Eliot Peper's Blog, page 28
February 17, 2014
Should you ever blow the whistle on your CEO?
Jeff Donahue is a good friend and battle-scarred veteran of venture-backed and private equity-backed companies. He has raised over $275M of funding for early and later stage startups and has been CFO of 10 emerging growth businesses. He's worked across the table from leading investors like GRP (now Upfront Ventures), Invesco, ComVentures (now Fuse Capital), Allegis Capital, Alta-Berkeley, Invision, Steamboat Ventures and many more. I'm thrilled that he's offered to write a Venture Financing Series. You can read episode one through five here. In episode six, Jeff dives into a critical but almost never discussed subject: what should a CFO do when he or she concludes the CEO is not up to the challenge? Should the CFO reassert a commitment to the CEO and strive to get the company back on track, or should the CFO appeal to the VCs on the board for a replacement CEO?
From my previous guest posts you know I am focused on a CEO’s ability to execute. Execution spans the functional expertise of the CEO’s direct reports in operations, research and development, engineering, manufacturing, supply chain and logistics, financing, sales, customer service, marketing, business development, strategic partnerships, strategy and a raft of other things. No CEO is an expert in all of them but, to be successful, a CEO has to know how to lead his or her C-team members who individually are the experts.
So, what happens when a CFO (or any other C-team player for that matter) senses the CEO’s inability to execute on the business plan? Should he or she remain loyal to the CEO in the hope the CEO will get a grip and turn things around, or should he or she blow the whistle and rat out the CEO to the VCs on the Board of Directors? Remember, a start-up CFO operates in a world without Sarbanes-Oxley and there are no rules and regulations governing disclosure, governance, compliance and the like that might have tipped the investors’ hats regarding the CEO’s non-performance along the way.
In theory, this problem should never arise because the VCs on the Board should be practicing oversight so proficiently that they are abreast of the company’s performance on an almost real-time basis. In reality, there is a wide range of degrees of proficiency of Board oversight. The fact that the vast majority of start-ups fail affirms the landscape is littered with CEOs who can’t execute and Boards who do not effectively oversee them.
CEO-Board relationships are intricate, fraught with not only the operational and strategic complexities of the business but also with the subtleties of personality and ego. I have found relationship dynamics to be firm-specific and any attempt to reach broad conclusions runs the risk of instead producing portentous generalities. Hence, perhaps a couple of anecdotes is the best way to introduce the subject of what C-team players should do when the CEO is asleep at the wheel.
In one particularly appalling case of CEO incompetency despite my and the rest of the C-team’s incessant support of him, I finally worked up the courage to approach the two VC firms backing the company. Both were highly regarded entities. I did so only after extraordinary consternation that kept me awake night after night. My case against the CEO was meticulously documented, and the company’s performance spoke for itself. One of the VCs responded very favorably and was effusive in its gratitude for my having egregiously violated protocol in contacting them. The other heaped scorn and opprobrium on me for not having brought the issue to them sooner, and they blamed me for having let the company spiral out of control. I am good standing with the former VC to this day – even to the point where they have given me recommendations going into other portfolio companies – whereas the latter deliberately poisoned the well for me when contacted by other VCs for recommendations.
In another case, I approached the lead VC in less than six months of working for the company. I had joined it after 4 rounds of financing, the last one of which was a serious down round. The CEO they had put in the company 3 months before I joined had no clue, and I had no choice than to convey that to the lead VC when all my efforts to support him in getting the company back on track had been rebuffed. Not only was the CEO pink-slipped but also the COO. And, the CSO was put on what amounted to probation. The earth wound up a tad more scorched than I anticipated, but that was the prerogative of the Board.
Keeping in mind my prior observation that all of this is firm-specific and relationship-specific, I do offer the following guidance if you have found yourself in the same CEO non-performance situation as I have several times in my start-up career:
Exhaust every opportunity imaginable to work with the CEO and make him or her successful prior to blowing the whistle to the VCs. Fundamentally, a CFO’s job is that of deuteragonist – someone whose purpose in the company is to make the CEO look like a stellar performer. You must be certain that the company’s looming failure solely is the responsibility of the CEO’s lack of leadership and not your failure as CFO. Up to the day you approach the VCs, your first loyalty unquestionably must be to the CEO. When you do approach the VCs, you must have a clear conscious that you put every ounce of your effort, intensity, loyalty, professionalism, purposefulness and creativity into remediating the company’s problems and helping the CEO make the company work. You are obligated to approach the Board when the CEO is incapable of performing. If the company fails as a consequence of the CEO’s inability to execute on the plan, you are going down the swirly with it and very likely so is your career in start-up space. If you think CEOs are expendable, CFOs are really expendable. Don’t complain about the CEO to the VCs; instead, document his or her failed execution and inability to dig the company out of the ditch going forward against the plan and the reasons why. It is suicidal to approach the VCs because you don’t like the CEO or disagree with him or her. Stick to the facts, and do not judge the CEO. You have to build a case that pre-determines the outcome.Form a coalition of your fellow C-team players to approach the Board if circumstances support that. Pick your alliances judiciously. One of the other C-team plays may have a different agenda which could encompass ratting on you to the CEO. If so, you will be on the receiving end of the fastest termination imaginable for disloyalty and insubordination.
Interestingly, in my experience when other C-team individuals discerned the CEO’s shortcomings they virtually always came to me first to share their concerns. Because the CFO is the financial connective tissue in the organization and has the best overview of what’s really going on, I was in a position to affirm their concerns or suggest that they re-commitment themselves to making it work and giving the CEO some more runway.
Of course, when the CEO not performing and the CEO is seconded from one of the VCs behind the company (i.e., the CEO is a partner in one of the VC firms that’s invested), you’re screwed. There is virtually no upside in that situation, and your best course of action is to update your resume and seek gainful employment elsewhere. Trust me, that will save you a great deal of heartache and consternation.
From my previous guest posts you know I am focused on a CEO’s ability to execute. Execution spans the functional expertise of the CEO’s direct reports in operations, research and development, engineering, manufacturing, supply chain and logistics, financing, sales, customer service, marketing, business development, strategic partnerships, strategy and a raft of other things. No CEO is an expert in all of them but, to be successful, a CEO has to know how to lead his or her C-team members who individually are the experts.
So, what happens when a CFO (or any other C-team player for that matter) senses the CEO’s inability to execute on the business plan? Should he or she remain loyal to the CEO in the hope the CEO will get a grip and turn things around, or should he or she blow the whistle and rat out the CEO to the VCs on the Board of Directors? Remember, a start-up CFO operates in a world without Sarbanes-Oxley and there are no rules and regulations governing disclosure, governance, compliance and the like that might have tipped the investors’ hats regarding the CEO’s non-performance along the way.
In theory, this problem should never arise because the VCs on the Board should be practicing oversight so proficiently that they are abreast of the company’s performance on an almost real-time basis. In reality, there is a wide range of degrees of proficiency of Board oversight. The fact that the vast majority of start-ups fail affirms the landscape is littered with CEOs who can’t execute and Boards who do not effectively oversee them.
CEO-Board relationships are intricate, fraught with not only the operational and strategic complexities of the business but also with the subtleties of personality and ego. I have found relationship dynamics to be firm-specific and any attempt to reach broad conclusions runs the risk of instead producing portentous generalities. Hence, perhaps a couple of anecdotes is the best way to introduce the subject of what C-team players should do when the CEO is asleep at the wheel.
In one particularly appalling case of CEO incompetency despite my and the rest of the C-team’s incessant support of him, I finally worked up the courage to approach the two VC firms backing the company. Both were highly regarded entities. I did so only after extraordinary consternation that kept me awake night after night. My case against the CEO was meticulously documented, and the company’s performance spoke for itself. One of the VCs responded very favorably and was effusive in its gratitude for my having egregiously violated protocol in contacting them. The other heaped scorn and opprobrium on me for not having brought the issue to them sooner, and they blamed me for having let the company spiral out of control. I am good standing with the former VC to this day – even to the point where they have given me recommendations going into other portfolio companies – whereas the latter deliberately poisoned the well for me when contacted by other VCs for recommendations.
