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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
Inside Ring's Cozy, Creepy Relationship with Law Enforcement
02:41 PM | July 15, 2022
Photo Courtesy of Ring
Ring, the camera doorbell company owned by Amazon, is under scrutiny after admitting to sharing users' footage with law enforcement 11 times so far this year without their explicit consent.
Founded by former “Shark Tank” entrepreneur hopeful James Siminoff, Ring launched in Santa Monica in 2012 and was acquired by Amazon – which has its own smart home and surveillance network ambitions – in 2018 for reportedly north of $1 billion.
Ring’s push to become cozy with the cops is spooking privacy experts and policymakers alike. It’s become a bipartisan issue – elected officials on either side of the aisle have sponsored or are lobbying bills that could reduce the scope of what private companies collect and share with law enforcement. But a bill that would block police from surveilling people’s internet habits without warrants was narrowly defeated two years ago, and there is no comprehensive federal regulation regarding what companies can – or can’t – share with police and how they should notify users.
“The ubiquity of straight to consumer surveillance technology has happened so fast and the relationships from the very start have been so cozy with police,” Electronic Frontier Foundation policy analyst Matthew Guariglia told dot.LA. “It's been so untransparent to some extent, that we really have not caught up yet.”
Amazon’s vice president of public policy Brian Huseman and Sen. Edward Markey (D-Ma.) exchanged dueling letters this week after Markey called Ring out for sharing data with police and asked for more information about the company’s privacy practices.
Huseman did not agree to several of Markey’s demands, including commitments to not accept financial contributions from policing agencies or allow immigration officials to access Ring recordings. Amazon also refuses to commit to never participating in police sting operations.
Ring's doorbell camera. Credit: Ring dot.la
One of Ring’s more contentious features is its Neighbors app, which comes free with a Ring device, and its companion app for public safety agencies, called Neighbors Public Safety Service (NPSS), where police can post “requests for assistance” where they provide some details of alleged crimes and ask users to publicly comment tips or privately share footage from Ring devices.
“I agree there are a lot of potential harms that might come with that type of function,” said Max Isaacs, a staff civil rights attorney for the Policing Project at the NYU School of Law.
Guariglia said there’s seemingly no limit to the amount of footage police can get. He also noted he’s seen requests for up to eight hours. “They can use that footage in any way they want [and] they can forward it to other departments,” he said. “They might tell you they're investigating a car break-in. But what happens if your neighbor is undocumented, are they free to forward that footage to ICE?”
Ring said over 2,600 law enforcement agencies are on the NPSS platform, over a fivefold increase from 2019, growth which could in part be attributed to Ring's policy of giving law enforcement officials freebies in exchange for hawking their products. Last year, Ring Chief Technology Officer Josh Roth told dot.LA "our customer is not the police department."
Ring’s policy is that it only allows agencies to see camera footage if the owner agrees, or police get a warrant. But it says it's allowed to share video without user consent if there’s an “emergency,” which is vaguely defined as “cases involving imminent danger of death or serious physical injury to any person.”
Markey asked Huseman and Ring to clarify, but the company refused to elaborate.
In an email statement to dot.LA, Ring said, "it’s simply untrue that Ring gives anyone unfettered access to customer data or video, as we have repeatedly made clear to our customers and others. The law authorizes companies like Ring to provide information to government entities if the company believes that an emergency involving danger of death or serious physical injury to any person, such as a kidnapping or an attempted murder, requires disclosure without delay. Ring faithfully applies that legal standard."
“Police can request footage without a warrant without consent of the user, if they and Ring decide the situation was extreme enough,” said Guariglia. “I don't know who elected them the arbiters of what an emergency is, and what requires the use of emergency Ring footage as quickly as possible. But apparently, it's them.”
Ring's "Always Home Cam." Credit: Ringdot.la
Max Isaacs worked on a December 2021 audit conducted by the Policing Project and commissioned by Ring (Isaacs told dot.LA NYU donated the $25,000 Ring paid for the study to a racial justice nonprofit) which found that more than 10 million people use Neighbors every month. He said Ring did take some of the Policing Project’s advice, including working to make the process of police requesting footage more transparent.
“What Ring has done through the audit is taking the first step; it’s modified some of its practices in a way that we think is a step in the right direction,” Isaacs told dot.LA. “What has to happen now is for policymakers to begin studying, learning from this transparency, learning how police are using this tool and creating sensible safeguards and rules for police to follow so that we can prevent some of the misuse and privacy implications that advocates are concerned about.”
Matthew Guariglia said the EFF wants Ring to add more public service groups to the app, like homeless outreach groups, fire departments and even animal control. He also said EFF recommends Ring make two key changes: firstly, turning on end-to-end encryption by default for users. People can turn this on in their app but only if they know where to find the setting and even understand the importance of encrypting their data.
