The annual employee review process can often be stressful, and when done poorly, detrimental. On Entrepreneur.com, I offer a few tips on approaches that I've seen work well, including a "leading and learning" framework that I learned from the amazing Jessica Orkin.

Through five acquisitions (buy-side and sell-side), coupled with nearly 20 years of working for/with early stage startups, I've seen a few patterns emerge.

For companies of less than 10 employees, buyers have gravitated towards simple, clear, emotionally compelling reasons to acquire. With clear rationale, a handful of formulas are then used to settle on price.

In all of my experiences, acquisitions have "felt right" for the CEOs, executives and boards pulling the trigger. There's been chemistry with the founders/team. The deals have been easily explainable. And the buyers have believed that the acquisition fills important holes in their business.

With buyers positively inclined, the negotiated price often is looked at in several ways.

1) Revenue Multiple: the starting point for acquisitions of startups is usually a multiple of annualized monthly revenue. So, if a company is at $50K per month in revenue, the acquirer would annualize to $600K. From there, I've seen 2x to 10x multiples, driven mostly by growth rates and compounded by other factors (company age, perceived attractiveness, clients/customers, location, etc.). 

2) Engineering Hours Multiple: although not a primary value driver, acquirers sometimes gauge IP value by a cost to reproduce formula. So, if a SaaS business has 10K hours of engineering time invested, the acquirer might put a $150/hour estimate on the 20K hours = $3M. From there, I've seen companies sometimes apply a discount, given learning time and various code changes along the way.

3) Team Value Multiple: in climates where competition for talent is fierce, and when a core team is viewed as healthy and committed, acquirers will look at the value per key team member. Engineers, product managers, sales leaders and one or two key operators all might be considered. From there, multiples can range from $250K/head to $1M/head (note that the high end has typically been applied more to senior engineering groups).

Of course, there are lots of other factors that acquirers consider (cash on hand, burn rate, market factors, etc.) when buying a small, early stage startup. And ultimately, price is simply a matter of what feels right to the individual buyer and seller. But when gut checks pass, approaches like the three above are useful in helping all parties feel like the deal is fair and rational.

Today, 20 startups affiliated with Capital Factory gave 3 minute pitches to a room full of potential investors. Here are 8 that caught my personal attention.

1) Authors: CEO Monica Landers highlighted how book publishing is broken and offered a compelling solution for writers, publishers and agents. 

​2) Pen Pal Schools: helping 70K+ students connect around the globe has turned Pen Pal Schools into an award-winning business for CEO Joe Troyen. 

3) ProHero: when CEO Mark Jackson (formerly one of John Elway's go-to-receivers at the Denver Broncos) told me I could book an experience with Tony Dorsett (yes, I'm aging myself), I was hooked. 

4) GoodyBag: I've been watching CEO Jay Panchal's office catering company for awhile and recently met him in person. I'm impressed by Jay and the potential for Goodybag.

5) Kandid.ly: CEO Sam Ulu has combined his aerospace brilliance, P&G experience, and personal history into a compelling service to help us source photographers for more of life's important events.

6) Music Meets Video: with a wonderfully addictive approach to tallying votes for American Idol style performances, CEO Alex Mitchell's destination is seeing impressive growth.

7) PopUp Play: as a father of three, I especially enjoyed CEO Bryan Thomas's modern twist on building a castle.

8) ROIKOI: hidden under a serious surfer's exterior is the creative brain of CEO Andy Wolfe. And with ROIKOI, he's figured out a compelling way to help companies identify and recruit serious talent -- via passive employee referrals.

Kudos as well to all of the companies that demo'd today: Chiron Health (reimbursable video visits for physician practices), Cloud9 (mobile patient engagement), Curb (home energy monitoring), md Portal (telemedicine services), PreSchool2Me (childcare connection technology), Rent Rebate (Redfin for Apartments), SchooLinks (international education connections), Social Matterz (social media lead sourcing), Tastebud (dynamic pricing for food/beverages industry), ThinkVoting (a new way to mobilize citizens), TripChapmp (nextgen corporate travel) and YouRoam (free calls and texts to your phone over WiFi).

Overall, the day was polished, energizing and impressive. Thanks to everyone at Capital Factory and to all of the entrepreneurs who presented. Your hard work was evident and you all helped demonstrate why Austin has become the startup capital of the world (see: Kauffman Foundation).

* Disclosure: I am an advisor to Authors and a Partner at Capital Factory.

Recently, I've read six books that have impacted my thinking and spirit -- and feel aligned with my overall quest for Growth (along multiple dimensions). 

Here's the list and why I'd recommend them:

On Kindness by Adam Phillips and Barbara Taylor.  This compact, 114 page exploration of the history and philosophy of kindness packs a punch. I especially found the authors' perspectives on Enlightenment-era debates by Hobbes vs Rousseau, Hume, Smith and others to be fascinating. The Freudian sections dragged on from my perspective and can be skipped. This fundamentally optimistic book is perfect for a flight -- especially if you're coming from or going to meetings in larger cities where not everyone outwardly and consistently projects kindness!

