The Incredible Value of an Outside Board

In the words of Clay Mathile, “If I had a popcorn stand on a corner in downtown Dayton, I would still have a board of advisors.”

If you missed the GCVA luncheon at the Cincinnati Contemporary Arts Center, you missed a great talk about the value of an outside board of advisors given by Joni Fedders of Aileron, a entrepreneurial resource and campus just outside of Dayton founded by Clay Mathile, former owner of The Iams Company.

A typical venture-backed company has a board of around 5 members that are mostly made up of investors, the CEO/founders, and maybe an industry expert. So, while these boards are critical to decision-making, they are not always objective because they are personally invested in the drivers and outcomes of the business. Investment decisions may require them to get out their checkbooks, HR decisions may require them to fire someone they like, and so on and so forth. Also, these boards are also not necessarily comprised of individuals with relevant experience. Venture firms are generally made up of some pretty sharp individuals (and I’m not just saying this because I work for a venture firm…), but they’re not all-knowing and they may lack the specific expertise that’s needed for a company to really succeed.An outside board of advisors is an objective group of hand-picked experts, seasoned executives, and well-connected individuals that can help the company set strategic goals and identify opportunities that may not be obvious to the less-objective and sometimes not as relevant board of directors. This objective, expert group becomes a powerhouse of ideas when they bring their marketing, financial, and strategic views together in a healthy debate focused on the success of your company.

So, before you even start booking appointments with VCs, get a board of advisors together first. You may have to pay for their expertise, but it’s probably the wisest investment your company can make. And the best part? It’s an incredible compliment to be asked to be a board advisor, so there’s no reason to be shy about asking the executives you most admire to be part of your board.

Innovation in Cincinnati: How we can stay #1

Now that it's been published in Soapbox Media, I thought I'd share the article I wrote just before the holidays on innovation in Cincinnati. You can also check it out on Soapbox here.

Innovation in Cincinnati: How we can stay #1

As a venture capital investor at Neyer Holdings http://www.neyerholdings.com/, I strive to quantify just about everything, so when invited to write a blog on my favorite topic, innovation in Cincinnati, I thought I’d apply some Carmen Sandiego sleuthing to the subject and find out how we stack up against other cities in the US in terms of innovation.

The US Patent and Trademark Office (USPTO) website http://www.uspto.gov/ is a plethora of information about how to file a patent, trademark, or copyright. The USPTO also has an online database where you can search patents and trademarks. So, in my quest to quantify innovation, I started there. Admittedly, not all innovations are patentable (to be patented they must be novel and useful in some way), but patents are a good apples-to-apples indicator of innovation in a region.

So, I picked five Midwest cities - Cincinnati, Chicago, Cleveland, Columbus, and Pittsburgh – and five cities from different parts of the US - Atlanta, Austin, Boston, Seattle and San Francisco – and ran some numbers. It’s important to note that in this analysis I only included the city proper (as opposed to the surrounding metro area), excluding places like Palo Alto from San Francisco and West Chester from Cincinnati.

How we stack up: We’re #1!
You might be interested to know that over 16,037 patents have been issued to Cincinnati inventors since 1976. In today’s numbers, that’s over 48 patents per thousand population. Out of the ten cities I searched Cincinnati had the highest number of issued patents per capita. We are truly an innovative city.

Innovative cities today
Whenever I speak on innovation and entrepreneurship, I often cite San Francisco as my shining-city-on-a-hill of an example. How did I go wrong? I was sure San Francisco was more innovative. Well, in San Francisco, where the population of the city proper is about twice the size of our city, the number of issued patents per thousand is only 26 per thousand compared to our 48 – but they are quickly catching up. Though Cincinnati has far more issued patents per thousand population, San Francisco’s rate of new innovation (or the number of new patent applications in the last 7 years) is pretty extreme, with 28 patent applications per thousand population compared to our 21.



Our challenge now? In order to create long term economic growth, new companies, investment, and jobs, we have to keep up with the cities such as Seattle, San Francisco, and Austin who are tearing it up in terms of new innovation. This graph plots innovation – issued patents on the Y axis and new patent applications on the X axis. We want to be high and to the right – and the only way to get there and stay there is to invent, invent, invent.

