Control Freaks Are Us

Let’s face it, startup entrepreneurs tend to be “control freaks”.  I certainly have that tendency (Yes, that’s right, I admit I can be a control freak!).

The fact is that when you start something, sweating the details is important.  By sweating the details, you establish a culture that important details matter and also that the highest quality of execution is expected.  And sometimes, when the going gets tough, digging in is important to help ensure success.  We all know this will drive the team quite crazy, and you have to know when to let go go, but that is the topic for a future post…

Control Freaks vs Venture Freaks
Now, since most of us are all card carrying members of the Control Freaks Association (and the remaining folks don’t want to admit it) one of the biggest fears with losing control in a startup comes from raising money especially from venture capitalists (VCs).

So the question is once you raise money, can you be a control freak, or at least be in control of the company’s destiny?  Or will the VCs take control and end up running the company?

Deliver
Well, the answer is quite simple.  Deliver the results, and you are in control.  That’s it.   If you want to stay in control, give your investors a reasonable plan, and deliver the results.  The very last thing a good venture capitalist (VC) wants to do is run a company.

Now you may be sitting here thinking about your last board meeting when the investors were adamant about telling you what to do.  And yes, many VCs have their opinions, but at the end of the day, it’s your job to deliver the results.  And how you deliver the results is ultimately up to you.  And if you’re right and deliver, then, well, you are in control.

But if you’re wrong and don’t deliver results, then you should expect investors will get more involved and may ultimately fire you.  And truth be told, if you don’t deliver, they should fire you.  Just as you should fire anyone on the team that does not consistently deliver the expected results.

“You want to do what?!”
Let me give you an example of something that happened to me.  There was a time in the early days of Vontu, when we had missed our first and second quarter sales results.  And not a small miss, but a big miss.  At this point we had raised $15 million from Benchmark, Venrock, and USVP.  Needless to say the board meeting following the close of the second quarter was a little tense. And my proposal was that we needed to invest more money in sales and marketing as opposed to cutting expenses to manage our cash.

At first this proposal was received quite coldly – to put it mildly.  The general mood from the investors was to conserve our cash.  Yet, I believed that the right thing to do was invest.  We were getting very real and very positive feedback from the market.  We had concrete data on the number of product evaluations underway.  And we believed that our issue was not having a high enough quantity of prospects in the pipeline given the long sales cycle in closing large enterprise deals.

While the investors were wary, they supported the decision (or maybe they simply relented?).  I knew that if I was wrong, then I would be on a much shorter “leash”, and eventually possibly be fired.

Success breeds control
In this case, we over delivered on the next two quarters and caught up to the plan.  And that was the first step in building trust.  Over time the investors (and board) became even more trusting as we continued to deliver the results we promised.  In other words, I was in control.

Not in a negative kind of way, but by delivering results, there was trust and respect.  The board and investors gave advice and support, but ultimately we controlled our destiny on what and how we would run the company.

In summary, the first step for being in control once you raise money is to deliver the results. As a matter of fact, in almost any job you have, if you deliver, then you are in control.  And the fact is that VCs would rather have you deliver the results than run the company.  Same for a good manager. And of course, this makes all of us control freaks a lot happier too.

That being said, there is certainly the legal aspect of control in venture funded company from voting rights, to board representation, anti-dilution et al.  And that will be the topic for a future post.  And of course, as I’ve posted before, picking the right investors and board members is important too.

Thanks for reading.  Feel free to sign up for email updates on new posts (no spam…) or to the RSS feed.  And feel free to leave a comment or question.

Your email:

 

Information on pictures used in this post:
(out of) control freak cartoon on main page

http://www.tomfishburne.com/tomfishburne/2008/04/out-of-control.html

Control Freak Remote

http://www.mcmorran.org/pages.php?page_id=317