Page 1

E145 Fall 2007E145 Fall 2007 Session 10 Session 10

ABCs of Venture TeamsABCs of Venture Teams + +

Lessons from the Movies Lessons from the Movies ++

Team Dynamics ExerciseTeam Dynamics Exercise

Tom Kosnik, Alex Gould, Chi-Hua Chien, and Tom ByersStanford University

Copyright © 2007 by the Board of Trustees of the Leland Stanford Junior University and Stanford Technology Ventures Program (STVP). This document may be

reproduced for educational purposes only.

Page 2

© 2003 Mark P. Rice, Babson

Last Month:Idea Versus Opportunity

This Month:Realities of Business

Operations

Page 3

Our AgendaOur Agenda

• Part I: ABCs of Venture Teams

• Part II: Lessons from the Movies

• Part III: Team Dynamics Exercise

Page 4

Finding the right team mates can be difficult…Finding the right team mates can be difficult…

Page 5

Part I: ABCs of Venture TeamsPart I: ABCs of Venture Teams

A. Team … Recruiting

B. Compensation… Rewards

C. Culture

… Norms

Page 6

A. Recruiting Key ContributorsA. Recruiting Key Contributors

InternalKey issues:

When to hire? Experience versus passion and energy? Qualifications versus motivation and character? When to use outsourcing?

Founders or Initial Partners CEO and VPs Designers, Developers,

“Architects” and Managers of Products & Services

Sales and Marketing Operations and Administration Others?

External Key issues: How to select? How to manage?

Board Of Directors Investors Advisory Boards Professional Services and Suppliers Others?

Page 7

How should you pick your team matesHow should you pick your team matesfor an entrepreneurial venture?for an entrepreneurial venture?

Do I enjoythem?

Do I trust them?

YES!

YES!

NO!

NO!

Soul mates

Dream team mates

Team mates

Play mates

Devils’Advocates

Bozos

Class mates

Page 8

Q&A with VC John Doerr of KPCBQ&A with VC John Doerr of KPCB

Q. What is the most important part of any business plan?

A. “I always turn to the bios of the team first. For me, it’s team, team, team. Others might say, people, people, people -- but I’m interested in the team as a whole.”

Page 9

“The way I attract these people to SOFTBANK is to explain what my dream is. It is not money because they actually come to work and we never talk about payment. They come to work, then a week passes, or longer, then we finally get around to talking about money. I’ll ask them, by the way, how much do you want? And they say, whatever you want to give me. Then I ask them, how much were you making last year? Then I give them the same amount. So they don’t come to SOFTBANK for the money. It’s for the dream that everyone has together. The dream of making the company successful.”

Masayoshi SonCEO of

SOFTBANK CORP. (Japan)

B. Compensation and RewardsB. Compensation and Rewards

Page 10

Understanding Rewards Understanding Rewards In High-Potential VenturesIn High-Potential Ventures

• Status Determined by Contributions to Improving Culture and Increasing the Value of the Company

• Hence, Rewards Tend to Be Value-Enhancing such as Stock Options (Equity Ownership)

Page 11

Compensation in Start-UpsCompensation in Start-Ups

• CashSalary and BonusBenefits

• EquityCommon Stock Plans

(Incentive Stock Options Have Favorable Tax Rates)

Vesting Schedule and Stock Budget

Tax Implications (IRS in USA) and Security Laws (SEC in USA)

Page 12

C: Culture …C: Culture … The Secret to Long-Term Success? The Secret to Long-Term Success?

Definition“A strong system of informal rules that spells out

how people are to behave most of the time”

Two Great Quotes

“The most durable asset of a venture is its culture” (Cook)

“First four letters of culture spell c-u-l-t” (Collins)

Page 13

A Winning Culture Can StimulateA Winning Culture Can StimulateInnovationInnovation = f(creativity, teamwork)= f(creativity, teamwork)

• Develop Sense of Teamwork

• Include Creative and Unusual People

• Understand Personalities of Key People

• Develop Open Internal Communication

• Remain Open to Ideas/Suggestions from Anywhere

• Be the Customer

• Be Willing to Experiment

• Address the Issue of Autonomy

Reference: Collins & Lazier, Chatman

Page 14

Even E145 Has A Culture …Even E145 Has A Culture …Recall The “Success Formula” Recall The “Success Formula”

Show up on time (with cell phones and other stuff turned off loud please).

Be nice to people (e.g., constructive comments only, listen carefully, and only one speaker at a time please).

