Companies That Failed to Innovate

By Stephen Day

Ice Plant

In the late 1800s and just after the turn of the 20th century, the most technologically advanced company in every town was neither the electric company nor the telephone company. It was the ice plant.  Really, every town had one.  It had changed the way people lived. For the first time, vegetables and meat could be kept for long periods and even shipped by rail or truck to distant towns, usually no more than 500 miles. At first, blocks of ice were delivered to each house a couple of times per week by horse and wagon.  Later, small trucks replaced the horses.  The ice plant owner had a lock on an essential necessity for every grocery, food distributor, and every home.


“If at first the idea is not absurd, then there will be no hope for it.” -Albert Einstein

So what happened to the ice plants?  They failed to recognize what business they were in.  Oh really?  Weren’t they in the ice business? NO!!!! They were really in the business of keeping food cold.  When the first refrigerators came to market, the ice plants refused to recognize the future.  Most ice plants were offered the dealership for the first refrigerators but they refused.  No one could afford these new electric ice boxes.  What an absurd idea.



Think about Kodak.  If you are older than 40, you will remember the term “Kodak Moment”.  Kodak was one of the great companies in the last century but new technologies caused them to lose focus on their mission.  Did you know that Kodak actually was developing a digital camera in the 1970s? But the management dismissed the concept because it would be a threat to their film sales.  

Kodak saw the rise of the digital age, and refused to change their company. With their legacy of photography, one would assume that they could have continued to be a dominant player in the space.

Later, Kodak would file for Chapter 11 because they tried to protect their legacy film business instead of being the change force in how images are created and used.  Kodak still survives but not so much in their traditional business. Kodak had to recreate itself.

We have many examples of companies that failed to innovate.  Often, as with Kodak, there was such a strong legacy of products that it was inconceivable that anything could replace them.  But when was the last time you saw anyone buying film in a CVS?  Not lately, I bet.


Let’s talk about some others that we all know.  In the early 1980s, Macy’s was approached with a bold idea.  Why not start a cable television channel selling their merchandise?   If we look at the pure logic, it made great sense.  Regardless of how many stores Macy’s had, the chain could not be everywhere.  But Macy’s said NO!

So a little company called QVC was started instead.  Now QVC is a major competitor to Macy’s.   I know everyone in this room has seen QVC on their televisions at home. But why are they so successful?  Macy’s insisted upon the customer going to their store, usually in a mall with dozens of other stores also selling similar merchandise.  One can only wonder how many other stores “stole” the potential sales from Macy’s.  But Macy’s, like most retailers, were in love with the whole traditional store concept.

What did the QVC do? Instead of forcing customers (mostly women) to shop in a store, the store literally came to their homes, via the QVC channel. Macy’s thought they knew their customers well, but they did not know the millions of others who did not shop there. Nor did  Macy’s consider the millions of women who did not like shopping at all.  What about the millions of women over size 12 or 14 who mostly disliked shopping, especially when they had fewer selections in larger sizes?  Add to that the sulky young, slim sales people in the stores, who often treated the larger or older customers with less than warm respect. 

Here came QVC.  Not only did they eliminate the trips to the mall, but they also had larger sizes of major designers.  If the customer received the product and did not like it for any reason, they could return it ….no questions asked.  And guess what? They even had normal-sized and plus-sized models.  Often the designer was actually pitching the new clothes, and would chat with the call-in customers. 

What we are discussing, is not selling dresses but a complete new business model that identified the needs of all the potential customers and found a way to meet those need.  What we are discussing is INNOVATION.

 Recently, Macy’s announced that they are closing 100 out of their total of 635 stores.   That is 15%.  Why?  Because they say they are trying to adjust to the changes afforded by shoppers buying from the web.

Terry Lundgren, the Macy’s CEO, says that Macy’s is the 3rd largest online retailer, close behind Amazon and Wal-Mart.  Yet, he insists that shoppers prefer to shop in the bricks and mortar stores. Is he correct? Or is he keeping to the same old mindset that most retailers have had for years….that the store is EVERYTHING.    Time will tell.  Macy’s did not really understand what their business was…to sell merchandise wherever the customer was. 


Neiman Markus

Here we are in Texas, home of the most prestigious department store in the USA…Neiman Markus.

Back in the late 1990s, at the height of the internet boom, the Washington, DC metro area was second only to Silicon Valley for startups. I had an office in a tower that was adjoining the Tyson’s Galleria Mall.

One day, the general manager of Neiman Marcus in the Galleria invited me to meet his boss.  It turns out his boss was the CEO of Neiman Marcus from Texas. 

We went to lunch at the adjoining Ritz Carlton, where we chatted about the new wave of internet companies.  I asked the CEO about how his website would affect his business.  He told me that they had no intention of launching a website anytime soon.  And if they did, it would be much later, and then only to drive people to the store. 

