Fountainhead is one of my all time top ten favorite books. The lead character, Howard Roark is an independent-minded architect who bucks conventional wisdom and delivers buildings with vision and verve in the face of criticism and doubt – in short, a true entrepreneur.

One of my favorite scenes is when his antagonist, Ellsworthy Toohey, an obsequious newspaper columnist, captures a private one-on-one moment with Roark and asks him: "Mr. Roark, we’re alone here. Why don’t you tell me what you think of me? In any words you wish. No one will hear us." Roark replies, “But I don’t think of you." The sentiment is simply delivered; no antagonism or emotion – Roark truly doesn’t even consider Toohey or other critics like him when embarking on his work.

As he embarks on his long-anticipated IPO road show, Groupon’s founder and CEO Andrew Mason will need to channel a bit of Howard Roark. Critics love to throw stones at the company, as they do for other high-flying start-ups. I admit, even I have my doubts about the daily deal model and how sustainable Groupon’s approach will be in the face of merchant and customer attrition over time. This week’s news that smaller daily deal rival, BuyWithMe, is retrenching and laying off half its staff is not a good omen.

Yet I really respect what Mason and the Groupon leadership have built and, in truth, I wish them well. I want more young companies to succeed, break through the IPO glass ceiling, and continue to prove out the venture capital-backed company-creation process can work. I want Groupon to settle in at a strong valuation that generates wealth and further fuels the Chicago entrepreneurial ecosystem while returning capital to liquidity-starved investors. And as a Boston-based venture capitalist and start-up cheerleader, I like that Groupon is proving that not all the good companies have to come out of Silicon Valley.

So why is it that so many people are so eager to tear the company down? I guess schadenfreude, that odd feeling of happiness humans feel when they see other people suffering, is not simply a German phenomenon. For whatever reason (too many type A competitive folks in one small Petri dish?), the start-up community is a very snarky one. VCs are famous for bragging about their portfolio companies and snidely putting down their rivals. I remember when I was an entrepreneur and my company, Upromise, was raising money, one VC heard I was talking to a famous partner at a rival firm and sniggered, “Really? Is he still in the business?”

Yet the best entrepreneurs (and VCs, I suppose) know to ignore the critics and naysayers. In fact, like Howard Roark, they don’t even think of them. They keep their head down and focus on building a great service that their customers love and creating a great culture that engenders loyalty and passion amongst their employees.

Good luck, Andrew.

I had an out of body experience last week.  A few days before Yom Kippur, the holiest day of the year in the Jewish calendar and a spiritual day of remembrance, I found myself in front of ten Palestinian high tech CEOs talking about entrepreneurship.  At the end of the session, they invited me to meet with Palestinian President Abbas to advise him on how to build a thriving IT sector (which now employs 3,500 across 300 companies).  How did this juxtaposition come about?

It all began a few months ago, when Massachusetts Governor Deval Patrick visited Israel on a trade mission.  He met with numerous Israeli entrepreneurs to foster greater business partnerships and opportunities with Massachusetts businesses.  While there, he met with a few Palestinian entrepreneurs as well and invited them to come to Boston to establish closer relationships with local businesses.  Last week, they took him up on this offer – coming to both Boston and Silicon Valley to meet with business leaders from the IT industry.  The Boston visit was coordinated by the Progressive Business Leaders Network, a business organization I co-founded, and Governor Patrick came to meet with the group to welcome them to Boston.

Honestly, when I was invited to speak to the Palestinian delegation, I paused.  You see, my father is a Holocaust survivor and finished high school in Tel Aviv.  My kids attend a Jewish day school, study Hebrew, and are being raised, like I was, as ardent Zionists.  I donate money to AIPAC as well as our local Jewish federation (CJP).  Although I strongly support a two-state solution, I worry that anti-Semitism remains rampant in the Middle East and that the demonization of Israel and Jews is at an alarming high.  And so the question I asked myself before accepting the invitation was:  would a strong Palestinian IT sector be a good thing for peace in the Middle East?  What if the next Skype or LogMeIn was started by a Ramallah-based entrepreneur instead of a Swede or Hungarian, respectively – would that be a good thing?

