I recently took my 12-year-old son, Patrick, backpacking in the Adirondack Park near Lake Placid, New York. We plotted a course that would take us two days through Avalanche Pass and up Algonquin Peak – the second highest peak in New York. Avalanche Pass and more notably, Avalanche Lake, are tucked between two mountains whose sheer rock walls rise directly out of the water on both sides of the lake. According to the Adirondack Mountain Club’s trail guide, this is “…probably the most spectacular route in the Adirondacks.” This was also my son’s first trip carrying a full backpack – his share of the load. It was during this hike that I realized that many young companies would benefit by recognizing that the peak is not the ultimate goal.
Although the morning started with everyone energetic and upbeat, as the trail began to wear on Patrick’s feet and the weight of his pack seemed to get heavier, I had to encourage him along the way. I found myself trying to convince my son that the steep climb was going to be worth it, that the views from the top would be spectacular, that we didn’t have much farther to go and that we were almost to the top. As we climbed above the tree line into what is referred to as the arctic alpine zone, the weary hikers felt a sudden sense of rejuvenation. The peak was within sight!
Once we got there, the reward was instant. The top was beautiful; you could see breathtaking 360-degree views of the Adirondacks. We felt an immediate sense of accomplishment. We made it.
This is not unlike the feeling an early-stage company gets when it reaches its first peak – whether it be launching version 1.0 of its product, securing its first paying customer, reaching a specific usage metric, etc. It’s a worthy accomplishment, for sure; but not the ultimate goal.
At the summit, after a brief rest, a drink of cool water pumped from a mountain stream and posing for several pictures, we started our descent.
In many respects, traversing down the side of a mountain with a full pack can be more difficult than climbing up. It was on the way down the backside of the mountain with increasingly sore muscles and tired legs that I remembered that really accomplishing our goal meant not just summiting Algonquin Peak, but rather summiting it and returning to our car at the trail head.
There is a similar dilemma with startups. Many entrepreneurs have their eye on the wrong prize – the peak – but haven’t thought through how the company is going to get down off the mountain; and completing the journey is really the true goal for either the hiker or the entrepreneur. This mindset manifests itself in many ways, none of which position the company for success.
When backpacking, the peak is when you are most exposed and vulnerable. The same is true for early-stage companies. Reaching the summit is a notable achievement worthy of recognition, but it isn’t the ultimate goal. Reaching this point without knowing the path back down can leave the company dangerously exposed. This is not the time to realize the company does not have the right team in place or enough resources to take advantage of the opportunities that “bagging the peak” have created.
For example, some early-stage companies have a “build it and they will come” attitude. They rely too heavily on building the perfect product and assume that the product alone – reaching the summit – will be enough to generate market awareness and revenue. With no regard to marketing and sales, pricing strategy, or implementation processes – no plan for getting off the mountain – too much is left to chance or to be developed later.
You hear the stories of the high-profile startup that does not have a revenue strategy and is only focused on the number of users or the number of messages sent via the platform, which neglects the high priority of the monetization plan. For an early-stage company, reaching the summit without a plan or adequate time to climb back down can end with disastrous results.
Fundable milestones – goals that, if achieved by a startup, position it for additional funding – might seem like the top of Algonquin Peak and the ultimate objective. For a young company, however, a delicate balance must be struck between achieving certain goals, leveraging those successes to achieve other goals, all the while maintaining the ability to continue hiking. Investors may be impressed that you summited Algonquin Peak, but don’t allow your company to reach the top of the mountain at dusk without your flashlight, nothing left to drink in your water bottle and without the energy needed to complete your mission.
…and keep your eye out for the bears!
If you’re a technology entrepreneur, you know how critical it is to be on the lookout for possible competitive advantages. You also likely know about the federal Small Business Innovation and Research (SBIR) and Small Business Technology Transfer (STTR) grant programs. If not, it’s time to get familiar.
Both of these grant programs provide tremendous opportunities for small high-tech businesses looking to fund R&D. The government solicits small businesses with innovative ideas to solve problems relevant to participating government agencies. The programs are great for commercializing the right ideas, but are also highly competitive.
Wouldn’t it be nice to secure a competitive advantage over the rest of the businesses vying for the same grant that you are?
