Almost a year into my second journey as a startup CEO at Bolster, and I’m getting more and more questions from other CEOs about what it’s like doing a second startup after almost 20 years at the first one…and achieving pretty good scale by the end.  The short answer is, it’s the same, only it’s way better.  Here’s why.

I’m more confident.  So is our whole founding team.  When Jack and I started Return Path, we were 29.  This time, we were 49 — and the average age of the founders was probably 46 or 47.  The bottom line is that we don’t know everything about the business we’re building, but we know what we’re doing in terms of building a business, a startup, a software company, a service-oriented business, leading a team, planning, executing, and on and on.  Confidence in all of those areas means large portions of our day and brain space are freed up to focus on the actual construction of the business without worrying if we’re doing things right or wrong.

It’s much easier to build a startup today.  1999 wasn’t the dark ages, but it feels like a different millennium in terms of what it’s like to start a technology company from scratch.  The cloud and micro services/APIs mean that we are able to build our platform much more quickly at much lower cost than in the past.  And in terms of tooling the business, we got up and running with about 20 different DIY cloud/SaaS solutions in about 6 weeks for a cost of less than $10k/year.

We are sharper on execution and impatient for success.  Your first startup in your 20s is a lot about “enjoying the startup journey.”  This time around, our team is significantly more focused on critical stage-gate success metrics.  In both cases of course, the objective was to win, but this time around, we are much more focused on getting to that point sooner and with less waste.

We are a lot more productive.  Ok, fine, we’re cheating because of COVID and working from home.  No train commutes.  No plane trips.  No water cooler chatter.  No fluff.  It’s not sustainable, and I’ll write about that more in a future post.  But it’s leading to a surge of productivity like I’ve never experienced or seen before in my career.  I do like to think at least some of it comes from professional maturity — we’ll see when life returns to something more closely approximating normal.

I am having a blast being on the front lines.  I went from running a 500-person company, where I’d honed my job and skill set around communication, people issues, and mobilizing the army to go do things…to spending less than 5% of my time running the company and managing people.  Now depending on the moment, I’m an SDR, a customer success manager, a product manager, and a marketing copywriter.  And probably some other things, too.  And I love every minute of it.  It’s a lot more fun to see the direct impact of my actions on the business as opposed to only really seeing the direct impact of my actions on the people in the business (and occasionally then on some aspect of the business as an individual contributor).

Maybe I’m not having a typical second startup experience.  I know some friends who had successful first exits and hated going back to square one, or failed at a second business and were really disappointed about it, only to shift careers.  But my experience so far is a much better second verse, even though it’s a bit like the first.

The Nachos Don’t Have Enough Beef in Them

Short story, two powerful lessons.

Story:  I’m sitting at the bar of Sam Snead’s Tavern in Port St. Lucie, Florida, having dinner solo while I wait for my friend to arrive.  I ask the bartender where he’s from, since he has a slight accent.  Nice conversation about how life is rough in Belfast and thank goodness for the American dream.  I ask him what to order for dinner and tell him a couple menu items I’m contemplating.  He says, “I don’t know why they don’t listen to me.  I keep telling them that all the people here say that the nachos aren’t good because they don’t have enough beef in them.”  I order something else.  Five minutes later, someone else pounds his hand on the bar and barks out “Give me a Heineken and a plate of nachos.”  The bartender enters the order into the point-of-sale system.

Lesson 1:  Listen to your front-line employees – in fact, make them your customer research team.  I’ve seen and heard this time and again.  Employees deal with unhappy customers, then roll their eyes, knowing full well about all the problems the customers are encountering, and also believing that management either knows already or doesn’t care.  Or both.  There’s no reason for this!  At a minimum, you should always listen to your customer-facing employees, internalize the feedback, and act on it.  They hear and see it all.  Next best prize – ask them questions.  Better yet – get them to actively solicit customer feedback.

Lesson 2:  Always remember another person’s person-ness, especially if he or she is in a service role.  The old story about the waiter spitting and coughing in the obnoxious customer’s soup would dictate that self-preservation, if nothing else, should inspire civility towards people who are serving you, be it a B2B account manager or a waiter in a diner.  Next best prize – self-interest to get a higher level of service.  Better yet – engagement and kindness like you’d want people to show you.  Chances are, they’re trying to make your day a bit better.  Shouldn’t you try to do the same for theirs?

