Tips from a Tech Superconnector: Interview with Randy Churchill of PWC
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Director of Business Development, Randy Churchill
“Funding is the pinnacle.”
Randy gives you some professional insight into the technical, dollars and cents process of seeking venture capital. AND he also offers up some time-tested tips on how to network, which include:
- Defining your objectives
- Not settling
- Be a value adding connection
- Networking as a long-term proposition
As the Dir. of Business Development for one of the BIG 4 accounting firms, PricewaterhouseCoopers, it is Randy’s job to manage relationships with emerging technology companies and venture capitalists. Randy Churchill is a “Super-connector,” a title he humbly dismisses. But, it’s hard to overlook his sophisticated network database, which boasts more than 2,000 of some of the influential people in business, innovation, and private finance.
I’m guessing you don’t have that many Facebook “friends.”
For full transcript, click here
ps. Randy also provided a PWC exclusive “Business Plan Evaluation Worksheet”, click here
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Transcript
CK: Maybe you could tell us a little bit about well what is the service that you provide for PWC and then we can go from there.
RC: Sure, PricewaterhouseCoopers as you might know is one of the Big Four accounting firms and broadly divided into three practice groups: issuance/audit, tax, and advisory; and you know issuance is anything where we would issue some type of third party report and the typical example is just an audit. We’ll come in and audit the financial statements of a company and then if it’s a public company it’s really the public and all the investors who rely on it, if it’s a private company it’s typically just those people who invested in that company, banks and venture capitalists, private equity firms, ummm there’s other types of insurance. Internet companies for instance sometimes get requirements from some of their partners and customers who have some type of IT audit you know to validate what they’re saying if they say they’re getting so many clicks or pass throughs on their Internet site we can come in from a technical standpoint and do that kind of audit. The tax is pretty self explanatory and then the advisory side we had management consulting practice for many years. In ‘03 we sold it to IBM, it became IBM Business Services. last, we had a five year non-compete in most of those business areas which expired last year so we’re in the process of rebuilding full fledged consulting practice internally although I think the economy’s probably caused us to do that a little more slowly than it might have otherwise. So there’s three big buckets, I’m housed in the issuance group, and my, my revenue generating job if you will is to track and identify promising venture backed companies that have the potential for a large liquidity event ideally then, and ideally that would be an IPO because that allows us to build and retain a strong client, and its a simple model but there are companies like Cisco and Yahoo, Qualcomm, United Online, those were all clients of the firm when they were just, you know, a few million dollars of venture funding and a business plan.
[10:00m]
I talked to the partner a few years ago in our firm who brought in the Yahoo client you know and he said, “I didn’t understand it, it just looked like somebody’s collecting our favorite websites.” You know this was back in the dawn of the Internet, again no clue whether it would be successful or not but he said, “Hey if Kliner Perkins is willing to put ten million into this company, we’re willing to take a wire on it.” So that, that’s the model. We’re looking for strong private investment into innovative technologies and then we’re willing to come in, you know, and gauge them typically as an audit client because if a venture capitalist puts that kind of money in they usually require an audit just to kind of keep track of their money; and so we’ll come in, it’s the only area within our firm that we’re willing to take on a client that’s that, you know, small as a company. I mean some of these companies are pre-revenue, literally a couple guys in a garage or somebody who has come out of a research institution, they might have just a handful of employees but one thing they all have in common is a very rapid growth forecast. And so we’ve had an Emerging Companies Services group that I’m, that’s where I’m housed so we will, you know, focus on those types of companies. And so that’s what I do to actually generate revenue for the firm is bring on those new clients, well kind of the softer side, the connecting side of it which I think you’re interested in is I, you know, maintain relationships with the investing community, [stutters], the angel investors, the venture capitalists, some of the private equity firms, law firms, the retain search firms, you know there’s specialized legal stake groups. There’s a whole ecosystem that really helps and supports people who are trying to start companies and then those who do. So I spend a lot of my time at those events and presenting our data and helping companies. You know last night I was in my office until about 10 p.m. sending out emails on behalf of a company, you know, in Venture that’s developed an innovative social networking site and they’re looking for funding. So I have the benefit of our database and I can do a little bit of research and say, “Here’s a, you know a bunch of, or here’s a handful of venture capitalists who’ve invested in similar technology, you know, let’s introduce this company to those guys.” So that’s my real value as a connector is I can help companies or people wanting to start companies really reign in the universe of potential funding sources because one of the first things you’ll hear if you, I’ve attended several, more than I’d like, you know panel discussions of venture capitalists and one of the tips they always point out is, you know, if you’re seeking venture funding to get your innovation off the ground don’t just you know, shotgun approach it, don’t just send an email to every venture capitalist you can find on the Internet. You really need to do your