Podcast: Play in new window | Download
Subscribe: Apple Podcasts | Google Podcasts | Email | RSS
Welcome to the Law & Business Podcast. Episode 43 begins a special mini-series with the Nessa Group, discussing what it means to work with a business consulting group and how that consulting group can help a business improve in all its areas.
We at Verna Law and the “Law & Business” Podcast hope you enjoy this special mini-series and that it tackles your business’ needs.
Anthony Verna: (00:02)
All right, and welcome to our special podcast mini series. My name’s Anthony Verna. We’re here with the NESSA group.
Jim Huerta, you’re one of the principals in the NESSA group. Please introduce yourself.
My name is Jim Huerta. I’ve been with the NESSA group for about 10 years when we started the company. Not much to say other than that. We’ve hopefully have provided a new avenue for people who are looking for help and starting new businesses.
Wonderful. And Barry, you’re one of the other principals of the NESSA groups. So go ahead and say hello.
Barry Kolevzon: (00:32)
Hello. It’s a delight to be here and we have some information that we’d like to mention to you to see if it would help you. And we’re very excited about this.
Anthony Verna: (00:45)
Great. And also with us is the patent agent of the NESSA group. Wil Jacques, how’s it going, Wil?
Everything’s going fine. It’s a pleasure to be here and hopefully we’ll be able to share some information that’ll be helpful to people.
I know that we will, Justin as a part of the brand consulting side of the NESSA group. How you doing, Justin?
I’m doing very well, Anthony. Thank you. I think it’s going to be quite fun to share with you how we kind of tackle the jungle of small businesses and startups leading them to success today.
Oh, I like that analogy. It’s a jungle out there for small businesses and startups and a group like the NESSA group is meant to help those businesses find success, find goals. Jim, one of the things you’ve told me in the past is that starting and running a business is the ultimate team sport. Unlike your Giants. I’m very sorry, sorry about that. But talk to me a little bit about that ultimate team sport about starting and running a business.
Jim Huerta: (01:45)
Well, I mean I’ve been certainly a jock all my life and I look at it, of success in my career, whether it be in sports or in business, has been because they were teams who understood their plan, who knew how to execute those plans and stay on top of what they were doing. And I think a lot of failures that have caused, and the Giants are a good example. There’s a team has a playbook, they’re just not executing and then not having the leadership that they need to really become a powerhouse in what they’re trying to accomplish. Though I do believe that business is a sport and if played well, it could be very successful.
Anthony Verna: (02:25)
Barry, what are you looking to do as a consultant for the small business? What’s your goal for that business?
Barry Kolevzon: (02:34)
My goal is to save them for their own folly and starting up a business by not really knowing what they want to do. Most of the time says, let’s start a business. And by the way, what is the business that we’re going to start? They don’t make definitive questions that have to be answered. They go, they get their best pal, bring them on because they know him and he’s a dud and he hurts the whole company that they’re starting up. They don’t plan ahead philosophically, they don’t have money, which is hard to run a business when you don’t have any money.
Oh, don’t we all know that?
Yes. And, but they do it worse. You know, most of them fail. This statistic is that 2 to 3% of startup companies succeed. The rest of them go down the drain.
Anthony Verna: (03:34)
Justin, how can a group like this help a small business be realistic about expectations?
Yeah, I think a lot of it both the Jim and Barry touched upon is that there’s a lot of considerations that a small business must understand and make in a short period of time because the two biggest limitations is time and money. And you need to understand how to utilize your budget to achieve certain goals and those goals go across strategy, revenue, production, cost efficiencies, and, of course, team build out. And going back to my jungle analogy, you wouldn’t go on a safari without a guide and we look to be your guide to kind of lead you down this path and helping you realize your milestones, whether that is capital funding, revenue production, entering new verticals, et cetera.
I like going on safaris without guides. I mean, how else are you going to deal with the wild and all of the animals and Oh yeah, exactly. Wil, you’re the the patent agent of the group and I help on the trademark branding protection side of this particular group. Let’s talk a little bit about what happens if a brand new invention is never protected by patent?
Well, certainly you kind of invite the competition, you know, to kind of jump into your space and if that competition has other assets or other resources that, let’s say they outspend you in terms of advertising. Let’s say they have a bigger team of people to get to the target market. Well you’re going to be fighting an uphill battle so you’re going to be losing. So the whole idea of say IP protection, the trade secrets, trademarks, patents, what have you, is that those things are supposed to provide you some sort of leverage in terms of keeping your competition at bay. But there is one caveat and I always tell people it is a capital asset, but it is not the business. The business is the business and it is support for the business and if those two things don’t work, then
we need to direct them elsewhere.
