Time Warner Cable: HELP ME!
February 29, 2008
DirectTV’s deal with TIVO fell apart a few years ago and the only TIVO compatible service is cable. After remodeling our home I called Time Warner Cable and ordered terrestrial cable service. The installer came in early January, but a couple of days later I realized that the sound did not work on premium stations such as HBO and Showtime. I called Time Warner Cable on January 9th and reported the problem, but to this date the company has been unable to resolve the issue. I received a disconnection notice from the company and I called to schedule another on-site visit and resolve the billing issue. I explained to the Time Warner associate my predicament, specifically that I had not been able to terminate my DirectTV service. She offered to refund the charges for the pay channels, but not the service in general.
I explained that I didn’t feel obligate to pay for a service that didn’t work properly. I also offered to send her a copy of my DirectTV bill so that she could see I was still using that service until they were able to resolve the problem with their service. She explained that between each call I made (i.e. attempting to repair the problem) Time Warner assumed the service worked and as a result would require me to make payment. She confirmed that I had been calling over and over regarding the same problem since January 9th, but she couldn’t be convinced that the problem was continuous. She didn’t care that I had been using DirectTV while I waited for the company to fix their service. I can’t stomach the thought of paying for a service that doesn’t work.
Does anyone have a good business contact at Time Warner Cable? I am sure the right person could waive their hand and resolve this matter (i.e. get my service fixed and waive the charged up-to the date of resolution). Any help would be appreciated.
Life isn’t Fair, and Mickey Mouse is a Rat
Scott mentioned that he read my post titled, “Deal Timing: Cut Your Deal ASAP” and it prompted a conversation about fairness that I decided to write about here. Far too many people in this country are focused on what is ‘fair’. When I was around six years old my mom explained an important concept about fairness, “Life isn’t fair, and Mickey Mouse is a rat.” It took me a while to get it, but once I did it was liberating.
Many of us spend time being frustrated when we encounter a less than fair situation. Of course the only way we can determine what is ‘fair’ is to compare our situation to the situation of others similarly situated (I hope that makes sense). Ironically, my mom’s point about fairness was rooted in our belief in grace, a concept better explained by John Claypool,
And so God began to create not to get something for God’s self but to give something of God’s self. In other words, bottomless generosity is the source out of which all creation comes, and because of generosity, the truth is none of us, if we look deeply into our lives, can claim that we have earned this existence of ours by our own efforts. Each one of us were given life as a gift. If you look profoundly enough, birth is windfall, is coming into the possession of something that is not ours by deserving, but something that has been given to us. If we will stay in touch with that primal grace that marks the beginning of all of our lives, then the truth is we have reasons to be grateful no matter what our particular circumstances. We no longer think in terms of justice because life is not fair, because it is rooted in grace. Rather we have reason to believe that the sheer wonder of aliveness is an unending source of joy and of gratitude.
Once you come to terms with your own sense of entitlement (and we as Americans have this sense in spades) you suddenly become painfully aware that, ‘yes life isn’t fair, and thank God it isn’t‘. Since you are already comparing your lot in life to everyone else around you, spend a moment to compare your life to all of the people in the world who live here now and who have ever lived; how does it compare? Is your situation fair? If you spend some time thinking about it, you may come to realize that fairness is unimportant. I can’t help you realize this, but if you take a hard look at your life I promise you will.
I have a friend and father of two who recently went through a messy divorce. He is still struggling with the ordeal and as a result he spends a lot of his time thinking about how unfair the process was. John Claypool’s telling of the parable of the two farmers expresses what I would like to tell my friend better than I can:
There is an old rabbinic parable about a farmer that had two sons. As soon as they were old enough to walk, he took them to the fields and he taught them everything that he knew about growing crops and raising animals. When he got too old to work, the two boys took over the chores of the farm and when the father died, they had found their working together so meaningful that they decided to keep their partnership. So each brother contributed what he could and during every harvest season, they would divide equally what they had corporately produced. Across the years the elder brother never married, stayed an old bachelor. The younger brother did marry and had eight wonderful children. Some years later when they were having a wonderful harvest, the old bachelor brother thought to himself one night, “My brother has ten mouths to feed. I only have one. He really needs more of his harvest than I do, but I know he is much too fair to renegotiate. I know what I’ll do. In the dead of the night when he is already asleep, I’ll take some of what I have put in my barn and I’ll slip it over into his barn to help him feed his children.