homework and find out which VCs, you know because VCs specialize, you don’t want to send an IT deal to a life science VC and vice-versa. So you really need to show that you’ve done your homework, find the venture capitalist who might be interested, and then secondly, as an entrepreneur you don’t want to just cold call or send in a business plan you know over to chance as they say, you need to find somebody to give a warm introduction; and that’s the link I provide is if I talk to somebody who’s got an idea they typically have to be to the point where you know, they’ve got a business plan and an executive summary in some cases, they’ve got to have some level of investment, either their own or friends and family and it has to be part way down the path. I’m happy to spend some time with them, look at the business plan. I have a pretty good sense, I call it our smell test, whether the company is venture fundable or not and if it is you know, I’ll start making those connections and likewise once, sometimes there’ll be companies where funding is not the issue that they need to know who the entrepreneurial law firms are or banks. So I’m kind of in the middle of that, I mean that’s probably why Ben referred me is, you know, he and I both kind of run in some the same circles with respect to boards and memberships and things that and events and you know we’re both constantly asked to introduce people to others, so that’s, as I say its not rocket science but it’s a, what I’ve found, I’ve been doing this about eight years, it’s a necessary, its a necessary role you know, and there’s a few of us out there that are doing it. But again, that’s kind of probably more information than you wanted but that’s…
[15:00m]
CK: That actually no, this, what you said is you open a lot of loops [RC: Yeah] and precisely for what you said this is not rocket science you know, but but this is something that a lot of the people who are starting just simply quite they don’t understand it, and and you know its not in the books so they cant figure how to actually do it [RC: OK] So I think you certainly serve a very important role in this ecosystem as you call it. Ummm, a couple of I guess follow up questions for you. I mean there is many things I could talk about, I think we could certainly talk about how you…let me ask you very specific questions here. So if some companies are pre-revenue how do you engage with them as clients in terms of generating revenue for PWC?
RC: That’s a good question because you know, we have as you can imagine a whole breadth of services for companies, most of them are geared, our client base, our targeting efforts as a firm are really at the Fortune 1000 [CK: Right] Ummm but the firm realizes that you know, well a couple things, one is that we’ve we’ve studied it and learned that you know, in past years, now I don’t know the exact numbers but ten or twenty years ago if you go back in time, the turn over in the Fortune 1000 was much less. You kind of made it, you were a brick and mortar company and you you know, once you reached that pinnacle you tended to stay there for years if not decades. Now, with the advent of the digital age and everything thats happening in the economy, there’s a lot of turnover in the Fortune 1000 so our client base as a result is more volatile. So the firms realized that, hey, a lot of these Fortune 1000 companies today were venture backed clients you know, five or ten years ago. Ummm so you know, how do we, how do we get a client from a ten million dollars and a business plan to become a Fortune 1000 and a strong client of the firm. What adds to that challenge is that fact that, especially after Sarbanes-Oxley firms, the independence that we’re required to keep makes it difficult to be an advocate. You know law firms can come in and from day one you know, be an advocate on behalf of the company, law firms can take equity in the company as part of their creative fee structure, they can do a lot of things, I mean they could probably even be mistaken for one of the management team. We on the other hand have to retain our independence. We can’t take contingencies, we can’t take equity, we can’t take anything that would lead somebody to believe we’re not objective when we issue the audit report and again we’ve got all these services to help companies grow but they’re geared towards companies that you know, have several million in revenue. So the threshold service is the audit and again that’s typically necessitated by the investor who would say, you know usually they put it in the financing documents, one of the requirements is information rights on part of the investor; they have the right to receive an audit and you know before Sarbanes-Oxley they would say, they would require from a nationally recognized firm which usually meant one of the Big Five, back before Arthur Andersen went under there were five of us. With whats happened in recent years the VCs have gotten real friendly with some of the more regional firms just because the Big Four, our workloads essentially doubled because our audit clients now had this new burden of Sarbanes-Oxley. So we got, as an industry we got overloaded with large company work and we had to go through a culling process and so a lot of our you know, weaker performing venture clients you know were let go and so there’s a mid-tier of accounting firms that picked them up and the venture capitalists got comfortable. That pendulum is starting to swing back because we now have, I say we under the industry, the Big Four: it’s PWC, Ernst and Young, Deloitte, and KPMG. I think all of us to some degree have more resources, I know here at PWC we’ve rededicated, we’ve re-branded, we’ve got a bunch of resources focused on that group of companies. Again the threshold is you know, financial statement, audit, we do it at amazingly discounted fees. So, we speak of it in terms of an investment although its not an equity investment but we’re offering highly discounted fees to the first few years because we know that cash constraints of the company wouldn’t allow it to pay our full rates but the idea is to have a relationship grow with the company and then in three to five years have a full-fledged client. You know, if that makes sense.
