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If the Shoe Fits: Do You Respect of Disrespect the Startup Social Contract?

Friday, March 28th, 2014

A Friday series exploring Startups and the people who make them go. Read all If the Shoe Fits posts here

5726760809_bf0bf0f558_m

A couple of years ago serial entrepreneur Matt Weeks wrote about the Startup Social Contract founders have with their people, with a focus on stock options.

Having worked with startups since the early Eighties I’m intimately aware of how fragile this contract has become and how often it has been totally disregarded in the last decade.

The result should come as no surprise.

Any time a group of workers feel they are being taken advantage of someone will always step up, marshal resources and organize them, especially when the workers are highly educated.

That’s why founders have only themselves to blame for the uprising among the people they need the most.

Employees at startups are being taken advantage of, said Chris Zaharias, who was joined by rally partner and stock option counsel Mary Russell. Founders and venture capitalists make the negotiations around equity (or how much of the company employees own) intentionally confusing.

Equity fairness and transparency  is the reason we developed Option Sanity.

While I don’t agree with all the content in the “Startup Employee Equity Bill of Rights,” it certainly reflects how badly the Startup Social Contract is being abused, if not totally disregarded.

And, as Matt says, “If the workers and/or the exec team come to disrespect, disbelieve or ignore this social contract, the company is lost.”

Image credit: HikingArtist

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If the Shoe Fits: Staying Lucky

Friday, March 16th, 2012

A Friday series exploring Startups and the people who make them go. Read all If the Shoe Fits posts here

5726760809_bf0bf0f558_mAnalysis by VC Anthony Tjan, founder of Cue Ball, found that 25% of both entrepreneurs and corporate business builders consider themselves lucky.

That’s a big percentage for something considered random, dubious or non-existent, depending on whom you ask.

Further research found “a combination of what we call a lucky attitude and a lucky network” as opposed to random luck.

What happens next? Does that attitude continue as success mounts?

But the biggest risk for top leaders is being complacent and overconfident — which amounts to being disconnected from the reality, attitude, and relationships that can sustain and take excellence to a new place.

Tjan recommends seven MAP functions to avoid the disconnect:

  • humility, the lack of which leads to arrogance;
  • intellectual curiosity, the lack of which also leads to arrogance;
  • optimism, looking first for the positive attracts great people, while the opposite repels them;
  • vulnerability, the best preventative for arrogance;
  • authenticity, which is lost when shrouded in spin; worse, believing the spin leads to arrogance;
  • generosity, no matter your success, share your knowledge sans the ‘what’s in it for me’ attitude; and
  • openness, willingness to a listen to new ideas from 360 degrees of non-traditional sources.

Read the article (it’s short) and then share your thoughts on luck below.

Option Sanity keeps you lucky.

Come visit Option Sanity for an easy-to-understand, simple-to-implement stock process.  So easy a CEO can do it.

Warning.

Do not attempt to use Option Sanity™ without a strong commitment to business planning, financial controls, honesty, ethics, and “doing the right thing.”
Use only as directed.
Users of Option Sanity may experience sudden increases in team cohesion and worker satisfaction. In cases where team productivity, retention and company success is greater than typical, expect media interest and invitations as keynote speaker.

Flickr image credit: HikingArtist

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If the Shoe Fits: Breaking Trust, an Industry Standard

Friday, February 17th, 2012

A Friday series exploring Startups and the people who make them go. Read all If the Shoe Fits posts here

5726760809_bf0bf0f558_mMost people consider it wrong to take something, whether tangible or intangible, from someone’s home without asking—it’s called stealing.

Most people will be highly offended, if not downright pissed off, if someone goes through their cell phone, contacts their friends or reads their texts and emails.

Companies, on the other hand, see nothing wrong with it—unless they are caught.

I’m not referring to sleazy porn sites, but to the biggest names in mobile and social, the ones that are role models; names like Google Android, Twitter, Foursquare, Apple i-Whatever (Apple claims they prohibit it, but Yelp, Gowalla, Hipster and Foodspotting all do it) and a host of startups and app makers.

The address book in smartphones — where some of the user’s most personal data is carried — is free for app developers to take at will, often without the phone owner’s knowledge.

Heck, appropriating data was actually industry standard, until they were caught, that is.

Now they all claim to be changing their practice and giving users notice when they take personal data.

Does that give you a warm feeling or do you still feel violated the way you would if your home was broken into? (Most people spend more time with their phone than their home.)

