Rob Adams is on the faculty of the MBA program at the University of Texas at Austin, where he is also director of Texas Venture Labs. Dr. Adams a former software executive, entrepreneur and institutional fund manager. He has served on many corporate boards, and has founded or financed more than 40 companies which have launched more than 100 products and raised more than a billion dollars of capital. Prior to his appointment at UT, he was in the venture capital industry. Dr. Adams recently led the Entrepreneur Accelerator Program hosted by Bradley Arant law firm in Jackson.
Q — Please explain how a culture of entrepreneurism is really important in developing a state’s economy and what you see happening here.
A — In the Southeast in general you’re beginning to see more companies work, which begets more entrepreneurs, which means there’s more angel money to go around, which means there’s more board of directors-type people who can help companies grow. So you’re definitely seeing things build up. And that’s usually the way it starts: There’s a couple local successes, and there’s a couple more local successes. You can kind of trace everyone back to the one or two companies that started the whole thing. … I think it’s beginning to get bigger and bigger here.
Q — So now is a good time to be an entrepreneur?
A — In the U.S. in general there’s a whole new respect for entrepreneurism. I think some of it is the economic times, meaning it’s almost easier to be working for yourself and know what’s going on than be working for a big company and not be sure what’s going on. Startups aren’t as risky as they once were because big companies are just as risky. There’s a bit of the leveling of the playing field.
Also, the current generation – call them the 20-somethings – they’re kind of out to save the world in their own way. So again, maybe it’s partially a product of the economic times as well, but they’re just not as materialistic. So, you know, living on peanut butter and hot dogs is not such a bad thing. There’s just this general cultural shift, I think, that entrepreneurship is more respectable.
Q — Mississippi is perceived as having a low amount of capital.
A — I have to say that everyone says that. People in Austin say that. Money is hard to get these days no matter where you are. You’ve got to focus on a compelling business opportunity. If you have a compelling business opportunity, the money will find you, and it really doesn’t matter where you are. Even in Silicon Valley where there is a lot of venture capital, I know plenty of people who think there isn’t enough. It’s not an uncommon complaint.
Q — Tell us about your work history and how you came to love startups.
A — I was an engineer undergrad. I actually ended up in my first job in sales in Lotus Development (later acquired by IBM) … I was the first sales rep they had. It was just a go-go company. Spent about 10 years there and learned everything about the software business at a very young age. I got exposed to tons of stuff. And then I thought that’s what companies were all about. So I went out and started a series of them and raised capital. Some of them worked; some of them didn’t. But I just learned this entrepreneurial lifestyle and got caught up in it: the fun, the thrill, the ups, the downs.
Q — Favorite companies?
A — The two companies I remember the most fondly: Lotus Development was definitely a lot of fun, just because it lasted so long, I got there so early, everyone was young, money was being spilled on the floor. … The other one was in the venture business. There was a fund I ran called AV Labs (Austin Ventures). It was just fun. Times were crazy. We were having a good time. Great group of people. Those were my two fun opportunities. There were plenty of other opportunities. Some made money. Some didn’t. Some of them were fun. Some weren’t.
Q — Why is it important to learn about the VC (venture capital) process?
A — I’m not saying people need venture capital, but that’s the highest bar to clear. So even if you’re doing it for yourself and putting your own money into it, you should still use the same standard. So what we’ve been talking about (at this seminar) is what does an investor work for and why. So, if you want investors, you will be able to get them, but also you will understand what a good startup is all about.
Q — Market validation is another key part of your lectures.
A — Market validation and building a successful company. Running a company is not all that hard, but generating revenue is really tough. We’re spending all our time on: how do you figure out what your market it, how do you tell who your customer is, what the right price is … Companies don’t fail because they can’t get their accounting right or because they rent office space at the wrong price. They fail because they can’t generate revenue. So that’s what market validation is all about: Figuring that stuff out beforehand. Figure that stuff out with just a little bit of money. Then, if you have the right market, build the product. If you don’t have the right market, go back and figure out the market again.
Q — And profitability?
A — If you have found the opportunity and the need for a product, can you deliver it at a price that is profitable? Can you get to the market at a price point where you can make money? If you can find a compelling market opportunity, that’s the first thing. Then, can you service it at a profitable price point? … You know there’s a market for a $10 widget. Can you make it for $8? If you can only make it for $12 and people are only willing to pay $10, you’re never going to have a good market.
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