[20:00m]
CK: Very cool, yeah thanks for clarifying that and getting into it. Ummm, in terms of this, because it sounds to me that you have an internal criteria on selecting companies that’s you know, quote unquote rapid growth, that has rapid growth forecast uhhh then that’s VC fundable right. Can you tell us what are some of those criteria?
RC: Yeah, its not as complicated as you might expect. If it’s, I mean to become a client of the firm, a couple of things, you’ve got, you’ve got to have funding, significant funding from a recognizable firm and that’s a little bit loose because it varies by market. You know our San Jose office as you might expect has hundreds of these type of clients. So you know if somebody came in and said, “Hey I just got three million from you know, an Angel investment group and I’m developing a social website.” You know we might say, “Hey that’s great you know, why don’t we hang tight until you get funding from Kliner-Perkins or a top tier venture firm.” Some type of validation beyond just three million in Angel funding. The smaller markets in Southern California is typically, as a total region including: LA, Orange County and San Diego, is typically number two or three behind Silicon Valley in terms of volume of venture funding. But our criteria are a little bit less stringent, now if its a recognizable venture capital firm that’s put in you know, its usually the minimum you would see in an A round from an institutional investor is probably you know two, probably close to two million dollars. You see a lot of Angel rounds these days of up to a million and Angel groups try to bring in a venture capital firm in that first round just to protect their interests on the next round. [CK: Mmhmm] I don’t know, not to get off track but it usually takes a couple, two or three rounds to get to liquidity event and {then in the first round} investors they take more risk and then they’re also, they just take more risk because you know, the technology is typically not proven yet, they’re also taking financing risks because the B round investor could come in and dictate valuation and essentially squeeze out or cram down is what they call it, the A round investors. But, umm anyway our criteria looks at the quality of the investor, the amount of money that went in, and then really again its kind of that smell test I mentioned earlier. Look at the business plan, how {likely} is it, I mean there’s no, its hard to quantify it but you know, is this a business model that looks like it will have the ability to become a stand alone company as opposed to a product. A lot of people come and they’ve got really cool technology, doesn’t know, you know we don’t know if its going to be accepted or commercialized but its very cool. [CK: Mmhmm] You see how that’s great you know, but if you’re wildly successful what do you expect, well this a perfect match you know its one product, its a perfect match to be acquired by Cisco or Intel or you know Cox Interactive or whatever it is. If you’re setting the company up for acquisition from day one [CK: Mmhmm] and they don’t have the, they don’t have the possibility or potential to grow it into a stand alone company it doesn’t make sense for us to work with it, to develop it into a client because there’s just going to go away, and when they go away…
[Overlap]
CK: So so let me, so so let me, so basically you are looking for companies that could actually go into the public market and really be a stand alone company? I.e. a platform of you know, some kind of product, right?
RC: Exactly, and when I say that to companies they’re like, “Well yeah, but they’re aren’t any IPOs.” I say, “I understand that.” So the way I put it to companies is, you haven’t ruled out an IPO you know. If the market changes, essentially you’re building your company today to realize the greatest potential value, you’re not foreclosing any options, you’re marching along as if this, there’s no closed doors, you’re going to build to its largest potential value and then when the times comes for liquidity you’ll look and see what the market offers and if the IPO market is back there’s no reason you wouldn’t pursue that. And yeah, they typically go, “Oh yeah of course.” but some companies will say, “You know I had one, its been a couple years.” But they say, “We’re building a brand new router, you know, Cisco is buying it from us now, they just put in a huge purchase order, as soon as we get to thirty million and prove it out you know, they’re going to buy us.”
