Christopher Mirabile, "Angel with a Plan," Ep. 12

Christopher Mirabile is an angel with a plan. This super angel wants to make angel investing more professional and methodical. He comes to this aspiration by way of being a consultant, a corporate lawyer and a CFO of a successful tech company. He is co-managing director of Launchpad Venture Group and sits on numerous boards. He has co-founded Seraf, a platform for tracking angel investments and helping angels become better informed. He is an engaging and thought-provoking interlocutor.

Click here to read the full episode transcript.

 

Do not miss this energetic interview which includes the following topics:

  • Christopher Mirabile Bio
  • From English Major to Junior Management Consultant and, Eventually, a Corporate Lawyer
  • Law Firm to Tech Company, First as Chief Counsel, Ultimately as CFO Taking the Company Public
  • Turbulent IPO Leads to Decision to Become an Investor Rather Than an Operator
  • What Christopher Mirabile Looks for in a Startup
  • Christopher Mirabile’s Favorite Pivots: Pixability, Powerhouse Dynamics and Vela Systems
  • Christopher Mirabile’s Informative Columns and Posts
  • Boston Has the Best Ecosystem for Angel Investing: “I've seen a lot of angel investing, and, as far as I'm concerned, there's no city in the world I would rather invest in than Boston”.
  • The Angel Treaty – Angel Syndication – Collaborative Culture of Angel Investing
  • Christopher Mirabile on the Value of a Board to an Early-Stage Company
  • “I'm to the point now where if I run into a team that I otherwise like and I get any sense of hesitancy about building a board, that's a huge red flag for me”.

 


Transcript of Christopher Mirabile, "Angel with a Plan," Ep. 12

GUEST: SUPER ANGEL CHRISTOPHER MIRABILE - EPISODE 12

SAL DAHER: Welcome to Angel Invest Boston, conversations with Boston's most interesting angels and founders. I am Sal Daher, and my goal for this podcast is to learn more about building successful new companies. The best way I can think of doing this is by talking to people who have done it; people such as my guest today, super angel, Christopher Mirabile.

Christopher, welcome!

CHRISTOPHER MIRABILE: Good morning.

SAL DAHER: I'm so grateful that you could join us today as we record our twelfth episode.

 

Christopher Mirabile Bio

Christopher Mirabile is the co-managing director of Launchpad Venture Group. He is a full time angel and an active member of the Boston area angel investing community with investments in more than 40 startup companies.

His accomplishments led him to be chosen as one of Xconomy's top angel investors in New England for 2012. He is certainly even more a top angel in 2017.

He is also chairman of the Angel Capital Association, the industry group for angel investors.

Christopher is an adjunct lecturer at the MBA program at Babson College, a regular advisor and mentor to startups, and a frequent panelist and speaker. He is amazingly ubiquitous.

There are books ... Google Christopher Mirabile and you will be astonished at how much this man produces. He's a member of the board of the directors, the board of advisors of numerous startup companies, as well as several non-profits.

Christopher has served as a public company CFO with Iona Technologies PLC, a corporate and securities lawyer with Testa, Hurwitz & Thibeault and as a management consultant with Price Waterhouse's Strategic Consulting Group.

Christopher earned his JD from Boston College Law School and his BA with Honors from Colgate University.

Remarkably accomplished man!

 

From English Major to Junior Management Consultant and, Eventually, a Corporate Lawyer

Now, Christopher, as an aid to our younger listeners, I like to, when I have incredibly accomplished people, such as yourself, on, I like to start in the beginning. How did you go from being an honors English major at Colgate University to working consulting, and then, ultimately, into law.

CHRISTOPHER MIRABILE: Yeah, sometimes your life story takes funny twists and turns, but in my case, I didn't want to sacrifice a good liberal arts education. I wanted that cultural literacy that comes with going to a good, rigorous liberal arts school. I knew I wanted to see the world and I wanted to learn how business worked.

I was describing my dream job as I wandered around the campus, my junior and senior year. Someone, it was actually my brother-in-law Giles, took me aside and said, "Dude, you're describing management consulting. Please stop torturing us all and just go get a job."

I said, "Okay, that sounds good."

I looked at a bunch of different things. I ultimately decided to go with the Strategy Group at Price Waterhouse, not because it was the most prestigious boutique practice, it was a very, very good practice, but because the PW name would be a useful name down the road.

I had a wonderful, wonderful stint with those folks. We were sort of at the cannon fodder level. I traveled an absolutely tremendous amount, did all kinds of interesting studies. At one point, I lived in a Marriott Hotel in Detroit, Michigan for 47 weeks in a row. That's just a couple weeks short of a year.

SAL DAHER: 52 weeks in a year, 47 weeks is pretty close.

CHRISTOPHER MIRABILE: That was a rough stint. We were doing a very interesting study at General Motors, which was really a formative experience for me and an industry I always loved and wanted to get more involved in.

What ended up happening, there were about 12 of us in my level, and what ended up happening was-

SAL DAHER: Were you married at the time?

