepreneur events and start-up schools
  • Harness local business community support

 

2a99882 Does Geography Matter? The Value of Clusters and How to Engineer OneDino, and other cluster pioneers, like the Foundry Group in Boulder and FirstMark in NYC, are clearly thinking holistically about how clusters take shape and what dependencies are required for them to take hold.

Will the valley’s choke hold on the technology industry continue?

Or, will the Valley’s rising costs, plus collaboration technology improvements, and cluster-based business-government initiatives (ex. Bend) see talent migrate to new clusters and geographies?

Please comment below and share your thoughts. It’s an important topic.


Why We Start Up Startups



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This is a guest post by Victor W. Hwang, CEO of T2 Venture Creation and the author of The Rainforest: The Secret to Building the Next Silicon Valley.

Pause for a moment.  And ask yourself some simple questions you probably don’t think about every day.  Why do we build companies?  Why do we innovate?  Why do we care about creating new inventions, products, and solutions, when we could simply leave things as they are?

These are questions that I think a lot about.  On the surface, the answers might seem deceptively easy.  For instance, some people want to make money.  Others like the thrill of the hunt, like a form of legalized gambling.  And others like the independence, the freedom.

But those answers seem incomplete to me.  If you’re an entrepreneur, you already know there’s more.  There are much easier ways to make money.  There are much easier ways to get a thrill.  And there are much easier ways to feel independent.  Therefore, we innovate and build companies for reasons that are deeper.

I am lucky to see a lot of the world through my work.  In particular, I get to observe a lot of entrepreneurial ecosystems.  It’s not just an academic pursuit.  I think this issue matters a lot.  In most parts of the world, they don’t build new companies fast enough, so unemployment often metastasizes like a cancer.  They don’t innovate fast enough, so standards of living creep slowly downward.  What I’ve discovered is that the underlying essence of innovation has a universal quality.  This is true whether you’re building a startup in Silicon Valley or running a family business in a Latin mercado, Asian alleyway, or Main Street in America.

Here’s what I’ve concluded.  The desire to build ventures, devise solutions, and bring ideas to life is core to the human condition.  Underneath it all, we create because we care about things.  We build because we believe in what is possible.  We innovate because we are inspired by others around us.  When entrepreneurship and innovation don’t thrive, after you strip away everything on the surface, it’s always because people somewhere, for some reason, have stopped caring, stopped believing, or stopped being inspired.  I’ve observed this phenomenon everywhere.  It’s always the same.

Theologian Reinhold Niebuhr once said: “Nothing that is worth doing can be achieved in our lifetime; therefore we must be saved by hope.”  He might also have said that nothing worth doing can be achieved by a lone individual; therefore we must create together in teams.  That’s what startup companies are.  They’re just human beings working together to do meaningful things.  Building innovative teams is the only way to solve the problems that really matter.

When we talk about innovation ecosystems, therefore, we simply mean environments where it’s easier to build the needed relationships to achieve common aspirations.  Ecosystems are powered by cultural norms that accelerate the human dynamic of bonding and building together, namely diversity, connectivity, trust among strangers, willingness to experiment, and a pay-it-forward mindset.  If you think about it, this is actually quite profound.  It means that soft things create hard economic value.  It’s a new paradigm for our economic lives.  And it provides a new model to govern our societies, manage our companies, and create communities together.

Why do I write these things?  Because the new paradigm is right under our noses, but is still largely invisible.  What’s missing is a way for the builders of ecosystems to convene together, share lessons learned, and create practical methods to design ecosystems more effectively.  To make the invisible visible.  That’s the reason we started the Global Innovation Summit.  (Brad Feld’s been a fantastic supporter and advisor.)  The event is a celebration of the spirit that gives rise to vibrant entrepreneurial ecosystems.  It’s a place for the builders of ecosystems to get together in person, connect with each other, and create a new set of tools, frameworks, and case studies together.  Last year, we had 49 countries participate.  The next Summit happens on February 17-19 in Silicon Valley.  I financed the whole thing last year on my personal credit card, and it’s not been easy, to be honest.  But it has to happen.  I hope you can participate.

If you’re not into conferences, we also feature lots of free or low-cost activities.  We call it Global Innovation Week, and it runs February 17-21.  A group of organizations are hosting over 20 events throughout the region related to ecosystem building.  There’s also an “indoor street festival” on the Art of Innovation, featuring over 30 creative artists and performers, sponsored by the City of San Jose as its official welcome to the world.

