Tag: matt blumberg

Jun 25 2015

How We Think About Values Versus Deeply Held Beliefs

Matt Blumberg, the CEO of Return Path, has an outstanding post up this morning titled The Difference Between Culture and ValuesGo read it, I’ll be here when you get back.

If you liked that, go get a copy of Matt’s book Startup CEO: A Field Guide to Scaling Up Your BusinessIt’s one of the books on my list of books all CEOs should read.

Matt distinguishes between culture and values. His punch line, which he reveals early, is:

Values guide decision-making and a sense of what’s important and what’s right. Culture is the collection of business practices, processes, and interactions that make up the work environment.

At Foundry Group, we have a slight modification to how we think of values. Supporting our values are a set of “deeply held beliefs.”  These deeply held beliefs tangibly define our values and give us a frame of reference to operate.

For example, one of our deeply held beliefs is that “we will never grow.” Each of our funds is $225 million, we have four partners and no other investment staff, and we work out of the same office we’ve worked out of since we started in 2007. We’ve had opportunities to raise much larger funds and have considered it in the past given a variety of factors. But, we kept coming back to this deeply held belief and realized that raising a larger fund would violate our brand promise of only raising $225 million funds.

Our deeply held beliefs are fundamental to our values, although we are comfortable challenging them regularly to make sure they are deeply held, and make modifications on occasion when we learn new things but only after a lot of thought and discussion, among ourselves and with several of our very close limited partners.

For example, when we started we said “we’ll make around 10 new investments a year.” This came from a belief around the importance of time diversity of investing – we have a three year time horizon for making the 30 or so initial investments in the companies we want in each fund.

Until 2013, we made between 8 and 14 a year, which is close enough to 10 (although the year we did 14 was a year where we all said “too much – slow down.”) But at the end of 2013, when the JOBS Act became official and AngelList created Syndicates, we decided to understand the phenomenon better by participating in it. So, rather than sit on the sidelines, observe, and prognosticate about angel / seed investing, we created the FG Angels Syndicate on AngelList and have done around 60 seed investments in the last 18 months.

Another example of a re-evaluation of a deeply held belief was our decision to create our Foundry Group Select Fund. Until we created this fund, we limited the amount that we could invest in a company to $15 million. We would occasionally go a little higher (the most we have invested in a company from one of our funds, other than Select, is $17 million) but, especially with successful companies, we were limited to what we could do in the later rounds. During a particularly challenging financing for Fitbit, which we believed deeply in at the time as an unambiguously successful company, we were frustrated that we couldn’t write a big check in the financing. We talked to our LPs about what we were thinking, quickly raised a late stage fund to invest on in our later rounds for our portfolio companies, and made our first investment from that fund in the last round Fitbit did in 2013. With Select, we are no longer limited to investing $15 million per company.

Matt states in his post:

“A company’s values should never really change. They are the bedrock underneath the surface that will be there 10 or 100 years from now. They are the uncompromising core principles that the company is willing to live and die by, the rules of the game.”

I strongly agree with this, although I have one nuance. It’s hard to be absolutely correct at the beginning of the journey. So, instead of being dogmatic about values you created when you were three founders in a cafe somewhere, make sure you have one layer of abstraction about how you implement them, that can be tuned over time. For us, these are our deeply held beliefs, which support our values, but can be tuned as we learn new things. But, because they are deeply held, they can only be slightly modified, rather than torn up and replaced.

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Jun 1 2015

Hot Seat by Dan Shapiro: A Book Every Startup CEO Should Read

On Saturday, I polished off Hot Seat: The Startup CEO Guidebook. I started it last weekend at the tail end of my Weekend Reading on Startup Communities but four books weren’t in me so I didn’t finish it.

It was excellent and is now on my “all startup CEOs must read” list. My recommended book list for startup CEOs is very long, but there are only three books on the must read list.

