Interviews at The Entrepreneur Center @NVTC

Bisnow on Business: What was the first business you created?
In college, I was always sitting at the same table in the same campus café. Throughout the day I would gather all sorts of useless gossip as people passed. Pretty soon I realized if I talked with enough people, I could find out pretty much anything. So I created a business that finds things out for people. It was a low class PI firm called Shawn Dolley Investigations. Dorky, I know!

How do you determine whether to use your own money as opposed to outside investors in a startup?
I'm a huge fan of using your own money. As an early member of the MicroStrategy team, there was a big focus on profitability and using operating income to fund growth. That culture of leanness, that genetic ability to be profitable, has been a huge influence on me. As a result, I am highly skeptical of the need for big capital infusions early on. I have gone through the process of learning how to raise money and evaluate and rank venture capitalists from all kinds of angel investors at small and large firms. I've met a cadre of local investors who I think are amazingly wise, smart, fun, and just good people. I can't imagine not including them whenever I do the next venture.

What do you look for in venture capital firms?
There are a lot of funds out there, and they’re not all created equal. One of the factors I look at is geography. What’s important is how quickly I can spend time with the investors, how quickly I can get mentoring, and how easy it is for me to communicate with the folks who are a part of my management team. To conduct board meetings in California and communicate frequently across the country is just hard. So I think geography is a factor that should weigh a little more heavily than one might assume. Secondly, each of these firms has some contribution to the board of directors. These are folks who are going to, or not going to, help make business decisions. There may be an inverse relationship between advising quality if you are going to a firm that has hundreds of portfolio companies, thus decreasing the chances of getting a founder, or someone who is amazingly strong on your board, as opposed to a firm where the mental capital experience is high but portfolio is low, allowing you to get more attention. There’s a curve to draw there and finding your optimal point on that curve is important. I’d also say the size of the fund is important as well as who the other companies in your fund are.

Do you find a great deal of benefit in advisory boards?
Keep them small. Use the people you like and who can make you feel good. You'll have enough headaches from customers and competitors, you don't need any heck from advisors. Be cheap! Don't give them lots of stock. Each advisor is going to have a specific area they are amazing giving advice about. Use them for that area, and use them, use them, use them. We've gotten some amazing advisors, and I haven't used them as much as I should have.

When you started Vision Chain, what was the financial situation?
I had a little money stashed away. That was June of 1999. It wasn't until October that we got our first customer, and then it took them a while to pay. So I'm standing in the Boston snow in January, going to Chinatown to eat dinner, and I realize that I have no money left. I had to make sure where we we're eating took credit cards. It's almost funny. It was a race to see whether the first check would show up, or the card would get cancelled. Fortunately, the check showed up.

Is money the most important aspect to a successful startup?
It's not the most important. Timmons wrote in New Venture Creation that the top five things a VC looks at when assessing a new venture are the management team, the management team, the management team, the management team, and the idea. I agree with this. I think the critical questions to ask are, “Has the team worked together before?” “What is the CEO best at doing in the world?” and “Does the CEO know how to be profitable?” A lot of companies don't end up doing what they originally started doing. The most important aspect to a successful startup is whether or not the team has the ability to enter a space, be nimble enough to find the real hidden gem, and just explode the hell out of it.

What have you read that was useful as a guide to being an entrepreneur?
The only business book I recommend is Good to Great, by Jim Collins. We use it as a business handbook, and try to have “good to great” meetings once a year. We work on each of the chapters one-by-one, just as recommended in the appendix.

You recently acquired Levi Strauss as a customer. How does Vision Chain help them?
Levi Strauss has hundreds of retail outlets around the world that sell their products. With consolidation of retail in the marketplace, there are 10 to 15 retail outlets for Levi Strauss who do the majority of their business. Therefore the company must have a tight partnership with their top retailers. These are companies like Wal-Mart, Target, K-Mart, etc. These companies are pushing large transaction data to the suppliers, and the supplier, Levi Strauss, in this case, is saying you are in charge of your inventory. So if a consumer comes in looking for a specific size or style, Levi Strauss wants it to be in the store. This is new. In the past companies would just send out shipments. Now this data enables the company to make sense of consumer trends and supply the appropriate products to a specific store. We give companies like Levi Strauss an insight every single day, and every single hour, to make a difference to their business.

Why are you in DC, and how does it affect you?
Back in ’99 there was a program in DC that gave software companies tax advantages. We don’t get those anymore, but we benefit from the fact that a lot of people like to live in DC and this way, instead of commuting to Herndon or Rockville, they can ride their bikes to work or take the Metro. At this point, we're kind of an oddball company here, purely software, with no sales to the Federal Government, no ties to AOL, etc. I think there are a number of amazingly good software people in the District who aren't interested in Federal, and along with Blackboard and Bantu we'll divvy them up and go to town. On the other hand, sometimes it's hard to recruit a candidate who lives in Reston. The commute is just a burden.

Are all the lawyers and accountants you work with helpful?
I love lawyers. I've never met a lawyer I didn't like. The ones that really beat us up, I love the most. Most good lawyers, though they’re expensive, don't make mistakes. We had only one experience in six years where an attorney just blew it. Accountants are another story.