Friday, October 14, 2011

Steve Jobs and the Seven Rules of Success

Great article here on Steve Jobs' Seven Rules of Success. Enjoy!

Wednesday, August 10, 2011

Mike Dodson on What Makes an Entrepreneurial Venture a Home Run and How to Build a World-Class Team

A seasoned entrepreneur, Mike co-founded 3 Silicon Valley companies with exits totaling $800M before moving to Utah and beginning his fourth startup last year. In addition to having strong operational experience building and running several companies, he is a technologist, visionary, patented inventor, and proven leader. Mike is a devoted husband and father, with an MSEE from Brigham Young University. He loves sports and has spent many years providing teams and athletes ways to benefit from the use of technology. He is a former collegiate cross country runner and huge fan of BYU athletics, the Utah Jazz, and several other professional sports and teams.

Recently, Ken Frei sat down to interview Mike.

Have you been an entrepreneur your whole life? What are some experiences you’ve had with entrepreneurship growing up until now?

In my opinion, entrepreneurship is something that’s either in your blood or it’s not and it’s always been in mine. From my first lawn mowing business and paper route to the beginning of my professional career when I took my first job in Silicon Valley, I’ve always been an entrepreneur. Within about three to four years of being in Silicon Valley, I started my first company. We went on to do two other companies out there and we had some success. We had one that failed, one that returned everybody’s money, and one that was a home run. It was great. Silicon Valley is a great place to start a company. It’s not exactly where I wanted to raise my family though, so eventually we moved out here. Starting companies is what I do.

What do you think made the difference between the company that failed and the company that was a home run?

With the one that failed, we were confident that we could make a product that people would like and that people would buy. We weren’t sure if we had a business or not though. We didn’t spend enough time validating whether or not there was a business. By that I mean, were there really enough people who would buy our product at big enough margins and with an easy enough sales effort.

It turned out that we were right in that we had a good product. It just didn’t look like it was going to turn into a business though. We had a patent on the device. It was a basketball training machine. We have subsequently licensed that patent and some people have been able to build a successful mom and pop business out of it. It just wasn’t the big opportunity we were wanting.

What were the key factors that made the other business a home run?

It was our focus on the product. We made sure that the product did what the market needed it to do. It took a long time because it was a medical device. It took eight or nine years from the day we founded the company to the day we had our IPO. There were five of us that started the company, four doctors and myself. It was a long battle.

Talk about iFan Media and how that got started.

iFan Media hatched during a sabbatical period for me. After the medical device company, Fox Hollow Technologies, was acquired, we had a nice exit and I took some time off. I was playing with my new iPhone and experimenting with this new thing called Twitter and starting to get into Facebook. I’m a passionate sports fan. As I was looking at how those new technologies were impacting that part of my life, the seeds of iFan sprouted.

It was initially a focus on communities of sports fans. We have subsequently found a better business opportunity focusing on other communities, namely cities and geographic communities. That’s our primary focus today.

How does iFan bring those communities together?

At iFan, our objective is built around the fact that a community of people want to communicate, conduct commerce, and converse and socialize when they are on the go. They want to do that around areas of common interest. They want to do it in a way that is very contextual.

All of that is really abstract, but what it means is that when you are on your way to a basketball game, or to a play, or to go mountain biking; the things that you want to be aware of and the communications you want to have are all related to the thing you are about to go do. You want to know who else is available to go mountain biking. You want to know if anyone has been on that trail before. You want to know where you can stop to eat after you are done and if the restaurant is offering a deal. You want to know who has plans for that evening.

Creating a platform that would facilitate that kind of on-the-go, community interactivity was really the goal. Now we do that and we do that in a way where we link arms with cities and city governments. It enables the city to communicate to all the residents about what recreational opportunities exist, what attractions there are, any emergency communications, and if there are events that are happening within the city.

It allows the citizens to communicate with one another to find others who are like-minded and to find out what is happening in the city and who wants to go do things. That allows the local businesses to communicate with the citizens as well and inform people of the deals that are going on and what events are happening.

What do you do to be innovative? Do you have any interesting techniques?

This is a subject of some joking among my friends and family, because it's absolutely a way of life for me on a daily basis. When I encounter difficulty or friction in anything that I'm doing or that I see other people doing, my thought process immediately turns to: "How can that be made simpler?”

Most times, the problem you look at doesn't have a solution that can be effectively turned into a business. Maybe there aren't enough people who have the problem, or there isn’t enough money or value tied to solving the problem. I think it’s important though, to cultivate that thought process so that your natural reaction when you see something that seems hard or has pain associated with it, is to think of how it can be done more effectively and efficiently.

How do you flush out the bad ideas and recognize the valuable ones?

I think literally there is not a day that goes by that I don’t have a new idea of some kind. And it is only a small fraction of them that have the potential to be turned into a business. It involves trying to honestly scope out as quickly and simply as possible the magnitude of the problem, the value of solving that problem, and who the customer will be. Running through those numbers will help you to see if it is worth chasing.

As a back drop to that, you have to be clear what type of business is interesting to you to chase because there are some ideas that are great ideas for building a lifestyle business. It may support you and a few other people, and it could be a great business for your future, your career, and your family. But if you are looking to build a large scale, venture backed business that idea might be totally uninteresting. So, you have to evaluate those ideas against that back drop of what your goals and interests are.

Do you have any tools that you use to do that kind of analysis or do you just get on and do a Google search to see what kind of a market there is?

You know, sometimes Google can be helpful, but the closer you get to the person who is writing a check or giving a credit card number the better information you are going to get. If you are thinking of some new consumer widget or some new game or some new technology service, one of the first things that I do is I think about who would actually buy it. And that is not always the same as the person who will benefit from it; those can be different people.

I initially just learn about that person who will buy the product. What else do they buy? How much would this cost them? How much would they be interested in spending? I try to understand that a little better. Usually it doesn’t take that long to go through that process because you might have a friend, neighbor, somebody in your civic group, church group, or from your gym who is connected to that business you are contemplating. My experience has been that people are more than willing to sit down and listen to an idea and give me an honest reaction to it.

You have had some pretty extensive experience in Silicon Valley. Why have you chosen to start this company here in Utah instead of there? Why is Utah a good place to start a tech business?

