What Happens If A Startup Founder Gets Hit By A Bus?

Studies

from the perhaps-not-much dept

The importance of a founder working at a company is a question that gets a lot of attention for various reasons. Most startup founders certainly want to stick around and see their “baby” through, obviously. However, once investors get involved, the role of founders gets trickier. Investors often ask the key question: “what happens if a key founder gets hit by a bus?” That’s the point at which a founder needs to convince the investor that the structure of the company itself is so well established that it can live on without the founder. Of course, if they’re too convincing, it can backfire when the investors look to replace the founder (as they very often do), noting that the founder made a convincing enough argument as to why they’re not needed.

Of course, until now, all of the stories on this were anecdotal. But, Paul Kedrosky points us to new research that was done on what happens if a founder dies early on in the life of a company, in an attempt to determine just how important it is for founders to stick around. It may surprise many (as it surprised me) to discover that, apparently, there isn’t much of an impact if the founder passes on. The only real impact is a brief hit to profitability — but it doesn’t seem to have much long term impact. In other words, it really does take a team of folks to successfully implement an idea and bring it to market. While that doesn’t necessarily mean founders are “expendable,” it does highlight the importance of a strong overall team, rather than reliance on a single “visionary” expected to guide all aspects of the company. It doesn’t mean founders shouldn’t watch out for speeding buses, however.

Filed Under: founders, startups

When We Said OLPC Should Act Like A Tech Company, We Didn't Mean Microsoft

(Mis)Uses of Technology

from the bureaucracy dept

In the latest blow to the OLPC project, the organization’s security chief, Ivan Krstić, has resigned over philosophical disagreements with the organization’s direction. The nub of the dispute seems to be chairman Nicholas Negroponte’s belief that now that it’s out of its startup phase, the project needs to be run “more like Microsoft.” Krstić complains that the organization’s previous president, Walter Bender, was demoted, and Krstić was asked to report to “a manager with no technical or engineering background who was put in charge of all OLPC technology.” Now as we’ve said before, it’s healthy that the OLPC organization is beginning to realize that they face many of the same challenges as for-profit technology companies, and might be more successful if it adopted some of their methods. But bringing in non-technologists for senior leadership positions and adopting a rigidly hierarchical org chart might be taking things a little too far. Culture matters in technology companies, and it probably matters even more in an organization like OLPC that depends on having employees willing to go above and beyond the call of duty for relatively modest pay. More orderly management is a good thing, but not if you cause your best people to jump ship in the process.

Filed Under: non-profit, olpc, startups
Companies: olpc

Hollywood Writers Eye Startup Life

Culture

from the risky-business dept

The LA Times reports on ongoing negotiations between writers and venture capitalists to create Hollywood startups. Apparently "dozens" of Hollywood writers are looking to launch companies that would allow them to produce video content that would be distributed directly to fans on the web. We've noted that there are already a number of companies pursuing this strategy, and with thousands of talented writers sitting idle, this is an ideal time to start more of them. In the long run, these kinds of startups will ensure writers get compensated fairly because it will give writers who feel they're under-compensated an exit option. On the other hand, the LA Times makes clear that writers jumping into alternative business models may find that the reality of Hollywood startups to be a culture shock. A lot of successful online content outfits tend to be shoestring operations, and it's likely to take a few more years before the bulk of viewers make the switch to Internet-based sources of information. Writers used to the relatively large budgets and large audiences of Hollywood studios may find it difficult to adjust to being at a web startup that no one has (yet) heard of. This may explain why in a town with ten thousand writers, only "dozens" are looking at the startup option. On the other hand, those writers with an appetite for risk or a thirst for creative control may thrive in an environment where they call the shots and reap a much larger share of the rewards if they succeed.

Filed Under: hollywood, startups, writer's strike, writers

If You Want To Attract Venture Capital, Don't Tell VCs Anything

Ramblings

from the we-need-money,-but-for-what-we-can't-say dept

The news that the micro-blogging/message service Twitter has attracted a round of venture capital funding has been greeted with the requisite back-slapping and congratulations, but also with some bemusement by folks wondering what the company’s business model is. Even the investors, Union Square Ventures, don’t know yet, and say the investment will go towards making Twitter “a better, more reliable and robust service.” Paul Kedrosky offers an interesting take on the matter by saying that for companies looking for VC money, business plans and profits are overrated. He contends that offering VCs a detailed business plan only gives them more things to nitpick, while early profits can overinflate their expectations, so it’s better for a startup looking for cash to go light on both. It’s easy to take his point to an extreme and say it’s yet more evidence that we’re in another bubble, but Kedrosky really seems to be saying that startups shouldn’t pitch their detailed plans to VCs, and not that they shouldn’t have one at all. Of course, regardless of whether you have business plan or not, if you can grab the traffic and attention of something like Twitter, there will be plenty of VCs ready to open their wallets, either as a vanity investment, or because they know they should be able to flip the company to a bigger buyer pretty quickly — much like Union Square did with a previous investment, the social-bookmarking service Del.icio.us, which was later bought by Yahoo.

Filed Under: startups, vc
Companies: twitter, union square ventures