Consider this advice from an expert: Startups should be laser-focused on getting their first product to market as quickly as possible.
“This might be controversial, but I really believe in the importance of getting revenue as early as possible,” said Jesse Lipson, a vice president and general manager at Citrix Systems and previously the founder and CEO of Raleigh-based ShareFile, which Citrix purchased for $54 million in 2011.
Lipson was among five Triangle entrepreneurs and executives – all with glittering resumes and enviable track records – who dispensed advice, shared their proudest moments and traded a few quips during a panel discussion Tuesday.
The challenge that entrepreneurs face when they are starting out, said Lipson, is that when they run a concept by others, “it will seem that 99 percent of the people think it’s an awesome idea.”
Never miss a local story.
But some of those people may just be telling you what you want to hear. Even frank appraisals of a concept aren’t a good substitute for definitive “market validation” – that is, finding out if customers will really pay good money for your product.
No less an entrepreneur than Thomas Alva Edison was a firm believer in this approach, said Chuck Swoboda, CEO of LED lighting company Cree.
Swoboda said that when Cree was developing its first LED light bulb, he did some research on Edison.
Edison, said Swoboda, firmly believed that “the reason you want to sell something is that’s the only way you know if you invented something that is worth it.”
The panel discussion was part of the Tech Venture Conference sponsored by Triangle-based entrepreneurial support group CED that concludes Wednesday at the Raleigh Convention Center.
In addition to Swoboda and Lipson, the panel also included Marc Noel, executive chairman of manufacturing companies Nomaco and Nomacorc, the latter being the world’s largest maker of synthetic wine corks; and SAS co-founder and CEO Jim Goodnight. Moderated by Red Hat CEO Jim Whitehurst, the discussion was billed as “A Conversation With The Greats – Tech Icons Panel.”
Some of the topics addressed during the one-hour discussion:
• Focus. Too many startups try to emulate successful companies that have a broad, sweeping vision.
“The biggest advice I would give to entrepreneurs is, one, start uncomfortably narrow,” said Lipson. “Because a lot of these companies didn’t start with the broad vision they have today. They started with (a narrow) vision and expanded it over time.”
• Falling in love. Beware of becoming so enamored with new technology that you recklessly throw a pile of money into it.
“Before you invest a huge amount of money, make sure that what you’re working on is something that someone wants or needs,” Goodnight said.
• State incentives. Goodnight said it’s a challenge to compete for talented workers with companies that have received hefty government incentives.
“I am very much opposed to companies that are looking for a big handout to come here,” he said.
Goodnight also drew a laugh when he told Whitehurst: “You took $12 million, I know you did.” Actually, Red Hat became eligible for more than $15 million in incentives when it agreed to move its headquarters to downtown Raleigh.
• Toughest day. Whitehurst said his stint as chief operating officer at Delta Airlines before he joined Red Hat gave him “a different perspective on what difficult is.”
Difficult, he continued, is “when you have a business model where you have tons of passengers in a metal tube loaded up with flammable liquid, you light the liquid on fire and hurl it through the air … and you lose money every time you do that.”
“Every day,” Whitehurst concluded, “is a great day at Red Hat.”