Counter Cliche: It’s Fun at the Top! Fred’s VC cliche this week is a good one — that CEOs have the weight of the company on their shoulders, otherwise known as "it’s lonely at the top." He’s right in a lot of ways, and his two suggestions for dealing with it are good. To those, I’d add a third suggestion, which is to create a peer group of other CEOs that gets together periodically to talk, share ideas, and blow off steam. It doesn’t need to be something formal like YPO or YEO — just have a quarterly dinner roundtable with a handful of other local CEOs you know and respect, whether from your industry or not. But the counter…
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Entrepreneurship
Counter Cliche: Win The Peace
Counter Cliche: Win The Peace Fred’s VC cliche of the week this week is a good one, Hope for the Best and Prepare for the Worst. It’s certainly true, as he says, for startups going through a financing, and in many other instances. I may regret mixing business and politics here, but since Fred has done that before (with the same caveat), I’ll give it a shot as well. As important as it is to prepare for the worst, entrepreneurs and politicians alike need to make sure they’re also planning to win the peace — in other words, planning for a successful outcome. How much happier would we be as a country at war right now if our administration had…
Highs and Lows
Highs and Lows I was reminded recently of one of my favorite entrepreneur sayings. What drives me nuts isn’t the inevitable presence of highs and lows of running a new company, it’s when they happen at the same time. It’s one thing to get used to the roller coaster ride of running a startup. That’s part of the fun and the challenge of it all. There are great moments when everything’s working beautifully. Your strategy is proving to be spot-on. Your team is executing brilliantly. Your biggest client renews and gives you a testimonial. Then there are the dark moments of despair. You’re running out of cash. The new product release is behind schedule. A competitor steals a top client. …
Counter Cliche: Sleeves, or Shoes?
Counter Cliche: Sleeves, or Shoes? Fred’s VC Cliche of the Week this week is about "rolling up your sleeves." It’s a good one about how investors need to really understand a business inside and out in order to be effective board members – that they have to believe that they work for the CEO as much as the other way around. One of my very first posts on this blog over a year ago talked about the fact that as a CEO, you have to remember that you don’t just work for your board, but you also work for your customers and your employees. It’s the same principle. My counter cliche this week is that Sometimes You Have to Walk…
Counter Cliche: The VC Pass
Fred’s VC Cliche of the Week this week is called "the pass," which is the euphemism that VCs have adopted when they decide not to invest in a particular company or entrepreneur. Fred’s VC wisdom comes down to this: 1 – Say no quickly to the things you know you aren’t going to do 2 – Don’t take an opportunity into diligence unless you are willing to spend enough time to truly undersand it, and if you don’t invest, make sure you are willing to spend time explaining why. It won’t make it any easier on the entrepreneur who is trying to find someone to invest in his business that you are passing, but they might learn something from the…
Mental Math
Mental Math One of the most important things a CEO can do when thinking about conversations with Board members or investors is to do mental math. That’s how directors operate. They remember key metrics from time to time and project them forward in their minds. Whatever your financial or operating results, you need to make sure they will mesh with your investors’ mental math. Looking at your cash balance? Look back at the last financial statement’s cash number and mentally work your way to the current statement: operating profits or losses, big swings in AR or AP, CapEx, and other "below the line" items. Do they add up? Be ready to walk everyone through the mental math at your next…
Promiscuity
Promiscuity I figure the title will entice someone new to read this (although he or she might be sorely disappointed with the actual content). Fred’s posting today about VCs’ conflicts of interest, besides giving me fodder for my weekly counter-cliche posting, brings up another interesting point, one about entrepreneurs and their levels of confidentiality or secrecy about their business plans. I heard a quote once from Vinod Khosla of Kleiner Perkins that has stayed with me for years: that “to be successful in the new economy you must be open to the point of promiscuity.” I think Khosla is right. As Fred says, VCs are notorious for meeting lots of companies before making an investment, and as an entrepreneur on…
Counter Cliche: No Conflict, No Interest
Counter Cliche: No Conflict, No Interest The entrepreneur’s take on Fred’s VC cliche of the week — "No conflict, No interest" is that it applies equally but differently to management teams. Our nation’s first president, George Washington, is often said to have brilliantly placed political enemies Thomas Jefferson and Alexander Hamilton on his first cabinet so he would have differing points of view from which to choose when deciding some of the complex and delicate issues that faced our nation in its infancy. And many of those early decisions of the Washington administration — things like how to pay down the debt from the Revolution, or whether and how to put down the Whiskey Rebellion — were critical in forming…
Book Short: Are You Topgraded?
Book Short: Are You Topgraded? I read a decent volume of business books (some of my favorites and more recent ones are listed in the left hand column of the blog). I have two main pet peeves with business books as a rule: the first is is that most business books have one central idea and a few good case examples and take way too many pages to get where they’re going; the other is that far too many of them are geared towards middle and upper management of 5,000+ person companies and are either not applicable or need to be adapted for startups. Anyway, I thought I’d occasionally post quick synopses of some good ones I’ve read recently. Topgrading,…
Counter Cliche: Good Choices Are Made From Good Options
Counter Cliche: Good Choices Are Made From Good Options The Counter Cliche to Fred’s VC Cliche of the Week this week, the Walk Away, is that Good Choices Are Made From Good Options. Fred’s right — sometimes you do have to walk away from a deal where you’ve invested a lot of time, energy, and emotion. But as an entrepreneur, you can mitigate the number of times you have to Walk Away by developing good alternative options to a particular deal. That way, if one option doesn’t pan out as you’d hoped, another very good option is waiting in the wings. There’s a very business school-sounding term called the BATNA, which stands for the Best Alternative to a Negotiated Agreement. …
More on the Quick Flip
More on the Quick Flip In case there’s anyone left that reads my blog but not Fred’s, he wrote a great follow-up posting today about the "quick flip," and how entrepreneurs and VCs have totally different (but reconcilable) views on these things.