March 28, 2024

You’re the Boss Blog: Why We Have Changed Our Minds About Pittsburgh

Building the Team

Hiring, firing, and training in a new era.

In August 2012, Fred Wilson, the venture capitalist, wrote a blog post called No Battle Plan Survives the First Enemy Fire. In it, he wrote:

“I have been using this line a lot lately. It is a bastardized version of Field Marshal Helmuth von Moltke’s ‘No plan of operations extends with certainty beyond the first encounter with the enemy’s main strength.’

I always encourage entrepreneurs to get on with the business of putting their product in the market. All the planning and designing and strategizing and grand plans of taking over the world are no match for reality.

The real world is messy. Stuff happens that you could never imagine. And then you are reacting to all of that and your grand plans are in tatters. That’s reality. It happens to everyone.

So no point in waiting in the hopes that you will nail it. You won’t. The enemy will take fire, you will hit the deck and then the good stuff starts.”

The post refers specifically to a new product introduction and interaction with the competition, but I think it applies to anything that happens in a start-up: avoid analysis-paralysis, gather data, assume it is imperfect information, have the courage to make a decision, but also the humility to make a change when new data or circumstances require it. Or, as Mark Suster, a venture capitalist in Los Angeles, put it succinctly (and in language more colorful than we can use here): “Just Do it.”

In my last two posts, I talked about the analysis that we had done of our sales funnel, and the decision we made as a result to start a dedicated lead-generation center. We chose a city, Pittsburgh, to build the new organization. We advertised the role and conducted job interviews. But, I don’t think we are going to open an office in Pittsburgh.

We executed our normal recruiting process. Our head of talent, Rebekah, set up 21 interviews for Tom, our head of sales, and me to conduct in person in Pittsburgh. And we met some great folks, but there was one interview in particular that made me change my mind.

I sat down with a smart woman who is currently doing sales for an event-planning company in Pittsburgh. She graduated from college just a couple of years ago and is well on her way to a stellar sales career. When we began the interview, it was clear she had done her homework to prepare. She knew about H.Bloom, the markets we are in, the products we offer and the customers we serve. When I asked her why she was interested in H.Bloom, she offered the following response: “I want the chance to grow. I’ve read about your SEED Program for market managers, and H.Bloom University. I’m hopeful to start out in lead generation and eventually grow into a larger role. In fact, I’d love to move to a new H.Bloom market at some point.”

This was an epiphany for me. I spend a great deal of time on talent development at H.Bloom: interviewing, hiring and training our folks. And yet, here I was in Pittsburgh, interviewing people for a position that didn’t have a growth path. Our data analysis had uncovered an extraordinary close rate by our sales people when they have an in-person meeting, and it highlighted the fact that the activities employed to generate those in-person meetings were performed remotely. But the data did not take into consideration one of our three founding principles (drawn from John Quincy Adams’ quote): “Create an environment in which team members can dream more, learn more, do more and become more.”

How could we combine these two important goals: create more activities with a dedicated lead-generation force while also continuing to provide an environment in which people can learn and take on more responsibility?

It would be difficult in Pittsburgh. While the remote location would provide a dedicated work force and a lower cost of operations, it would not have the additional resources that exist in our headquarters, including access to the management team and current account executives. And it would not have the ability to see our operations in-person on a daily basis. The absence of these things would be fine if the new office were exclusively a lead-generation center. However, if it were to reflect the H.Bloom ethos of talent development, its remote location would be a real impediment.

So, we are now evaluating the idea of creating a SEED Program for sales people. Our current thinking is to run the program out of our headquarters in New York. Participants would engage in a three-to-six month program, where they would focus on lead generation Monday through Friday, dramatically increasing the in-person meetings for our account executives across the country. In addition, they would do weekly sales training with our head of sales and learn about the rest of our organization and operations with “field trips” around our New York market.

I’m sure this plan will go through more changes as we balance the need for an increase in lead generation with the desire to maintain a fundamental trait of our culture, which is talent development. I am also certain that we will continue to be data driven, with the courage to make decisions based on the data but the humility to change direction when more information, or a different priority, comes to light.

In the meantime, I hope we can find a way to work with the ambitious sales person in Pittsburgh. She would make a great addition to our team.

Bryan Burkhart is a founder of H.Bloom. You can follow him on Twitter.

