Equality

Why, what and really? Yet another surreal week of sexual harassment in Silicon Valley

June 27, 2017 2 Comments

Yet another scandal of sexual harassment is unfolding in Silicon Valley this week, and after several nights lying awake, angry, thinking about the last 30 years, and expressing my ongoing frustration to a group of friends over dinner I was asked by a friend to answer 3 questions:

1. Why this still happens?
2. Are we really surprised that it does?
3. What does speaking up accomplish any more?

First to the news. As has happened thousands of times before a venture capitalist, Justin Calbeck of Binary Capital, sexually harassed women entrepreneurs attempting to raise money from him. But in an extraordinarily brave move 6 women spoke out, and 3 spoke out by name. The allegations were specific enough that despite an initial denial Justin Calbeck has now resigned and the firm no longer has strong support from its LPs. Its days are numbered.

Given that even the most egregious sexual predators don’t want to be publicly outed by the women they hit on, and we live in such a public online world, why does this still happen?

The reason is the incredible imbalance of power that exists in the venture fundraising world. Most VCs are clean cut white men. Most have been very successful financially…. and they think it is because they are smart. Some truly are. Company founders, old school VCs who have bankrolled winner after winner, VCs who are true company builders, but with the huge increase in capital coming into the venture market there are many VCs who got where they are by being in the right place at the right time. They were just lucky to be at a company that did well, they know the right people, they talk a good game and next thing you know they are raising a small fund from LPs who are desperate to find enough places to put their money and share in the phenomenon.

Venture partners get paid a lot of money to administer a fund, and entrepreneurs beat a path to their door to try to impress them. The entrepreneurs struggle to get their deck looked at, struggle to get a meeting, work hard to make an impact and as a result many VCs develop a sense of hubris and superiority. Rude, abrasive… and blend that sense of superiority with sex and you get some men who think it’s OK to proposition young women who are raising money.

The extraordinary generation of wealth going on in Silicon Valley now (and over the last 20+ years) will lead some people to behave badly. Behave badly to get access to that wealth (Uber being today’s poster child) and behave badly abusing their positions of power. Twas ever so when money is being made.

So why are we surprised? I am not. In fact I think in some ways the issue is worse and more pervasive now than it was 20 years ago. The objectification of women in media (see Miss Representation or https://seejane.org if you want to gather statistics on this) continues unabated and so some people forget that the young woman in front of them is not to be sexually objectified.

The prevalence of the bias against funding women should lead to a huge competitive advantage to the partners and firms that DO fund women and ARE gender blind. I get asked so often for a list of VCs who would be truly unbiased I think I need to create the list! If you have a fund that is actively looking for women founders, or have had a great experience with one, send me an email!

But the really tough question here is does speaking out accomplish anything?

I chose not to speak out in the 80s and 90s (and if that makes you angry stop reading here). I became very practiced at simply ignoring the sexual actions – the hand on my knee all through a coffee meeting – the hand on the back of my neck under my hair while talking with me – the stroking of my shoulder – all while I was clearly married. In my head I was made of stone, the action did not touch me, I believed if I simply ignored it and pretended it was not happening it would stop. Most of the time it did. Sometimes I would have to lift the hand off my body. And then sometimes the action would be so aggressive I would get upset and not be able to turn off my anger and I would need to remove myself from the situation before I blew up.

I did not believe speaking up would change anything, and was sure to backfire. Unwanted male attention was my responsibility, and shameful (perchance the influence of the nuns in my middle school). So I was not surprised when the one time I did go to HR for help with the unwanted attention of an executive I was told that if I made a fuss and sued I could get a settlement but my career would be over. Instead they gave me the words to say to get him to back off – turns out he had been warned before (but he was a valuable guy) and they were confident the right language would get the message across. I did, and it worked, but their words “you’ll never work in this business again” stuck with me.

