We have some exciting news for those early stage technology entrepreneurs located in Texas! Tech Ranch Austin, was launched in November of 2008 by successful entrepreneurs, Kevin Koym and Jonas Lamis. Tech Ranch provides many services to help early stage companies get off the launch pad. For entrepreneurs, Tech Ranch Austin serves as an adviser, offering guidance from day-to-day decision making to longer-term planning including product and marketing strategies. Since opening its doors only three months ago, Tech Ranch Austin has already built a network of hundreds of central Texas citizens on the entrepreneurial path. The company has hosted office hours with numerous budding startups.
As fear, uncertainty and doubt reign supreme in this topsy-turvy economy, Kevin and Jonas are seeing a groundswell of technology entrepreneurs looking for advice. We are fortunate to be joined today by Kevin Koym. Kevin has successfully started five companies and has gained nearly 20 years of startup experience. As you listen to Kevin share with us his insight and experience in the technology startup arena as well as his direction for Tech Ranch, you will realize what a valuable resource the early stage technology entrepreneurs in Texas now have available to them.
Please tell us about Tech Ranch Austin. What services do you provide?
Tech Ranch Austin is a pre-seed and seed stage business incubator for technology ventures that are going to change the world. In Austin, there aren't a lot of people who will even talk to much less work with entrepreneurs when they are at that early stage. In Central Texas there just isn't a lot of support. I really haven't seen a lot of support even in Silicon Valley. It's just that the density is so high there that people bounce off of each other a lot more there. In Austin, the startup ecosystem was limited in its support for early stage entrepreneurs. There wasn't someone who would pay attention to and support the early stage startup technology entrepreneur. So what my business partner, Jonas Lamis, and I have set out to do is to solve that problem and create a situation that helps early stage technology entrepreneurs get their businesses off the launch pad to actually have some size and motion. Some of the ventures we are working with are totally bootstrap, while others are looking for funding. A lot of the processes in this early stage (I call it the bare metal stage) are very similar at least in the context of the economic conditions that we have right now. Investors are expecting to see companies already have customer money before they hand them an investment because investors are risk averse right now compared to previous years. As a result, a lot of times a bootstrap strategy is what is necessary. Most entrepreneurs have absolutely no one to count on in his court during this stage.
The best way I can explain Tech Ranch Austin's role is to tell you to picture a four-sided table. The entrepreneur is on one side of the table, the vendors are on another side, the customers are on another side and the investors are on yet another side. The place that Tech Ranch Austin sits is on the side right next to the entrepreneur. We help them work with their vendors, their investors and their customers. Historically, especially in Austin, there has not been anyone sitting on that same side of the table working with the entrepreneur. What that means is a lot of times we are taking risks. We've got skin in the game alongside the entrepreneur, whether that's equity risk, because the entrepreneur has nothing to pay us other than sharing in the equity, or a very small amount of cash. We are very active in the local entrepreneurial community. As an example, we have at least one if not two major events per months for entrepreneurs. Most of the time, these events are ones where they can actually participate without having to pay anything, but they can get significant value out of it. The whole idea is that the entrepreneur is being supported by his community. We really consider Tech Ranch Austin to be more of an accelerator than an incubator because we help accelerate the company to the next stage much faster. We are a for-profit business, and as such, our whole model depends on us being successful in accelerating the companies with whom we are working.
We also offer free office hours one day a week. We share one hour of time with entrepreneurs on scheduled appointments. We see a new set of entrepreneurs each week. We meet them and determine if there is something we can do to help them out. Sometimes the entrepreneur is focused on building a technology instead of a business. Sometimes he needs an introduction. This is one of our gifts to the community. We try to do as much as we can do even when there is no commitment involved.
We also have a program where, for a small amount of cash on a monthly basis, people can get involved in our Innovator Program. This is where entrepreneurs can actually put into practice some of the things that are happening at the previously mentioned level.
Some of the entrepreneurs in our portfolio want to office with us. We have inexpensive office space available. We filled our first facility and are working on our second facility. Being around in our orbit is compelling- in creating the "water cooler effect"- where random social connections create great business value. Even though we've been in this new space since the week before Christmas, we are within a day or so of filling up our space here. Many people we work with have seen the value that other entrepreneurs are getting by sharing office space with us.
Sometimes an entrepreneur will have a need to have a special project done, so we'll actually get involved in special projects for the entrepreneur. This could be a market analysis. It could be a team assembly based on other entrepreneurs that we have in our trust network and that allow us to pull in other people.
