Ernst & Young Carolinas’ 2008 Entrepreneur of the Year

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Aaron and I won the Ernst & Young Carolinas’ 2008 Entrepreneur of the Year Award in the Emerging Category tonight at the ceremony in Charlotte. We were up against Virtual Heroes and Canvas on Demand, both from RTP.

The winners will be going to Palm Springs, California in November for the Ernst & Young 2008 National Entrepreneur of the Year Awards to compete against the other regional winners.

We’re really glad, and humbled, to have won. We are very appreciative of the support North Carolina and the Triangle community has given us the past six years and have to thank our family at iContact and our families at home. We have a lot lot lot more work still to do.

The full list of winners is below.

Ernst & Young Carolinas 2008 Entrepreneur of the Year Winners

Lifetime achievement. O. Temple Sloan. General Parts, Inc.

Financial Services
Robert Hatley
Paragon Commercial Bank

Health Services
Willam Cobb
JM Smith

Industrial Products
Christopher Kearney
SPX Corporation

Real Estate Hospitality Construction
Patricia Rodgers
Rodgers Builders

Retail and Consumer Products
Thomas Millner
Remington Arms

Emerging
Aaron Houghton
Ryan Allis
iContact

Software and IT
Matthew Szulik
Red Hat

Telecommunications
Eugene Johnson
FairPoint Communications

Video: Speaking at Collegiate Entrepreneurs Organization 2008

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Speaking in front of 1,500 people can be a little scary. Especially when you’re about to pull your pants off and dance in front of them.

When I was 16, I ran for President of the Manatee High School Key Club, a community service organization. I got up to give my speech. My knees knocked. My hands shook. My voice faltered. I lost to Mark Pinto.

Going into college, I was still a nervous public speaker. I tried to imagine the audience in their underwear but that was just awkward and didn’t help at all.

I didn’t get over the fear until my 2nd year when I had to speak to 60 attendees at the UNC Entrepreneurship Club every Tuesday at 6:30pm.

Finally, I could speak to a group of college students without nerves.

But them came speaking to ‘old people.’ You know, those scary adult-people. I didn’t really get over that fear until early 2006. I spoke to 500 economic developers at the Southern Growth Policies Board Conference in New Orleans and then 400 professors and administrators in Orlando at the National Association for Community College Entrepreneurship Educators.

In 2007, I ended up speaking in front of about 3,000 people over the course of many different events. In 2008, I spoke in front of 8,000.

But none larger than the speech on November 8, 2008.

I had already introduced Robert Kiyosaki to the group the day before–one of the great honors of my entrepreneurial life. His book Rich Dad’s Guide to Investing planted the seed in my mind and provided the path at 17 to “build a company and take it public.”

I had been the emcee of the conference along with Gerry Hills for the past two days. It was my 7th time at the Collegiate Entrepreneurs’ Organization conference. I knew my audience. I was them–just four years removed.

But it was still scary. 1500 people.

What if I messed up? What if I fell while running onto the stage? What if too many clothes came off while ripping my dress pants off to reveal track pants for the Soulja Boy dance? What if, what if?

After practicing “Finding The Purpose of Your Life in 6 Lessons” all the way through in front of Jenna and some amused caterers, I was fired up and ready to go.

Here’s the video… (The dance to Soulja Boy’s Bird Walk is in part 3 at 1:20)

Part 1

Part 2

Part 3

Part 4

Sustainable Capitalism and The Role of Aid vs. Trade in Prosperity Creation

I picked up a glossy investment prospectus from a firm called Legatum Group at up at the Fortune Brainstorm Tech conference today. A statement inside caught my eye. It stated:

“While aid can play an important role in alleviating immediate needs, its impact is naturally limited since it is neither sustainable nor scalable.” Separately, it states, “Quite distinct from the limited scope of charitable initiatives, businesses are both self-sustaining and scalable. Legatum directs its attention towards promoting entrepreneurship and business for all its social benefits within developing communities.”

I wanted to to take a chance to think more about the nuance of the right type of aid vs. the right type of trade and investment.

I feel presently that the answer to reducing poverty and increasing access to opportunity and prosperity in developing nations is three fold. The answer is A) for-profit private capital investment into sustainable companies that are socially responsible (or at least not socially irresponsible) AND B) direct “aid with standards” to community-based non-profit organizations run by local social entrepreneurs that are efficiently serving the needs of their communities AND C) efficiently run transparent government that creates and protects a system of law and property rights.