One of the surest ways to get the inside scoop is to attend the regional and national conferences offered throughout the year. I recently attended the SBIR National Conference in D.C. and can’t say enough about how much of a benefit it is for small technology businesses.
The convention not only provided firsthand insights about the SBIR/STTR federal programs, but also offered critical nuggets of wisdom on how to compete for funding. All of the participating agencies discussed their strategic directions and shared tips on what to do and what not to do when you submit a proposal.
But it wasn’t only the agencies talking; the speakers and sponsors for the events included technology giants from a wide range of industries that gave small businesses a chance to get up close and personal in private, one-on-one discussions. Imagine having a decision maker with money to spend as a captive audience! (Outside this conference, you might have to wait months and dazzle several gatekeepers for even a chance at a similar opportunity.)
But that’s not all. Government, academia, and businesses of all sizes had an opportunity to showcase their technologies in the exhibit hall where participants could take it all in and chat with the reps. There was even a “speed dating” segment. (No, not for romantic opportunities, but to meet potential strategic partners!) For those unfamiliar with how this activity works at a convention, think “musical chairs” but with enough seats to go around. Picture a room of tables with big business reps giving their elevator pitches. Every few minutes an alert sounds and the line moves to the next seat. The result is some very good connections made that could lead to highly productive relationships for both sides!
The conference was also co-located with the National Innovation Summit and Showcase and the TechConnect World Innovation Conference and Expo. Not only is that a good strategy for attracting attendees, it’s also a great opportunity for cross pollination of interests and ideas. When smart, inventive, and enthusiastic people (like you) get together, the potential for connections and groundbreaking work is BIG, regardless of the industry.
If you’ve never been to one of these events, I highly recommend attending one in the future. It’s worth the price of admission just for the networking alone.
And speaking of the price of admission, we provided $395 reimbursements for companies that had never won SBIR/STTR awards before. We’re so sold on the value of attending that we’re willing to help get you in the door. Government agencies all in the same place, with dollars to spend, telling you exactly what they’re looking for is an opportunity you should really consider. Not to mention other innovators, investors, business developers, grant writers and customers with tangible needs in the same building. Can you see how attending the next SBIR National has the potential to make a real difference in your company’s future? The next one is in Austin, Texas in November. Check it out!
And, if you’re interested in knowing more, click here or contact me!
Entrepreneurs are some of the most passionate people in the world. They care deeply about their ideas, believe wholeheartedly in their company and are extremely motivated to succeed. These are all excellent traits to have, but that passion can sometimes lead to tunnel vision, which can hurt your chances of securing funding. In my experience meeting teams and listening to pitches, I’ve noticed a few things that entrepreneurs commonly overlook or underemphasize. Because of this, I’ve come up with four areas you should focus on. While these things won’t necessarily turn your company into the next Facebook, making sure your bases are covered may increase your chances of securing venture capital.
- Be a Student Rather than the Smartest Person in the Room
No matter the industry, it’s beneficial to develop relationships with people who are smarter and/or more experienced than you. Even if you’re the world’s foremost authority in your field, there are people who you can learn from. This especially rings true when it comes to entrepreneurship. It’s important to get out of the lab or office and reach out to mentors, subject matter experts and potential customers. These externals can not only help validate your idea, but can also become team members or board advisors that will help you understand customer pain points, formulate strategy and structure your business model. They may even contribute funding.
Tip: Beware of “mentor whiplash.” You’ll have several business assumptions to test along the way and you’ll receive advice from multiple perspectives. Some of the advice may be contradictory and overwhelming. You should listen to all of it, but it is your job to synthesize the information and make the call.
- Build a Strong and Diverse Team
Investors value a strong team just as much as they value your idea. Your team should be one of the main things you pitch to a potential investor. Are they experienced company builders with the necessary relationships? Experts in their field? Have they been there, done that? If not, it’s time to build. Where do you find these people? If you’re embracing mentorship and building relationships, the answer should be obvious: your own network. Doug Roth, director, investments at CI, covered this in a recent blog post. Building a team from your own network may reduce risk and increase the likelihood of success.
Tip: Know thyself. Networking is not always a strong suit for technologists, but typically is for experienced CEOs. If your networking skills are weak, you’re going to need to either develop them or bring someone on board to do it for you. This is important not only for building your core team, but also for developing outside partnerships and collaborations. Partnerships are one of the core building blocks in a typical business model, and, if built correctly, will create value for your company.
