Month: February 2019

Feb 28 2019

Three Year Future Org Chart Exercise

I’ve been doing a three-year future org chart exercise with the CEOs of a number of the companies I’m involved in between $25m and $250m in revenue.

This can be done on a napkin, a sheet of paper, or a whiteboard. It should not be done in PowerPoint, Google Slides, or a fancy org chart maker app. It should be done in real-time, without preparation, and in front of a small group, which could include co-founders or board members. But, start with a small group – no more than four people in total.

Draw your current org chart. If this is difficult, messy, or ambiguous, then slow down and talk it through with whomever you have in the room. You probably have some opportunities for improvement here.

Do not draw any empty boxes. Do not have any TBH boxes. Try to avoid dotted lines, although own up to them if they exist. Given that you are at least $25m in revenue, go two levels down (your direct reports and their direct reports.)

Now, stare at it for a while and discuss with whoever is in the room. If you are the only person in the room, go get other people on your board or leadership team who you trust to give you blunt and constructive feedback before you continue the exercise.

Write down all of your thoughts and feedback. Don’t change your org chart, but try to decide what you don’t like about it. Identify when you have the wrong person in a role, or when they have too much, or too little span of control. Are all your direct reports white guys? Are they functional peers? Do you trust them and respect them equally? Do they communicate well with each other – both one on one and as a group? If you were to rehire them today for the role they are in, would you? Are you paying them too much or too little? Do they have too much equity or too little? Or is the org porridge just right?

Close your eyes and image three years into the future. You are three years older. If you have kids, they are three years older. If your parents are still alive, they are three years older. There are new politicians in office. The New England Patriots just won the Super Bowl again for another year in a row, but no one except people who live in New England care. You still get way too much email and VR is still pointless for anything except video games.

Open your eyes. Your business is somewhere between two and three times bigger than it was when you closed your eyes. Do not look at your old org chart from three years ago. Draw a new org chart. This time you can have empty boxes and TBH. You still don’t want dotted lines if you can help it.

Once again, go two levels down. But start with the CEO box. Are you still in it? If not, are you in a different box on the org chart? As you fill out the future org chart, once again only go two levels down. Make a list off to the side of people you have in the company today in senior roles who you don’t think will be with you in three years. Make a different list of the people who in senior positions today who will still be in the company, but won’t be in the top two levels of the organization.

Now, compare the org charts. Are there any changes you would (or should) make now, rather than in three years? As with the current org chart, discuss this with the people in the room. Let them challenge you, allow yourself to be defensive and feel whatever feelings you have, rather than try to please them or get to the right answer. Let it be uncomfortable.

As a bonus, design your ideal board of directors for three years from now. Once again, start with your current board. Close your eyes. Then draw your future board. Instead of names, put characteristics in the boxes. After you’ve done this, you can put names against the future board members when the person fits the characteristics.

Again, discuss.

Now, bring more people into the room. Ideally, you will now bring in your entire board and your leadership team. However, if you are uncomfortable bringing in your full leadership team (all of your direct reports), don’t bring in anyone from the leadership team at this point.

Walk everyone through today’s org chart, the future org chart, the current board, and the future board. Pause after each one for feedback or thoughts, especially on the future org chart and future board. Finally, go person by person for feedback on where you have ended up.

If you take this exercise seriously, it will take an hour or two. While you don’t have to do it face to face, I’ve found it most effective if the first set of people involved is in a room in front of a whiteboard. If you attach this exercise to a board meeting, do it at the end, and go out for a meal afterward.

As the CEO, record all of what you did (at the minimum, take photos with your phone.) Put it off to the side for a week, but then revisit it and decide what changes you are going to make and how you are going to make them to your team to get from today’s org structure to the org structure three years from now.

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Feb 23 2019

The American Tailwind 

Every year, one of my favorite things to read is the Berkshire Hathaway annual letter. The 2018 version is out and, as always, is a beautiful thing to read if you have any interest in business and economics.

I particularly loved Warren Buffett’s reflections at the end of the letter in a section called The American Tailwind, which follows:

On March 11th, it will be 77 years since I first invested in an American business. The year was 1942, I was 11, and I went all in, investing $114.75 I had begun accumulating at age six. What I bought was three shares of Cities Service preferred stock. I had become a capitalist, and it felt good.

Let’s now travel back through the two 77-year periods that preceded my purchase. That leaves us starting in 1788, a year prior to George Washington’s installation as our first president. Could anyone then have imagined what their new country would accomplish in only three 77-year lifetimes?

During the two 77-year periods prior to 1942, the United States had grown from four million people – about 1⁄2 of 1% of the world’s population – into the most powerful country on earth. In that spring of 1942, though, it faced a crisis: The U.S. and its allies were suffering heavy losses in a war that we had entered only three months earlier. Bad news arrived daily.

