Archive for the ‘ETL’ Category
For individuals interested in starting high tech companies that are related to biology, chemistry, etc., Mir Imran is your man. He has started a number of businesses focusing on the patents he has received and the application of these technologies. While I personally don’t see myself following a similar path as an entrepreneur, it just goes to show the variety and variability in being an entrepreneur. You can listen to his speech here, or read the summary below.
Background
Mir Imran founded InCube Laboratories in 1995 to focus on his passion: creating medical device solutions that change the standard of care in critical healthcare markets. Mir started out with a BS in Electrical Engineering from Rutgers and an MS in Bio-Engineering. From there he’s moved on to having over 200 patents issued in his name, starting over 20 medical device companies, and continuing to be one of the world’s most successful inventors, entrepreneurs, and investors in healthcare. Of his 20+ businesses, nine have been acquired, three went public and then were acquired, and the other eight are in development with one looking to go public.
Current Projects
Of his projects he is working on right now, 1/2 involve implantable devices. The breadth of fields include obesity, chronic pain, fibrillation, epilepsy, and the creation of an artificial colon. While on the surface it seems like he could be an expert in all thes fields, he really isn’t. When he notices a problem, Mir generally conducts his own research does and figures out what’s being done, what’s working, and what’s not working. As he digs deeper, for some of the problems he finds solutions and for some he doesn’t.
What is a project?
Each project is inspired by ideas, which come in random and multiple ways, and is the testing stages before becoming an official company. As an example for one project, at one time in his past, Mir had a couple friends affected by a specific problem. He talked to some doctors that said the problem shouldn’t be a problem with the right steps taken. As such, he did some research, found some inspiration for a solution, and created the project around it. Another key thing is to keep every project or company Mir starts separate because it prevents each project from interfering with one another. The result is that one project doesn’t hog resources because it is doing well and another doesn’t drag everything else down when it is performing poorly. When implementing an idea, it is a long and tough road. Ideas are cheap, but it’s all about implementing and executing these ideas that takes time. Another thing is that he’s willing to kill a project if it doesn’t meet the guidelines he sets up - which prevents a lot of the hardships if he pursues a bad idea into the company phase.
Thoughts on FDA approval?
Mir thought is that it is an absolutely necessary part of the process. It forces you to think about the impact that will result for patients. The regulations are good because you have to document things, follow procedures, and in general keep track of what’s going on. There is a level of accountability and replicability that makes for consistent (and hopefully successful) performance.
Have any failures occurred and what have you learned?
At first glance, it appears that Mir has an amazing success rate, but that it sonly because he is willing to kill the project before it launches if it is bad. Even with his level of success though, he has had two companies fail. One was a dot-com launched in 1999, which he acknowledges as a bad idea. The other is a failed business, even though the technology is still being used in many of his businesses. A great insight Mir provides is that it is much more painful - for everyone involved - to kill a company or fix a failing one than to kill the project.
It’s all about the team (and the people)…
Mir has a history of creating successful teams - which he describes as the hardest part - and reminisces about one company he started around a specific person. In fact, he offered this individual a cubicle and $1000 a month just to brainstorm with him. After a while, this individual took a position as senior engineer, and then went to CTO. Just this last year, this company did $30 million in revenue and is getting ready to go public. Lesson learned: When you find great people, hold on to them!
What motivates you?
Mir is like most entrepreneurs in that he is not in the business of making money but rather solving problems. And to have a theoretical “could be” answer is not enough - he has to bring them to life and commercialize them if they’re that good. The idea of creating something out of nothing fascinates him.
What’s each day like?
In short, every day is different. This morning, for example, he spent in a design review. Most of his time, though, is spent in the lab. Also, he has a very hands on approach to hiring people, brainstorming session, planning studies, and developing a regulatory strategy. He is intimately involved with all of the companies at an operations level, and spends more times with the less stable companies to get them to the point where they are more stable and he can move on to other projects.
Conflict of interest?
Because Mir found the fundraising process difficult, he started his own and partnered with Draper Fisher Jurvetson. This, of course, begs the question of whether or not a conflict of interest develops. As a humorous remark, he says that if there isn’t a conflict of interest, you aren’t doing anything interesting. As a more serious follow up, though, he states that to deal with conflict of interest, you have to be incredibly transparent and have a high level of disclosure.
What do you wish you had learned earlier in your career?
