September in New England is all about Fall, football, and at least for the last 4 years, philanthropy.  On September 23rd, 2010, venture capitalists, entrepreneurs and professional services providers celebrated the 4th consecutive year putting this tournament on.

The goals?

1) Sweat doing one of my favorite sports on one of its most challenging surfaces–

chasing a white ball around a grass lawn where the verb “to bounce” is used only in a relative sense.  Imagine a super-high gravity environment where what goes down, stays down.  A bit more like dropping a plate, versus bouncing a ball.

2) Compete in teams, with venture capitalists comprising one team, pitted against entrepreneurs, the other team.   This brings together the two key stakeholders in the business ecosystem in which our firm operates.   OK, so the entrepreneurs always get a bit feisty because they often feel the perceived chafe of the unspoken universal order, “those who have the gold make the rules.”  But in this format, spicy works.  Feisty is good. For further flavor,  see video mash-up of the tournament highlights below.

3) Give to charity, and create a collaborative giving engine that may at some point outstrip at least this author’s individual efforts.

The supplemental benefits of combining these three above?

1) Sweating couldn’t be in a lovelier setting.  The Longwood Cricket Club is just a spectacular venue, and again this year we were graced with perfect early Fall weather–blue sky highlighted by  brilliant reds of the autumn maple trees ringing the club house and the courts.  Sweating somehow is also a whole lot more fun on a tennis court if you play barefoot.  Don’t try this on hard courts or clay folks.  But at Longwood, all 40+ players doffed their togs and got back to nature (photos and video for up close and personals).

2)  Competing with VC and entrepreneur teams brings out…  well…  a prime opportunity for trash talking in the safety of numbers let us say.  It’s great to get both sides out in a friendly face off, united at the end for a good cause.

3) Giving to charity is something that seems easier the more perceived value is generated (for the altruist), or we receive (for those solipsists).  This year’s charity was again the Tenacity program, founded by Ned Eames.  We heard from some of the at-risk urban middle school children who have found Tenacity a backbone for discipline and achievement in an often keelless school environment.  Hearing some of their stories made us all reflect on our paths to relative success, and how those challenges compared to what these children face.  The goal was to raise $5,000 or more, and although the P&L is still being cyphered, we either met or came close to the target.

Who won this year? Technically, the Entrepreneurs won when toting up the total games score.  However, the VCs took it in a hotly contested 10-game pro set finals match   [see score card below]

The VC team was represented by Michael Balmuth of Edison Ventures and Michael Quinn of sponsor Silicon Valley Bank.  This fearsome duo faced off against entrepreneurs Bill Stone, co-founder of OutsideGC and Dean  Bogdanovic of CounterPath .

No doubt however that all players won in the larger sense what with the weather, the setting, and the collegiality.

Attributions:

To Sung Park who– as the poster-child for entrepreneurial ideation– decided years ago to innovate the fundraising process for his son’s school.  To do this, he cooked up the first VC vs. Entrepreneurs golf tournament we took part in some 6 or more years ago.  I asked him if he had the IP locked up on the idea or could I port the concept to the tennis court, and being the philanthropist that he is, he said heck no, it was “open source.”   Thanks Sung.

To Longwood Cricket Club, who has been a supporter of the event from the beginning, and Larry, the head tennis pro, who makes it a pleasure to orchestrate.

Tenacity’s Ned Eames, who’s vision and personal tenacity has grown a philanthropic organization that touches thousands of inner-city youth with a caring and purpose driven mission. See www.tenacity.org for more.

To our corporate underwriters without whom the event would not achieve its goals–  Silicon Valley Bank, XConomy, Version 2.0 Communications, the Boston Lobsters, and Microsoft.

To the captains of each team, who were elected in a rigorous vetting process operating under the game principle of “tag, your it!”

And of course, our guests/the players.  Getting ~40 or so players to set prioritize their time and money during a weekday afternoon is definitely worthy of acknowledge and appreciation.

And Cristina, no doubt all of us thank you for all you did in helping to pull the event together yet another year!

Photo Gallery

Pre-tournament chalk talk

For the last pro set of the tourney, barefooting experiment for all

Boston Lobsters mascot, offering support for which team?