Despite the alarming headlines, almost all Americans believed on that March 11th that the war would be won. Nor was their optimism limited to that victory. Leaving aside congenital pessimists, Americans believed that their children and generations beyond would live far better lives than they themselves had led.

The nation’s citizens understood, of course, that the road ahead would not be a smooth ride. It never had been. Early in its history our country was tested by a Civil War that killed 4% of all American males and led President Lincoln to openly ponder whether “a nation so conceived and so dedicated could long endure.” In the 1930s, America suffered through the Great Depression, a punishing period of massive unemployment.

Nevertheless, in 1942, when I made my purchase, the nation expected post-war growth, a belief that proved to be well-founded. In fact, the nation’s achievements can best be described as breathtaking.

Let’s put numbers to that claim: If my $114.75 had been invested in a no-fee S&P 500 index fund, and all dividends had been reinvested, my stake would have grown to be worth (pre-taxes) $606,811 on January 31, 2019 (the latest data available before the printing of this letter). That is a gain of 5,288 for 1. Meanwhile, a $1 million investment by a tax-free institution of that time – say, a pension fund or college endowment – would have grown to about $5.3 billion.

Let me add one additional calculation that I believe will shock you: If that hypothetical institution had paid only 1% of assets annually to various “helpers,” such as investment managers and consultants, its gain would have been cut in half, to $2.65 billion. That’s what happens over 77 years when the 11.8% annual return actually achieved by the S&P 500 is recalculated at a 10.8% rate.

Those who regularly preach doom because of government budget deficits (as I regularly did myself for many years) might note that our country’s national debt has increased roughly 400-fold during the last of my 77-year periods. That’s 40,000%! Suppose you had foreseen this increase and panicked at the prospect of runaway deficits and a worthless currency. To “protect” yourself, you might have eschewed stocks and opted instead to buy 31⁄4 ounces of gold with your $114.75.

And what would that supposed protection have delivered? You would now have an asset worth about $4,200, less than 1% of what would have been realized from a simple unmanaged investment in American business. The magical metal was no match for the American mettle.

Our country’s almost unbelievable prosperity has been gained in a bipartisan manner. Since 1942, we have had seven Republican presidents and seven Democrats. In the years they served, the country contended at various times with a long period of viral inflation, a 21% prime rate, several controversial and costly wars, the resignation of a president, a pervasive collapse in home values, a paralyzing financial panic and a host of other problems. All engendered scary headlines; all are now history.

Christopher Wren, architect of St. Paul’s Cathedral, lies buried within that London church. Near his tomb are posted these words of description (translated from Latin): “If you would seek my monument, look around you.” Those skeptical of America’s economic playbook should heed his message.

In 1788 – to go back to our starting point – there really wasn’t much here except for a small band of ambitious people and an embryonic governing framework aimed at turning their dreams into reality. Today, the Federal Reserve estimates our household wealth at $108 trillion, an amount almost impossible to comprehend.

Remember, earlier in this letter, how I described retained earnings as having been the key to Berkshire’s prosperity? So it has been with America. In the nation’s accounting, the comparable item is labeled “savings.” And save we have. If our forefathers had instead consumed all they produced, there would have been no investment, no productivity gains and no leap in living standards.

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Feb 22 2019

Robin Hauser’s Film Bias at the Boulder International Film Festival 2019

Amy and I are long-time supporters of the Boulder International Film Festival. The 2019 festival starts soon and runs from February 28 to March 3rd.

Bias, one of the documentaries that we helped fund, is making its Colorado Premier and showing on Saturday, March 2, 2019 at 10:00 am.

Robin Hauser, the director, is spectacular. Amy and I supported her previous moving Code: Debugging the Gender Gap, which was dynamite, incredibly informative, and very accessible.

I expect Bias to be even better. I encourage you to buy a ticket and go see it at the BIFF 2019.

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Feb 21 2019

How To Get A Job In Venture Capital

My partner Seth Levine has written several posts over the years on the topic of how to get a job in venture capital.

His 2019 post, titled creatively How To Get A Job In Venture Capital is excellent. Things have changed in the last decade since his 2008 post titled How to get a job in venture capital (revisited), which was an update from his 2005 post titled How to become a venture capitalist. All three posts are worth reading.

Following is a teaser for each of the key points Seth makes.

