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December 24, 2008

Reboot or Retool?

Today's OpEd in the New York Times by Tom Friedman describes rebooting America.  He's frustrated with the lack of investment in infrastructure in the US, as well as our lack of focus on key trends, such as energy efficiency.  It's a great read.

But, reboot isn't right.  We don't just need to restart, we need to adjust the mindset.  I've been frustrated by the anti-intellectualism in the US.  We elected a President that 'we wanted to have a beer with.'  Forget that.  I want the smartest person we can find, with the judgment to make the really hard decisions.

I think we need to retool.  We have to be ready to do things differently, and go back to valuing education, achievement, diversity, and equality of opportunity.  America's greatest strength in the modern world is our diverse population.  We should be able to understand more of what is going on elsewhere because we have people from almost everywhere right here in the US.  And, we should welcome more of them.  We need to improve the education system in our country and give more awards to scholars and fewer awards to actors and athletes.  We need to remind the world and ourselves that we stand for liberty for all and open opportunity.

I'd love to see musicians, actors, and athletes start to revere people of academic achievement.  We need to de-emphasize financial engineering and go back to real engineering.  This starts at the top.  I hope we have a President that will set that tone, and I hope that more leaders in our country will do the same.  And, each of us can do our part, particularly as we set the values of our children and influence those of our friends and family.

Happy holidays!  Let's get onto the right path in 2009.

December 22, 2008

Bill Belichick - Personality?

For those of you who think that Patriots coach Bill Belichick has no personality, check out this video from NFL.com.  It is behind the scenes footage of the Patriots preparation before their game a little more than a week ago against Oakland.  You can see Belichick joking a bit with the players and talking with Matt Cassell after the death of his father that week.  He shows a lot more than you see in a typical interview where he's pretty stoic.

Update - the URL for this video changed from my original posting.

More on Trust but Verify

My post from last week on lessons an entrepreneur can learn from the Madoff mess was picked up in Scott Kirsner's column in the Boston Globe today.

One additional aspect of how an entrepreneur must 'trust but verify' came in the comment from my friend, Angelo Santinelli:

...I agree with your advice to entrepreneurs, but want to add that Trust but Verify extends into the entrepreneurial organization itself in particular as it relates to direct and channel sales. The pressures on salespeople to make their numbers can cause them to be overly optimistic at a minimum. This also applies to development, where the readiness of a product can be difficult to measure in some organizations. What it all boils down to is the need for policy and procedures to gain some balance between Growth, Profit and Control.

Good point!

December 19, 2008

Boston-Power on NPR

The coverage of Boston-Power's announcement of HP as a customer has been fantastic.  One highlight is yesterday's interview on NPR.

Like one of the commenters on the NPR web site, I disagree with the industry analyst on a consumer's willingness to pay $30 for a battery that is guaranteed to last for 3 years.  Although consumers look at the bottom line cost, anyone who has had to purchase a replacement laptop battery (usually $100+) would probably pay $30 for one guaranteed to outlast several normal batteries.  Obviously, some customers will choose to stick with conventional batteries, but Boston-Power hopes to set consumers expectations that they should expect their laptop battery to ALWAYS last as long as the laptop!

December 17, 2008

A Holiday Smile

Here's a great holiday video from First Round Capital.  The story behind it is on Josh Kopelman's blog.  I challenge you to watch this and not smile.  It's a great way to cheer up in spite of the difficult market.  Happy Holidays!

 

Pete Glyman on CNBC again

My friend, Pete Glyman from Geezeo, is going to be on CNBC's On The Money again tonight at 9 PM EST.  You can read about it on the Geezeo blog here.  Here's a clip from Pete's previous appearance.

Disclaimer:  I have a small equity stake in Geezeo.

December 16, 2008

Lessons from the Madoff Mess

The Madoff Mess can provide some important lessons for any investor.  And, every entrepreneur is an investor of either their own money or, more valuably, their time.