In another case, I approached the lead VC in less than six months of working for the company. I had joined it after 4 rounds of financing, the last one of which was a serious down round. The CEO they had put in the company 3 months before I joined had no clue, and I had no choice than to convey that to the lead VC when all my efforts to support him in getting the company back on track had been rebuffed. Not only was the CEO pink-slipped but also the COO. And, the CSO was put on what amounted to probation. The earth wound up a tad more scorched than I anticipated, but that was the prerogative of the Board.
Keeping in mind my prior observation that all of this is firm-specific and relationship-specific, I do offer the following guidance if you have found yourself in the same CEO non-performance situation as I have several times in my start-up career:
Exhaust every opportunity imaginable to work with the CEO and make him or her successful prior to blowing the whistle to the VCs. Fundamentally, a CFO’s job is that of deuteragonist – someone whose purpose in the company is to make the CEO look like a stellar performer. You must be certain that the company’s looming failure solely is the responsibility of the CEO’s lack of leadership and not your failure as CFO. Up to the day you approach the VCs, your first loyalty unquestionably must be to the CEO. When you do approach the VCs, you must have a clear conscious that you put every ounce of your effort, intensity, loyalty, professionalism, purposefulness and creativity into remediating the company’s problems and helping the CEO make the company work. You are obligated to approach the Board when the CEO is incapable of performing. If the company fails as a consequence of the CEO’s inability to execute on the plan, you are going down the swirly with it and very likely so is your career in start-up space. If you think CEOs are expendable, CFOs are really expendable. Don’t complain about the CEO to the VCs; instead, document his or her failed execution and inability to dig the company out of the ditch going forward against the plan and the reasons why. It is suicidal to approach the VCs because you don’t like the CEO or disagree with him or her. Stick to the facts, and do not judge the CEO. You have to build a case that pre-determines the outcome.Form a coalition of your fellow C-team players to approach the Board if circumstances support that. Pick your alliances judiciously. One of the other C-team plays may have a different agenda which could encompass ratting on you to the CEO. If so, you will be on the receiving end of the fastest termination imaginable for disloyalty and insubordination.
Interestingly, in my experience when other C-team individuals discerned the CEO’s shortcomings they virtually always came to me first to share their concerns. Because the CFO is the financial connective tissue in the organization and has the best overview of what’s really going on, I was in a position to affirm their concerns or suggest that they re-commitment themselves to making it work and giving the CEO some more runway.
Of course, when the CEO not performing and the CEO is seconded from one of the VCs behind the company (i.e., the CEO is a partner in one of the VC firms that’s invested), you’re screwed. There is virtually no upside in that situation, and your best course of action is to update your resume and seek gainful employment elsewhere. Trust me, that will save you a great deal of heartache and consternation.
February 13, 2014
Choose your own destiny
Last month a I was talking to a friend about a project he's involved with at work. He was recently hired into a large private company to help them open up a new market. During the recruitment process they specifically described the position as 'entrepreneurial' and 'a startup within the larger corporate ecosystem.' Knowing how these things sometimes turn out, he asked them whether there was a budget for the new venture, buy-in from upper management, etc. They confirmed that everyone was behind the new initiative and that he would have what he needed to make it work. He accepted the job.
A few months later, he found himself struggling. The supposed budget had yet to be assigned and he couldn't achieve the current milestones he was executing against. The higher-ups did not appear to have the sense of urgency necessary to provide proactive support. He was frustrated and began rethinking the project and career move. That's when he came to me.
I suggested he evaluate his own perspective. The successful entrepreneurs that I know never take "no" for an answer. They see new obstacles as challenges that push them to new levels of performance. If an investor backs out, they find a way to reel them in or find a new source of capital. If the competition throws a curve ball, they dodge it like Neo from The Matrix. If their team is flagging, they find a new way to inspire them. One way or another, they figure out how to get across the goal line.
My friend had explicitly sought out a role that was entrepreneurial. He wanted to lead a startup within a larger company. That's what he signed up for. If a budget isn't there, he needs to figure out how to get it assigned (sometimes it could be as easy as buying the right person a coffee). If upper management hesitates, he needs to figure out how to call them to action.
Ultimately, entrepreneurs choose their own destiny. That doesn't mean that others line up with accolades or helping hands (although it's great if they do!). Regardless of whether you have your own company or work for an NGO or a government agency, think about how you can chart your own course rather than letting outside winds buffet you around. It's far too easy to let institutional barriers shape your actions and far more satisfying to start shaping the world around you. It's amazing how things fall into place once you commit.
Incidentally, my friend is now kicking ass and taking names at his company.
A few months later, he found himself struggling. The supposed budget had yet to be assigned and he couldn't achieve the current milestones he was executing against. The higher-ups did not appear to have the sense of urgency necessary to provide proactive support. He was frustrated and began rethinking the project and career move. That's when he came to me.
I suggested he evaluate his own perspective. The successful entrepreneurs that I know never take "no" for an answer. They see new obstacles as challenges that push them to new levels of performance. If an investor backs out, they find a way to reel them in or find a new source of capital. If the competition throws a curve ball, they dodge it like Neo from The Matrix. If their team is flagging, they find a new way to inspire them. One way or another, they figure out how to get across the goal line.
My friend had explicitly sought out a role that was entrepreneurial. He wanted to lead a startup within a larger company. That's what he signed up for. If a budget isn't there, he needs to figure out how to get it assigned (sometimes it could be as easy as buying the right person a coffee). If upper management hesitates, he needs to figure out how to call them to action.
Ultimately, entrepreneurs choose their own destiny. That doesn't mean that others line up with accolades or helping hands (although it's great if they do!). Regardless of whether you have your own company or work for an NGO or a government agency, think about how you can chart your own course rather than letting outside winds buffet you around. It's far too easy to let institutional barriers shape your actions and far more satisfying to start shaping the world around you. It's amazing how things fall into place once you commit.
Incidentally, my friend is now kicking ass and taking names at his company.
February 10, 2014
Editing a Novel: Copyediting
Okay. Now we've touched on beta readers, your first line of defense against suckiness, and developmental editing, working on pacing, structure and character motivation. This episode in the Editing a Novel series focuses on copyediting.
Copyediting is what I've always imagined the editorial process to be. I packaged up my manuscript and sent the file over to the copyeditor. She went through it line by line and returned it a few days later full of bright red tracked changes in Word.
One of the biggest mistakes self-published authors sometimes make is not to hire a professional copyeditor. Being a good writer does NOT make you a good copyeditor. Every manuscript has flaws and nothing inhibits a reader's enjoyment more than constantly tripping up on silly mistakes. Good copyeditors love their work and will groom your story to be a much better reading experience. Don't skimp here, it's not worth it.
My copyeditor, Annette, was fantastic. Now retired, she used to be a technical editor at a large company. She loves reading technothrillers and the first time we talked she told me how much it irks her when she finds typos in Tom Clancy novels. That's when I knew she would be a good fit.
When it showed up in my inbox, the manuscript averaged about a dozen corrections per page. I reviewed every single change and approved or rejected them individually. There were also queries that highlighted questionable word choice, awkward phrasing, etc. that I went through and streamlined.