  1. Startup CEO: A Field Guide to Scaling Up Your Business by Matt Blumberg
  2. The Hard Thing About Hard Things: Building a Business When There Are No Easy Answers by Ben Horowitz

and now #3: Hot Seat: The Startup CEO Guidebook by Dan Shapiro.

All three are from experienced CEOs. Each is a delightful mix of stories, advice, and experiences. They are all contemporary, highly relevant, and fun to read. Regardless of the number of times you’ve been a startup CEO, from having started ten companies to being an aspiring CEO/founder, you will learn a lot from each of them.

I don’t think I’ve ever physically been in the same place as Ben, but we’ve exchanged emails in the past and he was willing to allow me to republish his classic essay The Struggle in the book I wrote with my wife Amy – Startup Life: Surviving and Thriving in a Relationship with an EntrepreneurIn contrast, I’ve known and worked with Matt since 2001 when I first invested in his company Return Path (well – it’s a little more complicated than just an investment – see my post Return Path Launches Email Intelligence from 2012 where I recounted some of the story.)

Return Path is an extraordinary company that I’m proud to have been involved with for the past 12 years. At our board meeting last week, Matt gave me and Fred Wilson our 12 year anniversary gift – a pair of red Return Path-branded Adidas sneakers. I still vividly remember the phone call Fred and I had where we cut a deal to merge two nascent companies – Veripost and Return Path – in what became Return Path. We cut a deal in 10 minutes – I offered up a 50/50 merger and Fred suggested he wanted a little more since Return Path had raised 3x the money Veripost had. I responded with “how about 55/45″ and Fred said “it’s a deal.”

Matt has become one of my best friends and I treasure every minute I get to spend with him.

Dan is a new friend. The first email I remember getting from him was from 9/3/13, titled My new project: Robot Turtles, and he acknowledges in Hot Seat that it’s the one time he spammed everyone in his address book. I don’t know why I was in his address book, so I asked Dan, and he dug up his very first email to me, which happened to be about the term sheet series that my partner Jason Mendelson and I wrote that lead to our book Venture Deals.

First Email Between Shapiro and Feld

The first substantive email exchange we had was on 3/18/15, as a result of an intro from Ben Huh, the CEO of Cheezburger and another long time friend. We went back and forth on a rapid fire thread about Dan’s newest company Glowforge and the round he was starting to raise. We agreed to terms on a financing on 4/20/15 and closed a $9m financing with True Ventures on 5/8/15, at which point Amy and I went to Paris to celebrate (actually, we just went on vacation for one of our quarterly off the grid vacations.) There were a number of articles around the financing, but the best – and most thorough explanation of the company – was in Natasha Lomas‘s Techcrunch article Seattle’s Glowforge Is Building A Maker Machine To Challenge Amazon Prime.

Suffice it to say that in 75 days, I’ve gotten a good dose of Dan and am having an absolute blast working with him. He’s definitely got a healthy dose of evil genius combined with deep wisdom from being around the startup block a number of times. He’s tireless, intense, but delightfully funny and witty. He’s got extremely broad range as a CEO and entrepreneur, which comes through in his daily activities as well as his writing.

Which brings me back to Hot Seat. Like Matt and Ben’s books, it’s very fast paced. The chapters are short, written in first person, and easy to read. He’s not shy about calling things out clearly, including his own crazy experiences, especially the things he totally fucked up or had no idea about when he first encountered them. His examples are great, including some from mutual friends including Rand Fishkin and Ben Huh. The book is well organized and easy to dip in and out of. He flogs Venture Deals: Be Smarter Than Your Lawyer and Venture Capitalistwhich I put in the flattering special bonus category. And – he’s got great footnotes in each chapter which give you a special dose of his sense of humor.

I hope to get to work with Dan for a long time on Glowforge. But, regardless, I know I’ll be regularly recommending Hot Seat: The Startup CEO Guidebook to every CEO I know.

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Jan 8 2014

Startup CEO Online Class with Kauffman Fellows Academy

tl;dr – If you are a CEO and want to take an amazing online course about being a CEO by Return Path’s Matt Blumberg, sign up for Startup CEO from NovoEd now.

