Lessons from Atlanta’s Leading Angels — John Imlay/Sig Mosley December 16th, 2010MMM Tech Perspectives Lessons from Atlanta’s Leading Angels — John Imlay/Sig Mosley by John C. Yates An historic event occurred on the evening of November 16th — the Technology Executives Roundtable honored Sig Mosley with the first annual Imlay Leadership Award. The remarkable event capped the outstanding careers of Sig and John Imlay and highlighted their outstanding commitment to the technology community in Atlanta. In this two-part series, I first presented my introductory remarks about John and Sig. This second blog post includes the key life lessons from Sig and John during their fireside chat. During the fascinating fireside chat, John and Sig highlighted several key points about the Atlanta technology community, angel investing, and the past successes and challenges they’ve faced as supporters of entrepreneurs and tech industry growth in our state. Here are a few of the many high points and practical insights they shared: 1. People are the Key – John and Sig ran Management Science America, the second software company in the U.S. to go public and one of the greatest success stories in the U.S. technology community. They both stressed the focus on their people, highlighted by a gold lapel key worn by all employees as a reminder to remain focused on the importance of the individual. 2. Loyalty to the Team – The focus of people as the key extended to the unique sense of loyalty to the company. John shared a story about a new recruiting class where he discussed the importance of the gold key as a constant reminder of a successful and committed group of employees. As he left the meeting with the new recruits, he passed a fellow executive in the hallway — without their gold lapel key. John stopped the executive and remarked, “Dave, I notice you’re not wearing your MSA key, is something wrong?” Without hesitation, Dave responded, “I’m so sorry, John, I must have left it on my pajamas last night.” That’s commitment! 3. Focus on the Two Ms – In making an investment decision, Sig emphasized the importance of focusing on the management team first with market size being an important second. He often had to break the news to an entrepreneur that their idea might be a good one, but the market size was too small. (He referenced the fact that someone had printed up t-shirts reading “Sig said NO” — a badge of honor for many entrepreneurs.) 4. Culture is Important – Both John and Sig noted the importance of a positive, optimistic and forward-looking company culture. They told the story of a CEO who exuded enthusiasm and confidence in presenting his business strategy to them. In an unfortunate accident, the CEO died, leaving the co-founder in charge. Unfortunately, the company culture was driven by the charismatic CEO, now deceased, and the company was never the same. As with a sports team, the coach really does matter. The enthusiasm, optimism and drive of the CEO is important in creating a culture that is attractive to angels and venture investors. 5. Ahead of Their Time – When asked about their least successful investments (i.e. failures, dogs, disasters, etc.), John and Sig were refreshingly open. Interestingly, the companies in this category included at least one online business that was ahead of its time — selling underwear over the internet. While undergarments didn’t sell well on the web in the late 90s, they are apparently selling just fine in the 21st century ecommerce world. John and Sig mentioned a company in the UK that is prospering from web sales of underwear. 6. Importance of Angel Patience – Unlike venture investors, many angels are unable to weather the challenging times to wait for the market to come to their portfolio companies. John and Sig have been patient investors and supporters of the Atlanta technology community, but many angels don’t have the fortitude (or dollars) to survive through multiple rounds of financing. We could use more patient angels! 7. Impassioned Pleas for Capital Can Work – Only rarely will an impassioned, emotional plea for capital result in an angel investor stepping up with the money. The dynamic duo of John and Sig reflected on a fortuitous meeting that resulted in one of their most successful investments. The entrepreneurs made their plea to John and Sig for funds and were initially rebuffed. In response, one of the entrepreneurs threw his credit cards on John’s desk, remarking that he was “maxed out on his credit lines and would be out of business without an angel investment”. John and Sig relented — and the company became one of their most successful investments. This credit card “gambit” worked. Keep in mind that one of the principals was a well respected executive who had previously worked with John and Sig. The personal credibility of the entrepreneur was undoubtedly instrumental in the investors’ willingness to move forward with the deal. The lesson for entrepreneurs may be to make sure that one of the key executives has a track record of success, especially where the other co-founder is a rookie entrepreneur. 8. “When in Doubt, Buy the Football Team” – Communication was a key part of the success for John and Sig in their angel investments, and they didn’t always agree on investment targets. For example, John’s desire to invest in a professional football team, the Atlanta Falcons, didn’t exactly fit the entrepreneurial technology profile. On the other hand, the investment reflected the commitment of the fund to the Atlanta community –and is a great part of the American sports tradition. After many years of ups and downs, the Falcons are winning — and John and Sig look like geniuses! Postscript John and Sig confirmed that they are remaining active in the community, although they won’t be making any new investments. Their legacy will remain for decades as their portfolio companies continue to grow and their legendary support of entrepreneurs motivates others to invest in the best and brightest in Atlanta. For more information on the Technology Executives Roundtable, including membership info, click above This information is presented for educational purposes and is not intended to constitute legal advice. Opinions expressed are those of the author and not of Morris, Manning & Martin, LLP; see disclaimer at http://www.www.mmmtechlaw.com/privacy-policy-and-disclaimer/. Contact John Yates for more information at firstname.lastname@example.org.