Cram Down – A Test of Character for VCs and Founders

Cram Down – A Test of Character for VCs and Founders

Cram downs are a practice used by venture capitalists to provide more cash to struggling startups, but with unfavorable new terms for the founders. This practice was popular after the dotcom crash, and is making a resurgence due to changing economic conditions. Cram downs often involve re-writing stock agreements, forcing existing investors to participate... ...in the new financing or lose out, and can significantly devalue common shares. Venture capitalists justify this practice as their fiduciary responsibility or good business, however, it can be seen as abusive and usurious. Startups that are struggling to find product/market fit, generate sufficient revenue, or lack patient capital are especially vulnerable to cram downs. Founders agree to cram downs out of desperation to keep their company afloat, often compromising their ethical stance in the process. The article suggests that cram downs would not exist without the founder's agreement and encourages founders to consider walking away and starting afresh. The author argues that cram down funding is not a lifeline but a noose, as it often leaves... ...employees with little to show for their work and rarely turns around a failing business. Founders are advised to take time to consider alternatives, seek advice, and visualize what life might be like after their company ends. The article concludes by suggesting that if a founder is prepared to walk away, they might end up with a much better deal.

#downs#cram#practice

Sunday Thinking

Sunday Thinking

The Sunday Thinking newsletter is designed to stimulate thought processes for the week ahead. The concept of the "Power of Three" - stillness, solitude, and space - is important for making good decisions. Stillness allows for clarity, solitude reduces noise, and space provides distance from others' opinions and expectations. Self-awareness is cultivated through life auditing and questioning, focusing on small victories and daily improvements. Questions for morning reflection include identifying things to be grateful for, desired feelings for the day, and commitments. Evening reflection questions include identifying who was helped, what brought joy, and accomplishments of the day. Thriving is an art and involves using "no" as a complete sentence, continuously rediscovering oneself, and balancing empathy for others with self-empathy. An important aspect of thriving is knowing when to speak, listen, leave, pivot, pause, and persevere. The newsletter promotes a new way to get wine deals through WineText, which offers daily deals with potential savings up to 70% off. Reflection question for the week: "What are some things you've had to unlearn in order to move forward?" Weekly intentions include feeding imagination, choosing ease over hurry, keeping promises... ...to oneself, being intentional with habits, and engaging with the present moment. Recognizing that the biggest obstacle to inner peace is our own reactions to situations is crucial to developing self-awareness and calmness.

#include#newsletter#week

Why The Pentagon Can’t Count: It’s Time to Reinvent the Audit

Why The Pentagon Can’t Count: It’s Time to Reinvent the Audit

The Pentagon has repeatedly failed its financial audit due to its complex and massive financial management systems. Auditing the Department of Defense (DoD) is a massive task as it involves counting the location... ...and condition of every piece of military equipment, property, inventory, and supplies. The DoD is the largest employer in the country with 2.9 million people and has 643,900 assets... ...ranging from buildings, pipelines, roads, and fences to aircraft and battle force ships. Despite spending close to a billion dollars annually on auditing, the Pentagon has consistently failed to meet audit standards comparable to private companies. The DoD could innovate in auditing by leveraging new technology and approaches, including predictive analytics, fraud detection, and machine learning. The DoD has a history of leading business innovation, such as creating the COBOL programming... ...language in 1959, demonstrating its potential to innovate in the auditing sector. By allocating 10% of the auditing budget to Small Business Innovation Research programs, the DoD could... ...stimulate the creation of new startups in the auditing/data management/finance space each year. The DoD could also work with existing government audit standards bodies to create new machine-driven and semi-automated audit standards. Such investment could lead to the establishment of a defense audit center of excellence, fostering academic research and public-private partnerships. These actions could drastically reduce audit costs, standardize the DoD's financial management environment, and improve budget transparency. Despite these potential benefits, the DoD has not pursued this innovative approach, missing... ...an opportunity to lead in the development of next-generation auditing tools and services. Transformational, contrarian, and disruptive advice is needed to drive change within large organizations like the DoD. The DoD should consider if the high cost of auditing is leading to greater efficiency and better management, or if there might be more effective approaches.

#auditing#audit#management

Lessons on Leadership: Michael Abrashoff on Turning the Worst Ship in the Navy into the Best

Lessons on Leadership: Michael Abrashoff on Turning the Worst Ship in the Navy into the Best

Michael Abrashoff transformed the USS Benfold from being one of the worst-performing ships... ...in the navy to the highest-performing within three years without changing the crew. Abrashoff encourages organizations to reward risk-takers and innovators, not those who avoid change and controversy. He believes that the key to leadership is understanding oneself first, which can lead... ...to a transformation in how leaders interact with their team and make decisions. He stresses that leaders need to allow their subordinates to fulfill their talents to the utmost, emphasizing that... ...many limitations are self-imposed by the leader due to their own fears, ego needs, and unproductive habits. Abrashoff argues that command-and-control is not the most efficient way to tap into people's intelligence... ...and skills. Instead, he advocates for creating a culture where employees take ownership. He believes that rules should be questioned and challenged, as many may become obsolete over time. Abrashoff found that people leave organizations mostly due to lack of respect, inability to impact the... ...organization, not being listened to, and not being given more responsibility, rather than low pay. He suggests leaders should see the world through the eyes of their subordinates, which can make it easier to identify and address problems. Abrashoff criticizes systems that reward micromanagement, which he believes disempowers subordinates and removes ownership and accountability. He encourages leaders to constantly seek better ways to do things and to implement processes that people enjoy carrying out. Abrashoff argues against creating extensive rules and policies for every possible contingency, as they become difficult to change and discourage ownership. He believes that giving the right people direction and autonomy increases the odds of success. Instead of rules, Abrashoff suggests organizations should use principles, allow for exceptions... ...and judgement, and train people to think and make decisions on their own. His book, "It's Your Ship," details the techniques he used to win trust, create an environment where people felt accountable, and gain commitment.

#Abrashoff#people#believes