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Q&A With Ted West: The Making of a Successful Founder-Entrepreneur
A recession can be a challenging time for almost any business person but for the “founder-entrepreneur,” at this particular time, it would seem to be a particularly tough -- if not fatal -- period. Not necessarily so, says Sage Partners Managing Director and Co-founder Ted West. “A sharp focus on innovation – what you are able to deliver to a customer - coupled with a resourceful and disciplined execution of a business plan, not only helps a startup weather the economic storm, but also positions the founder-entrepreneur for success in the recovery,” West tells The Skouting Report. West knows what it takes to be a successful founder-entrepreneur. He has nearly 20 years of experience in entrepreneurship – as a startup founder and executive of four companies, as well as a director and an advisor to founders, boards, and senior management teams of over a dozen other startups around the world. West founded, built, grew and sold several private companies before joining Sage Partners, where he currently leads its venture development practice in serving founder-entrepreneurs in the US, in the UK and Europe and in Australia and Asia. The Skouting Report spoke to West about the qualities he values in a founder- entrepreneur, how this recession can be an opportunity for startups and why keeping the faith has never been more important.
The Skouting Report: Has your advice to entrepreneurs changed in light of the economic downturn?
Ted West: The fact of the matter is my advice has not changed that much at all.
First, innovation is critical, and entrepreneurs now simply need to double down their resolve to innovate. It is a mandate – especially because the best ideas come in these times. Microsoft, Cisco, even Google -- so many great companies grew out of hard times in their industries because they focused on critical innovation when everyone else stopped and “hunkered down.” In my own experience, I started a consumer shopping information company -- Catalyst -- in 1991, a deep recessionary period with no investment capital to launch a new business. I focused on more convenient ways for consumers to shop -- first by phone, then online. No one was thinking like that then. It is in tough times that entrepreneurs have an edge with innovation.
Second, while entrepreneurs need to focus sharply on their business mission, and to commit to innovation, they must demonstrate extreme resourcefulness with cash. Focus on your mission – but do it in a practical way. And be patient for the reward. This is no time for an entrepreneur to expect or look for any kind of value premium for their efforts -- the fruits of their labor will come later. I see so many people going into the startup world who are used to big salaries. Eventually they’ll get to that, but they need to be lean now.
TSR: What kinds of startups thrive in recessionary times?
West: The kind of company that has a great idea and a tight venture development plan and sticks to it. By great idea, I mean those offering a price/value proposition that is beating their competition by orders of magnitude.
TSR: You’ve worked with a lot of entrepreneurs. What are the qualities that usually define a successful one?
West: When I consider becoming engaged with a startup, I look very hard at the personal attributes of the founder-entrepreneur before I make the decision to commit. What do I look for?
Integrity is absolutely critical. If the people around the entrepreneur or their customers lose trust, it’s all gone.
Creativity and out-of-the-box thinking and coming up with inventive ideas for every aspect of the business is critical, too.
Customer smarts is critical. I am really drawn to entrepreneurs who are both smart and practical thinking when it comes to knowing what their customers really want, and will pay for. A lot of entrepreneurs end up with ideas that get lost in the clouds or they are smitten with their own product or technology cleverness and they lose sight of who the customer is. I want to hear an entrepreneur say, this is why customers will care, this is why they will value this product.
Good listening skills are also critical. Successful entrepreneurs take advice very easily, often in alignment with a close partner/advisor. I’ve seen smart, focused entrepreneurs fail when they didn’t listen to other people’s suggestions. The entrepreneur needs to be aware of what he or she knows and what they need to know. If these attributes don’t line up, the likelihood of success is not there. Look at the real stars among founder-entrepreneurs: Gates had Allen, Jobs had Wosniak, Hewlett had Packard, Paige has Brinn. These are all incredibly smart people but they are all different and, in the end, they balanced each other. They listened. There are few examples of entrepreneurs going it alone.
Lastly, it is critical that founder-entrepreneurs have personal focus and self-discipline to be successful in the long term. A lot of entrepreneurs have great ideas but they can’t figure out how to make them happen right away. It takes determination and perseverance. A lot of them think they’re going to change the world, overnight. They usually don’t.
TSR: What is your most memorable startup – the one that defied expectations or met them?
West: Google is certainly the most memorable startup for me. It came storming out of the dotcom bust, only 10 years ago, started strong, and was superbly executed. They were innovative in their field: they focused on more relevant search and then the monetization of search (frankly, their real value driver) when everyone else was hunkering down and going in the other direction. They are a perfect example of innovation in tough times. Before them, Microsoft braved steep start-up risks, and very tight resources in the challenging mid-1970s. But they kept going and focused their resolve to develop and deliver the first operating system for PCs, and to become the de facto standard for office applications to run on them.
Personally, my most memorable start-up experience was with Network 1.0 in the Fall of 1995. The Internet was just coming up as a publicly available medium, and people were starting to create Web sites and link structures to navigate the new world. Some of us thought then that the phenomenon of the Internet was going to become a powerful medium if people got access to it for free and if ad placements in various forms were sold to fund it. My company, Network 1.0, developed simple (by today’s standards) display ad programs for the Internet. We sold our first banner ad on Netscape in October 1995. The company grew and began to represent other leading Internet organizations – like Yahoo, Hotmail, FoxNews and ZDNet. By the end of 1996 we had a couple dozen people selling and servicing Internet advertisers. We sold the company to Softbank in 1996. It was the fastest growth start-up that I was involved in. We were innovative, creative, and absolutely customer-focused, as well as being in the right place at the right time. We defined a new market.
TSR: Are there any tips you can offer founder-entrepreneurs in startups on how to survive the downturn and position themselves well for success in the recovery?
West: The first rule is to stay focused on your mission. The second one is to set a plan and meet milestones. Be very disciplined and cherish cash. It is the oxygen of the business. When it runs out, the business suffocates. I’ve seen too many entrepreneurs play brinkmanship with cash -- and usually lose. It is the most important resource. Above all, keep the faith. Hard times breed negative thoughts. Believe in what you are doing, and take the time to get it right.
