Frank Addante got his motivation to work from financing his college life in the first years. He worked on his own, sold and installed car alarms and automatic starters. From this time on he continued to earn money through ad-hoc jobs to make his way through college, but he was always conscious for good ideas, which he could transform into businesses. This chance was given when he installed some high-speed communication lines for an office where two mar-keting companies had their headquarters.
When the owners of the two companies were argu-ing about any new ideas, they came up with a “search engine” for the internet. Addante was listening to them and came up with his own interpretation of the “search engine”. At this time he did not want any compensation for his work, even though he had to learn a programming language. So Addante’s motivation in getting involved in the “search engine” project called Starting Point was not about big salaries, he was fascinated about the idea that he could create something which other people could use online, as he said.
After the first few months Addante began to realise that the motivation to create something is not enough for financing his life, so he added the motivation of earning money to his motiva-tion-portfolio. Soon after 1997, when Addante’s two co-founders got into discussion with each other, Addante learned that equity is an important factor of a venture. Another motiva-tion he got was when his co-founders got more and more distanced to each other. Addante wanted to construct a team that could work together and that is not acting as separate indi-viduals.
For the founding of his second venture, Addante kept his motivation to create something new, which fulfils people’s needs. In addition the equity of the new company was almost split and Addante got a fixed salary, which reflected the motivation of Frank Addante to earn money with his venture. Furthermore a motivation of Addante became starting a venture with an ex-perienced IT worker and to profit from Cary’s know-how about the people management and day-to-day accounting. At the time where the provision of capital from Cary’s business began to decline and the growth of Addante’s second venture egan to struggle, he generated an-other motivation. His new goal was to secure enough funds for his next venture. When Frank Addante started his third venture the motivation of creating something new got into the background because L90, as it was the result of the merger between Frank’s second venture and the biggest customer of it, was not something completely new. He also trimmed back his motivation of getting equity of his venture. First, Addante was offered half a million shares of fifteen and a half million shares but he denied this offer and finally got a million shares after his part of value added was included.
This was caused by Addante’s motivation of being tutored. His partner, Mr. Bonham, was a great teacher for Addante and showed Frank how he could manage the sales end of the business. With this in mind Frank Addante had no worries and troubles and could concentrate at listening and learning and adding value when possible. But Frank also was able to work on his own. Another motivation that made Addante joining the venture was that funds were rose from outside funders. This development secured fast growth of the company and enabled Bonham and Addante to hire people and purchase equipment needed immediately.
Having this outside funding Frank could hire Tim McQuillen, a man who got a great part in Addante’s further career. After leaving L90 Frank Addante again wanted to start something completely new. In his forth venture, Zondigo, Addante created the motivation of being “The Guy”. This means that he wanted to stand in the front row, handling all the big decisions and taking on the challenge of creating and raising a business. In addition Addante again was chasing his motivation for receiving equity for his work. After offering his partners each 5% of the equity and forming a 15% option pool, 55. % of the equity belonged to Addante. Another thing that could be seen as a motivation of founding the venture was Frank’s idea of forming a “Dream Team” for the marketing and technology sections. But Zondigo could not satisfy all of Addante’s motiva-tions of founding ventures because the fast growth of Zondigo was averted by missing outside funding.
This problem was caused by several changes in the business plan. Addante had to adjust his ideas and adapt them to the investment community. After he finally received out-side funding he realized that there was no arket for his idea so he returned the funding to his investors. Frank Addante founded his fifth venture together with Tim McQuillen. Again he had the mo-tivation of creating a business out of a new idea but this time Addante made sure that there is a market for his products. With reference to Frank Addante’s motivation of holding equity it can be said that he decided to keep himself motivated with an adequate stake of the venture’s equity. Firstly, Addante did not want to run his “Strong Mail” venture as the CEO because he wanted to concentrate on the holding company he had created before he founded “Strong Mail”.
But after Frank detected a strong market for “Strong Mail’s” products he felt that he needed to jump in and lead the company. He also felt the motivation of working together with his friend and former employee Tim McQuillen, with whom Addante had worked together well in his former ventures. Addante declined his motivation of founding ventures for fast growth through outside funding and kept funding “Strong Mail” to his own holding company instead of letting it stand alone. Frank Addante lost his motivation of combining superstars of the engineering business to a team and instead formed a “B-Team” of three engineers.
