Wednesday, July 20, 2016
One of the first decisions an entrepreneur needs to make once she has raised money for her great new idea is to build a board.
This is a conscious act. Yes, your investors probably have board seats, at least the lead investor will. If your investors are angels maybe 2 or 3 of them have demanded to be on your board. But beyond this crew you owe it to yourself to step back and think about who do you want on your board to help you build your company.
It is entirely reasonable for you to put one outside director on your board, and it's an unusual set of investors that will not allow you to bring one new director on. And when you do, you want to bring on a current/former CEO.
Why a CEO? Why not a technologist, or a family friend, or your cofounder? Fundamentally, a current/former CEO is going to have seen your movie before and will bring a wealth of unexpected advantages to your board and your company.
Your board has a duty to represent all your shareholders, but more than that they have a responsibility to care for the company first. For your employees, your reputation, your probability of success. Having a board member who is truly independent of the investors can help bring a broader perspective to the board discussions. I have seen investors who are so focused on their own issues they lose sight of what's best for the company. An independent director can take her role - as the one person who is not worried about the timing and size of liquidity but is instead worried about the long term success of the company - very seriously.
I met with a big time PE partner (let's call him Adam - not his name) recently, who is sitting on a private technology board. As we talked he told me the CEO was dealing with the issue that he, and the other big time PE firm on the board have different agendas. One is a long term investor, one is interested in liquidity sooner, and the difference is a strategy problem for the CEO. The investors are balanced in ownership and the CEO is caught in the middle. I asked Adam "Why is this the CEO's problem? Surely the CEO's responsibility is to grow a great company and create the greatest value he can, not worry about negotiating between the two of you on the timing of an exit. It's a ridiculous waste of his time". Adam (figuratively) took a step back and agreed. I'm not on this board, but I can still make the case for the CEO not being distracted!
You're going to need advice as you build your company, great advice. Yes your investors may know a few people, but you want to be referred to people who are not looking to your investors for future referrals, again who are truly independent. You'll need lawyers (you want a pit bull in your corner unless you have truly world-class VCs), recruiters, marketing consultants etc. etc. And when you hire them you want to know they are loyal to you, not back channeling to your investors. An independent CEO should have a quality network for you to tap into.
Working for you
There will be times when you need to get something done but you are out of time and need some sleep. You can use your CEO/director to give you capacity. Maybe you need her to build a model for you, maybe you don't know how to present an issue to your board and your director can build a sample presentation for you to help you frame the issue. At a minimum your director can do deep reviews for you of your own presentations, legal agreements, offer letters, compensation plans... with the eye of someone who has done it before.
A high quality former CEO will bring experience of what the job really entails. What are you truly responsible for vs what decisions your board can make (which is very few in reality)? What does it take to build a world class team? What does it take to close your first few big deals? How to focus. Only someone who has done the job for many years really knows what it takes, and there are many investors out there who like to give you advice, but have never been in the role. Your director can be a sounding board for you in the role of CEO.
Being the bad guy
Your CEO director is not your friend, and sometimes she may feel like your enemy, but because her only reason to be there is to help the company, you can trust her even when you hate her. I've always had a former CEO on my boards, and sometimes it's been absolutely maddening.
For example, the time my director attacked me in a board meeting and took me to pieces for a plan I proposed. Afterwards I asked him what the hell was he thinking coming after me in a board meeting? He humbled me by telling me he could see my main investor was winding up to attack and so he decided to attack me first so I did not get into a fight with my investor. He knew me well enough to know that if attacked I would attack back, and hard, and that could damage my relationship with my investor.
And for example, the time my director had a one-on-one with me and decimated my forecast. Destroyed my faith in every deal. Ripped every one of my sales campaigns to shreds. His motivation? To wring every piece of optimism out of my forecast so I knew the worst case and could then focus on what needed to be done to bring the probability up on each campaign.
There are times when things go well, and then there are times which are rough. Raising money can be one of those times. Having someone you can call every day to review how things are going is so very helpful, and you cannot be calling your investors. You need a safe place to call. Someone who has no other agenda but to help you and the company succeed. And someone who has been there. That is a current/former CEO.
You may be thinking "well that's self-serving of her given she's a former CEO who sits on boards". Yes, probably right, but right now I am meeting with many, many interesting entrepreneurs, only one of whose boards I have joined so far (www.savonix.com) and I am hearing too many worrying stories of entrepreneurs who need better board advice and support.
Photo from Buzzfeed
Thursday, July 14, 2016
What do you think of when you think of being sold to? A salesman? Speed and feed? Talking your ear off with feature function? Closing you with obvious closing questions?
Sadly, still today, despite everything we know, many people sell this way.
But actually true selling is just the opposite. The sale is made in the silence.
There are a thousand B2B sales training classes and self help books you can read but they all basically say the same thing. Do discovery, qualify your customer, understand the org chart, understand their needs etc. etc. And yet, despite what we know, the simple concept that the power is in the silence gets lost and sales teams talk too much. They talk more than they listen.
