Growing A Great Company
Business is business. I tell our clients constantly that success requires a great idea, passionate execution and capital. You know the old saying, ideas are like……arms??? Everyone has them.
Passionate execution is vital to growing a great company. Entrepreneurs are humble by nature, but arrogant in their work ethic. They choose a life of 15 hour work days and shut down their social life, often sacrificing family contact. There is no such thing as luxury for a startup. I guy I know named Greg Robertson shared a story when he launched his start-up – CloudCMA. I asked him about his competitive differentiation and go to market strategy – typical consultant questions. I will never forget his answer. “I am the difference and my go to market strategy begins with me making the first 5000 sales calls.” To this day, years along the path to success, Greg is the guy in the booth at every show. He is passionate and relentless in his pursuit, like so many entrepreneurs that we know.
Capital is at least 1/3 of the struggle. Capital is both an offensive and defensive strategy. Offensively, it allows you to cover the costs of operating the business during its most difficult time. A company, like a young child, makes lots of mistakes in the early days. Some of those mistakes are very expensive. But failing and failing fast is the path to success. This is why early stage angel investors and venture capitalists what so much of the company. Failure is likely, success is uncommon. Defensively it protects you from parallel competition and unwarranted lawsuits.
I ran into this story by Art Cashin about a patent filed on Automobiles in 1895 that is worth sharing. If you want to know why I hate patent trolls – here is reason. By the way, kudos to my friend Randy who has everyone in the real estate industry dead to rights with his patent. You know who you are. You have not shot your patent gun yet, and I commend you for quietly going about negotiating with your competitors. It is courageous. Keep up the good fight.
On this day in 1895, a patent was issued to George B. Selden. It was the kind of patent mere mortals could only dream of. It ranked at or above those granted for the telephone or the electric light. What was it that Selden had invented that was so great - - it was the automobile - - only Selden didn't invent it.
Selden was a clever chap who had noticed the products being produced by the Duryea Brothers and Ransom Olds, in the preceding two decades. He had even read of the work of Karl Benz in Europe.
Since he was a patent attorney, he devised a broad based patent to cover all future automobiles. As the 1900's began, autos began to sell. Selden grabbed some Wall Street buddies and began to sue the early producers. Each one caved and Selden's Association of Licensed Automobile Manufacturers began to get a royalty from everybody.
In 1903, a guy named Henry Ford applied for membership. Hoping to up the ante, they turned Ford down. Ford (my hero - - he once said the role of your body is to carry your brain around) choose to keep making cars. For six years, they fought in Federal Court. Then a judge said Selden's patent was valid. The effect was electric. Everybody, including GM, decided to pay. Selden and the Wall Street types, sensing billions, magnanimously offered to let Mr. Ford pay at the old rate.
Ford told them where to place their offer and took them to Appeals Court, claiming the patent was too broad and counterclaiming they owned him and other damages. Two years later a judge with a sense of humor and a way with words held that Ford was right. Knowing when to cut and run (and save damages), the Selden/Wall Street Crowd puppied up. The automobile business was wide open and Ford became a multi-billionaire.