July 26th, 2010 | 
My good friend Dave sent this to me this morning. I laughed so hard I almost went into convulsions.
Source: SMBC
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Because of a nasty knee problem, I haven’t cycled much this year. Even so, I committed to ride in this year’s Pan-Mass Challenge, the largest charitable sporting event in the world and the primary fundraising activity for the Dana Farber Cancer Institute. For the last month, my training has been slow, but steady. Lots of stretching, ice, slow speeds and low mileage. My knee has hung in there with only relatively minor pain. That was, until a couple of days ago. About five miles into a 30 mile training ride, my right knee gave way. It felt like someone hammered a large nail into the side of my knee. At first it just hurt on the downstroke, but as I struggled to get home, it hurt at all points of the pedal rotation. Eventually, I had to unclip my right shoe and just pedal with my left to get home (it’s not that weird, many cyclists practice pedaling with a single leg to perfect their form – I do it from time to time). I’ve stayed off the bike for the last couple of days and probably won’t even test the knee again for a couple of more. I’m ignorantly confident that I can manage the situation. I’m going to try to get in to see a doctor before the PMC as well to see what can be done. If I’m going to have surgery on the knee, might as well inject it full of crap that relieves the pain beforehand, right? On a more positive note, fundraising for the PMC this year has been terrific. Actually, it’s been the donors that have been terrific. Thanks so much to everyone who has expressed support for me and, more importantly, the cause. So far, I have $8,000 committed to support the Jimmy Fund, Dana Farber’s fundraising arm. If you haven’t had the chance to donate, and cancer research is a cause you desire and can afford to get behind, there’s still time (go here).  I often run across early stage companies in a real quandary about how much money to take in their first round of funding. That is, the round just beyond the Ramen noodle eating, avoid starvation round that is usually funded out of your own pocket. The round that really gets things going once you’ve established a team and product viability. The advice they often get – build a spreadsheet outlining fixed and variable costs over the next year or more. Estimate headcount, salaries, rent, capital equipment needs, etc. and, voila, you’ll have your number. That’s fine, of course, but the spreadsheet should be the end result of the planning process, not the process itself. In my experience, there are certain high-level guidelines that should be used to determine how much money should be taken. Using these, you’ll ultimately have the data you need to plug into a spreadsheet and generate a cash flow estimate – one used for planning AND tracking cash flow – based on the high-level needs of the company and with an eye to future investment rounds. My thoughts here hold true whether you’re pricing your round or, for the most part, if you’re doing a convertible note. I should also state that this post looks at the question primarily from the entrepreneur’s point of view, although is certainly aligned with the thinking of investors as well. As always, your mileage may vary. This is my opinion and it’s worth exactly what you’re paying to read it . . .
No, it’s not a science. In the end, the most important part is to get the money you need and to get moving. Time is your biggest competition and it works tirelessly 24/7 to kick your ass. Try not to get caught in abstract notions about valuation. Do a sensitivity analysis, it’s likely to be less important than you subjectively think it is. That’s not to say it’s unimportant, but you should think about what the valuation being offered really means in terms of what you take away from the company given various scenarios. Ask yourself what it is you want to achieve, personally. If the valuation doesn’t seem right after that, move on and find someone else to invest. Otherwise, take the money you need and start executing. And don’t forget the spreadsheet. It really is a good tool. When recently watching a father play with his small child, it occurred to me that while I’ll always be a father and hope to remain a “dad,” I’m not a “daddy” any more and I kinda miss that. My kids will turn 20 and 18 this year. They’re adults. They rely on me still, of course, but don’t really need me. No more seeking protection by my side; arms thrown skyward indicating a need to be picked up or climbing into bed between my wife and me during a thunderstorm. Their love remains unconditional, but it’s much less overt and obvious than it used to be. They have real, established lives that don’t involve me and, in some sense are more important than the decreasing portion of their lives they share with their father. Nothing too sad, here. This is how happy and successful lives as parents work. I’m really, really lucky. My kids have grown in to terrific people and I have a blast spending time with them. I love them and I’m tremendously proud of both of them. My relationship with them is different now, but in its own way, it’s just as rewarding as it was at any time of our lives together. I’m going to work at remaining “dad” to them and relish every minute of it. Someday – hopefully a while from now – the need I have to be “daddy” will be fulfilled when I become a grandparent (yikes!). For all of you that are still “daddies,” have a blast on Daddy’s Day today. Personally, I’m going to enjoy my Dad’s Day.