At the very time he was thinking down that line, the younger brother was thinking to himself, “God has given me these wonderful children. My brother hasn’t been so fortunate. He really needs more of this harvest for his old age than I do, but I know him. He’s much too fair. He’ll never renegotiate. I know what I’ll do. In the dead of the night when he’s asleep, I’ll take some of what I’ve put in my barn and slip it over into his barn.” And so one night when the moon was full, as you may have already anticipated, those two brothers came face to face, each on a mission of generosity. The old rabbi said that there wasn’t a cloud in the sky, a gentle rain began to fall. You know what it was? God weeping for joy because two of his children had gotten the point. Two of his children had come to realize that generosity is the deepest characteristic of the holy and because we are made in God’s image, our being generous is the secret to our joy as well. Life is not fair, thank God! It’s not fair because it’s rooted in grace.
My mother freed me from myself when I was six years old by explaining this very basic concept to me. This isn’t to say I don’t get sucked into frustrations related to perceived injustice. In fact earlier this week I posted a diatribe describing how unfair a recent bankruptcy sale was. I have to constantly remind myself, “luckily for me, life isn’t supposed to be fair”. Focus on what you can do to make your life and the lives of those around you better. Don’t worry about fair. The constitution doesn’t say Life, Liberty, Happiness and the pursuit of Fairness for a reason…
Deal Timing: Cut your deal ASAP!
When you start a new business or join a new business it is important to negotiate your ownership and compensation on the front-end. Over and over I have seen co-founders or early key employees delay negotiations. Some are uncomfortable negotiating, while others are waiting for the best possible deal. You never know how a deal is going to work out, you never know what is going to end up being fair. The truth is, the whole thing is more likely to fail than not so you might as well split things up as soon as possible so that you can all get to work building the new business. Of course how to split things up (i.e. founders equity) is a whole other matter entirely. Noam Wasserman has a detailed post titled, “Splitting the Pie” that I recommend.
For Employees/Co-Founders: If you wait to negotiate your deal and the company progresses the other owners will perceive the value of the business to have increased. This perceived value inflation will result in a smaller stake for you. It is very easy to offer half or a third of nothing, than of $100,000 or $1,000,000. I realize that in some cases it will become very apparent very quickly that your value is far greater than the other members of your team and you will be frustrated with the deal you cut. Don’t be frustrated. Assuming you delayed negotiations and make greater demands based on this new information, in my experience, the team will find a way to replace you. You may not be aware, but every human being is replaceable (thank God).
For Founders/Employers: As a business owner you want each partner to cut their deal ASAP as well. There is no value in waiting. You may think that by delaying you will be able to cut a better deal (i.e. offer a lower percentage), but instead you are opening yourself up to a world of bad blood, resentment, frustration and potential litigation. You will spend countless hours arguing about a few points, instead of figuring out how to add an additional client or build a new widget. It is in everyone’s best interest to settle the matter and move on.
My own experience:
In the mid-nineties I interviewed with a small IT services business here in Dallas. Ultimately I either didn’t get the job or decided not to accept it (I can’t recall which). I did; however, begin a relationship with the vice president of sales. He and I lived in the same historic section of Dallas and as a result we became friends and would meet occasionally to chat. I recall one conversation where he confided that he was attempting to negotiate an equity position. The negotiations dragged on for a couple of years, but as the company grew (largely a result of his efforts) the owners were less and less inclined to meet his demands. Ultimately he left the company frustrated and resentful.
I lost track of my friend over the next couple of years only to catch up with him in early 2001. He was working for a business associate of mine and we met for lunch. Ironically he didn’t realize it, but he was in the exact same position he was years earlier. He was attempting to negotiate an equity position in an early stage IT services company. The dotcom meltdown had seriously impacted the little company and his role was to turn it around, but for a number of reasons he wasn’t making much progress getting his deal cut. In the meantime he was working for the business on an interim basis. It was obvious to me (but not to him) that history was repeating itself.