CHRISTOPHER MIRABILE: No, no. I was a young kid, right out of college. It was just great experience. What ended of happening was, the next level up were all the recent MBA grads. They were called the senior consultants.

That was what a certain amount of our class was ... There were about a dozen of us in the Strategy Group, PW. Ten went back to business school and two black sheep went to law school. I was one of the black sheep that went to law school.

I did it because I couldn't really put my finger on what I wanted to do. I didn't want to stay on the road as a consultant and I didn't want to be a brand manager for some consumer packaged good. I didn't want to be an investment banker.

I thought the law would be a really flexible way to get into business and a really interesting body of knowledge. That's exactly what happened.

Ended up in corporate practice, a very busy corporate practice in Boston, at the dawn of the dot com era, in the mid-90's, and worked with a ton of startups and really enjoyed being around the innovation economy.

 

Law Firm to Tech Company, First as Chief Counsel, Ultimately as CFO Taking the Company Public

Ultimately, I took a client public, and ended up going in house, and had an 11 year run at that company, ultimately becoming their CFO.

SAL DAHER: That was my next question. What motivated you from being an associate at Testa Hurwitz. You bill by the hour. You have a pretty steady life. A person as capable as you means that you have assured work in partner track.

What led you to go out on a limb and go work for Iona and go off and become a corporate lawyer at Iona?

CHRISTOPHER MIRABILE: Some people really like the law firm life and they're cut out for it. I'm not one of those people. I felt like it was too removed from where the chisel meets the grindstone. I wanted to be closer to the business and see the results of what I was doing.

There's a level of abstraction that occurs when you're in a big firm. For me, I wanted to get closer to the action.

I loved this company very much. When you do a company side IPO, you really get down into the weeds. You get to know the founding team. This was a great company and a really great founding team.

The nature of their business was that they were very transactional, negotiating really, really big contracts. They sold most of their software as heavy duty middleware software. They were selling it into telco [telecommunication companies], financial services, aerospace, government, defense. It was embedded in a lot of ISV [independent software vendor] software.

They really needed to professionalize their legal function. It was a very easy decision for me.

SAL DAHER: So, it was a perfect transition. It was like going into a mini law firm.

CHRISTOPHER MIRABILE: In some ways, I picked up the surface of my desk and moved it to Cambridge, because I was doing so much work for the company anyway. I never looked back. I loved it.

SAL DAHER: I've actually seen this happen. I saw this happen at Bank of Boston, of all places. There were a couple of attorneys who left Bingham, Dana & Gould and went on staff at Bank of Boston.

After 11 years working with Iona, the company got acquired by Progress Software. You had a big hand in that. You went off to become an investor.

 

Turbulent IPO Leads to Decision to Become an Investor Rather Than an Operator

SAL DAHER: How did you make that decision?

CHRISTOPHER MIRABILE: It helped that the last few years at Iona were really tough. I accreted a lot of responsibility, over time, and was running the global legal function for many years, which was a fairly taxing job. I ended up taking responsibility for the CFO role, as well, and was in that chair when things melted down at the end of '07, going into '08.

What ended up happening was, our exposure to financial services made for a fairly weak fourth quarter. We had deals go "poof". It was really the foreshocks of the earthquake that was coming in 2008.

We had a soft fourth quarter in '07. We pre-announced, that January, and one of our competitors sees the opportunity to kind of give us a bear hug.

What ended up happening was, their investment bankers in London ended up leaking a little bit. The business community in London and Ireland and business press were so closely linked that the leaks reached our home city in Ireland. The Irish regulators, on the Irish Stock Exchange, made us do a market leveling announcement.

So next thing we knew, we were telling the world that we were reviewing our strategic alternatives and Lehman Brothers was our bank. It was just chaos. We ended up having 20 or 30 companies look at the company.

Those last couple years, doing a public to public auction for the company, effectively, were really taxing.

SAL DAHER: You were a publicly listed company. Iona.

CHRISTOPHER MIRABILE: Yeah, on two exchanges.

SAL DAHER: On two exchanges.

CHRISTOPHER MIRABILE: NASDAQ and the Irish Stock Exchange.

SAL DAHER: And the Irish Stock Exchange. At the same time, you were negotiating the possibility of being acquired because you'd had a soft quarter and you needed to consolidate with a larger competitor, perhaps.

You were evaluating acquisition partners and that was prompted by one of your competitors releasing this information.

CHRISTOPHER MIRABILE: Bunch of the buyers were financial and a bunch were strategic. It was a really, really messy time. It was, of course ... The world was falling apart that spring.

We're narrowing down our options and we're negotiating a deal and pitching the company. Bear Stearns went under in March. We were approached in February and made our announcement in February. Bear Stearns went under in March, and then Countrywide got in trouble. Merrill Lynch and Bank of America and then AI-

SAL DAHER: This is the so called "subprime crisis". Meltdown.

CHRISTOPHER MIRABILE: AIG was going through a terrible ... We filed our proxy in June.