Grass court form can be quickly compromised by a bad bounce

Dynamic Xconomy sponsored team with ringer Lyn Calkins

Perfect serve form demonstrated by none other than Tenacity's Ned Eames himself

Doug Denny-Brown in serve-return combat pose

VC vs. Entrepreneurs 2010 Longwood Team

Entrepreneur Doug Denny-Brown, tennis gladiator at the ready

Registration is Now Open

4th Annual Benefit

VCs vs. Entrepreneurs – Davis Cup Challenge

Thursday, September 23, 2010
Longwood Grass Courts  /  2:00 – 7:30pm

Welcome Back!  BSG Team Ventures is proud to once again host the 4th Annual  Benefit: VC vs.  Entrepreneur Tennis Tournament – Davis Cup Challenge, and we are thrilled to have you join us.

The VC/Entrepreneur tennis community has been growing every year so please register now so we can build the teams early.

Entry is by donation of $175.00.  Please click here to register!

For questions, please email Cristina Vieira Abramson at cvieira@bsgtv.com or call 617.784.4987

Agenda Overview

VCs vs. Entrepreneurs - Thursday, September 23, 2010

Format - Round Robin, Doubles

Time - 2:00 – 7:30pm (includes tournament, finals, cocktails, dinner and networking)

Location – Longwood Cricket Club, Chestnut Hill, MA

REGISTER

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 venture-backed CEO faced the challenge of a sense of creeping entitlement around having dinner served every night at the company.  It had become customary to provide engineering dinners to keep them on track and not leave the building.  It cost money (VC investor’s money) and the productivity gains were being questioned and balanced against real expense dollars.

What this CEO determined was that working hard in a start up was the price of admission for equity.  60 hours a week was expected.  What would earn merit-pay in the form of dinner?  They scheduled the meals for 9:30p for everyone in the company who was still there.  This removed the stigma of an engineering only benefit.  It also made sure that “real effort” was rewarded.  And it sure ended up generating significant cost savings since the number of employee dinner was demonstrably lower as a result of the dinner hour shift from early to late evening.

Perks Case Study C: The allure of the “exotic”

One CEO had seen a swelling food and beverage budget over several quarters.  Given that burn rate was still an issue, he decided he had to do something about it.  But what to do? If he cut the corporate gourmet lifestyle, he might lose employees, or start to hear grumbling about how the company “used to be generous to its hard working staff, but now seems more interested in penny-pinching.”   So, he devised a plan to attract a high-end coffee shop into the building in which the company was housed.  After landing a Starbucks down in the lobby, the food and beverage spend dropped precipitously, employees being lured away by what they perceived to be just a notch above what the company offered in its own pantry.

Perks Case Study Addendum (extra bonus points):

One CEO had determined that staying on plan or on schedule for technology companies is a chronic challenge.  At some point he decided to reward achievement with a champagne toast.  But it created a double-edged sword.  Once they truly scoped out the development schedule and locked in the Gantt Chart, the CEO would write it on the champagne bottle and have everyone on the team sign it.

Then on the date the goal or project was to be achieved the CEO opened the champagne no matter the outcome.  If team made the goal or were near it, it was a great celebration.  If the team missed, the champagne tasted like the worst thing you can imagine.  The CEO recounted that he even had one person refuse to drink it, stating that the thought of doing so was too distasteful!

The next time an opportunity for a champagne toast rolled around, the engineering team knew what was coming and they got much better planning and targeting their development goals.  The CEO mentioned that he still has many of the signed champagne bottles as mementos of past hard work and development team milestones but hit, and missed…..

***

Comments are welcome with other creative approaches to fueling the entrepreneurial engine.

