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

Do you have or are you planning to put a woman on your board as you grow?

If you are like most of tech and many other companies you aren’t/won’t.

What if it wasn’t about diversity, but about money?

What if having a woman would actually increase your ROI and valuation?

Most boards—public or private, tech or not—fit perfectly into the description offered by one governance expert: “male, pale and stale.”

The last thing most tech people consider themselves is stale, but when it comes to what women want in a product/service or how to engage them they usually come up short.

Doctors and pharmaceutical companies learned the hard way that drugs act differently in men and women.

The automobile and many other industries have traveled a slow and painful road to understanding how and why women buy their product, as well as what they want.

But can just one female board member make that much difference?

One recent report from Credit Suisse analyzed 2,360 companies around the world over the six years ended in December 2011. It found that companies with one or more women on their boards generated higher average share prices and better returns on equity during that period than companies with no women as directors.

As a startup your board is small and usually made up of investors, but that doesn’t stop you from having women on your advisory board, executive team and in senior positions.

Just please don’t use the tired old excuse of “no qualified women available.”

It isn’t true, but it certainly drives home your “stale” mindset.

Image credit: HikingArtist

Most everyone who is at all involved with tech is aware that Tom Preston-Werner, founder and former CEO of GitHub, resigned over harassment charges; the complaints included actions by his wife, Theresa Preston-Werner.

In short, people felt pressured by her to contribute time/energy/knowledge pro bono to her own startup.

While they were cleared in the investigation, Theresa posted an apology that included the following.

I was the wife of the CEO, but that never entered my mind when I hung out with any GitHubbers.

That blind spot was my mistake. In my enthusiasm over my project, and my idealistic belief in the status-free community of GitHub, I failed to recognize that power structures cannot ever be obscured entirely. It’s a powerful lesson, and a mistake I will not repeat.

What the Preston-Werners learned the hard way is that bosses aren’t like the rest of us and the higher you are on the totem pole the more weight your words carry.

The following post dates to 2006, but it’s just as true now as then and I seriously doubt it will change in the future.

For Bosses, No Such Thing as “Casual”

Bosses can’t make casual comments because nothing is casual when it’s coming from “the boss.” In fact, “casual comment” in juxtaposition with “boss” is positively oxymoronic!

This is especially true when the boss in question is the CEO/president/owner. Quick story:

A CEO, who started as an engineer, casually remarked to a group of designers that he didn’t think the circuit design they were doing would work.

He said this while taking a shortcut though the department, and with no in-depth knowledge of the project or previous discussions. Just an off-the-cuff comment based on his own design experience—which was a couple of decades old.

The design group then told the engineering VP that they needed to rethink the entire design because the CEO had said it wouldn’t work.

The engineering VP first convinced her team that the design was fine and to go ahead (not an easy sell); she then told her boss (the CEO) to quit talking to the engineers and stay out of the department, since this wasn’t the first time this had happened.

The CEO agreed, although he couldn’t understand the problem, all he’d made was a casual comment. Obviously, he couldn’t know as much as the design team since he’s been out of engineering for many years and they should have understood that.

Stories such as this happen in every industry, every day. The unusual parts here are that, one, the VP said something and, two, the CEO actually listened.

The no casual comment rule applies at all levels in any company. If you have leverage, your comments carry weight to those below you—the more leverage, the more weight.

I hope bosses everywhere take this to heart, since few underlings are comfortable telling the person who can fire them to, essentially, shut up.

Flickr image credit: GDS Productions

Ease of replication will destroy your business.

Hat tip to KG Charles-Harris for sending this.

Image credit: Jeroom.Inc

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

The uncivil war between Bay Area techies and the rest of the citizenry is common knowledge.

London is facing similar problems, as exemplified by what’s happening in Shoreditch, a rundown neighborhood in East London (think the Mission before tech discovered it) now a home to co-working spaces from the likes of Google.

While it is gentrifying rapidly, with housing prices rising 17% last year, and hipsters and 20somethings moving in all boats aren’t being lifted by the tide.

Over the same period, however, the level of child poverty in the area remained one of the highest anywhere in London, according to the Child Poverty Action Group, a local charity, while unemployment now stands  around 11 percent, well above the national average.

But a different approach is being taken by some of the tech crowd, in order to craft sustainable, long-term solutions, rather than throwing a few million dollars (which is a rounding error to companies such as Google and Facebook) here and there.

