Formation

Take A Step Back To Take A Leap Forward

The introduction of a disruptive technology leads to the collapse of sales of recorded music.  Does this refer to the impact of legal and illegal digital music downloads on CD sales?  Certainly.  However, it is equally applicable to the first widespread adoption of broadcast radio in the mid-1920s.  During that period, record sales plummeted by more than half.  Sales did not recover to pre-radio peaks until the late 1930s as record companies embraced radio to promote their products. How can a founder apply history to current business issues?

Founders are visionaries.  Each founder has had at least one insight that led to formation of a venture, and probably a lot more.  Ironically, the tumult of day-to-day operations in a leanly staffed startup company may prevent the founder from effectively filling the role of visionary.

To achieve the next breakthrough, a founder may need to step back from day-to-day operations.  Bill Gates and other creative entrepreneurs made a habit of one or two annual “think weeks.”  During a think week, they were completely isolated from the day-to-day operations of the business.  Instead, they read business and technical articles from related fields, biographies of entrepreneurs, and industry history.  A senior management off-site retreat can also be used for this purpose.  For some, it is simply spending quality time with advisors and mentors who are willing to share their experiences.

The solution to day-to-day problems may lie in taking time away from them.  Clearing your mind might also lead to your next creative breakthrough.

Dealing with “Dead Equity”

“Dead equity” refers to company stock owned by individuals and entities no longer contributing to the company. In general, there are two types of dead equity seen on emerging company cap tables: Departed founders/employees. A co-founder or early employee leaves a company or no longer significantly contributes […]