Stick up for your employees, compensation, Secondaries and other sticky topics. Parents, quality over quantity and get out of the way sometimes....

Portfolio Update:

We are back at it. Sorry for the long delay, its been busy with my new startup Frontera ramping up to 200+ employees and launching. It has been hectic. But I will have a lot of news soon on some investments, a board role I have had and others. Some of these will be incredible stories and I am eager to share as soon as I can...

I Made 3 separate investments the past month. Also agreed to a follow on investment of decent size. The portfolio is getting pruned. We had a few go out of business. But now its becoming clear where the winners might be. Those that survived the downturn and are starting to grow. They didn't over capitalize or over value themselves. They were smart and humble. More to come on this but building a huge company is about substance. The valuation will change up and down sometimes drastically but to build an enduring company you need substance. If you dont have it, any value gains will be fleeting.

Of my now 50+ investments, only 5-10 will be highly profitable outcomes. Of those hopefully 1-2 pay back everything. No way still to know who or what that will be. I will support them all.

After all, I am a mission oriented investor and dont track financial returns closely. I also don't use lawyers. So whatever I get, I get.

All that said, look for some BIG winners in agtech and some decent sized winners in other areas from Divergent Investments over the next few years.

Venture capital investing is a LONG GAME. I have had no significant liquidity events or returns in 5 years. I don't expect any huge returns in the next few years. I think my portfolio will pan out, but I have little evidence tangibly of that at the moment. Yet I keep investing and keep taking risk because I know the game. Its portfolio theory and you must go long. If you want quick fixes or flips don't invest in early stage ventures. They will disappoint you. Great companies take 10 years to build. The rewards can be huge but that is the nature of the beast.

Entrepreneurs Corner: Sticky Topics: Secondaries, your compensation and sticking up for your employees.

Ok, you all have heard the VC and board horror stories. But let me tell you the vast majority of VCs are great and most contribute much more than capital. Board members certainly can be great, but most are sheep and dont have backbone. I am going to write more about that in the future- and give specific examples because I have so many friends who I worked with over the years and of course I have also experienced the good.

But there are some sticky topics you need to be prepared for. Have you ever had penny pinching partners or investors or board members? Have you ever had people who constantly critique you or your team? I am going to give the practical advice here:

Your compensation: So how do you set this? what should it be? I was always old school about this. Meaning you ought to be underpaid for an extended period of time. I do operate that way at my startup. But I can afford it. Here is some practical advice: Don't beat around the bush, just be clear. If you can afford it be clear about how long you will do it and then adjust to a market or above market rate. Everything revolves around your success. No board wants you starving or worried about a few extra bucks especially while scaling. Where entrepreneurs get in trouble here is being vague and allowing resentment or uncertainty to set in. Then the company hits a rough patch, is low on cash, and you are sheepish. Happens all the time. Act with clarity, have confidence and realize getting paid by your venture is not wrong in any capacity.

Your employees compensation: Ok this I feel strongly about. You need to stick up for your employees and their future financial and career prospects. This is an area I experienced some ridiculous behavior by a board once. I had board members who would literally fight every penny and sometimes outwardly criticize my team in front of them in public.

Childish behavior and often from those who were like 70 years old. . They would try to critique everything, form opinions with no facts and institute below market compensation because they somehow rationalized that it benefited them. It doesnt. It was annoying but it was also bullying. I fought hard for my employees and it probably cost me. But its the right thing to do. Your own compensation should matter to you but it should come after making sure others are treated fairly. They are working hard for you and if they trust you they always will.

Stock option re-ups: This is never an emotional topic until you become a late stage company and then for some reason people become incredibly sensitive about it. They should probably be more sensitive when you are early and the stock is expensive. You need to re-up employees. I actually like early re-ups especially for those who are over performing. Catch and employee with a re-up when they are not expecting it, and they will realize you have their best interest at heart. They will be acting like an owner because odds are, they already were, and thats why you did it. But please be proactive about talent. Dont take great people for granted- they value ownership and equity!

Secondaries: No longer a sticky topic I think, but once was. I have a true story:

I once had a board member, in front of my entire management team, suggest that anyone who sells in a secondary should be punished or retaliated against. This is verifiable true story. Not a rational argument (which do exist) against employees selling, but an emotional and again bullying one. I regret not making an example out of this person because everyone realized how wrong this was.

You need to to draw a line here again. If your company is succeeding and you want to offer this be very clear. Also wait until many years in when your company is past reasonable mortality risk. But look out for your employees. They dont get carried interest treatment- they have to exercise stock options to make money. How does one do that as company values grow? Its just too hard and it makes it nearly impossible to benefit from any wealth creation.

These are sticky topics in your business, but they will inevitably come up. Especially if you are successful. There are so many people who have a good attitude about all this and want the best for you. But if you wind up in a tough situation, it is you that must have courage. Your employees and others are counting on you and you must have a spine about these things.

Parents Corner: They grow up so fast... but quality of time over quantity of time is what matters. just like with your team at work

It drives me nuts when parents want to spend more time with the kids. For what reason? So they can inherit all your anxiety, difficult traits or emotions? You are not perfect and your kids can learn plenty from people other than you.... That said you should always be present and ready to support. Its your job. But being in their face every day isn't necessarily the way. I focus most of my energy on character building. Its really hard and takes persistence but I am confident they will get it over time.

Now imagine you are like me and have a kid with Autism. The picture here is of my son at less than 1 year of age. What a cute kid. I spent so much time with him as a baby. It was nice. But when he was diagnosed, he needed therapy. I am not a professional and my first instinct was get him what he needs and get out of the way.

It worked.

Today I have a thriving 14 year old ready to go off to boarding school on his own. My quantity of parenting time had nothing to do with it. I had to make smart executive decisions to help him. Sometimes that meant getting out of the way. I think it does now as well.

Just remember you think spending every waking minute is the right thing because its instinctual but context matters. I love spending time with my kids but what I really want is the best for them. And that isn't always me...

Final point, same is true in leadership at work. Micromanaging your teams and being in their face every minute won't make them better and may even annoy them. Trusting people, providing direction and creating an environment that fosters problem solving and creativity means that you dont have to be there every day. You should be 100% confident if your not there that stuff is getting done. I know I am because I hire for character and do the other sticky things to build trust and transparency. Then I focus on quality time and input versus just quantity.