A few weeks ago I did a long interview with Jason Calacanis on This Week In Startups. I got a bunch of positive feedback on it and thought it was one of the better long form interviews I’ve done in a while.
The other day Jason released an interview that he recently did with David Cohen, the CEO of TechStars. I listened to it earlier today – it was also excellent. I highly recommend it if you are interested in TechStars, accelerators, early stage investing, ramping your startup, and how David thinks about angel investing from his fund Bullet Time Ventures.
[youtube https://www.youtube.com/watch?v=KuWLGAbyEaw]
I joined my first board of a company other than mine in 1994 (NetGenesis). Since then, I’ve sat on hundreds of boards and been to a zillion board meetings. It crushes my soul a little to think of the number of board meetings I have sat through that were ineffective, poorly run, or just plain boring. I guess that’s part of the motivation I have in writing Startup Boards: Reinventing the Board of Directors to Be Useful to the Entrepreneur (the next book in the Startup Revolution series which should be out sometime this summer.)
In the mean time, over the past two years I’ve done a lot of experiments with the boards I’m on. I’ve tried a lot of different things – some that are awesome, some that don’t matter, some that suck, and some that have been epic fails. For any that aren’t awesome, I’ve tried to kill the experiment quickly so it didn’t hurt anything and when I reflect on everything I’ve tried I think I’ve managed to “do no harm”, which is more than I can say for a lot of the other VCs who I’ve sat on boards with since 1994.
By this summer, I expect I’ll have a very clear view on the best practices from my perspective for making a Startup Board effective. Until then, I’m still running experiments, or experiencing experiments that the entrepreneurs run. And I’m thinking out loud (including in posts like this) on what has worked and hasn’t worked.
One of the things I’ve played around with is the board package. The number of different formats, styles, information incorporated, and distribution methods over the years boggles my mind. I not-so-fondly remember toting around “binders full of board meeting material” in the 1990s. Or pre-Gmail having a “board meeting folder” in Outlook so I could quickly find the upcoming board meeting documents. Or fighting through 19 attachments to an email to figure out where the actual board material was. PowerPoints, PDFs, Word documents, text files, Excel spreadsheets, Prezi docs, videos, email outlines – the list goes on.
Recently, I had a magical moment. I’m a huge believer in distributing the board material a few days in advance, having all the board members comment on it in advance of the meeting, and then having the meeting without going through the board material page by page. No death by endless Powerpoint, no reading a document I’ve already read. My favorite board meetings are the “one slide board meeting” where the only piece of paper allowed in the room is the agenda of the meeting.
When entrepreneurs don’t get this, I suggest that they pretend their board members can read and cognitively process the information in advance. And, if they don’t believe their board members will do this, just start having the board meeting under this assumption and watch how they board members get their shit together and read the material in advance.
In this recent magical moment, rather than receiving anything via email, a Google Doc notification showed up in my inbox. I went to it and the entire board package was in a single Google doc file. The entire management team and the entire board was included on it. As I read through the Google doc, whenever I had a comment or a question, I highlighted the section in question, hit Command-Option-M, and left a comment. Then, as other people read through the package, they left comments. And then the management team responded to the comments.
Voila – an interactive board package. Zero special technology. It wasn’t planned, or assigned. It just naturally happened. When we showed up to the board meeting, everyone had the issues in their mind. We’d already cut out an hour of setup, and probably another hour of discussion. So we got right down to the higher level issues that the board material, and comments, and the responses generated.
In this case, the CEO created a very simple agenda immediately before the board meeting that captured the strategic issues we needed to address. There were a few tactical questions outstanding – they got knocked off quickly. We had a two hour board meeting – 90 minutes of it was intense and fruitful. No one referred to any paper – we looked each other in the eyes for 90 minutes and had a deep, engaged, substantive discussion.
I’ve been describing this as a part of a “continuous board engagement” – similar to “continuous deployment and continuous innovation” in Eric Ries’ The Lean Startup: How Today’s Entrepreneurs Use Continuous Innovation to Create Radically Successful Businesses. I get information daily from most of the companies I’m involved in. I’m in the flow of a lot of information – some “noise” but a huge amount of “signal.” Then – the week before the board meeting, the current state of things gets consolidated into a dynamic document that allows everyone involved to interact with each other around the content.
I’m going to play a lot with this in the next few months. Any suggested tweaks or changes to this approach? Any obvious pitfalls?