He had an idea to combine certain services from our two companies to offer something completely new and unique. I loved the idea and after several meetings with the owner (his boss) we put a deal together. I met privately with my friend and suggested that he should run this new business and suggested that it wouldn’t be unreasonable to ask for 10% of the business (with a reverse vesting agreement of course). For various personal reasons and professional reasons he was not prepared to negotiate. At this point I took my friend to dinner and attempted to help him understand why, after all these years, he wasn’t making any headway with his career or financial situation. I begged him to go ahead and negotiate the best possible deal for himself so that we could get to work building this new business. He didn’t take my advice.
Over the next few months the business grew and each new client signed up I could see that my friend was getting more and more concerned. One afternoon he stopped by my office and explained how he wanted to go ahead and ‘cut his deal’ and I suggested he talk to one of the three other partners. The conversation didn’t go as well as he had hoped and over the next few weeks his frustration flowed into his work. He missed meetings, deadlines and generally was difficult to deal with. Ultimately, he had enough and mailed each of us a resignation letter. Later that day we received a letter from his lawyer demanding 10% of the outstanding shares in the company.
Had my friend simply taken the 10% offer, or a potentially better negotiated deal, he would have been part of the creation of something great. Instead he ended up with nothing, but a legal bill. Despite the fact that I was willing to go ahead with the original deal, the three other partners became less and less willing over time. Ironically, by the end as I argued with my partners my friends behavior deteriorated making a deal all but impossible. I lost a friend and a great asset. The moral of the story: Cut your deal ASAP!
Vista: Disruptive for Business
February 28, 2008
Architel, our IT outsourcing company, generates a significant amount of data related to the thousands of users the company supports. Specifically, we can watch trends related to downtime on a macro level. Over the past two years Blackberrys and other hand held devices accounted for the largest increase in non-productive time for employees. We are starting to see a much more significant time-suck in the SMB market: users who switch to Vista without the consent of their company or IT department.
Typically, more senior employees will stop by a big box retailer and purchase a new laptop with Vista pre-installed. Based on the early data we are seeing that the average employee with a non-approved Vista install spends an average of eight hours per week working with our staff to keep their system running. The data is horrific. The AVERAGE is 34 hours per month resulting in an employer cost of more than $1,200 per employee who installs Vista. Talk about expensive! Earlier this week one of our clients asked why Architel was so behind the curve, i.e. why does Architel have such a hard time supporting Vista. It was a valid question, surely everyone else is having a ball with the new operating system ~ don’t bet on it…
Yesterday Todd Bishop reprinted internal Microsoft emails related to Vista performance that were shocking even to me. A federal judge unsealed the critical emails yesterday that, “reveal extensive hand-wringing, at the highest levels of the company, over Windows Vista’s hardware and software compatibility problems after the operating system was launched.” Todd explains,
For example, one February 2007 exchange (PDF, 17 pages) started with an e-mail to Microsoft CEO Steve Ballmer from board member Jon Shirley, who explained that he upgraded one of his computers to Windows Vista only to find it was experiencing compatibility problems with two of Microsoft’s own MSN applications. Shirley wasn’t upgrading his other computer because of a lack of hardware drivers. As many early Windows Vista users know, Shirley wasn’t the only one experiencing those kinds of problems, especially in the initial months after release.
In addition to some of the previously reported excerpts — including executive Mike Nash’s complaint that compatibility problems turned his $2,100 PC into nothing more than an “email machine” — that thread led to a revealing message from Steven Sinofsky, then the newly installed Windows chief. In the message, Sinofsky offered his take on what went wrong with Windows Vista’s launch, and how the company should change its approach in the future.
This is particularly notable given Sinofsky’s public silence during the past year. It will no doubt be closely examined by people looking for clues about Microsoft’s strategy with Windows 7, the code name for Windows Vista’s successor.
My advice? Give XP another couple of years if you can, especially for your office computers. Most startups can’t afford the downtime, for that matter most BUSINESSES can’t afford the productivity loss. Check out the full argument against Vista: Why Vista is a Bad Idea for your Business.