No question the very brave women who have spoken up recently, including Susan Fowler who wrote the blog post Reflecting on one very, very strange year at Uber, will make local change happen. The situations they call out will change for the better in the short term. I do believe the tactic of brushing the complaint under the rug won’t work now so that is good.

But to get to systemic change in the long run we need to get away from the boys club, to get away from situation after situation being dominated by men, often with no peer-level women in the room. For most of my career I have been the only woman in the room, and often treated as an honorary male. I’ve heard my share of locker room talk, even now, and every time I choose my reaction – usually a blend of humor and outrage – just enough to get the message across without damaging my relationship with the speaker.

I frequently raise the need to have more women on management teams and in the board room, although it often falls on deaf ears, and I have to be careful not to be “difficult” (and I am sure some think I am). But I know for certain that once there are 2 or 3 women in a partnership, or in a management team, or on a board not only do the decisions improve (lots of research coming out about this now) but also the locker room talk and unconscious bias decreases.

I have great confidence that most of the men I have worked with are not sexual harassers, and do not wish to be biased. But we all have unconscious bias and gender bias is one that we are only now really starting to grapple with in the technology industry. The industry is big enough and the bro culture prevalent enough, particularly with many of the new economy companies, that we must deal with it. To do that we need to attract women into tech, help them stay in tech, coach them, promote them and get them into leadership positions in venture partnerships and companies so we can build a better culture in the industry.

So does speaking up accomplish anything? The answer is maybe. Depending on your role sometimes you can make more difference working from the inside. But huge credit to the women that do, and to the men that are outspoken about the need for change.

Leadership

When to tell your employees to take a hike

May 13, 2017 Leave a comment
 Small companies are like families. They are full of tension, tight relationships, dreams and disappointments and they form a culture all of their own. And when they are small how each and every employee behaves affects the culture of the company. What it is like to come to work every day, how people solve problems, how they interact and help each other, or don’t.

In every group of employees you hire you are bound to hire a few non performers, and it’s management 101 that you know you have to move the non performers out. That’s what having an accountable team or a performance culture means.

But there is a group of employees that is harder to move on. I’m sure you’ve worked with people like this. They are good at their job but they are like dripping poison. They talk about “this place” or “this company” in negative terms. They make snide remarks about the leadership or about their coworkers. They work for you because it’s a good job, but nothing is good enough.

Clearly if the behavior is egregious you can move on the employee and treat it as a performance problem, but what if it’s borderline?

One way to handle this is to invite your employees to leave.

The most valuable resource an employee has is their time. Especially when they are in the early stages of their careers. In terms of personal growth and future earning power every year before 40 is more valuable that five after. Your millennial employees are investing in your company with their time learning, growing, inhaling everything they can do to improve their future. So if they are negative why are they there?

I talk to many teams and my logic to invite people to leave goes something like this:

“If you love this company and our mission, if you love working here, then invest your time wisely. Pour in your passion, work hard to make the company and your career they best they can be. Be a part of creating a positive, winning culture. Share your observations with your leaders but bring solutions, not just complaints. Support your leaders – they are human too and doing their best. Be positive.

But if you are unhappy here, if you see all the things that are wrong and you feel a need to continuously complain, if you think your leadership is incompetent, or the work is too hard then please leave. Get out.

Because life is too short to work in a company or a job you don’t like for people you don’t respect. If you think things could be better then make them better or please leave.”

Sometimes I am even more direct – “There’s the door”.

Photo: Petra © 2017 Penny Herscher

Leadership

Startups and adrenaline are a potent mix

April 26, 2017 Leave a comment

Fred Wilson’s post a few days ago “Starting is Easy, Finishing is Hard” speaks to the grind going on for many tech startups today. He says the easy exit days feel as if they have gone and for many it is taking raw tenacity to finish.

And he’s right. When you are the CEO or in the founding team of a startup the years are long. It feels as if it will take forever to get to the next stage of product, or growth, or market development.

But the days are short, and it’s what makes the days short that draws in many founders. It’s the adrenaline. Yes they should have a vision, and passion to change the world (a passion to get rich typically backfires) but without a love of the adrenaline rush they would not last a year.