SAL DAHER: What a time to be-

CHRISTOPHER MIRABILE: Really, really rough time. In fact, it ends in a fairly funny story. We ended up closing on Friday, September 12th and our banker, Lehman Brothers, went bankrupt on Saturday, the 13th.

SAL DAHER: Unbelievable.

CHRISTOPHER MIRABILE: I'm the last CFO to ever do an M & A transaction with Lehman Brothers. I was just-

SAL DAHER: The funds were escrowed and so forth, so there wasn't-

CHRISTOPHER MIRABILE: Yeah, it didn't the deal, really. Our team swore up and down things were fine, because that's what the senior team at Lehman was telling them.

The point is that it was a really rough couple of years and holding down responsibility for the financial and the legal. It was traveling a ton. I feel like I missed the fourth and fifth years of my daughter's life and the seventh and eighth years of my son's life.

I didn't want to do that. I didn't have to do that. I'd been at Iona for a really long time and did well in the exit. I took some time to network and decide I wanted to get into neutral before I figured out what I wanted to do.

For me, the calling of getting back towards innovation, and young companies, and the intersection of technology and life. That was a siren call for me. I couldn't resist. My networking very quickly became angel focused.

I was very active in a number of groups and platforms in town.

SAL DAHER: To say the least. I mean, you are everywhere. It's amazing.

CHRISTOPHER MIRABILE: I'm one of those people. You've met people like ... You know, just can't be on a committee without being the chair of it. It felt like I had ideas of how I wanted to do it differently.

I went to Ham Lord, I was an active member of Launchpad, and I sought some mentorship from him. He was very helpful in getting my group off the ground. Race Point Capital Group.

SAL DAHER: So, when you left Iona, it was acquired by Progress Software. You became a member of Launchpad, which was an angel investing group in the Boston area.

CHRISTOPHER MIRABILE: Mm-hmm (affirmative)

SAL DAHER: Led by Hambleton Lord. Ham Lord.

CHRISTOPHER MIRABILE: Yep.

SAL DAHER: Ham helped you raise the fund that you put together, your green investing fund, is that what you're saying?

CHRISTOPHER MIRABILE: Nope. The fund was just my money and one other friend had a little bit of money in it, as well.

I went to Ham and said, "I want to build an angel group my own way." Ham was a great mentor and we did a lot together. Race Point Capital Group was really the group to surround my fund.

It grew nicely and quickly over a year and Ham came back to me and said, "You know, I've been looking for a partner for a long time. I've enjoyed getting to know you and work with you at Launchpad. I'd love to find a way to work more closely together."

Ultimately, we decided to merge my group into his and run Launchpad together. That's, gosh, now seven years ago.

Angel groups are a funny thing. Sometimes bringing two people together is a one plus one equals three kind of a thing. Working together, we were able to really up our ambition level, in terms of what was possible for the level of professionalism and the amount of support we could give our companies and so forth.

That's really been our playbook since then. We're really motivated by the idea of professionalizing angel investing.

SAL DAHER: If you're a member of Launchpad, how does it work? You apply for membership. You're someone who's been successful in life and so forth, and then what goes on? You have monthly meetings and so forth. Please describe the work flow there.

CHRISTOPHER MIRABILE: Yeah, we're a pretty classic network model group. We're very fortunate to have more interest in joining the group than chairs, so we have a little bit of a wait list and are able to give some real thought to the kinds of skills we need and the kinds of people that we want to bring into the network.

Once you're a member, you're essentially paying dues to be on the platform. You get well curated deal flow and process. Everyone makes their own investing decisions, which for us, is a really philosophical, religious point.

We are looking for very active angels. One of the challenges with having a fund in the center of a group, or even around the periphery of a group, is that it can create behavioral dynamics that can be tricky. It can also lead to a more passive approach. A more disengaged approach.

SAL DAHER: Where the angels say, "If the fund invests, I'll invest, but if the fund doesn't invest, I won't invest." That sort of thing?

CHRISTOPHER MIRABILE: Or, "I'll just put my money in the fund and sit back and let the fund make all the decisions and diversify me through the fund."

SAL DAHER: Which is kind of like, you lose all the fun of being an angel investor?

CHRISTOPHER MIRABILE: It's a perfectly valid method and there are some terrific funds-

SAL DAHER: At least in my perspective.

CHRISTOPHER MIRABILE: Yeah. All across the country. For us, it wasn't what we were looking for. We really believe that the human capital that we bring to bear de-risks the financial capital in a significant way, which is not to say we take ourselves too seriously.

I think some angels fall into the trap of overestimating the value they bring. I think a big part of being a good angel is knowing when you can help and get involved, and knowing when you can't and getting out and not interfering.

We try to really calibrate the assistance we give, but it's a very active, lean forward group. We put about eight million to work a year, exclusively in the Boston ecosystem. We invest in about 10 new companies a year. We do 20 to 25, sometimes even 30 follow on rounds in a typical year.

