Entrepreneurial Leadership and Management . . . and Other Stuff

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Feb
28

Do Boards of Advisors Work?

I have never seen a board of advisors work after the initial few meetings. I’m sure there are cases where they are managed well and it works out, but for the most part, my experience is that any initial engagement and excitement wanes and the value diminishes fairly quickly.

I think that the reason this happens is that there’s no fundamental attachment between the members of the board of advisors and the company.  Sure, there might be a small financial one, created by offering the members of the group some equity or cash compensation, but it’s very difficult to establish any emotional link that would compel the outside members of the group to put in the long term effort to continue to add value, stay engaged and work to make the company successful.

The problem is that the people who are generally targeted as advisors have other jobs and responsibilities.  After the idea of equity participation and initial interest in what the company is doing wears off – which can happen quickly – the company that they are advising becomes a much lower priority than any of their other responsibilities.  Since they are not involved on a day-to-day basis, there is no other link to keep them thinking about what their advisee needs.  Ultimately, the relationship moves from a mutual one to one driven entirely by the company until it breaks down completely.

As it turns out, while the board of advisor setup doesn’t work that well, there are other ways of achieving the benefits desired in setting up the group in the first place.

  • Compensate company adviser(s) frequently – the value of any compensation dissipates quickly when the advisor isn’t thinking about the company.  More frequent grants of equity or cash payments will serve to keep their attention focused on the tasks at hand.
  • Put them on the Board of Directors – if they add enough global value, put them in a more responsible position with the company, like its board of directors.  The added responsibility will keep them focused on the company. Of course, you can only do this for a small number of people and only for those who are appropriate for such a role.
  • Hire them as a consultant – in this way, they have responsibility for delivering value to the company with an agreed upon income for doing it.  This arrangement has the added advantage that it’s easy to sever If and when the advisor no longer adds value.  The advisor can then be replaced by someone with different experience or knowledge.

Having outside advisors is always a good thing.  They can bring perspective to your efforts and direction.  They can also bring knowledge and wisdom into the company that may be missing in the current team.  Ultimately, the structure of such a group of advisors is critical to its success, though.  The classic board of advisors structure frequently fails because it does not establish an emotional or responsibility link between the company and the advisor.  There are other ways of accomplishing this though.  When these are used, a great relationship between an advisor and company can be established although, perhaps, not as a group.

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 February 28th, 2007  
 Will  
 Boards, General Business, Startups  
   
 15 Comments
Feb
26

Levi Leipheimer (US) of the Discovery Team Wins the Amgen Tour of California – No French Anti-Doping Agencies Cry Foul

In its second year, the Amgen Tour of California, the first big race of the professional cycling season, attracted some of the the best teams and riders from around the world.  The ToC is an 8-day, 650+ mile race through California from north to south.  The US-based Discovery team (Lance Armstrong’s old team) led the pack, garnering both first and third place finishes.  No word yet from the French anti-doping authorities on whether or not any of the 4 Americans in the top 10 will be stripped of their titles for taking Advil.  [ed. note – OK, while that felt great to write, it’s completely unfair.  Cycling, as a sport, appears about as honest as professional wrestling these days.  Someone’s gotta step up.]

The ToC is the biggest race in the US, but is still dwarfed by the great European cycling events.  The high level of participation and the exciting finish to the race indicate that this event has great promise in continuing to become bigger and better.

The downside for the Discovery Team was that George Hincapie fell and broke his wrist in stage six.  It looks like he’ll miss the Spring Classics – shorter, very challenging races in Europe where he tends to be a leader.

 February 26th, 2007  
 Will  
 Cycling  
   
 Comments Off on Levi Leipheimer (US) of the Discovery Team Wins the Amgen Tour of California – No French Anti-Doping Agencies Cry Foul
Feb
26

Gizmodo’s Boycott the RIAA Month

Moving from its everyday world of lusting after and reporting on shiny new technology to taking a stand on what is good and evil, one of my favorite gadget sites, Gizmodo, has declared March as Boycott the RIAA month.

This isn’t the first time that Gizmodo has railed against the RIAA.  As they stated before in their post, RIAA Wants to Kill Open WiFi, Puppies, Babies, “[the RIAA is] continuing their non-stop campaign to ruin everything that is good in the world.”  Gizmodo claims that the RIAA is the Darth Vader of free speech and privacy and “it’s about time we stopped merely bitching and moaning and did something about it.”

