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Case Analysis: Heidi Roizen

Introduction

The primary question in this case is “whether or not Heidi Roizen would need to tailor her approach to either venture capitalism or networking to allow herself to do both successfully?” The question was aptly triggered by her increasing role at Softbank, which by month four was consuming eighty percent of her time. As Roizen considered her network, industry knowledge, and leadership acumen, the transition appeared to be a natural progression. Therefore it was important to systematically evaluate how her growing involvement in venture capitalism could affect her network of personal and professional relationships. She also seemed resigned to the idea that balancing both demands could eventually require a strategic repositioning (McGinn & Tempest, 2010).

Building and Leveraging your Network

According to Uzzi and Dunlap (2005) the value of being an information broker includes the ability to access the right resources when appropriate. The case study informs the researcher that Roizen joined Softbank in 1999. This is especially notable given her previous experience building relationships over the course of twenty years (since T/Maker). One of the relationships that she developed was with Farros who eventually became CEO of iPrint.com. iPrint was one of the five companies mentioned in Exhibit 3 as a Softbank investment (McGinn & Tempest, 2010). Therefore, while the investment in IPrint.com was likely associated with the timing of the IPO filing, the long-standing relationship between Farros and Roizen was equally important.

This is notable because it reveals the general philosophy of Roizen which is to invest time in individuals that she believes have great talent and abilities. Even when Roizen joined Apple in 1996 her primary focus was to support the company which had just lost a Billion dollars of market share. She subsequently had to sell 12,000 external software developers on a broader vision (McGinn & Tempest, 2010). Therefore, one recommendation for her would be to reassess techniques and strategies used historically in those types of situations. Even though the stakeholder is different, the interpersonal skills used to pitch long-term valuation remains the same. The only difference now is that she is searching for IPO’s that fit a particular criteria.

IPO Criteria

An examination of the Softbank Funding process (Exhibit 2) reveals that there are certain criteria that they look for in terms of investing. One characteristic that is key is a company having an innovative idea. A second characteristic is that organizations that are attractive are either in seed-stage or first round financing. From a strategic standpoint Softbank wants to be positioned as a lead investor. This gives them greater leverage when it comes to influencing the growth of their handpicked IPO partners. A third characteristic is that IPO’s have products and or services that use the Internet (McGinn & Tempest, 2010).

This means that IPO’s that don’t fit the aforementioned criteria would not even be approached. This would ensure that consistency and performance of the relationship with networking partners remained intact. It would also ensure that any propositions made to potential IPO’s accurately fit the Softbank Funding criteria. Subsequently any formed partnerships would have the greatest potential for shared fiscal profitability.

So another recommendation would be for Roizen to have targeted conversations with specific companies within her network about their long-term goals. This way she could gauge what companies may be looking to launch their IPO in the near future and begin to plant initial seeds. Since Roizen has also appeared to master the art of turning a quick conversation into a value based connection, she could pitch the opportunity informally. A natural environment for such engagement would be the dinner parties that she often had at her house with high-tech executives (McGinn & Tempest, 2010).

System of Success

It appears that for Roizen sustained success in balancing the roles of networker and venture capitalist with Softbank Funding requires a scientific process. Since Roizen’s role as a networker is something that she enjoys it will be important to aptly manage her time and engage in purposeful conversations. The greater challenge will be the forecasting necessary to predict which IPO’s are worth the investment. Additionally, Roizen will need to provide ongoing support for the IPO’s that are already onboard. Currently she has been instrumental in the joint-partnerships with five IPO’s (McGinn & Tempest, 2010).

In terms of tailoring her relational approach Roizen’s role will most likely shift. When she is first pitching potential IPO’s on the opportunity for a long-term partnership her focus will be sales. She will be selling them on the idea of much needed cash flow for investment in infrastructure, operational expenses, and product development. However, when the IPO comes on board then the focus will shift to a consultative role.

