Mo Koyfman interview: Startup teams

May 19, 2010

Moshe “Mo” Koyfman is a principal at venture capital firm Spark Capital, where he leads investments in Web services such as www.aviary.com. Prior to joining Spark, Mo spent six years at IAC, most recently as Chief Operating Officer of Connected Ventures, parent of CollegeHumor.com, Vimeo.com and BustedTees.com. Mo is a graduate of The Wharton School and The College of Arts & Sciences at The University of Pennsylvania.

UpStart: What do you look for in a startup team?”

Mo Koyfman: “A great team is the first thing I look for in an investment opportunity. Successful businesses are built by extremely talented people and that’s where my investigation begins. I specifically like to see great co-founders, as there seems to be a unique chemistry that develops with the right mix of leadership at the helm. If technology is an integral part of the product, I also like to see at least one of the founders with a strong technical background. It’s certainly ideal if they’ve had prior success, but not a prerequisite. And it’s important that they’re still hungry, no matter how successful they’ve been previously. I also look for a balance between tenacity and passion on the one hand and a willingness to listen and learn on the other, as many mistakes will be made and the company will undoubtedly have to hear their users / customers and pivot over time.”

UpStart:  “What do you like to hear from a team when they present their business plan?”

Mo Koyfman: “First, I like a business plan to be clear, informative and brief. If your PowerPoint is more than 20 pages, you haven’t done a good enough job of crystallizing your plan. In the team section of the plan, I like to know how the team came up with the idea. I tend to prefer ideas hatched from real needs, as opposed to ideas developed in top-down brainstorm sessions. I also like to know how the team knows each other, to get a sense for their shared vision, and to understand how their skills are complementary. I also prefer when teams come with a built product rather than just a plan—particularly for Internet service companies, where it’s become easier and cheaper to build basic products right out of the gate. I like to see a team scrappy enough to have built a prototype themselves, with the least amount of money possible.”

Advertisements

Tommy Hilfiger interview: Team, team, team

May 19, 2010

Tommy Hilfiger is the founder of Tommy Hilfiger Corporation. An entrepreneur from his earliest days, Tommy skipped college to run a string of retail stores in upstate New York. He later turned down highly sought-after fashion design job offers to start a company of his own. In 1995, Tommy was named Menswear Designer of the Year by the Council of Fashion Designers of America. Three years later Parsons School of Design named him Designer of the Year. By 2004 Tommy Hilfiger Corporation had over 5,000 employees and revenue of more than $1.8 billion. Private investment company Apax Partners acquired the business in 2006.

UpStart: What does it take to be a great entrepreneur?”

Tommy Hilfiger: “I think skills and personality traits are more important than background. I never went to college or design school, but I had passion, drive, and resourcefulness in droves. When I launched Tommy Hilfiger Corporation, I wasn’t trained in the conventional rules of business, but that worked to my advantage. I experimented. I made bold moves. And I adapted as I learned. I credit much of my success to my drive to win and my fear of losing.”

UpStart:  “To what degree was your team responsible for your success?”

Tommy Hilfiger: “I’ve always been aware of my strengths and also my weaknesses. Because I acknowledge my weaknesses, I’ve been able to surround myself with people whose skills complement mine. Building great teams has been essential to my success.”


5 thoughts on whether to take on a partner

May 6, 2010

Deciding whether to take on a partner is one of the toughest choices a founder can make. Having recently gone through the process, I thought I’d share some tips (Note: I’ll get to how to find the right partner in an upcoming post):

1. Two beats one. Many founders choose to go it alone, at least at first (see below). Then again, adding a partner to your startup has many benefits. Two partners have more contacts, which can lead to more investors, employees, and customers. Likewise, two partners may have more cash, or at least more credit. Two founders working for free can get more work done, faster, with less cash outlay for employees or vendors. Lastly, don’t discount the softer side of partnerships. Startups are emotional roller-coasters, and having a partner can smooth out the loopdy-loops.

2. Consider a warm-up. Startups rarely find success with their initial strategies. More often, they switch to a “plan b” along the way. That means the ideal partner today may be dead-wood tomorrow. I’ve found it helpful to go solo for a few months. That gives me a bit of time to get feedback on my idea, tweak my strategy and approach, and then zero-in on what I really need from a partner.

3. Take stock. What are the major tasks that will be required to operate the business once it’s up and running (Note: Don’t make the mistake of choosing a partner to help with work you’ll only need to get started)? Are there logical groupings of those tasks, like one person selling and another executing? While two person teams tend to be easier to manage than three, you might find that there are three logical groupings of tasks, such as with an ad-supported website (One person gets people to the site, another generates content, and a third sells access to marketers).

4. Mind the gaps. Which of the logical task groupings are you best-suited to oversee? Once you carve those out, what gaps are left?

5. Profile your co-founders. The most common partnership mistake I see is when people choose their friends or relatives as partners, just because they are available. That leads to mismatches in skills/roles, goals, motivations, etc. Instead, follow the process above, and use it to develop a profile of your ideal founder, the way you would develop a job specification. Then go out and find the right person for the role.

Got tips of your own for founders deciding whether to take on partners? Please share.


5 tips for startup CEOs

May 5, 2010

Good news: You’ve come up with an idea, planned a new business, launched a product, and secured funding.

Bad news: Now comes the hard part.

