Pitching the OC – An Evening of Entrepreneurial Spirit in Irvine

A sketchy economy has one very positive benefit – it drives creativity and innovation. Thursday evening (28 May 2009) the Tech Cost Venture Network/TCVN met in Irvine, once again opening the stage to a new crop of entrepreneur candidates, and provided a great seminar on the topic of “Raising Money – Friends, Family, and other Early Capital Sources.”

In the fast pitch segment, 10 companies were given 30 seconds to impress a panel of 3 venture capital professionals from the Tech Coast Angels . The “fast pitch” guidelines are pretty simple, you have 30 seconds to present:

• Name, title, and company name
• Market pain or need you will satisfy
• Your solution
• Size of your market
• How you plan to make money
• Why you believe you and your team can execute
• What you are seeking (funding, staffing support, or introductions)

Last night the audience was introduced to several great ideas, including new ideas for coffee making, solar power, online shopping for executives, mobile and PDA phone applications, and a new vegan restaurant. The VC panel selected three finalists, and drilled further into their business plan, asking for clarification on pitch elements, as well as further exploring their business plan and ideas. The winner, the vegan restauranteur, won $100 and some one on one time with the VCs.

The fast pitch process may seem brutal, as it is always tough to pitch an idea in front of a large audience of people you don’t know. However it is a good indication of how your product or pitch will be received when bringing your product to market, or going for formal funding.

Nothing tests your product or idea better than public opinion, and the TCVN community is a low threat, friendly forum. Most of the audience are either entrepreneurs, or soon to be entrepreneurs, and are inclined to be more nurturing to their peers, rather than simply mocking an idea or presentation that did not meet their vision or expectation. The TCVN has a “mission of education,” measured by their ability to help bring entrepreneurs together with investors and create successful companies.

The second half of the night brought a distinguished panel of successful entrepreneurs together, discussing the topic of finding funding from friends and family. Thursday night brought

• Brent Collins CEO, AccioNet, LLC
• Jeff Greenberg CEO, Tech Coast Works
• Tim Case, Business Banking Specialist, Wells Fargo
• Mike Fontana, CEO, OnePitch, Inc.

together to discuss sources of early stage funding to kick a new company or idea off the ground.

Some sound bites from last night’s panel discussion include:

Key aspects in preparing for friends and family funding

• You must have a process that learns. Each time you talk with a friend, family member, mentor, or advisor, ensure you take good notes and incoroporate those ideas into your pitch and plan.
• Refine your Unique Selling Point/USP
• Even engineers must have a good grip on the business model of their idea. Nobody wants to fund a great idea that cannot be sold.
• Startups should avoid opulence in building out offices – direct your limited capital on business development.
• Have a great story or pitch on how your idea or product will make money and ensure funding will not be wasted.

How do banks look at investments and funding?

• The bank does not really care about your idea or product.
• The bank is concerned with recovering their loan or investment as quickly as possible.
• Small Business Administration loans are slightly different, requiring additional visibility into intellectual property and product valuation.

Who to approach for funding

• Find a source who understands your business
• Find a source with whom you can maintain a working dialog

Key elements of an investment – from the investor’s viewpoint

• Does your product or idea include a recurring revenue model?
• Is this a nice to have product, or a must have product?
• Can you scale up with a minimal additional investment?
• Is there an exit to the investment?

Building the management team

• Look for diversity
• Reject “yes” people
• Select the best quality people
• Ensure you have strong legal representation from the beginning

Important items to understand during the funding process

• You must have a real need for the money – this is not cash for the bank account, but rather funding to meet business plan objectives
• “No” answers can bring you a lot of good information on business plan or presentation shortfalls
• You must be able to simplify the technical aspects of your plan – not everybody is an expert in your field
• If your plan gets hung up in technical details, you will lose your chance for funding
• Keep your business plan in binary format – you will need to adapt, modify, and change
• Everybody will want to know what is in it for them – everybody is selfish with their money

A final bit of advice from the panel. The more people you know, the easier it is to get funding. Professional networking is an essential part of every new venture. Don’t let your idea die because you cannot find people to pitch or go to for advice.

The TCVN is a great example of how the southern California business community comes together to help fellow business people bring innovation and energy to the investment community. A great group, where even the most seasoned business person will find a useful professional networking and learning experience.

John Savageau, Long Beach

UnCommon Cloud Training at Interop Las Vegas

Organizers of the Cloud Camp have developed a great venue for training.

Objective – bring the masses quickly up to speed on cloud computing. Oh yes, and do it in an interesting, painless venue that not only informs, but also inspires and motivates attendees to become viral cloud evangelists. Several hundred people showed up for the Cloud Camp at Interop Las Vegas, showing not only intense interest in cloud computing, but also interest in a creative training environment organized locally by Dave Nielsen and Sam Charrington.

