Top 5 Tweets

1. Quora: “What are the coolest startup culture hacks you’ve heard of?”  http://b.qr.ae/107EMU9
2. Quora: What advice would you give to a startup CEO that wants to maintain control…despite equity dilution events?  http://b.qr.ae/18Qkz5p
3. How America Lost Its Way (WSJ) — “We used to have the rule of law. Now…we have the rule of lawyers….”  http://on.wsj.com/112fdm1
4. What Every Director Needs to Know About D&O Insurance Coverage – Before Entering Shark-Infested Waters! (via Weil)  http://bit.ly/13b6GLx
5. A Small Company’s Reality Is Altered by ABC’s ‘Shark Tank’ (NYTimes)  http://nyti.ms/10fKX8s

Blog-Related Tweets

1. “The way we think about smart is a combination of… two traits: curiosity, coupled with drive.” -Marc Andreessen  http://bit.ly/1bFbJa7
2. “When you’re doing what you love to do, you become resilient…” -Dick Costolo (solid vid from a few weeks ago)  http://bit.ly/1aitYEr

Welcome to our weekly series “Motivational Clips for Entrepreneurs.”  Each week, we share a favorite video clip to inspire and motivate entrepreneurs.  Why?  Because we know how tough it is being an entrepreneur; and whether you’re launching a venture, trying to execute your business model or raising funds, you need a little juice to help you push the ball forward.  I hope these videos are a little juice.  Cheers, Scott

http://www.youtube.com/watch?v=Atcky5LgjuY

To Our Clients & Friends: Welcome to our weekly series “Helping Entrepreneurs Succeed.”  Each week, we share a favorite video clip of a successful entrepreneur, investor or business leader on a variety of topics.  This week, we again present Marc Andreessen, a brilliant entrepreneur and a co-founder and general partner of the venture capital firm Andreessen Horowitz.

In this interesting, three-minute clip (courtesy of Fortune), Mark shares some words of wisdom for entrepreneurs.  My favorite quote:  “The way we think about smart is a combination of basically two traits: curiosity, coupled with drive.”  I hope you enjoy it.  Cheers, Scott

http://www.youtube.com/watch?v=4pOgsqzBb0E

Welcome to our weekly series “Motivational Clips for Entrepreneurs.”  Each week, we share a favorite video clip to inspire and motivate entrepreneurs.  Why?  Because we know how tough it is being an entrepreneur; and whether you’re launching a venture, trying to execute your business model or raising funds, you need a little juice to help you push the ball forward.  I hope these videos are a little juice.  Cheers, Scott

Top 5 Tweets

1. One of my favorite quotes: “Being an entrepreneur is about moving the ball forward a few inches every day.” -@msuster  http://bit.ly/13Qi2DC
2. Join me next Fri, June 7th in San Fran for a free workshop and then watch @Jason‘s fireside chat with Kara Swisher  http://bit.ly/17F0RMJ
3. “The day you raise money from a venture investor, you’ve also just agreed to their business model.” -@sgblank  http://on.wsj.com/17FWIZ9
4. “We’ve talked to a number of [VCs]…The problem is that they’re spoiled by Silicon Valley…” -Dmitry Itskov  http://nyti.ms/11xyAhT
5. “While all my classmates were interviewing at McKinsey & Bain, I said ‘no’ – this is the idea I am passionate about…”  http://tcrn.ch/14vsrra

Blog-Related

1. New post — Founders Beware: Fiduciary Obligations of Officers  http://bit.ly/179Tso0
2. “Everything around you that you call life was made up by people that were no smarter than you.” -Steve Jobs  http://bit.ly/11jNle4  (0:42)

Welcome to our weekly series “Motivational Clips for Entrepreneurs.”  Each week, we share a favorite video clip to inspire and motivate entrepreneurs.  Why?  Because we know how tough it is being an entrepreneur; and whether you’re launching a venture, trying to execute your business model or raising funds, you need a little juice to help you push the ball forward.  I hope these videos are a little juice.  Cheers, Scott

Introduction

Many founders do not realize that officers of a corporation have the same fiduciary obligations as directors.  This post briefly explores this issue and its ramifications.

 What Are the Fiduciary Obligations of Directors?