I spent an 18 year career in Silicon Valley, most of the time living there. There were a few years that I lived outside of Silicon Valley and traveled back on a regular basis, so every week I was on an airplane. When I was ready to start another company, I didn’t want to take my family back to Silicon Valley. We have roots in the West so we were looking for a place in the Western US. I knew a few people in Utah who were in the technology community here, so we made a trip up here and did some investigating.

What I learned then and what has been reaffirmed after moving here is that there is a tremendous entrepreneurial spirit in Utah. Frankly, it’s very comparable to what I experienced in Silicon Valley, but much smaller in scale and in experience. But in terms of the passion, and percentage of people who are interested in starting or participating in something new, I found it very compelling. In some ways, on a percentage basis, maybe even more than what I saw in Silicon Valley. So, that was very attractive and that was certainly one of the components in my decision to move here.

There is also a large technology base here. There are several universities; University of Utah, Utah Valley University, Brigham Young University, those being the three largest, and all three have really strong computer science, engineering, and technology programs. There is a large pool of talented people coming out every year from this community. I thought those things made for fertile ground.

What are some things that you think the community can improve upon to get to that next level and be a more complete entrepreneurial community?

That's a great question because there are a couple of things that, I think, are done quite differently here. The two that I think would really help produce more successful startup companies in Utah are, number one, technology teams need to band together to make deeper, stronger teams.

My experience at Silicon Valley was such that if you had a startup that had ten or fifteen people involved, almost all of them would be really strong developers. Not just one or two strong guys with a whole bunch of people who followed directions, but in a team of ten people you might find five or six who would each be capable of leading a very strong team.

From what I've seen around Utah so far, most of the start-ups generally are limited to one or two strong tech people and then they bring in a bunch of entry-level people to go with them. I think the stronger your technology team, the better chance you have of going fast and of doing things right.

That leads me to the second part of it, the guidance of those teams, be it management in the company or early investors. A lot of people have identified the fact that there are a lot of developers here and, the way it's commonly expressed, there aren't enough middle and upper mangers. By putting more developers together into a company, maybe it would offset some of that problem.  I also think that at times there's a bit of an adversarial relationship here between investors and entrepreneurs. I think there still are too many instances where investors are looking more to make money from the entrepreneurs than to truly partner with and mentor the entrepreneurs. I think that the more we get past that, the more successes will happen here.

Your background is in engineering. Is that right?

I have a master’s degree in electrical engineering.

When you start your own company, do you do much coding yourself?

It's rare that I write code. My team is happiest when I don't write code. But I think understanding technology is crucial to structuring a product at the very least, and sometimes very important to structuring a business. When you build a product, to get maximum value and utility out of the product, it needs to be architected in a way that contemplates the possible future uses of the product. The technologists have to understand where the business is trying to go and build the technology with that in mind. So, I think having a technology background is very, very helpful.

That's interesting. As someone who doesn't have much of a technology background, how can I add the most value as I come up with ideas and how can I help those that actually have the technology skills to create my ideas?

Keep in mind that the technology background is helpful, but it can also be a trap. If you start thinking that your role is to come up with the details of the solution, then your product will only be as rich as your own individual thoughts can be. But if you understand that your role is to express as clearly and completely as possible the problem to your technology team, then your solution can be as rich as the collective intelligence of the whole team.

The most helpful thing you can do is to make sure that the people who are building your technology have a genuine and deep understanding of what problem you're trying to solve. You need to shorten the communication channel as much as possible between the people who are writing the code and building the product and the people who are going to be writing the checks and using the product.

 Historically, technology companies have tended to have product managers decide what the product needed to be and then they would come back and tell the engineers, “This is what I need you to build.” What the agile methodology would help to foster, and what I believe is critical to the success of a technology startup, is to say no, it's not the role of the product visionary to determine what the product should be. It’s the role of the product visionary to determine where there is a problem that technology can solve and what kind of technology can solve that problem.

Then, when it comes to building it, the most important part is making sure that the guys who are going to be building it understand what you're really trying to accomplish. Then you can turn them loose and let them create and get out of their way.

Do you have any tips on how to form a good team? How do you find the right guys to involve in your startup?

Well, it happens before you need it. It starts with building relationships with the people you're working with now. Knowing who you can trust, who you can have a good relationship with, what they're capable of, and helping them understand what you're capable of.

When we were ready to start ramping up iFan, I reached out to guys that I had met about ten years before. They knew my background, we had worked together, and I was able to bring them on board. When you talk about having someone join you in a startup it is a lot more than a financial decision for them. It's an emotional decision and if they're married or have children it's a family decision for them. They're going to incur risk and exposure and they're going to be living and breathing the startup day and night and on the weekends.

In order to make that kind of a decision people have to know who they're lining up with. It's impossible to build your core team by just interviewing people you've never met and selecting them. I think it’s impossible anyway. There has to be a deeper connection than that.

Do you have any last advice for entrepreneurs looking to start something?

For those who haven't been through the experience before, I would suggest that going through a startup with somebody who has been through one before is a tremendous learning opportunity. I had the good fortune in my first couple of startups to work with Dr. John Simpson.  He had had numerous successful medical device startups. There were many, many lessons that I learned that even if they were written down, wouldn't come across in the same way as living them. That would be my advice.

If you think you want to start something, then great! Do it. But, if you have the opportunity to jump in with those who've already been successful in a quality startup and experience it once first hand from where you do not have to make all the decisions, you'll be much better off gaining that experience first. 

Friday, July 1, 2011

Curt Allen on How Entrepreneurship is Changing Education & Why You Have to "Be There" to be a Great Entrepreneur

Since 1986, Curt has been the founding Chairman, President, and CEO of VidComp, Folio Corporation,, and Agilix and has raised more than $100 million in venture capital. Agilix was founded in 2001 and has a mission to transform education worldwide through the Open Learning Suite, a set of Cloud Learning Services that enable partners to create their own customized learning solutions; and BrainHoney, a Personalized Learning Platform that facilitates individualized instruction through standards-aligned curriculum mapping of assessments and educational resources.

Recently, Ken Frei sat down to interview Curt.

