You're advising a portfolio company with a conflict of interest. How do you handle competition in the market?

When advising a portfolio company facing a conflict of interest, maintain transparency by clearly communicating the situation to all parties involved. Establish boundaries to avoid favoritism, and provide impartial, strategic advice focused on long-term value creation. If necessary, recuse yourself from decisions where the conflict is too significant to manage effectively.

Identify and Understand the Conflict of Interest - Definition: A conflict of interest occurs when your personal interests or relationships could potentially influence your decisions in your professional role. - Assessment: Clearly identify the nature of the conflict. Is it related to a competitor, a supplier, or perhaps a personal relationship? Understanding the specifics will help you address it effectively.

It's like being a referee in a sibling rivalry where you're secretly the cool uncle to both kids. Here's your game plan: Come clean: Spill the beans before they spoil in your pocket. Draw lines: Like splitting a pizza, make sure everyone knows their slice. Play Switzerland: Sometimes, neutrality is your best Swiss army knife. Hire a tiebreaker: Get a third party to be the bad guy. You're welcome. Innovate, don't imitate: Push for unique ideas. No copycat shenanigans! Kumbaya moments: Find win-wins. It's not a pie-eating contest. Paper trail: Document like you're writing the next great American novel. Remember, in the VC world, your reputation is like a credit score. Don't tank it for a quick buck!

One easy way to do this is speak openly and clearly with all founders / companies involved. Understand how they view the conflict, and how they want to handle it. Our reputations are all we have, and being seen to address this fairly is key. We aim to avoid these situations to start with, but if and as they arise, work to immediately address. Make a plan with founders, execute on it. Can look like not sharing boards seats between conflicting companies, not sharing info etc.

Establish Boundaries - Recusal: If the conflict relates to decisions that could benefit you personally, consider recusing yourself from those discussions and decisions. This helps to maintain integrity and trust within the organisation. - Implement Safeguards: Establish clear protocols for how decisions will be made in the presence of the conflict, ensuring that they are fair and transparent.

Communicate with Stakeholders - Internal Communication: Keep communication open with your team and stakeholders about how the conflict is being managed. This builds trust and transparency. - External Communication: If necessary, prepare a communication strategy for external stakeholders, ensuring that the company's reputation is maintained.

Monitor and Evaluate - Ongoing Assessment: Regularly monitor the situation to ensure that the conflict does not escalate or influence business decisions. This may involve periodic reviews or updates with your legal advisor. - Feedback Mechanism: Create a feedback loop with your team to discuss any potential concerns about conflicts and how they are being handled.

Innovate Strategically - Market Analysis: Conduct a thorough analysis of the competitive landscape. Identify gaps in the market that your company could exploit, considering both your strengths and the weaknesses of your competitors. - Foster a Culture of Innovation: Encourage your team to think creatively about how to differentiate your offerings. This could involve brainstorming sessions, workshops, or ideation meetings focused on strategic innovation. - Leverage Technology: Explore new technologies that could enhance your products or services. This may involve investing in research and development or forming partnerships with tech companies.