Sunday, July 1, 2012

Demo Day, Removing Teammates and Equity

As we get close to end of the class, we need to make a distinction between two groups of students: 

1- The students who wish to develop a site, a service, or even form a company with (some of) their teammates. 

2- The students who took the class just to learn about the entrepreneurship process, or did not find the right team, or just do not have the time and do not want to take the next step. 
Both options are completely fine. You should have a conversation with your teammates by the OEP interim report deadline (July 7) to decide what you wish to do. Those of you who are in group 2 can submit a personal business plan after July 7 and help us with reviewing team reports. 

If you wish to do #1 with your team, you should discuss it among yourselves and see whether a subset of team members wishes to continue. It is perfectly fine if only a strict subset of members of a team continue with choice 1. In that case, the rest of teammates can leave the team.   We will have a demo day at the end of the class where you can present your final presentation, business model canvas, marketing page (or website), and team to a group of experts, investors, and members of the press. Since this will be highly visible and could lead to funding or partnerships, you should work hard to create a perfect deck. 

More detail: [We want to create a demo day for those teams that have a site, a product, or wish to continue together to build something. Although the demos are online, we will invite mentors, investors, and members of the press. A select set of teams can also give a live pitch to a few Silicon Valley investors and get feedback. If your team wants to participate, you should put together a demo (pitch) deck, which includes links to your site (or marketing page), business model canvas, team and so on. You can review Henry Wong's video on the "Acid Test for Entrepreneurs" as well as my venture finance videos 1-3 for what should be included in a pitch deck and demo. We will announce the date in the next week or two as we are working to line everything up.

It is perfectly fine if you do not wish to do the demo day, and it is also perfectly fine if you do not want to continue with your team. Just submit the personal business plan as the final assignment. Or form a new team right away. 
You can also wait to form a new team with new students in the next round of the class!]

After the OEP interim report, we will let team leaders remove team members. This should be done with consultation with the rest of the team. If the team member was helpful in the beginning please be helpful by writing them a positive endorsement or a thank you note for their initial help. Your reputation is very important in entrepreneurship because so much of it is trust-based. We have an appeal process. If you feel you should not have been removed, you can initiate an appeal which will send a message to all of your teammates asking them to log-in and vote for whether you should continue to be part of the team. The majority decision will stand. Ties will remain on the team for the teammates to work out a solution. If you're removed, you can still submit the other assignments and the final personal business plan. You can also try to join a new team. If you are removed you can appeal. You will need majority support to come back.

In any case, we will maintain that you were a member of a particular team on your profile so it will be in your list of accomplishments if you wish to try again with the next class, or for other classes that we plan to offer on this platform. 

Finally, regarding equity, we can't give you a specific formula or resolve equity disputes between team members. Typically, if you are not continuing with the team to actively build the business, then you should not expect equity from those who do. For team members who are continuing you need to have a frank conversation about how to split equity that recognizes those who are taking bigger risks and devoting more towards the venture. Equity should also always vest over time, even for co-founders.