Surveys Archives

Below is the hyperlink to our latest CEO peers “speed-survey,” exclusively for growth-stage CEOs.  Topic– “Preparing for Recovery?”

http://surveys.polldaddy.com/s/D3642F14267CCC14/

We at BSG Team Ventures periodically take the temperature of the markets we serve. This speed survey is no more than 10 questions, simple multiple-choice.

Knowledge is power.  Aggregated peer-provided knowledge is “actionable power.”

We make an effort to survey only those who fit the category (in this case, sitting CEOs or board member/founders of technology/science-driven growth-stage companies). [Note, if you don't fit the aforementioned description, please refrain from responding.]

Feel free to forward to the qualified CEOs in your sphere of influence.  The more data generated, the more accurate the trend lines.

All responses are anonymous due to the web-based survey technology employed.

We will forward the survey results within the next two weeks to the email address on file.  Please let us know if there is another email address you wish us to send the results to as well.

Below is the final tally on top metrics for measuring executive success in the C-level and VP level team CEOs bring on board to help them executive on their businesses.  Thanks to the CEO input of more than 60 poll responses to this latest venture-backed company CEO survey.

The question we framed was phrased as follows:

“In evaluating the success of an executive hire after 12 months, what would be the top 3 criteria that you would use?”

The first choice from the poll results is somewhat self-evident– that the executive has exceeded performance expectations (goals, milestones, objectives, etc.) for the specific role from the CEO’s perspective.

However, the second most popular metric was “established internal and external reputation as functional expert.”   Essentially, this means that the executive has built his or her own political/social capital with internal peers and external influencers, customers, vendors, or other external relationships key to the success of the company.

The third most important metric was “culture fit.”   This was selected over the other 4 remaining metrics offered by a more than 2 -to-1 margin.

The question that pops up is how a CEO might best measure the  #2 and #3 metrics.  For both of these metrics perhaps a 360-degree review at the end of 12 months would be beneficial.  There are tools offered by the likes of the Hay Group and others that do an online version of this contextual employee review that can be quite useful to determine an objective read (see http://www.haygroup.com/tl/Questionnaires_Workbooks/Emotional_Competency_Inventory.aspx ).

Perhaps it would also be interesting if an executive search firm who brought a candidate to an organization also made this part of their fee structure.  And facilitated the process/offered the tools to make it happen.  Food for thought.  The goal of the executive recruiter would be to serve as that often mythical “trusted adviser” of executive talent, facilitating as much objectivity around executive team-building and talent assessment as possible.

Worthy of note is the fact that “integrity” ranked near the bottom of the list of success criteria.  No doubt CEOs assume perhaps that this is a given in any candidate.

We get hired to build early-stage executive teams by our clients every day. So we’ve seen our fair share of “team-building,” and much of what follows is likely intuitive to many.  It is a combination of our experience and the collective wisdom of more than two dozen early-stage venture capitalists in the North East who we asked the question, “What does a ‘bankable executive team’ mean to you?”

Consider these criteria common denominators, or universal norms for investability. They are by no means exhaustive or complete, as each investor has his or her own individual criteria he or she leverages in selecting portfolio companies.

First, some qualifiers.

¨      Different stages require bankable teams with different profiles: angel versus early stage versus later stage mezzanine/pre-IPO.

¨      Different value kernels drive greater emphasis on one part of the executive team or another.  For a deep science company in biotech, the chief scientist is going to carry greater scrutiny by investors.  This also holds true for a software or hardware company where the technology leader will carry a greater weight.

¨      Investors tend to look at where the risks lie-technology risk or market risk for example.  Something referred to as “execution risk” is all about the team being able to execute on the plan.

¨      Almost all VCs want to see a strong core team consisting of a serially successful CEO, a chief technologist with domain expertise in the area of the company’s product focus, and a veteran sales leader with a relevant rolodex and experience building a team that can score early customer wins.

¨      A strong board of directors, advisors, or scientific advisory board can help immeasurably, although won’t make up for significant lack of experience among the rest of the team.

However, the above is like describing human anatomy as two arms and legs, a head and a torso.  To drill down to more specific details, the grid below outlines the bankable team by function, team, and other characteristics.

The overwhelming preference by investors regarding “bankability” is an “experienced team.”  The majority of VCs we talked to cited their number one concern as experience; those deals that get a ‘hard look’ have this fact in common.  When asked what percentage of all business plans they receive have requisite experience on the team however, the number is well under half.   And we all know that deals get done with first-time teams, even in this difficult financing environment.