Do what you say you will do and deliver more than you promise (both in class and out).

Do it with energy and passion.

Reference: JM Perry

Page 15

Part II: Lessons from the MoviesPart II: Lessons from the Movies

Chariots of Fire

Startup.com

Page 16

Chariots of Fire: What worked?Chariots of Fire: What worked?

• The Context: • Movie released in 1982• Based on real team: England’s Olympic Track Team• http://www.youtube.com/watch?v=TYJzcUvS_NU

• Key questions:• What motivated the runners?• What would motivate you as an Olympic runner?• Who would you trust to lead you?• Why or why not?

Page 17

The Cast of Chariots of FireThe Cast of Chariots of FireIan Charleson Eric Liddell

Ben Cross Harold Abrahams

Nigel Havers Lord Andrew Lindsay

Nicholas Farrell Aubrey Montague

Cheryl Campbell Jennie Liddell

Alice Krige Sybil Gordon

Struan Rodger Sandy McGrath

Ian Holm Sam Mussabini

John Gielgud Master of Trinity

Lindsay Anderson Master of Caius

Nigel Davenport Lord Birkenhead

David Yelland Prince of Wales

Page 18

Startup.com: What NOT to doStartup.com: What NOT to do

• The Context: • Movie released in 2001• Based on real company: Govworks.com• http://www.youtube.com/watch?v=TYJzcUvS_NU

• Key questions:• What motivated the co-founders of Startup.com? (Kaleil

Tuzman and Tom Herman)• What would motivate you as a member of Startup.com?• Would you trust the co-founders to lead you?• Why or why not?

Page 19

What tools can help youWhat tools can help youbuild a winning team?build a winning team?

Use the Trust Spider to learn how to earn someone’s trust. Use Maslow Pyramid to explain what motivates you. Use 1 to 1 Diagnosis to understand a team mate’s behavior. Use Start-Stop-Keep to give each other feedback. Use the Seven Stage Model to manage teams. Get coaching and mentoring from the entrepreneurial Ecosystem

Page 20

Use the Trust Spider to learn Use the Trust Spider to learn how to earn someone’s trust. how to earn someone’s trust.

Empathy

Reliability

Competence

Chemistry/Sense of Humor

Communication

Responsiveness

Inspiration/Optimism

Entrepreneurship

Perspective/Humility

Fairness

Vision

Integrity

Cooperation/Commitment

The Trust Spider is under development by Kosnik (1995). See Kosnik for research sources.

Page 21

Mark the 5 qualities that are Mark the 5 qualities that are most critical to earn your trust. most critical to earn your trust.

Empathy

Reliability

Competence

Chemistry/Sense of Humor

Communication

Responsiveness

Inspiration/Optimism

Entrepreneurship

Perspective/Humility

Fairness

Vision

Integrity

Cooperation/Commitment

The Trust Spider is under development by Kosnik (1995). See Kosnik for research sources.

Page 22

Compare notes with your Compare notes with your team mates.team mates.

Empathy

Reliability

Competence

Chemistry/Sense of Humor

Communication

Responsiveness

Inspiration/Optimism

Entrepreneurship

Perspective/Humility

Fairness

Vision

Integrity

Cooperation/Commitment

The Trust Spider is under development by Kosnik (1995). See Kosnik for research sources.

Page 23

Get feedback from team mates on how Get feedback from team mates on how trustworthy you are. Fix the critical gaps.trustworthy you are. Fix the critical gaps.

Empathy

Reliability

Competence

Chemistry/Sense of Humor

Communication

Responsiveness

Inspiration/Optimism

Entrepreneurship

Perspective/Humility

Fairness

Vision

Integrity

Cooperation/Commitment

= One of the top 5 qualities that I think are critical to earn my trust

= One of the top 5 qualities that are critical to earn team mate’s trust = my self assessment of my own trust worthiness.

= my team mate’s assessment of my trust worthiness.

Page 24

Use Maslow Pyramid to explain Use Maslow Pyramid to explain what motivates you.what motivates you.

SelfActualization

Esteem/Achievement

Social/Belonging

Safety/Security

Physiological

What motivates me to join an entrepreneurial team?• Making a difference?• Doing work that I love?• Challenging work? • Having fun?• Cool technology? • Getting funded by a top-tier VC?• Future flexibility?• Future wealth (Stock Options)?• A good salary?• Job security/low risk of layoff?• Other?

Sources: Maslow, Stephens and Heil (1999), Maslow on Management,Maslow (Stephens ed.) (2000), The Maslow Business Reader.