(Lesson 3:  Always listen to your bartender!)

You, Too, Can Take Six Weeks Off

Note:  I have been really quite on OnlyOnce for a few months, I realize.  It’s been a busy stretch at work and at home.  I keep a steady backlog of blog topics to write about, and finally today I’ve grabbed a couple minutes on a flight to knock one out.  We’ll see if this starts me back on a more steady diet of blogging – I miss it!

I’ve written in the past about our sabbatical policy at Return Path, from what it is (here) to how much I enjoyed my own (here), to how great it is when my direct reports have been on Sabbatical so I can walk a few miles in their shoes (here and here).

But recently, a fellow CEO asked me if there was a special set of rules or advice on taking a sabbatical as a CEO.  My quick answer to his specific question was:

Well, first, you and your co-founder can’t take them at the same time. 🙂

But I have a longer list of thoughts as well.  It’s not easy, but as I’ve said many times, it’s important and wonderful.  Some tips:

• You have to make sure your balance sheet is strong and you’re not raising a round of financing
• You’re best off doing it a week or two after a Board meeting (and obviously, don’t miss one)
• You need everyone on your team to know about it and get excited for you!  They will rally/rise to the occasion more than you think
• You have to do a total disconnect, otherwise it doesn’t count.  Literally turn off email.  But make sure the team knows they can call you if there’s a true emergency
• Put someone in charge of keeping a running list of things that happened and be in charge of your “re-boarding”
• Put one person clearly in charge while you’re out, or tell your senior team that they’re responsible for collectively being in charge – either can work as long as you’re clear about it
• Be prepared to cancel or shift your plans if an emergency comes up before you leave

This last one is important.  I’ve postponed sabbaticals twice, and while it’s been a little tumultuous both at work and at home, it’s been better than going on a sabbatical and interrupting it with work, which I’ve also done.

Speaking of which…I’m coming up on my 17^th anniversary, which in our book means it’s time for another one!

The 90-Day Reverse Review

Like a lot of companies, Return Path does a 90-day review on all new employees to make sure they’re performing well, on track, and a good fit.  Sometimes those reviews are one-way from the manager, sometimes they are 360s.

But we have also done something for years now called the 90-Day Reverse Review, which is equally valuable.  Around the same 90-day mark, and unrelated to the regular review process, every new employee gets 30 minutes with a member of the Executive Committee (my direct reports, or me if the person is reporting to someone on my team) where the employee has a chance to give US feedback on how WE are doing.

These meetings are meant to be pretty informal, though the exec running the meeting takes notes and circulates them afterwards.  We have a series of questions we typically ask, and we send them out ahead of time so the employee can prepare.  They are things like:

-Was this a good career move?  Are you happy you’re here?

-How was your onboarding experience?

-How do you explain your job to people outside the company?

-What is the company’s mission, and how does your role contribute to it?

-How do you like your manager?  Your team?

-Do you feel connected to the company?  How is the company’s information flow?

-What has been your proudest moment/accomplishment so far?

-What do you like best about the company?

-If you could wave a wand and change something here, what would it be?

We do these for a few reasons:

-At the 90-day mark, new employees know enough about the company to give good input, and they are still fresh enough to see the company through the lens of other places they’ve worked

-These are a great opportunity for executives to have a “Moment of Truth” with new employees

-They give employees a chance to productively reflect on their time so far and potentially learn something or make some course correction coming out of it

-We always learn things, large or small, that are helpful for us as a management team, whether something needs to be modified with our Onboarding program, or whether we have a problem with a manager or a team or a process, or whether there’s something great we can steal from an employee’s past experiences

This is a great part of our Operating System at Return Path!

A couple of months ago, I was doing an internal lunch & learn for senior managers, and the topic came up as to “how do our VC firms work?”  In the spirit of deeply understanding our customers’ businesses in order to better serve them, I thought the same would be true of our investors and Board members – that educating our team on the inner workings and economics of our investors would lead to greater empathy of one of our other key stakeholders.

So with no small amount of help from my long-time investor and director Brad Feld and his colleague Jason Mendelson, whose book Venture Deals: Be Smarter Than Your Lawyer and Venture Capitalist I contributed to in a very small way by writing a series of sidebars called “The Entrepreneur’s Perspective” (that process led to my writing Startup CEO), I pulled together this presentation available on Slideshare entitled How Venture Capital Firms Work and Why You Should Care.

