Founders at Work.pdf

330 Founders at Work
money from pension funds, give it to you, and then talk to an underwriter along
the way.”
There were these two VC firms—Greylock and General Atlantic Partners—
that were among the group, and they would send their senior partners by to
schmooze us and talk about their successful track records–building companies
and management teams. I thought to myself, “I don’t want to be CEO of this
company where I have to repeat myself and tell people what to do and travel
everywhere. It would be so nice to just be the CTO and have a brilliant management
team installed in my place.” So it was very attractive to me, and our
MBAs said, “Yeah, these Greylock and General Atlantic guys, it’s a bigger name,
and it will really help us.” Slightly worse terms than Summit—actually, with the
deal Summit was offering, I could have sold some of my shares to them, taken
some cash out, and had some money, and in retrospect that would have been a
very smart idea. Especially if you are going to get into conflict with a venture
capitalist later, you don’t want to be a salary man with $130,000 a year while
they have billions of dollars in assets.
So I let them decide, and they chose Greylock and General Atlantic. Which
might have been OK, except that the senior partners in those firms were so rich
that they didn’t want to spend time sitting on the boards of companies they
were investing in. Why should they? They had six houses each and Gulfstream
jets to get among all their houses. They were going to the World Economic
Forum in Davos. Why would they want to sit at my board meeting? I used to sit
at my board meetings, and I would think to myself, “This is my own company
and I’m bored out of my skull.”
The VCs delegated very junior people to sit on our board. One guy had
been a management consultant at Bain. He had never run a company; he never
had profit-and-loss responsibility, which is the key. And he never started a company,
and that was true with the General Atlantic board guy as well. He had
been a middle manager at a big company before he went to General Atlantic.
We got these guys on our board who just don’t know anything about running a
business.
Fundamentally, if you have a lemonade stand, you have to sell your lemonade
for more than it costs you to make. That’s really all you need to know to run
a company. I would have been so much better off if the manager of the Central
Square McDonald’s had been on my board, because at least he would have
understood how to do accounting.
The guys on my Board had been employees all of their lives. You can’t turn
an employee into a businessman. The employee only cares about making his
boss happy. The customer might be unhappy and the shareholders are taking a
beating, but if the boss is happy, the employee gets a raise. By contrast, the
businessman cares about getting a customer, taking his money, not spending too
much serving that customer, and then selling something more to the same customer.
These are totally different psychologies.
The VCs found a CEO for the company, and I was like, “OK, great! Finally,
I can relax.” This guy was a very smooth talker. He had been the COO-type at a
software consulting firm, Cambridge Technology Partners, which is a pretty