- Do your Homework
If you’re fortunate enough to pitch a VC or angel, don’t blow it! Doing your homework really shows. I always appreciate when the entrepreneur knows the business and slides inside and out and is prepared for Q&A. Anticipate and research common questions that VCs ask and be ready to answer them.
Tip: Know the investment philosophy of the VC you’re pitching to. All VC firms have distinct missions, areas of expertise and industries of interest. Know the philosophy and speak to it during your presentation. In the same vein, know how the VC typically invests. How much do they usually invest per round? Do they prefer to work with other investors? What stage do they typically invest in? Understanding these things will help form your expectations before the pitch.
- Deliver on the Opportunity
During your pitch, make sure you cover all the bases when it comes to your business. Come prepared to talk about your team’s experience, the technology and competition, your business model and financials, the realistic size of your market (and if it’s growing) and your go-to-market strategy. These things should all be a part of the story in support of the ask. With that, VCs will consider risk factors. Is there anything you offer that might mitigate risk? Things like experience, external market validation, another investor at the table, or significant sweat equity and skin in the game from the core team are all very helpful.
Tip: Hone your pitch. When it comes to delivery, I like a mix of passion and expertise. Confidence and charisma don’t hurt, but don’t go overboard. The same goes for your expertise –do not get into the weeds of the technology unless asked. The best pitches are concise and underscore how we can work together and mutually benefit. After all, it is a partnership.
Have anything to add? Let me know in the comments.
Yesterday in our resources section, we explained why you should NEVER skimp on the hiring process. Today we’re coming back with some numbers. Take a look and then leave us your thoughts in the comments section. What hiring tips do you have?
For entrepreneurial ventures that are pre-revenue to $5M, a board of directors is a critical team that can make a meaningful impact on the company’s prospects during an impressionable time in the company’s life. Board meetings evolve as the company matures and grows, but for young companies forming their first boards, the task can be daunting.
To give you insight and help you manage board meetings, Douglas Roth, director of investments at CI, talked with Brian Murphy, chairman of the board of Umbie DentalCare, to get his thoughts on effective startup board meetings.
Setting a Foundation
Roth: How often should a board of an early stage company meet, and does that change depending on how early a company is?
Murphy: At an early stage startup, the key to determining frequency is balancing the time commitment necessary to prepare and attend the meetings with the need for regular check-ins and guidance.
It’s difficult for a very early startup to devote time to board meetings and in the case of Umbie, I know they are all very hands on. I wouldn’t want to put pressure on them to have to spend days preparing board decks and things like that. But, they need the check-ins and they need the guidance and the board has investors that have a right to check in as well, so, I think six to eight meetings a year is right.
Roth: What about timing? For a pre-revenue company, there may not be a need to have a meeting past the end of the quarter so that accountants have time to put together the results from the quarter and be able to report on them.
But, clearly, once you’re generating revenue, I imagine it would make sense to time your board meetings around the ability to report on the previous quarter.
So, for a pre-revenue or very early stage company, is there a better time than others to hold a meeting?
Murphy: Yeah, even at our stage, the key topic for a board meeting will be some sort of financial number. With Umbie, it’s pipeline and deals closed and we’re looking at things like that on a monthly basis. I think it’s good to space the meetings out so that you can get the latest data. Generally speaking, if you’re looking at financials and a company takes a week to close the books, you might want to schedule the board meeting no sooner than the second week of the month so you can get that latest data.
Also, like you said, you might want to align some of the meetings with quarter-end results if that’s important to the company and the board.
Roth: You mentioned finding the balance between providing frequent enough touch points to report and advise and not overwhelming the CEO and the team with preparations. So, when the team does have to prepare for a board meeting, what kind of information should they gather?
Murphy: The CEO should prepare an agenda that includes a section for regular updates and also one for strategic discussion. The CEO should have a template that he or she follows so there’s no need to create a new deck each time. Regular topics or regular categories that you can touch on each time can be things like pipeline, sales, key hires, roadmap, etc. It’s important to follow that template for the update portion so that there isn’t a ton of prep.