I redacted our cap table and pictures of our VCs, but otherwise, feel free to use it with your own management team, or even your whole company.

Child Prodigies, or Misspent Youths?

I just got an email from a reader of this blog with a subject line of "15 year-old entrepreneur" and a series of engaging questions around starting a business (and actually, quite a good idea for one as well).  It got me thinking about being a kid and being an entrepreneur at the same time.  The author of this email is impressively savvy and focused on the world of business and startups.

Ben Casnocha is another one.  Ben is 19, has already started two companies, and has written and published a book called My Startup Life. 

When I was 15, I actually did have an inkling that I was going to go into business someday, and probably even that I wanted to start a business someday.  After all, it’s what my dad did, and what both of my grandfathers did.  But the key words in that sentence are INKLING and SOMEDAY.  I’m not sure it would have occurred to me in a million years to actually start a real business.  I suppose I could have figured out how.  But I wasn’t interested in doing it, or I didn’t have a good peer network of business-minded teens, or something.

It’s interesting to think about whether or not I’d be a better entrepreneur or CEO today if I’d started entrepreneurial pursuits at age 15 instead of age ~25.  Certainly, one makes a huge number of mistakes the first time one does anything, so perhaps better to get those out of the way early.  But I have to imagine that there are some things that one learns with age about dealing with other people that can’t be hurried up just because one starts businesses early.

Anyway, my hat is off to guys like Ben and the even younger guy who wrote into me…I just hope they’re making enough time for more standard teenage fun with their friends as well!

Sometimes, There Is No Lesson To Be Learned

We had a very unusual employee situation this week at Return Path.  A brand new senior executive we brought in to the company to be our first ever head of HR and Organization Development resigned very abruptly after only a few weeks on the job, citing a complete change of heart about her career direction and moving on to a government position in economic and community development.  Unfortunately, the person gave no notice and provided no assistance with transition, and resigned by cell phone.  What a disappointment, especially coming from an HR professional!

After getting over my disbelief/irritation/rage (not easy, not a small amount), after communicating this difficult message to the company, and after sending a thoughtful-yet-cathartic note to the person, I sat down to think a little bit about how I could have prevented or at least spotted the situation in advance.

We interviewed the person thoroughly — 10 people internally conducted interviews, and I interviewed the person for almost four hours myself, conducting one of the most rigorous interviews I’ve ever conducted given how critical this position was to our organization at this time.  (The interview followed the Chronological In-Depth Structured interview format from Brad Smart’s book Topgrading — more on that in a future posting.)  I also checked five references on the person, all of which were sterling.  I had one outside person, an executive coach with whom I work, interview the person.  Everything checked out, and the person’s attitude and enthusiasm about the position couldn’t have been better.

My conclusion on the lesson learned here?  It’s “Sometimes, there is no lesson to be learned.”  There may be ancillary lessons around handling the situation once it became apparent, but I think the core lesson I’d hope to get out of this — that we could have done something different in the interview process or orientation or first few weeks to prevent or at least spot this ahead of time — appears to be nonexistent.  Hmmmph!

Last week, I blogged about Bolster’s Board Benchmark survey results, which really laid bare the lack of diversity on startup boards.  There are signs that this is starting to change slowly — one big one is that of all the board searches we are running at Bolster, about ⅔ of them are open to taking on first-time directors; and almost all are committed to increasing diversity on their boards.  

This is also something that I would expect to take some time to change.  Boards are small.  Independent seats aren’t necessarily easy to open up.  Seats don’t turn over often.  And they take a while to fill, as CEOs are thorough in their recruitment and selection process.

My new mantra for Startup Boards is simple:  1-1-1.  

1 member of the management team.

Then 1 independent for every 1 investor.

Simply put, this means you should grow from having 1, to 2, to 3 independent directors as your board grows from 3, to 5, to 7 members.

Here are four tough conversations you may have to have along the way, with some suggestions on how to navigate them.  All of these conversations need to come with a point of view of why independence and diversity matters to your company, a lot of empathy, and appreciation for the value the person brings to the table. 

