Setting up a management board for success with Dave Easton

Viewed from the outside, board selection and corporate governance can seem like a bit of a black box — particularly at a startup. Generation Investment Management partner Dave Easton spoke at TechCrunch Early Stage about how to build a board as a founder, and specifically how to build a board you can live with. Easton’s own ample experience serving on boards as both a full member and as an observer, as well as Generation’s focus on building sustainable, ethically managed, mission-driven businesses helped peel back the curtain on the murky topic of good governance.

On the composition of boards

Easton noted that many boards end up overcrowded — in terms of both the number of people and also the background of those present. Mixing up the type of board members you have managing your corporate governance is key, he said, especially as a company grows in size and maturity.

In terms of fields, the sorts of things that we find that often go wrong is when your board is stacked full of investors. I think investors are great — I’m an investor. I think there are super useful things investors do. But five investors is not very useful, right — it’s just more people who will generally think the same. So a typical thing that we’re doing when we come in is, we’re saying we’re not taking a board seat, we’re gonna give our board seats to an operator — someone who actually knows what they’re doing. When you’re in the earliest stages it’s probably fine to avoid operators and just have one or two investors. Particularly operators who come from, like bigger company backgrounds, they’re not necessarily so helpful when you’re getting product-market fit. But as you get bigger and bigger, you know, operators start to trump investors, and we think boards need to move more heavily in that direction. (Time stamp: 09:34)

Don’t put settled topics up for debate

On the subject of what should actually take place at well-run board meetings, Easton said that one of the most common pitfalls he’s encountered is when management sort of performatively offers up subjects for debate. It’s something that’s easy to do, but it also ends up not only being wasteful of the time of those present, it also leaves a bad taste in basically everyone’s mouths.

Understanding how fundraising terms can affect early-stage startups

You’ve got a great idea and a strong founding team. So now what? When VCs come knocking, it’s important to make sure you’re well positioned to make deals. Fenwick & West partner (and business lawyer) Dawn Belt joined us at TechCrunch Early Stage to break down some of the terms that trip up first-time entrepreneurs.

Belt has been involved in a number of key Silicon Valley moves, including EV company Proterra’s recent decision to go public via SPAC, as well as IPOs for and Facebook. Here, she discusses key concepts like equity and the right of first refusal, and the role they play in the early stages of startup funding.

How financially savvy should founders be?

When it comes to navigating early-stage deals, how important is it to have someone on the founding team with a deep knowledge of these financial guidelines?

I actually don’t think that’s really necessary. I think that it’s nice to have, and it’s good to be able to do this, but that’s not the core competency of the company. That’s actually a function. It’s pretty easy for you to outsource to somebody like me at the time when you need it and get the advice then. It’s more important for you to be really focused on building a good business, and then being open minded and a good listener and learner. (Time stamp: 27:48)

Getting legal help early on

How to get into a startup accelerator

Should you try to get your company into an accelerator? How far along should your idea and your team be before applying? When it is time to apply, how do you make your application stand out from hundreds or thousands of others? How fancy do you need to get with the application video?

For answers, we spoke with Neal Sáles-Griffin, managing director of Techstars Chicago, and the founder of one of the earliest coding bootcamps with Code Academy (later known as The Starter League). He is an adjunct professor at Northwestern University and was a mayoral candidate in Chicago’s 2019 election. He’s got an incredible wealth of knowledge about all things startups — our chat was only about 40 minutes long, but he absolutely crammed it with insights.

Here are some highlights from our conversation at TC Early Stage — Extra Crunch members will find the full video and a transcript below.

Why (or why not to) join an accelerator

Throughout the talk, Neal shares plenty of reasons why you might want to join an accelerator. The connections! The shared knowledge! The support network! The funding is nice too, of course — but he’s quick to point out that it shouldn’t be your sole motivation.

It can’t just be about the money. If it’s just about fundraising and you don’t really want any of the other parts of the experience, you’re probably setting yourself up to not have a very good time. I would highly recommend reconsidering that and instead focusing more on talking to early-stage investors who might be interested in providing more hands-on and specific support that you would need.

That being said, doing an accelerator can be amazing, because all those things that you would naturally do as a startup in your local ecosystem or community, or wherever you’re trying to grow your business … all of that happens in a far more immersive, effective and accelerated way. The mentors that you get connected to, the investors that you get introduced to, the level of knowledge, the holistic educational experience that you gain from being a part of an accelerator can be a game changer for so many startups that are in those early days of trying to figure out and find their path.
(Time stamp: 2:30)

Be prepared and follow up

It’s important to think through the entire interview process — not just your answers to the questions that might pop up. Knowing a little bit about the person interviewing you and showing that you really know what you’re getting into can go a long way.

The do’s and don’ts of bug bounty programs with Katie Moussouris

In the rush to launch, cybersecurity doesn’t always get the attention it deserves, and yet it’s one of the first things that startups learn can — and will — go wrong.

Hacker and security researchers can be some of your biggest assets in helping your startup stay secure. Vulnerability disclosure and bug bounty programs are part of working with the hacker community to build a stronger, more resilient company. But these are not a replacement for security investments, which as a growing company you should not overlook.

Katie Moussouris has been in cybersecurity circles since some of the world’s biggest tech companies were startups, and helped to set up the first vulnerability disclosure and bug bounty programs. Moussouris, who runs consultancy firm Luta Security, now advises companies and governments on how to talk to hackers and what they need to do to build and improve their vulnerability disclosure programs.

At TC Early Stage, Moussouris explained what startups should (and shouldn’t) do, and what priorities should come first.

