Finally, a publisher with cojones

Imagine that the Next Big Earthquake finally hits California. Then the most violent El Niño in living memory rolls off the Pacific to hit the West Coast. Finally, Tupac Shakur returns from a secret hermitage in the Sierra Nevadas where he’s composed sixteen new albums. This is the approximate state of the book publishing industry today.

Flux is a bit of an understatement. Amazon changes the rules of the game. Borders goes under and removes four hundred of the biggest brick-and-mortar bookstores in America. Ereaders take off and completely change what the word “book” means. Barnes and Noble is struggling to turn a profit just as independent bookstores are in the midst of a renaissance. The big New York publishers flounder while a new generation of indie writers storms the bestseller lists. It’s a crazy world out there for readers and writers right now.

The rules of engagement between authors and traditional publishers are decades out of date. Trying to impress a system of gatekeepers offering onerous commercial terms that restrict creative freedom while offering little or support is not the kind of partnership I’ve ever been interested in. As an indie writer, my solution was obvious: self-publish. At least until a very special new publisher called Foundry Group Press (FG Press) sent me an email out of the blue.

The next iteration of publisher
I had thought publishers were either evil or, at best, investing only in big names that would release guaranteed bestsellers. I was wrong. It turns out that just as indie writers are defining the cutting edge of storytelling, FG Press is setting the stage for the new frontiers of the book business.

I’ll let you in on their secret sauce. Drum roll. Ready? Common sense. That’s it. They are setting up publishing agreements with authors that create a simple set of aligned incentives: 50/50 royalty split, no outdated advances, editorial/production support that cultivates writers instead of limiting them, launch strategies implemented by folks that understand Amazon algorithms, etc. They are encouraging their stable of authors to communicate, collaborate and learn from one another. They are actively incorporating the gritty wisdom on Kindleboards and online forums to recruit the cream of the crop cover designers, editors and team members to produce the best stories possible. Instead trying to turn themselves into a big name traditional publisher they are creating a launchpad to accelerate new voices, an incubator for indie writers, and source of awesome new stories for the most important people of all: readers.

A fictional startup thriller
It’s been a roller coaster getting Uncommon Stock ready for release on March 5th (you can preorder it here). Various stages of editing, cover design, marketing kit, you name it. But it’s been a true blessing to have Dane, Brad and the FG Press team at my back. Writing can be a solitary endeavor but publishing is a group effort. I’m honored that Uncommon Stock is the lead title for FG Press. Can you imagine that? A publishing company launching the first book of an unknown author as its initial gambit? The guys in New York only make bets they know they can win. Where’s the fun in that?

I probably shouldn’t be surprised. Brad’s famous for investing in new technology entrepreneurs with ambitions to change the world. Uncommon Stock is a story about exactly those kind of people. I can’t wait to get it in front of readers and hear what you think. In the meantime, partnering with FG Press gives me more time to devote to writing my next book. It’s about 20% complete and I hope to have it in your hands later this year.

Once the Earthquake runs its course and El Niño dies down, Tupac is going to need to find someone with cojones to get those sixteen new albums produced. He might want to ask FG Press for a referral.

Oh, and you can pre-order Uncommon Stock here. It will release next Wednesday, March 5th and will be available on Amazon and other major retailers then. Hell, soon you'll be able to pay for it with bitcoin. Can't wait to hear what you think!

Should you ever blow the whistle on your CEO?

Jeff Donahue is a good friend and battle-scarred veteran of venture-backed and private equity-backed companies. He has raised over $275M of funding for early and later stage startups and has been CFO of 10 emerging growth businesses. He's worked across the table from leading investors like GRP (now Upfront Ventures), Invesco, ComVentures (now Fuse Capital), Allegis CapitalAlta-BerkeleyInvisionSteamboat Ventures and many more. I'm thrilled that he's offered to write a Venture Financing Series. You can read episode one through five hereIn episode six, Jeff dives into a critical but almost never discussed subject: what should a CFO do when he or she concludes the CEO is not up to the challenge? Should the CFO reassert a commitment to the CEO and strive to get the company back on track, or should the CFO appeal to the VCs on the board for a replacement CEO?

From my previous guest posts you know I am focused on a CEO’s ability to execute. Execution spans the functional expertise of the CEO’s direct reports in operations, research and development, engineering, manufacturing, supply chain and logistics, financing, sales, customer service, marketing, business development, strategic partnerships, strategy and a raft of other things. No CEO is an expert in all of them but, to be successful, a CEO has to know how to lead his or her C-team members who individually are the experts.

So, what happens when a CFO (or any other C-team player for that matter) senses the CEO’s inability to execute on the business plan? Should he or she remain loyal to the CEO in the hope the CEO will get a grip and turn things around, or should he or she blow the whistle and rat out the CEO to the VCs on the Board of Directors? Remember, a start-up CFO operates in a world without Sarbanes-Oxley and there are no rules and regulations governing disclosure, governance, compliance and the like that might have tipped the investors’ hats regarding the CEO’s non-performance along the way.