The conversation with your co-founder about only one founder/executive on the board.  This one will be the most personally difficult, since you likely have a strong personal bond.  Expect to hear things like “Aren’t we partners in this business?” and “How come my vote doesn’t count?”  Just let your co-founder know that while of course they’re a key partner, the company has a limited number of board seats to fill — each one is a golden opportunity to get an outside perspective on your business and get really good mindshare of an industry expert and create a new brand ambassador.  You already have 100% of the mindshare and ambassadorship your co-founder has to offer.  You can make that person a board observer, you can make sure they’re in all the key board conversations, and you can even give the person some special voting right in your charter or by-laws if you need to.  But do not put them on the board.  It’s obviously easier to do this from the beginning as opposed to removing them from the board down the road, but at least try to have the conversation up front that someday, it’s going to happen (note this could be a different dynamic if the person is a founder but no longer active in the business).

The conversation with an existing VC about leaving the board to make room for new investors or an independent.  This one will be less personally difficult but will require you to be very artful since the VC is likely contractually given a board seat – meaning you’ll have to get them to give it up voluntarily.  You may also want to align with another VC on your board to help the conversation or process along.  Depending on the circumstances at hand, your key points of logic could be one of the following:  (1) you don’t own as high a percentage of the company as you once did, and I’d like to make room for the new lead investor to join the board without compromising our independents or making the board too big; or (2) I’d like to replace you with an independent director who brings operator perspective and comes from an underrepresented group – it’s important to me that we build a diverse board, and it’s not great that we have don’t have gender or race/ethnic diversity on our board in this day and age.  As with a co-founder, you could change this person’s designation to a board observer so they’re still present for key conversations, you’re not changing their Information Rights, which are likely contractually given in your charter, and if required, you can give the person or firm some sort of special voting rights if there’s something they can no longer block (but which they have a contractual right to block) by losing their board vote.

The conversation with a new potential investor about not taking a board seat.  If you have a big new lead investor writing a $40mm check into a growth round, you may not have a leg to stand on.  But new investors who write smaller checks as you get larger, who might only be buying a 5-10% stake in the business…there, you might have some wiggle room to negotiate.  Your best bet is to do it early in the process before you have a term sheet, and do it as an exploratory conversation.  Otherwise, your talking points are the same as talking to an existing investor above. Investors are starting to realize the power of a diverse board, and may be open to this conversation. Some are making this a proactive practice, notably two of my long-time investors and directors Fred Wilson and Brad Feld (and some of their partners at Union Square Ventures and Foundry Group) — and those investors have also been willing to mentor the new, first time board members once they join.

The conversation with an existing independent director about leaving the board when their term is up.  Perhaps you have an existing independent director who is not adding to the diversity of the board, but you already have a full board.  Or perhaps your existing independent director isn’t doing a great job or has grown stale in the role.  Once a director is fully vested, you have an easy opportunity to thank them graciously and publicly for their service, extend their option exercise period multiple years, and affirm that they’ll still take your call if you need help on something.  You should set this expectation up front when you give the director their initial grant.  If they ask why you’re not renewing them, you can simply say something like “We’d like to add some fresh outside perspective to the team.”  One thing to think about, particularly for early stage companies, is only giving new directors a 1 or 2-year vest on their first option grant, so you can make sure they’re a high value director…and so you can have the option of an easy exit (or re-up) in a shorter period of time than a traditional 4-year vest.

The net of it is that as CEO of a venture-backed company, you wield an enormous amount of (mostly soft) power around the composition of your board – probably a lot more than you think.  You just have to wield that power gently and focus on the importance of building a diverse board in terms of both experience and demographics.

Two Ears, One Mouth

Brace yourself for a post full of pithy quotes from others.  I’m not sure how we missed this one when drafted our original values statements at Return Path years ago, because it’s always been central to the way we operate.  We aren’t just the world’s biggest data-driven email intelligence company – we are a data-driven organization.  So another one of our newly written Core Values is:

Two Ears, One Mouth:  We ask, listen, learn, and collect data.  We engage in constructive debate to reach conclusions and move forward together.

I’m not sure which of my colleagues first said this to me, but I’m going to give credit to Anita, our long-time head of sales (almost a decade!), for saying “There’s a reason God gave you two ears and one mouth.”  The meaning?  Listen (and look, I suppose) more than you speak.

This value really has two distinct components to it, though they’re closely related.  First, we always look to collect data when we need to understand a situation or make a decision.  To quote our long-time investor, Board member, and friend Brad Feld, “the plural of anecdote is not data.”  That means we are always looking far and wide for facts, numbers, and multiple perspectives.  Some of us are better than others at relying on second-hand data and observations from trusted colleagues, which means often times, many of us are collecting data ourselves to inform a situation.  But regardless, we always start with the data.