Knowing the basics

A bug bounty alone is not enough, and outsourcing the process to a platform isn’t going to save you time. Moussouris explained the basics and what differs between vulnerability disclosure, penetration testing and bug bounties.

Vulnerability disclosure is the process by which you hear about vulnerability from the outside. You digest that vulnerability somehow internally in your organization and figure out what to do with it — whether to create a patch, how to prioritize that patch, and then what to release to the public [ … ] What it comes down to is that organizations need guidelines on how to handle these issues appropriately.

Next we’ve got penetration testing: hiring professional hackers under contract [who have] a specific set of skills that match your problem set, and you pay them. They’re under a nondisclosure agreement (NDA) to keep your vulnerabilities secret for as long as you need them — perhaps forever — and you are at your leisure as to whether or not you fix those vulnerabilities.

Finally, bug bounties are simply adding a cash reward to the process of vulnerability disclosure programs. (Time stamp: 3:20)

ISO standards are your friend

Building and leading an early-stage sales team with Zoom CRO Ryan Azus

This year at Early Stage, TechCrunch spoke with Zoom Chief Revenue Officer (CRO) Ryan Azus about building an early-stage sales team. Azus is perhaps best known for leading the video-calling giant’s income arm during COVID-19, but his experience building RingCentral’s North American sales organization from the ground up made him the perfect guest to chat with about building an early-stage sales team.

We asked him about when founders should step aside from leading their startup’s sales org, how to build a working sales culture, hiring diversely, how to pick customer segments and how to build a playbook.

Below, TechCrunch has compiled a number of key comments from Azus, and afterward we’ve included the full video from the interview as well as a transcript. Let’s go!

When should founders let others run sales?

Nearly every startup leans on its CEO as its first salesperson. After all, who else knows the product and can talk it up like the startup’s leader? But having the CEO as point-person for sales scales poorly. So, when is the right time to have someone else step in?

Fairly early on. First off, CEOs need to solve customer needs. And so it’s important to be very hands-on for a while to really understand while you’re trying to figure out product-market fit. And then bringing in some of those sales people as you start seeing something [good].

Part of it is also knowing what type of salesperson you need. [ … ] Who is your core audience? What persona are you going after? And trying to find people that know and understand selling something that’s primarily very transactional to small businesses, [or] e-commerce lead, or selling something that’s more enterprise — those are different animals, different segments that you’re going after. One mistake [startups make] is hiring the wrong type of salesperson. (Time stamp: 5:29)

How much product-market fit is enough?

How founders can avoid blind spots and make better decisions with EchoVC’s Eghosa Omoigui

Building and maintaining a successful startup requires founders to see the entire playing field. Without that clear view, founders risk missteps when it comes to hiring, raising funds, launching a product or making an acquisition.

Essentially, any big decision can end in disaster if a founder loses perspective or lacks self- and situational awareness.

Eghosa Omoigui, the founder and managing general partner of EchoVC Partners, a seed and early-stage venture capital firm that serves underrepresented founders and underserved markets, has helped entrepreneurs navigate the first steps of starting a company and laying the right foundation early on.

Omoigui, who was previously director of consumer internet and semantic technologies at Intel Capital, advocates for founders to develop their own All-22 tape — a tool used by professional football coaches that allows the viewer to see all 22 players on the field at the same time. It improves a coach’s line of sight and, most importantly, helps avoid missing a critical motion or player.

The concept of this tool can — and should — be applied in the startup world as well, Omoigui said during the virtual TC Early Stage event.

Omoigui explained what it means to have an All-22 tape and the steps founders should take to develop a skill set that will allow them to see and understand the playbook from all sides.

The big picture

Before getting into the steps, it’s important to understand what the aim is. The upshot? For founders to have the best and most complete view of their company, team, investors, product and competitors.

For founders, that means being able to zoom out and see each of their employees’ points of view and being inclusive. Without an All-22 tape, founders can mistakenly spend too much on engineering while ignoring the product rollout strategy or forget to communicate with employees outside of their bubble of interest. A company can become fragmented as more blind spots emerge, which can ultimately lead to oversights that damage its reputation, operations or even its ability to raise money from investors.

For operators and investors, what we see is usually very driven by where we stand, or where we sit. And what you have to discover really is: How can I get much better views? And the best view is always the plan view, you’re looking from the top down, you’re watching the movement, and you have line of sight, you know, that’s essentially 360 degrees. (Timestamp: 3:40)

Situational and self-awareness

How to kick the 10 worst startup habits with Fuel Capital’s Leah Solivan

Fuel Capital General Partner Leah Solivan joined us at TechCrunch Early Stage 2021 to talk about how to avoid early mistakes in building your startup. Solivan has ample experience on both sides of the fence, as she founded TaskRabbit and led it to exit through an acquisition by Ikea in 2017. She shared a list of 10 things to avoid in total, but here are some highlights of what to watch out for.

Share your ideas freely

Solivan urged founders to not be shy about sharing their ideas, as some people can tend to be secretive about their startup concept. The notion that giving up your idea somehow means you’ll end up with more competition is not a legitimate concern in the end, Solivan said. Instead, sharing that idea with as many people as you can is much more likely to generate positive results than negative.

I can’t tell you how many times I would be giving a presentation. And someone after the presentation would come up to me and say, oh my goodness, I had this same idea for TaskRabbit, like 10 years ago. And I’d be like, great! What did you do with that idea? And I think the point is, is that the idea itself isn’t the magic — the magic is in the execution of your idea and actually turning that idea into a business. (Timestamp: 01:42)

Take everyone’s advice, but make the call