Page 25

Use 1 to 1 Diagnosis Use 1 to 1 Diagnosis to understand a team mate’s to understand a team mate’s

behavior.behavior.

The 1 to 1 Diagnostic is based on work by Kosnik, Blair Ramfelt and Pfeifer from 1987-2000.

I don’t have the time, money or authority.

External Problems:

Personality Differences:That’s the way I am. It’s

hard to change.

Principles Differences:It’s against my principles

and values!

Skill Problems: I don’t know how.

Motivation Problems:

What’s in it for me?

Culture Differences:

I don’t understand you.

Communication Problems :

I didn’t know!

Gen

der

Dif

fere

nces

Page 26

Use Start-Stop-Keep to give Use Start-Stop-Keep to give each other feedbackeach other feedback

Start: Why?

Stop: Why?

Keep: Why?

Page 27

Use the Seven Stage Model to Use the Seven Stage Model to manage your team.manage your team.

1.OrientationWHY am I

here?

2.Trust

BuildingWHO are

you?

3.Goal

ClarificationWHAT arewe doing?

4.DecisionMaking

WHICH way?

6.High

PerformanceWOW!

7.Renewal

WHYcontinue?

5.Implemen-

tationHOW?

Creating Strategies Sustaining Strategies

Unresolved• Disorien- tation• Fear

Unresolved• Mistrust• Caution• Facade

Unresolved• Apathy• Irrelevant competitiveness

Unresolved• Dependence• Counter- dependence

Resolved• Roles differentiated• Decisions Made• Work begins

Resolved• Sequence is clear• Creative, productive results• Process is disciplined

Resolved• Synergy in action• Flow state• Intuitive communications

Resolved• Commitment to renew• Congruence of vision, self, and team

Resolved• Orientation• Acceptance• Membership

Resolved• Group trust• Spontaneity• Data flow

Resolved• Calls for action• Options emerge• Tasks identified

Unresolved• Conflict/ confusion• Nonalign- ment• Missed deadlines

Unresolved• Overload• Non-attunement

Unresolved• Boredom• Burnout

Adapted from: Drexler / Sibbet, © 1987

Page 28

Get coaching and mentoring from Get coaching and mentoring from the entrepreneurial energy ecosystem the entrepreneurial energy ecosystem

Professors – Like your favorite profs in energy related specialties who worked with you on the first Energy Crossroads Conference, as well as new kids like Alex, Chi-Hua, Tomk and their STVP colleagues

Entrepreneurial Leaders who are known for building winning Teams – like the ones who come to DFJ ETL

VCs who know the importance of winning teams – Like the E 145 Mentors

Entrepreneurial Alumni and the mentors they know, via BASES, ASES, NUSEA, SWIB, SEC, ATI, and your own network.

Page 29

Summary: Use Tools and your Summary: Use Tools and your Mentors to Build a Winning Team!Mentors to Build a Winning Team!

Use the Trust Spider to learn how to earn someone’s trust.

Use Maslow Pyramid to explain what motivates you.

Use 1 to 1 Diagnosis to understand a team mate’s behavior.

Use Start-Stop-Keep to give each other feedback.

Use the Seven Stage Model to manage teams.

Get coaching and mentoring from the entrepreneurial Ecosystem

Page 30

Why do these tools matter for you? Why do these tools matter for you?

1. The tools we just presented can help you today on your E 145 Teams.

2. Use them now to increase your odds of success.

3. Thousands of alumni from Stanford, Harvard, NUS, KTH, and Silicon Valley players have learned the tools.

4. If you build a team without the right tools, your risks of losing escalate.

Page 31

Part III. Team Dynamics ExercisePart III. Team Dynamics Exercise

• Purpose and Objectives

• Step #1: Team Process Evaluation Sheet

• Step #2: Discussion of Two Basic Teamwork Concepts

• Step #3: Preparation for Team Exercise

• Step #4: Team Exercise on Your Own

This class exercise is adapted from Managing the Small to Mid-Sized Company: Concepts and Cases

by Jim Collins and Bill Lazier, Irwin.

Page 32

Exercise ObjectivesExercise Objectives

1. Chance to learn and practice exactly how

to improve the productivity and

effectiveness of a team.

2. Reinforces the importance of teamwork in

new ventures.

