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How to Run a Board Meeting: The Slide Deck

A few weeks ago, I blogged about my first board meeting as a CEO of a venture backed company. The response to the blog post was great and I received a few emails asking me to share more details. In that sense, I decided to put together a template of the slide deck I am using during board meetings.

The purpose of the board package slide deck is to provide a clear summary of the current state of the company including the major milestones achieved and challenges faced since the previous board meeting. CEOs should use the slide deck as the main vehicle to drive the discussions during the board meeting and it should be structured in a way that prevents unnecessary discussions that might derail from the main goals of the board meeting. In order to present the current state of the company, CEOs should give clear metrics about the main areas of the business: finances, sales, business development, product, team, marketing, etc.

While preparing for my first board meeting, I looked at different recommendations to structure the slide deck but, at the end, decided to create a specific structure that work for our investors. Even the slide deck template before might result as a good reference, I suggest you do the same and try to find the flow and structure that works for your company.

I hope this helps. Let me know your feedback.

 
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Posted by on March 20, 2014 in Uncategorized

 

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I am Back! And We Just Raised $5 Million Dollars

KIDOZEN-LOGO-NEGATIVE_2After a hectic couple of months, I am finally able to sit down and share some exciting news with you guys. The last 2 months have been incredibly intense for me to the point of affecting my regular writing on this blog. However, I do have a good excuse. If you haven’t read the news, I am super happy to announce that KidoZen just completed a $5M Series A led by Third Point Ventures!

Since the Wall Street Journal broke the news two weeks ago, I have been having different conversations with different folks from different backgrounds: VCs, journalists, entrepreneurs, partners, etc, explaining our reasoning and experience during the process. Based on those conversations, I thought it might be a good idea to share some of those insights with you guys. In that sense, I summarized some of the not-so-obvious lessons that I either learned or validated during the process.

While I work with various VC groups as a tech advisor, this is the first time I have raised institutional capital. In that regard, you might find some of my perspectives useful if you thinking on starting the process of raising VC money for your company. For the purpose of this blog post, I am going to keep the explanations short and simple. We can expand into the details in subsequent blog posts.

If you can, only raise capital when you are ready

From a financial standpoint, KidoZen didn’t need to raise capital. We have a large number of paying customer and revenue numbers on the mid seven figures. We decided to raise capital because we felt the company is at an inflection point from the growth perspective and we have a very aggressive roadmap in order to continuing acquiring meaningful market share. That position gave us a lot of leverage during the process in order to bring on-board the right partner under the right terms.

You are always raising

Officially, we met with different VC groups the last week of September and received the funds the week before Thanksgiving. While you might think that was a very rapid process, the fact of the matter is that we have been having unofficial conversations with different VCs for the good part of the year trying to identify the right partners for a company like KidoZen.

As a CEO, I am of the idea that you are always raising capital. Whether you are officially raising or having informal conversations, it’s your job to keep potential investors interested and up to date about your company and progress. If you only go on a fundraising exercise when you need it, you will put yourself and your company under unnecessary amounts of pressure that might result in an unfavorable deal.

Keep the team focused (or don’t tell them anything)

When we started our official fundraising process, the KidoZen executive team made the decision of not sharing the news with the entire company. While that might look contrary to the principles of transparency we constantly predicate, we decided it was very important for the team to remain focus on the product, customer and partner acquisition and not add any additional distractions.

Raising capital is a very stressful process. As a CEO, you need to decide whether you want to share that pressure with your team or put that burden upon yourself and keep the team focused on execution. There is no right answer, it all depends on your current state and culture of your company.

In our case, we decided that sharing that level of pressure and uncertainty with the entire company was going to become an unnecessary distraction. At the same token, we made the commitment to share the news with the team as soon as we knew the outcome regardless of whether we were successful or not.

Be honest, all the f… time

I can’t stress enough the importance of this. If you are truly partnering with your investors to build a great company, you need to be completely transparent with them. We see our investors as part of the team and not as an external entity. If your investors really believe in your company and are really interested on investing, they will roll up their sleeves and help you address any problems that are an impediment for the fundraising process.

Make sure your company is organizationally ready for institutional investors

Complementing the previous point, If you are thinking about raising institutional capital, I would suggest you take a serious look at your company and make sure it can undergo the detailed due diligence process which is typical is series A-B-…Z. in our case, I completely underestimated our readiness as a company and encountered numerous challenges throughout the Series A process. Thankfully, our investors, legal counsel, finance group were incredibly efficient fixing any unexpected issues and brought the process to a successful closure. At the end, I think that exercise made KidoZen a stronger and certainly more operationally organized company.