Do you trust them to be upfront/authentic/transparent/honest in the future?

Or do you wonder what else they are doing that they haven’t mentioned and probably won’t unless/until they are caught.

Trust is fragile and difficult to fix once it’s broken.

Even oblivious Americans are starting to notice.

Option Sanity™  is trustworthy.

Come visit Option Sanity for an easy-to-understand, simple-to-implement stock allocation process; so easy a CEO can do it.

Warning.

Do not attempt to use Option Sanity™ without a strong commitment to business planning, financial controls, honesty, ethics, and “doing the right thing.”
Use only as directed.
Users of Option Sanity may experience sudden increases in team cohesion and worker satisfaction. In cases where team productivity, retention and company success is greater than typical, expect media interest and invitations as keynote speaker.

Flickr image credit: HikingArtist

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If the Shoe Fits: You and Jeremy Lin

Friday, February 10th, 2012

A Friday series exploring Startups and the people who make them go. Read all If the Shoe Fits posts here

5726760809_bf0bf0f558_mBosses hiring for startups (or existing companies) wax lyrical on the benefits of hiring “stars” and are willing to jump through almost any hoop to get one.

Those of you who crave stars would do well to read the story of Jeremy Lin, who plays for the NY Knicks in the NBA.

Nobody considered Lin a star or even a potential star.

He was cut in December by the Golden State Warriors, his hometown team, after one season in which he rarely left the bench. The Warriors were intrigued enough to sign him but not enough to keep him. The Houston Rockets gave Lin a quick look and cut him.

Of course, his coaches didn’t play him, so they never learned what he could do.

The Knicks almost made the same mistake.

Lin started with two strikes against him; he is Chinese-American and graduated from Harvard—he doesn’t fit “the profile.”

In spite of superb high school playing he received no scholarship offers.

Similar scenarios play out every day in hiring decisions across industries and around the country.

In doing so managers walk by some of the best talent available.

How many Jeremy Lins have you missed?

How many of them now work for your competition?

Option Sanity™ recognizes stars-to-be

Come visit Option Sanity for an easy-to-understand, simple-to-implement stock allocation process.  So easy a CEO can do it.

Warning.

Do not attempt to use Option Sanity™ without a strong commitment to business planning, financial controls, honesty, ethics, and “doing the right thing.”
Use only as directed.
Users of Option Sanity may experience sudden increases in team cohesion and worker satisfaction. In cases where team productivity, retention and company success is greater than typical, expect media interest and invitations as keynote speaker.

Flickr image credit: HikingArtist

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If the Shoe Fits: Expedient Lies

Friday, January 20th, 2012

A Friday series exploring Startups and the people who make them go. Read all If the Shoe Fits posts here

5726760809_bf0bf0f558_mLast summer I wrote about the damage done by misrepresenting the real facts of your company culture.

Today I want you to think about the damage that can be done by misrepresenting your past—as was done by Yale football coach Tom Williams.

Williams said he had chosen to pursue a career in professional football at the expense of a possible Rhodes scholarship — and never regretted the decision. Witt leaned on his coach for advice, and eventually decided to play in the game. Yale was crushed, 45-7.

But Williams’s story was a lie.

Bottom line, Yale lost the game, Witt lost the scholarship, and Williams lost his job.

It doesn’t matter if the lie is large, like Williams’ was, or a minor tweaking of the facts; these are personal lies and they go beyond damaging cultural touchstones, they damage lives.

Too many entrepreneurs believe there is wiggle room as long as the words or actions further company goals or land rare and needed talent.

These entrepreneurs are willing to sacrifice not only everything, but everybody, to their vision.

Are you one of them?

Option Sanity™ isn’t for liars

Come visit Option Sanity for an easy-to-understand, simple-to-implement stock process.  So easy a CEO can do it.

Warning.

Do not attempt to use Option Sanity™ without a strong commitment to business planning, financial controls, honesty, ethics, and “doing the right thing.”
Option Sanity™ is not recommended for micromanagers, manipulators, or politicos. Founders and CEOs with large egos, or a sense of entitlement, should avoid prolonged exposure to Option Sanity™.
Use only as directed.
Excitement and a strong feeling of virtue are expected; contact your Option Sanity™ rep at the first sign of smugness or if you experience any difficulty explaining Option Sanity™ to others.

Users of Option Sanity may experience sudden increases in team cohesion and worker satisfaction. In cases where team productivity, retention and company success is greater than typical, expect media interest and invitations as keynote speaker.

