VC partner to start-up CEO-Gamekeeper turned poacher

Gamekeeper turned poacher

I read this article on a recruitment website I frequent...more so of late as redundancy looms...it caught my eye because I know the guy who had written it Mike Zimmerman, he was a contact I had developed in Australia as part of my "find a job in OZ" campaine, I did have a few interviews even offered a job ( www.digislide.com.au), but that is another story. I digress, Mike was a partner for technology venture partners (www.TVP.com.au) who are an austrailian VC that invests in ICM start ups (gamekeeper) who has started (poacher) his own company BuildingIQ (www.buildingIQ.COM).

In the article he reflects on the change andMike has some salient points to make on being a CEO of a start-up.

From VC partner to start-up CEO - a different view

By Mike Zimmerman

Ex TVP Partner Mike Zimmerman contemplates the view from the other side post his latest transition to CEO of start-up BuildingIQ.

How life has changed.

Late in 2008, I left my position as a partner at Technology Venture Partners, one of a very few technology venture capital firms in Australia. My time at TVP had been both enjoyable and challenging, as I spent almost 8 years investing in Australian start ups trying to make it big overseas. I learned a great deal from my partners, and even more from the experiences of sitting on boards and working closely with a number of entrepreneurs as they went through the ups and downs of their early stage companies.

I’m now on the “other” side. In October 2009, I started a software company called BuildingIQ which helps reduce energy consumption in commercial buildings. I’m the CEO and have a small but very capable team of 4 people working in operations and engineering. The foundation of our technology is based on work done by scientists at CSIRO’s energy research centre, who still actively collaborate with us. To get the company off the ground, I worked closely with Exto Partners, a small investment firm with a lot of experience in early stage commercialisation. I’ve raised a small amount of capital and we’ve been fortunate to be generating revenue almost since the day we launched.

As I reflect on what it’s been like to have moved across the table from investor to entrepreneur, the obvious things to flag are the differences. It’s very different, to be sure, but how specifically? Here are some of the bigger things:

1. Details matter: as an investor, I tended to focus on the big picture – was the investee company going after the right market opportunity, did they have the right people on the team, would they hit their numbers? As an entrepreneur, these things still matter, but they only happen if you can deliver on the details that make it so. “Going after the right market opportunity” requires you to spend lots of time with customers and others in the market, read and learn everything you can about your competitors, and deliver the right product with the right pricing and distribution strategy at the right time. Much easier said than done. “The right people” means writing a good job spec, talking to everyone you know for references, and interviewing then reference checking furiously. “Hitting your numbers” means generating and following up leads, making pitches, negotiating and closing contracts, installing product and then launching with customers without overspending. Lots of little steps to get to the big ones.

2. Going deep: Before I left TVP, my portfolio companies were in sectors as wide ranging as optical networking, mobile social media, internet fraud and voIP software. By definition Australia as an investment market is very wide and not very deep, so I was never focused very narrowly or going become an expert in any single field. Now as an entrepreneur, I need to be an evangelist for our sector as well as our specific company’s offering. I also am selling to people with 20-30 years experience in a sector, and trying to be convincing about why our stuff is as great as sliced bread and can’t be gotten anywhere else. In short, I have to be an expert in my field to be successful.

3. Ability to make it happen: Early in my career I had a great few years consulting with Bain & Company. Ultimately I left the sector because I couldn’t handle working up the strategy and recommendations but not being responsible for delivering results. I then got a taste of execution in a start up in Silicon Valley for 4-5 years during the web 1.0 days. As a VC you’re closer to the grindstone than in consulting, but it’s still not the same. You can be involved in strategy decisions, in hiring and in funding, but there’s a lot you’re not involved in, and you’re certainly not on the line for delivering. As the CEO, the buck stops with you, and that means you have to do anything that needs to be done, from ordering the business cards to closing sales to keep the door open.

So there are lots of differences, but I still find myself very thankful for my time as a venture capitalist. It’s helped to remind me of a few things I think are critical in a company at early stages. These include:

1. People, people, people: Being an investor and board member, I saw time and time again how important it was to have the right people involved in a company, and how costly it was when someone wasn’t a good fit, especially if they stayed around too long. So I’m trying now to be very thoughtful and picky about people, and encouraging my execs to do the same. So far I feel we’ve done a great job and I can already see the benefits even though it is early days.

2. Have a board and leverage it: Even though we’re still a very young company, we have an active board of 3 directors, with formal meetings and papers. As an investor, I always felt that there was benefit -- even for an early stage company -- to stepping back from the day to day and reflecting on progress, raising big issues and making strategic decisions on a regular basis. Moreover, I’ve formed an advisory board with people who can be very helpful on specific things but are not possible or practical to have working with us full time.

