Last week Brad spoke to a group of entrepreneurs from the California Lutheran University about Startup Communities. Stephanie Crowley is a graphic recorder who attended the event and proceeded to draw this…AWESOME!
How Should We Measure Success In Our Startup Community?
I’ve learned a lot in my 3 short years of organizing Triangle Startup Weekend (TSW). For one, you can get a lot done in 54 hours if you just focus on doing things rather than talking about what you plan to do. All of the Triangle Startup Weekends we’ve organized have been successes, each building on the previous and becoming a more efficient and impactful event for the startup community.
This past weekend, we hosted TSW EDU, North Carolina’s first Startup Weekend focused on spurring innovation and reform in the education space. Based on feedback from attendees, coaches, judges, sponsors, other organizers, and community members that followed along on Twitter, the event was a success. But how do we define success? Better yet, how should we define success?
How do we define success?
The first question I get after TSW usually relates to how many companies were formed or how many of the companies survived and are still operational businesses. How many got funding? How many are still around?
That’s understandable – it’s very human to think of the companies themselves as a measure for how successful TSW is at impacting our startup community. Don’t get me wrong, they’re definitely part of the equation. And there’s nothing worth hiding – both of the winners of TSW since 2011 are still around, operational, and joined by other companies that launched during TSW.
How should we define success?
I can tell you that after years of organizing TSW, the companies themselves are far from the most important measure of the event’s success. Just as website visits aren’t the best measure of success for a startup, the companies that form at TSW don’t tell the entire story worth telling.
When we tell people about what role TSW plays in the startup community, we start with the fact that it is one of the few events that engages the entire entrepreneurial stack. Brad Feld explains the importance of this engagement in Startup Communities and if he were to touch on the metrics that matter to a startup community in Startup Metrics, he would probably focus on more than just the companies that form out of Startup Weekends.
It’s common for attendees to meet future co-founders and find jobs. In fact, last year, one of our participants drove from Arkansas because his fiancée was starting graduate school in the Triangle and he needed a job. He walked away from the weekend with strong leads and found a job shortly thereafter.
One of TSW’s past mentors and judges, Richard White, CEO of UserVoice, came to TSW two years ago and points to the energy and engineering talent he saw as the sole reason he decided to open an engineering office in downtown Raleigh.
It’s those types of things that we should be talking about when we talk about startup events.
Just as we have done (or should do) in our businesses, we should rethink how we measure success in our startup community and ask ourselves whether we’re using metrics that matter or merely vanity metrics.
Broadly, TSW EDU introduced entrepreneurship to educators, and education to entrepreneurs. It’s very likely the EdTech community in the Triangle will point back to TSW EDU as a tipping point. It’s too soon to measure all of the things that will come from TSW EDU, but I can tell you the companies that form from the weekend are just the tip of the iceberg. And they’re impressive enough in their own right.
Not long ago the guys from Awesome Inc arranged for startup guru Brad Feld to speak at the Kentucky Center about the Boulder, Colo., startup phenomenon. Somehow Boulder has attained the mythical entrepreneurial status we also attribute to Austin, the San Francisco Bay Area and Research Triangle.
Now back in the post-Nam days, when I was a longer-haired undergrad at CU-Boulder, the only local entrepreneurs I can recall utilized baggies to distribute their product. Gnarly for sure, but definitely not a global hot spot.
So, I wondered, what changed since the late ’70s, besides the merciful death of disco? How had the most liberal college town in America transformed itself into one of the preeminent entrepreneurial communities in the world and a birthplace of TechStars?
Maybe Feld’s speech would provide some answers, so I bought a ticket (and later, his book).
From Boulder to Louisville
In Feld’s TED-style talk, he used a flip chart to quickly lay out what he calls the “Boulder Thesis” (which he stretches to 200 pages in his book, Startup Communities). In short, Feld’s Boulder Thesis states that a vibrant entrepreneurial community must:
- Be led by entrepreneurs who
- Have a long-term commitment, and
- Be inclusive of anyone who wants to participate in it, and
- Continually engage the entire entrepreneurial stack.
Understand that Boulder, which is fondly referred to as “eight square miles surrounded by reality,” sports five major research labs and the most degreed population in the United States. So it’s a pseudo-Oz, and whatever they do or (now legally) smoke out there might not translate to Kentucky.