Flickr image credit: HikingArtist

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If the Shoe Fits: Doing Well by Doing Good

Friday, December 16th, 2011

A Friday series exploring Startups and the people who make them go. Read all If the Shoe Fits posts here

5726760809_bf0bf0f558_mHave you ever had something you were aware jump up and hit you in the face? It’s not new information and your reaction is the same, but the impact is enormous?

That is what’s happening to me as I read Richard Branson’s Screw Business As Usual (I’ll be reviewing it next Thursday, December 22)

Maybe it’s just the entrepreneurs Branson talks about, but their goals seem so different from the entrepreneurs in the US.

The “already done it”entrepreneurs in Branson’s book grew up, as did Branson, with an eye to improving the world and knowing that they needed to a financial base from which to do it, but they never lost track of their main goal.

The current entrepreneurs he describes, many of them young, have a keen focus on creating jobs and improving their communities and see their company as a way to accomplish that.

They buy whole-heartedly into Branson’s basic idea for running Virgin, i.e., doing good is good for business.

Whereas a large segment of US entrepreneurs, especially the younger ones, seem to see their startups as the fastest way to get rich since the  financial, consulting and legal sector jobs dried up.

Obviously, not all of them, but a significant number.

“Doing well by doing good” just isn’t mainstream in the US.

Or is it?

Where do you fit?

Option Sanity™ helps equity do the right thing for all your stakeholders.

Come visit Option Sanity for an easy-to-understand, simple-to-implement stock process.  It’s so easy a CEO can do it.

Warning.

Do not attempt to use Option Sanity™ without a strong commitment to business planning, financial controls, honesty, ethics, and “doing the right thing.” Use only as directed.

Users of Option Sanity may experience sudden increases in team cohesion and worker satisfaction. In cases where team productivity, retention and company success is greater than typical, expect media interest and invitations as keynote speaker.

Flickr image credit: HikingArtist

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Positives of Social Media

Monday, December 12th, 2011

3085491268_9b8b16bbcf_mAs most of my readers know, I’m not into social media; I am on LinkedIn and my company’s new product Option Sanity is on Facebook and Twitter, but other than the blog posts, I can’t say that any of them are particularly active.

I also freely admit that I don’t really understand how to use them for business (I have no interest in building my ‘personal brand’).

The negative side, especially the bullying, personal attacks, hate and amazing level of active stupidity, that I read about dismays and disgusts me. Beyond the negative much of what I heard was just totally inane; granted, I’m not a celebrity watcher and wouldn’t care what God had for breakfast, assuming h/she bothered posting the information.

Then came the so-called Arab Spring and suddenly social media showed a decidedly positive side.

Right around Thanksgiving I read about Amit Gupta’s friends who started reaching out after he was diagnosed with leukemia.

And so his friends set up a website, amitguptaneedsyou.com, to encourage donor drives, during which the tissue type of potential donors is collected with a cheek swab. The site links to the National Marrow Donor Program website. It provides instructions on hosting a bone marrow dive and provides PDF fliers to promote the events. Yes, there is a Facebook page. Twitter blew up with news of the drives and Gupta’s health. And, of course, there’s a Twitter hashtag (#IswabbedforAmit).

When word of Gupta’s need for a match started circulating, unique visits to the marrow donor program website increased from about 16,000 on a typical day to 40,000. “That’s 21/2 times,” says Dr. Jeffrey Chell, the donor program’s CEO. “That’s impressive.”

I found many other stories of social media’s impact, and lives saved, as a result.

It’s good to know that social media, especially the 5000 pound gorillas Twitter and Facebook, can facilitate more real good than just keeping families in touch.

I guess the good offsets the bad.

Of course, the real problem is the humans that use it; they are just the same as they’ve always been—social media just makes them more so.

Flickr image credit: PUBLISYST Comunicaciones

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If the Shoe Fits: Zynga, a Cautionary Tale

Friday, November 18th, 2011

A Friday series exploring Startups and the people who make them go. Read all If the Shoe Fits posts here

5726760809_bf0bf0f558_mToday is not another rehash of the Zynga fiasco or CEO Mark Pincus’ follow-up email to the troops.

What I found fascinating is that the entire problem could have been averted by using Option Sanity™.

Seriously.

Yes; I know; every founder believes his or her product is the perfect solution in its nitch, but rarely are we gifted with such a high profile, real-life demonstration.