In theory, this problem should never arise because the VCs on the Board should be practicing oversight so proficiently that they are abreast of the company’s performance on an almost real-time basis. In reality, there is a wide range of degrees of proficiency of Board oversight. The fact that the vast majority of start-ups fail affirms the landscape is littered with CEOs who can’t execute and Boards who do not effectively oversee them.

CEO-Board relationships are intricate, fraught with not only the operational and strategic complexities of the business but also with the subtleties of personality and ego. I have found relationship dynamics to be firm-specific and any attempt to reach broad conclusions runs the risk of instead producing portentous generalities. Hence, perhaps a couple of anecdotes is the best way to introduce the subject of what C-team players should do when the CEO is asleep at the wheel.

In one particularly appalling case of CEO incompetency despite my and the rest of the C-team’s incessant support of him, I finally worked up the courage to approach the two VC firms backing the company. Both were highly regarded entities. I did so only after extraordinary consternation that kept me awake night after night. My case against the CEO was meticulously documented, and the company’s performance spoke for itself. One of the VCs responded very favorably and was effusive in its gratitude for my having egregiously violated protocol in contacting them. The other heaped scorn and opprobrium on me for not having brought the issue to them sooner, and they blamed me for having let the company spiral out of control. I am good standing with the former VC to this day – even to the point where they have given me recommendations going into other portfolio companies – whereas the latter deliberately poisoned the well for me when contacted by other VCs for recommendations.

In another case, I approached the lead VC in less than six months of working for the company. I had joined it after 4 rounds of financing, the last one of which was a serious down round. The CEO they had put in the company 3 months before I joined had no clue, and I had no choice than to convey that to the lead VC when all my efforts to support him in getting the company back on track had been rebuffed. Not only was the CEO pink-slipped but also the COO. And, the CSO was put on what amounted to probation. The earth wound up a tad more scorched than I anticipated, but that was the prerogative of the Board.

Keeping in mind my prior observation that all of this is firm-specific and relationship-specific, I do offer the following guidance if you have found yourself in the same CEO non-performance situation as I have several times in my start-up career:

  • Exhaust every opportunity imaginable to work with the CEO and make him or her successful prior to blowing the whistle to the VCs. Fundamentally, a CFO’s job is that of deuteragonist – someone whose purpose in the company is to make the CEO look like a stellar performer. You must be certain that the company’s looming failure solely is the responsibility of the CEO’s lack of leadership and not your failure as CFO. Up to the day you approach the VCs, your first loyalty unquestionably must be to the CEO. When you do approach the VCs, you must have a clear conscious that you put every ounce of your effort, intensity, loyalty, professionalism, purposefulness and creativity into remediating the company’s problems and helping the CEO make the company work. 
  • You are obligated to approach the Board when the CEO is incapable of performing. If the company fails as a consequence of the CEO’s inability to execute on the plan, you are going down the swirly with it and very likely so is your career in start-up space. If you think CEOs are expendable, CFOs are really expendable.  
  • Don’t complain about the CEO to the VCs; instead, document his or her failed execution and inability to dig the company out of the ditch going forward against the plan and the reasons why. It is suicidal to approach the VCs because you don’t like the CEO or disagree with him or her. Stick to the facts, and do not judge the CEO. You have to build a case that pre-determines the outcome.
  • Form a coalition of your fellow C-team players to approach the Board if circumstances support that. Pick your alliances judiciously. One of the other C-team plays may have a different agenda which could encompass ratting on you to the CEO. If so, you will be on the receiving end of the fastest termination imaginable for disloyalty and insubordination.

Interestingly, in my experience when other C-team individuals discerned the CEO’s shortcomings they virtually always came to me first to share their concerns. Because the CFO is the financial connective tissue in the organization and has the best overview of what’s really going on, I was in a position to affirm their concerns or suggest that they re-commitment themselves to making it work and giving the CEO some more runway.

Of course, when the CEO not performing and the CEO is seconded from one of the VCs behind the company (i.e., the CEO is a partner in one of the VC firms that’s invested), you’re screwed. There is virtually no upside in that situation, and your best course of action is to update your resume and seek gainful employment elsewhere. Trust me, that will save you a great deal of heartache and consternation.

Choose your own destiny

Last month a I was talking to a friend about a project he's involved with at work. He was recently hired into a large private company to help them open up a new market. During the recruitment process they specifically described the position as 'entrepreneurial' and 'a startup within the larger corporate ecosystem.' Knowing how these things sometimes turn out, he asked them whether there was a budget for the new venture, buy-in from upper management, etc. They confirmed that everyone was behind the new initiative and that he would have what he needed to make it work. He accepted the job.