Again, another bricks and mortar store executive who failed to innovate.

Later on, Neiman did add a website but by then, the CEO was long gone.  One cannot easily estimate how much revenue was lost by the failure to innovate.


National Geographic

 Let’s chat about one of the most respected brands ever…NATIONAL GEOGRAPHIC.  Fox took them over for $750M, far less than the value of 4 years of their cable revenues.

Their mainstay, the prestigious yellow National Geographic magazine was continually losing subscribers and their cable channel was well regarded, just not profitable.  Where did NG go so terribly wrong?

In the 1980s, a group of television producers and some investment backers visited the management of National Geographic at their office just a few blocks north of the White House.  The producers pitched an idea for a new NG cable channel, using the huge stockpile of films and mountains of research that NG had accumulated.  NG was just not interested, as they were focused upon their traditional magazine featuring their renowned explorers. 

So these visitors got into their car, drove up 16th Street to Silver Spring, MD and rented offices there.  Because National Geographic could not see the potential in a cable channel, the Discovery Channel was born, along with the History Channel and others.  In 1997, NG launched a cable and satellite channel but it was too little, too late.  By then, the Discovery Channel was in thousands of households, and today the NG channel is only second in viewership but much less in revenues.


Defining Innovation

Please understand, I am NOT an innovator, nor a scientist, nor a researcher.  Yet, through my companies, Day Capital Partners and FundWorks, I get to meet people like you…..some of the smartest people on earth. In places like NASA, and research institutions and universities and companies like you represent, I meet lots of folks who I consider just plain brilliant. You are the people who develop solutions to problems. Some big problems, some small.

What I most love is hearing from people who think about serious global problems and come up with creative solutions.  That is how I define INNOVATION.  

I am guessing that many of you have had bosses, or senior management or Boards of Directors who dismissed your ideas.  The world does not accept new ideas so quickly….especially if those ideas might cause your revenues to end.  


How to Get Your Innovations to Be Accepted  

“You can have brilliant ideas, but if you can’t get them across, your ideas won’t get you anywhere.” -Lee Iacocca

Let’s talk about what factors hold innovation from being accepted. Use the three questions below as a check-list.   

1.      Does the CEO, the CFO, and the Board understand how this will enhance your company?  If not, why not? Did you sell it? 

2.      Have you developed a commercialization plan for your innovation? 

         3.      Did you develop a PITCH DECK?


Transforming a Traditional Company into Innovation Leader

“Never tell people how to do things. Tell them what to do and they will surprise you with their ingenuity.” -General George Patton

Here are some areas where strong, visionary leaders can transform a

company into an INNOVATIVE Enterprise: 

1.      Create a culture that allows people to try out new ideas and treats failure as a learning experience  

2.      Consider each business unit as an internal venture  

3.      Reward the best ideas, especially when they come from the bottom up or from customers. 

“I have not failed. I’ve just found 10,000 ways that won’t work.” -Thomas Edison


Share the Innovation

Here is an idea that some of you may find surprising…..Once you have the IP secured, offer it to the public.  NOT FOR FREE, of course.  But certainly issue a press release describing the innovation and request proposals from interested parties.  Urge prospective licensees to present concepts on how they would commercialize your innovation.  Offer a cash prize. You and your company might find your innovation has many more uses than you suppose. 

If these proposals have merit, why not allow the licensing to other companies in other industries?  Not only will your company look great and progressive, but you will raise the esteem of your management, your Board of Directors, the company investors and your colleagues.

Perhaps the innovation that will make the strongest impact will not be the technology you and your team developed.  It may be the cultural change within your company when you demonstrate how your team can bring new products or technologies to market. 

Now that is INNOVATION!

Posted on September 28, 2016 .

Startup Communication with Employees

By Stephen Day

In my first article in this series, we discussed how to reach and communicate with customers and potential customers.  This 2nd article will focus on communicating with employees.  Now if you are wondering just how many employees will be working for a startup, perhaps not too many.  But I will also include outsourced contractors, 1099 part timers, and other service providers. Anyone who works for you, employee or not.  We will leave investors and vendors for a later edition.

You are either a startup founder or your company is already up and running, maybe for quite a while.  Really, if you have 5 employees or 5,000, good communication is a must. The tips I offer here are just a few of the methods that you can begin to effectively communicate with your employees.

Remember, communication is, by definition, a two-way street. 

If there is no give or take, then you are not communicating. You are merely issuing an edict from your own ivory tower.  While this may be necessary at times, such as issuing a policy statement or a new federal guideline for compliance. But if this is your normal manner of informing your employees of any changes, you will soon create an atmosphere of hostility. 