[25:00m]
Well that’s a great product then that’s going to you know return liquidity to the founders and the investors, you know and M&A deal in acquisition and returns you know, three to five times the money is a good deal. It just doesn’t make sense for us to get involved from an accounting stand point. Law firms can get some money off that merger because they’re representing the target [CK: Right.], but from an accounting standpoint you know, if we’ve issued the audit the acquirer comes in and there’ll sometimes be a diligence project, a lot of times they want to use a firm that wasn’t the auditor for obvious reasons. So that relationship on our end just goes away. So from an economic standpoint it doesn’t make a lot of sense.
CK: So so, I guess the follow up question is, you know you’re managing a lot of requests of you not only to speak to the universities, since that’s a big area for people really understand how the whole entrepreneurial process works but also from companies that possibly can ask for an introduction to a VC or some other people; do you get a lot of requests from those people right?
RC: You know I do and again you know, I try to, the first thing I ask them to do is send me their executive summary [CK: Mmhmm] you know so I can take a look at it and if I think its fundable I’ll, you know, let me kind of step back. When I first started eight years ago I spent a lot of time on it and I realized I’m becoming a, a consultant to these companies and what I’ve found is entrepreneurs are great, I like the culture, I like the people, but they’re also sponges. I mean they just want to learn as much as they can and they will suck as much time out of you as they can, that you’re willing to give. So ummm I’ve learned to a be a little more selective and also ummm you know kind of more efficient I guess is the word. Where I will look at something very quickly, if there’s something I can help with immediately in terms of, like one guy he just, the example {I used I’m sure last night} is, really nice executive summary but one of the things he had put in it you know, we’re trying to raise two million dollars, we’re going to sell 27.5% of the company for two million dollars which is essentially he is saying what his valuation is [CK: Mmhmm] and I called him back and I said, “You know this is great but my one bit of advice is take this out, you just don’t want to mention valuation.” VCs view that a couple of ways, one is they think, OK this guy is kind of unfamiliar with the process because he put valuation in but also looking at the actual number you know, if they think its to high they might not even touch it and on the other hand I said you know, “Wait, if the VC is interested they’re going to be interested in the business model first and then the economics. So get them interested in the business model and then if they are let them be the first to offer the valuation because who knows it might be higher than the one you’re asking for. So it just doesn’t do you any good to have it in there.” So this guy was like, “Oh that’s great.” So he made a couple of revisions to his executive summary and then I forwarded it out to a handful of VCs that we had targeted. So that’s kind of the drill. I’m looking at, if I sound a little scattered I’m looking as we speak for, I just reorganized my entire database, but I’m looking for a document I have that, it’s a very detailed list of issues, its kind of a checklist for, it answers your question you know what do we look at when a company comes in with a business plan but I’ll dig it up and I can email it to you, its very detailed.
CK: Yeah that’d be great, thanks Randy I appreciate that. Ummm so so, it really sounds like you are juggling with a lot of the, well there’s the hard side of it which you’re evaluating possible prospects and clients and to increase clients for PWC obviously that’s your bread and butter right.
RC: Right, my day job yeah.
CK: Your day job right. But then there’s also the soft side of you know, of of doing this, connecting the possible deals with the VCs, the other people in the ecosystem as you said it. Do you have any tips, I suppose, for ummm, well let me ask you this way. How do you juggle the soft side of you know, technology entrepreneurship?
RC: How do I juggle it?
CK: How do you juggle it, how do you think about, do you have a methodology of you know of managing the relationships?
[30:00m]
RC: Ummm.
CK: It’s a very broad question I know.
