Josh Coates Speech at UVEF

If you live in Utah and want to excel as an entrepreneur, I highly recommend joining the Utah Valley Entrepreneurial Forum. I’ve been attending forum lunches for about 8 years. Today’s meeting was one of the best ever. Josh Coates, Silicon Valley entrepreneur and founder of scale8 (they raised more than $80 million) spoke to us today. He spent 30 minutes on the right way to develop enterprise products–by including potential customers in every step of the design process.

While at scale8 he personally visited about 80 large companies in three months talking to their IT teams to find out what storage technology they needed. His passion for understanding customers was evident when he showed us a few of the 8,000 quotes he had fastidiously recorded (almost verbatim) in his design review sessions. Imagine having 8,000 quotes from your potential customers about what they want in a solution–before you complete version 1.0!

If you want to see how smart Josh is, check out this article he wrote about Open Source Bigotry. For an engineer to be an expert in large scale storage (he talks about “pedabytes” with ease), to have crossed over to the business side (as a founder and board member of scale8) and to be able to quote literature and history (as he does in the bigotry article) — this guy is very high wattage.

Josh is planning to live in Utah for about two years–it’s his two year experiment. I’ve told him that my goal is to make sure that he is so successful here that he decides to stay.

He doesn’t avoid controversy. During the last 5-10 minutes of his speech he talked about what is good, bad, and ugly about the Utah Technology landscape. He likes the milk prices here, and the beauty of Utah. Besides our white vinyl fences and the fact that UDOT doesn’t know how to clear a freeway after an accident, the thing he lambasted the most was how Utah treats “venture debt.”

He said any entrepreneur that gets convertible debt for his/her startup company should never have to sign a personal guarantee or mortgage a home; that the interest rate should be very low; that no valuation should be made; and that all convertible debt should convert to Series A preferred stock when the professionals establish a valuation and fund the first round.

The burden of debt hinders the growth of many companies. He wishes there were more early stage venture funds in Utah. He thinks Utah has way too many small Mom and Pop businesses (like how many dozens of wireless internet companies are there in Utah with 4 employees) that don’t have a funding strategy, a growth strategy, an exit strategy–they are just happy to stay small and get a paycheck.

Clearly, Josh is ambitious, wants to change the world, and can’t understand why Utah has so many small business owners that are comfortable and lack ambition.

Listening to Josh reminds me of my 19 months in Silicon Valley where there is a high concentration of ambitious, smart people who constantly talk about investing and high tech, have worked for a number of different companies, and who have an amazing energy and intensity. I hope Josh can infect hundreds of other Utah entrepreneurs with the ability to think big. After today, I’d say he’s well on his way.

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5 Comments

  1. I think it’s great that he got 8,000 quotes and got $80 million, but what about the rest of the story?

    I hadn’t heard of the company and wanted to find out more, only to find this byte and switch article about how they switched business models three times and ran out of money.

  2. Good entrepreneurs don’t drive companies into the ground. Just because you raise alot of money during the dot com boom doesn’t make you successful. Their are two types of bad entrepreneurs. Those that go out of business after raising ungodly amounts of money because they don’t know how to run a profitable business, and those that get kicked out of their companies after raising ungodly amounts of money and almost driving it into the ground, sound familiar Paul? Real businessmen run profitable businesses. Living off of other peoples money does not count as success.

  3. better late than never. i was just told about this blog entry!

    hey dan, i don’t know who you are, or what your background is, but if you are interested in learning more about what went on at scale8, i’d be more than happy to tell you “the rest of the story.” 😉

    btw, byte and switch is a fantastic muck raker in the storage industry, but only about half of what they print is true. 😉

  4. Russell Page

    wow. that is some serious customer dedication. I have actually never heard of this company either.

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