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Why a Startup Needs a Board: The Why and How of Constructing a Board Early
Spencer Rascoff
Spencer Rascoff serves as executive chairman of dot.LA. He is an entrepreneur and company leader who co-founded Zillow, Hotwire, dot.LA, Pacaso and Supernova, and who served as Zillow's CEO for a decade. During Spencer's time as CEO, Zillow won dozens of "best places to work" awards as it grew to over 4,500 employees, $3 billion in revenue, and $10 billion in market capitalization. Prior to Zillow, Spencer co-founded and was VP Corporate Development of Hotwire, which was sold to Expedia for $685 million in 2003. Through his startup studio and venture capital firm, 75 & Sunny, Spencer is an active angel investor in over 100 companies and is incubating several more.
If your business is a corporation, you are required by law to have a board of directors. For many startups, it can seem like just an option. However, there are many reasons startups should aim to form their own board of directors early in their lifecycle.
Does Your Startup Need a Board of Directors?
Yes. Even for experienced founders, a new company comes with new challenges — and an opportunity to make all new mistakes. For first-time founders, you don’t know what you don’t know. The best way to avoid many of these mistakes is to surround yourself with experienced counsel, and a board is a way to formalize that. The primary job of a board of directors is to look out for shareholders' interests, oversee corporate activities, assess performance, assess the CEO and senior management and give feedback about the future direction of the company. Your board should help provide advice and mentorship from people who have been there, done that.
When Should Your Startup Form a Board?
As you start to think about your board as founder and/or CEO, the board can initially be as small as just one director: you.
As the startup grows and evolves over funding rounds, you should expand and include more members. The most standard time to form a board is after the Series A funding round, but some startups choose to after the seed round. Typically, the board expands as the company does from two to three directors (including the CEO) around the Series A, to five to seven directors when the company is in the Series C/D stage to seven to nine directors as it is preparing to go public.
I prefer boards on the smaller side because they can be more collaborative and interactive, but as you create board committees, you will need a larger board in order to have two to three directors on each committee.
Who Should Serve On Your Startup's Board?
One of the best ways to fill a board of directors is to find the people you wish you could hire but may be in positions where it’s not really feasible. For a startup, you should aim for a board with three to five directors. This should include one or more in each of the following categories: the founder, an investor in the company and an independent director.
You’ll want to have some of your investors on the board because they are the ones most rooting for and affected by the financial success of the company. This will also allow them a small measure of control and visibility into the company's progress. Keep in mind it’s important to keep cultivating these relationships for when you need to raise capital down the road.
Additionally, it’s important to have one or more independent directors — a person who is neither an employee nor an investor in the company — on the board early. Ideally, you’ll be able to find another founder, peer, colleague or acquaintance who has been in your seat before and can bring a clear, objective perspective to board discussions. A trusted independent director can let you know if you’re missing an opportunity or taking a step in the wrong direction. Plus, most importantly, help navigate the challenges that arise when the investor board directors may have a different perspective from or disagree with the operating board directors.
Lastly, the diversity of your board is also extremely important. Groups from different backgrounds, genders, races and perspectives make better decisions and improve business outcomes. I recently had a conversation with CNBC’s Julia Boorstin at the dot.LA Summit about this very thing.
A Board Success Story
Throughout my countless years working and growing with boards, I’ve had many opportunities to see just how important a good BoD is. A great example of when a board decision aided my company and me more than expected is from my time at Zillow.
Prior to 2008, investors were looking to invest more money into Zillow — which we didn’t need at the time. One of our board members, Bill Gurley, gave the great advice of “take the hors d'oeuvres when they’re being passed” or take the money when it’s being offered. We ended up taking on the new capital and it was good that we did. When the 2008 financial crisis hit, the extra capital allowed Zillow to weather the storm and take advantage of the moment to expand more aggressively when the market was up for grabs.
It’s small moments like this that led to bigger successes down the road and prove the importance of having a board early.
Final Thoughts
Your board of directors should help you navigate challenges and serve as a trusted sounding board (pun intended) when you need advice. Something most, if not all, founders know by now is that startups are dynamic and constantly evolving, so as your startup scales your board will too. And if you build the foundations of your board thoughtfully, it will aid your startup in the years to come.
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Spencer Rascoff
Spencer Rascoff serves as executive chairman of dot.LA. He is an entrepreneur and company leader who co-founded Zillow, Hotwire, dot.LA, Pacaso and Supernova, and who served as Zillow's CEO for a decade. During Spencer's time as CEO, Zillow won dozens of "best places to work" awards as it grew to over 4,500 employees, $3 billion in revenue, and $10 billion in market capitalization. Prior to Zillow, Spencer co-founded and was VP Corporate Development of Hotwire, which was sold to Expedia for $685 million in 2003. Through his startup studio and venture capital firm, 75 & Sunny, Spencer is an active angel investor in over 100 companies and is incubating several more.
https://twitter.com/spencerrascoff
https://www.linkedin.com/in/spencerrascoff/
admin@dot.la
Here's How To Get a Digital License Plate In California
03:49 PM | October 14, 2022
Photo by Clayton Cardinalli on Unsplash
Thanks to a new bill passed on October 5, California drivers now have the choice to chuck their traditional metal license plates and replace them with digital ones.
