President and CEO
Covad Communications Co.
Santa Clara, California
When founders bring in an outsider to run a startup, they need to be very clear about what they want that person to do. If they want somebody to come in, build the company, and take it to the next level, then they've got to relinquish control. My board has been very supportive. From day one, my company's founders reported to me. I'm glad that somebody on the board had the wherewithal to arrange that. What an outsider like me can bring to a young startup company is a mission to increase scale to an unbelievable level.
But in your haste to put your spin on the place, you have to be sensitive. If you're not, you'll slow down the transformation process. As the new person, you need to spend time socializing throughout the business. Put more nurturing into it. People joined a startup; they didn't join you. Here I am thinking that we're going to be a great, huge company. But not everybody signed up for that.
Covad (www.covad.com) was launched in 1996 and went public in January 1999. It is building a digital network that will deliver data, voice, and video information, as well as high-speed Internet access, to homes and businesses. Robert E. Knowling Jr. joined Covad in July 1997. Previously, he was executive vice president of operations and technologies at US West, where he oversaw services for 25 million customers in 14 states.
Founder and president
BHC Inc.
New York, New York
Don't start a business unless you have enough money to invest in the business yourself and enough money to live on for a year. You're not going to be profitable for at least that long. How are you going to pay your rent in the meantime? And when you do take money from other people, be selective. So many entrepreneurs come to me and say, "It's no longer the business that I started." That's because they lost control. Control doesn't come with the title of CEO; control comes with cash.
You don't need to have a million dollars in the bank. Be creative, and understand how to get money. For the venture that I'm involved in now, we held a series of fund-raisers six months before we launched the company and raised $50,000 just to get things going. For example, we teamed up with a local theater, charged double the ticket price, and held a reception afterward. If we had taken $1 million from an outside investor, we would have lost more than half the company.
In the beginning, venture capitalists didn't want us. After all, being a financial educator for the poor isn't very sexy. Now they see that we have something to offer. But we feel that they would sell out our target market, and we don't want to become McStreet. Here are my tips for starting a business.
Make your idea your idea -- legally. Get the paperwork done for patents and trademarks.
Know your market. And don't just focus on traditional demographics, such as white males, ages 35 to 45. Dig deeper: What are the buying habits of your customers? What are their families like? Getting that kind of information takes time and money. So partner with universities to do market research.
Develop an exit strategy from the get-go. Go beyond strictly financial considerations. What is your personal exit strategy? You're not going to want to run the company forever. Step aside when the mission has to change, or when the market need shifts to involve something that you know nothing about. Otherwise, you're going to run your company into the ground.
BHC is a new-media company that helps women, minorities, and middle-class consumers to make informed financial decisions. Melissa Bradley (Bradleyml@yahoo.com) also teaches a marketing course at City College, New York. Previously, she founded the Entrepreneurial Development Institute, a nonprofit in Washington, DC that trained young people to develop small businesses. She also served as a financial regulatory-affairs fellow with the U.S. Department of Treasury and as a marketing specialist at the Student Loan Marketing Association.
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