I’m here to proclaim that the soul of the Boulder Thesis is, indeed, beginning to trend right here in the Bluegrass. Granted, we don’t yet match their 2013 Rockin’ Mountain High community, but (cue Journey) we are at least in the ’80s, or maybe even (fade to Pearl Jam) the ’90s in Boulder time, edging ever closer to the so-2009 Black Eyed Peas’ “I Got A Feeling.” (Way to remix those metaphors.)
My point is that this region is slowly but surely crafting its own energetic entrepreneurial community under flag bearers such as Phoebe Wood, Doug Cobb, Bob Saunders, Kimberly Nasief-Westergren, David Jones, Charlie Moyer, Tendai Charasika, Mark Crane, Greg Fischer, Adam Fish, Alex Frommeyer, Kris Kimel, Brian Raney, Suzanne Bergmeister and many others.
This isn’t a planned and managed affair; it’s organic and authentic. It’s like cat herding. It’s highly inclusive and spans the “stack” from investors to entrepreneurs to supporters. It includes long-standing groups such as Venture Connectors, KSTC, Nucleus and Enterprise Corp.; alongside rogues like Forge and Startup Weekend.
With the Gil Holland-led re-entrepreneurization of NuLu, the community even has a homeland.
From Louisville to the Commonwealth
To paraphrase Brad Feld, we are witnessing the birth of not just the Louisville Thesis, but the Kentucky Thesis, which I might point out is miraculously overcoming basketball rivalries and connecting with like-minded clusters of entrepreneurial diasporas from Paducah to Lexington to Covington.
A good thing? I damn well think so, and cheer on all comers who are willing to pitch in, whether by starting a company, investing, working, sponsoring or just showing up. We don’t have to become Boulder.Who needs weed dispensaries and 300 days of sunshine anyway? We just need to be ourselves and stick with it.
We have strengths in logistics, healthcare, food and manufacturing combined with that bull-headed Kentucky long-rifle sense of independence – hey, not every region is so blessed. We have plenty of bright people and ideas. And nobody sees us coming.
Granted, it was probably a hair easier to grow a vibrant entrepreneurial community in progressive, highly educated, uber-cool Boulder. But when we do it here, Mr. Feld will have an even better book to write.
Or maybe we’ll just write it ourselves.
Brad and Amy sat down with Sandy Grason of ICOSA to discuss their new book Startup Life: Surviving and Thriving in a Relationship with an Entrepreneur…
Last month Brad visited Rokk3r Labs in Miami to discuss building a startup community…
It wasn’t a long time, but it was certainly a good time when Brad Feld dropped by the Communitech Hub Thursday.
Feld, the 47-year-old Foundry Group managing director, TechStars co-founder, author, marathoner and all-around good guy from Boulder, Colo., was on his first visit to Waterloo Region.
Over about six hours at the Communitech Hub, he toured the space, met entrepreneurs, spoke about how to build a great startup community and helped judge a sold-out Startup Smackdown before returning to Toronto for an early-morning flight out.
Feld left us with much to mull over and plenty to be proud about, which I’ll expand on here in due course. For now, I’ll leave you with what he told me at the end of a long day.
Q - So, what did you think of your day here?
A - I thought Communitech was awesome. I had a great day here.
I didn’t really know what to expect because I hadn’t been to Waterloo before, and I thought the community was extremely vibrant.
There’s a huge amount of people who are working on the right kinds of things, and the energy level is off the charts, which is really, really fun to see.
Q - Did anything in particular stand out from what you usually see in startup communities?
A - I think the concentration of all of the different activities, including the accelerator, the university incubators, co-working space, event space, a bunch of entrepreneurs, the community space, is very powerful.
You see it in some other places, and it’s starting to appear in a more structured way in Chicago at 1871, or in D.C. at 1776, those two buildings. But this is a really mature example of it; it feels really built-out and not just well-organized, but extremely well-run.
It was nice to see, because I think there are a lot of people who aspire to have this at the core of their startup community, but it’s very hard to do, and it’s clear that this has been a lot of hard work over a number of years.
Q - So if you got home and (your wife) Amy asked, ‘How was Waterloo?’, what would you say?)
A - I’d say I had a great time.
I would tell her that I spent the entire time inside one building, so I didn’t really see Waterloo, but I saw Communitech, and I thought it was really cool.
