1. Tom Kosnik, Alex Gould, Chi-Hua Chien, and Tom Byers
E145 Fall Session 10 ABCs of Venture Teams + Lessons from the Movies + Team Dynamics Exercise
Tom Kosnik, Alex Gould, Chi-Hua Chien, and Tom Byers
Stanford University
Copyright © 2007 by the Board of Trustees of the Leland Stanford Junior University and Stanford Technology Ventures Program (STVP). This document may be reproduced for educational purposes only.

2. Last Month: Idea Versus Opportunity
This Month: Realities of Business Operations
© 2003 Mark P. Rice, Babson

3. Our Agenda Part I: ABCs of Venture Teams
Part II: Lessons from the Movies
Part III: Team Dynamics Exercise

4. Finding the right team mates can be difficult…

5. Part I: ABCs of Venture Teams
A. Team … Recruiting
B. Compensation … Rewards
C. Culture
… Norms

6. A. Recruiting Key Contributors
Internal
Key issues: When to hire? Experience versus passion and energy? Qualifications versus motivation and character? When to use outsourcing?
Founders or Initial Partners
CEO and VPs
Designers, Developers, “Architects” and Managers of Products & Services
Sales and Marketing
Operations and Administration
Others?
External
Key issues: How to select? How to manage?
Board Of Directors
Investors
Advisory Boards
Professional Services and Suppliers

7. How should you pick your team mates for an entrepreneurial venture?
Do I trust them?
YES!
Soul mates
Devils’
Advocates
Dream team mates
Team mates
Do I enjoy
them?
Class mates
NO!
YES!
Bozos
Play mates
NO!

8. Q&A with VC John Doerr of KPCB
Q. What is the most important part of any business plan?
A. “I always turn to the bios of the team first. For me, it’s team, team, team. Others might say, people, people, people -- but I’m interested in the team as a whole.”

9. Masayoshi Son CEO of SOFTBANK CORP. (Japan)
B. Compensation and Rewards
“The way I attract these people to SOFTBANK is to explain what my dream is. It is not money because they actually come to work and we never talk about payment. They come to work, then a week passes, or longer, then we finally get around to talking about money. I’ll ask them, by the way, how much do you want? And they say, whatever you want to give me. Then I ask them, how much were you making last year? Then I give them the same amount. So they don’t come to SOFTBANK for the money. It’s for the dream that everyone has together. The dream of making the company successful.”
Masayoshi Son CEO of SOFTBANK CORP. (Japan)

10. Understanding Rewards In High-Potential Ventures
Status Determined by Contributions to Improving Culture and Increasing the Value of the Company
Hence, Rewards Tend to Be Value-Enhancing such as Stock Options (Equity Ownership)

11. Compensation in Start-Ups
Cash
Salary and Bonus
Benefits
Equity
Common Stock Plans (Incentive Stock Options Have Favorable Tax Rates)
Vesting Schedule and Stock Budget
Tax Implications (IRS in USA) and Security Laws (SEC in USA)

12. C: Culture … The Secret to Long-Term Success?
Definition “A strong system of informal rules that spells out how people are to behave most of the time”
Two Great Quotes
“The most durable asset of a venture is its culture” (Cook)
“First four letters of culture spell c-u-l-t” (Collins)

13. A Winning Culture Can Stimulate Innovation = f(creativity, teamwork)
Develop Sense of Teamwork
Include Creative and Unusual People
Understand Personalities of Key People
Develop Open Internal Communication
Remain Open to Ideas/Suggestions from Anywhere
Be the Customer
Be Willing to Experiment
Address the Issue of Autonomy
Reference: Collins & Lazier, Chatman

14. Even E145 Has A Culture … Recall The “Success Formula”
Show up on time (with cell phones and other stuff turned off loud please).
Be nice to people (e.g., constructive comments only, listen carefully, and only one speaker at a time please).
Do what you say you will do and deliver more than you promise (both in class and out).
Do it with energy and passion.
Reference: JM Perry

15. Part II: Lessons from the Movies
Startup.com
Chariots of Fire

16. Chariots of Fire: What worked?
The Context:
Movie released in 1982
Based on real team: England’s Olympic Track Team
Key questions:
What motivated the runners?
What would motivate you as an Olympic runner?
Who would you trust to lead you?
Why or why not?

