From pets to AI to medicine, entrepreneurs have ideas

Even in the best of times, launching and growing an early stage company isn’t easy. It’s difficult to get the attention of investors, even harder to land angel or venture capital dollars once inside the front door, and harder still to keep a young company on track even after an investment is made.

And these are not the best of times.

Making the right moves in today’s hard-to-define economy was the theme at the 18th annual Wisconsin Early Stage Symposium, where more than 400 people gathered to hear entrepreneur pitches, to glean advice from people who have successfully led or invested in young companies, and to size up economic trends as well as hands-on business principles.

The job of defining trends shaping the U.S. economy and beyond fell to Mike Knetter, the chief executive officer of the UW Foundation and a former senior staff economist for both presidents George H.W. Bush and Bill Clinton.

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Knetter described the “economic expansion we love to hate” as shaped by a combination of encouraging factors — such as low unemployment, high payroll employment and prime-age workers returning to the labor force — and some worrying trends, including inflation, high interest rates, lack of housing mobility, the growth of the national debt and a need for consumer confidence to remain strong.

Inflation shows signs of cooling in most sectors and the Federal Reserve may yet “declare victory” in its fight to control it through interest-rate hikes, Knetter said, but concerns remain about conflict abroad, political polarization at home and the reality that transition away from “carbon energy” and globalization will hurt productivity and living standards for the short term.

What is the best hope for continued prosperity and avoiding a recession? Technology, innovation and entrepreneurship, Knetter said, which have saved the U.S. economy in the past and are poised to do so again. America can lead a “fourth industrial revolution” through its broad and deep capital markets, maintaining the rule of law, encouraging its entrepreneurial culture, incubating the right managers and keeping higher education strong.

Examining the “micro” side of the equation was the role of Susan Healy, who has been the chief financial officer for major companies, an investment banker and an adviser to young companies — including many in Wisconsin. Her message: Companies of all sizes must pay attention to metrics that will always matter, good times or bad.

She cited variable profit calculations, true customer acquisition costs and cash “burn” rate as mattering more than ever. That’s especially true for young companies, because venture capital dollars are harder to find at home or abroad; initial public offerings are near a historic low, which makes capital harder to find; and bankruptcies have soared.

Healy urged young companies to make sure they consider all costs that can alter how revenues are calculated and to be internally “ruthless” in doing so. That includes the costs of getting sales, credit card fees, couponing, customer service costs, commissions, software customization, shipping costs and third-party charges, to name a few.

In some companies where she has worked or advised, executives go through a “kill the company” exercise to try to imagine all the forces that could bring it down — and then act to counter current threats or guard against future risks.

Paraphrasing former Intel executive Andy Grove, Healy noted “only the paranoid (businesses) survive,” and when asked about the number one mistake young firms make her one-word answer was: “Denial.”

If some of what Knetter or Healy said sounds gloomy, it wasn’t meant to be. It was intended to help young companies weather storms they will encounter along the way, perhaps not tomorrow but eventually. Entrepreneurs should recognize larger forces that may affect their businesses — and be sure to implement time-honored business strategies that will make them stronger.

Tom Still is the president of the Wisconsin Technology Council. Email:

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