My conclusion:  100% yes.  And after meeting with the Palestinian CEO delegation, I would say 200% yes.

Thomas Friedman said recently that the surest cure to poverty was entrepreneurship.  I would say the same regarding peace.  If the Israelis and Palestinians are busy cooperating commercially, creating jobs and wealth for both sides, it will meaningfully reduce the tension that unemployment and a lack of opportunity for young and old represent.

I was blown away by the group of Palestinian entrepreneurs – they had more in common with entrepreneurs in Boston, Silicon Valley and NYC than probably many of their own people.  They could have stepped right out of Techstars central casting – smart, scrappy, ambitious, hungry.  I enjoyed hearing their stories of their entrepreneurial journeys to create their companies.  (I joked with some chagrin with the one female in the delegation – pictured above – that their male : female entrepreneurial ratio matched our own).

Traveling with the delegation was a USAID executive who is assigned to the region to foster more business development with entrepreneurial companies.  I was able to enlist a Palestinian Harvard Business School student (we hosted the event at Harvard’s new Innovation Lab, which is spectacular), to join us.  He was raised in Bethlehem and worked at a Palestinian venture capital firm last summer, called Padico, scouting opportunities for investment.

Who knows what will happen with the peace talks, but if these ten entrepreneurs are any indication, there’s hope yet for peace in the Middle East through posterity and entrepreneurship.  At least that’s what I was praying for in synagogue on Saturday!  With the recent bombshell announcement that Israeli Prime Minister Netanyahu has secured the release of Israeli soldier Gilad Shalit, perhaps we are a step closer.

The policy conversation regarding jobs and economic development is starting to show some promising signs, particularly in helping young companies flourish.  The fact that the entrepreneurial ecosystem is critical to job creation should be obvious, but there remains a misperception that small businesses create jobs.  In truth, it’s not small business that represents the country’s job engine.  It’s new businesses.  The Kauffman Foundation’s research on this matter is clear:  from 1997 to 2005, job growth in the US was driven entirely by start-ups.  What this means is that any economic development effort must be framed in the context of the following central question:  how can the government help more young companies be formed, grow faster and achieve long-term success?

Fortunately, there is a constructive policy conversation in this area on both sides of the political spectrum.  Unfortunately, it's going to take leadership and bi-partisan cooperation to push them through, and it's not clear where that leadership is going to come from.  Here are some recent policy developments worth tracking, as well as my own two cents on the policies I think should be getting more attention to support company formation, growth and ultimate success:

Policies:  Company Formation

One of the most valuable resource for American start-ups are immigrants who come to the US to pursue entrepreneurial careers.  Such household names as Google, Intel and eBay were started by at least one immigrant founder.  Yet, we make it very difficult for immigrant entrepreneurs to pursue their dreams and build their companies in America.  To address this, Senators Kerry and Lugar proposed a Start Up Visa in March 2011, providing “Entrepreneur’s visas” for immigrant entrepreneurs.  This bill needs to be passed immediately (it is in the midst of hearings and keeps getting caught up in partisan bickering over broader immigration reform) and should be expanded to provide green cards for those with degrees in science, technology, engineering and math.  For more on this important bill, read here and here.  The administration has proposed additional changes to process immigrants in a more streamlined fashion, including a recent set of policies that the US Citizens and Immigration Services department has advocated which can be found here.

The other major lever to improve company formation is facilitating the flow of ideas out of our university system.  Flybridge Capital recently created an organization called URES (University Research and Entrepreneurship Symposium) in partnership with the National Council of Entrepreneurial Tech Transfer (NCET2), to bring together researchers, investors and entrepreneurs to act as catalysts for company-building.  Greater attention and support for these efforts will help accelerate the process for research to be commercialized.  The recently passed Patent Reform Act is a good step forward in this area as well, simplifying red tape and reducing the backlog (despite last-minute, dysfunctional nods to special interests). 

