Yesterday I attended an interesting luncheon for entrepreneurs hosted by the Austin Technology Council. The event was part of their "CxO Best Practices Seminar Series", and featured several local experts on the panel with first hand knowledge in serving growing companies.
The panel was moderated by tech industry veteran Michael Cation, founder of NovusEdge. He did a great job of questioning the panelists, engaging the audience and sharing personal anecdotes from his 25 years of experience.
The panelists were:
Michael Barrett, Partner - Fulbright & Jaworski LLP
Corey Blahuta, Managing Director - vcfo
Jeff Sunshine, Managing Director - The Bank Street Group LLC
The first phase of the program covered ways to protect intellectual property, and the pros and cons of NDA's and the strategies for filing patents. While all of this is important to technology companies, sometimes the price of patents can outweigh their effectiveness. The best advice was that people should not get so worried about others ripping them off that they forget to focus on running the business. Many an entrepreneur has been overly paranoid about patents (some with less than stellar ideas) that they never got their businesses off the ground!
The next section covered how to tackle a company's post funding expenses such as office space, key hires (should you use a head hunter?) and other expenditures. The consensus was to keep it frugal when possible to conserve cash, but to also consult the boards of directors and advisers for their counsel and perspective. They might have access to sublet office space, know people you could hire or have vendors with whom they have a track record. An entrepreneur should avoid making early tactical expendatures that go contrary to the board's / investor's philosophy.
The last part of the discussion centered on how to cultivate a positive working relationship with the board of directors. The entrepreneurs were told to get out of "sales mode" after they get the funding, as they need to have a realistic working relationship with their board. Be pragmatic and grounded in setting expectations, as the only expectations your board will have about your company's performance is the ones you set with them during your meetings. All agreed that investors see the entrepreneur as the greatest assets in the companies they invest, so nobody should get seduced by the "coolness" of the product or service. The business plan will change over time, and that is expected.
They closed the discussion by pointing out that the current headlines around Lehman Brothers, AIG, Merrill Lynch, and Freddie Mac & Fannie Mae should not effect Series A funded companies in the short run. They have their money and need to execute on their business plans at this point and not freak out about the markets, headlines or political conditions. History shows that many successful companies have been born during economic downturns.
It would be harder at this point for companies looking for mezzanine funding or pursuing an IPO, but a funded start-up should buckle down and work to add customers and reach investor expectations.
Additionally, Austin, Texas is still a great place to start a company, as the technology ecosystem has lots of experienced employees, advisers, service providers and other talent which .
Have A Great Day.