Throwback Thursday

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Yesterday I had a group of my students participate in a group dynamics simulation. It’s a pretty standard one – a group is stranded in the dessert and needs to figure out which items to salvage from the crashed plane.  I am happy to report that my students now have sufficient training to prioritize items and perhaps survive in a desert environment.  And people suggest an undergraduate degree has no value….

Actually, the simulation is a very useful teaching tool, because it reveals important things about how people approach group decision making.  The process of group decision making is particularly relevant to startups, since they tend to have flat, consensus driven decision making structures, particularly in the seed and early stages.  Moreover, the vibe of startup formation, shaped by the hacker culture that spawned Jobs, Gates and the rest, tends towards consensus and inclusiveness.  Therefore, appreciation of the risks in group dynamics is an essential management tool for startup founders.

To understand group dynamics, you need first to appreciate that group behavior is very much shaped by…

Read entire blog post from April 12, 2012.

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Last week I had an interesting experience.  I read an opinion piece in Bloomberg that struck a particular chord. The writer took a surprisingly altruistic viewpoint based upon his economic position and stature, and I was very much taken by this – at least more than I usually am by opinion pieces in Bloomberg (read my earlier posts on my feelings on financial punditry).  The writer provided his email address at the bottom of the post.

Knowing myself how a posting of an email address online results in an expediential increase in Viagra, Nigerian Prince and similar emails, I was even more impressed.  So, I wrote a short email, expressing my support for the writer’s position and his willingness to be publicly accountable for a viewpoint on a highly politicized issue.  In a fit of intellectual solidarity (up the policy wonks!), I hit the send button and turned off my computer for the night.

After a restful sleep worrying about the Euro, I went to my email over my morning coffee.  In my inbox was a response from my new friend.  I was pleased to receive it – who knew what other insights he would offer?  What witty response I would receive from my email?  I put off reading about Newt Gingrich’s latest attempt at redefining my reality and opened the email.  And, saw the following (paraphrased slightly):

“Thanks for your email.  I am happy that you read my piece in Bloomberg.  If you liked what I wrote you can buy my book “Everyone is a jerk but me.”   Here’s the link to buy the book on Amazon.  [And, by the way, this email is so obviously generated by an automatic response you shouldn’t expect that I ever read your email to me at all.]

Somehow I felt duped and deflated.  Was I expecting to start a new and wonderful relationship?  No, not really.  But, I was expecting something different from  what I got.  I had read an opinion piece that struck me as being written by someone who was principled.  On reflection, it was clearly…

Read entire blog post from December 11, 2011.

 

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I read this article this morning in the Atlantic.  It suggested the importance of a founder to a company’s success.  It analogizes the success of Steve Jobs and Apple, as a jumping off point for a stronger correlation.  The underlying argument is that founders worry about the company’s best interest, while “professional” CEOs worry about the interests of the financial investors.  This is not a new trope, and very much plays into worn out saw that VCs grab the company and steal it from the founder.  In my experience, this dynamic is much more nuanced and deserves a clearer approach.

The relationship between the founder and the investor (particularly the lead investor) goes a long way to defining the ultimate success of an investment and the company.  There is not much debate about that – the challenge is…

 

Read entire blog from September 3, 2011.

 

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Last week I was talking with an entrepreneur who was negotiating his initial financing for his most recent startup. He had a group of Angel investors that appeared ready to go, but he had a problem – a big one – his expectations for the valuation of his business didn’t match up with theirs. He had done all the right things: checked with many entrepreneurs, investors and experienced service providers as to appropriate valuations for businesses like his, proposed a convertible bridge structure and been cooperative in due diligence. I really couldn’t fault his approach.

As I listened to his story, and he told me what the investors were offering, I came away feeling that they were trying to rip him off. I told him…

Read entire blog post from February 7, 2011.

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Next Friday, a group of experienced entrepreneurs from FounderCorps are doing a panel on the “Top Ten Mistakes Entrepreneurs Make.”  I’ll be joined by FounderCorps members Alex Murphy, Dadi Akhavan, Donna Harris and Tien Wong.  For those of you who can make it, we’ll be at the University of Maryland Technology Startup Bootcamp.  The link for the event is here.  I’ve participated in this bootcamp many times over the years, and I recommend it highly for any budding entrepreneur in the Greater Washington Region.  Knowing my co-panelists as I do, I am sure that they will have lots to share.  I know that they’ve made lots of mistakes over the years (as have I). It will be interesting to see who owns up to them….