Article source: http://boss.blogs.nytimes.com/2013/04/16/why-we-have-changed-our-minds-about-pittsburgh/?partner=rss&emc=rss

Media Decoder Blog: News Corp. Board Undergoes a Shuffle

The board of directors at News Corporation, considered to be highly deferential to its chairman, Rupert Murdoch, is experiencing some turnover that will bring a new independent voice to its ranks.

James W. Breyer, a prominent venture capitalist and member of Facebook’s board, will be nominated for election to News Corporation’s board when shareholders gather for their annual meeting in October, the company said Friday.

At the same time, the company said that two longtime board members, Kenneth E. Cowley and Thomas J. Perkins, were leaving the board.

The shuffling comes as the company, under investigation on two continents for improper business and journalism practices, faces growing questions about the independence of its board of directors.

While News Corporation complies with Nasdaq guidelines for the number of directors who lack direct ties to the company, many of the directors who are considered independent for practical purposes have long histories with Mr. Murdoch.

Mr. Perkins, a leading Silicon Valley entrepreneur whose ties to the company were minimal before joining the board in 1996, and Mr. Cowley, a former executive at Mr. Murdoch’s Australian media arm, were both considered independent directors.

Mr. Breyer appears to have no direct links to News Corporation. His experience on corporate boards is deep. In addition to Facebook, he also serves on the boards of Wal-Mart, where he is the presiding independent director, and Dell.

Given his experience in the technology, Mr. Breyer’s nomination is in step with News Corporation’s strategy to make digital businesses a focal point of its growth strategy.

In a statement, Mr. Murdoch said: “Jim has a remarkable track record in the investment community and his background in media and technology will enable him to make significant contributions to News Corporation’s board.”

Just last month, the board was expected to add Elisabeth Murdoch, Mr. Murdoch’s daughter. But she and the company decided it was best to delay her nomination. Not only is News Corporation facing questions about hacking voice-mails of private citizens in Britain and anticompetitive practices in the United States, but a lawsuit over its acquisition of Ms. Murdoch’s production company, Shine.

The purchase spawned a lawsuit last spring on behalf of some shareholders. The suit, filed by Amalgamated Bank, asserted that Mr. Murdoch ran his company “as his own private fiefdom with little or no effective oversight from the board.”

News Corporation has moved to dismiss the suit.

Article source: http://feeds.nytimes.com/click.phdo?i=b924884a3b804b1f0f91ba85f6623769

DealBook: Groupon Plans I.P.O. With $30 Billion Valuation

Groupon employees at its headquarters in Chicago. The company now employs more than 7,000 people and has 83 million subscribers across 43 countries.Tim Boyle/Bloomberg NewsGroupon employees at its headquarters in Chicago. The company now employs more than 7,000 people and has 83 million subscribers across 43 countries.

9:31 p.m. | Updated

As Groupon would say, the deal is on.

The social buying site on Thursday filed to go public, a hotly anticipated debut that could raise $3 billion, according to two people close to the company who were not authorized to speak publicly. At that level, the company would be worth roughly $30 billion, surpassing the value of Google at its initial public offering.

Groupon is part of an elite club of social Internet companies that is fanning investor ardor for the next generation of technology giants. The gaming company Zynga is preparing to file for an offering that could value it at more than $10 billion, according to two people with knowledge of the matter who were not authorized to speak publicly.

Facebook, which recently raised $1.5 billion in a financing led by Goldman Sachs, is expected to file by next year. It’s the giant of the group, valued at as much as $80 billion.

On Thursday, the online music service Pandora moved one step closer to the public markets by setting its I.P.O. price range at $7 to $9, according to its latest filing. Pandora plans to raise as much as $141.6 million in its offering, at a $1.4 billion valuation.

“I think its all about pent-up demand,” Bing Gordon, a venture capitalist and a director of Zynga, said. “Markets are often good predictors, and I do think social is just getting started.”

The first wave of new technology stocks has already sparked a frenzy, prompting worry that this boom could be a bubble. Shares of LinkedIn, a company that has struggled to maintain profitability, more than doubled on its first day of trading in May. At Thursday’s closing price of $78.63, it was still trading around 75 percent above its offering price.

