Archive for September, 2009
A topic that continually fascinates me, and about which I sometimes blog, is how to construct startup management teams. A startup is a very different business at the different stages of its evolution, with different challenges and leadership needs, making the task of having the right set of skills/experiences/passions around the table a never-ending challenge.
The “ideal” startup board changes over time as well.
I always prefer small boards to large boards. Small boards actually can get stuff done and allow the entrepreneur to focus on building his/her business. The larger the board gets the more the task of managing the board and extracting decisions becomes a job in and of itself.
This is especially true during the very early stage of a startup’s life, when the team is focused on building/launching a product, or is still in the phase of rapid iteration to find product/market fit.
Some argue that during these stages a startup should not even have a board. I am tempted to agree but, especially if some capital has been raised, I think this is unrealistic. What I would say is that the board should be *very* small (2 or 3), and should be primarily focused on providing help to the entrepreneur and otherwise staying out of his or her way. Board members (particularly those of the VC flavor, ahem…) like to see themselves as “adding value,” so the more of them you have and the more of a production board meetings become, the more complicated your life becomes. That is a hindrance, not a help.
There are some things a board needs to do during these early days, but there is a lot of other stuff board members like to dwell on that, while important later in the startup’s life, really are distractions now. You want to be maniacally focused on getting your product built and seeing what customers think. And your shareholders want you focused there. So do everyone a favor by building a small board that appreciates the medical profession’s Hippocratic Oath: First Do No Harm.
Congrats to our portfolio company Emo Labs, which was named Best of DEMO.
Emo makes invisible speakers, which produce sound by vibrating a thin clear film of plastic. So, for example, a flat panel TV’s screen itself can serve as its speakers. Go here to see CEO Jason Carlson explaining how it works.
Lots of great new announcements coming out of Dogpatch Labs today–expanding to Cambridge, MA; growing in SF; a new logo and Facebook and Twitter pages. More details over at DogpatchLabs.com. And, some nice coverage in TechCrunch, Boston.com, and Xconomy.
One of the most satisfying and challenging parts of a VC’s job is helping startup founders build their management team. It’s one of the areas where your VC can really add value. It’s also an area where we can really screw things up. Take it from me, because I’ve done it.
One of the hardest things about building a startup organization is that a successful startup is effectively 2 or 3 radically different companies between founding and achieving substantial commercial value. And the people who will be great at one of those different stages often will be pretty lousy at the other stages. In particular, the proven senior executive who is fantastic at executing and operating during the scaling phase often is a great executive but a not-so-great entrepreneur. So one of the mistakes we often are tempted into making is hiring that exec before the company is ready for him/her.
In one of the best posts on startup success I have read, Marc Andreesen wrote:
“The life of any startup can be divided into two parts: before product/market fit (call this “BPMF”) and after product/market fit (“APMF”).”
This dividing line is critical to informing many different aspects of what the startup needs to be doing, one of the more important being informing the right team that should be on the field. During the before product/market fit period, I would argue that it is critical that the startup be led and populated by highly entrepreneurial individuals — individuals who are creative, risk-taking, willing to change course quickly and decisively, all in the name of finding product/market fit. And, while this is a gross generalization, very often the executives who will become critical to taking the company the distance actually are not nearly entrepreneurial enough to excel during the BPMF stage. Whereas later stage successful startups typically should be run by executives who excel at scaling a business and its organization, early stage BPMF startups typically are best off being led by highly entrepreneurial founders with great product sensibilities.
Ironically enough, what led me to this post is a conversation I had with a CEO candidate for one of my companies. While the board felt that the company’s founder was excelling at many aspects of the CEO job, both the Board and the founder agreed that an experienced CEO would have a huge impact scaling the business. And, even though we weren’t yet an APMF company ready for the scaling phase, the board figured it made sense to go out and find a CEO now, especially considering we would need to raise another financing round next year and investors for that round would likely look for a CEO who could take the business “to the next level.” So we launched a CEO search.
And last week I was speaking with a candidate who probably is the perfect candidate for this business, and had a fantastically refreshing conversation. The candidate pushed me to articulate why I thought we needed a CEO now, and why we weren’t better off hiring some mid-level folks now to help the current team respond to a growing wave of customer interest, and put off hiring a CEO until the company had enough time in the market to nail product/market fit and really be ready to scale.
And he was exactly right. Duh.
So next time your VC argues for hiring a senior exec, make sure the spec for the job fits the stage of your startup.
After three blissful weeks without once boarding a plane, I am back in the air, en route to SF via Virgin America.
And once again they exceed expectations. Head pounding, I ask the flight attendant, William, if they have aspirin. He returns with a veritable headache care package: 14 Tylenol, swiss chocolate, coffee (yes, I broke my no-caffeine pledge for the cause). 30 minutes later, headache is gone. XXX asks me how I am feeling, and then, further asks me how I like the Virgin America product. And, he genuinely cares. Turns out William was a senior flight attendant for USAir, but tired of the discontent and low quality of service, and gave up his pension and other benefits of seniority to join Virgin America where he could be proud of his employer.
Yes, happy employees and great customer service make a difference.
Keep it up , Virgin!