But to really jumpstart company formation, the government should consider meaningfully increasing NIH funding – perhaps 2-3x its current level.  Most medical research labs around the company are dependent on NIH funding and it is one of the highest leverage investment we can make – supporting 325,000 researchers at over 3,000 universities around the country.  Yet, NIH funding is at a ridiculously low $31 billion per year, roughly the same in constant dollars as it was ten years ago.  We spend $21 billion on tax breaks to the oil and gas industry and tens of billions of dollars on farm subsidies.  This anemic NIH funding level remains despite the well-known fact that the impact on health care costs and job creation is enormous.  In diabetes alone, the total government support for research is a mere $1 billion in contrast to the $200 billion per year that diabetes costs the economy.  In addition to the clinical impact, each dollar of NIH funding generates more than twice as much in state economic output, not including the jobs generated by the companies who are spun out of NIH funding.  I'm shocked that there isn't more discussion about channeling more dollars towards this inmportant institution.

Policies:  Grow Faster

Once new companies are created, they need access to both financial and human capital to grow faster.  Just to prove that good ideas can come from unusual sources, Republican majority whip Kevin McCarthy proposed in September the Access to Capital for Job Creations Act, a piece of legislation that would widen the universe of potential investors for small businesses around the Securities Act of 1933.  Packaged with other proposals around expanding the number of shareholders private companies can have, this act would be an accelerant for small companies seeking access to capital from a broad range of sources. 

Access to human capital is another critical component to allowing young companies to grow faster.  The dearth of trained computer science and engineering is crippling the growth of many Innovation Economy companies.  Worker training efforts in combination with educational efforts, such as the emphasis on STEM (Science Technology, Engineering and Mathematics) is a start, but are woefully underfunded and under-supported.  For example, Congress nearly cut the $181m Department of Education’s Math and Science Partnership Program and the NSF’s programs in this area also do not get enough attention.  In thinking through our investment choices, we should keep asking ourselves, if they had a massive shortage of software engineers, What Would China Do?  The President’s Jobs Bill contains some good ideas in this area, such as a “Bridge to Work” program, which could have a big impact when the details are fully worked through.

Free trade is another critical component to support small business expansion.  Coming out of the recent economic crisis, there has been protectionist pressure that threatens to choke off the opportunity for small businesses to expand via global exports.  The free flow of capital across borders is one of the most critical ways to expand opportunities for US companies.  In September, the Council on Foreign Relations issued a new report that concludes that America is at risk of being left a bystander in the global trade arena as our share of exports and direct investment has plummeted.  Huge emerging economies in India and Brazil need to be opened up more aggressively with the help of the Congress and White House.  A more aggressive free trade policy, coupled with stricter punishment for unfair trade practices, must be embarked on.

Policies:  Achieve Long-Term Success

For young companies to truly have a shot at achieving long-term success, they need to be able to access the public markets through an IPO.  Unfortunately, the IPO market was the victim of excessive regulation in the wake of the Enron scandal, leading to the passage of the very restrictive Sarbanes Oxley, among other things.  Policy makers have finally been listening to the start-up and entrepreneurial community to adjust the policies to prevent the choking off of growth.  In September, Congressman Ben Quayle introduced the Startup Expansion and Investment Act, which seeks to make it easier for new companies with a market capitalization of less than $1 billion to go public by opting out of some of the more onerous regulations imposed by Sarbanes-Oxley.  This is a good start.  The National Venture Capital Association (NVCA) has put forward a comprehensive list of policies that need to be followed to make an event larger impact here.  Hearings on this have started.  Action needs to be taken.