How did you make the switch from to your current role with Agilix?

Well let me answer that question, but I do need to give you a little context because it will make a lot more sense.

Ok, please do.

While I was attending BYU, I had an experience that was pretty transformative in my life. You can relate to this, I think. I was sitting in class listening to a physics lecture and the guy sitting next to me started to laugh. I leaned over and asked him what was so funny. He said, "I took this class 25 years ago. I'm sitting in it to refresh because I'm going to teach it next semester, and the course notes match word for word from when I took it."

I laughed with him and I thought it was funny until I got home. I couldn't get it out of my head that we were teaching physics the same way 25 years later, when our understanding of physics changes every day. I started getting upset about that because I thought that we, as students, deserved better.

So, while I was at BYU, I actually started one of my companies, called Vidcomp. It was a precursor to Folio, which was a precursor to Ancestry and Agilix. Our whole purpose was to use technology to help teachers teach better, and help students learn more effectively. We connected PC's, some of the very first ones because this was a long time ago, to video disc players. We created a career guidance system that helped students identify what they wanted to be when they grew up, find the right major, and the right preparation that would help them get ready for that.

What we found was that the technology was very impressive and capable, but that it was ahead of the market’s ability to assimilate it. This was before CD-ROMs even existed, before the web even existed if you can imagine that, so things have changed a lot.

I can barely imagine that.

Yeah, so things have changed a lot. But what that caused us to do, is to say, "OK, let’s take what we built for this BYU program, and let’s generalize it, and make it available to anyone that wants to publish electronic information." So, we moved from career guidance to more of a general thing, and that's where Folio was born. Folio was designed to help take materials that are on paper or in books, and deliver them electronically. Initially, we did that on CD-ROMs, and then on the web.

The point of all this is that we learned a lot about how to create very scalable systems that can deliver lots of content to lots of people. When my brother Paul started, and asked me if I would come and be the CEO, we took a lot of what we learned at Folio and applied it to Ancestry.

We created this Ancestry technology platform, which is one of the biggest properties in the world, in terms of amount of content. It's got petabytes of content, billions of database records, millions of subscribers, and you can't avoid the ads on TV now. So, that's one success story.

After we brought in a management team to run Ancestry, we decided to create a new company called Agilix. We were trying to leverage everything that we learned from Folio and Ancestry, about electronic publishing and social media, and apply it to education. So that's the back story.

I started a long time ago as an undergrad and then did a couple of these companies because the world wasn't ready. Then we said, "There are three mega-trends that are going to come together to change everything about learning." The first mega-trend is mobile devices. This is ten years ago, so it sounds kind of obvious now, but it wasn't that obvious. Everyone is going to have a mobile device. The second trend is wireless networking. Everyone is going to be connected wirelessly to stuff in the cloud. And the third mega-trend are these hosted web services where you can get access to information anytime, anyplace.

We put ourselves at the confluence of those three places and said, "Let’s build a platform business that can create a next generation technology that will enable people to take advantage of mobile devices wirelessly connected to web-services.” Now we're applying that to the purpose of education.

Clayton Christensen is one of our advisers, so we've embraced the concept of disruptive innovation. We believe that everything about the way people have taught and learned is going to change. It should have a long time ago. It’s one of the few industries that has been holding out. It’s one of the few places where we still do lectures in a classroom out of textbooks with kids that are supposed to sit and listen, which is completely contrary to that way that anybody in the rising generation learns or communicates with each other.

That’s the purpose of Agilix, to create a next generation learning platform to help transform education both in the classroom and virtually, and to do it on a global scale. It’s a very exciting opportunity for us.

Do you focus more on providing tools for students, or on providing tools for teachers?

We do both teacher tools and student tools, but our primary focus is to create the enabling technology platform. What we do is called “learning as a service”. It’s just like you have software as a service with things that are hosted in the cloud. We do learning as a service.

It’s a platform and a set of building blocks that our partners can use to create solutions for students and teachers and administrators. We do have an example application that we call Brain Honey. Brain Honey is really targeted at teachers and students that want to do online teaching and learning. It simplifies the process, it reduces the time required, and it provides a dramatic improvement in learning outcomes.

But our primary focus is on enabling other companies that want to create learning solutions to do so on our platforms. The analogy would be like Farmville is the app and Facebook is the platform. We want to be the platform for learning, for education, and we expect there will be lots of Farmville-like apps. We’ve got several dozen partners, large and small, that are building applications on this learning platform.

Talk about the growth that you’ve had at Agilix in the last five years. How have you seen your company change and evolve?

One of the things that we’ve seen is that sometimes you can be too early to a market. We’ve had the tendency to be early with some of our past companies and with Agilix. We built the first tablet app in the world for the Microsoft tablet PC. The problem was, Microsoft didn’t do it right. Apple did it right with the iPad, but that was 10 years later.

We literally shipped a tablet app in 2001 and we were ready to transform teaching and learning, but the market wasn’t ready yet. One of the things I would advise entrepreneurs is that you can have a great idea, but you need to be right with your timing and positioning in the market. You can be early, and that’s sometimes a problem.

So, you don’t want to be too early to a market, but how did you recognize some of those early trends that led to the creation of Agilix? What would you suggest that entrepreneurs do who are looking for a trend to jump on?

Well, I wouldn’t recommend that people are too early. I would advise entrepreneurs to test their ideas on prospective customers. That’s one thing that we’ve learned. It’s ok to have a great idea, but you need to go sit with people that are going to use it in the real world and make sure that it’s positioned correctly, that it’s priced right, that it’s available in the way that they expect to consume it, and that they’re prepared to use it.

When we built the tablet applications 10 years ago, the world wasn’t ready. The devices were too heavy, too expensive, and they weren’t ubiquitous enough. There just weren’t enough applications built for them. It really took Steve Jobs and Apple to nail it. They just announced the iPad 2 and it’s killer, right? It’s smaller, faster, lighter, better, and there are 65,000 apps for it. So, timing has a lot to do with it.

The other thing is that partnerships and building the ecosystem are critical. You need to have not only a solution, but in the case of the iPad that I’m citing, applications built by third parties. You need to have an e-commerce infrastructure so that you can buy and sell apps, you need global access to the solutions, and you need a lot of people that are ready to use them.

