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. 


Marc Dedrick said...

Great article Ken! Thanks for posting!

kenfrei4 said...

Thanks Marc! I appreciate you reading. How is New York treating you?