[IN]cubes Demo Day: Live Broadcast
When: Wed, February 27th, 2013 @ 1pm
Where: Toronto, Ontario.
Description: Although physically closed to the public, Itbusiness.ca will be broadcasting the event live. Tune in to hear Brad Feld’s Keynote speech.
Startup Communities with Brad Feld
When: Thurs, February 28th, 2013 @ 4:30-5:30pm
Where: Tannery Event Center, 151 Charles Street West – Kitchener, Ontario
Description: Join us to hear Brad Feld talk!
The Boulder Thesis: Four Principles for Startup Communities.
When: Thurs, February 28th, 2013 @ 6:30-8:30pm
Where: Tannery Event Center, 151 Charles Street West – Kitchener, Ontario
Description: Startup Smackdown is a fast pitch competition, where 10 startups are called to the ring to pitch in front of a panel of judges.
When: Fri March 1st, 2013 @8:00am-8:00pm
Where: Student Life & Technology Center – Worsham Ballroom Hendrix College - Conway, Arkansas
Description: Join us Friday, March1, 2013 at Hendrix College in Conway for an open discussion on building the state’s entrepreneurial and startup ecosystem.
*Brad talks at 6:30pm Central
“Do More Faster: Lessons to accelerate your startup” is a book of advice and learnings that have derived from the technology accelerator program, TechStars. Do More Faster is written by TechStars founders David Cohen and Brad Feld and includes contributions from many of the mentors and past participants of the program.
TechStars in a mentorship accelerator program that started in Boulder, Colorado, but now has classes in Boston, New York and Seattle. Successful applicants take part in an intensive 3 month accelerator program where they get access to mentors in order to create successful companies. At the end of the program, the startups have the opportunity to pitch their company to Angel Investors and Venture Capitalists.
Do More Faster is based upon 7 themes of what it takes to start a successful company. Each theme contains lessons that mentors and previous TechStars participants have learned through their entrepreneurship endeavours.
The 7 themes of Do More Faster are:
- Idea and Vision
- Legal and Structure
- Work-Life Balance
Idea and Vision
Part of the application process of TechStars is submitting an idea that the team will work on. This can either be a currently operational company, or merely just a vision for what is hoped to be achieved. In either case, TechStars accepts applicants based on the merits of the team, and not the idea.
It is this freedom to change ideas that allows TechStars participants to pivot into a completely different opportunity should the current assumptions reveal themselves to be wrong. This freedom enables a more iterative approach to finding a really big business opportunity.
A second common theme around ideas in TechStars is that ideas are worthless and execution can’t be copied. New entrepreneurs are often scared to share their idea in fear that someone copies them. The mentors of TechStars encourage participants to share their ideas with everyone in order to gain feedback and test their assumptions. Execution is really the most important aspect of creating a successful company. Even if someone else is working on the same idea, the execution of that idea will usually be quite different.
TechStars encourages applicants to get their ideas and products out into the open as quickly as possible, talk to customers and focus on the one thing that they can really do well to solve an important problem. All of these things can seem inherently difficult to first time entrepreneurs. By exposing an idea to the world, you gain feedback on it’s value and you are able to progress the opportunity quicker.
The second theme of Do More Faster is People and how it is the people that are involved in a company that really make the difference. TechStars is a mentorship driven programme and so it values the input of people within the community, mentors and fellow company founders.
The majority of TechStars companies are founded by at least two co-founders. Whilst it is possible to found a company as a single founder, it will require you to take on more work and stress if you choose to go it alone. A co-founder can not only do half the work, but she should also be a sounding board for ideas, advice and a comrade when the going gets tough.
The early employees of a company are really important for creating a good company culture. The culture of a company will usually originate from the actions and attitudes of the founders and early employees, so it is extremely important to choose the right sort of people who you want to work with. Skills and experience can always be taught over time, but a bad attitude will be like a cancer in your company. Many of the TechStars mentors advise to hire for culture and to hire slow and fire fast. If someone is not working out as an co-founder or an early employee you need to do something about it as soon as possible.
As mentioned in the Ideas and Vision theme, TechStars value a team’s ability to execute their plan. An idea is worthless without execution, and so the TechStars mentors push the participants to continuously and relentlessly execute their vision.
