Interviews at The Entrepreneur Center @NVTC

Bisnow on Business: At what point did you realize you were entrepreneurial? Is their anything from your childhood that signaled your entrepreneurial spirit?
I did my first start-up, Columbia Spectrum Management, when I was in my late 30s. It’s funny because I did several entrepreneurial things when I was a kid, from selling greeting cards door to door to running a soda and snack operation when I was a teenager. I then got sidetracked and went to law school and ran an association before jumping into the business world.

What have your biggest mistakes and lessons been?
When I was in my 20s, I had a great entrepreneurial opportunity, but it involved working for equity instead of a salary. Since I had a mortgage and another rental property, I couldn’t afford to pursue it. My life has turned out just fine, but that missed opportunity turned out to be one of the biggest mistakes of my life. The lesson I would pass along is to make sure you have sufficient liquidity to take some risks and pursue what may turn out to be a once in a lifetime opportunity.

What was that equity-based opportunity?
It involved the early stages of the cellular industry. I don’t want to go into much more detail than that.

Do you really need a high tolerance for risk, or can you proceed as an entrepreneur prudently?
Risk is relative. I recall a conversation years ago with someone in government who wanted to do something “entrepreneurial,” but his idea was to join a company that would give him a bunch of equity and pay him at least as much as he was then making in salary. When I started CSM, I told my wife if it didn’t work out, we’d most likely lose our house. Of course, I was convinced it was a sure-fire winner. Fortunately, it worked, even though there were a couple of points where I worried about making payroll. We’ve all seen that working for a large company no longer guarantees a job for life, so early stage companies may not be as risky relative to some other options as people might think.

How do you determine whether to use your own money as opposed to outside investors?
For many entrepreneurs, they don’t have sufficient resources, so using their own money isn’t even an option. For others, the important decision relates to how fast they want or need to grow the business and what additional assistance outside investors will provide. Some business prospects have limited windows of opportunity, so raising capital is necessary to succeed. CSM was a services company, so I could have started it without capital, but we wouldn’t have been able to ramp nearly as quickly as we did to capture the market share that ultimately drove our success.

Is money the most important aspect to a successful startup?
Having sufficient capital is important, but having a good management team is even more important.

Have you ever borrowed from friends, family, or taken on debt?
I borrowed money from a bank when I started CSM. The rest of the money was from our VC partner, Columbia Capital.

What is the genesis of SquareLoop, how was the idea conceived?
I had been tracking the wireless location-based services industry for a few years. Indeed, the initial concept of NuRide, which is a company I co-founded with 3 others, was based on using wireless to match riders and drivers. The infrastructure wasn’t in place at the time we started that company, but I continued to track the technology and look for other opportunities. A little over a year ago, the Virginia CIT introduced me to an opportunity to license LBS technology that the Mitre Corporation had developed for the military. As soon as I saw it, I knew they had solved two very important problems relating to LBS: how to ensure the privacy of subscribers and how to provide the service without creating a burden on the networks by continuously tracking the location of users. We then moved forward with negotiating an exclusive license to commercialize their approach.

Who do you expect will be using this technology a few years from now?
We expect that it’s going to be available on all mobile phones and it will be used as the means of sending alerts to mobile devices. It will be the technology used by the National Alerting System and state and local officials in order to send emergency alerts over the mobile phone system.Within five years it’s going to be loaded on all devices sold by manufacturers.

Say there’s a bioterrorism attack in Arlington, Va. Everyone who lives in the area would get a message on their cell phone?
Everyone who’s in and around Arlington would get a message. There could be one message that goes out to first responders and another message that goes to the public who are in the area of danger telling them what to do or where to go. Another message could go to people who are not in danger because the safest thing for some people may be to stay where they are. The technology provides the ability to geographically delineate the messages going out.

What do you think of advisory boards?
They can be a great asset if you decide exactly what your needs are and what you want the members to do. One of the best examples is at NuRide, where we had several accomplished entrepreneurs among the co-founders, but none of us had experience within the transportation, or ridesharing industries, so we recruited former Secretary of Transportation Rodney Slater, and Virginia Secretary of Transportation John Milliken. We are in the process of pulling together one for SquareLoop right now and are seeking people with the comparable ability to assist the company.

How do you spend your days? What tasks are you working on currently?
We are getting ready to raise our Series A round of funding, so I’m polishing my pitch. We have several investors I know who have already expressed interest, so I am hopeful it will be a relatively quick process so I can get back to running the company.

How much are you trying to raise and what do you plan to do with the money?
We’re raising $3 million to $5 million. We’ll be using the money to ramp up and launch the commercial service. We’re starting our first trial next week.

How many employees do you have currently, and how many did you start with?
We started with the 4 co-founders and currently have 5 employees plus some very active advisors.

What do you think the most important roles in a start up are?
It varies according to the type of business. You almost always will need the visionary, and it certainly will help to have someone capable of ensuring the company is executing. Sometimes those are the same people. It’s also important to have someone with enough financial expertise to help determine whether this is a business that is really capable of making money. Sometimes that can be an outsourced expertise. Beyond that, it really varies according to the type of business, but within the group it is absolutely crucial to have someone who has start-up experience.

Are you currently partnering with any companies?
We are in the process of finalizing agreements with distribution partners in each of our focus areas: alerting, content delivery and mobile advertising.

When should a founder let go from running the company?
Probably a year or more before they realize it’s time to let go. Seriously, for some it is when they don’t have the same passion for the company because it is no longer the start-up environment in which they thrive. For others, it may be when someone who is a better manager is needed because it has grown beyond the founder’s ability to run the company effectively. That doesn’t mean the founder needs to leave the company, but it may be they need to take on more of a visionary role. That honest self-assessment is probably one of the hardest steps to take though.

Is being in this region a benefit to your company?
In addition to all of the talented people in this region, there are many benefits directly related to our business. We currently have activities in place with the wireless industry association, and there are legislative and regulatory initiatives underway that directly affect our business. As a result, our proximity to D.C. is a tremendous benefit because we have the opportunity to participate in them directly.

At what point do you consider your exit strategy? With IPOs not as common as they used to be, what other exits do you consider? Would you entertain buyout offers or do you want to reach a certain level of success and value before thinking about that?
We believe there are several categories of companies that will be interested in acquiring us. Indeed, we’ve already had one merger offer that was attractive on many levels. Nevertheless, we want to build a lot more value into the company before we would seriously entertain an acquisition. One of the biggest mistakes you can make is to try to build a company with one foot already out the door. If you build a great company, the exit opportunities will present themselves.

How do you evaluate venture capitalists?
You certainly want to know their track record, not just in terms of their home runs, but what did they do when things got tough. Entrepreneurs have a lot more information as to the latter point after the past few years. You want to know about the companies in their portfolio and whether there might be any synergies. Also, do the partners have a reputation for taking an active role and do they add value other than the ability to write a check? For example, do any of them have operational experience? Finally, do you like them as people, which is important because you are likely to spend a lot of time together, and it may not always be when things are going well.

[This interview conducted by Tania Anderson for Bisnow on Business.]