One of my favorite places to hang out in Atlanta is the Barnes & Noble/Starbucks at Georgia Tech.  I enjoy meeting local entrepreneurs here because of its proximity to mid town and the Advanced Technology Development Center (ATDC). 

ATDC is a start-up accelerator that helps Georgia technology entrepreneurs launch and build successful companies. Founded in 1980, ATDC has helped create millions of dollars in tax revenues by graduating more than 120 companies (Mindspring, RelevantKnowledge, Novient, Magnet Communications, Air2Web, Knowlagent, Fast-Talk, just to name a few), which together have raised more than a billion dollars in outside financing. ATDC has provided business incubation and acceleration services to hundreds of Georgia startups—most of which are not based on Georgia Tech research, but which benefit from the close proximity to the university.

Recently ATDC expanded its mission by merging with Georgia Tech’s VentureLab and with the Georgia SBIR Assistance Program.  The change will enable ATDC to greatly extend its reach to serve more technology companies along multiple growth paths and at all stages of development.  ATDC has opened its membership to all technology entrepreneurs in Georgia, from those at the earliest conception stage to the well-established, venture-fundable companies.

The team at ATDC is made up of seasoned entrepreneurs and investors dedicated to helping technology entrepreneurs succeed. This is similar to our model at OpenView Venture Partners via OpenView Labs with exception to exclusive focus on software companies at expansion stage.  OpenView Labs provides operational support and serves as a catalyst in helping companies accelerate their growth and ultimately produce better returns for the company and its investors. 

The primary lead at ATDC is Stephen Fleming, Vice Provost Enterprise Innovation Institute and Acting Director ATDC.  Stephen has over 14 years of private equity experience and 15 years in operational roles at AT&T Bell Laboratories, Nortel Networks, and LICOM (a venture-funded startup).  He has assembled an impressive team of entrepreneurs at ATDC as well as funding a mechanism for early stage start-ups. 

Another great organization in Atlanta is the Technology Association of Georgia (TAG).  TAG is dedicated to the promotion and economic advancement of the state's technology industry and provides leadership in driving initiatives in the areas of policy, capital, education and giving. TAG also brings the technology community together through events, initiative programs and networking opportunities.  Tino Mantella, President of TAG, has done an excellent job of establishing TAG as one of the premier technology associations in the country.

Several years ago, I served as President of the Southeast Software Association (SSA), a special interest group (SIG) under TAG.  The SSA consists of high-tech and software professionals looking for ways to grow their business and future businesses within the Southeast. Members look for opportunities to network with other professionals for career advancement and possible partnerships. These professionals are interested in learning about new emerging technologies and how they might apply to their business or the creation of another business, in which they would seek funding.  Naturally, this is an excellent organization to be associated with if you are an early to expansion stage investor. 

Well, now that I have given you a little insight into Atlanta's high tech community, I'm off to meet with a serial entrepreneur who introduced me to it all, Steve Bachman.  Steve has thirty years experience in sales, marketing, operations, and corporate management in the technology industry with startup and fast growth technology product and service companies. Steve’s experience includes a successful track record with self funded and venture capital funded businesses, with multiple successes in creating shareholder value through profitable company growth and sale of businesses to McAfee, NetIQ, Computer Associates, Xcelerate, and Renaissance.

One of Steve's recent ventures is AuditMyBooks, a software as a service (SaaS) solution that automatically analyzes small and medium business (SMB) accounting records to detect errors and possible fraud.  This has become an increasingly important and growing problem in the industry and one that Steve hopes to tackle.  I'm confident that Steve will assemble the right team and grow the business to a stage in which expansion stage capital from OpenView Venture Partners will help to accelerate their growth!

Today I am attending OpenView Venture Partner's quarterly executive forum on market segmentation.  The forum is being delivered by Luke Hohmann, Founder and CEO of Enthiosys and Igor Altman, Senior Associate at OpenView Labs.

Luke is a senior advisor to OpenView Venture Partners and is a recognized expert on agile product management of software products and former senior software product manager at four companies.  He is the author of three books and numerous articles on software product management and a frequent speaker at software and other industry events.

Igor is practice development lead of product development and management at OpenView Labs and works closely with Luke and Jeff Sutherland in supporting our portfolio companies in their adoption of Agile product development.

Each quarter, OpenView Venture Partners delivers an executive forum for its portfolio companies and investment prospects to further their knowledge around various functional topics ranging from sales and marketing, organization and operations (finance, legal, IT) to product development.  As a Growth Venture Capital fund, we believe the best way to accelerate a portfolio company's growth is to leverage operational best practices and subject matter experts.   

One of the consistent things we hear from our Growth Stage portfolio companies is the importance of market segmentation and its impact on capital efficiency and return. While market segmentation is important, it seems hard...we do it sporadically...and there is lots of misinformation.

The market segmentation forum helps to:

• demystify segmentation
• review a useful segmentation process
• discuss the difficulties on each step
• explore and provide guidance on the difficulties
• develop a plan or produce a result for each step

According to Luke, while there is plenty of research describing what market segmentation is, there is no source that really describes a method for doing it.   While Enthiosys is mainly focused on larger technology companies, Luke felt that it was important to establish a relationship with OpenView to leverage his expertise and best practices with Growth Stage companies.

As a Growth Venture Capital fund and an investor in Expansion Stage software companies, I've always been intrigued by intellectual property and licensing.