Luckily, there virtually no evidence of outright fraud in the venture capital business.  VC deals are well documented, venture funds are generally audited by top-tier accounting firms, and almost every venture-backed deal is also audited by well-established firms.  So, the lessons learned aren't about fraud, but about verifying the facts.

"Trust But Verify" is often attributed to Ronald Reagan.  He certainly used it very often.  And, these are good watchwords for every entrepreneur.  Some examples:

  • Don't just trust your VCs reputation.  Verify it through your own diligence, including blind reference checks and discussions with executives of companies that didn't work out.
  • Don't trust your VC when she agrees to some additional terms that aren't on the term sheet or promises to 'take care of you' if you are let go.  Verify every deal and agreement with terms in writing.  You never know if the person you make the agreement with will be the one you have to enforce it with.  If the deal is really a deal, no one should object to putting it in writing.
  • Don't trust that your VCs will fund your company if you can't raise money elsewhere.  VCs will always promise support for your company, but that isn't the same as wiring funds into your account.  If the VCs are promising to backstop your company with a bridge financing in the event that you can't raise money, get that agreement in writing, including the terms.  Once your company is actually on the brink, the terms may change.  But, if you have a prior agreement, hopefully it will be honored.
  • Don't trust the commitments that are promised by customers and partners.  Follow-up with emails confirming, or formal contracts if appropriate.  It may seem overly formal during more friendly relations, but the actual commitment may give you some moral high ground if the going gets tough.

From the looks of it, Madoff's investors (and "friends") trusted him without verifying his results.  It seems like no auditing of his transactions was done.  When you are dealing with 10s and 100s of millions of dollars, you have to verify the results.  A true friend or honorable money manager would never object.

December 13, 2008

Dilbert's take on the mortgage mess

Today's Dilbert shows a version of the thinking that got us into the mortgage mess.

 

Dilbert.com

December 10, 2008

Boston-Power video on NECN

Boston-Power's HP announcement was covered on New England Cable News (NECN) today, including a guest appearance by yours truly.  See where it all began!

 

Boston-Power announces HP as a customer

Boston-Power has announced HP as its first customer for its laptop batteries.  HP will offer Boston-Power batteries as part of its Enviro series of environmentally friendly products.  The Boston-Power Sonata batteries are made from more environmentally friendly materials, making them the only rechargeable Li-ion battery which has earned the Nordic Ecolabel.  And, since the Sonata batteries will maintain their charge capacity for three years, HP will offer an unprecedented 3-year warranty on these batteries.

The Enviro replacement batteries will be available for many HP notebook models, beginning in early 2009.

Wall Street Journal coverage of the story is here.  A more detailed story is in Xconomy.

Boston-Power is a great study in perseverance.  HP has been a vocal supporter of the company from the start.  However, getting a new battery approved for use in an HP notebook is no small task.  Not only must the technology be validated, but the long cycle-life benefits must also be confirmed.  Then, mass production capabilities have to be proven in order to supply a large customer like HP.  And, of course, it is much easier to describe scalable, high-quality, manufacturing than it is to do it, and to do it to the satisfaction of a demanding customer like HP.

Kudos to the Boston-Power team for realizing the first part of their vision.  They are the only US-developed technology supplier to be approved for notebook sales, arguably one of the most demanding applications for Li-ion batteries.  And, to have that realized with a top-tier customer like HP is something to be proud of.

Disclaimer -- I am an indepdendent director on the Board of Boston-Power.

December 08, 2008

Sports Update

My brief take on what's happening with the Patriots and Celtics:

  • The Patriots gutted out a win vs. the Seattle Seahawks yesterday.  The Patriots have had a lot of injuries (so have the Seahawks), but the Patriots remain in the hunt for a playoff spot.  It was a little frustrating watching Seattle move up and down the field during the beginning of that game, but it was very impressive that the Patriots slowed them down for the most part in the second half with only 4 of the defensive starters they had at the start of the season still available (Seymour, Mayo, Vrabel, and Hobbs).  If the Patriots are going to make the playoffs, it probably has to be as a division winner and not as a wild card.  The best would be if the Patriots win their last three games to finish 11-5 and the Jets and Dolphins final game against each other ends in a tie!  This would give the Patriots the division.  Short of that, the Pats need each of them to lose once since the Patriots would probably lose the tiebreakers against both of them if the teams end up with the same record.
  • The Celtics look great.  I think that they're better than last season.  So far, they have matched the fast start from last year.  And, this year, Ray Allen is much more a part of the offense.  It's great to see Ray drive in for those medium range jumpers.  And, I think that Rondo and Perkins have continued to improve.  The Celtics, Cavaliers, and Lakers seem to be far and away the best teams so far this season (and the Celtics have already beaten the Cavs once).  If you like to watch exciting basketball, give yourself and holiday present and watch the Celtics vs. the Lakers at 5 PM on Christmas Day.  I'm sure that the Lakers will have something to prove, and the Celtics should be up to the challenge.

In the Globe again

Scott Kirsner was once again kind enough to mention one of my recent posts in his Globe column today

In re-reading my original post, one thing I would add is that you not only have to build a good team, but you have to maintain it.  Team dynamics are organic -- people change and companies change.  As companies grow, they often outgrow some or all of their management team's capabilities.  So, the CEO and Board have to be vigilent about making sure that the team meets what will be required of the company in the future.  And, the CEO has to make sure that the team works well together.  The Board has the tricky problem of assessing whether the CEO is the problem in a team that isn't working well.  This is tough because much of the Board's information about the company comes through the CEO.  That makes it essential for the Board to maintain contact with the entire top management team.  If a CEO is wary of this, that's a red flag, too.

December 06, 2008

Looks like every bank can get a bailout

According to BailoutSleuth.com, my friends at Silicon Valley Bank are recipients of some bailout money.  Silicon Valley Bank is a great partner for many start-up companies.  They provide banking services as well as venture debt.  Silicon Valley bank is also our bank at Sempre Management.

But, I don't understand why we (as taxpayers) are investing in Silicon Valley Bank.  BailoutSleuth says that SVB has received $235M despite having $27M in profits (the $21.3M that BailoutSleuth mentions is from the prior quarter, Q2).  After a quick look at their financials, it seems that the biggest difference is that they are not making as much money from investment gains as they did a year ago (no surprise in this environment).  Their balance sheet looks as strong as ever.  And, since they are primarily a business bank, I don't think they got involved in any mortgage backed securities.

According to the company's press release on the receipt of this bailout (TARP) money:

SVB Financial Group's Tier 1 capital ratio of 9.94% at September 30, 2008, already exceeds that of a "well-capitalized" institution. On a pro forma basis, the new capital would have increased the Company's Tier 1 capital ratio on that date to approximately 12.79%.

It's great that SVB is in such good shape.  But, why does the government have to invest in them to make them stronger and to fund their growth (as their announcement says)? 

I think that the bailout is going way too far.  SVB isn't going to collapse.  And, if it did, I have a hard time believing that our banking system would go down with it.  It just seems now that we are in the business of investing in just about every bank.  Since I'm an owner now, I guess I can order around our account rep!

December 04, 2008

Battle of the Tech Bands 2

My friends at Xconomy are sponsoring a tech networking event that is also raising money for some good causes.  Check out Battle of the Tech Bands 2:

A tech networking event that really rocks. Musicians from New England’s most innovative companies play their geeky hearts out—you pick the winners!

Date: Thursday, January 22, 2009.

Location: Middle East Restaurant and Nightclub, 472 Massachusetts Avenue, Cambridge, MA.

Time: Doors open at 7:00 pm.

Tickets: $20 in advance, $25 at the door.
Half of all ticket proceeds will be donated to
Science Club for Girls and Community Music Center of Boston.
Snacks are included, and we’ll even buy you a drink or two.

And, for those of you ready to play your hearts out:

INFORMATION FOR BANDS

Who’s eligible: At least one member of your band must work for a New England-area technology or life sciences company or a venture-capital or private-equity firm that invests in technology. All levels of bands are welcome—from club veterans to garage hackers. All musical styles are welcome. Bands that entered Xconomy’s first Battle of the Bands in January 2008 are eligible for Battle of the Bands 2.