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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2)     Stage of company:  Does stage of company impact whether you hire a best athlete or domain expert?  Common practice dictates that yes, the later stage more mature company can be successful hiring a “best athlete,” where a faster-growth company needs to hire a candidate with more domain experience relevant to that industry.  Why?  The theory goes like this-

a.     Fast-growth companies: The faster a company is moving and growing, the less time there is to cross-train an employee on anythng. This applies to all candidate characteristics: level of industry knowledge, stage of company experience, and management experience.  In fact, if a fast growth company needs a VP, if anything that company may want to over-hire, looking for an executive who has managed larger teams over broader geography because it’s only a matter of time before this fast-growth company will experience its next growth spurt, and hiring an executive who’s seen what’s around that corner before is priceless in order to smooth out the growing pains inherent to all fast-paced companies.

b.     Slowing-growth companies: As a company matures,  hiring in a “best athlete” may make a lot of sense.  First, there is time to train up the executive being hired on the domain areas in which he or she has little/no experience-industry, geography, etc.   Also, best-athlete executives often like to learn new things, and be in continual learning-mode.  If they can take their business athletic ability and learn a new sport/industry, it keeps them motivated, excited, fresh, and leaning into the role rather than what can be called “career-coasting,” where an executive is just doing the same thing for a different company-same industry, same title, same goals, etc.

3)     Large versus small companies: Similar to fast-growth versus mature companies above, common wisdom dictates that large companies can support the “best athlete” better.  Often, large companies have an established internal employee training group tasked with taking new and existing employees and helping to round them out, whether that be by offering management or leadership training, functional skills education, or industry knowledge and education.  Smaller companies rarely have this pre-existing infrastructure.  Yes, an executive can go outside the company for supplemental business education by taking courses offered by industry trade groups and universities. However, the fear by the employer is that it will take time, cost precious budget resources, and detract from the time an employee has to give to achieving critical company goals and objectives.

4)     Impact on hiring of macro-economic cycles:  It’s worth noting that the prevailing economic cycle creates another impact on whether a company may be willing to consider a best athlete versus a domain expert.   From our experience, in a growing economy companies are more willing to consider best athletes for the following two reasons:

a.     Supply/demand of domain experts-In a flourishing economy, demand for talent often outstrips supply.  We saw this in the Internet bubble where talent available was so scarse that it became a serious constraint on new company formation and venture creation.

b.     Cost of domain experts-as a growing economy impacts the supply-demand equation, this also drives up price.  Even if you can find the domain expert, it may simply be considered too expensive, and the company instead decides to take a “wean-and-train” approach to filling the need,  favoring the hire of a best athlete.

***

Related to the question of experience versus aptitude is how this may impact executive compensation and management level for the employee considering a change out of their area of domain expertise and into the new.

Below is a bull’s-eye diagram that represents what we believe to be the inverse relationship in play.  When an executive decides to change any of the following characteristics in their employer, they are likely to move out at least one ring:

• •    Impact of size of company on title/level: If an executive wants to move from a smaller company to a larger company and they were a VP at the smaller, they should expect that they will move out a managerial ring, from VP in a smaller company to a director-level or even manger-level title.
• •    Impact of industry shift on compensation: If an executive wants to move from one industry to another (say software and/or tech to cleantech / renewable energy), often this will have to come at the expense of a reduction in compensation. Of course, if this is a CEO candidate, compensation may be less impacted than if it’s a middle management employee.
• •    Impact of functional shift on compensation: If an executive wants to move from sales to marketing, or technology development to sales, or any of those to an operations-focused role, this too is likely to negatively impact compensation.

If you try to combine more than one shift above into two or more, expect that with each compounding factor you’re likely to move out another ring on the bull’s-eye.

Impact of industry & function shift on compensation & level

]]> http://www.bostonsearchgroup.com/blog/aptitude-experience-important-hiring-equation/feed/ 0 http://www.bostonsearchgroup.com/blog/2009-green-tie-gala-brings-cleantech-community-jfk-library/ http://www.bostonsearchgroup.com/blog/2009-green-tie-gala-brings-cleantech-community-jfk-library/#comments Wed, 20 Jan 2010 20:18:47 +0000 Clark Waterfall http://www.bostonsearchgroup.com/blog/?p=902

Senator Markey addresses the formal-wear only crowd at the JFK Library during Clean Energy Week in November.

An annual event in Boston punches up the fact that we have an incredible cleantech cluster-New England Clean Energy Council’s annual Green Tie Gala.

