For 89 Bucks, anyone can be a Founder!


uber

When I relocated to Silicon Valley, I noted the usage of the ubiquitous sobriquet, “Founder”, next to the titles of CxOs for many startups.  Interestingly, anyone can register a C-corp for the total cost of $89 fee in the State of Delaware.  (By the way, it is cheaper in other states.)  With that action alone, one becomes a “founder”. But being a Silicon Valley founder can develop into a business leader?

I could never understand Silicon Valley’s obsession with the term, “founders,” almost as if that individual would be able to walk on water.  Start a company with 89 bucks, and that “founder” should be the sole manager of his/her vision to a very fruitful exit. Let that “founder” have absolute control over his/her company with the appropriate corporate, legal framework, where the founder’s shares represent multiple votes.  Those young founders should be given clear, loose reins like any infant coddled by a mother. One problem: these are not “children” and those toys are being bought with money from institutional investors, many of which are retirement funds. Being a founder does not equate to being a business leader. Many Silicon Valley founders, we are finding out, are petulant and selfish, others difficult, and some are merely aimless.

Of course, we should look at Uber, with one WSJ article comparing its management to the series, Game of Thrones – https://www.wsj.com/articles/uber-14-bosses-one-corporate-game-of-thrones-1497468304?mg=prod/accounts-wsj.  Frankly, I consider it apropos metaphor. Can we safely say that Travis Kalanick would be the “Ramsay Bolton” character, the ruthless leader who would execute whatever action to retain or seize his authority over his kingdom?   Bolton emphasized absolute control by removing any opponent who would block or interfere his leadership – including killing his father and half-brother.  He instilled fear. In his battles, he would release arrows to jeopardize the safety of his own soldiers, just to win. Yet, we know how the series terminated that character.  Fear and ruthlessness, as a mode of leadership, can only get you so far.

Therefore, “founder” does not equate to true leadership. Still, various leading SV commentators extol entrepreneurship and title, founder, as the only way to be successful in the business of technology. Having control is better than sharing leadership with employees. They conclude that ruthless founders should foster fast growing companies to return sizeable returns for its investors. One company, Theranos, raised an incredible $740 million, and its founder, Elizabeth Holmes, was profiled in many major business publications.  Uber capital raising efforts even surpassed that of Theranos by raising over a billion dollars. These commentators forget that control does not result in good and effective corporate management.

Leaders show compassion and empathy.  And that is what “Jon Snow” Game of Thrones character is about.  In the Game of Throne Series, Snow trains his own team better swordsmanship for them to survive.  In his battle against Bolton, he believed that Bolton’s selfish leadership would impact the motivation of his armed forces.  Snow believes that battles are won by encouragement and selfishness.  He is, unquestionably, a leader whom many would follow in any battle.

If Kalanick is the “Bolton” character, then Jamie Dimon, CEO of JP Morgan Chase, is the Stark family member, “Jon Snow.”   Why?  Dimon demonstrated his concerns about the lowest levels of his workforce by raising the minimum wage for the bank’s lowest ranking employees so that the lowest ranks have a decent standard of living.  http://fortune.com/2016/07/12/jamie-dimon-jpmorgan-employees-raise/. JPMorgan Chase employs over 234,000 employees and ranks as one of the best, profitable banks in the World.  Great business leaders generate the best long-term results for their organizations.

Contrast this Silicon Valley attitude when the Silicon Valley company, “Yelp”, discovered that a minimum waged employee complained in a blog about her low, minimum wage salary in one of the most expensive cities, San Francisco, where she barely made a living. Yelp’s response was to terminate her.  So much for compassion in Silicon Valley.  Or, in the case of Uber, one woman complained of sexual harassment, she was totally ignored and, consequently, she resigned.  Or people should remember the recorded video of Kalanick’s response to the Uber driver, an employee, who complained about his financial losses.  Or we can look at Theranos treatment of one employee, the grandson of one of the board members, spending over $200k to defend himself from Theranos’ ruthless attorneys, when he attempted to whistle blow the company’s ineffective technology.  His observations were later vindicated by the FDA.

Much of Silicon Valley’s behavior is attributed to the venture capitalists in the region. They invest in “founders” who will achieve growth at whatever it takes to get there. Whatever shortcuts needed. Even with mendacity. Paul Thiel, a well-known Silicon Valley investor, applies the “blitz-scale” approach to growth. Super speed to become number 1 priority in the industry in short-time frames. Maybe these guys should learn something from the Game of Thrones to see what appropriate management strategy achieves in the long run.

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About Juan Ramón Zarco, SVVGP 胡安•雷蒙•扎尔科

Juan Ramon Zarco, 胡安•雷蒙•扎尔科, Silicon Valley Ventures Growth Partners llp, Hygieia Healthcare Technologies Company, AllRest Technologies LLC, Crimson Growth Partners LLP, jrzarco2001@yahoo.com, is an experienced as CxO, General Counsel and Secretary to public and private companies with global operations. Established track record of producing practical, revenue-focused solutions. As Counselor and Secretary, demonstrating vision, integrity, and sound business judgment, to CxOs. Managed complex, strategic transactions, M&A, contracts support, PE Financing, IPO, SEC compliance, Corporate/HR governance, IP licensing, Budgeting, Staff, outside counsel management, International market access strategies, Domestic & foreign government relations and advocacy. Creative in designing and implementing market access strategies. Practices law beyond conventional model with low-overhead and project-based fees. Effective at managing departments, formulating marketing strategies, balancing budgets, and implementing cost-saving measures. Extensive in-house and private practice experience, advising clients on commercial, corporate, international business, and technology law and policy. http://www.docstoc.com/video/89135472/make-your-business-an-international-presence; http://www.youtube.com/watch?v=fx5gijf3yoc For Sprint, he managed iDen international development in Southeast Asia, Middle East, and Africa, and contractual issues with Verizon. In Private Equity, he worked with Pegasus in vetting international investment deals and interim President for portfolio companies, such as Data Foundation, a data storage company, handling marketing, strategy, fund raising, and accounting. Before Pegasus, Mr. Zarco, as CLO and V.P. of Corporate Development, played a principal role in the structuring, international expansions for 2 telecom companies, U.S. Cable Group and Viatel, Inc. in financing and M&A deals exceeding $200 million. Mr. Zarco earned a J.D. from NYU Law School, M.B.A. from Cornell, and B.A. from Williams College; is fluent in Spanish, Portuguese, French, and German, with working knowledge of Russian, Arabic and Japanese.
This entry was posted in Capital and Management, co-founder, Entrepreneurship, Management and Capital, Strategy. Bookmark the permalink.

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