One of the best enterprise sales people I ever sold with told me "Ask a question, shut up, and the first one who speaks loses". People are fundamentally uncomfortable with silence and they speak to fill it up. And when they do they reveal what they are thinking.
When you are selling working with silence allows you to truly deeply listen. Prepare and ask your questions about their needs, process etc. and then listen carefully. Let them speak and then be able to speak some more because you don't jump in to fill the silence they leave.
It also allows you to show respect. I'm always astonished at how often sales people talk over the customer or interrupt them. There is respect in silence. I am giving you the respect to fully express your needs and interests before I jump back in and tell you how great my mousetrap is. People buy from people and showing respect is a critical step to establishing trust.
And it allows you to close. When you ask for the order ask and then shut up. Too often people ask for the order and then immediately gabble on about why, when etc., justifying why they are asking for the order. You should not ask for the order until you know you can provide real value to your customer, and when you know you can, then ask, and wait. Don't explain, talking will not help by this point. And if they speak, they either say no (and you talking wasn't going to change that) or they reveal where they are at and you're on the path to close.
And the same concept applies whether you are selling an idea or a product. People want to be heard. Master the art of asking questions and being silent. Present, silent and listening.
Monday, June 20, 2016
I was struck by the interesting interview with Beth Comstock of GE in the NYT today - where she says "you have the permission to try something new". In this case she is talking about innovation but innovation is not the only area where we are held back by the need for permission. Too often we are stymied in areas that lead directly to our happiness.
Too often, as working professionals, and especially women, we are held back by our fears. Fear of failure, fear of what other people will think, fear of the unknown, fear of being less than. We live in the world of Lean In and male-dominated tech, where I know and have personally experienced that to get ahead you have to work twice as hard, and be twice as smart, as the men around you. This doesn't leave much room for permission to change, or to be rested, or happy.
So what's the solution. I think it's to consciously, and overtly, grasp the nettle and give yourself permission.
Permission to stop caring what other people think. As Cindy Gallop (entrepreneur and change agent extraordinaire) says "Fear of what other people will think is the single most paralyzing dynamic in business and in life. You will never own the future if you care what other people think". And yet so often we worry endlessly about what the people around us think. Our boss, our peers, our parents; the people who have opinions about our title, or car, or house, or how much money we make. But in the end, the only people whose opinion really matters is our closest friends (who if they love you will support you no matter what you do, or how your screw up) and our partners in life (who do have to be in the boat with us). No one else matters. Truly.
Permission to try something completely new - like start a company. Scary. What if I am no good at it, don't like it, fail at it? Well, so long as you do some basic financial planning so you can survive a temporary misstep what are you afraid of? Chances are you can always go back to what you did before. I have seen this many times in Silicon Valley - value accrues to failure. People try something completely new, it fails and they go back to what they did before. But they are often now actually more valuable. They have more experience, they may be humbled and so be a better leader and more compassionate. They will be changed, and usually for the better. Or maybe permission to try something completely new for yourself means going to back to school and taking the chance you can create a whole new career path for yourself.
Permission to not check your email 24/7 on vacation. Permission to not keep a perfectly tidy house. Permission to wear flats to work. Permission to leave a job you hate, or a boss you hate, even if it means making less money. Permission to pursue a sports passion which may mean you don't climb the corporate ladder as fast as your peers. Permission to experiment with your career.
I had to take myself through this process as I made the decision to change my professional life. I can get wracked with guilt that I am no longer driving the feminist CEO agenda. I can get down on myself that I stepped back when other women are running companies and setting the agenda for key technologies in the valley. I, like so many successful women, continue to fight the demon of feeling like a failure inside every day. And so I give myself a talking to - sometimes physically in the mirror! Permission to try a new way of life. Permission to be with my family, and travel, and read, and write. And to stop caring what other people think.
For a while at least!
Wednesday, May 25, 2016
The strange story of the lost Poussin the "Destruction And Sack Of The Temple Of Jerusalem" and my Uncle Ernie
Sometimes truth is stranger than fiction. This is a true story of a great masterpiece, lost in time for 350 years and found in our family.
My great-uncle Ernie was born Ernest Onians on August 14th, 1904 in Liverpool. He was the youngest of 6, and his immediate elder brother Frank, with whom he was close friends as a young man, was my grandfather. After working together as salesmen selling animal food in East Anglia, Ernie recognized a huge business opportunity - taking waste food at the back door of London restaurants and turning it into pig food which he would process at his mill in Suffolk and then sell to the farmers. He was very successful, a ladies man, and became wealthy.
As he traveled around Suffolk he became interested in art and to educate himself he read extensively, subscribed to art magazines and developed an eye for beautiful things. During and after the War many large houses were being forced to sell their paintings and furniture because of death, taxation and the poor economic situation in the country. As my cousin John wrote "during the 'forties and early fifties' he visited many a house sale and county auction, bidding - or more frequently leaving bids - for literally thousands of objects which, like the girlfriends of his youth, caught his curious and sensuous eye. The honied toned ivories, the fresher colors of porcelain, the weave of tapestries, the smooth escapements of watches, the chimes of clocks, the polished veneer of furniture, and above all the flesh, flowers, fruit, animals and landscape found in paintings, all called him to possess them."
