Day 4 Morning Operations, Chuck Colford And Brian Hurley

Lead to Win

Lead to Win

“Operations” June 23, 2009

Chuck Colford and Brian Hurley

“The time has come,” the Walrus said, “To talk of many things”…

- Lewis Carroll

…A great many things indeed

Lead to Win

Operations – Not such a dirty job

It can always be worse…

Slide 2

Lead to Win

Scope of Operations

•  Finance •  Human Resources •  Engineering •  Manufacturing and Supply Chain •  Customer Support •  Product Management •  Marketing •  Sales •  Site Management •  ICT •  Board of Directors •  Investors •  Advisors

Slide 3

Lead to Win

Scope of Operations

•  You will not be an expert in all domains – and don’t need to be

•  You do need to know how to build a team and get results from the team

•  You do need to know about where the bear-traps are – learn from the mistakes and pain of others

Slide 4

Lead to Win Slide 5

Agenda

•  The Team •  Steering the Ship •  Selling Related Finger Food •  Money Related Fun •  Burnt Flesh Potpourri

Lead to Win

Self-Awareness is Important to Operational Success

•  Know yourself •  Cover your weaknesses •  Hire people who are better

than you to strengthen the team

•  Learn from your mistakes… or better yet, from the mistakes of others

Slide 6

Lead to Win

Hiring Great People

•  Structured interview approach against a written role description to probe if they are suitable candidates

•  During initial call: –  Be explicit about what the expectations are in your start-up

relative to a big company – better to scare them away then hire the wrong person

–  Share company’s objectives and vision – they must want to be part of the quest

–  Share your company culture – it must resonate

•  Invest time and resources on candidate selection in stages, e.g.

–  Call with designated internal recruiter –  Meeting with hiring manager –  Meetings with other team members –  Reference checks –  Offer/negotiation

Slide 7

Lead to Win

Hiring Lots of Great People Quickly

•  Get a professional to lead the effort

•  Centralize the effort and establish a pipeline process

•  Prepare a hiring collateral package

•  Only bring in working staff for good candidates

•  Get creative on attracting attention and buzz

•  Great people know great people

•  Keep the bar high

Slide 8

http://www.ottawabusinessjournal.com/288580326461284.php

Lead to Win

Terminating People Who Don’t Fit

•  Formal employment agreements make things easier –  “Without cause” terms should be defined in contract

•  Engage HR professional – easier to do it right than to deal with consequences of a poorly executed termination

•  Treat employee with respect •  Never hire anyone you are not willing to fire

–  Avoid hiring founder’s relatives or spouses –  Avoid hiring friends –  Avoid hiring investor friends or relatives –  etc

•  If you ever enjoy firing people you should consult a doctor

Slide 9

Lead to Win

Rock Stars (“Big Names”) Can Help or Hinder

•  Big Names can help –  Experience –  Open Doors –  Reduce interval to sales –  Help recruit

•  Typical Roles –  Advisor –  Management –  Board Member

•  How –  Personal relationships and

introductions –  Don’t be shy

•  Why –  Exciting Vision –  Upside –  People –  Personal visibility –  Access to people or companies –  Retired and bored

Slide 10

•  Big Names can Hinder –  Big ego –  May not actually work

very hard –  May not deliver on

commitments –  May not hang around

long –  May work to replace the

founders –  May try to redirect the

company into a company they want to do (or have done in the past)

–  ….

Lead to Win

Hiring is NOT your only option

•  Escape your “employee mindset” experience –  Many of you will bootstrap and grow by contracting –  So why then is the natural instinct to fill up with employees?

•  Advantages to using contractors –  “Try before you buy” – Easy to escape bad recruiting decisions –  Limited obligation – reduces your liability –  Supports variability of your business –  Good sub-contractors can become great advocates

•  Disadvantages –  Less “loyalty” (often overstated – HBR “They’re not your

people”) –  More turnover & recruiting efforts to replenish –  Grant incentives may not apply (SRED, et.al) –  Harder to establish “brand”

Best of both worlds is possible –

Contract first and hire if good fit

Slide 11

Lead to Win

Outsourcing by Function

•  Very common to outsource things that are not: –  Your core competency –  Where you build value

•  Common functions –  IT, Website development & maintenance –  Office Manager, Clerical, Payroll –  Bookkeeping, Accounting –  Legal Counsel, IP (Patent Agent) work –  HR –  Specific Subject Matter Experts (SMEs) as required

•  SRED or IRAP write-ups •  Sales, Marketing

Getting the right expertise when required may be critical to success

Slide 12

Lead to Win

Outsourcing – Thinking Outside the Box

•  Pay an open source or shareware developer to install, personalize or add a key feature to their application so it better serves your business

•  Rather than cash: Can services be bartered, paid in stock or warrants?

•  Variable rates: Pay one rate pre-revenue; then top up to premium rate post revenue?