So who is inventing all this stuff in our city?
It should come as no surprise that our region is a Mecca for consumer product, surgical, and aircraft technology. In fact, P&G makes up over 15% of our patent applications and together, P&G, GE, and Ethicon make up about 25% of our city’s recent applications. While at 25% our proportion of corporate innovation is slightly higher than some of our metro peers, Seattle has a similar experience with its intellectual property giant, Microsoft. 34% of Seattle’s recent applications were Microsoft applications. But in Cincinnati, who makes up the other 75% of new applications? People just like you.

Inventors in Cincinnati
Back in 1841 James Gamble patented a candle molding machine, the first patent of thousands to be granted to Procter & Gamble. In 1862 Mary Jane Pulte invented a new kind of cleaning gloves, becoming the first Cincinnati woman to be granted a patent.

Granville T. Woods, a Cincinnati inventor at the turn of the century, was simply known as “The Black Edison”. He registered over 60 patents in a variety of technical areas – a phenomenal number for a single inventor. Among his most notable innovations are air brakes, steam boilers, and a telegraph system of sending messages while trains were still in motion. He also developed the concept of the “third rail” in mass-transit subway systems and the “trolley” system for trolley cars.

Today, Cincinnati is home to inventors like Forrest Gauthier, founder of Varis Corporation and current CEO of Tesseron Ltd. Gauthier is the named inventor on over twenty patents in the multi-billion dollar high speed variable data printing industry. He has licensed his innovative technology to some of the largest print controller OEMs in the world, making Cincinnati a center of innovation for commercially viable large scale personalized marketing.

The Heimlich maneuver, the oral polio vaccine, the first working tractor, Pringles, the Uno card game, and the first credit cards (called “Charga-plates”) were all created right here in Cincinnati. Innovation is part of our heritage and something we, as Cincinnatians, can be proud of.

Do your part! Here are six ways Cincinnatians can be even more innovative.

1. Help fund university intellectual property work.
One metric we can easily improve upon is the number of patents issued to our universities. I checked to see how many patents applications are attributed to universities in San Francisco and Seattle, two cities where universities are doing a phenomenal job funding academic intellectual property work. San Francisco and Seattle universities have filed 5-6 times the number of patent applications as our local universities. But don’t worry – this is a problem that is easily solved.

If you’ve visited any of our region’s universities lately, you will find a phenomenal amount of research going on – over $350 million of research in fact - and all of that research desperately needs separate funding for patent work. Most universities just don’t have funds to dedicate to patents, which can cost thousands of dollars each. This is because universities typically fund intellectual property work with revenue from existing royalties (unlike the research itself, which is usually funded through grants). While it works in theory, royalty streams are usually lumpy, creating years of budget gaps – and years of resource-constrained IP offices. In any given year, a university may miss out on millions in potential royalties because a deadline passed for a patent filing. Fortunately, a special committee at UC is working on a way to solve that problem at UC, creating a dedicated fund that will ensure that researchers don’t miss out on patent opportunities due to budget gaps. This small fund will allow breakthrough technologies at our universities to be protected, creating enormous economic value for our region.

2. Don’t be afraid to be a little bit weird.
There’s a bumper sticker you may have seen out on the road “Keep Austin Weird”. There must be some correlation between “weird” and “innovative” because Austin is doing a pretty great job of keeping it weird – and patenting their weird ideas. Austin actually ranked #1 in my random list of ten cities in terms of new innovation, with 32 patent applications per thousand population.

Inventions are by definition novel and many times odd – and they can come from the most unexpected places. The inventor of the Uno game was a barber from Reading. A great example from my own career is a Cincinnati dentist who invented an energy-efficient production process for biofuels. Who knows? The next great Cincinnati inventor may be… You.