17. The Cast of Chariots of Fire
Cast (in credits order) verified as complete
The Cast of Chariots of Fire
Ian Charleson Eric Liddell
Ben Cross Harold Abrahams
Nigel Havers Lord Andrew Lindsay
Nicholas Farrell Aubrey Montague
Cheryl Campbell Jennie Liddell
Alice Krige Sybil Gordon
Struan Rodger Sandy McGrath
Ian Holm Sam Mussabini
John Gielgud Master of Trinity
Lindsay Anderson Master of Caius
Nigel Davenport Lord Birkenhead
David Yelland Prince of Wales

18. Startup.com: What NOT to do
The Context:
Movie released in 2001
Based on real company: Govworks.com
Key questions:
What motivated the co-founders of Startup.com? (Kaleil Tuzman and Tom Herman)
What would motivate you as a member of Startup.com?
Would you trust the co-founders to lead you?
Why or why not?

19. What tools can help you build a winning team?
Use the Trust Spider to learn how to earn someone’s trust.
Use Maslow Pyramid to explain what motivates you.
Use 1 to 1 Diagnosis to understand a team mate’s behavior.
Use Start-Stop-Keep to give each other feedback.
Use the Seven Stage Model to manage teams.
Get coaching and mentoring from the entrepreneurial Ecosystem

20. Use the Trust Spider to learn how to earn someone’s trust.
Entrepreneurship
Inspiration/
Chemistry/
Optimism
Sense of Humor
Perspective/
Vision
Humility
Communication
Integrity
Empathy
Cooperation/
Commitment
Competence
Fairness
Responsiveness
Reliability
The Trust Spider is under development by Kosnik (1995). See Kosnik for research sources.

21. Mark the 5 qualities that are most critical to earn your trust.
Entrepreneurship X
Inspiration/ X
Chemistry/
Optimism
Sense of Humor X
Perspective/
Vision
Humility X
Communication
Integrity
Empathy
Cooperation/
Commitment X
Competence
Fairness
Responsiveness
Reliability
The Trust Spider is under development by Kosnik (1995). See Kosnik for research sources.

22. Compare notes with your team mates.
Entrepreneurship X
Inspiration/ X
Chemistry/
Optimism
Sense of Humor X
Perspective/
Vision
Humility X X X
Communication
Integrity
Empathy
Cooperation/
Commitment X X
Competence X
Fairness
Responsiveness
Reliability X
The Trust Spider is under development by Kosnik (1995). See Kosnik for research sources.

23. Get feedback from team mates on how trustworthy you are
Get feedback from team mates on how trustworthy you are. Fix the critical gaps.
Empathy
Reliability
Competence
Chemistry/
Sense of Humor
Communication
Responsiveness
Inspiration/
Optimism
Entrepreneurship
Perspective/
Humility
Fairness
Vision
Integrity
Cooperation/
Commitment X
X = One of the top 5 qualities that I think are critical to earn my trust
X = One of the top 5 qualities that are critical to earn team mate’s trust
= my self assessment of my own trust worthiness.
= my team mate’s assessment of my trust worthiness.

24. Use Maslow Pyramid to explain what motivates you.
What motivates me to join an entrepreneurial team?
Making a difference?
Doing work that I love?
Challenging work?
Having fun?
Cool technology?
Getting funded by a top-tier VC?
Future flexibility?
Future wealth (Stock Options)?
A good salary?
Job security/low risk of layoff?
Other?
Self
Actualization
Esteem/
Achievement
Social/Belonging
Safety/Security
Physiological
Sources:
Maslow, Stephens and Heil (1999), Maslow on Management,
Maslow (Stephens ed.) (2000), The Maslow Business Reader.

25. Use 1 to 1 Diagnosis to understand a team mate’s behavior.
I don’t have the time, money or authority.
External Problems:
Personality Differences:
That’s the way I am. It’s hard to change.
Principles Differences:
It’s against my principles and values!
Skill Problems:
I don’t know how.
Motivation Problems:
What’s in it for me?
Culture Differences:
I don’t understand you.
Communication Problems :
I didn’t know!
Gender Differences
The 1 to 1 Diagnostic is based on work by Kosnik, Blair Ramfelt and Pfeifer from