SAL DAHER: Are these companies limited, geographically, by industry?

CHRISTOPHER MIRABILE: Exclusively in the Boston area. If we can't imagine driving to a board seat… That's an old school view, but it really is reflective of that perspective that you need to de-risk the financial capital with the human capital.

The board is obviously an important conduit in, although oftentimes, we have many touch points with a company.

In terms of the focus areas, some ways, we reflect the indigenous industries of Boston, and have thoughtfully and deliberately done that. Our bread and butter is enterprise software. We tend to focus on need to have, rather than nice to have, products. We tend to focus on B2B, rather than B2C. We'll do a little bit of B2B2C, but we're not really a consumer products oriented group.

Our second biggest category is in the life sciences area. We do medical device, diagnostics, medical IT and digital health. We tend not to do hard core drug development biosciences, lab experiments.

The final third of our deal flow is split between green tech and ed tech and miscellaneous.

SAL DAHER: Please tell us a little bit about what Seraf is and what it's accomplishing.

CHRISTOPHER MIRABILE: That's been a lot of fun. It's great to be a founder and try to build a software company and get it to grow.

Seraf started out as a very personal project, for Ham and myself, that was really consistent with our desire to professionalize angel investing. One of the things that was an early hallmark of Launchpad was record keeping and performance reporting. Paying attention to the performance of the group and keeping records of the support the jobs are creating, the money that's going into things. If you've tried to manage an angel portfolio with a spreadsheet, you realize, very quickly, it's a pain in the neck.

SAL DAHER: It's impossible, yeah.

CHRISTOPHER MIRABILE: It really is. I mean, with the warrants converting and the convertible notes. We got super frustrated with it. We were running Launchpad with ... Ham had been originally running it with a spreadsheet. When I started Race Point Capital Group, I designed a big relational database to run my group. Then, we migrated Launchpad onto that platform when we merged.

That really was good, but it wasn't perfect. We set out to find a better tool. We were shocked to discover that there was nothing appropriate out there. There were some super expensive accounting packages for private equity funds and real estate funds and big VC funds, but there really wasn't anything suitable or affordable.

We hacked something together ourselves and showed it to a few people. They wanted to try it. They showed it to a few people and they wanted to try it. Next thing we knew, we had a huge list of feature requests and a road map that we people wanted us to build, so we said, "Well, let's just release this as an affordable SaaS product."

We've since added enterprise features for funds, and accelerators and groups, and university tech transfer offices. The product has really grown. I think there's somewhere between 500 million and a billion in assets on the platform at this point.

SAL DAHER: You got me thinking of ... I should put my investments on. I'm so flat out with this podcast, with all the other things, that I can't come up for air, but I should probably be doing it-

CHRISTOPHER MIRABILE: Well, drop us a line. We offer services for busy people. Getting them started, migrating their stuff over, on a paid basis. You can just get ... We have someone really terrific named Whitney and someone named Hillary.

SAL DAHER: Awesome.

CHRISTOPHER MIRABILE: They're really, really good at getting busy angels up and running on Seraf.

SAL DAHER: That's tremendous. Also, tell us a little bit about the publications of Seraf.

CHRISTOPHER MIRABILE: Part of professionalizing angel investing involves educating. Seraf is the platform. We have a learning center we call "The Compass". We've published hundreds of pieces of content, ebooks, check lists, videos, courses. It's really the blogging platform, for Ham and myself, and the writing platform. Have really open sourced all of the training that we do at Launchpad. We have a rigorous training program at Launchpad, and we've really open sourced all of that and put it on the Seraf Compass.

SAL DAHER: It's extremely valuable. We'll touch on that a little later.

Next, we're going to be asking Christopher Mirabile what he, as one of Boston's top angels, looks for in a start-up.

First, I'd like to thank one of my listeners, FIGmanager, who thoughtfully left a review on iTunes. The following excerpt from the review really moved me.

"I'm a novice angel investor, just getting into my first deals and starting out as an angel can be hard, but fun. Every company looks great, and it seems impossible to understand what makes a winner. Angel Invest Boston puts much of this in context and gives an experienced perspective on what makes a good company."

Thanks, FIGmanager, for giving back ... This is end quote.  Thanks, FIGmanager, for giving back by writing a review on iTunes. You give a really fine example.

The Angel Invest Boston podcast has outstanding guests, such as Christopher Mirabile, is professionally produced, so you get a really great sound, has no commercials, and comes to you free. The only thing we ask in return is that you help get the word out about our podcast.

Please tell an angel, or a potential angel, or a founder, about us. Take a minute to review our podcast in iTunes. Sign up at angelinvestboston.com to be notified of new episodes and of upcoming, in person, free events we'll be holding.

Enough of the pitch. Christopher, what do you personally look for in a start-up when you are investing?

 

What Christopher Mirabile Looks for in a Startup

CHRISTOPHER MIRABILE: Well, I really think there are two filters. One is basic blocking and tackling and the other has to do with your deal flow and your perspective as you become more experienced.

