Interview with Phil Yanov - Founder of GSATC
August 7, 2008
I recently talked with Phil Yanov of the GSA Technology Council. We had a great discussion of Phil’s career to date, his involvement with different groups throughout the Upstate, what excites him about technology in the Upstate today, and how to infiltrate Bill Gates’ secret lair.
SCStartups: It seems like you’ve had a pretty solid career in IT since your graduation from Bob Jones University. Can you give us some of the highlights from then up until now?
Phil Yanov: Coming out of Bob Jones, my interest was really in IT more than anything else. I really would have been a computer science major, but at that time the university didn’t even offer it as a major. While I was still in school, I worked for a small software company doing AS400 software development. I was there for a little, and it wasn’t really my thing or something I was good at. I then went off and worked for the very first “software-only” store in Greenville. The name of the store was “Software One.” I made a lot of great connections in the few years I was there. Software One decided it was too early to have a software-only store, and that it couldn’t be ramped up quickly enough. They sold the business, but they gave me a few clients with which I founded Phillip Yanov Associates.
So what did you do there?
I ran Philip Yanov Associates from ‘86 to ‘92. We did software development, networking, and computer sales. I always thought of us at a software development shop first. (We mostly developed in Paradox! They called these “third-generation” software environments.)
I built that into a little business until I sold it in ‘92. I sold it to MidSouth Data Systems. They were going through a consolidation and ramped that business up very quickly. They went from a number of small cash register companies to bringing all of them together and creating the world’s largest reseller of IBM systems. This became Kyrus Corporation. We grew from about 43 employees to somewhere near 700 employees.
Was that an exciting time?
Absolutely. I’ve always said that the ride up was spectacular. The ride down, not so much. You reach a peak there where you bring in a lot of folks, and you end up having to eventually downsize. It was one of those things where coming from a small business to having hundreds of employees and always going through growth, I never realized I would become good at letting people go. This was a very tough thing to do.
What happened next?
We parted ways in 2001. After that, I had a bit of experience and wanted to run my own PR business. I went off and did that for a little while. Basically, I wasn’t really thinking about running a PR business, but running a PR hobby that would pay me. That wasn’t a particularly good model. It was fun, but it wasn’t greatly profitable. For me, it was all about having a good time, and that didn’t really scale.
Did that lead to forming the GSA Technology Council?
I’m a self described recidivist community builder. I helped start the very first PC users group back in 1983. Over the first 15 years, I took on the job of President seven different times. We ran a really great BBS system though, and with that as something that would attract people, we actually had more than 1,000 members. We were larger than the Charlotte or Atlanta users groups at the time. Around 1995, Microsoft flew me out to Seattle to find out what exactly it was we were doing that was so successful. It was a great chance to talk about what we were doing and share some ideas. It was during the heyday of Windows 95, so I was able to see the inside of Bill Gates’ vault.
Was that inspiration for the GSATC?
It was a ton of fun, but I realized that I had really built a hobbyist group. That was fine, but I became more interested in professional uses of computers than hobby uses of computers. The idea was that I really wanted to create a professional organization that helped people build careers and companies around technology.
In September 2002, I wrote the first letters GSATC in my moleskin notebook and decided this is what the group of the future might look like.
What were some of the ideas you originally had for GSATC?
I thought then that it was for straight technology professionals – guys working in IT primarily. I was really trying to think about people doing networking – how do they learn about new technology and get connected to it. How did software developers decide upon platforms? My career at that point had been in helping IT people meet their full potential and figure out their future technology roadmap.
That’s what we figured out with GSATC early on. Let those people meet and get together.
How has GSATC expanded to help people get connected today?
The primary story of the GSATC is of just great growth. We started off with 1,300 names in a mailing list in 2002, and now we have 11,000 or so – people exclusively in the Upstate.
We also went from IT only to IT plus entrepreneurs and now to include other technologies such as chemists or people involved in pharmaceuticals. I’d say the biggest change is the growth and change in audience. The change has been to expand our mission and continue to connect people.
Do you have a favorite anecdote to share of people that have been involved in the GSATC?
There’s a person that is building a software business here, and he and I originally connected when he used to come to the PC user meetings when he was in grade school. A lot of the folks I know today I met when I was selling software and they were still in high school. That’s very exciting to think that we’ve been able to help people get excited about technology.
What’s the first step for people to get involved with GSATC?
We try to get new people into the email list to let them know periodically of what is going on. (Editor’s note: visit www.gsatc.org) Part of our mission is also to let everyone know about all the great technology groups out there. This is why we have this calendar that display meetings for many different events and groups. These groups are helping the point people in technology – people out there developing software, we help them get connected.
I’ve always noticed that a lot of smaller groups have failed because they didn’t find their audience before the original founder ran out of the enthusiasm to get it started. We’ve always thought one of the things we could do is help someone trying to start a group is help them find those 20 or 40 people that share similar interests and help them get connected. (Editor’s note: visit the GSATC calendar here.)
