Celebrating Entrepreneurship

10 01 2016

EntrepreneurshipI was sitting at lunch with a few of my friends and thinking about the start of the New Year.  Of course, we all made resolutions to eat better, exercise more, and to enjoy life by having more balance and more fun. As we start this New Year, we wish people success and prosperity.

Wishing and hoping are not strategies for success.   A clear purpose and course of action properly executed is essential.  I mentioned TechCoastAngels’ upcoming conference on Celebration of Entrepreneurship (www.techcoastangelscelebration.com)  in March, 2016 at the Segerstrom in Orange County.   As a member of TechCoastAngels, entrepreneurship and start-ups are part of my daily life.  But why should this be important to everyone, particularly entrepreneurs and others in the entrepreneurial eco-system?   And is it entrepreneurship only that is critical or should corporate venture, i.e. internally generated new products and business funded by larger corporations, be considered critical as well?

First, entrepreneurship in the OC is happening.  While not at the scale of Silicon Valley, the OC/LA area and the San Diego area are pretty high on the list of both VC and angel funded companies.    Here are some examples.  In the OC, we have accelerators/incubators (for example KF, FastStart Studios, EvoNexus, Octane); University supported entrepreneur programs (Chapman’s Leatherby Center and UCI), angel groups (TechCoastAngels, Kieretsu), and a newly formed Institute for Innovation aka The Cove at the tech campus of the University of California at Irvine.   Clearly,  the infrastructure is in place for the entrepreneurial companies to flourish.

While invention and innovation are sometimes accorded to startups and venture investment, there is another area which cannot be shortchanged.   Corporate Venture, those companies funded by corporations who have accepted a strategy of growing by new products and services, is also rampant in the OC.  Witness the growth of Broadcom which focused on internal investments in wireless and mobility technologies.  Or Vizio, which has migrated from a big screen TV company to a broader consumer platform.    Or Edwards Life Sciences which continues to innovate in the medical device field.   And there are countless others.

Between innovation through start-ups and innovation from existing companies, Orange County has the pieces in place to become a hub of innovation.    From what we have seen, medical device, social media, software, and consumer services are being developed by many young entrepreneurs still in college and supported by the college community, yet there is a new group of “older generation” entrepreneurs that are also getting into the act by developing products and services.    Many of these new entrepreneurs are driven by the economy to strike out on their own after leaving corporate life.   Grandpad, a hardware and software platform funded in part by TechCoastAngels, is led by Scott Lien who left the corporate world to focus on helping seniors use technology in a more personal manner.   Parcel Pending, founded by Lori Torres, is focusing on automating the package delivery system and has traction in several geographic markets.  It’s another company funded by angel money in the OC.

Innovation and the ability to grow business are critical for the long term success of our national and local economy.   At our upcoming event you will be able to hear about how ideas were generated, ways companies have been able to grow, and hear from entrepreneurs and investors alike in how to build their companies or portfolios.  If you are an investor, it will be an eye opening venue for networking and hearing the investment pitches from more than X outstanding new companies. If you are an entrepreneur, perhaps the conference and discussions during the conference will spark some new ideas or help gel some of your thoughts on your existing business.

For others who might attend, consider this.   Entrepreneurship and intrapreneurship  are exciting.  You are never too old to feel the urge to create something new.   Innovation is infectious and fun.  Sure, it is very challenging and sometimes gut wrenching but as they say, the glory goes to those that try.  In that vein, I want to leave you with this inspirational poem called “if you think you can” by Walter Wintle, which epitomizes the ethos of the entrepreneur or intrapreneur.

If you think you are beaten, you are,
If you think you dare not, you don’t.
If you like to win, but you think you can’t,
It is almost certain you won’t.

If you think you’ll lose, you’re lost,
For out in the world we find,
Success begins with a fellow’s will.
It’s all in the state of mind.

If you think you are outclassed, you are,
You’ve got to think high to rise,
You’ve got to be sure of yourself before
You can ever win a prize.

Life’s battles don’t always go
To the stronger or faster man.
But soon or late the man who wins,
Is the man who thinks he can.

And maybe you, too will be the founder of a Unicorn or be an investor in a unicorn company and have a private island next door to Larry Ellison.   Hope to see you at the Segerstrom in March.





The 7 Attributes of a Highly Successful Start-up CEO.

11 08 2015

I met Kirsten Mangers several years ago after she successfully sold her startup, Webvisible.   And over the years I have gained a strong appreciation for her abilities and most important, her style.   Kirsten is the founder of ChickLabs, an incubator that focuses on helping primarily women entrepreneurs.  She is also the CEO of Immunogum, a start-up in Newport, CA and one in which TechCoastAngels invested.entrepreneurial CEO

I was invited to a meeting at an entrepreneurial office called the VINE which is off the UC Irvine campus because I am an angel investor with TCA and one who works with startup CEOS in my consulting practice.   The key- and only- speaker, though, was Kirsten and she shared her thoughts on what makes a successful start-up CEO with a large cadre of young aspiring entrepreneurs.