Through college, Mir developed a strong technical and scientific background and wishes he had had the opportunity to take business courses. Courses in marketing, accounting, sales, etc. would have been really helpful, especially in just getting a simple understanding. Learn enough to know who to bring in, how to get things done, etc. One key to his education has been to develop a broad understanding of things and develop a depth of understanding in at least one area.
Question: What other advice would you want to give to students?
- Be a good listener. Because one person can’t have all of the right answers, you have to listen to and communicate effectively with others to find the right answers.
- Don’t fall in love with your ideas. A lot of times your first idea not necessarily right idea, and instead it is further revisions of the idea that make it successful.
- Failure is almost a necessary and humbling experience. If you haven’t failed, you aren’t stepping outside your comfort zone and trying something truly innovative.
- Surround yourself with experienced people. This works well with being a good listener because experienced people are much more likely to help develop the right answers to the problems you are facing.
- Businesses aren’t always the solution. If you make small improvements, think about licensing the technology versus starting a company.
- Learn the fundamentals. Once you have a strong foundation, in whatever the subject, you can build all kinds of things on top of it.
- View problems as opportunities. Such a reversal in perception opens the doors to solutions that wouldn’t come any other way.
Wired to be an entrepreneur and engineer
As a kid, his mother bought two toys for him - one to take apart, and one to play with. He built toys and then took them to school and sold them. Right now he has ten companies buzzing around in his head and wants to start them soon before other people start them.
Conclusion
Mir Imran is an amazing entrepreneur in his own right, and one many students thinking about an extremely technical background could learn from. The most important takeaway from Mir, to me, is the idea of developing a general background in everything and drilling down to being an expert in something. Combining this with a passion to view problems as opportunities creates a powerful force in developing innovative technologies in specific industries.
Brett Crosby, today’s speaker, was one of the most personable guys to come to ETL. Not only did he discuss his background in doing business and college stuff, but he also picked out the nuggets of wisdom he gained along the way. In a nutshell, Mr. Crosby started the web analytics company Urchin with his brother and a couple buddies from college which eventually was acquired by Google and is now known as Google Analytics. Also, here’s the full clip if you’re interested.
Background
Scott and Brett Crosby, brothers, were the co-founders of Urchin. Brett played a large role in writing the original business model, coming up with product plans and features, and developing the sales team. The idea was to create a great product that was easy to use and didn’t require a ton of support. They originally built the business around a scalable product that allowed them to target hosting companies and get a massive number of users in one deal. Brett currently works as a Group Manager of Google Analytics. He is responsible for product positioning, feature roadmap development and all external product communications. Brett also graduated from the University of Souther California with a degree in Political Science and International Relations.
The Early Years
Urchin started out as an internal tool to measure bandwidth for websites. Brett did website design and hosting from 1995-1996, and at that time bandwidth was expensive. Shortly after that, the web hosting business became Quantified Web Systems, Inc. and sold the parts of the original business that weren’t related to analytics. The reason being is that Honda was spending $6 million on their website, not getting much information, and after trying Urchin, they realized they had a product that worked amazingly well.
Change Until It Works
After that they became Urchin Software Corporation and offered a suite of products because that is what everyone else was doing at the time. The only problem is they didn’t do any one of the products well, so they dropped everything except Urchin. Then, in 1997-1998, when Earthlink was huge, Brett sent three emails to Earthlink asking them to try Urchin. The first two times he didn’t get a response, but on the third time, one gentlement asked for a demo and a whitepaper. At the time, they didn’t have either, but they developed both in a quick hurry. After having a meeting, they won Earthlink over and the revenue model them became to pay Urchin for paid customers and have banner ads for the free customers. Whe Earthlink started closing down, Cable Wireless became the next big hosting company and had major websites like Coke and American Airlines. By proving their scalability, they ended up landing their first seven figure deal. Lesson learned: go after datacenters!
Dot Com Bubble Bursts
Throughout their period of growth, Urchin was focusing on getting more revenue, but they were still operating at a loss. They were going through rounds of funding, and it was at that time the bubble burst and they realized the problem of little or not profits. To keep the company afloat, they cut salaries, closed their Tokyo office, and changed their business strategy yet again. They went from making deals in six months with all kinds of clauses to one sheet of paper. The deal was to pay $5,000 per day, and you could use Urchin’s software as much as you want. The goal was to become the most widespread and dominant analytics tool.