In preparation for the panel, I thought I would provide my own list memorable entrepreneur miscues I’ve…

Read entire blog post from October 7, 2011.

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If you have been watching Europe over the last year or two (or have been reading my blog), you know that there is a slow motion car crash happening over there.  As I have written about previously, the European Union is caught in an apparently unreconcilable conflict between Germany’s fear of inflation and a need to rationalize government spending and investment in a more flexible manner.  I am afraid that a breakup of the Euro is looking more and more likely, and in light of the path that Europe is on right now it could be argued that the sooner the better.  The similarities to early 1930s economic history with today’s Euro substituting for gold as the main protagonist are troubling.  Unless Germany dramatically changes its position and willingness to support monetary expansion in the EU, it is likely that a number of EU nations will be forced to take back their right to issue currency or fall ever deeper into a deflationary spiral.

Before I go on to the main point of this blog posting, I do want to emphasize that the breakup of the…

Read entire blog post from May 9, 2012.

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Recently, I was asked by the Washington Business Journal to provide my ten best hints on managing growth in an emerging business.  You can find that article here.  I believe that the challenge of growing a business past the start up phase is actually much harder than appreciated.  But, there is much less in the startup media about these issues.  Actually, what happens after “acceleration” is more important and much more littered with failure.  With that in mind, here are my ten keys to meeting the challenge of growth.

1.       Match Money to Growth. Corporate finance is not about getting a particular type of financing as a way to signal your importance. It’s about getting capital that has the right growth expectations for your business’ likely path.  Money is only a way to keep score once it’s yours.  Until then, it’s a resource to get the things you need to succeed.

2.       Avoid Burning Hair.  If everyone at your company is…

Read entire blog from October 6, 2013.

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This Friday I’m joining my good friend Jim Chung over at GW for a talk on “what makes a venture backable team?” As I prepared for the event I thought I would share some general thoughts on the topic in this blog post. I hope it’s useful to you if you are considering starting a business and putting your execution team together.
The first point I want to emphatically make is that I would not focus on putting a team together for attracting Venture Capital; I would focus on building a team to grow a businesses. If a business can be grown, and the team has the skills to grow it, then in my experience capital will find that business. Put another way – good entrepreneurs, and good teams, find a way to win.  A great idea in the wrong hands is nothing more than an idea. A great idea in the hands of a strong team is likely to become a business.
Therefore, when I look at a team I am focused on…
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Earlier this week I had a chance to talk to a startup entrepreneur who had an interesting problem.  He felt that he had gotten so much advice about the process of starting a company and growing it that he was having a hard time parsing through it.  He was suffering as much as anything from having too much information, and was looking for me to help him filter it. As I thought about the irony of being asked to provide advice on which advice to take, something else more interesting hit me: he was suffering from a larger issue – the way that information is presented to first time entrepreneurs.

There is a tendency for information that is intended to help startup entrepreneurs to be reduced to a playbook or recipe.  Information is clustered around topics; for example, “when should you raise money,” “lean startup principles” or “hiring your first employee.”  Or, it is structured around the stage of a business – “how to start your company,” “how to raise a VC round” or “how to exit.”  This is further accentuated by…

Read entire blog from November 12, 2011.

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I read this article this morning in the Atlantic.  It suggested the importance of a founder to a company’s success.  It analogizes the success of Steve Jobs and Apple, as a jumping off point for a stronger correlation.  The underlying argument is that founders worry about the company’s best interest, while “professional” CEOs worry about the interests of the financial investors.  This is not a new trope, and very much plays into worn out saw that VCs grab the company and steal it from the founder.  In my experience, this dynamic is much more nuanced and deserves a clearer approach.

The relationship between the founder and the investor (particularly the lead investor) goes a long way to defining the ultimate success of an investment and the company.  There is not much debate about that – the challenge is…

Read entire blog from September 3, 2011.

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