I know about the effect of such hostility!

Back in the 1990s, I will a full-time consultant to a large federal defense contractor. My responsibilities included management of the mergers/acquisitions.  To a smaller company of under $50ml in revenues, it sounded like a merger.  But make no mistake, to the larger firm, it was an acquisition.  Once the deal was signed, the various departments of the big company laid siege to the new “acquisition”.  There was an arrogant attitude that the big company’s HR department knew best and the “acquisition” had to accept the accounting and payroll systems and policies, including the compensation plans.

 One such smaller company was owned by two men, but had over 140 employees, many who had been involved since DAY ONE.  They had been promised that if the company was sold or merged, the employees would participate in the profits of the sale. But you already see where this is going, don’t you? No one saw a dime of a bonus while the owners pocketed millions.  To say they were upset was a severe understatement. They were blindsided by the owners and by our acquisition.

While the executives were issuing new rules and policies to the newly acquired employees, they had no idea that many of those employees were leaving.  Actually, it was about 20%, but that 20% represented the very best performers and the brain trust.  My challenge was to keep the key employees from leaving.  I became the acquired company’s employees’ gladiator to keep the big company officers away.  At the same time, I had to convince the CEO that the entrepreneurial nature of the smaller company was what made it successful.  I was met with resistance, including one executive who told me that the employees should be grateful that they could be part of such a great and big company.

I kept a constant communication with virtually all the employees.  I wanted them to understand that I was not making separate deals for a select few. They soon saw that I was trying to work out a solution for everyone.  Finally, I set up a meeting with 5 key managers and the Board of Directors.   What we did was leave the old structure of the company alone. It would become a partly-owned subsidiary rather than just another business unit, with 22% of the small company’s shares reserved in a profit sharing program. That way, the employees could keep their entrepreneurial culture and were rescued from the parent company.

Imagine if the employees of the acquired company employees had been given the opportunity to voice their concern, instead of having new policies and procedures pushed down their throat.   Good communications from the start would have saved hundreds of thousands of dollars, possibly kept the really great project managers and other key employees that left, and created an atmosphere that would have attracted other acquisitions. 

Here are some basic rules for general communications to employees:

1.  Know what your employees are thinking about you and the management of the company. Use Survey Monkey or other independent surveys to poll the employees over policies and management.

2.  Create a newsletter just for the employees and independent contractors. 

3.  When you announce good news, make sure you give credit to those that participated in the success.

4.  Do not announce that you are in negotiations with anyone for anything. No talk of mergers and acquisitions, no talk about a big customer you are wooing. 

5.  NEVER criticize anyone for anything in public. If your salesman got drunk at a convention, or your accounting department incorrectly billed your biggest customer, deal with them privately. Never make it public. NEVER!

6.  Praise your employees and mention when they have a significant life event…marriage, birth of a child, death of a family member, etc.  Make everyone feel that you consider them to be part of your business family.

7.   Once per month or so, ask for ideas on how the company could be better. There are never any wrong ideas.

8.  NEVER criticize your competition.  Find ways to take their customers and perhaps their best employees, but do not criticize them.

9.  If you do not know the names of all your employees, then ask each manager to develop a short bio of each one, including their interests outside the company. Include this in the newsletter.

This is really just basic good sense.  Remember, your employees may be wonderful friends. But you are still the BOSS, and they absolutely need to view you as a fair, even-tempered leader.

Contact and follow Stephen Day at:


Twitter: @stephenaday



Posted on September 12, 2016 .


By Stephen Day

Communication is essential for business startups.

People are so darn interesting.  Every person and every business has a unique story and I want to know it.  Now that may sound strange. But I really do want to know about the people and the businesses I encounter. Why?  Because each one of us comes from different places, cultures, experiences. So many people, so many stories.

I am a very curious man.  I think I will cheat myself if I do not get to know someone else’s story. So I work at this. But it never feels like work at all.  

Let’s talk about why communication skills matter in business.  Let’s suppose you are an entrepreneur launching a new venture.  We will disperse with the traditional entrepreneurial talk that always states the obvious….find a niche product or service, do a business plan, and search for capital.  You have heard that all before.

What we will discuss in the next series of blogs is how your communication skills can help you attract new customers, great employees, suppliers, creditors and investors.

This article will address only customers. I will discuss parties in later blogs.

Customers Come First

There is nothing more important that finding customers right away. I do not mean prospects; I mean CUSTOMERS.  I do not care if you refer to them as clients, or patients, or guests, they are ALL CUSTOMERS.  It is important to remember that you serve them; they do not serve you. Regardless of whether you are selling products, hotel rooms, or medical professional services, NOTHING HAPPENS UNTIL YOU MAKE A SALE.  NOTHING!