The question that should be asked cannot be as black and white of aid vs. trade. It’s not aid OR trade. It’s accountable aid AND sustainable trade AND efficient goverment. It’s a public/private/community partnership that does not succeed without participation from each sector. The questions that we as a society should be asking is how to make direct aid measurable and accountable AND how to make trade and investment sustainable AND how to make government efficient and transparent.

These methods of human and capital investment are on the spectrum of socially responsible venture philanthropy that builds human capital, infrastructure, and standards of living through education, medicine, nutrition, and technology that enables us to do more with less resources. At the end of the day–all private sector and public sector investment should come back to efficiently serving the needs and desires of the local population in a sustainable manner.

What the answer to prosperity creation seems not to be is the traditional bi-lateral government to government aid (read: loans that local populations will have to pay back to buy our stuff from our companies) nor traditional private capital investment in companies that are not socially responsible and end up hurting local environments. This of course is the very common and very key “aid vs. trade” question that so many like Sachs, Easterly, Collier, Stiglitz, Pralahad, and Gates have debated.

So what is the import of this debate and why is a tech CEO talking about it? The great war of ideas of the 19th and 20th Century between pure communism (total state control of the economic sector) and pure capitalism (total market control of of the economic sector) is giving way to an “end of history” state that could be simply called “Sustainable Capitalism.”

Sustainable Capitalism could be defined as a state in which competitive market economies that are based on environmental sustainability, democracy, transparency, communication technology, an educated populace, and a government with a limited but very important role in setting the rule of law, thrive while efficient social entrepreneurs with services that produce a public good are invested in with capital with measured returns and public servants integrate the same communication and ERP systems of the best-run companies in the world.

In this new Zakarian model of economic system, companies that destroy the environment, provide a negative net benefit through off-balance sheet externalities, or exploit their populations are video blogged and written about and pressured through market forces to reform or wither. This is perhaps somewhat idealist today–but it is the path I believe we are on. The fact that all companies must be sustainable soon enough for the system to scale and prosperity to be possible for all humans is clear. This trend will accelerate as we enter into the coming age of ubiquitous broadband and improved technology of the citizen blogger and as resources become less available. Governments, non-profits, and businesses will have a much higher level of accountability. This assumes of course people have incentives to work toward shared prosperity that can continue beyond the short-term, and I think that is a fair assumption and a vision shared by the global connected youth of today that I know.

What’s the common denominator for human invesment in either the public or private sector? Return on invested capital, as long as the definition of return is broadened to include social returns and the definition of cost is broadened to include environmental degradation. This is the Net Domestic Product (NDP) approach versus the Gross Domestic Product (GDP) approach.

So am I criticizing the Legatum brochure statement? No, not really–I just hope they share the belief–and I am sure they do–that prosperity in the developing world and continued sustainable improvement can only be possible if we find methods to enable entrepreneurs, social entrepreneurs, and public service entrepreneurs to transparently, efficiently, and sustainably make investments that maximize individual utility, return on investment, and the public good.

The effort toward sustainable capitalism and efficient government requires an improved ability to communicate, collaborate, and measure results. There’s a digital generation of entrepreneurs and social entrepreneurs that gets this who will be the global leaders sooner than you might imagine.

Financial Markets: 3 Predictions | Dare Mighty Things

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I may be wrong, BUT…

(Update 4/1/2009 – Wow, was I wrong or what! I’ve learned a lot.)

1. This is the End of the Financial Crisis–

This is the end, not the beginning, not the middle. AIG will likely get a $85B-$90B bridge loan from the Fed backed by company assets in exchange for a majority stake in the company. The Dow will continue its rise in the morning with the news of AIGs stabilization. Based on March market capitalization, AIG It is five times bigger than Lehman. AIG is the 13th largest company in the world according to the Fortune 500 versus 37 for Lehman. It is an insurance and annuities company mainly and not a broker. It affects Main St. Americans much more than Lehman did. It can’t, and won’t be liquidated.

2. Oil Is At a Bottom–

Oil is at its bottom. Remember $88.90 per barrel, the bottom today before it started rising at 2:30pm. It is the lowest we will see a barrel of oil sell for in the next fifteen years until sustainable energy technology (“ET” as Friedman calls it, “ST” as Sachs calls it) creates green power at a price/KWH that is lower than fossil fuels can and transportation fully converts to electric ( reducing global demand for oil significantly and possibly reducing the price under today’s price). Oil will trend upwards, more slowly, toward $150/barrel by the end of the decade.