Whatever your business model is, there are people that matter in helping you be successful. You need to make sure you got those early adopter customers, analysts, press, social sites; anything that can help you get the word out is going to be important to have early in your process.

Who have been some of your key partnerships with Agilix?

We work very closely with many of the global technology leaders. We work very closely with Intel, for example. Chris Thomas from Intel sits on our board. We’ve worked very closely with Microsoft for many years. We have partnerships with Dell and HP. We work with some of the largest publishers in the world. Those relationships allow us to deliver solutions into schools where we deal with networking, computers, wireless hot spots, training, services, integration customization, and all the industrial stuff.

Right now the world is really focused on social media where you don't worry about any of that stuff. You just go straight to the consumer. That was one of the benefits of our model is that it was a direct to consumer play. We did deals with a lot of people then, too. Intel invested in us then, and we worked with AOL and people like Compaq computer which is now HP.

But our play was a direct to consumer play with an online subscription model. That's really where all the heat, and the energy and excitement is today. We are very interested in providing things that can be direct to teachers, and direct to students. The next time I talk to you, I'll tell you more about some of those.

What do you see as the future in this industry? How will classroom activity change because of emerging technologies?

This statement may be a little heretical when it comes to traditional higher education, but let me just make it anyway and explain it. I think that everything needs to change about the way teaching and learning are done in K-12 and higher education. We have the technological capabilities now to deliver instruction that is personalized to the needs of every single student.

We do it in every other aspect of people’s lives except for learning. We’re still doing the mass-production model of the industrial era which assumes that everybody has to be in the same place, at the same time, learning at the same rate, and in the same way.

None of that is true. We’re each individual human beings. We each come with unique talents and gifts that prepare us to achieve a unique mission in this world. Why do we teach everybody like they are a widget in a factory? That shouldn’t be. We can do better than that.

We believe that there is an incredible transformative effect that is going to happen in this country and in this world. It’s already started. It’s being driven by a perfect storm of economic crisis, technology enablement, and a global competitiveness mandate with places like China and India that are going to out-compete us. Our students currently aren’t ranking well in comparison to other countries. We’re 24th and 25th in the world on some of the math and science scores with PISA. We’re not getting it done right now.

That perfect storm is coming to force us to do things differently and I think that it is a blessing in disguise. It’s going to make us get smarter about how we deliver instruction and how we personalize it for each individual student so they can maximize their individual achievement. It’s going to make us smarter about how we can deliver it more cost-effectively and how we can be more flexible in allowing students to learn anytime, in any place, and at any pace. It’s going to change everything about the way that education happens. That’s what we are trying to make happen on a global scale.

What do you personally do to be innovative? How do you come up with fresh ideas and be a change-maker in your industry?

My personal experience is driven by some rules of thumb. My number one rule of thumb is that you’ve got to be there. I take that literally. You have got to “be there” to get new ideas, to be involved in the creation of industries, to meet with other people that are innovators and that are creating new concepts. I highly advise any entrepreneur to go to conferences, to go to tradeshows, to go meet with customers, to meet with partners, and to travel. Now you can literally travel anywhere in the world. You can go anywhere you need to, to get the kinds of ideas that are going to help drive innovation.

You’ve got to be involved in these kinds of innovations and be active. I think there are a lot of advantages to be gained from sharing and from being part of the community. Most great ideas happen concurrently in multiple locations. The more that you can get involved in those communities of interest and the more that you can share, the more it comes back to you. It’s the abundance mentality. The more that you give out to help other people, the more that comes back to benefit you individually. That’s very consistent with the kind of mindset that the Utah community brings, and one of the reasons that the Utah technology community has evolved the way that it has.

I’m also a prolific reader. I highly recommend that. I read books the old-fashion way, in addition to online and social media, because sometimes the books crystallize principles in a way that you don’t get by just watching Twitter all day long. There’s a different kind of information and insight that is generated through those different means.

What advice would you give to aspiring entrepreneurs?

I would like to give a little advice to aspiring entrepreneurs.  I’ve learned a lot through mistakes that I’ve made or that I’ve watched other people make. A couple of principles: I’ve already talked about needing to be there.

When you say “be there”, what do you mean exactly?

Be there physically. Go to the conferences and other events. I went to the very first hypertext conference in the world, before the web even existed. My brother Paul went to the very first Facebook developer’s conference. I think he was the only person from Utah who went to that event. I travel around the world to meet with companies, partners, and customers. I’ve been to China, India, Europe, and Latin America. Being there is critical.

I would highly recommend to entrepreneurs that they focus. It’s probably the biggest challenge that I find personally, and that I see in others. Everybody wants to boil the ocean with a new idea. Not every idea will be the next Facebook. There are only a few Googles, Apples, and Twitters out there, but there are millions of opportunities to create very successful businesses that address needs in the market. So, my advice is: think about what you want to do and then cut it down by about 99%, and focus on the critically unique value that you can deliver, and then iterate.

That’s the other principle. It’s almost impossible to get it right the first time. If you look at companies like HP, they didn’t even know what they wanted to be. They just knew that they wanted to create a company. Then they started iterating and eventually fell into becoming what they are today.

Then, I would say making and keeping commitments is critical as well. I describe it as having integrity. Do what you say you’re going to do. If you commit to something, deliver it. If you promise a partner that you’re going to operate in a certain way, do it. John Huntsman is a great example of that. He does it by handshake. There are a very few companies that operate that way anymore, but that makes it unique.

There are two ideas that you said were important. One was to make a difference in the world and to try and improve people’s quality of life. The other was that it’s important to focus on something, and not try to boil the ocean. How do you combine those two ideas?

That’s a great question. Take Ancestry as an example. We wanted to provide useful family history information to anybody, anywhere, who could get access to it. We did things like digitize the entire US Federal census back to 1790. The old way of doing it was that you would go to a library and look at microfiche. Or, you would have to go to Washington DC and actually go into the archives, and that’s what people did. Our focus there was, take something that is incredibly difficult and make it super simple. We wanted anybody that had access to an Internet connection to be able to go and search billions of records in the comfort and safety of their own home.