Although this event took place back during Clean Energy Week in November, I was reminded of it when out in Denver recently.  Denver has some great stuff going for it.  NREL (National Renewable Energy Lab), University of Colorado with multiple campuses in Denver and Boulder that have significant funding from both Federal and State agencies, and a history of technology oriented companies, albeit with a heavy emphasis on telecom (Qwest, Level 3).

However, what there isn’t as much of in Denver is what some call the “ecosystem.” Others call it the “cluster.” This is a body of people who hold different but overlapping responsibilities in the entrepreneurial ecosystem and whose fusion is its wellspring–

• Academics: These are those most often with the new disruptive technology or science breakthrough that serves as the seed of a new company
• Business entrepreneurs: those who have experience taking the seed of an idea, and building a company around it
• Investors: The first friends & family, then angel investors, and often venture capitalists or corporate strategic investors who pour money into these new ideas to fund the business entrepreneurs scale the disruptive idea
• Professional services providers: These are often the “connectors” in the ecosystem. They’re comprised of lawyers, accountants, executive search consultants, and start-up advisors. They act as the glue between the prior three categories, more often than not introducing one to another, supporting the growth of these companies with their area of specialty

[Footnote: If you compare Boston to Silicon Valley however, Boston is shallower in large technology and sciences companies that serve to spawn "runners" to new start-up companies.   The biotech industry is perhaps better in Boston at doing this than the pure technology industry in the last decade, with a growing base of larger biotech and pharma companies including Genzyme, Cubist, Biogen and Sepracor.  Medical devices companies also fair better in many ways to large tech, with Boston Scientific, ThermoFisher, and Perkin Elmer.  In technology hardware and software, beyond EMC, there are precious few large technology companies left in Massachusetts. ]

Details on the Gala?  This year’s Green Tie Gala was held at the JFK Memorial Library in Boston (last year was held at the Museum of Science).    There are many organizations in the innovation sector here in Massachusetts that have done a good job at galvanizing a broad cross section of constituents, including the Mass Biotech Council, as well as MITX (formerly MIMC), and the Massachusetts Technology Leadership Council, or TiE Boston (Indus Entrepreneurs).  However, we’ve had yet to participate in a gathering of any that approaches that of the cleantech cluster here in New England.

Senator Markey gave the opening address to punctuate the cocktail hour.  To a person it seemed, everyone knew everyone.  Yes there were a few outsiders (a small contingent from the UK had come over as part of a trade mission coordinated with Clean Energy Week in Massachusetts because of its target rich calendar), yet all of these were welcomed by the larger fold, and the gathering seemed to virtually breathe together as some sort of larger unified body, a cluster with so few degrees of separation that walking from group to group or table to table was akin to going back to your high school reunion…. You knew at least half those sitting at every table.  For those who have experienced the annual Nantucket Conference, it is this atmosphere if intimacy and familiarity that presides.

To cap the night off, venture capitalist Chuck McDermott of Rockport Capital led his band in an after-hours session that continued the beat of familiarity both given its leader as well as in its musical selection (Chuck stating that the band only plays “songs popularized before 1960″).

Chuck McDermott, leading cleantech venture capitalist at Rockport, moonlighting as 50's music band leader

]]> http://www.bostonsearchgroup.com/blog/2009-green-tie-gala-brings-cleantech-community-jfk-library/feed/ 0 http://www.bostonsearchgroup.com/blog/headhunting-global-talent-innovationdriven-companies/ http://www.bostonsearchgroup.com/blog/headhunting-global-talent-innovationdriven-companies/#comments Mon, 05 Oct 2009 23:51:55 +0000 Clark Waterfall http://www.bostonsearchgroup.com/blog/?p=798 I had Tuesday to Monday eve in mid-September in a race across the planet to take advantage of British Airways’ generous offer to fly a batch of entrepreneurs wherever they wanted to go in an effort to further each’s fast-growing businesses… at no cost.

My itinerary?  Starting from home base of Boston, then to New York’s JFK, through London, with the ultimate destination– Singapore.  Total air time one way? 18 hours.  Total air and waiting in airport time one way? 24 hours.

