Start-up.com chronicles the real-life journey of two entrepreneurs
Start-up.com chronicles the real-life journey of two entrepreneurs (and buddies from high school) as they launch the journey of their first startup. Their venture – govworks.com – seeks to be the one-stop destination site for all online transactions with local government. While the venture got some traction – raising over $60 million dollars and employing several hundred employees at its peak – it eventually failed with govWorks.com filing for Chapter 11 bankruptcy in March 2001. The two founders were capable and well-intentioned and yet the documentary is a cautionary tale of mistakes to avoid. In this assignment, you will reflect on the documentary you watched based on the specific prompts below. I expect the completed assignment to be four pages long. If you consult additional sources besides the startup.com documentary, please provide an appropriate citation.
Q1. Founding team and Market opportunity fit
(i) Comment on the attractiveness of the market opportunity that govWorks.com sought to exploit.
(ii) In your view, what skills did each of the founders bring to the table in seeking to build govWorks.com to exploit this market opportunity?
(iii) Do you believe the founders had the right skill set and competencies to build this venture? Explain your reasoning.
Q2. Equity dilemmas
At govWorks.com, Chieh (the third cofounder), put up $19,000, worked “after hours” for five months (he had kept his day job instead of joining govWorks full-time), and then dropped out. When the remaining cofounders were about to close their first round of financing, their potential funder, Mayfield, was not willing to close until Kaleil and Tom bought Chieh out and reclaimed his equity.
(i) Briefly describe what happened next with respect to this equity buyout.
(ii) What steps (at least two) should the founders have taken when they founded the company that would have mitigated this risk? Describe the steps in detail.
Q3. Managing business and personal relationships
(i) Giving specific examples from the documentary to illustrate your points, discuss what you learnt from the documentary regarding going to business with a friend.
(ii) How did Tom and Kaleil manage their business-related conflicts and disagreements? Explain with examples
(iii) Do you believe there are things they could have done that would have enabled them to better manage their business and personal relationships? Explain your reasoning.
Q4. Raising and managing their financing
Kaleil and Tom were able to raise $60 million dollars of financing from venture capitalists. Reflect on their experience with raising financing.
(i) What are some things they did well regarding raising the money? Explain your answer with specific illustrations from the documentary
(ii) What could they have done better regarding raising financing?
(iii) In your view, how did the team spend their financing? Was the money well spent?
Q5. Board relationships and venture outcome
(i) Reflect on the team’s relationship with their board of directors? What did they do well? What could they have done better?
(ii) In your view, what was the leading cause (or causes) for the venture’s demise?
(iii) Are there steps the founders could have taken that would have mitigated the problem you identified in 5(ii)? Explain your reasoning.