I hope you can join us for this celebration of the ecosystems that drive entrepreneurship and innovation.  Ultimately, we start up startups because it is what human beings do.  Entrepreneurs and innovators in the trenches already know certain truths intuitively, deep down inside.  Handshakes are more durable than contracts.  Altruism is more efficient than selfishness.  And silly things like trust and dreams and love… they actually do power the world.




I was one of the first investors to invest in Iceland right after the financial collapse of 2008. That does not make me a contrarian, why I invested and the thinking behind that investment hopefull...


Success at Work, Failure at Home



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This post originates from Scott Weiss’s blog on Andreessen Horowitz.

One of the differences between being a CEO and a venture capitalist is that I obviously meet with many more CEOs now than I did then. As such, it has become more apparent that many of my struggles as a CEO are surprisingly common. One observation that stands out, probably because it is rarely discussed, is how many founder/CEOs have relationship struggles with their significant others and families. For me, the brightest years at IronPort were without a doubt the darkest years at home. While I was focused, motivating, articulate, and decisive at work, I was inconsiderate, preoccupied, self-centered, and lazy at home.

Now, having worked through that time with my family, I’m in a much better place to reflect on what happened, how I could have handled things differently, and offer some advice to other founders who may be caught up in a similar dynamic.

As a first time founder/CEO, I really had no idea what I was doing. Sure, I had gone to business school, worked at plenty of large companies and even other successful startups, but nothing prepared me for the incredible stress and overwhelming life focus of actually running a startup.

I did my best to move up the learning curve: I surrounded myself with great mentors, board members, coaches, and, most importantly, the challenging, wicked smart executive team members that worked with me everyday. We definitely made lots of mistakes, but we did many things right and IronPort grew to be a very large and successful company over the seven years before we ultimately sold to Cisco in 2007. All that said, I believe I could have been a much more effective leader if I had leaned in at home. As my relationship with my family deteriorated, so did my concentration at work as I was constantly trying to manage it in fits and starts. Here are some details of my personal struggle:

Part of the magic of a startup is the fear of death. You have only so much money in the bank, and if you don’t get to the right milestone before you run out, then you’re dead—company goes under, it’s over. There’s a way to cheat death when you are not going to make it—you sound the alarm and force everyone to code through the night and/or weekend. This is stereotypically the life one signs up for at an early stage tech startup. Get in early, kill yourself with a team making something great, and get a meaningful product out before you run out of money. And hopefully, make it up to that hardworking team with stock options later.

I didn’t code, but as the CEO, I felt it necessary to be there physically with the engineering team. I would sit through architecture discussions, product reviews, and wireframe layouts. Sometimes, I would just get everyone lunch or dinner. When we started pulling consistent coding weekends, we brought in the entire management team to serve the engineers: We brought them food, washed their cars, got oil changes, took in their dry cleaning, and arranged for childcare for their kids in the office. Lead by example, lead from the front, was the CEO approach I convinced myself was necessary.

Now contrast this with my home life.

One of the stated values at IronPort was “work/life balance,” but I clearly wasn’t living it. I was rarely home. And when I was home, well, let’s just say I wasn’t particularly helpful or cheery. My perspective at the time was: I’m killing myself at work, so when I get home, I just want to kick back with a cocktail and watch some TV. All I do is talk to people all day long and so at home, I’d really prefer not to talk much, just relax.

This posture was, of course, completely opposite to how my wife felt. After having left her VP role in a successful startup, she was now home speaking in monosyllabic words to kids all day and was starving for adult conversation when I got in the door. And that part about sitting on my ass in front of the TV with a cocktail? This ran counter to all of her efforts to teach the kids about pitching in as a family. The message of everyone helping to cook, clean, and be responsible for the household fell completely flat when daddy wouldn’t so much as take out the trash or change a light bulb. Nope, I was far too important for that and suggested she should hire someone to keep the house clean or even cook, if that was “stressing her out”.

Ugh. I was completely missing the point and talking past her… I was setting such a great example at work, but such a terrible one at home where I often acted like a self-important asshole.