From Gizmodo’s post . . .

“We want to get the word out to as many people as humanly possible that we can all send a message by refusing to buy any album put out by an RIAA label. Am I saying you should start pirating music? Not at all. You can continue to support the artists you enjoy and respect in a number of ways.

Firstly, I encourage everyone to purchase music from unsigned bands and bands on independent record labels. There are tons of great artists out there, many of which you’re probably already a fan of, that have nothing to do with the RIAA. Buy their records at eMusic, an online store that sells independent tunes in beautiful, DRM-free MP3 format.

Secondly, you can still support RIAA-signed bands without buying their music. Go see them live and buy their merchandise; they get a hell of a lot more money from that then they do from album sales. And hey, you could benefit from getting out more, couldn’t you?

If you are unsure whether or not an album is put out by an RIAA label, the handy RIAA Radar will clear everything up for you. They have both a search engine and a great bookmarklet, so be sure to get yourself hooked up.”

You go, Gizmodo!  I’m in.  Let’s see if I can compel my kids to do the same.

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 February 26th, 2007  
 Will  
 Gadgets, Misc Thoughts  
   
 Comments Off on Gizmodo’s Boycott the RIAA Month
Feb
23

You Suck: A Love Story by Christopher Moore

I haven’t done a book review in a while, but having just finished You Suck: A Love Story, I had to write a few sentences about it.  While I don’t think it’s nearly as good as A Dirty Job, or Lamb: The Gospel According to Biff, Christ’s Childhood Pal, Moore’s irreverent writing is still a hoot.  If you haven’t experienced Moore’s off-beat humor, my favorite passage from the book is a great example:

“But apparently, the entire fucking country shuts down on Christmas, slammed under the oppressive iron fist of the baby Jesus, so out of nine Starbucks we try, all are closed.”

It’s a very quick read and a lot of fun.  If you’re looking for your first Moore experience, though, I’d start with A Dirty Job or Lamb.

 

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 February 23rd, 2007  
 Will  
 Books  
   
 3 Comments
Feb
23

Prepare and Be Prepared

Brad Feld has a great post this week titled, Don’t Be Casual, in which he talks about a company in his portfolio that did a “casual” presentation to a VC firm, only to realize that the company’s idea of casual didn’t match the VC firm’s.  In the end, “the meeting was a disaster.”  Brad concludes his post with the message:

“. . . in all fundraising situations – don’t be casual.  The first impression counts a huge amount and sets the tone.  This is obvious, but even after doing hundreds of financings, I blew it this time.”

The post is a terrific lesson from many points of view and, while the comments seem to focus on the failure of the presentation itself, I believe that there are some higher-level lessons that can be drawn from this experience.  Two, in particular, come to mind.

  1. Generally speaking, if you blow your initial shot with VCs you’ve probably poisoned the well.
    • Many of my VC pals disagree with this point, but I’ve seen it time and again.  Most VCs have a lot on their plates.  If they’re not out fundraising, they’re looking at loads of deals or managing the ones already in their portfolio.  Because they’re busy, the impression they take from their first meeting with you will likely be the one they fall back on the next time they have the opportunity to think about your company.  If it was bad, it’s highly likely that their negative memory will make it easy for them to pass on the next meeting and ultimately, any deal with you.  This remains true after you’ve gone back, having taken their advice on what would make your idea better, and refined both your idea and approach.
    • Make sure that you’ve gotten all the advice and made all the changes to maximize your potential value to your target VCs before you present to them.  Find outside advisors and present to VCs that aren’t on your target list to get early feedback before you meet with the people you want to impress most.
  2. Whether in fundraising situations or not, in business, always be the best dressed person at the ball.
    • Until you’re the person in charge, the one making the decision or a recognized luminary in your field, always make it a high priority to do what’s important to your audience better than they expect it to be done.  That requires, of course, that you know what they expect; at least at a high level.  Uncovering expectations is usually fairly easy – ask.  If you can’t find out, do things in a way that would blow anyone away . . .
      • Treat the person your meeting like they’re the Queen of England – formality never hurts
      • Several readers of this blog feel differently about this, but I stand by it – stand up when you present.  It shows respect for your material and the audience.
      • When presenting, be prepared to take the conversation in many directions.  Check with the audience after the first few slides to see if your guess about best path is correct, if not, go to plan B, C or D.
      • Get feedback up front.  State what you believe are the expectations for the meeting as the meeting starts.  You may be surprised to find out that the person/people you are meeting with will tell you exactly what you need to do.
      • Don’t use jargon, acronyms and buzzwords to try to impress your audience unless you know for a fact that they’re in your audience’s lexicon.
      • When in Rome, dress like a Roman.  Wearing cargo shorts and Chuck Taylors may fly in the office and maybe even with customers and partners, but if you dress that way in a meeting with a banker in New York, no good will come of it.
    • Whether your presenting to VCs, meeting with customers or presenting at a conference, prepare and be prepared.  Knowing what to do ahead of time is always the best answer.  If that’s not possible, and sometimes it’s not, then set yourself up to deal with as many contingencies as possible.