Normally the publisher supplies the copyeditor with a style sheet. The style sheet is a guide that tells the copyeditor what the publisher wants to see in the final product. Because Uncommon Stock is the first title of a secret, brand-spanking-new publishing company, we didn't have a style sheet to send to Annette. Instead, I just shared a few guidelines:
We wanted serial commas: "X, Y, and Z" instead of "X, Y and Z."We preferred "Startup" used as a variant spelling for "start-up." I like simple dialogue tags so we closed off sentences near dialogue with periods instead of using commas to introduce what the character was saying.We wanted em-dashes instead of normal dashes (em-dashes are just longer dashes that look better in book format).I accepted 90% of Annette's changes and I had specific reasons for anything I rejected. The manuscript matured substantially with her sharp eye and helping hand. I also learned that you capitalize the word "mom" only if someone's name, i.e. Karen, could be directly substituted. If you say "my mom drank a cup of tea" it remains uncapitalized because you would never say "my Karen drank a cup of tea." But "Mom drank a cup of tea" is capitalized because it makes perfect sense to say "Karen drank a cup of tea." These are the things you learn while editing a novel...
Now it was time to run with the technothriller theme and give a computer the chance to edit Uncommon Stock. A few months before, William Hertling, a bestselling independent author whose books I love, recommended a crazy cool tool to me that sounded like science fiction: a program that uses special algorithms to highlight the typical mistakes writers make while writing novels. This didn't surprise me as much as it otherwise might have because Will's books often illustrate how machines are taking over the world beneath our noses.
The program, Autocrit, turned out to be a very useful tool. It identified many common mistakes like overused words, repeated words and phrases, funky dialogue tags, uneven pacing, etc. It even compared my prose to statistical averages of commercially published fiction. No writer should try to edit to optimize for Autocrit's algorithm. That would be like musicians composing specifically for Pandora. But Autocrit is a powerful addition to any writer's arsenal. It strengthened Uncommon Stock enormously and I plan on using it for future stories. Thanks Will.
Copyediting isn't sexy. Correcting grammar, phrasing, and word choice aren't the world's most thrilling activities for a writer. But it's absolutely necessary to creating a quality book that people might actually want to read. Copyediting is the wax that makes your story gleam.
With the near-final copy in hand, we were ready to advance to typesetting and the final stage of the editorial lifecycle: proofreading.
Copyediting is what I've always imagined the editorial process to be. I packaged up my manuscript and sent the file over to the copyeditor. She went through it line by line and returned it a few days later full of bright red tracked changes in Word.
One of the biggest mistakes self-published authors sometimes make is not to hire a professional copyeditor. Being a good writer does NOT make you a good copyeditor. Every manuscript has flaws and nothing inhibits a reader's enjoyment more than constantly tripping up on silly mistakes. Good copyeditors love their work and will groom your story to be a much better reading experience. Don't skimp here, it's not worth it.
My copyeditor, Annette, was fantastic. Now retired, she used to be a technical editor at a large company. She loves reading technothrillers and the first time we talked she told me how much it irks her when she finds typos in Tom Clancy novels. That's when I knew she would be a good fit.
When it showed up in my inbox, the manuscript averaged about a dozen corrections per page. I reviewed every single change and approved or rejected them individually. There were also queries that highlighted questionable word choice, awkward phrasing, etc. that I went through and streamlined.
Normally the publisher supplies the copyeditor with a style sheet. The style sheet is a guide that tells the copyeditor what the publisher wants to see in the final product. Because Uncommon Stock is the first title of a secret, brand-spanking-new publishing company, we didn't have a style sheet to send to Annette. Instead, I just shared a few guidelines:
We wanted serial commas: "X, Y, and Z" instead of "X, Y and Z."We preferred "Startup" used as a variant spelling for "start-up." I like simple dialogue tags so we closed off sentences near dialogue with periods instead of using commas to introduce what the character was saying.We wanted em-dashes instead of normal dashes (em-dashes are just longer dashes that look better in book format).I accepted 90% of Annette's changes and I had specific reasons for anything I rejected. The manuscript matured substantially with her sharp eye and helping hand. I also learned that you capitalize the word "mom" only if someone's name, i.e. Karen, could be directly substituted. If you say "my mom drank a cup of tea" it remains uncapitalized because you would never say "my Karen drank a cup of tea." But "Mom drank a cup of tea" is capitalized because it makes perfect sense to say "Karen drank a cup of tea." These are the things you learn while editing a novel...
Now it was time to run with the technothriller theme and give a computer the chance to edit Uncommon Stock. A few months before, William Hertling, a bestselling independent author whose books I love, recommended a crazy cool tool to me that sounded like science fiction: a program that uses special algorithms to highlight the typical mistakes writers make while writing novels. This didn't surprise me as much as it otherwise might have because Will's books often illustrate how machines are taking over the world beneath our noses.
The program, Autocrit, turned out to be a very useful tool. It identified many common mistakes like overused words, repeated words and phrases, funky dialogue tags, uneven pacing, etc. It even compared my prose to statistical averages of commercially published fiction. No writer should try to edit to optimize for Autocrit's algorithm. That would be like musicians composing specifically for Pandora. But Autocrit is a powerful addition to any writer's arsenal. It strengthened Uncommon Stock enormously and I plan on using it for future stories. Thanks Will.
Copyediting isn't sexy. Correcting grammar, phrasing, and word choice aren't the world's most thrilling activities for a writer. But it's absolutely necessary to creating a quality book that people might actually want to read. Copyediting is the wax that makes your story gleam.
With the near-final copy in hand, we were ready to advance to typesetting and the final stage of the editorial lifecycle: proofreading.
January 31, 2014
Mr. Penumbra's 24-Hour Bookstore
Sometimes books seem to drag. The story gets stale. The characters aren't as engaging as they could be. You set it aside and check Facebook.Mr. Penumbra's 24-Hour Bookstore is the polar opposite of that. It's a book that reminds me why I love reading. I zipped through it after successive friends told me it needed to jump to the top of my list. It's an offbeat, puzzle-packed, thinker-thriller that is an absolute delight.
It taps into the emotional kernel that makes the San Francisco Bay Area the Center of the Universe right now. The author, Robin Sloan, used to work at Twitter and lives in SF. He gives readers an intimate window into the heart of the special moment here at this place and time.
The characters feel like actual people. The story is weird enough to be interesting and believable. Don't be surprised if the caramelized cinnamon taste of magic lingers after you finish the book. It's a fable of our times.
January 27, 2014
How to buy a house in Oakland
Last fall was a crazy time for us. We returned from our seven month international sabbatical. We attended Burning Man for the first time. I accepted a publishing offer for my new novel. My beautiful fiance Drea accepted an exciting new job in San Francisco. We attended the International Hot Air Balloon Festival in Albuquerque with Drea's family. We saw my extended family in the first time in many years during a memorial service for my paternal grandparents. It was busy.
Drea's new job meant a last minute relocation to the Bay Area. Luckily we were still living out of our backpacks so this was far less insane than it otherwise would be. We arrived and were lucky to crash at a studio out back of my parents house in Oakland. We immediately started looking for a place to rent and discovered something weird: compared to our neighborhood in San Diego, rental prices in the Bay were sky high but purchase prices for homes were reasonable.
This spurred us to start exploring the real estate market up here. That meant signing up for a crazy roller coaster of an experience and I'll try to shed some light on what we learned so you don't have to make the same mistakes!
We were en route to visit a friend in Palo Alto one evening in November when we decided to call Jay Corrales, our friend and real estate agent from San Diego, to see if he could provide a referral to an agent up North. It turned out that Jay was driving through the Peninsula when we called and we met up with him for a hot chocolate. He told us he had recently decided to move up to the Bay Area as well and was interested in expanding his practice up here. He agreed to work extra hard for us to make up for the fact that he didn't know the local market too well. We agreed then and there to work together.