Startups: If you can avoid death you will get rich!
Thomas Ahn, founder and CEO of Mad Ventures, reached out to me today and as I Googled him I found an interview he did with Yaron Bazaz. Thomas suggested that anyone looking for first round investments should read Paul Graham’s post titled, “How Not to Die“. I recall reading the post back in 2007 when it first went up, but I reread it this evening. What a powerful post ~ you need to read it, twice.
Paul suggests that in a typical startup, if you can avoid dying you will get rich (rich being relative). He explains his own near death experience at Viaweb, “When we were visiting Yahoo to talk about being acquired, we had to interrupt everything and borrow one of their conference rooms to talk down an investor who was about to back out of a new funding round we needed to stay alive. So even in the middle of getting rich we were fighting off the grim reaper.”
Paul concludes his post with the following advice:
So I’ll tell you now: bad shit is coming. It always is in a startup. The odds of getting from launch to liquidity without some kind of disaster happening are one in a thousand. So don’t get demoralized. When the disaster strikes, just say to yourself, ok, this was what Paul was talking about. What did he say to do? Oh, yeah. Don’t give up.
Dissecting a Bankruptcy: ATMDirect
February 27, 2008
I thought it might be interesting to dissect a recent bankruptcy sale we were involved with. You might want to catch up by reading my post title, “Section 363 of the U.S. Bankruptcy Code“. Those of you who have been following Nicholas Carlson’s coverage of the Pay By Touch bankruptcy won’t be surprised that the company is running their Chapter 11 reorganization as well as they ran their business. Pay By Touch operated a business unit here in Dallas (Irving) called ATMDirect. Our team spent the past month conducting diligence on the business and ultimately participated in the auction to purchase ATMDirect last week.
The local ATMDirect people (both current and former employees) were very helpful and simply wanted to keep their business up and running. The Pay By Touch people (in general) were less than helpful and at every turn seemed to be erecting roadblocks. The creditors hired a company called FTI to sell off non-core assets like ATMDirect and to reorganize the core operations of the parent company Pay By Touch. FTI installed Thomas Lumsden as ‘Chief Restructuring Officer’ who, by looking at his CV, seems to be very qualified for the position.
After our first meeting with the local ATMDirect people I was certain we wanted to make an offer for the assets. Evidently Thomas had set a bid deadline, which failed attract even a single bid. I called him and offered to serve as the ‘stalking horse‘ so that an auction could be held. He suggested that he intended to draft his own asset purchase agreement (APA) and that he would be scheduling another auction in a couple of weeks. I suggested that it might be in the interest of the debtor to have one of the bidders (i.e. us) prepare the APA. Thomas didn’t agree and in a confusing twist became somewhat belligerent. Our subsequent communication was exclusively electronic, much of it rather silly.
Despite the fact that I was in contact with Thomas on a daily basis, we didn’t receive his APA until two business days prior to the deadline for bids. There simply wasn’t enough time to get our lawyers to review the document, circulate it to my team and complete it in time for submission to Pay By Touch. Some members of my team assumed this was by design (i.e. the conspiracy theorists in my group), while I simply assumed it was a matter of incompetence. This brings me to my thesis: ‘Bankruptcy is inherently chaotic and as a result creates real opportunity for anyone willing to endure the process’. Thomas’ sale process was broken and a result there was a good chance very few bidders would be willing to stay in the game resulting in a lower price.
We began digging into the business and we quickly realized that the asset value of the associated personal property (i.e. servers, networking equipment, computers and office equipment) was worth between $300,000 (quick and nasty sale) and $600,000 (current value based on recent ebay sales). Within two weeks we had a buyer willing to pay $475,000 for the equipment. With this information we began attempting to value the associated intellectual property (a lovely patent) ultimately finding an IP litigation boutique who suggested that (depending on the prosecution history) that they would buy litigation rights for the patent for $750,000 at a minimum. It wasn’t my intent to immediately liquidate the equipment or sell off the litigation rights of the patent, but these data points helped me understand the minimum value of the assets ($1.2MM). One interesting data point was that Pay By Touch had bought ATMDirect in 2006 for approximately $8MM ($4MM in cash and the remainder in debt/stock).
