I find it difficult to think of another time with as much macro risk as the present at least since the financial crisis and likely much longer than that. There is a shooting war in Europe with no clear endgame. China might make a move on Taiwan at any moment. We have an ongoing pandemic that could still produce a dangerous variant. US democratic institutions appear incapable of mounting a coherent response to pretty much anything and are under attack from within. The broader stock market has ...

Elizabeth Holmes was convicted on 4 counts of fraud related to her role as founder & CEO of Theranos. Was she treated differently than male entrepreneurs? It is certainly true that there hasn’t been a high profile criminal case against a male entrepreneur in quite a while, at least not one that I can recall (although I am old enough to remember Bernard Ebbers’s conviction in the Worldcom case and Jeffrey Skilling’s conviction in the Enron case). But beyond that observation, I believe that it’...

Many years ago I was debating whether or not to finish my PhD dissertation. One of the people I talked to about this decision was Prof. Thomas Malone, whose office was next to the oversized closet that I shared with one other graduate student. I brought up the sunk cost fallacy and Tom looked deeply at me before saying something to the following effect: “When evaluating life choices don’t treat them on the basis of financial principles. Your time and effort are something deeply personal and n...

Over the last two decades I have helped many companies raise venture capital rounds. Here are some of the lessons I have learned from this. If your company is growing like crazy you will have an easy time fundraising and you can ignore pretty much everything that follows. Put differently, what I am writing here is for companies where the ability to raise money is somewhat in question. Fundraising is selling. You are literally getting money in return for selling a part of your company. Because...

There has been a lot of discussion of whether or not startups qualify for forgivable loans under the Paycheck Protection Program administered by the SBA (part of the CARES Act). I don’t want to rehash the arcana of affiliation rules here but make a totally different point instead: there is a money grab going on right now by some venture backed startups that this program absolutely should exclude. Let me start by writing about the kind of business that I believe this is spot on for: the local ...

I got the idea for today’s Uncertainty Wednesday from seeing quite a few tweets in my timeline to the effect that startups don’t really have meaningful upside for employees. Tracing these tweets back, led me to this post titled “working for a startups makes increasingly less sense” which has the following quote in itThat startup sold for 200 million dollars and, as the 10th engineer, I made … 15000 dollars from that exit.First, let me do some math here: 0.015 / 200 = 0.000075 which is 0.0075%...

The latest Senate version of the “Tax Cuts and Jobs Act” has a stab in the eye for startups. It proposes to tax certain stock options and RSUs at the time of vesting. An earlier House version also contained this provision, but the House removed it. Startups are a key part of innovation. Often joining a startup means accepting a lower cash compensation for a higher potential upside. This upside usually comes in the form of stock options or other stock based compensation such as restricted stoc...

Two years ago I wrote a series of blog posts on board effectiveness tips. I am adding a new one today. If you have a large board, make sure you have a lead director. “What is a lead director?” you may ask. Informally speaking it is the director who makes sure that the board reaches consensus on important issues. Some companies formally elect director to the lead role, but this is uncommon for startups. Startups that have raised multiple rounds of financing can wind up with large boards with t...

We spent the first week of our NYU Stern class talking about value creation. The goal is to ask the seemingly simple question as to how a given company creates value. The first step of course is to ask what we mean by value. Some students wanted to jump immediately shareholder value. But shareholder value is the *result* if a company both creates value and has a means of capturing (some of) that value. So then what is value here? It is ultimately always that an enduser gets something they val...

When your company is growing you have to add new layers of management. One common mistake is to only look outside the company. This is often promoted by investors who are worried that the early employees are too young and inexperienced. But if you only hire from the outside it can be demotivating for the people inside the company who may come to think that they cannot have a career here. That’s why I like to see a balanced approach that also includes a lot of internal promotions. Internal pro...