At Day Capital Partners, we review many startups.  One of the first things we consider is the management team.  Does the team have any sales experience? If not, are they willing to beat the bushes and let the world know about their product?  Quite often, we see the CEO or team coming from a research position or a mid-level management position with a large corporation. They never had to ask for a sale, as that was a given within their company. Many have never even been on a sales call with their old company’s sales force.  Having accounting or management skills is important but it is no guarantee of a success if they cannot acquire customers.

If the CEO or founder is uncomfortable with selling, then he should never start a business.

We do encounter many people who cannot ask for an appointment or close a deal.  Usually I find that they do not have the strong belief that what they offer will genuinely help other people. If that is the case, why did they start a business?   When the startup CEO relies upon another person to bring in the deals, then there is little chance that the company will succeed.  That CEO probably should find another, stronger leader to replace him and act in some other capacity for his business.

Remember, because they are your customer today does not mean they will continue to be tomorrow. It is really up to you to keep them thinking positive thoughts about you and your business. If you do not seem grateful, they will move on to your competition.  If you do not state your appreciation of their support and business, they will be susceptible to the next good sales person to enter their door. To keep them happy requires good communication.

Here is an example of how things go wrong. I recently asked for my physician to call me.  The medical secretary attempted to schedule me for an office visit but I told her that I wanted my doctor to call me. When he did, late in the day, he was clearly exasperated that he had to actually call a patient.  I reminded him that I was not just a patient; I was a customer….and one who had brought other customers to him. I pay him; he does not pay me.  Instead of engaging in a very quick conversation about a concern of mine, he showed impatience at needing to deal with me in a non-traditional manner by actually meeting my needs instead of his.  The loyalty that I had felt for this physician evaporated in the few minutes of that call.   Instead of learning to communicate with his patients via the phone, he demonstrated to me that my needs were not important. 

Think about your customers. Do you or your staff convey the same attitude as my physician? I hope not.

Sadly, I have dozens of stories like this. I pay great attention to how businesses treat both new and existing customers. We all should work to improve our relationships and it all starts with good and regular communication.

Master Communication

Here are some tips to help in communication with customers:

  • Develop a pro-active Client Relationship Management (CRM) system to stay in touch with all your current and potential customers.
  • Develop a newsletter that can reach all of your existing and future customers. Feature articles about your customers as well.
  • Learn who your customers are.  Learn about the company, and then learn about the individuals. Remember, companies do not buy from companies. Individuals buy from individuals.  You may think that your big customer is a Fortune 50 company, but it is really the employee or officer of that company with whom you connected.  Nurture that relationship and any others within the company you meet.
  • Use social media (LinkedIn, Facebook, Twitter, etc) to promote your company, its products, and especially its employees.  Customers love to see photos of your employees, and learn more of their personal interests.  If your accountant loves to ride motorcycles and your HR manager is involved with a charity, feature them at various times.  You will be reminding your customers why they want to buy from you. Praise your employees to your customers.
  •  Pay personal visits with the customers and with potential customers.  Call your competitors’ customers and ask them why they buy from them and not you.  You might discover some rather surprising answers. 
  • In all your communications, engage with everyone with a natural curiosity.  People can tell when you are not genuinely interested. Do not take yourself too seriously. Let the customers see the human side of you. 

Contact and follow Stephen Day at:


Twitter: @stephenaday

Posted on September 6, 2016 .

The “Can’t-miss” Deal

by Daniel Broyles

“It’s a can’t-miss deal; if you invest in this company, you’re gonna make A Lot Of Money,” he animatedly told me. As I sat across from the Venture Capitalist broker, I couldn’t help but feel the excitement in his words. It may have been a cold, autumn day on Wall St., but the positive energy warmed the room.

A Lesson Learned

Six years later, that “can’t-miss deal” is my biggest tax write-off. While a great financial loss, it proved to be an even greater experiential gain. Far removed from animated pitches of “VC” investment bankers and brokers, I’ve learned that Wall St.’s commission culture often meshes poorly with Palo Alto’s long-term growth mentality. As true as the adage “where there’s smoke, there’s fire” remains, so, does the reality that where there’s money, there’s Wall Street. There’s a lot of money in successful ventures; over $60B was raised in 2015 alone. Such massive flows of capital have produced innumerable “can’t miss” pitches garnering many ill-fated investments. In 2010, I compromised my personal position with a lack of knowledge and experience, and it cost me. Moreover, the broker’s lack of knowledge of and experience in Venture Capital compromised his ability to effectively give investment advice. It’s a problem with a simple solution, but it’s a problem that has persisted.

