"Entrepreneurs need to have this unique ability to have their eyes to the sky, but their feet planted firmly on the ground," says Eric Paley. "Meaning you have to be the one that inspires everyone else with the vision of what is possible for your business, but also be your harshest critic in making the vision a reality. The entrepreneurs who cannot straddle these two perspectives well either lose credibility or fail to inspire."
A consultant out of college, Paley soon felt stifled by the incremental nature of the work and founded his first company, a Web development and marketing firm called Abstract Edge. "We worked with a good number of startups during the boom, which helped me to hone a view of what works well and what doesn't," he says. "When the bust came, we had to be incredibly scrappy to survive the fallout. It was painful at times, but I learned a ton about building lean businesses, because we were undercapitalized and sweating to make payroll."
While in business school in 2003, Paley got involved with Micah Rosenbloom, a classmate at Harvard, along with a research scientist and a tenured Professor at MIT on a project that ultimately turned into Brontes Technologies.
After an exhaustive search for the right market to focus an innovative technology for capturing digital three-dimensional images, Paley co-founded Brontes Technologies to market that innovative technology to...dentists. Paley, it should be said, is not a dentist. "I don't have any background in dentistry," he says. "Or hardware. Or medical devices. Or computer vision. Or optics. Or rapid manufacturing. Or so many parts of the technological components of what made Brontes possible." And yet, things worked out: Brontes was sold to 3M in 2006 for an 8X return after a bidding war broke out between the five largest companies in the industry. "Great technology companies bring together interdisciplinary teams," Paley argues. "No one person on the team can be an expert across the needed disciplines. Where such a team comes up against a real meaningful market challenge, they are in a great position to create something proprietary and valuable."
Paley credits strong product management as a key to Brontes' success. "There are infinite choices on how to spend scarce resources. Your job is to focus those resources to build the best thing you can possibly build. Great product management extracts from the customers what it is they want, and figures out how to turn that into engineering requirements that efficiently utilize those very scarce resources. " Paley had some early advice that informed this view: "Someone once told me that 90% of ventures fail because they build things people don't want. In the early stage, nearly all of the leverage and value is created around product management. Did the company use their limited time to build something customers really want?"
Paley launched Founder Collective because he believes that most venture funds are out of alignment with entrepreneurs at the seed stage. He says, "I believe that our goals are far more closely aligned with the entrepreneur as we are investing for the early stage, not to own an option on future investment rounds. We sit on the same side of the table going forward and manage success and dilution together."
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