The cloud camp has a very unique structure:

1. Kick off the meeting with 5 minute “lightning talks” by a group of industry experts
   • Arvid Fossen of AServer/Daas.com
   • Dan Butzer of Sun Cloud
   • Lew Moorman of Rackspace/Mosso
   • David Chou of Microsoft Azure
   • Tara Hunt of Intuit Partner Platform
   • Jesse Robbins of Opscode
2. Move on to the next phase, which is to ask 5 volunteers from the audience who claim they are cloud experts or cloud savvy to serve on a panel
3. Ask the audience to come up with 10 questions or topics related to cloud computing they would like explained in detail
4. Let the panel take turns answering the questions
5. If the audience is not satisfied with the answer, set aside the topic for later discussion and development
6. Once the 10 topics have been exhausted, break up the audience into several smaller groups with the “tabled topics” as a focus for further discussion
   • Add an industry expert to each focus group
   • Allow audience members to move between groups as their question is either satisfied or they want to move to a new topic
7. Walk away conversant in cloud computing

The response to this venue was great, and a very positive testament to the training programs within Interop. This training was free to all conference attendees, and was probably worth the trip to Las Vegas by itself.

There are additional Cloud Camps scheduled around the world, including several in the USA (Washington DC, San Francisco, Columbus/OH, Portland).

Congratulations to the Interop, Executive Cloud Summit, and Cloud Camp team for a very successful and valuable event.

SoCal Companies Shine at Interop Las Vegas

Interop Las Vega can be boiled down to a single topic – cloud computing. Lots of variations such as cloud security, cloud provisioning, cloud storage, cloud everything.

Monday kicked off with the Enterprise Cloud Summit, which attracted nearly 300 attendees. The speaker lineup was pretty impressive, with the focus on introducing the cloud concept and opportunity to business and enterprise users. The conference also sponsored “Cloud Camp,” which was a highly interactive training seminar for cloud students which ran well into the night.

Some very good speeches and presentations on the topic. Two Southern California companies kept coming up in the presentations and discussions as being both thought leaders, as well as powerful factors within the cloud industry.

Rightscale (Santa Barbara), which produces provisioning software for companies such as Amazon, Eucalyptus, GoGRID, and many others drew a lot of positive comments. Thorsten von Eicken, CEO of Rightscale, gave a very good presentation on the topic of deploying and managing multi-component clouds in virtual data centers.

This morning Thorsten also sat on a panel at the cloud summit on the topics of cloud billing models. He commented “It’s all about visibility and control. Provided you have both, you can make the decisions and budget more or less as normal. You actually have more control with cloud computing.”

3tera, based in Aliso Viejo, was mentioned in nearly all major presentations during the Enterprise Cloud Summit as a leader in developing cloud operating systems (Infrastructure as a Service/IaaS and Platform as a Service/PaaS), as well as a high end provisioning service. Walking past the 3tera kiosk on the conference floor was simply impossible, as the kiosk was constantly surrounded by large groups of people wanting to learn more about their products.

Eucalyptus, another Santa Barbara-based company, also received several positive mentions during the discussions, including highlight in Peter Laird’s presentation on the “Taxonomy of Could Offerings” as a strong player in cloud infrastructure services.

Southern California is quickly gaining recognition as a factor in development of cloud computing. We should be proud of our local companies, and reach out to them as we continue to step closer to clouds as a next logical step in our information and communications technology planning.

Fueling the Entrepreneurial Spirit with OCTANe in Irvine

Engineers are a funny breed. We spend much of our lives being skeptical, proving or disproving ideas and theories. At the same time we crave new ideas and technologies.

Those engineers who are creative and develop new ideas often lack skills needed to turn visions into useful products. Enter OCTANe, fuel for the entrepreneurial spirit in Orange County and Southern California. OCTANe’s goal is to fuel “innovation development” in Orange County and Southern California by connecting people, capital and technology. OCTANe accelerates entrepreneurs and company development for Orange County’s information technology and biomedical industries.

On May 14^th I attended an OCTANe’s weekly event entitled “Entrepreneurial traps – Tips for developing companies. What the big guys know but won’t tell you.” The speaker was Mr. Rich Henson, co-founder of Source Scientific, and Irvine-based biotech product development company.

Having been in the tech industry for much of the past 35 years, I was a bit skeptical that anything new or interesting would come of the event. Maybe I could collect a few business cards, and with a bit of luck expand my personal and professional network a bit deeper into the “OC.”

Surprise, Mr. Henson’s presentation was fascinating, relevant, and kept the audience focused for the entire evening. Using the entrepreneurial playbook 101 we all studied in university, Henson took the ideas, added very relevant examples and stories, and ensured everybody in the audience walked away with at least a few new thoughts on how they could and should get off the fence and innovate.