You feel the adrenaline every single day. When you close a deal, when you talk with your team about your dreams, when you pitch a VC (whether or not they bite), when you have a vision match with a huge customer, when you can feel the forward progress. Your heart beats faster, your hands may shake. It’s hard to come down (many startup CEOs I have known, me included, self medicate with a stiff drink at the end of the day), it’s hard to sleep, but it makes 5am exciting because you know the rush is going to start again the next day.

In many ways you need the drug (it’s a hormone) in your body. It makes your mind sharp, it increases your intensity, it helps you focus on exactly what you need to do second to second to win in each situation. And succeeding is all about having the tenacity to win against a million people/circumstances/barriers that want to stop you every day.

Getting a new company up and running and successful is SO hard that I don’t advise people to do it unless they simply cannot stand not to, and only then if they have the stomach for the stress and can manage themselves through it. I am working with a brilliant founder today who is swinging from the heights of heaven to the depths of hell as her company leaps forward and who has designed a swimming and yoga weekly schedule simply to help her manage the stress.

And what’s interesting about the adrenaline phenomenon is one day it all stops. I ran into a girlfriend at the airport this week who ran a hugely successful company, and is now retired, and as we compared notes she told me she just stopped enjoying the rush, and then she knew it was time. When you dread the 5am calls, and you dread taking another redeye, and while you can still get the rush in front of a customer, but not every day, then it’s time to hand the baton to the next woman who wants to change the world.

Boards

It’s time for Tone at the Top on Diversity – or Why Uber is Yet Another Wakeup Call for Boards and CEOs in Tech

February 24, 2017 Leave a comment
 Uber is just the latest company caught in the act of discriminating against women in it’s workforce. Sadly for many minorities in tech this is an old story.

As Ellen Pao writes in today’s Time article it is an indication of “tech’s existential rot”. In a world that “started off seemingly harmlessly by white men funding white men with few exceptions. When only white men were given opportunities, only white men were successful. White men went on hiring only white men, because it seemed to be a common trait of successful employees. Then investors who were white men decided only white men could be successful and doubled down on white men. White men who succeeded in the system decided it worked and saw no need for change. Fifty years later investors can’t break out of that pattern.”

But it is time for the pattern to break for many reasons. There is mounting evidence that diverse teams build better products – they are more likely to understand the buying behavior of their customers if they reflect the customer. There is also growing research that companies with diverse boards and management teams produce better returns for investors -so now some investors are encouraging boards to take on diverse board members.

But more importantly it is no longer acceptable for companies to allow employee harassment to continue while HR departments stand by or worse become part of the problem, as Uber is finding out to it’s detriment. The #deleteuber campaign has been due for a while and will hurt. (note, I switched to Lyft a year ago after reading about the leadership culture at Uber.)

So if it is no longer acceptable at the board level, in the executive team, and in the engineering ranks what can we do to make change happen faster?

I have worked in the “bro” culture of tech in Silicon Valley for more than 30 years. I have repeatedly experienced unconscious bias (sometimes not so unconscious ), being underestimated, being dismissed, being propositioned etc. and I have worked hard to over come it as I became a CEO who grew my company through a successful IPO and acquisition. And as I have done so I have been open and public about my wish to be a role model to other women that you can be technical, and be in a leadership role, and have a family in the technology industry. It’s possible to do and be happy.

I was conscious of the challenge I was facing from day one when I was one of only a handful (I think 5) women majoring in math at Cambridge in my year, out of about 300. And so, to be a role model, I have always tried to hold a leadership position in any situation I am in, especially if everyone else in the room is male.

It is so clear to me now that the problem we have in tech is not a pipeline problem. Yes, we need more little girls to like computers, and more little african american boys to believe they can be Mark Zuckerberg, but we have plenty already who enter the tech world. But the women leave in droves within 10 years because the environment is hostile. Our problem is keeping women in an industry that makes life difficult for them.