 February 23rd, 2007  
 Will  
 General Business, VC  
   
 4 Comments
Feb
21

Buy the Customer Lunch – At His/Her Office

One of the greatest challenges in direct sales is having your customer commit time to listening to your pitch.  Good direct sales people work hard to eliminate any and all barriers to such a commitment because even the most compelling pitch won’t get you anywhere if it’s not heard.

One tool for getting an audience to hear you out early in the selling process is bringing the story to them.  Instead of asking a potential customer to take time out of their busy day to travel to a meeting, eliminate any time or effort barriers – buy them lunch at their office.  Pick up some pizzas, have sandwiches delivered or order from the prospect’s cafeteria.  Free food is a surprisingly strong draw and will make it much easier to get a foot in the door.

Even better, have the prospective customer arrange a conference room and also invite the prospect’s colleagues along for free food in exchange for 45-60 minutes of listening about a cool new offering from an interesting vendor.  This way, of course, you’ll get more people involved and increase your chances that someone will latch onto your message and become a champion of it.  The implicit commitment made by each attendee goes a long way and the even larger commitment by the organizer of the meeting will help develop some ownership of the process in the prospect as well as to help establish a partnership between you and he/she.

In selling, those early audiences are difficult.  Early commitment is even harder.  Removing barriers of effort and time while establishing an early relationship with prospective customers can help you get both.  Easy access to free food is a great way of making this happen with benefits that far exceed your cost or effort.

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 February 21st, 2007  
 Will  
 Selling  
   
 8 Comments
Feb
19

Accepting a Seat on a Board

The first time I was presented with an opportunity to join a board, I was so flattered that I agreed to join without really considering whether it was right for me to do so.  That is, right for the company and right for me.  Luckily, it was a strong board and while I don’t feel that I contributed as much as a good director should, I feel that I made a few key contributions while learning a lot about the role of the board and it’s interaction with the CEO.

The next few boards I joined, though, turned out to be far less appropriate for me.  I wasn’t equipped to contribute as much as a director should and, more often than I expected, the CEO wasn’t looking for guidance as much as he/she was simply looking to fill a seat at the table – either to add a known name to the company’s list of advisors, or to satisfy a requirement made by investors.

Thinking back on it, the situation reminds me of the 80s television hit, Night Court, in which a young judge is appointed to the bench in New York.  Judge Harry Stone is as unlikely a judge as one could find and, according to the show, he’s appointed because:

“… the mayor was filling all open seats on the last day of his term, and Stone was the only nominee on the list at home to answer his phone.”

For at least some of the boards I joined, I’m sure my name was pretty low on the list of candidates but I just happened to be available.  Obviously, a crappy reason for either the company or the prospective director for joining as important a group as a board of directors.

While I can’t control the criteria created by the companies that ask me to join their boards, these days, I’ve gotten much better at determining which directorships are a fit for me and which ones aren’t.  In making this determination, it’s always my goal to both make sure that the position will work for me and, to the best of my knowledge, make sure that it’s the right move for the company.  I’ve turned down several invitations to join boards that I thought would be really cool because I didn’t think I could add enough value as a director.  

To make the choice on which boards to join, I’ve set up some basic rules that help me quickly determine if an opportunity is even worth considering. 