Trust your investor

Either you see your investors as true partners and part of your company or as a glorified ATM. If the former, is your duty to be completely honest with them, trust their judgment and accept the occasional criticism in order to make your company better. If you don’t like to be challenged on your decisions or have a problem when people disagree with you, I would suggest you explore other avenues to raise institutional capital. Dealing with VCs is too painful to do it just for the money.

Get help, don’t do it alone

Another one of my mistakes. I really thought that I could handle most of the fundraising process by myself with the help of our legal counsel and finance team without the need of additional help. What that ended up being mostly true, the process was as painful as short. Raising institutional capital can be incredibly stressful and not having anyone to share your challenges and frustrations with makes it even worse.

In my case, there were a couple of times on which I felt completely exhausted about the whole process. At the same time, I didn’t want to communicate that state of mind to the team because I felt it was very unfair to them. To this day, I can’t thank enough my dear friend (and new KidoZen board member ;) ) Jason Port for his support and help during this process.

I know a lot has been written about the process of raising institutional capital. I hope some of this ideas resonate with you as I was positioning them from my own experience. I will share more details in a future post.

 
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Posted by on December 13, 2013 in Uncategorized

 

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Enterprise Software Lessons: IT Services are Getting Sexy Again and VCs Love It

For the last decade, IT services has been a synonym of boring. Having started and ran an IT services company I am very bias against that line of thought but I don’t ignore the fact that the majority of the industry feels that way. Arguably, the clearest example of this fact is that shockingly low number of VC-backed IT services companies in the current market. Whether you love or hate the venture capital (VC) model, following the VC money will always point to the exciting areas in an industry.

Seriously, can you name any VC-backed IT services companies that started 5-10 years ago?

There are very good reasons why VCs have stayed away from the IT services market in the last decade. Long sale cycles, lack of recurring revenue, scalability challenges, increasing commoditization, lack of innovation and excitement are just some of the factors that never made IT services companies a good candidate for VC funding.

Well, things are changing and IT services are hot again!

As I mentioned many many times in this blog, these are the most exciting times that the enterprise software industry has witnessed since the internet boom. The emergence of technology revolutions such as big data, enterprise mobility, gamification, natural user interfaces, cloud computing, network virtualization, enterprise social computing is redefining the enterprise software landscape. New and exciting software packages are making inroads into enterprise customers and, a lot of times, those software required a complementary services delivery mechanism to facilitate their adoption in the enterprise.

Suddenly, IT services companies are reinventing themselves to play in all these new spaces and incumbents are challenging the well established players with new and innovative delivery models that result very appealing to enterprise customers. Like any other disruptive movement, VCs are actively watching and we are already seeing an increasing interest on IT services companies. In that sense, we can see firms like Sigma Partners backing Boston-based enterprise mobility startup Mobiquity (http://www.masshightech.com/stories/2011/03/28/daily16-Mobiquity-launches-with-5M-VC-financing.html ) and Intel Capital and Canaan Partners putting $45M behind IT services company Happiest Minds(http://articles.economictimes.indiatimes.com/2011-11-16/news/30405749_1_happiest-minds-technologies-chairman-ashok-soota-mindtree).

Without trying to give a complete explanation to this renewed interest of VCs in IT services companies, there are a few factors that can quickly help to explain the phenomenon:

Higher Rates

In the IT services world, new technologies is often a synonym of high rates. These days, enterprises are willing to spend large sums in IT projects related to technologies such as big data, enterprise mobility, cloud computing, etc which sometimes translates into large revenue sources for IT services companies.

Recurrent Revenue

SaaS models have not only redefined the software delivery model but they have opened for IT services companies to offer IT solutions in a subscription based model. With more and more enterprise solutions moving to public cloud infrastructures, enterprises are very receptive to the model of paying for those solutions in a subscription based model which can rerate sources of recurrent revenue for IT services players.

Vertical Solutions

The new generation of enterprise software technologies is redefining vertical solutions across different industries. Given the constant exposure to customers, IT services companies have traditional been in an enviable position to craft and deliver vertical solutions. A lot of these solutions can evolve into very lucrative revenue sources from an IT services perspective.

Vibrant Enterprise Software Ecosystem

The enterprise software ecosystem is more vibrant than ever and every year new players are challenging the traditional enterprise software vendors in different industry. This vibrant ecosystem offers a very unique opportunity for IT services companies to provide efficient mechanisms for enterprises to adopt these new software packages.