But sadly, although married for a while, he became a hoarder and a miser. He collected so many pieces that he filled up his house and three sheds in his garden with paintings stacked vertically in dirty conditions. As a child I remember my uncle and my father taking me through the piles of paintings, tapestries and clocks which were not insured because Ernie didn't want anyone to know. My father would visit him frequently (out of loyalty to his own father) as would two of my father's cousins who were in the art world themselves, one John the professor, the other Dick the artist.
Typical family stuff - until one day one of the sheds burned down. As a result of the fire Ernie did ask his nephews for help to get a review of his pictures. Christies came to the Mill for 2 days and told Ernie and his nephews that there were 7 paintings that should be fully researched before they were sold.
But as is so often the case, his treasures obsessed him. Arguments erupted about what was going to be in his Will and Ernie decided he did not want anyone to get the benefit of his treasures after he died. My father, despite having spent 30 years visiting his uncle and trying to help him, in the end would not be a part of it because, after many iterations, Ernie insisted that his whole estate be tied up in a trust that would last for 30 years after his death. Only a few of his great nieces and nephews who he hardly knew would benefit, and only if they did not get divorced in the meantime.
As a result, when Ernie died at age 90 in 1994 the paintings were not researched and his executors gave the sale of the estate to Sotheby's. A quick one day sale later the estate fetched £2M.
But unbeknown to the experts, and to my cousins who administered his estate, there was a treasure in among the paintings.
This painting had a small, very dark photo in the glossy catalogue (a copy of which my father keeps on his shelf as a reminder of life's ironies). It was "Attributed to Pietro Testa" as The Sack of Carthage and estimated to fetch £10,000-15,000. But experts watch the sales and as the Guardian reported four years later it was "picked up at the Onians' auction for £155,000 by the London gallery Hazlitt, Gooden and Fox, after its advisor, the distinguished Poussin expert Sir Denis Mahon, spotted a photograph of it "the size of a large postage stamp" in the catalogue and ordered them to acquire it "at any cost"."
Hazlitt's cleaned it, restored it, had it confirmed by the Louvre and it was then that we learned that it was actually the glorious masterpiece the Destruction And Sack Of The Temple Of Jerusalem. Painted by Nicholas Poussin in Rome in 1625-1626, it had been commissioned by the Pope's nephew Cardinal Barberini as a gift for Cardinal Richelieu! It fetched £4.5M when it was sold to the Rothschild foundation who gave it to the Israel Museum in Jerusalem where it is now the pride of the museum.
I visited the painting in Jerusalem in March of this year and as I stood in front of it I wondered at the mystery of its journey.
If the executors of Ernie's will, or Sotheby's, had had it cleaned as Christies had advised, they would have known what it was immediately. In the middle of the painting is a large menorah being carried out of a Roman temple. And it is the traditional shape of menorah that Poussin would have seen in Rome on the Arch of Titus (who was the general, and future emperor, who sacked and destroyed the Second Temple in Jerusalem in 70CE in a brutal, fiery battle to put down the Jewish rebellion - and until 2009 that was the earliest depiction of a menorah found). Any historian would have known it to be destruction of the Temple as documented by Josephus, an event that was the beginning of the diaspora and is mourned even today by Jews around the world.
But the story didn't stop there. My cousins sued Sotheby's for negligence in 1999 when this all came to light. The suit went on for several years until, in 2002, as Sotheby's realized their £3M insurance policy was running out, they settled (the BBC reported "Pig swill estate wins Poussin war" !! ) and £1.4M went to the estate with the rest going to the lawyers.
In the end my father bought a beautiful painting and a clock out of the estate which he cherishes in his home, and a cabinet which was in our house for many years as he lovingly had it restored for his uncle is now in a museum in Los Angeles and known as the Onians Cabinet. Hopefully many people are enjoying the many paintings Uncle Ernie saved, and millions of people will have a chance to marvel at the Poussin in Israel.
Is it sad that the family did not recognize the painting? After all, the children will get plenty of money from the estate in the end. Or is it instead perfect that a painting that depicts such an enormous event in Jewish history was lost, picked up for pig swill cash, not researched by the family, and so was available to be bought by a benefactor who gave it to Israel so Jews from all over the world can cherish it? Personally, I think it's ironic and perfect.