As the title of this book suggests, one of the mantras of TechStars is “Do more faster”. This does not mean reckless execution, but rather, creating a feedback loop to test and prove assumptions as quickly as possible. If a team can prove that an idea will not work, they can more quickly move onto an idea that will work. As a TechStars participant, you are encouraged to make decisions quickly, even when you don’t have all the information. A quick decision is usually better than a delayed decision, especially when the company is young.
Startups have a lot of disadvantages against established incumbents. Startups have no money, no customers, no partners and no leverage. However, Startups have nothing to lose and so they can take risks or focus on one precise opportunity without having to maintain legacy customers. If a Startup can’t take risks and move quickly with little information, they lose the one advantage they have over their established competitors.
During the 3 months of a TechStars program, each team will be getting a lot of different advice from some very experienced and respected mentors. TechStars teaches it’s teams to treat everything as data, and they should use their own synthesis of the various bits of data in order to make a value judgement on the future of their companies. This could mean completely neglecting the advice of a mentor, and instead, doubling down on an insight from a customer or a gut feeling.
The product is obviously one of the most important aspects of a company because it is the product that becomes synonymous for Customers. Many Entrepreneurs will try to build a product from their vision or an assumption, when really, a product needs to be created for a market opportunity.
As mentioned above, TechStars teaches it’s participants to move quickly. TechStars companies are encouraged to get their product into the market as quickly as possible. Many founders will be scared to put out a product that is not finished, not polished or lacking in features. However, it is this scope creep that will handcuff the company from ever releasing the product. The quicker you get a feedback loop with your customer, the quicker you can achieve product-market fit. As the old saying goes, “If you are not ashamed of your first release of your product, you launched too late”.
Part of launching a product is dealing with either established or new competitors. Every good idea will have competitors in some form, even if they are not directly competing against you. It’s important to find your differentiation and to market yourself as a clear solution to a concrete problem. Going after the entire market is too big for any company, you must find a single customer cohort, and a single opportunity to attack first.
When you are excited about your product and you are starting to gain traction, it can be difficult to stay focused on the current goals of the company. Usually as a startup, you will have an assumption of a market opportunity that you should try to either prove right or wrong as quickly as possible. Along the way you will have business development deals, partnerships, and new possible market opportunities at every turn. It’s important to stay focused on completing the current goal of the company before starting to chase every opportunity. Working with large companies can be great for distribution, but the opportunity cost of neglecting your other goals can be worth even more.
Creating companies on the Internet has a huge advantage over traditional companies in that you have a wealth of data about every possible metric. You can accurately track your marketing and how every penny you spend converts into revenue. You can track how your product is being used, how it is growing, are your customers coming back, or are they getting stuck or confused on a certain aspect. None of this data is available to traditional companies. The wealth of data that is available can be overwhelming. It’s important to only track the things that are important to your product and your opportunity. Tracking the wrong metrics can be worse than doing no tracking at all.
Whilst fundraising is an important aspect in the lives of many of the startups that go through TechStars, each of the participants are encouraged to take a step back and question whether they actually need to raise money at all. Some of the most successful TechStars alumni are actually bootstrapped companies that took no investment at all once the program had concluded.
Raising money might seem like the natural next step, but it is actually not such an easy decision. When you take money from an investor, you are giving away part of your company and you lose at least some control. Investors are looking for a return on their investment and so they plan for a liquidity event at some point in your company’s future.
Bootstrapping a company can mean slower growth, but you retain full control over your company and you are not forced into a liquidity event.
Recently there have been many startups that raise money when they really don’t need to. Some companies are capital intensive, or it will naturally take a long time to get to cash-flow positive. These types of companies need to raise investment or they could never get off the ground. However, it’s highly unlikely that your Software as a Service startup needs to raise money to get started.
If you are looking to raise investment, taking part in a program like TechStars will make the process considerably easier. You will be introduced to the right type of investors through mentorship and you will be immersed in a community of people who you can ask questions and get the right type of advice. Fundraising is a full time job, and so anything you can do to smooth the process will be beneficial to your startup.
Legal and Structure
When you are starting a company, it’s important to remember the legal and structural implications of doing so. During the life of the company, you will be entering contracts, taking on debt, handing out credit and dealing with partners, customers and competitors. It is your responsibility to ensure that the legalities of your company are correct before taking further steps.
You should ensure that your company is recognised as the correct legal entity. Choosing the wrong structure could lead to personal liabilities should your company default or you become involved in a legal battle.