The first filter, I hope, is pretty familiar to most of your listeners. It's really three things, right? It's a great team, it's an appropriate, interesting market and it's a smart, differentiated and defensible solution.

In my mind, that's the order of importance. The team is foremost. It's the most important aspect of it. You obviously have to have a market, but a great team can tweak and refocus and retarget. Ultimately, the product is fixable. If it doesn't work and it's not going to sell-

SAL DAHER: Yeah, if you have the right team. What do you look for in a team?

CHRISTOPHER MIRABILE: It's funny; actually, I'm doing a talk at MassChallenge about this, so I was just thinking about this this weekend. You're really looking for exceptional people. It's important to observe that at high functioning team is different than a group of high functioning individuals. You do need that chemistry.

I think there's two pieces of it. Every spear needs a point. Having a leader, a great CEO, is probably the most important piece. That's the hardest piece to replace. Having the right kind of person to lead that team. You can add to the team. You do ultimately need marketing skills, selling skills, appropriate technical skills, and product management skills. Ham and I feel really strongly that a lot of starups fail for lack of product management.

In terms of that all-important CEO, first and foremost I look for integrity. I look for scrupulous honesty, self-awareness and honestly, but also honesty with others. Integrity in dealings.

Then, I think, the next most important thing is tenacity. The ability to keep plugging away, despite difficulty.

I also think vision, the ability to see the big picture, and rapidly synthesize a lot of data and pull it together into an actionable perspective, is critically important.

Courage and humility, the ability to learn. Sometimes, we talk about that balance between IQ and EQ. EQ is, I think to some extent, a measure of your self-awareness and your learning orientation and your ability to get things done through other people. That's critically important.

Then, it's hard to define; it's a certain presence, a leadership presence. It's a leadership charisma to command any audience and that grace under pressure to perform, at least adequately, in even the most adverse situations. It's the presence of mind to keep your keel down and keep progressing forward.

Those people aren't ... They're not ... They don't grow on trees.

SAL DAHER: No. No. They're very rare. Yeah.

CHRISTOPHER MIRABILE: When you find an exceptional team like that, you develop the confidence that they will pivot as necessary to find the right market and tweak the product for product/market [fit]. You end up getting really inspired about supporting teams like that.

 

Christopher Mirabile’s Favorite Pivots: Pixability, Powerhouse Dynamics and Vela Systems

SAL DAHER: At Launchpad, you must have seen some really interesting pivots. Are there any pivot stories that you like to tell? I mean situations where a company has one business plan and discovers it's not working and then has to change its business plan.

CHRISTOPHER MIRABILE: Yeah, you know, we've seen some pretty remarkable pivots, some having to do with assumed demand and some having to do with changes.

There was one company that we were working with. When we originally funded them, they were really focused on helping consumers get their photos and videos organized. It was just an absolute luxury good. It wasn't something that anybody needed, especially when the bottom fell out in 2008.

The company reorganized itself around helping small to medium size enterprises create video assets in a world where social media and video sharing and YouTube were increasingly important for finding your voice and finding your audience. That was okay, but it was really, really hard. It was a lot of little customers, and a lot of production costs.

At one point, they were mailing flip cams to customers. That really wasn't going to scale. The CEO didn't give up, instead-

SAL DAHER: The CEO even wrote "An Idiot's Guide to Making a Video"-

CHRISTOPHER MIRABILE: At one point, she did write "An Idiot's" ... I think it was "Video Content for Dummies" or something.

What they realized in doing that was, they were learning an awful lot about getting those video assets to deliver. That ended up being the third, and ultimate, focus of the company, was really helping increasingly large brands figure out how to find their audience and get their YouTube channels to deliver.

SAL DAHER: Before you mention the name, I want to-

CHRISTOPHER MIRABILE: Wasn't going to mention it at all.

SAL DAHER: I want to challenge our listeners to see if you can name the company, because-

CHRISTOPHER MIRABILE: Female CEO.

SAL DAHER: Female CEO. The story has been told a couple of times in our podcast. This is an entirely different description of the elephant. Really, I'm so glad you told that, because I'm going to ask them if they can guess the name.

Christopher, the name is?

CHRISTOPHER MIRABILE: I wasn't going to name any names, Sal, but this is a company called Pixability and a CEO, Bettina Hein, who I really admire and has built a great team.

SAL DAHER: Awesome. Okay.

CHRISTOPHER MIRABILE: Interesting ... Here's a different company. This is one ... Actually, you might have been exposed, Sal, to this company, back in the early days at Walnut.

This was a company that started out focusing on retail. Consumers. The circuit level power monitoring and management in your home.

You'd plug this hardware box in and connect a magnetic coupling to each of your circuits in your house, and then you would connect it to the web. You could see how you were using power in your house.

They were selling direct to consumer and through Amazon. That turned out to be enormously expensive and difficult and the market wasn't very big. They immediately began focusing on business. That was okay, but the market wasn't that huge and the cost of sales was still relatively high.