3. The Dow and S&P Have Reached Their Bottom–

The DJIA has reached it’s bottom. Remember 10,742.70, the bottom today at market open. It’s the lowest you’ll see the DJIA go in your lifetime. The underlying profits and productivity of American businesses are simply too strong to justify the S&P 500 the same level it was at in December 1998, nearly ten years ago when the U.S. GDP was 58% lower than it is today (8.7T vs. 13.8T).

This graph shows the S&P 500 at the same place it was in December 1998. Today’s bottom was 1174.

I may be wrong here, BUT… I sure hope I’m not.

The Influence of Hank Greenberg on the Fed

As an aside, Hank Greenberg, a WWII hero and the former CEO of AIG for 37 years, has had quite a bit of influence on the Fed policy vis-a-vis AIG it seems. I heard him on Bloomberg radio today sounding like Mikheil Saakashvili on CNN five weeks ago when Russia was “invading” Tskhinvali. Greenberg wrote earlier today in the Financial Times:

“AIG is not an ordinary company. It has opened markets all over the world and, for more than three decades, stood at the vanguard of the liberalisation of the global trade in services. Its stock is owned directly or indirectly by millions of Americans. And it has contributed significantly to US gross domestic product directly and indirectly over the four decades of its existence. But all that is not why it should be saved. AIG has a trillion dollars in assets. It can (and always has) serviced its debt. With the right leadership, it will continue to do so. Action is needed now: AIG needs immediate help, because the threat to our financial system is real. For that reason, if private capital cannot rescue AIG, a temporary federal bridge loan – not a federal bail-out – is in order.”

A Place of Ideas: Renaissance Weekend Day One

I’m in Aspen, Colorado for an inspiring gathering over Labor Day Weekend. It’s Friday night at 10pm and the dance floor is calling–but I am driven to write first and dance later.

The gathering is called Renaissance Weekend, started by Ambassador Phillip Lader and Linda Lader in 1981. I first heard of the Weekend on my way to the Orlando airport in 2006 while serendipitiously sharing a taxi with former U.S. Congressman Martin Lancaster, the current President of the NC Community College System.

We were on our way back from the National Association of Community College Entrepreneurship (NACCE) conference. He told me how the weekend gatherings, originally in Charleston, SC over New Year’s and now in Aspen, Tuscon, and Monterey, brought together driven and accomplished people to discuss public policy, science, business, religion, and more.

I took a look at the site and saw past participants included Bill and Hillary Clinton, Alan Greenspan, Gerald Ford, Evan Bayh, Howard Dean, Bill Richardson, Janet Napolitano, Lawrence Summers, Ted Turner, Steve Case, Steve Jurvetson, Steven Colbert, and North Carolinians Terry Sanford and John Sall.

I wanted to go, but had no way in.

I heard nothing more of this gathering for two years, until this June when my friend Stever Robbins gave me a call. He nominated me to attend and wonderfully I’m now here.

Today was the first full day of Renaissance. I must say from the first day that it has been a wonderful experience so far. One of the ways the Weekends are different than any other conference is that every attendee is assigned to present briefly (for 2 minutes to everyone and then for about 10 minutes in numerous breakout panels) on either what they know most about or what they are most passionate about. This practice enables attendees to hear from experts in their field ranging from astronauts to cosmologists to entrepreneurs to neurosurgeons. At this Weekend, there are about 300 attendees.

Today I was assigned to present for 2 minutes to the group on “An Immodest Proposal – If I Could: Serious and humorous proposals on policy, work, religion, and marriage.” I then participated on a panel with six others called “Why Not Change the World? Examples and Visions of Social Entrepreneurship & Community Service.”

At noon, I experienced the most intellectually stimulating hour of my life since the panel on global peace at Fortune Brainstorm with Jeff Bezos last month. My friend and venture capitalist Nick Beim from Matrix Partners moderated a panel called “Putin’s Czarist Plan: Is His Russion a Neo-KGB State” that I hope to post about next.

Tomorrow, Saturday morning, I’m presenting for 2 minutes at 9am on “When I’m 65 – A Red Bull Generation Envisions Their Professional, Personal, & Nation’s Future,” taking the afternoon off to go white water rafting for the first time in my life on the Colorado River, then returning for a 6pm discussion, “Must There Always Be a Bottom Billion: Promise & Pitfalls of Reducing Poverty, Supporting Social Entrepreneurs, and Assisting the World’s Less Developed Nations.”