Your relationship with your co-founders should also be drafted in a legal document. Equity agreements, vesting schedule and Intellectual Property rights are important things to get right from the start.
Nobody starts a company with the expectation that something could go wrong, but it is your responsibility to take the correct precautions just in case. When you start a company with a co-founder, you expect to be both committed to the vision of the company. But outside events, or a change in personal circumstances can dramatically change things very quickly.
Despite a lack of money in the early stages of a company, you should invest in a startup lawyer who has a lot of experience of dealing with companies in your situation. General purpose lawyers won’t have the same expertise or guidance that a specific lawyer will have, and so it will mean you will have less problems further down the road when the legal agreements are actually needed.
Starting a company from scratch can seem like a tremendous amount of work in the beginning as the future success of the company is entirely in your hands. Striking the right work-life balance is important because it is likely going to take years to really build a successful companies and so no-one can sustain an all work-lifestyle for that period of time.
It probably goes without saying that you should only start a company in an area that you are passionate about. When you naturally combine your interests with building a company it means you can dedicate more time to not only working on your company, but also acquiring knowledge of your domain.
But even still, it’s important to be able to escape the pressure and work-load that you are putting yourself under so you can continue making the right decisions for the future of your company.
Do More Faster is a fantastic book for anyone who is interested in building a startup. The book is comprised on many very short essays on lessons to learn. This make it very easy to read and to take actionable advice in very small chunks.
TechStars has become a world-renowned model for mentorship-driven entrepreneurship. If you are interested in applying for TechStars, or simply want to take the lessons and advice and apply them to your startup, Do More Faster is definitely worth your investment.
Buy Do More Faster: Lessons to accelerate your startup on Amazon (Affiliate link)
Living the startup life is a hard roller coaster. One day you think you’re on the verge of building a billion-dollar company, the next you wake up in a cold sweat, paranoid that you are about to run out of cash and have to shut the whole thing down.
There a lot of good books on how to develop a customer value proposition, rigorously test it and raise money. But I have never seen a book address the hard issues of how to live your life while you’re working 80 hours a week trying to do all those things. Until now.
My friend, Brad Feld, has written precisely that book with his wife Amy Batchelor, called Startup Life. The couple tackle how to manage your relationship with your significant other while trying to live in the mad, crazy, demanding world of startups. Nothing is off limits for this book – Brad shares how he screwed up his first marriage, how they manage their highs and lows together and even addresses the topic of how to find time for sex while running a startup.
Brad asked me to share a few thoughts on my perspective on the topic and whether I had any additional tips. I have been happily married for 19 years and have known my wife, Lynda, over 25 years (we met our first day freshman year in college while moving in to the same dormitory entryway). Like Amy, Lynda is not in the startup world at all, but rather has a completely different work and personal profile than I do (she is a former professional Broadway-style performer and is now a pioneer in the world of aging and multi-generational programming). Additional context: we have three kids (now ages 16, 13 and 10). Brad and Amy don’t have kids, so they were light on addressing this additional challenge – a topic I struggled with when I was an entrepreneur and still struggle with today as a multitasking, over-scheduled venture capitalist trying to be an accessible, loving Dad for my three high-energy children.
Be Predictable, Even If It’s Bad News.
One of the hardest things about being an entrepreneur is the unpredictable schedule you face. A customer calls with a bug and there’s a crisis. A new product needs to get pushed out the door and it’s a crisis. Or you’re trying to raise money and you need to prepare all night for tomorrow’s investor meeting. It would drive my wife absolutely nuts when I would say I would be home by a certain time, and then not show up until one or two hours later. Dinner would be cold, kids would be mad and all hell would break loose.
I finally swore I’d get better at keeping track of time and setting expectations better with my wife about when I would come home. So we developed a system together: at the beginning of each month, I email her when to expect me home at night that month (or not at all if travelling) with a 15 minute range. Many nights the range is “9:45-10:00pm” if I’m in NYC that day or have an evening event. But it is what it is and I don’t try to sugarcoat it. Then, I work very hard to stick to that hour, treating that deadline as if it were a meeting with an entrepreneur or a portfolio company board meeting. If I know I am going to miss the deadline for being home (sure, stuff comes up), I always give her the heads up. This creates a sense of predictability for her and the kids.
If I see my kids in the morning (which is rare, although I’m working on that), I will tell them verbally what time to expect me rather than try to hide from the fact that I’m travelling or working late that day. This avoids my family getting more frustrated with my unpredictable schedule than my actual schedule!