Directors have two basic fiduciary obligations to the corporation and its stockholders: the duty of care and the duty of loyalty.  The extent of these obligations varies from state to state; however, since most companies are incorporated in Delaware, we will focus on Delaware law.

Under Delaware law, the duty of care requires a director to exercise the care that a reasonably prudent person in a like position would exercise under similar circumstances.  The duty of loyalty requires a director to act in good faith and to refrain from putting his personal interests ahead of the interests of the corporation and/or its stockholders.

Directors have historically been protected under the so-called “business judgment rule” – which is a presumption that a director’s decision has been made on an informed basis, in good faith and in the honest belief that the action taken was in the best interests of the corporation. This presumption is rebuttable; however, as a result of the business judgment rule, a court will not substitute its own views for those of a director or second-guess the outcome of a decision.

What About Officers?

Prior to 2009, the duties of officers were unclear.  In 2009, however, the Delaware Supreme Court held in the Gantler case that: “[O]fficers of Delaware corporations, like directors, owe fiduciary duties of care and loyalty, and…the fiduciary duties of officers are the same as directors.”

In the Hampshire Group case in 2010, the Delaware Chancery Court expressly noted that officers are “expected to pursue the best interests of the company in good faith (i.e., to fulfill their duty of loyalty) and to use the amount of care that a reasonably prudent person would use in similar circumstances (i.e., to fulfill their duty of care).”

Officers are also protected by the business judgment rule; however, due to a significant gap in the Delaware statute, if officers breach their fiduciary obligations, the consequences of the breach will not necessarily be the same as for directors.  Why?  Because pursuant to Section 102(b)(7) of the Delaware General Corporation Law, a corporation may adopt a provision in its certificate of incorporation exculpating its directors from monetary liability for an adjudicated breach of their duty of care.  There is no similar statutory provision relating to officers.

Who Is an “Officer”?

There is no definition of “officer” in the Delaware General Corporation Law.  Section 142(a) thereof merely provides that: “Every corporation organized under this chapter shall have such officers with such titles and duties as shall be stated in the bylaws or in a resolution of the board of directors which is not inconsistent with the bylaws . . . .”  That section further provides that: “Officers shall be chosen in such manner and shall hold their offices for such terms as are prescribed by the bylaws or determined by the board of directors or other governing body.”

Moreover, Delaware case law suggests that while the title of the position is an important factor in determining whether a particular individual is an officer, the term “officer” would apply to those individuals to whom executive functions have been assigned pursuant to the bylaws or by Board resolution and who have discretion as to corporate matters.  Similarly, Rule 501(f) of the Securities Act of 1933, as amended, defines “executive officer” as “the president, any vice president in charge of a principal business unit, division or function (such as sales, administration or finance), any other officer who performs a policy making function, or any other person who performs similar policy making functions for the issuer.”

What Does This All Mean?

It means every founder must be very careful whom he or she chooses as a co-founder or an investor.  As I discuss in my post “What Are the Rights of Minority Stockholders?”, any stockholder may sue an officer or director for breach of their fiduciary duties.  We live in litigious society – and this is a significant potential problem.

This is also the dark side of crowdfunding.  The more stockholders a startup has and the less sophisticated they are (e.g., a dentist, a neighbor, a stranger), the more likely officers and directors will get sued.  Indeed, this is another reason why I recommend that startups issue convertible notes instead of preferred stock in a seed investment – i.e., because noteholders are lenders, not stockholders, and thus have no right to sue officers or directors for breach of their fiduciary duties (unless perhaps the company is insolvent or in the “zone of insolvency”).

So How Can Founders Protect Themselves?

Again, the best protection is adequate due diligence: know thy co-founders and investors!  Additional protections include certificate-of-incorporation provisions that eliminate directors’ personal liability to the corporation and its stockholders (as discussed above), indemnification provisions contained in the corporation’s certificate of incorporation and/or bylaws, contractual indemnification agreements, and directors’ and officers’ insurance policies.  Bottom line for founders: discuss the foregoing with experienced legal counsel.