The plates are referred to as “Rplate” and were developed by Sacramento-based Reviver. A news release on Reviver’s website that accompanied the bill’s passage states that there are “two device options enabling vehicle owners to connect their vehicle with a suite of services including in-app registration renewal, visual personalization, vehicle location services and security features such as easily reporting a vehicle as stolen.”
Reviver Auto Current and Future CapabilitiesFrom Youtube
There are wired (connected to and powered by a vehicle’s electrical system) and battery-powered options, and drivers can choose to pay for their plates monthly or annually. Four-year agreements for battery-powered plates begin at $19.95 a month or $215.40 yearly. Commercial vehicles will pay $275.40 each year for wired plates. A two-year agreement for wired plates costs $24.95 per month. Drivers can choose to install their plates, but on its website, Reviver offers professional installation for $150.
A pilot digital plate program was launched in 2018, and according to the Los Angeles Times, there were 175,000 participants. The new bill ensures all 27 million California drivers can elect to get a digital plate of their own.
California is the third state after Arizona and Michigan to offer digital plates to all drivers, while Texas currently only provides the digital option for commercial vehicles. In July 2022, Deseret News reported that Colorado might also offer the option. They have several advantages over the classic metal plates as well—as the L.A. Times notes, digital plates will streamline registration renewals and reduce time spent at the DMV. They also have light and dark modes, according to Reviver’s website. Thanks to an accompanying app, they act as additional vehicle security, alerting drivers to unexpected vehicle movements and providing a method to report stolen vehicles.
As part of the new digital plate program, Reviver touts its products’ connectivity, stating that in addition to Bluetooth capabilities, digital plates have “national 5G network connectivity and stability.” But don’t worry—the same plates purportedly protect owner privacy with cloud support and encrypted software updates.
5 Reasons to avoid the digital license plate | Ride TechFrom Youtube
After the Rplate pilot program was announced four years ago, some raised questions about just how good an idea digital plates might be. Reviver and others who support switching to digital emphasize personalization, efficient DMV operations and connectivity. However, a 2018 post published by Sophos’s Naked Security blog pointed out that “the plates could be as susceptible to hacking as other wireless and IoT technologies,” noting that everyday “objects – things like kettles, TVs, and baby monitors – are getting connected to the internet with elementary security flaws still in place.”
To that end, a May 2018 syndicated New York Times news service article about digital plates quoted the Electronic Frontier Foundation (EFF), which warned that such a device could be a “‘honeypot of data,’ recording the drivers’ trips to the grocery store, or to a protest, or to an abortion clinic.”
For now, Rplates are another option in addition to old-fashioned metal, and many are likely to opt out due to cost alone. If you decide to go the digital route, however, it helps if you know what you could be getting yourself into.
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Steve Huff
Steve Huff is an Editor and Reporter at dot.LA. Steve was previously managing editor for The Metaverse Post and before that deputy digital editor for Maxim magazine. He has written for Inside Hook, Observer and New York Mag. Steve is the author of two official tie-ins books for AMC’s hit “Breaking Bad” prequel, “Better Call Saul.” He’s also a classically-trained tenor and has performed with opera companies and orchestras all over the Eastern U.S. He lives in the greater Boston metro area with his wife, educator Dr. Dana Huff.
steve@dot.la
Why This Monk-Turned-Entrepreneur Is Betting His NFT Lounge Can Survive the FTX Fallout
05:00 AM | February 15, 2023
Photo: Rafi Lounge
Set in the foothills of Eastern Malibu across the street from Robert de Niro’s Nobu, the Rafi Lounge, a NFT-powered wellness center and coworking space, somehow looks like both a beachfront country club and a swank monastery. On a clear day, you can see Catalina Island across the ocean. The sign above the entrance says, “Welcome, please allow us to reintroduce you to yourself.”
Pushing through the braided rope entryway and passing a tranquil stone Buddha head waterfall, I arrived just after a yoga class former playboy model-turned “Dancing With the Stars” host Brooke Burke finished. The central open space that usually houses yoga mats or stationary bikes has been cleared off, and the giant projection screen behind the small stage is playing a tranquil plant video – an hour earlier, a larger-than-life Burke was on it helping clients “booty burn.”