As a short aside I’ll share a fun story. This visit is my first time in Aspen and the Aspen Institute since July 2006 for Fortune Brainstorm 2006. I recall then sitting next to John McCain for 10 minutes while watching the Germany-Italy World Cup game in the lobby of Aspen Meadows and then seeing him go to the back of the lounge to speak with Vinod Khosla, ostensibly about alternative energy. Thinking she was a passerby and not knowing then who she was, I asked Cindy McCain to take a picture of Senator McCain and I. She somewhat unwillingly oblidged, but alas, the camara battery was dead and no proof exists.

This is a place of ideas and action–action that leads to making a difference in the world. I’m fortunate to be here and look forward to sharing tomorrow night how the day goes.

From their site:

“With equally distinguished participants, all Renaissance Weekends foster lively exchanges which transcend ideological, political, economic and religious differences. This eclectic, non-partisan group – CEOs, venture capitalists and entrepreneurs, Nobel Laureates and Pulitzer Prize-winning authors, artists and scientists, admirals, astronauts and Olympic athletes, judges and journalists, volunteers, diplomats and work-at-home parents, Presidents, Prime Ministers, professors and priests, Republicans, Democrats and lots of Independents, innovators from across America and several nations – has become for many an extended family.”

The dance floor is calling my name…

Speaking at ACG Research Triangle | Dare Mighty Things

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I spoke at the ACG Research Triangle breakfast meeting this morning on How to Build a Company to $1 Million in Sales. If you wish to download the slides from the event they are available at http://www.ryanallis.com/ppt/acgpresentation.ppt.

Thoughts on Uganda

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I was in Uganda from June 29-July 6. I was there to visit two non-profit organizations I have been involved with and contributed funds to in the past. It was my first visit to Africa, and definitely will not be my last.

Uganda really is a beautiful country. It has lots of challenges, yet lots of real opportunities. Seeing the extreme poverty that exists there first hand was difficult, yet instructive and very helpful to my understanding of the issue. 89% of Ugandans are currently subsistence farmers, so a great majority of the population lives in rural villages. It was very common to see families of 6 to 8 living in mud and stick one-room shacks with tin or grass roofs with dried dung floors with no running water, toilet, or electricity. The primary school we visited in Mityana in the West had neither windows nor doors and had dirt floors.

Even more difficult is the realization that the difficulty of the living conditions I saw in the rural areas pale in comparison to those in the refugee camps 300 miles to the north in Northern Uganda, centered around Gulu which was the center for the LRA activity, which has significantly calmed since the 90s. I was amazed at the extent to which the children and most adults living in these most difficult conditions maintain such a level of happiness and non-complaint.

It was a bit unnerving to see out front of every bank and gas station an armed security guard with a rifle or shotgun. The traffic is absolutely insane, enhanced by the pavement ending at times. At one point we were passing a car that was passing another truck, and got driven into the shoulder on the other side of the road. That type of experience was common. There are no medians and the highways are all two lanes. There are just three stop lights in Kampala and none elsewhere in the country.

The thousands of Boda Bodas (motorcycles) and Matatus (bus taxis) all over and the pedestrians crossing allover add to the confusion. And not to mention the cows, which are often in the road calmly walking across. Cows and goats tend to be tied up to the side of the roads so they can be used for mowing. Babies run around naked or just wearing shirts, often with no parents in sight, and kids from 3 to 12 wearing bright purple, yellow, green, or blue school uniforms can be seen walking along the side of the roads for miles around 8am and 5pm each day. The kids would often smile and yell out “Muzungu” which means white person when we drove by.

The current Museveni administration has been in power since 1986 and while it seems to be succeeding in providing some basic services, the roads are still very spotty and the electrical grids shut off a few hours per day outside Kampala. Many are calling for him to leave, not because he’s doing a horrible job but because he’s been in power 22 years. They seem to have a good freedom of speech there and an opposition newspaper. People we spoke to were not shy to offer their criticisms. Many people were speaking about Mugabe and his visit to the African Union last week and hoping for his ouster.

