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Executive Summary
Issue. Giving back to society Industry. Technology Key. When you find success, share the “how” to help others.
Suhas Patil's life has been dedicated to helping others learn. Even after building a billion-dollar company, that mission hasn't changed.
The former professor was a founder of Cirrus Logic, an Austin, Texas-based company that built a chip that is used in a number of technologies, including the iPhone.
Though the company started in 1981 now boasts $1.17 billion in revenue, Patil says he had to reach $6 million before he proved himself to his venture capitalist. “Now you are a company,” his VC said. “Before you were an experiment.”
Patil is also the founder of TiE, a nonprofit dedicated to helping entrepreneurs. He founded the group in Silicon Valley, with the gifts of a number of successful people from Southeast Asia. “We had learned from the school of hard knocks, how to start a company and make it successful.”
They wanted to become an “integral part of society.” First they would give back to their home, America. After that, Patil says the group wanted to “build bridges to the places where we came from.” Now, with more than 12,000 members worldwide, the group continues to give back to the next generation of entrepreneurs, regardless of where they are from.
Patil recently visited Tampa for a TiE event at the University of South Florida, to share some of the lessons he's learned during his career. “If everyone takes one good idea from this event, I've passed,” he says. “Two good ideas, I've done well. Three good ideas, I've hit the jackpot.”
The following are some of Patil's nuggets of wisdom:
Find initial inspiration. Patil grew up in India, where his surroundings were all built around the steel company plant where his father worked. The plant was the impetus for a school and roads. Everything else was jungle. Patil was intrigued about how one company could build that infrastructure. He was inspired to study so he could go to a good college to learn more.
You don't need to be rich to start a company. “No one in my family had their own business,” Patil says. “There was no family money.” When he went to MIT, he was assigned as a teaching assistant to Amar Bose, who had started his company, Bose Speakers, one year earlier. It was Patil's first exposure to the idea that “you don't have to be rich to start a company in America,” he says. “You need some assets — an idea or technology — but the money gets together with talent technology.”
You don't have to have the typical entrepreneur story. Bose was also proof that professors can start a company. Patil says after learning from Bose, he realized all he needed to do was come up with the right idea, pitch and find mentors to help him. Patil and his five students had never designed a chip for technology before, and “all the experts were shaking their heads.” But in the end, it was “perfect, worked the first time.”
Collect mentors. From the start, “I was collecting mentors,” Patil says. While at MIT, he would ask his host family to explain how stocks worked. He was always open to learning opportunities.
Listen and learn from other entrepreneurs. “Any entrepreneur who came to the university, I would listen to his story, and learn the nuances of financing or team building,” Patil says. He credits a lot of his success to talking to a lot of people and taking a lot of notes.
Do your homework. All startups require long preparation, Patil says. “The clock starts ticking and the money starts getting utilized. The real important time is when you're not spending much money, doing your homework.”
Come up with solid answers. When asked by a funder what his expectations for the company were, Patil admitted that he was looking to find success. He remembers saying, “If I make $5 million, I'm happy.” That answer was what sparked investors interest. “If I said a wishy washy answer, I don't think I'd get funding,” he says.
Don't get overconfident. Patil says his first big mistake was not going straight to venture capitalists to get funding after he made his first big deal, a $360,000 deal from a billion-dollar company. “At that point I could have gone to the venture capitalists and said, 'Give me a few million so I can do better, faster.' But I was so confident,” he says. He was too comfortable. But 18 months later, there was a downturn and he needed more money. “Raise money when you have the strength, not when you are running out of money,” he adds.
Don't be afraid to go to your mentors for advice. Patil reminds entrepreneurs they don't have to do everything alone. He remembers calling his mentor and telling him that he didn't know what to do because the University of Utah wasn't going to keep him on tenure if he started concentrating on his business. His mentor insisted that he would help get him the support he needed to get the company running, and it ended up being a great decision. Collective thinking can be powerful, Patil says. “How to get through tight spots comes with mentors.”
Find your customer and your funders and go to them. Several years in to Cirrus Logic, Patil realized the only time venture capitalists were coming to Salt Lake City was to hit the slopes. He could never catch them. The same was true of his customers. He made the tough decision of picking up and moving to Silicon Valley. “If we wouldn't have done, there'd be no Cirrus Logic,” he says. When he moved, the VCs who hadn't paid attention to him in the past asked where he had been. He said, “I was in front of you dancing!”
Make strategic decisions. Patil says in starting a new venture, some tough decisions must be made — but you should make them “like moves in chess — for a reason.”
When he had designed the chip with his students, he had proof that people wanted an improved version of a technology, and the only people who knew how to do it were him and his students. He even secured a deal with a big company for 1.2 million chips. “But the VCs weren't coming.”
He decided to talk to the head of the division, admitting that he hadn't gotten funding and that he didn't have the money to pay for the prototypes. Instead, he asked the company if it wanted to have the design. “After working so hard, to give away our one source of revenue was a pretty tough decision.” But that's what got him attention for funding on a broader scale.
Find the right partner. Patil first worked with Michael Hackworth, asking him to be a mentor and board member to the company to help build the business plan. Patil remembers Hackworth saying “you can design this?” Patil would respond “You can sell? Then we have a company.” Though Hackworth was up for a C-level position with Signetics, a division of semiconductor giant Philips, he was torn about wanting to work for the startup. Patil told him, “When you decide to quit ... I want you to call me before you call anyone else.” Sure enough, Hackworth decided to leave his corporate job in 1985 to be CEO of Cirrus Logic.
Know that going public has other implications. Patil learned that he should have calculated all of the changes that might occur after going public. “Until you go public, do not have to disclose financial information,” Patil says. After the company's road show, its biggest customer found out the company was making 50% gross margin. Though it worked out a deal to give a certain price if the customer ordered a certain level, it wasn't an anticipated change.
Understand the financial world has its own way of talking. As a professor, Patil wanted to help the student understand. But to talk to financial guys, you have to be more precise. “They don't really want to know how things work,” Patil says. They want to know what work they need to do to get the company generating funds.
Build a culture of brutal honesty. Patil's company was built on avoiding lies or self-confirming bias. If something didn't feel right- or if you were presenting something, it was always OK to ask people if they were being “intellectually honest,” without any penalty.
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