What earned me the opportunity?  First, membership in the Entrepreneurs’ Organization (“EO,” www.eonetwork.org, formerly known as YEO, or Young Entrepreneurs’ Organization ) a global membership organization that is nearing 10,000 members across more than a 100 chapters.  EO is one of a group of leadership organizations, including YPO, WPO, CEO, and several others.  Qualifications for EO membership include annual revenues of $1 million or more, and either founder or majority ownership status in your business.

Hailing from the Boston chapter of 100 or so EO members made up of computer software and hardware entrepreneurs, legal and staffing professional services business owners, and a host of other small business founders  including franchising, travel, consulting, real estate, and medical devices, I was made aware of the strategic partnership between British Airways and the EO organization.  The following paragraph, detailing what a face-to-face opportunity would mean to the growth and expansion of our boutique retained executive search firm, BSG Team Ventures, was what I jotted down–

We have a presence in Boston, New York, Silicon Valley, and London. These are key global innovation centers. However, there is clearly a fifth and/or sixth  location to round out our client value proposition of “on the ground coverage in the key innovation centers in the world”– and those are India and Asia. Although there is a term sometimes used that combines the two (“Chindia”), we feel that there is perhaps a need to be able to service our growth-stage clients in each. One alternative is a meaningful position in a location like Singapore, which is equidistant from both these key innovation markets.

The ability to set up a series of meetings with potential partners, and then bring pre-meeting calls and video conferences to an in-person, face-to-face setting, would be extremely meaningful in taking our business from EU-American only, to truly global, capable of better servicing the needs of our clients who continue to demand the need to themselves expand globally.

I had been to Singapore and Hong Kong in 2008 on business, and knew that another trip there would allow us to cement some developing relationships “face-to-face.”  In 2008, we completed a VP Worldwide Sales search based out of Singapore, and are now working on another General Manager search based out of Tokyo for a leading global technology innovator.  And with the recession of 2008-2009 projected to recover in west-bound fashion this time (Asia first, Europe second, and the U.S. last), China, Japan, and the rest of the Asia-Pacific corridor is important to every business, both large or small like ours.

Having won the right to cash in the BA offer, a plane load of entrepreneurs amassed down at JFK airport in New York.  BA was everything they’ve built their reputation on-service-oriented and courteous, only as the British can be-with a send off in the first-class lounge that was rich in food, spirit(s), networking with other entrepreneurs, and a few humor-filled greetings speeches by both British Airways officials and the British government.   Example of the power-networking in the BA lounge? I met up with Morgen Newman, co-founder of IdeaPaint, another Boston-based start-up that was a BA travel recipient, with a company out of Babson (my alma mater so plugging here) that has formulated a special paint that can be applied on any work surface that then functions as a “whiteboard,” completely erasable when using dry-erase markers.  IdeaPaint is a tool for entrepreneurs that simply brilliant.  Most entrepreneurs are visual thinkers, and this now allows us to scribble on every surface…. (“Beware office cleaners-these walls aren’t “dirty”…. DO NOT ERASE!”)

My itinerary and goals for the trip looked like the following:

-          Tuesday:  Departure from JFK New York on flight into Heathrow, England, arriving at 9:30pm, with champagne reception at the end at the hip Sofitel Hotel in the new BA swanky Terminal 5.  “Bubbly” is the right term for a plane load of entrepreneurs bottled up for 5-hour trans-Atlantic flight….

-          Tuesday eve: Trip into London to stay at one of BSG Team Ventures’ partner’s flats, Simon Haworth, for early meetings the following morning

-          Wednesday morning: Meetings with an affiliated venture fund Dr. Haworth is a partner of, IPSO Ventures, focused on zero-stage technology transfer out of UK universities

-          Wednesday lunch: meeting with Simon and additional BSG Team Ventures staff in UK to review firm-wide global priorities

-          Wednesday dinner: Meeting with Sean Sean-Rogers, venture capitalist originally based in Boston with Commonwealth Ventures, then London with Benchmark Capital, and now out with his first cool media start-up venture fund of his own, called PROfounders Capital .