We will take a part-time executive position within the company where we are actually rolling up our sleeves side-by-side with the entrepreneur. Jonas and I have been startup executives many times in the past. In many cases, the entrepreneurs we work with are only 25 years old. They are doing well, but they need a little bit of adult supervision. I've got almost 20 years of startup experience. We are able to help build a long-term sustainable company. We help them avoid a lot of the pitfalls.
You mention the term "trust network." Can you define that term for us?
I studied research behind fourth generation warfare, network-centric warfare and asymmetric warfare. I went in depth in studying those theories and I was looking for a positive way of applying that same thought. I started looking at social networking theory and how we can use those in a positive way. Trust network was one of the things I coined out of that. I have a network of people I recommend, but it actually goes deeper than that. If I tell you that I trust someone, not only am I telling you that this person is sincere, I am also telling you that they are capable in the domain that I'm mentioning to you, that they are reliable in the domain I am mentioning to you and that they are loyal in the domain I am mentioning to you. That is called the ontology of trust. So when I say trust network, I mean it in a really deep kind of way. Part of what is powerful about that is we are truly able to accelerate entrepreneurs in startups very fast because we have a very well thought out structured trust network that we are tying into.
Historically, Austin, Texas has been the center of the semiconductor and computing industries. However, you have noted that the problem with Austin is the lack of any easy way to make connections. Will you share with us your background as a successful entrepreneur and then comment on what obstacles you experienced when you moved to Austin and what you did to overcome those obstacles for yourself and for other entrepreneurs?
I grew up in San Antonio, Texas and went to University of Texas at Austin. Then, after getting my degree, I lived and worked in Dallas, Austin, Boston, Chicago, Guadalajara, the Bay Area, Phoenix and Santiago, Chile. So, I am a high-tech gypsy, but I keep coming home to Austin. I worked for Steve Jobs from 1989 - 1993 at NeXT and fell in love with startups and fell in love with the Steve Jobs' reality distortion field. I'm not sure which one was more powerful but both of them combined together to make me get hooked on being a startup guy. I've spent a lot of time in the Bay Area for NeXT. Silicon Valley has a history of just being a place where people go from around the world to get their companies off the ground. It wasn't until I had my own company and was working with a client that was on the West Coast that I actually had a true experience of how deals were being done there. If you were in Palo Alto on a Friday afternoon for happy hour and you went into a place called Gordan Biersch's, you would actually see people starting ventures right there. It would be a bunch of guys drinking beers and standing around and ventures were being started. It was powerful to see how ventures were being formed. Here in Austin, we have something that is more strategic and more powerful than what happens in Silicon Valley. I call it "Austin Friendly," and sometimes it's called "Texas Friendly." People really get along here. They will go out of their way to help each other. I formed my first entrepreneur group when I moved back here. It wasn't anything fancy. The whole idea came from this idea of entrepreneur helping entrepreneur. I come from a long line of ranchers and farmers. It is very natural for one farmer to help another farmer. What was surprising for me was to have this "Austin Friendly" culture but not to have this naturally happening for entrepreneurs, especially if it's happening in California.
One of the things that I have been specifically focusing on and ended up turning into a business called "Enterprise Teaming" is creating the conditions to have entrepreneurs naturally collect together. In California, there is such density of entrepreneurs, especially in the Bay Area, that I think they can't help but bounce up against each other. Here in Austin, the density of startup guys is not as high as the density of just general high-tech folks that are working somewhere like IBM, etc. For me, I started my first venture in 1994, a company called Praxis. We built the e-commerce engine behind Dell Computer, back when Dell was first getting into e-commerce. The problem was there just weren't a lot of startup guys here in town. Since then, I have been involved in starting up a number of venture groups where that's what we do. I call that whole process of how people team up together "Enterprise Teaming." It's kind of like, the dynamic in days of old when one farmer would help another farmer build a barn- so in turn in the future the other helped each other- although in this case it's "I'll help you build your startup, and you help me build my startup."
Do you help your portfolio companies find financing?
A lot of times in the market we are in now, we push the entrepreneurs to get customer money as quickly as they can. Even though the traditional model says to write your business plan, go talk to investors and then build a company around it. In most of the businesses I have founded, we made the decision to get customer money first. That is really what investors want to see. We at Tech Ranch Austin will help entrepreneurs think through how to get customer money first. We tell them that there is always a way of getting customer money because customers need to solve problems. However, to answer your question, I would say yes in the right situation, we do help make introductions on the investor side.