Page 33

Recall Session 1’s “Seven Recall Session 1’s “Seven Important Skills for Important Skills for

Tomorrows Leaders”Tomorrows Leaders”• Creativity and Opportunity Evaluation

• Real-time Strategy and Decision Making

• Comfort with Change and Chaos

• Basics of Start-Up Finance and Accounting

• Evangelism, Selling, Negotiation, and Motivation through Influence and Persuasion

• Oral and Written Communication

• Teamwork1.But what if things are going great?

2.Or what if things are going poorly?

Page 34

Step #1: Please Fill Out the “Team Step #1: Please Fill Out the “Team Process Evaluation Sheet” IndividuallyProcess Evaluation Sheet” Individually

Number & Name of Group: ___________________________

Group Process Evaluation Sheet 1 There is a clear unity of purpose.

There was free discussion of the objectives until members could commit themselves to them; the objectives are meaningful to each group member.

5 4 3 2 1 There is low unity of purpose – little or no evidence that the group is widely committed to common objectives or that the objectives are meaningful to each member of the group.

2 The group is self-conscious about its own operations. The group has taken time to explicitly discuss group process – how the group will function to achieve its objectives. The group has a clear, explicit, and mutually agreed-upon approach: mechanics, norms, expectations, rules, etc. Frequently, it will stop to examine how well it is doing or what may be interfering with its operation. Whatever the problem may be, it gets open discussion and a solution found.

5 4 3 2 1 The group tends to avoid discussion of its own maintenance. The group has taken little time to explicitly discuss group process – how the group will function to achieve its objectives. The group does not have a clear, mutually agreed-upon approach: mechanics, norms, expectations, rules, etc. There is often much discussion after a meeting of what was wrong and why, but this is seldom discussed within the meeting itself.

3 The group has set clear and demanding performance goals for itself and has translated these performance goals into well-defined concrete milestones against which it measures itself. The group defines and achieves a continuous series of “small wins” along the way to larger goals.

5 4 3 2 1 The group has low or ambiguous performance goals for itself. It has not defined concrete milestones against which it measures itself. The group has not given itself the stimulus of a continuous series of “small wins” along the way to larger goals.

4 The atmosphere tends to be informal, comfortable, relaxed. There are no obvious tensions, a working atmosphere in which people are involved & interested.

5 4 3 2 1 The atmosphere is likely to reflect either indifference (lots of side conversations, whispering, etc.), boredom, or tension. The group is not genuinely engaged.

5 There is a lot of discussion in which virtually everyone participates, but it remains pertinent to the purpose of the group. If discussion gets off track, someone will bring it back in short order. The members listen to each other. Every idea is given a hearing. People are not afraid of being foolish by putting forth a creative thought even if it seems extreme.

5 4 3 2 1 A few people tend to dominate. Sometimes their contributions are way off the point, but little is done by anyone in the group to keep the group clearly on track. People do not really listen to each other. Ideas are ignored or overridden. Conversations after group meetings reveal that people failed to express ideas or feelings.

6 People are free in expressing their feelings as well as their ideas.

5 4 3 2 1 Personal feelings are hidden. There is fear that these are too explosive if brought out.

Page 35

Step #2:Step #2: Two Basic Ways to Improve Performance Two Basic Ways to Improve Performance

Page 36

Example:“The group never gets all of its work done because

meetings start late and, once they do start, the group strays constantly from the tasks at hand.”

Systemic Causes?

1. The group meets at a time that makes it difficult for all members to arrive promptly.

2. The group doesn’t make any effort at the beginning of the meeting to create an agenda nor objectives.

3. No chair of the meeting is chosen to keep the group moving forward and finishing on time.

Individual Causes?

1. One of the members is chronically late, no matter what time the meeting officially starts.

2. One of the group members loves to stray off into unrelated topics during the meeting -- nobody feels comfortable saying “let’s get back to the task at hand.”

Page 37

Step #3: Preparation for ExerciseStep #3: Preparation for Exercise1. Circle the three lowest scores on your Group

Process Evaluation Sheet. Jot down what you think are the root cause or causes. Categorize each of them as either systemic or individual.

2. If you have identified a systemic problem, write down one suggestion that would improve the systemic functioning of your team.

3. For each of your teammates, list one characteristic or action that is helpful to the group. List one that is not helpful.

4. Write down one thing that you would do differently or better to improve the functionality of your group.

Page 38

Step #4 Create “Team Dynamics” SummaryStep #4 Create “Team Dynamics” Summary

Always Keep This In Mind Please …

Is this going to be relevant and helpful to improving the functioning of our group?

Please complete the exercise by the next class (Session 11) including sending the summary document by email to e145-homework.