An interesting article in Forbes highlights the growth of a high-tech venture community in Utah. Over the last few years, entrepreneurs there have built a number of billion-dollar-potential ventures, along with a number of very promising startups. The high-potential ventures built in this area, called Silicon Slopes, include the following:
- Domo, founded and developed by Josh James, is James’s second major venture. He sold his first, Omniture, to Adobe for $1.8 billion. Omniture was funded without VC.
- Qualtrics, founded and developed by Ryan Smith, was developed without VC, and got VC after Qualtrics had been profitable for about 10 years. Its sales were expected to hit about $250 million in 2017.
- Pluralsight was founded and developed by Aaron Skonnard and three others who invested about $20,000. Pluralsight was profitable for nine years without VC.
This pattern is similar to that of other billion-dollar entrepreneurs around the country. Billion-dollar entrepreneurs mainly used VC in Silicon Valley, but even here they delayed VC until after Aha when they could keep control. Outside Silicon Valley, they did not use VC.
The pattern has a number of steps, which include the following.
Technical expertise. Nearly all billion-dollar entrepreneurs from Sam Walton and Bill Gates to Mark Zuckerberg and Travis Kalanick had the technical skills to start their businesses in emerging industries.
Sales skills. The most important business skill possessed by billion-dollar entrepreneurs was the ability to sell. They knew how to find customers and how to sell to them. In my Minnesota study, over 80 percent of the billion-dollar and hundred-million-dollar entrepreneurs were experienced in sales and marketing. One of those who did not know how to sell, Earl Bakken of Medtronic, compensated for this lack of expertise with his technical expertise. He developed the world’s first cardiac pacemaker and thereby founded the electronic medical industry. Many of the billion-dollar entrepreneurs of Silicon Slopes were sales experts and learned how to do this while promoting their religion.
Money management skills. This can be easily taught. It is interesting to note that Josh James of Domo, who sold his first company for about $1.8 billion, and has raised venture capital for his second venture, still is very frugal with money. He does not overpay and expects his employees to value money.
Launch skills. All the billion-dollar entrepreneurs in Silicon Slopes launched their business with high-performance bootstrapping. This means getting sales, and an edge, while still running a frugal operation.
Leadership skills. Billion-dollar entrepreneurs know, or learn, how to build their ventures from take-off to dominance. All the billion-dollar entrepreneurs in Utah seem to have gone from launch to dominance by controlling their organization as it was growing, and then building a winning team based on motivation and performance, not just on pay and perks.
And the VCs have followed. True to form, there are now a bunch of VCs seeking to capitalize on this new venture growth. VCs don’t create a new venture environment. Dedicated entrepreneurs do that. VCs come later for the feast.
MY TAKE: The role of capital to build growth ventures has been over-emphasized. Don’t expect VC to start a high-growth, new venture economy. Focus on entrepreneurs. VCs come later, and leave if entrepreneurs fail to produce. Area-development executives need to stop focusing on the capital. Start focusing on the venture – and the entrepreneur.
