This past weekend I had the opportunity to hear VC and Aemitis CEO Eric McAfee speak to a group of young entrepreneurs on what it takes to be a successful entrepreneur, and to be attractive to VCs. A conventional VC? Not by a long shot. An intriguing entrepreneur? Entirely. His story …
At age 14 his California farming family was land rich and cash poor, being $2 million in debt. As Eric put it, “When you’re that young and that broke, everything you see is up.” He ended up having to work, holding three part-time jobs to pay his way through college.
In 1992 at age 29 – and still broke – he had the idea of putting applications onto laptops without increasing their already bulky weight or causing the hardware to break. The concept: business card-size memory cards that would eventually become PCMCIA cards.
He and two friends each put up $100, and found a small shop willing to build a working prototype for $300. They took the prototype to a small Silicon Valley systems firm that ordered $30,000 worth. With no supply and no manufacturing capability he took the contract to a banker who, on the strength of the buyer’s commercial credibility, lent him $24,000.
He and his friends immediately went to work sourcing and manufacturing the cards and, when delivered and paid, immediately took a check the banker for $24,000 plus interest. The banker, never really expecting to see most of the money return, was impressed enough to extend credit to Eric’s new firm. On the strength of that his firm established new clients – Compaq, AT&T and Toshiba among them.
All at age 29.
Eric went on to found 24 other companies – 7 of them public, including Pacific Ethanol – largely in the field of energy. From age 29 into his thirties he also had engaged and paid six lawyers to retain the family farm and its assets.
His messages to the twenty-somethings sitting in the room and glued to his every word:
- Managers are skilled at allocating resources within their control. Entrepreneurs must be skilled at allocating resources not within their control.
- Failure is the opportunity to begin again, this time more intelligently. – Henry Ford
- VCs look for inspired ideas – undiscovered areas of the internet – that offer something uniquely valuable on a worldwide scale.
For the rest of us it’s nice to know that when you’re in a hole, your face covered in mud, as you look upwards from the whole long enough eventually a rain will come that washes away the mud.
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