Second Wind’s (http://www.secondwind.com/) mission is to advance the use of wind data to make wind energy profitable for the businesses and investors who create wind energy plants, painless for the operators who work with wind energy equipment and practical for the businesses, consumers and utilities that benefit from wind energy as a low-cost and environmentally desirable source of power.

Second Wind prides itself on technology innovation with its in-house hardware development and software engineering talent. The company continues to develop ground breaking products related to wind data.

Thirty four employees staff Second Wind’s headquarters and manufacturing facility.  The company has an industry-wide reputation for innovative, reliable technology and excellent customer support. Inc. magazine recently ranked Second Wind on its first-ever Inc. 5,000 list of the fastest-growing private companies in the country. The company’s ranking was based on its 27% revenue growth from 2003-2006 and was the only business-to-business wind organization in the energy industry category. In December 2007, Second Wind secured $4 million in second round financing from Good Energies, a leading global investor in the renewable energy and energy efficiency industry.

Second Wind has been growing steadily, with annual sales of about $7M in 2008. Their clients include the largest developers and operators in an industry with a 30% annual growth rate.

History

Second Wind was founded in 1980 by Walter Sass and Kenneth Cohn.  Engineers who have been friends since grade school, they decided the emerging field of wind energy provided an opportunity to leverage their engineering skills to benefit the environment. They recognized that, to succeed, the industry needed more than wind turbines. Wind developers also needed software and hardware to measure wind accurately at prospective sites and to monitor turbine performance at established wind farms. The company’s first headquarters was the spare bedroom in Sass’s home.

Second Wind established a presence in wind resource assessment in 1981 by introducing the first data logger designed specifically for wind energy prospecting.  In 1985, the company introduced their first wind farm monitoring system. In 2007, Second Wind launched the Triton^TM sonic wind profiler, designed to re-invent sodar for wind profiling.

Market Opportunity

Wind energy is growing at 20-30% annually.  The market is global, with 17 countries having attained over 1,000 MW via wind.  Of the $37B invested in wind energy in 2007, 2% was for wind resource assessment instrumentation and services, or $735MM. 8,000 met towers were installed for prospecting, power performance and operations.  Target markets for wind assessment include large, medium and small developers as well as services firms.

The pressing need for viable alternative energy sources that do more than just supplement coal fired power-stations is driving advances in the development of wind energy. A major hurdle in establishing successful wind farms is the difficulty of attaining accurate site evaluation data.  The Triton Sonic Wind Profiler addresses this challenge. Designed to measure wind-speed at heights of up to 200m without the need for erecting costly and less effective masts, the wind profiler utilizes a technique known as Sodar (sound detection and ranging) that measures sound wave echoes in the atmosphere. The technique is not dissimilar to Sonar detection used by submarines underwater.

In evaluating a suitable site to establish a wind farm, measurements need to be taken over a period of at least a year. This has been achieved, until now,  by using a meteorological mast or met mast – a tower equipped with anemometers and other weather instruments. These masts are limited to a height restriction of 60m; any taller tower requires aircraft warning lights, which complicates assessment of a site for a turbine 75-80m high.  Another complicating issue is the masts’ high visibility, which can raise public concerns before the site has been properly evaluated.

Relying on precise measurements of frequency and time delay from sound pulses that are bounced back to the transmission unit by wind turbulence, Sodar technology provides a virtually invisible tool which measures wind speed and direction at heights up to 200 meters. The Triton system also overcomes some of the problems associated with existing Sodar technology by remaining effective even in poor weather and delivering easy to interpret wind data without an on-site presence.

Triton also boasts innovations such as a hexagonal transducer array and a tri-lobed acoustic enclosure that increase accuracy by improving signal-to-noise ratios and beam focus, rugged construction making the unit effective in all weather conditions and able to correct measurements when used on uneven ground.

The Products and Customers

Triton^TM Sonic Wind Profiler re-invents sodar technology for wind assessment. It captures accurate wind data from any height, in any weather, at any location, without being attended. Readings look like anemometry results, with no expert analysis required.

SODAR (SOnic Detection And Ranging  http://en.wikipedia.org/wiki/Sodar ), or sodar, is a meteorological instrument which measures the scattering of sound waves by atmospheric turbulence. SODAR systems are used to measure wind speed at various heights above the ground, and the thermodynamic structure of the lower layer of the atmosphere.