Consider all possibilities! Do what makes sense.

Slide 13

Lead to Win

Subcontractor Agreements

•  When dealing with subcontractors, where you direct the work, you should always put in place a standard sub-contractor agreement.

•  Why? –  Rate, payment schedule, GST in/out, termination notice periods

are clearly established –  It legally identifies them or their corporate identity including

business/GST number –  Defines who owns IP –  Liability: what if they damage clients facilities, breach security? –  NDA, confidentiality requirements. Any security clearances or

checks required –  Reporting requirements; Scope of work defined. –  Supports you when audited “So – what is this cheque you wrote

for?”

These are NOT rocket science –

your legal counsel will have one.

Use it!

Slide 14

Lead to Win

Advisors Can Fill Gaps Inexpensively

•  Engage experts to be advisors: –  In areas of weakness (e.g. sales) –  Where it is too early to hire a full time person –  Where they can provide a customer perspective –  Where they are a potential partner or channel to

customers –  To provide credibility

•  Limited time commitment – a few hours a week or a month

•  Advisor compensation: –  Free – usually as long as the work is interesting,

pleasant and not excessive –  Stock –  Retainer/honorarium/contract (i.e. cash)

Slide 15

Lead to Win Slide 16

Agenda


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Managing Teams – Vision, Culture

•  Vision – Points the way, generates

excitement and common purpose •  Culture

– Sets the context for independent and group actions in situations not formally specified, establishes norms

Slide 17

“There go my people. I must follow them, for I am their leader”

– Mahatma Ganhdi

Lead to Win

Managing Teams – Take Charge

•  Only one leader –  Not a democracy –  All the founders can not be the CEO

•  Set Roles and Responsibilities –  Reporting structure – formal organization chart –  Decision Making Authority –  For work and people management – not rigid communications silos –  Orients new staff

•  Setting Objectives –  Company, Individual –  Must do, WBN

•  Staff performance management –  Dealing with low performance –  Dealing with disruptive individuals –  Regular reviews and feedback

•  Staff development –  Informal, formal –  Selective apprenticeship

Slide 18

“When in command… take charge”

Lead to Win

Managing Teams – Day to Day

•  Regular staff meetings – efficient, regular (even if you are not there) •  Action registers – with follow-up and load balancing •  Make compromises explicit and formally managed •  Common (enforced) secure file repository (more on this later) •  Common (simple) reporting

–  Limit formal reporting to what is required to get the job done and consistent with phase

•  All-hands meetings – inform, motivate, celebrate, socialize •  Transparency – be open in sharing information and responding to

questions •  Accessibility

–  Open door policy –  Management by walking around – engage, ask to hear the problems and over

-communicate the vision/plans/successes –  Skip-level lunch meetings – inform, engage, socialize

•  Carry the water when required •  Lead by example – your actions define the acceptable “norm” •  Formal policies as (and when) required, e.g. use of open source,

working from home, vacation management, travel, expenses

Slide 19

Lead to Win

Bringing the Team to Bear

•  Listen more than you talk –  Use active listening techniques where you summarize

for understanding and confirmation

•  Seek out and engage all team members –  Control group discussions in a positive manner to

draw out the quiet members

•  Use delegation effectively and frequently •  Learn and use common methods to allow a

team to: –  Make decisions –  Solve problems –  Develop new ideas –  Learn from the past and look to the future –  Engage in continuous improvement –  Manage conflict constructively

Slide 20

Lead to Win

Delegation

•  Clearly define the task –  What –  When –  Scope of authority –  Resources available –  Reporting requirements

•  Select the best person for the job •  Train your staff for the tasks •  Motivate people by trusting them •  Get and give feedback

–  How do they feel about their progress?

•  Let the assigned people to do the work! –  Avoid jumping in or interfering

Slide 21

Bring everyone to bear on building the business

Lead to Win

Problem Solving Techniques

•  Appreciation - Extracting maximum information from facts •  5 Whys - Getting quickly to the root of a problem. •  Cause & Effect Diagrams - Identifying likely causes of problems •  Affinity Diagrams - Organizing ideas into common themes •  Appreciative Inquiry - Solving problems by looking at what's going right •  Flow Charts - Understanding process flows •  Risk Analysis and Risk Management •  SWOT - Analyzing your strengths, weaknesses, opportunities and threats •  PEST Analysis - Understanding "big picture" forces of change •  The Marketing Mix and the 4 Ps - Understanding how to position your

market offering •  The Ansoff Matrix - Understanding the different risks of different options •  The Boston Matrix - Focusing effort to give the greatest returns •  Porter's Five Forces - Understanding the balance of power in a situation •  Core Competence Analysis - Get ahead. Stay ahead. •  USP Analysis - Finding your competitive edge •  Critical Success Factors - Identifying the things that really matter for

success •  The Greiner Curve - Surviving the crises that come with growth •  The McKinsey 7S Framework - Ensuring all parts of your organization

work in harmony

Slide 22

www.mindtools.com

Lead to Win

Leveraging Creativity

•  Reversal - Improving products and services •  SCAMPER - Generating new products and services •  Attribute Listing, Morphological and Matrix Analysis - Creating

new products, services and strategies •  Brainstorming - Generating many radical ideas

