April 28, 2009 by Dave Clough.

I read an article recently where the founders of a 2001 startup were considering buying the company back from eBay.  My initial reaction is that this is a bad idea, though I don’t have all the details.  Let me explain…

 StumbleUpon started with $1.5M in venture funding and sold out to eBay for $75M.  Great story — so far so good.  Then after 2 years and very little progress, eBay needs money and starts shopping it around.  So three founders look to buy it back from eBay.  Why is this a good scenario?

While I am not an expert in their business, nor do I know the true influence eBay had on the company over those two years, there are many things that raise questions.  Is this is good decision for the founders?

The serial entrepreneur is not typically the right person to run a large company.  The right personality for a small team startup is not usually the person well suited to run a bigger company.  The singular focus of the team to achieve the vision and reach the payday is usually gone after the sale.  It appears the founders still have the drive, so are they going to pull it back and sell it again, or keep it private.  This decision will impact the hiring and employee motivation going forward.   It seems they can motivate startup people, but can they motivate people working at an “older” company.  These people have very different motivators (passion & risk vs. a job & security).

The next big question is whether eBay left the company alone for those two years or if they brought them into the fold.  Either way, there are other important managerial questions.  If they left StumbleUpon autonomous (scenario 1), why did the company stagnate?  Maybe the management team has already peaked.  If they brought them into the eBay fold (scenario 2), then it is likely that many of the original employees left and they hired more “big company” people who are more security minded.  So depending on the answer, either you have to make changes at the top (scenario 1) or bring in more “startup employees” (scenario 2). 

In either case, from the outside looking in, it seems that StumbleUpon needs to augment their staff with a good turnaround guy either on staff or as a consultant.  Doing what they have done over the past two years in not an option if they want to see the growth they experienced before selling to eBay.

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April 14, 2009 by Dave Clough.

For those who live in New England (and a couple of Midwest states), you may be familiar with an somewhat odd way of town government called Town Meeting.  Wikipedia: A town meeting is a meeting where the population of an entire geographic area is invited to participate in a gathering, often for a political, administrative, or legislative purpose. Traditionally, a town meeting is a time when community members come together to legislate policy and budgets for their town…

My town of Acton, MA just finished its town meeting, and it was a spectacle with more than 400 people attending at times.    The town boards were divided on issues, there were to community groups at odds — one promoting the schools, and one wanting to keep costs below the recommended budgets, and there were some people that just want to be heard (well, at least they talked — I’m not sure whether they were heard).  And after 3 days we slogged through 50 articles that required a vote. (Thank goodness for Roberts Rules.)

In my opinion makeing decisions at town meeting is a lot like making sausage — you don’t really want to experience the process, but the end result isn’t too bad. 

 Small businesses struggle with making decisions too, but on a smaller scale.  My town has about 20,000 people, and some small company decisions can affect that many people too, including their customers.  So what is the best way to make decisions in a small company.  As with much of my advise – it depends.

I am a big proponent of empowered teams.  Teams that work well together can accomplish more than a group of superstar individuals.  Good examples would be the first Red Sox team that broke the curse, or last years Tampa Bay Rays, or The NE Patriots who can replace an injured starter with a replacement without missing a beat.  Examples of superstars trying to do it themselves are the Olympic Basketball teams.  These teams are packed with superstars who don’t play together, and in 2004, despite being the most talented, only came away with the Bronze metal.  My assertion is that a group of people who truely work as a team will accomplish more than a group of talented individuals.

So is a small business really a team?  I used to think that every company could work as a team, but in my years of advising businesses, I’m come to realize that some the key ingredient to a successful team is the owner or person in charge (coach).  If that person is willing to loosen the reins and give up some control, it can work, but if they can’t (especially in challenging times) then the “team” will fail.   So now before I recommend a team approach, I assess whether the owner/coach will fully delegate some tasks.  I the answer is yes, then a team is possible, but if no, I don’t even try because the decisions made below will get vetoed either actively or passively.

Town meeting is a team in that everyone has a vested interest in the success of the town.  Those who thing they know better will be fustrated, and those who respect the collective knowledge like the process.  I’ll touch more on decision making in future blogs, but I’ll leave you with this to ponder: Can one person always make the right decision, or would the collective wisdom of an empowered group be right more often…

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