The economy is growing. The competition between CelTel, Warid, Uganda Telecom, and MTN for cell phone was intense. All the services sell Airtime Credits rather than monthly subscriptions since most Ugandans do not have a fixed postal address nor a credit card. These four companies advertise literally everywhere, including painting in exchange for compensation thousands and thousands of buildings and homes along the side of all the roads.

Uganda now has GPRS service which allowed me to access my Blackberry email without a problem most of the time even in very rural areas.

They also are deploying 3G service in the major cities. I saw a number of iPhones there among lawyers and professionals. The biggest employer in Uganda is interestingly Coca Cola. There are tremendous opportunities to invest in alternative energy production, especially in regards to biomass. Roey and I had a chance to visit Torero Cement, the largest cement factory in Uganda on Friday as he’s working with them to supply biomass so they can reduce their coal usage. The economy remains a cash economy. I did not find a single store or company that accepted credit cards outside of the airport.

We stayed with an investment banker who runs Daro Capital on Friday night in Kampala. He help a get together of a group of technology execs and professionals on Tuesday night, including a gentleman who is starting an SMS marketing service. I spoke to a number of people to get a sense of the ripeness for email marketing. Rough statistics, but it seems right now about 25pc of Ugandans have email addresses, though most check them via Internet Cafes. Broadband access is only available via Satellite at a cost of USD$1000 per month, so even the professional class and wealthy have only dial up or GPRS access. A T1 is being installed in Uganda in 2009 after which access will go substantially up.

We visited Entebbe and Kampala on Day 1, Mityana on Day 2, Mbale on Day 3 and 4, and Torrero on Day 5, and Mukono on Day 6. We also drove though Jinja and saw the source of the Nile river.

In Mityana, we visited Nourish International Students working at Naama Millennium School, a school funded by Dr. Christopher Kigongo, who now lives in Durham most of the year and was the former Director of Health Education for Uganda. In Mbale, we visited the Foundation for the Development of Needy Communities (FDNC) which has a vocational school and special needs school founded by Samuel Watulatsu, who presented at a Entrepreneur & Social Entrepreneur Meetup at our house in Chapel Hill last October.

On the way there I spent a day layover in Dubai. Dubai is one of the 7 emirates in the United Arab Emirates, so it’s the size of a county and has 6-7 cities in it, that have names like “Internet City, Media City, and Sports City.” The amount of construction and cranes there was immense. The Emirate boasts an indoor skiing area, and man-made islands in the shape of a palm tree and one in the share of the world. They have built the largest building in the world, the Burj Dubai, shown in picture 4. It is still being finished. When it is done next year it will be 166 floors and 2100 feet tall.

Bottom line, the experience has caused me to be even more dedicated toward spending the rest of my life working to increase access to education, healthcare, food, and technology and working toward ending warfare and ensuring sustainability. I look forward to going back again soon.

This Page May Contain Content That is Not Consisent With the Moral Cultural, or Social Values of the UAE

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I was in Dubai for a night two weeks ago on my way to Uganda and tried from my Holiday Inn Express in Dubai Internet City home of the Middle East campuses of Sun Microsystems, Cisco, and EMC and to access a blog called Secret Dubai Diary. The site came up in a Google search for Dubai nightlife. When I tried to access the site, I got the lovely “Surf Safely” message above, indicating that this site was “inconsistent with the moral, cultural, or social values of the UAE.” Unfortunately for the government censors in the United Arab Emirates, they didn’t think to block the Google Cache version of the page.

It was very reassuring that UAE recognizes the Internet as a “powerful medium of communication, sharing and serving our daily learning requirements.”

If you wish, you can send an email to “safesurf[at]du.ae” to share your view of Internet censorship.

How to Be a Public Company CEO

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I’m out here at the Pacific Crest Technology Leadership Forum in Vail, Colorado this week. The 600 attendees here are a mix of public institutional investors, hedge fund managers, investment bankers, public company analysts, venture capitalists, public company CEOs and CFOs, and private company CEOs and CFOs.

The investors are here to meet the management of the public and soon-to-be public companies and to build relationships with the people that feed them data about these companies–the analysts. The analysts are here so they can publish research on these companies to sell to the investors. The investment bankers are here to build relationships with the management of companies they hope to sell, advise on acquisitions for, take public, or do follow-on offerings for. The CEOs and CFOs are here so they can raise money from the investors and get covered by the analysts. It’s a fascinating dynamic.

I’m learning how to be public company CEO. Here are some of the things I’ve learned.

