If you haven’t yet heard about Female Founder Office Hours it is an initiative you should be aware of whether you’re male, female or any other gender identify. The idea is simple enough: several female VC partners at top funds will hold 1-hour meetings with 40 promising female entrepreneurs looking to get advice on their business and pitch in a friendly, non-judgmental, safe environment.
I want to outline why I think this is such an important initiative but first want to be sure you know that my partner Kara Nortman and my friend Eva Ho are hosting the next Female Founder Office Hours in our offices on March 13 and you can sign up here → LA Female Office Hours.
Please help share this widely so that more women become aware of this important resource that is being run nationally. For the LA event, for example, they will not only have a selection of great LA VCs but also 10+ senior VC women from the SF Bay Area will be coming down for it.
So why is this initiative so important for men, women and other gender identities?
1. Mentorship / Modeling Behavior
An important part of leadership is being a role model for those who may come after you to look up and say, “If she can do it then why can’t I?” Female Founder Office Hours gives founders the mentorship and the role models to see that it is in not only possible but also to have a plan to make it a reality.
“Since childhood, I have been fortunate enough to be inspired by strong women. My grandmother was one of the first woman to earn a math degree from Columbia and never gave a damn about what women are “supposed to do.” Thanks to her, I never thought much about my identity being defined by being a woman. I always wanted my academic & career achievements to just stand on their own.
Kara is a strong person and a confident leader and it’s clear that she had role models that taught her from a young age that there were no limits to her career potential or doing what she wanted in life. When people provide that kind of modeling you lift up those who come after you and make them better.
I recently read Dan Rather’s book “What Unites Us,” which is a book I highly recommend, in anticipation of interviewing him at the Upfront Summit. He has a section on “Inclusion” and I loved his angle on this term. What he told me was that “inclusion” isn’t about diversity per se as the end goal but the term literally signifies including somebody into work, life or any initiative that changes your perspective. Since our industry has been so heavily dominated by male leadership in both tech and venture capital for so long, this “inclusion” is something that would benefit us all in making better decisions.
In Dan Rather’s book he talks about Ruth Bader Ginsberg who was appointed the the Supreme Court in 1993. Of the 106 judges who preceded her 105 of them were men (Sandra Day O’Connor was the first woman). Now 33% of Supreme Court Justices are women (vs. 8% of VC partnerships, for example).
But here’s a story that hit home with me. Dan talks about a landmark case in 2009 that involved whether it was legal to strip search a 13-year-old girl. In the oral arguments of the case many of the justices expressed skepticism that the girl’s rights had been violated. From the book …
“They had never been a thirteen-year-old girl,” Justice Ginsburg explained to the USA Today. “It’s a very sensitive age for a girl. I didn’t think that my colleagues, some of them, quite understood.”
Justice Ginsburg apparently set out to make sure they understood and in a result that surprised many court watchers, the judges, despite initial skepticism, ruled 8–1 in favor of the girl. Have a woman in the group of decision makers gave the group insights they may not have had on their own. Inclusion begets understanding, which in turn begets more comprehensive decisions.
Years ago Upfront Ventures rented out a movie theater of 350 people in Santa Monica to screen the movie, “Code: Debugging the Gender Gap,” an important movie by Robin Hauser and we invited senior members of many local tech firms to attend. The film gives several examples of where not having women included in product decisions has led to poor design by not truly understanding 50%+ of the ultimate consumers. She gives examples ranging from poor auto air bag design (female body types being different) to “Clippy,” the Microsoft assistant that many women found creepy.
It surprised me how many male executives emailed me back with a list of 3 or 4 women on their team who might be interested attending the film. My response was swift, “No! You don’t get it. I want YOU to come. Yes, bring women on your team but bring as many men or more. Women already KNOW there’s a problem. The importance of screening this film is to raise the awareness of bias within men!”
So one reason I’m thrilled that these VCs created Female Founder Office Hours is simply that having a well-run organization to serve female founders is in itself a way to call attention to the issue in the first place in the way that Robin’s movie “Code” raised awareness of men for the implicit and explicit biases many men (and women) have.
4. Safe Space
I know that people can hear a term like “safe space” and make assumptions about what that might mean but the truth is that first-time founders really do need a safe space to make mistakes, ask dumb questions, learn & interact with peers and get advice from mentors who have a vested interested in helping them succeed.
One of the huge benefits that I’ve noticed with the growth of accelerators over the past 10 years is that they have created safe spaces for early-stage founders to test ideas, learn from others, prepare naive plans and then refine it all before taking a more polished company to market to fund raise, talk with journalists, recruit staff or service customers.
What I love about Female Founder Office Hours is that this creates a safe space for young (or not so young) woman to learn from experienced VCs who can help them hone their plans in an environment where the intention is to help make founders better at their jobs vs. feeling judged. I think it will also help that many of the female VCs can also help prepare these female founders for some of the male biases, social cues, likely responses or how to read the body language or feedback from their male counterparts in a way that will help them ultimately be more successful.
5. Deal Flow
I often talk about how I think the best VCs “play offense,” by which I mean proactive go out and find a market segment or niche that they uniquely know, can uniquely serve or have some other natural advantage and go out and find deals you like. Many VCs simply wait for referrals to come to them via email or introductions they get at conferences or demo days. I think these deals are less exciting than the ones you proactive seek out.
With so many talented female founders our there I think it’s crazy smart of these female VCs to go out and corner the market on some of this deal flow.
I know that VC firms don’t hire partners very often so the change to adding more female partners will take time. But nothing causes one to stand up and doing something faster than being beaten in the market. So my secret hope for the continued success of female office hours is that by keeping some of the best deals in this group of VCs, other VC firms will realize that without enough women in their organization at the top they’re simply going to be boxed out of some very compelling deals.
Deal flow and winning will drive change faster than any other outcome.
6. Creating the Future We Want to See
I don’t know of any reasonable male VC in our industry who doesn’t accept that our industry needs to change to be more inclusive and I don’t know of any reasonable male VC who doesn’t think it’s going to happen. The challenge I see is that several men in the industry don’t know how to drive this change and perhaps aren’t working on timescales that will lead this change to happen as quickly as our industry wants or needs.
With 8% of partners at VC firms being female — we have a long way to go. But I’m encouraged to see the unity and camaraderie of these group of VC leaders go out and make a difference.
If a picture is worth a thousand words then you already know that Chamillionaire is having a great time with his new startup Convoz. He’s here on stage with Snoop Dogg and they had just dialed in Shaq to record a live video for his platform. It was just announced today on TechCrunch.
We’ve known each other for nearly a decade and he’s been a friend, a co-investor in startups and a mentor to many startups with whom I’ve worked. As you can imagine, when you introduce tech professionals or VCs to a grammy-award winning rap artist they start with pre-conceived ideas but of course that “pattern matching” is what leads our industry to underestimate people. Cham is generationally talented and his insights about what make audiences tick has led him to be a valued investor and mentor at companies like Maker Studios and Cruise (acquired for $700 million and $1 billion respectively).
So of course when Cham wanted to build his own startup I was first in line asking to fund him. In creating Convoz, I have watched Cham literally dissect every screen interaction, UX navigation, social integration, etc. He has embodied the typical founder journey you would expect from any dropout kid from Stanford or Harvard. I would put him high on the list of startup founders who have a deep knowledge of the users they serve, what is unique about their app and how to build a product for scale.
Along with his co-founder Nsilo Reddick they have been active users in their app and have embodied what is truly unique about Convoz. In a world in which influencers are tired of people trolled on social platforms and everyday users are tired of superficial social promotion, he is built a video application in which real people can have asynchronous conversations that matter and are curated to avoid trolls.
If chameleon is a metaphor for somebody who can cross over and fit in with any environment in which they inhabit then choosing the public name Chamillionaire was a stroke of genius because the man that I know well is a cross-over genius who has mastered both worlds.
I don’t really want to tell you about his presentation because it was such a masterpiece, so profound & insightful that I’d urge you just to watch it yourself. I promise you insights, entertainment, emotion, thoughtful challenges and a bit of celebrity guest appearances :) TED — eat your heart out.