•  Reverse Brainstorming - A different approach to brainstorming •  Reframing Matrix - Looking with different perspectives

•  Concept Fan - Widening the search for solutions

•  Random Input - Making creative leaps •  Provocation - Carrying out thought experiments

•  DO IT - A simple process for creativity

•  Simplex - A powerful problem solving process •  TRIZ - A powerful methodology for creative problem solving

Slide 23

www.mindtools.com

Lead to Win

Decision Making Techniques

•  Pareto Analysis - Choosing what to change •  Paired Comparison Analysis - Working out the relative

importance of different options •  Grid Analysis - Making a choice taking into account many

factors •  PMI - Weighing the pros and cons of a decision •  Force Field Analysis - Analyzing the pressures for and

against change •  Six Thinking Hats - Looking at a decision from different

perspectives •  Starbursting - Understanding options better by

brainstorming questions •  Stepladder Technique - Making better group decisions •  Cost/Benefit Analysis - Seeing whether a decision makes

financial sense •  Cash Flow Forecasting with Spreadsheets - Analyzing

whether an idea is financially viable •  Decision Trees - Choosing by valuing different options

Slide 24

www.mindtools.com

Lead to Win

Decision Making – Who, What, When

Key concepts: •  Who owns the responsibility?

–  Designated –  Delegated

•  What stakeholders are affected? •  Quality - Are all the facts and alternatives known? •  Time - How long until the call must be made?

A BAD decision is one that: –  Is made by the wrong person - Violates delegation or authority –  Does not consider the impact on the stakeholders –  Is unsupportable by the majority of stakeholders –  Is made in haste (before facts and alternatives are understood) –  Takes too long (occurs too late to have impact, squanders resources)

Don’t confuse a bad decision with a bad outcome

Slide 25

Lead to Win

Decision Making – Calling the Shots

When the person who owns the decision is known (lets assume it is you), various styles may be employed to make it:

1.  You decide alone. 2.  You seek information and then decide alone. 3.  You consult with individuals and then decide alone. 4.  You consult with the group and then decide alone. 5.  You share the problem with the group and you all

mutually decide what to do. •  None of the above are wrong. •  The person who owns the decision chooses. •  When choosing to consult for information or advise, be careful

not to send the wrong signals – if you plan to make the call yourself.

Leadership is always situational!

Slide 26

Lead to Win

Decision Making – Balancing buy-in with Action

•  Since the Magna Carta – the King has not had absolute power: –  The CEO serves at the pleasure of the Board –  The customer can take their business elsewhere –  “They’re not your people” – They can leave with 2 weeks notice –  So… Buy in is important

• You must balance need for “buy-in” with need to move forward • You will fail if you try to please all the people all the time

–  Leadership is not about popularity –  All your decisions will not be loved (It sucks to be you - get over it!)

• You will exhaust yourself and your team if everyone needs to be involved in everything

–  Use decision style #5 sparingly – for serious or “bet the company” issues

–  Beware compromise – It produces horrible results! Compromise is often a position that no-one supports.

–  Instead, strive for consensus – A decision that everyone can agree to support (rather than undermine)

Very few decisions are fatal –

Get on with it!

Slide 27

Lead to Win

Decision Making Tips – “House Rules”

1. Wait until the last minute - but not a minute later. "If you're not going to do anything differently tomorrow by making a decision today, then don't make it today. Situations change; markets shift. That's not an excuse to procrastinate. But the best decisions are just-in-time decisions. You should decide as late as possible - but before you need to take action."

2. Don't be afraid to argue. "Conflict is good for an organization - as long as it's resolved quickly. Unresolved conflict is a killer. That's why real leaders deal with conflict head-on. They take individual feelings seriously, but then they get beyond those feelings. One way to make progress on a tough decision is to agree on what the question is. Agree on the wording and write it down. Debate often stems from having different ideas about what's being decided."

3. Make the right decision, not the best decision. "People can spend months debating the 'best' decision without actually arriving at any decision. Every decision involves risk. And if there are 10 ways to do something, 8 of them will probably work. So pick 1 of the 8 and get going. Life's too short. You have 10 more decisions to make after this 1."

4. Disagree - and then commit. "Not everyone gets a chance to decide, but everyone should have a chance to be heard. Without at doubt, the most vigorous debates yield the best thinking. But once a decision is made, you should not be able to tell who was for it and who was against it. Fully supporting decisions that have been properly made is a condition of employment."