LinkedIn’s stunning debut has pushed Silicon Valley and Wall Street bankers to revise expectations higher on all types of technology offerings. According to one person close to Groupon, the company and its bankers have struggled to pinpoint the final valuation for the I.P.O. The person cautioned that it could move higher or lower based on market conditions.

“I would urge any investor to think about the fundamentals,” said Sucharita Mulpuru, a Forrester Research retail analyst. “Sure Groupon could be the next Amazon, but as an investor do you have the patience to wait them out?”

Groupon, based in Chicago, has enjoyed a meteoric rise in its short life.

Shortly after its founding, Groupon notched revenue of $94 million in 2008. Two years later, it swelled to $713 million. The company — which now employs more than 7,000 people and has 83 million subscribers across 43 countries — reported $644.7 million of revenue in the first quarter of 2011 alone.

As its prospects have grown, so has investor interest. In 2010, the company was worth roughly $1.4 billion, based on a fund-raising round led by the Russian firm D.S.T. Global. Groupon spurned a $6 billion takeover bid from Google in December, opting instead to raise nearly $1 billion from Fidelity Investments, T. Rowe Price and other investors.

At a $30 billion market value, Groupon would top that of Google at its market debut. Google raised $1.67 billion in August 2004, putting its value at $27 billion. (In its filing, Groupon put its I.P.O. value at $750 million, a nominal amount used to calculate the registration fee.)

In a letter to prospective shareholders, Groupon’s chief executive, Andrew D. Mason, highlighted the company’s growth opportunities but cautioned investors to temper their profit expectations.

“In the past, we’ve made investments in growth that turned a healthy forecasted quarterly profit into a sizable loss,” he said. “When we see opportunities to invest in long-term growth, expect that we will pursue them regardless of certain short-term consequences.”

Like many start-ups, Groupon is still struggling to turn a profit. Last year, the company’s loss topped $450 million, compared with $6.9 million in 2009 and $2.2 million in 2008. The company’s biggest expense is marketing. Groupon spent $263.2 million on advertising and subscriber e-mails in 2010, compared to just $4.5 million the year before.

“We cannot be certain that we will be able to attain or increase profitability on a quarterly or annual basis,” the company said in its filing.

With less-than-ideal financials under generally accepted accounting principles, Groupon is trumpeting a nonstandard metric that excludes marketing and acquisition costs. On that basis, it reported $60.6 million in operating income last year and $81.6 million in the first quarter this year.

To some, the use of such nonstandard measures harkens back to the days of the technology boom in the late 1990s, when unusual metrics like “eyeballs” were touted instead of numbers like net income. Those specialized figures were often used to present a rosier picture of a company’s financials, obscuring their profitability.

Groupon argues that its massive marketing budget is both necessary now and will dwindle over time. Locked in a race for subscribers around the world, the company is willing to spend a tremendous amount of money in the short-term to secure a dominant market share. It says it will cost less to maintain those subscribers over time.

As an example, Groupon said in its filing that it spent $18 million to add about 3.7 million subscribers in the second quarter last year. By March 31 of this year, those customers generated $145.3 million in revenue and $61.7 million in gross profit.

Groupon’s investors and early employees stand to reap a windfall in an I.P.O.

The company’s largest shareholder, its co-founder and board member Eric P. Lefkofsky, owns 64.1 million shares, or roughly 21.6 percent of the company’s Class A common stock — a stake that would be worth billions of dollars. The venture capital firm, Accel Partners, which invested in Groupon in November 2009, owns a 5.6 percent stake. Mr. Mason, who made $184,599 last year, controls 7.7 percent of company’s Class A shares.

While Class A shares will be sold in the I.P.O., Mr. Mason, Mr. Lefkofsky and Bradley Keywell, a co-founder and director will hold onto all of Groupon’s Class B shares. The dual-class stock structure, already in place at Facebook and Google, allows founders to effectively maintain control of their companies while still trading in the public markets.

The rush to go public, at increasingly higher valuations, has fanned concerns that the market is, once again, starting to feel bubbly.

Groupon, which will trade under the ticker “GRPN,” has hired Morgan Stanley, Goldman Sachs and Credit Suisse as underwriters for the offering.

Claire Cain Miller and Ben Protess contributed reporting.

Article source: http://feeds.nytimes.com/click.phdo?i=93ed15141cda9e99025850c9679d6403