Some of the other characteristics-when combined in the right amount and order-that are considered important criteria when an investor looks at financing a start-up team are listed below.

One VC actually tried to capture the essence of a bankable team with a mnemonic-FIRVOC: More…

One of the big questions clients, executive search firms, and even executive candidates often try to answer is, “Was the executive I hired a successful hire?”

Metrics might include:

•     Are they still in the seat 6, 12, 18, 24 months in?

•      Or, have they been promoted within X months to a position of greater responsibility?

•     Or, would it be better to measure them against other metrics more specific to the role for which they were hired, like an executive’s MBOs (management by objectives list) or how much of their bonus potential they earned in the first year.

In the book,  The Wisdom of Crowds (http://www.randomhouse.com/features/wisdomofcrowds/ ) , the assertion is made that if you get 100 or more individuals knowledgeable about a certain area to weigh in, there is predictive intelligence created.  The poll below aims to achieve that, and share it back as “leadership catalysts” in our role as retained executive search practitioners.

Please pick 3 from the below that are the most important to you as leader in your organization.  Perhaps picking the #1 or #2 appears self evident, but the #3 might be a bit more interesting to figure out and share with others.

After quite a bit of discussion was sparked on an earlier blog post in March around the 7 Reasons why early and growth-stage CEOs fail (http://www.bostonsearchgroup.com/blog/7-reasons-ceos-fail/ )in technology-driven innovation-stage companies, we thought we’d get the venture capital perspective.  Below are the results.  The two biggest reasons behind CEO failure revolved around a CEO’s inability to balance revenues and burn-rate (23%), tied with the CEO’s inability to hire well at the VP level, with repeat VP-level failure/turnover (also ~23%).  The balance of forced ranking of CEO failure include categories such as–

- New CEO didn’t integrate with rest of incumbent team

- Business model changed (different horses for different courses)

- Leadership fatigue (plateauing company for too long a period)

- CEO “Peter Principle,” and

- CEO getting sideways with Board of Director(s)/ board chemistry

We’ve just compiled the results from the most recent CEO survey we sent to our Rolodex of CEO relationships.  The theme for this survey was a combination of economy-oriented questions like “What three cost reductions are you planning” and  “Do you continue to anticipate further staff reductions,” to following results to the opposite question, “What are you spending more on this year than last?”–

Great feedback and insights were provided by all, and thanks to all those who participated.  Below are the slides of the responses, along with some of the content of the responses to questions like “What questions would you like to ask your peer CEOs if given the opportunity?”

When it comes to prognostications as to when the recession will end for innovation-stage companies these CEOs are leading, there was an overwhelming opinion that we still aren’t out of the woods, with more than 60% voting that it won’t be until 2010.

CEOs who responded were overwhelmingly venture-capital backed (~60%), with the balance of CEO respondents spread pretty evenly between private-equity backed, bootstrapped, and angel-funded.

When CEOs responded to the question of what other cost cuts outside of staffing they felt were the most likely, the top 3 responses were:

1)     Delaying specific new project or product development

2)     Outsourcing of key responsibilities (development, testing, sales, etc.) to make variable that cost, and

3)     Reduction of cash compensation for staff, replaced by more equity (options or other stock grants)

As for other areas CEOs were considering cutting, or other ways in which CEOs are considering burn-rate reduction, these included the following:

• – External legal and accounting fees
• – Eliminate bonus and reduce benefits
• – Delaying office expansion
• – We made adjustments in Q4 2008. We are judiciously incrementing investment as traction increases in 2009. We have already added headcount.
• – Taking-on contract-development work to keep developers attached
• - Salary freeze

When CEOs were queried as to the potential for further reduction to headcount in Q2 2009, three-quarters of them responded “No,” which was an encouraging sign that they feel that perhaps the bottom of the economic miniscus had been hit.

For the 25% or so who said that they were indeed considering more staffing cuts, more than half of these CEOs were looking at staff reductions of less than 20%.

When CEOs were asked what questions they’d like to pose to their own peers, the most popular topic was funding-related questions (38%), followed by questions about the economy (28%), staffing (17%) and burn-rate/expenses related questions (also 17%).