One of the recent events that has grown in popularity is Tech After 5. What are your plans for it?
We started TA5 because people always said that they loved lunch meetings, but they didn’t get a chance to talk enough with each other. We kept hearing that message, so we decided we needed to come up with an event that is a true networking event. There’s a different crowd that just wants to talk with each other, and we want help those people meet.
I wasn’t sure this would work for a very long time, but we finally launched it in March of this year, and we’ve seen tremendous growth every month.
We built a simple model for people to connect – we get them to RSVP online, drop a business card in a bowl, you get a free beer, and then you’re on your own. We know there are entrepreneurs, tech professionals and investors in that room - these are people that can help. We’re going let you make something happen.
What are some of the things you’ve seen in Greenville that have you really excited?
At risk of leaving someone off, what Jim Oswald is doing at PinPoint GeoTech is a fascinating model. His timing couldn’t be better. They place GPS devices inside city trucks so that trucks can tag a problem they notice while driving. Someone else can then come back to that problem. The city dispatcher then gets the work ticket and adds it to a person’s job queue. There is a great efficiency to be had here. Think about all the big trucks with awful gas mileage rolling around the city. They’re doing the best they can, but right now they don’t have the best information. This service help cities get information to the right people.
I’m also excited about Innegrity. They are making fibers that have most of the strength of Kevlar at a fraction of the price. They’re in a mode where when they get real traction, they are going to become a fantastic business. (Innegrity just received a $15 million investment. Read about it at the GSATC site. )
As far as Greenville goes, what do you think has gone well over the last few years, and what are the next steps to make the city even better?
There are so many people involved in making the city “better,” there is no one group – it’s our ability to come together and create the idea that we’re headed in the same direction. For us to reach out and communicate. Today, I can communicate with people like at the Upstate Carolina Angel Network and help them get companies in their pipeline. We’ve really managed to fill in some gaps – we used to not have an angel network; we didn’t have FastTrac Venture Training. We’re happy to be part of all of these things. These things are dramatically different from where were five or six years together.
Why are you doing this? Why not go be a partner in a PR firm? Why do this?
I can’t help myself. This is something that, when I started with the PC users group, I’ve done as a hobby most of my life and been lucky enough to stumble into some success with it. The real thing for me has been to get people connected and make sure they have a good time. It’s just the way I’m wired.
Interview with Matt Dunbar of the Upstate Carolina Angel Network
August 4, 2008
Last week, I had the opportunity to talk with Matt Dunbar, the Managing Director of the Upstate Carolina Angel Network. Matt is a graduate of Clemson University, and he recently returned to the upstate after earning his MBA from Stanford and spending several years with Boston Consulting Group in Atlanta. Matt discusses his transition from consultant to managing director, entrepreneurship in the state, and the present and future of UCAN.
SCStartups: So Matt, you graduated from Clemson. Can you walk us through your career to now?
Matt Dunbar: I graduated from Clemson in ‘99 with a Bachelor’s degree in Chemical Engineering and took a job with a company I co-oped with when I was in school, Eastman Chemical Company. I worked for Eastman for about four years as a manufacturing engineer in one of their specialty plastics plants and in an applications development role working with our scientists and our customers to improve our product offerings to the marketplace. Along the way I decided to shift my focus from engineering to business, and I was fortunate to have an opportunity to study at Stanford’s Graduate School of Business, so I ventured out west. I earned an M.B.A as well as a Masters in Education while I was at Stanford from 2003-2005.
What led you to choose Stanford instead of an east coast school?
Quite frankly it was a combination of the strong academics at Stanford and a real sense of adventure and a kind of romantic concept of “go west young man.” I love the landscape in California, and I took advantage of the weather to spend a lot of time outdoors hiking and fishing. Of course the classroom experience was phenomenal as well - with incredible exposure to some of the pioneers of Silicon Valley, as well as extraordinarily talented students and professors. I had a great experience.
So what did you do after you graduated from Stanford?
I really enjoyed my time in California but long term I wanted to be back in the Southeast, so I set my sights on making a move back in that direction. Also, I was pretty impressed with my classmates who had come out of the management consulting world, and I thought that their skill set was really compelling - strong analytics coupled with a unique ability to communicate clearly. So given those drivers, I focused on seeking opportunities with the top management consulting firms that had offices in Southeast. In the end I joined the Boston Consulting Group in Atlanta, so it accomplished both my goals of extending my business education and getting back to the Southeast. I came on with BCG in September of 2005 and was there for about two and a half years.
UCAN is a network of individual investors who seek to infuse equity capital into fast-growth, high-potential startup companies in the region. These kinds of investors are known as “angels,” because they provide a source of capital between friends and family and institutional investors. There has been a trend over the last decade or so for individual angel investors to form groups to improve their ability to screen, evaluate and negotiate investments, and there are about 300 angels groups around the country today. Our group is a network in which each member makes his or her own investment decisions - in other words, we are not a committed fund.