In 2005-06, I had an opportunity to work with Marshall Phelps, Corporate VP of IP Policy and Strategy and David Harnett, senior director of IP Ventures at Microsoft.  Marshall oversaw Intellectual Property and Licensing at IBM for 28 years and then went on to work for Microsoft as Corporate VP of IP Policy and Strategy responsible for setting the global Intellectual Property Strategies and Policies for the company (comprising well over 60,000 patents and patent applications worldwide). He also co-authored a book entitled Burning the Ships: Intellectual Property and the Transformation of Microsoft which describes Microsoft's radical overhauling of its intellectual property (IP) strategy.

The mission of IP Ventures was to spin-out IP from Microsoft Research (MSR) to entrepreneurs and companies in order to foster innovation and new product development. At the time, I worked for Dan'l Lewin, corporate vice president for Strategic and Emerging Business Development, responsible for fostering relationships with venture capitalists and start-ups worldwide.  Dan'l has been in the Valley for several years and very well respected by venture capitalists and entrepreneurs, as well as Microsoft's primary emissary to the Valley. Dan'l has also been a great mentor to me for the past 7 years and someone I often turn to for advice. 

Needless to say, the relationship between IP Ventures and Emerging Business was a natural fit.  What we learned is that VCs don't invest in technology, only the entrepreneurs who can build a business around it, and there was no way the VC community would ever go for deals unless they were structured according to "industry normal" terms.  While these were major hurdles to overcome, they were nothing compared to changing the strategic mind set at the company that had long discounted the value of collaboration and technology sharing.

How vividly I recall the number of miles that David Harnett and I racked up traveling back and forth to Microsoft's research facility in Cambridge, England to establish a working relationship with the research teams, while evangelizing corporate spin-offs at various venture capital events throughout Europe and Silicon Valley. It wasn't until the announcement of IP Ventures at the National Venture Capital Association Conference (NVCA) in San Francisco on May 4, 2005, that the venture capital community would stand up and take took notice that Microsoft was serious about reaching out to entrepreneurs and VCs in helping to launch new and exciting ventures. This also went a long way to enhancing Microsoft's image with venture capitalists and start-ups worldwide. 

Yesterday, I had an opportunity to meet with Ellyn Foltz, senior managing director of Microsoft's Strategic IP Partnerships responsible for negotiating cross-license agreements (CLAs) and formulating Business Growth Strategies for the Company.  Ellyn and I go back a number of years.  She hired me as a managing consultant for Microsoft Consulting Services (MCS) and brought me to the great city of Atlanta.  I respect her dearly and she has always been a great mentor and friend.  Ellyn is busy these days working on Microsoft's strategic open source partnerships such as their IP and interoperability agreement with Novell. 

You may have also read about Microsoft's recent deal with Amazon in which both companies have access to the other's patent portfolios. 

Since Microsoft launched its IP licensing program in 2003, the company has entered into more than 600 licensing agreements and continues to develop programs that make it possible for customers, partners and competitors to access its IP portfolio. In recent years, Microsoft has entered into similar agreements with other leading companies, including Apple Inc., HP, LG Electronics, Nikon Corp., Novell Inc., HOYA CORPORATION PENTAX Imaging Systems Division, Pioneer Corp., Samsung Electronics Co. Ltd. and Fuji Xerox Co. Ltd.

While this approach promises to move the needle over time (IBM grew to $2 billion) and promotes the benefits of innovation and avoiding costly patent litigation, there are pundits that believe this is nothing more than a Microsoft "tax" levied against Amazon. In this case, Amazon's use of Linux which Microsoft claims violates several hundred of its patents.

Over the past few years, a new model has evolved called invention capital.  This is namely driven by Intellectual Ventures founded by Nathan Myhrvold, former chief technology officer at Microsoft.  This secretive $5 billion investment firm has scooped up 30,000 patents and inspired both admiration and angst among special interest groups, high technology companies, and venture capitalists.

Intellectual Ventures has been described by special interests groups as "patent trolls" or "non-practicing entities", *a pejorative term used for a person or company that enforces its patents against one or more alleged infringers in a manner considered unduly aggressive or opportunistic, often with no intention to manufacture or market the patented invention.

Nathan recently published a whitepaper in the Harvard Business Review entitled The Big Idea: Funding Eureka! in which he claims:

Like software, the business of invention would function better if it were separated from manufacturing and developed on its own by a strong capital market that funded and monetized inventions.

Nathan asserts that while inventiveness is one of our nation's competitive strengths and fuels a powerful engine of economic growth, it gets amazingly little direct attention or funding from product makers, universities, or the government (he refers to it as the charity model). 

Consider this: Inflation-adjusted federal spending on academic research rose by 60% from 1983 to 2007. Meanwhile, investments in the business sector by the U.S. venture capital and private equity industries soared by 1,140% and 1,940%, respectively. The total $1.6 trillion (in 2008 dollars) invested by venture capital and private equity firms in this period is three times the $537 billion that the U.S. government spent on academic research.

The only way invention can attract comparable private-sector investment is to treat inventing like a for-profit business. Needless to say, there are organizations and people who feel threatened by change and loudly oppose it. Remember when venture capitalists were called “vulture capitalists” for taking companies away from founding entrepreneurs?

Is invention set to become the next software?