Last year I rode on a special route, 342 miles across Italy. This year I’m being a bit less ambitious and am doing one of the standard PMC routes without leaving the country or even the state. Unlike previous years, where I’d have about 1,500 miles of training under my belt by mid-June, a knee problem has kept me off the bike almost entirely for the last nine months. I’ve only ridden about 100 miles at this point. That’s gonna make the PMC a bit of a challenge this year and it might mean a lot of time in the saddle during the ride. I feel some bond with the effort, though, and want to make the best of it. Last year, my aunt died of cancer and my mother, a cancer survivor several times over passed away. Earlier this year, my wife’s aunt died of cancer as well. Sadly, my story is not all that different from many others’ – most of us have been touched by the horrible disease. While I think of myself as a generous donor to many causes, sometimes I need a kick in the pants to remind myself to write a check. If you’re like me, please feel free to treat this as your gentle nudge. While I’d appreciate your support and donation for my ride this year, supporting me isn’t what’s important. If you’re financially able, supporting a worthy cause like cancer care and research and a great organization like the Jimmy Fund is. So, sponsorship of my ride is less important than sponsorship of these organizations and efforts – financially or otherwise. If you’re interested in donating to Dana Farber and this seems like a reasonable way of doing it, you can do it online at this web page or click on the PMC logo to the left. My PMC Gift ID is: wh0028 if you access the PMC web site another way. Of course, you can make the donation directly to Dana Farber or to the PMC. No obligation and donations can be made anonymously, if you prefer. Thanks for even reading this far and if you choose to donate, thanks in advance for your support. For the purposes of this post, I’m referring to a member of the board of directors of a company that does:
The independent director does not:
That’s actually the simplistic list, biased toward the role of the independent director in a small, private company or startup. The list for public company directors is much longer, more detailed and has a lot of legalese associated with it to cover the asses of the respective company and director. I’ve been a director of 16 different companies so far in my life. I think I was a good director on most of those boards and I knew that I sucked on at least a couple of them. Several of the companies were publicly traded, but the vast majority were private, venture-backed companies. On those boards, I was (and still am at three companies) usually the only “independent” director. I put quotes around independent because I’m not sure that it’s possible to completely follow the rules I laid out above. As a board member of a small company, I usually get stock options or restricted stock in payment for my services and in larger or publicly traded companies, I get compensated with cash as well. Sometimes, I’m also a small investor in the company. Does that influence my decisions? Well, yes, sometimes it does. I hope and believe that when that happens, though, I’m still working in the best interest of the shareholders – the group that the board works for in the first place. The boards of small, venture-backed companies actually vary little these days in my experience. There is usually one insider, almost always the CEO (sometimes, there are two – a founder and a CEO when the CEO is not a member of the founding team); one or more VCs; and one or more mutually agreed upon outsiders (sometimes there is more than one, but it’s hard to find qualified directors – in my experience having only one is the norm). Like all directors, the independent director should help guide the company by taking a participative role in strategy setting; help the management team make high-level financial decisions; contribute to the setting of overall direction; determine compensation when appropriate; ask loads of probing questions; and advise the CEO when asked as well as, as needed, when not asked. Most board-level decisions are made with reasonable thought and discussion. They are rarely . . . rarely a result of a non-unanimous vote (they are, obviously, always the result of a vote, it’s just usually unanimous). That doesn’t mean that disagreements don’t occur, it just means that reasonable people have a desire to work through things and to try and find consensus – before they vote on it. This is where the independent director has another, somewhat unique role on a board. That of the mediator or synthesizer of the parochial opinions of the insiders. That is, those that are employed by or heavily invested in the company. Often, this means bridging the gap between the management team and the investors of the company. Once in a while, it even means trying to find common ground between investors. As an independent director, I find myself assuming this role a few times a year when things aren’t going well inside companies and once in a while when things are going according to plan or better. It’s time consuming because no party wants an arbiter. They just want it their way. At times, I feel like the Secretary of State working with Middle East factions. You get the idea. It’s enjoyable and frustrating. When it works out – which it almost always does