Some of these CEO peer questions in each category are listed below:

• -burn rate  | How are you lowering non-core costs such as health, insurance, WC etc?
• -burn rate   | What are companies doing for benefits. How much does the company pay, versus employee. What are innvovative ways to contain, reduce cost
• -burn rate  | I’d want to explore issues around forecasting revenue in a non-linear world.
• -economy   | When will you start spending money at a normal pace
• -economy   | What are the drivers for economy to  turn around
• -economy   | Do you think that eliminating benefits such as a 401k match or bonuses will have a significant impact on employee morale or will they be happy just to have a job?
• -economy    | Are you able to confidently recognize the biginning of a shift back to a more positive business environment?
• -economy/funding  | When will credit markets open and when will VCs start to invest again?
• -funding | How does present economic situation bear on raising additional operating capital? For Series-A companies, what is likelihood of any funding becoming available in 2009?
• -funding  | “Do you receive funding or revenue from US Govt? Have your receipts of US Govt cash increased or decreased compared to prior years? Are you counting on US Govt cash to make plan in 09?”
• -funding  | Congress should increase funding for SBIT and STTR to $250 thousand in Phase 1 which would increase jobs immediately rather than year delay; when people get a SBIR grant they immediately spend the money hiring folks.
• -funding  | which sources of early stage funding feel open still?  My sense:  family offices, corporate venture funds. Where is blocked?  My sense:  most VCs, Angels
• -funding  | “How will marketing and sales budgets change in the coming year?
• -funding | What types of fundraising options are your reviewing?
• -funding | Are you looking at merging, selling or acquiring rather than raising equity financing?”
• -funding  | are you cash flow positive/economically sustainable without a raise, if not when do you need to raise cash again?
• -funding |  How have the criteria for outside venture funding/financing changed in your sector?
• -staff |  How are you linking compensation to performance?
• -staff |  What success have you had with outsourcing
• -staff |  Where are the best software developers in Boston?

A majority of responding CEOs came from the software/internet/telecom sector (61%), while the balance were distributed across cleantech, medical devices, life sciences/Biotech, and interactive media/content/community.

From the venture investor’s perspective, what are the top reasons CEOs fail in venture-backed early and growth-stage companies?

Below is a poll aggregating responses.  For VCs taking the poll for the first time, check out prior blog post at http://blog.bostonsearchgroup.com/7-reasons-ceos-fail/  for further detail on some of the possible reasons short-handed below.

Feel free to forward to other qualified investors.  [Please note, it's the honor system on investors only.  In other words, please resist the temptation to stack the deck or share "opinion."  Experience only.]

For summary of Harvard Business Review article written a few years back around “Why Entrepreneurs Don’t Scale” see below poll.

[Poll closed. See blog post at http://www.bostonsearchgroup.com/blog/common-reasons-ceos-fail-venture-capitals-perspective/ for for results.]

Founder “Peter principle.” This has been well-documented by others, most notably by John Hamm, venture capitalist at VSP Capital and leadership development coach who authored a Harvard Business Review article a few years back, titled “Why Entrepreneurs Don’t Scale.” To set up John’s observations, most of our time as executive recruiters, we focus on helping early-stage companies jump the leadership chasm from entrepreneurial to professional leadership. More often than not, there is absolute certainty that a casualty will occur- the only question is whether that casualty will be the founder(s), or the company. Where venture capital or private equity is involved, all is done to avoid the latter in favor of the former. Regardless, it is too rare an occurrence when this collision between founder CEO, growth mandate, and outside investors ends positively, and if the company survives, it has to deal with the emotional baggage of shedding this first founder layer and all the pain this brings with it. John outlines four management tendencies that work for smaller-company environments but become Achilles’ heels as these CEOs try to scale their companies. The first tendency is loyalty to founding team mates. In entrepreneurial mode, you need to lead as though you’re in charge of a combat unit on the wrong side of enemy lines where anyone on your team is a keeper. However, in larger company growth mode, blind loyalty can become a liability. At some point, it may be required that the rest of the team that started the company with the CEO may need to be changed out for an executive team with experience at the “growth-stage” versus just the “start-up” stage. The second tendency, task orientation, is critical in driving toward a big initial product launch, but excessive attention to detail can cause a growing organization to either suffocate under such leadership-one that can’t generate creative ideas or momentum without being instructed by the CEO-or lose sight of its long-term goals. The third tendency, single-mindedness, is important in a visionary CEO who is unleashing a revolutionary product or service on the world. However, this can limit the company’s potential as it grows, as all good ideas aren’t always born from one person. In addition, often a lack of self-awareness or “emotional intelligence” can create a large blind spot around what isn’t working with the original idea, and instead of an ability to iterate to a better but related idea for the marketplace, the founder CEO can become caught up in the initial “vision” and stick to it regardless of external market input that would indicate changes to the initial value proposition are needed to capture broader market adoption. The fourth tendency, working in isolation, is fine for the brilliant scientist focused on an ingenious idea, technology or science. But it’s a non-starter for a leader whose expanding organization increasingly relies on people other than the CEO. There is also a significant difference in skill set required when the company grows beyond a single layer of management, requiring, VPs who manage directors, who may manage managers. Managing through a multi-layer management system requires a very different managerial toolbox. As the summary for the article outlines, “Leaders who scale deal honestly with problems and quickly weed out nonperformers. They see past distractions and establish strategic priorities. They learn how to deal effectively with diverse employees, customers, and external constituencies. And, most important, they make the company’s continuing health and welfare their top concern.”