RC: Its always a challenge, I mean its funny because I’ve probably got you know, close to a thousand contacts in my database and its hard to keep, its hard to keep those contacts warm. You know, one is just broadly speaking you put them in the buckets of who’s important and for me the most valuable relationship I have is with the potential funding sources so I try to touch the VCs in some way, just keep contact with them. I occasionally hold, you know, networking events, just, you know, we share a suite at Staples Center with {Gibson Dunn}, one of the big law firms and you know every year we have an annual venture capital night so I’ll get a dozen or fifteen VCs in our suite. You know things like that, kind of simple entertainment and occasional lunches. As a rule I think your key contacts I think you should set up a plan where you touch them at least quarterly, you know coffee, breakfast, phone whatever it is. Ummm so that’s kind of what I try to do on the key contacts on the investing side and the banks and the law firms. You know you’re only as relevant as your, if you’re going to hold yourself out as a connector and I didn’t start out that way it just kind of evolved, you’re only as good as your last connection and its like well if I let all those contacts go stale, people aren’t going to take my calls or respond to my emails so that’s the first thing I guess is kind of keep your network warm and manage it. The other thing I found is that you need to add value. You can’t constantly be seen, you can’t constantly be seen as somebody who’s asking for something. So whats really allowed me to gain this kind of unique position is the data that our firm collects on venture funding. Because obviously the entrepreneurs want it, they want to know what industries are being funded, what VCs are doing the funding, but the VCs as well; they’re very interested, and this kind of surprised me, they want to know what kind of deals their competitors are funding, they want to know details on companies and then also our database keeps some of the performance data on the VC industry, so they want to know how their fund is performing you know [CK: Yeah, yeah.] kind of benchmark their fund against the industry. So whenever I get an information request from a VC I jump to respond to that, so ummm, I kind of put myself in the middle as a value provider and you know, of information that they can’t get elsewhere. So that’s what I’ve done to kind of, I don’t know if that’s juggling it but that’s how I kind of maintain my value and in terms of managing multiple contacts its interesting because what my firm recently did, I’ve been doing this primarily for the benefit of PWC in the LA area, and we have offices in Orange County and San Diego and just about a year ago they said, “This is great, we like what you’ve done in LA, where we’re beefing up our focus on venture backed companies in Orange County and San Diego, why don’t you start going down to those markets and doing the same thing.” And that’s, that proved much more difficult, there’s a lot of overlap.
CK: I’m sorry where was this?
RC: This is Orange County and San Diego.
CK: Oh OC.
RC: I’ve been asked to expand my reach beyond LA. [CK: Mmhmm] You know when I say LA, LA, kind of Santa Barbara through Long Beach is my focus for most of my tenure here and recently they said expand throughout Orange County and San Diego. So really made me stop and think to question that you just posed, well, I kind of morphed in and evolved into where I was and suddenly I had to think you know mechanically and methodically, how am I going to expand? [CK: Mmhmm] And it proved very difficult because its hard to develop a network in a region, say San Diego, you know I was only going down there a couple times a month, it’s it’s hard to create the personal relationships if you’re not there to answer the calls, to be seen out at the events, and you know kind of be a man of the people. So that’s, its been very difficult to juggle that. What I’ve learned is, you know I’m really limited geographically to what I can do. I’ve now, I’ve kind of devised a way to help those offices without being physically present there. [CK: Yeah.] That’s taken some time to figure that out. But its, it is difficult. You know like I, the other thing I mentioned just a minute ago was I’ve gotten more efficient. That’s one way, time has just [CK laughs], time is, I’ve got to think back four or five years ago I really became a consultant to a couple of companies that were trying to find funding you know, and helped them, I would guide them through the Tech Coast Angel process. I don’t know if you’re familiar with that group, I know they have a Santa Barbara chapter.
[35:00m]
CK: I actually spoke to Frank Peters, he has, you know, [RC: Ah, OK] a Frank Peters Show.
RC: Oh yeah, I’ve been a guest on his show. He’s a guru of that. Yeah, he’s a consummate connector.
CK: Yeah, that’s what he does.
RC: But you know that process is just, it takes forever, and I just got, you know once I got in I was kind of the mentor of these companies and I can’t abandon them and its difficult. So I guess yeah, become more efficient and you know, just try to figure out ways to be more efficient with my time and you know, prioritize who the important contacts are.
CK: Well so, so no personal gain so far but do you have any recollections of one of the most rewarding moments for you being in the game for eight years, doing this?
RC: Ahhhhh, yeah I guess its, a couple, I’ll give you two examples. You know ones happened a couple of times and that’s just where, you know I meet a lot of people, I used to when I go to events, I’d set up a table with some of our brochures and I’d put like a fishbowl there and ask for business cards to create a mailing list or some of our thought leadership materials and you know so I’d meet a bunch of people and then I’d get barraged after events with phone calls and emails and its hard to keep track. But there were a couple of instances where you know, two or three years had elapsed and I’d run into somebody at an event and they would come up and they’d know my name and they’d say, “I just want to thank you.” and I’m like, “OK.” and they’re like, “The introduction you made to me back at the LA Venture Association breakfast you know, in 2004, you introduced me to so-and-so and they turned out to where they helped fund my company and now you know, I’ve got this successful company and I’m…” That’s, that makes me happy because I’m like, wow, I didn’t even know, that’s happening without my knowledge, its like, you know so, its like the film Its a Wonderful Life where the guy goes back and sees what life would be without him. Not to say that the guy wouldn’t have found the introduction without me but because of me he was introduced and you know, his life and company has changed because of it. That makes me happy but it also makes me sad because I’m like, “Wow if I were a consultant I’d now own part of your company!” [laughs, CK laughs] There’s that, and that’s kind of on the soft side.