because all parties want it to – it’s a lot of fun. The process isn’t always pretty, though. As a CEO, I really appreciated the independent directors that sat on my boards. Even when their energy was directed at talking me off the ledge (i.e. I was wrong and needed to be shown the path), someone stepping in, holding my hand and offering me a different light to see the situation with was a huge help. I really valued having the person and role on my board. Similarly, I knew the independent director was working with other insiders to try to find common ground when he/she felt that the management team was in the right. So, there are two lessons here. For those interested in being an independent director, be forewarned, you have a unique role to fill in addition to the normal directorship role. It’s an opportunity and responsibility in my opinion. For CEOs, recognizing the value that an independent director brings to the table should help you recruit the right person to fill that role and to, perhaps, think through the value of such a person on your board when it is being established. ![Reblog this post [with Zemanta]](http://img.zemanta.com/reblog_e.png?x-id=d67e4bb2-c97c-4a2c-8972-c2f791b03f2c) After yesterday’s phenomenal Angel Boot Camp in Cambridge (MA), I’ve been thinking about a long overdue post on the topic. I did my first angel investment in 1994 and I’m now in the process of wrapping up my 31st (individually, that is, not as part of a fund) – it’s also my third in the past six months. I’ve probably done about 30 more as a limited partner in seed funds and incubators along the way as well. All in, that probably makes me a second tier angel investor, at least in terms of deals done. Third tier if you count the “super angels” who have knocked off hundreds of deals in shorter periods of time. That said, I was recently “voted” as one of Boston’s best angel investors – I think that say’s more about Boston’s investment community than it does about me, I’m afraid. I invest because I have a blast doing it. It’s about 75% of the fun of running the company yourself with only 5% of the stress. I get to meet smart, energetic people with great visions and boundless energy. It keeps my head in the game, and when I can add value (in addition to money) to help a startup weave it’s way through product, market and management mine fields, I avoid feeling like the least productive member of society for yet one more day. The difference between a second tier investor like me and the first tier guys (other than brains and talent), is that the first tier investors actually work at finding investments. I’m, dangerously (see below), more passive about it, reacting to the investment opportunities that come to me. I get to see my fair share of of potential deals, but by selecting from a smaller set I not only miss loads of opportunities, but my comparative perspective is likely skewed – the best companies I see may be among the worst potential investments out there. Fortunately, I’ve been moderately successful with this type of investing. A little over one third of my investments have provided reasonable returns over time with a few big successes doing most of the financial heaving lifting for my “fund.” While my 300 foot yacht with accessory submarine and helicopter remains on the wish list for affordability reasons, I haven’t had much trouble putting food on the table. While I don’t have any absolutes when it comes to investing, I do have some guidelines that I loosely attempt to adhere to, at least when they’re convenient. Some of them are general and are similar to those used by many angel investors. Others are more personal and, for one reason or another, I’ve picked up over time as a result of my investment experiences. The general guidelines:
My Personal Guidelines:
This is hardly a definitive list of any kind, of course, but hopefully it’s a starting point for anyone wanting to get involved in angel investing and for anyone looking for an angel investment. Keep in mind that none of these guidelines have anything to do with the actually business criteria used in selecting an investment. I’ll leave that for another post. ![Reblog this post [with Zemanta]](http://img.zemanta.com/reblog_e.png?x-id=b9ba2f24-3758-4307-a0fc-7e080fd5afc3) Today I did my first ride since last October when my knee went out on me. I’ve seen three doctors about my knee problem and all three say “surgery,” although none can tell me exactly what’s wrong with it. So, eschewing Western medicine, I sought out Eastern help through acupuncture, tensiology and whatever other voodoo I could find someone to throw at me (I know, bad attitudes don’t help, but some of this stuff really requires a huge leap faith – bigger than I can make sometimes . . . ). Nothing. Nada. I still can’t descend a set of stairs without pain. Totally sucks. Having sat on my ass for seven long months, I thought I’d give the knee a try. Thankfully, I’m not compelled to take a hacksaw to my lower thigh at this point. There was some pain, but it is manageable with ice and a few dozen Advil. The three margaritas before and during dinner are helping a lot as well. While focusing on my knee, I completely forgot how my body would deal with my prolonged absence from the saddle. It wasn’t pretty. I huffed and puffed up hills and my speed . . . well let’s just say I was able to move fast enough to avoid falling over. Thank God the ride was flat.