Conclusion

Despite the partisan rhetoric and bickering, the last few months have seen substantial progress amongst policy makers in the areas of helping the startup economy thrive.  The link between startups and jobs is becoming more broadly understand, as are the policies required to help business form, grow and ultimately succeed.  It will require extraordinary leadership to step forward and advocate these policies in a comprehensive way that transcends the classic “left” vs. “right” debates.  I sure hope that leadership is on its way.

I'm pleased to announce that my book, Mastering the VC Game, is now available in paperback, complete with a new introduction and a few updates.  Amazon has priced it at $10.88 for Prime customers.  Frankly, I'd prefer to give it away for free as making money off the book isn't really my goal.  The folks at Penguin have a business to run, though, so books still cost money.  That said, I was able to convince them to let me give away the first 40 pages for free – so download it here or at the book website at www.jeffbussgang.com to get a taste.

Since the publication of Mastering the VC Game in 2010, I have received wonderful feedback from the entrepreneurial community. In fact, I have been blown away by the response from such a diverse population of entrepreneurs and would-be entrepreneurs around the world. One twenty-something entrepreneur working at a non-profit in Australia wrote me:

 “Thank you for writing this book. It was a captivating read that gave me the basics of how the industry looks. I loved it. My only problem was feeling inspired to action, which made me put the book down to send emails to friends, and look up companies, which was a great problem to have.”

Inspiring entrepreneurs into action was my original goal for the book. The need for entrepreneurship is greater than ever. Policy makers and business leaders have both come to recognize that the capacity of human beings to innovate is our best hope for addressing and ultimately solving society’s thorniest problems. It has never been more critical that we brew up that magic elixir that comes of mixing entrepreneurs, who are the source of innovation, with investors, who are the source of capital to fuel that innovation.

I wrote Mastering the VC Game to contribute in some small way to this phenomenon and inspire entrepreneurs around the world to arm themselves with the knowledge, skills, and tools they need to take action and to succeed in their endeavors.  When entrepreneurs and investors align and work in harmony, the long odds for start-up success are greatly improved and real magic can happen – creating that next Google, Facebook, or Twitter.  Let me know what you think!

Like many members of the start-up ecosystem, I was excited to watch the Bloomberg TV show on Techstars NY last night.  The opportunity to see our little subculture of whacky characters and idiosyncrasies playing out on television was so alluring that it was worth foregoing my usual nightly email binge.

Yet, when the show was over, I was strangely disappointed.  I had that same feeling you get when you eat a bag of potato chips, which taste good going down, but then feels unfulfilling and unappealing after the last chip is gone.  In short, I think the show was a huge wasted opportunity.

First, I should say that I’m a huge fan and supporter of Techstars.  My partners and I are personal financial investors in Techstars Boston and we funded one of the first Techstars companies (oneforty) and have served as advisors to countless others in NYC and Boston.  Finally, I am a huge fan of David Tisch, Katie Rae and the other Techstars managing directors.  What they have created from nothing a few years ago, with the backing and support of Brad Feld and David Cohen, is nothing short of remarkable.

OK, caveats aside, here’s what I didn’t like about the show:  the tone was all wrong.  The edgy graphics, music and camera shots tried to bring a crass, reality TV feel to a serious and sophisticated business.  The producers apparently wanted to create something akin to “the Bachelor metes The Apprentice” and, in doing, cheapened the whole endeavor.  Get rich quick, kids, was the message, complete with hip sound track, sound bites and quirky camera angles.

I would submit that’s not the point of entrepreneurship or, for that matter, Techstars.  I would have much preferred to see a more sophisticated show that brought out the “change the world” passions of the founders and provided a more nuanced view of the ups and downs of start-up life.  I wanted to see more big picture thinking, for example an explanation about the game-changing (and, in many cases, life changing) impact start-ups are having in our society, transforming industries and households up and down the economic stack.  