Working under my two assumptions a) the process was broken and b) the assets were worth $1.2MM I spent my weekend marking up the debtor provided APA. I settled on a total bid of $1MM ($250K in cash and $750K in a 24 month note). My business plan allowed us to attempt to execute on the underlying business (there were significant risk factors) for up-to 24 months and ensured that if the business failed we would break even (on a cash basis, obviously our time would be lost). We were prepared to bid as much as $750,000 cash plus up-to $500,000 in debt for a total bid of $1.5MM (risking around $700K in cash at this price).
The day of the auction arrived and two other bidders were present. After several hiccups on the teleconference Thomas explained to us that the prevailing bid was $1MM cash. This was more cash than I had wanted to bid and after a few moments of consideration I told him we weren’t interested in meeting the offer. I was disappointed, but I learned long ago not to bid on emotion. The two remaining bidders remained and Thomas terminate our connection to the conference bridge. To our shock and dismay on Monday we learned from the debtor that the prevailing bidder paid $600,000 cash for the business. The sale hearing had already occurred earlier in the day and as we had assumed Thomas had given us accurate information we had no reason to object to the sale. Had we known the sale went through at the $600K price we would have certainly objected to the sale.
This morning we discussed our options and instead of dragging the process out in court and objecting to the sale we have decided to move on as it is our understanding and belief that the prevailing buyer would have bid as much as $800,000 cash. This bid would have been higher than ours. The only damage seems to have been borne by the creditors. I am no expert, but within fourteen days I was able to secure buyers for key assets for a cash price of $1.2MM; however, after months of ‘marketing’ and tens of thousands of dollars in legal fees Thomas Lumsden was only able to recover half of that amount. What is wrong with this picture?
Everything, but at the end of the day the important thing to remember is that it is the very process that can create value for you as a buyer. Think about the motives of the parties involved. The seller (i.e. the debtor) is being run by employees who almost certainly don’t have a future with the company. How concerned are they going to be with their duty to obtain the highest and best price for the creditors? Not very. Ironically, according to insiders at Pay By Touch, in this case the creditors hired FTI to sell off assets and agreed to pay them a percentage of the sale price. Anyone would assume that Thomas Lumsden would be more than interested in getting the highest and best price for the assets. Again, in this case it was KEY that we understand the motives of everyone involved. For example, I couldn’t understand why Thomas wanted to draft the APA instead of having one of the bidders bear this cost. But it didn’t take long to figure out that, the costs associated with the process are not deducted from his firm’s commission. Secondly, by controlling the APA he was able to control the definitions, definitions that would dictate how much money he would make. Specifically, he defined the purchase price as not only the price paid by the buyer, but by the value of the ‘assumed liabilities’ (i.e. executory contracts such as the lease). Our fatal flaw was realizing this too late. In our APA we rejected almost all contracts of the seller (the most powerful feature of a 363 sale). We felt that we could negotiate new contracts on better terms. From Thomas’ point of view, $600,000 plus the assumed liabilities was more valuable to HIM than $1.5MM without the assuming liabilities. Of course, from the secured creditors perspective, the $1.5MM would have been far more valuable as the assumed liabilities would have never come into play (i.e. none of them were secured).
Turns out the creditors are VERY aware that their interests aren’t being protected. Just last week according to Nicholas Carlson, “On Friday, a party of creditors filed a restraining order with a court in Los Angeles to prevent management from “shutting down the operations of Pay By Touch Payment Solutions”– its main business.”
Lee Taft on Apologies and Medical Malpractice
February 26, 2008
Lee Taft, the former dean of the Harvard Divinity School, realized that ‘after all his years in practice in the field of injury law is that people need meaningful apology from the wrongdoers in order to fully recover from the inflicted wrongs. This realization came to him after he handled a medical malpractice case. A young widow was left with small children and scarce resources because of the negligence of doctors in handing her husband’s illness. This widow was extremely disappointed that none of the doctors that contributed to the agonizing death of her husband came forward with an apology. To her, this was a moral harm, another injury that was added to the malpractice.’