Yesterday, I wrote about Rand Fishkin of Moz falling out of love with the CEO role. Today I read Jason Goldberg of Fab’s great post on his struggles as CEO in 2013 and what he learned from it. This topic is front of mind for me as many of the companies I’m on the board of are growing extremely fast and the demands on the CEOs are significant.

It’s really hard to be a CEO. Becoming a great CEO takes a lot of time, work, focus, coaching, and introspection. I’ve had the privilege of working with some incredible entrepreneurs who, over many years and several companies, became remarkable CEOs. Dick Costolo (Twitter CEO) immediately comes to mind. While I didn’t work with him at Twitter, I was on the board of FeedBurner and worked with him and his three founders (Eric Lunt, Steve Olechowski, and Matt Shobe), who are all still close friends. I learned an amazing amount from each of them, but especially from my time with Dick.

Another great CEO I’ve had the honor to work with is Matt Blumberg who has led Return Path since founding the company in 1999. Matt is a first time CEO and has a fun blog titled Only Once which references the idea that you can only be a first time CEO one time. In a delicious twist, he’s now been a first time CEO for 14 years. While Return Path has had countless twists and turns along the way, Matt has been CEO from inception and presides over a large and significant company that continues to be a leader in a market it helped create.

Fred Wilson, who is on the board of Return Path with me and Matt (along with the FeedBurner board, and the Twitter board) had a frank and insightful post about turning your team three times through the life of the company to meet the different challenges that face a company from its journey from sweat driven startup to massive scale. Often this process of turning the team includes the CEO; other times it doesn’t. In Matt’s case, there have been plenty of team changes along the way, but Matt has demonstrated an impressive ability to scale and adapt himself in the evolving role of a CEO of a rapidly scaling company.

As a result, when Matt started talking to me about writing a book about the role of a Startup CEO, I was super excited. I encouraged and supported this, and it resulted in another book in the Startup Revolution series that I’ve done with Wiley. Matt’s book, Startup CEO: A Field Guide to Scaling Up Your Business, is a must read for any CEO.

Last summer, Matt began exploring doing an online course around the content in Startup CEO. He teamed up with the Kauffman Fellows Academy to put together a course titled Startup CEO, an online class that really drills into the important material of the book. It’s the real deal with hours of video, Q&A that Matt did in front of a live studio audience of NYC startup CEOs, as well as engagement with the teacher through the NovoEd platform.

I’m encouraging all the CEOs in Foundry Group’s portfolio to take the class, and I encourage you to take the class as well.

The class starts on January 20th on the NovoEd platform. You can learn more about it on Matt’s blog post about the Startup CEO course.

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Feb 2 2012

What Makes An Awesome Board Member?

Over the past two years I’ve been struggling mightily with the dynamics of “classical VC funded board of directors” and how these boards work. When I hear a VC say “I’m an active board member” it gives me the same nauseous feeling I get when someone says “I’m a value added investor.” I’ve been on some awesome boards, some terrible boards, and everything in between. Today, I refuse to be on a shitty or dysfunctional board and I’m proud that every board I’m on is one that I’d consider to be effective, although they all operate in different ways.

I’ve experimented with a bunch of different approaches across a lot of boards and have been thinking hard about this lately. I’m working on a book called Startup Boards with Mahendra Ramsinghani and have done some interviews about this topic lately, including a chaotic one the other day with James Geshwiler on the Frank Peters Show.

My long term friend Matt Blumberg (Return Path CEO) and I were going back and forth about his recently board meeting (which ironically I missed) and he wrote some kind words about me and his other board members (Fred Wilson – USV, Greg Sands – Sutter Hill, Scott Weiss – A16Z, and Scott Petry – Authentic8.) I asked him if he’d write a guest post about what makes an awesome board member. He was willing – it follows.