-          Wednesday late eve: Flight out of Heathrow to Singapore

-          Thurs eve: arrive in Singapore 13 hours later but given time zones crossed, a full calendar day later.  On way to hotel, bump into another fellow EO Boston chapter member, Warren Katz, who’s military software simulation company MAK Technologies based in Cambridge, MA was recently bought by a Singaporean company and where he had meetings completely unrelated to anything to do with EO, British Airways etc.  The probability of bumping into a fellow Bostonian and dear friend 9,500 miles and 15 hours away from home in the same hotel lobby in Singapore is….. rough math? Zero.  If anything proved Thomas Friedman’s claim that “the world is flat,” this certain did.  Serendipity works in strange ways.

-          Thurs late eve: After a run on the treadmill and a shower at the hotel to shake off the jet lag, meet-up with Warren at the hip Equinox Bar at the top of the SwissHotel in downtown Singapore for a nightcap on the 70^th floor overlooking the city (Warren holding porcelein statue of a lion, the symbol of Singapore, as proof of authenticity and handy memory jogger for old age).

-          Friday day: Meetings with the Singapore Economic Development Board regarding the state of the cleantech industry in Singapore, and the Ignite Clean Energy Competition I currently chair.  Potential partnership with Singapore on global cleantech competition expansion.  This was followed by three meetings with boutique retained executive search firms with a similar focus and specialization to our own firm.  Great meetings.  All three firms turned out to be potential partner-caliber opportunities.  And each of them had active retained executive recruiting practices that did search work in India, Singapore, Mainland China, Hong Kong and Korea.

-          Saturday:  Meeting with existing technology client who went public earlier in 2009 for lunch to discuss current and future expansion searches both in the U.S. and Asia

-          Sunday:  Originally, I had booked the trip to try to squeeze in one more business day by staying the weekend and leaving late Monday eve to allow for more business meetings.   However, once there, was greeted with the fact that Monday was a holiday, the end of Ramadan for the Muslim religion, and business was closed.  It’s a great example of Singapore as an Indo-Chinese melting pot not dissimilar to that of the United States.  However, in Singapore, it is a fusion of Chinese, Malay, and Indian cultures that co-exist and create not only incredible cuisine, but a vibrant cultural diversity where all three associated religions are celebrated and many languages spoken.   Moved from hotel in downtown Singapore out to a small island just 15 minutes out of the city called Sentosa, a former military base built by the British half a century ago to protect the island, now converted to a natural wildlife habitat and recreational weekend playground for Singaporeans with several resorts anchoring each end of the island, dotted with golf courses, tennis, beach, dolphin petting, and lots of beach and water sports.  Note to self-keep windows of hotel room closed….

Ran back into Singapore the city to do some late Sunday shopping, and again bumped into the cultural diversity of Singapore, with a street celebration capping off the end of a period in Chinese culture and I believe Tao religion that starts In May, and ends in September, often referred to as the “Moon Cake” festival.  This is a festival  and celebration on the streets of Singapore and many other parts of Chinese Asia I’m told that celebrates the return of all the ghosts to the underworld who each year are let out to roam the earth and make trouble for their living relatives.  At the end of September, these ghosts are all returned behind the gates to the underworld, rendering the earth safe again until the following May.  The Chinese celebrate with parades, demonstrations, the burning of special urns the night before on the streets, and the Chinese pastry called “Moon Cakes” made up of a bean paste with some sort of frosting over the top.

Below is a picture of several groups of Chinese children rehearsing before the start of the parade.  The boys were part of a martial arts school; not sure what the girls were part depicting.

All said and done,  in 4 business days the dash across the globe was a great opportunity, albeit an exhausting one.

Here’s to entrepreneurship and the pioneers in all facets of enterprise who take on the unknown every day, week, and month, in an effort to forge new business value.  Whether those pioneers are in the U.S., UK, Singapore, or India, we’re all very much the same, driven by a like urge to grow and nurture an emerging idea.  Hats off to the rest of that planeload of globe-trotting entrepreneurs.  Can’t wait to hear their stories no doubt more compelling and inspirational than mine….

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.

Per Suneby and Doug Denny-Brown, winner of 2009 Tournament

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”….