Then they said, "Well, let's really focus in on businesses that are power hogs." Convenience stores with a lot of lighting, a lot of refrigeration, a lot of A/C. Restaurants that have all the heating and cooling.

That was a big improvement, but it still wasn't growing fast enough. Then they began focusing on chains that fit in that. That helped a lot. They could go make one sale and sell to 400 locations, so that helped a lot.

But then, immediately, they wanted a stronger value prop, because it was a marginal savings on a marginal cost. The product evolved into really offering a true dashboard of how your 400 locations are ...

Now we're a software company, right?

SAL DAHER: Wow. Yeah.

CHRISTOPHER MIRABILE: With a ... We're a hardware enabled software company. That evolved as they learned more. They realized, to strengthen their value prop, that predictive analytics around the maintenance of refrigeration equipment and food safety would be really, really helpful.

That led to integrations with the major equipment manufacturers in restaurants. That really turned the company into, essentially, an IoT [Internet of Things] gateway.

SAL DAHER: Wow.

CHRISTOPHER MIRABILE: They added monitoring water and gas.

So, it started out as a little retail gizmo for homeowners to monitor their power usage and now it's a full-fledged IoT [Internet of Things] platform, working with OEM [original equipment manufacturer], selling kitchen equipment to restaurants, and monitoring all the energy and all the food safety and all the equipment.

SAL DAHER: Amazing.

CHRISTOPHER MIRABILE: Talk about a pivot.

SAL DAHER: Complete, I mean, you can see multiple levels of pivots, as Bettina went through as well. That story can be told even more fine grain.

What is the name of the company?

CHRISTOPHER MIRABILE: This is a terrific company called Powerhouse Dynamics that's run-

SAL DAHER: Powerhouse Dynamics.

CHRISTOPHER MIRABILE: That's run by a terrific CEO, Martin Flusberg. Martin never gave up. He just kept tuning and tweaking and listening to his customers. He's enjoyed years of support from his angels and institutional investors and has done a great job.

SAL DAHER: Amazing story.

CHRISTOPHER MIRABILE: It's just the most amazing pivot. I could go on for hours, so stop me.

SAL DAHER: No, no, no, no, no. We're a little-

CHRISTOPHER MIRABILE: If you want more pivot stories, I can give them to you.

SAL DAHER: No, this is delightful. This is really wonderful. Please feel free to tell another one.

CHRISTOPHER MIRABILE: Well, here's one that's a little bit different in the sense that it has to do with ... I talked about a macroeconomic change, in the case of Bettina and then 2008.

I talked about product/market fit and cost of sales and trying to find your jam when it comes to the right balance between the value prop and the cost of sales.

Here's an example of one, a couple, really, around technology shifts. There were a couple of companies that we were invested in that basically, you could argue, they were saved by the iPad. The iPad really didn't exist at the time the companies were founded.

SAL DAHER: The product road map, yeah.

CHRISTOPHER MIRABILE: One was a company that was trying to use Microsoft's early pen computers in the field. The battery life and the connectivity weren't there. They were trying to bring construction blue prints onto the sight, into the field, and were really struggling.

Some of the struggles had to do with hardware. How the hardware value prop not being good enough.

SAL DAHER: Oh, yeah, I can imagine with a computer.

CHRISTOPHER MIRABILE: Another company was in a similar situation. They came out of the storage space and they started really focusing on data de-duplication, as a way of moving and managing data in the enterprise, in particular, out to the edge of the network on mobile devices.

In both cases, the advent of the iPad and the consumerization of IT really changed and accelerated those companies.

One, the cellular connected iPad made the field based blueprint work possible. That company went on to sell for an extremely high multiple of revenues in a good exit. That was a company called Vela Systems. They ended up being acquired by Autodesk.

The other one ended up really getting into mobile device management, in the end, brought on by the consumerization of IT and had a good original acquisition by Good Technology, although Good ended up on somewhat hard times and, in the end, sold to BlackBerry. In the end ... Good was an IPO candidate there for a while, but didn't happen for them.

There's an example of a couple companies who sort of ... It's probably too strong of a statement to say they had their bacon saved by changes in technology, but it's in that direction.

SAL DAHER: That's interesting, because a lot of times we hear about changes in technology creating an obstacle for a company, and undoing them, and these guys were enabled by the notepad technology.

 

Christopher Mirabile’s Informative Columns and Posts

We're ... Basically, we have about nine, ten minutes of time left, so if you want to tell another story of a successful company. We can talk about Boston as a place to build a startup. We can talk a little bit about general advice from all the stuff that you've done in Inc. Magazine and all the writing you've done.

CHRISTOPHER MIRABILE: Sure. Sal, I do a lot ... A lot of the writing that Ham and I do at The Seraf Compass is really advice for investors, but as an angel, you know that a big part of what you do in your daily life is advice for entrepreneurs.