The Process of Going Public

The general process of taking your company public in the United States is:

1. Build your company to at least $40M in annual sales (the sort-of-hard ‘takes 7 years’ part).
2. Reach breakeven or profitability and have solid positive EBITDA in sight.
3. Invite investment bankers to pitch you in what’s called a ‘bake-off’
4. Buy labels and write on them the price of your cakes and cookies
5. Select two of the following ‘bulge-bracket’ investment bankers to ‘bookrun’ your initial offering of shares: Goldman Sachs, Morgan Stanley, Credit Suisse, Deutsche Bank, Merrill Lynch, Lehman Brothers, UBS, Citigroup, and JP Morgan
6. Select two to three ’boutique’ investment bankers to ‘co-lead’ your initial offering of shares such as Pacific Crest, Jeffries, Piper Jaffray, William Blair, Cowan, Needham (there are dozens and dozens)
7. These four or five banks form your ‘underwriting syndicate’ (the people who help you ‘make a market’ for the percentage of your company that you are selling to the public by taking initial orders from institutional investors).
8. Meet with your bankers to write your ‘Form S-1‘ which is a couple hundred page document detailing every part of your business, every product, every management team member, every metric, every material agreement, every options plan, every differentiation, every risk etc.
9. Determine which exchange you wish to list on. The NYSE has higher revenue requirements than the NASDAQ. The NASDAQ is weighted toward technology companies. NYSE ARCA and NYSE Euronext are also options for smaller offerings, as is the AMEX. The London Stock Exchange (AIM) is also sometimes an option, though it requires different filing steps and doesn’t presently provide the branding imprimatur or liquidity that a New York exchange does.
10. Presuming you are going public on an American exchange, file your S-1 with the Securities and Exchange Commission.
11. Publicly announce your registration and your intent to go public.
12. Respond back to the comments and questions that the SEC provides until they tell you you are good to go.
13. Determine with your bankers which metrics and the definition of each metric you will report to ‘the Street’ (the institutional investors that will buy/sell your shares and analysts which will cover your company once it’s public). You will have to report all financials (bookings, revenue, GM, COGS, Cap Ex, R&D, Sales & Marketing, General & Admin, OpEx, Net Profit, EBITDA, assets, liabilities, ARs, APs) and numbers such as customers, growth rate, ARPU, retention/churn, LTV, and CAC.
14. Work with your bankers to craft your story and prepare your slidedeck for the roadshow, emphasizing your strengths, metrics, and opportunity.
15. If the market timing is good then prepare for your roadshow. The market is rather bad right now (August 2008) for IPOs. There have been no venture-backed IPOs to date in 2008, although there will likely be a few in Q4 and many in 2009.
16. Determine your initial price per share target and how much money you wish to raise, and the percentage of the company you wish to sell to the public market.
17. Hold an ‘IPO roadshow’ in which you and your CFO visit the major U.S. cities to present to the institutional investors and mutual fund managers who may wish to purchase your shares.
18. At this point your ‘bookrunners’ will take orders for shares and help build interest among firms that they know have demand for businesses like yours.
19. Based on demand (# of orders) you and your investment bankers make a final determination on price per share, amount of shares to sell, and who to sell shares to (ideally stable investors that won’t trade out of your stock right away) the night before or the morning of the listing.
20. Ring the bell the morning of your offering and celebrate. Watch the wire of funds go into your corporate bank account. Now the work begins to properly manage expectations, overperform, and gain trust with your investors.

The Advantages to Being Public

The advantages to going public are generally greater access to capital to help grow the business, liquidity for pre-IPO shareholders (though not for at least 6 months after the offering), an ability to command a higher revenue multiple than most private companies can, and a greater level of trust and respect among larger customers or vendors.

The Disadvantages of Being Public

The disadvantages of being a publicly traded company include the 3 months of time you as CEO will have to be fully focused on going public and the 6 months your CFO will have to be fully focused on the process of going public–causing you to lose some focus on operations, having to report many of your key metrics and strategies to the public–including your competitors, having to ‘manage to the Street’ or in other words manage your results and report every quarter which sometimes causes short-term thinking, an inability to be fully flexible, the legal reporting requirements of Sarbanes-Oxley that cost around $2 million per year in compliance costs, and a requirement to be profitable or within clear visibility of profitability that sometimes can limit ability to pursue growth.

Some Tips for the Public Company CEO To Be

Here’s a few tips I’ve picked up here at the conference on being a public company CEO.

