Curt Doolittle

Author: Curt Doolittle

  • Executive Compensation: How Much Should A Founder Receive As Salary During An Earn-out Period?

    His market salary is a fair salary. There is no other concept of ‘fair’. If he does not get a market salary, then the cash value of his earnout is decreased by the difference between his current salary and his market salary. 

    If this was not covered in the agreement whatsoever, then there might be an argument to be made that he is due market compensation or they are artificially reducing his earnout by depriving him of income he could make elsewhere. If it was covered and he agreed to it then that’s likely to be a problem.

    However, these things are very difficult to negotiate unless you have some sort of leverage. If he can lose the earnout by not performing, or the business will not perform well enough to capture the earnout without him there, then he may have a very difficult time with it.

    As an acquirer I have generally benefited from underperformance of retained executives. There are a lot of people like me out there.  For that reason it’s best to have someone with investment banking experience work on M&A deals and not business lawyers.

    https://www.quora.com/Executive-Compensation-How-much-should-a-founder-receive-as-salary-during-an-earn-out-period

  • What Are The Best Pieces Of Advice For Founders Wanting To Start Companies That Build Physical Products, Given The Current Funding Climate Where Incubators And Accelerators Seem To Focus On Web, Mobile, And Social Companies?

    The question is really too broad as stated. 

    We’d need this information:

    1) Do you have a market and can you prove it? Meaning can you list specific customers or specific distribution channels to reach customers with? Or are you hoping to build a product that will sell itself?  Because that doesn’t happen unless it’s either sex or money.

    2) What is your plan to produce this product in volume? And do you have production estimates from reliable firms?

    3) Do you have a prototype that works already? 

    4) If you produce this product and get any traction at all, who would be interested in buying your company, and who do you know at those organizations?

    5) Can you explain how this product is valuable to someone in 30 seconds or less? or does it require specific domain knowledge?

    6) Does your product require external infrastructure or investment by others in order to sell and distribute or can you sell it over the web, or directly without externalizing any costs?

    These questions determine what kind of funding sources you’ll have to pursue.

    As someone else said, if you have an interesting idea, Kickstarter works wonders. If it doesn’t fit the Kickstarter profile, then there are always people with money willing to invest in product companies if you have a market, an exit they can understand, a production plan they can understand and a product they can understand.  Right now, multiples for social companies are speculatively high. So they attract the easy money.  But if you want to raise money for something that isn’t ‘hot’ you need to find people who have experience in the same industry you’re in, so that they can at least understand your idea.

    Generally it’s better to work nights and weekends to get your first customer(s) and then go to investors when you have a production or distribution problem.  “Early Stage” investments are a random number generator: they are unpredictable and effectively a matter of luck — and you simply have to knock on a lot of doors to find that luck.  Time is better spent on the product or on a customer.  The low capital requirements of social media are attractive despite the fact that it’s proven hard to make money in the space. The high capital requirements for products are not attractive. A patent on a product that can be sold to a large company is a net positive. All things being equal,  a consumer product is not — the point is that it’s a pretty complex question.

    https://www.quora.com/What-are-the-best-pieces-of-advice-for-founders-wanting-to-start-companies-that-build-physical-products-given-the-current-funding-climate-where-incubators-and-accelerators-seem-to-focus-on-web-mobile-and-social-companies

  • Do People With Mba’s Run More Successful Businesses? Why?

    It appears from the data that floats around the internet, that an MBA will help your career in a large company. It does not appear that an MBA (or any education for that matter) will help you as an entrepreneur.  Hard work, likability, the ability to sell ideas and persuade, and a little bit of money seem to matter the most.   I do believe that the books used in an MBA program will help a young CEO who already has a startup and who better wants to understand what capital will do for him.

    Most of the education any entrepreneur needs comes from mastery of the strengths and weaknesses of his industry, and deep knowledge of his customers, and the ability to accumulate customers by working harder for them than his competitors.  The most common problem I have found with new entrepreneurs is that they have very little competitive advantage, and are little more than also-rans. It’s very hard to sell something that’s ‘just as good as everything else’.

    https://www.quora.com/Do-people-with-MBAs-run-more-successful-businesses-Why

  • Executive Compensation: How Much Should A Founder Receive As Salary During An Earn-out Period?