“People often say that motivation doesn’t last.  Well, neither does bathing – that’s why we recommend it daily.” – Zig Ziglar

Welcome to our weekly series “Motivational Clips for Entrepreneurs.”  Each week, we share a favorite video clip to inspire and motivate entrepreneurs.  Why?  Because we know how tough it is being an entrepreneur; and whether you’re launching a venture, trying to execute your business model or raising funds, you need a little juice to help you push the ball forward.  I hope these videos are a little juice.  Cheers, Scott

Top 5 Tweets

1. “What is the most common mistake made when pitching your business to potential investors?” Solid responses:  http://b.qr.ae/107RQGx
2. Why I abandoned my startup – “I had no empathy for my users and…no passion for the…problems we were solving”  http://bit.ly/17YyxBX
3. “The number of private companies across Silicon Valley that is mature is at an all-time high.” -@venkyganesan  http://on.wsj.com/160n87j
4. “I spend a lot of time just watching videos on YouTube of CEOs.” -@levie  http://bit.ly/11Pf7R5
5. “Why did so many successful entrepreneurs and startups come out of PayPal?” A few solid responses:  http://b.qr.ae/16dyc0N

Blog-Related

1. New motivational vid post: “It’s About How Hard You Can Get Hit and Keep Moving Forward”  http://bit.ly/YN3wAn
2. “I don’t have an exit strategy; I have an entrance strategy.” -Dick Costolo (at 1:03)  http://bit.ly/13Ln6vz

Welcome to our weekly series “Motivational Clips for Entrepreneurs.”  Each week, we share a favorite video clip to inspire and motivate entrepreneurs.  Why?  Because we know how tough it is being an entrepreneur; and whether you’re launching a venture, trying to execute your business model or raising funds, you need a little juice to help you push the ball forward.  I hope these videos are a little juice.  Cheers, Scott

http://www.youtube.com/watch?v=5tnCVMAtf9E

To Our Clients & Friends: Welcome to our weekly series “Helping Entrepreneurs Succeed.”  Each week, we share a favorite video clip of a successful entrepreneur, investor or business leader on a variety of topics.  This week, we present Tim O’Reilly, the founder and CEO of O’Reilly Media and a brilliant entrepreneur.

In this interesting, five-minute clip from a couple of months ago (courtesy of Stanford University’s Entrepreneurship Corner), Tim discusses the following three nuggets for entrepreneurs:

• the importance of “getting…deeper into your customers’ problems”;
• how “great companies have big, hairy, audacious goals” (citing Built to Last); and
• how “great companies have an idea about transforming the lives of their customers”  (citing “Who Do You Want Your Customers to Become?”).

I hope you enjoy it.  Cheers, Scott

http://www.youtube.com/watch?v=NnOaAVt_jVc

Welcome to our weekly series “Motivational Clips for Entrepreneurs.”  Each week, we share a favorite video clip to inspire and motivate entrepreneurs.  Why?  Because we know how tough it is being an entrepreneur; and whether you’re launching a venture, trying to execute your business model or raising funds, you need a little juice to help you push the ball forward.  I hope these videos are a little juice.  Cheers, Scott

http://www.youtube.com/watch?v=zxwrRpvD3Zs

To Our Clients & Friends: Welcome to our weekly series “Helping Entrepreneurs Succeed.”  Each week, we share a favorite video clip of a successful entrepreneur, investor or business leader on a variety of topics.  This week, we present Dick Costolo, the CEO of Twitter and a very impressive leader.

In this interesting, three-minute clip from a few years ago, Dick provides the following four nuggets to entrepreneurs:

• Have an authentic company voice;
• Have an entrance strategy, not an exit strategy;
• Don’t maximize short-term revenues by sacrificing long-term goals; and
• Launch late to launch often.

I hope you enjoy it.  Cheers, Scott

http://www.youtube.com/watch?v=jQY0cgT77VA

Top 5 Tweets

1. “What are the early symptoms that a startup is going to fail?” Solid response via @williampietri:  http://b.qr.ae/10oSn2u
2. Quora: “How much money should I raise?” A few solid responses:  http://b.qr.ae/Yo38bf
3. “Recognize that VCs negotiate for a living.” -@bfeld  http://on.wsj.com/12d8zbi
4. “If you don’t understand the tax effects of the deal, you probably don’t understand the deal.” -@davidlee  http://bit.ly/11DToI6
5. In [VC] Deals, Not Every Founder Will Be a Zuckerberg – “the rights negotiated by entrepreneurs…really matter”  http://nyti.ms/18cV8vF

