Facebook is now trading at 24% below the IPO price. This is a significant price adjustment for a new stock (or any stock) and suggests that the bankers overpriced the stock at the IPO. Aswath Damodaran, the legendary NYU finance professor, explains where the bankers went wrong in this excerpt from Business Insider:
"I think the investment bankers priced the offering based on how shares of Facebook were trading in the private market and their assessments of institutional demand. I don't think that revenue growth, margins, risk or any other fundamentals played much of a role in the pricing. I don't fault them for playing the momentum game, but they played it badly."
Most stocks do not have a large active private market prior to their IPO. Facebook established their private market partly as a means to provide liquidity to the founders and perhaps to provide some support for an aggressive valuation at the IPO.
As crowd funding grows as a means to fund startups and other private markets in pre-IPO stock emerge, perhaps one should be cautious about these markets as a basis to price IPOs.
I am always intrigued by companies trying to curate information. I continue to believe it is huge business opportunity. Last post on this theme is here.
From the Live to Close website comes Industry Dive, described here. Industry Dive provides original content as well as a collection of articles, posts and tweets by industry.
I have been following Live to Close for about ten days and they consistently post on interesting startups.
The assertTrue blog has an interesting post on market share leaders in the physical and Internet worlds. The writer points out that in the physical world there are usually two to three companies that control the market as measured by market share. McKinsey made the same point in the 1980s. In the Internet world, to date, there is usually one dominant company and then a bunch of also rans. Examples include Google (search), Facebook (social networking) Amazon and Netflix.
If this change in market share dominance is correct, the question to ask is why does a sole Internet company in a market dominate? I think there is one principal reasons:
Comparatively low capital requirements to enter the market and to scale rapidly
Internet businesses are not as capital intensive as physical world companies and therefore can achieve dominant market positions faster. With the notable exception of Apple, Internet companies do not have to invest in stores. Few have warehouses or any significant sales forces. Little investment is required for logistics after the server farm is established. With Amazon Web Services such investment is turned into a marginal cost. In summary, low startup capital and limited capital requirements to scale characterize Internet companies and explain why a single company can dominate a market segment. First to find product/market fit combined with a limited capital constraint allow Internet companies to achieve dominant market positions faster that can not be displaced.
Arnon Kohavi, an Israeli venture capitlist, tried to start a venture fund in Chile according to this story in TNW. After six months he pulled out. His reasons, as reported in TNW, are below:
"I took off because it will take longer for Chile to reach the tipping point. Good will from the government and a few people isn’t enough to re-create what places like Silicon Valley, Israel and Finland have.
The heart of the problem is Chile’s dramatic generation gap, between young entrepreneurs and the old generation. The Chilean society is less dynamic than Asia or the US; a handful of monopolistic families control the country, and won’t move.
Worse, these families don’t care about anything (the young, the poor…) besides their money. They don’t have to: the country’s natural resources (copper, etc.) are a disadvantage here, because it means the rich don’t need to work hard. The Asian model is better, because it focuses on exporting manufactured goods.
Chilean family offices may still give money to Endeavor, but for them it’s not about entrepreneurship – it’s just a way to brush their ego, and they only do it because it is all conducted in Spanish.
I know people were disappointed when I left, and the Chilean government would have supported my fund, but I also wanted a commitment from the elite, and it didn’t happen. Yet, I’d be happy to come back and do business when the country is ready."
I suspect the same result would have happened in ten other countries in LATAM. Organized and supported entrepreneurship struggles in most of LATAM with the exception of Brazil. I am working with a group to organize a high tech entrepreneurship center in Colombia that is supported by the private sector, municipal and state government and local universities. With such widespread support maybe we will do better.
November 4th I will be moderating a panel on corporate social responsibility in Latin America at a new conference in Miami. Sponsored by the Colombia University Business School (my alma mater) alumni in South Florida, the Latin American Business and Finance Conference brings together thought leaders from across North and South America to discuss a wide range of themes in business, finance and economic development. Conference details are here.
Miami should expand its role in the thought leadership of LATAM. UM and FIU have several organizations that contribute to a better understanding of a wide range of topics in LATAM (but more conferences raise the profile of Miami even further). Two organizations that are particularly noteworthy are the Center for Hemispheric Policy at the University of Miami, which hosts high quality monthly events, and the Institute for Public Management & Community Service at FIU which focuses on the issues of the cities and states in LATAM and also hosts a great annual conference now in its 12th year.