Our vision is grand, and I challenge people to have grand visions. We should and we need to. Changing the way education is the delivered in the world is a grand vision, but it doesn’t mean that we have to do all of it. We don’t have to necessarily build schools, or publish the curriculum, or build the Internet that is required to deliver it, or develop and deliver the cell phones that are required. Our unique focus is to build these pluggable learning components that anybody can use in their systems; whether they’re in Brazil, China, India, or wherever they are going to go next.

We enable teachers to teach more effectively, students to learn more efficiently, and institutions to deliver learning at scale in a less expensive way than they ever could before. So, I think that a grand vision combined with a very specific focus on what your unique value proposition is, is very important. 

Thursday, June 30, 2011

Finding a Tech Co-Founder

This is a great article I found on finding a technical co-founder. I am looking for one myself and this article has some great points. I also enjoyed the comments on the article. I the information here will be valuable to all of us as we push forward in our entrepreneurial ventures. Let me know what you think about the ideas discussed!

Saturday, June 11, 2011

Greg Whisenant on How He Turned a Burglary Into a Business Opportunity and What it Takes to be a Successful Entrepreneur

Greg Whisenant is founder and CEO of Public Engines, which makes the web application. Previously, he was a senior legislative advisor for law firm Hale and Dorr (now Wilmer Hale), where he lobbied the US Congress and Clinton Administration. Greg also worked for several years as a legislative aide to U.S. Senator Robert F. Bennett (R-UT), where he handled law enforcement, technology and telecommunications issues. Greg also served as a consultant in the launch of Unitus, which uses private capital to supercharge successful microfinance institutions throughout the world. He helped create a microfinance bank for a small village in Mali, West Africa.

Recently, Ken Frei sat down to interview Greg.

Have you been an entrepreneur your whole life? What are some of the things you have done that have led you to where you are now?

I have a wide and varied background, and it doesn't have a clear theme to it necessarily. I started out in politics where I worked for
U.S. Senator Bennett in Washington for several years as a legislative aide. Then, I went and got a master's degree and went back and worked as a lobbyist. 

I had a political beginning, but I was always naturally drawn to business. My energy was there. I think it's way too early to declare myself a success, but if I were to point to anything in my past that has led to success, being able to tie together different experiences from across a broad spectrum has been really helpful.

I moved from Washington to Salt Lake in 2000 and joined a dotcom startup that imploded. Then, I started my own little company doing some consulting and some computer work. That first business was really tough. I learned a ton and it was a great way to get my bearings in terms of trying to understand how I would attack the market. I launched Public Engines and with a partner about four years ago.

I read that you majored in English in college.

I did.

That is an interesting background for someone who has started his own business. How has that degree translated to running a business?

It hasn't been perfect, I can tell you that. I certainly feel like I'm at a disadvantage compared to some of my peers and others who are trying to start businesses. I think that having a broad knowledge base and having discipline in other industries has been helpful.

I think I would be in worse shape if I had focused exclusively on business. It has really helped to have a broad understanding of different types of industries and different perspectives that help me know how to run the business.

What are some things that you do to make up for the business training that you didn't get in school? How have you acquired that training yourself?

From the School of Hard Knocks, and there have been plenty, believe me. It's a truly humbling experience to try to create a business and get it going. There have been a lot of fits and starts, and many, many mistakes along the way. It has been an inelegant liftoff.

I've tried to surround myself with people who are knowledgeable, subject matter experts. I'm also naturally a learner and I don't assume that I have all the answers. Maybe that works to my disadvantage sometimes. It helps for me to think, “I really need to beef up on this or on that.” I try to constantly improve my skill-set. That's definitely been part of the process.

Tell me how got started.

I was living in Arlington, Virginia, and I let a burglar into my building on accident. I didn't know he was a burglar, I just figured he was another tenant. From that experience, I got to meet my local police department and I went to a community meeting. Through that dialogue, I came to understand that there was a disconnect between members of the public and law enforcement agencies.

There are 18,000 agencies in the United States, which is a lot. They don't have a lot of resources, and they are really doing things in old ways. I saw that there was an opportunity to use not just web 2.0 tools, but other Internet tools that were out there to create a better, more comprehensive engagement between the public and law enforcement.

Then, it was when Google Maps launched that I started to get really serious about it. That was when the light bulb went off. I was not the pioneer in this regard; there were other people who had created mash-ups of crime data on maps and I saw an opportunity. We had plenty of momentum already and saw an opportunity to serve law enforcement with high quality, easy-to-use products delivered from the cloud that helps prevent, reduce, and solve crime.

Why have you chosen to locate your company here in Utah as opposed to an area like Silicon Valley or like Boston? What about the Utah business environment has been good for you?

I think Utah has the right balance of opportunity and talented people. That's a pretty important thing. There is also a great lifestyle here. There are solid values and people who want to work hard. There is just a culture of wanting to get something done and really make an impact. It is, in many ways, all about the money at some point in time and people definitely care about that, but I think they feel a higher sense of purpose than a lot of people that I've met with. It's just a great culture.

It's a great place to be professionally. There is plenty of opportunity. There are a lot of resources for entrepreneurs. There are a lot of really smart people who think at a high level. I just think it's a great place to live and have a business. There is a basic cost structure here that is a little more tolerable for a start-up. It feels like it's a little more manageable. Utah has the right balance and the right key elements that you need to infuse your business with talent.

What do you do personally to be innovative in your company? What are some strategies you use to innovate?

I look for patterns in other industries. I try to look at what other companies and people are doing out there on the Internet and in the broader business ecosystem. I look at that through the filter of law enforcement and say, "When I see what other people are tying together—can I tease together a pattern that makes sense?" 99% of the ideas go by the wayside, but occasionally I get a glimpse of something good.

Something that we've done well at Crime Reports is that we have focused on consumers. That has forced us to have simplicity in our user interface, making it easier for our law enforcement. I'm so pleased with the UI that we've come up with across our product suite. I think our products are naturally intuitive and people understand how to use it just by looking at it. They don't need comprehensive training and it's not tedious. Our users are surprised by the simplicity and that’s a very powerful thing for a government agency. I mean, nobody wants to be tortured in their daily work.

