Startup Issues #1

This week in Silicon Valley, as is typical, there were several meetings sponsored by the many organizations supporting various industries, professions and entrepreneurial activities. I was able to attend a couple of ones that had great value in their content.

On July 12th, I participated in the Backstage Pass event

The panel on "Best Practices for Running a Board Meeting" was the second of three, with the third planned for November. During this discussion, some major observations were made about the issues of resolving conflict, the need for three separate sections of the Board Meeting, and the importance of communications outside the Board Meeting. While the discussion was of course focused on VC funded, privately held corporations, with little mention of the earliest stage of a startup's life prior to funding, there were some very important points made as to the support of the new CEO.

Here in Silicon Valley, the professional institutional investor does not want to replace the CEO. Doing so creates great risk, and the investor's job is to minimize risk and maximize outcome. What the new CEO must learn is to communicate with the Board prior to the meetings with honesty and supportive data. The Board is there to help you! While many entrepreneurs focus on stealth during the earliest, formative phase, when the CEO is reporting to the Board, stealth is quite inappropriate, as is over stating results. Honesty is the best policy.

Next week, there are additional groups worthy of attention, such as the Startup Epicenter event on Thursday, July 19. If you are an early stage entrepreneur who can learn from others, I highly recommend attending this event.

While working with an entrepreneur this last week, I have been able to demonstrate in substance why I am so much against the "Consultant" who claims that they will help a company raise money. A real management consultant must validate all of the business strategy and determine the level of reality of the business plan and its financial projections before it is possible to get an intelligent investor to invest. After all, if the consultant really does know investors, then his or her reputation is always on the line when an introduction is made. When I work with an entrepreneur or startup, I ask the hard questions and help to answer them.

So, while I am looking for a new opportunity to join, I am helping some entrepreneurs to get their act together. If someone says that they'll help you get funding without learning a lot about your company, then count your fingers after you shake hands.