I can’t disagree with a word that you said. Jim, do you want to talk a little bit about the business being the business? I mean, there almost sounds like an
entry to talk about maybe entrepreneurs not seeing the forest from the trees or not necessarily being goal-oriented properly.
Jim Huerta: (06:05)
Yeah, I agree. I think that a lot of times people come up with phenomenal ideas and they really don’t understand what they have in their possession and how to optimize their opportunities. And I think again, that that shouldn’t be that way. It needs to be done in a way that can be creative. And again, I go back to this whole idea of the playbook. I can give you an example of what Wil and I worked together on the company out of South Dakota and we took the steps to make this company have an advantage in the marketplace. I remember many times from a business side Wil saying to me, “Jim, don’t let those guys start advertising that stuff. Let them start talking about that stuff because this could be stolen in a heartbeat.” It’s that simple and that is the business side for people like me who were not in the IP world per se, to make sure that that’s one of my tools, that I know how to apply it correctly and I know how to build a business around that for the people that I need to protect that asset and although we can’t report that asset on the balance sheet has become patents have always become a problem for the accounting profession. We know that that asset is the difference in the marketplace. We just need to make sure that the business could build around that asset.
Anthony Verna: (07:27)
Barry, what kind of management problems do you see a lot of small businesses having, especially as they begin to grow and sell product and maybe hit that point where they’re successful
but not as successful as they want to be and they need to push forward?
Well, I think there’s a certain basic structure of every company like P and L’s, balance sheets, efficiencies, qualified people, projections of what they’re going to do down the road, which they prepare, they don’t prepare and it just gets out of hand and the company goes down because they’re not taking a business, running a business. You have a business to make money. It’s not a hobby to some people it is. But most of the small companies, they gotta do certain things to do. And one of the things that we do at the NESSA group is we can help them and guide them so that they can be successful. And that’s very, very important. And they have to have a team that talks to each other.
trademark Mark Cuban phrase? You need to be an entrepreneur. Not a wantrepreneur.
It’s trite. I hate it, but it’s actually true.
One comment that I wanted to add before I think Barry just touched on. I think it’s important that, and I keep seeing it all the time in our business when I talk to an entrepreneur and we sit and they say, “Jim, I’ve gone through $400,000.” And I’m sitting there saying $400,000. If someone gave me that, what are the steps that I would take to make that business successful? And I can’t quite put my finger on where that $400,000 went. Cause they’re not showing me a marketing plan, they’re not showing me any understanding that they’ve done something with their intellectual property. And I’m saying to what is it that you think you’re doing to go through that kind of money? And that again is what the NESSA group hangs its flag on. That we want your money to work efficiently for the startup of your company and this and that success as well as the ongoing concern concept. You can’t just throw money away without having some kind of guidance.
You know, Justin, one of the things you and I have talked about in the past is lack of industry experience. Is a lot of these problems related to that lack of industry experience or is it maybe a lack of entrepreneurship experience?
Justin Tripodi: (10:15)
It’s definitely a combination. Whenever you start off under your own path as an entrepreneur, there’s a lot of unknowns. And I always joke that you’ll be successful. But it’s a race against, as I mentioned before, time and money and there’s no better way to best utilize the budget available and to do so in a quick fashion then with people who’ve done it in the past. Whether they’re on your team or they’re an advisory board. I will say if you’re entering a market that you have little subject domain expertise, you should surround yourself with a team or advisory board who have lived and breathed that industry. They’ll have insights that you can’t get from just reading reports and their whole connections that could take you months to years to foster. And I think when we look at our main purpose as the NESSA group, it’s to increase the overall value of a company.
And when we say value, that’s multifaceted. It’s obviously increasing the revenue production, but it’s also decreasing risk, and it’s doing so under a very strict plan with milestones or KPIs. And that’s where we really see as a difference between a hobby and a business. And we’ve all seen plenty of hobbies that could be making hundreds if not a million or $2 a year as a hobby. And just imagine if they had the right planning and team and scalable resources around them, what their business potential could be. And that’s kinda how we look at a business and how we look to collaborate with those founders or CEOs of companies.
Anthony Verna: (11:47)
We had a TLA alert and a TLA, of course, is a three letter acronym. So I think
KPI was the TLA that you said. So please define that.