I grew up in the Temescal/Rockridge area in Oakland so I was a step ahead in local neighborhood knowledge to start with. We immediately got signed up on MLS and Redfin and started viewing houses like it was our job. We started by categorizing the different Bay Area cities:
San Francisco: diverse, good nightlife, way too expensive, crappy weather.Silicon Valley/Marin: safe, better weather access to nature, expensive, lack of diverse culture, long commute to SF. San Jose: no.Richmond/San Leandro/other East Bay cities: crime, cheap, better weather, not a lot going on.Walnut Creek/over the hills: suburbia, expensive, safe.Berkeley: intellectual, insane rent control laws, diverse culture, access to nature, static (Berkeley feels the same as it has for 50 years).Oakland: crime, diverse culture, up and coming neighborhoods, access to nature, good weather, short commute to SF.We chose to focus on Oakland and Berkeley. Oakland especially feels like the Brooklyn of the Bay Area. It's where all the artists and DIY types live. It's the Bay Area's creative hub. The local Googlers have metal working shops in Dogpatch or Emeryville. The baristas roast their own coffee at home. The hole-in-the-wall barber shops serve you bourbon with your haircut. The breweries sell you kegs without requiring a deposit. Everyone rock climbs and goes to First Fridays. Unfortunately everyone's also been mugged/robbed/terrified but that seems to be par for the course. Having grown up here it's crazy to see Oakland's trajectory over the past 25 years. I've never seen an American city with this kind of momentum.
Ok, so what about the house hunt? Here are some of the places we made moves on:
A two house, one lot, place in Longfellow very close to Macarthur BART. The longtime owner residents were moving out and had renovated the place in preparation for sale. We imagined living in the sunny back unit and renting out the front one to help with the mortgage. In the basement of the front house was an old-school speakeasy bar with too-low ceilings. We presented our above listing offer in person to the seller's agent with a heartfelt letter. They asked us if we could come up because there were two investors that had come in higher. We told them that was our max. They gave it to the all cash investor.A small two unit place in Northwest Berkeley near Gilman St. In my view, this is the coolest part of Berkeley right now. There was a two bed one bath and a one bed one bath. The 2/1 had been owner occupied and the 1/1 was tenant occupied. We made an offer but then rescinded it. The tenant was a "life tenant." She had been paying essentially the same rent for thirty years. In Berkeley there is no way to (1) raise the rent in any meaningful way, (2) evict her for almost any reason, (3) buy her out because she'd never find another place willing to rent her a place for 20% of market, and (4) all of these terms survive change of ownership and even foreclosure. No way in hell we were signing up for that nightmare.A large single family in back in Longfellow that had been beautifully renovated by the best flippers in Oakland. We imagined finding roommates to help us afford the mortgage. Gorgeous kitchen, open design, etc. We called the listing agent to put in an offer. He said he literally just accepted one for substantially above the listing price. He didn't accept backup offers. We were too late. A converted duplex in West Oakland that had been transformed from a crack house into a hipster den. The current tenants wanted to stay along with their Macbook Airs and fixed gear bikes. The owner had planted hundreds of street trees on the surrounding blocks, knew the local drug dealers by name and was helping to transform the neighborhood. We were interested until we drove by in the evening and saw how far the neighborhood still had to go to ratchet down its sketchiness.A beautifully renovated fourplex in Southwest Berkeley. Originally a single family home the bottom floor had been converted into three studios and the top was a gorgeous 2/2. Same reno team as the second house in Longfellow. We put in a blind offer early to increase our chances. There were over a dozen offers on day one. It went for 30% over asking.There is your quick taste test. We reviewed a few hundred homes on paper, walked through 50-60 places and made ~9 offers. After about 6 weeks I knew every single neighborhood we were interested in block-by-block. I also knew every single house on the market in those neighborhoods and what the historical pattern for local deals looked like. Here are a few take-aways:
The Oakland/Berkeley real estate market is really frothy right now. But it is ASYMMETRICALLY frothy. There is a single buyer demographic that is going nuts right now: young tech refugees fleeing SF in hopes of buying their first homes. This demographic wants to buy houses that are beautiful, hands-off and ready to move in. They would rather pay 75% more for a fully renovated house with granite counter-tops than hire a contractor to put in the counter-tops themselves. Every newly renovated place we looked at was ridiculously competitive and went for way over asking. Conversely, homes that have good fundamentals but aren't shiny are not competitive. I'm not talking about serious fixer-uppers. I'm talking about functional homes with good layouts and quality construction that don't have shiny cosmetic flash yet. The Twitter folks want houses that are Pinterest-worthy on day one. The Twitter folks also happen to be the only demographic that's accelerating the market. You can still get a very good deal on move-in-ready humble homes with good bones.Don't mess with Berkeley rent control. Don't even bother researching more about it. I did it for you. Don't touch it.Oakland is the hottest city in America for good reason. Check it out (but don't walk down the street talking on your new iPhone).So where are we now? Two weeks ago we closed on an awesome duplex in the NOBE neighborhood in Oakland right at the intersection of Berkeley and Emeryville (with Jay's extraordinary help of course; you can reach him on his cell at 760-433-1505 if you're looking for a fantastic agent). The neighborhood's on the up-and-up and changing fast. Subaru's are in ~33% of the driveways. About half the homes have new owners and half are incumbent owners from a time when it looked a whole lot different. We're one block from a new park with a jungle gym, dog park and creek. We're a few blocks from Pixar. Two BART stations are within easy reach on protected bike lanes. We're smack dab in middle of our two climbing gyms. We can walk to Arizmendi. Two friends are moving in to the downstairs unit. We put down a deposit on a Sheepadoodle puppy from Feathers and Fleece Farm. We're rolling up our sleeves to make good on this home's amazing fundamentals... and we're looking forward to your next visit!
Drea's new job meant a last minute relocation to the Bay Area. Luckily we were still living out of our backpacks so this was far less insane than it otherwise would be. We arrived and were lucky to crash at a studio out back of my parents house in Oakland. We immediately started looking for a place to rent and discovered something weird: compared to our neighborhood in San Diego, rental prices in the Bay were sky high but purchase prices for homes were reasonable.
This spurred us to start exploring the real estate market up here. That meant signing up for a crazy roller coaster of an experience and I'll try to shed some light on what we learned so you don't have to make the same mistakes!
We were en route to visit a friend in Palo Alto one evening in November when we decided to call Jay Corrales, our friend and real estate agent from San Diego, to see if he could provide a referral to an agent up North. It turned out that Jay was driving through the Peninsula when we called and we met up with him for a hot chocolate. He told us he had recently decided to move up to the Bay Area as well and was interested in expanding his practice up here. He agreed to work extra hard for us to make up for the fact that he didn't know the local market too well. We agreed then and there to work together.
I grew up in the Temescal/Rockridge area in Oakland so I was a step ahead in local neighborhood knowledge to start with. We immediately got signed up on MLS and Redfin and started viewing houses like it was our job. We started by categorizing the different Bay Area cities:
San Francisco: diverse, good nightlife, way too expensive, crappy weather.Silicon Valley/Marin: safe, better weather access to nature, expensive, lack of diverse culture, long commute to SF. San Jose: no.Richmond/San Leandro/other East Bay cities: crime, cheap, better weather, not a lot going on.Walnut Creek/over the hills: suburbia, expensive, safe.Berkeley: intellectual, insane rent control laws, diverse culture, access to nature, static (Berkeley feels the same as it has for 50 years).Oakland: crime, diverse culture, up and coming neighborhoods, access to nature, good weather, short commute to SF.We chose to focus on Oakland and Berkeley. Oakland especially feels like the Brooklyn of the Bay Area. It's where all the artists and DIY types live. It's the Bay Area's creative hub. The local Googlers have metal working shops in Dogpatch or Emeryville. The baristas roast their own coffee at home. The hole-in-the-wall barber shops serve you bourbon with your haircut. The breweries sell you kegs without requiring a deposit. Everyone rock climbs and goes to First Fridays. Unfortunately everyone's also been mugged/robbed/terrified but that seems to be par for the course. Having grown up here it's crazy to see Oakland's trajectory over the past 25 years. I've never seen an American city with this kind of momentum.
