Tyle of Lync

1. What were the most critical choices faced by James Milmo early in the founding of
Lynx? Do you agree with his decisions?

In lieu of the case, following seem to be the most critical choices faced by James Milmo
early in the founding of Lynx.

A. Working with Doug Curtis

• Milmo got the idea of advertising on handheld device screensavers while he was still
working on another idea next to Doug.
• But he took some time, before he discussed it with Doug.
• He had already worked with Doug on another idea and was sure about Doug’s
appetite for entrepreneurship.
• He was never deeply inclined to work with Dough, but it was better than starting
things from scratch with someone else.
• After meeting his family and seeing Doug interact with them, Milmo found that he
was a good guy and Milmo can trust him with the new and innovative idea.

To my opinion it was a good idea to start the new venture with Doug as Milmo knew him and
had already worked with him. They had a better work understanding which is very important for
the success of every venture. Further it is always easy to trust someone whom you have known
for some time than to start with a totally random person.

B. Pursuing a business degree

• Milmo was not sure about his aspirations as an individual.

• He got admitted in the Harvard Business School and turned down his admission for
his real estate idea. He got an admit the second time as well and initially he planned
to just have a feel of it for 10 days but later decided to continue it further.
• He was fickle minded about going to the business school. One side, he thought it was
counter-entrepreneurial for an entrepreneur to go to a business school and spend a
handsome sum on tuitions. On the other hand, when he joined HBS, he was liking it
there.
In my view, it would have been better if he would have focused on one thing at once, which he
later did and finally left business school to grow Lynx.
 C. Equity Stake

• The most important issue was equity stake.

• Milmo insisted that Doug should work for 2 years before being fully vested whereas
Milmo himself would be fully vested immediately.
• Furthermore, Milmo considered Pascal as a critical piece of Lynx and argued that the
three founders should be equal partners in Lynx and therefore should each receive a
third of its equity, but Doug thought that Pascal should get only an “Engineer Equity”
which should be nothing more than 5%.
• They later came on a conclusion that Pascal gets 25% of equity, and Milmo and Curtis
each received 37.5% of the equity, with Milmo’s vesting immediately and the others
vesting over two years.
• Other than that Pascal will be treated as a full-fledged founder in every other way.

At first glance, Milmo’s decision appears to be reasonable and pertinent. However, I think he
should not have insisted the right to immediate vest for himself as well. Even though he got the
right to vest, Lynx was his Brain Child and it was not likely for him to leave Lynx before the 2 year
vesting period. His assertion is likely only to provide distrust to his partners and potential
investors. In case of Pascal’s stake, even though the final agreement might be fair, Milmo was
impetuous. He should have discussed the issue with his partner, Doug, in advance before he
made an agreement with Pascal. He stepped off on the wrong foot, which became another
cause for the constant disharmony and mistrust between Doug and Pascal. As we know, the
absence of trust amongst team members is the first and critical dysfunction.

2. Has the founding team done a good job of structuring itself and building the Lynx
organization?

“True teams are formed when you put aside individual wants for collective good”-
Chinay Ogwumike

A. Dividing Positions and Responsibilities

• Three co-founders established Lynx with the triumvirate structure. Milmo was President
and Chairman, Curtis was CEO, and Pascal was CTO.
• Pascal was appropriate for his positions, while Curtis, who had years of sales experience
for VC-backed companies, was suitable for marketing or raising funds rather being a CEO
and as because it was Milmo’s brain child, he was the most suitable one to be the CEO.
• I think that they should have clarified their role and responsibility, and that they should
have prepared milestone for its structural evolution as the Lynx would grow.
B. Decision Making Authority

• They should have considered that the triumvirate structure could cause dissensus, make
decision making unclear, and deepen the abrasive nature of their relationships.’
• Milmo often found that he was acting as a mediator between his other two co-founders.
• Further, in the triumvirate, Doug was the one who was being unfortunate because he
has the CEO title and the team expected him to lead them which he was not able to and
hence that created a frustration among the employees.
• In my opinion, rather than taking every decision among their triangle, they should have
divided the departments and should have headed a department each of their expertise,
which they did but they should have had a single leadership face as well which everyone
should have listened to.