The CEO should also think about the strategic topics they’d like to cover at the meeting. This is their time with the board to get that advice and feedback that will help move the company forward. It should be the key focus.
During the Meeting
Roth: In general, how much time should be allocated to the various agenda items that you just discussed?
Murphy: The agenda’s going to differ meeting to meeting, so I don’t want to say that there’s just one kind of board meeting. Certainly, if you’re on a calendar year and you’re preparing a budget or an annual plan, your board meetings toward the end of the year are going to be about presenting your next year’s plan and your budget, so that can get pretty tactical in terms of looking at numbers, plans and forecasts. Otherwise, the two major parts are updates and strategic topics. There may be some approval items for the board like key hires, options etc., but, generally speaking, I think people agree that you should keep the updates to a minimum. That’s the reason you should send that portion out in advance – so the board members can read it and as long as they don’t have any questions, you don’t spend a lot of time on that part.
Roth: So the majority of the time is spent talking about strategic issues?
Murphy: Yeah, ideally. It’s going to differ depending on who you bring into the board meeting. The more people you bring in, the more time it’s going to take because you have to go through more presentations.
For example, at Moo Print, most of the meetings included the entire executive team. So, you had a marketing presentation, a tech presentation, a product presentation – and they weren’t all just updates. A lot of times it was proposals and directional things, so it’s hard to say. But in general, you want to spend more than half your time talking about strategy instead of reviewing results.
Roth: Who should come to board meetings? You have the board members and whatever that makeup is – the CEO, upper management, other investors and independents etc., but beyond the actual directors who sit on the board, is there anyone else that shoud show up either consistently or periodically?
Murphy: Certainly members of the executive team. As the company matures, they benefit from direct interaction with the board and direct advice from the board. It’s also good for the board to get a feel for how the executive team is performing. I think that can be very helpful.
Sometimes, though, you’ll want to have closed board meetings where it’s just the CEO and the board, especially if you’re taking up topics that are sensitive or strategic at a level that doesn’t involve the executive team.
Other times, you might want to bring in people who aren’t even on the executive team for something like a special topic presentation. For example, you might want your director of product to come in prior to a product launch for a demo.
You could even have presentations from the outside. For example, you could have a consultant come in if they’re doing a big engagement on brand so they can present their findings to the board.
It all depends. It depends on what kind of executive team you have, what kind of management team you have and what stage the company’s at. But early, early on, I think it’s typically going to be just the CEO or the founders and the board.
Roth: I like the point about outside guests – whether it’s to educate or help facilitate a discussion, or many times there’s a banker helping to raise money or to explore sales and even reporting on those efforts.
Murphy: Sure – or the accounting firm will come in to report audit findings.
Roth: Interesting point with the audits – that raises the issue of subcommittees of the board like an audit committee or a compensation committee. Is there a time where it’s too early to get down into that granularity? Or should every company have those kinds of subcommittees?
Murphy: Of the boards I’ve been on, including Moo that had 200+ employees, we never saw a need for committees. I can’t speak for every company but it just seems like a bit of overhead for a small organization.
Roth: Earlier you alluded to CEO and board member-only executive sessions. Who sits in on those sessions and what are the types of topics that are discussed?
Murphy: Well, you won’t need to have an executive session every meeting, but I do think that you should have them periodically. I think the idea of it is that the board, minus managers, the CEO or any executives, goes into a closed session and talks about how the CEO and the management team are doing. I think it should be viewed as something constructive and just good hygiene for the board to confer on these things. It should be an exercise that builds trust between the board and the management team and I think what comes out of it should be specific and constructive feedback.
And then the role of the chairman is to speak with the CEO as soon as possible after the meeting and distill that information back. Unless there’s a crisis or you’ve lost faith in the CEO, it should never be used as something to make the management team feel uncomfortable.
Roth: So, clearly it’s an opportunity for the board to talk about the performance of the CEO. But, typically an early-stage board will have a number of investors. Does the executive session, in your mind, double as an investor discussion as well?
Murphy: I think so. Early on, your board is typically appointed by your investors. Later on you start to bring in non-executive members who are also not investors. But early on, the executive session conversation is about how the investors feel the CEO is doing and whether they’re concerned or want to give feedback. The whole purpose is for the chairman to distill that valuable information back to the CEO in a way that you couldn’t really do in a meeting with the entire board.
