chuck eesley stanford university · the highest likelihood of having an exit (hoetker 2007; norton...

Chuck Eesley Stanford University

Copyright © 2010 by the Board of Trustees of the Leland Stanford Junior University and Stanford Technology Ventures Program (STVP). This document may be

reproduced for educational purposes only.

 Presentation skills  Market size

–  Some (perhaps many) of you may need to look for a new idea/opportunity

 Advertising is not the only (or the best) business model!

 Get out of the building –  Talk to customers (hint, 10 is not enough) –  Talk to partners, distributors, advertisers, anyone else

who plays a role in your business model

 Competitive analysis  Domain name taken?  For OEP, draw the business model

© 2003 Mark P. Rice, Babson

First Half: Idea Versus Opportunity

Next Steps: Realities of Business

Operations

A. Team … Recruiting

B. Compensation … Rewards

C. Culture … Norms

Internal Issues and trade-offs:

When to hire? Experience versus passion and energy? Motivation and character traits versus qualifications?

  Founders, CEO and VPs   Designers, Developers,

“Architects” and Managers of Products & Services

  Sales and Marketing   Operations and Administration   Others?

External Issues and trade-offs: How to find and select? How best to manage?

  Board Of Directors   Investors   Advisory Boards   Professional Services and Suppliers   Others?

•  Status Determined by Contributions to Improving Culture and Increasing the Value of the Company

•  Rewards Tend to Be Value-Enhancing such as Stock Options (Equity Ownership)

Definition “A strong system of informal rules that spells out

how people are to behave most of the time”

 The “A” Team –  Not just competent – Don’t hire B players –  Not just your roommates

 Sources –  Stanford –  VC’s –  Professors –  Professional Network

Wily Technology Case

 Founder and CEO of New Relic, Inc.  Founder and CEO/CTO of Wily Technologies  Board Member Pano Logic  Entrepreneur-in-Residence, Benchmark

Capital  Senior Software Engineer at Apple  Coding since the Commodore Vic 20 (3583

bytes of RAM)

 Events, conditions and founder characteristics precipitating a replacement

 Search process involved  Founder’s negotiations with the Board over

candidate characteristics   Importance of culture  Whether the founder should remain with

the company and in what role after succession

 How involved the founder (and top management) should be in the search process

25

Employees (%) M&A or IPO (%)

Idea assets (outside of Biotech/chem)

4.5 16.6

Contracting Exp. w/o VC 11.9 159

Contr. Exp. present, adding idea assets

8.2 87.8%

Idea assets present, adding contracting

14.9 20x

Interaction effects for idea assets in weak appropriation environments are strongest for firms with the highest likelihood of having an exit (Hoetker 2007; Norton et al., 2004). It is weakest for those at

very low or very high probabilities.

The interaction effect for idea assets and contracting experience is strongest for those at a moderate likelihood for an exit event.

“ The myth that any given entrepreneur is a rugged individualist, who toils alone, can often be demolished by just asking to look at his or her calendar. Nearly always, the majority of his or her time will be spent as part of a group -- at meetings with the management team, board meetings, project team meetings, customer and partner meetings, and so on.

As such, knowledge about leading a group, being a constructive group member, the dynamics of healthy versus destructive groups, and designing – or repairing – groups so that they function well should be a central component of entrepreneurship education.”

Source: Tom Byers, Heleen Kist and Bob Sutton

 Khosla on Teams  Larry and Eric on Teams

Thank you Lew!

• Cash  Salary and Bonus  Benefits

• Equity  Common Stock Plans

(Incentive Stock Options Have Favorable Tax Rates)

 Vesting Schedule and Stock Budget

 Tax Implications (IRS in USA) and Security Laws (SEC in USA)

1.  Develop Sense of Teamwork 2.  Understand Personalities of Key People 3.  Develop Open Internal Communication 4.  Remain Open to Ideas from Anywhere 5.  Be the Customer 6.  Be Willing to Experiment 7.  Include Creative and Unusual People 8.  Address the Autonomy Balance

Reference: Collins & Lazier, Beyond Entrepreneurship

chuck eesley stanford university · the highest likelihood of having an exit (hoetker 2007; norton...

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