Next up for Cham? He will have to prove that he can hit the fund-raising trail as hard as he’s hit the product development phase of Convoz and if history is any lesson for me, I predict continued success.
Men use similar tropes on why #MeToo may go too far. It’s time to break these down.
It’s time for more men to start saying, “enough is enough,” “I believe her,” and “I will step out of my comfort zone and speak up so that others feel empowered to follow me.”
Men will make mistakes. But mistakes are much better than silence. Mistakes are better than condoning misconduct, harassment, bias or abuse.
I find myself fighting indifference even on some company boards where misconduct has occurred, been identified and has been swept under the rug of being “a gray area.” As a board member, sadly you don’t always have the power alone to act on your own and your motives can be questioned, too. Founder CEOs can have more power than you might imagine.
In any event, I was reflected on Twitter tonight about the disappointing and SHOCKING (to me) stories I read tonight and this about Russell Simmons, Salma Hayeck’s op ed about Harvey Weinstein, potential misconduct by Tavis Smiley that follows Charlie Rose, Matt Lauer, Louis CK, Shervin Pishevar and so many others that my head is going to explode. The stories about Dustin Hoffman — so hard to read about how he tormented this young woman and made her life miserable.
Every day when I see names “trending on Twitter” I think to myself, “Oy. Did they die or harass?” That’s my starting point. Do you find yourself having the same thought?
I suppose all this has done is shine a light on what so many women have known their whole lives and with this cloud lifted I feel unable to shut up. So my rant on Twitter …
1/ I believe that through the pain of women coming forward and men losing power the equilibrium in society will permanently shift for the better. Still, there are disappointing things that I still hear men saying when women aren't around ...
2/ Men say, "They're taking this too far. Now anybody can make an accusation and reputations will be ruined." There will be some press mistakes but overwhelmingly stories are vetted, verified & fact-checked for multiple and credible sources.
3/ Men say, "Women are just going to lose because now. I won't want to be in a private meeting with a woman for fear of what she could accuse me of." What a pile of shite thought. If you're a respectful person you have nothing to fear
4/ Men say, "Fewer women will be hired. Men will be afraid of hiring a senior woman for fear of being sued." Men who don't hire women will be obsolete. As more women gain power you won't be able to hide from data, statistics & patterns of discrimination.
5/ Men say, "She only got hired because they needed a female partner." I hear same about affirmative action. These same men never acknowledge the white privilege of legacy admissions at universities & internships they got through Daddy. A qualified woman is a qualified woman.
6/ Men say, "I don't want to speak up. I agree with what you say but I don't want to be attacked." True. You will be attacked for speaking up. Imagine what it must be like for women to speak up against powerful men. Face the online trolls!
7/ Men say, "You should hire the best candidate - we don't need quotas" True. We don't need quotas. But given the imbalance in leadership roles we're going to have to lean on the scales and break some shit to make sure things really change.
8/ When I spoke up and wrote this blog post on sexual misconduct I got trolled hard by a few women who said I was patronizing. It stung for a moment. I brushed off the dust & thought "it comes with the territory of speaking up." https://t.co/ao9CRFdPlX
Time Magazine published its “person of the year” edition today and honored “the silence breakers” for speaking up and forcing our society to confront its position towards men in power exploiting their power for sexual gain. Real change is clearly needed.
These brave women who have taken on personal risks and faced doubters to change the culture globally to stop sexual misconduct, harassment & gender bias deserve the recognition x1000 along with the many other women who have spoken up.
Men must speak up, too. We must create space for women to have their voices be heard and respected and believed.
I titled this post “We Must Have Zero Tolerance in Venture Capital” but of course I could just say “zero tolerance anywhere” because that’s true. As a VC let me specifically just speak out for our industry.
As VCs we find ourselves in power relationships in nearly every interaction we have, which means we need a much higher standard of accountability for our actions. There are things that are never appropriate, like physically forcing yourself on another human who doesn’t want to be touched or groped. When you’re in a power situation you have to be extra conscious not to use your power in ways that are exploitative but where you feel you might be able to get away with it.
An absurd version of this is the comedian Louis C.K. who thought it was ok to pull out his junk and masturbate in front of women because he “asked permission.” We feel conflicted when hear about these actions by people that we had admired (like Louis C.K or Charlie Rose) and then later find out that he they were bad people. This is what Sarah Silverman wondered out loud when she said, “Can You Love Someone Who Did Bad Things?’.
I think the answer is yes. You can love them and want rehabilitation and perhaps one day redemption but when a person has exploited a position of power they don’t deserve our sympathy above that of the victims and they don’t deserve a free pass back into power. Victims must always deserve more respect than a flawed human being in search of redemption.
And of course this is how I have felt about Dave McClure because despite the fact that I love the guy and respect all the great things he actually did do for women or minorities I cannot allow myself to place his needs above those whom he exploited. I got in a little bit of trouble for publicly thanking Dave for apologizing authentically rather than attacking victims as many others have. I later realized that when you stand up for an apologizer you diminish a victim. These are lessons we are learning in real time. It’s hard for all of us to figure out our own morality lines, which is why I think so many people are struggling with how and when to speak up, what to say and when to forgive.
Men in a position may find that somebody much younger or with less power or in need of your money or connections is willing to go along with a request that makes them uncomfortable but for which they feel powerless to turn down. An obvious example would be inviting a woman to your hotel room under pretenses that “it’s only to work” and then having that woman be in an uncomfortable situation where they fear for their safety.
This is the kind of shit that women have to put up with from exploitative men in power. Because so many men like me are never present when these indiscretions happen, we can literally be blind to it. It’s not that I thought every man was a saint but I was incredulous that a professional man in the VC industry could act this way. I was wrong. I am grateful to the many women who have spoken up and made me realize the kinds of actions they’ve had to deal with their entire lives. And it has to stop. Literally — zero fucking tolerance for this kind of behavior.
It is not ok to be a comedian and grope women who ask for photos with you as it appears Al Franken had done. The fact that I agree with Al Franken’s politics is irrelevant. This isn’t about politics — it’s about protecting and respecting women.
Which brings me to the story if this week — Shervin Pishevar. I have known Shervin, liked him and respected his big bets as a VC like Uber and Hyperloop. This past week he was accused of having made sexual advances on 6 women in a well-researched article published by Bloomberg’s Emily Chang. Shervin is apparently threatening lawsuits for defamation and claiming it’s the equivalent of a “right wing conspiracy.”
Here’s the thing — I know the journalist Emily Chang and trust her reporting. She is thoughtful and thorough and would never chase headlines without evidence. She apparently worked on the story for months and had 6 sources for her article and she says that several were willing to go “on the record” until they heard about lawsuits for which they asked to have their names removed. Having no names of accusers makes it harder for the rest of us to weigh in; however, I trust the veracity of Emily’s reporting and I therefore BELIEVE the accusers. And having no names of accusers is precisely what abusers of power want and why they wield legal threats to obtain silence.
I have also met the young woman in the story, Austin Geidt, from Uber. She is not quoted in the story but third-party sources have validated that she received unwelcome advances from Shervin. And unless I hear a denial from Austin I must say that I BELIEVE her, too.
What are we to do? So many of us are freaked out about how and when to speak up lest we get something wrong. Of course we want to make sure there’s enough evidence lest we are guilty of a mob-like response. Of course a single accusation can’t be enough to publicly incriminate somebody.
But when there’s a pattern of behavior profiled across many women and researched by a trusted journalist who has examined evidence, we must speak up and make sure this kind of behavior won’t be tolerated no matter how powerful somebody is and no matter how many people they threaten and try to silence.
In hindsight, many of us in VC and tech are saying, “How did so many people in Hollywood know about Harvey Weinstein and not say anything?” Yet when it’s in tech or VC we seem much slower to speak up. It’s much easier for us to sound acrimonious when it’s not our own industry.
