
How to handle a VC who flies First - danshapiro
http://www.danshapiro.com/blog/2011/09/how-to-handle-a-vc-who-flies-first/
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annon
Maybe it's just me, but it seems like it would be better to speak with the VC
directly about this. If you can't have a candid conversation about expenses
with one of your investors, you probably shouldn't be in business with them.

Drafting up the expenses agreement, having the board approve it, and having
the comptroller deal with it seems like a lot of work that could have been
dealt with by a simple conversation instead.

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ams6110
Any company should have a reimbursement policy anyway, just as they should
have HR policies. It avoids charges or perception of unfair treatment.

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danshapiro
Yes - but you can imagine that it's not Priority One when you're a 5 person
company and the only travel is being done by a tightfisted CEO and acting CFO
who are staying in Motel 6's.

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danilocampos
Is it really that common to be in charge of a company and simultaneously lack
the basic assertiveness necessary to say you're not going to cover lavish
travel expenses?

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danshapiro
This theme appears in the comments here a few times. The gist seems to be "Why
not just confront the person?"

There are a few different answers to this one. The one you postulate is that
the CEO lacks assertiveness. Presumably this is not a terribly common case.

A second situation is that the CEO is sufficiently assertive in the general
case, but there are major power differentials between the players. One of the
other commenters pointed out that a first-time CEO might not feel comfortable
telling one of the titans of the industry to fly coach. This is presumably
also uncommon, but more forgivable, although that CEO will need to get over it
fast.

My circumstance, and I assume that of others, is that I regard board matters
as a long-term interaction of fallible people. Matters of face, allegiances,
and frankly who's in a bad mood on what day determine outcomes as often as
logic. My job isn't to be idealistic about what should or shouldn't matter;
it's to maximize the outcome for the company. Sometimes that may mean picking
a fight over nothing to prove a point. Much more often, it means saving my
bullets for big game. Others have different styles, but I find this a useful
tool to have in the kit.

That said, this sort of minor-conflict-annoyance backfired on me once. I'll
see if I can bang together a blog post about that soon.

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jwedgwood
>> Matters of face, allegiances, and frankly who's in a bad mood on what day
determine outcomes as often as logic.

This is so true. Matters of face can spiral out of control easily. I think you
handled this specific one with real dexterity.

One related thing from my own experience - As groups grow you tend to get
moments where the community norms that everyone took for granted can't be
assumed anymore.

It always starts with a single person operating outside those norms. You're
faced with the question of whether you have a one-off situation, or a systemic
problem (of which this one moment is just the first inkling). Knowing which
approach is the right one seems like it's frequently gut feel, but then again,
if you know that you are going to need process or guidelines soon, you can use
see those moments as an opportunity to get things right before you get bigger
problems later.

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littlegiantcap
I kind of feel like this is a bandaid solution. While this may help with
travel expenses this seems indicative of a larger issue that needs to be dealt
with directly. I think you need to have a talk with your investors about this
rather than taking the passive approach.

On a side note most investors I know (admittedly that number is very very
small), but still they would be incredibly conscious of any sort of over the
top expense and would want the money to stay in the company and be used for
something more productive than a better seat on a plane.

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latch
Off topic but...Last year I started work on the other side of the world at a
large bank. The reimbursement policy clearly stated that for any flights
longer than X hours (might have been 5), business class HAD to be taken and
any non business class WOULD NOT be reimbursed even if it ended up to be less
expensive.

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ams6110
Maybe they realize that flying these days is a basically awful experience, and
a 5 hour flight means more like 8 hours door-to-door so why not do a little to
make it a bit more tolerable.

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mathattack
It's actually that they don't want people to lose a day of effectiveness to
save money. Some quick math - for an investment bank, average wages can be as
much as $400K/year. Divide that by 200 days, and you have someone getting paid
$2,000/day. If flying coach kills their productivity for a day, saving $1,000
doesn't amount to much. At the senior levels, this is much more true. Of
course having one policy for execs and another for everyone else has many
negative consequences.

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jacques_chester
Some companies also take the view that cramming folk who fly 20+ hours a month
into economy is a health risk.

(Nobody's told this to FIFO miners, however).

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jmacd
Yeah, companies who hire consulting firms also get worried about this. Jr
consultants on planes 3 or 4x a week and when you get them at your office they
are unhealthy and not as effective as they should be. Smart clients force the
firm to fly the consultants less in most cases (the economics of paying for
biz class aren't as attractive or necessarily the point)

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KirkWylie
I liked this article so much that I wrote a response (
[http://kirkwylie.blogspot.com/2011/09/good-vcs-dont-
charge-t...](http://kirkwylie.blogspot.com/2011/09/good-vcs-dont-charge-their-
companies.html) ) about a reasonable policy that I wish all VCs would adopt:
charge firms what they'd pay for employee travel.

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rdl
Another advantage of being in the bay area and taking investment here too. I'd
be fine with ubering board members, or picking them up myself.

Do board members seriously expense meeting costs to early (series a)
companies? I haven't seen this, but I haven't seen non local investors at late
stage companies either.

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danshapiro
Yes, AFAIK it's a part of every standard law firm's templates. To be clear
this refers to Series A (>$1mm - in our case $4.5mm), not seed.

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rdl
I know it is part of the documents, but I haven't seen a series a company
actually get an expense reimbursement request from a friendly boardmember.
I've seen money flow the other way ("let's meet at my house"). I assume this
all depends on many factors.

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typfy
I don't really understand this post. Why would a VC stay in a crappy hotel?
Traveling is stressful and a burden. A company should do everything in its
power to ease that burden. Everyone from our CEO to our admins stays at the
Ritz Cartlon when traveling to NYC. If a company can't make similar
accommodations then I wonder how much they truly care about their employees.

~~~
rdl
The differential between crappy hotels and nice ones is maybe a factor of 4-8,
and often around 2x

With discounted coach vs full fare coach, often 10x, and for coach vs first,
another 10x (maybe 5x if negotiated).

I have a fondness for nice Starwood hotels (since I get a suite for the lowest
rate), or luxury rentals via airbnb, but still stick to upgradable coach and
then pay for SWUs, even if a client offers business class. Marginal luxury
dollars can go to better meals (even a great meal, without alcohol, is
20-100), then renting luxury cars (50-150 per day vs 25-50), then hotels
(200-300 outside NYC), then upgrading flights (500 or so to go business
internationally) and choice of hotel/airline for points.

Little things like having an exec or ops person personally spend time with you
vs fending for yourself cost little and seem like the first dollars you should
spend, especially at a startup, when dealing with clients, investors,
potential hires, etc.

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pjhyett
Not for nothing, but full fare economy can often be more expensive than
discounted biz tickets. Having an actual conversation telling the VC to cool
it might have ended up saving you more money.

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roel_v
So you're positing that it's in a significant % of cases possible to fly
business at _less_ cost than economy? If so, you'll need to back it up,
because it's a very bold claim to make.

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burrokeet
full fare economy will mean fully refundable and changeable with no fees etc.
discounted business/first class will be just like discounted economy - not
refundable, and not changeable w/o fees - the latter can definitely be cheaper
if you don't mind the constraints.