What do you think? Is the IT services industry back?

 
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Posted by on September 20, 2012 in Uncategorized

 

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The Importance of Product Vision and Mission: The Story of the Annoying Girl I Met Last Night

For privacy reasons, I decided to not mention official company names in this post

Last night I was having dinner with a few friends that work in private equity technology investments. Every few weeks, we enjoyed getting together and just chatting about the technology market, recent funding rounds, exciting new companies or technologies etc. While enjoying dinner I recognized somebody in the table right next to us as a business development executive from one of the NOSQL databases companies that recently raised a new financial round, for the privacy of the story let’s call the company DreamDB ;). I am personally a big fan of DreamDB and Tellago Studios’ is not only a paying customer but we use their technology as one of the foundational components of our upcoming enterprise mobility platform. I know some of DreamDB’s founders and have an immense respect for the company.

Considering those facts and the coincidence that, just minutes before, we had been talking about DreamDB’s latest funding round, I thought it would a good idea to invite that person to join us for a little bit. I waited until an opportune moment to introduce myself and congratulate her on the financial round. After thanking me her immediate response was a loud, “ohhh I know your company” which was very surprising considering we have not been very public about our use of DreamDB.

After a few introductions she quickly move closer to our table on which my friends asked her a few questions about DreamDB. Remember, these are guys that make a living investing on tech companies; they’ve heard tens of thousands of pitches and don’t easily get impressed ;). To my surprise, the girl answered the question listing DreamDB’s main investors and biggest clients. A little surprised by the answer, my friends asked more directly the problem DreamDB solves, the market, etc. Again, the response was an incoherent explanation of how DreamDB is backed by these VCs or used by these companies. Trying to present the question from another angle, my friends asked about the company mission, origins, etc and again our girl just gave us a description of DreamDB’s latest financial round. A little bit confused by her answers, we thanked her and wish her luck in her job at DreamDB.

Thinking about this story on the way home, I couldn’t avoid feeling shocked about how this girl could only describe a great product based on the story of their financial rounds or their clients. As far as I know, companies rarely embrace a product because is backed by a specific VC firm or because is used by some big name.

As an entrepreneur, it’s important to understand that the vision behind your products and the mission of your company are foundational to everything you do and completely independent of the current stage of your company or your existing customer base. Clearly stating the mission of your company and the vision behind a specific product will make your team drive together towards accomplishing those goals while staying loyal to your core values. Here is a simple sequence you can use when asked about your product or company:

  • Who are the founders (team) and the mission as the company (vision)
  • What problem do you solve? (problem)
  • What is your current product and the vision behind it? (execution)
  • What’s your customer audience, target market? (market potential)
  • How is your product different from the competition? (competitive advantage)
  • Optionally, list some of our current clients and best stories (execution )
  • Only if it makes sense, talk about the financial composition of your company.

If nothing else, annoying situations like last night’s, are a clear reminder of the importance of clearly detailing the vision of a product and the mission and values of a company. Everything else: customers, funding rounds, partnerships are just part of the execution of your vision and goals.

 
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Posted by on May 31, 2012 in Uncategorized

 

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A good reason why we are not in a technology bubble: Competition

There is a lot of debate in the venture capital circles around whether we are seeing the first signs of another internet or technology bubble. When the last internet bubble burst I was in high school and not even living in the United States but I clearly remember starting computer science school reading the horror stories of companies going out of business and the entire world complaining about the lack of sustainability of Internet startups. Ten years after, we are, yet again, experiencing an explosion in technology markets that are bringing back dark memories from the last collapse.

Certainly, the excitement in areas like cloud computing, mobility or green computing are pushing valuations to levels that, sometimes, are not a true reflection of the real value of a company. You even have companies like Pandora being able to pull a $1B IPO without even being profitable. On the other side, we have many indicators that contradict the hypothesis that we are entering a technology bubble. Arguably, the clearest of those indicators is the fact that the hottest technology companies like Apple or Google are trading below average levels.

I’ve spent a lot of time watching the market and thinking about this topic and I firmly believe that we are NOT experiencing a technology bubble. I will go as far as to say that there are some very specific conditions that will prevent the technology market from experiencing another massive collapse. If you do some research online, you will find a lot of macroeconomic reasons that will sustain this argument and I certainly don’t plan to expand on those aspects in this post. Instead, I would like to focus on a basic and almost trivial argument that, in my opinion, will prevent another technology bubble: Competition.

