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Wednesday, January 28, 2009

January 14th 2009: Meeting with Joe Caruso the ‘Advocate for Entrepreneurs’

By Prasad Chandra, TLP Fellow

In my opinion, yesterday’s meeting with our invited guest speaker was one of the most insightful we've had. We had the pleasure of hosting Joe Caruso, who has served multiple roles as the CEO for several startup companies and mentor, coach and motivational speaker. Bala’s introduction was apt. Joe is not just a coach and advisor, but has touched and molded a number of organizations ranging from not-for-profits to educational institutions. He has also been an active angel investor for the last fifteen years. Joe has a BS in EE from Northeastern and an MBA from Harvard. As Bala put it, he has walked a path that many of us aspire to. My interest was piqued by his association with the BU Photonics Center and a myriad of companies with interesting names – including Boston Micro Machines, Cyborg Corporation and Wwwhosh.
Joe chose to do a Q&A session instead of a speech or a lecture. He had no prepared presentation but this was great! - it was highly engaging and interactive from the start. He shared with the class his experiences and several convincing anecdotes from his career. Almost everyone posed questions of all sorts to which Joe answered with candidness, patience and thought. I heard several penetrating insights and had a few of those Aha! moments. Here are a few points that I noted from the QAs that followed.

  • This is a great time to start a company. Joe said this is a great time to start companies. Assuming that there will be a recovery in one or two years. (Hmm… a study by the Kauffman foundation concluded the same.)
  • In pitching to the investors and customers, entrepreneurs must focus on what problems they are solving. It's important not to focus on the space as much as ‘who wants it’. Next, entrepreneurs need to present why their solution is compelling. Ask yourself: Who is interested? A large customer, a domain expert, or any credible ‘external’ confirmation adds a great deal of credibility to your pitch.
  • On missed investing opportunities: When asked if there are any opportunities he missed out on investing due to a decision on his part, Joe mentioned the company which produces K-cups for making single serve coffee from a machine. He admitted that he could not initially see why people would buy them over making their own coffee. A lesson to be learned here apparently, is that the convenience of the customer is a big factor that cannot be overlooked.
  • On the dynamics of presenting to a group of potential angels: In another question Joe confirmed what was to me an intriguing observation by one of the Fellows – that angels can be very nitpicky and critical, even of money-making companies with reputed board members. A crucial piece of advice that Joe gave here was that the entrepreneur needs a ‘champion in the room’, that is, someone among the potential investors who will serve as an ally and talk you up before you walk into the room.
  • On presenting doubts or pitfalls about an idea you're pitching: I always felt was that if I were to have supreme confidence in my idea in spite of my reservations with the idea, I am fine. Joe said to present weaknesses carefully. But keep in mind that if you are blind to the weaknesses, you won’t survive.
  • On which founders' qualities impress VCs: Joe stressed passion, intelligence and high integrity. The idea is the most important thing, but VCs and angels look for the above. An idea is necessary but not sufficient -- "unless it is a patented cure for cancer."
  • On founder credentials: I found it interesting that Joe thought that the pedigree and credentials of the founders are not such a big deal. This surprised me. If I were a VC and if I met someone who has outstanding credentials, I would sit up and take notice.
  • On leadership: In answer to a question about leadership, Joe's answer was clarity of message, integrity and openness. The most frequent cause of failure in his experience – ego and testosterone! He can’t be off the mark on these I think. All of us agreed based on our own experience.
  • On the importance of having a patentable idea: Joe told us that having that elusive perfect idea, or worrying solely about IP and patents is overrated. His admonition to potential entrepreneurs: Look at McDonald's! Flip the buns, put the patty in the middle and sell it, that’s all there is to it. But that is not what made Ray Kroc a great entrepreneur. How many people who know how to make burgers make it that big? So of course, if you don’t have some unusual ability of execution, then you better have technology.
  • On pitfalls and teamwork: Entrepreneurship is a lonely and potentially depressing thing. Have a ‘functional’ team. It is important that the team be a great team, i.e. they know each other very well, they are on great terms, and that they are passionate.
  • On founders as long term CEOs: The Founder is not necessarily the best CEO in the long run. He related an anecdote of a founder who took three months to be convinced that he needed someone else as CEO.
  • On revenue: A crucial warning Joe gave us is that fund raising should not mistaken for revenue. Many entrepreneurs consider themselves a success after raising a great seed round. But fundraising is not revenue generation and is not the mark of success. At the end of the day, $200K in revenue is much better than a million that you raise in capital.
  • On grit: One of the most important things an entrepreneur needs is grit. Don't walk away when chips are down. Only then you’ll succeed.
Final Thoughts
I noticed that Joe was a quiet and unassuming speaker who was a change of pace from the charismatic, energetic speakers we've hosted in the past. In my mind, Joe provided a unique perspective – one from that of an investor, who has earned the trust of both CEOs and entrepreneurs. I found his answers to be measured and candid. Even though he apologized for not preparing a formal presentation, all of us found his answers to the point and insightful. A couple of us asked Joe how he had changed over the years and what he had learned. Towards the end, he told us: don’t think you know it all, even if you know a lot. And communicate what you know without sounding arrogant. My parting observation was that Joe actually seemed to live by this creed.

1 comment:

joe said...

Prasad: Thanks for the complementary comments (your check will be mailed soon :-).
One correction: I would not characterise myself as a "motivational speaker"... I think there is another Joe Caruso who fits that description.