We're giving it all the time. Sometimes we repeat the same advice over and over again. You wish you had it written down somewhere-

SAL DAHER: Exactly, which is-

CHRISTOPHER MIRABILE: Because it would save you a lot of time.

That really was the genesis of my column in Inc. Magazine, was trying to cover a lot of the basics. All the stuff that you need to cover. It's actually been a lot of fun. I think I've done in the neighborhood of 50 columns at this point.

SAL DAHER: I could find 39. There's probably more, though.

CHRISTOPHER MIRABILE: I'm cranking that out. I target two a month and really having fun with that. I'll probably bundle it up.

SAL DAHER: I just want to say to the listeners, he has only two hands and only one head, despite all the stuff that he does.

CHRISTOPHER MIRABILE: I was an English major, Sal; don't forget, so I do like to write.

That column's been a lot of fun. It really is the one thing I do, in writing, that's focused on teaching and advising, directly to entrepreneurs. It saves me a lot of time. I'll probably bundle that up into an ebook or a physical book at some point.

SAL DAHER: I've read many of those, even before I was prepping for the show. I would search for something, you know, Section 1442 or whatever, and Seraf would pop up. It really is an outstanding ... Compass is an outstanding source and also your writing on Inc. A really, really outstanding source. You're doing tremendous work.

CHRISTOPHER MIRABILE: You're very kind. We're putting it out there for the world to use.

SAL DAHER: It's free. It's amazing what you can get for free. It really is.

CHRISTOPHER MIRABILE: It is, it is. That's a big part of it.

 

Boston Has the Best Ecosystem for Angel Investing : “I've seen a lot of angel investing, and, as far as I'm concerned, there's no city in the world I would rather invest in than Boston”.

In terms of the Boston question, I don't want to make your national podcast too parochial, but I will talk in general terms about what I think makes a city great for investing and for startups.

I think Boston really is great. Speaking as an experienced angel who's personally invested in, probably at this point, 50 companies myself, plus a bunch in the two funds that I'm managing, plus a whole bunch with Launchpad.

I've seen a lot of angel investing, and, as far as I'm concerned, there's no city in the world I would rather invest in than Boston.

The reason for that is, Boston has some really key ingredients. Brad Feld did a great book on this, by the way, when he was talking about Boulder and what it takes to build an ecosystem for entrepreneurship, innovation economy.

I think Boston has unbelievable schools, a lot of tech history and a lot of alums from tech companies. There's a lot of advice and mentorship available. It's got an active investing community. It's got great industry/academic partnerships. The life sciences world, the medical device and the research hospitals; very open to entrepreneurship and accessible to the community.

SAL DAHER: It's not ... It has ... What you're describing here, it has the hospitals, but it also has the enterprise software area. It has nanotech. It has ... Lots of these-

CHRISTOPHER MIRABILE: Phenomenal research institutions. I don't always agree with tech transfer offices, as an investor. Sal's laughing knowingly, because we've all tangled with the TTO's and don't always see eye to eye in terms of how to do that. The universities spin off unbelievable technologies and unbelievable people.

For me, for my personality, the thing I like best about Boston ... I mean, it's livable. People want to be here. We're right near the ocean. It's a great livable city. It's getting a little expensive, but a great livable city.

But for me, the thing I like best is the lack of hype. Compared to other top innovation oriented cities, Boston is just getting on with business. There's a lot of down to earth people who aren't overly focused on popularity contests and chasing fads. It's just a-

 

The Angel Treaty – Angel Syndication – Collaborative Culture of Angel Investing

SAL DAHER: From my perspective, the Angel Treaty, which you had a big hand in, is really an example, for the country, of having angel groups collaborate. When they produce research. Talk a little bit about the Angel Treaty. I think that's so-

CHRISTOPHER MIRABILE: Actually, Boston is acknowledged by most, and certainly the Angel Capital Association, as the birth place of modern angel syndication.

Actually, Ham was there for the first deal. It was Ham's deal. He was investing in a ... I think it was a company called NeurOptics. It might have been Cognoptix, but it was one or the other.

He was trying to fill out the round. He went around and built a multi-network syndication. That really became the template and was the genesis of the Treaty. The Treaty, basically, is a hold harmless that says, "If I do diligence, I'll share it with you, as long as you agree that you're going to hold me harmless."

It's a very simple concept, but it really allowed for the groups to come together. I think it's an-

SAL DAHER: Exceptional level of collaboration that goes on. It's amazing.

CHRISTOPHER MIRABILE: It's really emblematic of, I think, a really, really fundamental trend in angel investing right now, which is that there is a real capital gap and angels are coming together into groups. Groups are coming together into syndicates and taking companies much, much farther than they used to, out of necessity and also out of a desire to control their destiny a little bit further and take companies a little bit farther.

You see it increasingly as a necessity. As VC's have raised bigger funds and moved later stage and farther up market, the angels have to carry the companies farther. It wouldn't be possible without that kind of a treaty and that kind of cooperation, building big syndicates.