Another upcoming conference is the 2011 Americas Venture Capital Conference, November 16-17, sponsored by FIU and the Pino Center for Entrepreneurship (where I am on the Board). This conference focuses on bringing together LATAM entrepreneurs and funding sources. Now in its second year, details for this premier event are here.
Take advantage of these events to expand your knowledge of Latin America. Please share this post on FB, Twitter, etc. so that more people realize that a great deal of though leadership on LATAM comes from right here in Miami.
There has been a lot of recent improvement in the design of user interface, inspired in part by leading examples for the iPad, such as Flipboard. Flipboard was named iPad app of the year in 2010. Such highly visual, simple interfaces have now been captured in websites and the general media. Fuse Project's website is a good example, Ferrari has a great site and this rendering of the NYT is my favorite. Two new businesses following this trend are Pinterest and Prezi.
Pinterest is a relatively new site that allows one to tell stories in pictures. The company has reportedly just raised capital through a venture round lead by Andreessen Horowitz. What is more noteworthy is that their user statistics are reported to mirror Facebook in the early stage.
Prezi is a cloud-based alternative to Powerpoint. That is the simple explanation. The more complex explanation would be mind mapping meets Flipboard meets Powerpoint. For the presentation of complex ideas Prezi may be the answer. Now I just have to figure out how to use it.
One of the concepts I teach in my entrepreneurship class is that a new business concept is really just a hypothesis until annual revenues reach about $10 million. Too many entrepreneurs lock on to an initial idea of who their customer is and run out of cash before they find a customer base of sufficient size to sustain the company. By considering a new business concept a hypothesis I am trying to encourage my students to be more flexible in their thinking, to realize that their initial thinking may be wrong and to be on the lookout for a better market for their product.
In 2005 I helped raise the initial Series A venture capital for a location-based services company--LOC-AID. LOC-AID originally planned to target the large carriers and offer them location-based games, geo-fencing products and related consumer apps. The longer term strategy was to provide a gateway for consumers to share their location regardless of the cell carrier they used (in 2005 this sharing was not possible). Neither of these strategies appear to have ever worked, but in building the gateway LOC-AID found its customer and market. It was neither the consumer nor the cell carriers.
Read Write Mobilereports that LOC-AID is now one of the largest providers of location-based information. Their customer base is now financial institutions and other firms that use location as an additional way to verify security. For example, a credit card is presented to a merchant in San Francisco but the card holder's cell phone location shows that they are in NYC. FRAUD ALERT. LOC-AID's gateway to all the carriers provides a location on almost all cell phones in the U.S. for financial institutions. Other examples are in the RWM story.
A couple of other points to note:
We presented LOC-AID to over 20 leading Silicon Valley VCs, who all passed, before finding a lead investor on the east coast
The consumer is not the only market for all of this modern technology; B2B applications can be large markets if you are flexible enough in your thinking to find the new opportunities
Just a reminder that this archive of articles on entrepreneurship is updated frequently. The original post and the link to the archive are below. Recently the articles have been on strategy and the customer value proposition.
"I have shared the articles here that I send to my entrepreneurship students during the semester. Will add articles during the remainder of the semester and in future semesters. The mix is mostly blog posts and videos. Naturally it is a bit eclectic and reflects my interest in design as a model for innovation, social entrepreneurship and venture capital amongst other topics.
I used Evernote to make the articles available. Evernote is excellent for organizing large amounts of information."
Business Insider had a very interesting article about Roger McNamee, a Partner at VC firm Elevation Partners and an investor in Facebook. McNamee stated that the era of social media is over and that everything in this space is now just a feature and not a business. I agree with this conclusion but what I found more interesting are these three statements from McNamee:
"Microsoft's share of internet-connected devices has gone from 95% to under 50% in 3 years." Would someone please explain to me why anybody needs to be trained in Windows to have computer literacy, particularly given that Windows share is only going to decline further as more operating systems appear (in China).
"Google only has 50% of the Internet searches" when you consider all the specialized search services, such as Realtor.com, Wolfram Alpha, etc. I have been making the point about the opportunity in vertical market search for some time.
