Meet the Superheroes of Maveron: At Maveron, we don’t invest in companies. We invest in people. We look for the most innovative entrepreneurs, the most dedicated and focused visionaries who won’t take no for an answer. To us our CEOs and their teams are the superheroes.
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By A.T. Trader, Venture Partner
We held our First Annual Maveron Product Roundtable in SF on Tuesday night. The event was an outrageous success! We hosted 25 CEOs, product leaders and entrepreneurs including Maveron’s own Danny Shader, Matt Sanchez, Paul Freedman, Rob Goldman and Adam Pritzker, plus other rock star entrepreneurs Wences Casares/Lemon, Pam Kramer/Twitter, Joe Green/Causes, Simon Rothman/eBay, Ethan Prater/Castlight Health, just to name a few.
The three hour program included a lively product discussion, drinks at Barrique and dinner in the office. Plus, I gave a short presentation about product lessons from Zynga that the group really enjoyed (it’s all about the data!). The conversations were lively and informative. Most importantly, we made a lot of great connections with and among our team, portfolio companies and new/old friends.
Huge props to Sarah who owned the event planning and logistics, Stephen for helping out at the event, and Andra for the invite. You make these events look easy, but we know how much work they are. Your commitment and attention to detail is terrific!
By Amy Errett, Partner
There are, of course, many critical decisions an entrepreneur must make during the long process of transforming an innovative idea into a profitable global company. But perhaps no decision is more important than choosing the right Board of Directors. And choosing your board members is just the first step – you’ve also got to work effectively with them at every step of the way to leverage their insights, knowledge, and connections.
One of a venture capitalist’s key roles is to help their portfolio companies build great Boards of Directors. At Maveron, we’re committed to offering hands-on guidance at every step of the company-building process, and one of the ways I personally get involved in each of my investments is to both serve on their Boards of Directors and also recommend other high-impact members.
The right Board of Directors offers an outside perspective on – and often personal experience with – execution and growth issues, strategic direction, and key hiring decisions. Your board should not only offer strategic guidance and vision, but also be willing to make introductions to potential hires, partners, customers, and investors. As an entrepreneur, you need involved and supportive board members you can lean on during the first years when you don’t have full management teams in place, but also board members who have the expertise to guide the company in later stages through growth, partnerships, acquisitions, and potential exits.
Some of the key issues board directors should be involved in include: selecting the right management team, compensation and how it’s linked to actual performance; the right strategy at every stage; and monitoring company health, strategic planning, setting key objectives, performance and risk.
I’ve sat on both sides of the board table – as a CEO and as an outside director – so I’ve been involved in my share of “boardroom dynamics.” Finding board members who work well together and have synergistic skills is critical to creating a powerful, cooperative board. To be effective, directors much gel as a group; there must be mutual respect and trust among directors and management. Every director should feel comfortable adding to the discussion .Also, finding the right team who is supportive to the CEO and management is essential.
When setting out to create a “dream team,” the first step is to make a list of the types of expertise you need. Of course, you want executives who know your business inside and out, and who have built companies in the space from the ground up. You also want connected partners who will introduce you to key players. But you may also need access to very specialized expertise that only a few people possess. Work directly with your venture investors to get the right people around the table.
Secondly, make sure you get the right types of board members. There are two main types, in my opinion. The High Maintenance Board member wants to get involved in every aspect of your day-to-day business. Avoid these people, because they will waste the CEO’s precious time and will distract management from executing on important goals. You don’t need the organizational confusion of board members who act like part of the everyday executive team.
The second type of board member is the Value Add Board Member – and these are the folks you want. These people bring focused expertise to the table, jump in when asked for advice or when they believe they can add real value, but leave the day-to-day operations to the CEO and his or her management team. These board members help you tackle the larger business issues, but don’t meddle in your operations on a daily basis.
How do you tell the difference between the two types of potential board member? That’s one place your venture investors can help –because they likely know your prospective directors personally or have at least run across them in their network.