It is time to set the tone at the top. To insist that boards have at least 2 or 3 women on them (not just none, or the “we have one so we’re done” you see on so many boards). There are now several recruiters who specialize in finding qualified women with the right experience for boards. For example Beth Stewart of Trewstar would tell you there is no shortage of qualified women to serve, but a shortage of boards who think this is an important issue.

It is also time for boards to insist that the CEO builds a diverse leadership team. This takes real work to find diverse, qualified executives but it can be done in most fields. Uber is just one of many examples where a mostly male leadership team is simply deaf and blind to the issues facing their female employees.

“Tone at the top” is an expression used by boards when reviewing the results of the annual audit. They discuss whether the management team is committed to honest, ethical behavior and whether they operate with integrity. The discussion is important to sign off the financials – after all what audit committee chair would want to sign off the financial filings if he did not believe the CEO and CFO had integrity with the numbers?

It’s time for companies to embrace a “tone at the top” discussion around equal opportunity for all employees. It is time for every board to pay attention to the diversity statistics within their companies. How many women are employed at every level, has the company done an audit of pay across gender to check that women are not paid less than men for the same job? Are the percentages of women in leadership growing or shrinking? It is just not hard for HR to run reports and track progress over time – but it takes a serious discussion on the importance of diversity from the board down to build a world class company in the 21st century.

I am hoping this is what Eric Holder and my friend Arianna Huffington will now do for Uber.

My Personal Journey

How 2016 rocked my world as I talked with women entrepreneurs

January 4, 2017 Leave a comment
 I am more convinced than ever that there is a bright future for women entrepreneurs and 2016 proved it to me!

I stepped back from being a full time CEO a little more than a year ago. It was time, for family reasons, and I set out to change my life. I still work (I serve on two public company boards) but I decided to spend a great deal more time with my father and my family than I have ever been able to do before, and to prioritize my time to giving back. But I had no idea what that really meant for me – what could I do that was meaningful other than work as a CEO?

I decided that I would just say “yes” to every request for help from entrepreneurs, especially, but not exclusively, women. Not that I would be a pushover and do anything I was asked, but I would say yes to any request for a meeting from an entrepreneur who wanted advice. A first meeting at least and if I thought I could make a difference I’d keep saying yes. I wish I could say I was inspired by Shonda Rhimes’ TED talk but I did not see it until I was well into the year. Instead I was thinking of it as following breadcrumbs without knowing where they were going to lead.

It’s been an extraordinary year, it’s taken me in directions I never would have expected, and it’s changing me.

I’ve met with many amazing female entrepreneurs. Aged twenties to sixties. A psychiatrist who has figured out how to use technology to dramatically reduce the cost of cognitive testing for veterans with PTSD or the elderly with dementia, a media executive with a passion for travel who’s changing how people explore the world, a technologist who’s figured out how to measure skin tone so you can buy the right makeup for your skin, a CEO with an IoT product that can tell you all about the water leakage risks in your commercial property assets (something I did not know was a big problem), a woman revolutionizing the sex tech industry, a woman with breakthrough security technology to protect your phone, a visionary who set up the first and only incubator in Gaza… a new calendaring app, a better travel itinerary planning app, a next generation geospatial model, better on-chip failsafe technology, the artistic director of a ballet, networking technology, machine learning technology … the whole gamut! I have found I love talking with entrepreneurs and CEOs. I love listening to their stories about their businesses, what’s working, what’s scaring them, how they are getting funded.

I ask questions, ad nausea, and then focus in on one of two challenges they face and discuss with them how to overcome them. It’s fun for both of us, and I realize I can help many of them. No judgement, just the experience of being there myself more than once before. And I now believe, more than ever, it is much harder for women to get venture funding than men. I have far too many data points now!