Roth: Right, and I think having the chairman meet one-on-one with the CEO afterwards gives the chairman the ability to have that discussion in a non-awkward way. It’s not “I feel you’re not performing,” it’s “in executive session there was a concern…” It takes it off the shoulder of the chairman and it’s really just the chairman reporting what was discussed and takes that awkwardness away a bit.
Murphy: I agree. The chairman and the CEO should have the best board-to-management relationship and that’s one of the things that supports that.
Roth: That being the case, does it make sense to have a chairman who’s not an investor?
Murphy: Yeah, I’ve seen it a couple of ways. I’ve seen a chairman who’s not an investor and I’ve also seen a chairman who’s an angel investor, so, someone who hasn’t come in at the next round. The board members were from the series A, but the chairman was an angel investor – someone who had been with the CEO and had a relationship with the CEO from day one.
I think it could be tricky to choose a chairman from a board made up of several VC partners. One way or another, the chairman needs to be distinguished from the other board members.
Roth: Okay, so, if you’re having six to eight meetings in a year, how long should each one last? Does that change at different times of the year and at different stages of the company’s development?
Murphy: The duration of the board meeting is definitely going to vary. It’s going to vary depending on the time of year and the type of topics that you’re taking up.
Board meetings around annual planning where you’re trying to go through your plan and have a lot of people presenting are going to take more time.
I personally couldn’t see a startup board meeting taking more than three hours, though. I do understand that when you’re running the board of a public company and you’re flying people in from around the country, you might as well put the time in. But in a startup, I haven’t seen much of a need for that.
I have seen situations where you’re having an all-day, strategic offsite meeting and you invite the board member to participate, but I can’t see a board meeting lasting that long. A strategic offsite is different. It’s a whole different atmosphere. It’s meant to be creative, stimulating and fun.
Roth: I agree. I can see that when there’s a crisis or even a really positive point in the company and you need to really think things through. Or, if there’s some Outward Bound-type of team building that the board should participate in. But if you’re having 4-6 meetings a year, I don’t know how a meeting longer than three hours could be valuable.
Murphy: I don’t know either. And that gets to another point. The CEO should feel free to reach out to the board in between board meetings to discuss things. If there’s more to talk about, it doesn’t have to happen only at the board meeting. The only things that really need to be included in the board meetings are the governance-type things.
Roth: What about the formalities of a board meeting? Do you need to have someone taking minutes? Do you need to have company counsel sit in?
Murphy: Yeah, there’s a backdrop of formalities of course. A board meeting is a necessary and legally required element of governance so there has to be some formalities like minutes and votes on certain things, and it’s the role of the chairman to keep things legal and structured. But that said, at a startup, you want to keep formalities to a minimum and keep the emphasis on ideas and productive dialogue. I don’t think there’s any sense in acting like a public company before you have to.
After the Meeting
Roth: What are some of the follow-up actions that typically occur after a board meeting?
Murphy: As soon as the board meeting ends, it’s really important for the CEO to be sure that he’s captured any takeaways and specific requests of the board for immediate follow-up or for presentation at the next meeting. A lot of times the board will ask for information that you don’t have with you and they’ll say, “Okay, I understand you don’t have this handy, but can you get it to us before the next meeting?” You definitely want to avoid showing up to the next meeting without having taken action on these things.
Roth: Do you typically see interim reporting in-between board meetings – whether it’s financials or product development or pipeline reports?
Murphy: Absolutely, if you’re on a monthly financial reporting schedule, it’s quite common once the management team approves the financials and has reviewed them internally to share them with the board regardless of the board meeting schedule. And you might agree to share other bits of information with the board as well whether it’s sales reporting, pipeline reports etc. I think that’s appropriate.
And then there are also special requests. They may ask for analysis – like if you’re running a TV campaign they might say, “Hey, can you send us the campaign analysis so we can see what the results are?” I think it’s typical for requests like those to be fulfilled between board meetings.
Roth: Earlier you alluded to the CEO reaching out in between board meetings and speaking with the directors either to give them updates or to seek advice on a particular topic. The board meeting is a unique environment in which all the people are together, can hear each other’s perspectives, can push on ideas that they don’t necessarily agree with, offer alternatives, build on ideas they hadn’t thought of that someone else brought up, etc. How do you balance not ruffling any feathers and the benefits of that dynamic with having individual conversations in between board meetings?
