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And, why ideas aren't worth much, but teams are worth tons
Often entrepreneurs are advised to be nimble and flexible; they're told to realize that their ideas and business models will change over time. So, why bother with a five-year plan? Well, as important as adapting to new realities is having goals and milestones and a road map. "One of the biggest lessons I've learned is the importance of working backwards," said Bill Davis, CEO and President of Ze-gen, which makes fuels for power plants and has raised some $8 million from investors. "Figure out what success is three or four or five years down the road, and then what are all the steps required to get there."
Without a goal, "sometimes activities get in the way of the strategy," he said. Additionally, talk to people in the market. You may find that what you want to build isn't exactly what customers or financiers want built.
The other advice from Bill is to not to sweat over getting a high valuation. "The fact of the matter is, if you only have an idea, it's not worth much anyway," he said. Many entrepreneurs "fight too hard for equity," he said. And, when a company does get a high valuation early on, they may possibly have to endure a down round in the future. That's not very pretty.
Finally, Bill advises entrepreneurs to really take the time to find the right people. "One lesson I continue to re-learn is when you're up against the wall to fill a position, you tend not to fill it well," he said. Take the time to find the right people and the right chemistry. As he puts it: "It's absolutely critical."
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Ze-gen, Inc. is a renewable energy company that is emerging as a leader in the development of advanced gasification technology for converting wood debris and other solid waste streams into a synthesis gas (syngas) mixture of carbon monoxide and hydrogen gas. This syngas is a renewable fuel which can be used to offset consumption of fossil fuels in conventional power and industrial facilities.