*Wikipedia

 

Whether you are a customer of Central Desktop or presently evaluating SaaS workgroup, enterprise & community business collaboration solutions, take a glimpse of their new user interface (UI) design. I think you will be highly impressed.    

As part of the Product Management Lifecycle, user interface design/experience is critical to customer adoption/usage.  For the past few months, the folks at Central Desktop have been heads down working on giving their user interface a facelift. They have interviewed and collaborated with hundreds of customers and incorporated a tremendous amount of feedback into what they are calling Central Desktop 2.0.  According to their CEO, Isaac Garcia, a keen eye was applied to optimizing the flow of information, readability, iconography, click optimization (reduction), navigation and overall usability. 

This is just a preview of what is coming next week. 



As a Growth Venture Capital investor in Central Desktop, I've had the privilege of working closely with Isaac and his co-founder, Arnulf Hsu, for a number of years.  I love to see the passion they exhibit in delivering compelling solutions to customers every day.  

If you are an analyst, media or blogger of Influence Marketing and would like a briefing (and product tour) prior to release next week, please contact jchai@centraldesktop.com to schedule.

Also, register for one of the Live Webinars they are hosting next week as part of the Central Desktop 2.0 launch that will highlight the key changes, upgrades and some tips on how to leverage the most of the refreshed User Interface.

Central Desktop 2.0 Release Webinars are available on:

• Monday, February 22nd, 8am Pacific Time
• Tuesday, February 23rd, 11am Pacific Time

www.centraldesktop.com/register_webinar

I recently read an article in Directions on Microsoft by Matt Rosoff, that Intuit plans to push Azure and Microsoft Online to its development partners and to customers of its QuickBooks small business accounting software.

The Microsoft deal involves the Intuit Partner Platform (IPP), which provides a way for third-party developers to build and host SaaS applications that might appeal to QuickBooks customers. 

The IPP provides several services for developers, including data-sharing with customers' on-premises QuickBooks installations (Software + Services), as well as an Apps Exchange called AppCenter through which Intuit customers can buy or subscribe to services from Intuit and its IPP partners. 

Ultimately, this deal could help Azure developers reach Intuit's small and midsize business customers and in turn could increase the popularity of the Azure platform vs. competitors like Amazon, Google and Salesforce.com. It could also help Intuit build support for the IPP among Microsoft's large developer base.

Needless to say, this is a clever approach and a great way of Creating Competitive Advantage.  All too often, companies go into a business relationship without harnessing each others core assets and it generally fizzles after the initial splash.

As a Growth Venture Capital fund, we are always looking for ways for our Growth Stage portfolio companies to leverage and scale.  Building an AppCenter is a great way to do this while harnessing the power of a developer eco-system and delivering high-value solutions to customers.  It also helps to create the "blow-fish" effect and competitive positioning with the big guys.  

BTW, if you are interested in learning more about Microsoft and its strategies, the best periodical I have found is Directions on Microsoft.   Rob Horwitz and team at Redmond Communications go way back with Microsoft and are entrenched in the halls of Redmond. 

Today, I read an article in WSJ online called Venture Capitalist's Most Trafficked Web Sites published by VentureWire. 

Larry Cheng, a partner at Volition Capital (formerly Fidelity Ventures), has ranked 150 venture firms based on their Web sites' average monthly unique visitors for the fourth quarter, as scored by Compete.  This is the second list of its kind compiled by Cheng, who has previously ranked individual VC blogs using the same data. 

While OpenView Venture Partners did not top this year's list, I am pleased that we were able to achieve #26 ranking.  I expect us to climb to the top of this list next year as we execute against our Content Marketing Strategy in delivering rich and compelling content to entrepreneurs around the world.

In 2009, we decided as a firm that we needed to do a better job of telling our story and Creating Competitive Advantage.  This means delivering compelling messaging, describing our key competitive differentiators, and sharing best practices with the community. 

Each and every individual at OpenView Venture Partners is dedicated to providing rich and compelling content via his or her blog.  This has become an excellent way for the team to connect with the community in expressing their thoughts, opinions and best practices related to various functional areas within the firm including Sales and Marketing Support, Operational Support, or Product and Development.

Whether you are actively Looking for Investors or just searching for shared best practices, check us out at OpenView Venture Partners and let us know what you think. 

Today, I participated in a quarterly business review with one of our Expansion Stage portfolio companies.  We discussed several functional areas of the business to include Professional Services Business Development. 

The question that was asked is "does product sales own this and if so, what % of their time should be allocated to it and how do we incent them?" 

In general, I believe product sales understands the importance of selling professional services as a component of Business Growth Strategies and its impact on customer adoption/satisfaction and ultimately renewal/up sell, however, is this something that they are equipped to do? 

One approach to consider is to package services in a way that is easy for sales reps to sell and customers to consume.  An example might be an architectural review or scalability assessment.  A service bundle may include a certain number of hours, set-up fees and/or facility charges with a clear scope of work.  Naturally, this gets wrapped with marketing collateral and FAQ/qualification questions that makes it easier for sales to position with customers.  While this may be an effective way of positioning professional services, I believe it is important to have someone in the professional services group who is dedicated to training the reps, answering questions, preparing agreements and ultimately tracking the pipeline of deals.

As far as incentive is concerned, professional services can be a % of the sales reps quota paid at a certain rate or spiff provided by professional services.  My preference is the former for several reasons, most importantly, that sales reps are focused on it. 