UCAN was formed over the course of the last year or so by several folks around Greenville who had been involved in angel investing on an individual basis and in groups in other cities, such as Charleston. They began exploring the interest in forming an angel group in the Upstate and had a strong response, so they put together a core team who hammered out the details and launched UCAN in April of this year.
How did you get involved with UCAN?
I attended a Clemson Renaissance Center event in January, and it just so happened that I stood in the buffet line next to JB Holeman (one of the founders of UCAN along with Tim Reed). I mentioned my interest in returning to the Upstate, and he mentioned that UCAN was seeking a Managing Director. Over the course the next couple of months or so, we stayed in touch, and I was invited to come up for an interview in April, and I came on board full time in May.
How do you fit into the day to day operations?
My job as Managing Director is to coordinate the overall investment process for our group - which entails everything from general administrative tasks to generating and screening deal flow to working with entrepreneurs on their presentations to working with our investors on due diligence and deal negotiations. Fortunately, we have a strong Board and several committees who help carry the load.
What’s the current investment model? Will you co-invest with other groups or VCs?
Our model is much like other investment groups - we are seeking preferred equity investments in early stage companies, primarily as a first tranche of capital beyond friends and family. We are very much interested in syndicating with other angel groups, and have established relationships with a number of them in our region - we expect to share deals on a regular basis and are currently working on a joint due diligence effort with the Charleston Angel Partners. We will also look to build strong relationships with VC firms to help develop a pipeline for our portfolio companies to seek additional capital as they grow.
Lets say I am an entrepreneur with a great idea and a solid team. I’m interested in having UCAN fund my company. What do you look for if you were to invest in our company?
After benchmarking with a number of other angel groups, our Board has recently set down some deal screening criteria that define what we’re seeking. Primarily we are looking for companies that can achieve very rapid growth and have the potential to return ten times the investors’ money within 3-5 years - so in otherwords, these are not “lifestyle” type businesses.
From a business perspective, we are looking for a strong management team that’s trustworthy, passionate and articulate - and preferably with deep startup and industry experience. If the management team doesn’t have that experience we at least need to see a Board or key advisors who can bring those critical skills to the table. Of course we also need to see a compelling market need, a viable solution and a defensible competitive advantage for the company’s product. Finally - there must be a viable, well-constructed, believable plan to execute against the opportunity - there are tons of great ideas out there, but we need to see a clear-cut path - from a sales and marketing standpoint - to “cross the chasm” from idea to viable fast-growth business.
That raises an interesting question (defensible position) about patents. Some people say that patents are not necessary because if you are startup and you get sued by IBM, you won’t win anyways. What’s your view on that?
We like to see a defensible position. That doesn’t necessarily have to be a patent - especially in areas such as software, where there are so many ways to get around a patent anyway. It’s quite possible that a strong patent position is an important part of building the company’s defensible position, particularly in industries such as materials and devices, in which case we put more emphasis on it, but overall we’re really looking at the company’s competitive advantage - which can come through many avenues, including patents, unique cost-structure, first-to-market timing, novel processes, etc.
Are you accepting executive summaries or business plans?
Yes. We are taking business plans through out web site. (www.upstateangels.org) Click on the Entrepreneur’s page and follow the link to submit plans through AngelSoft.
How has the transition been from consulting world to the investing world in dealing with startups?
The nature of a large company is vastly different from startups, and there’s quite a bit of difference in thinking about what is critical for success given the stage of development. However, there are many things that the consulting teaches you - especially how to analyze, prioritize and communicate - that are also critical skills for a role like this one. It’s very challenging, but also great fun, and I’m learning a lot. I really enjoy learning from our investors and from entrepreneurs, and I love being a part of the real engine of our capitalist system - the risk-taking and hard work that drives the economy.
Have you noticed any trends in the ways large Fortune-500 companies do business that could help startups be successful at an early stage?
There are certainly lessons to be learned. A strong management team is key in both - their ability to execute, prioritize and adjust to changing conditions is essential. There are also great lessons to be learned about developing and implementing strategies that allocate precious, limited resources to the most-important, highest return uses. Of course, the challenge that is unique to entrepreneurs is that they generally have to be more focused on short term cash flow - otherwise a great growth strategy can run you right out of business if you can’t generate the immediate cash needs to stay afloat until you reach critical mass.
As a native of Upstate South Carolina, what can the state and universities do to foster more innovation and help people start companies?
So does that mean you look to take board seats or advisory roles?
In most cases we would expect to have a Board seat in our portfolio companies, although in some cases we would take on observer status - especially if we invest in syndicate and another group is represented on the Board. Either way, we intend to be a resource so that a portfolio company CEO can call us up to help them navigate through their challenges.
