offaCliff

It's been a LONG, LONG time since I posted anything on this blog -- but the world has continued to turn. :) I'm happy to share this video that we did today as a response to David Hornik's great video on the Sh#t VCs Say......

Don't be Bored with your Board

In life, they say that the only things that are for sure are death and taxes. In venture-backed startups, the only things that are for sure are burn-rates and Board meetings. 

The most dangerous thing on earth is a well-funded startup (and North Korea).  Since startups don’t have the normal feedback mechanisms of mature companies (look up revenues and earnings in an old business dictionary) – it’s so easy for even a well-intentioned and hard-working CEO to deceive himself. Board meetings should serve as intellectually-honest forums to review the fundamental mission of the company and ponder the big questions. Is our product fulfilling a real customer need? Can we monetize this value? How can we defend our business and scale? Do we have the right team? Are we spending too much money too soon (likely), or are we not spending enough money (not likely but theoretically possible)?

My VC-board involvement started personally when I founded IFN in 1994 (I was 24). Now, that I’m running a newly-funded startup at 36, the biggest difference for me is that I don’t need to pretend that I have all of the answers (I thought that I really did know all of the answers). I’ve learned to accept (perhaps even welcome) confusion. It’s more than ok to candidly ask questions of your Board, provided that you can help crystallize what the most important actions that needs to be taken to find the answers and make progress.

Top Ten Things I’ve learned about BOD meetings:

1). Drive your organization to achieve desired results for Board meetings – but don’t drive things especially for your Board. 

2). While everyone admonishes CEOs to distribute materials a week before the BOD meeting, I’ve found that in early startups, this rarely happens. On a practical basis, try to get at least financial data distributed a couple of days before the meeting. If you are going to be discussing a key contract, proposed hire, or a new product – then get that specific information out before the meeting as well. Don’t send out your “deck” in advance if you want anyone to be paying attention to you during the meeting. 

3). When you are working on your “deck” – (likely very late in the evening before the BOD meeting) – use that time to deeply think about what is most important to the success of your business. Think deeply about the important things accomplished, the key things you’ve learned, and the most important execution required going forward. 

4). Expose your key team members (and key consultants) to the Board. It’s good for your team members, and good for your Board members. Both groups will see that you’re not “hiding the ball” from each other and the discussion will be more interesting and valuable for everyone. 

5). Don’t ask your VCs for more money in the actual Board meeting. Have private conversations either in advance or after the Board meeting. If you have any bad news, share it before the Board meeting privately with all Board members. 

6). “Real Boards” of mature companies are normally responsible for only four things: selecting leadership, approving strategy, approving budget, and monitoring governance issues. In VC-backed startups, the Board has an expanded role. Think of the meetings as a combination of an employee review, brainstorming session, and perpetual VC-pitching meeting. The main objective is for the Board to adjourn the meeting with continued confidence in the team and CEO. 

7). While you must update the Board on key accomplishments since the last Board meeting, focus on the key things that you have learned in the vital areas of value propositions to customers, product development, competitive developments, and your sales learning. Unless you are profitable or project to be so soon – make sure that you and the Board are aligned on what needs to be accomplished in order to secure the next round of capital. The best VCs that I’ve worked with are most honest about managing to the next “VC-hurdles”. 

8). Spend as much time in the meeting really talking about the key issues that are “keeping you up at night” – and your direct thinking on how to deal with these issues. Don’t “whine” – but make sure you share your key concerns and priorities. 

9). Clearly state what you think are the key milestones and deliverables that you expect to accomplish before the next Board meeting. This will flush out how you should be spending your time. Try to get consensus from your Board that you are spending your time and resources on the right areas. 

10). Ask your Board members for help – either with introductions, or deeper thought/involvement in areas that a member has expertise.

 

 

 

Uncle Rocky

My uncle was Rocky Pomerance -- the late, great and legendary former Police Chief of Miami Beach. Rocky rose to become the President of the International Association of Chiefs of Police (basically the “top cop” of the world) – largely due to his brilliance in keeping the presidential conventions peaceful in 1968 and 1972. He became one of the top private security experts in the world.

Every time I travel these days, I think about how much I’d love to talk with my Uncle Rocky about airport security. Rocky used to deride private condominium security as a farce – and I’ve thought of him so many times when I’ve walked or driven past security guards with a confident stride and a friendly wave. 

However, in a post 9-11 world, airport security shouldn’t be like a condo in Miami Beach – and today’s security farce isn’t at all funny.

It is maddening to realize that long lines are partly created in order for barely-trained (still private airline employees) to review boarding passes and ID cards (that can both be easily forged by someone with the right software and a laser printer).  Despite the fact that Senator Schumer pointed this absurdity out in 2005, a P.h.D. candidate in Indiana may face criminal charges for calling out the same loophole.

