I received a lot of interesting and positive feedback on my post on talking about failure. There’s no question that enlightened entrepreneurs get the value of failure and generally enlightened people have noticed the absence of VCs (and entrepreneurs) publicly talking about it for a variety of reasons.
Adam Green pointed me at a podcast he did with Adam Bosworth (now at Google) discussing his lessons learned from the failure of Reflex. I hadn’t thought of Analytica / Reflex for a long time (I had an original copy and loved it) – and subsequently discovered this useful essay about it on the web.
Thankfully I no longer get fedexed binders of board packages from my portfolio companies in advance of a board meeting. Through the modern miracle of email, the board packages show up in my inbox – hopefully a few days (rather than a few hours – or even minutes) before the board meeting. The board packages tend to show up in three different formats – one that is easy to deal with, one that is ok, and one that sucks.
Having dealt with this across lots of board meetings, I much prefer that the whole shebang be incorporated into a PDF file. This is easy to do, gives the CEO complete control over how the information is presented, and makes it easy for board members to deal with, especially if they just want to forward the email to their assistant and say “print out the board package for me.”
I’ve noticed a pattern in many of the VC and entrepreneur blogs I read – very few people ever talk about failure.
Failure is a key part of entrepreneurship. As an entrepreneur, angel investor, and venture investor, I’ve had lots of success, but I’ve also had lots of failures. So has everyone that I know that has accomplished much of anything.
While it’s often difficult to talk about failure, there are a lot of lessons that can be learned from it. The cliche “I learn more from my failures than my successes” applies directly to entrepreneurship and creating companies. It can be difficult to be self-reflective, but I’ve personally found it very cathartic to study my failures, understand what I did wrong, learn as much as I can from them, and move on. Occasionally I’ll have a similar failure a second time or a third time – hopefully I learn eventually.
I’m going to start writing more regularly on failure. For those of you that have been involved in failed businesses with me, I’ll be careful about confidentiality – so many of my examples and stories will have the names changed unless I feel like sharing the posts with the people involved in advance. I’ll try not to self-censor the stories, although the “personal denial / rewrite history impulse” is a often a tough one to overcome.
I also encourage my fellow entrepreneurial and VC bloggers to talk more about failures, alongside their successes. Entrepreneurship is really hard and the lessons come from both sides of the equation.
Often there’s a perception that to be a successful CEO, you need to be an extrovert. Media and pop culture reinforces this – we regularly see people that are comfortable in the spotlight and equate them with the model of success.
I’ve always had a number of CEOs and entrepreneurs that I’ve worked with that are introverts. While they are comfortable being in a public forum, they prefer to be either alone, with their family, or in small settings. My wife Amy has often told me that I’m a closet introvert (nope – this doesn’t mean that I like to hang out in closets) – while I spent a lot of time in group settings (and am comfortable in this environment), I much prefer to either be alone, be with Amy, or have dinner with one person or a couple.
One of my introverted CEOs sent me a great article from USA Today titled “Not all successful CEOs are extroverts.” It has some good nuggets and real data in it. The punch line – in one of the studies, it was concluded that “the study found that the charismatic CEOs make more money, but make no difference to corporate performance.”
I’ve been to a zillion board meetings (ok – let’s guess between 1,000 and 2,000 assuming 10+ / month for the past 12 years.) While the food is usually lousy (but not always, as I’ve seen a marked improvement since I wrote my Board Meeting Food Is Usually Shit post), I’ve found a more troubling pattern than just bad food. The official business of a typical board meeting is back end loaded. Specifically, items such as the ones that follow will come at the end of the meeting.
There will always be some things in the voting category that might require an extended discussion. While a CEO’s tendency will always be to use the bulk of the board meeting to set these issues up, if you have an engaged and informed board, it’s much more productive to carve out specific time without the setup to discuss the specific issues that require a vote.
The problem with these items coming at the end of the meeting is that there is never enough time allocated to them. Even the most anally retentive CEOs can’t keep a board on a tight schedule and invariable someone needs to leave early to catch a plane, drops off the phone for another call (or meeting), or people just get impatient and rush through these items. While they usually don’t require a lot of discussion, they occasionally do and there seems to be a high correlation between “important voting items” and “no time left to talk.”
So – if you are a CEO, do your board (and your company, and yourself) a favor. Do the formal stuff first and give it the right amount of time and attention. That way, as the rest of the meeting goes off in an unexpected but highly interesting and relevant tangent, you won’t keep looking at your watch thinking “this is good stuff, but we are going to run out of time.”
Will Price at Hummer Winblad has a really nice blog post up on a speech he attended by Verne Harnish the other day.
Verne is a long time friend, extremely captivating and insightful speaker, and a guy who has been around entrepreneurs and entrepreneurship forever. I first met Verne in 1990 at the first Inc. Magazine / MIT Entrepreneur Forum / YEO Birthing of Giants Conference. This was a conference that Verne created for founders of companies under the age of 40 with at least $1 million of annual revenue. My company was four years old, we’d just broken the $1m mark, had 12 employees, and I was struggling with all of the normal startup issues. In four days, I met 59 other people, many of whom became close friends, who were either struggling with or had struggled with similar stuff. This was also my introduction to a long standing involvement with YEO. I remember driving home from Endicott House thinking “Holy Shit, I Am Not Alone.”