I recommend reading the full article:
Apology Subverted: The Commodification of Apology
Lee Taft
The Yale Law Journal, Vol. 109, No. 5 (Mar., 2000), pp. 1135-1160
doi:10.2307/797485
This article consists of 26 pages
Hidden Talent at Architel: Farstar
February 25, 2008
I was surprised to learn that Architel’s help desk manager is also the lead singer for Farstar, a Dallas-based rock band. I have been playing Shannon’s latest album and to be honest I am impressed. Check them out here.
The Architel team will be out in force to support Shannon and his band on Friday night. Pegasus News Local Music Showcase is featuring Farstar. If you sign-up on Pegasus’s website and ‘favorite’ the event you will get free tickets - no excuses.
Texchange Dinner featuring Sue Dark of DeepNines
If you’re a technology entrepreneur and you own a business, uncertainty is a daily occurrence and it can be a real distraction–particularly in times like these!How do successful business owners replace the shroud of uncertainty with a blanket of opportunity? Respected entrepreneur Sue Dark has been there–for over 25 years, and she’s doing just that in a big way! What’s her secret? Join us at Texchange this month to hear her answers. Register here (February 27th).
Under Sue’s leadership, DeepNines Technologies (www.deepnines.com) has produced proactive security solutions that advance the ability of corporations, government agencies and educational institutions to conduct business in a more secure environment. Beyond DeepNines, Sue is an active participant in the AeA, recently completing her term as the Chairman of the Board of Directors of the AeA Texas Council. Sue also serves as a member of the National Board of AeA and the AeA Executive Committee. Sue serves on the Greater Dallas Chamber’s Technology Business Council, which provides oversight of both policies and programs for the Technology Business Development Department of the Chamber and reports to the Board of Directors, In addition, she co-chairs the CIO/CTO Forum.
Barcamp Austin III
Right in the middle of SXSW, Whurley and the gang are holding the third annual Barcamp Austin. Hope to see you there (March 7th and 8th at GSD&M’s Idea City)!
Sproutit Mailroom is a Webware 100 Finalist!
Our friends at Mailroom (run by Texans) are Webware 100 finalists! Help them out by voting here.
Advice to anyone lucky enough to get a referral. . .
This advice applies to anyone who is the recipient of a referral for a job, an investment or a service. If someone takes the time to make a referral and you accept the referral you have several responsibilities:
- Only accept referrals you intend to follow-up on.
- Promptly follow up on the referral (returning the call, sending the information, scheduling the meeting, whatever).
- Let the referrer know (usually via email) that you made the connection, or request help making the connection.
- Close the loop (usually via email) by explaining how it turned out.
- Return the favor. Take a minute to think about how you might be able help the referrer (regardless of how the referral turned out).
More than a week ago a friend of mine who is raising money was in a tight spot. I offered to help connect him to a potential investor. Within a day I had scheduled a meeting over drinks with the investor and my friend. I moderated the meeting over sushi and drinks and by the end the investor was interested enough to request an investment book and my friend seemed appreciative. For some reason I got stuck with the tab (responsibility No. 6: don’t make the referrer pick up the tab). Anyway, I followed up with my friend several days later only to learn he hadn’t sent an investor package to my investor friend. I begged the investor to do the meeting for me as a personal favor. I felt let down and somewhat burned.
However, over the weekend (I was at Ethan’s soccer game) a headhunter told me about a CEO job for a pre-IPO company and I mentioned that I might have the perfect candidate for him. I made a quick call and gave the candidate the headhunter’s contact information. He agreed to contact the headhunter today after sending me a thank you email. This morning I got an email from the candidate indicating that he had connected with the headhunter. He is keeping me in the loop because he realizes that I am extending my relationship to him ~ he is showing me that he respects my relationship and is taking it seriously. Guess who I will refer a second time?
What they can’t/won’t say about Obama!