  • Take the long view. Despite the relative increase in the number of venture firms, there still aren’t all that many jobs in venture.
  • Get involved in your community. Venture and entrepreneurship aren’t spectator sports and are best experienced from within.
  • Get involved in companies. There are lots of great ways to help out companies directly. 
  • Network. Most people are terrible networkers. They treat networking transactionally and they are always looking to take from their networks vs. give to them (good networkers adhere to the #givefirst mentality)
  • Engage. Lots of venture capitalists put out a lot of content and it has never been easier to engage with the venture community. Comment on blog and Medium posts, follow VCs that you respect on Medium and Twitter, send them ideas and thoughts on what they’re writing about and investing in. Stay active and top of mind. 
  • Look for any way in. Your first job in venture is typically the hardest to get.
  • Work for a startup or start one of your own. This was true 10 years ago and it remains true today.
  • Invest if you can. With investment becoming slightly less regulated there are opportunities to put even modest amounts of money to work through platforms like AngelList and others. If you have the ability, it’s not a bad way to show an interest in investing and give you something to talk about in your networking. 
  • Persevere. Getting a job in venture is hard and can take a while. Likely it won’t happen. Keep the long game in mind, have fun while you’re going through the process and keep at it.

If you are interested in a job in venture capital, go read Seth’s posts How To Get A Job In Venture Capital (2019). And How to get a job in venture capital (revisited – 2008). And How to become a venture capitalist (2005).

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Feb 20 2019

Happy Robot Valentines Day

Day 1 of Sphero’s RVR pre-order campaign is off to a great start (> 1000 backers, > $250,000 in the first 24 hours.) It’s Day 2, but for some people in the tech world it’s always Day 1, so if you missed RVR, go take a look and jump in on the pre-order fun.

I was on vacation during valentines day so I’m a little late. But, robot valentines day transcends time, especially since I love robots.

Misty is shipping soon, but you can follow along and pre-order now.

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Feb 19 2019

Meet RVR from Sphero

Sphero has announced RVR, a go anywhere, do anything programmable robot. It launched on Kickstarter today and is available, along with a bunch of other fun pre-order options.

Over the last eight years, Sphero has made a bunch of different robots. We’ve been discussing the “every-programmer” robot for a while, which is both hardware and software hackable. Watching RVR come together from the inside over the past year has been pretty awesome.

If you are into robots, programming, STEM, or the future, go visit Kickstarter and pre-order RVR today.

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Feb 7 2019

Mentors 18/18: Have Empathy. Remember That Startups Are Hard

This is the final post (18) of the Techstars Mentor Manifesto. As with item 17, Jay Batson, a long-time Techstars Boston mentor, nudged me several times to finish this up and wrote a draft from his perspective. Following is item #18 of the Techstars Mentor Manifesto, in Jay’s words.

During one of the Techstars Boston cohorts where I’ve been Mentor-in-Residence, I worked with a 20-something CEO founder (code named Mary) who, shortly after raising a seed round of several million dollars, hired a high-powered exec, granting a significant equity option. This new hire was a commercial hustler (code named Scott), moving quickly and broadly to try to secure customers and partners, including some of the tech industry’s largest companies.

Mary had never managed somebody a decade senior to her and was struggling to manage Scott. Further, Scott tended to work autonomously, sometimes doing things outside his remit that was not well-communicated to Mary. As a result, Mary was worried about how this looked to her board. A massive sense of imposter syndrome started creeping in, especially since Mary felt investors had bet on her, yet Scott was having a notable impact, for better and worse, on the strategy and success of the business.

Mary was concerned that the investors thought she wasn’t being effective. A fear was brewing in the pit of her stomach and she worried that everything was going to come apart.

Pause for a moment. Recall the last time you had a consuming passion. Remember how it felt. Think about that incredibly exciting idea that grabbed you and took over your mind, time, priorities, and emotions. Remember how excited you were as you imagined all the threads of what could be, and how your heart beat faster and your adrenaline surged.

And then … you had an existential crisis. A moment when you feared that this awesome future might come crashing down because of a particular situation or the actions of one person. Your heart beat faster again, but this time out of worry, anxiety, and fear.

I want you to replay your joy and fears again for a moment. Having empathy requires you to feel what the other person is going through. To put yourselves in their shoes and feel their fear. And to not immediately try to fix it. Remembering your own hopes and fears will help you have empathy. And this is critical as a mentor because startups are extremely hard.

In the situation above, I could relate to Mary feeling imposter syndrome. My first venture-backed company was not a big exit, and neither I nor my investors fared well. So I felt some imposter syndrome when founding my second venture-backed company (which, happily, has done well.)

So what Mary needed from me as a mentor was to talk to a neutral third-party who understood how technology companies worked and who had felt the expectations placed on a founding CEO. She needed to talk openly about how she was feeling to someone not on her board or exec team, and to whom she could be fully and safely transparent.