You’re Just Not That Interesting.
In my early startup days, and the early days of the Internet, we used to refer to the crazy pace that we were living as “Internet Time”. There was this feeling that everyone else was living a slower pace than we were. Indeed, to me, my 12-14 hour work day was chock full of a week’s worth of stories, characters and drama. Subconsciously, I thought my day-to-day was more exciting than my wife’s and would come home eager to share all the drama. After a few years, I began to realize that as interesting and dramatic as my work life is to me, it’s really not that interesting to Lynda. She cares about the big things, of course, and she cares about how I’m feeling about it, but the ups and downs about new product releases and who’s missing the quarter and what competitors are doing are all just noise to her.
So my mantra now is, my work life just isn’t that interesting to my family. I share with them the top-line highs and lows, but I don’t think my wife could name each of my portfolio companies. Instead, when I come home, I focus on them: the ups and downs of my kids social and academic lives; the ups and downs of my wife’s work and social life. In my head, I try to keep it to “80% them, 20% me” sharing time. I’m sure it ends up more balanced, but if I aim for 20%, I know I’ll come home focused on them rather than on me. To be clear, I love my work and love being consumed in it. It’s just not that interesting to the four other members of my household. And I’m ok with that.
Find Together Projects.
My wife and I operate in different professional worlds, but we have found that we love collaborating together on projects beyond the raising of our three kids. Raising our kids takes an enormous amount of thought and energy. The topic of our children often dominates our private time together. We have discussions and make decisions each week about their activities, their school work, who is to have a sleepover, who is picking them up when (during the weekend, we often switch to “taxi driver” mode) and what they should do for the summer. But, we have found that having “adult projects” that we collaborate on is also very rewarding. We have pored energy into various non-profits, our synagogue and our kids’ schools as a way of making a difference, yes, but also spending our outside work time together. Thus, although our professional communities are very separate, our personal and social communities are totally integrated.
In addition to those few tips and reading Amy and Brad’s books, I recommend a few other books:
- The Three Big Questions For a Frantic Family by Patrick Lencioni. Lencioni is one of my favorite business book writers (see this blog post on his work on team dysfunction) and so this book was a refreshing way to apply some of his core business lessons to family management.
- Raising Cain by Daniel Kindon and Michael Thompson. I have two boys. I have read this book twice – once when they were recently born and again recently as they move into the world of teenagers and found both sessions incredibly helpful and informative.
- Nurture Shock: New Thinking About Children by Po Bronson and Ashley Merryman. David Kidder of Clickale suggested this one to me and I have enjoyed it as a book that cuts against conventional wisdom in many areas of raising children.
- The Talent Code: Greatness Isn’t Born, It’s Grown. Here’s How by Daniel Coyle. My partner Jon Karlen recommended this one to me. Jon was an all-American squash player and his wife was a 12-letter athlete (!) at Harvard, so I take his recommendations about raising talented kids seriously!
Good luck with your own journey for balance and happiness!
This is a re-post from Jeff’s blog Seeing Both Sides
Everyone At Cheezburger Reports To Another Employee Of Cheezburger — Except For Me. I Work For The Board Of Directors
- Brad Feld (Boulder, CO)
- Greg Gottesman (Seattle)
- Ben Huh (Yes, I legally report to myself. Xzibit and I feels.)
- Rich Levandov (Boston)
- (Unnamed, open seat)
What does a Board do?
The Board is another tool of business. You can use it wisely, or it can use you. Legally, as a corporation, we are required to do certain things according to the legal documents we all signed (this gets really complex and there are a million ways to do it) but the role of the Board, regardless of who is on it and why, is to: look after the best interests of the shareholders/owners of the corporation.
In this case, our Board members have a specialty (not all businesses are the same), they represent the world of high-risk, high-reward Venture Capital investment and invest in startups of a certain, smallish size. (Vs. say, a large publicly-traded company, or a charitable organization.) The Board of Directors are also not the same thing as Board of Advisors. Advisors don’t take on legal responsibility of looking after the company, Board of Directors do. Often, this gets confused, but BoD is the real deal where the rubber meets the road. BoA is a loose collection of advisors.