I’m not suggesting Bloomberg should try to emulate their own Charlie Rose, and risk putting the audience to sleep, but at least channel a bit of Jon Stewart (who, Bill Moyers recently put, is brilliant at taking “a critical view of the news and marinating it in humor”).  I would have much preferred to see the producers treat the audience like adults, able to digest serious issues and trade off decisions that the founders were struggling with, rather than target hipsters that are looking for dramatic founder break-ups because they’re too busy to watch mid-day soaps. 

Perhaps the start-up community needs a Jon Stewart-like figure to act as our guide through the Techstars process – more of an shrewd yet entertaining narrator than an MTV host.  Some of the quick-hit interviewees on the pilot show would be great candidates for this (e.g., Fred Wilson, Roger Ehrenberg, Brad Feld).  Start-up life has plenty of drama that doesn’t need fabrication or exaggeration.  Hard problems are being faced by each team professionally and personally.  The characters in most start-up dramas are fascinating people, with compelling stories – I know many of the folks depicted in the show and they are deserving of more than surface treatment, but rather real character development and dimensionality.

Sure, I enjoyed seeing so many friends and familiar faces on screen and seeing “my world” exposed to a broader audience.  But, objectively, I thought the actual show kind of stunk.  That said, I’ll be tuning in to the second episode.  And hoping for the best.

There is an old parable about the concept of commitment when it comes to breakfast. The story goes that when looking at a plate of the traditional fare of ham and eggs, it's obvious that the chicken is an interested party, but the pig is truly committed.

When I tell this story to entrepreneurs, my point is usually to contrast the approach VCs have to start-ups as compared to entrepreneurs. The VC is an interested party, but at the end of the day, if their start-ups live or die, they typically still have their job, their office and their portfolio of other investments. The entrepreneur, on the other hand, is the pig – truly committed to the outcome, with no fallback.

But lately I've been thinking about the parable of the pig and the chicken in the context of the characteristics that make a great entrepreneur – and the kind of entrepreneur that we VCs in general, and my firm Flybridge Capital in particular, like to back. In short, we like to back pigs – entrepreneurs who are truly and completely committed to the outcome of their venture, have a lot of stake, and no fallback.

How do we discern the difference between the two entrepreneurial archetypes? It's usually relatively easy, but sometimes subtle. Here are a few of the top characteristics we see in entrepreneurs who appear to be exhibiting behavior that suggests they're more like "chickens" when it comes to their start-up:

1) Prefer to wait to start their venture only after they receive funding ("We are ready to go, as soon as you give us your money." …um, does that mean you won't start the company if I don't give you my money?).

2) Don't quit their day jobs before receiving funding. ("This has been a side project for a year, and I can't wait to focus on it full-time" … um, if you can't wait – why are you waiting?)

3) Don't physically move themselves or their teammates to be in the same geography when starting their venture (think Eduardo Severin in the Social Network spending his summer in NYC).

4) Prefer to play a hands-off chairman role or look to quickly hire a COO/president in the early days rather than operate as the hands-on CEO/president. (I'll leave out the numerous examples to protect the innocent, but as a rule of thumb, companies with fewer than 40 employees don't typically need a COO).

5) Are unwilling to fully leverage their own personal and professional networks to drive recruiting, fundraising and business development.

On the other hand, the top five characteristics we see in "pig" entrepreneurs include:

1) Commit to the new company everything they have – even if that means moving their families, quitting their jobs, or even dropping our of their schools (as much as I don't want to condone or encourage this!).

2) Put themselves "out there" publicly and visibly with the industry, their relationships, family and friends. If the company is a failure, it will not be a quiet one.

3) Have not yet achieved a mega-success already and/or yet achieved wealth beyond the point of needing to work again. (I remember my mentor and boss at Open Market, CEO Gary Eichhorn, congratulating me when I became a first-time homeowner in the mid-1990s and observed: "I hope you got a large mortgage so that you are locked in and highly motivated to create wealth!").