In VC we must have zero tolerance for our peers who are pervs. As men you must call out bad behavior when you see it or know about it. We can’t let women alone have to deal with the consequence of the bad behavior of a minority of men in our industry. In an industry with only 7% of partners at VC funds being women — it literally must fall on us to speak up.
I know many of you won’t feel the safety to write this publicly yourself but I know many, many men have voiced a similar opinion to this blog post to me privately. So if you’re one of the men (or women) who want to put an end to the kinds of behaviors we hear reported about Shervin Pishevar, Justin Caldbeck, Dave McClure and other men — please at least Retweet this article in support. Sharing alone is better than complete silence.
And complete silence on this topic is what many of my female friends in the industry are telling me has been so hurtful about this past week. I first saw it from fellow VC Ashley Mayer. I felt it was brave of her to speak up and wondered how and when I should speak up, too.
Aside from media tweets and pony jokes, the silence from prominent tech figures on this story is deafening. To the women in this story: thank you for coming forward. I wish you had felt comfortable using your names so we could support you directly. https://t.co/DxMl00ui5T
I traded many messages with Sarah Kunst on this topic. I told her that had initially wanted to wait to see more names revealed even though I of course believed Emily Chang’s reporting. She encouraged me to speak up now. She said that the silence was deafening and once voices come forward others often follow.
Sarah Lacy has been early and vocal on female empowerment and calling out bro culture behavior. Rose McGowan risked her career. And Susan Fowler literally changed my mind about the culture at Uber and the need for change. If others risked careers by not staying silent — the least I could do was use my position of privilege to try and offer some air cover for others who feel the same as I do about all of this. I figured I could and should speak up, too.
So when people like Justin Caldbeck try to teach at Duke University on the ‘bro culture’ only 6 months after sexually harassing and assaulting women- we must say, NFW.
How on Earth did someone at @DukeU agree to have Justin Caldbeck speak to students < 6 months after he was forced out of VC for sexual assault & harassment? Letting him lecture finance students? Really? https://t.co/kmrxA10EhE
We all have a pretty good idea about things that drag down our productivity or suck up time that would be better spent on more fulfilling activities.
Two years ago I made a commitment to stop bringing my mobile phone into my bedroom and with like a 95% compliance rate this made a big improvement. At nighttime I don’t check my email or social feed right before bed, which helps me from having last-minute anxiety before going to sleep. But more concerning for me is that I often found myself checking email or social feeds in bed in the morning and this is a TOTAL waste.
I prefer to have peacefulness in the morning and time to think / chill out / zone out. This is critical to peace of mine, but …
If I DO need to get work done I’m infinitely more productive if I come to my computer with a big screen and keyboard.
So my goal was to either have more time to just think or relax OR admit that I have work to do and do it more productively. I’m happy to say that this has been a huge improvement in my life and productivity and I notice the downside of this behavior when I travel and have my mobile phone in my hotel room. I sink back into old habits and regret the wasted time.
I had a more important breakthrough about 90 days ago.
I deleted Facebook and Twitter from my phone. This has been game changing. I’m not a connected-all-the-time social media user anyways so it wasn’t immediately obvious to me how profoundly positive this would be but I’ll explain why it’s been such a positive experience. Let me start by telling you I didn’t stop using Facebook or Twitter entirely — I just deleted them off of my mobile phone.
Why did I delete Facebook and Twitter?
For starters I must tell you that I’m not a Facebook or Twitter mobile “power user” — I mostly used them to fill downtime. Maybe I’d be at a sports match or concert and was between plays or songs or I’d be on public transportation. I might use them if I showed up to a coffee meeting and the other party wasn’t there yet. Or at a school function where the speaker was boring me. I guess you could say that it was fuel to my ADD and need to be distracted.
Like many of you intuitively I knew it wasn’t good for me. I felt I had less time to allow my brain to react and the more I checked social feeds the more I felt the need to check social feeds. Of course when you’re looking at your feed you are by definition not present with the person you are with or paying attention to the moment. Your brain in lost in a virtual world of mostly unimportant information that will still be there when you get home. I have known this for a long time but did nothing about it.
But I chose to delete Facebook & Twitter because I found myself being angry too often and I could feel the effects on my mindfulness during the day. If I checked my feed between meetings I would inevitably find something outrageous that Donald Trump had said or done and I would instantly be angry. But I couldn’t DO anything about it so it just made me angry for no reason.
So I deleted the apps and decided I would check Facebook and Twitter in the evening when I sat down at my computer and only if I felt like it. I love Facebook for showing me what my friends & family are up to but I’ve grown tired of it as my news source. I love checking Twitter to see what my friends and work colleagues are saying and I’ve already blocked Trolls and muted over-sharers so I’ve pruned it to what I really want to see. But I don’t need to see it during the day and I don’t need to post to it during a concert, sports event or school recital.
My routine has changed a great deal. After responding to email, rather than checking Facebook I find myself going straight to Axios to check the news summary. I find Axios to be a much better aggregator for what I want to know (politics, news, tech) than Facebook is. I don’t get sucked into meaningless videos or news stories. I then check Washington Post and NY Times. I then open Twitter, look at what friends are saying and respond to people who have @ messaged me.
What have I noticed?
This has really had a massive improvement on every day of my life in ways I can’t describe unless you try it yourself.
Yes, I don’t know EVERYTHING going on at EVERY MINUTE during the day but I read voraciously in the evening and always feel informed. The status of a hurricane when I’m living in California won’t change enough between 3pm and 9pm when I read about it to matter to me.
I find myself less addicted to checking my phone. Not zero addiction but greatly reduced.
I find myself more at peace during the day. I still think Donald Trump is a fucking idiot and he annoys me daily but it’s much easier to digest on my own terms and my own time and stay peaceful during the day.
But by deleting Facebook & Twitter I’ve also found myself significantly less likely to feel like “I need to share this moment with friends … now, now now!” I share a bit on Twitter. I share a bit on Snapchat. I share a bit on Instagram. But less than before and cutting out Facebook & Twitter on my mobile phone has helped a great deal.
Yes, I can check the mobile web versions (that are actually quite good) if I truly feel the need. But no more notification messages. No more red nagging button beckoning me to open the app. No more addiction.
Am I going to delete other social media apps?
For now I’m very content not to cut out other apps but we’ll see in the future. My great secret that few over 35 understand is that the best place to truly discover breaking news is Snapchat. In a time of tragedy it will make you cry. But you’ll see the raw realities on the ground. Or you’ll see fan reactions to your favorite football game. It’s curated, which post Russia turns out to actually be quite a good thing.
I turned off notifications for 100% of the apps I use. Your app can’t try to pop my Dopamine and try to drag my into being addicted to using it. I’ll check when I’m ready. I’m all good.
I love Instagram because it’s the best of what I loved about Facebook (photos of friends and family) with none of the politics and news. Until Facebook and Twitter allows me to block stories about Trump or right-wing racists like Jeff Sessions, Sebastian Gorka or Stephen Miller — I’m frankly just not that interested in spending my time there. It’s become a place of anger and hatred and I get nothing back from that exchange.
I still love Twitter but I use it much less during the day.
It is still a great place for breaking or trending news before videos get uploaded and vetted onto Snap (Earthquake!)
I still get DMs there so it can be useful to have lightweight chats with industry professionals
I still use it for LinkedIn-like functionality. When I read about a company or an entrepreneur I check his or her feed, read about them, click on links. It’s very useful for that.
But I’m still considering trying to turn my smart phone into a truly smart phone — limited social media.
The apps on our mobile phones have played an important role in our daily lives. I Waze almost daily to fight LA traffic accidents. I Yelp constantly to find a local cafe or restaurant for my meetings in cities I don’t know well. I look up hotels nearby on TripAdvisor and transfer money using PayPal or SquareCash (yes, I know the cool kids, including my wife, use Venmo).
So I love having a smart phone. But for the most part I’ve found that having Facebook and Twitter on my phone hasn’t been smart, quite the opposite.
In reality I’m guessing that even Facebook or Twitter executives would privately admit that limiting their usage in our moments between moments is a worthy outcome in improving your mental state and peacefulness. And that best way I know to resist anything addictive is not to be around it constantly.