I’ve written a bunch of posts over the years about how I manage my Board at Return Path.  And I think part of having awesome Board members is managing them well – giving transparent information, well organized, with enough lead time before a meeting; running great and engaging meetings; mixing social time with business time; and being a Board member yourself at some other organization so you see the other side of the equation.  All those topics are covered in more detail in the following posts:  Why I Love My Board, Part IIThe Good, The Board, and The Ugly, and Powerpointless.

But by far the best way to make sure you have an awesome board is to start by having awesome Board members.  I’ve had about 15 Board members over the years, some far better than others.  Here are my top 5 things that make an awesome Board member, and my interview/vetting process for Board members.

Top 5 things that make an awesome Board member:

  • They are prepared and keep commitments: They show up to all meetings.  They show up on time and don’t leave early.  They do their homework.  The are fully present and don’t do email during meetings.
  • They speak their minds: They have no fear of bringing up an uncomfortable topic during a meeting, even if it impacts someone in the room.  They do not come up to you after a meeting and tell you what they really think.  I had a Board member once tell my entire management team that he thought I needed to be better at firing executives more quickly!
  • They build independent relationships: They get to know each other and see each other outside of your meetings.  They get to know individuals on your management team and talk to them on occasion as well.  None of this communication goes through you.
  • They are resource rich: I’ve had some directors who are one-trick or two-trick ponies with their advice.  After their third or fourth meeting, they have nothing new to add.  Board members should be able to pull from years of experience and adapt that experience to your situations on a flexible and dynamic basis.
  • They are strategically engaged but operationally distant: This may vary by stage of company and the needs of your own team, but I find that even Board members who are talented operators have a hard time parachuting into any given situation and being super useful.  Getting their operational help requires a lot of regular engagement on a specific issue or area.  But they must be strategically engaged and understand the fundamental dynamics and drivers of your business – economics, competition, ecosystem, and the like.

My interview/vetting process for Board members:

  • Take the process as seriously as you take building your executive team – both in terms of your time and in terms of how you think about the overall composition of the Board, not just a given Board member.
  • Source broadly, get a lot of referrals from disparate sources, reach high.
  • Interview many people, always face to face and usually multiple times for finalists.  Also for finalists, have a few other Board members conduct interviews as well.
  • Check references thoroughly and across a few different vectors.
  • Have a finalist or two attend a Board meeting so you and they can examine the fit firsthand.  Give the prospective Board member extra time to read materials and offer your time to answer questions before the meeting.  You’ll get a good first-hand sense of a lot of the above Top 5 items this way.
  • Have no fear of rejecting them.  Even if you like them.  Even if they are a stretch and someone you consider to be a business hero or mentor.  Even after you’ve already put them on the Board (and yes, even if they’re a VC).  This is your inner circle, and getting this group right is one of the most important things you can do for your company.

I asked my exec team for their own take on what makes an awesome Board member.  Here are some quick snippets from them where they didn’t overlap with mine:

  • Ethical and high integrity in their own jobs and lives
  • Comes with an opinion
  • Thinking about what will happen next in the business and getting management to think ahead
  • Call out your blind spots
  • Remembering to thank you and calling out what’s right
  • Role modeling for your expectations of your own management team
  • Do your prep, show up, be fully engaged, be brilliant/transparent/critical/constructive and creative.  Then get out of our way
  • Offer tough love…Unfettered, constructive guidance – not just what we want to hear
  • Pattern matching: they have an ability to map a situation we have to a problem/solution at other companies that they’ve been involved in – we learn from their experience…but ability and willingness to do more than just pattern matching. To really get into the essence of the issues and help give strategic guidance and suggestions
  • Ability to down 2 Shake Shack milkshakes in one sitting
  • Colorful and unique metaphors

Disclaimer – I run a private company.  While I’m sure a lot of these things are true for other types of organizations (public companies, non-profits, associations, etc.), the answers may vary.  And even within the realm of private companies, you need to have a Board that fits your style as a CEO and your company’s culture.  That said, the formula above has worked well for me, and if nothing else, is somewhat time tested at this point!

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