Developing a Strong Brand
The next business move was to switch from installed software to a web based system. They started to mature the brand by getting a good copywriter and graphics guy to create a strong image for the company. The idea was to look bigger than you are - which is important for people to take you seriously - by elevating the look of the company as well as creating decent booths when getting involved with the circuits.
Google’s Acquisition
At Search Engine Strategies in San Jose of 2004, Wesley Channon (Google Adwords Product Manager at the time) came up to Urchin’s booth and asked what Urchin was all about. Mr. Channon initially lied about who he was and it was only until Brett went to a party hosted by Google that he found out who he was. It was also during this party that Brett suggested that they should be acquired by Google. At the time, Urchin had $1 million in the bank after a 2-3 year turnaround. The company had turned extremely conservative due to the dot-com bust and never wanted to have the problem of laying off people again, and as such, they had a lot of money and looked very good from a revenue/profit generating perspective. They were in talks for nine months longer than they thought they would, and it wasn’t until April 20th of 2005 that the deal was closed.
Lessons Learned
- Go big (biz models, acquisitions). Make the product as easy to use as possible and do whatever you can with the product you have.
- Keep it legal. There were many dot-coms that did deals that made revenues and balance sheets look much better than they were. Because Urchin didn’t partake in these deals, he feels they stayed out of some unnecessary trouble.
- Build a great team. One story to elucidate this point was when Brett asked their main engineer if they could make Urchin’s software work on Windows. The engineer said it was impossible, but then Brett said a $1 million deal hinged on this development. That said, the Windows based product was made over the weekend.
- Act big, stay humble. Three of them were sharing a room at Ramada to cut expenses. They also carried their stuff onto a plane vs getting a private plane. Instead of hiring people, they would also set up and take down the booth by themselves.
- Try new business models. As discussed above, they went through many different business models until they hit the one that resulted in the best results for them and their customers.
- Celebrate the crazy moments. Sharing these times with friends makes life more enjoyable and shows that you are having fun while doing the work.
- Don’t give up. Even when times are tough, it is usually by getting through these times that the huge payoffs occur.
- Be flexible (work on your business not in your business). One of things Brett did was to learn how to do one job, such as web development, and then hire someone to do that and move on to another system. This is great in the respect that you understand how each system works within your business and you continue to grow it as you move on to different systems.
- Use what you’ve got. For some reason, a lot of country music stars were using Urchin on their websites, and by working with stars such as Faith Hill, Urchin was able to develop ads for their software.
- Work with people you like. When asked how Brett manages personal and business relationships, he said that he didn’t want anything to do with the business personal and instead wanted people he could connect with and were real to him. As such, most of the people he went into business with were friends and this has allowed him to have fun doing what he wanted to do.
Conclusion
Brett was a great example of showing that you can and should be yourself when getting involved with business. While there are certain aspects of your life that should be kept out, your personality shouldn’t change. I also had the incredible opportunity of going to dinner with him and his brother. While most of the discussion was chitchat, one thing I did learn is that both of them failed at a couple of businesses before starting on Urchin. They also both felt that the failure was immensely useful later on in their business careers. Overall, great speaker and someone I feel I could learn a lot from if I met with him on a regular basis.
As I was perusing the EdCorner one evening, I stumbled across a podcast of Tina Seelig, one of the professors here at Stanford, talking about ten lessons she wishes she knew when she was 20. To many students I’ve met here at Stanford, Professor Seelig is a hero and I’m actually supposed to have the great privilege of meeting her both in Discovering Entrepreneurship and Social Entrepreneurship ASB. I’m extremely excited about this opportunity, and without further ado, I’ll give a recap of the ten lessons.
1. Every problem is an opportunity for a creative solution.
Also, the bigger the problem, the bigger the opportunity. One example she gave is that she presented students in her class with $5. They then had a week to change that money into whatever kind of profit they could muster. Some may think that they made $10, $50, or maybe even $100, but in fact the teams averaged $200, and the greatest was $650. How’s that for only a weeks worth of creative problem solving? And, in case you were wondering, the winning idea was a 3 minute pitch that was sold to recruit students in the class. Others bought reservations for popular restaurants and then sold them to those who didn’t make reservations but were willing to pay to get in. One final idea that was particularly interesting is that students asked for donations after checking bike pressure and adding air if it was necessary. The reason why this is interesting to me is that the idea of asking for donations put the challenge of determining value into the hands of the beneficiaries - the students - and many of them ended up donating much more than the students could have been asking for.