Sodar systems are like radar (radio detection and ranging) systems except that sound waves rather than radio waves are used for detection.

Sodar sends an audible “chirp” up through the air, and wind turbulence sends a portion of the sound back toward the ground. By precisely measuring the frequency and time delay of the chirp’s echo, the sodar device measures the wind speed and direction at various heights.

Sodar technology is commonly used for “site profiling” at the end of the prospecting process for potential wind farm locations. It measures above the 60-meter height of most meteorological masts, assessing wind at actual turbine heights. In addition, sodar is more portable than masts and can be moved to determine ideal turbine placement.

Current sodar products have multiple limitations for wind profiling. They require on-site support to

operate, and deliver wind data in formats that require expert interpretation. Readings must be carefully analyzed to filter out “side lobes,” or sound artifacts from nearby trees and buildings that can produce inaccurate results. Most current sodar products also must be covered in rain or snow to avoid damage to the sensitive microphones and speakers.

Benefits of the Triton Sonic Wind Profiler

Numerous Triton innovations address the shortcomings of existing sodar products for wind profi

• • More accurate data. A hexagonal speaker array (patent applied for) focuses sound beams more

effectively than previous designs, which improves signal-to-noise ratio accuracy and decreases

disruption. The array is housed in a tri-lobed acoustic enclosure, which reduces the chance of

sound artifacts disrupting data.

• • Unattended use in any location. A solar array and battery can provide adequate power for the

Triton unit to operate for prolonged periods of time, depending on available sunlight and amount

of use.  Bundled with new Skyserve satellite wind data service, the Triton profiler delivers

accurate wind data to any computer from any location in North America.

• • Ready-to-read data. Unlike other sodar products, the Second Wind sodar delivers easy-to-read

data that is similar to data read outs from conventional meteorological towers.

• • Works in any weather. The unit is made of rugged plastic with stainless steel components and

sound absorbing material that functions when wet, unlike foam. Internal temperature sensors and

a propane heater also allow Triton to operate in icy conditions.

• • More portable and less obtrusive. At six feet tall, Triton can easily be towed by a pick-up truck.

The unit has internal controls to compensate for uneven ground, and a built-in GPS and compass

identify the time and location of data as it’s captured. Because of better acoustics, it is also less noisy than other sodar products.

The Position

Reporting to the VP Global Sales Peter Gibson, the Director Eastern European Sales will be responsible for the planning and execution of sales activities for Second Wind in Eastern and Central Europe. The Sales Director be focused on direct sales of the company’s Triton SODAR device and services.

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CEOs and executive leaders of innovation-stage companies often ask themselves what is the best approach to employee appreciation, productivity and retention.

We’ve all heard the stories around the lengths some venture capital-backed companies go in their efforts to service the needs of their employees.  What started as the water cooler and drip coffee pot, fast-growth companies have super-sized, continuing to up the employee pampering ante–  installing company-paid cappuccino machines and Kurig coffee makers with what appears to be an endless supply and variety of coffees and teas.  Keeping well-stocked office kitchen pantries with either favored junk food, healthy snack choices, or both.  Catering lunch, breakfast, dinner, sometimes all three meals plus a midnight snack that rivals food options found on luxe cruise liners.  Car valet services, onsite dry-cleaning pick-up/drop off, massages, yoga, concierge services, onsite daycare/nanny service, bring-your-pet-to-work options.  And on and on and on, the calories and comfort food arms race continues its grim march toward caffeine OD and adult-onset diabetes.

However, there’s a moral and dilemma CEOs often face when trying to strike the right balance of perks and austerity.

The argument for pampering:  In the new knowledge-worker driven economy, there is often precious little machinery or automation.  So every time an employee walks out the door to Starbucks, Dunkin’ Donuts, the sandwich shop, or the drycleaner, the corporate engine slows down a notch.  Therefore, the logic emerges that if you can remove all interruptions for employees, you’ll get far more in productivity out of them than junk food and pampering you put in to them.