Doing that first allowed us to get around to eventually discussing ways to handle the situation. I reminded Mary that first and foremost, Techstars mentors are here to coach her on how to manage athletes like Scott, so she should relax and look for help. She had time to handle the situation if Scott was indeed a problem, as his option grants had a one-year cliff and he was only a couple of months in. So, instead of feeling anxious and pressured into reacting, I encouraged Mary to focus on helping Scott be successful and assess things again in a quarter.

Several years later, after the company, led by Mary, was acquired and had a very successful outcome, she told me that the most memorable and important thing I did for her at that moment was to simply sit, listen, and relate to the feeling she was having. I hadn’t immediately replied with a solution to her problem. Instead, I started with empathy.

As a mentor, be aware when to suspend, or defer, your advice or judgment. The entrepreneur you are mentoring may not be in a head space to hear your solution. Mentoring is often an emotional rather than a functional or intellectual role. Take a breath and be empathetic, instead than jumping in to solve the problem. And never forget that startups are hard.

Jay Batson has been the founder of four companies, including two venture-backed startups, with some big success and disappointing failure. His biggest success is as founding CEO of Acquia, now an 800+ person company with offices around the globe. In 2012, Jay invented the “Mentor-in-Residence” role at Techstars. MIR’s spend near-full-time at Techstars during each cohort to help as extensively as possible with companies and help other Mentors be good at it. Jay has embraced this responsibility for every Boston cohort since then. He’s an LP in several Techstars funds and a direct investor in a selection of Techstars companies.

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Feb 6 2019

Mentors 17/18: Be Challenging/Robust, but Never Destructive

I wrote 16 posts detailing each item of the Techstars Mentor Manifesto. However, there were 18 items and, for some reason, I never got around to writing the final two.

Jay Batson, a long-time Techstars Boston mentor, nudged me several times to finish this up. I kept saying “I’ll get to it” but never did. So, he did it for me, with the added motivation of getting it up prior to the kickoff to this year’s Boston program. Following is item #17 of the Techstars Mentor Manifesto, in Jay’s words.

This item on the list might sound very similar to #4, “Be Direct. Tell the Truth, However Hard.” But, it’s different. This item (#17) has to do with you, not the companies.

You have been asked to be a mentor at Techstars because you’ve been successful as an entrepreneur and/or a leader. The managing director for your cohort trusts that you’ll help the founders. And those founders are betting – with stock in their company – that you’ll be good for them.

Because of your expertise, you are likely to quickly spot areas in their businesses that need work urgently.

Because you’ve read all the posts here about the Techstars Mentor Manifesto, you dutifully start by being socratic and digging into the fundamental thing that is broken. You are direct, telling the hard truth that you are deeply concerned about some area.

But at some point, you sense the entrepreneur isn’t simply following your lead. They aren’t changing some element of their business to align with your direction. So, you are more direct. You push harder and more forcefully because you think it’s important. But the entrepreneur continues to “not get it”.

And, just like that, you’re irritated. You shut down, you quickly end the meeting, or you push even harder. After the meeting, you vent to the Techstars managing director that this company is in real trouble because the founders aren’t paying attention to this element you find important.

We’ve now reached the point of this post: Never Be Destructive.

The moment you go beyond trying to get your point across to the entrepreneur and do something outside that moment that is less-than-supportive, you’ve stopped being a mentor. You are now simply a judge. Or, worse, a detriment to the company.

You have let your desire to succeed as a mentor become paramount. Your actions can easily shift from being helpful as a mentor to being hurtful to the entrepreneur.

If you let this state persist, your frustration will leak outside the safe space of Techstars. It might be something you say to an investor; which means you’ve now affected the company’s ability to raise capital. If you vent to another founder, you either hurt your own reputation or the mentee’s reputation. At worst, you may end up affecting their relationships with potential partners or future hiring candidates.

Being a Techstars mentor does not mean being 100% dedicated to being a successful mentor. It means being 100% dedicated to helping founders build great companies.

So, be robust if you have to in making sure they hear what you’re trying to make them aware of.

But when you leave the room, make sure you flip the switch and remain 100% dedicated to making them successful, whether or not you think they heard what you had to say.

Jay Batson has been the founder of four companies, including two venture-backed startups, with some big success and disappointing failure. His biggest success is as founding CEO of Acquia, now an 800+ person company with offices around the globe. In 2012, Jay invented the “Mentor-in-Residence” role at Techstars. MIR’s spend near-full-time at Techstars during each cohort to help as extensively as possible with companies and help other Mentors be good at it. Jay has embraced this responsibility for every Boston cohort since then. He’s an LP in several Techstars funds and a direct investor in a selection of Techstars companies.

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