[40:00m]
Just, roughly speaking just successes when you find out after the fact that some introduction actually paid off but its typically, I don’t know why, funding is kind of the pinnacle so when I found out a company got funded because of some introduction I made that’s very nice; and then you know within the firm there have been a couple instances where, you know, high profile companies will get large fundings you know, and our firm is like, “Wow! How do we get into this company we need…” and I say, “I know the guy. I know the Chairman of the Board.” And I’ll just pick up the phone or send an email and you know next thing I know I’ve got a team of six or eight PWC people around a conference table you know, we sit down and it turns out, it turns into a nice client and I realize that without my network we, this wouldn’t have been, not to say it wouldn’t have been possible because PWC has a great name and they probably would have found this but just the ease, just the, having it all happen because, you know basically just because I knew somebody, yeah that’s rewarding. And that’s happened recently as well, there was a large ummm solar energy company that, I think they got the most venture funding in {LA} they received one hundred and forty million.
CK: Who was this?
RC: It’s called Solar Reserve.
CK: Solar Reserve, OK, that’s interesting I can check them out.
RC: Its a cool company. Look at their website, they’ve got a, they’ve got a video that you can click on that describes their technology, essentially, again not to get way off track but they’ve got technology that, you know uses heliostats to create heat but it doesn’t go directly to power, they heat salt and create molten salt which is actually able to retain the solar energy for months. So that was one of the big challenges in solar energy was how you store it for rainy days or night time and they’ve overcome that…
RC: Umm yeah, we’ve got, in this area within the firm, the Emerging Company Services, we’ve got four counterparts around the country. One in San Jose, Boston, D.C., and New York. Those are kind of the five top technology commercialization markets and we, its interesting because we have ummm also developed a strategy that focuses most of the firms resources on those top companies. Its basically kind of created a pyramid and we look at the size of the company and the size of the opportunity for the firm, and although our is strategic focus, our companies today are at the bottom of the pyramid so its hard to get internal resources but it forces us to be entrepreneurial internally. So we’re ummm, I kind of like being under the radar a little bit.
RC: He was, he talked about his book and he talked about the mavens and the connectors and its interesting because he, you know, he had a room full of PWC accounting partners you know the people who actually generate the revenue, then he had a bunch of us: the sales professionals, and he kind of admonished them he said, {”Look who the connectors are, your sales people, you can’t diminish that skill set.”} and he said, “You have to realize that those people are really at the forefront of generating your revenue.” and he really told these partners, “Look around, you really have to appreciate these people, they have value that you cannot underestimate.” And that kind of made me smile.
CK: [laughs] So Randy a couple of more questions, OK so I promise I want to be appreciative of your time so I know that your time is very valuable, so, so you had talked about you know, now that your network is about two thousand strong its becoming more time consuming, energy consuming, to manage so therefore you’re trying to be more selective and more efficient on how you use your efforts yes?
RC: Correct.
CK: So for somebody who’s maybe not in the accounting field, maybe not working for large firms like this what kind of advice do you have for them to be that value added player so then people like you would see the benefit in working with them?
RC: You know, that’s a great question because as I mentioned for me it’s been, I was given this tool that, I make no bones about it, its people, everywhere I go people say, “Oh everybody knows you!” I say, “No everybody knows me because I have a great brand and a great tool that I’ve been able to leverage, this Money Tree survey.” It would be, the story I tell is before I came to PWC I was at an Internet startup for a couple of years, actually for about a year and I went, this is back in you know the boom days and there was all these kind of networking, digital media groups and I remember I went to an event, this huge event, on the pier in Santa Monica and ummm you know I had my badge on, my name badge with my company and it was one of those events where they put a sticker, a color coated sticker if you’re money, if you’re an entrepreneur, if you’re a service provider and I had the service provider color key color key code, anyway people would come up and literally come right up in your face and look at your name badge and then they’d just turn and walk away. I had nobody ask me about my company or what it was that I did and I just walked away feeling, God you know, I’m a nobody. [CK laughs] The next, that was my last day though at this company, and the next day I started at PWC and I went to an event at the Regency Club, it was hosted by the LA Business Journal and I show up, you know anonymously, or I thought, and when I checked in they were like, “PWC we’ve been waiting for you!” and they gave me my name badge, “We’ve got you seated at the main table with the Microsoft guy, the editor of the Business Journal, and there was like the business development person from Cisco.” And so in a twenty four hour turn over I’m going from a nobody to where you know, its like people were literally lined up to talk to me because I had a name badge that said PricewaterhouseCoopers and this was back still right on the heels of the Internet bubble. But I guess my point is, yeah its difficult if you’re a small consultant or if you’re in a very competitive industry, even law firms because there are so many of them, they have a hard time differentiating, you know one of the law firms Fenwick & West up in the Bay Area I think, you know seeing the value that our survey holds with the venture investment, they started to conduct their own, it was kind of a Silicon Valley survey but they started collecting on a quarterly basis deal terms, what the VCs were doing in terms of valuations and some of the other you know deal terms and publishing that and that created a value that then people wanted and you know people started coming to them. So I guess my advice, I’ve got all these long winded answers for you, but my advice is try to create some value, I see so many people out there just kind of trying to be pushy and get in front of people. If you can create a demand so then people start coming to you because I don’t, I’m not, by nature I am more of an introvert, but just the number of people…
[50:00m]
CK: No way, really? You, an introvert? Now the super connector, how interesting.