My thesis here is very simple, I believe that the fierce competition we are experiencing in the technology market will guarantee that only great companies will prevail at the end of this cycle. If you look at any of the hot internet trends these days like location, social or recommendations, you will find a small number of companies raising the level of innovation at an unprecedented pace which, at the same time, is raising the level of maturity of the current market. This almost contradicts the characteristics of a technology bubble.

How Is That Different From The Dotcom Days?

Well, if you think about it, despite the number of internet companies started during those days, there was not enough level of competition to increase the maturity level of the market. Interestingly enough, the few areas that did experience tough competition like search or ecommerce ended up producing companies like Google, Amazon and EBay which are some of the pillars of the modern internet.

What Competition Can Do…

Here is a quick anecdote of how the rivalry between two of the greatest masters of the Italian renaissance helped to influence a beautiful piece of art.

Italian Renaissance artists Michelangelo. Buonarroti, and Raphael Sanzio were unspoken rivals. The irascible Michelangelo, forced by Pope Julius II into painting his own private chapel, the Sistine as we know it, complained that he was not a painter, but a sculptor. This complaint fell on deaf ears as the pope had a war to fight and little time or patience for soothing the artistic temperament.

Raphael, on the other hand, blessed with a much more affable personality, never seemed to lack for funds or friends. Both artists were occupied simultaneously with the pope’s own private artistic visions in the Vatican.

Raphael’s work in the Vatican Stanze was open to the curious; while Michelangelo left strict orders that no visitors were to be allowed in the Sistine Chapel. Michelangelo, busy as a bee himself, consumed with a daunting task, apparently had little interest in Raphael’s work. But Raphael had an interest in his. Raphael paid a secret visit aided by the pope to view Michelangelo’s ceiling in progress.  So profoundly did it affect him that he returned to his work in the Stanza della Segnatura (the pope’s private library), where he proceeded to pay tribute to Michelangelo by incorporating a seated figure of Michelangelo in the foreground of his masterpiece fresco, The School of Athens.

Competitive Market For Investors

The level of competition we are currently experiencing in technology expands beyond companies and  touches the investors behind these companies. Even though it’s true that there are a lot of funding options available to companies these days, competition is putting investors under constant pressure to make sure they back and grow the right companies and is forcing founders to make sure they select the right investors. With a little bit of luck, such a competitive market will play a role on preventing investors from focusing heavily on irrelevant companies.

Forcing To Innovate Fast

Competition is forcing companies to innovate really fast. If you think about it, only great companies have the ability to continuously innovate at a fast pace and, at the same time, stay very competitive. The companies that are not able to do keep up with this level of innovation, will see their value proposition diminished and, therefore, will have little chances to influence a potential technology bubble.

Forcing To Pivot Fast

When you are operating in a highly competitive environment, your target market and users are likely to evolve relatively fast. In that fast changing market you will, inevitably, realize that some of the your product features or even complete ideas are not relevant anymore. At that time, is when great companies have the ability to pivot onto a different direction that allows them to stay competitive or to expand onto new market areas.

Pivoting a business is extremely hard and a large majority of companies simply don’t have the skillset or support to do it. The fierce competition between internet startups will force a lot of founders and investors to pivot their businesses multiple times which will cause a lot of those businesses to either fail or stagger which will leave little chances to influence a technology bubble.

Alternatives To IPO

Technology bubbles are mostly influenced by disproportional company valuations which is a phenomenon ultimately reflected when companies start trading their stocks publicly (IPO). In recent years, the level of competition and innovation in the internet space have, almost organically, created various alternatives to IPOs which allow founders and investors to stay involved in a company for longer times.

Acquisitions, secondary markets or secondary funds are some of the most obvious alternatives to traditional IPOs. This competitive market is obviously forcing a lot of the big technology vendors to expand onto new areas by acquiring new technologies, which, at the same token, influence their competitors to acquire similar technologies.

Secondary Funds like Russia’s Digital Sky Technologies (DST) are offering investors and founders the opportunity to obtain some liquidity without the pressures of going public. Finally, secondary marketplaces like SecondMarket offer shareholders the opportunity of trading some of their stock options while the company stays private.

There Will Be Exceptions

Like any other big macroeconomic phenomenon, we will see exceptions that make us believe we are in a technology bubble. Unreal valuations, companies going public without creating a sustainable business are going to be a normal element in the near future of the technology market. However, we should trust that the level of competition in today’s technology market will be one of the factors that will organically help to prevent another technology bubble.

 
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Posted by on August 2, 2011 in entrepreneurship, startups

 

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