Management Team: Borrow Big Names
Hello. This is Irino, a strategy consultant.
Today, I will explain about management team.
Table of Contents in Business Plan
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Nobody can do everything perfect. If he claims he can do it alone, it means that he’s an inexperienced big egoist or his business is too small to claim to be a future IPO.
A bad example when writing your profile is:
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1985 Panasonic company
1989 Panasonic company, associate VP
1990 Sony company, VP
1993 Sony company, associate vice president
1999 Nintendo company, managing director
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Company names and positions don’t tell what you did. “I can be an associate vice president!” doesn’t make sense in entreprenuership. Such a CV might make your investors think you’re a corporate parasite who achiveved nothing as an individual.
What matters is what you did, and whether you can do it again. That’s called “relevant experiences” or “proven track records”, which investors care about. So, make sure you’ll write what you did.
Many statistics prove that startups will fail with very high probability if the management team does not have a persion with industry experience.
Portable skills like IT and accounting is easy to borrow. But industry experience is hard to borrow, and is time-consuming to acquire.
Mediocre people work for money. But talented people do not work for high salary. They work for something else: passion and cause
Investors won’t put money untill you build a talented management team. Get talented people first, and get moeny later. It’s not the other way around.
Bad examples are:
- All directors are from the founding family.
- All directors are childhood friends.
- All directors are former Sony colleagues.
Such a company will alienate a talented candidate. He may think he can never get a change of promtion, no matter how good a job he does:
“I was not born in their family.”
“I can’t go back to my childhood.”
“I can get a job in Sony. But they are not in Sony any more.”
Don’t make a new type of glass ceiling to the board.
Your board is imbalanced if all the board members former management consultants. There is a big difference between wanting to manage and wanting to do this particular business.
All startup companies inevitably go through ups and downs. Even when things don’t go well, those in love with a particular business never give up. Those who just wanted to feel what it is like to be a manager tends to quit too soon, because they have other choices than this industry. Investors won’t trust their hard-earned money to a management team, if all managers are potentially quiters.
Your management team is imbalanced if all the members are elites without any bottom experience.
Startups always go though setbacks and even poverty. An elite cannot live in miserable poverty. If he can, his wife cannot. You need a self-made man who can show how to go up from the bottom.
Your board has a bad generation balance if all the board members are young men in their twenties. If all board members are gray-haired in their sixtie, it’s not good, either.
Many teams are too proud of their own generation, saying “they are just kids” or “they are just old coots.”
Be humble. Each generation has strong and weak points:
Young generation is not good at:
- Openning “back doors” for sales
- Making appointments with top VIP’s
- Making stable work environment
Senior generation is not good at:
- Keeping working 30 hours a day.
- Showing valnerability to attract supporters
- Coding IT programs
- Catching up mobile technology trends
There are many peoeple with an experience of IPO in Japan. It doesn’t mean, however, that they played a central role in IPO. Some of them were just lucky to jump on the bandwagon and didn’t contribute very much. Make sure you’ll check what they actually did before you welcome them on board.
Some managers cannot give a clear answer to the question, “How would you describe your co-founder?” It reveals that you don’t understand what your partner is good at, and you cannot delegate tasks to scale your business.
Investors won’t put money untill you build a management team. In Japan, however, you’ll often have a situation in which you want a talented person to join your company, but the person cannot take a risk of joinning a small underfunded startup for family reasons.
You need the person to get money. But you need money to get the person.
To break the deadlock, it is a good idea to ask him to sign a letter of intent to join the company when it succeeds in fundraising. Show it to your investors to guarantee that you’ll surely get a talent if they invest in your company.
In Japan, the letter of intent is called “Blood thumb signiture”, which is often signed by blood and stamped by a thumb. The contract is not legally binding, but tradictionally and culturally binding. Advanced entrepreneurs go to the extreme of using this bloody pact with the devil.
Some companies successfully invite celebrities as managing directors or advisory board members. It is an effective way to make your company look promising.
Experienced investers know, however, that those celebrities are too busy to do practical tasks. Investors give you a higher valuation just because the company got through celebrities’ screening process, not because the celebrities can help your company.
So, do not say, “The famous Mr.X will be in charge of this project”.
You would sound too dependent on celebrities. It’s better to say honestly, “To tell the truth, we’re just borrowing his name.”
That’s it for today. Thanks for reading my blog.
Irino
- One-two finish in the largest business plan contest in Japan
- One-two finish in Asian Entrepreneurship Award
- No.1 in google "business plan"
- Judge in the Cloud-Computing Awards
- Write/Review +100 business plans a year
- Meet +300 entrepreneurs a year
- Large-scale project management
e.g. +15,000 man-months post merger integration - Expertise: business planning, financing, IT, project management
- Fortune Global 500 companies:
bank, brokerage, card, SIer, etc - Startups:
IT, cloud, bio, cosmetics, minor metals, aerospace, etc - Tokyo University -> University of British Columbia -> Oracle -> Headstrong -> Independent
- One-two finish in the largest business plan contest in Japan
- One-two finish in Asian Entrepreneurship Award
- No.1 in google "business plan"
- Judge in the Cloud-Computing Awards
- Write/Review +100 business plans a year
- Meet +300 entrepreneurs a year
- Large-scale project management
e.g. +15,000 man-months post merger integration - Expertise: business planning, financing, IT, project management
- Fortune Global 500 companies:
bank, brokerage, card, SIer, etc - Startups:
IT, cloud, bio, cosmetics, minor metals, aerospace, etc - Tokyo University -> University of British Columbia -> Oracle -> Headstrong -> Independent