I also read a lot. I really do try to read interesting books that are compelling. I read stuff from people that I respect and people that I don't. I try to fill myself with information in order to get a lot of ideas.

What drives you to be successful?

I can't muster the will to do work that I don't truly enjoy. That is a blessing and a curse. I really have to feel like the work I do has an impact. I want to be able to say, “This does something. It really accomplishes something.” I guess I'm naturally drawn in that way, where I'd rather have some impact or none at all. If I don't genuinely enjoy it, I'm just not going to be good at it. I just won't have my heart and soul in it. That's really the driver.

I also want to continually improve. I always assume that I don't have the answers. I really try to understand what our company can be doing better. We genuinely want to understand our customers and find out from them how we can improve. The more successful you get the harder that gets, but fortunately it has been pretty easy for me.

That whole concept of iterating and validating your business model with customers - at one point in time I think it saved our company. It really did. You have to listen to customers because they’re able to give insights into the direction that your company should go. I was willing to hear that and it kept us from heading down a path that I think would have gotten us in trouble.

What did you do to get back on the right track?

I got on a plane and flew out and talked to customers. I interviewed them. I sat down with a tape recorder like you're doing right now. I said, “This is not a sales process, this is a listening exercise. Tell me about how you do your work. Show me what you do. Tell me what's missing with our product.” Then, we genuinely tried to solve their problems. It was a very rewarding experience for me when we were able to make our customers happy.

Are there any particular books that you would recommend?

Right now I'm reading two books, both of which I'd highly recommend. They're both painful and wonderful. One is called
Rework by the 37Signals founders. It is intensely painful to read for an entrepreneur. The other is called Not All Those Who Wander Are Lost by Steve Blank. It's a collection of all his blog posts and acutely painful as well.

I would have loved to have read these books as I was starting my first business. They're so powerful and infused with wisdom. Neither book is very well known, but they’re both great.

Do you have any other advice that you want to give to entrepreneurs?

Just do it. There are a lot of good ideas and it doesn't take that much to actually start doing some work. You don't have to devote your full time and attention to it. You can start in little ways. Just understand that all of your experiences are going to contribute in some way to how you start, launch, and run a business.

People can get lost in this idea that it's just too hard to start.  I'm no more talented than the next guy, as any number of people in this building would attest. It's just a matter of saying, "Hey, I'm going to go out and do this," and then start doing something.

I would also advise entrepreneurs to keep their costs low. It's always nice to test out the model in the smallest, cheapest way possible. It really helps you to think through where you're trying to go.

If I were to give one other piece of advice it would be to work on networking. Get to know people and genuinely try to help them and also have them help you with what you are trying to do. It’s really valuable to know people and have them know who you are and what you‘re working on. It‘s a good practice.

Friday, May 20, 2011

Eric Jacobsen- Why investing will be harder in future years and the makeup of a great entrepreneur

Eric is the managing partner and a co-founder of Dolphin Capital. He formerly served as CEO of Winder Farms. Eric was also the founder and CEO of TNT Sound which was sold in 1983, Vice President of MECA Software which went public and was sold to H&R Block in 1994 and Founder and President of Home Financial Network which was sold to Sybase in 2000. Early in his career, he was an investment banker with Smith Barney.

Recently, Ken Frei sat down to interview Eric.

Have you been an entrepreneur your whole life? How did you get into the business world?

I don't know if I have been an entrepreneur my whole life, but I started my first company when I was in college. It sort of happened by chance more than me setting out to start a company because I had some grand vision or plan. I didn't write a business plan or anything. I just started selling stuff and making money and doing something I loved. One thing led to another and pretty soon I had a business on my hands and I was able to grow that business and be fairly successful.

So my entrance into starting companies was really by fluke rather than any grand plan or strategy. In fact, when I graduated, someone told me that I should add that I was an entrepreneur on my resume, and I spelled it wrong. I didn’t even know what it was. I guess I have been an entrepreneur, but again it was not by design.

I thought I always wanted to be a CEO of a business but I don’t know if I even knew what that really meant. I figured that I needed to learn how to read financial statements and how to raise money and deal with the financial side of things. I also assumed that I needed to learn how to sell, because I think sales are important for every company, and I needed to understand operations. So, when I graduated I actually became an investment banker. My logic was that I would learn a lot about finances and raising money and that it would be a great experience.

And then I joined a small software technology company. I hated investment banking. I wanted to get out of it and I wanted to move to back to San Francisco. I just wanted to get out of New York City because I was from California and software and technology was a hot thing at the time. If you were young, you could rise quickly in the industry because there weren’t a lot of old people in it. As a young person, I figured it was a great way to go to California and a great way to be able to get on a fast career trajectory.

I joined a small computer software company that made personal finance and tax software. There were about 20 people in the company when I joined. I was head of sales and marketing and I was learning how to sell in real time. I thought it would be a great experience. We ended up growing this company and we took it public in 1993. We ultimately sold it to H&R Block who bought it primarily for our tax software expertise. I guess I was an entrepreneur but not really. I joined this small company and I was one of the key players, but I don’t know if you would call that entrepreneurial or not.

Right place at the right time, I guess, right?

You bet. No doubt about that. And then I did start a company. My partner and I started
a company called Home Financial Network and we were at the very beginning of the internet banking revolution. Again, sort of the right place at the right time. We raised 5 million dollars of venture capital money off of a power point business plan that we wrote. We ended up, over the life of the company, raising about $22.5 million. We were square in the middle of the dot com revolution and we were one of the larger internet banking software providers. We sold to customers like Wells Fargo and helped them build their internet banking sites. 30 of the top 100 banks in the United States were customers of ours. We had several international customers as well. We grew that business and we ended up selling that to Sybase, a public database software company out of California. So that really was my long-winded entrance into being an entrepreneur.

It sounds like you did several technology based things, but your education was more on the business side of things. Is that right?

I was a political science major when I was in school, so I knew nothing about business, marketing, or sales. I had none of the classical training required to be in business.

What are some important skills that entrepreneurs need to have to be successful? If they don’t have classical training, like you didn’t, how can they gain those skills?