Rather than simply firing under-performing employees and handing unvested options over to the replacement, Pincus often likes to find another position within Zynga where the employee might still be able to contribute. But because that new position was often lower down the corporate totem poll, Pincus basically wanted to cut the person’s compensation by reducing his or her number of unvested options (vested options were not touched).

Some say bad hires just shouldn’t happen, while others accept them as a normal part of business and believe fast hire/fast fire is the right approach.

I believe Pincus’ approach to a miss-hire is valid; in the heat of a high growth hiring frenzy managers do hire good people for the wrong positions, oft times because candidates oversell their experience and/or managers are desperate to fill their openings.

Think of it as a people pivot—repositioning talent for the good of the company.

The problem is that any unexpected changes made after the fact, no matter how valid, breach the social contract and, in doing so, break trust.

The hiring errors and the associated stock grants should have been corrected as soon as they were identified. Waiting until just before the IPO significantly exacerbates the damage to both Zynga’s and Pincus’ street rep and puts employee morale in the toilet.

It’s a different result when incentive stock grants are based on a transparent, fair, structured methodology that everyone understands, especially when it’s rooted in the company’s stated values/culture.

A methodology that

  • assigns positions to levels based on its ability to influence the company’s success as opposed to urgency or charm and history of the candidate;
  • assigns an ISO baseline to each level that dictates both the initial hiring grant and
  • the Annual Stock Bonus, so that a significant portion of each person’s stock rewards are based on the actual success of the company over time, as measured against quantified annual goals approved by the Board;
  • allocates based on the current risk level as defined by set milestones; and
  • spells out what happens for both promotions and demotions

It’s easiest to put that structure in place at the very beginning when it’s just the founders.

That’s why we provide Option Sanity™ free for six months to any startup with fewer than four people.

(Feel free to email me or call 866.265.7267 for more information or if you are just curious.)

Option Sanity™ prevents Zyngavitis

Come visit Option Sanity for an easy-to-understand, simple-to-implement stock process.  It’s so easy a CEO can do it.

Warning.

Do not attempt to use Option Sanity™ without a strong commitment to business planning, financial controls, honesty, ethics, and “doing the right thing.”
Use only as directed.
Users of Option Sanity may experience sudden increases in team cohesion and worker satisfaction. In cases where team productivity, retention and company success is greater than typical, expect media interest and invitations as keynote speaker.

Image credit: hikingartist.com

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If the Shoe Fits: Clarity or Bafflement

Friday, October 28th, 2011

A Friday series exploring Startups and the people who make them go. Read all If the Shoe Fits posts here

A young programming whiz called me after reading this post and requested some help.

“Jim” had job offers from two strong startups and wasn’t sure which to accept.

I discussed which technology he found most interesting, which position he thought would be the most challenging, where he thought he would learn the most, which people he felt most comfortable with, which company seemed to have values/culture that was most synergistic to his own.

I asked if there was anything about either one that bothered him and Jim said that was the problem, he wasn’t sure.

In both cases, his final interview had been with the respective founders. Both shared their vision and seemed open when responding to his questions. He left each feeling excited and enthralled with the opportunities.

Jim said the problem surfaced when he was telling his parents about the companies (call them A and B).

He said he was easily able to explain B’s vision, market, opportunity and even culture, but when he tried to describe A’s vision and the founder’s answers to his questions he couldn’t.

What seemed so clear when they were talking wasn’t when he used his own words to explain it to his folks.

When he replayed the founder’s actual sentences and even wrote them out and re-read it they didn’t make as much sense—worse, some didn’t make any sense at all.

What happened to Jim made me think of a recent post by Steve Roesler about keeping things simple.

Truth comes in sentences. B_ llS_it comes in paragraphs. If you can’t say it with a noun, verb, and object, you aren’t clear about your thought.

I suggested he read it and also yesterday’s post and apply the information to the problem.

Jim just emailed me to thank me for the time we spent and the links; he also said that he had accepted B’s offer.

Which do you remind your candidates of, A or B?

Option Sanity™ makes ISO allocation transparent.
Come visit Option Sanity for an easy-to-understand, simple-to-implement stock process.  It’s so easy a CEO can do it.

Warning!

Do not attempt to use Option Sanity™ without a strong commitment to business planning, financial controls, honesty, ethics, and “doing the right thing.” Use only as directed.
Users of Option Sanity may experience sudden increases in team cohesion and worker satisfaction. In cases where team productivity, retention and company success is greater than typical, expect media interest and invitations as keynote speaker.

