value drivers and the entrepreneur’s dilemma
DESCRIPTION
From a talk I gave to the Venture Association of New Jersey about the challenges of growing a business.TRANSCRIPT
Value Drivers and the Entrepreneur’s Dilemma
Frank J. Graziano Managing Partner
September 21, 2010
Monmouth Venture Partners presents
to the
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Do you want to be rich?
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Or king?
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Achieving both is a rare exception…
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Here’s the reality…
“Most entrepreneurs want to make a
lot of money and run the show.
Research shows that it’s tough to
do both.”
“If you don’t figure out which matters
more to you, you could end up
being neither rich nor king.”
_ Noam Wasserman, The Founder’s Dilemma, Harvard Business Review, February 2008
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Some sobering facts…
• 50% of founders no longer
CEO 3 years after funding
• After 4 years, only 40% are
still in that role
• By time of IPO, less than 25%
X X X X X
X X X X X X
X X X X X X X X
• 4 out of 5 founding
CEOs have to be
forced out!
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Growing pains…
• Limits of bootstrapping
• Outside money enables faster
growth
• Loss of total control of the
business
• Investors want oversight and
seats on the board
• First steps in putting your role
as founding CEO at risk
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The paradox of success…
Product Launch
Marketing
Sales
Customer Service
Finance
HR
Operations
Structure
Process
Specialized Roles
Managerial Heirarchy
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FFFs Angels VC PE
Entrepreneurs v. Investors
Implications for raising money…
Worse Terms
Better Terms A
lign
me
nt o
f In
tere
sts
Sources
Wealth
Control
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Implications for creating value…
Economics
Product
Market
Sales &
Marketing Competition
Management
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If your motive is…
…influenced by venture’s potential
Wealth Control
Use your own
capital (FFFs)
Not recruit
potential rivals
Raise less $$$
overall
Seek outside
investors
Hire professional
management
Raise a lot more
$$$
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Other tales from the trenches…
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Q & A
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Thank You
Frank J. Graziano
Managing Partner
Monmouth Venture Partners, LLC
(732) 930-0161