Blog-Related

1. “In theory, experience is a plus; in practice, it is often a bit of a minus…” -Peter Thiel  http://bit.ly/ZLEcIR
2. New motivational vid post: “Screw ‘Em, This Is Your Time”  http://bit.ly/Y4ACZW
3. “When people laugh at the idea or laugh at the company…, that’s usually in my mind a good sign.” -Fred Wilson  http://bit.ly/15amAec

To Our Clients & Friends: Welcome to our weekly series “Helping Entrepreneurs Succeed.”  Each week, we post a short video of a successful entrepreneur, investor or business leader on a variety of topics.

This week, we present Fred Wilson, a super smart investor and the Managing Partner of two VC firms, Flatiron Partners and Union Square Ventures.  In this outstanding interview by Michael Arrington, Founder of TechCrunch, Fred shares some words of wisdom for entrepreneurs with respect to fundraising and pitching investors, including the following:

• “When people laugh at the idea or laugh at the company…, that’s usually in my mind a good sign.” (at 1:56)
• “What I think you need to do is get [investors] engaged in a conversation as quickly as possible… If you only get through one slide because the partnership has hijacked the conversation, that’s the best thing that can ever happen.” (at 5:45)
• “Going through a really long back story is a bad idea.” (at 6:33)
• “I prefer someone to come in and make a really bold, audacious statement right off the bat.” (at 7:11)
• “Hook the [investor] and then reel them in.” (at 7:48)
• “It’s better to show the product [first] and then talk about [it]…” (at 8:38)
• “The best entrepreneurs are the ones who will listen to you, but won’t take orders from you.” (at 14:50)
• “You want [to invest in] somebody who is crazy, but mentally healthy.” (at 15:30)
• “To see things differently than other people see them and to have the courage to know you’re right requires somebody to be wired-up a little differently.” (at 16:25)
• “I think crazy is a compliment…I think you make money with people who are crazy.” (at 19:18)

I hope you enjoy it.  Cheers, Scott

http://www.youtube.com/watch?v=yrcgofzvc5k

Welcome to our weekly series “Motivational Clips for Entrepreneurs.”  Each week, we share a favorite video clip to inspire and motivate entrepreneurs.  Why?  Because we know how tough it is being an entrepreneur; and whether you’re launching a venture, trying to execute your business model or raising funds, you need a little juice to help you push the ball forward.  I hope these videos are a little juice.  Cheers, Scott

http://www.youtube.com/watch?v=vwpTj_Z9v-c

To Our Clients & Friends: Welcome to our weekly series “Helping Entrepreneurs Succeed.”  Each week, we post a short video clip of a successful entrepreneur, investor or business leader on a variety of topics.

This week, we present (i) Peter Thiel, co-founder of PayPal and a brilliant entrepreneur and investor; and (ii) Reid Hoffman, co-founder of LinkedIn, a partner at Greylock and another brilliant guy.

In this interesting, five-minute clip Peter and Reid share some words of wisdom for entrepreneurs, including the following solid quotes:

• “Assembling a crew of people who are very smart, very fast learners [is] kind of the key to a success in a startup.” –Reid Hoffman (at 2:11)
• “In theory, experience is a plus; in practice, it is often a bit of a minus because people are less open to learning new things or they are more set in doing a particular job…” –Peter Thiel (at 2:45)
• “There’s maybe 20 or 30 percent where you follow certain rules…, but 70 to 80 percent of it is about doing something that’s never been done – and if it’s been done before, you’re not really an entrepreneur…” –Peter Thiel (at 3:21)
• “The ability to succeed in each new wave requires that mental agility and flexibility to [ask] ‘what are the rules now?’.” –Reid Hoffman (at 5:28)

I hope you enjoy it (and special thanks to Thomas Korte of AngelPad for sharing this video).  Cheers, Scott

http://www.youtube.com/watch?v=MiTfx4bECDA

Top 5 Tweets

1. Quora: What are the most useful laws that every entrepreneur should know of?  http://b.qr.ae/17pVP4l
2. Amen: “the e-mails highlighted the perverse incentives of the billable-hour system”  http://nyti.ms/15jfuDB
3. Kudos to Ron Conway: A Silicon Valley Vision for San Francisco – “You need a catalyst, so I’m a catalyst.”  http://nyti.ms/17B2HsN
4. “Although our company did not succeed…, we all learned more in the past year than we had in college.” -@nemrow  http://bit.ly/Yr73D8
5. Quora: “What should I do if I have lost confidence in my startup?” A few interesting responses:  http://b.qr.ae/17HRucW

