A presentation on careers in startups given to the GA Tech Mech Engr Grad Student Association

1. MLN Consulting
Best Supporting Actor
A non-Founder’s Career in Tech Startups
Mike Nagy
July 24, 2012
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2. Like the world of music, the
world of startups has many
solid players, but few
superstars.
This presentation gives
the perspective of a non-
founder, non-CEO who is
having a great career in
startups.
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3. A “Series of Gigs”?
Whether you have a career or a series of gigs depends on whether you’re growing...
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4. Big or Small?
BigCo Startup
Long Term Average $$ ++ +
Potential for Huge $$ ― +
Awareness of the Big Picture ― +
Significance of My Team’s Work + +
Significance of My Contribution ― +
Opportunities in “Big Tech” + ―
Getting Credit ― +
Dodging Blame + ―
Fewer Unproductive Politics ― +
Job Security ― ―
Emotional Intensity ― +
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5. Get the PhD?
• Are they always smarter / better than MS? no
• On average, you make more $$ with MS
• In BigCo’s / Institutions:
– Lab Rat or Bureaucrat
– better payscale, but some prejudice
• In Startups, a very handy credential
– investors / grantors require it (“IBM syndrome”)
– name of school / advisor very important
– if you don’t have one, plan on hiring one
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6. Technical or Management?
"Technology is dominated by two types of people: those
who understand what they do not manage, and those
who manage what they do not understand."
—Archibald Putt, Putt’s Law
• Engineers are smarter than managers, and yet
we’re not
• Do not ignore the “other side”
• Management newbie pitfalls: (1) tyrant; (2) one
of the boys; (3) micromanager; (4) clueless
manager
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7. Where Will You Live?
• US Startup Life is very Geographical
• Two “1st tier” hubs for tech startups: Silicon Valley and BOS
• Several 2nd tier hubs: MSP for medical, SEA / AUS for software, etc
• Investors will pressure you to move
– Correct answer is “yes”
– But only if you mean it
• Hubs have:
– investors
– good startup culture
– resources and jobs
– high cost of living
• You can have a great startup outside the big hubs, but it’s harder
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8. Who Are the Supporting Actors?
• We are all leaders in some contexts and followers in others
• Know when to lead and when to stay out of other leaders’ way
• Other key roles:
– CTO
– CFO or VP Finance
– VP Engr
– COO
– Full Time Technical Staff
– Full Time Operations Staff
– Full Time Sales & Marketing
– Part Timers and Contractors
– Legal Counsel (IP and Corporate)
– Advisors (tech and business)
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9. Growing Pains
• Different company phases have different rockstars
• Investors often bring in their own rockstars
• Job completion is often “rewarded” with dismissal
• Past performance is rarely rewarded! Stay relevant or plan
your exit
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10. How To Stay Relevant?
• Understand that all roles in development have
a beginning, a middle, and an END
• Know when it’s time to change roles
– and when it’s time to leave the stage
• Be a Teacher, not a Hoarder of skills and
knowledge
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11. PRODUCT Focus
• Companies exist to make MONEY
• Don’t fall in love with technology
• When you have a “working” prototype, you
are not 90% done – you are about 5% done!
• Write a product spec early
• Always ask “so what?” and “who cares?”
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12. Know Your Value Proposition
My Customers’ Customers
My Customers’ Customers
My Customers’ Customers • EVERYBODY IN THE CHAIN HAS
TO MAKE REAL MONEY
My Customers
My Customers
My Customers
• Know the val prop early
• Have detailed, researched val
prop by time of 1st funding
My Company
• This includes knowledge of
competitive landscape
My Suppliers
My Customers
My Customers
• EVERYONE in your company
needs at least basic
understanding of this
My Suppliers’ Suppliers
My Customers’Suppliers
My Suppliers’ Customers
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13. What Kind of Startup?
• Hardware, software, services, or combination?
• Brick & Mortar or Virtual?
• US or Global?
• Know your sector BEFORE you dive in too deep
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14. Have a Plan
Exit Points: $ $$ $$$
Proof of Full Spec
Profitability
Concept Protos 1st Sales
Cash
Needs: $0.2M $2.5M $6M $14M
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q
12 12 12 12 13 13 13 13 14 14 14 14 15 15 15 15
• Clearly defined value-inflection milestones
• Technical milestones are means, not ends
• Possible exit points
• How much will you have to raise and when?
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15. Know Your Money!
• Know your present & future Money
– Who owns the money?
– Who manages the money?
– Why are they giving it to you?