The Art of Stillness by Pico Iyer. I loved this book. Like "On Kindness," it's a quick read (even shorter at 66 pages). You might even be tempted to finish it on the airport tarmac before your ascent. But what it lacks in length, it makes up for in riches via a call to the quiet life. Iyer, an acclaimed journalist and constant traveler, simply and beautifully describes the benefits of silence and aloneness. Whether via short retreats or quick walks, he encourages us to slow down at times in a way that feels refreshing, energizing and achievable.

The World's Great Thinkers: Man and Man, the Social Philosophers.  Originally printed in 1947 and part of a four part set, I found this gem on my late father's book shelf. As a public school kid from Upstate NY, and a management undergrad major at a State university, I missed a classics education. If you're like me, or are looking for a brush-up, this wonderfully edited piece includes important slices of Aristotle, Plato, Epicurus, Marcus Aurelius, Epictetus, Emerson and others -- coupled with historically grounding editorial introductions. You may have to hunt a bit for the now out of print set but it's well worth the search. 

Wind, Sand and Stars by Antoine de Saint-Exupery. Like many, I originally discovered de Saint-Exupery as the author of "The Little Prince." What I didn't know was that he was one of the original French aviators. This National Book Award winner, recipient of the Grand Prix of the Academie Francaise, and National Geographic Top Ten Adventure Book of All Time is soaring and majestic. The translated prose captures the spirit of humanity via first-hand accounts of the dangers and gifts of early air travel.  Riveting history and thought-provoking explorations abound.

Reinventing Organizations by Frederic Laloux (forward by Ken Wilber). While I've yet to finish this overview on a new way to create business structures, I've deeply appreciated what I have read. In 2014, Laloux quietly published a book that has had rippling impact (see the Amazon reviews, for instance). In it, he looks at the evolution of organizational structures that parallel our evolution of consciousness. And he argues that we're at the forefront of a major shift that can be seen today in select organizations. Full of concrete case studies and examples, Laloux's work to build upon Wilber's theories is important for those of who study and lead organizations. This has become a book that I'm keeping close at hand as I challenge myself to fully digest its essence. The Foreword and first couple of chapters are already dog eared and reread in my copy!

Brain Maker by David Perlmutter. I was first introduced to Dr. Perlmutter via his exploration of the evolution of wheat, increase in inflammatory states, and link to brain diseases in the important book "Grain Brain." In his latest piece, Perlmutter explores how our gut microbes (our "microbiome") impact our health. Once again, his research seems sound, his writing is clear, and his topic important for our ability to lead and serve with health and vigor. 

In closing, the above clearly aren't a typical set of business books for entrepreneurial executives. That's definitely by design. In my experience, the journey of business is one where our whole, authentic selves can be drawn in. These books have helped me discover and explore new boundaries, thinking and frameworks. I'm hopeful that they are enjoyable, challenging and enlightening for you as they have been for me.  

Idea in a nutshell: 100% of unscientific survey respondents indicate that great teams are a major factor in fueling energized work. 

About a month ago, I posted a variety of loose thoughts on what I've been calling Energized Working. In a nutshell, I offered that Energized Working was different from Flow, that it required an amalgamation of aligned elements, that it had the potential to operate over an elongated time horizon, that focus and optimism often seemed to be at play, and that I was just starting to scratch the surface on my exploratory work.

Last week, I pushed forward a bit and leaned on my friends for perspectives. Picking 35 folks in a very unscientific way, I asked two questions: 1) How would you rate your current work/professional energy? and 2) What factors contributed most when you last felt most energized at work?

The results were interesting -- to say the least!

First, ~2/3 of those asked actually answered the survey. This shocked me as typically surveys I've conducted have gotten less than 50% response rates. Way less. I optimistically looked at this as an indicator that people were interested. And several of the comments I've gotten since further demonstrate interest in the topic. Maybe we're on to something here. Thank you deeply to everyone who took the time to respond!

Second, my friends are feeling better than I would have imagined. While ~8% indicated their energy was relatively low, ~60% said that it was pretty good. And a full ~32% (nearly one in three) said their energy was excellent. Wow. I didn't expect such good energy (but again, since this was an unscientific survey there are likely all kinds of biases and skews at play here).

Third, the ranking and focus on energizing factors was intriguing. Per below, 100% of respondents indicated that a great team was a primary factor in contributing to the last time they felt energized at work. Amazing, right? I can't think of the last time 100% of my friends agreed on anything!

Some items that I personally expected to be higher in the survey, weren't. For example, only 40% of respondents indicated that meaningful work relationships were major energizing factors. And a great boss? Only 44% felt significantly energized via their boss (sorry to my managerial readers).