2. The harder I work, the luckier I get.
This quotation, repeated by many individuals, really highlights one of the keys to my success. I’ve always been a person to go the extra mile in things I really care about, and one example that really paid off is getting into the school of my dreams. Another thing that’s talked about is to do interesting things. Go to fascinating lectures. Meet interesting people. Travel to interesting places. Not only will you become an interesting person, you will learn a lot and have a ton of fun along the way. One final tidbit Professor Seelig provides is that the key to working hard is not only performing on the whole but also executing the details.
3. Find the intersection between your interests, your skills, and the market.
One comment that really resonated with me is the idea that passion isn’t enough. You also have to understand and appreciate the other two pieces. For example, if you have only passion but no skills or there’s no market, you have a hobby. If you only have the skills but don’t have the passion, you are working a job.
4. Try lots of things and keep what works.
This idea I have a bit of a problem with… I personally find myself either trying too many things (and thinking I’m unproductive) or not experimenting enough (and falling into a boring rut.) The personal balance may be a bit off, but I also know that there are too many things that I will find interesting and works that I don’t have enough time for. I already find myself too busy at Stanford, and I haven’t even experienced a small fraction of what the world has to offer. Overall, if you’re bored, you’re not experimenting enough. Tina goes on to say that if you’re not failing sometimes, you’re not taking enough risks. Failure is one of the greatest teachers, and I definitely agree to this through personal experience. An example from Professor Seelig is that for every book she gets published, she has two that are unpublished. One final idea that she left, and I think is really cool (and I will do), is to create a failure resume… I think the results will tell a lot about myself that I haven’t thought about.
5. Don’t have to wait to be anointed.
Entrepreneurs are individuals who make their own business cards. They are the people who decide what they do, and they realize that in order to get ahead you have to take on whatever responsibility is necessary. A quick quip for those working as employees - if you do the job, you will get the job! Therefore, don’t wait to be asked to do something, simply step up to the plate and do what’s necessary. If you do a great job, it should be recognized by your superiors, and eventually you should be rewarded proportionally.
6. It is a very small world, so don’t burn bridges.
In this world, there are only 50 people that really are the movers and shakers, and Professor Seelig noted that you will bump into them all over the place. As such, it’s a horrible idea to burn a bridge, especially with one of these individuals, because you never know when it is going to come back and hurt you. To put the idea as simple as possible, you should be proud of the relationships you maintain.
7. You can do it all, just not at the same time.
Again, this is another issue that is currently facing me. I want to do everything, all the time, and I’m realizing there is a glass ceiling (usually referred to as time) that limits what I can do and what I can’t do. Ultimately, it forces you to be creative and figure out what your priorities are. Here are the three things that are critical to Professor Seelig. Be okay with saying no vs. dropping priorities that you are already committed to and engaged with. Next, be willing to reassess priorities frequently. Finally, there is no such thing as a balanced life. An example that proved quite interesting is that former Supreme Court Justice Sandra Day O’Connor said, “Work life is really long, but kids are little for only a short period of time.” I personally want to have a family, and I’m very unsure of whether or not I should make that a priority when I’m younger or when I’m older… At least it’s something to ponder.
8. The little things matter the most.
When it comes to an interview, you should make eye contact, shake, thank you. After the interview, you should send a thank you note within 24 hours. It’s the little things like these that make a huge difference, and when I was fundraising for a summer program I might get into, I made sure to say “thank you” to all of the individuals that donated multiple times.
9. Team is about making everybody else successful.
Put simply, the more you make others successful, the more it comes back many, many fold. I personally don’t have a lot of experience working in dynamic, successful teams, but I think that she’s onto something with this one. I’ve read a ton of stuff about developing successful team dynamics, and all of them have something different to say. While I think it’s important to note that there are several characteristics of successful teams not noted - such as skill sets, similar goals, etc - I also believe that entering a team with this mentality increases the odds of success manyfold.
10. Never miss an opportunity to be fabulous.
If you’re not doing best work now, when will you do it? The key is to keep an open mind and let people run with the idea. Setting up premature expectation vs. leaving things a bit open-ended most times results in a cap with the mentality, “I only need to do X, Y & Z to get an A.” Professor Seelig instead wants to point people in a particular direction and realize the amazingness of the results they produce. This idea is very sticky and extremely contagious. The times I’ve been most impressed are when people are given a general sense of where to go with something and then they produce something that is absolutely phenomenal.