On one side this motivation was caused by the experience that Addante made in his forth venture when he hired popular workers that could not work as a team. On the other side “Strong Mail” had not the liquidity to afford this kind of experienced workers. This progress over the five ventures shows that Frank Addante’s motivations of founding companies changed a lot from his first venture to his fifth. He started his career with just wanting to create something new that people can use and that makes life easier for them.
These thoughts got a little bit in the background at some stages of his career, but it had been the moving thing for Addante to get involved in founding ventures. Ignoring the fact that he had to finance his life and college he firstly was not interested in getting big remunerations and equity stakes. This motivation of earning money with his ventures just emerged when Addante abandoned his college studies and wanted to become a full time worker. The motiva-tion of receiving equity stakes and to enlarge them came a little bit later when Addante learned that the possession of equity is a big factor in running a enture. The next motivation for founding ventures was that the company should be able to grow fast and therefore Ad-dante needed outside investors that trusted him and his idea. Later in his career he changed his mind because he started only with funds of his own holding company and relinquished out-side funding. To get connected to potential investors Frank Addante developed the motivation to start up his ventures with experienced workers. In addition to raise outside funding easier Addante was able to learn from his more experienced partners.
After Addante got a venture veteran he wanted to create something new on his own, with him standing in the first line making important decisions and being responsible for profit or loss. 2. Constructing founding teams As now should be clear why Frank Addante founded all his ventures, it is now interesting to look at the teams and partners with whom he raised the companies. When Frank Addante worked to finance his college life, he sold and installed the products on his own. Because it was only a small business with nearly no administrative action to do, Frank was able to handle it on his own.
At his first official venture his partners were two owners of individual but complementary businesses, who wanted to collaborate to implement some new ideas. In this venture Addante did not choose his founding team, he just was at the right place at the right time to participate in the “search engine” project. At this first stage of his career Addante had no experience with business operations like accounting and billing. He had no administrative control and conse-quently he could not make decisions regarding changes in the team structure.
This was shown as one of the partners used the database of the “search engine” to cross-promote the services of his own company without compensation for Addante and Deborah, the third partner. Deb-orah and Kevin got into discussions and Addante, who wanted to stay productive, could not interfere in these discussions because of the lack of power. The second venture, “ReaXions” was founded by Frank Addante and the former IT-vendor of Addante’s first venture, a guy named Cary. Again Addante looked for someone who was an experienced worker and Cary had his own company and therefore more know-how on how to run a company.
Because Addante had learned many things in the first venture, he did not need the full administrative action to be carried by someone else. Cary could manage his own com-pany and take the role of a mentor when he gave pointers on people management and day-to-day accounting. When Cary’s other business started to struggle he was not able to provide further capital to “ReaXions” which was his primary contribution, things started to split up. The team of Addante and Cary parted and Addante decided to shut down “ReaXions”, which was the end of Frank’s second founding team, but simultaneously the start of his third ven-ture’s founding team.
This venture Frank Addante founded with the guy whose company bought all the technology assets from “ReaXions” and where the key employees of the venture found new positions. Addante again wanted a partner who was an experienced worker and found this guy in John Bonham, the owner of Adnet. As Bonham was directly involved in the businesses of “L90”, he was not only a mentor type of guy, he became a teacher for Addante and they worked to-gether well. Bonham introduced Addante into how he managed the sales end of the business.
Addante therefore had no pressure or worries he could mainly concentrate on the technology development. Bonham took the lead on everything and Addante could monitor him at work and bring in his ideas when he thought he could add some value. For example Bonham took the lead in managing the IPO, but Addante was involved in the process and he learned every step of the way. After being forced to make himself redundant, Addante concentrated on his forth venture “Zondigo” and he left “L90”. At “Zondigo” Addante did not want a teacher or mentor anymore.