4) Participate in a minimal set of outside interests and hobbies that aren't directly related to their business. Starting a company is a consuming, obsessive, 7×24 endeavor. Raising a family and remaining healthy is enough of a battle. When we see entrepreneurs with long lists of hobbies and outside interests, it's a red flag. One of my partners went so far as to look up the number of times an entrepreneur played golf one summer (which apparently is public information somehow, although I'm not a golfer so still don't know how he figured this out) as a barometer for how hard they were applying themselves to their new venture.

5) There exists a rare breed of entrepreneurs that have already had mega-success are so special and driven that they remain obviously hungry and scrappy. For these entrepreneurs, the key is to watch and see if they're still as hands on as they ever were (e.g., obsessed with the product, knee-deep in the financial model, out in front of the organization in selling). Again, these entrepreneurs are very special.

So what are you – the chicken or the pig? Investors clearly prefer one model over the other, not just in the founder, but in the entire team. As a result, as you are assembling your start-up team, be careful not to hire chickens. In the eyes of prospective investors, you may find it's even less kosher than hiring pigs.

• A New Earth:  Awakening to Your Life's Purposes by Eckhart Tolle.  My former business partner Michael Bronner recommended this excellent book to me.  I found the lessons regarding managing your ego and maintaining personal equilibrium to be so compelling that I wrote down a dozen or so excerpts and put them up in my office.  
• Happier:  Learn the Secrets to Daily Joy and Lasting Fulfillment by Tal Ben-Shahar.  This book is a thoughtful exploration into what makes you happy, encouraging self-awareness and wise choices.  My friend Dan Allen recommended it to me.  An insightful study covered by the Atlantic Monthly on this important topic of happiness is also worth a read.
• Younger Next Year: A Guide to Living Like 50 Until You're 80 and Beyond by Chris Crowley and Henry Lodge.  One of my softball teammates pushed this one on me and I adored it.  I've given it to a dozen friends as a gift – encouraging them to maintain the philosophy that health, fitness and well-being does not have to degrade as you get older.

Family/Kids

My three kids remain one of my most passionate obsessions, so I'm a sucker for any recommended books about child-rearing and family management.  A few of my recent favorites:

• Nurture Shock: New Thinking About Children by Po Bronson and Ashley Merryman.  David Kidder of Clickale suggested this one to me and I have enjoyed it as a book that cuts against conventional wisdom in many areas of raising children.
• The Talent Code:  Greatness Isn't Born, It's Grown. Here's How by Daniel Coyle.  My partner Jon Karlen recommended this one to me.  Jon was an all-American squash player and his wife was a 12-letter athlete (!) at Harvard, so I take his recommendations about raising talented kids seriously!
• The Three Big Questions For a Frantic Family by Patrick Lencioni.  Lencioni is one of my favorite business book writers (see my recent blog post on his work on team dysfunction) and so this book was a refreshing way to apply some of his core business lessons to family management.

Fiction/Fun

When you don't feel like serious non-fiction, a little light fiction hits the spot.  For example:

•  The Strangler by William Landay.  Full disclosure:  Billy is my brother-in-law, but as a former prosecutor in the DA's office, he's got a great angle on crime mysteries.  His third book, Defending Jacob, comes out next winter and is also outstanding.
• Delirious by Daniel Palmer.  This is a very fun and a bit freaky fictional work about a start-up CEO who goes insane.  Murder, drama and software all play heavily.  Palmer used to be a start-up executive and gives a great view into this world. 
• The Finkler Question by Howard Jacobson.  A hedge fund buddy of mine recommended this to me.  Wry and somewhat bizarre depiction of a philo-Semitic (as opposed to anti-Semitic) world view. 
• Cityboys:  Beer and Loathing in the Square Mile by Geraint Anderson.  A buyside equity analyst buddy of mine recommended this one to me.  Anderson is a London-based trader who provides a laugh out loud fictional (but based on fact) inside look at the hypocrisy and idiocy on the trading floor. 