Second, we use data as the foundation of our decision-making process.  I heard another great quote about this once, which is something like, “If we are going to make a decision based on data, the data will make the decision for us.  If we’re going to use opinion, let’s use mine.”  And while I’m at it, I’ll throw in another great quote from Winston Churchill who famously said “Facts are stubborn things.”  While we do have constructive debates all across our organization, those debates are driven by facts, not emotion.

Finally, when this value says that “we move forward together,” that is the combination of the points in the two prior paragraphs.  People may have different opinions entering a debate.  Even with a lot of data behind a decision, they may still have different opinions after a decision has been made.  But we work very deliberately to all support a decision, even one we may disagree with, and we are able to do that, move forward together, and explain the decision to the organization, because the decision is data-driven.

Entrepreneur’s Perspective on Non-Competes

(Note: I just found this post in the “drafts” folder and realize I never put it up! It was written months ago, although I just updated it a bit.)

Bijan Sabet kicked off the discussion about non-competes by asserting that they are a barrier to innovation and that they are unenforceable in California anyway, so why bother?

Fred continued the discussion and made some good assertions about the value of non-competes, summarizing his points as:

Non-competes are very much in the interests of our portfolio companies. But the non-competes need to be tightly defined and the term of the non-compete needs to be paid for by the portfolio company if the employee was forced out of the company. The non-competes should certainly apply to all senior management team members and all key employees (like star engineers and such). It takes a lot of work to build a company. You should not risk all that knowledge and talent being able to walk out the door and set up shop across the street.

Brad and Jason/Ask the VC are generally on board with Fred’s view.

We’ve had non-competes since the beginning at Return Path.  I am generally in agreement with Fred’s parameters, but to spell out ours:

1. Our non-competes are very narrowly defined.  I had a very bad taste in my mouth when AOL acquired my former company, MovieFone, back in 1999 and stuck a 3-year non-compete in front of me that would have prohibited me from working anywhere else in the Internet.  I think the language was something like “can’t work in any business that competes with AOL or AOL’s partners in the businesses they are in today or may enter in the future.”  It was just silly.  Our non-competes apply very narrowly to existing direct competitors of the part of Return Path in which the given employee works.

2. We do not pay for non-competes.  Because our non-competes are very narrowly defined, we don’t expect to pay for someone to sit on the sidelines.  If people leave, or even if people are fired, they have 99.99% of the companies in the world as potential employers. 

3. We are willing to excuse people from non-competes if they are laid off.  Fair is fair.  However, we still expect our confidentiality and non-solicit agreements to remain in full force.

4. Everyone signs the same non-compete.  100% of the people, 100% of the time.  Same language.  No exceptions.  Again, this comes back to how narrowly defined the non-compete is.  It shouldn’t just be limited to senior executives.  Obviously you have to respect local laws of places like California or   Europ which have different views of non-competes.  If these cause in equalities in your employee base by geography, we make an effort to “re-equalize” in other ways.

5. We enforce non-competes in all situations.  I don’t believe in selective enforcement.  That sends the wrong message to employees.  We have had a couple instances where junior people have left and brazenly gone to a competitor.  While we have never blocked someone from starting a new job, we would if there wasn’t another resolution.  Fortunately, in those cases for us, we have contacted the employee and the hiring company and been able to work out a deal — the employee went to work in a non-competitive part of the new company, we struck a commercial relationship between us and the hiring company, etc.

6. We try to play by the rules when hiring people who have non-competes.  I think consistency is important here show to employees.  If we expect people to respect our non-compete, we should respect other companies’ non-competes.  This doesn’t mean we don’t try hard to lure competitors’ people to us when the situation warrants — it just means that if a non-compete is relevant and in effect, we will either make a deal with the other company, or in special circumstances, we will pay the employee to sit on the sidelines and ride out the non-compete.  This is a tricky process, but we’ve had it work before, and we’d do it again for the right person.

Our people and intellectual capital are a huge source of competitive advantage.  They are also the product of massive investment that we make in developing our people.  A good, narrow, non-compete is important for the company and can be done in ways that are fair to employees who are the beneficiaries of the training and development as well as their employment.  I think that’s part of the social contract of a great workplace.  Non-competes don’t stifle innovation — they protect investments that lead to innovation.  I suppose the same argument could be made of patents, some of which make more sense than others, but that’s the subject of another rant sometime.