I’ve met with women hedge fund managers who only invest in women led companies, recruiters whose only business is placing women on boards, bankers who want to do deals for women CEOs. The movement is happening. Women are, more than ever, proactively helping women. I threw a book party for Joann Lublin’s new book Earning It – the party was 3 days after our horrific election – and I saw ~60 women (eating my husband’s terrific food and drinking good wine) talking to each other about how this cannot be our future and becoming even more committed to make a different future for women.

But I also visited Israel for the first time and I was hooked. I found Israel fascinating and a historical goldmine but then I spent time in the West Bank with family who are orthodox settlers, and at the same time joined a small group trying to help Palestine with Silicon Valley technology. Wow, that is a complex area. I am reading like crazy trying to understand, but it’s also an area where young women are starting businesses and where I can help.

2016 wasn’t all about female entrepreneurs. I’ve spent 25% of the year in Europe. Driving with my Dad through France, quiet days with him in England helping him write his life story, Italy with my daughter, with my husband, with my sister. Enough time that I know I was truly present for my family, for the first time in a long time.

I am not unaware that it is a privilege for me to be able to do this, but I also now recognize that it is not only money that holds us in our jobs. It is also social status, recognition, a sense of being important. One of my new friends, now in her seventies, and who had a very big, high profile CEO job, told me one of the things she found most difficult about retiring was not being important any more. We are all, in our own ways, driven by ego and giving up the identity that defined me for most of my adult life has had it’s hard moments, like when a man asked me at a fundraiser what I do for a living and when I said I am retired he said “oh” and walked away. I’ve had plenty of “invisible” moments this year and it takes some getting used to.

We may feel it’s hard for women entrepreneurs in 2017, but the groundswell is growing. The number of smart women building businesses inspires me. The number of powerful female CEOs inspires me. And in 2017 I am open for business to help them in any way I can!

Boards, Career Advice

So you want to join a board: Advice to help you prepare

December 20, 2016 Leave a comment
 If you want to join a board, you are not alone. Some people want to find a board in the middle of their career because they like the idea of learning about board life, or for the status of it; some people are looking for board work towards the end of their career because they want to stay engaged and give back. Either way it’s a common, serious interest for many people.
But what does it take – how do you prepare yourself to be qualified?

First off, determine why you want it – and be able to articulate that. Are you looking for income or interest? Be clear about this because there is a huge difference between the two. Non-profit boards typically don’t pay, in fact they expect you to give money. For-profit private company boards may pay cash, or they may only pay in stock (which may, or may not, ever be worth anything) and for-profit public company boards pay, but the pay varies widely depending on the size, industry and country of the company.

Once you can clearly state what you want and why, the next step is for you to determine what value you are going to bring – what is your value proposition? What experience do you bring, how will you be helpful, why should a board want you on it? I had never done this formally until a few weeks ago when I was on a panel and the moderator asked us panelists to write down our value propositions. This is what I came up with (late at night in a hotel room!):

As someone who has 20 years as a high tech CEO, has been through an IPO and many M&A deals  and who is very technical, I bring experience in what it takes to create the strategy, execution plans and leadership teams necessary to drive growth. As a compensation committee chair on two public boards I team with the CEO to create the right incentives to execute the operational plans and create shareholder value. I tend to be the voice in the room focused on strategy and the needs of the leadership team in a rapidly changing world.

Try writing yours – what would you say?

Another way to approach this is to inventory your skills. Make a list of what you’re good at – what makes you unique. This is your experience – what types of jobs you’ve had – PLUS what is it about your intellect and personality that will be helpful? Are you good under pressure, are you energized by solving hard problems, are you good at negotiation, are you natural coach, do you have strong P&L management experience? These are skills that are often not on your resume, but when a recruiter asks you what you would bring to a board it’s good to be able to confidently state the top 3 or 4 skills that you would bring.

The next challenge is that while  you may feel you are ready to contribute on a board, many boards will not want to hire someone with no previous experience. This is one of the top objections that prevents boards diversifying – boards tend to hire people they know, who are like them, who have served on boards before. It’s less work than hiring someone who is different and needs training. But as the trend towards building more diverse boards continues, nomination committees are coming to terms with hiring board members without previous experience.