Disruptive Technologies. While hitting most of the Entrepreneurial 101 outline, a couple topics were particularly notable to me. His breakdown of sustainable technologies vs. disruptive technologies was great. Starting with the example of digital photography, and how it has nearly wiped out the personal camera and film industry, he went on to show many additional examples of disruptive technologies and their impact on entire industries. The final lesson was that we should consider how to position a disruptive technology to either make an existing product obsolete, or to force a large incumbent to respond to your product by changing or dismantling their core product. Other examples include VoIP (voice over Internet protocol), alternative power generation, shipping containers, and others.

Building the “A” Team. This topic dealt with an entrepreneur building his management and product development team. While this may be a common idea, it was the first time I had heard the concept of “A” people always hire “A” people. “B” people on the other hand nearly always hire “C” or “D” people. The “A” will nearly always win, if they are focused on a common goal or objective. The “A” team leader should be smart enough to embrace other “A” team member ideas, visions, and criticisms, and the result should be the best possible product. Very true.

Entering Mature Markets. You do not always have to produce an earth-shattering, innovative and visionary product. You can introduce new products into mature markets, as long as you are not afraid to go directly against a mature and stronger incumbent. Example, Apple’s iPhone is a new product entering a very old telephone industry. And it is doing just fine.

Don’t Try to Recover All Startup Costs with Your First Product Launch. A prototype or first run on a product will always have an economy of scale that is unfavorable. You should not plan to raise process to a level that will make your product unattractive to a potential target market. Make your money after your product gets some traction and creates a market awareness and strong industry desire to use your product.

Create market Awareness and Demand. You need to understand the difference between push and pull marketing. Push marketing is very labor and energy intensive. Pull marketing brings higher market velocity and demand. To effectively benefit from pull marketing you need to accomplish two things:

• Get your public evangelist. This is often a thought leader in a target industry who commands immediate respect within the community. If you can win the thought leader’s favor, the rest of the community will soon follow.
• Don’t sell your technology, sell the vision. Hensen’s outstanding example was “in the factory we make cosmetics.” “In the stores we sell hope.”

Many more topics, many more great ideas. Not a person left the room, and we were reluctant to let him off the stage, even as we passed the allotted time for the meeting.

In summary, Hensen left us with a couple of positive, motivating thoughts. Nothing we’d never heard before, but after the seminar the words took on a much larger context and meaning.

        “There is never a bad time to be an entrepreneur”

        ”Never let anybody steal your dreams”

The skeptic in me took the night off, and I will be spending a lot of time for the next few days codifying my dreams

John Savageau, Long Beach, http://www.linkedin.com/in/johnsavageau

San Diego Tops Southern California in BizJournals’ Tech Ranking

BizJournals posted their 2009 Top 100 Tech City Center listing on Monday.  Three SoCal locations ranked within the top 25 tech center cities, including San Diego (6), Los Angeles (12), and Oxnard/Thousand Oaks (17).

San Jose topped the list, with the San Francisco/Oakland area coming in 4th.

BizJournals’ methodology for ranking tech centers looks at a combination of factors, including:

1. Number of high tech companies (definition)
   
2. Number of high tech jobs
   
3. Jobs per high tech company
   
4. High-tech jobs/1000 private sector jobs
   
5. High-tech companies per 1000 private sector companies
   
6. Percentage in high-tech workforce of adults 25 and older with graduate degrees
   

The ranking methodology classifies high-tech jobs being within a list of “fourteen occupations classified as Level I, encompassing the aerospace, computer, control-instruments, pharmaceutical and semiconductor industries and scientific research-and-development services.”

Of the top 25 cities, there are a total of 2,530,145 persons listed as having Level I high-tech jobs.  Of that number nearly 18% of the high tech jobs are located within Southern California.  While the San Jose/San Francisco area has a higher city ranking, SoCal has a much higher number of actual jobs identified as high-tech. 

Smaller towns such as Santa Barbara and Irvine were not included in the survey.  Had they been included I am sure we would have a different lineup, as both cities clearly have a high density of tech companies.  It would also be very interesting to see a comparison of counties, with the same argument showing Orange and San Diego counties likely having a much better status than other locations around the United States.

The story is not so good for other California cities, such as Bakersfield (89), Fresno (94), Modesto (98), and Stockton (100).  These cities actually rank below other troubled cities such as El Paso, Little Rock, and Cleveland in the high-tech job index.  This is not too surprising as much of California is focused on agriculture, and would not be expected to rank near the top of a high-tech job listing.

Unfortunately I could not find a similar ranking for previous years, and could not easily determine the movement of San Diego and the LA/Ventura areas over time.  We will do this in the future.

As a frequent traveler along the 101/405/5 corridor between Santa Barbara and San Diego, I am always encouraged by the number of powerful companies listed on marquees along the route.  This is a great time for the tech industry Southern California, and we will continue to lead the nation in technologies such as cloud computing (3tera, Rightscale, Eucalyptus, etc) and biotech.

We look forward to seeing our progress as a community in next year’s review.

John Savageau, Long Beach, California  http://www.linkedin.com/in/johnsavageau