When Amy and I moved to Boulder in 1995, Verne was the only guy we knew living there. He and his wife Julie moved away shortly after we showed up, leaving us friendless in Boulder, but only for a brief period of time. Over the years, I’ve seen Verne periodically, but every time I see something like what Will wrote up, I remember how amazingly great Verne is at standing in front of a group of people and talking about the issues that entrepreneurs deal with.
If you ever have a chance to hear Verne talk, take it. If not, grab his book Mastering the Rockefeller Habits: What You Must Do to Increase the Value of Your Fast-Growth Firm – it’s great roughage for any entrepreneur’s diet.
I did a quick podcast interview with Outside In Innovation a few weeks ago when I was at MIT at Eric von Hippel’s Innovation Lab seminar. There are two segments – How VCs View Users and Usability and Innovation Through Acquisition. I’m not sure it’s appropriate to generalize my comments for all VCs (in fact, I’m sure it’s not), but I thought Jim and Jonathan did a nice job of rapping on these topics. If you are into the 53,651 meme (or the idea that the first 25,000 users are irrelevant) or you just like to listen to me talk (hi Mom), there is some good stuff in here that pre-dates those posts.
Jason and I occasionally get asked “why are the majority of companies incorporated in Delaware, regardless of their actual physical location?” Besides being difficult to spell (c’mon – you thought there was an “e” instead of an “a”, didn’t you), Delaware offers some tangible advantages over incorporating in other states. While we aren’t experts on state laws outside of California, Colorado, and Delaware (e.g. feel free to offer “my state is better than Delaware to incorporate in” comments), we thought we’d summarize a few of the reasons below.
First, Delaware’s large body of business laws helps a company plan carefully to avoid a lawsuit. Certainty is “power” and one can generally be “more certain” about a particular legal outcome in Delaware compared to other states. While we might not agree with a decision made by Delaware courts, it is at least nice to know what the ground rules are, which are much less clear in most other states.
Next, Delaware courts have the ability to deal with complex cases. In general, their reputations is at least as good, if not the best, in the country. Some of the courts adjudicate with jury trials, so in addition to the mitigated expense factor, their decisions are generally well-developed and easy to read.
Furthermore, most corporate attorneys are clued into Delaware law in addition to the particular state they practice in. For instance, Jason assures me that he is as comfortable with California legal issues, as well as Delaware law, despite the fact that he has never set foot in the state (quick – name the bordering states.)
Finally, the infrastructure of Delaware allows for most administrative functions and filings to occur at a much more rapid pace and at less expense than other states. For instance, Delaware was among the first to accept faxes as legally binding, thus greatly improving the speed of incorporations and amendments to corporate documentation.
As you can see, many of the advantages are due to the court system and case precedents in Delaware. Many investment bankers will demand that their clients are incorporated in Delaware before going public. Some of this is just “tradition,” but a lot of it is the clearly legal picture that Delaware law paints and the comfort zone that insurers have insulating boards subject to Delaware law.
Keep in mind that regardless of where you incorporate, you may still have to comply with laws of the state that you reside in. For instance, California has a code section that is called the “long arm statute” that basically says: we don’t care where you incorporate, if your primary place of business is California, then you need to abide by X, Y and Z.
Recently, I spent part of a day at the Computer History Museum in Mountain View, CA at the National Center for Women & Information Technology Entrepreneur Alliance Planning Session. It was a good meeting – we covered a lot of ground with an interesting group of people as we explored whether or not it makes sense to create an NCWIT Entrepreneurial Alliance (it does) to go along with the Workforce Alliance, Academic Alliance, and the new K-12 Alliance.
One of the topics we discussed was networking. Building effective social networks is an important part of being a successful entrepreneur and – in addition to talking about it generally, we spent some time talking about how good (or not good) women (and men) tend to be at this. There was some discussion about how some of the organizations in the room helped both teach women how to build networks as well has help facilitate them.
As I was listening, all I could think about was how in so many cases people simply don’t know how to network effectively. I blurted out “hey – one of the problems is that people don’t know how to network – all they are doing is stalking other people.” I went on to explain two stories – one of a time that I was at an event where I ended up simply locking myself in my hotel room because I felt like a soccer ball at a game between teams consisting of five year olds – wherever the ball (I) went, all the kids (my stalkers trying to network with me) followed. My other example was the endless supply of people offering to have coffee with me. Since I don’t drink much coffee, it’s relatively easy to turn down these requests “to get to know [you] better”, and replace them with a “hey – why don’t you email me what you want to talk about instead.”
I’ve found that many people that try to “network” simply don’t have a clear purpose in mind. I used to get frustrated by this and would occasionally go into stalker avoidance mode. Now, rather than dodging the stalkers, I confront them head on and try to offer some practical advice by asking the simple question “Why do you want to talk to me?” It’s not intended to be an arrogant question – rather it’s a focusing question – if you can tell me what you want, I’ll see if I can help. If you can’t, you should should spend some time thinking about the reason. And – if I can’t help – I’ll tell you directly so that I don’t waste your time either.
The Computer History Museum was very cool, BTW. I got to spend 30 minutes by myself with a bunch of old (and some very old) computers. Some were even created before networking.