Although only preliminary, below are the early returns on the February 2009 growth-stage CEO survey for technology & science-driven companies.  The majority of the CEOs surveyed are from venture capital-backed or institutionally funded companies.   The theme remained the economy for the February survey.  The first question was around what the prevailing sentiments were for a recovery.  Unfortunately, although perhaps not unexpectedly, less than 25% of CEOs surveyed expect the economy to improve before Q4 2009, and more than half the CEOs don’t expect the economy to shows significant signs of recovery until 2010.

As CEO, when do you predict the market conditions to take a turn for the better?

When CEOs were asked whether they were still seriously considering cuts in Q2, 2009, more than 25% of the early respondents answered affirmatively.

As CEO, are you seriously considering further downsizing in Q2 2009

We will post the rest of the survey responses in the next 10 days or so, and will include updates in the interim.

Below is the hyperlink inviting you to participate in our latest “CEO speed-survey,” exclusively for growth-stage CEOs running technology/science driven companies. Topic for Feb ‘09 remains the economy– MORE Recession-proofing needed for ‘09?

Reason for the periodic survey? Knowledge is power. Aggregated peer-provided knowledge is “validated power.”

Click here to launch: http://www.polldaddy.com/s/FFFA0F30BE507AC2/

You can subscribe to the results of this survey by RSS. Simply copy the link below into your RSS reader:

http://polldaddy.com/surveyRSS.aspx?id=FFFA0F30BE507AC2

We at BSG Team Ventures periodically take the temperature of the markets we serve. This speed survey is no more than 10 questions, virtually all simple multiple-choice. Once you answer, you immediately get the results from those who have answered before you.

Thanks to those more than 60 CEOs who participated in the Dec/January survey, which also had an economy focus. Results of those questions can be found on our blog at http://blog.bostonsearchgroup.com/?p=52 . With everyone in the growth-stage tech and sciences innovation sector still being buffeted, in December 2008 we launched our first of a periodic series of online surveys of growth-stage CEOs to take the temperature. The first survey’s responses published at the beginning of January 2009, not counter-intuitive, can best be summarized as various versions of “cold.”

We make an effort to only send these surveys to those who fit the category (in this case, sitting CEOs or board member/founders of technology/science-driven early-stage investor-backed companies). [Note, if we've mistakenly sent this to you and you don't fit, please refrain from responding. Feel free to forward to the qualified CEOs in your sphere of influence. The more data generated, the more accurate the trend lines].

All responses are anonymous due to the web-based survey technology employed.

Regarding the prior speed survey results:

We’re happy to report that we had statistically relevant responses from CEOs covering technology, cleantech, medical devices and biotech. We also had more than 30 CEOs want to pose their own questions to their peers. We posted these questions on the blog post, and will use them as follow-on survey material going forward. However, if you’d like to review and comment on any of those questions from other VC-backed CEOs, please feel free to post your comment and reference the question using the blog comments tool.

Here is the balance of the survey responses from the VC-backed CEO survey we administered at the end of December 2008 into the first week of January 2009, both responses and a bit of interpretation.

Given survey responses, it appears the bell curve peak is in the 20-40% reduction in headcount.  The group of CEOs who indicated these reductions were approximately half of the 60 CEO respondents.

• •    40% or more staff reductions? ~ 10% of total CEOs surveyed
• •    Less than 20% staff reductions? ~ About 17% of all CEO respondents

Winner on this question was “more than 9 months,” with more than 40% of the CEOs.  Runners-up were the “0-to-6 months of cash” CEOs, evenly split with 25% saying 3 to 6 months, and another 25% saying “less than 3 months.”  What this may indicate is that there is a bimodal distribution of funding in the market –those who are well-funded, with 9 months or more, and those companies who are running out of cash (popular definition = less than 6 months of cash remaining).  This is reinforced by the fact that very few companies responded that they had 7-9 months of cash (less than 10% of companies).  Therefore, one might imagine that those companies who are shortest on cash are also those who are making the deepest cuts in staffing.  In addition, that there may be another round of cuts in store for those low-cash companies if they can’t get another round closed soon.