    His market salary is a fair salary. There is no other concept of ‘fair’. If he does not get a market salary, then the cash value of his earnout is decreased by the difference between his current salary and his market salary. 

    If this was not covered in the agreement whatsoever, then there might be an argument to be made that he is due market compensation or they are artificially reducing his earnout by depriving him of income he could make elsewhere. If it was covered and he agreed to it then that’s likely to be a problem.

    However, these things are very difficult to negotiate unless you have some sort of leverage. If he can lose the earnout by not performing, or the business will not perform well enough to capture the earnout without him there, then he may have a very difficult time with it.

    As an acquirer I have generally benefited from underperformance of retained executives. There are a lot of people like me out there.  For that reason it’s best to have someone with investment banking experience work on M&A deals and not business lawyers.

    https://www.quora.com/Executive-Compensation-How-much-should-a-founder-receive-as-salary-during-an-earn-out-period

  • What Are The Best Pieces Of Advice For Founders Wanting To Start Companies That Build Physical Products, Given The Current Funding Climate Where Incubators And Accelerators Seem To Focus On Web, Mobile, And Social Companies?

    The question is really too broad as stated. 

    We’d need this information:

    1) Do you have a market and can you prove it? Meaning can you list specific customers or specific distribution channels to reach customers with? Or are you hoping to build a product that will sell itself?  Because that doesn’t happen unless it’s either sex or money.

    2) What is your plan to produce this product in volume? And do you have production estimates from reliable firms?

    3) Do you have a prototype that works already? 

    4) If you produce this product and get any traction at all, who would be interested in buying your company, and who do you know at those organizations?

    5) Can you explain how this product is valuable to someone in 30 seconds or less? or does it require specific domain knowledge?

    6) Does your product require external infrastructure or investment by others in order to sell and distribute or can you sell it over the web, or directly without externalizing any costs?

    These questions determine what kind of funding sources you’ll have to pursue.

    As someone else said, if you have an interesting idea, Kickstarter works wonders. If it doesn’t fit the Kickstarter profile, then there are always people with money willing to invest in product companies if you have a market, an exit they can understand, a production plan they can understand and a product they can understand.  Right now, multiples for social companies are speculatively high. So they attract the easy money.  But if you want to raise money for something that isn’t ‘hot’ you need to find people who have experience in the same industry you’re in, so that they can at least understand your idea.

    Generally it’s better to work nights and weekends to get your first customer(s) and then go to investors when you have a production or distribution problem.  “Early Stage” investments are a random number generator: they are unpredictable and effectively a matter of luck — and you simply have to knock on a lot of doors to find that luck.  Time is better spent on the product or on a customer.  The low capital requirements of social media are attractive despite the fact that it’s proven hard to make money in the space. The high capital requirements for products are not attractive. A patent on a product that can be sold to a large company is a net positive. All things being equal,  a consumer product is not — the point is that it’s a pretty complex question.

    https://www.quora.com/What-are-the-best-pieces-of-advice-for-founders-wanting-to-start-companies-that-build-physical-products-given-the-current-funding-climate-where-incubators-and-accelerators-seem-to-focus-on-web-mobile-and-social-companies

  • Do People With Mba’s Run More Successful Businesses? Why?

    It appears from the data that floats around the internet, that an MBA will help your career in a large company. It does not appear that an MBA (or any education for that matter) will help you as an entrepreneur.  Hard work, likability, the ability to sell ideas and persuade, and a little bit of money seem to matter the most.   I do believe that the books used in an MBA program will help a young CEO who already has a startup and who better wants to understand what capital will do for him.

    Most of the education any entrepreneur needs comes from mastery of the strengths and weaknesses of his industry, and deep knowledge of his customers, and the ability to accumulate customers by working harder for them than his competitors.  The most common problem I have found with new entrepreneurs is that they have very little competitive advantage, and are little more than also-rans. It’s very hard to sell something that’s ‘just as good as everything else’.

    https://www.quora.com/Do-people-with-MBAs-run-more-successful-businesses-Why

  • Why Do I Include Certain Authors In My Reading List And Not Others?