I thought I would share some of those thoughts with my readers.  Clearly, the CEO is THE most important role in a company.  She is the quarterback of the business.  I want to point out, as well, that angel investors are looking at the CEO, his/her characteristics, trustworthiness, and credibility as a critical and sometimes the most important decision factor in making an investment.

Here are Kirsten’s Magnificent Seven attributes and roles for an entrepreneurial CEO.

  1. Chief sales person. Selling is required whether it is for sales of the company’s products or selling the business idea to investors. Pure and simple, it is the number one attribute.  If a CEO cannot get comfortable selling then he/she needs to find a strong complement or a replacement CEO.
  2. Culture Maven. The culture of a company attracts and retains great people.   Think about the culture of Google or Apple and you get somewhat different impressions.   But culture will help you succeed and be one of the differentiators to also-rans.
  3. Chief Strategist. As Louis Carroll said in Alice and Wonderland:  “if you don’t know where you are going, any road will take you there.”  CEOs need to set the direction and if necessary make the decisions to pivot the company.  Early startups will go through false starts and pivoting will be essential.
  4. Teacher, tutor, and mentor. Kirsten claimed to be a whiteboard fanatic.  Where there is a whiteboard, she could share ideas and interact with the staff on a regular basis and even get others to critique, comment, and debate those ideas.   This goes along with the concept that the CEO needs to be a visible leader and wander about with the team.
  5. You have to challenge yourself and others even with ideas that seem outrageous.   Why?  You stay fresh and there may be a kernel of insight into the new idea or someone else may see another path to success buried in that idea. Someone may say: that’s crazy but what if we did this?  Challenging prevailing wisdom and valuing the diversity of though among people is critical to engage your team.
  6. Chief Reporter and Scribe. This is the issue of transparency.   The CEO of a start-up needs to create an environment where everyone on the team feels that they understand and can contribute to the business’s success.   With normally smallish teams and fewer people, such discussions keep the team engaged and motivated.  I have personally witnessed employees banding together to find solutions to seemingly unsolvable problems.
  7. Chief Recruiter. To be successful, a strong team needs to be assembled and nurtured.  As Kirsten said, it all starts with people and finding the best people is the biggest challenge.  When she interviews someone, she has asked some interesting questions to probe the character, drive, and attitudes of the recruit.   One question I like is: if you were on a three hour flight and could sit next to one person, who would that person be and why?   From this answer you can determine motivation and quest for learning, both of which are critical in a start-up

These sage words of wisdom from Kirsten will help the aspiring entrepreneur be successful and potentially be as successful as Kirsten.

Let me know your thoughts.

david





A View to an Angel…Investor that is.

12 03 2015

Entrepreneurs.  Love ’em    At the Meet the Angels event in Irvine, CA last night I had the privilege to talk with many of the Entrepreneur170 would-be entrepreneurs in attendance.  I hosted about 25 of them in a separate breakout session to answer specific questions they had regarding the angel investment process and other activities surrounding building a start-up.

Many entrepreneurs, especially those just starting out, have an impression – or mis-impression of the angel investor.  Because of the hit show “Shark Tank” many people believe that angel investors sit around and make instant decisions and throw money at companies.     That is theater and entertainment.  Let’s also not minimize the fact that the “sharks” DO invest and many companies in which they invest become successful.  However, angel investing is a little more than having many

mini-shark tanks around the country where entrepreneurs come to champion their ideas.

During one of the panel discussions one entrepreneur asked “what do the investors want to hear during a pitch.”  On Shark Tank the investors seem to ask the same questions and want to hear answers particularly relating to current revenue and revenue growth.  So I thought I would compile two lists of what I heard- and what I also believe- are things we angle investors want to hear, and things we DON’T want to hear.

Things Angel Investors Want to Hear

  • How the background of the CEO/Founder relates to the opportunity
    • Does the CEO/Founder have experience in this industry and market?
  • Skills and competencies of the management and advisory team
    • Ideally, has that team been in place for 6 months or more or better yet has this same team been successful in the past on a previous venture?
    • Is the team virtual, distributed or in one place
  • Skin in the game from the founders and early executives
  • That the entrepreneur and team are “all-in” committed to make it work.
  • A team that can execute to plan
  • Commitment and passion of the Entrepreneur (see my previous blog on this subject https://streetsavvymarketing.wordpress.com/?s=passion+of+the+entrepreneur )
    • One entrepreneur I know developed a medical device for insulin delivery because he would be able to use it for himself and his background was in medical devices
  • Strong product concept
    • What is the concept and why is it a strong one?
    • Has it been tested with customers in some manner?
  • Extensibility of the product concept
    • Is this a one trick pony or does the product have legs to spawn new products or be applicable to other markets?
  • Solid go to market plan
  • Identification of the ideal customer
  • Reasonable valuations
  • Credible evidence that the market will accept the product and it is scalable in some manner
    • This could include trials, early betas, partnership agreements, letters of intent, earlier funding.