Top implied answer here?   Don’t raise a venture round in 2009.  And this is what the largest slug of CEOs responded with (33%).  Of those who are going to try to raise in 2009,

• •    one-third of CEOs see a flat round
• •    16% feel they’ll get an up round
• •    and almost half (45%) are predicting a down round

Winner for this question shows some great optimism however, with about 1/3 each of the CEOs responding answering with either “revenues up 1 to 25%”  or “Up more than 50%.”

There was an intentional effort to get a fairly even distribution of venture-backed CEO respondents for this survey, to try to avoid sector bias.  We were fortunate to have at least 10% (6 or more companies) from each of life sciences / biotech, medical devices, and the cleantech sectors.  Software/Internet/telecom was the largest category represented, with 42% of CEOs hailing from this sector.

BONUS SLIDE

Q: If YOU could survey your peer CEOs, what question(s) are both urgent AND important to running your business you’d like us to consider asking in future polls?

This was one of the most rewarding questions for which to see the responses.  Fully half of the CEOs polled had a question they’d like to pose to their peers, and some CEOs had several.  Below is a partial list of questions we’ll choose from in follow-on surveys.  If any of those CEOs would like to respond individually to any of the questions below, feel free to post a comment on this blog entry and we’ll post it for public consumption (clustered by general question subcategory as well as by industry sector).  Of course, the winning question asked by one of you CEOs, just to validate that venture capital-backed CEOs are-if anything-self-aware, pragmatic, and not fatally over-optimistic:

“What will CEOs do if their company fails?!”
1.   Cost-related questions

• •    Approaches or success stories in restructuring debt to the company’s advantage.
• •    Is it better to reduce headcount 20%, go to a 4-day work week, or reduce salaries by 20%?
• •    In addition to headcount reductions (if any), what type of expenses are you reducing?  Are you delaying new projects/initiatives?  How have investors reacted to this?
• •    Will you consider outsourcing some of your product development to make cost variable, at the expense of some know-how then being outside the company?

2.    Sales/Marketing/Revenue-related questions

• •    How are you using the economic downturn to improve your business position/model?
• •    What are you going to spend more money on in 2009 than in 2008?
• •    What changes in the sales cycle are you seeing in the last 6months, 2 months, currently?  What does the resultant trend point to for 2009 and what actions are you taking in response?
• •    How has your visibility into the level of future business changed in the last 3-6 months?Asked another way – what level of confidence do you have in your current forecast of business?
• •    (1) What emphasis do you place on marketing in your organization? (2) What do you consider the top 3 most important elements of marketing to be?
• •    How will you as CEO deal with longer term rate issues if you are a service business as it seems all labor rates are being pushed down?
• •    The number one reason why clients buy your product is? (cost, quality, service, other?)

3.    Funding/exit/valuation questions

• •    Are you finding lending lines out there?
• •    If an acquirer made an offer to buy your company today, but at a multiple less than what it would be in a strong economy, would you consider it, or wait until the economy improves so you could get a higher valuation?
• •    Are you considering merging your company with another? Are you looking at merger partners as a legitimate exit option in 2009?
• •    Are you looking to current investors or new investors for additional rounds of financing?

4.    Board of Directors/investor-related questions

• •    How will venture capital investing change in 2009?
• •    What is your satisfaction with your Board’s ability to fundraise in the future? (I think the current environment highlights a board’s function as protector of value through fundraising and too few board members are good at it)?
• •    Compensation for outside board members?

5.    Staffing/talent questions

• •    How are you balancing full time versus contract employees?
• •    How are you retaining employees during these tough times?
• •    What kind of retention ideas have you considered to make sure your key folks don’t bail for a more stable environment?
• •    What skills are you as CEO still looking to hire?
• •    What do you do to conserve cash? attract customers?
• •    How many of you CEOs have proposed reducing people to part time levels and adding equity compensation instead of releasing them all together?

6.    Economy-related questions

• •    When do you predict the market conditions to take a turn for the better?

There a few industry-specific questions CEOs wanted to ask their peer as well:

Life sciences/biotech-related questions

• •    What kind of deal structures are you seeing in liquidity-directed partnerships? What kind of partnerships, if any, are you envisioning for discovery stage assets?

Medical devices-related questions

• •    How do you expect reimbursement to be influenced during the next administration?