As IronPort grew, I was constantly on the road with customers, press, analysts, and of course, recruiting and energizing employees. We ultimately did over 60% of our revenue outside of the U.S., and we all felt it very important to support all of our disparate offices from Europe to Asia to South America. There were times in a given month when I was gone 50-75% of the days. Even when I was home, I was usually in this brutal state of sleep deprivation and recovery from adjusting to yet another time zone. While I was gone, 100% of the daily burden fell on my spouse, usually resulting in a solid week of arguments upon my return. I started referring to the week after a long trip as “re-entry”, like John Glenn’s Friendship Seven fireball.

After years of working full-time with our first child, and part-time after our second, my Harvard MBA wife, who had had an amazing career in her own right, “decided” to become a full-time mom and take care of our children shortly after our third was born. I say “decided” because at the time, it was clear to both of us that I wasn’t willingly scrubbing in as a 50/50 partner at home. She endured the rocky years while I was running IronPort, but insisted that when it was over, we were going to re-evaluate and recalibrate.

I took about 18 months off in between IronPort and joining Andreessen Horowitz. During that time, I was packing lunches, driving carpools, and making dinners, and began doing my real part in the family. With the help of my wife and other role-model dads, I essentially got re-programmed and it has continued to work for us even though I’m working full-time again. Now one might say that being a partner at a VC firm, even a hard working one, isn’t the same as being a founder/CEO of a startup… I’ll admit that’s true. However, now that I’m on the other side, I believe that I could have coached my former CEO self to success as well. Here are the most critical things I needed to change:

Disconnect to Connect. Although it’s easy for me to see it now, at the time I clearly thought what I was doing at work was far more important and urgent than what was going on at home. It sounds weird now, but this required a real mindset change for me. My wife dropped a bunch of hints (e.g. “How did I suddenly land in a 1950’s relationship?!”), but I was undeterred in the thick of it. The shock of almost losing the relationship made me pay more attention, but I was only going through the motions with my mind still firmly attached to the business. I believe the change in attitude came from truly connecting and tuning in at home. This required disconnecting from work (e.g. turning off the computer and phone), and completely focusing all of my attention on the details of the home. Cooking a great meal. Helping with a science project. Discussing the future with my partner. I was often rightly accused of being physically present without being mentally present. If you find yourself sneaking into the bathroom to complete emails, then you’re certainly not in the moment… Getting some time physically out of the Silicon Valley pressure cooker was also helpful in changing my perspective.

Participate. It’s just not possible to be a real partner if you aren’t materially participating. I believe even the busiest CEOs must drive a carpool, pack a lunch, help with homework, make a breakfast or dinner, and consistently attend school events. Being involved every week is the only way to stay connected at home, and it cannot be outsourced. No matter how exhausted I am from traveling, I push myself to “not be lazy” at home—it’s just too important. When you are involved, there is a natural cadence to planning the week together and communication improves dramatically.

Communicate. Multiple, daily phone and text check-ins are the norm now, but not then. When I was traveling at IronPort, I would sometimes go for days without communicating at all. Now that I am completely tuned in to the weekly family schedule, we plan and calendar family meals (perhaps the single most important thing we do), pickups and drop-offs, and make adjustments on the fly. E.g. Did some time suddenly free up so I can complete an errand? Can I pick something up on the way home? Etc. My norm is to check in between meetings, but if I’m the “parent on duty”—i.e., if my wife is out of town—then I will start a meeting with, “You’ll have to excuse me, but I’m the parent in town so I need to keep my phone handy in case of an issue.” Communication was by far my biggest area for improvement.

Planning and Priorities. My wife and I have a weekly date night. My son and I are in a fantasy football league together. I cook with my daughters. Most times these have become immovable appointments on my calendar. There is a phrase—“truth in calendaring”—if something is important, then you must carve out time in your life to do it. When my calendar reflects that I can’t do a meeting on Wednesday and Friday mornings before 9am, because I cook breakfast and drive a carpool, then it’s amazing how meetings just don’t get scheduled. If at all possible, living physically close to the office is also a huge help to juggling the priorities. It means that I can cut out for a family dinner and then go back to the office or have a late meeting afterwards.

In retrospect, I believe that I could convince the hardest working CEOs that having some real life balance by investing in your important relationships will make you a better CEO. When you are out of balance, it affects your stress, judgment, and ultimately becomes another destabilizer just when you need to be the most put together. I also believe this change is actually a much better example of leadership than the one I was exuding. When a leader shows the way toward getting things done and balancing their life, it sets a much better example for everyone else in the company who struggle with it too.

Scott Weiss, Andreessen Horowitz


Startup Communities - Chapter 3