Ockham Technology – what happened?
Board of Directors
Raised first round from VCs (Noro-Moseley & Monarch), with each getting one seat on the board Added a 5th, very experienced industry person
Outsourced to ThoughtMill
Also hired Gus as internal development team leader
Tensions continued to grow, and worsened after Ockham hired a COO Mike left
Company sold in 2002 to competitor
Splitting Founder’s Equity
Considerations in Allocating Initial Ownership
Potential Problem – Ockham founders split only based on amount of initial equity Other criteria to use:
What cash, ideas, & property contributed?
If property, what is value?
What contributions are founders expected to make in the future? What opportunity costs will each founder incur?
Career risk taken by each founder
Financial demands faced by each founder
May have to reserve ownership for future founders.
Potential problem - split equity very early
Building a Board
Boards and new ventures
The Benefits of Having an Independent Board
Brings perspective and experience, and a set of complementary skills for the CEO Recognize the need for long-term planning and assist in long-range strategies Can provide a framework for control and discipline and give CEO someone to answer to Can be challenging and objective critics, serving as an internal check for CEO Can be mentor or coach
Can lend credibility
The Size of the Board
Small enough to be accountable and to act as a deliberate body, but large enough to carry out the necessary responsibilities. Outsiders should outnumber the insiders
Usually, no more than 2 insiders on the board.
Type of Representation Needed on Board
Need functional skills needed to keep the business running smoothly and to bring business to next level of growth Need right mix of personalities
Should inventory the resource needs of the company before you begin recruiting the board: What is the competitive advantage of the company?
What will be the demands on the company and the likely changes in the next few years? How much technical expertise is needed to understand the company’s practices? What role does marketing play? R&D? Customer service?
What is the company’s access to financing?
Type of Representation Needed – The needed skills
Assess management team’s strengths and weaknesses with regard to industry experience, financial expertise, marketing experience, start-up experience, and technical know-how, maybe international experience. Age, gender and cultural background
Be wary of filling board with:
People whose interests may not be aligned with the company’s, or to whom the company already has access. Attorney
Subordinates to CEO
Outsourcing & New Ventures
Reasons new ventures outsource
At early stages, founders are stretched too far
Founding team may lack relevant capabilities
Working on tight deadlines
Adds flexibility when when a company is still experimenting with its business model Negative: May lack a level of control for critical function Social capital & Entrepreneurship
The case ends as James Triandiflou, the founder of Ockham Technologies, describes the company's early growth in launching an enormous deal with IBM and triumph over financing their business operations because it received financing offers from successful investors and venture capital firms. However, Ockham continues to face operational problems from assembling its human recourses to establishing outsourcing relationships for its on-going success. Rationale for problem selection:
1. James Triandiflou's faced problems with assembling his executive team. Though Ockham Technologies assembled its founding team, numerous problems arose: (1) there was “friction” between co-founders Triandiflou and Meisenheimer as they shared different prospective on company's control issue leading one to make decisions without the...
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