Editor’s Note: This post was originally published on Seattle 2.0, and imported to GeekWire as part of our acquisition of Seattle 2.0 and its archival content. For more background, see this post.
By Gerry Langeler
The problem, of course, stems from the following: Entrepreneurs often have mixed goals in starting a business. They want to deliver on a product vision, want to grow a major enterprise and make money, and also want to be the boss. Venture capitalists have only one goal: To make money for their investors and themselves. Sometimes, if the company gets off track and management doesn’t seem able to fix it quickly, VCs want to bring in people who they believe can.
So, if you are the entrepreneur/CEO, how do you avoid this potential conflict point? First and foremost — perform. The last think a VC wants to do is change senior management. It is messy and risky and often leads to a washout of the previous round of investment. And no VC in their right mind wants to take the reins themselves. We know how hard you work!
- Poor Leadership
- Lacks the confidence of key personnel
- Hires/retains weak people in key positions or fails to fill key roles in a timely way
- Fails to grow/retain successor(s) and/or create management depth
- Poor Vision
- Lacks clear understanding of where business is going
- Lacks focus on organization and priorities or tries to keep too many balls in the air
- Is unable to strike key industry strategic partnership relationships
- Poor Results
- Has major and sustained poor financial performance or missed targets
- Shows major loss of competitive position or market share
- Is unable to forecast timing/nature of recovery events or of revenue achievement
- Poor Understanding of Business
- Misses key industry trends and changes
- Lacks understanding of fundamental profitability factors
- Cannot crisply define what it takes to win
- Poor Work Habits
- Does not put heart and soul into business
- Sets bad example/role model for others
- Is not viewed in industry as a key player
- Poor Management Style
- Allows top management infighting, not working as a team
- Demonstrates unpredictable decision processes or will not make tough decisions
- Starves key programs but spares sacred cows
- Poor Board Candor/Communication
- Controls flow of information/agenda, preventing focus on or sufficient time for critical issues
- Does not allow ready access to VPs and other key individuals
- Keeps favorite nonstrategic programs or perquisites out of board review and approval process