Why Non-Tech Execs Should Learn to Code.

Smart phone apps are fast becoming the lingua franca of the tech world. They offer much higher user engagement rates than traditional websites, and are supporting thousands of highly successful start-up business models.

The use of apps will increase exponentially later this year when Google evolves its search engine algorithms to allow for mobile “deep linking” or a way for their search engines to go inside apps and link to a specific location rather than just launch the app.

As a marketing executive with a long history of helping create websites, digital and content marketing programs I always felt at a distinct disadvantage when it came to talking to web and app developers. I just didn’t “speak their language” nor fully understand the development process.

I decided to take the plunge earlier this year enrolling in a part-time Swift development course at a NYC Flatiron district coding school – TurnToTech. Swift is the relatively new iOS app development language from Apple.

In class we learned about the basic process of designing and building apps starting with downloading Apple’s Xcode 6. We became familiar with strings and characters, control flows, functions and closures. We learned about classes and structures, properties and methods. As I said, learning a whole new language.

Lots of Swift code is “open-source” and available online in places like github, so you don’t need to “cook from scratch” every time you start the development process.

My co-workers asked the obvious question: “What’s it like?” and “Is it really hard?” My answer was simple “It is like being in France and jumping on the TVG bullet train. They’re speaking a foreign language, and it’s moving really fast.”

I learned how to do business effectively with people in the EU by getting on a plane and spending time on the ground in the UK, France and Italy. I needed to learn both the culture and process of how they get things done, which in many cases was different from the way I learned to do business in the US.

The same applies to learning code and working with developers. They have their own culture and process for getting things done, one that needs to be understood and respected by non-tech executives.

I now have a much better idea of how apps are developed, that there is usually more than one way to accomplish a task, how long development should take and a better idea of how much it might cost. I also know how to look at “source code” and have an idea of what it is trying to accomplish.

This kind of knowledge would be helpful to all sorts of non-tech business people, from senior marketing executives to operations people. I’m sure the business people in many start-ups would also benefit from having a better understanding of how websites and apps are created, tested and optimized without having to learn-on-the-job.

I don’t have plans to become an app developer anytime soon, but I will be much more effective working with developers moving forward, and I owe a debt of gratitude to the instructors and my classmates at TurnToTech in NYC – who where patient and helpful as I ran hard to catch up with the technology that is redefining the way business is done in so many ways.

Time to leave your big bank?

Community banks are fast emerging as the unsung heroes of the US economic recovery, following the fall-from-grace experienced by their big money-center bank brethren. Is the time right for more consumers and small businesses to take a hard look at their relationship with big banks in favor of community banks?

Community banks as a sector of the banking business have seemed always to have their priorities straight: Putting the interests of their customers first, reinvesting in the communities where they live and do business, and avoiding high-risk investments / business practices like derivatives and currency / commodity trading. They also seem able to sidestep most bank regulatory entanglements. 

Turns out these smaller banks are now are looking like both a sound investment and a critical part of the economic recovery. The Wall Street Journal cited these trends in a a recent article “Good Banks Come in Small Packages.” The smaller banks now hold a majority of the commercial real estate loans. They also have boosted key lending like C&I (commercial & industrial loans). Earnings results for smaller banks are robust as well.

There are some obvious reasons that the community banking sectors is on the rise, including:

1.    Community banks offer a better value to customers: Most locally owned banks deliver the same range of services from checking accounts to debit and credit cards at a much lower cost than big banks. They often offer, on average, better interest rates on savings and better terms on credit cards and other loans.

2.    Community banks invest in growing local economies: Small businesses, which have been at the forefront of the economic recovery and have created the majority of new jobs depend heavily on small banks for financing. Although small and mid-sized banks control less than ¼ of all bank assets, they make more than half of the volume of small business loans.

3.    Bank with an institution that shares a commitment to your community: The fortunes of local banks are intimately tied intimately to the fortunes of their local communities. The more the community prospers, the more local banks benefit. Big banks generally are generally not tied to their places where they operate. Indeed, they often use a community’s deposits to make investments in other regions, on Wall Street or to help pay big regulatory violation fines.

4.    Support productive investments, not gambling: Community banks are in the business of turning deposits into loans and other productive investments. Meanwhile big money center banks devote lots of their resources to speculative trading and other Wall Street bets that may (or may not) generate big profits for the bank, but provide precious little economic or social value to it customers or communities where they do business.

5.    Local decision making: Community banks make loan approvals and other significant decisions on a local basis. They often using personal knowledge of the businesses or individuals to help provide qualitative insights into the lending decision, approving loans that a big bank, using computer generated models and less personal evaluative criteria might reject.

The Independent Community Bankers of America trade association provides an excellent overview of itself and the advantages of community banks and overview community bank facts at Independent Community Banks of America overview.

A final and somewhat blinding glimpse of the obvious is around the issue of honesty and integrity. Big banks continue to make headlines by pleading guilty to a seemingly endless stream of criminal and anti-trust violations for activities such as price rigging foreign currencies, mortgage related charges and tax evasion and manipulating interest rates.

A study by the Boston Consulting Group determined that legal claims against the world’s leading banks have reached $178 billion since the financial crisis. The study concluded that big banks have now come to accept big fines as another cost of doing business.

Despite these massive legal charges, banks recently have returned to profitability for the first time since the financial crisis. Any wonder their fees and rate charges have skyrocketed?