The argument against:   It’s expensive.  It creates a sense of entitlement in employees.  It creates a false sense of prosperity in a company that may be pre-revenue and in need of several more rounds of funding before it can stand on it’s own two financial legs.

Some might say that economic recessions pound the potential for excess back to square one.   OK, so perks have slowed down a bit after each economic set-back in the last decade, starting with the Internet bubble bursting and post-Y2K malaise, the aftermath of 9/11 on the U.S. economy and, most recently, the banking sector melt-down.  However, after each setback it seems a new “floor” gets set that’s just a bit tonier than the last one.

So how do CEOs handle this arms race in employee perks you ask?

Below are a few lessons learned and secrets shared by a number of CEOs who know a bit about the word “value” in serving up employee perks-

Perks Case Study A: Intra-office “micropreneurship.” The secret of the concession license

One venture-backed CEO wanted to offer some of the perks, but not all when it came to stocking the pantry.    So, rather than facing an all-or-nothing approach, the CEO decided that a business principle was in play that could be exploited in a win-win-win fashion–  what the company had as an asset was the equivalent of a monopoly.  He reasoned that employees were a captive audience.  If the CEO offered the “vendor concession” contract to an aspiring employee who wanted to make a few bucks, the company would offer exclusive stocking/inventory rights to that employee to stock the pantry.  However, in trade, the employee had to agree to offer below-market pricing on food and beverages, and also manage the “SKU requests” that the employees would log from time to time regarding food selection and preferences.  His formula in a nutshell looked like this:

-          win for employees-as the got a below market food and beverage offering, the equivalent of a “company subsidized” pantry offering

-          win for the “intra-preneur”-who was given the food concession to run, and could make a few extra bucks running the business

-          win for the company-the company didn’t have to provide all the food gratis, nor had the headache of fielding all the requests from employees

Perks Case Study B:  Serving dinner not as an entitlement, but only to the truly meritorious

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One of the questions we as executive recruiters often get asked  is the trade-off between experience and aptitude.   Both sides of the equation are prone to asking it, clients and executive candidates alike.  Sometimes this teeter-totter is referred to as “domain expert versus best athlete.”

What do they mean when they ask?  There’s actually a lot of nuance in the question-when are skills and experience most important to success in the role versus pure talent and aptitude?

• •    Just because a CEO is moving from one industry to another, does s/he lose his ability to successfully lead?
• •    If a VP Sales has been successful at one stage of company growth, can s/he take that same sales toolbox and be successful in another stage company, say either emerging-stage or mature-stage?
• •    Can a VP Engineering be equally effective managing in large companies and small?
• •    Do companies look for the same types of leadership in good economic cycles as well as bad?
• •    How does an executive’s move out of their wheelhouse of skills and experience impact their compensation and/or level in a new industry and company?

These questions are only a few of the factors that impact the answer.    The following discussion is aimed at trying to lend some clarity and context to question.

Let’s take a look at the hour-glass graph below to lay down some of these factors against our “expert or athlete” question:

1)     Level of management: The first factor is where an employee sits in the organizational chart.   In general, skills and experience are most critical at the “waist” of the hour-glass graph-mid-to-upper level management, starting at manager, through director- and VP-level.  At the top and bottom of the hour-glass, aptitude often ends up as the greater emphasis in “hireability.”  This may be fairly intuitive for many.

a.     Entry-level: When you first get out of school, employers often hire for a combination of attitude and intelligence and look for those who exhibit room to grow or “headroom.”   In fact, at entry-level, skills and experience for those roles are often a liability.  Employers may feel someone is overqualified, or a “flight risk” if that employee finds another better-paying and/or higher level position at another company.

b.     CEO-level: When you achieve P&L/CEO status, employers often will place more emphasis on the track record a CEO has in leading a company versus a tenured career history in a specific industry area.  Can a CEO move from rust-belt manufacturer to biotech?  Likely not.  However, there isn’t the same granularity of fit applied at the CEO-level as at the middle-management layer.  If a CEO has been broadly successful in in a number of software companies, it often becomes less important what type of software, or what industry vertical that software was developed for.  Certainly some screening is applied to industry, with some of the below more general industry characteristics takingi precedence-

i.      Experience in selling to similar customer base, B2B vs. B2C or government

ii.      Experience raising equity capital from venture capital or private equity

iii.      Experience creating exits for investors that have generated good returns for those investors

iv.      Experience taking a company from one industry into other industries, popularly referred to as “crossing the chasm”

c.     Mid-to-upper management:   Mid and upper management are where skills and experience over mere aptitude are often most sought after by employers.  Those who are hiring at this level will often even emphasize industry skills and experience above managerial experience, giving the edge to a candidate with industry-relevant background and a lesser degree of leadership experience, assuming that management is a learned skill and can be taught or picked up on the job.  Is this right?  That’s not the focus of our discussion here.  Rather, our goal here is to describe corporate hiring  norms from our observations.