Here’s some advice for those of you running startup organizations.

1.) Stay focused. Great entrepreneurs know what they’re going after and don’t let anything get in the way—including tangential opportunities that are best left to be done down the line. Keep your strategy and tactics simple and get the execution right. Hit your initial milestones before you branch out into new territory. Learn to say “no”.

2.) Get help. It takes a village to build a company. You can’t do it alone. Enlist the support of your investors, advisors, partners, family, and friends. These people make up your extended team. This is no time to be proud. Be aware of your weaknesses, and shore them up by getting help.

3.) Stop and reflect. Building a company is a bit like swimming underwater. You set your sights, dive down, and swim all-out and as long as you can hold your breath. But you have to surface periodically to breathe and get your bearings. With a startup, you have to stop swimming once in a while. You’ll need to see what’s going on in the world around you, make sure you are still swimming in the right direction, and take stock of your accomplishments as well as the challenges ahead.

4.) Track progress. Set quantitative goals for the business, make your extended team aware of them, and measure your results against your goals. It will help you stay honest with yourself and your stakeholders, and give you added encouragement to produce results.

5.) Adjust strategy. Chances are, the first strategy you follow won’t be the one that ultimately prevails. The trick is to stick with good ideas long enough to see if they can work, but be ready to let go of them before it’s too late. How do you know when it’s time? Use progress against your goals as a measurement and your extended team as judges.

What are YOUR tips for leading startup teams?


Partner pre nups

April 1, 2010

I got burned by a partner once. He flaked out after just a few months, keeping a big chunk of equity while I did all the work.

So when I took on a partner for my latest venture (coming soon), I insisted on a partner pre nup. There are a lot of ways partnerships can go sour, and it’s tough to protect against all of them. Also, it’s a bit awkward to be talking divorce during your honeymoon. But better safe than sorry.

The core of our pre nup is a partner vesting mechanism. It works like this… Both partners start with slices of the equity pie. Let’s say we each get 50 shares out of 100 total, to keep things simple. Over the coming years, we’ll work hard to turn our respective equity stakes into something valuable. But we’ll have to earn our rights to that equity.

We’ll earn a bit more every quarter (three months), over a four year period. With four quarters per year over four years, there are a total of 16 vesting periods. So, we’ll each earn 50/16, or about three shares every quarter (we’ll make up for the rounding issue during the last period).  At the end of the first quarter, we’ll each earn three shares. At the end of the second quarter, each of us will have earned a total of six shares. And so on, until we reach 50 each.

If one of us leaves to do something else, or otherwise stops contributing in a positive way (e.g. gross negligence) we’ll only walk away with the equity we’ve earned so far.

Suppose we’ve been working on the startup for 13 months, and we’re struggling. At that point, one partner wants to stick it out, and another decides to pursue other opportunities. The partner who leaves keeps four quarters of equity, or 12 shares. The other partner gets the remaining 38 shares. So now the partner who leaves owns 12 over 100 shares, or 12%. The partner who sticks around gets the remainder, or 88%.

Flake factor be-gone.


Startup Diary: Entry 4. I think I’m gonna need a bigger boat.

March 10, 2010

About two months ago, the thought hit me like a frying pan over the head: I needed a partner to help me build and run my school for startups. At the time, I was managing six freelancers, each in a different state. I was bootstrapping, so I had taken a pass on the expensive project managers, and I was running everything myself.

But tasks were slipping through the cracks. There were just too many details, many of which were outside of my primary areas of expertise. What I needed was a Mr. / Mrs. Inside to my Mr. Outside. Someone to run product development and operations. Someone who had done it before, and done it well.

Deciding you need a partner is of course only part of the challenge. Next you have to find someone with the right stuff, make sure you are a good fit, negotiate a deal, and learn to work together well. Over the next few posts, I’ll explore each of those issues.

Got any tips or stories about partnering? Please chime in.


Build a great team that can bootstrap

October 1, 2009

Excerpt from a great post on TechCrunch by Meebo CEO Seth Sternberg. Among other things, he argues that it’s critical to have a great founding team, and that your team should get a product up and running before raising capital. Keep in mind this is about tech, and may not be quite as easy to do in other industries, but directionally the points are spot-on:

“At the exact moment you had your idea, ten other people had the exact same idea. There was just something in the environment that made it the right time for folks to think that one up. The race has already begun! Who’s going to execute first? Who’s going to execute best? If you want to waste nine months trying to raise VC money for that idea, great. But six months in, you’re gonna cry when you see someone else put out that same product you’re pitching me right now. Like I said, forget everything else and just get your product out the door. Now.

Inevitably, the excuses begin: I need to hire people to build the product. I don’t know any developers. I need money for the servers. I want to get that last promotion at my current company first!

Here’s the rub: in consumer internet (and often enterprise), if your founding team doesn’t have the chops to get a prototype of your product out and in the hands of a blogger to test and write about, you might as well save yourself a lot of pain – you’re not going anywhere. Need proof? Just look at some of the most successful tech companies in the last decade: eBay, YouTube, Sun, Oracle, Apple, Cisco, Facebook, Yahoo!, and Google. All of them share a couple common traits: they launched before taking outside investment, and they were able to do it because they had a set of founders with the skills to build the initial version of the product themselves. Only eBay was founded by a single individual – the rest were team efforts.

Read the full article here.