Tuesday, August 04, 2015

Can I Take a Vacation right after my Company gets Acquired?

You probably can't. If you can, you shouldn't.

I get it: You're coming to the end of the due diligence cycle, all the terms are settled, and now you're wondering if you can get the acquiring company to give you a vacation before you start.

Running a startup is hard, and running a startup while doing due diligence and pretending nothing out of the ordinary is happening is even harder. A vacation seems more appealing than ever.

In most cases, you can't immediately take a vacation: Most employers like Google start you off with 0 days of vacation, each payroll cycle you get extra ~0.288 vacation days, and you can't go too many days into to the red. For these acquirers, you could negotiate a vacation between close and your start date, but I've never seen that happen in practice.

In some cases you can: For example, Twitter has an as-needed vacation policy without a preset limit, so you could argue that right at the beginning of working there, you need a vacation.

If you can take a vacation, when should you?

As hard as it sounds, you should start your new job and work hard for at least a month: You just got your TechCrunch mention, and everyone at the acquirer's company is curious about your team and what you can bring to the table. You should use the time in the spotlight to get to know your new coworkers, and show your new manager that he or she has done the right thing in sponsoring your deal. As the former CEO or COO, you'll also receive a ton of requests from accounting and finance to explain your balance sheet, and your attendance will be mandatory.

After a month or so, you've met everyone and now you can use the fruits of your labor to pay for a nice vacation.

Monday, August 03, 2015

Paternity Leave

Our wonderful son Atlas was born in February and he is the most amazing boy ever.

Twitter's paternity leave is very generous: 10 weeks of leave at full pay. I've taken it in two chunks: 3 weeks at birth, and the remaining 7 is about to come to an end as he is about to go to day care.

Occasionally he does sleep a little bit so I'm going to try to blog a bit this week.

Friday, January 16, 2015

Startup Infrastructure

I get a lot of questions about the setup we had at Namo Media: "What did you use for accounting?", "How did you do payroll?", and so on.

As a startup founder, it's important that you get a lot of the startup infrastructure out of the way as quickly as possible. There's little time to waste while your angel or seed funding is ticking down. Cleaning up the mess later is costly and wasteful, so getting these right is important. Back at Xobni in 2007, we hired a full-time admin who managed payroll, catering, and so on, but in most cases you no longer need a dedicated person for these activities just after your first big round. The good news is that there are now all sorts of great tools to get the administrative work done. 

Keep in mind we were based in San Francisco. If you're elsewhere, these might not apply to you.

Lawyers: If you're starting a new company, this is the first thing you'll need. I could spend hours singing the praises of Trevor Knapp at Gunderson Dettmer. He helped me through both reMail and Namo Media - incorporation, term sheets, exits, the whole nine yards. He just made partner so his help is now pricey, but totally worth it. He won't waste your time and will have actionable and useful advice.

Bank account: This is the second thing you'll need. At Namo Media, used a Wells Fargo corporate checking account, as they had partnered with Founders Den and offered us a great deal. Wells Fargo has amazing service, but honestly, a run-of-the-mill small business checking account would have sufficed. At reMail I used Citibank which was pretty much the same. I've also heard good things about First Republic.

Credit Cards: Initially, we used secured credit cards from our Wells Fargo account, which was a waste of time and liquidity. Eventually, we switched to using an American Express Gold Business card, which gives you travel rewards for the dollars you spend - well worth it if you're running an ad tech business and need to fly back and forth between NY and SF. 

Office Space: At the start, we were based out of Founders Den, which is in a great location and has useful events where you can meet investors and accomplished startup people. It has a cappuccino machine but no lunch. We moved to The Hattery which offers a great vibe and serves lunch, but the coworking space can get a bit loud. Next, we considered a number of different spaces to move into, including Runway, which is coincidentally in the same building as Twitter. However, we decided to sublet from another startup for a while, before finding our own space. Eventually we rented our own office at 185 Berry (the same complex as Dropbox), through a commercial real estate agent named Jerry Adamson, who came through a personal recommendation and had office space ready for me to tour the very next day. Office space in San Francisco is expensive, so get ready for sticker shock. You'll likely need a real estate lawyer to negotiate your lease, but the one we worked with I wasn't happy with so you'll have to find your own.

Accounting: We used Xero which was great. It makes it easy to set up, import your bank feeds, reconcile, and write invoices. Make sure you get started on accounting early - most professional investors like Google Ventures (they were our lead investor) now require quarterly statements at the seed stage. As a side note, at reMail I used QuickBooks, but Xero makes QuickBooks look like a dinosaur.

Accountant: We worked with Barlow&Hughan because I've been a happy client there for many years.

Cap table management: We let every one of our employees early-exercise their shares. In retrospect, I wouldn't have done that, since the amount of paperwork involved is extreme, and even the smallest mishap can cause major headaches in due diligence for M&A or the next round of funding. But even if you're just issuing options, you'll need to get this right. I've heard good things about eShares, which will automate a lot of this and will let you view your cap table in real-time.

409a: We worked with Intrinsic Valuation and they were quick and professional. Cap table management services like eShares now offer 409a's as a subscription, which may be a preferable setup and something I would look into.

Payroll: We used ZenPayroll which was awesome. Great online dashboard, super-responsive support, very professional. Most of what you'll want to do you can do with Zenpayroll. Your employees can do log into a portal do download pay statements and W-2s. Your accountant can log in and easily pull payroll reports. At reMail, I used Paychex, which is bad, complicated, and has a human calling you in the middle of the day to authorize your payroll.

Health insurance: We used SimplyInsured but had a rocky start as their systems weren't up to ZenPayroll-level perfection, and some of the stuff on their dashboard was misleading. It got a lot better towards the end of Namo Media. You may want to consider going through a run-of-the-mill small-business insurance agent. Don't economize on health insurance since that's the last thing employees want to have to worry about.

Signing contracts: We used what is likely the highest-margin business in the world, HelloSign. Their dashboard is amazing, and it's easier to use than DocuSign. They will charge you $40 a month for the privilege, mostly because they can and because it's worth it. If you're an old-time YCombinator founder, you can dig up a code in the mailing archives which will give you a slight discount. We signed literally everything with HelloSign, even our M&A paperwork.

Catering: I would have liked to use Zerocater, but we didn't qualify because they had a 10 person minimum requirement (we were 8 people), so we ended up going with Cater2.me, which was a OK. They had some suppliers that show up an hour or more late, by which time I was having a hunger attack. Your mileage may vary with any of these companies, as they all tap into the same pool of restaurants.

This is about it - once you have all this set up, you and your co-founders will be well on your way. Don't forget to focus on your product and your business because it's not the infrastructure that makes you succeed.