He wanted to stand in the first line being responsible for everything so he took the main role of the CEO. He created a “Dream Team” of individuals which worked for him and which should hire the people who would work under them. The “Dream Team” consisted of stars in their work area, but they had not worked together before they met at “Zondigo”. This shows that Addante searched only for the smartest, most respected workers but he did not concentrate on the chemistry be-tween those guys.
Over the course of time Addante found that managing the team at the head-quarters was increasingly difficult, because there was no progress in their work. As they all were stars in their work area they all wanted to be heard when a decision had to be made. For example Addante wanted to a product road map to be assembled but when he returned one week later nothing was produced because there was a part of the team that had opposite views of the product roadmap. Addante had to spend the whole day hearing both sides before he could go on.
This and many other similar situations made Addante realize that if only some-one is a great individual, he does not have to be a great teammate too. But Frank Addante also identified something else: He was not ready to carry the whole load of work that came with working as the CEO. He had always to deliver results to investors and board-management and this was not compatible with motivating the team. After all this troubles Addante decided to concentrate again more on the chemistry between him and his partners than on the fact that they are the best in business in their work area.
In his fifth venture he teamed up with Tim McQuillen. Frank Addante was impressed with the flexibility and resourcefulness and the two developed a close working relationship. One thing that made their collaboration so efficient was that they were opposite in many ways. McQuil-len was the more conservative guy, whereas Addante was more like a renegade. For “Strong Mail” the two arranged that McQuillen would be the CEO and therefore run the business. Addante wanted to run his holding company. But the strong market convinced Addante that he had to step in the company and take the lead.
In addition to McQuillen three engineers were hired. Those engineers were not superstars but they could work together and achieve the goals they were meant to reach. Later, when “Strong Mail” enlarged its activities with more and more work to do the B-Team of engineers got overwhelmed forcing Addante and McQuillen to micromanage them. This took up to six hours a day and convinced Addante that the needs to exchange the majority of his team to carry the workload. This development of Addante’s way of choosing partners and teams for founding is ventures goes hand in hand with Addante’s personal progress. In the early stages of his career he tends to team up with experienced workers who are able to impart their knowledge to Addante and to give him the chance to get into the world of how a successful venture should be led. In the course of time Frank Addante’s needs for a teacher or a mentor were exchanged by the desire of creating optimal penetration of the market by hiring the best workers that could be found on the market. At this time Addante thought that he was already able to handle all the tasks that a CEO of a company needs to do.
But when the venture struggled Addante realized that opposite to his idea of combining the best in business to have the most success in business Frank had to learn a very important lesson: Do not only keep an eye on work-related compe-tences, search for the ability to co-operate too. After this failure Frank Addante was con-vinced that there needs to be more than work-related competence in his co-founders and that was the right chemistry between people that enables them to create much bigger things that one alone could do. With this in his mind he co-founded his fifth venture together with his best friend Tim McQuillen and three engineers.
By combining their abilities and working as a team and admittedly a strong market too, they could achieve positive cash-flows quite soon. 3. Failed lessons to learn From the beginning of his career to the fifth venture, Frank Addante had a lot lessons to learn. One of these was how to handle a business as a CEO. To do so, Addante needed a lot of help and mentorship. After having the chance to be part of big meetings between his mentors and big customers or looking over the shoulders of his teachers to learn how to manage the ac-counting, he got more experienced and created some knowledge to carry the workload of a leader of a company.
Another big lesson Frank Addante had to learn was that the commercial world, as cold as it is, does not only depend on work-related competences and the best formal education, quite a big stake is also about friendship and trust. 3a. Addante was missing confidence of his value of work But as there were lessons Addante learned over his career there have been some of them that Frank could not learn. The biggest of them was that Frank Addante has never been able to understand what his value was in terms of money and equity. Furthermore he always underes-timated his added value to the success of the venture.
In the first venture he relinquished sal-ary and equity at the beginning. Later he asked for a full-time job with an adequate salary, but he did get only an equity stake of 5% although he had created the idea and had brought the know-how. Frank was satisfied with his stake and did not ask for a higher one, what shows that the 5% were enough for him. In his second venture Addante again relinquished a major or at least equal stake of equity because he had the feeling that his idea is not as valuable as the capital provided by his partner.