Why the Former President of Nickelodeon Joined mitú as CEO. (Hint: 60 million US Latinos driving US growth engine)
I am beyond excited to announce the Herb Scannell has agreed to move from NYC to Los Angeles to take on the role of CEO at mitú, the fast growing Latino digital media company, serving more than 100 million monthly unique viewers.
Herb is a Puerto-Rican American media executive who was previously the President of Nickelodeon. He oversaw the launch of iconic properties including Dora the Explorer, SpongeBob & Rugrats — all multi-billion-dollar global powerhouses. Nickelodeon under Herb was the top-rated network in cable for 10 straight years. He was also Vice Chairman of MTV Networks and oversaw adult brands Spike and TV Land.
He left traditional media at the top of his game to be the founding CEO of Next New Networks, one of the first digital video startups, backed by Spark Capital and bought by YouTube in 2011. After a stint as the President of North America at BBC Worldwide, Herb is returning to his roots in both digital and Latino.
Latino is the Next Big Break Out
At this year’s recent Emmy awards Stephen Colbert rightly pointed out that there had been a marked increase in the number of successes by creators with diverse backgrounds and then proceeded to name several prominent African-American actors, directors and writers that were present.
The obvious slight he made that went largely unnoticed was the lack of Latino representation and it’s a big freaking market gap that is set to explode. We believe that mitú is positioned at the forefront of this because we represent the next generation of Latinos who are young, digital, largely American born and predominantly speak English (94%).
Large groups that are cut out of traditional representation are precisely the groups that achieve breakout successes by getting around the system and giving the market what they want directly. So while not one single Latino actor, director, writer or producer was nominated for the major awards in 2017 and the last major acting Latina win was 10 years ago and acting Latino win was 27 years ago — audiences are craving content that resonates with their experiences.
What Hollywood hasn’t been able to deliver in film or television has seen generational break-out successes like Lin Manuel Miranda’s “Hamilton” or the astounding success of Despacito, now the all-time most viewed video on YouTube approaching 4 billion views. Yes, with a “B.” I’m not sure what it takes to get through to people who green light traditional media. There is no more Latino-only market. This isn’t your grandmother’s Univision or telenovelas. We* are now the mainstream market and we’re bringing more to your mobile phones and living rooms. (We = my father is from Colombia, South America, immigrated to the U.S. legally for medical school, served in the Air Force and then was a productive, tax-paying contributor for nearly 40 years. His son then went on to raise more than $1.1 billion to finance US startups.)
mitú has been able to amass more than $40 million from Universal/Comcast, WPP, The Chernin Group, Advanceit Capital and of course Upfront Ventures to take on this opportunity we see in front of us.
Shit’s About to Get Real
Herb Scannell is teaming up with mitú’s founder & president Beatriz Acevedo who oversees content production, talent development and social impact.
Beatriz has been a tireless public advocate of the role of Latinx leaders in startups, technology y media. Of course Beatriz is the female in the picture above and if you want a taste of the impact she makes watch her own the 800-person audience despite being on stage with Magic Johnson, Troy Carter and Tristan Walker in this epic video dispelling myths about businesses targeting diverse customer bases.
In the startup industry long criticized for its under-representation of groups from ethnic minorities and women, I can proudly tell you that mitú actually over-indexes on non-whites and strong female leadership within the company - the team is 90% Latinx and has a roughly 50/50 split of men and women.
Latinos are now 60 million strong in the US and around 450 million globally (more than English speaking people at 335 million). The population is now approaching 20% of the US population, 40% of California, 40% of Texas, 25% of Florida, 20% of New York … this is a multi-cultural country already whether Trump’s base likes it or not.
In fact, for every retired person in the United States, they are supported by 2.9 workers who are paying taxes into economy that fund their retirement plans. If you removed Latinos that would leave just 2.1 people supporting retirees (US Census via LDC analysis). So before those pinche cabrones try to deport 800,000 productive Dreamers in our country they should think about who will make up the tax bases to help their parents retire.
It’s important to know that Latinos are now an economic powerhouse and if you want your company to grow you need to reach this audience. There are some powerful stats by the Latino Donor Collaborative that show just how powerful Latinos have become in economic development.
Latino purchasing power will reach $1.7 trillion in 2020 (U.S. Census), surpassing total expenditure of even the much sought after Millennial population. Advertisers, wake the fuck up.
30% of all real income growth in 2005–2015 was from Latinos (U.S. Census) who will represent 40% of the entire US workforce in just 5 years (Pew Research).
Latinos also watch 16% more online video than the national average (PwC), 10% more stream videos on their mobile devices (PwC)and they share content 26% more than non-Latinos (Univision).
If you’re trying to reach the fastest growing, most dynamic, economically improving population in the United States you need to reach them on their terms, with their content and delivered authentically in their voice. The rewards if you get it right? How about your largest increases in car sales?
Or how about your biggest gains in beauty products?
Or what about the largest driver of economic growth the country — housing? U.S. Latinos drove 69% of total net increasing in U.S. home ownership in 2015 (NAHREP).
So is Herb a Genius?
Well. On the one hand his referencing included some huge names in entertainment calling him “one of the strongest leaders in helping young talent deliver new, iconic media franchises,” so I’d have to give him his dues as a creative and media leadership genius.
On the other hand, I’d have to say that you don’t have to be a rocket scientist to see that mitú is sitting on the precipice of the biggest economic trend in the most powerful country on the planet.
Latinos will not be stopped.
Please take just 90 seconds to try a small flavor for yourself of la vida mitú.
In more than a decade of writing about the Internet and tech-enabled businesses I’ve learned that mobs don’t do nuance well. If you read the headlines or talk with zealous friends you may well think cryptocurrencies are either our savior from bureaucratic, ossified governments or are purely speculative Ponzi schemes. The reality is that cryptocurrencies can be both and can be liberating and corrupting at the same time.
So I’m going to try and do a single sitting riff of how I’ve viewed the topic as I’ve watched the cheerleaders & naysayers from the sidelines. My goal is to lay out a basic framework for anybody unsure whom to listen to as a way of helping you think about a way to orient your own views.
I also hope to lay out a way to develop a healthy degree of skepticism for the more outlandish arguments.
A. The Simple Case for Cryptocurrencies
Currency is something most of us take for granted in our daily lives and don’t give much thought to where money came from, how it became accepted and trusted and how it’s evolved over time. It’s pretty tough to have a view on cryptocurrency if you don’t have a history of currency.
Currencies only began in earnest about 2,500 years ago and ever since have been a great enabler of democracy and social mobility, not the other way around. By making it easier to capture value for goods & services that ordinary people provide and by creating a means of storing value today that can be used in the future — currencies have literally changed society and the world.
I provided a short reading list in the Appendix if you want to read directly about the history of money. It will captivate you and the many things you likely take for granted in the modern world.
The strongest cases FOR the existence of cryptocurrencies in my mind include:
Allowing for a decentralized Internet in which value is accrued to infrastructure, protocols and applications that serve market needs
Allowing electronic trade across actors who may not know or trust each other without middlemen who take a heavy toll / tax on the transaction
Allowing for (the potential of) a more stable currency than one’s own government for citizens who may live under despotic or irresponsible regimes
1. Decentralized Internet —
This is perhaps the most unsexy part of cryptocurrency but the one that most purists I follow on this topic are most excited about. I believe this use of cryptocurrency will develop and flourish long after the dust settles from the hype and crash of cryptocurrencies that we’re experiencing in 2017.
The Internet and World Wide Web themselves emerged from open protocols (HTTP, HTML, SMTP, etc) that allowed businesses, individuals and governments to put information online that was accessible to the masses and then to build applications on top of this infrastructure to the benefit of the masses. These standards allowed global collaboration and expanded the boundaries of trade. The Internet allows people in relatively poorer parts of the world to complete work for relatively richer parts of the world at wages higher than a local economy may bear. This has massively enriched the world and one can see why a currency that underpins Internet infrastructure would be attractive.