This whole business about liquids and gels is also ridiculous. On a flight up to San Francisco this week, my toothpaste was allowed. On the flight back, the same tube was confiscated. I realize that the planned plane bombings in Europe using carry-on liquids were scary – but how can the TSA be so reactive? Didn’t anyone think about this risk BEFORE the news broke the story? Wasn’t the whole point of having a well-funded Federal Agency -- was to have these people think in advance of the terrorists?  It drives me crazy to think about how poorly these people must think. When the terrorists used one-way tickets on 9-11, the TSA started specially screening one-way passengers. As if modern-day terrorists wouldn’t now know to buy a round-trip ticket!

Unlike my uncle Rocky, I don’t know how real airport security should work. However, I’ve read enough to believe that it would likely entail having smart people reviewing passengers in line – well-trained people who can detect passengers under duress. It would also likely take an intelligent database, perhaps some facial recognition software – not a foolish list that ensnared Senator Kennedy  more than once while flying!

Today’s airport security measures are like Manhattan office buildings that require visitors to show identification, sign-in, and then proceed unguided in the building! It’s not security – it’s a farce.  I was down in Miami Beach a few months ago, and sadly -- condo security is looking comparatively intelligent compared to the airport!

 

First Round CEOs of the World Unite

I had the dubious distinction of starting my career in the hedge fund industry in 1987 (when there were only a handful of funds) -- working for both Michael Steinhardt and Soros Fund Management -– and then I started an ultimately seriously-funded venture-backed internet company in 1994 (which was sold honorably, but by no means lavishly to AOL in ’03) – and I’m still not rich! What a schmuck!

Fortunately, I must have done a few things right along the way and my entrepreneurial zeal and optimism remains strong – and I still love building companies from scratch.  Most significantly, I have two business partners who I trust like brothers – and who compliment my skills and temperament almost perfectly. I’ve also learned to surround myself with fantastic engineers, artists, and staff members.

I’ve also suffered through the slings and arrows of outrageous investors – and one of the most important things that I’ve learned as an entrepreneur – is to surround myself with investors who can provide encouragement, guidance, discipline, and wisdom -- together with capital, connections, and domain expertise.

My partners and I are honored that First Round Capital  has invested in all three of the companies that we’ve helped to found (VideoEgg, mSnap  and “NeoSurf”). For full disclosure – Howard Morgan (one of First Round’s founding partners, was our lead investor in our last company and a close mentor).  Today, First Round held their first CEO Summit for their portfolio companies – and I think that everyone who attended left feeling as positive as I did about the day. As startup CEOs – we’re a busy bunch. Since First Round’s leader (Josh Kopelman) certainly wouldn’t want us to waste a minute (let alone a full day!) – the content and speaker program were refreshingly relevant and useful.

All attendees were sworn to secrecy regarding what was said and by whom – however, the agenda itself is fair-play so I’m posting it here:

Download frc_ceo_summit_agenda.pdf

Startup CEOs face major headwinds. I think that all attendees left feeling buoyed by each other, and by the speaker program. Much thanks to Josh, Howard, Chris, Rob, Judy and Carly --  for putting on a great program!

Now, I better get back to work!

We all need some perspective

I've been honored to personally get to know Dan Millman (www.danmillman.com) , the best-selling author of The Way of the Peaceful Warrior (which was made into a movie starring Nick Nolte last year). Dan has been a hero to me, and I continue to aspire to better execute his very-wise teachings.

Dan sent out the following link today in a group email. If you could use a little perspective -- please take a couple of minutes and click on it.

http://dingo.care2.com/cards/flash/5409/galaxy.swf

Chutzpah

In the Broadway show The Rothschilds, there is a scene when Prince William of Hess (remember the Hessian mercenaries?) asks Mayer Rothschild (a coin peddler who rose to become one of the richest and most powerful men in the world) about the Yiddish word Chutzpah. He asks Mayer something like: “This thing that you call Chutzpah, how do you teach it to your sons?” Mayer responds something like, “No, Prince. This thing Chutzphah is something that your people teach to my sons”. 

There is no doubt that it takes a lot of chutzpah to start any business, especially a VC-backed startup. My partners and I joke that if our venture development group had a tag-line, it would be “We revolutionize industries that we know nothing about”. Recruiting great people, raising money, building products to compete globally against entrenched corporations, forging business partnerships, selling anything new – all takes a lot of chutzpah. 

So, the other day I had lunch with an aspiring entrepreneur -- even though my partners and I aren’t taking on any new projects (which I made very clear when I was introduced to this person by a good friend). Let’s call this entrepreneur “Jennifer” (not her real name – wow, I’ve always wanted to do that). Anyway, Jennifer has a lot of chutzpah. Since she drove down all the way from LA to San Diego to have lunch with me, I wanted Jennifer to get her gas-money’s worth. 

