Blog: What I Learned at Entrepreneur Programme: Strategies for Team Building
I joined - as an observer- the Astia Global Entrepreneur Program’s 2012 Summer Cohort, held in New York City. Twelve exceptional women-led ventures attended this weeklong intensive boot camp.
In Informed Business Strategies tactics of team building and equity allotment were discussed by Jennifer Hill of Gunderson Dettmer Stough Villeneuve Franklin & Hachigian, LLP, Allen Murabayashi (CEO and Founder, PhotoShelter), Bo Yaghmaie (Cooley LLP), and Joy Marcus (DFJ Gotham).
These were the key-learnings:
Timing, Failure and Red Flags
Regarding at what poing VCs look at companies, DFJ looks early. They want to see a product/prototype, even without that many users, saying, “having built something beats having a PowerPoint” and that “pre-revenue is fine.”
What is the investor looking for? : “people, market, product . . . are the most important, in that order.”
Founders will iterate the product, and that's why the importance of the ability to fail and move on was stressed. Noted also was a cultural difference between small and large companies -- at large companies, with larger teams, personal failure is sometimes “harder to determine,” but it’s a critical quality at startups.
The investor will ask in the evaluation of a presentation, “Can this person take it – fail, understand why they failed, and move on after failure?." If the answer is negative, then the investors will not be eager to invest.
The investors in the panel elaborated on the joint red flags of not listening and hubris, which is more common these days with our being in a frothy market.
Letting People go: the Zappos Model
The conversation then evolved into reflecting when people and teams – even the founding team – aren’t working.
Recommended was the Zappos model of getting rid of someone early, and with a pay-out.
An investor commented that one just knows when it’s not working, and that people“never regretted firing someone, just how long it took.”
Of critical importance was whether people are treated fairly, since the rest of the team still watches that very closely.
The effect on the culture was mentioned repeatedly, and setting up legal documents in advance, to address non-solicitation, working “at will,” and a non-compete. There are times when a co-founder is no longer invested, and might be more than happy to be bought-out.
Equity Allotments and Timing:
There was also much discussion of equity as a way to keep people motivated. it’s best that equity's shared up and down, even to the assistants.
The founding team usually gets some equity upfront, or sometimes monthly or quarterly vesting after the first year, especially for the rank and file, since people like to see their stakes tick-up.
It was stressed strongly that people don't just work for money.
Tactically, the investors encouraged always saving a chunk of equity for a key hire, suggesting one save like 1-3% for a CFO or CEO role down the road.
Modeling out the headcount was suggested. This was in reference to VCs commonly asking companies to set aside a 15% equity pool. However, if a firm can show how a different amount, like 8%, would be enough until the next raise, a firm can get away with a smaller amount. Founders might want to put together a vesting plan amongst themselves before the VCs request it.
The investors mentioned that they don't like to see tech firms using a technology consultant for the CTO role, or other key roles. I.e., another key role might be a sales leader within a media sales driven company; the startup should also be able to attract a strong person, since this is often a hard role to place.
Otherwise, “consultants are negotiable (PR, marketing, and even developers below the CTO level).” Even more important is to avoid adding someone weak.
Regarding part-time CTOs, his biggest concern was mindshare: “will the person dig deep?”
Luke Haseloff is an entrepreneur who also works part-time doing “freelance business development” for tech startups; he joined the inaugural Astia Global Entrepreneur Program’s 2012 Summer Cohort, held on June 25-29, 2012 in New York City as an observer. Astia is a global non-profit accelerator with a mission to propel women-led high-growth ventures, and Astia’s tag line, “Where Women Innovators Succeed,” says it all.Twelve exceptional women-led ventures, carefully selected by the Astia community, will attend this weeklong intensive boot camp. After the Summer Cohort, the startups will be mentored for three months.
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