- Dave House – Bay Networks Slide 28

Lead to Win

Conflict Management

•  Conflict is natural - happens in every organization

•  Conflict is good – brings out different points of view

•  Unresolved conflict is a killer – stops progress, destroys teams

Slide 29

Lead to Win

Conflict Management – Straight Talk

•  Address the issues directly with the person with whom you have the conflict –  You may have misunderstood –  They may have misunderstood –  They may not have all the information

you have –  You may not have all the information

they have

•  If possible do it privately and 1 on 1

Slide 30

Lead to Win


Slide 31

If you are in disagreement:

•  State up front that you disagree – explain why

•  Ask the other person to state why they came to their decision

•  Do not attack •  Actively listen – ask questions

and get clarification – be open to change

If someone disagrees with you:

•  Listen to their position •  Do not be defensive – consider

alternative options •  Actively listen and feed back what

you think you heard •  State your position •  Ask questions – be receptive to

change

Lead to Win


Slide 32

Recognize the conflict

Address directly

State your case

Listen

Escalate

Discuss

Gather more data or meet with consultant

Implement

Agreement Need

information/ consultant

YES

YES

NO

NO

Lead to Win

Time Management

•  Time management is extraordinarily important!

•  Self-discipline •  Key elements of effective time

management: –  Goal Setting –  Activity Planning –  Prioritization –  Prioritized To Do Lists –  Scheduling –  Managing Interruptions

Slide 33

http://blog.iqmatrix.com

Lead to Win

Avoid Busywork from Investors

•  Investors will tend to use their portfolio companies –  To extend their own personal research and support groups –  Which defocuses you and sucks time and energy –  Common practice is to call up a portfolio company to do research on

other deal flow items •  “What do you think about…” •  “I need a white paper on…” •  “How would your offer stack up against…”

•  Even if you delegate, you will be dragged into discussions later •  It is a slippery slope

–  Carefully balance collaboration goals with need to keep your business focused on winning customers.

–  Once you have done a few, the precedence is established and it is more work to wean them off

–  Be mindful what is occurring.

Slide 34

Lead to Win

Meeting Tips

•  Very few meetings make you any money – minimize these –  Always ask yourself “Why do we need to have this meeting?” –  Know before it starts – Know what you will have when it is done.

•  Not everyone needs to be in every meeting –  When you have a small team, it is important to manage time well since it is so scarce. –  If a key player is missing consider rescheduling; rather than having the same meeting twice. –  Bring who you need to meeting but not more then you need

•  “Start on-time/finish on-time” is a cultural thing –  You will set the example and lead culture – You get what you demonstrate and tolerate. –  No golden rule, but avoid mixed messages.

•  Informal (break and meal) times are often highly productive –  Frequently seen to be more valuable than the formal portion – Don’t skip these –  Especially when bringing multi-site people together –  For off-site meetings to pay; you need to keep people together off-hours to extract the value

•  Get in the habit of documenting –  Purpose, Participants, Agreements and Actions –  Blog, Wiki probably better than email –  You can then see if you are getting value, –  And if you are following through

Slide 35

Lead to Win

Meetings - A Team Model (Projects)

•  Core Team: •  this is the project team accountable for the

deliverables •  the team sets it’s objectives and plans •  members are on the team for the project duration

and commit to be at all team sessions •  should identify a set of Subject Mater Experts , or

Interested Presenters for info/skills required

•  Subject Matter Experts, Invited Presenters: •  are prepared to provide info or give team detailed

technical guidance •  are not required to be at team meetings unless

needed by core team •  are able to use their time in team interaction more

effectively

•  Listeners: •  people with applicable interest in the outcome of

the team •  may be on distribution for all team minutes •  can send info to team or give feedback

Listeners

Subject Matter Experts

Invited Presenters

Core Team

The Curious

Slide 36


Agenda


Lead to Win

Don’t Let People See the Dog

•  PowerPoint template – fonts, colors, format •  Email signature •  Logo variants allowed – on dark or light

background, with tagline and without •  Letterhead template •  Business cards template and common vendor to

produce •  Brochure template •  Establish basic common collateral set: company

/product awards, corporate overview, product overview, etc

•  Domain name and standard email naming convention, e.g. [email protected]

–  Don’t use personal email addresses for business purposes!

•  Professional website – even if only one slick-looking page

•  Use a professional to polish important presentation slide sets, e.g. www.bittnerdesigns.com

Slide 38

Lead to Win

Sales Management Basics

•  Define: –  Sales plan – target customers and characteristics –  Sales process – steps from qualification to close –  Sales pipeline – estimate volume at each sales step, ratios don’t lie –  Sales targets – quarterly, core element of business plan –  CRM tool – Salesforce, SugarCRM, etc

•  Staff to ratios as necessary to meet your sales targets •  Hire appropriate to your stage and your sales model

–  Not all “sales” roles are the same (e.g. hardware/software) and include roles such as: Business Development, Channel/Partner Development, Sales, Inside Sales, Marketing, Technical Sales Engineer, Product Manager

•  Establish compensation plan based on need/phase –  First sale? Volume? Margin? New Market Penetration?

