There are some meetings that are so impactful that you never forget them, even twenty years later. And this throwaway meeting that Thomas and I had at Tellabs, a major telecommunications manufacturer, years ago definitely was one for the books.
Thomas was the most senior applications engineer in my organization, and I really enjoyed meeting customers with him. Thomas would do the heavy lifting of answering the detailed technical questions the customer might have, and then I could sit back, observe, and add in if necessary.
The thing I loved about working this way was I was free to listen…
“Hostile armies may face each other for year, striving for the victory that is decided in a single day. This being so, to remain in ignorance of the enemy’s condition, simply because one grudges the outlay of a hundred ounces of silver in honors and emoluments, is the height of inhumanity.” Chapter XIII: The Use Of Spies, from The Art of War, by Sun Tzu.
Okay, so what do spies have to with business success? The answer is everything.
If Sun Tzu were a CEO today, instead of a general 500 BC, then he’d be saying that market research (spies)…
“How long do you think it’s going to take to get funding?” Blossom asked me.
It was January, and we had just started raising money.
“My guess is we’ll be funded by June,” I said to my wife.
It turned out I was right. We were funded by June…two years later!
We started off our fundraising with a lot of momentum. We had lots of warm introductions to VCs through the various contacts I had.
A very rare thing happened after one of our first meetings. A VC actually called me to pass on the deal.
Then something even rarer…
“You look very tan,” I said to “Jason” during our Zoom update. “How was your vacation?”
“The vacation was great,” he said. “The weather was a perfect 80 degrees every day with a slight breeze off the ocean. We had a really nice time.”
“I’m guessing that may be part of the reason for item number five on your list?” I said, laughing. I have my clients write up a top five list of items they’d like to discuss during our conversations. Jason’s item number five was, “I think I’d like to sell the company in the next year.”
Successful companies usually have a way of doing things. We certainly did when I was at Maxim Integrated Products. Jack Gifford, our CEO, called it “The Maxim way.”
And our way was unbelievably successful. Every year, like a clock, revenue and profits grew at 40 percent per year. The company grew to $2 billion/year in revenue with close to 40% net margins. It was literally a cash machine.
But, and this is a big but, as we grew, our thinking became more entrenched too.
For example, we had a product evaluation process at Maxim that we called RODT (Return on…
I worked at two public companies in the same industry that had very different views on how to treat their employees.
The average time employees spent at the first company, Maxim Integrated Products, was over 10 years. The average time employees spent at the second company, Micrel, was around four years.
These were two companies that were direct competitors but had very different employee retention rates. What caused the difference? I believe there were three key reasons Maxim employees stuck around longer than Micrel employees:
Maxim had a policy of refreshing its employees’ stock options. Every year, Maxim would add…
“It’s amazing what we’ve accomplished considering we started with $80,000,” “Jason,” the founding CEO of a company I’m working with, said. “Now, we’re preparing to sell the company for a lot of money.”
“Most people don’t get to the level you’ve gotten to,” I said. “Most startups fail. And to think you bootstrapped yourself to a sale for likely over $300 million.”
Then, I paused and said, “That’s unbelievably impressive. As I said, very few companies get to your level, even with VC funding.”
Jason’s company has, after a slow start, been on a meteoric rise these past few years…
“We’re upping our plan for the year,” “James,” the CEO of a very successful startup I’m working with said to me. It was the second time he’d increased his plan in the past six months.
“Cool,” I said. “You’ve finally entered what I call ‘turn the crank’ mode. The flywheel is turning at a really good pace, so your revenue growth will get easier and easier.”
“Yes, it is,” he said. “I think revenue is going to double to over $20 million this year.”
“That’s fantastic,” I said. “How’s the team feeling?”
“They’re really pumped up,” James said.
“How much money are you going to try and raise?” I asked “Sarah.”
“I’m thinking we should raise $1.5 million this round,” Sarah said to me.
“How long will the money last?” I asked.
“I’m not sure,” Sarah said. “I’m waiting on my fractional CFO to give me the data.”
I sighed. “Okay,” I said. “Let’s see if we can come up with a reasonable guess. How much money do you think you’re going to burn, after you calculate your revenue and your expenses, each month?”
“I think it will be around $150K per month,” Sarah said.
“All right. Then…
“This is the first time we’ve ever disagreed,” I said to Gill, one of the investors in my company. I had just told him that I wanted to get a loan for my company, and Gill, much to my surprise, was against the idea.
“I know, Brett. I know,” Gill said. “My feeling is that Venture Capital is like jet fuel for a startup.
“A loan is like the exact opposite of jet fuel.
“Besides,” Gill said ominously, “Loans always come due at exactly the wrong time.”
Two weeks prior to meeting with Gill, I was meeting with Tina, our…