"The fact that most people now have more than one device means the cloud is vital, because you want to have all your stuff on all your devices. (It also means the old PC paradigm is dead, because the old PC paradigm means everything stored on one device, instead of everything in the cloud synced to many devices.)" This is why Dropbox has such a tremendous future. They understood the idea of multi-device information availability and developed a great interface and feature set. Now if everybody would use Dropbox I would not receive anymore email stuffing Powerpoints.
The Gong Show has an interesting article on a different style of presenting an investment to an investor. After the introductions and small talk, start the presentation by highlighting the reasons not to do the deal. In other words, present the key assumptions or risks in the deal. By getting these issues out of the way, the presentation can focus on the reasons to do the deal.
This is perhaps an extreme approach to pitching but it has several advantages that should be in every first pitch:
It conveys honesty
It shows a more profound understanding of the business concept
It focuses the pitch on the key issues for the investor
It weeds out the uninterested investor more quickly, saving you time
Suffice it to say, you are supposed to have mitigants for the risks identified and these are further developed in the presentation.
If you are going to use this up front style I would make one exception. At the end of the presentation I would briefly mention felony convictions, tax liens, personal bankruptcies or Attorney General or SEC investigations. Up front these issues might consume all the alloted time or turn off the people before you get to describe the business concept, but you mention such items in the first meeting.
Sophisticated investors are very methodical in risk analysis and they are going to discover the issues eventually. The key is to have the honesty and experience to correctly identify the major risks. I have used this type of approach for thirty years and it works effectively worldwide regardless of culture with sophisticated investors.
Note: This approach is for pitching sophisticated people, which would be my preferred source of capital every time. I have never pitched friends and family but honesty is still the best policy if you want a chance to be invited back to Thanksgiving dinner after the company fails.
The blogging muse went on vacation and did not tell me. So today's post is a summary of some very interesting articles from this morning's reading.
Fred Wilson, legendary NYC VC, started a huge debate on the internet here on the role of marketing in early stage companies. Basically all the VCs lined up with Fred and the marketing mavens all took the opposite view. Fred basically argued for a focus on sales with support from internally generated PR and social media. What the marketing mavens said was largely wrong or confusing. Bottom line do not think about "marketing" in the classic sense and focus on very capital efficient approaches to get customers. One of the more interesting articles in the debate came from the Equity Kicker.
Another interesting article came from an old Tech Crunch post on the pitch deck for a VC or angel. Tim Young reveals the secrets that he used successfully to raise $10 million for two startups in the same year. He uses a 5 slide deck. I love the simplicity, clarity and elegance of his sample deck. I think I found this article through an answer on Quora.
I cannot believe I am going to mention a story about Microsoft technology. Please do not tell anybody. This story describes how Microsoft is developing technology where the human body is the interface to the computer. No mouse, no keyboard. Just hit your arm with your hand in different places and the computer correctly does what you want. And you thought the iPad was cool. Interface to the computer is a big new frontier.
I travel alot for One Laptop per Child and frequently meet foreign government officials and university administrators. After discussing the benefits of primary school education through OLPC, the discussion invariably turns to whether OLPC can help to foster entrepreneurship in their country. The discussion turns to entrepreneurship for two reasons:
Everyone wants to tap into the worldwide open source communities for Linux and Sugar that make OLPC possible and duplicate such programming communities in their countries, universities or organizations
Everyone wants OLPC to facilitate access to MIT and in particular the MIT Media Lab (from which OLPC started) and the MIT Entrepreneurship Center, perhaps the leading academic entrepreneurship program in the world (Disclosure: I taught a course in social entrepreneurship at the MIT Sloan School of Management in January 2011.)
