CREATING THE EXECUTIVE TEAM Who, When

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CREATING THE EXECUTIVE TEAM Who, When

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Building a Great Company. Lessons From the School of Hard Knocks ... Bookkeeper HR Admin. Administration. Sales VP. Sales Group. Sales. Product Manager ... – PowerPoint PPT presentation

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Title: CREATING THE EXECUTIVE TEAM Who, When


1
CREATING THE EXECUTIVE TEAM Who, When How
It Affects FundingSoftware Development
ForumJuly 24, 2002J. Peter Bardwick
415/385-4523 peter_at_jpbardwick.com
2
The Magic Bullet For Raising Capital
  • Just Two Requirements
  • Build a great company
  • Effectively communicate its value

3
Building a Great CompanyLessons From the School
of Hard Knocks
  • Nothing is more deterministic of a companys
    success than the quality of its team. (Sorry,
    clichés are often true)
  • Quality Shared Goals Raw HP Sheer
    Determination
  • Personnel costs are the highest single expense
    for most companies.
  • Great management is rare and usually learned
    through long trial and error and conscious
    focused effort.
  • Every hour spent on preventable employee problems
    subtracts three hours from productive work and
    gives you a migraine.
  • An executive team that recruits and manages
    effectively has done at least half the work
    required to make a great company.

4
Company Stages
5
Company StagesDrive Company Activities
6
Company StagesDrive Team Requirements
7
VCManagement Check List
  • Communicate (aka effectively sell an honest and
    consistent message to all stake-holders)
  • CEO has previously been a CEO or divisional
    manager
  • Domain expertise
  • Calls get returned by the most important people
    in the industry (potential customers channel
    partners)
  • Big and small company experienceideal is
    previous start-ups
  • More interested in company success than personal
    success
  • Clichés  passion, focus and drive
  • Communicate (aka effectively sell an honest and
    consistent message to all stake-holders)

8
Hiring Cycle
  • Recruiting
  • Managing Promoting
  • FiringCan be minimized with thoughtful management

9
Recruiting
  • Should be more formalized than is typical in
    startups
  • Previous or current co-workers
  • Network
  • From potential customers/channel partners
  • Never headhunters for early stage companies (in
    this environment)
  • Written job descriptions testing

10
Managing Promoting
  • Should be more formalized than is typical in
    start-ups.
  • 2x year formal performance reviews with written
    feedback and goals.
  • More honest feedback than is typical in corporate
    America.
  • Many incentives/disincentives are more effective
    than .
  • High growth companies naturally create new
    opportunities for achievers.
  • Some quantitative evidence that employee training
    produces positive shareholder returns. (ASTD)

11
Problem Employees Firing
  • Should be more formalized than is typical in
    start-ups.
  • Very thorough performance documentation. Not
    cookie cutterspecific goals objectives.
    (Important management toolnot just CYA).
  • Straightforward feedback gives people the chance
    to improve.
  • Rapidly growing companies create new slots
    appropriate to peoples skillsbut successfully
    moving people down requires that this be part
    of the corporate culture.
  • How do you know when to let someone go?

12
Minimizing HR LiabilitiesCA Litigious and
Employee Friendly
  • Suits often driven by people treated badly on the
    way out.
  • Employee option agreements generate breech of
    contract suits.
  • Covenants not-to-compete are not enforceable in
    CA (except for company sales) and can lead to
    liability for Unfair Business Practices.
  • Non-solicitation of employees customers can be
    valid but specific language is important.
  • Very through performance documentation.
    Performance evaluations are exhibits 1, 2 3 in
    HR suits.
  • Average cost of defense is 100k.
  • Employee Practices Liability Insurance (EPI) of
    questionable value.

13
Pros Cons of Outsourcing
  • Recommended where high quality is critical but
    not a full-time need HR, PR/IR, accounting, web
    design
  • Not recommend for sales or CEO (interim CEO is
    OK).
  • Should be task oriented and specific, raising
    capital, building infrastructure, strategy,
    book-keeping, etc.
  • Costs are highly variable and may include equity
    and/or success fees. Good starting place is an
    appropriate annual salary divided by the time to
    be spent.
  • Best source is word of mouth, best source of
    diligence as well.
  • Downsides, quality control and commitment are
    common issues but probably overblown.

14
Other Issues for Start-Ups
  • CEO succession
  • Hiring friends is a great idea if you dont want
    to manage well or have any friends left
  • Managing a gap in the team
  • Taking a team from a larger corporation
  • Can you raise capital if working full time for
    someone else?
  • Do options still work as an employee incentive?

15
Suggested Reading
  • People Skills, Robert Bolton (Straightforward
    text on communications)
  • Letters to Shareholders Annual Reports, Warren
    Buffet (A genius who has been studying management
    for 50 years).
  • Good to Great, Jim Collins (Discussion of
    management qualities that create great
    companies).
  • The Practice of Management, Peter Drucker (Or
    almost anything by Drucker, disciplined thinking
    about management).
  • Theodore Rex, Edmund Morris (Disciplined and
    Inspired).
  • The Human Equation, Jeffrey Pfeffer (Broad
    discussion of what makes effective management).
  • Topgrading, Bradford Smart (Could be 100 pages
    shorter but makes the point about hiring/managing
    effectively).
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