In human history, we have an illustrious pattern of fucking up the art of representation, oversight and management — over and over again. Mob rule? Meh. Despotism? Sucked ass. Monarchy? High failure rate. Democracy? Not bad. Companies are no exception. The Corporate Board is a method of shareholder representation, oversight and management.
A healthy Board should be independent, thoughtful, supportive, and aligned. This is the art of corporate governance that’s a real thing and a seldom visible and seldom credited KEY CONTRIBUTOR to the success and failure of many companies. Corporate governance is fascinating to a business nerd like me, and again, like all things in business, deceptively simple, yet virtually impossible to master. (Major BoD failures make the news, but successes don’t. Hello, Enron!)
There are many duties (legal, ethical, and quasi) of a board. Here are some examples:
- Hire/fire the CEO (Shareholders vote — based proportionally on the number of shares each one controls and the Charter of the company– to elect the Board of Directors, who in turn hires/fires the CEO. My legal and ethical obligation as CEO is to the Board and by extension the shareholders of Cheezburger.)
- Review and approve executive hires
- Review and approve the official plan
- Review and approve the financial controls and accounting
- Review and approve mergers and acquisitions
If the Board members are smart, well-connected, and helpful, FANTASTIC! But there is actually no law that requires each company to have smart, well-connected, and helpful Board members.
I’ve been exposed to a fair number of board interactions through my friends who are CEOs of their own companies. I also sit on the Board of one other company, Circa (a way to be on the other side of the table) where I try to not be a shitty Board member.
What’s it like working for your meta-self and the Board?
We have excellent Board members. (I’m not just saying that because Brad gets these blog posts emailed to him.) Because we were profitable, we were able to reject about a dozen different interested VCs before we took money from this group — because I couldn’t tell if they were good or bad until Greg and Brad came along. Our investors were heads and shoulders above the rest.
The key to what makes them great is that:
- They believe that the best way to create a great return on their investor is to support the CEO.
- They believe in WORKING HARD to do it, and they love doing it. As Rich told me once “it’s a great gig, if you can get it.”
That’s all I ask of them. Really. That’s it.
I’ve met a lot of VCs who do not work hard to help their companies. They come to a meeting every few months, don’t read up on the business, dish out irrelevant advice, and then leave. Bad Board members waste the time of the company — this is the cardinal sin of Board members.
I can list many examples of our Board members busting ass at all hours, on and off vacation because I asked for help. They take me at face value and while they are not afraid to challenge my thoughts and assumptions and whip me out of a funk, they trust me and defer the decisions to me — no matter how much or how little stock a CEO owns, it’s their company until it’s not.
And in return, I don’t hold back, and I don’t put up a wall. They see me at my best, and also at my worst.
I talk to them quite often. Before the days of the Internet, the Board operated on a far slower, monthly, or quarterly schedule. You’d spend hours in meetings reviewing reports and financial data. Now, we send them information as soon as we have it, which keeps them and us more connected, productive, and allows us to use our valuable Board Meetings to discuss opportunities and issues, not reports.
Side-note: How does the business of a Venture Capital investor work?
Greg, Brad, and Rich all have to look out for the best interests of THEIR investors (called Limited Partners, or LPs for short) who gave their companies (venture capital firms, VC for short) money (capital) to invest in companies like ours through a financial instrument and a legal entity called a “fund” (a VC firm usually operates several separate funds at any given time since a fund’s lifecycle runs only for several years).
It’s the job of venture capitalists (usually called “partners” in a VC firm) to invest the money of their LPs from a particular fund and spread the risk out over many investments. And in about 5-15 years, if things work out, they send the LPs a bigger box of money (return on investment). If the VCs are good at this, they get to raise new funds, and do it over again.
Their jobs depend on our success too.
Problems always have answers:
A bad CEO comes in just as many flavors as bad Board members. One of the things I have gotten better since that day was not just presenting the problem, but also showing what we’re doing to fix, mitigate, not-repeat it. If it’s my legal duty to be honest with the board, and if it’s my ethical duty to tell them as quickly as possible, it was all my learning as CEO to present the best possible solutions with the problem.
Good Board members won’t tell you how to solve the problem. Like good teachers, they show you the direction, they prod, they support, they suggest, but the solution is mine to own, and I am accountable and responsible for the decisions I make. It’s a strange thing, but I can disagree with my Board for weeks, but once I make the decision, they support me 100%. I count myself lucky to have people like this back me. They serve as role models for me as to how to be an employee and manager.