Image credit: Bun in a Can

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If the Shoe Fits: How to Hire for the Long Haul

Friday, September 30th, 2011

3829103264_9cb64b9c62_m Kevin Spencer http://www.flickr.com/photos/vek/3829103264/Yesterday I had the displeasure of enduring multiple power outages for about 90 minutes. When the power finally stabilized and I turned on my computer nothing happened.

Nothing I tried worked, so today I dragged out a seven year old laptop and spent the time between phone calls getting enough running to be able to work—more or less. (don’t you just love technology?)

However, one of the calls was from a founder whose last three hires didn’t work out. They all had great skills, but none worked well with the team. All three fell in the category of “first outsider,” AKA, cold hire, in other words not friends or referrals.

He asked if there was a way to ensure a good fit with the current team.

I’ve been asked this a lot lately, so I think it is once again time to share the following post with you.

Don’t Hire Turkeys!
Use Your Culture as an Attraction, Screening and Retention Tool to Turkey-Proof Your Company.

Companies don’t create people—people create companies.

All companies have a culture composed of its core values and beliefs, essentially corporate MAP (mindset, attitude, philosophy™) and that culture is why people join the company and why they leave if it changes.

Generally, people don’t like bureaucracy, politics, backstabbing, etc., but when business stress goes up, or business heats up, cultural focus is often overwhelmed by other priorities.

In startups, it’s easier to hire people who are culturally compatible, because the founders first hire all their friends, and then their friend’s friends.

After that, when new positions have to be filled the only people available are strangers.

So how do you hire strangers and not lose your culture?

Since your culture is a product of your people, hire only people with matching or synergistic attitudes. The trick is to have a turkey sieve that will automatically screen out most of the misfits and turn on the candidates with the right values and attitudes.

Here is how you do it.

  • Your sieve is an accurate description of your real culture.
  • It must be hard copy (write it out), fully publicized (everyone needs to know, understand, believe and talk about it), and, most important of all, it must be real.
  • Email it to every candidate before their interview and be sure that everyone talks about the culture during the interview and sells the company’s commitment to it.
  • Everybody interviewing needs to listen carefully to what the candidate is saying and not saying; don’t expect a candidate to openly admit to behaviors that don’t fit the company MAP, since she may be unaware of them, may assume that your culture is more talk than walk or consider it something that won’t apply to her.
  • Red flags must be followed up, not ignored because of skills or charm.
  • Consider the various environments in which she’s worked; find out if she agreed with how things were done, and, more importantly, how she would have done them if she had been in control.
  • Whether or not the candidate is a manager, you want to learn about her management MAP, approaches to managing, leadership and work function methods.
  • Probing people to understand what their responses, conscious as well as intuitive, are to a variety of situations reveals how they will act, react, and contribute to your company’s culture and its success.

Finally, it is up to the hiring manager to shield the candidate from external decision pressures, e.g., friends already employed by the company, headhunters, etc.

Above all, it is necessary to give all candidates a face-saving way to withdraw their candidacy and say no to the opportunity. If they don’t have a graceful way of exiting the interview process they may pursue, receive, and accept an offer, even though they know deep down it is not a good decision.

A bad match will do major damage to the company, people’s morale, and even the candidate, so a “no” is actually a good thing.

Remember, the goal is to keep your company culture consistent and flexible as you grow. From the time you start this process, you need to consciously identify what you have, decide what you want it to be, publicize it, and use it as a sieve to be sure that everyone who joins, fits.

Use your cultural sieve uniformly at all levels all the time. If someone sneaks through, which is bound to happen occasionally, admit the error quickly and give her the opportunity to change, but if she persists then she has to go.

For more help, download the CheatSheets in the right hand frame or give me a call at 360.335.8054.

Option Sanity™ is a great screening tool because it mirrors your culture

Come visit Option Sanity for an easy-to-understand, simple-to-implement stock allocation process.  So easy a CEO can do it.

Warning.
Do not attempt to use Option Sanity™ without a strong commitment to business planning, financial controls, honesty, ethics, and “doing the right thing.” Use only as directed.
Users of Option Sanity may experience sudden increases in team cohesion and worker satisfaction. In cases where team productivity, retention and company success is greater than typical, expect media interest and invitations as keynote speaker.

Fickr image credit: Kevin Spencer

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