Yes, after experimenting with Blogger I decided to re-design it and enrich the user experience by moving it onto a new platform. All the new posts will appear at this address:
"The Art of Growing High-Tech Ventures"
www.paulslaby.com
Please visit me at the new address, update your links, RSS feeds, etc.
Let me know if you like the new site.
Paul
Wednesday, 7 August 2013
Wednesday, 15 May 2013
Founders, Investors, and CEOs
Why do so many founders in high-tech
startups fail to
successfully go through the corporate transitions and come out as
winners at the end? A good example is the
story of SiGe Semiconductor. Founded by John Roberts with 2 other cofounders back in 1996 and
ultimately acquired by Skyworks in 2011 for $210M, the company went through
several reincarnations with three waves of investors either wiped out or
severely diluted. Close to $150M was poured into the company and thus the
ultimate outcome was a modest success, primarily benefitting the last-round
investors. Even though the founder, who was forced out around 1999, had a good
vision, laid down a solid foundation and lifted the company off the ground, at
the conclusion he ended up with nothing or next-to-nothing. Why?
Why do Boards struggle with managing the dynamics of
the typically conflicting interests between the VC investors, founders and
management, often resulting in the failure of their ventures? The
histories of most high-tech startups are full of colorful stories of
fascinating ups and downs of the relationships between these three groups of
players as they go through the evolving startup life cycle. Those relationships
often go from the seduction stage, through a reasonably calm but rather brief
marriage, only to end up in bloody separation and divorce battles. What could
be done to make it a bit more civilized and productive?
And why are so many CEO careers often brutally
interrupted, paused or derailed in the most often stormy and highly stressful
world of high-tech ventures? In the world of high-tech startups,
the CEO job, even though often glamorized, is actually one of the most fragile
on the planet. Apart from the occasional glory when things go well, most of the
time they are the lightning rods for anything that may go wrong with the
venture. Since typically high-tech startups are high risk ventures, guess who
gets severely beaten and pays the highest emotional toll most of the time?
Looking around at the careers of early-stage company CEOs in the Ottawa Valley
such as: Jim Derbyshire, Rick White, Jim Roche, George Cwynar, Paul
Slaby, Kevin Rankin, and many others, one could generally observe a large
turnover rate with a half-lifetime of 2-3 years and a pause of 1-2 years before
they land a new gig. Isn't this a terrible waste of top talent? Why is this?
The key
to understanding and dealing with these issues is to realize that startups,
just like human beings, go through a predictable life cycle consisting of
infancy, childhood, adolescence, adulthood, and maturity/exit. Each of these
stages has its specific characteristics and requirements which necessitate
different talents and qualifications to navigate through it. We could typically
distinguish a Founders Team, Growth Team and Exit Team. Between these major
stages of the life cycle, the company and the people involved go through a
transition. In general, these are typically Entrepreneurial Transition,
Growth Transition and Maturity Transition.
The problem arises when the key players in these
transitions (founders, investors, CEOs) are not prepared for what is about to
happen and drift blindly into the white waters ahead of them. Navigating
corporate transitions in the seas of ambition, passion, and conflicting
interests is a skill that could be
developed. And since these transitions often carry a heavy emotional toll, you
cannot afford to be naïve about it but rather you must plan ahead and put in
place protective measures against being screwed.
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