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Periodically, we make an effort to pull together executive compensation trends and analysis focusing on venture capital backed companies in the United States.  The last executive compensation report we put out was in September 2009 (see prior blog post http://www.bostonsearchgroup.com/blog/ceo-compensation-analysis-west-east-founder/), and focused on C-level compensation, with a further contrasting of founder versus non-founder CEO compensation, both West Coast and East Coast.

This report is similarly focuses on West Coast and East Coast differences in executive compensation, however this time looking at the VP level across the functional organizational structure.  For purposes of this report, only companies who broadly fit the definition of “information technology” were used in the analysis, not including biotech, medical device/medical technology, or cleantech.

The titles looked at include the following–

Vice President Business Development

Vice President Engineering

Vice President  Marketing

Vice President Sales

Vice President Sales & Marketing

VP Software Development

VP Product Management

Note that below we’ve only included the analysis of the executive compensation data, in other words the deltas. If you’d like more detail and the information on which we based the analysis, please email damador@bsgtv.com with your name, title, company and business email address, and we can provide you with the baseline full report.

Do keep in mind that this is only one set of data. To draw the best comparables, it’s important to do all three data-grabs listed above. Also, this is a “blended” sample set of multiple venture-backed industry sub-sectors in the information technology category. Some industry sub-segments may pay more or less than others with further parsing.

West Coast Early vs. Later-stage Venture Capital-backed Companies

Cash compensation is almost always higher in later stage companies, and this is reflected in all 3 quartiles of data analyzed.  For West Coast venture-backed companies, the differences are $15,000 to $50,000 in most roles, with an average different of about $25,000.  The only exception is for the VP Sales/Sales Marketing role, where cash was significantly higher in later stage companies for these roles, ranging between $75,000 to more than $125,000 in the top quartile companies.

Conversely, equity is almost always higher in early-stage companies to offset the lower salaries referred to above.  For these West Coast companies, regardless of quartile, earlier-stage companies received on average ¼% to ½% more equity, with the biggest jump in VP Sales/Marketing, and lowest in the VP Engineering function.

East Coast, Early vs. Later-stage

East Coast compensation tells a different story from their West Coast counterparts.  Although cash compensation was similarly lower in early versus later-stage companies, East Coast executives of venture-backed companies didn’t see the “make-up” effect in equity.  In fact, equity appears lower in many of the quartiles compared, by as much as ½% comparing East Coast early versus East Coast later-stage.

East Coast vs. West Coast, Early-stage

Cash compensation, East versus West, shows that West Coast executives of early-stage companies more often than not earn more in base .  West Coast Engineering is $10,000-20,000 more in base, VP Marketing is up West over East by $10,000 to $50,000. VP Sales/Sales & Marketing is actually the one notably lower cash category where East Coasters are better off than West in the higher quartiles (but not the lowest).  As noted above, West Coast early-stage executives are compensated more favorably when it comes to equity than their East Coast brethren virtually across the board.

East Coast vs. West Coast, later-stage Venture Capital-backed Companies

As for cash compensation for later-stage companies East vs. West, a similar pattern existed being mostly lower than their West Coast counterparts, than its West Coast peers.  However, when looking at equity stakes in later stage companies East vs. West, the East Coast did better, often by ¼% to as much as ½%.

I had the opportunity to be out in Denver for the 22^nd Annual National Renewable Energy Lab’s (NREL) Growth Forum.  As many know, the U.S. has more than half a dozen national labs, some of the best known being Los Alamos and Lawrence Livermore, and Sandia.  These labs are scattered across the U.S., and each often has a specific focus (nuclear research for instance is what has kept the National Labs in the public eye most often).