3. Alignment with investors: As a VC, I don’t think I spent enough time with my CEOs understanding what their motivations and goals were, and then being honest about whether those goals fit with what we as investors needed. Poor alignment between founders and management can really screw up a company and usually becomes most evident at the critical junctures in the company’s life: fundraisings and exit. One thing Exto and I did – and this was Exto’s idea – was draft up a letter agreeing how the company would be run, our initial thoughts on strategy, fundraising and exit and what would happen if we ran into conflict. It forced us to get everything out upfront, and ensure there was alignment from day one. I would recommend this approach to anyone starting a company with co-founder or taking on investors.

So life has changed, definitely. I’m having a great time as an entrepreneur and my world is very different. But having spent a number of years working as an investor has been invaluable and will serve me well in my start up. Next up: retirement!

NPI are you happy with the introduction off new products in your company

This topic is an interesting one from a personal point if view, I have worked with start up companies for a while now, and I am amazed at the idea generation that happens when you get a group of "geeks"/ techie founders together in a new company, the sad thing is that only a fraction hit the market and make a good ROI. There are many reasons for that, some of which are included in this article, if this process is not running effectively in your business then you will have major problems cropping up. There is this critical balance point in an early stage company of lack of resource and stretching the technology road map, it all depends on the focus of the founders and investors how it develops, is it a quick in and out make a buck, or to build a long term company, my thoughts are take the pain up front and have a robust NPI strategy( like my patented NGPM strategy) and have your cake and eat it later.


www.mckinseyquarterly.com


The path to successful new products
Businesses with the best product-development track records stand apart from their less-successful peers in three crucial ways.

JANUARY 2010 • Mike Gordon, Chris Musso, Eric Rebentisch, and Nisheeth Gupta


Is your company finding it hard to develop new products? If so, you might try learning from the masters.

We found—after surveying more than 300 employees at 28 companies across North America and Europe—that the businesses with the best product-development track records do three things better than their less-successful peers: They create a clear sense of project goals early on, they nurture a strong project culture in their workplace, and they maintain close contact with customers throughout a project's duration.

The teams in our study that embraced these tactics were 17 times as likely as the laggards to have projects come in on time, five times as likely to be on budget, and twice as likely to meet their company's return-on-investment targets.

While we focused on companies in the automotive, high-tech, and medical-device industries, we believe that product makers of all stripes could benefit from our work.

Here is a closer look at what we found:
Keep it focused

Whenever project requirements were clearly defined and communicated to teams before kickoff, the project had a greater chance of success.

In our survey, 70 percent of the people working on high-performing projects—those that ranked in the top quarter of a performance index linking best practices to outcomes—said they had a clear view of the project's scope from the beginning, compared with just one-third of poor performers. We found that not thinking through a project's scope early on—say an appliance maker asks developers to design a new cooking range in the four-burner category but then later expands the project to include ranges with six burners—can create delays.

The teams with a clear understanding of project requirements appeared better able to make trade-offs between product performance and things like cost, time to market, and project risk. Only 19 percent of poor performers said they had the necessary information to make those decisions.

Top performers also focused more intensely than low performers on staffing projects with the right people: 47 percent of the former researched employees' skill sets before the project kicked off to ensure the project team was well rounded. None of the low performers did.
Nurture a project culture

The top-performing companies in our survey also nurtured a strong project culture by making product development a priority. They made more of an effort than the laggards—39 percent versus 12 percent—to minimize staffing disruptions due to external demands and to staff projects adequately. When people with critical skills become overburdened, they often decide on their own which of their many projects is the most important, a decision best made at the management level.

Two-thirds of top performers compared with 39 percent of poor performers said team members focused more on the success of the project than on satisfying the needs of their job function when those interests competed. They also were more likely than the laggards—44 percent versus 17 percent—to give team leaders responsibility for reviewing team members' job performances.

Three years ago, a North American medical-device maker in our study began an effort to stem market-share losses. Recognizing that one of the company's underlying problems was that project culture was weak, the device maker gave senior team leaders ownership of projects from beginning to end, as well as authority over staffing, personnel reviews and, in some cases, profit-and-loss responsibility. The new structure encouraged leaders to make better decisions, resolve conflicts quickly and reduce delays.
Talk to the customer

The successful innovators in our study kept in close contact with customers throughout the development process. More than 80 percent of the top performers said they periodically tested and validated customer preferences during the development process, compared with just 43 percent of bottom performers. They were also twice as likely as the laggards to research what, exactly, customers wanted. That made them better able to identify and fix design concerns early on, minimizing project delays.

The medical-device maker we mentioned created a matrix to identify and weigh the importance of various product features to different customer segments. It then tested trade-offs between product performance and things like price by bringing in surgeons and other medical specialists to use the product in simulated clinical settings. That allowed the team to fine-tune the product well before launch.

The result? Three years after starting its effort to shore up market share, employee satisfaction with product development increased, time to market improved for all projects—up to 40 percent in some cases— and overall gross margin rose six percentage points.