Jennifer actually has a promising idea for a business (large market, real value potential to consumers, poorly served by competitors, promising enabling technologies, etc). I even said so – but then I started asking her about the key hurdles and execution paths, and our lunch virtually fell apart. I think that she came close to doing what my mother did to me decades ago, when she poured a glass of wine over my head at a restaurant. I was a Republican then so my Mom had cause. “Jennifer” didn’t have any reason to get upset with me – I thought that she drove down because she said on the phone that she didn’t know what she was doing, and needed help. Turns out she really only wanted $200k in capital from me (boy, she came to the wrong place). 

I just (mildly, at least by VC standards) started asking Jennifer about how she would get distribution and create her core content. And she blasted me for getting into the specifics, telling me that she would hire someone to run the business and do that. Now, my partners will tell you that I’m definitely not a “detail person” – I’m certainly more in the “big picture” camp. However, Jennifer had me feeling like I was the Compliance Director for Goldman Sachs (who I am sure does a great job, and is very-well compensated). I was just trying to be helpful, letting her know what I thought were her challenges. At one point, I told her flatly that I would never invest in her project, even though I think that her idea has merit (I’d probably make a horrible real VC since I told her the truth). 

Jennifer told me that she “can’t deal with reality because it interferes with the dream.”

Since she has created a prototype and a business plan (and she’s had a successful career in Hollywood) – maybe her Chutzpah and the dream will carry her. Maybe it’s just old-age (I feel like the world’s oldest child prodigy) – but these days, I want to cherish the dream, but know as much as possible about reality. You can’t delegate execution until you have delegated execution. Since Jennifer isn’t self-funding and needs capital – (despite telling me over and over how successful she has been in Hollywood) – she should be listening and learning, and at least trying to understand the key path of her idea. She took my questions about execution as an insult to her inner fire and ability to succeed. I once had the pleasure of accompanying a consulting client (another startup CEO) to a meeting with Jeff Bezos. I was struck by something that Jeff said, something to the effect that “you need to keep the dream and big picture, but relentlessly execute day-to-day”. Bezos definitely has a lot of Chutzpah.

While my partners and I still have a lot to accomplish as entrepreneurs, I think that the highest compliment ever paid to us is that we actually listen to VCs. It’s not that we will do it their way – but we always try to listen carefully. I’m convinced more than ever that entrepreneurial success requires chutzpah and great doses of reality. I hope that Jennifer learns that the more she digs into “reality”, the more likely she will be to make her dream come to fruition. 

After our lunch, Jennifer got back to LA and sent me her business plan, asking me to make edits. Now, that’s Chutzpah! 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

My First-Ever Accomplished New Year’s Resolution!

In addition to my recurring annual resolutions to read the complete works of Shakespeare, run a marathon, lose fifteen pounds, find the perfect mate, and win a Nobel Prize in economics (which I’ve never studied) – my 2007 new year’s resolution is to start blogging. Since pontificating comes to me a lot more naturally than those other endeavors, I’m excited to finally, actually accomplish a new year’s resolution! 

So, hello world! My name is Cliff Boro. Since this is going to be primarily a business blog, I may as well tell you what I do for a living. My two partners and I start – startups. We’re so passionate about starting startups – we’ve even recently jumped into one of our projects as the full time executive team. After we sold our previous company (Infogate – best known for buying and fixing Pointcast) to AOL in March ’03 (honorably but not lavishly) – we founded a venture development group called CVT Ventures. We’ve been busy, and we’ve been fortunate to work with some great entrepreneurs to help found both VideoEgg (www.videoegg.com) and mSnap (www.msnap.com). I’m the proud Chairman of both of those companies. 

These days, my partners and I have put CVT on mothballs to work full-time on a stealth-funded VC-backed company (sorry for the coerced mystery but it’s still embryonic). It’s humbling to be a startup CEO again (after pretending to be a quasi-venture capitalist for the past few years!). Basically – my partners and I wanted to eat our own dog food, take our own medicine – and start something from scratch and build a great business. We’re really excited about the opportunity and eager to apply the key lessons we learned from “web 1.0” – and just do everything a little bit (or even much) better. 

I expect to primarily blog about our own startup experiences, and to comment on the human-side of being an entrepreneur. I’ve enjoyed reading many blogs from people I know (Josh Kopelman, Howard Morgan, Tom Shields, David Hornik, Ed Sim) and other blogs including Fred Wilson, Guy Kawasaki and Seth Godin. I’ll do my best to add to the conversation. Happy New Year!