Given the Obama Administration’s commitment to renewable energy and innovation, it was an upbeat gathering.    The attendee list was well-balanced between entrepreneurs, venture capitalists, and academics.  Geographically, the majority of attendees either hailed from the Colorado area (with Boulder as the epicenter for cleantech in CO despite the NREL lab being located in Golden, CO), the West Coast (Silicon Valley entrepreneurs and venture investors), and New England (Boston-skewed).

What was surprising is how small the renewable energy community truly is.  It’s still a very close knit group.  And the community tends to shift from one location to another to pursue the next opportunity to contribute to the national cleantech ecosystem.  Two notable examples are Tod Perry, who now is the Program Manager of the Clean Energy Entrepreneurship Center for NREL.  Tod had originally started as a cleantech entrepreneur 5 years ago in Boston, pioneering a water purification technology, and a contestant in the first Ignite Clean Energy Competition in 2005.  Another Bostonian who’s moved out to Colorado recently is Trent Yang, formerly a principal at Globespan Venture Partners, now Director, Entrepreneurship and Business Development at RASEI in Boulder (Renewable and Sustainable energy institute), part of the University of Colorado commitment to innovation in the renewable energy sector in the Rocky Mountain region.  Other notable Bostonians sited at the conference included Peter Rothstein of New England Clean Energy Council, Bob Metcalfe of Polaris, and Chris Hobson, CEO of BandGap Engineering.

While out there, stopped by the Finals for the Cleantech Open’s Rocky Mountain Finals.  New Sky Energy, Rivertop Renewables, and SunTrac Solar were the winners, now headed to the Cleantech Open Finals for all 3 regions up in Silicon Valley.

For more on the winners, see http://www.metrodenver.org/news-center/metro-denver-news/mayor-hickenlooper-announces-cleantech-open-winners.html

We’re often asked how to establish fair market compensation when it comes to CEOs of privately held companies, often with venture capital or private equity backing.

Below is one method that can be employed as a jumping off point for this calculus:

1)     “De-risked,” how much is a CEO worth?  Is  $500 -$1M a year too much?  For our purposes here, we’re talking about a talented CEO.  Not someone below average, but above the average, one that a retained executive search firm, venture or private equity investor, or board of directors would be proud to put in the role.   Rather than pick some arbitrary number, this should be  ”market set,” by looking at what someone working for any global 2000 company (i.e. General Electric or other similar) earns annually.  From our executive search experience and database of compensation comparables in these companies, base salary is usually between 250K and 400K, depending upon how big the divisional P&L responsibility is, there is usually a bonus that is between 50-100% of base, and an LTIP (long term incentive plan) that-once partial vesting begins-can generate from 100K up to 250K or more a year in cash.

2)     So, the cash component of a comparable, including average base, annual average bonus, and yearly LTIP pay-out looks something like this:

Base ~ 300K

Bonus ~250K

LTIP (cash only) ~ 200K

TOTAL: 750K

* This does not include any meaningful RSUs (restricted stock units) that are usually also part of that package, which could add another 200K or more per year in value to a general manager’s package with true P&L responsibility for their division, group, or sector/segment.

* This is also not indexed to geography/cost of living.  If the position is in New York City tri-state area (New York, northern New Jersey, southern Connecticut), San Francisco, Boston, London, Singapore, Hong Kong, or Tokyo, a multiplier factor needs to be used to level-set for cost of living increase required for those metropolitan areas.

3)      Now, back out the cash portion of a CEO’s compensation for the company that they’re stepping into (say 250K a year in cash in smaller companies as all base, or combination of base + cash bonus).  So you’re left with say 500K that needs to be made up in equity, on a per anum basis.