•  Weekly sales team reviews –  Review from CRM tool – make it the bible –  Look at what isn’t working – adjust, adjust, adjust –  Replace sales staff that are not a good fit or are not delivering

Slide 39

Lead to Win

Lead to Win Example 2009 Pipeline

Slide 40

Unique Website Visitor

Application Downloaded

Application Submitted

Application Accepted

Complete Phase 2

Launch a new

Business

100% 3% 12% 80% 84% 50%

900 27 3.24 2.59 2.17 1.08

Pipeline Stages

Conversion % From One Stage to the Next

Numbers for LTW To Generate 1 New Business

Lead to Win

Tip: Not all Customers make good Leads

Customer Leads not same as Lead Customers

• Must differentiate amongst the three to use finite resources/time wisely.

• Early wins are about relationships –Must manage to a small number of simultaneous trials - staggered windows; make each one “feel” special.

• Managing expectations is just as important as managing deliverables.

• Validate before you scale up.

•  In ramp – methods change – Can’t make each customer feel special.

3 types of pre-sales “customer encounters”

1. Baiting the Hook –  Generate awareness, interest, pull –  Demo, Trade Show, Press, Partner or channel

recommendation 2. Product validation

–  Get your product right –  Alpha Trial, Beta Trial, pre-GA soak

3. Customer acceptance –  Generate revenue –  Lab Trial (CAT), Bake Off

You may blow your brains out if you try to do validation with #3 (Early adopters are a different breed)

Slide 41

Lead to Win

Calling on Customers - Tips

•  Respect the customary dress codes –  Business attire as appropriate to the locale

•  Manhattan, TO Financial District – Suit & Tie (gents) •  Pressed shirt, Belt •  Silicon Valley – No tie; Golf shirt; jacket probably

–  When was the last time those shoes were polished? –  Personal grooming is important – Haircut, Shave…

•  Take an extra shirt –  Coffee spills happen at the worst times!

•  Be on time –  Traffic sucks in big cities (even if you know they way) –  I usually skip hotel breakfast; get to the client’s building early and eat

nearby –  If so, take toothbrush and/or mouthwash to freshen up before meeting

•  An umbrella can be a life saver

Treat EA’s with great respect – They can literally open or close doors

Slide 42

Lead to Win

Contain Feature Creep

Slide 43

Resist the urge to add in “features” before the core product works.

- Graphic

- – Peter Evans (Riverdale Partners)


Agenda


Lead to Win

Money Related Fun Stuff

Slide 45

•  Managing Cash •  Managing Cost •  Managing Equity

Lead to Win

Budgeting and Cash Management

How Any Firm Fails: Run out of Money Airplanes crash when they run out of altitude prematurely.

Cash is your altitude!

Dollars (& credit) on hand + Money IN - Money OUT --------------------- must be > $ 0 to survive

NO MATTER HOW GOOD THE IDEA!

Starting altitude + rate of climb x time - rate of descent x time --------------------- must be > 0 to survive (unless you are over a runway.)

EVEN IF THE PLANE IS PERFECT!

•  Someone in the firm MUST be responsible for managing cash flow

–  Monthly projection of what is coming in / going out –  Accounting package or spreadsheet is fine –  Closer management when the cash is getting low –  Keep track of all liabilities –  Always remit your payroll taxes!

Slide 46

Lead to Win

Watch Cash Outflow & the Bottom Line

Net Cash Flow

•  Early detection creates more opportunity to work the issues.

Are you tracking to plan?

Getting better or worse?

Slide 47

Lead to Win

Group Benefit Plans •  Your company can buy coverage similar to big firms

–  Dental, Vision care, Prescription and Hospital •  Typically need 6 members or more

–  Varies by supplier •  Small groups will likely need medical evidence for each participant

–  Histories –  Medical tests

•  Suppliers: Insurance brokers or Canada’s large Insurance companies •  Beware: US coverage can be VERY expensive •  Initial US coverage options:

–  Use COBRA and pay their benefits cost –  Pay a monthly supplemental benefit for them to use for a private plan (which

goes away when company plan is in place written in as part of employment contract)

•  Possible to put in place self coverage –  But make sure it is capped (unlimited exposure would be bad!) –  Understand administration effort required

Slide 48

Lead to Win

Travel Cost Tips (Small team) •  Even as a small team, you can manage your travel costs well