You know that’s a question I could talk about for a long time. Years ago, I went to a venture capital conference in San Francisco held by one of the top venture capital firms. There was a Stanford Business School professor who was going to give a speech on “What are the ten traits of a successful entrepreneur?” I was very excited to go to see what this was. Then, the business school professor put up his number one trait and I looked at it and said, “Really?!” Well, that’s not me, but I’m sure that I’m going to have the next nine. And he put up the second one and I said, “Really?!” That’s not me either.

It turns out that I had six of the ten traits that he said were important for a successful entrepreneur to have. And it got me thinking about what really makes a great entrepreneur. If you think about it, there are introverted entrepreneurs and extroverted entrepreneurs. There are the technology and science entrepreneurs who are brilliant, and there are political science major entrepreneurs. There are people who are great at sales, and there are people who are not great at sales. There are people who are all about brand and image, and people who don’t even know what that is. Entrepreneurs literally, in my opinion, take all sizes, shapes, and varieties.

And so for years, I sort of thought about, what does it take? And my conclusion was that it ultimately takes two things: One is your willingness to take that first step and to go for it. It’s just having enough confidence and believing that you can pull it off. Most people are afraid and don’t do it. I think you need to have guts to just go for it. So that’s one.

I think the second trait, and I have talked to a lot of entrepreneurs, is that they refuse to fail. Most successful entrepreneurs have faced bankruptcy or debt or destruction. They have faced incredibly dark, gloomy days, where they had no right to continue to be in business. But somehow, the successful entrepreneur figures out how to make it happen.
In my opinion, those are two very important traits for an entrepreneur to have.

Greg Warnock has some interesting opinions and theories about successful entrepreneurs. He believes that successful entrepreneurs tend to share the information and not hoard it. They tend to put themselves in the middle of an idea generation process. If somebody had an idea, they’re willing to provide suggestions on how to make it better so that more people come to them with their ideas. Then, the more ideas they get, the more knowledgeable they get. The more knowledgeable they get, the more they can share with other people. They become the center of this idea universe and therefore, they have lots of ideas and they have connections to a lot of people. They understand what competitive things are out there. They become knowledge centers.

Greg thinks that entrepreneurs tend to have good networks. They tend to meet people, connect with people, and build networks. Whether it is with technology guys, other scientists, computer science geeks, salesmen, or just good business people, entrepreneurs tend to be good network builders.

Greg believes that entrepreneurs are willing to, what he calls “give a gift". In other words, I will, as an entrepreneur, reach out to somebody or take their phone call or help them in any way I can. Successful entrepreneurs tend to be very giving. And by giving, without asking for anything in return, they build this army of people who want to help them be successful and who want to give back to them.

So, it’s not about taking certain classes or reading balance sheets or having any particular skill. Those things are all valuable, but at the end of the day it’s more of a personality type than a skill set.

How did you transition from starting companies into private equity investing and some of the things you are doing now with Dolphin Capital?

I sold my internet banking company in January of 2000 around when the dot com crash
happened. And in my opinion, in those ensuing 3 to 5 years, there was no premium, or what I call founders premium. There was no benefit to taking the risk of starting a company. If I took the risk to start a company and got to the point where I could raise meaningful venture capital, the valuation that VC firms were giving was so bad, that I would end up with only 10 or 15 percent of the company having taken a lot of risk. I could have gotten a job as a hired gun at a technology company and gotten 10 or 15 percent in options without taking all the risk. So there was no real incentive during those couple of years to start a company.

I kept looking and trying to figure out what to do next. I didn't want to be a CEO anymore. It is a lot of work to be a CEO and to run a company. You make enormous personal and family sacrifices to be an entrepreneur and a CEO if you are really going to be successful. I was at a phase of my life where I wasn't sure that I wanted to do that.
I was then approached by a gentleman who suggested that I start a fund and I said, "No, I don't want to be in that business. That’s the dark side. I don't like venture guys." And then he said, “Well, what if I put up the money?" And I said" well that would be different. If I don’t have to go out and fundraise, that would be different." So, I basically raised a fund from five high-net-worth individuals, and just as an entrepreneur would, sort of figured out how to start that business instead of starting another technology company. And I’ve loved it by the way. It’s been awesome.

Now that you’ve got that going, how do you decide what types of things to invest in? What types of ventures really get you excited?

At Dolphin Capital, we like companies that have a proven product. What we mean by proven is that they are generating revenue and some level of income. We’re not smart enough to be able to predict if some new technology is going to be the next Google. We like a product that has already been built and has customers that are voting with their pocketbooks and saying "Yes, we value this product, and we will pay “X” for it." So, that’s sort of criteria one.

Criteria two is that we need to believe that we can grow it. We are growth people. We’re not really venture in the traditional venture world. I would say we are more growth, private equity. We want to find things that have revenue and profits and that we can use our skills to grow. We believe that we are good at sales and marketing, and we believe we are good at management, and picking management and we believe we are good at finance. We don't believe we are good at inventing products or technologies or markets. We’re not smart enough to do that. So, we want to start with something that's proven and figure out how to make it materially better.

We want to be passionate about the industry that we’re working with. We invest in things that we are excited about and that we think would be really fun. Philosophically we believe that if we're building a widget just to make money, it's harder to be financially successful. We believe that we have to really enjoy it and be users of it. It makes it easier to get up and go to work every day. We have to really care.

We also have to like the people we're working with. Philosophically, we believe that life's too short to work with people we don't enjoy just to make a buck. We really want to care about, like, respect, and admire the people that we're investing in.

We also rarely invest in a company that has the perfect business plan. What I mean by that is that if somebody has got everything perfectly figured out, then they probably don't have any need to come to us. It's okay when people come to us and they aren’t very great at sales and marketing. That's probably almost the best thing for us because then we believe that we can add a lot more value than just money. Or, if they have great sales and marketing and a great product, they might not have very good financial controls, or reporting mechanisms. We're good at that stuff. We're a bunch of numbers geeks, and spreadsheet geeks. We're cool with that kind of stuff. We like businesses where we believe we can add value above and beyond the money.

Has your investment strategy changed at all with the slower economic times that we've had recently? And if so, talk about how that's changed.

