CONFIDENTIAL For Internal Use Only UCI BPC Workshop ”Successful Teams in Start-up Enterprises ” John Creelman (UCI BA ‘79, MBA ‘89) January 15, 2013

CONFIDENTIAL For Internal Use Only Contents My background. Attributes of successful teams in start-up enterprises. Practical application to BPC. Q&A

CONFIDENTIAL For Internal Use Only My background “Mature” Companies Western Digital Corporation (5 years): –Corporate, treasury and operations finance – Public Company MTIC (2 years): –Corporate, treasury and operations finance - Private Company. –IPO in 1994 Emerging Growth Companies CFO for 7 Venture backed start-ups (19 years): –Who: Elemental SW, Copper Mountain Networks, VSK Photonics, Active Network, ID Analytics, PowerGenix Systems, RainTree Oncology. –What: Web development SW, professional services, telecommunications equipment, semiconductors/photonics, SAAS, energy storage, health care services. –The environment: constant change, under-resourced, dynamic and hyper competitive markets, new business models, constantly fund raising.

CONFIDENTIAL For Internal Use Only Attributes of Successful Teams 1.The team has a designated leader. 2.The team has a credible blend of skills to succeed. 3.The leader has a process for constructive internal debate and for decisive decision making. 4.The team adapts and changes over time.

CONFIDENTIAL For Internal Use Only Key Attribute #1 The team has a designated leader. –Being the CEO / leader is the hardest job. –Democracy works well in politics but not in start-ups. While you need internal debate, ultimately someone has to be tasked with making the hard decisions. –Success will be tough if team does not have one designated leader. –Part of leadership is clarifying roles (and ownership): Agree upon roles and essential competencies. In most cases, agreeing what you won’t do is also important. Focus, focus, focus……. Structure the ownership / equity / compensation.

CONFIDENTIAL For Internal Use Only Key Attribute #2 The team has a credible blend of skills to succeed. –Investors fund 2 things: “the idea” and “the right team”. –The composition of “right team” changes over time. –Titles matter. Extreme example: don’t have a CEO and a President and a COO. –Some skills can be provided by advisors and Board members. –Don’t apologize for what your organization lacks, acknowledge gaps and have a plan to address them.

CONFIDENTIAL For Internal Use Only Key Attribute #3 The leader is skilled at fostering internal debate and driving to resolution: –Core values here are critical: Intellectual honesty. Respect. Listening. Humility. –When the debate is over, if there is not pure consensus the leader makes the tough decision and creates consensus.

CONFIDENTIAL For Internal Use Only Key Attribute #4 The team adapts and changes over time. –Adaptation means changes in roles, organization structure, process, systems and tools. –Adaptation is a dynamic process it starts on “day one”. –The faster the pace, and the greater the challenges the more essential adaptation is. –Supplement internal team with advisors, technical advisors and Board of Directors. –The team also modifies and tailors its message to fit the environment and constituents.

CONFIDENTIAL For Internal Use Only Practical Application to BPC 1.Teams with a clear leader will be viewed as being more grounded and decisive. 2.Initially, focus on the essential skills of the core team: –Supplement with advisors and BOD members –Acknowledge which skills you lack and communicate the plan to remedy the gaps 3.Develop a culture which fosters healthy debate: –Ask yourselves questions that outside investors would ask. –Talk about the tough decisions with investors 4.The team should always have a sense of the adaptations and challenges that it faces (“what keeps you up at night?”)