Let’s face it—when you create a concept, work to perfect it, f...Read More
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RIGBY: And it’s chronic. I have often thought, Brad, when you and I started in the early ‘80s up in Research Park, if the state had had just lowered the boom and said, “There is no class in our public schools greater than 30 kids, period. And we are going to have really competitive salaries for science and math teachers.” If they had done that in the early ‘80s, can you imagine what the talent would have been like today?
What advice do you have for new entrepreneurs?
JOHNSON: My advice would be solve a real problem for a real customer in an exceptional way, and the rest will happen. Too many people are just showing up with their idea and they don’t even know what problem they are trying to solve. They don’t even know how to target that to somebody. So do that and you are going to have a good company.
SLOVIK: If you want to learn how to swim, you throw someone in the pool and they will figure it out. They will drown or they will learn how to swim. But if you want to be an Olympic swimmer, you get a coach. I don’t know any really successful person who doesn’t say that at some point in their life they had a mentor or somebody who really gave them good advice. Entrepreneurs need to seek those people out.
BELL: Two pieces of advice. One would be to let your passion drive you in the early days. There’s a lot of people that can tell you no. There are a lot of people that tell you that it’s not going to work. If you believe it, and you are excellent, if you exude these qualities that people have talked about—being passionate, driven, smart and easy to work with—then you can be successful.
The second one is that for me, as an entrepreneur, I would absolutely 100 percent agree to get a mentor. Probably the smartest thing we ever did was get a board of directors around us that were smarter than us, better than us and could help us every step of the way.
ESBER: If you are a tech guy, get a good marketing person or product marketing person. If you are a product marketing guy, get a good tech guy. You need that balance.
How do you think crowdfunding is going to affect the entrepreneurial climate and the investing climate in Utah?
WIDLANSKY: Crowdfunding on one level is a good thing, because it will allow folks to get their idea out there—and failing fast is a good thing. I think it will also create a lot of noise. A lot of bad ideas will get funded and a lot of people will say, “What a horrible idea raising money is.” A lot of folks may get dissuaded from raising money because of bad experiences. And it will frankly probably generate a lot of lawsuits until we figure it out.
KUNZ: I have always felt that crowdfunding is going to have a negative impact on the market, both from an investor point of view and an entrepreneur point of view. I kind of like what’s happening. It is going to be a nice experiment. But I look in the angel groups that I’m attached to, and even the limited sophistication in those angels being part of formal groups, doing due diligence, understanding the entrepreneur and being able to mentor and coach them, to going to the extreme where people are going to be throwing money at the companies—that’s a disaster waiting to happen.
SLOVIK: Especially in Utah, where we have such a history of scams and scam artists, people are going to start companies and it will get funded and then they will pay themselves a million dollar salary, and they will shut down the company tomorrow.
BORGHETTI: So the Utah Division of Securities is going to be hiring after this law passes.
A lot of people underestimate the complexity of what a shareholder is, and managing shareholders. Everybody talks about execution risk—can management build it—and market risk. Will customers adopt it and will it be well received in the marketplace? Very few people who fund a deal understand what investor risk is, and it’s real. I have seen a lot of deals that have failed, not because of market risk or execution risk, but just because shareholders wanted different terms—and now you have 100 crowdsource folks, and what do you do with those guys? You have to go public sooner than you want.
PORTER: Entrepreneurs early on are anxious to get money from any source. And they don’t give a lot of thought to the number of people that they are bringing into their tent. Administratively it can be extremely difficult. My general advice is try to raise the money from as few people as possible, people who can add value not only from their pocketbook but also from their experience.
Sometimes companies have no choice but to raise from a broader group, but it brings all of these very issues—shareholder management can be extremely difficult. Not to mention that’s your first round and you may be raising more money down the line, and that just makes everything after that point more difficult.