Entrepreneurs need to keep in mind that venture capitalists are looking to do a moon shot. They will look at an investment and think we are either going to the moon or we're going to blow up along the way. This is the rocket metaphor. The other metaphor is the camel metaphor. If you are going to cross Death Valley, you slowly make it across like a camel. When you come through the desert, you will be as hard as steel. Venture capitalists are betting on one out of ten being successful. Your chances of succeeding as an entrepreneur will be much higher if you can get customer money with a little bit of investment and control the company yourself. We tell the companies that we work with to try the camel route first. You can always go from camel to rocket but not from rocket to camel. Intel is one of the best examples of the camel strategy. While they did have investors, they always kept costs low. As an example of a rocket strategy that went bad there was a company based in Austin called Agillion. They bought a Super Bowl ad before they even had any sales. It was truly a rocket strategy not a camel strategy, and it did not work. They were soon out of business.
Will you share with us your impression of the venture capital market in Austin?
Some West Coast venture capital firms are contacting Tech Ranch Austin now because they know we have the pulse on the early stage companies in our region, companies they will not see sitting in California. A new crop of angel investors that have created new wealth are also getting involved in investing. Central Texas Angel Network has been around for several years now and is getting more involved in Austin. Tech Ranch Austin's model allows us to stay very close to the ground with the entrepreneurs we work with. As such, we will, on an informal basis, introduce the appropriate entrepreneur to the appropriate investor. We jokingly liken ourselves to Julie on The Love Boat. Like Julie, we play matchmaker and make sure everything runs smoothly. Tech Ranch Austin has no plans at this time to raise our own fund. We want to be in a position where investors, be that VCs or angels, see us as providing access to what's interesting in Austin. Investors and VCs are looking favorably on Austin right now and believe there are many opportunities. We believe that Tech Ranch Austin provides the best way to plug into that.
I'm intrigued by the name "Tech Ranch Austin." How did you arrive at the name?
I've had five generations of family ranching within twenty minutes of where I am standing right now. I have a preponderance of history here in Austin. A lot of the name comes from Jonas' and my families' history.
What industries and geographic locations are served by the companies you seek to work with?
Predominantly, Central Texas. Because of my connections with Chile and my love of Latin America there will be some natural connections there. We are hyper-focused locally but are open to other opportunities. It would just have to make sense. We focus on technology companies that can change the world. What I mean by that is they have to be growth companies. The company has to have a chance of actually having an impact. The predominance of our experience has been on the software and internet space. In our portfolio, the majority of the companies are software, hardware and internet companies. With that being said, we have talked to companies of all different types. Our input is on building the business around the technology. A lot of times the founders know the technology very well but don't know how to build the business.
For our entrepreneurial readers, how would they go about finding out if they qualify to be part of the Tech Ranch Austin incubator program?
As you will learn on our website, techranchaustin.com, the Tech Ranch Austin team is offering free collaborative meetings between start-ups and our staff to help entrepreneurs solve challenges they face on the path to funding and venture success. Office hours can be scheduled on Fridays between 2pm and 5pm at Tech Ranch. Please complete the form found on our website to arrange your meeting. You can also sign up to receive our email newsletter.
How many companies are part of the Tech Ranch Austin system now?
There are currently 19.
At the recent ProductCamp, Jonas presented his "12 Steps to go from Employee to Entrepreneur." I understand that the simple, one slide presentation (which we have linked here ) held everyone's attention for an hour, as they talked through the trials and tribulations of finding a passion, building a product and team, getting fired, launching and eventually scaling a venture. Tech Ranch Austin is planning to launch a workshop around the Employee 2 Entrepreneur paradigm. Please tell us about this workshop and what you hope to achieve.
We will be initiating programs for people who are making that transition from employee to entrepreneur who have never made that transition before. Certainly, Jonas and I have gone through that. We offer entrepreneurial support before anyone else will talk to them. We are here for them.
You have a book that is to be published later this year. Can you share with us what the book will be about?
It is called The Rise of the Enterprise Tribe. Enterprise means focused on business. A tribe is a group of people who are ideologically connected and economically connected. They are ideologically connected because they look at the world similarly. Economically connected doesn't mean they hand each other money. It just means they have an economic connection and because they have an affiliation, they have a better chance of surviving. Similarly, a group of Indians who have a loose affiliation have a better chance of getting through a rough winter than they would without any affiliations. The predominance of my work and the theory behind the work we are doing at Tech Ranch Austin is based on these enterprise team concepts.
Will you share with us how the state of the economy right now makes what you are doing at Tech Ranch Austin both more challenging and also more necessary?
There is an extreme need in the whole country to help people to become entrepreneurs. It has been true for years. Over 50% of the jobs created in the last few years came from small firms. I hope the US Congress will see that historically that is where the job growth has come from. We really need to be focused on that. More than anything else, support the entrepreneurs in this country. It's what's going to change the country and pull it out of recession. Entrepreneurs are always going to be entrepreneurs. They will always innovate, whether it's in good times or bad. We want to help them to do that.
We thank you, Kevin, for your time and insight.
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