The crypto in cryptocurrency is of course referring to cryptography on the ability to encrypt your transactions so they can’t be modified after they have been written to the blockchain. In order to have a secure, decentralized means of transferring money between individuals you need a way of providing services that a modern centralized financial system would offer. For example, you need to know if a transaction was completed, you need to know the parties involved, you need to ensure that they actually own the money that they are transferring and that they haven’t previously pledged it to somebody else. And you need a means of auditing transactions so that they are verifiable.
This great Internet that has offered so much economic opportunity has also centralized wealth creation into the hands of relatively few people on a scale and in a timeframe never seen before. And while many of the people bringing you the great applications and infrastructure you now rely on are benevolent, there is of course an inbuilt incentive for these companies to use their scale advantages to continue to dominate the markets they’re in, making it harder for upstarts to compete.
This market structure in which the few, large players use their market position to eliminate competition is inevitable. It’s Hobbesian economics 101. When you achieve economies-of-scale advantages it doesn’t benefit you to help newer companies draft off of your infrastructure to rise and compete against you. Of course our great technology industry did itself rise on the back of infrastructure created by telecommunications & cable infrastructure as well as decades of media production.
The world in which our communications was controlled by the telephone and media companies of 20 years ago would have been much less innovative than what we have achieved, which is precisely why we need to protect future companies not even created yet from anti-competitive behavior.
For example, distribution to find new apps in a mobile Internet is tightly locked down by the oligopoly of Apple and Google. Distribution of media is tightly controlled by YouTube, Netflix, Facebook, Amazon and a handful of others. Our social graphs are locked in Facebook, Twitter and Snapchat. Breakout companies become much harder and this isn’t likely to improve unless we give new companies the tools and capital they need to flourish.
Because so many of us (myself included) love out technology providers, few have begun to fully grasp how much centralized control Amazon has over cloud-based storage and processing and it’s even more dominant in eCommerce and physical, last-mile distribution. I love that Amazon can deliver me products a mere hours after I order them but fast-forward 20 years and if they have no real competition for last-mile distribution this eventually could produce negative consequences for the market and for consumers.
Enter the decentralized Internet. If you think about some of the great breakout peer-to-peer file or resource sharing products like BitTorrent, Skype, Naspster, Gnutella and the like they found a way to use distributed resources across the Internet not controlled by a centralized company. In essence users like you probably used many of these products without complete awareness that your computer became a node and was being used to transmit files.
Enter blockchain. Like the P2P services that came before it, it decentralizes the transfer of information across any node that will run its services and in this case what is transferred are all transactions between parties on the blockchain and stored on a public ledger.
The existence of cryptocurrencies can create a way to provide economic value for those who provide computing resource or bandwidth to a product built on P2P infrastructure.
And of course any kind of application could be written to run on this infrastructure including things like a file management system that could compete with Dropbox, a database or raw storage company that competes with Amazon’s AWS or something that doesn’t exist already in today’s world.
For example, using cryptography and the blockchain I could transmit a blog post or a picture to a third-party who could know authoritatively that this was written word-for-word by me and not doctored in any way. In a world where perhaps foreign governments start propagating false information to influence our society, guaranteeing authenticity would become a very big deal.
For products or services to work with a non-governmental, uncontrolled currency based on cryptography, they have to rely on more than the promise of authentication that cryptography offers today. They also need to be able to count on a stable currency whose value doesn’t wildly fluctuate or it makes it hard to provide services or for people to trust they will get fair value from the system.
I believe the massive valuation increases in cryptocurrencies we’ve witnessed of late are not based on any fundamentals other than speculation and a drive for a quick profit by many who have gained from the market hype. I don’t believe this does any good for the legitimate long-term purposes of having cryptocurrencies.
Of course anybody who says this publicly gets lambasted. Nobody making massive amounts of money in a short period of time without any real basis for making this money would ever want to acknowledge the arguments of somebody who might stop them from making even more money. That would be like Turkey’s voting to have Thanksgiving dinner.
2. Allow untrusted network participants to trade
If you started a business 200 years ago you could mostly only trade in your local economy and you relied about “traders” who could transport your products great distances to those who might like to buy them in foreign lands. But your buyers were limited so your market size was limited and thus your ability to build at scale was limited unless you controlled armies or natural resources.
The great promise of the Internet was the ability to break down barriers and allow you to sell products and services globally, benefitting buyer and seller. But as with most Internet businesses, over time middlemen become very powerful brokers in marketplace businesses. If you’re a driver you need to Uber or Lyft to give consumers the confidence that you’re trustworthy. If you want to buy artisan goods on Etsy, the marketplace helps you source goods and verify a degree of reputation. Same Airbnb, Upwork, Thumbtack and others.
Middlemen play the role of distribution, authenticating buyers/sellers, clearing financial transactions, providing insurance and restitution if something goes awry.
If distributed systems can be built and if blockchain can record transactions and if network protocols emerge that verify authenticity of users and provide useful services such as creating escrow in transactions then in theory cryptocurrency ought to streamline online business, remove more control from centralized brokers and reduce transaction costs.
This does not mean that all existing intermediaries go away. Mostly I think new types of brokers will emerge and this will drive down transactions costs, improve services and make it easier to do business with people around the globe.
3. More Stable Currency for Some Citizens of the World
Some people don’t trust their governments with a national currency. History is filled with governments who plundered resources on wars or explorations or have provided economic handouts to buy-off the loyalty of certain population and have printed money to meet their obligations. As economists know, sharp increases in the money supply is one major cause of inflation and inflation erodes the value of people holding that currency.
Throughout history Governments have also restricted the flows of capital outside of national boundaries and have tightly tracked stores of capital as a means of controlling and/or taxing its citizens.
If one lives in the United States or other stable economies it’s far fetched to suggest that cryptocurrencies are more stable or more widely accepted than one’s national currency like the dollar. But of course if you live in a repressive regime and value the easier transfer of capital and particularly the anonymous transfer of capital then the additional risks of cryptocurrency fluctuations in value may be more attractive than a currency controlled by your local government.
So I think one’s embrace of cryptocurrency for reasons other than speculative, short-term gains may be inversely correlated with one’s trust for their local government to protect the value of their wealth through a stable economic system and currency.
B. The Simple Case against Cryptocurrencies
In the case for cryptocurrencies I argued that some global citizens rightly value their governments not having control and of course for many citizens this is an understandable goal. But there are also many markets that favor cash today precisely because they are conducting business that today’s societies don’t want to exist including illicit drug trafficking, the sex worker trafficking market, organized crime, foreign government interference in elections, terrorism, gun smuggling and so forth.
So I would outline the simple case against cryptocurrencies includes three completely related factors
Powerful governments who won’t tolerate the loss of monetary control or illegal activities
Societal pressure to regulate cryptocurrency will increase as more people are duped, as more fraud is discovered, as more hacks occur and as more market participants collaborate to manipulate the value of the currencies themselves
Erosion of trust as first-time cryptocurrency participants get duped, lose money and develop skepticism for the asset
1. Governmental crackdowns
Governments regularly use surveillance to track illicit behavior and curb or curtail activities. Our own government in the US regularly looks for cases of racketeering, crack down on the drug trade, try to prevent illegal sex trafficking, looks out for insider trading on stocks, tries to stop child pornography and so forth.
And of course all of these illicit activities take place precisely because there is so much economic interests and stake in providing “social bads” to people who want to consume them. It’s no wonder that the creation of a currency that has total anonymity would gain favor first with people for whom so much money could be gained by improving the ability to transact without governmental oversight.
No event has gotten the US and other governments so involved in the crackdown of monetary flows than the movement of money for terrorist activities post 9/11. Terrorism at scale can only occur when these organizations can move money around to finance people who make bombs, buy guns, train recruits and so forth.
And if you think the US government is going to allow wide-scale movement of money within the United States in which the government can’t identify the sources and uses of capital you’re kidding yourself.