I had an opportunity to catch up with Jeremy Aber over breakfast this morning.  Jeremy is a Senior Advisor to OpenView Venture Partners and provides value-add legal services to our Expansion Stage portfolio companies.  Jeremy runs his own IT focused law firm, the Aber Law Firm, and has over 18 years experience in technology and corporate law. He previously served as General Counsel and Vice President to ScriptLogic Corporation, a Windows software tools vendor; and the Head of US Licensing for BMC Software, a Fortune 500 enterprise software vendor. In addition, Jeremy began his career as a Corporate and Finance Associate Attorney at Mayer Brown, a global law firm.

Our discussion centered on the contract negotiation process and how this is generally handled by Expansion Stage companies, in particular, the relationship between sales and legal, i.e., roles, negotiation process, and creating a "win/win" scenario.

It has been my experience in contract negotiations that sales views legal as a necessary evil. I often hear from sales that "legal does not share the same sense of urgency in getting a deal done or legal is more interested in "risk mitigation" then trying to work a "win/win" scenario".  Granted, this is exaggerated a bit, however, the point is that the interests of sales and legal are misaligned in the negotiation process.  This often results in mistrust and difficulty in getting the next deal done.

In order to avoid a total meltdown between sales and legal and to improve the negotiation process (close rate), Jeremy and I discussed a need to have clear role definitions and a well defined negotiation process.  For example, it is the role of legal to clearly understand and address the customer concerns, assess the legal risks, and maintain neutrality.  It is the role of sales to align the interests of both parties and establish a "win/win" scenario. 

I recall during my earlier days at Microsoft sitting in a room with Steve Ballmer (executive sponsor) and the CIO of AIG drawing a "T-square" with positives and negatives of the deal.  Interestingly, this was the best way to align the interests of both parties and ultimately helped us to achieve a "win/win".  It's similar to a term sheet serving as the framework for legal or definitive documents in the investment process.    

Jeremy and I then went on to discuss various best practices and agreed that the single, most important way of increasing your probability of success is to align "executive sponsors" on both sides of the fence.  Often, companies will assign junior attorneys to the negotiation process to prove how effective a negotiator they are.  Many times, this ends in a "lose/lose" scenario and generally backfires somewhere down the line.  Whenever both parties arrive at a stalemate, executive sponsors can be helpful in removing road blocks and accelerating the negotiation process.

To assist our Expansion Stage companies, Jeremy has developed a methodology for streamlining and simplifying the revenue generating agreements and negotiation process for IT based companies, and helps his clients, among other things, to increase their revenue by trying to shorten the contracting process. This is also one of the several value-add initiatives he often helps the OpenView portfolio companies with as part of OpenView Labs, as growing revenue often involves significant contracting challenges.

Are you achieving "win/win"? 

I just completed reading the book "What Customers Want - Using Outcome-Driven Innovation to Create Breakthrough Products and Services" by Anthony Ulwich, CEO of Strategyn, Inc.

This is a great read for those faced with the innovator's dilemma of building products or services that satisfy customer needs or requirements.

Anthony points out that although customer-driven thinking is well entrenched in corporate America, companies still find that 50 to 90 percent of their product and service initiatives are failures, collectively costing them more than $100 billion each year.  He suggests that a new approach is necessary and that the answer lies in the fundamentals of business process improvement.

In Anthony's years of analyzing the customer-driven approach to innovation, he discovered one factor that stands out above all the others in derailing the customer-driven approach and in introducing process variability.  It's the inputs that come from the customer. When companies gather customer requirements they do not know what types of inputs they need to obtain from the customer.  Neither does the customer.

To figure out what customers want, companies must think about customer requirements in a different way. 

Anthony has created a more effective approach that he calls the outcome-driven method.  Three tenets define this approach:

• Customers buy products and services to help them get jobs done.
• Customers use a set of metrics (performance measures) to judge how well a job is getting done and how a product performs.
• These customers' metrics make possible the systematic and predictable creation of breakthrough products and services.

A simple example of getting the job done is people buy running shoes to work out; they buy snow blowing machines to remove snow (especially in Boston!), etc.   You get the picture.  They then use a set of metrics to judge the desired outcomes.  When corn farmers grow corn, for example, they may judge products for their ability to minimize the number of seeds that fail to germinate, increase the percentage of plants that emerge at the same time, or minimize the yield loss owing to excess heat during pollination.

Only after knowing what jobs customers are trying to get done and what outcomes they are trying to achieve are companies able to identify opportunities and create products and services that deliver significant value. Only then can they figure out What Customers Want.

I really enjoyed Anthony's approach to outcome-driven innovation and recommend this book to any Expansion Stage Company that is trying to answer the question, "What do customers want?" and Creating Competitive Advantage.

For Growth Stage companies whose New Year's resolution is to begin blogging, refer to a recently published article by Small Business Trends entitled 100+ SMB Blogging Ideas to Kick Start 2010.  Lisa Barone does a great job of answering the question “what should I blog about today?”

Lisa has prepared topics in five categories:

• Focus on Your Industry
• Go Social
• About Your Business
• Highlight Your Customers
• Get Personal

As a Growth Venture Capital fund, OpenView Venture Partners has embraced blogging with a vengeance in order to leverage our knowledge base of best practices for entrepreneurs of Growth Stage Companies. A large percentage of these best practices are culminated from our work with Growth Stage Portfolio Companies in the areas of Sales and Marketing, Organization and Operations, and Product Development.  