But at the end of the day, it’s up to us to retain our people by providing a great place to work and advance careers so this whole thing is a non-issue!

Selecting Your Investors

Fred Wilson has been a venture investor and director in Return Path since 2000, first with Flatiron Partners and then with Union Square Ventures.  We’ve been through a lot of wars together.  In a couple of weeks, he and I are team-teaching a class in Entrepreneurship at Princeton, and the professor gave us the assignment of writing two pairs of blog posts to tee up discussion with the class.  This is the first one…and Fred’s post on the other side of the topic is here.  Next week, we’ll address the topic of building a successful CEO-VC partnership once it’s established.

If you’re fortunate enough to have built a really strong early stage company, you will find yourself in the position of being able to pick from a number of potential venture investors.  The better your business and the more exciting the space you’re trying to tackle…the more investors you’ll find circling around you.  Here are a few tips for ending up with the best long-term partner as an investor.

1. Look for VC portfolios that have a lot of “like” companies (B2B, B2C, media, tech, etc.).  One of the strongest points of value that venture investors bring to the table is pattern matching, and you can maximize that by making sure the investor you end up with has seen a multitude of companies like yours
2. Check references carefully.  Don’t be shy – prospective VCs are checking up on you, and you have every right to do the same with them.  When Fred first invested in Return Path, he gave me a list of every CEO he had ever worked with and said “Call anyone you want on the list.  Some of these guys I worked well with, a couple I fired.  But they’ll all tell you what I’m like to work with.”  First prize is the VC who volunteers this information.  Second prize is the VC who gives it to you when you ask.  A distant third price is the VC who gives you two names and ask for time to prep them ahead of time
3. Focus on the person first, the firm second.  Having a good venture firm is important.  But at the end of the day, you’re dealing with a person first and foremost.  That’s who will be on your board giving you advice and measuring your performance.  Better to have an A person at a B firm than a B person at an A firm (of course, even better to have an A person at an A firm).  This means two things – selecting a great person to be on your Board, and also making sure you end up with a person who has enough juice within his or her firm to get things done on your behalf with the partnership
4. Always have a BATNA (Best Alternative to a Negotiated Agreement – a fancy way of saying Plan B).  This is probably the most important piece of advice I can offer.  And this is true of any negotiation, not just a term sheet.  It’s often said that good choices come from good options. Sometimes, you 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.  If you negotiate with two or three VCs, you’ll have a great backstop and won’t let the emotional investment in the deal get the best of you.  Yes, you will spend twice to three times the amount of time on the process, but it’s well worth it
5. Don’t be swayed by promises of help.  I’ve heard VCs say it all.  They’ll help you fill out your management team.  They’ll get you customers.  They’ll help with your back office.  They’re loaded up with value-add.  If venture investor has staffed his or her firm with support personnel who are available free of charge to portfolio companies (this does happen once in a while), then assume your VC will be as helpful as possible, but no more or less helpful than another investor
6. Handle the negotiation yourself, in person as much as possible.  The best way to get to know someone’s character is to negotiate a deal with him.  This gives you lots of opportunities to look for reasonableness, and to see if he or she is able to focus on the big picture.  The biggest warning sign to look for is someone who says things like “you have to agree on this term, because this is how we always do deals.”  By the way, how you handle yourself in this negotiation is equally important.  The financing is the line of demarcation between you and the VC courting each other, and the VC joining your board and effectively becoming your boss
7. “Pay up” for quality and for a clean security.  There is a world of difference between good VCs and bad VCs (both the individual partners and the firms) that will ultimately have a lot to do with how successful your company can become.  The quality of your VC isn’t more important than the quality of your product or your team, but it’s right up there.  But – and this is an important but – you should expect to “pay” for quality in the form of slightly weaker terms (whether valuation or type of security).  Similarly, I’d always sacrifice valuation for a clean security.  Everyone always thinks that price/valuation is the most important thing to maximize in a deal. However, the structure of the security can be much more important in the long run.  Whether the VCs buy 33 percent of your company or 30 percent of your company is much less important than having a capital structure that’s easy for an outsider to understand and want to join

As with all things, there are probably another dozen items that could be added to this list, but it’s a good starting point.  However, your more important role as CEO is to put your company in a position where you can select from a number of high quality investors, so start there!