3. Don’t be afraid to fail.
Nothing ventured, nothing gained. Failure is absolutely fine. It means you tried. At the InOneWeekend kickoff this past July, Roy Gilbert, Global Director of Operations at Google, gave a great talk about innovation, entrepreneurship, and the keys to success that he’s learned at Google. The idea that stuck with me the most is the way Google approaches failure. At Google, if you reach your goals more than 80% of the time, that means you’re not setting the bar high enough for yourself. To their company, failure is not the end of the world; it’s just another step towards ultimate success.

I believe our city is teeming with latent ideas. In my work, I hear ideas all day long – and I’m amazed at the ingenuity that exists here. To ensure our long term economic success in this region, we need to take a piece of advice from Google and get comfortable with a little more risk and a little more failure. We need to take our ideas and make them real.

4. Consult a patent attorney.
We have world-class intellectual property attorneys here in town. Take advantage of it! If you have a great idea, but not a lot of money to spend on a patent yet, a provisional patent (basically, a rough draft) may be for you. I checked with Taft, a very well-known firm downtown with a strong IP group, to see what a typical provisional patent generally costs. Depending on the complexity and nature of the subject matter, a provisional patent application can be prepared and filed for approximately $2,000-4,000. Non-provisional applications run any where between $6,000 and 8,000. Don’t let the price tag discourage you. Depending on how novel and valuable your idea is, your patent attorney may be able to work with you to get the ball rolling while you raise capital.

5. Make connections with potential investors.
All are welcome to come mix and mingle at the monthly Greater Cincinnati Venture Association meetings http://www.newgcva.com/ where you will find inventors, entrepreneurs, venture capital investors, and others interested in start-ups drinking cocktails, pitching their ideas, and talking about innovation and entrepreneurship. If you’re looking for investment, GCVA will connect you to CincyTech, Queen City Angels, Neyer Holdings, and a variety of venture capital firms. If you’re thinking of making a pitch to investors, contact the GCVA board, who will help you refine your pitch before going in front of investors. You can register for the January 13th GCVA lunch event at the Contemporary Arts Center at www.newgcva.com.

6. Try out the start-up life for a weekend.
Transforming a good idea into a real, live start-up takes a lot of work, but the good news is – you can try it out for a weekend! In July, look out for InOneWeekend, an event where 100 people create a real start-up company in 3 days. Technology, design, and business professionals gather over a weekend to take part in a participant-driven event put on by venture capital investors and successful start-up entrepreneurs. On Friday, we brainstorm ideas and vote on the one we’re going to build. Then on Saturday, we start building every aspect of the company: technology, design, business plan… everything. On Sunday, we launch! To get your name on the list, visit http://www.inoneweekend.org/.


About Elizabeth Edwards
Elizabeth joined Neyer Holdings 2006. As an active investor, Elizabeth delivers capital and builds winning strategies for start-up and growth businesses in a variety of sectors, including energy, life sciences, consumer, and technology.

Elizabeth came to Neyer Holdings from Deloitte Consulting, where she was part of the Strategy & Innovation team, deployed over a broad range of industries, mainly focusing on the health care and life sciences. At Deloitte, Elizabeth’s work focused on strategic marketing, disruptive innovation, and new markets.

Elizabeth holds a BS in Economics and Psychology from the University of Michigan and a MBA from the University of Cincinnati.

She is an active member of the Cincinnati USA Regional Chamber Agenda 360 Initiative, serving on the committee for Economic Competitiveness, and is a founding board member of several community organizations, including the Twenty-first Century Forum and CincyPAC. Founder of Cause Catalyst, Elizabeth fundraises and raises awareness for better diagnostic and therapeutic solutions for melanoma skin cancer. She is a member of the Cincinnati Chamber’s C-Change Class 3, where she was co-chair of the Transportation team that created Fetch, a single number for cab service in Cincinnati (513-35-FETCH). Elizabeth is also the founder of InOneWeekend, an innovation and entrepreneurship organization that hosts participant-driven events where 100 people create a start-up company in 3 days.

In her free time Elizabeth enjoys traveling and downhill skiing, and coaches youth basketball. She is also an amateur pilot and Pilates enthusiast.
You can contact Elizabeth at elizabeth@inoneweekend.org