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One of the highlights of Silicon Beach Fest was a fireside chat with Frank Addante, founder and CEO of The Rubicon Project. A serial entrepreneur, Addante has a long resume of founding companies, including four companies prior to Rubicon - which means a wealth of advice. Here are seven tidbits:
1) Los Angeles is a good place to build a tech company:
- “I think there is this myth in LA: yes, there are a lot more resources [in the Valley] but there’s also a lot more competition."
- LA has good resources too:
- “If you think of the aerospace industry, some of the smartest engineers in the word are here in Los Angeles.”
- “Hollywood is really pushing the boundaries on technology, a lot of that hasn’t been harnessed in tech.”
- Besides, “I love it here. What’s not to love.”
2) Nothing more important than company culture:
- “I think it’s the thing that is probably most overlooked in companies but it is the thing that is going to create the greatest amount of value.”
- “The very first thing we did when we started Rubicon Project was what kind of team do we want to build? What kind of culture do we want to cultivate? If you look at businesses, they are living organisms, they change, they are very fluid. Many things in business change, the product will change, the marketing will change, the industry landscape will change, the competitive set will change, the economy might change; but the one thing is most difficult to change in any company is your team, you people and your culture. If you build a good foundation there that is going to help you to be able to evolve and change with all those other things that are going to require change.”
- “At Rubicon Project we manage culture as a project. We have a project manager for it. That product manager acts like any other project manager. We have a road map for culture. We measure culture. We have a thing called return on productivity.”
- “You have to make culture a priority from day one. You have to keep putting it front and center and fight for it."
3) People first:
- “We have a formula at the company: people, products, customers. In that order."
- “A lot of people say 'customers first' but we put we put people first because the philosophy is great people will innovate great products. If you can solve the product problem that is going attract great customers.”
- You have to ask: “What kind of people do we want to be around? What qualities do we want in those people?”
- “They can’t be the qualities you have in yourself because that doesn’t create healthy diversity, of mindsets and thinking.”
4) The "find-out" stage and the "rollout" stage of a company:
- “In the find out stage you are really trying to find out ‘do I have a business?' You work out a lot of kinks in the product. You work out a lot of kinks in the operations of the company.”
- Rollout stage: “That’s were you want to put fuel in the tank. Either you want to go faster or longer. And that’s the most critical stage to raise significant capital.”
5) Raise little capital:
- “Raise as little capital as possible until you are ready to go from that transition find out to rollout. The reason why is, as soon as raise capital you are taking on addition responsibility, and that responsibility is to people whose jobs is to invest money.”
- “As an investor you want to get a return.” That means as a business, “you are now taking on additional responsibility,” the responsibility of bringing a return to your investors.
- “So there’s this artificial clock that you want to be mindful of, and you have an obligation to provide a return to these investors.”
6) Get to know the people at your venture capital firm:
- “You really have to get to the investors because there’s a really big difference between the person and the firm.”
- “If you have a new investor at the firm, they might be a little more risk-adverse” or they might think “I don’t care about the double or the triple, all I need is grand slams.”
7) How much venture capital should you take?
- “I have never taken the highest value term sheet because I’ve always focused on the people (at the venture capital firm)."
- “If you have money, you typically spend it. And spending it is not necessarily the smartest thing either, because if you spend because you have it, you might be spending on the wrong things, which could send your business of in the wrong direction.”