Seems that nearly any way you look at it, community banks are the smart choice for personal and small business banking, and will continue to help empower success and growth for the US economy into the foreseeable future.

Finding the Right Partners for Start-Up Success.

2014 saw 478 venture deals in NYC worth $ 5.0 B.

It has been reported that over $5 billion in venture capital funding flowed into the NYC “Silicon Alley” start-up sector in 2014. This represented 478 venture deals for the region according to a report issued by PWC and the National Venture Capital Association using Thomson Reuters data. It is likely that the level of venture financing in 2015 will equal or exceed that number.

A host of high-profile NYC-based venture capital firms including Union Square Partners, Thrive Capital and Lerer Hippeau continue to make venture investment in start-ups hoping for successful outcomes, a few big winners and maybe even the elusive "unicorn" - a firm that achieves a billion dollar plus valuation. 

Yet many start-ups who find seed and even series-A financing end up failing. One of Silicon Valley’s most striking mantras is “Fail fast, fail often” and it is widely circulated at tech conferences. Many tech entrepreneurs view failure as a right-of-passage.

The estimated rate for the failure of start-ups goes as high as 90%. Companies typically die around 20 months after their last financing round, and after raising an average of $1.3 million according to a study from CB Insights titled The RIP Report – Start up death trends.

A venture capital firm that that takes a deep and active role in its portfolio companies after the investment is made is Greycroft Partners, based in NYC and Los Angeles. The firm currently manages 120 investments, and has $ 600MM under management. They have also done $2.6 billion in exits over the last 24 months. Recent deals include Maker Studios - a global leader in short-form video, which was acquired by Disney for $950 million; and a personalized clothing service for men called Trunk Club which was acquired by Nordstrom for $350 million.

Eliie Wheeler

Ellie Wheeler – a NY based Principal with Greycroft noted recently “We don’t leave entrepreneurs asking ‘Now what?’ after we’ve made an investment. We take a very active role in business development for our portfolio companies.”

Wheeler went on to say “We typically focus on Series A investments worth $1-3 million. We then often syndicate the investment to a second party to add additional perspective.” She continued “We focus on sales and marketing KPI metrics, like B2B companies having paying customers and audience / engagement data for media companies.”

She said that they also make introductions to larger companies (like GE) through the company’s extensive network to help them gain visibility, build strategic partnerships and plan for successful exits. “We want to see portfolio company KPI data points move to the upper right quadrant.”

Good legal counsel is also of paramount importance to start-ups. A Palo Alto, CA -based firm (with a big NYC office) that is offering great online advice to start-ups is Cooley and its website cooleygo.com.

The Cooley GO website offers a wide range of legal resources to entrepreneurs of all sizes, tracking their life cycle stage from formation to M&A and sale. Launched in 2014 the site delivers legal and business know-how. Content covers issues like financing, building a team, working with directors and advisers, intellectual property and is updated by Cooley partners on a regular basis to keep it fresh and engaging.

“We work with the innovation community 24/7 and we’ve listened” said Craig Jacoby, chair of Cooley’s Emerging Companies Group. “In Cooley GO, we have developed a platform to assist start-ups though all states of growth. Cooley GO is designed to help entrepreneurs fulfill their goals with a toolkit that is easy to navigate and use.”

Many tech start-up firms are founded by visionary entrepreneurs, who are adept at digital development and IT related skills, but may have missed attending a business school. As a result they may lack finance and accounting acumen. Enter Marks Paneth  - a NYC based financial advisory and accounting firm. 

Jeanne Goulet

Jeanne Goulet is the Senior Consultant at Marks Paneth (MP) that oversees the firm’s tax and accounting practice for NYC tech start-ups. Jeanne spent the majority of her professional career at IBM, so she’s no stranger to tech. In her role at MP she’s developed a series of Marks Paneth webinars / white papers addressing the finance, tax and accounting needs of start-ups, with MP being able to play the role of a “scaling CFO” for start-ups.

She’s focused on issues such as how to build the financial infrastructure of a new business and relevant topics such as “How to craft a better exit” with six steps that help entrepreneurs maximize their return on time, effort and money. Her recommendations include how to establish a solid foundation in terms of structuring a start-up, how to minimize tax liability risks and cash outflow, and how to take advantage of tax benefits to increase current or future cash flow. 

Then there is the tech-talent pipeline issue in NYC. The huge demand for high quality web and smart-phone app developers has created a shortage of qualified developers. In response to this need, a whole host of “coding academies” has sprung up in NYC including TurnToTech, General Assembly and the Flatiron School, which just raised $ 9 million in Series B funding.

In May 2014, Mayor de Blasio launch of the NYC tech talent pipeline to support the growth of the tech sector and train New Yorkers to be tech companies' premier hiring choice.

Building on existing relationship with CUNY and the Department of Education, and the Department of Small Business Services, the NYC Tech Talent Pipeline will combine city, state, federal, and private funding to reach a budget of approximately $10 million, distributed across three years, to recruit and train New Yorkers; design new curricula to meet employer need; and engage employers in building the talent pipeline.

In the end savvy entrepreneurs should work hard to find strategic business partners that will help keep their best interests in mind, and offer complementary skills and expertise to the founders. By selecting an engaged VC, a good law firm, smart accountants and by working with the likes of the NYC Tech Talent Pipeline and leading coding schools for developer talent - there is a good chance that aspiring NYC-based entrepreneurs will be able to avoid the “fail fast, fail often” scenario.