I always enjoy hanging out with Jason Calacanis. We first met in the mid-1990s when Jason was hanging out in NY doing Silicon Alley Reporter. I can’t remember who initially introduced us – it was probably Fred Wilson.
We covered a lot in the hour+ interview for This Week In Startups. Things like why I didn’t retire at age 30, what Amy’s ring tone is, Startup Communities, Boulder, what motivates me, the different between mentors and advisors, my biggest failures in the Internet bubble, the Foundry Group investment strategy, my angel investment strategy, why Fred Wilson and USV has been so successful, why the objective of a VC is a straightforward and how to define success as a VC, why the answer to “how is a VC fund doing” is “check back in a decade”, hiring for culture fit vs. competence., why entrepreneurs get to – and should – define their culture, why you can’t change people (and how my first marriage blew up), why investors are like D&D characters, examples of bad behavior of VCs and entrepreneurs, more stuff about VC and entrepreneur interactions, what the best board meetings are, a reminder that people lie, Lance Armstrong and ego, CEO coaches, the first person I ever fired, and a bunch of other stuff.
Enjoy!
Jason – you are the Internet’s Charlie Rose. Well done.
A month or so ago I did an interview with Moe Abdou of 33voices. I do a lot of interviews, but this one stood out to me as Moe did a great job of moving the conversation around and pulling some great stuff out of me.
Because it was a longish interview, Moe broke it into Part 1 and Part 2.
If you don’t want to listen to the whole thing, Moe compiled some of the maxims and one-liners into a nice slide deck.
In the Startup Communities, I talk extensively about leaders and feeders. I assert than anyone in the startup community should be able to start / create / do anything that is helpful to the startup community. They don’t have to ask permission – there is no VP Activities in a startup community. I also talk about how the students are the precious and most valuable resource of a university.
This morning I got the following email from Fletcher Richman, a student at CU. It’s a perfect example of what I’m talking about and it is immediately actionable for every entrepreneur in Boulder and Denver.
Dear Founders and Friends,
As students at CU Boulder, we have noticed that there are many startups that would love hire more interns and full time employees from the university, and lots of students would love to work at a startup. However, there seems to be a disconnect between the two.
We would like to fix this issue. We have created a simple form to get a better idea of the positions available for students at startups that we would greatly appreciate if you could fill out:
I’d like to hire some CU Students!
The data from this form will be used for two things:
1) To help start an online startup jobs and internships board for students that we are currently building.
2) To build a contact list of companies for the Students2Startups fair early next year, which will be bigger and better than ever before!
Thank you so much for your help! Please let us know if you have any questions.Sincerely,
CSUAC and AECU
So – what are you waiting for. Go sign up to hire some CU Students!
This first appeared in the Wall Street Journal’s Accelerator series last week under the title Cultural Fit Trumps Competence. Also, I’m going to be doing online office hours with the WSJ on Friday 12/21 at 3pm ET – join and ask questions!
The first people you hire in your startup are critical to your company’s success. So it’s easy to say that you need to hire the “absolute best people you can find.” But what does this actually mean?
Take two different spectrums – (1) competence and (2) cultural fit. Imagine that you have a spectrum for each person – from low to high.
Now, you obviously will not hire someone who is low on both competence and cultural fit. And you obviously will hire someone who is high on both competence and culture fit. But what about the other two cases?
Many people default into choosing people who have high competence but a low cultural fit. This is a deadly mistake in a startup, as this is exactly the wrong person to hire. While they may have great skills for the role you are looking for, the overhead of managing and integrating this person into your young team will be extremely difficult. This is especially true if they are in a leadership position, as they will hire other people who have a cultural fit with them, rather than with the organization, creating even more polarization within your young company.
In contrast, people with low competence but a high culture fit are also not great hires. But if they are “medium” competence, or high competence on in a related role, or early in the career and ambitious about learning new skills, they may be worth taking a risk on.
While you always want to shoot for high competence, high cultural fit people when you are hiring early in your company’s life, it’s always better to chose cultural fit over competence when you have to make a choice.
If you are interested in working with a company that is an expert at figuring this out, go take a look at RoundPegg.
This article (Business Plans Are An Historical Artifact) first appeared last week in the Wall Street Journal The Accelerators Column, which I’m contributing to on a regular basis.
In 1987 when I started my first company (Feld Technologies), I wrote a business plan for a course at MIT that I was in called 15.375: New Enterprises. The textbook for the course was Jeffry A. Timmons’ classic book “New Venture Creation” and the course ended with the submission of a written business plan.