With his action he implemented that he had no power in deci-sion making. In the third venture Frank Addante again was the guy with the idea and again his partners wanted him to take a minority stake of the equity. He should take half a million shares out of 15 and a half million outstanding which would have been only 3% of all the shares. Admit-tedly he managed to enlarge his stake to one million shares, but now he held 6% of the total value of shares, which did not give him a decision making status too. As he founded his forth venture Frank Addante held 55. 5% of the equity.
This progress showed that he had learned a little bit on how to evaluate his stake in terms of equity but this time Addante thought that a “team” of superstars would give the venture a greater reputation as his own competences. This insecurity was charged by many problems within the “team” which finally was an issue of shutting down the venture. In his fifth venture Addante, for the first time in his career, thought about the equity thing from his point of view. He asked himself what would keep him motivated and replied that a big enough stake of equity would.
He also did not hire any superstars of the business and had confidence in his abilities to lead the company. Everything was fine until he got outside fund-ing from Sequoia. He felt like having Sequoia looking over his shoulder and suddenly percep-tion played a big role in his thinking. He began to second guessing himself and he reworked the value proposition of the product and changed the product road-map which let the confu-sion grow throughout the company. He also started to hire people for the job of VP of sales that did not fit in the job and therefore lost reputation.
With all these failures and problems Frank Addante considered quitting the job. But quitting never was Addante’s way of living so he decided to act as if Sequoia was not included anymore. This big change in his mind made Addante free in thinking again and he could do what he could do best: making visceral deci-sions without depending on any other opinion. With handling things again his way Addante got back a lot of his self-confidence but pressure from outside funders is now much bigger this time and it is not clear if he can enforce his style of leadership. b. Addante never got to be the business man When Frank Addante co-founded his first venture with Kevin and Deborah his major part was coding the site. When he left college he was concerned with handling the sales as well. He called several companies to sell advertising on the website. Instead of conducting market research with the goal of defining a price for the ads he just estimated a price of the ads which was much to low. Addante got more and more comfortable with marketing but he had still problems with business operations such as accounting and billing.
Furthermore at this time Frank Addante just started to understand what the possession of equity means in companies. This kind of thinking was transported to his second venture where he accepted to get a stake of 49% the equity and therefore just abandoned the chance to be a part of the major decision making. Addante’s co-founder had to mentor Addante in handling people management and day-to-day accounting. This shows that Frank Addante was not really a business guy and edu-cation in this area would have been very useful for Addante to work more independently.
In his third venture Addante again was not able to receive an adequate stake of equity. As mentioned above this was caused by his lack of understanding his value added to the venture but it was also a reason of a missing ability to be a business guy, who takes what he thinks he deserves. Addante, like in his former ventures, focused on the technology development, whereas his partner managed the sales end of the business. Addante still was not ready to lead the company in accounting and sales matters.
The biggest evidence for Addante’s lack of be-ing a business at this time was that he did not sell a part of his equity stake when the share price was at its peak. He was emotional and thought that selling his shares is like loosing the confidence in the business. When founding “Zondigo” Addante showed again that he was not the great business guy. He decided to act as the CEO and therefore handling all the business activities on his own. But after a while he knew that he underestimated the thing of being the guy to answer all the ques-tions.
In his thoughts being the CEO was more like being a founder and not like a manager. In addition to all this problems he had with keep the business running, he had to motivate and to unite his superstars to work efficiently. This combination of workload overcharged Addante because he had still not created the instincts of a business man, which made it difficult for him to make decisions over accounting and sales intuitionally. In his fifth venture Frank Addante showed several improvements in his ability to act as a business man. He hired the right people and he kept the company as small as he was able to handle it.
But at the time when he accepted outside funding Addante got insecure and did not trust his own understanding of how to lead a company. Thus he made bad decisions after moving the venture to Silicon Valley when he hired two VPs of Sales that did not fit into the company. After thinking about giving up Addante got back his confidence in running a busi-ness. He made the unorthodox decision of hiring two VPs of Sales at the same time. As the board did not react well on this progress it is now on Addante whether to trust his business sense or to cancel his decision.