4)      Over how many years is the liquidity horizon (and/or vesting rate, 3, 4 ,5 years)? Let’s say it’s 4 years, at net 500K, equals ~$2 million

5)      Now, this is with ZERO beta risk factor.  Add back the beta risk of an earlier stage company.  Let’s assume a global 200 company equals “1.”  A CEO role in a privately held, externally backed company is not “1″.  It’s probably a multiplier of 1.5, or 2.  For a pre-revenue, VC-backed company with high burn rate, it could be as much as in the 3 to 5 range.  Note that any illiquid company is inherently risky in terms of cashing in any equity at a reasonable price.  Let’s pick a beta risk multiplier of 2.5 times riskier than “average.” So, 2M * 2.5 = 5M.  Note that when there are preferences for the investors that create an exit hurdle rate before any common shareholders get paid, beta risk goes up accordingly unless the CEO participates in any exit event via cash carve out or other instrument.   As mentioned above, a recent IPO that represents a reasonable market comparable netted a CEO who joined the company 4 years ago $20M.  Using this number, the CEO’s compensation was $5M a year, or a beta multiplier of approximately 5.

6)     Then, are there any combat pay provisions you need to add in (warts that a CEO or executive team member is required to overcome and vanquish in their role that are above and beyond the normal call of duty)-reconstituting the executive team, or raising an outside round of capital because existing investors are tapped out, or starting up an Asia manufacturing capability that will require the CEO to take a dozen 15-hour flights one-way to get up and running.

7)      Finally, you have to look at what likely dilution there is going to be to an initial options grant for the CEO.  If you start with a 6% stake in an early stage company in a Series A funding, and you then raise a series B and C, depending upon valuation for those rounds, the CEO will likely end up below 3% as a “fully diluted” stakeholder.  There is an argument to be made that any of the management team critical to the success of the company will be “topped off” at later funding events in order to keep them motivated.  However, there is no guarantee that this happens.  It’s only good business sense to do it.  For the CEO, it is more important what s/he ends up with, not how much with which they start.

8)     Add water, and stir…

Notes & disclaimers:

• * This is not intended to be biased in any direction, to any party, neither CEO candidate, nor company and/or investor.
• * This is only one way of calculating compensation, indeed there are many others.
• * There is no way an earl- stage emerging/growth company will be able to compensate a CEO in all cash, nor truly be able to offset the risks inherent in this stage of venture.  The CEO either accepts this, or is not truly capable of working successfully in this milieu.
• * Other than the impact of cost of living  adjustments to base compensation, each CEO candidate comes with what we refer to as their own subjective “keep the lights on” cash needs.  We calculate this simply as the amount of cash required on a yearly basis to cover their living/family obligations without having to write checks out of savings to cover it.  Some CEO candidates may have 3 children in private school or college, while others may have no children and no mortgage.  Cash needs therefore may range widely, and need to be adjusted for using equity as a “leveler” (less cash-needy, higher the equity, and vice versa)
• * Alternatives to paying bonuses in cash might be to pay bonuses in equity, upon achievement of key milestones for the company
• * This same calculus can be applied to the Vice President level as well, subject to appropriate adjustments downward in cash and equity
• * In a circumstance where there is a “turn-around” required, equity may not be enough of a certainly to attract a competent CEO for the challenge ahead.  In these circumstances, a cash carve-out may be warranted in addition and/or in substitution for a stakeholder role.  The cash carve-out may be just for the CEO, or for the key management team required to achieve the turn-around.  Often, the cash-carve out structure is a percentage of total sale price over a certain amount, with the possibility for an accelerator depending upon exit/liquidity circumstances/outcome.
• * Often the question of anti-dilution comes up in an effort to assure a CEO of a certain percentage of equity upon liquidity.  Granting 5% equity to a CEO at a Series A financing with anti-dilution would ensure that the CEO retained his or her stake across the growth and additional funding needs of the company.  However, this is rarely a good mechanism, as the CEO becomes less interested in new company valuations at subsequent funding events, and becomes misaligned with the company’s investors.

On September 24, 2009, BSG Team Ventures hosted the 3rd annual Charity tennis tournament at Longwood Cricket Club in Chestnut Hill, MA.  The format is a la Davis Cup, with venture capitals pitted against entrepreneurs.

We’ve been graced with great weather all three years, and this Thursday was nothing different, with a touch of Indian Summer in the air.

Although the teams were a bit smaller in number this year, many remarked (including the blogger) that there has never been a higher quality of play, or sense of competition.