One of the ways you can prepare yourself is to go and take training. I am a member of the volunteer faculty at a two day intensive training course – the NextGen Directors Academy – designed to take a small group of diverse, aspiring future board members through the nuts and bolts of being on a board. We cover the basic responsibilities, what each committee is responsible for, what your institutional investors care about and case studies of boards who got off track with activists. It’s an interactive, peer to peer format, and there are no stupid questions. There are several courses around like this, but not all have deep, intense content so make sure you talk with previous attendees before you sign up.

Another way you can prepare is to make sure you have the business basics covered. Most of the top business schools run executive training classes, from a few days to several weeks, ranging from general management preparation to specialized skills like cyber security. Once you have inventoried your own skills and experience, think about whether you have a gap you need to fill with some training, or whether you want to develop a skill that is currently in high demand for board members.

One of the ephemeral requirements of many boards is “fit”. Boards are expected to be collegiate, to get along, to voice difference but in the end come together on decisions. (I could write a tome on whether this is healthy for the shareholders or not, but not here). If you want to get onto a company board, but have no experience to point to, try joining a non-profit board first. Pick one that is a decent size (>$500k a year in budget), that has a real board that meets 2-4 times a year and that is run by an experienced chairperson. Reading the prep materials, listening to the management team, sitting in the meetings contributing to the discussion in a balanced, collegiate way will bring you confidence and experience that you can then refer to when you discuss your first for-profit board.

Make sure you have the time to be an effective board member. Being on a board carries status with it, it sounds important, and it may pay well. And many boards have 4-5 meetings a year so it doesn’t sound like much. But actually board work can take a huge amount of time. On a regular basis you need to put the time aside to read, to prepare and to attend the meetings. But in addition you will have countless phone calls and phone meetings outside of the regular meetings. You will need to meet with the CEO and members of the executive team and if the board needs to find a new CEO (for whatever reason) expect to spend days and days, over a series of months, meeting candidates and discussing them with the other board members. So before you pour time into preparing yourself to sit on a board make sure your day job allows you enough time to truly contribute.

And finally, don’t be shy. If you want to get on a board say so. Tell everyone you talk with about boards that you are, yourself, looking for a board seat. Network with recruiters who specialize, and stay in touch with them so you are current in their minds. Talk to people who are already on boards. Finding the right board is a pretty random process and so getting the word out will help the right board find you.

Leadership

The difference between being right and getting the right answer

October 29, 2016 Leave a comment
Entrepreneurs can be a hard headed lot. It takes courage, determination, a lot of luck, and sometimes just old fashioned, bull-headed persistence to create a company but as a result entrepreneurs don’t always listen well.But even if you know you resemble this description, ask yourself – is it more important for you to get to the right answer, or to be right?

You want to be right because your team wants to follow someone who knows what to do. You want to be right because it’s more efficient, and it increases your confidence, and if you’re right more often than you are wrong you have a good chance of winning. And if you believe you are right you are more likely to take risk.

But your potential investor wants you to be more interested in getting to the right answer than being right. When you are building your company you cannot predict what’s going to happen. You may switch markets, your customers may show you a different direction, the company may almost die more than once, you are certain to make some bad hires along the way. It is almost guaranteed that your journey will not be smooth.

As a result, it is much more impactful as an investor to work with entrepreneurs who are seeking truth, seeking to understand, seeking the right answer. These entrepreneurs ask questions, question themselves and try out ideas without fear of being wrong. As an investor you can dig in and problem solve with them. It’s more fun, it’s less frustrating, and you are more likely to get to a great end result together.

So when you are talking with potential investors, or even potential senior team members you want to hire, ask yourself how strong is your need to be right?

Career Advice

Three critical questions to ask a startup before you agree to work for it

September 1, 2016 Leave a comment

So you want to work for a startup!