There’s a lot written about the entrepreneur, entrepreneurship, and what ingredients make for success over failure in the industry of business venturing.  Much of it is pretty shallow, pop psych fodder, meant to be read in a short trip to the commode, and disposed of similarly.

Books like Malcolm Gladwell’s Outliers takes a much more thoughtful approach, one of myth-busting versus myth-making.

Another similarly thoughtful deconstruction of entrepreneurship was brought to my attention via Babson College’s new president, Len Schlesinger, and his efforts to better match entrepreneurship’s leading institution for  higher education and its curriculum with a more effective toolbox for start-up success [full disclosure, Babson is my MBA alma mater].

Dr. Saras Sarasvathy, Professor at the Darden Graduate School of Business, is the author of this piece, written back in the dark corners of the 2001 post-Bubble recession, when entrepreneurship was the worst nightmare of those smart enough to avoid its allure while clinging to safety in their day jobs.    The full piece can be found at www.effectuation.org/ftp/effectua.pdf.

As a foundation for the suppositions Sarasvathy makes in her article, she interviewed 30 founders of U.S. companies ranging in size from $200M to $6.5B across the spectrum of industries.  She also had them each tackle the same case study to see how each founder approached the problem-solving required.  Her goal was to try to determine whether there was a common denominator in the way entrepreneurs thought, and if so, could it be distilled to several core nuggets of “teaching wisdom” to help aspiring entrepreneurs.

After Sarasvathy completed her interviews, she transcribed the tapes in search of a common set of principles each entrepreneur operated from in problem-solving.  Sarasvathy strings the principles she identified together into what she terms “effectual reasoning” of the entrepreneur.  Effectual reasoning is a different approach to problem solving than what is used in large corporations, or already successful and established enterprises.  She refers to the mature company’s approach to problem solving as the inverse, or predictive, “causal reasoning” -

Causal rationality begins with a pre-determined goal and a given set of means, and seeks to identify the optimal – fastest, cheapest, most efficient, etc. – alternative to achieve the given goal.

However, effectual reasoning takes a very different approach, and the metaphor Sarasvathy uses paints an evocative image of the difference-

It does not begin with a specific goal.  Instead, it begins with a given set of means and allows goals to emerge contingently over time from the varied imagination and diverse aspirations of the founders and the people they interact with. While causal thinkers are like great generals seeking to conquer fertile lands (Genghis Khan conquering two thirds of the known world), effectual thinkers are like explorers setting out on voyages into uncharted waters (Columbus discovering the new world).

Sarasvathy identified that there is no question that creativity is the cornerstone of effectual reasoning.  Another metaphor she uses is that of cooking – a chef given a recipe, versus a chef given the ingredients.  The chef given the recipe can go out and shop for what they need, compare cost versus quality versus convenience given the time allowed to prepare the meal, and create a very “causal” approach to the preparation.  However, the chef given the ingredients must use his or her creativity and invent a dish out of a combination of what raw materials they were given, and the background and experience they have had in cooking across their career.  Sarasvathy refers to this creative chef as having three categories of means:

1.      Who they are – their traits, tastes and abilities

2.      What they know – their education, training, expertise, and experience; and

3.      Whom they know – their social and professional networks.

From these means, they start to cook up their idea, be it a product, service or invention.  One of the big initial differences between causal and effectual reasoning is that causal reasoning demands a rigorous analysis before any test-marketing of a product begins.  MBA curricula herald that a best practice for starting a business is extensive market research before any products are actually offered up for public consumption.  Conversely, effectual reasoning relies on very early market and customer feedback to guide product development.  This interaction with the actual market and its users is a very iterative process.  Using this approach, at some point a clear path evolves, and one or more achievable goals (new products, services etc. that the customer likes) make themselves apparent.
At a deeper layer of analysis, Sarasvathy identifies three underlying principles at work in the process of effectual reasoning and how it is distinguished from the causal reasoning approach:

1.      While causal reasoning focuses on expected return, effectual reasoning emphasizes affordable loss. The key way to do this is to try to sell the product  before you’ve even made it.  See if you can get someone to buy something that doesn’t exist yet. “I will have “x” available in the near future, will you buy it?”  There is no sunk cost of manufacturing or development; a simple conditional close is used on a prospective customer.  If they say no, there is very little lost.  However, there is a lot gained regarding information, and perhaps a different product or service is articulated by the customer that they would buy.

