Striking A Balance

In 1996, David Stein and his two partners finally nailed down $7 million in first-round financing for Smartroute Systems, their traffic information startup in Boston. "We were giddy with great expectations," recalls Stein, who was executive vice-president. Three years later, the relationship between the partners and their New York venture firm soured. "We weren't making the kind of money the investors were interested in," says Stein.

You know what happened next: The board sent a flurry of detailed requests for the kind of information someone would need to run the company, which, Stein says, "was definitely a warning." Shortly thereafter, Stein and his partners were out. The VCs hired an interim CEO to cut costs, put growth plans on hold, and position the company for sale.