Key performance indicators.
So what are key performance indicators?
Those are the metrics that you place behind your business that would validate a certain milestone of success, whether that’s a user acquisition, a certain cost or customer acquisition numbers. Anything that you feel is a, as the acronym states, a key performance indicator of your business. And those should be planned out. And especially for startups going to market pre-revenue startups or just post funded startups, you need to understand how you’re using that money and an investor is going to want to understand exactly what my return is going to be. And part of the way you show that return is through the KPIs that you surrounded your business on.
Wil Jacques : (12:40)
Yeah. What I would call claim elements, right?
Yes, absolutely. So, let’s get into that because I was going to come right to you anyway. So, you said the business is the business, that your intellectual property is not the business cause you still actually have to implement it. So, if your business is the business and not the IP, what does an entrepreneur need to know about the importance of intellectual property?
Well, you have to understand first of all, where you stand within the landscape of your potential competitors or your current competitors. Let’s just use the case of clothing.
Cause we’re gonna get into that series.
We’re getting into clothing anyway, and then we’ll talk about some other things. But, I want to introduce new performance clothing.
Is the fabric new?
Now the fabric may, may be new, the fabric may not be new. The weave of the fabric may be something that’s not obvious. What you start with is what is it that I’m trying to accomplish for the customers that I potentially see. If these are outdoor people, they like to ski, they can’t get wet, they got to stay warm, but they don’t want to be constricted. So, all of these KPIs in terms of claim elements that I’m looking at kind of go into this equation and then you start to understand, well, what does this fabric need to look like? And then you do a search to see whether or not that fabric exists already in one form or another, or if it’s something that you’re going to create. And as soon as you say you’re going to create something, then there’s the potential for protecting it, using some sort of intellectual property, be it a trade secret or a patent if that’s warranted. Once you understand that that’s something that is protectable, something you may need for your business, then you go about the business of generating that security and they’re not called securities.
Not unless you want the FCC to come after you.
Wil Jacques: (14:52)
But it certainly is something that secures your idea. So, you know, I always say, you want to make sure you have those elements known.
Go ahead, Justin.
We’re spending a lot of time talking about intellectual properties, whether they’re patents or trademarks to copyrights. And some of you listening might not feel that’s relevant either to your business as a whole or just your immediate needs right now. We obviously love IP because it is an asset to the business in some capacity for intellectual property or patents. It shows that you are unique in the market that you’re trying to compete within and that’s defendable and that in turn has a value to your business.
But what I love about intellectual property and patents in particular is it gives you a couple of different monetization opportunities, which is how are you going to make money and how are you going to go to market?
A lot of people think I need to build a big brand and get customers to have a business. And that’s not always true. If you have unique technology that has a patent behind it, you can actually license that technology out and that gives you some options and how you go to market and the cost of doing so. Building a brand and a business versus licensing technology are incredibly different. And I would also challenge a lot of founders to think about what type of lifestyle do you want to live when you’re running this business. Building a brand, something that you might get investment money could be a job. And let me tell you, that might be an 80 hour a week job and it’s a much different story if you’re licensing technology, which we liked to kid about, could sometimes be just a mailbox money.
Anthony Verna: (16:25)
That’s right. I think one of the sharks, no, it was the comedian who used to use the… Jeff Foxworthy always talked about mailbox money when he was on Shark Tank, all those years ago. The IP lawyer agrees with every single word that you just said. And just to tell you a short story, I was at, I forget which event it was up in Connecticut. It was at the tech expo or whatever it’s called. I forget. And somebody came up to me and my wife and the three of us were talking. And when I said, “I’m an IP lawyer.”, he then says, “Oh, well I have a patent.” I said, “Oh great.” He goes, no, no. I picked up the phone. I called the patent and trademark office. I spoke to an attorney there. I told him what my patent does, and you know, eventually I got a patent, but it’s written so narrowly that I’m not able to enforce it as well. So just to balance what you said a little, Justin, is that the importance of having a patent is there, but the important of having the right patent because this particular patent does actually do everything that you said, but it’s totally not protectable.
And I think that goes right back to your patent or your technology’s not your business.
In any capacity, you need a business model around, and I’m working with two clients right now who have spent a hefty price in building their technology without a real understanding of what the product is, whether that’s a B to B or business to business product or consumer facing product. They’re not far away. But that would something I would challenge them to consider both in terms of what is their product that their technology can be infused within and what is their market positioning? How are they competing in the market prior to spending the pretty penny that they have so far?
