A-B-E
Almost universally our best companies are constantly experimenting. This takes different forms in different parts of their businesses but the common theme is that every process, every page on your website, every communication to a customer is an opportunity to test and optimize. Sometimes this is chipping away at a mountain (small improvements that add up over time). Other times we see large jumps in efficiency (I had a company recently change some text on a landing page and see a 10% improvement in sign-ups to a white paper). The improvements are important – businesses become efficient over long periods of time and these efficiencies compound each other to create significantly better operational outcomes (and business outcomes). And even small improvements over long periods of time (and when combined with other improvements in the same flow) add up to significant changes. And it’s worth noting that optimization is a never ending process – even when you find something (like the landing page example above) that seems to make a big difference, that doesn’t end the experimenting. Tastes change and effectiveness of pretty much any page/email/process tends to go down over time. …
April 10, 2019· 1 min read
What’s a Fair 409A Discount?
Quick note: I’m not your lawyer. I’m not giving legal advice in this post. Back in the olden days of venture capital, company boards had wide discretion in pricing company options. As is true today, there was a requirement that options be priced at or above the “fair market value” of the underlying stock (otherwise there would be tax consequences to the optionee and sometimes to the company as well). However the board could determine what that fair market value was and, generally speaking, there wasn’t a practical way that these valuations could be challenged. Most boards did some level of work to determine the FMV of a company’s stock but generally options were priced between 10% and 15% of a company’s then preferred price (because common equity sits behind preferred equity there is typically a discount applied to the FMV of common stock to account for this “overhang”). It was and is imprecise science but – at least in the case of venture backed startups – there wasn’t much harm in an option being priced low. It was a benefit to employees and a slight value transfer from equity holders to option holders (generally speaking in M&A transactions the value of the aggregate option exercise ends up allocated across the rest of the cap table). In a funny way it also benefitted the IRS in terms of tax collections as employees were taxed on the spread between the option and the value of the stock on exit and since these shares were typically exercised at the time of an exit were subject to short term capital gains. Higher strike prices distributes proceeds away from short term gain tax to equity holders who more typically are paying long term gains on the value that was shifted (I’m skipping a huge amount of nuance and detail here but the above is a general representation of how things work). …
August 15, 2018· 4 min read
Friday Fun #5 – I have your friend’s phone
One of my all time favorites.
March 2, 2018· 1 min read
Friday Fun #4: Ordinals, Texas Style
Two of my partners are from Texas (Brad, which surprises many; and Lindel, which surprises no one). This article on the various ways of describing direction in Texas was hallarious. Who knew, “down”, “out”, “over” and “up” were directions…
February 12, 2018· 1 min read
What does it mean to be an “executive”
We have active and lively Foundry CEO and Portfolio Executives email lists. They are among the things that I love the most about the community we’re creating at Foundry. I love watching execs across the portfolio (who refer to each other as “Foundry cousins”) help each other out and share ideas. It’s an important reminder that great companies are created not by solo, heroic efforts, but by the collective force of entire communities. …
February 1, 2018· 6 min read
Focusing on Actions, not Results
I just had a conversation with an entrepreneur I’ve worked with for decades that resulted in an insight that I thought was worth sharing more broadly. We were talking about managing teams and in this case the challenge of getting some of his exec team focused on broader goals and the end result we’re driving for in the upcoming year (a big growth year for this business). The solution we outlined was to focus on actions (concrete, clear, definable) vs. the more vague set of results that we had been trying to align everyone around. We’re still driving to the same outcomes but the leap was too large in a couple of cases for people to get their hands around. By focusing on actions we moved a strategic conversation to a tactical one that each exec could internalize and the end of year results became the outcome not the driver, as they ultimately should be. Every journey starts with a step…
January 3, 2018· 1 min read
BREAK THE INTERNET TO SAVE NET NEUTRALITY
We have just hours. The FCC is about to vote to end net neutrality—breaking the fundamental principle of the open Internet—and only an avalanche of calls to Congress can stop it. So we decided to help “Break the Internet” on our sites. You can also support on Twitter, Tumblr, Youtube or in whatever wild creative way you can to get your audience to contact Congress. That’s how we win. Are you in? …
December 11, 2017· 1 min read
How Startups Actually Grow
We’ve all seen the growth curve on the left – all successful startups strive for a version of one. But in reality, the notion of a smooth growth curve actually masks how most successful companies truly grow. Our experience at Foundry suggests that if you blow up the growth curve you’ll find that companies grow linearly and that what creates the log curve is a series of small changes that either change the slope of the growth (it’s still linear, but now growing faster) or that “jump” the growth curve up (growing at the same rate but now from a high base). Examples of things that fit in the first category are changes in sales efficiency, successfully adding to the sales organization, establishing channel relationships that add predictable revenue, etc. Typically these are small and change the slope of growth only a bit at a time. But over time they add up. Examples in the 2nd category are generally either changes in product that increase pricing across the board or landing an outlier large customer. These tend to be bigger, more obvious, and less frequent. …
December 7, 2017· 2 min read
Reading Your VC Pitch Meeting
I’ve come to realize that many – most – entrepreneurs suck at reading pitch meetings. Frequently what I hear from a company CEO is completely uncorrelated to what I hear from the VC they were pitching. In thinking about why this is, the answer is actually relatively straightforward: VCs are predisposed to give good meetings. AND By being equivocal at the end of a meeting they preserve maximum option value. …
April 11, 2017· 5 min read
2 Productivity Hacks That Will Change Your (work) Life
I’ve been putting a lot of effort into enhancing my productivity. I actually hired a coach to help me with this (more on that in another post) and have changed around a LOT of my work life in an effort to free up time. I’ll write a longer post on a handful of tools that I’ve found that have significantly increased my ability to get work done, but I thought I’d share some low hanging fruit with everyone about the 2 things I did that have most changed my life. …
March 2, 2017· 4 min read