Friday, April 30, 2010

Notes from Nantucket Conference: Building Big Companies

(Photo of Bob Metcalfe skyping with Jason Calacanis, CEO of Mahalo at Nantucket Conference 2010.)

I attended a session at the Nantucket Conference on Building Big Companies lead by Avid Technology Founder Bill Warner, Flybridge Ventures Partner Michael Greeley, Communispace CEO Diane Hessan, and iRobot CEO Colin Angle. Bill described the goal of the session as being to change beliefs and actions to help grow companies to scale in the region. He described a taxonomy of "Singles" being companies with revenue, "Doubles" being companies with under $10M, "Tripples" for under $100M, "Home Runs" for market cap of under $1B, "Grand Slams" for market cap under $10B, and "Walk off Grand Slam" for under $100B.

Bill asked the audience of about 30 tech leaders and investors to describe in a couple words how we can accomplish this goal. Here are the responses (mostly just raw notes): galvanize angels, role models to give back, more risk taking, stop thinking about small exits, feeder system for ideas, more mentors for wannabe entrepreneurs, more professional seed investors, connect colleges and talent, unlock IP at universities (like MIT has done), invest in consumer companies, celebrate buying (rather than selling) companies (ie Kayak's acquisition of CA-based company), help young women take entrepreneur leap earlier in life, inspire and galvanize younger generation, respect (rather than patronize) digital natives (aka young generation), richer counter culture outside business (ie Fort Point Channel), fund really big ideas, affordable housing, how to "print" buildings, promote successes, make it cooler to be an entrepreneur in MA, cooler to join start-ups, more collaboration amongst start-ups, less of a "club" and more inclusive of early, Boston-based "Lunch 2.0", business plan contest to connect Media Lab and non-MIT students, more investing outside 128, focus on density, more access to Ray Stada, aggressive recruiting of talent from outside, diversity -- Boston is close to Europe, less analysis of MIT/Harvard people going to CA, differentiation -- what is our identity, work from our own identity, more engagement with developing world, why is healthcare underrepresented at this conference?, more focus on healthcare and biotech, more invention that crosses technologies, get universities to collaborate on mentoring program across schools, "type 2 angels" to focus on getting triples to home runs (Bill Campbell did that for Google), raise the stakes, more events like this, returns data suggests that East Coast funds seem to outperform, better exposure to how we really compare, recycling talent, investing for IPO and big company rather than for acquisition and easy exit, are we just farming short quick trees or do we want to nurture big giant Oaks?, if you take the founder (Colin) out of the company (iRobot) then you are less likely to grow the big company, founders have a vision and drive companies over time to succeed, how do we keep founders in companies, first companies are often successes.

What are we trying to accomplish? Create lots of $100M companies and sell? This may be a good economic outcome. Does the management team want to build it big despite attractive exits along the way? It is a matter of will to do it. Let’s draw road maps and help big companies take the next few steps. How can we "up the stakes" and passionate desire to get there? Do I want to be done? Is my vision achieved yet? If not, do I have the motivation and support to keep doing it? I have a vision of where I want to take it. When you reach double and triple level, you are always faced with attractive options/exits. Am I doing the right thing for the shareholders? Do I have the vision to take it to the next level?

Rational thinking is not a generator of wealth or great human achievement. Rational thinking might make you want to sell. Founders are important because they have more heart in it. Colin noted that "it would matter to my decision if I felt that MA was behind me and supported me." We are counting on you and will get you the support you need. How do we up the ante? The issue is what you do with what goes right and what you are going to do with more success, rather than with what is going to go wrong.

Why big companies? We don’t just want to churn $100M companies. Cannot be world center for innovation in [robotics] without anchor companies. Just small companies without anchor companies would be catastrophic to the ecosystem. We need big companies and need to think about growth. Just creating more small companies (without changing the mindset) will not necessarily result in any more big companies. We need global market leaders, not just big companies. What we are doing is not okay.

Bill said that what scares him is the prospect that the economy will get better and we will just become a feeder system for other regions. We're pretty good at building $100M companies. Who can mentor a $100M 10 year CEO to get to $1B? Some companies are point solutions and never be a $1B company. There are fewer $1B mentors.

Why $1B companies are important: $100M exit is not big enough to have real money to invest (as founder may only get $10M). We are not on top of a real trend right now. Need to identify the next area or really big growth and mobilize around it. If social media, then unleash to keep Facebook here. There is tons going on in healthcare. Let's aim our laser to grow big companies in these areas. What are the big things that are happening and let galvanize around it. Why do students leave. Culture is to make things to sell. We don’t believe and fund companies that will have an effect on lots of people -- Facebook, Twitter, etc. There are measurable cultural differences between MA and CA (ie non-competes). Bill is going to CA to meet with and learn from some Super Angels.

Why do we want big companies? Why does it matter? It contributes to our brand, helps generate spin off companies (already 5 mini iRobots). Though not specifically mentioned in the meeting, big companies are also important for their massive informal "alumni" networks, R&D capacities, and their ability to create more significant angel investors. In 5-10 years, what do you want to see?

Read my prior blog post, "MassTLC Issues Call to Arms for Tech Community to Create 100K new Jobs by 2020."

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