Notes on the painting from an exhibition at the Israel Museum, Jerusalem
Nicolas Poussin was the foremost exponent and practitioner of seventeenth-century Classicism. This work from his early Italian period (1625-1626) was commissioned by Poussin' patron Cardinal Francesco Barberini, nephew and secretary of Pope Urban VIII, and was offered as a gift to Cardinal Richelieu, the French head of state. Barberini led a papal legation in a vain attempt to reconcile France and Spain, at the time engaged in a bloody war. Poussin draws a parallel in the painting between his patron, the would-be peacemaker, and the enlightened pagan emperor Titus, who tried unsuccessfully to prevent the ruin of Jerusalem and its temple. The composition is divided between the image of the Temple engulfed in flames in the background and the chaotic struggle, dominated by the striking figure of Titus on his white mount, in the foreground. A sense of drama, with the clash of arms and flashes of golden light from the Temple vessels, suffuses the entire work. Classical Roman architecture and sculpture provided sources for Poussin's painting. The scene seems to be a Roman city: the soldiers' dress is taken from reliefs on Roman sarcophagi; the facade of the Temple resembles that of the Pantheon; the figure of Titus was inspired by the equestrian statue of Marcus Aurelius in the Capitoline; and the menorah derives from the famous depiction on the Arch of Titus. After Richelieu's death, the painting was inherited by his niece, who then sold it. It changed hands many times and eventually reached England. Its whereabouts were unknown from the late 1700s until 1995, when it was rediscovered by the art historian Sir Denis Mahon, restored to its original state, and donated to the Israel Museum in 1998.
Tuesday, May 17, 2016
The NACD (the National Association of Corporate Directors) held a discussion afternoon in San Francisco in late April designed to make directors smarter about current events (not hard to do since so much is always changing!)
The agenda was politics, a cyber attack simulation, CEO succession planning, and the economic outlook. All interesting, but the cyber attack simulation was chilling.
The simulation was run by Mary Galligan who was with the FBI for much of her career. She’s an expert in crisis management having been the supervisor of the FBI investigation into 9/11 and she was the commander on the ground in Yemen following the attack on the USS Cole. She’s now at Deloitte.
The simulation was an attack on a pharma company that sells generic drugs online and through stores. The attackers, #Hackme, gave the management team 11 hours notice before they would release confidential information (personal information of the directors and executives). They took down the stores and the web site 9 hours into the notice period; the company could not stop the attacks, or meaningfully respond within the notice period. It was on headline news before the notice period was up because it leaked. It was based on a real case. The simulation was the executive team (all drafted members of the audience) trying to figure out what to do against the deadlines.
And so... the learnings were led by Mary Galligan at the end.
What Directors should now understand about cyber attacks and how to respond:
1. You must have a plan
- do you have a plan for how to respond to a cyber attack?
- do you have a plan and has the management team practiced it?
- who will run the response, who will run the company?
- you must assume you will not get enough information in the time you need it to respond, so you must have a crisis response plan
- you should also assume you will get incorrect information, even from your own IT who will be scrambling
- map out “what will happen if” so you have response scenarios for the things you can imagine, but also have a process to respond to the things you did not imagine. Don’t only do scenario planning because the type and scale of attacks is changing fast. Enough companies have paid of Ransomware now that it has grown exponentially in the last 60 days
- the tail of a cyber incident is very long, prepare for how you are going to trade off the stress between team members
2. Know the stakeholders
- who do you need to notify and in what order?
- board, major customers, insurance, investors etc.
- what should be escalated to whom and when?
- keep it to the top (execs and directors) - must assume if ANY employees know it will leak - this is human nature (stressed this applies to all crisis management). The existence of a cyber attack typically leaks within 2 hours.
3. Directors responsibility
- to have done their duty to ensure the company has prepared
- to ask questions, review the plan, ensure management has practiced it
- review the bill going into the senate that would require every board have a cyber expert on it - but it mat not pass because there are not enough cyber experts in existence today to implement it so pay attention to the SEC’s opinion on the issue.
4. Extortion events are on the rise and are increasingly not about money but about moral/ethical issues. “hacktavists” and most events fall into one of five types:
1. Stealing information or IP
2. Disrupting operations
4. Destroying software and hardware
5. Releasing confidential/personal data (of the directors and management team)
Altogether eye opening and a rapidly developing area to watch! These photos are from the simulation.
Friday, May 13, 2016
I am not a shrinking violet. I am confident and speak my mind. And yet there is a behavior that, unless I am really determined, makes me go quiet: men aggressively, deliberately talking over me.
I’m in a meeting making a point the prospect does not like. He raises his hand (shows me the palm) and starts to talk in a loud, dominant fashion. He mansplains to me. I listen for a while, then try to politely interrupt, but it’s useless. He’s aggressive, determined to dominate, and rude. The bully in the workplace.
I’m at dinner with a friend. He’s mad about something and is determined to speak over me to prevent me making my case. As I speak he puts his hand out onto my wrist, holds it down and as every time I try to speak he speaks over me. Again and again until I give up. I can’t think of a way to be heard without being downright rude. I get mad. I go quiet (for a moment).
I’m in a board meeting and we’re discussing the need for diversity. And one member insists on mansplaining to me that diversity is not an issue at the company. I’m the only woman in the room, meeting after meeting, but I get explained to me why we don’t need another diverse board member. And when I speak I’m not listened to because he assumes I have an agenda. I do, but it’s the agenda of good governance.
I’m fed up of it, but I know I am going to keep experiencing the behavior. (Some) men trying to dominate women by talking very aggressively isn’t going to stop in my lifetime. So I have to deal. I talk a tough game. 3 years ago I was so mad I wrote a short, cryptic post on a day when only I knew why I was so mad. Titled Enough. But it’s never over. So I just have to put my big boys pants on and stride back out to change the world a little bit every day.