Murphy: Well, you don’t want to do something that undermines trust. If you’re going to be reaching out to board members in between meetings, you don’t want to just have to have a close relationship with one board member.
It’s good to have some level of contact and relationship with board members outside of board meetings and certainly there should be no surprises at the board meetings. I think an effective CEO should have a good idea where members of the board stand on issues before the meeting so that no one is surprised.
As with most things, it’s a balancing act. It’s fair game to reach out and say, “Here are some things we’re thinking about and here are some things I’m going to bring up at the board meeting, I wanted to get your input on this.” But it’s not meant to be an exercise of politics that undermines trust.
Did you like the topic? Did we miss anything? Got anything to add? Let us know in the comments section!
About Brian Murphy
Brian is vice president, supply chain and customer experience at Teespring, executive chairman of the board of directors for Umbie Dentalcare and a mentor at Betaspring. Over the past decade, Brian has focused on the digital printing space as a founding manager at both MOO and Ofoto.com (which became Kodak Gallery). With a career best characterized as “bringing order to chaos,” he has helped early-stage companies overcome the special challenges and obstacles associated with rapid growth and constant change. His specialties include international e-commerce operations, product development, manufacturing and finance/analytics.
Senior Program Associate, Small Business Innovation Connecticut Innovations
Capital One wants to know “What’s in your wallet?” but I’m more interested to know “What’s in your workforce?” When forming a staff, it’s tempting to build a team that keeps you in a comfort zone. What better way than to have people who align with your ideas and opinions, right?
Well, commonality can be great when you’re ordering a group pizza, but not so much for the success of your business – at least according to Jack Canfield and Mark Victor Hansen, co-authors of the One Minute Millionaire.
In their best-selling book, they assert that for a team of any kind to have a shot at success, it must first have a “SHOT” or a mix of work-personality types called Squirrels, Hares, Owls and Turtles. So, how can you tell if your company has a “SHOT” or if it needs one? Well, let’s first learn what each work-personality in “SHOT” means.
Squirrels –These are your “doers.” Detail oriented and capable, they will make sure the job is done thoroughly. Methodical and practical, squirrels pay attention to details and see that plans follow an orderly process. They tend to be cautious when trying out something new and think things over carefully before acting. Although squirrels require strong direction and focused objectives so they don’t pursue irrelevant strategies, they can be the lifeblood of any organization. They are the “steady Eddies” who finish what they start and do things right.
Hares – Brainstorming, anyone? Hares are the creative, out-of the box thinkers so necessary to innovation in any business. You’ll definitely want to hear their ideas. They’re big picture people and often risk takers and rule breakers. They’re great at out-of-the-box thinking and exploring alternatives. Every business needs at least one hare, but beware of a complete team of “idea people” – they’re notoriously bad at follow-through!
Owls – Enter your planners and go-getters. Better lieutenants than visionaries, they think about how to make things happen, developing careful plans based on past experiences and proven methods. They want the most direct, efficient means, and are not inclined to let rules and boundaries discourage them. Be aware, you may have to rein them in. With zealous intent to make things happen, the owl may drive to an unrealistic or inappropriate goal by jumping to implement concepts that aren’t completely thought through, or by ignoring danger signs and realistic barriers. With their eye on the right prize, however, owls can be skilled and highly productive multi-taskers able to focus on many things at once.
Turtles – Ah, the turtles. They’re the cautious types – the devil’s advocates who seek out and raise the issues, shoot holes at ideas to test their soundness and the ones that prepare for surprises. They ensure that all the bases are covered and nobody gets blindsided, but if left unchecked on an unbalanced team, they may also unduly influence the group to choose low-risk ideas that might have smaller payoffs. On the other hand, turtles are great for reeling in the more impetuous hares or the over-eager owls and squirrels rushing headlong into trouble.
The right mix alone probably won’t make you a “One Minute Millionaire,” but it can certainly increase your chance at success. And by the way, if you don’t have a big staff budget, don’t worry. One dominant category usually surfaces, but most people are a mixture of one or more types, so you may still have what you need.
Which personality type do you most identify with? Let us know in the poll below.