Since that poor investment decision, I have spent a great deal of time working in and learning from the VC industry.  One of the first VC firms was actually established in Palo Alto in 1959: Draper, Gaither & Anderson. The rest, as they say, is history: a nearly 60-year history that offers a wealth of experience and a dearth of excuses to industry professionals. It is a history with which all self-respecting VCs should make themselves well aware, because they have a responsibility to their investors. That responsibility is to ensure that they seek and leverage all the knowledge and experience possible to bolster their due-diligence process. Many years ago, it was the inability to perform such due diligence that cost me.

A Lesson Lived 

In order to perform proper due-diligence, it is imperative to understand an industry and its nuances. It is very easy to become excited by the prospect of a large commission today, but VC is about growing businesses over years and years. VC investors are in it for the long haul, so responsible VC brokers should not be shortsighted. Far too often, the focus is on making deals and not on making GOOD deals for investors. Consequently, investors should always perform their own due diligence on deals and those who pitch them. If I were as well equipped in my early years as I am today, things would have turned out very differently. Ultimately, resources were available back then that would have allowed me to make a much better-informed decision.

My due diligence process today is, in a word, exhaustive. Startups will be ever subject to risk, but these risks need not be foolish. After all, whether it be an investor or me, someone is relying upon a concerted effort and a thorough analysis of an investment. Evaluating intellectual property portfolios, management teams, competitive positioning, market size, or a myriad of other elements create opportunities to mitigate the aforementioned risks and produce better portfolios. In the end, investors should prepare themselves to ask every question and to know every answer that gives clarification.

When I chose poorly six years ago, I had two options. The first option had a very compelling broker, and the second option had all the elements of the types of companies I look for today. The great divide was a simple matter of not knowing the industry and simply trusting someone to know it for me. If you ever think it too burdensome to bridge that gap, just know that my second option was Tesla Motors.

Posted on August 31, 2016 .

Pitch Decks That Work For All

by Stephen Day

We get a LOT of investment inquiries each week.  Some do not have an executive summary much less a business plan.  But if a company management wants to command attention quickly, they should develop a Pitch Deck.

When we think about Pitch Decks, we think about startups seeking investment.  Rightly so, but Pitch Decks are useful for all of us when we are making a presentation or seeking funding from the Board of Directors.


Investment companies review so many deals that we often have little time to thoroughly review every deal’s complete business plan.  Even reading executive summaries can be time consuming. There are tens of thousands of startups seeking capital.  So a well-developed pitch deck is essential for a startup to get the attention of angel investors, VCs or institutionals.

What an investment Pitch Deck should do:

·        Describe your business, its current financial situation and market.

·        State the prospects of the business.

·        State the size of the targeted market. Is it growing or stable?

·        Explain how your product or service will solve customers’ problems.

·        Present in a quick and simple way.

·        Create interest among investors.

·        Explain the investment opportunity including the expected ROI and EXIT.

Common problems to avoid in investment Pitch Decks:

·        Indefensible and poorly thought-thru financial projections

·        No consideration for costs of sales and marketing

·        Unrealistic estimates of overhead and compliance

·        Little or no consideration of the needs of the investors

·        Fear of dilution by the founders

·        No exit strategy

·        Failure to note the management team’s experience and expertise


OK, that seems logical for startups seeking funding.  You are thinking, “But what does this have to do with me?”

Well, a lot!

If you are in any position in any company, you need to sell your ideas for business improvement or new innovations to the upper management or to the Board of Directors. Even if you are the CEO, you need to sell the Board or a bank or even your employees on the direction of the company.  As Darren Hardy says in his best-selling book “The Entrepreneurial Roller Coaster”, everyone is selling at all times. Every one of us in business is selling; even if we delude ourselves into thinking we do not.  Maybe we do not need to sell to customers but we do need to sell our ideas, our visions, and our policies to others.

So if we do need to sell our ideas to others, then let’s think about how we do that.  As an experienced Board Director, I have watched all sorts of people make proposals attempting to gain the company as a client or customer.  Other times, we have employees seeking budgets for new equipment, additional staff, or other needs.  Most of the time, the presentations are dismal. We only have a limited amount of time and a board meeting is no place for a long rambling sales presentation. 


What about a Pitch Deck to a Board of Directors?

·        Think like a startup founder

·        Outline the problem

·        Demonstrate a solution

·        Provide supportive documentation

·        Enlist others who work within the company who will support your program

·        State your needs (i.e., budget, merger, acquisition, raise, etc.)

·        Prepare to answer all the questions that the Board may ask

 A Pitch Deck is a great tool for all of us, regardless of our positions or titles. Have you prepared yours?

If you are working on a Pitch Deck and need support, please contact me at

Posted on August 27, 2016 .

From Research to Business

by Stephen Day

We often see great innovations developed by research centers, universities and government agencies like NASA, or by a couple of crazy visionaries working in a garage. Let us see what could come up out of this.