The strategy has not changed. It's been much harder to get deals done because what we are willing to pay and what entrepreneurs are hoping to get is farther apart now. The gap widens in these tough economic times. So, it has been much harder to get deals done, but our strategy has not changed.

How do you see the private equity and venture capital landscape changing over the next few years?

I'm more familiar with the private equity side than the venture capital side. On the private equity side, I think there's going to be a lot fewer deals that are done purely with financial maneuvering in order to get a return. I think there's going to be higher value placed on private equity firms who can go in and add value above and beyond just injecting money, strapping on a bunch of debt, doing some financial figuring, and flipping out of the company in 2 years. I think private equity is going to get a lot harder, and therefore there is going to be a lot less of it.

What kinds of things do you think investors will have to do that will make it harder for them?

They're going to have to be more involved. They're going to have to roll up their sleeves. They're going to have to bring greater expertise within the companies as opposed to finding debt, adding a bunch of leverage, adding sub debt and more sub debt, and sucking down management fees. Firms are going to have to add real value as opposed to just buying low and putting on a bunch of debt and stripping out a little bit of costs and flipping it in two years for a nice return.

I think that the fundraising is going to be much harder for venture and private-equity firms over the next few years for a whole variety of reasons. And I think that the trend toward bigger and bigger private equity and venture firms is going to subside. There are going to be a lot more small, niche oriented firms as opposed to big, giant monolithic, huge firms that are wielding billions of dollars. I think people are going to be looking for more local expertise and industry expertise within a private equity firm, instead of trying to be all things to all people.

Why have you chosen to locate and invest here in Utah as opposed to Silicon Valley or Boston or another entrepreneurial hub like that? What do you like about being in Utah?

I am a big, big fan of Utah on this topic. When my partner and I started our first personal financial software company that we sold to H&R Block, we had our technology center in Connecticut. It was very difficult to find state of the art technologists in Connecticut. The state had great sales and marketing people, but not really great technologists. We sold that business to H&R Block and we started our new firm.

We wanted to put our technology center somewhere other than Connecticut. We looked at Boston and we looked in the Raleigh-Durham area in the Raleigh-Durham triangle. We looked in Austin and we were looking in Silicon Valley. We really thought we would put our technology center in Silicon Valley for all of the obvious reasons that somebody would go to Silicon Valley.

One of the guys that we worked with before was originally from Utah and he said, “You know, you should look in Utah.” My reaction was, “Utah?! Why would we ever go to Utah?” And he said, “Well, let me just go and explore”. I honestly thought it was just a way for him to get a free trip to go and see his family. But when he came back, it happened to be a moment in time when Novell had just purchased Word Perfect. And Novell was laying off and getting rid of a lot of the Word Perfect people when the two companies were joined together.

We were able to put together an unbelievable technology team in Orem, literally over the weekend. We found 10 programmers that were unbelievably talented and cost us probably 30-50% less than what we thought we were going to have to pay if we were in Silicon Valley. That was a great benefit. It was probably the single best decision we made in starting and building that company, called Home Financial Network.

We had an unbelievable technology team here. The work ethic here is absolutely fantastic. People don't go out and party all night long and therefore come in late the next day. It's a very loyal employee base. The odds that they are going to have somebody from Silicon Valley come along and offer them 20% more if they move to California are pretty slim. Most people aren't willing to pack up and leave their families and leave Utah for just a little bit more money. The ties here are too strong. I think there is much better loyalty here.

From the investment side of things, Utah is still, in my opinion, undercapitalized from a venture and private equity standpoint. If you really think about it, on the private equity side, there was Huntsman Gay, Sorenson, Peterson, and Dolphin, my firm, is probably the fourth largest private equity firm. And we're tiny. And Huntsman Gay has basically left Utah. 

Then, on the venture side, there is vSpring, UV, Mercato, and basically not much else. So, there's just isn't a lot of money chasing the deals here. There's not as much competition for the quality of deals that come out of the state of Utah. For people in Utah trying to raise capital, they constantly have to go to Silicon Valley in order to get money. And I think there's a great hotbed of entrepreneurial ideas and entrepreneurs in this state that are worth investing in.

What advice would you give to entrepreneurs who are seeking investment here in Utah?

My belief is that if you actually have a good idea, a good product, a good company, a good plan, then it is easy to raise money. It's hard to raise money if you don't have a good product, a good idea, a good team, and a good plan. There's money out there that wants to invest. You just have to find the right mix of all the factors that are going to make it successful.

I think that entrepreneurs often fall in love with their own ideas. They don't do enough market research to find out and understand who their competitors are. They don’t know who else is trying to do what they are doing and what all the other forces are that are pressing against whatever their idea is. I think that entrepreneurs are often naïve about what their real competitive advantage is with their products and ideas, versus whatever else is out there. Are their products really that different? Are they really that much better? Are they really earth-shattering? Do they really appeal to a broad group of people? Is there really a big market for whatever their idea is?

Entrepreneurs really need to understand their markets. I think entrepreneurs usually understand their products really well and their customers that they have sold or targeted so far. They understand those very well. But I don't know that they understand the forces beyond that. Who are their competitors? Who's threatening them? What other trends are in their favor or against them? I think having a very real understanding of that would help them raise money because as investors, that's the stuff we're looking at. And that's the kind of stuff we're comparing it to and thinking about when an entrepreneur is sitting there pitching his idea. This guy knows his product pretty well, but who's going to crush him? Who's going to prevent them from being successful? What are the other forces out there?

Are there any good books or blogs that you would recommend to people who want to be more informed on investing or entrepreneurship?

I am not a big reader. I have read some great business books, certainly. I don't know that there are great entrepreneurship books. I personally read general publications a lot, such as Fortune magazine, just to know what's going on, what's happening on the economy, what businesses are doing and trying to do. I read the Economist and I read a lot of industry trade rags. I don't know if there are any books that I would say are great books on setting out a road map for an entrepreneur or how to be successful entrepreneur. I think there's just an unfortunate dearth of good entrepreneurship writing out there because it is hard to quantify. It's hard to put an entrepreneur in a bucket, you know? It’s hard to write something that says, “Here is what an entrepreneur is. Here’s what it takes to be successful.” It's just hard to that. Therefore, there's not much written that's very good in my opinion.