–  Plan ahead; arrange multiple visits on each trip –  Visit your local travel agents – find one who wants your business

and book through them; Saves you time –  Leverage your client’s corporate rates/travel agent –  Negotiate with hotels; Ask for the day manager; Visit while on

other trips. Even on a few trips this can make a difference –  www.priceline.com plus BetterBidding.com (see

www.mahalo.com/how-to-successfully-bid-on-travel) –  Flights: www.flightnetwork.com (Canada) www.webflyer.com –  Hotel FFPs – Save on food, internet, phone –  IP Phone or Skype work well in many locations –  Beware cell-phone plan roaming charges; hotel LD charges

•  You can go too far! –  Safety is important –  Location is important –  Cleanliness is important

Always a balance of time vs. money –

Don’t waste $100/hr time for something that can be done for $10/hr

Slide 49

Lead to Win

Travel Cost Tips (Large team)

•  Travel approval process – control, control, control – what, who, why – do you really need 2 people at the same conference?

•  Travel and expense policy – limits, expectations on what is considered allowable/reimbursable, rentals, hotel rates, meals, sundry, entertainment, economy/biz class, etc

•  Designate one person who is authorized to book and manage all authorized travel arrangements – consistency, speed, expertise, accountability -- $10/hour versus $100/hour labor

•  Traveling to same location repeatedly (or having staff come to main office repeatedly) – negotiate a special rate at a hotel and mandate its use, rent an apartment

•  Use corporate credit cards – tracking, simplify expensing, make it easier for employees

Control

Process

Mandate

Slide 50

Lead to Win

Avoid Costs (time, goods, legal) Due to Theft

•  Locked filing cabinets •  Locked management offices •  Locked, controlled access to labs •  Controlled access to labs •  IT staff access to files/systems •  IT security (control of root/admin passwords), password logs •  Document shredding, e.g. ShredIt •  Employee badges and electronic access •  Sign-in of guests •  High value asset control and security, e.g. processor chip vault, laptops •  Desktop security, e.g. locks, passwords •  Laptop policy, e.g. lockup in desk afterhours, locked to desk during day •  IT security, e.g. WiFi WPA security, SSL VPN, Firewall •  After-hour access •  Backup of all desktop, laptop, server data, e.g. incremental and off-site

storage/rotation of backups

Slide 51

Lead to Win

Costs – Tips for other than travel

•  Space –  Sublet from someone who has downsized –  Share with others –  Beware the long term lease commitment! Fixed costs can

be deadly

•  Capital Equipment –  Borrow from someone who has it –  Buy used (eBay, Kajiji, Craigs list, your peer network …) –  Auctions (Going out of business sales) –  Bank lease to cover

•  Your banker can help with these (secured credit easier to get, but likely will not finance the full value of the asset)

Slide 52

Lead to Win

Maintaining Shareholder Records

•  Your corporate lawyer may be a good place to keep your minute book •  They may also have facilities to securely store founders stock

certificates so they never get lost – ask. –  It can be a major issue if those stock certificates get lost –  They may be needed for surrender to close certain exit deals

•  They or you will need to maintain a Shareholder’s Register: –  Simple 5 column spreadsheet –  Who owns what

Date of Issue Name Address Shares Class

April 1, 2009 John Smith 1 Endless Loop, Cupertino, CA, USA

1000 Class A Common

Slide 53

Lead to Win

Cap Table – Example (pre Series-A)

$100,000 500,000 = $0.20/share

Post-money Valuation

Pre-money Valuation Contributed Capital

4,000,000 x $0.20 = $800,000 ($100,000) $700,000

Private investor negotiates to buy

12.5% of company for $100,000

Slide 54

Lead to Win

$4M pre + $4M new = $8M post



10,000,000 x $0.80 = $8,000,000 ($4,000,000) $4,000,000

An Up Round $8,000,000 10,000,000 = $0.80/share

Cap Table – Example (post Series-A)

Slide 55

VC negotiates to invest $4M, and “gives” you a pre-money value of $4M

- But you must top up option pool to 15% first

Lead to Win

$4M pre + $4M new = $8M post



10,000,000 x $0.80 = $8,000,000 ($4,000,000) $4,000,000

An Up Round $8,000,000 10,000,000 = $0.80/share

Cap Table – Example (post Series-A)

Slide 56

$4,000,000 6,000,000 = $0.67/share



11,175,000 x $0.67 = $7,450,000 ($4,000,000) $3,450,000

An Up Round

Must factor in the added ESOP Dilution! VC negotiates to invest $4M, and “gives” you a pre-money value of $4M

- But you must top up option pool to 15% first

Lead to Win

Cap Table – Impact of Dilution & Valuation

•  In this example: –  Founders holdings more than doubled (grew by $1.4M) –  Your Angel did not get crammed down (it was an up-round), but they did not

participate pro-rata on the follow on –  The VCs used the Option Pool trick to give you a seemingly higher pre money value –  You lost control – you are now an employee, and the VC’s have enough options to

incent/recruit your replacement

Slide 57

Lead to Win

Ways to Use Stock Options

•  Attracting Talent –  Sharing in success / upside –  Negotiation flexibility

•  Retaining Talent –  Key employees

•  Incentives to Drive Results –  Give bonus options on completion of a milestone –  Can be partially vested upon award