You’ve been talking to one that you think is going somewhere and will give you the experience you want, you like the people and the title, job and salary sounds right for you. They make you an offer. Great!

But now is the point where you need to ask three critical sets of questions to determine if this is actually a good company to work for or not. Remember each job you take influences your future career. What you learn, who you get to know, what opportunities you get as a result. Many people peak in their forties (career wise, and for a myriad of professional and personal reasons) and so the job choices you make in your twenties and thirties will affect how you peak.

After 30 years in Silicon Valley, 20 of them as a high tech CEO, and now talking almost every day to people who want company and career advice, I’ve seen too many bad company structures to take any offer at face value. I recommend you (respectfully) ask questions to explore these three areas – the health of the business, the capital structure and the organization – and if a company won’t answer then that in itself tells you this is a not a great situation for you.

1. Understand the health of the business

Health is all about rate of growth. What is the revenue, how is it growing and what other metrics are critical health indicators for the business? so ask:

– What was the revenue for the last 2 years, what is the forecast for this year and next year? You’re listening for consistent, sustainable growth and a management team that is making its plans. There is no right answer here because it depends on the stage of the company, but you’re listening for b.s. or inconsistency.

– What percentage of the revenue this year is recurring (ie. it renews every year)? Do you expect this percentage to improve? You’re listening for the quality of the revenue. Recurring is higher quality than one-time revenue and drives a higher valuation. If a high percentage is recurring then you want to understand how many of the customers renew – i.e. what is the customer retention rate? How much do they churn.

– Are you profitable? If so for how long? If not when do you plan to be profitable? If not, when do you need to raise your next round of investment? Note, if your hiring manager says “we’re not profitable and we don’t want to be” don’t buy the b.s. The ONLY time you don’t want to be profitable is when you have easy access to lots of cash and you’re truly investing for growth but most good companies would like to be profitable, while still growing, so they stop burning cash. They should be able to talk about how much time and cash it is going to take to get profitable if everything goes to plan.

– What are the other important metrics you track for your business? For example customer acquisition rate and costs, customer retention rates etc? Be sure to listen for real metrics that are about the true health and growth of the business, not just marketing metrics (clicks, downloads etc) but which are not metrics leading to revenue growth.

2. Understand the capital structure and cash

Startups run on cash from investors, not cash from operations and so it’s important you know what the terms are and how they might affect the future of the company, so ask:

– What is the capital structure? How many preferred shares are outstanding, how many common and what is the total number of shares including the unallocated options in the employee pool? You want to know the total number of shares so you know what your options may be worth in the future.

For example
The company has raised $5M selling 5 million shares at $1 per share to preferred sharesholders
The founders have 5 million shares
The option pool has 1 million shares priced at 10 cents per share
=> there are 11 million shares and the post-money valuation is $11M


The company is sold for $49M. 


$5M is returned to the preferred shareholders so now there is $44M to share
This means $4 per share – you make a gain of $3.90 per option you have vested at that time

– What are the basic terms of the preferred shareholders? Are they participating? – this means they take their money back first as in the example above and then what’s left is divided across the total number of shares.

– Do the preferred shareholders have any control on the sale of the company? For example, can they veto a sale below a certain valuation, or veto a capital raise below a certain threshold valuation? You want to know this because if they can, and you think it’s unreasonable then you should discount the potential value of your shares. These kind of terms are not typical with high class VCs, but you do see them with PE firms and newer VCs who don’t have a lot of experience on the downside effects. And I know of too many founders who lost their companies because of these types of terms. If you are unsure, ask around or check out The Funded to get a measure of the quality of the investors.

– Do any of the executives have 100% vesting on change of control? Some VCs say no to this for everyone, some say only the CEO, some say only the CEO, CFO and VP Sales and so on but most executives want it. This tells you a lot about whether the executives are looking to ramp quickly and sell vs. build a long term company.

– And if they suggest you buy your common stock don’t. Look at what happened to the employees at Good Technology, and there are thousands of examples like this where the common holders lost their money because they were behind the VCs. Be patient and pay a little more tax when you make money.