  1. Can I handle the load?
    • There are people who take on too many directorships at a time, in my opinion.  Because I tend to be fairly operationally biased, I know that I can only handle 3-5 directorships at a time.  When things are going well in the companies I work with, I have loads of spare time, but when things are going poorly, which seems to happen at all companies I work with at the same time, it wouldn’t be fair if I don’t have the time to help any one of them out.
  2. Am I truly interested in what the company is doing?
    • If I’m not genuinely interested in what the company is up to, I won’t give it my all.  The best boards are those that offer constant learning experiences.  It’s those boards that I’m eager to contribute to.
  3. Can I help?  Do I have knowledge and/or experience that will be valuable to this company.
    • It’s taken me a long time, but I now know the small pool of things that I know and I have a much better understanding of the oceans of things that I don’t know anything about.  If I don’t already know most of what you need me to know, I’m of little value.
  4. Is the CEO looking for guidance or is he/she looking to fill a seat at the table.
    • You don’t have to do what I say, but you have to ask, listen and consider my response.  If you don’t, we’re both wasting our time.
  5. Can I make some money?
    • Unless the Board we’re talking about is a non-profit, any advisor worth his/her salt will want to see a path to some income for their efforts.  Of course, any compensation will most likely be in the form of equity, but for some companies, cash or, some combination, is a better option.  I hate to sound like a greedy bastard, but my efforts, for the most part, are worth what you pay for them.  If they’re not worth something to you, see 4, above.

Since I’ve adopted these criteria (OK . . . guidelines), I think I’ve become a much better board member.  I feel I can contribute more and am much more available to the CEOs of the companies that I work with. 

There are many fewer people available these days to fill the expanding number of directorships being created.  As such, more people will have the opportunity to join boards and build a similar set of rules for how they pick which ones are most applicable.  Those looking to recruit directors should also establish a similar set of rules to make sure they make the best decision.  Understanding the criteria for both sides will ultimately help to establish the best, long-lasting relationship for the company.

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 February 19th, 2007  
 Will  
 Boards  
   
 4 Comments
Feb
08

Marketing on a Microscopic Budget

One of the big challenges that young companies face is how to let the world know about their great product or service.  When the company is well funded and the founding team has the wisdom to plan for their big marketing push, there are generally funds available to run all sorts of marketing programs.  Most often, though, the lion’s share of the money invested in the company is used for the creation of the product or service and there never seems to be enough left over to make potential customers aware of it.

Recently, a company that I am an investor in and director of, AccuRev, invested a couple of thousand dollars into creating a series of short videos that they placed on YouTube.  The videos mimic (rip off may be a better term), Apple’s “I’m a PC/I’m a Mac” commercials.  As you’d expect, AccuRev is the ever-so-cool Mac and AccuRev’s biggest competitor, IBM’s Clearcase, is the stodgy, slow, un-hip and very un-cool PC.

The first video in the series has already had almost 3,000 views.  The company is tracking the lead data closely and will attempt to correlate leads and sales that are initiated by the videos.  At the very least, exposing 3,000 sets of eyeballs (clearly not all those of existing customers) to singular competitive messages, clearing stating a specific advantage of the company’s product against its biggest competitor raises awareness of the product and company and can lead to being considered for purchase later.

Pretty nice way of leveraging a small marketing budget.

 
Using an RSS reader?  Try: http://www.youtube.com/watch?v=msDuQoKqysw

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 February 8th, 2007  
 Will  
 Marketing  
   
 2 Comments
Feb
06

Lessons in Customer Support

A few days ago, I wrote a post titled, Caught in a Geek’s Gravitational Field.  The truly unimportant post just outlined the geeky stuff that I have been working on and the fact that the mess I have been making has gotten me into an infinite loop of debugging, fixing and re-breaking many things simultaneously.  In describing the my dilemma, I mentioned several products that I have been having particular difficulties with.  Surprisingly, within hours, I began hearing from representatives of a couple of these companies expressing concern, making suggestions and offering services.

I was shocked for a variety of reasons . . . 

  • First, and like most people, I don’t expect to get good support even when I ask for it and I certainly don’t expect it to be offered without me asking
  • Second, the post was created on a Saturday morning on the East Coast and I had responses that morning
  • Third, the people who responded were not regular readers of this blog so they were searching for people like me
  • Fourth and perhaps most surprising, the two products I got virtual immediate responses about were free versions of the companies’ offerings

You can see some of the interest shown by these companies – Telligent, the creators of Community Server and VMware, the creators of a wide range of computer virtualization products – in the comments following the post.  Both followed up further via email as well, making sure they closed the loop.  Needless to say, I was extremely impressed with both companies’ efforts.