If you are an entrepreneur faced with the challenges of growing a business, please visit our blog site here.   Hopefully, you will find this useful and continue to visit frequently.  We will do our best to provide compelling best practices.

Also, the Firm is leveraging a third-generation blogging platform from Compendium Blogware.   Chris Baggott and Ali Sales have done a great job of providing a SaaS based offering that provides a compelling ROI.  Don't forget to sign up for a demo to receive your $50 Starbucks Gift Card!

Happy blogging.

While enjoying some needed down time with my family in Colorado this week, I took the opportunity to reflect on 2009 and begin to answer the question "what are the two or three things that I need to focus on in 2010 that best leverage my skills to deliver high impact results to our Growth Stage portfolio companies and Growth Capital Fund?"

The three things I identified are:

1. delivering exceptional customer service/experience
2. building highly effective management teams
3. building highly effective boards

Given that OpenView Venture Partners has developed strategic value-add skills around sales and marketing, organizational and operational effectiveness, and product development, I first had to identify my strengths and weaknesses and how best to compliment these skills.  I recognize that as an investor and board director that I can't be all things to all people.  You have to identify what you don't know and ask for help.  Hopefully, the humility of it all will make me a better person in the long run.  

Yesterday, I ran across a good article in Business Week's Entrepreneur's Journal entitled "To Recruit the Best, Admit Weaknesses" written by Andy Dunn, co-founder and CEO of online pants retailer Bonobos.

One of the things that Andy points out in his article is to first recognize that your meaningful weaknesses will become an obstacle to growth.  The company is better off hiring those weaknesses, which means a need to hire people better then he and then give them equity and power.  Once he accepted this principle, it gave him the humility he needed to inspire key recruits to join. In their eyes, he saw not only excitement for the equity they offered, but the earnest belief that they would be entrusted to do their jobs with his counsel, if they sought it, but without unwanted meddling. By accepting and acknowledging his own weaknesses, Andy was able to prove the naysayers wrong and hire winners from both worlds. He now begins his conversations with potential recruits with a sentence that always brings a smile: I am not good at what you do, and I need your help.

My partner and mentor, Scott Maxwell, constantly reminds me of this and it's time that I heed his advice since I've been preaching this to CEOs of our portfolio companies for a couple years now.

Here's to eating some humble pie and a prosperous New Year!
 

As a Growth Venture Capital fund, we need to constantly remind ourselves about the importance of work/life balance.

One thing I have realized over the years is that it is hard to distinguish between work and non work time.  The two blend together so much nowadays that it's hard to feel like you're "on vacation" unless you go away for an extended period of time or just disconnect from society. 

As venture capitalists and entrepreneurs, we need to be constantly reminding that it's "ok" to disconnect when you're on vacation.  That means no email, mobile devices, or conference calls to remind us of work.  This does not mean that you lack passion for the business, rather there are other things in life that you should be equally passionate about. All too often, we get caught up into thinking that just because others find it acceptable to work while on vacation, that somehow, we feel inadequate for taking time off. 

At OpenView Venture Partners, we encourage our team to completely unplug from work and take the required downtime that is needed to recharge and come back as more productive and innovative individuals.  Having the right work/balance is essential to people feeling good about their accomplishments and having time to reflect and celebrate. 

The subject of this week's blog is corporate governance and the roles we play as company directors.

While researching this topic, I found an excellent whitepaper entitled "A Simple Guide to the Basic Responsibilities of VC-Backed Company Directors" published by Pascal Levensohn of Levensohn Venture Partners. This paper, like the two preceding it, "After the Term Sheet: How Venture Boards Affect the Success or Failure of Technology Companies" (2003), and "Rites of Passage: Managing CEO Transition in Venture Backed Technology Companies" (2006), is written by a working group of venture capitalists to promote VC-backed company director education.

This guide addresses the critical role of corporate governance in contributing to effective boards and answers essential questions and recommends guidelines for all VC-backed company directors.

The paper points out that privately held boards have a very high percentage of inexperienced corporate directors.  First-time entrepreneurs who become founding CEOs frequently become corporate directors even before they obtain their first institutional round of venture capital financing.  Also, many venture capitalists, particularly younger partners of larger firms, join founding CEOs as rookies on a board.  Independent directors may also lack the relevant experience.  In the current environment, regulators, institutional shareholders, and the courts are demanding greater oversight and sensitivity to governance requirements by corporate directors. To have a high-functioning, effective board, directors must be familiar and comfortable with board governance issues facing Emerging Growth Companies throughout their life cycle.

Pay particular attention to sections on how to achieve an aligned and effective board, recommended guidelines for internal controls, as well as things you need to know about legal and business basics before you join the board.  

Additionally, I found the section on how to conduct an annual CEO performance review and annual board peer review especially useful.

As you embark on 2010, now is a good time to review this with the board to determine how effective you are as individual corporate directors and as a collective board.

During this time of year, our Growth Stage portfolio companies are heads-down in creating their 2010 operating plans.   This requires intense analysis and retrospect to help synthesize the data and ultimately determine how the company is tracking against its aspirations. 

Over the past 3-4 months, my partner George Roberts and I have been spending a fair amount of time at one of our Growth Stage portfolio companies to explore different ways to optimize the sales organizational structure in 2010. George is a well known veteran in the ranks of the high tech community as former EVP of North American Sales for Oracle and understands how to scale and optimize a sales organization.  I too ran sales at Microsoft for a number of years and really enjoyed digging deeply to understand how to optimize sales organizational structures.  