So those are a few of my top suggestions – many are a bit off the beaten track but very enjoyable.  Happy reading!

Every summer we invite our portfolio company executives and their families along with friends of the firm to Kennebunkport, Maine for some fun and sun.  The event is all about having fun and community building – no conferences or panels allowed.  On Saturday night, we have a costume bash and in past years, people get really into it.  

This year's theme was Saturday Night Live and my (very creative) partner David Aronoff produces a video each year to show at the party.  You can see this year's video here, with numerous guest stars and a brilliant "Mr. Bill raises VC money" skit:

David promises me this is the last year he'll make fun of me for writing a book.  I'm not holding my breath.  Here's a picture of the Flybridge team in full regala:



My wife and I have picked out the perfect spouse for my son.  They have developed a wonderful relationship together over the years, with great chemistry and warmth.  She comes from a family that has identical values and priorities to ours and would make wonderful in-laws.

They are both 9 years old.

This example – admittedly absurd (although we still do talk about it!) – got me thinking about the challenge of arranged marriages in the world of entrepreneurship.

Many entrepreneurs come to us and say "I have this great idea, all I need is a technical co-founder" or "I have a killer technology that I'm developing, all I need is a business co-founder."  They look to us to help make the match in the hopes that they will complete their team and live happily ever after.  

Unfortunately, arranged marriages are hard to execute.  You can't force a partnership.  It has to come naturally and evolve organically.  When two partners have worked together already and come to us, we know that "team risk" has been meaningfully mitigated.  But even when a founding team has a long personal history, if they don't have a professional history together it can be hard to predict whether things will work out harmoniously.

We have had a few examples in the Flybridge portfolio where we have been able to make matches between business builders and technical founders that have really worked.  In particular:

• Virtual Computer, where we were able to match the late Alex Vasilevsky (RIP) with CEO Dan McCall to build a successful desktop virtualization company.
• Cartera Commerce, where we were able to match technical founder Dave Andre with CEO Tom Beecher to build a successful e-commerce and performance marketing company.
• Digital Lumens, where we paired a data communications veteran, CEO Tom Pincine, with a lighting guru, Brian Chemel, to start the leading LED-based solid-state lighting company.

But we have also seen plenty of examples where it has not worked – where putting two strong personalities together to build a venture leads to disaster.  Here are a few tips based on lessons learned in trying to make arranged marriages work:

1. Sign a pre-nup.  Two founding team members may think they have a clear agreement as to how they are going to divide up responsibilities, but unfortunately humans have a tendency to listen to what they want to hear.  To avoid misunderstanding, write it down.  Write down the roles and responsibilities, the mechanisms by which you will resolve disputes, and what the financial deal is (equity split, deferred compensation, etc.)  between the two of you.  HBS Professor Noam Wasserman wrote a good blog post on how to think through the initial equity split that I highly recommend.
2. Celebrate diversity.  I have found that it's best to have two founders who are really different – different skills, backgrounds, different perspectives on the world.  Otherwise, there is a risk that they step on each other's toes by inserting themselves into the same set of issues.  Which founder will be Ms. Outside vs. Ms. Inside?  Which founder will handle fundraising vs. product development?  These questions should have obvious answers based on skill set and experience, rather than coin-flipping.
3. Don't rush it.  Having a year long engagement period is a good practice in marriages – it allows the newlweds to "try on" the whole marriage concept over a long period of time.  Similarly, allowing a founding team to have some hang time together and not rush into a relationship is an important practice.  With a fast-moving industry, a year is typically not practical, but take a few months to "try it on" before you jump in to a founding partnership.
4. Talk it out – in private.  I believe it was President Bill Clinton who began the practice of weekly lunches with his Vice President, Al Gore (cute joke on that here).  That cadence of private 1 on 1 sessions is a valuable mechanism to set up between two founders to make sure they remain in synch.  If employees sense even slight disagreements between founders, it can lead to confusion and misalignment.
5. Seek a counselor.  I am a big fan of busines coaches and would advise founding teams to consider hiring a professional coach or nominating an advisor to help them resolve disputes – before any disputes arise.  There's a good reason complex business contacts have a built in agreement on the dispute resolution process.  In the heat of the moment, that's the last thing you want to negotiate.  Similarly, founders should setup a neutral party and process to assist them in resolving issues so that when they inevitably arise, it's an orderly, rational process.