Thursday, May 12, 2016
It’s always nice to talk about all the things you can do right in your career and in the office, but sometimes it’s worth focusing on what you should not do because it’s so hard to recover.
There are two ways I have seen people break trust in the office that are almost always fatal. They are not the only two, of course, but when they happen it’s always a surprise to me because these mistakes are always visible - whether you think they are or not.
1. Make, and stick to, a bold faced lie
This mistake is often about the use of information. You, the manager, share a piece of information with Angela. Maybe Angela sits in a meeting where she hears it, and you stress in the meeting how confidential it is, or maybe you need to share the information with Angela so she can do her job. But, for whatever reason, Angela just cannot keep the information to herself. She shares it with John. Maybe she shares it because it’s just too juicy not to, or because it gives her sense of power to show John that she has the information, but once she does it’s out.
John is shocked by the information and asks his manager, Bill, is it true? Bill asks him how he heard and John tells him, and shows Bill the text Angela sent him. Bill calls you to discuss the leak. So you, the manager, know the source. You confront Angela, and she lies, and sticks to the lie. She doesn’t know you have evidence so she won’t back down.
This is a real scenario I experienced, and it’s not unusual. In a recent seminar on cyber security an FBI instructor told us that in the case of a security breach the average time to leak is 2 hours because employees cannot sit on the information, but they deny it because they are afraid. Decisions like layoffs and reorgs which affect people’s lives spread fast, as do knowledge of in-office sexual relationships.
But as the manager, once you have an experience like this with an employee, will you ever trust them again? If you know they will lie like that? Probably not.
2. Break a serious promise
Strong teams are formed on human relationships. Trust, relying on one another, knowing that you have each other’s back. And so, at times, employees make commitments to one another. A commitment to stick with a project until it’s done, not matter how hard it gets. A commitment to stay on the team through thick or thin until the mountain is taken. A commitment not to lie to one another. A commitment to take on the customer travel for the team because they need to focus on the project within HQ. A promise to protect someone’s job when they go on maternity leave.
Jeff is leading a small team taking on a significant challenge for the company. He knows it’s going to be hard, and he’s worried about it before, but he commits to his manager and his team that he’s going to see it through. He won’t quit on them and they’ll win together. A month later he gets a better offer and quits. He’s an important player but do you try to turn him around?
When someone breaks an explicit commitment/promise to you, or to their team, would you ever work with them again, or give them a reference? Probably not.
Everyone is human, and everyone slips up sometimes. And it’s not only early on that people that make these mistakes, but experience has taught me that age has nothing to do with breaking trust in the office. And so what do you do if you make one of these mistakes?
My advice is as soon as you realize you have made one of these mistakes you come clean. Go to the person you have betrayed, tell them everything, and sincerely apologize from your heart. Don’t try to explain it away, or explain why you think there were extenuating circumstances, or why your actions were really OK but you got caught. Just take the blame squarely on the chin and, if you believe can, make the commitment to never make that mistake again because you understand the cost to their trust in you.
Trust is fragile. It takes time to build and, once broken, can be very hard to rebuild. Admitting your mistake is a good first step to rebuilding trust.
Tuesday, May 3, 2016
15 years is a milestone I think. Short enough that I still remember, long enough that is seems far in the past.
We took Simplex public 15 years ago today. May 3, 2001. It was the culmination of a wild ride, and the beginning of another. Going public is a rite of passage. It's not a birth (founding a company), it's not a marriage (M&A), it's not a death (shutting down) so maybe it's like a bar mitzvah or confirmation - a rite of passage into adulthood. You take a company public when you are large enough that you want to fund the company into the next phase of growth on the public markets, and you want to provide liquidity to your investors. In 2001 that meant revenue of about $50M was needed, profitability, and steady, predictable growth which we had. We loved our company, and we were proud of our technology and our customer relationships.
With the Simplex IPO we threaded the needle between two significant market crises. In April 2000 the dot com bubble burst. We were not a dot com, we were a real company in the semiconductor space selling very nerdy software to chip designers. We filed our first S1 on September 11, 2000. Yes, 9/11 but a year earlier. (Actually we sent the docs to the SEC on Friday Sept 8 but we missed the cutoff so the filing date was 9/11).
Even by Sept 2000 there was little appetite on Wall St for a tech IPO because everyone had been burned by tech valuations based on a faddish bubble. But by late March 2001 we still needed cash to keep growing (we were opening international offices and hiring people behind our growth). I met with Larry Sonsini and Frank Quattrone (both kings of the Valley at the time) and we all believed we could price the deal. So we went on the road.
One of the most intense experiences of my life. 3 weeks of meetings 7-8 meetings every day. Paris, The Hague, London, New York, San Francisco, New York, Chicago, Minneapolis, Dallas and finally Houston. I drank too much vodka and took smoking back up for the 3 weeks (I did quit again at the end thank goodness). I lost 12 lbs in 15 days because I was not eating much. It seemed as if I was always presenting over breakfast and lunch so when was I going to eat?