1. Manage Expectations Well: Become very good at managing expectations. As a public company CEO your job is to consistently hit or outperform your revenues and earnings per share (EPS) guidance every quarter. It takes time to develop trust with institutional investors. And if you go out saying one thing and end up not hitting that plan and doing another, it will cause turnover among your shareholder base, which will cause your share price to go down (bad). To become very good at managing expectations, make sure you have a solid financial model in place that can very accurately model future revenues, bookings, gross margins, and earnings projections. Don’t go out indicating you’ll have 10% net profits and then decide that you’re going to have 3% net profits so you can grow faster.
2. Build Relationships Before You Need Them: Just as with raising venture capital, build the relationships before you need them. Start going to the analyst and investment banker conferences at least 18 months prior to your offering and build relationships with both the ibankers and public investors. Make sure they know who you are and like you and the company story many months prior to the roadshow.
3. Pick Sticky Investors: When you are going out, you’ll decide which institutional investors get to purchase your stock and which do not. Ask in your contract with your investment bank that you significant input if not have final say as CEO. Get to know in advance which firms are long-term investors and which are not. You can use a service like the ‘Business Intelligence’ offering from Thompson Reuters to determine which institutions are looking at your deck and materials. Pick the firms that are going to hold your stock and not have high share turnover. Be wary of hedge funds who have high portfolio turnover.

Hope you enjoyed the post! I’ve still got a lot to learn so please let me know in the comments what I’ve mis-stated or altogether missed. Man I love this stuff.

At Fortune Brainstorm Tech in Half Moon Bay, CA | Dare Mighty Things

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Today through Wednesday I am the Fortune Brainstorm Tech conference in Half Moon Bay, California, about 45 minutes south of San Francisco. After a Segway tour along the Pacific this afternoon, the sessions began at 4pm. We’ve heard from Michael Dell, Jeff Bezos, Marc Benioff, and Brad Smith, the CEO of Intuit.

Here are some notes on what some of the panelists spoke about:

Dell

• 500,000 people per day who come onto the internet for the first time
  large majority are outside the United States
• Long term bull on the long term impact technology can have on society
• Came back as CEO for second time
• Put his ‘big ears’ on, listened to the employees
• Thought of themselves as a company that listened
• Will have about 2 billion conversations with our customers this year
• centrally controlled tops-down is not most response way
• We should have fiber to the home

Benioff

• It’s not just company talking with customers, but customers talking with eachother in a one to many conversation
• Customers are able to gang up on us
• The acceleration of the soul of the world
• Fareed Zakaria – Post-american World
• The internet is the great accelerator in societal evolution
• A change in the world can only happen if there is a change in conciousness
• Dalai Llama – world peace comes through inner peace
• web 1.0 – transact
• web 2.0 – collaborate
• web 3.0 – innovate (via platform)

Brad Smith, 5th CEO of Intuit in 25 years

• 50 million end users
• Connecting florists with florists in different zip codes
• Intuit now 50% SaaS

Other livebloggers at the conference include:

• Joi Ito
  Chief Executive Officer, Creative Commons
• Rebecca MacKinnon
  Co-founder, Global Voices
  Assistant Professor
  University of Hong Kong
• Amy Messenger
  Managing Director, U.S. Technology Practice Head
  Ogilvy Public Relations Worldwide
• Chris Elam
  Founder and Director
  Misnomer Dance Theater
• Rodrigo Sepulveda Schulz
  Chief Executive Officer, vpod.tv
• Aaron Houghton
  Co-founder and Chairman, iContact
• Frank Shaw
  President, Microsoft Accounts, Worldwide
  Waggener Edstrom Worldwide
• Richard Edelman
  President and CEO, Edelman
• Ryan Allis
  Co-founder and CEO, iContact
• Ross Mayfield
  Chairman, President, and Co-founder
  Socialtext
• Thomas Crampton
  Director, New Business Development
  Next Media
• Per Mosseby
  Chief Executive Officer, Islanders
• Steve Jurvetson
  Managing Director
  Draper Fisher Jurvetson
• Bart Becks
  President International and Director
  Netlog
• Julia Boorstin
  CNBC
• Oliver Marks
  ZDNet
• Bruce Carlisle
  CEO, Digital Axel
• Susan Hassler
  Editor in Chief, IEEE Spectrum
• Daniel Kaufmann
  Director, Governance and Anti-Corruption, World Bank Institute

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