My wife and I will keep a close eye on my son's evolving relationship with his nine year old girlfriend.  In the meantime, I'll keep looking to make more great entrepreneurial matches.

I can type faster than my assistant.  If she is reading this blog, she may dispute this (and we may have to have a show down with the help of an online typing test), but I'm a pretty darn fast typer.

But, if my assistant were to sit in on my board meetings for me while I stayed back in the office and typed, I'm not sure my entrepreneurs would be very happy (at least, I hope not!).

Thus, despite the fact that I may be a faster typer than she on an absolute basis, it's way more important for my job as a VC that I maximize my time working with entrepreneurs, something I am comparatively better at than she is.

This simple example is derived from an economic law discovered by David Ricardo that has always fascinated me, called the Law of Comparative Advantage.  This law says that it does not matter  whether a nation is better at producing a particular good on an absolute basis as compared to another nation.  What matters is whether a nation is comparatively better at producing a particular good as compared to other goods it can devote its resources to producing relative to another country.

Unfortunately, I see too many founders ignoring the entrepreneurial corollary to this law, the Start-Up Law of Comparative Advantage.  I'm no David Ricardo, but it seems to me that if entrepreneurs followed this "law", the gains to their start-ups would be akin to the gains attributed to free trade.  Here's why:  founders are typically gifted, multi-talented, versatile professionals.  As such, they get sucked into spending time doing things that they may be better at than the others in their organization on an absolute basis, but that, comparatively speaking, they are worse at in relation to the handful of things that they are uniquely suited for.

I work with one founder/CEO who is so talented, I think he literally could perform the job function of each of his direct reports better than they could.  But if he spent all his time doing operational project management or tactical sales activities, he wouldn't be able to spend time on the things that only he uniquely can do relative to his teammates.  

In a fast-growing start-up, a founder needs to be very protective and strategic with how they spend their time.  Founders are always complaining that they are spread too thin, are overwhelmed with the job at hand, and struggle to figure out how they should be prioritizing their efforts.

I would submit that, above else, there are two areas a founder should not delegate:  product and people.  Product-related activities include developing customer intimacy (studying the "voice of the customer"), designing features, thinking through product strategy and setting priorities.  People-related activities include hiring, setting the culture, coaching and mentoring.

If a founder finds themselves spending the bulk of their time on issues not related to product or people issues, they are violating the Law of Comparative Advantage.  They need to rethink whether they're delegating in the wrong areas, and not being (appropriately) obsessively hands-on in the right areas.

I remember reading once that in the early days at Microsoft, Bill Gates and Steve Ballmer would review each other's calendars on a monthly basis and give feedback to each other on where they should be spending their time.  That concept has always stuck with me, and my partners and I endeavor to do the same periodically. 

Try the following exercise:  at the end of the week, write down the top 6-8 categories of time spent on your start-up (e.g., product, people, project management, operations, marketing, sales, investor relations, miscellaneous).  Just as a lawyer would, track your hours at the end of the week by "billing" each of these buckets.  When you step back and analyze how much time you are actually spending (as opposed to how much time you think you are spending), you may find you can make appropriate adjustments to better deploy your time. 

Adhering to the Start-Up Law of Comparative Advantage may not earn you the Nobel Prize in Economics, but it will help you direct your time more productively when starting your company.