Conclusion
I don’t know if there is a day that has gone by recently where I haven’t been thoroughly impressed by something someone has said. The atmosphere for entrepreneurship is amazing here, and I don’t think there is an equivalent anywhere else in the world. Being that this podcast was relevant to myself and other college students, I found it intriguing and ultimately very beneficial. While I have my reservations about some of them, I look forward to capitalizing on a few of them in my day to day life.
ETL today was very different from the ones I have had in the past. Today’s guest was Christine Benninger of the Humane Society of Silicon Valley (HSSV), and is very different because she isn’t part of some crazy startup or investment circle. While the HSSV appears to be very boring, I assure you the things Ms. Benninger has accomplished while there are not. There are a lot of really cool lessons to be gleaned from the podcast which can be listed to here or read below.
Christine Benninger Background
Ms. Benninger has been President of Humane Society Silicon Valley for the past 13 years. During her tenure, she implemented a spay/neuter program that reduced the number of incoming animals to the shelter from 45,000 in 1993 to approximately 9,000 in 2006. She has also implemented key policy changes that have resulted in 99 percent of animals finding new homes while simply ten years ago less than 15 percent found new homes. Since taking a management role, Mrs. Benninger has grown the Humane Society’s volunteer base from 50 to more than 700 volunteers, along with the shelter’s donor base increasing from 300 to 30,000 donors. She also owns four dogs, all of which were adopted from the HSSV.Ms. Benninger also has a strong business background, spending four years as an auditor with Arthur Andersen & Co. and 15 years with Hewlett Packard. At HP, Christine held several managerial positions both in the United States and Europe. She is a Certified Public Accountant and received an M.B.A. degree from Stanford University. On top of being President, she also serves as a board member of the State Humane Association of California and acts as a volunteer consultant to various nonprofit boards. In 1989, Business Month magazine named Ms. Benninger to its list of “100 Women to Watch in Corporate America.”
Ms. Benninger’s Beginning in HSSV
Even though she wasn’t looking for a new career, Ms. Benninger decided to send in her resume and cover letter and hope for an interview because it seemed interesting. After four months, she received a reply and went in for the interview. They offered her the job and she accepted on the spot before hearing what her responsibilities would be and the compensation involved. Her reasoning for making the decision was because it felt right in her heart and gut, and as such she decided to go for it and hasn’t regretted the decision one bit. I personally identify with this because I make quite a few decisions based on my gut, and even though I make a mistake and fail miserably occasionally, I succeed more often than not and it makes up for the failure.
Early Strategic Decisions
When Ms. Benninger started at the HSSV, the contract with the county that provided 90% of the funding was being cancelled and they had only 300 donors. There was no support from local vets, the government, and the community; and employees were dealing drugs on site. Some animals were being sold to bunchers for use in somewhat questionable labs. They didn’t want to ask for donations because the board felt it gave the impression that they were begging. The one thing it did have going for it according to Ms. Benninger is an amazing mission, and that is to save and enhance lives. Even though there some huge revenue issues looming, Ms. Benninger decided they had to expand into the animal control realm and bid on contracts. In a period of six months, they had nine contracts in different cities that helped keep them afloat.
Finding the Right People
There was a lot of turmoil the first year, and Ms. Benninger ended up creating a complete turnover in management. Because there was too much distrust within the organization, something had to be done to get the right people involved. When looking for people who shared a similar vision and would be a good fit, Ms. Benninger identified luck as one of the primary motivating factors for finding some people. She was able to bring some colleagues from HP over because she was able to share the vision and dream of the mission. It was all about the difference an individual can make in saving an animal’s life.
Passion is a Double-Edged Sword
When it came to hiring “regular” employees, Ms. Benninger found it particularly easy to find those who are passionate about working for the HSSV versus those looking for a paycheck. The problem comes though when people are too passionate and will do nearly anything for the mission. In those cases, passion ends up being personal and in times of conflict, teamwork has a tendency of going out the door if the individual passionately believes they are right. It is important to find the right balance of passion so that individuals will work effectively as a team.
