Four of Austin's top organizations that support the entrepreneurial community (Entrepreneurs Organization, EO Accelerator, ATI, and CTAN) co-hosted an event to bring their members together on Tuesday night. Not even the "Blizzard of 2010" could stop entrepreneurs from showing up to network and listen to local business leader Jack McDonald (it had snowed three inches that day -- A lot by Austin standards, ...... and when it snows in Austin, everything else shuts down) .
I have written about my friend Jack McDonald in the past. Last year he had formed and exploratory committee to look at running for Congress. In the end, he did not run this time around. The chances of his winning as a Democrat in the Republican district (against a well funded incumbent) did not add up.
As a real businessman, he made the informed decision to not make the run (a real politician would have run anyway, wastefully spending $3 million of donor money. A good entrepreneur does not waste cash - A politician will wast money any day of the week).
Jack's talk centered on "How To Grow Your Business In A Tough Economy", something he knows a lot about, having lead a successful public technology company (Perficient, Inc. - PRFT) over the past ten years.
Austin (and Texas) have been fortunate in this recession. We have several companies that are adding jobs (example: entrepreneur Brett Hurt's Bazaarvoice has grown from zero to 400 jobs over the past four years), and the city's young workforce is among the best educated in the world. The diverse and open culture coupled with other positives in the region means we have what it takes to grow. Both individual businesses and Central Texas are poised for expansion in 2010 and beyond.
But Austin cannot be complacent. There is a lot of other cities who are positioning themselves for growth in tech, bio-tech, energy and the other industries. We are not immune to the challenges of the recession or the future and we must continue to take actions to make the region successful. The Austin business community must reinvent to stay ahead of the curve.
McDonald challenged the audience of entrepreneurs not to sit on the sidelines, but to instead be involved in the process. The Austin Chamber of Commerce and other organizations are working on the plans for the future through policy, business recruitment and retention, and other business ecosystem investments. However, the tech entrepreneurial companies are often not at the table, because many of these companies are customer focused (and their customers are around the world, not in Austin). He reminded the crowd that their success is directly tied to the city's future.
He had three pieces of advice on how to survive and grow in any economy:
1. Do not chase "easy revenue". Know who you are and who you want your clients to be. He witnessed may of Perficient's competitors disappear because they chased the Dot-Com economy in the late 1990s.
2. Avoid ego driven expenditures. By keeping fixed costs low, a company can survive the tough times. Too many small businesses obsess over Class A office space (Class B office space is just fine for a growth company!) and other expenses in order to "look bigger". This can be a fast track to going out of business.
3. Be realistic. After the tech crash in 2001 too many entrepreneurs and investors stuck their head in the sand, when they should have moved fast to make changes to get lean.
The end of his talk touched on national politics. The global economy has a lot of competition, and it is not going away. Our federal government must make policy adjustments to keep the country on the right track. The tax code on small businesses is neither effective or fair. Big corporate welfare is not driving job creation. GE, who is not adding jobs pays around 12% in taxes while growth oriented companies pay close to 40%. (Huh? That is nuts. Are you listening in Washington DC?).
America's secret weapon is entrepreneurs. Washington must recognize this and make decisions that encourages capital formation and supports those who start and grow companies. We have one of the highest corporate tax rates in the world, and this puts America at a disadvantage.
It is a shame that Jack will not be going to Congress. We need more people in Washington DC and in state governments who are entrepreneurs. Our elected officials are often good people who went from law school to politics without ever having met a payroll, created a job, or developed a product or service. They have no clue about business, but are the ones making the decisions that effect not just Wall Street, but Main Street.
Overall it was a great event, and I would like to thank the four hosting organizations and sponsor, Frost Bank, for making it happen.
I am enjoying my involvement in EO Accelerator, as the organization continues to expose me to great people and educational programs that help me in my own journey as an entrepreneur.
Have A Great Day.