Startup 125: Term Sheet – Liquidation Preferences

This is the second post in a series attempting to demystify venture capital term sheets.  If you have not read the first post about Valuation, you can find it here.

Talking Stock
As mentioned in the previous post, a venture capital term sheet is a letter of intent that outlines a potential investment in a startup.  The first and usually most debated item is the valuation as it has the largest effect on the dilution or amount of ownership you give up in order to receive funding.  Once you agree on valuation (while keeping in mind the option pool twist), it’s important to understand what you have actually sold.  Read more... (1375 words, 1 image, estimated 5:30 mins reading time)

Startup 124: Term Sheet – Valuation and Dilution

Lots of folks have asked a very common question about startups: “What is a Venture Capital Term Sheet and what do all the terms mean?”  Since there are lots of terms to discuss, I will break the answers into multiple posts to get the content out more quickly and in smaller digestible chunks.

What’s the Big Idea?

Before jumping into post-money valuations, liquidity preferences and other legal mumbo jumbo, you must first decide whether you want to go down the path of taking venture capital.  Read more... (1758 words, 2 images, estimated 7:02 mins reading time)

Startup 123: Another Reason Startups Kick Corporate Butt

As a previous post discussed, some of the reasons startups win are people, freedom and failure.  In addition to these cultural differences, there are some inherent challenges for “entrenched” companies which startups often exploit to ensure their success.  One of the challenges (among others…) is that entrenched companies have a set of assumptions that become out of date and incorrect.  That often leads them to confuse the product they provide with the value customers perceive. And as a result, they become blinded by their existing business model success until it’s too late.  Read more... (895 words, 4 images, estimated 3:35 mins reading time)

Startup 121: Lessons for the Recession from Rice Krispies

The past few months have been, how shall I say, pretty crappy and have caused lots of cut backs for most startups (and companies of every size).  Mostly, this has meant laying people off, cutting expenses, and generally “battening down the hatches to weather the storm”.

I randomly had several conversations with people on the topic of what a startup (or any organization) should do in times like these and some basic things came up each time:  Read more... (1217 words, 2 images, estimated 4:52 mins reading time)

1. Measure to manage
2. Mix it up
3. Take calculated risks

Startup 119: Why Startup Innovation Kicks Corporate Booty

I recently had coffee with David, a friend from college that was an advisor at Trio Development and an early employee at Connectify.  As he now works in the incubation group of a large enterprise software company, he was lamenting about how hard it is for large corporations to innovate.  That got me thinking about what it is about startups that leads them to “out-innovate” large corporations.

It ain’t about the technology
To start, I believe innovation is simply about creating significant new value though some combination of unique products, processes, and services.  I do not think innovation is solely about creating new products or technology.  That is simply invention.  Read more... (1462 words, 4 images, estimated 5:51 mins reading time)

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…  Read more... (853 words, 1 image, estimated 3:25 mins reading time)

Can You Count?

Good execution is a corner stone for success. The following post is a little execution test.  Let’s see how good you are at the simple task of counting

Your goal is to count how many times the team in white passes the ball.  It’s going to get complicated so keep an eye on the white team.  Click the video and start counting.

Now scroll down to read more once you’ve watched and help me answer the question, if you “can count”?

How many of you saw  “it”?  I’ll admit it. I missed it.  Read more... (1444 words, estimated 5:47 mins reading time)

Startup Life 103: Love

Successful startups (or any other successful company or adventure) cause memory loss. Yes, memory loss. It’s fascinating how success tends to make all the late nights, struggles, frustrations, fears, anxiety and stress fade away. Yet the fact is that startup life is hard and not for the faint of heart.  Read more... (785 words, 1 image, estimated 3:08 mins reading time)

Startup Life 101: The Marathon

Being successful in all aspects of your life – your work, your relationships, your community and your personal life – is not easy especially when working at a startup. Conventional wisdom is you have to work 18 hour days, 7 days a week to succeed. Yet maybe it’s not necessarily the best way to succeed?

What got me thinking about writing about this was re-connecting with a professor I knew from the Wharton school, Stewart Friedman. He recently wrote a book and teaches a class titled Total Leadership: Be a Better Leader, Have a Richer Life.  Read more... (916 words, 2 images, estimated 3:40 mins reading time)