During the past 2 years, one of our portfolio companies has been in hyper drive mode and focused on hiring and ramping an inside sales team, establishing a sales methodology, and otherwise getting to a state of repeatability.  Needless to say, this is a challenge for most Growth Stage companies as they try to determine their target segment, messaging and economic model.  

Now that the company has reached a critical mass of inside sales people and customers, the question is how do they best optimize the sales organization to take advantage of the greatest opportunity.  

While examining various approaches to sales organizational structures, we visited with a few companies to understand what worked well and not so well at various stages of their growth.  We first visited with Scott Bleczinski, VP of Sales at ExactTarget and then Hilarie Koplow-McAdams, EVP Global Corporate Sales at Salesforce.com.

One of the things that really resonated with me during our visit with Scott Bleczinski at ExactTarget is his formula for success.  It is simply Segmentation + Specialization = Scale. My other partner, Scott Maxwell, also subscribes to this in a big way and has been on the board of ExactTarget for a number of years addressing the same issue of how to optimize the sales organizational structure.  

Our second visit to Salesforce.com was also very helpful in examining their sales organizational structure and methodology.  Some of this is described in the books Sales 2.0 and Behind the Cloud. Hilarie Koplow-McAdams and her team were very gracious with their time and something each of our portfolio companies will enjoy for a lifetime.

As you begin to explore various approaches to sales organizational effectiveness, one of the areas that is often overlooked is customer segmentation.  I can not emphasize enough the importance of rolling up your sleeves to understand discrete customer attributes and how powerful this can be in optimizing your sales resources against the highest potential segments, while tailoring the company's offerings in Creating Competitive Advantage.

Bain & Company describes customer segmentation methodology as:  

• Divide the market into meaningful and measurable segments according to customers' needs, their past behaviors or their demographic profiles;
• Determine the profit potential of each segment by analyzing the revenue and cost impacts of serving each segment;
• Target segments according to their profit potential and the company's ability to serve them in a proprietary way;
• Invest resources to tailor product, service, marketing and distribution programs to match the needs of each target segment;
• Measure performance of each segment and adjust the segmentation approach over time as market conditions change decision making throughout the organization.

Example questions you may ask yourself is how are my customers divided today, e.g., by # employees, revenues, industry and what is the growth year over year in each of these segments?  Do we know how many leads there are per segment and the conversion rates? 

Once you gain a thorough understanding of this, things will become much clearer and you will recognize the high impact areas and how best to organize for maximum profitability.  

One of our Growth Stage portfolio companies called VersionOne has published a great document for those considering Agile development.  The Agile Checklist consists of a series of interdependent planning and delivery rhythms. While these agile rhythms have proven to be complicated at times, this checklist seeks to simplify this. While no single publication or presentation delivers all of the ammunition agile teams need to get the rhythm, this set of agile meeting and facilitation checklists offers an easy framework to help guide software development teams through the various agile cycles.

Strategy
Projects and product development efforts ideally start with a vision associated with a business need or direction. This vision is then typically framed in context of a strategy and associated goals and objectives during a management team planning session. The strategy is often accompanied by supporting materials such as a project charter and funding approval.

Release
Releases represent the large-grained delivery cycle in agile development. Releases typically range between one and six months, but may extend longer in some environments. Releases begin with a release planning meeting where product owners (or product managers, project leads, etc.) work to define and prioritize a candidate set of features that are then estimated by
the team.

Iteration
Also known as Sprints, iterations are short, fixed-length subsets of releases, generally in the 1-6
week time frame. Iterations represent the execution heartbeat of the project. During, each iteration the team’s goal is to deliver useful software. Iterations incorporate three key meetings: Iteration Planning, Iteration Review and Retrospective.

Daily
Every day the team is focused on completing the highest priority features in the form of
working, tested software. As features are delivered within the iteration, they are reviewed
and accepted, if appropriate, by the product owner. Each day a short, 15-minute standup
meeting facilitates the communication of individual detailed status and any impediments or issues.

Continuous
Agile development teams are constantly driving towards a state of continuous, adaptive
planning, collaboration, design, development, testing and integration. This commitment fosters a dynamic, highly productive environment in which automation is critical and the output is always high-quality, valuable working software.

Hope you find this step-by-step guide valuable.

Rise of the C-Suite
How Executives Locate and Filter Business Information



Forbes Insights, in association with Google, recently published a white paper entitled The Rise of the Digital C-Suite where they surveyed 354 top executives at large U.S. companies (those with annual sales of greater than $1 billion). This survey was augmented through one-on-one interviews with another 15 high-profile executives. The findings clearly showed that the Internet has become the chief source of business information, but how the Internet is used frequently depends on the age and work experience of the executive.

Among the key findings of the study:

A gen shift is occurring in the C-suite that is transforming how they use the Internet. Executives ages of 40 and 50 are now assuming leadership positions in corporate America. These executives access information more frequently than typical executives, see greater value in emerging Internet technologies, and are willing to retrieve information in different ways, such as via video or through a mobile device.

The Internet is the C-suite’s top information resource.
Executives find it more valuable for locating business related information than references from colleagues, personal networks, newspapers and magazines, TV and radio, and conferences and trade shows.