Ok, so what about the house hunt? Here are some of the places we made moves on:
A two house, one lot, place in Longfellow very close to Macarthur BART. The longtime owner residents were moving out and had renovated the place in preparation for sale. We imagined living in the sunny back unit and renting out the front one to help with the mortgage. In the basement of the front house was an old-school speakeasy bar with too-low ceilings. We presented our above listing offer in person to the seller's agent with a heartfelt letter. They asked us if we could come up because there were two investors that had come in higher. We told them that was our max. They gave it to the all cash investor.A small two unit place in Northwest Berkeley near Gilman St. In my view, this is the coolest part of Berkeley right now. There was a two bed one bath and a one bed one bath. The 2/1 had been owner occupied and the 1/1 was tenant occupied. We made an offer but then rescinded it. The tenant was a "life tenant." She had been paying essentially the same rent for thirty years. In Berkeley there is no way to (1) raise the rent in any meaningful way, (2) evict her for almost any reason, (3) buy her out because she'd never find another place willing to rent her a place for 20% of market, and (4) all of these terms survive change of ownership and even foreclosure. No way in hell we were signing up for that nightmare.A large single family in back in Longfellow that had been beautifully renovated by the best flippers in Oakland. We imagined finding roommates to help us afford the mortgage. Gorgeous kitchen, open design, etc. We called the listing agent to put in an offer. He said he literally just accepted one for substantially above the listing price. He didn't accept backup offers. We were too late. A converted duplex in West Oakland that had been transformed from a crack house into a hipster den. The current tenants wanted to stay along with their Macbook Airs and fixed gear bikes. The owner had planted hundreds of street trees on the surrounding blocks, knew the local drug dealers by name and was helping to transform the neighborhood. We were interested until we drove by in the evening and saw how far the neighborhood still had to go to ratchet down its sketchiness.A beautifully renovated fourplex in Southwest Berkeley. Originally a single family home the bottom floor had been converted into three studios and the top was a gorgeous 2/2. Same reno team as the second house in Longfellow. We put in a blind offer early to increase our chances. There were over a dozen offers on day one. It went for 30% over asking.There is your quick taste test. We reviewed a few hundred homes on paper, walked through 50-60 places and made ~9 offers. After about 6 weeks I knew every single neighborhood we were interested in block-by-block. I also knew every single house on the market in those neighborhoods and what the historical pattern for local deals looked like. Here are a few take-aways:
The Oakland/Berkeley real estate market is really frothy right now. But it is ASYMMETRICALLY frothy. There is a single buyer demographic that is going nuts right now: young tech refugees fleeing SF in hopes of buying their first homes. This demographic wants to buy houses that are beautiful, hands-off and ready to move in. They would rather pay 75% more for a fully renovated house with granite counter-tops than hire a contractor to put in the counter-tops themselves. Every newly renovated place we looked at was ridiculously competitive and went for way over asking. Conversely, homes that have good fundamentals but aren't shiny are not competitive. I'm not talking about serious fixer-uppers. I'm talking about functional homes with good layouts and quality construction that don't have shiny cosmetic flash yet. The Twitter folks want houses that are Pinterest-worthy on day one. The Twitter folks also happen to be the only demographic that's accelerating the market. You can still get a very good deal on move-in-ready humble homes with good bones.Don't mess with Berkeley rent control. Don't even bother researching more about it. I did it for you. Don't touch it.Oakland is the hottest city in America for good reason. Check it out (but don't walk down the street talking on your new iPhone).So where are we now? Two weeks ago we closed on an awesome duplex in the NOBE neighborhood in Oakland right at the intersection of Berkeley and Emeryville (with Jay's extraordinary help of course; you can reach him on his cell at 760-433-1505 if you're looking for a fantastic agent). The neighborhood's on the up-and-up and changing fast. Subaru's are in ~33% of the driveways. About half the homes have new owners and half are incumbent owners from a time when it looked a whole lot different. We're one block from a new park with a jungle gym, dog park and creek. We're a few blocks from Pixar. Two BART stations are within easy reach on protected bike lanes. We're smack dab in middle of our two climbing gyms. We can walk to Arizmendi. Two friends are moving in to the downstairs unit. We put down a deposit on a Sheepadoodle puppy from Feathers and Fleece Farm. We're rolling up our sleeves to make good on this home's amazing fundamentals... and we're looking forward to your next visit!
January 23, 2014
Editing a Novel: Developmental Editing
In the first episode of the Editing a Novel Series I talked about my experience with beta readers for Uncommon Stock and how writers can maximize the utility they get out of having a small group of qualified friends give feedback on their manuscript. Once you've gone through at least one iteration with beta readers it might be time to move on to the next step of the editorial process: developmental editing.
What differentiates developmental from other kinds of editing is that it helps to develop the story rather than focus on language, grammar and stylistic issues. It's higher level stuff: this character's motivation doesn't feel right for the decisions they're making, that plot point doesn't make sense given what's happening in the previous scene, this story arc leads nowhere, etc. Not all writers use developmental editors. Not all developmental editors give the same kind of feedback. It's highly variable and personal but the core point is that your developmental editor helps you refine the moving parts in your story to help maximize its potential.
Good developmental editors are hard to find. Anyone can claim to be one but, needless to say, quality varies widely. You can find them on various freelancing websites and a few maintain their own sites. I asked other authors for referrals without a ton of success. Luckily for me, a fantastic developmental editor had snuck into working on Uncommon Stock with ninja-worthy stealth.
My good friend Shannon had been kind enough to be a volunteer beta reader for the manuscript. In a previous life, Shannon was a developmental executive in Hollywood and an acquisition editor for screenplays. She's devoured thousands of stories and her eye for narrative was as spot on as her extremely direct feedback. After getting her detailed beta reader feedback, I immediately offered to bring her in as the official developmental editor for Uncommon Stock.
Shannon did three full passes on the manuscript over the course of about seven weeks. In between each pass she would send me notes and we would have a phone conversation to go over the details. Here are the three major things we focused on:
Structure. TV and movie scripts are highly structured. They follow a three act formula that provides a framework for the story. Novels are much less structured and authors have more freedom to follow the story wherever it leads them. Nevertheless Shannon pointed out some structural elements of Uncommon Stock that could be reworked to improve the bones of the narrative (don't worry, we weren't trying to achieve or emulate a written-for-TV formula). Pacing. Pacing is a critical element of any good story. Ever find yourself yawning halfway through a movie? Remember how the first hundred pages of that novel you read in high school took forever to get through? Stories have rhythms. Just like music, different kinds of stories have different kinds of rhythms. Literary fiction is like Jazz. Epic fantasy is like Wagner. Technothrillers, like Uncommon Stock, are like electronic House music (layered beats building towards a crescendo). If the pacing isn't right, the story loses momentum and the reader gets distracted.Balance. Uncommon Stock weaves together narrative threads that involve everything from raising venture investment in a technology startup to uncovering a criminal conspiracy. The story needs to be well balanced lest the narrative list to one side or the other. It was important to fine tune how the scenes fit together to fill out the story in a satisfying way that maximized the impact of every thread and every character arc.Uncommon Stock benefitted enormously from going through the developmental editing process. If you have friends who have keen eye for narrative sometimes you can rely simply on using them as beta readers. Throughout my work with Shannon, I complemented her feedback with input from additional beta readers sprinkled in throughout the various revisions. This established an ongoing sanity check that I recommend any writer take advantage of.
My manuscript was ready to enter the sandblasting workshop of copy editing.
What differentiates developmental from other kinds of editing is that it helps to develop the story rather than focus on language, grammar and stylistic issues. It's higher level stuff: this character's motivation doesn't feel right for the decisions they're making, that plot point doesn't make sense given what's happening in the previous scene, this story arc leads nowhere, etc. Not all writers use developmental editors. Not all developmental editors give the same kind of feedback. It's highly variable and personal but the core point is that your developmental editor helps you refine the moving parts in your story to help maximize its potential.