I was giving it everything I had to average 16.2 mph for the measly 12 mile ride today. Usually by this time of year, I would have 1,000 miles or so under my belt and my average ride would be about 35 miles. This year it’s now 12.2. The ride I look forward to the most all year, the Pan-Mass Challenge, is in eight short weeks. If my knee holds out, I might be able to get enough training in to do reasonably well. We’ll see. In the mean time, I’m gonna keep trying until I can’t ride any more. That may be tomorrow, but I hope not. In the June issue of Car and Driver magazine, Aaron Robinson has a different cut on the Toyota unintended acceleration problem (can’t find it online yet). He states that in the great scheme of things, maybe it’s not a problem at all; maybe faster-moving Toyotas will keep them from blocking the left lane so the rest of us non-Toyota driving public can get somewhere at a reasonable speed. While I would normally be thinking about Subarus in this regard, Robinson certainly has a point. He states of the stereotypical Toyota driver:
Yeah, yeah, yeah, this is a gross generalization which is unfair, as all generalizations are, blah, blah, blah. Keep in mind, while I might share this perspective, I’m just quotin’ here. Robinson does have some remorse for his point of view and he worries that bad wishes toward a line of Camrys and Priuses blocking the express lane (aka, the left lane) on major roads in the US might actually be the cause of the problem.
Although, if this were true, I would have increased the speed of half the car brands on the planet by now . . . ![Reblog this post [with Zemanta]](http://img.zemanta.com/reblog_e.png?x-id=76380ca7-3431-4617-9a7d-ba52023f77ae) Last week, my wife and I spent time relearning the game of tennis at the Vic Braden Tennis College in St. George, Utah. I say relearning because the Vic Braden school is less about improving your current game than it is about changing your strokes and strategy to Vic’s way of thinking. That sounds bad, but it isn’t – at least not in my opinion. Vic is a psychologist by training, but he’s spent most of is life playing, coaching and studying professional and amateur tennis. He has researched the game and how it’s played (including using detailed slow motion photography, wireframe analysis and motion capture) thoroughly over the years and has loads of logical reasoning behind his way of playing it. While the changes he encourages are major for most people, they make a lot of sense and are somehow, easier to adopt because of it. Vic, himself, videotapes each player several times during the session and then meets with small groups to explain what can be Vic is over 80 now and has a head full of tennis memories, fact and figures. He knows and works with all of today’s greats as he did with tennis legends in the past. He can tell stories about Roger Federer and Rod Laver and discuss details of their strengths and weaknesses as well what made them both different, but great champions. Braden is a complete crack-up too. He had us all laughing within minutes of our first meeting. The Vic Braden Tennis College has other locations as well. We chose St. George so that we could spend some time hiking with friends in Zion and Bryce Canyon National Parks too. The area is phenomenally gorgeous if you have the time and, more importantly, the energy to explore after Vic kicks the crap out of you. If you’re a 5.0+ tennis player, you may not want your game entirely disassembled. If you’re playing below that level and feel like you plateaued years ago, this type of game upheaval may be just right for you. It’s a lot of fun and the instructors are very patient. I know, I tested them. ![Reblog this post [with Zemanta]](http://img.zemanta.com/reblog_e.png?x-id=b9c6e47d-c04f-4446-8540-21473a8adfc4) |
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