2.      While causal reasoning depends upon competitive analyses, effectual reasoning is built upon strategic partnerships. Effectual reasoning dictates that once you find something a customer will buy, you then identify a few key players in that market, and establish deep strategic partnerships with them.  Make them premier or “flagship” customers, and dig into their further needs while selling them your first product to help refine, expand, and augment the value of your existing and future offerings.

3.      While causal reasoning urges the exploitation of pre-existing knowledge and prediction, effectual reasoning stresses the leveraging of contingencies. Sarasvathy puts it best, referring to it as “the ability to turn the unexpected into the profitable.”   One of the entrepreneurs she interviewed phrased it this way – “I always live by the motto of Ready-fire-aim.  I think if you spend too much time doing ready, aim-aim-aim-aim, you’re never gonna see all the good things that would happen if you actually start doing it and then aim.  And find out where your target is.”   It is similar to an old artillery approach to hitting a target. You would take your first shot, and then adjust the canon accordingly.  Causal reasoning on the other hand, tends to focus on the avoidance of surprises as much as possible.

Sarasvathy goes on to distill further the differences in the logic that underpins causal and effectual reasoning -

Causal reasoning is based on the  logic, To the extent that we can predict the future, we can control it.   Effectual reasoning, however, is based on the logic, To the extent that we can control the future, we do not need to predict it.

Sarasvathy gives several examples of how causal versus effectual reasoning might play out in different scenarios.  However, entrepreneurs all preferred to be in markets that were not predictable.  In unpredictable markets, the entrepreneur can shape the outcome rather than a predictable market where vast resources would be required to accurately render the predictive analytics required to succeed and win.  Business schools often teach the following mantra for sales:  you should sell either new products to existing markets, or existing products to new markets, but never sell new products to new markets.  For entrepreneurs however, effectual reasoning specifically targets new products for new markets.

Sarasvathy wraps up her research and results, concluding -

Entrepreneurs are entrepreneurial, as differentiated from managerial or strategic, because they think effectually; they believe in a yet-to-be-made future that can substantially be shaped by human action;  and they realize that to the extent that this human action can control the future, they need not expend energies trying to predict it.  In fact, to the extent that the future is shaped by human action, it is not much use trying to predict it – it is much more useful to understand and work with the people who are engaged in the decisions and actions that bring it into existence.

Also in her paper and of particular interest to our firm as executive recruiters, Sarasvathy makes the point that entrepreneurs –  whether the founders of a company, or those who join start-ups early in their existence –  need to feel emotional ownership in the goals and objectives of the start-up company and its mission, “…and can only be incentivized by the belief that the effects they create will embody their deepest passions and aspirations while enabling them to achieve their best potential.”  When we recruit executives for our clients, not only should they have the requisite resume experience with in the technology, medical devices, software, cleantech, or mobile, but we interview deeply against the less visible characteristics Sarasvathy refers to in her research.  We have adopted the term “eductive reasoning” for what Sarasvathy refers to as pattern recognition where patterns are not immediately obvious (see http://en.wikipedia.org/wiki/Fluid_and_crystallized_intelligence).  When selecting an executive, resume is just the starting point, with thorough assessment of entrepreneurial DNA actually the more predictive of success in any given executive role in growth-stage companies.

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Saras D. Sarasvathy is a member of the Strategy, Entrepreneurship and Ethics area and teaches courses in entrepreneurship and ethics in Darden’s MBA program. In addition, she teaches in the doctoral program and the research seminar on Markets in Human Hope. In 2007, Saras was named one of the top 18 entrepreneurship professors by Fortune Small Business Magazine.

Saras is a leading scholar on the cognitive basis for high-performance entrepreneurship and is the author of Effectuation: Elements of Entrepreneurial Expertise (book overview). Effectuation is widely acclaimed as a rigorous framework for understanding the creation and growth of new organizations and markets. The research program based on effectuation involves over a dozen scholars from around the world whose published and working papers can be found at www.effectuation.org.