China has already made moves to massively curtain Bitcoin activities so that should be a clue of what is to come. You think Turkey is going to be eager to allow the movement of capital it can’t track? Russia? Iran? No way. I know Putin talks about cryptocurrencies but since his geopolitical strategy seems to be destabilization of democratic regimes and alliances it would seem to me that Russia would have a strategy to use cryptocurrencies in a destabilizing way to its advantage.
Think for example if the people with whom you’re trading currency with can use huge piles of cash to drive up the value of your currency in a short period of time and then use coordinated groups to then drive down prices through trading and misinformation to destabilize people.
It’s certainly food for thought.
Many cryptocurrency mega-cheerleaders are radical libertarians that want no governmental control of currency or trade or other forms of regulation. I understand why people are turned off by regulation and of course undue regulation can stifle business.
But for the same reason we have SEC oversight on trading public stocks, we need oversight or nefarious actors will manipulate the system. There is a fascinating story in “The Ascent of Money” by Niall Ferguson in which Ferguson describes how the modern corporation emerged. About 400 years ago merchants from the Netherlands were sending ships to Asia in search of spices widely desired in Europe. More than 50% of all ships that sailed wouldn’t return so groups of people banded together and formed the Dutch East India Company to share the risks and the rewards of their conquests.
This is amongst the first examples of the modern corporation. The company brought back spices and reaped profits that went back into building more ships and sailing back to Asia. The company didn’t distribute the profits to individual shareholders who instead were issued the modern form of a share certificate for their ownership. Because they couldn’t monetize this ownership they started selling shares of their ownership to others, thus perhaps the first stock market and transaction dating back to the early 1600s.
No sooner did people start selling shares in these companies than market speculators started spreading false stories about merchant ships being sunk or about large spice conquests to drive up or down the price of these stocks through false information and manipulation. So oversight became necessary to establish trust in the value of these assets.
This is where I see cryptocurrencies today. I speak to colleagues who participate in trading crypto who tell me that there are coordinate rings on encrypted instant messaging platforms like Telegram to have coordinated buying and selling of new currencies. This sounds to me like fraud, pure and simple.
And I know that ICOs (initial coin offerings) are all the rage amongst startup and some are raising for entirely good and valuable reasons. On the other hand, with no oversight of the ICO process and with the possibility of Dutch East India Company style manipulation by either companies or individual buyers of these currencies, I worry about the integrity of the market unless there is oversight.
What I can tell you from my vantage point? I see companies that have been trying to raise professional money for years and have struggled suddenly gearing up for ICOs because they know there is so much demand from them — precisely because so many people speculatively made money on Bitcoin and Ethereum.
Ask yourself this — how did it go when a bunch of Internet companies when public in 1998–1999 with limited revenues or oversight? Why would pouring hundreds of millions into even earlier stage startups with even less or no oversight be a good idea?
Regulation will come. It needs to come fast.
Between 1998–2000 the world became enamored with the “new economy” and Internet companies that were going public on NASDAQ in the United States. Not to be outdone, the UK promoted the AIM market, Germany the Neuer Markt and France the Nouveau Marché all with the aim of taking Internet companies public.
Many of these countries hadn’t been big stock speculators but the gains of the US Internet companies were too tempting. So ordinary citizens poured hard-earned money into owning any company that could claim to be an Internet company and their valuations skyrocketed with no underlying rationale.
Unsurprisingly a whole generation of first time stock traders became jaded about not just Internet stocks but the entire public stock market system as many people lost a large portion of their net worth. Trust doesn’t come back easily, which is why the role of regulation is so important.
In order for people to trust cryptocurrencies in the long run they will need to believe they are transparent, fair, stable, safe and that somebody is watching over them to provide an imprimatur of trust.
Without trust no currency has value.
C. The Arguments That Should Make You Suspicious1. Cryptocurrencies offer a better mechanism for companies (or funds) to raise money
ICOs are not a better way to raise capital than traditional routes, they are a different way and can work together with other forms of fund raising including traditional crowd-funding and/or product pre-release funding like Kickstarter and Indiegogo.
I welcome the role that ICOs may play in some technology companies where a legitimate purpose exists for a “coin” or some form of token to exchange value between market participants. But I also believe that the backlash that will happen against ICO fraud will likely burn some people to future participation until and unless there are some frameworks for oversight of the market.
2. Cryptocurrencies will eradicate VCs
I know that people hate having to deal with people to raise money and the idea of being able to turn to an anonymous crowd and if they value what you do they will provide you money is appealing.
But putting large sums of money in the hands of first time or even experienced entrepreneurs with absolutely no oversight is a recipe for disaster. The fundamental role a VC plays is the role of board members and their job is to provide oversight (and even auditing) of the company for the purposes of protecting shareholders. This is the same board role that emerged from the Dutch East India Company to provide more transparency to investors.
So however populist the idea of cutting out people from the process may be, I strongly doubt it will replace the role of the existing venture capital ecosystem. In many ways, it could even become a new tool for earlier shareholder liquidity including the exit of some VC money. We’ll have to see how it all plays out.
3. Cryptocurrencies will drive a reorganization of societies into more libertarian structures
The most vociferous promoters of cryptocurrency include a group of people who have a total disdain for governments and financial markets and imagine a world in which technologists cut out all power structures and create a truly flat world.
I understand the idealistic tendencies in the same way I understand the idealistic tendencies of those who long for socialism or communism. It seems like the world would be a more fair place if it weren’t for leaders who run countries and organizations and benefit from these activities.
The problem without having governmental systems, however imperfect, is that the opposite is anarchy. And through every idealistic movement to bring equality to all ends in newer forms of power structures and usually wants that are less benign as they seek to hold on to power.
I know it seems strange to veer into this topic in my post but the more time you spend listening to cryptocurrency promoters the more you realize that there really a small undercurrent who have an objective of subverting existing order. And no prizes for guessing who would benefit if this order was disrupted.
D. So Where Do I Personally Net Out?
As with many things in life, I’m super optimistic that out of this current wave of innovation around distributed ledgers (blockchains) and cryptocurrencies (like Bitcoin and Ethereum) will come some great leaps forward of innovation that will benefit the world.
At the same time I remain skeptical about the motives of many of today’s market participants and extremely skeptical about the massive run up in valuation of many of today’s crytocurrencies. The arguments “for” of many market participants ring as hollow as they did in 2005 when they told me I was an idiot for believing that Florida real estate prices would drop or in the dotcom 1.0 boom where many companies had deeply inflated values.
As with every situation, I always try to think through, “What are the motives of those who are telling me A or B?” and “what is the intrinsic value of a given asset and what will determine its future value?”
If you really want to have an informed opinion money & currency then it would help to read a historical primer on the topic and I have two great recommendations. The first is “The History of Money” by Jack Weatherford (who also wrote one of my favorite books on world order & world trade, “Ghengis Khan and the Making of the Modern World”). And another great book on the role currencies play in the creation of governments and in war & peace read Niall Ferguson’s, “
It’s been a tough year globally. Many feel the division in our families and societies. It has been heart-breaking to see progress reversed and social & racial tensions exacerbated unnecessarily.
Much of the focus on the public discourse has been how social media and the polarization of information sources has worsened the problem. We seem to be stuck on the narrative that our angst is tied to the arguments we’re having on Facebook, Twitter or the Thanksgiving dinner table.
I feel the weight of these differences, too. There was a period of time where we were encouraged to open up our horizons and make sure we were listening to the viewpoints of others. I did much reflecting and listening and reading.
I wanted to better understand the African American journey and anxiety better so I read “Between the World and Me” which was important to me even if its conclusions were sometimes hard to read. I watched 13th and cried.
I was touched by the messages of J.D. Vance and his poignant comment that white liberals go so far to try and remove any racial & religious prejudices from their minds & hearts yet still condescend and show prejudice against poor, white, working class populations of what we call “fly over states” or areas like Appalachia. It was hard for me to disagree with this view when I heard it so I read his biography “Hillbilly Elegy” and recommend it highly. The first step of understanding is reading an informed narrative of lives lived differently than yours.