Evolution of Business Strategies
After getting the HSSV out of its revenue crisis and developing a stronger management team, Ms. Benninger began to recognize the inherent clash between animal control and performing humane work. The objective of animal control is to keep people safe from animals., while humane work is to protect animals. As such, the decided to focus on their mission and drop the animal control portion. Even though 60% of their revenue came from animal control contracts, the inherent conflict had the opportunity of alienating all parties and destroying the momentum that was being developed. The most significant problem they decided to focus on was the community save rate - the number of animals that get adopted out of shelters. The average save rate is between 30% and 68% in Santa Clara county, yet Ms. Benninger was able to get that number to 90% in HSSV. Because they have been so successful, they have also been able to engage in something called regional rescue, which allows the HSSV to adopt animals from other shelters that would normally be euthanized. Sometimes these animals have medical or behavioral problems that the original shelter isn’t willing to treat, so it works out well that the HSSV adopts these animals.
Future Role
In the coming years, Ms. Benninger would like to attack the core issue of what drives animals to shelters. She identifies the core issue as a lack of commitment to pets, and feels that being involved in a community that enhances the human-animal bond would do wonders to solving this problem. As such, the HSSV has made the decision that current facility does not fit in with this new dynamic of providing a community and is intending to build a new facility that acts as an animal community center. it is a combination of the traditional shelter services of adoption, education and spay/neuter, but will also develop a community outreach program that includes daycare, boarding, grooming, dog parks, a pet store, and a cafe. The idea is to allow like minded individuals to come together and develop a social network full of opportunities for both the owner and their pet. They will have a place to come and essentially develop a sense of family, and it is this vision that Ms. Benninger perceives as the solution to commitment issues. From a business perspective this will also allow the center to diversify with alternative revenue streams.
Unconventional Solution to Feral Cat Issue
Eighty percent of all euthanasia occurs to cats. The vast majority of those that are homeless, and it is estimated that there are 125,000 homeless in Santa Clara county. Because cats are more elusive than dogs, they are treated somewhat as second class citizens and thus the problem isn’t perceived to be as serious as it really is. The traditional approach that was to catch cats off the street and then euthanize them. The problem with this is that they breed faster than can be euthanized. The catch neuter release program instead works allow the colony to decline because the same number of cats are on the street but they are no longer able to reproduce. She knew that donors don’t want to pay $25-40 per cat to spay them, so she had to go to the city for support. In order to get the city to pay for this idea, though, Ms. Benninger had to phrase the cost in terms of what the city was used to. As such, she pointed out that to catch and euthanize a cat, it costs approximately $200 (which the government was already paying), yet it would only cost $25-40 to spay them. Let’s just say the city went for the idea.
Perception of Value
Originally, the HSSV charged $25 to adopt a cat and $40 for a dog. Five years after she took over, the California Veterinary Association did a study that showed people who paid less for adoption saw the animal as worth less and were more willing to give them up. Ms. Benninger then decided to raise prices to increase the perception of value because she felt that these individuals were more likely to keep their adopted pet. At the same time, she decided to end the message that cats aren’t as important as dogs. After the first year of the change to $110 for each, there was a 10% increase in adoptions and a 50% decrease in returns. To me, this is an amazing insight and I’m very impressed that it actually worked.
How to Get Involved
The average stay of an animal is two weeks to seven months before they get a home. Therefore, to keep the animals in good condition they need volunteers that simply come and love the animals to keep them in good social condition. Sure, they need people to clean kennels, work events, stuff envelopes, do analytical studies, etc., but the easiest way to get involved is as a socializer. One example of a study that is being performed, though, is determining who is leaving without a pet and why? Also, as a final plug, Ms. Benninger says that no contribution is too small (time and money), and she absolutely loves it when little old ladies send them $5.
Audience question: How do you manage your own passion and other people’s passion?
I have to agree with Ms. Benninger when she immediately responded that it is a very difficult question to answer. She says that we should start with ourselves and be willing to strike a healthy balance. From there, we can work to develop a strong team with everyone willing to be a team player versus an extremely passionate individual. She worries about people who absolutely love animals and are willing to state that they think they are much better than people. Essentially, what she really needs is strong people-people. Also, because it is easy to work 15 hours a day, 7 days a week, you have to take care of one another and be able to tell people when to go home.
Conclusion
Although Ms. Benninger may seem at first glance nothing like an entrepreneur, after listening to her talk and reading her accomplishments, it’s easy to see that she is a perfect example of the entrepreneurial spirit. She has a knack for generating concrete results at the same time as passionately pursuing a social mission. Her strong analytical capabilities and amazing strategic thinking provides her with the assets to creating lasting change that adds value to the world.