To build bridges between the two communities, a group of local tech founders has started to run monthly programs to connect successful entrepreneurs with those who either have nontech businesses or who want to start their own company.

Over three hours, Niklas Zennstrom, a co-founder of Skype and Richard Reed, a co-founder of the British smoothie maker Innocent Drinks, shared business advice and marketing tips with the small business owners, including the founder of a local fitness company and a maker of custom bike clothes.

Think about it.

How much time/effort would it really take to stop by the small businesses near you, invite them to discuss and brainstorm ways and means to grow their businesses over coffee and even set up a similar mentoring program?

Besides helping them you may be surprised at how much you learn through the interactions.

Image credit: HikingArtist

In writing my post on Ageism in Silicon Valley, I came to think of a good friend of mine who was an extraordinary developer. 

Two years ago he was, in essence, one of the people around 50 with great knowledge and skills, but with little knowledge of how to rejoin the burgeoning Silicon Valley entrepreneurial development workforce after having been focused on other projects for several years. 

 He eventually landed a gig at a young technology startup, one which was badly managed and where he was underpaid.  However, he liked the technology and some of the people he worked with.  But the environment was relatively toxic and he considered leaving quite soon after joining the company.

After slugging it out there several months, he slowly transitioned into a role of being mentor/manager – simply because of his greater experience and maturity.  In fact, despite his frustration with how the company was run, he managed to maintain productivity among the engineers and foster a better environment.  This, of course, had the effect that he became slightly less frustrated.  However, he still harbored thoughts of leaving quickly.

He started discussions with a few other startups – ones where he knew the work environment was positive.  He could easily do this as he now had a track record and people spoke highly of him.  But then a bomb went off – one of the largest internet companies on the planet put in a bid to acquire his company (unfortunately I cannot divulge any detailed information). 

Today he’s a senior manager in one of the most popular internet properties, one which most younger, hotshot, MIT or Stanford engineers would do anything to be able to work at.  He’s the “grey head” among the “young guns” and if he stays at the company for two years he will not have to work another day in his life.  The added upside is that the acquiring company has a fantastic company culture and he’s really happy at work.

This is almost a fairy tale story, but it’s real.  I don’t expect most of you to experience such a surreal ride, but the moral of the story is that nothing good can happen unless you go out there and make yourself attractive.  This means that you will probably not get full value for your past experience, but it does mean that because you do have experience you will progress faster than the younger team members – you have actually learned a lot of the lessons they’ll have to acquire over the next 15-20 years already.

Get out there!

Also, if any of you read this and want to be referred to any startup companies, we are always searching for people and I know several others in the same situation.  Feel free to contact me— kgch@emanio.com

I can no longer count the amount of events I’ve been to as an entrepreneur in Silicon Valley, and with the exception of very few (I’ve mentioned the exceptions in my previous posts), most are a colossal waste of time and money.  In fact, I view them as “preying on the weak, confused and desperate” company founders who seek ways to create their companies and products and get them funded.

I spent last Friday afternoon in Woodside at the Digital Marketing Summit with Geoffrey Moore put on by SVEN – the Silicon Valley Executive Network.  To those of you who don’t know Geoff Moore he created the “Crossing the Chasm” framework based on the eponymous book he wrote on the commercialization of technology products and companies.  He created the intellectual basis for what we, as entrepreneurs go through in building companies, and he is bringing a new and equally important addition to this work in the 3^rd Edition of Crossing the Chasm – the Four Gears Model that describes the levers of growth for technology user adoption.

Though in the book he describes this as directed toward consumer adoption, it applies strongly to the B2B software business as well.  The Consumerization of the Enterprise is in full swing and startups and large companies alike need to understand how this works and how to use it to generate revenues and profits.  The Four Gears structure is a central tool for accomplishing this.

I only recently joined SVEN and this was my first event as a member.  It was excellent – a good mix of large companies such as Cisco and Genpact mixed in with fast growing startups like Lithium and Bizo.  The discussion was led by the founder or SVEN, Brian Reynard, who led the interesting discussion deftly and expertly.  The topic was one of great interest to anyone building or growing a company.

Some of the interesting themes that came up in the Q&A were how to re-engage customers who had become disenchanted with the brand, the difference between B2B and B2C marketing, the new channels and how to use them and the entire framework of the Four Gears and how to tune them.  By the way, I consider the concept of the 4 Gears as both revolutionary and very practical to implement.