Licensing Technologies for Startups

You would think that the research center innovations would be the most successful, but that is just not always the case.  Too often, the institutions are forcing the researchers to seek grant funding prior to starting the projects classic examples of “You eat what you hunt.”

The problem is that the researcher is usually inept at chasing funding and naïve as to commercialization.  But, why should we expect it to be any different? These skillsets are not part of most researchers’ experiences or training. As a result, these researchers are being set up for failure.   When it comes to grant funding, we have seen too many try to satisfy what the grant committee wants to see, rather than presenting a compelling plan for their application.  Hence, what started out as a bold new innovative concept can quickly get diminished by the requirements to get fundedThe garage guys developing technology on their own often are funding everything themselves, and usually have a better sense of the commercial value of their research.

We recently spent one hour with a research scientist who had no idea of how he could turn his technology into a commercial product.  He had not even thought about it.  It occurred to me that he was assuming that the commercialization office would enabling him to get more funding for research.   The university commercialization office was attempting to license it but it was several years before it would be ready, if ever. What made matters worse was that the information presented by the commercialization department listed various agencies who were working with the technology, which was false. This was not just an exaggeration; it was just a plain ….well, you can choose the word.

Too often, we have been presented with ineffective technologies that government agencies developed and attempted to license.  Some institutions seem afraid to admit that their research ended in a dead-end.  So we have seen quite a bit of research that claimed to be effective but did not work in the real world.  I have had scientists try to convince me that their tech was both effective and commercially viable.  But then I discovered that they would not receive any more funding if they could not show their current work was licensed.

Some research centers and universities do a great job at determining whether research is ready for commercialization.  Tech Transfer offices like David Day’s University of Florida Innovation Square not only screens the prospective technologies but also assists in getting them commercialized, very professional and effective.

Usually, when a company licenses a university technology, it is safe to assume that  some additional work will follow to prepare it for the marketplace.  This is especially true in biotech and pharma. We expect this. But we get exasperated when researchers or institutions attempt to commercialize too early.  Researchers need to understand the difference between grants and investments.

Making Technology Work

In spite of all I have written here, licensing a technology can be a great way to start a business or add depth to your existing company. 

Here are a few tips:

  • DON’T fully believe the researcher.  Trust but verify.
  • Do your own research on the marketability of the technology.
  • Verify if more work or research is needed to mature the tech.
  • Meet with the researcher(s) and determine if they believe the tech is completed.
  • Determine if your company is the right one to take this to market.
  • Option the technology license for 90 days for due diligence. And, DO IT.
  • If more work is necessary, ask yourself if you have the resources to finish the work?
  • Licensing fees can be negotiable. The more work you need to do, the less fee you should be willing to pay.
  • Most licensing deals require some level of royalty. Again, everything is negotiable.  
  • Ask if the institution or state has available funds to match your investment.
  • Write a separate business plan with capitalization requirements. This will convince the licensing team that you are the one that deserves their license.

There is so much more that we could discuss here, but this primer will prep you for the use of technology transfer.

If you are considering a licensing deal and need some counsel, please contact me at

Posted on August 20, 2016 .

Why Founders Fail To Get Investment

by Stephen Day

Recently, we met with a very smart scientist who had developed an exciting new technology.   It was apparent that he had much experience in manufacturing but little in finance or startups.  Did we like the technology? Yep.  But more importantly, we really liked him.  He needed several million to further develop his tech. So why did he not get investment?

Because he just did not understand what investors need to make a decision.

The CEO did tell us that he needed another cash infusion to get the company funded.  We were obviously interested. We asked for a business plan, but we never did receive one.  He did not have a Private Placement Memorandum (PPM) and furthermore, did not know what a PPM was. 

After two hours of hearing about the technology, we were anxious to hear about the company and its structure.  It was the standard LLC that so many attorneys advise. No problem.  Most companies start that way and then move into a C Corporation as they grow. 

 I asked about the company legal counsel. The attorney was his old friend, but evidently not someone who had much startup experience.   There was no consideration on how the company would raise needed capital. A good startup attorney would have taken this into consideration.

We kept awaiting the pitch to invest.  It never came.  We left and felt great about the founder, but not so much about his ability to handle the capitalization.  He did need the investment but did not show us a reason why anyone would wish to invest.

DAYCAP receives a dozens of request from startups for funding. At least 50% of them have no idea on how to structure their company to receive investment.  At another recent meeting with a founder, I asked him what ownership we would receive if we invested and how we would expect when and how we would receive our money back.   He had NEVER even considered any of this. 


Here are just a few insights:

1. All CEOs must constantly raise capital.  Just because you have raised enough to get by for a while, does not mean you should assume you have enough capital for the future growth. Raising capital should be a skill set you must learn.