The Obama campaign is in an uproar about photos being circulated by Clinton Staffers. The photos show Obama dressed as a traditional Muslim Elder from Somalia. The irony is that the more the mainstream press keeps the ‘Muslim’ rumors just below the waterline the more people think there is something to them. I myself assumed that Obama must have been a ‘reformed’ Muslim, attending a Christian church just for show. I got tired of the ‘elephant in the room’ and decided to do a little digging of my own. I won’t vote for Obama for one simple reason: his tax policy. It doesn’t have anything to do with his religion. But for those of you who were wondering:
Here are the facts: Obama moved from Hawaii to Indonesia when he was six and attended a Madrasah in Jakarta until he was ten. The curriculum was generally secular according to 60 Minutes. His biological father (a Kenyan national) was a Muslim, but was a confirmed atheist and his stepfather (an Indonesian national) was also Muslim, but according to Obama he was “a man who saw religion as not particularly useful.” His experience in Indonesia seemed to be the most positive part of his life.
Obama wrote in his best selling book, that when he returned to the United States he began using alcohol, marijuana and cocaine to “push questions of who I was out of my mind.” In 1988 Obama joined the Trinity United Church of Christ, the largest congregation in the United Church of Christ (Oprah attends). Obama denies that he has ever been a Muslim, suggesting that he is a committed Christian.
The proof? Lots of leaders have worn local garb:
Fred’s thoughts on picking board members
February 24, 2008
Fred had some great thoughts on picking board members in a post today:
- Avoid “big names” For the most part, they are useless.
- Select people who will attend each and every meeting, who will pay close attention to the business
- Select people who have an affinity for your business, who understand your challenges and your opportunities
- Avoid putting someone you can control on your board. In tough situations they will have a fiduciary duty to do what’s right and you won’t be able to control them when it matters most to you.
- Don’t let conflicts get in the way of selecting the ideal board member. Conflicts will be disclosed and can be managed. Many times the people who will understand your business best are conflicted in some way. There are ways to deal with this problem.
- Make sure to have an experienced accountant/auditor on your board and have them run the audit committee. That is no place for amateurs.
- Make sure to have at least two or three CEOs of comparable companies on your board. Make sure they are on the comp committee. Compensation issues are best handled by people who understand the talent market.
- Select people who have the time to do the job right. Being a board member is a job. It’s not a retirement perk. If someone cannot commit to attend each and every meeting and to spend at least several hours a week on your company, they are not the right choice.
- Select people who will get along with each other. The very best boards I am on are friendly social active groups. Serious business doesn’t have to be stilted and formal. It can and should be fun.
- Above all else, look for great judgment and ethics.
Where are you from? Does it matter anymore?
Last week I was visiting with an inventor from New York named Reza and he said something that got me thinking. Reza had asked my favorite question, “Where are you from?” After I explained how I had moved across the country as a kid, he suggested that today with social networks like MySpace, Facebook and LinkedIn, that same experience wouldn’t be as disruptive as it was for me.
My father’s career took me across the United States as a child. I attended three different elementary schools, two different middle schools and three different high schools. On one hand, moving throughout the United States was an amazing experience. During this ‘pre-internet’ time there were vast differences between people in New York, Massachusetts, Delaware, Virginia, Georgia, Tennessee and Texas. I met hundreds of people, many of whom I have fond memories of them to this day.
When Michele and I decided to have a family we made a decision to raise our children here in Dallas. We found a church home, Wilshire Baptist Church, and began to grow roots in the area. Over and over we had the opportunity to move our businesses to California or New York, but each time we stuck to our guns and stayed in Texas. Over the years my relatives began to believe me when I said we were staying in Dallas. My sister left Berkeley and moved to Dallas. In a couple of years she married a great engineer from TI. Then my parents decided to sell their home in the Bay Area and they too moved to Dallas. Next my grandmother moved to Dallas and then my grandfather. Soon my entire family was here in the Dallas area.
To Reza’s point, I wonder what happened to: Brett Waltz from Moore Elementary; Gary Heidt and Valerie Brazina from Seabrook Junior High; Robert Brennan and Liisa McConnell from Pittsfield High School; and so on. Too bad the internet wasn’t born until three years after I graduated from high school. Of course having local connections, specifically family connections cannot be replaced by a virtual connection. Your Twitter friends make lousy babysitters…
