I have previously written about wrestling and startups, here and here. You can only imagine my delight reading this article entitled “Why Wrestlers Make the Best Employees” that was recently published by Forbes.
Yes, I am biased as I wrestled in high school and closely follow Cornell wrestling now. Yes, we (at Cayuga Venture Fund) hire a wrestler as an intern each year. And yes I favor wrestlers when I interview them – the same way I tend to favor military folks. They get the job done!
I will be joining more than 100 angels and VCs for StartFast Demo Day in Syracuse on August 16, 2012. This year’s cohort includes eight high growth startups from around the world who will present their business cases for investment. This event should be one of the largest gatherings of angel investors, serial entrepreneurs and venture capitalists in Upstate’s history. Demo Day details and online registration (free) are at http://startfast.net/investors.
StartFast Venture Accelerator (http://startfast.net) is a private investor backed program that is bringing the most promising Internet and mobile software startups to our region each summer. Full disclosure: Cayuga Venture Fund is a StartFast investor.
The eight teams were selected from over 320 prospects worldwide and have spent the past three months building their products and refining their business models under the guidance of more than 80 mentors who are also successful entrepreneurs and investors.
I am hoping that you share my belief that entrepreneurship and private capital investment are the keys to creating a better future for our community in Upstate. Demo Day offers a wonderful opportunity to grow your personal network, celebrate our region’s emerging entrepreneurial community and get a first glimpse at companies that have the potential to make a big impact!
I look forward to seeing you in Syracuse on August 16!
I have been asked a bunch of questions lately by young entrepreneurs that have made the phrases “please get a good startup lawyer” or “please get a good startup accountant” leap out of my mouth. A good startup lawyer or accountant needs to be a real person. It really cannot be an online filing service. Said another way, it is not possible to have a meaningful conversation with a computer. Also, you need to have a lawyer or accountant familiar with startups.
To illustrate, here is an exchange from last night (names changed to protect the innocent!):
“Hi Mr. Shulman, I hope you are having a great summer. I successfully filed XYZ Corp as a C corp back in June and am waiting for the Articles to arrive in the mail. I had a chance to speak with an accountant regarding what to do with the 83b tax election and was wondering if you happened to know the answer to my question: The accountant told me I have to submit it within 30 days after I purchase the stock (or the “Award Date”). Do you know if I need to submit a Stock Purchase Agreement and when I need to do it? Technically I started the company, so wouldn’t I have started with all the shares to begin with? I changed my incorporation form (on LegalZoom) to say that I contributed $0 (where it says $3,000). Thanks so much for your time and advice.”
My response: “Joe, you need to consult with your lawyer or accountant. If your stock is not vesting then you would not need to file a 83b.”
Joe’s response: “Ok. Yes, my stock will be vesting.”
My response: “Are you the only stockholder? Is your stock actually vesting NOW?”
Joe’s response: “Nope I am not the only stockholder. My partner and I have not signed any formal agreements. There is no written statement that says when my stock will begin vesting.”
My response: “You have 30 days from the date vesting starts. The 83b election is a form. Talk to your accountant and don’t mess it up.”
Joe’s response: “Ok thanks.”
This exchange illustrates my point. I was a little tired and writing from my phone so my responses were short and direct. First, LegalZoom is not a person so it is really hard to ask it follow on questions (add dose of sarcasm here). LegalZoom is fine for getting your entity set up (though I have no clue why it would take so long for Joe to get a copy of his filing!) or filing a trademark (though I always recommend a live human being instead). But you need a good human resource for legal and accounting questions. AKA: a startup lawyer and accountant. Joe’s question on the 83b election is critical. If he messes up the filing it could have dramatic and adverse tax consequences if his company is successful. I wish the accountant that the spoke with gave him more concrete accurate advice. He needs to file within 30 days of vesting being imposed. Note that I think it is great that Joe and his partner have agreed to have their shares vest. See my earlier post on that topic here. When they put that vesting in place, they better timely file the 83b election.
Summary: paying for good advice from a lawyer or accountant that is a human being is worth the cost! Gets you peace of mind, gets you efficiency and lets you focus more on your business.
Just came across this awesome resource relating to tech reporters, tech bloggers and PR basics. It should save you lots of time! Check it out here.
Enjoy the rest of your weekend.
I got into a discussion with a startup CEO recently and also one of my venture fund partners regarding directors of a startup having open access to all officers at the company. This is a very delicate topic.
My mindset is that directors of a startup should be expected to talk with all officers of the company without “going through” the CEO. I think the CEO should expect this to happen and should also encourage it. I think the CEO should view this as a way to empower his/her team members. I call this communication scheme “open access”. Yet I actually know a number of CEOs who cringe instead at the concept.
I do have some basic assumptions that are critical for “open access” to work:
1. The CEO runs the company day to day. The other officers (COO, CFO, VPs, etc.) report to the CEO (there are infrequent exceptions when another officer (typically a co-founder) does not report to the CEO, but rather directly to the board; often this ends in $%^#show, and I don’t recommend it).
2. So, having the board members have access to the officers requires that the CEO be comfortable with his/her position in the company and his/her level of respect with the board. This is not always the case. Confidence and security levels vary. The need to control (whether justified or not) varies. The ability to delegate correctly varies. These facts add variables that board members need to acknowledge and deal with. They are challenging variables.
3. The directors have to have the proper skill set to handle the information that they receive from officers as a result of open access. The directors should NOT be tasking the officers – that is the CEO’s job. Rather, the directors should ask officers for their views on company culture, strategy, product development and related high level matters. Then, proper use of the learned information is key. Ideally it should produce honest discussion among all the board members, including the CEO when appropriate.
4. Getting “inputs” by asking for views is critical. The officers must understand that the directors are not trying to undermine the CEO by asking for input. Rather the directors are trying to enhance how the startup functions. One way to ensure this is to establish the “director to officer” communication channel very early and make it part of the normal governance procedures. Simply, it should be expected.
5. The “director to officer” communication channel does not need to be frequently tapped to be effective. Perhaps a given officer has a conversation once every month or two with a director. Again, these communications are empowering. They are often ad hoc and not regularly scheduled.
So, I encourage you to practice open access at your startup companies. And here is one more point to consider: officers owe the same fiduciary duties to the company’s shareholders as directors do. See this article for a good summary. This means that officers have a duty to report up to board members and bypass the CEO when necessary (in other words when reporting up on issues concerning the CEO). If an officer believes that a CEO is not responsibly executing, then the most sound course of action is to get the ear of a director to discuss.
More to come on this topic. Look forward to your comments.
ithaca VC 