Newport Board Group West Florida partner Pete Savage works with multi-disciplinary technology companies, high growth companies, and companies where his experience in turn-arounds, M&A, domestic and international R&D and channel partnerships is especially valuable.
As in the first part of this Q&A, Pete describes his takeaways from several decades leading and advising entrepreneurial high tech companies on business strategy, product development and marketing.
Pete, you mentioned previously that, while emerging growth companies in their early years must focus on getting their business off the ground, they also need to think about long-term issues like exit strategy. How do investors and executives discipline themselves to think about long term issues?
When I advise company CEOs we agree on a process to execute strategy. One point I emphasize is to think long term about future suppliers and production volumes. CEOs have to constantly look at their company through the eyes of current and future suppliers. Companies typically start with local suppliers. At this point production volume is low. They’re not all that attractive as customers. They need to credibly demonstrate their future value to suppliers.
Then, as they scale up production, CEOs need to steer their buying toward world class suppliers that recognize the longer term potential of their business, provide value-added services tailored to the company’s needs, help the company get through cash-starved times and perhaps even contribute market insights and connections. Strategic suppliers can be as important to the growth of a company as customers and investors.
If your business model calls for an alliance with a contract manufacturer, do your homework. Put yourself in the manufacturer’s shoes and understand their economics of serving you. How much will it cost a contract manufacturer in non-reoccurring expenses (NRE) such as up-front design, tooling and other setup and process costs to ramp up their business with you? In the future when you are looking for growth capital from later stage investors and private equity, you will need a fully defined vendor/sourcing strategy, which shows how you will achieve higher production volumes while staying within the limits of your working capital. As in other areas of business development and growth, long-term production planning pays off.
What makes intellectual property (IP) strategy such a key issue for emerging technology companies?
Most tech-savvy entrepreneurs don't understand the intricate complexities of patent law and practice - and especially the role of IP strategy in their business strategy. Many go into their first exposure to the often arcane area of patent law unfamiliar with basic concepts like utility patents (describes product functionality independent of how its technology works) versus design patents (describes design features like shape and ornamentation). Copyright and trade secrets add another level of complexity. CEOs need to understand these topics, and to establish relationships with outside experts.
IP strategy requires that you get market intelligence from your competitors. I was with a company that was an early entrant in a market sector. We had to find a way to develop our products without being sued for patent infringement by a dominant player who was convinced their proprietary IP would allow them to suppress competition and dominate the market. We talked to other companies, all of whom were our competitors, who were feeling the same pressure from the dominant company. Cooperating with competitors to create a level industry playing field - while avoiding any hint of improper collusion - requires an experienced guide and often an intricate legal strategy.
About the Expert
Pete has been CEO and Board Member of several innovative telecom firms. Pete’s deep background in technology has led him to entrepreneurial roles in many industries. He currently leads a company organized to commercialize technology developed at the University of South Florida to support video imaging systems for minimally invasive surgery. Contact or learn more about Pete here.
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