Both Sides of the Table


One of the vivid memories I have from being a startup CEO is the feeling that most people in your company have a look in their eyes that like they can do your job as well as you. How hard could it be? You just assign out tasks to all of us.

In the early days the CEO is the jack-of-all-trades, doer-of-all, famously the “chief janitor” or coffee maker. But if you level up, raise capital and grow customers, revenue and staff – life changes. Eventually you need a VP of Product to handle your product roadmap, a CTO for engineering leadership and VPs of sales, marketing & biz dev. Most companies that are scaling have CFOs, heads of HR or talent. The “span of control” for a growing tech startup is probably 6-9 people. The “doers” in your organization.

This is when your job function truly starts to match the definition of “leader” because that’s exactly what your role is. You set direction. You hire great people. You help them prioritize their objectives and review the results. You course correct. You motivate, cajole, reassign tasks, hire, fire and push the organization forward. CEOs who try to do everything themselves rather than lead are usually pretty ineffective – they can’t scale.

Leadership is actually quite difficult. You have this tension between on the one side being a micro-manager (by which great people won’t want to work with you) or being hands off (and having quality lapses or team alignment issues). Neither end of the spectrum is particularly effective. The best leaders are great at hiring in large part because they are inspirational.

If you hire truly talented people you end up definitionally with a lot of competitive peers who will inevitably jockey for resources and control. Extremely talented people are ultra competitive.

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I was at a dinner recently in Chicago and the table discussion was about building great companies outside of Silicon Valley. Of course this can be done and of course I am a big proponent of the rise of startup centers across the country as the Internet has moved from the “infrastructure phase” to the “application phase” dominated by the three C’s: content, communications and commerce. But the dinner discussion included too much denial for my liking.

I think startup communities being simple cheerleaders doesn’t help anyone. Those of us outside Silicon Valley need to make an effort to effect change not just wish for it.

At the dinner some of those arguing that Chicago has everything it needs now that it has built: GroupOn, Braintree, GrubHub and others and that it has “come along way” and “will never get the full respect it deserves just because it’s not Silicon Valley.” But I think this misses the point. I’m a very big fan of Chicago. I started my career at Andersen Consulting (now Accenture) so I went to Chicago many times a year for nearly 9 years.

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Let me start with the news that I’m excited to share with you. After years of trying to persuade Kara Nortman to become a partner at Upfront Ventures I can officially announce now that she’s joined us effective immediately.

I have known Kara for 7 years and knew almost immediately after meeting her that I wanted to work with her one day in some capacity. Thus began my marketing campaign. It is rare to find somebody who matches exactly what I’m looking for in a partner so when you find it you act:

Academic rigor (Princeton undergrad, Stanford MBA)
Competitive (Athlete: skier & rowed at Princeton, hates losing at everything she does)
Investment experience (5 years a VC at Battery Ventures)
M&A experience (Morgan Stanley and later co-headed M&A for Barry Diller at IAC)
Operating experience (Helped run parts of CitySearch & UrbanSpoon, tons of product management experience, Board of Hatch Labs which helped spawn Tinder)
Startup CEO experience (Founded P.S. XO along with my good friend Soleil Moon Frye.

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We all know that funding markets have changed for startups. The trends are well understood: more angels, more seed funds, more crowdsourcing and so forth. We all can intuit the benefits to founders of these trends so there’s little reason to elaborate. What is less understood are the consequences of these changes.

I have blogged about some of the downside consequences of the changes and the private information I have says the consequences are much worse than is reported in the press since few people publicly talk about

1. How founders get screwed on convertible notes
2. How party rounds can burn you if it takes time to find your groove

There’s another issue I can add to your list of things to be aware of – information rights. Generally speaking in venture capital financings the legal documents will specify that only “major investors” (a threshold set in the agreement – which can be $500,000 investor or more). There is a reason for this.

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Last week a company we enthusiastically backed, uBeam, led by a very special entrepreneur, 25-year-old Meredith Perry, announced a $10 million round of financing.  The press around the raise & company was fantastic and the promise of their technology – wireless charging that works as easily as WiFi – would positively affect many of our lives. What person hasn’t crouched at an airport to get 18% extra on one’s battery before boarding an airplane?

But then one person – who happens to be a physicist – wrote a back-of-the-envelop calculation of uBeam and said it’s not physically possible. His math was correct and I can hardly blame him for taking a guess at what uBeam does but every assumption that he used was wildly inaccurate. uBeam’s tech does work and I have safely seen it demo’d in the real life many times. Most of those that have been privileged enough to get a look at what they are actually doing have moved from skeptics to believers.

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