While the survey was intentionally skewed towards motivating factors, hygienic elements were included as I was curious to see how people would respond (for deeper perspectives, see Herzberg's motivator-hygiene, or two-factor, theory). And via conscious intention or not, work hygiene factors like compensation (30%) and a commute (9%) found their way to the bottom of the list. 

In other words, minimal dissatisfiers don't produce energy.

Here's the full set of responses:



















What do you think? Did I skew the survey too much via who we selected and/or the choices I provided? Do these results seem aligned with what you might expect? Is this whole Energized Working thing something new...or are we just backing our way into yet another test of happiness or flow, subjects well covered elsewhere?

As always, I'd love your feedback, via either a comment below or to steve at alder dot vc via email. 

And until next time, I hope that your energy is high and your hygienic dissatisfiers low!

Idea in brief: when pursuing Series A rounds during the fall of 2015 in/from Austin, consider four key points.

As summer 2015 creeps to a close, several recently seeded companies are getting ready to pursue their first significant Series A institutional investment round.  Things have changed dramatically in the 18 years I've lived in Austin and have been part of three Series A+ backed companies (ichat, Motive, Pluck). And the landscape for Series A raises is very different from the days when many folks pursued a bit of an "Austin Ventures and everyone else" strategy. 

Yesterday (July 19, 2015), Semil Shah published an excellent post on Series A raise guidance in general. I wholeheartedly agree with his perspectives on timing initiation (September), precision (targets), vision (big), teams and more. If you haven't already read it, check it out here. 

While Shah's take holds true broadly, there are also a few Austin specifics that are worth drawing attention to and considering, especially for SaaS/enterprise software firms getting ready to raise. These include:

Hit Your MRR Cliff: while not a hard and fast rule (and sometimes addressable via high growth), $100K+ in current MRR along with a clear pathway to $1M+ in MRR is often tablestakes for Series A dialogues. If you're not at least at $100K MRR yet, make sure you understand the competition you'll have for investors' deal cycles.

Consider Starting Outside of Austin: while my local institutional friends would prefer an alternative path (see below for my shout outs to them), I've seen several examples of Austin companies that bring in a lead investor from outside of town (and then often line up a local partner for a club/group deal). Examples of great non-Austin based Series A investors who have invested in town include:
* Mike Maples, Floodgate
* Anthony Lee, Altos Ventures
* Jeff Hinck, Rally Ventures
* Blair Garrou, Mercury Fund
* Seth Levine, Foundry Group
Note that the list above is non-exhaustive and is based on personal and friends' experiences. There are certainly other significant firms that are active in Austin, including Battery Ventures, Charles River, and Mohr Davidow. And doubly note that raising money in Silicon Valley is arguably harder in many ways than raising elsewhere, including Austin. But that might be a good topic for another post!

Ponder Medium-Sized Austin Funds: maybe not surprisingly, my primary list above is mainly made up of $100M - $200M funds. In my experience, many funds look to return 20% of the fund (reasonably) with each investment. So, a $100M fund that makes a $4M Series A bet can look at a 5x return without requiring a public offering (for simple math, a 20% position in a $100M acquisition can reasonably drive 5x on $4M (=$20M = 20%); of course funds would like 10x+ returns but 5x in a reasonable time period is generally viewed favorably in my experience). On the contrary, $1B+ funds sometimes struggle with the need to return $200M per investment (10x the formula above). Accordingly, three compelling Austin Series A-oriented investors (in my experience) are:
* Krishna Srinivassan, LiveOak
* Morgan Flager, Silverton
* Jason Seats, Techstars
Note that while Jason is in Austin, Techstars is technically a distributed fund with partners in Boise and Boulder. Other notable Austin funds generally tend to be seed oriented (e.g. ATX Seed) or Series B+ focused (S3, Vista, etc.). Several Austin Ventures partners have been great friends to startup teams historically and may be in a position to help as their partnership continues to morph. Don't rule them out.

Have Your Support Network Ready: as Austin SaaS/enterprise software is still a pretty small community, having influential folks in your camp really helps during due diligence (i.e. back channeling). Executives who know your business (advisors, angel investors, etc.) and who have produced hits via portfolio companies like Vignette, Tivoli, Motive, Pluck, BlackLocus, Bazaarvoice, HomeAway, Waveset, Convio, Adometry, SolarWinds, and RetailMeNot are key for startup teams. 

Of course, there are lots of nuances around your pitch desk (Kip McClanahan of Silverton has a 2012 series of tips that still hold true here) , ham-and-egging your approach, pondering a single investor versus a club/group round, determining valuations, and navigating the myriad of complexities inherent in term sheets. But if you can start with a wise approach, and find your way through good execution + a little luck on the four points above, you are well on your way.

One final point: there are lots of people (myself included) who are absolutely inclined to "root local" and who love to see Austin companies raise capital from great partners. So, lean on us to help!