• Grants & Loans
– Federal: SBIR, STTR, etc want to see technologies used
& create jobs
– State: GRA, University, etc want to create jobs
• Equity
– Venture Capital wants big returns & big buzz
– Angel Groups want returns & local involvement
– Individuals variety of reasons, often philanthropic
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16. If I were a 25-year-old grad student, I’d:
• Not worry so much about salary (yet)
• See the world
– places
– jobs / roles / market sectors
– different kinds of companies
• Build a network
– mentors (good and bad)
– contacts
• Then decide what I want to do when I grow up
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17. ...and if I wanted to do a GA startup, I’d:
1. Research my idea (tech AND market) & file provisional patents
2. Talk to the Venture Catalyst advisors at ATDC www.atdc.org
3. Get a GRA phase 1 grant for $50k to make a proof-of-concept
prototype www.gra.org
4. Use the proto to get Angel or VC funding
a. and a matching GRA phase 2 grant ($100k + $100k)
b. find Angels on www.gust.com and www.angelcapitalassociation.org
5. Check out ATDC and other local incubators (ISC) www.intelsys.com
6. Use my biz plan to tell me what other kind of funding I need: big
VC, small Angel , SBIR, etc
7. When ready, get a GRA phase 3 low interest loan for $250k
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18. Family vs Work
• A Zero-Sum Game
• Talk a lot
• Be where you are
• Organize / plan / warn
• Marry a steady salary if you can
• And if all else fails: get divorced before you get
rich
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19. Ethics
• Engineering IS an ethical
act
• Do not wait for the
moment of ethical crisis to
start thinking about ethics
• Avoid “I deserve it”
syndrome
• Money changes people
• Don’t get desperate
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20. Summary
• Engineering is a big place: there are all kinds
of careers.
• You can have a great career in startups
without being a founder or CEO.
• Know who you are. Know what you want. Go
get it! Repeat...
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21. Find me at:
Michael Nagy
MLN Consulting, Inc.
(770) 634 0034
nagy@ieee.org
http://www.linkedin.com/in/mlnconsulting
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22. Backup Slides
Following are slides that were cut from the main
presentation, but may be of interest...
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23. The Biggest Part Of Your Life
• “Job” = Selling hours of your life to someone
else
• You will spend more waking hours doing your
job than you will any other activity in life
• Being an engineer is very different from being
an engineering student
• The good news: If you don’t like it, it’s a great
springboard into other areas
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24. The Risk Spectrum
Gov or School Institution Mortgage your house
Tenure Invest Years of Life
Stay Put Rack Up Debt
Big Company / Institution
Startup
• Startups have a wide risk spectrum – even though
most people only think of the extreme end
• You can move around on the spectrum
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25. A Case (Western) Study
Mike Nagy Nick Mourlas
• MSEE Case Western ’96 • MSEE Case Western ‘96
• took the MS and ran • PhDEE Stanford
• engr lead, now consultant • founder, CEO
• based in CLE and ATL • based in SFO
Nick’s Comments
On PhD: Upside: Great marketing tool. People assume you are technically
capable. Downside: Costs you 5-7 of your most energetic years
On Living in SFO: Upside: Very satisfying to live in a culture where everyone is fighting to
change the world. Downside: Your community tends to be your
industry, not your neighbors.
On Being a Founder: Risky, likely to fail... but having a shot at doing something great is worth
it. You will get autonomy, fast pace, much responsibility, work with
motivated people.
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26. A Note on Advisors
• Surround yourself with people who are smarter than you
• Listen critically: even bad advice can be useful
• Everyone speaks from their experience: some do not realize
there are other ways than theirs
• Know parasites from good advisors
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27. Hires And Contractors
• Full time hires
– Cost more overall
– Burn money when they’re idle
– Care more
• Contractors
– don’t charge you when there’s no work to do
– are sometimes less available
– bring infrastructure, network, experience
• Only hire a FT when it’s PAINFUL not to
• In all cases: DEFINE THE JOB well, and stay connected
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28. Who Makes the Best Founder?
• Business or technical?
– Should be a business person, but with good understanding of the tech
– Tech people tend fall in love with technology
• Advice to young founders / CEOs:
– When you can afford one, get a trusted greyhair to advise you
– Investors like young founders because they’re “coachable”, but sometimes
they take advantage of you; get 3rd party data on what a fair cut is
– Always understand your legal obligations, from YOUR OWN attorney!
• Leaving the Stage
– Investors often bring in their own management team
– Make sure your exit terms are covered in writing before accepting money
– Make sure you are emotionally ready for “the Talk”
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29. Pitching
• Know your audience – research the individuals
• Cover the “Standard” bases
• Tell your company’s story from founding (past) to future (profitability)
• Be able to defend EVERYTHING you say
– backup slides, spreadsheets, etc
– 3rd party data
– backup experts present or on phone
• Tailor your pitch
– to the audience, time limit
– to the purpose (know what you want when you walk out of the meeting)
• Never be surprised!
– anticipate and “game out” all possible questions – be ready with answers
– don’t contradict one another: be careful whom you bring and coach them
• Listen to them: don’t text; don’t interrupt; answer questions directly
• Address objections without being defensive
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30. Disclaimer
Observations are based on my
personal, anecdotal, unscientific experience.
Some names and details have been changed to
protect the guilty.
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