Thursday, June 5, 2008

Newt Hamlin of LGE Execs talks about LGE Execs and its practice of technology transfer

Newt Hamlin of LGE Execs talks about LGE Execs and its practice of technology transfer and commercialization coming from Texas university systems.

How did you get involved with LGE Execs?

I was running a software company called Optimal Electronics and we were an LGE client. Managing Partners Rocky Bullock and Terry Sadowski asked me to join to help them build and diversify and add organization and management structure behind LGE. I began meeting with them last year as an interested bystander and in 2008 we have started significant growth. To date we’ve built up to over 80 partners in the Americas, Europe and Asia.

What’s the focus of the group now?

We’re now focusing supporting both pre-seed and early stage tech transfer and commercialization spinning out of US and European universities; and on providing everything from virtual management teams to project management and silo management for small to mid cap to Fortune 100 companies.

How did you get over 80 people so quickly?

We actually are being targeted by several potential partners a week who are intrigued by our model and interested in joining us. We’re becoming very selective about whom we bring on, and we have established pretty good momentum.

Who are some of your clients?

For tech transfer we are working with public and private universities in Texas and are launching a relationship with Enterprise Ireland and several Irish universities. In all cases we’re in the initial stages of reviewing their IP to see which ones have the best prospects for commercialization—either to license or build companies.

What about UT – where are they on tech transfer these days?

That’s a good question. We have been in ongoing discussions with people at the UT system and a number of its universities and they collectively are an amazing collection of good engineering, life science, agriscience, energy, nanotechnology and other patents. Commercialization is a different animal however. In fact, a leader at a major university just recently told me that there are three notable successes in university tech transfer—MIT, Stanford, and Gatorade. Most universities believe they are doing a good job but for many it’s just a hobby. Our review across the country and in Europe indicates that there is simply not enough money committed, and that a large percent of researchers and professors don’t consider commercialization their best route to tenure. On a positive note we are talking with a larger and larger number of schools that really “get it” and understand the huge value of building a knowledge based economy.

What about Texas A&M?

It’s the same there as UT, filled with great IP and struggling to find a way to make commercialization a more rewarding effort. Making capital available for pre-seed development is vital, and universities in general push back against allowing the tech transfer/commercialization people to solicit funds from their development contributors or to redirect resources or investment away from other projects.

What is the UT system currently doing?

In addition to laying out aggressive objectives and coordinating with system universities, they have an innovative program called the Texas Ignition Fund which gives grants to startups. They are currently reviewing business plans from universities across the state. The plans promote exciting, often revolutionary science but understandably they rarely demonstrate an understanding of market analysis. Then again, while nice $50,ooo is not enough to move a technology far toward commercialization.

So what does LGE Execs do?

We can work with universities to evaluate IP, then either license the technologies we believe have commercial potential, help the university license them, or bring a management team to the table to build companies, develop business plans and strategies and manage growth going forward.

Do you provide the funding?

Currently, we generally rely on funding from states (or nations) along with some funding from the universities, and we help emerging companies raise subsequent rounds of growth capital. We have been encouraged by many to raise a large global fund, a large portion of which we would invest side by side with others in tech transfer companies. That would be valuable and we believe our window into the best technologies would add value to other investors as well.

Are LGE Execs consultants?

Actually, no. Meaning no disrespect to all the great consultants we call ourselves “anti-consultants” because we’re operators and executors. We want to partner with analysts and strategists from Bain and McKinsey and execute the operations plans they recommend to their clients. Because of our depth of total experience we can certainly participate in the planning process but our forte is its execution. Our large company clients typically have a hole in their management team or their supply-chain process and we can come in and start executing from day one.

What types of work does LGE perform?

The diversity of our collective experience allows us to deliver across a broad set of functions. We have created four practice areas thus far:

1. Supply, which is everything to do with the creation, manufacture, delivery and service of goods and services, including supply chain, operations, development, customer service, IT, etc.
2. Demand, which is everything to do with the marketing and sale of goods and services, including strategic positioning, product management, product marketing, sales, channels, marketing communications, etc.
3. Management/Finance, which covers general management, governance and fundraising, including interim CEOs, board of directors placement, advice on capital raises, corporate structure, and M&A.
4. Talent, which covers recruitment and development, including executive recruiting, training, CEO and executive coaching, outsourced HR, and staffing.

On which industries does LGE focus?

Our strengths are technology, IT, IT services, energy, media, telecommunications, health care, life sciences, biotech, medical devices, nanotech, consumer goods, retail, food processing, insurance, aviation, and hospitality.

How often are you building a new strategy versus executing on an existing strategy?

Because our client mix is going to skew toward earlier stage companies, by the end of this year it’ll probably be close to 50% building new strategies and 50% executing existing ones. We’re getting referrals and calls from potential clients just about every day.

What kind of companies are they?

For the most part they are companies that have just raised capital and know they need management help, or companies that have to rethink their strategy. With tech transfer we’ll choose four or five technologies we believe can succeed, license them, put them into companies to develop proofs of concept, then either license the successful ones or build businesses around them.