Good developmental editors are hard to find. Anyone can claim to be one but, needless to say, quality varies widely. You can find them on various freelancing websites and a few maintain their own sites. I asked other authors for referrals without a ton of success. Luckily for me, a fantastic developmental editor had snuck into working on Uncommon Stock with ninja-worthy stealth.
My good friend Shannon had been kind enough to be a volunteer beta reader for the manuscript. In a previous life, Shannon was a developmental executive in Hollywood and an acquisition editor for screenplays. She's devoured thousands of stories and her eye for narrative was as spot on as her extremely direct feedback. After getting her detailed beta reader feedback, I immediately offered to bring her in as the official developmental editor for Uncommon Stock.
Shannon did three full passes on the manuscript over the course of about seven weeks. In between each pass she would send me notes and we would have a phone conversation to go over the details. Here are the three major things we focused on:
Structure. TV and movie scripts are highly structured. They follow a three act formula that provides a framework for the story. Novels are much less structured and authors have more freedom to follow the story wherever it leads them. Nevertheless Shannon pointed out some structural elements of Uncommon Stock that could be reworked to improve the bones of the narrative (don't worry, we weren't trying to achieve or emulate a written-for-TV formula). Pacing. Pacing is a critical element of any good story. Ever find yourself yawning halfway through a movie? Remember how the first hundred pages of that novel you read in high school took forever to get through? Stories have rhythms. Just like music, different kinds of stories have different kinds of rhythms. Literary fiction is like Jazz. Epic fantasy is like Wagner. Technothrillers, like Uncommon Stock, are like electronic House music (layered beats building towards a crescendo). If the pacing isn't right, the story loses momentum and the reader gets distracted.Balance. Uncommon Stock weaves together narrative threads that involve everything from raising venture investment in a technology startup to uncovering a criminal conspiracy. The story needs to be well balanced lest the narrative list to one side or the other. It was important to fine tune how the scenes fit together to fill out the story in a satisfying way that maximized the impact of every thread and every character arc.Uncommon Stock benefitted enormously from going through the developmental editing process. If you have friends who have keen eye for narrative sometimes you can rely simply on using them as beta readers. Throughout my work with Shannon, I complemented her feedback with input from additional beta readers sprinkled in throughout the various revisions. This established an ongoing sanity check that I recommend any writer take advantage of.
My manuscript was ready to enter the sandblasting workshop of copy editing.
January 18, 2014
GroundMetrics Inc. and the new generation of San Diego Startups
Here's an article on the new generation of companies in America's finest city that StartUp San Diego published yesterday. They asked me to write a piece on what the new frontier for tech entrepreneurship looks like and I was more than happy to contribute. I'm really excited about what they're doing to support the community of entrepreneurs in San Diego.
“My high school science teacher is holding a tennis ball in his hand.” George Eiskamp smiles as he mimes the motion. “He says, ‘Imagine someone offers you $1M to hit the ceiling with this tennis ball.” And he tosses the tennis ball up so it just kisses the ceiling with green fuzz. He looks around the classroom. ‘Are you going to throw it softly and risk falling short? Or are you going to nail it?’ And he pitches the tennis ball up to ceiling with all his might, sending it careening violently around the classroom.” George sits back and raises his eyebrows. “From that day on, I knew how I wanted to live life leaving everything on the table.”
We’re sitting in a hotel lobby in Houston, TX. Professionally dressed guests are sitting in buzzing conversation circles around the room. A new skyscraper is under construction next door. Houston is a busy town, all the more so given the boom in the oil and gas industry. That’s actually why we’re here. George is the CEO of GroundMetrics Inc., a San Diego startup with a new electromagnetic sensing technology that can image subsurface resources like water, geothermal sources, oil and gas.
GroundMetrics has been kicking major butt since its inception in 2010 and I’ve been working with George on Special Projects since 2012. They have already done jobs for many of the world’s major oil companies and most of the major mining companies. Almost all of their customers have followed on to purchase subsequent surveys. The U.S. Department of Energy recently awarded them a $1.8M grant to use their technology to monitor subsurface carbon sequestration. They regularly present papers at the leading technical forums in their field and are constantly fencing off new IP territory. They set records for their Series A1 raise for speed and size of close with the Tech Coast Angels. Their Series A2 last Spring was oversubscribed even though they raised the deal ceiling by 50% and they achieved a 2.5X valuation jump in just over a year. Oh, and they’ve got a shelf full of awards to point to.
What I love about GroundMetrics is how they represent the best of San Diego and never take no for an answer. In a town where everyone is always complaining about access to capital, they continue to close top notch financings. In an industry that is infamous for slow technology adoption, they are forging new inroads into major customers and leaving no stone unturned. In an an entrepreneurial culture that bypasses hardware and hard science, they are building sensor systems from scratch based on fundamentally new physics.
GroundMetrics is but one example of the new generation of San Diego startups. These entrepreneurs are building businesses that TechCrunch doesn’t even know they should be covering. They’re capitalizing on the many strengths of San Diego instead of lamenting that they don’t live in Palo Alto. They’re more excited about closing customers than investors. They know that investors dollars follow entrepreneurs and not the other way around. You’re more likely to find them at work than at a meet-up because they’re so busy creating their own success. They’re doing whatever is necessary to generate momentum.
I don’t know about you, but I’m bullish on San Diego. Someone hand me a tennis ball.
“My high school science teacher is holding a tennis ball in his hand.” George Eiskamp smiles as he mimes the motion. “He says, ‘Imagine someone offers you $1M to hit the ceiling with this tennis ball.” And he tosses the tennis ball up so it just kisses the ceiling with green fuzz. He looks around the classroom. ‘Are you going to throw it softly and risk falling short? Or are you going to nail it?’ And he pitches the tennis ball up to ceiling with all his might, sending it careening violently around the classroom.” George sits back and raises his eyebrows. “From that day on, I knew how I wanted to live life leaving everything on the table.”
We’re sitting in a hotel lobby in Houston, TX. Professionally dressed guests are sitting in buzzing conversation circles around the room. A new skyscraper is under construction next door. Houston is a busy town, all the more so given the boom in the oil and gas industry. That’s actually why we’re here. George is the CEO of GroundMetrics Inc., a San Diego startup with a new electromagnetic sensing technology that can image subsurface resources like water, geothermal sources, oil and gas.
GroundMetrics has been kicking major butt since its inception in 2010 and I’ve been working with George on Special Projects since 2012. They have already done jobs for many of the world’s major oil companies and most of the major mining companies. Almost all of their customers have followed on to purchase subsequent surveys. The U.S. Department of Energy recently awarded them a $1.8M grant to use their technology to monitor subsurface carbon sequestration. They regularly present papers at the leading technical forums in their field and are constantly fencing off new IP territory. They set records for their Series A1 raise for speed and size of close with the Tech Coast Angels. Their Series A2 last Spring was oversubscribed even though they raised the deal ceiling by 50% and they achieved a 2.5X valuation jump in just over a year. Oh, and they’ve got a shelf full of awards to point to.
What I love about GroundMetrics is how they represent the best of San Diego and never take no for an answer. In a town where everyone is always complaining about access to capital, they continue to close top notch financings. In an industry that is infamous for slow technology adoption, they are forging new inroads into major customers and leaving no stone unturned. In an an entrepreneurial culture that bypasses hardware and hard science, they are building sensor systems from scratch based on fundamentally new physics.