The speakers for today’s talk were interesting, although Jesse Fink was the only one talking while Steve Blank asked the questions (I would have preferred that both talk). The two have a long history together and actually met on family vacations to the Galapagos. The discussion mostly focused on green investments as well as utilizing all financial markets (other than VCs) to create change. You can listen to the clip here or catch the notes below.
Jesse Fink Background
Mr. Fink is the cofounder of MissionPoint Capital and Priceline, and acts as President and CEO of Marshall Street Management (MSM). In 2004, MSM established MSM Capital Partners to manage its investments in clean technology and the environmental finance sector. He acted as COO of Walker Digital Inc. and Priceline.com, and previously worked at Georgia-Pacific, Citicorp, and CUC International. He received his B.S. in Resource Management from New York’s College of Environmental Science and Forestry and then received an MBA in Business & Marketing at Syracuse University’s School of Management.
Steve Blank Background
Mr. Blank is a retired serial entrepreneur with over 28 years of experience in the high technology sector. He has either founded or participated in eight Silicon Valley startups since 1978. They include E.piphany, Zilog, MIPS Computers (which Stanford President John Hennesy did research for), a workstation company, a supercomputer firm, a computer peripheral supplier, a military intelligence systems suplier (ESL) and a video game company. He is currently on the board of Macrovision, CafePress.com, IMVU, and Audobon National as well as being part of the California Coastal Commission. Currently Steve also teaches at UC Berkeley’s Haas Business School and at Columbia Business School.
MissionPoint Capital
The current focus of MissionPoint Capital is a transition to a low carbon economy. It focuses on investments in clean energy and environmental finance, as highlighted above, and his investment portfolio includes or has included solar, wind, and other clean technology investments. Mr. Fink pointed out that the East coast is focusing its investments in things like trading carbon credits (environmental finance) while the West coast is focusing on innovations in clean energy. What he would like to see is a marriage of this innovation and commercialization through the financial markets, and is investing in organizations he feels fit in the overlap. An example he gave is a wind turbine servicing company which is both a technology business and a service business.
Platform Companies
The purpose of the firm is to utilize very diverse individuals such as technology, policy, and market experts along with investors to thoroughly research an issue and answer the questions, “What is the problem?” and “How are we going to solve it?” Because there is a huge focus on research, they try to conceive of something called a platform company - an organization that is well positioned for growth. Sometimes these businesses don’t exist, sometimes they have to merge two or more organizations to form a platform company, but either way they try to identify and recognize such organizations
Engaging Market Mechanisms
As I’ve talked about earlier and was mentioned by Mr. Fink, many investors in Silicon Valley are engaged with green technology and startups. Other markets such as bonds, equity, and real estate, though, are not. One thing Mr. Fink says would be great to figure out is how each asset can be utilized to achieve the end goal of solving the HUGE issues we face today. As he sees it, nonprofits help push policy and solutions, markets create said solutions, and his role is to provide capital to create those solutions. Venture capital only solves a piece of the puzzle (creating innovations) and commercialization is providing the billions of dollars necessary to market these ideas. A slight problem also is that the payback is not as large as what some ventures are looking for, and utilizing other markets would provide a better fit in other scenarios.
Public Policy is Important Too
Mr. Fink is also engaged with studying policy making and decisions, primarily because he wants to influence said policy. Even though capital markets are amazing and there is still a lot of potential in that area, Mr. Fink recognizes it will only go so far. With policy, you can influence the flow of capital, and a simple example can be seen with corn based ethanol. It was heavily subsidized by the government and is horrible in the respect that there is a net loss of energy and studies are proving that it is equally bad for the environment. On the flip side, though, understanding how policy influences capital flow is empowering because creating good policy will help capital flow into new markets more effectively.
Entrepreneurs: Born or Made?
This question was posed in one of my previous posts, which can be found here, and the only reason I want to discuss it is because he gave the exact opposite response of my previous article. Mr. Fink decided to argue that entrepreneurs are born, rather than made, and he feels this is true because there are certain traits present at a young age that relate to entrepreneurship. The examples he gives are from his childhood and include a paper route and the constant generation of new ideas. While I personally did not have a paper route, I did start a candy business on the school bus for awhile and made some money from that. Overall, though, I’m not sure if I can believe the idea that entrepreneurs are only born, because I would definitely consider myself a made entrepreneur even though I did start the candy business.
