1. FastTracTechVenture Chapter 7 May 2, 2011

2. BUILDING THE TEAM Discussion tonight is on Building your Team WHO Employees Board Members HOW Recruiting Compensation Contracts

3. EMPLOYEES #1 HR Challenge around the world: Recruiting and retaining the “right” talent Know what you want and need Knowledge/skill sets Experience Fit (assessments?) Check out successful competitors Look for rowers instead of people who want to work out on a rowing machine (uncertainty, challenging waters, victories, defeats, survival skills)

4. EMPLOYEES How to Identify Potential Team Members People you know People known by a friend/co-worker Employees of competitors People who find you Typical job listings---universities, Monster, etc. NOTE: Don’t take short cuts with the interview process

5. EMPLOYEES How to Determine the “Right” Pay Surveys (e.g. salary.com), friends, the job candidates 70% of pay predictors correlate with company size Salary? Commission on sales? Bonus? Stock? Highly negotiable NOTE: No matter what someone says, pay matters

6. EMPLOYEES Considerations for Compensating with Stock Dilution---e.g. 10% over 5 years? Projected value—Cash + stock value/ # of years = potential annualized value to an employee Vesting—Immediate or earned over time Restrictions---OK to sell? Buy/sell agreement? Marketability—None, Some, Guaranteed? Valuation---Formula? Valuation? Transaction? Option vs Grant---Own now or buy later?

7. EMPLOYEES What about Contracts? Employment contracts Severance/termination agreement Change of control agreement Non-competition agreement Non-solicitation agreement Offer letter

8. EMPLOYEES Retaining Good Employees #1 Interesting work #2 Treated fairly #3 Career growth opportunities

9. BOARD OF DIRECTORS How to Build a Board Industry, legal, finance experience Start- up operations Investor Majority should be independent outside directors Recruiting Board Members Proceed with caution NOTE: Helpful to serve on other boards asap

10. BOARD OF DIRECTORS Organization Elected by shareholders Average size is 6 members (number grows as company grows) Board chair likely to be CEO Specific term allows for a graceful exit Fast track start-ups meet 6-12 times per year Director and Officer liability insurance

11. BOARD OF DIRECTORS Primary Responsibilities Assist with strategy Provide proper risk management/governance Financial oversight Ethical behavior Legal compliance Reputational enhancements/Reputational damage Acquisition/merger/liquidation event CEO compensation Hire/fire CEO

12. BOARD OF DIRECTORS Compensation for Board Members Equity plus travel expenses for early stage companies Equity equal to 0.5% – 2.5% of common shares/director Cap of approximately 10% of common shares Initial directors might get more than late joiners Non-executive chair will get more than others Vesting schedule negotiable