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UCI BPC Workshop

”Successful Teams in Start-up Enterprises ”

John Creelman (MBA 1989, Finance)

January 20, 2015

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Contents

• My background and context.

• Attributes of successful teams in start-up enterprises.

• Practical application to BPC.

• Q&A

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My background / Context• 27 years in entrepreneurial environments: “taking risk in exchange

for challenge, innovation and reward” • 8 years with “mature” Computer Storage (IT) Companies:

– Western Digital Corporation: Radical transformation in technologies, products and revenue streams.

– MTI Technologies: private to public (IPO in 1994)

• 19 years as CFO for 7 Venture / Emerging Growth Companies:– Firms: Elemental SW, Copper Mountain Networks, VSK Photonics, Active

Network, ID Analytics, PowerGenix Systems, RainTree Oncology.– Businesses: Web SW, telecomm equipment, photonics, data and predictive

analytics, energy storage, drug distribution / health care informatics. Product / manufacturing, services, software. Domestic / International.

– Skills: Finance, accounting, operations, capital markets (private equity, IPO and debt financings), business development, M&A and restructuring.

• Currently Co-founder of RainTree Oncology: 4 year old, PE backed distribution services and analytics firm in San Diego.

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Attributes of Successful Teams

1. The team has a clearly designated leader.

2. The team has a credible blend of skills to succeed.

3. The team has a process for constructive internal debate and for decisive decision making.

4. The team adapts and changes over time.

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Key Attribute #1

• The team has a clear leader.– Democracy is a nice aspiration but does not always work in start-ups. While

you need internal debate, ultimately someone has to be tasked with making the hard decisions.

– Success will be tough if team does not have one designated leader.

– Part of leader’s job is clarifying roles (and ownership): • Division of labor and roles for existing team

• Identify essential competencies for the organization (even if they are missing)

• In most cases, agreeing what you won’t do is also important. Focus, focus, focus…….

• Structure the ownership / equity / compensation in a fair, decisive and timely manner.

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Key Attribute #2

• The team has a credible blend of skills to succeed. – Investors fund 2 things: “the idea” and “the right team”.

– Titles matter. Extreme example: don’t have a CEO and a President and a COO.

– Some skills can be provided by advisors and Board members.

– Don’t apologize for what your organization lacks, acknowledge gaps and have a plan to address them.

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Key Attribute #3

• The team is skilled at fostering internal dialogue, gathering all points of view and driving decisions:– Core values here are critical:

• Intellectual honesty.

• Respect.

• Listening.

• Humility.

– When the discussion is over, if there is not pure consensus the leader makes the decision and “creates” consensus. This is why the CEO role is the toughest role on the Management team.

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Key Attribute #4

• The team adapts and changes over time:– Adaptation means changes in roles, organization structure,

process, systems and tools.– Adaptation is a dynamic process it starts on “day one”. – The faster the pace, and the greater the challenges, the more

essential adaptation is. – Supplement internal team with advisors, technical advisors and

Board Members.– The team also modifies and tailors its message to fit the

environment and constituents.

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Practical Application to BPC1. Teams with a clear leader will be viewed as being more grounded

and decisive.

2. Initially, focus on the essential skills of the core team:– Supplement with advisors and BOD members

– Acknowledge which gaps you have and have a plan to address them

3. Develop a culture which fosters healthy discussion: – Ask yourselves questions that outside investors would ask.– Talk about the tough decisions with investors

4. The team should always have a sense of the adaptations and challenges that it faces

– “what keeps you up at night?”

– “what gets you out of bed in the morning?”