As I read Daniel J. Isenberg's article in Harvard Business Review "How to Start an Entrepreneurial Revolution" I find that I agree with some of his findings but generally I disagree with his conclusions. Isenberg's conclusions about an environment that fosters entrepreneurship in foreign economies are:
Stop emulating Silicon Valley
Shape the Ecosystem Around Local Conditions ("foster homegrown solutions—ones based on the realities of their own circumstances, be they natural resources, geographic location, or culture")
Engage the Private Sector from the Start
Favor the High Potentials (support and foster companies with world class potential)
Get a Big Win on the Board (entrepreneurship is viral and a successful example will spawn further successes )
Tackle Cultural Change Head-On (entrepreneurship needs to lose its stigma and become something supported by society)
Stress the Roots (encourage resourcefulness by rationing capital)
Don’t Overengineer Clusters; Help Them Grow Organically (“pave the footpath by gently encouraging supportive economic activity to form around already successful ventures")
Reform Legal, Bureaucratic, and Regulatory Frameworks
My conclusions to foster entrepreneurship are based on ten years working in Indonesia (a hot bed of entrepreneurship despite a then authoritarian government), eleven years of working with entrepreneurial clients in the Caribbean and Central America, five years of teaching entrepreneurship to many foreign university students and eighteen months representing OLPC. My conclusions are:
1. Capital is King. Many entreprenurs around the world can build $3-10 million companies through Isenberg's "stress the roots" approach, but they cannot achieve "world class" status for lack of access to capital. I was lucky to build a billion dollar publicly traded company in Indonesia, but the reason, in large part was that I was better able to access capital than my competitors. I recently lectured a group of Haitian entrepreneurs through a program spons0red by Digicel Group, Dennis O'brien's telecommunications company. This very optimistic group of Haitian business owners cited access to capital as their biggest problem despite the total devastation of their country by an earthquake. Financing techniques for entrepreneurs was the subject of the lecture.
Isenberg cites the successful Israeli example of combining government funds with management of the monies through professional venture capital and private equity funds. I like this example, which has been used in Florida where some government pension monies are under the management of Hamilton Lane to invest in early stage companies. (Florida, a state with a population of almost 19 million, at last count had less than ten "real" venture capital firms.) I would encourage a portion of the monies in such approaches to be specifically earmarked for "seed" investments and for the VCs not to be disguised private equity investors.
In Indonesia one of the largest untapped pools of capital was the reserves of the local insurance companies. Within reasonable and appropriate asset allocation and risk profiles perhaps insurance reserves in some developing countries could be directed to local investments in secured loans to provide medium term growth capital.
2. Integrate Foreign Investment into the Entrepreneurship Initiative. Foreign multi-nationals provide many benefits to foreign countries, not the least of which is hands on training in professional management to local staff. Due to weaker education systems in many countries, most entrepreneurs have only limited access to the thinking and processes of modern management. This lack of experience is a major factor in limiting the emergence of world class companies.
Perhaps foreign investors must have social responsibility programs that support local entrepreneurship. Programs in education, local suppliers and services and sabbaticals for employees to work for a year in a local company all would qualify. Preferential tax rates might encourage this activity. The Digicel workshops for Haitian entrepreneurs is an example of such a program (albeit with no particular tax incentives).
3. Education is Critical. Several academic studies have shown that a part of the success of Silicon Valley and Boston as entrepreneurship centers is their proximity to great universities. Mayor Bloomberg's recent initiative to attract a world class engineering school to New York City as a means to foster greater entrepreneurship there points out the need for education in certain subjects that tend to produce more entrepreneurs. Of course, if we provide good engineering universities, access to capital and professional venture capital investors, a country would be well on its way to duplicating the critical success factors that explain Silicon Valley or Boston.
Based on conversations with many government officials around the world, the development of intellectual property is going to be the engine of economic growth in the 21st century. This concept is a basic tenet underlying the philosophy of OLPC, which in part explains the success of the program and the approximately 2 million computers distributed to children. Improved education, and in particular science, math and engineering, is a necessary part of any sustainable entrepreneurship program at the country level. Procter & Gamble's social responsibility program in Latin America focuses on education, which suggests that they share my view on the importance of education in emerging markets.
4. Focus on Entrepreneurship. Isenberg cites the example of Malaysia's program to foster entreprenurship in the idigenous population as a failure and support for his concept of "stress the roots" by encouraging resourcefulness. I agree but I think Isenberg fails to draw the more important conclusion. The indigenous population in Malaysia is not some small tribe of nomadic Indians but rather the majority of the population. Malaysia has a history of failed programs to support the indigenous majority while the Chinese minority thrives. Malaysia's entrepreneurship program failed because it did not focus on entrepreneurship but rather addressed a wider range of social and political issues. I see many governments starting good projects only to fail because they have too many social or political objectives. If governments would refrain from discrimination on the basis of culture, race or religion and not try to solve all the problems with one solution, their programs would be much more effective.
An example that supports this view of focus is the Uruguay program to implement OLPC. Uruguay is the first country in the world where every child in primary school (450,000) has a laptop computer (from OLPC) and the program has garnered worldwide acclaim for the country. The reason that this program succeeded, in large part, was that the government had one simple goal--include every child in Urugauy with no exceptions--rather than adopting discriminatory programs or complex, multiple social goals.