2. Find a mentor who has done startups.  My experience is that a Fortune 1000 seasoned executive, while impressive, is not very helpful if he or she has never done a startup.

3.  Hire a startup lawyer. A general practice attorney who handles divorces, DUIs, and everything else is just not going to have the knowledge you need.

4.  Know how much capital you really need.  If you are funding a startup, you will likely not get help from a traditional bank. So you may think you can only qualify for equity financing …i.e. selling shares or convertible preferred debentures. But some capital needs (building, machine tools, office copiers, computers, etc.) could possibly be leased or financed through a non-traditional bank.

5. If you are a CEO or founder, understand that the investors are allowing you to use THEIR money to build your business.  NEVER forget that the investment is THEIR money.  State how the new investment funds will be used.  No matter how innovative your technology may be, nor how cool your office set up is, the investor wants to know that you can keep their money safe and make it grow. 

6.  Keep your business plan (BP) current.  Of course, a BP is fluid and should always be updated to meet the changing conditions of your industry.

7.  Make sure you have several options for a liquidity event or exit.  Be able to discuss these options at any time.

8. Create a Board of Directors of experienced business executives. If you are a science-based company, develop a Board of Advisors with subject matter expertise.  You do not need to pay them with cash.  Offer equity.  Make sure that each director and ALL your senior officers understand the business plan and can speak to potential investors.

9. If you are seeking more than a few “family and friends” for investment, make sure you develop a Private Placement Memorandum (PPM) to raise funds. Keep several copies in your briefcase, along with a subscription agreement.

10. Develop and learn to tell a story about your company. That will become your pitch. Learn it by heart.  Then practice, practice, practice.  You will soon become an experienced and effective fundraiser for your company. You may not think this is necessary, but if you are evangelistic in describing your company, you are also demonstrating a special trait that will attract your investors…your own enthusiasm.  Investors are not investing just in a business. They are investing and putting their trust in the leader……YOU!


You can contact Stephen Day at:

Posted on August 14, 2016 .

What Urban Ministries Taught Me About Management

by Stephen Day

I learned to be a manager in a very non-traditional way.  I thought I was a pretty good manager. After all, I had run a real estate construction and development company, building single family houses and mixed-use shopping/office centers.  But in 1991, everything I thought of my management abilities flew out the window. That was when I became the Director of Urban Ministries for the United Methodist Churches of Washington, DC. 

First some background

Let me go back a bit.  I had been dividing my time between DC and Florida, where I was born and raised. My family was non-church going Christians and like many of my generation, I totally was turned off by church and organized religion. But somewhere in the 1980s, I realized that there had to be more. A well-known politician in Jacksonville recognized my situation and led me slowly and patiently into becoming a Christian. But that is another story.

In Washington, I had the great fortune (blessing) to have the Chaplain of the United States Senate, Dr. Richard Halverson, befriend me.  Dr. Halverson was a world famous Presbyterian minister, the founder and Chairman of World Vision, and Young Life. We spent a lot of time together after he would open the Senate in prayer each day. His real mission was to minister to the spiritual needs of the one hundred Senators and the several thousand of Senate staffers.  He was way too busy to devote time to me, but he did.

I volunteered to work for him for one year for free. He told me he did not want me there, which greatly disappointed me. Then he told me of another position that he had been considering for me. Maybe it was not what I wanted, but it was what I needed.  He told me that to grow, I needed to step out of my comfort zone and deal with a different class of people.  Dick Halverson saw that I was accustomed to working with people in power, but I needed to learn to learn to deal with people without any power, the poor and the disenfranchised.

I was sent to visit a Methodist minister who would become my boss for one year.  I told him I was not a Methodist, he told me that did not matter.  I said that I had never been to seminary and my Biblical knowledge was not strong.  He said that might give me a fresh approach.  Then I told him I was a divorced man and I liked girls. He laughed and said, “We’re the Methodists. You will fit right in.”

My role was to reach out to the Washington, DC community and work with the homeless, the poor, the alternative lifestyle people, but also the professionals in Washington, DC.  I learned there were many homeless, but many more spiritually homeless. Those were the folks that had good incomes with often great careers but were feeling lonely and apart from the community.  My job was to bring all of them into the embrace of a collective group of loving believers, who could offer either physical support or emotional support.  


I built groups and brought together many people which we organized into small groups. I set up programs and agendas for the groups and even goals. I appointed certain people who I thought would be great team leaders. I thought I would easily manage them.  But that turned out not to be the case. I had run construction jobs and managed every phase of a shopping center development, so I must be already skilled at managing these small groups. Right? NOPE! Wow, I was so WRONG.