What Angels Don’t Want to Hear

  • We are going to be the next Google and have a market cap of over $100B in only 2 years.
    • Or our valuation today is $100M because we have a solid concept and a breadboard design.
  • Our product is unique and we are alone in this space
    • It might be and that would be great but help us understand that. You might be the next SNAPCHAT and we don’t want to miss that opportunity!!
  • We have IP and no one can copy that?
    • This might be true but if you tread on the grounds of a giant company do you really want to pursue IP litigation over the next 7 years at a 7 figure cost?
  • We have a lot of downloads and freemium users
    • That is a great start but can you tell us about your conversion plans to paid users?
  • We have no competition
    • There is always competition or alternatives to your solution. The issue is how you will market the differences to get people to use your product or service vs another option.
  • Trust me; we know what we are doing
    • I am very attached to my dollars (my little financial soldiers so to speak) so I trust only those that have proved themselves to me in the past.

Certainly every start-up and entrepreneur is different.  In the early stages of a market, the team and the ability to execute is more important than the product per se in terms of sustainability of the business.  Early on, the management i.e. the CEO should have a clear view on the product, the vision for the product and business and a plan they can execute because we investors will track that to see if you make your commitments.  There should be clarity on what the ideal customer looks like.   For proof of concept, the angels would like to see functionality, a 3D model, capabilities comparison, market research to the extent practicable, feedback from current users if there is a product or input from lead users suggesting that the product or service in question makes sense and they would be interested in buying it.

We would be glad to hear from entrepreneurs on their concepts and ideas.  TechCoastAngels is always looking for deal flow and we would be glad to entertain those ideas.  Feel free to submit an application on www.techcoastangels.com.    And I would glad to talk with entrepreneurs who actually do have the idea for the next Google or Facebook!!





The Passion of the Entrepreneur

27 11 2009

A few weeks ago the Tech Coast Angels of Orange County (www.techcoastangels.com)- a group to which I belong- held an open meeting which enabled would-be entrepreneurs to meet with about a half dozen of us angels.   We expected about 30 people to show up, yet we would up with more than 70 entrepreneurs attending.   Ray Chan and Stu Roberts of our group did a superlative job of arranging the meeting.

The entrepreneurs were very engaging and had extreme passion.  Recognizing that we were looking for great opportunities in which to invest, the entrepreneurs tried to sell us on their ideas and how great they were.  They become enamored with their ideas and the technologies.   And it is great to have that much passion.  But passion without the true understanding of the market and making money is misplaced.  Therefore, we, angels, spent time explaining how to make their pitch stronger.

To each entrepreneur, I explained that there are fundamentally four main questions that I need to understand and therefore they have to address each area. 

  1. Is there a market?  To whom are you trying to sell and can you pinpoint and find the actual buyers of the product or service?
  2. Can you make it?   How is the product made and do you have to use a new process and/or new technology?  Patent protection is great to have, yet that is not sufficient to make a product a business success.
  3. Can you make money?  Angels want a return on their investment over a relatively short period of time.  Very few projects result in a 10x or higher return on investment and many angel investments may languish or worse.  The entrepreneur must understand how money is made- the routes to revenue early in the product lifecycle, and at least a preliminary view of how other products or line extensions can be developed.   I was amazed that the entrepreneurs were so focused on their technology and product that many failed to see the advantage of partnering with others in a broader eco-system.  As an angel, I felt it was our obligation to help them see that aspect of business.
  4. Can you support it?  What happens after the product is in the market?  If it is a consumer product specifically, how is the entrepreneur going to support it? Is there a call center or will the entrepreneur handle the calls him/herself?  And what happens after the initial product is in the market?  How will it be extended to uncover new opportunities in the market?

I am on the Advisory Board of a couple of startups as I also look for a corporate C-level opportunity.  One startup company in which I am involved has developed a patented technology to make mail boxes “smart.”  As I reviewed the business plan and considered my involvement in the company, I was looking for the answers to the four questions cited above.  Based on what I read and what I could add, I decided to join the advisory board and am very excited about their prospects.

I can see the market and the person to whom I would sell the product.  I understand the patent and see how it can be made today, tomorrow, and extensible to products in the future.  I understand the financials although with such a large market we have to be careful not to let the “law of large numbers” distort the reality of the market.  So we started to review the financials top down and correlated with the market sizing from the bottom up.   And finally, I could see how we can support the product today and in the future.   When I put it all together, I see a high probability of success as an investment and as a successful company long term, notwithstanding any exit. 

I am glad to hear your thoughts.

I trust all had a good Thanksgiving and wish all my readers a healthy and happy holiday season.

David