As such Roizen can also look at the development of customized forecasting strategies and initiatives. It will be important for her to collaboratively set realistic expectations for each IPO. This will ensure that forecasting goals are not unattainable. According to Lovallo and Kahneman (2003) there are organizations that have misplaced optimism and subsequently fail to achieve their desired goals. Since there is shared risk between the companies, Roizen must do her part to ensure a successful partnership. So now when Roizen is meeting with partner IPO’s she has to switch hats from networker to realist. Helping them increase their chances of success will require this strategic shift.

Conclusion

In a final analysis it appears that in order for Roizen to be successful maintaining both roles as (networker and venture capitalist) is critical. In fact it could be argued that when properly positioned both roles can work synergistically. In other words it is vitally important that she continues to operate as a savvy and influential networker. The class 15 PowerPoint on Social networks provided helpful tips. From a performance standpoint Roizen will need to abide by whatever promises she makes to prospective IPO’s. In fact even those that may not fit the profile of a partner IPO should be treated in the same manner. This is because the technology industry is a network industry and another company may have a relationship with a potential prospect. The last thing that Roizen wants is to have the Softbank brand tarnished.

Consistency is also important so that Roizen’s internal and external stakeholders know what to expect from her. As previously mentioned as she focuses on establishing win-win connections then stakeholders and prospects will be more likely to answer the phone when she calls. Reciprocity is important because people don’t want to feel as if a relationship is one-sided. This could be something as simple as providing workshops that are industry related or connecting companies within her network even if there is no monetary benefit.

Also it’s important that Roizen continues to engage in shared activities. She’s already shown a natural proclivity throughout her life to expand her corporate reach. This is further reinforced in Exhibit 1 which lists four boards that she is involved in including (Great Plains, Preview Systems, Soft book Press, and Software Development Forum). She is also on the Advisory Boards of (Garage.com, Microsoft, Personic, Time Domain Corporation, and WhoWhere Inc.) (McGinn & Tempest, 2010).

In final analysis of her relationship with Softbank currently time is Roizen’s greatest commodity. She has expressed in the case study that she prefers spending more time cultivating relationships and advising existing venture partners. She does not appear to enjoy going through the approximately 10 business plans that she receives each day. Therefore, since time is her greatest commodity a reexamination of where her time is spent is important. Since 50% of her time is spent engaged in activities that she does not enjoy (reviewing business plans) she should delegate that responsibility (McGinn & Tempest, 2010).

Perhaps whomever she assigns to be the initial reviewer of those business plans would only bring her the top 5% of plans meeting that criteria. That way she now only spends maybe 20% of her time involved in reviewing business plans. She can now spend 30% more time cultivating relationships with companies that Softbank has already invested in. This is beneficial in several respects. First, Roizen is more likely to enjoy her work which will cause her stress to go down. In fact, the networking events actually seem to energize her and allow her the flexibility to balance such activities with home life. Secondly, being able to spend more time with companies where there is already a fiscal investment ensures greater potential profitability. It also appears to be one of Roizen’s greatest strengths, which is why Softbank brought her onboard.

Finally, by realigning her time Roizen will save approximately two hours per day or ten hours per week in time consuming pitch meetings. This ten hours can now be reinvested in the entrepreneurial community and finding out what innovative ideas are out there. It will also ensure that she does not jeopardize the relationships with those within her network. Since many of those sending her business plans consider her a friend she will no longer struggle with feeling obligated to invest time unnecessarily (McGinn & Tempest, 2010).

References

Lovallo, D., & Kahneman, D. (2003, July). Delusions of Success: How Optimism Undermines Executives' Decisions. Retrieved from https://cb.hbsp.harvard.edu/cbmp/login

McGinn, K., & Tempest, N. (April 28, 2010). Heidi Roizen. Retrieved from https://cb.hbsp.harvard.edu/cbmp/login

Uzzi, B., & Dunlap, S. (2005, December). How to Build Your Network. Retrieved from https://cb.hbsp.harvard.edu/cbmp/login

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