Wil Jacques: (18:15)
Yeah. As we’re having this discussion, I’ll just kind of add that in. You’re right, Justin, the patent is not the business because one of the things I always try to inject is a patent is not a right to do something. And that’s a mistake that a lot of entrepreneurs or, or folks with great ideas kind of bring to the table. They go, wow, I’ve got something here that you know, that I could patent. And I go, yeah, I might be able to get you a patent. But a patent doesn’t give you a right to do something. It just gives you a right to restrict somebody else from copying or doing that. So does that give you what you need to get into the business, then chances are the answer in a lot of cases is no,
Justin Tripodi: (19:01)
And you’re exactly right. Not every good idea. And it could be a great idea, even one that can get a patent behind it can be turned into a business and that there are so many reasons why that must be taken to account. One of the first ones is, is the market big enough? Is the demand big enough to warrant the investment necessary to make some money? Or is the solution I found really more personal to myself, which sometimes it is.
I lost my train of thought.
Well, that’s okay because I think I’m going to jump in with this particular train of thought, which is whenever somebody calls my office and I know Wil’s office as well, asking about intellectual property protection, one of the questions that we have is what’s your business plan? So that’s important to everything that you guys just said. Jim and Barry, let’s talk about this for a second. What are some key elements of business plans that you want to help entrepreneurs and startup start off as and small businesses refine?
Jim Huerta: (20:10)
I believe that entrepreneurs in many cases, and I’m loving what I’m hearing, this conversation don’t really do their homework when it comes to creating a business plan. What I’m saying by that is there is pieces within that business plan that even before you get to the executive summary, you really have to understand how your product is going to land in the marketplace. So, there’s some key elements there. Do you know what your competition is? Do you know the power of your business? Now I’m going to talk again to this thing that Wil and I just experienced. I think it’s a good example.
I’m not going to get into the details, but this is a product that’s couldn’t be more simpler if they tried, but yet we found out right away that this market is huge and productive and it’s not going to go away. It just can’t go away. That’s the size. That’s the type of market. So in the business plan, we made mention of that. But I think that you need to do your homework. You need to be able to understand what you think you have and how you’re going to get it out there and how you’re going to make money from it. And I think a lot of times people don’t do a, we’re doing right now. I think what’s happening here right now, you have five people with different academic and intellectual backgrounds who are participating in the conversation to make something stronger. The business plan has to have that impact. If it doesn’t, it’s a failure.
Justin Tripodi : (21:31)
And I think when you say doing their homework, it’s not that they’re not working hard or putting the right effort in. It’s that they’re working efficiently and effectively. And I know at the early part of my career when I first went off on my own, I thought I was working very hard, but I wasn’t working smartly. Now that’s in no way to say that we have, you know, we have the test in hand with all the answers prepared for you. We don’t. But what we do have is a pretty good understanding of what the questions are. And together with anyone we work with, we can find the answers. Just as a whole, your head is probably spinning right now. I know mine is which is why I lost my train of thought before. But that, that is working in a small business and entrepreneurial community. There’s a lot to consider, a lot to consider at any one time. And as you could tell just from this podcast, we debate each other sometimes. And you’re kind of sitting in on what a meeting between the five of us would look like with the client when we best try to understand what their business is, what their challenges is and what could be a potential path forward.
Wil Jacques: (22:37)
That is the growth of the business. See, it only took me… well, you know, our radio audience can’t see me, but you know, but 45, 50 years to get to the point that it wasn’t something that I was going to necessarily read in a book. In the book, I got the skillsets in the book. I learned how to do math. I learned how to read. I learned how to analyze, but what the book doesn’t give you is the value of the experience and the value of having made the mistakes and the value of having bounced your ideas off of people just like us sitting around this table. So you’ll go different sectors and you don’t know what you don’t know.
Justin Tripodi: (23:24)
Exactly, exactly. I think it was said at the beginning of this conversation, yeah.
Well, I think you really started, well when you said the patent is not the business, because I think people, even when I started looking at intellectual property, you and I go back a long time in that area. I looked at it, I have the powerhouse. Well, I’m not the powerhouse. I have something that could help me, but I got to understand how I use it as a tool and I think people just sometimes entrepreneurs don’t get that. If you remember Kevin Revet, I remember Rembrandts in the attic. Yeah, that was a great book, but if anybody hasn’t read it, you should really pick it up. Kevin Revet was an attorney, an IP attorney who said that if most stockholders found out what CEOs was stockpiling in the basin when it came to patents, they’d be fired instantly because they hadn’t built businesses around them, unlike the 3m model, which they were smart enough to do that.