Marriage and Meaning
Speaking of marriage, Mr. Fink met his wife in college and has since realized that people are more fulfilled doing things that are meaningful to them. In the past, nonprofits and for profits were battling, but have also realized that when they could come together and work synergistically they can create meaningful solutions to diverse problems. For example, in order for a marriage to work effectively both the husband and wife need to communicate successfully. In the business realm, nonprofits are beginning to hire business people so the two can understand each other and communicate more effectively.
The Difference Between Public and Private Funding
The private sector is great at jump-starting initiatives and testing the waters, and then the large-scale investments come from the public to test whether or not an initiative scales well. Currently, though, there is a shortage of public funds in the energy sector and as such investments are lacking. One great example currently happening is in the realm of solar, and even though I haven’t done a lot of personal research, I have a strong gut feeling that there is going to be an even larger amount of innovation and activity in this one area in the coming decades.
Audience Question: How did ethanol get where it is if it’s so bad?
When ethanol legislation was being pushed in congress, people weren’t focusing on the environmental side, but rather the energy independence aspect. At the time, people weren’t standing up for environmental impact, but since then there have been a number of people and groups talking about the negative ramifications of corn based ethanol. Another factor influencing the decision was the belief that even if it started out bad, it would eventually lead to cellulosic ethanol and other biofuels which are arguably much better. Essentially, corn based ethanol would start the activity and the hope was that it would lead to cellulosic ethanol.
Audience Question: What is Cap and Trade and how does it work?
The idea of setting up a cap and trade with carbon dioxide came from a successful implementation of a similar system for sulfur dioxide and other gases. The idea is to put a cap on the total number of emissions that can be made. Each company is allocated a certain number of credits, and if they invest in improvements that reduce their credit needs, they can then sell those credits to other businesses that haven’t successfully innovated. Such a system forces nearly everyone to innovate and make energy usage more efficient. The system is being successfully implemented with the Kyoto Protocol, and the question for the United States isn’t if but when.
Audience Question: Are there problems with combining nonprofits and for profits?
With nonprofits that have large endowments, they have the capability of making investments everywhere. Mr. Fink points out that there is so much money locked up in endowments that it should rather be released and directed towards large scale problems that are consistent with the programs that they support. One of the problems though is that people are still stuck with the idea of simply writing a check to show your support and forgetting about it. Instead, Mr. Fink wants us to consider the idea of investing in a nonprofit. In the example of nature conservancy, what if you could own a piece of land that is being protected by the organization you are supporting? An important question, and even though Mr. Fink is interested in the answer, he made a specific point of stating that he is not doing nonprofit stuff and feels that solutions to problems need to come from the commercial and investment sectors.
Audience Question: What’s the relationship between big utilities and small funded companies?
In the case of the big utilities, they are being forced to buy renewable energy sources. They are beginning to work with independent operators to find sources of renewable power, and are becoming accepting of this position because it solves demand needs. One point Mr. Fink made that I especially agree with is the idea of decentralized power and that people creating their own power is great. While the major utilities could see a conflict of interest in this model, it is much like the internet in the respect that it is necessary for a stable and successful network of energy.
Building Momentum in Green Investing
Early investors in the realm of green investing were not return focused but rather thought about double bottom line or triple bottom line investing (you can read my post on TBL economics here). They were not your mainstream investors, and didn’t care if they were great investments. What mainstream investors have realized is that some of these investments offer a great return, which in turn results in more capital, investors, entrepreneurs, and everything else involved. Essentially, we can fuel the economy with green collar workers. There will be a lot of jobs, careers, and wealth created in this field, and that can’t be easily outsources. A simple example to illustrate this point is that you can’t outsource the installation of solar panels. In fact, Mr. Fink references Van Jones (of whom I talked about in this post) and his point that everything can and potentially will be created in the community. Another final comment is that Mr. Fink feels that the realm of energy efficiency is vastly underserved and underinvested, and as such, has huge potential.
Conclusion and Final Lesson
Overall, the talk was very informative on different realms that investors like Mr. Fink are involved with. Even though there was a lot of information and statistics thrown around in this talk, I feel it all boils down to finding the best fit in the market for the ideas you have and the issues you want to solve. Even though VC money is great and cherished in Silicon Valley, there are a number of scenarios and circumstances in which different mechanisms would be more efficient and effective. Understanding and appreciating this point could be key to your future startup.