And then, on May 2, in the late afternoon in Houston, we priced the deal, sold 4 million shares to CSFB, brought in $44M in proceeds for Simplex and hopped on the private jet to New York to be there for the market opening the next day. I slept on the plane, but not much when I got to New York.
May 3 was a round of interviews. Radio, Bloomberg TV, CNN's finance network at Nasdaq, and time on the floor with the CSFB trader who was making the initial market in SPLX stock. We opened at $12 and closed over $21. The book was 11X over subscribed and we were one of the very first tech deals to get done successfully in 2001, opening up the market for many more that had been waiting. Maybe we priced too low, maybe not, there was no way to know because the market was so skittish.
But, of course, we were only public for 4 months before September 11, 2001 hit. The market collapsed, our customers delayed orders and our stock dropped to $8. A violent roller coaster is too gentle a term for what this felt like. The gripping stress of how to make sure the company, our employees and our customers were OK. When Cadence approached us to buy us in January 2002, a deal we eventually closed on June 2, 2002 for $300M, it was the right outcome for the company. As one of my board members told me "there's a war coming, you are too small to survive it".
Thursday, February 4, 2016
Thinking of starting your own company... or you're already in it? There's a fun new self-help book out for entrepreneurs called "Build Something Great!: Fifty Best Tips for High-Tech Startups" that is a must read and excellent reference book for anyone wanting to win the first time.
Written by two of the Simplex founders, professors Resve Saleh and David Overhauser, it boils down valuable startup advice into 50 tips on how to build your own successful venture.
And yes, I admit I'm biased since Resve and David hired me to be their CEO. But we learned a lot together as we built a world class team and important technology family into a really fun company and a very successful IPO.
The book is full of useful and easy to consume advice on the steps you'll take in building your company. As Aki Fujimura, who was on our team and COO at Simplex, says in his foreward:
"There are a thousand ways to fail and only one or two ways to succeed. Trying to learn what not to do from a failure only makes it 1/1000th less likely to fail again. We all make plenty of mistakes of our own. We can learn from failures in real life without reading a book. The only way to learn from a book is to learn about what leads to success. The 50 tips here will guide you to help make your company more likely to succeed."
The book is available on Amazon in both paperback and Kindle formats.
Monday, January 25, 2016
Activists have been on the rise over the last few years and it depends who you ask whether they are agents of the devil or the good guys just driving boards to create higher returns.
Some activists are now very high profile as the whole area of shareholder activism grows. You've got the attention getters like Dan Loeb of Third Point. His signature is pithy, hyper critical public letters to boards eviscerating management and often demanding a change, as he did at Yahoo. You've got the old salts like Carl Icahn who invests his own money and has been at the aggressive game of taking on companies for 30 years. And because the technique and approach is growing you've got any number of small firms getting into the game.
Activists are basically trying to accelerate a return from an investment strategy by engaging (forcing) the company into a discussion of what they should be doing that they are not doing. Replace the CEO, spin off a division, shut down a piece of the business, buy back stock - whatever the strategy is that they think management and the board are not doing but should be doing. They can be tough to take because the best ones do extensive research, they are experienced smart investors, and they are probably right more often than they are wrong. The board and management may even know it and agree, but the activist is forcing the timing of the discussion.
And because they are often driving for a different use of capital (such as buying back stock or selling the company rather than investing in more speculative, long term R&D) and they are typically aggressive (in your face) and gutsy (they buy at least 5% of the company's stock), and they are trying to make things happen on a faster timeline (than is natural for management) they have a reputation of being short timers.
But when you look at the data of who's holding the stock that is not necessarily the case.
I had the pleasure of being on a panel titled Shareholder Activism: The Good, The Bad or Just Ugly at Stanford Law School last week. The panel was moderated by David Berger who is a litigator at WSGR, and the other two panelists with me were Steven Davidoff Solomon who is a professor of law at U C Berkeley and writes a column for the New York Times and Jesse Cohn from Elliott Management. Jesse is another very high profile activist known for disrupting companies like Riverbed, EMC and Citrix - and it was fascinating to listen to his side of the world and how he views companies and their boards.
The panel was held by SVDX and so the general content is not to be discussed outside the room - but a fact came up that challenged everyone's assumption that activists are operating on a short time frame. The fact is that the average hold time of Elliott's positions is 2.5 years. It takes time to get into a company, and to drive the change they want. But, in contrast, the average holding period for a mutual fund is now 270 days. 270 days! That means most mutual funds are holding a stock for less than a year, and quite a bit less time than the activist who is trying to get the company to take action.
Also, once the activist holds more than 5% it is public knowledge - they have to file their position and typically when they do they are open about what they think needs to change. So while they may disagree with the company on strategy, at that point their financial objective is the same as management - increase the value of the stock.
There's no question the rise of activism increases the stakes for boards and management, and it has good and bad actors, and good and bad strategies. But it's no more short term than your granny's mutual fund is, and it's here to stay.