•  Cash Conservation –  Give more options, less cash

Slide 58


Agenda


Lead to Win

Potpourri - Definition

1.  A combination of incongruous things

2.  A miscellaneous anthology or collection

3.  A mixture of dried flower petals and spices used to scent the air

Slide 60

Lead to Win

Know Your Personal Risk Tolerance

•  As an entrepreneur – know your risk tolerance

•  Look at the worst possible outcome scenario for you personally – financial loss, lost reputation, lost opportunity, etc

•  Can you live with the worst possible outcome?

•  If not – stop now

Slide 61

Lead to Win

You Need Support

•  Launching a new business is – hard work, long hours, stressful, can take you away from home for long periods of time, reduces your earnings at the front-end, can deplete your savings, …

•  Ensure you have the support of your spouse and family

Slide 62

Lead to Win

Multi-site operations for young companies

•  Access to mail –  Gmail; imap; hosted exchange; Webmail via your ISP

•  Access to Calendar –  Gmail; hosted exchange; Plaxo; Tungle

•  Contacts Database –  Gmail; hosted exchange; Plaxo; Linked-in

•  Voice/Voicemail –  SIP (BYOD); Primus; Vonage; Skype; Good cell plan

•  All data must be secure –  SSH, VPN access to home office; between offices –  Laptops should always have encrypted storage; and cable locks (in office

and on the road) –  Never trust a computer you don’t know – Assume it is compromised

•  Centralized document repository –  SharePoint; Hosted server; Yahoo Groups; Google Docs (ITutility.net is a

local player) –  Multiple people in groups need to collaborate – so authentication and

security controls are essential

Essentials •  Files • Email • Voice • Schedule

Make sure your repository is backed up

Keep all needed templates there!

Slide 63

Lead to Win

Company Knowledge is Gold

•  Knowledge is core to any business – product, design, customer relationship contact information, market research, HR information, marketing collateral, financial planning information, etc

•  Must be centralized not distributed in an adhoc manner or held in people’s heads or held on people’s laptops or on scraps of paper…

•  Uniform access to knowledge multiplies the team’s effectiveness

•  Need to protect against people hoarding knowledge -- what happens if they leave or are terminated?

•  Setup as appropriate CMS, file repository, CRM, ERP •  Enforce and audit usage •  Ensure backed-up •  Ensure secure

Slide 64

Lead to Win

Live IT-free

•  Avoid internal IT infrastructure (e.g. servers, internal applications)

•  All basic business functionalities are available as an online service

•  Cheaper then doing it yourself, e.g. hosted exchange, hosted SharePoint, hosted QuickBooks, hosted SVN, hosted CRM

•  Less staff, less staff playing with IT, more functionality for less cost, backups handled automatically, available anywhere, pay as you grow, enforces a company standard

Slide 65

Lead to Win

NDA Practical Perspective

•  Use to protect your ability to patent IP •  Have a standard set of papers •  Clear process on who signs and

authorizes changes •  One person responsible to receive

/confirm and file the signed agreements •  Assume everything you say or share will

eventually end up with a competitor

Slide 66

Lead to Win

Legal - Read the Fine Print on all Documents

The big print often draws your attention from the truly important messages

Slide 67

Lead to Win

Cheques & Fraud Prevention

•  Authorizing outgoing cheques –  Good practice is to have 2 authorized persons sign cheques above a

specified dollar amount; Some organizations require two for all –  Sign as “Authorized Agent” or “Authorized…” – not personally –  NEVER pre-sign cheques

•  I shouldn’t have to tell you this, but I’ve seen it done!

•  Endorsing received cheques (yes Virginia – This is why we Invoice)

–  Rather than have an authorized person sign them – have the person who receives mail – STAMP them “For Deposit Only”.

–  They may ONLY be deposited in the Company bank accounts.

Slide 68

Lead to Win

Pay Attention to Your Signature Line

•  You will sign lots and lots of documents running your business •  Only authorized officers can bind the company into contracts •  Pay attention to the signature line – Exactly on who’s behalf

are you signing (“as”, “for” or “per”) –  Make certain your company name is complete and correct –  Ltd. Limited Inc. ,Inc. Corporation Corp. are not the same

•  At law, if you sign on behalf or a company that does not legally exist, you may be personally undertaking the liability

MYCORP, INC. Per: ________________ John Smith President

________________ John Smith MyCorp

THE SMITH FAMILY TRUST Per:

Authorized Trustee

Slide 69

Lead to Win

Sh*t happens – Get over it!

If something has been done wrong – Don’t fret; Just fix it!

Don’t compound problems.

Learn from mistakes.

