Planning to Assemble aTeam: Essential Human Capital

An information security start
–
up
AmbarSec
Ltd
.
quickly went from concept
to company in the spring of
1998.
The founder members of the team
hoped to capitalis
e on
a
strong
environment for information
security start
–
ups, many of which were
acquiring
Venture C
apital
(VC)
investment,
hoping
for a few
years of
growth, then acquisition by
another large firm
—
Symantec
or Computer Associates
—
in the
computer security sector
or one of the
military
defenc
e contr
actors such as Raytheon or
Northrop
Grumman, if not an initial public offering.
A pre
–
incorporation dinner in a Japanese restaurant
was the scene of the first meeting of all of the
founders,
and the first time that some had actually met each other.
All we
re at least friends of friends.
The initial idea for a
company to make ‘‘hacker’’ tools for use by the ‘‘good
guys’’
—
computer security
professionals
—
turned into an
invitation that built up a team of a dozen or so individuals.
What
helped
the company’s coming together was
a combination of computer and social networking,
with
the former enabling the latter to work in
fast
–
moving developments i.e.
‘‘Internet time.’’
By 1998
the Internet was quite well established. Since then
it’s led to an e
normous rise in social and
professional
networking, with sites such as LinkedIn, Tribe, and Orkut
that allow individuals to both re
–
establish old connections
and create new ones with fellow alumni, others with
common interests, and
geographically local con
tacts.
One of the factors that allowed for assembling the
team was a
willingness and ability of many of the
founders to
endure a difficult start
–
up
period
and
to work
hard for
mainly
equity
in the business
.
The
CEO
of AmberSec
had
already sold
of
f
a previ
ous
venture and could afford to launch a new
company as a lifestyle
choice rather than a livelihood. O
thers
in the team
were relying on
savings, a
spouse’s income, or a ‘‘day job’’ to hold them
over to the point where the new venture could pay
something approaching a
reasonable
market salary. The company
found a modest amount of finance
through
a customer willing to
pre
–
pay for a heavy discount on the firm’s first product,
and
so the
management
decided
not to seek venture capital investment.
Th
e team evolved partly through
self
–
selection based on an ability
to
work for little pay.
Their
social
connections
as e
ngineers were may have been disadvantageous to creating
a
more rounded team
of
individuals with varied skills
.
The teams desire
to treat
a
ll
employees
the same
may also have
restricted
management
from
attracting and retaining aggressive, sales
–
oriented
employees.
In
addition, s
ome of the founders weren’t local to the company
headquarters in
Cambridge
, but worked
remotely.
Given the
start
–
up’s finances and other issues (such as a
company health care program limited to
Cambridge
),
they were also part
–
timers. Ultimately the company
dismissed
its tele
–
commut
ers (who
were mainly
the non
–
engineers).
Eight years later, 2006
the company is
still in business.
AmbarSec had done well to last so long, but
had
n’t achieved the
kind of success the founders had hoped for. Many of its
founders moved on, and
some made use of each other as
a virtual network for contacts and connections. Although
none o
f the
founders have
sold their share in the company
,
their equity
is
still
“locked in” to the
stock of a privately
held company. S
ome
founders
are considering launching new
businesses.
In retrospect, the company’s founders might have
spent more time, both
while recruiting participants
and in
structuring the company, in exploring their various views
on the
strategy and vision for the
venture
. In this case, not
all of the founders were in agreement as to what they
wanted, but those issues weren’t
discussed
w
hile the
company was being formed
. Some of the
founders saw the company
more as a speculative investment, and would have been
happy to take
the
risk of
VC funding for a chance to
enjoy
bigger
rewards.
O
thers
however
saw the
company as a
comfortable employm
ent environment and
were
unwilling
to see the company sold to some
acquisition
partner or
to change radically in the pursuit
of rapid growth.
At present, t
he majority of
shareholders
are content for
slow growth
; the company has never taken outside
money or
invited outside influence.
The dominant culture at the company was ultimately
one of a small community of technology
–
focused
engineers. Its CEO serves as a lead engineer, and the
company expends less effort on sales and
marketing than
most high
–
tech com
panies. Many high
–
tech companies
may rely on the Internet to
permit a distributed workforce,
but this company is more local and activity is focused on
interaction in
its physical offices.
Answer
all
q
uestion
s
(Group)
:
Submit all responses in one assignment
(~2
–
3 pages)
.
If
you have been asked to
make a
present
ation
, create a
concise
10
–
15minute presentation
of
your responses
.
A
.
Read the case study above and answer the following questions
as a group
*
1.
In this case,
h
ow might the
AmbarSec’
s founders have addressed
the issue of differences in
expectations before
those differences actually appeared
?
2.
Explain
the
possible
advantages
and
disadvantages
to
AmbarSec of
a tele
–
commuting
workforce?
3.
P
art
–
time employees (even
the
founders)
can be an asset or a liability for AmbarSec. Discuss
some of the potential problems of this
type of
employment
to
AmbarSec
and make feasible
recommendations of how they might be
overcome
?
*
NB
:
Where appropriate your answers should show some
knowledge
of the course work and its
application
to the incident
(perhaps through the use of relevant
examples, readings
or
experience)
. Furthermore, you should show some
analysis
of the
incident and
evaluate
comments you make or opinions you might have. P
lease respond to questions in a
question
–
answer
format rather than an essay style.