How to REALLY Negotiate a Term Sheet: Venture Hacks

I love the Internet. Really smart people with direct experience of issues offer free advice to anyone who cares to read their blog. A couple of experienced entrepreneurs recently started a blog called Venture Hacks. The first few posts are about the strategy surrounding board seats. Honestly, I hadn't given board composition any serious thought, so their posts were a wakeup call.

An excerpt:

Whether you negotiate a proportional or investor-leaning board, your term sheet will probably state that the CEO of the company must fill one of the common board seats. This may seem reasonable. One of the founders is probably the CEO and you were going to elect him to the board anyway.

Don’t accept this term. The investors are looking several moves ahead of you.

How to Choose a VC?: Fred Wilson and the Pixies, and Human Tendencies

Here’s the sad thing about humans, we like people who appear similar to us even superficially. It’s probably hard-wired from the prehistoric days when we roved around in ten person packs and killed anyone who was a stranger. Fun times. (If you want more insight into pack mentality, read the early chapters of Jared Diamond’s Guns, Germs, and Steel. )

Thus, I like Fred Wilson. Why? Because he’s as passionate about the Pixies as I am. I’ve never met the guy and yet I’d be happy to do business with him, because he has excellent taste in music.

Which is stupid of me. I mean, when you’re evaluating a potential business partner, someone who could easily mean the difference between the success and failure of your company, music taste shouldn’t enter into the equation.

Now, obviously Fred has been very successful. By all measures, he appears to be a good guy with whom to do business. But the reason I’d choose him over another VC isn’t his track record, it’s because he grooves on “Brick is Red”.

I think this is human nature and while I’m not proud to make business decisions based on musical compatibility (now there’s an interesting use for iLike), it absolutely influences my relationships with people...just like it did in high school.

Maybe if all VCs and entrepreneurs exchanged a list of their top ten favorite artists as part of the due diligence process, we’d all end up with better business partners.

So here’s mine, as of today, in no particular order:

1. Pixies
2. Weezer
3. The Smiths
4. Joy Division/New Order (yes, I’m cheating)
5. The Magnetic Fields
6. Barcelona
7. The Clash
8. Belle and Sebastian
   
9. My Life with Thrill Kill Kult
10. Curtis Mayfield

I doubt I'll have a hard time convincing Fred to post his favorites.

UPDATE: I was right, it wasn't hard. Fred responded within a minute of me posting this. Check the comments to see his top ten list. And after looking over Fred's list, I realized I forgot Belle and Sebastian. I updated my list appropriately.