Wednesday, January 13, 2016
Customers are usually really fun to work with, but sometimes you run into a difficult one, a classic "tough customer". So what do you do when you have to work with a customer who is a true bully? You know, the customer who throws his weight around, talks over you, raises his voice if you push back, disrespects you and insults you with aggressive behavior.
I've dealt with my fair share of bullies over time and learned the following approaches to defusing the bully behavior. Note, all these tips refer to "him". I have never encountered a female bully (I am sure they exist), but then again, I have not worked with many female customers, so I will say "him."
1. Get to know him
Most bullies have a hard time keeping up the aggressive and domineering behavior once they are on a familiar, social ground with you. Not always, but often. Invite your customer out to lunch with no agenda; don't talk business, just get to know one another. Be sure to ask lots of questions. Most bullies are insecure, so make him the center of attention. Ask about his family and interests, and listen attentively. You are more likely to enable him to relax around you, and you'll learn something new about him. This knowledge will help you connect with him in the future.
I had a customer in Arizona many years ago who was awful to deal with--short, angry and aggressive in every meeting, convinced, we, (the vendor), were trying to mislead him. By investing the time getting to know him I earned his trust, and we sold a significant contract to him. In the process I learned what he was deeply worried about; buying the wrong tool and losing technical credibility.
A word of caution--you need to be genuinely interested. If you are faking it your customer will know and you'll lose his trust.
2. Don't take his behavior personally
As I said, most bullies are insecure. If you watch them carefully, you will notice their behavior is no different towards you than it is towards other people. They tend to also bully those below them in the power structure. So while their tactics may push your buttons, or make you so mad you want to punch something or cry, (this had happened to me more than once), remember it is not about you. It's about him; his fear, his need to assert himself to feel better. Take a step back from the onslaught, take a deep breath, and let it go. This small gesture will turn into a big investment in the long run.
3. Get to know his boss and peers
This is your insurance policy. In most organizations the other people in his company will know he's a bully. They usually won't admit it, but they know. They might have a culture where it serves them to keep him around, or maybe they don't let people go, (more popular in the 80s than today). Find ways to meet and develop professional relationships with his peers. Discuss areas of common interest such as a mutual customer. Make sure you get to meet his boss, even if he keeps telling you that you don't need to (which is classic blocker behavior). This way you establish your own credibility, independent of how he portrays you. You will both gain from what you learn about the business as a result: you will be more useful to his company because you'll understand more of their needs, and your knowledge will help you cement a relationship with him when you are.
4. Stand your ground
With all that said, you do not have to cave and agree just because someone raises his voice, talks over you or becomes aggressive with you. If you are in the right on a discussion point, or you need your customer to understand an aspect of your work together, hear him out and then gently assert yourself. Let him talk, let him bluster, wait him out. Don't disagree or cut him off or he'll increase his bullying. Think tai chi in your head. Let his energy flow over you, and then, when he gives you an opening, tell him what you believe he needs to hear.
5. Move on
Finally, sometimes you are just incompatible with a bully. Either you trigger something in him, or he triggers something in you. If you've tried building a relationship, you've been professional and diligent in your service of the customer, and still he's a bully then maybe you are not the right person to work with him. It's important to recognize when you can succeed in changing someone's behavior towards you and when it is hopeless. And if it's hopeless, stand down and ask your team to put someone else in instead.
Of course, if you are the CEO this is almost impossible. But even so, you can usually find someone compatible to front for you, someone you can bring into judicious scenarios and protect you from your bullying customer, and protect your customer from your temper!
Repost of my latest posted in Inc today
Thursday, December 17, 2015
I’ve been conditioned from an early age that what I look like to men matters. My mother was one who would put on lipstick at the time she knew my father was coming home from work and, based on 50+ years of conditioning, I have a part of my brain which worries all the time about what men think of how I look.
I had a chance a few days ago to remind myself of just how ridiculous this brainwashing is. It was Sunday and I had spent the whole day in sweats. I’d been to meet my best friend for coffee (she was also in sweats), I’d been to visit Bret’s mom (her Alzheimer’s is so advanced now she is just pleased to see me and doesn’t comment on my looks any more), I’d decorated the house for Christmas with my family and cooked dinner. A typical busy Sunday.
In the late afternoon my husband Bret had been watching the weather and decided to drive to Tahoe after dinner to snowboard; he coordinated with a friend to meet at the house and drive up together. We had roast chickens in the oven and lots of food and so I invited the friend to dinner.
And this is where my brainwashing kicked in. I found myself standing in the kitchen worrying and wondering if I should go and change. I did look like crap, I confess, but I was reasonably clean. Why did I care? Why such a concern that a man is coming to dinner and I am worried what I look like. If it had been a female friend it would not have even occurred to me. And I know for certain the friend did not care.
This sense of the need for women to please men and to worry about what they think is drilled into my brain and even though I am conscious of it now it frustrates me. The continuous voice in my head is perfectly captured in this powerful short video of the things women hear, over and over, throughout their lives that diminish them. Worth a watch whether you are male or female.
