Steven Carpenter at Cake Financial (Abridged)

Thomas R. Eisenmann; Joseph B.  Fuller; Shikhar  Ghosh

Case | HBS Case Collection | January 2014

Steven Carpenter at Cake Financial (Abridged)

by Thomas R. Eisenmann, Joseph B. Fuller and Shikhar Ghosh

Abstract

Steven Carpenter reflects on the successes and failures of his recent venture, Cake Financial. Carpenter had just sold the four-year-old startup and was at work on a new business plan. But first, he wanted to understand why Cake Financial, a service that allowed users to access their brokerage accounts on one platform and also see how other users were investing, had not been widely adopted by customers despite positive receptions from technology and financial observers. The startup had also received financial support from prominent angel investors. Carpenter asked himself what he should have done differently with the technology supporting the platform, and how Cake should have better targeted customers and responded to their unique needs. He also wondered whether he had made the right decisions about when, and from whom, to seek funding at various stages of the company's growth.

Keywords: Corporate Entrepreneurship; Business or Company Management; Business Model; Growth and Development Strategy; Business Strategy; Internet; Financial Services Industry; Web Services Industry;

Language: English

Format: Print

20 pages

Educators

Citation:

Eisenmann, Thomas R., Joseph B. Fuller, and Shikhar Ghosh. "Steven Carpenter at Cake Financial (Abridged)." Harvard Business School Case 814-054, January 2014.

In December 2018, Kevin Ryan and Wendy Tsu faced an important decision – to finalize the CEO candidate for Truebird, an innovative, automated coffee café concept. Like many of AlleyCorp and Ryan’s companies, Truebird started with the observation of an unmet need – an inability to get good coffee at a reasonable price without a wait. Ryan’s track record as a serial entrepreneur included companies such as MongoDB, Gilt Groupe, Zola, and Business Insider. The commonality across AlleyCorp’s diverse businesses was a systematic process to ideation, led by Wendy Tsu, and an emphasis on the early Co-founder/CEO. Over the years, Ryan had refined his process of identifying the most appropriate person to serve as CEO. Two strong candidates had been shortlisted for the CEO position at Truebird. Unlike traditional approaches that used the reference check as a safety net, Ryan and Tsu considered reference check interviews as a stronger indicator of on-the-job performance. How should they structure a reference check process that would allow a complete understanding of each candidate? What questions should they ask when they found people who had worked with, or for, each of the candidates?

Working Paper | HBS Working Paper Series | 2020

Determinants of Early-Stage Startup Performance: Survey Results

Thomas R. Eisenmann

To explore determinants of new venture performance, the CEOs of 470 early-stage startups were surveyed regarding a broad range of factors related to their venture’s customer value proposition, product management, marketing, technology and operations, financial management, funding choices, team management, and founder attributes. Multivariate regression analysis shows that startups that employed lean startup management practices—in particular, an optimal rate of pivoting—had stronger seed equity valuation growth, as did new ventures that struck the right balance in recruiting for skill versus attitude and that professionalized human resource policies earlier. High levels of confidence in financial metrics—including estimates of unit economics, the ratio of customer lifetime value to customer acquisition cost, and total addressable market size—were also associated with strong growth in seed equity value. Valuation outcomes were not related to several founder/CEO attributes, including age, educational background, personality traits, and motivations for becoming an entrepreneur. Likewise, choosing angels versus venture capital firms as lead seed round investors did not predict subsequent growth in equity valuation, nor did decisions about partnerships to provide technology, operational capacity, or marketing support.

Keywords: Startups; survey research; performance analysis; Entrepreneurship; Performance; Analysis; Business Startups; Failure; Surveys;

Citation:

Eisenmann, Thomas R. "Determinants of Early-Stage Startup Performance: Survey Results." Harvard Business School Working Paper, No. 21-057, October 2020. View Details

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As companies struggle with chronic skills shortages and changing labor demographics, a new generation of talent platforms, offering on-demand access to highly trained workers, has begun to help. These platforms include marketplaces for premium expertise (such as Toptal and Catalant), for freelance workers (Upwork and 99designs), and for crowdsourcing innovation (Kaggle and InnoCentive). Almost all Fortune 500 firms use such platforms. But most do so in an ad hoc, inefficient way, according to a Harvard Business School/BCG study. Companies need to get much more strategic about their engagement with talent platforms and fully embrace their ability to increase labor force flexibility, speed time to market, and facilitate business model innovation. That will require rewiring policies and processes and redefining working norms. Most important, leaders must inspire the cultural shift needed to realize the platforms’ transformative potential.

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Steven Carpenter at Cake Financial (Abridged)

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