I went on to create a company, with my partner Dave Jilk, that bore very little resemblance to that business plan. When I reread the plan several years ago for amusement, it motivated me to go dig up plans for other successful companies that I was a co-founder of or early investor in, including NetGenesis and Harmonix. In each case, the business plans were big, long, serious documents that had only a minor semblance to actual business that got created.
In the 1990s, business plan competitions were all the rage. I was a judge early on at the MIT $10k Competition (now the $100k Competition) and read lots and lots of business plans. By 1997, when I started investing as a venture capital investor, I was no longer reading business plans. And I don’t think I have since then.
Today, it’s clear to me that business plans for startup companies are a historical artifact that represented the best approach at the time to define a business for potential investors. In the past decade, we’ve shifted from a “tell me about it” approach (the business plan) to a “show me” approach (the Lean Startup). Rather than write long exhaustive documents, entrepreneurs can rapidly prototype their product and get immediate user and market feedback. They can use Steve Blank’s Lean LaunchPad approach to get out of the building and actually incorporate customer development early into the definition of their business. And they can learn the lesson we teach over and over again in TechStars – “show don’t tell.”
While “business plan competitions” are still around, some are rapidly evolving into “business creation competitions.” CU Boulder is at the forefront of this with their New Venture Challenge, which is experimenting with new things each year. And activities like Startup Weekend are teaching a new generation of entrepreneurs how to envision, create, and launch a startup in a weekend, and then incorporating Blank’s Lean LaunchPad into a month-long process called SWNext.
As an entrepreneur, I encourage you to reject the notion of a classical business plan from the 1970’s. You should still thinking deeply about the business you are creating and communicate clearly what you are doing to investors – just use contemporary approaches that are much more deeply incorporated into the actual creation of your product and business.
I got an email today from an exec at a company who I was with at a recent board meeting. I thought it was a powerful summary of part of our discussion, specifically around the sales pipeline for Q4 and overall sales execution. I’ve been in something like 91,293 pipeline reviews in my life and it continues to baffle me that experienced sales execs manage to snow the CEO and the board with “probability weighted sales pipeline.” I hung in there in this case and continued to make my point about playing offense on sales forecasting.
Rather than trying to summarize it, I got permission to just reprint the email. It follows.
One of the larger take aways for me was your insight on our attitude towards how we were predicting revenue. Prior to our meeting, we thought we were doing a good job of predicting revenue. We are working on 10 deals and we explained to you that we thought that 75% of these deals would close within the next 60 days or so.
You asked specifically, “which of those deals would close?”
Our answer, was “we feel confident that each of these deals has a 75% chance of closing”.
You pushed us and asked “which of these 10 deals has a 100% chance of closing?”
Our exec team looked at each other in silence.
We were hard pressed to answer that specific question. We couldn’t answer that question.
The takeaway for me was that we need to take the offense when it comes to predicting revenue. We need to change our mentality from Defense to Offense.
Defense was: Us allowing FATE to play a large factor in whether or not a deal closed. We accepted the fact that 75% of these deals will close, but couldn’t point to WHICH 75%. We were in “wait and see” mode and allowing fate to decide our monthly revenue.
Offense is: We feel good about these 5 specific companies signing and we are going to commit to them closing as a sales team and a company. We are going to keep on top of them, be proactive, and make sure they close. Fate will have VERY LITTLE to do with whether these deals close or not.
It is a subtle adjustment, almost semantic, but one that will make a very large difference in how we act, how we talk, how we think, and ultimately how much revenue we book.
If you are looking for a cool job in the bay area, go take a look at the recruiting event happening on 10/5/12 organized by a bunch of our portfolio companies searching for amazing folks.
The neat thing to me about this is that my partners and I had nothing to do with this – it was completely self-organized by the CEOs of the companies in which we’ve invested in the bay area. We have a very active internal CEO list and I saw a thread about this that started a week ago and then generated a long thread as the CEOs decided to do it and figured it out. I’m sitting with Seth, Jason, and Ryan after a long (awesome) day together doing email and watching football and Jason said “hey – did you see the tweet about the bay area recruiting event!”
It’s another example of the power of the network that I believe is rapidly dominating the way we live and work. No one asked permission. No one had to get approval. It is a great idea – and it just got implemented fast.
If you are looking for a new gig, our friends at Datahero, Sifteo, Awe.sm, Singly, Mongolab, Authentic8, and Pantheon want to hang out with you. Go sign up for the event on 10/5/12 from 6pm – 8pm. It’s free and there will be food, drink, cool tech, and great people.