SAL DAHER: I've used some of the research from Launchpad. I've used research from MIT Angels. We've provided some, as well, on companies that we've looked at. Incredibly valuable. Really, really extremely helpful.

 

Christopher Mirabile on the Value of a Board to an Early-Stage Company

Take a moment and talk a little bit about the value of a board in an early stage company that's trying to build out the company.

CHRISTOPHER MIRABILE: I won't invest in a startup that doesn't have a board. I don't think you can really responsibly take money from third parties without a board.

Boards really serve two functions. One is just basic governance and controls and accountability. They sort of force you to report out regularly and approve a budget. They're typically ... Those kinds of controls are required in Series Seed term sheets anyway, so that as a general matter, startups need boards.

I think that governance function's very important. It can absolutely be overdone at the early stage. When a company's biggest risk is whether the dogs will eat the dog food, you really don't need gold-plated minutes books, right?

SAL DAHER: Right, right.

CHRISTOPHER MIRABILE: It's really about trying to get the product/market fit. There's a place for basic controls, but it certainly could be overdone.

I think the real value of a board is that you're bringing ... In some ways, you could argue that angel investing is about one generation taking all the mistakes they made, and all the lessons they learned, and all the scars on their back, and sharing it with the younger generation for the mutual benefit of both of them.

SAL DAHER: It's a lot of mistakes and a little bit of seed corn and passing that on to the next generation.

 CHRISTOPHER MIRABILE: It really is. The thing about a board is it's really the coming together of two kinds of people.

There's super, super busy founders who are up to their eyeballs in the details and charged with basic operational stuff.

Then there's people who have a lot more experience, typically, who are not weighed down in the day to day operations.

They're able to come together and sit back and ask a question, that's a bigger picture question, that's born of different perspective and different experience and having seen things done before.

Boards are fantastic for pulling CEO's, whose eyes tend to end up just a few inches in front of their feet, raising their vision up towards the horizon, and reminding them to look at the big picture, holding them accountable, and challenging them to drive harder and drive farther, and ask them to visualize what does success look like?

It's an enormously valuable function. Without it-

SAL DAHER: No doubt. Yeah.

CHRISTOPHER MIRABILE: Companies can substitute activity for progress, right?

SAL DAHER: Right.

 

“I'm to the point now where if I run into a team that I otherwise like and I get any sense of hesitancy about building a board, that's a huge red flag for me”.

CHRISTOPHER MIRABILE: A board is a great place ... It's about creating a little bit of space to step back and ask, "Why?" and ask, "How?"

To me, that's the value of it. I'm to the point now where if I run into a team that I otherwise like and I get any sense of hesitancy about building a board, that's a huge red flag for me. It starts to make me worry about control issues. It starts to make me worry about coachability issues.

A great CEO is ... I joke that a great CEO is a Chief Synthesizing Officer. They don't have to follow all the advice, but they need to take it in and synthesize different viewpoints and formulate them into a strategy.

I think the board's a hugely important ... It's sort of like a monthly therapy session for a startup.

SAL DAHER: I ask this question all the time, and in some of the answers I've gotten, people emphasize the resources that a good board can bring to help a CEO, in hiring, in connecting with people and so forth.

I think you're really emphasizing another important aspect, which is the mindset of the CEO. Kind of like being a CEO sherpa, a CEO shrink, a CEO guru-

CHRISTOPHER MIRABILE: All those things. Ham and I did a book on being a great director for startups. The introductions, help raising capital, help building a team, not reinventing the wheel, and human resources, and operations, and things to watch out for when you're leasing your first commercial space for a growing team.

That's all Mom and Apple pie. That's all stuff-

SAL DAHER: Can you give us the title of the book, please?

CHRISTOPHER MIRABILE: Oh, I forget what we called ... It's something having to do with directorship. If you look in Seraf Compass, it's right there under board stuff. I forget the exact title because it's come out in different formats.

It's that perspective, that creating the space, to step back and ask the bigger picture questions, that I think is so valuable.

SAL DAHER: That is really, really tremendous.

Christopher Mirabile, I thank you, emphatically, for participating and helping make this a remarkable podcast. I look forward to having you on again with Ham Lord at a future date, if we can arrange it. Have Ham on by himself and then have you and Ham, together.

CHRISTOPHER MIRABILE: Sure. That'd be fun. It's great to sit down and talk about something I love as much as angel investing.

SAL DAHER: I look forward to that. I thank you very much for taking time from your incredibly busy schedule to be here with us.

I'd like to invite our listeners who enjoyed the podcast to give back a little bit and review it on iTunes. You can sign up at Angel Invest Boston, to be notified of future events, including in person gatherings. Also, we'll tell you when the next episode launches if you're not subscribed in iTunes. That can be useful.

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I'm Sal Daher. This is Angel Invest Boston, conversations with Boston's most interesting angels and founders.

I'm glad you were able to join us.

Our engineer is James Willetts. Our theme was composed by John McCusick. Our graphic design is by Maywood Art.

This is Angel Invest Boston. I'm Sal Daher