5. Liberalize the Legal System. The structure and philosophy of the U.S. legal system has been a major factor to explain the scale of entrepreneurship. The U.S. system is built on the concept that if something is not prohibited by law, it is permitted. Many countries adopt the contrary approach--if it is not permitted by law, it is prohibited. This later controlling view of legal systems greatly inhibits entrepreneurship. I have thirty years of stories where entrepreneurs were stopped by government bureaucrats from expanding their businesses because a law did not permit something. What countries need to do to foster entrepreneurship is to change the philosophy of their legal systems to make them permitting rather than inhibiting.
Professor Isenberg should be applauded for this important article on the importance of entrepreneurship in developing economies. Perhaps our differences of opinion will foster further debate and research on this important topic.
Tech Crunch reported today on a new seed fund, Collaborative Fund, based in Los Angeles. Every good venture capital fund has a specialized focus that explains the technologies and/or market segments where their capital will be invested. Collaborative is planning to invest in companies where the "brand means something". In other words, values are used as a competitive advantage. Collaborative cites two companies, Zappos and Honest Tea, as examples where values are a significant part of the brand message.
Zappos, the customer service fanatics, and Honest Tea, known for "truly" healthy organic beverages, appear to me to just be well run companies that consistently communicate a clear message that appeals to today's customers. In other words, clear communication of a "good" message appears to represent value for Collaborative. There seems to be something missing in these examples.
I think that Collaborative would have better explained value if they had cited TOMS Shoes and Better World Books. Both of these companies clearly communicate a concept of value in a truly substantive way. TOMS gives a free pair of shoes to a needy person for every pair of shoes they sell and BWB devotes a significant part of the cash flow from book sales to alleviating illiteracy in Africa. These social activities bound into a brand message are what I think of when I define "values".
In a post in the Equity Kicker that linked to a graphic from Tech Crunch there was the image below of all the start ups spawned by former Yahoo employees. (Click on the nodes for the detail. Takes a while for nodes to show)
Yahoo has served as an entrepreneurial incubator because employees participated in the early stock appreciation of Yahoo and the scale of Yahoo involved a lot of talented people (per Equity Kicker).
When we look at Yahoo and all the entrepreneurs that it produced, the point that is perhaps overlooked is that Yahoo in its early days was an entrepreneurship classroom for the employees. The founders made a lot of good entrepreneurial decisions that the employees learned from (a form of mentoring). Of the seven senior managers at the billion dollar company I built in Indonesia, four became successful entrepreneurs, two are CEOs of large companies and one is still a senior executive with the company.
As we look at the South Florida entrepreneurship scene and the number of large companies developed here, the landscape is pretty bleak. The best examples are Brightstar, Citrix and Carnival. Why do we have so few:
There are few successful technology companies or near tech (Brightstar) to foster employee entrepreneurship by example
We have no great universities. I continue to believe that we should offer an irrestible deal to Oxford or Cambridge to set up a branch of their university in South Florida focused on science education and related disciplines (mathematics, entrepreneurship, etc.) The University of Miami Medical School might fill this void but that is debatable.
There is little seed money, few angel investors and no venture funds for early stage companies. Perhaps what we need is an incubator funded by the private sector, tightly affiliated with a university, but looking for investments in the entire community.
Last Friday the Pino Entrepreneurship Center at FIU hosted its first Shark Tank. The Shark Tank is a form of business plan competition but the big difference is that three of the judges had the ability to fund seed stage startups. I think it was the most successful event of this type where I have participated for several reasons:
The presenters represented a more diverse group than usual including older entrepreneurs and two FIU professors in addition to FIU students (Professor Wu from the Engineering School at FIU had us all captivated with his new approach to hurricane protection for homes.)
5 or 6 of the presenters had really good web-based business concepts,
and these concepts generated the best discussions (Hat tip to
@johnfleming for excellent comments throughout the day on the web-based
businesses)
Alex Acosta from Miami-based private equity firm Trivest consistently
asked the best questions to presenters by focusing on the big issues of
market opportunity and revenue generation. (Alex is an FIU alum who
"gives back" by working with Pino.)
Funniest part of the day for me was when one presenter naively said he had no competition and two hours later a competitor presented.
