By SUSAN LAHEY
Reporter with Silicon Hills News
Alan Knitowski calls it like he sees it, letting fly his controversial perspectives that: Austinites bootstrap too much, entrepreneurs interested in work/life balance need to “grow up” and he would happily rail on the entire group of investors at Austin Ventures to their faces.
The investor, serial entrepreneur and CEO and co-founder of Phunware spoke at Startup Grind Austin Monday night, giving his audience of about 30 people a fast lesson in how to reach entrepreneurial success, Knitowski-style.
When he founded Phunware in 2008, he said, he knew that peoples’ mobile devices were going to be their main screens and that the perfect convergence for future endeavors was SaaS, the Cloud and mobile. So he created a company that’s Mobile as a Service.
He wanted to help companies with apps accomplish:
• universal login and data capture
• advertising content management
• media and hosting alerts and notifications
• high margin loyalty and rewards
• location tools
• analytics and business intelligence
“Nobody wants 12 partners for procurement with 12 sets of hardware and 12 people pointing fingers when nothing works,” Knitowski said. He wants Phunware to do it all.
Knitowski grew up in Arizona to economically disadvantaged parents. Until he was 19, he said, he was 5’2 and weighed 110 pounds. So he got tired of being told what he couldn’t do because of his circumstances or his size. He admonished the budding entrepreneurs in the room “If you don’t live life as a victim and you get off your ass and work, anybody can do anything.”
He got his bachelor’s in industrial engineering from the University of Miami on an ROTC scholarship and his master’s from the Georgia Institute of Technology. He served as a ranger with the U.S. Army Corps of Engineers, and spent part of that inspecting nuclear facilities in Korea before getting his MBA at University of California at Berkley. That launched his years in Silicon Valley.
His first business model, he said, was annihilating Nortel because the company tried to pull funding from his MBA.
“Hell hath no fury like a serial entrepreneur with a crap load of capital,” he said.
Austin entrepreneurs, he said, think in terms of building a customer base in Austin, then Central Texas, then Texas, then the world. Silicon Valley entrepreneurs, on the other hand, think in terms of taking on the world with a revolutionary idea. Austin entrepreneurs love stealth mode; Silicon Valley entrepreneurs, and Knitowski himself, readily share their ideas, he said, because they know that just because someone knows your business model doesn’t mean he can execute it. And Austin entrepreneurs are so wedded to bootstrapping that they miss the opportunities that well-funded companies get from influxes of cash. Gowalla, he said, not Foursquare, should have dominated that market, but they were too dedicated to bootstrapping their business and Foursquare won.
Knitowski had a whole series of points for the entrepreneurs present:
• Always be honest and always be transparent. We send reports to investors every month. Too many people never talk to their investors until they want money again. Your investors will fight to the death with you if they trust you.
• Cash flow is the only thing that matters. Make sure you know, every day, how much you have coming in and how much you have going out. What’s your burn rate? We have a current asset report every week.
• Use reputable lawyers, auditors and other professionals. If an investor asks who your auditor was and you mention a low budget firm, they’ll have to do the numbers all over again. If you say Price Waterhouse Coopers, that’s a question answered. He gave a list of recommended firms.
• Raise money before you need it.
• If you want a lifestyle business, that’s fine. But if you take a dollar from anyone, you have to let go of the idea of work/life balance or leaving every day at five to attend a kid’s sporting event. “Stop fooling yourself. Being an entrepreneur is an immense sacrifice and I can only do it because I have an amazing wife. She shoulders crazy burdens with our four kids.”
Phunware is slated to have $23 million in revenues this year and aiming for more than $100 million by 2015. It has received $20 million in several rounds of funding and is planning to take its first institutional investment soon to expand the company globally.
There will be no Startup Grind Austin event in November. The next event is Monday, Dec. 2 and features Robin Thurston, co-founder and CEO of MapMyFitness.