Members of the C-suite search for information themselves.
While delegating research may be part of the stereotype of a C-level executive, it is not the reality. More than half of C-level respondents said they prefer to locate information themselves, making them more self-sufficient in their information gathering than non-C-suite executives.

When they go to locate info., the C-suite first turns to mainstream search engines.
And they do so frequently, with six out of ten executives conducting more than six searches a day. Once they get started on a search, executives are willing to click around to locate the right information, and will follow a path of links driven by search results, content, and advertising.

Video and online networks are emerging as C-suite tools.
While text is still the preferred format for receiving information, streaming video, webcasts, and similar formats are increasing in prevalence, especially among executives under 50. Similarly, although most executives prefer personal contacts, they are increasingly willing to network and seek advice through online communities.

Execs in IT are the most prevalent users of the Internet for information gathering. CIOs and other IT leaders are the most likely executives to conduct Web searches, use online communities to gather information and recommendations, seek out blogs and other Web 2.0 tools, or use online video over text.

Execs under 40 are the most willing to engage with emerging Internet technologies such as blogs, wikis, Twitter, mobile computing, and online social networks. Having come of professional age in the Internet era, this generation defines fluency in Web technologies. As they rise into the C-suite, they are likely to take collaboration and networking in research to unprecedented levels.

Having grown up in an era described as "Generation PC",  I can identify with C-suite members who grew up on word processing, spreadsheets, desktop presentation software, email and search engines.  Now that its members are 40-50 years old, they are increasingly dominant force in the C-suite.  

I recall from my earlier days of carrying a bag for Wang Labs (1984) that CIOs at the time preferred reading content (print) from research analysts or leveraging their personal relationship with vendors as a primary means of educating themselves and Creating Competitive Advantage.  In my opinion, there is nothing more powerful in building a relationship (Influence Marketing) with the C-suite than cutting out an article or two and mailing it along with a personal note. Rest assured, C-suite execs love to hoard information and be the first to espouse statistics amongst their peers.  Needless to say, they look smart and the sales rep looks even smarter!

Now that "Generation PC" is controlling the halls of IT, they feel comfortable embracing all forms of digital information to give them a leg up on their peers. Let's face it, organizations are much more data-driven these days and while gaining access to the information is easy, it is still difficult to navigate and takes an enormous amount of time.

So how can a sales rep leverage this to his or her Competitive Positioning?  If you can determine a CIO's areas of interest and then collect and synthesize the information (targeting), you will help supplement their learning process and ultimately build a customer for life.

 

While having my typical 7 am coffee, I read an interesting blog from Peter Auditore on MyVenturePad entitled How Social Media Peer Groups are Impacting Small Business and Startups. 

According to research presented by Nora Barnes of UMASS at SNCR, there has been a huge jump in the use of social media, blogging, and video since 2007-2009 by fast-growing small businesses in the US. While this may come as no surprise, you can't help but scratch your head and ask the question "then why do companies still measure success through hits and page views?" 

Here are Peter's top ten takeaways from the presentation.

1.   Company website are losing value
2.   Social networks are increasing in usage
3.   Social sites are now the primary tool of journalists
4.   Journalists are monitoring sentiment and voice in Twitter, social networks and blogs
5.   Twitters ranking increased significantly over last year
6.   Only 16% of the Fortune 500 has a corporate blog
7.   Charities, nonprofits, and higher education are way ahead of the Fortune 500
8.   Video is the fastest growing in 2008 and 2009
9.   Social networking growing faster on LinkedIn and MySpace
10.   51% of the Inc. 500 have Twitter accounts

One of the key findings for me is the fact that company websites are losing value.  This represents a major behavioral shift for the Internet as many companies large and small think that the customer is going to come to them and they don’t realize this.

Peter's conclusion, you must go where the customers are; don't expect them to come to you!

I agree with him that many companies are too hung up on using their website as the uber portal.  The problem is that company websites are generally not easy to use, not globally or culturally fit for most users, and are fraught with a miss-matched assembly of content.

As a Boston Venture Capital firm, we have noticed that a number of our portfolio companies are having reasonable success in creating landing pages that are optimized to their targeted audience with a call-to-action.   This also means having a Content Marketing Strategy.  If you can provide the right content, at the right place, at the right time, it equates to increased conversions and that's what it's all about.

Now on to engaging social networks.  I believe social networks are similar to on line job boards.  According to TheLadders, your odds of finding the right candidate go up exponentially if you search the database of potential candidates and find the right attributes, e.g., skills, industry, or specific competitor versus just posting the job and hoping that "qualified" candidates will apply.  The point is that you have to reach out and solicit the candidate or in this case, the customer.  The same holds true for LinkedIn (best source for finding candidates IMO) or whether you are harnessing Twitter, social networks or blogs.

While it is still early to determine the ROI of using social networks for lead generation, I believe this will change over time given the increasing number of companies using social media and the user or buyer's desire to find collaborative "watering holes" to educate themselves and discuss similar needs or interests.  

Over the years, one of the things I have learned about successful software companies is they are highly metrics oriented.  They have clear aspirations (mission, vision, values), strategies, initiatives and most importantly, SMART goals - Specific, Measurable, Achievable, Realistic and Time Framed.