RC: Well, I kind of fell into this position, I have to be honest, in Southern California we hadn’t really leveraged that tool as much as we might have and I just took it and ran with it and that’s what the created the, any familiarity I’ve gotten is because of that and just be nice. The other bit of advice is, a lot of people look for the quid pro quo immediately, you know why would I take time to do something for this person when I don’t see what I’m going to get out of it. I was lucky that we went through a few years where, you know we couldn’t, we had to trim back our ummm we kind of cut back on our resources serving the venture market so you know I got a lot of time to go out and build a network and was able to do stuff for people that I might not have done had I been more tied up in the office. But the willingness to do stuff without an expectation of an immediate return [CK: Mmhmm] you know it comes back. I mean, I think about, I’m looking at, I had framed on my wall here about a year, I had given a bunch of data and helped one of the new reporters at the LA Business Journal and then one day I get a call from her and this was kind of at the beginning of the economic, I don’t have the date on it but it was when a lot of the banks, commercial banks were under turmoil and I got a call, frantic call, and she said, “You know were getting ready to do our banking piece and none of the banks want to talk to us so we’ve got this big hole in next weeks addition that we need a piece, and we just had our meeting and I committed to do a piece on Web 2.0 companies and I know you and you know all these companies can you help us, you know put a list of them together, kind of all of the connectors within that ecosystem?” I gave them a list of twenty people and I think they ended up profiling eighteen out of those twenty [CK: Nice.] and then, including me, and I got this big, I got my picture on the front of the business journal just because I had helped in her in the past. It was like, OK, and then when shes in a pinch she comes to me and next thing you know there’s more exposure so, ummm kind of do unto others is the rule.
CK: So you are a big believer of that? [RC: I am] After doing this for eight years.
RC: I’m sorry?
CK: So after doing this for eight years and have plenty of experience and see the ins and outs you are still a big believer of this rule?
RC: Yeah and it’s not always going to pay off. Just don’t, most succinctly, just don’t expect the immediate payback. I mean networking is a long term proposition. Because I get that in my firm all the time, its like, “Hey you know, we’ve got a table at this event or we’ve sponsored an event, whats our return on that investment? How many clients did we get from attending that event?” And I just shake my head, I say, “You’re off your rocker.” The chances of going to a networking event or any event and walking away with a client or a customer or somebody who’s funding your company or whatever you’re end goal is, that’s not the way it works. You know its really more of a connect the dot process. You know what you want to do is meet some connections that might be able to lead you to other connections or that you know, might call you in three, six, nine months, its not going to happen immediately and you just can’t get frustrated, you just can’t expect that immediate return. The problem is the people who hold the purse strings, you know the people who fund these endeavors need to show an immediate return and they, if they don’t understand the process. I think that’s the biggest thing that surprises me about this, to me this just all makes sense its just intuitive, its the same way I would build a social network, its the way I make friends, you kind of meet people and it evolves and if you’ve got something in common and you get along you become friends, its kind of how it works in a networking situation. But what struck me is how many people don’t get it, you know its just they’re not, maybe they’ve just never built a social network. [CK laughs] You know their own, I’m not talking about online, I’m just talking about a group of friends. So many people just don’t understand you know how to create and leverage a network.