Here are five strategies I’ve used with portfolio companies to help them build great Boards of Directors.
Define the Rules of Engagement. Before asking anyone to join the board, make sure to clearly define what participation will entail. Draw up rules for the norms of behavior required to achieve productive dialogue, such as guaranteeing that every member has a chance to speak at each meeting, how decision-making will work, and how discussions will be recorded. Craft a board plan that enables everyone to contribute their unique expertise and viewpoint, but also maps out how you’ll come to a consensus. Lively debates should be encouraged, but it’s important to stick to key issues to lead to consensus and closure.
Conduct an Annual Board Evaluation. Boards should have a plan in place for an annual self-evaluation. How is the team working together? What problems have arisen? What’s working and what’s not? Has feedback been collected an acted upon? Make sure to regularly measure how the board’s implemented recommendations have impacted your business, both positively and negatively. Ask yourselves the hard questions, because a board’s self evaluation should uncover the real issues that inhibit effectiveness.
Proactively Manage your Board. Neither the over-zealous board member who wants to direct every decision, nor the slacking board member who doesn’t participate, are assets to your board. Don’t be afraid to approach members who aren’t contributing in a beneficial way to discuss ways you can work more effectively together. One way to approach sensitive conversations like is to host social events, such as a board dinner, before or after a meeting to talk through issues that impact working relationships. If things still aren’t working out with a board member, think about asking that person to leave, if possible.
Clearly Communicate. Clear, open, and regular communications are vital to the health and functioning of your board. Information should be focused, timely, and digestible. Don’t send out an 80-page deck with financials the night before the meeting. You can’t expect directors to stay up to speed on your business the way the management team does, so present them with the main facts and updates in a short document. The most important rule of board management is to not surprise them – make sure they know everything important that’s going on, good or bad. And, lastly, don’t bullshit your board. If you are stumped on a next business move, admit it. Tell them you’re searching for an answer and ask for their guidance and advice.
Focus on Substantive Issues. A CEO’s job at board meetings is to keep the discussion focused. Busy directors will appreciate you keeping things on topic and on time. One way to keep the focus on important issues is to present potential solutions – not open-ended questions. This way, you get their immediate input on your concrete business ideas. Don’t let your board spend too much time talking about minor issues or get bogged down in compliance – and then become rushed when it comes to the real opportunities to add value. Always present a simple agenda with only substantive topics, and get closure on each topic before moving onto the next. Keep all administrative matters for the end.
In the end, creating a stellar Board of Directors is part science, part art. Entrepreneurs should lean on their venture investors to help create the best Board possible – because the right Board makes all the difference in growth, market reach, and business success.
By Amy Errett, Partner
The current excitement among entrepreneurs and venture investors is palpable. After a few long recessionary years, companies are lining up to IPO, hiring is on the rise, and the business climate is improving. The next generation of Internet, technology, and consumer business leaders are emerging.
With this return to optimism, venture firms are again keen to invest in high-quality startups with the potential for greatness. The result, as always in times like these, is that too much money is chasing too few good deals. Entrepreneurs are in the driver’s seat.
If you’re a proven entrepreneur starting an innovative, revenue-generating business today, you’ll probably have your pick of venture firms. VCs had the upper hand in structuring deals during the recession, but many are beginning to realize they need to “earn the right” to invest in the best companies. At Maveron, a venture firm founded by and for entrepreneurs, we’ve always taken this approach. We approach venture investing as a partnership; we provide the funds to support an entrepreneur’s dream of building a great consumer business.
The shift today toward an entrepreneur-driven funding market is not just a temporary result of the return of high-profile exits and increased optimism. In fact, the entrepreneur should always be in the driver’s seat no matter how the exit markets evolve. Why? Because startups simply are not as reliant on VCs as they were 10 years ago. There are several reason why this is the case.
