There was an editorial in the New York Times over the weekend talking about the likelihood of bankruptcies among companies that have gone through buyouts during the time when credit was flowing too freely. I agree with the column that this is highly likely as we are facing a significant slowdown in economic activity and these companies have way too much leverage (and given the credit crunch, no real option to refinance). Why did the companies wind up with so much leverage? That reminded me th...

There was an editorial in the New York Times over the weekend talking about the likelihood of bankruptcies among companies that have gone through buyouts during the time when credit was flowing too freely. I agree with the column that this is highly likely as we are facing a significant slowdown in economic activity and these companies have way too much leverage (and given the credit crunch, no real option to refinance). Why did the companies wind up with so much leverage? That reminded me th...

Given the financial crisis, there have been a lot of posts about trimming costs by laying people off. But there may also be opportunities to save money by hiring people. This (generally) does not apply to tiny startups but only to businesses that have achieved a certain scale and employ consultants. It is often the case that consultants are brought in to work on a specific project but wind up working on essentially a recurring basis. So in times like this it’s a good idea to look at all your ...

Given the financial crisis, there have been a lot of posts about trimming costs by laying people off. But there may also be opportunities to save money by hiring people. This (generally) does not apply to tiny startups but only to businesses that have achieved a certain scale and employ consultants. It is often the case that consultants are brought in to work on a specific project but wind up working on essentially a recurring basis. So in times like this it’s a good idea to look at all your ...

There have been a lot of great posts this week about what the financial crisis means for startups. There was Jason Calacanis’s epic Startup Depression and Fred’s thoughts on it, Brad Feld’s Focus on Things Under Your Control and Roger Ehrenberg’s somewhat dissenting view that there is a new group of angels that might not pull back. I attended several conferences and panels this week and was asked the question about how this influences startups and startup investors at everyone of them. If you...

There have been a lot of great posts this week about what the financial crisis means for startups. There was Jason Calacanis’s epic Startup Depression and Fred’s thoughts on it, Brad Feld’s Focus on Things Under Your Control and Roger Ehrenberg’s somewhat dissenting view that there is a new group of angels that might not pull back. I attended several conferences and panels this week and was asked the question about how this influences startups and startup investors at everyone of them. If you...

Two things that make for great leaders in startups are the ability to recruit and motivate top talent and honesty (with the team and with investors). Top talent is critical because that’s how stuff actually gets done and gets done well. There are so many important decisions to be made every day that they have to be delegated. Otherwise the leader becomes a complete bottleneck. Honesty is critical because if you are keeping your team or your investors in the dark about problems (or opportuniti...

Two things that make for great leaders in startups are the ability to recruit and motivate top talent and honesty (with the team and with investors). Top talent is critical because that’s how stuff actually gets done and gets done well. There are so many important decisions to be made every day that they have to be delegated. Otherwise the leader becomes a complete bottleneck. Honesty is critical because if you are keeping your team or your investors in the dark about problems (or opportuniti...

Barack Obama’s acceptance speech yesterday at the Democratic National Convention was remarkable in its clarity and delivery. Concrete attacks on John McCain and clear policy statements replaced the at times lofty oratory of some his more recent speeches. Yet it was hard to even look away for the entire duration – that’s how riveting the delivery was. And none of it involved powerpoint slides. The speech managed to be substantive and rousing at once using just words. This was such a welcome ch...

Barack Obama’s acceptance speech yesterday at the Democratic National Convention was remarkable in its clarity and delivery. Concrete attacks on John McCain and clear policy statements replaced the at times lofty oratory of some his more recent speeches. Yet it was hard to even look away for the entire duration – that’s how riveting the delivery was. And none of it involved powerpoint slides. The speech managed to be substantive and rousing at once using just words. This was such a welcome ch...

Entrepreneurs sometimes wonder why VCs are so bent on owning a 20% stake in the companies they invest in. The answer is surprisingly simple: It’s a successful heuristic. Heuristics are “rules of thumb” and they turn out to be really useful whenever you deal with a lot of uncertainty. As an investor, one might be tempted to try to optimize the ownership percentage on a deal-by-deal basis. But so much can go wrong with any particular company that such optimizations are likely to backfire – if y...

Entrepreneurs sometimes wonder why VCs are so bent on owning a 20% stake in the companies they invest in. The answer is surprisingly simple: It’s a successful heuristic. Heuristics are “rules of thumb” and they turn out to be really useful whenever you deal with a lot of uncertainty. As an investor, one might be tempted to try to optimize the ownership percentage on a deal-by-deal basis. But so much can go wrong with any particular company that such optimizations are likely to backfire – if y...

One of my father’s favorite sayings is “Tennis, chess and war are lost through one’s own mistakes” (translated from German). Growing up, I used to really dislike this saying, in retrospect mostly because I lost against my Dad at tennis for a long time excactly because of my own mistakes. Yesterday afternoon, I took the kids to the US Open to see some of the first and second round matches on the side courts where you can sit right up close. All afternoon there was only one instance of a player...

One of my father’s favorite sayings is “Tennis, chess and war are lost through one’s own mistakes” (translated from German). Growing up, I used to really dislike this saying, in retrospect mostly because I lost against my Dad at tennis for a long time excactly because of my own mistakes. Yesterday afternoon, I took the kids to the US Open to see some of the first and second round matches on the side courts where you can sit right up close. All afternoon there was only one instance of a player...

The Sequoia “RIP: Good Times” presentation: Super clear presentation about how we got ourselves into this mess and why it will take a long time to get back on track. Must reading for everyone (not just entrepreneurs).

The Sequoia “RIP: Good Times” presentation: Super clear presentation about how we got ourselves into this mess and why it will take a long time to get back on track. Must reading for everyone (not just entrepreneurs).