In the early years when Cincinnati entrepreneur Mike Collette was launching OnTarget Media, he was driving a Honda Civic with 100,000 miles and living off what had been his life insurance policy.
His key asset was his stereo.
Since then, he's secured venture funding, sold the company twice to private equity firms and changed the name to Healthy Advice Networks. Twenty years later, it's a $70 million operation that provides patient education programming and information to doctors' offices and hospitals.
His advice for entrepreneurs? Realize that launching a business is a long journey.
A native of New York State, Collette had come to Cincinnati to work for Procter & Gamble. He already had the startup bug at the time - in college he made $10,000 one summer painting houses. It was the mid 1980s when P&G recruited him, saying they wanted more entrepreneurs on board. But Collette found the comfortable corporate life wasn't for him.
"They didn't need me," Collette says of his two-plus years at P&G. "I wasn't making a difference."
So he founded On Target Media-an out-of-home marketing agency out of a P&G project he'd been working on, with the Fortune 500 company as his primary client. In 2000, the company turned its focus to health care, converted its business to a multi sponsor media model and changed the company name to "Healthy Advice".
The company was powered by two core product lines -- a digital-screen program that provides health-care related programming for doctors' offices and an exam room display unit program containing educational patient education brochures.
Both programs were supported by advertising from pharmaceuticals companies and other related health care advertisers.
In 2004, Collette sold a majority stake to the private equity group Alta Communications, and in 2007, at which point revenues had increased seven-fold, Alta sold to Greenwich, Conn., private equity firm Catteron.
Recently, CincyTech communications director Carolyn Pione sat down with Collette for lunch at Trio in Kenwood, not far from the Healthy Advice offices, and tapped his brain about his takeaways in nearly two decades of steering a successful startup to maturity.
His lesson No.1: Hang in there.
"There's no startup in the history of the world that's going to go exactly as you think it's going to -- there is no easy way. It's brutal.
"That's the biggest mistake I see entrepreneurs making. They say 'this is too hard.' "But if you see a need in a business, you just have to see it through (to reap the rewards)." And what kind of person does it take to do that? One with a very poorly refined sense of fear, he says, only half-joking.
QUESTION: How important is it to an entrepreneur's success to validate his or her business model?
ANSWER: It's everything. It's the tipping point. That's where you want to spend the money. For Healthy Advice, it was proving our positive return on investment by tracking the prescriptions related to advertising made by physicians who subscribed to the programming.
Many times there is not a big enough market for what you are doing. Entrepreneurs don't do a good enough job of finding out who's doing what they want to do and describing how they are going to be different.
Q: What is stopping entrepreneurs from taking this basic step?
A: For many, the passion for the idea becomes blinding. That's why you need an independent board. An idea must be a game-changer. It's very hard to come up with a product or service that's better than what's out there. You also have to spend significant money in creating demand for the product or service either through marketing and PR -- or through pushing the product to customers directly through a sales team. The product or service won't sell itself.
Q: How important is it to put dollars into sales efforts vs. marketing?
A: A lot of times people try to skimp on sales. I let my sales people make a ton of money. Most make more than I do as the CEO. Way too many companies skimp on commissions. But if you pay them well, they don't leave. People try to steal our people all the time until they find out what they make.
Internal optimism is really important to validating your business model too. You've got to have a plan that you really believe in. Sometimes you do need to change the plan. Knowing when it needs to be changed and when you need to stick with it and figure out a better way to make the plan work is tricky. Again, an independent Advisory Board can be really help here.
Q: Some prospective entrepreneurs try to boot-strap operations out of the fear of or dislike for the idea of taking other people's money. You've worked for two private equity groups. What's your take on that?
A: In taking other people's money, trust that little voice inside your head. All money is not the same. And sometimes you don't have a choice. But try to be strategic in who you take your money from.
People who are entrepreneurs themselves are often great people to take money from. They understand what it's going to take. Conversely, if you're getting a bad vibe from someone on the initial meeting, don't move forward. It's going to be 10 times worse when you're working with them.
And in reference checking, I would try to talk to companies a VC or angel has invested in where the business struggled. Ask how the VC or angel handled the situation.
Q: Any other advice for Southwest Ohio entrepreneurs?
A: Know when it's time to get out completely. Some of the most savvy investors can just smell it. Don't assume it's going to go well forever. Have a number in mind and get out when someone is willing to pay it.
Also, be realistic. Your ego can cause you to miss out on an opportunity if you think the company is worth more than it is.
CincyTech is a public-private partnership whose mission is to invest in high-‐growth startup technology companies in Southwest Ohio. |