3. Understand the org chart and politics

– Figure out where you fit in the organization. How many layers are between you and the CEO? What is the span of control of your VP? You’re looking for a relatively flat organization where you are in a strong part of the organization – i.e. your exec has power.

– Does the organization make sense to you? Do you see what looks like politics between founders (odd titles, responsibilities in places they should not be)? Do you see one CEO by name, but two CEOs by organization? Does the balance between R&D and sales make sense to you? Again, does it pass the sniff test for you?

Remember, you want to work for someone who is really good at their job, a great manager, and who will invest in you and your skills. And someone who you will work for for a decent period of time – like a year. You don’t want a weak manager, a revolving door of managers, or ill defined responsibilities between you and other people/teams. The chaos being reported at WrkRiot is certainly unusual, but there are many aspects of this story I have seen and heard when founders don’t know what they are doing and don’t have good advisors – so be selfish and do your homework.

Most good companies will help you understand these three areas because they will respect that you are making an important decision for your career. The most precious thing you have is your time and the best thing you can get is experience. Not money, or options, or a title but experience. Training, education and opportunity. So measure your startup against those metrics too before you fall in love.

My Personal Journey

The Silk Roads – and other Summer reading which may make me live longer

August 22, 2016 Leave a comment
I was highly amused to read the New York Times article that people who read books live longer!

According to the NYT “Compared with those who did not read books, those who read for up to three and a half hours a week were 17 percent less likely to die over 12 years of follow-up, and those who read more than that were 23 percent less likely to die. Book readers lived an average of almost two years longer than those who did not read at all.”

Well I am on my way to changing my longevity to a long old age surrounded by piles of books. Hooray!

And this Summer, as my first Summer not working full time as a CEO, the books are certainly piling up but by far the best book I have read in a long time is the Silk Roads by Peter Frankopan. This book is a retelling of world history by looking at it through the lens of the development of trade routes, specifically the silk roads, through the center of the world (Persia and it’s neighbors). It does a beautiful job of weaving a complex story of how these economic relationships developed in a completely compelling and riveting way, while at the same time it ties the trading relationships into world events as diverse as the discovery of the New World and the Second World War.

It’s not perfect – as the Guardian review says “The need for brevity has led to some troubling misrepresentations” but at 646 pages of dense type it is hardly brief. And the Washington Post review is fair in both praising the book, and pointing out it’s shortcomings.

But for me much of the fascination with this book comes not from learning any specific new history but instead to see how intimately everything is connected. I, like the author, was raised with a Eurocentric point of view and my education was very pro British Empire. I cringed at times at how critical the author is of the British in the 19th century, but my discomfort was even more acute reading his perspective on the Americans in the Middle East since the second world war. He’s harsh, and maybe a little biased against both my countries (I’m a dual national after all) and yet his perspective was thought provoking.

If you are interested in world history this is a book truly worth making the time and effort to read. And even if you are not, this book will open your eyes to a new way of thinking about the history we were taught.

For the rest of my Summer… of the many books I have read I recommend:
Sicily by John Julius Norwich – a loving walk through the history of this fascinating island and a must if you are thinking of visiting.
My Promised Land: The Triumph and Tragedy of Israel by Ari Shavit – gorgeous, rich description of the birth of modern Israel, although a little biased.
Jerusalem: The Biography by Simon Sebag Montefiore – deeply researched sweep through 2500 years of this fascinating city’s history, also well written.
Augustus: First Emperor of Rome by Adrian Goldsworthy – a nerdy feast on this fascinating man.

And for a scented confection that makes you want to cook with lemons and get on a plane to Italy my current delight is The Land Where Lemons Grow by Helen Attlee. It is simply perfect!

  • About Penny

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    Board director and former tech CEO, passionate about building great businesses and achieving economic equality for women. Mother, wife, daughter. Avid traveler, loyal friend.

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