I read books like where a professor in moral philosophy — Jonathan Haidt — discusses how humans make decisions in daily life and how they rationalize the choices they make. His book “The Righteous Mind — Why Good People are Divided by Politics and Religion” literally changed my views about how human decision-making and gave me a framework for understanding why some people may be wired to view the world differently than I do. He made me realize that people in industrial areas weren’t necessarily irrational people stupidly voting against their own economic interests but rather were making choices that supported different moral foundations than those that I thought were important to them. He made me think hard and realize that of course I personally vote against my own economic interest by supporting higher taxes and spending on programs to create equality and fairness so it might be understandable that others vote against their perceived economic interests on the other side, too.
I continue to go on a path of self discovery. But in the past year I’ve also realized something very important that I think gets missed in our anger about the blatant racism and anti-semitism and muslim fear-mongering promoted by the President of the United States and the apologists who surround him …
I’ve also found my tribe and feel more bonded to them.
I want to hug Hunter Walk and Manu Kumar for every post on Facebook where they speak out for values I hold dearly. I have grown closer to my sister-in-law Adrienne in absolute pride at her political activism with her three children marching on behalf of women’s rights and tolerance.
I’ve always considered Jason Hirschhorn a dear friend but he has now become family. I have to take twice as many meetings with Rebecca Kantar now because we need half of our meetings to debate how to save the world and half to talk about how Imbellus is moving from strength to strength.
Jonathan Strauss decided to take time off of work to help in local elections. I am inspired by his dedication.
I’ve talked with immigrant founders tell their stories about coming to this country and their fears for their children’s futures. These have gotten emotional and personal and I’ve never felt closer to many of them.
I’ve been proud of my partnership and their complete support for the rights of women and people of color and immigrants and refugees. I feel ever more bonded that we have built a tribe that is supportive and aligned.
I love CRV for the anti-Trump stand they took during the election and I want to find more ways to work with them.
I am grateful for the public voices of Chris Sacca and Kara Swisher and Ina Fried. I feel blessed by the positives notes of encouragement and the voices from friends like Foundry Group. I text Walker & Co. founder Tristan Walker more often and share our frustrations and disbelief but I also feel more kinship and unity.
I feel fortunate that many of my LPs have thanked me for speaking up and I’ve learned so much about their families and their own personal missions. I feel united.
I am grateful that my kids who long teased me for watching too many politics shows on Sundays now regularly watch Trevor Noah and Stephen Colbert and know way more about what’s going on in the United States than they ever have before. They are engaged.
In the wake of Charlottesville it is easy to feel despondent. But the reaction of cities to rip down Confederate statues across the country is such a positive boomerang effect.
Politics in this country are going to get a whole lot worse. I will have to unfollow more people because frankly I DON’T WANT TO HEAR THEIR VOICES. And I’m ok with that. I can understand the other side from reading thoughtful books and magazine articles and not from vitriolic yelling or trying to justify blatant racism. I don’t need that in my life. And it’s ok if they’re tired of hearing from me, too, and choose to unfollow. I can’t NOT speak up: Silence killed too many of my tribe just 75 years ago in Europe.
But as things get a whole lot worse I also have comfort that my relationships and bonds with those I love, admire and respect are going to get a whole lot stronger. And it’s time we look at the positive side of this moment in time.
Many board meetings are bored meetings. Management teams whisk through slides trying to get through a presentation to share how great things are going and they are eager to get through the meeting so they can get back to their real jobs. This is a shame since the value that the right board could add is immense if you select the right board members and manage them effectively.
Yesterday I wrote a blog post about what the role of a board actually is. In short the board is there to represent the interest of all shareholders (big & small) of the company and all other stakeholders (debt, creditors, employees, etc.). The board’s job is to review the company’s financial performance and strategy and help provide counsel to the executive team.
Some boards are highly functional, many are not. Sometimes dysfunctional boards are a result of having investors who don’t really understand their role on the board or have the right skills or experiences to be helpful. Sometimes poorly run boards are a function of the executive team not knowing how to get the most out their boards (and also their investors).
I can’t change who your board members are so let me offer some thoughts on how to make your interactions with your board more productive.
Communicate frequently and proactively
The most effective CEOs that I’ve observed send regular, short, board update emails every few weeks or monthly just to give the board a sense of what is going on. Of course it’s not required and many don’t do it. But I find that the more informed your board is and the more you’re staying on their radar screen the more effective they’ll be for you.
As a starting point the more you’re on their mind the more likely they’re out advocating on your behalf when they are out talking with senior executives at potential customers, future potential investors, potential employees, biz dev partners, journalists and all of the other constituencies where investors should be helping you.
The more you keep investors update the more likely they will respond and try to be helpful for problems you’re trying to solve. The most updated they are the more prepared they are when they do turn up at board meetings. And the more informed they are (thus the less surprised they are if things aren’t going to plan) the more they feel bought in to your company’s successes or setbacks and the more productive they will become.
Keep your updates short and to the point or they run the risk of not being read and also don’t waste your time on too long of updates.
Many board meetings become really long slideshow presentations where management takes the board through pages and pages of financial results and plans. Once you prepare the deck each department that contributed slides feels compelled to get it’s half hour of time presenting their progress. The problem with this approach is that most of this information could be disseminated before the meeting and the time you have with what should be some of your most important mentors is wasted as they turn into an audience vs. counsellors.
Your goal should be to have discussions with your board. As executives you know the details of your company infinitely better than we ever will and you shouldn’t suck us down into the weeds with you. In stead, we can be valuable in that we see dozens of boards and situations and can try to offer helicopter view solutions from what we’ve learned elsewhere. Boards shouldn’t assume that situations are broadly applicable but by introducing views from experience across many companies this should give executives ideas they may not have seen on their own.
Run board meetings focus on solving strategic issues
So in stead of wasting your time walking us through financial information we should already be familiar with you should spend your time walking us through a few key decisions you’re trying to make and get our input / debate on the topic.
Boards will only discuss the information you provide them and will mostly get off track if your agenda or your management style allows them to. If you set expectations before a board meeting and get financial information out before the board meeting and understand any issues on the minds of investors before the board meeting your actual discussion will be infinitely more productive.
Remember — it is your responsibility to stop investors who want to get into the weeds and it’s important for the good of all board members. Nothing drives me more bonkers than board members who want to hold dissertations on 409a valuations, product feature minutiae or spend 30 minutes on how many people they know that they can introduce you to. This should all be handled outside the board meeting.
Financial information should be sent out 72 hours before a board meeting. If you send a deck and information 24 hours before the board meeting or at 11pm the night before a meeting then you should expect that investors will come unprepared. I always read the deck before the meeting but if I get it 12 hours in advance I certainly don’t have time to do analysis, formulate views, check on facts and so forth and therefore I’m less prepared to add value when I arrive.
Early stage tech startups aren’t public companies so you don’t need to obsess with “having your books formally closed” or scheduling the board meeting only after the end of the quarter. If you’re at that level of reporting you’re probably sub-optimizing your board’s role.
Have pre board meeting calls
I always recommend that founds call each board member well before the board meeting for a super quick update. First, it meets the needs of point 1 — super frequent communication. But secondarily it enables you to walk an investor through the major financial information in advance so they can turn up and be more productive in the actual meetings and focus on strategic topics. Most investors want to enquire about a few operating metics and this type of discussion is less productive in a group setting.
But as importantly is that by having pre-board calls you can run the agenda items by the board member and confirm that these topics are what are on his or her mind. That way they feel bought into the topics when you meet and if they DO have a burning topic on their mind (let’s say their upset about something) — you get a chance to learn about it in advance and come more prepared.
Never be surprised at a board meeting. If you’re surprised at a board meeting it’s on you.
Never decide anything super critical at a board meeting
I know that it can be controversial to say “nothing critical should be decided at board meeting” but it’s actually a really important point. You can “ratify” critical decisions that were discussed individually in advance. You can get a group of people to come to consensus on the direction of the company — choosing amongst multiple difficult options. But you should really know board members views before the meeting. If you can’t get a board member to see your point of view in advance then at least you can try to modify your position to win their support.