Slide 70

Lead to Win

Learning from the Past

•  Hold “Good/Bad/Ugly” working sessions after each major milestone – product, sales, financing, etc

•  Typical meeting flow: –  Brainstorm using sticky notes – Good, Bad, Ugly –  No ass-covering – open, honest, non-rationalizing –  Group sticky notes into “like” –  Rank the groups in each category

•  Embrace and celebrate the Good •  Reflect back on the top Bad and Ugly items

–  Why, how could have been avoided or mitigated, etc

•  Reflect forward/brainstorm on what to do differently •  Develop forward looking actions

Slide 71

Those who don’t learn from history are doomed to repeat it.

Lead to Win

Perseverance is Critical to Success

The Dark Night of

the

Innovator

OPT

IMIS

M

PESS

IMIS

M

WEEKS OR MONTHS

UP TO TWO YEARS

Slide 72

Lead to Win

Exercise Roundtable discussion

11:00 - breakout meetings 11:30 - breakout presentations back to group (10 minutes each) 12:00 - breakout presentations done

Sound off! 1, 2, 3, 1, 2, 3, … you get the idea?

BREAK OUT GROUPS 1.  Cash Conservation

–  What can you do to save cash –  What non-cash assets do you have and how can you leverage them

2.  Survival Game –  Linear phases of start-up company growth –  Of topics and suggestions presented - what is most important and at what phase and

why 3.  Time Management Tips

–  Discuss and prepare a presentation back to the group on your best time management tips

–  What are the top time management mistakes you have made and why?

Topics of interest

Group discussion

Slide 73


Wrap

•  The walrus having drunk too long from the fire hose… took a much needed break.

Good luck – And Thank-you

Lead to Win

Effective Executives

Acquire knowledge they need

•  Ask “what needs to be done?” •  Ask “what is right for the organization?”

Convert knowledge into effective action

•  Focus on opportunities rather than problems •  Develop action plans •  Take responsibility for their decisions •  Take responsibility for communicating

Make the entire organization feel responsible and accountable

•  Ran productive meetings •  Always use “we” and not “I”

Slide 75

Lead to Win

Build and operate effective Boards

Upon completion, you will know about: •  what entrepreneurs and investors want from Boards •  gaps in Board memberships

And you will be able to: •  select Board members •  define Board responsibilities •  help Board operate effectively

Lead to Win

Entrepreneurs want Boards to:

•  Help obtain key resources (e.g., capital, information, partnerships, customers)

•  Provide services (e.g., legal, mentoring, expertise)

•  Guide changes in business strategy and respond to opportunities and crises

•  Promote the company’s reputation

Lead to Win

Institutional investors want Boards to:

•  Monitor executive behaviour, performance and compensation

•  Select, control and replace the CEO

•  Be independent from management

•  Act in the interest of shareholders

•  Guide changes in business strategy and respond to opportunities and crises

•  Guard against infringements of the law

Lead to Win

Board emphases

•  What Boards emphasize depends on: –  Company’s stage of development –  Number of outside vs inside directors

•  Early stage Boards emphasize resource acquisition and services

•  Mature stage Boards emphasize executive performance, legal issues and community impact

•  Outside directors emphasize reviewing executive performance, employees and community

•  Inside directors emphasize shareholders concerns

Lead to Win

Build an effective Board

•  Select members who the CEO views as peers and have the time

•  Each member must bring at least one competency

•  Board as a whole must have knowledge of all important issues and major stakeholders

•  Board members must be able to work together

•  Significant proportion must be independent and not subordinate to CEO

Lead to Win

Build an effective Board

Select members who: •  CEO views as peers •  have the time •  bring at least one competency

Ensure Board: •  has knowledge of all important issues and major stakeholders •  is able to work together as a team •  has a significant proportion of independent members

Lead to Win

Define Board responsibilities around

•  Development of detailed strategies that produce large amounts of pixie dust

•  Development and evaluation of strategy implementations

•  Development and evaluation of CEO and senior management team

•  Management of crises

•  Monitoring legal and ethical performance of executives and company

Lead to Win

Operate Board effectively •  Define Board responsibilities •  Bring Board members up to a minimum level of knowledge

concerning key issues they may face •  Welcome constructive feedback •  Have Board decide how it will work as a team in time of crisis •  Have Board members interact with customers, employees and

suppliers •  Provide information that is accurate and timely in a clear way •  Provide information from multiple data sources •  Provide scoreboards that measure company performance in the eyes of

different stakeholders •  Define a process for employees to contact Board about illegal or

unethical practices •  Review development plans and appraisals for key executives •  Motivate Board members through recognition and money •  Schedule enough time to examine facts and make decisions

Day 4 Morning Operations, Chuck Colford And Brian Hurley

Business

buzz great people

terminating people

firing people

big company

worse slide

brand slide

doctor slide

hiring manager meetings