Blog-Related

1. “If I would have listened to the naysayers, I would still be in the Austrian Alps yodeling.” -Arnold Schwarzenegger  http://bit.ly/17QliE6
2. “An engineer is the closest thing to a magician that exists in the real world.” -Elon Musk  http://bit.ly/ZpV5Vs

“If I would have listened to the naysayers, I would still be in the Austrian Alps yodeling.” – Arnold Schwarzenegger

Welcome to our weekly series “Motivational Clips for Entrepreneurs.”  Each week, we share a favorite video clip to inspire and motivate entrepreneurs.  Why?  Because we know how tough it is being an entrepreneur; and whether you’re launching a venture, trying to execute your business model or raising funds, you need a little juice to help you push the ball forward.  I hope these videos are a little juice.  Cheers, Scott

http://www.youtube.com/watch?v=vH0nP4NzS9M

Welcome to our weekly series “Motivational Clips for Entrepreneurs.”  Each week, we share a favorite video clip to inspire and motivate entrepreneurs.  Why?  Because we know how tough it is being an entrepreneur; and whether you’re launching a venture, trying to execute your business model or raising funds, you need a little juice to help you push the ball forward.  I hope these videos are a little juice.  Cheers, Scott

In this interesting, one-minute clip from a couple of years ago, Elon shares some words of wisdom for entrepreneurs.  My favorite quote:  “Companies that don’t make good products or services just should not exist.”  I hope you enjoy it.  Many thanks, Scott

http://www.youtube.com/watch?v=aQusYd0Vijo

If you would like to learn more about Elon and his amazing entrepreneurial career, you can watch the Bloomberg documentary below.  My favorite quote:  “An engineer is the closest thing to a magician that exists in the real world.”

http://www.youtube.com/watch?v=CTJt547–AM

Top 5 Tweets

1. “Be careful not to have too many co-founders; it’s the most expensive dilution you’ll ever face.” -@msuster  http://bit.ly/ZilCKX 
2. “[T]he strongest correlation to success has been the founding team – much more than the idea…” -@Bill_Gross  http://b.qr.ae/16EpQMr 
3. Quora: What are some of the most ridiculous startup ideas which eventually became successful?  http://b.qr.ae/10xhfIA 
4. Seed Finance Survey 2012 (via Fenwick) http://bit.ly/X8y7r9 
5. Quora: “What separates the top 10% of startup CEOs from the rest?” Some solid responses:  http://b.qr.ae/Yvw15y 

Top 5 Tweets

1. Quora: “What are the most common mistakes first-time entrepreneurs make?” Some interesting responses:  http://b.qr.ae/XY4bwt
2. “[S]ome investors deliberately mislead startups about how interested they are in investing.” -Paul Graham  http://bit.ly/XaFARm
3. Benefits matter, or why I won’t work for your Y Combinator start-up — interesting post/perspective via @mhalligan  http://bit.ly/13cV27n
4. Quora: “What does it feel like to be the CEO of a startup that fails?” A few solid responses:  http://b.qr.ae/10J53nz
5. “First to file” patent law starts today: what it means in plain English (via @gigaom)  http://bit.ly/15k776k

Blog-Related

1. “Mediocrity is for losers.” -Seth Godin  http://bit.ly/YHkVns  (at 0:26)
2. New motivational vid post: “He’s Paying His Dues. When Have You Paid Yours?”  http://bit.ly/XwfY1o

To Our Clients & Friends: Welcome to our weekly series “Helping Entrepreneurs Succeed.”  Each week, we post a short video clip of a successful entrepreneur, investor or business leader on a variety of topics.  This week we present marketing guru Seth Godin with words of wisdom for entrepreneurs. My favorite quote: mediocrity is for losers (at 0:26).  I hope you enjoy it.  Cheers, Scott 

http://www.youtube.com/watch?v=KBrRLI4ozag