Encryption “is not a perfect solution, but it's much safer and more verifiable than the case where the data is sitting on their servers and they can give it to whomever they want,” Dr. Clifford Neuman, director of USC’s Center for Computer Systems and Security told dot.LA.
Another thing the EFF says Ring needs to fix is ending default audio collection. Guariglia told dot.LA a study of Ring devices by Consumer Reports found that Ring doorbells can record audio up to a 30-foot radius, further increasing Big Brother’s range of sight.
“The cameras aren't even deployed by the government. It's individuals doing it for their own purpose, but you've got the aggregation of the data that changes the nature of surveillance that can be accomplished,” Neuman noted.
Will Ring and its competitors, including Nest, Blink, and Arlo be reeled in any time soon, or will these tens of millions of cameras scattered across the country eventually form an unavoidable mesh network of lateral surveillance that continues to foster racism and over-policing? Experts said that depends on how quickly lawmakers regulate the business. But as the first video security firms figured out ages ago, as long as people remain in fear of crime, Rings will continue to sell.
“Simply put, fear sells,” Guariglia quipped. “The more you are paranoid and afraid, the more cameras you're going to buy, the more apps you're going to download, [and] the more you're going to surround yourself with things that are going to make you even more afraid.”
Editor's note: This story was updated Friday, July 15 to reflect comments from Ring.
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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
Employee By Day, Influencer By Night: The Rise Of Non-Professional Creators
08:00 AM | October 21, 2022
Photo by Patrick Tomasso on Unsplash
Anasofia Gomez spends her early mornings filming herself journaling, picking up coffee and getting ready for the day. By 9 a.m., she’s ready to start her full-time job as a social media marketer.
The Los Angeles-based creator is just one of the 53% of non-professional creators in the United States who maintain a full-time job while also creating monetized content. Colloquially speaking, Gomez is considered a micro-influencer—creators with followers that range from 1,000 to 100,000.
Gomez treats her content creation as a second job: she starts her day at 6 a.m. just to film her content, which often features her outfits and local recommendations, and ends her days at 11 p.m. by posting her daily video. This level of dedication has earned Gomez almost 38,000 TikTok followers and partnerships with brands like perfume company Dossier and FitOn—a fitness app.
Jon Davids, the CEO of influencer marketing company Influicity, says brands often partner with micro-influencers to create a larger volume of content. Similar to their partnerships with normal influencers, companies will send micro-influencers free products in exchange for a promotional video. Depending on the influencer, some companies will pay over $200 per video.
The difference, of course, is that since companies can pay micro-influencers less, they’ll get more content for their money. For example, he says a mega-influencer may charge $5,000 for one video, while companies can take that same budget and work with roughly 30 micro-influencers.
“You can get lots and lots and lots of content without paying massive amounts of money for it,” Davids says. “And, frankly, the supply is just there.”
But Gomez says the money is often inconsistent. A month-long deal can briefly boost her income, but that doesn’t guarantee a partnership for the upcoming months. The inconsistency isn’t without its benefits, however. Gomez says that since she doesn’t rely on these partnerships for income, she can be more particular about what companies she works with.
Gomez has even turned her micro-influencing, work-life balance into content. Her series documenting her attempts to make the most of her time outside of work has taken off. Gomez’s first video about her “promise to get off the couch and seize life” has over 10 thousand likes. As such, she’s since maintained a series of videos focused on how she uses her time outside of work.
In fact, the “5 to 9” trend, which features people showing off their detailed routines before and after work, often with homemade meals and elaborate skincare routines, can get creators thousands of views. Other micro-influencers highlight content specifically about their careers: lawyers translate legal jargon, nurses discuss their work hours and teachers share their classroom management strategies. Which is to say, for many non-professional creators, quitting their full-time job would likely alter their content and potentially alienate their audience.
To that end, Davids says, these niche communities, such as influencers who make content about engineering or waste management, are often where micro-influencers thrive.
“The micro-influencers that we have today really didn't exist five or six years ago,” Davids says. “People who had very, very small audiences on social weren’t doing it to have any kind of professional presence—they were just kind of creating content for their friends and family.”
Which is why, Davids adds, amateur content creators can actively engage their followers on a more personable level than many mega-influencers.
Nonetheless, Gomez has thought about pursuing content creation full-time. But, she finds that she enjoys the security her traditional job provides compared to the lack of financial consistency from her influencing endeavors.
“You just never know what the future is with social,” Gomez says. “I think you really do have to be in a really good place [financially] to be able to say, ‘I'm going to quit my job and just do content creation.’” Amen.
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Kristin Snyder
Kristin Snyder is dot.LA's 2022/23 Editorial Fellow. She previously interned with Tiger Oak Media and led the arts section for UCLA's Daily Bruin.
https://twitter.com/ksnyder_db
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