This follows the golden rule of any political decision: you lobby in advance, you count your votes, you modify your positions to build consensus and then you show up to ratify the position you’ve triangulated in advance. Just “showing up and seeing how things go” is a recipe for things to get off track.
Many things get decided at board meetings. But also many ideas percolate but aren’t fully decided or require more work. What you do after the board meeting can be as important if not more important than what happens in the time you have together. If you took away actions — follow up. If a board member agreed to take actions, hold them accountable. As with most meetings, much progress is squandered by lack of follow up. I know it sounds obvious. It IS obvious. Yet more people of guilty of this than you’d imagine. It turns out many people are terrible at follow up.
Have as many board meetings in person as possible
There are times when a given board member can’t be in person. It happens. But you should push for as many investors to be physically present as possible and as often as possible. If they need to dial in make sure they’re on a web conference and you can see them and vice versa. When you dial in by voice most people have a harder time being totally in sync with the conversation and are often distracted by other activities. There is no way they’re as productive when it’s just voice. Also, having a well functioning team with a high degree of trust in each other and confidence in each other’s opinions is critical to a successful board. And you simply can’t build relationships on the phone.
Ban the use of electronic devices at board meetings
I know they are “taking notes” for the meeting and “reviewing slides” and materials and need their: laptop, iPad, phone, etc. It is a HUGE MF distraction. I’m usually more able to see their laptops than you can at the front and I promise you — best will the world — they are sneaking a peek at their email, stock prices, web, etc. It’s human nature. Help them be their best selves by banning electronic devices if you want a productive meeting. I recommend you do a 15 minute break in the middle of your meeting and inform people that there will be sufficient time to check in on their email during the break. Obviously there are exceptions if they have something mission critical going on that might pull them away. But this should be the exception, not the rule.
Allow enough time for a board meeting / don’t rush through it
Some people schedule 90 minutes for board meetings. Maybe 2 hours. Unless you’re a super early stage company there is no way that this is enough time to: Present information, frame strategic options, have informed discussions, agree actions and build important relationships across board members. If you’re trying to “get through your deck” and get back to work then 2 hours is plenty. If you truly want input, discussions and relationships — NFW.
Build social relationships amongst your board members
I am a strong believer in getting board members out for social occasions together. We’re all busy so it can’t be every meeting but certainly once or twice / year you can have a board breakfast, lunch or dinner to build social relationships. These relationships are critical to getting your board to act in concert in difficult times so invest early in building a “board team.” I personally prefer if the board meeting is before the social occasion or otherwise the meal ends up becoming a mini board meeting and the actual meeting feels superfluous. I suggest the meal either be purely social or at least a follow-up discussion on board topics you’ve already debated in the meeting.
There you have it. 11 tips. I’m sure I could keep going. Boards take work. But the best boards are super critical to your success and you get out of them what you put in.
There’s a lot of mystique about what happens at board meetings and a lot of imagined board-room drama. I read commentary or Twitter or blogs and realize that there are also strongly held convictions that there are these evil VCs who do terrible things to mostly altruistic founders.
The image of boards and of investors vs. founder conflicts has been so at odds with my experiences on dozens of boards over the past 20 years that I thought it was worth sharing what I actually see.
As a starting point the board is intended to have legal and financial responsibilities to a few key constituencies: shareholders, debt holders, creditors, employees, government and major parties with whom the business operates.
In some ways being a board member is like how I’ve heard people describe learning to become a pilot: Many hours of boredom followed by some brief moments of absolute panic and fear. In fact, as one Twitter commenter observed to what do board do, “Often, not much.” That’s true. Executives run the day-to-day so often the board is more involved as a sparring partner at key intervals.
The administrative work we actually do at board meetings?
Agreeing an annual budget
Setting a 409a valuation used to price stock options
Agreeing stock option allocations
Reviewing financial performance
Talking about the organizational structure and where we need to bolster things
Talking about law suits (patents, trademarks, employee disputes)
And so forth
Between board meetings we do calls to discuss performance or major initiatives. Often we are asked to get involved in executive-level recruiting. And of course we help with business development introductions and with fund raising events.
Board work does involve a lot of conflict at moments throughout the company. Sometimes conflict comes because a company isn’t hitting its expected targets and investors vs. executives have different views in the causes or the consequences of under-performance. Sometimes conflict comes because executives want to increase personal compensation and investors aren’t in favor of this. Sometimes it comes because investors believe the company needs more experienced leadership to run the company or more often to help run the company.
But unlike the popular press reporting of this conflict — 80% of the time it is founder-to-founder conflict and not investor-to-founder conflict. The overwhelming majority of conflicts that I’ve seen on boards over the years are a result of the tensions of either:
underperformance of a company in which executives blame the action of each other or specific individuals
founders or senior executives in a company upset that they don’t have the right role, title or compensation
organizational changes in a company initiated by the CEO that leaves somebody in the company being unhappy
different risk expectations founders have with each other: Raise more vs. raise less, engage in M&A vs. fund raise, grow faster with higher burn or cut costs and focus on profitability, etc.
In nearly 20 years of sitting on boards I have seen:
Founders trying to fire other co-founders
Companies revolting against the founder & CEO and asking for the board’s help
Founders physically threatening other co-founders or employees
Major problems with depression and dysfunction at the executive level
Of course I’m not saying most founders have problems — I’m just pointing out that when you’re involved with scores of companies you see every kind of human behavior. But importantly non-founders who are often major contributors to the success of a company and would be interested to know that it’s not unheard of to see founders
Ask for major top-ups of their personal equity while not having commensurate top-ups for rank-and-file executives
Major squandering of company resources on travel & entertainment that isn’t in support of company goals
Profligate spending with limited regard for future fund raising that causes major dilution when funds are raised at the last minute
I point out the worst that I’ve seen in 20 years for a reason. Boards are not appointed to be founder-friendly lapdogs for the 1–3 founders who start companies and usually own the largest equity positions in the company. Boards are fiduciaries to represent the interest of all shareholders — big and small — and this includes employees who bet with their careers and with reduced pay in order to have equity they hope will be valuable.
To be clear — most founders I’ve ever worked with have been super ethical, very conscientious, not overly greedy and take their personal responsibilities very seriously. I also want to be clear that some investor board members can act like total jerks at times.
I am usually loyal to the founders I’ve backed above all else. I consider myself founder friendly. I will work evenings or weekends to help a founder in need. I prefer to leave the passionate, mission-driven founder in charge for as long as is possible. If the founder has limitations in running a company I will normally try any other option other than removing them from the CEO role. And if I believe they aren’t the best suited person to run the company I will always sit down and walk the founder through why I believe the company might be better suited with somebody else at the helm. I will see if I can get him or her to see this herself.
But in the end — a board’s ultimate loyalty must be to the company and all of its shareholders. The board is there to represent the interests of all shareholders & creditors and to put the interests of the company before their own interests. At times being “founder friendly” can mean protecting many founders from a CEO or it can even mean providing tough guardrails to protect a CEO’s own personal interests from his or her worst instincts. I saw this first hand with a CEO who tried to get into numerous company-betting lawsuits that we knew weren’t in his best interest.
What prompted this post? It has nothing to do with any individual company. I have been meaning to write this for a while as I’ve noticed that much of my board time is involved in trying to be an independent referee for founders who themselves are trying to resolve their own conflicts. Those seldom get reported.
The rise of crowd funding saw the first wave of founders gleeful that they could raise capital without having to deal with terrible VCs. I think we’re far enough into this trend to see that having strong board members — including VCs — is a healthy alternative to party-rounds of crowd funding with no oversight.
Lately I’ve noticed that there is a second wave that many fantasize about a world in which ICOs drive all funding and founders and employees never have to deal with venture capitalists. ICOs certainly have a place in startup financing.
But having a board of directors and having some of those board members be large financial owners in the business with shared corporate governance forces a tension in businesses that I believe is healthy. This is similar to the role that public markets play in helping shape publicly traded companies. At times I’m sure it feels terrible to be a publicly traded company but ultimately I believe the sunshine of publicly reported numbers produces better results. So, too, a healthy and skeptical board.