Why is this important?  As with all Growth Stage Companies, the business becomes more complex over time and the odds of getting defocused go up exponentially.  Unfortunately, this costs time and money.  More often than not, companies get caught up in the weeds and lose focus on the "big picture" or things that really matter.  Establishing SMART goals at all levels within the company (functional and individual) ensures that everyone is going in the same direction and focused on the things that matter.   Also, people just like to know that their work is aligned to the company's long-term goals and aspirations.

Once you have established SMART goals at all levels within the organization, the next most important thing is to make sure everyone is well orchestrated and beginning to hold each other accountable.  This means having an established "rhythm of the business" or operational calendar of daily, weekly, quarterly and annual meetings that keeps everyone focused and dancing to the same beat of the drum.  

There is nothing better than having an organization that is well tuned, people that are highly motivated and feeling good about their contributions to the company's success. Having well defined SMART goals and an operating rhythm are surefire ways to succeed. 
   

What do the worlds best business executives have in common with elite athletes and military commandos?  The ability to pay attention, to avoid becoming distracted under pressure and the ability to remain focused on the task at hand.



For several years, the worlds top business executives have taken the The Attentional & Interpersonal Style (TAIS) assessment.  TAIS is a 144-item, self-assessment inventory that can be answered directly on the computer. Over 25 years of applied research in business, sports, and the military provide direct evidence of the link between changes in physiology, as a function of increasing or decreasing arousal, and the ability to concentrate. Those changes have critical implications for performance, coaching, and skills training programs.

TAIS inventory were developed by one of the world's leading sport psychologists, Dr. Robert M. Nideffer, Ph.D., ABPP Diplomat in Clinical Psychology. Dr. Nideffer is highly regarded for his work in attention control training and his performance coaching techniques. The TAIS inventory helps identify those performance situations where mistakes are likely to occur, their causes, and strategies for minimizing their effects or preventing them all together, thus enhancing actual job performance.

TAIS is used to gain crucial information over a wide range of applications including:

• Executive Coaching
• Team Building
• Sales Training
• Selection and Screening

During this week, we conducted TAIS for one of our Expansion Stage portfolio companies to enhance Management Teams performance.  While people were skeptical going into the assessment (takes 15 minutes online), at the end of the day, I believe they found high value in understanding everyones style attributes and how to best harness this across the team to achieve high productivity and results.   

While I have taken Myers-Briggs several times over my career, I especially like TAIS because it gets to the core of how people will react in high performance situations.  Lets face it, this occurs almost everyday and people are thrust into various tasks, projects and roles that they may not be well suited for, thus heightening their stress level and lowering productivity.  Unfortunately, this does not benefit the individual or the company.  Ideally, we want to match peoples strengths against these assignments to promote high levels of productivity across the organization.  

In Jim Collins 2002 book entitled Good to Great, he explained that one of the common
denominators of success that turned ordinary companies into consistently
extraordinary performers was the ability to get the proper people on the team,
or the bus, as he put it, and the right people in the right seats.

As a Boston Venture Capital firm, we at OpenView Venture Partners are continuously looking for ways to enhance our Growth Stage portfolio companies in building high performance teams.  This is generally something that takes back seat at most companies, however, people are the greatest asset we have.     

While attending Microsoft's SharePoint 2009 Conference in Las Vegas last week, I discussed how Microsoft has established Competitive Positioning with a partner ecosystem that is second to none. This is further supported by InfoWorld's recent interview with Jeff Teper, Microsoft's corporate vice president of SharePoint Server, entitled 'Swiss Army Knife'.  Editor Paul Krill talked with Jeff about the new release of SharePoint 2010 and its relationship to the open source movement, as well as other aspects of the platform.

Beyond Microsoft's traditional developer community, they have drawn scores of open source developers (upwards of 1000 open source apps) built on the SharePoint platform according to CodePlex.  Microsoft has made this easy via Web services and REST and Atom, which expose standard protocols for SharePoint so that you can build apps in front of it on Windows Server.

Also fueling this growth is Microsoft's much anticipated link between Windows Azure cloud platform and SharePoint. While both are part of Microsoft Online, developers will be drinking Microsoft's cool aid of software + services and creating some compelling applications that drive the new buzz factor, while Creating Competitive Advantage.

Meanwhile, no one is slowing down for Microsoft.  Google is trying to attack them on many fronts, including its Google Search Appliance aimed at the enterprise, including better SharePoint integration and a wide array of cloud-based services to enterprises looking to dismantle themselves from the desktop.  Matt Asay of CNET News best describes it in Google competes for the future; Microsoft, the past.

Microsoft's way of holding off the threat from Google and others is SharePoint. Microsoft CEO Steve Ballmer has described it as Microsoft's new operating system.  In his recent interview with Forrester, he compares it to the PC.  The PC started off life as a spreadsheet machine, then became a programming machine, a word processing machine, a general purpose infrastructure that connect people and people to information.  This makes SharePoint a serious development platform and Microsoft's best attempt to connect desktop applications like Office with centralized, cloud collaboration and storage.

Lastly, Channel Inside reports that VARs eyeing a cut of the cloud craze should take a closer look at Intermedia, Ingram Micro's new partner in cloud-based email and collaboration tools.  The two companies announced this week that they inked a deal to offer Intermedia's hosted Microsoft email and collaboration solutions to Ingram Micro's vast reseller community through Ingram Micro's Seismic platform.  The cloud solution is designed for midsize and small businesses and includes hosted SharePoint, Exchange 2007 and Microsoft CRM Dynamics solutions. 

Time to rip another page out of this book..