One, it is cheaper to start a startup today. Moore’s Law has made hardware cheap; open source has made software free; the web has made marketing and distribution platforms accessible; the cloud has made geographic location irrelevant; and more powerful programming languages mean development teams can be smaller. In other words, the entrepreneurs who created all this amazing technology have changed the game for the entrepreneurs who come after them, making start-up costs much lower and the need for a big infusion of venture capital less pressing.
Second, startups are reaching profitability sooner. Every startup is constantly calculating the “runway” – how long they have until the money runs out. But because startups have become cost effective to run, that runway is longer and the threshold of profitability can be reached sooner. If you have a profitable company, you don’t necessarily need venture capital to sustain growth.
Despite these realities, VCs aren’t about to disappear overnight. The firms that understand this new world of “capital efficient startups” will not only survive, but thrive, in the coming decades. Entrepreneurs that want to build really big global businesses will still need venture money – because even if you’re profitable enough to keep growing slowly and organically, you’ll still need a big capital injection to take a big leap.
If you’re an entrepreneur in this position right now, how should you vet the VCs clamoring to fund your company?
1. Approach the fundraising process as “buying capital” rather than “selling equity”. You need to buy capital at the best possible terms for your company, with the goal of using that capital to reach clearly defined growth goals.
2. Research VC firms carefully and come up with a short list of firms that are the best fit for your company. Things to consider are:
a. What business sectors does the firm have expertise in? Does this expertise map to your business?
b. Do they have any partners who are proven experts in your industry? Do they have operating backgrounds?
c. Which companies in your space have they already backed?
d. What is the potential “network effect” via the key partners’ industry contacts?
e. How much does the firm typically invest per deal and how much “dry powder” do they have in reserve?
f. How are their investments typically structured?
g. What are their exit expectations?
h. Are they known as entrepreneurial friendly and can they be referenced to prove that?
Competition among VCs for the most promising companies is fierce right now – and due diligence is a two-way street. As an entrepreneur, you should be as interested and concerned about the qualifications of your potential investor as they are about your qualifications, business plan, and execution strategy. Ask for references and investigate each partner’s professional and career background. Ask for a list of the CEOs of their portfolio companies, so you can contact them to get better understanding of how they work with entrepreneurs. Meet all of the investment team members and the other partners in particular.
Finally, it is critical that trust, honest communication, and respect form the foundation of every new funding relationship. Building a company is likely the most challenging thing you’ve ever done – and you want a venture partnership who shares your goals and is “in it to win it” right alongside you.
CEO Mike Fridgen talks to CNET TV about making smarter decisions, with no regrets!
By Amy Errett, Partner
The common adage goes, a banker provides money, but a VC (supposedly) provides smart money. Venture capitalists shouldn’t just pony up cash, but should be available to dive in head-first to help build companies from the ground up. Investors often have past operating experience at large companies or as entrepreneurs themselves, and they leverage this expertise to offer advice and guidance to the startups in their portfolios.
While this seems like a win-win situation, some entrepreneurs wonder whether this guidance is a help or a hindrance. After all, many entrepreneurs are driven, passionate individuals with clear ideas on how they want to create, run, and grow their businesses. But, there are ways that a VC can really help.
A VC with operating or entrepreneurial experience is a valuable strategic partner. VC operators have “been there and done that” and have learned a lot along the way. Maybe a VC grew a company from startup through a big exit, or maybe he or she managed a large team and P&L at a large corporation. As an entrepreneur trying to build the most successful business possible, in the shortest amount of time, is it not helpful to take advantage of this expertise?
There are many ways a VC can help an entrepreneur strategically ramp up growth, below is a selection of a few tangible value-adds a VC operator can bring to the table. Every entrepreneur should feel free to ask their investor for this type of guidance:
• An outside perspective on – and often personal experience with – management issues that can prove especially useful in the complex relationships between founders and CEOs;
• Operational experience in scaling a business, managing people, and building infrastructure – and an understanding of what it’s like to be in the trenches and what it takes to move forward;
• Understanding of competitive markets to give an operational assessment on whether the business model is sustainable and how the company can rise above competitors;
• Experience running all the ecosystems in a company (finance, marketing, recruiting, sales, etc.)