I know most of my male friends simply don’t have the same toxic voices in their head - and many of them, my dear husband included, don't care what they look like 99% of the time. I’m determined to learn a new way of thinking about myself through my own eyes, not the eyes of the men around me.
It can be hard to find that first job, and sometimes you need to take
whatever you can get to start your career. But whether it is your very
first job or a job search in the first five years of your career, there
are three critical things you should not settle without.
1. A great manager
Having a great manager early on will by far create the strongest impact toward your long-term growth. Working for someone who is talented, generous with their time, and willing to teach you can be a powerful jumpstart. And working for a turkey is both demotivating and a waste of your time. Remember, for every way to do something well, there are a thousand ways to do it badly. Every year counts early on, so partner up with a strong leadership team, make sure that you are efficient with time and sponge every skill possible when you are young, hungry and hopefully don’t need much sleep. Strong management will steer you onto projects that stretch you and teach you, and catch you when you stumble. Poor managers come in a variety of flavors: micro managers, absentee managers, inconsistent managers, and the list goes on, but they share one characteristic, they deprive you of valuable learning. So pick wisely. Interview your potential manager so you get a sense of how much they will help you grow.
Just as a rising tide floats all boats, finding a thriving environment early on will create an opportunity for advancement. Think about the people who landed early in companies like Google and LinkedIn. Were they any smarter than their peers who joined loser companies? Probably not. But the diligent, hard-working ones took advantage of the extraordinary emerging opportunities to grow their own careers, fast. Even in modestly flourishing/booming times, you will find that growth creates opportunity. Early in your career, you should be alert for new tasks, projects and be sure to volunteer and raise your hand up when companies are searching for aggressive new talent. Take on new challenges, be a problem solver and stretch your skill set. Stagnant companies make it difficult to do this, so stay alert for rising tides.
3. Visibility into the business
Too often I talk with people early in their career, and they don’t understand the Profit and Loss principles of their company. Being able to distinguish between decisions that help or hurt the business is pivotal. Insist on acquiring visibility of cash flows from customer reports, sales deals, marketing expenses and product development costs. Looking at the cash trail of a company early on is essential to understanding how the company makes money. Whether you are the egghead designing a new product (which will make money), or you are the inside sales rep selling (bringing money in) or you are the accountant working on the P&L (watching the money) you want to see it and understand it. That way, later in your career when you are making decisions that directly impact the growth, profit or loss of your own company, or the company you work for, you will have a visceral feel for how the financials of a company actually work. And if you don’t understand basic finance in the first 5 years of your career take classes until you do. The knowledge is well worth giving up a few evenings for.
Often, I am contacted by people who want a little coaching as they start their careers or who are looking for a change in direction. And so often I am asked my opinion about whether they should go and get an MBA. There are some circumstances where an MBA is worth the time and money – for example if you want to switch from engineering to finance – but in most cases it isn’t. It’s my belief, after managing so many talented people both with MBAs and without, that in most cases these three things are fundamental: a great manager, a growing company, and getting yourself familiar with the money trail.
Wednesday, December 9, 2015
Reminders of death are everywhere, but never more so than exploring the past in churches and graveyards, and especially in Italy.
Before I went to Naples recently I understood the phase "See Naples and Die" as an encouragement to enjoy everything Naples has to offer, and posted in excited preparation. So death was on my mind, but I found it everywhere as a reminder of our mortality, smiling out at us from endless skulls.
And I mean endless. Consider the Fontanelle cemetery. Four millions skulls. Yes four million! Stacked up logically and beautifully within deep tufa caves, the relocated bones from hundreds of years of plague and cholera. And yet it is a fascinating and beautiful site. It's in a dangerous part of town, Matadei, where the locals told us the police are afraid to go, but being English we went anyway.
Deep at the back of the caves we learned about the cult of skull devotion. Locals adopt a skull and care for it, bringing it flowers and gifts and asking for favors. Some skulls are even celebrities with small piles of offerings including rosaries, candles, food, books, ribbons, hair, everything a well dressed skull needs.
But it didn't stop there. Everywhere we went we were reminded of our mortality through the art of skull symbolism. From the crypt under the Chigi chapel in Santa Maria del Popolo in Rome (famously featured as a murder site in Angels and Demons)
to the beautiful inlaid marble and floor brass of the Church of St Luigi del Francesi
Even the Romans in Pompeii (buried in AD79) remind us that death is the great leveler between rich and poor: Memento Mori - a fine, detailed mosaic you can see in the Naples Archaeological museum.
All good fun, but probably the most dramatic reminder we found was not in Italy at all, but in Westminster Abbey in London at the grave of Lady Elizabeth Nightingale who died young at 27. Her grave was erected in 1761 (same approximate era as the Fontanelle cemetery). Death comes lunging out from his underworld to throw a spear at the young lady to kill her! Macabre high drama - and distinctly creepy.
I'm not usually a morbid person, but after a week of endless skulls, images of dying saints, image of the dying and dead Christ, I had to find some humor in the situation. And as the immortal Maximus (Russell Crowe) says (in Rome) in my favorite film, Gladiator: "Death smiles at us all, all a (wo)man can do is smile back!"