GroundMetrics is but one example of the new generation of San Diego startups. These entrepreneurs are building businesses that TechCrunch doesn’t even know they should be covering. They’re capitalizing on the many strengths of San Diego instead of lamenting that they don’t live in Palo Alto. They’re more excited about closing customers than investors. They know that investors dollars follow entrepreneurs and not the other way around. You’re more likely to find them at work than at a meet-up because they’re so busy creating their own success. They’re doing whatever is necessary to generate momentum.
I don’t know about you, but I’m bullish on San Diego. Someone hand me a tennis ball.
January 16, 2014
Editing a Novel: beta readers
Since last July I’ve popped my editorial cherry by going through the process for the first time with Uncommon Stock. Editing is a painstaking, and often painful, undertaking that has a very different feel from pounding out the first draft. Before starting, I had no idea what the process even involved. After jumping in the deep end I figured it might be helpful to share some of what I learned along the way.
Here’s a breakdown of the editorial life cycle as I experienced it: beta readers -> developmental editing -> copy editing -> proof reading. I’ll make this an “Editing a Novel Series” and will write an in depth post on each stage of the process. Let’s start with beta readers.
Beta readers are unsuspecting victims in your personal network that you ambush with a request to give feedback on the first draft of your manuscript. If you manage them well, their input can be enormously useful as you work to make your story the best it can possibly be.
I sent out the manuscript to four carefully selected beta readers. I spent a lot of time thinking through how many people to send it to and who those people should be. I decided on the number four because I figured that hopefully at least three out of four would read it and that I would be able to balance their input against one another without getting overwhelmed. Then I made my list. I made sure the people on it:Had a high probability of turning it around in a reasonable time frame.Would give their honest opinion minus any rosy tints.Had specialized knowledge relevant to the story and/or editorial experience.Within a few weeks I had three out of four responses. The first was short and high-level. It was encouraging but didn’t include in-depth advice. The second was extremely detailed. It gave specific plot, character and stylistic tips and referenced the text frequently. The third focused on gaps in character motivation (i.e. Why did Johnny steal a cookie from the cookie jar?) and conflict.
With three beta reader opinions in hand (the fourth person hadn’t had time) I read through the entire manuscript again. Then I weighed their opinions against each other and my own. If more than one agreed on something I made sure to address it. If only one brought something up I would consider addressing it. If they directly disagreed then the tie went to the writer (i.e. me!).
As a startup thriller, Uncommon Stock weaves together business and adventure elements. In the first draft the business elements came on too strong. Parts of it read like an entrepreneurship manual in a fictional setting instead of a story that takes place in the tech world. Some conflicts between the characters felt like they were too easily resolved. The pacing of the story needed to be better balanced so that all the excitement didn’t happen all at once, leaving the rest of the story flat. There were too many “suddenly’s.” There were too many adverbs. The list goes on.
I did two new passes on the entire manuscript, going through every word. Why two? I can only keep so many priorities in my head at a time (ask Drea about my dismal multitasking skills). I chose 3-4 critical pieces of feedback and did a rewrite. Then I chose 3-4 more and did it again. After I made it through the second pass the manuscript had improved a great deal. The plot thickened. The characters deepened. The language tightened.
Now it was time to move on to the next step in the editorial process: developmental editing (detailed post coming soon).
Here is how to maximize the value you get out of beta readers:Choose carefully. You need to be sure they will be candid and not shower you with useless praise that doesn’t give you anything constructive to work on. Remind them that you trust their judgement and that their critiques are much more useful than their kudos. It also helps if they’ve edited things before or are expert in something relevant to your book (i.e. an astronaut reads your story about a trip to the moon).Limit the list. Too few sources of feedback don’t give you anything to balance against. Too many are overwhelming and slow down the process. Right size your list for your own work style.Step back. Writing is an intensely personal pursuit. If you don’t bleed some of your soul onto the page then it’s guaranteed to be boring. That said, you MUST NOT TAKE FEEDBACK PERSONALLY. Remember, your beta readers are doing YOU a favor. You may not agree with everything they say (nor should you) but you should be maniacally thankful for their time and input. If you don’t seriously consider what they say then you’re disrespecting their generosity. Keep your perspective and remember that they’re helping you achieve your goal: crafting the best story you possibly can.Keep a few aces up your sleeve. You’re going to want to tap some additional readers later on in the editorial process to vet later drafts. You’ll need fresh eyes so make sure you save some potential beta readers for down the line.Good luck!
Here’s a breakdown of the editorial life cycle as I experienced it: beta readers -> developmental editing -> copy editing -> proof reading. I’ll make this an “Editing a Novel Series” and will write an in depth post on each stage of the process. Let’s start with beta readers.
Beta readers are unsuspecting victims in your personal network that you ambush with a request to give feedback on the first draft of your manuscript. If you manage them well, their input can be enormously useful as you work to make your story the best it can possibly be.
I sent out the manuscript to four carefully selected beta readers. I spent a lot of time thinking through how many people to send it to and who those people should be. I decided on the number four because I figured that hopefully at least three out of four would read it and that I would be able to balance their input against one another without getting overwhelmed. Then I made my list. I made sure the people on it:Had a high probability of turning it around in a reasonable time frame.Would give their honest opinion minus any rosy tints.Had specialized knowledge relevant to the story and/or editorial experience.Within a few weeks I had three out of four responses. The first was short and high-level. It was encouraging but didn’t include in-depth advice. The second was extremely detailed. It gave specific plot, character and stylistic tips and referenced the text frequently. The third focused on gaps in character motivation (i.e. Why did Johnny steal a cookie from the cookie jar?) and conflict.
With three beta reader opinions in hand (the fourth person hadn’t had time) I read through the entire manuscript again. Then I weighed their opinions against each other and my own. If more than one agreed on something I made sure to address it. If only one brought something up I would consider addressing it. If they directly disagreed then the tie went to the writer (i.e. me!).
As a startup thriller, Uncommon Stock weaves together business and adventure elements. In the first draft the business elements came on too strong. Parts of it read like an entrepreneurship manual in a fictional setting instead of a story that takes place in the tech world. Some conflicts between the characters felt like they were too easily resolved. The pacing of the story needed to be better balanced so that all the excitement didn’t happen all at once, leaving the rest of the story flat. There were too many “suddenly’s.” There were too many adverbs. The list goes on.
I did two new passes on the entire manuscript, going through every word. Why two? I can only keep so many priorities in my head at a time (ask Drea about my dismal multitasking skills). I chose 3-4 critical pieces of feedback and did a rewrite. Then I chose 3-4 more and did it again. After I made it through the second pass the manuscript had improved a great deal. The plot thickened. The characters deepened. The language tightened.
Now it was time to move on to the next step in the editorial process: developmental editing (detailed post coming soon).
Here is how to maximize the value you get out of beta readers:Choose carefully. You need to be sure they will be candid and not shower you with useless praise that doesn’t give you anything constructive to work on. Remind them that you trust their judgement and that their critiques are much more useful than their kudos. It also helps if they’ve edited things before or are expert in something relevant to your book (i.e. an astronaut reads your story about a trip to the moon).Limit the list. Too few sources of feedback don’t give you anything to balance against. Too many are overwhelming and slow down the process. Right size your list for your own work style.Step back. Writing is an intensely personal pursuit. If you don’t bleed some of your soul onto the page then it’s guaranteed to be boring. That said, you MUST NOT TAKE FEEDBACK PERSONALLY. Remember, your beta readers are doing YOU a favor. You may not agree with everything they say (nor should you) but you should be maniacally thankful for their time and input. If you don’t seriously consider what they say then you’re disrespecting their generosity. Keep your perspective and remember that they’re helping you achieve your goal: crafting the best story you possibly can.Keep a few aces up your sleeve. You’re going to want to tap some additional readers later on in the editorial process to vet later drafts. You’ll need fresh eyes so make sure you save some potential beta readers for down the line.Good luck!