[55:00m]
CK: No, this is a very good point. So thanks for sharing that. But that guy who asked you that question, it’s a valid question though right? Because they actually need to show some kind of return on investment and I know its a long game, its not the short game and certainly immediate return is not a, something that you can really show but you know, from your position you still need to show a ROI on some of the efforts that you put in, so how do you actually do that? How does one do that?
RC: Can’t. I mean you know you just intuitively you can say, well OK, we went and pitched the largest venture capital firm in Southern California just a while ago and we won the audit work. And they said one of the reasons we like you and your firm is what you and what Randy Churchill are doing in the community, in the venture community. But OK so how do you quantify that, I mean that’s not the only reason, I mean PWC has a very quality reputation but it’s a differentiator you know, and if they actually bring it up and its something that they noted and that helped tipped the scale, I don’t know if it was the one grain of salt that tipped the scale but the fact that a high profile client has taken notice that our firm is active in the community and we’re supporting the ecosystem, you know its got a positive effect. I guess that’s the only way I can, the return is our market presence is very positive, you know, do we need to spend half a million dollars or ten thousand dollars to support that? Its kind of closer to ten thousand these days but you know, I agree there can be a lot of money frivilously spent so that’s, that’s the other thing I learned in eight years. When I first started we had several hundred thousand dollars that was being spent in support but that was a different era and we just learned to be more selective and there’s a lot of overlap especially in this region in terms of groups that are trying to support the same cause. So you just need to be smart and selective and efficient but I don’t think there’s anyway you can quantify a return on the investment. I mean there might be, you know you could trace back, [CK: You can what?] you can say, “Hey OK we just won a client that we just met at an event, or met through somebody we met at an event.” But that’s difficult to do, you need some tool like LinkedIn to do that.
CK: Two last questions Randy once again I do want to be appreciative of your time, two last questions. So you, given your involvement with the TMP, Technology Management Program here at UCSB so you mentor lots and lots of young technologists and innovators what kind of advice would you give them on starting their professional network? Because obviously they’re not in the position to give yet, right. So what kind of advice would you give them to start on the journey to be a valued contributor to society?
RC: I guess first advice is to definitely start. [CK: OK.] You know I don’t mean; I’m serious when I say that. So many people are like, “Well you know I can’t, I don’t have time.” That’s the biggest thing we hear here its like, well business development, building a network, kind of the soft side of it, that’s stuff I do in my filler time or my spare time. And by the way I’m so busy with my main business, I don’t have time to do it. I’ll never have time. So treat it as you know an appointment or treat it as you would an appointment. You are going to have to quit doing something to do it. If you sign up for an event or if you’ve, you know you’re going to meet some people somewhere at an event or just informally, but stick to it. I’m just, I’m reading through, its funny that you asked that because our firm just published, because they tell you people don’t know how to do it, its true within our firm. We just published a little booklet on Investing in Relationships, Networking Tips. Looking through it its not necessarily proprietary I might be able to send you this as well.
CK: Great thanks.
RC: You know, just simple things like we’ve talked about. It says, when investing in relationships take a long term view, ummm, you know I guess the other thing we didn’t talk about is just, kind of to focus on what your objectives are. It kind of goes back to that do unto others rule but so many people when they meet in a setting just want to talk about themselves or their business or their product or service. To really build a strong connection you want the other person to feel that you, you’re interested in what they have to offer so I always, I always try to focus on understanding their business and what drives them personally rather than just kind of you know, I gotta get everything out about myself, people can tell when you’re always selling. I walk away from people like that. The one thing I learned is just to be, within a room, {you know how they say work a room}, I go in and I have no compunction about if I’m talking to somebody, if they’re just boring me to tears I’ll just stop and say, “Will you excuse I just saw somebody I’ve been trying to connect with for weeks.” and just move on. You know, don’t sell. Ummm I should send you this as well. [CK: Great thanks.] This might be something you can share. So tell me just real quick, your group is students and researchers, are they all kind of on campus people?
RC: Kind of interesting, well let me do this, you said you had one more question?
CK: Yeah one more question, the question would be is there anything that you wish that I asked that I just forgot to ask you?
RC laughs.
RC: Ummm no to be honest I don’t think I’ve ever had this in depth conversation with anybody about what I do. You, you made me formalize some thoughts on the fly so ummm the only thing you think I could have asked was whether I want to come work for you for a million dollars a year but you didn’t ask that [CK laughs] so…
CK: When I have a million dollars a year and plus, trust me you’ll be one of the first guys I call.