During the afternoon I served as the moderator instead of judging. This was even more fun than judging and I would welcome the opportunity to moderate other forums. (Next time I will remember to introduce myself.) Judges Mike Tomas from Astri Group and Ricardo Weisz of New World Angels made it easy for me with excellent first questions for each presenter.
The shark tank forum worked really well and it will be repeated in the fall. I encourage entrepreneurs at any stage of company development to participate and present. For students interested to learn more about entrepreneurship it is a relaxed way to learn practical tips from some very knowledgeable judges.
Ben Horowitz is a partner with Marc Andreessen in a relatively new venture capital firm. Ben writes a very different type of VC blog, ben's blog, which frequently talks about how he evaluates different factors in the investment decision process. Today's post is on evaluating the CEO.
Today for the first time I noticed that a quote from Jon von Neumann appears on every post. As you may recall from a previous post, von Neumann was considered by many the greatest mathematician of the 20th century. This is the quote:
There is no sense in being precise when you don't even know what you're talking about.
This quote should be the first quote in every book on writing a business plan. It would be worthy of a tattoo if it were a little shorter.
I always tell start ups and early stage companies in Florida to go to Atlanta for their capital. There is a large community of venture capital and private equity firms that finance all stages of development in a wide range of industry sectors. Today in Tech Drawl, a blog that covers the Atlanta VC/tech community (and does a great job), there is a story by the Founder of First Light Ventures.
I have written before about venture investment in social entrepreneurship (here), but I believe First Light is the first venture fund devoted to social entrepreneurship. Their focus on seed round funding makes them especially attractive. Perhaps the most important point about First Light is that they are further evidence that social entrepreneurship and venture capital can combine to generate appropriate investor returns and social good.
One of the riddles studied in philosophy is "in the land of the blind, the one eyed man is king". In such a place perhaps 50 percent of the people would not even know that sight existed, 40 percent would think one eye was required to see and maybe one percent would consider the concept of two eyed people (or more eyes). In other words the nature of the information can shape reality but that does not make it true (the inductive fallacy).
The recent rash of VC blog posts in response to Vivek Wadhwa's post on Tech Crunch about entrepreneurship being learned (discussed in my post here) demonstrates the VCs' need to study more philosophy. The VCs almost unanimously conclude that entrepreneurs are born. What they overlook is that their sample of entrepreneurs is almost entirely people who make funding requests to VCs (the one percent). Many entrepreneurs never use other people's money (OPM) and those that use outside financing typically go to banks, factors and leasing companies. In other words the VCs are assuming that their data is representative of all entrepreneurs and in fact it is not. They appear to be overlooking all the entrepreneurs who never go to VCs. Entrepreneurship can be learned :)
The National Venture Capital Association has just released their latest member survey. Expectations for 2010 are as follows:
The number of venture capital firms will decrease as poorly performing firms will be unable to raise new money
Lower risk later stage investments will attract a greater percentage of available capital, as VCs look for lower risk investments
Existing portfolio companies will receive a greater percentage of capital
Early stage companies will be more difficult to fund through venture capital
In summary, the investors in venture capital funds are being more selective in these challenging economic times, which forces the VCs to lower their risk profile to attract new capital. Plan accordingly.
@philmur posted a good question in response to yesterday's post on VC mentoring. He asked:
"How specifically would you recommend entrepreneurs better experience the mentoring potential of their VC's?"
Most entrepreneurs are usually good at some of the following:
product development/tech
selling
story telling
Most entrepreneurs have little experience in:
starting a new business
business strategy
managing an organization
raising capital
cash flow management
Most VCs are good at:
evaluating business strategies
forecasting operating performance
forecasting cash flow requirements
raising follow on capital
managing an exit
The key to develop the maximum benefit from VC mentoring is to recognize where the VCs have vastly superior knowledge and show respect for that expertise. The ill will that undermines the mentoring relationship usually develops in either the area of business strategy or capital raising. If the VC disagrees with the proposed strategy, they rarely will tell you that you are wrong. However to barge ahead with your plan and not take the time to reach an agreement with the VC is almost always a mistake and can lead eventually to management changes. The same is true with capital raising. If you and the VC disagree it means that you have not convinced the VC and you need to continue the dialog. If after 2-3 board meetings you have not convinced the VC, you are probably wrong!
Like with good marriages, keep talking until you reach an agreement.