When I had my prior business experience, I was in charge. I was the one holding the purse strings. When an employee did not follow my instructions, I could either correct him or I could fire him.  But now I was working with ALL VOLUNTEERS, who did not see me as the Boss but just an organizer or group coordinator. Everything I tried just did not work. When I said, “let’s take this hill.”, I would start running up the hill and suddenly see that no one was following me.  I was a total failure at managing people.  I was shocked and humiliated. 

Now some wisdom I gained

What I learned is that everything I had thought about managing people was nonsense.  What I learned from that year in the ministry taught me what really essential in managing people in business.  Here are some key points that I learned the hard way:

1.  Stating your vision is fine.  But remember, it is just YOUR vision, not the employees.

2.  State the ultimate aim for your company or your project. Then let the team create a joint vision for that. You just might be surprised at how they will augment and improve your vision.

3.  If the team creates the vision with you, they will have ownership of that vision and make it happen.

4.  Allow the team to create smaller collaboration groups.

5.  Even if you spot natural leaders, let the small groups decide upon their group leaders.

6.  Your team members each have their own ideas of how their tasks should be accomplished.  Leave them alone except to check on progress and to offer support only if needed.

7.  Do not expect your employees to do work that you assume they wish to do. Just because someone has an accounting degree does not mean that they want to be involved in accounting activities. Perhaps they would like to explore another area.  Ask them.

There is much more I learned that year.  But if you keep these few principles in mind, you will discover that any obstacle you face, your team is facing it with you.


Posted on August 7, 2016 .

How I Became a Penniless Millionaire

by Stephen Day

Recently, my wife Tahmina asked how I felt when I earned my first million dollars.  When I told her, she could not stop laughing.

How it happened

Back in the 1980s, I was working as a junior partner with a real estate development firm based in Maryland. We were building a small office/retail center in Orange Park, Florida. I was not only the project manager, I was the construction superintendent, the leasing agent, the landscaper, the zoning director, and doing…well, everything.  We were seeking both a construction loan and a permanent mortgage for the 2nd building and I was in charge of the loan acquisition as well. 

I had never put together a loan package for a large lender before and I was struggling to understand all that needed to be included.  (We see the same confusion in the new startups we review for DAYCAP.)  I had approached the local banks, the large national banks, and other funding sources. I was asking everyone. Wait, that is not quite accurate. I was groveling with everyone to get the loan. 

So, I am sitting in my construction trailer on a very hot Florida day, lime rock dust from the new parking lot covering me and I was looking at my worn-out tires on my car, one of which had been flat that morning.  I had to get a whole set of new tires. But I had NO MONEY.  Really!  NO MONEY.  I had no idea where I was going to get any more money until the first building was given its certificate of occupancy and that loan would be closed. However, that could take two more months and I really needed to get the 2nd building’s financing in place so we continue construction.

That afternoon, as I sat sweltering in my construction trailer, pleading with various lenders, our CPA stopped by with the financials and the loan package to present to the big insurance company that was our best bet for funding.  We chatted a bit while I was taking calls from contractors and then he left.  Maybe an hour later, I opened the file with financials, which included my personal financial statement. 

I could not believe my eyes. I had to read this again.  According to the CPA’s review, my net worth (based upon the value of the real estate project) was now over one million dollars.  I was a millionaire!  It was just incredible.  And it was NOT how I thought I would feel when I got to that “mark of success”.  Just imagine how I felt, a millionaire with NO MONEY, sitting in a hot construction trailer and unable to buy a new set of tires. Not exactly Mr. Big Shot.

I suddenly learned that the movie/television version of the debonair millionaire was often quite different from the reality. Yes, on paper I was a millionaire. Only on paper.  But I did not have ready, available cash.  As is often the case with business owners, our wealth is tied up in our business enterprises, and not readily available for spending.  

What I learned

I came to realize that there are many folks like me, penniless millionaires, many who have assets, land or businesses worth millions, yet do not always have available cash resources.  One such businessman once told me, “Sure, I guess I could afford a $350K Bentley but I can hire seven people with that money.  That is seven families that will receive $50K per year, still a pretty decent living for many people.” I loved his mindset, as I did when another said over a Barbeque lunch, “Instead of spending $100 on an expensive bottle of champagne, why not buy one share of IBM.  Which do you think will give you longer pleasure?” 

I have learned to greatly value the people who are building assets quietly without all the show.  Many of them have to really consider the expense of a cruise or a vacation to an exotic locale.  But they are on their own wonderful adventure. We can learn much from them.

By the way, I did finally get a new set of tires, but I had to wait a couple of months.  On that day, I spent three dollars to fix my flat tire.  After all, what else would you expect a millionaire to do?

Posted on August 3, 2016 .