The best aspect of the event was to hear CMOs from small and large enterprises describe their growth strategies and problems in an open manner and the ability for personally interfacing and making connections.  Without a doubt, SVEN is one of the more useful organizations fostering networks and interchange between companies in Silicon Valley.

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

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

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

Craig and Randy Rubin are married entrepreneurs who built a $50 million, 130-employee company that was acquired in January by Nanotex.

20 years ago they saw a giant, although relatively mundane, need that you probably remember complaining about (assuming you’re old enough).

It was almost impossible to have a decorative fabric that would stand up to the abuse of people coming to a restaurant and spilling on it. What was used was a vinylized fabric that would crack and peel.

Craig knew textiles and had an inventive streak, so he set out to solve the problem.

They patented their space-age material, called it Crypton (more on the name in a moment) — and their first customer was McDonald’s.

Randy Rubin summed up successful entrepreneurship this way,

“If you want to become an entrepreneur, make sure you have something that fills a need or solves a problem. Someone will always pay for something if it brings value.”

Perhaps the reason so many Internet businesses are dependent on ads for all or most of their revenue is because it requires real value to charge for your product.

Image credit: HikingArtist

Founders love styling themselves as CEOs.

(I did it too, back when I started RampUp Solutions.)

It says you are in charge; the boss.

Plus, it sounds cool.

As CEO, you are responsible for formulating and articulating the company’s vision to employees, investors and the media.

Heady stuff.

You are also directly responsible for creating a winning culture, developing viable financial plans, instituting a solid hiring process and a wide range of other administrative actions.

No matter what happens—good, bad, or indifferent—you are the person held responsible for everything by the board, investors, employees and media.

As the company grows there are more business and human headaches meaning less time for hands-on creativity.

CEO isn’t a 70, 80 or even 100 hour a week job; it’s a 168 hour, 24/7 job.

It’s not the right job or even a good job for many founders.

Founders need to understand that giving up the CEO role can be the smartest, wisest, and most perceptive decision they will ever make (just ask Brad Feld).

Flickr image credit: TechCocktail

Startup people are notorious for their long work hours.

They’re also known to play hard and not just in bars; most are into some form of working out or athletics and many are into extreme sports.

And most are knowledgeable enough to eat right and allow their bodies to recuperate.

But what about brains?

Brains work just as hard as bodies, if not harder and longer per 24 hour period.

It turns out that brains have their own janitorial system comparable to the body’s lymphatic system that cleans up metabolic toxins.

Maiken Nedergaard, a Danish biologist who has been leading research into sleep function at the University of Rochester’s medical school calls She called it the glymphatic system, a nod to its dependence on glial cells (the supportive cells in the brain that work largely to maintain homeostasis and protect neurons) and its function as a sort of parallel lymphatic system.

The bad news, from the viewpoint of most startup folks, is that it only works while sleeping.

“In a series of new studies on mice, her team discovered exactly that: When the mouse brain is sleeping or under anesthesia, it’s busy cleaning out the waste that accumulated while it was awake.”

But the truly bad news, the news that should make you think twice about ignoring these findings and charging ahead, is the long-term damage.

“The Journal of Neuroscience, the Veasey lab found that while our brains can recover quite readily from short-term sleep loss, chronic prolonged wakefulness and sleep disruption stresses the brain’s metabolism. The result is the degeneration of key neurons involved in alertness and proper cortical function and a buildup of proteins associated with aging and neural degeneration.”

It’s been proven over and over that a tired brain is neither productive nor innovative and now there’s early proof of potentially serious long-range damage from lack of sleep.

After all, what good does it do to improve physical health if your mind is rotting?

“Nationwide, entrepreneurs tend to eat more healthful foods and exercise more than other workers. But they also have more stress and are less likely to have health insurance.”

Worse, there is a chicken-and-egg connection between less sleep and neurodegenerative diseases like Alzheimer’s and Parkinson’s.

Not absolutely proven, but neither was the football connection between concussions and brain problems that is playing out in the courts today.

Editor’s note: Since the subject came up, what makes more sense to solve the problem of how a startup can offer health insurance than a startup with a founder who really understands?

Scott Gerber, founder of the Young Entrepreneur Council, which provides startup mentorship and resources and conducts research on entrepreneurs’ needs. To address this problem, his organization is introducing StartupInsurance, an online platform of health insurance plans offered by major health insurers, which will be compliant with the Affordable Care Act by 2014 and are tailored for entrepreneurs.

Flickr image credit: Adam Goode