So, if this isn’t an indication of how the business world is changing, I don’t know what is.  Here I am, an individual using free software, getting offers of support from companies on a Saturday morning.  I didn’t complain or bad-mouth these companies. I didn’t advise that others steer clear.  I completely understand the fact that the solutions I was using were free and I get exactly what I pay for.  Nonetheless, these companies or, at least, their representatives, understood the value of a happy customer (perhaps especially one who blogs).  They were actively searching for me to make sure that I had support and to get feedback about how they can make their products better for people like me the next time. 

This is how you create loyalty folks.  Time to step up the support efforts if you want to compete.

The whole situation is even more impressive for me in light of the horrible customer support experience I’m having with another product/company that has been part of my geeking activities.  As part of my server rebuild project, I chose a new 3Ware RAID controller.  The documentation sucked, but the installation was fairly straightforward.  The RAID array (initially 3-750GB drives later to be expanded to 4-750GB drives as part of the project) was slow to initialize and get running, but it was reasonable enough.  Extending the array with the fourth drive took 5 full days.  Even though this is entirely out of whack, I didn’t complain nor put in a support request.  Now, however, I can’t get the Windows Server 2003 to recognize the larger array and this is a problem.  I put in a support request on Saturday and didn’t hear back until Monday.  After explaining my situation in detail via email, the response I got was a terse sentence telling me that the 3Ware controller was right and Windows 2003 was wrong.

That’s it.  That was their response.  Not how to fix it.  Not where to go to read more.  Not even a request for more information.  Just, we’re right and they’re wrong.  Very helpful (dripping of sarcasm).  I took a deep breath and replied politely that the response I got wasn’t very helpful and repeated my problem using words that an 8-year old might understand.  To this, I got another response telling me that I’m calculating Kbytes incorrectly (1,000 vs 1,024) and that I shouldn’t eexpect more space when adding a fouth 750GB drive.  I’ve just responded again suggesting that being off 750GB in a 3TB array could not possibly be because I’m miscalculating the size.  You get the idea here.  I’m frustrated and I’m not holding out a lot of hope for getting this problem resolved.

Would I acquire another product, even one I paid for from Telligent or VMware.  You bet.  From 3Ware, I don’t think so.  The guys I’ve paid $0 are supporting me like a valued customer.  The vendor that I’ve paid loads of money to is putting the least effort into support possible.

There’s the reality of quality customer support. 

 February 6th, 2007  
 Will  
 Customer Focus  
   
 5 Comments
Feb
06

Guardian Unlimited: I Hate Macs

Yesterday’s Guardian Unlimited had a very funny article by Charlie Brooker titled, “I Hate Macs.”  In the article, Mr. Brooker pokes fun at the latest ad campaign by Apple in which two actors portray the human incarnations of a PC and Mac.  From the article:

“I hate Macs. I have always hated Macs. I hate people who use Macs. I even hate people who don’t use Macs but sometimes wish they did. Macs are glorified Fisher-Price activity centres for adults; computers for scaredy cats too nervous to learn how proper computers work; computers for people who earnestly believe in feng shui.”

Perhaps a bit strong, but you know where the author stands.  On a more factual note, the article continues:

Aside from crowing about sartorial differences, the adverts also make a big deal about PCs being associated with “work stuff” (Boo! Offices! Boo!), as opposed to Macs, which are apparently better at “fun stuff”. How insecure is that? And how inaccurate? Better at “fun stuff”, my arse. The only way to have fun with a Mac is to poke its insufferable owner in the eye. For proof, stroll into any decent games shop and cast your eye over the exhaustive range of cutting-edge computer games available exclusively for the PC, then compare that with the sort of rubbish you get on the Mac. Myst, the most pompous and boring videogame of all time, a plodding, dismal “adventure” in which you wandered around solving tedious puzzles in a rubbish magic kingdom apparently modelled on pretentious album covers, originated on the Mac in 1993. That same year, the first shoot-’em-up game, Doom, was released on the PC. This tells you all you will ever need to know about the Mac’s relationship with “fun”.”

Terrific stuff.  Definitely worth the read.

Thanks, Newsgator.

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 February 6th, 2007  
 Will  
 Computers, Misc Thoughts  
   
 4 Comments