The building – which used to belong to a venture capital firm – has been totally transformed to look like nature’s reclaimed it, dotted with lemon trees and cloaked in ornamental faux grass carpeting. Buddha statues are in every corner, some larger than five feet. On the way to one yoga room, there’s a small shop selling pricey essential oils, Rafi Lounge merch, and CBD gummies. On the wall of the shop hang three breathtakingly detailed portraits of indigenous peoples made by the founder with charcoal. There’s some construction ongoing, as they’re converting former corner offices into hot yoga saunas and a spa.
On the day of my visit, the place is bustling with staff who are lugging boxes of Himalayan salt panels to install in the hot yoga room. Israeli-born Kung-Fu master and former monk Rafi Anteby, the founder of the eponymously named space, tells me that after our chat he plans to paint them all black to match the walls. No detail is too small to notice, something evident in his Mandala work.
Rafi Lounge founder, Rafi Anteby, pictured here with his Mandala and sand collections. Photo: Rafi Lounge
The Rafi Lounge opened last year on November 10—the day before crypto exchange FTX went bankrupt. “Everyone said Rafi, go into a shutdown, don’t do it,” Anteby said. “I said I can't, because I pre-sold to members and I promised them [the launch is] what will happen.”
Still, Anteby felt he couldn’t renege on his promise to open the lounge to those who did buy in, so he forged ahead. So, what do NFTs have to do with a wellness center?
Each, according to Anteby, corresponds to a level of access. The least expensive, Unity, is the lowest tier and gives holders access to virtual classes. The second tier, Mindful, encompasses physical and virtual access to the Lounge. And the highest tier selling for $5,500, Awakened, are the ones Rafi is selling individually that act as an all-access pass to the Lounge and its benefits and events (including, Anteby said, “spiritual yacht parties”). Both Mindful and Awakened NFTs are lifetime memberships to Rafi Lounge, and include free access to annual retreats it hosts.
But facing the changing seasons of the crypto market and unwilling to sacrifice his brand by letting the Rafi Lounge tokens be resold to oblivion on public markets, Anteby took the drastic step to control his NFT inventory – buying up the remainder a mere day after the minting.
Anteby admitted he “lost a quarter of a million dollars” between creating and buying the NFTs back. But he said it was worth it: “I'm going to take each because I want to control who's coming to my lounge. I want to know that they will be my advocates as well.”
A view of the Rafi Lounge in the afternoon, before a yoga class. Photo: Rafi Lounge
Currently, there are 100 members, 55 of which are lifetime NFT holders. The 6,000 square-foot rooftop lounge is also open to the public. Which is to say, anyone can buy a 10-day pass for $250, pay the $40 fee for individual classes or come to public events. One of those people is Amie Yaniak who was diagnosed with stage four cancer last May that has since metastasized into her bones.
“I’ve never been anywhere like this. This was the first class I’ve done since the cancer, and it was just so cleansing,” Yaniak says. While she’s not a member, Yaniak told me she was interested in returning for more classes.
In addition to people like Yaniak, Anteby is also curating a more select crowd of well-to-do celebrities that can act as brand ambassadors for the lounge. He said he wants it to be a sort of more laid-back SoHo house, where top minds converge on the Pacific Ocean to make deals and network. Some of the names dropped during my tour of the property included Jamie Foxx (who Anteby calls a good friend), Chris Noth, Gladys Knight, and Equinox co-founder Lavinia Errico, whom I actually briefly met, since she’s a member of the Lounge’s advisory board.
The lounge's entryway and check-in. Photo: Samson Amore
As Tame Impala wafts from the lounge’s speakers, Anteby tells me stories of getting Taoist monks drunk at karaoke bars and studying medical qigong and tai chi in China. Anteby hung the intricate mandalas on the walls of a yoga room and he says they take around two years to complete as he carefully places individual grains of sand and uses tree sap to preserve their form. The mandalas are meant to be a contemplation of man’s relationship with nature, which is partly why Anteby designed the NFT versions of them to resemble a sort of elemental fusion that combines water, fire and earth.
Owning an NFT also corresponds to owning a fraction of the Malibu Mandala Rafi made that hangs in the lounge.
Anteby, right, speaks with a partner at his lounge in Malibu.Photo: Samson Amore
While Anteby admits the launch hasn’t netted him any profits yet and said he’s out around $1 million launching the place, he’s determined to turn the Rafi Lounge into a franchise and has plans to open future locations in other cities big into tech and wellness like Miami, Scottsdale, Ariz., Newport Beach, and Austin.
Besides the obvious cases like Yaniak’s, Anteby said he thinks the larger tech community needs a breather. “They all have digital burnout,” he said. “It's more than just me helping you to breathe. You need to take care of yourself, and here people do that all the time.”
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Samson Amore
Samson Amore is a reporter for dot.LA. He holds a degree in journalism from Emerson College. Send tips or pitches to samsonamore@dot.la and find him on Twitter @Samsonamore.
https://twitter.com/samsonamore
samsonamore@dot.la
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