26. Use Start-Stop-Keep to give each other feedback
Why?
Stop:
Keep:

27. Use the Seven Stage Model to manage your team.
Creating Strategies
Sustaining Strategies
Unresolved
• Disorien-
tation
• Fear
Resolved
• Orientation
• Acceptance
• Membership
Unresolved
• Boredom
• Burnout 1.
Orientation
WHY am I
here? 7.
Renewal
WHY
continue?
Resolved
• Commitment
to renew
• Congruence
of vision, self,
and team
Unresolved
• Mistrust
• Caution
• Facade
Resolved
• Group trust
• Spontaneity
• Data flow
Unresolved
• Overload
• Non-attunement
Resolved
• Synergy in action
• Flow state
• Intuitive
communications 2.
Trust
Building
WHO are
you? 6.
High
Performance
WOW!
Unresolved
• Apathy
• Irrelevant
competitiveness
Resolved
• Calls for
action
• Options
emerge
• Tasks
identified
Unresolved
• Conflict/
confusion
• Nonalign-
ment
• Missed
deadlines
Resolved
• Sequence is clear
• Creative, productive results
• Process is disciplined 3.
Goal
Clarification
WHAT are
we doing? 5.
Implemen-
tation
HOW? 4.
Decision
Making
WHICH way?
Unresolved
• Dependence
• Counter-
dependence
Resolved
• Roles differentiated
• Decisions Made
• Work begins
Adapted from: Drexler / Sibbet, © 1987

28. Get coaching and mentoring from the entrepreneurial energy ecosystem
Professors – Like your favorite profs in energy related specialties who worked with you on the first Energy Crossroads Conference, as well as new kids like Alex, Chi-Hua, Tomk and their STVP colleagues
Entrepreneurial Leaders who are known for building winning Teams – like the ones who come to DFJ ETL
VCs who know the importance of winning teams – Like the E 145 Mentors
Entrepreneurial Alumni and the mentors they know, via BASES, ASES, NUSEA, SWIB, SEC, ATI, and your own network.

29. Summary: Use Tools and your Mentors to Build a Winning Team!
Use the Trust Spider to learn how to earn someone’s trust.
Use Maslow Pyramid to explain what motivates you.
Use 1 to 1 Diagnosis to understand a team mate’s behavior.
Use Start-Stop-Keep to give each other feedback.
Use the Seven Stage Model to manage teams.
Get coaching and mentoring from the entrepreneurial Ecosystem

30. Why do these tools matter for you?
The tools we just presented can help you today on your E 145 Teams.
Use them now to increase your odds of success.
Thousands of alumni from Stanford, Harvard, NUS, KTH, and Silicon Valley players have learned the tools.
If you build a team without the right tools, your risks of losing escalate.

31. Part III. Team Dynamics Exercise
Purpose and Objectives
Step #1: Team Process Evaluation Sheet
Step #2: Discussion of Two Basic Teamwork Concepts
Step #3: Preparation for Team Exercise
Step #4: Team Exercise on Your Own
This class exercise is adapted from Managing the Small to Mid-Sized Company: Concepts and Cases by Jim Collins and Bill Lazier, Irwin.

32. Exercise Objectives
Chance to learn and practice exactly how to improve the productivity and effectiveness of a team.
Reinforces the importance of teamwork in new ventures.

33. Recall Session 1’s “Seven Important Skills for Tomorrows Leaders”
Creativity and Opportunity Evaluation
Real-time Strategy and Decision Making
Comfort with Change and Chaos
Basics of Start-Up Finance and Accounting
Evangelism, Selling, Negotiation, and Motivation through Influence and Persuasion
Oral and Written Communication
Teamwork
But what if things are going great?
Or what if things are going poorly?

34. Step #1: Please Fill Out the “Team Process Evaluation Sheet” Individually

35. Step #2: Two Basic Ways to Improve Performance

36. Example: Systemic Causes? Individual Causes?
“The group never gets all of its work done because meetings start late and, once they do start, the group strays constantly from the tasks at hand.”
Systemic Causes?
Individual Causes?
1. The group meets at a time that makes it difficult for all members to arrive promptly.
2. The group doesn’t make any effort at the beginning of the meeting to create an agenda nor objectives.
3. No chair of the meeting is chosen to keep the group moving forward and finishing on time.
1. One of the members is chronically late, no matter what time the meeting officially starts.
2. One of the group members loves to stray off into unrelated topics during the meeting -- nobody feels comfortable saying “let’s get back to the task at hand.”

37. Step #3: Preparation for Exercise
Circle the three lowest scores on your Group Process Evaluation Sheet. Jot down what you think are the root cause or causes. Categorize each of them as either systemic or individual.
If you have identified a systemic problem, write down one suggestion that would improve the systemic functioning of your team.
For each of your teammates, list one characteristic or action that is helpful to the group. List one that is not helpful.
Write down one thing that you would do differently or better to improve the functionality of your group.

38. Step #4 Create “Team Dynamics” Summary Always Keep This In Mind Please … Is this going to be relevant and helpful to improving the functioning of our group?
Please complete the exercise by the next class (Session 11) including sending the summary document by to e145-homework.