C. Hiring, Human Resource Management and Employee Retention

• Human resource is one of the weightiest assets for any start-up company.
• In this aspect, they made right efforts to hire ‘Renaissance people’ and retain them,
which effectively established a close-knit culture and overall moral within Lynx and
provided another driving force for overcoming a series of crisis.
• However, the problem was that the co-founders were very averse to turn-over and made
excessive efforts for retention of its people, even to the extent of offering excessively
large salaries to staffs who announced to leave Lynx.
• Even worse was that, they were more likely to lose morale if a key person left.
• Although they stopped the excessive obsession of Renaissance people a bit late, but it
was already late.
• It would have been great if they would have hired some experienced HR professional to
manage the team and they themselves would have engaged themselves in making a
proper process for the company.
• Further, lately hiring Evans Clark was a good decision on their part as he was a senior
and experienced person with some experience with startups as well and he actually
helped them to streamline things.

D. Salary Structures

• All the three co-founders withdrew equal salary from the company and it was merely
$60,000 per year.
• The investors didn’t decide the salary for them but they themselves did it thinking that
they are doing a favor to the company.
• They never had a process setup for their own salary review.
• Later when they had to go to the board for a salary hike, the board gave them a 50% hike
which sounds amazing but the salary band on which they already were was too low.
• As a result of which even after the hike, they all were at a salary of $90,000 which was
below market and even less than some employees in their own organization.
• As per my understanding, they should not have set themselves on an artificially low salary.
• It would have been better if they would have at least had it in books that the company
owns them a certain sum which they could have withdrew later.
• Hence in my opinion, the approach of the co-founders was not appropriate in terms of
the salary structure of the higher management(co-founders themselves).

3. If you are James Milmo, are you going to fight back against changing your strategy, or
are you going to agree to the change demanded by your board member? What factors
motivated his demand? Should James have known this was coming? How could he
have avoided the problem?
• Wireless Advertising industry was going cold and the climate in the capital markets had
changed.
• The board required to cut off the RealCell distribution and take Lynx down to a “kernel”
of a few people who would rethink its strategy, and make a dramatic strategic change,
shifting from a consumer-focused company to a wireless enterprise company developing
strictly business applications.
• This was an actual setback for Lynx as in 3 years’ time they were never able to come to a
position wherein they were profitable and the advertising downturn was a real hit.
• If I were Milmo, I would have insisted on a gradual shift rather than the catastrophic turn
down.
• It is always a good idea to change the company’s strategy as per the market demands
but Lynx was a customer focused advertising company and the large customer base
which they had was their greatest strength.
• They would have made an easy shift by using their customer base as their strength and
presenting a strong product as an enterprise company.
• As a founder, Milmo had a heart with the company and the employees and for the same
reason it was a good idea to defend the company but it should have been in a way that
the investors also support your decision.
• In my opinion, I believe that Milmo knew that it was coming.
• Being the pioneer in the wireless advertising, he knew that what the dip in the market
meant.
• It was a high time for them to make a proper strategic plan and business model for
themselves.
• They never knew who their customers really were and were in process of developing
different products all the time.
• In my opinion, James would have easily avoided the problem by making a proper and
stable business plan, jotting down a proper concept statement and doing a feasibility
analysis on the same.
• Further, he should have setup a proper hiring process to turn the organization into a
cohesive unit.
 4. If you are James Milmo at the end of the case, what is your biggest worry? What can
you do to manage that issue?

• If I were James, the biggest worry would have been my deteriorating relationship with
Pascal.
• In any organization, big or small, the understanding between the founders is utmost
important.
• If the decision making hands of the company are not synchronized and the discussions
are no more healthy then it is a very crucial situation for the company.
• Even if the company was making profit, it would have been a time for me to ponder
upon the fact that why the problems between the founders were worsening.
• In case the differences between the founders does not get resolved, there would have
been no clear strategic direction for the company’s growth and sooner or later this could
impact the overall growth and profitability of the company.
• In order to manage the issue, I would have talked with Pascal and hired a person like
Clark again who has the first-hand experience with startups.
• When there is no way when two people can come on a mutual agreement, a neutral
third party is required for proper decision making. I would have done that for the well-
being of the company.
• Further, I would have made individual efforts as well to make my relationships with
Pascal fine.
• I would have sat with him and talked over all the issues we both had and would have
made him understand that both of us have one thought in common which is that both of
us want the company to grow multifold. We both have put in enough time and energy in
the company so we should keep the differences apart and take a step forward to get the
things sorted among ourselves.
• Let us make a proper structure to solve our issues and come to an agreement which is
beneficial for the company’s growth.

Towards the end, to summarize I would say that just having an excellent idea and an amazing
team, the first mover advantage with a proper funding and back up is just not sufficient for an
organization to grow. Even when you are profitable, if you don’t have proper people handling
skills and coordination among your peers, running a profitable company with everything going
well can be as frustrating as anything else. Thus it is very important for the team to have proper
communication and understanding among itself.