A few months later, he found himself struggling. The supposed budget had yet to be assigned and he couldn't achieve the current milestones he was executing against. The higher-ups did not appear to have the sense of urgency necessary to provide proactive support. He was frustrated and began rethinking the project and career move. That's when he came to me.

I suggested he evaluate his own perspective. The successful entrepreneurs that I know never take "no" for an answer. They see new obstacles as challenges that push them to new levels of performance. If an investor backs out, they find a way to reel them in or find a new source of capital. If the competition throws a curve ball, they dodge it like Neo from The Matrix. If their team is flagging, they find a new way to inspire them. One way or another, they figure out how to get across the goal line.

My friend had explicitly sought out a role that was entrepreneurial. He wanted to lead a startup within a larger company. That's what he signed up for. If a budget isn't there, he needs to figure out how to get it assigned (sometimes it could be as easy as buying the right person a coffee). If upper management hesitates, he needs to figure out how to call them to action.

Ultimately, entrepreneurs choose their own destiny. That doesn't mean that others line up with accolades or helping hands (although it's great if they do!). Regardless of whether you have your own company or work for an NGO or a government agency, think about how you can chart your own course rather than letting outside winds buffet you around. It's far too easy to let institutional barriers shape your actions and far more satisfying to start shaping the world around you. It's amazing how things fall into place once you commit.

Incidentally, my friend is now kicking ass and taking names at his company.

Editing a Novel: Copyediting

Okay. Now we've touched on beta readers, your first line of defense against suckiness, and developmental editing, working on pacing, structure and character motivation. This episode in the Editing a Novel series focuses on copyediting.

Copyediting is what I've always imagined the editorial process to be. I packaged up my manuscript and sent the file over to the copyeditor. She went through it line by line and returned it a few days later full of bright red tracked changes in Word.

One of the biggest mistakes self-published authors sometimes make is not to hire a professional copyeditor. Being a good writer does NOT make you a good copyeditor. Every manuscript has flaws and nothing inhibits a reader's enjoyment more than constantly tripping up on silly mistakes. Good copyeditors love their work and will groom your story to be a much better reading experience. Don't skimp here, it's not worth it.

My copyeditor, Annette, was fantastic. Now retired, she used to be a technical editor at a large company. She loves reading technothrillers and the first time we talked she told me how much it irks her when she finds typos in Tom Clancy novels. That's when I knew she would be a good fit.

When it showed up in my inbox, the manuscript averaged about a dozen corrections per page. I reviewed every single change and approved or rejected them individually. There were also queries that highlighted questionable word choice, awkward phrasing, etc. that I went through and streamlined.

Normally the publisher supplies the copyeditor with a style sheet. The style sheet is a guide that tells the copyeditor what the publisher wants to see in the final product. Because Uncommon Stock is the first title of a secret, brand-spanking-new publishing company, we didn't have a style sheet to send to Annette. Instead, I just shared a few guidelines:
  • We wanted serial commas: "X, Y, and Z" instead of "X, Y and Z."
  • We preferred "Startup" used as a variant spelling for "start-up." 
  • I like simple dialogue tags so we closed off sentences near dialogue with periods instead of using commas to introduce what the character was saying.
  • We wanted em-dashes instead of normal dashes (em-dashes are just longer dashes that look better in book format).
I accepted 90% of Annette's changes and I had specific reasons for anything I rejected. The manuscript matured substantially with her sharp eye and helping hand. I also learned that you capitalize the word "mom" only if someone's name, i.e. Karen, could be directly substituted. If you say "my mom drank a cup of tea" it remains uncapitalized because you would never say "my Karen drank a cup of tea." But "Mom drank a cup of tea" is capitalized because it makes perfect sense to say "Karen drank a cup of tea." These are the things you learn while editing a novel...

Now it was time to run with the technothriller theme and give a computer the chance to edit Uncommon Stock. A few months before, William Hertling, a bestselling independent author whose books I love, recommended a crazy cool tool to me that sounded like science fiction: a program that uses special algorithms to highlight the typical mistakes writers make while writing novels. This didn't surprise me as much as it otherwise might have because Will's books often illustrate how machines are taking over the world beneath our noses

The program, Autocrit, turned out to be a very useful tool. It identified many common mistakes like overused words, repeated words and phrases, funky dialogue tags, uneven pacing, etc. It even compared my prose to statistical averages of commercially published fiction. No writer should try to edit to optimize for Autocrit's algorithm. That would be like musicians composing specifically for Pandora. But Autocrit is a powerful addition to any writer's arsenal. It strengthened Uncommon Stock enormously and I plan on using it for future stories. Thanks Will.

Copyediting isn't sexy. Correcting grammar, phrasing, and word choice aren't the world's most thrilling activities for a writer. But it's absolutely necessary to creating a quality book that people might actually want to read. Copyediting is the wax that makes your story gleam. 

With the near-final copy in hand, we were ready to advance to typesetting and the final stage of the editorial lifecycle: proofreading.