Anthony Verna: (24:17)
All right, so one last thought before we move on to the end of this episode. Barry, when you are looking at the hierarchical structure of a small business, I mean a lot of small businesses of course are just the owners and maybe an employee or too, but how are you looking at the need to add managers as revenue comes in or as work gets more complex for that business?
Barry Kolevzon: (24:42)
I really think that people that come up with the eureka, one person comes up with it and said, I’ve got it. What they have to do and they don’t like to do because they have pride that they thought of this in the first place and the big problem is to say you’re still at the beginning side. What kind of business are you thinking about? You don’t have to go and spend lots of money to find out how you can get there, but is it the right money for the right reason that will help the business grow?
Anthony Verna: (25:20)
But sometimes the business owner does have to let go. I had a client years ago who if you wanted to put together that organizational chart, her name would’ve been in everything and at some point it can’t because it’s not the expertise. When do you start adding people in there?
Barry Kolevzon: (25:41)
I think you sit down and you have to prepare something on a piece of paper, laying out what your thought is and what you’re going to do and then you have to have people come in, other members of the organization or somebody outside the organization and have what we’re doing today where we’re trying to look at all sides because that will help us I believe to get a better conclusion.
Jim Huerta: (26:10)
If I might just add something to that. I think that the analogy we started with this whole thing about is business the ultimate team sport. I think when you’re looking at an organization, you have the event or the person who says, “This is my baby. Uh, I can’t let you beat up my baby kind of stuff.” I think the important thing is that this whole idea of drafting the right team. If you play a sport and you know you have a weakness, my God, look for the strength of that weakness. They are out there. There’s a lot of talent out there that can help you. What makes, I think what we’re trying to do in this conversation is that we already had that team go out and vet us, find out about who we are, but we can bring that team and we’re going to have this conversation that we’re doing right now in front of a client.
We want the client to know, Oh my God, I didn’t realize that that’s a big hole in my, in my playbook. Well, we’re here to fill it for you, hopefully fill that void. So I think the looking for, looking for management’s an ongoing thing. Don’t carry the load too long because you will not succeed on your own. It’s just there’s too many, there’s too many principals in the theory of business. There’s too many smart guys in history who understood marketing. One of the stood management, understood the finance, accounting. These guys develop theories and those theories can only help if you try to execute them correctly.
Go ahead, Justin.
Justin Tripodi: (27:33)
And that just goes back to something I said before, which is time matters. Especially if you’re trying to run a technology business. The rate of technology advancement is astronomical right now. You don’t have a year to three years to try to go to market and validate your technology. That needs to be done in a very condensed period of time and building the right team that has a shared vision, which is always very important. And you notice a lot of times in a startup they might not be a shared vision. And unfortunately, a lot of times in startups I find that founders are also founders in multiple businesses on one time. So their attentions are kind of diversified and that could lead to a lack of shared patient and to say the least… diluted, diversified and diluted. I stand correctly, Even as even as a a group of individuals that work with founders and small businesses, we in turn look for the team that we get to collaborate with.
Earlier on in my career, I looked at any large market opportunity or any cool solution thought I could make that successful. And what I’ve learned over the course of my career is that’s wrong. I was wrong. It really comes down to the team that you’re privileged to work with. And the founder needs to know that and he’s to understand that I can’t wear all 18 hats forever. They need to be willing to either make the right hires if they had the capital or invite the right co-founders in to help them accelerate their path to market.
Jim Huerta: (28:54)
And I think that following your point, there’s a lot of good specialists consultants out there all the time. There’s a specialist in marketing, there’s a special in IP. What we’re talking about here is getting all those specialists in the same room at the same time with our client because now what you’ve created is a management team that comes from those different disciplines who are talking to each other. What a clever concept. That’s where I think the NESSA group excels in.
All right, everyone, thank you so much. Episode one of our special podcast mini series is finished. And our next episode we’re going to be talking expounding a little bit more about new ideas and business plans. So, we look forward to having everyone listening. Continuing to do, I’m Anthony Verna. Thank you very much. And Jim, before we go, how do people get in contact with the NESSA group?
Oh, it’s easy. You can find us at thenessagroup.net you’ll see our site. We’re on LinkedIn. You look for us, you can find this, and if not, just holler out. We’ll find you.
Thank you so much, Jim.