January 13, 2014
What to do after your company gets funded by a VC
Jeff Donahue is a good friend and battle-scarred veteran of venture-backed and private equity-backed companies. He has raised over $275M of funding for early and later stage startups and has been CFO of 10 emerging growth businesses. He's worked across the table from leading investors like GRP (now Upfront Ventures), Invesco, ComVentures (now Fuse Capital), Allegis Capital, Alta-Berkeley, Invision, Steamboat Ventures and many more. I'm thrilled that he's offered to write a Venture Financing Series. Without further ado, here's episode five. You can read episode one through four here.
VCs are compelled to be successful and generate massive returns for their Limited Partners. Their careers, egos and reputations rest on this. In short, they cannot tolerate your failure to execute as CEO, and they will do virtually anything to protect themselves from having to write down or write off their investment in your company.
Your job as CEO is to make the VCs rich, and that unequivocally is how the game is played. It often has been observed that the real entrepreneurial work commences once you get funding.
Failed execution will result in an array of unpleasant consequences for you. It is not just getting fired and, in the extreme, getting crushed/washed out in a restart that results in your ownership of the company becoming worthless. It is also the arduous, painful, confrontational, and often-hostile process of failure that feeds on itself and distracts you, your team and the VCs along the way. So, here are some points to help you avoid that process.
Understand that immediately post-funding you will be under the pervasive, relentless and proctoscopic-intense scrutiny of the VCs at all times. Because the success rate of most of their investments is low, the minute you take a VC’s money your life changes dramatically. If there ever was a profession grounded on judgment, it is VCs judging CEOs. They will judge you based on everything you say and do – everything you say and do is a marker to them – and they also will be busy reading between the lines of everything you communicate. While they love success, they are on high alert for any perceived signs of slippage or failure.Be careful in how you communicate with the VCs. Don’t ever be cute in your communications with them (digital or in-person communications). Don’t joke with them and don’t try to be friends with them – save that for post-exit. Until exit, you have but one job, which is to execute on the business plan. Doing so will take care of the future, either via IPO or your company getting acquired. Of course, you will have gotten to know the VCs during the investment process, possibly quite well, but once funded a whole new relationship between you and them commences.Communicate the truth, the whole truth and nothing but the truth to the VCs as your company evolves. If there is anything that destroys trust with a VC, it is hiding something from him/her. If there is slippage in the execution of the business plan, you have to rigorously document how and why it happened and what you are going to do to catch up. Undocumented slippage is ganz verboten. For an in-depth discussion, see Mark Suster’s excellent post on how board meetings should be conducted.If your execution slips and remediation is not in sight, a VC will stop at nothing to terminate you, including colluding with your co-founders behind your back. Perhaps this is to be expected since the venture capital realm is one of the few investment arenas in the world where the investors (the Limited Partners behind the VCs) stand a greater than 50% chance of losing everything. VCs are very busy wanting you to be who they want you to be. Be prepared for that, and buck up. VCs who competently oversee their portfolio companies (see my prior post) are quick to grasp management’s failures and take the necessary remedial actions to preserve their interests. At the same time, good VCs are quick to supplement your execution with additional resources, typically highly skilled people in the areas where the company needs them. No VC wants a CEO to fail, and they will step in to help. But, they have finite patience and short fuses.
A moral of the story might be: don’t take a VC’s money unless you really want to or have to. Bootstrapping can be bliss. The VC world can encompass a mind-boggling amount of greed and ego. Sing to that mantra, never take things personally, and spend wisely.
Speaking of spending wisely, I remember being CFO of a start-up in London. On the heels of a stupendous Series A round from top European and American VCs, almost the first thing the CEO did was acquire a very expensive membership to one of London’s premier golf clubs. The rationale was that it was needed to entertain potential customers, vendors and partners. I perceived the membership and its rationale as ominous. I wish I ultimately had not been vindicated.
At the end of the day, if you succeed in executing, everyone gets rich – you, the VCs, employees, and other stakeholders in your company. That is a glorious outcome, and, as I noted in a prior post, the degree of difficulty of raising funding for your next venture plummets. But, keep in mind that as CEO you are the single point of failure for the VCs. Key members of your management team can be deemed culpable as well, but it is your fault for having not overseen them. The only bulls-eye the VCs have is painted on your forehead.
VCs are compelled to be successful and generate massive returns for their Limited Partners. Their careers, egos and reputations rest on this. In short, they cannot tolerate your failure to execute as CEO, and they will do virtually anything to protect themselves from having to write down or write off their investment in your company.
Your job as CEO is to make the VCs rich, and that unequivocally is how the game is played. It often has been observed that the real entrepreneurial work commences once you get funding.
Failed execution will result in an array of unpleasant consequences for you. It is not just getting fired and, in the extreme, getting crushed/washed out in a restart that results in your ownership of the company becoming worthless. It is also the arduous, painful, confrontational, and often-hostile process of failure that feeds on itself and distracts you, your team and the VCs along the way. So, here are some points to help you avoid that process.
Understand that immediately post-funding you will be under the pervasive, relentless and proctoscopic-intense scrutiny of the VCs at all times. Because the success rate of most of their investments is low, the minute you take a VC’s money your life changes dramatically. If there ever was a profession grounded on judgment, it is VCs judging CEOs. They will judge you based on everything you say and do – everything you say and do is a marker to them – and they also will be busy reading between the lines of everything you communicate. While they love success, they are on high alert for any perceived signs of slippage or failure.Be careful in how you communicate with the VCs. Don’t ever be cute in your communications with them (digital or in-person communications). Don’t joke with them and don’t try to be friends with them – save that for post-exit. Until exit, you have but one job, which is to execute on the business plan. Doing so will take care of the future, either via IPO or your company getting acquired. Of course, you will have gotten to know the VCs during the investment process, possibly quite well, but once funded a whole new relationship between you and them commences.Communicate the truth, the whole truth and nothing but the truth to the VCs as your company evolves. If there is anything that destroys trust with a VC, it is hiding something from him/her. If there is slippage in the execution of the business plan, you have to rigorously document how and why it happened and what you are going to do to catch up. Undocumented slippage is ganz verboten. For an in-depth discussion, see Mark Suster’s excellent post on how board meetings should be conducted.If your execution slips and remediation is not in sight, a VC will stop at nothing to terminate you, including colluding with your co-founders behind your back. Perhaps this is to be expected since the venture capital realm is one of the few investment arenas in the world where the investors (the Limited Partners behind the VCs) stand a greater than 50% chance of losing everything. VCs are very busy wanting you to be who they want you to be. Be prepared for that, and buck up. VCs who competently oversee their portfolio companies (see my prior post) are quick to grasp management’s failures and take the necessary remedial actions to preserve their interests. At the same time, good VCs are quick to supplement your execution with additional resources, typically highly skilled people in the areas where the company needs them. No VC wants a CEO to fail, and they will step in to help. But, they have finite patience and short fuses.
A moral of the story might be: don’t take a VC’s money unless you really want to or have to. Bootstrapping can be bliss. The VC world can encompass a mind-boggling amount of greed and ego. Sing to that mantra, never take things personally, and spend wisely.
Speaking of spending wisely, I remember being CFO of a start-up in London. On the heels of a stupendous Series A round from top European and American VCs, almost the first thing the CEO did was acquire a very expensive membership to one of London’s premier golf clubs. The rationale was that it was needed to entertain potential customers, vendors and partners. I perceived the membership and its rationale as ominous. I wish I ultimately had not been vindicated.
At the end of the day, if you succeed in executing, everyone gets rich – you, the VCs, employees, and other stakeholders in your company. That is a glorious outcome, and, as I noted in a prior post, the degree of difficulty of raising funding for your next venture plummets. But, keep in mind that as CEO you are the single point of failure for the VCs. Key members of your management team can be deemed culpable as well, but it is your fault for having not overseen them. The only bulls-eye the VCs have is painted on your forehead.
