I hope you all are staying well, safe and healthy!
I recently went through an exercise with the team at Entrepreneurship at Cornell. We have all been working remotely (obviously), and I wanted to get a very good read on how each team member viewed his/her primary contributions to our program. So I went back to basics and asked each team member to send a list of bullet points describing their material functional duties. Importantly, I only asked for bullet points (knowing that sometimes it is hard to be concise) and material duties (so things that are ongoing and not one-off small tasks). I gave examples to the team for me and our assistant director. Here was my list:
- Manage the Governing Board, including meeting preparation
- Manage the Advisory Council, including meeting preparation
- Heavily involved in all aspects of Eclectic Convergence speaker selection, planning and hosting the event
- Heavily involved in all aspects of Celebration planning and hosting
- Represent EaC with central administration (particularly Provost, AAD, VP of Research, VP of HR and VP of Communications)
- Heavily involved in all aspects of EaC budget setting and planning; responsible for budget results
- Heavily involved in all aspects of fund raising for EaC (including corporate sponsor interface)
- Heavily involved in the Student Business of the Year and Entrepreneur of the Year and Beck Fellows selection
- Chair of eLab, responsible for budget
- Represent EaC on various Cornell related boards (for example, McGovern, Praxis)
- Responsible for hosting faculty/staff lunches
- Responsible for EaC performance and staff
- Interface directly with Student Agencies on eHub and other matters
- Supervise the EaC team
I got back responses from the team, and we will review this week as a group at our staff meeting so that everyone knows what everyone else perceives as their primary functional duties. I am hoping that the discussion will lead to a few edits.
The exercise got me thinking about job descriptions. I have NEVER been a huge fan of them. In fact, I think that job descriptions are most (perhaps only) useful in the initial hiring process. Beyond that they can serve to stifle innovation, creativity and growth. I would hope that people would want to continually find new things to do at work – things that interest them, things that advance the “office agenda”, things that engage others, etc. Things that might not fit into their job description. I hope to never hear “that is not in my job description” :). Sure, there are only so many hours in a work day, but job evolution is part of what makes going to work enjoyable.
Doing the bullet point exercise periodically (perhaps yearly) could be a great way to keep things fresh and encourage innovation at work. The bullets are like a “live” job description. Never gets stale!
Finally getting some spring weather in Ithaca! Have a great week.
Happy New Year! Quick post.
First Round Capital is literally a treasure trove of valuable information. Its First Round Review repository is outstanding, and should be a go to resource for any startup founder. Today First Round Review published “The 30 Best Pieces of Advice for Entrepreneurs that We Heard in 2019.” It is a wonderful compilation of advice and tidbits with easy to understand and apply stories. Definitely worth reading!
I was recently in a board meeting and the topic of change of control stock option vesting acceleration came up. I wrote a pretty long post on this topic already so won’t rehash the basics again here. But the recent discussion confirmed my view that double trigger stock option vesting acceleration is very clunky, difficult for management teams to understand when it actually matters (at the time leading up to the change of control) and, in my view, should be used infrequently. I am pretty sure that my view on this is not that widely shared.
Absent provisions in a stock option plan or stock option agreements issued under a plan, an employee’s unvested stock options will simply terminate on a change of control (this is the default plan rule). This makes complete sense – once a company is sold in a change of control, the actual stock underlying the option is worthless going forward (in other words there is no longer a company to hold equity in as it was sold).
When a company is sold it is often very attractive for option holders to have their vesting accelerate immediately prior to the time of the change of control. This allows the option holder to participate in the change of control exit to a greater equity extent assuming the options are in the money. As pointed out in my prior post, option agreements may provide for single (just the change of control) or double trigger (change of control followed by termination of the employee following the change of control) vesting acceleration.
Implementing double trigger acceleration is often really confusing for the option holder (who likely worked hard to get the company sold). Implementing single trigger is easy, understandable and better for the option holder (again, who likely contributed to getting the company sold!!). So, I remain a big fan of single trigger. Simple = more understandable = better for the management team.
Critically, change of control acceleration is NOT standard. Often it will just apply to senior members of the company’s team. If the board (who grants options) is concerned with inadvertent windfalls (like when a senior team member joins 6 months prior to an unpredicted change of control and has vesting acceleration), then there are very easy ways to avoid that. Just have the single trigger acceleration kick in after a set period of time (like 2 years after employment starts) or have it apply ratably over a time period (like 25% of unvested options accelerate if the team member has been employed less than one year, 50% if less than 2 years, etc., so that any windfall is limited).
My overarching theme is that team members work hard to get to exits. Without the hard work of a senior team a good exit won’t happen. Reward them with single trigger acceleration. All incentives will be aligned and, most importantly, the team members will fully understand what they have in terms of equity potential.
Sorry for the big gap in posts!
As a bunch of you probably know, James Holzhauer is on a streak to set the record for Jeopardy game show wins. I just read that the show picks back up on May 20th with “live versions” (which are actually taped). I do not watch Jeopardy at all. But, the news stories have caught my eye so I have read a few of them. The other day I came across a print interview that included this question: Would you describe the traditional way of playing “Jeopardy!” as overly risk-averse?
Holzhauer’s answer: “I would definitely say it’s too risk-averse. The funny thing is, my strategy actually minimizes the risk of me losing a game. There’s times in a football game where a team goes for a big TD pass. If you don’t take a risk like that, you’re not going to win. Really, the big risk is never trying anything that looks like a big gamble.”
In case you don’t know, a core part of Holzhauer’s strategy is to go after the $1000 “answers” first so that he builds up a pot to bet when he hits a daily double. This is why he is the fastest money winner in Jeopardy history.
Anyway, I loved his answer as it made me think of many entrepreneurs – they take risk all the time! And guess what, so do VCs when they bet on those entrepreneurs! Risk is a given and taking risks is required.
Happy New Year everyone! I hope you all have had a great holiday season. Quick post just following up to my most recent post on independent board members.
a16z has a podcast series, and one of my CVF partners just sent me this podcast from them on independent board members. Great quick 23 minutes. Have a listen.
Tidbits of value from the a16z podcast:
- Independent member are able to diffuse hidden agendas among investors.
- Independent members are able to provide feedback to CEO by a trusted non-investor.
- Makes the overall board dynamics way better as the relationship between the VCs and CEOs is just different than the relationship between the independent board members and the CEO.
- The reality is that the VCs have to give up board control too once the independents arrive!
- Entrepreneurs don’t like working for others and CEOs always have to work for the investors. The independents make the board function better.
- Being a board member is MUCH different than being a board observer or advisor. Independents can start as observers/advisors but entrepreneurs need independent board members with board power.