The beneficiary of the charity tournament all three years has been Tenacity, the brainchild of Ned Eames, who founded it a decade ago this year to use tennis as a tool to help build discipline and academic achievement in inner-city at risk youth.   Their 10 year Gala is coming up in the next week or two, so be sure to visit www.tenacity.org to learn more and register.  It too will be held at Longwood, and is guaranteed to be a memorable evening with hundreds of supporters sharing food, tennis, and a shared mission together.  Ned Eames is pictured below, with one of the Tenacity students, addressing this year’s tournament and conveying his story as to the value Tenacity has brought to his life and his family’s.

This year’s winners of the Longwood Charity Cup 2009 were the entrepreneurs, both the entire team, as well as the play-off match-up of best VC team and best entrepreneur team.

Per Suneby and Doug Denny-Brown played in the finals for the entrepreneurs, against the best VC team from the day’s play, represented by Will Peppo of Revolution Partners and Dan Waintrup.  In a fiercely fought super-tie-breaker format, the entrepreneurs brought the Cup home for the year (above pictured winners Per and Doug).

Given the competitive nature of participants, several asked for statistics from the team score cards reported.  The format dictated that each doubles team played together for the entire afternoon, and there were a total of 5 teams each, VC and entrepreneur.

The mean total game score for entrepreneurs?  22.6 games per team.

Mean total game score per team for VCs? 16.5 games.

Grumblings from both sides sounded very similar, with a refrain echoed that “[VCs/entrepreneurs] certainly had more time to practice this summer than we did….”

A special thanks to our sponsors, Silicon Valley Bank and Xconomy without who’s support the event would never have happened.  Jim Maynard was much missed from SVB, but Jim’s bank colleague, Mike Quinn, held his own, and will clearly be coming back next year with Jim to present a fearsome twosome.

And this year we honor our first female competitor, Lynn Calkins, playing for the Xconomy team, and racking up a total game score with her partner than came in a close second in total team game scores.  Thanks Lynn for coming out, and Xconomy for once again blazing the path of innovation in building their corporate team.

Finally, no reflection on the day would be complete without a total two-team photo of all who contributed their time and energy.  Note that only one player dared play barefoot.  Next year, we’re going to mandate that the last two games of the tournament will both be played shoeless by all teams.  It’s an experience that needs to be added to everyone’s “bucket list”….

Every few months we survey the innovation-stage community of CEOs with the goal of leveraging our C-level relationships as executive recruiters to generate collective wisdom to share back.    We hope below you find insights that help to run your companies more strategically.

In August, we surveyed our CEO community and had more than 60 CEOs participate.  Thanks to all who contributed.   The theme of this survey was centered around whether a different strategy is required to succeed post-recovery than that which was in place pre-recession.  These CEOs came from those practice areas in which we focus, and included broad based technology companies in the media, software, mobile and telecom sectors, Biotechnology, medical devices, and cleantech / renewable energy.

The 60-plus participating companies were spread across the growth-stage spectrum, ranging from pre-revenue through profitable/shipping product, most being seed-funded through post-Series C, as well as private equity-backed–

To set the stage for the survey questions, when asked when CEOs were expecting the recovery to materially reach their companies, the results were still quite bearish, with more than 50% responding Q2 2010 or later–

Although entrepreneurs are supposed to be eternal optimists, when asked what sort of recovery CEOS expected, again, the majority picked the worst of the alternatives, with more than half opting for a “W” recovery (in graphical terms, a double dip, with the last year starting September 2008 to now equalling the first “u” of the “W,” and another anticipated dip between now and Q2 2010 or later.  Almost as bearish, 28% of CEOs chose an “L” recovery, indicating that they felt “recovery” was really better defined as a flatting out of the downward trendline, but no corresponding upward rebound–

The next several survey questions focused on business strategy.  58% of CEOs indicated that they were not planning on pursuing the same strategy after the recession than before–

In executing on their strategies, CEOs responded somewhat intuitively that sales & business development functions would be two of the most important executive level functions that would help them in executing successfully post-recovery.  Somewhat less intuitively, the third most important functional area ranked was product development–

The last strategy question posed to CEOs was whether - if a majority of the CEOs were executing on a different strategy in post-recovery than pre-recession – did CEOs feel that the same executive team they had could execute effectively on both.  More than a third of CEOs surveyed indicated, no, their current executive teams were not the right teams for their new post-recovery strategies.