Prizes: Prizes will be awarded to the Audience Favorite band and the Most Innovative band. Prizes include: Free retail service from Nimbit, a Framingham, MA-based direct-to-fan sales and marketing platform. Additional prizes to be announced.

Logistics: Up to six bands will compete for the prizes. Each band will get 15 minutes of play time. Bands can perform as many songs as they like within this 15 minute period.

How to Enter: If you and your band want to join the battle, please send an e-mail to techbands@xconomy.com including following:

  • The name of your band
  • The name(s) of the technology, life sciences, or investment firms at which your members work
  • Names of all band personnel and their instruments
  • Band leader e-mail and phone contact information
  • At least one MP3 demo recording of a song performed by your band
  • URLs for your band’s website and/or MySpace page

Deadline: We must receive your entry by midnight on Friday, December 12, 2008.

Sounds like a great time, for a great cause!

December 02, 2008

It's Globe Santa season

 

Those who have known me for a while know that I am a big supporter of Globe Santa.  It's one of my favorite charities because it focuses on children and all of the money you donate goes directly to buy toys for needy kids.  The Boston Globe pays for all of the administrative costs.

I'm sure that many of you have seen the joy in a child's eyes when they receive a gift during the holiday season.  Now, imagine how crushing it is for a child who has to miss this.  They know that others are getting gifts.  But, due to their family's misfortune, these children will get nothing.  That's where Globe Santa comes in.  They receive applications from needy families (vetted by social workers or clergy) and deliver toys to those kids in time for the holidays.  Each year they help over 29,000 families and 57,000 children in 167 communities around Boston.  These children get some holiday joy and the knowledge that someone cares about helping them.

Please join me in giving to Globe Santa this year.  The economic troubles make it more important than ever.

December 01, 2008

What Makes a Good Team?

With all the political emphasis on Obama's 'team of rivals' approach, I've been thinking about what makes a good team.  Politics is different than entrepreneurship, however.  Lincoln had to appease various constituencies to maintain support for his policies.  As the country was at risk of being torn apart, with him as President but relatively unknown, he needed support from other power holders.  In a company, it's very different.

On a corporate team, you want to have representation from various types of experiences:

  • In your market, and from outside your market
  • In companies your size, and those that are larger (or smaller)
  • People from various companies, and not too many from any one company
  • Independent thinkers who aren't afraid to express their opinion
  • But, also people are are able to 'disagree and commit' if a decision doesn't go their way

Personal chemistry is also critical.  You have to enjoy working with the people on your team, but you don't have to be their friend socially.  In fact, I think it's better if that's not the case.  If you become personal friends, you can lose objectivity.  Be friendly, but not friends.

On a team, it's important to set the right culture.  Make sure everyone has a chance to be heard.  And, make sure that everyone's opinion is respected.  Team members want to feel valued.  However, once the leader makes the decision, that has to be followed.  A good leader is also willing to revisit decisions in light of new information.  You have to be flexible and have the courage to be right, even if you started off wrong.

The way that the leader operates will set the tone for the team.  I always expect very high ethics and integrity in any leader.  They shouldn't tolerate less than that from their team.  If a leader exhibits less than that, it sends a message to others that they are better served by cutting corners to get the 'right' result.  Before you know it, you have Enron.

Another important team dynamic is getting rid of people who don't pull their weight.  Although no one wants to see someone fired, knowing that poor performance isn't tolerated is actually a motivator for the strong members of the team.  It may scare poor performers, but you don't want them around anyway.  Rely on the input from your team in assessing team performance.  They will always know who is great (and who is poor) before you do.

There is no magic formula for the right team, but don't be afraid to hire team members who are even stronger than you are.  They'll make your company stronger.  Would you be worried about hiring someone who turns out to be so strong that they could become your boss?  If so, you probably aren't qualified to make the hiring decision yourself.  From the company's perspective, those great people will lead the company into the future.

What other approaches have you used to build a strong team?


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