Where do you find the money coming from?

As I mentioned we are thinking about raising a large global fund. Aside from that there is private equity, venture capital, university alumni, and strategic partners—Pfizer, Merck, Cisco, and the like.

Are you working with UT Austin?

We’re moving slowly and cautiously, working with the System management and a few of the universities; as yet not with UT/Austin. As people from almost every university have told us, universities have two divergent viewpoints on tech transfer. On the one hand they want to attract and keep great professors, they want to license technology or build companies and make money and provide tenure for professors; and they want to generate good publicity. On the other hand they don’t want to lose money, assume liabilities, lose good professors, generate bad publicity or have outsiders soliciting their capital campaign donors. The greatest problem I see is that if they’re not organized then their technology gets sold off for a nickel on the dollar. I want our university clients to put $5M into a deal and make it worthwhile for the university, its alums and a state’s citizens. That’s our objective.

Best regards,
Hall T.

Monday, June 2, 2008

Jonathan Davis of American Workforce talks about the new model for recruiting

Jonathan Davis of American Workforce talks about the new model for recruiting, the cost of mishiring, and the new Entrepreneur Organization Accelerator program.

What does American Workforce do?

We are the next evolution of what recruiting has evolved into. We partner with companies in which the CEO is frustrated by the process of trying to hire the best people and concerned about the sacrifice he and his managers have to spend out of their day talking to unqualified candidates. Companies hire us to build pipelines for the type of people they are going to hire. We become their recruiting department or a supplement to it. The biggest benefit: our clients get a chance to see the best talent in the marketplace, not just the best candidates who happen to be interested in a role at the exact time that companies have that specific need. Instead of billing by the cost of their first hire, we bill more like a law firm: by the increments of each hour - increasing both transparency and allowing a client to dial up or down their recruiting efforts in any given week. We’ll actually do the work in their name instead of trying to cloak the idea—you know what that typical call sounds “I can’t tell you the name of the company or the job but here’s what it may look like.” We think that model is broken. Freakonomics analyzed the realtor model which is we’ll charge you 3% of whatever we sell your house for or the old recruiting model which is we’ll charge you 25% of whatever the first year salary is including bonuses. If a recruiter is only compensated for the placement, their incentive is not to help the client hire the best person; rather, they just want to get someone hired.

How’s it going?

You know if keeps growing. Clients keep coming back. They keep telling other companies about the service. We have some that are now long-standing clients of over 3 years. We really do help companies find “A” players.

How do you define an “A” player?

In the book Topgrading by Brad Smart, he analyzed what is the definition of an “A” player. In a particular job, at that salary, you may be an “A” player, but if we took you out of that job and placed you in another entirely different position (think a Marketing Associate being asked to be a CFO)at a different salary, you likely will no longer be an “A” player. It helps you define that top 10% of the talent available for that role at that salary level. It helps you calculate the cost of mis-hiring which is about 20X of what you would have paid someone. If you hire someone and pay them $10K for two months and then discover it was a mistake, it’ll probably have cost you $200K due to lost time and opportunity cost to correct the situation. Companies that get that are hiring American Workforce to find and hold key candidates until they are needed. We find the “A” players proactively.

That sounds like an interesting book?

It’s definitely interesting but it’s also a textbook. It’s quite thick and dry. He’s got an updated e-book that’s a lot like Cliff Notes and it is a lot easier to read.

You’re now taking over the EO Accelerator Program . What successes have you had so far?

Well it’s cool because we’re on the next level of its evolution. The program continues to grow and could be larger than EO in short order (EO has 6,800+ global members). As you know, EO takes Founders & CEOs whose companies have revenues of $1M or greater. There are only so many companies in the city that meet those criteria. With the EO Accelerator program we reach so many companies. If someone had given me this program five years ago, my company would be quite different today and for the better.

How does the EO Accelerator Program work?

It’s a facilitated learning session held once a quarter. We fly in a facilitator that was involved in creating the content of the program. It’s got four particular areas of study: strategy, money, people, and sales/marketing.

We have sixteen companies in the program now. In the upcoming session we’ll focus on strategy and answer questions such as how do you find and utilize mentors, how do you build a company vision and values, what are some creative strategies for outsourcing and how do you establish a culture inside your company? Our target participant probably only has 3 or 4 employees. That’s a general rule of thumb that when you start adding those employees it’s time to start thinking about culture. The program also involves our existing EO members which is exciting. Austin is unique in that we trend towards some more established businesses that are taking part in the Accelerator Program. These include Chris Justice of SparkSite which is an event planning/logistics company and Dean Dzurilla of Xolved which resells and implements Netsuite packages.

What have they changed from a year ago?

The program focuses more on case study and bringing more mentor input into each of the lessons as we get a wide range of people in the program so one size doesn’t fit all. They kept the core areas the same but stayed true to the EO mantra which is: everyone gets offered advice all day. What Entrepreneurs really need is not advice, rather they need to hear tips and experiences from others who have already been there so that they can avoid the same pitfalls and mistakes.

Best regards,
Hall T.