• A strong referral network of contacts in many areas who can add value to the startup to help with recruiting key personnel, meeting strategic partners and potential customers, and forging alliances in market channels.
This all sounds good so what’s the problem? A long-term, strategic relationship between VC and entrepreneur will never work without “alignment.” At Maveron, we don’t ask ourselves “What advice can I offer this entrepreneur?” but rather “How can we align our goals to work together to build a great company?” Clear communication, a commitment to joint success, authenticity/trust and an ongoing open dialogue are the cornerstones of a solid VC-entrepreneur team. As the startup grows, the entrepreneur and VC must continually re-align their mutual goals – adapting to changing markets and business milestones to continue to generate the best business outcomes. Only when the entrepreneur and VC are aligned can they work together to build and scale a great company.
The truth is that great VC’s want their companies to succeed as much as the founders do, so why not align our goals to increase the probability of a fantastic outcome?
zulily co-founder Mark Vadon speaks to Henry Blodget about his new venture. There are already over a million moms using the site and Vadon shares why zulily is already such a hit.
Zynga Founding Team Member Brings Social Gaming Expertise to Consumer-focused Venture Firm
SAN FRANCISCO–(BUSINESS WIRE)–Maveron LLC, a venture capital firm with offices in Seattle and San Francisco, today announced that Andrew Trader has joined the firm as an Entrepreneur in Residence. Based in Maveron’s San Francisco office, Trader will explore new web-enabled consumer service opportunities.
“I’m looking forward to finding the next massive consumer opportunity, and am excited to join a venture firm that I greatly admire in Maveron.” Trader, who is known as A.T., is a successful serial Internet and software entrepreneur. In 2007 he was an integral member of Zynga’s founding team, and in the process helped create the social gaming industry. At Zynga, he built and managed all business operations including revenue management, marketing, user acquisition, business development, and strategic partners including Facebook. His contribution was instrumental in driving Zynga’s meteoric success, growing to 60 million daily users and achieving profitability within just a few months of its launch.
“A.T. has a proven ability to recognize social gaming and networking trends ahead of the curve and he understands the fundamental steps to rapidly building huge presence among online communities. We are thrilled to welcome A.T. to our firm,” said Maveron Partner Amy Errett. “At Maveron we focus on scaling consumer brands very quickly, and A.T. brings that expertise based on his experience with Zynga.”
Before the founding team of Zynga, Trader was the CEO of Utah Street Networks, operator of Tribe.net, one of the first social networking sites. He led the sale of Utah Street’s platform to Cisco in 2007. He was also the co-founder of Coremetrics, a leader in website marketing, where he served as the company’s VP of Business Development, growing the company to over 100 employees and raising $65 million in invested capital. Coremetrics was acquired by IBM in 2010. Additional prior experience includes corporate finance and business consulting at Ernst & Young LLP. He holds both a bachelor degree and an MBA from The Wharton School at the University of Pennsylvania.
“I’m looking forward to finding the next massive consumer opportunity, and am excited to join a venture firm that I greatly admire in Maveron,” said Trader. “This is a fantastic opportunity for me to work among a team that builds great brands from the ground up, and with Maveron’s network and consumer-oriented bias, this is exactly the right environment to explore my next venture.”
Maveron’s portfolio includes a range of well-known technology-enabled consumer brands with high profile IPOs including eBay, Capella Education Company and Shutterfly. Maveron’s current investments include a range of fast growing consumer, Internet, health and wellness and education-related companies.
“It summed up the creative will of VideoEgg and the pioneering work of Six Apart. It will continue to drive us as we invent a modern media company.” SAY Media
SAY Media Explained from SAY Media on Vimeo.