The purpose behind my blogs is to encapsulate my experiences and observations that relate to startups and fast growth companies or divisions. I have worked with one startup in telecommunications that raised capital virtually every month to expand and grow that later exited through a NASDAQ IPO. At another company, I was brought in to restructure a subsidiary in half billion dollar broadband telecommunications company that was failing and needed restructuring. That division was spun off and sold at a profit. I have worked with sizeable divisions of publicly traded companies to stave off losses, identify the most profitable product lines in manufacturing, or create a system to handle asset backed financial sales averaging billions of dollars every month.
I have also observed one investor who earned over $100 million from an acquisition, having spent most of his lifetime with large companies, attempt to enter the Venture Capital world, and then lose every dollar. His approach to buying medium sized companies did not function well in the VC world. I have met entrepreneurs who, although with great ideas and products, fail to raise capital because of poor presentation skills, or poorly drafted business plans and presentation materials. I have seen companies raise $10 million with patents and great business plans and fail within their first year of operations because of poor executions — could not control their costs, had targeted the wrong customer profiles, or did not focus on sales fast enough. So, if teaching is a reflection of the sum of experiences, I hope that I am doing that clearly.
The world renowned photographer, Henri Cartier-Bresson once said that “[y]our first 10,000 photographs are your worst.” Unfortunately, startups are given limited amount of capital with which to deliver results or it might not be able to raise the next round. Investors cannot wait for 10,000 bad photographs. This year alone, early Spring, I advised the CEO of a startup that, unless a viable product were ready May 2012, given the state of the current funds and burn rate, it is very likely he would have shut the doors. Did he do that? Instead the company made missteps every month and failed to complete one project by June. A litany of problems –poor hiring, bad engineering, too much indecision – added fuel to the implosion. (I gather that this CEO was uncoachable, as described in an earlier blog.)
In one company for which I had been General Counsel, the company was growing rapidly but also burning so much capital that I was concerned that my next paycheck might be refused by the bank. In spite of the CEO, I had to focus on fast turn-around in due diligence through major investments and promote mergers and acquisitions in order to have a viable company that would attract additional investors quickly, sometimes less than 30 days. My contributions were successful enough that led to the IPO.
In other words, startups are given very limited amount of time in which to show results and can only afford very mistakes. And that company must use whatever funds efficiently to achieve those objectives.
So my blogs focus on efficient use of capital, costs management, blitzkrieg marketing, dispelling false assumptions, strategies, proper executions, and the realism on how a startup should function. Sometimes, you have to make geographic decisions – does it pay to expand internationally rather than domestically? And whenever the competitive environment dictates it, you have to expand at a furious rate. These variables and the opportunities to meet those challenges are what I believe make the successful startup companies.