I’ve worked with startups for many years, first as a headhunter and later as a coach. My company is in the process of launching Option Sanity™, an incentive stock allocation system based on founder/company values.

People join startups for many reasons and one is the possibility of substantial financial rewards; they take a sizable risk that only pays off if the company is acquired or goes public.

But what of the gigantic payouts public companies are giving execs who took no real risk and whose actions aren’t actualy responsible for the stock price.

Stock granted when the market is down, as it is in any recession, goes up no matter what management does or does not do. Yes, management skill can drive it higher, but, as the old saying goes, a rising market lifts all boats and that is whether the skipper has a clue or not.

This recession is no different; in fact the payouts are going to dwarf anything seen previously. They may not equal the obscene bonuses paid by Wall Street, but they are pretty obscene in their own right.

An Associated Press analysis of companies in the Standard & Poor’s 500 index shows that 85 percent of the stock options given to CEOs last year are now worth more than they were on the day they were granted. For some the value jumped by a factor of 10 or more. An Associated Press analysis of companies in the Standard & Poor’s 500 index shows that 85 percent of the stock options given to CEOs last year are now worth more than they were on the day they were granted. For some the value jumped by a factor of 10 or more.

I’ve never met workers who thought they should earn what their bosses earned, but they do what they hear in the news to make sense when measured against the company’s success.

I doubt anyone inside or outside of Apple has ever questioned Steve Jobs’ value when they hear about his compensation.

Carol Bartz received $47.2 million in 2009, 90% from stock options that went up primarily because the market did.

I wonder how motivated Yahoo employees are knowing that.

How motivated would you be?

Flickr photo credit to: Svadilfari on flickr

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I’m fortunate to be a member ExpertCEO, an online community of CEOs of startups and fast growing companies that offers peer support and advice.

A couple of weeks ago a member invited everybody to post “things you’d never hear a VC say.”

They were pretty hilarious, with some of the best responses coming from VCs themselves.

Apparently I’m not the only one who felt that they’re too good not to share and today we were presented with a great compilation of the 12 best entries.

Anyone who has worked in a startup or spent time around VCs will appreciate the following; anyone contemplating doing so should appreciate the insights.

Image credit: vcobserver.

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Image credit: woodsy CC license

Working with entrepreneurs on writing business plans to finding affordable office space and everything in-between is big business. And, as with most services, they vary in value and effectiveness.

But venture firm Highland Capital Partners (Boston and Silicon Valley) is doing something different. Instead of charging the promising entrepreneurs they pay them.

“The program was designed as a sort of summer camp for entrepreneurs. Open to undergrad and graduate students, it offered aspiring entrepreneurs a $7,500 stipend, free office space, and access to Highland’s staff and outside contacts.”

The greatest value to the entrepreneurs isn’t the cost or the pay, but Highland’s knowledge and network.

Last year, “Michael Sullivan was trying to figure out how to add some mojo to his startup. As a graduate student in applied mathematics at Harvard, Sullivan had co-founded Affine Systems in 2006 with classmate Bobby Impollonia. Working out of their homes, the two computer whizzes had whipped up a software program to let media companies know if their copyrighted videos show up on the Internet.”

Anyone who follows the news knows that copyright on the Net is beyond hot.

So what did Sullivan and his partner get out of their ten weeks?

Highland’s partners helped Affine craft a business strategy, land their first test customers, and hire two senior executives. Ultimately, last winter, Highland put venture money into Affine, one of two companies in the program to get funding.

Highland isn’t the only program, Lightspeed Venture Partners (Silicon Valley) also runs a camp as do several other VCs. As with conventional startups, not all attendees’ ideas fly, but that’s OK, the connection is made and the next idea could be the next big thing.

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Image credit: arkitekt

Do you sometimes get the impression that, like the garage of “olden” times, the college dorm room is where most startups start? That founders are dominantly twenty-somethings, many who skipped or quit college, who got some friends together and grabbed the brass ring?

Even more hilariously, do you believe that startups are a by-product of the Internet, as has been frequently explained over the last 15 years to me by younger, more nimble minds?

You may if you go by the media, since even old media focuses obsessively on young entrepreneurs doing wild things on the Net from their dorm rooms.

Not so.

“…a new study by the Ewing Marion Kauffman Foundation and researchers at Duke and Harvard universities reveals most U.S.-born technology and engineering company founders are middle-aged, well-educated, and hold degrees from a wide assortment of universities.”

I found this information at Dobbs Code Talk where Jon Erickson’s great post highlights key points in the study (note that the focus is US-born founders of engineering and tech companies), the first two being that

• twice as many U.S.-born tech entrepreneurs start ventures in their 50s as do those in their early 20s.
• elite, highly ranked schools are over-represented in the ranks of these founders, and Ivy-League graduates achieve the greatest business success; however, 92 percent of U.S.-born founders graduate from other universities.

According to Vivek Wadhwa, the study’s lead researcher and a Wertheim fellow with the Harvard Law School and executive in residence at Duke University,

“While education clearly is an advantage for tech founders in the United States, experience also is a key factor.”

Click on over to read more and for a link to the actual report, you’ll find both interesting reading.

Do you think the media presents an accurate picture of entrepreneurs?

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