    Who is not included in my reading list and why? You might notice that I don’t include Steven Ozment and other great romantic historians. If you want to read them, then that’s fine. I agree with their rapture. On the other hand, I’m a POLITICAL ECONOMIST which means I care only about the necessary institutions needed to produce the greek and british miracles. It is an emotionless pursuit. And the romantics do not help me in that regard. I have the same problem with much of the conservative reading list produced by the National Review, which I view as, like that of Kirk, romantic and inspirational, but not helpful to an analytical intellectual looking to define institutions to create romantic attachments rather than assuming that those attachments create those institutions if such feelings could be instilled somehow. From my view this is simply illogical: it’s putting the cart before the horse. People feel romantic attachments to their institutions. But it is the institutions that created that sentiment. (Thanks to FredR for suggesting I include Victor Davis Hanson’s “The Other Greeks”.)

  • Why Do I Include Certain Authors In My Reading List And Not Others?

    Who is not included in my reading list and why? You might notice that I don’t include Steven Ozment and other great romantic historians. If you want to read them, then that’s fine. I agree with their rapture. On the other hand, I’m a POLITICAL ECONOMIST which means I care only about the necessary institutions needed to produce the greek and british miracles. It is an emotionless pursuit. And the romantics do not help me in that regard. I have the same problem with much of the conservative reading list produced by the National Review, which I view as, like that of Kirk, romantic and inspirational, but not helpful to an analytical intellectual looking to define institutions to create romantic attachments rather than assuming that those attachments create those institutions if such feelings could be instilled somehow. From my view this is simply illogical: it’s putting the cart before the horse. People feel romantic attachments to their institutions. But it is the institutions that created that sentiment. (Thanks to FredR for suggesting I include Victor Davis Hanson’s “The Other Greeks”.)

  • Question? Where In History Has Libertarianism Ever Worked?

    Where in history has libertarianism ever successfully been practiced? It seems a miserable failure in Somalia. What are the problems that you feel need to be “fixed”? I like much of what I read at the Mises site and other Libertarian internet gathering places, but I dislike and disagree with the majority of it. What would you call “socially progressive” and how can that be achieved through libertarian policy as opposed to our current system?– Jeff.

    You’re right sort of. That is, if you define libertarianism as rothbardianism (anarchism) rather than Hayekianism (jeffersonian classical liberalism). Because the term ‘liberal’ was stolen by the progressive and socialist movements, the classical liberals adopted ‘libertarian’ under Hayek’d advice. The anarchists under rothbard adopted it as well, following the french tradition. (Realistically this division is a debate between the jewish and christian concepts of social order. and those two concepts are differentiated by the norms needed by land holding Christians and non-land holding jews.) At this moment, the anarchists and classical liberals are fighting over ownership of the self identifying label ‘libertarian’. This pair is, over the past two years, further breaking into ‘bleeding heart libertarians’ under the guidance of Horowitz, the Propertarians under Hoppe and people like myself, and the ‘libertarians” (anarchists) under the mises institute., and the more classical liberal republicans under the Cato institute, and the conservatives under the Heritage and other organizations. So when you hear ‘libertarian’ most of the rhetoric on the web is driven the the Rothbardians under the Misesians. Because Lew Rockewell has succeeded in educating a legion of informed followers using the argumentative model developed by the marxists. That is why the ron paul effect is working. And the rest of us are trying to promote either private government that replaces political bureaucracy with private insurance companies, or some version of jeffersonian classical liberal institutions with updated principles that include libertarian economic insights – mostly those developed by Friedman, and legal insights, most of which are developed by Hayek and Sowell. The conservatives meanwhile are relying on insights found from history that finally articulate the conservative position as something rational. These ideas are being provided by economic historians like Neal Ferguson, Religious historians like Karen Armstrong, and inadvertently by political historian Francis Fukuyama as well as hundreds of others. And then I’m in my little corner of the world trying to piece it all together as a consistent framework so that we can have rational rather than moralistic arguments.