As for their companies’ financial condition, 60% CEOs responding indicated they were still burning cash, 15% were cash flow break-even, and 25% were running their companies in cash positive position–

And answering the perennial question as to whether CEOs were planning on raising equity capital in the near future, slightly more than half responded in the affirmative–

In conclusion, the survey pointed up the fact that innovation-stage companies are still very cautious around the economic forecast, have recast their strategies as different from pre-recession in preparation for the recovery, but still have some retooling to do within their executive teams to optimize the chances of outstripping their competitors in 2010.

Thanks again to the CEOs who participated.  Knowledge is power.  Collective knowledge is actionable.

We are often asked to do some executive compensation “ciphering” on behalf of our clients.  Getting an accurate read on market compensation is always a bit of fuzzy math.  You can call around to those you think may know or are in those positions now, you can commission a survey, or dig into some of the executive compensation databases that pre-exist.  We often do all three on behalf of our clients.  However, the below numbers are based on the Dow Jones executive compensation data collected several times a year, targeting venture-capital backed companies in the U.S.  The companies surveyed cover early stage seed-round and Series A, through later funding stages, and companies that are pre-revenue through shipping product and profitable.  From an industry perspective, the below data is an amalgam of all venture-backed industry sectors in the U.S., including technology (software, hardware, services, interactive media, etc.), sciences (biotech specifically), medical devices, cleantech / renewable energy, and other related fundable venture sectors.

For this bit of ciphering, we’ve focused on three executive compensation comparisons involving CEO compensation–

1)     West Coast versus East Coast, and the differences that may exist between them

2)     “Founder CEO” vs “non-founder CEO”

3)     and early stage CEO compensation vs. later stage companies and associated CEO compensation within

This is always an interesting analysis.  Each category of CEO always feels as if the other is getting a “better deal”-CEOs on one coast think it’s likely better on the other, and founders and non-founders often feel the other has a better package.  Similarly, early-stage CEOs are often jealous of the “rich cash packages” that they seem to hear about in later stage companies, and late-stage CEOs always feel that early-stage CEOs get so much more meaningful an equity position than they as “hired guns” seem to be able to garner.

Note that below we’ve only included the analysis of the executive compensation data, in other words the deltas.  If you’d like more detail and the information on which we based the analysis, please email damador@bsgtv.com with your name, title, company and business email address, and we can provide you with the baseline full report.

Do keep in mind that this is only one set of data.  To draw the best comparables, it’s important to do all three data-grabs listed above.  Also, this is a “blended” sample set of all venture-backed industry sectors.  Some industry sub-segments may pay more or less than others with further parsing.

Highlights of the analysis

In the first “delta” table, we took a look at West versus East for early stage start-up/product development focused companies.   What was apparent in this earlier stage company setting was most recently, West Coast early-stage CEOs  on the whole have lower cash packages in both base and bonus. In addition, an equity analysis also returns 1-2% less on the West Coast than East in this data set in the lower quartile and median.  However, in the top quartile compensation range (those CEOs who have compensation in the top 25% of all CEOs surveyed), West Coast CEOs outearned East Coast in both cash (by only $13,000) and equity (a full 1% more).  Another interesting data point is that West Coast CEO’s have more upside in terms of bonuses (an average of 27% of their base compensation) than East Coast CEO’s whose bonuses are an average of 16% of their base compensation.

In later-stage companies where they are already shipping product, West Coast founder CEOs are paid less cash and ultimately hold less equity than East Coast founder-CEOs, except again for the top equity quartile, where West Coast founder-CEOs make up for less cash with +4% more equity on average than East Coast founders.  However,  West Coast bonuses for CEO are 29% of their base compensation while on the East Coast, CEO bonuses are 22% of base compensation.

West Coast non-founder CEOs (hired guns) make more than East Coast in cash only.  Equity is about the same, East vs. West.

On the East Coast in later-stage companies professional president/CEOs are paid less cash and hold less equity vs. similar founder CEOs.

On the West Coast, the pattern that Noam Wasserman at HBS has observed does prove out–  that non-founder CEOs get paid less cash compensation, but hold much more equity than their non-founder CEO counterparts (see http://founderresearch.blogspot.com/)

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.