Transcript Yahoo Case Study - mtipo / FrontPage

NANOGENE CASE STUDY
By MTiPO:
Desiree Fabunan
Yee Han Kuan
Svyatoslav Mishchenko
Patrick Lin Ngai Lung
Wenhan Zhou
DECISION

Decision
1.
2.

Hire Paige Miller as CEO
Make Will Tompkins Chief Scientific Officer
Assumptions:
1.
2.
3.
4.
We want to maximize the strength of the company and the team
Paige will accept more responsibilities in exchange for a lot of
equity
Tompkins will accept relinquishing some of his responsibilities
as CEO
Co-founders will accept Paige’s leadership
2
SWOT ANALYSIS
Strengths
•
•
•
Industry experience
Experience in diverse roles
Experience in later stages of a
company (pre-IPO to post-IPO)
Weaknesses
•
•
•
Opportunities
•
•
•
Exploit knowledge of successful
pre-IPO firm to make changes
Allow Tomkins to avoid dealing
with hiring and culture
Boost strength of team in VC’s
eyes to get higher valuation
Never held CEO role
No experience raising funds or
writing business plans
Potential conflict of interest if she
consults other startups
Threats
•
•
•
May turn out to be a poor CEO
Co-founders will not recognize
her as hew leader
VC’s will not like outsider’s
leadership
3
COMPENSATION DETAILS

Compensation:
1.
2.

Motivation
1.
2.
3.

$175,000 yearly
7.81% post-series A equity (3.15% times 2.5), vested at:
1.
20% at start, 20% at year’s end, 60% at 2% per month
Keeping her responsible by giving ownership of the company
Rewards (equity value) based on effort
Vesting with milestones so that things get done
Signals to Paige
1.
2.
3.
Her contribution and value to the company are important
She has a lot of responsibility and power in the company
Company did its best to provide a fair package given means
4
NEW CAPITALIZATION TABLE
Founding/ Incorporation
# shares
Tompkins
333,000
Rupert
333,000
Masterson
333,000
Rhoota
333,000
Garfield
333,000
Paige Miller
0
Total
1,665,000
Angel Investors
Total
EIT
Total
%
20.00%
20.00%
20.00%
20.00%
20.00%
0.00%
100.00%
Angel Round
# shares
333,000
333,000
333,000
333,000
333,000
0
%
14.70%
14.70%
14.70%
14.70%
14.70%
0.00%
600,000
2,265,000
26.49%
100.00%
IP Deal
# shares
333,000
333,000
333,000
333,000
333,000
0
%
12.50%
12.50%
12.50%
12.50%
12.50%
0.00%
600,000
22.51%
600,000
5.68%
400,000 15.01%
2,665,000 100.00%
400,000
3.79%
2,075,000
5,000,000
10,565,000
19.64%
47.33%
100.00%
Option Pool
Total VC Investors
Total
Assumed Series A
# shares
%
333,000
3.15%
333,000
3.15%
333,000
3.15%
333,000
3.15%
333,000
3.15%
825,000
7.81%
Note: Assumed financing is $10 million in Series A Preferred Stock at $2.00 per share
5
REALITY TEST
Risk
Co-founders are
unhappy with CEO
Team
with more money
and equity
Paige performs
poorly with
Performance extensive
responsibilities as
CEO
VC’s pull funding
due to noncompliance with
Financial
suggestion to lower
compensation for
founders
Mitigation Strategy
Explain industry
standards for CEO’s and
motivations for hiring
Paige as CEO
Contingency
Plan
Increase cofounders’
compensation
Severity Probability
High
Low
Clearly outline goals and Find another
responsibilities and adopt CEO with
to difficulties
Tomkins as
interim
Low
Medium
Explain to VC’s reasoning
behind current
compensation and
Find a new VC
difficulties in lowering
compensation
Low
Medium
6