    So to answer your question: the reason you and I have the choice to argue about the ‘spoils’ of productivity from this classical liberal economy (libertarian economy) that we live in, is because unlike every other society on earth, we developed the rule of law (which means that the government is limited in what it can do by laws, it does not mean that we have to follow the laws). We developed rational debate, and the competition between powers in order to preserve that rule of law. And we developed the nuclear family in order to break bonds of consanguinity so that people would eschew corruption — something unique to the west — in order to be loyal to society and abstract rules, rather than family and tribe. The trick in history it turns out is to produce innovation faster than the state and others can seek rents against that productivity. This feat is accomplished through property rights guaranteed by the rule of law.

    So the answer to your question is that we live in libertarianism. It was successfully attacked by marxism, at the cost of 100M dead. It was attacked by socialism, at the cost of endemic corruption and poverty. It has been attacked by social democracy, which has played out as bankrupting the west. And finally it has been conquered through immigration.

    The underlying question is whether we transfer from the productive who breed less to the unproductive who breed more. And that question has a dysgenic answer. That answer has resulted in the falling of westerners behind their ashkenazi peers. That is the best metric we use for a practical example of the result.

  • Question? Where In History Has Libertarianism Ever Worked?

    Where in history has libertarianism ever successfully been practiced? It seems a miserable failure in Somalia. What are the problems that you feel need to be “fixed”? I like much of what I read at the Mises site and other Libertarian internet gathering places, but I dislike and disagree with the majority of it. What would you call “socially progressive” and how can that be achieved through libertarian policy as opposed to our current system?– Jeff.

    You’re right sort of. That is, if you define libertarianism as rothbardianism (anarchism) rather than Hayekianism (jeffersonian classical liberalism). Because the term ‘liberal’ was stolen by the progressive and socialist movements, the classical liberals adopted ‘libertarian’ under Hayek’d advice. The anarchists under rothbard adopted it as well, following the french tradition. (Realistically this division is a debate between the jewish and christian concepts of social order. and those two concepts are differentiated by the norms needed by land holding Christians and non-land holding jews.) At this moment, the anarchists and classical liberals are fighting over ownership of the self identifying label ‘libertarian’. This pair is, over the past two years, further breaking into ‘bleeding heart libertarians’ under the guidance of Horowitz, the Propertarians under Hoppe and people like myself, and the ‘libertarians” (anarchists) under the mises institute., and the more classical liberal republicans under the Cato institute, and the conservatives under the Heritage and other organizations. So when you hear ‘libertarian’ most of the rhetoric on the web is driven the the Rothbardians under the Misesians. Because Lew Rockewell has succeeded in educating a legion of informed followers using the argumentative model developed by the marxists. That is why the ron paul effect is working. And the rest of us are trying to promote either private government that replaces political bureaucracy with private insurance companies, or some version of jeffersonian classical liberal institutions with updated principles that include libertarian economic insights – mostly those developed by Friedman, and legal insights, most of which are developed by Hayek and Sowell. The conservatives meanwhile are relying on insights found from history that finally articulate the conservative position as something rational. These ideas are being provided by economic historians like Neal Ferguson, Religious historians like Karen Armstrong, and inadvertently by political historian Francis Fukuyama as well as hundreds of others. And then I’m in my little corner of the world trying to piece it all together as a consistent framework so that we can have rational rather than moralistic arguments.

    So to answer your question: the reason you and I have the choice to argue about the ‘spoils’ of productivity from this classical liberal economy (libertarian economy) that we live in, is because unlike every other society on earth, we developed the rule of law (which means that the government is limited in what it can do by laws, it does not mean that we have to follow the laws). We developed rational debate, and the competition between powers in order to preserve that rule of law. And we developed the nuclear family in order to break bonds of consanguinity so that people would eschew corruption — something unique to the west — in order to be loyal to society and abstract rules, rather than family and tribe. The trick in history it turns out is to produce innovation faster than the state and others can seek rents against that productivity. This feat is accomplished through property rights guaranteed by the rule of law.

    So the answer to your question is that we live in libertarianism. It was successfully attacked by marxism, at the cost of 100M dead. It was attacked by socialism, at the cost of endemic corruption and poverty. It has been attacked by social democracy, which has played out as bankrupting the west. And finally it has been conquered through immigration.

    The underlying question is whether we transfer from the productive who breed less to the unproductive who breed more. And that question has a dysgenic answer. That answer has resulted in the falling of westerners behind their ashkenazi peers. That is the best metric we use for a practical example of the result.